79th Congress, 2d session

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House Document No. 754

COMMUNISM IN ACTION

A DOCUMENTED STUDY AND ANALYSIS
OF COMMUNISM IN OPERATION
IN THE SOVIET UNION

PREPARED AT THE INSTANCE AND
UNDER THE DIRECTION OF

REPRESENTATIVE EVERETT M. DIRKSEN
OF ILLINOIS

BY
THE LEGISLATIVE REFERENCE SERVICE
OF THE LIBRARY OF CONGRESS

UNDER THE DIRECTION OF
ERNEST S. GRIFFITH

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1946

90681

# FOREWORD

By Representative EVERETT M. DIRKSEN, of Illinois

In the fall of 1945 I addressed a group of farmers and farm leaders in Chicago. A portion of that address was devoted to the march of communism in many areas of the world. Those remarks were based upon personal observations made in many countries in the winter and spring of the same year.

At the conclusion of the speech several members of the audience wanted to know if I could recommend a short, simple treatise on how communism operates which dealt fairly and impartially with the subject and which did not employ a heavily slanted or biased approach. Offhand I could think of no such treatise.

But the inquiry prompted me to explore the matter. I thought of the emotionalism with which this whole subject had been surrounded for a long period of time and how ineffective it was in dealing with this new totalitarian philosophy which has admittedly made some gains in the United States in recent years. One conclusion kept reasserting itself. The real antidote to communism lay in a diffusion of knowledge and information on how it operates.

On the plane which brought me back to Washington I blocked out in my notebook the kind of a book I would write on this subject if time permitted and what should be included in such a volume to meet the inquiry of my farmer friends.

If farmers could but know what the Soviet system of agriculture is really like; if laboring men had a better working knowledge of the status of labor in the Soviet Union, and especially the system of forced labor which is so common; if people who are devoted to God and who value a free conscience above all else could better know how religion fares in the Soviet Union; if our people generally, who enjoy the highest living standard in any time or place, could know more about living standards under the Soviet scheme; if those who see in the free-enterprise system as it has been pursued in the United States for more than 150 years the greatest instrument for material human advancement could know a little more about industry and management in the Soviet Union; if those who at some time or other may have found themselves toying with the idea of bringing about a change in our form of constitutional representative government had a better perception of government and governmental methods under communism; if those who have at one time or another felt that a perplexing world required a planned existence, had a broader knowledge of how leisure time is employed under communism; if those who feel that a regulated system of education might be preferable to the free system in the United States had a better perspective of how the educational system operates in the Soviet Union, it would halt the march of communism as nothing else could do.

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IV

FOREWORD

As I pondered this matter, several things were constantly in mind. Such a treatise should be reasonably short. It should be couched in understandable language. It should not be wearisome with too much historical detail. It should concern itself with communism in action. It should be well documented. That is to say that every authority for each observation should be quoted so that it could not be impounded on the ground that it was merely naked and unsupported opinion. It should be fair and impartial.

Having blocked out the chapters to be covered and indicated the method and manner in which the whole subject should be treated, the next problem was to assemble the material and make it available to the Congress and the country.

My first thought was to introduce a resolution in Congress to authorize the creation of a joint committee of Senators and Representatives who would be empowered to select a dozen scholars of outstanding reputation in the fields of history, agriculture, labor, economics, business, education, religion, and government to undertake this task. This idea, however, did not appeal to some of my colleagues and friends whom I consulted because they could foresee difficulty in bringing about the enactment of such a resolution and even greater difficulty in securing agreement upon the names of those who should be considered for the task.

It then occurred to me that there was at hand an agency of Government which was well equipped to do the job. It was the Legislative Reference Service in the Library of Congress under the very able direction of Mr. Ernest S. Griffith. This Service—as a component of the Library of Congress—was under the immediate direction and control of the Congress. Its very business and its primary function was to probe for facts, to document those facts, and make them readily available to Members and committees of Congress. Here then was a public agency, supported by public funds, and an integral part of the legislative branch of Government itself, which seemed most appropriate to this labor.

Mr. Griffith and his staff cheerfully accepted the assignment. We had many conferences, in the course of which the scope and method of approach was carefully determined. At the very outset, I made it plain that the Legislative Reference Service was to have a free hand in the matter. Personally, I wanted the facts, good and bad. I wanted an unbiased account of communism in action and I am sure the people of this Nation who are interested in this problem would be equally interested in a thorough and unadorned treatment of the subject.

At long last, the task has been accomplished. It represents a long and patient labor. The treatise embodies the careful and painstaking labor of many scholarly men and women who spared neither time nor effort in exploring books, documents, files, and even confidential sources of information, to make available to the Congress and the people a short, practical, well-documented report on this vital subject.

To Mr. Griffith and his associates, I express my personal appreciation for the useful and notable contribution to better understanding of the challenge of communism. I esteem it a valuable work which deserves wide distribution.

PREFACE

Twenty-five years ago communism as an operating system was in its infancy. It has now grown up. The Union of Soviet Socialist Republics, a Communist State, emerged from World War II in position to play a leading role in world affairs and to exert a powerful influence on the political, economic, and social institutions of many nations.

The purpose of this study is to explain to the lay reader briefly and in simple terms how communism operates in the Soviet Union. It does not pretend to be an analysis of the theory of communism. Neither is it an appraisal of communism. It is primarily a description of the operation of the economic, political, and social institutions of the Soviet Union in recent years. Communism has proved to be like democracy in at least one respect; it has expressed itself in many and varied ways. No attempt is made, however, to trace its entire evolution in the U. S. S. R. The dates of the more significant developments are noted in the chronological chart.

Part I deals with the Soviet economic system. In keeping with the Communist emphasis on the economic basis of society, it includes three-fifths of the chapters of this study and even more than that proportion of the space. Part II contains chapters on the political system, national defense, education, the use of leisure time, religion, and individual freedom.

In order to help the reader to visualize the institutions, practices, and policies described, comparisons and analogies are frequently made with the United States. These comparisons and analogies are not to be taken as measures of the success or failure of communism, or as an indication of the precise form which communism would take if it were ever put into effect in the United States.

It will be noted that references to monetary values in the Soviet Union are in rubles. It is recognized that the American reader would like to know the equivalent in dollars; but this is not really practicable. The ruble is used only in domestic transactions in the Soviet Union; it does not enter into trade like the dollar. In the U. S. S. R. the official exchange value of the dollar is 5.3 rubles. To put it the other way around, the ruble would be at that rate the equivalent of approximately 19 cents. The exchange value of the dollar for persons in the United States diplomatic service, however, is 12 rubles, indicating that the official rate may not constitute an accurate measure of the purchasing power of the ruble. After consideration of this and other factors, it was deemed less confusing to make no attempt to convert.

The direct sources used are nearly all in English. All chapters, however, have been read and commented upon by persons familiar with Russian sources in their respective fields.

The study was undertaken at the request of Representative Everett Dirksen, of Illinois, who also indicated its general scope. Representative Dirksen had for some time felt the need of such an objective and comprehensive study so as to make the facts about the Soviet Union available to the American public.

ERNEST S. GRIFFITH,
Director, Legislative Reference Service.

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## AUTHORS AND ACKNOWLEDGMENTS

Chapters I, II, III, IV, and V were written by Gustav Peck; chapter VI by Leisa G. Bronson; chapters VII and XV by Hugh L. Elsbree; chapters VIII and IX by Raymond E. Manning; chapter X by Nancy Baster, Virginia Brewer, and Dudley B. Ball; chapters XI and XII by Charles A. Quattlebaum; chapter XIII by William H. Gilbert, Jr.; and chapter XIV by Amelia H. Baldwin.

General editorial supervision was provided by Hugh L. Elsbree.
Bibliographical assistance was provided by Janie E. Mason, and
editorial assistance by Dudley B. Ball. The chronological chart was
prepared by William H. Gilbert, Jr.

Acknowledgments are made to the following for reading the chapters
indicated and for offering valuable comments and suggestions:

Dr. Sergius Yakobson, Library consultant, who reviewed the entire
study.

The Union of Soviet Socialist Republics Section of the Office of
International Trade Promotion, Office of International Trade, Depart-
ment of Commerce, which also reviewed the entire study.

Dr. Lazar Volin, agricultural economist, Office of Foreign Agricul-
tural Relations, Department of Agriculture, who reviewed chapters
VI, VII, and XV.

Also to Dr. Vladimir Gsovski, Chief, Foreign Law Section, Law
Library, for advice on a number of points.

VII

COMMUNISM IN ACTION IN THE SOVIET UNION

PART I—ECONOMIC

CHAPTER I

FROM THE REVOLUTION TO THE 5-YEAR PLAN

FIRST EFFORTS OF COMMUNISM

When the Bolsheviks seized power on November 7, 1917, they took over plants and industries as the first step in the establishment of the basis of socialism or communism. Throughout 1918 an increasing number of industries and activities were nationalized, including banking and foreign trade. Former Government loans made by the Czarist regime were repudiated. By the end of June 1918 all large-scale industry, finance, and commerce was nationalized. Small-scale industry was permitted to continue in private hands until a decree issued in November 1920 nationalized all concerns employing not less than 5 workers where machinery was used and not less than 10 workers were there was no machinery.¹ In all these ways the Soviet Government succeeded in eliminating private capital and gaining control of the "commanding heights" of the national economy.

Within a few weeks after the Revolution was proclaimed, the Government set up a Supreme Economic Council charged with the organization of all industry and finance and the coordination of all existing economic organizations; but it was many years before any real nationalization was attained.² The Supreme Economic Council later set up operating departments to deal with various branches of industry, and together they became the central state institution for the general administration of all nationalized industry. Subdivisions or trusts were created to direct the actual course of production and distribution for individual branches of industry or for groups of factories. The department for each industry retained the formulation of the broader industry plans, the coordination of requirements and the provision of supplies and finance, while the trusts were to direct and operate the concerns. The dire need to keep some industry in operation in the first 2 years after the Revolution left little time for the broader national planning which all this foreshadowed. But this was a beginning in gaining actual experience in the planning and management of socialized industries.

The departments of Government which took over the management of economic life were left with a legacy of dying industries which they

¹ Alexander Baykov, The Development of the Soviet Economic System (Cambridge University Press, 1946), pp. 6-7; Emile Burns, Russia's Productive System (New York, E. P. Dutton & Co., Inc., 1930), p. 18.

² References are given in the first five chapters where there might be some dispute among the authorities or where a source for a judgment may be required. Specific reference is not made to the steps in the broad evolution of Soviet society or policies for which the writer must assume responsibility based on a careful comparison of authorities and reflection on the facts.

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were trying to bring under concentrated control. One of the principles of early communism, that money was "a testimony of the right of the exploiter to obtain social goods with a view to speculation, profit, and plundering the workers,"³ resulted in greatly hampering the exchange, of economic goods. The reckless issue of paper money when production and trade were declining led to a sharp depreciation of the currency and to the refusal of those who had goods to accept money at all.⁴ Money thus ceased to serve its proper functions as a measure of value, unit of account, and medium of exchange. The Government then tried to move agricultural and industrial products without the use of money by such means as central depots, state-organized barter, forced collections, and requisitioning. State enterprises were instructed at the end of 1920 to reckon their costs in units of labor value, but this purely socialistic method of accounting never took hold.⁵

None of this worked. Trade stagnated. Towns were deserted. Peasants reduced their production. Industrial discipline deteriorated under the workers' control over management, relative equality of wages, and the payments in kind which grew in importance as the currency depreciated. During the period of communization as originally preached and ardently and fervently supported by Lenin and his followers at home and abroad, the Russian economy—that is, the actual production and exchange of goods—was, by all accounts, completely disrupted and tended progressively toward stagnation.⁶ This is brought out by the State Economic Planning Commission itself (Gosplan).⁷

TABLE I.—Index of production in Russia

<table><thead><tr><th>Industries</th><th>Large-scale</th><th>Small-scale</th><th>Total</th><th>Industries</th><th>Large-scale</th><th>Small-scale</th><th>Total</th></tr></thead><tbody><tr><td>1913</td><td>100.0</td><td>100.0</td><td>100.0</td><td>1918</td><td>33.8</td><td>73.5</td><td>43.4</td></tr><tr><td>1916</td><td>116.1</td><td>88.2</td><td>109.4</td><td>1919</td><td>14.9</td><td>49.0</td><td>23.1</td></tr><tr><td>1917</td><td>74.8</td><td>78.4</td><td>75.7</td><td>1920</td><td>12.8</td><td>44.1</td><td>20.4</td></tr></tbody></table>

The decline in industrial production in 1917 may be understood in the light of the break-down of the war effort, the February Revolution and the November Revolution; but the continued steep decline in 1918, 1919, and 1920, although it is chargeable by some to the continuing civil war and the sabotage of former capitalists, must be ascribed in large measure to the failure of theoretical communism to build any solid foundation for the productive energies of the people, at least within 3 or 4 years.

The decline in agricultural production was equally catastrophic.⁸ Despite the fact that the Russian people did not have a very high standard of living in the years before the First World War, production of both agricultural and industrial commodities was so much less in the first few years of the Soviet regime that the conclusion is in-

³ Lenin quoted in Boris Brutzkus, Economic Planning in Soviet Russia (London, G. Routledge & Sons Ltd., 1935), p. 105.

⁴ Baykov, op. cit., pp. 31-38.

⁵ Brutzkus, op. cit., p. 105; Baykov, op. cit., pp. 37-38.

⁶ Brutzkus, op. cit., pp. 99-109; Paul Haensel, Economic Policy of Soviet Russia (London, P. S. King & Son, Ltd., 1930), p. 29; Baykov, op. cit., p. 5; Leonard E. Hubbard, Soviet Labour and Industry (London, Macmillan, 1942), pp. 30-37.

⁷ As reproduced in Baykov, op. cit., p. 8.

⁸ See the chapter on agriculture. Also Baykov, op. cit., table, p. 23, for decline in crop yields and in number of horses, cattle, sheep, and goats.

COMMUNISM IN ACTION

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escapable that even the lower standard of the period between 1917-21 was possible because the people were living by grace of existing stocks from the prerevolutionary period and by confiscation of existing wealth as much as by fresh production.

SECOND BREATH: THE NEW ECONOMIC POLICY

When the Tenth Congress of the Communist Party met in March 1921, Lenin made his followers face the bitter facts.

We are living—he said—in such conditions of impoverishment and ruin, over-strain and exhaustion of the principal productive forces of the peasants and the workers, that for a time everything must be subordinated to this fundamental consideration—at all costs to increase the quantity of goods. * * * In our attempt to pass over to Communism, we had suffered by the spring of 1921, a more serious defeat than any previously inflicted on us by Kolchak, Denikin or Pilsudsky. Compulsory requisition in the villages and the direct Communist approach to the problems of reconstruction in towns—this was the policy which interfered with the growth of the productive capacity of the country and proved to be the main cause of a profound economic and political crisis which confronted us in the spring of 1921.⁹

It was at this Congress that the first steps were taken toward the introduction of the New Economic Policy (N. E. P.). Lenin himself described this policy in one sentence in the same speech:

The New Economic Policy means the substitution of a food tax for requisitioning; it means a transition to the restoration of capitalism in no small degree.

The New Economic Policy restored market dealings up and down and through the various sectors of industry. Even though the N.E.P. was announced when industry was practically stagnant and agriculture was in the early stages of the famine of 1921-22, some revival occurred at once. Wherever there was still some industry and where famine had not struck, production picked up. Hope was revived. Trade was stimulated. Small industries started up again.

Despite the fact that small-scale industry cannot practice the economies of large-scale industry (when properly managed), and despite the legal insecurity of private business during the N. E. P. period, private ventures made great headway in the ensuing years. By 1925-26 private trade did 44 percent of the retail trade of the country and 7 percent of wholesale trade. Their shops mostly employed four or fewer persons, but they constituted 83 percent of the retail enterprises. Small private industry had more difficulty developing any substantial volume in the face of Government hostility, and larger private industry even more. In 1925-26 only 5,684 private factories employing more than six workers existed.¹⁰

The entire Communist Party was by no means agreed as to the necessity for the N. E. P., for many of them, under the leadership of Trotsky, saw that it threatened the future of communism. Altogether private business was kept insecure and uncertain of its future. It could not engage in long-range planning and had to depend on quick turn-over and profits. Nonetheless, private firms, charging lower prices than the state monopolies, did more of the business of the nation.

In the outside world the N. E. P. was viewed as a confession of the failure of communism in Russia and the return to capitalistic methods. In reality the years between August 1921 and 1926-27, when the

⁹ Quotation from Lenin's Collected Works in Baykov, op. cit., p. 43.

¹⁰ Haensel, op. cit., pp. 38-40.

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N. E. P. was abandoned, were years of taking breath for the next great surge of communistic construction on lines which the changing leadership of Soviet Russia thought would be workable. The Government retained the ownership and management of large-scale industry, construction, transport, the credit system, foreign trade and shipping, and the larger trading organizations. The Soviet leaders clearly planned the N. E. P. as a breathing spell to restore economic activities, gain time, study and learn the problems of administering large socialized enterprises and, above all, build up the interconnecting institutions of a planned socialist state which would work progressively to release and encourage the productive forces of the nation and the people.

Consequently from the beginning of the N. E. P. Lenin and his followers thought in terms only of a temporary retreat. Not only did they hold on to all the "commanding heights" of the national economy, but they also planned from the beginning to restrict the restored portions of capitalism to serve communist ends. This was consciously done by numerous measures, such as restricting dealings in profitable agricultural raw materials to Government trading institutions and cooperatives, providing for the "planned transfer" of manufactured goods by state agencies, imposing discriminatory measures and heavy taxation. The foreign concessions, permitted during this period to stimulate capital development and the production of raw materials, were also restricted and by 1927-28 tended to disappear.¹¹ By 1928 except for a limited and contracted existence of private enterprise in some parts of domestic trade and small-scale industry, the Soviet economy was state-owned and state-administered.

ORIGIN OF THE 5-YEAR PLANS

The multiplication of local, provincial, and national agencies to plan and direct the increasing number of public enterprises and the policy of direct control by workers which was being followed by many individual factories in the early period of the Revolution resulted in the establishment in 1920 of a still higher coordinating authority entirely divorced from actual administration—the State Economic Planning Commission or the Gosplan. In February 1921, on the eve of the launching of the N. E. P., Gosplan was instructed to draw up a general plan for the national economy and to break it down into annual programs. It was the responsibility of Gosplan to formulate plans and programs for the control, expansion, and interrelation, of the entire economic life of the nation, including industry, agriculture, finance, trade, and transport, whether nationalized, municipal, cooperative, or still privately owned and operated. It developed its planning work into an Annual Plan and a 5-Year Plan and a more general Plan indicating the course of development beyond the 5 years. This has become the central planning agency of the Soviet economic system, without which the various individual plans and projects would come into conflict with one another. While Gosplan does not administer or operate any elements of the national economy, it records the progress of the plans, its successes or failures in different sectors of industry and in different sections of the country, and works out modifications as experience dictates.

¹¹ Baykov, op. cit., pp. 59-70, 125-127; Brutzkus, op. cit., pp. 112-122; Eugene Lyons, Assignment in Utopia (New York, Harcourt, Brace & Co., 1937), p. 81.

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All through the period of the N. E. P., Gosplan was at work studying and engineering the economy as a whole. Areas of development and expansion were laid out in different industries and regions, and in agriculture, transportation, trade, and public construction. A basic decision was made to emphasize capital development for future growth in the broad outlines of a general economic plan, and there would have to be much tightening of belts to carry out this program.

In 1925, after a new stable currency had been introduced, Gosplan issued a report on the economic control figures of the U. S. S. R. for the year 1925-26. By that time the desperate need to increase food and raw materials for any broad program of Socialist construction seemed of the clearest urgency to the dominant leaders of the Soviet state. Increased raw materials were needed for the expansion of industry and for exports with which to pay for machinery and foreign supplies.

The program called for sharp increases in food and basic raw materials on the farms to be furnished at what the peasantry considered low and confiscatory prices. The plan failed in its objectives largely, it was said, because private dealers were ready to pay much higher prices to the peasants than the Government's fixed prices. As private business was being squeezed out, it was left only in areas of life where it would not interfere with the laid-out plans of the Government, or might even help accomplish them, like the sale of certain perishable farm surpluses to the town and city populations.

