Political Economy economic collaboration

Political Economy

CHAPTER XLIII : ECONOMIC COLLABORATION BETWEEN THE COUNTRIES OF THE SOCIALIST CAMP

The Rise and Consolidation of the World Market of Countries of the Socialist Camp

As has already been said, after the second world war the countries which had fallen away from the world capitalist system and formed, together with the Soviet Union, the socialist camp closed their ranks economically and built up close collaboration among themselves. Parallel with the world capitalist market arose a new world market of the countries of the socialist camp.

At the present time the countries participating in this market are: the Soviet Union, the Chinese People’s Republic, Poland, Czechoslovakia, the German Democratic Republic, Hungary, Rumania, Bulgaria, Albania, the Mongolian People’s Republic, the Korean People’s Democratic Republic and the Democratic Republic of Viet-Nam. In the territory of these States, equal to a fourth of the land surface of the globe, lives more than one-third of the whole of humanity. After the renewal of the temporarily broken trade relations between the States constituting the new world market and Yugoslavia, broad prospects have opened up for developing economic cooperation with that country.

The countries of Central and South-eastern Europe which fell away from the capitalist system, immediately after the establishment of the people’s democratic regime, began to establish close economic relations with the Soviet Union and mutual collaboration among themselves. These relations, based on the principles of fraternal mutual aid, played a big role in the rapid restoration of the economy of the people’s democratic States and in the solution of other urgent economic tasks of the post-war period. Following the formation in 1949 of the Chinese People’s Republic, a Great Power with a population of 600 millions came into the socialist camp.

The economic collaboration of the States of the socialist camp entered on a new stage when the countries of people’s democracy proceeded to the fulfilment of their long-term national economic plans, aiming at building up the foundations of socialism. This stage is characterised by the passing over to long-term economic treaties and agreements regarding mutual deliveries of commodities. Such treaties and agreements guarantee to each country the delivery over a long period of definite types of machines, equipment, raw materials, and other goods indispensable for the carrying out of their national economic plans. At the same time the long-term agreements guarantee to each country the sale of its products on the foreign market. The existence of stable and lasting economic relations creates a clear perspective for the further development of their economy, and is one of the most, important conditions for planned socialist construction in the countries of people’s democracy.

Experience of economic collaboration between the countries of the socialist camp proves that the world market of the countries of the socialist camp possesses such resources that every country in this camp can find within its bounds all that it needs for its economic development.

With the aim of planned economic collaboration between the countries of the socialist camp, the Council of Mutual Economic Aid was established in 1949 on the principle of complete equality of rights of all States participating in it. The Council of Mutual Economic Aid organises the exchange of economic and technical experience and the provision of mutual aid in raw materials, food, machines, and equipment; it ensures the planned linking together and co-ordination of the economic development of the States of the socialist camp, on the basis of a rational division of labour between them. This fully accords with the interests of the most rapid development of the productive forces of each of these countries, and of the socialist camp as a whole.

The steady growth and strengthening of the world market of the countries of the socialist camp serve as irrefutable proof of its historically progressive character.

At the same time development of economic collaboration between the countries of the socialist camp not only does not exclude the growth of their trade connections with the countries of the capitalist part of the world, but creates favourable prerequisites and conditions for it. The countries of the socialist camp are endeavouring to develop business relations with the countries of the capitalist camp on the principles of equal rights, mutual advantage and strict observance of all obligations undertaken. They see these relations as a substantial factor in the further progress of their own economies, the acceleration of their technical progress and the raising of the standard of living of their population.

Proceeding from Lenin’s principle of peaceful co-existence of the two systems and consistently fighting for peaceful co-operation between States with different social and economic systems, the countries of the socialist camp are striving to bring about an extensive development of trade with all States which, for their part, are ready to increase their economic ties with the camp of socialism. In the capitalist countries the desire for normalising and extending trade with the States of the socialist camp is growing—the desire to overcome the, artificially-created obstacles in the way of the development of international economic co-operation, to do away with the numerous bans and restrictions engendered by the "cold war’ policy and the militarisation of economies. The capitalist countries cannot but take into account that the countries of the socialist camp constitute a stable market which is not subject to market fluctuations and economic crises of overproduction. The countries of Western Europe are especially interested in trade with the countries of the socialist camp.

