Rubles and the Soviets - By Dmitry Oreshkin

Politics and money

RUBLES AND THE SOVIETS

By Dmitry Oreshkin
September 2006
Source

If a currency is an expression of confidence in the state impressed on paper and the state is built on a lie, a war against its banknotes is as inevitable as a war against its people. This process is cyclical. The cycles were particularly sweeping in the early days of Soviet history, when the lie was fighting for an exclusive right to be called the truth, and then, closer towards modernity, they were gradually subsiding.

First cycle

It was Vladimir Lenin who set this process in motion: “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. To reduce this effect we must undertake the strict registration of all banknotes in circulation in order to change all old currency for new.” (Report to the All-Russia Congress of Representatives of Financial Departments of Soviets, May 18, 1918)

In his striving for some make-believe equity, Lenin deprived the economy of what economists refer to as liquidity. This ideological step entailed real material consequences. The economy sank to the level of a natural economy and direct barter trading. By a well-known Russian tradition, the people, robbed of their possessions, were headed for death by starvation.

It was about time to stop and look back. The young Soviet regime, however, was of a different kind. It believed in an idea more than it did in reality. Strangely enough, the idea was named “materialism.”

“Money is coined liberty”

However, not everyone was wearing blinders at the time. Baron Nikolai Wrangel, the elderly liberal-minded father of the well-known “White” (anti-Bolshevik) general, was working at the recently nationalized Russian Gold-Mining Company. (N.Ye. Wrangel, Reminiscences (From Serfdom to the Bolsheviks), chapter “My Flight.”)

One day a Commissar for mining (a twenty-year old fitter leading a Red Guard detachment) came to the company, confiscated the remaining cash and demanded that the company’s staff serve the new regime. This was understandable. What was impossible to understand was how they could serve it without cash. That is, without those very “banknotes,” without “certificates of social well-being.”

‘If you do not send provisions to the workers in the gold fields, you will be shot for sabotage.’
‘Where will we get the money for the provisions?’
‘Where you got it in the past.’
‘But now the workers appropriate the gold they mine.’
‘That is not our business. When in winter gold was not mined, where did you get money?’
‘By borrowing from a bank.’
‘Do so now.’
‘We cannot; they have all been nationalized.’
‘Then raise funds yourselves. But as soon as we hear a complaint of sabotage, you will be shot to death.’

“It was physically impossible not to commit sabotage,” Wrangel the elder sums up.

The materialist regime took control of enterprises. It failed to notice, however, that it had destroyed the financial infrastructure that linked them together. Because of its being nearly non-material. The regime dried up the monetary environment — the language in which market participants communicated among themselves.

“Money is coined liberty,” is a favorite saying in the West. This statement bears the stamp of truth. Who disposes of his or her own liberty and in what way is a separate story. Liberty should also have its limits, and they are mainly determined by the socio-cultural background. By ideas. By fashion. By the rules of decency.

Historical materialism, however, teaches us that culture, morality and other stuff like ethics are just reflections of simple material interests. Having destroyed the material basis for inequity, we will obtain equality. Thus they used to say before the revolution. Or a potentiality for ensuring equality. In an ever longer run. Thus they began to say after the revolution.

Dashing belief in materialism views money as a material instrument of inequality and prevents one from seeing such an ideal component as the confidence of the two parties to a deal in a third, practically invisible party — the state. Which has printed these banknotes and inspired them with its word of honor. If the state has no honor, there is no confidence in its word of honor. Hence, there is no environment in which a deal could be negotiated. This environment is also almost completely non-material and consists of laws, notions of duty and a good name, and other bourgeois prejudices. From the point of view of resolute fighters for social progress, all of this was not worth a brass farthing.

Thus the first downward cycle of moving from a false idea to an economic disaster began in 1918. The environment in which communication among economic entities was carried out in the language of money flows was now rolled out into a flat cake, where all matters were settled by threatening to shoot to death anyone who fails to comply. And, certainly, by resorting to the impassioned public persuasiveness of talented Bolshevik orators.

