V. I. Lenin

Part III: Tenth Congress of the R.C.P.(B.)

Report On The Substitution Of
A Tax In Kind For
The Surplus Grain Appropriation System

March 15

Comrades, the question of substituting a tax for surplus-grain appropriation is primarily and mainly a political question, for it is essentially a question of the attitude of the working class to the peasantry. We are raising it because we must subject the relations of these two main classes, whose struggle or agreement determines the fate of our revolution as a whole, to a new or, I should perhaps say, a more careful and correct re-examination and some revision. There is no need for me to dwell in detail on the reasons for it. You all know very well of course what totality of causes, especially those due to the extreme want arising out of the war, ruin, demobilisation, and the disastrous crop failure—you know about the totality of circumstances that has made the condition of the peasantry especially precarious and critical and was bound to increase its swing from the proletariat to the bourgeoisie.

A word or two on the theoretical significance of, or the theoretical approach to, this issue. There is no doubt that in a country where the overwhelming majority of the population consists of small agricultural producers, a socialist revolution can be carried out only through the implementation of a whole series of special transitional measures which would be superfluous in highly developed capitalist countries where wage-workers in industry and agriculture make up the vast majority. Highly developed capitalist countries have a class of agricultural wage-workers that has taken shape over many decades. Only such a class can socially, economically, and politically support a direct transition to socialism. Only in countries where this class is sufficiently developed is it possible to pass directly from capitalism to socialism, without any special country-wide transitional measures. We have stressed in a good many written works, in all our public utterances, and all our statements in the press, that this is not the case in Russia. for here industrial workers are a minority and petty farmers are the vast majority. In such a country, the socialist revolution can triumph only on two conditions. First, if it is given timely support by a socialist revolution in one or several advanced countries. As you know, we have done very much indeed in comparison with the past to bring about this condition, but far from enough to make it a reality.

The second condition is agreement between the proletariat, which is exercising its dictatorship, that is, holds state power, and the majority of the peasant population. Agreement is a very broad concept which includes a whole series of measures and transitions. I must say at this point that our propaganda and agitation must be open and above-board. We must condemn most resolutely those who regard politics as a series of cheap little tricks, frequently bordering on deception. Their mistakes have to be corrected. You can’t fool a class. We have done very much in the past three years to raise the political consciousness of the masses. They have been learning most from the sharp struggles. In keeping with our world outlook, the revolutionary experience we have accumulated over the decades, and the lessons of our revolution, we must state the issues plainly—the interests of these two classes differ, the small farmer does not want the same thing as the worker.

We know that so long as there is no revolution in other countries, only agreement with the peasantry can save the socialist revolution in Russia. And that is how it must be I stated, frankly, at all meetings and in the entire press. We know that this agreement between the working class and the peasantry is not solid—to put it mildly, without entering the word “mildly” in the minutes—but, speaking plainly it is very much worse. Under no circumstances must we try to hide anything; we must plainly state that the peasantry is dissatisfied with the form of our relations, that it does not want relations of this type and will not continue to live as it has hitherto. This is unquestionable. The peasantry has expressed its will in this respect definitely enough. It is the will of the vast masses of the working population. We must reckon with this, and we are sober enough politicians to say frankly: let us re-examine our policy in regard to the peasantry. The state of affairs that has prevailed so far cannot be continued any longer.

We must say to the peasants: “If you want to turn back, if you want to restore private property and unrestricted trade in their entirety, it will certainly and inevitably mean falling under the rule of the landowners and the capitalists. This has been proved by a number of examples from history and examples of revolutions. The briefest examination of the ABC of communism and political economy will prove that this is inevitable. Let us then look into the matter. Is it or is it not in the interest of the peasantry to part ways with the proletariat only to slip back—and let the country slip back—to the rule of the capitalists and landowners? Consider this, and let us consider it together.”

We believe that if the matter is given proper consideration, the conclusion will be in our favour, in spite of the admittedly deep gulf between the economic interests of the proletariat and the small farmer.

Difficult as our position is in regard to resources, the needs of the middle peasantry must be satisfied. There are far more middle peasants now than before, the antagonisms have been smoothed out, the land has been distributed for use far more equally, the kulak’s position has been undermined and he has been in considerable measure expropriated—in Russia more than in the Ukraine, and less in Siberia. On the whole, however, statistics show quite definitely that there has been a levelling out, an equalisation, in the village, that is, the old sharp division into kulaks and cropless peasants has disappeared. Everything has become more equable, the peasantry in general has acquired the status of the middle peasant.

Can we satisfy this middle peasantry as such, with its economic peculiarities and economic roots? Any Communist who thought the economic basis, the economic roots, of small farming could be reshaped in three years was, of course, a dreamer. We need not conceal the fact that there were a good many such dreamers among us. Nor is there anything particularly bad in this. How could one start a socialist revolution in a country like ours without dreamers? Practice has, of course, shown the tremendous role all kinds of experiments and undertakings can play in the sphere of collective agriculture. But it has also afforded instances of these experiments as such playing a negative role, when people, with the best of intentions and desires, went to the countryside to set up communes but did not know how to run them because they had no experience in collective endeavour. The experience of these collective farms merely provided examples of how not to run farms: the peasants around either laughed or jeered.

