[Continued from Part 2]
3. Democracy and the categories of commodity economy
It was from the angle of proportions in the economy, not micro decision-making, self management, that the issues of the relation of democracy and economics were most fundamentally posed. Democratic resolution of the plan, to decide the allocation of resources, was the decisive issue. As Trotsky noted: ‘The problem of the elements of production and the branches of the economy constitutes the very heart of socialist economy.’ 
Only by democratic decision-making could the essential allocation of proportions in the economy take place. Trotsky noted on this: ‘The processes of economic construction are not yet taking place within a classless society. The questions relating to the allotment of the national income compose the central focus of the direct development of the class struggle and that of social groups, and among them, the various strata of the proletariat itself. These are the most important social and economic questions: the link between the city and the village, that is, the balance between that which industry obtains from agriculture and that which it supplies to it; the interrelation between accumulation and consumption, between the fund for capital construction and the fund for wages; the regulation of wages for various categories of labour (skilled and unskilled workers, government employees, specialists, the managing bureaucracy); and finally the allotment of that share of the national income which falls to the village, between the various strata of the peasantry. All these questions by their very nature do not allow for a priori decisions by the bureaucracy, which has fenced itself off from intervention by concerned millions.
‘The struggle between living interests, as the fundamental factor of planning, leads us into the domain of politics, which is concentrated economics… Only through the interaction of these three elements, state planning, the market, and Soviet democracy, can the correct direction of the economy of the transitional epoch be attained. Only thus can be assured, not the complete surmounting of contradictions and disproportions within a few years (this is utopian!), but their mitigation, and through that the strengthening of the material bases of the dictatorship of the proletariat until the moment when a new and victorious revolution will widen the arena of socialist planning and will reconstruct the system.’ 
The distortion of the proportions in the Soviet economy, the disappearance of the light industry and services and the unbalanced expansion of heavy industry, were the expression of the fact that working class democracy had ceased to function – no democratic decision by the working class would ever have arrived at such an allocation of resources. As Trotsky noted: ‘the bureaucracy more and more resolutely ruled out any demands, protests, and criticism… The only prerogative which it ultimately left to the workers was the right to exceed production limits. Any attempt to influence economic management from below is immediately described as a right or a left deviation, that is, practically made a capital offence. The bureaucratic upper crust, in the last analysis, has pronounced itself infallible in the sphere of socialist planning.’ 
This issue was particularly decisive when it came to determining the key question of the rate of accumulation. As Trotsky noted: ‘A five year plan can be projected with the necessary proportions and guarantees only on condition of a free discussion of its rates and terms; only with the participation in these discussions by all related industries and by the working class, drawing in all its organisations… only with an evaluation of the whole experience of the Soviet economy in the last period, including the monstrous faults of the leadership.
‘The most important element of the plan is not a question of what the workers and peasants want and are able to consume immediately, but what they can save and accumulate. The question of the tempo of industrialization is not a matter of bureaucratic fancy, but of the life and culture of the masses. Therefore the plan for building socialism cannot be issued as an a priori bureaucratic command. It must be worked out and corrected in the same way that the construction of socialism itself can only be realised, i.e., through broad soviet democracy… Soviet democracy is not an abstract political demand and still less a moral one. It has become an economic necessity.’ 
The defence of the working class
Democracy, not just political but in the unions and workers’ control, was indispensable for controlling costs of production and preventing industrialisation striking at the interests of the workers. Without this both would inevitably deteriorate: ‘in a socialist economy under construction a basic condition for the economical expenditure of national resources is vigilant control by the masses, above all the workers in the factories and shops. As long as they cannot openly criticise and expose irregularities and abuses, exposing those responsible by name… the struggle for a “regime of economy” or for higher productivity will inevitably travel down the bureaucratic path, i.e. more often than not will strike at the vital interests of the workers.’ 
It was only the introduction of democracy which would ensure economic planning that created a systematic improvement in the position of the working class. Thus even on the direct question of wages for example: ‘Without the rebirth of workers’ democracy, a correct policy of wages is absolutely unattainable. “Collective contracts”, says the platform of the Russian Opposition, “should be made after real and not fictitious discussion at workers meetings. The work of the trade unions should be judged primarily by the degree to which they defend the economic and the cultural interests of the workers under the existing industrial limitations. The trade unions must fulfil their functions on the basis of genuine elections, publicity, accountability to the membership, bearing the responsibility at every degree of the hierarchical scale. An article should be introduced into the Criminal Code punishing as a serious crime against the state every direct or indirect overt or concealed persecution of a worker for criticising, for making independent proposals, and for voting”.’ 
Or as Trotsky noted: ‘That the old method of wages was bad from every point of view has been obvious to us for a long time. One cannot work out a rational, viable, and progressive system of wages without the collaboration of the masses themselves… Collective contracts and wage scales are elaborated in the offices and imposed upon the workers, like all other decisions in the infallible centre. Without the rebirth of workers’ democracy, a correct policy of wages is absolutely unattainable.’ 
Democratisation of the unions and proportions in the economy
For correct economic functioning, above all correct proportions in the economy, democratisation had to be extended not only to the Soviets and political parties but to the trade unions: ‘The trade unions have finally been degraded to auxiliary organs of the ruling bureaucracy. A system of administrative pressure has been built up, under the name of shock troops, as if it were a question of a short mountain pass and not a great historical epoch. The economic plan must be checked from the point of view of the actual systematic improvement of the material and cultural conditions of the working class in town and country. The trade unions must be brought back to their basic task: the collective educator, not the knout… The problem of raising the political independence of the proletariat and its initiative in all fields must be put in the foreground of the whole policy.’ 
