The planned economy and the struggle for socialism

Red Plenty, by Francis Spufford, mixes fact and fiction to describe post-second world war Russia. The author sets out to expose Stalinist mismanagement and authoritarian rule – and, by extension, any notion of socialist planning. Inadvertently, however, he also shows the great potential of socialism – if it were truly run under the democratic control of the working class. PETER TAAFFE reviews this fascinating book.

This article was first published in Socialism Today

THE SUBJECT OF this book is the Khrushchev years in Russia, the period following the death of Stalin in 1953 up to the overthrow of Nikita Khrushchev as first secretary of the Communist Party of the Soviet Union in 1964. And Francis Spufford, despite his intentions to prove the opposite, partially at least, helps to rehabilitate the idea of a planned economy.

The book is neither a novel, in the strictest sense of the term, nor is it pure fact. Normally, this is an unsatisfactory method for examining important issues. But Spufford combines fact and fiction in quite an ingenious way. Moreover, it is not without literary merit.

Spufford illustrates the huge achievements and great potential of the planned economy. The obvious flaws inherent in a bureaucratic system based upon control and management from the top are highlighted. This is in marked contrast to most accounts of the history of the Soviet Union from 1917 onwards, which paint a picture of an endless dark night of dictatorship, repression, the Gulag, etc, without any redeeming features or lessons for today.

In fact, Spufford points to the undoubted achievements of the Soviet Union even after the terrible destruction wrought by the Nazi invasion in the second world war. He writes: “Since the fall of the Soviet Union, and the opening of its archives, historians from both Russia and the west have recalculated the Soviet growth record one more time: and even using the most pessimistic of these newer estimates, all lower again than both the Kremlin’s numbers and the CIA’s, the Soviet Union still shows up as growing faster, in the 1950s, than any other country in the world except Japan. Officially, the Soviet economy grew by 10.1% a year; according to the CIA, it grew 7% a year; now the estimates ranged upwards from 5% a year. That was still enough to squeak past West Germany, the other growth star of the period, and to cruise past the US average of around 3.3% a year for the decade”.

In the 1960s, in the journal Scientific American, an objective study came to the same conclusion: that the growth rate of Russia was unprecedented, even exceeding that of Japan, according to its analysis. Even if Japan exceeded the growth rate of Russia at this stage this was in one country, and not the semi-continental Soviet Union. Moreover, Japan’s growth was a consequence of the special efforts undertaken by American imperialism, in particular, to completely renovate Japan economically, including the land revolution implemented by US pro-consul General MacArthur. This was because of the threat in Asia to the interests of imperialism from the example of the newly victorious Chinese revolution.

The advantages of planning

MARXISTS WERE ACCUSED of exaggerating the achievements of the Soviet Union. We pointed out that, with the advantages of a planned economy and despite the colossal inefficiencies of the Stalinist one-party totalitarian regime, it was able to produce more scientists, engineers and technicians than the rest of the world put together. This was a source of mirth to our opponents. Now, this book essentially makes the same point. At one stage, the Soviet Union was producing more scientists and technicians than the US and was actually ahead in key fields of space research and exploration, among others.

Moreover, the economic growth engendered by the advantage of a planned economy allowed the Khrushchev regime to begin to significantly increase living standards. Spufford points out: “Workers’ wages were raised, and the salaries of the elite were capped, creating a much more egalitarian spread of income”. For a while, in the late 1950s and early 1960s, the capitalists in the west felt the same mesmerised disquiet over Soviet growth that they were going to feel about Japanese growth in the 1970s and 1980s, and Chinese and Indian growth from the 1990s onwards. Nor were they just being deceived: “The work day shrank to eight hours, the work week to five days. The millions of families squeezed into juddering tsarist tenements, and damp ex-ballrooms subdivided by walls of cardboard, were finally housed in brand-new suburbs”.

He continues: “It was clear that another wave of investment was going to be needed, bigger if anything than the one before, to build the next generation of industries. There’d need to be factories soon turning out plastics, artificial fibres, and equipment for the just-emerging technologies of information: but it all seemed to be affordable, now. The Soviet Union could give its populace some jam today, and reinvest for tomorrow, and pay the weapons bill of a superpower, all at once”. This was the background to Khrushchev’s visits to the US – which form a major theme of the book – when he drew comparisons between the achievements of the planned economy, albeit under Stalinism, and that of the most advanced capitalist power on the globe.

