STATE CAPITALISM

LENIN; On State Capitalism, During the Transition to Socialism

REPLY TO THE DEBATE ON THE REPORT ON CONCESSIONS
Comrades, the question was raised here from the very outset whether our differences in regard to concessions were serious or not, and the desire was expressed, incidentally’ by Comrade Shlyapnikov that more systematic information be given on each agreement. I’m afraid this is impracticable, if only for technical reasons. For instance, take the case of peace treaties with different countries. After the general directives, which at first were drafted in great detail, it so fell out that a certain type of treaty with bourgeois countries was adopted by tacit consent, the mass of details being left to the representatives authorised to sign the treaty. And most of these details are probably unknown to the majority of the members of the Council of People’s Commissars and the Central Committee. The same here: we were dealing with a question of principle and we thought there was a danger of disagreements arising. Therefore, the Party congress had to step in, and therefore the present meeting, in which only members of the Party are taking part, was a meeting called for the purpose of mutual information. We have read out to you what the Council of People’s Commissars has adopted.

The C.P.C.’s decision was adopted in spite of the motion by two very prominent trade unionists. What other method of information do the majority of the communist group members have if not through such a meeting as this one? It works out that there were less disagreements than we thought. This is the most desirable thing for us. No minutes of this meeting are being kept and we do not intend to have a press discussion on it. Our purpose has been achieved.

In informing you of the decision of the Council of People’s Commissars, we are letting you know how we have accepted the decision of. the Party congresses. The remaining differences of opinion do not exceed those which arise from day to day on various questions and are decided by a simple vote, without becoming a hindrance to the work. Submission to the majority in that case is not only a matter of form, but an act that does not hinder further work. I think we have achieved here a result in that no serious differences have come to light, and partial differences will be ’ironed out in the course of the work itself.

Comrade Ryazanov, characteristically, has tried to drag in disagreements with the Workers’ Opposition. He specially chose a formulation that was intended to be a teaser, but he failed in this, and none of the speakers fell for it.

One comrade sent in a note saying that we here are concluding a second Treaty of Brest. The first one had turned out well, as to the second one, he has his doubts. This true, but the present agreement, in the field of economy is something between the Brest Treaty and an agreement with any bourgeois state. We have already signed several such agreements, including a trade agreement with Britain. The one on concessions will be something between the Brest Treaty and such agreements with bourgeois states.

Comrade Ryazanov then passed a remark, quite correctly, which I should like to underline at the very outset. He said that if we want to grant a concession it was not meant to improve the position of the workers, but to raise the productive forces. Quite right! As to improving the position of the workers’ we always stand by this. I have here a draft agreement with a Swedish corporation of ball-bearing plants written by the staff of the Supreme Economic Council (reads).

This agreement does not stipulate any improvement in the condition of the workers. True’ it is so worded that the Russian Government undertakes to supply the workers with everything they need, and if it fails to do this, the capitalists have the right to bring in workers from abroad. As to the ability of the Russian Government to fulfil everything the plan calls for as far as the workers are concerned, I think that neither we, nor the Supreme Economic Council, nor the Swedes can have any illusions on this score. At any rate, in this Comrade Ryazanov is quite right’ for the main thing in concessions is not improvement of the workers’ condition, but the raising of the productive forces and such a transaction under which we are making great sacrifices in order to increase output. But what are these sacrifices? I have been told that I gloss over these sacrifices, play them down. Comrade Ryazanov even tried to crack a joke on this score. I did not play down the sacrifices, I only said that we may have to give the capitalists not only hundreds, but thousands of per cent in profits. That’s the whole gist of it!
If, as I assumed, on the basis of calculations by our specialists, we take 30-40 per cent of the oil, for instance, for ourselves, if the capitalist, out of every 100 million ponds of oil which he produces, takes 50-60 million ponds for himself, and possessing the transport, sells them at a profit of perhaps 1000 per cent, or maybe more, then the position is clear. And when I tried to find out from Krasin the terms of his agreement on the basis of his preliminary talks with the businessmen and tycoons, I asked: “Can one conceive of a type of agreement under which we stipulate a definite percentage of profit for the capitalist, say up to 80 per cent.” He said: “It is not a question of the size of the profits, because these robbers now make as much as 1000 per cent, not 80.”

