First published: Autumn 1991
This article was first published in Socialist Action in Autumn 1991. Its prognosis – that the reintroduction of capitalism would devastate those economies, reduce hundreds of millions of people to poverty and result in steps towards capitalist dictatorship – has been amply confirmed by events. The text is reproduced in full with only stylistic corrections.
Economic catastrophe is sweeping Eastern Europe and the former USSR with the reintroduction of capitalism. It is bringing the rise of racism, reactionary nationalism, and moves to capitalist dictatorship. Stalinism in Eastern Europe, by repelling the working classes from socialism, brought these countries to the brink of disaster. However, the subsequent assault on the working class and the violent moves of these societies to the right, which have accompanied the re-introduction of capitalism, completely discredited those in the West who believed that the events after 1989 in Eastern Europe – the introduction of capitalist governments – represented a way forward. Instead they confront the working class with the threat of the greatest defeats in its history and the unfolding of a period of unparalleled reaction in Europe – and internationally. In fighting the consequences of this for Eastern Europe and the former USSR the left, above all, needs an economic programme that both opposes the reintroduction of capitalism and is a planned alternative to the course launched by Stalinism. The most important of these historically was Trotsky’s economic policy for the Soviet Union – put forward directly against Stalin. This supplement outlines the economic positions of the Left Opposition in the USSR.
‘The composers of the plan proclaimed that it was their task to “lift up the country to a new and hitherto unseen high level of material and cultural development”… In actuality, the shortage in commodities has become unbearably acute, the supply of bread has sharply decreased, meat and dairy products have become rarities… In the midst of newly constructed factories, plants, mines, electric stations, collective and Soviet farms, the workers and peasants begin to feel more and more as if they are in the midst of gigantic phantoms indifferent to the fate of humans.’ Trotsky – Alarm Signal!
The central issue which underlies politics in the former USSR is the economy. Economic disaster looms for the peoples of the USSR as a result of the attempt to restore capitalism. Living standards for the majority of the population have plummeted, the death rate has risen sharply, previously eradicated diseases have reappeared and domestic manufacturing industry – particularly the consumer goods sector – has been decimated. While the peoples of the USSR were told capitalism would bring them a ‘consumer society’, the production of consumer goods and agriculture has been comprehensively thrown backwards.
The inadequacy of mechanisms without content
Confronted with such a scale of issues it is tragic that most left wing writing on Soviet economic policy in the West is completely inadequate – either infantile or not really about economics at all. Its typical feature is to propose mechanisms – ‘democratic planning’, ‘self–management’, ‘workers’ control’ – without content, i.e. it does not propose what should be produced, how it should be allocated, whether the proposed system of production is internally coherent, how international trade should be organised and what its long term economic consequences will be.
The most substantial economic problems are not solved simply by saying that a plan, if there is to be one, should be drawn up democratically, or that there should be workers’ control or self–management. Naturally a plan drawn up undemocratically will be a bad plan – corresponding to the interests of those who determined it and not society. But merely stating that a plan be decided democratically, rather than dictatorially or bureaucratically, does not determine whether it is a good or a bad plan.
‘Self management plus the market?’
The economic views promulgated by those who like to term themselves the ‘libertarian left’, whose key theme is generally ‘self-management’, are equally inadequate.
The economic catastrophe that has affected Eastern Europe and the former USSR, means that the economic decisions will not primarily be about superior democratic means of organising production in a functioning economy but the immediately desperate ones of mass unemployment, poverty, and economic dislocation. Second, an economy founded on the market, no matter whether individual units of production take their decisions by capitalist fiat or by self-management, will arrive at essentially the same allocation of resources as market capitalism – that is, today, one involving increasing inequality, poverty, North-South conflict, international exploitation, and de-industrialisation of Eastern Europe.
The fact that decisions are taken ‘democratically’ by self–management, instead of by private owners, does not make any significant difference to the allocation of resources in market economies which compete on the basis of profit. Furthermore, in practice ‘democratic’ forms of taking market decisions will not survive because the allocation of resources decided on the basis of the market will be so demoralising that employees will progressively cease participating. Only if economic decisions can arrive at a different, that is non-market, determination of the allocation of resources will any significant number of people consider it worth bothering to participate in decision-making.
