The Author
1st June 2007, 03:57
Our system of economy exhibits a certain diversity, it contains no less than five forms. There is one form of economy that is almost
page 311
on the level of natural economy: the peasant farms that produce very little for the market. There is a second form of economy, the commodity production form -- the peasant farms which produce chiefly for the market. There is a third form of economy -- private capitalism, which is not dead, which has revived and will continue to revive, within certain limits, as long as we have NEP. The fourth form of economy is state capitalism, i.e., the capitalism that we have permitted and are able to control and restrict in the way the proletarian state wishes. Lastly, there is the fifth form -- socialist industry, i.e., our state industry, in which production does not involve two antagonistic classes -- the proletariat and the bourgeoisie -- but only one class -- the proletariat.
I should like to say a word or two about these five forms of economy, because otherwise it will be difficult to understand the group of figures I intend to quote and the trend that is observed in the development of our industry; the more so that Lenin already dealt in considerable detail with these five forms of economy in our social system[57] and taught us to take the struggle among these forms into account in our work of construction.
I should like to say a word or two about state capitalism and about state industry, the latter being of a socialist type, in order to clear up the misunderstandings and confusion that have arisen in the Party around this question.
Would it be right to call our state industry, state-capitalist industry? No. Why? Because under the dictatorship of the proletariat, state capitalism is a form of organisation of production involving two classes: an exploiting class which owns the means of
page 312
production, and an exploited class which does not own the means of production. No matter what special form state capitalism may assume, it must nevertheless remain capitalist in its nature. When Ilyich analysed state capitalism, he had in mind primarily concessions. Let us take concessions and see whether two classes are involved in them. Yes, they are. The class of capitalists, i.e., the concessionaires, who exploit and temporarily own the means of production, and the class of proletarians, whom the concessionaire exploits. That we have no elements of socialism here is evident if only from the fact that nobody would dare turn up at a concession enterprise to start a campaign to increase productivity of labour; for everybody knows that a concession enterprise is not a socialist enterprise, but one alien to socialism.
Let us take another type of enterprise -- state enterprises. Are they state-capitalist enterprises? No, they are not. Why? Because they involve not two classes, but one class, the working class, which through its state owns the instruments and means of production and which is not exploited; for the maximum amount of what is produced in these enterprises over and above wages is used for the further expansion of industry, i.e., for the improvement of the conditions of the working class as a whole.
It may be said that, after all, this is not complete socialism, bearing in mind the survivals of bureaucracy persisting in the managing bodies of our enterprises. That is true, but it does not contradict the fact that state industry belongs to the socialist type of production. There are two types of production: the capitalist,
page 313
including the state-capitalist, type, where there are two classes, where production is carried on for the profit of the capitalist; and there is the other type, the socialist type of production, where there is no exploitation, where the means of production belong to the working class, and where the enterprises are run not for the profit of an alien class, but for the expansion of industry in the interests of the workers as a whole. That is just what Lenin said, that our state enterprises are enterprises of a consistently socialist type.
Here an analogy with our state could be drawn. Our state, too, is not called a bourgeois state, for, according to Lenin, it is a new type of state, the proletarian type of state. Why? Because our state apparatus does not function for the purpose of oppressing the working class, as is the case with all bourgeois states without exception, but for the purpose of emancipating the working class from the oppression of the bourgeoisie. That is why our state is a proletarian type of state, although any amount of trash and survivals of the past can be found in the state apparatus. Lenin, who proclaimed our Soviet system a proletarian type of state, castigated it for its bureaucratic survivals more strongly than anybody else. Nevertheless, he asserted all the time that our state is a new proletarian type of state. A distinction must be drawn between the type of state and the heritage and survivals still persisting in the system and apparatus of the state. It is equally imperative to draw a distinction between the bureaucratic survivals in state enterprises and the type of structure of industry that we call the socialist type. It is wrong to say that because our economic bodies, or our trusts, suffer
page 314
from mistakes, bureaucracy, and so forth, our state industry is not socialist. It is wrong to say that. If that were true, our state, which is of the proletarian type, would also not be proletarian. I can name quite a number of bourgeois apparatuses that function better and more economically than our proletarian state apparatus; but that does not mean that our state apparatus is not proletarian, that our type of state apparatus is not superior to the bourgeois type. Why? Because, although that bourgeois apparatus functions better, it functions for the capitalist, whereas our proletarian state apparatus, even if it does fumble sometimes, after all functions for the proletariat and against the bourgeoisie.
