1927’s bad harvest creates a crisis. The 15th Congress of the Communist Party of the Soviet Union held in late 1927 initiated the first Five Year Plan. While under the New Economic Policy, a multi-faceted debate on implementing industrialization had been going on in the Party. Very broadly speaking, two tendencies had developed on how to proceed. One, the so-called ‘genetic approach’ based the plan on existing trends within the largely peasant economy (Rykov, Bukharin, Bazarov, Kondratyev, and initially Stalin); another, the so-called ‘teleological approach’ sought to transform the existing economy through rapid industrialization (Kuibyshev, Strumilin Trotsky–expelled at the Congress, and Krzhizhanovsky). The debate accelerated after the Congress as 1927’s bad harvest created a crisis, which Rykov addresses here. 1928 saw Stalin dramatically switch course and support the ‘teleological’ transformation, including forced collectivization of agriculture. That policy in particular led to the split between Stalin and Bukharin and Rykov. Here, Rykov continues to defend the ‘genetic approach’ and the New Economic Program in March, 1928. Both Rykov and Bukharin would be accused of ‘right deviationism’ and decisively lose power in the struggle that followed.

‘Questions of Soviet Economy’ by A. I. Rykov from International Press Correspondence. Vol. 8 No. 20. March 29, 1928.

We publish below the most important of such parts of the speech delivered by Comrade Rykov at the Plenum of the Moscow Soviet on March 9th, 1928, as refer to economic questions (save for that portion of the speech dealing with the counter-revolutionary economic conspiracy in the Donez Basin, which we published in full in our last issue). Ed.

The Provision of Grain and the Market Position.

To what economic reasons can the difficulties experienced in the provision of grain be attributed? The chief reason was the dearth of goods, which has also on former occasions acted as a serious deterrent to our grain traffic.

It is extremely difficult to establish exactly the extent of the shortage of goods, since the methods of calculation employed for the purpose of ascertaining the extent of supply and demand are unreliable and altogether conditional. According to the computations of certain economic statisticians, the shortage of goods in the last quarter of 1925/26 and for the first quarter of 1926/27 can be put at a value of approximately 200 million roubles. The extent of this shortage again for the last quarter of the previous year and the first quarter of the current year can be estimated approximately at 500 million roubles, or at two and a half times as much as was assumed for the corresponding section of the preceding year.

From July to December last, the peasantry realised rather more than 1,700 million roubles out of the sale of their produce, and for the corresponding section of this year more than 1,900 millions, or about 11 per cent. more. From side occupations, such as constructional work, forestry, and the like, the peasantry increased their income over the preceding year by about 100 million roubles.

On the other hand, the extent of taxes collected from the peasantry has not increased over the preceding year, so that the accretion of income remained at the disposal of the peasants. If we deduct from this revenue the tax and insurance dues and the expenditure for the purchase of non-industrial goods, the increase in the purchasing fund of the rural districts for industrial goods figures at approximately 300 million roubles or 11 per cent.

And what happened in the cities? Here there was a similar process of increase in the effective demand (in connection with the increase of wages and the price reduction) to the amount of about 10 per cent.

And what have we to counter-balance such a big increase in demand both in the urban and in the rural districts? The output of industry receded in the fourth quarter of last year (as a result of the lack of raw materials and of a number of other causes) by 11 per cent, as compared with the first quarter. The output of the first quarter of the current year also proved smaller than all our calculations. Numerically there was an increase in industrial production, but since at the same time a price reduction of 10 per cent. was effected, the volume of industrial products augmented in value (according to retail prices) by no more than 0,4 per cent. over the corresponding period of the preceding year.

This resulted both from causes independent of industry; such as delay in the importation of some raw material or other from abroad (especially as regards wool), and from causes dependent on industry. To the latter may be counted the faulty distribution of raw materials and the introduction in the cotton industry of new and increased standards and assortments, which entailed a delay in output; likewise the organisational deficiencies noticeable in the wool industry etc.

Such were the market conditions accompanying the sale of the crops. The stationariness in the output of the light industries in the face of a vigorous increase in the effective demand of the rural and urban districts, inevitably caused an acute aggravation of the shortage of goods and a weakening of the feeblest links in the traffic of goods between country and town. This weakest link proved to be the grain provision, which receded in comparison with the preceding year, whereas all other products of cultivation were forthcoming in quantities in advance of those of the previous year.

From the beginning of the campaign until January inclusive, the accretion over the preceding year in the provision of goods figured at 70 per cent. as regards hemp, 28 per cent. for small hides, 15 per cent. for large hides, and 58,5 per cent. for oil seeds. In the first few months the provision of flax was fairly satisfactory, though a decline set in as soon as ever the flax producing areas experienced a deterioration in the supply of grain (in December). Subsequently it began to rise again, but at present the position as regards the provision of flax is by no means stable.

