TRB #5 Chapter Two Part 1: The State in a Planned Economy


I spoke before of bourgeois revolution, taking for examples the most classic cases: the English Civil War and the Great French Revolution. At this point, I want to make a couple of observations about them, that are true in the case of every sort of revolution.

1. The economic pressure that results in the overturn of the State begins building considerably before the revolution: by the time the actual insurrection takes place, the new (in this case, capitalist) content has been built up to the point the old form is historically absurd.

2. Nevertheless, the fact that the new, progressive class (in our example, the bourgeoisie) now controls the State in its own interest, does not, in that instant, remove each and every vestige of the old (feudal-monarchical) system. For a greater or lesser time, these vestiges in law, in property relations, in custom and culture, in individual psychology, and in habits, remain in place until, over the course of a generation or two, they are finally left behind, and the new class can fully exercise its power and establish its imprint in all areas of life.

(In passing, it is because of this phenomenon that impressionists believe that the violence of revolution is “unnecessary,” because they see the evolution both before and after it, and consider it a pointless bump in a smooth flow of evolution. By this logic, of course, given the development of the fetus and the subsequent development of the infant, the violence of childbirth is “unnecessary.” But I digress.)

The same evolution-to revolution-to evolution must occur in the transition to socialism. The results of the October revolution were massive and sweeping: The banks and the major industries were expropriated, control concentrated in the State. The State itself became an organ of the Soviets, elected by the workers, the soldiers, the peasants. But it would be a mistake to think this instantly meant socialism had been accomplished, either in popular consciousness, or, more important, in all of the economic relationships—in particular, distribution. To be precise: production of goods was concentrated in the hands of the State, while distribution of goods still took place in the old way: the worker received wages, the peasant sold his product, and these were exchanged at the market for commodities.

This was inevitable—even under the best of conditions, it would take a certain amount of time to work out exactly how to distribute goods evenly and fairly, “to each according to his need.” I hope it is obvious that even distribution of goods requires, more than anything else, a society that can produce plenty for everyone; when the society cannot produce enough, some can have enough, others not. What then to do, particularly in the period of 1918-1921, when an impoverished nation, which had just made a broadly-based revolution in order, in large part, to get out of a war, was faced with yet another war? The answer was, quite simply, to hold out. The Bolsheviks themselves, during this period, were confident of two things: first, that given a period of peace, the potential for industrial growth was tremendous, and, second, that rescue by the world working class was bound to follow. “The theoretical mistake of the ruling party remains inexplicable, however, only if you leave out of account the fact that all calculations at that time were based on the expectations of an early victory of the revolution in the West. It was considered self-evident that the victorious German proletariat would supply Soviet Russia, on credit against future food and raw materials, not only with machines and articles of manufacture, but also with tens of thousands of highly skilled workers, technicians and organizers.”

The first of these need not be justified as the facts and figures are there, as I mentioned in the previous post. As for the second—it did not fall out that way. This brings up what is, I think, a critical point in evaluating the economic and political decisions made by the Bolshevik Party: were they deceived in expecting this rescue? The prediction of a massive upsurge by the European working class was dead on. The prediction of revolutionary crises, in which the European worker had to confront the question of power, was also accurate. So where did it go wrong?  In Britain, France, Belgium, and especially in Germany where the working class had actually taken power, the infant Third International proved, in the event, too new and small to turn the tide of betrayal by the Social Democracy, which still held the trust of most of the working class in those countries. In 1919, the Social Democracy cooperated in the murder of Rosa Luxemburg and Karl Liebknecht by the fascist Freicorps, and gave power back to the capitalists. The Third (Communist) International was building as quickly as possible—parties sprang up in every major capitalist country, and most of the minor ones, and its influence within the working class grew. The Communist Party of Hungary took power (or, more precisely, was handed it by an utterly demoralized capitalist class), and workers in other countries rose. But there was simply not enough time. Building a mass party happens quickly when the objective circumstances are right and the program reflects the needs of the working class, but not instantly, and when the revolutionary crisis arose the working class was still too trusting in its Social Democratic leaders (no doubt helped a bit by the petty bourgeois dilettantes who insisted the Communist Party spent too much time criticizing other tendencies).

