‘Naturalization’ and Taxes This was the content of the so-called ‘naturalization’ of economic relations i.e., the alleged ‘abolition of money’ in the state sector. In January 1920, the State Bank was closed, not because the money was ‘abolished’ but because the Vesenkha usurped its functions through budgetary arrangement. During the First World War like other belligerent governments, Tsar Government had also to depend on the mintage and printing of money. Balanced budget became the objective of the Soviet government since its inception, but the economic disintegration and high costs of the civil war caused large deficits, which were to be covered from other sources. At that time, public debt was impractical. The attempts to raise tax revenues, such as by the Central Executive Committee of the All-Russian Congress of Soviets (VTsIK) decree of 30 October 1918 imposing two new taxes, namely “Special Revolutionary Tax” and “Tax in Kind”, miserably failed. Therefore, the only source open was note printing which only contributed to spiraling inflation. Again, the Marxists must note: Lenin viewed that all communists are against indirect taxation, which is regressive, and are for a progressive direct tax. Whereas in Marx’s point of view: “Taxes are the economic basis of the government machinery and of nothing else….Income tax presupposes the various sources of income of the various social classes, and hence capitalist society” (CGP, p. 29). Thus, with the replacement of capitalism by socialism, tax ceases to exist at all. True, the nationalized concerns did not have to pay any tax during War Communism, and as nationalization proceeded to cover more and more firms leaving only the very small ones, less and less tax was collected. Nevertheless, the view that nationalization deepened the government’s budgetary troubles is misleading. Because, the fall in revenue of the state under this head was compensated by the rise in revenue under another head, i.e., the required deposits of the receipts of nationalized concerns. This means, the part of the profits of an enterprise, which was entering into the state’s budget in the form of direct tax receipts before the enterprise was nationalized, was, now after its nationalization, directly entering into the state’s budget in another form of revenue receipt. This change of form does not change the essence of the matter. The process reached a point by early 1919 when all receipts and payments and hence profits and losses of the state enterprises had to be transferred to the People’s Commissariat of Finance (Narcomfin). Moreover, before May 1918 the state bank was the source of industrial credit. Since May 1918 following a government decree all credit applications were to be made with Vesenkha, approved credits were to be provided by Narcomfin, and by the spring of 1919 applications were to be made with Narcomfin instead of Vesenkha. Thus, the state bank was stripped of its most important function. This was the result of the proposals of placing the state bank under Vesenkha and limiting its role to bookkeeping for nationalized enterprises placed before the second All-Russian Congress of regional Economic Councils in December 1918. Finally, in the second half of 1919 the state bank had no work to do. Therefore, in January 1920 it was closed down. Again, it must be noted that this closure implied neither the ‘abolition’ of the banking system, nor the ‘abolition’ of money in the state sector. Clearly, the myth that the so-called ‘naturalization’ of the state sector saw money dying is demolished. However, dwelling at the surface layer does not help us reach the root of the problem. Marxists have to reach the source of motion of any phenomenon for finding out, perforce, when and how it could be rooted out. We know how Marx and Engels have perfectly located the source of motion of money in the heart of commodity that congeals and conceals indirect human labour that is value and, as such, until value is abolished, money cannot be abolished. Thus, the most fundamental question to be asked: Was value ever even a target of attack by the Bolsheviks? According to Marxian materialist method, the only way to uproot value is to uproot the relation that needs the causal-historical-but-spontaneous economic category that is indirect social labour and, at the same time, to implant the relation that needs the causal-historical-and-conscious economic category that is direct social labour. As Marx observed, “since now in contrast to capitalist society, individual labour no longer exists in an indirect fashion but directly as a component part of the total labour.” (CGP, pp. 14-15). The point is deeply subtle and dialectically differentiating. In both the systems quantum of social labour embodied in a product is an average magnitude, but what constitutes the basis of capitalism is the indirect labour whereas that of socialism is the direct labour. Division of labour, private property and exchange turn individual labour into indirect social labour, whereas