For the working class, against Bolshevism: Once more on the class nature of the Soviet Union in reply to cde C.M.
Paper prepared by Lucien van der Walt for the Lesedi Socialist Study Group

[This paper was, in fact, never presented as Lesedi got caught up in 2000 in the struggle against the neo-liberal ‘Wits 2001’ plan at Wits University, and fell apart]

In an (as always) thoughtful and precise piece, cde C.M. has responded to my earlier paper for Lesedi, “The Soviet Mirage.” In my original paper, which proceeded from a revolutionary anarchist perspective – that socialism is the rule of the working class expressed through direct self-management of the means of production, brought about by a revolutionary stay-in strike in which the trade unions seize economic power – I argued that:

  • The Soviet Union was a state-capitalist formation, a giant capitalist corporation, “Soviet Union Inc.”;
  •  That capitalists existed in the Soviet Union with legal ownership, economic ownership and possession of the means of production, as part of the larger ruling class; conversely, the working class was separated from the means of production, and exploited through the wage system;
  •  That the roots of this capitalist dictatorship lay in the degeneration of the Russian Revolution of 1917 under Lenin and Trotsky (taking place, in other words, before Stalin assumed power in the inner-party succesion conflict by 1928);
  • That socialism must involve self-management as the actualisation of working class control of the means of production. At the centre of my argument was the imperative to examine what actually happened at the point of production.

In his reply, cde C.M. makes several key arguments:

  • That the “state-capitalist” argument presented above is inadequately materialist as it focuses on the relations of production as opposed to the forces of production;
  • That the argument fails to conceptualise a “transition period,” a “social formation” in which the base and superstructure may be disarticulated;
  • That socialism has no intrinsic relation to working class self-management; that self-management cannot, in fact, exist in the absence of adequately developed forces of production;
  • That the Soviet Union was not a capitalist corporation as it was not subject to the imperatives ofcapital accumulation, either internally, or externally in the world market.

In this paper, I will reply to these specific arguments, but for details of my original argument, cdes are referred to my “The Soviet Mirage.”


It is the merit of any debate that it clarifies different conceptions. What emerges quite clearly here is that cde C.M. and I have radically different views on how society operates.

In his reply, cde C.M. states that “the fundamentally determining conditions are economic” and that in the “complex level” of the economic, it is ultimately “the development of the forces of production [that] determines … social direction.” Cde C.M. gives the forces of production pride of place, speaking of “the role of the forces of production in articulating and determining the relations of production in the social formation” (my emphasis). Indeed, “class struggle,” we are told, “can only effect an acceleration/ deceleration” -in other words, a secondary modification- “of the direction of this articulation/determination” (my emphasis).

  • The relations between people that organise production. In a class society, the relations of production are, above all, the relations between the class that owns and controls means of production, and the class that does not;
  • The technical conditions of production: labour power, machinery, tools etc. used in production;
  • In classical Marxism, social relations are determined by broadly economic conditions: there is a “base” made up of both relations of production and forces of production, that determines the nature of the “superstructure,” which is pretty much everything else e.g. law, culture, art, the State etc. Contradictions in the “base” supposedly drive history. Marxists have called this theory “historical materialism;
  • But in this model, as expressed by Marx,[1] historical change amounts to a sophisticated economic determinism.

Thsi is the chain of cause and effect that is posited:

Forces of production->>Relations of production –>> “Superstructure” (law, culture, thought, State etc.)

Socialism itself is then simply the outcome of evolution of the forces of production (“accelerated” or otherwise by class struggle, of course). If we admit both points, then the Russian Revolution was doomed without a revolution in the West that could provide access to advanced forces of production. No German Revolution, therefore no Russian Revolution. And this is precisley what cde C.M. says: any struggle for socialism in isolated Russia was “bound” to be “zeroed” by the forces of production.

This is where we part ways. My own analysis – which stressed the role of political factors in destroying the Russian Revolution by 1921, and class relations within the Bolshevik-ruled territories – obviously rejects technological determinism.

How sound is my approach? Is it valid? I believe so.

There is no basis at all for the monistic theory of history that cde C.M. asserts. No neat boundaries can be set up between a “base” – made up of forces of production and relations of production – and a superstructure. State power and popular ideology reproduces class domination, and is thus present within the “base” – indeed, within the “forces of production” themselves.

To assert the inherent primacy of the “base” in every instance is just that – an assertion. It cannot be proven, unless everything that happens in the “superstructure” is somehow construed as reflecting the needs of the “base.” This is the road to functionalism – imputing events to alleged needs, without any evidence – and tautology – a circular argument, for pretty much anything, short of killing the bourgeoisie en masse – and maybe not even that – can construed as serving the alleged “needs” of the “base.” Cdes may wish to dodge these problems by taking recourse in Engels’ claim that the “base” only determines in the “final instance,” that is, to give the superstructure a relative autonomy, but the notion of a “final instance” is conceptually vacuous; its introduction is a tepid admission that materialism does not work.

