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Foreign concessions in the national economy of the USSRPeriod: 1922-1927
State publishing house 1928
Moscow 1928 Leningrad
Printed at the 1st Exemplary Printing House of Giza. Moscow, Pyatnitskaya, 71.
Glavlit No. A 613. Giz No. 2371 Order No. 4679. Circulation 3000 copies.
What are concessions and why do we need them?
Revolutionary Russia was a country where a patriarchal subsistence economy existed side by side with a developed capitalist industry, and small commodity production coexisted with a widely ramified banking system.
In the process of historical development, an economy was created on the territory of Russia that corresponded to its geographical position - it was half-Europe, half-Asia.
The proletariat of our country has set itself the task of transforming these heterogeneous elements of socio-economic systems into a single socialized planned economy based on large enterprises with improved machinery, an economy that represents a higher technical type than the most technically highly developed capitalist state.
The October Revolution has as its goal the transition to socialism, and the proletariat has invested this goal in the very name of their state - "Socialist Soviet Republic". Such a transition is possible only under the condition of the industrialization of the entire national economy as a whole, i.e., both industry and agriculture. The industrialization of agriculture is dependent on the industrialization of industry.
We could not, unfortunately, begin to carry out this task immediately after the October Revolution. We had to defend ourselves in a hard, painful war against internal and external counter-revolution. The civil war completely exhausted the country, already exhausted by the imperialist war. Agriculture fell into disrepair, factories and factories stopped, transport fell apart. By 1920, our industry had reached the maximum level of its decline: although it employed 43% of the pre-war workforce, its output was equal to only 18% of the pre-war. The village starved itself and gave almost nothing to the city. The sown area decreased by 32%, and the gross agricultural output by 40%.
Our growth.
But the very first years of the new economic policy revived the national economy of the Soviet Union. One after another, branches of our industry were restored, labor productivity increased from year to year, the quality of products improved, and the position of the working class improved. Transport has also revived. At the same time, agriculture also grew. As a result of this rise, by the beginning of 1926/27, in a number of branches of the national economy, we approached the level of 1913, i.e., the pre-war level. All available fixed capital has already been involved in the production process, the country is advancing along the path of industrialization, and the proportion of industrial output in the total output of the national economy is increasing. If, for example, in 1923/24 the share of industrial output in pre-war prices was 27.8% of the output of the entire national economy, and agricultural output was 72.2%, then in 1926/27 the share of industrial output in the same pre-war prices will already amount to 39.7%, and agricultural production to 60.3%. At the same time, over the past four years (1923-1927), agricultural production has grown by 36.8%, and its commodity part - by 59.7%. Along with industry and agriculture, electrical construction is growing. Before the October Revolution, the capacity of Russian power plants was 402,000 kilowatts. As of December 1927, the power plants of the Union reached 1,690 thousand kilowatts. Before the October Revolution, the capacity of Russian power plants was 402,000 kilowatts. As of December 1927, the power plants of the Union reached 1,690 thousand kilowatts. Before the October Revolution, the capacity of Russian power plants was 402,000 kilowatts. As of December 1927, the capacity of the Union's power plants reached 1,690,000 kilowatts.
Our backwardness
But can we say that this growth has moved us far ahead of the big capitalist states? Unfortunately no. We are extremely behind the advanced capitalist countries: backwardness is the main legacy we have received from the past. The head of our economy crashes into American technology, and the tail drags even in the conditions of the Middle Ages.
If we use the contemporary United States as a model of a highly developed national economy, then our task is to overtake and outstrip this advanced capitalist country of the world. Let's see how far behind we are compared to this country. We take the United States for comparison also because they have many features in common with the USSR: 1) almost the same climatic and geographical conditions; 2) both the United States and the USSR are moving from an agrarian-industrial type of development to an industrial-agrarian one; 3) the United States and the USSR have a homogeneous raw material and food base; 4) the similar role of transport and trade in connection with the size of the territory; 5) a market of the same size; 6) finally, the most barbaric remnants of pre-capitalist relations have only recently disappeared from the United States and the USSR. And when we come to the comparison of these two largest states of the world, we are faced with the contrast of poverty and wealth. While our national annual income in 1926/27 is estimated at 22 billion rubles, the national annual income of the United States is 130 billion gold rubles. There are 1,500 rubles per capita in the United States, and 166 rubles in our country. By the beginning of 1927/28, capital investments in industry in our country amounted to 7.8 billion rubles, in America - 90 billion, i.e., 12 times more. The development of the entire American economy in recent years is the result of the rapid development of agricultural mechanization, motor transport, road and housing construction, replacement and renewal of industrial equipment and electrification. To improve and increase the material basis of the economy,
But we are not only lagging behind the United States. In the first half of 1927, our coal production is 2.5% of the world's output, while the United States provides 45%, England - 21%, Germany - 12.2%. In the global iron production, we produce only 3.6%, while the United States produces 47.7%. England - 9.2%, Germany - 15.4%. In world coal production, we occupy the 5th place (as before the war). We occupy the same place in steel production. In terms of pig iron, we are in 6th place (before the war, 5th). And this at a time when the actually established stock of iron ore in our country is 2 times the probable stock of the rest of the globe; if we have inexhaustible sources of oil, we provide only 5.8% of world production (1926), while the USA provided 70.7%, and Mexico 8.2% of world production.
