IDEOLOGICAL DETERMINANTS OF SOVIET TRADE WITH THE NON-COMMUNIST WORLD

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• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A001400110002-1
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• Original Classification: C
• Document Page Count: 38
• Document Creation Date: December 27, 2016
• Document Release Date: May 29, 2013
• Sequence Number: 2
• Publication Date: June 1, 1959
• Content Type: REPORT

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CO
ECONOMIC INTELLIGENCE REPORT
N? 110
IDEOLOGICAL DETERMINANTS OF SOVIET TRADE
WITH THE NON-COMMUNIST WORLD
CIA/RR 59-23
June 1959
OFFICE OF RESEARCH AND REPORTS
CO
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This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Sees. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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C-O-N-F-I-D-E-N-T-I-A-L
IDEOLOGICAL DETERMINANTS OF SOVIET TRADE
WITH THE NON-COMMUNIST WORLD
Office of Research and Reports
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This report attempts to make explicit the influence of Communist
political doctrine on the development of Soviet trade with the non-
Communist world. Within the limits prescribed by Soviet attitudes
toward the West -- limits which as long. ago as 1927 Stalin declared
were "set by the opposite characters of the two systems, between which
there is competition and conflict" -- Soviet economic planners are, of
course, willing to behave'like "economic men," and Soviet foreign-eco-
nomic policy is motivated by commercial as well as political consider-
ations. It is'believed, however, that the Soviet "world view" and
changes in the Soviet "world view" determine the development of Soviet
trade with the West. It is also believed that the parameters of this
trade, which are determined by Soviet attitudes toward world historical
development, reflect both current and ultimate Communist political goals.
I
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I
Soviet Foreign Trade with the Non-Communist.World,
1918-58 . . . . . . . . . . . . . . . . . . . . . . 4
vi -
C-O-N-F-I'D-E-N-T-I-A-L
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IDEOLOGICAL DETERMINANTS OF SOVIET TRADE
WITH THE NON-COMMUNIST WORLD*
For Communist leaders in 1917, who felt themselves poised on
the threshold of world revolution, "coexistence" was considered
little more than a short-run tactic applicable only until the Bol-
sheviks had consolidated their victory in Russia. They did not
foresee any possibility of a permanent, or even a prolonged, accom-
modation between the capitalist world and the USSR. Soon faced,
however, with the failure of world revolution to materialize, with
the surprising recuperative powers of world capitalism, and with
pressing economic demands at home, these leaders saw that some
adjustment of Communist doctrine was mandatory in terms of an
indeterminate period of "coexistence with the capitalist encircle-
ment." That an inevitable and violent struggle between East and
West would be the dramatic climax to this transitional epoch, how-
ever, was never seriously doubted, or indeed denied, by Soviet
leaders.
In view of the "breathing space" which history had apparently
granted the capitalist world, Soviet foreign trade policy, too,
became oriented -- and ultimately reconciled -- to a period of
coexistence with the non-Communist world. Convinced, however,
that the "partial, relative, and temporary stabilization of capi-
talism" would not be a long one and that an ultimate struggle
between the two systems was an inescapable part of the historical
process, Soviet policymakers viewed international trade as a
tactical expedient rather than as an end desirable in itself.
Although the advantages of an international division of labor and
of a worldwide exchange of goods and services were recognized by
Soviet leaders, they accepted only those features which would con-
tribute to the strengthening of the USSR's economic and military
potential and which would not reduce state control over the econ-
omy. Stalin's almost pathological concern for security made the
pursuit of economic self-sufficiency an openly avowed goal of
Soviet policy and severely limited both the volume and the pattern
of Soviet foreign trade.
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 June 1959.
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But the quest of the USSR for economic independence from what it
regarded as a hostile capitalist environment -- an insulation which
would serve to protect the USSR from economic penetration during the
period of coexistence and to guarantee its victory during the "inevi-
table clash" to follow -- was not synonymous with autarky in the
sense of a proscription of all trade. Economic realities had clearly
demonstrated to Soviet economic planners that self-sufficiency could
be achieved most rapidly through an expansion of selected imports
from the more industrialized countries of the West. The "granite
wall separating two worlds" which characterized the monopoly of for-
eign trade during the prewar period at the same time was to "serve
as a bridge to transfer to the USSR the advanced technical develop-
ment of the capitalist countries." 1/*
In the postwar period, however, factors which could not possibly
have been foreseen by earlier Soviet policymakers -- the threat of
mutual destruction inherent in war in a nuclear age coupled with a
rapid growth in the economic capabilities of the Sino-Soviet Bloc --
ostensibly have motivated Soviet leaders to renounce violent con-
flict as a means to ultimate Communist aspirations in favor of a
carefully conceived and skillfully executed campaign of "competitive
coexistence." Originally devised as only a tactical maneuver, an
interval between battles, "peaceful coexistence" in its new "com-
petitive" form has now become a positive element of Soviet strategy.--
it has become the battle itself. The last doctrinal impediments to
a peaceful modus vivendi with the non-Communist world- the con=
cepts of capitalist encirclement and the inevitability of war --
ostensibly have been discarded, and in their place has been prof-
fered the prospect of a prolonged contest of economic strength with
the West.
Within this context, the motives of Soviet foreign economic
policy may be stated simply: (1) in the industrial West, to utilize
economic contacts with the Free World to keep abreast of Western
technology and to hasten an economic growth the immediate aim of
which is to "overtake and surpass" the capitalist West, and (2) in
the underdeveloped areas of the'world, to. help free these newly inde-
pendent areas from Western influence and subsequently to create in.
them, either through economic blandishments from the Bloc or.through
the domestic appeal to Communism, an increasing vulnerability to
ultimate absorption into the Communist' sphere. If, in the meantime,
economic pressure is created upon capitalist countries dependent on
this area for markets and sources of supply and/or if it leads to
conflicts within the Free World tending to weaken its unity, so
much the better.
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In summary, a critical evaluation of the history of Soviet
policy relating to foreign trade suggests the following conclusions.
The extent to which the USSR is willing to trade with the Free World
remains today, as it has for the past 40 years, a reflection of its
current policies and ultimate aspirations, both political and eco-
nomic'. The concept of "coexistence" which characterizes current
East-West relations comprises, in Soviet eyes, nothing less than the
time required to bring the still economically backward East up to
the level of the advanced industrial countries. The active "export"
of revolution has been subordinated to an emphasis on rapid economic
growth, the ultimate aim of which is to establish the economic and
cultural superiority of socialism over capitalism. If and when this
objective is attained, another phase in the development of East-West
relations. will have been reached: the reactivation of the revolu-
tionary potential in the Western world either through the inherent
contradictions and crises of a capitalist society increasingly be-
reft of its colonial markets and sources of cheap labor and materials
or through the active military intervention of the USSR.
