Part 2: Lenin in Double Pack
Part 2: Lenin in Double Pack
The second part of the China series focuses on Lenin’s principle for Chinese socialism: the New Economic Policy.
The debate about socialist development processes is as old as socialism itself:
From Havana’s market reforms in 2021, through Vietnam’s “Doi Moi” (“Renewal Policy”) in 1986, and Yugoslavia’s “socialist market economy” under Tito — various states and socialist regimes have repeatedly employed market mechanisms in building their respective economies, more or less successfully.
The most significant and historically first example of such a recourse to the law of value is Lenin’s “New Economic Policy” (NEP), established by the Bolsheviks after the end of “War Communism” in 1921.
After years of civil war and underdevelopment of productive forces under the Tsar in the previous century, the Bolsheviks found themselves after the revolution in a state plagued by extreme hunger, poverty, and threatened by imperialist aggression.
Lenin was aware that the material principles were not ready to realize socialism directly, because the contradiction between underdeveloped means of production and the advanced socialist mode of production had to be addressed first.
At that time, the Russian economy consisted of a variety of different forms of production and ownership, inherited from the Tsarist Russia, largely characterized by underdeveloped capitalism with semi-feudal and feudal features.
Essentially, it was composed of “small commodity production” (dominated by the peasantry), “patriarchal peasant economy,” “private capitalism,” and “state capitalism,” and in some regions, proto-Soviet socialism.
Production was not even fully in the phase of state capitalism, let alone in relations comparable to those Marx envisioned in Germany, for which he developed scientific socialism.
Lenin was determined that the “proletarian state” should “allow the freedom of action and development of capitalism (…) to a certain extent and (…) under the condition of state regulation (…) of private trade,” despite ongoing class contradictions, to accelerate the development of productive forces.
To create the material conditions for socialism, Lenin took a step back, allowing private capital, re-legalizing profit-oriented work, private ownership in consumer goods production, and “concessionaires” (Lenin’s term for foreign investors), who were to exploit unused resources and thus develop new industrial pathways.
The development of state capitalism was not only tolerated but actively promoted. Veteran experts from the Tsarist era were reactivated and generously compensated to introduce accounting and cost analysis into the newly nationalized industry.
“The transfer of state enterprises to the so-called economic calculation is unavoidable and inseparable from the New Economic Policy.”
Following the “retreat to state capitalism” in the first phase of NEP, the second phase, completed by the end of 1921, saw the further withdrawal of the state from the market; from then on, it took on a purely regulatory role, not very different from that of a modern “social”
market economy.
The NEP significantly improved the supply situation of the newly founded USSR and was able to completely overcome the food crisis within a few years; nevertheless, (as is inherent in) the natural course of the Freimarkt, social contradictions continued to intensify considerably, and many revolutionary proletarians and party cadres were unclear about what this temporary capitalism meant for the new socialist state.
A party cadre of that time summarized the mood of many within the party as follows:
“We young communists grew up believing that money would be a thing of the past once and for all. (…) If money comes back, wouldn’t the rich also return? Were we not on a slippery rope that would lead us back to capitalism?”
The situation was unprecedented: on the one hand, the people held power over the state through the party; on the other hand, this socialist state tolerated the bourgeoisie class—seemingly a contradiction, but a necessary one.
Lenin described the situation as follows:
“In a capitalist society, power and money develop in tandem. Any amount of money can be converted into a precisely defined portion of political power, and the exchange rate is a predictable unit. The Soviet state has interrupted this osmosis of money and power. The party reserves all power for itself, while leaving the money to the NEPman.”
As the first socialist state, the Soviet Communists found themselves in a position where they could not rely solely on the writings of Marx and Engels in many aspects of socialist construction, because the starting point for socialism was now entirely different.
Lenin could not see the end of the NEP (1927), which he did not live to witness. Facing the threat of fascist aggression, the Soviet Union was compelled to adopt centralized methods for building heavy industry.
The “tactical retreat” back to capitalism, as Lenin describes the NEP, remains a groundbreaking piece of Marxist theory (and practice), which prevented the near economic collapse of the young USSR and provided the CPSU with a sufficiently stable foundation for defense against Hitler-Fascism a few years later.
The “Left Radicalism”
Lenin’s NEP, like today’s Chinese path, was controversial among the ultra-left and anarchist currents of the European left of that time.
The disillusionment of many CPSU cadres, especially from Trotsky’s left opposition, upon realizing that a economically underdeveloped country like the USSR in 1920 could not directly realize socialist democracy, led to wavering in the utopian socialist thinking of many socialists and dogmatists of the left opposition.
Similar debates are also observable today among many comrades regarding China’s approach.
The differing economic conditions in Germany, Russia, and China at the respective times of proletarian revolutions shaped how Marx and Engels’ ideas were applied in these countries.
While Germany during Marx and Engels’ time (publication of Capital, 1868) was one of the wealthiest and most economically advanced industrial nations, providing the background for the emergence of Marxist ideas, in Russia and China, during periods of underdevelopment and feudal or colonial servitude, these ideas had to be adapted to the material conditions to achieve socialist goals — precisely in Lenin’s manner: taking a step back to go two steps forward.