FINAL REMARKS ON THE REPORT CONCERNING THE SUBSTITUTION OF RATIONING WITH A NATURAL TAX

15 MARCH
Comrades, I believe I can confine myself to rather brief remarks. First and foremost, let me address the issue of the Siberian food administrators. Yaroslavsky and Danishevsky asked me to make the following point: if Drozhzhin has been brought to trial, it was precisely in order to demonstrate that he is not guilty. I hear some skeptical murmurs here, but in any case, it must be said that this is a perfectly sound line of reasoning. Complaints and gossip are all too common—and to expose their falsehood through such means is a thoroughly appropriate tactic. Furthermore, a number of food administration officials in Tyumen were executed for flogging, torture, rape, and other criminal offenses. Consequently, in this instance, it would be entirely inappropriate to link these incidents to food administration work; rather, we must see them as clear manifestations of outright criminal misconduct—misdeeds that, in the context in which food administration operates, demand punishment far more severe than usual. Thus, from this perspective, the measure taken was undoubtedly the right one.  Now, I would like to begin by saying a few words about the question of cooperation. As Comrade Tsyurupa himself stated—and as we have all heard here—the report he delivered was not intended as a counter‑report in the sense of presenting a fundamentally different viewpoint opposed to that of the rapporteur. The Central Committee’s decision to replace rationing with taxation was adopted with such unanimous support—and, most importantly, even before the Congress opened, we could already see that, in the various localities, different comrades had independently arrived at the same conclusion: there was, in essence, no real doubt about the expediency or necessity of such a measure. Comrade Tsyurupa’s report consisted primarily of supplementary remarks and cautionary notes on several issues, but it did not contain any proposals for an alternative policy.
The only deviation from this general line in Comrade Tsyurupa’s report concerned the question of cooperation. Here, Comrade Tsyurupa objected to the resolution I had proposed—but it seems to me that his objections cannot be considered convincing. As to how relations within the sphere of local, free economic activity will develop, in terms of their underlying foundations—whether through cooperation or by reviving small-scale private trade—we can hardly determine with certainty at this time. This question certainly needs to be examined—and in this regard, we must carefully study local experience; on this point, of course, we can all agree. However, I believe that cooperation still offers certain distinct advantages. If, as I have already pointed out, politically speaking, cooperation serves as a venue for organizing, centralizing, and uniting elements that are, in many respects, hostile to us—elements that, in essence, pursue Kolchak’s and Denikin’s policies—then, of course, compared to small farms and petty trade, cooperation merely alters the form in which these activities are carried out. Naturally, every tendency toward the emergence of kulaks and the development of petty-bourgeois relations gives rise to corresponding political parties—parties that have taken shape in Russia over decades and that are well known to us. In this context, we should not be debating whether to allow these parties to flourish or to suppress them—they inevitably arise from petty-bourgeois economic relations—but rather, to a certain extent only, we should choose among the various forms of concentrating and coordinating the actions of these parties. There is absolutely no basis for claiming that cooperation is inferior in this respect; on the contrary, the Communists will, after all, possess somewhat greater means of systematic influence and control over cooperative organizations.

The resolution of the Ninth Congress on cooperation met with staunch defense from Comrade Tsyurupa and resolute opposition from Comrade Milyutin.
Comrade Tsyurupa, among other things, noted that I myself had witnessed the intense debate that had raged over the question of cooperation prior to its resolution by the Congress. I must confirm this fact: indeed, there was a fierce struggle, and the resolution of the Ninth Congress put an end to it by tilting the balance in favor of the Food Administration—or, to be more precise, by securing an overwhelming majority in its favor. But to abandon greater freedom of action and freedom of choice in political measures concerning cooperation on account of this consideration would, without a doubt, be politically misguided. From the standpoint of, say, the Chairman of the Sovnarkom, it is far more unpleasant for me to be forced to watch, over the course of a dozen sessions, petty squabbles and even minor quarrels than to have, at my back, a resolution binding on all members of the Congress—a resolution that brings this struggle to a definitive close. Yet we must take into account not such conveniences, but the interests of pursuing a specific economic policy. You have all seen here—and the great number of memos I have received—a mountain of documents—that further confirmed, in the most vivid manner, just how many detailed difficulties arise when we attempt to implement this change in our policy in this particular matter. That is the crux of the issue. And there is no doubt that we will not be able to resolve them all at once. If we adhere to the resolution of the Ninth Congress on cooperation, we will tie our own hands. We will place ourselves in a position where, though fully accountable to the Congress and obligated to carry out its policies, we will be unable to deviate from the letter of that resolution. The resolution constantly reminds us of rationing, while you are replacing it with taxation.
To what extent we will leave room for freedom in economic activity, we do not yet know.
It is beyond dispute that we must, to some degree, preserve freedom in economic activity. We must take into account and carefully examine the economic conditions that underpin this freedom. Therefore, of course, the repeal of the resolution of the Ninth Congress once again places us in a situation where the question of how…

