Some books I read in 2021 (1) – ‘Red Globalisation’

‘Red Globalisation: The political economy of the Soviet Cold War from Stalin to Krushchev’, Oscar Sanchez-Sibony, Cambridge University Press, 2014

Despite the disintegration of the Soviet Union and Eastern bloc the politics of Stalinism lives on, infecting even those who declare their politics to be its historic left opposition.  This politics is summed up in the idea of the possibility of establishing socialism in one country.  

For example, there is no basis for left support for Brexit other than the possibility of taking otherwise prohibitive steps towards socialism on a purely national basis.  Such a view of this left case is supported by its argument that the EU prevents the implementation of state ownership, which, when combined with nationalism, is termed nationalisation and is considered more or less synonymous with socialism.

Since neither state ownership or nationalism expresses specifically working class interests or its powers to assert them, they do not at all define socialism.  Despite its demise the example of the Soviet Union continues to be been held up as embodying socialism, based on its definition as state ownership, and moreover this achievement in one country, so justifying nationalism.

The book ‘Red Globalisation’ argues that the Soviet Union, far from being an economic construct separate from the world capitalist economy, was intrinsically enmeshed within it as a middle-income country, very much subject to the forces shaping that world economy.  This can be seen not only in its autarky in the 1930s but also in its own particular globalisation after the Second World War.

To forestall any presumption that the book can be employed to make the case that the Soviet Union was some sort of capitalism, it simply confirms that socialism can be international or not at all.  The book argues that ‘as is usual in large countries, trade did not play much of a role in the Soviet Union’s economic growth at this time; in this almost purely domestic achievement, coercion and surveillance were everything, and these only started to be undermined by Krushchev’s reforms late in the 1950s.’ (page 122). It should also be noted that this reviewer would not agree to the assessment that the domestic achievements of the Soviet Union could be put down solely to repression.

After the early years of the revolution, far from disengaging from the capitalist world, Sanchez-Sibony argues that from the industrialisation debate in the 1920s onwards there was widespread agreement on the necessity of links with the foreign capitalist market, and all the steps considered necessary to ensure that this would succeed, including following ‘the liberal prescription of gold standard orthodoxy, namely austerity.’ (page 36-7).

The pressure experienced on new regime’s currency and gold reserves ‘threatened the credibility of the state’s commitment to monetary stability both domestically and abroad . . .  possible exclusion from international capital markets . . . was not countenanced until it became inevitable . . .‘ (page 37).  Sanchez-Sibony notes that the ‘NEP had been designed precisely to take advantage of the coming global expansion; what the Bolsheviks got instead was the full measure of the world economy’s 1920s fluctuations.’ (page 45)

While one response to these was monetary expansion, this only resulted in inflation and a plummeting value of the currency, leading to increased exertion and coercion.  Remaining creditworthy became ‘a bit of an obsession, particularly for Stalin, who would prove quite willing to implement whatever policies were needed to achieve this purpose, both in the 1930s and after World War II, even if it compounded times of starvation.’ (page 47).

So, while the first five-year plan envisaged foreign trade as one of the most rapidly growing sectors, the Great Depression led to a reduction in credit and then of trade, with internal crises leading to a turn to what was called ‘import substitution’ but was in fact import deprivation – reduced imports did not lead to increased domestic production.

It therefore became a case of attempting to make a virtue out of necessity rather than any ‘discourse on the desirability of economic independence.’ (page 52). Cuts to imports to one-third of their 1931 value kept the Soviet Union solvent in 1933 while austerity allowed it to pay off its debt by 1935 – ‘the surprise was that the Soviet Union, unlike many economically emerging countries during those years, did not default on its debt, preferring to starve the Soviet population instead . . .’ (page 53) This included, by the way, paying Adolf Hitler the debt accrued to Germany in gold ingots in the mid-1930s.

