Private Capital in the USSR -1927, Yuri Larin
State publishing houseEntrepreneurial organization of waste. Construction.
Even before the revolution, we had an annual departure of part of the peasants from the countryside to work. A book by Comrade Mintz has recently been published, which is specially devoted to this question. It summarizes pre‐war data, as well as data from the latest surveys that were already carried out under Soviet rule. From all these reports it is clear that in the last years before the revolution, approximately from 1900 to 1913, the average number of otkhodniks annually was about 6 ½ million people. Moreover, of these, about 3 million were spent on agricultural earnings and about 3 1/2 million ‐ on non‐ agricultural, including 2 1/2million people construction and road workers (of which 1,750,000 laborers) and 1 million engaged in various other seasonal trades, in particular, logging, etc. (Mints, pp. 38‐39). During the World War, under the influence of mobilization, the departure was reduced and in 1917 amounted to only 2,700 thousand people. (ibid.). In the first years after the revolution, the retreat completely stopped. The counter‐revolutionary armies of Denikin, Kolchak and others separated from the center by military fronts those areas where a fair portion of otkhodniks usually went—the south of the Ukraine, the North Caucasus, and the Trans‐Volga region. In the very center, the landlord economy was destroyed, and the kulak economy was almost destroyed. As for the departure to the city, under the influence of the famine of 1918‐1919, on the contrary, people left the cities for the countryside. But then, after the end of the war and the new unification of the country, gradually, the retreat began to recover from about 1921‐1922, when the new economic policy made it easier to increase the use of wage labor in the restored non‐agricultural economy and in agriculture. According to Gosplanʹs Control Figures (p. 286),
over the past three years, from 1923/24 to 1926/27, we have added 3 million people. of the proletariat—an average of 1 million in year. This increase was mainly due to the migration from the villages to the cities, both returning and finally moving for the first time. we have added 3 million people. of the proletariat—an average of 1 million. in year. This increase was mainly due to the migration from the villages to the cities, both returning and finally moving for the first time. we have added 3 million people. of the proletariat—an average of 1 million. in year. This increase was mainly due to the migration from the villages to the cities, both returning and finally moving for the first time.
In addition, the annual seasonal departure from the countryside began to gradually increase, similar to the pre‐ revolutionary one. At present, it reaches about 3 million people. per year (for 1926). Of these 3 million people. at least a million are construction workers, about 500,000 are forest workers, i.e., such workers who go to the forest to cut firewood, and so on. Further, approximately 1 million is the mass of laborers who are unemployed in our cities, then 500 thousand go to various other industries ‐ water transport, etc., including agriculture (for seasonal work in state farms Sugar trust, tobacco and vineyards in the Crimea, the North Caucasus, etc.). I must make a reservation about this figure—1 million unemployed laborers. In the statistics of our labor exchanges, one cannot find such a figure, there the number of unemployed unskilled workers is much less. This is due to the extreme incompleteness of the statistics of unemployment through labor exchanges, which we have. Labor exchanges registered unemployment before October 1, 1926, only in 256 cities, and after October 1, 1926, only in 283 cities. Meanwhile, the unemployed are not only there. At the suggestion of the All‐Union Central Council of Trade Unions, the trade unions made a calculation as of April 1, 1926, of how many members of the trade unions are
unemployed and how many of them are registered with the labor exchanges (these data were published in the report of the All‐Union Central Council of Trade Unions to the recent 7th Congress of Trade Unions on p. 247). There were 1,182,000 unemployed members of the trade unions, but meanwhile, only 509,000 of them, i.e., 43%—about half, were registered at the labor exchanges in these 256 cities. The other, larger half, almost 700 thousand people. obviously has to that part of the country where there is no registration of the unemployed by labor exchanges. It must be assumed that among the unemployed who are not members of trade unions, there are also quite a few in places where there are no labor exchanges and therefore no registration of the unemployed is carried out. At the end of December 1926, there were 1,310,000 unemployed at the labor exchanges (according to the ʺReference Bookʺ of the CSB, p. 302). So, in general, we actually have at least two million unemployed. As for their percentage distribution by category, the latest data was published (according to labor exchanges) as of October 1, 1926: skilled workers of all types ‐ 25%, Soviet employees of all types ‐ 20% and Deskilled ‐ 55% (p. 303
ʺHandbookʺ). From here we get up to a million unskilled workers who somehow manage to get by (help from relatives, hand‐selling without a patent, standing in lines for hire, etc. ‐ few of the unskilled workers receive state benefits).