The economic environment was simplified to the utmost. It was made more materialistic. The ruble was replaced with a soldier carrying a rifle. A Cheka (secret police) officer carrying a Nagant revolver took the place of a ten-ruble bill. How could it be any otherwise? Such was the equality that had been promised.

Root crop growing as a problem-solving method

The Bolshevik experiment would have been much more useful if honest evidence of its implementation had been preserved. The experimenters, however, most thoroughly weeded out relevant documents, substituting mythological implants for them. Such are the technological dictates of downward development. The bombastic lie about a new, more equitable and more equal world that was about to emerge became an attribute of the economy as essential as the sharply increased inequality between those who were shot to death and those who did the shooting. The powers that be, one has to hand it to them, are aware of this. That is why the secret services still do not permit declassifying seventy to eighty year old archives. If they do, it will become exceedingly clear what the roots were from which they have grown.

The Red Terror was not just a response to the White Terror. It was in no smaller degree a forced response to the destruction of normal motivations for work. The entire subsequent history of perverting our economy was a serial thriller about a war waged by the Soviet government against the Soviet ruble. A war whose victim was not so much the ruble (which it was!) as an individual’s capability to work without being whiplashed and shoulder responsibilities, and his desire and ability to provide for his family and his country.

Since we are not allowed to come near archival documents, we will turn to testimony left by Communists themselves. As a matter of fact, not much of it has survived to this day: books dating from the days of the Revolution, the New Economic Policy (NEP) and the subsequent period up to Stalin’s death have been removed from circulation. Yet something has survived. For example, in his book (Tikhvin Uyezd in the Years of the Revolution), published by the Executive Committee of the Tikhvin Uyezd (District) Soviet in 400 copies back in 1925, Vladislav Ravdonikas, a local chronicler, recollects with a winner’s complacent objectivity how the Uyezd Soviet Executive Committee was combating famine in the summer of 1918.

“We had either to uncouple cars [from through trains.—D.O.] when we had a chance to do this or to requisition what we could; either way, the takings were small… We bombarded the central government bodies, up to the Council of People’s Commissars, with telegrams. We convened food congresses and food conferences. We sent food purchasers on trips through the uyezd. The most practicable way out was to propose that the population itself should launch an active struggle against famine brought about by the world war in two ways: firstly, by expanding the area under crops using the slash-and-burn technique and, second, by growing more home garden vegetables, in particular, root crops. (Resolution of the Second Uyezd Congress on the food question.) As a matter of fact, the struggle against famine in the uyezd proceeded mainly in these two ways; in a year or two, the ploughland area increased, numerous new kitchen gardens emerged, the redundant population either died out or moved away, and the uyezd adapted itself to the new economic conditions.”

Interestingly, some 60 years later the Soviet government came to approximately the same conclusion: if society’s leading and guiding force is unable to feed this voracious, ideologically illiterate trash, then maybe we will allot them plots of inconvenient land six hundredths of a hectare in size per family, and let them get out of the scrape as best as they can by growing root crops.

Note that Lenin spent three to four years apprehending economic reality before he consented to switch to NEP. That is, he thought about fifteen times as fast as the ideologically blinkered Soviet leadership did in the post-Stalin period. Yet he was only about one-fifth as fast as the Tikhvin provincials were in 1918.

What can you expect? That was a case of downward development. The deeper down you go, the more difficult it is to get back to the human system of values.

Quite unwittingly, the Tikhvin chronicler gave an accurate description of the Bolshevik economic cycle: a false populist idea — its forced implementation —natural failure — backoff and suggestion that the population get out of the mass grave on its own.

If the cycle had included the right to free discussion of the results and submission of alternative proposals, then maybe the elite, at the stage of failure and an attempt to clamber out, would have been able to produce other, less destructive recipes. However, the Bolshevik principles leave no room for freedom. On the contrary, they dictate a highly materialistic approach: put the blame on enemies and saboteurs, punish them with the utmost rigor and tell all the others to keep their mouths shut. And then, having caught one’s breath, step on the same rake with fresh energy.

