Talk given to an audience at the University of California, Berkeley, during Oct. 4–6, 1968 Berkeley Conference on Revolutionary Socialist Politics.
Transcribed by Duncan Chapel.
Copied with thanks from the Red Mole Rising Website.
Marked up by Einde O’Callaghan for ETOL.
Good evening, ladies and gentlemen. After a period of sustained economic growth and [an] important increase in the standard of living for the mass of the Soviet people in the 1950s, the end of the 1950s [and] the beginning of the 1960s opened [an] era of great economic problems in that country, which took at least at one moment the form of a real crisis. Many political developments in the Soviet Union, amongst them the downfall of Khrushchev, and the tendencies towards a strengthening of state control and state restrictions on many fields of social life are related to these economic problems.
However, their overall importance from the point of view of the
development of the non-capitalist part of the world and of socialist
theory are, of course, the famous economic reforms which have been
introduced in the Soviet Union. These reforms were partially
introduced before in other Eastern European countries and have led to
a big ideological crisis in the world communist movement and [are
the] subject of a very strong political and ideological discussion in
the socialist movement in general.
Now, if we examine the reasons for this slowdown of economic growth in the Soviet Union at the end of the 1950s and the beginning of the 1960s, we can try to distinguish a certain number of causes for what happened there. The general formula used by the late Polish economist and theoretician Oscar Lange, that all the so-called socialist countries were faced with the problem of transforming extensive into an intensive industrialization process, can be considered to a certain extent correct.
It is a fact that the type of industrialization which the Soviet
Union knew, starting with the First World War, with the first
five-year plan, was an industrialization in which no real cost
calculations, at least for the expenditure of labor and land, entered
into consideration. The idea was to increase production
quantitatively as quickly and as largely as possible. This approach
relied on taking the large reserves of manpower and of land which
were available in the Soviet economy as given, and taking out of
these reserves whatever is necessary to achieve certain production
goals, largely, although not completely, irrespective of cost.
The Soviet price system, which was very much geared to this extensive industrialization process, has had many results in the later stages which became absolute obstacles for further progress. Just to quote one example, one could quote many others, the revolution in sources of energy, which was pushed through in the West, and especially in Western Europe, with so many negative social consequences.
Performance indicators, which were extremely complicated, and many thick books have been written on that subject, were in the last analysis reduced to two: gross output in physical terms and gross output in value. Value, in this sense, means at the given wholesale prices artificially fixed by the Soviet government.
It is easy to understand that this system of retribution for the key sector of the Soviet economy, the sector which makes the system tick, was highly negative from the point of view of rapid technological change. When you introduce rapid technological change, then you very often upset immediately the total quantity of production, because there is [a] certain time during which you have to reorganize the plant in your factory, the equipment. You have to wait for new equipment, you have to replace [it]. You have some dead time. Your labor organization has to be revised, and so on. So this introduction will cost something in the form of overall output.
As to value, as to the wholesale price system of the Soviet Union,
it was very highly weighted against such rapid technological change.
You had a whole series of what we could call backward, less
progressive goods which were more linked with backward technology
than with the latest technology, which were higher priced than the
products of later technology. Paradoxically, the value of production
of a factory would go down when its product, when its technology,
would advance.
One of the main reasons why the old management system was to be revised, why there was a big pressure in favor of a revision of this management system, came out of this rapid need to overcome the technological gap which had occurred in certain sectors of Soviet industry in the beginning of the 1960s. Many of the detailed decisions into which I cannot go for the moment were strictly related with that necessity of overcoming the technological gap.
One of the results of [the] technological gap [that] appeared in the Soviet Union in the last seven [or] eight years is not only the underdevelopment of the electronics industry, but also the relative underdevelopment of the petrochemical industry. And this leads to the paradoxical situation that you have in the Soviet Union today, a cost price for metal coating [or] non-ferrous metal coating of cables which is lower than the cost price of coating these cables with nylon and other plastic products, as it is generally done today in the West.
Now, they want to induce the generalization of the plastic and nylon coating. So as a result of this, they fix the price system accordingly. But this gives a very high premium to those industries which continue to use metal coating, as under the concrete conditions, this metal coating is cheaper than the nylon coating. And this is completely irrational to leave these premiums to these factories and allow them to distribute higher and higher income because they are using a more backward technology.
