1. The nationalization of (a) the means of production, with the important (albeit temporary) exception of agriculture, (b) transport, and (c) all but the smallest enterprises.
2. The liquidation of private commerce through the nationalization of the retail and wholesale trade, and its replacement by a government-controlled distribution system.
3. The elimination of money as a unit of exchange and accounting in favor of a system of state-regulated barter.
4. The imposition on the entire national economy of a single plan.
5. The introduction of compulsory labor for all able-bodied male adults, but on occasion also for women, children, and elders.
These unprecedented measures, pursued not because of but despite the Civil War, were designed to provide Soviet Russia with a coherent and rational economic system conducive to most efficient productivity as well as fairness in distribution.
War Communism had several sources of inspiration. State control (though not ownership) of production and distribution of commodities and labor had been introduced by Imperial Germany during World War I. These emergency policies, known as “War Socialism” (Kriegssozialismus), made a great impression on Lenin and his economic adviser, Iurii Larin. The replacement of the free market for commodities with a network of state-run distribution centers was patterned on the ideas of Louis Blanc and the ateliers introduced in France in 1848 under his influence. In spirit, however, War Communism resembled most the patrimonial regime (tiagloe gosudarstvo) of medieval Russia, under which the monarchy treated the entire country, with its inhabitants and resources, as its private domain.8 For the mass of Russians, who had never really been touched by Western culture, state control of the economy was more natural than abstract property rights and the whole complex of phenomena labeled “capitalism.”
If one were to take at face value the flood of Soviet economic decrees issued between 1918 and 1921, one would likely conclude that by the end of this period the country’s economy was completely state-managed. In fact, Soviet decrees of that time often reflected only intentions: the discrepancy between law and life was never greater. There is ample evidence that alongside the ever-expanding state sector there flourished a private sector which withstood all attempts at its elimination. Money continued to circulate even in an allegedly “moneyless” economy, and bread was sold on the open market despite the regime’s claim to a grain monopoly. The central economic plan was never put into practice. In other words, in 1921, when it had to be given up, War Communism was only very incompletely realized. Its failure was only in part due to the government’s inability to enforce its laws. No lesser a role was played by the realization that strict enforcement, even if it were possible, would bring about economic catastrophe: Communist sources conceded that without the illicit trade in food, which supplied the urban population with two-thirds of its bread, the cities would have starved. War Communism, under a new name and with fresh slogans, became a reality only ten years later, when Stalin resumed economic regimentation at the point where Lenin had left off.
The goal of War Communism was socialism or even communism. Its proponents had always believed that the socialist state would abolish private property and the free market, replacing them with a centralized, state-run and planned economic system. The main difficulty which the Bolsheviks faced in implementing this program derived from the fact that Marxism envisioned the abolition of private property and the market as the end result of a lengthy process of capitalist development which would concentrate production and distribution to such an extent that they could be nationalized by legislative fiat. But in Russia, at the time of the Revolution, capitalism was still in its infancy. Her overwhelmingly “petty bourgeois” economy, dominated by tens of millions of self-employed communal peasants and artisans, was further exacerbated by the Bolshevik policy of breaking up large estates for distribution to peasants and giving workers control of industrial enterprises.
Lenin gave ample proof of being an extraordinarily astute politician, but when it came to economic matters he revealed himself to be remarkably naïve. His knowledge of economics derived entirely from literary sources, such as the writings of the German socialist Rudolf Hilferding. In his influential Finance Capital (1910), Hilferding maintained that as capitalism entered its most advanced stage, that of “finance capitalism,” it concentrated all economic power in the hands of banks. Once it reached its logical conclusion, “this trend would produce a situation in which a bank or a group of banks would have at their disposal the entire monetary capital. Such a ‘central bank’ would thereby secure control over the entire social production.”9 Connected with the notion of “finance capitalism” was an exaggerated view of the role of syndicates and trusts. Lenin and his associates believed that in Russia syndicates and trusts virtually controlled industry and trade, leaving market forces a small and diminishing scope.
From these premises it followed that nationalizing banks and syndicates would be tantamount to nationalizing the country’s economy, which, in turn, meant laying the foundations of socialism. In 1917, Lenin argued that the concentration of economic power in the hands of banking institutions and cartels in Russia had attained a level at which finance and commerce could be nationalized by decree.10 On the eve of the October coup, he made the astonishing statement that the creation of a single state bank would provide, in and of itself, “nine-tenths of the socialist apparatus.”11 Trotsky confirms Lenin’s optimism:
In Lenin’s “Theses on the Peace,” written in early 1918, it says that “the triumph of socialism in Russia [required] a certain interval of time, no less than a few months.” At present [1924] such words seem completely incomprehensible: was this not a slip of the pen, did he not mean to speak of a few years or decades? But no: this was not a slip of the pen.… I recall very clearly that in the first period, at Smolnyi, at meetings of the Council of People’s Commissars, Lenin invariably repeated that we shall have socialism in half a year and become the mightiest state.12
During the first six months in power Lenin thought of introducing into Russia a system which he called “state socialism.” It was to be modeled on German Kriegssozialismus, with this difference that it would embrace the entire economy, not only the sector directly relevant to the war effort, and work for the benefit not of “capitalists and Junkers” but of the “proletariat.” In September 1917, on the eve of the coup, he thus described what he had in mind:
Besides the predominantly “oppressive” apparatus of the standing army, police, officialdom, there exists in the contemporary state an apparatus, especially closely connected with banks and syndicates, which carries out a great deal of work of accounting and registering, if one may put it this way. This apparatus cannot and should not be smashed. It must be removed from its subjection to the capitalists, it must be cut off… from the capitalists with their threads of influence, one must subordinate it to the proletarian soviets, one must make it more comprehensive, more all-embracing, more national. And this can be done, leaning on the achievements already accomplished by large-scale capitalism.… The “nationalization” of the mass of employees of banks, syndicates, commercial societies, etc., is fully realizable both technically (thanks to preparatory work done for us by capitalism and finance capitalism) and politically under the condition of Soviet control and supervision.13