At the same time the development of international economic co-operation between the States of the two camps constitutes an important factor in strengthening peace, relaxing international tension and establishing an atmosphere of international confidence.

Of great importance is the steady extension of economic ties between the States of the socialist camp and the underdeveloped countries. For these countries economic co-operation with the States of the socialist camp is one of the principal ,means of securing their’ economic independence. While the capitalist monopolies invariably strive to enslave the underdeveloped countries economically, the Soviet Union and the people’s democracies strictly maintain in their economic relations with these countries the principles of non-interference m the internal affairs of other peoples, co-operation on the basis of equal rights, and mutual benefit. The consistent implementation of these principles will facilitate increased co-operation between the underdeveloped countries, which are striving to emerge as quickly as they can from their State of backwardness, and the countries of the socialist camp.
The Character of the Economic Relations between the Countries of the Socialist Camp

The countries of the socialist camp differ in regard to the level of their economic and technical development. Nevertheless, the mutual relations between these countries are determined by one most important and decisive factor—that they are all following the path of building socialism and communism. In the economy of the countries of people’s democracy the leading place is occupied by the socialist forms of economy. As a result of this, in the sphere of mutual relations between the countries of the socialist camp the economic laws of capitalism, expressed in the exploitation of man by man, competition and anarchy of production, have lost their validity. In this camp relations between the States are based on the economic laws of socialism. The economic collaboration of the countries of the socialist camp represents a new type of international relations, which history has never known before. In the process of strengthening and extending this co-operation a socialist system of world economy is being formed and developed.

In accordance with the basic economic law of socialism, economic relations between the countries participating in the new, world market are subordinated to the task of the fullest satisfaction of the constantly growing needs of the working people by means of the uninterrupted growth and perfection of socialist production, on the basis of the highest technique. For this reason, in the socialist camp there are not and cannot be economic penetration, unequal exchange, competitive struggle, exploitation, and the enslavement of weak States by stronger ones. The mutual relations of the countries of this camp are characterised by comradely collaboration and mutual aid.

The most important peculiarity of the socialist camp is the planned character of the economic connections of the countries belonging to it. In accordance with the law of planned, proportional development of the national economy, the economic collaboration of the countries of the socialist camp is developing on the basis of the mutual linking together of the national economic plans. The plans of economic collaboration are taken. into account in the State plans of development of the national economy of the Soviet Union and the countries of people’s democracy. Therein lies the tremendous advantage of the world market of the countries of the socialist camp in comparison with the world capitalist market, subject to periodical crises of overproduction. Basing themselves on their own resources and on fraternal mutual aid, the countries of the socialist camp are securing an uninterrupted growth of the national economy and a systematic raising of the material well-being of the working masses. This in turn provides a secure basis for the constant extension of the new world market, which is free from the sales difficulties inherent in the world capitalist market.

The planned character of the economic development in the countries of the socialist camp guarantees the possibility of the most rational use of existing resources, with the aim of the most rapid development of the productive forces and an uninterrupted advance of the economy and in the well-being of the people. The countries of the socialist camp are interested in the development in every way of the productive forces of each one of them since such development strengthens the economic might of the camp as a whole. This creates extraordinarily favourable conditions for enlarging and strengthening economic collaboration between the States of this camp.

The development and strengthening of economic collaboration between the countries of the socialist camp are proceeding on the basis of a new, socialist international division of labour, which is radically different from the international division of labour in the capitalist system of world economy.

Unlike the conditions prevailing under capitalism, division of labour between the States of the socialist camp is carried out not by means of compulsion and force, not by fierce competitive struggle, but by collaboration between States with equal rights.