The only basis which will sustain a democratic economy therefore is one which is not market controlled – not in the sense that it does not contain markets – for reasons discussed below there should be no attempt to eliminate markets by administrative means on the Stalinist model – but in the sense that markets are used to regulate priorities which are set by an economic plan. The central question at stake is whether the market is the framework of planning (for large firms plan constantly) or whether the plan is the framework of the market.
Serious left economic debate
The classic exception to ‘contentless’ left wing economic debate concerning a major economy is that regarding the USSR in the 1920s and 1930s. The differences between Bukharin, Preobrazhensky, Stalin, Trotsky and others did not involve abstract exercises. They were by members of a party that took the practical economic decisions for the state.
Trotsky, whose views are considered here, was not simply head of the army during the post-1917 war of intervention but was a member of the Supreme Council of the National Economy and chair of its commissions on foreign concessions, electrification, and industrial technology – as well as a member of the Politburo and Central Committee of the ruling party. The economic policies he advocated necessarily involved not just form but practical priorities.
Trotsky’s analysis was so outstanding, so prophetic in its outline of the choices facing the USSR, and what would be the effect of the actual decisions taken, that 60 years later it reads like a description of the contemporary Soviet economy. Furthermore Trotsky’s views were the exact reverse of the slanders made by Stalinism. Far from seeking greater ‘commandism’ he placed greater stress on economic regulation against the administrative methods of Stalinism.
The aim of the present article is to outline the theoretical framework and principal practical conclusions of Trotsky’s analysis of the Soviet economy – and his alternative to the Stalinist course.
The foundations of a left economic policy
The starting point of Trotsky’s economic analysis – which marked it out from both capitalist and Stalinist positions – was the consistent application of Marx’s starting point that the greatest productive force was the ‘collective labourer’. That is the working class was simultaneously the bearer of a new mode of production and the greatest productive force within it. It was a concept also brilliantly formulated by Gramsci: ‘the new system will lead to an improvement in production – but that is nothing but the confirmation of one of the theses of socialism; the more the productive human forces freely organise themselves by emancipating themselves from the slavery to which capitalism would have liked to condemn them forever, the better does their mode of utilisation become – a man will always work better than a slave.’ 
From a distorted point of view an understanding of these realities is arrived at by modern bourgeois economic thought itself. The ability to rebuild capital rapidly if a trained labour force exists (as in post-World War II Germany), the emphasis on knowledge, information and decentralisation are all central in modern bourgeois theories of the economy. They are exemplified in the (personal) computer revolution and the emphasis on training and education central to most modern bourgeois economies. All emphasise in their own way that the collective worker, the proletariat, not ‘dead labour’, capital, is the greatest productive force.
In such a framework the economic development of the working class must coincide with the development of the new relations of production of which it is the bearer. The problem is how such a collective potential is to break out of the shell which constrains it under capitalism – and Stalinism. The core of Trotsky’s economic position therefore, was to advance the interest of the working class, the collective labourer, against attacks from both the market and the commandist programme of Stalinist bureaucraticism. The strengthening and improvement of the position of the working class was the core of the development of the productive forces. Such an economic concept coincided simultaneously with the objective of consolidating the political support of the working class for the Soviet state.
As Trotsky put it: ‘the most basic “capital” is the people, i.e. its strength, its health, its cultural level. This capital requires renewal even more than the equipment of the factories or the peasant implements.’  And: ‘The proletariat is the basic productive force in the construction of socialism. Of all the investments, that which is put into the proletariat is the most “profitable”.’ 
As Trotsky noted of both pro-capitalist currents, the Right Opposition (Bukharin) of the 1920s, and the Stalinists: ‘not a word is said [by either] about the material, cultural and political situation of the proletariat in its daily and political life. It appears on this field there are no differences between the Stalinist centre and the right. But a correct appreciation of the differences between the factions can be obtained only from the point of view of the interests and the needs of the proletariat as a class and of every individual worker.’ 
