This is an excerpt from a forthcoming book, written by Robin Cox, a comrade from our sister party, the SPGB.
The Soviet Union: A Class-Divided Society
Class ownership is very much bound up with the question of control and the ability to extract an economic surplus from the working population. To put it bluntly, “ultimate control” and de facto ownership of the means of production—above all, labour power—are, in reality, just two sides of the same coin. To exercise de facto ownership over these means, in effect, amounts to exerting ultimate control—and asserting an exclusive right—over them. Or, to put it differently, having ultimate control over something is the same as owning it. Marx himself seems to have implied something along these lines in his essay “Moralising Criticism and Critical Morality,” writing that “Property, at all events, is also a kind of power. Economists call capital, for instance, ‘power over the labour of others.’”1
This point is crucial to understanding the nature of the Soviet system itself. In the Soviet Union, the principal means of production were formally owned by the state, yet this has not infrequently been interpreted to mean that these means were owned by everyone in Soviet society—or, what amounts to the same thing, that they were owned by nobody. But how could this possibly be the case when “ultimate control” was extremely concentrated in the hands of a small minority that alone decided on the allocation and disposal of society’s economic resources? If ultimate control is strictly limited, in this sense, then so, too, must de facto ownership, by this reasoning.
One is reminded of the example of the Ethiopian dictator and fierce exponent of state capitalism, Colonel Mengistu. In an address to the nation marking the ninth anniversary of the bloody coup that overthrew Haile Selassie, Mengistu bitterly complained that his economic goals were not being met due to wastage, laziness, and theft, and because “nationalised properties are being treated as if they have no owners.”2 Mengistu’s words speak for themselves. It is the state that nominally owns such nationalised properties and, thus, by extension, those who ultimately control the state: its ruling class.
Critics of a class model of the Soviet Union have argued that the means of production were essentially in the hands of the state and that this somehow precluded the possibility of there being a capitalist class owning and controlling these means. Since there was no identifiable capitalist class you could point to in the Soviet Union, it therefore follows that you could not sensibly talk of there being capitalism there. This seems to be the position taken up by commentators like Trotsky:
The attempt to represent the Soviet bureaucracy as a class of “state capitalists” will obviously not withstand criticism. The bureaucracy has neither stocks nor bonds. It is recruited, supplemented and renewed in the manner of an administrative hierarchy, independently of any special property relations of its own. The individual bureaucrat cannot transmit to his heirs his rights in the exploitation of the state apparatus.3
To begin with, one might note that, if it were the case that there was no identifiable capitalist class in the Soviet Union, then, in Marxian terms, it strictly follows that there could be no such thing as a working class, or proletariat, either. As Marx noted, the existence of a capitalist class presupposes the existence of a working class and vice versa. Capital, he maintained, “presupposes wage labour; wage labour presupposes capital. They reciprocally condition the existence of each other; they reciprocally bring forth each other.”4
The implications of all this for the standard Leninist-cum-Trotskyist claim that what existed in Soviet society was a “proletarian” or “workers’” state are, needless to say, fatal. If there was no capitalist class in the Soviet Union—and, thus, no proletarian class—you could not sensibly talk about the Soviet Union being a proletarian or workers’ state. A “proletarian state” (so-called) cannot exist without a proletariat (and hence also an exploiting capitalist class over which such a proletarian state supposedly exerts its “dictatorship”). The so-called “dictatorship of the proletariat” that the Soviet Union was supposed to have established was in reality a (class) dictatorship of the minority or vanguard over the proletarian majority. It boils down to a question of how you choose to define this minority.
Curiously, Stalin himself in a speech delivered on November 25th, 1936, sought to square the circle by suggesting that in the Soviet Union, “there are no longer such classes as the capitalists, the landlords, the kulaks, etc. In the U.S.S.R. there are only two classes, workers and peasants.“5 From a strictly Marxian perspective, this makes no sense at all. Stalin seemed to have been vaguely aware of this but argued, nevertheless, that “the working class of the U.S.S.R. is an entirely new working class, a working class emancipated from exploitation, the like of which the history of mankind has never known before.”6 In other words, what is presented here as an “entirely new” definition of the working class is something that has completely severed any connection with the Marxian concept of working class. It is a non-Marxist definition of class that Stalin employed.
The argument that will be advanced here is that there was indeed a capitalist class in the Soviet Union—a state capitalist class—and that this class was constituted on the basis that it collectively appropriated an economic surplus, the disposal of which it alone had decisive control over. The ultimate control this tiny class exercised over the economy whereby all the important decisions affecting the economy were concentrated in its hands, was effected precisely through its complete stranglehold on the machinery of the state itself. Because it exerted ultimate control over the means of wealth production via the state machine, this meant, in effect, that it owned those means collectively as a class in de facto terms.