Division of labour between the countries of the socialist camp takes into account the possibilities of each country and leads to their general advance. Each country apportions part of its resources to satisfying the needs of other countries, and in its turn relies on their fraternal help. The rational division of labour between the countries of the socialist camp helps in the all-round development of their productive forces on the basis of priority growth of the production of means of production, since each country can, in a planned way, not only mobilise its own resources but also make use of the resources of the fraternal countries in the interests of a common advance.

At the same time, the socialist division of labour allows the individual countries which supplement each other as participants with equal rights in the general system of the socialist camp, to have the possibility of accelerating the pace of their economic development, while saving vast resources and efforts and avoiding unnecessary overlapping in the development of the various branches of the national economy. Each country can concentrate its efforts and resources on developing those branches for which it has the most favourable natural and economic conditions, production experience and cadres. Along with this, the different countries can avoid having to cope with the production of those types of products the demand for which is. met by supplies from other countries. In this way there is achieved a broad specialisation and co-operation in industrial production, and the most useful division of labour in the production of food and raw materials.

Such specialisation and co-operation are effected through the linking together of plans of capital construction, and by the conclusion of long-term multilateral and bilateral agreements on mutual aid and collaboration. Specialisation and co-operation have particularly great importance in the most important branches of heavy industry—engineering and metallurgy—where, thanks to this, great possibilities are opening out of considerably reducing the costs of production. In agriculture the establishment of the appropriate division of labour is creating favourable conditions for the most rapid increase of production in all its branches, by raising the productivity of labour and a rational use of agricultural land.

As a result of successful economic co-operation, possibilities for planned coordination of the national economies of the countries of the socialist camp have considerably increased. Work is proceeding at the present time, in the European people’s democracies as in the Soviet Union, on the drawing-up of Five-Year Plans for 1956-60. Thus, the long-term plans of these countries will embrace one and the same period of time. This creates conditions for closer co-ordination in economic construction in the Soviet Union and the European people’s democracies.

socialist camp, for the first time in history, an end has been put to the contradictions, insoluble for capitalism, between the objectively progressive tendencies to economic linking together of separate countries, and the imperialist methods of this linking together, effected by means of financial subjection and colonial enslavement of the economically weak peoples by the capitalistically developed States.

Economic relations between developed and backward countries in the capitalist camp are built on the principle of domination and subjection, and reflect above all the relative strength of the partners. The imperialist States, pumping out valuable raw materials from the underdeveloped countries, colonies and semicolonies, strive to perpetuate their backwardness and dependence as suppliers of agricultural products and raw materials for the economy of the metropolis.

Economic relations in the Socialist camp are characterised by all-round mutual aid, to raise the underdeveloped countries to the level of the advanced ones. As a result of the socialist international division of labour, the liquidation of economic backwardness and one-sided economic development inherited by the countries of people’s democracy from capitalism is facilitated favourable conditions for their industrialisation are created their economic self-reliance and independence of the capitalist world is strengthened, their economy is rapidly advancing and the well-being of their population is rising.

In the socialist camp the relations between the countries are the embodiment of the principles of proletarian internationalism, the international solidarity of the working people. These mutual relations are founded on disinterested mutual support, on respect for their State sovereignty and the national interests of each country. The fraternal friendship and close collaboration of the countries of the socialist camp are a most important source of the unbreakable might of this camp, the determining condition for successful socialist construction in these countries.
The Basic Forms of Economic Collaboration of the Countries of the Socialist Camp

The principal forms of collaboration of the countries of the socialist camp are foreign trade, the granting of credits, scientific and technical aid, collaboration in the training of cadres and exchange of experience in economic construction. Among these forms of economic collaboration foreign trade is of basic importance.

The foreign trade of the countries of the socialist camp is; built on principles completely different from those governing foreign trade on the world capitalist market. In the capitalist world foreign trade, concentrated in the hands of the monopolies, is subordinated to the interests of extracting the maximum profit, by means of unequal exchange and other methods of plundering and enslaving the backward and dependent countries. The foreign trade of the countries of the socialist camp is a State monopoly (U.S.S.R. and European countries of people’s democracy), or is carried on under the strict control of the State (Chinese People’s Republic), and serves the interests of a general advance, the acceleration of the economic development of the countries of this camp, and the raising of the standard of living of their population.