Because the USSR is committed to a rapid rate of economic growth,
the achievement of which requires a planned and controlled economy,
Soviet authorities appear to be unwilling to tolerate any vitiation
of their exclusive control of the organs of foreign trade or of the
subordination of foreign trade to the dictates of the national eco-
nomic plan. Although imports from the West may indeed be called
upon to make a substantial contribution to Soviet economic growth,
it is unlikely that such trade will be permitted to attain a level
at which it may exert a disruptive influence on planned rates of
growth internally. Predicated on a philosophy which conceives as
impossible any relation but one of hostility between East and West
and which regards open conflict, if not as inevitable, then at least
as always an imminent possibility, Soviet policy on foreign trade
continues to ignore, as irrelevant, a comparison of current Soviet
costs with foreign costs in those industries which are deemed "stra-
tegic" to Soviet national interests. The USSR seems willing (and,
perhaps more importantly, capable) of bearing the economic costs
which a departure from a trade pattern more nearly reflecting pre-
sent comparative advantage entails. The sacrifice of productivity
and the loss of efficiency, in Soviet eyes, apparently have been
amply compensated for by the long-term advantages accruing to an
economy which for 40 years has sought to accommodate itself to the
isolation that war would bring.
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I. Introduction.*
"The foreign trade policy of the USSR is an integral part of its
foreign policy." J Implicit in this quotation from a Soviet textbook
published in 1958 is the fundamental divergence between Communist and
capitalist approaches to international trade -- between (1) a foreign
trade operated and administered exclusively by state organs, conducted
on the basis of national economic planning, and made to subserve the
ends of a political creed, and (2) a trade carried on predominantly by
private enterprise more or less in spontaneous response to market con-
ditions. Soviet foreign trade is as much a political as an economic
phenomenon. Inseparable as it is from Soviet foreign policy, Soviet
trade must be viewed within a framework of hostility between East and
West which admits of no facile comparison with normal Western economic
relations, based as they are on a common tradition of mutual trust and
confidence.-
For the purposes of this report, the Soviet concept of a polarized
world economy -- one encompassing two separate and parallel world mar-
kets -- has been used as a point of departure. The commercial rela-
tions between these two systems are the subject of this report. This
approach seems justified as much by the presence in Soviet minds of
the "antagonistic contradictions and mutual hostility" which frus-
trate trade relations with the West as by their presumed absence in
the "higher form of economic collaboration" which ostensibly governs
Soviet relations with the Satellites. It is the aim of this report
to make explicit the influence of this Soviet "world view" on the
development of Soviet trade with the non-Communist world.
II. Communist Doctrine and "Coexistence" (1918-40).
A. Genesis and Development.
If there was one characteristic common to all the Bolshevik
leaders in 1917, it was their almost messianic faith in the imminent
coming of world revolution and in the rapidly approaching collapse
of the capitalist world. Nevertheless, although in 1917 it had been
possible to argue that revolutionary prospects in the West were favor-
able, subsequent events rapidly transformed the prevailing Party mood
of optimism to one of disappointment. The wave of revolution that
swept over Europe in the wake of the Bolshevik uprising -- in Germany,
Italy, Hungary, and the Baltic states -- ended in a series of defeats,
and in 1925 the Fifth World Congress of the Comintern was obliged to re-
cognize that the tide of revolution had ebbed and that the world had
* For a graphic presentation of the value of Soviet foreign trade
with the non-Communist world, 1918-58, see the chart, following p. 4.
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 . Soviet Foreign Trade
with the Non- Communist World
1918-58
Total Soviet Foreign Trade, 1946-58
Million US Dollars
TOTAL T
RADE
FREE
WORLD TRAD
E
0
1946
TSARIST WAR
RUSSIA COMMUNISM
1925
N E P
1930 1935 1940 1945 1950
FIRST FIVE-YEAR ECONOMIC WAR YEARS FORMATION
PLAN ISOLATION OF SOVIET BLOC
1955 1958
COMPETITIVE
COEXISTENCE
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witnessed "a partial, relative, and temporary stabilization of
capitalism." Skepticism as to the success of a renewed effort at
world revolution and conviction that an extended truce with world
capitalism was both unavoidable and, on the whole, desirable for
the Soviet state led naturally to a reappraisal of the role which
the USSR was to play in international affairs. From Stalin's
point of view it would have been utter folly to risk the reality
of socialism in the USSR for the nebulous shadow of revolution
abroad.
In an attempt to clothe his actions in the mantle of Marxist
orthodoxy, Stalin took great pains to seek what little doctrinal
justification he could find in the writings of Lenin. He sought it
in Lenin's theory of imperialism. "The real greatness of Lenin,"
declared Stalin, "consists in his raising up openly, honestly, and
fearlessly the question of the necessity of a new formula, and in
proclaiming the possibility of the victory of the proletarian revo-
lution in separate countries." J
Lenin had maintained that capitalism in its last and mori-
bund stage inevitably turns monopolist and imperialist. Gigantic
trusts and international cartels engage in fierce rivalry for the
control of world markets. The capitalist system, impelled by its
frantic quest for profits, transcends national boundaries, per-
meates every corner of the globe, and merges into one world capi-
talist system. Revolution, accordingly, occurs not as earlier
Marxists had predicted, simply as a result of local conditions,
but rather as the result of the total interplay of forces within
the world capitalist system. Revolutions need not take place
first in the countries that are most advanced industrially, as
Marx's historical materialism seemed once to imply. On the con-
trary, they are more likely to occur as a break in the world
"front" of the capitalist system -- at a point where the chain has
its weakest link.
The front of capital will be pierced where
the chain of imperialism is weakest, for the pro-
letarian revolution is the result of the breaking
of the chain of the world imperialist front at
its weakest link; and it may turn out that the
country which has started the revolution, which
has made a breach in the front of capital, is
less developed in a capitalist sense than other,
more developed countries, which have, however,
remained within the framework of capitalism.
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In 1917 the chain of the imperialist world proved
to be weaker in Russia than in the other countries.
It was there the chain gave way and provided an
outlet for the proletarian revolution.
Having sought doctrinal justification for "socialism in one
country" in Lenin's theses on imperialism, Stalin set forth a com-
plete exposition of his views in The October Revolution and the
Tactics of the Russian Communists, published in December 192. The
work, however, clearly demonstrated the naivete of those who saw in
"socialism in one country" the promise of a permanent, peaceful co-
existence between capitalism and Communism. Those are "wrong," wrote
Stalin, who regard the victory of socialism in one country as an end
in itself, as merely a "national phenomenon," as "something passive."
He also wrote as follows:
The world significance of the October Revo-
lution lies not only in that it constitutes a
great start made by one country in causing a
breach in the system of imperialism and that it
is the first centre of Socialism in the ocean of
imperialist countries, but also in that it consti-
tutes the first stage of the world revolution and
a mighty base for its further development. 5/
Thus the change in tactics required by the new doctrine was
explained to be no alternative to world revolution but a vital step
toward it. "He who does not understand this peculiar feature of
the October Revolution," added Stalin, "will never understand either
the international nature of this revolution ... or its peculiar for-
eign policy."
Thus it was only with the "ebbing of the revolution tide"
in Europe and the establishment of what appeared to be at least a
temporary equilibrium between capitalism and socialism that some
readjustment of Communist doctrine was made mandatory in terms of
an indeterminate period of "peaceful coexistence with the capitalist
encirclement"; but that the coexistence need not necessarily be peace-
ful or, indeed, very long was implicit in the concept. The pursuit
of international proletarian victory was now less a matter for eager
and dedicated Marxists the world over than a task to be accomplished
through the instrumentality of a militarily powerful and economically
viable Soviet state. The "new economic policy" (NEP) and the forced
industrial development of the early Five Year Plans were victories to
be won on the home front before a final assault on world capitalism
could be undertaken:
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Perhaps the most convincing demonstration of the impermanence
which Soviet leaders attached to their proffers of peaceful coexistence
is provided by Soviet doctrine itself, in the concept of the "inevi-
table clash." This assumption of irreconcilable hostility between
capitalism and socialism has been so much an integral part of Marxist
doctrine and has so permeated the thinking of Lenin and Stalin that
current Soviet propagandists have been forced to rationalize coexis-
tence in terms of "living Marxism" and "new conditions" rather than
in terms . of. logical or doctrinal consistency.
