Longer version of the article on Evgeny Preobrazhensky

"The New Economy. Theory and Practice.
1922-1928"

The works of E. Preobrazhensky
are important from the point of view of understanding the economic nature of
the Soviet society. He clearly shows that in this society there is a struggle
between two contradictory laws: the law of value, which is from capitalism, vs.
"the law of primitive socialist accumulation", which is how he
explained, from the point of view of 1920's, the law of planned production on
the scale of an entire society, one which is aiming at socialism, and one which
is undergoing an accelerated industrial development. For example, here is one
quote from his book "The New Economy", which illustrates this:

"industrial equilibrium in the Soviet economy is produced
as a result of a struggle of two antagonistic laws - the law of value and the
law of primitive socialist accumulation, which means denying a single unified
regulator in the entire system"

Opponents of this view, who deny socialist tendencies today in
the modern post-Soviet society, can not explain basic problems of the economy
and policy in the former Soviet republics. One example: a low price of bread.

"The New Economy. Theory and Practice. 1922-1928", Evgeny
Preobrazhensky

The works of E. Preobrazhensky are important
from the point of view of understanding the economic nature of the Soviet
society. He clearly shows that in this society there is a struggle between two
contradictory laws: the law of value, which is from capitalism, vs. "the law
of primitive socialist accumulation", which is how he explained, from the
point of view of 1920's, the law of planned production on the scale of an
entire society, one which is aiming at socialism, and one which is undergoing
an accelerated industrial development. For example, here is one quote from his
book "The New Economy", which illustrates this:

"industrial equilibrium in the Soviet economy is produced as a result
of a struggle of two antagonistic laws - the law of value and the law of
primitive socialist accumulation, which means denying a single unified
regulator in the entire system"

Opponents of this view, who deny socialist tendencies today in the modern
post-Soviet society, can not explain basic problems of the economy and policy
in the former Soviet republics. One example: a low price of
bread. The government controls the staple food prices, such as grains. As for
the politics, the opponents cannot explain such basic phenomen of the world
politics as renewal of the "cold war" between Washington and Moscow,
in the 2000's, after a temporary relaxation of the tensions in the
1990's.

It is absurd to affirm, without reference to facts, that the law of value
has completely destroyed all aspects of planned production which existed in the
former Soviet society. As the author of this article stands closer to the
system of education (in Ukraine), he knows that there is a state order for
certain professions in certain amounts. The students who enroll in colleges and
universities in these professions obtain a free education. But those who go
outside the limit imposed by the state must pay for their own education. Also,
state orders continue to exist in such important sectors as the defense
industry, which covers many spheres of production and the most advanced
enterprises.

"The New Economy. Theory and Practice.
1922-1928", Evgeny Preobrazhensky

The works of E. Preobrazhensky
are important from the point of view of understanding the economic nature of
the Soviet society. He clearly shows that in this society there is a struggle
between two contradictory laws: the law of value, which is from capitalism, vs.
"the law of primitive socialist accumulation". For example, here is
one quote from his book "The New Economy", which illustrates this:

"industrial equilibrium in the Soviet economy is produced
as a result of a struggle of two antagonistic laws - the law of value and the
law of primitive socialist accumulation, which means denying a single unified
regulator in the entire system"

The law of value means that the value of a commodity is
determined by the quantity and quality of labor necessary for its production.
In a socialist-oriented economy, we don't have "an exchange-value",
but "a use-value", in other words, each thing, or activity, is first
of all a useful thing or activity. It is first of all a quality, not a quantity
of labor. The law of primitive socialist accumulation means that in a
relatively backward economically society, accumulation of value for accelerated
industrial development takes place first of all due to the unequal exchange
taking place between the industry of the towns (mostly owned by the state) and
the agricultural sector (mostly in private hands of the peasants). The state
forces the peasants to pay more for industrial articles than if they paid for
them, if they bought them on the world market. The value accumulated in this
way goes towards accelerated industrialization. Also, the law of primitive
socialist accumulation means that the state pays less to the city workers than
is the real cost of their labor power (for example: the salary of doctors in
Ukraine, in the present day, is about 5-10 times less than what they obtain
working for countries in Africa). Again, the value accumulated this way is
supposed to go towards the industrial development.

Hence, a society aiming at a socialism is involved in a whole
series of contradictions:

a. between a need for an unequal exchange between the town and
the country, and the need to do away with this inequality and hence develop the
agriculture, erase the differences between the town and the country;

b. between paying to the workers less than is the real cost of
their labor power, and the need to increase the wages, so as to improve the
cultural level of the workers;

c. between hostile countries, surrounding a socialist society,
and the need to become rapidly integrated into the world economy, with the goal
of a rapid industrial development, etc.

A solution to these contradictions Preobrazhensky sees on the
roal of a world socialist revolution. Yet, this must be a democratic
revolution, for Stalinism means repressing all civil society initiative, and
hence all development (first of all in material production, then in cultural
and social life). Perhaps, this was the reason which has led Preobrazhensky
into the camp of a Left (Trotskyist)
opposition in the USSR, and later into the underground organization of I.N. Smirnov,
one of the leaders of the Left opposition.