In 1926 the First 5-Year Plan was laid out by Gosplan, with the co-operation of numerous economic bodies and subsidiary planning organizations. The Plan was carefully studied and revised. In its final form it covered the period from October 1, 1928, to the end of 1932. A Second 5-Year Plan was launched in January 1933 and was completed at the end of 1937. The Third 5-Year Plan, started in 1938 was interrupted by the attack on the U. S. S. R. by Germany. Since a Fourth 5-Year Plan has already been announced, it may be assumed that the management of the economic system as a whole by the devices and techniques of the 5-Year Plans is a stable mechanism in the U. S. S. R.

These succeeding 5-Year Plans embodied a large variety of specific programs which determined the direction and the rate of progress of the economy of Soviet Russia. They provided for the collectivization of agriculture, the rapid development of heavy industry, the increase in basic materials, the exploitation of the vast eastern areas of the country, mechanization and electrification, improvements in the transportation system, the absorption of planned increases in the urban population and of industrial employees. The Plans set goals of production in each industry and each plant, determined the increases in the productivity of labor and production costs to be accounted for, the reduction in hours, increases in pay, and the provision of social services.

HISTORICAL PERSPECTIVE

The Soviet state, which originally had been a regime dominated by intellectual Marxian revolutionaries who thought they were the spearhead of a world revolutionary movement, settled down by 1926 to try to achieve "socialism in one country." Lenin had passed away on January 21, 1924. Between 1924 and 1926 Stalin emerged as the undisputed leader of national communism and of the type of economic

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planning which has characterized Soviet Russia since the promulgation of the first of the 5-Year Plans in 1928. The three 5-Year Plans which have been completed, developed and maintained a stable economic structure and organization under which the Soviet economy has made genuine progress in industrialization and to a lesser extent in the standard of living of peoples living in the Soviet Union.

There have, of course, been some changes in the organization, operation, and management of industry, in the organization of labor, the functioning of trade unions and in the systems of work and pay in the Soviet Union since 1928; but such changes have not themselves been regarded as revolutionary, since they have retained the Government ownership and operation of productive property and were not advertised as having radically changed the basic operating principles. Before the victory of Stalinism there had indeed been another and greater revolution—the period of militant communism under Lenin and Trotsky which ended in 1921, and the period between 1921 and 1926 when the New Economic Policy (N. E. P.), reversing the prior steps of management of industry by committees of workers, single wage level for all workers, the prohibition of profit seeking and private trade, and the abolition of money as a medium of exchange, helped to revive industry from the stagnation into which these principles of militant communism had brought it. Between 1924 and 1928 the international revolutionary intellectuals who had sponsored militant communism gave way to the Communist Party bureaucracy and the military and civilian technicians whose ideology and planned construction dominates Soviet Russia today. Many dissidents still had to be liquidated in the purges of the 1930's; but these "deviationists" of both the Left and the Right had been losing influence since the death of Lenin in January 1924.

It is basic to an understanding of the present phase of Soviet development to distinguish the abstract communistic theories of its earlier revolutionary phase from the system of industrial control which has actually evolved in the U. S. S. R. The Communist or Leninist Revolution, by seizing power, made the present system of operation of industry in the U. S. S. R. possible; but the present Soviet industrial system is by no means the same as that initiated in the Revolution. Old communistic theories, phrases, slogans, and poses were generally not officially repudiated; but those who were unable to accept the changing reality were displaced by followers who saw the need for the changes in organization and control which were being made. The official spokesmen of the new Party line did not drop many of the slogans of militant communism; instead they reinterpreted them and used them to describe a whole new set of controls which were succeeding as academic communism or the communism of the books had never succeeded. That is the system, perhaps better described as Stalinism than as communism, Marxian socialism, or Leninism, which prevails in the U. S. S. R. today and is described and compared with the American system in these pages.

## CHAPTER II

# THE OPERATION OF THE SOVIET PRODUCTIVE SYSTEM

### BROAD CONTRAST OF AMERICAN AND SOVIET ECONOMIES

Aside from a very small part of the economy, the productive system of the United States is organized on the basis of the private ownership and operation of the factories, machines, and other facilities of production; a relatively free market for goods, services, and labor; prices determined by the free interchange of willing buyers and sellers—the whole economy deriving its stimulus from the type, character, and intensity of the wants of the people and their productive power. Business enterprise responds to these wants in its endeavor to produce the goods desired at a profit. The quest for profits results in the growth of competing units of production, while the discrimination of buyers throws the available business to the lower-cost firms. Miscalculations of producers regarding the volume of demand for particular products are borne as losses by producers who have not met market favor. New balances are continually created at higher or lower levels of production, prices, employment, wages, and profits, as the public expresses its wants and as its buying power changes. In normal times these are the guiding principles in the operation of the American economy, although their force and effect are mitigated in certain sections of the economy by the existence of such phenomena as relative monopolies, other efforts to control or maximize profits, so-called administrative prices, and the regulation of business by Government by such means as licensing, rate regulation, the establishment of parity prices, and the interference with absolutely free consumer choices in articles or services believed to be injurious to health or welfare.

The Soviet economy has no such foundation of freedom of consumers' choice, private property, freedom of enterprise, general and pervasive competition, and private profit or loss. Private enterprise is restricted to an enterprise which can be managed by the owner-producer without any hired labor. This is a negligible element in the economy of Soviet Russia, since it is restricted practically to handicrafts. In addition farmers are permitted to cultivate their own very small plots of land on time available after they meet the standards of production on collective farms and to sell this produce on the open market. With these minor exceptions and some of the enterprises of the cooperatives, all the capital in production, distribution, finance, and so forth, is owned by the state. Agencies of the Government plan the economy as a whole, determine relative urgencies of production, manage its operating units, fix prices, and in all these ways tend to determine consumers' choices. All profit theoretically goes to the state and the state makes all investments for additions or expansion.

### THE GOSPLAN

Practically all economic activity in the U. S. S. R. is encompassed in a plan laid down by the Government and the Communist Party in their directives and orders. The 5-Year Plan sets the major goals, and expected accomplishments. Annual and quarterly plans break

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these down into branches of industry and single-plant operations. All economic activity and all economic behavior must be subordinated and coordinated within the objectives of the plans.

The Gosplan, which has remained the central and highest planning body since 1921, although its functions and authority within the system have been altered through the years, receives general directives from the Central Committee of the Communist Party and the Party Congresses. On these it bases its 5-Year, Annual, and Quarterly Plans. From these it draws up plans for the various interrelated sectors of economic life such as heavy industry, light industry, and transport. These are further broken down on a territorial basis. Gosplan also supervises the fulfillment of all plans on a national, regional, and plant basis. To accomplish this, they must lay out plans for the erection of new plants, determine the requirements for raw materials and manpower, and financial requirements. Representatives of Gosplan are located in regions or large plants to watch operations on the spot and make some alterations when necessary.

## INTERMEDIATE PLANNING

The general planning directives of Gosplan are carried out by the Commissariats, the Glavks,¹ the combines, and the trusts. These also have their own subordinate planning departments. In this way each branch of industry and every large plant has its own plan, which of course is more specific and detailed than the general plans developed by Gosplan. They also have the problem of allocating production to single plants and settling interrelations among plants producing common components. Plans move down from Gosplan to the individual plants through the planning departments of the Commissariats, the Glavks, the combines, and the trusts. Successful plants are permitted to work out their own production programs for the year based on the results of the previous year. These must be approved by the Glavk, which may also make changes based on broader national considerations such as new sources of supply, interrelations of plants, and financial resources. The consolidated program for the total of its subordinate plants is sent to the Commissariat for approval and further change. All of these are then coordinated and brought together by Gosplan in an annual plan. Quarterly plans do not need to be approved higher up than a Glavk.

## REGIONAL PLANNING

Regional planning was given greater consideration in each of the 5-Year Plans, in part because of its obvious economy, such as regard for the location of plants near raw materials or fuel or power, and in part also for strategic reasons and to stimulate the interests of the various constituent republics within the U. S. S. R. Regional planning was, however, mainly the work of central organs such as Gosplan, Commissariat, and Glavk rather than of regional planning boards. Regional planning boards operate in conjunction with the Gosplan of the various republics, which have an interest in developing local resources. In January 1941 a decree was issued decentralizing plants of local importance.²

¹ Glavks are planning coordinating units below the Commissariats. Combines or kombinats are complex plants making a wide range of goods based on the use of a single main raw material, with its byproducts and wastes, as in coal or rubber.

² Summarized and reference given in Gregory Bienstock, Solomon M. Schwarz, and Aaron Yugow, Management in Russian Industry and Agriculture (London, New York, Oxford University Press, 1944), p. 52.

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PLANT-LEVEL PLANNING

Planning on the plant level is covered by directives from the Commissariat or Glavk or trust and covers the familiar problems of plant management-production in quantity and value, new investment, working capital, number of workers and expected increases in labor efficiency, the total wage bill and planned increases which must be allowed, reductions in cost of production and sources from which reductions in cost must come. There is a certain amount of collaboration with plant management in arriving at these figures, plant management sometimes furnishing the original forecasts and estimates. Cooperation agreements are worked out between plants with the approval of higher authorities making for an economical dovetailing of suppliers and customers.

THE HIERARCHY OF INDUSTRIAL ORGANIZATION

The lowest rung of the operating ladder is the individual enterprise; but the enterprise is a creature of the state, not the result of individual initiative and the collective aggregation of capital and management by associates and stockholders as in the United States. The enterprise, be it a factory, shop, mill or mine, is not itself a legal or complete entity in the Soviet Union. It receives its orders from higher organizations and confines itself to carrying out technical operations.

Over the enterprises in the same branch of production are the state trusts, which are the lowest legal entities in Soviet industry. The trusts provide the enterprises with raw materials, machinery, credit, etc., and then dispose of the product to other state enterprises, to cooperatives or to the public. There are, however, a few very big enterprises, like the Magnitogorsk Metal Works in the Urals, which operate as trusts.

In the First 5-Year Plan, the industrial combine was set over a number of trusts using the same basic raw materials. They direct the broad planning of production, the planning and control of capital construction, the organization of supplies and the disposal of the produce, technical management, the appointment and dismissal of the managerial personnel of the trusts and enterprises under their direction, broad questions of labor policy and the disposition of technicians and skilled workers.

Over the combines (and trusts and enterprises) is the chief administration of the People's Commissariat responsible for the type of production in question. The number of Commissariats has gradually been increased until there were 48 in 1946. Some of these are All-Union Commissariats, which are in charge of those branches of production of importance to the whole Union. (Coal, petroleum, chemicals, armaments, heavy machine building, electric power stations, etc.) Other People's Commissariats are Union-Republican. (Light industry, textiles, fish, building materials, etc.) They administer only a limited number of enterprises determined by the Supreme Soviet of the U. S. S. R. In general they work through like-named People's Commissariats of the constituent republics.

The Commissariats are further coordinated by Interdepartmental Councils and by the Economsoviet, which is a super-Commissariat headed by an outstanding official, such as the Chairman of the Council of People's Commissars. The function of the Economsoviet is to

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coordinate the various People's Commissariats, issue decrees affecting or involving more than one Commissariat, confirm the supply plans of the different industries and regions as well as general plans for the transportation and warehousing of goods.

### QUESTION OF MALADMINISTRATION OR ILL EFFECTS OF COMMUNIST PLANNING

This schematic presentation of the workings of the Soviet economy gives an impression of order, careful planning, the avoidance of waste, the interrelatedness of parts, the assurance of markets—in fact, all that an engineer viewing the economy as a series of interrelated operations would want. No wastes of capitalist individual enterprise. No uncontrolled competition. No interlopers starting new businesses or new lines of old business. No advertising to take business away from one firm to another. No price "anarchy." No strikes. No profiteering. Everything is in order and subject to control from on top.

Because of the secrecy of the practices of the Soviet Union and because of the presumed unreliability or lack of technical competence of journalists and opponents of the Soviet regime who were able to leave for other countries, criticisms of the actual operation of the Soviet economic system have always been subject to reservation on grounds of bias, unfairness, prejudice, or inaccuracies. On the other hand, Government releases can certainly not be taken at face value; while the books of visiting firemen and fellow travelers are generally written by men without background in economic problems, whose chief qualification may indeed be nothing but an ardent will to believe.³ While the best evidence, finally, is the statistics of produc-

³ For these reasons it may be well to state in this place the sources which were used in arriving at the judgments which are interspersed in this and the subsequent chapters. All the books to which references are made in the footnotes were read and digested. A number of others—books and pamphlets—pro and con—detailed and general—served to fill in the background and to make the writer aware of the prejudices which abound, pro and con.

The basic facts in this chapter and the subsequent chapter on industrial management in the U. S. S. R. come from the following publications:

(a) Bienstock, Schwaz, and Yugow, op. cit. This is a publication of the Institute of World Affairs and was released by the Oxford University Press in 1944. The Research Council of the Institute includes the names of some of the most outstanding American scholars. The authors were educated in Russia and lived there until sometime after the Revolution. They have followed Soviet economic developments conscientiously and have had their contributions accepted by the most reputable journals of several different countries.

(b) Alexander Baykov, Development of the Soviet Economic System (Cambridge University Press, 1946). This is a well-documented review of the experience and results of planning in the U. S. S. R., written by the lecturer in charge of the Department of Economics and Institutions of the U. S. S. R. in the University of Birmingham, England, and published in 1946. It is one of the publications of the National Institute of Economic and Social Research, which has among its staff some of the leading economists and statisticians of Great Britain. Dr. Baykov is a native of Russia, which he did not leave until 3 years after the revolution. Before coming to England he wrote and lectured on Soviet economy from his post in the University of Prague.

(c) Boris Brutzkus, Economic Planning in Soviet Russia (London, G. Routledge & Sons, Ltd., 1935). This is an earlier publication than Baykov's, also written by a Russian scholar and published in Great Britain in 1935. It is less factual than Baykov's work and more given to theoretical analysis; but it exhibits the same breadth of view and fairness of approach, close familiarity with Soviet operating conditions and results and willingness to admit accomplishments which have actually occurred. Dr. Brutzkus had been professor of agricultural economies at Petrograd from 1907 to 1922. He served in the planning councils of Soviet Russia until the end of 1922, but was then compelled to leave. For the next 10 years he was professor at the Russian Scientific Institute at Berlin, a position which he lost with the coming of Hitler.

(d) Alexander Barmine, One Who Survived (New York, G. P. Putnam's Sons, 1945), embodying Barmine's earlier work, Memoirs of a Soviet Diplomat (London, L. Dickson, Ltd., 1938). Barmine is one of two Soviet industrialists and middle to top hierarchy men who have had wide industrial experience under Stalinism and are free to tell what they regard as the truth about their experiences. There is further discussion of Barmine in the body of this chapter.

(e) Victor Kravchenko, Chose Freedom (New York, C. Scribner's Sons, 1946). This book was written in the United States in late 1945 and early 1946 by a man who had had the most intimate industrial experience as an engineer and director of enterprises under Stalinism. His experiences are presented in much greater detail than Barmine's and they throw even more light on actual operations because Kravchenko worked little in Moscow. He was responsible for industrial operations in a half dozen different sections of the U. S. S. R., including the area beyond the Urals. There is also further discussion of Kravchenko in the body of this chapter. Barmine and Kravchenko did not know each other when they lived in Soviet Russia.

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11

tion and consumption, because this is the final test of any economy, it might be instructive to look at one or two experiences in the reports of two industrial managers and public officials of medium rank. One is Victor Kravchenko, whose career covered positions of assistant chief engineer of plants, assistant director and director of plants, enterprises, and trusts, and official of the Sovnarkom of the Russian Soviet Federated Socialist Republic. As a trusted Party member and official, Kravchenko was sent to the United States as a representative of the Soviet supply agency. At the end of his term he decided to throw himself on the protection of public opinion of the United States rather than go back to the land of his birth, where his father had served much time as a political prisoner during the Czarist regime and had later fought in the Revolution, and where he himself had been brought up as a Communist, attended Soviet schools and had made a successful career for himself in the Soviet political-industrial hierarchy in the 20 years of his maturity. The other witness is Alexander Barmine, who had also had a successful career as a Soviet industrial manager as well as in the army and the diplomatic service. He had held the post of first vice president of the Machine-Tool Importing Trust and later was selected as the president of the new Auto-Moto-Export Trust. Barmine had represented the Soviet Union in Persia, Latvia, Belgium, and Greece before he escaped to France, from which country he finally came to the United States.

Both these industrial managers have lifted the iron curtain to let us see political and economic planning as it involved men of their standing and position in the Soviet hierarchy—men who are the important cogs which make the plans and programs effective or ineffective, operate at more than 90 percent efficiency or 50 percent or 20 percent. A society can live according to its fashion at one level or at another, even though such indices as death rates, longevity, standard of living, and so forth, would be affected. The population might indeed continue to increase at a relatively low level of operation in comparison with its industrial potential—as, for example, in China or India.

In one of his last, and up to that time, the most important post to which he was appointed, that of director of the steel pipe mill to be erected in Stalinsk in Siberia in 1939, Kravchenko reports the following series of events:⁴ For many months the metallurgical industry had been discussing the decision of the top authorities to establish a grandiose pipe-rolling project in Stalinsk. The choice of the site, named after Joseph Stalin, attested to the importance of the project. The construction would cost 150,000,000 rubles.

In the prescribed Soviet fashion, the plans were being ballyhooed well in advance. * * * Without consulting my preferences, the Commissariat and the Central Committee of the Party selected me to direct the entire construction of this new plant.

Kravchenko wanted to see the site before accepting the responsibility for its construction and operation. His immediate superior, the head of the Glavk that stood over enterprises and trusts in the iron and steel industry, "tossed me like a hot potato to Comrade Merkulov, who by this time had become Commissar of Ferrous Metallurgy."

⁴ Kravchenko, op. cit., pp. 315-331.

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Merkulov said:

What's the idea? I gather you want to make a personal check-up on a decision confirmed by the Commissariat, the State Planning Commission (Gospian), the Metallurgical Project Institute, the War Commissariat, the Central Committee of the Party and the Politburo. Are you in your right mind?

Kravchenko was finally permitted to take a special trip to see the site. At the same time the Commissar cautioned that—

funds for the factory had been appropriated. The Project Institute in Leningrad had been working on the blueprints for months. But since it can do no harm, I'll authorize the trip. Only bear in mind that we can't fool around with a party decision.

What Kravchenko saw in Stalinsk appalled him:

Conditions for undertaking the pipe-rolling project here were not merely difficult or unfavorable; they were utterly impossible. The factories already in progress were stymied by shortages of wood, cement, brick, fuel. Despite the prison camps⁵ there were neither enough workers nor living space for workers.

The site was a huge naked stretch of muddy river front a considerable distance from town without electric or gas lines, without railroad tracks or a trolley line, without so much as a negotiable road.

Most serious of all, the terrain was wholly unsuitable for a metallurgical establishment. One did not have to be a construction engineer to observe that the ground would not support big buildings and the heavy machinery called for by pipe-rolling—how in the world had so many engineers and commissions approved the site and the plans? Who had hoodwinked the Commissariat and the Central Committee? Who had permitted the outlay of millions of rubles in advance planning for an undertaking that was clearly doomed to failure?

Equipped with photographs, charts, and other materials, we returned to Moscow. It was a heartrending task I faced—to unsell the government on a widely ballyhooed enterprise which had the imprimatur of the highest authorities and involved the reputations, perhaps the freedom, of scores of big and little officials whose bureaucratic indifference or technical illiteracy was at the bottom of the inept project.

My report to Merkulov (the Commissar of Ferrous Metallurgy) and his staff had the force of an earthquake. Everyone stared in stupefaction. All of them, it was evident to me, thought only how to extricate themselves from what might snowball into a political catastrophe. The picture I drew was too clear, too detailed to be wished away. Besides, it quickly appeared that voices had been raised in warning before, but had been silenced by fear. The responsible officials looked at me with angry, accusing eyes, as if my findings rather than their own ineptitude were responsible for the unpleasant situation.

There followed weeks of stormy conferences, filled with veiled threats that my head would be forfeit if I made too much noise about the business. But I resisted all pressure to undertake the job despite the certainty that it meant wasted millions and wasted energy. In the end a solution was found: a perfectly typical Soviet solution, one, that is, which saved face for officialdom and concealed the gigantic mistake from wider circles.