Still the belief held firm. The workers state must hold out, and must remain a beacon of hope to the international working class while it awaited rescue.

But, then, how to hold out? By the time of the failure of the first German Revolution, the Soviet Union had already been invaded, and everything was focused on survival: building an army, equipping it, feeding it, all under intolerable circumstances. This was the period of “War Communism,” in which the regulation of distribution of commodities was aimed, not at improving the life of the individual, but at survival in the face of foreign powers and Russian counterrevolutionaries determined to crush the Russian working class. It is a testament to the vitality of socialist property relations, and to the fighting spirit of the Russian worker and peasant, and to the leadership skills of the Bolshevik Party, that it held out at all. But the strain was incredible.

I spoke before about the relationship between peasant and worker—the worker’s need for the products of the peasant (food, and much of the raw material of production), and that, in turn, only through an improvement in farm machinery could the level of production of the peasant be increased. Co-existing with this relationship was one of prices. Price controls, of course, are nothing new: all of the major capitalist countries, certainly including the United States, have resorted during wartime and other crises to prices fixed by the State. But the tremendous pressure of poverty and civil war made this task especially difficult. Set the prices too low, and the peasant would refuse to sow, or hide his grain. Set the prices too high, and the worker would face starvation, or at best an inability to increase the productive forces.

And it is here that we arrive at one of the important features of a socialized economy: the novel role of the State in making decisions of prices and production. “…the Soviet government occupies in relation to the whole economic system the position which a capitalist occupies in relation to a single enterprise.”

To the bourgeois economist or apologist for capitalism, of course, this is a weakness. Yet, we have seen from the growth of the productive forces how it is a strength, and is one of the things that permitted the Soviet Union to survive in nearly impossible circumstances. But this, too, has its reverse: to effectively direct the economy of an entire country requires studying and learning and a willingness to adapt to new circumstances; to experiment boldly and to analyze the results of the experiments honestly. For this to happen, Soviet democracy and freedom of discussion within the ruling party are among the most important features in order to ensure that the decision-making process is robust and flexible. For reasons that we’ll get to later, it was this democracy and freedom that was missing when, beginning around 1923—in other words, at the end of the Civil War—a bureaucratic clique gained more and more power. But before we study why this happened, we’re going to look at the results.

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28 thoughts on “TRB #5 Chapter Two Part 1: The State in a Planned Economy”

  1. I once read a paper pushing the idea that the biggest revolutions come shortly after the biggest wealth advancements of the people. It used the French revolution as its best example, and also the U.S. revolution. The paper said we don’t like to see our neighbors getting rich faster than us, and we aren’t willing to accept the status quo anymore.

  2. My impression is that the biggest revolutions came after crop failures. When a bunch of people are about to starve anyway, a lot of people feel like they don’t have as much to lose as usual.

    It makes sense but I don’t have a lot of proof. There are anecdotes, like the story about the guy who complained to Marie Antoinette that the people had no bread, and she suggested they should eat the trimmings carved off the loaves.

    In Russia, the 1905 revolution followed famines. The Russian revolution did come after some food shortages, and one of the grounds for the second revolution was that in 8 months the new government had not created enough food.

    There was famine in China before the revolution but I find a whole lot more google hits are bout famines after the revolution. It’s that way about Russia too.

    When people know there isn’t enough food and somebody (the poorest and maybe others too) has to die this year, it might affect their thinking.

  3. @skzb,
    Forgive me for sounding gushy, but I figured out over twenty five years ago that you write a humdinger of a fantasy novel. But you also do a bang-up job summarizing and distilling the key elements of a dense text. Thanks for keeping me interested.

