Programme

The Illusion of Socialism and the Reality of Capital in the USSR

The historical myth of a global confrontation between the West’s “free market” and the East’s “socialist plan” served for decades as a convenient ideological smokescreen for the world bourgeoisie. In reality, however, on both sides of the so-called “Iron Curtain”, the inexorable logic of the self-expansion of capital was at work. This text is an introductory article opening a series of materials on the class nature of the USSR. Setting aside legal fetishism, we attempt to analyse the “Soviet” economic model from the standpoint of rigorous Marxist political economy, in order to reveal its true essence as ordinary capitalism. The aim of this work is to outline a basic conceptual framework for a more detailed analysis to follow. Drawing on classical theory and a wealth of empirical material – from testimonies by members of the highest echelons of the nomenklatura and official publications to evidence concerning the shadow “tsekhovik” entrepreneurs – the text demonstrates, step by step, that in the USSR neither the law of value, nor the ruling class in the form of the bourgeoisie, nor wage labour and the alienation of the proletariat were abolished. Despite the legal illusion of a single state monopoly, ordinary capitalism prevailed in the USSR, with all its inherent attributes: money, the law of value, capital and wage labour. The economic basis of the state could not have been otherwise, given its enormous backwardness compared with the advanced capitalist economies of the West and its critically lower level of labour productivity. Moreover, the USSR was never isolated from the world market. On the contrary, it functioned within it, subject to the global laws of competition. The logical outcome of this process was the collapse of the 1990s, when the “Soviet” bourgeoisie simply seized the opportunity to cast off its socialist mask.

Contents

The basis of Marxist political struggle is not the rote learning of slogans, but the ruthless exposure of the economic essence of phenomena. If we set aside the legal fetishism of “Soviet” constitutions and other laws and turn instead to an analysis of the «Mont Blanc of factual material»1 provided by the economic life of the USSR, we shall discover the rigorous logic of capital’s development.

The first and most striking manifestation of this logic is already evident in the very fact that the USSR was never cut off from the world capitalist market. Contrary to the myths of autarky, during industrialisation, the grain seized from small producers functioned as a classic commodity: it was thrown onto international exchanges at dumping prices in order to advance capital for the purchase of Western machinery and technology. After the Second World War, the USSR’s economy became even more deeply integrated into the international division of labour, becoming critically dependent on world energy prices. The logic of domestic accumulation was dictated by the harsh necessity of survival in inter-imperialist competition on the world market.

To reduce relations of production to their legal form is to fall into the deepest form of legal fetishism. This is precisely what the Stalinists do when they equate state ownership with ownership by the whole people.

On the one hand, the Trotskyists correctly expose this illusion. As Trotsky himself wrote, the identification of state ownership with the property of the whole people is «the fundamental sophism of the official doctrine»2. But, on the other hand, the Trotskyists themselves fall victim to the choice of incorrect criteria. As evidence of the socialist character of the USSR’s economy, they cite either high rates of growth – «the language of steel, cement and electricity»3 – or the historical origins of the system, pointing out that nationalisation was carried out «with the method of social revolution»4. In other words, they assess the system not according to the actual mode of exploitation, but according to its secondary indicators, its genesis and its legislative acts.

Moreover, both the Stalinists and the Trotskyists share the naïve belief that centralised planning was supposedly established in the USSR. In reality, what was called a “plan” was merely an attempt by the bourgeois state – more often than not an unsuccessful one – to bring the balance into line under the conditions of the raging anarchy of commodity production.

In both cases, there is a fatal idealist separation of the legal form and political superstructure from the actual relations of production. They forget Marx’s fundamental postulate: the criterion by which the nature of an economic system is determined is not political declarations, nor the presence of a party card in a director’s pocket, nor even the rate of industrial growth as such. Capital is an objective social relation. If commodity production, money and wage labour remain universally in place at the economic base, if the worker is separated from the means of production and produces surplus value that is appropriated – whether by an individual capitalist or by a group of them – then we are dealing with capital, whatever red banners may be used to conceal its genesis.

Nationalisation in itself does not abolish this relationship. Friedrich Engels, in the third section of The Development of Socialism from Utopia to Science (1880), demonstrated this exhaustively:

«The modern state, no matter what its form, is essentially a capitalist machine – the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit. The workers remain wage-workers – proletarians. The capitalist relation is not done away with. It is, rather, brought to a head. But, brought to a head, it topples over. State-ownership of the productive forces is not the solution of the conflict, but concealed within it are the technical conditions that form the elements of that solution».5

Communism is the overcoming of private property in all its forms, including state property. If genuine socialisation had taken place in the USSR – that is, the overcoming of private property in the broad political-economic sense, meaning the appropriation of surplus value by one part of society through the exploitation of another – this would have meant nothing other than socialism.

The historical tragedy of the Left Opposition, and first and foremost of Leon Trotsky, lay in the fact that, while operating with Marxist categories, it strayed from the main path of historical materialism. Trotsky believed that power in the USSR belonged not to the bourgeoisie but to the working class, but that at the level of the political superstructure it had been usurped by the bureaucracy, which had transformed itself into a peculiar Bonapartist caste6.

Unlike the theorists of the “new class” (M. Shachtman, T. Cliff, B. Rizzi, M. Đjilas, M. Voslensky and others), Trotsky did not regard the bureaucracy as an independent ruling class “hanging in mid-air”. It is precisely the theories of the “new class” that are undermined by the criticism of the young Marx, who, in his work Critique of Hegel’s Philosophy of Right (1843), noted that bureaucracy is a purely derivative phenomenon. It is «merely the formalism of a content which lies outside the bureaucracy itself»7. The theorists of the “new class” failed to understand this entirely, attempting to endow the bureaucracy with an independent socio-economic essence.

Trotsky, however, fully aware of this, held that this content was the proletarian base (state property), upon which the bureaucracy was compelled to rely and which it defended. At the same time, the superstructure in the form of the bureaucracy acquired a dual historical nature: while defending the working-class base, it simultaneously harboured bourgeois tendencies that could in the future become the basis for the restoration of capitalism.

It was precisely on the basis of this dual, yet derivative, nature of the Soviet bureaucracy, derived from the proletarian base, that Trotsky concluded that only a political, rather than a social, revolution was necessary to save the system.

The claims made by Stalinists and Trotskyists concerning the “physical disappearance of the bourgeoisie” in the USSR reveal their methodological objectivism. Capital requires its own personification. As Marx wrote in the first chapter of The Eighteenth Brumaire of Louis Bonaparte (1852):

«Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past».8

Social processes, in principle, cannot take place without the participation of concrete individuals. The absence of the classic factory owner in a top hat does not mean that capital has disappeared. As Marx noted, the capitalist functions merely as personified capital, endowed with will and consciousness.

There is a widespread petty-bourgeois view that reduces private property exclusively to the ownership of a particular factory by a particular individual. However, this is a feature of early capitalism alone. Under developed state-monopoly capitalism, the right to dispose of capital is concentrated in the hands of the state apparatus and monopolies.

In the USSR, this transition took political shape when, in the first half of the 1920s, the proletariat lost the mechanisms of direct workers’ control (the Soviets) over the economy, thereby losing its political power. The state apparatus, having merged with the ruling party, broke away from the proletarian masses and became an independent instrument of capital.

A common layman’s counter-argument runs as follows: an official in the USSR could not pass a factory on to his heirs, and therefore was not a capitalist. But at the stage of monopoly capitalism, even in the West, inheritance had long ceased to take the form of transferring individual enterprises or entire “industrial empires”; instead, it took the form of converting surplus value into liquid assets – money, securities, luxury real estate and material goods. The accumulation of vast monetary holdings, including funds in bank accounts, together with nomenklatura privileges, special distribution centres and closed systems of provision, constituted a form of appropriation of surplus value. In this respect, the “Soviet” system was fundamentally no different from the capitalist states of Western Europe.

Of course, not all 1.8 million “Soviet” employees (according to data from the Central Administration of National Economic Accounting of the USSR State Planning Committee for 1940) were exploiters; the majority belonged to the classes of wage workers or the petty bourgeoisie and did not differ in their standard of living from the proletarian masses. The senior party and economic officials who made investment decisions and controlled the flows of profit constituted a specific section of the bourgeoisie, personifying national capital. It is therefore erroneous, as various bourgeois and pseudo-Marxist theorists have done, to refer to this bureaucracy as a “new class”.