To my mind’ the sacrifices will be very heavy. We shall probably have to make great sacrifices if we are going to give concessions on ores or timber’ if we are going to give away raw materials which they are so desperately in need of abroad, such as manganese ore’ for example. Georgia has now become Soviet. The thing is to unite the Caucasian Republics into a single economic centre: the Georgian, Azerbaijan and Armenian Republics. Azerbaijan produces oil; it has to be transported via Batum through Georgian territory, so there will be a single economic centre.

According to one report, the Georgian Menshevik government had concluded a concession agreement, which, on the whole’ is acceptable to us. Preliminarily, I could only get in touch with Georgian comrades and ascertain from a talk with Comrade Yenukidze, the Secretary of the All-Russia Central Executive Committee, who is himself a Georgian, that he had been there and concluded an agreement—true, not a concession agreement—with the Menshevik Georgian government granting us without resistance one-sixth of Georgia while retaining a guarantee of inviolability.

After this agreement, to the signing of which Comrade Yenukidze was a party, they preferred nevertheless, despite the guarantee of inviolability’ to quit Batum for Constantinople, so that we have gained by this in two ways, positively and negatively—in that we have acquired territory, not for Russia’ but for Soviet Georgia—Batum and its environs—and in that we have lost a good many Mensheviks, who have left for Constantinople.

It appears that the Georgian Revolutionary Committee is inclined to confirm the concession on unworked coal-mines, which it considers a very important one. Two representatives of foreign powers were in Georgia and did not leave at the time of the Soviet coup—the Italian and the German—most important circumstance, as it is desirable to develop relations with these countries, by means, among others, of concessions. Italy even had a concession agreement with Georgia, while in Germany the situation is that some German capitalists own a tremendous per cent of the Chiatura manganese mines. The thing is to transfer the right of ownership to a lease or a concession, that is, to grant on lease to the German capitalists the very mines which they owned as property. Owing to the change in the political situation in the Caucasus, the circumstances are favourable for concession relations. The important thing for us is to force windows open one after another. The agreement with Britain was that of a Socialist Republic with a bourgeois state, an agreement that imposed upon us a certain burden.

To the first state with whom we concluded an agreement we gave a much greater part of our gold fund than we have given to others. But the consequences have shown that thanks to this agreement we have forced open a window of sorts. It is from this point of view that we should judge every concession.

Germany and Italy, owing to their economic position, are obliged to seek an alliance with Russia. For Russia, an alliance with Germany opens up vast economic prospects, irrespective of whether or not the German revolution will soon win a victory there. We can come to terms even with a bourgeois government in Germany, because the Versailles Treaty has made Germany’s position impossible, whereas an alliance with Russia opens up entirely different possibilities. Since Italy has no fuel resources of her own, they have taken a coal-mining concession in the Caucasus at coal-fields that have never been worked before. I should not be surprised to see the Germans hankering after oil concessions, as Germany has no fuel at all.
One of the comrades here said that the Kamchatka concession would not improve the condition of the workers. That is absolutely wrong. And Comrade Ryazanov was quite wrong when he tried to crack a joke about our dealings with Vanderlip turning out to be a Vander-slip. True, we made one mistake—our telegram to Harding. But since we have had no agreements or relations with ’America till now’ there was no mistake on our part, and we only found out that Vanderlip had been boasting of his connections with the American Administration. Now it is quite possible that in sending our representatives to Canada, where we are to buy locomotives, that through this side door we may gain, some access to the American market.

