# Russia & The Struggle for Peace/Chapter 6

CHAPTER SIX
THE REVOLUTION AND THE EXHAUSTION OF INDUSTRY
IN the previous chapters I tried to show that the economic exhaustion of Russia and the ruin of Russian industry were long processes, and inevitable results of the war and of the isolation of Russia. The process began immediately after the war broke out. Its effects went on increasing steadily as the war continued, and were bound to grow more destructive the longer the war dragged on. This inevitable process of exhaustion was yet augmented by the maladministration of the unintelligent and corrupt Tsarist Government, and by the rapacious exploitation of industry on the part of the manufacturers.
With the Revolution a new factor came into play: the class war and the heavy demands of the workers. For a correct understanding of the Russian situation as a whole and of Russia's economics in particular, it is most necessary to gain a true idea of this class factor, and of its exact share in bringing about the destruction of Russia's economic strength. The army of publicists and correspondents who raised such an outcry against the workers after the Revolution, sat silent during all those terrible years when Russia was wearing herself out and the manufacturers were ruthlessly exploiting the industries for their own ends. Thus they produced the impression in Western Europe that the disintegration of Russia began with the Revolution. This was a very clever trick, to the double advantage of the journalists themselves and of the capitalist elements in all countries. The correspondents were silent at a time when it was their civic duty to speak and call attention to the dangerous situation through which Russia was passing. Now they began to speak, and contrived at ​the same time to justify their silence before the Revolution. Thus they convinced British public opinion that Russia's downfall was wholly brought about by the disorganisation due to the "class egoism" and excessive demands of the workers.
This was a mere trick, and no trick could alter the fact that Russia's industry was practically destroyed before the Revolution was accomplished. But, in stating this fact, I am far from intending to relieve the Revolution, the workers, and the Socialist parties from all responsibility. It is my firm conviction that nothing but blind hatred and dishonest partisanship could lead people to accuse the Revolution of destroying Russia's industry and transport system. But I do accuse it of not arresting the process of disintegration. The duty of the revolutionary democracy and of the Socialist parties was to stop the process of decomposition of the national economy. But they had not sufficient courage and strength of purpose to save Russia and the Russian industry from utter ruin.
The most striking feature which impressed every unbiassed observer of the Revolution was the marvellous instinct and truly prophetic foresight of the revolutionary democracy. Unfortunately the new democracy of Russia proved unable to fulfil its vision and its great programme. The reasons for this inability were very complicated. The gigantic tasks of the Revolution, which they saw so clearly, repeatedly caused them to waver in the critical moments by their very magnitude. Periods of the most marvellous creative upheaval were followed by intervals of humble scepticism and diffidence. And in these moments of spiritual depression the revolutionary democracy had not the moral courage and strength of character to withstand the united opposition of the bourgeois, imperialist and reactionary enemies of the new democracy. That is why so many vague and senseless compromises appeared during the Revolution and destroyed more than one great scheme of genuine reconstruction. The ​worst effects of this tendency to compromise appeared in the inability to carry out the economic programme of the Revolution which the revolutionary democracy had formulated with such striking clearness. The revolutionary democracy was in a position to formulate a complete programme of economic reconstruction literally on the next day after the Revolution. Their foresight in this instance is probably less surprising. For the best economists of Russia—the truly creative school of Russian economists—belonged to the Socialist Party. The Economic Department of the Soviet of Workers' and Soldiers' Delegates included some of the best-known economists, with a research section consisting of many of the younger economists of the Russian school.
In a few weeks after the Revolution, this Department presented to the Soviet its programme of economic reconstruction, which was afterwards discussed at the All-Russian Convention of the Soviets and definitely formulated as a resolution of the Executive Committee on the eve of the formation of the first Coalition Government. In the preamble to this resolution the Soviet expresses its awareness of the extreme seriousness of the situation:
"The old régime fell to pieces just because it did not fulfil the task of systematic control of the national economy and industry, which was necessitated by the war."
The Soviet foresees that the exhaustion and disintegration of the national economy, which is progressing with every day of the war, will inevitably lead to economic catastrophe, to social and political anarchy, and to the devastation of the country by the external foe; unless the State is firmly and decisively resolved to intervene at once in the social and economic relations of the country. "The State must intervene immediately, on all sides, and most energetically. The eleventh hour is already passed."
Hence, in order to prevent economic disintegration ​and financial bankruptcy, the Government must immediately undertake a most energetic State control of production and distribution. It must introduce a new system of financial measures to prevent the further depreciation of the value of the rouble. And a larger share of the financial burden must be shifted on to the shoulders of the propertied classes.
The Soviet programme then emphasises the necessity of State monopoly in certain branches of industry, such as grain, meat, salt and leather. In other branches, such as coal and petroleum, metals, sugar and paper, combines are to be formed under State control. And throughout the whole of industry there must be State control and State distribution of fuel and raw materials, coupled with a fixation of prices. A maximum output is demanded, particularly a control of supplies in munitions, and an increase of the supplies for the civil population. There must be State control and a rational distribution of the resources of the country in labour. All workers who are needed for the important industries must be combed-out from the army, but there must also be a drastic revision of the lists of exemption in order not to deplete the army. Energetic measures are demanded against idleness and social parasitism.
The financial measures of the Soviet are based on the demand for a proportional increase in income-tax and death duties, for a heavy taxation of war-profits and unearned increment, for taxation of luxuries and for a levy on capital. In order to set capital free for war loans and State needs, speculations in land are to be prohibited. And, in the event of these measures being inadequate, the need of compulsory loans is foreseen.
