Finance and Industry: Who are the share-owners (1962)

The Finance and Industry column from the August 1962 issue of the Socialist Standard

Who are the share-owners

Last month we reported on the new campaign being organised to encourage British workers to buy more stocks and shares. We also quoted the estimates made by the organisers about the number of shareholders in the country.

The New York Stock Exchange has now provided details of the number of shareholders in the United States. These are estimated at about 17 million, an increase of over 10 million in the last ten years.

The U.S. correspondent of the Financial Times, giving these figures, comments that in happier times they might have been a cause for congratulation, but that recent events have given “people’s capitalism” a rather tarnished look. Judging by the panic and disillusionment that hit many of these small investors in the recent Wall Street shake-up, he is certainly right.

High pressure salesmen

One result of this shake-up has been the questioning of the methods that have apparently been used by many U.S. Stock Exchange firms to get business. They have been using a large army of part-time salesmen to go round getting people to buy stocks and shares just as they would soap or toothpaste. Some of them have even been selling extremely doubtful issues in such industries as electronics, automatic vending machines, etc., which have turned out to be virtually worthless. We wonder how many of the 17 million have been accounted for by this sort of dubious activity?

Beyond the curtain

In view of the way production and distribution are carried on in Russia and her satellites, Socialists would not suppose that the trading and financial problems there would differ essentially from what we have here.

It suits ill-informed writers in the Press to keep plugging the theme that it is quite astonishing that capitalist Russia should behave like a capitalist power—but what else would they expect?

In the early part of July, a two-week international summer school of bankers was held in Moscow to enable the foreigners to learn about the Russian banking system. (Last year they met in Oxford). The British visitors numbered 35 and represented the big five joint-stock banks as well as the Bank of England and the merchant banks. More than 50 countries were represented, including the U.S.A. and many of the newly formed African and Asian countries.

Innocents who suppose that things are really different in Russia may wonder why Russia needs to encourage such an affair. But Russian industry is engaged in producing goods for sale at a profit in home and foreign markets and has just as much need of a vast banking and finance apparatus as has the rest of the world. It has not at all been able to escape the necessity of finding markets for exports and has been no more successful than its Western rivals. If Britain has problems which lead some industrial groups to favour entry into the Common Market, Russia has her own difficulties in COMECON (The Council for Mutual Economic Assistance, established in 1949 by Russia, Poland, Czechoslovakia, Hungary, Bulgaria, Rumania, Yugoslavia and Albania).

An article by Norman MacKenzie in the New Statesman last month maintains that these countries have been unable to achieve the degree of common planning already attained by the six European countries in the Common Market—hence Krushchev’s apparent anxiety lest Britain’s entry into the Common Market and the further development of the Market may make great difficulties for the exports of the Comecom countries, including Russia. Mr. MacKenzie’s view is that each of the Comecom countries is concentrating on industrial self-sufficiency rather than on integration into the whole group. One outcome has been that “with the exception of Poland, these predominantly rural countries are now chronically short of food.”

One ironical accompaniment of the relationship between Russia and the other Comecom countries related by Mr. MacKenzie is that their internal price systems are so complex that when they enter into trade agreements between themselves they have to make use of world prices as a common basis of measurement, which “explains why the trade attaches of communist embassies in the West spend so much time collecting invoices and catalogues which are sent to Moscow for analysis.”

The mailed fist

It is the fashion these days for managing directors, Ministry of Labour officials and politicians to congratulate themselves and everyone else on the harmony and amity that is supposed to mark industrial relationships. To the extent that things have changed it is mostly the result of years of low unemployment and shortage of labour—employers have had to hide the mailed fist a little. But Mr. Peregrine Worsthorne, of the Sunday Telegraph, recently scented a wind of change. He noted that the Wall Street Stock Exchange collapse alarmed the workers at the Ford Motor Works at Dagenham with whom Mr. Worsthorne had been talking.

This is what he had to say about it:

“The men I talked to were frightened and malleable, as if they had been suddenly awakened from a deep sleep, and scarcely knew where they were. If the mood at Ford’s is any guide, now would seem to be the time to put industrial relations on a sounder footing. At the risk of being called all sorts of unpleasant names, I should like to suggest that this means, in blunt terms, putting the working man in his place, which is a very much lower one than he has been encouraged to enjoy for 15 years.”

Don’t say you haven’t been warned!

Going up or down?

On the whole economists and politicians claiming to understand the workings of the economic system have lived in a mood of sustained optimism for the past twenty years, based on the sanguine belief that things would never get really bad again because there is more knowledge and experience available than there used to be. Bernard Harris, writing recently in the Sunday Express, on prospects of a slump in America like that in the ‘thirties, dismissed it, not precisely because there aren’t danger signals, but because “the cause of business fluctuations is better understood. The techniques for dealing with them are better developed.”