  4. Interesting OP and discussions. It seems like revolutions are often betrayed in one form or another. By people wanting power and wealth. And the revolutionaries are willing to be betrayed by giving power to those who say the right things at the right time.

    Food and comfort are important. A government needs to supply those things or the seeds of revolution are sown. The GOP wants to take those things away from the poor and give them guns. What could possibly go wrong? If that is deliberate, I have no idea how the GOP plans to make that work for them.

  5. “If that is deliberate, I have no idea how the GOP plans to make that work for them.”

    I doubt that it’s deliberate. Probably more instinctive. And their instincts tell them that in rural or small-town environments with reasonably cohesive societies, and small cities, people will organize and their guns will be what they use to keep the peace before things get organized, and once they’re better organized they’ll be ready to expand.

    But in culturally diverse areas that don’t have nearly enough food, things would collapse and the survivors would not nearly be ready to challenge other areas.

    You might get a sense of the dream by reading _Lucifer’s Hammer_ by Niven and Pournelle. A big natural disaster destroys all services and a whole lot of people die. In the western USA essentially the only survivors are in one isolated valley that’s prepared. Everybody there swears fealty to its king, and when they get more refugees than they can care for they execute the surplus. When the black cannibal army that’s killed everybody else for their canned goods arrives at their valley, they exterminate it with poison gas. In the entire western part of the ex-USA, two black people survive, an ex-astronaut and a woman who ran the last surviving nuclear power plant. They marry each other.

    Again, I think it’s probably not consciously thought out much. But if a bunch of poor people did start an abortive revolt that has no chance, that would be a perfect excuse to stop molly-coddling them and take the gloves off etc.

    Also, they might want to just write off the blue states and secede from the USA. If a bunch of poor people with guns cause a great big disturbance in blue-state cities but not red-state cities, they could write a card offering their condolences.

  6. David Hajicek: Do the Republicans want to GIVE the poor guns? I suspect they think the well-off will be the well-armed. (I don’t know what they think about drug gangs, maybe that the middle class should be able to defeat the gangsters if it comes to that.)

  7. No, they aren’t giving the poor guns (or anything else, if they can help it) as far as I know. Please forgive the poetic license. They are enabling people to buy guns easily with minimal restrictions. Certainly most poor rural white people already have guns, it is part of the culture and is considered normal.

    Maybe the GOP fears a race war. They certainly seem to want one. The fear drives gun purchases. One would think the gun market is saturated as most people who want a gun have one. But if you frighten enough people, maybe you can get them to buy more guns. So maybe that is the goal, gun sales.

  8. I suspect you’re giving the Republican propaganda machine for devising a more consistent overall strategy than it actually has. Their ultimate goal is oligarchy, but I think they’ll use any means to reach it even when those means contradict each other. Just like “gun rights” and “helpless working class” don’t fit together, “pro-life” and “opposed to any form of state-funded social welfare for children” don’t fit together either. But as long as “gun rights” and “pro-life” gets more votes, they’ll keep it as part of their position.

  9. It’s very hard for any movement to keep with a unified strategy – about the only way is to follow under a dictatorship. The Republicans found a common strategy that has worked – tell voters that it isn’t their fault they don’t have everything they want, it’s the other guys’ fault. But when the definition of “the other guys” keeps expanding, eventually it includes most everybody. It’s a short term strategy (and politicians, like most people pursue short term strategies at the expense of the long term).

  10. “The Republicans found a common strategy that has worked – tell voters that it isn’t their fault they don’t have everything they want, it’s the other guys’ fault.”

    That exact same strategy worked for the Bolsheviks for a long time too.

    “But when the definition of “the other guys” keeps expanding, eventually it includes most everybody.”

    Don’t let it keep expanding. If you start out with just the bourgeoisie. and you keep it just them and foreign powers and internal saboteurs and wreckers, and socialists who have the wrong ideas … I guess they did let it keep expanding. But they shouldn’t have.

