Record of Comrade J.V. Stalin’s Discussion with Economists

Dated 29th January 1941

On Issues of Political Economy


On The Object of Political Economy
There are several definitions of the object of political economy: Engels’ definition which views political economy as a science about production, exchange and distribution; there is the definition given by Marx in his preparatory notes to Capital; there is Lenin’s point of view which accepts the definition given by Bogdanov in 1889. We have a lot of bookworms and they would attempt to counterpose one definition to another. We are very fond of quotations. And quotations are a sign of our ignorance. That is why we must rigorously think over the correct definition of the object of political economy and then standing inside of it introduce it.

If we write that ‘political economy is the science about historically developing modes of social production, then people would not immediately understand that we are talking about the economy and relations between people. It is better to say that political economy is the science of the development of the relations of social production, i.e. the economic relations between people. This definition explains the laws governing the production and distribution of the necessary means of consumption for both individual and production purposes’. When I speak of distribution, I have in view not the common notion of distribution in the narrow sense of the word, i.e. distribution of the means of individual consumption. We are talking about distribution in the sense in which it has been used by Engels in Anti-Duhring, where he analyses distribution as a form of ownership of the means of production and means of individual consumption.

On the next page, after completing the second paragraph, we must make an addition in the following words: ‘i.e. how the means of production are distributed between the members of the society as, subsequently, also the material goods necessary for peoples’ lives.’

You certainly know about the preparatory notes of Marx for the fourth volume of Capital. There you have the definition of the object of political economy. When Marx speaks of production, he includes transport (independently of whether we are talking of long distance or short distance transport, about transportation of cotton from Turkestan or a factory’s internal transport). With Marx all the problems of distribution are included in the concept of production. What do those present here think: is the definition being outlined here the correct one?

Remark: Unconditionally, the outlined changes bring about a fundamental improvement.

Question: Is it correct to use the words relations of ‘social production’ in the definition? Is the word ‘social’ not irrelevant here. After all, production is also social. Will we not have a tautology?

Answer: No, we must write ‘social-production’ with a hyphen, as, after all, there can be technical relations in production, here we must speak specifically of the relations of social production.

Question: Will it not be more appropriate to talk of consumption as ‘individual and productive’ instead of the words ‘individual and production’?

After a short exchange of opinions ‘individual and production’ was written.

If we accept the proposed formulation of the object, then the general conclusion must be made that the question of distribution in all the formations must be accorded much more attention. Otherwise, here, very little is said about banks, stock exchanges and markets. This will not do. In particular the section on socialism also suffers because of this.

There are stylistic irregularities on page 5. These must be removed. It is written ‘it is a historical science, examining and explaining different modes of production and explaining the traits that distinguish each of them.’ It should be written in proper Russian as not ‘examining’ and ‘explaining’, but the science that examines and explains.

On the Law of Value

I am coming to the section on socialism. A few things have been improved. But a lot has been spoilt in comparison to what was there earlier in this section.

It is written here that the law of value has been overcome. Then it becomes incomprehensible from where the category of cost arises, without which we cannot calculate, cannot distribute according to labour and cannot set prices. The law of value has not been overcome yet. It is not true that we are commanding with the help of prices; we want to command, but cannot. In order to command with the help of prices, there must be huge reserves, an abundance of commodities. Only then can we dictate our prices. As long as there is an illegal market and a collective farm market, market prices would exist. If there is no value, then there is nothing by which to measure incomes.

Incomes are not measured by labour. When we begin to distribute according to needs, then it will be an altogether different matter. But for the present the law of value has not been overcome. We want to consciously use it. We are compelled to set prices within the framework of this law. In 1940 the harvest was lower (in Russia – ed.) than in Estonia and Latvia. There was not enough bread and the prices jumped upwards. We threw in about 200,000 poods of bread and the prices came down immediately. But can we do this with all the commodities all over the country? No, we are far from dictating prices for all commodities. For this we have a great deal more to produce. Much more than presently. But at present we are unable to command with the help of prices. And also the income from the sales in the collective farm market goes to the collective farm peasantry. Obviously with us the means of production cannot be bought with this income, and this income goes towards increasing the individual consumption.

Poster propaganda finds its way into the textbook. This will not do. An economist should study facts, and here all of a sudden: ‘Trotskyite-Bukharinite traitors’ what is the need to mention that the courts have established this thing and that? What is economic about it? Throw the propaganda out. Political economy is a serious matter.

Voice: It was written long ago when the trial was underway.

Answer: When it was written is irrelevant. Now the new edition has been presented and it is there too. And it is out of place here. In science we appeal to Reason. And here we are appealing to something like the belly and a bit to something else. This spoils the job.

