N.I. Bukharin and E. Preobrazhensky: The ABC of Communism
Few workers have a precise idea of what banks are, and what their function is in capitalist society. They conceive a bank to be a sort of huge treasure chest in which rich folk hoard money. The workers who have any savings and put them in a bank know that interest is paid upon these deposits, and they are aware that money deposited in a private bank sometimes vanishes. The savings are lost.
The first thing we have to understand is that a bank is not a money-box. At any given moment there is very little ready money in the bank. The essence of banking business is something quite different from the functioning as a fireproof safe for the money of people who have saved money. It is quite true that hundreds of millions of savings are paid into the bank, but these sums do not lie unused in the strong boxes. The money which flows into the banks is immediately put into circulation again. In the first place, it is lent to entrepreneurs who found factories, exploit workers, and pay part of their gains to the banks as interest on the loan — the bank, in its turn, paying part of its profits to its depositors. In the second place, the banks themselves found new undertakings with the funds they receive from depositors, or they finance extant undertakings. Finally the banks lend money to various States,1 on which these States pay interest. Thus, through the instrumentality of the governments, the banks plunder the populations of the debtor States. Inasmuch as the banks belong to a small group of the wealthier capitalists, their work is seen in the last analysis to consist merely in the extraction of surplus value with the aid of their own capital and that of their depositors.
But the banks are not merely spiders sucking up the surplus labour of the workers and peasants. They have an additional significance. Let us suppose that I have some money and deposit it in the bank. This means that I had certain commodities which I sold, transforming them into money. The flow of new and ever new sums of money through all the banks, an increase in the total amount of capital in any society, signify that new and ever new masses of values are passing into circulation. Money represents a product; it is, so to speak, the certificate of a product. From the general circulation of money, we can approximately infer the general movement of products. Inevitably, therefore, the banks become, as it were, the book-keeping offices of capitalist society.
The foregoing considerations show us the function which the banks can perform in capitalist society, and what the proletariat must do with them as soon as it has seized power.
After the socialist revolution, or, rather, during the socialist revolution, the working class must seize all the banks, and, above all, the central State bank. This is necessary, in the first place, simply in order that the workers may confiscate all the monetary deposits of the bourgeoisie, all the share certificates, and all the monetary obligations of the capitalists. This act of confiscation will strike capitalist exploitation to the very heart.
We adopted this course after the November revolution, and our action was a crushing blow to the capitalist class of Russia.
What should the proletarian Power do with the confiscated banks? It must turn to account everything that is of value in the capitalist banking system. This means that the workers must preserve the banks as apparatus for keeping account of production, and as instruments for distributing financial resources. Above all, there must be a thoroughgoing nationalisation of banking business. Not merely must all the banks taken from the bourgeoisie be converted into State institutions of the proletariat, but all future banking operations must be declared a State monopoly. The State alone can be allowed to found banks.
Furthermore, all the banks must be amalgamated. Superfluous banks must be abolished, and those which it is considered desirable to maintain must become branches of the unified bank of the Soviet Republic.
Instead of the manifold methods of account-keeping and instead of the various kinds of banking operations conducted by the bourgeois banks, in the unified people’s bank there will be a single and simple method of keeping accounts. This will enable the proletarian State to draw up a complete picture showing where and how much the State has paid out, whence and how much it has received.
If, however, the revenue and expenditure of the State are recorded by the unified bank of the republic, what will happen to the bank when the State itself becomes, as it tends more and more to become, the sole administrator of a unified and gigantic apparatus organising the entire economic life of the country?
It is obvious that the bank will then play the part that is played by the counting-house in any economic enterprise. The bank, as such, will gradually disappear. As our party program explains, the bank will become the central counting-house, “the central book-keeping establishment of communist society.”
Communist society will know nothing of money. Every worker will produce goods for the general welfare. He will not receive any certificate to the effect that he has delivered the product to society; he will receive no money, that is to say. In like manner, he will pay no money to society when he receives whatever he requires from the common store. A very different state of affairs prevails in socialist society, which is inevitable as an intermediate stage between capitalism and communism. Here money is needed, for it has a part to play in commodity economy. If I, as a bootmaker, need a coat, I change my wares, the boots that I make, into money. Money is a commodity by means of which I can procure any other commodity I may please, and by means of which in the given case I can procure the particular thing I want, namely a coat. Every producer of commodities acts in the same way. In socialist society, this commodity economy will to some extent persist.
