5. Methods of Exploitation and Subjugation

Submitted by libcom on March 27, 2005

Methods of Exploitation and Subjugation

"Masses of labourers, crowded into the factory, are organized like soldiers. As privates of the industrial army, they are placed under the command of a perfect hierarchy of officers and sergeants."
K. Marx and F. Engels, The Communist Manifesto (1848).


There were still other ways of exploiting the people. Trade, for example. The Communist governments of Eastern Europe soon saw that Russian heavy industry was incapable of providing them with capital goods. They knew that machinery and raw materials were essential. They were prepared to try and get these from the West. The Marshall Plan seemed to be an answer to the problem. At least two of these countries, Czechoslovakia and Poland, made clear their desire to take part in the Marshall Plan. Even after pressure from Moscow had compelled them to drop the idea, attempts were still made to get trade with the West.

Moscow's plans in this period were helped by Washington. The U.S.A. established an 'iron curtain' to trade between the West and the countries of Eastern Europe, when she instructed other Western nations not to exhort 'strategic goods'. The State Department's 'secret list' of strategic goods covered practically every kind of capital equipment. It included such items as gramophone recording discs and needles for the textile industry. [27] Trade with the Soviet Union (on Russia's terms) was assured.

To some people, the term 'trade' means 'a mutually agreed exchange of commodities between countries'. Those in the Kremlin did not accent this definition. Their idea of trade was based on the old imperialist principle of buying cheap and selling dear - very, very dear!

The satellite states were regarded as a source of raw materials and of cheap manufactured goods. Exploitation worked in two directions. Russia secured the satellites' exports at below world prices. And it exported to them at above world prices. The Polish-Soviet agreement of August 16, 1945, for the annual export of Polish coal to the U.S.S.R. is a startling examole. "The robbery of Poland through this transaction alone amounted to over one hundred million dollars a year. British capitalists never got such a large annual profit out of their investments in India." [28] Shoes manufactured in Czechoslovakia at a cost of 300 crowns a pair were sold to Russia at 170 crowns a pair. Yet when the Czech government, owing to the severe drought of 1947, was forced to import large quantities of grain from the U.S.S.R., it had to pay more than 4 dollars a bushel for it. At the time, the U.S.A. was selling grain at 2.5 dollars per bushel on the world market.

Bulgaria found no difficulty in selling her tobacco for badly needed dollars. Yet in 1948, she had to sell nearly all her tobacco crop to the U.S.S.R. at a very low price. Russia was then able to re-sell the tobacco to Italy, making a handsome profit - in dollars.

That Russian 'trade' with Hungary was considerable is shown by the 1948 long-term agreement. This stated that 'trade' was to be trebled in 1949. No details were given. Although Russia supplied cotton, and Hungary manfactured goods, the quantities involved and their prices were as jealously guarded as military secrets. One of the main reasons for the secrecy was that workers in the factories were, to some extent, aware of this exploitation and strongly resented it.


The amount of German capital invested in Bulgaria, Hungary, and Rumania, was considerable. In Rumania, for example, it equalled over a third of all investments in oil, banking, and industry. In Hungary, German-owned property was estimated at being worth 1,200 million dollars. Russia exercised her 'rights' under the Potsdam agreement. All German investments were confiscated. (The Russians only took over the assets of the various enterprises. Their liabilities were charged to the state.) This was done partly by dismantling machinery, partly by taking control of those industries still operating in Hungary. Jointly controlled companies were set up. These were, at first, operated in partnership with private capitalists but when these were later expropriated, the U.S.S.R. held joint control of the companies with the Hungarian Government. [29] No industry was completely owned by the U.S.S.R.. Russia invested in as many undertakings as possible, thus gaining a greater grip over the whole economy. These 'mixed companies' were organized and conducted on capitalist lines. The only notable difference was that one side of the 'equal' partnership (U.S.S.R.) was making far greater profits than the other (the satellite State). In some cases the latter even had to underwrite the losses!


It was not, however, until 1948 that integration of the Hungarian economy into that of the Soviet Union was seriously begun. This was achieved through nationalization.

The term 'nationalization', when used by the leaders of either East or West, has only one meaning: to ensure and consolidate their own control over the means of distribution, production and exchange. [30]

In Hungary, some industries had already been nationalized. But until the nationalization law of March 25, 1948, 25% of heavy industry and 80% of all other industry was still in private hands. This law laid down that all firms employing more than 100 people were to be taken over by the State.

It was not until the end of 1949 that nationalization was completed. The Hungarian Communist leaders did not differ from those of the British Labour Party on the question of whether nationalisation should involve control by the workers themselves. This is shown by the report that "Easter Monday, 1948, was declared a holiday. While the workers were not in the factories, State officials came down and took them over. The next day the workers arrived to find a new master". [31] Nationalization by the Labour Government was carried out with rather more political sophistication. As far as the workers were concerned, the net result was much the same. [32]


Another method of exploiting the population was the Russian type of collectivization. While in other states of Eastern Europe this was begun at an early stage, in Hungary, the Government remained, for a long time, shy at making the attempt. After some manoeuvring, it eventually began slowly to 'collectivize' agriculture.

By November 1949, some 7% of the arable land was in the hands of cooperative or state farms. The diffidence of the Hungarian rulers was due mainly to their fear of open opposition from the agricultural workers. The reason, in the jargon of the government, was that faster collectivization might strengthen 'Titoist tendencies'.

In the process of completing nationalization, what few rights the workers had enjoyed under private ownership were whittled away. Strikes, as before, were of course illegal. Complete control of the factory was placed in the hands of a single manager. Minister Erno Gerö, in his June 1950 report to the Central Committee of the Party, put it like this: "a factory ... can have only one manager who in his own person is responsible for everything that happens in the factory". The screw subjecting the workers to the will of management had been given the final turn. Hungary was a fully qualified satellite of the U.S.S.R..

The destruction of the gains which the Russian workers had for a short while secured in 1917 had taken rather longer. True, the Party campaign for 'one man management' of production - and against workers' management - had begun as early as the spring of 1918. It met with considerable resistance. For the first few years industries were run by the so-called Troika, i.e. the workers' committee, the Party cell and the manager. By 1924 even this had become a farce. By 1929 the Party's Central Committee felt ready to pass a resolution that workers' factory committees "may not intervene directly in the running of the plant or endeavour in any way to replace plant management. They shall, by all means possible, help to secure one-man control, increased production, and plant development, and thereby improve the material conditions of the working class." [33] The ghost of the erstwhile Troika was not officially buried until 1937. The official presiding at this particular ceremony was Stalin's right-hand man, Zhdanov. Speaking at the Plenum of the Central Committee he said: "...the Troika is something quite impermissible ... the Troika is a sort of administrative board, but our economic administration is conducted along totally different lines." [34]

In the 'workers' states' of Eastern Europe, the people were not even allowed to go through these limited and distorted forms of economic self-administration. The Troika system was never introduced.

Given the complete political and economic integration with the Soviet Union, nothing seemed now to stand in the way of total exploitation. Nothing?