The fundamental theoretical error made by proponents of all such theories is that, in essence, they postulate the existence in the USSR of some special mode of production – state capitalism/monocapitalism, the Asiatic mode of production, bureaucratic collectivism, neo-feudalism, and so on – intermediate between capitalism and communism. They identify a special mode of exploitation, but fail to explain its mechanism. If the workers were exploited by the state apparatus, then in whose interests? In its own? But even if this were the case, the fact that workers in such a society were exploited directly by the state would mean only that the ruling class, which collectively owns the means of production, coincides with the state apparatus. Yet we would still not know what methods of exploitation this ruling class employs, and therefore could not determine the character of the exploiting class or of society as a whole.

However, it is fundamentally wrong to assume, even on purely empirical grounds, that the functions of personified capital in the USSR were performed exclusively by the highest party apparatus and the nomenklatura as a whole. A significant proportion of the actual capitalists – particularly those controlling money capital – were not even members of the Party. The functions of the disposers of capital were assumed by the directors of individual large enterprises, trusts and construction administrations, as well as by individuals who in practice controlled colossal amounts of money and commercial capital. The economic base gave rise to a classical bourgeoisie at all levels.

Many empirical studies expose the mechanics of power of this complex bourgeoisie. For example, the American historian Arch Getty writes:

«Few people trusted or even believed in institutions; they believed in people. Everything was personal».9

The party and economic clans, nepotism and mutual assistance that permeated the entire “Soviet” system from top to bottom were, from a Marxist perspective, by no means merely the legacy of an archaic culture. They constituted a real, fundamental mechanism for the self-organisation of the capitalist class, bound together by the joint extraction and distribution of surplus value. It is therefore unsurprising that, within the depths of this system, the figure personifying the entire national capital naturally re-emerged: as is well known, the party leadership constantly referred to Stalin as the «khoziain»10.

The Dual Nature of the Transition Period and Primitive Accumulation

In his 1918 work Left-Wing Childishness and the Petty-Bourgeois Mentality, Lenin openly acknowledged the necessity of state capitalism, but only as a temporary retreat under conditions of economic ruin and with the strict preservation of the dictatorship of the proletariat. State capitalism under the control of armed workers is a step towards socialism; state capitalism without the political power of the workers is pure capitalism. It was precisely the latter path that was realised in the USSR.

Developing this idea in 1921, with the transition to the NEP, Lenin no longer regarded state capitalism as the main danger, but as a kind of “ally” of socialism in the struggle against the petty-bourgeois forces and dispersed private capital. The introduction of the NEP and the decision to develop state capitalism were not a theoretical error, but a conscious accommodation to objective reality – a desperate attempt to retain political power in a devastated, isolated peasant country until the arrival of the European proletariat.

It is a mistake to suppose that the Bolshevik vanguard failed to recognise the capitalist threat arising from within its own ranks. As early as the Eleventh Congress of the RCP(b), in March 1922, Lenin openly diagnosed the impending Thermidor and acknowledged that the state apparatus was no longer subordinate to the proletariat:

«The machine refused to obey the hand that guided it. It was like a car that was going not in the direction the driver desired, but in the direction someone else desired; as if it were being driven by some mysterious, lawless hand, God knows whose, perhaps of a profiteer, or of a private capitalist, or of both. Be that as it may, the car is not going quite in the direction the man at the wheel imagines, and often it goes in an altogether different direction. This is the main thing that must be remembered in regard to state capitalism».11

Lenin harboured no illusions about the class nature of the state apparatus and described in detail the mechanics by which it would swallow up the revolution. Asking who was in control – the 4,700 Communist administrators in Moscow or the bureaucratic machine – he answered bluntly: «they are not directing, they are being directed»12.

Drawing a historical analogy between conquerors and the conquered, he stated:

«If the conquering nation is more cultured than the vanquished nation, the former imposes its culture upon the latter; but if the opposite is the case, the vanquished nation imposes its culture upon the conqueror. Has not something like this happened in the capital of the R.S.F.S.R.? Have the 4,700 Communists (nearly a whole army division, and all of them the very best) come under the influence of an alien culture? True, there may be the impression that the vanquished have a high level of culture. But that is not the case at all. Their culture is miserable, insignificant, but it is still at a higher level than ours. Miserable and low as it is, it is higher than that of our responsible Communist administrators, for the latter lack administrative ability. Communists who are put at the head of departments—and sometimes artful saboteurs deliberately put them in these positions in order to use them as a shield—are often fooled».13

The bourgeoisie, having been defeated militarily and politically, was nevertheless able, thanks to its more developed culture of administration and the elemental force of commodity production, to impose its own logic on the proletarian victors. Nationalised industry operated under conditions in which the market was preserved. Nor did private capitalists disappear; they existed throughout the entire history of the USSR. In an isolated territory, the base dictated the form of the superstructure. However theoretically flawless the best of the Bolsheviks may have been, they could not, by an act of will, abolish the objective laws of the economy. To reduce this historical catastrophe to a mere “lack of theory” or a bureaucratic conspiracy is to retreat from historical materialism into idealism.

Approaching the problem from the standpoint of historical materialism, we must recognise the dual nature of the October Revolution. By destroying the remnants of feudalism, it radically resolved tasks that the bourgeoisie could no longer resolve, while at the same time attempting to pave the way for the world proletarian revolution. A logical question therefore arises: did the isolated proletarian dictatorship in a devastated peasant country in 1921 have any other material alternative? Lenin’s tactics rested entirely on the desperate attempt to “buy time” until the victory of the revolution in the West. But if proletarian power could not govern state capitalism for any length of time without degenerating, then the isolation of the revolution in a single backward country meant its fatal, objectively inevitable demise. Lenin’s “mistake” consisted only in the fact that he hoped to buy that time.

Here we come to the key question: why, then, was that time not bought? In criticising Amadeo Bordiga’s well-known metaphor of the revolutionary train that “never came”, we must conclude that the objective economic conditions for a socialist revolution in the West were more than ripe. The train did indeed pass, but the subjective factor – the revolutionary vanguard, the Communist Party – proved immature and arrived at the station too late, a fact most tragically manifested in the defeat of the revolution in Germany. It was precisely this defeat that condemned the Russian proletariat to isolation.

However, as historical materialists, we must ask ourselves: why did the subjective factor prove to be so weak? We cannot, in an idealist manner, attribute this to the moral decline, cowardice or betrayal of the leaders of the Second International. The roots of this phenomenon lie in the objective development of capitalism. Engels, observing the British labour movement, had already noted the formation of a layer of the labour aristocracy, bribed by the British bourgeoisie’s monopoly on the world market. In the era of imperialism, as Lenin demonstrated, this tendency spread to all the advanced capitalist countries. Decades of relatively “peaceful” capitalist development (from 1871 to 1914) created a powerful material basis for reformism: liberalism, rotten to the core, revived itself in the form of socialist opportunism, preaching “social peace”. The Western bourgeoisie, drawing on super-profits from colonial exploitation, had mastered the art of deceiving and bribing the workers to perfection. Workers’ parties and trade unions in the West became structurally fused with the bourgeois state, and the betrayal of 1914 was merely the political expression of this material process.14

Lenin overestimated the West’s readiness for world communist revolution. As a Marxist, he undoubtedly understood the dialectic of the objective and the subjective: even the most favourable objective conditions will not lead to the overthrow of capitalism in the absence of a mature, politically independent subjective factor. Lenin’s error lay not in a theoretical disregard for this law, but in an overly optimistic assessment of the actual maturity of the European proletariat at that particular historical moment. The West’s colossal productive forces and the crisis of imperialism could not break the bourgeois system without a revolutionary communist vanguard that was strong and influential among the proletarian masses. Communists in Europe had to wage an extremely arduous struggle not only against the bourgeoisie, but also against the colossal apparatus of social democracy, and there was simply not enough historical time for this subjective factor to take shape. Ultimately, the overestimation of the West’s readiness made the Bolsheviks hostages to the policy of “capitalist construction” in an isolated Russia.

