A great deal of interest has been aroused by the recent appearance in a Soviet publication of an article dealing with fundamental elements of the capitalist and Socialist economic systems. The article, "Some Questions in the Teaching of Political Economy," which appeared in the periodical Under the Banner of Marxism,[i] has been taken to be an authoritative pronouncement of the most far-reaching importance, representing a radically-changed appraisal by the Soviet Government of the nature of capitalism and Socialism, fraught with bright prospects for the future relations between the U.S.S.R. and the capitalist countries. Is this interpretation correct and are the happy expectations which are based upon it justified?

There can be little question of the importance of the article, even though there is considerable misunderstanding in this country about the "official" character of anything which appears in Soviet publications. To judge from some comment, one would almost suppose that Stalin or at least his personal representative censors everything which is published in the Soviet Union. It is perfectly true that no one in Russia would publish anything which he thought would be viewed unfavorably by Stalin, since the consequences would probably be serious indeed. This fact does most importantly condition the nature of everything which is printed. Though a Soviet writer knows that Stalin or anyone close to Stalin will read only a small proportion of what appears in even the more important books, periodicals and newspapers, he will not disregard the possibility that his product will receive such attention. Nevertheless, very little which is published in Russia can automatically be considered an authoritative pronouncement, even though practically every author in the U.S.S.R. writes with the earnest intention of avoiding conflict with any state or party official more powerful than himself.

It is perfectly possible that the position taken by the writers of the article in question might later be sharply repudiated by Stalin without anyone feeling that such action meant that Stalin had changed his mind. It is certain, however, that the article would never have been written if the authors had any premonition that their position would be repudiated by Stalin. It has happened, times without number, that articles have been published and policies advocated, which have turned out to be contrary to the party line as later established by Stalin, or by some other party official if the matter were not considered important enough to warrant Stalin's attention. If a heresy is considered sufficiently dangerous, the writer may be required to confess his errors publicly, as were Bukharin, Tomsky and Rykov among many others. The public confession of error has been so often correlated with eventual liquidation as to render it an experience not lightly to be risked.

The occasion for the publication of the article in Under the Banner of Marxism was the resumption of the teaching of political economy in the higher schools after a considerable period of suspension. Defects in the textbooks used earlier were characterized at a meeting of the Central Committee of the Communist Party as amounting to "wholesale transformation of the subject of political economy from a general historical science devoted to the study of the living tissue of society into a collection of antiscientific abstractions and lifeless schemes." Due to these errors, "students lost the sense of the progressiveness of the development of human society." The present writers conceive their responsibility to be that of outlining the proper principles and methods for teaching political economy and of preparing textbooks on the subject, now that instruction is to be resumed.

Far from suggesting a repudiation of Marxism, the writers show an almost agonized concern that their principles and method should be considered rigorously Marxian in the most orthodox sense. At the same time, they reflect a sense of confidence in the efficacy of the present Soviet economic system and a consciousness of its permanency. Consequently they are able to say that in spite of the fact that the Soviet economic system is founded squarely upon Marxist principles, Marx could not be expected to have been able to draw up a blueprint of the exact structure and method of functioning of a present-day Socialist economic system. The errors and mistakes in the teaching of political economy in the past thus were due not to any lack of validity in the Marxian doctrines but to the attempt to interpret these doctrines too rigidly and too abstractly. These mistakes could have been avoided if the development of society had been considered from an adequately historical point of view.

The thesis of the article is that the present Soviet economic system is quite consistent with Marxism and that any insinuations to the contrary represent the stupid failure of left wing Communists to understand Marx and Lenin, the present Soviet economic system, and the nature of the laws of economic progress. A fundamental error of these critics was the idealization of the primitive communism which existed at the dawn of history. The development from primitive society into the class society was erroneously presented not as progress but in terms of mankind's banishment from Paradise through original sin. Thus the goal of the Soviet economic system was represented as a communism in which the way of life would be similar to that of primitive times. Actually, mankind lived under the most miserable conditions at this earliest stage of human development. Communal organization was a necessity if men were to obtain the barest means of subsistence. There was no surplus product during this period, either for the use of exploiting classes or as a source of accumulation for the improvement of the means of production, for cultural advancement or for any other purpose.