But let us apply these points to the Russian case. In September 1917, and November 1917, the forces of production in Russia were identical. Yet cde C.M. speaks, like me, of a “Russian Revolution.” He also insists that Russia after October was not capitalist – and he clearly includes the industrial sector in this statement – nor socialist. It was in a transitional stage under a workers’ State, and this lasted until 1989-1991. So, there was a break with the capitalist mode of production. This persisted despite radical changes in the forces of production: initial continuity, sharp decline from 1918 to 1921, and then a rapid increase from 1928 onwards. And that rapid increase was driven by the State: that is, by the so-called “superstructure” with its Five Year plans etc.

By admitting that capitalism was abolished, despite these radical fluctuations in the forces of production, cde C. M.contradicts his own technological determinism, which obviously cannot account for this situation –elegant proof, I think, of the limits of materialism.

The forces of production being constant in the “base” throughout 1917, the abolition of capitalism must – at the least – mean a radical change in the relations of production.[2]

But this means that cde C.M.’s argument that the forces of production “articulate” and “determine” the relations of production, and that “class struggle can only effect an acceleration/ deceleration of the direction of this articulation/determination” falls away. Here the relations of production are assuming a degree of irreducible and determinant causality – as opposed to the role of secondary modification attributed them by cde C.M. – that breaks down his whole claim for the primacy of the forces of production.

Likewise, consider the forced industrialisation under Stalin: notwithstanding an backward economy, the Soviet Union outstripped the forces or production of Germany – hitherto the most advanced industrial economy in Europe – within three decades despite starting from a technical base similar to that of India in the 1940s. How can this be reduced to the “determining” character of the forces of production? It would seem, on the contrary, that the advance of the forces of production was determined by factors outside their immediate realm, and, specifically, the formation of a totalitarian State apparatus ruled by an ambitious ruling class in the conflict-ridden context of the international State system of the 1920s and 1930s.

Further, cde C.M.’s very ability to speak of a “workers’ State” –and his claim that a revolution in the West could have allowed socialism to take place in backward Russia- suggests the limits in his technological determinism. If, on the one hand, a revolutionary State – that idol of Marxism – is able to abolish capitalism, the whole “base”/ “superstructure” model collapses: the Marxist strategy is in direct contradiction to the Marxists’ materialist analysis.[3] On the other hand, if the fate of revolutions in the West determined the fate o f Russia, then there is no serious basis for any claims that class struggle – and the politics and ideology that decisively shapes its outcomes- is secondary to the forces of production in the unfolding of history.

But if this is the case, then cde C.M.’s major criticism of my paper “The Soviet Mirage” for failing to recognise the primacy of the forces of production falls away. My approach – a non-deterministic model that takes class analysis seriously – is vindicated. Thus, I believe that my argument (to quote from my “The Soviet Mirage”) that while “the civil war and economic collapse posed a severe test for the revolution,” it was “what actually happened in the factories in the revolution (1917-1921)” that determined the fate of the Revolution – remains intact.

I would just add that cdes need to be far more critical of the whole Marxist notion of history as proceeding through necessary stages. History is far too complex to be reduced to a universal set of stages; to assume that what happened had to happen is pure assertion; to claim that a single set of causes drives history relentlessly down a predetermined path is teleological mysticism that cannot be established in any scientific way.


Now, I am aware that cde C.M. tries to resolve the contradictions within his analysis – between a revolutionary State and a backward set of forces of production – by introducing the notion of a “transition period,” a “social formation” in which the base and superstructure may be “disarticulated” i.e. in which there is not the neat, and determining relationship between the two that cde C.M. suggested normally obtains. In his argument, neither the laws of motion of the previous stage drive such a “transition period”, nor is it subject to the laws of motion of the incoming stage. It is something between. In cde C.M.’s analysis, the Soviet Union was just such a “transition period”: it was not capitalist or socialist – cde C.M. is quite clear on these issues – and it was run by a “workers’ State.”

Let us take these points one by one. First, let us face facts: the Soviet Union lasted 70 years, and in that time developed from a backward “third world” region to global superpower. It was driven to consistently accumulate means of production; relations of production were revolutionised, as the country moved from an overwhelmingly peasant labour force to one based predominantly on wage labour.

What drove these changes? Cde CM.. has no answer, and the reason is clear: the flaw lies in his very concept of a “transition period.” This prevents him from answering: the “transition period” is, by definition, not a historical stage, with clear laws of motion. Now, cde C.M. poses the notion of “transition period” as an alternative to my notion of State-capitalism. I submit that the latter must be regarded as the superior approach, if only because it at least allows some analysis of the dynamics of the Soviet system. It also allows us to account for the collapse of the Soviet Union: it was, in part, a consequence of the global capitalist crisis of the 1970s, as I suggested in my previous paper.

Cde C.M., who speaks of the determining role of the forces of production, does not explain why the “transition period” ended with neoliberal capitalism despite the massive expansion of the forces of production from the late 1920s onwards. What drove those changes? Why did they end in neoliberalism? Again, cde C.M. does not say.