This class—sometimes dubbed the Nomenklatura—consisted essentially in the top echelons of the Communist Party, the managers of state enterprises, the upper levels of the state bureaucracy—such as government ministries—and the leading figures of the military establishment. Here, I must emphasise, again, that it was collectively, as a class, that this powerful and privileged elite enjoyed de facto ownership of the means of production, not as private individuals. This is what makes Trotsky’s objections irrelevant and beside the point.
Whether we can characterise these elites as a strictly (state) capitalist class, as opposed to some other kind of ruling class, is of course contingent upon demonstrating that the mode of production operating in the Soviet Union, over which this class presided, was basically a capitalist one. That is precisely what it was, given the prevalence of such capitalist categories as money, wage labour and profits. Considered singly, such categories do not necessarily denote the existence of a capitalist mode of production—money, for example, long predated anything resembling capitalism. Rather, it is the combination of these organically interconnected features (in capitalism, that is) and the extent to which they prevail as constituent parts of the economic totality, that defines capitalism. By that token, the Soviet Union was very clearly a capitalist society.
It cannot be denied that this class or ruling elite did, indeed, exercise real de facto collective control over (and, hence, ownership of) the means of wealth production, in stark contrast to the great majority in Russian society, who were essentially alienated or divorced from these means. Being alienated or divorced from the means of production is what required the latter to sell their labour power in exchange for a wage, just as is the case with their counterparts in the West. The Nomenklatura, collectively speaking, amounted to an owning and employing class, however you choose to look at it, and the relationship of workers to this class was that of a non-owning class of employees.
The claim that, because the means of production were (largely) state owned in the Soviet Union, there was no private property and, therefore, no owning class in possession of this private property, is based on fallacious reasoning. State property, as Mengistu’s words inadvertently betray, is, in fact, a form of private property. What those who cleave to this line of reasoning fail to understand when they talk of the absence of private property in the Soviet Union is that they are referring to only a particular form of private property—namely, individual private property. But, ironically, as Chattopadhyay explains, Marx himself believed the tendency in capitalism was to precisely eliminate this form of private property and replace it with a collectivist form of capitalist property:
When Marx speaks of abolition of private property, it is not in the sense of individual private property, contrary to the Marxist Vulgate, but in the sense of “class property,” as is seen in texts as temporally distant as the Communist Manifesto (1848) and the Civil War in France (1871). The reason is simple. It is precisely capitalism’s “historical mission” to destroy individual private ownership in the means of production, and in the remarkable chapter on the function of credit in capitalist production in the third volume of Capital (of which Roemer seems to be blissfully innocent) Marx refers to the “abolition of capital as private property within the limits of the capitalist mode of production itself’ and of the genesis of “directly social capital.”7
In other words, there is a double sense to the notion of “private property” in Marxian usage which is habitually overlooked by Leninist-leaning commentators and, indeed, market libertarians, as well. There is the individual private property of individual capitalists. Then there is the collective private property of the capitalist class as a whole. For Marx, there was, as stated, a tendency within capitalism for the former to be crowded out, and replaced, by the latter.
The collective private property exercised by the nomenklatura in the Soviet Union was, as it were, just one step further along the development continuum towards a fully collectivised capitalist property, compared to the West. But, in the West, too, the business world is subject to this self-same development, as evidenced by the emergence and spectacular growth of the joint stock company, historically speaking. In the West, few medium or large companies are owned by just one single person. Private property is collectivised, in other words, to a lesser or greater extent.
Chattopadhyay expands on this argument thus:
Individual private property tends to disappear within capitalism itself through the dynamic of accumulation, ceding place to “collective property” beginning with share companies.(…)
In the Communist Manifesto when Marx and Engels speak of the “abolition of private property” as the task of the workers’ revolution, they explicitly mean the “disappearance of class property”. Marx repeats this in his address on the 1871 Paris Commune. One could indeed advance the proposition: the existence of wage labour (the outcome of non-property by the majority) is a necessary and sufficient condition of the existence of capital. Hence ownership of the means of production by the state with continuing wage labour (which implies commodity production) is effectively the “private property of a part of society”. This ends only when the new classless (necessarily stateless) society itself takes over the means of production.8
In the case of the Soviet Union, while individual members of the nomenklatura were able to accumulate considerable wealth, they were not generally permitted to use that wealth as “capital”—or, at least, not openly. There were some exceptions, such as state bonds which were issued and made available for public subscription, making use of lottery-type devices. These bonds were marketed as a source of state budget financing, although the share of state funds accounted for by state bonds rarely reached double figures in percentage terms.
