A New Course of Economic Policy.

The aim of this article is to clarify the general meaning of our new economic policy, its reasons, its purpose, and its significance in the overall perspective of the development of our national economy towards communism.
For what many of our comrades in the Party lack is precisely this perspective: it is as if it has been lost, as if the clear and distinct lines have blurred into something vague and highly uncertain.

I. The Reasons for the Shift in Economic Policy

The reasons for the 'new course' lay deep in the sphere of our economy and outwardly manifested themselves in the unusually acute socio-political crisis of the spring of 1921.

Our economic policy during the epoch of so-called 'war communism' could not, in essence, be a policy aimed at the development of productive forces. The 'shock' and comprehensive task was the red defence of the country. This included everything: material resources, organisational forces, in short, all the qualified elements of economic management. In relation to the national economy under such conditions, the main slogan was not concern for its lasting restoration (any 'minor reconstruction' is not realised in a minute), but the immediate acquisition of products, even at the cost of undermining productive forces. Not to 'produce' but to 'take' in order to supply, in the shortest possible time, the Red Army, the workers of defence factories, and so on. This and only this was the focus of attention. The victory over the forces of counter-revolution is the historical justification of this policy. Under such conditions, 'planned inefficiency', insofar as its elements were present, inevitably turned from a plan for the development of production with proper distribution into a plan for economical consumption with the secondary importance of production.

This had an extremely pronounced effect on agriculture. Our economic policy here was reduced almost exclusively to the policy of the People's Commissariat for Food, i.e., to the requisition system of prodrazverstka. Under this system, however, the individual producer, the peasant, was deprived of interest and incentive to expand production: they would take everything except a portion for sustenance, no matter how much land you cultivated. Thus, there was a conflict between the needs of individual farm development and our policy. But since Russian agriculture is peasant agriculture (state farming played a very insignificant role overall), our economic policy stood and could not help but stand in objective contradiction to the development of all agriculture during the war: the agricultural crisis had to worsen, and it did worsen in reality. And since the basis of our industry is agriculture, this generally meant an aggravation of the national economic crisis as a whole.

Hence the following inevitably followed. The balance between the classes that was established during the Civil War was based not on a "normal" economic process, but on the mutual military interest of the proletariat and the peasantry. Of course, this military-political alliance was also justified by economic motives: the proletariat received bread for defending the peasant land against the landlord. But at the same time, it was clear that as soon as the war was no longer a factor, purely economic contradictions had to become extremely acute. The problems of the economy, of the development of productive forces, conceivable in relation to agriculture only in the form of the growth of the petty-bourgeois economy, came to the forefront. The correct relationship between the proletariat and the peasantry in the economy, i.e., such a relationship that would provide room for the development of productive forces, became the order of the day with all its acuteness.

The basic contradiction of the whole revolutionary process of development towards communism, with the petty-bourgeois character of the country, was expressed in a sharp social crisis.

In the general process of economic devastation, the city deteriorates faster than the village; he who controls the bread gains an economic advantage over he who controls the products of urban industry. Economically, the village liberates itself from the power of the city to the extent that the productive forces are destroyed. This happened everywhere in all countries during the war. It also happened in Russia, where the economic weight of the peasant increased in comparison with the economic weight of the worker. Moreover, in Russia, where the working class had taken power, it was precisely because it had taken power that it had to disperse its forces (to manage the 160 million population, the Red Army, etc.). The industrial devastation turned a large part of the working class into rural artisans, and the part of the workers who remained in the cities became small-scale producers of a different order (making lighters, self-employment, etc.).

With the development of productive forces, the petty industrial bourgeoisie turns into the proletariat. In times of devastation, the proletariat turns into the petty bourgeoisie. The lighter maker is interested in free trade directly and immediately, just like the artisan, the craftsman, or the peasant.