You know perfectly well how many cases there have been of this kind. I repeat that this is not surprising, for it will take generations to remould the small farmer, and recast his mentality and habits. The only way to solve this problem of the small farmer—to improve, so to speak, his mentality—is through the material basis, technical equipment, the extensive use of tractors and other farm machinery and electrification on a mass scale. This would remake the small farmer fundamentally and with tremendous speed. If I say this will take generations, it does not mean centuries. But you know perfectly well that to obtain tractors and other machinery and to electrify this vast country is a matter that may take decades in any case. Such is the objective situation.

We must try to satisfy the demands of the peasants who are dissatisfied and disgruntled, and legitimately so, and who cannot be otherwise. We must say to them: “Yes, this cannot go on any longer.” How is the peasant to be satisfied and what does satisfying him mean? Where is the answer’? Naturally it lies in the demands of the peasantry. We know these demands. But we must verify them and examine all that we know of the farmer’s economic demands from the standpoint of economic science. If we go into this, we shall see at once that it will take essentially two things to satisfy the small farmer. The first is a certain freedom of exchange, freedom for the small private proprietor, and the second is the need to obtain commodities and products. What indeed would free exchange amount to if there was nothing to exchange, and freedom of trade, if there was nothing to trade with! It would all remain on paper, and classes cannot be satisfied with scraps of paper, they want the goods. These two conditions must be clearly understood. The second—how to get commodities and whether we shall be able to obtain them—we shall discuss later. It is the first condition—free exchange—that we must deal with now.

What is free exchange? It is unrestricted trade, and that means turning back towards capitalism. Free exchange and freedom of trade mean circulation of commodities between petty proprietors. All of us who have studied at least the elements of Marxism know that this exchange and freedom of trade inevitably lead to a division of commodity producers into owners of capital and owners of labour-power, a division into capitalists and wage-workers, i.e., a revival of capitalist wage-slavery, which does not fall from the sky but springs the world over precisely from the agricultural commodity economy. This we know perfectly well in theory, and anyone in Russia who has observed the small farmer’s life and the conditions under which he farms must have seen this.

How then can the Communist Party recognise freedom to trade and accept it? Does not the proposition contain irreconcilable contradictions? The answer is that the practical solution of the problem naturally presents exceedingly great difficulties. I can foresee, and I know from the talks I have had with some comrades, that the preliminary draft on replacing surplus-grain appropriation by a tax—it has been handed out to you—gives rise to legitimate and inevitable questions, mostly as regards permitting exchange of goods within the framework of local economic turnover. This is set forth at the end of Point 8. What does it mean, what limits are there to this exchange, how is it all to be implemented? Anyone who expects to get the answer at this Congress will be disappointed. We shall find the answer in our legislation; it is our task to lay down the principle to be followed and provide the slogan. Our Party is the government party and the decision the Party Congress passes will be obligatory for the entire Republic: it is now up to us to decide the question in principle. We must do this and inform the peasantry of our decision, for the sowing season is almost at hand. Further we must muster our whole administrative apparatus, all our theoretical forces and all our practical experience, in order to see how it can be done. Can it be done at all, theoretically speaking: can freedom of trade, freedom of capitalist enterprise for the small farmer, be restored to a certain extent without undermining the political power of the proletariat? Can it be done? Yes; it can, for everything hinges on the extent. If we were able to obtain even a small quantity of goods and hold them in the hands of the state—the proletariat exercising political power—and if we could release these goods into circulation, we, as the state, would add economic power to our political power. Release of these goods into circulation would stimulate small farming, which is in a terrible state and cannot develop owing to the grievous war conditions and the economic chaos. The small farmer, so long as he remains small, needs a spur, an incentive that accords with his economic basis, i.e., the individual small farm. Here you cannot avoid local free exchange. If this turnover gives the state, in exchange for manufactured goods, a certain minimum amount of grain to cover urban and industrial requirements, economic circulation will be revived, with state power remaining in the hands of the proletariat and growing stronger. The peasants want to be shown in practice that the worker who controls the mills and factories—industry—is capable of organising exchange with the pcasantry. And, on the other hand, the vastness of our agricultural country with its poor transport system, bonndless expanses, varying climate, diverse farming conditions, etc., makes a certain freedom of exchange between local agriculture and local industry, on a local scale, inevitable. In this respect, we are very much to blame for having gone too far; we overdid the nationalisation of industry and trade, clamping down on local exchange of commodities. Was that a mistake? It certainly was.

In this respect we have made many patent mistakes, and it would be a great crime not to see it, and not to realise that we have failed to keep within bounds, and have not known where to stop. There has, of course, also been the factor of necessity—until now we have been living in the conditions of a savage war that imposed an unprecedented burden on us and left us no choice but to take war-time measures in the economic sphere as well. It was a miracle that the ruined country withstood this war, yet the miracle did not come from heaven, but grew out of the economic interests of the working class and the peasantry, whose mass enthusiasm created the miracle that defeated the landowners and capitalists. But at the same time it is an unquestionable fact that we went further than was theoretically and politically necessary, and this should not be concealed in our agitation and propaganda. We can allow free local exchange to an appreciabIe extent, without destroying, but actually strengthening the political power of the proletariat. How this is to be done, practice will show. I only wish to prove to you that theoretically it is conceivable. The proletariat, wielding state power, can, if it has any reserves at all, put them into circulation and thereby satisfy the middle peasant to a certain extent—on the basis of local economic exchange.

