Economic Situation and the Policy of the Party

J. V. Stalin

THE ECONOMIC SITUATION OF THE SOVIET UNION AND THE POLICY OF THE PARTY

Leningradskaya Pravda, No. 89, April 18, 1926
From J. V. Stalin, Works Foreign Languages Publishing House, Moscow, 1954, Vol. 8, pp. 123-56.

Prepared © for the Internet by David J. Romagnolo, djr@marx2mao.org (October 1999)

Report to the Active of the Leningrad Party Organisation on the Work of the Plenum of the C.C., C.P.S.U.(B.) [51]
April 13, 1926

Comrades, permit me to begin my report.

There were four items on the agenda of the April plenum of the Central Committee of our Party.

The first item was the economic situation of our country and the economic policy of our Party.

The second item was the reorganisation of our grain procurement agencies with a view to making them simpler and cheaper.

The third item was the plan of work of the Political Bureau of our Central Committee and of the plenum of the Central Committee for 1926, from the view-point of working out the principal key questions of our economic construction.

The fourth item was the replacement of Yevdokimov as Secretary of the Central Committee by another candidate -- Comrade Shvernik.

Leaving aside the last item -- the replacement of one secretary by another -- it may be said that all the others, which formed the main axis around which the discussion at the plenum of the Central Committee turned, could be reduced to a single basic question -- the economic situation of our country and the policy of the Party. In my report, therefore, I shall deal with this one basic question -- the economic situation of our country.

TWO PERIODS OF NEP

The major factor determining our policy is that our country in the course of its economic development has entered a new period of NEP, a new period of the New Economic Policy, a period of direct industrialisation.

It is now five years since the New Economic Policy was proclaimed by Vladimir Ilyich. The principal task which faced us, the Party, at that time was to lay a socialist foundation for our national economy under the conditions of the New Economic Policy, under the conditions of expanded trade. Today, too, this strategic task confronts us as our principal task. At that time, in the first period of NEP, beginning with 1921, we approached this principal task from the view-point of the development primarily of agriculture. Comrade Lenin said that our task was to lay a socialist foundation for the national economy, but that in order to lay such a foundation it was necessary to have a developed industry, because industry is the basis, the alpha and omega of socialism, of socialist construction, and in order to develop industry, it was necessary to begin with agriculture.

Why?

Because in order to expand industry under the conditions of economic disruption which we were then experiencing, it was necessary first of all to create certain prerequisites for industry in the way of markets, raw materials and food. Industry cannot be developed out of nothing at all; industry cannot be developed if there are no raw materials in the country, if there is no food for the workers, and if agriculture, which represents the chief market for our industry, is not developed to at least some extent. Consequently, in order to develop industry, at least three prerequisites were necessary: firstly, a home market -- and our home market so far is predominantly a peasant market; secondly, it was necessary to have a more or less developed output of agricultural raw materials (sugar beet, flax, cotton, etc.); thirdly, it was necessary that the countryside should be able to provide a certain minimum of agricultural produce for supplying industry, for supplying the workers. That is why Lenin said that for laying a socialist foundation for our economy, for building industry, we should have to begin with agriculture.

There were many at that time who did not believe this. Objections on this score were raised especially by the so-called "Workers' Opposition." How can that be? it said: our Party calls itself a workers' party, yet it is beginning the development of the economy with agriculture. How, it said, is that to be understood? Objections were also raised at that time by other oppositionists, who believed that industry can be built in any conditions, even if starting with nothing, and without taking the real possibilities into account. But the history of the economic development of our country in that period has clearly shown that the Party was right, that in order to lay a socialist foundation for our economy, in order to develop industry, it was necessary to begin with agriculture.

That was the first period of the New Economic Policy.

Now we have entered the second period of NEP. The most important and most characteristic feature of our economy today is that the centre of gravity has shifted to industry. Whereas at that time, in the first period of the New Economic Policy, we had to begin with agriculture, because on it depended the development of the whole national economy, now, in order to continue laying the socialist foundation of our economy, in order to promote our economy as a whole, it is on industry that we must focus attention. Agriculture itself can now make no progress if it is not promptly supplied with agricultural machines, tractors, manufactured goods, etc. Consequently, whereas at that time, in the first period of the New Economic Policy, the development of the national economy as a whole depended on agriculture, now it depends, and has already depended, on the direct expansion of industry.

II
THE COURSE TOWARDS INDUSTRIALISATION

That is the essence and basic significance of the slogan, of the course towards industrialising the country, which was proclaimed at the Fourteenth Party Congress, and which is now being put into effect. It was this basic slogan that the plenum of the Central Committee in April of this year took as the starting point of its work. Consequently, the immediate and fundamental task now is to hasten the tempo of development of our industry, to promote our industry to the utmost by utilising the resources at our disposal, and thereby to accelerate the development of the economy as a whole.