At Kemerovo, about 160 miles from Stalinsk, also on the Tom, another important industrial center was under development. At the time the project was planned, this place too had been mentioned as a possible site for this pipe-rolling factory. Galvanized by fear, the bureaucratic machine now went into high gear and soon all the enthusiasm pumped up for Stalinsk was being efficiently diverted to Kemerovo.

All along the line, planning bureaus and Academicians, Party functionaries and technical authorities, suddenly discovered that Kemerovo must take precedence over Stalinsk. The "political conjuncture" abroad—by which we meant the tense relations with Japan—and the interests of Siberian industrialization generally, it appeared, demanded that Kemerovo receive preference. Stalinsk could wait—forever, I knew full well, though no one as yet dared to concede that openly.

Kravchenko patriotically characterizes this episode as "confusion which seems inevitable in planning on so large a scale."

⁵ See the chapter on forced labor.

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13

Kravchenko details a number of other experiences in his long report which prefaces why he "chose freedom." These reveal something less than perfection in the planning and coordination of the Soviet economic system.⁶

From the outset our efforts were snarled in red tape and blocked by bureaucratic stupidity. I had to accumulate materials and tools and arrange for their transport and storage. Thousands of skilled and unskilled workers had to be mobilized, then provided with homes and elementary care. Under normal conditions such problems would not involve insurmountable difficulties. Under our Soviet system every step required formal decisions by endless bureaus, each of them jealous of its rights and in mortal dread of taking initiative. Repeatedly petty difficulties tied us into knots which no one dared untie without instructions from Moscow. We lived and labored in a jungle of questionnaires, paper forms and reports in seven copies.

We were in critical need of brick. Hundreds of prisoners marched from their distant camps to toil fourteen hours a day to meet construction demands for this material by various Kemerovo administrations. At the same time, however, two large and well-equipped brickyards stood idle. They happened to belong to another commissariat which was "conserving" them for some mythical future purposes. I begged and threatened and sent emissaries to Moscow in an attempt to unfreeze these yards, but bureaucracy triumphed over common sense. The brickyards remained dead throughout the period of my stay in the city.

While we were making frenzied efforts to find homes for our workers, a block of new houses stood like a taunt, unfinished and useless, on the outskirts of Kemerovo. The credits made available for this project, it appeared, had been exhausted before the work was finished. I had the necessary money to buy and complete this housing but never succeeded in breaking through the entanglements of red tape. The organization which had started the building was willing to relinquish its interest. Everyone, in fact, seemed willing and authorization for the deal seemed about to come through—only it never did.

A vital tramway line running through our area was nearly completed. Several tens of thousands of rubles would have sufficed to put it into operation, and the funds were on tap. But because of some budgetary snarl the city fathers dared not release them without a decision from higher up. I wrote dozens of urgent letters demanding that the line be opened. There were stormy sessions of the City Committee of the Party and the Kemerovo Soviet on the issue. But month after month passed and nothing happened. Meanwhile thousands of weary men and women spent two and three hours a day trudging to and from work.

One is struck particularly with the relative unconcern on the part of the Soviet planners for the human aspects of economic production. When construction was started on ambitious industrial enterprises, as in Stalinsk and Magnitogorsk, little thought was given to the provision of decent living accommodations for workers. This is all the more noteworthy in a communist society which is supposed to be devoted to the welfare of workers as a capitalist society never is supposed to be and when the problem is simplified because the complete plans of capacity production and employment do not depend upon an uncertain market but are altogether in the hands of the Government industrial officials. Moreover, Government housing and the provision of facilities would be only an extension of the Government factory and the odium of company towns and company housing would not adhere. Yet they have opened plants employing tens of thousands of workers without any special facilities for them, depending to a large degree on the manager's fund obtained through reductions in cost below planned reductions for housing facilities for workers with the passing years. Kravchenko mentions the pathetic housing in Stalinsk, the nearby concentration colonies of "8,000 slaves," and the slums which the workers called "shanghais." "What a contrast," he exclaimed, "be-

⁶These quotations are from Kravchenko, op. cit., pp. 328-329.

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tween these 'shanghais' and these mud 'homes' and the propaganda pictures in our films and magazines!⁷ In Pervouralsk, Kravchenko remarked that "intrinsically good human material was being spoiled by a senseless emphasis on production which ignored the comfort and the health of the human beings behind the production."⁸

Alexander Barmine gives numerous experiences illustrating the poor planning, ineffective coordination, the loss of time in formalities and in waiting for approval from higher up. Two of these are selected because they illustrate other weaknesses than those pointed out by Kravchenko.

The manufacture of ball bearings involves much detailed calculation and extreme precision of workmanship. The machinery used for the purpose is very costly and has to be maintained with serupulous care. When I went through the shops with Mr. Brown [manager of an English machinery concern], a number of machines were standing idle, since no one had yet learned how to use them. Moreover, my guest noticed that the floors of the rooms where the work of highest precision was being carried out were made of cement. "Cement dust," he said, "will soon deteriorate delicate machinery." Nobody had ever thought of that! Mr. Brown suggested that the floors be covered with a certain oil byproduct, and I wrote a report to the Industry Commissariat, mentioning his suggestion.

Two years later I went over the factory again. I found an epic struggle now being carried on against bad work. A higher and higher percentage of the product was being rejected as below standard. Alleged sabotage was being hunted down; there was a never-ending series of investigations; and "shock tactics" had been introduced, with the usual slogan: "Get on with the plan." But I noticed that the floors were still made of cement! There had been no time to halt the machines and make the necessary alterations. The Party chiefs insisted that the plan of production of this much-publicized factory should be "exceeded at any costs."⁹

In 1934, 16 years after the Revolution, Barmine arranged to drive from Leningrad to Moscow in an American Buick on a road which "had been the pride and joy of the Department of Roads and Bridges under the Imperial regime." This was a distance of about 450 miles.

First we had to get a card entitling us to buy gasoline. We made the necessary requests to the administration of the road and car society, the Avtodor, to the gasoline rationing board, and to the Committee of the Party in the hope that we might be able to hasten the formalities. The business was completed in two days, for we both held high positions. Our gasoline cards gave us the right to replenish our tanks anywhere in the Union, without further explanations.

We were in high good humor when we took the road. The first 150 miles passed pleasantly enough against a background of trackless snow and a mildly Artic landscape. From time to time we passed trucks standing motionless by the roadside, some empty, some loaded. There was never any sign of their drivers. The heavy vehicles waited there on the white road, looking oddly abandoned. The sight was a strange one and pricked our curiosity. The further we got, the more numerous became these trucks, until at times it looked as though whole caravans had been abandoned by the roadside. It was only very occasionally that we met one on the move, and when we did so we noticed that the driver stared at us with an expression of surprise mingled with respect.

We began to think about refilling our tanks. We would do it at the next market town, a traffic center of importance, the hub of several roads linking the various big townships of the ancient government of Tver.

The small town was dozing in the cold sunlight. We went into a tavern.

"Where can we find gas?" Some truck drivers seated at a table made ironic faces when we put the question to them.

"Gas, comrades? We've been waiting for gas for two days! There's not a drop anywhere along the road. Didn't you see all the stalled trucks?"

We gazed at each other in amazement, for we had been led to believe that the Soviet Union came second only to the United States in oil production. We would

⁷ Kravchenko, op. cit., p. 325.

⁸ Ibid., p. 294.

⁹ Barmine, op. cit., p. 210.

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15

have to look into this mystery later; but what could be done to solve the immediate difficulty? We had a bad quarter-hour cudgeling our brains. Then my friend had a brilliant inspiration.

"There must be a few druggists somewhere in this hole. Let's buy up all their benzine."

We went through that town with a fine-tooth comb, putting our case to every druggist we could find. They were impressed when they learned that we were directors of the Commissariat of Foreign Trade, and we collected several quarts of benzine. We started off again under the surprised gaze of the stranded drivers. It wasn't that they thought us adepts in black magic, but that they assumed that the G. P. U.—the only people still likely to have any gas—had got us out of our difficulties because we happened to be, so to speak, "in the trade."

We counted on being able to fill up again nearer Moscow. But as a result of the delay there was no longer any hope of getting home that evening. We should have to put up somewhere for the night. This new problem was hardly less difficult than our last one. There were no hotels on this road, and the few taverns were already crammed with carters, truck drivers, local officials, and peasants. Their taprooms were suffocating, and most of them had no accommodations. We finally found one with beds in the living room, and sheets, to be sure, but sheets which had already been used by someone else. The manager explained, "We do our washing once a month." We accepted the inevitable, for sleeping in our cars would have meant risking death from cold.

Next day our drugstore benzine carried us another 70 miles and then gave out. We realized with horror that we still had more than 200 miles to go. The white ribbon of road stretched endlessly before us. The abandoned trucks which we passed at intervals reminded us of an army in retreat. Several of them were scarcely visible under their blankets of snow. At every village, at every filling station, we made the same inquiry, always without effect. There was no gas to be had. We began to hate the sight of those cards which gave us permission to replenish our tanks "anywhere in Russia." Wouldn't it have been simpler to tell us there was no gasoline to be had between Leningrad and Moscow—after five peaceful years of triumphant industrialization—or, rather, that the filling stations were there but all bone dry?

"Does this often happen?" we asked.

"It's very remarkable when it doesn't," was the reply.

In Moscow we had seen for ourselves hundreds of persons queuing up for a few quarts; we knew that gasoline was being sold on the black market at four or five times its official price, but we had thought that those in charge of the Five-Year Plan would at least have provided for the needs of people traveling on state business on the main road between the capitals. All these broken-down trucks meant disorganization of work and failure to transport food over vast districts of the country.

We spent our second night at an empty filling station. Whatever happened we'd got to get to Moscow somehow! My eye caught sight of a barrel. "Kerosene?" I asked. The risk was considerable, but we had to take it. We trembled with apprehension as we fed our cars, accustomed to the refined product of Shell, with the awful stuff used for local lighting—black, greasy crude oil, full of foreign bodies. Surely our engines would never be able to digest such food! But they did. To an accompaniment of spitting, kicking, groaning, and jerking, we finally got off.

The road was a road now only by courtesy. Ruts of frozen snow alternated with stretches of ice. There were quite unaccountable holes and lumps in the surface. Our springs broke. We got them mended in a rough-and-ready way at a village smithy. We were frozen and exhausted; we both had streaming colds. My companion went to sleep as he drove, very nearly turned his car over in a stream, and got a nasty jab in the ribs from the wheel, which was damaged in the process! We looked pitiful and sick. We might have been conducting a retreat from Moscow instead of traveling to Moscow in modern cars. At last, at Kalinin, we managed to get some gas. Victory!¹⁰

An illustration of more careful planning is given by Barmine in the episode of his purchase of coke furnaces for Kuznetsk from a French company.

¹⁰ The quotation is from Barmine, op. cit., pp. 203-205. There is more to the story: He never actually made Moscow; the car was smashed and sold to Torgsin without repairs. (Torgsin are the stores where more expensive purchases may be made for gold or foreign exchange.)

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We asked for delivery in nine months. The director of the French company protested.

"But I've just come back from Kuznetsk," he exclaimed. "The place is a trackless desert. What is the point of taking delivery of stuff which you can't possibly use until the district has been opened up? And that won't happen for two years at least."

Actually Stalin's ruthless determination had thrown into Kuznetsk gangs composed of Old Bolsheviks, Young Communists, workers' shock brigades, engineers fired by enthusiasm or terrified by threats, convicts condemned to forced labor, and expropriated kulaks. These men lived in huts and ate black bread and stale cabbage. But the factory was ready in a year.¹¹

Aside from the industrial experience of these two men, there are no free, self-critical studies and analyses of operations under the Plans, which appear on paper to be so carefully worked out; but the sharp criticism of a large number of writers who have lived in the Soviet Union and the vast numbers—estimated by all who have looked into the matter in the millions—who have been liquidated or exiled for poor work, for sabotage, "wrecking," etc., generally the direct consequence of orders issued in Moscow, certainly does not support the picture of a perfect plan perfectly worked out from on high, with the ablest and the most effective officials exactly in the right places and the mechanism of production planning on local, industrial, interindustry, and national levels all worked out to promote the welfare of all.

PLANNING AND COMPETITION

The human love of order has lent a certain amount of prestige to the Soviet system because their economy gravitates about the concept of Plans. But it certainly has not been proved to the satisfaction of dispassionate economic analysts that the faults of a completely planned economy, which must effectively eliminate competition and socialize all productive assets—probably also completely control the movement of workers and their compensation—are less serious than the faults and instabilities of a free competitive society, whose excesses may be controlled in the public interest.

The principal value of competition is that it gives a vested interest to no one. It leaves vast areas of our economic life open to continuous exploration, experimentation and innovation, and, by the substantial rewards it makes possible, stirs people to action in very many directions. If one metal or plastic at lower cost and price is successfully substituted for another, no other decision is necessary. Competitive producers must conform or lose their market. In a fully protected economy, like that of Soviet Russia, traditional methods tend to continue because no one competes with the Government enterprise. Inefficiency has a larger measure of protection. The managers are intent on meeting and even surpassing goals set by the top Government planners and executives, all of whose interests tend to be to go along together. Even in Soviet Russia a purge is a serious matter. You can't have one every year and still get the necessary work done. And the ultimate question as to who is to purge the purgers always remains. Are the top men always right? Do they always know and employ the best methods? Do they never grow old or stodgy? Have they never any interest to protect their own particular methods and ways of doing things? Are all the brains and

¹¹ Barmine, op. cit., p. 178.

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daring in the top management and do they have the exclusive genius always to select the best of all possible methods for the welfare of all?

The question is not plan or no plan, for there is plenty of planning in American industry as well as in the U. S. S. R. The twentieth century has indeed been called the Plan Age by many analysts of economic and social trends in the United States. The question which is of paramount interest to Americans is the effectiveness of the operation as a whole, its ability to furnish to the people the highest possible standard of living and the largest area of freedom to pursue their own lives and make the best contribution possible to their own and the common welfare.

PROGRESS OF SOVIET INDUSTRY, 1928-38

As already indicated, the N. E. P. was a strategic retreat which served the dual purpose of restoring productive industry of the country to some level near the productivity of prerevolutionary Russia, while it retained a dominant position for the sector of large-scale production which remained socialized. The First 5-Year Plan, inaugurated in 1928, undertook a definite reconstruction of the whole national economy. Its broad elements have also been outlined. This system is the present Soviet economy. What progress has been made in the decade or more before the Second World War during which it was in operation?

We must recognize that this entire period was planned for a vast effort at industrialization—that is, to increase the capacity to produce and to become more self-sufficient, rather than to increase the volume and variety of consumers' goods here and now. The volume of consumers' goods was increased under all the 5-Year Plans, but the emphasis on armaments, which began in the Second Plan and continued more urgently in the Third Plan, took up much of the slack which would have been released by the progress of general industrialization.

Historically, both Stalin and the Communist Party have recognized that the main achievement of the First 5-Year Plan was a vast capital construction. They were not, however, satisfied that production was efficient because neither management nor labor still had the know-how. Emphasis in the Second 5-Year Plan was therefore to be placed on mastering the technique of production, improving quality, increasing labor productivity, and lowering production costs.¹² After soberly examining the results of the First 5-Year Plan, goals for the Second 5-Year Plan, which had provided for very steep increases in the preliminary proposals, were sharply reduced. They provided over all for an average annual increase of 16.5 percent in industrial production over the levels attained in the First 5-Year Plan.¹³ The Second 5-Year Plan called for a gross output of 92.7 billion rubles in 1937. Official figures show that 95.5 billion was produced.

The Third 5-Year Plan stepped up the industrialization of the country still further, with emphasis on the location of new industries and the development of the local resources in the eastern and far-eastern regions of the U. S. S. R.¹⁴ An average annual increase of all industrial production of 12.4 percent was planned. In the Third, as in the other two Plans, the increase in producers' goods was to be greater than the increase in consumers' goods. Under the Third 5-

¹² Baykov, op. cit., pp. 168, 179.

¹³ Ibid., p. 183.

¹⁴ Ibid., p. 287.

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Year Plan, the gross output of industry was to increase from 95.5 billion rubles in 1937 to 180 billion rubles in 1942. By 1940 it had reached only 125.5 billion rubles, which suggests that even if war had not intervened, the goal would not have been fulfilled.

Whatever the cost in suffering and sacrifice, in internal tensions, acerbity of emotion, and ruthlessness, there can be no doubt that very substantial economic progress was made by those who survived. To the opponents of the regime—emigres, those who were made to suffer, those who “escaped” and those who could not take it, and to hosts of foreign correspondents and visitors—the U. S. S. R. became a vast prison. To others inside and outside the country it is reported as a land in which thought is taken, as in no other land, of the welfare of the common man. The regime planned far ahead and, beginning with so little, belts had to be tightened. But goals were set for the calculable future, and all energies were focused on them. The goals were met in general, modified only as sound experience dictated. In the process a new and virile people were created who felt they were on their way to being masters of their own destiny.

The emphasis of Soviet Russia's development has been on industrial power—capital goods, basic materials, fuel, and electricity. Secondly it has been on the opening of the vast eastern areas, “behind the Urals.” Both of these developments give promise of proportionately greater achievements in the production of consumers' goods than the record thus far shows.

A measure of the progress of industrialization between the pre-revolutionary period and 1938 is given in the following physical terms:¹⁵

(Milliard rubles, 1926-27 value)

<table><thead><tr><th></th><th>1913</th><th>1929</th><th>1933</th><th>1937</th><th>1938</th></tr></thead><tbody><tr><td>Engineering and metal industries</td><td>1,446</td><td>3,054</td><td>10,822</td><td>27,519</td><td>33,613</td></tr><tr><td>Engines</td><td>418</td><td>602</td><td>941</td><td>1,581</td><td>1,626</td></tr><tr><td>Goods trucks (thousands)</td><td>14.8</td><td>15.9</td><td>18.2</td><td>66.1</td><td>49.1</td></tr><tr><td>Motor cars (thousands)</td><td></td><td>1.4</td><td>49.7</td><td>200.0</td><td>211.4</td></tr><tr><td>Electric power (milliard kw-h.)</td><td>1.9</td><td>6.2</td><td>16.4</td><td>36.4</td><td>39.6</td></tr><tr><td>Coal (million tons)</td><td>29.1</td><td>40.1</td><td>76.3</td><td>127.9</td><td>132.9</td></tr><tr><td>Oil (million tons)</td><td>9.2</td><td>13.8</td><td>22.5</td><td>30.5</td><td>32.2</td></tr><tr><td>Iron ore (million tons)</td><td>9.2</td><td>8.0</td><td>14.4</td><td>27.7</td><td>26.5</td></tr><tr><td>Manganese ore (thousand tons)</td><td>1,245</td><td>702</td><td>1,021</td><td>2,752</td><td>2,273</td></tr><tr><td>Pig iron (million tons)</td><td>4.2</td><td>4.0</td><td>7.1</td><td>14.5</td><td>14.6</td></tr><tr><td>Steel (million tons)</td><td>4.2</td><td>4.9</td><td>6.9</td><td>17.7</td><td>18.0</td></tr><tr><td>Rolled steel (million tons)</td><td>3.5</td><td>3.9</td><td>5.1</td><td>13.0</td><td>13.3</td></tr><tr><td>Copper (thousand tons)</td><td></td><td>35.5</td><td>44.5</td><td>99.8</td><td>103.2</td></tr><tr><td>Aluminum (thousand tons)</td><td></td><td></td><td>7.0</td><td>37.7</td><td>56.8</td></tr><tr><td>Cement (million tons)</td><td>1.5</td><td>2.2</td><td>2.7</td><td>5.5</td><td>5.7</td></tr><tr><td>Cotton textiles (million m.)</td><td>2,227</td><td>3,068</td><td>2,422</td><td>3,447</td><td>3,491</td></tr><tr><td>Woolen textiles (million m.)</td><td>95</td><td>100.6</td><td>86.1</td><td>108.3</td><td>114.0</td></tr><tr><td>Leather shoes (million prs.)</td><td></td><td>48.8</td><td>80.3</td><td>164.2</td><td>213.0</td></tr><tr><td>Raw sugar (thousand tons)</td><td>1,200</td><td>1,283</td><td>995</td><td>2,421</td><td>2,519</td></tr></tbody></table>

Official statistics of industrial production as a whole show a steady increase since the First 5-Year Plan became a working success:

Gross production, all industry ¹⁵

[In milliard rubles in fixed prices at 1926-27]

<table><tr><td>1928</td><td>15.7</td><td>1939</td><td>123.9</td></tr><tr><td>1932</td><td>34.3</td><td>1940</td><td>137.5</td></tr><tr><td>1937</td><td>95.5</td><td>1941 (plan)</td><td>162.0</td></tr><tr><td>1938</td><td>106.8</td><td>1942 (plan)</td><td>184.0</td></tr></table>

¹⁵ Official figures reproduced in Baykov, op. cit., p. 307.