Now a few words about local economic exchange. First of all, the co-operatives. They are now in an extreme state of decline, but we naturally need them as a vehicle of local economic exchange. Our Programme stresses that the co-operatives left over from capitalism are the best distribution network and must be preserved. That is what the Programme says. Have we lived up to this? To a very slight extent, if at all, again partly because we have made mistakes, partly because of the war-time necessity. The co-operatives brought to the fore the more business-like, economically more advanced elements, thereby bringing out the Mensheviks and Socialist-Revolutionaries in the political sphere. This is a law of chemistry—you can’t do anything about it! (Laughter.) The Mensheviks and Socialist-Revolutionaries are people who either consciously or unconsciously work to restore capitalism and help the Yudeniches. This too is a law. We must fight them. And if there is to be a fight, it must be done the military way; we had to defend ourselves, and we did. But do we have to perpetuate the present situation? No, we do not. It would be a mistake to tie our hands in this way. Because of this I submit a resolution on the question of the co-operatives; it is very brief and I shall read it to you:

“Whereas the resolution of the Ninth Congress of the R.C.P. on the co-operatives is based entirely on the principle of surplus-grain appropriation, which is now superseded by a tax in kind, the Tenth Congress of the R.C.P. resolves:

“That the said resolution be rescinded.

“The Congress instructs the Central Committee to draw up and carry out through Party and Soviet channels decisions to improve and develop the structure and activity of the co-operatives in conformity with the Programme of the R.C.P. and with a view to substituting the tax in kind for the surplus-grain appropriation system.”[25]

You will say that this is rather vague. Yes, it is, and should necessarily be so to some extent. Why necessarily? Because if we are to be absolutely definite, we must know exactly what we are going to do over the year ahead. Who knows that? No one.

But the resolution of the Ninth Congress ties our hands by calling for “subordination to the Commissariat for Food”. This is a fine institution, but it would be an obvious political mistake to subordinate the co-operatives to it and to no other, and to tie our hands at a time when we are reviewing our attitude to the small farmers. We must instruct the newly elected Central Committee to elaborate and carry out definite measures and changes, and to check up on every step we take forward or back—to what extent we must act, how to uphold our political interests, how much relaxation there must be to make things easier, how to check up on the results of our experience. Theoretically speaking, in this respect we are facing a number of transitional stages, or transitional measures. One thing is clear: the resolution of the Ninth Congress assumed that we would be advancing in a straight line, but it turned out, as has happened again and again throughout the history of revolutions, that the movement took a zigzag course. To tie one’s hands with such a resolution would be a political mistake. Annulling it, we say that we must be guided by our Programme, which stresses the importance of the co-operative machinery.

As we annul the resolution, we say: work with a view to replacing surplus-grain appropriation by a tax. But when are we to do this? Not before the harvest, that is, in a few months’ time. Will it be done the same way everywhere? In no circumstances. It would be the height of stupidity to apply the same pattern to central Russia, the Ukraine, and Siberia. I propose that this fundamental idea of unrestricted local exchange be formulated as a decision of this Congress.[26] I presume that following this decision the Central Committee will without fail send out a letter within the next few days and will point out—doing it better than I can do here (we shall fnd the best writers to polish up the style)—that there are to be no radical changes, no undue haste, or snap decisions, and that things should be done so as to give maximum satisfaction to the middle peasantry, without damaging the interests of the proletariat. Try one thing and another, study things in practice, through experience, then share your experience with us, and let us know what you have managed to do, and we shall set up a special commission or even several commissions to consider the experience that has been accumulated. I think we should issue a special invitation to Comrade Preobrazhensky, the author of Paper Money in the Epoch of the Proletarian Dictatorship. This is a highly important question, for money circulation is a splendid test of the state of commodity circulation in the country; when it is unsatisfactory, money is not worth the paper it is printed on. In order to proceed on the basis of experience, we must check and recheck the measures we have adopted.

We shall be asked where the goods are to come from, for unrestricted trade requires goods, and the peasants are shrewd people and very good at scoffing. Can we obtain any goods now? Today we can, for our international economic position has greatly improved. We are waging a fight against the international capitalists, who, when they were first confronted by this Republic, called us “brigands and crocodiles” (I was told by an English artiste[27] that she had heard these very words spoken by one of the most influential politicians). Crocodiles are despicable. That was the verdict of international capital. It was the verdict of a class enemy and quite correct from his point of view. However, the correctness of such conclusions has to be verified in practice. If you are world capital—a world power—and you use words like “crocodile” and have all the technical means at your disposal; why not try and shoot it! Capital did shoot—and got the worst of it. It was then that the capitalists, who are forced to reckon with political and economic realities, declared: “We must trade.” This is one of our greatest victories. Let me tell you that we now have two offers of a loan to the amount of nearly one hundred million gold rubles. We have gold, but you can’t sell gold, because you can’t eat it. Everybody has been reduced to a state of impoverishment, currency relations between all the capitalist countries are incredibly chaotic as a result of the war. Moreover, you need a merchant marine to communicate with Europe, and we have none. It is in hostile hands. We have concluded no treaty with France; she considers that we are her debtors and, consequently, that every ship we have is hers. They have a navy and we have none. In these circumstances we have so far been in a position to make use of our gold on a limited and ridiculously insignificant scale. Now we have two offers from capitalist bankers to float a loan of one hundred million. Of course, they will charge us an exorbitant rate of interest. Still it is their first offer of this kind; so far they have said: “I’ll shoot you and take everything for nothing.” Now, being unable to shoot us, they are ready to trade with us. Trade agreements with America and Britain can now be said to be almost in the bag; the same applies to concessions. Yesterday I received another letter from Mr. Vanderlip, who is here and who, besides numerous complaints, sets forth a whole series of plans concerning concessions and a loan. He represents the shrewdest type of fnance capitalist connected with the Western States of the U.S.A., those that are more hostile to Japan. So it is economically possible for us to obtain goods. How we shall manage to do it is another question, but a certain possibility is there.

