Movement for the Reorganization of the CP of Greece 1918-1955

The restoration of capitalism in the Soviet Union (1953-1990) – IV

In Unity & Struggle number 25 (Spring/Summer 2013) we published the third part of this article with the title: "The commodity economy of the Soviet Union in the Khrushchev-Brezhnev period: A complete and permanent capitalist economy"

Here is the fourth part:

The capitalist reforms in the Soviet Union and the bourgeois theories of “Socialism”

The character of the capitalist economic reforms in the Soviet Union and the other Eastern countries during the Khrushchev-Brezhnev period (1953-1965) – that completely restored capitalism in these countries by the mid to late 1960s – were based on the theories of "socialism" promulgated by the reactionary vulgar bourgeois economists, but also on those of the internationally renowned Polish revisionist economist Oskar Lange, the successor of the theories of “socialism” of the bourgeois economists, as appears from the following very brief reference.

This very short and incomplete note – for such a big issue – is mostly informative in nature (for motivating younger people to take up this theme), and is not intended to refute the bourgeois theories of “socialism”.

In the years immediately after the publication of the "Manifesto of the Communist Party" (1848) by Marx and Engels, the bourgeois economists, who, as we know, regarded the individual capitalist ownership as a "natural" and "eternal" economic category, began to fight the revolutionary communist views, which were dangerous for the power of the bourgeoisie, while they simultaneously worked on their own theories of "socialism" according to which “socialism-communism” was essentially identical with capitalism; some of them claimed that socialism-communism could allegedly not be applied and operate "rationally" as an economic and social system. Since then, a host of bourgeois economists worked on the question of whether socialism-communism could function.

In the field of the various schools of vulgar bourgeois political economy – which, let it be noted, has no scientific knowledge to offer – there were developed and formed two main directions: one which identified socialism with capitalism (only this one is of interest here), and another that claimed the impossibility of socialism-communism, with the leading and best-known case that of the Austrian economist Ludwig von Mises (1919), which led to the subsequent discussions during the decades of the 1920s, 1930s and 1940s; there will be no reference to this here because is irrelevant to the question of the capitalist character of the reforms in the Soviet Union.

One of the first of these, as early as 1854, was the German Hermann Heinrich von Gossen, founder of the subjective theory of marginal utility, who suggested in his work “Entwicklung der Gesetze des menschlichen Verkehrs und der daraus fliesenden Regeln fuer menschliches Handeln” (“The Development of the Laws of Exchange among Men and of the Consequent Rules of Human Action”) (Braunschweig, 1854 and 1889, 1927: pp. 228-231) that a central planning of the economy is impossible because "the solution of this task goes far beyond the powers of individual people."

In 1874 there followed the Swiss economist Leon Walras who in his book “Elemente der reinen politischen Oekonomie” (“Elements of Pure Political Economy”), addressed among other things, the questions of prices and general economic equilibrium, admitting that the latter can be more easily achieved in a system of organized economy, thereby accepting the possibility of the application and functioning of socialism, a theme that was further developed by his students. In the same year, 1874, a small pamphlet on the subject of socialism: “Die Quintessenz des Sozialismus” (The Quintessence of Socialism”) was published by Albert Schaeffle.

Later, in 1889, the Austrian Friedrich von Wieser, in his “Der natuerliche Werth” (“Natural Value”) (Vienna, 1889, pp. 59-66) for the first time expressed the view that the economic categories Price, Interest, rent, etc., are common to both to capitalism and socialism-communism, thus effectively equating the two diametrically opposed methods of production. It is no coincidence – and it should be particularly emphasized – that Wieser’s view was openly applauded and accepted by the Soviet revisionist economists as correct, including S.R. Kirillov: "Wieser rightly pointed out that such categories as price, interest, rent, etc., may be present in the socialist economy" (Moscow 1974).