under “co-operative society based on common ownership of means of production” (loc. cit.) individual labour is not exchanged and hence becomes directly social labour. It is understood that the latter system was never introduced in Russia. In May 1919 at a congress of heads of financial sections, Milyutin said, “A system without money is not a system without payment. On the contrary, the revenue of an enterprise, like its expenditure, must be entered and accounted for in monetary symbols; money must not pass from hand to hand, but must be recoded to the requisite number of millions of rubles; the account of so many millions…” (quoted in E. H. Carr, The Bolshevik Revolution, Vol. 2. Macmillan, 1952, p. 266). Clearly, the basis of and measure for this method of settlement by bookkeeping is prices set by the government. Nevertheless, according to Marx price is nothing but the money name of general labour realized in a commodity. Commodity is the congealed value. Moreover, “the money form is but the reflex, thrown upon one single commodity, of the value relations between all the rests.” Further: “the fact that money can, in certain functions, be replaced by mere symbols of itself, gave rise to that other mistaken notion, that it is itself a mere symbol.” (Capital, l, pp. 93-94). Hence, Milyutin’s “mistaken notion” that the ruble measure used in settling the accounts in the state sector was itself a mere ‘monetary symbol’ and, to use Marx’s phrase, “under this error lurked a presentiment that the money form of an object is not an inseparable part of that object.” (loc. cit.) “But money itself has no price. In order to put it on an equal footing with all other commodities in this respect we should be obliged to equate it to itself as its own equivalent. The price or money-from of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form; it is, therefore, a purely ideal or mental from. … Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds’ worth of goods. When, therefore, money serves as a measure of value, it is employed only as imaginary or ideal money.” (ibid., pp. 98-99, emphasis added). Since commodity is the congealed value and value of a commodity is the fundamental state of existence of money, as value exists, so exist commodity and money. In Russia as value remained untouched, so remained the necessity of turning the products into commodities and of a “material” for the expression of their values even in the state sector, however naturalized it was. And Marx says, commodities express by their price how much they are worth, and money serves as money of account* whenever it is a question of fixing the value of an article in its money-form.” (ibid., p. 103). As “money of account”, “material” existence of money is not necessary. What is necessary is its “imaginary or ideal” existence. When Milyutin said that a system without money still required monetary symbols to serve as a unit of account for reckoning the commodities in the state sector in terms of prices set by the government, he mistook the imaginary or ideal existence of money to be “monetary symbols”. Change in name of a thing does not change its essence at all. At a later stage of the proceedings of the same congress, Krestinsky admitted, “the ruble may remain as a unit of account even when money has ceased altogether to exist in a material form”. (See Carr, op. cit, Vol. 2, p. 266). Money’s “material form” for Krestinsky is what is money’s palpable bodily form (i.e., currency) for us and for Ruble’s existence as a unit of account implies its imaginary or ideal existence and thereby the existence of money itself. *As a category ‘unit of account’ differs from ‘money of account’. In positivist economics money is merely a unit of measurement which, besides its various other functions, serves as a unit of account. This theory is ideological because it takes money as a ‘neutral’ unit just as various other units of weights and measures, namely, gram, metre, litre, Celsius, Fahrenheit, &c. are, and not as an expression of a social relation of production. On the contrary, ‘money of account’ accurately expresses the social relation which money really is. Thus, ‘Marxists’ who claim that money was ‘abolished’ in the state sector during War Communism are ‘Marxists’ who abandon Marx’s theory of money to accept the positivist one. As Marx points out, according to positivist economics “Money has been cunningly devised” to overcome “certain technical inconveniences” suffered by commodity exchange. Hence, while criticizing Thomas Hodgskin, Marx says, “Proceeding from this quite superficial point of view, an ingenious British economist has rightly maintained that money is merely a material instrument, like a ship or a steam engine, and not an expression of a social relation of production, and hence is not an economic category.” (CCPE, p. 51). Thus, in positivist economic ingenuity money is a non-economic category, a product of the idea, a ‘neutral’ “material instrument,” used to reckon economic activities