Caesar 13 - Soviet Views on Capitalism

8/4/2019 Caesar 13 - Soviet Views on Capitalism

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APPROVED FOR RELEASE .ATE: JUN 2007 '.,.A, 19-b.....

OCI No. 0976/56Copy No./ Ii,'

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SOVIET STAFF STUDY

SOVIETVIEWS ON CAPITALISM(Reference title: CAESAR V-A-56)

Office of Current IntelligenceCENTRAL INTELLIGENCE AGENCY

WARNINGTHIS MATERIAL CONTAINS INFORMATION AFFECTING THENATIONAL DEFENSE OF THE UNITED STATES Wl7!HIN THEMEANING OF THE ESPIONAGE LAWS, TITLE 18, USC, SECS,793 AND 794, THE TRANSMISSION OR REVELATION OFWHICH IN ANY MANNER TO AN UNAUTHORIZED PERSON ISPROHIBITEDBY LAW. 1 .


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S o v i e t S t a f fI ' O f f i c e of C u r r e n t I n t e l l i g e n c e

I Ie . R e f e r e n c e T i t l e : CAESAR V-A-56,

SOVIET STAFF STUDYS o v i e t V i e w s on C a p i t a l i s m ,--

' T h i s s t u d y i s a working paper . I t a t t e m p t s t oi d e n t i f y major t r e n d s i n S o v i e t views on capi ta l i sms i n c e World War 11. I t is c i r c u l a t e d t o a n a l y s t s ofS o v i e t a f f a i r s as a c o n t r i b u t i o n t o c u r r e n t i n te r -p r e t a t i o n of S o v i e t p o l i c y . This p a r t i c u l a r s t u d yi s p a r t of a se r i es prepa red unde r t h e g e n e r a l t i t l e"Projec t CAESAR", des igned t o i n s u r e t h e s y s t e m a t icexamina t ion of i n f o r m a ti o n on t h e l e a d i n g members oft h e S o v i e t h i e r a r c h y , t h e i r p o l i t i c a l a s s o c i a t i o n s ,an d t h e p o l i c i e s w i t h which t h e y have b e e n i d e n t i f i e d .


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T B L E OF CONTENTS

S O V I E T V I E W S O F C A P I T A L I S M

111. The Vmga Heresy and I I tq Aftermath L - - - - - - - - - - 10m e Varga Heresy- - - - - - ..- - - - ..-?e-- - - -The Campaign Against Heresy - - - - - - - - - - - - -Implication8 of the Varga Heresy- - - - - - - - - - -

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e .m. S d e t V i W S Of kpitd.%Sm: 1948-1952- - - - - - - - - - 23The Deformation of Soviet Economic Scholarship/

""he Approachfng US Economic Crisis": Do- vs. Reality 26Stalin's ll&cmomic Problems of Soc i s l imn - - - - -:-- 25

Post-Stalin Soviet V i ew s of C a p i t a l i s m : 1953-1955 - - - - 32Va r g a ' s New Book: Stalinism In Flux (Heresy Re-visited) 32Vh e Approachiag US Fconomic C l ' i s 5 d 1 : A New Twist? - +

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VI.VII.V I I L

Rebdlding the Research Base: The Dilemma of Planned-c h a n g e - - - - - - - - - - - - - - - - - - - - - - - -A P P E N D I C E S

Par t ic ipants a t May 1947 Mscussion of Varga'Structure of the Economics Institute i n 1948- - - - - - -.The Heresiea of t he Varga School: 1945-1947- - - '- - - -Postwar Sessions of Soviet Economists on Capitalism - - -Personnel Changes in Sector on Capitalfst BusinessConditions-Soviet Publications on Capitalism Before and AfterSoviet Use of %stern Sources --- - - - - - - - - - - - -

- - - - - - - - - - - - - - - - I - - - - -the Deluge- - - - - - - - - - - - - - - - - - - --.-Bibllopaphy -- - - - ,.- --- - - - - - .. - - - -

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S O V I E T V I E F V S O F C A P I T A L I S M

CONCLUSIONS/' IC I siHis o r 'cal

changes i n t he c a p i t a l i s t wor ld economy have confrontedS o c i a l i s t s e ve ry wh er e ( R e fo r m is t s, Revis-ts , Marxist-L e n i n i s t s ) wi t h c e r t a i n b a s i c q u e s t i o n s : Can c a p i t a l i s m beregu l a t ed and s t a b i l i z e d ? Can t h e t r a n s i t i o n t o Social ism bep e ac e f ul ? Can t h e c a p i t a l i s t s y s t e m be organized t o preven tw a r ? The d i f f e r en t answers t o t h e s e q u e s t i o n s , b o th beforeand du r i ng t he Sov i e t pe r i od , have provoked b i t t e r con t ro -ve r s i e s and have p l ayed an i m p o r ta n t p a r t i n d et e rm i ni n g PO.-l i t i ca l s t r a t e g y and t a c t i c s . In t h e e a r l y po st wa r p e r i o d t h el ead i ng Sov i e t s t ud en t of cap i t a l i sm , Eugene V arga , and h i sp r o f e s s i o n a l a s s o c i a t e s p r e s e n t e d t h e K re mlin w i t h g e n e r a l l ya f f i r m a t i v e a n s w e r s t o t h e s e b a s i c q u e s t i o n s , e c h o i n g t h ei deas of the e a r l y neo-Marxists , Kautsky and Hi l ferding.t h e i d e a s of Varga and his co l l eagues p robab l y r e f l e c t e dc o n t r o v e r s y , o r a t l e a s t u n c e r t a i n t y , w i t h i n t h e S o v i e tl e a d er s h i p o ve r t h e s t a b i l i t y of t h e c a p i t a l i s t wo rl d and t h echo i ce of t a c t i c s by the regime. Varga * s i n t e r p r e t a t i o n oft he t r e nds i n w orl d cap i t a l i s m would have suppor t ed t he COQ-t i n u a t i o n of t h e t a c t i c s of t h e w a r t i m e c o a l i t i o n , by p l a c i n gmore r e l i a n c e upon t h e t r a d i t i o n a l i n s t r u m e n t s of diplomacyand e x p l o i t i n g t h e n a t i o n a l i n t e r e s t s of t he c a p i t a l i s tpowers ra th er than upon t h e s u b v e r s i v e a c t i o n s of f o r e i g nCommunist part ies and the "cold war" t a c t i c s of expansionismand r evo l u t i on . The Varga c o n tr o v e r s y i l l u s t r a t e d t h e e x i s t -e n c e o f d ee p s t r a i n s and f i s s u r e s b e ne a th t h e m o n o li t h i cfacade of S o v i e t t o t a l i t a r i a n i s m .

The co nt ro ve rs y .duri ng 1947-1948 which w a s provoked by

A lt hough eve n t s i n t he form of t he un i t ed Wes t e rn r eac t i ont o So vi et power and t he worsening of East-West r e l a t i o n s l edt o t h e d e f e a t o f Varga and h i s h i gh - l eve l backers , t he van-qui shed r a i s e d q u e s t i o n s ab o u t t h e e co nom ic s t a b i l i t y a ndp o l i t i c a l u ni t y of t h e West t h a t ha ve c o n ti n ue d t o p l ag u e t h eS o v i e t l e a d e r s h i p u p t o t h e p r e s e n t t i m e . Varga's d e f i a n tc h a l l e n g e t o the Kremlin on t he v a l i d i t y of L e n i n ' s t h e s i st h a t t he c a p i t a l i s t powers would f i g h t among t hem sel ves i n s t e adof u n i t i n g a g a i n s t t h e USSR c a r r i e d s uc h a u t h o r i t y t h a t i t w a s

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l e f t t o S t a l i n allone among the Soviet leaders t o answer Varga.S t a l i n ' s o f f i c i a l reply i n 1952 was d e s i g n e d t o a l l a y fearsa b o ut t h e d e s t r u c t i v e i m p l i c a t i o n s of modern warfare anddoubt sabout the d a n g e r o w c o u r s e of postwar S o v i e t p o l i c y. The bankquptsy of Sta l i an 's o r tho dox answer w a s c l e a r l y i l l u s -t r a t e d by' Malenkov*s s t a t em ent in 1954 a b o u t t h e " d e s t r u c t i o nof c i v i l i z a t i o n " and b y s u b s eq u e n t r e v i s i o n s of S o v i e t doc-t r i n e i n t h i s f i e l d .

A f t e r 1949 S t a l i n almost c e r t a i n l y n ev er s e r i o u s l y be-l i e v e d i n t h e imminen ce of a major c a p i t a l i s t d e pr es si on .A f t e r 1951 the inm-eashg propaganda emphasis on t h e r v d i s -u n i t y " theme (d i sun i t y be t w een the governments of t h e majorc a p i t a l i s t ~ Q W @ ~ S ) nd -tbe signs of a wa ke ni ng S o v i e t i n t e r e s tin f o r e i g n t r ade i n d i c a t e d t h e beg i nn i ng of a new phase i nS o v i e t t a c t i c s a r i s i n g from S o v i e t r e c o g n i t i o n of the armedp ow er , e c on om ic s t r e n g t h , a nd p o l i t i c a l c o h e si o n o f the West-ern c o a l i t i o n l e d by t h e US, A lt ho ug h S t a l i n r e c o g n i z e d t h er e a l i t i e s of c a p i t a l i s t s t a b i l i z a t i o n , he r e f u s e d t o a c c e p ti t s pe rm anency . S t a l i n9s c a l l to fo re i g n Communist p a r t i e st o p l ay up "democistic r ight s" a nd " n a t io n a l i n t e r e s t s " andhis c o n c e n t r a t i o n on problems of t h e world m a r k e t i n d i c a t e dthe d i r e c t i o n of S ov ie t e f f o r t s t o d e s t r o y t h e W e s t e r n c o a l i -tion,StnlinOs campaign to im pose i de o l og i c a l con fo rm i ty onS o v i e t i n t e l l e c t u a l s al mo s t d e s tr o y ed t h e research / i n t e l l i -gence base of S o v i e t a n a l y s i s of fo re i g n economi c t r ends .N o t h i n g s e r i o u s was pub l i shed in t h e USSR a f t e r t h e V mga

c o n t r o v e r s y p only s t r a i g h t p ro pa ga nd a. In view of the ex-tremei n g w i t h in Soviet s o c i e t y under Stalin, i t i s highly doubt - -fuP that S o v ie t f o r e i g n ~ C Q H ~ O F ~ ~ Cn t e l l i g e n c e a n a l y s e s c o ul dhave differed i n n any significant way from t h e p u b l i s h e d writ-ings of p r o f e s s i o n a l e c on o mi st s . Heace, i t is ex t r em e l y un-l i k e l y t h a t S t al i m c o ul d have g o t t e n an a c c u r a t e 0 b J e c t iv aa p p r a i s a l of fo re i g n econom ic trends e ve n i f h e had r e a l l yd e s i r e d one. The damage $0 psofessioaa~ c t i v i t y under S t a l i nhas remained a t roublesome legacy of h i s s u c c e s s o r s .

p o l i t i c a l p r e s s u r e s an d i d e o l o g i q a l c om pu ls io ns operat-

The Current S S f t ~ a t i ~ nThe center of c u r r e n t S o v ie t i n t e r e s t i n c a p i t a l i s m i s

t h e q u e s t i o n of the e f f e c t s .of r ea rm am en t on t h e c a p i t a l i s teconomy, espec ia l ly the US economy. The p r e s e n t S o v i e tl e a d e r s h i p a p p e ar s s t i l l to a d h e r e t o t h e l o ng - he ld b e l i e ft h a t only r e a n ament prevented the o u t b r e a k of major depres-s i o n s i n the U n it e d S t a t e s i n 1 94 5 a nd 1949. P rofess iona l


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w r i t i n g s s i n c e S t a l i n ' s d ea th c l e a r l y r e f l e c t Sov i e t r ecog -n i t i o n o f t h e b e n e f i c i a l e co no mic e f f e c t s of rearmament ont h e US econom y , pa r t i cu l a r l y as t h e p r i m ary s t i m u l us t om odern i za t ion and c a p i t a l expans i on. The w r i t i ng s o f t hel e a d i n g J o v i e t e co no mi st s i n d i c a t e h i g h r e g a r d f o r t h ec a p a b i l l t i e s of t h e US economy and provide no bas i s w ha t so -e v e r for t h e v ie w t h a t t h e US w i l l spend i t s e l f i n t o u l t i m a t eeconomic co l l apse .' the post-Stalin l e ad er sh ip ha s been demanding from i t seconomic s p e c i a l i s t s on c a p i t a l i s m p r e c i s e , q u a n t i t a t i v eanswers on th e economic impl i ca t ions of a h i g h l e v e l o fc a p i t a l i s t arms p r o d u c t i o n , i n s t e a d of the academic prop-aganda t h a t p as se d f o r r e s e a r c h h d e r S t a l i n . I n t h e ab-s e n c e of s uc h s c h o l a r l y s t u d i e s , t h e c u r r e n t view of Sov i e ts p e c i a l i s t s on c a p i t al i s m a pp e ar s t o have posed a c e n t r a lproblem f o r So v ie t diplomacy: how t o f o r c e a r e d u c t io n i nWestern arms' p r o d u c t i o n ( l e a d i n g t o a n t i c i p a t e d a d v e r s e co n-s e qu e nc e s on t h e c a p i t a l i s t ec on om ie s) w i th o u t s a c r i f i c i n gv i t a l S o vi et i n t e r e s t s .

