In 1921 Lenin wrote the following on ‘Concessions and the Development of Capitalism’:

“The Soviet government is inviting foreign capitalists to obtain concessions in Russia.”

“What is a concession? It is a contract between the government and a capitalist who undertakes to organise or improve production (for example, felling and floating timber, extracting coal, oil, ore, etc.) and to pay the government a share of the product obtained, keeping the rest as his profit.”

“Is it right for the Soviet government to invite foreign capitalists after expelling the Russian landowners and capitalists? Yes, it is, because, seeing that the workers’ revolution in other countries is delayed, we have to make some sacrifices in order to achieve a rapid and even immediate improvement in the condition of the workers and peasants. The sacrifice is that over a number of years we shall be giving away to the capitalists tens of millions of poods of valuable products. The improvement in the condition of the workers and peasants is that we shall immediately obtain additional quantities of petroleum, paraffin oil, salt, coal, farming implements, and so forth. We have no right to forego the opportunity of immediately improving the condition of the workers and peasants, for our impoverishment makes it essential, and our sacrifices will not be fatal.”

“But is it not dangerous to invite the capitalists? Does it not imply a development of capitalism? Yes, it does imply a development of capitalism, but this is not dangerous, because power will still be in the hands of the workers and peasants, and the landowners and capitalists will not be getting back their property. A concession is something in the nature of a contract of lease. The capitalist becomes, for a specified period, the lessee of a certain part of state property under a contract, but he does not become the owner. The state remains the owner.”

In this view, the proletarian nature of the state guaranteed the socialist character of an economic construction carried out upon the foundations of state capitalism.  The undeveloped and crisis conditions in Russia meant that the state capitalist foundations had themselves to be built under the workers’ own state in alliance with forms of state capitalism that involved individual capitalists, and including foreign capital.  In these circumstances “the worker will never be afraid of such
 a [capitalist] leader, because he knows that Soviet power is his power, that it will stand firm in his defense, and because he knows that he wants to learn the practicalities of organization.”  This was considered a requirement all the more pressing because of the low cultural level of the Russian working class we noted in our earlier posts.

One such collaboration shows what this might involve but also the differences within the Bolsheviks and the new state over the policy and its practical implementation.  In January 1918 the head of the Mining-Metallurgy Department of the Supreme Council of the National Economy (Vesenkha), reported discussions with Alexis P. Meshchersky, a self-made industrialist, 
on the formation of a metallurgical trust.

This would involve creation of a milliard-and-a-half ruble trust combining some 20 industrial enterprises to control approximately 60% of railway wagon and 85% of locomotive production, or 50-60% of Russia’s machine construction and metallurgical industries. Initially, Meshchersky offered the government one-third of the trust’s shares (corresponding to the number of enterprises to be included which were already nationalised) and the same representation on the central administrative board of the trust. Each factory would be run by a board consisting of the existing ‘specialists’ and a commissar representing Vesenkha.

The idea for the trust met with a positive response on the part of leaders in Vesenkha but opposition from some local metallurgical trade unions, who called for complete nationalisation of the factories involved.  Meshchersky then began to back off from his original proposal, in particular with regard to the relative proportions of private/state control.

Meshchersky was forced to reveal that almost 20% of the stocks in the proposed trust were in the hands of German banks and opposition to possible foreign control resulted in readjustment of the shares in the proposed trust from 60% private and 40% government to 50-50, 20-80, and finally to a 100% government share and complete control. However, included in this final proposal was a ‘loophole’ from which Meshchersky never retreated: that 20% of the shares be held in reserve to be returned to the original owners with accumulated dividends should the government ever offer the trust’s shares for sale. When Meshchersky refused further concessions, Vesenkha voted to break off the talks but to proceed with the formation of a unified metallurgical trust.

Vesenkha continued to circulate the Meshchersky proposal to unions and representatives of workers but while they supported creation of trusts or national syndicates they rejected Meshchersky’s proposal because he had refused from the beginning to cooperate with the trade unions and because of the potential influence of foreign capital in the trust.  Eventually Vesenkha nationalised the Sormovo-Kolomna industrial complex in June and other factories in November

Similar negotiations took place in the spring of 1918 between owners and managers of the sugar, textile, and leather industries and trade union representatives, which resulted in formation of a joint or state controlled trust.  The typical pattern for creating joint trust organisations in these cases involved the addition of trade union representatives to pre-revolutionary regulatory boards (usually privately initiated, state sanctioned organisations) which were authorized by Vesenkha to take control of the whole industrial branch.