All this did not result in any particularly autarkic economy by world standards; while exports by value fell by half between 1931 and 1934, by volume they fell by 28 percent, still 18 percent above the 1929 level, while world trade had reduced by 20 percent.

Sanchez-Sibony acknowledges that ‘trade did not revive much thereafter’, explaining this by the preparations for war making import dependence ‘a foolhardy proposition’ or ‘perhaps’ Soviet leaders coming to believe their ‘own propaganda on the virtues of economic independence’, which seems rather unlikely given their prior and later history.  He argues that imports of equipment became less critical than they had been at the beginning of industrialisation while the requirement  for industrial materials increased and the import of military technology became a priority. (page 55)

He states that during this period ‘the soviets continued to be dictated terms by the world economy against their plans and best interests’ and speculates whether both the role of Stalin and the course of Soviet history might have been different ‘had the Soviet state developed in a globalising, inflationary world economy more akin to the triumph of the 1950s rather than the disaster of the interwar period?’ (page 56)

Following the war, the settlement in Eastern Europe ‘presented the Soviets with their first opportunity ever to trade with other countries without overwhelming economic or political complications.  It was telling that they seized the opportunity; it heralded the explosion to come.’ (page 70) See graph below:

Foreign Trade turnover by Region (millions 1961 rubles) [from ‘Red Globalisation]

This however did not entail a decoupling from the world capitalist system.  Referencing the new Bretton Woods system in the West, Sanchez-Sibony writes that ‘the Soviet Union, along with its CMEA [Council for Mutual Economic Assistance] partners, remained appendages to the much larger and dominant liberal construct.’ (page 73)

He recalls one ‘small episode’ that ‘best captures the nature of power relations in the new liberal order the Soviets encountered against their best predictions.’  This involved Soviet fears for the security of their ‘meagre’ reserves, more than two-thirds of which lay in American banks and almost half of which was already committed to importing rubber, that they thought might be safer if they were deposited in European banks. (page 73)

The Soviet Union remained committed to engagement with world capitalism, in what they called the “international division of labour”, resisting defaulting on their war debts in order to defend their credit within ‘the liberal financial architecture of the postwar period.’ (page 74). 

The shortage of dollars was a problem for the Soviets as it was for everyone else and they often employed barter arrangements to avoid currency requirements. They could, however, ‘only watch from the sidelines and rage about the subversive American influence’ as the latter led the reconstruction of a functioning capitalist system in Europe through Marshall Plan funding and the European Payments Union, which facilitated commercial and financial transactions among the West European countries.

The Americans became a real barrier to economic relations with other capitalist powers, which only loosened as these reduced their dependence on the US.  Even so, the Soviet economy began to grow quickly during the 1950s with foreign trade expanding at an even faster rate, the vast proportion with the other Stalinist states.  The weight of trade with developing countries also grew along with the process of decolonisation although it soon reached a  plateau, while trade with the West continued to grow ‘unrelentingly’, with the Soviet Union especially keen for access to Western technology, which was exchanged for raw materials such as oil and timber. 

Ironically Sanchez-Sibony argues that ‘the Soviet Union’s inherently weak position in international politics’ was exploited by both its East European allies, whose provision of low quality goods was subsidised, and other ‘alleged allies in the developing world.’ (page 95)  

In 1958 the Soviet Union was declaring that “in the future we will not relax our efforts to normalise and expand trade and economic relations with capitalist countries,” which year was also the beginning of large net imports of machinery from the West. (pages 107-8). About the same time Soviet leaders started to become preoccupied with repeated complaints by customers about the quality of Soviet exports.  These even included issues with their exports of raw materials, such as unseasoned timber, and coal and chromium ‘riddled with too many impurities.’ (p 116) 

Nevertheless, statistics for foreign trade showed that it increased from 12 percent of national income in 1960, to 21 per cent in 1975 and to 27 per cent in 1980; levels comparable to that of Japan.  In fact, Sanchez-Sibony claims that ‘the Soviet Union throughout the postwar era was more sensitive to changes in the world economy than other large countries such as the United States, Brazil, India, and by the late 1970s, even Japan.’ (page 5).