There i s very f r a g i l e e v i d e n c e t h a t the p r e s e n t Soviet"c o l l e c t i ve l eade r sh i p " may no t be unanimous in t h e b e l i e ft h a t a US d e p r e s s i o n l e a f i g t o a w o r l d economic cr i s i s isimminent . Whatever th e d i f f e r en ce s wi th in th e Kreml in overt h e economic s t a b i l i t y of t h e c a p i t a l i s t wor ld , t h e k r p o l i c yi m p l i c a t i o n s u nd er c o n d i t i o n s of con t i nued atomic stalemateu s e of po l i t i ca l and economic power t o s t r e n g t h e n t h e S o v i e ts t a t e , d e s t r o y t h e Western co a l i t i o n , and remove Western in-f l u enc e i n t he uncom mi tted U e a s ,of the, East-West s t r u g g l e ,The prevent ion o r outbreak of a major economic cr is is in t h e

would appear t o l e a d t o t he same p r a c t i c a l c o nc l us io n : the

West would no t on ly a f f e c t t h e wor ld ba l ance of power buta l s o c o n d i t i o n t h e c h o i c e of t a c t i c s by the Kremlin. Signsof economic weakness i n th e West c o u l d l e a d t o a major mPs-c a l c u l i t i o n i n S o vi et t ac t i c s , as w e l l as t o h i g h- l ev e l d i f -f e r e n c e s o v er t h e t a c t i c s t o be pursued . Cont inued un i ty ,s t a b i l i t y , and s t r en g th i n t he West might be a s o u r c e ofcon t r ove r sy w i t h i n t he S ov i e t l e ad e r s h i p , now and in t h efu t u re , and poss i b l y even o f changes i n i t s composi t ion andp o l i c i e s .T h e r e c e n t p r e d i c t i o n b y a So vi et economist , who i s be-

l i e v e d t o h av e c o n t a c t s wi t h i n f l u e n t i a l e l em e nt s in t h eh i e r a r c h y , of a d e p re s s io n i n t h e US " i n t h e n e x t few months"r e p r e s e n t s t h e most c l e a r - c u t S o v i e t p r e d i c t i o n of r e c e n tt i m e s . I t i s c l e a r l y premised upon an an t i c ipa t ion of ad e c li n e i n f u t u r e US d e f e n s e o u t l a y s and a b e l i e f t h a t t h e


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i n t e r n a t i o n a l market w i l l i n t h e f u t u r e become t h e c r i t i c a la rena de t e rm i n i ng t h e devel opment of t he a n t i c i p a t ed w or ldeconomic cr i s i s . I t i s p o s s i b l e t h a t r e c e n t S o v i e t t a c t i c sof pedd l i ng d i sc on t en t i n t he uncom mit ted areas of t h e Nearand Middle E a s t may be p r e d i c a t e d i n p a r t o n a n a ss u mp ti o nof an . i'mminent dep res sio n hth eU Sl ea di ng t o a world economicc r i s i s . Element s wi th in t h e S o v i e t l e a d e r s h i p may c a l c u l a t et h a t i n s u c h a n e v e n t e le c t i o n -y e a r p o l i t i c s , economic na-t i o n a l i s m , a nd e a r l y N e w Deal preceden t s m i gh t l ead t h e USt o r educe i t s ' Commitments abroad , t h u s l e a v i n g t h e USSR witha f r ee r hand.economy-has been made a t t h e expense o f i de o l og i c a l o rt hodoxy ,bo t h be f o re , du r i ng , and a f t e r S t a l i n ' s l i f e t i m e . Si nceS t a l i n ' s dea t h some Sov i e t econom i s t s, l e d by Varga, havea dv an ce d c e r t a i n h e r e i c a l p r o p o s i t i o n s on c a p i t a l i s m , andd e s p i t e p r o f e s s io n a l c r i t i c i sm these men have not backeddown, no r have t hey been s i l en ce d ye t o f f i c i a l l y . The pos t -S t a l i n regime a p p e a r s t o be a t t em p t i ng t o e s c a p e t h e dilemmaposed by t he c o n f l i c t be tw een i de o l o g i ca l o r t hodoxy and crea-t i v e a c t i v i t y by t o l e r a t i n g r ea s on a bl e h e r e s i e s i n t h e hopeof o b t a i n i n g a c c u r a t e est imates of f or e i gn economic t re nds .Continued economic s t a b i l i t y in t h e West has been , i s now,and w i l l con t i nue t o be bo t h a headache for t h e regime anda r e cu r r en t sou r ce o f he re sy among Sov i e t p ro fe s s i o na l s .T o l e r a t i o n o f s u c h h e r e s y , w h i l e i t w i l l almost c e r t a i n l y 0l e a d t o marked im provem en ts i n p ro f e s s i on a l a c t i v i t y , cou l dover th e long run undermine t h e e t ho s imposed over S ovi e ts o c i e t y a nd ev en d eb as e t h e i d e o m a l a pp e al of Communismt o d i s a f f e c t e d fo r e i gn i n t e l l e c t u a l s . .Over t h e l o n g - r u n ,t h e i n t e l l e c t u a l c r i s i s o f S o v i e t M a r x i s m may be r e s o l v e dby t h e o f f i c i a l a cc e pt an c e of c u r r e n t h e r e s i es as estab-l i s h e d or hodoxy.

E ver y s e r i o u s p r o f e s s i o n a l a n a l y s i s of t h e c a p i t a l i s t

D ev elo pm en ts i n t h e f i e l d of Sov i e t economi c r e s ea rc hon c a p i t a l i s m i n t h e po st wa r p e r i o d d e m o n s tr a t e t h e a d v e r s ee f f e c t s o f i d e o l o g i c a l c o n fo r m it y and e x c e s s i v e s e c r e c y onS o v i e t p r o f e s s io n a l a c t i v i t y . I f e v e n t s i n t h i s f i e l d areviewed, as w e b e l i e v e t h ey s h o u l d b e , as a microcosm of thel a r g e r a r e n a of S o v i e t p r o f e s s i o n a l l i f e , t h e n t h e y s u g g e s tt h a t t h e i n t e r p l a y of modern t o t a l i t a r i a n and t r a d i t i o n a lByzant ine in f luences d id immeasurab le harm t o a l l f i e l d s ofpostwar S o v ie t s c i e n t i f i c a c t i v i t y . The s i g n i f i c a n t , s p ec -t a c u l a r a dv an ce s of S o v ie t s c i e n c e i n t h e m i l i t a r i l y - a r i e n t e df i e l d s were probably ach ieved a t g r e a t e xp en se in terms of

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t o t a l res our ces . The present regime's heavy emphasis onr a i s i n g o v e r -a l l p r o d u c t iv i ty and c r e a t in g a more favorableatmosphere for p r o f e s s i o n a l a c t i v i t y i n a l l f i e l d s probabl yi n di c at e s, t h a t i t . c a n no l on ge r s u s t a i n su ch i n e f f i c i e n t useof i t s q.atura1 and human r e so u r c e s .. ,

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SOVIET VIEWS OF CAPITALISM

I . FOREWORDThe 'purpose of t h e p i e s e n t s t u d y i s t o examine t h e ele-ments of con t i nu i t y and change and t h e i n d i c a t i o n s of uncer-t a i n t y and c o n f l i c t i n po st wa r S o v i e t vi ew s of capi ta l i sm,and t o at tempt t o d e te r mi n e t h e i m p l i ca t i on s of t hose v iewson S o v i e t p o l i a i e s . As a major component of t h e o v e r - a l lS o v i e t appra i sa l of t h e i n t e r n a t i o n a l s i t u a t i o n , t h e Sov i e tviews of c a p i t a l i s t economic developments undoubtedly p l a yan im p o r t a n t r o l e i n t h e d e c i s i o n s t h a t determine Sovie tp o l i c i e s a t home and abroad. What i s t h e economic s t r e n g t hand s t a b i l i t y of t h e c a p i t a l i s t world? W i l l th e c a p i t a l i s tworld be able t o a v o i d d e p re s s io n ? W i l l it a t te m pt t o escapedep res s i on by r e s o r t i n g t o war? W i l l such wars break o u tw i t h i n t h e c a p i t a l i s t world or w i l l t h e y be d i r e c t e d a g a i n s tt h e So vi et Union? The answers t o these a n d s i m i l i a rques t i ons abou t t h e c a p i t a l i s t world have been a major con-c e r n for t h e S o v i e t leaders and a major t a rge t f o r S o v ie te x p e r t s s i n c e World War 11.I n a r r i v i n g a t t h e i r estimates of t h e i n t y r n a t i o n a l s i t u a -t i o n t h e S o v i e t leaders, by v i r t u e of t h e immense importancet h e y a t t a c h to t h e economic aspec t s of Marx i s t doc t r i ne , havea l w a y s p a i d c o n s i d e r a b l e a t t e n t i o n t o f o r e i g n e conomic d ev el op -m en ts . S t e ad fa s t l y adhe r i ng to t h e basic Marx i s t t ene t t h a tcap i ta l i sm faces in e v i t a b le doom, So vie t spokesmen have re -

p e a t e d l y p r e d i c t e d t h a t t h e c a p i t a l i s t world i s approachinga major economic depression, w i t h d i sa q t r ous consequencesf o r i t s p o l i t i c a l u n i t y a nd powek p o s i t i o n r e l a t i v e t o t h eCommunist worl d. I n t h e face of such prospects Moscow hasobv i ous l y kep t a watchful eye on foreign economic develop-m ent s, eve r s ea rch i ng f o r symptoms i n d i c a t i n g t h e t iming ,i n t e n s i t y , and d u r a t i o n of t h e a n t i c i p a t e d c r i s i s .The t ask of a s c e r t a i n i n g t h e v i e w s o f t h e S o v i e t leader-ship on c a p i t a l i s t economic developments i s con f ron t ed byf or mi da bl e d i f f i c u l t i e s , n o t t h e l e a s t of which are t h e m0no-l i t h i c u n if o r mi t y and p r o p a g a n d is t i c character of S o v i e t pro-nouncements. How can one be c e r t a i n t h a t t h e a l l e ga t i on sof Sovie t spokesmen neseasar i ly re f l ec t t h e a c t u a l t h i n k i n g

of t h e l e a d e r s h i p ? A lt ho ug h no d e f i n i t i v e s o l u t i o n t o t h i sproblem is p o s s i b l e , t here are c e r t a i n te n d en c ie s i n t h e be-hav i o r of S o v i e t t o t a l i t a r i a n i s m w hich do o f f e r some c l u e sfor a n a l y s i s . I n t h e f i r s t pl ac e, So vi et pronouncements canbe ana l yzed w it h cons i s t ency and c l a r i t y , because t he y are-1-


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dominated by c en t r a l i z ed , known purposes t h a t have been de-f i n e d by t h e l e a d e r s h i p an d t h a t h av e a cons t ancy absen t inn o n a u t h o r i t a r i a n s t a t e s . Thus Soviet spokesmen are bound toc l i n g t o the o rt ho do x l i n e , u n t i l i t is modified from above.Moreover,i ' s i n c e t h e S o v i e t l e a d e r s h i p p r of esses a l l e g i a n c et o a p u r po r te d ly r a t i o n a l s ys te m of i d e a s , i t i s o b l i g e d t oe x p l a i n r e v e r y c o u r s e of a c t i o n r a t i o n a l l y in terms of or t ho -do x i d e o l o g i c a l fo rm ul ae . T r a d i t i o n a l l y c o n s e r v a t i v e a b o uti t s i d e o l o g i c a l l e g a c y , t h e S o v i e t l e a d e r s h i p d o es n o t ta mp erwith i t i n t h e a bs en ce of a pr es s i n g m o ti ve. H ence , an a l y s i sof t h e m o d i f i c a t i o n s , r e a d j u s t m e n t s , a nd c o n t r a d i c t i o n s int he se i de o l og i ca l fo rm u l ae may not o n l y p r o v id e 8 means ofm easu r i ng t h e dep t h and i m por t ance of a c t u a l p o l i c y t r ends ,but may a l s o , when viewed a ga i n s t t h e background of t h o s et r e n d s , i l l u m i n a t e some of t h e u n d e r l y i n g r e a l i t i e s govesn-i n g S o v i e t t h o u g ht and a c t i o n .

