The problem was that Marx had predicted the wrong revolution. He had said that socialism would come, not in backward agricultural Russia, but in the most developed and advanced industrial countries: in England, or Germany, or the United States. Capitalism (he'd argued) created misery, but it also created progress, and the revolution that was going to liberate mankind from misery would only happen once capitalism had contributed all the progress that it could, and all the misery too. At that point, there would be so much money invested by capitalists desperate to keep their profits up, that the infrastructure for producing things would have attained a state of near-perfection. At the same time, the search for higher profits would have driven the wages of the working class down to the point of near-destitution. It would be a world of wonderful machines and ragged humans. When the contradiction became unbearable, the workers would act. They would abolish a social system that was absurdly more savage and unsophisticated than the production lines in the factories. And paradise would very quickly lie within their grasp, because Marx expected that the victorious socialists of the future would be able to pick up the whole completed apparatus of capitalism — all its beautiful machinery — and carry it forward into the new society, still humming still prodigally producing, only doing so now for the benefit of everybody, not for a tiny class of owners. There might be a need for a brief period of decisive government during the transition to the new world of plenty, but the 'dictatorship of the proletariat' Marx imagined was modelled on the 'dictatorships' of ancient Rome, when the republic would now and again draft some respected citizen to give orders in an emergency. The dictatorship of Cincinnatus lasted one day; then, having extracted the Roman army from the mess it was in, he went back to his plough. The dictatorship of the proletariat would presumably last a little longer, perhaps a few years. And of course there would also be an opportunity to improve on the sleek technology inherited from capitalism, now that society as a whole was pulling the levers of the engines of plenty. But it wouldn't take long. There'd be no need to build up productive capacity for the new world. Capitalism had already done that. Very soon, it would no longer be necessary even to share out the rewards of work in proportion to how much work people did. All the 'springs of co-operative wealth' would flow abundantly, and anyone could have anything, or be anything. No wonder that Marx's pictures of the society to come were so rare and so vague: it was going to be an idyll, a rather soft-focus gentlemanly idyll, in which the inherited production lines whirring away in the background allowed the humans in the foreground to play, 'to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind…’
None of this was of the slightest use to the Marxists trying to run the economy of Russia after 1917. The Soviet Union inherited very few whirring production lines. Marxists elsewhere, in the countries where the revolution was supposed to have happened, had settled down over the years since Marx's death as 'Social Democrats', running parliamentary political parties which used the votes of industrial workers to get exactly the kind of social improvements that Marx had said were impossible under capitalism. Social Democrats still dreamed of the socialist future; but here and now they were in the business of securing old-age pensions, unemployment insurance, free medical clinics, and kindergartens equipped with miniature pinewood chairs. Except in Russia, obscure despotic Russia, which had the oddest Social Democrats in the world. With almost no industrial workers to represent, the Bolshevik ('majority) faction of the Russian Social Democratic Party was a tiny, freakish cult, under the thumb of a charismatic minor aristocrat, V.I. Lenin, who had developed a doctrine of the party's, and by extension his own, infallibility. The Bolsheviks had no chance of influencing events, and certainly no chance at getting anywhere near political power, until the First World War turned Russian society upside down. In the chaos and economic collapse following the overthrow of the Tsar by disorganised liberals, they were able to use the discipline of the cult's membership to mount a coup d'etat — and then to finesse themselves into the leadership of all those in Russia who were resisting the armed return of the old regime. Suddenly, a small collection of fanatics and opportunists found themselves running the country that least resembled Marx's description of a place ready for socialist revolution. Not only had capitalist development not reached its climax of perfection and desperation in Russia; it had barely even begun. Russia had fewer railroads, fewer roads and less electricity than any other European power. Its towns were stunted little venues for the gentry to buy riding boots. Most people were illiterate. Within living memory, the large majority of the population had been slaves. Despite this absence of all Marx's preconditions, the Bolsheviks tried anyway to get to paradise by the quick route, abolishing money and seizing food for the cities directly at gunpoint. The only results were to erase the little bit of industrial development that had taken place in Russia just before the First World War, and to create the first of many bouts of mass starvation. It became inescapably clear that, in Russia, socialism was going to have to do what Marx had never expected, and to carry out the task of development he'd seen as belonging strictly to capitalism. Socialism would have to mimic capitalism's ability to run an industrial revolution, to marshal investment, to build modern life. Socialism would have to compete with capitalism at doing the same things as capitalism.