in conformity with ‘natural laws’. Therefore, by citing the existence of money in the existence of Ruble as the unit of account in Russia, economic ideologues rejoice their victory: in exposing the existence of money even in communism. They condemn Marx’s theory – “money is an expression of a social relation of production,” and hence is “an economic category”, which will cease to exist in socialism – as an utopia towered upon a fundamental error, and thereby firmly positing the ‘natural law’ of money’s indispensability as a ‘neutral’ “material instrument”. Market and Inflation Existence of money, commodity and value implied existence of market in Russia, though in a form different from that in which it exists in the West. Thus, all exchanges between nationalized enterprises were simple and pure commodity exchange, which according to the Marxist method is not defined by any specific form of expression or state of existence. In its function as a medium of circulation, money does not require any palpable bodily form (cf. bank deposits). During War Communism, this function of money was well served by the centralized accounting. In fact, neither had the Bolsheviks any plan to root out money immediately after the seizure of power, nor did they clearly know its know-how. Yet some of them dreamt money dead, which others predicted its inevitable death. Moreover, the VTsIK decree viewed its declaration of the merger of the State Bank in the Narcomfin (the Commissariat of Finance) as an attempt “to establish moneyless settlements with a view to the total abolition of the money system”, whereas money and its illusion never lost its sway over society. The revised party progamme adopted by the eighth party congress in March 1919 said, “In the first period of transition from capitalism to communism …the abolition of money is impossible”, but in the same breathe recommended measures “which will widen the sphere of moneyless settlements and pave the way for the abolition of money”. (See Carr, op. cit., p. 265) Upholding this ideology, Bukharin and Preobrazhensky in their ABC of Communism published in the Autumn of 1919 insisted on the need for money “in the socialist society” and said that the abolition of money would come when society passed from ‘socialism’ (‘the lower stage of communism’) – [a Leninist fallacy – BS] – to the communism proper. (ibid., p. 262) At the end of 1919, “the demand for currency was so great that factory tokens issued on bits of ordinary paper with stamp of some responsible person of local institution or president of some committee or other passed as money” (quoted in Carr, op. cit., p. 259). Even when money reaches the stage of token money, i.e., symbols of value, ‘its functional existence absorbs, so to say, its material existence,” yet, says Marx, “this token which functions as money, must have an objective social validity of its own”. Even expanding demand for Ruble compelled the state to follow a policy of unlimited inflation via unlimited issue of paper money by resorting to the printing press, which worked to capacity. Despite this fact, Preobrazhensky viewed the money-printing press as “that machinegun of the Commissariat of Finance which poured fire into the rear of the bourgeois system and used the currency laws of that regime in order to destroy it.” While even a positivist analyst like Carr has seen in it as merely “a virtue” “made of necessity”, “an ex post facto justification of a course which was followed only because no means could be found of avoiding it”. (ibid., p. 261) In 1920, Zinoviev said, “We are moving towards the complete abolition of money”; Larin dreamt, “the progressive ‘dying out’ of money” grows in proportion to the growth in organization of Soviet economy. Money no longer exists as the sole measure of value. Money as a medium of exchange can already be abolished to a considerable extent. Money as a means of payment will cease to exist when the Soviet state can free the workers from the necessity of flocking to the Sukharevsky market [i.e., the ‘black market’]. Both will be realized in practice in the next few years. Money will then lose its significance as a store of value and will remain merely as what it actually is: “coloured paper”. (see M. Dobb, Soviet Economic Development Since 1917, p. 122). And in Lenin’s words, it is “the coloured pieces of worthless paper”. (see A. Nove, op. cit., p. 75). Needless to repeat the already raised arguments to show that the above view is also positivist. That a piece of specially “coloured paper” becomes money is not because people wish it to be so, but because the evolution of a given relation of production came about to be expressed in that tangible from. As long as money exists in the form of a “coloured paper”, or in any other form, it actually exists to accomplish all the necessary functions of the same relation of production that has brought it into being in the first place.
Posted on: Thu, 09 Oct 2014 13:47:03 +0000
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