Vladimir Smirnov
First Published: in Kommunist. Ezenedel'nyi zurnal ekonomiki, politiki i obsenstvennosti. Organ Moskovskago Oblastnogo Byuro RKP (bol'sevikov) [The Communist. Weekly Magazine for Economics, Politics and Social Questions. Organ of the Moscow District Office of the RCP(B)], No. 4, June 1918.
Source: Internationalist Communist Tendency.
Online Version: Marxist Internet Archive 2021
HTML Markup: Zdravko Saveski
Despite the particularly acute character of the financial crisis that we inherited from the Tsarist regime and the Kerensky government, the budgetary policy - aside from the nationalisation of the banks (which fundamentally relates to a slightly different domain) - has occupied one of the last spots in the queue of economic policy issues faced by the Soviet power.[1] It is true that the financial crash that threatens us has greatly worried certain members of the Council of People's Commissars, and particularly Comrade Lenin. However, no concrete solution to this problem has been proposed, nor is there a programme to deal with it. And facts must be faced: the Soviet power, on the question of the financial crisis, finds itself in an incomparably more complex situation than any bourgeois power has ever known.
And even for the latter, total financial upheaval represented a practically impossible task. Enormous spending on the military and on reconstruction weigh considerably on the State budget, which taxes of all kinds struggled to sustain. The need to put the printing machine to work, industrial ruin, all of this made the chances of normalising the financial situation laughable. However, there remained one possibility, though granted, a problematic one - appealing for foreign loans in extraordinarily unfavourable conditions and placing the country in "normal" bourgeois bankruptcy. This is how the ex-minister of finance, Bernatsky, proposed international borrowing and devaluation as a solution in an article in the review International and Economic Policy.
For Soviet power, even this solution does not exist. It is not worth raising a foreign loan. Our budgetary expenses are growing exponentially due to the nationalisations which initially require a great amount of finance, with no guarantee of reimbursement in the short term. Added to this we have the total dilapidation of the old financial apparatus. The problem is turning out to be truly impossible to resolve.
And we have to realise that there is no solution. The solidity of the financial system in its entirety depends on that of the bourgeois regime. Given that we are moving towards socialism, the notion of finances should gradually wither away. Indeed, after the nationalisation of an enterprise, it becomes impossible to tax its profits. When more and more people begin to receive material support directly from the Soviet State, the taking of taxes on revenue only represents a complicated procedure whose result can be achieved much more simply by greatly reducing the amounts to be paid. For us, the monetary and financial crisis can be resolved not by re-establishing the monetary and financial system, which would result in a return to the bourgeois system, but by abolishing this system by moving towards the socialist organisation of production.
However, if anyone has taken this fact into account, it is not visible in the attempts to establish a financial programme that have taken place recently. In his well known speech before the Central Executive Committee (CEC), the Commissar of Finance, Gukovsky, places himself in the first camp: that of re-establishing bourgeois economic relations. The CEC welcomed this programme in silence, neither approving nor criticising it, but seemingly incapable of coming up with any alternative proposition. Indeed, if the idea of obtaining tax revenue by partially re-establishing the bourgeois regime seems unacceptable to them, the other idea, namely the need to reduce expenditure, making cuts in the economy, is already being applied with a relentlessness that would be more useful in another domain. This religious respect for money and the sacred horror at a deficit are too deeply anchored in the spirits of the leaders of the Soviet power. Because of this sentiment, numerous nationalised factories are ceasing to operate, sometimes for long periods, and in recent times this tendency has continued to grow. As we see with more distance, this respect for money goes hand in hand with a relatively acerbic hatred of it.
In rejecting the return to bourgeois relations and, at the same time, trying to restore order to our monetary and financial system, the Soviet leaders place themselves squarely on the petty bourgeois and utopian terrain. And this was particularly notable in the speech given at the last Congress of Commissars of Finance.
