This book is an attempt to assess the main aspects of our economic process. The difficulty of an evaluation of this kind lies in the sharp break made by our development. When a movement proceeds along a straight line, two points are sufficient to determine its course. On the contrary, when development describes a complex curve at a turning point, it is difficult to judge it by individual segments. And eight years of the new regime is a short segment.

Repeatedly, however, our opponents and enemies have already issued their categorical judgments about our economic development—and that long before the eighth anniversary of the October Revolution. Their judgments follow two lines: in the first place, they tell us that in building the socialist economy we are ruining the country; in the second, they say that in developing our productive forces, we are in fact heading towards capitalism. The first line of criticism is characteristic of pure bourgeois thought; the second is typical of social democratic, i.e., disguised bourgeois thinking. There is no sharp line of demarcation between the two types of criticism and the two often exchange weapons in a neighborly way—without even noticing it themselves—in the intoxication of their sacred battle against communist barbarism.

The present work will show, I hope, to the unbiased reader, that both the outspoken big bourgeoisie and the petty bourgeoisie who are masquerading as socialists are lying. They do so when they say that the Bolsheviks have ruined Russia. The most incontestable facts show that in Russia, devastated first by the imperialist war and then by the civil war, the productive forces of industry and agriculture are approaching their pre-war level, which will be attained in the course of the next year. They are also lying when they say that the development of our productive forces proceeds along capitalist lines. In all branches of economic life—in industry, transport, trade, the credit system—the role of the state economy, far from diminishing with the growth of the productive forces, is, on the contrary, steadily increasing. This is fully borne out by figures and facts.

The question of agriculture is much more complicated. For a Marxist, there is nothing surprising in this. The transition from scattered peasant farming to socialist cultivation of the land is conceivable only through a series of technical, economic, and cultural steps. The main condition for such a transition is the preservation of power in the hands of the class that is striving to lead society toward socialism and that is increasingly able to influence the peasantry through state industry, by raising the technology of agriculture and creating thereby the premises for its collectivization.

Needless to say, we have not yet solved this problem. We are only creating the premises for its gradual and consistent resolution. What is more, these very conditions give rise to new contradictions and new dangers. What are they?

At present the state places on the market four-fifths of industrial production. About one-fifth is supplied by private manufacturers, i.e., mainly small craftsmen. Rail and steamship transport is one hundred per cent in the hands of the state. State and co-operative trade now covers nearly three-quarters of the trade turnover. Approximately 95 percent of foreign trade is in the hands of the state. Credit institutions form a centralized state monopoly. But this mighty state combine is confronted by 22,000,000 peasant holdings. The combination of state economy and peasant economy, provided that there is an overall growth of the productive forces, constitutes the fundamental social problem of socialist construction in our country.

Without growth of the productive forces there can be no question of socialism. At the present level of economic development and culture, the development of the productive forces is made possible only by the inclusion of the individual interest of the producers in the social system of the economy. With regard to industrial workers, this is secured by the fact that wages are dependent on the productivity of labor. Much success has already been achieved in this direction. With regard to the peasants, personal interest is secured by the very existence of individual holdings and their participation in the market. But there are also difficulties arising from this very fact. Differences in wages, however considerable they may be, do not lead to a social stratification of the proletariat: workers, no matter what their wages are, remain workers in state-owned factories and works. The case is different with regard to the peasants. With 22 million peasant holdings working for the market, where the state farms (sovkhozes), collective peasant farms and agricultural communes form but an insignificant minority among them, we are inevitably led to the following: at one end of the peasant masses we have not only more prosperous but even exploiting farms; and on the other end, a part of the middle peasants become poor peasants, and some of the latter become hired laborers. When the Soviet government, under the leadership of our party, introduced the New Economic Policy or expanded its scope in the countryside, it was quite aware of the inevitable social consequences of the market system, as well as the political dangers associated with it. However, we regard these dangers not as fatal phenomena to which we must bow, but as problems that must be carefully analyzed at each stage and resolved in practice.

The danger might have become insuperable had the state given up its direction of industry, trade, and finance at the same time as the differentiation among the peasant masses was gaining ground. Had that been the case, the influence of private capital would have grown on the market, the peasant market first of all, and in accelerating the process of stratification among the peasantry might have turned the whole of the economic development towards capitalism. That is the reason why it was so very important for us to make sure, first of all, in what direction change was taking place in relation to the class forces in industry, transport, finance, and domestic and foreign trade. The growing predominance of the socialist state in all these branches—the State Planning Commission proves this beyond a doubt—has created quite a new relation between town and countryside. We are too firmly established on the commanding heights of the economy for the growth of capitalist or semi-capitalist tendencies in agriculture to roll over our heads in the foreseeable future. And to gain time in this matter means to win everything. Insofar as we have a struggle in our economy between capitalist and socialist tendencies—and it is the co-operation and competition between them which actually constitute the essence of the New Economic Policy—we can say that the outcome of the struggle depends on the rate of development of both tendencies. In other words, if state industry began to develop more slowly than agriculture, and if the latter with ever increasing speed began to produce the two opposite poles we have spoken of—the capitalist farmers at the top, the proletarians at the bottom—this would, of course, lead to a restoration of capitalism. But let our enemies try to prove that this prospect is inevitable. They will burn their fingers, even if they go about it more skillfully than poor Kautsky (or MacDonald). Is the prospect just outlined excluded, however? Theoretically it is not. If the ruling party were to make mistake after mistake in the political and economic spheres; if it were to slow down the growth of industry, which is now developing in such a promising way; if it were to lose control of political and economic processes in the countryside, then, of course, the cause of socialism in our country would be lost. In our prognosis, however, we by no means intend to proceed from such assumptions. How to lose power, how to surrender all the conquests of the proletariat, how to work for capitalism—all this has been brilliantly taught to the international proletariat by Kautsky and his friends after the 9th of November, 1918. There is nothing more to be added to that. Our tasks, our goals, and our methods are different. We want to show how to maintain and strengthen the power we have won and how to fill the form of the proletarian state with the economic content of socialism. We have every reason to believe that, with the right leadership, industrial growth will outpace the process of rural stratification and neutralize it, creating the technical prerequisites and economic possibilities for the gradual collectivization of agriculture.

My brochure does not contain statistical characteristics of rural stratification. The fact is that there is still no data that would allow for an overall assessment of this process. This is explained not so much by the shortcomings of our social statistics as by the peculiarities of the social process itself, which encompasses molecular changes in 22 million peasant households. The State Planning Commission, whose estimates form the base of the present work, is now investigating the process of the economic stratification going on among our peasantry. The conclusions it will reach in this regard will be published in due course and will undoubtedly be of the utmost importance for state measures in the areas of taxation, agricultural credit, cooperation, etc. However, these data cannot in any way change the basic perspective outlined in this brochure.

Needless to say, this perspective is closely linked to the fate of the West and the East through the tightest economic and political ties. Every step forward taken by the world proletariat, every success achieved by the oppressed colonial peoples, strengthens us materially and morally, bringing closer the hour of our common victory.

L. TROTSKY

Kislovodsk, 7th November, 1925 The eighth anniversary of the October Revolution