From "Red Plenty" by Francis Spufford:
The problem was that Marx had predicted the wrong revolution. He had said that socialism would come, not in backward agricultural Russia, but in the most developed and advanced industrial countries. Capitalism (he'd argued) created misery, but it also created progress, and the revolution that was going to liberate mankind from misery would only happen once capitalism had contributed all the progress that it could, and all the misery too. At that point the infrastructure for producing things would have attained a state of near-perfection. At the same time, the search for higher profits would have driven the wages of the working class down to near-destitution. It would be a world of wonderful machines and ragged humans. When the contradiction became unbearable, the workers would act. And paradise would quickly lie within their grasp, because Marx expected that the victorious socialists of the future would be able to pick up the whole completed apparatus of capitalism and carry it forward into the new society, still humming, still prodigally producing. There might be a need for a brief period of decisive government during the transition to the new world of plenty, but the 'dictatorship of the proletariat' Marx imagined was modelled on the 'dictatorships' of ancient Rome, when the republic would now and again draft some respected citizen to give orders in an emergency. The dictatorship of Cincinnatus lasted one day; then, having extracted the Roman army from the mess it was in, he went back to his plough. The dictatorship of the proletariat would presumably last a little longer, perhaps a few years. And of course there would also be an opportunity to improve on the sleek technology inherited from capitalism, now that society as a whole was pulling the levers of the engines of plenty. But it wouldn't take long. There'd be no need to build up productive capacity for the new world. Capitalism had already done that. Very soon it would no longer be necessary even to share out the rewards of work in proportion to how much work people did. All the 'springs of co-operative wealth' would flow abundantly, and anyone could have anything, or be anything. No wonder that Marx's pictures of the society to come were so vague: it was going to be an idyll, a rather soft-focus gentlemanly idyll, in which the inherited production lines whirring away in the background allowed the humans in the foreground to play, 'to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind…'
None of this was of the slightest use to the Marxists trying to run the economy of Russia after 1917. Not only had capitalist development not reached its climax of perfection and desperation in Russia; it had barely even begun. Russia had fewer railroads, fewer roads and less electricity than any other European power. Within living memory, the large majority of the population had been slaves. It became inescapably clear that, in Russia, socialism was going to have to do what Marx had never expected, and to carry out the task of development he'd seen as belonging strictly to capitalism. Socialism would have to mimic capitalism's ability to run an industrial revolution, to marshal investment, to build modern life.
There was in fact an international debate in the 1920s, partly prompted by the Bolsheviks' strange situation, over whether a state-run economy could really find substitutes for all of capitalism's working parts. No, said the Austrian economist Ludwig von Mises, it could not: in particular, it couldn't replace markets, and the market prices that made it possible to tell whether it was advantageous to produce any particular thing. Yes, it could, replied a gradually expanding group of socialist economists. A market was only a mathematical device for allocating goods to the highest bidder, and so a socialist state could easily equip itself with a replica marketplace, reduced entirely to maths. For a long time, the 'market socialists' were judged to have won the argument. The Bolsheviks, however, paid very little attention. Marx had not thought markets were very important — as far as he was concerned market prices just reflected the labour that had gone into products, plus some meaningless statistical fuzz. And the Bolsheviks were mining Marx's analysis of capitalism for hints to follow. They were not assembling an elegant mathematical version of capitalism. They were building a brutish, pragmatic simulacrum of what Marx and Engels had seen in the boom towns of the mid-nineteenth century, in Manchester when its sky was dark at noon with coal smoke. And they didn't easily do debate, either. In their hands, Marx's temporary Roman-style dictatorship had become permanent rule by the Party itself, never to be challenged, never to be questioned. There had been supposed to be a space preserved inside the Party for experiment and policy-making, but the police methods used on the rest of Russian society crept inexorably inward. The space for safe talk shrank till, with Stalin's victory over the last of his rivals, it closed altogether, and the apparatus of votes, committee reports and 'discussion journals' became purely ceremonious, a kind of fetish of departed civilisation.
Until 1928, the Soviet Union was a mixed economy. Industry was in the hands of the state but tailors' shops and private cafes were still open, and farms still belonged to the peasant families who'd received them when the Bolsheviks broke up the great estates. Investment for industry, therefore, had to come the slow way, by taxing the farmers; meanwhile the farmers' incomes made them dangerously independent, and food prices bounced disconcertingly up and down. Collectivisation saw to all these problems at once. It killed several million more people in the short term, and permanently dislocated the Soviet food supply; but forcing the whole country population into collective farms let the central government set the purchase price paid for crops, and so let it take as large a surplus for investment as it liked. In effect, all but a fraction of the proceeds of farming became suddenly available for industry.
