The Day After Russia Attacks
What War in Ukraine Would Look Like—and How America Should Respond
THE Soviet Five Year Plan of national development (shortened in practice to a four-and-a-quarter year plan) came to an end December 31, 1932. In retrospect we see that the adoption of this gigantic blue print for the regulation of every branch of social, economic and educational activity was one of the three most important dates in the history of the Russian revolution, the other two being the Bolshevik revolution itself on November 7, 1917, and the acceptance of Lenin's New Economic Policy in March 1921. Variously interpreted as a hope, a menace, a warning, a challenge and a chimera, the Plan has focussed foreign eyes on the Soviet Union. The interest which it has aroused has naturally been enhanced because it has coincided with a world crisis of unprecedented severity.
Although final figures will not be available for several months, it is already possible to strike a rough balance-sheet of success and failure. Plainly the Plan can neither be hailed as an unqualified triumph nor dismissed as a dismal and complete defeat. Under the pressure of circumstances, some external and some internal, the Plan has developed along lines very different from those which its makers foresaw. It was originally conceived as a program that would simultaneously push ahead the industrial and the agricultural development of the country; moreover, it was to increase greatly industrial output and at the same time raise the general standard of living. In practice, agriculture has been sacrificed to industry; while the unmistakably rapid largescale industrial construction which has been achieved has been at the expense of an equally unmistakable deterioration in the general living standard. The Five Year Plan has been conspicuously successful in dotting the country with big new factories and power plants, in drawing masses of the peasants into the new collective farms, in averting the widespread unemployment and the paralysis of new constructive enterprise that have been the scourge of America and Western Europe during the last three years. It has proved conspicuously unsuccessful in giving the average Soviet citizen satisfactory food and housing or in supplying him with manufactured goods. If Russia escapes the depressing spectacle of mass unemployment, it has been confronted with a serious problem in the shape of great numbers of workers and peasants wandering about the country in search not of jobs, which are plentiful, but of adequate food and housing, which are not.[i] It has proved easier to build huge new plants than to operate them efficiently; to bring peasants (with the warning of the "liquidation" of the kulaks before their eyes) into collective farms than to obtain from those farms the productivity of labor that would relieve the chronically strained food situation.
Passing from summary impressions to concrete details, one finds that in some branches of industry, notably oil, tractor and machine-building, the estimates of the original Plan have been surpassed. On the other hand, the basic iron, steel and coal industries are so far behind their schedules that they cannot conceivably produce in 1932 the amounts demanded for the last year of the Plan, namely 10,000,000 tons of iron, 10,000,000 tons of steel and 75,000,000 tons of coal. Soviet official figures for the first ten months of 1932 report an output of 5,100,000 tons of pig iron, 4,900,000 tons of steel and 52,400,000 tons of coal. Some of the consumption industries, notably textiles, have also lagged behind the figures prescribed by the Plan.
Industrial output in the Soviet Union has been increasing by something like 20 percent annually, although preliminary estimates show that in 1932 this rate of growth declined to 13.8 percent. This is a fast rate of quantitative progress, even taking into account the fact that Russia's relatively slight industrial development makes it less striking than it would be in a country with a greater annual volume of production. Making the inevitable discount for low quality (this feature has perhaps been accentuated in recent years because the opening of many new plants has intensified the shortage of trained industrial executives, engineers and skilled workers), one cannot escape the conclusion that Russia has made considerable strides toward its goal of becoming a powerful industrial country. The significance of the progress which has been made in this direction is likely to be more clearly discernible during the next few years, after some of the large enterprises which have now just started or are on the eve of starting are in full operation and when the "growing pains" which beset every large new Soviet factory have been alleviated if not eliminated.
In agriculture the situation at the end of the Five Year Plan is much less satisfactory than it is in industry. When Communist leaders discuss agricultural achievements they are apt to point to such structural changes as the organization of over fifteen million peasant households in 211,000 collective farms, the creation of a considerable number of state farms with a total area of almost thirty million acres, and the establishment of over 2,000 machine-tractor stations, central establishments from which tractors and large machines are sent out to serve the neighboring collective farms.