S i n c e ' t h e r e i s no d i r e c t source material t h a t t e l l s uss p e c i f i c a l l y how t h e S o v i e t l eade rs v ie w t h e c o u r s e of c a p i t a l -i s t economic development or what e f f e c t t h e i r v ie ws h ave onp o l i c y d e c i s i o n s , i t is n e c e s s a r y t o r e l y p r i m a r i l y upon in-ferences d r a w n from t h e i r pu bl i c p ronouncement s and from t h ew r i t i n g s of p r o f e s s i o n a l S o v i e t e c on o mi st s . D ur in g t h e p re -war p e r i o d a s p e c i a l sec to r o f Varga's I n s t i t u t e of WorldEconomy and World P o l i t i c s of t h e USSR Academy of Sc i encesw a s r e p o r t e d l y r e s p o n si b l e for bas ic econom i c i n t e l l i gencer e s e a r c h a n d r e p o r t i n g i n t h e USSR. I t was t h e p a r t i c u l a rmiss ion of t h i s u n i t t o p r o vi d e e v a l u a te d r e p o r t s a n d e s t i -mates t o t h e S o v i e t l e a d e r s h i p on t r e n ds i n t h e c a p i t a l i s teconomies.Whether th e pos twar cha nnel4 a re t h e same i s n o t known.I n October 1947 t h e Economics I n s t i t u t e of t h e USSR Academyof Sc i ences took o v e r t h e f u n c t i o n of t h e I n s t i t u t e of WorldEconomy a n d World P o l i t i c s , and Cont iQued t o s u p e r v i s e re-s e a r c h on f o r e i g n e co no mi es u n t i l A ug us t 1955, when a newo r g a n i z at i o n ,' The I n s t i t u t e of t h e Economy of Modern C a p i t a l -i s m , was formed i n t h e USSR Academy of Sciences. I t is, ofc o u r s e , p o s s i b l e t h a t be c au s e of t he con t i nuous c r i t i c i s m tow hi ch t h e Econom ics I n s t i t u t e was exposed dur ing t h e postwarper iod i t was DO l o n g e r e n t r u s t e d w i t h an i n t e l l i g e n c e andeva l ua t i on func t i on . However, En view of t h e c o m p l e xi t y oft h e d a t a on c a p i t a l i s t economic developments , as w e l l as the

f a c t t h a t t h e Ecsoomics Xns t i tu t e and i t s s u c c e s s o r c o n t a i nt he fo rem os t co l l ec t ion of e c o n o m i c t h e o r e t i c i a n s and t e c h ~ i -c i a n s in t h e USSR, i t seems p l a u s i b l e t h a t t h e Kreml i n con-a n a l y s i s an d r e p o r t in g . The p u b l i c a t i o n s o f p r o f e s s i o n a lt i n u e d t o r e l y u pon p r o f e s s i o n a l economists f o r i n t e l l i g e n c e

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S E k

S o v i e t economists c o n s t i t u t e a pr i m ary s ou r ce f o r many of t h eo b s e r v a t i o n s of t h e p r e s e n t s t u d y , a nd t h e y a re b e l i e v e d top r o v i d e a r e a s o n a b l e p o i n t of d e p a r t u r e for h y p o t h e s i z i n g o nt h e a c t u a l v ie ws l i k e l y t o be he l d by t he K rem l i n .

Given the extreme p o l i t i c a l p r es s ur e s a n d i d e o l o g i c a lcow pu lsPons ope r a t i ng w i t h i n t h e Sovie t t o t a l i t a r i a n p o l i t y ,it seems h ig h ly d o u b t fu l t h a t S o v ie t i n t e l l i g e n c e r e p o r t s(as d i s t i n c t from p u b l i c a t i o n s o f p r o f e s s i o n a l ec o no m is t s)c o u l d ha ve p r ov i d e d t h e Kr em li n w i t h a c c u r a t e , o b j e c t i v ea n a l y s e s o f i s r a i g n econsgnic t r e n d s d u r i n g S t a l i n ' s l i f e t j m e .In t h e p re wa r p e r i o d S t a l i n h i m s e lf is r e p o r t e d t o have com-p l a i n e d a b o u t t h e p r o p a g a n d i s t i c character of t h e economici n t e l l i g e n c e r e a c h i n g him, w i t h t h e r e s u l t t h a t t h e s p e c i a ls ec t o r of Vaxga's I n s t i t u t e r e p or t ed l y resolved t h e dilemmab y c o l l e c t i n g q u o t a t i o n s fr om c a p i t a l i s t p u b l i c a t i o n s a nd i n -t r o d u c i n g t hem w i t h t he caveat t h a t t h e y r e p r e s e n t e d "bour-geois propaganda"! I t is a l s o i n s t r u c t i v e t h a t even i n t h e i ro v e r t a c t i v i t i e s S o v i e t econom i s t s were u n ab le i n S t a l i n ' sl i f e t i m e t o p r e p a r e t h e g e n e r a l textbook on p o l i t i c a l economyt h a t had b e en demanded by t h e p o l i t i c o s s i n c e a t l e a s t 1948.Memories of t h e b l ood pu rges of t h e t h i r t i e s and t h e gene ra ld e t e r i o r a t i o n of t h e domestic p o l i t i c a l a tm os ph er e u nd er S t a l i nwere almost c e r t a i n l y u n l i k el y t o promote a n y h e r o i c searchesgovernment.f o r ob jec t ive t r u t h by S o v ie t p r o f e s s i o n a l s i n or out of the

a t is n e c e s s a r y t o d i s t i n g u i s h between analyses of foreigneconomic t r en ds and factaaal r e p o r t i n g on t h e p h y s ic a l growthof n a t i o n a l pomfer. Thnaks t o t h e e a s y access to i n f o r m a t i o ni n f ree s o c i e t i e s a n d the e f f i c i e n c y o f , i t s own c o ve r t i n t e l -l i g e n c e s e r v i c e s , t h e Kreml in un4ues t ionably en joyed ueggaral-l e l e d s u c c e s s i a a o b t a i n i n g f a c t u a l data on t r e n d s i n f o r e i g ni n d u s t r i a l a nd m i l i t a r y p r od u ct io n . The r a p i d g ro wt h o f West-e r n i n d u s t r i a l - m i l i t a r y poaes a f t e r Korea was obvious t o event h e most confi rmed Sov i e t Marxist. However, t h e problem. ofd e t e r m i n i n g w h et h er t h i s g r o wt h An p h y s i c a l power was %eallthy**i n an economic sense, whether i t would complicate t h e C OUF ~ S Qof f u tu r e economic deve lopment and lead t o c r i s e s and c o l l a p s e ,w a s a n a n a l y t i c a l task fo r t e c h n i c i a n s familiar w i t h t h e p e c u -l i a r i t i e s 0% f o r e i g n ~ ~ l h o m i cnd p o l i t i c a l l i f e . The p r e s e n ts t u d y is concssaaed w i t h the S m i e t a n a l y s e s of f o r e i g n ecsmoxnict r e n d s and n o t with S o v i e t factasaa reportBng of .physAcaP dataon Western product ion.

The problem of d e t er m i ni n g t h e i n f l u e n c e of Marxist doc-t r i n e on Sov i e t v i ew s of capitda~isna s , of c o u r s e , of no l i t t l eimpor tance . There i s , however; a d a ng e r i n tisaSgMrs&Lat'-3-


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. ,

d o c t r i n e , or r a t he r t h e o f f i c i a l S o v i e t v e r s i o n s o f i t , asan i n f l e x i b l e a nd i n t e g r a t e d s y st em o f i d e a s , v a l i d f o r a l lh i s t o r i c a l p e r i o d s . I n f a c t , v a r i o u s e l e me n t s o f Marxismi n t he Sq vi e t Union have updergone e r os io n and change undert h e i m p a c t of i nexo rab l e c i r cum s t ance . T he re fo re , f rom ani n t e l l i g e n c e s t a nd p o in t , i t i s p e r h a p s more u s e f u l t o attemptto i d e n t i f y t he s o c i a l r e a l i t i e s u n d e r l y i n g t h e c h a n g i n g So-v i e t d o c t r i n a l f or mu la e t h a n t o a t t e m pt t o d e te rm in e th e de-gree 'of i n t e l l e c t u a l c o nv i ct io n or i d e o l o g i c a l zea l e n t e r -t a i n e d by t h e S o vi et leaders a t any p a r t i c u l a r t i m e .

Although t h e Kremlin has endeavored t o cloak i t s a c t i o n sbehind a facade o f m o n o l i t h i c u n i t y , t h e o c c a s i o n a l e r u p ti o n so f d i s o r d e r i n po l em i cs a nd p o l i c y h a ve p r o v id e d a gl impseof t h e c o n f l i c t of f o r c e s and movement of ideas o p e r a t i n gw i t h i n t h e S o v i e t h i e r a r c h y . Even i n t h e absence of preciseknowledge of t h e i nner work ings of t h e S o v i e t l e a d e r s h i p ,su ch major landmarks of postwar S o v ie t h i s t o r y as the Vargah e r e s y a n d S t a l i n ' s l a s t a r t i c l e , t o m en ti on a f e w , haves e r v e d t o h i g h l i g h t the basic i s s u e s and d i s p u t e s t h a t c on-f r o n t e d the , leadership when i t a t t em p t ed t o as say pos t w ardeve lopments i n t h e c a p i t a l i s t wor ld. Given t h e h i g h s takesof S o v i e t p o l i c y , th e complex i ty of t h e bas i c problems, andt h e d i v e r s i t y of t h e c o n te n d i ng p e r s o n a l an d g ro up i n t e r e s t s ,i t is n o t s u r p r i s i n g t h a t c o n f l i c t i n g c o nc ep ti on s of i n t e r -n a t i o n a l r e a l i t i e s and t h e i r i m p l i c a t i o n s fo r S o v i e t p o l i c yc o n t i n u a l l y p l ag u e t h e S o v i e t l eade r sh ip .on c a p i t a l i s m , t h e p r e s e n t s t u d y i s focused on t h e problemof the p o s i t i o n of t h e i n t e l l e c t u a l i n - S o v i e t s o ci e ty . Ast h e i n d iv id u a l upon whom t h e Kremlin r e l i e s for t e c h n i c a l

I n a d d i t i o n t o examining t h e c o n t e n t o f S o v i e t t h i n k i n g

g u i d a n c e , t h e p r o f e s s i o n a l i s p e r p e t u a l l y b ad g er ed by c o n f l i c t -i n g demands of t e c h n i c a l a c c u r a c y , p r o f e s s i o n a l h o n e s t y , p o l i t -i c a l e x p e di e n cy , a nd d o c t r i n a l o r th o do x y. The c h an g es i nt h e p o s t w a r i n t e l l e c t u a l climate and t h e r e s u l t i n g deforma-t i o n of p r o fe s s io n a l a c t i v i t y i n t o p o l i t i c a l propaganda areboth a n i n t e r e s t i n g s i d e l i g h t o f - S o v i e t h i s t o r y and a trouble-some l e g a c y of t h e p r e s e n t S o v i e t l e a d e r s h i p. I t is b e l i e v e dt h a t t r e n d s i n S o v ie t p o l i c y toward i n t e l l e c t u a l s , p a r t i c -u l a r l y t h o se i n d i v i d u a l s f o l lo w i n g d ev el op me nt s i n t h e non-S o v i e t w o r ld , w i l l provide one of t h e best i n d i c a t o r s o fchanfzes i n S o v i e t s o c i e t y a n d, more imp or tan t , t h e perlpanencyof changes i n Soqwt s t a t e pol ic ies . Developments l a t h e i n t e l -l e c t u a l f i e l d c o n s t i t u t e a r i c h , t ho ug h r e l a t i v e l y u nt op pe d,source of i n t e l l i g e n c e on t h e USSR.In a cer ta in s e n s e , : the p r e s e n t s t u d y is i n t e n d e d as ani nves t m en t i n t h e f u t u r e , insofar as i t is s u c c e s s f u l in l a y i n g