Another example, which is, of course, something which is true in the West, even to a much larger extent than in Eastern Europe and in the Soviet Union, [is] all production of heavy equipment which is not produced on a mass production scale, which is unique, produced on order as the result of discussion between a plant which produces [a] heavy type of machinery and another plant which orders this machine is practically dictated by the producers. I say you have more or less the same thing in the West. You have no real market for heavy equipment of the greatest power plants in the world. You have tenders, but it is an open secret that the few firms who are capable [of submitting] to these tenders have some kind of price leadership applying amongst themselves.
So you have pretty well a similar situation in the West. But the Soviet economists found that as a result of that, a certain, I would say, the majority of the firms which produce this heavy equipment on order made profit up to 50 and 70% during the second semester of 1967. And it is obviously irrational to let them get away with that and have these huge sums, to a large extent, be transformed into premiums for managers and partially even premiums for workers.
So what they now think about, what they now try to operate with,
is a notion of a certain differentiated tax on profit, which will not
be the same for all factories, which will be variable and which will
enable the state central government to siphon away what we could call
monopolistic rent or monopolistic surplus profit. Any formula would
be acceptable in this relationship, this connection, [to siphon]
aside from these rents or surplus profits, away from the plants,
where they are produced, to the central resources.
Now, when we examine the tendency and the scope of these reforms introduced under the very general and incorrect title of Libermanism [or] return to profit incentives in the Soviet economy, we have to separate rather carefully two distinct motivations which overlap at a certain level of leadership. Probably amongst the top leaders of the Soviet government and the Communist Party of the Soviet Union, or what I would call the top leaders of the Soviet bureaucracy, there is a certain identity between both motives. But at a lower level, amongst the mass of the managers, those who are in charge of the economy, this distinction becomes very relevant.
For the leaders of the economy, and especially for the top economists, what they were really searching for was a way to eliminate or to reduce the negative results of over-centralization. These results are amongst the main causes, as they think, and I think they are not wrong, on that of the slowdown of economic growth in the Soviet Union at the end of the 1950s, in the beginning of the 1960s.
Over-centralization can retain a certain element of rationality under conditions, especially precisely of extensive industrialization, and when the number of factories, of decisions which have to be taken, is relatively reduced. But it becomes completely irrational when you are faced with several hundreds of thousands of enterprises, and that’s the situation today in the Soviet Union, and when you are faced with a tremendous number of concrete options which are absolutely impossible to be made in a rational way, on a national level.
They are all the more impossible, as there was for a long time a strong resistance amongst the Soviet leaders [to] utilizing modern, contemporary mathematical techniques, which had, this is the paradox, been invented in the Soviet Union. The whole technique of linear programming has been for the first time developed by the Soviet economist Kantorovich in the late 1930s, inasmuch as there were not some predecessors, which we don’t know amongst Soviet economists, because a big part of the history of Soviet economics in the end of the 1930s is shed in darkness.
Now we will find out some astonishing things, I’m quite sure, in the next 10 and 20 years, when some of the sources will become better known. But inasmuch as they did not even apply mathematical calculation to this decision making, there was a tremendous element of irrationality which kept in the system as the result of this over-centralization of a growingly complex economy.
So what the leaders of the economy and the chief economists were
really looking for was a kind of automatic mechanism, a kind of a
system of incentives, [or] if you can call, as we say in Western
Europe, more elastic planning, more indirect planning through
utilization of financial, monetary and banking mechanisms. This
mechanism would take away from the center the necessity to take
itself or to have other very highly centralized bodies like
ministries or regional bodies take a great number of decisions. The
goal was to reduce the key decisions of the center to a series of key
strategic decisions, and create some kind of automatism which would
take care of the rest as efficiently as possible. I think we can say
that the quest of the leaders of the economy and of the top
economists was limited to that point.
But when we look at the same problem more from a social point of view, when we look at it from the point of view of the material interests of this managerial group, which exercised a growing importance, a growing influence in the Soviet economy after Stalin’s death, then the motivation becomes more complex. They were, of course, in favor of greater decentralization, because that would concretely increase their own power. But they were looking for specific forms of decentralization which would increase their power, not only towards the center, towards the plan the ministries and the political apparatus, but also towards the mass of the workers.
It is extremely interesting to see that since the early 1950s already, I think it starts around 1955, there is a systematic campaign led in the Soviet economic press, specialized press, which sometimes pierces the wall of the more broadly popular magazines, in favor of increasing the rights of the managers. This was not only in comparison with government and political bodies, but also with regard to the mass of the workers.