Instead the approach must be that: ‘The proletariat is not only the fundamental productive force, but also the class upon which the Soviet system and socialist construction rest… [They] can have no powers of resistance if its distorted regime leads to the political indifference of the proletariat. The high rate of industrialisation cannot last long if it depends on excessive strain which leads to the physical exhaustion of the workers. A constant shortage of the most necessary means of existence and a permanent state of alarm under the knout of the administration endanger the whole socialist construction.’ 
Economic policy, in short, should not be aimed at attacking the working class, as in both market and Stalinist conceptions, but at developing its position. Trotsky’s genius lay in working through the implications of such a classic Marxist position into the practical details of economic organisation.
Key issues in the left’s policy
Five immediate conclusions flowed from Trotsky’s application of this Marxist thesis to the concrete circumstances of the USSR.
First, that the restoration of capitalism in the USSR would be a catastrophe hurling its economy backwards. Therefore on a capitalist basis no democratic state could be created in the USSR.
Second, that the maintenance of a workers’ state in the USSR was necessary from the point of view of the international struggle for socialism, from the point of view of the development of the productive forces, and from the interests of the Soviet working class itself. The Soviet working class therefore could place itself at the head of all the oppressed in the USSR – and must do so if catastrophe was to be avoided for the Soviet peoples.
Third, that the development of the productive forces to a stage qualitatively superior to capitalism, that is socialism, could only take place on an international economic framework. The theory of socialism in one country was a reactionary utopia.
Fourth, that while political power was taken by the proletariat as a single act, a revolution, the economic reconstruction of society involved an entire epoch of historical development. During that period the guides of commodity economy – prices, supply and demand etc – could not be suppressed by administrative fiat but only progressively outgrown. The working class therefore must lead, not suppress, its potential class allies in the petty-bourgeoisie and peasantry.
Fifth, that the overriding goal of economic policy must be the improvement of the conditions of the working class and the gaining of its support for socialism. The framework, and chief measure, of economic success was therefore not abstract ‘maximum’ economic growth but the degree of sustainable improvement of the living standards of the working class. Or as Trotsky put it: ‘The tempo of industrialisation must guarantee, not the building of national socialism, but… the improvement of the conditions of the working masses of the city and countryside.’  We will outline these points in order, starting with the most fundamental theoretical and international foundations of Trotsky’s policy and proceeding to the most detailed questions.
1. The foundations of Trotsky’s economic policy
Defence of the USSR
The starting point of Trotsky’s analysis of the Soviet economy flowed from his analysis of the October Revolution itself. The core of Trotsky’s position was that neither the Russian Revolution, nor the development of any country, could be understood in isolation but only from the point of view of its position in the world economy. The common starting point of Stalin, Bukharin, and the Mensheviks was to rip the Russian economy out of its relation to the world economy and to consider it via the concept of an isolated economy – something which could not exist in reality. The correct starting point must not be a concept of a non-existent isolated capitalism but the reality of an international economy.  This point of departure of Trotsky has, of course, acquired a double significance today when the internationalisation of the world economy has risen to a far higher level even than when he wrote.
Why the Russian Revolution occurred
The Russian Revolution occurred not because an ‘isolated’ Russia was ripe for socialism but because an isolated Russia did not, and could not, exist. As Trotsky noted in The Revolution Betrayed: ‘Russia took the road of proletarian revolution, not because her economy was the first to become ripe for socialist change, but because she could not develop further on a capitalist basis. Socialisation of the means of production had become a necessary condition for bringing the country out of barbarism.’  Without the maintenance of the planned economy, Russia, and the USSR, would be thrown backwards between the pressure of the imperialisms of the United States, Germany and Japan.
‘More generally the formula: “No social formation disappears before all the productive forces have developed for which it has the room” – takes its departure… not from the country taken separately, but from the sequence of universal social structures (slavery, medievalism, capitalism). The Mensheviks, however, taking this statement from the point of view of the single state, drew the conclusion that Russian capitalism has still a long road to travel before it will reach European or American levels.
‘But productive forces do not develop in a vacuum! You cannot talk of the possibilities of a national capitalism and ignore… its dependence upon world conditions… The structure of industry, and also the character of the class struggle in Russia were determined to a decisive degree by international conditions… “A correct appraisal of our revolution,” said Lenin, “is possible only from an international point of view.”… World development forced Russia out of her backwardness… Outside the web of this development, her further destiny cannot be understood.’ 