As early as the beginning of the 1920s, some communists and advanced workers in Russia were already concerned about what was happening. In the autumn of 1923, against the backdrop of mass strikes against wage cuts, the “Rabochaya Pravda” group15 published an Appeal to the Revolutionary Proletariat and All Revolutionary Elements Who Have Remained Loyal to the Struggling Working Class, which provided an accurate class analysis of the emerging nomenklatura:

«Following the successful revolution and the civil war, broad prospects opened up for Russia to rapidly transform into a country of advanced capitalism. This is undoubtedly a tremendous achievement of the October Revolution.

But what has changed in the position of the working class? – The working class of Russia is disorganised; confusion reigns in the minds of the workers: are they in a country of the “dictatorship of the proletariat”, as the Communist Party tirelessly repeats both orally and in print, or in a country of arbitrariness and exploitation, as life convinces them at every turn? The working class ekes out a miserable existence, while the new bourgeoisie (i.e. responsible officials, factory directors, heads of trusts, chairmen of executive committees, etc.) and NEPmen live in luxury, bringing to mind the picture of bourgeois life throughout the ages. And ahead lie yet again long and arduous years of struggle for existence. But the more difficult the situation, the greater the clarity and organisation required by the struggling proletariat. […] The Soviet, party and trade-union bureaucracies, and the organisers of state capitalism, find themselves in material conditions sharply different from those of the working class; their very material well-being and the stability of their general position depend on the degree to which the working masses are exploited and subordinated to them; – all this makes the contradiction between their interests and the rupture between the Communist Party and the working class inevitable».16

It is telling that the theorists of the Trotskyist “Left Opposition”, even before the final victory of Stalin’s counter-revolution, justified the extraction of surplus value from the working class for the needs of state accumulation. The economist E. Preobrazhensky developed the theory of «primitive socialist accumulation», while Leon Trotsky, in his report on industry at the Twelfth Congress of the RCP(b) in 1923, quoted what he considered a «very interesting» passage from a booklet by an unknown party trade-union official, who argued that «the working class, being in power, has the opportunity, when this is dictated by class interests, to grant industry credit at the expense of workers’ wages», and commented:

«In other words, there may be times when the state does not pay wages, or pays only half, and you, the worker, lend to your state at the expense of your wages».17

Beneath the mask of the “workers’ state”, classical capitalist exploitation became increasingly apparent.18

Marx explained what actual primitive accumulation of capital entails in Chapter 24 of Volume I of Capital. It is the historical process of separating the producer from the means of production:

«What does the primitive accumulation of capital, i.e., its historical genesis, resolve itself into? In so far as it is not immediate transformation of slaves and serfs into wage labourers, and therefore a mere change of form, it only means the expropriation of the immediate producers, i.e., the dissolution of private property based on the labour of its owner.

Private property, as the antithesis to social, collective property, exists only where the means of labour and the external conditions of labour belong to private individuals. But according as these private individuals are labourers or not labourers, private property has a different character. The numberless shades, that it at first sight presents, correspond to the intermediate stages lying between these two extremes».19

In the USSR, the violent act of primitive accumulation of capital unfolded in the late 1920s and 1930s. Collectivisation deprived millions of peasants – small-scale owner-producers – of their land. National capital, as acknowledged by Academician Yuri Yaremenko (a follower of F. List’s school of economics), acquired «a colossal resource – the peasantry», which it «exchanged for industrialisation».20

By drawing millions of impoverished peasants into capitalist agriculture and driving some of them into the cities, the state created a colossal reserve army of labour, deprived of property and forced to sell their labour-power to state and private enterprises. The commodity character of the agricultural sector inextricably linked the entire economy of the USSR to the operation of the law of value.

The Fundamental Law: Wage Labour and Alienation

In his work Wage Labour and Capital (1849), Marx formulated an incontrovertible proposition:

«Capital therefore presupposes wage-labour; wage-labour presupposes capital. They condition each other; each brings the other into existence».21

Throughout the entire history of the USSR, the proletarians sold their labour-power, which thereby retained its essential commodity character: it had an exchange value, determined by the value of the means of subsistence of the worker and his family, and a use value, namely the capacity to create new value greater than the value of labour-power itself. In the USSR, Marx’s basic formula for the circuit of capital – M–C–M′ (Money – Commodity – Money with an increment) – operated fully. State monopolies advanced capital (M) to purchase the means of production and labour-power, in order, through the exploitation of labour, to produce commodities (C), extract surplus value and obtain augmented capital (M′).

The mechanism of this exploitation is described with impeccable precision in Volume I of Capital (Chapter IX, The Rate and Mass of Surplus Value):

«If we consider the process of production from the point of view of the simple labour process, the labourer stands in relation to the means of production, not in their quality as capital, but as the mere means and material of his own intelligent productive activity. In tanning, e.g., he deals with the skins as his simple object of labour. It is not the capitalist whose skin he tans. But it is different as soon as we deal with the process of production from the point of view of the process of creation of surplus-value. The means of production are at once changed into means for the absorption of the labour of others. It is now no longer the labourer that employs the means of production, but the means of production that employ the labourer. Instead of being consumed by him as material elements of his productive activity, they consume him as the ferment necessary to their own life-process, and the life-process of capital consists only in its movement as value constantly expanding, constantly multiplying itself. […] The simple transformation of money into the material factors of the process of production, into means of production, transforms the latter into a title and a right to the labour and surplus labour of others».22 «We have seen how money is changed into capital; how through capital surplus-value is made, and from surplus-value more capital». Thus, «the accumulation of capital presupposes surplus-value; surplus-value presupposes capitalistic production; capitalistic production presupposes the pre-existence of considerable masses of capital and of labour power in the hands of producers of commodities»23 , i.e. capitalists who appropriate surplus value.

Vulgar socialism tends to seek the distinction between classes exclusively in the sphere of distribution – in levels of income and consumption. Of course, Marxism is not confined to this philistine criterion, since the primary consideration is the relation to the means of production. However, at the macroeconomic level, the dynamics of capitalist production inevitably lead to the concentration of wealth in the hands of members of the ruling class. Marx wrote in Chapter XXIII of Volume I of Capital:

«Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital».24

Although income level is a necessary criterion for determining the class affiliation of large social groups at the macroeconomic level, it generally cannot be applied to individual persons, especially in borderline cases. The only exceptions are Marx’s very “poles”, where the gap in income is measured in orders of magnitude – tens, hundreds or thousands of times. In such extreme cases, the quantitative criterion unambiguously determines the class of a particular individual: a member of the richest 1 per cent of a capitalist country’s population cannot, in principle, be a proletarian, while a member of the poorest 1 per cent cannot be a bourgeois.

In the particular form of capitalist society that existed in the USSR, where people’s actual relation to property was draped in red banners, while the overall statistics on social stratification were «surrounded with an impenetrable veil»25, as Trotsky rightly observed, the presence of glaringly high incomes becomes one of the simplest and most reliable indicators for anyone seeking to establish the true nature of the underlying economic processes.

