Socialism in Undeveloped Countries


BEFORE discussing this subject, we must briefly answer the preliminary question: What do we mean by ‘Socialism’? The word is often used very vaguely, but it is not difficult to give it a precise meaning. The definition of Socialism consists of two parts — one economic and one political; one concerned with the production and distribution of goods, the other with the distribution of power.

As regards production, all land and capital must be the property of the State — though perhaps the State might sometimes delegate possession to some large body of producers or consumers, such as a trades-union or a coöperative society. As regards distribution, what is paid for each kind of work must be fixed by a public authority, with a minimum of what is required for bare necessaries, and a maximum of what will give the greatest incentive to efficient work. There is no need of equality of income for all, as part of the definition of Socialism; the fact that Chaliapin is paid more than a sceneshifter does not suffice to prove that Russia is still bourgeois. What is essential is that a man should not be able to extort profit by his possession of means of production, whether land or capital. But Socialism certainly has as its ideal, equality of income, subject only to such modification as may be imposed by the special needs of various classes of workers.

On the political side, Socialism is not compatible with autocracy or oligarchy but demands that all sane adults shall have an equal share of ultimate political power. Even the Bolsheviki, who oppose democracy during the time of transition, regard it as part of their ideal, and admit that Socialism will not be fully realized until it is possible to restore liberal democratic institutions. (This appears in their writings, and was confirmed by Kamenev in a conversation we had with him while in Russia.) The different forms of Socialism do not differ here, but only on the extent to which proximate political power is concentrated in the democratic State, or diffused through various federated bodies.

It seems impossible that industrialism should continue efficient much longer unless it becomes socialistic. This is partly because the system of private profit rouses the discontent of the workers, and gives them a sense of injustice; partly because the private ownership of land and capital confers upon the owners a degree of control, both over private citizens and over the State, which is dangerous, since it is used to increase private power and profit. But the transition from the present system to Socialism is full of difficulty, and it is doubtful whether the attempt will succeed or will result in a return to barbarism.

Marx, whose prophetic insight was remarkable but not impeccable, conceived the transition with a schematic simplicity which does not appear at all likely to be realized. He thought that the line between capitalist and proletarian would always remain quite sharp so long as Capitalism survived; and that the proletarian could never obtain more than starvation wages. Gradually the capitalists would grow fewer through the concentration of capital, and the proletariat would grow more discontented and more organized through experience of their misfortunes and struggles against them. Their struggles would be first local, then national, then international; when they became international, they would be victorious. Then, suddenly, by a revolution, the whole economic system would be changed, and international Socialism would be established.

In all these respects Marx has proved to be partly mistaken. The line between capitalist and proletarian is not sharp: trades-union leaders, with comfortable incomes, enjoy bourgeois comfort, associate with capitalists on equal terms, and often acquire much of the capitalist mentality. The iron law of wages, invented by orthodox economists to discourage trades-unions, and accepted by Marx to encourage revolution, was an economic fallacy: wages in America, and even in England, now afford far more than a bare subsistence to the majority of wage-earners. The concentration of capital in a few large enterprises has not meant a diminution in the number of capitalists, owing to the growth of joint-stock companies. The proletariat have not grown more discontented; they were certainly more revolutionary in England a hundred years ago than they are now. It is true that they have grown more organized nationally; but the war showed the complete futility, up to the present, of international organization. And if to-morrow a war were to break out between America and Japan, the proletariat of both countries would equal the capitalists in enthusiasm, and surpass them in patriotism.

Finally, the numerical preponderance of the proletariat has been realized in only a very few countries (of which Great Britain is one). Elsewhere they are outnumbered by the peasant proprietors who, as a rule, side with the capitalists. In this last respect, however, time may yet justify Marx. Lenin’s scheme of electrification is designed to industrialize agriculture, and thus give to the peasant the mentality of the proletarian. It is possible that technical improvement in agricultural methods may produce a similar change in other countries. This is a very important consideration; but, unfortunately, it is a matter as to which prophecy is exceedingly difficult.