If we turn now to foreign trade, we will see that here, too, we are far behind other countries. In 1925/26 our share in world foreign trade amounted to 1.2%, in 1913 to 3.68%; while the most important part of our grain exports accounted for 7.7% of the world (for 9 months. 1926/27 - 8.3%). In European imports, imports from the USSR amounted to 8.7%. Thus, in spite of the fact that our productive forces are growing, we are still very, very far from the economic height at which the developed capitalist countries are. The pre-war level is still the level of poverty and thinness. The old technique in the form in which we received it from capitalism is completely unsuitable for socialism. The completion of the restoration period on the basis of old equipment brings us to the period of the grandiose task of reconstructing the entire national economy on the basis of all the latest achievements of world technology, under the firm leadership of the socialist state. We still have a very long and difficult path ahead of us, we still have enormous work ahead of us, enormous expenditures before we are able to build a socialist society in our country.
Our building plans.
Our planning bodies have outlined a plan for the construction and development of our economy for the first five years of the reconstruction period. In the next five years (1927/28-1931/32) it is planned to invest 20.2 billion rubles in our national economy. These 20.2 billion rubles. represent an enormous figure for us and will undoubtedly change the entire structure of the Soviet economy.. The national income in 1931-32 will exceed the national income at the beginning of the five-year period by 68%. Incomes in rubles per capita for the same five years increased by 30.9%. The fixed capital of industry from 7.8 billion rubles. will grow to 11.3 billion rubles. Gross industrial output by the end of the five-year period will grow by 80%, wages by 25%. 2.376 million rubles will be spent on urban housing and communal construction. The power of the power stations will increase by 1932 from 1,690,000 kilowatts to 3,900,000 kilowatts. Instead of 14 district stations in 1926 with a capacity of 380,000 kilowatts, we will have 37 district stations with a capacity of 2,150,000 kilowatts. The average capacity of stations will increase by about half. Coal mining from 2.640 million pounds. in 1925/26 it will rise to 4,400 million poods. in 1930/31; fuel consumption within the country will rise from 2,600 million poods. up to 4150 million pounds.
At the same time, oil production is also growing - 65% over the five years. The successful development of coal and oil production, along with the parallel process of rationalization of fuel supply, will make it possible to completely abandon the import of coal and coke that took place in pre-war Russia (about 52 million rubles in total) and at the same time increase the export of oil and oil products without prejudice to domestic fuel supply. Enormous investments in state industry will increase the importance of the socialized sector of the national economy, i.e., its socialist part.
And with all this, we could move forward at a faster pace if we had additional funds at our disposal. If we had, for example, another 1.5 billion rubles. at our disposal in this five-year period, we could increase industrial production not by 80%, but by 100-114%[ 1 ]). If we had additional funds, we would more quickly catch up with the capitalist states that are ahead of us. And the comparisons given above, with sufficient clarity, indicate that for this we need to do a huge amount of work in terms of size.
Foreign capital in old Russia.
Naturally, the question arises: is it possible for us to obtain additional funds from outside. Tsarist Russia developed mainly due to foreign capital. Foreign capital flowed into Russia in a continuous stream. Russian industry and foreign trade were dominated by banks, in which the foreign bourgeoisie owned ¾ of the capital. The sum of all fixed capitals of Russian commercial banks as of January 1, 1914 was expressed in 585 million rubles. The share of banks, which were agents of foreign banks, accounts for 434 million rubles of this amount.[ 2 ], i.e., 74% of Russia's banking capital. 49.5% of the fixed capital of industry (1.502 million rubles) belonged to foreigners. If we add here foreign capital invested in trade, then this figure will increase to 2.005 million rubles. (53%). The commanding heights of the Russian economy firmly belonged to foreign capital, and the very growth of this economy was based to a very large extent on the continuity of an ever new influx of funds from foreign states. The control of foreign banking capital over Russian industry by 1913 amounted to 8.235 million rubles.[ 3 ]. Over 1.5 billion rubles was invested by foreigners in our railways, and the tsarist government received huge sums in the form of state loans[ 4 ].