Commodity-money relations in the USSR did not disappear for a single moment. This can be found even in literature from the Stalinist period: «Money expresses the production costs of all sectors of the national economy, the value of the entire socialist social product».26

The ruthless logic of capitalist expanded reproduction was evident even to honest bourgeois researchers, who on this question were sometimes even more Marxist than, for example, Trotsky. While the latter mistakenly believed that «socialism has demonstrated its right to victory, not on the pages of Das Kapital, but in an industrial arena comprising a sixth part of the earth’s surface»27, the American economist Vasily Leontief, creator of the input-output method, stated that the secret of “Soviet” growth rates had nothing to do with socialism, but was precisely described by Marx’s theory of capital accumulation:

«The fundamental proposition which explains the high rate of Soviet economic development is simple enough. Nearly two hundred years ago it had already been clearly stated by Adam Smith and in more homely language by Ben Franklin. To expand one’s income fast, one must channel as large a part of it as possible – and then more - into productive capital investment. This means that consumption must be restricted; while thus holding down the living standard of the masses, one must at the same time keep them working hard. Marx, in his theory of capitalist accumulation, describes exactly such a process […]. Low wages mean a low level of consumption. High profits – the high “rate of exploitation” – mean a high rate of accumulation […]».28

In 1950, the monetary income of a peasant household in the USSR amounted to less than 100 roubles a month, while a minister’s salary reached 20,000 roubles – a difference of two hundredfold, not counting closed special distribution centres, dachas and the like. Moreover, the system produced legal millionaires and individual owners of money capital. Academician Igor Kurchatov – the “Soviet Oppenheimer”, the father of the “Soviet” atomic bomb – was not a Party member at the time. By a government decree of 21 March 1946, he received a bonus of 500,000 roubles (having already been awarded an identical sum), a ZIS-110 car, double his salary and a mansion as his personal property. Likewise a non-Party member, the “proletarian” writer Maxim Gorky received 143,955 roubles in royalties in 1928–29 alone29 – a sum for which a worker would have had to labour at the machine for decades. The existence of such exorbitant incomes demonstrates that the surplus value extracted from the proletariat was transformed not only into new factories, but also into a gigantic fund for the personal enrichment of the ruling elite and its scientific and ideological servants.

Piecework pay, which Marx described as «most in harmony with the capitalist mode of production»30 (Capital, Vol. I, Chapter XIX), became the foundation of early “Soviet” industry (the Stakhanovite movement). This is a classic mechanism for extracting relative surplus value.

The conflict between labour and capital was real, finding open expression, for example, in the shooting of striking workers in Novocherkassk in 1962 – an act defending the bourgeoisie’s monopoly over surplus value. However, as the system exhausted its terrorist methods of control, it shifted to time-based pay with bonuses, which gave rise to enormous alienation. In the late USSR, the class struggle took on a hidden form: an absolute decline in labour discipline and productivity according to the principle “you pretend to pay, we pretend to work”. The culmination of this phenomenon was the total alienation of the working class. Y. Yaremenko described this process with great precision:

«People» [the academic prefers to use the abstract term “people” rather than the specific “wage workers”] «had become accustomed to living under the pressure of the plan, playing antagonistic games with the state: who would cheat whom […] a stereotype of negative behaviour had emerged: to produce as little as possible […] and to cheat».31 As a result of the alienation of the proletariat, «in our production, instead of socialisation, there is active desocialisation, the teaching of anti-social skills. An anti-social type of person emerges […]. Many simply drink themselves into oblivion. But even those who have not degenerated, who value themselves and want to earn – what sort of people are they? They are anti-social individuals who find it extremely difficult to integrate into the social collective. Their main characteristic is strong negativism. This is by no means “class consciousness”, if by that we mean a striving for social consolidation and the defence of common interests».32

For a Marxist, there is nothing surprising in the fact that wage labour is perceived by proletarians not as a free activity, but exclusively as an external, hostile force. This fact should impel the worker to struggle against the domination of capital. As for Yaremenko, a researcher in the service of capital, he has no choice but to lament the surplus value that goes unrealised as a result.

The development of state capital, too, was strictly subject to the universal laws of accumulation. The centralisation of the means of production through nationalisation enabled the system to achieve a significant acceleration of industrialisation. The state directed the surplus value extracted from wage workers towards inter-imperialist competition. Yaremenko himself, an astute observer of the processes taking place in the USSR, writes that the «division» of surplus value «took place in accordance with the existing system of priorities», while «world expansion and great-power interests were the principle that determined this entire hierarchy».33

The USSR demonstrated its imperialist maturity during the Second World War by taking a direct part in the new division of the world alongside other predators. This marked the ultimate low point in the decline of proletarian internationalism and provided incontrovertible evidence that the USSR was fully integrated into the global capitalist market. However, imperialism is by no means reducible to aggressive foreign policy or territorial annexations; it has an economic nature and constitutes a specific stage in the development of capital. The post-war USSR fully manifested its fundamental characteristics, including the export of capital. The creation of “mixed Soviet-foreign joint-stock companies” in Eastern Europe and Asia, as well as unequal exchange within the Council for Mutual Economic Assistance (CMEA), where trade was conducted on the basis of world prices, transformed the “people’s democracies” into markets for the sale of goods and sources of super-profits for “Soviet” national capital. Thus, annexations, reparations and the export of capital to CMEA countries constituted an imperialist policy under the red flag. Proletarian internationalism had become an empty phrase.

As the highly respectable bourgeois historian V. A. Shishkin notes, as early as the 1920s the Comintern served as a smokescreen, while the actual course of Soviet foreign policy was to «secure the national […] interests of the country», which in practice meant pursuing «the traditional interests of pre-revolutionary Russia».34 Soviet foreign policy ultimately became a function of defending and expanding the sphere of influence of national capital.

The Illusion of Planning: Why the Means of Production Remained Commodities

Debunking the myth of “socialist planning” requires a shift from analysing legal labels to examining the anatomy of the production process itself. For decades, Trotskyist and Stalinist arguments clung to the same lifeline: they claimed that since the means of production in the USSR (machinery, raw materials and factories) were allocated by the State Planning Committee rather than sold on the free market, they had supposedly ceased to be commodities.

In 1952, in his work Economic Problems of Socialism in the USSR, Stalin, attempting to salvage the ideological façade, declared that the law of value in the USSR was confined to the sphere of consumer goods and that the means of production were not commodities. From a Marxist perspective, this is a theoretical absurdity.

«With the exception of that part of the product which is constantly consumed again as means of production directly by its producers, the following general proposition applies to capitalist production: All products reach the market as commodities and therefore circulate for the capitalist as the commodity-form of his capital, as commodity-capital, regardless of whether these products must or can function in their bodily form, in accordance with their use-values, as elements of productive capital (of the process of production), as means of production and therefore as fixed or circulating elements of productive capital; or whether they can serve only as means of individual, not of productive, consumption. All products are thrown upon the market as commodities; all means of production or consumption, all elements of productive and individual consumption, must therefore be extracted from the market by purchasing them as commodities»35 (Karl Marx. Capital, Volume II. Chapter 9).

It is impossible to isolate the law of value within a single workshop. The economy of the USSR was based on the system of “khozraschyot”, or economic accountability. Every enterprise had its own balance sheet and settlement account. Relations between state-owned factories were formalised through commercial contracts, while disputes were resolved through arbitration, with penalties being imposed for breaches of contract. Marx explained this clearly in the first chapter of Volume I of Capital:

«Only such products can become commodities with regard to each other, as result from different kinds of labour, each kind being carried on independently and for the account of private individuals».36

In reality, the economy of the USSR was not a single, harmonious mechanism, but an arena of ruthless market competition between separate corporations. The illusion of the USSR as an absolutely monolithic “single state-capitalist trust” is shattered by the reality of commodity production. In reality – and, in principle, it could not be otherwise under capitalism – there was no absolute unity even at the level of the external market or the labour market. “Soviet” enterprises operated as separate commodity producers, competing fiercely with one another for labour power and for export and import orders. Yet this market fragmentation was dialectically combined with class synthesis: acting as a committee for the affairs of the bourgeoisie, the “Soviet” state ensured the general conditions for reproduction. It defended the interests of all factions of national capital with an iron hand against the working class within the country, while on the external market it safeguarded their collective position against competing capitals.

Various factions of the nomenklatura and non-Party managers de facto acted as competing private owners. The subjects of this competition were the industrial ministries, sectoral departments, “glavki” (main directorates), trusts and the heads of individual factories, state farms and collective farms.

The most striking example of such intra-class competition was the struggle within the military-industrial complex. For decades, the design bureaux of Korolev, Chelomey and Yangel waged a ruthless struggle for budgets, duplicating one another’s missile programmes. Their leaders employed aggressive lobbying, political intrigue and connections within the Politburo to secure funding and resources specifically for their own enterprises, while undermining their competitors’ projects. A similar struggle for investment funds, scarce raw materials, highly skilled labour and a share in the distribution of surplus value took place among all the ministries. This was classical competition between capitals.

