THE rôle which the Soviet Government will play in the crucial months ahead is a principal question mark of international politics today. Among the determining factors none is more important, particularly as affecting Russo-German relations, than the state of the Soviet national economy.

The success of the first two Five Year Plans was so widely publicized by the great host of Communist fellow-travellers and liberal and socialist sympathizers outside of Russia that the U.S.S.R. was generally assumed to have become an industrial giant. This impression, strong during the early and middle thirties, has however been rapidly fading in recent years. The third and current Five Year Plan, covering the years 1938-42, has received much less attention in the outside world than did its two predecessors. This has been due not only to the exodus of Left intellectuals and journalists from the Communist fold following the signing of the Russo-German Pact, but also to the reticence of the Soviet authorities in giving facts and figures concerning the state of Russia's industrialization program. Since 1937 Soviet statistics have become more and more incomplete and obscure, and the natural conclusion is that there are serious failures to be hidden. This conclusion squares with the facts as we know them. The reports of the few foreigners who have recently come out of Russia tell of continuing, and even increased, hardships being endured by the mass of the people. Such a trustworthy observer as Mr. Spencer Williams, who lived ten years in the Soviet Union, has stated that conditions this last year were almost as hard as in the near-famine years of 1931-33. All witnesses agree that the Finnish War threw the Russian transport services into chaos and in general seriously set back the country's material condition.

Soviet statistics now usually give only figures of value, not quantity. Since no one can say what is the value of the ruble -- because of the tremendous inflation of the past decade and because no cost of living figures are published -- it becomes more and more difficult to gauge the state of Russia's national economy. Only by a careful perusal of the specialized trade journals, written for home consumption by experts in the various branches of production, may one come to an approximate estimate of present

1913 1932 1937
Percentage of Percentage of
Planned Actual Achievement Planned Actual Achievement
Coal
  (million tons) 29.1 75.0 64.7 86 152.2 127.1 84
Pig iron
  (million tons) 4.2 10.0 6.2 62 16.0 14.5 91
Steel ingots
  (million tons) 4.2 10.4 5.9 56 20.1 17.8 89
Oil
  (million tons) 9.2 21.7 22.3 103 46.8 30.6 65
Locomotives 664 1,641 828 52 2,800 1,583 53
Freight cars (2-axle) 14,832 12,600 20,152 184 118,000 66,100 56
Tractors none 53,000 50,640 94 195,000 ? ?
Automobiles none 105,000 23,879 24 230,000 200,000 87
Cotton fabrics
  (million meters) 2,224 4,588 2,417 53 5,100 3,450 68
Leather footwear
  (million pairs) 8.3 80.0 84.7 106 180 164 90
Canned goods
  (million cans) 93.0 550 906 164 2,000 874 44
Matches
  (million cases) 3.8 12.2 5.6 47 12.0 ? ?
Paper
  (1,000 tons) 197.0 900.0 479 53 1,000 883 83
Electric current
  (million kw. hrs.) 1,945 22,000 13,540 62 38,000 36,400 86

conditions in Soviet industry. Supplementing this information is the data printed in the daily papers during the recent campaign to increase "labor discipline." As I shall show later, the available information suggests that since 1937 production in the basic industries has either been stagnant or has declined. First, however, we must examine the published results of the first two Five Year Plans, covering the years 1928-37 when a supreme effort was made to industrialize the country at a rapid tempo.

II

The accompanying table shows both the planned figures and the actual results for the major industries. We must keep in mind, however, that the grandiose "control" figures upon which foreign estimates of Soviet achievements have frequently been based were much higher than the figures of the original Plan, which are the ones given in this table. The "control" figures were never more than aspirations, and insofar as the separate industries endeavored to reach them, they served to create confusion and dislocation in the Soviet's so-called "planned economy." For it is obvious that if one branch of industry were successful in increasing its production beyond the planned figure and up to the control figure, it could only be because some other branch of industry was thereby deprived of its due share of raw materials and power. How fantastic the "control" figures were can be demonstrated by citing the examples of the coal and oil industries. The 1932 control figure for coal was 90 million tons as against the planned figure of 75 million and the actual production of 64.7 million. The control figure for oil was 45 million tons as compared with the 22.3 million actually produced.

