STATE CAPITALISM

LENIN; On State Capitalism, During the Transition to Socialism

MEETING OF ACTIVISTS OF THE MOSCOW ORGANISATION OF THE R.C.P.(B.)
DECEMBER 6, 1920
1
From REPORT ON CONCESSIONS
I now go over to economics. When we were speaking of Germany we came up to the question of economics. Germany cannot exist from the economic standpoint following the Peace of Versailles 2; neither can all the defeated countries such as Austria-Hungary in her former boundaries, for though parts of that country now belong to the victor states, she cannot exis.t under the Treaty of Versailles. These countries form, in Central Europe, a vast group with enormous economic and technical might. From the economic standpoint they are all essential to the restoration of the world economy. If you carefully read and re- read the Decree on Concessions of November 23, you will find that we stress the significance of the world economy, and we do so intentionally. That is undoubtedly correct. For the world economy to be restored, Russian raw materials must be utilized. You cannot get along without them-that is economically true. It is admitted. even by a bourgeois of the first water a student of economics, who regards things from a purely bourgeois standpoint. That man is Keynes, author of The Economic Consequences of the Peace. Vanderlip, who has travelled all over Europe as a financial magnate, also admits that the world economy cannot be restored because it appears that there is very little raw material available in the world, it is having been dissipated in the war. He says that Russia must be relied on. And Russia now comes forward and declares to the world: we under take to restore the international economy-here is our plan.

That is sound economics. During this period Soviet government has grown stronger; not only has it grown stronger, but it has advanced a plan for the restoration of the entire world economy.
The rehabilitation of the international economy by means of a plan of electrification 5 is scientifically sound. With our plan we shall most certainly attract the sympathy, not only of all the workers but of sensible capitalists as well, regardless of the fact that in their eyes we are "those terrible Bolshevik terrorists". and so forth. Our economic plan is therefore correct; when they read this plan, all the petty-bourgeois democrats will swing over towards us, for while the imperialists have already fallen out among themselves, here is a plan to which engineers and economists can offer no objection. We are entering the field of eco- nomics and are offering the world a positive programme of construction; we are opening up prospects based on economic considerations, prospects which Russia regards not as a selfish plan to destroy the economies of other lands, as was the rule in the past, but as a way to restore those economies in the interests of the whole world.

We are-shifting the question to the anti-capitalist plane. We say that we undertake to build the whole world on a rational economic foundation; there can be no doubt that this idea is a correct one. There can be no doubt that if we set to work properly, with_ modern machinery and the help of science, the whole world economy can be restored at once.
We are conducting a kind of industrial propaganda when we say to the master class: "You capitalists are useless; while you are going to rack and ruin, we are building in our own way; so don't you think, gentlemen, it is time to come to terms with us?" To which all the capitalists of the world will have to reply, though grudgingly: "Yes, perhaps it is. Let us sign a trade agreement."

The British have already made a draft and sent it to us.36 It is under discussion. New times are setting in. Their war schemes have miscarried and they now have to fight in the economic field. We fully understand that. We never imagined that with, t he fighting over and the advent of peace, the capitalist wolf would lie down with the socialist lamb. No, we did not. Yet the fact that you have to fight us in the economic field is a tremendous step forward. We have presented you with a world programme by regarding concessions from the standpoint of the world economy. That is indisputable from the viewpoint of economics. No engineer or agronomist who has anything to do with the national economy will deny that. Many capitalists say there cannot be a stable system of capitalist states without Russia. Yet we have advanced such a programme in the capacity of builders of a world economy based on a different plan. That is of tremendous propaganda value. Even if they do not sign a single con- cession-which I regard as quite possible-even if the sole out- come of all this talk of concessions will be a certain number of Party meetings and decrees, without a single concession being granted we shall still have gained something. Besides advancing - a plan of economic reconstruction, we are winning over all states that have been ruined by the war. At ,the congress of the Third, Communist International I said that the whole world is divided into oppressed and oppressor nations. 37 The oppressed nations constitute not less than seventy per cent of the population of the earth. To these the Peace of Versailles has added another hundred or hundred and fifty million people.

We now stand, not only as representatives of the proletarians of all countries but as representatives of the oppressed peoples as well. A journal of the Communist International recently appeared under the title of Narody Vostoka. It carries the following slogan issued by the Communist International for the peoples of the East: "Workers of all countries and all oppressed peoples, unite!" "When did the Executive Committee give orders for slogans to be modified?" one of the comrades asked. Indeed, I do not remember that it ever did. Of course, the modification is wrong from the standpoint of the Communist Manifesto, but then the Communist Manifesto was written under entirely different conditions. From the point of view of present-day politics, however, the change is correct. Relations have become tense. All Germany is seething; so is all of Asia. You have read how the revolutionary movement is developing in India. - In China there is a fierce hatred of the Japanese, and also of the Ameri cans. In Germany there is such seething hatred of the Entente as can only be understood by those who have seen the hatred of the German workers for their own capitalists. As a result, they have made Russia the immediate representative of the entire mass of the oppressed population of the earth; the events are teaching the peoples to regard Russia as a centre of attraction.