Out of 5 million workers, hardly a million, together with 700,000 communists, were against free trade. In this state of affairs, the petty-bourgeois pressure on the core proletariat, pressure backed by the real contradictions of the war communism economy, threatened to overthrow the dictatorship of the proletariat. Thus, economic and political reasons merged into one whole. The party of the proletariat had to take into account the changed balance of class forces. In this changed conjuncture, the party of the proletariat had to set itself a new task—the task of raising the productive forces. The process of demobilisation, the lifting of the blockade, etc., already provided a real opportunity for this work. A new period was at hand. A "new course" became necessary.

II. The main task of the new ‘course’.

Under all conditions and any course of economic policy, the main interests for the construction of communism are the interests of large industry. Large industry is the starting point of all technological development; large industry is the basis of the economic relations of communist society; large industry is the backbone of the social force carrying out the communist revolution, the industrial proletariat. Therefore, the main task of economic policy along the line of the development of the productive forces is the strengthening of large industry.

But as soon as we raise the question of strengthening large industry, we are confronted with a "sick" question. To strengthen large industry, we need "funds" (funds for food, raw materials, additional equipment, etc.). And here we are in danger of finding ourselves in a vicious circle: industry needs products, and to obtain products, industry is needed. "The earth on whales, whales on water, water on the earth; earth on whales," and so on.
Hence it is clear: in order to raise large-scale industry, it is necessary to increase the quantity of products at any cost and by any means.

At any cost! Because otherwise we will not have the most elementary prerequisites for this rise. As the experience of the past has shown, appeals to labour enthusiasm without raw materials, without provisions, etc., will not get us far.

By any means! Because this additional quantity of products, which must be injected into our large industry, must be taken from outside, not from the sphere of large industry itself, which is in the hands of the workers' state, but from other, external sources, no matter the cost of these sources.

This increase in the quantity of products is the supreme law of the current economic moment. In the above-mentioned statement, the "whole wisdom" of the new course, its basis, is revealed. This question must be answered: yes or no. There is no third option.

What sources of additional products can we have? These sources are as follows: peasant economy, small-scale industry, rent, concessions, foreign trade.

What sources of additional products can we have? These sources are the following: peasant farming, small industry, rent, concessions, and foreign trade.

The peasant economy is, as everyone knows, an individualistic, petty-bourgeois economy. But as we have already seen, we cannot do without strengthening and raising this petty-bourgeois economy. On the contrary, its rise is a necessary condition for the growth of our large industry. It is absolutely wrong to consider the peasant economy outside its connection with the rest of the world, and it is doubly wrong to do so now.

The extraction of an additional quantity of products from this sphere presupposes its growth, which temporarily, in the current phase of development, is nothing but the growth of bourgeois relations. But this growth makes it possible to obtain an additional quantity of products.

With small-scale industry, the case is exactly the same as with the peasant economy.

Rent is conceivable in two forms: in the form of capitalist rent (leasing the enterprise to a capitalist), or in the form of leasing the enterprise to workers' collectives. In the second case, there is no capitalist danger, but the workers' collectives will usually lack working capital. In the case of capitalist leasing, it is assumed that we are not dealing with a speculative lessee, but an organiser of production who has capital in one form or another. He will not have to extract raw materials, foodstuffs, etc. from the state warehouses, but from the sphere of the peasant economy and small industry. Since the enterprises to be leased are mainly those that are inactive, poorly functioning, etc., and since the proletarian state will have an additional quantity of real values in the form of rent, these values will form part of the necessary fund for large socialised industry.

Concessions are essentially the same as leases. But here we will have capitalist tenants of a higher grade, who will need to import parts of the fixed capital (machinery, buildings, etc.).

The concessionaires' contributions in favour of the Republic will also constitute one of the sources of additional products for the fund of socialised industry.
Foreign trade is also partly related to the concessions, as the concessionaires will pay us for the lease by importing foreign products.

On the basis of our basic task of increasing the quantity of products, the proletariat turns to the growth of non-proletarian (petty-bourgeois and large-bourgeois) forms of economy in order to preserve, strengthen, and develop the forms of proletarian economy, the socialised large-scale machine industry.