One of the main demands of the managers, and you find the same
phenomenon with very little exception, in practically all the Eastern
European countries, was the right, the demand that the managers
should have the right to hire and fire workers, as they saw the
interests of the enterprises.
Now, the nexus of these two quests, which are, as I said, not completely identical, although they can identify in a certain number of people as to their motivation, the nexus of these two quests was the search for an element, a factor, an indicator of performance appraisal of the enterprise which would fit in with both these tendencies.
The government was looking for such an indicator which would enable economic rationality to increase, for the whole industry to say, which would make possible to appraise overall progress of the enterprises, much more so than the old indicator of gross physical output, of gross value output did. And the managers were looking for an appraisal indicator of performance of [the] enterprise, which would enable [them] to strengthen their social position, and let us not be too idealistic, also a little bit at least their income.
So this is the secret, if I can express myself in that way, of the campaign to reintroduce profit as such an overall element of appreciation of the performance of [the] indicator of appreciation of the performance of enterprises. And the whole ideological aspect of the story, the campaign of Liberman, and a series of theoretical discussions into which I will go into a minute, must be related very concretely to these different motives which were socially involved in this problem of reform.
Now, it was obvious from the start that if you wanted to replace [the] gross value of output, or gross output in physical terms, by profit of an enterprise as the main indicator, which would then determine the premiums for the managers and other material incentives for the upper ranks of the bureaucracy, you would have to change many things. Obviously, you could not do that when a large part of Soviet enterprises, I don’t know the exact figure, although it has been published in Soviet literature, [suggests] something like 20 or 30% were not operating under profit at all. [They] were operating with a deficit.
You couldn’t do that with a price system which was very
largely arbitrary, in which you had great elements of subsidy at the
one hand, many prices were subsidized. Prices were prices below real
cost. And at the other hand, certain prices, especially those of
consumer goods, heavily weighed up, whilst [burdened] by very high
taxes. You had to have wholesale prices, which came at least near in
a general tendency towards real production costs. And you had to see
how the changes in the price system would relate to performance of
the factories under the given structure of the Soviet economy, how
they would relate to technological change under that given
structure.
It is very interesting to separate here two aspects of the problem. [This is] to say, make a short survey of the effects of these changes in practice, and then look at the theoretical reflection, or the ideological reflection, of these changes in the type of discussions which is going on now among Soviet economists on the theoretical field.
The introduction of the Liberman reforms, [that] is to say, the use of profit as [a] performance indicator for enterprises and the correlation of income, material incentives for managerial personnel, and to a very small extent, also workers, to this profit, started in certain fields of light industry. But it became the tendency [or] became rather pronounced to generalize it in the whole of industry. And this was only delayed by the necessities and the difficulties of the price reform.
[The] price reform, which was finally introduced in the beginning of the second half of the last year of 1967, and we have now the balance sheet of the operation of this reform for the six last months of 1967, and this series of very remarkable lessons can be drawn.
First of all, the goal of the price reform. What was the goal of [the] price reform? There was a big dispute among Soviet economists, whether to try to make [or] reform wholesale prices in such a way that all or nearly all enterprises would become profitable, or whether to have a more modest goal, [that] is to make all industrial branches profitable. And they decided for the second solution and against the first, for obvious reasons, because if they would have taken the first decision, this would have led to such an increase in average prices of goods in the Soviet Union, that any comparison with the world market would have become impossible.
I think that they calculated that they would have to have a coal price, which would be more than three times as much as the price of coal on the world market, so that all their exchanges with the other Eastern European countries, and with the capitalist countries, would become extremely complicated and practically impossible, or at prices unrelated to Soviet prices, and that they would introduce a whole lot of elements of confusion as the result of this.
I must say in passing that even by adapting prices to the goal of having industrial branches become profitable, they had to increase certain prices to such an extent that the distortion with world market prices is very heavy. I think they had to change [the] price of coal to the extent that it is today, 50% over world market price, which creates some difficulty, at least in the transparency of the system when large scale exchanges happen with the Eastern European countries.
Now, they seem to have achieved that goal. That’s what they say, at least in official documents, that for the second semester, six last month of 1967, all industrial branches were profitable. And I just say in passing, this has absolutely no meaning from the point of view of performance, because prices were fixed in such a way that they should be profitable, given the level of operation and of cost structure. But they seem to have reached that goal.