A Menshevik newspaper in Georgia recently wrote: "There are two forces in the world: The Entente and Soviet Russia." What are the Mensheviks? They are people who trim their sails to the wind. When we were weak internationally, they cried, "Down with the Bolsheviks!" When we began to grow stronger, they cried, "We are neutral!" Now that we have beaten off the enemies, they say, "Yes, there are two forces."

In the concessions decree we come forward, on behalf of all humanity, with an economically irreproachable programme for the restoration of the world's economic forces by utilising all raw materials, wherever they are to be found. What we consider important is that there should be no starvation anywhere. you capitalists cannot eliminate it; we can. We are speaking for seventy per cent of the population of the earth. This is sure to exert an influence. Whatever comes of the project, no exception can be taken to it from the angle of economics. The economic aspect of concessions is important, regardless of whether they are: signed not. .

As you see, I have been obliged to make a rather long introduction and to demonstrate the advantages of concessions. Of course, concessions are important to us also as a 1neans of obtaining commodities. That is unquestionably true, but the chief thing in the political aspect. By the time the Congress b Soviets meets you will receive a book of six hundred pages-the plan for the -electrification of Russia. This plan has been devised by the leading agronomists and engineers. We cannot expedite its realization without the help of foreign capital and means of production. But if we want assistance, we must pay for it. So far, we have been fighting the capitalists, and they said that they would-either strangle us or compel us to pay up twenty thousand mil lions. However, they are in no position to strangle us, and we shall not pay the debts.39 For the time being we are enjoying a-certain respite. As long as we need economic assistance, we are willing to pay you-that is the way we put the matter, and any other way would be economically unsound. Russia is in a state of industrial ruin; she is ten times or more worse off than before the war.' Had we been told three years ago that we would-be fighting the entire capitalist world for three years, we would: not have believed it. But now we shall be told that to restore the eco no my, with only one-tenth of the pre- war national wealth is a still more difficult task. And indeed, it is more difficult than fighting. We could fight with the help of the enthuse on the working-class masses and the, peasants, who were defending themselves against the landowners. At present it is not a question of defence against the landowners, but of restoring economic life along line: the peasants are not accustomed to. Here victory will not depend on enthusiasm, dash, or self-sacrifice., but on day-by-day, monotonous, petty and workaday effort. That is undoubtedly a more difficult matter. Where are we to procure the means of production we need? To attract the Americans, we must P Y: they are men of business. And what are we to pay with, With gold? But we cannot throw gold about. We have little old eft. We have too little even to cover the programme of electnficat10n. The engineer who drew up the programme has estimated that we need at least a thousand and one hundred million rubles of gold to carry it out. We do not have such a stock of gold. Neither can we pay in raw materials, because we have not yet f: d all our own people. When, in the Council of People’s Commissars.,. the question arises of giving 100,000 poods 40 of gram to the Italians, the People’s Commissar for Food gets up and objects. We are bargaining for every trainload of grain. Without gram we cannot develop foreign trade. What then shall we give? Rubbish? They have enough rubbish of their own. They say, let us trade in grain; but we cannot give them grain. We therefore propose to solve the problem by means of concessions.

I pass to the next point. Concessions create new dangers. I shall mention what I said at the beginning of my speech, namely, that an outcry is going up from the rank and file, from the working-class masses: "Don't yield to the capitalist; hey re clever and crafty." It is good to hear that, because 1t 1s a s1g of the development of that vast mass which will fight the cap1talists tooth and nail. There are some sound ideas in the articles of Comrade Stepanov, which he planned on pedagogical lines (first set forth all the arguments against concessions, and then say that they must be accepted ; but certain readers , before they get to the good part , may stop reading, convinced that concessions are unnecessary); but when he says that we must not give concessions to Britain because that will mean some Lockhart coming here, I cannot agree we coped with him at a time when the Cheka was still in its infancy, not as effective as it is now. If we cannot catch spies after three years of war, then all that can be said is that such people should not undertake to run the state. We are solving far more difficult problems. For instance, there are at present 300,000 bourgeois in the Crimea. These are a source of future profiteering, espionage and every kind of aid to the capitalists. However, we are not afraid of them. We say that we shall take and distribute them, make them submit, and assimilate them.

To say after this that foreigners who will be attached to the various concessions will be a danger to us, or that we shall not be able to keep an eye on them, is ridiculous. Why, then, should we have started the whole business? Why, then, should we have undertaken to run the state? The task here is purely one of organisation, and it is not worth dwelling on at length.