Only such methods could ensure the fundamental goal – the improvement at the most rapid pace possible of the conditions of the working class. As Trotsky wrote in 1926: ‘It is necessary to reverse all decisions of the last two years that have worsened the situation for the workers, and to emphasise forcefully that without a planned and systematic improvement – even if at first it is only a slow improvement – in the conditions of the working class, this “main productive force” (Marx), it is impossible, in the present situation, to salvage either the economy or the construction of socialism.’ 
Furthermore, democracy would become still more decisive as the economy developed, for: ‘Behind the question of quality stands a more complicated and grandiose problem which may be comprised in the concept of independent, technical, and cultural creation. The ancient philosopher said that strife is the father of all things. No new values can be created where a free conflict of ideas is impossible… epochs of revolution have never been directly favourable to cultural creation: they have only cleared the arena for it.
‘The dictatorship of the proletariat opens a wider scope to human genius the more it ceases to be a dictatorship. The socialist culture will flourish only in proportion to the dying away of the state. In that simple and unshakeable historic law is contained the death sentence of the present political regime in the Soviet Union. Soviet democracy is not the demand of an abstract policy, still less an abstract moral. It has become a life and death need of the country.’ 
In short: ‘A true left course would require an economic plan extending over a period of years… All that can be accomplished by the issuing of circulars from on high is a zigzag to the left. But it is impossible to carry out a true left course by issuing circulars. To carry out a left, proletarian course, a Leninist course, our party must have a new orientation, from top to bottom, and a realignment of forces. Those are processes that would have to develop in a serious way over a long period.’ 
Democracy and the law of value
Nevertheless if democracy set the framework of economic organisation – as Marx put it ‘democracy is content and form’ of the future organisation of society – democracy was subject to the constraint of the relations of commodity economy over an entire historical epoch.  In this contradiction lay the fundamental tension of socialist construction. As long as scarcity existed, that is, as long as a superior development of the productive forces to capitalism had not been achieved, allocation of resources according to the democratic will of society collided with the continuation of allocation on the basis of the laws of commodity production – the law of value. Commodity production could only progressively be replaced by democratic, that is planned, allocation of resources. The feature of this prolonged transition period in the economic field, as Trotsky put it, was that for many years: ‘The plan is checked and, to a considerable degree, realised, through the market.’  This reality, which would last even in the most advanced country for many decades and on a world scale for centuries, in turn dictated Trotsky’s attitude to supply and demand and the other features of commodity economy. In particular it meant rejection of the administrative pricing policy of Stalin.
The idea of a command economy rapidly overriding commodity calculation, introduced by Stalin, was an absurdity from the Marxist point of view. While the political transition from a bourgeois to a working class power was necessarily accomplished in a single transition, a revolution, the economic transition was spread out over an entire epoch of development. As Marx wrote in the Communist Manifesto: ‘The proletariat will use its political supremacy to wrest, by degrees, all capital from the bourgeoisie.’ 
What was involved in the Soviet Union was a society, as Marx had foreseen, where: ‘What we are dealing with… is a communist society, not as it has developed on its own foundations but on the contrary, just as it emerges from a capitalist society, which is thus in every respect, economically, morally and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.’ In such a society the most important commodity relation, labour power, would remain a commodity over a prolonged period: “Accordingly, the individual producer receives back from society… exactly what he gives to it.” Only over an entire epoch would payment of labour achieve: “From each according to his abilities to each according his needs”.’ 
What applied to one commodity, labour power, necessarily applied to others. The Stalinist attempt to abolish the commodity character of production by administrative means, rather than society outgrowing it progressively over an entire historical epoch, was an adventure, an administrative attempt to suppress the labour determination of value, which inevitably ended in economic disaster.
The Civil War had imposed on the Bolsheviks the command economy of ‘war communism’ which administratively overrode commodity relations in the economy – involving rampant inflation, ignoring the pricing mechanism, administrative allocation of resources, seizure of products etc. A command economy is typical even of bourgeois states in times of war – capitalists do not attempt to fight wars on the basis of the market – and was politically justified by such circumstances (as indeed such a mechanism would have been justified during World War II or other times of extreme crisis). But these were exceptional regimes.
For long-term efficient economic functioning it was necessary to move towards re-introduction of the realisation of economic planning through supply and demand and the market – the plan set the framework within which the market functioned, and the plan only progressively made inroads into the market.
Furthermore, as the fundamental economic reality confronted was the world economy, pricing would have to fundamentally reflect world prices – for prices are the reflection of commodity relations. Other mechanisms for redistributing resources – social spending, subsidies, direction of resources – must be developed with the minimum disruption possible of the pricing mechanism – and least of all by hidden distortion of prices. As Trotsky noted: ‘A brief experiment showed… that industry itself, in spite of its socialised character, had need of the method of money payment worked out by capitalism. A planned economy cannot rest merely on intellectual data. The play of supply and demand remains for a long period a necessary material basis and indispensable corrective.’ 
Pricing was necessarily crucial as supply and demand cannot operate without accurate prices. As Trotsky wrote in The Revolution Betrayed criticising the theory of administrative pricing developed by Stalin: ‘The owl of wisdom flies, as is well known, after sunset. Thus the theory of a “socialist” system of money and prices was developed only after the twilight of inflationist illusions. In developing the… enigmatical words of Stalin, the obedient professors managed to create an entire theory according to which the Soviet prices, in contrast to the market price, has an exclusively planning or directive character. That is, it is not an economic, but an administrative category, and thus serves the better for the redistribution of the people’s income in the interests of socialism.
‘The professor forgot to explain how you can “guide” a price without knowing real costs, and how you can estimate real costs if all prices express the will of the bureaucracy and not the amount of socially necessary labour time expended. In reality, for the redistribution of the people’s income the government has in its hands such mighty levers as taxes, the state budget and the credit system… The budget and the credit mechanism is wholly adequate for a planned distribution of the national income. And as to prices, they will serve the cause of socialism better, the more honestly they begin to express the real economic relations of the present day.’ 