Between them, these policies created a society that was utterly hierarchical. Metaphysically speaking, Russian workers owned the entire economy, with the Party acting as their proxy. But in practice, from 8.30 a.m. on Monday morning until 6 p.m. on Saturday night, they were expected simply to obey. At the very bottom of the heap came the prisoner-labourers of the Gulag. Stalin appears to have believed that, since according to Marx all value was created by labour, slave labour was a tremendous bargain. You got all that value, all that Arctic nickel mined and timber cut and rail track laid, for no wages, just a little millet soup. Then came the collective farmers, in theory free, effectively returned to the serfdom of their grandfathers. A decisive step above them, in turn, came the swelling army of factory workers, almost all recent escapees or refugees from the land. It was not an easy existence. Discipline at work was enforced through the criminal code. Arrive late three times in a row, and you were a 'saboteur'. Sentence: ten years. But from the factory workers on up, this was also a society in a state of very high mobility, with fairytale-rapid rises. You could start a semi-literate rural apparatchik, be the mayor of a city at twenty-five, a minister of the state at thirty; and then, if you were unlucky or maladroit, a corpse at thirty-two, or maybe a prisoner in the nickel mines, having slid from the top of the Soviet ladder right back down its longest snake. But mishaps apart, life was pretty good at the top, with a dacha in the country, from whose verandah the favoured citizen could survey the new world growing down below.
And it did grow. Market economies, so far as they were 'designed' at all, were designed to match buyers and sellers. They grew, but only because the sellers might decide, from the eagerness of the buyers, to make a little more of what they were selling. Growth wasn't intrinsic. The planned economy, on the other hand, was explicitly and deliberately a ratchet, designed to effect a one-way passage from scarcity to plenty by stepping up output each year, every year, year after year. Nothing else mattered: not profit, not accidents, not the effect of the factories on the land or the air. The planned economy measured its success in terms of the amount of physical things it produced. Money was treated as secondary, merely a tool for accounting. Indeed, there was a philosophical issue involved here, a point on which it was important for Soviet planners to feel that they were keeping faith with Marx, even if in almost every other respect their post-revolutionary world parted company with his. Theirs was a system that generated use-values rather than exchange-values, tangible human benefits rather than the marketplace delusion of value turned independent and imperious. For a society to produce less than it could, because people could not 'afford' the extra production, was ridiculous. Instead of calculating Gross Domestic Product, the sum of all incomes earned, the USSR calculated Net Material Product, the country's total output of stuff — expressed, for convenience, in roubles.
This made it difficult to compare Soviet growth with growth elsewhere. After the Second World War, when the numbers coming out of the Soviet Union started to become more and more worryingly radiant, it became a major preoccupation of the newly-formed CIA to try to translate the official Soviet figures from NMP to GDP, discounting for propaganda, guessing at suitable weighting for the value of products in the Soviet environment, subtracting items 'double-counted' in the NMP, like the steel that appeared there once in its naked new-forged self, twice when panel-beaten into an automobile. The CIA figures were always lower than the glowing stats from Moscow. Yet they were still worrying enough to cause heart-searching among Western governments, and anxious editorialising in Western newspapers. For a while, in the late 1950s and the early 1960s, people in the West felt the same mesmerising disquiet over Soviet growth they were going to feel for Japanese growth in the 1970s and 1980s, and for Chinese and Indian growth from the 1990s on. Nor were they being deceived. Beneath several layers of varnish, the phenomenon was real. Since the fall of the Soviet Union, historians from both Russia and the West have recalculated the Soviet growth record one more time: and even using the most pessimistic of these newest estimates, all lower again than the Kremlin's numbers and the CIA's, the Soviet Union still shows up as growing faster than any country in the world except Japan. Officially it grew 10.1% a year; according to the CIA it grew 7% a year; now the estimates range upward from 5% a year. Still enough to squeak past West Germany, and to cruise past the US average of around 3.3%.
On the strength of this performance, Stalin's successors set about civilising their savage growth machine. Most of the prisoners were released from the labour camps. Collective farmers were allowed to earn incomes visible without a microscope, and eventually given old-age pensions. Workers' wages were raised, and the salaries of the elite were capped, creating a much more egalitarian spread of income. The stick of terror driving managers was discarded too; reporting a bad year's growth now meant only a lousy bonus. The work day shrank to eight hours, the work week to five days. The millions of families squeezed into juddering tsarist tenements were finally housed in brand-new suburbs. It was clear that another wave of investment was going to be needed, bigger if anything than the one before, to build the next generation of industries: plastics, artificial fibers, the just-emerging technologies of information. But it all seemed to be affordable now. The Soviet Union could give its populace some jam today, and reinvest for tomorrow, and pay the weapons bill of a super power, all at once. The Party could even afford to experiment with a little gingerly discussion; a little closely-monitored blowing of the dust off the abandoned mechanisms for talking about aims and objectives, priorities and possibilities.
And this was fortunate, because as it happened the board of USSR Inc. was in need of some expert advice. The growth figures were marvellous, amazing, outstanding — but there was something faintly disturbing about them, even in their rosiest versions. For each extra unit of output it gained, the Soviet Union was far more dependent than other countries on throwing in extra inputs: extra labour, extra raw materials, extra investment. This kind of 'extensive' growth (as opposed to the 'intensive' growth of rising productivity) came with built-in limits, and the Soviet economy was already nearing them. Whisper it quietly, but the capital productivity of the USSR was a disgrace. With a government that could choose what money meant, the Soviet Union already got less return for its investments than any of its capitalist rivals. Between 1950 and 1960, for instance, it had sunk 9.4% of extra capital a year into the economy, to earn only 5.8% a year more actual production. In effect, they were spraying Soviet industry with they money they had so painfully extracted from the populace, wasting more than a third of it in the process.