I

The State Planning Commission has published a summary table giving the “control” figures of the Soviet national economy for the financial year 1925–1926. This may sound dry and bureaucratic, but in the dry columns of figures and in the equally dry explanations of them, we can hear the magnificent, historic music of growing socialism. Here we no longer have conjectures, propositions, hopes, or theoretic speculations; here we have the persuasive language of numbers, convincing even to the New York Stock Exchange. We will pause at these figures, at the most important of them, for they are fully worth it.

First of all, the very fact of their publication is a glorious economic event for us. The day on which they appeared (20 August 1925) should be marked on the Soviet calendar. Agriculture, industry, home and foreign trade, the volume of money in circulation, prices of commodities, credit operations, the state budget, are all shown in these figures in the process of their development and correlation. We have here a clear and comprehensible comparison of all the important figures for 1913, for 1924–1925, and the estimates for the year 1925–1926. The explanatory notes give all the necessary data for the other years of the Soviet economy. As a result, we receive a general picture of our process of construction, as well as an estimate for the succeeding financial year. That this has been possible is an achievement of the first order.

Socialism means accounting. Under the New Economic Policy, the forms of accounting are different from those we attempted to adopt under War Communism, and will find their full expression with the development of socialism. But socialism is a matter of accounting, and now, in a new stage of the NEP, it is perhaps even more so than under developed socialism, for then, accounting will have a purely economic content, whereas now, it is bound up with the most complicated political problems.

And here, in this table of control figures, the socialist state is for the first time taking stock of all the branches of its economic system in their correlation and development. This is an enormous achievement. Its very possibility is a sure sign of concrete economic success, as well as of a growing ability to calculate, to generalize, and to lead in economics. The control figures may be regarded as a sort of matriculation. We must bear in mind however, that a certificate of matriculation is given out not when people “finish” their education, but when they pass from secondary to higher education. The summary tables of Gosplan place before us tasks of a higher order. It is these tasks we wish to analyze.

When we look at the figures, the first question that arises is, how far are they correct? In this respect, there is a wide field for reservations, restrictions, and even skepticism. We know that our statistics and figures are often inaccurate, not so much because less efficiency is to be found than in other branches of our economic and cultural activities, but because they reflect all, or at least, many aspects of our backwardness. This however, does not justify a wholesale disbelief in them in the hope that in a year or two perhaps, one might be able to show up some error in one or other of the figures and pose as being wise after the event. There will most probably be many errors, but wisdom after the event is the very cheapest of all wisdom. For the moment, the figures of the State Planning Commission give the highest possible approximation to truth. Why? For three reasons. First of all, they are founded on the most complete material available, and material, moreover, which has not been obtained from the outside, but has been evolved day in, day out, by the different sections of the Commission itself. Secondly, the material has passed through the hands of the most competent and qualified economists, statisticians, and engineers; and thirdly, the work has been carried out by an institution which is free from all departmental partiality and can always confront the different departments when necessary.^[1] There are, moreover, no commercial and no economic secrets generally for the State Planning Commission, for it has the right to verify either directly or through the Workers and Peasants Inspection any production process or trade calculation. All balance sheets are open to its inspection, as well as departmental estimates, and not only from the end of the budget, but also in draft form. Some of the figures, of course, are bound to be disputed one way or another by the different departments. The objections, whether accepted or refuted, may seriously influence the work to be done for current practical purposes, such as import and export operations or the allocation of revenues for economic needs, etc., but such adjustments will not affect the figures in the main. Figures more reliable, or more carefully weighed and examined than the control figures of the State Planning Commission, cannot be had at the present time. At any rate, even provisional figures, based on all the preceding work, are infinitely preferable to working in the dark. In the first place, we make our adjustments as a result of experience and thus learn something; in the second, we hope for the best.

The control figures take us to the 1st October, 1926. This means that in about 20 months, when we shall be in possession of the actual figures for the financial year 1925–26, we shall be able to compare our activities of tomorrow with our provisional estimates of today. No matter how widely the two may differ, the comparison of the figures will in itself be an invaluable school of the planned economy.