Gullible foreign tourists nevertheless continued to propagandize on the basis of these absurd "control" figures, and so little was known abroad about the true state of Russia's national economy that they were seldom contradicted. The Soviet Government has been eminently successful in duping the simple-minded "friends of the Soviet Union." When visitors to a government institution or a factory in the U.S.S.R. ask for production figures, they are usually given the planned rather than the actual ones. When I first visited the textile factories at Ivanovo-Vosnysensk as a "specialist," I was given production figures which I could not reconcile with what I had learned in the weaving sheds or from my experience at the Moscow export organization. Eventually, however, after being catechized for half an hour, a light broke over the face of the manager as he exclaimed: "Oh I see now; you want the facktichiskiye figures, not those according to the Plan." Since I was a foreigner he had naturally assumed that I would be satisfied with the planned figures of production.

When, at the conclusion of the First Five Year Plan, Stalin computed that it had been 93.7 percent attained and stated that industrial production by the end of 1932 was three times the prewar figure, it was assumed abroad that he was referring to volume of output, whereas in fact he was basing his claim on fictitious ruble values. No one knows how far the Plan as a whole fell short of fulfillment in quantity; but in those branches of industry for which quantitative figures were published the actual achievements were (as the table shows) a third or more below the planned figures. This was notably the case in the basic iron, steel and electric industries which in 1932 were producing respectively 38, 44 and 38 percent less than had been planned. Coal, which made a better showing, was only 14 percent below the Plan. Since the factories could have fulfilled their plans only if provided with the fuel and raw materials calculated as producible under the Plan, the failure of the coal, iron and steel industries obviously involved the failure of the plans for other industries for which quantitative figures were never published. Nevertheless, the Soviet officials claimed that the metal and machine building industries had over-fulfilled their plans. If this were true, then the Plan never really was a plan since an economy in which there is so little coördination between the parts that the planned production of machinery and construction goods bears no relation to the planned production of iron, steel and coal, can hardly claim to be a planned economy. Either there was no real plan, or it failed.

But regardless of the unreliability of Soviet statistics, the fact remains that Russia today produces coal, iron, steel and electric power on a scale vastly greater than in Tsarist times. The output of these vital industries is today at least four times as great as in 1913 -- in itself a very great achievement. The Soviet Union also manufactures a large quantity of machinery not produced at all under the Tsars. But what about the social cost of these "successes on the industrial front"? Only a country ruled by a ruthless and all-powerful despotism could ever pay so high a price in human misery as Russia has paid in order to become a large producer of iron, steel and machinery. The failure to increase substantially the production of food, clothing and housing has had a vitiating effect upon the efficiency and morale of the Russian worker and it is doubtful whether the industrial gains compensate, from the point of view of national strength, for the general decline in the standard of living and for the discontent among the mass of the people.

With regard to light industry the failure of the Plans has been obvious and marked. The production of cotton fabrics in 1932 -- 2,417 million meters -- was little more than half the planned figure and only slightly in excess of the 1913 output. By 1936 there had been some improvement, but not enough to compensate for the liquidation of the large handicraft industry that existed before the Revolution. This great household industry had been wiped out during the years of the First Five Year Plan as part of the drive against private enterprise in town and village. As regards the woolen industry, the 1933 production of 86,100,000 yards still lagged behind the prewar figure of 103,000,000; by 1936 the prewar figure had only just been reached. The output of paper fell nearly 50 percent short of the Plan. That of leather goods and canned goods exceeded the Plan; but since these were produced largely for export, this success in light industry was of little benefit to the Russian people.

Soviet statisticians seek to convince the world that the Plans have been fulfilled by discounting failures on one "front" with successes on another. But in reality this method of computation has little validity. For instance, the plan for consumer goods production cannot be said to have been fulfilled merely because the output of perfumery has been exceeded while essential goods such as textiles have been turned out in quantities far short of the plan. It used to be painfully ironic when I lived in Moscow that when there was no clothing or footwear to be bought one could indulge expensive tastes in scents, face creams and wines.