This task has become particularly urgent just now, at the present juncture, among other reasons because a certain discrepancy has arisen, owing to the way our economy has developed, between the demand for manufactured goods in town and country and the supply of those goods by industry, because the demand for industrial products is growing faster than industry itself, because the goods shortage we are now experiencing, with all its attendant consequences, is a reflection and outcome of this discrepancy. It scarcely needs proof that the swift development of our industry is the surest way to eliminate this discrepancy and to put an end to the goods shortage.

Some comrades think that industrialisation implies the development of any kind of industry. There are even some queer fellows who believe that Ivan the Terrible was an industrialist, because in his day he created certain embryonic industries. If we follow this line of argument, then Peter the Great should be styled the first industrialist. That, of course, is untrue. Not every kind of industrial development is industrialisation. The centre of industrialisation, the basis for it, is the development of heavy industry (fuel, metal, etc.), the development, in the last analysis, of the production of the means of production, the development of our own machine-building industry. Industrialisation has the task not only of increasing the share of manufacturing industry in our national economy as a whole; it has also the task, within this development, of ensuring economic independence for our country, surrounded as it is by capitalist states, of safeguarding it from being converted into an appendage of world capitalism. Encircled as it is by capitalism, the land of the dictatorship of the proletariat cannot remain economically independent if it does not itself produce instruments and means of production in its own country, if it remains stuck at a level of development where it has to keep its national economy tethered to the capitalistically developed countries, which produce and export instruments and means of production. To get stuck at that level would be to put ourselves in subjection to world capital.

Take India. India, as everyone knows, is a colony. Has India an industry? It undoubtedly has. Is it developing? Yes, it is. But the kind of industry developing there is not one which produces instruments and means of production. India imports its instruments of production from Britain. Because of this (although, of course, not only because of this), India's industry is completely subordinated to British industry. That is a specific method of imperialism -- to develop industry in the colonies in such a way as to keep it tethered to the metropolitan country, to imperialism.

But it follows from this that the industrialisation of our country cannot consist merely in the development of any kind of industry, of light industry, say, although light industry and its development are absolutely essential for us. It follows from this that industrialisation is to be understood above all as the development of heavy industry in our country, and especially of our own machine-building industry, which is the principal nerve of industry in general. without this, there can be no question of ensuring the economic independence of our country.

III

QUESTIONS OF SOCIALIST ACCUMULATION

But, comrades, in order that industrialisation may go forward, our old factory equipment must be renovated and new factories built. The distinguishing feature of the present period of development of our industry is that the mills and factories bequeathed to us by the capitalists of the tsarist period are already being operated to capacity, to the full, and in order to make further progress now the technical equipment must be improved, the old factories must be re-equipped and new ones built. Unless this is done, it will be impossible now to go forward.

But, comrades, in order to renovate our industry on the basis of new technical equipment, we need considerable, very considerable, amounts of capital. And we are very short of capital, as you all know. This year we shall be able to assign something over 800 millions for the fundamental cause of capital investment in industry. That, of course, is not much. But it is something. It will be our first substantial investment in our industry. I say it is not much, because our industry could quite comfortably absorb several times that sum. We have to advance our industry. We have to expand our industry as swiftly as possible, to double or treble the number of workers. We have to convert our country from an agrarian into an industrial country -- and the sooner the better. But all this requires considerable capital.

Consequently, the question of accumulation for the development of industry, the question of socialist accumulation, has now become one of first-rate importance for us.

Are we able, are we in a position, left to our own devices, without foreign loans, on the basis of the internal resources of our country, to ensure for our industry such accumulation and such reserves as are essential for pursuing the course towards industrialisation, for the victory of socialist construction in our country?

That is a serious question, to which special attention should be devoted.

Various methods of industrialisation are known to history.

Britain was industrialised owing to the fact that it plundered colonies for decades and centuries, gathered "surplus" capital there, which it invested in its own industry, and thus accelerated its own industrialisation. That is one method of industrialisation.

Germany hastened its industrialisation as a result of its victorious war with France in the seventies of the last century, when it levied an indemnity of 5,000 million francs on the French and poured these funds into its own industry. That is a second method of industrialisation.

Both these methods are barred to us, for we are a land of Soviets, for colonial plunder, and armed conquest with the aim of plunder, are incompatible with the nature of the Soviet power.

Russia, the old Russia, leased out concessions and received loans on enslaving terms, endeavouring in this way gradually to get on to the road to industrialisation. That is a third method. But it was the road to bondage, or semi-bondage, to the conversion of Russia into a semi-colony. That road, too, is barred to us, for we did not wage civil war for three years and repel interventionists of every type only in order, after victory over the interventionists, to enter voluntarily into bondage to the imperialists.

There remains a fourth road to industrialisation.That is to find funds for industry out of our own savings, the way of socialist accumulation, to which Comrade Lenin repeatedly drew attention as the only way of industrialising our country.

Well, then, is the industrialisation of our country possible on the basis of socialist accumulation?

Have we the sources for such accumulation, sufficient to ensure industrialisation?

Yes, it is possible. Yes, we do have the sources.

I might refer to such a fact as the expropriation of the landlords and capitalists in our country as a result of the October Revolution, the abolition of private ownership of the land, mills, factories, etc., and their conversion into public property. It scarcely needs proof that this fact represents a fairly substantial source of accumulation.