Secondly, what is the basis for claiming that the Soviet Union was undergoing a “transition period” – that is, why should its “social formation” be regarded as one of perpetual transition, rather than an identifiable mode of production?

This is not very clear. Cde C.M. informs us that change does not happen overnight, that there are intermediate moments between different stages of history and so forth. Let us, for the moment, grant that claim. Surely, a transition must end. Nonetheless, despite his fealty to Marxist theory, cde C.M. sees no signs of such an end in the Soviet period, even though the forces of production expanded so dramatically – an expansion that surely must have consequences if we admit cde C.M.’s notion that the forces of production “articulate” and “determine” the relations of production.

Why not? Again, it is not very clear. Cde C.M. argues, as noted, that a transition period may be characterised by a disarticulation – a mismatch – between “base” and “superstructure,” but again, how long can this take place before it does damage to cde C.M.’s own technological determinism? This “transition period” took the better part of a century and was characterised by radical social and economic changes.

Clearly cde C.M. does have a clear beginning, and end, for his “transition period”: 1917, on the one side, 1989-1991 on the other. Fair enough. But what changed at those two crucial moments, that allow this dating? Not the forces of production, for these changed between the two points. So what changed?

Either, there was no real change at either end, and therefore, no point about discussing the class nature of the Soviet Union for no break can be discerned between Tsarist and Revolutionary Russia, because the forces of production remained static. Hence, cde C.M. must agree with those who argue that Soviet Russia was a capitalist country throughout.

(NB: an argument for simple continuity is NOT what I have in mind, as I do see a revolutionary rupture in 1917 to 1921 – one that was defeated. The point is that such a situation of simple continuity must lead to the conclusion that the Soviet Union was capitalist – a claim that can follow from cde C.M.’s argument against the State capitalist thesis!)

Or there was a real change, in which case the argument for the “articulating” and “determining” role of the forces of production falls away and the relations of production again become crucial to the argument. And in this case, then, the basis of cde C.’s dismissal of an analytical focus on the forces of production falls away, as does his alibi for Lenin and Trotsky viz., that they had no choice but to beat up on the working class, because the forces of production were low.

For, if this is so, we must take seriously the question of “who runs the factories?” which I posed in my original paper as the basis for a class analysis of the Soviet Union. Further, then, we must move away from the argument that the Russian Revolution went wrong– if, of course, we think it did – just because of bad economic conditions, an argument that at once alibis Lenin etc. and simply ignores the working life of the Russian proletariat. [4]


By shifting the focus to the forces of production, cde C.M. has tried to reject, out of hand, my argument in “The Soviet Mirage” that the question of the relations of production were crucial: it will be recalled that I argued that there was a minority class that owned and controlled the means of production in the Soviet Union, that class being a State bourgeoisie. But if cde C.M.’s argument for the primacy of the forces of production falls away, then surely this argument can no longer be avoided.

The relations of production must provide a key criterion for differentiating modes of production. Both capitalism and socialism, for example, will involve modern industrial technique, but will nonetheless be distinguishable as modes of production due to different relations of production.

The question, then, becomes “What were the relations of production in the Soviet Union”? I have suggested that they were:
a) exploitative class relations, and
b) capitalist class relations.

I do not believe that cde C. has successfully refuted a), nor has he refuted my insistence that self-management is an essential feature of the abolition of capitalism.

There is simply no basis for cde C.M.’s claim that the “underdevelopment of the proletariat demands that it be subjected to iron discipline” Any situation can be met in a range of ways: the notion that economic backwardness requires the coercion of the working class to increase output is hardly objective fact arising from the logic of history. Rather, it arises from a particular political outlook, that of Marxism.

Nor is it even accurate: Voline, in his The Unknown Revolution, an eyewitness account of the Russian Revolution by a leading anarchist, documents in great detail how innovative and productive forms of working class self- management in the Russian Revolution were continually closed down, only to be replaced by the bumbling of Bolshevik bureaucrats, both at the factory and at the level of government.

Alternatives did exist. Anarchists have traditionally argued that self-management – by liberating the forces or production from capitalist and State control and by laying the basis for workers to massively increase output through the introduction of new techniques of production, the fuller use of plant, and improved individual productivity – can play a massive role in overcoming backwardness. Authoritarian work organisation is not, therefore, the inevitable outcome of the level of development of the forces of production. Rather, it reflects particular relations of production: class relations. Power relations, and work arrangements, are not technical matters but social matters: when analysing power relations, the issue becomes that of in whose interest power is exercised.

Authoritarian work organisations generally reflect the fact that work is imposed upon one class by another, is organised for the purpose of exploitation. As Makhno and Arshinov argue in the Organisational Platform of the Libertarian Communists:

“Authority is always dependent on the exploitation and enslavement of the mass of thepeople. It is born of this exploitation, or it is created in the interests of this exploitation.  Authority without violence and exploitation loses all raison d’etre.”

