STATE CAPITALISM

LENIN; On State Capitalism, During the Transition to Socialism

THE NEW ECONOMIC POLICY AND THE TASKS OF THE POLITICAL EDUCATION DEPARTMENT
From REPORT TO THE SECOND ALL-RUSSIA CONGRESS OF POLITICAL EDUCATION DEPARTMENTS
OCTOBER 17, 1921
OUR MISTAKE
At the beginning of 1918 we expected a period in which peaceful construction would be possible. When the Brest peace was signed it seemed that danger had subsided for a time and that it would be possible to start peaceful construction. But we were mistaken, because in 1918 a real military danger overtook us in the shape of the Czechoslovak mutiny and the outbreak of civil war, which dragged on until 1920. Partly owing to the war problems that overwhelmed us and partly owing to the desperate position in which the Republic found itself when the imperialist war ended—owing to these circumstances, and a number of others, we made the mistake of deciding to go over directly to communist production and distribution. We thought that under the surplus-food appropriation system the peasants would provide us with the required quantity of grain, which we could distribute among the factories and thus achieve communist production and distribution.

I cannot say that we pictured this plan as definitely and as clearly as that; but we acted approximately on those lines. That, unfortunately, is a fact. I say unfortunately, because brief experience convinced us that that line was wrong, that it ran counter to what we had previously written about the transition from capitalism to socialism, namely, that it would be impossible to bypass the period of socialist accounting and control in approaching even the lower stage of communism. Ever since 1917, when the problem of taking power arose and the Bolsheviks explained it to the whole people, our theoretical literature has been definitely stressing the necessity for a prolonged, complex transition through socialist accounting and control from capitalist society (and the less developed it is the longer the transition will take) to even one of the approaches to communist society.

A STRATEGICAL RETREAT
At that time, when in the heat of the Civil War we had to take the necessary steps in economic organisation, it seemed to have been forgotten. In substance, our New Economic Policy signifies that, having sustained severe defeat on this point, we have started a strategic retreat. We said in effect: “Before we are completely routed, let us retreat and reorganise everything, but on a firmer basis. “If Communists deliberately examine the question of the New Economic Policy there cannot be the slightest doubt in their minds that we have sustained a very severe defeat on the economic front. In the circumstances it is inevitable, of course, for some people to become very despondent, almost panic-stricken, and because of the retreat, these people will begin to give way to panic. That is inevitable. When the Red Army retreated, was its flight from the enemy not the prelude to its victory? Every retreat on every front, however, caused some people to give way to panic for a time. But on each occasion—on the Kolchak front, on the Denikin front, on the Yudenich front, on the Polish front and on the Wrangel front—once we had been badly battered (and sometimes more than once) we proved the truth of the proverb: “A man who has been beaten is worth two who haven’t.” After being beaten we began to advance slowly, systematically and cautiously.

Of course, tasks on the economic front are much more difficult than tasks on the war front, although there is a general similarity between the two elementary outlines of strategy. In attempting to go over straight to communism we, in the spring of 1921, sustained a more serious defeat on the economic front than any defeat inflicted upon us by Kolchak, Denikin or Pilsudski. This defeat was much more serious, significant, and dangerous. It was expressed in the isolation of the higher administrators of our economic policy from the lower and their failure to produce that development of the productive forces which the Programme of our Party regards as vital and urgent.

The surplus-food appropriation system in the rural districts— this direct communist approach to the problem of urban development—hindered the growth of the productive forces and proved to be the main cause of the profound economic and political crisis that we experienced in the spring of 1921. That was why we had to take a step which from the point of view of our line, of our policy, cannot be called anything else than a very severe defeat and retreat. Moreover, it cannot be said that this retreat is—like retreats of the Red Army—a completely orderly retreat to previously prepared positions. True, the positions for our present retreat were prepared beforehand. That can be proved by comparing the decisions adopted by our Party in the spring of 1921 with the one adopted in April 1918, which I have mentioned. The positions were prepared beforehand; but the retreat to these positions took place (and is still taking place in many parts of the country) in disorder, and even in extreme disorder.

PURPORT OF THE NEW ECONOMIC POLICY
It is here that the task of the Political Education Departments to combat this comes to the forefront. The main problem in the light of the New Economic Policy is to take advantage of the situation that has arisen as speedily as possible.

The New Economic Policy means substituting a tax for the requisitioning of food; it means reverting to capitalism to a considerable extent—to what extent we do not know. Concessions to foreign capitalists (true, only very few have been accepted, especially when compared with the number we have offered) and leasing enterprises to private capitalists definitely mean restoring capitalism, and this is part and parcel of the New Economic Policy; for the abolition of the surplus-food appropriation system means allowing the peasants to trade freely in their surplus agricultural produce, in whatever is left over after the tax is collected—and the tax~ takes only a small share of that produce. The peasants constitute a huge section of our population and of our entire economy, and that is why capitalism must grow out of this soil of free trading.

That is the very ABC of economics as taught by the rudiments of that science, and in Russia taught, furthermore, by the profiteer, the creature who needs no economic or political science to teach us economics with. From the point of view of strategy the root question is: who will take advantage of the new situation first? The whole question is—whom will the peasantry follow? The proletariat, which wants to build socialist society? Or the capitalist, who says, “Let us turn back; it is safer that way; we don’t know anything about this socialism they have invented”?

WHO WILL WIN, THE CAPITALIST OR SOVIET POWER?
The issue in the present war is-who will win, who will first take adv;7itage of the situation: the capitalist, whom we are allowing to come in by the door, and even by several doors (and by many doors we are no aware of, and which open without us, and in spite of us), or proletarian state power? What has the latter to rely on economically? On the one hand, the improved position of the people. In this 'connection we must remember the peasants. It is absolutely ·I controvertible and obvious to all that in spite of the awful disaster of the famine-and leaving that disaster out of the reckoning for the moment-the improvement that has taken place in the position of the people has been due to the change in our economic policy.
On the other hand, if capitalism gains by it, industrial pro duction will grow, and the proletariat will grow too. The capitalists will gain from our policy and will create an industrial proletariat, which in our country, owing to the war and to the desperate poverty and ruin, has become declassed, i.e., dislodged from its class groove, and has ceased to exist as a proletariat. The proletariat is the class which is engaged in the production of material values in large-scale capitalist industry. Since large-scale capitalist industry has been destroyed, since the factories are at a standstill, the proletariat has disappeared. It has sometimes figured in statistics, but it has not been held together economically.

The restoration of capitalism would mean the restoration of a proletarian class engaged in the production of socially useful material values in big factories employing machinery, and not in profiteering, not in making cigarette-lighters for sale, and in other "work" which is not very useful, but which is inevitable when our industry is in a state of ruin.

The whole question is who will take the lead. We must face this issue squarely-who will come out on top? Either the capitalists succeed in organising first-in which case they will drive out the Communists and that will be the end of it. Or the proletarian state power, with the support of the peasantry, will prove capable of keeping a proper rein on those gentlemen, the capitalists, so as to direct capitalism along state channels and to create a capitalism that will be subordinate to the state and serve the state. The question must be put soberly. All this ideology, all these arguments about political liberties that we hear so much of, especially among Russian emigres, in Russia No. 2, where scores of daily newspapers published by all the political parties extol these liberties in every key and every manner-all these are mere talk, mere phrase-mongering. We must learn to ignore this phrase-mongering. ·
Vol. 33, pp. 62-66