But state and collective farms and machine-tractor stations are not, or should not be, ends in themselves. Their purpose is to produce food; and from this standpoint Soviet agriculture leaves much to be desired. The acreage under cultivation is now 340,000,000 acres, as against the 355,000,000 acres which the Five Year Plan demanded. The harvest yield in grain this year will in all probability be at least 25,000,000 tons below the figure of 106,000,000 tons which was set for achievement in the last year of the Plan. And this striking discrepancy between a slight underfulfilment as regards planted acreage and a serious underfulfilment as regards crop yield indicates the root of the Soviet agrarian difficulties. Quality has been recklessly sacrificed to quantity. Every year more land has been planted than could be effectively harvested in view of the shortage of animal power and of labor. Every year great quantities of grain, sugar beets and other crops have been left unharvested in the fields.
Such large-scale losses were unknown in the years when the peasants farmed the land on an individual basis; and this fact, combined with the poor care of the fields which is now very noticeable in some parts of the country, suggests that the simultaneous mechanization and collectivization of agriculture is more difficult in practice than in theory. The stimulus of private ownership of land is a tremendously strong one in agricultural pursuits; and so far, despite much experimentation, it cannot be said that a satisfactory substitute has been found. The process euphemistically described as "liquidation of the kulaks as a class," which involved the economic extermination of the more prosperous four or five percent of the peasantry, is also bearing bitter fruits. For the kulaks were as a general rule the best farmers and produced an amount of food out of all proportion to their numerical weight in the population.
Russia's most serious agricultural problem today is in the field of animal husbandry. There has been no appreciable recovery from the stunning blow which the country's flocks and herds received in the winter of 1929-1930, when about a quarter of the cows, a third of the sheep and half of the pigs were destroyed by the peasants, partly as a protest against forcible methods of collectivization, partly because the ruthless requisitions of grain did not leave them enough feed for their beasts. Indeed, the process of slaughtering cattle was resumed, although on a smaller scale, last winter. Agriculture, especially in the Ukraine, seems in danger of falling into a vicious circle, with the diminished number of working cattle causing a lowering of the planted acreage, and this in turn causing further reduction in the number of the cattle.
It is not surprising, in view of the present unsatisfactory state of agriculture, that the promise of the original Five Year Plan to increase per capita consumption of meat in the towns by 27.7 percent, of eggs by 72 percent, of milk products by 55.6 percent, has most emphatically not been realized. A food situation that would have been difficult in any case, as a result of the decline in livestock, has been gravely aggravated by two additional factors: the abnormally rapid growth of the towns, especially those which are sites of big new factories, and the necessity for forcing all available exports, including foodstuffs, in order to obtain the wherewithal to pay for machinery and equipment.
The Five Year Plan has gone definitely awry in the complicated sphere of prices, costs and wage-scales. The original Plan prescribed a steady rise in money wages, to be accompanied by an even greater increase in real wages as a result of a reduction in the cost of living. The process of increasing money wages has gone ahead even faster than the Plan foresaw; and it would be easy to create a misleading impression of a rapidly rising standard of living by merely citing money wage increases without mentioning the highly important fact that the purchasing power of the ruble has been dropping much faster than the wages have been rising. Soviet statistics in recent years have been noticeably reticent on such points as the cost of living and the per capita consumption of food. But there can be no reasonable doubt, in the light of such obvious facts as the increasingly scanty allotments on ration cards, the fantastically high prices which prevail on the open markets, the execrable quality and scant variety of food in almost all the cheaper eating-places, and the complete lack of such simple things as tea and sugar in many agricultural districts, that the great majority of the Soviet population is distinctly worse off, as regards food supply, than it was before the Plan was initiated. Communists have a notorious contempt for miracles, and only a very remarkable miracle could have assured a satisfactory food supply in the towns during a period when the population was increasing and the number of livestock was diminishing.
In the field of currency the Plan has been overfulfilled in rather undesirable fashion. Original estimates set 3,200,000,000 as the number of rubles to be in circulation in the last year of the Plan. Actually the amount of currency now in circulation is in the neighborhood of 7,000,000,000 rubles. Every year the framers of the Soviet budget have optimistically overestimated the amount of money which could be saved through reductions in production costs, and the printing-press has been called in to redress the balance when expected economies did not materialize. This overabundant issue of currency, combined with the shortage of foodstuffs and manufactured goods, has tended to drive prices upward -- most of all, naturally, on the free market, but also in state and coöperative shops. The Plan's reckoning on a lower cost of living has been definitely and completely upset by the course of events. The fact that as a general rule people have far more paper money in their possession than they can exchange for the desired foodstuffs and manufactured goods has given rise to the joking conundrum: "Who are the richest people in the world? The Russians, because they don't know what to do with their money."