X CONGRESS OF THE RCP(b)
While it remains, to a certain extent, concealed, it is gradually transforming into an open process. Yet this development is entirely inevitable. To attempt to circumvent it would fundamentally undermine the very economic policies we have outlined—policies that are undoubtedly far more conducive to the interests of the peasantry.
As for the claim that replacing requisitioning with taxation represents an economic policy more favorable to the peasantry, there seems to be little disagreement on this point at the present congress—and indeed, no real divergence of opinion among communists. A number of statements from non‑party peasants further corroborate this view. The fact is now firmly established. For this reason alone, we should embrace such a change. Accordingly, I once again put forward the resolution on cooperation: “In view of the fact that the resolution adopted by the IX Congress of the RCP regarding its attitude toward cooperation was entirely grounded in the principle of requisitioning—which is now being replaced by a tax in kind—the X Congress of the RCP resolves:
To rescind the aforementioned resolution.
The Congress instructs the Central Committee to formulate and implement, within both party and soviet organs, resolutions that will enhance and develop the structure and operations of cooperatives in accordance with the program of the RCP and in light of the substitution of requisitioning with a tax in kind.”
I shall now propose to the Congress, on behalf of the Central Committee, the adoption of the first resolution—a preliminary draft on replacing requisitioning with taxation—approve it in essence, and entrust the Party’s Central Committee with the task of coordinating, elaborating, and submitting it to the VTsIK; and also the second resolution—on cooperation.
I now turn to the remarks that have been made here. It must be said that the volume of questions contained in the notes I have received is so great, the mountain of material before me so overwhelming, that I am not only unable to enumerate all the issues they raise—I am forced, quite simply, to abandon any attempt to fully categorize them in a way that would allow us to continue our discussion on these matters at this very moment. Regrettably, I must forego this endeavor and instead retain the notes as raw material for further deliberation on this question.

Perhaps we can make more detailed use of them in print—or at the very least, gather and organize them so as to provide a comprehensive, thoroughly detailed summary for all those comrades who are economists, administrators, and political leaders tasked with preparing the forthcoming law on replacing requisitioning with taxation. For now, I can identify just two main lines of inquiry and offer a few words on the two primary objections or observations, the two principal types or clusters of questions raised in these notes.
First is the emphasis on technical details: a host of numerous and highly specific warnings about how difficult it will be—and how many unresolved issues will arise—as we seek to implement these measures in practice. As I noted in my initial report, such concerns are entirely unavoidable, and at this stage it is simply impossible to know, with certainty, exactly how we will address these challenges.
Second—and more broadly—this concern ultimately points to the fundamentals of economic policy. What many, even the majority, of the speakers here have emphasized in their addresses, and what is echoed in the submitted notes, is the inevitable resurgence of the petty bourgeoisie, of bourgeois elements, and of capitalist tendencies. “In doing so,” some wrote in their notes, “you are throwing wide open the doors to the development of the bourgeoisie, of small-scale industry, and of capitalist relations.” On this point, I must say, comrades—reiterating, to some extent, what I stated in my opening report: there is no doubt that the transition from capitalism to socialism can take various forms, depending on whether large-scale capitalist relations already predominate in a given country, or whether small-scale farming and production still hold sway. From this perspective, I should note that while some criticized certain conclusions drawn from my speech—criticizing the relationship between state capitalism and small-scale free enterprise—no speaker voiced any criticism of the specific provisions I had laid out, nor did any of them submit a single note (though I did, after all…