Tikhvin is situated not far from St. Petersburg, in the non-chernozem belt of Russia. However, the same thing happened in the south as well. Here are the reminiscences of a certain Party secretary from the Petrovo-Maryino Uyezd in the Donbas: “I visited Maryino villages; formerly, people used to live well there, whereas during the famine after 1921 people died and there were even cases of cannibalism. Our entire work was to gather peasants together and urge them to sow well and at the proper time or, better still, ahead of time. We ourselves could hardly understand what we said… Peasants … were literally swaying in the wind, and so they came creeping rather than walking to the meetings…”

It is just as well that at the time the entire work of the Soviets boiled down to saying wishes. At least, the brakes were put on executions by shooting. The stage of people crawling out of the burial trench into the light of day began. Two or three years passed, and the very same Party secretary noted with surprise that, as a result of this passive style of leadership, “agricultural production soon recovered to its pre-revolution level and even went beyond it in some respects. In 1925, we had as much foodstuffs as we wanted and they were cheap. Now, after the year 1922 with its famine and cannibalism, came an abundance of foodstuffs. Agriculture was regaining its feet right before our very eyes. It was simply a miracle.”

How strange it is to read words about a miracle written by such a staunch materialist as Nikita Khrushchev from whose reminiscences (N.S. Khrushchev, Vospominaniya [Reminiscences], Vol. 1, Moscow, Moscow News Publishing House, 1999) these extracts are quoted. It is he who was that uyezd Party secretary. And yet this indeed was a miracle. A miracle of unity of human intellect, energy and will with the external surroundings. Which is described in economics by the dull term “private property.”

Expediency of executions by shooting

Things with villages are more or less simple. They practically have a natural economy that can be restored without investments, loans and other elements of economic infrastructure. But what is to be done about towns?

In the summer of 1918, there were incidents of railway sabotage in the town of Tikhvin. Workers dismantled railway tracks, demanding bread. Less than a year had passed, and the very same proletariat in whose name Lenin destroyed the foundations of capitalist society was now itself infected with petty-bourgeois ideas. This, however, could not be helped. And so Comrade Ravdonikas states reticently: early in the morning on September 3, 1918, the Tikhvin Revolutionary Committee had to execute railway office worker M.L. Borisov, fitter P.A. Laurin, railway worker M.V. Karpov, head of the railway depot L.I. Kompus, and fitter A.V. Smelkov by shooting. “On the basis of evidence materials and, mainly, in view of political expediency.” One of the Revolutionary Committee members, Pivnikov, a Tolstoyan [follower of Leo Tolstoy’s philosophy and his doctrine of nonresistance to evil] kept refusing to sign the sentence, but then, as the book’s author puts it, “influenced by very weighty arguments,” he eventually signed it.

It would be interesting to see what kind of arguments they were. In terms of ideological values. The chronicler, however, says nothing about the point. And for some reason there is no plaque in Tikhvin in memory of the first fighters in the cause of the working class shot down by the Bolsheviks.

“This was the first execution by shooting in Tikhvin, and it had a stunning effect. Quite a few people were terrified and dumbfounded. The authorities showed muscle; everyone became aware that it was no time for joking when the interests of the revolution were at stake… One might argue about whether the executed men were guilty enough for such a rigorous sentence to be applied, but one thing is sure: the political benefit of the execution was immense,” the author narrates.

Indeed that is true. The economy had to function. Without money, in conditions of equality and equity. Ergo, some people had to be shot. The ruble went, only to be replaced with a gun out of whose barrel, according to Mao Zedong’s pithy saying, political power grows.

Rubles are part of a different reality

In a sense, a time of grace set in. The authorities’ interaction with the population was simplified to the utmost. Not only such a conventional thing as money but also such a conventional thing as elections was no longer needed. “The famine provided good ground for anti-Soviet agitation… For it was so easy to put the blame on Soviet power,” Comrade Ravdonikas explains. “Taking advantage of the ignorance of the average man, the socially alien element penetrated the Soviets on a mass scale. For example, the June election to the town Soviet ended in electing members of the bourgeois class to nearly all the seats in the town Soviet. The town’s biggest bourgeois–N.K. Meyerovich, N.A. Churin, I.V. Voskresensky, V.I. Nagolsky, and others – became members of the Soviet. Naturally, the Uyezd Executive Committee cancelled the election results, yet a new election yielded no positive results in terms of the Soviet’s composition either…”

Thus it transpired that not only money as a system of communication among economic entities but also elections as a system of communication between the authorities and the population worked inequitably. So they had to be cancelled.