That fundamental difference must not be forgotten.
The same must be said about state industry. We must not, because of the defects and survivals of bureaucracy that are to be found in the managing bodies of our state enterprises, and which will exist for some time yet, we must not, because of those survivals and defects, forget that, in their nature, our enterprises are socialist enterprises. At the Ford plants, for example, which function efficiently, there may be less thieving, nevertheless they function for the benefit of Ford, a capitalist, whereas our enterprises, where thieving takes place sometimes, and things do not always run smoothly, nevertheless function for the benefit of the proletariat.
That fundamental difference must not be forgotten.
7. CONCERNING STATE CAPITALISM
Connected with this question is Bukharin's mistake. What was his mistake? On what questions did Lenin dispute with Bukharin? Lenin maintained that the category of state capitalism is compatible with the system of the proletarian dictatorship. Bukharin denied this. He was of the opinion, and with him the "Left" Communists, too, including Safarov, were of the opinion that the category of state capitalism is incompatible with the system of the proletarian dictatorship. Lenin was right, of course. Bukharin was wrong. He admitted this mistake of his. Such was Bukharin's mistake. But that was in the past. If now, in 1925, in May, he repeats that he disagrees with Lenin on the question of state capitalism, I suppose it is simply a misunderstanding. Either he ought frankly to withdraw that statement, or it is a misunderstanding; for the line he is now defending on the question of the nature of state industry is Lenin's line. Lenin did not come to Bukharin; on the contrary, Bukharin came to Lenin. And precisely for that reason we back Bukharin. (Applause.)
The chief mistake of Kamenev and Zinoviev is that they regard the question of state capitalism scholastically, undialectically, divorced from the historical situation. Such an approach to the question is abhorrent to the whole spirit of Leninism. How did Lenin present the question? In 1921, Lenin, knowing that our industry was under-developed and that the peasantry needed goods, knowing that it (industry) could not be raised at one stroke, that the workers, because of certain circumstances, were engaged not so much in industry as in making
page 376
cigarette lighters -- in that situation Lenin was of the opinion that the best of all possibilities was to invite foreign capital, to set industry on its feet with its aid, to introduce state capitalism in this way and through it to establish a bond between Soviet power and the countryside. That line was absolutely correct at that time, because we had no other means then of satisfying the peasantry; for our industry was in a bad way, transport was at a standstill, or almost at a standstill, there was a lack, a shortage, of fuel. Did Lenin at that time consider state capitalism permissible and desirable as the predominant form in our economy? Yes, he did. But that was then, in 1921. What about now? Can we now say that we have no industry, that transport is at a standstill, that there is no fuel, etc.? No, we cannot. Can it be denied that our industry and trade are already establishing a bond between industry (our industry) and peasant economy directly, by their own efforts? No, it cannot. Can it be denied that in the sphere of industry "state capitalism" and "socialism" have already exchanged roles, for socialist industry has become predominant and the relative importance of concessions and leases (the former have 50,000 workers and the latter 35,000) is minute? No, it cannot. Already in 1922 Lenin said that nothing had come of concessions and leases in our country.
What follows from this? From this it follows that since 1921, the situation in our country has undergone a substantial change, that in this period our socialist industry and Soviet and co-operative trade have already succeeded in becoming the predominant force, that we have already learned to establish a bond between town and country by our own efforts, that the most striking
page 377
forms of state capitalism -- concessions and leases -- have not developed to any extent during this period, that to speak now, in 1925, of state capitalism as the predominant form in our economy, means distorting the socialist nature of our state industry, means failing to understand the whole difference between the past and the present situation, means approaching the question of state capitalism not dialectically, but scholastically, metaphysically.
