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"The New Economy. Theory and Practice. 1922-1928"

The works of E. Preobrazhensky are important from the point of view of understanding the economic nature of the Soviet society. He clearly shows that in this society there is a struggle between two contradictory laws: the law of value, which is from capitalism, vs. "the law of primitive socialist accumulation", which is how he explained, from the point of view of 1920's, the law of planned production on the scale of an entire society, one which is aiming at socialism, and one which is undergoing an accelerated industrial development. For example, here is one quote from his book "The New Economy", which illustrates this:

"industrial equilibrium in the Soviet economy is produced as a result of a struggle of two antagonistic laws - the law of value and the law of primitive socialist accumulation, which means denying a single unified regulator in the entire system"

Opponents of this view, who deny socialist tendencies today in the modern post-Soviet society, can not explain basic problems of the economy and policy in the former Soviet republics. One example: a low price of bread.

"The New Economy. Theory and Practice. 1922-1928", Evgeny Preobrazhensky

The works of E. Preobrazhensky are important from the point of view of understanding the economic nature of the Soviet society. He clearly shows that in this society there is a struggle between two contradictory laws: the law of value, which is from capitalism, vs. "the law of primitive socialist accumulation", which is how he explained, from the point of view of 1920's, the law of planned production on the scale of an entire society, one which is aiming at socialism, and one which is undergoing an accelerated industrial development. For example, here is one quote from his book "The New Economy", which illustrates this:

"industrial equilibrium in the Soviet economy is produced as a result of a struggle of two antagonistic laws - the law of value and the law of primitive socialist accumulation, which means denying a single unified regulator in the entire system"

Opponents of this view, who deny socialist tendencies today in the modern post-Soviet society, can not explain basic problems of the economy and policy in the former Soviet republics. One example: a low price of bread. The government controls the staple food prices, such as grains. As for the politics, the opponents cannot explain such basic phenomen of the world politics as renewal of the "cold war" between Washington and Moscow, in the 2000's, after a temporary relaxation of the tensions in the 1990's. 

It is absurd to affirm, without reference to facts, that the law of value has completely destroyed all aspects of planned production which existed in the former Soviet society. As the author of this article stands closer to the system of education (in Ukraine), he knows that there is a state order for certain professions in certain amounts. The students who enroll in colleges and universities in these professions obtain a free education. But those who go outside the limit imposed by the state must pay for their own education. Also, state orders continue to exist in such important sectors as the defense industry, which covers many spheres of production and the most advanced enterprises.

"The New Economy. Theory and Practice. 1922-1928", Evgeny Preobrazhensky

The works of E. Preobrazhensky are important from the point of view of understanding the economic nature of the Soviet society. He clearly shows that in this society there is a struggle between two contradictory laws: the law of value, which is from capitalism, vs. "the law of primitive socialist accumulation". For example, here is one quote from his book "The New Economy", which illustrates this:

"industrial equilibrium in the Soviet economy is produced as a result of a struggle of two antagonistic laws - the law of value and the law of primitive socialist accumulation, which means denying a single unified regulator in the entire system"

The law of value means that the value of a commodity is determined by the quantity and quality of labor necessary for its production. In a socialist-oriented economy, we don't have "an exchange-value", but "a use-value", in other words, each thing, or activity, is first of all a useful thing or activity. It is first of all a quality, not a quantity of labor. The law of primitive socialist accumulation means that in a relatively backward economically society, accumulation of value for accelerated industrial development takes place first of all due to the unequal exchange taking place between the industry of the towns (mostly owned by the state) and the agricultural sector (mostly in private hands of the peasants). The state forces the peasants to pay more for industrial articles than if they paid for them, if they bought them on the world market. The value accumulated in this way goes towards accelerated industrialization. Also, the law of primitive socialist accumulation means that the state pays less to the city workers than is the real cost of their labor power (for example: the salary of doctors in Ukraine, in the present day, is about 5-10 times less than what they obtain working for countries in Africa). Again, the value accumulated this way is supposed to go towards the industrial development.

Hence, a society aiming at a socialism is involved in a whole series of contradictions:

a. between a need for an unequal exchange between the town and the country, and the need to do away with this inequality and hence develop the agriculture, erase the differences between the town and the country;

b. between paying to the workers less than is the real cost of their labor power, and the need to increase the wages, so as to improve the cultural level of the workers;

c. between hostile countries, surrounding a socialist society, and the need to become rapidly integrated into the world economy, with the goal of a rapid industrial development, etc.

A solution to these contradictions Preobrazhensky sees on the roal of a world socialist revolution. Yet, this must be a democratic revolution, for Stalinism means repressing all civil society initiative, and hence all development (first of all in material production, then in cultural and social life). Perhaps, this was the reason which has led Preobrazhensky into the camp of a Left (Trotskyist) opposition in the USSR, and later into the underground organization of I.N. Smirnov, one of the leaders of the Left opposition.