Of all the waste that comes from the villages, a part is organized by entrepreneurs. The main types of waste now are for construction and forestry. There are many construction artels. Some building artels, or rather most of them, are really labor associations, but some are organized by the entrepreneur under the guise of a senior worker, headman, etc., in relation to whom the rest of the members of the artel are in fact hired workers. To determine what part of construction waste is organized in this way, one has to dwell on the question of the role of private
capital in the production of construction work in the USSR in general.
The cost of repairing and building residential premises in the USSR is greater than is often assumed. The role of private construction in this case is also much more significant than is sometimes estimated ʺtentativelyʺ.
According to the Peopleʹs Commissariat of Internal Affairs (certificate dated February 22, 1927, No. 33/064/10), private owners own 83% of buildings, 66% of apartments and 50% of the living space of the cities of the RSFSR; in the rest of the USSR this percentage is higher (because the largest areas are municipalized precisely in Moscow and Leningrad); therefore, we can assume that private owners now own at least 17 1/2 million square meters. soot living space (calculation of the State Planning Commission). According to the December 1926 census, the entire urban population of the USSR is about 25 million people, which, with an average actual number of about 10 1/2 sq. arch. per capita gives only about 29 1/2 million square meters. soot housing in cities.
The cooperation currently manages almost 6 million square meters. soot living space, and for the 1925/26 financial year the cooperatives spent almost 37 million rubles, or more than 50 kopecks, on repairs. per month for 1 sq. soot living space on average (according to the reporting1 data of the Allied Council of Housing Cooperation, No. 4 of the Housing Cooperation for 1927, p. 14). In terms of living space administered by government agencies, this expenditure is about 20% less per sazhen (judging by survey data in both capitals, etc.) and, consequently, the government agencies have a total of about 30 million rubles. Finally, in private houses it is even less (about 30 kopecks per sazhen per month), and in total it should reach 63 million rubles in them.
The entire cost of repairing urban residential buildings, therefore, amounted to at least 130 million rubles for the year. At least half of the repairs are carried out by private owners through private contractors and entrepreneurial artels. As regards the repair of cooperative houses, data are available for Leningrad, which accounts for 40% of all cooperative expenditures on repairs (and the same percentage of the cooperative living space in the cities of the USSR). According to these data (leading in No. 1 for 1927 of the Leningrad magazine Zhilischnoe delo), work through private contractors of the total amount of repairs of cooperative houses in Leningrad amounted to about 25% (for the 1925/26 financial year), including about half by direct orders to a private contractor, and just as many ʺhiddenʺ, that is, in the form of false artels (which are just a cover for the same private contractor). There is no reason to think that this percentage is lower in other cities (in the provinces, even, undoubtedly, much higher) and in the houses of government agencies (data for Moscow, etc.). Together with the amount of repair of residential buildings of government agencies and cooperation (67 million rubles), this will amount to about 17 million rubles, and in total, out of the entire amount of the annual repair of urban residential buildings, about 47 million rubles will have to be worked through an explicit and hidden private contractor. and through state construction offices and labor artels, about 38 million rubles. (including the economic hiring of individual workers). and in total, out of the entire amount of the annual repair of urban residential buildings, about 47 million rubles will have to be worked through an explicit and hidden private contractor. and through state construction offices and labor artels, about 38 million rubles. (including the economic hiring of individual workers). and in total, out of the entire amount of the annual repair of urban residential buildings, about 47 million rubles will have to be worked through an explicit and hidden private
contractor. and through state construction offices and labor artels, about 38 million rubles. (including the economic hiring of individual workers).