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th e base f o r a n t i c i p a t i n g f u t u r e d eve lo pm en ts . I t p u r p o r t st o c o n t a i n n o t a n ex h a u s t iv e r e c o r d of t h e e v e nt s r e l a t i n gt o S o v i e t v ie ws of c a p i t a l i s m , b u t ra the r a n a n a l y s i s oft h o s e l e a d i n g e v e n t s w h i c h, a r e t h o u gh t t o have molded t h emain l i n e s of deve lopmentz At t e n t io n has been d i r ec t ed v e r yg e n er a l l y t o c e r t a i n se lec ted e v e n t s a nd c o n t r o v e r s i e s w hi ch ,though they took place w e l l b e f o r e t h e per iod u n d e r i n v e s t i g a -t i o n , are b e l i e v e d t o be h e l p f u l i n a p p r a i s i n g t h e s i g n i f i -canc e' of much of l a t e r - d a y S o v i e t t h i n k i ng . I t is a l so hopedt h a t t h e p re s' eh t s t u d y w i l l demonst ra t e t h a t c e r t a i n areas ofresearch on S o v i e t th o u gh t c a n , i n terms of t i m e a n d r e s u l t s ,be more e f f i c i e n t l y and s u c c e s s f u l l y p ur su ed w $ t h in t h e i n -t e l l i g e n c e c o m m u n i t y i t s e l f r a th e r t h a n by e x t e r n a l research .I

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11. AdARXIST VIEWS OF CAPITALISM: THE HISTORICAL SETTING1 . Si nce its. appearance as a r e v o l u t i o n a r y f o r c e i n Europe,Marxism 4has been t he ceater of e n d l e s s i n t e l l e c t u a l co n tr o ve r syand b i t t e r f a c t i o n a l d i s c o r d b e t w e e n M a r x i s t s a n d reformis tsw i t h i n e a c h n a t i o n a l p a r t y a n d w i th i n t h e s o c i a l i s t movementa t l ar ge . The emergence of new co nd it io ns i n l a t e n i n e t e e n t hc e n t u r y c a p i t a l i s a - - t h e s t a b l i z a t i o n a nd e xp an si on of pro-duc' t ion a t home and over seas , t h e gen era l r i s e i n l i v i n g s ta n d-a r d s , t he g row t h of t h e m i dd l e c l a s s i n i n dus t ry and gove rn -ment, t h e i n c r e a se i n l a b o r ' s p o l i t i c a l i n f l u en c e , and thebroadening base of par l i amentary democracy-- reg i s t e red a pro-f o u n d e f f e c t on t h e r e v o l u t i o n a r y t r a d i t i o n s and p o l i t i c a lprograms of s o c i a l i s t s e v e r y w h e r e . In r e sponse t o t h e s es o c i a l c h a n g e s , t h e i n t e l l e c t u a l and p o l i t i c a l l e a d e r s ofEuropean s oc ia l i s m sought new per sp ec t iv es upon which t o baset h e i r s o c i a l p h i l o s o p h ie s a nd s h a p e t h e i r p o l i t i c a l p ro gr am s.2 . T h e e f f e c t s of t h e c h a ng es i n c a p i t a l i s m were t os t r i k e a t t h e v e r y f o u n d a t i o n s of Marxism and t o ch a l l eng emany of i t s bas ic concep t s . C ou ld ca p i t a l i sm be r e g u l a t e dand s t a b i l i z e d ? Co uld t h e p r o l e t a r i a t g a i n power p e a c e f u l l yw i t h i n t h e fr am ewo rk of t h e c a p i t a l i s t s t a t e ? Could thec a p i t a l i s t s t a t e s e n t e r i n t o a new phase of com bi ni ng t o sh a r ei n t h e d i v i s i o n of world resources? The d i ve rgen t answ ersg i ven t o t h e s e basic q u e s t i o n s b y Marxists a nd r e f o r m i s t smarked t he t u rb u l en t h i s t o ry o f t h e so c i a l i s t movement andproduced in t e rminable deba t e and i r r e c o n c i l a b l e d i f f e r e n c e so v er b o th t h e o r i g i n a l s u b s ta n c e of Marxist t heo ry and t h ep r e s s i n g q u e s t i o n s of s t r a t e g y and t a c t i c s . The changes inC a p it a li s m i n t h e p e r i od b e f o r e World War I gene ra t ed afi n t e l l e c t u a l f e r m e n t w h i c h w a s e xp re ss ed p o l i t i c a l l y i n t h efo rm a t i on of d i sco rdan t g roup i ngs w i t h i n t he Second In t e r -n a t i o n a l , t h e p r i n c i p a l wings of which were headed by EdwardBer-nstein on t h e R i g h t , Karl K au tsky i n t he C en t e r , and L eni non t h e e x t r e m e L e f t .3. -B e rns t e i n , whose do c t r i ne s became known a s r e v i s i o n -ism and whose sup po r t e r s inc lude d a m o t l e y grouping of s o c i a lr e f o r m e r s , b e l i e v e d t h a t t h e f un da me nt al t e n e t s of Marxismh ad b ee n g e n e r a l l y i n v a l i d a t e d b y t h e l a t e r developments i nc a p i t a l i s m . H e o bs er ve d t h a t t h e p r o s p e ct s f o r g r e a t p o l i t -

i c a l ca t a s t rop hes had been d i m i n i shed by t he de m ocra t i za t i onof t h e modern c a p i t a l i s t n a t i o n s , a nd h el d t h a t t h e c o l l a p s eof c a p i t a l i s m w a s no t imminent. Hence , he a rgued ag a i n s tt h e a d o p t i o n of t a c t i c s t h a t a ssum ed t he immediate !outbreakof a grea t soc ia l r e v o l u t i o n , a n d he preached evo l u t i on and-6-

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c o l l a b o r a t i o n r a t h e r t h a n r e v o l u t i o n and c lass c o n f l i c t .H e p o i n t e d t o t h e g rad ua l im provem en t o f t he w orke rs ' l o tthough s uch measures as f a c t o r y l e g i s l a t i o n , t r a d e unio na c t i o n , a nd d e m o c r a t i z a t i o n , a nd m a i n t a in e d t h a t t h e g r a d u a lmovement$(torward of t he work ing class was e v e r y t h i n g , t h ef i n a l a i m of s o c i a l i s m n o th in g . In d e f e n s e of t h e n a t i o n a ls t a t e a nd t h e p e a c e f u l t r a n s i t i o n t o s o c i a l i s m , B e r ns t ei ni n s i s t e d t h a t t h e i n t e r e s t s of t h e workers t ended t o becomei d e n t i c a l w i t h t h o s e o f. t h e h i g h l y d e ve l op e d d e m oc r a ti cs t a t e . I n g e n e r a l , he d ou bte d t h e i n e v i t a b i l i t y of s o c i a l i s ma nd i n s t e a d ar g ue d i n f a v o r o f i t s d e s i r a b i l i t y .

4. Kautsky , whose su pp or t e rs cons ider ed themselvesl lor thodox U r x i s t s " a nd f ormed t h e l a r g e s t g r ou p i n t h eS e c o n d I n t e r n a t i o n a l , w a s d u r i n g t h e p e r i o d of t he prewarI n t e r n a t i o n a l i t s l e a d i n g t h e o r i s t , who in l a t e r l i f e w a st o become a s e v e r e c r i t i c of t h e So vie t reg ime. Al thoughKautsky , l i k e h i s R u ss ia n M ensh evik a d h e r e n t s , was a d d i c t e dt o " revo l u t i ona ry ph ra seo l ogy" and subsc r i bed t o t h e o r t h o d o xMarx i s t concep t s o f c l a s s , c r i s i s , a n d r e v o l u t i o n , he stressedi n The Road t o Power (1909) t h a t t h e p r o l e t a r i a t c ou ld " w e 1 1a f f o r d t o t r y a s l o n g as p o s si b le t o p r og r es s t hr ou gh s t r i c t l yl e ga l m et hods a l on e . ** Unl ike Berns e in , he accepted Marx 'sl a w s of t h e decay of c a p i t a l i s m , b u t he ten de d t o i n t e r p r e tthem i n terms of pea cef u l development , p l ac in g emphas i s ont h e i n e v i t a b i l i t y of s o c i a l i s m a s t h e c l i m a x of a ve ry l eng t hypro ces s of development i n w hic h t h e c o n t r a d i c t i o n s of c a p i t a l -i s m would become inc re as in g l y ev id en t . A l though rega rded byLenin i n t he pe r i od be fo re Wor l d War I as a r e v o l u t i o n a r yMarxi s t , Kaut sky in p r a c t i c e a d v o c a t e d a program of g r a d u a l i s mand re form.p r o l e t a r i a t , by u t i l i z i n g t h e i n s t r u m e n t s of l i b e r a l democracy,c o u l d i n c r e a s e i t s s t r e ng t h w i t h i n t h e f ramework of t he c a p i -t a l i s t s t a t e and o b t a i n fundam en ta l conces s i ons f rom t hec a p i t a l i s t s .l l u l t r a - i n p e r i a & i L s m , " which w a s b i t t e r l y a t t ac k ed by L eni n i nIm per i a l i sm , The Highe s t S tage of Cap i t a l i sm (1916). Fo llow-ing i n t h e f o o t s t e p s of Rudolf Hi lf er di ng , th e German neo-

A bhor r i ng v i o l en ce , ,Kautsk,y be l i e ved t h a t t he

5 . During World War I Kautsky developed the concept of

Marx i s t , K au ts ky a dv an ce d t h e t h e s i s t h a t p e a c e f u l e x p l o i a-t i o n of w or ld r e s o u r c es by a l l i e d c a p i t a l i s t s was p o s s i b l e .He argued t h a t economic monopol i es were com pa t i bl e w i t hnonmonopol i s t i c , nonv i o l en t , nooexpans i on i st methods i np o l i t i c s , a nd m ai nt ai ne d t h a t i mp e ri al is m w a s n o t t h e o n l yo r e ve n t h e f i n a l s t a g e of m odern c a p i t a l i s m , a s Lenin wasl a t e r t o a s s e r t , bu t on l y one of t he fo rm s of t h e p o l i c y ofmodern c a p i t a l i s m a g a i n s t w hich t h e P r o l e t a r i a t s h o u l d s t r u g g l e .