In general, the investment of capital was a collective enterprise conducted via such financial intermediaries as GOSBANK and undertaken by and on behalf of the Nomenklatura state capitalist class, with most of the funding deriving from other mechanisms such as turnover taxes levied on state enterprises. As members of that privileged class, these individuals could only hold onto the wealth they had accumulated chiefly in the guise of non-productive assets—luxury consumption.
To an extent, the process of economic reform which became increasingly apparent in the final years of the Soviet era could be seen as an attempt to move away from this highly centralised model of capital investment, permitting state enterprises a more active role in their own growth and expansion. As such, it seemed to represent a movement in the opposite direction of what had been assumed to be the normal capitalist accumulation trajectory from individual to collective capitalist property.
From the perspective of who actually owns the means of production, however, those features of purely individually owned capitalist property at the other end of the spectrum to purely collectivised capitalist property—such as the legal right to hold stocks or bonds or the legal right to pass on one’s property to one’s heirs—are really of secondary sociological significance. It is ironic that, while purporting to put forward a Marxist perspective on the matter, Trotsky should give primacy to a legalistic de jure definition of class ownership, prioritising it over de facto considerations. His reliance upon concepts deriving from bourgeois jurisprudence, rather than a materialist conception of history, is noteworthy in this regard and it tells us something about his own underlying political orientation.
As Buick and Crump point out, how a class reproduces itself is “not a question of prime importance”. There are other ways in which an owning class can reproduce itself and, in this regard, they cite examples such as the “examination system” in Imperial China and the Catholic Church in medieval Europe.9
To take the latter example, the Church was an enormously powerful landowner throughout Europe. Not only that, many monasteries served as major centres of industry and innovation, as well as of learning. Though nominal celibacy would, for obvious reasons, rule out the principle of inheritance among the clergy, this did not affect the position and institutional continuity of the Church as a landowner or diminish the benefits that accrued most strikingly to those favourably positioned within its upper reaches—the Church hierarchy itself. This clerical elite was thus, collectively, the de facto owner of Church property and certainly not the lay congregations from whom, incidentally, it forcibly extracted a handsome income in the form of rents, tithes and so on.
That Leninist thinking should have so effectively tied itself up in knots in this way is the direct outcome of its own very narrow and rigid perception of what capitalism entails—its identification of “capitalism” with individual capitalist property rights. In this respect, Leninists of all shades mirror the naiveté of their overtly pro-capitalist free market opponents.
The argument that people like Trotsky put forward confuses two quite different things. What needs to be explained is the social fact of the existence of a capitalist class, not the particular route by which particular individuals might themselves become members of this class. In the West, individuals have traditionally been able to exercise individual legal entitlement to capital, unlike what supposedly obtained in the Soviet Union, and by such means have sometimes been able to become capitalists or inherit capital. But, even here, mere legal entitlement to capital in the form of stocks and bonds does not explain how it is that most capital comes to be concentrated in the hands of a small capitalist class.
There is no “law,” in a Western jurisprudential sense of the word, which says that capital should come to be concentrated in the hands of this minority. No western country that I am aware of gives legal recognition to the existence of a distinct capitalist class. If anything, the existence of such a class is denied insofar as it blatantly contradicts the egalitarian pretension of all citizens to be “equal under the law”—a corollary of western individualism itself.
That capital should be concentrated in the hands of a few is actually the outcome of a de facto process that makes class monopolisation of the means of production a de facto, if not a de jure, reality. Accordingly, it needs to be understood sociologically, and not in bourgeois legalistic terms.
Class Inequality in the Soviet Union
In fact, a legalistic approach with its emphasis on formal equality can seriously—one might even say, wittingly—obfuscate what is happening on the ground in a sociological sense. An example of this is the suggestion that since Soviet citizens were universally dependent on a paid money income (as well as payments in kind of various sorts which we shall touch on shortly), this placed everyone in the same basic position of being employees of the state. For present purposes, I will ignore the question of the substantial black market—what Gregory Gossman called “The second economy of the USSR” in a notable essay written in 1977—that operated within the Soviet Union and focus simply on this particular argument.
Right from the start, the argument strikes one as specious and vacuous. After all, the existence of employees must logically imply the existence of employers, too. It is nonsensical to talk of employees being employed by no one inasmuch as everyone is an employee and no one, an employer. By reductio ad absurdum, some must logically perform the function of employers. The state is not some abstract entity vaguely hovering in the ether above us; it is an organisational body staffed by real people who enter into specific kinds of highly asymmetrical relationships with other, equally real people, notwithstanding that the former might be formally categorised as “employees” of the said state.