It would, of course; be a great mistake to think that concessions ply peace. Nothing of the kind. Concessions are nothing but a new form of warfare. Europe waged war on us, and now the war is shifting to a new sphere. Previously, the, war was conducted in a field in which the imperialists were infinitely stronger than we were-the military field. If you count the number of cannon and machine-guns they have and, the number we have, the number of soldiers their governments· can mobilize and the number our government can mobilize, then we certainly ought to have been crushed· in a fortnight. Nevertheless, we held our own in this field, and we undertake to continue the fight and are going over to an economic war. We definitely stipulate that next to a concession area, a concession square of territory, there will be our square, and then again, their square; we shall learn from them how to organise model enterprises by placing what is ours next to theirs. If we are incapable of doing that, there is no use talking about anything. Operating up-to-date equipment nowadays is no easy matter, and we have to learn to do so, learn it in practice. That is something that no school, university course will teach you. That is why we are granting con- cessions on the chequerboard system. Come and learn on the job. We shall get a tremendous economic gain from concessions. Of course, when their dwelling areas are created, they will bring capitalist customs along with them and will try to demoralise the peasantry. We must be on the alert and exercise our communist counter-influence at every step. That too is a kind of war, a duel between two methods, two political and economic systems- the communist and the capitalist. We shall prove that we are the stronger. We are told: "Very good, you have held your own on the external front; well, start construction, go ahead and build. and we shall see who wins. " Of course, the task is a difficult one, but we have said, and still say, that socialism has the force of example. Coercion is effective against those who want to restore their rule. But at this stage the significance of force ends, and after that only influence and example are effective. We must show the significance of communism in practice, by example. We have no machinery; the war has impoverished us and deprived Russia of economic resources. Yet we do not fear this duel, because it will be advantageous to us in all respects.

. . .The capitalist will seek pretexts for going to war. If they accept our proposal and agree to concessions, that will be harder for them. On the one hand, we shall have the best conditions in the event of war; on the other hand, those who want to go to war will not agree to take concessions. The existence of concessions is an economic and political argument against war. States that might go to war with us will not be able to do so if they take concessions. This will bind them. We set such a high value by this that we shall not be afraid to pay= the more so that we shall be paying from the means of production that we cannot develop. For Kamchatka we shall pay in terms of 100,000 poods of oil, taking only 2 per cent for our selves. If we do not pay up, we shall not get even two poods. This is an exorbitant price, but while capitalism exists, we cannot expect a fair price from it. Yet the advantages are beyond doubt. From the angle of the danger of a collision between capitalism and Bolshevism, it can be said that concessions are a continuation of the war, but in a different sphere. Each step of the enemy will have to be watched. Every means of administration, supervision, influence and action will be required. And that is all warfare. We have fought a much bigger war; in this war we shall mobilize even larger numbers of people than in the preceding.

In the war any working people, will be mobilised to a man. They will be told and given to understand: "If capitalism does this or that, you workers and peasants who have overthrown the capitalists must do no less. You must learn!"

I am convinced that the Soviets will overtake and outstrip the capitalists and that our gain will not be a purely economic one. We shall get the miserable two per cent-very little indeed, yet it is something. But then we shall be getting knowledge and training; no school or university is worth anything without practical knowledge. You will see from the map appended to the pamphlet Comrade Milyutin will show you that we are granting concessions principally in the outlying regions. In European Russia there are 70,000,000 dessiatines of northern forest land. About 17,000,000 dessiatines are being set aside for concessions. Our timber enterprises are mapped out chequerwise: these forests are in West Siberia and in the far North. We have nothing to lose principal enterprises are located in West Siberia, whose wealth is immense. We cannot develop a hundredth part of it in ten years. However, with the help of foreign capitalists, by letting them have, say, a single mine, we shall be able to work our own mines. In granting concessions, we do · the · choosing of the locations.

How are the concessions to be organised as, regards supervision? They will try to demoralise our peasantry, our masses. A small master by his very nature, the peasant is inclined to freedom of trade, something we consider criminal. That is a matter for the state to combat. Our task here is to contrapose the socialist system of economy to the capitalist system. That, too, will be a war in which we shall have to fight a decisive battle. We are suffering from a tremendous crop failure, lack of fodder and loss of livestock, yet at the same time vast areas of land are uncultivated. In a few days a decree will be issued providing that every effort be exerted to achieve the largest possible sowing of crops and the greatest possible improvement of agriculture.

Next, we, have a million dessiatines of virgin soil which we cannot bring under the plough because we have not enough draught animals and implements, whereas with tractors this land can be ploughed to· any depth. It is therefore to our advantage to let out this · land on lease. Even if we surrender half of the produce, or even three-quarters, we shall be the gainers. That is the policy we are guided by, and I can say that our actions must be guided, not only by economic considerations and the trend of the world economy, but also by profound political considerations. Any other approach to the matter would be short sighted. If it is a question of whether concessions are economically advantageous or disadvantageous, the reply is that the economic advantages are beyond dispute. Without concessions, we shall not be able to carry out our programme and the electrification of the country; without them, it will be impossible to restore our economic life in ten years; once we have restored it, we shall be invincible to capital. Concessions do not mean peace with capitalism, but war in a new sphere. The war of guns and tanks yields place to economic warfare. True, it also holds out new difficulties and new dangers, but I am certain that we shall overcome them. I am convinced that if the question of concessions is posed in this way, we shall easily be able to convince the vast majority of the Party comrades of the necessity of concessions. The instinctive apprehension I have spoken of is a good and healthy sentiment, which we shall con vert into a driving force that will secure us a more rapid victory in the impending economic war.
Vol. 31, pp. 450-59