The correct objection to proposed price reform in the USSR was not that it attempted to move Soviet prices towards world prices – that would be a step forward, but that it did not propose to compensate the working class for the losses involved. It is not a price reform but a market attempt to attack the living standards of the working class disguised as price reform. It is to move from the Stalinist to the (worse) market attack on the working class. Both have to be rejected in favour of a line of advancing the interests and living standards of the working class. Given that the aim is to improve working class living standards, price reform which does not include full compensation, that is one which aims to lower the living standards of the working class, should be opposed.
Accounting and costs
What applied to prices, and currency, in the Soviet economy necessarily applied also to accounting and costs. With the destruction of commodity pricing under the Stalin system rational accounting become impossible – for, as Trotsky noted in the transition period, ‘economic accounting is unthinkable without market relations.’  Furthermore any attempt to develop the economy without precise accounting would inevitably lead to misallocation of resources and disaster. As Trotsky put it aphoristically, ‘socialism means accounting.’ 
Trotsky developed this position at length commenting on the speech given by Stalin to economists and managers in June 1931: ‘From the speech [Stalin’s] we note that “a number of enterprises and economic organisations have long ceased to count(!), to keep proper accounts, draw up sound balance sheets of income and expenditure”. Reading this one cannot believe one’s eyes. How is this possible? What kind of leadership of industry is it whose effectiveness is not measured and checked on in an every more precise manner? We learn further that such concepts as “regime of economy… rationalisation of production have long gone out of fashion.” Does the speaker weigh his own words? Don’t they sound like a monstrous slander of the Soviet economy, and primarily a merciless indictment of the top leadership?
“It is a fact,” Stalin continues, “that production costs in a number of enterprises have recently begun to increase.” We know what such words as “here and there”, “in a number of enterprises” mean when spoken by Stalin. They mean that the speaker is afraid of the facts, obscures them, and minimises them. Under the words “in a number of enterprises” is concealed heavy industry; yielding a 6 per cent increase instead of 40 per cent. This at the same time drives up the costs of production, undermining in this manner the possibility of its future growth. In addition to this, it turns out that the keeping of accounts is thrown overboard and rationalisation is out of fashion. Does not the alarming conclusion come to the fore that the actual situation is even worse than that presented by the speaker?
‘How could this happen? Why and how have accounting and calculation been thrown overboard? Stalin keeps silent… We will reply in his stead. Calculation, which was never ideal, because the Soviet state has only begun to learn to make calculations on a national scale, was thrown completely overboard from the time that the bureaucratic leadership substituted the naked administrative whip for a Marxian analysis and flexible regulation of the economy.’ 
The inevitable consequence of destroying any rational accounting system was a disastrous escalation of costs and deterioration in quality. As Trotsky put it: ‘The coefficients of growth have become questions of bureaucratic prestige. Where is there a place for calculation? The director or chairman of a trust who “completed and exceeded” the plan, having robbed the budget and laid a mine in the form of bad quality of production under adjacent sectors of the economy, proved to be a hero. On the other hand the economists who tried to estimate correctly all the elements of production and did not push for the sacred bureaucratic targets constantly fell into the ranks of the penalised.’113
The inevitable result of the attempt to administratively override commodity relations, supply and demand, prices and rational cost calculation was a catastrophic decline of quality of Soviet production. Indeed the entire bureaucratic system produced deterioration of quality output. As Trotsky noted, commenting on the Sixteenth Congress of the CPSU in 1930: ‘Only the figures that describe the rate of growth were given; not one figure that describes the quality of production! It is as though one were to describe a person by giving the dimension of height without that of weight.
‘The same was true of net costs, The whole economic system, and above all the effectiveness of its direction, is tested by the productivity of labour, and in the tributary economic forms the productivity of labour is measured by production costs or net costs. To ignore this question is the some as to declare a person healthy on the basis of appearance, without listening to complaints or checking the heartbeat.’ 
Trotsky’s views on this were indeed confirmed by the constantly growing Soviet complaints about quality of production: ‘Matters are worse, however, with the qualitative indices. The newspaper Za lndustrializatsiia, speaking of coal production, says: “The gap for qualitative indices is much wider than for quantitative indices”… in connection with the output of Krivoy Rag iron ore, the newspaper writes: “The qualitative indices have fallen”… Have fallen! But we know that even earlier they stood at an extremely low level.’ 
Similarly: ‘Side by side with these quantitative results, which Ekonornicheskaya Zhizn (EZ) [Economic Life] characterizes as “shocking lapses”, there is to be placed an extremely unfavourable and, because of its consequences, much more dangerous decline in quality. Following the special economic press, Pravda openly confesses that in heavy metallurgy “the situation as regards the indices of quality is impermissible.” “The defective products eat up the steel that is up to quality.” “The technical coefficients in the use of the equipment are taking a sharp turn for the worse.” “The cost of production of commodities is rising sharply.”
‘Two figures will suffice: in 1931 a ton of iron cost 35 rubles; in the first half of the current year the cost come to 60 rubles… Coal, hastily mined and poorly sorted, hampers the operation of coke-producing enterprises. Excessively high contents of moisture and cinders in the coke not only reduce the quantity of produced metal by millions of tons but also lower its quality. Machines of poor metal produce inferior products, result in breakdowns, force inactivity upon the workers, and deteriorate rapidly.
‘Pravda characterises in the following manner the condition of the Stalingrad tractor factory in which the quantity of annual castings fell from 250 to 140 thousand tons. “The equipment, because of the absence of rudimentary and constant technical supervision… has excessively deteriorated.” “Defective products have become as high as 35 percent.” “The entire mechanisms of the plant is wallowing in dirt”…
‘“The cement factory in Podolsk is in dangerous straits,” writes ZI. “In the first half year the production programme was fulfilled approximately 60 percent, in the last months the fulfilment dropped to 40 percent… The basic costs are twice as high as those set by the plan.” The characteristics cited above apply in various degrees to all of present industry.