III. Economic strategy and the dangers of the New Course.

In this growth of non-proletarian, bourgeois, capitalist forms, there poses a significant danger. And herein lies the objective contradiction of our ‘present moment’. On one hand, we are interested in increasing the additional quantity of products, and this can only be done in the form of strengthening the bourgeois tendencies of development; on the other hand, this very strengthening is a danger for communism, a danger, so to speak, from the other end, from the point of view of the competition of economic forms.
Indeed, the intensification of the petty-bourgeois economy means nothing else than the separation of the miser, the merchant capitalist, the entrepreneur on the basis of commodity turnover. The capitalist tenant, the concessionaire, etc. will also have a firm base in the economically growing petty-bourgeois element. Given these conditions, what does the future development landscape look like?

This picture will be quite clear if we understand the new course of economic policy as a grandiose strategic operation of the proletariat on the economic front.

It seems to us that on this front of the proletarian struggle we have a situation very similar to our situation at the time of the Brest Peace on the front of the armed struggle against international imperialism.

What was that position? And what was our strategy in dealing with the strongest enemy? There were these elements:

1. The main danger was German imperialism, which jeopardized the existence of the dictatorship of the proletariat;
2. The main task for us was to build our military forces, our Red Army.
3. The primary slogan for achieving this objective was peace at all costs, by any means necessary, regardless of the price;
4. The main content of the task: the use of breathing space to build the Red Army;
5. Derivative danger: the internal influence of German imperialism;
6. Completion of the strategic operation: once the Red Army has been built, you can turn the wheel in the other direction.

Compare with this the state of affairs on our economic front. Here we see the same elements:

1. The main danger is devastation, which also jeopardises the whole construction of communism;
2. The main task for us is to build our red industrial army, i.e., our large socialised industry:
3. The primary slogan for realising this goal is to increase the additional quantity of products by all means, even if it means temporarily strengthening the petty-bourgeois and big-bourgeois industries;
4. The main content of the task: the use of the additional quantity of products for the construction of a large socialised industry, for bringing it "into full combat readiness";
5. Derivative danger: the internal influence of the growing bourgeois forms of the economy;
6. Completion of the strategic operation: when a large socialised industry has been built on the basis of the use of additional quantities of products, the rudder can be turned in the other direction.

What explained the success of our Brest policy? The fact that we succeeded in building the Red Army and the fact that German imperialism was undermined by the revolution from within. What will be the guarantee of our victory on the front of the struggle against economic ruin? In the fact that we will be able to raise our socialised big industry.

Having achieved this, we shall, as we said above, "turn the wheel." But this new turning of the rudder in the opposite direction will by no means mean a return to the old ways, i.e., to the prodrazverstka, etc. For these methods, designed to regulate consumption on the basis of the decline of the productive forces, the decline of the economic power of the State in relation to the countryside, would be totally unsuited to a state of affairs which is based on the development of the productive forces, especially on the growing power of big industry. The "turning of the wheel" will consist in the gradual economic liquidation of the large private economy and in the economic subordination of the small producer to the guidance of big industry: the small producer will be drawn into the generalised economy not by measures of extra-economic coercion but mainly by the economic benefits that will be brought to him by the tractor, the electric light bulb, the agricultural machinery, etc.: he will be entangled (for his own benefit) in electric wires carrying with him the life-giving energy that fertilises the economy.

IV. The problem of labour in large industry.

We have previously discussed that our primary task is to organise a large nationalised industry. However, this task has an internal aspect regarding labour and its intensity. During the period of "war communism," the working class largely served as a reservoir of organising forces, which were increasingly mobilised for the fronts. Those who remained in the workforce were supported more or less evenly, regardless of whether they fulfilled their productive function or not. Consequently, with a general decline in enthusiasm and labour productivity (due to hunger, exhaustion, etc.), coupled with the growth of petty-bourgeois sentiments and, consequently, personal motives in management, there was an inevitable decrease in labour intensity.

Mutatis mutandis (with appropriate modifications), the situation here partly mirrored that in agriculture: the absence of personal and group non-mediated material interest in production led to a decrease in output. With an excess of labourers supported by the state, the productivity of labour declined.