In the concluding sentences the Soviet once more expresses its realisation of the great difficulties which confront the country:
"It is enormously difficult to begin the struggle against economic disintegration in the 35th month of the war, which has exhausted all the economic forces of the nation. But the more difficult this task, the greater ​the necessity of proceeding at once to its most energetic fulfilment.
"The catastrophe is already on the country, and only the creative efforts of the whole people under the direction of the State can hope to save Russia. The State must consciously take on itself the gigantic task of saving the country, destroyed as it is by the ravages of war and of the Tsar's régime."
This programme shows quite clearly that the revolutionary democracy was conscious that the exhaustion of the country had already reached the dimensions of a catastrophe, and that its first and foremost task was to find out ways and means of stopping the disintegration.
This economic and financial policy of the democracy, although representing a considerable change in the economic and social relations of the country, by no means constituted a social revolution. The free play of economic interests, whereby the minority was enriched in proportion as the majority became impoverished, was to be replaced by a new order, under which the State would take control of the economic activities of the country, setting a limit to the increasing wealth of the few, and guaranteeing a minimum of existence to the many. In this country, where people are becoming more and more conscious of the danger of economic exhaustion and of the imperative need of applying drastic measures of State control and State organisation, there is no need to emphasise that the above programme of the Soviet was not Socialism.
Had the democracy been allowed to carry out this programme, anarchy would have been checked, and the disintegration of Russian industry would have been arrested. Unfortunately this programme was never put into action, and State control was not applied till the October Revolution, when the Bolshevik State took over the mortal remains of what was once the industrial system of Russia.
The first Coalition Government was created with the threefold purpose: first, of inaugurating an "active" ​foreign policy in accordance with the ideals of the Revolution; secondly, of preparing for the nationalisation of the land; and, thirdly, of carrying out the above economic and industrial programme of State control. The programme of the Soviet was fully adopted by the Government, and yet nothing was done. It was now that the united opposition of the bourgeois parties began to assert itself. The cry was raised: "State control over industry—but that is Socialism!" And then began a clever and insistent propaganda, equipped with plausible and elastic arguments. The programme of the Soviet was declared to be doctrinaire and unreal.
The main argument was that such far-reaching "social revolution" could not be accomplished in one country alone—least of all in an economically backward and very little industrialised country like Russia. The opposition to State control was so strong that the manufacturers, financiers, and their political supporters even threatened to resist any such attempts by ceasing to carry on the management of industry. As a matter of fact, Konovalov, the very able Minister of Trade, already resigned from the Ministry, and it was evident that the bourgeois parties were prepared to fight. The "sabotage" which the bourgeois parties applied so effectively during the first months of the Bolshevik régime, was already looming ahead in these early days of the Revolution. The democracy was in an anxious frame of mind, and the bourgeois opposition succeeded in perplexing and eventually in splitting the democratic forces. The moderate elements tried to compromise with the Liberals, and as usual in such cases one compromise led to another, and State control, though still the centre of manifold discussions and conflicts, was actually shelved.
Meanwhile, the economic exhaustion of the country steadily progressed. The breakdown of the transport system was almost complete; the transport difficulty augmented the scarcity of coal and fuel, and the food ​supplies grew worse and worse. The dearth was increasing on all sides. Short of introducing the system of State control, the only method of relieving distress and meeting popular discontent was to increase wages. And the bourgeoisie, which feared the State regulation of prices and profits more than fire, took the line of least resistance. The programme of reconstruction as elaborated by the Soviet was set aside, and in place of genuine economic reconstruction there was an increase of wages.
At first the workers were happy with their increase in wages. To understand their psychology it is necessary to remember what was their condition before the Revolution, and in what mood they entered it. There is manifold evidence to show that the exploitation and repression of labour in Russia during those three years of war had far exceeded anything that has been heard of in other countries. I need only quote one article from a Liberal paper, the Petrograd "Den" of March 30, 1917. "Few people have any imagination of the condition to which three years of war-work have reduced the working classes of Russia…
"The terror of the military autocracy was augmented by the tyranny of the workshop régime. … Into the unorganised masses of the workers, broken down by years of the most barbaric exploitation, the war-industrial régime entered with its autocratic demands, aggravated by executions, exiles, arrests, and a whole series of other repressive measures. It was augmented by a hellish intensification of labour, combined with an absolute neglect of the physical and moral needs and civic interests of the workers. These were years of a mad race, when, in addition to the most excessive overwork, the workers were perpetually underfed, almost to the extent of starvation. They were years of the most merciless terrorisation of the workers' life in all imaginable and unimaginable directions. Categorically they were required to work, and to work unceasingly, night and day, week-days and ​Sundays, all under the pretext of the lofty ideals of national self-defence. It was a merciless waste of the physical forces of the working classes; of adults and children, men and women alike. Those were indeed terrible years for the working classes."
The workers had been too much exploited all their lives to be able to ignore the sudden apparent relief of their position. They gladly accepted the increase of wages which was offered them in place of the economic policy which the revolutionary democracy had proposed. The moderate Socialist parties were glad of an opportunity of compromise with the propertied classes, and the more consistent elements, who realised that the mere increase of wages could only lead to disaster, were powerless to resist this mistaken policy. The increase of wages was accepted, and indeed, as time went on, actually demanded by the workers, and the vicious circle thus began. It was indeed a vicious circle, for the rise in wages led to a still greater increase in prices, and the increase in prices to a still greater rise in wages. Both these factors—the increase in wages and the rise in prices—demanded a corresponding increase of currency, and the inflation of the currency led to its still greater depreciation, and so to an increase in prices, which again had to be met by a rise in wages.
This process did not finish till industry was completely destroyed. The Bolshevik regime abruptly put a stop to this game, but, alas! it was too late.