The figures in the table do not reveal anything as to quality, which deteriorated catastrophically during the period of "gigantic successes on the industrial front." In the cotton textile industry, where I worked as a so-called "foreign specialist" in 1931 and 1932, it was "normal" for 80 percent of the cloth turned out to be defective. We had the greatest difficulty in securing any plain bleached goods for export, for they show defects whereas printed goods hide them. Russian mothers seeking to buy material for their babies' layettes could secure only coarse prints.

The Second Five Year Plan came nearer to fulfillment than the First, both because it was less grandiose and because the workers were able to secure a little more food and a minimum of clothing between 1934 and 1936. But the huge investments made at such tremendous sacrifice from 1929 to 1932 bore fruit for only a few years. In 1937 the rapid deterioration of machinery again began to create acute shortages in necessities.

The real failure of both Plans was most clearly revealed in the figures showing the productivity and cost of labor. Actual investment under the First Five Year Plan was admitted to have been 120 billion rubles as against the estimated 86 billion; and whereas the Plan had provided for an increase of 1,250 million in the note issue (which had amounted to 1,774 million in October 1928), by October 1932 it had already been expanded by 4,626 million. This great inflation reflected the complete failure to perform the work under the Plan according to the estimate of labor and wage payments required. The output per worker had been planned to increase 100 percent; but the result showed that it can have increased little if at all, since the number of wage-earners, supposed to increase from 11.3 million to 15.8 million, actually increased to 22.8 million. Thus, 44 percent more workers than estimated were required to create an amount of goods and services far inferior to the planned production figures.

There was still enthusiasm and faith among the Russian workers during the First Five Year Plan, but it was impossible for them, undernourished, ill-housed and ill-clothed as they were, to speed up the tempo of their work. Nor could the drastic penalties imposed on "slackers" redress the shortcomings due to sheer physical inability to work more intensively on a diet of black bread, cabbage soup, mush and an occasional piece of herring. Moreover, the long hours spent standing in line in poor clothing in the winter cold to secure scanty rations further weakened them, increased their sickness rate and undermined their morale.

By the end of the First Five Year Plan the rise in prices had reduced the ruble to about one-tenth of its former value in relation to commercial prices. However, because of the rationing system and the "closed distributors" -- from which the bureaucracy and the favored workers in heavy industry could obtain a kilo or two of meat and butter and other "luxuries" each month at comparatively low prices -- the ruble had all sorts of values depending upon the status of both the recipient and the purchaser. When the rationing system and the "closed distributors" were abolished in 1935, an attempt was made to stabilize the ruble and to introduce cost accounting into industrial enterprises. Some success has attended these efforts, but they are vitiated by the need to pretend that plans have been fulfilled whether they have or not. Inflation of the ruble has continued, but at a slower tempo.

Although the industrial plan fell far short of the estimates, there was at least something to show for all the sacrifices made by the Russian people. In agriculture, however, instead of progress there was a serious decline. Ten billion rubles had been invested in agriculture under the Plan, mainly in the form of tractors and other agricultural machinery. Yet, in 1932 the grain crop was 26 percent below the prewar level -- 69.6 million tons as against 94.1 million in 1913. The production of industrial crops had decreased by as much as 50 percent. Soviet authorities admitted that of the 147,000 tractors supplied to the farms, 137,000 were already in need of repairs. Furthermore, in five years the livestock had been reduced from 276 million to 160 million.

I have dwelt at some length on the results of the First Five Year Plan because during those years an effort was made to industrialize the U.S.S.R. -- an effort which once it had been made could never be repeated on the same scale. At no time after 1932 was it possible to arouse the enthusiasm of those first years among the workers, for from that year onwards they have felt cheated and have sunk into disillusioned apathy. Furthermore, the régime can no longer raise funds on the former scale for the import of machinery and for the payment of salaries to foreign specialists. The fleecing of the peasants, the draining of every bit of gold from the population through terror and the Torgsin shops,[i] the influx of foreign currency from the United States, Poland, Germany and elsewhere in the form of remittances to starving relatives -- mainly to the Jews who formed the section of the Russian population which had relatives abroad -- all these were expedients which could not be repeated after the liquidation of the kulaks, Hitler's rise to power and the world armament race.