Although legally owned by the state, the factories of the USSR functioned economically as separate commodity producers. The very process of so-called “planning” concealed the fierce competitive struggle among these separate departmental corporations. As Y. Yarуmenko acknowledged, «there was indeed bargaining over the allocation of resources in the State Planning Committee and the State Supply Committee […], mutual pressure and the establishment of a certain balance of power in these negotiations».37 The state plan did not precede production but trailed behind it. It was a means of legitimising the balance of power that had already taken shape among competing “glavki”, «a patching-up of holes doomed to failure», while the system itself «had absolutely no understanding of itself».38 The dual nature of the commodity – as the unity of use-value and value – inexorably tore the supposedly planned economy apart from within. The fundamental contradiction of commodity production – the contradiction between concrete and abstract labour – had not been overcome. The concrete labour of workers produced qualitatively different things (machine tools, shoes, bread), but the system assessed them exclusively in monetary terms, that is, as coagulations of qualitatively homogeneous abstract socially necessary labour, as value.

Capitalist production in the USSR, as everywhere else, was directed towards the production of value rather than useful things. The dictatorship of the gross-output indicator led to the triumph of exchange value over the real needs of society. The state, competing on the world market, required the accumulation of abstract wealth. Factories were assigned production targets in abstract units (roubles or tonnes). A chandelier factory turned out heavy bronze structures instead of lightweight light fittings because this made it easier to fulfil the target in roubles and secure a share of surplus value (bonuses).39 Use-value was ruthlessly sacrificed to the capitalist self-expansion of “gross output” under the dictates of abstract labour.

The 1965 economic reform (the Kosygin–Lieberman reform) effectively constituted an open acknowledgement of the triumph of the law of value. It reduced the number of aggregated planning indicators by eliminating such indicators as labour productivity, production costs, the number of employees and average wages. In their place, profit and profitability in relation to the value of fixed and working capital were introduced. The volume of realised output was also established as the principal indicator of the volume of production, replacing the volume of gross output. This was a crucial step that laid bare the separate, capitalist character of “Soviet” enterprises – a character they had possessed all along, but which had previously been concealed to a much greater extent by the “socialist” rhetoric of official documents.

Academician Y. Yarуmenko provides empirical confirmation of the logic of the self-expansion of capital and the existence of separate groups of proprietors within the bureaucracy:

«By this time, the CPSU had already ceased to be the absolute authority. […] Major ministries and departments – all these administrative monsters – had felt their independence from the CPSU. I have in mind above all the army, the military industry, to some extent the KGB, and then the Council of Ministers […]. Trade deserves a special mention on this list, as it had corrupted many levels of power and, together with them, formed its own super-department. […] The agro-industrial complex […] resembled a person who was constantly being short-changed at the common table, and all its attempts to secure some rights for itself were unsuccessful.

All these structures tore the country’s available resources apart, yet they still did not have enough, because they had colossal, resource-intensive programmes that were very often unrelated to any real problems. The economy, like the army, was simply a space for expanding the bureaucratic structures of one administrative monster or another. In this sense, their growth acquired, as it were, irrational features, becoming a means of bureaucratic self-reproduction […] they strove for more factories and more capital investment».40

This is nothing other than a purely capitalist thirst for accumulation for accumulation’s sake.

The much-vaunted method of centralised planning in the USSR was itself a fetish. As V. Leontief pointed out, attempts by Western economists to unravel the scientific secret of “Soviet planning” had failed because «to this day, no such method exists at all». Leontief likened the USSR’s planning system to «a talking horse: what is surprising is not what it says, but the fact that it can speak at all».

And the point is not even that the notorious “balance method” contained no mathematical or economic algorithms capable of scientifically reconciling the supply and demand of millions of commodities. The crux of the matter is that the low level of productivity and, above all, the absence of genuine socialisation of production made planning impossible in principle. Any change to the plan disrupted the entire chain of production, so in practice «the final adjustments are left to informal trial-and-error procedures of the actual month-by-month and week-by-week operations».41 Official “Soviet” political economy, whose purpose was to conceal this chaos of capitalism, as Leontief aptly observed, «remained […] essentially sterile», being «a huge, impassive, and immovable monument to Marx – with scores of caretakers engaged in its upkeep, fresh flowers placed in slightly different arrangements at its feet from time to time, and lines of dutiful visitors guided past in never-ending streams».42

The myth of the “rigid allocation” of resources in the USSR is shattered by the fact that value-based indicators prevailed. The allocation of the means of production was carried out primarily through money, while physical indicators played only a subsidiary role – that is, precisely as under capitalism. Marxist logic is ironclad: genuine socialisation of production excludes commodity-money relations, since a unified non-market economy has no need for money. The preservation of value-based assessments, however, irrefutably proves that enterprises remained separate commodity producers. Consequently, the “Soviet plan” did not overcome the anarchy of the market, did not abolish the commodity character of the economic base, but functioned entirely within market conditions.

Commodity-money relations broke through spontaneously even into the inner sanctum of the administrative system. Getty, drawing on reports of the Party Control Commission, cites a striking fact: the system of commercial barter had entangled the workings of the authorities to such an extent that «they even swap in the Vinitsa provincial party committee cafeteria»43.

The law of value operates as a blind law of nature:

«The character of having value, when once impressed upon products, obtains fixity only by reason of their acting and reacting upon each other as quantities of value. These quantities vary continually, independently of the will, foresight and action of the producers. To them, their own social action takes the form of the action of objects, which rule the producers instead of being ruled by them. It requires a fully developed production of commodities before, from accumulated experience alone, the scientific conviction springs up, that all the different kinds of private labour, which are carried on independently of each other, and yet as spontaneously developed branches of the social division of labour, are continually being reduced to the quantitative proportions in which society requires them. And why? Because, in the midst of all the accidental and ever fluctuating exchange relations between the products, the labour time socially necessary for their production forcibly asserts itself like an over-riding law of Nature. The law of gravity thus asserts itself when a house falls about our ears»44 (Karl Marx. Capital, Volume I. Chapter I).

The illusion of total planning was shattered by practice: the system of “planning bodies” was organically supplemented by the shadowy yet widespread institution of “tolkach” (suppliers and fixers). Factory directors regularly sent agents to other enterprises with unaccounted-for money (“black cash”) or goods for barter, in order to obtain raw materials and machinery in defiance of the directives of the State Supply Committee. This practice is one of numerous pieces of empirical evidence – valuable precisely because of its obviousness – that the means of production in the USSR circulated as classical commodities. Where it was impossible to balance the books, separate producers restored the proportions of exchange through the de facto market.

Shadow Capital: The Breakthrough of the Law of Value

The capitalist system of the USSR, subject to the blind law of production for production’s sake, over-accumulated capital in heavy industry (Department I, according to Marx), while severely suppressing the sphere of mass consumption (Department II). «Civilian industry», Yaremenko notes, «began its fictitious development in an empty resource space […]. The fiction manifested itself in fictitious plans and fictitious reports».45

The law of value broke through spontaneously wherever the rate of profit was highest – in scarce consumer goods. The shadow economy (which, according to estimates by the State Statistics Committee, had reached 100 billion roubles by 1990) was not a criminal aberration, and certainly not the result of some mere oversight by the “militia” or shortcomings in the work of the OBKhSS46. It was a necessary, albeit grotesque, structural element of backward capitalism. Having concentrated enormous amounts of capital in the production of the means of production, the cumbersome state apparatus was structurally incapable of adequately supplying the market with consumer goods. The shadow sector objectively compensated for this structural deficiency, organically permeating the economic base of the capitalist system. Everyone knew that it existed. Yaremenko, whom we have already encountered, states:

«The shadow economy existed in trade, in production and in supply».47

“All-people’s” ownership served as a convenient legal shell. The case of Nikolai Pavlenko, who in the 1940s and 1950s created a large construction corporation under the guise of a military unit, demonstrated that a state structure could serve as a cover for an individual private owner to extract profit. Pavlenko concluded contracts, hired workers, extracted surplus value and distributed dividends, fitting perfectly into the economy of Stalinism.