When we speak of the accuracy of the provisional estimates, we must first of all clearly understand of what kind the estimates are. When the statisticians of, let us say, the Howard Institute of America, try to determine the tendencies or the rate of growth of different branches of the American economy, they proceed to some extent like astronomers—they try to grasp the dynamics of processes completely outside their control, with the difference only that statisticians do not possess anything like the precise methods of astronomers. The position of our statisticians is, in principle, a different one. They are on the staff of organizations which lead the economy. An estimate is not a passive thing, but a lever of positive economic discretion. Each figure here is not only a photograph, but also an order. The control figures have been prepared by an organ of the state owning (and to what an extent!) the commanding heights of the economy. When the figures say that our exports have to increase from 462,000,000 rubles to 1,200,000,000 rubles in the financial year 1925–26, that is to say, by 160 percent, it is not merely a forecast but an assignment. On the basis of what is, the figures show what has to be done. When the figures say that the amount of capital to be put into industry, i.e., the cost of reconstruction and expansion of basic capital, is to be 900,000,000 rubles, it is again not a passive estimation, but a statistically motivated practical task of the greatest importance. Such is the table of control figures from beginning to end. It is a dialectical combination of theoretical foresight and practical judgment, i.e., taking into account objective conditions and trends with the subjective setting of tasks for the worker-peasant state. This is the fundamental difference between the Gosplan summary table and any possible statistical records, calculations, and forecasts of a given capitalist state. Here, as we shall see further on, lies the enormous superiority of our, i.e., socialist, methods over capitalist ones.

The State Planning Committee’s prospective control table provides, however, a numerical assessment of socialist economic methods not in general, but in their application under definite conditions, i.e., at a certain stage of the so-called New Economic Policy (NEP). Spontaneous economic processes lend themselves primarily to an objective-statistical approach. In turn, economic processes controlled by the state, at one stage or another, enter the market and are linked by market methods to elemental, so to speak, and uncontrolled economic processes, generated mainly by the diverse nature of peasant farming. Planning currently consists largely of combining controlled and directed economic processes with those that are still following market forces. In other words, in our economy, socialist tendencies at different stages of development are combined and intertwined with capitalist tendencies, again at different stages of maturity and immaturity. Control figures link some processes with others and thus reveal the resultant force of development. This is the main socialist significance of the provisional plan.

We have always known and made no secret of the fact that the economic processes developing in our country are deeply contradictory, representing a struggle between two mutually exclusive systems, socialism and capitalism. On the contrary, it was precisely during the transition to the NEP that Lenin formulated the historical question in a few words: who will defeat whom? Menshevik theorists, foremost among them Otto Bauer, condescendingly welcomed the NEP as a sober capitulation of the premature, violent, Bolshevik methods of socialist economy to tried and trusted capitalism. The fears of some and the hopes of others have been put to an extremely serious test, and the results are reflected in the control figures of our socio-economic calculation. Its significance, among other things, lies in the fact that it is now no longer possible to talk in general terms about the socialist and capitalist elements of our economy, about the plan in general and the uncontrolled elements in general. Let it be rough and preliminary, but we have already calculated, we have quantitatively determined the relationship between socialism and capitalism in our economy—for today and for tomorrow. Thanks to this, we have obtained valuable factual material for answering the historical question: who will prevail?

II

Everything stated above characterizes only the methodological significance of the Gosplan summary table, i.e., it shows the enormous importance for us of the fact that we have finally gained the ability to assess all the main processes of our economy in their interconnection and development, and thereby gain a basis for an incomparably more conscious and far-sighted planning policy—and not only in the sphere of the economy. But much more important for us, of course, is the direct material content of the summary table, i.e., the actual numerical data with which it characterizes our social development.

In order to get the right answer to the question: “Are we moving toward socialism or capitalism?”—we must first of all formulate the question correctly. The latter, of course, breaks down into three subsidiary questions: a) Are our productive forces developing? b) What are the social forms of this development? and c) What is the pace of this development? 