III

The First Five Year Plan proved so disastrous and wasteful that Stalin knew he could not repeat it. Instead, its ravages had to be repaired, popular discontent softened, and some inducement given to the peasants to produce. In short, the Russian people had to be allowed a little rest and a little nourishment if they were to continue to work at all. When the Second Five Year Plan came, it provided, as the table shows, for a somewhat more modest increase in production. The results in 1937, at the end of the Second Plan, accordingly came a lot closer to the planned figures than in 1932, and agricultural production reached the pre-Revolution level. Such essentials of mass consumption as textiles, however, continued to lag far behind the Plan, although its objectives were very modest as regards most consumption goods.

Nevertheless, the years 1934 to 1936 saw less misery than those either behind or ahead. When rationing of bread ceased in 1935 it was doubled in price; but herring, margarine, butter, meat and vegetables came gradually to appear in the shops in larger quantities and were sold at prices which, though much higher than the former rationed prices, were much lower than they had originally been in the "commercial shops." Since the majority of the workers had never obtained anything but bread, sugar and a pound or two of cereals and herring on their ration cards, and since the village population had never had bread or other ration cards, most Russians were a little better off after the "special distributors" had been abolished.

The productivity of labor also seems to have increased slightly during the Second Five Year Plan, due, at least temporarily, to the Stahkanov movement and to the various rewards and penalties which were instituted to ensure "labor discipline."

Nevertheless, the production figures for the years following 1936 indicate that what was won on the swings was soon lost on the roundabouts through the rapid depreciation of machinery and the neglect of repairs. Since a factory manager's position, very frequently his life, depended upon his fulfilling the Plan, he dared not stop machinery for necessary overhauling or repairing. The workers themselves, urged on by the shock workers and knowing that they would starve if they failed to produce the quantities required of them, had no scruples about working machinery to a premature breakdown. The eventual result, as revealed with increasing clearness since 1937, has been to decrease production in many enterprises. All available information indicates that the huge capital investments made from 1929 to 1937 have been very largely wasted through neglecting and overworking the industrial machinery. The chaotic state of the Russian transport system today is due largely to the reckless overloading and to negligence in repairing rolling stock and permanent way during the first two Five Year Plans.

The reticence of the Soviet Government, not only concerning the Third Five Year Plan, but also concerning current figures of production suggests, as remarked above, that there have been failures. For such reticence is not characteristic of the "Socialist fatherland." No detailed program for the various industries under the Third Plan has ever been published. The only figures presented to the Party Congress by Molotov in 1939 concerned values and percentages. Stalin, having admitted that the U.S.S.R. was lagging behind the advanced capitalist countries with respect to per capita production, made the following ambiguous statement: "We have outstripped the principal capitalist countries as regards technique of production and rate of industrial development. We must outstrip them economically as well."

The press campaign for the "tightening of labor discipline" which began in the fall of 1939 lifted a corner of the veil hiding recent failures to attain the planned production. It was admitted, for instance, that the plans for the last quarter of 1938 had not been fulfilled and that quantitative production in the basic industries was no higher in 1939 than in 1938. On November 17, 1939, Industriya stated that the production of steel had steadily lagged behind the planned figures and had fallen below the 1938 figure. The same newspaper on December 12, 1939, disclosed the fact that in 1939 the production of coke had come to only 16.6 million tons, less than in either of the two preceding years. On December 12, 1939, and again on January 6, 1940, it revealed that the deep oil wells (which in the Baku district account for the major part of the total output) are so badly operated that 40 percent of them are permanently inactive. The Soviet press has also admitted that the Gorki automobile plant has failed to fulfill its plans and that critical conditions prevail in the factories producing tractors and spare parts. On April 4, 1940, Industriya published a report by the Commissar of the Coal Industry stating that the Donbas (the principal coal producing area of the U.S.S.R.), although constantly receiving new technical appliances, had increased its output by only a bare 3 percent during the previous three years.