A student of L. Walras, the Italian economist Vilfredo Pareto, was the one who contributed significantly to the development of the bourgeois theory of "socialism", based on the views of his teacher and of Friedrich von Wieser. Pareto was a known and avowed enemy of socialism and in his “Cours d 'economie politique”, (“Course of Political Economy”, 2nd vol., pp. 363-364, Lausanne-Paris, 1897), after noting that "the inequality of income distribution... is much more dependent on the nature of people despite the economic organization of society" (p. 363), he says, referring to socialism, that "economic goods are distributed according to the rules found when we investigate a free competition system” (p. 364), that is, the capitalist system.

Subsequently, there came the great contribution to the development of the bourgeois theory of "socialism" by the Italian Enrico Barone in his work “Il ministro della produzione nello stato collectivista” (“The Ministry of Production in the Collectivist State” (“Giornale degli economisti” (“Journal of the Economists”), September-October 1908), who adopted and further developed the views of Pareto, writing: " is obvious, how unreal are those teachings, creating the impression that the production in a collectivist regime could effectively be managed differently than in ‘anarchic production’,” echoing Friedrich von Wieser in favour of the necessity of the economic categories of capitalism under "socialism": "...all economic categories of the old regime must still occur, though perhaps with other names: prices, wages, interest, ground rent, profit, savings, etc." (p. 289, English, 1935; p. 297 French).

Finally, Enrico Barone, in agreement with Walras, but mainly with Wieser, Pareto and others, argued: "... that it is not impossible to solve the equations of equilibrium on paper. It would be a huge, gigantic task (a task that should be removed from the productive agencies), but not impossible" (p. 287, English, 1935).

Concerning Wieser, Pareto and Barone and for the sake of some completion of the above, it is worth noting the precise opinion of the Austrian economist Joseph A. Schumpeter according to which “Wieser, Pareto and Barone, not due to any sympathy towards socialism, created what basically constitutes the pure theory of socialist economy” (Joseph A. Schumpeter: “Geschichte der oekonomischen Analyse” (“History of Economic Analysis”), 2nd half-volume, pp. 1083-1084 and p. 1190, Gottingen, 1965), that is, the bourgeois theory of "socialist economy".

In 1919, two years after the October proletarian revolution, the Austrian economist, an anti-Marxist and avowed enemy of socialism-communism, Ludwig von Mises, wrote his famous article: “Die Wirtschaftsrechnung im sozialistischen Gemeinwesen” (“Economic Calculation in the Socialist Commonwealth”), published in April 1920 (“Archiv fuer Sozialwissenschaft und Sozialpolitik” (“Archive for Social Science and Social Policy”), vol. 47, No. 1), which supported the view that "without a pricing mechanism there is no economic calculation" and that "socialism is tantamount to the end (the elimination) of the rational economy" (p. 104) and thus, because there is no economic calculation, socialism is unfeasible. This is a view that has no scientific basis and was refuted by the existence and construction of socialism in the Soviet Union of Lenin and Stalin (1917-1953), but which also caused the long, famous international debates during the decades of the 1920s, 1930s and 1940s that still continue today, and in which dozens of economists participated, including the Pole Oskar Lange. Mises's view concludes with the preposterous claim: socialism cannot exist and act rationally because it is not capitalism.

Oskar Lange answered Mises in his famous article “On the Economic Theory of Socialism” (in: “Review of Economic Studies”, Vol. IV, No 1 and 2, October 1936 and February 1937, in German: “Zur oekonomischen Theorie des Sozialismus” in: O. Lange: “Oekonomisch-theoretische Studien” (“Economical-Theoretical Studies”), Frankfurt am Main-Cologne, 1977, Greek: Oskar Lange-Fred Taylor: “The Economic Theory of Socialism”, Athens, 1976).

The answer given by Oskar Lange to Mises is based on the bourgeois views of "socialism" of Walras, Pareto and Barone – something that he himself did not hide in the above-mentioned work and also, 30 years later, in his last short article “The Electronic Computer and the Market" (1965) (in: O. Lange: “Financial Planning and Political Relations”, pp. 76-77, Athens, 1974) – written from a social democratic perspective, that is, that of “socialist competition”, and that has as a starting point the bourgeois subjective theory of marginal utility. It is precisely on this basis that he points out in his work: "the definition of equilibrium prices in a socialist economy is entirely analogous to that of a competitive market" (p. 91), and elsewhere, "the Central Council for Planning has to set such a price for the capital and natural resources so that resources are directed to areas that can ‘pay’..." (p. 88).