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By s u g g e st i n g t h e p o s s i b i l i t y t h a t t h e c a p i t a l i s t world co ul dbe o rgan ize d e i t h e r by agreemen t be tween the great monopoliesor by the d o m in a t io n o f t h e i r most p o w e r f u l r e p r e s e n t a t i v e s ,Kautsky r a i s e d d o u b t s t h a t were t o c o n t in u e t o t r o u b l e M a r x i s t severywhe,$e.s c h o l a r l y a t t a c k a g a i n s t M arx's t h eo r y of t h e i n e v i t a b l e col-l ap ,s e:of c a p i t a l i s m f o r ec on om ic r e a s o n s was Rudo l f B i l fe rd ing ,t he theo r e t ica l1 spokesman o f th e German Independen t S oc i a l i s tPa r ty a n d a u th o r of Fin a n c e C a p i t a l (1910). H i l f e r d i n g d i -r e c te d h i s a t t e n t i o n t o t h e grow th of monopolies under capi-t a l i s m a n d a r r i v e d a t a c o nc l u si o n d i f f e r e n t fr om Marx 's ,n am el y, t h a t t h r ou gh c o n c e n t r a t i o n c a p i t a l i s m m ig ht g a i ni n t e r n a l s t a b i l i t y . I n i n t e r n a t i o n a l r e l a t i o n s , he f or es awthe development of a #*genera lc a r t e l th rough which t h e c a p i -t a l i s t monopol ies c o u l d j o i n t l y e x p l o i t w o r l d resources . I nh i s l a t e r y e a r s H i l f e r d i n g became a main advocate of the con-c e p t of "organized" or "p lanned" cap i ta l i sm. He a r g u e d t h a ta s t h e r e s u l t of f i n a n c i a l and i n d u s t r i a l c o n c en t r a t io n ,t h e f l u c t u a t i o n s i n t h e b u s i n e s s c y c l e would t en d t o becomem i l d e r as t i m e went on, and t h a t i n s t e a d of i n e v i t a b l e c o l l a p set h e cycle might take t h e shape of mere con t inuous r i se s andf a l l s i n p r o du c ti o n and p r o f i t s . Hence, H i l f e r d i n g l a i d t h et h e o r e t i c a l b a s i s f o r t h e t r a n s i t i o n of monopoly capi ta l ismi n t o a planned economy suscept ib le t o e v e r - i n c r e a s i n g p r e s s u r eand co n t ro l by t he work ing c l a s s .i s m , Lenin s tood a s t h e uncompromising exponent of a l l t h er e v o l u t i o n a r y a s p e c t s of Marxism: He s t r e s s e d t h e i r r e c o n -c i l a b i l i t y of t h e c l a s s c o n f l i c t a nd ad vo ca te d t h e m i l i t a n ts t r u g g l e of t h e p r o l e t a r i a t a g a i n s t a l l t h e i n s t i t u t i o n s oft h e b o u r g e o i s s t a t e . I n h i s I m p er i a li s m an d l a t e r i n S t a t eand Revo lu t ion (1917) , Lenin waged a r e l e n t l e s s t h e o r e ms t r u g g l e a g a i n s t t h e s o - c a l l e d " Ka ut sk ia n p e r v er s i o n s " o fMarx. H e d e n ie d t h e p o s s i b i l i t y o f c a p i t a l i s m o ver com ing t h eana rchy of produc t ion by monopo ly -cap i ta l i s t p lann i ng and ofa n o n - e x p an s io n i s t c a p i t a l i s m . I n r e p ly t o K a u t sk y ' s c on -c e p t of "ultra-jonperialism,". h n i n s t a t e d t h a t t h e g e n e r a ll a w of t h e uneven development of c a p i t a l i s m would r e n d e ra n y i n t e r im p e r i a l i s t ag r ee m en t e p he m er a l a nd a mere p r e lu d et o new c o n f l i c t s f o r t h e re d i v i s i o n of t h e world . Accordingt o L en in , t h e c a p i t a l i s t s t a t e s were d e s t i n e d t o s u f f e r f r o mc r i s d s of overproduct ion which they would seek to overcomeby a i t e m p t i n g t o secure f o r e i g n m ar ke ts . I n t h e r e s u l t a n tc o m p e t i t i o n t h e y w ould c l a s h in i m p e r i a l i s t wars which wouldweaken t h e c a p i t a l i s t front and pave the way f o r t h e u l t i m a t e

6 . ' The f i r s t of t h e r e f o r m i s t s t o d i r e c t a wel l -o rgan ized ,

7 . A g ai n st t h e s e r e f o r m i s t i n t e r p r e t a t i o n s of c a p i t a l -

-8-ST

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v i c t o r y of t h e p r o l e t a r i a t . For L e n i n a n d h i s S o v i e t s u c -ces s o r s , i m pe r i a l i sm was t h e u l t i m a t e f i n a l s t a g e of c a p i -ta l i sm i n which t h e d e c i s i v e s t r u g g l e f o r i t s overthro w wast o be fought .a nd r e f o r m i s t s ov e r t r e n d s i n c a p i t a l i s m l a y a t t h e r o o t o fWorld. War I . In Western Europe, where reformis m had ta kenf i F m hold and had sapped t he r o o t s of r e v o l u t i o n a r y f e r v o r ,t h e s o c i a l i s t p a r t i e s were t o y i e l d t o the demands of n a t i o n a li n t e r e s t a nd t o formulate programs of s o c i a l democracy withint h e f ram ewor k o f t h e c a p i t a l i s t s y s t e m . I n R u s s i a t h e Marxist- '

/ I

8 '' These theore t i c a i d i v e r g e n c i e s b e tween Marxistst h e a c t u a l d i f f e r e n c e s i n t h e i r b e h av io r d u r i n g a nd a f t e r

L e n i n i s t c o n c e p ts of capi t a l i sm, which had p layed such av i t a l p a r t i n t h e sh ap in g of B o ls h ev i k s t r a t e g y an d t a c t i c s ,w e r e t o f i n d a c o n c r e t e p r o v in g g ro un d f o r r e v o l u t i o n a r ya c t i o n . To t h e S o v i e t l e a d e r s c o nf r o n te d w i t h t h e d u a l t a s kof govern ing a n a t i o n a l s t a t e a nd c a r r y i n g o u t a world re -v o l u t i o n , t h e v e r y q u e s t i o n of su rv i v a l and succ es s dependedupon th e accuracy of t h e i r a p p r a i sa l of t h e fo rces a t workw i t h i n t h e c a p i t a l i s t world.9 . Since examina t ion of t h e d i ve r ge n t i n t e l l e c t u a la nd p o l i t i c a l t r e n d s i n S o v i e t an d W es te rn Marxism i n t h ei n t e r w a r p e r i o d i s beyond th e scop e of t h e p r e s e n t s t u d y , i tmay be u s e f u l t o assess t h e r e l e v a n c e of t h e e a r l y c o n t r o -v e r s i e s t o l a te r - da y t h in k in g . F i r s t , t he s e e a r l y c o n t r o v e r s i e si l l u m i n a t e t h e c r i t i c a l importance of the ory i n Marxis t

i n g t o e x p la i n s c i e n t i f i c a l l y t h e p ro ce ss of s o c i a l develop-ment , t heory w a s t h e a n v i l on which th? p ra c t i c a l p rob lems ofs t r a t e g y and t a c t i c s were hammer'ed ou t . Second, even a f t e rt he m ono l i t h of S t a l i n i s t t o t a l i t a r i a n i s m had e nv el op edSov i e t so c i e t y and had pu l ve r i zed oppo s i t i on , t heo ry rem ai nedt h e v e h i c l e i n wh ic h c o n t r o v e r s y w a s e x p r e s s e d , d i s c i p l i n ee n f o r c e d , a nd p o l i c y r a t i o n a l i z e d . B ec au se t h e o r e t i c a l c e r t i -t ude was r e q u i r e d t o en s u re i d e o l o g i c a l a p p ea l a nd t o s a n c t i f yp o l i t i c a l ac t i o n , t h e o r e t i c a l e r r o r was t o be regarded as oft h e most se r i ou s consequence. L a s t l y , t he fundamen ta l ques -t i o n s of t h e o r y an d p o l i c y t h a t had b ee n ar g ue d o v e r i n t h ee a r l y c o n t r o v e r s i e s were, d e s p i t e t h e e x i s t e n ce of n a t i o n a lbounda r i e s and i ron c u r t a i n s , t o r em a i n t he l egacy of S o v i e tMarxism dur i n g t he i n t e rw ar pe r i o d and a f t erw a- rd. Thechanges i n cap i t a l i sm w hi ch had provoked t he e a r l y d i spu t e sover Marxism were t o con t i nue t o a f f e c t t h e ba s e of S o v i e ta t t i t u d e a nd p o l ic y .

thought . To Marxists a d h e r i n g t o a u n i v e r s a l p h il o so p hy seek-

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111. THE VARGA HERESY AN D ITS AFTERMATHThe Varga Heresy

10 . I t i s c lea r from t h e major speeches of t h e S o v i e t,C!,,

. I

l e a d e r s i m m e d i a t e l y a f t e r World War I1 t h a t t h e y b e l i e v e dt h e i p t e r n a t i o n a l s i t u a t i o n p r es e nt e d bo t h improved oppor-t u n i t i e s for e x p a n d i n g S o v i e t power and inc reased dangerst o t h e USSR e m a n a t i n g from t h e c a p i t a l i s t w o r ld , p r i m a r i l y) t h e US. On t h e one hand , t h e de sp er a t e l y weakened condi -t i o n of Western Europe a nd l a rge p a r t s of A s i a , t h e convul-s i o n s i n t h e US economy at tending t h e c o n v e r s io n from wart o peace, a nd t h e p r o s p e c t s f o r a devas ta t ing economic de-

p r e s s i o n in t h e c a p i t a l i s t wor ld - -a l l these prov ided g roundsfor optimism. On t h e o ther hand, t h e t r emendous inc reasei n t h e power and in f luence of t h e US in w o r l d a f f a i r s gavec a u s e for grave concern. In v iew of these p e r s p e c t i v e s ,t h e S o v i e t l eade rs r e q u i r e d an assessment of t h e fo rces a twork in t h e c a p i t a l i s t w o r l d upon which t o base t h e broadg u i d e l i n e s of pos twar po l icy . I o t h i s assessment of t h ew o r l d s i t u a t i o n , g r e a t importance w a s u n q u e s t i o n a b ly at tachedt o f o r e i g n economic developments, which t h e Kremlin hadt r a d i t i o n a l l y r e g a r d e d a s d e t e r m in a n t s of p o l i t i c a l a c t i o n .11. The Kremlin 's e f f o r t s t o come t o g r i p s w i t hpostwar i n t e r n a t i o n a l r e a l i t i e s faced g r e a t d i f f i c u l t i e sa r i s i n g from t h e domestic campaign t o e n s u r e p o l i t i c a l con-

t r o l and res to re i deo l og i ca l orthodoxy. Concerned ove rt h e g e n e r a l w a r t i m e r e l a x a t i o n of p p l i t i c a l c o n t r o l s andt h e widesp read hopes of t h e S o v i e t people for change, t h eKremlin had begun a small-scale campaign, even before t h ew a r had ended, t o wipe o u t t h e e f f e c t s of Weste rn in f luenceand t o impose a r i g i d s t r a i t - j a c k e k o f i d e o l o g i c a l ortho-doxy on S o v i e t s oc ie ty .* S t a i i n ' s speech of February 1946c l e a n i n g b y h i g h l i g h t i n g t h e c o n t i n u e d d a n g e r s f a c in g t h eUSSR from t h e c a p i t a l i s t w o r l d . I n c o n t r a s t w i t h t h e pre-v i o u s t r e a t m e n t of $he w a r as a " f i g h t i n g a l l i a n c e of demo-c r a t i c s t a t e s agains t fascism," S t a l i n s c r a p p e d t h e w a r t i m e

' c o a l i t i o n i d e o lo g y and placed t h e c o n f l i c t s q u ar e ly i n t h e

. had f i x e d t h e r a t i o n a l e f o r s u c h a n ideologica l house-

*For an excel lent summary of t h e e a r l y s tages of t h i sdevelopment , see John S . C u r t i s s a n d Alex. I n k e l e q , "Marxismi n t h e - USSR:-the Rec ent Re vi va l" , -o l i t i c a l Science .Q u a r t e r l y, September 1946.-10-

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c o n t e x t of t h e s t r u g g l e of t h e two s y s te m s o f c a p i t a l i s mand social i sm, F o ll ow in g t h i s s p e e c h , t h e p ac e of t h e .i d e o l o g i c a l campaign was s t epp ed up , and i t s scope waswidened t o c ov er a l l s t h e p r o f e s si o n a l g r ou ps i a t h e USSR.12. , 'A lthough th e Sovi e t economis t s were among thoset o f e e l t h e f u l l weigh t of the i d eo lo g i ca l campaign, theywere i n i t i a l l y t r e a t e d less h a r s h l y a n d more p e r f u n c t o r i l y 't ha n t h e' o t h e r p r o f e s s i o n s i n t h e USSR. I t is p o s s i b l et h a t t h e r e g i m e, ' a c u te l y aware o f t h e d i s r u p t i v e c on se-quences of prev i ous pu rges , d i d n o t w i s h t o demoralize t h ecadres upon which i t r e l i e d f o r a n a l y s e s of fore ign economicd ev el op me nt s. I n J u ne 1 94 6 t h e f i r s t i s s u e of C u l t u r e a ndL i f e , t h e o r ga n of t h e depa r t men t of propaganda and a g i t a -tion of t h e c e n t r a l committee, con t a i ned an a t t a c k on Sov i e teconomists f o r t h e i r f a l l u r e t o produce any monographs onfo re ign economic developments, The October i s s u e o f t h ej o u r n a l c r i t i c i z e d t h e " t h e o r e t i c a l b ac kw ar dn es stt of t h ep r i n c i p a l S o v i e t o r g a n i za t i o n r e s p o n s i b l e for t h e s t ud yof ca pi t a l i sm , th e I n s t i t u t e o f Wor ld Economy and WorldP o l i t i c s , headed by th e foremost Sov ie t economist , EugeneVarga. With the except ion of t h e s e r o u t i n e barbs , how-e v e r , t h e economists s t u d y in g c a p i t a l i s m were spared s h a r pP a r t y c r i t i c i s m u n t i l mid-1947 and 1948.