Reports appearing in Soviet organs early in 1939 indicated that during the last quarter of 1938 production in the iron, steel and coal industries had declined so catastrophically as to suggest that something in the nature of strikes must have taken place. The daily production of iron, which according to the Plan should have been 45,600 tons, had sunk to 34,500 on December 15, to 28,000 on December 17, and to 26,000 on December 19. On December 19, the daily output of steel had sunk to 32,600 tons as against the planned figures of 56,100. At the same time, coal production was 100,000 tons below the planned figure of 390,000 tons a day. In January 1939 production was still at a figure below that for 1935.

A hint of what had been happening was given in Pravda on January 15, 1939, in an article which thundered against "lax executives" who were "afraid to fire shirkers for fear of creating difficulties for themselves with the labor supply." The possibility that strikes, sitdown or otherwise, take place is, of course, not admitted in Soviet Russia; so "shirkers" may well have meant "strikers." The Soviet Government is more severe than the Nazis in dealing with labor troubles; nevertheless it cannot liquidate the workers -- as a class -- in the same way that it liquidated the kulaks and recalcitrant peasants. Someone must tend the machines. On occasion, then, factory managers must be "lax" if their whole labor force is not to be transferred by the OGPU to concentration camps as shirkers or wreckers or saboteurs. Hence in 1939 the original regulation forbidding the reëmployment of dismissed workers was modified to permit rehiring after a six months interval. Presumably, a worker who has been starving and homeless for half a year will not soon rebel again.

But no amount of terrorism has been able to prevent serious failures in production. By 1938 the Kremlin should have learned that only by improving the material conditions of life for the Russian worker could he be made to work more efficiently. Yet, under the Third Five Year Plan, as under the previous ones, most of the new capital investment is allocated to heavy industry -- 82 percent of it going to those producing capital goods. The production of consumers goods is scheduled to increase by only 38 percent. By 1942, the planned output of shoes is to be less than a pair and a half per person per year -- and the quality is so poor that a pair will scarcely last a month without repairs. The output of cotton cloth is to be only 27 meters per person. But since the textile industry has in the past attained only half its quota, and since textiles are still being exported, the Russian people are likely to be as short of clothing as ever.

IV

Since the current Plan makes no attempt to ameliorate the acute maladjustment between the production of consumer goods and that of capital goods, we are safe in assuming that there is no prospect of stabilizing wages and prices in the near future. Outsiders cannot, of course, make exact statistical calculations concerning the conditions under which the Russian people are living so long as inflation continues and so long as the Soviet Government refuses to publish figures on the cost of living. Yet, even allowing for a wide margin of error, a comparison of wages and prices under the Soviet Government with those prevailing under the Tsar, shows that in 1937 the Russian workers were very much worse off than they had been in 1914; while since 1937 their standard of life has deteriorated even further, though this may in part be ascribed to war conditions. Reliable figures indicate that the cost of staple foods, for instance, was about fifteen times higher in 1937 than in 1914, whereas the increase in wages was only fivefold. In 1914 a worker of average qualifications could purchase 90 kilograms of beef with his monthly wage as against only 24 in 1937. Expressed in terms of black bread, which then as now constituted the staple diet of the Russian people, the worker's wage in Tsarist times was worth 24 kilos a day as against only nine kilos in 1937. With regard to clothing and other manufactured goods the decline in his standard of living was even more striking.

Soviet apologists, of course, never produce such figures as these; and when confronted with them, they argue that the Soviets' social services more than compensate for the decline in real wages. This claim is quite absurd. The social services afforded the Russian workers are not only very meagre and not to be compared to those available to the workers of Western Europe; since 1939 they have been severely curtailed. Today only those workers who have held a job in the same factory for six consecutive years are entitled to "full" social services, which in any case are poor compensation for the steep decline in real wages, the housing shortage, and the lack of food, clothing and fuel. The foreign tourist who has gone home to write glowing accounts of the hospitals, schools, crèches and rest homes in Soviet Russia did not know that he was being shown places accessible only to the high Party bureaucrats and to a few favored foremen and shock workers.