It is obvious, therefore, that the mechanisms operating in capitalism and socialism are considered identical, or more precisely: the same mechanism operates in both economic systems.

It is known that O. Lange was the principal founder of the theory of so-called “competitive socialism” or later “market socialism”, that is, a bourgeois conception of "socialism" with the known connection "Plan-Market", or more precisely: the replacement of the Plan by the capitalist market.

The bourgeois and revisionist economists admit that the economic reforms implemented in the Soviet Union and other Eastern countries are based on the opinions of Oskar Lange. The Soviet N.P. Fedorenko writes: "Theory and practice has shown that the optimal operation mechanism of the socialist economy involves an organic combination of the Central State Plan and the financial independence of the enterprises of the production units in socialist society and that a planned socialist economy inherently involves the use of value relations and value categories" (N.P. Fedorenko: “Problemi obtimalnowo funkzionyirowanyija sozialistscheskoj ekonomiki” (“Problems of the Optimal Functioning of Socialist Economics”), p. 565, Moscow, 1972). The Hungarian Csikos-Nagy correctly points out the connection of Fedorenko's bourgeois views with those of Enrico Barone: “…thus, scientific facts lead back to the view that E. Barone had already described in the early 20th century. Barone was the first one who dealt with questions concerning the rational operation of the socialist economy. He considered this possible based on the general equilibrium theory of Walras” (Bela Csikos-Nagy: “Sozialistische Marktwirtschaft” (“Socialist Market-Economy”), p. 45, Vienna, 1988). However, in this case, it is not about "scientific knowledge", but instead, the connection of the anti-Marxist views on socialism of the Khrushchevite Fedorenko with those of the bourgeois economist Enrico Barone. And elsewhere: "Mr. O. Lange was one of the first who tried to link socialist planning with the market operation and stressed the importance of price equilibrium with the objective of efficient allocation of resources in socialist production. His greatest contribution consists in placing at the centre issues related to the structure of production, taking into account the existence of product replacement in the sphere of production and consumption. He emphasized the role of prices in creating financial solutions" (p. 47).

Regarding Fedorenko’s anti-Marxist assertion that "theory and practice verified" supposedly the correctness of the Khrushchevite bourgeois views on building socialism-communism, this was completely refuted by the subsequent restoration of capitalism in the Soviet Union. What actually happened was that the Khrushchevite revisionist traitors abandoned Marxist views, adopting at the theoretical level and putting into practice the views of vulgar bourgeois political economy in order to achieve the gradual restoration of capitalism in the Soviet Union, which nobody doubts today.

Finally, the Pole Adam Zwass is right to extol Oskar Lange as a great reformer in the revisionist countries: "the basic ideas of the democratic reform movement were expressed most clearly by the great thinker and reformer Oskar Lange" (A. Zwass: “Planwirtschafr im Wandel der Zeit” (“Planned Economy Through the Ages”), p. 386, Vienna, 1982).

From the newer cases of bourgeois economists we mention only Joseph E. Stiglitz. Referring to the reforms in the Soviet Union and other countries, he writes: "Many of the reforms were based on the idea of socialist market economy, which meant to combine the advantages of market mechanisms with the ownership of the means of production by the state. Oskar Lange, who was a professor of economy at the University of Chicago before returning after the 2nd World War to Poland and becoming vice president of the communist government, was a leading figure and representative of this direction. In socialist market economy, the Prices have the same function in the distribution of resources, as in capitalism. The prices must be determined so as to match supply with demand. Firms accept the prices and compete with each other. They maximize their profits at given prices, by producing (Output) at a price that meets the marginal cost" (Joseph E. Stiglitz: “Volkswirtschaftslehre” (“Economics”), p. 1099, Munich, Vienna, Oldenburg, 1999).

From this very brief and incomplete reference, it becomes obvious that, in their reforms, the Khrushchevite revisionists adopted both the capitalist market-price mechanism and the capitalist economic categories, that is, the well-known theories of the bourgeois economists of "socialism".

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