It was an inexcusable error, the authors of the article maintain, to fail to realize that great progress took place when mankind evolved through the stages of slavery and of feudalism to capitalism. Under capitalism the great improvements in the means of production which had been made possible by the development of a surplus beyond that necessary for immediate subsistence permitted the development of a still larger surplus product. It is true that under the capitalist system this surplus product became, in the main, the property of the parasitic bourgeoisie and was accompanied by economic crises with their attendant miseries. Under Soviet Socialism no part of this surplus product has to be turned over to parasitic owners of private property nor does it lead to periodic crises of overproduction. It is used as the source of improvement of capital equipment, for education and cultural purposes, and to provide the means for national defense.

There is a difference, too, between capitalism in different countries and in different stages, the writers allege. The monopolistic, imperialistic capitalism of Fascism and Hitlerism is anathema. The capitalism of the United States and Great Britain is at least accompanied by democratic and parliamentary institutions, including labor unions. Interestingly enough, the writers claim that the Soviet system is even more democratic and that it affords the greatest opportunities for "full blossoming of the individual."

The writers refute as erroneous the doctrine that economic laws do not exist under Socialism. There are economic laws under Socialism just as under capitalism, they say, although they are not the same laws. The important difference is that under capitalism economic laws operate outside social control to produce catastrophic results. Under Socialism economic laws are used for social ends. Thus there is a law of value under Socialism. There are, they explain, two kinds of prices in Soviet Russia: one governs in the fully socialized area of the economy and another in the "free or private markets" in which are sold the products produced by peasants in their individual gardens or those produced by individual craftsmen. The first type of price is consistent with the laws of value of a Socialist economy. It reflects the elements of cost of production, as established by the prices set by the state on labor of various kinds and qualities and on capital equipment. Price in the free or private market reflects only the current inability of the economy to produce sufficient goods to satisfy the demand at prices which reflect costs in the socialized economy.

The Soviet Socialist economic system has, however, emancipated itself from the capitalist law of average profit. Under the Soviet system, the writers continue, it is possible to undertake industrial production even when the cost in the initial stages is so high that the average rate of profit cannot be earned. This does not in the least mean that cost of production is ignored; the writers insist on the desirability of precise cost accounting. It does mean, for example, that the steel industry of the Urals could be put into operation even though the cost of bringing together iron ore and coal from distant points seemed prohibitive. As methods of production were improved and more favorably located supplies of coal were discovered and developed, the cost could be lowered.

The value of labor, and hence the wages which it earns, is not measured by the amount of time which workers expend but by the value which the labor contributes to the product. This, of course, justifies almost any conceivable differences in rates of compensation between citizens of the Soviet state. Thus it is an important device for repudiating the Communist doctrine of distribution of income, "From each according to his ability, to each according to his need." The correct principle of distribution is now declared to be, "From each according to his ability, to each according to his work." [ii]

A strong tone of Soviet nationalism runs through the entire article. There are repeated references to the Soviet fatherland. Again and again the authors point proudly to the success of the Soviet economic system in building an industrialized Russia which could so successfully provide for national defense. Prospective teachers of political economy are admonished that the teaching of economics should not only further the building up of Socialism but should also promote "love of our Soviet fatherland and hatred of its enemies."


It is remarkable how successfully the authors harmonize the tenets of the present Soviet economic system with the principles of Marx and Lenin. It is true that this requires skill and care in selecting appropriate passages from Marx and Lenin. But Stalin long ago chose with great shrewdness the ideological ground upon which he intended to defend the kind of economic society which he rules. Indeed, it requires no great tour de force to find in Lenin's "State and Revolution" alone the necessary sources for such a defense. In the main the authors of the article had only to follow the line already marked out by Stalin.

In order to appreciate this it is necessary to recall the essential steps which have been taken since the October Revolution in molding the Soviet state to its present form. Stalin has claimed for many years that the régime which he has established constitutes the first stage of Communism, and should be called Socialism, in contrast with the second and ultimate stage, which is Communism proper. In this final stage the state would no longer exist, and distribution would, indeed, be "from each according to his ability, to each according to his need." Until such a stage is reached, however, the state must continue to exist and distribution must be according to the value of services performed.