The supply of a number of other goods, too, has increased (butter, eggs, etc.). In the first quarter of the current economic year, the supply of butter amounted to 398,000 poods as against 385,000 in the preceding year, while 1,446 waggon loads of eggs were forthcoming instead of 855 waggon loads. In general the provision of all agricultural goods, with the exception of grain, was on a higher level than in the preceding year. And if there were and are instances of delay in the provision of the cities with certain foodstuffs, butter and eggs in particular, this is to be explained by the great increase in the demands of the town population, and by shortcomings in the work of our commercial organisations. According to a report of the Peoples’ Commissary for Trade, the sale of butter in the first quarter of the current year increased from 256,000 to 323,000 poods at Moscow and from 140,000 to 178,000 poods at Leningrad, while the sale of eggs increased by 40 per cent.

The impediments in the provisioning of the towns with these products also result partly from the fact that we have, admittedly, somewhat underestimated the growth of the requirements of the cities in this regard. It is extremely difficult to establish exactly this growth of requirements occasioned by the great changes in progress in the households of workers and employees in the direction of an improved standard of living. The change from the predominant use of black bread to that of white bread, from vegetable to milk butter, ensues with such rapidity in this country, that it is very easy to make mistakes in regard to the calculation of the probable quantities likely to be required for the purpose of satisfying the rapidly growing demand. Mistakes made one year must serve for the guidance of provisions in the next. The improvement in the alimentation of the working population is a tremendous positive factor in the life of our Soviet Union, and naturally the programme of our supply organs, i.e. our entire commercial and co-operative system, must include as a task of prime importance the satisfaction of the ever increasing demands of the working class.

Nor must it be forgotten that we cannot at present fully renounce the exportation of such products as eggs. The total volume of exports had to be restricted on account of the suspension of grain exports. The suspension of grain exports meant the creation of a “gap” in the export scheme, which had to be filled by something or other. Had we fully discarded the exportation of agricultural produce, this would have entailed a restriction in the textile industry.

What has just been said enables us to conclude that there neither was nor is a general crisis in the goods traffic between town and country, save for some delay in the provision of grain, the revenue from the sale of which commodity, however, constitutes barely more than 20 per cent. of the total income of the peasant population. How is it that the lack of industrial goods has found expression most pronouncedly in the provision of grain? It appears to me that one of the reasons is the relation between the prices of the various agricultural goods. As a matter of fact, the price index in the first quarter of the current economic year was as follows: Rye 100,5, wheat 110,7, all cereals 109,4, technical plants on the other hand 140,1, eggs 217,7, meat 172,6, big hides 161,6, small hides 210.

We must now put ourselves in the position of the peasant to understand why, with a view to obtaining money, he does not in the first place sell grain, but those agricultural products which will fetch the highest prices. If the peasant has to pay the agricultural taxes and gets 100.5 for rye according to the index, while he gets 210 for small hides, it is obvious from his standpoint the standpoint of a seller and the only reasonable economic standpoint that it is more to his advantage to sell leather than to sell rye. And wherever he has the choice, the peasant will naturally sell what brings him in most. Seeing, however, that we could not offer the peasant a sufficient quantity of goods, while the level of taxation remained as low as in previous years, he was not sufficiently interested in getting rid of all his produce and sold only what brought him the greatest profit.

But selling grain merely to get paper money in return was not attractive to many. Our currency has undoubtedly been growing stronger and stronger year by year. Nevertheless, the peasantry has not altogether forgotten the experiences of the late war, which showed how a rouble could dwindle into a six copeck piece. The more we spoke of war and the war menace, therefore, the smaller grew the number of those who were inclined to sell grain merely for the sake of having paper money.

If the competitive properties of the cereals has proved smaller in comparison with that of cultural goods, the proportionate value of agricultural in relation to industrial goods has improved over last year. According to calculations by members of the Supreme Economic Council, the difference between the value of industrial and agricultural goods was last year 70 per cent. above what it was in pre-war proportion. This was an outcome of the campaign for reducing industrial prices, which effected diminution of 10 per cent. in the case of the more important goods, and also of a certain appreciation of the prices of agricultural products.