If the October Revolution had not taken place, Russia would have been dismembered, during or after World War I, between a German sphere of influence in the West and a Japanese sphere of influence in the East. That would remain its fate today.
Planned economy and national independence
Trotsky understood, therefore, that the same international forces which had produced the Russian revolution ensured that the restoration of capitalism in the USSR would destroy its economy and submit the country to de facto domination by foreign powers. It was, indeed, because ‘socialisation of the means of production had become a necessary condition for bringing the country out of barbarism’ that so many who were not socialists in Russia had rallied to the October Revolution and the Soviet state after 1917. As Trotsky said: ‘The Soviet system with its nationalised industry and monopoly of foreign trade, in spite of all its contradictions and difficulties, is a protective system for the economic and cultural independence of the country. This was understood even by many democrats who were attracted to the Soviet state not by socialism but by a patriotism which had absorbed some of the lessons of history. To this category belonged many of the forces of the native technical intelligentsia, as well as the new school of writers.’ 
The overthrow of the planned economy, therefore, would lead to Russia being reduced to the status of a semi-colonial state – a Mexico or Brazil. This flowed inevitably from the non-possibility of an isolated national capitalism and from Russia’s position in the international imperialist chain. As Trotsky noted: ‘What is involved [in the restoration of capitalism]… is not the introduction of some disembodied democracy but returning Russia to the capitalist road. But what would Russian capitalism look like in its second edition?… A capitalist Russia could not occupy even the third-rate position to which Czarist Russia was predestined by the course of the World War. Russian capitalism today would be a dependent, semi-colonial capitalism without any prospects. Russia Number 2 would occupy a position somewhere between Russia Number 1 and India. 
The error of those who failed to understand this reality of capitalist restoration in Russia was that they looked at the Soviet state in isolation – without considering its real position in the international capitalist economy: ‘a return to capitalism would now mean… that Russia would again become part of the chain of imperialism, having the clearly understood status of a subordinate link – that is, on a semi-colonial status … the development of the productive forces in our country would be retarded in the extreme. In other words, Russia would not take its place alongside the United States, France and Italy but would fall to the some category as India and China… The reactionary character of Menshevism and the Otto Bauer school is that they think of Russia in terms of “capitalism in one country” rather than examine the fate of a capitalist Russia in the light of international processes.’ 
The standard of living of the Russian workers would therefore fall far lower under capitalism than under the planned economy: ‘the bourgeoisie and the Social Democracy scare the workers… [by] citing the comparative living standards of the workers without regard to the development of the productive forces. It is in response to this basic argument of the Social Democratic scoundrels against the USSR… that we assert: the workers of a bourgeois Russia, with the same level, would never have had a living standard as high as they have now, despite all the mistakes, miscalculations and departures from the correct line.’ 
The defence of the USSR as a workers’ state, that is from the angle of the international interests of the proletariat, was therefore also directly in the interests of Soviet peoples themselves. As Trotsky put it: ‘The fall of the present bureaucratic dictatorship, if it were not replaced by a new socialist power, would thus mean a return to capitalist relations with a catastrophic decline of industry and culture.’  ‘Without a planned economy the Soviet Union would be thrown back for decades.’ 
Opposition to the restoration of capitalism
From this conclusion directly flowed Trotsky’s unshakeable position, maintained until his death, that no matter what the crimes of Stalin, the Soviet Union must be defended and any restoration of capitalism must be opposed. This was not a matter of covering up for Stalin but of the most direct interests of the Soviet workers: ‘It is one thing to solidarise with Stalin, defend his policy, assume responsibility for it – as does the triply infamous Comintern – it is another to explain to the world working class that no matter what crimes Stalin may be guilty of we cannot permit world imperialism to crush the Soviet Union, re-establish capitalism and convert the land of the October Revolution into a colony. This explanation… furnishes the basis for our defence of the USSR.’ 
On a wider field the overthrow of the USSR would lead eventually to a new war to determine a fresh imperialist division of the world: ‘the crimes of the Kremlin oligarchy do not strike off the agenda the question of the existence of the USSR. Its defeat… would signify not merely the overthrow of the totalitarian bureaucracy but the liquidation of the new forms of property, the collapse of the first experiment in planned economy, and the transformation of the entire country into a colony; that is, the handing over to imperialism of colossal natural resources which would give it a respite until the third World War.’ 