According to calculations made in the foreign economic press for the Genoa Conference, foreigners had invested in old Russia in the form of loans, bank capital, capital of joint-stock companies and private individuals by the time of the revolution about 18 billion rubles. (of which about 7½ billion are war debts)[ 5 ].
Foreign influence in our national economy consisted not only in the fact that foreign capitalists invested their capital in us. It also penetrated to us through foreign equipment. Old Russia produced the means of production on a minimal scale, so equipment for almost all branches of our industry was ordered from abroad. It can be unmistakably said that ¾ of the equipment of the factories and plants left to us from capitalism is of foreign origin. The October Revolution expropriated the Russian bourgeoisie, expropriated the foreign bourgeoisie as well , but expropriated it, of course, only at home. The bourgeoisie abroad preserved the billions of rubles it had accumulated during the imperialist war.. And if we could borrow at least some of them from her, our economy could develop at an even faster pace.
The Soviet Union needs foreign loans.
A loan is the first form of attracting foreign capital to us. Both in Genoa and in The Hague, we raised the issue of granting loans to us. We returned to this issue repeatedly and later, but almost always ran into demands for the return of old debts. And, apparently, until the capitalist world finally becomes convinced that no force can force the Soviet Union to return to the capitalist path, it will be very difficult for us to count on obtaining foreign loans.
We need foreign technology. Concessions.
But besides money, we also need the latest advances in technology, which we can get from abroad. And now, if only money can give loans, then another form of attracting foreign capital - concessions - can give us, in addition to investing capital in our national economy, also foreign technology.
On the basis of a contract drawn up in advance and concluded for a definite period, the foreign capitalist acquires the right to build and operate any enterprise or to develop this or that natural wealth of the country, deriving profit from his work for the entire duration of the concession. At the end of the term of the concession agreement, the concession passes into the hands of the state in a completely serviceable form.
Thanks to the concession, the base of our upswing is extended beyond the limits of our present material accumulations. With the help of European and American technology, with the help of European and American machines, we will speed up the process of producing products in the Soviet Union. Each product produced by the concession enterprise must fill a certain gap in our economy, whether it be a raw material, a semi-finished product or a consumer product. Concessions facilitate our economic work and accelerate our general economic progress. The building of socialism is possible only on the basis of developing productive forces. The concessions must contribute to the development of these productive forces, and consequently they must objectively help the building of socialism.
VI Lenin on the role of concessions.
Vladimir Ilyich, in his speeches and articles, repeatedly gave an assessment of the role that concessions should play in our national economy. This role is twofold: political and economic.. We are not yet in a position to defeat international capital, but in our struggle against the imperialist states, using the contradictions and opposites between them, we can count on victory. Vladimir Ilyich in 1920 pointed out a number of contradictions in the capitalist world that must be exploited. These contradictions still exist today. It is Japan's struggle with America, America's struggle with the rest of the capitalist world, and finally, for the time being perhaps hidden, the struggle between the victorious countries in the world war and Germany. Giving concessions to one side, we whet the appetites of the other. Giving large concessions to any state, we provide ourselves for a certain period of time from war with this state. “As long as capitalism and socialism remain, we cannot live peacefully: either one or the other will win in the end. The capitalists will look for reasons to fight. If they accept the offer and go for concessions, it will be difficult for them. Those states that could fight with us will not be able to fight if they take concessions.[ 6 ], because they will be indirectly interested in the economic growth of our country.
Concessions are state capitalism.
What is the economic role of the concession? “What are concessions under the Soviet system, from the point of view of socio-economic structures and their correlation? It is a pact, a bloc, an alliance of Soviet, i.e., proletarian, state power with state capitalism against the petty-property (patriarchal and petty-bourgeois) elements. The concessionaire is a capitalist. He conducts business capitalistically - for the sake of profit, he agrees to an agreement with the proletarian authorities for the sake of obtaining extra profit, in excess of the usual, or for the sake of obtaining such raw materials that otherwise it is impossible or extremely difficult for him to get. The Soviet government benefits in the form of the development of productive forces, an increase in the quantity of products immediately or in the shortest possible time. We have, say, a hundred such-and-such industries, mines, forest areas. We can not develop everything - there are not enough machines, food, transport ... By “implanting” state capitalism in the form of concessions, the Soviet government strengthens large-scale production against small, advanced against backward, machine against manual, increases the amount of products of large industry in its hands, strengthens state-ordered economic relations, as opposed to petty-bourgeois anarchist . A moderately and carefully pursued concession policy will undoubtedly help us improve (to a certain small degree) the state of production, the condition of the workers and peasants. strengthens state-ordered economic relations as opposed to petty-bourgeois anarchist ones. A moderately and carefully pursued concession policy will undoubtedly help us improve (to a certain small degree) the state of production, the condition of the workers and peasants. strengthens state-ordered economic relations as opposed to petty-bourgeois anarchist ones. A moderately and carefully pursued concession policy will undoubtedly help us improve (to a certain small degree) the state of production, the condition of the workers and peasants.[ 7 ].