I might refer, further, to such a fact as the annulment of the tsarist debts, which removed a burden of thousands of millions of rubles of indebtedness from our national economy. It should not be forgotten that if these debts had remained, we should have had to pay annually several hundreds of millions in interest alone, to the detriment of our industry and our entire national economy. There is no question that this circumstance has greatly facilitated the matter of accumulation.

I might point to our nationalised industry, which has been restored and is developing, and which yields a certain amount of profit necessary for the further development of industry. That is also a source of accumulation.

I might point to our nationalised foreign trade, which yields a certain amount of profit and which, consequently, also represents a certain source of accumulation.

One might also refer to our more or less organised state home trade, which likewise yields some profit and hence also represents a certain source of accumulation.

One might point to such a lever for accumulation as our nationalised banking system, which yields some profit and within the measure of its capacity supplies funds for our industry.

Lastly, we have such a weapon as the state power, which is in control of the state budget and which sets aside a certain sum of money for the further development of our economy in general, and of our industry in particular.

Those, in the main, are our chief sources of internal accumulation.

They are of interest because they provide us with the possibility of creating those necessary reserves without which the industrialisation of our country is impossible.

But possibility, comrades, is not yet actuality. As a result of incompetent management a pretty wide gap may develop between the possibility of accumulation and actual accumulation. We cannot, therefore, rest content with possibilities alone. We must convert the possibility of socialist accumulation into actual accumulation, if we are really thinking of creating the necessary reserves for our industry.

The question therefore arises: how are we to conduct the business of accumulation so that our industry will feel its benefits; what key points of our economic life must we concentrate on first of all in order that the possibility of accumulation may be converted into actual socialist accumulation?

There exists a number of channels of accumulation, and the chief of them, at least, should be mentioned.

Firstly. It is necessary that the surpluses from accumulation in the country should not be dissipated, but should be gathered together in our credit institutions -- co-operative and state -- and also by means of domestic loans, in order that they may be utilised primarily for the needs of industry. Naturally, the depositors should be paid a certain rate of interest. It cannot be said that in this field matters have been at all satisfactory. But the problem of improving our credit network, of enhancing the prestige of our credit institutions in the eyes of the public, and of floating internal loans is certainly one of the immediate problems confronting us, and we must solve it at all costs.

Secondly. We must carefully plug up all those channels and orifices through which part of the surpluses from accumulation in the country flow into the pockets of private capitalists to the detriment of socialist accumulation. This makes it necessary to pursue a policy in regard to prices which will not create a gulf between wholesale and retail prices. All measures must be taken to reduce retail prices of manufactured goods and agricultural produce, so as to stop, or at least to reduce to a minimum, the seepage of surpluses from accumulation into the pocket of the private capitalist. That is one of the cardinal questions of our economic policy. It is a source of serious danger both to the work of our accumulation and to the chervonets.

Thirdly. Within industry itself and every one of its branches, certain reserves must be set aside for the amortisation of enterprises and for their expansion and further development. That is a matter which is absolutely necessary and essential, and we must go ahead with it at all costs.

Fourthly. The state must accumulate certain reserves needed to insure the country against all kinds of contingencies (crop failure), to keep industry supplied, to support agriculture, to promote culture, etc. We cannot live and function nowadays without reserves. Even the peasant, with his small farm, cannot manage nowadays without certain reserves. Still less can the state in a big country manage without reserves.

We must above all have a foreign trade reserve. Our exports and imports must be so arranged that a certain reserve, a certain favourable balance of trade, remains in the hands of the state. That is absolutely necessary not only to insure ourselves against surprises in the foreign markets, but also as a means of supporting our chervonets, which so far is stable, but which may begin to fluctuate if we do not secure a favourable balance of trade. The task is to increase our exports and to adapt our imports to our export possibilities.

We cannot say, as used to be said in the old days: "We shall export even if we go short of food ourselves." We cannot say that, because our workers and peasants want a human standard of eating, and we fully support them in that. We could, nevertheless, without detriment to home consumption, adopt every measure so as to increase our exports, and so that a certain reserve of foreign currency remains in the hands of the state. If, in 1923, we were able to abandon the Soviet paper money for a firm currency, one of the reasons was that we then had a certain reserve of foreign currency, thanks to a favourable balance of trade. If we want to keep our chervonets firm, we must continue to manage our foreign trade in such a way as to leave us with a foreign currency reserve as one of the bases for our chervonets.

Further, we need certain reserves in the sphere of home trade. What I have chiefly in mind is the accumulation of grain reserves in the hands of the state so as to enable it to intervene in the grain market and combat the kulaks and other grain speculators who are inordinately forcing up prices of agricultural produce. That is essential if only to avert the danger of the cost of living being artificially forced up in the industrial centres and the wages of the workers being undermined.

Lastly, we need a taxation policy which will shift the burden of taxation on to the shoulders of the well-to-do strata, and at the same time create a certain reserve at the disposal of the state in the sphere of the state budget. The course of execution of our 4,000 million ruble state budget indicates that our revenue may exceed our expenditure by about one hundred million rubles or more. To some comrades this figure seems enormous.