Comrade Spunde,[2] the Commissar of the State Bank, developed a programme aimed at increasing the activity of the banks. His method is particularly simple: the bourgeois foundations of banking operations having been destroyed, it will be necessary to recreate the conditions for their existence. And there we have it - a plan to maintain the coercive character of the money of the banks: all cash beyond a certain pre-established quota must be paid into an account (we notice on this subject that Comrade Lenin lobbied intensely for this idea). Never mind the instinctive embarrassment aroused by it! Because, first and foremost, if the population retains any cash, and this can be established precisely, why not simply confiscate it? Then, is it not well known that the patrimony of cash, owing to its mobile character, is the hardest to trace? Without evoking the undeniable fact that we cannot destroy the foundations without destroying the edifice itself, and that it is impossible to maintain the edifice no matter what artificial supports are put in place. It must be stated frankly: this idea is reminiscent of Proudhon[3] in an almost identical form.
On the other hand, Comrade Lenin has announced the next replacement of the old monetary instruments with new cuts. In itself, this measure is as necessary as it is usual. It is obviously impossible to continue living with such a plethora of monetary instruments -Tsarist bank notes, Kerensky notes,[4] State security coupons, State bonds - currently in circulation. There is nothing objectionable about this attempt to suppress by exchange some of these values in circulation, even though there is almost no chance that this suppression will unfold the way Comrade Lenin envisages it - by the partial abolition of money corresponding to the surplus part of exchange. It is curious to see what motivates this measure: "[during the transition to socialism] the fourth task of the moment is the substitution of new currency for the old. Money, banknotes - everything that is called money today - these titles to social well-being, have a disruptive effect and are dangerous insofar as the bourgeoisie, by hoarding these banknotes, retain economic power."[5] But if only Marx were here to see this! How can we not understand that no money reserve will suffer from the absence of a continual influx of notes and that, if this were not the case, the bourgeoisie would become like the Miserly Knight,[6] sitting on their coffers and ceasing to be the bourgeoisie. How is it not abundantly clear that there is only one way to stop the accumulation of money in bourgeois pockets, and that is depriving them of their sources of revenue, that is to say, planned nationalisation and reorganisation of production? In the contrary case, it is socialist money, bearing the socialist signatures, which will accumulate in the pockets of the bourgeoisie and this, with the same rhythm of the notes sporting the figure of the Tsars and the signatures of their lackeys. And the pay-off of this petty bourgeois utopianism is precisely the declaration of this measure as being socialist, with phrases on the "latest and decisive battle against the bourgeoisie" in the theatre of hostilities. In all these tirades, the petty bourgeoisie's hatred of money is palpable, this futile aspiration sanctified by all the petty bourgeois economists seeking to put pressure on capitalist production but, just like the lizard, they rid themselves with ease of their trapped tails before rejecting it some time later. And it is completely characteristic that these plans are proposed just at the moment when we begin discussions (and not just these ones at that) by evoking either the interruption of nationalisation, or the implementation of "State Capitalism", which Comrade Lenin so assiduously promotes.
Comrade Spunde is trying to adapt the foundations of banking policies to make them conform to State capitalism. All businesses, those that are nationalised and those that are not, have loans from the State Bank, as well as from the public Treasury, that is, the establishment which ensures the financial management of the State and fuses with the State Bank. It is difficult to imagine the conditions under which the bank will deliver the money as part of its budget plans - the nationalised enterprises will see its colour, whatever it is, in the form of credit. But this means that the nationalised enterprises are managed according to capitalist principles - albeit it State capitalist ones - that is, they receive bank loans and implement production thanks to them. They sell their products and pay back their loans to the bank, keeping a profit, with the obligation, in all probability, to place this money in the current account of the bank. The latter in turn retains a right to control over the enterprises, which obviously means that the bank can, where necessary, exert pressure over this or that enterprise. In a word, we find ourselves back in the typical schema of the bourgeois system. Comrade Spunde has simply forgotten to say that several crucial pre-conditions of his system no longer exist. Previously, for enterprise (apart from in periods of economic upheaval) money was everything, and because of this, one could get everything one needed for production. Today, the situation is a little different: the administrations prone to "pressuring" enterprises are very numerous, and from this perspective the Bureau of fuel can exert pressure just as effectively as that exerted by the State Bank. Comrade Spunde forgets that the reports that he describes are, in bourgeois society, based not on the power of banking capital (which has played a very modest role for quite some time) but of course the concentration of banks and industrial enterprises in the hands of certain economic groupings of finance capital. Moreover, another idea has occurred to him: the control of the State Bank over national enterprises is based on the fact that the latter transforms itself progressively into a central organism compatible with socialist production. Be that as it may, the accountant must be put back in his place: it is not he who manages the enterprise.