On Planning
Regarding the plan for the economy a lot of terrible words have been piled up. What all has not been written. ‘Directly social character of labour in the socialist society. Overcoming the law of value and elimination of anarchy in production. Planned conducting of the economy as a means of bringing the production relations of socialism in conformity with the nature of the productive forces’. Some kind of a flawless planned economy is painted. Whereas one can say simply: — under capitalism it is not possible to carry on production on the scale of the whole of the society, there you have competition, there you have private property, which separates.

Whereas in our system the enterprises are united on the basis of socialist property. Planned economy is not something we want, it is an inevitability, otherwise everything would collapse. We have destroyed such bourgeois barometers as the markets and the stock exchanges, with the help of which the bourgeoisie corrects the disproportions. We have taken everything up on ourselves. Planned economy in our system is as much inevitable as is the consumption of bread. And it is so not because we are all ‘good boys’, not because we are capable of doing everything, and they cannot, but because in our system the enterprises are integrated. In their system integration is possible only within trusts and cartels, i.e. within narrow limits, but they are incapable of organising an All peoples’ economy. (It is in place here to remind ourselves of Lenin’s critique of Kautsky’s theory of super capitalism). The capitalist cannot run industry and agriculture and transport according to a plan.

Under capitalism the town must devour the countryside. Private property there is an obstacle. So say simply: there is integration in our system, and in their system there is division. Here (page 369) it is written: ‘planned functioning of the economy as a means of bringing the production relations of socialism in conformity with the character of the productive forces’. It is all rubbish, schoolboys’ chatter. (Marx and Engels spoke long ago, and they had to talk about contradictions). But why in hell are you treating us to such generalisations? Say simply: in their system there is division in the economy, the form of property brings divisions; in our system there is integration. You are at the helm, and the power is yours. Speak simply.

We must properly define the objectives of the planning centre. Not only must it establish the proportions. Proportions are not of central importance, they are essential, but still secondary.

What are the main objectives of planning?

The first objective consists in planning in a way that ensures the independence of the socialist economy from capitalist encirclement. This is obligatory, and is most important. It is a form of the struggles against world capitalism. We must ensure that we have metal and machines in our hands so as not to become an appendage to the capitalist system. This is the basis of planning. This is central. GOELRO and subsequent plans were drawn up on this basis.

How to organise planning? In their system capital gets spontaneously distributed over the branches of the economy depending upon the profits. If we were to develop various sectors according to their profitability we would have a developed flour-grinding sector, toy production (they are expensive and give high profits), textiles, but we would not have had any heavy industry. It demands large investments and is loss-making in the beginning. Abandoning the development of heavy industry is the same as that which the Rykovites had proposed. We have turned the laws of development of the capitalist economy upside down, have put them on their head, or more precisely on their feet. We have begun with the development of heavy industry and machine building. Without planning of the economy nothing would work out.

How do things happen in their system? Some states rob others, loot the colonies, and extract forced loans. It is otherwise with us. The basic thing about planning is that we have not become an appendage to the world capitalist system.

The second objective of planning consists in strengthening the absolute hegemony of the socialist economic system and closing all the sources and loopholes from which capitalism arises. Rykov and Trotsky had once proposed to close down advanced and leading enterprises (The Putilov Factory and others) as unprofitable. Going by this would have meant ‘closing down’ socialism. Investments would have then gone into flour-grinding and toy production because they yield profit. We could not have followed this path.

The third objective of planning is to avoid disproportions. But as the economy is huge, ruptures can always take place. Therefore, we need to have large reserves. Not only of funds, but also of labour power.

We should provide something new to the reader, and not endlessly keep repeating about the correlation between the relations of production and the productive forces. It does not produce any results. There is no need to go overboard in praising our own system and ascribe to it those achievements which are not there. Value exists and differential rent exists, but they are used differently. I was thinking about the category of Profit — should we leave it out or to keep it?

Remark: Maybe it is better to use the word ‘income’?

Molotov: Income is of different kinds.

Remark (N.A. Voznesensky–ed.): May be socialist accumulation?

Answer: As long as profit has not been extracted it is not accumulation. Profit is a result of production.

Question: Should we have in the textbook that there is surplus product in the socialist society? There were differences of opinion on this matter in the Commission.

Molotov: We have to educate the workers so that they know that they work for the whole of the society and not only for their families.

Answer: Without surplus product you cannot build the new system. It is necessary that the workers understand that under capitalism they are interested in what it is that they are getting. But under socialism they take care of their own society and this is what educates the worker. Income remains but it acquires another character. The surplus product is there, but it does not go to the exploiter, but towards increasing the welfare of the people, strengthening defence etc. The surplus product gets transformed.