I!.

13. T he pub l i ca t i on o f Varga's book, Changes in t h ein September 194 touched o f f a con t ro ve r sy w h i ch spanneda p e r i o d o f o v e r two y e a r s a n d which. r e f l ec t e d t h e c o n -f l i c t i n g c u r re n t s of i deo l ogy and r e a l i t y u n de rl yi ngpos twar Sov ie t v i ews of cap i t a l i sm. , Varga had been com-miss ioned by t h e c e n t r a l committee d u r i n g t h e w a r t o pro-d u c e a n a n a l y s i s of t he i m pac t of t h e war on thc: cap i ta l -ist economy. Varg a 's book and t h e co nt ro ve rs y it pro-voked were focused on t h e c e n t r a l problem of whether t h ew a r h ad produced changes i n t h e e s s e n t i a l s t r u c t u r e ofc a p i t a l i s m . I n many respects , t h e i s s u e s r a i s e d i n t h ec o u r s e o f t h i s c o n t r o v e r s y e ch oe d t h o s e t h a t had b ee ndebated by Marxists a nd r e f o r m i s t s b e f o r e World War I , and ,j u s t a s i n t h e e a r l i e r p e r i o d, t h e d iv e r g e n t views'oft he bhanges i n c a p i t a l i s m c o n t a i n e d i m p o r t a n t i d e o l o g i c a la nd p o l i t i c a l i m pl ic a t i o ns . I n a d d i t i o n , t h i s e a r l y p o st -war c o n t r ov e r s y ha s s p e c i a l s i g n i f i c a n c e b ec a us e i t r e p r e -s e n t e d o n e of t h o s e r a r e , f l e e t i n g moments i n S o v i e t h i s t o r ywhen men spoke t h e i r minds f r e e l y and e x p r e s s e d t h e i r r e a lt h o u g h ts a b o ut t h e o u t s i d e world.

Economy of C a p i t a l i s m as a R esu l t of t he Second World W a r 9

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14. Varg a 's book is s i g n i f i c a n t n o t o n ly b ec au se i twas t h e f i r s t S o vi e t as se ss me nt of t h e over-all conse-quences o f t h e war, bu t a l s o because V arga occup ied ap o s i t i o n o f , p r o f e s s i o n a l p re -e mi ne nc e a n d grea t p o l i t i c a lin f l ue nc e Bmong So vi et econoni is t s . Varga was t h e l e a d i n gS o v i e t e x p e r t on t h e economy o f ca p i t a l i sm and t he au t ho rof m any t heo re t i ca l works o n t h e c a p i t a l i s t b u s i ne s s cy cl e.H i s a b i l i t y t o b r i n g h i s s t a t i s t i c a l a n a ly s e s i n t o pre-c i se c o rr e sp o nd e nc e w i t h t h e P a r t y l i n e had once l e dT r o t s k y t o c a l l ' h k m t h e " t h e o r e t i c a l P o l o n i u s of t h e Comin-tern" who was "always ready t o prove s t a t i s t i c a l l y t h a tt h e c l o ud s i n t h e s k y look l i k e a camel 's back, b u t i fyou p r e f e r , t hey resemble a f i s h , and i f t h e P r i nc e de-s i r es i t , t hey bear w i t n e s s t o ' social ism i n o n e coun t ry .* t tA n old- t ime Hungarian Bolshevik who had emi grat ed t o t h eUSSR a f t e r t h e f a i l u r e '01 t h e B e l a Kun r e v o l u t i o n , V a r g ahad access t o t h e h i g h e s t P a r t y c i r c l e s . H e was known t oh av e p e r s o n a l l y a d v i s ed S t a l i n on economic matters i n t h ep re wa r p e r io d , and h i s I n s t i t u t e r e p o r t e d l y had a d i r e c tc h a n n e l t o t h e P o l i t b u r o , i nf o rm in g t h e l e a d e r s h i p onf o r e i g n economic development s . In v i ew of t h i s background ,Varga's views were bound t o c a r r y g r ea t weight among pro-f e s s i o n a l economists and h ig h P a r t y o f f i c i a l s . I n f a c t ,i d e a s i n many ways s i mi l a r t o Varga's had b e e n c i r c u l a t i n gamong t h e a r t i c u l a t e elements o f S o v i e t s o c i e t y f o r a tl e a s t a y e a r before t h e p u b l i c a t i o n of Varga's book.

15. W hile g e n e r a l l y a d h e r i n g t o t h e gloomy t ene t sof Marxism on t h e l ong- run cou r se of developments i n t h ec a p i t a l i s t economy, Varga advanced ce r t a i n p r o p o s i t i o n si n h i s book t h a t n o t only r a n c o u n t e r t o D f f i c i a l S ov i etd o c t r i n e , b u t a l s o c h a ll e n ge d t h e v e r y f o u n d a t i o n s oft h e p o l i c i e s t hen be ing deve loped by the S .ov ie t leaders.The m o s t i m p or t a nt an d c o n t r o v e r s i a l o f t h e i d e a s developedby Varga may be summarized as fo l lows:

a. Role o f t h e St a t e . The crux of Varga's argumentwas t h a t Fhe wartime i n t e r v e n t i o n by t h e c a p i t a l i s t s t a t ei n th e op er at io n of t h e economy had tended t o o f f s e t t h ea c t i o n o f t h e f un da me nt al laws determin ing the deve lopmentof cap i t a l i sm, and t h a t such i n t e r ve n t i o n wou ld r em a inmore i m por t an t i n t h e p os tw ar p e r i o d t h a n b e f o r e t h e war.H e i n s i s t e d t h a t t h e wartime c a p i t a l i s t s t a t e r e p r e s e n t e dt h e i n t e r e s t s of t h e e n t i r e bourgeoisie IS 8 whole, andn o t o n l y t h e i n t e r e s t s of t h e la rge monopolies. (He l a t e ra d m i t t e d i n t h e debate over h i s book t h a t t h e c a p i t a l i s ts t a t e was a l s o i n cr e a si n gl y s e n s i t i v e t o t h e i n t e r e s t s oft h e w o rk i ng c la s s and consumers.) Varga a rg ue d t h a t t h e

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c a p i t a l i s t s t a t e had been forced by t h e e x i g e n c i e s oft h e war t o i n t e r ve n e i n c r e a s i n g l y i n t h e o p e r a t i o n - o fthe economy and t o s u b o r d i n a t e t h e p r i v a t e intere.ij;ts oft h e powerfu8 monopolies t o the common in te res t of wagingt h e war . i j ' * b-t h e wartime econom i c i n t e rven t i on by t h e c a p i t a l i s t s t a t ehad rBdrtced t h e a na rc hy p r e v a i l i n g i n c a p i t a l i s m i n t i m e so$ peace. While ' c a r e f u l ly p o i n t i n g o u t t h a t s u c h s t a t ei n t e r v e n t i o n w a s n o t l lplanning*' i n t h e S o v i e t s e n s e , hecon t i nued t o s tress i t s i m por t ance du r i ng p e r i o d s ofemergency. H e p r e d i c t e d t h a t t h e scope of s t a t e r e g u l a t i o nwould diminish a f t e r t h e e n d of t h e war, b u t t h a t t h ei s s u e of pla nni ng would become u r g e n t once more w i t h t h eadvance of a new economic c r i s i s .

,.. Ib. Pl ann i ng unde r C a p i t a l i s m . Varga mainta ined t h a t

C. The C l a s s S t r u g g l e . V arga p red i c t ed t h a t t h ec l a s s s t r u g g l e i n postwar cap i t a l i sm would take t h e formof a s t r u g g l e b etw ee n t h e b o u r g e o i s i e a n d t h e p r o l e t a r i a tf o r a greater share i n t h e a d m i n i s t r a t i o n of t h e s t a t e .T h i s p r o p o s i t i o n , w i t h i t s c l ea r o v e r t o n e s of gradua l i smand reformism, i m p l i e d t h a t t h e c l a s s s t r u g g l e would bewaged w i t h i n t h e framework of t h e c a p t i a l i s t s t a t e andt h a t t he work ing c lass would not be p r o g r e s s i v e l y e x c l u d e dfrom p o l i t i c a l p o w e r , as S o v i e t propaganda and Marxistd o c t r i n e m a i n t a i n e d . This v i ew, cou pled w i t h Varga's con-cepts of s t a t e i n t e r v e n t i o n a n d r e g u l a t i o n u n d e r c a p i t a l i s m ,s u g g e s t e d t h a t there might be a p e a ce f u l t r a n s i t i o n fromcap i ta l i sm to socia l i sm.

d. T h e S t a t u s of C ol on i e s and Empires. f t e r s t u d y i n gB r i t a i n ' s i m p e r i a l r e l a t i o n s d u r i ng t h e war, Varga con-c l u d e d t h a t t h e r e l a t i o n s h i p s b et we en t h e c o l o n i a l powersand t h e c o l o n i e s had a l t e r e d t o t h e b e n e f i t of t h e c o l o n i e s .He observed a t endency of t h e c o l o n i e s t o become less e co t - .nomica l lydep endent upon t h e c o l o n i a l powers and t o approacht h e s t a t u s of o r d in a r y c a p i t a l i s t c o u n t r i e s . P o i n t i n g t ot h e i n c r e a s e d power of t h e c o l o n ie s a r i s i n g from t h e i remergence as a c r ed i t o r n a t io n s a f t e r the war, Varga fore-saw a per iod of concess i ons by t h e c o l o n i a l powers t o t h ec o l o n i a l a s p i r a t i o n s f o r na t i ona l i ndependence .

I

e. The Eastern European S a t e l l i t e s . Varga d i scoun t edt h e economic importance of t he S a t e l l i t8s i n t h e w o r l db a l a n c e of power. H e asserted t h a t t h e r e l a t i v e i m p o r t a n c eof t h e S a t e l l i t e economies was too small t o a f f e c t t h eg e n e r a l p e r s pe c t i v e s f o r t h e over-a l l deve lopment of-13-


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capi ta l i sm i n t h e postwar period. Even worse from anideo log ica l s t a n d p o i n t , V a r g a characterized t h e S a t e l l i t eeconomies as a form of s t a t e c a p i t a l i s m , s i t u a t e d midwaybetween capi , t a l i sm and sociallsm,cap i ta l i sm, Varga made s e v e r a l s p e c i f i c forecasts regard-ing t h e f u t u r e c ou r s e of t h e c a p i t a l i s t bu s i ne s s c yc le .Dashing co ld water on S o v i e t e x p e c t a t i o n s of a n e a r l ycol lapse of cap i t a l i sm, Varga pred ic t ed t h a t i t wouldtake a t l e a s t t e n y e a r s before a major economic depress ione r u p t e d in t h e c a p i t a l i s t w o r l d , I n h i s o p i n i o n &h e,US,C an ad a, a nd t h e n e u t r a l c o u n t r i e s would e n j o y p r o s p e r i t yf o r two t o t h r e e y e a r s , a f t e r which they would experiencea r o u t i n e c r i s i s of ove rp roduc t i on. T h i s cr is is wouldn o t become s e v e r e or w i desp read, howeve r, u n t i l a f t e r th edevas t a t ed econom i es of Western Europe and A s i a , a i d e db y c r e d i t s from the US, had reached t h e i r prewar l e v e l sof prod uct io n . Then and on l y then , Varga i n s i s t e d , woulda l l t h e f u n d a m e n t a l c o n t r a d i c t i o n s i n t h e c a p i t a l i s t s ys t e mbecome sharpened and lead to a major world-wide economiccr is i s .qext economic depression were undoubted ly of grea t impor-t a n c e t o Sovie t po l i cy-makers , t h e y were c l e a r l y over-shadowed by h i s a p p r a i s a l of t h e changes i n t h e e s s e n t i a ls t r u c t u r e of capi ta l i sm. I f Varga's a n a l y s e s of t h e changesin capi ta l ism were correc t , t hen t hey ra ised a s t r o n g poss i -b i l i t y , d e s p i t e t h e appea rance of s t a t i s t i c a l p r e c i s i o ni n h i s own p r e d i c t i o n s of t h e a p p r oa c h in g . de p r e ss i o n, t h a tcapi ta l i sm might escape a f i n a l col lapse e n t i r e l y by mak-i n g c e r t a i n modilbications i n i t s basic s t r u c t u r e . T h e ya l s o r a i s e d s e r i o u s d o u b t s a b o u t t h e s u c c e s s of t h e coldwar po l i c i e s t hen be i ng i m p l em en t ed by t h e S o v i e t leaders.Thus, i t i s n o t s u r p r i s i n g t h a t both t h e p r o f e s s io n a l aadP a r t y c r i t i c s of Varga and h i s s u p p o r t e r s were q u i c k t oseize and c o n c e n t r a t e on these h e r e t i c a l p r o p o si t i o as ,ra ther than spend much t i m e on h i s s p ec i f i c p r e d i c t i o n s .