The establishment of a Communist government in Russia has brought to the fore a new set of considerations. The Bolsheviki are attempting to establish Communism in a country almost untouched by capitalistic industrialism. This raises the question whether Capitalism is, as Marx believed, a necessary stage on the road to Socialism, or whether industry can be developed socialistically, from the outset, in a hitherto undeveloped country. For the future of Russia and Asia this question is of the most vital importance.

The Bolsheviki came into power with the intention of establishing Communism at the earliest possible moment; and this intention they, no doubt, still entertain. But apart from all external difficulties, the internal obstacles have proved greater than they expected. This may be gathered from a very candid article on ‘The Meaning of the Agricultural Tax,’ by Lenin, published in English in the first number of the Labour Monthly (July, 1921). What he says of Russia would be equally applicable to a socialistic China, or to India if it became Bolshevist. Lenin distinguishes in presentday Russia, elements at five different levels of economic development, namely:—

1. Patriarchal—to a large degree, primitive — peasant production.

2. Small commodity production. (This includes the majority of peasants who sell corn.)

3. Private Capitalism.

4. State Capitalism.

5. Socialism.

The term ‘State Capitalism’ occurs frequently in this article, as well as in others of his writings. It seems to mean the running of enterprises by the State for profit, that is, in the same way in which they would be run by private capitalists. It appears in the course of the article that it includes the running of railways by the State, whether in Soviet Russia or in pre-war Germany. The term is not defined in the article. But the essence of the matter seems to be that, under State Capitalism, the State sells the goods or services concerned, instead of supplying them gratis to those who have a claim to them.

Lenin regards the later stages as higher in the economic scale than the earlier ones, and considers any development from one of them to the next as an advance. He also seems to hold — though this is scarcely reconcilable with Bolshevist policy — that no stage can be skipped, but all must be passed through in their proper order. He argues that small-commodity production must be encouraged, because it is an advance on patriarchal peasant production; that large-scale private capitalism is better than small production (though he hardly ventures to say that his government should encourage it); that State Capitalism should not be opposed by Socialists, because it is so much better than private capitalism; and that Socialism cannot be brought about quickly. He quotes the following passage from a pamphlet of his, written in 1918: —

‘State Capitalism would be a step in advance in the present state of affairs of our Soviet Republic. If, for example, State Capitalism could establish itself here during the next six months, it would be an excellent thing, and a sure guarantee that within a year Socialism will have established itself and become invincible.’

Later on in the article he says: —

‘In the above-quoted arguments of 1918, there are a number of errors in connection with periods. Periods prove to be much longer than was then assumed.’

But the question of speed need not concern us at present; it is the nature and direction of the movement toward Socialism in undeveloped countries that we wish to investigate.


If one investigates Lenin’s argument closely, one finds (if we are not mistaken) that its upshot is this: A government of convinced Communists can limit the phase of private capitalism to rather small businesses, replacing largescale private capitalism by State Capitalism; also, they can enormously accelerate the movement from any one phase to the next; but they cannot enable a community to skip any of the phases altogether, or to overcome the laws of economic evolution.

A few further quotations will help to elucidate the position taken up in this very important pronouncement.

‘State Capitalism is incomparably higher economically than our present economic system’ (that is, that of Russia in 1921).

‘Socialism is impossible without large capitalist technique.’

‘Socialism is impossible without the domination of the proletariat in the State.’

‘I will, first of all, quote a concrete example of State Capitalism. Everybody will know this example: Germany. A victorious proletarian revolution in Germany would immediately, and with tremendous ease, smash the whole shell of imperialism . . . and would for certain bring about the victory of world Socialism.’

‘If the revolution in Germany is delayed, our task becomes clear, to learn State Capitalism from the Germans, and to exert all our efforts to acquire it. We must not spare any dictatorial methods in hastening the westernization of barbarous Russia, and must stick at no barbarous methods to combat barbarism.’

‘The problem of power is the rootproblem of all revolutions.’

‘Our poverty and ruin is such that we cannot immediately establish large State Socialist Factory Production.’

’It is necessary, to a certain extent, to assist the reëstablishment of small industry, which does not require machinery.’

‘What is the result of all this? Fundamentally, we get a certain amount (if only local) of free trade, a revival of the petty bourgeoisie, and Capitalism. This is undoubted, and to close one’s eyes to it would be ridiculous.’