It was clear that the time came to introduce a new, more adequate management technology on a broad scale. Commissars from Leningrad came to the town of Tikhvin to set up a local Cheka branch there. So the people of Tikhvin had their fair share of executions by shooting awaiting them.

Khrushchev and omerta

Such was actual reality. We know next to nothing about it. But on the other hand everyone knows an alternative myth. Pavka Korchagin [principal character in Nikolai Ostrovsky’s novel How the Steel Was Tempered], ill with typhus, with a filthy towel around his neck, a spade in his hands, is hewing out hollows for railway sleepers in the frozen earth. Being shot at by bandits. Half-starving. Building a narrow-gauge line to a timber tract. In order to provide the freezing town with firewood. Pavka is a hero.

The question arises, however: Where does the firewood come from? Understandably, the mythological text provides no answer to this question. Since it is uncharacteristic of firewood to be stacked into large piles at timber tracts outside of a town all by itself, it may be assumed that it was brought there by some pre-revolutionary exploiter. Who was motivated by acquisitiveness. Quite likely he intended to sell it to the townspeople for a good price. That is, he was planning somehow to arrange for its timely delivery to the town—most likely, to build the very same narrow-gauge line. Only, unlike Pavka Korchagin, he would have got down to building it in summer, for this would have been cheaper. It was the usual procedure in pre-revolutionary practice: timber was felled in winter, then brought by sleigh to a timber yard; in summer it was dried (sometimes for a whole year or even two!) and then, in early autumn, its delivery to customers began.

The logic of the heroic plot is interesting in that Pavka, the sailor Zhukhrai or their uncompromising comrades did away with the firewood tycoon (and, together with him, the infrastructure of the firewood market) in the name of the Revolution—sent him packing or shot him down, does not matter which. The book and the film tell us nothing about this. In them, the hero, ill with typhus, with a filthy towel around his neck, a spade in his hands, is hewing out hollows for railway sleepers in the frozen earth…

Doing all this for the sake of the people! For the sake of the bright future. That was a true self-sacrifice.

Bolshevik Nikita Khrushchev writes not without pride that in the 1930s, when he was a high-placed Party functionary in Moscow, his family were worse off than in 1912 when he was working as a fitter in the coalminers’ settlement of Yuzovka. In terms of Soviet mythology, that was a precious fact of his biography. Whereas in terms of economic rationalism, it was nothing to write home about. Suppose that both he and Pavka Korchagin exerted themselves to the utmost for the sake of the people’s happiness. But then, if the Party leaders were living so modestly, the masses that they guided were hardly enjoying better conditions. Indeed, the masses were not enjoying their conditions! This is an empirical fact. Recorded by Khrushchev, Ravdonikas and numerous others whose testimony somehow leaked through ideological filters. The people were living much worse than they had been in 1912. Putting it plainly, the people were again starving to death.

Although, according to Comrade Ravdonikas, “redundant population” died out during the first cycle, ten years later the Russian land once again became too small for the Russian people. That was an amazing drop in the carrying capacity of the environment — or was it not? For a complicated, asymmetrical social infrastructure based on variegated private initiative creates a lot of places for the application of labor. Whereas the state-determined flat pancake structure is only capable of creating jobs that the state deems necessary. Somehow or other, the late 1920s saw a new death wave in place of the upsurge in well-being that Nikita Khrushchev described so touchingly.

