The international situation is of paramount importance in the life of Russia. It is so not only because Russia, like every other country in Europe, is linked by innumerable threads with the neighbouring capitalist countries, but also, and primarily, because, being a Soviet country and therefore a “menace” to the bourgeois world, she finds herself, as a result of the course of events, surrounded by a hostile camp of bourgeois states. It is obvious that the state of affairs in that camp, the relation of the contending forces within that camp, cannot but be of paramount importance for Russia. The chief factor that characterises the international situation is that the period of open war has been replaced by a period of “peaceful” struggle, that there has arisen some degree of mutual recognition of the contending forces and an armistice between them, between the Entente, as the head of the bourgeois counter-revolution, on the one hand, and Russia, as the advanced detachment of the proletarian revolution, on the other. The struggle has shown that we (the workers) are not yet strong enough to put an end to imperialism forthwith. But the struggle has also shown that they (the bourgeoisie) are no longer strong enough to strangle Soviet Russia. As a consequence of this, the “fright” or “horror” which the proletarian revolution aroused in the world bourgeoisie when, for example, the Red Army was advancing on Warsaw, has disappeared, evaporated. At the same time the boundless enthusiasm with which the workers of Europe received almost every bit of news about Soviet Russia is also disappearing. A period of sober weighing up of forces has set in, a period of molecular work in training and accumulating forces for future battles. That does not mean that the certain degree of equilibrium of forces that was established already at the beginning of 1921 has remained unchanged. Not at all. Recovering from the blows of revolution sustained as a consequence of the imperialist war, and pulling itself together, the world bourgeoisie passed from defence to an attack on “its own” workers and, making skilful use of the industrial crisis, hurled the workers back into worse conditions of existence (reduction of wages, longer working day, mass unemployment). The results of that offensive were exceptionally severe for Germany where (besides everything else) the precipitous fall in the rate of exchange of the mark still further worsened the conditions of the workers.

That gave rise to a powerful movement within the working class (particularly in Germany) for the creation of a united workers’ front and for the establishment of a workers’ government, a movement that called for agreement and joint struggle against the common enemy on the part of all the more or less revolutionary groups among the working class, from the “moderates” to the “extremists.” There is no ground for doubting that in the struggle for a workers’ government the Communists will be in the front ranks, for such a struggle must lead to the further demoralisation of the bourgeoisie and to the conversion of the present Communist Parties into genuine mass workers’ parties.

But the matter is by no means confined to the offensive of the bourgeoisie against “its own” workers. The bourgeoisie is aware that it cannot crush “its own” workers unless it curbs Russia. Hence the ever-increasing activity of the bourgeoisie in preparing a new offensive against Russia, a more complex and thorough offensive than all the previous ones. Of course, trade and other treaties are being and will be concluded with Russia, and this is of immense importance for Russia. But it must not be forgotten that the trading and all other sorts of missions and associations that are now pouring into Russia, trading with her and aiding her, are at the same time most efficient spy agencies of the world bourgeoisie, and that, therefore, the world bourgeoisie now knows Soviet Russia, knows her weak and strong sides, better than at any time before, a circumstance fraught with grave danger in the event of new interventionist actions.

Of course, the friction over the Eastern question has been reduced to “misunderstandings.” But it must not be forgotten that Turkey, Persia, Afghanistan and the Far East are being flooded with agents of imperialism, gold and other “blessings,” in order to create an economic (and not only economic) cordon around Soviet Russia. It scarcely needs proof that the so-called “peace” conference in Washington promises us nothing really peaceful.

Of course, we are on the “very best” terms with Poland, with Rumania and with Finland. But it must not be forgotten that these countries, especially Poland and Rumania, are vigorously arming with the assistance of the Entente, are preparing for war (against whom if not against Russia?), that now, as in the past, they constitute the immediate reserves of imperialism, that it was they who recently landed on Russian territory (for espionage purposes?) whiteguard Savinkov and Petlura detachments.

All these facts, and much more of a similar kind, are evidently separate links in the whole activity of preparing a new attack on Russia.

A combination of economic and military struggle, a combined assault from within and from without—such is the most likely form of this attack.

Whether we succeed in making this attack impossible, or, if it is launched, in turning it into a deadly weapon against the world bourgeoisie, depends upon the vigilance of the Communists in the rear and in the army, upon the success of our work in the economic field and, lastly, upon the staunchness of the Red Army.