The dialectics of historical development leads to the fact that capitalism becomes for some time the creditor of socialism. Compared to other forms of state capitalism within the Soviet system, the concession is the simplest, most clearly defined form. “We have here a directly formal written agreement with the most cultured, advanced Western European capitalism. We know exactly our benefits and our duties, we know exactly the period for which we are renting out the concession ... We pay a certain “tribute” to world capitalism, we “pay off” from it, receiving immediately a certain measure of strengthening the position of Soviet power, improving the conditions of our management . The whole difficulty of the task in relation to the concession comes down to thinking over and weighing everything when concluding a concession contract, and then being able to monitor its execution.[ 8 ].
Cooperation and struggle of socialist and capitalist tendencies.
Concessions must, of course, play only a subsidiary role in our economy. Command heights remain in our hands. Finance, credit, banks, foreign trade, transport are entirely in the hands of the state. Holding on to commanding heights, we strengthen them more and more every year. We, as a workers' state, decide for ourselves where and how, that is, in what branch of industry, in what part of the country and to what extent this or that concession agreement is desirable and permissible for us. The Soviet system is based not only on the struggle of socialism against capitalism, but, to a certain extent, on their cooperation. While admitting the existence of capitalist tendencies, the Soviet state keeps them in check to a certain extent, nourishing and supporting socialist tendencies in every possible way. “Capitalism is an evil in relation to socialism. Capitalism is a blessing in relation to small-scale production. Insofar as we are not yet able to make a direct transition from small-scale production to socialism, capitalism is inevitable to a certain extent as an intermediate link between small-scale production and socialism, as a means, a way, a method, a means of increasing the productive forces.[ 9 ].
Concessions are “a tribute, a payment that we paid “for science”. It’s not a pity to pay for science, as long as learning goes right”[ 10 ]. There is no doubt that concessions are fraught with some danger, since they increase the strength of capitalism working inside a socialist country, but this danger is not great, since “we give the concessionaire a few factories, keeping the majority for us. Of course, it would be absolutely absurd if the Soviet government were to distribute most of what belongs to it in concessions—then it would not be a concession, but a return to capitalism. Concessions are not terrible as long as we hold all state enterprises in our hands and weigh accurately and strictly what and under what conditions we can give concessions, in what amounts.[ 11 ]. "However, the concessions must be monitored, step by step we must oppose them with our communist influence." - Concessions are "a kind of war, a military competition of two methods, two formations, two economies - communist and capitalist"[ 12 ].
What do they give us concessions.
Our concession policy provides firm forms for attracting foreign capital and foreign technical and organizational assistance to the USSR. What exactly are we being given and can be given by concessions?
1. By building new factories and factories or restoring destroyed ones, the concessionaire increases the quantity of goods circulating in the country and raises the base of the given branch of industry to a higher technical level.
2. The work of new enterprises reduces unemployment, increases the cadres of the industrial proletariat, forms new proletarian centers in presently non-industrial areas, and creates new centers of proletarian power.
3. Acquaintance of the workers of the concession enterprises with the achievements of foreign technology, with new methods of production, prepares qualified workers for our state industry.
4. The competition of the concession enterprises is pulling up the Soviet enterprises, forcing them to produce products of higher quality and cheaper.
5. Thanks to the introduction of the products of concession enterprises into the peasant economy, the marketability of the peasant economy increases, the demand for agricultural products increases for processing at concession enterprises, for the personal consumption of their workers and employees, or for export.
6. The demand for machinery and other industrial items, the demand for raw materials and fuel causes the growth and development of the economy and enterprises that produce these items.
7. Concessions contribute to the improvement of the settlement, in particular the currency, balance of the country, due to the inflow of foreign currency to us and the reduction and even cessation of the import of those items that the concession enterprise produces and which were imported from abroad before its operation.[ 13 ].