Re the Kulak and the Measures of January 1928. The objective difficulties in the direction of grain provisionment have enabled the richest kulak elements in the villages to exploit the situation for the purpose of speculation and of a fight for higher prices, which has made the supply of grain yet more difficult. Generally speaking, difficulties in procuring grain are also conceivable without the existence of a single kulak in the villages. If we supply no goods to the rural districts and fail to provide a price proportion making the sale of grain profitable, we shall immediately be faced with difficulties in procuring grain, even if there is not a single kulak in the area in question. On the other hand, the nature of all and every goods traffic, whether it be simple or capitalistic, is such as can only be developed on the basis of the sale of a surplus of commodities.

In the present case we are faced with attempts on the part of the wealthiest elements in the villages to exploit these difficulties in the interest of a fight for higher prices, to which end all holders of marketable surpluses of grain are being mobilised. We have observed a number of cases of the purchase of grain by the kulak elements, of the refusal to sell stocks of grain, and of increased agitation for a raising of the grain prices. In our fight for the solution of the grain crisis, therefore, we were obliged in the first place to proceed against those elements which acted as the organisers of the sabotage of grain provisioning and originators of the demand for higher prices.

From this consideration there resulted those well-known methods of procuring grain, which have been the subject of so many communications on the part of the peasants.

Apart from an increase in the price of grain, which would entail a revision of price in general, there is one other conceivable expedient, viz. the importation of grain from abroad. But both of these expedients would, it seems to me, have been far worse than the campaign we have undertaken for a more vigorous provisioning of grain.

This campaign has undoubtedly all the characteristics of what may be termed a forced campaign. If you ask me whether it would not have been better to employ more normal methods instead of having recourse to such a forced campaign, I must openly admit that it certainly would have been better to do so. The fact of the matter was, however, that we had a very limited time at our disposal in which to overcome the crisis in the procuring of grain, which had to be effected by the commencement of the spring season, i.e. in a period of three or four months. It must be admitted that we had wasted time, that we had allowed the beginning of difficulties in procuring grain to pass unnoticed and that we had failed at an earlier moment to undertake a whole series of measures which ought to have been undertaken in the interest of a successful development of our campaign, so that we had a very short time before us in which to solve the highly important and very complicated question of collecting the grain and furnishing the country with grain products.

If we had recourse to a forced campaign, it was because it appeared in the circumstances to be the only and most advisable expedient. In pursuing this campaign we were obliged, as, in the case of every forced campaign, to employ at short intervals a whole series of combined methods of an economic and extra-economic nature. We threw great quantities of goods. into the rural districts, thus depriving the cities of commodities. We altered the tax liabilities of the peasants for the purpose of extracting all surpluses of means, we put through a law in regard to self-taxation, we had recourse to an invigorated campaign against the secret spirit distilleries, we mobilised all the available local Soviet, Party, and village organisations in the interest of grain provisioning, and we transferred a great number of central and local collaborators to the grain producing centres. The Party and Soviet organisations transferred their operations to the grain areas and the whole provisioning apparatus was revised and purged of a number of alien and malignant elements.

All this together formed the contents of that campaign which has been carried on of late and which has led to a complete revolution in grain provisioning.

Among the positive results of this campaign we must count the fact that the question of the grain crisis has been eliminated from the programme. In January we already bought 75 million poods as against 57 million poods in the January of last year and in February 115 million poods as against only 53 millions last year. In March the collection of grain has also proved satisfactory, and in all probability we shall by the end of this month have succeeded in buying up all the grain we had intended to buy up, i.e. 250 million poods. This will practically mean the solution of the problem of eliminating the menace of stoppages in the grain supply of the country.

Another positive result of this campaign lies in the fact that, thanks to the testing (on the basis of the experiences of this campaign) of the activity of all our organisations in the rural districts, including not only the grain-collecting and co-operative, but also the Soviet and Party organisations, a far more rigid adherence to class directives is guaranteed in the activity of these organisations than hitherto. This campaign has practically promoted one of the main principles set up at the 15th Party Congress, in regard to intensifying work among the village poor, strengthening the alliance with the great mass of middle peasants, redoubling our attacks on the kulak class in the villages and restricting their tendencies towards exploitation. In this sense the significance of the grain provisioning campaign far exceeds the limits of a mere elimination of a crisis in the supply of this commodity.

The New Economic Policy and the Regulation of the Traffic in Goods.

