Throughout 1928 and 1929, Vesenkha's officials enacted piecemeal organizational reforms, but they began to discuss publicly the need for a complete administrative restructuring only in late 1928. As expected, discussions of organizational reform divided along factional lines. In late September, Kosior published the first set of proposals on the organization of industry. He intended his proposals as a strong plea to restore the trusts' authority, but he damaged his credibility by singling out Iugostal' for special mention. At that time Iugostal' was embroiled in one of its biggest fights with Rabkrin over the latter's survey of the trust. Accounting procedures were at the heart of a series of heated and very public exchanges between the trust and the control agency. In his theses, Kosior lauded Iugostal' as a model to be emulated in the way it established financial and accounting relations with its factories. His reference to Iugostal' was clearly intended as a public defense of his old and close "Ukrainian" comrade Stepan Birman. The connections between Kosior and Birman were well known, however, and Kosior's comments about Iugostal' gave a partisan flavor to his general argument. Many in Vesenkha regarded his proposals, not as a plan for organizational reform but specifically as an attempt by the "South" to reassert its influence in the central industrial apparatus.
Kosior's proposals provoked a flood of vituperation from syndicate leaders. At an October 8 meeting of the VSS, the syndicates' governing board, one presidium member dismissed Kosior's proposals as the trusts' final and desperate effort at bureaucratic survival. "They are afraid of their fate," he declared. Kosior's proposals, noted another official, might be appropriate for 1924, when economic and commercial mechanisms were not well developed in the economy, "but not for 1928." Another called them a "dangerous step backward" to the glavkism of the early 1920s, and received unanimous agreement. Kosior's proposals had "no basis in any economic reality" and were "wholly useless" (iavno ne prikhoditsia).
In October, Vesenkha's trade department published a set of counterproposals that favored an increased role for the syndicates in planning. Other departments and individuals followed suit with their own versions of reform, and it soon became clear that no consensus existed within Vesenkha's hierarchy over how to reorganize industry. Even Vesenkha's presidium was divided on the issue. Iosef Khodorov, the syndicate councils' trade expert, told his fellow syndicate leaders that Kuibyshev and M.L.Rukhimovich supported "only parts" of Kosior's plans. Moreover, Kuibyshev was more inclined toward the syndicate's view than he was commonly thought to be. Khodorov quoted Kuibyshev to the effect that Vesenkha had "mistakenly underestimated" the usefulness and experience of the syndicates in organizing industry. Khodorov encouraged his syndicate colleagues to take heart in the hope that officials at the highest level of government were beginning to see the importance of the syndicate movement. [Rukhimovich did oppose Kosmr's proposals, but Khodorov was wrong in assuming that he therefore supported the syndicates. Rukhimovich was in Rabkrin's camp and supported centralizing reorganization that would usurp the roles of both syndicates and trusts.]
A Vesenkha commission attempted to find a compromise between trust and syndicate positions in a set of proposals, also published in October 1928. As with most compromises, however, the commission's theses brought no clarity to the organizational debates and did little more than muddle the issues. Exchanges continued in meetings and in the press right up to the beginning of Vesenkha's fourth plenum meetings, which started on 30 November 1928. The plenum produced no breakthrough. Trust supporters made a strong showing, but so did officials sympathetic to the syndicates. The plenum's resolutions did nothing to change the status quo or to clarify lines of authority.
Rabkrin entered the debate on industrial organization in early January 1929, not long after the close of Vesenkha's fourth plenum. Until then, the RKI had taken an active role in the survey and reorganization of individual branches of industry but had made no proposals for fundamental reform. Neither did Rabkrin officials commit themselves in the trust-syndicate debates. They supported the creation of the textile trade syndicate, for example, merging the glavk with the VTS and subordinating trusts to the single organization, yet they took no principled line in Vesenkha's organizational debates. Ordzhonikidze, when pressed to endorse or criticize the textile syndicate's experiment, equivocated, giving a wait-and-see answer.