‘The administrative hue and cry for quantity leads to a frightful lowering of quality; low quality undermines at the next stage the struggle for quantity; the ultimate cost of economically irrational “successes” surpasses as a rule many times the value of these same successes. Every advanced worker is acquainted with this dialectic, not through the books of the Communist academy (alas! more inferior goods), but in practice, through experience in their own mines, factories, railroads, fuel stations, etc.’ 
This deterioration of quality made a mockery of many official Stalinist claims of economic success: ‘If we were to introduce a corrective coefficient for quality into the official data, the indices of the fulfilment of the plan would immediately suffer substantial drops. Even Kuibyshev was forced to admit this more than a year ago. “The figures relating to the tremendous growth of industry become relative,” he announced cautiously at a session of the Supreme Council of National Economy, “when one takes into account the variations in quality.”
‘Rakovsky expressed himself much more lucidly: “if one does not take into account the quality of production then the quantitative indices represent in themselves a statistical fiction”… “One billion rubles have been immobilised, ‘frozen’ by [heavy] industry, in the course of only the first half of 1932, in the form of stocks of materials, unfinished products, and even finished goods in factory warehouses”… Such are the expressions in terms of money of certain disproportions and discordances, according to the official estimate.’ 
Once more deterioration of quality particularly struck at light industry and consumer services – the sectors which were most important from the point of view of the standard of living of the working class: ‘While the growth of industry and the bringing of agriculture into the sphere of state planning vastly complicates the tasks of the leadership, bringing to the front the problem of quality, bureaucratism destroys the creative initiative and the feeling of responsibility without there is not, and cannot be, quantitative progress. The ulcers of bureaucratism are perhaps not so obvious in the big industries, but they are devouring, together with the cooperatives, the light and food producing industries, the collective farms, the small local industries – that is, the branches of economy which stand nearest to the people.’ 
The inevitable result was that the already insufficient production of light industry and consumer services was further degraded: ‘Light industry, which lagged excessively behind the plan last year, showed a rise in the first half of the current year of 16 per cent, but in the third quarter it fell below the figures of last year. The industry providing foodstuffs occupies last place. The supplementary production of products by the plants of heavy industries composes for the eight months only 35 percent of the yearly goal. It is not possible at present to estimate what part of this mass of commodities that are hurriedly improvised really meets the requirements of the market.’ 
The economic role of the bureaucracy
The above analysis was not mode by Trotsky in the 1980s, when the whole world knew the problems of Soviet quality, but in the 1930s, at a time when the success of the Five Year Plan were dazzling the world and Stalin’s praises were being sung by reformists throughout the West. It was an incredible example of economic analysis and foresight.
From it flowed also Trotsky’s formulation of the historical role of the bureaucracy – a formula which is now widely acknowledged. He noted: ‘The progressive role of the Soviet bureaucracy coincides with the period devoted to introducing into the Soviet Union the most important elements of capitalist technique. The rough work of borrowing, initiating, transplanting and grafting, was laid down by the revolution. There was, thus far, no question of any new word in the sphere of technique, science or art.
‘It is possible to build gigantic factories according to a ready-made Western pattern by bureaucratic command – although, to be sure, at triple the normal cost. But the farther you go, the more the economy runs into the problem of quality, which slips out of the hands of a bureaucracy like a shadow. The Soviet products are as though branded with the grey label of indifference. Under a nationalised economy, quality demands a democracy of producers and customers, freedom of criticism and initiative –conditions incompatible with a totalitarian regime of fear, lies and flattery.’ 
Agriculture and collectivisation
Finally, to complete our survey of the Soviet economy, the Stalin course not only struck blows at the working class directly but smashed the class and social alliances which the working class had to make – with disastrous political and economic consequences. On the Marxist formula the working class needed to place itself ‘at the head of the nation’ within the Soviet Union – that is to lead all the oppressed and exploited. The Marxist formula, encapsulated in Lenin’s concept of a ‘worker-peasant alliance’ as the basis of the Soviet state, was that the working class had to expropriate monopoly capital and lead, ally with, the urban and rural petty bourgeoisie. This was the expression of working class hegemony. It was vital not merely politically, to maintain state power, but economically – because the peasantry was both the supplier of the single most important basis of working class living standards, food, and a large internal market of the Soviet economy. On the basis of a correct development of the Soviet economy, that outlined by Trotsky, there was no strategic contradiction between the economic development of the working class and peasantry. In addition to direct industrial goods for agricultural production what the peasants most wanted was what the working class required – a rising supply of consumer goods and state and consumer services. An industrialisation based on improving the living standards of the working class, and therefore slanted towards light industry and services, would have supplied the peasantry and given it a strong incentive to produce food to sell in exchange for these goods. Such a course of industrialisation strengthened the worker-peasant alliance – as Trotsky had advocated in the 1920s.
But the Stalin course cut completely across this. A peasant could not consume a dam or a steel mill. If industry would not supply consumer goods for the peasants, because it was totally oriented to heavy industry, then the peasants had no economic incentive to produce food for the working class. Food production would therefore have to proceed by coercion. The pattern of industrialisation decided upon by Stalin dictated not an alliance with the peasantry but a violent assault on it – with catastrophic consequences for Soviet agriculture and the entire economy.
The course embarked on towards agriculture and the rural petty bourgeoisie (the peasantry), was the Achilles heel of the Soviet economy ever since the 1930s. Trotsky’s position on this also nails decisively the Stalinist/Gorbachevite lie that Trotsky was an exponent of a commandist/administrative line or of ‘workerism’.
To create the alliance of the working class and peasantry the correct formula was that the proletariat should expropriate monopoly capital and ally with the petty bourgeoisie – that is what ‘placing itself at the head of the nation’ meant in social terms. But Stalin turned that into a different formula – that the working class should expropriate not only monopoly capital but also the petty bourgeoisie. Such a formula of the revolution not leading, but against, the petty bourgeoisie was not merely a political but an economic disaster. (Pol Pot’s in Kampuchea was the ultimate expression of such a course.)