Clearly, despite their dependence on paid income which nominally rendered them state employees, there were some in Soviet society that performed precisely this function of “employers”. This, in fact, was a logical extension of their role, collectively speaking, as de facto owners-cum-controllers of the means of wealth production—namely, to employ the non-owning or excluded majority via a system of wage labour primarily for the purpose of accumulating capital. The bloated salaries—not to mention, huge perks—this employing or owning class received represented the specific form in which they syphoned off part of the economic surplus for themselves, the other—greater—part being invested as capital, the return on which being the source of any future income they might command.
It is the latter aspect—its decisive control over the investment of capital and the proceeds of such investment—that essentially defines this class as a capitalist class rather than just what it creams off from the social product to finance its luxury consumption. This is an important point. In theory, one could conceivably envisage a form of capitalism that was relatively egalitarian by comparison with what is the case today—as far as the living standards or consumption levels of citizens are concerned. However, this would not in itself change the basic capitalist relation of a small minority in society acting as functionaries of capital in opposition to the interests of the majority. It is the economic role of this minority within capitalism, rather than the economic privileges that it enjoys as such, that marks it off as a distinct capitalist class.
Of course, in practice, the performance of this role will tend to go hand in glove with, and predictably come to be reflected in, the enormous economic privileges this class enjoys—even where these privileges are financed or delivered in the form of nominal salaries and other benefits. This was the case in the Soviet Union. The so-called “salaries” the Soviet capitalists received bore no relation to the cost of producing and reproducing their labour power; they were not really authentic salaries, in that sense. They represented merely the dressed–up ideological form or appearance in which the extraction of an economic surplus could take place, whilst drawing a veil over the exploitative process this entailed, by lumping together, in a quite cynical and calculated fashion, both exploiter and exploited under the category of “state employee”.
Not that there was anything particularly new or unique about this development. Back in the 19th century, Marx had already observed:
On the basis of capitalist production a new swindle develops in stock enterprises with respect to wages of management, in that boards of numerous managers or directors are placed next and above the actual director, for whom supervision and management serve only as a pretext to plunder the stockholders and amass wealth.10
The same “swindle” is going on today. For instance, according to a report by James Langton in the Canadian newspaper Investment Executive, the incomes of the richest Canadians are increasingly tied in with the jobs they hold. The Canadian Centre for Policy Alternatives, investigating the growth of economic inequality in Canada, found that “the richest 1%—whose average income is $405,000—accounted for almost a third of all growth in incomes from 1997 to 2007” whereas, back in the 1950s and 60s, this same group accounted for only 8% of all income growth. Relatedly, Langton points out there that there has been a substantial increase in the dependence of the very rich on paid positions as a source of this income:
Back in 1946, paycheques accounted for less than half, 45.5%, of the income of the wealthy. Today, 67.6% of their income comes from wages, with the balance mostly coming from professional fees, dividends, interest and investment income, it says. For the richest 0.01%, almost three-quarters of their income, comes from employment pay.11
In other words, supposedly paid income is increasingly serving as a fig leaf to camouflage the extraction of an economic surplus and to afford a sense of moral legitimacy to the super rich. In the Soviet Union, that fig leaf was judiciously expanded in such a way as to accommodate and legitimise the enormous and growing inequalities in wealth and income that characterised Soviet society.
Lenin, around the time of the Bolshevik revolution had, seemingly, enthusiastically endorsed the principle of equal pay for everyone—what is called uravnilovka or “income leveling”—as a political tactic to gain working class support. However, less than a year later, in an address given in April 1918, he abjectly recanted:
We were forced now to make use of the old bourgeois method and to agree to a very high remuneration for the services of the biggest of the bourgeois specialists. All those who are acquainted with the facts understand this, but not all give sufficient thought to the significance of such a measure on the part of the Proletarian State. It is clear that such a measure is a compromise, that it is a defection from the principles of the Paris Commune and of any proletarian rule.12
Though, as earlier hinted, it is not essential to a definition of capitalism that wealth and income should be grotesquely unequal, there is nevertheless a systemic tendency in that direction. Capitalist governments seeking to administer the capitalist system are often compelled to go along with, and even promote, this tendency—even more so today, given the fluidity of capital and the ease with which it can relocate to more investor-friendly parts of the world. At the end of the day, capitalism can only be administered in the interests of capital and the bearers of capital—the capitalist class—that these governments serve.
This is, in fact, what the Bolshevik regime discovered in trying to administer soviet capitalism. Lenin himself admitted as much, as we saw, in promoting his New Economic Policy and urging the Russian working class to reconcile themselves to the unpalatable fact that foreign capitalists, concessionaires and leaseholders would squeeze profits out of them “amounting to hundreds per cent”, further enriching themselves at the expense of the workers.