Let us suppose that the resistance of the bourgeoisie has been overcome, and that those who formerly constituted the ruling class have now become workers. But the peasants still remain. They do not work for the general account of society. Every peasant will endeavour to sell his surplus product to the State, to exchange it for the industrial products he needs for his own use. The peasant will remain a producer of commodities. That he may settle accounts with his neighbours and with the State, he will still need money; just as the State will need money in order to settle accounts with all those members of society who have not yet become members of the general productive commune. Still more is it impossible to abolish money immediately, when private trade still continues to a considerable extent, and when the Soviet Power is not yet in a position to replace private trade entirely by socialist distribution. Finally, it would be disadvantageous to abolish money altogether so long as the issue of paper money is a substitute for taxation, so long as it helps the proletarian State to cope with the exceedingly difficult conditions now prevailing.
Socialism, however, is communism in course of construction; it is incomplete communism. In proportion as the work of upbuilding communism is successfully effected, the need for money will disappear. In due time the State will probably be compelled to put an end to the expiring monetary circulation. This will be of especial importance in order to bring about the final disappearance of the laggards of the bourgeois classes who with hoarded money will continue to consume values created by the workers in a society which has proclaimed: “He who does not work, neither shall he eat.”
Thus, from the very outset of the socialist revolution, money begins to lose its significance. All the nationalised undertakings, just like the single enterprise of a wealthy owner (for the owner of the unified enterprises is now the proletarian State), will have a common counting-house, and will have no need of money for reciprocal purchases and sales. By degrees a moneyless system of account-keeping will come to prevail. Thanks to this, money will no longer have anything to do with one great sphere of the national economy. As far as the peasants are concerned, in their case likewise money will cease by degrees to have any importance, and the direct exchange of commodities will come to the front once more. Even in private trade among the peasants, money will pass into the background, and the buyer will find himself able to procure corn only in exchange for products in kind, such as clothing, household utensils, furniture, etc. The gradual disappearance of money will likewise be promoted by the extensive issue of paper money by the State, in association with the great restriction in the exchange of commodities dependent upon the disorganisation of industry. The increasing depreciation of the currency is, essentially, an expression of the annulment of monetary values.
But the most forcible blow to the monetary system will be delivered by the introduction of budget-books and by the payment of the workers in kind. In the work-book will be entered how much the holder has done, and this will mean how much the State owes him. In accordance with the entries in his book, the worker will receive products from the consumers’ stores. In such a system it will be impossible for those who do no work to procure goods for money. But the method can only be realised when the State has been able to concentrate into its own hands such a quantity of articles of consumption as is requisite for the supply of all the working members of socialist society. It will be impossible to carry it out until our disorganised industrial system has been reconstructed and expanded.
Speaking generally, the process of abolishing monetary circulation takes the following form to-day. First of all, money is expelled from the domain of product-exchange as far as the nationalised undertakings are concerned (factories, railways, soviet farms, etc.). Money likewise disappears from the domain of account-keeping between the State and the workers of the socialist State (that is, as far as concerns account-keeping between the Soviet Power on the one hand, and the employees and workers in soviet undertakings on the other). Furthermore, money becomes superfluous in so far as the direct exchange of goods is effected between the State and the small producers (the peasants and the home workers). Even within the realm of small-scale industry, the direct exchange of goods will tend to replace the use of money; but it may be that money will not completely disappear until small-scale industry itself disappears.
1 For example, foreign banks lent more than 16,000,000 roubles to the tsarist Government and to Kerensky’s government.
There is very little literature dealing with this subject. The following may be recommended: PYATAKOV, The Proletariat and the Banks. SOKOLNIKOV, The Nationalisation of the Banks. Also the files of “Ekonomicheskaya Zhizn” [Economic Life], and “Narodnoe Hozyaistvo” [Political Economy].