But there are dissident voices. Mr. Enoch Powell, who has been “saving the country” by resisting the nurses’ demand for higher pay, went on record two years ago to the effect that the Government’s techniques for handling the crisis of 1958-9 had had no effect whatever. (As he had resigned from the Government he was exercising the right to be critical of what his ex-colleagues were doing). And Mr. George Schwartz has been wondering in the Sunday Times whether we aren’t “back to the old trade cycle” (Powell’s view appears to be that we never left it.)

Mr. Samuel Brittan in the Observer goes further than Powell, who thought the Government’s actions had no effect, because he (Brittan), thinks they make the problem worse:

“Government financial measures have in recent years actually accentuated the trade fluctuations that they were supposed to control.”

The Financial Times (June 15) pointed out another difficulty about prescribing cures for whatever ails the patient, namely, the difficulty of diagnosis. How do you prescribe for an unhealthy state of trade if you can’t decide what is its state?

“At present British industry is operating on a plateau, and one can make out an almost equally convincing case for saying that the plateau is sloping downwards as upwards.”

East-west trade

For many years after the war, and particularly when the Western governments rigidly prohibited the export to Russia and her allies of products and materials useful for armaments, never a trade union conference went by without resolutions being moved demanding more trade with Iron Curtain countries. Many workers who were enthusiastic about it had a somewhat mixed idea of what it meant: to them “more trade” meant more British goods being sold abroad without its counterpart of more foreign goods being marketed here. (Some supporters of joining the Common Market have the same blurred vision.)

In the last year or two, with more exports from Russia and Eastern Europe coming into world markets, zeal for East-West trade has cooled off considerably. British coal miners who had supported the idea had never anticipated that it might take the form of the large quantities of cheap Russian oil hastening still further the decline of coal as a fuel for manufacture and domestic lighting and heating. And workers in engineering concerns doing big business in exports were not counting on the steady increase in the amount of machinery and equipment that now figures in Russian exports. A recent, development has been the Russian invasion of the watch market. Soviet Weekly (June 28, 1962) tells how Russian exports of watches have increased from 12,000 in 1938, to 250,000 in 1955, 1,147,600 in 1957 and 4½ million in 1961. They go to 50 countries in all parts of the world and “in price and quality Soviet watches are challenging the long-standing pre-eminence of the Swiss watchmakers in this field.”

Edgar Hardcastle

So They Say: Good God, said God (1973)

The So They Say Column from the November 1973 issue of the Socialist Standard

Good God, said God

If ideas were worn like garments, most upholders of capitalism would make their speeches in the nude. As soon as the Arab-Israeli war began, both sides claimed heavenly justification and support. The Times (8th October) reported that Dr. Abdel Halim Mahmoud, the leader of Egypt’s biggest Muslim religious institution, called the conflict a holy war and said:

  The enemies of God have committed aggression on Muslim lands and desecrated our sanctuaries. It has become the duty of every Muslim to make every sacrifice to liberate Muslim territories from Zionist aggressors.

In Tel Aviv Brigadier-General Mordechai Piron, chaplain to the Israel armed forces, said “Snap”:

  Israel is fighting a sacred war against a cruel foe . . . The whole House of Israel has its eyes on you with heavy prayers and blessings for your success in repelling the enemy. The Lord will give you strength.

Perhaps God would appreciate a gift of Pelican psychiatry books, to find out what you do about schizophrenia.

Percentage from Peking

Those who believed in China’s march towards Socialism are still reeling from the news of China’s application for membership of the World Bank and the International Monetary Fund: in order to be able to raise big loans abroad. In The Observer on 30th September, John Davis made the dose more bitter still by advising investors to go for Chinese government bonds. These have been in default (i.e. paying no interest) for many years, and so can — or could before 30th September — be bought cheaply. However, the IMF and the World Bank would almost certainly make a condition that the debts on the bonds be settled. Says Davis:

  The sum needed to wipe the slate clean for the Chinese is peanuts in the context of the sort of money China will want to raise in the future. In fact, it need not be more than the price of a few Concordes.

A nice “killing” for those who can afford it. Where will the money come from, and the interest on the loans China hopes to raise? From the surplus-value created by exploited workers in this “new utopia”.

A Roof over your Head

Architects and town planners from the Comecon countries recently had a conference in Bratislava about “one of the worst headaches of all East European leaderships — the problems of housing in towns” (Guardian, 26th September). The plight of workers in these countries generally is no different from that of those elsewhere. The promises are just as familiar:

  Poland, with a housing situation reckoned to be among the worst in Europe, now has a programme introduced by Mr. Gierek’s regime to provide every family with its own accommodation by 1990.

In Bulgaria, almost 50 per cent, of households share their accommodation with others.

What is interesting is that attempts to solve the problem revolve round finance as much as buildings: subsidies, schemes in which flats revert to the State at the end of the "owners’ ” lifetimes. So the housing problem in “Communist” countries is that of all the capitalist world — simply an aspect of working-class poverty.