As a result of the Soviet Government's acute need for foreign currency a curious system of double currency bookkeeping has grown up in Moscow and in all the larger provincial towns. The best hotels, restaurants and stores accept payment only in foreign currency. Naturally this policy tends to devalue the ruble still further, since the most tempting and attractive wares are withdrawn from ordinary circulation and sold only to the fortunate possessors of foreign currency. Where the same objects are sold both for foreign currency and for rubles there are immense discrepancies in price (taking the ruble at its nominal value of slightly less than two to the dollar), a clear indication that the official valuation of the ruble is very much in excess of its real purchasing power. The difficulty of exchanging rubles for goods of the desired kind and quantity has led to the development of a surreptitious bartering system, which the authorities denounce but are unable to suppress. A factory that manufactures nails, for instance, will sometimes shortcircuit the elaborate state distributive system by trading a few cases of its scarce and highly valued products for an equivalent amount of textiles, macaroni, confectionery or some other product sufficiently usable to be tempting.
Rumors of currency reform are in the air. While it is not altogether clear how this can be brought about under present conditions, it seems evident that piecework methods of payment and differential wage-scales lose much of their stimulating quality when the ruble possesses such uncertain and scanty purchasing power as it does today. Money salaries and wages are of very little consequence in Russia under present conditions. What determines a man's economic standard of living is not the amount of rubles which he may be paid, but the tangible things which are allotted to him: the apartment in which he lives, the store at which he may buy, the dining-room in which he may eat, the type of rest home in which he may pass his vacation.
The Five Year Plan in the first years of its operation possessed a kind of millennial significance for some observers, both in Russia and abroad. It was rather hastily and credulously assumed that as soon as the Plan was completed difficulties and privations would be a thing of the past. The reality has been very different. The Five Year Plan has proved to be simply an introductory period in a new phase of Soviet economic history, a phase which promises to be no less crowded with problems and difficulties than those which preceded it. As it draws to a close and gives way to the second Plan, which will run from the beginning of 1933 until the end of 1937, Soviet statesmen are confronted with three problems of uncommon urgency.
The first problem, and the most urgent, is the restoration of the peasant's will to work, which alone can cure the present abnormal food stringency. The proverbial endurance of the Russian has been a great asset to the Soviet régime during the last years, when an immense investment in national industrial construction was being paid for heavily in hardships and privations. But there is always the danger of an overdraft on this endurance. Moreover, one need not be a thoroughgoing Marxian materialist to recognize the truth of the general proposition that a high standard of living and high labor productivity are closely and inseparably associated. High skill and technique go with high real wages. A Russian worker, inured to hardship and pumped continually with Communist propaganda, may put up stolidly with such familiar discomforts as crowded housing conditions, unappetizing food, and standing in queues at stores. But it is doubtful whether this worker, under these conditions, will or indeed can achieve the level of skill and productivity of a corresponding worker in Western Europe or America.
The Communist Party leadership has recently adopted several measures with a view to improving the food supply. The quantities of grain, meat and other produce to be requisitioned from the peasants have been reduced; somewhat freer trade is permitted on the markets; factories are urged not to rely entirely on the overstrained central supplying agencies, but to cultivate their own kitchen-gardens and pig and rabbit farms; there is increased emphasis on the necessity for producing more goods for the consumer, and especially for the peasant. During the winter there has been a marked tendency to substitute a fixed levy, payable in kind, for the former practise of compulsorily buying up at fixed prices the whole of the peasants' estimated surplus crops. Whether these measures will revive the peasants' morale and turn the curve of agricultural output upward remains to be seen. We shall know more, perhaps, after Russia has passed through the period of late winter and early spring when the food supply is always at a seasonal low point.
A second major problem, somewhat vaguer in character and yet very important, as anyone who has made a round of new Soviet factories knows, is the education and training of industrial executives, engineers, technicians and skilled workers. Lack of trained men in all these categories is an important cause (though not by any means the sole cause) for the high percentage of waste and breakage in the big new plants. And this waste and breakage, in its turn, is a constant heavy drain on the people's living standard. The Soviet effort to operate the huge new steel, tractor, automobile and chemical plants which have been created under the Five Year Plan sometimes suggests an attempt to break in a spirited horse, which gives his rider many falls before he can be tamed.