But these comrades, apparently, have poor eyesight, otherwise they would have observed that for a country like ours a reserve of one hundred million rubles is a drop in the ocean. There are some who think that we do not need this reserve at all. But what if there should be a crop failure or some other calamity in our country this year? What funds are we to have recourse to? Nobody, surely, is going to give us help for nothing. Consequently, we must have something laid by of our own. And if nothing untoward happens this year, we shall use this reserve for the national economy, for industry in the first place. Rest assured, these reserves will not be wasted.

Such in the main, comrades, are the key points of our economic life which we must concentrate on first of all in order that the possibility of internal accumulation for the industrialisation of our country may be converted into actual socialist accumulation.

IV
THE PROPER USE OF ACCUMULATIONS. THE REGIME OF ECONOMY

But accumulation is not by any means the whole of the problem, nor can it be. We must also know how to spend the accumulated reserves wisely and thriftily, so that not a single kopek of the people's wealth is wasted and so that the accumulated funds are used for the main purpose of satisfying the vital requirements of the industrialisation of our country. Unless these conditions are observed, we shall run the risk of our accumulated funds being misappropriated or dissipated on all sorts of minor and major expenditures which have nothing to do either with the development of industry or with the advancement of our national economy as a whole. The ability to expend funds wisely and thriftily is a most valuable art, and one which is not acquired all at once. It cannot be said that we, our Soviet and co-operative bodies, are marked by great ability in this respect. On the contrary, all the evidence goes to show that things are far from satisfactory in this field. It is hard to have to admit it, comrades, but it is a fact which no resolutions can cover up. There are times when our administrative bodies resemble the peasant who saved up a little money and, instead of using it to re-equip his farm and acquire new implements, bought a great big gramophone and -- came to grief. I say nothing of the cases of downright misappropriation of accumulated reserves, of the extravagance of a number of agencies of our state apparatus, of embezzlement, etc.

A series of effective measures must therefore be taken to save our accumulations from being dissipated, misappropriated, dispersed into unnecessary channels, or otherwise diverted from the main line of building up our industry.

It is necessary, in the first place, that our industrial plans should not be the product of bureaucratic fancy, but that they should be closely co-ordinated with the state of the national economy, taking into account our country's resources and reserves. The planning of industrial construction must not lag behind the development of industry. But neither must it run too far ahead, losing touch with agriculture and disregarding the rate of accumulation in our country.

The demand of our home market and the extent of our resources -- these are the foundation for the expansion of our industry. Our industry is based on the home market. In this respect the economic development of our country resembles that of the United States, whose industry grew up on the basis of the home market, in contrast to Britain, whose industry is primarily based on foreign markets. There are a number of branches of industry in Britain forty or fifty per cent of whose output is for foreign markets. America, on the contrary, still relies on its home market, exporting to foreign markets not more than ten or twelve per cent of her output. The industry of our country will rely upon the home market -- primarily the peasant market -- to an even greater extent than American industry does. That is the basis of the bond between industry and peasant economy.

The same must be said of our rate of accumulation, of the reserves available for the development of our industry. Among us there is sometimes a fondness for drawing up fantastic industrial plans, without taking our actual resources into account. People sometimes forget that you can build neither industrial plans nor any "broad" and "all-embracing" enterprises without a certain minimum of funds, a certain minimum of reserves. They forget this and run too far ahead. And what does running too far ahead in the matter of industrial planning mean? It means building beyond your resources. It means noisily proclaiming ambitious plans, drawing thousands and tens of thousands of additional workers into production, raising a great hullabaloo and later, when it is discovered that funds are inadequate, discharging workers, paying them off, incurring immense losses, sowing disillusionment in our constructive efforts, and causing a political scandal. Do we need that? No, comrades, we do not. We must neither lag behind the actual development of industry, nor run ahead of it. We must keep abreast of the development of our industry and impel it forward, without however cutting it off from its base.

Our industry is the leading element in the entire system of the national economy; it draws with it and leads forward our national economy, including agriculture. It reshapes our entire national economy in its own image and likeness; it leads agriculture along with it, drawing the peasantry, through the co-operative movement, into the channel of socialist construction. But our industry can fulfil this leading and transforming role with honour only if it does not get out of touch with agriculture, only if it does not disregard our rate of accumulation, the resources and reserves at our disposal. An army command which gets out of touch with its army and loses contact with it is not a command. Similarly, industry that gets out of touch with the national economy as a whole and loses contact with it, cannot be the leading element in the national economy.

That is why correct and intelligent industrial planning is an indispensable condition for the expedient use of accumulations.