Would you care to hear Sokolnikov? In his speech he said:
"Our foreign trade is being conducted as a state-capitalist enterprise. . . . Our internal trading companies are also state-capitalist enterprises. And I must say, comrades, that the State Bank is just as much a state-capitalist enterprise. What about our monetary system? Our monetary system is based on the fact that in Soviet economy, under the conditions in which socialism is being built, there has been adopted a monetary system which is permeated with the principles of capitalist economy."
That is what Sokolnikov says.
Soon he will go to the length of declaring that the People's Commissariat of Finance is also state capitalism. Up to now I thought, and we all thought, that the State Bank is part of the state apparatus. Up to now I thought, and we all thought, that our People's Commissariat of Foreign Trade, not counting the state-capitalist institutions that encompass it, is part of the state apparatus, that our state apparatus is the apparatus of a proletarian type of state. We all thought so up to now, for the proletarian state is the sole master of these institutions. But now, according to Sokolnikov, it turns out that these institutions, which are part of our state apparatus, are
page 378
state-capitalist institutions. Perhaps our Soviet apparatus is also state capitalism and not a proletarian type of state, as Lenin declared it to be? Why not? Does not our Soviet apparatus utilise a "monetary system which is permeated with the principles of capitalist economy?" Such is the nonsense a man can talk himself into.
Permit me first of all to quote Lenin's opinion on the nature and significance of the State Bank. I should like, comrades, to refer to a passage from a book written by Lenin in 1917. I have in mind the pamphlet: Can the Bolsheviks Retain State Power? in which Lenin still held the viewpoint of control of industry (and not nationalisation) and, notwithstanding that, regarded the State Bank in the hands of the proletarian state as being nine-tenths a socialist apparatus. This is what he wrote about the State Bank:
"The big banks are the 'state apparatus' we need for bringing about socialism, and which we take ready-made from capitalism; our task here is merely to lop off what capitalistically distorts this excellent apparatus, to make it still bigger, still more democratic, still more all-embracing. Quantity will be transformed into quality. A single State Bank, the biggest of the biggest, with branches in every volost, in every factory, will already be nine-tenths of the socialist apparatus. That will be nation-wide book-keeping, nation-wide accounting of the production and distribution of goods, that will be, so to speak, something in the nature of the skeleton of socialist society" (see Vol. XXI, p. 260).
Compare these words of Lenin's with Sokolnikov's speech and you will understand what Sokolnikov is slipping into. I shall not be surprised if he declares the People s Commissariat of Finance to be state capitalism.
page 379
What is the point here? Why does Sokolnikov fall into such errors?
The point is that Sokolnikov fails to understand the dual nature of NEP, the dual nature of trade under the present conditions of the struggle between the socialist elements and the capitalist elements; he fails to understand the dialectics of development in the conditions of the proletarian dictatorship, in the conditions of the transition period, in which the methods and weapons of the bourgeoisie are utilised by the socialist elements for the purpose of overcoming and eliminating the capitalist elements. The point is not at all that trade and the monetary system are methods of "capitalist economy." The point is that in fighting the capitalist elements, the socialist elements of our economy master these methods and weapons of the bourgeoisie for the purpose of overcoming the capitalist elements, that they successfully use them against capitalism, successfully use them for the purpose of building the socialist foundation of our economy. Hence, the point is that, thanks to the dialectics of our development, the functions and purpose of those instruments of the bourgeoisie change in principle, fundamentally; they change in favour of socialism to the detriment of capitalism. Sokolnikov's mistake lies in his failure to understand all the complexity and contradictory nature of the processes that are taking place in our economy.
Permit me now to refer to Lenin on the question of the historical character of state capitalism, to quote a passage on the question as to when and why he proposed state capitalism as the chief form, as to what induced him to do that, and as to precisely under what concrete conditions he proposed it. (A voice : "Please do!")