The third problem is one which Russia shares with almost all countries which produce primary commodities on a large scale. It is how to maintain a satisfactory balance of payments in the face of the contracting markets and falling prices which accompany the world crisis. During 1931 the unfavorable Soviet balance of trade amounted to 294,200,000 gold rubles; and this was increased by 135,700,000 gold rubles during the first ten months of 1932. During that same period Soviet exports declined by 31.5 percent and Soviet imports by 35.1 percent, in comparison with the corresponding period in 1931. The Communist boast that the world crisis stopped at the Soviet frontier rings less and less convincingly as year after year rolls by without relieving the stringency in food and manufactured goods. It is true that Russia has escaped unemployment and industrial stagnation. But it is equally true that the employed population is subjected to deprivations which could scarcely be paralleled in other countries. The necessity for exporting foodstuffs which can ill be spared at home, for cutting off the list of imports almost every item that ministers to the immediate need of the consumer -- these important factors in keeping down the Soviet standard of living are the direct result of the fact that the Soviet Union is able to sell less abroad, and at much lower prices than those which prevailed two or three years ago. Paradoxical as it may seem, Soviet Russia's best chance of relieving the strain on the population and appreciably improving its standard of living in any predictable future would seem to lie in a world capitalist business upturn, which in all probability would bring higher commodity prices and easier credits. The converse side of this proposition, that world economy would benefit from any improvement in Russian conditions that would make Russia a larger purchaser on world markets, is equally true.
No survey of the Five Year Plan would be adequate if it left out of account the social by-products of the Plan. For these recent years have seen a tremendous uprooting of old standards, values and habits. The rapid changes taking place in the face of the Russian land is both a result and a symbol of this fact. Five years ago a shrewd foreign observer remarked on the contrast between the social upheaval that had taken place in the country and the relatively slight changes in the physical aspect of the cities and the countryside. This observation no longer holds good. Moscow's skyline is changing almost continuously as old landmarks (e.g. the golden-domed Cathedral of the Redeemer) are demolished, new public buildings completed, and old squares and streets broadened. In almost any large provincial town one will find not only one or more new factories, but rows of new brick tenements which stand out in striking contrast to the little frame houses in which people lived in the pre-revolutionary years.
The Five Year Plan has coincided with, and to some extent caused, immense drifts of population, from the country districts to the towns, for instance, and from older settled regions to dozens of new population centres that have sprung up around new enterprises. The erection of a huge steel plant on a stretch of steppe where Kirghiz nomads formerly roamed or the establishment of a state farm in the uplands of the Caucasus inevitably influences and changes old habits and ways of life.
The Plan should not be thought of as an impersonal collection of projects and blue-prints, or the resulting masses of bricks and mortar and concrete. It is an intensely human drama, and there are very few people in Russia whose lives have not been affected by it for good or for ill. Thus the Plan has fired the imagination of the youth of the country and has helped to make the Soviet Union a land of opportunity for young people (always excepting those who are discriminated against because of their aristocratic or "bourgeois" class origin). At a moderate estimate, it has doubled or trebled the number of posts of authority and responsibility in the country. It has created an insatiable demand for new engineers, technicians, teachers, agricultural experts, executives in industry, agriculture and trade. It has accentuated the social fluidity of the Soviet system, the ease with which the common man may rise from the ranks and be promoted. Quality has certainly often been ruthlessly sacrificed to quantity in the production of new specialists; the young Soviet engineer is seldom able to do as good work, and almost never receives the same material reward, as his more carefully trained colleague in America or Western Europe. But the sense of opportunity is there; and, despite all the bleak, drab and hard sides of Soviet life in recent years, one cannot overlook or underestimate the fact that Russia has escaped one of the great human tragedies of the world crisis: the plight of the highly educated and trained young man or woman who finds no place in an upset social and economic order.
Not that the Plan lacks its dark and tragic sides. One thinks instinctively of the well-to-do peasant who has been torn from his home and banished, with or without his family, to perform rough labor in some remote and inhospitable spot; of the engineer or professor who has been summarily exiled to a concentration camp on some charge of disloyalty or sabotage; of the priest who sees his old church torn down to make way for the edifices of a new iconoclastic and intolerant faith. The Five Year Plan, like the revolution itself, is far too vast a social drama to permit any arithmetical computation of the amount of happiness and unhappiness that may be laid to its account. As in all periods of violent ferment the score of both is a long one.