t16. . ,Following h i s a n a ly s i s of t h e w a r t i m e changes i n

17. Although Varga's s p e c i f i c prognoses a b o u t t h e

18. Varga's book was s u b j e c t e d t o extensive c r i t i c i smi n May 19 47 a t a three-day formal s e s s i o n of t w en t y Sov i e ts c h o l a r s . * The s e r i o u s n e s s w i t h w hi ch t h e Soviet l e a d e r -s h i p v iewed t h e i s s u e s raised by Varga i s demonst ra t ed by

*The p a r t i c i p a n t s a t t h i s session are l i s t e d i n AppendixI .-14-


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st h e f a c t t h a t u n l i ke t h e s i t u a t i o n i n l i t e r a t u r e a n d p h l l o s -ophy where t h e P a r t y i n te r v en e d b l u n t l y an d d i r e c t l y i nt h e pe r son of Zhdanov, t h i s meet ing was p r e s i d e d ove r bya profess ioqa l , K.V. .O s t rov i t yanov , head of t h e EconomicsI n s t i t u t e q.f t h e USSR Academy.of Sc ie nc es . The P a r ty leader-s h i p was , g p pa r e n tl y i n t e r e s t e d i n r e c e i v i n g a p r o f e s s i o n a la s se s sm en t of Varga ' s f i n d i n g s before i n d u l g i n g i n ideolog-i c a l h i s t r i o n i c s . In c o n t r a s t t o s u b se q u e nt s e s s i o n sd e a l i p g k i t h t h e t r e n d s i n cap i t a l i sm, t h i s meet ing wasd i s t i ng u i s h e d by' r e l a t i v e l y s e r i o u s s c h o l a r l y deba te , i n 'l a r E e p a r t u n c l u t t e r e d by p e rs o n a l v i l i f i c a t i o n a nd po l i t -i c a l i n v e c t i v e .

19. Al though Varga w a s widely c r i t i c i z e d a l o n g ortho-dox l i n e s f o r a l l h i s h e r e t i c a l , r e fo rmis t p r o p o s i t i o n s ,h i s s e v e r e s t c r i t i c s ( t he econom i s t s A.N. Shneyerson, A . I .Kats, Motylov, I .N . Dvorkin and K.V. O st rov i t yanov) reproachedhim s h a r p l y fo r hav i ng se pa r a t e d economi cs from p o l i t i c s andi gno red t he "gene ra l cris is of c a p i t a l i s m " a n d t h e s t r u g g l ebetween t h e two sys t em s of cap i t a l i sm and social ism. In .t h e c o u r s e of t h e deba te a t t h i s s e s s i o n, a s w e l l as i n t h el a t e r c r i t i c i sm , Varga was at tacked fo r h i s p o s i t i o n ont h e d e c e p t i v e l y s c h o l a s t i c q u e s t i o n of t h e o r i g i n s of t h e"general c r i s i s of cap1 al ism, u which a c c o r d i n g t o Vargahad o r i g i n a t e d a t t h e beg i nn i ng of t h e t w e n t i e t h c e n t u r yi n s t e a d of w i t h World War I and t h e Russ ian Revolu t ion , a ss e t f o r t h i n o f f i c i a l S o v i e t d o c t r i n e . I n t h e j u n g l e ofS t a l i n i s t symbol ism, t h e r e a l i s s u e s were (1) whether t h ebreakdown of cap i t a l i sm a n d t h e s h i f t i n p o l i t i c a l power *w i t h i n t h e c a p i t a l i s t s t a t e c o u ld d e v e l o p a u t o m a t i c a l l y o rhad t o r e s u l t f r o m w a r a nd r e v o l u t i p a ( t h e former view wasa s c r i b e d t o Varga by h i s c r i t i c s , and he never disowned it)a n d (2) whether there cou l d be a n i n t e r m e d i a t e s tage betweencap i t a l i sm and socia l i sm (Varga had charac ter ized t h eS a t e l l i t e s a s s t a t e c a p i t a l i s t ) . I n r e p l y t o h i s c r i t i c s ,Varga stated t h a t he was p r e p a r i n g a s t u d y of the p o l i t i c a lr e s u l t s of t h e war which would serve a s a companion piecew i t h h i s economic t rea t i se .20. D esp i t e t h e g e n e r a l c r i t i c i s m of Varga's i n t e r -p r e t a t i o n of t h e changes produced i n capi ta l i sm by t h e war,t h e r e s u l t s of t h e debate were i nconc l us i ve . With t h e ex-c e p t i o n of h i s t r e a t m e n t of t h e S a t e l l i t e s , Varga stood

h i s ground f i rm l y a n d advanced some of h i s t h eo r e t i ca l P O P -o s i t i o n s , e ve n f u r t h e r . C i t i n g d ev el op me nt s i n Great B r a t -a i a , , he p o i n t e d o u t t h a t a t t h a t ver y moment c e r t a i n formsof planning--admi t t ed ly un l ike t h e Sov i e t va r ie t y --w erebe i ng unde r taken i n some c a p i t a l i s t coun t r i e s . Moreove r ,-15-


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some of Varga's c o l l e a g u e s i n h i s I n s t i t u t e ( t h e e c o n o m i s t sI .A. Trakhtenberg , M.I. Rub ias hte i n , Sh.B. L i f , V.A, Maslenni-kov , L.Ya. Even tov, and La. Me ndel son), as w e l l a s t h eh ig h l y r e g a r d e d e c o no m ist S,,G. S t r u m i l i n , w h i l e s u b m i t t i n gp a r t ia l l p !t o t h e g e n e r a l l y c r i t i c a l t e n o r of t h e debate ,defended, : 'Varga agains t charges t h a t he had ignored t h er e a l i t i e s of t h e c a p i t a l i s t w o r l d . I n sum, t h e p r o f e s s i o n a l swho had been commissioned t o re-examine Varga's p r o v o c a t i v ec o n c lu s io n s o n t h e s t a t e of contemporary cap i ta l i sm cou ldcome t o no basic' agreement among themselves.

The Campaign Against Heresy21. Faced w i t h u n p l e a s a n t a n sw e r s a b o u t e c on om ic t r e n d s

i n t h e c a p i t a l i s t worid an d i n c i p i e n t h e r e s y w i t h i n t h e r a n k sof i t s p r o f e s s i o n a l s , t h e Kr eml in was n o t slow i n r e a c t i n gi n t r a d i t i o n a l f a s hi o n w i th a ready-made ideo log ica l pro-p h y l a x i s . S u r p r i s i n g l y , t h e f i r s t s h a r p P a r t y c r i t i c i s mwas n o t d i r e c t e d a t Varga b u t a t a work of one of h i s I n s t i -t u t e co l l ea gu es , L.Ya. Eventov, The War Economy of England(1946). Th is book, e d i t e d b y I .A. Trakhtenberg , was'a schol-a r l y a nd r e l a t i v e l y objec t ive work which was a p p a r en t l y w r i t t e ni n t h e s p i r i t of t h e wartime c o a l i t i o n a nd w hi ch w a s g e n e r a l l ys y m p a th e t i c t o economic developments i n t h e UK, T r a i n i n gi t s s i g h t s OD Eventov's book, t h e a u t h o r i t a t i v e P a r t y o rganBolshev ik (15 J u l y 1947) at tacked t h e f o l l o w i n g p r o p o s i t i o n s :t h a t t h e w a r t i m e d e l a y i n o p en in g t h e s e c o n d f r o n t w a s con-n e c t e d w i t h i n a d e q u a t e a l l i e d product ioD r a the r t h a n e v i la n t i - S o v i e t motives; t h a t B r i t a i n ' s ' c o l o n i a l i n t e r e s t s hads u f f e r e d t o t h e a d v an t ag e of h e r c o l o n i e s ; t h a t a cc ep ta nc e oft h e US l o a n an d a l l i a n c e w i t h t h e US were t h e o n l y a l t e r n a -t i v e s o pen t o the Labor i t e government ; t h a t B r i t i s h n at io na l-i z a t i o n #as p r o g r e s s iv e a n d r e a l i s t i c ; a n d t h a t ?'the war,i n c r e a s in g t h e e c o n o m ic ro l e of t h e s t a t e , expanding i t s func-t i o n s , m o v e s cap i ta l i sm t o a h i g h e r level. ' t With regard t ot h e l a s t poin t , Gven tov w a s charged w i t h fo l lowing Kautsky ' st h e s i s of a ''new phase," a "new l e v e l " of cap i ta l i sm. More-o v e r , i n d i c a t i v e of i n c r e a s i n g v i r u l e n c e of t h e P a r ty a t t ackon t h e Varga s c h o o l was t h e c r i t i c i s m of t h e a n t i - Va r gaeconomis t , M.N. Smit , for f a i l i n g t o expose Eventov's doc-t r i n a l errors i n her -book review- (Sovetskaya Kniga No. 1,1947) e a r l i e r i n t h e year .

22. The tempo of t h e i d e o l o g i c a l c a m p a ig n a g a in s t t h eVarga s c h o o l was s t ep p ed u p i n t h e s ec on d h a l f of 1947,c u 'l mi n at in g i n a d m i n i s t r a t i v e s a n c t i o n s . I n Se pt em be rB o l s h e v i k c r i t i c a l l y reviewed t h e May discuss ion of t h e

,

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,

' .

econom i s t s a nd a t t a c k e d Varga's c o ll ea g ue s f o r f a i l i n g t or ep ud i a t e him. L a t e r i n t h e y e a r P o l i t b u r o member Zozne-s e n s k y ' s book, The War Economy of t h e USSR d u r i n g WorldWar 11, appeared and car r i ed a b i t t e r a t t a c k a g a i n s t t h eeconom i s ts ' sha r i ng V arga 's #iews, though n o t m ent i on i nghim by qame. F i n a l l y , o n 7 October Pravda announced themerging' of V arga ' s I n s t i t u t e w i t h t h e m c o n o m i c s In-s t i t u t e i n t o a s i n g l e I n s t i t u t e h e ad ed by O st r ov i ty a no v .*23. D e s p i t e t h e s e h e a v y blows t h e Varga schoolk e p t p l u gg i n g h i s l i n e up t o t h e t i m e of t h e m er ge r i n h i sI n s t i t u t e j o u r n a l , World Economy and World P o l i t i c s . I nA ugus t i n an a r t i c l e o n Angl6'-American relat ions, s i mi l a rt o o n e he had cont r ibu ted t o F o re i gn A f f a i r s ( J u ly 1947) ,he wrote t h a t d e s p i t e t h e i r c o n t r a d i c t i o n s t h e US and B r i t -

a i n were u n i te d i n t h e c h i ef aims of t h e i r f o r ei g n p o l i c y ,which was d i r e c t e d a g a i n s t t h e USSR. A t o n e p o i n t h e a l s ct r ea ted t h e M a r s h a l l P l an as advantageous t o B r i t a i n be-c a u s e it would receive s o r e l y n e e d e d c r e d i t s . I n October,w r i t i n g on t h e t h i r t i e t h a n n i v e r s a r y o f t h e R e vo lu ti on ,h e gave a re fo rmis t c h a r a c t e r i z a t i o n of t h e p r o s p e c t s f o rt h e p e a c ef u l t r a n s i t i o n from cap i t a l i sm t o social i sm i nWestern Europe, d es cr ib in g how even t h e European bourgeoi-s i e f a t a l i s t i c a l l y ac ce pt ed n a t i o n a l i z a t i o n , s t a t e economicco n t r o l , and I1p lanning ." In November L.A. Mendelson wrotean a r t i c l e i n w hi ch h e , l i k e Varga, p r e d i c t e d a sho r t - t e rmupsw ing i n t h e post w ar bu s i n es s c yc l e s t i m u l a t ed by consumers p en d in g d e f e r r e d d u r i n g t h e w a r . H i s u s e of t h e c o n ce p t" d e f e r r e d demand" was l a t e r denounced by h i s c r i t i c s asa d e n i a l of t h e Marxist v l l a w f t of t h e a b s o l u t e and r e l a t i v eimpover i shment o f th e workere unde r cap$ t a l i sm . , In v i ewof t h i s s i t u a t i o n , i t i s unde r s t and ab l e why t he P a r t ydec i ded t o s t o p p u b li c a ti o n of Varga's mouthpiece a t t h ee n d oP t h e y e ar .

