Apropos of the Soviet economy PRIOR to Perestroika/Glasnost... from The Economic Development of the USSR by Roger Munting [1982]: --Summary [of the late 1970s, to year 1980]
"The exploitation of the natural resources of Siberia and he far east [with 80 percent of the fuel reserves] is necessary to meet the energy needs of the economy and provide vital foreign exchange. Ironically in order to develop these resources quickly imported technology [particularly Japanese] is required-- there being a direct oil-for-technology exchange. No doubt, exploitation and development could proceed without knowledge and equipment imported from capitalist countries, but it would be slower. Technological innovation has gone ahead at a faster rate in the capitalist world than within the USSR. In particular, the USA has been a fountain of technology and the capitalist market, and the international companies in particular, have enable new technology to be spread about the world. Some technological shortcomings may be one reason for the continued relative inefficiency of Soviet production. To secure Western technology the USSR in the 1970s became increasingly indebted to the Western banks and governments. While its credit has remained sound, the need to service such debts has in turn imposed further demands on the economy and in particular on the extraction of oil and other resources. In 1976, 22 percent of hard currency earnings were required for interest and amortization payments, and this at a time when, because of rising oil prices, the terms of trade have never been more favorable. One of the problems long evident in the Soviet economy has been its chronic inefficiency; reforms have not yet overcome the lags and transformed extensive productive techniques [based on increases in the proportions of labor power applied] into intensive [based on the substitution of machinery, thus amplifying the productivity of labor]. Low maintenance standards and long-neglected infrastructure investment in the past have meant that much investment has been needed for replacement rather than a net addition to capital stock. The scarcity of productive capital has been further exacerbated by the conflicting demands between the high costs of armaments, the huge costs of opening up new areas and resources and the increasing production of consumer goods. The 'problems' of the modern economy have not been absolute: growth has continued, consumption has improved. Rather the economy has failed to meet the expectations of the country and the political leadership, both in the particular-- the plan forecasts [the ninth 5 year plan being particularly disappointing]-- and in the general. In November 1979 President Brezhnev made public criticisms at the failure to meet plan figures...... not only were consumer goods in short supply but even coal and oil, and, as ever, meat. Plan targets for 1980 were reduced because of the very porr overall showing of industry in 1979. The output of many basic industries showed an absolute fall. As well as coal, steel production fell.... The superiority of the Soveit system in providing plenty, which had been the expectation of central planning remained unproven at the end of the 1970s." __________________ Now I bring this up not because I take any pleasure in the difficulties of central planning in the USSR-- I don't. I consider the Russian Revolution to be the greatest single event in all of human history. And I don't bring this up because I was a partisan of Gorbachev.. or Yeltsin. I was not. I consider the collapse of the USSR the greatest single defeat for human emancipation since the decapitation of the revolutionary wave that ran through Europe and Asia in the 1920s and 1930s. I bring this up because these difficulties of central planning, the "erosion" so to speak of the remnants of the Russian Revolution, took place prior to Gorbachev, took place in fact while the same property relations that dominated the economy during what Dogan and George probably consider the halcyon period, if not the golden age, at least the rising period of the Soviet state. The very same property relations created, or supported, or evolved into the terms of their own inadequacy. And Gorbachev with his "opening" did not just drop from the sky as some mole, some sleeper cell, some great traitor activated by the bourgeoisie when the time was right. The above listed failures of the Soviet economy are the backdrop, and the reason, for Gorbachev's ascent. Now we can say China has been more astute than the USSR:-- In adopting an explicit cheap labor policy, encouraging foreign investors to "enrich themselves," in demanding FDI rather than loans, in removing labor protections and denying even a legal status to migrant workers, the CCP has avoided the corrosive affects of international debt to the capitalist countries. Nevertheless the central planning, and the property relations that both Dogan and George find as critical and superior to that of modern capitalism proved inadequate in the case of the USSR. Which gets us right back to the NEP to which Tetsuzo likes to compare the Chinese adaptation, and embrace, of foreign and domestic capitalism. The NEP represented quite clearly to Lenin a tactical retreat, a necessary retreat brought about by the devastation of the civil war. At an earlier point in the then public debates about the Soviet economy, an accusation was made [I think by a Left Social Revolutionary] that the Bolsheviks had instituted "state capitalism." Lenin replied [perhaps wistfully] that "state capitalism" would be an improvement, an advance for the Soviet economy, describing the status of the economy as that of a "petty producer state." In that regard, there was no alternative to the NEP, and its adoption represented an "advance" not over socialism, not over planning, but over the petty producer mode that dominated the Soviet economy. It was a tactical retreat. And how was this retreat to be reversed? Clearly, it would not reverse itself. Clearly, there was a risk of creating a proto-bourgeoisie, of the development of the USSR stimulating private property and eroding social property. Clearly, also, based on everything we know about Lenin's life, Lenin's work, the reversal, the resolution of the conflicts created by this uneven and combined development/retreat of the Soviet economy, required the advance and success of the proletarian revolution in the advanced countries of Europe and the Americas. Without that, the course of the NEP, and even its violent abrogation, would make the USSR more vulnerable, more permeable to capitalism-- something proven violently, with a bang, by WW2; and tragically, in the collapse, with not only whimpers but howls, in 1991. There are many "interesting China articles" out there, not the least interesting an article in the Financial Times of August 25, 2009, about China's overproduction of fixed assets, about the amount of stimulus money that has found its way into the stock and real estate markets [based on estimates, and frankly, speculation since Chinese statistics can be pretty opaque]. What is less speculative is this: "The fiscal and monetary policy response to the crisis has mostly benefited the largest enterprises and biggest projects," Wang Yijiang, professor of economics and human resources management at the Cheung Kong Graduate School of Business in Beijing. "The small and medium sized enterprise sector provides 75 percent of the jobs to China's urban workforce but it is shrining for the first time in 30 years of economic reforms." That contraction is of course part and parcel of the previous expansion based on "market reforms," which means profitability of the "market economy under socialism." The stimulus and recovery in China has been based exclusively on a gigantic, rapid increase in loan volumes. In 2007 or 2008, I believe the "private sector" output exceeded that of the state sector. Profitability has driven both sectors for sometime. Profitability declines, if they continue, means repayment of those loans will be questionable. That is exactly what happened in the west beginning in 2007. What we have right now in China is not the demonstration of the "superiority" of a "communist economy," but the creation of an financial and asset bubble. ________________________________________________ YOU MUST clip all extraneous text when replying to a message. Send list submissions to: Marxism@lists.econ.utah.edu Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