The first question is the simplest and most fundamental. Without the development of the productive forces, neither capitalism nor socialism is conceivable. War Communism, which grew out of iron historical necessity, quickly exhausted itself, stalling the development of the productive forces. The most elementary and, at the same time, most compelling meaning of the NEP was the development of the productive forces as the basis of any social movement in general. The NEP was welcomed by the bourgeoisie and the Mensheviks as a necessary (but, of course, “insufficient”) step on the path to the liberation of productive forces. Menshevik theorists of both the Kautsky and Otto Bauer varieties approved of the NEP precisely as the dawn of capitalist restoration in Russia. They added: either the NEP will overthrow the Bolshevik dictatorship (a happy outcome), or the Bolshevik dictatorship will overthrow the NEP (a sad outcome). Smenovekhovstvo in its original form^[2] grew out of the belief that the New Economic Policy would ensure the development of productive forces in a capitalist form. It is here that the control figures of the State Planning Commission provide the main elements of the answer not only to the question of the general development of productive forces, but also to the question of the social form in which this development is making its way.

We are well aware, of course, that the social form of our economic development is of a dual nature, because it is based on the cooperation and struggle between capitalist and socialist methods, forms, and goals. Our development is placed in these conditions by the new economic policy. Even more than that: this is the main content of the latter. But this general idea of the contradictory nature of our development isn’t enough for us anymore. We seek and demand, as far as possible, precise measures for our economic contradictions, i.e., not only dynamic coefficients of overall development, but also comparative coefficients of the relative weight of one tendency or the other. Too much—or rather, everything—depends on the answer to this second question, both in our domestic and foreign policy.

In order to approach the question from the sharpest angle, let us say: without an answer to the question of the relative strength of capitalist and socialist tendencies and the direction in which the ratio of their relative weights changes as productive forces grow, it is impossible to form a clear and completely reliable picture of the chances and possible dangers of our peasant policy. Indeed, if it turned out that, as productive forces develop, capitalist tendencies grow at the expense of socialist ones, then the latest expansion of commodity-capitalist relations in the countryside could have fatal consequences, turning the arrow of development definitively toward capitalism. Conversely, if the relative weight of the state, i.e., socialist, economy in the country’s overall economy increases, then the greater or lesser “liberation” of the commodity-capitalist process in the countryside already falls into the channel of a certain balance of forces and is therefore decided from a purely business point of view: how? when? to what extent? 

To put it differently, if the productive forces at the disposition of the socialist state and securing all the commanding heights grow not only rapidly, but more rapidly than the private, capitalist productive forces of the town and the countryside, and if this is proved by the experience of the most difficult period of reconstruction, it becomes clear that a certain expansion of the commodity-capitalist tendencies, emanating from the depths of peasant agriculture, in no way threatens us with any economic surprises, any rapid transformation of quantity into and quality, that is to say, with a sharp turn toward capitalism.

Finally, the third issue concerns the pace of our development from the perspective of the world economy. At first glance, it may seem that this question, despite its significance, is a subsidiary one: of course, it is desirable to achieve socialism “as soon as possible,” but since progress is ensured by the triumphant development of socialist tendencies in the context of the New Economic Policy, the question of pace seems to be of secondary importance. However, this is not true. Such a conclusion would be correct (and even then not entirely) if we were a closed, self-sufficient economy. But this is not the case. It is precisely because of our successes that we have entered the world market, i.e., we have entered the system of a world division of labor, and we remain in a capitalist environment. Under these conditions, the pace of our economic development will determine the strength of our resistance to the economic pressure of world capital and the military-political pressure of world imperialism. And for the time being these factors cannot be ignored.

If we approach the summary table and explanatory note of the State Planning Committee with our three “control” questions, we will see that the table provides not only a clear and distinct answer to the first two questions—about the development of productive forces and the social forms of this development—but also an extremely favorable one. As for the third question, about the pace of development, the course of our economic development has only just brought us to the point of posing it on an international scale. But here too, as we shall see, the favorable answer to the first two questions creates the preconditions for resolving the third question. The latter will be the highest criterion for our economic development in the coming era.