The most dramatic expression of this was in Soviet agriculture – the peasantry being by far the largest section of the petty bourgeoisie.
The catastrophe of forced collectivisation
Trotsky foresaw with total clarity that the result of forced collectivisation, the expropriation of the petty bourgeoisie, would destroy the productivity of Soviet agriculture. As he noted in The Revolution Betrayed: ‘An exaggeratedly swift collectivisation took the character of an economic adventure… Twenty-five million isolated peasant egoisms, which yesterday had been the sole motive force of agriculture… the bureaucracy tried to replace at one gesture by the commands of two thousand collective form administrative offices, lacking technical knowledge, and the support of the peasants themselves. The dire consequences of this adventurism soon followed.’ 
Far from being a step forward, forced collectivisation was a catastrophe: ‘Fifteen million peasant farms have been collectivised; and ten million private enterprises have been deliberately placed under such conditions so as to hide the superiority of primitive small scale farming over purely bureaucratic collectivisation. Thus by means of combined methods the bureaucracy succeeded in weakening, if not in killing, all stimulus for work among the peasantry. The harvest of crops, even previously extremely low, began to drop ominously. From season to season the supply of raw materials to industry of food to the cities worsens catastrophically.’ 
The administrative attempt to leap over commodity and small-scale production guaranteed there would be a lack of food, a permanent block to the increase in living standards of the Soviet population, and a permanent drain on the Soviet economy. Trotsky noted clearly that every attempt by the bureaucracy to use administrative methods to try to overcome the situation could only lead further into the mire: ‘The piling up of fixed prices, those set conventionally and the prices in the free market; the transition from planned collection of farm products, that is the semblance of trade between the government and the peasantry, to grain, meat, and milk taxes; the struggle not for survival but against death itself, against mass pillage of collective farm property and against mass concealment of pillage; the out and out military mobilisation of the party for a struggle against kulak sabotage, after the “liquidation” of the kulaks as a class; and simultaneously with all this the under-nourishment in the cities, the return to the card system and rations, and finally the restoration of the passport system… The bureaucracy leans harder and harder upon the administrative lever instead of pulling asunder the framework that restricts the personal interest of the peasant in conformance with the real conditions of agriculture.’  Anyone acquainted with the inability of the bureaucracy to improve the situation in Soviet agriculture, despite the vast resources allocated to it, will recognise perfectly the situation already outlined by Trotsky in the 1930s.
Trotsky therefore also noted that the more rapidly forced collectivisation went after 1928 the worse it became: ‘Collectivisation has already at the present time, i.e. at the beginning of the second year, taken in more than 40 per cent [of the peasantry]. If this tempo is maintained, in the coming year or two collective farms will encompass the entire peasantry. This would appear to be a great success. In fact, it is a great danger…
‘The liquidation of the NEP presented the middle peasant with the following alternatives: either to revert to the natural consumers’ economy, i.e. to become extinct, or to become involved in a civil war for the market, or to try his hand at the new way in the collective economy…
‘The [Stalinist] leadership created a new theory: the building of socialism has entered into its “third” stage: there is no longer any need for a market; in the near future the kulak as a class will be liquidated. In essence this is not a new theory. It is the old theory of socialism in one country, but shifted into “third gear”. Earlier, we had been taught that socialism would be built in backward Russia “at a snail’s pace” with the kulak growing into socialism. Now the snail’s pace has been replaced by a speed almost that of an aircraft’s. The kulak is no longer growing into socialism… but is simply being liquidated by administrative order.’ 
The class error of this policy was to launch an attack not on monopoly capital but on the petty bourgeoisie – a turn from the hegemony of the working class to administrative terror – a totally false class line: ‘In practice the liquidation of the kulaks led to merely administrative methods of the confiscation of the kulak’s property, his house, his lot; and to his deportation. This policy has been carried out in a way that regards the kulak as an entirely foreign body among the peasants, some kind of invader, like a Pecheneg or Polovstian nomad. As a matter of fact, the kulak represents only one of the stages of the development of the middle peasant.’ 
By this erroneous class policy the entire system of motivation in Soviet agriculture was thereby destroyed: ‘The headlong race to break records in collectivisation, without taking into account the economic and cultural potentialities of agriculture, has led in fact to ruinous consequences. It destroyed the incentive of the small commodity producer long before it was able to replace it by other and much higher economic incentives. Administrative pressure, which exhausts itself quickly in industry, is absolutely powerless in the sphere of agriculture.’  The total debacle of Soviet agriculture in the six decades that followed flowed inevitably from this course.
Furthermore, while the attempt to suppress the rural petty bourgeoisie was the most disastrous of all the same principle applied to the urban petty bourgeoisie – shopkeepers, the retail trade, the service sector. The nationalisation of small units of production or service in the USSR had nothing to do with a Marxist analysis. It was positively harmful. Recreating a petty bourgeoisie is, paradoxically, one of the tasks of the working class in regard to reversal of the Stalinist economic course.
Finally it should be noted that the maintenance of peasant production by itself would have dictated the continuation of market relations in large parts of the Soviet economy because: ‘A peasant represents a small productive unit and as such cannot exist without a market.’  This market in turn would have created a distribution network linked to it. The absence of an adequate distribution and service system in the USSR is itself indissolubly linked to forced, as opposed to any elements of voluntary, collectivisation.