The nature of this symbiosis was exposed as early as 1927 by Yuri Larin in his work Private Capital in the USSR. Larin demonstrated empirically that, in the early years of the NEP, the state apparatus of the USSR itself became an incubator for the bourgeoisie: through a system of “agency” contracts, state funds flowed into private pockets. The essence of these contracts (the so-called system of commission agency) was that the cumbersome state trusts and syndicates, lacking their own flexible networks for retail distribution and the procurement of raw materials, hired private businessmen (NEPmen) as their official representatives and suppliers. In practice, this took two main forms:

First, in the sphere of sales. State monopolies (for example, the Textile Syndicate or the Leather Syndicate) supplied private individuals with scarce industrial goods on credit for resale. Operating under the guise of an “agent of a state trust”, the private trader received the goods at fixed wholesale prices but sold them locally at inflated, speculative prices. Returning only the basic cost of the consignment to the state, the agent pocketed the lion’s share of the surplus profit. In essence, the private trader was selling state-owned goods on the basis of state credit.

Second, in the sphere of procurement. The state provided private intermediaries with huge cash advances to purchase grain, flax, furs or raw hides from peasants for the needs of industry. Using state money as interest-free capital, such an agent bought raw materials cheaply, supplied state enterprises with only part of the goods (often of inferior quality) in order to formally settle the advance, while putting the best part into speculative circulation on the free market or reselling it to those same state factories through a chain of “sham co-operatives”.

Thus, as Larin aptly demonstrated, a typical NEPman wholesaler often had no initial capital of his own and risked none of his own money. He parasitised on interest-free state loans and commodity credits, turning the institutions of the state itself into a cash cow for extracting surplus value and accumulating personal capital.

Larin convincingly documented that even then a vast stratum of de facto capitalists was forming outside the ruling party. Possessing money capital and commercial capital, and acting as tenants, contractors or managers of mixed companies, these businessmen were not even members of the All-Union Communist Party (Bolsheviks), yet they exercised real control over surplus value. At that time, up to 30 per cent of wage workers in the USSR worked for private individuals. During the NEP, private capital controlled more than 50 per cent of retail trade and over 20 per cent of wholesale trade. This was a natural consequence of commodity production: it inevitably generates capital under conditions in which there is no direct consumer connection between sectors and the state is incapable of establishing such a connection artificially.

This tendency for capital to function independently of party membership did not disappear in later periods either. The functions of personified capital were increasingly assumed by directors of trading bases, heads of industrial workshops and artels. Striking examples include the underground millionaires of the 1960s: from Siegfried Gazenfranz, the supervisor of knitwear factories in Kyrgyzstan, and his associate Isaac Singer, to the famous director of the Eliseevsky Grocery Store, Yuri Sokolov. They operated with capital running into millions, extracted surplus value, invested funds in expanded reproduction and engaged in competitive struggle. Even more revealing are the “internal offshore” arrangements of the 1960s–1980s. Shadow syndicates made use of the training and production complexes of the All-Union Society of the Deaf and Hard of Hearing, which enjoyed tax privileges. People with hearing impairments became the object of classic super-exploitation. Unaccounted-for goods were produced using state-owned equipment. The shadow shareholders divided the surplus value, while official factory managers and representatives of the repressive apparatus received a fixed rent in return for providing cover.

In her study of the USSR’s workshop entrepreneurs (“tsekhovik”), historian Marianna Zhevakina vividly describes the dual nature of this system: while officially remaining a state-owned enterprise, the “socialist” factory served merely as a cover and provided free infrastructure (buildings, raw materials and machinery) for the operation of a «secret private firm». These underground capitalists openly referred to themselves as «shareholders» or «co-owners». They invested their own capital and appropriated the lion’s share of the surplus value – the unpaid labour of the workers. Meanwhile, the enterprise’s official management (the director, accountant and chief engineer) were reduced to mere rentiers. They received a fixed monthly rent from the tsekhovik in exchange for their silence and for making state-owned production facilities available to them, which the businessmen themselves cynically called a «fixed rate» or «salary». Many of these shadow capitalists deliberately remained non-party members, preferring to be listed as ordinary foremen or workers, while the formal party officials found themselves on their payroll. Operating according to the harsh laws of the capitalist market, these illegal enterprises went through the classic cycles of capital concentration and centralisation: they underwent mergers (to suppress competition), restructuring and the division of workshops. They resolved commercial disputes over the distribution of surplus value through informal arbitration tribunals.48

The legal “owner” in the person of the state found itself in direct economic subordination to the actual owner of the capital.

Systemic Crisis and the Legalisation of Capital

The USSR collapsed not because of the “betrayal” of the nomenklatura, but under the weight of intractable contradictions in the economic base, rooted in economic backwardness and the resulting low level of labour productivity.

For Marxism, the question of productivity is not a purely technical one – it is a fundamental criterion of the historical legitimacy of any mode of production. In Volume III of Capital (Chapter 15), Karl Marx categorically stated that the historical task and justification of capital lie precisely in the unprecedented development of the productive forces of social labour: «This is just the way in which it unconsciously creates the material requirements of a higher mode of production».49 Capitalism has a historical right to exist only so long as it is capable of revolutionising the economic base and increasing productivity. If a particular political system is incapable of fulfilling this role, it is objectively doomed.

The economy of the USSR, developing according to the laws of commodity production, encountered the classic capitalist tendency described by Marx: a rising organic composition of capital (c/v, where c is constant capital and v is variable capital) and a steady fall in the rate of profit. The empirical evidence of economic history is merciless: the USSR failed to ensure that the productivity of capital kept pace with, let alone outstripped, that of the West.

Firstly, by the 1970s, the extensive model of accumulation had exhausted itself: the demographic resources of the countryside had been depleted, leading to a fall in the rate of profit. The state had exhausted its reserve army of labour. We find confirmation of this in the observations of Yarуmenko:

«As the powerful influx of labour into industry from the agricultural sector was exhausted, we increasingly began to live at the expense of the labour resources of the cities – at the expense of people who, having come from the countryside, had passed through the “limit”».50

Secondly, having lost the ability to draw in new living labour (v) extensively, the system attempted to compensate for this with colossal injections of constant capital (c) – through the construction of new factories, the production of vast quantities of machine tools and the extraction of raw materials. However, this led to a catastrophic decline in the productivity of fixed capital. According to the official statistical yearbook of the State Statistics Committee, The National Economy of the USSR over 70 Years (1987), output per unit of value of fixed production assets (fixed capital) in the “sphere of social production” was falling rapidly: taking the 1970 figure as 100 per cent, it had fallen to 74 per cent by 1980 and plummeted to 64 per cent by 1986. According to the calculations of the macroeconomist G. I. Khanin, set out in his work The Dynamics of Economic Development in the USSR (1991), the real picture was even more bleak: the productivity of fixed capital had been falling steadily since the late 1950s, declining by an average of 3 per cent annually during the period of stagnation. Capital was inexorably becoming “heavier”: the growth in the value of fixed production assets (dead labour) far outpaced the growth in national income (newly created value). The state was forced to advance ever-increasing amounts of means of production simply to prevent growth rates from collapsing altogether. This was a classic crisis of overaccumulation of capital, in which the accumulated mass of dead labour was devalued because of the inability to extract a sufficient mass of surplus value to maintain the rate of profit.

Thirdly, the USSR’s integration into the global capitalist market – its dependence on oil exports and technology imports – left it defenceless in the face of the global crisis.

Ultimately, it was the world market, as the supreme arbiter of the law of value, that delivered a merciless economic verdict on the “Soviet” system, which was incapable of producing abstract wealth as efficiently as Western capital.

It is important here to dispel the myth propagated by bourgeois propaganda and by certain “Marxists” (who see this as a fulfilment of Trotsky’s prediction) that the so-called “transition to the market” was driven by a conscious desire on the part of the nomenklatura to legalise their capital. Firstly, this subjective aspiration was by no means shared by all its members: the appeals to “socialism” at the 28th Congress of the CPSU, the conflict between the centre and the regions, and the August 1991 coup all testify to the contrary. Secondly – and this is the key point – subjective desires of any kind were not, and could not have been, the decisive objective cause of the system’s transition to an openly bourgeois form.