I repeat, the type of economic relations which on top looks like a bloc with foreign capitalism makes it possible for the proletarian state power to arrange for free exchange with the peasantry below. I know—and I have had occasion to say this before—that this has evoked some sneers. There is a whole intellectual-bureaucratic stratum in Moscow, which is trying to shape “public opinion”. “See what communism has come to!” these people sneer. “It’s like a man on crutches and face all bandaged up—nothing but a picture puzzle.” I have heard enough of gibes of this kind—they are either bureaucratic or just irresponsible. Russia emerged from the war in a state that can most of all be likened to that of a man beaten to within an inch of his life; the beating had gone on for seven years, and it’s a mercy she can hobble about on crutches! That is the situation we are in! To think that we can get out of this state without crutches is to understand nothing! So long as there is no revolution in other countries, it would take us decades to extricate ourselves, and in these circumstances we cannot grudge hundreds of millions’ or even thousands of millions’ worth of our immense wealth, our rich raw material sources, in order to obtain help from the major capitalists. Later we shall recover it all and to spare. The rule of the proletariat cannot be maintained in a country laid waste as no country has ever been before—a country where the vast majority are peasants who are equally ruined—without the help of capital, for which, of course, exorbitant interest will be extorted. This we must understand. Hence, the choice is between economic relations of this type and nothing at all. He who puts the question otherwise understands absolutely nothing in practical economics and is side-stepping the issue by resorting to gibes. We must recognise the fact that the masses are utterly worn-out and exhausted. What can you expect after seven years of war in this country, if the more advanced countries still feel the effects of four years of war?!

In this backward country, the workers, who have made unprecedented sacrifices, and the mass of the peasants are in a state of utter exhaustion after seven years of war. This condition borders on complete loss of working capacity. What is needed now is an economic breathing space. We had hoped to use our gold reserve to obtain some means of production. It would be best of all to make our own machines, but even if we bought them, we would thereby build up our industry. To do this, however, you must have a worker and a peasant who can work; yet in most cases they are in no condition for it, they are exhausted, worn-out. They must be assisted, and contrary to our old Programme the gold reserve must be used for consumer goods. That Programme was theoretically correct, but practically unsound. I shall pass on to you some information I have here from Comrade Lezhava. It shows that several hundred thousand poods of various items of food have already been bought in Lithuania, Finland, and Latvia and are being shipped in with the utmost speed. Today we have learned that a deal has been concluded in London for the purchase of 18,500,000 poods of coal, which we decided to buy in order to revive the industry of Petrograd and the textile industry. If we obtain goods for the peasant, it will, of course, be a violation of the Programme, an irregularity, but we must have a respite, for the people are exhausted to a point where they are not able to work.

I must say a few words about the individual exchange of commodities. When we speak of free exchange, we mean individual exchange of commodities, which in turn means encouraging the kulaks. What are we to do? We must not close our eyes to the fact that the switch from the appropriation of surpluses to the tax will mean more kulaks under the new system. They will appear where they could not appear before. This must not be combated by prohibitive measures but by association under state auspices and by government measures from above. If you can give the peasant machines you will help him grow, and when you provide machines or electric power, tens or hundreds of thousands of small kulaks will be wiped out. Until you can supply all that, you must provide a certain quantity of goods. If you have the goods, you have the power; to preclude, deny or renounce any such possibility means making all exchange unfeasible and not satisfying the middle peasant, who will be impossible to get along with. A greater proportion of peasants in Russia have become middle peasants, and there is no reason to fear exchange on an individual basis. Everyone can give something in exchange to the state: one, his grain surplus; another, his garden produce; a third, his labour. Basically the situation is this: we must satisfy the middle peasantry economically and go over to free exchange; otherwise it will be impossible—economically impossible—in view of the delay in the world revolution, to preserve the rule of the proletariat in Russia. We must clearly realise this and not be afraid to say it. In the draft decision to substitute a tax in kind for the surplus appropriation system (the text has been handed out to you) you will find many discrepancies, even contradictions, and that is why we have added these words at the end: “The Congress, approving in substance [this is a rather loose word covering a great deal of ground] the propositions submitted by the Central Committee to substitute a tax in kind for surplus-grain appropriation, instructs the Central Committee of the Party to co-ordinate these propositions with the utmost dispatch.” We know that they have not been co-ordinated, for we had no time to do so. We did not go into the details. The ways of levying the tax in practice will be worked out in detail and the tax implemented by a law issued by the All-Russia Central Executive Committee and the Council of People’s Commissars. The procedure outlined is this: if you adopt the draft today, it will be given the force of a decision at the very first session of the All-Russia Central Executive Committee, which will not issue a law either, but modified regulations; the Council of People’s Commissars and the Council of Labour and Defence will later make them into a law, and, what is still more important, issue practical instructions. It is important that people in the localities should understand the significance of this and help us.