Spufford claims that Khrushchev predicted ‘red plenty’, the title of his book. In 1956, Khrushchev had been loosely translated as declaring to an audience: “We will bury you!” (The actual quote reads: “Whether you like it or not, history is on our side. We will dig you in”.) Bolstered by the huge achievements in space technology, symbolised by the first human flight into space by the cosmonaut Yuri Gagarin, Khrushchev warned the US capitalists: “For the time being you are richer than us... but tomorrow we will be as rich as you. The day after? Even richer! But what’s wrong with that?” Spufford comments: “The listeners did not seem as charmed as he had expected by this frank, capitalist-style sentiment”.

From dreams to reality?

TRYING TO GET inside the mind of Khrushchev, he has him thinking how much change had been effected since the death of Stalin: “If you looked at people on the street, all the old clothes had vanished, in the last few years. No more patches, no more darns. Everyone was wearing fine new outfits. The children had winter coats no one had worn before them. People had wristwatches on their arms, like his own good steel watch from the Kuibyshev plant. They were moving in their droves out of the horrible old communal flats, where four families shared a toilet and there were knife-fights over who used the stove, into pristine concrete apartment buildings”.

It could be objected that Khrushchev’s claims about a new, dramatic increase in living standards were bogus. After all, the new ‘Khrushchev flats’, while welcomed at the time, were objected to by subsequent generations as too small, cramped in high-rise blocks. But the same criticisms could be made of the 1960s planners in Britain and elsewhere for building high-rise council estates. For the generation moving out of the slums, they represented a big step forward. Of course, a planned economy with workers’ democracy would have consulted the people about what they required, what was possible from new dwellings, etc. But capitalist town hall planners were just as arbitrary, and still are, in the conception, design and the building of houses ‘for’ the people, which the latter have very little say in.

At times, the author clearly fears that that the material he draws on to show the achievements of the Soviet Union at that stage could ‘unduly’ influence the reader in a manner he does not intend. On the one side, he records Khrushchev speaking in Moscow on 28 September 1959: “The dreams mankind cherished for ages, dreams expressed in fairytales which seemed sheer fantasy, are being translated into reality by man’s own hands”.

Spufford comments: “And of course, Khrushchev was right. That is exactly what did happen in the 20th century, for hundreds of millions of people... Khrushchev believed that… plenty… was coming in Soviet Russia, and coming because of something that the Soviet Union possessed and the hungry lands of capitalism lacked: the planned economy. Because the whole system of production and distribution in the USSR was owned by the state, because all Russia was (in Lenin’s words) ‘one office, one factory’, it could be directed as capitalism could not, to the fastest, most lavish fulfilment of human needs. Therefore it would easily out-produce the wasteful chaos of the marketplace”.

But then, comparing this vision of red plenty to Russian fairytales of the past, Spufford writes: “It is wishful, irresponsible, not to be relied on”. But is this a utopian ‘fairytale’ redolent of a Russian past? For example, Spufford attempts, rather successfully, to get into the mind of a mathematician of the time pondering his own situation: “He was lucky enough to live in the only country on the planet where human beings had seized the power to shape events according to reason, instead of letting things happen as they happened to happen, or allowing the old forces of superstition and greed to push people around”.

Speaking of planning, the same character thinks: “He could see that this would not be possible under capitalism, where all the factories had separate owners, locked in wasteful competition with one another. There, nobody was in a position to think systematically. The capitalists would not be willing to share information about their operations; what would be in it for them? That was why capitalism was blind, why it groped and blundered. It was like an organism without a brain. But here it was possible to plan for the whole system at once. The economy was a clean sheet of paper on which reason was writing. So why not optimise it? All he would have to do was to persuade the appropriate authorities to listen. Suppose that the Soviet economy could be made to grow by an extra 3% a year – an extra 3% a year after year, compounded. It would mount up fast. After only a decade, the country would be half as rich again as it would have been otherwise”.

Therefore, the idea of Khrushchev of the Soviet Union overtaking and surpassing the capitalist USA is not as far-fetched as the author would have us believe. Khrushchev himself represented that wing of the bureaucracy, albeit trapped within the stultifying framework of Stalinism, which did actually believe that the rate at which the Russian economy was developing could challenge and overtake even the mightiest power of capitalism. And, with a different political system, this would have been entirely possible.