Stalin too recognised the importance of unequal remuneration upon coming to power and having to fashion policy to fit the needs of the developing system of Soviet state capitalism. Interestingly, American corporations and big business played a key role in that development; their collaboration having been secured by the Soviet state ensuring the compliance of soviet workers to being exploited in the process.
Indeed, without the technical assistance of several large American and other western corporations, the Soviet Union´s industrialisation programme would have been seriously retarded. Evidence of such collaboration was revealed in the 1999 film documentary Yanks for Stalin which provides glimpses into the working conditions faced by American workers working in Russia at the time, but of course, when the Cold war began, the corporations sought to conceal their involvement in this programme, for obvious reasons.13
In fact, Stalin went a lot further than Lenin in denouncing the “evil of equality”, even declaring Marxism to be the “enemy of equalisation.”14 Uravnilovka was vigorously opposed on the pre-eminently capitalist grounds that it undermined incentives and economic performance. Most surreally of all, perhaps, Foreign Minister Molotov declared that “Bolshevik policy demands a resolute struggle against egalitarians as accomplices of the class enemy, as elements hostile to socialism.”15
In any event, it was perhaps not surprising that in Russia, the nominal ratio between the lowest and highest wages steadily increased from 1:1.75 just after the Bolshevik Revolution to 1:40 in 1950.16 While such differentials appear modest by western standards, they hardly capture the true picture. There were a number of other factors that greatly accentuated the degree of inequality within the Soviet Union and its satellites. These included:
1) The widespread practice of multiple or plural salaries among the Soviet elite
2) The “thirteenth month” bonus system whereby some members of the Nomenklatura were secretly paid an additional month in every year by the central authorities as a reward for their loyalty,17 as well as the “packet system,” as reported by Medvedev18
3) Payments-in-kind of all sorts—such as free dachas, chauffeur-driven cars and foreign holidays—which were massively skewed in favour of the Soviet elite, such that the higher up one was in the social hierarchy, the larger this component of one’s income—certainly in absolute, if not relative, terms
4) Corruption, bribery and backhanders from the black economy representing a hidden transfer of wealth to the Soviet elite who were well placed to benefit from this
In terms of international comparisons, one commentator has noted: “Bergson’s wage study indicates that wage differentials in the Soviet Union in 1934 were about as great as those in the United States at a comparable stage (1904) of economic development.”19 In the post-war era, a similar pattern prevailed. John Fleming and John Micklewright, in their paper “Income Distribution, Economic Systems and Transition,” cite the work of researchers like Morrison who, using data from the 1970s, found that countries like Poland and the Soviet Union had relatively high levels of income inequality, registering gini coefficients of 0.31 in both cases, which put them roughly on a par with Canada (0.30) and the USA (0.34).20
Indeed, in 1976, the decile ratio rose slightly to 3.35.21 Peter Wiles, writing about the same time, noted that the figure for the UK in 1966 was 3.4 but that this was “gross of a much heavier income tax.”22 The British figure also includes agricultural workers, while Soviet figures exclude the lowly paid collective farm workers. Both of these factors would serve to make the British figure significantly more equal than the Soviet.
There can be no doubt, then, that by any standard, the Soviet Union was a highly unequal society. According to Roy Medvedev,23 considering not only their inflated “salaries” but also the many privileges and perks enjoyed by the Soviet elite (who even had access to their own retail outlets stocking western goods and various other facilities from which the general public was physically excluded), the ratio between low and high earners was more like 1:100. Some among the Soviet elite became very wealthy in their own right and a much-cited source in this regard is a pamphlet published in 1945 called “Soviet Millionaires”, written by Reg Bishop, a supporter of the Soviet regime, that proudly boasted of the existence of rouble millionaires there as an indicator of Soviet economic success.24
Unsurprisingly, some amongst the Soviet elite, following the collapse of the Soviet Union, moved on to transmogrify themselves into the oligarchs of modern day Russia, drawing on their extensive power and influence built up in the Soviet era. According to a 1995 study conducted by the Russian Academy of Sciences, more than 60 percent of Russia’s wealthiest millionaires, and 75 percent of the new political elite, were former members of the “communist” nomenklatura, and 38 percent of Russia’s business people held economic positions in the CPSU.25
However, as stated, this elite’s wealth was not something that could simply be measured in terms of paid income. Though soviet capitalism was clearly a money-based system—it would not be capitalism otherwise—in some ways, the appropriation of wealth by individual members of the elite resembled the direct appropriation of use-values enjoyed by a feudal ruling class. That is to say, they had little need for actual money to purchase the luxury goods they craved, since so much of what they had was freely provided by the state as a matter of right based on their exclusive membership of the Nomenklatura.