Negotiations for Kamchatka concessions are beginning to stir now, and it is quite wrong to say that these concessions will not improve the condition of the workers. If these concessions materialise, there will be an undoubted improvement in the condition of the workers, because we shall be receiving a certain deduction share, 2 per cent I believe, and when we have nothing at all, even 2 per cent is something. If we get 20,000 out of one million and use it for an exchange with the peasants, this will give us some of the products the workers need.
Further I wanted to point out that some of the remarks you have made here show that there are disagreements among the trade unionists, or rather perplexities, which are the only real danger and which we’ among ourselves’ perhaps by further discussions among the Party members, have to eliminate. For example, Comrade Marshev spoke about payment having to be made in cash, and not by coupons. As to the Amsterdamists and whether they will attack us, we must come to an arrangement about this.

I recently re-read my pamphlet written in May 1918. I quoted in it the Menshevik newspaper Vperyod which the Menshevik Isuv accused the Soviet government of agreeing to concessions’ of having deals with bourgeois states. It is an old trick of the Mensheviks to blame us for granting concessions. Quite a few groups have already taken shape in this connection in Western Europe. The Communists understand that concessions are a treaty of Brest, which we are obliged to put up with because of the ruined state of a country with a predominantly peasant population. Everyone understands that regeneration of the country without a big industry is unthinkable.

The Communists of Germany understand why we have to give ground, but the Scheidemanns and the II/2 International say that these concessions are proof of our complete failure, and I remember at a meeting last year I mentioned the American chauvinist Spargo, who specialised in writing a heap of books about the Bolsheviks in the vein of our Alexinsky, and in connection with the concessions he all but performed a dance of triumph. I mentioned at the time that this was an utter distortion. Yesterday international capital was out to strangle us, and today we have a number of agreements with this international capital.

We are making sacrifices in giving away to foreign capital millions’ worth of valuable materials from which they can make profits running into hundreds of per cent. These are sacrifices which we are making deliberately and consciously. But at the same time we should note that while allowing them to make any profit they like, we are receiving the advantages we need ourselves, i.e., increased output, and as far as possible an improvement in the condition of our workers, both those employed at the concession enterprises and those not so employed.
Comrade Shlyapnikov said here that it would be a good thing to grant a concession to Russian workers. The idea is absurd. We would then have to guarantee fuel, etc., a thing which we can’t guarantee even to our most essential enterprises. We are bad off for fuel. The idea of a concession agreement with Russian workers’ generally speaking, is permissible in principle, but such a solution of the problem for our big industry is not serious, since we cannot guarantee them anything, whereas foreign concessionaires can bring in supplies from abroad. That is what distinguishes the agreement with foreign capitalists. They have the world market; we have no secure economic base and would have to spend ten years creating it. This is what we must soberly take into account. All our people engaged in this problem have proved this situation.

We know that the electrification plan is the most economical one. We cannot lease our big factories to the Russian workers. We must stake here on small industry’ develop it and not rail at our tax-in-kind measures the way Comrade Ryazanov does, or the author of that pamphlet which says that we are putting through anarcho-syndicalist laws.

As regards the development of small industry, we must take several steps, as we can get something out of it right now without state guarantees, and since we cannot guarantee even our most essential factories, we must do everything we can to develop small industry, which will give us a certain amount of produce which the peasants need.

On the question of cash or coupons I would say this: it would be something to fear if the capitalists had the power, but we have nothing to fear, since all the factories and enterprises are in our hands, and we haven’t leased a tenth part of them to the capitalists. I repeat, “we have nothing to fear from coupons’ as the capitalists will be obliged to stock the goods, we tell them to’ not just salted fish, as was mentioned here, but such-and-such products. Since we are taking the norm of a foreign worker, we know that under this norm he gets even more and better products than the Russian worker does.

