Nikolai Bukharin 1922

Economic Organization in Soviet Russia

First Published: Die Rote Fahne, March 8, 1922;
Source: The Living Age, July-September 1922;
CopyLeft: Creative Commons (Attribute & ShareAlike) 2006;
Transcribed: by Brian Reid.

PEOPLE usually call the economic system now evolving in Russia ‘state capitalism’. Our economic relations, however, are so complex that they cannot be embraced in a single concept. The idea, state capitalism, moreover, does not have the same meaning in the literature of political economy that it has recently assumed in Russia. I propose to describe, therefore, the different economic forms that are now developing in our country.

Enterprises of the Proletarian Government. – These embrace the enterprises nationalized by the Proletarian Government. They are a state monopoly. However, they are not state capitalist monopolies, since, in case of the latter, the bourgeoisie, as controllers of the government, would be the true owners of the enterprise. In our case, the working classes are the owners of nationalized undertakings. Since forms of production are characterized by ownership, it is perfectly clear that we cannot designate enterprises belonging to a laboring man’s government as state capitalist undertakings. On the other side, these enterprises are not Socialist units of production in the strict sense of the word; for a Socialist economy, it goes without saying, assumes a complete and harmonious system of production and distribution. In Russia, however, especially under the conditions amid which we are now working, a systematic and harmonious plan of production, accommodated to the consumptive demands of the country, is of minor significance. The circumstances that our undertakings copy the methods of capitalist enterprises, pay wages, and sell their products in the market, do not make them capitalist so far as ownership is concerned.

Mixed enterprises. – These include undertakings partly owned by the Proletarian Government and partly by private capitalists. In these so-called mixed enterprises part of the shares belong to the Government; the other part may belong to foreign or Russian owners. It is perfectly clear that such mixed enterprises are neither state industries nor purely capitalist industries. Both capitalists and the Workers’ Government own stock in them. The Workers’ Government receives part of the profits, the private investors receive the remainder. In the course of the future history of such undertakings, there will be a constant struggle between the Government and the private owners to control them. As the proletariat becomes more competent to administer industry, the importance of private ownership will decline. If we make no blunders, the Government will acquire a growing share in these undertakings, in the same way in which, in a capitalist country, great banks and trusts control a vast number of smaller undertakings.

Concessions and leased enterprises. – As a rule, enterprises of this class belong to the Workers’ Government. However, this is not necessarily the case, for the owners of concessions and leaseholders may import machinery, erect new buildings, and otherwise add to and extend their plants, and thus become owners of a part of them. However, in a majority of cases the new capital will be furnished by the Workers’ Government. In this instance, also, the profits will be divided into two parts: the fluctuations of the class-struggle will be recorded in the relative shares of the Workers’ Government and of the private investors in this profit.

Private enterprises regulated by the Proletarian Government. – These are private enterprises in the strict sense of the word – enterprises whose only owner is a capitalist or a group of capitalists. The growth of such enterprises will be regulated more or less by the national bank, the national credit system, the national currency, and by direct legislation of the Proletarian Government.

Small private shops and groups of such shops. – These include little economic units, small producers, mechanics’ shops, and peasant industry, which are the subsoil from which private capital springs. These business units contain all the elements of the pre-capitalist period. This is particularly true of those in our Eastern border-territory. Naturally freedom of trade, assuming the presence of a relatively large number of small independent producers, will inevitably lead to an extension of capitalist production and the gradual formation of important groups of capitalists, which will be in a position to compete with purely state enterprises and enterprises of the mixed type mentioned above.

These are roughly all the forms of production at present existing in the territory of the Soviet Government.

I cannot leave the subject here without referring to a question of immense importance. Russia’s whole economic structure, viewed as a unit, faces in the world-market great capitalist systems. This creates the following situation. Conditions in the world-market may cause part of the excess value created in Russia, that created by strictly government enterprises, to flow into the pockets of the foreign bourgeoisie. Payments that we have to make to foreign Governments, and the losses that we must incur, in consequence of the weakness of our whole social organization when we deal with other countries, will take this form. Apparently, therefore, even enterprises that are exclusively in the hands of the working people will have to yield part of their profits to others. This situation, due to Russia’s temporarily weak position in world-economy, is absolutely no proof that our government industry has a capitalist character. It merely proves that our processes of economic evolution are also steps forward in the class-struggle. In Russia, this battle has taken the form of competition for more liberal concessions and leases, of a struggle to increase production and to obtain a share of real control that private owners have in undertakings of the mixed type.

Abroad, however, this struggle manifests itself as a contest for advantageous commercial treaties, tariffs, loan conditions, and bargains between individual firms and state enterprises in Russia and private firms abroad.

However, the share the Workers’ Government will take of the excess value produced by the industries: of Soviet Russia is bound to grow. But in case we are defeated in the class-struggle, capitalists at home and abroad will reduce the share of the workingman to nothing.

The economic literature of Western Europe conceives state capitalism as the higher form of capitalism in the hands of a bourgeois government; as the most complete and powerful organization conceivable of the capitalistic classes.

Naturally our state capitalism is diametrically opposite to this. But naturally, too, the kind of state capitalism we have in Russia can easily be converted into the kind of state capitalism conceived under a bourgeois government in case the laboring classes lose power in Russia. We are confident, however, that this will not occur.

If the proletariat wins in this long and arduous battle, the most capable groups of capitalists will have served during the period of incubation of the new economic system as capitalist experts and thus, against their will, they will have labored for the benefit of the working classes.

The great diversity of enterprises in the Soviet Republic is characteristic of our economic life at present and must be constantly kept in mind.