Such, in general, is the external situation. No less complex and, if you like, “peculiar,” is the internal situation in Soviet Russia. It may be described in these words: a struggle to strengthen the alliance between the workers and the peasants on a new, economic, basis for the development of industry, agriculture and transport, or in other words: a struggle to maintain and strengthen the dictatorship of the proletariat in a situation of economic ruin.

There is a theory current in the West that the workers can take and hold power only in a country where they constitute the majority, or, at all events, where the people engaged in industry constitute the majority. It is indeed on these grounds that Messrs. the Kautskys deny the “legitimacy” of the proletarian revolution in Russia, where the proletariat is in the minority. This theory is based on the tacit assumption that the petty bourgeoisie, primarily the peasantry, cannot support the workers in their struggle for power, that the mass of the peasantry constitutes a reserve of the bourgeoisie and not of the proletariat. The historical basis of this assumption lies in the fact that at critical moments in the West (France, Germany) the petty bourgeoisie (the peasantry) were usually found on the side of the bourgeoisie (1848 and 1871 in France, attempts at proletarian revolution in Germany after 1918). The reasons for this are:

1) The bourgeois revolution took place in the West under the leadership of the bourgeoisie (at that time the proletariat merely served as the battering ram of the revolution); there the peasantry received land and emancipation from feudal bondage from the hands of the bourgeoisie, so to speak, and, as a consequence, the influence of the bourgeoisie over the peasantry was already then considered to be assured.

2) More than half a century elapsed from the beginning of the bourgeois revolution in the West to the first attempts at proletarian revolution. During that period the peasantry managed to give rise to a powerful rural bourgeoisie, exercising strong influence in the countryside, which served as a connecting bridge between the peasantry and big urban capital, thereby strengthening the hegemony of the bourgeoisie over the peasantry.

It was in that historical situation that the abovementioned theory arose. An entirely different picture is revealed in Russia. First, in contrast to the West, the bourgeois revolution in Russia (February-March 1917) took place under the leadership of the proletariat, in fierce battles against the bourgeoisie, in the course of which the peasantry rallied around the proletariat as around their leader.

Secondly, the attempt (successful) at proletarian revolution in Russia (October 1917), also in contrast to the West, did not begin half a century after the bourgeois revolution, but immediately after it, within a matter of 6-8 months, during which period it was, of course, impossible for a powerful and organised rural bourgeoisie to spring up from among the peasantry; moreover, the big bourgeoisie that was overthrown in October 1917 was never able to recover.

This latter circumstance still further strengthened the alliance between the workers and the peasants. That is why the Russian workers, although constituting a minority of the population of Russia, nevertheless found themselves the masters of the country, won the sympathy and support of the vast majority of the population, primarily of the peasantry, and took and held power, whereas, in spite of all theories, the bourgeoisie found itself isolated, was left without the peasant reserves.

From this it follows that:

1) The above-mentioned theory that the proletariat “must constitute the majority” of the population is inadequate and incorrect from the standpoint of Russian reality, or, at all events, is interpreted in too simple and vulgar a manner by Messrs. the Kautskys. 2) Under the present historical conditions, the actual alliance between the proletariat and the toiling peasantry that was formed in the course of the revolution is the basis of Soviet power in Russia.

3) It is the duty of the Communists to maintain and strengthen that actual alliance.

The whole point in the present case is that the forms of this alliance are not always the same. Previously, during the war, we had to deal with what was chiefly a military-political alliance, i.e., we expelled the landlords from Russia and gave the peasants the land for their use, and when the landlords went to war to recover “their property” we fought them and upheld the gains of the revolution; in return the peasants provided food for the workers and men for the army. That was one form of the alliance.

Now that the war is over and danger no longer threatens the land, the old form of alliance is not adequate any more. Another form of alliance is needed. Now it is no longer a matter of saving the land for the peasants, but of ensuring the peasants the right freely to dispose of the produce of that land. In the absence of such right there will inevitably be: a further diminution of the crop area, a progressive decline of agriculture, paralysis of transport and industry (due to food shortage), demoralisation of the army (due to food shortage), and, as a result of all this, the inevitable collapse of the actual alliance between the workers and the peasants. It scarcely needs proof that possession by the state of a certain minimum of grain stocks is the mainspring of the revival of industry and the preservation of the Soviet state. Kronstadt (the spring of 1921) was a warning that the old form of alliance was obsolete and that a new form was needed, an economic form, that would be of economic advantage both to the workers and to the peasants. That is the key to an understanding of the New Economic Policy. Abolition of the surplus appropriation system and of other similar obstacles was the first step along the new road that freed the hands of the small producer and gave an impetus to the production of more food, raw materials and other produce. It will not be difficult to understand the colossal importance of this step if it is borne in mind that Russia is making the same mass onrush towards the development of productive forces as North America experienced after the Civil War. There is no doubt that, while releasing the productive energy of the small producer and ensuring certain advantages for him, this step will, however, put him in a position— bearing in mind that the state remains in control of transport and industry—in which he will be compelled to bring grist to the mill of the Soviet state.