  11. @skzb:

    > By this logic, of course, given the development of the fetus and the subsequent
    > development of the infant, the violence of childbirth is “unnecessary.”
    > But I digress.)

    Sorry to pick on a casually deployed figure in a digression, but I’m going to anyway.

    For some births there is already no great violence in childbirth, for the mother at least. And perhaps in the future there will be no great violence for the infant, either. It’s not hard to imagine, and of course birth has been depicted that way countless times in SF.

    Which is to say that considering violent revolution to be an essential element of dramatic social change seems a little narrow-minded, even if it is mostly historically accurate, and even if dramatic social changes are likely to be violent in the near term as well.


    Re wealth changes, there was certainly extreme stratification just before the French Revolution, and that does seem like an plausible provocation for revolution. But I believe the French nation at that time was quite a bit poorer than previously due to the gross economic mismanagement of the regime. So I’d say that national increase in wealth isn’t a factor or a motivator for revolution. Under Louis XIV for example similar stratification existed but the nation including the peasantry and working class was wealthier overall and so various revolutionary forces were weaker.

    And for that matter I believe stratification was even worse in early 19th century England (Regency period) prior to “reform” than in pre-revolutionary France, and yet revolutionary forces were only nascent and weak in that time and place. Of course reform in England shortly before and around Victoria’s coronation was rather pathetic, and stronger Chartist movements emerged thereafter. But even then the attempts at revolution in England during that time were abortive and not too difficult for the government to suppress, despite the period government’s general incompetence and factional divisiveness. So however obvious economic stratification may be as a revolutionary indicator, it’s not enough in itself.

  12. Miramon: The childbirth process is inevitably violent; it may be relatively little violence compared to a difficult labor (I’ve been in the delivery room for both sorts), but even in the easiest there is blood and intense activity and massive cellular destruction in a very compressed time.

  13. SKZB: And it is here that we arrive at one of the important features of a socialized economy: the novel role of the State in making decisions of prices and production. “…the Soviet government occupies in relation to the whole economic system the position which a capitalist occupies in relation to a single enterprise.”

    But Trotsky also writes: “The play of supply and demand remains for a long period a necessary material basis and indispensable corrective.”

    1) Perhaps because central banks and movement away from the gold standard was relatively new, Trotsky underestimates their ability to control economic growth with cyclical and counter-cyclical measures.
    2) He also underestimates the ability of non-socialist governments to direct spending towards economic sectors at will and in relatively quick fashion either through direct expenditures, tax incentives, or both.
    3) He also underestimates the ability of non-socialist nations to adopt ‘command economiies’ when crisis hits. I.e., war or extreme market shocks (think Nixon and wage-price controls).
    4) There is an unspoken assertion here; that a command economy has better information on supply and demand than ‘free’ markets and is more flexible in creating market balance. There may be some theoretical underpinnings for this belief, and it is undoubtedly true in specific market sectors, but as a whole there is scant real-world evidence of it.

  14. @Kevin O’Neill, I think you mis-read Trotsky when you make your fourth point, or maybe I misread him. I don’t think he’s claiming a command economy has better information on supply and demand. He made the comparison between the Soviet government and a capitalist to be critical of what the Soviet government was doing.

    I don’t think I’ve gotten to any such segments in the book yet, but I believe Trotsky envisions a more directly democratic method for governing a socialist economy. That seemed to be what he was hinting at.

    Again, I’m still wrestling with the translation a bit. I have a sense that I’m missing a lot of Trotsky’s meaning as I read.

  15. Mike S. – as I said, the assertion is unspoken. We can, at least to an extent, consider the ‘needs’ of a socialist/communist society akin to capitalism’s demands. To meet those needs one must quantify the demand/need and then generate the necessary supply. So, regardless of the system, supply will usually be based on information about demand/needs. And the better your information about demand/needs the more likely the correct supply will be generated to meet it.