Why must we replace surplus appropriation by a tax? Surplus appropriation implied confiscation of all surpluses and establishment of a compulsory state monopoly. We could not do otherwise, for our need was extreme. Theoretically speaking, state monopoly is not necessarily the best system from the standpoint of the interests of socialism. A system of taxation and free exchange can be employed as a transitional measure in a peasant country possessing an industry—if this industry is running—and if there is a certain quantity of goods available.

The exchange is an incentive, a spur to the peasant. The proprietor can and will sure]y make an effort in his ovrn interest when he knows that all his surplus produce will not be taken away from him and that he will only have to pay a tax, which should whenever possible be fixed in advance. The basic thing is to give the small farmer an incentive and a spur to till the soil. We must adapt our state economy to the economy of the middle peasant, which we have not managed to remake in three years, and will not be able to remake in another ten.

The state had to face definite responsibilities in the sphere of food. Because of this the appropriation quotas were increased last year. The tax must be smaller. The exact figures have not been defined, nor can they be defined. Popov’s booklet, Grain Production of the Soviet and Federated Republics, gives the exact data issued by our Central Statistical Board and shows why agricultural production has fallen off.

If there is a crop failure, surpluses cannot be collected because there will be none. They would have to be taken out of the peasants’ mouths. If there is a crop, everybody will go moderately hungry and the state will be saved, or it will perish, unless we take from people who do not eat their fill as it is. This is what we must make clear in our propaganda among the peasants. A fair harvest will mean a surplus of up to five hundred million poods. This will cover consumption and yield a certain reserve. The important thing is to give the peasants an economic incentive. The small proprietor must be told: “It is your job as a proprietor to produce, and the state will take a minimum tax.”

My time is nearly up, I must close; I repeat: we cannot issue a law now. The trouble with our resolution is that it is not sufficiently legislative—laws are not written at Party congresses. Hence we propose that the resolution submitted by the C.C. be adopted as a basis and that the C.C. be instructed to co-ordinate the various propositions contained in it. We shall print the text of the resolution and Party officials in the various localities will try to co-ordinate and correct it. It cannot be co-ordinated from beginning to end; this is an insoluble problem, for life is too varied. To find the transitional measures is a very difficult task. If we are unable to do this quickly and directly, we must not lose heart, for we shall win through in the end. No peasant with the slightest glimmer of political consciousness will fail to understand that we, as the government, represent the working class and all those working people with whom the labouring peasants (and they make up nine-tenths of the total) can agree, that any turn back will mean a return to the old, tsarist government. The experience of Kronstadt proves this. There they do not want either the whiteguards or our government—and there is no other—and as a result they find themselves in a situation which speaks best of all in our favour and against any new government.

We are now in a position to come to an agreement with the peasants, and this must be done in practice, skilfully, efficiently, and flexibly. We are familiar with the apparatus of the Commissariat for Food and know that it is one of the best we have. We see that it is better than that of the others and we must preserve it. Administrative machinery, however, must be subordinated to politics. The splendid apparatus of the Commissariat for Food will be useless if we cannot establish proper relations with the peasants, for otherwise this splendid apparatus will be serving Denikin and Kolchak, and not our own class. Since resolute change, flexibility and skilful transition have become politically necessary, the leaders must realise it. A strong apparatus must be suitable for any manoeuvre, but struggle is inevitable when its strength makes it unwieldy and hampers change. All efforts must, therefore, be turned to achieving our aim: the complete subordination of the apparatus to politics. Politics are relations between classes, and that will decide the fate of our Republic. The stronger the apparatus, as an auxiliary, the better and more suitable it is for manoeuvring. If it cannot manoeuvre, it is of no use to us.

I ask you to bear in mind this basic fact—it will take several months to work out the details and interpretations. The chief thing to bear in mind at the moment is that we must let the whole world know, by wireless this very night, of our decision; we must announce that this Congress of the government party is, in the main, replacing the surplus appropriation system by a tax and is giving the small farmer certain incentives to expand his farm and plant more; that by embarking on this course the Congress is correcting the system of relations between the proletariat and the peasantry and expresses its conviction that in this way these relations will be made durable. (Stormy applause.)

Summing-Up Speech On The Tax In Kind

March 15

Comrades, I think I can confine myself to a few fairly brief remarks. First of all, the question of the Siberian food supply workers. Yaroslavsky and Danishevsky have asked me to make the following statement. Drozhzhin has been put on trial to prove that he is not guilty. I can hear sceptical remarks, but at all events it must be said that this course is correct. We hear a lot of scandal and gossip, and this is the proper way of proving them to be false. Then again, a number of food supply workers in Tyumen have been shot for flogging, torture, rape and other crimes. Consequently, in no circumstances can this be connected with food supply work, but should be regarded as criminal outrages calling for harsher penalties than usual, in view of the conditions in which the food supply work is proceeding. From this aspect, therefore, the measures adopted were correct.

