Time Will Run Back (2 page)

The industrial disorganization has been less spectacular, or better concealed—at least if we pass over that in the initial phase between 1918 and 1921. But in spite of extravagant claims of unparalleled “economic growth,” Russia’s problems of industrial production have been chronic. Since factory output goals are either laid down in weight or quota by the planners, a knitwear plant recently ordered to produce 80,000 caps and sweaters produced only caps, because they were smaller and cheaper to make. A factory commanded to make lampshades made them all orange, because sticking to one color was quicker and less trouble. Because of the use of tonnage norms, machine builders used eight-inch plates when four-inch plates would easily have done the job. In a chandelier factory, in which the workers were paid bonuses based on the tonnage of chandeliers produced, the chandeliers grew heavier and heavier until they started pulling ceilings down.

The system is marked by conflicting orders and mountains of paperwork. In 1964 a Supreme Soviet Deputy cited the example of the Izhora factory, which received no fewer than 70 different official instructions from nine state committees, four economic councils and two state planning committees—all of them authorized to issue production orders to that plant. The plans for the Novo-Lipetsk steel mill took up 91 volumes comprising 70,000 pages, specifying precisely the location of each nail, lamp and washstand.

Yet in 1964, in Russia’s largest republic alone, deliveries of 257 factories had to be suspended because their goods were not bought. As a result of the consumer’s stiffening standards and an increased inclination to complain, $3 billion worth of unsellable junk accumulated in Soviet inventories.
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Such conditions have led to desperate remedial measures. In the last couple of years, not only from Russia but from the Communist satellite countries, we get reports of massive decentralization programs, of flirtations with market mechanisms, or more flexible pricing based on “actual costs of production” or even on “supply and demand”. Most startling, we hear that “profits” is no longer a dirty word. The eminent Russian economist Liberman has even argued that profit be made the foremost economic test. “The higher the profits,” he has said, “the greater the incentive” to quality and efficiency. And equally if not more miraculous, the Marxian idea that interest represents mere exploitation is being quietly set aside, and in an effort to produce and consume in accordance with real costs, interest (usually at some conventional rate like 5 per cent) is being charged not only on the use of government money by shops and factories, but against the construction costs of plants.

On the surface all this looks indeed revolutionary (or “counterrevolutionary”); and naturally I am tempted to hope that the Communist world is on the verge of imitating the optimistic prediction of my novel and rediscovering and adopting a complete capitalism. But several weighty considerations should warn us against setting our hopes too high, at least for the immediate future.

First, there is the historical record. This is not the first time that the Russian Communists have veered toward capitalism. In 1921, when mass starvation threatened Russia and revolt broke out, Lenin was forced to retreat into his “New Economic Policy”, or NEP, which allowed the peasants to sell their surplus in the open market, made other concessions to private enterprise, and brought a general reversion to an economy based on money and partly on exchange. The NEP was actually far more “capitalistic”, for the most part, than recent reforms. It lasted till 1927. Then a rigidly planned economy was re-imposed for almost forty years. But even within this period, before the recent dramatic change, there were violent zigs and zags of policy. Khrushchev announced major reorganizations no fewer than six times in ten years, veering from decentralization back to recentralization in the vain hope of finding the magic balance.

He failed, as the present Russian imitation of market mechanisms is likely to fail, because the heart of capitalism is private property, particularly private property in the means of production. Without private property, “free” markets, “free” wages, “free” prices are meaningless concepts, and “profits” are artificial. If I am a commissar in charge of an automobile factory, and do not own the money I pay out, and you are a commissar in charge of a steel plant, and do not own the steel you sell or get the money you sell it for, then neither of us really cares about the price of steel except as a bookkeeping fiction. As an automobile commissar I will want the price of the cars I sell to be set high and the price of the steel I buy to be set low so that my own “profit” record will look good or my bonus will be fixed high. As a steel commissar you will want the price of your steel to be fixed high and your cost prices to be fixed low, for the same reason. But with all means of production owned by the state, how can there be anything but artificial competition determining these artificial prices in such “markets”?

In fact, the “price” system in the U. S. S. R. has always been chaotic. The bases on which prices are determined by the planners seem to be both arbitrary and haphazard. Some Western experts have told us (e. g., in 1962) that there were no fewer than five different price levels or price-fixing systems in the Soviet Union, while others were putting the number at nine. But if the Soviet planners are forced to fix prices on some purely arbitrary basis, they cannot know what the real “profits” or losses are of any individual enterprise. Where there is no private ownership of the means of production there can be no true economic calculation.

It is no solution to say that prices can be “based on actual costs of production.” This overlooks that costs of production are themselves prices—the prices of raw materials, the wages of labor, etc. It also overlooks that it is precisely the
differences
between prices and costs of production that are constantly, in a free market regime, redirecting and changing the balance of production as among thousands of different commodities and services. In industries where prices are well above marginal costs of production, there will be a great incentive to increase output, as well as increased means to do it. In industries where prices fall below marginal costs of production, output must shrink. Everywhere supply will keep adjusting itself to demand.

But in a system only half free—that is, in a system in which every factory was free to decide how much to produce of what, but in which the basic prices, wages, rents, and interest rates were fixed or guessed at by the sole ultimate owner and producer of the means of production, the state—a decentralized system could quickly become even more chaotic than a centralized one. If finished products M, N, O, P, etc. are made from raw materials A, B, C, D, etc. in various combinations and proportions, how can the individual producers of the raw materials know how much of each to produce, and at what rate, unless they know how much the producers of finished products plan to produce of the latter, how much raw materials they are going to need, and just
when
they are going to need them? And how can the individual producer of raw material A or of finished product M know how much of it to produce unless he knows how much of that raw material or finished product others in his line are planning to produce, as well as relatively how much ultimate consumers are going to want or demand? In a communistic system, centralized or decentralized, there will always be unbalanced and unmatched production, shortages of this and unusable surpluses of that, duplications, time lags, inefficiency, and appalling waste.