Each of the countries participating in the new world market, realising, thanks to foreign trade, an ever-increasing part of the products of its national economy, receives in return ever greater material values: industrial equipment, raw materials and other commodities required for its economic development. Each country imports commodities which it requires, and exports commodities needed by other countries; and none of the parties to the exchange forces on any partner goods which it does not require, as is often the practice on the capitalist market.

Prices of commodities on the world market of the countries of the socialist camp are stable. They are fixed on the basis of voluntary agreements between parties having equal rights, with strict observance of their mutual interests, which rules out any kind of discrimination and inequality of exchange.

The uninterrupted growth of the foreign trade of the countries of the socialist camp is clear evidence of the development and growing strength of the new world market.

The volume of the Soviet Union’s foreign trade in 1954 was four times pre-war, while the foreign trade of the capitalist countries had increased only a little more than one and a half times during that period.

The foreign trade turnover of the Chinese People’s Republic in 1954 was double what it had been in 1950. The foreign trade turnover of the six European people’s democracies (Poland, Czechoslovakia, Hungary, Rumania, Bulgaria and Albania) was in 1954 more than 70 per cent greater than in 1948. Compared with 1946 foreign trade turnover in 1954 had increased—in Poland about 6.5-fold, in Czechoslovakia about 4-fold, in Hungary 14.5-fold, inn Rumania 16-fold in Bulgaria 3.5-fold. In the German Democratic Republic it was more than 25 times what it had being in 1947.

Foreign trade ties between the countries of the socialist camp themselves are developing at especially rapid rates. In 1938 the U.S.S.R.’s total trade with Poland, Czechoslovakia, Hungary, Rumania, Bulgaria, and Albania accounted for barely 1.5 per cent of its foreign trade turnover. In 1954, however, trade with these countries was 40 per cent of the foreign trade turnover of the U.S.S.R. In 1938 U.S.S.R. trade with China amounted to 4 per cent of the Soviet Union’s foreign trade turnover; in 1954 it was 18 per cent.

In 1954 the share of the countries of the socialist camp in the total trade turnover of Poland was more than 70 per cent, of Czechoslovakia about 75 per cent, of Rumania 82 per; cent, of Hungary 70 per cent, of Bulgaria 87 per cent, of Albania nearly 100 per cent, and of the German Democratic Republic over 75 per cent.

The Soviet Union, having at its disposal a highly developed heavy industry, particularly in engineering, is supplying great quantities of the most diverse equipment to the countries of people’s democracy. Between 1948 and 1954 the supply of industrial equipment and machines from the Soviet Union to the countries of people s democracy increased more than ten-fold.

Machines, equipment and other means of production have an important place also in the exports of other countries of the socialist camp. Czechoslovakia exports products of the engineering, metallurgical and chemical industries and coke, as well as foot-wear. Poland supplies hard coal, coke, rolled metal, zinc, railway rolling stock, besides food products. Hungary exports metal-cutting lathes, turbines, transformers, cranes, aluminium, bauxite, and food-stuffs. Oil, oil products, and timber occupy an important place in Rumania’s exports. Bulgaria exports lead and zinc concentrates, cement, timber, chemicals, fruit, tobacco, and wines. Albania supplies ores, oil, bitumen, ores, skins, and fruit. The German Democratic Republic exports products of the engineering, electro-technical, and chemical industries, precision tools, and optical instruments. The Chinese People’s Republic exports industrial and agricultural raw materials and food products.

An important form of economic collaboration between the countries of the socialist camp is the provision of credits. In the capitalist world credit relations serve as one of the most effective instruments for the economic robbery of underdeveloped countries by the monopolies of the imperialist Powers. The provision of credits usually carries with it the obligation to spend the sums advanced in the purchase of goods from the creditor country. In this way the imperialists unload on the debtor countries their old stocks of goods, in the first place consumer goods, at monopoly high prices. In the socialist camp the provision of credits is not linked with any privilege for the creditor. Credits are provided chiefly for purchasing equipment and machines and other means of production, but also for the purchase of those consumer goods which are not produced in the country in question but are required for its population. The States which take up loans pay them off, with the interest on them, by means of goods of the type normally exported by them, and at fair prices.