Michael Voslensky relates that Stalin’s daughter, Svetlana, recalled how her father received his “wages” in sealed envelopes which were simply left unopened in his desk.26 This highlights one difference between soviet capitalism and western capitalism—namely, that the privileges of its ruling class were based more on naked political power converted into the currency of economic wealth, rather than the other way round.
True, workers in the Soviet Union were likewise paid in kind as well as in wages—even if payments-in-kind disproportionately benefited the soviet elite—meaning the higher up you were in the social hierarchy, the greater the non-monetary component of your income. But would this undermine the significance of generalised wage labour in such a society as a key generic feature of capitalism? Some theorists seem to think so. Howard and King, for instance, advance the argument that labour power was not a genuine commodity in the Soviet Union since “a very large proportion of the Soviet worker’s consumption bundle was provided outside the market, through the ‘social wage’ supplied by the state (pensions, education, health care, sometimes housing) and by the enterprise (housing, holidays, social welfare).”27
However, this claim is empirically questionable. The evidence suggests that, on the contrary, the wage packet remained the single most important component of income for Soviet workers.28 Other commentators have noted that the “social wage” constituted less than a quarter—23.4%—of the income of the average soviet worker, though, during the seventies, this figure grew somewhat.29
In any case, the phenomenon Howard and King describe is not that different from what obtains in an indisputably capitalist country such as the United Kingdom with its own comprehensive system of state welfare. The social wage, in this instance, is financed out of the surplus value realised through the sale of commodities on the market, even if the benefits provided are not themselves marketised, and so it is quite misleading to suggest that they are provided “outside of the market” as such. Strictly speaking, this is not the case.
Moreover, such benefits clearly have a direct impact on the level of nominal wages, exerting a compensatory downward push on the latter precisely in order to maintain industrial profitability which would otherwise be threatened by too large a transfer in the form of the “social wage”. As the saying goes, there is no such thing as a free lunch in capitalism.
Thus, from the standpoint of the “workers’ consumption bundle,” the phenomenon of payment-in-kind whereby a proportion of what workers were paid took the form of goods rather than money wages should not be seen as something independent of but, rather, as closely conditioned by the latter. This was particularly evident, for instance, in the agricultural sector where payments in kind to agricultural workers served as a supplementary work incentive in the face of a deteriorating currency.30 Non-payment of money wages, or extended delays in paying workers, for whatever reason, have historically tended to increase the scope and extent of payments-in-kind—though, needless to say, this does not mean that labour power has become any the less a commodity as a consequence.
Ironically, since the fall of “communism,” this tendency to resort to payment-in-kind became rather more pronounced, with the Russian government itself frequently being guilty of dragging its feet in paying its employees the wages they were owed as part of a concerted attempt to slash budget deficits. I say “ironically” given the extent to which the argument that the position of workers in the Soviet Union supposedly differed from that of their counterparts elsewhere hinges upon the presumed level of non-monetary consumption. As Tore Ellingsen notes:
Recently, we have witnessed massive domestic barter at the firm level in Russia (and in several of the other former Soviet republics). In Russia, barter constituted almost fifty per cent of industrial sales in 1997, up from around five per cent in 1992 (Aukutsionek (1997,1998)). In the same five-year period, Russian firms started to pay their workers in kind on a grand scale, sometimes under tragic-comic circumstances. Hungry workers were paid everything from porcelain and kitchen utensils to sex toys and fertilizer, in the form of piles of manure, instead of their ordinary money wage. Likewise, a large fraction of taxes were being paid in kind rather than cash (OECD, 1997).31
In summary, then, there can be little doubt that the Soviet Union was a grotesquely unequal society and that this multifaceted inequality was undeniably grounded in, and emerged out of, the basic class structure that characterised Soviet society. However, the fact that such inequality existed, though compelling, does not in itself clinch the argument that the Soviet Union was an essentially capitalist social formation.
In order to provide sufficient evidence for the existence of capitalism in the Soviet Union, we have to go beyond the mere empirical description of soviet inequality. In short, we have to closely examine the very modus operandi of the Soviet system itself.
There are essentially two different, albeit somewhat overlapping, arguments that have been invoked to refute the claim that the Soviet Union was capitalist. The first has been dubbed the “empty husk” argument. According to this, those generic features that we associate with capitalism, such as generalised commodity production, were not actually to be found in the Soviet Union in any substantive sense, despite indications to the contrary. So, for instance, what appeared to be commodity production—that is, the production of goods for the purpose of being sold on a market—did not at all signify what was actually going on. In short, the outer appearance of activities we normally associate with commodity production concealed the inner fact that, in the Soviet Union, commodity production had effectively ceased to exist, according to this argument.