¹⁶ Derived from official figures reproduced in Baykov, op. cit., pp. 165, 283, 289, 291.

COMMUNISM IN ACTION

19

Detailed comparisons with progress made during this period in the United States could prove almost anything a writer sets out to prove. Even without getting into the rabid controversy as to the reliability of Soviet statistics and the consistent playing down of Russian industrial accomplishments in pre-Soviet days, with its own potenti- alities for progress in the three decades in which private enterprise was destroyed, we must arrive at the admitted fact that the Russian people are still very poor not only by American, but also by prewar western European standards as well. Until we were all involved in the Second World War, Soviet leaders, proud of their accomplishments, were nonetheless always ready to admit that Soviet industry still had a way to go "to catch up with and surpass capitalism" and that per capita production was still far behind that of the United States and Germany—Hitlerite Germany, be it remembered.

In their own minds the Soviet leaders have been fighting a con-
tinuous war since the great days when, with the slogans "Peace and
No Annexations and No Indemnities" and "All Power to the Soviets",
they established themselves as the governing power in the land. All
through its history Soviet industry has been organized and managed
on the analogy of battles to be won on the way to victory over capital-
ism. There is an economic General Staff that lays out what needs to
be done. There is a military organization with military discipline
from the top down. War metaphors such as "the coal front," "the
grain front," "shock brigades," "the hero of Soviet labor," the
"storming" of positions, have been commonly used in describing
industrial needs or problems.

The concentration on public investment and capital development
may indeed have saved the country in the time of its greatest peril.
They had the plants, the power, and the basic materials which could
rapidly be devoted to abundant war production. They have, how-
ever, never had the abundance of consumers' goods available to the
American and the western European. The mere establishment of
large factories and the increase in basic materials was the basic
"victory."

Looked at, then, from the point of view of what the average worker
and farm laborer and their families have, the Russian is still a poor
man. His life revolves around the factory—his precious productive
unit, which yields him not only wages, but housing, food, and such
recreation as he has. Mr. W. L. White, the American journalist
who recently toured the Soviet Union in company with Mr. Eric
Johnston, was very much impressed with this. He noted:

A Russian belongs to his job. He and his family usually sleep in an apartment which his factory owns. He probably eats, in his factory dining room, food raised on his factory's farm. His children attend a day nursery which it maintains. They play games and go to movies in its culture palace and they go on vacations when it can spare them, on trains which it designates, to resorts and workers' rest homes which it controls.¹⁷

Whether the acknowledged shortages of consumers' goods will con-
tinue to be a characteristic of the Soviet economy cannot be said with
certainty. The Fourth 5-Year Plan seems to differ hardly at all from
its predecessors. The chief emphasis continues on heavy industry
and transport. There will still be a very low level of consumption
for a high level of production if the Fourth 5-Year Plan is successful

¹⁷ W. L. White, Report on the Russians (New York, Harcourt, Brace & Co., 1945), pp. 29-30.

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COMMUNISM IN ACTION

by the end of 1950. At the same time the economic might of Soviet
Russia is already a fact. As John Scott, the American who worked
in the Urals between 1932 and 1938, put it:

Pig iron was pig iron, whether or not the blast furnace was constructed by prisoner specialists and disfranchised kulaks.¹⁸

PROFITS IN THE SOVIET ECONOMY

The theory of socialism and communism is that profits are a purely
capitalistic phenomenon—the share which the owners of capital,
machinery, and other instruments of production by their superior
economic power are able to wrest from the defenseless workers who
have no capital and therefore must accept jobs which yield them
just enough for sustenance and to perpetuate their kind. [Licardo]

The expropriation of capitalists and landlords, which was the heart of the original Communist Revolution, was justified on the moral ground that property was theft, built up by robbing the workers of the full product of their labor. Indeed, one early slogan of the revolution was "rob the robbers."

The first 2 or 3 years of the Revolution furnished abundant proof to the thinking leaders of the Revolution that there was more to it than that. The people were living on accumulated stores, which were running out. Production was stagnating. Machinery was deteriorating. They acknowledged temporary defeat in inaugurating the new economic policy. Beginning with the N. E. P. the Soviet leaders never again made the mistake of assuming that labor produces all values, that capital in its myriad forms just reproduces itself, and that business management was a parasitic capitalistic appendage.

There is a certain naïveté in the speculations of theoretical communists about “surplus value” and the right of the worker to “the whole product.” In the actual operation of the Soviet economy, as in any economy, it was soon learned that there are other costs of operation and that reserves must be set aside for the restoration of capital and for its enlargement, for fluctuations in business, and for the social cost of both industry and government. This is brought out very well by a Soviet economist who later became head of Gosplan. He wrote:

> It would be thoughtless to suppose that under socialism the worker receives as his individual allotment the full product of his labor for his personal consumption. * * * The total product of the labor of all workers constitutes the entire social product of a given society. From this it is necessary to deduct, first the part needed for restoring the depreciated means of production; an additional part for expanding production; and a reserve fund as an insurance against accidents and unforeseen natural calamities. The remainder is that part of the total social product which is to be used for consumption. But before this can be distributed to individuals, the following must be set aside: the general expenses for that administration not directly connected with production; a share for the social satisfaction of needs, such as schools, hospitals, etc.; a fund for the support of those who are unable to work, etc. Only after this is done do we finally have that part of the consumption fund which is distributed as the individual allotment. The other parts constitute the social accumulation, reserve, and socialized consumption funds. The problem of what part of the workday should be for consumption and what part should be put into the fund of socialist accumulation is concretely a historical problem, and will be solved in each case by a planned directive of the proletarian state.¹⁹

¹⁸ John Scott, Behind the Urals (Houghton Mifflin Co., 1942), p. 227.

¹⁹ N. Voznesensky, The Problem of the Economics of Socialism, Lenin's, Nos. 1-3, January 30, 1932, p. 26. Quoted in Joseph Freeman, The Soviet Worker (New York, Liveright, Inc., 1932), p. 53.

COMMUNISM IN ACTION

21

The size of the profit account in the Soviet economy may be drawn from some available statistics on Government receipts from profits and from the turn-over tax, which is another form of profits in the Soviet economy, because it is added to other costs in fixing prices. The profits of factories are the difference between prices set by the state and total costs, including the turn-over tax, multiplied by the volume produced. In 1940 profits made up 12 percent of all federal revenues, while the turn-over tax provided 59 percent of total revenues—71 percent in all.²⁰ This is not all, because only about half of the profits go into the federal treasury; the other half remains with the enterprises and is used for servicing the plant and for the benefit of workers.

The turn-over tax is a charge on all industry, and the vast receipts from this tax are the main contribution of every worker and producer to the expenses of Government. The contribution is made whether or not the enterprise is profitable, since the Plans fix the prices, which include the turn-over tax. Price is manipulated to attain whatever ends the Government may desire.

Reduction of cost does not ultimately result, as under free competition, in reduction of price. In an even more absolute way than the monopolistic corporations of the capitalist countries, the Soviet State may keep prices unchanged despite reduction of cost: State monopoly is complete. Reduction of cost may, therefore, wholly or in part, result in increased plant profits and State revenue, instead of in lowered prices. * * * Not more than one-third to one-half of all cost economies achieved during the three Plan periods can have been used for reductions in sales prices.²¹

Turn-over tax rates differ widely and are imposed in accordance with the purposes of the Plans. Some of the prewar rates on consumers' goods as percentages of retail prices were: Bread, 75 percent; meat, 70 percent; butter, 60 percent; salt, 82 percent; tea and coffee, 86 percent; tobacco, 80 percent; textiles, 74 percent; shoes, 80 percent; soap, 62 percent. The retail price of sugar in 1940 was fixed at 6.50 rubles per kilogram, of which 5.20 rubles represented turn-over tax.²² As this is not a graduated tax and there are no exemptions for persons of low income, the "ultimate consumer" pays plenty from whatever the proceeds of his labor may yield in wages.

The appropriation of interest, profits, and taxation by the state does not change their function. Neither does it add 1 pound of sugar or one pair of shoes to the supplies available to the people. In fixing prices in the Soviet economy a wide margin is maintained between the price charged and the costs of production, including labor costs. In the First 5-Year Plan this margin was said to be wide enough on the average to permit the reinvestment of 30 percent in capital expansion and to pay the vast bureaucratic overhead as well.²³ In Soviet Russia this surplus is said to belong to the whole nation, but it is, of course, withheld just as effectively from the possible enjoyment of the workers in any year of its production. It is supposed to be indicative of a deep concern of the Soviet planners for the future, as indeed the existence of capital in any land is a measure of the value which is placed by the community upon the future in comparison with the present. In that sense, the amount of capital at the disposal of the average American worker is still many times the amount available to the average Soviet

²⁰ Bienstock, Schwarz, and Yugow, op. cit., pp. 79, 85.

²¹ Ibid., p. 84.

²² Ibid.

²³ Brutzkus, op. cit., pp. 131-133.

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COMMUNISM IN ACTION

worker. Reliable comparable statistics are not available, but the
Soviet leaders have always been ready to admit this fact and to gear
their plans to the prospect of attaining the degree of mechanization
which exists in the United States.

PROFITS AND "EXPLOITATION"

Communist literature assumes that private property per se is a
means of exploiting other men—and the only means. But the regime
in the U. S. S. R. furnishes ample proof that under any system capital
is the product of past and present industry withheld from present
consumption in order to be used in further production and that it
must be paid for in waiting and sacrifices. Whether one or another
method of paying for the services of capital is preferable may, of
course, be debated; but even on moral grounds, the decision would rest
on what is, in the long run, available to the people after all deductions
for plant and other capital are made.

The possibilities of exploitation in the Soviet Union are found both
in the operations of the economy and in political life. Abundant
illustrations of these possibilities which became actualities are given
in this and the following three chapters. There are many who would
regard these forms of exploitation as far more destructive of human
values than the institutional exploitation which is postulated by
Communists as characterizing every private business enterprise.
There are many old Socialists and revolutionaries inside and outside
the Soviet Union who feel rather strongly about this. Kravchenko's
father was such an old revolutionary who grew very bitter about what
he considered the exploitation of Stalinism even when his son was
rising in the Soviet hierarchy. He saw that his son had everything
that Soviet Russia had to offer—a car, a chauffeur, a beautifully fur-
nished apartment, fresh fruits and vegetables, what seemed to be
security and savings, while in his bitterness he generalized that the
workers were worse off than under the Czars.

I am not happy that a son of mine is among the new exploiters, even if he is not
himself to blame for it.²⁴

In the Soviet Union, where all the profits of the labor of all the people
are absorbed by capital investment, the state and its apparatus, and
by the officialdom, it is the totalitarian Government which determines
what the different classes of workers shall get, how much shall be
withheld to restore and develop capital and to support the bureauc-
racy, what shall be the place and conditions of work, what shall be
produced and the selling prices, the terms of exchange (through price
fixing) between agricultural and industrial production, the amount and
type of export and import, who and what numbers shall be housed or
go into exile at forced labor, and how many others shall be destroyed
with or without trial.²⁵ Yet it is said that this cannot possibly be
exploitation of man by man because, forsooth, the state owns all
productive property. By contrast, they allege that each and every
worker employed in the automotive, steel, chemical, textile, air-trans-
port, and motion-picture industries in the United States, and every
worker in transportation, communication, and any of the large service
trades is sure to be "exploited" because the "means of production"
are furnished by private individuals or corporations.

²⁴ Kravchenko, op. cit., p. 205.

²⁵ For more elaborate treatment on some of these matters, see the chapters on labor and forced labor.

COMMUNISM IN ACTION

23

CONTRASTING BASIC PRINCIPLES OF SOVIET AND AMERICAN ECONOMY

The workers (and peasants) of Russia have had a long memory of hostility and struggle against the Government of the country. In Czarist days it was the people against the Government. When they took over the Government and with it the expropriation and nationalization of the land and industrial property, the people were told there was nothing else to fight against. The people owned everything. The "dictatorship of the proletariat" was said to be a holding operation against the return of "bourgeois rule," of landlords and capitalists. In the first decade of the revolution the distinction and antagonism between the people and the Government broke down. It is true that a new governing class was being created—a class of politicians, commissars, planners, administrators, managers, Army officers, and intellectuals drawn from the Communist Party. These now make up the Government, and their Government runs industry and agriculture as well as the political activities of the State.

The Soviet Government which manages all industry is not, of course, a democracy in the American sense; but neither is it simply a personal dictatorship. It has developed many new forms in structure and organization in its three decades of history. It is operated in consultation and with the cooperation of numerous representative bodies in their society. A Government decision is, however, final in realms in which Government does not operate in the United States. A course of action having been settled upon in accordance with the determined needs of the state (as viewed by the Communist Party hierarchy), it is carried out whether or not desired or repugnant to the persons or groups directly and indirectly affected. Forms and symbols of cooperation are set up and elaborate steps are taken to show the great benefit of the course of action to all and its superiority to "capitalist methods." Thus all Government action in the economic sphere is always presented as the embodiment of the will of all the people—and this is true whether the decision, for example, is to spend vast sums for capital development rather than for consumers' goods, or to increase production quotas without increases in pay, to pay on a piecework rather than time basis, or to have greater inequality rather than relative equality of income for different categories of workers.

Government decisions may be debated thoroughly in the inner councils of the Communist Party; but once they are made, they are the official "Party line," and the Party line brooks no "right deviationists" or "left deviationists." The new Party line may, indeed, be the opposite of the Party line of a year or two ago; but it is none the less true Marxism and Leninism. Thus, as we shall see in the chapter on labor, equality in wages turned into magnified wage differentials, payment in accordance with needs was supplanted by payment by results to a greater extent than elsewhere in the world, the cooperative management of industry was interpreted to include "Socialist competition," speed-up and Stakhanovism, severe penalties for minor industrial infractions, and the discipline of "labor books." To further convince the unwilling or skeptical, these changes in the operations of the Soviet economy (as well as turnabout with reference to matters of foreign policy) were accompanied by the liquidation of the dissidents. In these ways the success of the new programs and the dangers of irregularity were advertised. And since any of those who were

90081-46-3

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COMMUNISM IN ACTION

articulate in their opposition to a Party policy are no longer articulate, the Party decision becomes indisputably "the will of the people." The Government, and, behind the Government, the Party, speaks for the whole nation on all matters of economic policy at all times.

The decisions of the Government are accepted without deviation in minor as well as in major matters, and they permeate not only the broad planning of the interrelation of parts in industry but also the operations of plant and institutional management and the status of the individual worker. There is at the present stage of the evolution of communism in the U. S. S. R. apparently no question of the correctness of this point of view, for the country has no traditions of popular government and the withholding from the governing party of precious inalienable rights reserved for the individual.

In contrast with centralized economic planning in Soviet Russia, the American system has left the initiative in industry to private planners, employers, and investors who are given an inducement to find new markets, reduce costs of production (but not at the expense of the highest wage levels of any country in the world), and meet the needs and predilections of their customers. When our system remains in balance, it is because the risks taken by thousands of independent enterprises or corporations either fill voids which exist or these enterprises contract or are eliminated when they do not find a profitable place for themselves in serving the consumer or as suppliers of other lines of business.²⁶

The phenomenon of the market is itself one of the most democratic forces ever devised. It determines whether there shall be more beer, more petroleum products, more retail outlets, and more housing rather than more industrial plants, more coal, more blacksmith shops, and more outmoded styles of apparel. It also determines the success of particular types of housing, particular styles of clothing, varied types of public eating accommodations, and public amusement. It depends upon the individual whether he spends more for milk or fruits and vegetables or liquor or household furnishings or books or the latest automatic fountain pen; whether he chooses to spend or save without regard to the standards or wishes of a Government department. Our choices are free, limited only by the amount of money we can make and the ingenuity of our collective intelligence to furnish anything the people may want to buy.

On the production side also there is no fixed way of doing things. Different producers obtain their own sources of materials and components, employ different processes, are at different degrees of mechanization, and are struggling for their existence and for ever wider markets. If they see an opportunity to reduce costs and widen their markets by substituting one material for another, substituting new machinery, rearranging the plant, using new fuels or byproducts, for the most part they need no one's permission beyond the management of the plant.²⁷ If they lose, they lose only the company's money. If they win, others will soon be forced to make similar improvements, and the winning company will have to try again to keep ahead of the pro- cession. This is called by Communists the "anarchism of capitalistic production."

²⁶ Unemployment as an economic phenomenon is treated in the chapter on labor.

²⁷ An exception must be made of the "administered" sector of our economy; whether the administration is private through such a device as a patent pool or public through policies such as agricultural crop control.

COMMUNISM IN ACTION

25

Taking the economy as a whole, the people in the Soviet Union live on a hand-to-mouth basis, which makes it comparatively easy to control purchasing power and the direction of spending. The widespread use of rationing and different levels of prices for different classes of persons in the Soviet Union makes it easy to lap up excess purchasing power which may flow from differential wages or high payments for Stakhanovites, executives, artists, and Government officials, for whom in any case only a small proportion of luxuries must be produced.

There has been persistent evidence of the dissatisfaction in the Soviet Union with the comparatively small increases in the production of consumers' goods available to the general public. Living standards for the average man and woman are still pitiably low—estimated by some of the warmest friends of the Soviet system as at the level of relief workers in the United States in the depth of the depression of 1931-32. There seems to be a need for official promises to increase the supply of consumers' goods whenever new plans or programs are announced or reports of accomplishments are made.

While there is no Gosplan in the United States, the cooperative efforts of management, finance, labor, and Government have made it possible to produce goods and services purchased by nearly all families and persons which are considered the greatest luxuries in the Soviet Union. Nor has it been necessary for any Government department to continue year after year to withhold these benefits from the people in order to produce the necessary factories, machine tools, locomotives, etc. Funds for capital maintenance and expansion are made available from the savings of all the people. New workers are induced to take their proper places largely on the basis of their own self-interest and generally at more attractive pay and working conditions than heretofore. Prices for all these items are reduced as markets expand and the more efficient firms drive out the less efficient. In all this the Government plays its part, of course. It sets minimum labor standards; it tries to prevent monopolistic price control; it encourages competition; it promotes collective bargaining; it renders vast social services, adjusted to the ebb and flow of business success or failure; it conducts its own public works when the people decide that these are best operated as public enterprises. Through its elaborate taxation system, the Government collects its receipts largely on the basis of ability to pay and uses these receipts increasingly to balance inequalities and open opportunities for all. And if the people do not like the degree or direction of change, there is nothing to stop them from calling in new leaders and passing new laws which will bring the results more nearly to their heart's desire.

### CHAPTER III
# ROLE OF INDUSTRIAL MANAGEMENT
## INDUSTRY WITHOUT MANAGEMENT

The communism of the 5-Year Plans is not the natural communism of the treatises or the communism envisaged by the early Russian revolutionaries. To be specific about the type of communism flourishing in the U. S. S. R. today, we have defined it as Stalinism, in commemoration of the Soviet leader who nourished it, gave it scope, defended it against all attacks from within and without, and now proposes to continue the system in wider domains in a Fourth 5-Year Plan.