    Under capitalism the markets generally have free play to balance supply and demand. Under socialism/communism someone in government (the bureaucracy) must make this determination.

    If socialism/communism is not better than capitalism in assessing and meeting these ‘needs’ – then it’s rationale for existence is greatly diminished.

    I think Trotsky here – and elsewhere – places the Soviet failures at the feet of individuals unsuited to their authority (as opposed to systemic failure). This was no doubt to a large extent true. But even given adept bureaucrats the assertion is not necessarily justified.

    In a Star Trek economy we could dispense with both free markets and bureaucrats in central planning. The question though, is until such a time under which system are we better off?

  16. Kevin, are you reading the same book I’m reading? Trotsky sees the presence of bureaucrats, any bureaucrats, as an indicator that socialism is not present. He’s not seeking different bureaucrats, or more qualified bureaucrats, he’s seeking zero bureaucrats.

    You keep bringing up centralized control. Now, it may not be feasible for a socialist economy to exist without centralized control, but that’s clearly Trotsky’s goal. He wants some kind of democratic system for controlling the socialist economy. Not democratic republic, with elected leaders, but direct representation. Or at least, that’s my take on the sections Steve has covered so far. I haven’t read much further into the book yet.

    You’re poking holes in a position that’s nowhere near Trotsky.

  17. Mike – whether we are talking of socialism, that Marx called “the lowest stage of communism” or the highest form of communism (which we can only theorize about, since it has never been realized) it is practically impossible to have a State without bureaucratic offices. Someone has to make the planning decisions.

    As the ‘lowest stage of communism,’ socialism definitely requires bureaucratic positions – though a professional bureaucratic class is anathema to both Marx and Trotsky and is the ‘bureaucracy’ that Trotsky attacks relentlessly.

    Or as Marx and Engels wrote, “… all will fulfill the functions of control and supervision so that all may for a time become ‘bureaucrats’, and therefore nobody can become a bureaucrat.” This implies some sort of rotational or elective scheme, but does not imply that the bureaucratic positions are non-existent.

    Most of what I’ve written above is based on Chapter 3.

  18. We’re splitting hairs, I think. Correct me for any mis-summarization of your position: You’re saying the concentration of power in bureaucrats is an inescapable part of managing a socialist economy. At the end of the day, somebody has to make the decisions. Even if the proletariat votes on every single economic decision, the members of the proletariat who word the propositions that go onto the ballots everyone votes upon hold huge power. Even if the person who gets to word the ballots changes every week, for one week that person has huge power and it’s impossible for every citizen to get that week.

    Is that right?

    I’m trying to think a step earlier in the process. What if, later in the book, Trotsky has some workable solution to this fundamentally unfair distribution of power that I haven’t considered? At this point in the reading, I’m giving him the benefit of the doubt that bureaucracy can legitimately be escaped.

    But I’m only trying to keep an open mind. In truth, even before I started reading this was my fundamental concern with Trotsky’s ideas and socialism in general – how do you stop the bureaucracy from taking power for itself? Stalin and the Soviets betrayed the socialist revolution in Russia. But I think it’s likely that every socialist revolution inevitably makes its own Stalin. I’m trying to keep an open mind and I want it to be wrong, because I do think Marx’s moral philosophy is more coherent and consistent than the moral philosophy used to justify capitalism. But – to Marx and Trotsky’s credit – they push the reader to focus on the world that is, not only an ideal.

  19. Sure, socialist revolutions create their own Stalin – and bureaucrats. All revolutions are self-corrupting. All systems are self-corrupting. Look at capitalism for instance – or churches that gain power.

  20. Mike – I think bureaucratic positions are necessary – but a bureaucratic class is not. In the end it still comes down to information and decisions based on that information.