As for the construction of new residential buildings in cities, according to the NKVD (certificate dated February 22, 1927 No. 33/061/10), in 1925 the construction of private homeowners amounted to 49.9%, or almost exactly half of all new living space in the cities of the RSFSR. For every thousand urban residents of the RSFSR, according to the NKVD, this amounted to 80 m 2 of living space, and in the next year, 1926, according to the approximate calculation of the NKVD, it already reached 100 m 2 , or 22 sq. m. soot, per thousand inhabitants. Extending this to the rest of the USSR, we get for 1926 all new private construction of 550 thousand square meters. soot living space per year.
New private houses are almost entirely small wooden or stone (often of a simplified type) buildings, designed on average for no more than two families each. Due to the simplification of the type and the advantages of working through private contractors and private artels (the forest is bought from the peasants, which they harvest under the law on labor allotments without a penalty fee, they do not pay for members of social insurance artels, etc.), these private houses (more than 90 % wooden, according to the NKVD) are much cheaper than state and cooperative construction.
Stone houses in Moscow in 1926 cost an average of 802 rubles. for 1 sq. soot living area. Wooden houses of cooperation (in the RSFSR, according to the NKVD, wooden construction still accounts for almost 89% of the living space in the cooperation) on average in the state cost 480 rubles. for 1 sq. soot living space (data from cooperation according to the brochure of engineer Glagolev ‐ ʺConditions for housing constructionʺ, M., 1927).
The price of private construction in cities should be taken on average another 25% cheaper, or about 360 rubles. for 1 sq. soot. living area. This gives the price of all new urban private housing construction to about 200 million rubles. in year. All of it is carried out by private contractors, private labor artels and individual stove‐makers, roofers, etc. hired in an economic way (including false artels). The role of contractors and pseudo‐ artels is estimated by experts to a quarter.
The new cooperative construction of dwellings in urban‐type settlements (including factory settlements) in 1926 amounted to only 42 million rubles. (according to Tsentrozhilsoyuz). According to the certificate of the Tsentrozhilsoyuz (dated February 19, 1927, No. 2/411/10), construction through private contractors accounts for only about 2%, i.e. no more than 1 million rubles. The difference from repair work is clear. During repair work, often small sums are involved, which do not justify the creation of their own economic apparatus and which are insufficient to obtain consent to undertake these works from state construction offices. Since most housing unions do not yet have cooperative repair and construction offices for minor repairs, it is often necessary to turn to a private trader for repairs (as we have seen, 25% of the total repair amount). When building new houses, however, it almost always pays off either the organization of its own apparatus, or, perhaps, consent to the construction is obtained from state construction offices— because the role of private contractors is insignificant here (2%). No more and the role of false artels.
The new construction of residential buildings by government agencies (executive committees, trusts, peopleʹs commissariats, etc.) for 1925/26 gave an amount of about 200 million rubles. Accurate, or at least approximate data, including how much was done by private contractors and through private artels, is not available. But the certificate of the Central Committee of the
Union of Builders (dated February 10, 1927, No. 527/133/11) makes it possible to make a rough estimate based on the number of hired workers employed by private contractors.
The same estimate, on the same basis, has to be limited to the construction of non‐residential buildings by government agencies (factories, warehouses, railway water pumps, etc.). According to the report book of the Supreme Economic Council of the USSR ʺConsolidated production and financial plan of state industry for 1926/27ʺ (pp. 304‐305), all capital work in the industry of the Supreme Economic Council for the 1925/26 business year was actually carried out for 781 million rubles. Of these, equipment accounts for 213 million rubles. and for buildings 568 million rubles. (counting together new buildings and renovations of existing ones). Including: almost 95 million rubles were spent on housing construction, which are already included in the price of housing construction of government agencies. Remains for all construction and repair of non‐ residential buildings in the industry of the Supreme Council of National Economy 473 million rubles. Adding the construction and repair of non‐residential buildings by other government agencies (schools, hospitals, transport,9 according to the
ʺcontrol figuresʺ of the State Planning Commission, the amount of all construction (including repairs) in transport, communications, trade, utilities, education, health care and general administration in 1925/26 amounted to about 500 million rubles (in including transportation, almost 300 million rubles.) Discarding, however, from here the price of rails and other equipment, etc., we get about 250 million rubles .