III

That our productive forces have recovered rapidly is now a well-established fact. There is no greater proof of it than the table of control figures. Agricultural production in 1924–25, including the poor harvest of 1924, amounted to 71% of the production of the bumper harvest of 1913, calculated at pre-war prices. The financial year of 1925–26 with its splendid harvest, according to the latest estimates, promises to exceed the figure of 1913 and to be only slightly below that of 1911. If our total collected supplies of grain in the last few years have never reached 3 billion poods, it is estimated that in the present year they will yield 4.1 billion poods.^[3]

Our industries in the concluding year had, in regard to the value of their output, reached 71 percent of the output of the full-blooded year of 1913. In the next financial year it is estimated that production will reach no less than 95 percent of the 1913 figure, that is to say, it will practically have completed its process of recovery. If we remember that in the year 1920 our production had fallen to one-fifth or one-sixth of the productive capacity of our factories, we shall realize more clearly how rapid has been the process of our recovery. The output of the state industries has trebled since 1921. Our exports, which do not amount to half a billion rubles in the current year, promise to significantly exceed a billion in the next. Our imports too are showing a like development. The state budget from 2.5 billion rubles promises to go far beyond 3.5 billion rubles. Such are the principal control figures. The quality of our manufactures—still very imperfect, it is true—has nevertheless shown great improvement since the first two years of the New Economic Policy. Thus, to the question as to whether our productive forces are developing, we receive the emphatic reply—the “emancipation” of the market has given a most powerful impulse to the productive forces.

But the fact that the impulse has come from the market—a factor of a capitalist order—has stimulated and still stimulates the malice of the theoreticians and politicians of the bourgeoisie. The nationalization of industry and economic planning methods seemed to have become hopelessly compromised by the fact of our recourse to the New Economic Policy and its undoubted economic success. This is why only an answer to our second question regarding the social forms of our economy can provide a socialist evaluation of our development. The productive forces of Canada are growing, for instance, stimulated by capital from the United States. In India the productive forces develop notwithstanding the throes of colonial oppression. Productive forces too, are growing in the form of reconstruction, in the Germany of the Dawes Commission. But all these are cases of capitalist development. In Germany, in particular, all plans for nationalization and socialization which had been so popular—at least in the fat books of academic socialists and among Kautsky’s followers—during 1919 and 1920, have been cast aside like so much rubbish, while under the hard patronage of America, the principle of private capitalistic enterprise, in spite of the teeth that have fallen out, is celebrating its second youth. How do matters stand with us in this regard? What social form is the development of our productive forces assuming? Are we moving toward capitalism or socialism?

The prerequisite for a socialist economy is the nationalization of the means of production. Has this prerequisite survived the test of the New Economic Policy? Has the market-based method of distribution of commodities led to the weakening or the strengthening of nationalization?

The State Planning Commission’s “summary table” provides invaluable material for assessing the interaction and struggle between socialist and capitalist tendencies in our economy. Here we have completely indisputable “control” figures which cover basic capital, production, commercial capital, and all the other most important economic processes in the country.

Perhaps the most conditional among the figures are those relating to the distribution of fixed capital, but this has a far greater bearing on absolute figures than on their relative proportions, and we are much more interested in the latter. According to estimates of the State Planning Commission, at the beginning of the current fiscal year, the state-owned capital funds, “by the most modest estimates,” of no less than 11.7 billion chervonets rubles; the co-operatives owned 0.5 billion rubles; and private, mostly peasant agricultural holdings, owned 7.5 billion rubles. This means that 62 percent of the whole means of production has been socialized, including those with the best technical equipment. About 38 percent remains unsocialized.