Far from it advancing beyond capitalism however its trade with Western Europe spoke of the reverse – ‘whereas in 1955, manufactured goods made up 28 percent of Soviet exports to Western Europe, in 1983 the figure was 6 percent.  In the mid 1980s, some three-fourths of their exports to the developed countries consisted of oil, gas, and gold.’ (page 19)

He records the fate of eight Ilyushin IL-18 airplanes sold to Ghana in the early 1960s.  Only four worked regularly, only clocking up fifteen hours each month on average, while a single British Bristol Britannia was flying 113 hours a month and required less repairs.

The Soviet Union’s trade with newly independent nations involved ‘no great Communist crusade’, and a good part of ‘Red Globalisation‘ details the commercial considerations on both sides and the absence of ideological considerations, whatever pretence was sometimes made.  For the Soviet Union ‘the main motivations . . . were political goodwill and the alleviation of western pressure on both the Soviet Union and its economic partners.’ (page 251)

He records the visit of Indian businessmen to the Soviet Union in 1954 to what were presented as the country’s most modern ‘flagship’ factories, such as Moscow’s “Stalin” car factory, and the “Red Proletariat” machine-building factory.

The report back by the businessmen to its government noted that they thought the factories ‘rather dilapidated’, housed in ‘neglected buildings’ and with ‘machinery suffering from widespread disrepair’.  They were unimpressed by the quality of output and productivity and the factory manager’s lack of concern for quality.  The ‘airplanes were chronically late’, the trams were ‘too full’, and the hotels outside Moscow and Leningrad ‘were badly made and unsanitary’, although the ‘people seemed content and children in particular looked healthy and well taken care of.’

They concluded that ‘there was little in the way of technology and industrial equipment in the Soviet Union that could not be bought somewhere else, and moreover have it be of better quality.’ (pages 162-3)

More trade with the West was thus not going to be the answer to the question of economic development while exports were uncompetitive.  In any case, as we have seen, trade with the West did increase and the Soviet Union still collapsed.  Even without autarky or the constraints on trade imposed, especially by the United States, the Soviet Union could not constitute a society with greater productivity than Western capitalism.

’Opening-up’ was not in itself an answer.  Trade with the West did not negate the problems imposed by the Stalinist policy of ‘socialism in one country’, which could not survive even with the benefit of massive oil price increases in the 1970s, of which the Soviet Union was a great beneficiary.

‘Red Globalisation’ is not a particularly long book so it could not be comprehensive. It has also been criticised by some academics for relying on a rather narrow range of archival material that avoids the documentation that would reveal the (supposedly aggressively anti-capitalist) ideological and political motives of the Soviet Union, as opposed to the portrayal by Sanchez-Sibony that it was overwhelmingly economic considerations that drove trade and economic policy.

They advance this argument by noting the original Bolshevik repudiation of the Tsarist debt and particularly the state monopoly of trade.  These, they say, demonstrate the mainly ideological character of Soviet policy.  This however misses the point, or rather several.

As Sanchez-Sibony himself argues, the choice of economic policy was itself ideological, which for Marxists derived from Stalinism’s commitment to a policy of socialism in one country.  The commitment to a state monopoly of trade was simply a reflection of the non-capitalist character of the Soviet Union, while the early Bolshevik repudiation of Tsarist debt reflects, among other things, the revolutionary character of the Soviet regime at that early point of the revolution. 

Sanchez-Sibony’s book is mainly concerned to show that the Soviet Union was not an autonomous autarky but that ‘the world economy quickly slotted the country within its economic and technological hierarchy.’ (page 247). This failure has been registered by much of the Left but not assimilated.  The majority of workers consider its experiment a failure, while the determination of much of the left not to learn from it also signals its determination to continue to own that failure.

1 thought on “Some books I read in 2021 (1) – ‘Red Globalisation’

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