The fundamental concept of inevitable clash has been reit-
erated in every period of pre-Stalin Soviet history. An ultimate
struggle between the two systems was persistently portrayed as an
integral part of a historical process the culmination of which was
to be the establishment of a worldwide, classless, stateless society.
The question "Kto kogo?" -- "Who will'conquer whom?" -- implies
Soviet belief in this ultimate clash. Both Lenin and Stalin clothed
the struggle between capitalism and communism with an inescapable
either-or quality which made peaceful coexistence of the two systems
a matter of tactical expediency rather than an end desirable in it-
self. "As long as capitalism and socialism exist," wrote Lenin in
1920, "we cannot live in peace; in the end one or the other will
triumph -- a funeral dirge will be sung over the Soviet Republic or
over world capitalism. This is a respite in war." / In the light,
however, of the pressing internal economic demands of the Soviet
state, it was clearly to the interest of the Soviet leadership to
postpone this conflict until a time of its own choosing.
Faced with the failure of concurrent revolutions in Europe,
the surprising recuperative powers of world capitalism, and economic
dislocation in the USSR, Soviet theoreticians rationalized a period
of prolonged coexistence with the non-Communist world. What the USSR
needed was time, a breathing space in which to fulfill Lenin's in-
junction to "overtake and surpass" the capitalist West. Communism
was forced to make important concessions to the exigencies of the
moment, but in its steadfast adherence to the assumption of irrecon-
cilable hostility between the Communist and capitalist worlds, it
left little doubt as to the historical role coexistence was to play
in Soviet strategy. It was a policy to be followed in interludes
between conflicts, a temporary respite which Lenin himself charac-
terized as a "means of mustering forces for new battles."
The implication of universal destruction inherent in thermo-
nuclear war and a consequent significant transformation of the Soviet
concept of the "inevitable struggle" in the postwar era -- a change
in means and immediate objectives if not in the fundamental antago-
nism itself -- is discussed in VII, below.
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.B. Commercial Implications.
As the theme of "peaceful coexistence" early in Soviet
history became a tactical expedient of Soviet foreign policy, so
too was foreign trade considered an integral element of that policy.
At the Economic Conference which convened in Genoa on 10 April 1922 --
the first major international meeting at which the USSR was repre-
sented -- the Soviet delegate formulated one of the earliest practical
expressions of the economic coexistence of the two social systems, as
follows: "Adhering to the principles of Communism, the Russian dele-
gation recognizes that in the present historical epoch which makes
possible the parallel existence of the old and the newly born social
systems, economic cooperation between states representing these two
property systems is an imperative necessity for general economic re-
covery." J The commercial advantages which the NEP seemed to pro-
mise to the capitalist West -- a West considered to be market hungry
and short of raw materials -- were deemed by Soviet leaders as much
an inducement for economic cooperation as were the industrial demands
of the Soviet state. In 1922, Lenin stated the following:
The bourgeois countries must trade with
Russia; they know that without some form of
economic relations their collapse will proceed
further than it has gone up to now. ... The
interests of all the capitalist states ... call
for the development, regulation, and expansion
of trade with Russia. Since such interests
exist ... this fundamental economic necessity
will hew a road for itself.* v
The economic realities which provided a basis for "mutually
profitable" trade between the USSR and the capitalist West were
made further explicit by Stalin in 1926, as follows:
* The emphasis on the "advantages" to be derived by the West in trade
with the USSR.has been a recurrent one in Soviet trade offers. In the
ECE in April 1958, economic cooperation between East and West was
offered as a means of softening the effect of the Western recession.
The Soviet delegate declared that "we do not rejoice at the sight of
growing unemployment in the West" and reminded his listeners that dur-
ing the US depression in the 1930's "orders placed abroad by the Soviet
Union gave employment to many thousands of workers" in the West. In a
similar vein, Khrushchev's letter to President Eisenhower on'3 June 1958
suggested that increased Soviet-US trade "would enable American indus-
tries to work at a higher percentage of their capacity and would raise
the level of employment."
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Not only does our economy depend upon the
capitalist countries, but the capitalist coun-
tries too depend upon our economy, upon our oil,
our grain, our timber and, lastly, our boundless
market. We receive credits, say, from Standard
Oil. We receive credits from German capitalists.
But we receive them not because of our bright
eyes, but because the capitalist countries need
our oil, our grain, and our market for the dis-
posal of their machinery. It must not be for-
gotten that our country constitutes one-sixth
of the world, that it constitutes a huge market,
and the capitalist countries cannot manage with-
out some connection or other with our market.
All this means that the capitalist countries de-
pend upon our economy. 10
One year later, in 1927, Stalin told a visiting US labor
delegation that "the existence of two opposite systems, the capi-
talist system. and the socialist system, does not preclude the
possibility of ... agreements ... fnd thag such agreements are
possible and expedient under conditions of peaceful development."
Exports and imports are the most suitable
ground for such agreements. We need equipment,
raw materials (raw cotton, for example), semi-
manufactures (from metals, etc.), while the capi-
talists need oil, timber, grain products; we
need a market for those goods. There you have a
basis for agreements. We need credits; the capi-
talists need good interest for their credits.
There you have still further basis for agree=
ments -- namely, in the field.
Stalin took great pains, however, to emphasize the limited
and "temporary" nature of such agreements. "The limits to these
agreements," he maintained, "are set by the opposite characters of
the two systems, between which there is rivalry and conflict. With-.
in the limits allowed by these two systems, but only within these
limits, agreement is quite possible." 11
Perhaps the most explicit statement of the "limits" within
which the USSR was willing to trade in the prewar period was that
contained in the program adopted by the Sixth World Congress of the
Comintern in September 1928. Its prophetic anticipation of the
course of Soviet foreign trade in the ensuing 30 years warrants
its quotation in full, as follows:
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The simultaneous existence of two economic
systems, the Socialist system in the USSR and
the Capitalist system in other countries, im-
poses on the Proletarian State the task of
warding off the blows showered upon it by the
capitalist world (boycott, blockade, etc.), and
also compels it to resort to economic maneu-
vering and utilizing economic contacts with capi-
talist countries (with the aid of the monopoly
of foreign trade -- which is one of the funda-
mental conditions for the successful building
up of Socialism, and also with the aid of credits,
loans, concessions, etc.).. The principal and
fundamental line to be followed in this connec-
tion must be the line of establishing the widest
possible contact with foreign countries -- within
limits determined by their usefulness to the
USSR -- i.e., primarily for, strengthening indus-
try in the USSR for laying the base for her own
heavy industry and electrification and, finally,
for the development of her own Socialist engi-
neering industry. Only to the extent that the
economic independence of the USSR in the capi-
talist environment is secured, can solid guar-
antees be obtained against the danger that
Socialist construction in the USSR may be des-
troyed and that the USSR may be transformed into
an appendage of the world capitalist system. L2/
III. Soviet Foreign Trade in the Prewar Period (1918-40).'
A. Foreign Trade and "War Communism" (1918-21).
With its advent to power. in November 1917 the Soviet govern-
ment introduced little reorganization of Russian foreign trade beyond
the enforcement of an all-embracing system of export and import li-
censes. The nationalization of foreign trade was proclaimed only
several months later in April 1918. But other than to declare that
the central government was henceforth to carry out the country's for-.
eign trade, the decree of nationalization did not specify which or-
ganizations were to carry out import and export transactions on behalf
of the state. Occasional purchases of essentials were made by rep-
resentatives of the Commissariat of Commerce and Industry in foreign
countries, and no definite foreign trade machinery was devised during
the years 1918-20.