As far as agriculture is concerned, the figures so far show results not so much of the nationalization of the land, as the liquidation of landlord ownership. The results are both extremely serious and instructive. The liquidation of landlord and, in general, large-peasant land ownership has led to the almost complete elimination of large agricultural enterprises, including some of the most up-to-date farms. This was one of the reasons—a secondary one, it is true—for the temporary decline of agriculture. But we already know that the harvest of the present year is raising agriculture to the pre-war standard—without landlord ownership and without capitalist “scientifically-run” farms. And we are only at the very beginning of the development of agriculture freed from the landlords! This means that the elimination of the landlord class with all its “nests” and even the “barbaric” black repartition [the transfer of the whole land to the peasants], which the respectable Mensheviks feared so much, has already justified itself in the economy as a whole. This is a first and, we might say, not unimportant conclusion.

Regarding the nationalization of the land, due to the fragmentation of peasant farming, this principle has not yet been properly tested. The gilded hue of populism^[4] that inevitably covered the early period of socialization inevitably slipped away from it. At the same time, the idea of nationalization as a socialist measure under a government of the working class has revealed itself sufficiently for us to understand its ultimate role in the further development of agriculture. Through the nationalization of the land, we have secured for the government unlimited opportunities for the further development of agriculture. No barriers of private, individual, or group ownership will prevent us from adapting land use to the needs of the production process. Currently, only 4 percent of the agricultural means of production are socialized; the remaining 96 percent are still privately owned by the peasants. We must bear in mind, however, that the agricultural means of production, both of the peasants and of the state, form but a little over a third of all the means of production of the Soviet Union. It is hardly necessary to say that the full importance of the nationalization of the land will only be felt when agriculture has attained a high technical standard, resulting in the collectivization of agriculture—that is to say, many years hence. But this is precisely the direction in which we are heading. 

IV

For us Marxists it was, of course, clear even before the Revolution that a socialist reconstruction of the economy would begin with industry and mechanized transport, and spread from there to the countryside. For this reason a statistical survey of the activities of the nationalized industries is the cornerstone of a socialist assessment of the current transitional economy. 

In the industrial sector, 89 percent of the means of production have been socialized, along with 97 percent of the railways and 99 percent of large-scale industry. These figures show that as regards ownership, the results of nationalization during these years have not changed to the detriment of the state. This circumstance alone is of great importance. But what concerns us chiefly is something else: what percentage of socialized means of production contribute to annual output? In other words, to what extent does the state use the resources allocated to it productively? The control figures of the State Planning Commission give us the following answer to this question. The industries controlled by the state and cooperatives accounted for 76.3 percent of gross output in 1923–24; this year they account for 79.3 percent, and next year, according to Gosplan estimates, they are expected to account for 79.7 percent. As for private industry, it accounted for 23.7 percent of production in 1923–24, 20.7 percent in 1924–25, and, finally, is estimated to amount to 20.3 percent next year. Regardless of the cautious projections for the coming year, it is extremely important to compare the dynamics of state and private production in the country’s total commodity output. We see that in the past and present years, that is to say, in the years of intensive economic growth, the proportion of state industries has grown by 3 percent, and private industries have decreased by the same amount. This percentage, for the short period in question, measures the growing strength of socialism over capitalism. The percentage may appear insignificant, but in fact, as we will now show, its symptomatic importance is enormous.

Wherein lay the danger of the transition to the New Economic Policy in the early years of its adoption? It lay in the fact that, owing to the complete exhaustion of the country, the state might not have been strong enough to lift on its shoulders in so short a time the large industrial enterprises. With their extremely low capacity utilization (we were dealing with utilization rates of 10 and 20 percent), medium-sized, small, and even cottage enterprises could gain a huge advantage in terms of mobility. The so-called “selling out” of the first period, which was the socialist payment to capitalism for restarting the factories and works confiscated from it, threatened to deliver into the hands of merchants, middlemen, and speculators a big part of state property. The craft industries and small workshops were the first to revive in the atmosphere of the New Economic Policy. A combination of private commercial capital with the petty and craft industries might have led to a fairly rapid process of initial capitalist accumulation along well-trodden paths. These conditions threatened such a loss of speed in the rate of development that the reins of economic management might have been spontaneously wrested from the hands of the workers state. We do not, of course, mean to say by this that every temporary or protracted increase in the relative weight of private industry in the aggregate turnover inevitably threatens catastrophic or even grave consequences. Here, too, quality depends upon quantity. If the control figures had shown us that the relative weight of private capitalist production for the last two or three years had increased by one, two, or three percent, this would not have meant that a dangerous position had been created; state production would still account for three-quarters of the total production, and restoring the lost momentum now that large enterprises are becoming increasingly busy would be a perfectly solvable task. Had we been shown that the proportion of private capitalist production had increased by 5 or 10 percent, this fact would have to be taken more seriously, but even then, for the early period of reconstruction, it would not have meant that economically nationalization was a disadvantage. The conclusion would have only been that the most important part of nationalized industry had not yet developed the necessary momentum. This makes it all the more significant that during the early, purely reconstructive period of the New Economic Policy—the most difficult and dangerous period for the state—nationalized industry not only did not cede any of its territory to capitalist industry, but had, on the contrary, managed to push the latter back by 3 percent. Such is the enormous symptomatic significance of this small figure.