But what they did not succeed, and what is very strange to me, we cannot go into the intriguing, certain complex thought processes of bureaucrats, which sometimes are impenetrable, they fixed a certain absolutely arbitrary figure of 15% profitability. Why? I don’t know. I mean, there is absolutely nothing rational in this figure of 15%. And they tried to achieve this 15% in all industrial branches, and they, of course, didn’t succeed. They found that out very quickly that it was impossible to have this absolute equalization. This must have been some of these perverted notions of introducing capitalist laws of motion of a capitalist economy into the Soviet economy, because Marx speaks about the equalization of the rate of profit under capitalism. They probably think that they have to have something similar in a non-capitalistic economy, which is absolutely irrational and uncalled for.
But they did not succeed. And in actual fact, if I am not mistaken, the profitability of the branches of industry differs as much as from below 10%, from six or 7% for certain branches and 30% for other branches. But there is a certain average. If you come to the large subdivisions of light industry and heavy industry, there is a certain tendency towards making the difference less pronounced than it was in the past, and especially doing away with non-profitable branches of industry. Of course, what they did not do away with are non-profitable enterprises, and some of them they consider as inevitable in new enterprises, enterprises under bad geographical conditions.
(Tape change noted in original source)
At this point, it was necessary to make a tape change. When taping resumed, Mr. Mandel was discussing the economic effects of various technological gaps in Soviet industry. I could give ...
[I could] give many examples for this.
Now, what is the theoretical discussion? What is the ideological discussion? It goes around essentially two very important questions and which are closely interrelated.
One, on a very high level of abstraction, is [the] discussion about the nature of the means of production, whether means of production are commodities, [or] are not commodities. [Also], the nature of a certain number of, let us say, financial technique, technical changes introduced in the financing of the enterprises. Whether you could call the tax which is now levied on fixed investment and on stocks an interest charge or not, whether you could call this part of the social surplus product of society or not.
At that level of abstraction and of sophistication, many people could think these are completely pure theoretical discussions, without any implications as to the practical day-to-day functioning of the system. But once you get away from this highest level of discussion of abstraction, you come to an intermediary level, you see immediately the implications between this type of theoretical discussions, and the type of demands, practical demands, which the Soviet managers are making today, for a change in [the] operation of the system, in their social advantage.
You have the question whether you should have a market for producers’ goods, whether the mass of the producers’ goods, except small, very small tools, should continue to be centrally distributed by allocation. Whether you should have a kind of wholesale market, wholesale firms, which would appear where any firm could try to buy directly machinery, and which would lead inevitably to a certain fluctuation in price for this, for that machinery.
And the second question, which is discussed with the same type of
heat, is whether after this new price reform, prices would remain
stable for a long period, or whether there should be mechanisms built
in into the system for periodic and short period adaptations of the
prices. And whether this should be done centrally, or whether the
factories themselves, or factories regrouped into certain form of
centralized bodies, by industrial branch or by region, or by both
industrial branch and region, should have the right to modify
partially the prices of the goods which they sell.
What this really means, that’s the social significance of these demands is that the Soviet managers are asking for the right to have a certain degree of free disposition over part of the means of production, to have, in reality, a certain transfer of what we could call property rights, de facto property rights, because that’s what it is in the last instance, about from the nation, from the state to the enterprise.
There can be a big theoretical discussion about the implications of this from the point of view of developing a non-capitalist economy. The French Marxist economist Bettelheim has been engaged in a big discussion with myself on this question. I don’t want to go into details of the theoretical substance of this kind of argument.
But what is very clear is that the pressure in that direction is pressure which would involve great structural changes in the Soviet economy, and that it expresses specific social interests. There is not a coincidence, none whatsoever, between pure economic rationality, the demand for using profitability of the individual enterprise, as [the] pure and only indicator of economic performance. There is only an identity between this type of demands and specific social interests.
And I would say that amongst those ideologues of the communist movement in Eastern Europe which I have had the occasion to meet, this is absolutely clearly understood and expressed, often in a very, very cynical way. These people will say, well, our countries have been managed till now by a political apparatus, by political apparatchik, who were very inefficient, very little educated, very little sophisticated. We have to replace them by sophisticated, rational and technologically well educated managers. And in order to do that, we have to pay the price which such managers demand for their services.
In other [words], in other form, what they think is not an
abolition of the system of bureaucratic privileges and bureaucratic
monopoly of power, but what they think is simply a switch from a
political bureaucracy to a more technocratic bureaucracy, a
technocracy, if we can call it like that, which would be capable of
higher economic efficiency.