In 1930, having diverted himself from the affairs of state in Moscow, Khrushchev went to Saratov Region, aiming to gladden the local peasants with a supply of industrial goods sent to the countryside as a form of assistance from the proletariat. And he was surprised to see that time had gone back 10 years: “We arrived there and saw literally a famine. People, half-starved, were moving around slowly like autumn flies… All of them with one voice were asking us for bread, whereas the machines made little impression on them…” Later on Khrushchev, sent by the Party to the Ukraine, saw that the situation that existed there was quite similar. “A number of railway cars arrived in Kiev and, when they were opened, it turned out that the cars were loaded with human bodies. The train had traveled from Kharkov to Kiev by way of Poltava, and on the leg between Poltava and Kiev someone loaded the bodies on the train and now they arrived in Kiev…”

That “someone” was evidently a desperate person. It was surely quite easy to determine who the organizer of the loading was. Apparently, that “someone” had nothing more to lose. And, what is perhaps even more terrible, he had no other way to communicate his opinion about what was happening to his higher-ups in Kiev. That is, the degradation of the socio-cultural infrastructure had already affected the foundations of interpersonal communication. Most likely, everyone suspected the truth—in private with oneself. However, there was no room for it in the communication environment. There was no place where one could call a problem by its name. There was a scattered multitude of individuals with their miserable, twisted lives and the magnificent plane of an epic myth in which everyone (except enemies) looked cheerful and happy, spoke in strong, clear and bright voices and admired Pavka Korchagin — more or less sincerely.

This is precisely the great social technology discovered by the Bolsheviks. Radical simplification of a complex culture as a multidimensional space where a nation becomes conscious of itself, argues about and finds its ways into the future. They found a brilliant method of solving all problems. Social reality is what is called by a name and realized in mass consciousness. What has not been realized does not exist in social reality. No man, no problem. No news, no event. No name, no phenomenon. The experience of the USSR, the Democratic People’s Republic of Korea, the People’s Republic of China and Byelorussia shows that peoples can exist in this way for generations. And be happy in their own way.

Degradation from a flexible and lively socio-cultural environment to a hierarchical, monumental and coercive one is the best way of consolidating one’s personal power. Be it the lively environment of money for the economy, electoral democracy for politics or free mass media for culture. In the broad sense of the word, an environment of freedom in which society is inventing its future. It was this environment that Stalin strangled.

What is interesting about the first part of Khrushchev’s reminiscences is his sincere non-readiness to accept a fact as a reality. And his lack of information, which is amazing in the case of a high-placed Party functionary. Wouldn’t he have learnt about the famine if the death train had not arrived in Kiev? Would he have prevented the information from entering his mind by means of a psychological barrier? It transpires from the text that he had no doubts about the correctness of the Soviet dogma at the time. Although he was sorry for the people. And was surprised to find this was possible in our society, the world’s most just one. And tried honestly to relate this to posterity. That is, to restore the destroyed integrity of the information environment. Which is quite an achievement — perhaps the most remarkable achievement Nikita Khrushchev made in the course of his long and winding journey through life.

No one except Khrushchev — neither Molotov nor Malenkov, nor Kaganovich nor Bulganin, nor Kalinin — found enough courage to commit their memories to the information environment! Had they nothing to reminisce about? Or was the individual truth of every one of them too horrible to make it known to the public? The memoirs of the Stalin period are mostly represented by military leaders’ heroic reminiscences. As for the Party elite, its members kept silent, in Nabokov’s phrase, as if holding a mouthful of blood.

This is omerta, the code of silence according to which the Sicilian mafia live. Such is their system of moral values. Common cause above all truths. In czarist days, the Russian Social-Democrats used the phrase “Our Common Cause” as a codename for the Revolution. Translated into Italian, this will be precisely “Cosa Nostra.” Poor Ravdonikas with his annalistic blabber certainly could not imagine such depths of downward development.