I should now like to start by saying a few words about the question of the co-operatives. Comrade Tsyurupa’s report—as we all heard him say here—was not a co-report presenting a point of view opposite to that of the chief rapporteur. The Central Committee’s decision to substitute a tax for the surplus-grain appropriation system was adopted with such obvious unanimity—and what is most important, we saw at once, even before the Congress opened, that various comrades in the localities had arrived at the same conclusions independently of this decision, on the basis of their own practical experience—that it is essentially impossible to doubt that as a measure it is proper and necessary. In his report, Comrade Tsyurupa added a few suggestions and warnings on a number of questions, but he did not propose a different policy.

The only departure from this general line in his report was made on the question of the co-operatives. He opposed my draft resolution, but I’m afraid his arguments do not carry conviction. We can hardly determine just now how relations in local free economic exchange will develop, and how the fund is to be handled—through co-operative societies or the restoration of small private trade. This question must certainly be examined, and in this respect we must make a careful study of local experience; that, of course, is something we all agree upon. I think, however, that the co-operative societies still present certain advantages. In so far as, politically—I have already pointed this out—they serve as centres for the organisation, centralisation and amalgamation of elements politically hostile to us and are in effect pursuing a Kolchak and Denikin po]icy, the co-operatives are only another form of small economy and small trade. Every emergence of the kulaks and the development of petty-bourgeois relations evidently give rise to corresponding political parties, which had been developing in Russia for decades, and with which we are quite familiar. The choice before us is not whether or not to allow these parties to grow—they are inevitably engendered by petty-bourgeois economic relations. The only choice before us, and a limited one at that, is between the forms of concentration and co-ordination of these parties’ activities. It cannot possibly be proved that the co-operatives are worse in this respect. On the contrary, the Communists will have somewhat greater opportunities to exert systematic influence and control over the co-operatives.

The resolution on the co-operatives passed by the Ninth Congress was strongly defended here by Comrade Tsyurupa, and strongly opposed by Comrade Milyutin.

Incidentally, Comrade Tsyurupa said that I had been a witness to the struggle over the question of co-operatives before it was settled by the Congress. I must corroborate this. Indeed, there was a struggle, and the resolution adopted by the Ninth Congress put a stop to it by ensuring greater predominance, or it would be more exact to say complete predominance, for the Food Supply Department. Bnut it would, undoubtedly, be politically wrong, on these grounds, to forego greater freedom of action and freedom of choice of political measures in respect of the co operatives. In my capacity of, say, Chairman of the Council of People’s Commissars, I find it much more unpleasant to have to watch this petty strife, and even bickering, at scores of meetings, than to have the backing of a Congress resolution, which is binding on all and which puts a stop to this struggle. But we must not be swayed by such conveniences, but must look to the interests of a definite economic policy. You have all seen here, and the large number of notes—a great pile of notes—that I have received confirm it even more strikingly, that in this concrete question a vast number of difficulties of detail arise in the course of changing our policy. That is the whole point. And there is no doubt whatever that we shall be unable to solve them at one stroke. If we allow the resolution on the co-operatives adopted by the Ninth Congress to remain in force we shall have our hands tied. We shall put ourselves in a position where, being entirely subordinate to the Congress and bound to pursue its policy, we shall be unable to depart from the letter of this resolution. The resolution repeatedly refers to the surplus-grain appropriation system, but we are substituting a tax for it.

We have no idea how much latitude we shall leave to economic exchange.

That we must allow some is beyond doubt, and we must take account of and verify the economic conditions for it. That is why, of course, if we rescind the resolution of the Ninth Congress we shall be back where the question, which seems to have been closed to some extent, becomes an open one again. This is absolutely inevitable. To evade it would mean basically to prejudice the economic policy relations which we have outlined and which are, undoubtedly, more acceptable to the peasants.

There is evidently no difference of opinion at this Congress, or among Communists in general, as to whether the switch from appropriation to a tax is a more acceptable economic policy for the peasants. And we have a number of statements to this effect from non-Party peasants as well. This has been definitely established, and it alone suggests that we ought to have the change. Let me, therefore, read you the resolution on the co-operatives again:

“Whereas the resolution of the Ninth Congress of the R.C.P. on the co-operatives is based entirely on the principle of surplus-grain appropriation, which is now superseded by a tax in kind, the Tenth Congress of the R.C.P. resolves:

“That the said resolution be rescinded.

“The Congress instructs the Central Committee to draw up and carry out through Party and Soviet channels decisions to improve and develop the structure and activity of the co-operatives in conformity with the Programme of the R.C.P. and with a view to substituting the tax in kind for the surplus-grain appropriation system.”

On behalf of the Central Committee, I shall ask the Congress to adopt the first resolution—the preliminary draft on substituting a tax for the surplus-grain appropriation system—to adopt it as a basis and instruct the Central Committee of the Party to co-ordinate the proposals, make the final draft and submit it to the All-Russia Central Executive Committee; and also the second resolution on the co-operatives.