The impossibility of bourgeois democracy in the USSR
On the political field, given that capitalist restoration would involve a vast regression of the productive forces, living standards would be thrown back, and Russia would be transformed into a semi-colony, there was no basis for bourgeois democracy in Russia. A restored capitalism in Russia would inevitably be a dictatorship. Trotsky noted: ‘what is absolutely excluded is a transition from the Soviets to parliamentary democracy… The very same causes that prevented our weak and historically belated [bourgeois] democracy from carrying out its elementary historical task will also prevent it in the future from placing itself at the head of the country. There is a handful of impotent doctrinaires who would like to have democracy without capitalism. But the serious social forces that are hostile to the Soviet regime want capitalism without democracy.’ 
The restoration of capitalism in Russia would therefore mean a new era of reactionary capitalist dictatorship in the USSR, with regression of its productive forces, and the throwing back of the entire position of the working class internationally and domestically. The very forces that had created the Russian Revolution determined its defence, both for the interests of the Soviet and international working class.
Socialism in one country
The international nature of capitalism, and Russia’s place within it, in turn determined the error represented by the theory of ‘socialism in one country’. This concept was introduced by Stalin and, in various guises, provided the basis for Soviet economic development from Stalin until Gorbachev.
The concept introduced by Stalin was the possibility of creating a superior development of the productive forces to capitalism – for that is what a developed socialist society means – on the basis of one country. In Stalin’s own formula: ‘What is meant by the possibility of socialism in one country?… It means… the possibility of the proletariat seizing power and using that power to build a complete socialist society in our country, with the sympathy and support of the proletarians of other countries, but without the preliminary victory of the proletarian revolution in other countries.’  This perspective of the ability to create a complete socialist society within a single country found its most ludicrous formulation in Khrushchev who proclaimed that even Communism (and by 1980!) could be constructed in the USSR!
Such a ‘theory’ found the semblance of rationality in projecting the growth rate of the Soviet economy during the first Five Year Plans forward into the future without any consideration of the bases on which economic development could take place, or the constraints that would become more pressing as the Soviet economy developed. Trotsky wrote the decisive rebuttal of such positions: ‘the mistrustful and short sighted “practicals”, who formerly thought that the proletariat of backward Russia could not conquer power… have taken subsequently exactly the opposition position. The successes attained against their own expectations, they have simply multiplied into a whole series of Five Year Plans, substituting the multiplication table for a historic perspective. That is the theory of socialism in one country.
‘In reality the growth of the present Soviet economy remains an antagonistic process. In strengthening the workers’ state, the economic successes are by no means leading automatically to the creation of a harmonious society. On the contrary, they are preparing a sharpening of the contradictions of an isolated socialist structure on a higher level.
‘The world-wide division of labour stands over the dictatorship of the proletariat in a separate country, and imperatively dictates its further road. The October Revolution did not exclude Russia from the development of the rest of humanity, but on contrary bound her more closely to it.’ 
The programme of socialism in one country was characterised by Trotsky, in precise terms, as a ‘reactionary utopia.’  His implacable opposition to it – he stated in his critique of the draft programme of the Communist International that ‘the manner in which the question of socialism in one country is solved determines the entire draft as a Marxian or a revisionist document’ – was not motivated by internationalist romanticism or adventurism but by the most sober economic analysis. 
The international division of labour
The error of the programme of socialism in one country was its failure to grasp that, although the dictatorship of the proletariat may be created in a single country, it is not possible, on the basis of the resources of one country alone, to create a development of the productive forces superior to capitalism.
It failed to understand that even: ‘the productive forces of capitalist society have long ago outgrown the national boundaries.’ And therefore: ‘to aim at building a nationally isolated socialist society means, in spite of all passing successes, to pull the productive forces backward even as compared with capitalism.’ 
