Reform and Recovery
Excerpts from The History of Soviet America, (London: Penguin, 1975)
A university level history textbook, groundbreaking in its atypical neutral tone, and use of both internal and external sources to discuss the history of the UASR. It went out of print following the 1979 crisis and faded from popular consciousness before the advent of mass internet culture. Its subsequent rediscovery as a curiosity from the era of détente led to renewed interest, and an expanded second edition, covering the years following 1975, was announced.
Chapter IV: From War Syndicalism to State Socialism
Key Terms:
Collective: A "high-level cooperative," where all productive resources are held in common.
Cooperative: An economic enterprise run by an association of workers.
Mutual: A "low-level cooperative," typically agricultural or housing. A voluntary association in which members pool shared assets for mutual benefit, but retain private ownership of some assets. In a mutual farm, the mutual owns productive assets such as tractors, irrigation, etc., while land remains in the hands of the individual members.
State socialism: An informal name for the economic system based on a tripartite balance between state investment and planning, cooperative enterprises, and market mechanisms in allocation and exchange.
War syndicalism: Economic policy of the American Civil War, an ad hoc arrangement in which unions took a commanding role in organizing production for the war effort with state assistance
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America's civil war had been relatively short. This did not mean that the damage, in both blood and treasure, was negligible. Recent studies have estimated that nearly fifty-five thousand soldiers died on the battlefield or from related industries. A further seventy thousand civilians perished from collateral damage, hunger and pestilence in 1933 alone. Sociologists estimated another twenty thousand excess deaths occurred during the winter of 1933-34, due to de-housing, disruption of infrastructure, and famine.
Much of the provisional government's business was occupied with distributing food and fuel, and finding accommodations for the many hundreds of thousands who find their lives disrupted by the civil war. The previous ad hoc economic arrangements—War Syndicalism—continued throughout the winter. While the left was setting the agenda in the Congress of Soviets, especially in shaping the constitutional basis of the new union, in the actual administration of government the right was making its presence felt.
While the Workers' Party had a mass of enthusiasm and shop-floor expertise, it was stymied by a lack of experience in administration. The new right-wing of the political spectrum, which encompassed farmer-laborists such as Mike Mansfield, progressive liberals such as Theodore Roosevelt III, and the ranks of the recently converted in the military and the civil service. By necessity, Foster's government would rely upon their experience in the formative years of the UASR.
The new Basic Law was ratified on 15 March 1934, establishing the basic forms of the workers' republic. As previously agreed upon, the Congress of Soviets dissolved itself for new elections. The new republic's first election, scheduled for 6-8 of April, would meet the minimum criteria for a free election. Free speech and assembly would be protected, and all the major parties were given space to propagandize and debate. Even the restrictions on the counterrevolutionary "True" Democrats were relaxed. It however, would not be a competitive election. The three largest parties in membership, the Communists, the DFLP, and the DRP, were united in an alliance. The election would serve only to establish the relative balance of power within the United Democratic Front.
The Front had its own line which it enforced based on the principle of democratic centralism. In practice, the UDF's line was mostly an agreement between the party leaders that certain issues would remain uncontroversial. Whatever misgivings one had about the Red Terror, the hardline on racism, or the suppression of counterrevolutionary organizations, a member of the Front would not raise these issues in the election or as part of debate.
The parties did compete in certain avenues. But it was well understood from very early on that the Communists would lead the governing coalition by weight of membership, and expected to carry the day in most political disputes.
The resulting II Congress of Soviets convened on 16 April. Acting President Upton Sinclair was confirmed as the Secretary-General of the Presidium at the opening of the day's proceedings. He addressed the Congress, outlining the challenges facing the new republic, and the necessity of bold action. Often called the "What is to be Done?" speech, Sinclair's words would be broadcast across the entire country, and repeated in extracts in news reels around the world.
In his speech, Sinclair summarized "the state of the world proletarian revolution." The workers of the world, he argued, "have captured a beachhead in the center of global capital. The tyrant has retired across Caribbean to reign in hell rather than serve in heaven, but this is not the end of the world revolution. It is not even the beginning of the end. The American proletariat has united in the universal purpose of abolishing class domination. They control the most advanced and productive industrial economy in the world, the very fulcrum of the global economic system, but the task is far from over. It is not the beginning of the end; rather the end of a beginning."
The American economy was still on life support. War Syndicalism had maintained production for the anti-fascist war effort, but the system of requisition and command economy could not be maintained. Economic normalization would prove to be a trying, often painful process, necessitating balancing numerous material and ideological interests.