In our country distribution takes place according to labour. We have qualified and unqualified labour. How should we define an engineer’s work? It is multiplied simple labour. With us incomes are distributed according to labour. It cannot be that this distribution happens independently of the law of value. We think that the entire economy is run according to the plan, but it does not always happen this way. There is a lot of spontaneity with us also. We knowingly, and not spontaneously, make calculations according to the law of value. In their system the law of value operates spontaneously, bringing in its wake destruction, and demands huge sacrifices. In our system the character of the law of value undergoes a change, it acquires a new content, a new form. We knowingly, and not spontaneously, set prices. Engels speaks of leaps. It is a risky formula, but it can be accepted, if we correctly understand the leap from the realm of necessity into the realm of freedom.

We must understand freedom of will as necessity recognised, where the leap means a transition from spontaneous inevitability to the recognition of necessity. In their system the law of value operates spontaneously and it leads to large-scale destruction. But we should conduct things in such a way that there are fewer sacrifices. The necessity resulting from the operation of the law of value must be used by us consciously.

Question: In the Commission there were misunderstandings and discussions regarding whether there are commodities in the Soviet economy. The author, against the opinion of the majority in the Commission, speaks not about commodities but about products.

Answer: Once we have a monetarised economy, we also have commodities. All the categories remain, but have acquired a new character. Money, in their system, serves as a tool for exploitation, but in our system it has a different content.

Question: Until now the law of value was interpreted as a law operating in a spontaneous market which determines the spontaneous distribution of labour power.

Answer: This is not correct. One should not narrow down the scope of the formulation of the question. Trotsky repeatedly limited money to its being an instrument for calculation. He insisted on this both before and after the transition to NEP. This is wrong. Our answer to him was: when a worker buys something, is he calculating with the help of money, or is he doing something else? Lenin repeatedly would point out in the Politbureau that such a formulation of the question is wrong, that one should not limit the role of money to it being an instrument of calculation.

Remark: Surplus product in a socialist society — the term is embarrassing.

Answer: On the contrary, we have to educate the worker that the surplus product is needed by us, there is more responsibility. The worker must understand that he produces not only for himself and his family, but also for creating reserves and strengthening defence etc.

Remark: In the Critique of the Gotha Programme Marx did not write about surplus product.

Answer: If you want to seek answers for everything in Marx you will get nowhere. You have in front of you a laboratory such as the USSR which has existed now for more than 20 years but you think that Marx ought to be knowing more than you about socialism. Do you not understand that in the Critique of the Gotha Programme Marx was not in a position to foresee! It is necessary to use one’s head and not string citations together. New facts are there, there is a new combination of forces — and if you don’t mind — one has to use one’s brains.

On Wages and Workdays
A few words about wages, work-days and incomes of the workers, the collective farmers and the intelligentsia. In the textbook it has not been taken into account, that people go to work not only because Marxists are in power and there is a planned economy, but also because that it is in their interest, and that we have grasped this interest. The workers are neither idealists nor ideal people. Some people think that it is possible to run the economy on the basis of equalisation. We have had such theories: collective wages, communes in production. You will not move production forward by all this. The worker fulfils and over-achieves the plan because we have piece-work for the workers, a bonus system for the supervisory staff and bonus payments for farmers who work better. Recently we have enacted the law for the Ukraine.

I will tell you of two cases. In the coal industry a few years ago a situation was created when the people working overground received more than the people working in the mines. The engineer sitting in the office received one and a half times more than those who worked in the mines. The top leadership, the administration want to attract the best engineers to their departments so that they sit by their side. But for the work to move ahead, it is necessary that people have an interest. When we increased the wages for the underground worker, only then did the work move forward. The question of wages is of central importance.

Take another example: cotton production. For four years now that it is moving uphill only because the procedure of paying the bonuses has been revised. The more they produce from a unit of land the more they get. They now have an interest.

The law on bonuses for collective farmers in the Ukraine has exceptional importance. If you go by peoples’ interests they would move forward, would upgrade their qualification, work better and will clearly see that this gives them more. There was a time when an intellectual or a qualified worker was considered fit only to be social outcasts. This was our foolishness, there was no serious organisation of production then.

People speak of the six conditions of Stalin. Come to think of it — what news! What is said there is that which is known all over the world but has only been forgotten with us. Piece-work for the worker, a bonus system for the engineering and technical staff and bonuses for the collective farmers — these are the levers of industrial and agricultural development. Make use of these levers and there would be no limit to growth in production and without them nothing is going to work out. Engels has created a lot of confusion here. There was a time when we used to boast that the technical staff and the engineers would receive not more than what the qualified workers get. Engels did not understand a thing about production and he confounded us too. It is as ridiculous as the other opinion that the higher administrative staff must be changed every so often. If we had gone along with this everything would have been lost. You want to leap directly into communism. Marx and Engels wrote keeping full communism in view. The transition from socialism to communism is a terribly complicated matter. Socialism has yet not entered our flesh and blood, we still have to organise things properly in socialism, we still have to properly set up distribution according to work.