We must ask ourselves, however, whether this campaign has engendered other than satisfactory results. Of course, it has. Among its negative results, which have often enough been enumerated in the papers, we have seen attempts to introduce an immediate barter of goods, to force the placing of the peasants’ loan, to organise sequestration detachments, and the like. In short, certain comrades have thought fit in certain cases to revive the methods of war Communism. All such steps are unsatisfactory. and must be most decidedly opposed. The revival of war Communism in the rural districts and in their relation to the towns is impossible, and all talk of such a revival is nonsensical. In its instructions in regard to the grain provisioning campaign, the Central Committee issued the following regulations in this connection:

“All the talk to the effect that we are abolishing the New Economic Policy and introducing a system of requisitioning and the like, is nothing but counter-revolutionary twaddle, which must be most energetically opposed. The New Economic Policy underlies our entire economy and will remain so for a long historical period. The New Economic Policy permits of a traffic in goods and the sufferance of capitalism on the condition that the State retains the right and the possibility of regulating trade from the standpoint of proletarian dictatorship. Without this, the New Economic Policy would be tantamount to a simple restitution of capitalism, which the counter-revolutionary talkers, who jabber about an abolition of the New Economic Policy, will not recognise.”

In spite of the repeated declarations by the Central Committee and the Government and in spite of the articles on this subject in the press, the talk of a restoration of the regime of war-Communism in the rural districts continues. A few days ago I was told by some workers in a certain district of Moscow that letters are still arriving from the rural areas in which the peasants express their misgivings as to a restoration of the system of war-Communism in the villages. I am convinced that in the majority of cases the reasons of such misgivings are to be sought not in omissions and abuses on the part of the local organs of Soviet power, but in the fact that attempts have been made to represent the pressure which has been brought to bear upon the grain speculators and the committal to trial of certain grain-speculating kulaks as a general attack upon the peasantry. The kulaks like to present matters as if not they themselves but the peasantry in general are the object of attack.

In spreading these rumours and in their attempts to convince the other peasants that the attacks directed against the kulaks are a menace to the peasantry in general, the kulaks are naturally actuated by the desire to obtain the support of the broad masses of peasants for their own speculative interests. Such malicious attempts on the part of the kulak elements in the villages, to sow dissension between the working class and the broad masses of the poor and middle peasants, must be counter-acted most energetically. In their policy against the speculators, exploiters, and kulaks in the rural districts, the Soviet Government and the Communist Party have been, are, and will continue to be, guided by principles of reliance on the broad masses of the peasantry and co-operation with the middle peasants.

We have asked ourselves whether in the coming year an organisation of grain provisioning would not be possible on the following lines: The State to establish definite grain prices binding on every one, and to appoint an organ which alone will be authorised to purchase grain in a given district; to this organ the peasants are obliged to sell their grain and will be liable to punishment if they do not sell their grain. Can anything be found in this method which is contrary in any way to the fundamental policy of the Soviets? It would seem to me that such a policy should be theoretically altogether conceivable. In the current year and for the next few years, however, it is unfeasible and therefore not permissible.

Such a system, which does not leave the peasants the possibility of manoevring freely within the limits of the local market, presumes an absolute and unconditional monopoly of the State both in regard to grain provisions and in respect of grain distribution. In the latter regard, however, considerable quantities are already passing through the local markets and circumventing our grain-dealing organisations. The extent of the internal grain turnover which does not pass through the State and co-operative organisations, cannot be accurately established. There can be no doubt, however, but that a considerable proportion of the grain-purchasing peasants, the regions of domestic-industry, the small towns and market-villages are even now frequently supplied immediately by the grain producers or by the mediation of private traders. We are not in a position to establish exactly what and how many peasants have sold directly to dealers or in the grain markets and bazaars, nor vet who purchased their grain of them.

A complete grain monopoly in the hands of the State would shift onto the shoulders of the latter not only the distribution in the cities but also the distribution in all grain-consuming rural districts and among all grain-purchasing classes of the peasantry. To take over such a burden we are at present not in a position, nor is this really necessary. Any such relationship with the rural districts would certainly lead to an estrangement, not only from the kulaks but also from the broader classes of the peasantry.

In the provisioning of grain, the role of the private dealer has continued to decline for several years and has declined quite particularly in the last twelvemonth. As far as our means and powers allow, we must continue to diminish it in the future too. The co-operative and State purchase of grain must increase; year by year the number of those grain consumers must grow who cover their requirements solely from State and co-operative sources. With a view to a successful collection of grain, we must also strive to eliminate that competition between the individual grain-collectors which has so greatly impaired the work of grain-collection in the past few years. We must be more emphatic than ever in maintaining the stability of grain prices on a definite level determined by the State.

But all this has been done and will continue to be done within the limits of the New Economic Policy. We have never understood our New Economic Policy to stand for complete freedom in matters of trade. If bourgeois States have recourse in certain cases to regulating commercial traffic by methods of administration and of the courts, the proletarian dictatorship must do so all the more. In cases of emergency, it is true, we have always resorted to administrative measures, amounting in some instances to judicial condemnations, and this we shall continue to do. This means we employed in the towns against the foreign-exchange jobbers, the speculators in textiles and other goods. This neither was nor is an infringement of the principles of the New Economic Policy and of the traffic in goods. Such methods are also indispensable in dealing with malignant kulak elements in the rural districts.