Finally, in early 1929, Rabkrin established a commission to investigate organizational issues and named A.Z.Gol'tsman to head it. From the beginning, Gol'tsman made it clear he would not continue the piecemeal approach taken by Vesenkha and Rabkrin to questions of administrative reform. He believed in root reorganization. In a memorandum to Ordzhonikidze that spring, Gol'tsman stated the need to create an industrial structure "entirely new," a system that "will mold the economy to our ends, whatever it is we wish to accomplish.
What Gol'tsman and his Rabkrin colleagues wished to accomplish was to turn the USSR into an "industrial power." To favor industrialization was not unusual; strengthening the Soviet Union through industrialization was a widely accepted goal. But the word Gol'tsman used for power was derzhava, which called forth memories of autocratic state power, the samo-derzhavie of the tsarist regime. Gol'tsman's apposition of the words industrialnaia and derzhava created provocative images of an "industrial autocracy," a term that linked the processes of industrialization, statebuilding, and great-power status.
Such language and the images it created shaped the way many economic planners thought about industry and state power. M.N.Falkner-Smit, member of the collegium of the Central Statistical Bureau and head of its section on industrial statistics, cited only two people, Gol'tsman and Lenin, in her introduction to the 1929 statistical survey of industrial capital in the USSR. This was the first Soviet survey of its kind to describe statistically the distribution of capital and labor in industry. Falkner-Smit credited Gol'tsman with providing the organizing principle behind the survey, which was to measure the "capital capability" or "capital power" - kapitalovooruzhennost' - of Soviet industry. The term was Gol'tsman's, as Falkner-Smit indicated by setting it off in quotation marks. Quotation marks also drew attention to the word and its military connotations. Vooruzhenie most often referred to capability or power in the sense of military armament. The implication of a military-like mobilization of the economy reinforced the autocratic image evoked by Gol'tsman's industrial'naia derzhava.
Like Gol'tsman, Falkner-Smit defined the goal of industrialization as world-power status. She emphasized the connection between the two by comparing the process of capital concentration in Soviet Russia to the same process in the two most powerful capitalist nations, Germany and the United States. For her authority on industrial concentration under capitalism, Falkner-Smit quoted at length from a work that was familiar to her readers, Lenin's Imperializm kak poslednii eiap kapitalizma (Imperialism as the highest stage of capitalism). Lenin argued that it was the concentration of capital in large-scale industrial development that made the imperial nations of Europe and North America great world powers. Drawing on the works of the Austrian economist Rudolf Hilferding and the British economist John Hobson, Lenin referred to the transition of capitalism from its Manchesterian stage to the stage of organized or monopoly capitalism. The former was small-scale and individualistic; the latter was organized on a massive national and international scale and was directed toward the world aggrandizement of capitalist state power. Falkner-Smit favorably compared the processes of industrial concentration in Soviet Russia with the levels already achieved in Germany, Britain, and the United States.
Falkner-Smit's linking of Gol'tsman's vision with Lenin's analysis created a compelling image of Soviet industrial power acting on the world stage. At the same time, that image carried implications of industrialization for the sake of state power, not for the sake of social improvement. In fact, Gol'tsman's ideas about the state and the economy had little to do with socialist principles. Neither his nor Falkner-Smit's language evoked images of industrialization as a means to raise standards of living; neither fostered images of the state as a mechanism to ensure social justice, foster commercial exchange, or achieve an equitable distribution of wealth. Gol'tsman and his Rabkrin colleagues favored state monopoly control over industry and economy, but not because they considered planning a better way to distribute economic goods than the capitalist anarchy of the market. For Gol'tsman, as for many of his Rabkrin colleagues, the economy served as a source of wealth for the state. Centralized administration served as the best means to extract that wealth. Like his friend Georgii Piatakov at Gosbank, Gol'tsman set out to create the mechanisms that would maximize the state's ability to manipulate the economy and mine capital and other resources from it. For Gol'tsman, industrialization amounted to an extension of state power and was part of the process of state-building.