This concept is definitely advanced by Lenin in his "State and Revolution," written in 1917, although there are numerous ambiguities and even contradictions in his exposition of the thesis. In an embryonic form it can even be found in Marx. The concept seems to have developed in the course of a conflict with the ideas of Proudhon concerning the nature of the revolution which was to overthrow capitalism. Marx pointed out that it was absolutely necessary for the workers to organize a "dictatorship of the proletariat" if they were to hold the power which they had seized. To do so they must temporarily carry on some of the forms of the state and society which had been overthrown. It seems certain that both Marx and Lenin believed that this period would be very brief and that as soon as the conquest of power had been complete the state would "wither away" and the workers themselves would administer industry. Indeed, Lenin is most categoric about this withering away of the state. He changed his mind, however, as he perceived the difficulties of destroying capitalism, of maintaining the dictatorship of the proletariat, and of founding a Socialist society.

Lenin in 1921 inaugurated the New Economic Policy, or "Nep," which he characterized as "a step backward, the better to leap forward," and which did reintroduce some of the elements of capitalism. This period was accepted by Communists of the left with the greatest reluctance, and it seriously complicated the ideological timetable. There was no way in which the period of "Nep" could be integrated into the stages of Communism which Marx or Lenin had foreseen; yet during this period the mold which was largely to determine the shape of things to come was taking form.

In 1929, in the second year of the first Five Year Plan, Stalin surprised his Trotskyist opponents, who were accusing him of preparing a "reaction of Thermidor," by inaugurating his first and only sharp turn to the left. Almost all of the capitalist elements of "Nep" were liquidated, as were the Nepmen and kulaks themselves. A gigantic stride was also taken toward the collectivization of agriculture, which was later to become complete. A wave of terror was instituted against the "former people" who had been associated in any way with the bourgeois Tsarist state. The personal property of kulaks, Nepmen and "former people" was forcibly expropriated.

This sharp and powerful turn to the left was accompanied by an attack on the leaders of the right wing of the party, such as Bukharin and Rykov. Stalin nevertheless took steps to halt the leftward trend when it had gone as far as he considered advisable. He stopped dead the movement toward the renewed equalization of wages which had swept the country in 1929 and 1930. He slowed down, but took care not to halt, the rate at which agriculture was being collectivized, and he redressed some of the worst abuses of power which were being carried out at the expense of the peasants. Yet a couple of years later he was to hold to his policy of industrialization, and of collectivization of agriculture, even though it meant death by starvation for countless peasants.

After this one leftward turn in the early thirties Stalin inclined in the direction of the right and toward a policy of Soviet nationalism. He had earlier repudiated the Trotskyist doctrine of "permanent revolution" and had liquidated the abortive effort to spread the world revolution to China. He was now in the course of proving what he had so long contended, that Socialism could be established in one country, even if no international revolution took place. Gradually the position of the new professional and governing classes was improved. The limitation on the amount of wages or salary which a member of the party could accept was dropped. Greater differentials in salaries and wages were granted. The "progressive method" of education, found wanting in the development of the technicians required by a greatly expanded industry, was abandoned and the old formal system of education was reintroduced.

The glorification of the Spartan way of life for the governing class began to disappear.[iii] Military titles and the trappings and other accompaniments of formal military discipline were revived in the Red Army. The Order of Suvorov was added to those of Lenin and of the Red Banner. Russian historical figures were no longer ridiculed and despised; such "heroes" as Alexander Nevsky and Peter the Great were dramatized and glorified in film and literature. The teaching of history was altered and new textbooks were written in accordance with the new trend. The Society of Proletarian Authors was dissolved and the old operas, ballets and plays, never wholly displaced, were restored to favor.

It must never be forgotten, however, that in all this there was little evidence of a renewed "retreat to capitalism." A new type of state had evolved which was almost wholly collectivist, absolutist and authoritarian. It shows signs of permanency and absolutely no sign of "withering away." In this new society there is no private property of consequence in the means of production. Instead, substantially all means of production are in the hands of the state. The Soviet state has become the most powerful and all-pervading form of political and economic organization of human society which has ever existed. Yet Stalin has been able to root it into Marxian-Leninist doctrine by using the exceedingly convenient concept of the two successive stages of Communism. Stalin and his followers vigorously deny that this new political-economic state form is state capitalism. Whether it is, or whether it is indeed a form of Socialism, is perhaps a matter of semantics. It is certainly fundamentally different from the political and economic system which exists under the quasi-laissez-faire capitalism of the United States.