We have filth in our factories, but we want to go straight to communism. But who will let you in there? We are sinking in garbage and we want communism. In one large enterprise about two years ago they started breeding fowl — chicken and geese. Where does all this lead you to? Dirty people would not be allowed entry into communism. Stop being swine. And only then talk about entering communism. Engels wanted to go straight to communism. He got carried away.

Molotov: On page 333 it is written: ‘the determining advantage of the artel consists in that it correctly combines the individual interest of the collective farmers with their social interests, that it successfully harmonises the individual interests of the collective farmers, with the interests of society’. Such a formulation of this question is avoiding the question. What is ‘correctly combining the individual interest of the collective farmers with society’s interests’ ? It is a hollow sentence which has very little of concrete substance in it. You get something like ‘all that exists is rational’. In fact it is far from being so. In principle we have come to a correct solution of these questions, but in practice there are a lot of things that are wrong and out of place. This needs to be explained. The social economy has to be placed first.

It is necessary also to pose the question of piece-work wages. There was a time that when this question was very complicated, the piece-work system was not understood. Visiting workers’ delegations, for example, of French syndicalists, would ask why do we support piece-work and the bonus system, after all under capitalist conditions workers are fighting against it. Now everyone understands, that without a progressive system of payment and without the piece-work system there would have been no Stakhanovites and front-rank workers. In principle this question is clear. But in practice a lot of disgraceful things are happening with us. In 1949 [sic.–ed.] we are forced to go back and repeat the decisions of 1933. Spontaneity is pulling us to the opposite side. The top echelons want the best engineers to be by their side. We have not yet grown up to become as neat and tidy as we would like to be. There is a lot of colouring up of our reality, and we have not at all become as clean and tidy as we want to be. We must criticise our practice.

On Fascism
A few more observations on fascist philosophy. They write as if they have socialism. This needs to be exposed in economic terms. This is what Hitler says: ‘The State, The People! our capitalists receive only 8%. That is enough for them’! The formulation of this question needs to be accompanied by throwing light on the question of competition and the anarchy of production, with the attempts of the capitalists to get rid of competition with the help of the theory of ultra-imperialism. It must be demonstrated that they are doomed. They are propagating a corporativist system, as if it is above the class of workers and the capitalists and the State cares and looks after the workers. They are even arresting individual capitalists (it is true that Thyssen could escape). One should say that in all of this there is more of demagogy, that this is just the pressure of the bourgeois State on individual capitalists who do not want to subject themselves to class discipline. It should be mentioned once in the section on cartelisation and their unsuccessful attempts at planning. Mention it again in the section on Socialism. In your system, gentlemen fascists, to whom do the means of production belong? To individual capitalists and to groups of capitalists and, therefore, you cannot have genuine planning, except for bits, as the economy is divided among groups of owners.

Question: Should we use the term ‘fascists’?

Answer : Name them the way they call themselves: the Italians — as fascists, the Germans — as national-socialists.

In this cabinet I met [H.G.] Wells, and he said to me that he is neither for the workers to be in power nor for the capitalists to be in power. He is for the leadership of engineers. He said that he supports Roosevelt whom he knows well and says that he is an honourable person and a person loyal to the working class. Petty ideas about a reconciliation of classes among the petty bourgeois do exist and are widespread. These ideas have acquired a special meaning with the fascists.

About the place where you talk about the Utopians. Here one should also critically mention the idea of reconciliation among classes. There, obviously, is a difference between the way the question is put by the utopians and the fascists, a variance in favour of the Utopians, but one must not circumvent this issue. Owen would feel very bad if he is put in the same rank as the fascists, but Owen must also be criticized.

The abusive style should be removed from the whole book. You do not convince anyone by abusing. You may sooner get the opposite results, the reader would become wary: ‘since the author is being abusive, it means that not everything is clean’.

One should write in a way that we do not get the impression that everything in their system is bad, and everything in our system is good, one should not beautify things.

Remark: It is written here that the State formulates the plan for almost everybody.

Answer: It is nonsense. In general there is a lot of philosophizing in the section on socialism. One should write more simply.

Question: Is the heading of the chapter ‘Preparation of the capitalist mode of production’ correct? Do we not we get a slight impression that it was consciously prepared?

Answer: This is a terminological issue. One may certainly use the word ‘prepared’. The issue actually is about the birth and the creating of the preconditions.

In fact there is another question regarding the preparation of the Socialist mode of production. It is mentioned here that socialism does not arise within capitalism. It needs to be explained that the material preconditions are created within capitalism, that the objective and subjective preconditions are created within capitalism. It should not be forgotten that we have emerged from capitalism.

Composed according to the notes of Com[rades]
[L.A.] Leontyev, [K.V.] Ostrovityanov, [A.I.] Pashkov.

Translation from
Revolutionary Democracy
Vol. IV, No. 2, September 1998

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