After explaining the folly of attempting to prevent all private trading, with a half-confession of the fact that this policy has been vigorously pursued hitherto, he explains the new policy which he now advocates:—

‘Or (and this is the only possible and sensible policy) we can refrain from prohibiting and preventing the development of Capitalism, and strive to direct it in the path of State Capitalism. This is economically possible; for State Capitalism exists in one or another form, and to one or another extent, everywhere where there are elements of free trade and Capitalism in general.’

He proceeds to mention concessions and coöperative societies as examples of this policy.

On the subject of fitting the peasantry into a Socialist system, he says: —

‘Is it possible to realize the direct transition of this state of pre-capitalist relations prevailing in Russia to Socialism? Yes, it is possible to a certain degree, but only on one condition which we know, thanks to the completion of a tremendous scientific labor. That condition is: electrification. But we know very well that this “one” condition demands at least ten years of work; and we can reduce this period only by a victory of the proletarian revolution in such countries as England, Germany, and America.’

‘Capitalism is an evil in comparison with Socialism; but Capitalism is a blessing in comparison with mediævalism.’

‘It must be the aim of all true workers to get local industry thoroughly going in the country districts, hamlets, and villages, no matter on how small a scale. The economic policy of the State must concentrate on this. Any development in local industry is a firm foundation, and a sure step, in the building-up of large-scale industry.’

We have thought it necessary to make these numerous quotations, because they contain admissions, based on experience, of many things which socialistic critics have vainly urged upon the Bolsheviki, both in Europe and in Asia. The problem of what can and what cannot be done toward the hastening of the advent of Socialism in undeveloped or partially developed countries, is made much clearer by Lenin’s exposition of his difficulties. The great importance of the problem lies in the fact that, while technical and economic conditions are more favorable to Socialism in advanced countries, the political conditions are more favorable in backward countries. If, therefore, the technical difficulties could be overcome by the Bolsheviki, they would immensely facilitate the introduction of world Socialism. But the Bolshevist method has not only the difficulties recognized by Lenin. It has others at least as formidable, as we shall now try to show. The result seems to be that there is more hope of the inauguration of successful Socialism in the advanced countries than in those which have hitherto escaped any large development of capitalistic industrialism.

Industrialism in an undeveloped country must be aristocratic, and must at first entail great poverty for the bulk of the population, unless it is inaugurated by foreign capital. The Bolsheviki are obliged to manage industry as autocratically as any trust magnate, and are unable to afford more than a bare subsistence to their employees. Moreover, the attempt to dispense with the assistance of foreign capitalists has had to be abandoned since the resumption of trade and the adoption of the policy of concessions. The policy of developing industrialism without outside help entails such terrible hardships, over and above those that are, in any case, inevitable, that no nation, not even Soviet Russia, can face them. It is true that in England industrialism was built up without foreign capital; but the circumstances were very special, and not such as can be repeated. Coal and iron were plentiful and in close proximity to each other; new inventions, all English and confined to England by the Napoleonic wars, were cheapening production enormously; and above all, there were no other industrial nations to compete. In spite of all these advantages, the poverty and overwork of the operatives were appalling, and such as can be imposed only upon a nation subject to an aristocratic tyranny. We cannot hope, therefore, that a modern undeveloped nation, without special advantages, can become industrial without the help of foreign capital.

Under these circumstances, is it possible for a country like Russia or China to pass straight to what Lenin calls State Capitalism, without passing through the stage of large-scale private capitalism? To make the matter concrete, is it possible to have railways, docks, and so forth, built and owned by the State, and mines worked by the State, by means, partly, of borrowed capital, but without allowing the lenders any voice in the management? A strong State can do analogous things for ordinary purposes; for example, the holders of war-loans were not allowed a representative at General Headquarters, to see that the war yielded good dividends. Nor did the French investors who lent to the Tsarist government demand a voice in the management of the secret police, although they knew that revolution might mean repudiation. In such matters it is assumed that the interests of governments and their creditors are identical, and that, therefore, governments need not be interfered with by private capitalists.