China and Vietnam
Where this disastrous policy of forced collectivisation has been abandoned the results have been remarkable. In China and Vietnam de-collectivisation turned the countries’ agriculture from shortage, and even famine, to surplus – Chinese peasants have far exceeded Japanese industry in the rate of growth of productivity last decade. Small rural industry was thereby similarly created. China, whatever one thinks of its politics, is the greatest economic success story of the last decade – far exceeding in its economic achievements South Korea and the other East Asian ‘Newly Industrialising Countries’. China, contrary to myth, has not pursued a policy of ‘market socialism’ in industry but what might be termed the ‘original NEP’. It has reintroduced market-commodity relations into agriculture, and allowed the recreation of a petty bourgeoisie, but kept the industrial sectors of the economy under planning. The result is startling economic success compared to the USSR.
With Soviet agriculture still not having recovered sixty years later, few warnings were more prophetic than Trotsky’s implacable opposition to the policy of forced collectivisation. In agriculture it was a total confirmation of his warning that ‘It is… false… to measure the degree of the realisation of socialism by the specific gravity of state and private economy.’  The decisive issue was not voluntarist statisation but the class alliances the working class could make to most rapidly develop its own living standards – and, in large part through the market this created for the peasantry, to help maintain its place at the head of the nation.
Developing light industry and services, the essential base for improving working class living standards, will help recreate the base for the alliance with the peasantry.
1. Gramsci, ‘To the Workshop delegates of the Fiat Centro and Brevetti Plants’, in Selections from the Political Writings 1910–20, Lawrence and Wishart London 1977 p5
2. Trotsky, ‘To Build Socialism means to Emancipate Women and Protect Mothers’, Women and the Family, Pathfinder Press New York 1975 p45
3. Trotsky, ‘Crisis in the Right–Centre Bloc’, in The Challenge of the Left Opposition (1928–29), Pathfinder Press New York 1981 p328
4. Trotsky, ibid.
5. Trotsky, ‘Problems of the Development of the USSR’, in Writings 1930–31, Pathfinder Press New York 1973 p228
7. As Trotsky wrote: ‘Marxism takes its point of departure from world economy, not as a sum of national parts but as a mighty and independent reality which has been created by the international division of labour’ (Trotsky, Permanent Revolution, p22). It was therefore impossible to approach the fate of one country ‘in any other way but by taking as the starting point the tendencies of world development as a whole in which the individual country, with all its national peculiarities, is included and to which it is subordinated’ (Trotsky, The Third International After Lenin, p42).
8. Trotsky, The Revolution Betrayed, New Park Publications London 1967 p5
9. Trotsky, The History of the Russian Revolution, Sphere Books London 1967 Vol 3 pp349–350
10. Trotsky, ‘Is Parliamentary Democracy Likely’, in Writings 1929, Pathfinder Press New York 1975 p55
11. ibid. Trotsky continuously stressed this point. Writing in 1932 for example he noted: ‘In their appraisal of the possibilities and tasks of the Soviet economy, Bolshevik-Leninists take as their point of departure… the real historical process in its world relations and living contradictions. Only the foundations that have been laid by the October Revolution can guard the country from the fate of India or China’ (Trotsky, ‘Alarm Signal’, in Writings 1932–33, Pathfinder Press New York 1972 p109.
12. Trotsky, ‘What is the “Smychka”?’ in The Challenge of the Left Opposition (1928–29), p359
13. Trotsky, ‘Pravda sound the alarm’, in The Challenge of the Left Opposition (1928–29), p55
14. Trotsky, The Revolution Betrayed, p251
15. ibid, p285
16. Trotsky, In Defence of Marxism, Pathfinder Press New York 1976 p219
17. ‘Imperialist War and World Revolution’, in Documents of the Fourth International, Pathfinder Press New York 1972 p325
18. Trotsky, ‘Is Parliamentary Democracy Likely’, in Writings 1929, p55
19. Stalin, ‘Concerning Questions of Leninism’, in On the Opposition, Foreign Languages Press Beijing 1974 p322
20. Trotsky, The History of the Russian Revolution, Vol 3 p352
21. Trotsky, Permanent Revolution, Pathfinder Press New York 1978 p22
22. Trotsky, ‘The Draft Programme of the Communist International’, in The Third International After Lenin, Pioneer Publishers New York 1957 p23
23. Trotsky, Permanent Revolution, p22
24. Trotsky, The Third International After Lenin, p53
25. Trotsky, The History of the Russian Revolution, Vol 3 p350
26. Trotsky, Permanent Revolution, p28
27. Trotsky, ‘Towards Capitalism or Socialism?’ in The Challenge of the Left Opposition (1923–25), Pathfinder Press New York 1975 p373. Trotsky outlined the economic perspective which flowed from this internationalisation of the productive forces clearly in his speech to the Seventh Plenum of the International Executive Committee of the Communist International in 1927. ‘We have reached the end of the so-called reconstruction period; we have now reached approximately the pre-war level. However, the end of the reconstruction period is simultaneously the beginning of the re-establishment of our material connections with world industry… The industrialisation of our country… means not the lessening, but on the contrary, the growth of our connections with the outside world, i.e., also our (of course mutual) dependence upon the world market, capitalism, its technology and industry, and at the same time the growth of the struggle against the international bourgeoisie’ (Trotsky, ‘Speech to the Seventh Plenum of the ECCI’ in The Challenge of the Left Opposition (1926–27), Pathfinder Press New York 1980 p183.
28. Trotsky, ‘Successes of Socialism and Dangers of Adventurism’, in Writings 1930–31, Pathfinder Press New York 1973 p104
29. Trotsky, ‘Answers to Questions by the New York Times’, in Writings 1932, Pathfinder Press New York 1973 p46
30. Trotsky, In Defence of Marxism, p11
31. Marx and Engels, The Manifesto of the Communist Party, in Marx and Engels Collected Works Vol 6 Progress Publishers Moscow 1976 p489
32. Smith’s opening paragraph precisely outlined this in terms of the development of the division of labour: ‘The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgement with which it is everywhere directed or applied, seems to have been the effects of the division of labour’ (Adam Smith, The Wealth of Nations, Penguin London 1986 p109).