Our conclusion will become even clearer if we examine the figures concerning not only production but the trade turnover. In the first half of 1923, the proportion of private capital in intermediary trade was about 50 percent; in the second half of the year it was 34 percent; in 1924–25, about 26 percent. In other words, the relative weight of private capital in intermediary trade for these two years had decreased by half (from one half to one quarter). This was by no means achieved by simply restricting trade, because during the same period, the turnover of state and cooperative trade more than doubled. Thus, the decline in the social role is evident not only in private industry but also in private trade. Both are based on the growth of productive forces and trade turnover. For the coming year, the control figures estimate a further, albeit slight, decrease in the weight of private industry and trade. We may await without any anxiety the realization of this prediction. The victory of state industry over private industry need not necessarily be conceived as a single, continually ascending line. There may be periods when the state, relying on its economic power and seeking to accelerate the pace of development, consciously allows a temporary increase in the share of private enterprises—in agriculture in the form of “strong,” i.e., farmer-capitalist farms; in industry, and also in agriculture in the form of concessions. Taking into consideration the extremely fragmented nature of most of our private industry, it would be naïve to imagine that every increase in the weight of private production above the current 20.7 percent inevitably pose a threat to socialist construction. It would generally be wrong to attempt to set a rigid percentage limit here. The question is determined not by a formal limit, but by the general dynamics of development. A study of these dynamics shows that during the most difficult period, when the large enterprises revealed more of their negative than positive advantages, the state successfully withstood the first onslaught of private capital. During the most rapid rise, over the last two years, the correlation of economic forces created by the revolutionary upheaval has steadily shifted in favor of the state. Now that the main positions are much more securely established by the fact that large enterprises are approaching 100 percent capacity, there can be no reason to fear any surprises, since we are dealing with internal factors of our economy.

V

With regard to the smychka, that is to say, to the combined economic work of the city and the countryside, the summary table provides basic and, for that very reason, extremely convincing data.^[5]

As can be seen from the table, the peasantry puts less than one third of its gross output on the market, and this mass of agricultural commodity produce accounts for more than one third of the total commodity turnover.

The value ratio between agricultural and industrial goods fluctuates within a narrow range, of around 37:63. This means that, if goods are measured not by the piece, pood [approximately 36 pounds], or arshine [approximately 27 inches], but in rubles, a little over a third of the goods from the countryside and a little under two thirds of those from the city, that is to say, of industrial goods, are traded on the market. This is due to the fact that the countryside satisfies its own needs to a large extent outside the market, while the cities put nearly all their produce on the market. More than two thirds of the consumption of the scattered peasant holdings is excluded from the market, and only the lesser third has a direct influence on the country’s economy.

By contrast, industry, by its very nature, directly participates with the whole of its products in the total national turnover, because the “natural” turnover within industry itself (through the trusts and syndicates), which reduces the marketability of produce by 11 percent, not only does not decrease but increases the importance of industry in the general economic process, by simplifying turnover.