In fact, we must end this illusion once and for all that by nationalising the banks, we have nationalised credit. This is not possible when the State Bank remains an organ of bourgeois government and a faithful clerk at the heel of its capitalist masters. If this is not the case, then nothing is left of this system. By nationalising the banks, we destroyed credit, and this was a good thing, since we dealt a heavy blow to the bourgeoisie. And we have no reason to resuscitate the old finance-capitalist apparatus with a socialist flavour: this would be totally pointless.
If we develop the programme that was evoked at the Congress of Commissars of Finance (something that, happily, the authors of this speech did not do), we admit that it is a totally utopian programme, typical of those petty bourgeois who desire to construct a State capitalist system. It is only by basing ourselves on the inevitability of the disappearance of State finances that we may pose milestones on a whole series of measures in this domain, measures that will allow us to survive this period of transition. And in this case, we must pay particular attention to the countryside.
There is no doubt that the countryside remains far from the orbit of socialist production. And it is there that the source of financial means of the Socialist Republic are held. The tax system will be extremely difficult to implement on a large scale. It will only be possible to extract the money found there by selling the fruits of socialist production at a higher price.[7] By engaging in this way, it will be possible to obtain rapid results. But this will require the broad implementation of a system of socialisation of industry, and that we bestow on it a force that would make the countryside dependent on the city. The coherent planning of the socialisation of the means of production on socialist grounds is necessary as well as the refusal not only of attempts to implement semi-public programmes, but also "State capitalism". Only by following this direction will we be able to emerge from the financial crises, and we owe it to ourselves to put all our strength into this.
V. Smirnov
Notes
[1] The preparations for the nationalisations of the banks began the day after the victory of the revolution. The State Bank was occupied on 25 October 1917. Having smashed the sabotage of the bourgeois functionaries, the Soviet power established control over private banks as a transitional step on the path to their nationalisation. The sabotage by the financial capitalists obliged the Soviet government to accelerate the nationalisation of the banks. On 14 December, by order of the government, dispatches of workers and red guards occupied the local branches of all the banks and credit establishments of Petrograd. The same day, the decrees "On the Nationalisation of the Banks" and "On the Inspection of Bank Safes" were voted in at a session of the Central Executive Council of Russia. The two decrees were published on 15 December in the Izvestia of the CEC, no. 252.
[2] Alexander Petrovich Spunde (1892-1962): son of a Latvian worker, graduated from a commercial school in Riga in 1907. Arrested several times and exiled to Siberia in 1913. Delegate to the Second All-Russian Congress of Soviets in October, 1917. Chair of the State Bank from February to November 1918.
[3] Pierre-Joseph Proudhon (1809-1865): French socialist, one of the first theoreticians of anarchism and of the cooperative movement, which earns him the editor's irony here. Marx thoroughly refuted the foundations of Proudhon's theses in his work The Poverty of Philosophy (1847).
[4] Bank notes distributed by the Provisional Government.
[5] Extract from the Report to the All-Russia Congress of Representatives of Financial Departments of Soviets, 18 May 1918: "Money, banknotes - everything that is called money today - these titles to social well-being, have a disruptive effect and are dangerous in so far as the bourgeoisie, by hoarding these banknotes, retain economic power." In Lenin: Collected Works, Vol. 27.
[6] Pushkin tragedy (1836) and Rachmaninoff opera (1904).
[7] Here we find a rough outline of the concept of "primitive socialist accumulation" as it would later be taken up by Preobrazhensky. Bukharin did not forget to credit Smirnov in a note in Chapter 4 of his Politics and Economics of the Transitional Period. This would merit a handwritten note over it from Lenin on this term: "extremely poorly chosen, one could speak of children copying terms used by adults".