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The negligible role played by foreign trade during the period
of "War Communism" is not difficult to explain. From a doctrinal point
of view, the question of foreign trade could hardly have been a press-
ing one for Soviet planners preoccupied with thoughts of world revolu-
tion and of an international proletarian Soviet republic. Prerevolu-
tionary Communist literature is singularly devoid of any discussion
of the subject. From a more practical point of view, however, the
Allied blockade imposed on the Soviet state in the wake of the German
collapse in November 1918 virtually ended all commercial relations
with Western Europe, and the ensuing civil war severed the last re-
maining link with Russia's traditional Asian markets and sources of
supply. Imports and exports, which had shrunk to trivial proportions
in 1918, almost vanished in 1919 (see Table 1).
Soviet Foreign Trade
1913 and 1918-20
1913
1,324.5
1,197.9
1918
7.1
91.7
1919
0.1
2.8
1920
1.2
25.0
a. Dollar figures are given in current
prices recalculated from ruble values at
the present official rate of 4 rubles to
US $1.
A so-called "gold blockade" imposed by the West in 1920
served to deprive the Soviet authorities of the one means of pay-
ment which.they might have used to obtain much-needed imports.*
B. Foreign Trade and the "New Economic Policy" (1921-27).
It was, as we have seen, only with the establishment of
what appeared to be at least a temporary equilibrium between
* The gold blockade was lifted only after the conclusion by the
RSFSR of a trade agreement with the UK in March 1921, concurrent
with the adoption of the NEP.
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capitalism and socialism that some readjustment of Communist doctrine
was made mandatory in terms of an indeterminate period of "peaceful
coexistence with the capitalist encirclement." The equilibrium which
"replaced the phase of war by a phase of respite ... which changed a
brief respite into an entire period of respite," declared Stalin in
1925, "gave us the opportunity, as I1'ich fLLeni] said, for some kind
of 'collaboration' with the capitalist world." 13 The pursuit of
international proletarian victory therefore became a task to be ac-
complished through the active leadership of a militarily powerful
and economically viable Soviet state -- a state made strong by the
skillful exploitation of the experience and resources of the capi-
talist West.
The objectives of Soviet foreign economic policy were im-
plicit in Lenin's stern admonition: "Either death or we overtake
and surpass the advanced capitalist countries." He also said:
"We are behind the advanced countries by fifty or one hundred years.
We must cover this distance in ten years; we either do this, or we
shall be crushed." 14 An official journal made even more explicit
the urgent task which faced the nation's foreign commerce:
It will be necessary to export what we need
ourselves simply in order to buy in exchange what
we need even more. For every locomotive, every
plough, we shall be obliged literally to use pieces
torn out of the body of our national economy.
It was largely through the medium of a monopoly of foreign
trade that the fledgling Soviet state sought realization of its two
basic economic goals -- "maximum assistance to and stimulation of
the country's productive forces, and defense of the building so-
cialist economy against encroachment by capitalist countries." L6J
Characterized by Lenin as a "commanding height" of the socialist
economy, the foreign trade monopoly was itself so merged with ul-
timate Bolshevik success that, in the words of one Soviet official,
"the Soviet Union cannot contemplate its existence without this
monopoly." L7/
Stalin himself was no less expansive in his appreciation of
the foreign trade monopoly as a vital protective buffer against a
hostile capitalist environment. In a speech before the Seventh
Plenun of the Executive Committee of the Communist International in
1926, he declared:
Capitalist control means a free run of our mar-
ket; it means abolition of the.monopoly of foreign
trade. I know that the Western capitalists have
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time and again dashed'their heads against the wall
trying to shatter the armour-plate of the foreign
trade monopoly. You know that the foreign trade
monopoly is the shield and protection of our young
socialist industry. But have the capitalists
achieved any success in liquidating the foreign
trade monopoly? Is it so hard to understand that
so long as Soviet power exists, the foreign trade
monopoly will continue to live and flourish, in
spite of everything? L8/
A year later, in an interview with a Delegation of American
Trade Unionists, Stalin also said:
In point of fact, what would the abolition of
the monopoly of foreign trade mean for the workers?
For them it would mean abandoning the industrial-
ization of the country, stopping the construction
of new mills and factories, and the expansion of
the old ones. For them it would mean flooding the
USSR with goods from capitalist countries, winding
up our industry because of its relative weakness,
an increase in unemployment,' a worsening of the
material conditions of the working class, and the
weakening of its economic and political positions.
And what would the abolition of the monopoly
of foreign trade mean for the laboring masses of
the peasantry? It would mean transforming our
country from an independent country into a semi-
colonial one and impoverishing the peasant masses.
... Is it not obvious that the laboring masses of
the peasantry cannot be in favor of abolishing
the monopoly of foreign trade?
Any group that would demand abolition of the monopoly of
foreign trade, concluded Stalin, "could not support the Soviet
government, because such a group could only be one that was pro-
foundly hostile to the whole Soviet system." 19
The monopoly of foreign trade during the period of eco-
nomic rehabilitation was faced with the task of providing the
goods needed to put Soviet factories back in production. Imported
goods which were required to restore former levels of industrial
output took precedence -- almost to the point of exclusion -- over
those imports classified for "consumption" (see Table 2*).
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Percentage Distribution of Soviet Imports
of Producer and Consumer Goods a/
1922/23 to 1926/27 Compared with 1909-13 Average
Percent
1909-13 (average)
73
27
1922/23
76
24
1923/24
84
16
1924/25
69
31
1925/26
84
16
1926/27
91
9
With the aid of imported raw materials and equipment, the
Soviet government was enabled, during the first 10 years of its exist-
ence, to restore the industry, transportation, and agriculture of the
country to their prewar effectiveness.
In spite of urgent domestic requirements, the volume of Soviet
exports and imports increased about sevenfold during the period 1921-28
as Soviet gold resources and foreign credits were more effectively
utilized (see Table 3*).
C. Foreign Trade and the Five Year Plans (1920-40).
Procurement on a scale required by the First Five Year Plan
(1928-32) constituted a major challenge to the Soviet trading appa-
ratus. The Commissariat of Foreign Trade was called upon to obtain
a wide range of industrial equipment and raw materials then unavail-
able within the USSR. At the same time, it was expected to raise from
domestic production a volume of exports commensurate with the foreign-
exchange needs of the enlarged import program.