There was in fact an international debate in the 1920s, partly prompted by the Bolsheviks' strange situation, over whether a state-run economy could really find substitutes for all of capitalism's working parts. No, said the Austrian economist Ludwig von Mises, it could not: in particular, it couldn't replace markets, and the market prices that made it possible to tell whether it was advantageous to produce any particular thing. Yes, it could, replied a gradually expanding group of socialist economists. A market was only a mathematical device for allocating goods to the highest bidder, and so a socialist state could easily equip itself with a replica marketplace, reduced entirely to maths. For a long time, the 'market socialists' were judged to have won the argument. The Bolsheviks, however, paid very little attention. Marx had not thought markets were very important — as far as he was concerned market prices just reflected the labour that had gone into products, plus some meaningless statistical fuzz — and the Bolsheviks were mining Marx's analysis of capitalism for hints to follow. They were not assembling an elegant mathematical version of capitalism as described by its twentieth-century theorists. They were building a brutish, pragmatic simulacrum of what Marx and Engels had seen in the boom towns of the mid-nineteenth century, in Manchester when its sky was dark at noon with coal smoke. And they didn't easily do debate, either. In their hands, Marx's temporary Roman-style dictatorship had become permanent rule by the Party itself never to be challenged, never to be questioned. There had been supposed to be a space preserved inside the Party for experiment and policy-making, but the police methods used on the rest of Russian society crept inexorably inward. The space for safe talk shrank with the list of candidates to succeed Lenin as the embodiment of infallibility, till, with Stalin's victory over the last of his rivals, it closed altogether, and the apparatus of votes, committee reports and 'discussion journals' became purely ceremonious, a kind of fetish of a departed civilisation. The only necessary ideas about economics — and the only acceptable ones—were those embodied in the particular programme of crash industrialisation on which Stalin rose to total power.
They were not very complicated, these ideas. Until 1928, the year of Stalin's 'Great Break', the Soviet Union was a mixed economy. Industry was in the hands of the state but tailors' shops and private cafes were still open, and farms still belonged to the peasant families who'd received them when the Bolsheviks broke up the great estates. Investment for industry, therefore, had to come the slow way, by taxing the farmers; meanwhile the farmers' incomes made them dangerously independent, and food prices bounced disconcertingly up and down. Collectivisation saw to all these problems at once. It killed several million more people in the short term, and permanently dislocated the Soviet food supply; but forcing the whole country population into collective farms let the central government set the purchase prices paid for crops, and so let it take as large a surplus for investment as it liked. In effect, all but a fraction of the proceeds of farming became suddenly available for industry. In the same way, nationalising all shops and eating places allowed the state to take direct control of the proportion of the USSR's income that was spent on consumption: and to lower it drastically, in favour of investment again. The diverted funds went to start the production lines going, to feed industries picked out for superfast growth in the new Five-Year Plans. Which industries? The heavy ones, of course; the ones supplying goods like steel and coal and concrete and machine tools, which in turn could be used to bootstrap other industries into existence. Marx had helpfully pointed out that capitalist economies grow fastest when they are producing to expand the production base itself. Stalin took the hint. Managers of plants turning out producer goods' were given dizzily increasing targets for output. If they met them, by whatever means they could contrive, they would be rewarded — and the targets would increase the next year by another leap and a bound. If they failed to meet them, they'd be punished, often by death. When things went wrong, in Stalin's industrial revolution, someone was always to blame.
Between them, these policies created a society that was utterly hierarchical. Metaphysically speaking, Russian workers owned the entire economy, with the Party acting as their proxy. But in practice, from 8.30 a.m. on Monday morning to 6p.m. on Saturday night, when the work week ended, they were expected simply to obey. At the very bottom of the heap came the prisoner-labourers of the Gulag. Stalin appears to have believed that, since according to Marx all value was created by labour, slave labour was a tremendous bargain. You got all that value, all that Arctic nickel mined and timber cut and rail track laid, for no wages, just a little millet soup. Then came the collective farmers, in theory free, effectively returned to the serfdom of their grandfathers, since they weren't issued with the internal passports which they'd have needed ever to leave the kolkhoz. A decisive step above them, in turn, came the swelling army of factory workers, almost all recent escapees or refugees from the land. It was not an easy existence, crowded into squalor in cities built for populations half the size, systematically deprived of consumer goods, exposed to splashing molten metal and unguarded machines that ripped off arms and legs. The spare income workers couldn't spend was raked off through compulsory 'bond purchases' and fed back into even more investment. Discipline at work was enforced through the criminal code. Arrive late three times in a row, and you were a 'saboteur'. Sentence: ten years.