33. The Third International After Lenin, p58
34. Trotsky, Permanent Revolution, p22
35. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, Pathfinder Press New York 1973 p266. Or as Trotsky noted against one Stalinist attack: ‘Kaganovich in a speech on October 8 asserted that the Opposition, Left as well as Right, “proposes to us that we strengthen our dependence upon the capitalist world.” As if the matter concerned some artificial and arbitrary step, and not the automatic logic of economic growth!’ (ibid)
36. Trotsky, ‘The Platform of the Left Opposition’, in The Challenge of the Left Opposition (1926–27), p53
38. Trotsky, ‘The New Course in the Soviet Economy’, in Writings 1930, Pathfinder Press New York 1975 p108
39. Trotsky, ‘Amendments to Rykov’s Resolution’, in The Challenge of the Let Opposition (1926–27), p57–8
40. Trotsky, ‘Towards Capitalism or Socialism’, in The Challenge of the Left Opposition (1926–27), p372–3
41. Trotsky, ‘Notes on Economic Questions’, in The Challenge of the Left Opposition (1923–25), p372–3
42. The Third International After Lenin p40 and p50. It was in its isolation that the first roots of Soviet Bureaucratism were to be found. As Trotsky wrote: ‘The continuing privations of the masses in the USSR, the omnipotence of the privileged caste, which has lifted itself above the nation and its misery, finally, the rampant club–law of the bureaucrats are not consequences of the socialist method of economy but of the isolation and backwardness of the USSR caught in the ring of capitalist encirclement’ (Trotsky, Marxism in our Time, Pathfinder Press New York 1970 p34).
43. Trotsky, ‘Declaration to the Sixth Comintern Congress’, in The Challenge of the Left Opposition (1928–29), p130. The foreign policy aspects of this are dealt with at length elsewhere. See for example Imperialism, Stalinism, and Permanent Revolution, London 1972. What is considered in this article is the economic conclusions which flowed from this reality.
44. Trotsky, The History of the Russian Revolution, Vol 3 p350
45. Trotsky, ‘Declaration to the Sixth Comintern Congress’, in The Challenge of the Left Opposition (1928–29), p138.
47. Trotsky, ‘The New Course in the Soviet Economy’, in Writings 1930, Pathfinder Press New York 1973 p118
48. Trotsky, ‘Successes of Socialism and Dangers of Adventurism’, in Writings 1930–31, Pathfinder Press New York 1973 p92
49. ibid. p102
50. ibid. p96
51. Trotsky, ‘New Zigzags and New Dangers’ in Writings 1930–31, Pathfinder Press New York 1973 p106
52. Trotsky, ‘Successes of Socialism and Dangers of Adventurism’ in Writings 1930–31, Pathfinder Press New York 1973 p106
53. Trotsky, ‘Amendments to Rykov’s Resolution’, in The Challenge of the Left Opposition (1926–27), p49–50.
54. Trotsky, ‘Alarm Signal’, in Writings 1932–33, Pathfinder Press New York 1972 p98
55. Trotsky, ‘The New Course in the Soviet Economy’, in Writings 1930, Pathfinder Press New York 1975 pp106–7
56. Trotsky, ‘Is Stalin Weakening or the Soviets’ in Writings 1932, Pathfinder Press New York 1973 p36 our emphasis
57. Trotsky, ‘The New Course in the Soviet Economy, in Writings 1930, Pathfinder Press New York 1975 pp116–117
58. Trotsky, ‘The July Plenum and the Right Danger’, in The Challenge of the Left Opposition (1928–29), p169
59. Trotsky, ‘Successes of Socialism and Dangers of Adventurism’ in Writings 1930–31, Pathfinder Press New York 1973 p102
60. Trotsky, ‘Alarm Signal’, in Writings 1932–33, Pathfinder Press New York 1972 p96
61. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, Pathfinder Press New York 1973 p274
62. Trotsky, ‘New Zigzags and New Dangers’ in Writings 1930–31, p284
63. Trotsky, ‘Crisis in the Right–Centre Bloc’ in The Challenge of the Left Opposition (1928–29), p330
65. Trotsky, ‘Successes of Socialism and Dangers of Adventurism’ in Writings 1930–31, p91
66. Trotsky, ‘New Zigzags and New Dangers’ in Writings 1930–31, p288
67. Trotsky, ‘Alarm Signal’, in Writings 1932–33, Pathfinder Press New York 1972 p101
68. Trotsky noted: ‘The second year of the five year plan is characterised in all speeches and articles in this manner: “The national economy of the country has entered into the period of socialism”. Socialism exists “in its foundations”. Everybody knows that socialist production, even if only in ‘its foundation”, is production that satisfies at least elementary human needs. However in our country, with its frightful scarcity of goods, heavy industry increased last year by 28.1 per cent and light industry buy only 13.1 per cent, hampering the basic programme. Even if this proportion is asserted to be ideally correct “which is far from the basic truth” it will nevertheless follow that in the interest of a kind of “primitive socialist accumulation” the population of the USSR will be compelled to tighten its belt more and more. But precisely this indicates that socialism on a low level of production is impossible; only the preparatory steps towards socialism can be taken’.