Comrade Shlyapnikov here said: “We have seen concessions.” Both Comrade Shlyapnikov and many practical workers make this mistake. I have heard people say: “Your idea of concessions is schematic. The capitalist has always tricked the most experienced Russian lawyers.” To be sure he did’ when state power was in the capitalist’s hands and he was all-powerful. What was that state power? A committee for the affairs of the propertied master class—that’s what it was. A committee for the affairs of the landowners and capitalists—that was what the capitalist government was. But if we, having in our hands most of the factories, mills and railways, with our Party standing at the head—with communist cells below and Communists on top—if we do not hold our own in such conditions, then we might as well commit suicide. And that is panic!
We are not that bad though 1 think, to allow ourselves to be tricked, and if we have already concluded several agreements in which the governments in France and Britain had the services of first-class bourgeois diplomats, and if even under these conditions we have not once been tricked, then why should we panic at the idea of being tricked by coupons? Let me remind you of the treaty of Brest. In what way was this treaty difficult? What were the difficulties of defence? When I was asked whether I had any hopes of our being able to fool the Germans, I was obliged, in my official capacity, to say that I did not. But now the treaty of Brest is past history.

I don’t know whether the pamphlet Comrade Kamenev was preparing has come out (it deals there with Ludendorf), but I do know that Ludendorf has written a brilliant volume of memoirs in which ten pages are devoted to the Brest negotiations. When Kamenev and I read that chapter, we said: “This is the best justification of the Brest Treaty.” He tells how Trotsky and the others drove them into a corner during the talks, how they were outwitted, and so on. We decided there and then that these pages had to be translated and published with a short preface by Comrade Kamenev, and the fact that this hasn’t been done yet is a specimen of Soviet ineptitude. Or take a fact like this. We know that Comrade Joffe, our Ambassador to the German Government, was expelled from Germany on the eve of the revolution there. After this, don’t try to guess who is going to trick whom. Don’t let us lay down how many days will pass between the conclusion of the first concession agreement and the first big European revolution. That is why’ on the question of agreements, I maintain that the comrades are absolutely wrong. There’s nothing to worry about.

The agreements will say what goods they are to have and at what price. We can agree to any coupons or ration books. If they break the agreement, we have the right to cancel it immediately. The agreement is a civil contract. I haven’t gone into the question of what arbitration there is to be and who is to settle disputes, but I shall run through the initial draft of the agreement with the Swedish corporation. It says here: “Differences are settled ”

People here have brought academicians into play, and these will try to bring the lawyers into play. I remember Bebel saying that lawyers were the most reactionary and at the same time bourgeois’ people. Of course,’ we can mend this somehow’ but there is nothing at all to worry about. If the concessionaires were to lay down this condition, we could accept it. Once the agreement stipulates precisely that there are to be such-and-such goods and payment on the ration book is to be made in such-and- such a way, we can agree to this, and the Socialist Republic has nothing to fear from coupons or ration books. It was further stated that Point 9 was bad because we would be drawing away from the international T.U.C. Lozovsky threatened that the Amsterdam people would slam us, but they will slam us all the same on all other points, and end up’ as always, with slamming themselves.

You remember how the Mensheviks intended slamming us for having made the slightest concessions to the capitalists. When we wanted to overthrow capitalism’ they said we would overthrow it only for a few days’ but when we have overthrown it for a few years, they are trying to set another trap for us. They are trying to lure the enemy into a spot where he is sure to be beaten.
First, they called us utopians, then invited us to jump from the fifth floor. We know that we have many small businesses. Petty proprietors are our opponents. The petty-bourgeois element is our most dangerous enemy. Brokers and leaseholders are the lesser enemy. Bureaucracy’ too, and bureaucratic abuses are our enemy.

In regard to the point Comrade Lozovsky spoke about’ I will say this—listen to it carefully. It says: “The trade unions shall not have the right to demand application of Russian pay rates or of Russian rules of employment to that category of workers.” It speaks here of the Russian trade unions, and I am told about the international unions. Naturally, when the capitalists see the Russian terms’ they say they are communist terms, ridiculous terms, and that the Russian trade unions have no right to demand Russian terms of employment, which are likely to be pretty stiff and far-fetched’ but they do have a full right to apply international trade union agreements. This is good enough. Nothing is mentioned here about strikes about their being banned. The thing is to be able not to mention everything before its time.