There is no unemployment pay in the U.S.S.R. A worker who loses his job for being a few minutes late must, with his family, go hungry until he secures other work -- if he can with the black mark against him. The family of a man who has been arrested -- even if he is later released as not guilty -- must starve unless a relative or friend helps them. Since millions have been arrested in recent years without trial or without the formulation of any definite charge, one can readily understand why newly homeless children are always appearing in the streets of Russian cities.

All these miseries being endured by the Russian people must inevitably constitute an important factor in any appraisal of Russia's national strength. The material conditions described above have worsened since 1937, and in particular since the Finnish War. Early in 1940, the prices of all foodstuffs except bread were increased between 35 and 100 percent and food queues again became a normal feature of Soviet life. In December 1939 piece-rate wages were reduced 15 percent in most industries and penalties for slackness were stiffened still further. In June 1940, the working day was increased from seven to eight hours and the working week to six days instead of the previous five out of six. In October 1940, the price of bread was increased by 15 percent. A new law of July 10, 1940, classifies as "wrecking" the production of goods below standard, and those responsible are now liable to from five to eight years of imprisonment.

The available data suggest that the state of Soviet industry in 1940 is one in which the normal deficiencies arising out of poor or moderate harvests, industrial inefficiency, unduly rapid capital deterioration and a growing shortage of raw materials, have been intensified by the strain of the Finnish War and by the need of maintaining a large army in a state of constant preparedness. But even if there had been no general European war, the rapid deterioration of the machinery imported under the First Five Year Plan, and the liquidation or imprisonment of a large proportion of the technicians and skilled workers, would in any case have reduced the Soviet Union to a condition in which new imports of machinery and the assistance of foreign technicians could alone have halted the fall in production apparent since 1938. It is this fact which renders Soviet Russia dependent on Germany so long as she cannot obtain credit for new machinery in any other country.

V

The industrialization of the U.S.S.R. has been largely financed by an enormous tax on bread [ii] and by the hundred percent turnover tax on manufactured goods. These and other burdens on the peasantry are fundamentally responsible for the failure of the Plans, since it is the discontent of the peasants that causes the chronic food shortage, which in turn reduces the productivity of industrial labor. The forced collectivization of the peasantry, the investment of capital in agriculture in the form of tractors and other agricultural machinery, and the harsh laws designed to force the collective farmers to work harder, have not succeeded in raising the productivity of Soviet agriculture. Indeed, Russia's national economy has been greatly weakened by collectivization and the much advertised "mechanization of agriculture." Workers who might have been producing consumption goods that would have raised the general standard of living in town and country, have instead been making agricultural machinery, which owing to its poor quality and the lack of trained mechanics has failed to increase the yield of the land. Today a larger number of collectivized households with tractors are producing less food per capita than a smaller number of peasant households without machinery produced under the old system of private enterprise.

The situation with regard to meat, dairy produce and vegetables has become worse since 1939. The shortage of meat and butter -- even in Moscow, most favored of the cities -- has been acute since last winter. This would appear to be the result of the new drive against individual enterprise in the villages initiated in the summer of 1939. A decree of May 28, 1939, and another issued in July 1939, virtually annulled the Collective Farm Charter of 1935 which had permitted the collective farmers to own private livestock and allotments of land. The 1935 concessions to the individualistic instincts of the peasants had led to a rapid increase in the number of cows, sheep, pigs and poultry, and in the intensive cultivation of vegetables. This development had substantially ameliorated the food situation in the towns. According to the preambles of the 1939 decrees and to articles in the Soviet press, the right of private ownership over a small plot of land and some livestock had come to be exercised to such an extent that many of the collective farmers had "virtually withdrawn from the kolkhoz, and were spending all their time working on their own land." The kolkhoz managers had apparently been allowing the peasants to take over a part of the collective farm lands for private cultivation, in return for a fixed rent in kind, thus ensuring for their master, the Soviet Government, a definite quantity of produce. The unwillingness of the Russian peasantry to work on the collective farms, because of the terrible mismanagement and the small return they received for their labor, had caused a relapse to private cultivation. The private plot, said the decree, had been losing its subsidiary character and in many cases had become the main source of income for the collective farmer.