The second argument takes a somewhat different tack. In this case, the actuality of commodity production in the Soviet Union is not denied. However, it is asserted that the latent capitalist tendencies inherent in commodity production were effectively held in check, or overridden, by a system of centralised resource allocation informed by what has been called the “socialist law of proportional development”. Resources were allocated in line with the priorities of the central planners themselves, rather than according to the dictates of the capitalist profit motive under a system of market-based allocation.
Notes
- Karl Marx, “Moralising Criticism and Critical Morality: A Contribution to German Cultural History Contra Karl Heinzen,” in Marx & Engels Collected Works: Marx and Engels 1845–48 (London: Lawrence & Wishart, 2010), 6:318, https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%206_%20Ma%20-%20Karl%20Marx/page/n345/mode/2up. ↩︎
- AP and Reuter, “Mengistu war on waste,” Guardian, September 15, 1983, 7, https://www.newspapers.com/image/259562582/. ↩︎
- Leon Trotsky, “Social Relations in the Soviet Union,” in The Revolution Betrayed: What is the Soviet Union and Where is it Going?, trans. Max Eastman (Garden City, NY: Doubleday, Doran & Company, Inc., 1937), 249, https://archive.org/details/in.ernet.dli.2015.74858/page/n263/mode/2up. ↩︎
- Karl Marx, “Wage Labour and Capital,” in Marx & Engels Collected Works: Marx and Engels 1849 (London: Lawrence & Wishart, 2010), 9:214, https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%209_%20Ka%20-%20Karl%20Marx/page/n243/mode/2up. ↩︎
- Joseph Stalin, “On the Draft Constitution of the U.S.S.R: Report Delivered at the Extraordinary Eighth Congress of Soviets of the U.S.S.R.,” in Collected Works of Joseph Stalin: 1934–1940 (London: Red Star Press, 1978), 14:179, https://archive.org/details/joseph-stalin-works-volumes-1-16-foreign-languages-publishing-house-1954/page/n6357/mode/2up. ↩︎
- Ibid., 14:158, https://archive.org/details/joseph-stalin-works-volumes-1-16-foreign-languages-publishing-house-1954/page/n6337/mode/2up. ↩︎
- Paresh Chattopadhyay, introduction to The Marxian Concept of Capital and the Soviet Experience, ed. Rodney Green (Westport, CT: Praeger Publishers, 1994), 4–5, https://archive.org/details/chattopadhyay-paresh-the-marxian-concept-of-capital-and-the-soviet-experience/page/4/mode/2up. ↩︎
- Paresh Chattopadhyay, “Twentieth Century Socialism: Anti-Emancipatory, Enslaving,” Mainstream Weekly, December 10, 2011, 49, no. 51, https://www.mainstreamweekly.net/article3190.html. ↩︎
- Adam Buick and John Crump, “The Revolutionary Road to State Capitalism,” in State Capitalism: The Wages System under New Management (New York: St. Martin’s Press, 1986), 57, https://files.libcom.org/files/State%20Capitalism.pdf. ↩︎
- Karl Marx, “Interest and Profit of Enterprise,” in Marx & Engels Collected Works: Karl Marx – Capital Volume III (London: Lawrence & Wishart, 2010), 37:388, https://archive.org/details/MarxEngelsCollectedWorksVolume10MKarlMarx/Marx%20%26%20Engels%20Collected%20Works%20Volume%2037_%20K%20-%20Karl%20Marx/page/n397/mode/2up. ↩︎
- James Langton, “Richest Canadians taking a bigger piece of the economic pie: report”, Investment Executive, December 1, 2010, https://www.investmentexecutive.com/building-your-business/financial-planning/richest-canadians-taking-a-bigger-piece-of-the-economic-pie-report/. ↩︎
- Vladimir Lenin, “The Need of Specialists,” in The Soviets at Work: The International position of the Russian Soviet Republic and the Fundamental Problems of the Socialist Revolution, 5th ed. (New York: The Rand School of Social Science, 1918), 14–15, https://archive.org/details/sovietsatworkin00lenigoog/page/n17/mode/2up. ↩︎
- Thomas P. Hughes, “How America Helped Build the Soviet Machine,” American Heritage, December 1988, 39, no. 8: 56, https://archive.org/details/americanheritage0000byro_n8n9/page/56/mode/2up. ↩︎
