Imminence of Capitalism in the Soviet Union
22 September, 2011
Imminence of Capitalism in the Soviet Union

Minor examples of capitalist attempts all over the Soviet Union served as a vivid corroboration of the fact that the introduction of real capitalism was imminent in the country. Capitalization became inevitable and major enterprises were sure to take place of sporadic minor workshops. Professor Simon Maskharashvili has more.

GJ – The ruling elite of the Soviet Union was aware of necessity of reforms in the country even before the entrance of Gorbachev who decided to make practical steps and to

put the country on a totally different track of economic and social development. This was certainly a very difficult, painful and complicated process to embark on, wasn’t it?

SM – Introduction of capitalism in the USSR – the flagman of the world socialist system – was probably an extremely complicated and multi-faceted process. Gorbachev must have been very well aware of this presumption. Therefore, a thorough preparation for the process to start and continue made huge sense. For example, a minor experiment was staged in Soviet Georgia in this connection: in the Abasha district of west Georgia, the peasants (they were not yet called farmers) were given in private ownership certain amount of heads of cattle to work with. The result turned out to be very promising. Soon these cattle ‘farmers’ managed to increase the production and their own revenues.  Even the Minor examples of capitalist attempts all over the Soviet Union served as a vivid corroboration of the fact that the introduction of real capitalism was imminent in the country. Capitalization became inevitable and major enterprises were sure to take place of sporadic small workshops. In order to set the country back on feet it became necessary to privatize and expand major enterprises and to let commerce develop accordingly. Even if the overwhelming and immediate transfer to market economy was not possible yet, the gradual introduction of private property, free market economy, economic competition and profit-oriented activity were becoming absolutely inevitable. There definitely was no other way out. Had it been continued in the old socialist way, the Soviet economy would simply have stopped functioning at a certain point in the nearest future. The incentive for working was simply non-existent in the country. And Gorbachev had got it right.

GJ – Before Gorbachev, general secretary Andropov had tried to introduce certain economic reforms in the Soviet Union, hadn’t he?

SM – Yes he had! The discussion of the issue of possible economic collapse in the Soviet Union had started as early as 1983 in the Kremlin when the construction of the Uzhgorod-Urengoy gas pipe-line was crippled. But the Andropov plan to make people work by force and under terror could not justify itself. This is why the discussion of the problem persistently continued in the Soviet government in search of the optimal way to continue living and working. The government was not prepared to admit the full entry of capitalism, but they were compelled to introduce something partial, like the so called ‘khozraschyot’ – cost accounting – a method of the planned running of an economic unit  based on the confrontation of the expenses incurred in production with the production output, on the compensation of expenses with the income. This much they understood.

GJ – Could you please explain the notion of ‘khozraschyot’ in more comprehensible terms?

SM – I will certainly try my best! A factory or any other enterprise would determine the salaries for workers based on the amount of production and the actual realization of the product. This sounded like the first stage of Soviet capitalism. The Soviet leadership wanted to keep the Soviet people living and thinking within the framework of communist ideology and at the same time let the Soviet economy start rolling onto the capitalist track. In a word, they wanted to give the economy the ‘state capitalism’ orientation, which could be described as management of business and productive forces by the state. In this case, the entire money, generated as profit would go to the deep pockets of the communist party elite representatives exactly as it was happening in China.

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