8. Concessions in remote, sparsely populated areas contribute to the development of communication lines, the settlement of suburbs, etc.
9. Paying taxes, excise duties, shared contributions, concessions increase state budget revenues.
10. By passing into the hands of the state after the expiration of the period specified in the contract, the concession enterprises strengthen and strengthen the socialist sector of our economy and accelerate the organization of socialist society.
concession forms.
According to their organizational form, concessions are of two kinds: pure concessions and mixed societies .
By pure concession is meant a concession in which the entire capital belongs to the foreign capitalist. By a mixed concession is meant one in which a foreign capitalist and a Soviet trust jointly in one joint-stock company operate an enterprise or develop natural resources. In such a society, of course, part of the capital is invested by a foreigner, part by us. The management of such a concession is carried out jointly - its board includes both our representatives and representatives of the foreign capitalist. The profits of such mixed companies are usually divided in proportion to the invested capital.
Interested in obtaining not only foreign capital, but also foreign technology, foreign organizational experience and skills, we, along with these two forms of concessions, conclude concession agreements for technical assistance with foreign firms of interest to us. This or that firm undertakes under such an agreement to acquaint us with the secrets of production known to it, to provide us with its patents. This gives us the opportunity to improve the technique of production at our factories, to introduce various improvements unknown to us, and finally, with this help, to set up new production facilities that do not yet exist in our country. With huge capital expenditures, already amounting to more than 1 billion rubles. per year, it is extremely important for us to build our factories and factories, to put our production on the basis of the latest improvements already known to the capitalist world. The cost of technical assistance will be repaid a hundredfold by the low cost of production and its high quality, which will make it possible to improve the well-being of the workers and peasants.
"Whoever wants to learn must pay for teaching."
In both concession and technical assistance, we are paying “for our backwardness, for our weakness, for what we are now learning and what we must learn. Whoever wants to learn must pay for teaching . We must make this clear to everyone and everyone in practice, and if we prove this in practice, then the huge masses of peasants and workers will agree with us, since this will immediately improve their situation, since this will ensure the restoration of our industry.[ 14 ].
“We are not alone in the world. We exist in the chain of capitalist states, as a link in the world economy. On one side are the colonial countries, they cannot yet help us, on the other are the capitalist countries, they are our enemies. A well-known equilibrium is obtained, however, a very poor equilibrium. But we still have to reckon with this fact. We must not close our eyes to this fact if we are to exist. Either an immediate victory over the entire bourgeoisie, or the payment of tribute . We quite openly admit, we do not hide it - concessions in the system of state capitalism mean a tribute to capitalism. But we are gaining time, and gaining time means winning everything, especially in an era of balance, when our foreign comrades are thoroughly preparing the revolution. The more thoroughly we prepare it, the more certain will be the victory. Until then, we will be forced to pay tribute ... "[ 15 ].
We are building socialism in one country, and here it is not a pity to give up tens, and perhaps even hundreds, of millions of our immense wealth, of those huge sources of raw materials that lie in vain, in order to accelerate it, if only to get the help of advanced big capitalism.
We will return it with a vengeance.
Notes :
[ 1 ] A report by A. M. Ginzburg on the construction of a five-year plan, “Commercial and Industrial Newspaper”, January 30, 1927.
[ 2 ] N. Vanag . Financial capital in Russia on the eve of the war, ed. 1925, p. 53.
[ 3 ] N. Vanag . Financial capital in Russia on the eve of the war, ed. 1925, p. 43.
[ 4 ] Report of the Liquidation Commission for Private Railways in 1918
[ 5 ] A. Ioffe . Genoa Conference, ed. 1922, p. 40.
[ 6 ] V. I. Lenin , Collected Works, vol. XVII, p. 398.
[ 7 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 217.
[ 8 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 218.
[ 9 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 222.
[ 10 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 227.
[ 11 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 199.
[ 12 ] V. I. Lenin , Collected Works, vol. XVII, p. 397.
[ 13 ] Concessions for manufacturing industrial equipment are particularly important here. The plan for the development of our industry and transport provides for imports from abroad of raw materials, semi-finished products, and equipment in 1926/27 for 803 million rubles, in 1929/30 - for 1043 million rubles, in 1931/32 - by 1517 million rubles. Naturally, the concessions that produce and procure those items that we must import from abroad will reduce these costs, which are a heavy burden on our foreign exchange balance.
[ 14 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 332.
[ 15 ] V. I. Lenin , Collected Works, vol. XVIII, part I, p. 332.