Socialism must necessarily be constructed on a far higher development of the productive forces than capitalism. From the fact that, ‘the productive forces are incompatible with national boundaries’ followed: ‘the economic impossibility of a self-sufficient socialist society… Socialist society… can be built only on the most advanced productive forces… how then can socialism drive the productive forces back into the boundaries of a national state which they have violently sought to break through under capitalism?’ 
An attempt to create an isolated socialist society in one country would simply mean pulling back the productive forces: ‘The productive forces of our time have outgrown… the boundaries of national states… The proletarian revolution is directed both against private property in the means of production and against the national splitting up of a world economy… The creation of a national socialist society, if such a goal were in a general way attainable, would mean an extreme reduction of the economic powers of men. But for that very reason it is unattainable.’ 
Internationalisation and the advance of the Soviet economy
Trotsky noted that, given that the higher the development of the productive forces the greater their internationalisation, the advance of the Soviet economy would not lead to a lessening of its need for internationalisation but to far greater pressure in that direction: ‘The international division of labour and the supra-national character of modern productive forces not only retain but will increase twofold and tenfold their significance for the Soviet Union in proportion to the degree of Soviet economic assent.’  In short: ‘The universal division of labour is not a circumstance that we can afford to ignore. We can only accelerate our own development in all fields by expediently utilising the means arising from it.’ 
As he wrote in 1930: ‘The greater the success of the development of the Soviet economy in the future, the more extensive foreign economic relations will have to be. The contrary theorem is even more important: it is only through a growing extension of exports and imports that the economy will be able to overcome in time the partial crises, to diminish the partial disproportions, and to balance the dynamic equilibrium of the various sectors in order to assure an accelerated rate of development.’ 
Indeed at the most fundamental level, just as ‘medieval particularism hindered the development of capitalism in its youth, so now at the peak of its development capitalism is strangling in the limits set by the national states. Socialism cannot confine productive forces in the procrustean bed of national states. The socialist economy will develop on the basis of an international division of labour, the mighty foundations of which have been laid down by capitalism.’  ‘The crisis of the capitalist system is produced not only by the reactionary role of private property but also by the no less reactionary role of the national state.’  This was not a flight of revolutionary rhetoric but a strictly objective assessment of the economic situation.
A classic Marxist analysis
In making the analysis that the greater the development of the productive forces the greater their internationalisation, Trotsky was not presenting a new theory. He was simply reasserting, in contemporary terms, the analysis of Marx, who had already noted in the Communist Manifesto that: ‘The need for a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, establish connexions everywhere. The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of the Reactionists, it has drawn from under the feet of industry the national ground on which it stood.’ 
Strictly speaking, the theory of ‘socialism in one country’, of Stalin and his successors, did not even reach the level of bourgeois political economy. The founding work of classic bourgeois economy, Adam Smith’s The Wealth of Nations, had been designed to show that countries should not seek to be self-sufficient but should base themselves on an international economy.  Such a division of labour was necessarily international.
From the internationalisation of the productive forces, the international division of labour, it was therefore impossible to construct ‘socialism in one country’ even in an advanced country – let alone the USSR. As Trotsky noted: ‘To be sure, all other conditions being equal, the more highly developed productive forces [of an advanced capitalist country] are of enormous advantage for the purposes of socialist construction… But the building of socialism on a national basis would imply for these countries a general decline, a wholesale cutting down of productive forces, that is to say something directly opposed to the tasks of Socialism.’  ‘To attempt… to realise a shut off proportionality of all the branches of the economy within a national framework means to pursue a reactionary utopia.’ 
Therefore, instead of an attempt to construct socialism in one country it was instead necessary to attempt to insert the socialised economy of the USSR as far as possible into the world economy – against the inevitable resistance the imperialists would put up to this. As Trotsky noted: ‘The problem of the disproportionality of the elements of production and the branches of the economy constitutes the very heart of socialist economy… Major and minor disproportions make it necessary to turn to the international market. Imported goods to the value of one chervonet [a gold monetary unit] can bring domestic production out of its moribund state to the value of hundreds and thousands of chervontsi.
‘The general growth of the economy, on the one hand, and the sprouting up of new demands and new disproportions, on the other, invariably increase the need to link up with the world economy. The programme of “independence,” that is, of the self-sufficient character of the Soviet economy, discloses more and more its reactionary, and utopian character. Autarchy is the ideal of Hitler, not of Marx and Lenin.’ 