c

24. Throughout 1948 t h e f u l l f o r c e o f t h e i d e o l o g i c a lj ugge rnau t , p rop e l l ed by t he post -C om in fo rm l i n e of m i l i -t a n t s t r u g g l e b etw ee n two sys t em s , was di rec t ed a t t h eVarga school a n d i t s heresies. Art i c l e , i n t h e p r o f e s s i o n a la n d P a r t y journa l s s c a t h i n g l y a t t a c k e d t h e s c h o l a r l y wo rk sof Varga a n d h i s former I n s t i t u t e co ll eagues - -w orks w h ichc o l l e c t i v e l y r e p r e s e n t t h e best and most p r o d u c t i v e a c h i e v e -ment of postwar S o v i e t economic sch ola rsh ip . * These works ,T s t ruc t u re ' of t h e n e w I n s t i t u t e is foundi n A q i g f f ? n -accou:t o f t h e c r i t i c i sm i n 1948 d i r e c t e d a tt h e e c o no m is t s r e p r e s e n t i n g t h e Varga s c h o o l a nd t h e i rh e r e t i c a l w orks is t o be f o u n d i n Appendix 111.-17-


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some of which were d i s c o v e r e d t o c o n t a i n germs of H i l f e r d i n g ' s"organized" capital ism and Kaut s k y 's "ul t ra- i rnperial i sm;* weredenounced as un-Marx is t, un m i l i t an t , and reformis t . No lesst h a n f i v e pajor s e s s i o n s of t h e new Economics Ins t i tu t ewere convened i n 1948 t o t r$at t h e problems of contemporarycapi ta l i ,&, f o u r of which were d e v o t e d l a r g e l y t o denouncingMoreover , widespreadp e r s o n n e l changes were made i n t h e s e c t o r s of t h e EconomicsI n s t i t u t e s t ud y in g capi ta l ism; i n t he SeCtor on C a p i t a l i s tB us i nes s C ond it kons a l o ne , t h e i m por t an t %ody r e s pon s i b l ef o r c o l l e c t i n g and processing a l l t h e d i v e r s e s t a t i s t i c a ldata on t h e c a p i t a l i s t c o u n t r i e s , there w a s a complete t u r n -o v e r of personnel .**

. t h e heresies of t h e Varga schoo l . *

25. ID t h e face of s u c h an a s s a u l t , t h e u n i t y of t h eVarga school began to ' c rumble . W h i l e some of h i s a d h e r-e n t s r em ai ne d r s i l e n t , p o s t of them r e c a n t e d p u b l i c l y , a n d,i n t h e poi soned s p i r i t 00 S o v i e t p o l i t i c s , t u r n e d v i c i o u s l y 'on each other . Varga h i m se l f became t h e objec t of t h e i rc r u e l a t t a cks , a nd i n a symbolic d i s p l a y of P a r t y - l o y a l t yhe p r ep a re d s e v e r a l v er y h o s t i l e a n d p r o p a g a n d i s t i c a r t i c l e son US p o l i c y f o r t h e j o u r n a l Ne w Times.i n t h e face of th rea ts , a c c u s a t i o n s , a n d t h e unsavo ry spec -. of widespread p r o f e s s i o n a l d e g r a d a t i o n , Varga re t rea tedOD o n l y a f e w minor po in t s . ID October he a d m i t t e d t h a t th et o n e of h i s book w a s too temperate and t h a t - t h e s e p a r a t i o n -of economics from p o l f t i c s was e r roneous . However, he n o to n l y h e l d h i s g round on h i s major t he o r e t i c a l heresies,b u t a l s o d e l i v e r e d a most t e l l i n g c o u n t e r b l o w a t h i s adver-sa r i e s. In an October meet iug of t h e E conom i cs In s t i t u t e ,a t which m.any of Varga's assoc ia te s f u l l y r e c a nt ed t h e i rerrors af te r having been soundly denounced , Varga h u r l e da n o t h e r c h a l l e n g e t o t h e Sovie t l eader sh ip on t h e i n v i o l a -b i l i t y of t h e L e n i n i s t t h e s i s of t h e i n e v i t a b i l i t y of warbetween t h e i m p e r i a l i s t c o u n t r i e s . I t w a s on t h i s v e r y-table l i s t i n ' g t h e formal p os tw ar s e s s i o n s of Sovie teconomists d e a l i n g w i t h capitalism i s pres en t ed i n A ppendi xIV.

Y e t t h roughou t 1948,

26.

**Appendix V c o n t a i n s a l i s t o f t h e known p e r s on n e l i nt h i s Sector i n Varga's old I n s t i t u t e i n 1 947 an d i n i t ss u c c e s s o r i n 1952-1953.-18-


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p r i n c i p l e - - t h a t t h e g r o w i n g c o n t r a d i c t i o n s b e t w e e n . t h ei m p e r i a l i s t c o u n t r i e s would l e a d f i n a l l y t o war and co l l apse- -t h a t t h e S o v ie t leaders based t h e i r h o p e s f o r u l t i m a t e vic -t o r y . Varga main ta ined t h a t t h e overwhelming economic andm i l i t a r y , s u p e r i o r i t ' y o f t he ;V S i n t h e c a p i t a l i s t camp, asw e l l a s t h e p r e s s i n g d o m e s ti c a n d co l o n i a l problems of t h eimper i a l ' i s t powers , made war between them ext remely improb-able i n the p r e s e n t p e r i o d , I n t h e l i g h t of such l lpowerfu ln t i t h e s e s , t t Varga d e f i a n t l y c a l l e d fo r a re -examina t ion oft h e e f u n d a m e n ta l . Le n i n is t t h e s e s on t h e o r i g i n and n a t u r e ofwar. T h e s p e c t e r of Kautsky 's 11ul t ra- imperial i sm91whichVarga had publ i c ly r a i s e d w a s t o h a u n t t h e Sov i e t l e a d e r s h i pt h roughou t t h e pos t w ar pe r i od .27 . I n 1949 t he powerfu l wave of a n t i c o s m o p o l i t a n i s mf l o o d e d over i n t o t h e # i d e o l o g i c a l c u r r e n t , a n d t o g e t h e rt h e y were a b l e to sweep away t h e l a s t remnant s of Varga's30-month heresy . Varga re ca nt ed for h i s h e r e t i c a l m i s t ak esin t he March i s s u e of Problems of E conomi cs , t h e j o u r na l t h a th a d , r e p l a c e d V a rg a 's ow n house organ. H e a d m i t t e d t h e erroro f h i s r e f o r m i s t p r o p o s i t i o n s o n t h e i n c r e a s e d eco no mic r o l eof t h e s t a t e , c a p i t a l i s t p l a nn i n g , r e l a t i o n s be tw ee n t h ec o l o n i a l pow ers an d t h e c o l o n i e s , a nd t h e p e a c e f u l t r a n s i t i o nf r o m c a p i t a l i s m t o social ism. Y e t , s u r p r i s i n g l y , h e w a ss i l e n t a b o u t h i s l ong-r ange p r e d i c t i o n s of economic depres-s i o n an d h i s c h a l le n g e t o t h e L e n i n i s t t h eo r y of t h e i n e v i ta -b i l i t y of war. T hi s s i l en c e , pe rhaps , may have been t h er e a s o n h e a nd h i s a d h e r e n t s were ag-ain denounced a t a Marchs e s s i o n of t h e E co nom ic s I n s t i t u t e f o r t he i r l l ha l i -wayl l re-can ta t ions .

I

I m p l i c a t i o n s of t h e Varga Heresy28. The Varga case is s i g n i f i c a n t a o t ' o n l y b ec au se iti l l u s t r a t e d how t h e P a r t y mo bi li ze d S o v i e t i n t e l l e c t u a l s be-h i nd i t s programs, b u t a l s o because it i nv ol ve d i s s u e s t h a twere i n t i m a te l y r e l a t e d t o S o v i e t p o l i c y . The o u t l i n e s oft h e s e i s s u e s may be d i s ce r n e d i n t h e c o n tr o v e rs y o ve r Varga'sviews. According t o V ar ga , t h e S o v i e t leaders would be con-f r o n t e d w i t h t h e f o l l o w in g p r o s p e c t s a n t h e postwar p e r i o d :

t a l i sm, t h e c a p i t a l i s t s t a t e s would be a b l e t o remain power-f u l a nd t o p r e s e r v e a u n i te d f r o n t f o r a l o n g per iod of t i m e .C onsequen t ly , any fu t u re war would not be between the capi-t a l i s t powers, but between them and the USSR;

a , Give n t h e l i k e l i h o o d o f a s t a b i l i z a t i o n of capi-

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b. In t h e h ig h ly i n d u s t r i a l i z e d c a p i t a l i s t coun-t r i e s , t h e c l a s s s t ru gg l e upon wh ich t he K rem li n r e l i e df o r t h e e x pa ns io n of i t s power would be modi f i ed and sloweddown. Xn f a c t , i n , t h e major coun t r i e s o f Wes t e rn E u ropei t was a r r e a d y b e i n g r e p l a c e d b y a s t r u g g l e f o r a s h a r ei n t h e p a r t i c i p a t i o n by t h e working c lass a n d b o u r g e o i s i ei n t h e ' d i r e c t i o n ,of t h e s t a t e , a s Varga h a d p r e d i c t e d ;t h e i r economic an d p o l i t i c a l s t a t u s , t h e be gi nn in g of in-d u s t r i a l i z a t i o n , a nd t h e gr ow th o f t h e n a t i v e b o ur g e o is i ewould r e d u c e t h e prospec t s f o r s u c c e s s f u l re v o l u t io n a r ya c t i v i t y f o r many y e a r s ;

c , In t h e c o l o n i a l c o u n t r i e s , t h e i mprovement i n

d e Wi t h cont inued economic so lvency in t h e capi-t a l i s t world and t h e g r a d u a l t r a n s i t i o n toward social ismt h r o ug h t h e v a r i o u s n a t i o n a l i z a t i o n a nd w e l f a r e pr og ra mssponso red by t he -w ork i ng c l a s s , t h e c ha ng in g c a p i t a l i s tworld m i gh t deve l op a n i d e ol o g y t h a t c o u l d compete w i t hCommunism for u n i v e r s a l a l l e g i a n c e by o f f e r i n g b o th e co -ncauicsecuri ty and p o l i t i c a l f reedom. Such a developmentm i gh t e v e n t u a l l y h av e a d v e r s e r e p e r c u s s i o n s w i t h i n t h eSov i e t sy s t em . In sum, i m p l i c i t i n Varga's est imate oft h e c a p i t a l i s t world was a s t r o n g a rg um en t i n f a v o r ofc o n t i n u a t i o n of t h e t a c t i c s of t h e wartime c o a l i t i o n , a tl ea s t 011 a l e v e l of m i l i t a n t c o m pe t it io n , r a t h e r t h ans u p po r t f o r t h e t a c t i c s of t h e v'cold warf' t h a t werea c t u a l l y a d op te d.

29. T h e p e c u l i a r t r e a t m e n t of t h e Varga heresy--t h e t o l e r a t i o n of w i d e d i v e r g e n c i ? s betyeen a r tdc l e s o nc a p i t a l i s m a n d t h e P a r t y l i n e , t h e l o n g d e l ay in s i l e n c i n gt h e Varga school , a nd t h e c on t in u ed f a i l u r e t o d i s c r e d i tVarga comple te ly and t o remove him from i n f l u e n t i a l pos i -t i o n s even a

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