STATE CAPITALISM

LENIN; On State Capitalism, During the Transition to Socialism

CONCESSIONS AND THE DEVELOPMENT OF CAPITALISM
Recorded Speech

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 fore go 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.

The Soviet government will see to it that the capitalist lessee abides by the terms of the contract, that the contract is to our advantage, and that, as a result, the condition of the workers and peasants is improved. On these terms the development of capitalism is not dangerous, and the workers and peasants stand to gain by obtaining a larger quantity of products.
April 25, 1921
N. Lenin
Vol. 32, pp. 368-69

From a letter TO M. F. Sokolov
Comrade M. Sokolov, Secretary of the Department for Management of Property Evacuated from Poland Dear Comrade,

I have received and read your draft report for May 18. You write that I have “slipped up”. On the one hand, you say, by leasing forests, land, etc., we are introducing state capitalism, and on the other hand, he (Lenin) “talks” about “expropriating the landowners”.

This seems to you a contradiction.

You are mistaken. Expropriation means deprivation of property. A lessee is not a property-owner. That means there is no contradiction.
The introduction of capitalism (in moderation and skilfully, as I say more than once in my pamphlet ) is possible without restoring the landowners’ property. A lease is a contract for a period. Both ownership and control remain with us, the workers’ state.

“What fool of a lessee will spend money on model organisation,” you write, “if he is pursued by the thought of possible expropriation...”

Expropriation is a fact, not a possibility. That makes a big difference. Before actual expropriation not a single capitalist would have entered our service as a lessee. Whereas now “they”, the capitalists, have fought three years, and wasted hundreds of millions of rubles in gold of their own (and those of the Anglo- French, the biggest money-bags in the world) on war with us. Now they are having a bad time abroad. What choice have they? Why should they not accept an agreement? For 10 years you get not a bad income, otherwise ... you die of hunger abroad. Many will hesitate. Even if only five out of 100 try the experiment, it won’t be too bad.

* At the top of the letter Lenin wrote: " (from Lenin) ( to be signed on receipt) to M. Sokolov, 18 Malaya Nikitskaya."-Ed,
Written on May 16, 1921 Vol. 35, pp. 491-92

From REPORT ON THE TACTICS OF THE R.C.P.
JULY 5
... It goes without saying that the tax in kind means freedom to trade. After having paid the tax in kind, the peasant will have the right freely to exchange the remainder of his grain. This freedom of exchange implies freedom for capitalism. We say this openly and emphasise it. We do not conceal it in the least. Things would go very hard with us if we attempted to conceal it. Freedom to trade means freedom for capitalism, but it also means a new form of capitalism. It means that, to a certain extent, we are re-creating capitalism. We are doing this quite openly. It is state capitalism. But state capitalism in a society where power belongs to capital, and state capitalism in a proletarian state, are two different concepts. In a capitalist state, state capitalism means that it is recognised by the state and controlled by it for the benefit of the bourgeoisie, and to the detriment of the proletariat. In the proletarian state, the same thing is done for the benefit of the working class, for the purpose of withstanding the as yet strong bourgeoisie, and of fighting it. It goes without saying that we must grant concessions to the foreign bourgeoisie, to foreign capital. Without the slightest denationalisation, we shall lease mines, forests, and oilfields to foreign capitalists, and receive in exchange manufactured goods, machinery, etc., and thus restore our own industry.

Of course, we did not all agree on the question of state capitalism at once. But we are very pleased to note in this connection that our peasantry has been developing, that it has fully realised the historical significance of the struggle we are waging at the present time. Ordinary peasants from the most remote districts have come to us and said: “What! We have expelled our capitalists, the capitalists who speak Russian, and now foreign capitalists are coming!” Does this not show that our peasants have developed? There is no need to explain to a worker who is versed in economics why this is necessary. We have been so ruined by seven years of war that it will take many years to restore our industry. We must pay for our backwardness and weakness, and for the lessons we are now learning and must learn. Those who want to learn must pay for the tuition. We must explain this to one and all, and if we prove it in practice, the vast masses of the peasants and workers will agree with us, because in this way their condition will be immediately improved, and because it will ensure the possibility of restoring our industry. What compels us to do this? We are not alone in the world. We exist in a system of capitalist states. . . On one side, there are the colonial countries, but they cannot help us yet. On the other side, there are the capitalist countries, but they are our enemies. The result is a certain equilibrium, a very poor one, it is true. Nevertheless, we must reckon with the fact. We must not shut our eyes to it if we want to exist. Either we score an immediate victory over the whole bourgeoisie, or we pay tribute.

We admit quite openly, and do not conceal the fact, that concessions in the system of state capitalism mean paying tribute to capitalism. But we gain time, and gaining time means gaining everything, particularly in the period of equilibrium, when our foreign comrades are preparing thoroughly for their revolution. The more thorough their preparations, the more certain will the victory be. Meanwhile, however, we shall have to pay tribute.

Vol. 32 pp. 490-92

TELEGRAM TO 'SAMARKAND COMMUNISTS B2
Sharansky, Gubernia Party Committee, Samarkand

I thank the group of friends for their greetings. The main thing just now is an immediate improvement in the conditions of the workers and peasants. On the vigour and skill of the workers in the localities now depends everything: the tax in kind, the development of turnover between agriculture and industry, and the development of small-scale industry. We have no fear of capitalism, because the proletariat has the power, transport and large-scale industry firmly in its hands and win succeed, through its control, in channeling it into state capitalism. Under these conditions, capitalism will help to combat red tape and the scattering of the petty producers. We shall win out because we know what we want.

Lenin
Chairman, C.L.D. Written on June 27, 1921
Vol. 45, pp. 195-96