Under capitalism, for example, exploitation is reflected in, and reinforced by authoritarian work organisation. Under capitalism, furthermore, exploitation takes a particular form: it is structured around the need to accumulate capital i.e. to continually concentrate capital in order to enhance commodity output in a competitive economy.

Concomitantly, the abolition of the class system is no mere matter of abolishing exploitation it also involves the abolition of the relations of domination that always underpin and reinforce exploitation. Replacing an exploiting capitalist with State control will not do: it simply creates new relations of domination, and these, in turn, inevitably lay the basis for new exploitation. Further, class domination is not reducible to the needs of exploitation- it has its own logics, even though domination and exploitation are inextricably intertwined

These points apply to all class systems, including capitalism. Consequently, socialism must involve self-management, which abolishes domination and removes the possibility for exploitation, as the actualisation of working class control of the means of production: this is the key to the abolition of the economic and social hierarchy of class, of which exploitation is one part.[5] Cde C.M.’s technological determinism, which fails to look at domination as an important and irreducible feature of class systems – one that is more than just a means for exploitation – evidently cannot accept this point, and assumes hierarchy at work to be a merely technical matter.


In “The Soviet Mirage” I suggested that it was precisely the fact that the working class did not own and control the means of production – that it did not “run the factories” – that allowed that system to be identified as a class system. I went on to suggest that the character of that class system was that of capitalism. Indeed, I stated that the “Soviet Union is [a]… single interlocking capitalist conglomerate co-ordinated by the central government’s economic ministries and competing internationally against Eastern, Western, and Southern ‘private’ and State companies.”

So far, I have suggested that cde C.M. has failed to refute the argument that the Soviet Union was a class society. What, then of his argument that it was a capitalist society?

Cde C.M. raised a number of key points against the state-capitalist argument. His core argument was, essentially, that in capitalism, the chase after profits leads to ongoing reallocations of capital from unprofitable sectors to those with higher yields. This is tied to the long-term tendency of the rate of profit to fall: under capitalism, rising mechanisation reduces the amount of surplus value in any given commodity, because it reduces the socially necessary labour time required in its production, and, thus, the surplus value – the basis of profit – embodied in the commodity; as the rate of profit falls, investment is directed to (less advanced) new sectors with a higher rate of profit.[6] Over time, moreover, capitalism tends to crisis, as excessive amounts are invested in commodities whose surplus value cannot be realised in the market. The “law of value” ensures that commodities exchange in proportion to the amounts of socially necessary labour time that they embody, and underpins the ongoing reallocations of capital.

None of this, cde C.M. claims, applied in the Soviet Union. The economy was characterised by (he says)m assive and ongoing misallocations of capital, but these were not corrected, as they would be under capitalism. Neither unemployment, nor crisis, was a feature of the system, nor was there an internal labour market (s). The “law of value” also did not determine prices, as there were no internal markets in the Soviet Union through prices could be set, and, consequently, there was also no capitalist mechanism to realise (actually extract) any surplus value incorporated into commodities.

Further, if I understand cde C.M. correctly, the claim is that there was no tendency for the rate of profit to fall in the Soviet Union, nor were there mechanisms – including the “law of value” – to penalise waste and provide a basis for avoiding “misallocations” of investments.

Well, let us see.

Part 1: pricing, transfers and planning
First, let us deal with the question of the “law of value.” The law of value is an important conceptual breakthrough as it allows an estimation of the rate of exploitation, and understanding of price, and a defence of the labour theory of value. Yet it also has serious limitations. At best, the law of value is only schematic model: while it indicates an important aspect of capitalism – that labour creates all new value – it is inadequate as a theory of price and allocation. As Berkman suggested in Now and After: the ABC of communist anarchism, a whole host of factors other than the incorporated labour time of a commodity set prices, including short-term levels of supply and demand, advertising, and direct manipulation of prices by corporations.

These factors operate so consistently that they must be incorporated into any theory of price, which cannot, therefore, be reduced to the law of value. Indeed, the tendency towards the centralisation and concentration of capital in a few hands – something that is inherent in capitalism, even if it does not (as Malatesta noted) mean that small companies shrink in number relative to the large companies –will always lead to systematic violations of the law of value. The extreme examples are the monopolies like De Beers and Microsoft, which set prices that have no real relation to the socially necessary labour time involved in producing either diamonds or Windows.[7]

The simple operation of the law of value cannot therefore be the sole –even the primary – basis for pricing under capitalism, or the very label of “capitalist” would hardly apply anywhere. It follows that the failure of the law of value to neatly set prices – or determine investment allocations -in the Soviet Union in no sense precludes the possibility of regarding the Soviet system as that of a capitalist company.

At the same time, admittedly, there were few internal markets in the Soviet Union that may be compared to the markets of the Western economies. Cde C.M. is correct to point this out. But what is its significance? If the law of value is only one component of the theory of price, then one of cde C.M.’s main arguments for the significance of this absence falls away.