But which could be, as the examples of several Eastern European countries have shown us, but which could be also very favorable for even higher inequality than you had under Stalin’s and in Stalin’s and Khrushchev’s time in the Soviet Union and other Eastern European countries.
Now, if one would stop at the level where I stopped, where which I
have reached, no one could conclude that I am absolutely hostile to
the economic reforms which have been introduced in the Soviet Union
and in Eastern Europe, and that I judge them completely negatively.
And of course, I would not be the only one to do that. Many other
people have done that. As you know, the Chinese Communist Party
leadership has done so, the Cuban leadership and Fidel Castro has
done so. I can’t say the Soviet Union leadership has done so.
It does so in Czechoslovakia. It is unable to do so in the Soviet
Union because it had introduced all these reforms itself in the
Soviet Union and finds itself there in a very, very difficult
ideological spot.
But to stop here would be to make a double mistake. In the first place, we have to weigh very carefully, even on a purely economic, from a purely economic point of view, the relative importance of overcoming the paralyzing effects of over-centralization of the Stalinist type, which weighed very heavily on the economy of some of these countries. And you have to understand that when we are talking about slowdown of economic growth, we mean not just the shift from eight to 7% or from seven to 6%, which wouldn’t have been a catastrophe, but we mean certain things which were actually near catastrophes in the economies of some of the Eastern European countries and of the Soviet Union.
The Soviet Union for at least one, if not two years, [had] a decline in real income of the producers as the result of the slowdown of economic growth and the changes in the pricing system. And that was one of the causes which brought Khrushchev down. And in Czechoslovakia, you had, for two or three successive years, an absolute decline even of industrial output. And as the result of that, of course, also an absolute decline in real income of the mass of the population.
So in itself, any reform, whatever may be its social connotation, which tries to overcome at least the gravest aspects of this paralysis, or near paralysis, which the Soviet economy had arrived at in the late 1950s, the beginning of the 1960s, it cannot be condemned out of hand.
There some of the extreme critiques, especially the Chinese critique of the Soviet economic reforms, is just not serious, is not irresponsible. It denies that there has been [a] very high degree of inequality under Stalin, that there has been a very definite trend to slowdown of economic growth before Khrushchev and at the end of Khrushchev’s rule. And that means that it denies facts. I mean facts which are absolutely undeniable from any sources whatsoever. May there be Eastern or Western sources, they come to the same conclusion.
So I would say a certain number, not all, but a certain number of
these reforms have to be considered as economically inevitable. A
certain number of decentralization measures are absolutely and highly
necessary in all of these countries. The question of the form of this
decentralization and whether it increases [the] power of technocracy
or the way it leads to the introduction of workers’ councils
and workers’ power in the decentralized bodies. That’s,
of course, another question. That’s a question of political
preferences. And I think you have understood in what direction my
political preferences go from that point of view.
But here we have to stop and say any attempt to judge these economic reforms from a purely technical economic point of view, is in itself insufficient, and I would say largely un-Marxist. You cannot disconnect these economic reforms from the overall operation of the society, from the overall functioning of the society.
And the most important aspect of these reforms, which has been seized by quite some people in the West, but with other with other goals, and with other perspectives, of course, than the socialist perspectives which I defend here, the certain basic aspect of these reforms has to be understood. It is impossible to systematically introduce this type of liberalization, between inverted commas, of the economy without a certain amount of liberalization of the political superstructure.
It is impossible to have an increased decentralized economy, to
have increased research for economic mechanisms, to have an increased
rationalization of certain aspects of planned and economic
administration, and maintain complete suppression of freedom of
criticism, of freedom of scientific research. And when you speak
about criticism and scientific research in the field of the economy,
of economic theory, you very, very quickly come to problems of
Marxist theory in general, of Marxist politics in general, and you
are forced to increase the atmosphere and the potentials of political
freedom in general. And that is, of course, what happened in the
Soviet Union and in Eastern Europe.
And that is why one must be much more circumspect as to the long range effects of these reforms, as much too hasty critics as some of the Chinese and some of the Cuban Critics have been up to now. Even if you consider, which is probably true, that the overall economic effect of these reforms is revisionist, whatever that word may mean, but I’m ready to accept it for its own sake, in such a polemical argument, and right wing, [that] is to say, tend to slow down basic historical processes towards a socialist society, you have to concede that greater freedom of criticism and freedom of analysis and research on theoretical and practical fields sets in motion a political process of differentiation which gives the working class and which gives progressive students and intelligentsia the possibility to accelerate the process of building of a socialist society.