Khrushchev’s thaw

LEON TROTSKY POINTED out in the 1930s that the bureaucracy contained different trends or tendencies. The pro-capitalist tendency was there from the outset of Stalin’s triumph over the International Left Opposition – which was under the leadership of Trotsky and demanded the restoration of workers’ democracy in the planned economy – in the 1920s and 1930s. But the majority of the bureaucracy, probably right up to the 1980s, the decade before the overthrow of Stalinism and the liquidation of the remnants of the planned economy, preferred to rest on the planned economy which represented ‘progress’, both for society, in general, and for their privileges, in particular. Khrushchev represented this layer, which won out over the arch-Stalinists in the struggle for power after the death of Stalin himself in 1953.

Following this came the ‘thaw’, which loosened the iron grip of Stalinism, allowing the Khrushchev wing of the bureaucracy to seek to renovate the system within ‘safe limits’. However, this encouraged opposition to the system and detonated the revolution in East Germany in 1953 and the earthquake of the Hungarian revolution of 1956.

Red Plenty also has a very interesting chapter on Novocherkassk which was the scene of a Russian uprising in 1962, similar to those that had taken place earlier in eastern Europe. The trigger for mass demonstrations, in which the working class held portraits of Lenin alongside demands for “meat, butter and a pay rise”, and “cut Khrushchev up for sausages”, was the doubling of prices for those basic products. On the urgings of the Stalinist Kozlov – a supporter of Khrushchev – who was present in the city during the uprising, the order was given by Khrushchev to fire on the defenceless crowd. This resulted in 28 deaths and 84 wounded. Of the 116 arrested, seven people were executed. Together with increased economic problems, this served to undermine the ‘liberal’ image of Khrushchev. This, in turn, prepared the ground for his removal by Leonid Brezhnev in 1964.

This illustrates, along with the subsequent seizing up of the system, that Khrushchev was incapable of going outside the limits of the bureaucratic regime. He represented, within the privileged elite, the generation that came to prominence in the Stalin era of the 1930s. Stalin had completely eliminated all of those connected with the great traditions of the October 1917 revolution. In so doing, to a large extent, he wiped out the memory of the working class within Russia. Newly promoted bureaucrats like Khrushchev were completely ignorant of recent history, particularly of the Bolshevik party with its emphasis on democracy within the party and of workers’ control and management in the state and society. Therefore, after the death of Stalin, then the removal of Khrushchev, his collaborators and heirs were incapable of looking for solutions in this history. They were unable to go outside the system of bureaucratic rule from the top.

Repeating the slanders

THIS PUT ITS stamp and imposed severe limitations on the Khrushchev regime, severely hampering how far it could go in political terms, as well as on effective and efficient planning of the economy. It is on this fundamental point that Spufford comes to grief in his criticism of the concept of the ‘planned economy’, its origins and achievements. He echoes every slander of Orlando Figes, Robert Service and the army of bourgeois professors and writers who completely misrepresent what happened in 1917 and subsequently. For example, the Russian Social Democratic Labour Party (RSDLP) was “a freakish cult under the thumb of a charismatic minor aristocrat, VI Lenin, who had developed a doctrine of the party’s, and by extension his own, infallibility”. The Bolsheviks carried out a ‘coup’ in October 1917, etc. In fact, Lenin broke from the RSLDP to form the Bolsheviks as a separate formation in 1912. The Bolshevik party was the most democratic workers’ party in history, with rich internal discussions and disagreements. That it created a democratic workers’ state based upon soviets (workers’ councils) and workers’ control and management is of little importance in Spufford’s analysis.

The Bolsheviks were ‘utopian’, he argues, because they wanted to establish socialism in Russia, a country “that least resembled Marx’s description of a place ready for socialist revolution”. Spufford passes over the ‘small detail’ that the Bolsheviks did not believe that the country was ready for socialism on its own. But capitalism could be broken at its weakest link, the revolution would spread internationally – as it did – and then, on the basis of linking Russia with the great industrial, scientific resources of Germany and Europe, the basis would be furnished for the beginning of a movement towards socialism. Only on a world scale would it be possible to begin to lay the foundations for that sort of society on the basis of a higher material wealth and productivity of labour.