X CONGRESS OF THE RCP(b)
Having read most of them—there were several dozen in total—I found not a single note that challenged the positions I had set forth. If we were to live in a country where large-scale industry predominated—or even if it did not dominate, but remained highly developed, and where large-scale agricultural production was likewise well advanced—then a direct transition to communism would be feasible. Without such conditions, a transition to communism is economically untenable. Comrade Milyutin spoke here of the systematic framework we had established, and of how our legislation, as he put it, represented, to a certain degree, a coherent system for such a transition—though this system failed to fully account for the need to make certain concessions to the petty bourgeoisie. In making this observation, Comrade Milyutin drew a different conclusion than the one I am reaching. The systematic framework that was being constructed was shaped by military needs, considerations, and circumstances—not by economic imperatives. In those conditions of unprecedented devastation, when we were compelled, following a great war, to endure a series of civil wars, there was no other viable path. To be sure, in applying certain policies, mistakes were made; there were numerous instances of overreach—this much is clear. But under the wartime conditions we faced, the underlying logic of that policy was sound. We had no alternative but to exercise maximum, immediate control over resources, seizing every surplus—even without any compensation—and to proceed in this manner if we were to meet our objectives. This did not constitute a coherent economic system; rather, it was a measure dictated not by economic considerations, but largely by military exigencies. As for economic considerations themselves, the paramount concern today is to increase the quantity of available goods. We find ourselves in a situation of such profound impoverishment, ruin, exhaustion, and depletion of our principal productive forces—the peasantry and the working class—that, for the time being, we must subordinate everything to this fundamental imperative: to increase the output of goods at all costs.

I am often asked: What is the relationship between replacing the grain requisitioning system with a tax-based system and the current sowing campaign? In their notes, comrades have sought to expose a number of contradictions in this regard. In my view, what we are dealing with here is, for the most part, not contradiction but rather economic coherence. The sowing campaign is predicated on a series of measures designed to harness all available economic potential to maximize the area under cultivation. To achieve this, it is necessary to redistribute seeds, preserve them, and transport them. Yet even with our meager seed reserves, we are unable to move them; all too often, we must resort to a host of mutual assistance efforts—despite the dire shortage of agricultural implements—to mitigate crop shortfalls and ultimately eliminate them altogether. For many provinces, such considerations are simply out of the question. If a non‑party peasant, who in countless cases has already himself called for the replacement of grain requisitioning with a tax—and who, by virtue of this very demand, is now being encouraged to develop his farm within the existing economic framework—if, before the spring sowing season, he receives official assurances from the state authorities that this measure has been decided upon and will be implemented—does this run counter to the overarching policy of the sowing campaign? No, it does not; on the contrary, it is a measure that introduces an element of encouragement. I know some will argue that this element of encouragement is exceedingly small. But that is not the real issue. If we could immediately show the peasants dozens of steamships sailing from England, laden with goods in exchange for the harvest they are about to reap—of course, that would be far more tangible. Yet it would be absurd to attempt to deceive people who are acutely aware of the realities of our trade. We know full well that coal-laden vessels, carrying only modest supplies of food, are setting sail from England; we have received this information from Comrade Krasin. We also know that, even before the conclusion of a trade agreement—which has yet to be signed—trade is proceeding semi‑legally with individual merchants whom the bourgeois government, of course, cannot forbid from engaging in such transactions. Breaking through the economic blockade that surrounds us is no easy task, and to promise anything beyond what can realistically be achieved…