page 380
"We cannot under any circumstances forget what we very often observe, namely, the socialist attitude of the workers in factories belonging to the state, where they themselves collect fuel raw materials and produce, or when the workers try properly to distribute the products of industry among the peasantry and to deliver them by means of the transport system. That is socialism. But side by side with it there is small economy, which very often exists independently of it. Why can it exist independently of it? Because large-scale industry has not been restored, because the socialist factories can receive only one-tenth, perhaps, of what they should receive; and in so far as they do not receive what they should, small economy remains independent of the socialist factories. The incredible state of ruin of the country, and the shortage of fuel, raw materials and transport facilities, lead to small production existing separately from socialism. And I say: Under these circumstances, what is state capitalism? It will mean the amalgamation of small production. Capital amalgamates small production, capital grows out of small production. It is no use closing our eyes to this fact. Of course, freedom of trade means the growth of capitalism ; one cannot get away from it. And whoever thinks of getting away from it and brushing it aside is only consoling himself with words. If small economy exists, if there is freedom of exchange, capitalism will appear. But has this capitalism any terrors for us if we hold the factories, works, transport and foreign trade in our hands ? And so I said then, and will say now, and I think it is incontrovertible, that this capitalism has no terrors for us. Concessions are capitalism of that kind" (see Vol. XXVI, p. 306).[1]
That is how Lenin approached the question of state capitalism.
In 1921, when we had scarcely any industry of our own, when there was a shortage of raw materials, and transport was at a standstill, Lenin proposed state capitalism as a means by which he thought of linking peasant economy with industry. And that was correct. But does
* All italics mine. -- J. St.
[1] Lenin, Report on the Tax in Kind Delivered at a Meeting of Secretaries and Responsible Representatives of R.C.P.(B.) Cells of Moscow and Moscow Gubernia. April 9, 1921.
page 381
that mean that Lenin regarded this line as desirable under all circumstances? Of course not. He was willing to establish the bond through the medium of state capitalism because we had no developed socialist industry. But now? Can it be said that we have no developed state industry now? Of course not. Development proceeded along a different channel, concessions scarcely took root, state industry grew, state trade grew, the co-operatives grew, and the bond between town and country began to be established through socialist industry. We found ourselves in a better position than we had expected. How can one, after this, say that state capitalism is the chief form of managing our economy?
The trouble with the opposition is that it refuses to understand these simple things.
An interesting, Marxist-Leninist point of view on the theory of "State Capitalism."
Full 14th Congress Report can be found here (http://www.marx2mao.com/Stalin/FC25.html#p4s7). I've only quoted the relevant passages.
page 311
on the level of natural economy: the peasant farms that produce very little for the market. There is a second form of economy, the commodity production form -- the peasant farms which produce chiefly for the market. There is a third form of economy -- private capitalism, which is not dead, which has revived and will continue to revive, within certain limits, as long as we have NEP. The fourth form of economy is state capitalism, i.e., the capitalism that we have permitted and are able to control and restrict in the way the proletarian state wishes. Lastly, there is the fifth form -- socialist industry, i.e., our state industry, in which production does not involve two antagonistic classes -- the proletariat and the bourgeoisie -- but only one class -- the proletariat.
I should like to say a word or two about these five forms of economy, because otherwise it will be difficult to understand the group of figures I intend to quote and the trend that is observed in the development of our industry; the more so that Lenin already dealt in considerable detail with these five forms of economy in our social system[57] and taught us to take the struggle among these forms into account in our work of construction.
I should like to say a word or two about state capitalism and about state industry, the latter being of a socialist type, in order to clear up the misunderstandings and confusion that have arisen in the Party around this question.
Would it be right to call our state industry, state-capitalist industry? No. Why? Because under the dictatorship of the proletariat, state capitalism is a form of organisation of production involving two classes: an exploiting class which owns the means of
page 312
production, and an exploited class which does not own the means of production. No matter what special form state capitalism may assume, it must nevertheless remain capitalist in its nature. When Ilyich analysed state capitalism, he had in mind primarily concessions. Let us take concessions and see whether two classes are involved in them. Yes, they are. The class of capitalists, i.e., the concessionaires, who exploit and temporarily own the means of production, and the class of proletarians, whom the concessionaire exploits. That we have no elements of socialism here is evident if only from the fact that nobody would dare turn up at a concession enterprise to start a campaign to increase productivity of labour; for everybody knows that a concession enterprise is not a socialist enterprise, but one alien to socialism.