The May 1939 decree inaugurated a new drive against the peasants to deprive them of both the allotments of extra land they had "illegally" acquired for private cultivation as well as of most of their privately-owned livestock. It severely curtailed the size of the allotments and declared the kolkhoz lands "inviolable." The practice of renting them out was made a criminal offense. It also forbade, on pain of severe penalties, the leasing of meadows and hayfields to individual collective farmers, thus making it impossible for the latter to feed their privately-owned livestock. The July decree laid down the minimum number of cattle, pigs, sheep or goats which each collective farm must possess; and provided that henceforth the amount of meat to be delivered to the state was to be based upon the area of arable land instead of on the number of livestock in the farm's possession. Since the only way in which the collective farms could acquire the livestock that they were required to possess was to confiscate the property of their members, the July 1939 decree in effect called for the expropriation of the privately-owned livestock of the collective farmers. The latter have been forced to "sell" their cows, pigs and sheep to the kolkhoz at one-tenth of their market price. The result has been an acute meat, butter and poultry shortage since the winter of 1939-40. Presumably the peasants, as in 1931-32, slaughtered many beasts rather than give them up to the collective farms.

VI

It is doubtful whether at this stage the Soviet Government could materially improve the conditions of the Russian workers and peasants except by such radical economic and political changes as would deprive Stalin and his bureaucracy of their power and material privileges. The rot in the social system has already gone too far. The struggle for place and power and material advantage among the bureaucrats, coupled with the apathy, skepticism and despair of the mass of the people, would by now render any change in policy largely abortive. Above all, the liquidation of the trained personnel over the past ten years is a loss which cannot be replaced. Only the purge of 1936-38 received world-wide attention; yet the earlier quiet and continuous purging of non-party specialists was even more fatal to Russian economy than the later wholesale purge of the Party itself.

It had been Lenin's and Trotsky's policy to utilize the educated personnel trained under the Tsars -- accountants, engineers, technicians, clerks -- and to afford the best of them comparatively decent conditions of existence. During the era of the New Economic Policy which preceded collectivization and the Five Year Plans, the non-Party specialists with high qualifications actually earned more than the Party men who held the leading positions in industry and trade. Stalin, however, put an end to the privileged position of the experts, and at the same time bound the Party members to himself by granting them all sorts of privileges. The high Party members were able to buy food and clothing in "special distributors" for a fraction of what the workers, employees and specialists had to pay, and they were provided with free houses, automobiles and other luxuries. The Party rule against its members receiving more than a maximum of 300 or 350 rubles a month therefore lost all meaning. The specialists meanwhile found their income of 500 to 700 rubles reduced, in terms of purchasing power, to a fraction of its former value through the inflation.[iii] Further, they were made the scapegoats for all the failures under the fantastic plans drawn up without relation to actual potentialities. With power stations, blast furnaces and factories being built at great speed and at colossal sacrifice, the Government should have sought to secure the wholehearted coöperation of every man with technical experience. But Stalin, instead of continuing Lenin's policy of conciliating these non-Party experts, inaugurated a régime of terror against them and reduced their standard of life far below that of the Party bureaucracy.

The great tragedy of the educated and competent people in Russia during the years I worked there was that in their effort to do conscientious and honest work they endangered their existence. Specialists who pointed out that a plan could not be carried out without wrecking or fatally depreciating the means of production, were accused of sabotage, or of being counter-revolutionaries. Statisticians who made careful estimates based on intelligent surveys of materials available or of productive capacity were flung into concentration camps because they had not drawn up grandiose plans which could not be fulfilled. The Gosplan specialists who formulated the original Five Year Plan were shot for sabotage; yet in 1932 it was found that actual achievements under the Plan just about reached the figures they had estimated -- only those achievements had been won at a cost infinitely higher than would have been the case if the whole national economy had not been dislocated by the attempt to carry out plans bearing no relation to actual potentialities. The only way in which the non-Party specialist could preserve his life was to kowtow to the all-powerful Party bosses and place the blame for failures on others. The most decent men who survived the purge were corrupted by this new social system based upon calumny instead of competition.