My Dad can Fight Yours, too

A prize for the funniest item of the month should go to Norman Atkinson MP. On 26th September he wrote to The Times protesting against an apparent slight on the Labour Party’s Marxism. His letter said:

  For these reasons the Labour Party became — and still remains — a Marxist party . . .  all the leading Labour Party names you mention from Harold Wilson to Roy Jenkins accept the Labour Party’s Marxist constitution — and I assume are proud to do so. Sidney and Beatrice Webb, the SDF, the ILP, GDH and Margaret Cole, the Fabians, and Arthur Henderson . . .  all would have agreed that it was their own Marxist scholarship which had the greatest influence during the early formative years of the Labour Party.

In the nineteen-fifties Morgan Phillips, the Labour Party secretary, claimed its derivation to be not from Marx but from Methodism. In fact, what almost all those Atkinson mentions have in common is their denial of the class struggle to which, as he says, “Marxist understanding is geared”. But has he “Marxist understanding”? He says "classless society is not possible without the common ownership of the means of production and exchange”. How do people exchange what they own in common? Marx would have writhed.

Achievements of Reform

Norman Atkinson’s letter also asks: “How two families can enjoy equal rights when one has an income 100 times greater than the other.” A sensible question, but the wrong one. It should be: How can one family have an income 100 times greater than another after government by the "Marxists” he names ?

On 27th September the Guardian had a review by Michael Meacher of new books on income distribution. Citing Wealth, Income and Inequality (ed. A. B. Atkinson, Penguin Education) the reviewer says:

  Historically, from 1801 when paupers and vagrants, the bottom 23 per cent of the population, had each a mere £20 per year income, while peers, the top 0.01 per cent, had annual incomes 400 times as great, the picture scarcely changed till the mid-twentieth century. Even since the Second World War, though the share of post-tax incomes held by the highest paid 1 per cent fell from 6½ per cent to 5 per cent between 1949-67, the share of the lowest-paid 30 per cent . . . also fell from 14½ per cent to 12 per cent.

It would be interesting to hear Atkinson explain how “a Marxist party” dedicated to “the founding of classless society” — and in power up to 1970 — let this happen. Certainly, how can families “enjoy equal rights” ?

Life in the Old Dog

The main problem for the Polish manager Kazimierz Gorski is whether to bring Marx into the side following his recent recovery from a leg injury.

(Guardian sports page, 10th October)

Perhaps that is what Harold Wilson and Norman Atkinson are worried over too.

Robert Barltrop

Background to the Czech Crisis (1968)

From the September 1968 issue of the Socialist Standard

Democracy is vitally important to the working class. Socialists maintain that it is the experience of working men and women under capitalism which will drive them in the end to understand the need for socialism and, as we see it, this process is enhanced by the degree of democracy which workers have won for themselves. Recent developments in Czechoslovakia before the Russian invasion have a real interest for the working class and the question arises whether socialists should support Dubcek and the ‘liberal’ wing of the Czechoslovakian Communist Party against the conservative forces there and in the other state capitalist countries. But first, to understand what is taking place in Czechoslovakia, it is necessary to know something of the background to the recent reforms.

The Czechoslovakian economy has been in difficulties for some time. These first came to a head in August, 1962 when the five year plan (1961-65) had to be abandoned because of balance of payments difficulties and an all-round failure to increase productivity. As a stop-gap measure an interim plan was devised for 1963 but this resulted in another disaster, with both industrial output and gross national product slumping even further than they had done the year before. Faced with this situation the government was forced to postpone the new five year plan and instead the then President — Novotny — concentrated on exposing the failure of certain key industries to meet their production targets. Yet the .Czechoslovakian economy was in sufficient of an impasse to provoke a more radical approach from many quarters. It was pointed out that trade was heavily oriented towards the Comecon countries, especially Russia which had a virtual monopoly in supplying Czechoslovakia with many of its raw materials. In fact, some of the statistics quoted were quite staggering; Russia was the source of almost all Czechoslovakia’s oil, 80 per cent of its imported iron-ore, 63 per cent of its imports of synthetic rubber and so on. The clear implication was that this in itself was an unhealthy state of affairs and this view was reinforced when the prices paid by Czechoslovakia for some of these raw materials were pointedly compared with those paid by Western countries for the same commodities. Thus, while Italy was known to be getting its crude oil from Russia at 8 roubles/ton, Czechoslovakia was buying the same for 20.8 roubles/ton. There was also criticism of Czechoslovakia’s role within Comecon, since the supranational plans laid it down that Czechoslovakia would concentrate on heavy industry. In 1963, for example, this sphere was accounting for 28 per cent of total investments and this emphasis on heavy industry was said to be helping to produce a lop-sided economy.