Lenin was a revolutionary par excellence and practically his whole life experience had been as an intellectual leader and pamphleteer in the underground Russian revolutionary movement. Not the least element in his great influence and appeal to his supporting revolutionaries was the directness and simplicity with which he visualized the task before him. He thought that capitalism had so simplified and routinized methods of operation that socialized industry could be operated by anyone—

who can read and write. The ability to observe and record and to make out receipts—this, with a knowledge of the four rules of arithmetic, is all that is required.¹

At first the work of the manager of industry was not regarded as at all important to the success of industry. He was thought to be merely an instrument concerned with siphoning off the "surplus value" created by the workers. In the early months of the revolution, factory committees took over the function of the owners and managers of the enterprises in which they were employed. Lenin soon saw that this would not work because the workers were not trained to deal with the problems of supply, manufacturing, and distribution. A few years of operating without trained and authoritative business management resulted practically in the drying up of economic activity in all parts of the country. Old managers were called back under the N. E. P. and new private ventures were encouraged to get started by self-appointed managers.

As the responsible head of the Government which had to make communism work, Lenin tended to go slow in eliminating all capitalistic organization and nationalizing all industry. He is quoted as having admitted that "for a considerable period our decrees were a form of propaganda."² By nationalizing the banks immediately he hoped to gain control of the capitalist economic system without destroying its economic organization.

This attempt failed because capitalism simply could not operate under the revolutionary stimulus which resulted in the seizure of property by the workers, the disappearance of the old owners and managers and the sudden removal of all the guaranties and induce-

¹ N. Lenin, State and Revolution. Quoted in Boris Brutzkus, Economic Planning in Soviet Russia (London, G. Routledge & Sons, Ltd., 1935), pp. 99-100.

² Boris Souvarine, Stalin (London, Seeker & Warburg, 1940), p. 197.

20

COMMUNISM IN ACTION

27

ments which make the capitalist world go 'round. The foundering of the "Communist experiment" for so many years was due in large measure to the lack of appreciation of the constructive role played by management in organizing and directing the general productive forces of any country, which lie ultimately in its resources, its manpower, its capital and machinery, its technical knowledge, and its effective and stimulating institutions to make the efforts of work worthwhile. Later the Soviet authorities tried to fill this void by enlarging schools for the training of engineers, technicians, and managers and by giving greater scope and status to the role of the manager in state industries.

As we have seen, the Communists did not abandon their long-time goals under the N. E. P. The big Government projects remained nationalized and plans were being laid for their extension and better interrelation. For this task a new type of industrial leader had to be developed—one who could plan economically, direct factory operations, measure and improve results, eliminate waste, get things done and on time. He would deal with a less recalcitrant labor force—the Government would see to that by other measures.³ His position would be recognized by his subordinates and he would receive material and social rewards commensurate with the importance of his work and the dependence upon it of the success of the Communist enterprise as a whole. But this took time to get across to the workers who had been led to believe that it was “their” enterprise to manage as it was theirs in putative ownership. For years the great problem of management in the Soviet Union was its lack of freedom to manage. Factory committees and trade-unions had to be consulted on every matter. To build up the manager and the technical personnel and to make them independent of the workers became a conscious policy of the highest authorities in the Soviet Union. It may be listed as one of the triumphs of the Stalinist regime.

## SELECTION OF MANAGERS

The number of original Communists with practical industrial experience or special managerial training was, of course, very small. The earliest Communists were underground workers, intellectuals, factory workers, journalists, and students. Since active Party control was a first principle of the Revolution, many men with inadequate experience and training had to be used in posts for which they had no training or experience whatever. The employment of non-Party members in important managerial posts meant special surveillance by Party members and by the security officers of the OGPU or the NKVD.⁴

The evolution of “one-man control” was accompanied by a lessening of supervision and consultation with Party and trade-union organizations. But there were Party representatives in all levels of management up to the outbreak of the war and their influence is always felt; while the secretary of the provincial or city Party committee is the chief controller and inspector of all the industrial plants in the province and can, and does, interfere in the management of the plants.⁵

³ See chapter on labor.

⁴ The NKVD is an institution which plays a big part in Soviet society. It has a number of functions having to do with "internal security." The NKVD absorbed the OGPU (or GPU as it is more generally known in the United States) which earlier had absorbed the Cheka. See the chapter on forced labor for further details regarding the activities of NKVD which has recently been divided into the Ministry of Internal Affairs and the Ministry of State Security. The distribution of functions is not known.

⁵ Gregory Bienstock, Solomon M. Schwarz, and Aaron Yugow, Management in Russian Industry and Agriculture (London, New York, Oxford University Press, 1944), pp. 19-31.

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The higher executive, administrative, and planning posts are practically always held by Party members and the Party influence is thus also represented in appointments to the manager's staff. Kravchenko, who was himself a Party member, nonetheless was not permitted to select his own administrative staff when he was placed in charge of the pipe-rolling project in Kemerovo.

The top officials were appointed directly by the Commissariat and the chief of Glavtrubostal, without so much as asking my opinion. This system aimed to encourage officials to watch each other and tended to create mutual distrust among people brought together for common tasks * * *. Some of the local appointees, it was evident, were merely espionage agents for the Regional Committee, the City Committee, the Economic Department of the NKVD and Glavtrubostal.⁶

The highest authorities of the Government recognized the resulting inefficiencies and held a number of exhibition trials and purges to ferret out inefficiency as well as political unreliability. As far back as 1928, after the Shakhty trial, the Central Committee of the Party proclaimed:

> Under present conditions it is especially intolerable that economic officials lack knowledge of the production-technical side of enterprises; that they are often transferred from one kind of work to another; that they are overburdened with tasks utterly alien to the job of production (reports, lectures, trips to the center); that, furthermore, various circumstances transform them from economic leaders into commissars and bad commissars at that, people incapable of assuming genuine responsibility for the work entrusted to them.⁷

In each one of the purges that liquidated famous names in Soviet revolutionary history there were some who had attained their high posts because of Party services in the past and not because they had been specially selected for their managerial competence.⁸ The training of engineers and managers whose entire education and experience had been in a Communist society became a major objective. Scholarships were granted. Courses were accelerated. Intense specialization was ordered. Younger ambitious workers were given opportunities for technical training while on the job and during short periods of leave.

When these measures tended to lower the quality of technical training, they were revised to lessen the number of students admitted and there were stricter examinations given; they also reduced the number of youths of proletarian origin who were favored.⁹

The great purge which began toward the end of 1936 caused a very sharp turn-over of industrial chiefs. This purge, which lasted over a year, resulted in the displacement of practically all the old Bolsheviks who held high posts in administration and in the Party. Its reverberations were felt in every planning board, every coordinating agency, every plant, and all through the Party machinery. Managers of different rank were displaced by the thousands. Estimates of the total number of persons involved in the purges go into the millions and many thousands of these were managers and executives of all ranks.

The new industrial chiefs who were promoted to responsible posts were the better trained energetic men who had had no other experience

⁶ Victor Kravchenko, I Chose Freedom (New York, C. Scribner's Sons, 1946), p. 328. Kravchenko gives numerous illustrations of the diffusion of authority—the orders and counterorders from Moscow, the charges made against managers for mistakes made in Moscow. It was routine practice to have agents of the NKVD disguised as workers in the factories. They took up time in endless investigations, interfered with operations, and frightened the life out of the personnel.

⁷ Bienstock, Schwarz, and Yugow, op. cit., p. 105.

⁸ Alexander Baykov, The Development of the Soviet Economic System (Cambridge University Press, 1946), p. 381.

⁹ Bienstock, Schwarz, and Yugow, op. cit., pp. 104-113.

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29

than that in a Communist country. They were practical professional men, not too much concerned with shades of political beliefs and deviations from the eternal truths of the communism of the books. As they were growing up, they had seen Stalinism win over all opposition. It was not for them to question basic political decisions and they learned how to accept such decisions without wavering or deviation. They felt their country was going somewhere and they were going to help to get it there. They must have decided early in their careers to let the past bury the past—the Leninist past as well as the Czarist past. They were Russian patriots and this was their country. The progress the country had made had been dearly bought. They could see that there were great opportunities in this society to build, to improve their own positions, and to make the Soviet Union a power in the world. At the same time, since the catchwords of the revolution had not been abandoned, they were impressed that they lived in a classless society, that they were the advance guard of social and economic progress, and that they had devotees in every country in the world who looked to the day when they too would overthrow their "capitalist oppressors" and establish a "classless society."

### INCENTIVES AND REWARDS OF MANAGEMENT

The plant manager, as we have seen, works under the close supervision of the Commissariat, the Glavk, the combine, or the trust; and all of these, in turn, are guided, inspected, and supervised by the regional and national planning agencies, the State Bank, and Party committees under the discipline of the 5-Year and Annual Plans. This is unavoidable and doubtless makes for stimulation, as well as irritation and interference.

While Party membership is still generally a condition of appointment to a managerial post, merit and previous success now count most even among Party members. Each man's career is followed very carefully and his successes or failures in relation to the plans are freely discussed in industrial periodicals.

In the United States managers are supposed to be dominated by the profit motive, which leads them to make the economies in purchasing, using materials, arranging production, etc., in order to keep a margin between costs and selling prices while enlarging sales. Among corporation executives there is not quite the direct reward for profits made, since these go to the owners and not directly to the managers. American businessmen are mixtures of enterprisers and managers. Only a small proportion of them are capitalists, strictly speaking, although they typically own some shares in the business which they manage. Successful corporation executives also covet honor and prestige as end products as well, frequently, as a step to higher opportunities within the corporation or with another corporation.

In Soviet Russia there has been a steady drift to treat and reward managers after the capitalistic pattern. After establishing his status vis-à-vis the workers, the Party cell, and the trade-union, they began to reward the manager with much higher salaries. Bonuses were paid to practically all managerial personnel from foremen up for reducing cost, saving materials and fuel, and for exceeding quotas of production, so that total bonuses sometimes were higher than regular salaries. In addition generous compensation in kind was made in

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the form of luxurious apartments and dachas, special food, a private automobile, and free transportation. Servants in the homes of some important executives sometimes reach the number of a half dozen or more and this was possible even in wartime, when the country was organized for a desperate defense of its territory.

Published data on the earnings of various classes of managers is not very ample but some information is available. In 1921, before the managerial class had reached its later high estate, technical personnel was limited to a schedule which gave it from 1.6 to 5 times the rate of the lowest paid workers, while the leading administrative personnel was paid from 4 to 5 times the rate paid the lowest paid workers. On the American analogy that would mean that in a plant where the minimum wage yielded, say, $1,000 per year, the top executive salary would be $5,000.

This schedule of salaries for technicians and managers, which tied them to the rates of the lowest paid workers, remained in effect for 5 or 6 years. In 1929 a salary schedule was fixed without reference to workers' wages. This general schedule has been revised from time to time by Economsoviet, the coordinator of Commissariats.

The appointing body fixes the classification of each manager, depending upon the size of the job. The Commissar for a particular branch of industry may, however, supersede these general rates by "personal" rates, which may be up to 150 percent of the general rates.

Some actual salaries in different years may be given from the scanty material available. In coal mining, chief engineers, a category just below the managers, received in 1933 from 550 rubles to 1,500 rubles per month, depending on the type of mine. In that year the monthly average earnings of manual workers in coal mines was 133 rubles. Chief engineers therefore earned from 4 to 13 times the average miner's wages, easily from 5 to 15 times the earnings of the lowest-paid workers in the mines. In iron and steel, regular engineers' salaries were 600 to 1,500 rubles per month. In 1940 the over-all monthly average for technical personnel (engineers, technicians, foremen) was 1,223 rubles in an open hearth in Moscow and 1,570 rubles in a coal mine nearby.¹⁰ In Sverdlovsk in 1938 Kravchenko received approximately 3,000 rubles a month in salary and bonuses, while unskilled labor received about 150 rubles, skilled mechanics about 250, and qualified engineers around 600. The salary and bonus of Kravchenko were supplemented by an apartment, two automobiles, and horses assigned for his exclusive use.¹¹ Sir Walter Citrine, General Secretary of the British Trades Union Congress, found in a shoe factory in Leningrad in 1935 that the technical director earned 2,000 rubles in salary and bonuses; the head of the children's boot department received 1,900 rubles and his assistant 1,500; the head of the cutting department received 1,600 rubles and his assistant 1,300. Production workers in this factory earned from 125 to 250 rubles a month, while wages in the technical staff ranged from 306 to 663 rubles a month. In the Kirov Engineering Works, where 30,000 people were employed, the chief construction engineer and the chief draftsman received 1,800 rubles a month, while the wages of the workers ranged from 120 rubles to about 475 rubles per

¹⁰ Ibid., p. 93.

¹¹ Kravchenko, op. cit., p. 285.

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31

month. In the Kaganovitch Ball Bearing Works in Moscow both the director and the chief engineer received 2,000 rubles per month, while wages ranged from 106 to 496 rubles. In a Moscow underwear factory, where 98 percent of the 3,000 workers were women, the mass of the workers received about 160 rubles per month, the highest category yielded 268 rubles, while the heads of departments received about 700 rubles in salary and bonuses.¹²

## GENERAL CONTRASTS BETWEEN SOVIET AND AMERICAN MANAGERS

The Soviet manager is a state official. His psychology must always remain that of an order taker. Goals are set for him. He agrees and he works hard to meet and surpass the tasks set for him. He wants to have a good reputation at headquarters and he tries to avoid mistakes. He is not working for big gains but for a good record or in fear that failure may result in serious punishment, such as social disgrace, exile to remote regions, or worse. At the same time, he has no sales or consumer problems and the market for his production is assured. There are no "unreasonable" unions demanding steep increases in pay, which will increase his labor costs at a time when higher prices are impossible. If the total wage bill is to be increased, the Soviet manager knows about it at the beginning of the year and provision is made for it in prices or production standards. He is given his "planned costs" and even his "planned profits," which together make up the fixed factory price, but if he is to get bonuses and promotions he has to reduce costs and increase profits above the planned figure.

The People's Commissar (Narkom) of a branch of industry is really the boss. He is the Soviet equivalent of the Fords, Graces, Girdlers, Wilsons, du Ponts, Sinclairs, and Averys, with the difference that they run whole industries rather than merely giant corporations and they are also part of the top machinery of Government and of the Communist Party as well. On this analogy the top executives on the level of the combine would be equivalent to the American director of an important subsidiary of a very large corporation, the director of a trust would be the counterpart of a chief executive officer of a representative American corporation, while the head of an enterprise would be represented by an American superintendent of a plant or a factory manager. The analogy is not a very good one because, except for the Commissar, all these Soviet executives are subordinate functionaries carrying out plans made largely by others from which they may generally not deviate. At the very top, however, even at the level of the Commissar, there is a greater concentration of power than under the American system.

While there has been some loosening of control from Moscow to intermediate and plant levels, the Soviet industrial operator is subject to the surveillance of both party representatives and the NKVD in the localities. The Soviet manager must always operate within the confines of the master and minor plans. There is real danger in experimenting because of the close oversight of the management hierarchy, the Party, and the NKVD. Lack of success according to plans could be interpreted as "wrecking." The Soviet manager can never have anything like the latitude and the freedom to experiment which

¹² Walter Citrine, I Search for Truth in Russia (London, G. Routledge & Sons, Ltd., 1936), pp. 39, 51, 92-93, 100-101.

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his American counterpart has in laying out his ground, choosing his own course, arranging his production program, providing for materials, components, and supplies, and expanding his own customers.

The manager in the American economy may be self-elected, as when he risks his own capital, or appointed, as is more common in the larger companies where other people's money has been acquired by the sale of bonds, stocks, and so forth. Such managers are tried and tested in the various divisions of management like sales, production, purchasing, and so forth. Some are organizers, others are specialists, still others are executives—as such they can make a team work together more successfully than others. Managers are promoted to higher responsibilities within organizations and among organizations. Individually and severally they are subjected to the test which determines the constructive role they play in a capitalistic economy: that they can so organize and combine all the factors in production and execute the tasks undertaken that their total outlay is at least covered by their total sales. But that is not enough. If a manager wants to make real money he will find ways of reducing his costs below any of his competitors and he will have to keep ahead of them all the time. His self-interest is in every way tied up with the success of the enterprise he manages and thus he gives it all he has in ingenuity, energy, drive, and perseverance. The top men are judged by the expansion and profits of their enterprises, not by the meeting of formal requirements from a Government bureau or even by meeting or surpassing someone else's plans in accordance with more or less prescribed methods of operation.

CHAPTER IV

LABOR

LABOR LEGISLATION IN THE FIRST SOVIET DECADE

In all Socialist and Communist literature and agitation it is pre-
sumably the desperate position of the industrial workers, whose
status and standard of living is supposed to become worse with the
progress of capitalism, that serves as the foundation for the logic of
communist theory and action. It became something of an embarrass-
ment as the years passed that the Revolution did not spread to the
more advanced industrial nations after the example of Russia, for
that would have been "according to Marx."

The Revolutionary Government early decreed the control by
workers' representatives over all enterprises, including questions of
supply, production, and marketing. Labor mobilization offices were
instituted under the management of trade-unions. The Government
also formally decreed an 8-hour day, prohibited nightwork and under-
ground work for women and children, established annual holidays of
2 weeks to 1 month at full pay and a social-security scheme which
covered unemployment, disablement, sickness, and pregnancy. The
contents of some of these decrees were later amended. The standards
intended were not, however, actually in operation during the period
of militant communism or even under the N. E. P., since the where-
withal to carry them out was not provided. In fact, the decline in
production and in general well-being resulted in a strong movement
back to the villages, which were closer to the food supply as well as
to some kind of shelter.¹

True to what were then believed to be Communist or Socialist
principles, wages tended toward equality. By 1921 workers of
entirely different qualification, skill, or performance received nearly
equal wages. What effect this may have had on productivity is not
known accurately, but it doubtless contributed to the general decline.
In 1919 the efficiency of labor was estimated to be only 22 percent
of average prewar efficiency.²

Under the N. E. P. many forms of capitalistic economy were
reinstated, including the freedom of choice of employment; the right
to strike was recognized; wider differences in wages were permitted.

In the following years additional labor decrees were issued and
some revoked. These are of interest in revealing the experimentalism
of the Soviet regime, but they may be passed over quickly because
they are, after all, no longer descriptive of prevailing conditions.
Among the more interesting were the mobilization of "labor armies"
for heavy work in different parts of the country and the establishment
of a workweek of 5 days followed by a free day for each worker, the

¹ Alexander Baykov, The Development of the Soviet Economic System (Cambridge University Press, 1946), pp. 39-44, 140-141.

² Paul Haensel, *Economic Policy of Soviet Russia* (London, P. S. King & Sons, Ltd., 1930), pp. 29-30.

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plant itself being operated on a 7-day-a-week basis. While labor conscription was formally abandoned for free workers, restrictions on the free movement of workers continued to be imposed and forced labor became a thriving institution for politically unreliable workers and others forced by the millions into labor camps.³ The confusion and disorganization caused by the continuous workweek canceled out the benefits of the fuller use of resources; and this measure also was subsequently abandoned.

## COMMUNIST PRINCIPLES IN TRANSITION

In the first years of the Revolution, workers, factory committees, and unions interfered with management at every turn. The expropriated owners and managers could not be depended upon to lend themselves to the purposes of a Communist society, while the revolutionary-conscious workers could. And as, during the period which we have called militant communism, factory committees tried to manage the existing plants, the original owners, managers, foremen, and technical staffs disappeared. The factory committees became the new managers, issuing orders, buying materials and fuel, and pricing their products. In order to lessen the disorganization thus caused, the trade-unions, representing a larger point of view, were pushed forward to take over the factory committees. For a while factories were managed by representatives of the Supreme Economic Council and the trade-unions.

The New Economic Policy of Lenin, inaugurated in 1921, was definitely a strategic retreat in this as in other respects, made necessary by the failure of militant communism. While industry was making progress under the N. E. P., that was no final solution for the Communist leaders since they had no intention of restoring capitalism in the sense of the private ownership of productive capital. Anyway, national production was still below prerevolutionary times in a country whose national production had never been outstanding. The years following Lenin's death brought an intense struggle among the leaders. But matters were really worked out in Party Congresses which came more and more under Stalin's personal control. During these years Stalin's party had become convinced that diffused responsibility and equality of reward do not bring results. It was a fact that despite the confiscation of all productive property, the socialization of all industry, and the steep increase in the total number of industrial workers in Soviet Russia, neither total industrial production nor the plane of living of the workers was greater a decade after the Revolution than they had been in Czarist times.⁴

In the 5-Year Plan high goals were set by the new masters of Russia. The Plan called for a 110-percent increase in the productivity of labor in manufacturing, 60 percent in construction and 75 percent in transportation.⁵ While all the old vocabulary was retained—in other words, while the workers were still supposed to “own” the factories manage them themselves and receive all the benefits—since there were

³ See ch. V on Forced Labor.