Gol'tsman's ideas about the state evolved, in part, from his work in the "scientific organization of work" movement, or NOT (nauchnaia organizatsiia truda). During the Revolution and Civil War, Gol'tsman had been a prominent member, along with Aleksei Gastev, of the Taylorist faction that dominated the metal workers' union. In 1918 this group was instrumental in forcing the reintroduction of piece rates and production norms. Using methods developed by the American Frederick Taylor and other scientific management experts, Gol'tsman also helped Gastev pioneer military-like methods for training new labor recruits. In fact, Trotsky proposed to incorporate these ideas into his own plans in 1919 and 1920 to create a militarized labor army.
Goltsman's vision of the state reflected the ideas behind scientific management projected onto a grand scale. According to Gol'tsman, scientific and technological mastery, harnessed in the service of the state, was the key to power (vlast') in the modern age. Gol'tsman believed that a certain level of commercial activity was necessary, but he excoriated the "anarchy of production" that allegedly ran rampant in NEP Russia." The messiness of markets and trading confounded Gol'tsman's obsession, which he shared with Georgii Piatakov, to systematize, discipline, and order. The restructuring of industries into branches controlled by central cartels represented, in theory, a triumph of administrative efficiency over the chaotic regional and commercial market structures that characterized Russia's economy. Gol'tsman's proposals complemented Piatakov's efforts at Gosbank to centralize and streamline control over financial and credit transactions. Both men were committed to a vision of state power unconstrained by social and market demands.
Gol'tsman looked to Germany for practical models, drawing on an extensive study of the German industrial cartel system. He became interested in the German system for several reasons. By the late 1920s, Germany was the Soviet Union's major trading partner among Western industrial nations and one of the most powerful capitalist industrial economies. More important, cartelization in German heavy industry had created monopoly market conditions that closely resembled the conditions of state trading in Soviet heavy industry. Moreover, the relation of production trusts to trade and planning cartels in German heavy industry approximated the Soviet relation of trusts to syndicates and glavki. Gol'tsman examined the American corporation system, but quickly concluded that market competition and the subcontracting relationship of suppliers and producers did not provide a model on which to base Soviet reforms. Gol'tsman studied the German system firsthand as head of a Rabkrin delegation in the winter, spring, and early summer of 1929. They visited nearly all the major capital industry associations and examined operations of firms in the giant petrochemical conglomerate I.G.Farben. Gol'tsman held working discussions with the steel industrialist Fritz Thyssen and examined the structure of the steel cartel, Vereinigte Stahlwerke A.G. The Soviet commission also examined the organization of the Ruhr coal producers' syndicate and the German machine tool and engineering consortium, the Verein Deutsche Werkzeugmaschine, or VDW.
The Soviets took particular interest in the way the German cartels organized production and commercial relations. Gol'tsman examined in detail how the cartels contracted with consumers and how they distributed orders among consortium members. The commission studied the production specialization of member firms and how costs and prices were assessed. The Soviets interested themselves especially in how German cartels organized the division of administrative tasks at the various levels of the industrial bureaucracy and how they managed the flow of orders and information from one office to another, from one factory to another, and from administrative and commercial offices to production offices. The Soviets examined German accounting methods, and Gol'tsman even noted where cartels located their business, production, and engineering offices in physical relation to production sites.
Similarly, the Rabkrin commission examined how cartels balanced commercial and engineering factors that affected the organization of production. The tension between commercial and engineering demands was particularly troublesome in the Soviet industrial economy. Soviet trusts and factories resisted specialization and mass production for reasons of commercial flexibility. The German cartels, Gol'tsman found, protected their member enterprises from the uncertainties of the business cycle by guaranteeing them a certain percentage of the cartel's market influence. Market protection, in turn, encouraged firms to specialize and introduce new technologies and production systems with little commercial risk.
Gol'tsman was particularly impressed by this monopoly approach to innovation. He was convinced, as were others, that cartelization was the key to the enormous technological and productive power of German industry in the late nineteenth and early twentieth centuries. He believed it was only under monopoly conditions - either through market monopolies, as in Germany, or through outright state ownership and organization, as in the Soviet Union - that industry could overcome the "distortion" caused by market demands. Only through monopoly conditions, Gol'tsman believed, could the state free production to achieve its full technological and therefore highest productive potential.