The friction had begun even before the ink had dried on the nation's constitutional documents. The provisional government had begun the transition to normalization in January. Foreign Secretary Reed had reached a preliminary agreement with the British and French delegations regarding outstanding debt owed to the United States as well as nationalization financial institutions. As part of the agreement, the revolutionary government made certain guarantees about the status of property owned by foreign nationals.
Practical concessions were made to get the economy back on its feet, and assuage the fears of the more moderate fellow travelers of the revolution that the nation would descend into an austere Bolshevist autocracy. The new economic policy sought to balance pragmatic economic considerations with the dictatorship of the proletariat. Limited spheres for private ownership would be permitted.
Outside of the state owned core enterprises, economic activity would be organized either by cooperatives or petty producer private holdings. Private enterprise was retained with strict limits on wage labor and rentier behavior. Private land plots were restricted in size. The small shops and family businesses could employ limited wage labor, provided they obeyed closed shop and collective bargaining rules; restrictions in the size of wage labor force would be set by the trade union.
Cooperatives would follow their own framework; in essence, a limited liability corporation with a workers' association as majority stakeholder. This allowed third parties to invest through stock ownership while still preserving the irreducible program of worker control.
The new economic policy faced a tumultuous road to passage. After its presentation at the Party Congress on Monday, 22 January 1934, howls of protest came from the left wing factions. Four days of debate were scheduled to put a lid on the rancor, which in several instances broke into fistfights among the party deputies. Party General Secretary Earl Browder took the floor on Tuesday to personally present the case for the "basic socialism" of the policy.
In a surprising move, Browder outlined a left communist case for the cautious program. After a short excursus on the dynamics of international capital, he argued that the American revolution's position as a beachhead against world capital, the move to fully communist relations would be impossible. Communism must be, in Marxian terms, a world system, integrating the productive capacities of a critical mass of the world into a united framework. Without this necessary condition, the construction of more advanced communist relations, fully abolishing private property, money, and wagedom would be unfeasible. The limitations of productive forces, technics, and the necessity for defense against counterrevolution were roadblocks that could only be overcome in time, after a "dual campaign" against both the threat of external reaction and the development of technological forces.
Browder defended his thesis with the first official statements by the Workers Party leadership on the limitations of the Bolshevik Revolution, and the bureaucratic deformations that developed in the Soviet Union. While he employed the language of excuseology, Browder's critical remarks drew some protest from the Soviet ambassador, Sergei Kirov, who had attended the Party Congress as a guest.
In any case, Browder's arguments constituted the WCP's first open break with the Soviet programme of "Socialism in One Country." As long as money existed, the value form and commodity relations existed, including the commodification of labor. The restructured economy would place control of production in the hands of workers, whether through the workers' soviets, the factory committees, or the trade unions. This transitory state between capitalism and communism existed to provide the means for its own dissolution.
Solon DeLeon, a stalwart of the Party's left wing, cross-examined Browder tenaciously, focusing his questions on the General Secretary's historical materialist analysis. Browder handled the questions excellently, quoting from
Das Kapital from memory, and citing more recent analyses by the German-American Marxist economist Paul Mattick. Satisfied with Browder's answers, DeLeon moved from the opposition camp to a position of critical support, though this would not become apparent until the next day of debate.
The Harvard University political economist and latter day communist Abraham Cheshire* spoke next. Cheshire, a co-author of the policy, defended the program on its technical merits. He focused on the role the central government would play in undoing the legacy of bourgeois market failure, directing resources to get the nation back to work, and utilizing its productive capacity to benefit the multitude. He likened the preservation of private incentives to "greasing the wheels" of industry. It would serve as a lubricant to enable efficient allocation of resources. The Solidarity Union leader Guy Firenze* grilled him in cross examination. Cheshire, to his credit, stayed on message, and emphasized the strong protection of worker power in the compromises.
The next day's business was dominated by more critical voices. DeLeon voiced his concerns about the potential for bureaucratic deformation, and the threat of a new class forming within the ranks of the planning apparatus. Clarence Ayres, another Veblenite economist, argued that the chair's projections for economic recovery were overly optimistic, and criticized the numerous gray areas in the plan.
The proposal was ratified on Friday. The final vote tally, after a number of amendments were made to the proposal, gave state socialism just over a 2:1 margin in support. The truly difficult work would come in the months ahead, as Foster's government began to put the policy into practice.
Post-Reform Currency of the UASR
"Money is a measure of poverty," as Solon DeLeon put it.(1) The imposition of the dictatorship of the proletariat during the revolution had not yet annulled capitalism fully. And post 1933, the Workers' Party had quietly repudiated Leninist stageism as part of the general line of the party.
The transitional state of the dictatorship of the proletariat, as a practical matter, required maintaining the value form and money, and with that some form of property relations and class distinction was inevitable. Even the notion that America was a union of socialist republics was somewhat blasphemous to this notion. Foster and Browder had walked a careful line, indicating that the official style of the polity was aspirational.