If, however, the naturally consumed volume of agricultural produce has no influence on the market, it does, of course, not mean that it has no influence on the economy. Given the current state of the economy, it forms the necessary rear of the commercial third of peasant production. This third, in its turn, constitutes the value for which the countryside demands an equivalent from the city. Hence, the gigantic economic significance of rural production as a whole, and its commercial third in particular, is clear. The realization of the harvest and, more particularly, export operations, are a major factor in our annual economic balance sheet. The further we develop, the more complicated the mechanics of the smychka become. The question is no longer limited to the exchange of a given number of poods of peasant grain for a given number of arshines of printed cotton. Our economy has become part of the global system. This has added new links to the chain of the smychka.

Peasant grain is exchanged for foreign gold. Gold is exchanged for machinery, tools, and missing consumer goods for the city and countryside. Textile machinery obtained with gold earned through grain exports provides new equipment for the textile industry and thus lowers the prices of fabrics supplied to the village. The cycle becomes extremely complicated, but its basis remains the same—the familiar economic relationship between the city and countryside.

We must not for a moment forget, however, that this relationship is dynamic, and that in this complicated dynamic process, the leading force is industry. This means that if agricultural production and, more particularly, its commercial component, set certain limits for industrial development, these limits are not rigid or immutable. It means that it is possible for industry to expand, not merely to the extent of the increase in the harvest, but beyond it. No, the interdependence here is much more complex. Relying mainly on its weak flank in the countryside and developing thanks to its growth, industry itself is becoming an ever more powerful market.

Now that agriculture and industry are nearing the end of their process of recovery, industry will play a much greater role as a driving force than it has done so far. The problem of the productive socialist influence of the city on the countryside, not only by supplying cheap consumer goods, but also through increasingly sophisticated agricultural tools that necessitate collective forms of cultivation, now confronts industry in all its concreteness and grandeur.

Of course, the socialist restructuring of agriculture will be achieved not simply through cooperation as a bare organizational form, but through cooperation based on the mechanization of agriculture, its electrification, and its general industrialization. This means that the technical and socialist progress of agriculture is inseparable from the growing predominance of industry in the country’s overall economy. And this means that in future economic development, the dynamic coefficient of industry will, at first slowly and then more and more rapidly, outpace the dynamic coefficient of agriculture until this very opposition disappears.

VI

Total industrial output for the year 1924–25 has exceeded the output of the previous year by 48 percent. Next year an increase of 33 percent over the present year is anticipated, if we do not take into account the decline in prices. However, different categories of industrial enterprises are by no means developing at the same rate.

The large enterprises have grown in the present year by 64 percent. The second group, which we will tentatively call the group of medium-sized enterprises, has grown by 55 percent. The small enterprises have increased their production only by 30 percent. We have therefore reached a point where the advantages of large enterprises over medium-sized and small ones are already very apparent. This, however, does not mean that we are already fully utilizing the possibilities inherent in the socialist economy. In relation to the greater production of the large enterprises as compared with the medium and the small, we are we are currently realizing the advantages that are characteristic of larger enterprises even under capitalism. The standardization of products on a national scale, the rationalization of the production processes, the specialization of enterprises, the conversion of whole factories into powerful workshops of a single all-Union production organism, planned material coordination of production processes in all branches of the extractive and manufacturing industries—we are only just approaching these fundamental production tasks of socialism. Here, there open up immeasurable possibilities that, within a few years, could allow us to far surpass our old standards. But this is a task for the future, and we will discuss it later on.

Up until now, we have not used the advantages of state management of the economy in the area of production itself, that is to say, in the organization and combination of its material processes, but rather in the area of production distribution—providing individual industries with supplies, raw materials, equipment and so on, or, to use the language of the market, supplying circulating capital and in part, fixed capital. Unconstrained by the framework of private property, the state has been able through the state budget, the State Bank, the Industrial Bank, etc., to pump cash resources where they were most needed to maintain, recreate, or develop the economic process. This advantage of socialist management has truly saved us in recent years. Notwithstanding the often grave miscalculations and mistakes in the distribution of resources, we have, nevertheless, distributed them incomparably more rationally and economically than would have been the case under a spontaneous capitalist process of restoring the productive forces. Thanks to this alone, we have been able in such a short of time to rise to our present level without foreign loans. 