I now come to the remarks made here. I must say that the questions I have received in writing are so numerous, there is such a heap of them, that not only am I unable to enumerate the subjects they touch upon, but I am compelled to give up the effort to classify them all in a suitable way for discussion here. I regret to say that I am compelled to abandon this task, but I will keep these notes as material for any future discussion of the subject.

Perhaps it will be possible to utilise them in greater detail in the press, or, at all events, to collect and classify them and then compile a detailed and really full summary for the benefit of the comrades economists, executives and political leaders who will be directly engaged in the task of drafting the law substituting the tax for surplus appropriation. At present, I can only select the two main trends and say a few words about the two main objections or remarks about the two main types or groups of questions raised in these notes.

The first deals with technical questions: these are numerous and detailed references to the difficulties and the many problems that will arise in carrying out these measures. I pointed out in my report that this was absolutely inevitable and that it is quite impossible at present to determine at once how we shall proceed to solve these difficulties.

The second deals with general principles of economic policy. Many, I should say most, of the speakers, and these written questions, all pointed to the inevitable increase in the strength of the petty bourgeoisie, the bourgeoisie and capitalism. A number of comrades wrote in their notes: “This is throwing open the door for the development of a bourgeoisie, small industry and capitalist relationships.” In answer to this, comrades, I must say, repeating something of what I said in my report: There is no doubt whatever that the transition from capitalism to socialism is conceivable in different forms, depending upon whether big capitalist or small production relationships predominate in the country. And I must say on this score that criticism was expressed of certain conclusions drawn from my speech on the relation between state capitalism and free small-scale exchange; but no one has criticised my propositions, nor were they criticised in any of the notes I have received (I have read most of them, and they run to several dozen). Direct transition to communism would have been possible if ours was a country with a predominantly—or, say, highly developed—large-scale industry, and a high level of large scale production in agriculture, otherwise the transition to communism is economically impossible. Comrade Milyutin said that we had a harmonious system, and that our laws represented, as he put it, to a certain extent, a harmonious system for such a transition, which, however, did not take account of the necessity of having to make a number of concessions to the petty bourgeoisie. But having said that, Comrade Milyutin drew a different conclusion from mine. The harmonious system that has been created was dictated by war and not by economic requirements, considerations or conditions. There was no other way out in the conditions of the unexampled ruin in which we found ourselves, when after a big war we were obliged to endure a number of civil wars. We must state quite definitely that in pursuing our policy, we may have made mistakes and gone to extremes in a number of cases. But in the war-time conditions then prevailing, the policy was in the main a correct one. We had no alternative but to resort to wholesale and instant monopoly, including the confiscation of all surplus stocks, even without compensation. That was the only way we could tackle the task. That was not a harmonious economic system; it was not a measure called forth by economic conditions, but one largely dictated to us by war conditions. The main economic consideration now is to increase the quantity of products. Our principal productive forces, the peasants and workers, are in such a state of impoverishment, ruin, weariness and exhaustion that for a time we must subordinate everything to this main consideration—increasing the quantity of products at all costs.

Some ask: What connection is there between the substitution of a tax for the surplus-grain appropriation system and the sowing campaign now in progress? In their notes, the comrades strive to expose a number of contradictions. I think that, in the main, there is economic consistency here, and not contradiction. The sowing campaign is based on a number of measures directed towards taking the utmost possible advantage of all economic opportunities to increase the sown area. For this purpose, we must redistribute the seed, store it properly and transport it. But scanty as our seed stocks are, we are unab]e to transport them; very often we are compelled to resort to various forms of mutual aid to reduce the area left unsown to a minimum and to eliminate it altogether, in spite of the appalling shortage of implements. That is out of the question in a number of gubernias. If the non-Party peasants, who in very many cases have themselves demanded the switch to the tax—for it gives them an incentive to develop their farms on the present economic basis—are definitely told by the state authorities before the spring campaign that this measure has been decided upon and will be applied—does that run counter to the general policy of the sowing campaign? No, it does not; it is a measure that introduces an element of encouragement. I know that it will be said that this is a very small element of encouragement. But that is not the point. It would, of course, be something much more real, if we could immediately show the peasants dozens of ships on their way from Britain with goods to be exchanged for the grain they collect in the coming harvest. But it would be ridiculous to attempt to deceive people who have practical knowledge of the state of our commerce. We know that ships loaded with coal and a small quantity of foodstuffs are leaving Britain; we have the information from Comrade Krasin. We know that pending the conclusion of a trade agreement, which has not been signed yet, semi-legal commerce is being carried on with individual merchants whom the bourgeois government cannot, of course, prohibit from trading with us. It is a difficult task to break through the economic blockade, and, of course, we cannot make any great promises. At all events, we are doing all we can, and we are altering the imports plan accordingly.

From the standpoint of the small proprietor, the small farmer, the tax, which is to be smaller than surplus appropriation, will be more definite and will enable him to sow more, and assure him of the opportunity of using his surplus to improve his farm. From his standpoint, it is a policy of rendering the utmost assistance to the industrious farmer, and this is being emphasised in the sowing campaign. In the last analysis, all the objections can be reduced to the following: Who will gain most by this—the petty bourgeoisie, which is economically hostile to communism, or large-scale industry, which is the basis of the transition to socialism and—in the light of the state of the productive forces, that is, the touchstone of social development—is the basis of socialist economic organisation, for it unites the advanced industrial workers, the class which is exercising the dictatorship of the proletariat?