It is necessary, in the second place, to reduce and simplify our state and co-operative apparatus, our budget-maintained and self-maintained institutions, from top to bottom, to put them on sounder lines and make them cheaper. The inflated establishments and unparalleled extravagance of our administrative agencies have become a by-word. It was not without reason that Lenin asserted scores and hundreds of times that the unwieldiness and costliness of our state apparatus were too great a burden on the workers and peasants, and that it had to be reduced and made cheaper at all costs and by every available means. It is high time to set about this in earnest, in a Bolshevik way, and to introduce a regime of the strictest economy. (Applause.) It is high time to set about this, if we do not want to go on allowing our accumulations to be dissipated, to the detriment of industry.

Here is a vivid example. It is said that our grain exports are unprofitable, do not pay. And why are they unprofitable? Because our procurement agencies spend more on procuring grain than they should. It has been established by all our planning bodies that the procurement of one pood of grain should cost not more than 8 kopeks. But it turns out that instead of 8 kopeks, they have been spending 13 kopeks per pood, an excess of 5 kopeks. And how has this happened? It has happened because every more or less independent procurement agent -- whether Communist or non-Party -- before proceeding to procure grain considers it necessary to inflate his staff of assistants, to provide himself with an army of stenographers and typists, and, of course, to provide himself with a car, and he incurs a heap of unproductive expenditure -- so that later, when the accounts are made up, it is found that our exports do not pay. Bearing in mind that we procure hundreds of millions of poods of grain, and that on each pood we pay an excess of 5 kopeks, the result is tens of millions of rubles wasted. That is where the funds we accumulate are going and will continue to go if we do not adopt the strictest measures to stop the extravagance of our state apparatus.

I have given only one solitary example. But who does not know that we have hundreds and thousands of such examples. <"p141">

The plenum of the Central Committee of our Party decided to simplify our procurement apparatus and make it cheaper. You have probably read the resolution of the plenum[52] on this point -- it was published in the press. We shall put that resolution into force with the utmost rigour. But that is not enough, comrades. That is only one tiny section of the inefficiency and shortcomings of our state apparatus. We must go further and adopt measures to reduce the size and cost of our entire state apparatus, both budget-maintained and self-maintained, of the whole co-operative apparatus and of the whole goods distribution network, from top to bottom.

It is necessary, in the third place, for us to wage a determined struggle against every species of extravagance in our administrative bodies and in everyday life, against that criminal attitude towards the people's wealth and state reserves which has been noticeable among us of late. We see prevailing among us now a regular riot, an orgy, of all kinds of fêtes, celebration meetings, jubilees, unveilings of monuments and the like. Scores and hundreds of thousands of rubles are squandered on these "affairs." There is such a multitude of celebrities of all kinds to be fêted and of lovers of celebrations, so staggering is the readiness to celebrate every kind of anniversary -- semi-annual, annual, biennial and so on -- that truly tens of millions of rubles are needed to satisfy the demand. Comrades, we must put a stop to this profligacy, which is unworthy of Communists. It is high time to understand that, with the needs of industry to provide for, and faced by such facts as the mass of unemployed and of homeless children, we cannot tolerate and have no right to tolerate this profligacy and this orgy of squandering.

Most noteworthy of all is the fact that a more thrifty attitude towards state funds is sometimes to be observed among non-Party people than among Party people. A Communist engages in this sort of thing with greater boldness and readiness. It means nothing to him to distribute money allowances to a batch of his employees and call these gifts bonuses, although there is nothing in the nature of a bonus about it. It means nothing to him to over-step, or evade, or violate the law. Non-Party people are more cautious and restrained in this respect. The reason presumably is that some Communists are inclined to regard the law, the state and such things as a family matter. (Laughter.) This explains why some Communists do not scruple sometimes to intrude like pigs (pardon the expression, comrades) into the state's vegetable garden and snatch what they can or display their generosity at the expense of the state. (Laughter.) This scandalous state of affairs must be stopped, comrades. We must launch a determined struggle against profligacy and squandering in our administrative bodies and in everyday life, if we are sincerely desirous of husbanding our accumulations for the needs of industry.

It is necessary, in the fourth place, to conduct a systematic struggle against theft, against what is known as "carefree" theft, in our state bodies, in the co-operatives, in the trade unions, etc. There is shamefaced and surreptitious theft, and there is bold-faced, or "carefree " theft, as the press calls it. I recently read an item by Okunev in Komsomolskaya Pravda about "carefree" theft. There was, it appears, a foppish young fellow with a moustache, who carried on his "carefree" theft in one of our institutions. He stole systematically and incessantly, and always without mishap. The noteworthy thing is not so much the thief himself, as the fact that the people around him, who knew that he was a thief, not only did nothing to stop him but, on the contrary, were more inclined to clap him on the back and praise him for his dexterity, so that the thief became something of a hero in the eyes of the public. That is what deserves attention, comrades, and is the most dangerous thing of all. When a spy or a traitor is caught, there are no bounds to the indignation of the public, which demands that he be shot. But when a thief operates in the sight of all and steals state property, the people around him just smile good-naturedly and pat him on the back. Yet it is obvious that a thief who steals the people's wealth and undermines the interests of the national economy is no better, if not worse, than a spy or a traitor. Finally, of course, this fellow, the fop with the moustache, was arrested. But what does the arrest of one "carefree" thief signify? There are hundreds and thousands of them. You cannot get rid of them all with the help of the G.P.U. Another measure, a more important and effective one, is needed here. It consists in creating around such petty thieves an atmosphere of moral ostracism and public detestation.