Thus, under the credit agreement concluded on February 14, 1950, the Soviet Union undertook to grant the Chinese People’s Republic a long-term credit on advantageous terms (from 1 per cent per year) for 300 million American dollars, to be utilised over a period of five years from January 1, 1950, in equal annual instalments, for acquiring from the Soviet Union equipment and materials, including equipment for electric power-stations, metallurgical and engineering works, equipment for coal and ore mines, for railways and other means of transport, rails and other materials necessary for the restoration and development of China’s national economy. In 1954 the Soviet Union granted the Chinese People’s Republic a long-term credit for 520 million roubles. Under economic agreements in 1953 and 1954, the Soviet Union, rendering aid to China in the carrying-out of its first Five-Year Plan undertook to be responsible for planning and supplying equipment for the building or reconstruction of 156 very large industrial enterprises. The Soviet Union is helping China to build, equip and start up these enterprises.

On the basis of long-term credit agreements, the Soviet Union is supplying large quantities of machinery and equipment to Bulgaria, Albania, and other countries. Thanks to Soviet credits, Albania has received complete equipment for whole factories and works: for a textile combine, sugar and cement works, for an oil refining works and other undertakings. Bulgaria has received complete equipment for the Stalin chemical combine, for the Chervenkov thermo-electric station, for a metallurgical and lead and zinc works and for a number of other undertakings.

Scientific and technical aid is of tremendous importance for the economic advance of the countries of the socialist camp. This help is given in many different forms, in the first place in the form of handing over patents, licences, and technological documents covering the most modern inventions and technical improvements, mutual exchange of technical experience in production, joint exploitation and utilisation of natural resources, joint construction of industrial undertakings, mutual aid in specialists.

The countries of the socialist camp furnish one another with this extensive scientific and technical aid on the basis of close collaboration and mutual assistance.

The Soviet Union is helping the countries of people’s democracy to erect huge modern undertakings and whole branches of industry, in the first place, of heavy industry, which is the basis for the economic development of all the countries advancing towards socialism. In the field of technical aid the Soviet Union provides industrial undertakings and cultural institutions, built according to Soviet designs, with the newest and best equipment. The Soviet Union passes on to the other countries of the socialist camp scientific inventions, patents, and licences covering the most modern productive technical achievements, for which they pay only the actual expenses incurred in the planning and preparation of the scientific documentation. Soviet specialists—engineers and technicians—help the countries of people’s democracy to carry on research work, to exploit local deposits of useful minerals, and to carry out complicated assembly and construction work on a number of large new projects.

Extensive exchange of the achievements of science and technique between the countries of the socialist camp is playing an important part in hastening technical progress in all these countries, ensuring rapid introduction of the most advanced kinds of equipment and methods of production into industry, transport and agriculture.

Of outstanding importance for the development of the productive forces of the people’s democracies is the decision of the Soviet Union to render these countries scientific, technical and industrial help in setting up experimental centres for research in the field of nuclear physics and the use of atomic energy for peaceful purposes. The people’s democracies will be provided with the necessary amount of fissionable material for atomic piles and experimental work, and they in their turn will supply the Soviet Union with appropriate raw materials.

Among the number of very large industrial undertakings, originated and built in the European people’s democracies with the assistance of the Soviet Union, are the Lenin metallurgical combine, a factory for light cars and trucks, and an aluminium works in Poland; the Gottwald metallurgical combine in Czechoslovakia the Stalin metallurgical combine in Hungary; the Lenin hydro-electrical station and a tractor works in Rumania; the Stalin chemical combine and the Lenin metal works in Bulgaria; the Lenin hydro-electrical station in Albania; and a number of other combines, heavy industrial enterprises, and power-stations.