Hence, the remedy for this ailment inevitably followed: the introduction of personal and group interests of workers in production. In other words, it was necessary to make workers' supplies dependent on the quantity of product produced. This is achieved by applying the so-called "collective supply" principle in one way or another.

The principle of collective supply plays a twofold role: on the one hand, by providing an incentive of immediate interest, it drives workers to increase labour intensity and thus enhance productivity; on the other hand, it serves as a lever for the qualitative improvement of the proletariat's condition. Through its implementation, there will be a continual selection of genuine cadre workers, who will constitute the fundamental core of large-scale industry. Conversely, bourgeois and non-proletarian elements will be filtered out and dispersed into the petty-bourgeois milieu. A reorganised and developing big industry will have a corresponding proletarian cadre.

V. “State capitalism” under the system of proletarian dictatorship.

We have only to say, for the sake of complete clarity, a few words about “state capitalism” under the system of proletarian dictatorship. We personally consider this term wrong. But since it is not a question of terms, but of the “essence of things”, not a word but a concept (and here there is no disagreement in the ranks of the Party), this “essence of things” must be emphasised.

State capitalism in its, so to speak, Western European and American meaning, is the omnipotence of the bourgeoisie carried to its extreme limit, when production is concentrated in the hands of the bourgeois state. In such a case, the bourgeoisie, represented by its state, is the owner and supreme manager of all the means of production.

When the proletarian state leases an enterprise to a concessionaire (i.e., in the unprecedented case where the capitalist is a tenant of the worker), the proprietor of the enterprise remains at all times the working class.

This results in a completely different character of development.

In state capitalism in the real sense of the word, all surplus value goes to the bourgeois state, i.e., the bourgeoisie. In our “state capitalism” (concession, rent, etc.), the surplus value immediately splits into two parts: one part goes, as profit, into the pocket of the capitalist; the other takes the form of a share or rent and goes to our state, i.e., into the hands of the proletariat.

The more we grow ourselves, the more advantageous contracts we will conclude, and the greater will be the proletarian share, which, increasing over time, will eventually absorb the capitalist's share. This will be the ultimate victory of communism. Then it will be evident that the foreign capital, against its will and desire, and regardless of its volition, has played in our common economy the role of a 'specialist' who has helped to pull the Soviet economy's cart out of the quagmire.

State capitalism of the European-American type must be broken by the proletariat through revolution. Our 'state capitalism' will be completely outlived in a peaceful manner, provided that we correctly fulfil our strategic plan.

VI. The main objections to the new course.

The main objections which are sometimes made against the new course of economic policy are based on a misunderstanding of the whole “plan of the strategic operation” and resemble, like two drops of water, those objections which some comrades (“of them the first is az”) made against the absolutely correct tactics of the Brest peace, or which were made against the Brest peace by open opponents of the proletarian dictatorship.

The main “objection” was the question of the “limits of concessions”. Where does the limit of concessions end? If we surrender Minsk, shall we surrender Smolensk? Or Moscow? Clearly, the question was ridiculous. The limits of concessions could not be predetermined: they depended on specific conditions. As long as it was possible to build up our forces - that was the question.

It is the same now. "The limits of concessions, down to the factory and plant, cannot be defined. For here we can only say in general: the base of large industry and transportation must remain directly in our hands, which does not exclude the transfer of one or another enterprise or territory to the concessionaire.

The second objection was that we would degenerate. And the enemies said: by going to the Ustunki, you are turning into a party of German imperialism. Clearly, this was nonsense.

But now they sometimes argue the same way: if you make concessions to the petty bourgeoisie, you turn into a party of the petty bourgeoisie. If this is so, then, for example, the English government, which has made concessions to the coal miners, is a workers' government, or at least a “national” government. The reasoning is not Marxist.

Of course, we are in a dangerous situation. Of course, if we do not build large industry, then we will either degenerate or be overthrown. But we will build, to the fear of our enemies, our large industry. Let bourgeois 'respectable people' laugh and predict our imminent end. We hope to sing 'eternal memory' over their graves.