The scarcity of exportable commodities was aggravated during
the First Five Year Plan and the world depression, when prices of raw
materials and agricultural products -- the bulk of Soviet exports --
drastically declined in the world market: So urgent, however, was
the need for imports to carry out the First Five Year Plan that
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Soviet Foreign Trade J
1921-28
Year
Exports
Imports
Balance*
1921
17.5
183.5
-166.o
1922
71.0
235.0
-164.0
1923
190.0
124.8
+ 65.2
1924
293.8
226.5
+ 67.3
1925
530.0
720.3
-190.3
1926
631.3
600.0
+ 31.3
1927
650.0
66o.5
- 10.5
1928
700.0
830.5
-130.5
a. Dollar figures are given in current prices recalcu-
lated from ruble values at the present official rate of
4 rubles to US $1.
imports (particularly machinery and equipment*) were expanded in
spite of the impossibility of paying fully for them out of the
* Machinery and equipment accounted for almost three-quarters of
total Soviet imports during 1931-32. Approximately one-third in 1931
and almost one-half in 1932 of the world export of machinery and equip-
ment were sent to the USSR. As domestic production increased, however,
Soviet reliance upon foreign suppliers diminished. Indexes of Soviet
production and imports of machinery for the years 1929-37 are as
follows 31/:
1929
100
100
1930
176
182
1931
294
222
1932
369
148
1933
433
57
1934
468
22
1935
612
22
1936
1,106
47
1937
1,343 (Plan)
33
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receipts derived from current export trade. Instead of the favorable
balance of trade called for by almost every Party pronouncement, the
actual developments in the Soviet export and import trade resulted
in a persistently unfavorable trade balance between 1927 and 1932 (1929
excluded) and contributed to the growing indebtedness of the USSR.
Debts had to paid, however, and a favorable balance of trade
was therefore essential. All previous efforts to augment the export
capability of the USSR had met with little success in the light of
the adverse terms of trade on the world market and the ambitious
growth rates of the domestic Five Year Plan. The solution now was
to be found in a drastic curtailment.of Soviet imports. Never reluc-
tant to make a virtue out of necessity, Soviet economists rational-
ized the curtailment of imports as evidence that "technical and eco-
nomic independence from the capitalist world" had been achieved and
that consequently the USSR "was enabled to implement the Second Five
Year Plan with fewer imports." L2/
The conclusion of the First Five Year Plan; the Soviet policy
of restricting imports; the improvement in Soviet terms of trade; and
the considerable increase in the production of gold, which became
available for a rapid repayment of foreign indebtedness, were factors
which contributed to a marked improvement in the Soviet balance of
payments. The USSR was able to achieve an active balance of trade
for every year between 1933 and 1937 and accumulated fairly 'substan-
tial foreign-exchange balances, particularly in pounds sterling (see
Table 4*).
In brief, the fundamental aim of prewar Soviet economic
policy was that expressed in the draft of the First Five Year Plan:
"Our country is conducting an unexampled experiement in capital re-
construction on a huge scale at the cost of current savings, at the
cost of a rigid regime of economies and of a renunciation of present-
day needs in order to achieve great historical objectives." In com-
pliance with this general guiding principle, the Commissariat of
Foreign Trade systematically decreased imports of articles for per-
sonal consumption and increased imports of means of production. The
imports of these two basic groups of commodities fluctuated in re-
lation to total imports, as shown in the following tabulation:
Group 1913 1924-25 1927-28 1932 1937
Consumer goods 30 31 13 8 9
Producer goods 70 69 87 92 91
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Soviet Foreign Trade a/
1929-38
Year
Exports
Imports
Balance
1929
804.8
767.3
+ 37.5
1930
903.0
922.5
- 19.5
1931
706.8
962.8
-256.0
1932
501.0
613.5
-112.5
1933
431.8
303.5
+128.3
1934
364.5
202.5
+162.0
1935
320.0
210.3
+109.7
1936
270.3
269.0
+ 1.3
1937
327.8
254.0
+ 73.8
1938
255.3
272.5
- 17.2
a. Dollar figures are given in current prices recalcu-
lated from ruble values at the present official rate of
4 rubles to US $1.
That this heavy importation of goods from the West, however,
was not to foreshadow any permanent dependence on Western sources of
supply was soon to become evident. By 1932, Soviet leaders were de-
claring their "economic independence" from the capitalist countries
and boasted that the USSR could proceed with the Second Five Year
Plan (1933-37) on the basis of an "insignificant import." Four
years later the authoritative Soviet foreign trade journal Vneshnyaya
torgovlya affirmed triumphantly: "The Second Five Year Plan is being
put into force with an insignificant amount of importation. The
Third Five Year Plan [938-42J can be fulfilled almost without any
imports. All of this testifies to the gigantic success of our so-
cialist economy, of the constant further strengthening of the tech-
nical and economic independence of the USSR from the external world." L3/
By 1937, Soviet imports had indeed been reduced to almost one-fourth
the level of 1931, and imports of machines and equipment to one-
seventh that of 1931.
The evolution of Soviet foreign trade during the periods of
1925-32 and 1933-37 furnishes an illuminating precedent for evalu-
ating the current Soviet trade drive. Given all the inadequacies of
argument from historical analogy, history in this case does appear
to offer a parallel that is not easily dismissed. In its current
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program to expand and modernize the chemical and chemical equipment
industries, for example, the USSR looks once more to the West for a
contribution in advanced technology. There remains, however, the
very likely prospect that if the West does provide the needed machin-
ery and equipment, these will be immediately applied toward making
the USSR independent of the need for such imports as soon as possible
or, more importantly for the West, will enhance Soviet capability to
continue an "economic offensive," the consequences of which are al-
ready of major concern.
IV. Autarky, Security, and the Soviet State (1928-40).
It would be erroneous to conclude that Soviet economic planners
ever viewed the attainment of self-sufficiency as desirable per se.
Neither in the writings of Marxist economic theoreticians nor in
the official pronouncements of the Soviet government can one find
autarky advocated as an integral element of Communist economic phi-
losophy. On the contrary, the opposite was commonly asserted, and
the advantages and desirability of participation in an international
division of labor and of the worldwide exchange of goods were re-
cognized by Soviet leaders insofar as they would contribute to the
strengthening of the Soviet state. Soviet commercial policy in the
prewar period was, in essence, a double-edged sword. Underlying
the desire for expansion of trade with the West was a goal never
lost sight of by Soviet economic planners -- the quest for an eco-
nomically self-reliant state. This apparent paradox in Soviet com-
mercial policy -- efforts to increase trade on the one hand and an
equally determined desire to.achieve self-sufficiency on the other --
need not be a source of confusion. The two policies, far from
being mutually exclusive, served to complement each other. Economic
realities had clearly demonstrated to Soviet economic planners that
selective trade with the more technically, advanced countries of the
West constituted a major instrument for the more rapid achievement
of that greater self-sufficiency for which Soviet leaders strove.