Let us take another type of enterprise -- state enterprises. Are they state-capitalist enterprises? No, they are not. Why? Because they involve not two classes, but one class, the working class, which through its state owns the instruments and means of production and which is not exploited; for the maximum amount of what is produced in these enterprises over and above wages is used for the further expansion of industry, i.e., for the improvement of the conditions of the working class as a whole.
It may be said that, after all, this is not complete socialism, bearing in mind the survivals of bureaucracy persisting in the managing bodies of our enterprises. That is true, but it does not contradict the fact that state industry belongs to the socialist type of production. There are two types of production: the capitalist,
page 313
including the state-capitalist, type, where there are two classes, where production is carried on for the profit of the capitalist; and there is the other type, the socialist type of production, where there is no exploitation, where the means of production belong to the working class, and where the enterprises are run not for the profit of an alien class, but for the expansion of industry in the interests of the workers as a whole. That is just what Lenin said, that our state enterprises are enterprises of a consistently socialist type.
Here an analogy with our state could be drawn. Our state, too, is not called a bourgeois state, for, according to Lenin, it is a new type of state, the proletarian type of state. Why? Because our state apparatus does not function for the purpose of oppressing the working class, as is the case with all bourgeois states without exception, but for the purpose of emancipating the working class from the oppression of the bourgeoisie. That is why our state is a proletarian type of state, although any amount of trash and survivals of the past can be found in the state apparatus. Lenin, who proclaimed our Soviet system a proletarian type of state, castigated it for its bureaucratic survivals more strongly than anybody else. Nevertheless, he asserted all the time that our state is a new proletarian type of state. A distinction must be drawn between the type of state and the heritage and survivals still persisting in the system and apparatus of the state. It is equally imperative to draw a distinction between the bureaucratic survivals in state enterprises and the type of structure of industry that we call the socialist type. It is wrong to say that because our economic bodies, or our trusts, suffer
page 314
from mistakes, bureaucracy, and so forth, our state industry is not socialist. It is wrong to say that. If that were true, our state, which is of the proletarian type, would also not be proletarian. I can name quite a number of bourgeois apparatuses that function better and more economically than our proletarian state apparatus; but that does not mean that our state apparatus is not proletarian, that our type of state apparatus is not superior to the bourgeois type. Why? Because, although that bourgeois apparatus functions better, it functions for the capitalist, whereas our proletarian state apparatus, even if it does fumble sometimes, after all functions for the proletariat and against the bourgeoisie.
That fundamental difference must not be forgotten.
The same must be said about state industry. We must not, because of the defects and survivals of bureaucracy that are to be found in the managing bodies of our state enterprises, and which will exist for some time yet, we must not, because of those survivals and defects, forget that, in their nature, our enterprises are socialist enterprises. At the Ford plants, for example, which function efficiently, there may be less thieving, nevertheless they function for the benefit of Ford, a capitalist, whereas our enterprises, where thieving takes place sometimes, and things do not always run smoothly, nevertheless function for the benefit of the proletariat.
That fundamental difference must not be forgotten.
7. CONCERNING STATE CAPITALISM
Connected with this question is Bukharin's mistake. What was his mistake? On what questions did Lenin dispute with Bukharin? Lenin maintained that the category of state capitalism is compatible with the system of the proletarian dictatorship. Bukharin denied this. He was of the opinion, and with him the "Left" Communists, too, including Safarov, were of the opinion that the category of state capitalism is incompatible with the system of the proletarian dictatorship. Lenin was right, of course. Bukharin was wrong. He admitted this mistake of his. Such was Bukharin's mistake. But that was in the past. If now, in 1925, in May, he repeats that he disagrees with Lenin on the question of state capitalism, I suppose it is simply a misunderstanding. Either he ought frankly to withdraw that statement, or it is a misunderstanding; for the line he is now defending on the question of the nature of state industry is Lenin's line. Lenin did not come to Bukharin; on the contrary, Bukharin came to Lenin. And precisely for that reason we back Bukharin. (Applause.)