Second cycle

Let us revert to the war against money. The resolution of the 14th Conference of the All-Union Communist Party (Bolsheviks), or VKP (B), held in April 1925 (when Khrushchev was wondering at the miracles of abundance), listed measures that had to be taken to ensure further advancement. They included the “organization of cooperative credit” (credit, naturally, implies confidence in the currency) and a ban on “administrative interference” in the work of cooperatives. There is even a mention of the right to use “special capitals” in trade operations, the introduction of “deposit operations without risk to the depositor,” “profits from operations and an increase in material incentives,” “accumulation of producers’ cooperative organizations’ own funds and consolidation of their capitals”…

Logically enough, all of this terminology, dubious from the working class’ point of view, is accompanied by demands for progress in the “legal sphere” (for protecting the handicraftsman’s rights), restriction of money emission, and, as a triumph of common sense, the thesis that the “introduction of a hard currency has resulted in the abolition of emission tax and facilitation of the fulfilment by the population of tax obligations.” Whereas the “total amount of public revenues is growing.”

The conference summed up: “The Party firmly sets before the government the task of safeguarding and protecting the taxpayer’s interests and preserving his household.”

Points of growth

Putting it in a nutshell, by 1925 the old Party elite painfully came to an awareness of the need for the gun to fall back before the ruble. The need for regeneration of the complex and inequitable economic environment which by itself, without any instructions from the top, sets its points of growth and then, with a lot of moaning and groaning, complaining of exploitation and inequity, is compelled to reach upwards towards these points. Capitalist NEP trade, inequitable kulak-ruled village and a consumer-oriented services are commercially efficient, whereas a collectivized industry is not. Money flows away into the pockets of efficient private entrepreneurs — that is, to the class enemy. To the points of growth.

Bread appeared. But industrial towns, administered by inefficient bureaucrats, could not afford to buy it.

The interesting thing is that, after the non-material socio-cultural environment was rolled out flat by the Bolsheviks, simpler social structures gained an advantage in the rates of spontaneous self-restoration. Village returned to life. Whereas town still lay in ruins.

The revival of towns and industry called for a much more complex non-material infrastructure. Much weightier and longer-term guarantees commensurate with the scale of investments were required. The risks were too great, and there was no one foolish enough to invest funds on the Bolsheviks’ word of honor. Bread shortage was replaced by a shortage of industrial products in Soviet Russia. As a matter of fact, it had previously been present as well, only industrial products seemed to be of minor importance in a situation of mass deaths. And now a need for them developed all of a sudden. Which in itself was a good sign.

It was a good sign for the economy but not for the apparatchiks and komitetchiks (bureaucrats and members of various types of committees) specializing in class struggle. Because they did not manufacture industrial products. They specialized in rendering services, mostly of an administrative-punitive character, for the population.

The Soviet regime once again found itself in a choice situation. Should it admit the private entrepreneur into industry as well, humbly promising him freedom and inviolability of his investments, bowing low before him and asking him to believe in the Party’s good will? As a matter of fact, this is what the 14th Party Conference meant to do. However, this line of action was to the members of the power elite headed by the Cheka and the Politburo, which had grown in strength, like being hit hard below the belt. What were we fighting for? Why were we tempering the steel while suffering from typhoid fever?

It was as a representative of the new power bureaucracy that Joseph Stalin entered the historical scene in the late 1920s. As a wise economic manager, he clearly saw politics behind economics. As a wise apparatchik, he saw corporate interests behind politics. He had come to terms with the most important corporation, that of siloviki, members of security and military services, and now he was confident of the victory of his policy line. For, in effect, it was the question of who would take up commanding positions. Either these positions would slowly but inevitably fall under control of those who were in control of bread, money and, later on, industry. Or Stalin’s falcons would twist NEPmen’s and kulaks’ greedy hairy upper extremities and repeat the cycle of establishing social justice through shooting executions.

The choice that Stalin made is well known, as is his logic. “…There are always people on the market, all sorts of speculators and profiteers, who can pay three times as much for grain, and since we cannot keep up with the speculators, for they buy some 10 million poods in all while we have to buy hundreds of millions of poods, those who hold grain will all the same continue to hold it in expectation of a further rise in price.” (J. V. Stalin, The Right Deviation in the VKP (b), speech delivered at the Plenum of the Central Committee and the Central Control Commission of the VKP (B) in April 1929.)

One can see the faith of the present-day patriot economists showing through this uncomplicated approach. Comrade Stalin openly admits uncompetitiveness of the state in its competition with private entrepreneurs. And explains this by the large scale of purchases. Similarly, the patriot economists admit uncompetitiveness of our state economy. Only they explain it by our bad climate.