As to improving the condition of the Russian worker, Comrade Marshev and Tartakovsky have made an attack here, saying you won’t be able to cope with the workers’ you won’t be able to make them work, because if you provide for one-fifth of them, the other four-fifths won’t want to work under worse conditions. Do you mean to say we are dealing with workers who are so foolish, uncultivated and undisciplined? If so, then the only thing is to panic and commit suicide. If a hundred workers are underfed and we tell them that we can feed twenty, and no more, do you mean to say they will refuse it? So far, we have not come up against anything like it. We have managed somehow to feed workers in certain branches of industry, but not all of them, yet the workers didn’t all run away from these enterprises, whereas they all did from other enterprises. Can the Russian worker be so spoilt by the mistakes of Soviet power that he cannot figure out that it was better to feed at least 20 people than to make the whole hundred go hungry? There is a good deal here that ought not to be spoken about before its time. Why can’t it be arranged for people to take turns in working for the capitalists? The workers would work six months, get working clothes, then give others a chance to feed up. Of course,’ we shall have to break down prejudices here.

When concessionaires come here, we must restrain our trade unions from making excessive demands. You know that the usual term of an agreement is a short one. In Europe there are no long-term agreements. The usual term is six months. In this way the workers will be able to feed up, get boots and clothes, then quit and make way for others.

Is it so impossible to arrange things so that a man works six months, feeds up’ gets American boots and clothes, and makes room for the next man? It will be difficult, of course. It will demand a higher degree of organisation and discipline than we have’ but it is not impossible. If we have contrived to keep a hold on the workers against an invasion of foreign capital during three years of terrible famine, do you mean to say we won’t manage it this time? I realise only too well what difficulties confront us here. And therefore, I say that concessions do not signify the advent of peace among the classes. Concessions are a continuation of the war among the classes.

If previously the war could be expressed in—111 get you through starvation and you’ll get nothing’ now I say that I want to give the workers a pair of boots each, but I want them to work six months. And we’ll fight for all the workers getting boots. We do not reject strikes, all this remains in our hands, if only we are reasonable and try to put the accent now on what we can do to attract the capitalists.

People here have talked about what a great danger this is, saying that the capitalist will come and trick us, but I assert that there is no danger, and that in the interests of raising productivity it is desirable that he should come, because he has a splendidly organised base and splendidly equipped factories’ where we can order the necessary parts without having to buy them on the open market’ where there is only junk. The first-class factories have their orders booked up for several years ahead. Even if we paid in gold, we would not receive anything’ whereas a member of the syndicate would get everything he wanted. We wouldn’t mind paying him extra if it meant improving the condition of at least a small section of the workers and peasants, because each extra product will go to the peasants in exchange for grain’ and that will create stable relations between the working class and the peasantry.

Winding up, I would ask the trade unionists to waive questions of principle and disputes. All these are idle disputes’ sheer scholasticism. They should be dropped. Attention should be wholly directed to those practical terms of concession agreements from which we, if we are sensible, may derive benefit for ourselves. The trade unionists and Party leaders should display here their inventiveness and practical knowledge of conditions, of which we cannot and shall not speak about in the press, because the Russian press is being followed by the capitalists, just as during the Brest talks we did not speak about the instructions that had been given to Comrade Joffe. We shall give practical attention to the practical methods by which we can derive benefit in the way of improving the condition of the workers and peasants. Every such improvement is of tremendous importance to us. This is where the trade unionists should give their attention. All trace of friction and prejudice should be eliminated. It is a difficult business. So far no one has been willing to conclude a concession agreement with us. They are all expecting us to present impracticable demands.

We, therefore, on our part must use every effort to conclude several such agreements. Of course, we shall make a number of mistakes. It is a new business. So far, no socialist republic has ever granted concessions to capitalists. But we want the trade unionists to help us. There is vast scope here for interpretations and pressure, including strikes, which remain in our hands.
Vol. 42, pp. 285-96