⁴ Much of the statistics published by the Soviet Government and by sympathetic foreign enthusiasts use 1917, 1918, 1919, or 1920 as a base. As production was declining steeply in all these years, any comparisons with later years must show progressively better results. For the accuracy of the generalization in the text see Baykov, op. cit., p. 121 ff. and Leonard E. Hubbard, Soviet Labour and Industry (London, Macmillan & Co., Ltd., 1942), pp. 41, 50, 51, 67.

⁵ Joseph Freeman, The Soviet Worker (New York, Liveright, Inc., 1932), p. 77; Baykov, op. cit., p. 186.

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35

no "capitalist oppressors"—the dictatorship masked a power which no capitalist possesses.

In Stalin's famous "six-point program," issued in 1931, the whole emphasis was on raising productivity and reducing waste and inefficiency. It called for more rigid cost accounting. It eliminated the 5-day continuous workweek and interference by workers, factory committees and unions with the operation of plants. It glorified piece rates and differential wages. It raised the status of management and the technical specialists and was to make the manager personally responsible for the success of each enterprise, accountable only to the top management, and to be rewarded for success with ample bonuses and other perquisites.

The 5-Year Plan undertook to break with the revolutionary past and it is no wonder that Stalinism has aroused such hostility from doctrinaire Communists and Socialists in every land who have had no experience with communism in practice but are certain that Stalinism is not in accordance with Communist theory. Anyway, since the rise of Stalinism we have had the spectacle of a Communist society where the greatest emphasis is being placed on inequality of treatment and reward as a spur to ambition and responsibility. Perhaps we could say that Stalin and his lieutenants had waited patiently for a decade or more for Russian workers to learn to act as they are supposed to act in a society where they "own" everything.⁶ But "capitalistic" and "bourgeois" traits perversely persisted in Russian human nature and could not be eradicated by legal transfers of property, by Communist propaganda or even by wholesale liquidations and purges.

It is this development of individual responsibility, payment in accordance with individual output, high rewards as a goal and as inducement to further activity, and the stimulation of "Socialist competition"—topics which will be discussed in later pages of this chapter—which former Ambassador Davies had in mind when he wrote on the basis of his Mission to Moscow: "To maintain its existence, the Soviet Government has to continue to apply capitalistic principles. Otherwise it will fail and be overthrown. That will not be permitted by the men presently in power, if they can avoid it. I expect to see this government, while professing devotion to Communism, move constantly more to the right, in practice, just as it has for the past eight years."⁷

## THE PROBLEM OF LABOR DISCIPLINE

In discussions of labor in the Soviet Union the problem of "labor discipline" comes up again and again, year after year. In the first decade and a half there was an erratic movement from the country and the villages to the cities with changes in the agricultural and

⁶ What the original Communist attitude toward labor and reward may have been is suggested by the following quotation from Lenin: "Communist labor in the narrower and stricter sense of the word is unrewarded toll for the common good, toll not to discharge a fixed duty, nor to earn a claim to certain goods, nor according to previously fixed standards, but voluntary toll without a fixed task, given without calculation or condition of remuneration, toll performed through the habit of tolling for the common good and the consciousness that toll is necessary for the common good—in other words, toll must be regarded as a vital necessity of a healthy organism." (Quoted in Hubbard, op. cit., p. 33.) The Eighth Congress of the Communist Party in March 1919 had announced haltingly: "While aspiring to equality of remuneration for all kinds of labor and to total communism, the Soviet Government cannot consider as its task the immediate realization of this equality at the present moment when only the final steps are being made toward the transition from Capitalism to Communism". (Quoted in Baykov, op. cit., p. 43).

⁷ Joseph E. Davies, Mission to Moscow (New York, Readers League of America, 1943), p. 253.

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industrial situation. Workers would shift about to improve their position or to accommodate themselves to changing circumstances. At different times decrees were issued tying workers to their jobs or requiring internal visas. In 1932, a penalty was imposed for 1 day's absence without good cause. A decree in 1938 required managers to make rigid application of the 1932 decree. Lateness, idling, and taking too long for meals were causes for dismissal, if these offenses were repeated three times in 1 month or four times in 2 months.

In addition to continued "labor legislation" of this type, which continued until the Second World War, the Government counterattacked the problem of labor discipline by sponsoring and propagandizing a movement which was known as Stakhanovism after its Soviet-acknowledged originator, Alexei Stakhanov. As a technique, Stakhanovism is nothing more than a combination of the well-known principles of the division of labor and Taylorism; but as a Soviet institution it came to be regarded as the workers' own contribution to the blessings of speed-up and relentless work. American management has had a hard road to sell similar principles of efficiency to American labor, although they are of course widely used in American industry. The problem has always been a fair distribution of the increased production thus made possible. In Soviet Russia in the form of Stakhanovism the system is well-nigh universally imposed by the Government and the differential rates and bonuses are worked out and revised by its industrial officials.

The Government pushed this movement with great vigor. No less a person than Stalin presided at the first congress of Stakhanovites in November 1935. Machines were overhauled and tuned up for public exhibitions and everything arranged for the smoothest flow of production during the trial period. The press and factory and public speakers were called in to spread the new gospel. A Stakhanovite—an official title now given only to those who regularly meet rigidly high standards of production, quality, avoidance of waste and machine maintenance—is given special facilities to maintain these standards. He also gets "the best flats in factory tenement houses, holidays at a fashionable watering place, trips to Moscow, tours in the Caucasus, etc., and infrequently the right to buy and run a private motorcar."⁸ In 1937 only Stakhanovites had been put up by the Party and elected to the Council of the Union, which is one of the two Houses in the Supreme Soviet.⁹ Thus the representation of the working class was through the Stakhanovites and they too dictated for the proletariat. Though they are not everywhere popular among Soviet workers, Stakhanovites are undoubtedly as enthusiastic about communism as the "aristocrats" of American labor are about capitalism—and for the same reason.

This new version of "workers' solidarity" in Soviet Russia today suggests a consideration of the role of trade-unions, the traditional institution of modern industrialism designed to protect the interests of the workers against the interests of those who direct their operations and tend to determine their remuneration.¹⁰

⁸ Hubbard, op. cit., p. 79.

⁹ Ibid., p. 81, quoting a high Soviet official.

¹⁰ "Labor discipline" is discussed further at the end of this chapter in the section entitled "Labor Legislation Before World War II."

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37

SOVIET TRADE-UNIONS IN TRANSITION

Trade-unions in Soviet Russia, we are told, are voluntary organizations of workers; but practically all workers join up. There is said to be a small proportion of workers who are indifferent or slow to join the unions in their plant and industry, but they do not make up more than 5 or 6 percent of the workers. In practice, joining the union in the plant is a political and economic necessity. Nonunion members do not receive the benefits under the social security program extended to union members; if, for example, they are incapacitated, they receive only half the benefits extended to union members.

Before the Revolution trade-unions were regarded by the Communists as "organs of revolt" and the spearhead of the coming Revolution. In the first flush of revolutionary enthusiasm it was thought that the worker, through the Soviets, would also manage, direct, and control the factories.

In the early years of the Revolution unions played an active part in the management of the factories and in the effort to construct a Socialist state. The industrial workers during the time of the Revolution, numbering only about 3,000,000, were told they were to own and manage the producing facilities. They carried with them notions about the role of trade-unionism derived from their capitalistic past and from the hard conditions of Czarist times. The industrial population increased to the present total of some 28,000,000 by drawing large numbers from rural areas and villages who flocked to the towns and cities or were forced by conditions to leave for the new industrial areas. Between 1928 and 1935 the industrial communities of Soviet Russia absorbed over 17½ million of its vast peasantry. Many of the old working class rose to managerial or administrative positions in the extensive hierarchies of industry, administration, Party, state, regional and local government. Others died or were liquidated during the years. The children of these workers had even a better opportunity to rise to the places vacated by the hated bourgeoisie.

As a consequence the working class who would constitute the new labor movement were overwhelmingly men and women without urban experience, people recently come from the country and to whom city life under almost any condition would be an improvement, provided food was available. But when the crops failed, as in 1921 and 1932, they flocked back to the country.

During the early period of the N. E. P. Lenin thought of the unions as schools of communism which would have the dual function of defending the interests of the workers against the exploitation of the Nepmen and the faults and failures of the bureaucracy in the state industries. A well-known statement of the Central Committee of the Communist Party written by Lenin said:

> State plants have been shifted to so-called business accountability. At the same time it is urgently necessary to increase labor productivity, to abolish deficits, and to assure profitability in every factory. All this along with inevitable departmental interests and overzealousness unavoidably brings about a certain clash of interests in questions of work conditions between the working masses and the plant managers or the relevant government departments. With respect to socialized factories, trade-unions have therefore the absolute duty to defend the interests of the workers. As far as possible they must help to raise the workers' material living conditions. To achieve this, the unions have to

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correct systematically errors and exaggerations committed by organs of economic administration and resulting from bureaucratic distortion in the State apparatus.¹¹

Up to the period when the First 5-Year Plan was taking shape, the traditional notion that unions were designed to protect workers against the driving, cost-cutting and, overzealousness of management to make a success of the enterprise, prevailed in Soviet Russia. The leader of the trade-unions had remained Michael Tomsky,¹² a member of the Politbureau and close friend of Lenin. While his influence was dominant, the arguments that unions should be obedient organs of the state concerned primarily with the improvement of production, while raised, were without much practical effect.¹³

However, with the inauguration of accelerated industrialization under the First 5-Year Plan, the whole influence of the Communist Party under its new hierarchy of leaders was thrown against Tomsky. The Party had started on a program to build up new industries, and to expand in many directions. The old trade-unionism would have resulted in the dissipation of the earnings of specific enterprises to the particular workers who happened to be employed in those enterprises. The workers might have gotten more nearly "the full value of their labor," to the detriment of the planned industrial expansion.

This is the way the Ninth Congress of Trade Unions described the transition:

Instead of mobilizing all the forces of the working class for the development of an increased tempo in socialist construction, for the fulfillment of the Five-Year Plan, and for leadership in the growing productive activity of the wide masses of proletarians directed toward an increase in the productivity of labor and toward overcoming the difficulties involved in the Socialist reconstruction of national economy, the old leadership of the trade unions gave precedence to the "defensive" work of the trade unions as against the problems of their participation in socialist construction. Through Tomsky, the old leadership urged that "it is impossible at the same time to manage an enterprise on the basis of commercial cost accounting and yet be the exponent and defender of the workers' interests." Actually, this meant leading in the direction of isolating the trade unions from the struggle for the building of socialism in our country. This was an expression of narrow "trade unionism," departmental and other petit-bourgeois moods in the trade unions alien to the proletarian. At the same time it meant a refusal to struggle for the radical improvement of the material conditions of the workers on the basis of developing socialist economy and increasing labor productivity * * *. The slogan "face production" signifies a new stage in the development of the work of the trade unions, and their turning to the problem of a wide development of socialist competition. The problem was to make socialist competition the basis of all productive work of the trade unions, to make it the decisive method in the daily struggle of the trade unions for fulfilling and exceeding the industrial-financial plan.¹⁴

Tomsky and his followers were therefore purged and replaced by men appointed by the ruling group. With these came a new program of activities for trade-unions centering about the united effort to make and surpass new production goals in all industries, to increase differential wages, improve "labor discipline," organize "shock brigades," promote "socialist competition," speed up production by the universal adoption of Stakhanovism, and keep busy by administering

¹¹ Quoted in Gregory Bienstock, Solomon M. Schwarz and Aaron Yugow, Management in Russian Industry and Agriculture (London, New York, Oxford University Press, 1944), p. 34.

¹² Tomsky was the only member of the Politbureau at the time of Lenin's death, excepting only Stalin, who was not killed as a traitor or "wrecker" in later years, or banished, as was Trotsky. Tomsky committed suicide.

¹³ Freeman, op. cit., pp. 104-110; Bienstock, Schwarz, and Yugow, op. cit., p. 55.

¹⁴ Quoted in Freeman, op. cit., pp. 133-134.

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39

the social security and welfare programs of the state.¹⁵ With variations and additions this has been the dominant sphere of activity of Soviet trade-unions to this day. Lenin's earlier notion of the proper function of trade-unions now was characterized by such themes as "opportunist" and "trade-unionist".

PRESENT ROLE OF UNIONS IN SOVIET RUSSIA

The primary functions of trade-unions in Soviet Russia in recent years was made clear by N. M. Shvernik in April 1941, when, succeeding Tomsky, he had been President of the All-Union Central Council of Trade Unions for some 13 consecutive years. Speaking to the All-Union Council he—

emphasized that the most important task facing the trade-unions, "as the nearest helpers of the Bolshevik Party, as schools of communism," was to concentrate the efforts of the workers on fulfilling the state plan of production for 1941
* * *. Trade-unions did not put enough energy into organizing socialist competition and the Stakhanov movement in the factories; factory meetings were not summoned with sufficient energy to serve as a real means of improving organization of labor and speeding up production; labor discipline was still low;
* * * not enough attention was being paid to the adjustment of wage rates so as to eliminate "the rotten practice of leveling" and stimulate productivity.

The delegates who spoke in the subsequent debate unanimously supported these criticisms and agreed with the need for improvement.¹⁶

The role of unionism thus revealed is radically different from its role in the United States and indeed in Soviet Russia itself in the early years of its history. In the early years, labor agreements were made with industrial organizations in the Soviet Union and there was a recognition of the need of protecting the workers from any type of administration. In reports of labor and industry conventions in the 1920's reported in the International Labor Review differences in the point of view of state managers of industry and the workers and unions were frequently indicated. For instance, in connection with the decline in production for several months in 1928, the increase of absenteeism and the relaxation of discipline, management ascribed these conditions to the increasing consumption of alcohol by workers and their refusal to accept the authority of the technical and managerial staff, while the trade unions ascribed these conditions to the lack of initiative of management, the failure of management to train workers and raise their cultural level, poor supply and accident prevention, frequent errors in drawing up production programs, and continual modification of such programs.¹⁷ One may assume that in any country, if workers are free, they would emphasize just such shortcomings of management, while management would tend to lay the blame at the feet of labor. But with the liquidation of Tomsky, unions ceased to be independent fighting organs of labor and became part of the apparatus of the government machinery in which labor and unions had their assigned parts to play.

¹⁵ Sidney and Beatrice Webb, *Soviet Communism: A New Civilization* (New York, C. Scribner's Sons 1936), p. 161; Solomon M. Schwarz, "Trade Unions in Russian Industrial Life", *International Post-War Problems, July 1945*, pp. 320-324; Hubbard, op. cit., pp. 156-161.

¹⁶ Quoted in Margaret Miller, *Labour in the U. S. S. R.* (London, British Association for Labour Legislation, 1942), p. 25. "The study is confined to statements of facts based on Russian sources and prepared by a constant visitor to Russia and keen student of its industrial life" (p. 5).

¹⁷ Reported from various Soviet periodicals in Industrial and Labor Information of the International Labor Organization (I. L. O.), September 24, 1928.

90681—46—4

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The planning system requires that a decision be made in advance regarding the amount of the national income to be devoted to wages. The size of the total pay roll—the amount of money to be paid out in wages in each branch of industry—is worked out by Gosplan. It deals, among other things, with the total national pay roll, the total number of workers to be employed in industry and the planned productivity per worker. Its report is submitted to the All-Union Central Council of Trade Unions for study and review, but all decisions are made by Gosplan. Thereafter, the total amount of national income going to wages is fixed and is not subject to discussion or negotiation between the government and the trade-union.

This fund could not be made subject to the uncertainties of collective bargaining, and collective-bargaining contracts ceased to be instruments of labor policy after 1935. Wage rates are fixed by economic planning agencies on the basis of the principles established by the Government. It is true that trade-union officials play a part in this machinery; but since their dominant outlook must be to protect the enterprise in carrying out its assigned tasks, their influence on wages is conceded by all impartial students to be negligible. The wage committee of the local union is, however, permitted to discuss classifications, plant inequalities, and incentive rates with the local state management and to assist management in setting daily work quotas. It would be "opportunistic deviation" and "an attempt to destroy the one-man leadership and to interfere with administration" for trade-unions to have equal say with the economic agency in fixing wages.¹⁸

It is said in all seriousness that there could not be any divergence in the views of the Government and all labor regarding the size of the total wage bill or between local management and labor regarding its local application, none at least which could not be settled on the Government's terms. Such arbitration is carried out locally and may be carried up to higher trade-union bodies, the highest of which has already agreed to the soundness and justice of the total wage payment and the amount available for the particular enterprise. This, and not collective bargaining over the terms of employment, is an important function of trade-unions in Soviet Russia. Their other functions and activities are to handle the administration of the social insurance program of the U. S. S. R., sponsor recreational activities; operate schools for children attached to the factories, rest homes and bathing beaches; provide for lectures on Soviet policy and Stakhanovism; participate in state and communal activities, such as housing, food distribution, and the allotment of garden land; and help in political campaigns.

Soviet unions are not organized to conduct strikes. While there does not appear to be any specific legislation prohibiting strikes, strikes never occur in state industries, at least not since the strike of the Kronstadt sailors way back in 1921.¹⁹ One writer puts it cryptically that "strikes, according to the unwritten and unpublished Soviet law, are forbidden." ²⁰

¹⁸ Schwarz, op. cit., p. 328. See also Bienstock, Schwarz and Yugow, op. cit., pp. 35-38, 40-41.

¹⁹ The Kronstadt sailors had demanded freedom of speech and the press, the liberation of workers and peasants held as political prisoners, equal rations for all workers and the right of nonprofitering peasants and artisans to sell the products of their labor. They were treated as "counterrevolutionaries and their protests were drowned in blood." Freda Utley, The Dream We Lost (New York, The John Day Co., 1940), pp. 43, 139-140.

²⁰ Manya Gordon, Workers Before and After Lenin (New York, E. P. Dutton & Co., 1941), p. 93.

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41

It has thus come about that trade-unions in Soviet Russia have been absorbed by its general Government economic machinery. Soviet trade-union officials as Party "activists" are Government officials, carrying out Government policies, and Soviet trade-unions are Government institutions, disciplining the workers to the Government's needs and goals and performing functions which in other countries are performed either by management or by Government. The juncture of management and Government has resulted in making Soviet trade-unions state controlled and ultimately Party controlled institutions.

In recognition of this changed status the People's Commissariat of Labor was abolished in 1933 and its duties transferred to the trade-unions, which took on the Government functions of regulating safety and hygiene inspection, the administration of social insurance and recreational and cultural activities. The unions also took on the managerial functions of working for increased production through the Stakhanovite movement, maintaining discipline, enforcing the decrees with reference to restricting mobility, idling and absenteeism, and organizing "Socialist competition." And all of this was forecast in the Declaration of the Sixteenth Congress of the Communist Party which declared in 1930:

> The present phase of Socialist Construction raises the problem of the complete reorganization of the activities of the proletarian mass organizations, and among others the trade-unions. It is necessary to concentrate production. Under the leadership of the (Communist) Party the trade-unions have now removed their bankrupt leaders and have begun a determined fight against the elements of "trade-unionism" and opportunism in the trade-union movement. Today the basic factor in organizing and improving the entire work of the trade-unions must be Socialist competition and its offspring, the shock brigades. Socialist competition and the shock brigades must become the primary concern of all the constructive activities of the unions. The trade-unions must organize fraternal contests between the best shock brigadiers in order to make the necessary impression on persons who violate labor discipline.²¹

In pursuance of its aims the Government, through the employing enterprise, contributes 2 percent of the pay roll to the union, while the workers contribute 1 percent of their earnings. The relation of the union to the employing enterprise took on the aspects of "company unions" which used to flourish in the United States. Party members were made officials of unions to carry out Party instructions and perpetuate the new Stalinist ideology.²² The "cooperation" of the unions and the Government was complete,

²¹ Quoted in Gordon, op. cit., p. 100.