The Platform of the Left Opposition
The reality facing Russia and the Soviet states was therefore clear. The restoration of capitalism would hurl back their economies. At the same time the attempt to construct a self-enclosed ‘socialist’ economy was impossible and would throw back the productive forces. The only way forward for the USSR was to fight for its greatest possible integration into the world economy on the basis of a planned and socialised economy. This dictated on the international field the some choice as on the domestic one – that is to advance the positions of the working class against both capitalist restoration or Stalinism, which, by a different method, was also an economic blind alley. Trotsky outlined this choice clearly in The Platform of the Left Opposition – the most widely circulated document of the Left Opposition:
‘In the long struggle between two irreconcilably hostile social systems – capitalism and socialism – the outcome will be decided in the last analysis by the relative productivity of labour under each system… It was this fundamental fact that Lenin had in mind when in one of his lost speeches he warned the party of the “test” that would be imposed “by the Russian and international market, to which we are subordinated, with which we are connected, and from which we cannot isolate ourselves.”
‘For that reason, Bukharin’s notion that we proceed towards socialism at any pace, even a “snail’s pace”, is a banal and vapid petty-bourgeois fantasy. We cannot escape from capitalist encirclement by retreating into a nationally exclusive economy. Just because of its exclusiveness, such an economy would be compelled to advance at an extremely slow pace, and in consequence would encounter not weaker, but stronger pressure, not only from the capitalist armies and navies (“intervention”), but above all from cheap capitalist commodities.
‘The monopoly of foreign trade is a vitally necessary instrument for socialist construction, under the circumstances of a higher technological level in the capitalist countries. But the socialist economy now under construction can be defended by this monopoly only if it continually comes closer to the prevailing levels of technology, production costs, quality and price in the world economy.
‘The aim of economic management ought to be not a closed-off, self-sufficient economy, for which we would pay the price of an inevitably lower level and rate of advance, but just the opposite – an all-sided increase of our relative weight in the world economy…’ 
Instead of ‘socialism’ in one country, Trotsky stated: ‘The orientation towards the isolated development of socialism and a rate of development independent of the world economy distorts the entire perspective, throws our planning efforts off the track, and fails to provide any guideline for correctly managing our relations with the world economy. As a result we have no way of deciding what to manufacture ourselves and what to bring in from the outside.
‘Firm rejection of the theory of an isolated socialist economy would mean, even in the next few years, an incomparably more rational use of our resources, a swifter industrialisation, and increasingly well-planned and powerful growth of our own machine industry. It would mean a swifter increase in the number of employed workers and a real lowering of prices – in a word a genuine strengthening of the Soviet Union despite capitalist encirclement.’ 
Instead of orienting towards self enclosed, autarchic, development the USSR should orient to the greatest possible extent to the international economy: ‘The Soviet economy depends upon the world economy. The dependence is expressed through exports and imports. Foreign trade is the biggest bottleneck in the entire Soviet economic system.’ 
The military threat to the USSR
In particular Trotsky foresaw that the more the productive forces advanced, and become internationalised, the more the programme of socialism in one country would become disastrous even from a military point of view – a fact anyone considering the 1980s arms race against the USSR should well understand. He noted in 1926: ‘The advance towards socialism can only be assured if the distance separating our industry from advanced capitalist industry – in volume of production, cost-price, and quality – diminishes in a palpable and evident way, rather than increases. Only on this condition can our armed forces be given the technical base capable of protecting the socialist development of the country.’ 
Only economic development, not autarchy, could secure the military defence of the USSR. Stalin’s attempt to create autarchy, instead of orienting to the world economy, in the long run undermined even the military defence of the USSR by creating economic backwardness. As against those who argued for socialism in one country on the basis of defence needs Trotsky noted: ‘The argument as to the dangers of war or blockade after we have “grown into” the world market might perhaps seem somewhat farfetched and abstract. For, in strengthening us economically, the international exchange in all its forms also strengthens us for the eventuality of a blockade or a war.