But in the development of new industrial resources a different point of view is customary, and a government can seldom effect a loan without selling some part of the national independence. In China, for example, foreign investors expect the concession of monopoly rights — railways, mines, and the like — before they will lend to a government. This makes State Capitalism impossible in so far as the rights granted to foreigners are concerned. The money that they lend is spent in bribery, paying troops, and so forth, not in productive enterprises; the productive enterprises remain in the hands of foreign private capitalists.

In Russia, the Bolsheviki hope to restrain this policy of concessions within narrow limits, and to retain the bulk of the nation’s resources in the hands of the State. If they could succeed decisively, the Russian State, or perhaps the Communist party, could in the end replace the foreign capitalist as the exploiter of China, and could acquire a hold there which foreign nations would find very hard to loosen. The success or failure of Russia will probably decide whether it is possible to pass to Socialism through State Capitalism, rather than through large-scale private capitalism. If the Bolsheviki succeed, Asia may escape the advanced forms of private capitalism; if they fail, the whole world will probably have to arrive at the stage at which the advanced industrial countries are now.

The success or failure of the Bolsheviki turns on three kinds of factors: military, economic, and moral.

It is of course obvious that success is impossible without an army sufficiently strong to repel all attacks that can be easily provoked. Any trade agreements that the Bolsheviki conclude are the fruit of their success in defeating Kolchak and Denikin, and holding the Poles at bay. If at any moment a combination of, say, Japanese, Poles, and Rumanians had a good chance of defeating them, such a combination would, of course, at once declare a holy war against them. The only thing that may in time alter this state of feeling will be the investment of large amounts of foreign capital in the form of concessions which a White government might repudiate. It is the military strength of Russia that gives her preeminence above other undeveloped countries.

The economic factors introduce more difficult considerations. It is necessary for the Bolsheviki, first, to import from abroad the minimum of machinery, rolling-stock, and the like, required for reviving agriculture and restoring industry to its pre-war level. When this has been done, and it has become possible to purchase food from the peasants by supplying them with goods instead of paper, it will become possible to revive and increase the pre-war export of food and raw materials, and at the same time to develop Russian industry enormously. It is the early steps in this process that are the most difficult and dangerous. Imports are needed, first of all, and although a few of the most indispensable can be paid for in gold, the bulk will have to be paid for in concessions, since exports are impossible in these days of famine and collapse of transport. Russia’s need being desperate, the concessionhunters will exact very severe terms. Each concession will become a centre of private trading, and will make it more difficult to keep the bulk of foreign commerce in the hands of the State. There will be loopholes for corruption; and it may well be doubted how many of the later phases in the economic recovery will take place on the lines of State Capitalism.

All these difficulties are in no way peculiar to Russia, but are bound to occur in any undeveloped country which attempts a method of development disliked by foreign capitalists. But though the difficulties are great, they are not economically insuperable; by sufficient honesty, determination, and energy on the part of the rulers they could probably all be overcome.


This brings us to the moral factors of success. It is here that the difficulties of the Bolshevist programme are greatest. Few governments in history have had more honesty, determination, and energy than the Soviet government;1 yet it may well be doubted whether even they, in the end, will be found to have enough for the carrying-out of their original intentions. If the period of time involved had been, as Lenin believed in 1918, six months, or a year, or even a few years, the men who initiated the movement could themselves have carried it to a triumphant conclusion, without any great change meanwhile in their own outlook and disposition. But it is now four years since the October Revolution, and by Lenin’s confession the work is scarcely begun. When the Bolsheviki speak of the period during which the dictatorship will have to continue, they seem to contemplate at least a generation. Meanwhile, many of the original leaders will have died, while those who remain and those who replace them will have acquired the habit of arbitrary power. The practice of negotiating with capitalists and their governments will tend to produce an acceptance of their assumptions, as it often does in trades-union leaders. Capitalists will endeavor to extend their concessions, and wrill offer corrupt bargains to induce extensions. It may not be assumed that all officials will be incorruptible.

It is of course possible, for a time, to secure a very high moral level through enthusiasm and hope. Revolutionary ardor will do wonders while it lasts; but it does not last forever. The road from pre-industrial production to welldeveloped State Capitalism (to say nothing of Communism) is so long that it cannot be traversed during an outbreak of revolutionary ardor; and after such an outbreak, there is usually a period during which demoralization and corruption are rampant.