Consequently, monetary policy and currency were a major practical concern for the workers republic. In full socialism/communism (the two are not distinguished by Marx nor the Workers' Party's general line), money would not exist. Even the term "state socialism", so often used in European liberal and social democratic sources, was an (over)simplification of Browder's notion of "state promotion of socialist relations."
With that circle squared, Foster's government commenced as part of war measures the confiscation of private stocks of gold bullion, coin and jewelry, often without compensation. With the US Mint and the Bureau of Engraving and Printing out of commission for the duration of the war, the economy floated on War Syndicalist fiat and scrip issued by the Provisional Government.
Following the establishment of a constitutional regime, more substantive reform measures were undertaken. Gold was revalued at $1.25 per gram (~$38.76 per Troy ounce), a major devaluation of the dollar and monetary expansion. As a part of open market operations, the gold reserves held by the All-Union Central Bank would nearly treble in five years to approximately 19,000 tonnes. Paradoxically, the socialist state became a major target for capitalist investment, and the expansionary monetary policy greatly eased investment and consumption, and thus economic growth.
On a more day-to-day level, the UASR continued to mint and print pre-revolution currency for a short time for practical reasons.
Series 1914 and 1918 Bank of the Republic Notes,
Series 1915 Bank of the Republic Bank Notes,
United States Silver Certificates,
United States Gold Certificates, and
United States Notes continued to circulate and be printed for nearly two years.
But their political unpalatability, and their continued use in the White-exile regime in Cuba ensured this would not last. Design process for a new currency began in mid 1934, spurred on by reports of a number of dies and engraving plates being unaccounted for. When the exile regime began what amounted to a massive state sponsored counterfeiting operation, the new "Workers' Currency" was rushed into production. Overstamping of existing banknotes helped thwart the smuggling of exile currency in the interim. For a short period from May Day 1936 until 1938, the new currency was co-official with the old. Old notes would be demonetized after this period, and conversion of unstamped old notes was blocked. Older coinage was retired but never officially demonetized, though most were melted down. Older coins and banknotes are consequently prized collectors items in present day.
The new currency featured a mix of classic and modern design elements. This was politically pragmatic as well as aesthetically appealing, and established a visual sense of continuity with the symbolism of the first revolution.
1936 Series
Coinage
Cent (1¢): "Phrygian cent".(2) Face: Lady Liberty wearing Phrygian cap. Back: Laurel wreath surrounding "One Cent".
Half-dime (5¢): "Arm and Hammer Nickel" Face: Arm and Hammer. Back: Roman numeral V, wreathed by wheat.
Dime (10¢): "Ploughshares dime". Face: Worker beating his sword into ploughshares. Back: Olive branch and fasces
Quarter (25¢): "Liberty quarter". Face: Liberty armed for battle, with Corinthian helm, hoplon and spear. Back: Seal of the UASR
Dollar ($1): "Nude Liberty." Face: Lady Liberty, in style of a Negro freedwoman, arms aloft holding the sun, broken chains at her feet. Back: Coat of Arms of the UASR
Banknotes
Standard template. Obverse: Left-side portrait. Right side Allegory.(3) Denomination in the corners. Top banner "Workers of the world unite!". Reverse: Mural
$5: Portrait: Abraham Lincoln. Allegory: The Power of Labor (a workman beating chains into munitions.) Mural: All Power to the Soviets (dramatized portrayal of the planting of the red flag on the Capitol building)
$10: Portrait: John Brown. Allegory: Freedom: (woman worker building civilization). Mural: "
The Tragic Prelude"
$25: Portrait: Norman Thomas. Allegory: Proletarian Cincinnatus (workman standing, one hand on the machinery, the other holding fasces in outstretched hand). Mural: Four as One (four Red Army men with rifles and bayonets drawn. One black, one white, one Asian, one Native.)
$100: Portrait: Daniel DeLeon. Allegory: Justice Casts Aside Her Blindfold. Mural:
Great Hall of the Soviets
- I feel I should note that though Daniel DeLeon had a son OTL named Solon, there's really no biographical information about him, and as far as I can tell he was apolitical. So he's sort of a literary blank slate for the purposes of this timeline.
- Before the current presidential coins were minted (IOTL, the Lincoln Cent was released in 1909, the Washington Quarter in 1932, the FDR Dime in 1945), American coinage had a variety of motifs, usually focused on Lady Liberty, eagles, classical artistic symbols, American Indians, etc. Designs were changed regularly, and the mix of circulating currency resulted in common nicknames for the various designs.
- In this sense, art symbolically representing an idea.