69. Trotsky, ‘The Successes of Socialism and Dangers of Adventurism’ in Writings 1930–31, p96
70. ibid. p98
71. Trotsky, ‘New Zigzags and New Dangers’ in Writings 1930–31, p284
72. Trotsky, ‘Is Discussion Needed’ in The Challenge of the Left Opposition (1926–27), p121
73. Trotsky, ‘New Zigzags and New Dangers’ in Writings 1930–31, p284
74. ibid. p286
75. Trotsky, ‘The Successes of Socialism and Dangers of Adventurism’ in Writings 1930–31, p89
76. ibid. p91
77. Trotsky, ‘Crisis in the Right-Centre Bloc’ in The Challenge of the Left Opposition (1928–29), pp328–9
80. Trotsky, ‘Amendments to Rykov’s Resolution’ in The Challenge of the Left Opposition (1926–27), p134
81. Trotsky, ‘Speech to the Fifteenth Congress’ in The Challenge of the Left Opposition (1926–27), p134
82. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p267–8
83. ‘New Zigzags and New Dangers’ in Writings 1930–31, p283–4
85. Trotsky, ‘Declaration of the Eighty-four’, in The Challenge of the Left Opposition (1926–27), p234
86. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p282
87. Trotsky, ‘Alarm Signal’, in Writings 1932–33, p98
88. Trotsky noted: ‘The workers’ state must become wealthier in order that it may be possible seriously to tackle the public education of children and the releasing of the family from the burden of the kitchen and laundry. Socialisation of family housekeeping and public education of children are unthinkable without a material improvement in our economics as a whole. We need more socialist economic forms. Only under such conditions can we free the family from the functions and cares that now oppress and disintegrate it. Washing must be done by a public laundry, catering by a public restaurant, sewing by a public workshop’ (Trotsky, ‘From the Old Family to the New’, in Problems of Everyday Life, Monad Publishers New York 1973) p42. Similarly: ‘The problem of women’s emancipation… is closely tied to that of the transformation of family life… This can be accomplished only through the organisation of communal methods of feeding and child rearing’ (Trotsky, ‘A Letter to Moscow Women Workers’ Celebration and Rally’, Women and the Family, Pathfinder Press New York 1974 p29).
89. Trotsky, ‘From the Old Family to the New’, in Problems of Everyday Life, Monad Publishers New York 1973 pp37–8.
90. Trotsky, ‘To Build Socialism Means to Emancipate Women and Protect Mothers’, Women and the Family p45
91. ibid, pp47–8
92. Trotsky, The Revolution Betrayed pp144–146. Trotsky concluded: ‘No, the Soviet woman is not yet free. Complete equality before the war has so far given infinitely more to the women of the upper strata, representatives of bureaucratic, technical, pedagogical, and, in general, intellectual work, than to the working woman and yet more the peasant woman. So long as society is incapable of taking upon itself the material concern for the family, the mother can successfully fulfil a social function only on condition that she has in her service a white slave: nurse, servant, cook etc… the situation of the mother of the family, who is an esteemed Communist, has a cook, a telephone for giving orders to the stores, an automobile for errands, etc, has little in common with the situation of the working woman, who is compelled to run to the shops, prepare dinner herself, and carry her children on foot from the kindergarten’ (Trotsky, The Revolution Betrayed, pp155–6).
93. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p265
94. ibid, pp274–5
95. ibid, pp276–7
96. Trotsky, ‘The New Course in the Soviet Economy’, in Writings 1930, pp116–7. What applied to the Soviets also applied to political parties within them. Trotsky noted that Stalin’s suppression of inner party democracy and public debate was completely at variance with the earlier practice of the Bolsheviks. ‘Even in the cruellest hours of the civil war we argued in the party organisations, and in the press as well, over such issues as the recruitment of specialists, partisan forces versus a regular army, discipline etc; while now there is not a trace of such an open exchange of opinions on questions that are really troubling the party’ (Trotsky, ‘First Letter to the CC’, in The Challenge of the Left Opposition (1923–25), p57).
97. Trotsky, ‘Declaration of the Thirteen’ in The Challenge of the Left Opposition (1926–27), p84
98. Trotsky, ‘New Zigzags and New Dangers’, in Writings 1930–31, pp288–9
100. Trotsky, ‘Problems of the Development of the USSR’, in Writings 1930–31, pp228–9
101. Trotsky, ‘Declaration of the Eighty-four’, in The Challenge of the Left Opposition (1926–27), p232
102. Trotsky, The Revolution Betrayed, pp275–6
103. Trotsky, ‘Declaration to the Sixth Comintern Congress’, in The Challenge of the Left Opposition (1928–29), p138
104. Marx, ‘Contribution to the Critique of Hegel’s Philosophy of Law’, Collected Works Vol 3 p29
105. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p274
106. Marx and Engels, The Manifesto of the Communist Party, in Marx and Engels Collected Works Vol 6 Progress Publishers Moscow 1976 p504
107. Marx, Critique of the Gotha Programme, in Marx and Engels Collected Works Vol 24 p85–7
108. Trotsky, The Revolution Betrayed, p24
109. ibid. p75. In order to have a workable system of prices strict attention had also to be paid to the currency. As Trotsky noted: ‘A stable currency system must be restored as the only reliable regulator of planned economy at the present stage of its development. Without it the locomotive of planned economy will inevitably fail to make the grade’ (Trotsky, ‘Alarm Signal!’, in Writings 1932–33, p112).
110. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p276.
111. Trotsky, ‘First Letter to the CC’, in The Challenge of the Left Opposition (1923–25), p57
112. Trotsky, ‘New Zigzags and New Dangers’ in Writings 1930–31, pp281–2
113. ibid. p282
114. Trotsky, ‘Who will Prevail?’ in Writings 1930, pp328–9
115. Trotsky, ‘The Five Year Plan in Four Years?’ in Writings 1930–31, p183
116. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p262
118. Trotsky, The Revolution Betrayed, pp275–6
119. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p262
120. Trotsky, The Revolution Betrayed, pp275–6
121. ibid. p39
122. Trotsky, ‘Alarm Signal!’ in Writings 1932–33, p109
123. ibid. p98
124. Trotsky, ‘The New Course in the Soviet Economy’, in Writings 1930, pp270–271
126. Trotsky, ‘The Soviet Economy in Danger’, in Writings 1932, p270–1
127. Trotsky, ‘The New Course in the Soviet Economy’, in Writings 1930, p110
128. Trotsky, ‘Problems of the Development of the USSR’, in Writings 1930–31, p218