This leaves his second main point: the question of realising surplus value. However, the sale of commodities on the market is only one possible way of realising surplus value. It is only a means of accessing unpaid labour time: it is a mechanism. Surplus value is incorporated into goods and services at the point of production under capitalism whether or not these are sold.

This surplus value can, equally, be realised directly as use-values – for example, fed directly into the system as means of production – and provide a basis for a privileged class. This – combined with the issues with the law of value noted above – suggests the need for some form of non-market costing to operate in order to allow accounting and planning.

Is this possible, and could it apply to the internal operations of what I have called Soviet Union, Inc.? Certainly. A non-market realisation of surplus value, and non-market systems of pricing, take place routinely within large corporations in the West through systems of internal transfers.[8]

These are generally recorded in monetary terms, but they bypass the market – cde C.M. is quite incorrect to describe them as “market transfers” – and their costing is thus undertaken in a nonmarket manner, based on comparisons with market prices, but even moreso, on calculations of input costs, including labour costs. They do, in other words, take account of the law of value, but they do not rely on the market to do so. Further, such internal transfers are components of a broader regime of a-priori investment planning: all large companies operate internal planned economies.

In short, the fact of non-market costing, and of an a planned economy, is in no way in contradiction with the existence of capitalism, unless, for example, we are to suggest that Coca-Cola is internally “socialist” in character, or perhaps undergoing a transitional stage. If non-market costing, internal transfers and investment planning were in-and-of-themselves evidence of a non-capitalist epoch, or of “transition period” then it would follow that Anglo-American, Coca-Cola, Microsoft etc. were post-capitalist. I think cde C.M. will agree that this is an absurd contention.

This, I would suggest, is a key element of how the Soviet Union – a “single interlocking capitalist conglomerate co-ordinated by the central government’s economic ministries and competing internationally against Eastern, Western, and Southern ‘private’ and State companies” – operated. Its internal operations were centred on internal transfers, involved the non-market costing of goods and services, that took into account the law of value yet bypassed markets, and central investment planning. I should add that this is not the whole story – there were some real markets within the Soviet Union, notably for labour – while many commodities were sold on the international market, and the money capital shared out among the ruling elite.

Let it be quite clear what I mean here. The fact of non-market costing, internal transfers and investment planning in no sense precludes the existence of capitalism. However, the opposite does not follow: the mere fact of these features, in no sense, definitely shows that capitalism is present. Both market costing and non-market costing, market transfers and internal transfers, ex post facto planning and a priori planning, can only be capitalist if they are components of a larger capitalist system.

Part 2: capitalist dynamics
It follows that the identification of a particular social and economic organisation as capitalist cannot be reduced to question of pricing and planning. What is crucial is the extent to which such operations are determined by a broader capitalist logic. What is crucial is the nature of the system within which such activities are embedded.

Non-market costing, internal transfers and investment planning could take place within socialism, as certainly did take place well within feudalism, slavery etc. For us to conclude that Anglo-American, Coca-Cola, Microsoft – and the Soviet Union – were capitalist, it is necessary to also show that:

  • Investment decisions were determined by competition with other companies, and there is a continual accumulation of capital to that end;
  • Production was aimed at profit, and premised on exploitation;
  • Wage labour[9] is the characteristic the form of exploitation. [10]

Cde C.M. was quite correct, in his critique of “The Soviet Mirage,” to also note that the mere fact of a high volume of foreign trade also does not definitively establish the existence of a capitalist dynamic. Indeed, trade is a common mode of articulation between different modes of production, and does not itself provide a basis for proving the existence of internal capitalist dynamics.[11]

This was the central weakness in “The Soviet Mirage,” where I placed far too much emphasis on the foreign trade of the Soviet Union, and I am glad that cde C.M. drew my attention to this flaw. As his critique suggests, the relative volume of such transactions in no way is crucial to the case that a system was capitalist.

To what extent, then, can we speak of the operation of capitalist dynamics in the case of the Soviet Union? Cde C.M. is insistent that we cannot.

I believe, however, that we can show that the economy of the Soviet Union was determined by competition with other units of capital take place, and was the key determinant of the amount of surplus value reinvested into the forces of production insofar as competition created the need to continually develop the forces of production to keep pace with those of competitor units of capital, and that the ultimate source of that accumulated capital was exploited wage labour.

There was, on the one hand, direct competition in international markets – notably via raw material production and the arms trade. Much of this was premised on the planning that took place in the Soviet Union and its satellites – including the Soviet practice of paying below world market process for goods from east Europe, then selling them at full price on world markets – but it was competition of the type that, for example, takes place between, say, Coca-Cola and Pepsi in soft drinks. This is the export sector to which I alluded in “the Soviet Mirage,” where I argued, “the State capitalist countries each operated as a bloc of capital on the world markets. The actual extent of integration into the world economy through ‘foreign’ trade with Western capital, and between state capitalist countries, varied between different blocs of State-capital.”