It consists in launching such a campaign and creating such a moral atmosphere among the workers and peasants as to prevent the possibility of thieving and to make life difficult and impossible for thieves and pilferers of the people's wealth -- whether "carefree" or not. The task is to combat theft -- as one of the means of protecting our accumulations from misappropriation.

It is necessary, lastly, to conduct a campaign to put a stop to absenteeism at the mills and factories, to raise the productivity of labour and to strengthen labour discipline in our enterprises. Tens and hundreds of thousands of man-days are lost to industry owing to absenteeism. Hundreds of thousands and millions of rubles are lost as a result, to the detriment of our industry. We shall not be able to advance our industry, we shall not be able to raise wages, if absenteeism is not stopped, if productivity of labour remains stationary. It must be explained to the workers, and especially to those who have only recently entered the mills and factories, that by absenteeism and by not helping to raise labour productivity, they are acting to the detriment of the common cause, to the detriment of the entire working class, and to the detriment of our industry. The task is to combat absenteeism and to fight for enhanced productivity of labour in the interests of our industry, in the interests of the working class as a whole.

Such are the ways and means that must be adopted to protect our accumulations and reserves from being dissipated and misappropriated, and to ensure that they are used for the industrialisation of our country.

WE MUST CREATE CADRES OF BUILDERS OF INDUSTRY

I have spoken of the course towards industrialisation. I have spoken of the ways of accumulating reserves for the development of industrialisation. I have spoken, lastly, of how the accumulations should be rationally used for the needs of industry. But all that, comrades, is not enough. If the Party's directive concerning the industrialisation of our country is to be carried out, it is necessary, over and above all that, to create cadres of new people, cadres of new builders of industry.

No task, and especially so great a task as the industrialisation of our country, can be accomplished without human beings, without new people, without cadres of new builders. Formerly, at the time of the Civil War, we were especially in need of commanding cadres for building the army and waging war -- regimental, brigade, divisional and corps commanders. Without those new commanding cadres, who had come from the rank and file and had risen owing to their ability, we could not have built up an army and could not have defeated our numerous enemies. It was they, the new commanding cadres, who saved our army and our country in those days -- with the general support, of course, of the workers and peasants. But we are now in the period of the building of industry. We have passed now from the fronts of the Civil War to the front of industry. Accordingly, we now need new commanding cadres for industry -- capable directors of mills and factories, competent executives of trusts, efficient trade managers, intelligent planners of industrial development. We now have to create new regimental, brigade, divisional and corps commanders for economy, for industry. Without such people, we shall not be able to advance one step.

The task therefore is to create numerous cadres of builders of industry from the ranks of the workers and the Soviet intelligentsia -- that Soviet intelligentsia which has thrown in its lot with the working class and which, together with us, is laying the socialist foundation of our economy.

The task is to create such cadres and to bring them to the fore, giving them every assistance.

It has become customary of late to castigate business executives on the charge of moral corruption, and there is often a disposition to extend what are individual faults to business executives in general. Anyone who takes the fancy can come along and give a kick to a business executive and accuse him of all the mortal sins. That, comrades, is a bad habit, and must be dropped once and for all. It must be realised that there is a black sheep in every family. It must be realised that the industrialisation of our country and the promotion of new cadres of builders of industry is a task that requires not scourging our business executives, but rendering them every support in building our industry. Our business executives must be surrounded with an atmosphere of confidence and support, they must be assisted in the work of moulding new people -- builders of industry, and the post of builder of industry must be made a post of honour in socialist construction. Those are the lines along which our Party organisations must now work.

WE MUST RAISE THE ACTIVITY OF THE WORKING CLASS

Such are the immediate tasks confronting us in connection with the course towards the industrialisation of our country.

Can these tasks be accomplished without the direct assistance and support of the working class? No, they cannot. Advancing our industry, raising its productivity, creating new cadres of builders of industry, correctly conducting socialist accumulation, sensibly using accumulations for the needs of industry, establishing a regime of the strictest economy, tightening up the state apparatus, making it operate cheaply and honestly, purging it of the dross and filth which have adhered to it during the period of our work of construction, waging a systematic struggle against stealers and squanderers of state property -- all these are tasks which no party can cope with without the direct and systematic support of the vast masses of the working class. Hence the task is to draw the vast masses of non-Party workers into all our constructive work. Every worker, every honest peasant must assist the Party and the Government in putting into effect a regime of economy, in combating the misappropriation and dissipation of state reserves, in getting rid of thieves and swindlers, no matter what disguise they assume, and in making our state apparatus healthier and cheaper. Inestimable service in this respect could be rendered by production conferences.There was a time when production conferences were very much in vogue. Now, somehow, we don't hear about them. That is a great mistake, comrades. The production conferences must be revived at all costs. It is not only minor questions, for instance of hygiene, that must be put before them. Their programme must be made broader and more comprehensive. The principal questions of the building of industry must be placed before them. Only in that way is it possible to raise the activity of the vast masses of the working class and to make them conscious participants in the building of industry.