Together with the cost of 200 million rubles. government agencies for the construction of dwellings receive a total amount of up to 900 million rubles, for which the share of a private trader can only be determined roughly, using
information from the Central Committee of the Trade Union of Builders on the distribution of construction workers.
Some part of this work is carried out by artels, whose members are not accepted as members of the trade union at all and therefore are not taken into account by them. Many of them are real comradely craft organizations of people from the same village. But often in the form of an artel, under the guise of a
ʺseniorʺ, etc., the contractor acts. At least in the mentioned reference, the Central Committee of Builders writes that artels
ʺin a number of cases are a hidden organization of private capital.ʺ What share of the total amount of work worth 900 million rubles is generally accounted for by such false artels is not known; in repair work, cooperation, as we have seen, is about 12% (and the same amount is rented to undisguised contractors). If for government agencies in general, out of caution, we assume a lower value ‐ up to 5%, then we will get about 45 million rubles for the share of artel‐camouflaged work through a contractor ‐ hardly less.
The rest of the work is carried out by hired workers, including the hiring of labor (non‐fictitious) artels. According to the Central Committee of the Trade Union of Builders from workers, members of the union, as of October 1, 1926, almost 7% were employed by private entrepreneurs, and on average,
27 workers hired by him accounted for one private entrepreneur. The Central Committee considers (mentioned reference) that, together with non‐members of the union, the total number of construction workers in private entrepreneurs will be up to 10% of their total number, no more. Therefore, we can assume that, excluding construction, false artels, the open work through contractors from government agencies in total accounts for about 85 million rubles.
To this must be added the construction work in the peasant village. Every year, up to 500,000 households are completely
rebuilt in our country (counting the rebuilding part of the population growth and the restoring part of those that burn down). The average price of the buildings of one peasant household in 1926, on average throughout the state, according to a special survey of the Peopleʹs Commissariat of Land of the RSFSR, is 406 rubles at pre‐war prices (collection ʺOn the Ways of Socialist Developmentʺ, M., 1927, article by Comrade Svidersky, p. 109). At current prices, this amounts to about 800 rubles, and in total, about 400 million rubles.10
10 ʺControl figuresʺ of the State Planning Commission are supposedly 769 million rubles, but it seems to me that this does not correspond to the number of new huts under construction.
It is generally assumed that at least half the peasant contributes his own labor and his own material. Artels or individual workers are hired only for furnace, carpentry, roofing, etc. in some places for the assembly and installation of log cabins, wall‐beaters (in the south), etc. Thus, no more than 200 million rubles will remain for work through artels, small contractors, etc. What part is accounted for, including by explicit and hidden contractors together, is unknown, but one can think that it is less than in the city, presumably up to 10%, or about 20 million rubles.
Thus, not counting their own labor and their own (non‐ purchasable) material of small builders, the entire cost of repair and new construction of residential and non‐residential buildings in the 1925/26 business year in the USSR amounted to about one and a half billion red rubles. Including about 450 million rubles. accounts for work through labor artels, about
250 million rubles for construction through private capital (counting together open orders to the contractor and work through false labor, essentially entrepreneurial artels), and about 800 million rubles for the work of state construction organizations. The share of private capital accounts for such;
Thus, about one‐sixth of the performance of all paid construction work in the USSR. At the same time, it is possible that out of the materials counted for the absence of materials, 800 million rubles are completely constructed by the state apparatus.