There was, on the other hand, indirect competition. Those sectors of the Soviet economy not producing for export were also driven to continual accumulation of means of production by indirect competition i.e. not in the market but real nonetheless. The key example was the “arms race” between different State-controlled arms industries in both the East and the West. Investments were determined by competition even though there was little direct competition in the markets. While neither the United States not the Soviet Union sold more than a tiny fraction of – for example – their nuclear arsenals they operated as if they did, and compared the development of the forces of production with those of each other.

Soviet investment decisions were thus determined by the need to continually to continually develop the forces of production to keep pace with those of competitor units of capital (in this case, with the “military-industrial complex” of the West). This investment planning was, in turn, heavily reliant on non-market systems of costing and ongoing internal transfers between the different parts of this vast corporation.

Cde C.M. is incorrect to claim that there was persistent misallocation and wastage and that the Soviet Union ignored these problems for “70 years”. On the contrary, the state-led industrialisation of the Soviet Union was always shaped by attempts to determine an optimal allocation of resources between different industries and there were ongoing attempts to improve efficiency, create better systems of data collection and discipline, promote productivity etc.

These administrative reforms – quite typical of any large company – were a central feature of the Soviet economy. Consider the Great Industrialisation Debate of the 1920s, the shift to the 5 Year Plans, the Khrushchev reforms of the 1950s and 1960s, which including a greater role for internal markets in agriculture in particular, and the 1980s perestroika, which tried to unbundled the Soviet Union and create direct competition within the corporation etc.

That these reforms did not succeed– as the need for the bankrupt Soviet Union to be sold off and broken up from the 1980s shows – does not mean they did not exist, or could not work. China, for example, shows a successful case of internal reform in State-capitalism, and a carefully managed transition to neoliberalism.

Part 3: unemployment, crisis and wage labour
Let us look, finally, at questions of unemployment and crisis. It is not true that there was no unemployment in the Soviet Union, as cde C.M. suggests. Unemployment did exist in the Soviet Union and its satellites – although it was concealed as forced labour (the gulag system, which grew out of the concentration camps of the Lenin period, but were massively expanded later), low paid work, and seasonal and migrant work in the outlying areas. Note that we are talking about wage labour here.

Furthermore, internal labour markets were a well-documented feature of Soviet society. Although the overall Soviet corporate plan allocated different volumes of labour in advance to different sectors through a system of pass laws and labour bureaux, there was also competition for labour within each sector, and between different sectors. This was expressed, in part, through a system of discretionary wage funds that allowed local managers to bid for workers, recruiting skilled workers from one another, while also drawing in casual labour from the factory gates at times of peak demand.

According to Buick and Crump’s State Capitalism, up to 30% of wage labour was hired outside of formal state labour bureaux. It was precisely the surplus value created by this wage labour, and realised in various ways, that provided the lifeblood of the Soviet corporation.

As for the question of crisis, it is true, as cde K. pointed out some time back, that the Soviet Union was barely affected by the Great Crash of 1929. How could it be? Simply: it was then a backward, isolated region with few links to the world economy. This hardly shows that it was non-capitalist. South Africa, reliant on gold exports for foreign exchange, was directly affected, but it was linked into the world economy in a way that the Soviet Union simply was not. No doubt the inner provinces of China were also barely affected.

By the 1970s, however, the Soviet Union was highly integrated through trade – particularly, the export of raw materials and weapons to raise foreign for grain and capital goods for high technology sectors and was immediately and directly affected by the crisis in the West in the 1970s. Demand fell, the fixed currency system was abolished, and foreign debt rose in the Soviet Union’s satellites etc.

What accounted for increased integration into the broader world economy? There were, I think, two key developments. First, Direct competition in world markets increased, and became a far more important component of the Soviet system than had been the case in the 1920s and 1930s. It was precisely the inability of the Soviet system to effectively modernise its forces of production from the 1960s onwards – its inability to create an effective local electronics and computing sector, specifically – plus the ongoing problems in agriculture – the recurrent grain failures and the consequent need to import wheat – that led to being trapped in raw material, weapons and heavy industry.

The growing need to import capital goods – itself arising from the need to compete with capital elsewhere – followed from the general inability of the Soviet Union to innovate in the high tech sector.[12] In raw materials, weapons and heavy industry the Soviet Union had something of a “comparative advantage,” which it sought to use to overcome its failings in the more advanced sectors: growing exports from the efficient sectors raised foreign exchange, which was used to purchase the capital goods the company could not produce efficiently within. These foreign inputs were necessary to both the sectors involved in direct competition, and to the sectors driven by indirect competitions.

When the world crisis came in the 1970s, there was a fall in demand for Soviet goods, plus a fluctuating currency system centred on the “hard currencies” of the West, in place of the old fixed system of the Gold Standard, and this disrupted the entire Soviet economy. Perestroika was one consequence. So was growing foreign debt, as countries like Poland sought to alleviate the balance of payments problems through lending on international markets. As I noted in “The Soviet Mirage,” the countries of the East bloc were in debt to the tune of $18 billion in 1976; by 1978 this rose to $58 billion. It is also in this context that I quoted Theodore Zivkoff, Prime Minster of Bulgaria: “the crisis in the West affects us immediately and very deeply because of our trade and other ties with the West. We hope that this crisis will pass as soon as possible” (this was from A.G. Frank, 1980, “Global Crisis and Transformation”, World Development, p345).