A curious tendency we notice after the death of Preobrazhensky
(who was, in a law-like way, shot by Stalin in 1937). Other socialist
revolutions have taken place in economically backward countries, such as China
(1949), Cuba (1959), Vietnam (1975). This can only mean that a world
socialist revolution starts in economically backward societies, especially
in those where the socialist revolution coincides with a struggle against an
external imperialism. However, democracy is possible only in economically advanced
societies, those where a surplus product exists that allows the population to
develop culturally, take the initiative for solving the problems of life in its
own hands (one example would be volunteers at http://librivox.org/). Hence, the second
stage of a world revolution means spreading it to the most advanced
economically societies. However, due to the unequal exchange that exists
between these countries and the rest of the world, the ruling classes of
imperialist countries have been systematically buying off its revolutionary
youth, de-reailing the revolutionary aspirations through drugs, stupid
entertainment, etc. At the same time, the lumpen-proletariat has been held off
through the system of welfare, i.e. economic means aimed at preventing
hunger-racial riots. However, today we see that imperialist countries are in a
period of a permanent crisis. One evidence for this are recent (August 2011)
riots in England. The welfare system is cut back. At the same time, these
countries are attacked by the migrant workers from Africa, Eastern Europe, and
Asia. They all demand low-paying jobs, or at least some welfare. The
unemployment in the imperialist countries increases. This is especially true for the
youth. Hence, the more active layers of youth leave their own mother
country, travel abroad to study, and sometimes even become involved in the
revolutionary movements in the Third World and Eastern Europe. For example, see
the
interview of Tanja Nijmeijer (with the FARC of Columbia) to the Dutch radio.

This is what gives us grounds to believe that a second stage
of revolution is coming to the U.S. and other advanced countries. The third
stage of a world socialist revolution may sweep away the remnants of
capitalism in the most backward societies of the globe (Africa) and
bureaucratic cancer in the countries where the socialist revolution has
initially started (former USSR, etc.) It will be like the sun in the spring
melting away the remains of the snow.

The three stages of a world socialist revolution is a scientific
hypothesis, confirmation, or correction of which, or its becoming concrete,
we will see in the future.

⇔

After the break-up of the Soviet Union, the contradictory
tendencies which Preobrazhensky defined continue their opperation. The main one
is the contradiction between the law of value and the need for a planned
socialist development of society. Opponents of this view, who deny socialist
tendencies today in the modern post-Soviet society, can not explain basic
problems of the economy and policy in the former Soviet republics. One example:
a low
price of bread. The government controls the staple food prices, such as
grains. As for the politics, the opponents cannot explain such basic phenomen
of the world politics as renewal of the "cold
war" between Washington and Moscow, in the 2000's, after a temporary
relaxation of the tensions in the 1990's.

It is absurd to affirm, without reference to facts, that the
law of value has completely destroyed all aspects of planned production which
existed in the former Soviet society. As the author of this article stands
closer to the system of education (in Ukraine), he knows that there is a state
order for certain professions in certain amounts. The students who enroll in
colleges and universities in these professions obtain a free education. But
those who go outside the limit imposed by the state must pay for their own
education. Also, state orders continue to exist in such important sectors as
the defense industry, which covers many spheres of production and the most
advanced enterprises.

It is curious that those who deny socialist tendencies in the
modern post-Soviet society have their origin in the menshevik analysis of the
Soviet economy during NEP (new economic policy). Hence, the so-called
"State Capitalism" theory, so popular among the left, is just modern
menshevism.

It is curious to take one example from the economic life of
1920's (Part II of "The New Economy", chapter 3, "The Law of
Value in the Soviet Economy"):

"Let's look at the railroad transportation, which is
totally in the hands of the proletarian state. The People's Commissariat of
Communications places an order for trains, cars, rails, etc., with Glavmetal
(main agency for producing metal). Are the prices defined by the market
relations? The prices are not defined by the market relations, as there is no
private train industry, private car production, private metal industry, etc.
The prices are not completely determined by the world prices, as the order is
placed within the country, independently of the prices on the world market. At
the basis of the order within the country is not the law of value of the world
economy. The prices are created from planned calculations, they are adjusted to
the prices of production at the factories of Glavmetal, taking into account a
certain margin of profit for the builder, or at a loss for the builder, as the
state consciously wants prices below the cost of production and gives subsidies
to the factories from its own budget".

Do we have private train building today? No, all the new metro
cars are built at the same old Soviet-era factories, as before 1991. Do we have
private metal production? Yes, we do, but here again the prices are set by the
government, not by the private owners. I.e. the factory can be a private
property of some olygarch, but, for example, we saw how Putin
recently dictated his will to one of the industrial olygarchs. The
communications industry may be private, but the state dictates tariffs for
mobile communications, and all private companies "voluntarily" lower
their tariffs. We also witness that coal mines are unprofitable, as the state
dictates its own prices for coal, and prefers to pay subsidies to the mines
from its own budget (which means, in fact, that these are state-controlled
enterprises!). Similar phenomena we observe in the agriculture. The state buys
bread at one prices, from producers, and gives subsidies to the agrarians.
Later the bread may be exported at the world prices. Before, the profit went to
enlarge the industrial basis of the country. Now, part of the profit goes into
the pockets of the high state officials, and part of the profit goes for buying
agricultural machinery from (mostly) American producers. Thus, the native
industry producing agricultural machinery is left idle. But the officials get
the "kick-backs" from the foreign companies in which they place the
orders.

In other words: we have today the economy of the Soviet type,
but with large "black holes" due to the corruption and theft of the
state resources. In this economy, the law of value and the law of planned
production aimed at socialism continue their struggle. Today, it appears as the
former is winning, but we hope that the ultimate victory will go to the later.

See Evgeny Preobrazhensky