Lenin cited these organisations as exemplary of state capitalism’s role in the transition period: “The situation is best among those workers who are carrying out this state capitalism: among the tanners and the textile and sugar industries, because they have a sober, proletarian knowledge of their industry and they want to preserve it and make it more powerful-because in that lies the greatest socialism.”

The pursuit of this state capitalist road reflected not only the relative backwardness of Russian capitalism exacerbated by war and economic collapse, but an analysis that socialism could only be built on the grounds of capitalism and not from simply ‘smashing’ the capitalist state and creating socialism ex nihilo.

In neither of these could Lenin be criticised for being wrong.  What was wrong was (1) that the weak development of Russian capitalism could not be overcome within Russia itself and socialism could neither be created through state capitalism (with a workers’ state place on top of it) nor could this stage be leapt over by going ‘straight’ to socialism and (2) the socialisation created under capitalism upon which socialism could be built was not limited to the centralisation and concentration of production by state capitalist trusts.

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The Bolsheviks faced the same problems as their Tsarist predecessors, caused by war and economic collapse.  It was their ideology that determined their particular responses.

This element of choice has nearly always been considered true in the case of the alternative policies advocated by Stalin and Trotsky in the dispute over the future course of the revolution.  This choice ultimately entailed the former’s forced collectivisation and the Great Terror.  The various policies pursued by the Bolsheviks during Lenin’s life showed that alternatives were possible before as well.  It is not the case that the conditions of crisis determined Bolshevik policies, rather than severely constraining them.

I’m reminded of the exhibition on art and the Russian Revolution held in the Royal Academy in London earlier this year, which felt more like a museum exhibition than an art gallery and which had an audio guide that, in its increasingly reactionary commentary, managed to both present the series of policies pursued after the revolution while implicitly condemning revolutionary single-mindedness.

Policies of War Communism, New Economic Policy (NEP) and forced industrialisation and collectivisation of agriculture were presented in such a terse and dismissive way that it would have been impossible for the untutored to make any great sense out of it; other than perhaps that the Bolsheviks capitulated to capitalism under the NEP and then turned 180° to ‘socialism’ (why did they not bother to do it in the first place?)

No appreciation was in evidence that socialism can only be built on the achievements of capitalism. Socialism is not an alternative route to ‘modernisation’, which has proved over the twentieth century to be a route not to socialism but to Stalinist dictatorships; or to ‘national liberation’ and an end to colonial rule, that has simply been a route to capitalist development through greater or lesser intervention by the state.

Some misconceptions derive from the mistaken views of the Bolsheviks themselves, which were understandable when they arose but indefensible now.

Less often noted, is that the Bolsheviks were not united or always very clear themselves on how socialism could be constructed in Russia, even allowing for a shared recognition that they could not ultimately be successful without successful socialist revolution in the more advanced countries in Europe.

In his speech at the First Congress Of Economic Councils in May 26, 1918 Lenin stated that “in such a gigantic task, we could never claim, and no sensible socialist who has ever written on the prospects of the future ever even thought, that we could immediately establish and compose the forms of organisation of the new society, according to some predetermined instruction and at one stroke.”

“The task which we set ourselves is a task of world-historic difficulty and significance.”

“Of all the socialists who have written about this, I cannot recall the work of a single socialist or the opinion of a single prominent socialist on future socialist society, which pointed to this concrete, practical difficulty that would confront the working class when it took power, when it set itself the task of turning the sum total of the very rich, historically inevitable and necessary for us store of culture and knowledge and technique accumulated by capitalism from an instrument of capitalism into an instrument of socialism.”

“All that we knew . . . was that transformation was historically inevitable and must proceed along a certain main line, that private ownership of the means of production was doomed by history, that it would burst, that the exploiters would inevitably be expropriated. This was established with scientific precision, and we knew this when we grasped the banner of socialism, when we declared ourselves socialists, when we founded socialist parties, when we transformed society. We knew this when we took power for the purpose of proceeding with socialist reorganisation; but we could not know the forms of transformation, or the rate of development of the concrete reorganization.”