In other words, related to the old over-centralized system of the economy was complete apathy, complete apathy on the political field of the mass of the producers and of the youth. Every Chinese and Cuban criticism on that field of what was the prevailing atmosphere in Eastern Europe and in the Soviet Union eight or seven years ago was absolutely correct. The overwhelming majority of the workers and student population had no political interest. And it had no political interest because it had no freedom of political activity, and it knew that the types of goals which were fixed for it by its political masters were goals unrelated to its own interest.
Once you have a greater atmosphere of freedom which prevails, once
you have a certain political differentiation which prevails, there
are not only people favorable to [the] restoration of capitalism, as
they say in certain countries, which become more active, but you have
also the mass of the workers, of the students and of the
intellectuals, which can become more active. And in this milieu, you
have then quick, rapid political differentiation. Certain tendencies
go to the right, but other tendencies go to the left. And the revival
of self-confidence and self-activity of the workers and the students
is, in my opinion, a much bigger guarantee that capitalist
restoration will not take place than censorship, than police
dictatorship, or than repressive measures of any type whatsoever.
And it is precisely in this ideological and political product, if we can call it like that, of the economic reforms, that I see the most positive result. Let me substantiate this by the example of Yugoslavia.
Yugoslavia was the prototype of the countries where capitalism was abolished, where the experiments in decentralization, in [the] application of material incentives, in [the] reintroduction of [a] market economy, in realignment with the international capitalist economy, went farthest and had undoubtedly its most pronounced negative effects from the point of view of socialist construction of a new socialist society and of socialist consciousness.
But all those who are talking about the inevitable and gradual return [to the] restoration of capitalism in Yugoslavia forgot the other side of the picture. They forgot that in such an atmosphere of greater freedom of criticism and greater freedom of thought, the workers also, and the radical students also, could act more freely than they could do in other countries. And that it is inconceivable that a large working class, which had, after all, made a socialist revolution in its country, where the change of relations of production had not been introduced by a foreign army as they had in most of the other Eastern European countries, but was the result of a native socialist revolution. It was inconceivable that this working class would not start to react and react very strongly on the political and ideological field, against growing social inequality, against [the] return of unemployment and all the other very negative products of the exaggerated decentralization in the last three years.
And this [is] exactly what happened this summer. This summer, we
saw first the Belgrade students and then the workers’
representatives at the National Trade Union Congress in
Czechoslovakia react in an extremely violent and an extremely
conscious, not revisionist and not right wing, but left wing way
against these negative results of the economic reforms and clamor
with great force for greater equality, for the disappearance of
unemployment, for [the] guarantee of full employment, for greater
social security benefits, for increased economic growth, for [the]
reduction of unequal development between different nationalities, and
all other demands which any advanced socialist could conceivably
formulate under these conditions.
We have there a very strange revision of Marxism. If I might use this term, on behalf of those who think that you will have gradual reintroduction of capitalism in Eastern Europe as the result of these economic reforms. You have a strange revision of Marxism on behalf of all these currents, because what they forget is that [the] reintroduction of capitalism, as [well as the] abolition of capitalism, cannot be the result of any automatic economic process, but can only be the result of [the] struggle of social forces, [the] struggle of living social forces. And that you cannot eliminate the working class of these countries as a factor in politics in these countries, that you cannot eliminate this working class from the social forces which will and which are weighing on the evolution of these countries.
[This] gives the whole story about the introduction of restoration
of capitalism a completely different slant and a much more realistic
way of looking at it. And which means, in reality, that restoration
of capitalism on the basis of these economic reforms, is extremely
unlikely, extremely unlikely, as long as you have a growing capacity
of self-expression and self-activity on behalf of the workers and the
progressive students in these countries.
I will perhaps conclude not with the description of an absolute utopia, but with a few words of description of what I consider the ideal model for management of an economy, which is building socialism. Because I should say, [or] should have said it in the beginning, that, in my opinion, you do not have a socialist society, a socialist economy in any of the Eastern European countries, and for that [matter] in any country in the world. The definition which Marx gives of socialist societies, [that] is to say, a society in which different classes, class differences have disappeared, and in which you have no more commodity production, such a society does not exist anywhere in the world.