The authors of the article in Under the Banner of Marxism make several references to the second stage of Communism in which the state withers away and distribution is according to need. There can be little doubt, however, that this second stage of Communism has come to play somewhat the same rôle for Soviet writers as did the second coming of Christ for the later Christian theologians. The evidence seems very strong that Stalin, on the basis of experience, has decided that the first stage of Communism, which he styles Socialism, is to be the permanent form of Russian state and society.

Plainly the authors of the article are fully aware that this is so. There is no reference to the withering away of the state under present circumstances. There is a reference to the incorrectness of the charge of bourgeois critics that the state intervenes in the Soviet economy even more than it does in a capitalistic economy. The authors say that this represents a misunderstanding of the rôle of the state under the two different systems. In the capitalistic economy the state intervenes in an effort to overcome the contradictions of capitalism, or in the interests of one class against another. In the Soviet economy the state is not "intervening;" the Soviet state is itself the instrument of society and operates without contradictions in the interest of the whole of society. The authors have a somewhat obscurantist allusion to the direction of the economy by the Communist Party and by the "builders of Socialism," and there are a number of references to the brilliant leadership of Stalin. They do not otherwise attempt to explain the glaring discrepancy between the original Marxian-Leninist concept of the first stage of Communism, which definitely presupposed a much reduced rôle for the state, and the present Soviet system of a dictatorship state. There is no reference in the article to world revolution and the references to capitalism are unusually objective in their nature. But world revolution in the Trotskyist sense has not been an objective of Soviet foreign policy for a long time.

It has already been pointed out that the article does not represent an authoritative statement marking out a new party line, even though the authors would not have written it if they had not been quite sure that it was in accordance with the party line. Actually its significance lies partially in the fact that there is relatively little new in it. It definitely accords with actual developments in Soviet principles, policies and practices over the years. It is important precisely because these principles, policies and practices have now been so fully accepted in the U.S.S.R. that a group of writers feels safe in spelling them out for the use of teachers of political economy and writers of elementary textbooks on economics. There can consequently be no possibility that their article is a statement of policy issued for its effect upon officials or public opinion in foreign countries.


What is the significance of the evolution of the present form of the Soviet state for the rest of the world? Perhaps of most importance is the answer it provides as to the power of survival of a modern, collectivist, industrial state both in time of peace and under the utmost strain of war. It is easy to forget that 20 years ago and less it was confidently maintained and very widely believed that Socialism was practically an economic impossibility. We should also remember that it was usually taken for granted that Socialism meant an increase in democracy and a decrease in the authority of man over man. The predestined failure of a system of Socialism was often assumed to arise out of the inability of such a society to induce appropriate economic action from the populace. Consequently one would be quite wrong to say that the development of the Soviet state has proved that democratic Socialism would "work." But it has clearly been demonstrated that a collectivist state can exist and function, even under the most difficult circumstances, when it is organized on the basis of command and obedience.

Communists, whether Trotskyists or Stalinists, used to assume that the successful establishment of Socialism in Russia would inevitably be accompanied by the spread of the proletarian revolution in all lands. However, the Soviet régime has long ceased simply to embody a segment of the revolutionary world proletariat which had succeeded in capturing the great Russian semicolonial fortress of capitalism and was intent on pursuing the proletariat's main purpose—the extension of that conquest to the rest of the capitalist world. The revolution which, beginning in Russia, was supposed to evolve a classless, stateless world society, has become a single state, Russia. That state is not by any means identical in characteristics with the bourgeois, democratic states of the West; but it nonetheless shares with them many of the essentials and even the trappings of sovereign nationalism.

The Soviet state does not, and indeed could not, deny its pedigree. Quite regardless of the foreign policy it follows, the Communist Parties of all lands will continue to recognize its leadership, invoke its prestige and seek its aid. The brilliant success of the Russian armies against the Wehrmacht guarantees Soviet power an important rôle in the postwar world. The Communist Parties throughout the world which were faithful to the U.S.S.R. in the period of great tribulation cannot be expected to forego invoking the help of Soviet power in the time of triumph. The Soviet state, similarly, cannot be expected to disavow all kinship and sympathy with Communist Parties in other countries, nor fail to use these parties as an instrument of Soviet Russian foreign policy where opportunity offers.