These sort of arguments all led in a direction which, for political reasons, Novotny and his colleagues were not prepared to go. However indirectly it was argued, the pressure was for a loosening of Czechoslovakia’s dependence on Comecon and Russia and for an increase in trade with the West. Although the recent struggle in the Praesidium and in the Central Committee of the Czechoslovakian Communist Party has appeared to be focused on an organisational and ideological dispute, it is this clash over economic problems which has formed the real battleground for the upheaval and which led to Novotny being eased out of first the first-secretaryship of the Party and then out of the Presidency. This explains the fact—which has baffled many observers—that in the split in the Praesidium in January, 1968 when the two factions were equally balanced (5-5), the pro-Dubcek camp included such arch conservatives as Hendrych (chief of the Party’s ideological department, who was chiefly responsible for hounding the Czech writers in 1967) and Dolansky (now described as a “reformed Stalinist”) while several so-called liberals voted for Novotny.

The overriding importance which the new leadership attaches to the economic reforms was hinted at by Jaromir Balcar—the vice-president of the Czechoslovakian Chamber of Commerce—when he issued a statement that “the process of political demonstration must, as far as trade is concerned, run in close harmony with the economy of the country as a whole.” In fact, important adjustments to the economy have already been pushed through—such as a reduction of investments in heavy industry by over a third to 18 per cent of total investment. Despite political difficulties, the new Czechoslovak leadership has also been making encouraging noises towards Western powers for intensified economic relations. The Prime Minister, Cernik, has said that Czechoslovakia wants to cooperate with the Common Market and EFTA and there has been a lot of talk about working towards convertibility for the Czech crown. Coupled with this, there has been some forthright criticism of economic relations with Russia, a good example being that involving the $500 m. credit which the Czechoslovakian government originally agreed to advance for the development of the Tyumen oil fields in Siberia. The agreement here was for Czechoslovakia to advance the capital and for Russia to eventually pay it back with oil products from the new Siberian fields. But a controversy has developed over the quantity of oil which Czechoslovakia's $500 million entitles it to. As a commentator on Prague radio put it:

These are precisely the problems Where the interests of the individual Socialist countries clash.

This sort of evidence would seem to be fairly conclusive proof, then that the Czech-Soviet confrontation leading to invasion is rooted in the conflicting economic and strategic interests of the ruling classes of these two countries. This means that workers in Czechoslovakia and elsewhere have no direct stake in this continuing struggle, but it does not mean that they should adopt a completely passive role. Whichever faction in the Communist Party assumes eventual control, the class struggle in Czechoslovakia will continue and the Czech workers should take advantage of any embarrassments which the ruling class is subjected to by pressing ahead with their own demands. And they have done this remarkably well in some respects. Although Dubcek and his followers have found the liberalisation campaign a convenient weapon to hammer their opponents with, it is the working [class] (at least for a time) which has taken over the agitation for democracy and which has already pushed the demands much further than the most 'liberal’ apparatchniks would like to go. Whereas in countries like Russia and Poland recent opposition to the regime has tended to be focused on dissident members of the ruling class (Pavel Litvinov is the grandson of Stalin's foreign minister, for example; Karol Modzelewski is also the son of a late foreign minister) in Czechoslovakia discontent with present conditions has been actively expressed by millions of working men and women. While there is nothing reveloutionary about this—according to opinion polls in the newspapers, over 90 per cent of the Czech population imagines that capitalism has already been eliminated in that country—socialists do not belittle the reforms which workers in Czechoslovakia have been campaigning for. Moves for relaxing press censorship and for establishing something approaching free speech on the streets are important gains for the working class and in the end they will have to rely on nothing but their own efforts to maintain them.

But there are obvious weaknesses as well in this reform movement. The famous '2000 Words' manifesto has underlined these better than anything else. Here the problems confronting working men and women in Czechoslovakia are explained by the 'mistakes’ committed by the previous leadership:

   . . .  the reins of government did not fall into good hands. The incorrect line of the leadership transformed the Party, which had been a political and ideological force, into an organisation of power and it therefore attracted all types of would-be dictators, rogues and charlatans.
   Parliament disregarded parliamentary procedures, the government forgot how to govern and the leaders how to lead. 

Against this was opposed the need for a restyled communist party which would base itself “not on force but on popular support”.

Other workers have a much clearer grasp of the situation and some have been discussing the possibility of forming new political organisations, independent of the regime. Already an independent ‘Non-Party Club' is functioning in Prague and this trend is obviously causing a lot of uneasiness in official circles. This is a development which socialists consider of the greatest importance, for what is desperately needed in Czechoslovakia now is a group of socialist propagandists who can explain that political democracy is not enough, that the working class will only be free when there is common ownership and democratic control over the means of production. For this purpose the Communist Party is useless; it can no more be converted into a socialist workers' party than could the Conservative or Labour parties in Britain. In Czechoslovakia the Communist Party is the organ of the ruling class. Its programme is geared to the interests of state capitalism and inevitably this brings it into conflict with the workers.