What you have in Eastern Europe are societies in transition between capitalism and socialism at different levels of transition, where the basic problems of building a socialist society have been only partially solved. What has been solved is the problem of the private ownership of the means of production. What has not yet been solved is the problem of [the] gradual disappearance of economic scarcity, [the] gradual withering away of commodity production and [the] gradual withering away of classes and of the state, which are all more or less correlated social processes.
Now we have several models of administering these societies in transition. We have the Stalinist model at the one extreme. We have the Yugoslav model at the other extreme. And we have between these two extremes a whole series of variations, many, many of them, practically as many as there are countries today, and even more than there are countries, because in the same country, you have had [a] successive number of models applied.
We cannot analyze the relative advantages and disadvantages of all these models, and from the point of view of economic rationalities, and from the point of view of a certain number of socialist priorities, which I consider embedded in socialist theory and in socialist goals. But we can say in general that [neither] over-centralization, which gives [an] absolute monopoly of power to a bureaucracy in the management of the economy and the management of the social surplus product, nor excessive decentralization, which reintroduces large elements of [a] market economy, and as the result of that, growing social inequality and growing alienation into the society, can be considered ideal models.
The ideal solution lies probably somewhere between these two extremes. It lies in the understanding that the goal should be the largest possible application of self-management, producers’, workers’ self-management, at every relevant level of decision making, [that] is to say, not only at plant level, but also at regional and national level.
It lies in [the] abolition of any political monopoly which is in contradiction with this self-management of producers and citizens, [that] is to say, it implies the restoration of political freedoms for the mass of the population, of the producers in the population, the freedom to develop different political tendencies and parties, free access to the press. The idea, which has now been revived by Brezhnev, that socialism equals censorship and that the abolition of censorship equals restoration of capitalism, is one of the biggest discredits which you can give to socialism in the eyes of the inhabitants of this world.
And how anybody can say such monstrosities can only be understood
if you understand the Marxist theory of ideology, [that] is to say,
that what people say does not represent from a certain level on any
rational argument, but only very specific social interests. And what
comrade Brezhnev means when he says that the abolition of censorship
is the restoration of capitalism, is in reality that the abolition of
censorship threatens his rule and the rule of his social group, which
is, of course, absolutely correct, not the rule of the working class,
but the rule of this bureaucracy.
But the conclusion which we have to draw out of that is that an abolition of monopoly of power in the hands of one privileged group is necessary to have real self-management of workers, producers and citizens at the relevant levels of decision making, which is, in my opinion, the Socialist democratic solution of the problem of management of a society in transition between capitalism and socialism.
This implies the maintenance of centralized planning. This implies that you have centralized investment decisions, at least the big decisions, the investments, the big investment decisions must be centralized, but that they should be centralized in a democratic way, [that] is to say, that planning organs should submit different variants of plans to a congress of workers’ councils, which, after free and open discussion with all the necessary publicity, should be then called upon to take a decision in one sense or another.
The tremendous advantage of such a system compared with the capitalist system of the West and the system of the Stalinist bureaucracy in the East is self-evident. In the West, you have capitalists, monopolists, who take economic decisions, and when they make a mistake, millions of workers have to pay for that mistake, either in the form of unemployment or in the form of higher prices and lower income. But they themselves suffer very little. Generally, they suffer not at all. They maintain all their positions of power and privileges.
The same thing is, mutatis mutandis, also true for the leaders or
the members of the Politburo in any of the Eastern European
countries. When they take a decision and the decision is wrong, there
will be millions of people who will pay the price for this wrong
decision, but they themselves will not have neither their power nor
their privileges, at least as a social group, significantly reduced
as the result of that mistake.
In the democratic system of management of a socialized economy, which I tried to describe very quickly, you would at least have that advantage, that tremendous pedagogic advantage, that people take the decisions who also suffer the consequences of these decisions. And that you then have a very powerful built-in brake on too big a number, too large a number of mistakes, and too rapid [a] succession of these mistakes, because people will be very careful before condemning themselves to unemployment, to high prices of consumer goods or any of the other processes which wrong decisions in the distribution of the national income generally entail.
So I think that a system of democratically socialist management, self-management of the economy and the society, is the most democratic system, the most free system and the most educative system which you can today imagine. And that is the reason, of course, why I am in favor of socialism and against capitalism and against the type of bureaucratic management which is today applied in the Soviet Union and the other Eastern European countries.
Last updated on 16 June 2025