The large role of the private sector in the market of building materials is thus based, first of all, on the large role of construction not through the state apparatus (nearly half, almost 700 million rubles ʺprivate sectorʺ and about 800 million rubles ‐ state), partly — the lack of inclusion in the plan of bank lending of the supply of housing cooperation funds for the cooperative procurement of handicraft building materials necessary for repairs and partly for new construction. In addition, state construction offices generally do not undertake minor repairs, and the organization of cooperative offices for minor repairs encounters an obstacle in the indicated absence of special credit for this matter.
The large role played by false artels and artels in the very production of buildings is additionally explained by the still greater advantages which, according to the laws in force, they have in supplying timber and other expenses (social insurance, etc.) over cooperative and executive committee construction. The equalization of conditions, by reducing the cost of cooperative, executive committee and industrial construction of dwellings, can bring about essential changes in this matter.
The amount of circulating capital of private capital in construction, excluding work through labor artels, is approximately 50 million rubles, judging by the usual percentage of advances in construction (the amount of entrepreneurial construction, including through false artels, amounted, as we have seen, to about 250 million rubles for the last year). The amount of net profit should be up to 20 million rubles. (i.e. up to 8% of turnover by analogy with known
calculations), which is up to 40% of capital, i.e. approximately corresponds to the net return on private capital in wholesale and semi‐wholesale trade.
One of the forms of inconspicuous favoring of private capital in the field of construction is the habitation of non‐working elements in ready‐made municipal apartments (with the investment of their new savings in the growth of speculative operations), while the state and the workers take from themselves the most necessary funds for the construction of new dwellings, moreover in insufficient quantity.
It is necessary to oblige the Nepmen within two years to build new apartments for themselves at their own expense without a state loan, freeing up all the large living space they occupy. People subject to income tax of at least 5 thousand rubles. per year are able to do so.
It is necessary to enable state‐cooperative construction offices to work at the same prices as private‐enterprise artels: a) by establishing an equally reduced percentage of social insurance for artels and state construction companies when building one‐ story and two‐story houses; b) by equalizing the building workersʹ cooperatives in the stumped payment for timber with the peasants who pay for the timber according to the labor norm, from where the private trader feeds on cheaper timber;
c) by developing the state‐cooperative procurement of handicraft building materials by including it in the bank lending plan; d) setting the task of creating state cooperative offices for minor repairs; e) limiting the profit in the calculation of state construction offices to no more than 2%.
Thus, it can be considered that private capital occupies about 15‐20% of all migrant construction workers, yet private construction accounts for an even larger share.
Similarly, of the peasants who go to work in the forests, of these 500,000 forest workers, about 15‐20% are also employed by large private lumberjacks. These large private procurements (sometimes even now in a ʺpseudo‐stateʺ or ʺpseudo‐ cooperativeʺ form) are the main base for private trade in firewood and forest products. Private timber trade, including wholesale, is currently very large. For example, in Moscow it makes up about one third of the total timber and firewood turnover, in some places it is even larger in the provinces. It is based on two sources: firstly, on the fact that private capital itself harvests timber with the help of hired workers and peasant artels, and, secondly, on the fact that individual big buyers buy timber from the peasants, who have the right to cut it without foam payment on especially favorable terms within the limits of the so‐called labor norm from the forests allotted to them. Thanks to this, private loggers get the opportunity to have timber for construction and for sale, including firewood, partly cheaper than the cooperatives and government agencies that pay the foam fee.
Thus, of the two main types of current peasant non‐agricultural waste—construction and timber—at least 15 percent is exploited (and partly organized) by private capital. Incidentally, this roughly corresponds to the share of marketable output that capitalist entrepreneurship has in agricultural production itself. As for the unemployed unemployed laborers from the countryside, who are in the cities, some of them also fall into the hands of private capital as dummy agents in ʺqueuesʺ at retail stores, as manual salesmen without patents, etc. thisʺ to the remaining share of long‐ distance departure for agricultural earnings (to the Kuban, to the Crimea, etc.)