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We certainly cannot afford to act on a grand scale. At any rate, whatever we can accomplish, we are doing—and we are making adjustments to our import plan accordingly.
From the perspective of the smallholder, the petty farmer, a tax levied at a lower rate than the grain requisitioning system, one that is determined with greater precision and which gives him the opportunity to sow more, one that assures him that any surplus will be used to improve his farm—this represents the maximum possible support for the diligent farmer, a principle that was likewise advanced during the sowing campaign. In the end, all objections boil down to this question: Will the petty bourgeoisie—economically hostile to communism—gain more, or will big industry—whose role lies in laying the foundations for the transition to socialism and which, in terms of the state of the productive forces—that is, according to the fundamental criterion of all social development—forms the basis for socialist economic organization, uniting the vanguard of industrial workers and embodying the class that exercises the dictatorship of the proletariat—gain more?
Some have tried to argue, or to present an economic case, that the petty bourgeoisie—and especially artisanal commodity production—will undoubtedly benefit more. They have gone so far as to justify this claim by pointing out that it is precisely big industry, thanks to concessions, that will fail to become socialist. In my view, however, there is a fundamental economic error in these arguments. Even if it were absolutely proven that, proportionally speaking—even, let us say, in absolute terms—the petty industries stood to gain far more, this would in no way undermine, either theoretically or practically, the soundness of the steps we are taking. The bottom line is that there can be no other foundation capable of strengthening the economic underpinnings of our entire endeavor to build socialism. Let us take a purely hypothetical example—for illustrative purposes—I am using this scenario merely to clarify the point: suppose that petty industry accounts for 100 units (whether that figure represents 100 million labor‑units or 100 units of some other metric—it makes no difference), while big industry totals 200. Let us assume, for the sake of argument, that petty industry grows at a capitalist rate, reaching 175, while big industry remains at just 200. Now imagine a period of stagnation in big industry, accompanied by tremendous growth in petty industry. Even this, the worst-case scenario I have imagined—and even if it were to prove disadvantageous for us—would still represent a clear advantage, because, as the current year has shown, as our fuel and transportation conditions have demonstrated, and as the distribution of food supplies reveals—about which Comrade Milyutin reminded us only too aptly—we are barely managing to stay afloat.
Some have argued, and others have asked in their notes: “How will you maintain a workers’ state in the face of the rise of capitalism in the countryside?” This phenomenon—namely, the proliferation of small-scale production and the growth of the petty bourgeoisie in rural areas—is, in fact, the greatest threat we confront.
Let us turn now to concessions. Concessions represent a bloc with the capitalism of the advanced nations. We must understand the nature of concessions clearly. They are economic alliances, blocs, agreements with the advanced financial capital of the leading industrial countries—a pact that may yield only a modest increase in output for us, but which also brings with it a corresponding increase in output for our trading partners. If we grant a concessionaire access to ore or timber, that concessionaire will extract a substantial share of the product, while granting us only a small, proportional return. Yet for us, the imperative to increase total output is so pressing that even a small return represents a significant gain. A modest improvement in the living standards of urban workers—secured through concessions by treaty, and which poses no difficulty whatsoever for foreign capital—still constitutes a positive development, a reinforcement of our large-scale industry. And through its economic influence, this will contribute to the betterment of the proletariat’s condition, to the advancement of the very class that holds state power in its hands.
And we should not fear that small-scale agriculture and small-scale industry might expand to levels that could…

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that it might prove dangerous for our large-scale industry, is unfounded. In order for industry to rise, certain signs must appear.
If we have a crop failure (I have already referred you to Popov's pamphlet), if we have a crop failure and the same meager resources as last year, then there can be no question of reducing the crisis or developing small-scale industry: the restoration of capitalist relations is possible only on the condition of obtaining surpluses from agricultural industry. The latter is possible, and this is very important, since it gives us a significant advantage. The question of whether small-scale or large-scale production will gain more is a question of combining and coordinating the use of our fund and the development of the market, which we achieve through agreement with capitalism in connection with concessions, and this will give us an increase in agricultural production. Which of us uses these means better, the results depend on this. I think that if the working class, having in its hands the most important branches of large-scale industry, focuses on the most important of them, then it will gain more than small-scale industry will gain, even if it grows faster proportionally. Our situation in the textile industry was such that by the end of 1920 an improvement was undoubtedly noticeable, but there was not enough fuel, and if we had enough fuel, we would have received up to 800 million arshins of fabrics and we would have materials of our own production to exchange for peasant products.
But with the fuel crisis, we have a gigantic drop in production. Even if the purchase of coal abroad is now being implemented and we receive ships with this cargo in a week or two, we have still already lost several weeks or even months.
Any improvement in the situation of large-scale production, the possibility of launching some large factories, so strengthens the position of the proletariat, that there is nothing to fear from the element of the petty bourgeoisie, even if it is growing. We should not be afraid that the petty bourgeoisie and petty capital will grow. We should be afraid that the state of extreme hunger, need, and lack of products, from which the complete exhaustion of the proletariat already stems, the impossibility for it to resist the element of petty-bourgeois fluctuations and despair, continues for too long. This is more terrible. With an increase in the quantity of products, no development of the petty bourgeoisie will be a major disadvantage, since this gives rise to the development of large-scale industry, and we must encourage small-scale agriculture. Everything that we can do to encourage it, we are obliged to do. The tax is one of the modest measures in this regard, but an undoubted measure that will give this encouragement and which should certainly be adopted. (Applause.)
*Pravda* No. 58, March 17, 1921