What killed the Soviet Economy?

[Jacob Cliff]

Trotsky made the point that the USSR's economy slowed down because of lack of democracy; howso? I myself also would like to know how the USSR's command economy could be considered socialist considering there was no worker's self management; the capitalist was replaced by the bureaucrat. So could you additionally tell me how a genuine socialist economy would look like? State capitalism isn't socialism, as far as I know.

[Blake's Baby]

A 'socialist economy' - personally, I don't see how there could be such a thing, but perhaps you define either 'socialism' or 'economy' (or both) differently to me - would be based on the principle of 'from each according to their ability, to each accordding to their needs'.

I's that simple.

If you want a bit more complexity, my assumption is that there would be 'democratic' control by some sort of district (this would scale up as big as you like) assembly setting targets ('the plan') and actual fulfilment of the targets would be set by the assemblies at points of production.

And you're right, the Soviet Union wasn't a socialist/communist society.

[Tim Cornelis]

What killed the Soviet economy was the absolute over-accumulation of capital, and not naughty revisionist ideas infiltrating the Soviet elite. We should argue that the reforms in the Soviet Union were in response to the material conditions, the economic base, and economic stagnation. There was a constant downward trend in the growth rates of the USSR from 1937 onwards -- growth rates began to slow from 1937 onward, then the economy began to stagnate from the 1950s onward, then growth rates began to lower from the 1970s onward, and finally, the economy began to shrink from circa 1985 onward. The growth rate and reproduction of the Soviet economy was sustained by the “massive quantitative mobilization of productive resources” (p. 68, The Marxian Concept of Capital and the Soviet Experience) as well as the large volume of available labour-power. The rate of growth for constant capital was many fold that of the growth of living labour, “there was no corresponding growth in the productivity of social labour.” (p. 77, The Marxian Concept of Capital and the Soviet Experience). In other words, the source for economic growth (or capital accumulation) in the USSR was its massive resources of labour and raw materials, yet there was stunted growth of labour productivity and stunted growth of technical improvements of the methods of production. That the methods of production, fixed capital, were notoriously and comparatively outdated and old can be seen as an affirmation or indication of the crisis of absolute over-accumulation of capital in the Soviet Union. Invention, innovation, diffusion, and incremental improvements were falling or consistently low (p. 73, The Marxian Concept of Capital and the Soviet Experience). Gorbachev noted that “the structure of our production remained unchanged and no longer corresponded to the exigencies of scientific and technological progress.” (p.74, The Marxian Concept of Capital and the Soviet Experience). The reason for this was that the implementation of new innovative technology in production disrupted the production process temporarily and managers obstructed this, as it threatened reaching their production quotas, with no additional future rewards as prospect.

The economic stagnation and eventual economic decline can thus be seen as the crisis of absolute over-accumulation. In an effort to correct this, the management of capital had to re-invent itself. The various reforms implemented under the rule of subsequent Soviet leaders, particularly the Liberman reforms and the reforms of the Gorbachev era, (market-oriented reforms) were intended to make capital's management more efficient.

A socialist economy would look something like this: first, labour would be directly social. There would be production units, all part of one association of producers. This association would operate like on cooperative body, with associated organs. Instead of selling their labour-power, producers would join associations of equals. Instead of producing for exchange or the market, the producers would produce for social or individual needs. Directives for this may be articulated via general popular assemblies in communities. So there would be no commodity production, no money, no market.

[John Nada]

Trotsky made the point that the USSR's economy slowed down because of lack of democracy; howso?Are you referring to http://www.marxists.org/archive/trotsky/1932/10/sovecon.ht ? Look at the bottom section for his suggestions. Seems more like he wanted greater accounting and to slow down a bit to focus more on quality.

The Soviet economy was growing at a great rate till the 70's, stagnating and falling in the 80's. There was a focus on industrializing the country and subsidies for that purpose. However, production and distribution were still calculated in rubles.