²² On this point Kravchenko observed: "Since trade-union officials could not open their mouths, let alone make decisions, without permission from the Party, they were generally men of no importance. The whole Institution of labor organizations under a dictatorship seemed a curious remnant of the distant past. It was not even a hoax, since no one was fooled by the rigrmarole of meetings and decisions, least of all the workers." (Victor Kravchenko, I Chose Freedom (New York, C. Scribner's Sons, 1946), p. 175. And Scott, speaking of a steel mill in Magnitogorsk in which he was employed in 1935, wrote: "The trade-union secretary was a comparatively unimportant figure. Although virtually everybody in the mill was a member of the union, its activities were limited to educational and 'cultural' work". (John Scott, Behind the Urals, p. 150). Barmine observed in his dealings with his staff that "trade-unionism had practically ceased to exist. Formerly the union local had been a power to be reckoned with whenever it came to inflicting punishment, dismissing employees, or in any way altering wages or other conditions of labor. Now neither the factory directors nor we—executives in Soviet institutions—needed to bother our heads about anyone representing the workers. The local existed, but its activities were confined to carrying out the biddings of the Party cell. Apart from this, all it did was to see that the 'voluntary' loans to the Government—they were, in fact, forced—were duly paid. There had ceased to be any protection whatever for the clerk in the office or the worker in the factory."

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SOME CONTRASTS WITH AMERICAN UNIONS

In contrast with these primary functions of trade-unionism in the U. S. S. R., American unions have as their main reason for existence to enable workers to deal on equal terms with employers on all matters of mutual interest. Our industries are, of course, privately owned; and collective bargaining is encouraged in recognition of both the common and opposing interests of workers and management. In different industries and trades, union representatives bring up and negotiate and bargain about those matters which are of greatest moment to them. These include not only wages, hours, overtime, holidays, shift differentials, standard work loads, methods of remuneration, transfers or changes in work assignment, but also broad matters of long-time interest to workers, such as seniority, the control of hiring and lay-off, the training of apprentices and learners, union participation and agreement in job evaluation, classification and the setting of piece rates, and the protection of the interest of the workers in the handling of grievances, disputed matters and shop discipline. Many employers have not been happy about the aggressive independence and increased power of unions and have tried to limit their power. But it is a fact that trade-unions in the United States are independent, fighting representatives of the workers, interested in the success of the enterprise which employs them, to be sure, but primarily interested in protecting the human and democratic rights of the workers against the apathy, the convenience, or the self-interest of the employer.

In the U. S. S. R., in contrast, unions are part of the apparatus of the all-knowing and presumably far-seeing employer who, by definition, is supposed to have the same interests as the workers at all times. Their labor leaders are not leaders of labor independent of both Government and the employer, with an independent treasury and strike funds, independent of the "boss" control, and free to fight for the rights of workers to a comfortable and steadily less onerous existence. They get what they get because the Government and the Party ordered it so. But since the Government, by definition, can act only in the interests of all, the workers can never have a just cause for complaint after a final decision has been made by the Government.

Most American unionists would, however, probably agree with Victor Kravchenko's father who, in a moment of exasperation with his son as the embodiment of Soviet success, exclaimed:

> The worker * * * doesn't much care who exploits him, a private owner or the State. When he's dragged off to prison or exiled, it's small consolation to him that it's being done in his own name. After all, when the capitalist boss didn't pay me enough or failed to give me decent working conditions, I could change my job. I could propagandize my fellow workers, call protest meetings, pull strikes, join political parties, publish opposition literature. Try any of it today and you'll end up in prison camp, or worse. Believe me, we had more chance dealing with a hundred thousand capitalist employers than we have now with one employer, the State. Why? Because the State has an army and secret police and unlimited power. * * * There was a time when labor organizations were really spokesmen for the workers. They were political schools in which we learned to demand our rights and to fight for them. Who dares protest against anything today? The press, which poses as a mouthpiece of public opinion, is now the property of the Party and the State. It reflects only their opinion.²³

²³ Kravchenko, op. cit., p. 204.

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WAGES AND EQUALITARIANISM

Theoretical socialism postulates not only the exploitation of the worker by the capitalist but also by the skilled and better-paid workers, who are believed to be able to draw more from the social product because of their calculated cupidity, their advantages in education and opportunity and the entrance and the monopoly restrictions of capitalistic trade-unions. The goal of socialist wages has been something quite radically different—from each according to his ability; to each according to his needs. This is the basis of socialist equalitarianism. What has been the fate of this element of socialist ideology in the history of Communist Russia?

In the first 2 or 3 years after the Revolution, wage differentials were narrowed and wages tended toward equality. During the N. E. P. greater inequalities were reintroduced, especially in the private sector of the economy. With increasing experience Government enterprises seemed to appreciate more fully the production advantages of inequality. Equality of income came to be regarded as a goal only for the distant future after communism had been fully established. It was not until 1931, however, Stalin again giving the signal, that equality was made "counterrevolutionary," while inequality was firmly acknowledged to be the basic factor in wage administration in the Soviet economy.

In an important speech at a meeting of factory managers in June 1931, Stalin said that—

> in a number of establishments the wage rates are established in such a manner that the difference almost disappears between qualified labor and unqualified labor, between heavy labor and light labor. Equalitarianism leads to this, that the unqualified (unskilled) laborer is not interested in becoming a qualified laborer. We cannot tolerate a situation where a railway locomotive driver earns only as much as a copy clerk. We must give the unskilled worker a stimulus and prospect of advancement, of rising to a higher position. It is necessary to organize such a system of wage scales as will take into account the difference between qualified labor and unqualified labor, between heavy labor and light labor. Marx and Lenin say that the difference between qualified and unqualified work will exist even under socialism, even after the destruction of classes. Who is right—Marx and Lenin or the equalitarians?<sup>24</sup>

This was the signal for a campaign against "equalitarianism." No law had to be passed or decree issued. The Party leaders, the trade-unions and the press went to work. Henceforth "equalitarianism" was "petty bourgeois" or "counterrevolutionary" or a symptom of "rotten liberalism," characteristic phrases used to describe those who had difficulty in accepting and following the evolving Party line.

To invigorate this policy and to obtain better cooperation from all elements in production it was decreed that half the reduction in cost realized in a state enterprise below Plan be set aside as a Director's Profits Fund, half of it to be used for workers' housing, which has been grossly below western standards throughout the Soviet period, and the rest for further technical improvement and supplementary capital construction, bonuses for outstanding workers, training, and the improvement of social and recreational services such as creches, clubs, and dining rooms. In addition one-half of 1 percent of the annual wage bill of each enterprise was to be set aside for the payment of

<sup>24</sup> Quoted in Abram Bergson, Structure of Soviet Wages (Cambridge, Harvard University Press, 1944), p. 178.

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premiums for outstanding production records and economies realized from "Socialist competition" and "shock" work. This was part of the movement to solve "labor discipline" by placing complete authority in the directors of enterprises. The unions, as we have seen, could take their complaints to superior organs of their own hierarchy but they must otherwise take orders from plant management and carry out their assigned tasks. As an official manual puts it:

> Current operations in fulfillment of Plan are the task of the administration. The chief of a workshop, the manager of the plant, the head of the Glavk, have full powers, each within his field, and the Party and trade-union organizations may not interfere with their orders.²⁸

## SOVIET WAGE SCALES

Despite the oft-repeated slogan that in a Communist society every value created by the worker redounds to his own personal advantage, Stalinism has found it necessary to place before the worker the possibility of higher earnings for himself alone in order to induce him to undertake longer or more intensive training, greater risk, greater responsibility, to accept a harder or more disagreeable job, and to stick to his job with less idling, waste, and indifference.

There does not seem to be any national minimum wage in the Soviet Union. The lowest wage rate in different industries is determined by the industrial management, which has the problem of keeping within the pay-roll allowances fixed by the Plans.

Wages above the minimum are determined by a schedule of wage rates, expressed as multiples of the wage rate of the lowest-paid category. The range and number of categories above the minimum are determined by the Commissariats and approved by the Economicsoviet, the body whose function it is to coordinate the various Commissariats and act as a kind of economic general staff. The influence of trade-unions and plant committees on fixing wages and norms declined at the end of the 1920's.

As collective contracts died away, trade-unions and plant committees gradually ceased to participate in fixing wages in the plant.²⁹

Wherever possible and more commonly than in the United States, wages are paid on a piecework basis or on some other form of measured production. The elements include "norms" of production or standard tasks, rates per unit of production, and bonuses for exceeding the norms. Even clerks in retail stores and in offices have norms. The differential rates or "categories," as they call them, are designed to induce workers with different degrees of skill and responsibility to do their very best and thus to assist in attaining the highest possible levels of production, while indirectly and, as a result, they influence the availability of supply of workers in the different categories needed. In January 1938, according to a Soviet publication, 75 percent of the total number of workers were paid on a piecework basis, with assigned standard tasks or norms. Of these 43 percent were paid on straight piece rates plus bonuses while 32 percent were paid at progressive piece rates—that is, higher rates for later increments or production beyond standard.²⁷

²⁸ Quoted in Bienstock, Schwarz, and Yugow, op. cit., p. 19.

²⁹ Ibid., p. 41.

³⁰ Soviet source quoted in Bergson, op. cit., p. 161.

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In setting wage scales all the familiar capitalist principles are given weight, since these measure the relative supply of different classes of labor or their relative productivity—the arduousness of the work, its riskiness or unpleasantness, its complexity or exactness; the degree of independence and responsibility borne by the worker; the education and experience required; the volume and quality produced. As in the United States, where competition and collective bargaining rather than the Government agencies fix wage rates, these principles work out in higher wages for heavy industry than for light industry, higher wages for men than for women, higher wages for all degrees of skill compared with unskilled labor, regardless of the family obligations of unskilled labor. The difference between the scales in the Soviet Union and the United States is one of degree and trend—the Soviet Union maintaining wider differentials and showing a definite tendency to increase differentials and inequalities, while in the United States, the widespread educational and training opportunities, the imposition of higher legal minimum wages, and the operating effect of wage adjustments based on the notion of a “living wage” are tending to narrow differentials and inequalities in wages among different classes of workers.²⁸

A further practice to encourage individual initiative on the part of workers in the Soviet Union, similar to that of a large percentage of private firms in the United States, is the practice of paying premiums for savings in fuel or materials, improvement in quality, in safety and sanitary techniques, and other technical improvements similar to those rewarded in American “suggestion systems.”

WAGES AND PRODUCTIVITY

With the progress of industry in Soviet Russia new “norms” or standard tasks were established at different times. Each of the Plans, as we have seen, provided for a planned increase in labor productivity. Norms which form the basis of the piecework scales are revised each year in consideration of expected average increases in productivity.²⁹ How much the real wages of workers have been raised by these increases in labor productivity or in the higher standard tasks or norms assigned in the various wage categories is a debatable matter. The evidence necessary for any sound conclusion is not available to the outsider.

It is known, however, that at some times new norms were established requiring increases in production for the same amount of pay. For instance, in 1936 new norms were established for all industry from 10 to 30 percent above the old norms without any adjustment in wages.³⁰ A strong defender of the Soviet economy has made the following defense of the increases in norms at that time:

> But it is equally clear that, once the new methods of work had been popularized, and the speed of work of the majority of workers in a plant had thereby been substantially enhanced, it would have been impossible to maintain the old output standards intact. At any rate, if these had been so maintained, the whole structure of industrial costs would have been drastically inflated just at the time when,

²⁸ This refers only to differences in wages received by workers, not to inequalities of income among all the people, which are, of course, much greater in the United States than in Soviet Russia because of the much more extensive private appropriation of interest, profits, and rents, the much higher general level of incomes, and the existence of almost universal private trading.

²⁹ Maurice Dobb, *Soviet Planning and Labor* (New York, International Publishers, 1943), p. 85.

³⁰ Hubbard, op. cit., pp. 105-107.

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following derationing, strenuous efforts were being made to reduce retail prices. It was, accordingly, decided that as soon as the new methods had come to be widely adopted among the workers, and opportunity had been given to more backward workers to improve their output, and upward revision of output standards must occur. This was done in most industries in the course of April 1936. By the end of August it was announced that in heavy industry between 70 and 80 percent of the pieceworkers were able to attain or to exceed the new output standards: that is, to assimilate the more rationalized methods of work sufficiently to suffer no loss of earnings from the change. There seems to be little ground, therefore, for the statements sometimes made that an outstanding result of Stakhanovism was to create a labor aristocracy, whose higher earnings were at the expense of the majority of the unskilled. The minority, constituting perhaps a quarter or a third of the labor force at the outside, may have suffered some reduction of earnings as a result of the change; and to a large extent these may have been the same persons as, previous to derationing, had spent a relatively large proportion of their earnings on rationed foodstuffs, and hence were adversely affected by the abolition of the low ration price. Many Stakhanovites also, no doubt, suffered a reduction of earnings on the high levels at which they had been earning for the first few months after their achievements, although they continued to benefit substantially as compared with their original position.³¹

In my plant of 1,500 men—

wrote Kravchenko—

perhaps 200 qualified as Stakhanovites or speed kings. For the others the revision of norm meant simply a serious cut in earning power. * * * To add insult to injury, the new norms had to be presented and accepted by the workers "themselves," not only "voluntarily" but "enthusiastically."

Kravchenko then goes on to show how this was staged.³² Ambassador Davies called this 1936 maneuver an "effort to reduce costs, to improve the profit position of these industries." ³³

It appears also that—

the decree increasing the working day from 7 to 8 hours in most industries and from 6 to 7 hours in all others, and lengthening the working week from 5 days to 6, did not include any raise in wages; in fact the daily and monthly rates of pay remained unchanged, while the production quotas were raised and piecework rates lowered to correspond to the greater number of hours worked.³⁴

The foregoing illustrations and quotations are not meant to imply that workers did not sometimes participate in the increases in productivity directly or that they did not benefit by increases in production in other ways. In the Soviet Union the workers' receipt of goods and services is also influenced by their actual production and availability, by the expansion of the social services, by rationing and special low-price stores, by progressive rental rates and the like.

While no attempt is made to compare workers' incomes in the U. S. S. R. and the U. S. A., it is not disputed anywhere that the average level of wages and earnings and the standard of living is very much higher in the United States. This is so principally and finally because production and output per worker is higher in the United States. For instance, Soviet iron workers produced 86 kilograms of pig iron per capita in 1937, while in the United States 292 kilograms per capita were produced. In the same year Soviet coal miners mined 757 kilograms per capita compared with 3,429 in the United States.³⁵ One could argue ad infinitum, as it has been, regarding all the reasons for

³¹ Dobb, op. cit., pp. 87-88.

³² Kravchenko, op. cit., p. 189. Kravchenko reports another general upward revision of norm without wage increases in 1939 (p. 312).

³³ Joseph E. Davies, op. cit., p. 112.

³⁴ Economic Conditions in the U. S. S. R. in 1940, International Reference Service, U. S. Department of Commerce, May 1941. See also Hubbard, op. cit., p. 98.

³⁵ Frederick L. Schuman, Soviet Politics (New York, Knopf, 1946), p. 578. The figures are attributed to Molotov, Land of Today and Tomorrow, Report of Congress, XVIII, pp. 113-114.

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or explanations of the much greater per capita productivity in the United States. The only thing which is clear and indisputable is that the final result for the worker depends on per capita productivity and the availability of the goods and services which the public needs and wants, since that which can possibly be distributed as earnings for the worker must first be produced. It is also true that the efficiency of an economic and social system and the standard of living it yields is a resultant of all the forces in a society that contribute to its comprehensive productivity. In the face of all the argument and discussion regarding private property and free enterprise, state-owned production and state-managed enterprise, the validity or value of this or that social institution, it is per capita production which finally counts most in determining what workers in all categories shall receive for their labor.

The history of industry and labor in the Soviet Union and the guiding hand of Government has impressed upon the workers that the only sure way to increase wages permanently is to increase production. It is doubtless easier to explain this in a land where private profit is not permitted and where, therefore, all profit and all investment is by definition for the good of all. In the United States the close relationship between per capita production and wages is concealed by the ideology that higher wages come from the "swollen profits" of the employer. But the close relationship between productivity and real wage increases through the years is even clearer in the United States than it has been in the Soviet Union, where the market for consumer goods has been rather severely restricted.

Soviet trade-unions have for a decade before the war preached the urgent necessity for increased production. Government decrees and propaganda and not "selfish management" ever seeking to "exploit the worker"<sup>36</sup> developed the miscellany of high-pressure methods and practices to get out production in the Soviet Union—"labor discipline", "shock brigades", "socialist competition", a system of wage payments based on standard tasks, piece rates, measured production, bonuses, and the increase in "norms" with the progress of industry, Stakhnovism, "heroes of Socialist toil", rest homes for fast workers, and a union movement whose primary function is to increase production. But the methods have helped Soviet industry to make a very creditable record in increasing both the physical volume of production and the output per worker.

WORKERS OF LOW AND HIGH ESTATE

The setting of increasing production goals, the emphasis on capital development rather than consumers' goods, the time limits set, the lack of competing establishments, the labor movement absorbed in managerial and administrative problems, and the working of the whole economy against time—added to the complete control of all operations by undisputed authority—all work to place the human element in production in a very subordinate position. In one of the

<sup>36</sup> "It is a cardinal article in the Communist faith that in no circumstances can a capitalist employer ever behave otherwise than as a ruthless exploiter. If the workers in a capitalist State receive undeniable good wages and enjoy free social services, it is because (a) the workers themselves have extorted these concessions from unwilling and inimical employers, or (b) the employers have for their own ends improved the workers' conditions on the same principle that it pays to keep a beast of burden well fed and in good condition. Hence the extraordinary distortions of fact and misrepresentations of motive always found in Soviet references to conditions elsewhere." (Hubbard, op. cit., p. 104.)

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first engineering investigations he was asked to make, Kravchenko reported that the failure of the project (at Nikopol) was due to two broad causes: First, the interference with local authority by distant management and Moscow planners, and second, a group of causes which—

can all be summed up as disregard of the human factor in the process of production. Although tens of millions of rubles were being thrown away recklessly in unused machines and abandoned construction, wages were kept pitifully low when measured in what the ruble could buy just then. Workers' homes existed in blue prints, but the flesh-and-blood workers were packed into hastily constructed wooden barracks, with leaking roofs, moist walls and floors, lacking even the most primitive hygienic comforts. The emphasis was on output, in utter contempt of the men who did the work.³⁷

Great masses of people have lived for decades under the most crowded conditions under which decent privacy is next to impossible. Practically every report on conditions in Soviet Russia throughout its history mentions or admits the thoroughly inadequate housing of the people in both city and country—in western Russia, including Moscow and Leningrad, as well as “behind the Urals.” A room for a whole family is standard in the western regions, barracks or crudely covered dugouts in the Siberian and eastern regions. This is not a war phenomenon but has been a characteristic of Soviet economic planning from the beginning. The International Labor Review (Journal of the International Labor Office) regularly carried reports on the housing shortage in Soviet Russia, characterizing the situation as “never more critical” in August 1925 and “becoming more and more intense” in May 1928. In 1935 Citrine fulminated about housing conditions everywhere he went on his second tour of Soviet western industrial cities. He never located a worker’s family with its own exclusive toilet facilities. John Scott, the American who lived and worked in Magnitogorsk, said that conditions steadily improved from 1932 to 1938. Yet he offers the following break-down of available housing for this city of 200,000 inhabitants in 1938:³⁸

<table><thead><tr><th></th><th>Percent</th></tr></thead><tbody><tr><td>Berezki and the Central Hotel</td><td>2</td></tr><tr><td>Kirov district and other permanent apartment houses</td><td>15</td></tr><tr><td>Permanent individual houses</td><td>8</td></tr><tr><td>Barracks and other “temporary” houses</td><td>50</td></tr><tr><td>Zemlyanki (“shanghais”)</td><td>25</td></tr></tbody></table>

The inequalities resulting from better earnings are not the only inequalities in the Soviet Union among different classes of workers. A Stakhanovite and others who have not quite made that grade are privileged workers. They not only earn more, but they are given special facilities for work, special foods, special restaurants and the

³⁷ Kravchenko, op. cit., p. 79. That there is, however, some hope for improvement is attested by John Scott: “Much was said, but, unfortunately not much done to make the working conditions in the coke plant more healthful. Ventilating systems often did not work, and sanitary inspectors (and themselves powerless to force the administration (which had other more pressing duties) to take effective action. There were numerous accidents, though the number decreased with the years. Beginning with 1936 any fatal industrial accident became the subject of criminal investigation. Often they tried the wrong people, but in Russia this is relatively unimportant. The main thing was that the technicians and workers alike began to appreciate and correctly evaluate human life, both their own and other people’s and this was extremely important in a country where tyranny, war, famine, and strife had made life very cheap.” (Scott, op. cit., p. 159).