This is what the majority of Czech workers have to learn about Dubcek and his party. At the moment his image is one of the humane and good-natured ruler, intent on building a just society in Czechoslovakia. But the problems which harried the working class in Novotny’s days are not going to be eliminated by the new leadership. Superficially the techniques of ruling might be different, but the aim of any capitalist government is always the same—to increase the exploitation of the working class. Novotny realised that the Czechoslovakian economy was in a bad way and sought to use traditional, Stalinist methods to extract more work from the labour force. Dubcek is being more successful with his more subtle approach. Inspired by the call for ‘national unity', employees at the engineering plant of Komorany have decided to create a ‘Fund for the Republic' and to work an extra day without pay in an effort to revive the economy. This move has been taken up elsewhere and at other plants workers have volunteered to give up 1 per cent of their monthly salaries. Already miners in Lezaky (Bohemia) have donated 1,950,000 crowns to the Fund.

The case against men like Alexander Dubcek and Josef Smrkovsky is the argument which socialists apply lo all reformists. However radical the reforms which the new leadership sponsors, they will never allow anything approaching common ownership of the mines, factories and other means of producing wealth. The initiative for this social revolution will have to come from the working class. No socialist, then, could think of supporting Dubcek. Socialists do not take sides in struggles between sections of the ruling class. Socialists in Czechoslovakia will have to form their own party, hostile to “all sections of the master class” and based on principles similar to those of the Bund Demokratischer Sozialisten across the border in Austria.

John Crump

State capitalism in the Russian Empire (1984)

From the Winter 1984 issue of the World Socialist 

Probably the greatest obstacle to the acceptance of socialist ideas in the present century has been the belief on the part of millions of workers that socialism - or communism - has been established. Quite understandably, workers look at the tyrannies of Eastern Europe, China, Albania and the other self-proclaimed "socialist countries" and reject what they see. The media in the West are quite happy to accept the myth that these police states are "socialist". Since the 1920s the Communist Parties of the world have been spreading the lie that socialism exists; for example, the Communist Party of Great Britain's official policy document, The British Road to Socialism, asserts that

Today socialism is a reality for all to see. Countries with a population of hundreds of millions are socialist states. (October 1968, p.17) 

The constitutions of these countries repeat the lie: article I of the Polish constitution declares that 

The Polish People's Republic is a socialist state in which power belongs to the working people . . . . 

The first article of the most recent constitution of the USSR (established in 1977) states that 

The USSR is a socialist state of the whole people, expressing the will and interests of the workers, peasants and intelligentsia . . .

It is the contention of the World Socialist Movement that these countries are not socialist or communist and must be exposed for what they are: capitalist state dictatorships. It is not our view that the countries of the Russian Empire used to be socialist, but ceased being so on a certain date. (We leave such crackpot theories to the Trotskyists and other assorted confusion-mongers who wish to advocate the Bolshevik recipe while spitting out the Stalinist cake). The Russian Empire - by which term we include the seven members of the Council for Mutual Economic Assurance (Comecon) - is a group of countries which exhibit the features of capitalism. 

As scientific socialists, we shall explain what we see as the two main defining characteristics of capitalism and will then proceed to demonstrate that these exist within the Russian Empire. Firstly, capitalism is a system in which wealth takes the form of commodities. i.e. objects produced for sale on the market. Commodity production is not unique to capitalism, but the commodity nature of labour power is. So, capitalism is defined by the fact that the mental and physical energies of most people have to be sold on the market for a price called a wage or a salary. Where there is wage labour there is capitalism. Secondly, capitalism is defined by the law of value. Value is a social relationship which exists in property society where commodities are exchanged. Where there are no commodities, because production and distribution have advanced beyond the stage of buying and selling relationships, there will be no need for the concept of value or for prices and money. As Marx pointed out, "Value is the expression of the specifically characteristic nature of the capitalist process of production" (quoted in T. Cliff, Russia A Marxist Analysis, p.148). 

Most early socialists, including Marx and Engels, accepted the logical supposition that the abolition of capitalism would necessitate the ending of commodity production, wage labour and the law of value, including prices and profits. In short, they were under no illusion that socialism - which is to be the antithesis of capitalism - could exhibit the social features of the capitalist system. For example, Engels pointed out that "With the seizing of the means of production by society, production of commodities is done away with. .," (Socialism: Utopian and Scientific). Marx, replying to a German writer called Wagner who thought that the law of value would exist in socialism, rejected explicitly "the presupposition that the theory of value, developed for the explanation of capitalist society, has validity for socialism". This point is explained in greater detail elsewhere in this issue (see pages 34-42). 