But it is not enough to secure an increase in the production of food and raw materials. It is also necessary to collect, to accumulate, a certain minimum stock of these products necessary for the maintenance of transport, industry, the army, etc. Therefore, leaving aside the tax in kind, which simply supplements the abolition of the surplus appropriation system, we must regard as the second step the transfer of the collection of food and raw materials to the Central Union of Consumers’ Co-operatives (Centrosoyuz). It is true that the lack of discipline in the local organisations of the Centrosoyuz, their inability to adapt themselves to the commodity market that has rapidly developed, the unsuitability of barter as a form of exchange and the rapid development of the money form, the shortage of currency, etc., have prevented the Centrosoyuz from fulfilling the assignments allotted to it. But there are no grounds for doubting that the role of the Centrosoyuz as the principal apparatus for the wholesale purchase of the chief items of food and raw materials will grow day by day. It is only necessary that the state should: a) make the Centrosoyuz the centre for financing trade operations (other than state) within the country; b) make the other forms of co-operative organisation which are still hostilely disposed to the state financially subordinate to the Centrosoyuz; c) in some form or other give the Centrosoyuz access to foreign trade.

The opening of the State Bank as the organ for regulating the currency within the country must be regarded as the third step. The development of the commodity market and the currency leads to the following two chief results:

1) it will make commercial operations (private and state) and production operations (wage rates, and so forth) completely dependent on the fluctuations of the ruble;

2) it will transform Russia’s national economy from the isolated, self-contained economy it was during the blockade into an exchange economy that will trade with the outside world, i.e., that will depend on the fortuitous fluctuations of the exchange rate of the ruble.

But from this it follows that if the currency is not put in order and if the exchange rate of the ruble is not improved, our economic operations, both home and foreign, will be in a bad way. The State Bank as the regulator of the currency, capable of being not only a creditor but also a pump for extracting the colossal private savings which could be put into circulation and make it possible for us to do without new emissions—this State Bank is still “music of the future,” although, according to all the data, it has a great future.

The next means of raising the exchange rate of the ruble must be an extension of our exports and an improvement of our desperately unfavourable balance of trade. It must be supposed that drawing the Centrosoyuz into foreign trade will be of assistance in this matter. Furthermore, we need a foreign loan not only as a means of payment, but also as a factor that will enhance our credit abroad and, consequently, enhance confidence in our ruble.

Further, the mixed trading and transit and other companies that Sokolnikov wrote about in Pravda recently would undoubtedly also help matters. It must be observed, however, that the granting of industrial concessions and the development of the proper exchange of our raw materials for foreign machinery and equipment, about which so much was written in our press some time ago, while being factors promoting the development of money economy, are themselves wholly dependent upon a preliminary improvement of the exchange rate of our ruble. Lastly, the fourth step must be the placing of our enterprises on a business basis, the closing and leasing out of the small non-paying enterprises, the singling

THE OCTOBER REVOLUTION AND THE NATIONAL POLICY
out of the soundest of the big enterprises, drastic reduction of inflated staffs in government offices, the drawing up of a firm material and financial state budget and, as a result of all this, the expulsion of the charity spirit from our enterprises and offices, the general tightening up of discipline among factory and office workers, and improvement and intensification of their labour. Such, in general, are the measures that have been and are to be taken and which, in the aggregate, constitute the so-called New Economic Policy. Needless to say, in carrying out these measures we, as was to be expected, have made a large number of mistakes, which have distorted their true character. Nevertheless, it can be taken as proved that it is precisely these measures that open the road along which we can promote the economic revival of the country, raise agriculture and industry and strengthen the economic alliance between the proletarians and the toiling peasants, in spite of everything, in spite of threats from without and famine within Russia.

The first results of the New Economic Policy in the shape of the incipient expansion of the crop area, the increase in the productivity of labour in the factories, and the improvement in the mood of the peasants (cessation of mass banditry) undoubtedly confirm this conclusion.

Pravda, No. 286,

December 18, 1921

Signed: J. Stalin