This could also be explained by the schemes of saboteurs. Or by the great size of the country. Or by its people being lazy, ignorant and undisciplined.

Comrade Stalin’s explanations are designed for a very slow-witted audience. An attempt to compete with speculators and profiteers on the market “…can only lead to the complete nullification of the Soviet price policy, to the nullification of the role of the state as the regulator of the market, and to giving a free rein to the petty-bourgeois elemental forces.” And it would profit only “the kulaks and the well-to-do, the Nepmen and other prosperous classes. … The workers and the economically weaker strata of the rural population would have every right to ask us: Whose government are you, a workers’ and peasants’ government or a kulak and Nepmen’s government?”

“Obviously,” Comrade Stalin goes on to say, “the Party cannot take this fatal path.”

Indeed, it could not take this path. Because this would have entailed not only the ruin of a false idea adorned with a lot of idle talk but also the loss by tens of thousands of armed security police agents—not unlike Ivan the Terrible’s dreaded corps of oprichniki—on whom Stalin relied and for whom there was no place in a market economy of their state service and privileges. NEP as an economically compelled retreat of the power bureaucracy was doomed.

What kind of phraseology would be adorning the beginning of the second downward cycle had mostly an aesthetic significance: whether the leader’s lies would be beautiful or not. Stalin’s lies were ugly. But they were awesome and mobilizing. In his system of semblance of truth, the loss by the state of its governing role was in itself a terrible evil, and he was ready to trade efficiency and cost-effectiveness for it like pawns for a rook. The question of why the state should make such massive purchases the mere volume of which doomed the state to losing competition was utterly ignored by Stalin. For how could the state do without state purchases? Who would then provide the urban proletariat with bread? Would private business do this—on terms it dictated?

The way it was in Khrushchev’s settlement of Yuzovka back in 1912?

Bourgeois cost-effectiveness

Once the ideological choice had been made, the subsequent degradation cycle progressed without a hitch. First, there was a lie in the form of renouncing the Party’s assertions and promises. Next came the treacherous killing of the country’s currency for going over (once again!) to the class enemy. Then followed repression against the stupid man in the street who could not comprehend that joining a collective farm was much better than being a free agent. The cycle was completed by destroying historical documents and wiping out the Party elite that still remembered enough to be able to compare life past and present and assess the actual efficiency of Stalin’s policy.

The 14th Party Conference unambiguously demanded legal protection of private entrepreneurs and a reduction of the taxes levied on the peasants. Four years later, Comrade Stalin not only proclaimed the levying of an additional “supertax” but also theoretically justified it. It should be noted that he justified it in quite an interesting manner. But then this was already a second downward cycle; by that time, the socio-cultural environment had degraded significantly even when compared with 1918, so that now it easily swallowed most uncomplicated lies:

“But does this mean that by levying this additional tax we are thereby exploiting the peasantry? No, it does not. The very nature of the Soviet regime precludes any sort of exploitation of the peasantry by the state. It was plainly stated in the speeches of our comrades at the July plenum that under the Soviet regime exploitation of the peasantry by the socialist state is ruled out; for a constant rise in the well-being of the laboring peasantry is a law of development of Soviet society, and this rules out any possibility of exploiting the peasantry.”

These tautological phrases were uttered precisely at a time when tens of thousands of irresponsible peasants were dying in the south of Russia and in the Ukraine, shamelessly breaking the “law of development of Soviet society.” Alongside the peasants and the chervonets, a gold-backed currency of the NEP period, the well-being, hopes and lives of those few cranks who had risked believing the Communists and displaying private initiative were reduced to dust.