In the 60's greater emphases was placed on the "profitability" of a workplace, supposedly for accounting. They introduced temporarily high price for new goods to encourage investment, which was suppose to discourage them from subsidizing shitty old stuff. Instead, there was a shift away from innovation and production for public good, towards just make a profit by commodity production.

The economy only got worse and worse as more market-based "reforms" were put into effect. Workers were alienated from their labor. The leaders were only paying lip-service to Marxism, they didn't give a fuck about communism. Eventually the SU was just a hollow shell and fell after the counterrevolution.
I myself also would like to know how the USSR's command economy could be considered socialist considering there was no worker's self management; the capitalist was replaced by the bureaucrat.Worker's self-management alone does not free us from capitalism. It'd just become self-managed capitalism. Bureaucrats alone don't turn into bourgeois, office work isn't necessarily a mechanism for capitalist exploitation; it's when they control the means of production and derive their wealth from workers' labor, or aid bourgeoisie to that end. De facto or De jure.

The argument that the USSR was socialist was that de jure state ownership was supposedly the same as common ownership(Marx and Engels didn't think this), that money was just some accounting fiction, and commodities were for immediate use, not exchange-value. Clearly this wasn't the case.
So could you additionally tell me how a genuine socialist economy would look like? State capitalism isn't socialism, as far as I know.In a way state capitalism is a redundant term, since capitalism can't exist without a state. The states purpose is for one class to rule over another. Under socialism no one will rule over everyone just because they're rich.

There will be no ruling class. The people will control their destiny, a real democracy. Production and distribution will no long be driven by "the markets"(ie what makes bourgeoisie money), instead it'll be by need. The "anarchy of the market"(chaos, not the literal ideology), will be replaced with "from each according to their ability, to each according to their needs".

[Zoroaster]

What failed was that capitalist social relations were created in Russia. Partly due to the failures of the revolution, and partly due to the lack of international support, not the lack of a "real democracy" (for that would imply that revolutionaries should work with the bourgeoise, since democracy is a form of co-operation).

[Blake's Baby]

Unless by 'real democracy' one means the workers' councils of course.

[Illegalitarian]

What killed the Soviet economy was the absolute over-accumulation of capital, and not naughty revisionist ideas infiltrating the Soviet elite. We should argue that the reforms in the Soviet Union were in response to the material conditions, the economic base, and economic stagnation. There was a constant downward trend in the growth rates of the USSR from 1937 onwards -- growth rates began to slow from 1937 onward, then the economy began to stagnate from the 1950s onward, then growth rates began to lower from the 1970s onward, and finally, the economy began to shrink from circa 1985 onward. The growth rate and reproduction of the Soviet economy was sustained by the “massive quantitative mobilization of productive resources” (p. 68, The Marxian Concept of Capital and the Soviet Experience) as well as the large volume of available labour-power. The rate of growth for constant capital was many fold that of the growth of living labour, “there was no corresponding growth in the productivity of social labour.” (p. 77, The Marxian Concept of Capital and the Soviet Experience). In other words, the source for economic growth (or capital accumulation) in the USSR was its massive resources of labour and raw materials, yet there was stunted growth of labour productivity and stunted growth of technical improvements of the methods of production. That the methods of production, fixed capital, were notoriously and comparatively outdated and old can be seen as an affirmation or indication of the crisis of absolute over-accumulation of capital in the Soviet Union. Invention, innovation, diffusion, and incremental improvements were falling or consistently low (p. 73, The Marxian Concept of Capital and the Soviet Experience). Gorbachev noted that “the structure of our production remained unchanged and no longer corresponded to the exigencies of scientific and technological progress.” (p.74, The Marxian Concept of Capital and the Soviet Experience). The reason for this was that the implementation of new innovative technology in production disrupted the production process temporarily and managers obstructed this, as it threatened reaching their production quotas, with no additional future rewards as prospect.