The chief mistake of Kamenev and Zinoviev is that they regard the question of state capitalism scholastically, undialectically, divorced from the historical situation. Such an approach to the question is abhorrent to the whole spirit of Leninism. How did Lenin present the question? In 1921, Lenin, knowing that our industry was under-developed and that the peasantry needed goods, knowing that it (industry) could not be raised at one stroke, that the workers, because of certain circumstances, were engaged not so much in industry as in making
page 376
cigarette lighters -- in that situation Lenin was of the opinion that the best of all possibilities was to invite foreign capital, to set industry on its feet with its aid, to introduce state capitalism in this way and through it to establish a bond between Soviet power and the countryside. That line was absolutely correct at that time, because we had no other means then of satisfying the peasantry; for our industry was in a bad way, transport was at a standstill, or almost at a standstill, there was a lack, a shortage, of fuel. Did Lenin at that time consider state capitalism permissible and desirable as the predominant form in our economy? Yes, he did. But that was then, in 1921. What about now? Can we now say that we have no industry, that transport is at a standstill, that there is no fuel, etc.? No, we cannot. Can it be denied that our industry and trade are already establishing a bond between industry (our industry) and peasant economy directly, by their own efforts? No, it cannot. Can it be denied that in the sphere of industry "state capitalism" and "socialism" have already exchanged roles, for socialist industry has become predominant and the relative importance of concessions and leases (the former have 50,000 workers and the latter 35,000) is minute? No, it cannot. Already in 1922 Lenin said that nothing had come of concessions and leases in our country.
What follows from this? From this it follows that since 1921, the situation in our country has undergone a substantial change, that in this period our socialist industry and Soviet and co-operative trade have already succeeded in becoming the predominant force, that we have already learned to establish a bond between town and country by our own efforts, that the most striking
page 377
forms of state capitalism -- concessions and leases -- have not developed to any extent during this period, that to speak now, in 1925, of state capitalism as the predominant form in our economy, means distorting the socialist nature of our state industry, means failing to understand the whole difference between the past and the present situation, means approaching the question of state capitalism not dialectically, but scholastically, metaphysically.
Would you care to hear Sokolnikov? In his speech he said:
"Our foreign trade is being conducted as a state-capitalist enterprise. . . . Our internal trading companies are also state-capitalist enterprises. And I must say, comrades, that the State Bank is just as much a state-capitalist enterprise. What about our monetary system? Our monetary system is based on the fact that in Soviet economy, under the conditions in which socialism is being built, there has been adopted a monetary system which is permeated with the principles of capitalist economy."
That is what Sokolnikov says.
Soon he will go to the length of declaring that the People's Commissariat of Finance is also state capitalism. Up to now I thought, and we all thought, that the State Bank is part of the state apparatus. Up to now I thought, and we all thought, that our People's Commissariat of Foreign Trade, not counting the state-capitalist institutions that encompass it, is part of the state apparatus, that our state apparatus is the apparatus of a proletarian type of state. We all thought so up to now, for the proletarian state is the sole master of these institutions. But now, according to Sokolnikov, it turns out that these institutions, which are part of our state apparatus, are
page 378
state-capitalist institutions. Perhaps our Soviet apparatus is also state capitalism and not a proletarian type of state, as Lenin declared it to be? Why not? Does not our Soviet apparatus utilise a "monetary system which is permeated with the principles of capitalist economy?" Such is the nonsense a man can talk himself into.
Permit me first of all to quote Lenin's opinion on the nature and significance of the State Bank. I should like, comrades, to refer to a passage from a book written by Lenin in 1917. I have in mind the pamphlet: Can the Bolsheviks Retain State Power? in which Lenin still held the viewpoint of control of industry (and not nationalisation) and, notwithstanding that, regarded the State Bank in the hands of the proletarian state as being nine-tenths a socialist apparatus. This is what he wrote about the State Bank:
"The big banks are the 'state apparatus' we need for bringing about socialism, and which we take ready-made from capitalism; our task here is merely to lop off what capitalistically distorts this excellent apparatus, to make it still bigger, still more democratic, still more all-embracing. Quantity will be transformed into quality. A single State Bank, the biggest of the biggest, with branches in every volost, in every factory, will already be nine-tenths of the socialist apparatus. That will be nation-wide book-keeping, nation-wide accounting of the production and distribution of goods, that will be, so to speak, something in the nature of the skeleton of socialist society" (see Vol. XXI, p. 260).