But from the factory workers on up, this was also a society in a state of very high mobility, with fairytale-rapid rises for those who could fill the Soviet state's insatiable hunger for skills. The economy needed whole categories of trained people to spring into existence in the twinkling of an eye: teachers, nurses, doctors, chemists, metallurgists, pharmacists, electricians, telephonists, journalists, architects, designers, book-keepers, aviators, car drivers, truck drivers, locomotive drivers, and engineers, engineers, engineers of every description. Every new factory needed its cadre of managers, every level of the new bureaucracies handling retail and food distribution needed its office staff, every part of the apparatus of control and surveillance needed its white-collar specialists. If you could fill a quota, if you could talk the talk convincingly as laid down in Stalin's Short Course, while negotiating the subtler personal politics of the hierarchy, then a middle-class life beckoned in short order.
Or something grander still, especially once Stalin started purging away all the original Bolsheviks, and opened up every job but his own to the ambitious. You could go to work as a foreman in a textile plant in 1935, and be the commissar for the whole textile industry four years later: that was the fairytale rise of Alexei Nikolaevich Kosygin, for example, who will come into this story later. You could be an ex-coal miner with a gift of the gab and the knack of making Stalin feel unthreatened, and go in two years from semi-literate rural apparatchik to deputy mayor of Moscow. That was the upward ride ofNikita Khrushchev. You could be the mayor of a city at twenty-five, a minister of the state at thirty; and then, if you were unlucky or maladroit, a corpse at thirty-two, or maybe a prisoner in the nickel mines, having slid from the top of the Soviet ladder right back down its longest snake. But mishaps apart, life was pretty good up at the top, with a salary twenty times, thirty times the wages on the shopfloor, as steep a relative reward as the spoils of any capitalist executive. There'd be a car and a cook and a housekeeper, and a fur coat for Mrs Red Plenty to wear when the frost bit. There'd be a dacha in the country, from whose verandah the favoured citizen could survey the new world growing down below.
And it did grow. It was designed to. Market economies, so far as they were 'designed' at all, by their institutions and their laws, were designed to match buyers and sellers. They grew, but only because the sellers might decide, from the eagerness of the buyers, to make a little more of what they were selling, or because the buyers might decide to use what they'd bought to sell something else. Growth wasn't intrinsic. It wasn't in the essence of a market economy that it should always do a little more this year than it had last year. The planned economy, on the other hand, was created to accomplish exactly that. It was explicitly and deliberately a ratchet, designed to effect a one¬way passage from scarcity to plenty by stepping up output each year, every year, year after year. Nothing else mattered: not profit, not the rate of industrial accidents, not the effect of the factories on the land or the air. The planned economy measured its success in terms of the amount of physical things it produced. Money was treated as secondary, merely a tool for accounting. Indeed, there was a philosophical issue involved here, a point on which it was important for Soviet planners to feel that they were keeping faith with Marx, even if in almost every other respect their post-revolutionary world parted company with his. Theirs was a system that generated use-values rather than exchange-values, tangible human benefits rather than the marketplace delusion of value turned independent and imperious. For a society to produce less than it could, because people could not 'afford' the extra production, was ridiculous. By counting actual bags of cement rather than the phantom of cash, the Soviet economy was voting for reality, for the material world as it truly was in itself, rather than for the ideological hallucination. It was holding to the plain truth that more stuff was better than less. Instead of calculating Gross Domestic Product, the sum of all the incomes earned in a country, the USSR calculated Net Material Product, the country's total output of stuff — expressed, for convenience, in roubles.