Thus, I contend, Voline was quite right when he described the Soviet Union as an example of “totalitarian” and “integral State capitalism”:

“State-capitalism: such is the economic, financial, social and political system of the USSR, with all of its logical consequences and manifestations in all spheres of life – material, moral, and spiritual. The correct designation of this State should … be … USCR, meaning Union of State Capitalist Republics… This is the most important
thing. It must be understood before all else. The rest follows.”

Voline himself did not provide, perhaps, a sufficiently thorough analysis of the system – although he did a great deal to show the inequalities, property relations, wage labour and exploitation of the Soviet system – but his basic insight provides the basis on which such a model may be built. “The rest follows.”

It is hardly “scholastic,” as cde C.M. states, to raise the issue of “who runs the factories?” in this context, when he writes: “To have raised the question ‘who runs the factories?’, as if the proletariat had mastered the techniques of production would have been scholastic.” Rather, I argue, without working class control of the factories, there can be no socialism; it is rather more “scholastic” to blame the Bolshevik assault on the working class on the forces of production, as if politics, ideology, and relations of production are irrelevant.

Moreover, in many cases, the working class had indeed “mastered the techniques of production.” As I noted in “The Soviet Mirage,” “In 1919, individual managers ran only 10,8% of enterprises. By 1920, under ‘War Communism,’ 82% of factories had been placed under individual management, typically government appointees.”

Does cde C.M. deny this? Cde C.M. is quite right when he says that the Bolsheviks were not concerned with the question of “who runs the factories?” from “1917-1921 to the Great Industrialisation Debate.” This does not indicate the correctness of this position. It simply underlines what revolutionary anarchists have always argued: the Bolsheviks wished to substitute the “Party” for the class, one elite for another. It demonstrates not the irrelevance of the question “who runs the factories?” but rather indicts the Marxist corpus for its total silence on issues such as the libertarian restructuring of work and working class self-government.[13]

And here, we differ. I place my faith in the self-emancipation of the working class through its own struggle and organisations. Cde C.M. calls for what can only amount to a revolution from above by an elite. In my view, self-management is not an arbitrary “scholastic” addition to socialism, a luxury: it is its very heart and soul. And all socialist strategy must be centred on this issue: the unification of the working class and the development of its capacity for self-management and direct democracy.

In his The Lessons of October, Leon Trotsky blamed the failure of the German Revolution on the lack of a vanguard party of the Bolshevik type to “lead” the German workers.

My paper suggests a rather different set of “lessons of October.” Above, I criticised cde C.M. for setting up an argument that downplays the importance of the relations of production, effectively avoiding the question of who owned the means of production in the Soviet Union and undermining a specification of the class nature of the Soviet Union. Yet these issues cannot be avoided or dismissed.

I reiterate: the Bolsheviks, that is, the Communist Party, of Lenin and Trotsky- men long regarded with almost godlike reverence by the Marxists- was directly culpable for crushing the Russian Revolution. The working class had already won with blood in 1917 control of most industries – contrary to cde C.M., it had “mastered the techniques,” as well as “mastered” the old masters – and it was Bolshevism – not the laws of history – that drove the workers from these heights. True, Russia was relatively backward, but this says nothing about how the workers in the modern industrial plants.

This historic defeat was not a “scholastic” irrelevance. However backward Russia may have been relative to Germany, or to Britain, the fact of the matter is that it was between 1918 and 1920 the working class was driven from the heights of economic power it had won in the Revolution in a rapid and anti-working class offensive spearheaded by the Bolsheviks, and resulting in most cases in government officials – and even former capitalists – being appointed as unelected managers. A new pattern of production relations, which apologists for the Soviet Union describe as “bureaucracy,” and I call state-capitalism, was established in this period, 1918-1920, not later. There was no substantial change in the relations of production between 1920 and 1928. The Russian Revolution was already destroyed by then. The subsequent debates on economic policy took place above the heads of the working class and the peasantry: they were, essentially, the debates of the masters on how best to use the slaves.

This is the lesson of October. Lenin and Trotsky laid the basis for Stalin. They did so by smashing workers’ attempts to restructure the economy and society of Russia. Attempts to avoid this unpleasant fact by abstract references to the economic difficulties faced by Russia during the Revolution operate as economistic alibis for the Bolshevik “vanguard party” and shy away from actually examining the fate of the working class between 1918-1921.

The effect is to avoid critically examining the “vanguard party”, and the manner in which this particular political conception led directly to the concentration of power in the hands of a small elite whose revolutionary programme was counter-revolutionary in practice because of its abject hostility to workers’ self-management of economy and society.

