What Is the Soviet Economic System?

The Soviet economic system has been the subject of such bitter controversy that we must try to look at it today as calmly as we can if we want to get a fairly accurate picture. Russia is not, and has not been in the past quarter century, the economic and social utopia pictured by some pro-Soviet writers in the United States. On the other hand, it has not been the unrelieved hell, compounded of brutality and inefficiency, painted by anti-Soviet writers. It has been a vast, churned up, yeasty mixture of good and bad, of achievement and failure, of aspirations for the better things of life and attempts to attain them by violent short cuts. Those short cuts involved much cruelty toward individuals who for one reason or another stood in the way or opposed certain practices. Often the result was loss or wastage of lives, talents, and material—but also remarkable success in achieving the industrialization of a relatively backward nation.

The first thing that strikes Americans when they look at Russia is that it is not what we call a capitalistic country. Now what do we mean by capitalism? We usually mean an economic system under which private individuals can accumulate money or capital and can invest this capital in enterprises controlled either by an individual or by a group of individuals formed into a corporation. The investment is at private risk and for private gain. Capitalism means also the opportunity for the individual to create his own private business and to sell his products freely for whatever the market will bring. Many of these opportunities have not existed in Russia since 1917.

The end of Russian capitalism

But we must again look back at Russia’s history and remember that, before 1917, ownership of private property by individuals was far less widespread than in the United States or the countries of western Europe. Russia had only a small middle class, wedged in between the monarchy and aristocracy at the top, and the vast masses of poor peasants and underprivileged factory workers at the bottom.

In Western countries the presence of a middle class, constantly replenished from the ranks of workers and peasants, served to cushion the shock of revolutionary movements in the nineteenth and twentieth centuries. Because Russia had only a new and weak middle class in 1917 it could not make an orderly change from absolutist monarchy to a political system similar to that of Britain, the United States, or republican France.

When capitalism was suppressed by the Soviet government in 1917, therefore, it was not the far-reaching and fundamental change in the country’s economic system that a similar change would be in the United States. The relatively few members of the aristocracy and the rising middle class were deprived of all property that could be used in productive enterprise. Manyof them were driven into exile, executed, or imprisoned. For the individuals involved, these things were tragic. We would be glossing over human cruelty to forget this.

But the vast masses of people in Russia were not much affected by the change. They only knew that property formerly owned by the monarchy, the aristocracy, the church, the very small middle class, and the big landowners became the property of the Soviet state. And the Kremlin has always been careful to point out to the people that they are the state and that therefore it is they who now collectively, if indirectly, own Russia’s forests, fields, mines, and factories. The Kremlin has also impressed on the people that they must never permit these resources to pass into the hands of individuals or groups of individuals uncontrolled by the state.

The Soviet government early gave up the attempt to practice the Marxist principle that all goods produced in the state should be distributed to each person “according to his need.” It encourages workers in factories and peasants on collective farms to turn out more or better work. As an incentive it offers them opportunities to increase their piecework wages, or to receive bonuses, or enjoy such special privileges as vacations at state resorts in the Crimea and the Caucasus. Thus people in Russia today are remunerated not according to their “need” but according to their “work.”

Rewards for skill and efficiency

It would therefore be entirely mistaken to think that there is a dead level of economic and social conditions for everyone in Russia. A famous actor, a highly trained engineer, or an experienced industrial manager receives a salary which, in terms of Russian living standards, would compare quite favorably with the salaries of individuals employed in similar capacities in the United States.

On this salary the engineer, manager, or actor can enjoy a higher standard of living in Russia than the unskilled worker or the unskilled peasant. He will probably be unable to buy some necessities and many luxuries that the average worker can obtain in the United States. Russia does not now produce sufficient consumers’ goods to meet even the simplest needs of the civilian population. But of the goods that are available, he will be able to buy more than his lower-paid fellow citizens. Under no circumstances, however, will he be able to invest any part of his salary in private enterprise.

Russia’s new middle class

This differentiation in wages and salaries has become more—and more pronounced during the past decade. As a result, Russia, on the eve of the German invasion, for the first time in her history was witnessing the appearance of a large middle class. This new middle class, however, is in no way linked, as it is in the Western capitalist countries, to a system of private enterprise, and its status is not protected by law. These are very important distinctions to bear in mind when comparing Russia with the United States.

This new group, like the corresponding group in Western countries, is composed of engineers, actors, government officials, industrial managers, administrators of collective farms; doctors, and teachers. It also includes highly skilled workers known as Stakhanovists, in honor of a worker who set new records of production. Like the middle class in Western countries, it is a changing group, which is being constantly enlarged by the promotion of younger workers and peasants to posts of authority and responsibility. Promotion may carry with it not only a higher income, but a bigger and better house or apartment and perhaps a car. Such extras as these go with the job—and are lost if the job is lost.

With the rise of this group there has also come a way of life alien to the ideas of many early Bolshevik leaders. It is not far different from what they once scornfully called “bourgeois” (middle-class) in other countries. From their former contempt for the privacy of the home, the Soviet Russians have swung toward respect for home life. From an extremely elastic attitude toward marriage, divorce, and abortion, they have swung over to respect for marriage, encouragement of large families, and prohibition of abortion.

Opportunity for all

Under czarism, the poor peasants and underprivileged factory workers seemed condemned to a narrow, impoverished, and, as they called it, “dark” existence. Today in Russia, birth is no barrier to advancement for men and women of ability. If he has the right qualifications, the son of a peasant may become an engineer, an industrial manager, or a general. This is one of the principal advantages of the Soviet system from the point of view of the masses.

This freedom of opportunity is a recent development. For many years after the Bolshevik Revolution, the Soviet government, fearing counter-revolution, discriminated against the children of priests (who in the Orthodox church are allowed to marry), of czarist officials, of industrialists, and later of Trotzkyists. These discriminations, however, have been gradually abandoned.

Today the younger generation is relatively free of the hat-reds and prejudices accumulated during centuries of one form of absolutism or another. Every young man and woman feels that, if he or she is bright and hard working, undreamed-of opportunities for achievement lie ahead. This feeling of confidence has done much to create enthusiasm on the part of the younger generation. The Soviet government has been active in promoting young people, many of whom under 30hold important posts. They can accomplish imaginative and creative work, free of some of—if not all—the fears, reservations, and suspicions that cast such a dark shadow on their elders during the early years of the Soviet regime.