It is because of his severe limitations – writing from the standpoint of a supporter of capitalism – that Spufford’s sneering general criticisms of planning are so wide of the mark. That is not to say that he does not make some telling points about the bureaucratic method of planning pursued under Stalinism. Where he happens to be correct, he has already been anticipated long ago in the criticism of Stalinism by Marxists and Trotskyists. For instance, he comments on the “borrowing and catching up” which the Soviet Union was compelled to do, particularly when the revolution was isolated following the defeat of the revolutionary wave of 1917 to 1923 in western Europe.

Bureaucratic bungling

STALINISM MADE MONUMENTAL blunders that resulted in huge overheads which burdened the planned economy. There was a tremendous disproportion in the development of separate branches of industry. This was, however, inseparable from bureaucratic methods. Trotsky commented on this: “From the standpoint of an ideal planning directive, which would guarantee not the maximum tempo in separate branches, but the optimum result in the economy as a whole, the statistical coefficient of growth would be lower in the first period, but the economy as a whole, and particularly the consumer, would be the gainer. In the long run the general industrial dynamic would also gain”. (The Revolution Betrayed, 1936)

Marxism, not ex post facto but at the time when Russia was industrialising, made trenchant criticisms of the methods employed by Stalinism. First of all, Stalin rejected the programme for industrialisation spelt out by Trotsky and the Left Opposition. Then, when challenged by the newly confident pro-capitalist forces, which were encouraged by the policies of Stalin and his group, Stalin swung violently over to a repressive programme against the ‘Nepmen’ (those who had grown rich under the New Economic Policy).

The history of Stalinism in relation to the economy was one of zigzags, inevitable for a regime based upon bureaucratic rule from the top. Trotsky wrote: “The Soviet regime is passing through a preparatory stage, importing, borrowing and appropriating the technical and cultural conquests of the west. The comparative coefficients of production and consumption testify that this preparatory stage is far from finished”. (The Revolution Betrayed) Thus Stalinism could preside over the development of an industrial base, with a low productivity of labour. During this stage, the bureaucracy played a relatively progressive role.

However, once that task was fulfilled, the bureaucracy came into conflict with the further development of industry and society. This is illuminated, very well in parts, in this book. The bureaucracy became a drag on the possibility of the further development of society. It became an absolute brake on the further development of the Soviet Union.

Nonetheless, it is quite clear from this book that Russia, although still behind the USA in living standards (wages were 25% higher in the US at this stage), was at an incomparably higher level than in the 1930s or even in the period immediately following the second world war. New needs and tasks were posed in this situation. Instead of the extensive development of industry of the earlier stage, what was required were very intensive methods of harnessing science and technique in order to take production and society forward. This, the Stalinist bureaucracy was incapable of doing.

The situation facing the Bolsheviks

SPUFFORD TRIES TO show that, right from the outset, the Bolsheviks were utopian in their plans and practices for industry. This is emphasised when dealing with the issue of prices and how they are formed in both capitalist society and, particularly, in one that was in transition from capitalism. Dealing with the immediate period after the revolution – so-called ‘war communism’ – he writes: “Despite this absence of all Marx’s preconditions, the Bolsheviks tried anyway to get to paradise by the quick route, abolishing money and seizing food for the cities directly at gunpoint”. The methods employed in this period were forced on the Bolsheviks by the civil war and the intervention of 21 armies of imperialism. They were what were required in a ‘besieged fortress’.

There was some comparison to what the Bolsheviks did and the first majority Labour government of 1945, which was forced to employ the methods of rationing because of acute shortages of food and fuel. Although much worse in Russia because of its poverty and isolation, there was a similarity in method, only on a massive scale. There was undoubtedly a certain ‘utopian’ hope that such methods could be maintained, but only on condition that the revolution would spread from Russia to western Europe and then to all of the world. When this did not happen, because of the betrayal of the social-democratic leaders in western Europe, the Bolsheviks did not hesitate to resort to new methods, which meant a partial restoration of the ‘market’.

Indeed, it is a fallacy to believe that Marxists envisaged that money and prices could be completely abolished immediately after capitalism is overthrown. Only proponents of the false theory of ‘state capitalism’ (their characterisation of the Soviet Union) naively believed that a socialist planned economy would mean the immediate overcoming of the law of value.