This does not mean there is no revolutionary alternative to capitalism. There is: we can see it in Seattle and Prague. And that is revolutionary class struggle anarchism. That does not mean that project has not had its failings. It is not enough to bemoan the fact that the working class was defeated by the Bolsheviks in an “anti-working class offensive”; it is essential to  understand why it was defeated. But that is for another paper.


[1] In his Preface to his “A Contribution to The Critique of Political Economy, “ Marx provided the classic statement of his views: “At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production, or – what is but a legal expression for the same thing – within the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution. With the change of the economic foundation the entire immense superstructure is rapidly transformed.” This sounds impressive, but it essentially boils down to the idea that: the forces of production continually expand over time; after a while further development of the forces of production is undermined by existing relations of production; the relations of production must therefore change; as a result of the contradictions in the economic “foundation” of society, the whole “superstructure” (law, culture, religion, the family, the State and so forth) is “rapidly transformed.” This essentially means the forces of production are primary, and actually determine the relations of production – hence, it is a form of technological determinism.

[2] This is not to claim that social revolution can be reduced to changes in the economy, but it is to stress that such change is indispensable.

[3] Cde C.M. has not, I think, fully grasped this contradiction: in his paper, he argues that “if one were to grant cde L.’s ‘premise of historical materialism,’” – that the “base” determines the “superstructure” – “then how can we explain the Marxist theory of dictatorship of the proletariat, the party, class struggle and ideology in the transition to socialism?” How, indeed!

[4] This directs us to the hoary old Trotskyist view that poverty in Russia – due to general economic backwardness and war destruction – forced the otherwise peaceful and radically democratic Bolsheviks to resort to extreme, but temporary measures, to “save” the Revolution i.e. dictatorship. This argument is essentially an alibi which allows later Trotskyists and even some moderate Stalinists to say that (a) the original Bolshevik party was democratic (b) that so-called “Stalinism” ( a term that personalises the Stalin period, and sets up an aribtrary distinction between  “Stalinism” and “real” Leninism) was a distortion of the original Bolshevik party that was at odds with Lenin and Trotsky’s democratic impulses. Hence, you can be a Leninist but oppose Stalinism as if it were a totally separate ideological formation. This argument is spurious because it ignores actual conditions and developments in the 1917-1921 periods – in which Lenin and Trotsky systematically destroyed workers’ self-management of factories, militias and city governance- and ignores the role of the authoritarian politics of the Bolsheviks in laying the basis for Stalin’s dictatorship.

[5] Indeed, the decisive and distinguishing part. While class relations involve relations of domination, they differ from all other forms of social and economic inequality in that they necessarily involve exploitation. Racism may facilitate, deepen, or justify exploitation, but racial inequalities can exist in the absence of exploitation, and racism can, at least theoretically, be absent from capitalist society. On the other hand, class relations always involve exploitation. This gives them a strategic primacy. This is not to say that every worker is exploited – for example, the unemployed are not, strictly speaking, exploited, nor are many service workers – but it is to claim that exploitation is an intrinsic characteristic of the oppression working class as a whole, across race, gender and other lines.

[6] It should be noted that the fall in the rate of profit does not mean that the absolute volume of profit falls: hence, a highly mechanised company may – in fact, will fenerally tend to – have a lower rate of profit than a less advanced rival, yet still be able  to pay higher wages.

[7] Pricing in the case of MS Windows may, of course, be partly explained as a form of rent, but pricing in the case of De Beers is nothing but the crudest form of monopoly.

[8] That is, internal and direct allocations within a given company that entirely bypass the market.

[9] Wage labour does not imply “free labour.” Marx suggested that under capitalism the working class is “free” in a double-sense: “free” of direct coercion (and thus able to change jobs freely) and “free” of independent access  to the means of production. However, wage labour has only rare been free of direct coercion: a whole battery of directly coercive measures has continually compromised the ability to choose employers freely, ranging from indenture, to pass laws, and open terror. For example, apartheid South Africa. To assume, like Marx, that capitalism inherently involves labour free of coercion is to accept liberal ideology and mutilate the historical record.

[10] In the sense that the wage – which need not be monetary – pays only for the costs of reproducing the worker – food, housing, transport etc.- and is on no sense a reflection of output., the difference between the wage – the price of labour power, which is its cost of reproduction – and the output of the worker – actual labour – is surplus value. The dominant class takes this surplus value, and the wage labour system is thus one of exploitation.

[11] This is precisely the great advance of Marxist economics on liberal economics: liberal economics reduces capitalism to trade and distribution; Marxism draws attention to the abode of production relations.

[12] The fact of importing capital goods to facilitate competition is common to many capitalist countries: while gold makes up less than 10% of the overall SA GDP, it accounts for nearly 60% of the foreign revenue required to purchase abroad the capital goods that local capital has consistently been unable to produce.

[13] I challenge any Marxist comrade to show me a single article from the classical Marxist corpus where the necessity and economics of direct workers’ self-management of the production for revolution, as both strategy and aim, is seriously and systematically discussed. I do not mean vague allusions to “free association,” or “every cook can govern,” but concrete discussions of this matter.


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