This made it difficult to compare Soviet growth with growth elsewhere. After the Second World War, when the numbers coming out of the Soviet Union started to become more and more worryingly radiant, it became a major preoccupation of the newly-formed CIA to try to translate the official Soviet figures from NMP to GDP, discounting for propaganda, guessing at suitable weighting for the value of products in the Soviet environment, subtracting items 'double-counted' in the NMP, like the steel that appeared there once as its naked new-forged self, twice when panel-beaten into an automobile. The CIA figures were always lower than the glowing stats from Moscow. Yet they were still worrying enough to cause heart-searching among Western governments, and anxious editorialising in Western newspapers, especially once the launch of Sputnik in October 1957 provided a neat symbol for backward Russia's sudden technological lift-off. For a while, in the late 1950s and early 1960s, people in the West felt the same mesmerised disquiet over Soviet growth that they were going to feel for Japanese growth in the 1970s and 1980s, and for Chinese and Indian growth from the 1990s on. Nor were they just being deceived. Beneath several layers of varnish, the phenomenon was real. Since the fall of the Soviet Union, and the opening of its archives, historians from both Russia and the West have recalculated the Soviet growth record one more time: and even using the most pessimistic of these newest estimates, all lower again than both the Kremlins numbers and the CIA's, the Soviet Union still shows up as growing faster, in the ipsos, than any other country in the world except Japan. Officially, the Soviet economy grew 10.1% a year; according to the CIA, it grew 7% a year; now the estimates range upwards from $% a year. That was still enough to squeak past West Germany, the other growth star of the period, and to cruise past the US average of around 3.3% a year for the decade.
On the strength of this performance — which they probably valued at their own, higher figure — Stalin's successors set about civilising their savage growth machine. The prisoners (or most of them) were released from the labour camps. The collective farmers were allowed to earn incomes visible without a microscope, and eventually given old-age pensions. Workers' wages were raised, and the salaries of the elite were capped, creating a much more egalitarian spread of income. To compensate managers, the stick of terror driving them was discarded too: reporting a bad year's growth now meant only a lousy bonus. The work day shrank to eight hours, the work week to five days. The millions of families squeezed into juddering tsarist tenements, and damp ex-ballrooms subdivided by walls of cardboard, were finally housed in brand-new suburbs. It was clear that another wave of investment was going to be needed, bigger if anything than the one before, to build the next generation of industries. There'd need to be factories soon turning out plastics, and artificial fibres, and equipment for the just-emerging technologies of information: but it all seemed to be affordable, now. The Soviet Union could give its populace some jam today, and reinvest for tomorrow, and pay the weapons bill of a superpower, all at once. The Bolshevik simulation of capitalism had vindicated itself. The Party could even afford to experiment with a little gingerly discussion; a little closely-monitored blowing of the dust off the abandoned mechanisms for talking about aims and objectives, priorities and possibilities, the road already travelled and the way ahead.
And this was fortunate, because as it happened the board of USSR Incorporated was in need of some expert advice. The growth figures were marvellous, amazing, outstanding — but there was something faintly disturbing about them, even in their rosiest versions. For a start, at a point when the plans called for growth to rise faster still, it was in fact slowing from one plan period to the next, not much, but unmistakeably. And then there was a devil in the detail of the amazing growth, if you looked closely. For each extra unit of output it gained, the Soviet Union was far more dependent than other countries on throwing in extra inputs: extra labour, extra raw materials, extra investment. The USSR got 65% of its output growth from extra inputs, compared to the USA's 33% and the frugal 8% achieved by France. This kind of 'extensive' growth (as opposed to the 'intensive' growth of rising productivity) came with built-in limits, and the Soviet economy was already nearing them. There weren't that many more extra Soviet citizens to employ; timber and minerals couldn't be slung into the maw of industry very much faster than they already were; and investment was a problem in itself, even for a government that could choose what money meant. Whisper it quietly, but the capital productivity of the USSR was a disgrace. The Soviet Union already got less return for its investments, in terms of extra output, than any of its capitalist rivals. Between 1950 and 1960, for instance, it had sunk 9.4% of extra capital a year into the economy, to earn only 5.8% a year more actual production. In effect, they were spraying Soviet industry with the money they had so painfully extracted from the populace, and wasting more than a third of it in the process.
Yet somehow this economy had to grow, and go on growing, without a pause. It wasn't just a question of overtaking the Americans. There were still people in the Soviet Union, at the beginning of the 1960s, who believed in Marx's original idyll: and one of them was the First Secretary of the Party, Nikita Sergeyevich Khrushchev. Somehow, the economy had to carry the citizens of the Bolshevik corporation all the way up the steepening slope of growth to the point where the growing blended into indistinguishable plenty, where the work of capitalism and its surrogate were done at last, where history resumed its rightful course; where the hunting started, and the fishing, and the criticising after dinner, and the technology of abundance would purr in the background like a contented cat.