N.I. Bukharin and E. Preobrazhensky: The ABC of Communism
We have previously shown that the State is the organisation of force, that it is the expression of the dominion of one class over another class or over other classes. The bourgeois class, in the course of capitalist development, becomes to an increasing extent a class of idlers, who consume goods while doing nothing to help in the work of production. What view, then, are we to take of the bourgeois State, which serves to protect the ease and the income of these idlers from the exploited and incensed masses? The police and the gendarmerie, the standing army, the whole judicial apparatus, the entire machinery of administration — these comprise a huge mass of individuals not one of whom has ever produced a bushel of wheat, a yard of cloth, or so much as a pin or a needle. The whole organisation lives upon surplus value, which is produced by the workers and peasants. This surplus value is absorbed by the State in the form of direct and indirect taxation. For example, the tsarist government extracted in this way from the workers and peasants more than three milliards of roubles. (Translated into the terms of our present paper currency, this would represent three hundred milliards, which is thrice as much as all the money in Russia.) Only a small fraction of the State revenue was devoted to production, to such things as the building of roads and railways, bridges, ships, etc.
Turning to consider the proletarian State, we find that this likewise, so long as the civil war continues and so long as the resistance of the bourgeoisie has not been broken, must to a degree be an organ standing above production. The work of many of the instruments of the proletarian State is not work that effects the creation of new values. Indeed, many of the State instruments are maintained at the cost of the goods produced by the workers and peasants. To this category belong our military apparatus and the Red Army, the administrative system, all the means that are requisite for the struggle against the counter-revolution, and so on. But such features are not characteristic of the proletarian State; in these respects it is radically different from the exploiters’ State. The essential characteristic of the proletarian State is its gradual transformation from an unproductive organisation to become an organisation for the administration of economic life.
Long before the end of the civil war, the proletarian State becomes mainly concerned with the production and distribution of goods. A mere enumeration of the central and local commissariats will make this perfectly plain. The most important of the soviet organisations is the Supreme Economic Council with its various subdepartments. This body is exclusively productive. The commissariats for agriculture, food, communications, and labour, are all likewise productive or distributive organisations, or organisations for the utilisation of labour power. In like manner the Commissariat for Popular Education, in proportion as its program for the institution of a unified labour school is realised, becomes an organisation for the preparation of skilled labour power. In the proletarian State, the Commissariat for Public Health is an instrument for the protection of the health of the workers; the Commissariat for Social Welfare is mainly concerned with the welfare of those who have been or will be workers (sanatoria, land settlements, etc.). Even the Commissariat for Administration finds its main activities engaged in supporting and leading the organs of local economic life, and in especial those of the municipalities. Taking it as a whole, the proletarian State mechanism becomes transformed into a huge organisation for the management of economic life, and for its advancement in every possible way. A study of the budget of the Soviet Republic will make this clear. Here are some characteristic items of expenditure.
Estimates for the half-year, January to June, 1919, in millions of roubles:
| Supreme Economic Council | 10,976 |
| Commissariat for Food | 8,153 |
| ” ” Communications | 5,073 |
| ” ” Education | 3,888 |
| ” ” Public Health | 1,228 |
| ” ” Social Welfare | 1,619 |
| ” ” Agriculture | 583 |
| ” ” Army | 12,150 |
| ” ” Navy | 521 |
| ” ” Foreign Affairs | 11 |
| ” ” National Affairs | 17 |
| ” ” Justice | 250 |
| ” ” Home Affairs | 857 |
| Extraordinary Commission | 348 |
These figures show that the defence of the republic still requires vast sums of money. Putting on one side this item, which arises out of the peculiar conditions of the moment, we see that nine-tenths of the expenditure of the proletarian State is devoted to production, administration, the safeguarding of future functional capacity, the maintenance of labour power, etc. All this expenditure is purely economic.
Furthermore, in the Communist Saturdays the workers in the various productive organisations, the soldiers of the Red Army, and the war commissars, all combine to do their duty in the matter of productive labour — though at first, of course, the results are slender. Prior to the year 1919, there was no State in the world in which the civil servants were voluntarily engaged in such tasks as the repairing of locomotives and the lading of wood on behalf of the State.