VII

WE MUST STRENGTHEN THE ALLIANCE OF THE WORKERS AND PEASANTS

But when speaking about raising the activity of the working class, we must not forget the peasantry. Lenin taught us that the alliance of the working class and peasantry is the basic principle of the dictatorship of the proletariat. That we must not forget. The development of industry, socialist accumulation, the regime of economy -- all these are problems that must be solved if we are to gain the upper hand over private capital and put an end to our economic difficulties. But none of these problems could be solved in the absence of Soviet power, in the absence of the dictatorship of the proletariat. And the dictatorship of the proletariat rests upon an alliance of the working class and peasantry. Consequently, all our problems may remain unsolved if we undermine or weaken the alliance of the working class and peasantry.

There are people in the Party who look upon the labouring mass of the peasantry as a foreign body, as an object of exploitation for industry, as something in the nature of a colony for our industry. These are dangerous people, comrades. For the working class, the peasantry can be neither an object of exploitation nor a colony. Peasant economy is a market for industry, just as industry is a market for peasant economy. But the peasantry is not only our market. It is also an ally of the working class. For that very reason, improvement of peasant economy, mass organisation of the peasantry into co-operatives, and the raising of their standard of life, are prerequisites without which no serious development of our industry can be achieved. And, conversely, the development of industry, the production of agricultural machinery and tractors, and a plentiful supply of manufactured goods for the peasants are prerequisites without which there can be no advancement of agriculture. That is one of the most important bases of the alliance of the working class and peasantry. Hence we cannot agree with those comrades who every now and then urge that greater pressure should be exerted on the peasantry in the shape of excessive increases of taxation, higher prices of manufactured goods, and so on. We cannot agree with them because, without themselves being aware of it, they undermine the alliance of the working class and peasantry and shake the foundations of the dictatorship of the proletariat. And what we want is to strengthen, not undermine, the alliance of the working class and peasantry.

But it is not just any sort of alliance of the working class and peasantry that we advocate. We stand for an alliance in which the leading role belongs to the working class. Why? Because unless the working class plays the leading role in the system of the alliance of the workers and peasants, the toiling and exploited masses cannot defeat the landlords and capitalists. I know that certain comrades do not agree with this. They say: yes, the alliance is a good thing, but why also leadership by the working class? Those comrades are profoundly mistaken. They are mistaken because they do not realise that only an alliance of the workers and peasants that is led by the most experienced and revolutionary class, the working class, can be victorious.

Why did the peasant revolts of the time of Pugachov or Stepan Razin come to grief? Why did the peasants in those days fail to get rid of the landlords? Because they did not then have, and could not have had, such a revolutionary leader as the working class. Why did the French revolution end in a victory for the bourgeoisie and the return of the previously expelled landlords? Because the French peasants did not then have, and could not have had, such a revolutionary leader as the working class; at that time the peasants were led by bourgeois liberals. Ours is the only country in the world where an alliance of the workers and peasants has triumphed over the landlords and capitalists. How is this to be explained? By the fact that at the head of the revolutionary movement in our country there stood, and continues to stand, the battle-steeled class of the workers. The idea of leadership by the working class has only to be discredited, and the alliance of the workers and peasants in our country will be utterly destroyed, and the capitalists and landlords will return to their old nests.

That is why we must preserve and strengthen the alliance of the working class and peasantry in our country.

That is why we must preserve and strengthen the leadership of the working class in the system of that alliance.

VIII

WE MUST PUT INNER-PARTY DEMOCRACY INTO EFFECT

I have spoken of raising the activity of the working class, of the task of drawing the vast masses of the working class into the work of building our economy, into the work of building our industry. But raising the activity of the working class is a big and serious matter. In order to raise the activity of the working class, it is necessary first of all to raise the activity of the Party itself. The Party itself must firmly and resolutely adopt the course of inner-Party democracy; our organisations must draw the broad mass of the Party membership, which determines the fate of our Party, into discussing the questions of our constructive work. Without this, there can be no question of raising the activity of the working class.

I lay particular stress on this because our Leningrad organisation recently passed through a period when some of its leaders would not speak of inner-Party democracy except in sarcasm. I have in mind the period prior to, during and immediately after the Party congress, when the Party units in Leningrad were not allowed to assemble, when some of their organisers behaved -- pardon my bluntness -- like policemen towards their Party units and forbade them to meet. It was by this, in fact, that the so-called "New Opposition," headed by Zinoviev, worked its own undoing.

If members of our Central Committee, with the help of the active in Leningrad, succeeded in the space of a fortnight in repelling and isolating the opposition, which was waging a struggle there against the decisions of the Fourteenth Congress, it was because the explanatory campaign on the decisions of the congress coincided with the urge for democracy that existed, that was seeking an outlet, and at last broke through in the Leningrad organisation. I should like you, comrades, to bear this recent lesson in mind. Bearing it in mind, I should like you to put inner-Party democracy into effect sincerely and resolutely, raise the activity of the Party masses, draw them into the discussion of the fundamental questions of socialist construction, and convince them of the correctness of the decisions adopted by the April plenum of the Central Committee of our Party. It is precisely to convince the Party masses that I should like you to do, because the method of persuasion is the basic method of our work in the ranks of the working class.