Once capitalism is overthrown, this does not mean that the new socialist regime could start with a blank sheet. Classes, the production of surplus value, prices, money – all the ‘unfortunate’ inheritances from capitalism – will continue to exist. It is not possible to move from the realm of necessity to freedom overnight. However, the conscious intervention of the state, which owns the means of production, means that these vestiges, carried over from capitalism, will play a different role. Rather than being determined by the blind play of the productive forces, they can be used for the conscious allocation and planning of the resources of society.

Real workers’ control

EVEN IN A more economically developed society, as the Soviet Union became, particularly in the 1960s and 1970s, it would not be possible to completely ignore the ‘market’, even for a healthy workers’ state. Spufford implies that a developed society would not be able to harmonise the determination of prices with the planning of industry and society. In fact, Trotsky and the Left Opposition wrestled with this issue in the 1920s, particularly after the introduction of the New Economic Policy in 1921. Even in 1923, because of the bungling of Stalin and his group, there was a demonstrative divergence of industrial and agricultural prices, called at that time ‘the scissors’. Therefore, by 1927, the Left Opposition was demanding “a guarantee of the unconditional stability of the money unit”. Without this there was a danger of inflation, “the syphilis of a planned economy”. (The Revolution Betrayed)

Genuine Marxism, both then and now, would not approach this issue in an arbitrary fashion or in a bureaucratic way. The precondition for setting realistic prices is an understanding of costs – real costs, not prices that are bureaucratically determined. This, in turn, is not possible without understanding real economic relations, particularly with the gross inequalities that characterised Stalin’s regime. In answer to Spufford, who thinks the Marxists have an arbitrary attitude on this question, Trotsky wrote that “directive prices were less impressive in real life than in the books of scholars”. (The Revolution Betrayed)

In other words, the precondition for setting prices, if they are to be accurate in a planned economy, must be the freedom from all bureaucratic control, from one ‘infallible’ centre. The author gives the example of the prices of hundreds of thousands of commodities set at the all-powerful centre. This would not be the case in a regime of workers’ democracy. That would mean workers’ control in the factories and workers’ management at national, regional and local levels. This would harness all the talents, ideas and views for the future development of society by the producers, consumers, and by society as a whole.

Clearly, neither the Khrushchev regime nor those that followed, such as that of Brezhnev, was able to achieve this. Nonetheless, what Spufford does show is the colossal achievements of the planned economy, even when it was blighted by Stalinist totalitarianism. In economically undeveloped societies, in certain historical periods, it fulfilled the task of laying the basis for heavy industry and basic infrastructure, which was incapable of being implemented by capitalism.

The end of Stalinism

ONCE AN ADVANCED industrial society is in the offing, however, the needs of production come into collision with bureaucratic misrule. The history of the Soviet Union in the period dealt with by Red Plenty shows that, not only was it competing with the advanced industrial societies, but it was outstripping them in some key fields. Even the development of cybernetics and computers was well advanced. But bureaucratic blunders by the Stalinist regime meant it was incapable of recognising the colossal advantages which would flow from the implementation of this new technology. Ironically, the windfall of high oil prices – the first field in Siberia was discovered in 1961 – helped to cushion the regime and hide its underlying weakness. A similar bonanza, North Sea oil, played the same role for British capitalism.

That is why Khrushchev failed and the hopes engendered by him turned to ashes under the rule of Brezhnev and Alexsei Kosygin. This book remains valuable, however inadvertently, in arguing the case for real socialist planning. The period when the Stalinist regimes of Russia and eastern Europe were used as a scarecrow against planning and socialism is coming to an end. Capitalist rule in these countries has been an unmitigated disaster. Half of all Romanians now believe that life was better under the ‘Communists’, says a recent poll by Balkan Insight. This is now not untypical of the situation in the former Stalinist regimes.

As capitalism becomes more and more discredited, the working class will turn to alternatives. Stalinism has had its day and will never become the mass force that it was in the past, particularly in advanced industrial countries. It was not socialist planning that was discredited in the former Soviet Union, it was the Stalinist perversion of a planned economy. It is the task of genuine Marxism today to purge from this concept all elements of top-down bureaucratic control and situate it in a socialist and democratic framework.

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