‘There is no doubt that our enemies may still desire to put us to this test. But, on the one hand, the more varied our international economic relations become, the more difficult our potential enemies will find it to disrupt these relations. And, on the other hand, if this thing should nevertheless come to pass, we shall give a far better account of ourselves than would be possible in the case of an isolated and therefore retarded development.
‘We may learn a little in this connection from the historical experience of bourgeois countries. Germany had developed a tremendous industry by the end of the nineteenth and the beginning of the twentieth century, and became an extremely active force in the world economy by reason of this industry. Its foreign trade and its relations with foreign… markets developed to huge proportions within a short period. The war put an abrupt end to this situation. By reason of its geographic position, Germany was forced into an almost complete economic isolation from the first day of the war. And yet the entire world was then made to understand the extraordinary vitality and endurance of this highly industrialised country. The preceding struggle for sales markets had developed an unusual elasticity in Germany’s productive apparatus, which it then proceeded – during the war – to utilise, in the now constricted field, to the last penny.’ 
The Five Year Plans
The dead end, the ‘reactionary utopia’, represented by the programme of socialism in one country meant that Trotsky understood that whatever short-term successes were produced by the system of Five Year Plans introduced under Stalin they could not solve the strategic problems of the Soviet economy.
Planning, by itself, could not solve the problems of the Soviet economy. This could only be achieved by planning carried out within a framework that oriented to the international extension of socialism and not the attempt to construct socialism in a single country. This Stalin rejected. This strategic framework determined everything.
Despite the economic growth produced by the first Five Year Plan, Trotsky, therefore, rejected any political adaptation to Stalin – because the programme of socialism in one country would inevitably lead the economy into a blind alley both internationally and domestically. Trotsky outlined this fundamentally criticising Preobrazhensky, who had formulated the laws of Soviet economic planning as being ‘the planning principle versus the market principle’, and who therefore capitulated to Stalin with the launch of the first Five Year Plan: ‘The analysis of our economy from the point of view of the interaction (both conflicting and harmonising) between the law of value and the law of socialist accumulation is in principle an extremely fruitful approach – more accurately, the only correct one.
‘Such analysis must begin within the framework of the closed-in Soviet economy. But there is a growing danger that this methodological approach will be turned into a finished economic perspective envisaging the “development of socialism in a single country”. There is reason to expect, and fear, that the supporters of this philosophy… will try to adapt Preobrazhensky’s analysis by turning a methodological approach into a generalisation for a quasi-autonomous process.
‘It is essential, at all costs, to head off this kind of plagiarism and falsification. The interaction between the law of value and the law of socialist accumulation must be placed in the context of the world economy. Then it will be clear that the law of value that operates within the limited framework of the NEP is complemented by the growing external pressure from the law of value that dominates the world market and is becoming ever more powerful…
‘The monopoly of foreign trade is a powerful factor in the service of socialist accumulation – powerful but not all-powerful. The monopoly of foreign trade can only moderate and regulate the external pressure of the law of value to the extent that the value of Soviet products, from year to year, comes closer to the value of the products on the world market… But in the context of the world competition between economic systems, the requirement above remains in full force – that is, the rate of Soviet industrialisation must be such as to assure that Soviet products approximate those on the world rnarket in a way perceptible to our workers and peasants.’ 
The conclusion which Trotsky drew was that the international policy of the USSR, the necessity to break the international constraint on the Soviet economy and to extend the new non-capitalist relations of production, was the most important of all issues: ‘the way out of those contradictions which befall the dictatorship of the proletariat in a backward country will be found in the arena of world revolution… world socialist economy will not at all be a sum total of national economies. It can take shape in its fundamental aspects only on the soil of the world division of labour which has been created by the entire preceding development of capitalism.’ 
The most decisive of all issues for the USSR was therefore its foreign policy and the necessity to break its international isolation by the expansion of socialism: ‘A correct domestic policy in the USSR is inconceivable without a correct policy for the Comintern. Therefore, for us, the question of the Comintern’s line, that is the strategic line of the international revolution, stands above all other questions.’  This was because: ‘Internationalism is not an abstract principle but the expression of an economic fact. Just as liberalism was national, so socialism is international. Starting from the worldwide division of labour, the task of socialism is to carry the international exchange of goods and services to its highest development.’ 
[Continued in Part 2 ]