But this does not exhaust the question. The economic, and, consequently, the social expediency of socialism was manifested in the fact that it had freed the process of economic recovery from the overhead costs of the upkeep of parasitic classes. The fact is that we are approaching the production levels of 1913, while the country is significantly poorer than before the war. This means that we are attaining the same production results with lower social overhead costs: the upkeep of a monarchy, a nobility, a bourgeoisie, ultra-privileged intellectual classes, and lastly, without the obstructive friction of the capitalist machine itself.^[6] It was owing to this socialist approach in particular that we were able, with the limited means at our disposal, to mobilize much more of them directly for production purposes, thereby preparing for a more rapid rise in the material standard of living of the country’s population in the next stage of our development.

* * *

We therefore have, on nationalized land, scattered peasant farms, whose commercial production accounts for little more than one-third of the value circulating on the market. Socialized capital in agriculture barely reaches 4 percent.

We have industries, the socialized fixed capital of which equals 89 percent, supplying over 79 percent of the total industrial production. The 11 percent of the non-socialized means of production in industry consequently account for over 20 percent of the gross output.^[7] The share of state industry is growing.

The railways are 100 percent nationalized. The work of transport is continually expanding. In the year 1921–22, it formed about 25 percent of the pre-war figure; in 1922–23, 37 percent; in 1923–24, 44 percent, and, finally, in 1924–25, it will form over half the pre-war figure. The freight-turnover for next year is estimated at 75 percent of the pre-war figure.

In the sphere of trade, the socialized resources, i.e., those controlled by the state and co-operatives, form about 70 percent of the aggregate capital turnover, and this proportion is continually increasing.

Foreign trade has been socialized completely; the state monopoly of foreign trade remains the unshakable foundation of our economic policy. The aggregate turnover of foreign trade is expected to increase in the next year to 2,200,000,000 rubles. The proportion of private capital represented in this turnover, even including contraband goods, which should be included, will hardly reach 5 percent.

The banks and the entire credit system are almost 100 percent socialized. And this powerfully growing apparatus is growing more and more flexible and capable of mobilizing the financial resources to fuel the production process.

The state budget has increased to 3.7 billion rubles, forming 13 percent of the aggregate national income (29 billion rubles), or 24 percent of the goods volume (15,200,000,000 rubles.) The budget is increasingly becoming a powerful lever for raising the economic and cultural life of the country.

Such are the control figures in the summary table provided by the State Planning Commission.

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These figures have world-historic significance. More than a century of continuous activity on the part of socialists, commencing with utopias and passing to scientific theory, has at last given birth to a great economic experiment, which has been going on for almost eight years. All that has been written regarding socialism and capitalism, freedom and oppression, dictatorship and democracy, has passed through the furnace of the October Revolution and the Soviet economic experiment, and appears before us in a new, incomparably more concrete form. The figures of the State Planning Commission work out—if roughly and provisionally—the first sum total of the first chapter of the great experiment of transforming bourgeois society into a socialist one. And this sum total is entirely in favor of socialism.

No country was so devastated and exhausted by a whole series of wars as Soviet Russia. All capitalist countries which had suffered most from the war have, without exception, recovered only with the help of foreign capital. It was only the land of the Soviets, the most backward in the past, the most devastated and exhausted by wars and revolutionary upheavals, that has risen from complete poverty by its own efforts, despite the active opposition of the entire capitalist world. Only thanks to the complete elimination of landlord ownership and bourgeois property; only thanks to the nationalization of all the principal means of production; only thanks to the state socialist methods of mobilizing and distributing the necessary resources, has the Soviet Union risen from the ashes, and as an ever-growing factor, is penetrating the world economy. From the summary table of the State Planning Commission, unbreakable threads stretch back to the Manifesto of the Communist Party of Marx and Engels, and forward to the socialist future of humanity. The spirit of Lenin hovers over these dry columns of figures.