- Alex F. Dowlah and John E. Elliott, “Stalin and Totalitarian State-Directed Economy: Origins, Institutions, and Policies,” in The Life and Times of Soviet Socialism (Westport, CT: Praeger Publishers, 1997), 82, https://archive.org/details/lifetimesofsovie0000dowl. ↩︎
- Tony Cliff, “Socio-economic relations in Stalinist Russia,” in State Capitalism in Russia (London: Pluto Press, 1974), 69, https://www.marxists.org/archive/cliff/works/1955/statecap/ch01-s4.htm. ↩︎
- Stanislaw Ossowski, “Non-Egalitarian Classlessness — Similarities in Interpreting Mutually Opposed Systems,” in Class Structure in the Social Consciousness, trans. Sheila Patterson (New York: Free Press of Glencoe, 1963), 116, https://archive.org/details/classstructurein0000unse/page/116/mode/2up. ↩︎
- Mervyn Matthews, “Special Elite Benefits,” in Privilege in the Soviet Union: A Study of Elite Life-Styles under Communism, (London: George Allen & Unwin, 1978), 36, https://archive.org/details/isbn_0043230202. ↩︎
- Roy A. Medvedev, “Socialism and Pseudosocialism,” in Let History Judge: The Origins and Consequences of Stalinism, trans. Colleen Taylor, ed. David Joravsky (New York: Alfred A. Knopf, 1972), 540, https://archive.org/details/lethistoryjudgeo0000medv_e8t6/page/540/mode/2up. ↩︎
- F.D. Holzman and Universities-National Bureau Committee for Economic Research, “Financing Soviet Economic Development”, in Capital Formation and Economic Growth (Princeton, NJ: Princeton University Press, 1955), 235, https://core.ac.uk/download/pdf/6837429.pdf. ↩︎
- John Flemming and John Micklewright, “Income distribution in socialist countries,” in Income Distribution, Economic Systems and Transition, Innocenti Occasional Papers, Economic and Social Policy Series, no. 70. (Florence: UNICEF International Child Development Centre, 1999), 24, https://www.academia.edu/78531796/Innocenti_Occasional_Papers_Economic_and_Social_Policy_Series_no_70_Income_Distribution_Economic_Systems_and_Transition. ↩︎
- Michael Ellman, “A Note on the Distribution of Earnings in the USSR Under Brezhnev,” Slavic Review, December 1980, 39, no. 4: 670, https://doi.org/10.2307/2496505. ↩︎
- Peter Wiles, “Recent Data on Soviet Income Distribution,” in Economic Aspects of Life in the USSR: Main Findings of Colloquium Held 29th–31st January, 1975 In Brussels (Brussels: NATO–Directorate of Economic Affairs, 1975), 120, https://archive.org/details/economicaspectso0000unse_k6v3/page/120/mode/2up. ↩︎
- Roy Medvedev, “Freedom of Movement and Other Problems,” in On Socialist Democracy (Nottingham, UK: Spokesman Books, 1977), 225, https://archive.org/details/onsocialistdemoc00medv/page/224/mode/2up. ↩︎
- Reg Bishop, Soviet Millionaires (London: Russia Today Society, 1945), https://web.archive.org/web/20231123095655/https://cominternist.blogspot.com/2010/06/soviet-millionaires.html. ↩︎
- Glenn E. Curtis, “The Society and Its Environment,” in Russia: a country study (Washington, DC: Federal Research Division–Library of Congress, 1998), 241, https://archive.org/details/russiacountrystu00curt/page/240/mode/2up. ↩︎
- Michael Voslensky, “Privileged Class,” in Nomenklatura: Anatomy of the Soviet Ruling Class (London: Bodley Head, 1984), 231, https://archive.org/details/nomenklaturaanat0000vosl/page/230/mode/2up. ↩︎
- M. C. Howard & J. E King, “‘State Capitalism’ in the Soviet Union,” History of Economics Review, 2001, 34, no. 1: 122, https://doi.org/10.1080/10370196.2001.11733360. ↩︎
- Wlodzimierz Brus, “The Economic Role of the State: West and East”, Survey: A Journal of East & West Studies, 1980, 25, no. 4: 74. ↩︎
- Bob Arnot, “The Political Economy of the USSR,” in Controlling Soviet Labour: Experimental Change from Brezhnev to Gorbachev (Armonk, NY: M.E. Sharpe, 1988), 36. ↩︎
- D. Gale Johnson, “Agriculture—management and performance”, Bulletin of the Atomic Scientists, February 1983, 39, no. 2, https://doi.org/10.1080/00963402.1983.11458946. ↩︎
- Tore Ellingsen, “Payments in Kind”, Stockholm School of Economics Working Paper Series in Economics and Finance, No 244, February 10, 2000, 2, http://swopec.hhs.se/hastef/papers/hastef0244.rev.pdf. ↩︎