The relationship between the Soviet state and the Communist Parties of other countries may be expected to be close when there is no conflict between the interests of Soviet Russia as a national state and the interests of any one of the Communist Parties. The Soviet state may even find it more natural to maintain friendly relations with Communist governments than with capitalist governments. This may not always be true, however. In the defeated Axis countries particularly, the Soviet state might conceivably prefer governments from which it would have no compunctions about exacting reparations. Likewise, when internal stability in other countries is to the advantage of Soviet Russia for the sake of trade relations or for some other reason, the interests of Russia as a nation might well override any ideological sympathies. In no case does it appear likely that the interests of Communist Parties in overthrowing capitalist governments would be allowed to take precedence over the national interests of the Soviet state.

The recent decision of the Soviet Government to give preliminary approval to the plan for an international stabilization fund, involving as it does participation in international economic affairs with capitalist countries, great and small, serves to illustrate the fact that the Soviet state has long passed the stage where there is any feeling of embarrassment about such dealings.

The monopoly of foreign trade which is so appropriate to the Soviet system of a collectivized economy and which has served the Soviet state so well is not at all likely to be given up. Indeed, the Soviet trading monopoly is so integral a part of the economic system as to be inseparable from it. Before the war the effort to achieve as high a degree of economic self-sufficiency as possible dominated the foreign trade policy of Soviet Russia. This may be somewhat relaxed if military considerations no longer seem so compelling; but no great results should be expected from such a development.

Theoretically at least, a collectivized economy with a state monopoly of foreign trade has a powerful advantage in carrying on trade negotiations and bargaining with other countries and their nationals. Participation by Soviet Russia in an international agreement to lower tariffs, for example, would of itself be meaningless, since all the purposes of a tariff from the national point of view can be attained much more directly by the simple decision of the state trading monopoly to buy or sell or not to buy or sell. On the other hand, a state with a collectivized economy normally has no motive, as capitalist countries sometimes do, for trying to sell as much as possible and to buy as little as possible. Furthermore, the development of the Communist Party in Russia from the spearhead of a revolutionary movement into the administrative bureaucracy of a state means that in this field also there is almost no prospect of the foreign trade policy of Soviet Russia being dominated by revolutionary purposes. Consequently, a serious potential barrier to trade between Soviet Russia and capitalistic countries has disappeared.

All things considered, it is correct to conclude that Soviet society has evolved into a state form which has resumed the coloration of Russian nationality. Both in the economic field and in the political field the U.S.S.R. can be expected to act toward capitalistic countries primarily as a dynamic national state, even though still strongly conditioned by its collectivist and authoritarian form.

[i] The editors of Pod Znamenem Marxizma (Under the Banner of Marxism) are L. A. Leontiev, M. B. Mitin, P. N. Fedoseiev, V. C. Kruzhkov, L. A. Orbeli, V. P. Potemkin, P. F. Iudin, S. I. Vavilov, M. P. Tolchenov and M. N. Korneiev. The article in question appeared in the issue No. 7-8, 1943, p. 56-78. It is unsigned and seems in the nature of an editorial. Most of the American comment on it has apparently been based upon a very useful summarized translation by Henry F. Mins, Jr., which appeared in the Spring 1944 issue of Science and Society. My thanks are due Dr. W. A. Perlzweig, of the Duke University School of Medicine, who collaborated with me in the article's translation and analysis.

[ii] It is ironic that both the Soviet economic system and capitalism lay claim to the same distributive principle.

[iii] When I revisited the Soviet Union in 1939 no sight impressed me more than an advertisement on a large signboard which I saw in both Kiev and Moscow, done in a style which would have done credit to Esquire, depicting a lady in evening dress drinking from a champagne glass. It was an advertisement of Soviet champagne! Ten years earlier such an advertisement would have been considered an impossible blasphemy.

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  • CALVIN B. HOOVER, Dean of the Graduate School of Duke University; author of "The Economic Life of Soviet Russia," "Germany Enters the Third Reich" and other works
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