“With the transition of all power . . . to a new class, and, moreover, to a class which for the first time in the history of humanity is the leader of the overwhelming majority of the population, of the whole mass of the working and exploited people—our tasks become more complicated.”

“We must build our economic edifice as we go along, trying out various institutions, watching their work, testing them by the collective common experience of the working people, and, above all, by the results of their work. We must do this as we go along, and, moreover, in a situation of desperate struggle and frenzied resistance by the exploiters.”

“We know . . . that organisation, which is the main and fundamental task of the Soviets, will inevitably entail a vast number of experiments, a vast number of steps, a vast number of alterations, a vast number of difficulties, particularly in regard to the question of how to fit every person into his proper place, because we have no experience of this . . .“

What preconceptions Lenin did have, which were reinforced by the social and political circumstances under which the revolution took place, were of the central role of the new state in construction of the new socialist economy, something taken for granted by many socialists since, but not at all obvious from a careful reading of Marx.

So Lenin could, at the beginning of his speech, say that:

“There is not the slightest doubt that the further the gains of the October Revolution go, the more profound the upheaval it started becomes, the more firmly the socialist revolution’s gains become established and the socialist system becomes consolidated, the greater and higher will become the role of the Economic Councils, which alone of all the state institutions are to endure. And their position will become all the more durable the closer we approach the establishment of the socialist system . . . After the resistance of the exploiters has been finally broken, after the working people have learned to organise socialist production, this apparatus of administration in the proper, strict, narrow sense of the word, this apparatus of the old state, is doomed to die; while the apparatus of the type of the Supreme Economic Council is destined to grow, to develop and become strong, performing all the main activities of organised society.”

This statist conception of economic construction viewed the increasing socialisation of the socialist economy as almost a linear continuation of the socialisation present and theorised in the existing capitalist economies.

Development of the capitalist system had involved monopoly, increasing domination by finance, and the increasing role of the state.  This form of capitalism was categorised as imperialism, the highest stage of capitalism.  According to Lenin, this had brought capitalism to the ‘threshold of the most complete socialisation of production. In spite of themselves, the capitalists are dragged, as it were, into a new social order, a transitional order from free competition to complete socialization’.

The ‘war has accelerated the development of capitalism, which advanced from capitalism to imperialism, from monopoly to state control. All this has brought the socialist revolution nearer and has created the objective conditions for it.”

However, the Russian Revolution took place in particularly unfortunate conditions and

“The capitalism described in 1903 remains in existence in 1919 in the Soviet proletarian republic just because of the disintegration of imperialism, because of its collapse.”

“If we had had an integral imperialism before us, which had entirely altered capitalism, our task would have been a hundred thousand times easier. It would have resulted in a system in which everything would be subordinated to finance capital alone. It would only have remained to remove the top and to transfer what remained to the proletariat.”

The transition from socialised capitalism to the socialisation of production under the rule of the working class was explained in this way: ‘as for the organizational form of work, we shall not invent it, but shall take it ready-made from capitalism: the banks, syndicates, the best factories, experimental stations, etc. …. Our problem here is only to lop away that which capitalistically disfigures this otherwise excellent apparatus and to make it still bigger, still more democratic, still more comprehensive.’

This view was contested by other leading Bolsheviks such as Bukharin and Osinsky.  For the latter, a Bolshevik policy of state capitalism as proposed by Lenin is ‘basically an unchanged continuation of the economic policies of capitalism’, and, therefore, ‘every attempt to establish a truly human society upon the old capitalist foundations is foredoomed.”

Lenin responded to critics in March, April and in May I918, elaborating the transition from capitalism to socialism as an extension of the ‘socialisation process’ begun under capitalism but now under proletarian authority and with new aims. He pronounced Bukharin’s and Osinsky’s reliance on his earlier work ‘State and Revolution’ and the slogan ‘smash the bourgeois state and economic apparatus’ as out of date: ‘this we have already done, it is a task which belongs to a previous day “

For Lenin “the possibility of building socialism will be determined precisely by our success in combining the Soviet government and the Soviet administrative organisation with the modern achievements of capital.”’

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