The economic stagnation and eventual economic decline can thus be seen as the crisis of absolute over-accumulation. In an effort to correct this, the management of capital had to re-invent itself. The various reforms implemented under the rule of subsequent Soviet leaders, particularly the Liberman reforms and the reforms of the Gorbachev era, (market-oriented reforms) were intended to make capital's management more efficient,

I would say the stunted labor productivity came as a result of being technologically backwards in the way of heavy industry, and the fact that investment in light industry was entirely non-existent on top of the lack of a service sector, which was big for the world in the late 70's and 80's.

Wouldn't this technically be an issue of under accumulation of capital? Or rather, a poor utilization of existing capital? I agree with what you're saying, I just don't understand how it could be called over accumulation.

[Dodo]

I would say the stunted labor productivity came as a result of being technologically backwards in the way of heavy industry, and the fact that investment in light industry was entirely non-existent on top of the lack of a service sector, which was big for the world in the late 70's and 80's.

Wouldn't this technically be an issue of under accumulation of capital? Or rather, a poor utilization of existing capital? I agree with what you're saying, I just don't understand how it could be called over accumulation.
I think over-accumulation fits well. The lack of technological transformation and stunted productivity growth is directly linked to political ideology and the lack of elasticity in the system. While capitalist world crushed and fixed itself many times in better ways, Soviets tried to continue with high employment in capital-labor intensive industries.

The capitalist crises allows the over-accumulated capital to be taken back and be invested elsewhere. That was not the case in Soviet Union. A major theme I believe was that Soviets believed that "modern society" and "fordist production" was the end of history. But the way things worked, socially and economically managed to change a great deal, especially in post-modern times. Soviet in-elasticity could not keep up with these breaking changes.

[The Disillusionist]

One factor is that the Soviet state leaders, in an attempt to keep up with the US in the insane arms race that was the Cold War, acted just like the capitalists they really were and exploited the workers and neglected the people (they had the power to do so, so this shouldn't be a surprise), driving the economy into the ground to build weapons that didn't really contribute in any way to socio-economic development and to make it seem like a Communist system (though they weren't really Communist) could keep up in production with a Capitalist system, which is ridiculous.

It is absolutely insane to think that a Communist system, a system built on community and shared capital, could ever match the total product output of a Capitalist system, a system built on exploitation and the accumulation of capital. It'd be like a self-sufficient solar powered house outproducing a coal power plant, the goals of the two systems aren't even directly comparable.

[RedWorker]

It is absolutely insane to think that a Communist system, a system built on community and shared capital, could ever match the total product output of a Capitalist system, a system built on exploitation and the accumulation of capital. It'd be like a self-sufficient solar powered house outproducing a coal power plant, the goals of the two systems aren't even directly comparable.

Huh? Why is that? Friedrich Engels noted in "Principles of Communism":
— 20 —
What will be the consequences of the
ultimate disappearance of private property?

Society will take all forces of production and means of commerce, as well as the exchange and distribution of products, out of the hands of private capitalists and will manage them in accordance with a plan based on the availability of resources and the needs of the whole society. In this way, most important of all, the evil consequences which are now associated with the conduct of big industry will be abolished.


There will be no more crises; the expanded production, which for the present order of society is overproduction and hence a prevailing cause of misery, will then be insufficient and in need of being expanded much further. Instead of generating misery, overproduction will reach beyond the elementary requirements of society to assure the satisfaction of the needs of all; it will create new needs and, at the same time, the means of satisfying them. It will become the condition of, and the stimulus to, new progress, which will no longer throw the whole social order into confusion, as progress has always done in the past. Big industry, freed from the pressure of private property, will undergo such an expansion that what we now see will seem as petty in comparison as manufacture seems when put beside the big industry of our own day. This development of industry will make available to society a sufficient mass of products to satisfy the needs of everyone


[...]

[The Disillusionist]

Redworker, that quote actually completely demonstrates my point in many ways, total production beyond the needs of society is a capitalistic concept.