It is only with private property in the means of production that the problem of production becomes solvable. It is only with private property in the means of production that free markets, with consumer freedom of choice and producer freedom of choice, become meaningful and workable. With a private price system and a private profit-seeking system, private actions and decisions determine prices, and prices determine new actions and decisions; and the problem of efficient, balanced, coordinated and synchronized production of the goods and services that consumers really want is solved.

Yet it is precisely private property in the means of production that Communist governments cannot allow. They are aware of this, and that is why all hopes that the Russian Communists and their satellites are about to revert to capitalism are premature. Only a few months ago the Soviet leader Kosygin told Lord Thomson, the British newspaper publisher: “We have never rejected the great role of profits as a mechanism in economic life.... [But] our underlying principle is inviolate. There are no means of production in private hands.”
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The Communist rulers cannot permit private ownership of the means of production not merely because this would mean the surrender of the central principle of their system, but because it would mean the restoration of individual liberty and the end of their despotic power. So I confess that the hope that some day an idealistic Peter Uldanov, miraculously finding himself at the pinnacle of power, will voluntarily restore the right of property, is a dream likely to be fulfilled only in fiction. But it is certainly not altogether idle to hope that, with a growth of economic understanding among their own people, the hands of the Communist dictators may some day be forced, more violently than Lenin’s were when the mutiny at Kronstadt, though suppressed, forced him to adopt the New Economic Policy.

Yet any attempt to decentralize planning while retaining centralized ownership or control is doomed to failure. As a recent writer
⁴
explains it:

“If the state owns or controls the major resources of the economy, to allow for local autonomy in their utilization invites utter chaos. The Soviet planners, then, are caught on the horns of a serious dilemma. They find that their economy is becoming too complex and diverse to control minutely from above; yet they cannot really achieve the tremendous productiveness of a decentralized economy without relinquishing complete ownership or control of the nation’s resources.”

Henry Hazlitt

March, 1966.

PETER ULDANOV had been waiting half an hour. He walked to the window and looked down to the streets thirty stories below, and then his glance wandered higher to the drab buildings opposite, and out over the city, until everything melted into a misty horizon.

It was a picture of unrelieved shabbiness.

So this was Moscow! This was the capital of Won world!

This building itself was new, towering and shiny black. He had caught a moment’s outside glimpse of it when he had entered from the taxi. But from his present point of outlook he could see nothing with the slightest charm or interest, nothing even clean and fresh-looking.

It was Peter’s first day in Moscow since early childhood.

Since the age of eight he had spent his years, isolated with his mother and a handful of servants and instructors, on a small island in the Bermudas. A vivid picture of the white house with its white roof, and of the incredibly blue sea just beyond his garden, now came between him and the sordid actuality below.

Why had his father sent for him? He had not seen him since childhood. He remembered only a dark, towering man from whom he had shrunk in terror.

His father was Dictator of Wonworld, ruler of all the peoples of the earth. The fact would have given Peter himself a tremendous distinction if it had ever been a matter of common knowledge. He took a secret pride in it, overlaid by the hatred and fear which he had caught from his mother. It was a fact, also, that threatened the chief desire of his life—to be let alone, and to work in peace at his music.

What could his father want of him now, after ten long years of silence?

He turned and looked idly at the room in which he stood waiting. The single object on the wall was a large day calendar. Leninsday, April 30, 282 A.M.

A.M
: After Marx. Marx was born, under the old, bourgeois calendar, in 1818. If no change had been made in the calendar it would now be the bourgeois year 2100. It had never occurred to Peter to make the calculation. No one was interested in the old, poisonous capitalist world that had been wiped out more than a century ago.

Stalenin’s private secretary, Sergei, entered at last: “His Supremacy will see you now.” Peter followed through an office which he assumed to be the private secretary’s own, and then into an immense paneled room.

Behind a great desk in the far left-hand corner sat Stalenin, Dictator of Wonworld. It now occurred only as a second thought to Peter that this was his father.

The secretary bowed himself out.

The Dictator stood up, and came forward. He was grayer and more tired-looking than in his pictures, which had not been changed for as long as Peter could remember. But he had the same massive strength. His frame was big; his hair cropped close; his head, shoulders and chest solid and square as if hewn out of granite.

He put his hands on his son’s shoulders, gazing at him appraisingly. Peter was surprised to discover, at this nearness, that his father was no taller than he. Peter himself was a little over six feet, but he now realized that he had unconsciously come to think of his father as being of much more than human dimensions. The enormous posters had no doubt contributed to this impression. It was almost a shock to realize that Stalenin was only another man like himself. Their eyes met on the same level.

Stalenin’s expression, which had been grim, softened a little. “You are handsome,” he said. “Even impressive. That’s good. Important, too.” He looked at Peter again. “They tell me that you are a first-rate pianist and composer. I’m glad to hear it. If a man shows talent even in trivialities, he is apt to show it in important things also.”

Peter flushed. Music a triviality? And how did his father come to know anything about Peter’s music? They had never written to each other. Nor had his mother, up to her death last year, exchanged a single letter with his father since she left him ten years ago. Who had been his father’s informant?