Compare these words of Lenin's with Sokolnikov's speech and you will understand what Sokolnikov is slipping into. I shall not be surprised if he declares the People s Commissariat of Finance to be state capitalism.
page 379
What is the point here? Why does Sokolnikov fall into such errors?
The point is that Sokolnikov fails to understand the dual nature of NEP, the dual nature of trade under the present conditions of the struggle between the socialist elements and the capitalist elements; he fails to understand the dialectics of development in the conditions of the proletarian dictatorship, in the conditions of the transition period, in which the methods and weapons of the bourgeoisie are utilised by the socialist elements for the purpose of overcoming and eliminating the capitalist elements. The point is not at all that trade and the monetary system are methods of "capitalist economy." The point is that in fighting the capitalist elements, the socialist elements of our economy master these methods and weapons of the bourgeoisie for the purpose of overcoming the capitalist elements, that they successfully use them against capitalism, successfully use them for the purpose of building the socialist foundation of our economy. Hence, the point is that, thanks to the dialectics of our development, the functions and purpose of those instruments of the bourgeoisie change in principle, fundamentally; they change in favour of socialism to the detriment of capitalism. Sokolnikov's mistake lies in his failure to understand all the complexity and contradictory nature of the processes that are taking place in our economy.
Permit me now to refer to Lenin on the question of the historical character of state capitalism, to quote a passage on the question as to when and why he proposed state capitalism as the chief form, as to what induced him to do that, and as to precisely under what concrete conditions he proposed it. (A voice : "Please do!")
page 380
"We cannot under any circumstances forget what we very often observe, namely, the socialist attitude of the workers in factories belonging to the state, where they themselves collect fuel raw materials and produce, or when the workers try properly to distribute the products of industry among the peasantry and to deliver them by means of the transport system. That is socialism. But side by side with it there is small economy, which very often exists independently of it. Why can it exist independently of it? Because large-scale industry has not been restored, because the socialist factories can receive only one-tenth, perhaps, of what they should receive; and in so far as they do not receive what they should, small economy remains independent of the socialist factories. The incredible state of ruin of the country, and the shortage of fuel, raw materials and transport facilities, lead to small production existing separately from socialism. And I say: Under these circumstances, what is state capitalism? It will mean the amalgamation of small production. Capital amalgamates small production, capital grows out of small production. It is no use closing our eyes to this fact. Of course, freedom of trade means the growth of capitalism ; one cannot get away from it. And whoever thinks of getting away from it and brushing it aside is only consoling himself with words. If small economy exists, if there is freedom of exchange, capitalism will appear. But has this capitalism any terrors for us if we hold the factories, works, transport and foreign trade in our hands ? And so I said then, and will say now, and I think it is incontrovertible, that this capitalism has no terrors for us. Concessions are capitalism of that kind" (see Vol. XXVI, p. 306).[1]
That is how Lenin approached the question of state capitalism.
In 1921, when we had scarcely any industry of our own, when there was a shortage of raw materials, and transport was at a standstill, Lenin proposed state capitalism as a means by which he thought of linking peasant economy with industry. And that was correct. But does
* All italics mine. -- J. St.
[1] Lenin, Report on the Tax in Kind Delivered at a Meeting of Secretaries and Responsible Representatives of R.C.P.(B.) Cells of Moscow and Moscow Gubernia. April 9, 1921.
page 381
that mean that Lenin regarded this line as desirable under all circumstances? Of course not. He was willing to establish the bond through the medium of state capitalism because we had no developed socialist industry. But now? Can it be said that we have no developed state industry now? Of course not. Development proceeded along a different channel, concessions scarcely took root, state industry grew, state trade grew, the co-operatives grew, and the bond between town and country began to be established through socialist industry. We found ourselves in a better position than we had expected. How can one, after this, say that state capitalism is the chief form of managing our economy?
The trouble with the opposition is that it refuses to understand these simple things.
An interesting, Marxist-Leninist point of view on the theory of "State Capitalism."
Full 14th Congress Report can be found here (http://www.marx2mao.com/Stalin/FC25.html#p4s7). I've only quoted the relevant passages.