As the fundamental system of our relations to the rural. districts, the New Economic Policy continues to obtain on the basis of goods traffic, and all such extravagances, abuses, and stupidities as are perpetrated in a number of cases by local functionaries, entailing the spread of malicious rumours as to the liquidation of the New Economic Policy, are both harmful and dangerous. We must wage a bitter and systematic fight against them. The entire peasantry must know that the traffic in goods between town and country is to be maintained just as rigidly as the revolutionary legality in the internal affairs of the rural districts.

Ways towards Strengthening Peasant Economy.

The question presents itself as to how great the role is which is at present played by the socialised elements in agriculture. If we count the collective farms and the Soviet farms together, we have for the year 1926/27 a total of 2.7 per cent. of the entire production; in the current year it may be assumed that their share will have increased to about 3.5 per cent. In the aggregate volume of goods in agriculture, these socialised factors represented about 8 per cent. in 1926/27. In the current year the role played by the Soviet farms and the collective farms together may be expected to figure at approximately 10 per cent. in regard to the goods turnover.

Naturally the process of strengthening agriculture by collective methods is a lengthy one and cannot be effected by any coercive measures. It is just for this reason that we must most energetically take all the necessary steps for the purpose of promoting and accelerating the process of a transference to collective economy. We must keep in mind that we shall be in a position to achieve important successes in this direction, if we develop a systematic, energetic, and persevering activity. It is naturally on the collective farms in particular that the prospects of a development of Socialist elements are the most favourable. Last year already the Government contributed considerable sums towards the support and development of the collective undertakings. In the current year, these contributions have been raised to more than the double, and the attention of the Party and of the Soviets must be concentrated particularly on the solution of the task of consolidating and strengthening the collective movement in economy.

At the close of my remarks on the subject of grain provisions and on questions of our rural policy, I should still like to dwell on one particular factor. The last time we experienced economic difficulties was in 1925. We overcame them thanks to a considerable augmentation of the grain prices, thanks to the revision of all plans of agricultural development, and thanks to restrictions in our investments. The difficulties of the current economic year have been overcome without recourse to any such measures. The crisis in grain provisioning has been eliminated without a revision of our industrial investments and without an augmentation of the grain prices, in short without making any retreat.

The most serious danger ahead of us is the possibility of an insufficient expansion of the area under cultivation. Those rural elements which have suffered most as a result of their attempts to force up the grain prices (i.e. the kulaks), will perhaps desire to restrict the area under cultivation. Together with the middle peasant class and the poor masses in the villages, we must put un such a fight for the expansion of the summer sowing, as will ensure the increase of the area under cultivation. For the summer seed campaign of the current year, the Government has already earmarked considerable funds besides adopting a number of other measures towards attaining the extension of the cultivated area and the increase of the output of cereals.

This year the campaign for the summer sowing will be far more pronouncedly political in character than hitherto. It will consist mainly in a fight against the kulaks. I am in possession of information from several districts to the effect that the kulaks are already refusing to lease ground they have been in the habit of leasing, tilling, and sowing. Also that they are restricting their employment of seed-corn. This tendency has not yet spread very far, but in general the kulaks are agitating for a smaller cultivated area. The sowing campaign must therefore be so carried through that, relying on our alliance with the poor and middle peasant classes and on such material sources as are at the disposal of the State and co-operative organs, we shall be able to carry the day in our fight against the kulaks. The success of our forced campaign in the interest of grain provisioning and of our summer seed campaign will be greatly determined by the fact that the situation in the rural districts has changed considerably from what it was a few years ago. This alteration consists mainly in the fact that the organisations of the village poor have been strengthened, our alliance with the middle peasant class has improved, economy in general has advanced, our Party, co-operative, and other organisations in the rural districts have materially gained in experience, while their significance in the villages and their importance in agricultural production have grown substantially greater than was the case two or three years ago.

International Press Correspondence, widely known as”Inprecorr” was published by the Executive Committee of the Communist International (ECCI) regularly in German and English, occasionally in many other languages, beginning in 1921 and lasting in English until 1938. Inprecorr’s role was to supply translated articles to the English-speaking press of the International from the Comintern’s different sections, as well as news and statements from the ECCI. Many ‘Daily Worker’ and ‘Communist’ articles originated in Inprecorr, and it also published articles by American comrades for use in other countries. It was published at least weekly, and often thrice weekly.

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