THE BOLSHEVIK DREAMERS 

It is often imagined that the Bolshevik revolution of November 1917 (October according to the old Russian calendar in force at the time) was the most significant event in Russia that year. In fact, this is far from the case. In March (February) 1917 a far more significant revolution took place. This was not led by any party or faction, but resulted from the spontaneous indignation of Russian workers and peasants who were suffering huge losses in the imperialist war, were starving in the towns and deprived of land in the vast peasant areas. The workers of Petrograd and Moscow set up soviets (councils) without any help from the Bolsheviks who later claimed credit for these bodies - in fact, Lenin was living in exile in Switzerland when the revolution broke out and did not return to Russia until April. The workers and peasants of 1917 were not interested in ideas about socialism - their demands were for peace, land and bread. When Lenin turned up in April 1917 he told the Bolshevik party that they should turn the revolution into a socialist revolution - in a country which had only developed capitalism in a few cities and in which three million industrial workers were overshadowed by over a hundred million peasants. Listening to Lenin's unpractical scheme, Bogdanov - a fellow Bolshevik - described such ideas as "the delirium of a madman". Bogdanov had a point. The Bolsheviks won power mainly by offering everything to everyone, even though many of the promises conflicted. Using the anger of the workers and peasants against the provisional government which was set up in March and insisted in pursuing the unpopular war, the Bolsheviks seized power. Having obtained power, the Bolsheviks were forced to act like puppets, dancing to the tune of the existing historical conditions. In short, they were forced to develop capitalism. But, being a party which was led by a number of dogmatic intellectuals, the Bolsheviks maintained the myth that they were creating genuine socialism. For example, in 1919 Bukharin and Preobrazhensky wrote that

Communist society will know nothing of money . . . Thus, from the very outset of the socialist revolution money begins to lose its significance . . . By degrees a moneyless system of accounting will come to prevail. (The ABC of Communism). 

In 1920 Zinoviev declared boldly: "We are moving towards the complete abolition of money" (quoted in E.H. Carr, The Bolshevik Revolution, Volume 2, Penguin, p.263). This was pure utopian fantasy. 

Lenin and his fellow Bolshevik leaders in Petrograd, who tended to be less taken in by their own rhetoric than were their Moscow comrades, did not take long to realise that their job was to develop state capitalism. Leninists often gasp with horror when it is suggested that Lenin ever had such intentions - they should read the man himself: 

. . . state capitalism would be a step forward . . . if in approximately six months' time state capitalism became established in our Republic, this would be a great success . . . ('Left-Wing' Childishness and the Petty- Bourgeois Spirit, May 1918). 

By March 1919 the Bolshevik party congress resolved that "in the period of transition from capitalism to communism the abolition of money is an impossibility". The so-called period of transition, which the Bolsheviks called socialism, was a period of state capitalism - a point which Lenin had explicitly made even before the Bolsheviks seized power: 

Socialism is merely state-capitalist monopoly which is made to serve the interests of the whole people . . . (The Impending Catastrophe and How to Combat it, September 1917). 

So, when the Russian Empire describes itself as socialist it does so in the logically perverse Leninist sense of meaning that it is state capitalist. 

In the early days of state capitalism the Bolsheviks claimed that the basic features of their society were different from those which define capitalism in the Marxist definition. By the time of Stalin this had all changed, and in his Economic Problems of Socialism in the USSR, written in 1952, Stalin admitted that commodity production and the law of value existed in Russia: 

 . . . our commodity production radically differs from commodity production under capitalism . . . It is sometimes asked whether the law of value exists and operates in our country, under the socialist system. Yes, it does exist and does operate. 

So, Stalin admitted that he was presiding over a system of buying and selling, wage labour, value and price- all of the features which Marx attributed to capitalism - but kept up the illusion that this was socialism. 

NO STATE IN A SOCIALIST SOCIETY 

According to the Communist Parties the Russian Empire is socialist, despite its capitalist characteristics, because there is a workers' state. According to them, the state in Russia is controlled by the working class. Logically, this must mean that the workers operate a police state to exploit themselves. Other Leninists, who think that Trotsky's analysis was correct, say that Russia is a "degenerate workers' state" (whatever that is), while others disagree vehemently, declaring that it is a "deformed workers' state". Lengthy theoretical arguments between various brands of Trotskyists' typewriters have gone on for years in this heated and utterly silly debate. The simple fact is that the existence of socialism - a classless society - can have no need of a state machine - an instrument for the coercion of one social class by another. Socialism entails the abolition of the state machine. Leninists answer this by saying that the state in socialist society is "withering away". In fact, the coercive state under so-called socialism has grown more powerful, not less. 