In 1930, one Soviet official stated the following:
In the final analysis, the balance of the trade re-
lations between the Soviet Union and the world market
shall be of a nature as to contribute to the strength-
ening of the economic independence and national defense
of the USSR against the capitalist world. There is
nothing contradictory about this policy. It is a result
of and is dictated by all the conditions of the coexist-
ence of the socialist and capitalist systems of economics
and the great historical competition that is taking place
between these two economic systems. 24
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If the actual policies of the Soviet government have been con-
sistently directed toward rendering the USSR economically independent
of the outside world, they stemmed less from a slavish acceptance of
autarky as a valid principle of Soviet economics than from a practical
quest for security against the resumption of another economic blockade
and a determination more effectively to "build for itself that defen-
sive rock against which break the waves and blows of the world market,
world exchanges, crises, and fluctuations." 25 "fThi27 line is im-
perative," declared Stalin, "as long as the capitalist encirclement
exists." L6/ In 1926 he said:
No one denies that there exists a dependence of our
national economy on the world capitalist economy. To
depict a socialist economy as something absolutely self-
contained and absolutely independent of the surrounding
national economies is to talk nonsense. Can it be asser-
ted that a socialist economy will have absolutely no ex-
ports or imports, will not import products it does not
itself possess, and will not, in consequence of this,
export its own products? No, it cannot. ... Our country
depends upon other countries just as other countries de-
pend on our national economy; but this does not mean our
country has thereby lost, or will lose its independence,
that it cannot uphold its independence, that it is a
capitalist economy. 27
In spite of the demonstrated advantages of international trade
during the period of reconstruction, the economic blockade of 1917-20
remained for the Bolsheviks a symptom and a symbol of their isola-
tion in a hostile world. Stalin's almost pathological concern for
"security" continued to dominate Soviet foreign trade policy through-
out the prewar period, and the pursuit of economic self-sufficiency,
became an openly avowed principle of Soviet commercial policy.
With perhaps more bravado than truth, Foreign Trade Commissar
Anastas Mikoyan triumphantly declared in 1939: "Now with the vic-
tory of socialism the country has become so rich that it can retain
for itself everything that it needs and export only the surplus.
Our country is so strong now in the economic sense that it can
satisfy its fundamental needs without imports." `~, An authorita-
tive study on world trade, published by the Ministry of Foreign
Trade in 1940, 'voiced approval of the fact that the USSR ranked
second among the nations from the point of view of industrial pro-
duction and nineteenth with respect to foreign trade. This fact,
the study concluded, "confirms once more the absence in our coun-
try of that dependency upon the foreign market which is experienced
by the capitalist nations." 2/
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When Mikoyan boasted in 1939 that the USSR "is so strong now in
the economic sense that it can satisfy its fundamental needs without
imports," he had little reason to.expect it to be put to an acid test
scarcely 2 years later. With the rapid German advance in June 1941,
the expansion of import requirements, both civil and military, cou-
pled with the deprivation of many of the richest agricultural and in-
dustrial areas in the USSR, necessitated a profound transformation
in the pattern of Soviet foreign trade. Soviet commodity imports in
1943 increased almost fivefold, and commodity exports fell to almost
one-fourth of the 1940 level (see Table 5).
Soviet Foreign Trade a
1940 and 1942=43
Million US $
Exports
Imports
Total
1940
266.4
272.8
539.2
1942
75.3
520.0
595.3
1943
70.4
1,596.2
1,666.6
To meet the Soviet need for immediate outside. aid, the US lend-
lease and the UK and Canadian mutual aid programs transferred goods
worth almost $13 billion to the USSR during the course of the war.
Although the paucity of trade data makes difficult any quantitative
estimate of the effects of the wartime disruption of the USSR's
normal pattern of trade on its internal economy, at least this much
seems clear: without the aid of its three Western allies the con-
tinued survival of the USSR would have been immeasurably more dif-
ficult.
VI. Soviet Policy on Trade with the West in. the Postwar Period.
With the postwar consolidation of Soviet power in Eastern Europe
and the promise of rapid technological advances at home, Soviet for-
eign economic activity appeared to be less firmly anchored in the con-
cept of self-defense and was assigned more aggressive missions, the
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most important being the creation of an economic Bloc. "As far as
this area is concerned," said Mikoyan in 1949,."the monopoly of for-
eign trade no longer performs the function of protecting the Soviet
economy but becomes a means for the planned linking of the Soviet
economy with the economies of the nations of the peoples democracies,
directed toward mutual cooperation in economic development." 31
The concentration of Soviet efforts to provide an ideological
framework for the self-contained trading area it has created among
its Satellites reached its zenith in the summer of 1952, when Stalin
promulgated the thesis of "two parallel world markets." In his last
work, Economic Problems of Socialism in the USSR, Stalin contended
that "the disintegration of the single, all-embracing world market
must be regarded as the most important economic sequel of the second
world war," and he warned the West that the strength and unity of
the socialist camp would soon prove a powerful commercial competitor
for the capitalist powers:
It may be confidently said that with this pace of
industrial development, it will soon come to pass that
these countries will not only be in no need of imports
from capitalist countries, but will themselves feel
the necessity of finding an outside market for their
surplus products. 32
Indeed, during the last years of Stalin's rule, the level of
Soviet exchange with the markets of the West was allowed to drift
downward. The guiding policy here, apparently, was to punish the
West and, if possible, to lend force to the repeated Soviet argument
that the security safeguards in trade adopted by the Western nations
in 1948-49 would prove harmful only to themselves. During the per-
iod 1948-53 the share of the Free World declined from 50 percent to
17 percent of total Soviet foreign trade.
The advent of Malenkov to power in 1953 and the expansion of
imports from the Free World implicit in his program to raise stand-
ards of consumption in the USSR provided an ironic refutation of
the prognosis contained in Stalin's last work. In spite of the em-
phasis on intra-Bloc trade, the need for imports from the West, now
hampered by Free World trade controls, was becoming more imperative
for the USSR in the light of its own projected economic growth and,
of increasing Satellite requirements for industrial equipment. By
1954 the European Satellites were ceasing to represent for the USSR
a fruitful plundering ground from which it could obtain at little
or no cost goods which were needed to augment Soviet resources.
Indeed, by 1956 the increasing flow of financial assistance from the
USSR, coupled with the elimination of some of the more obvious
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Soviet abuses, had begun to evidence a shift in the net flow of real
goods and services in favor of the Satellites.
With the USSR accounting for little more than 1 percent of total
Free World trade, however, it was difficult.for Soviet strategists
to build a strong case for the significance of the Soviet market in
the commercial life of the West. Although the loss resulting from
the decline in the volume of trade was mutual, there was a notable
difference in effect upon the economies of the two areas concerned.
The West had little difficulty in replacing Soviet raw materials
from overseas sources. The USSR, on the other hand, could find no
ready substitute for many items of modern industrial equipment in
any other market than that of the industrial West.
From the Soviet point of view, then, this lapse in commercial
contact had to be mended as quickly as possible. The only way to
reverse the downward trend in trade with the West was by practical
action. Under the circumstances, this action had to be initiated
by the USSR, simply by bringing more of its goods to the Western
markets and by placing a larger volume of orders with Western pro-
ducers. Once the Soviet government decided to reverse the trend in
its trade with the West, it had no difficulty in getting results.
Demand for the standard type of Soviet exports on the part of ex-
panding Western industry was, quite firm. Improved Soviet perform-
ance in supplying these markets, and increasing its earnings there,
resulted in a steady increase in the exchange of commodities. Be-
tween 1953 and 1957 the value of Soviet trade with the Free World
increased from $1 billion to $2.189 billion, an increase of 119
percent.