Meanwhile, in February-March 1931 there was still another collapse of industry. The railways failed. Throughout the summer, the economists of the Supreme Council of the National Economy demanded, requested and begged the government to buy a supply of imported railway car axles and, in general, at least a small quantity of high-quality steel. They produced their calculations and kept saying that this would be more profitable in the final analysis. In reply, Stalin demanded that the “bourgeois approach to the question of cost-effectiveness be pecked to bits” (his telegram to Kaganovich sent not later than August 6, 1931); the Supreme Council of the National Economy, which was trying to “squander the currency resources of the working class for the sake of its apparat staff’s peace of mind,” be subjected to a purge (his letter to Kaganovich dated August 30, 1931); and the Collegium of the People’s Commissariat of Railways be “more diluted with Chekists” (his letter to Kaganovich dated October 4, 1931).

It went without saying that additional material input was allocated to the new managers from the Cheka: “I have no objections to making use of resettlers and uslagovtsi [prisoners of the Solovki Special Purpose Camp] on the Murmansk and Northern Railway Lines” (his telegram to Kaganovich dated September 12, 1931).

And the railways were put back into operation! Without imported car axles and without money. Just as the railway in Tikhvin did in 1918. That was an inexpensive and cost-effective way to deal with the problem. And what would such a remarkable system need money for? It had people at its disposal.

However, we will call a halt here. For it was precisely the question of money (hard currency) that made Comrade Stalin so angry. That is, he needed it badly. But he needed real — that is, bourgeois — money. And so he made a simple exchange. He spent what could well be discarded — the labor effort and lives of “resettlers and uslagovtsi” — to save what was in extremely short supply — “the currency resources of the working class.”

Socialist cost-effectiveness

Meanwhile, the universal laws of social asymmetry (inequity) showed through even in the GULAG. Out of prudent economic considerations, various types of sharashkas, white-collar prison labor compounds providing relatively better conditions for specialists, were set up. For example, engineer Mikhail Koshkin, the designer of the legendary T-34 tank, designed his unique tank diesel engine behind barbed wire. He was remunerated not with money but with a promise that his term of imprisonment would be reduced in case of success. Or increased in case of failure. The cost-effectiveness was simply unbelievable. True, engineer Koshkin died through lack of comforts shortly before the war. But this didn’t actually matter. For nonmaterial Russian culture provided Stalin with enough of such Koshkins—gifted, honest and conscientious men—and to spare. Take as many as you like.

And so those materialists took them and put them to use while the supply lasted.

However, even the most progressive proletariat and its greatest leader are unable to foresee all the twists and turns of the future. For example, to demand that prisoners should, as a matter of routine, devise computers, cell phones, software, biotechnology, and genetic engineering. All of this could be born in a different, free environment open to innovation and private initiative. Whereas an environment that is not free is at best doomed to catching up. Always. Within a strictly limited sector of centralized efforts. To be more precise, in the defence industry. Nowhere else. As for its own “factory of the future,” it simply does not function.

There are instruments of coercion, but it’s not clear in what way they are to be used for achieving a breakthrough into the future. Maybe, by digging still another channel?

As a result of the Chekists’ mobilizing efforts, the country obtained a number of durable, hand-made concrete bridges, navigation locks and railway stations, atomic bombs, and spaceships. However, its culture, language, science and related unconventional (nonmaterial?) technologies for decades suffered from a shortage of words, thoughts, metaphors, ideas, investments, and projects. Today’s realities show that it is precisely these nonmaterial resources and technologies that have proved to be of paramount importance…

Exerting every effort to produce enough iron and steel, the USSR fell behind in a variety of other, much more important areas. It raised a generation of politically active young oafs like the very same Khrushchev. It taught people to lie cheerfully in word and deed. It printed mock money. It could not be any otherwise, for this was a downward cycle. Plekhanov was more respectable than Lenin, Lenin was more decent than Stalin, Stalin was cleverer than Khrushchev…

The latter, however, turned out to be more conscientious. And so he, poor soul, blew up the Snow Queen’s ice country. Lots of splinters flew in every direction!

But then people thawed. And began slowly, blindly, mumbling something with their scurvy mouths, climb out of the trench of mythological contempt towards a complex, unbalanced, inequitable yet honest reality. Upwards, where spirit and freedom and not matter reign supreme. I am not sure whose spirit and freedom these are—human or someone else’s.

As for materialistic demagogy, it has since then known only one path, a path that leads downwards.