An attempt to establish Socialism in an undeveloped country, while the developed countries remain capitalistic, must pass through two phases: the first purely militant, in which the forces of internal and external Capitalism are resisted; the second constructive, when the work of industrial development is undertaken under State management.

Russia is, perhaps, at the end of the militant phase, and has been successful so far as fighting is concerned; but the constructive phase is a more difficult test. During the militant period, men’s combative instincts, as well as their nationalism, assist the enthusiasm for a new economic order. But when peace is restored, it becomes natural to grow tired of everything strenuous and tense. At this moment the foreign capitalists, in their concessions, begin to offer all kinds of advantages, from well-paid work for the ordinary wage-earner up to a fortune for the technical expert. To resist them will be very difficult — as difficult as it has been found to prevent small private trading: an attempt which Lenin frankly declares to have been a mistake.

There is, it would seem, only one force which could keep Communism up to the necessary pitch of enthusiasm, and that is nationalism, developing into imperialism as foreign aggressions are defeated. Otherwise the period during which revolutionary ardor can be kept alive will not be so long as the period required for the militant and constructive stages together. And if imperialism once gets the upper hand, it is of course vain to hope that any genuine Communism can result. Marxians, who believe that economic causes alone operate in politics, ignore such difficulties as we have been considering, because they are psychological, not economic. But the difficulties are none the less real on that account. Nor is it safe for rulers to treat themselves, in the Bolshevist manner, as exempt from human weaknesses, not subject to psychological laws, and certain to retain their original purposes unchanged throughout any number of years.

In spite of all these obstacles, the Bolsheviki may succeed; and if they do, they may quite possibly become a model for China and India. There is one very important thing that they have made clear, and that is, that Socialism in undeveloped countries must be aristocratic, an affair of a few energetic intellectuals leading that small percentage of the population which consists of ‘class-conscious proletarians.’ It is impossible for progress in these countries to come as it has come in the West; because the men who are capable of leading revolutions have absorbed the latest Western thought, and will not be content with anything acknowledged to be out of date in England or France. Miliukov might have been content with a revolution like Cromwell’s, Kerensky with one like Danton’s; but the Bolsheviki, who alone had the energy required for success, wanted Marx’s revolution, which Western revolutionaries still believed in because it had not yet happened. In the West, however, as in Marx’s thought, his revolution had always been conceived as democratic. In Russia, where democracy is as yet impossible, some form of oligarchy had to be found until education could become more widespread; and this form of oligarchy was found in the dictatorship of the Communist party. For the same reason, namely, that democracy is not yet possible in Russia, it was in the name of democracy that Capitalism criticized and attacked the Bolsheviki. Thus both sides lost sight of an important part of the truth: the Bolsheviki, practically if not theoretically, of the fact that democracy is part of the aim of Socialism; their opponents, of the fact that democracy cannot be achieved all at once in an uneducated nation.

The Bolsheviki have, however, made a very important contribution to the solution of Eastern political problems, by discovering an oligarchy which is neither that of birth nor that of wealth, but that of believers in a certain economic and political creed. When this creed is progressive and constructive, like that of the Communists, it is likely to produce a better oligarchy than any other that is politically feasible, except for the one reason that it rouses the hostility of the outside world. This is, however, such a very large disadvantage that it is scarcely possible to strike the balance. If the governments of the Western powers were socialistic, there would be no such disadvantage.

We are thus brought back to international questions, as dominating the problem of Socialism in undeveloped countries. If Russia proves sufficiently strong and determined; if China also comes in time to be dominated by Communists, then — assuming Lenin’s new methods successful in keeping the peasants contented — it is quite possible that Asia and Russia may be strong enough to succeed in the establishment of their economic independence on a basis of Socialism. But there are so many ifs in this argument that probability is against it. It is more probable that China will remain, and Russia will relapse, under the economic dominion of the Western powers, until such time as their industry shall have been developed by capitalistic methods. In that case, the ultimate victory of Socialism, if it comes, will have to come from the advanced countries, as was universally assumed before the Russian Revolution. Whether and how Socialism may be expected to come about in that case, we shall not consider in the present article.

  1. Readers of Mr. Russell’s book — Russia — will know that his political philosophy is quite at odds with Bolshevist theory. — THE EDITOR.