Efforts were now intensified to rationalize the avowed quest for
self-sufficiency with the already manifest expansion of trade ties
with the West. An example of such efforts is the following quota-
tion from M. Nesterov, Chairman of the Soviet Chamber of Commerce:
To the question of whether the Soviet Union can exist
without trade with the capitalist countries and manage with
its own resources and industrial production, the answer may
be found in the past, when the Soviet state carried on and
developed its economy in spite of a blockade. At the pre-
sent time the USSR enjoys ample opportunities to build up
its economy without extensive foreign trade, but this by
no means signifies that it is tending toward autarky. The
fact is that one way of assuring the most expedient and
rapid development of economy is participation in inter-
national division of labor through trade with foreign coun-
tries. 33
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And in a similar vein, V. Spandaryan, Soviet economist and trade
official, reconciled the desire for autarky with increased East-West
trade in the following terms:
Opponents of wider East-West trade usually put for-
ward the following "arguments" that East-West trade is at
a low ebb and does not develop, firstly, because the coun-
tries of the East'are interested in importing from the
West only a limited range of goods and because, it is
alleged, they are leaning towards autarky; and, secondly,
because the countries of the East lack adequate resources
for exports. A glance at the facts will show how un-
founded and fictitious these "arguments" are. The authors
and propagandists of this kind of "argument" cannot or do
not wish to understand that a desire for economic inde-
pendence or self-sufficiency is by no means equivalent to
a "leaning toward autarky." The Soviet Union is a great
economic power. Its economy is of course quite self-
sufficient, independent, and able to meet the growing
requirements of the population and of advancing its own
progress. But does that lead to self-isolation, to
autarky? Not in the least. On the contrary, it is pre-
cisely the uninterrupted progress of Soviet economy
that creates greater possibilities for the expansion of
the USSR's foreign trade and other economic relations
with all countries of the world. 34
The Twentieth Party Congress in February 1956, characterized by
First Deputy Premier Mikoyan as "the most important Party Congress
since Lenin," was notable, among other things, for some important
pronouncements on foreign trade. The restrictive implications for
foreign trade contained in the Stalinist concept of "two parallel
world markets" as enunciated in Stalin's Economic Problems of So-
cialism in the USSR was subject to tacit modification by the Con-
gress. Mikoyan urged Soviet economists "to make a deep study and
critical review ... from the point of view of Marxism-Leninism" of
certain postualtes in the Economic Problems and denied that the
existence of the second world market did, indeed, preclude trade
"between all countries":
We firmly believe that stable, peaceful coexistence
is unthinkable without trade, which can be a good basis
for this in spite of the establishment of two world mar-
kets. The existence of two world markets -- those of
socialism and capitalism -- not only does not preclude,
but, on the contrary, presupposes a developed, mutually
profitable trade between all countries. The correct
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understanding of this question is of fundamental impor-
tance from the point of view of the coexistence of the
two worlds and is also of practical, economic impor-
tance. 35
On 11 March 1958, in a preelection speech to his Yerevan consti-
tuents, Mikoyan dealt a final blow to the Stalinist thesis of "two
parallel world markets." He attacked certain "comrade economists"
who, basing themselves on the Soviet concept of a division of the
world economy into two world markets, socialist and capitalist, con-
clude that there is no possibility of significant or meaningful
trade or other economic ties between the two markets:
We have, however, economists who reason thus: once
we say that the world market is split into two markets,
this means that it is impossible already to speak of
any unity of the two world markets; it means there is no
world economy; there are not even world prices. These
comrade economists obviously have forgotten that unity
is not identity, that there is the unity of opposites
and, in the given case, of antagonistic opposites.
But all the same this is unity. To deny this means
to err and to perpetrate a gross mistake, to proceed
from a dogmatic interpretation, to close one's eyes to
the existing significant trade turnover between the two
markets and to other forms of economic ties. If one
looks more deeply, then /Zne sees tha] such reasoning
essentially contradicts the Leninist principle of the
coexistence of the two systems. ...
And in this connection, we now stand and will stand
on the position of Lenin, who considered that there is
a force greater than the wish, will, and decision of any
government or class, and this force is general, universal
economic relations. 36
Most recently, Khrushchev, in his report to the Central Committee
Plenum of 6 May 1958, also pointed to a dispute over the issue of
East-West trade, suggesting that those "comrades" on the "wrong" side
had argued that such trade helps to-shore up capitalism:
Some comrades may allege that we cannot profit from
increased orders from the United States, West Germany,
Britain, and other capitalist countries. By so doing
we, as it were, support capitalism. These comrades are
wrong. We stand on Leninist position and proceed from
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the fact that we live at a time when two systems --
the capitalist and socialist -- exist, and economic
relations between them can develop on a mutually ad-
vantageous basis. 37
Why such questions should be posed at this time and what the
specific sources of contention may be are, at present, matters for
speculation. It is not unlikely, however, that the position attri-
buted to the "comrade economists" is one of favoring the more or-
thodox Stalinist concept of economic isolationism and in opposition
to the "new look" in Soviet foreign economic policy. In light of
what purports to be a policy of expanding trade ties with capitalist
nations, the Soviet leadership may well feel constrained to quell
any latent domestic opposition to this policy by branding its ad-
herents as "dogmatists" and non-Marxists.*
VII. From "Peaceful" to "Competitive" Coexistence.
The apparent acceptance by Soviet leaders of the idea of a non-
violent, economic competition with the capitalist West necessitated
the readaptation of some fundamental doctrinal tenets in response
to "changed conditions." The exaggerated Communist polar view of
the world, the dichotomous split between the "capitalist and so-
cialist world," had provided a major rationale for prewar Soviet
foreign trade policy. Stalin himself often repeated that, as long
as the capitalist encirclement exists, "our economy shall develop ...
as an independent economic entity relying chiefly on the internal
market." 39
* Some intimation of such differences was provided by what seems to
be a calculated Soviet effort to suppress Maxim Saburov's speech of
4 February at the Twenty-first Party Congress. Pravda's failure to
print the speech is striking in light of its publication, in full
text, of every other speech reported by Radio Moscow to have been de-
livered at the Congress. Saburov's speech appeared in full print
for the first time with the publication of the official Stenographic
Report of the Congress. In his speech, Saburov is reported to have
charged the "antiparty group" with having "opposed or delayed deci-
sions on vital measures in the sphere of foreign policy-- namely, the
necessity to develop our economic relations with the people's-demo-
cracies and to extend them economic assistance -- to say nothing of
the program to aid the underdeveloped and dependent countries of Asia
and the Near East." If Saburov's speech was deemed to give unwelcome
publicity to opposition by people such as Molotov to Khrushchev's pro-
gram of loans and assistance to neutral countries, concern over the
reaction of elements both in the USSR and in the Bloc who may well
have agreed with Khrushchev's opponents could have been one factor
prompting suppression of the speech. 38 .