However, I find it interesting that Engels claims that Communism's solution to overproduction is the creation of new markets, because that is exactly what Marx said was Capitalism's solution to overproduction:

"The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented."

I'm with Marx on this one, a Communist society should not need to produce nearly as much to meet the needs and wants of its citizens, because Communism is not built on exploitation of workers and the environment, and the creation of a consumer culture to justify that exploitation. Also, Engels was living during an era in which the average American wasn't consuming several times more than necessary, leading to a rampant destruction of world resources. Environmentalism wasn't really such a big concern during Marx and Engel's time either, and so they tended to think of resources as being unlimited, with unlimited production capacity, but nowadays we realize that this isn't the case (another reason why Marxism isn't the answer to everything).

[Illegalitarian]

Redworker, that quote actually completely demonstrates my point in many ways, total production beyond the needs of society is a capitalistic concept.

However, I find it interesting that Engels claims that Communism's solution to overproduction is the creation of new markets, because that is exactly what Marx said was Capitalism's solution to overproduction:

"The conditions of bourgeois society are too narrow to comprise the wealth created by them. And how does the bourgeoisie get over these crises? On the one hand by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented."

I'm with Marx on this one, a Communist society should not need to produce nearly as much to meet the needs and wants of its citizens, because Communism is not built on exploitation of workers and the environment, and the creation of a consumer culture to justify that exploitation. Also, Engels was living during an era in which the average American wasn't consuming several times more than necessary, leading to a rampant destruction of world resources. Environmentalism wasn't really such a big concern during Marx and Engel's time either, and so they tended to think of resources as being unlimited, with unlimited production capacity, but nowadays we realize that this isn't the case (another reason why Marxism isn't the answer to everything).

Aye


Look at the simple among of food and almost everything else produced every year that's destroyed or shelved because, if let loose on the market, its sheer volume would force prices so extremely low that no business would ever make a profit.

There's no need for such over production in a communist society, since production will be based on need rather than producing 1000000000 units of product X every year and half of it not even making it to the market.

[MonsterMan]

nuclear arms race seems to be the standard answer here, though look forward to reading through this thread, just signed up:)

[Blake's Baby]

Aye


Look at the simple among of food and almost everything else produced every year that's destroyed or shelved because, if let loose on the market, its sheer volume would force prices so extremely low that no business would ever make a profit.

There's no need for such over production in a communist society, since production will be based on need rather than producing 1000000000 units of product X every year and half of it not even making it to the market.

It doesn't make it to the market because it's not profitable, not because it's not needed. Stupid Africans can't even work out how to buy the food we graciously make for them due to their corrupt governments taking the money we generously lend them to buy the food we generously provide out of our superdooper western awesomeness ('West' not actually being the opposite of 'Africa' but muh cultural superiority).

So, just because we make a lot of... X-Boxes, let's say, rather than feeding 1.2 billion people, it doesn't mean after the revolution we still don't have to sort out the food for the 1.2 billion people (or however many people it actually is that are basically 1 meal from starvation for no technical reason at all).

[Illegalitarian]

It doesn't make it to the market because it's not profitable, not because it's not needed. Stupid Africans can't even work out how to buy the food we graciously make for them due to their corrupt governments taking the money we generously lend them to buy the food we generously provide out of our superdooper western awesomeness ('West' not actually being the opposite of 'Africa' but muh cultural superiority).

I said:


because, if let loose on the market, its sheer volume would force prices so extremely low that no business would ever make a profit.


Them damn Africans mooching off the white man's generosity! :laugh:


So, just because we make a lot of... X-Boxes, let's say, rather than feeding 1.2 billion people, it doesn't mean after the revolution we still don't have to sort out the food for the 1.2 billion people (or however many people it actually is that are basically 1 meal from starvation for no technical reason at all).

You mean we can't feed them the x-boxes? :o

[Blake's Baby]

The point I was making was about production. You said we wouldn't need such 'overprouction'. I was disputing how much of the wasted food you (rightly) refer to might actually be utilised.