Several speakers tried to prove or draw the economic deduction that the petty bourgeoisie—handicraft commodity production—will undoubtedly gain most; and they urged this particularly on the grounds that as a result of our granting concessions, large-scale industry will cease to be socialist. I think there is fundamental economic error in these arguments. Even if it could be definitely proved that small industry will gain most, relatively, or even, say, absolutely, it would not, either theoretically or practically, disprove the correctness of the steps we are taking. The fact is that there is no other basis for the economic consolidation of our work of building socialism. Let us assume—purely for the sake of example and illustration—that small industry has a value of 100 (100 million work units, or 100 units of any other kind, it makes no difference) and large-scale industry, 200. Let us assume that on a capitalist basis small industry increases to 175, while large-scale industry remains at 200. We are assuming stagnation in large-scale industry and an enormous development of small industry. I think that even this worst assumption that I have made would represent an undoubted gain for us because at present, as this year’s experience has shown, as our fuel and transport conditions indicate, and as the food distribution—which Comrade Milyutin very opportunely reminded us of—is showing, we are barely holding on.

Speakers here have asked, and I have received written questions to the same effect: “How will you retain the workers’ state, if capitalism develops in the rural areas?” This peril—the development of small production and of the petty bourgeoisie in the rural areas—is an extremely serious one.

I now come to concessions. They signify a bloc with capitalism in the advanced countries. We must be clear in our minds about the nature of concessions. They signify an economic alliance, a bloc, a contract with advanced finance capital in the advanced countries, a contract that will give us a slight increase in products, but will also result in an increase in the products of the concessionaires. If we give the latter ore or timber, they will take the lion’s share and leave us a small share. But it is so important for us to increase the quantity of products at our command that even a small share will be an enormous gain for us. Even a slight improvement in the condition of the urban workers, which will be guaranteed in the concessions agreement, and will not present the s]ightest difficulty to foreign capital, will be a gain and will serve to strengthen our large-scale industry. And this, as a result of its economic influence, will serve to improve the condition of the proletariat, the class which is wielding political power.

There is no ground to fear that small-scale agriculture and small industry will grow to dimensions that may prove dangerous for our large-scale industry. There must be certain signs for the rise of industry.

If we have a bad harvest (I have already mentioned Popov’s pamphlet), and our resources are as scanty as they were last year, an abatement of the crisis and development of small industry are out of the question: capitalist relations can be restored only if agricultural industry yields a surplus. That is possible, and this is very important, for it represents a material gain for us. The question of whether small or large-scale production will gain more will be determined by the extent to which we succeed in co-ordinating and combining the utilisation of our funds and the development of the market, which we shall achieve by means of concessions agreements with capitalism; and this will result in an increase in agricultural production for us. The result will depend upon which side makes the best use of these resources. I think that if the working class, which controls the most important branches of large-scale industry, concentrates on the key ones, it will gain more than small industry, even if the latter does have a relatively faster growth. The situation in our textile industry was such that at the end of 1920 there were obvious signs of an improvement, but there was a shortage of fuel. Otherwise we should have obtained about 800 million arshins[Arshin is equal to 28 inches.—Translator] of cloth, and would have had materials of our own manufacture to exchange for farm products.

Owing to the fuel crisis, however, there has been an enormous drop in production. Although we have succeeded in purchasing coal abroad, and ships with this cargo will arrive in a week or two, we have nevertheless lost several weeks or even months.

Every improvement in the state of large-scale production and the possibility of starting some large factories will strengthen the position of the proletariat to such an extent that there will be no need to fear the petty-bourgeois element, even if it is growing. We must not be afraid of the growth of the petty bourgeoisie and small capital. What we must fear is protracted starvation, want and food shortage, which create the danger that the proletariat will be utterly exhausted and will give way to petty-bourgeois vacillation and despair. This is a much more terrible prospect. If output is increased the development of the petty bourgeoisie will not cause great harm, for the increased output will stimulate the development of large-scale industry. Hence, we must encourage small farming. It is our duty to do all we can to encourage small farming. The tax is one of the modest measures to be taken in this direction, but it is a measure that will undoubtedly provide such encouragement, and we certainly ought to adopt it. (Applause.)


[25] Lenin’s draft resolution on the co-operatives was adopted at the fourteenth sitting of the Tenth Party Congress, on March 15, 1921. See K.P.S.S. v rezolutsiakh . . . (The C.P.S.U. in the Resolutions and Decisions of Congresses, Conferences and C.C. Plenary Meetings, Part 1, 1954, p. 564).

[26] The Tenth Congress of the R.C.P.(B.) adopted a resolution “On the Substitution of a Tax in Kind for the Surplus Appropriation System”. See K.P.S.S. v rezolutsiakh . . . (The C.P.S.U. in the Resolutions and Decisions of Congresses, Conferences and C.C. Plenary Meetings, Part 1, 1954, p. 563-64).

[27] Clare Sheridan, an English sculptor, who visited Soviet Russia in 1920.