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But that such doctrinal dicta were not to prove an obstacle to
increased East-West exchanges was made clear at the Twentieth Party
Congress in January 1956, where Khrushchev relegated Stalin's already
diluted theses of "capitalist encirclement" and the "inevitable clash"
to historical significance only -- to a time when the USSR, the "first
socialist state," was a beleaguered island in a hostile capitalist
sea. "The main feature of our epoch," declared Khrushchev, "is the
emergence of socialism from within the bounds of a single country and
its transformation into a world system." Two years later, Khrushchev
repeated: "One cannot speak any longer about capitalist encirclement
in the former conception of it." With the formation of the world
system of socialism, he said, "it is not known who encircles whom,
whether the capitalist countries encircle the socialist states, or
vice versa. The socialist countries cannot bLO/
e considered as some
kind of island in a rough capitalist sea."* The logical inconsistency of advocating "peaceful coexistence"
and an expansion of trade with the West, on the one hand, and the
"inevitability" of war, on the other, was also not lost on Soviet
theoreticians. At the Twentieth Party Congress, efforts were made
* At the Twenty-first Party Congress the concept of "capitalist en-
circlement" was still further vitiated as a determinant of Soviet for-
eign policy. It will be recalled that the danger of intervention
posed by the "capitalist encirclement" was repeatedly advanced by
Soviet leaders during the prewar period as the major obstacle to the
"final" victory of socialism in the USSR and to the ultimate establish-
ment of a Communist society. In his much-publicized Letter to Ivanov
in 1938, Stalin declared, "Only blockheads or masked enemies . can
deny the danger of military intervention and of attempts to restora-
tion LZf capitalism] as long as the capitalist encirclement exists."
Although socialism in the USSR had been "built in essentials," he
contended, "we could say that this victory was final if our country
were situated on an island and had not been surrounded by a number
of other, capitalist countries. But since we live not on an island
but in a 'system of states,' a considerable number of which are
hostile to the country of socialism, thus creating a danger of inter-
vention and restoration, we say openly and honestly that the victory
of Socialism in our country is not yet complete." Q/ Twenty years
later, at the Twenty-first Party Congress, Khrushchev confidently
asserted: "No forces exist at present in the world capable of res-
toring capitalism in our country and of shattering the socialist
camp. The danger of the restoration of capitalism in the Soviet
Union has been excluded. This means that socialism has triumphed,
triumphed fully and finally. Thus, it can be considered that the
problem of building socialism in one country, of its complete and
final victory, has been solved by the world-historic progress of
social development." 41/
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to reconcile the embarrassing contradiction between the doctrine of
inevitable conflict and Soviet expressions of a peaceful foreign
policy. Khrushchev, accordingly, rejected the allegation that the
USSR puts forth the principle of coexistence from purely tactical
considerations and proclaimed the doctrine "a basic principle of
Soviet foreign policy." He declared that Soviet Bloc strength and
political conditions have so changed since Lenin's day that "war is
not fatalistically inevitable."* The socialist system will win the
competition between the two systems, he added, but "this by no means
signifies that its victory will be achieved through armed interfer-
ence by the socialist countries in the internal affairs of the capi-
talist countries." 45 Virtually repudiating Lenin's stern admonition
voiced 40 years earlier, that "as long as capitalism and socialism
exist, we cannot live in peace," Khrushchev at the Twenty-first
Party Congress predicted the "real possibility of excluding world
war from the life of society ... even before the universal triumph
of socialism, while capitalism still exists in a part of the world."
Thus, impelled by a factor which could not possibly have been
foreseen by earlier Soviet policymakers.-- that is, the threat of
mutual destruction inherent in war in a nuclear age coupled with a
rapid growth in the economic capabilities of the Sino-Soviet Bloc --
current Soviet leaders have apparently chosen less violent (if no
less effective) means of resolving the East-West power struggle.
Peaceful coexistence appears to have been abandoned as a tactical
maneuver, as an interval between battles. Instead, in its new com-
petitive form it has become a positive element of Soviet strategy --
it has become the battle itself.
In summary, then, the following conclusions may be drawn from
postwar developments in Soviet trade policy. For the present Soviet
leaders the determining factor in the world situation is that the
development of socialism -- or, more accurately, the transition to
Communism -- in the USSR parallels the general "crisis" of capitalism
in the West (rather than following it as envisaged by more orthodox
Marxian theory). The ability of capitalism to weather successfully
the destructive propensities "inherent in its own contradictions" has
led to a prolonged (and unexpected) stabilization of world forces --
and to a new Communist stratagem. The "export" of revolution has
* The Soviet renunciation of war as not "fatalistically inevitable"
is, however, a conditional one, valid only "at the given moment
under the concrete conditions of the presentperiod" and does not
exclude the possibility of a "Just war."!L3/ The transition to
world Communism may indeed be a peaceful one if, to quote Marx, "the
old has enough intelligence to go to its death without a struggle;
5u7 forcibly if it resists this necessity." L4/
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been replaced by an emphasis on a rapid economic growth, the ultimate
aim of which is to establish the economic and cultural superiority
of socialism over capitalism and to spread socialism "by contagion"
and "example" and by the sheer weight of its efficacy as an economic
system. As long as this parallelism exists, it is likely to be the
basic factor in the orientation of both Soviet domestic and foreign
policy.
Because the USSR is committed to a rapid rate of economic growth,
the achievement of which requires a planned and controlled economy,
the Soviet authorities are still unwilling to tolerate any significant
vitiation of their exclusive control of the organs of foreign trade
or of the subordination of foreign trade to the dictates of the
national economic plan. Although imports from the West may indeed
be called upon to make a substantial contribution to Soviet economic
growth, it is unlikely that such trade will be allowed to attain a
level at which it might permit a disruptive Western influence on
internal plans. Thus the volume of trade with the West continues
to reflect the Soviet world view, but, whereas in earlier years the
2mphasis was predominantly defensive and therefore tended to inhibit
trade, the emphasis now has become more aggressive, and the main fac-
tors limiting trade are the administrative requirements of the in-
ternal plan.
The USSR thus seeks to resume once again the kind of contact with
Western industry which in the past has served to foster the existence
of present-day industrial techniques in the USSR by the introduction
of tested methods of production which had been developed in the West
by slow stages, under the rigorous discipline of cost calculation en-
forced on the producer in a market economy. Indeed, if Soviet trade
were conducted entirely on the basis of the international division of
labor or solely in the interest of improving domestic productivity,
the West rather than the Bloc would hold the center of the Soviet for-
eign trade interest. As it is, this sector of the world economy con-
tinues to be used by the USSR as a dependable pool of critical goods
needed to supplement domestic sources. These imported goods are used
mainly to stimulate industrial technology, to balance the annual output
of the domestic economy, and to correct the failures and miscalculations
of the planning mechanism.
Finally, the intimation of differences of opinion over Fast-
West trade within the USSR suggests that the current, more flexible
approach to foreign trade may have elicited some opposition among
Soviet economists. Because it is unlikely that the "comrade econo-
mists" are objecting to a continuance of traditional Soviet trade,
one logical assumption would be that their opposition is directed
at the new Soviet economic offensive, particularly in underdeveloped
areas. "There certainly is at least a lurking opposition," states
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one recent report, "between the goal of Bloc self-sufficiency on
the one hand and the economic offensive in the underdeveloped coun-
tries on the other. ... It is logical to assume that the substan-
tial aid commitments recently undertaken by the USSR have troubled
certain groups such as economists, planners, and perhaps even some
top leaders, who are keenly aware of internal Soviet needs for
capital equipment as well as of the needs of other Bloc countries. 47
Whatever the sources of contention, however, there is evidence to
indicate a growing awareness on the part of 'Soviet leaders of the
need to explain, or, more properly, to explain away, the rapidly
expanding trade with the Free World in terms of what has been a
traditional Soviet malevolence toward such extensive economic ties.
C-O-N-F-I-D-E-N-T-I-A-L
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CONFIDENTIAL
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