    This is where I started – the unspoken assertion is that socialist bureaucratic decisions will be better at assimilating the information and responding to it than free markets. And yes, bureaucratic decisions are simply decisions made by whomever holds decision making power in the State. It might be for a day, a week, a month, indefinite but subject to recall at any time, etc. It is this unspoken assertion that I find no compelling evidence to believe.

  21. There seems to be an underlining assumption, in the discussion of Soviet socialism, that everybody is equally competent and has the same goals. Thus some random person could take a bureaucratic position for a week (or whatever) and perform the job well. Bureaucrats can perform useful functions because they know how things get done and they have the skills to make things happen. This is specific knowledge not easily passed on to the next person. So we are stuck with bureaucrats, unfortunately.

    One could say similar things for any profession, be it farmer, machinist, pilot or scientist. So if Trotsky thinks anybody could do any job interchangeably, that is a false assumption.

  22. ” I think bureaucratic positions are necessary – but a bureaucratic class is not. ”

    Aside from quibbles over the exact meaning of the word “class,” that is my position as well.

  23. David – you may be right that not training specific people to be skilled bureaucrats leads to all sorts of problems with the competence of their administration. But the central problem with the Soviet Union, as far as I can tell, is that specifically trained bureaucrats accumulated power.

    I don’t know what the solution is. But – and admittedly, I’m biased as a software developer – maybe there are possibilities with distributed computer systems and variations on the distributed but cryptographically verified database idea pioneered in the Bitcoin blockchain. Certainly Marx, Trotsky, and their respective peers couldn’t have imagined the internet, much less the ideas in Bitcoin, when they were designing systems to manage a socialist society.

  24. Of course, we don’t train people to become skilled at being legislators or presidents either – they are skilled at being elected, which is a very different thing.

  25. Exactly. Carly Fiorina comes to mind as an example. She was great at self promotion, the best thing since sliced bread. When she got the CEO job at HP, she fell flat on her face and nearly destroyed the company.

    This is a universal problem and socialism doesn’t solve this problem as these kind of people protect themselves from removal.

    So what ever system is used, there need to be ways to depose the fearless leader bloodlessly and frequently.

  26. “This is where I started – the unspoken assertion is that socialist bureaucratic decisions will be better at assimilating the information and responding to it than free markets.”

    I think they might be good at different kinds of decisions.

    It’s like, your body has various ways to automatically respond to stuff. If you use particular muscles a lot they’ll get stronger. If iyou eat particular foods your digestive tract will tend to get better at handling those foods. When you exercise your heart beats faster, you release stored glucose for your muscles to use, you increase bloodflow to the muscles that do the work and less to other places, etc. All automatic feedback cycles, like free markets.

    But when you see a threat coming, your brain decides on actions. You may run, or be ready to fight, etc. If your brain sends signals for fear, you release hormones that result in more bloodflow to your legs and less to your brain so you can run faster. Your veins get slippery and harder to cut. Etc. If it sends signals for anger, your hormones do different appropriate things. The changes in the feedback systems and also the details of the fighting or felling strategies come from your brain looking at the big picture.

    How would we do a free-market approach to war? A hundred million consumers each wants to be ready for war, so most of them buy rifles and ammo, some buy automatic weapons, some flamethrowers, etc. They buy books on small-unit tactics and play paintball? When the war comes they buy bus tickets to the front?

    We can’t expect free-market consumers to get a coherent view of the big picture. When we do free-market stuff we don’t want anybody to do that. Unions are monopolists who use their big-picture perspective to siphon off a bigger share of the income. Cartels are groups of capitalists who figure out that they can get a bigger share if they subvert the system . The free market concept depends on each entity playing its own role, and not changing the big picture to suit itself.

    Free markets are good for relatively stable situations where a lot of individual people individually want products and we want to make the right amount of those products.For choices that do better with a brain, we need some way to put a few people in charge, and we need a way to give them the information they need to make informed choices.

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