WE MUST PROTECT THE UNITY OF THE PARTY

Some comrades think that inner-Party democracy implies freedom of factional groups. Well, comrades, in this respect I beg to differ. That is not the way we understand inner-Party democracy. Between inner-Party democracy and freedom of factional groups there is absolutely nothing in common, nor can there be.

What does inner-Party democracy mean? Inner-Party democracy means raising the activity of the Party masses and strengthening the unity of the Party, strengthening conscious proletarian discipline in the Party.

What does freedom of factional groups mean? Freedom of factional groups means disintegrating the Party ranks, splitting the Party into separate centres, weakening the Party, weakening the dictatorship of the proletariat.

What can there be in common between the two?

There are people in our Party whose one dream is to have a general Party discussion. There are people among us who cannot conceive of the Party not being engaged in discussion, people who covet the title of professional debaters. Heaven protect us from those professional debaters! What we need now is not an artificial discussion, nor the conversion of our Party into a debating society, but the intensification of our constructive work in general, and of industrial construction in particular, the strengthening of a militant, solid, united and indivisible party that can firmly and confidently direct our constructive work. Anyone who strives,for endless discussions, anyone who strives for freedom of factional groups, undermines the unity and saps the strength of our Party.

Wherein lay our strength in the past, and wherein lies our strength today? In the correctness of our policy and the unity of our ranks. The Fourteenth Congress of our Party gave us a correct policy. The task now is to ensure that our ranks are united, that our Party is united and ready to carry out the decisions of the Party congress, come what may.

Such is the basic idea of the decisions of the plenum of the Central Committee of our Party.

X
CONCLUSIONS

Permit me now to pass to the conclusions.

Firstly, we must promote the industry of our country, as the foundation of socialism and the guiding force which leads forward the whole of our national economy.

Secondly, we must create new cadres of builders of industry, as the direct and immediate operators of the course towards industrialisation.

Thirdly, we must accelerate the pace of our socialist accumulation and accumulate reserves for the needs of our industry.

Fourthly, we must arrange for correct use of the accumulated reserves and establish a regime of the strictest economy.

Fifthly, we must raise the activity of the working class and draw the vast masses of the workers into the work of building socialism.

Sixthly, we must strengthen the alliance of the working class and peasantry and the leadership of the working class within this alliance.

Seventhly, we must raise the activity of the Party masses and put inner-Party democracy into effect.

Eighthly, we must protect and strengthen the unity of our Party, the solidarity of our ranks.

Shall we be able to accomplish these tasks? Yes, we shall, if we want to do so. And we do want to -- every one can see that. We shall, because we are Bolsheviks, because we are not afraid of difficulties, because difficulties exist in order to be contended with and overcome. We shall, because our policy is correct and we know where we are going. And we shall march forward firmly and confidently towards our goal, towards the victory of socialist construction.

Comrades, we were a tiny group in Leningrad in February 1917, nine years ago. Veteran Party members will remember that at that time we Bolsheviks constituted an inconsiderable minority of the Leningrad Soviet. Veteran Bolsheviks will remember how we were scoffed at by the numerous enemies of Bolshevism. But we marched forward and captured one position after another, because our policy was correct and we waged the fight with united ranks. Then that tiny force grew into a mighty force. We routed the bourgeoisie and overthrew Kerensky. We established the power of the Soviets. We routed Kolchak and Denikin. We drove the Anglo-French and American marauders out of our country. We overcame economic disruption. Lastly, we restored our industry and agriculture. Now we are confronted with a new task -- the task of industrialising our country. The most serious difficulties are behind us. Can it be doubted that we shall cope also with this new task, the industrialisation of our country? Of course, not. On the contrary, we now have all the requisites for overcoming the difficulties and accomplishing the new tasks set us by the Fourteenth Congress of our Party.

That is why I think, comrades, that on the new front, the front of industry, we are certain to win. (Stormy applause.)

NOTES

^<"en51">[51] The plenum of the C.C., C.P.S.U.(B.) was held April 6-9, 1926. At the morning sitting of the plenum on April 9,

J. V Stalin spoke in the discussion of the report on "The Economic Situation and Economic Policy, " and at the evening sitting he delivered a report on the plan of work of the Political Bureau and plenum of the Central Committee, C.P.S.U.(B.) for 1926. (For the decisions of the plenum, see Resolutions and Decisions of C.P.S.U. Congresses, Conferences and Central Committee Plenums, Part II, 1953, pp. 138-47.) [p. 123]

^<"en52">[52] This refers to the resolution on "Organisation of the Grain Procurement Apparatus in the 1926/27 Campaign" adopted at a plenum of the C.C., C.P.S.U.(B.), April 9, 1926. [p. 141]