The absence of documents bearing an official seal did not in the slightest prevent the top bureaucracy from disposing of state resources as if they were its own. It had colossal sums in bank accounts, unlimited access to special distribution channels, elite property and other material benefits and, without any legal titles, secured a luxurious future for its children. The children of the “Soviet” nomenklatura – the so-called “golden youth” – occupied cushy positions within the Ministry of Foreign Trade, the diplomatic corps and overseas missions, gaining direct access to foreign-currency flows and a Western standard of consumption.

Only after recognising the system’s historical impasse (as a result of the falling rate of profit and the collapse in the productivity of capital), and sensing the threat of losing this de facto control amid the crisis, did the nomenklatura, by then inextricably intertwined with the shadow sector, initiate Perestroika.

The processes of the 1990s involved the redistribution and privatisation of capital that had already been accumulated and highly concentrated. Factions within the state apparatus and the shadow sector simply seized the opportunity to cast aside the fiction of “socialism” and legally secure the means of production for themselves.

The class continuity of this process is absolute. Arch Getty states quite plainly:

«During the privatization process, personal connections were more important than ever before […]. This was easiest for people who had worked in the nomenklatura elite in Soviet times, and simply kept in touch with their former colleagues. The Soviet Communist Party disappeared, but the nomenklatura survived».51

Following the collapse of the USSR, this system of managing capital did not disappear; it simply laid bare its underlying economic base:

«No longer embedded in the party nomenklatura, clans exist in and overlap with finance and banking, industrial management, and a host of other endeavors apparently outside the state. Their membership does indeed seem to be more porous and changing, as clan members can enter and leave networks more freely».52

This transition was accompanied by the massive destruction of productive forces (the widespread closure of factories). From the standpoint of Marxist political economy, the physical destruction of over-accumulated, surplus capital is a classic objective mechanism for resolving a capitalist crisis – the shedding of the dead weight of unprofitable constant capital in order to restore the rate of profit.

The “parade of sovereignties” should likewise be viewed within this strictly political-economic context. Behind the façade of “national liberation movements” and “popular fronts” lay the direct economic separatism of regional factions of the bourgeoisie. The republican elites sought to sever their institutional ties with the Union centre solely in order to secure their unchallenged monopoly over local resources.

What bourgeois journalism coyly calls the “rampant crime” of the 1990s was, in reality, a bloody phase in the redistribution of capital. When the physical division of the productive forces (such as ports and steelworks) began, the state’s unified repressive apparatus fragmented into hired detachments serving different factions of the bourgeoisie. The phenomenon of “protection in uniform”, whereby career officers of the security services acted as the clients behind the murders of rivals, clearly demonstrates the Marxist thesis: the law-enforcement apparatus is a machine of violence serving the interests of capital. Criminal bosses and “militia” colonels played the same historical role: they fused the scattered fragments of “Soviet” capital into a new private oligarchic monopoly.

The Historical Task of the Proletariat

The commodity form of the product itself in the USSR contains the answer to the question of its nature. As Marx wrote in Capital, «this ultimate money form of the world of commodities […] actually conceals, instead of disclosing, the social character of private labour, and the social relations between the individual producers».53

Overcoming this class antagonism is impossible through mere nationalisation or political upheaval. It requires the abolition of commodity production itself and the transition to directly social labour, which will forever preclude the transformation of the product into value and capital.

The real task of the communist movement is the abolition of private property. Exposing the myths of false socialism is not a struggle against the ghosts of the past, but the sharpening of the theoretical weapons needed for future battles for communism. Only through the re-establishment of the world communist party of the proletariat, the overthrow of the bourgeois state, the establishment of a genuine dictatorship of the proletariat (based on a system of workers’ councils), the genuine socialisation of the means of production on the basis of a universal plan, and the organisation of labour on an associative basis will it be possible to break the mechanism of capital’s self-expansion and begin the true history of humanity.

June 2026

Footnotes

  1. - V. I. Lenin. What the “Friends of the People” Are and How They Fight the Social-Democrats // Marxists Internet Archive. URL: https://www.marxists.org/archive/lenin/works/1894/friends/01.htm ↩

  2. - Leon Trotsky. The Revolution Betrayed. Chapter 9: Social Relations in the Soviet Union // Marxists Internet Archive. URL: https://www.marxists.org/archive/trotsky/1936/revbet/ch09.htm ↩

  3. - Leon Trotsky. The Revolution Betrayed. Chapter 1. What Has Been Achieved // Marxists Internet Archive. URL: https://www.marxists.org/archive/trotsky/1936/revbet/ch01.htm ↩

  4. - Leon Trotsky. The Revolution Betrayed. Chapter 9: Social Relations in the Soviet Union // Marxists Internet Archive. URL: https://www.marxists.org/archive/trotsky/1936/revbet/ch09.htm ↩

  5. - Frederick Engels. Socialism: Utopian and Scientific. Chapter III: Historical Materialism // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1880/soc-utop/ch03.htm ↩

  6. - Leon Trotsky. The Revolution Betrayed. Chapter 11: Whither the Soviet Union? // Marxists Internet Archive. URL: https://www.marxists.org/archive/trotsky/1936/revbet/ch11.htm ↩

  7. - Karl Marx. Critique of Hegel’s Philosophy of Right // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/download/Marx_Critique_of_Hegels_Philosophy_of_Right.pdf ↩

  8. - Karl Marx. The Eighteenth Brumaire of Louis Bonaparte. Chapter I // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1852/18th-brumaire/ch01.htm ↩

  9. - J. Arch Getty. Practicing Stalinism: Bolsheviks, boyars, and the persistence of tradition. New Haven and London: Yale University Press, 2013. P. X. URL: https://dokumen.pub/download/practicing-stalinism-bolsheviks-boyars-and-the-persistence-of-tradition-9780300198850.html ↩

  10. - i.e. master. Ibid. P. 83. ↩

  11. - V. I. Lenin. The Political Report of the Central Committee to the Eleventh Congress of the R.C.P.(B.) // Marxists Internet Archive. URL: https://www.marxists.org/archive/lenin/works/1922/mar/27.htm ↩

  12. - Ibid. ↩

  13. - Ibid. ↩

  14. - Undoubtedly, each individual country had its own specific reasons for the delay in the formation of the subjective revolutionary factor. In the USA, vast domestic resources, the absence of feudal remnants and the influx of migrants created a powerful material illusion of social mobility, fragmenting the working class. In Germany, the objective need for legal struggle gave rise to a gigantic apparatus of trade unions and parliamentary factions, which over time developed its own material interests and became fused with the state. The belated organisational break between the revolutionaries and the opportunists was dictated by the fact that Luxemburg and Liebknecht had to confront not only the ideas of Bernstein and Kautsky, but also the colossal material power of the reformist apparatus within the workers’ movement itself. The delay in the formation of a genuinely revolutionary vanguard in Italy was no accident, nor was it merely the result of the indecision of the leaders of the Italian Socialist Party. It was deeply rooted in the structural unevenness of Italian capitalism, in the historical divide between the rapidly industrialising North and the agrarian, semi-feudal South. This objective duality enabled the northern bourgeoisie to nurture reformism, represented by Turati and the trade-union bureaucracy, and to build a durable apparatus of class compromise, whilst the South remained in the grip of poverty and clientelism. It was precisely this economic fragmentation that fuelled the political paralysis of the maximalists, who concealed their inaction behind high-sounding revolutionary rhetoric. As a result, by the time of the “Red Two Years” (Biennio Rosso), when the workers occupied the factories, the political vanguard had simply arrived too late: the Communist Party was formed in Livorno only in 1921, by which time the objective revolutionary wave was already receding, yielding the historical stage to the fascist reaction. ↩

  15. - In September 1923, members of the group were arrested by the GPU, expelled from the Party and sent into exile. ↩

  16. - Cit.: Sotsialisticheskii vestnik [Socialist Herald], Berlin, 1923, No. 3, pp. 12–14. (in Russian) ↩

  17. - Twelfth Congress of the R.C.P.(B.). 17–25 April 1923. Stenographic Report. Moscow, 1968. P. 345. (in Russian) ↩