In the state capitalist countries the function of the state is to act as the functionary of capital in the exploitation of wage labour. The bureaucratic elite who run the state live in comfort and privilege as a result of the exploitation of the working class. Of course, just as the state owns some parts of the means of wealth production in the private capitalist countries, so there is some degree of private capital ownership under state capitalism: 80 per cent of Polish land is owned by individuals, some of whom are very rich, and in Russia there are several millionaires who enjoy lifestyles substantially different from the workers simply because they are living off surplus value. In general, the ruling class of the Russian Empire have less legally established rights of power than their Western counterparts. But the essential point is not to point to individuals and say, Look, there is the capitalist class, but to be able to point to the exploitative social force of capital, which in the Russian Empire is represented by the state machine. 

COMECON AS A PART OF WORLD CAPITALISM 

The socialist analysis of capitalism is not based upon the localised investigation of individual nations: under capitalism all nations are involved in, and dictated to by, the world market. It is often claimed the Comecon countries are removed from the capitalist world market. This is not so. In October 1976 the London Times published a supplement headed as follows: " ANGLO-SOVIET TRADE: A SPECIAL REPORT TO MARK THE 60th ANNIVERSARY OF THE BRITISH- SOVIET CHAMBER OF COMMERCE". One does not have to be a mathematical wizard or a searching historian to realise that sixty years before 1976 was 1916, ie one year before the so-called socialist revolution in Russia. In short, the revolution did not interrupt the commercial links between Russia and its capitalist neighbours. 

From the middle of the nineteenth century onwards Tsarist Russia attempted to develop capitalism in Russia by trading with the more advanced countries of the West. When the Bolsheviks took power they had no option but to continue that policy if they were to successfully build up state capitalism. In 1918 Radek reported to Sovnarkom, the council for national economy, that: 

For Russia . . . it is an indispensable condition of restoration of her national economy to establish economic relations with the central powers as well as to maintain and broaden relations with the Entente countries. (quoted in Carr, p.135) 

So Russia set about trading within the world capitalist market. Krasin, who was one of the few Bolsheviks to know much about business, was appointed as President of the Council for Foreign Trade. Such commerce has taken three main forms: 

1 .Counter purchase The earliest form of trade between Russia and the West took the form of barter agreements: products of equivalent values would literally be swapped. In modern times barter has developed into counter- purchase agreements whereby Western firms export vitally needed capital to the Comecon states, but, instead of paying for them, the Comecon countries send back cheaply-produced Comecon commodities to the West. For example, Fiat has exported heavy machinery to the Comecon states and has accepted in return Comecon - made car components. These components allow Fiat to produce cars at a lower price than would be the case if they were produced by the relatively more expensive West European labour power. 

2. Leasing By leasing capital equipment to the Comecon countries the Western capitalists can receive their share of Comecon surplus value in rent on machinery , while leaving open the option of removing the capital if economic or political conditions so dictate. Companies like ITT and Rank-Xerox receive very lucrative rents on technology rented to the Russian Empire. The political strategists also like the arrangement as it allows the West to place pressure on Comecon: You fit in with our market arrangemets or we'll take back our capital. For example, US companies decided in the late 1970s that they would only lease container ships to the Comecon countries if they agreed to join the World Shipping Conference, which is a cartel that regulates world shipping trade. 

3. Co-production Western investment in Comecon industry does not end with counter-purchase and leasing agreements. It is now possible for Western investors to buy shares in Comecon enterprises. In other words, capitalists can, without legal restriction, invest in the exploitation of East European wage slaves. According to the most recent statistics - published by Comecon in 1982 - there are currently over 6,000 co-production projects, ie jointly owned capital enterprises, with one share owned by the state and the other by Western investors. In reality, we can assume that there are many more than 6,000 deals of this kind in existence, but both sides have a political interest in hiding them: the state capitalist governments do not want it to be known how much of their industry is co-owned by the multinational companies which the Western Communist Parties claim to be absent from their beloved "socialist states", and the Western capitalists do not want it to be known that they are invested heavily in their professed ideological enemies. In fact, there are now over 100 US multinationals with trading offices in Moscow. (Deals with the Russian Empire used to be carried out through Austrian and Swiss intermediaries, but the traders have these days thrown out the pretence.) 

Investment in the Russian Empire is very profitable. Since 1976 Poland and Romania have allowed Western capitalists to buy up to 100 per cent shares in their enterprises. There is no shortage of capital for investment in Comecon capital. Why? Cheap labour power-the best reason in the world for a parasite to invest. 

THE EMPIRE OF REGIMENTED LABOUR 

Unlike the unionised workforces in the advanced West (who have the cheek to strike for higher wages and better conditions from time to time) the workforce which investors are exploiting in the Russian Empire is paid little, non-unionised, and disciplined stringently. The Russian Empire is an exploiters' dream - the sort of set-up in which the charlatan, freedom-loving bosses of the West can make money out of the acquiescent wage slavery of an exploited class who are told that they are living in a non-exploitative, classless society. 