Broad technical assistance by the Soviet Union is one of the most important conditions for opening up to the countries of people’s democracy the possibility of setting up in a short time new manufactures and whole branches of industry which these countries did not have. Thus Rumania not only extended its oil-extracting industry but also set up its own oil machinery industry, producing nearly all the equipment necessary for extracting oil and a considerable part of the complicated apparatus needed for oil refining. It is a unique event in the world for a small country, possessing an abundance of oil, to be able to set up its own oil machinery plant. Small countries with oil resources in the capitalist world mercilessly exploited by American and British monopolies could not even dream of such things.

By the Czechoslovak-Hungarian agreement, Czechoslovakia is given the possibility of setting up an aluminium industry based on Hungarian bauxite: Poland helped Czechoslovakia to organise the production of carbide and to construct a zinc smelting works. At Nowy Dwory (Poland) Poland and Czechoslovakia jointly constructed an electric power-station supplying power to both countries. By granting to Czechoslovakia a long-term lease of part of the port of Szczeczin, Poland provided her with an outlet to the sea.

Closely connected with scientific and technical collaboration of the countries of the socialist camp is collaboration in the training of cadres. In the higher educational institutions of the Soviet Union, Czechoslovakia and Poland, a large number of students from fraternal countries are given systematic training. Young specialists from these countries acquire practical experience in factories and scientific institutions.

On an ever wider scale study and exchange of experience in a very wide range of production, technical and organisational questions is taking place. With this aim numerous delegations of public men, business managers and engineers are being exchanged and industrial exhibitions organised, etc.

An important factor in strengthening economic co-operation between the peace-loving countries is the development of foreign trade and other economic ties by the Soviet Union and the people’s democracies (Czechoslovakia, Poland, Hungary) with economically underdeveloped countries. These ties are being steadily developed on the basis of commercial and other agreements which facilitate the growth of the productive forces and improvement in the well-being of the peoples.

Thus, the Soviet Union is building in India under the provisions of the Soviet-Indian agreement of February 2, 1955, on long-term favourable credit conditions, a large metallurgical works with a capacity of a million tons of steel per year. The Soviet Union is supplying all the equipment and rendering all the technical help needed, including despatch of highly qualified specialists, and also training Indian personnel both in India and in the Soviet Union.

The progress of economic collaboration between the countries of the socialist camp, the steady growth of the many-sided economic relations both among themselves and between them and the capitalistic countries facilitate the consolidation of peace and friendship between the peoples.

BRIEF CONCLUSIONS

(1) The mutual economic relations between the countries of the socialist camp represent a completely new, socialist type of international relations. At a time when, in the capitalist world, economic relations between countries are founded on the principles of the rule of the strong countries over the weak, the struggle of all against all, on anarchy and planlessness, economic relations in the socialist camp are built up on the principles of complete equality on both sides and mutual benefit, respect for the State sovereignty of all peoples, large and small, fraternal mutual assistance, planning and organisation of all economic connections. Relations between the countries of the socialist camp are the embodiment of the principles of proletarian internationalism—the international solidarity of working people.

(2) Economic collaboration between the countries of the socialist camp is based on the economic laws of socialism. In conformity with the basic economic law of socialism and the law of planned, proportional development of national economy, the economic ties between the countries. of the socialist camp are subordinated to the general aim of the fuller satisfaction of the constantly growing needs of the whole of society, through a continuous increase in production, and develop in a planned manner on the basis of equality of exchange. All this secures the constant extension of the capacity of the world market of. the countries of the socialist camp and eliminates the possibility of economic crises. The planned character of the economic development of the countries of the socialist camp guarantees the possibility of the most expedient utilisation of their resources. The economic collaboration of the countries. of the socialist camp is achieved on the basis of a new, socialist international division of labour.

(3) Foreign trade, rapidly growing from year to year, occupies chief place among the various forms of economic collaboration of the countries of the socialist camp. Of great importance are such forms of economic collaboration as the provision of credits and loans, scientific and technical aid, collaboration in the training of cadres and exchange of experience of economic construction. All these forms of economic collaboration of the countries of the socialist camp are developing with the aim of achieving the most rapid growth of the productive forces, the steady growth of the economy and of the well-being of the peoples.