What is the significance of the completed Plan for the outside world? The idea, current some two years ago, that the Five Year Plan carried a gigantic "Red trade menace," which would take the form of flooding all the world's markets with cheaply produced Soviet goods, has been pretty thoroughly disproved by actual developments. The value of Soviet exports in 1931 declined by 21.7 percent in comparison with 1930; the figures for the first ten months of 1932 show a further shrinkage of 31.5 percent in comparison with the corresponding period of 1931. Judging from preliminary indications, Soviet exports in 1932 (the last year of the Plan) will be the lowest in many years and will be considerably less than half the value of Russia's exports in 1913.[ii] The real "Red trade menace" is rather that the Soviet Union may find itself obliged to cut its purchases abroad to a minimum figure, thereby removing a valuable market from foreign manufacturers of machinery and equipment.
Besides arousing fear the Five Year Plan inspired hope among economists who incline to see in organized planning at once a cure for the present crisis and a preventive of future crises. As a matter of fact, however, accurate and balanced planning had extremely little to do with such industrial progress as Russia has achieved during the last few years. Some of the miscalculations which were made both in laying out the original Plan and in executing it were so glaring that if the functioning of the Soviet economic system had depended upon precise fulfilment of the original estimates a very negative verdict would have been necessary. The makers of the Plan, for instance, miscalculated the requirements of transportation so badly that freight transport has been a weak spot in the country's economic life despite the fact that the original calculations for freight transportation in the last year of the Plan have already been exceeded. Last year's schedule called for the production of 8,500,000 tons of pig iron; the actual output was only 4,900,000. In the present year there is every indication that the production of iron and steel have fallen short of the schedule by 40 percent, while the coal plan has been underfulfilled by 30 percent. Such chronic and serious miscalculations suggest guessing or hoping rather than planning and do not indicate that the Soviet Union has yet evolved the technique of making up a balanced and realistic national economic plan. Indeed, there is an amusing and rather typically Russian discrepancy between the painfully exact calculations, down to the last decimal point, of how much of every given object is to be produced at the end of a year, or of five years, and the frequent chaotic changes and revisions in the working plans of individual factories and enterprises.
Not in accurate planning, but in the concentration of the whole national production apparatus in the hands of a state armed with dictatorial powers lies the real explanation of Russia's extraordinary contribution to economic history during the last four and a quarter years, and of the success of the Plan in promoting industrial construction and its simultaneous failure in raising the standard of living. There is an infinite field for study and research in Russia's venture into the sphere of planned economy. But unless some country desires to adopt the Soviet system lock, stock and barrel (and no such tendency is visible today), the planned economy that is essentially a part and function of the Communist dictatorship perhaps offers more scope for study than for imitation. Certainly a government that had to face periodic popular elections would have found it impossible either to exact the sacrifices which have accompanied the Five Year Plan or to carry out such measures as the collectivization of agriculture and the liquidation of the kulak class.
There is something about Russia, or at least about Soviet Russia, that predisposes the observer to superlatives. That is one reason why the Five Year Plan usually has been either overpraised or overdamned abroad. January 1, 1933,was not very different in Soviet Russia from December 31, 1932. The country was not transformed into an earthly paradise because some parts of the Plan had been fulfilled, nor did it collapse because other parts had not been fulfilled. Viewed retrospectively, the first Five Year Plan will appear merely the bare beginning of a process probably requiring most of the present century -- the process of transforming the Soviet Union into a highly industrialized country, with well-built cities, a thick network of roads and telegraph and telephone lines, and a high per capita consumption of food, clothing and other comforts and necessities. The real test of the validity of the Soviet assumption that economic planning of the national life on a large scale is feasible probably lies in a far distant future. Today, however numerous and harassing may be the difficulties of Soviet economic administrators, there is no need for them to have the slightest fear of overproduction. There is not a single field of economic life where demand is not several jumps ahead of supply. The test of planning will come when the Soviet Union can match America and Western Europe in the volume and quality of its output of staple foodstuffs and manufactured goods. Then the planners will have an opportunity to show their worth by so adjusting production to consumption, by so quickly transferring labor and capital from a saturated industry to one not yet in that condition, that a normal rhythm of industrial progress can be maintained without slumps, stagnation and unemployment. But when one looks at the bare shelves of many Soviet stores today one realizes that this test lies far, very far in the future.
[i] It remains to be seen whether the draconic decree issued by the Soviet Government in November, threatening absentees from work with loss of food-cards and rooms (if they dwell in factory-owned houses) will check effectively the enormous labor turnover which previously took place in spite of restrictive measures.
[ii] Soviet exports during the first ten months of 1932 amounted to 461,400,000 rubles, as against Russian exports of 1,506,100,000 rubles in 1913.