Trotskyists like to claim that ruthless exploitation was not intended by Lenin and the early Bolsheviks, but was an invention of nasty Joe Stalin. They should study their history: in fact, as early as 1918 Lenin was making it clear that workers would have to be regimented if state capitalism was to be developed: 

A condition of economic revival is an improvement in the discipline of the workers, in knowing how to work, in speed and intensity of work, in its efficient organisation . . . (Current Task of the Soviet Power, March-April 1918) 

In 1919 Tomsky, the Commissar for Labour, told the All-Russian Trade Union Congress that at that time " . . . no strikes can take place in Soviet Russia. Let us put the dot on this i." (quoted in Carr, p.204) So, Russian trade unions were taken over by the Bolshevik state and used as instruments of labour regimentation. Still today the unions of Eastern Europe are dominated entirely by the state bosses. How many Western workers would be prepared to join a union which is run by the employer? They would be mad if they were - yet that is what the Communist Parties of the West are content with for the workers of the Russian Empire. 

1983 witnessed the initiation of a series of newly repressive labour laws in Russia. These were welcomed by the All-Russian Trade Union Congress, according to a report entitled "STEPS TAKEN TO TIGHTEN LABOUR DISCIPLINE" published in Pravda on 7 August 1983: 

Loafers, truants and drifters frequently feel free to do as they wish, and in terms of wages . . . they are on a par with conscientious employees. In combating phenomena of this sort, poor use is being made of disciplinary sanctions. In future, while making full use of material and moral incentives for selfless labour, it is necessary to resolutely eradicate instances of conciliatory attitudes towards violators of production discipline . . . Violations of labour discipline should be regarded as a deviation from the fulfilment to work conscientiously, which is established by the USSR constitution. 

And that is only what the unions think! The new labour laws are very severe, including penalties of sending workers for up to three months to work in a different area of the country if they are absent from work without leave and the loss of a week's holiday for "loafing or intoxication". We must assume that trade unionists in the Western Communist Parties are fighting to achieve such "socialist" labour conditions? 

With workers as well regimented as that, one can appreciate the words of the American capitalist, Cyrus Eaton, in 1974 when his tyre company entered into a joint-ownership agreement with Comecon: 

This (deal) enabled the East European countries to earn badly needed hard currency and, because of lower labour costs, the venture can sell tyres much cheaper than Western companies can (quoted in C. Levinson, Vodka-Cola) 

Indeed, some Western firms are now objecting to the uncompetitive Comecon - made commodities coming on to the Western market and reducing the sales of the unionised - made products. Examples are Czech and Polish shoes, the Czech-made Fiat 125 and Czech sugar-beet harvesters. Ironically, in Britain the Communist Party, which has a policy of opposing import controls, at the same time is running a campaign to increase imports from the Russian Empire.

BANKING LINKS 

Space does not allow us to investigate the important links between the loans made to the Comecon countries by Western banks and the policies of those countries. At the moment Romania is a member of the International Monetary Fund and Poland has recently applied to join. Most of the major Western banks have offices in the main East European capital cities. Russia applied to the Western banks recently for a £600 million loan; if they receive it, then Russian workers will have to work harder than ever in order to produce the surplus value to pay the interest rates. 

In 1980 Poland owed 27 billion dollars to the Western banks: 500 million dollars interest had to be paid in that year alone. In order to pay the banks food prices were increased. For the first time in the history of state capitalism millions of workers resisted the state's cut into their already impoverished real wages. Solidarity came into being and, despite our criticisms of the religious and nationalist illusions of many of its members, socialists greeted this great emergence of resistance with sympathy and admiration. In the West there was no shortage of rhetorical support for Solidarity from politicians who were busy bashing their unions at home. But the Western banks, on whose behalf the Polish state was trying to exploit its workers, were not concerned about so-called free trade unions: they wanted their loot, even if that meant dealing with the resistance of the Polish workers by force. As one official of a London bank put it in the London Sunday Times of 13 December: 

Speaking only as a banker, it would be a good thing if Russia invaded Poland, because then she would be obliged to honour Poland's debts. 

That day martial law was introduced in Poland. The brute force of the state (using Polish troops and police) did the job which the bankers had asked to be done. 

STATE CAPITALISM VERSUS SOCIALISM 

Nationalisation or state-run capital is simply another form of capitalism. There are plenty of ways to run exploitation and calling it socialism will only fool those who read the labels without examining the contents of the bottles. Socialism will be a classless, wageless, moneyless, stateless world society. It will in no way resemble the hideous dictatorship over the proletariat of the Leninist police states. As the Solidarity newspaper, Jednosc stated in one of its articles: 

State ownership and social ownership of the means of production are two completely different concepts which should never be confused. The means of production may be owned by the state, but this does not mean that they are thereby the social property of the working class. 

And until the property of the world does belong to the workers - or rather, until we have abolished both property and class - those who speak of the existence of socialism in the world today are either fools, liars or both. 

Steve Coleman (Britain)