We have seen that the expenditure of the proletarian State is increasingly devoted to productive purposes. The question now arises, from what sources its income will be derived.
The finances of the Russian Soviet Republic give some information upon this subject.
In the early days of its existence, the Soviet Power had certain extraordinary sources of revenue. It had the bank deposits which had been confiscated from the bourgeoisie; it had the cash resources of the late government; it had various sums which were secured by taxing the bourgeoisie, by the sale of goods confiscated from private traders and firms, etc. All these sources of income were small in relation to the necessary expenditure. As far as the local soviets were concerned, taxes levied upon the capitalists were for a considerable time their only source of revenue, but for the central government such taxes could not provide any notable means of support. Moreover, such a source of revenue was transient. The bourgeoisie was soon stripped bare; or else, and this is what usually happened, members of the bourgeois class vanished, after hiding their savings. A graduated income tax has not given and does not give satisfactory results. In so far as it is levied upon employees and workers, it is an absurdity, for the State is simply taking back in the form of a tax what it has paid in the form of salary or wages. In so far as it is levied upon the urban bourgeoisie, officially no bourgeois exist any longer. Legally the bourgeois cannot continue their former occupations. Such a tax, therefore, is extremely difficult to collect, and in actual experience this source of State revenue proved altogether inadequate. A graduated income tax might be far more lucrative when levied upon the rich peasants; but for its regular collection we should have to depend upon the work of local instruments of taxation, which would need to be organised by the local authorities, chiefly those of the rural districts. As far as the middle peasants are concerned, it is undesirable for political reasons to levy any tax upon them while the civil war continues, for such a measure would tend to alienate them from the proletariat. The attempt to raise an extraordinary revolutionary tax of ten milliards miscarried, for, after great efforts, less than two milliards were secured. The main source of revenue for the State has been the issue of paper money. This, in so far as the money is able to buy anything, is in reality a special form of taxation. Inasmuch as the issue of paper money accelerates the depreciation of the currency, it leads indirectly to the expropriation of the money capital of the bourgeoisie, for it reduces the purchasing capacity of this money capital to a fraction of that which it formerly possessed. It can readily be understood, that the issue of paper money cannot in the long run constitute a means of revenue for a State which aims at the ultimate abolition of money altogether. We are faced with this problem: What is the best foundation upon which the proletarian State can build up its revenues?
Such a secure foundation is furnished by production. If the issue of paper money has hitherto proved to be a successful method of collecting State revenue, it is because this sort of tax can be collected without the taxpayer being aware that he is paying anything of the sort. No less inconspicuous is it when we secure revenue indirectly by means of State monopoly. This form of State revenue is, in reality, perfectly just. The cost of production of any articles which are produced by the State must include all the administrative charges requisite for the particular branch of production. The proletarian State apparatus actually realises such a form of administration. In practice this means that if the transport of passengers costs one milliard of roubles per annum, the State can fix the fares at such a figure that it will receive from this source the sum of twelve hundred million roubles. If the total cost of all manufactured articles is five milliards, they can be sold for six milliards, and so on. The excess is devoted to the maintenance of the State. Of course the revenues from monopoly are not to be conceived solely in the form of money, but also directly in the form of a definite quantity of goods.
If the proletarian State becomes transformed into an organ for the administration of the socialist economic system as a whole, the question of its upkeep, that is to say our old question of the budget, is greatly simplified. The affair is merely one of assigning a definite portion of goods to a definite item of economic expenditure.
But whereas the question of the State budget is now very simple, far less simple is the problem of how we are to determine precisely what portion of products can be consumed, that is to say, what portion can be expended in the economic system as a whole. It will be necessary to calculate with extreme forethought exactly what proportion of the total products can be consumed ungrudgingly, and exactly what proportion must be reserved as stores to use for the expansion of production, and so on.
We see, then, that in proportion as the State as a parasitic apparatus is destroyed, the problem of the State budget is merged into the general problem of the distribution of all products in a socialist society. The State budget will have become merely a small section of the integral budget of the cooperative commonwealth.
There is practically no literature dealing with this question. We may recommend POTYAEV, The financial Policy of the Soviet Power.