A curious tendency we notice after the death of Preobrazhensky (who was, in a law-like way, shot by Stalin in 1937). Other socialist revolutions have taken place in economically backward countries, such as China (1949), Cuba (1959), Vietnam (1975). This can only mean that a world socialist revolution starts in economically backward societies, especially in those where the socialist revolution coincides with a struggle against an external imperialism. However, democracy is possible only in economically advanced societies, those where a surplus product exists that allows the population to develop culturally, take the initiative for solving the problems of life in its own hands (one example would be volunteers at http://librivox.org/). Hence, the second stage of a world revolution means spreading it to the most advanced economically societies. However, due to the unequal exchange that exists between these countries and the rest of the world, the ruling classes of imperialist countries have been systematically buying off its revolutionary youth, de-reailing the revolutionary aspirations through drugs, stupid entertainment, etc. At the same time, the lumpen-proletariat has been held off through the system of welfare, i.e. economic means aimed at preventing hunger-racial riots. However, today we see that imperialist countries are in a period of a permanent crisis. One evidence for this are recent (August 2011) riots in England. The welfare system is cut back. At the same time, these countries are attacked by the migrant workers from Africa, Eastern Europe, and Asia. They all demand low-paying jobs, or at least some welfare. The unemployment in the imperialist countries increases. This is especially true for the youth. Hence, the more active layers of youth leave their own mother country, travel abroad to study, and sometimes even become involved in the revolutionary movements in the Third World and Eastern Europe. For example, see the interview of Tanja Nijmeijer (with the FARC of Columbia) to the Dutch radio.

This is what gives us grounds to believe that a second stage of revolution is coming to the U.S. and other advanced countries. The third stage of a world socialist revolution may sweep away the remnants of capitalism in the most backward societies of the globe (Africa) and bureaucratic cancer in the countries where the socialist revolution has initially started (former USSR, etc.) It will be like the sun in the spring melting away the remains of the snow.

The three stages of a world socialist revolution is a scientific hypothesis, confirmation, or correction of which, or its becoming concrete, we will see in the future.

After the break-up of the Soviet Union, the contradictory tendencies which Preobrazhensky defined continue their opperation. The main one is the contradiction between the law of value and the need for a planned socialist development of society. Opponents of this view, who deny socialist tendencies today in the modern post-Soviet society, can not explain basic problems of the economy and policy in the former Soviet republics. One example: a low price of bread. The government controls the staple food prices, such as grains. As for the politics, the opponents cannot explain such basic phenomen of the world politics as renewal of the "cold war" between Washington and Moscow, in the 2000's, after a temporary relaxation of the tensions in the 1990's.

It is absurd to affirm, without reference to facts, that the law of value has completely destroyed all aspects of planned production which existed in the former Soviet society. As the author of this article stands closer to the system of education (in Ukraine), he knows that there is a state order for certain professions in certain amounts. The students who enroll in colleges and universities in these professions obtain a free education. But those who go outside the limit imposed by the state must pay for their own education. Also, state orders continue to exist in such important sectors as the defense industry, which covers many spheres of production and the most advanced enterprises.

It is curious that those who deny socialist tendencies in the modern post-Soviet society have their origin in the menshevik analysis of the Soviet economy during NEP (new economic policy). Hence, the so-called "State Capitalism" theory, so popular among the left, is just modern menshevism.

It is curious to take one example from the economic life of 1920's (Part II of "The New Economy", chapter 3, "The Law of Value in the Soviet Economy"):

"Let's look at the railroad transportation, which is totally in the hands of the proletarian state. The People's Commissariat of Communications places an order for trains, cars, rails, etc., with Glavmetal (main agency for producing metal). Are the prices defined by the market relations? The prices are not defined by the market relations, as there is no private train industry, private car production, private metal industry, etc. The prices are not completely determined by the world prices, as the order is placed within the country, independently of the prices on the world market. At the basis of the order within the country is not the law of value of the world economy. The prices are created from planned calculations, they are adjusted to the prices of production at the factories of Glavmetal, taking into account a certain margin of profit for the builder, or at a loss for the builder, as the state consciously wants prices below the cost of production and gives subsidies to the factories from its own budget".

Do we have private train building today? No, all the new metro cars are built at the same old Soviet-era factories, as before 1991. Do we have private metal production? Yes, we do, but here again the prices are set by the government, not by the private owners. I.e. the factory can be a private property of some olygarch, but, for example, we saw how Putin recently dictated his will to one of the industrial olygarchs. The communications industry may be private, but the state dictates tariffs for mobile communications, and all private companies "voluntarily" lower their tariffs. We also witness that coal mines are unprofitable, as the state dictates its own prices for coal, and prefers to pay subsidies to the mines from its own budget (which means, in fact, that these are state-controlled enterprises!). Similar phenomena we observe in the agriculture. The state buys bread at one prices, from producers, and gives subsidies to the agrarians. Later the bread may be exported at the world prices. Before, the profit went to enlarge the industrial basis of the country. Now, part of the profit goes into the pockets of the high state officials, and part of the profit goes for buying agricultural machinery from (mostly) American producers. Thus, the native industry producing agricultural machinery is left idle. But the officials get the "kick-backs" from the foreign companies in which they place the orders.

In other words: we have today the economy of the Soviet type, but with large "black holes" due to the corruption and theft of the state resources. In this economy, the law of value and the law of planned production aimed at socialism continue their struggle. Today, it appears as the former is winning, but we hope that the ultimate victory will go to the later.

See Evgeny Preobrazhensky

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