  18. - Moreover, in the second half of the 1920s, this was so widely recognised that it had to be mentioned in important public Party documents. For example, in the report “The Party and the Opposition on the Eve of the 15th Party Congress”, delivered by Bukharin on 26 October 1927 at a meeting of the activists of the Leningrad organisation of the All-Union Communist Party (Bolsheviks) and published in a print run of 125,000 copies, an entire section was entitled “The Opposition Denies the Socialist Character of Our Commanding Heights”. ↩

  19. - Karl Marx. Capital, Volume I. Chapter XXXII: Historical Tendency of Capitalist Accumulation // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch32.htm ↩

  20. - Yaremenko Yu. V. Ekonomicheskie besedy [Economic Conversations]. Recorded by S. A. Belanovskii. Moscow: Tsentr issledovanii i statistiki nauki, 1998. P. 30. (in Rus.) ↩

  21. - Karl Marx. Wage Labour and Capital. Chapter VI: The Relation of Wage-Labour to Capital // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1847/wage-labour/ch06.htm ↩

  22. - Karl Marx. Capital, Volume I. Chapter XI: Rate and Mass of Surplus Value // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch11.htm ↩

  23. - Karl Marx. Capital, Volume I. Chapter XXVI: The Secret of Primitive Accumulation // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch26.htm ↩

  24. - Karl Marx. Capital, Volume I. Chapter XXV: The General Law of Capitalist Accumulation // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch25.htm ↩

  25. - Leon Trotsky. The Revolution Betrayed. Chapter 6: The Soviet Economy in the Mirror // Marxists Internet Archive. URL: https://www.marxists.org/archive/trotsky/1936/revbet/ch06.htm ↩

  26. - Gusakov A. D., Dymshits I. A. Denezhnoe obrashchenie i kredit SSSR [Money Circulation and Credit in the USSR]. Moscow: Gosfinizdat, 1951. P. 12. (in Russian.) ↩

  27. - Leon Trotsky. The Revolution Betrayed. Chapter 1: What Has Been Achieved // Marxists Internet Archive. URL: https://www.marxists.org/archive/trotsky/1936/revbet/ch01.htm ↩

  28. - Leontief W. W. Essays in Economics: Theories and Theorizing. New York: Oxford University Press, 1966. P. 225. ↩

  29. - Gorky’s case was not unique – an entire stratum of legal “millionaires” emerged in the USSR. Alexei Tolstoy (the “Red Count”): by 1940, his official earnings had reached almost 117,000 roubles a year. There is a documented case of his receiving a one-off advance of 83,000 roubles for a novel he had not yet written. Demyan Bedny, the leading “proletarian poet”, received cheques from Gosizdat for 35,000 roubles at a time. The 1936 statistics for the Writers’ Union are revealing: at the top of the pyramid of approximately 4,000 writers stood a group of 14 people whose monthly income consistently exceeded 10,000 roubles (120,000 a year). ↩

  30. - Karl Marx. Capital, Volume I. Chapter XXI: Piece-Wages // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch21.htm ↩

  31. - Yaremenko Yu. V. Ibid. P. 47. ↩

  32. - Ibid. P. 258. ↩

  33. - Ibid. P. 38. ↩

  34. - Shishkin V. A. Stanovlenie vneshnei politiki poslerevoliutsionnoi Rossii [The Formation of the Foreign Policy of Post-Revolutionary Russia]. Moscow, 2002. P. 334. (in Rus.) ↩

  35. - Karl Marx. Capital, Volume II. Chapter X: The Reproduction of the Circulating Capital // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1885-c2/ch10.htm ↩

  36. - Karl Marx. Capital, Volume I. Chapter I: The Commodity // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch01.htm ↩

  37. - Yaremenko Yu. V. Ibid. P. 37. ↩

  38. - Ibid. P. 42. ↩

  39. - In order to fulfil the “gross output” target, it was advantageous for factories to produce expensive but less labour-intensive goods (for example, heavy curtains instead of children’s dresses, and adult beds instead of children’s beds). Unwanted goods worth billions of roubles accumulated in warehouses as dead stock. Everyday consumer goods (needles, clothes pegs, small items of crockery, children’s clothing) became chronically scarce, not because of a shortage of raw materials, but because their production was unprofitable from the standpoint of factory reporting. Ministries officially allowed enterprises to under-supply ordered products (by 1 to 10 per cent of the target) while retaining their right to bonuses provided the overall monetary target was exceeded. In heavy-industry enterprises, the production of consumer goods was artificially restrained. Because of its high labour intensity, it “ate up” a disproportionately large share of the wage fund, sharply worsening the overall profitability indicators of the entire plant. This is how the mechanism worked: Substitution of the product range for the sake of “gross output” (using the example of the VPO “Soyuzpodshipnik”). In 1982, Vologda State Bearing Plant No. 23 reported that it had fulfilled its production target in units by 100.2 per cent. However, this figure was achieved by overproducing 5 million simple bearings while failing to supply 7 million complex, labour-intensive types. Nationwide, the association failed to supply 30 million of the required bearings, while nevertheless exceeding the plan both in roubles and in total output. Simulating a shortage of raw materials (the garment industry). A garment factory failed to supply 30,700 girls’ dresses, citing a lack of fabric. An inspection revealed that the factory had used precisely this fabric to produce 36,400 curtains and 1,700 women’s dresses above the target. The result: labour costs were reduced, the additional rouble revenue more than compensated for the shortfall, while the country received hundreds of thousands fewer items of children’s clothing. Growth “in roubles” amid a physical decline in production (tableware and footwear). In just three years (1978–1980), the physical output of enamelled tableware fell by 17 per cent (retail trade was short of 38 million roubles’ worth of saucepans and kettles), yet reported output in monetary terms rose by 12 per cent. Similarly, footwear output, measured in millions of pairs, fell to the level of 1972, while its value in roubles continued to rise steadily. Ignoring demand for the sake of convenient reporting (furniture). The plan called for 85,000 iron beds to be produced; 85,700 were reported. However, this over-fulfilment was achieved entirely through the production of expensive adult beds, which accumulated in warehouses, while children’s and teenagers’ beds, for which there was acute demand, were not supplied to customers at all. Consumer goods as a threat to the plant’s performance indicators (Magnitogorsk Iron and Steel Works). Wage expenditure per 100 roubles of sales amounted to 1 rouble for the production of tinplate, compared with 18 roubles for enamelled tableware. Small consumer goods accounted for only 1–2 per cent of the plant’s output, but consumed up to 10 per cent of its wage fund. As a result, it was advantageous for enterprises to fulfil their consumer-goods targets by producing heavy buckets and large basins, while fulfilling orders for small kettles and frying pans by only 15–20 per cent. (Compiled on the basis of: Valov D. V. Ekonomika absurdov i paradoksov: Ocherki-razmyshleniia [The Economy of Absurdities and Paradoxes: Essays and Reflections]. Moscow: Politizdat, 1991. (in Russian.)) ↩

  40. - Yaremenko Yu. V. Ibid. P. 26. ↩

  41. - Leontief W. W. Ibid. P. 226. ↩

  42. - Ibid. P. 223–224. ↩

  43. - J. Arch Getty. Ibid. P. 187-188. ↩

  44. - Karl Marx. Capital, Volume I. Chapter I: The Commodity // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch01.htm ↩

  45. - Yaremenko Yu. V. Ibid. P. 29. ↩

  46. - The Department Against Misappropriation of Socialist Property (translator’s note). ↩

  47. - Ibid. P. 48. ↩

  48. - Zhevakina M. Sovetskie tsekhoviki: etika “levykh” otnoshenii [Soviet Workshop Entrepreneurs: The Ethics of “Informal” Relations] // Neprikosnovennyi zapas, No. 5, 2020. Pp. 207–217. (in Russian) ↩

  49. - Karl Marx. Capital, Volume III. Chapter XV: Development of the Internal Contradictions of the Law // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1894-c3/ch15.htm ↩

  50. - Yaremenko Yu. V. Ibid. P. С. 44. ↩

  51. - J. Arch Getty. Ibid. P. 271. ↩

  52. - Ibid. P. 273. ↩

  53. - Karl Marx. Capital, Volume I. Chapter I: The Commodity // Marxists Internet Archive. URL: https://www.marxists.org/archive/marx/works/1867-c1/ch01.htm ↩

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