³⁸ Scott, op. cit., p. 234. “A ‘shanghai’ is a collection of improvised mud huts huddled in a sort of ravine overlooking the railroad yards. The roofs were usually made of old scrap metal, sometimes covered by sod or by thatch. The same house was inhabited by the family, the chickens, the pigs, and the cow, if there was one. This manner of housing livestock was usual in the poorer sections of the Russian countryside. The dwellers in these ‘zemlyanki’ were laborers and semiskilled workers and their families. Their possession of chickens and goats was witness of the fact that they ‘were living well’ by the standards of Russian peasantry. They had eggs and milk, while the fathers working in the mill supplied a cash income.”

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right above others to purchase needed industrial goods and clothing. In 1932, William H. Chamberlin, the American journalist who represented the Christian Science Monitor in the U. S. S. R., noted seven different dining rooms in Magnitogorsk, the big iron and steel center in the Urals. They "ranged in quality from the plentiful, if heavy, food served to high plant offices and imported American engineers to the subhuman diet allotted to the unfortunate kulaks and political prisoners, of whom tens of thousands were employed on forced labor jobs." ³⁰ In 1944 this "caste system" in dining rooms was reported as existing in a Soviet motor factory visited by W. L. White.

Next to the stimulation of productivity, the conduct of welfare activities (including the administration of the social-security benefits) is the most important and time-consuming function of Soviet trade-unions. Much is made of the provision of rest homes and summering places for workers. But a selection must be made, since obviously there is no provision at these resorts for 25 to 27 million workers, not to speak of their families. Citrine estimated that 3 percent of the industrial workers had the privileges of a rest home in 1932.⁴⁰ In the plant managed by Kravchenko at Nikopol, pretty near the Black Sea, where several of these resorts are located, only 57 workers out of 1,500 had been to a rest home during the year, even though all the workers had had deductions from their wages for this service. To be sent to a rest home was something of a prize, to say the least.⁴¹

A holiday in the Crimea or the Caucasus was a reward for exceptional services both in the field of productive work and political activity—it was far from being the right of every worker.⁴²

Consistent with the new Soviet practice of differentiating all classes of labor, three new "orders" were created in 1938.

Of these the highest was the order of "Hero of Socialist Toil," which carried with it double pay or salary. The second was the order of "Prowess of Labor" which entitled the holder to a medal, R. 10 a month and unlimited free tram rides throughout the U. S. S. R. The third was the order of "Excellence in Labor" with a medal, R. 5 a month and tram rides.⁴³

## UNEMPLOYMENT AND UNEMPLOYMENT COMPENSATION

It is said that in the third year of the First 5-Year Plan there was no longer any unemployment in the Soviet Union. The growth of industry, the opening of new areas, the construction of elaborate public works, and the increase in the size of the Army in the succeeding years kept the total demand for manpower ahead of available supplies. Larger numbers of peasants were released from agricultural employment by one means or another and went to the towns to work. Between 1928 and 1940 the number of wage and salary workers (including employees on collective farms, but not members of collective farms nor individual farmers) increased from 11.6 million to about 30.4 million. In no country in the world is there so large a proportion of women in industry, especially in heavy industry, as in Soviet Russia. Between January 1, 1929, and November 1, 1939, the proportion of women manual workers increased from 28.8 to 43.4 percent.⁴⁴

³⁰ W. H. Chamberlin in American Mercury, May 1945, p. 626.

⁴⁰ Walter Citrine, I Search for Truth in Russia (London, G. Rontledge & Son, Ltd., 1936), p. 242.

⁴¹ Kravchenko, op. cit., p. 203.

⁴² Hubbard, op. cit., p. 51.

⁴³ Ibid., pp. 97-98.

⁴⁴ Judith Grunfeld, Women's Work in Russia's Planned Economy, Social Research, February 1942, pp. 22-45.

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The decree abolishing unemployment benefits, issued on October 9, 1930, provided:⁴⁵

1. In view of the great shortage of labor in all branches of state industry, insurance bureaus are requested to discontinue payment of unemployment benefit. No provision for the payment of unemployment benefit has been made in the Budget of Social Insurance for the supplementary quarter October-December 1930.

2. Labor exchanges are instructed to take all necessary measures in order that the unemployed be immediately sent to work, and of these the first to be sent are persons entitled to draw unemployment benefit.

3. Unemployed persons are to be drafted not only to work in their own trades, but also to other work necessitating special qualification. At the same time labor exchanges, according to local conditions (the needs of any particular trade) should extend their activities in the training and retraining of unemployed.

4. No excuse for refusal to work, with the exception of illness, supported by a medical certificate, should be considered. Refusal of work carries with it removal from the registers of the labor exchanges.

Medical certificates should be issued to the unemployed by medical boards and medical control boards. Unemployed in possession of medical certificates will receive benefits under the heading of unemployment benefit, but this benefit will come out of the sums allocated for temporary incapacity.

5. The personal responsibility for the due and correct execution of the present decree is placed upon the heads of the labor exchanges (and in districts where these are not in existence on the directors of labor organizations) and upon the chairmen of insurance bureaus.

The responsibility for finding jobs and training for available jobs was thus placed on the individual and on the labor exchanges. In order to fill the goods-starved economy of Soviet Russia the Government expanded existing plants and built many new ones. There could be no question either of overproduction, or missing the market, since the market was completely controlled. Everything produced was sure to be sold at planned profits or more and at prices which included a huge tax for the Government. Unemployment could arise only when one plant was deliberately curtailed, but the workers released would be taken up by expansion elsewhere. There were many complaints about high labor turn-over, and a number of decrees attempted to deal with this problem. A very small part of the labor force was engaged in the making of consumption goods, where, owing to the nature of demand for the goods, seasonal unemployment might have developed and, in a really rich country, some overemployment. Even a smaller proportion of the labor force is engaged in the numerous service industries, which fluctuate violently with changes in the levels of income and demand. The only large-scale unemployment possible was that which could arise out of faulty planning or radical changes in the planned production program.

In a free society there is always some unemployment caused by seasonal fluctuations, industry shifts, and workers' efforts to locate a satisfactory job, rather than any job. In the United States in 1944 and 1945 we always had a floating unemployment of 750,000 to 1,500,000 despite the full utilization of all the available local manpower and womanpower in war, war-sustaining, and civilian production. But furriers are not expected to work in foundries nor are skilled workers forced to take work unsuitable to them or to go immediately to distant places where work in their skill may be available. Such workers are unemployed during their off season and during the period of readjustment; and they receive unemployment com-

⁴⁵ Reproduced in W. H. Chamberlin, The Soviet Planned Economic Order (Boston, World Peace Foundation, 1931), pp. 201-202.

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pensation in the United States. In the light of some of the evidence of the misapplication of capital and labor in Soviet industry it is inconceivable that for 15 years there never has been any unemployment which did not merit some unemployment compensation.⁴⁶

It is written in the Soviet constitution that "he who does not work shall not eat." It does not say that exceptions will be made for certified efforts to quit work (strikes) or because of temporary difficulties in locating a new and satisfactory job (seasonal or frictional unemployment). Thus far the conclusion is inescapable that the cyclical fluctuation in production and employment is a characteristic of capitalism and of a surplus economy. Soviet Russia has neither the competitive anticipation of market changes which makes for the scramble and imbalances of the business cycle, nor has it had the great surpluses in consumer production and income spent on abundance, luxury, and more or less "unnecessary" and postponable items, which in turn create industries on a shakable foundation and stimulate extremes of expansion and contraction in all other industries. Since cyclical unemployment is the most costly and fearsome experience of workers in capitalist countries, and business depression and cyclical unemployment have afflicted capitalist nations periodically, the payment of unemployment compensation, which amounts to from one-third to one-half of normal wages, is a necessary concomitant of a responsible capitalist society. It is noteworthy also that unemployment compensation in the United States and even relief under the WPA gives workers a greater command over goods and services than full employment has given the average Russian worker in the period of the three 5-Year Plans.⁴⁷

LABOR LEGISLATION BEFORE WORLD WAR II

Labor legislation in the Soviet Union is made up of Government decrees, generally later approved by the Supreme Soviet in its short sessions and always unanimously. These decrees are, by hypothesis, the embodiment of the will of the people. The decrees issued between 1938 and 1941 would be considered harsh, restrictive, and undemocratic by American standards. They would certainly be regarded as "antilabor" by union spokesmen in the United States because they restricted the freedom of movement of workers, imposed severe penalties for absenteeism, lengthened hours, reduced maternity benefits, and made other insurance benefits dependent upon length of employment on the same job.

⁴⁶ Among the charges leveled against Tomsky before he was removed from the headship of the trade- unions was that "unemployment relief was distributed in such a way as to become in effect an inducement to the pseudo-unemployed to avoid working" (Hubbard, op. cit., p. 58).

⁴⁷ In November 1941, Mr. Ralph Ingersoll, editor of PM, a New York newspaper very friendly to the Soviet Union, visited the U. S. S. R. and wrote a series of articles for the American press. He came to the con- clusion, on a comparison of wages and prices in Moscow and the United States, that a typical Soviet indus- trial worker was able to buy commodities in Moscow on his weekly earnings which could be purchased for $10 in the United States (Washington Evening Star, November 10, 1941). At that time the average factory earnings in the United States were $29.58. Most States pay 50 percent of earnings in unemployment com- pensation, with a maximum generally of $15 to $20 per week.

Walter Citrine, general secretary of the British Trade Union Congress, remarked on his visit to Soviet Russia in 1935 that the average worker did not earn any more than the unemployed British worker was receiving in unemployment compensation at that time (Citrine, op. cit., pp. 102, 201).

Ambassador Davies wrote about a survey of industrial plants at the end of 1936: "The average wage generally was 200 to 250 rubles a month (about $10 to $12.50 'bootleg' ruble gold value)" (Davies, op. cit., p. 68).

"The Soviet system admits of no unemployment except of persons who are not fully trusted or who are being punished. Millions of people in the country, however, are not working in the fields in which they desire to be employed, and although regularly employed are in much worse status than those in the United States employed with relief funds. Political prisoners are not unemployed. They are working" (Davies, op. cit., p. 240).

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The last-mentioned decree, effecting new conditions and reductions in insurance benefits, was issued on December 28, 1938. It was entitled "A Decree of the Council of the People's Commissars of the U. S. S. R., of the Central Committee of the Communist Party and of the All-Union Council of Trade Unions, Concerning Measures for Regulating Labor Discipline, for Improving the Practice of State Social Insurance and for Combating Abuses in this Matter." When this decree came up for ratification by the Supreme Soviet, it did not receive a word of criticism.⁴⁸

"Labor discipline" has never ceased to be a subject of solicitude on the part of the Soviet lawmakers. In American industry, workers are expected to be "disciplined" by their own skill and natural desire to do a good job, supported by a sense of justice growing out of mutual relations of employer and employee, fair work loads, and wage differentials—all of it energized by the natural and encouraged desire of everyone to improve his own position. Excesses of "discipline" by employers and management are curbed by both unions and the Government. It would be a most uncommon thing for an American employer, even though he is supposed to be guided exclusively by the quest for profit, to discharge an employee for a single day's absence even without good cause. Discharge is a serious matter in trade-union ideology and in the psychology of the individual worker, and the employer is restrained by numerous contract provisions from abusing the power or opportunity to discharge. The last thing in the world anyone could ever expect is for the top American labor leaders to recommend such legislation and for the American labor movement to endorse it "unanimously."

In the decree of December 28, 1938, a number of provisions were designed to reduce labor turn-over and to encourage workers to stick to a definite job and factory. Benefits were tied in with continuity in one job. A worker could receive full relief for temporary incapacity only if he had served 6 years in his last employment. He receives less than 100 percent of benefit for lesser years of continuous service, down to 50 percent of full relief for less than 2 years of continuous service. Workers dismissed for misconduct or leaving a job of their own accord must serve 6 months in a new job before qualifying for any relief at all. The amount of relief for permanent disability was also made to vary with the years of employment in the same establishment.⁴⁹ Thus, although the administration of social insurance is in the hands of the trade-unions themselves, the trade-unions are in a mood to reduce benefits and so to operate the system as to make it a weapon of the state in inculcating "labor discipline."

The decree of December 28, 1938, not only provided for the foregoing changes in the operation of the social-security system and for the dismissal of workers absent without good cause for even 1 day, but it also provided penalties for clocking in late, knocking off before time, spending too long over meals, or idling during working hours. Dismissal was made compulsory if these offenses were repeated three times in 1 month or four times in 2 months.

Still another stimulant to "labor discipline" under this decree was the restriction of the opportunity to take the annual vacation until 11 months had been served in the same enterprise.

⁴⁸ Hubbard, op. cit., pp. 87, 89.

⁴⁹ Ibid., pp. 97, 212-214.

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A law of June 28, 1940, extended the industrial working day from 7 to 8 hours, revoked the 6-day week, and reestablished the 7-day week with Sunday as a day of rest. Piece rates were adjusted downward in order that the workers should not earn more from the extra hours of work. Workers were expressly forbidden to leave their employment without authority, the penalty being "correctional labor" for 6 months with a 25-percent cut in wages.⁵⁰

As war approached in 1940 and 1941 further decrees were issued lengthening the working day, freezing workers to their jobs, arranging for the calling up and training of a million boys a year between the ages of 14 and 17, and conferring upon the Government the power to transfer workers from one part of the Union to another. The details of this legislation need not concern us, because they may definitely be regarded as war measures. Yet it is noteworthy that both in content and in the penalties provided, the wartime labor legislation of Soviet Russia follows the pattern of its peacetime legislation, passed by a self-perpetuating bureaucracy on the fiction and propaganda of "the dictatorship of the proletariat."

⁵⁰Ibid., pp. 98-99.

## CHAPTER V

# FORCED LABOR

Undoubtedly the most troublesome of all the Soviet institutions to present and discuss without passion is the institution of forced labor. Although the Government publishes no statistics regarding the camps in which prisoners are concentrated—and thus confuses and throws out of line all its other employment statistics—there can be no reasonable doubt that in the Soviet Union several million workers are employed under police discipline and receive only miserable keep for their labor.¹

The Government makes every effort to conceal the existence of these camps. No foreigner or correspondent is ever permitted to see them. Correspondents accredited to the country do not dare to tangle with the censors and the NKVD regarding this matter.² One Canadian newspaperwoman who succeeded by wile in gaining entrance to a concentration camp was quickly expelled from the Soviet Union.³ Our information comes from those who have escaped, from Russian writers now living abroad, from Americans who have worked, lived, or traveled in Soviet Russia, and from American correspondents who were able to write about the institution of forced labor after they left the Soviet Union.

The first correction labor camp was established in 1923. They grew rapidly in the 1930's, when it was apparently decided to keep most of the "liquidated" alive and working for the state rather than to kill them.⁴ The men and women—for there are very large numbers of women among them—work on railways, highways, and canals, cut timber, mine metals and minerals, fill swamplands, help on large construction projects, and open up new areas for settlement. Some are segregated in barracks and work in heavy industries.

The population of these camps was drawn from political offenders, nonconforming engineers and intellectuals, kulaks, recalcitrant peasants, former industrial and other officials, and deviating Communists of the right and of the left. They are exiles who are sent thousands of miles from the towns or villages of their birth. In later years the reserve of forced labor was increased by national groups believed to be hostile and populations residing along the many borders of the Soviet Union in Europe and Asia. There are apparently some differences in the treatment of the various groups which make up the forced

¹ Official statistics do not mention the category of forced labor. They sometimes appear under "workers" and sometimes not at all. David J. Dallin, The Real Soviet Russia (New Haven, Yale University Press, 1944), p. 98.

² The NKVD has recently been divided into the Ministry of Internal Affairs and the Ministry of State Security. The distribution of functions is not known.

³ Eugene Lyons, Assignment in Utopia (New York, Harcourt, Brace & Co., 1937), p. 425.

⁴ Freda Utley, The Dream We Lost (New York, the John Day Co., 1940), pp. 239-245. This book contains on pp. 240-253 a long quotation from Professor Tchernavin's Life in Concentration Camps in the U. S. S. R., which describes conditions in the camps, the original policy of extermination, the new policy of profiting from their labor begun in 1930, the formal organization of camps as copies of Soviet enterprises, food rations, discipline, and the vast amount of productive work performed.

Professor Tchernavin is connected with the Natural Science Museum in London and was formerly professor of ichthyology in the Agronomic Institute of Leningrad. He performed the miracle of escaping from a concentration camp. He also wrote I Speak for the Silent, and his wife published Escape From the Soviets. Many concrete examples of forced labor and conditions of life and work under GPU and NKVD control will be found in the other books mentioned in this section.

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labor of the Soviet Union from those living in the many concentration camps spread all over the land, to those exiled to work at reduced wages in the unsettled sections of the country, to those exiled as precautionary measures from frontier regions. Also, large numbers charged with or convicted of some unreliability by the authorities are permitted to work in established communities and factories at their old jobs at reduced pay.⁵

We are concerned only to the extent that such camps exist in a country with the pretension of leading the world in improving the conditions of those who toil and labor. Nor does it matter in a sober comparison of industrial and social conditions whether these are called "correctional" or "educational" or "prison labor," "forced labor" or "slave labor." It is sufficient that for more than two decades reliance has been placed upon millions of involuntary workers who have produced enormous wealth practically at no cost to the state. Conditions, discipline, death rates, etc., in these camps will not be described. It is sufficient that millions who have been sentenced to them work for years or for life without wages and that they have no freedom to move out until their sentences are commuted or have run out.

The labor camps became very important economic enterprises in the Soviet Union in the 1930's and the GPU, which then bossed them, became the world's largest employer of labor. In July 1934 the GPU was transferred into the NKVD. "Originally Cheka, then GPU, now NKVD, the changes in name had altered neither the methods nor the awesome reputation of this naked sword of the revolution."⁶ Under the NKVD there was organized the Chief Administration of Corrective Labor Camps and Labor Settlements (GULAG) to administer the growing forced-labor camps. Besides using millions of political prisoners directly—on the highways, in mining salt, or gold, laying rails, felling forests, clearing swamps, building harbors and industrial plants—the NKVD farmed out its surplus prison labor to other Soviet enterprises. While the supply of forced labor was always available in the millions it was insufficient to meet the demand.⁷

The question remains, how many workers were condemned to forced labor? Estimates vary widely. This has always been secret information in the Soviet Union, admitted only inadvertently, as on some occasions when some prisoners were amnestied. The following estimates come from a variety of sources. They differ very widely because of the different sources of information of the estimators and the different years in which the estimates were made; but they all attest to the existence of the institution of forced labor and of camps conducted under harsh prison conditions and they all count the victims in the millions—not only at any one time, but also year after year.

⁵ W. L. White, Report on the Russians (New York, Harcourt, Brace & Co., 1945), pp. 228-229; Victor Kravchenko, I Chose Freedom (New York, C. Scribner's Sons, 1946), pp. 285, 286, 351, speaks of a sentence imposed on him of "1 year's compulsory labor at my present place of employment. This is a unique Soviet invention. The convicted citizen continues to live and work in freedom—but 10 or 20 percent of his earnings are forfeit to the NKVD. In my case it was 10 percent. Tens of thousands of Russians through this device are forced to pay a part of their income as tribute to the secret police under guise of punishment for crime. Notification of my new status was received by the bookkeeping department at the factory. From then until the case was thrown out by the supreme court, 10 percent of my wages and bonuses was deducted each month for the NKVD treasury."

As a career man in the Soviet managerial hierarchy Kravchenko later had many experiences with the use of prison labor camps in the different sections of the country to which he was assigned. His book contains numerous illustrations of prison labor as a key Soviet institution.

⁶ Kravchenko, op. cit., p. 176.

⁷ Ibid., pp. 199, 285-286, 406. Kravchenko found-forced labor camps in and around every industrial enterprise with which he was connected—in Taganrog, at Pervouralsk, in Sverdlovsk, Stalinsk, Kemerovo, and other places.

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