One very good reason for the far greater efficiency of the Nazi system is that Hitler has been wise enough not to liquidate the old possessing, administrative and professional classes. Instead, he has forced them to serve the interests of his new state. The Nazis, as he remarked to Rauschning, "could not afford to let Germany vegetate for years, as Russia had done, in famine and misery," but had "compelled the possessing classes to contribute by their ability toward the building of the new order." Stalin's remedy for all shortcomings is ever greater repression. Yet the more experts he arrests, the worse become the conditions of life for the masses. The 1930-32 purge dealt a fatal blow to Soviet economy; the great purge of 1936-38 shattered the morale of the Bolshevik Party. So long as Party members had felt safe, provided they toed the "Party Line," they formed a solid framework for upholding Stalin's government. But since 1936 no one has felt safe.

VII

Had it not been for the present war, Soviet economy might have stagnated indefinitely under the tyranny of Stalin and his henchmen. But the war poses new problems which Stalin cannot solve merely by terror. This method of government can be successful only where there is no threat from abroad. A dictator who lacks popular support dare not risk a war in which weapons would be placed in the hands of subjects who might be more anxious to use them against him than against the foreign enemy.

Every Russian with a memory that stretches back twenty-five years knows that he is worse off now than before the Revolution. The younger workers and peasants know that they are worse off than before 1929, and that conditions in 1940 are worse than in 1936. But their Government continues to tell them that their conditions have improved and that the status of the working class in the capitalist world is much worse than in the Soviet Union. State-sponsored propaganda which runs directly counter to personal experience naturally induces skepticism. For example, the soldiers returning from the recently annexed areas in Finland, Poland and the Baltic Countries told the people at home that conditions in the capitalist world were "wonderful."

The apathetic and sullen Russian masses might perhaps be seduced by the promise of national glory, or at least by the prospect of more loot -- such as the food supplies obtained in Bessarabia last year. Presumably the Red Army would fight to defend the frontiers of the Soviet Union. As for its power of attack, Hitler need have no fear of an assault from a Russia in which, as he knows from the German specialists who have been working in the U.S.S.R. since the signing of the Russo-Soviet Pact, industry and transport are in a state approaching chaos. Russia is much too weak economically and politically to challenge Germany.

In the final balance Stalin's fear of his own people must be weighed against his fear of Germany. So long as Hitler is content with the Kremlin as a vassal, and is not compelled by his need of food and raw materials to acquire direct control over the Soviet Union, Stalin will probably keep out of the war and carry out Hitler's orders. Yet the uncertainties of the situation are manifold. The Soviet rulers, canny as they are, have often shown themselves to be quite ignorant of the state of affairs in the outside world -- a world which they never visit and which they view through the distorting spectacles of Marxist theory. It is this ignorance and miscalculation which may unwittingly lead Stalin to involve himself in the war -- as he nearly did when he attacked Finland -- in spite of all his efforts to end up as the non-combatant victor over both sides after they have become exhausted.

[i] The special shops where food and manufactures could be bought for gold or foreign currency at prices not much higher than world prices. They were abolished in 1936.

[ii] The collective farms receive from the state between 1.10 and 1.50 rubles for a pood of rye. At the higher figure this equals 9 kopecks per kilogram. Prior to 1940 the state sold black (rye) bread to the people in its shops at 85 kopecks a kilogram. Today the price is 1 ruble per kilogram.

[iii] Since the abolition of the "closed distributors" and the derationing of bread in 1935, the monthly salaries of the "Party bosses" have risen to as high as 5000 rubles, or even more, while specialists receive only 600 or 700 and in rare cases 1000.

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