Gol'tsman's reports from Germany make for arcane reading, but the mass of detail they conveyed was the stuff of administration. The information Gol'tsman and his colleagues gleaned from their trip was vital to Rabkrin's efforts to replace a market economy with an administered one. Gol'tsman called for a sharp expansion in the sphere of centralized, planned regulation of the state's industrial economy, but he did not call for the wholesale elimination of a market economy. He distinguished between two types of economic exchange: exchange within the socialized sector, which he defined as trade turnover within the state industrial system, and exchange, or trade, in the private market sector. According to Gol'tsman, production should be planned and trade regulated within the state industrial system, while market forces should operate within the private sector. Gol'tsman saw in the syndicate system the organizational mechanism to regulate trade and turnover within the state sector. He saw Narkomtorg, the state's commercial trade commissariat, as the agency best suited to facilitate trade between state and private sectors.
Gol'tsman claimed that his organizational plans placed the syndicates at the center of the industrial system. In fact, syndicate officials understood that if Gol'tsman's plans were implemented, the syndicates' role would be significantly diminished. The syndicates' influence was based on their function as trade organizations. State industry, Gol'tsman argued, should not be subjected to the operation of trading and market forces. In Gol'tsman's scheme, state trade was to be conducted on the basis of planned industrial expansion, not on the basis of consumer demand. That trade should be regulated by the syndicates, but Gol'tsman preferred to describe their function as distribution (raspredelenie) rather than trade (tovar). Gol'tsman regarded trade as a rudimentary form of capitalist market organization. Stripped of their trading role, then, syndicates would be reduced to mere executive offices of higher planning bureaus. Gol'tsman's proposals threatened the syndicates in one other way. In accordance with plans then being discussed by Rabkrin and Gosbank officials, financial transactions among industrial trusts and branches would be regulated by Gosbank, not, as they had been, by the syndicates. Gol'tsman argued that the new syndicates, indeed all of Vesenkha, should concentrate on the organization of production, not on the organization of exchange. Exchange was to be the business of Narkomtorg. To highlight this shift in emphasis, Gol'tsman suggested for a brief period in 1929 that Vesenkha be renamed the Commissariat for Organization of Production (Komissariat Organizatsii Proizvodstva).
Within this new commissariat, Gol'tsman proposed to unify planning and commercial administration by merging the glavki with the syndicates to form powerful associations, or ob''edineniia, of state-owned manufacturers. These ob"edineniia would concentrate all the functions that previously were divided among Vesenkhas various administrative bureaucracies. The ob"edineniia were to combine the functions of technical and production planning and design; functions of distribution, by which Gol'tsman meant sales and supply; export and import planning; capital construction; and cost accounting. The new super-ob''edineniia were the center of Gol'tsman's reforms. They were to be the mighty organizational engines of state industrialization.
When critics charged that he was reviving the worst features of glavkism, Gol'tsman argued that the ob"edinenie system would in fact advance the struggle against bureaucratism. He assured the Central Committee that concentration of all administrative functions in a single association would enforce economic accountability. No longer, he said, could an office at one level pass off responsibility to another at a higher or lower level. Moreover, the concentration of functions in the ob"edineniia would allow the state to realize huge savings by eliminating redundant and competing structures. Gol'tsman anticipated, for example, that by creating one sales and supply office at the ob"edinenie level, the state could eliminate the welter of analogous structures that currently operated at both the trust and syndicate levels.
Gol'tsman's plans were often misinterpreted as a call for the elimination of the trusts and the overcentralization of authority in the new ob"edineniia. Overcentralization is in fact an apt description of what happened, but it is not what Gol'tsman intended. To him centralization did not mean that ob"edinenie leaders would sit in their offices in Moscow and never set foot in a factory. To counter this image, he often cited the German steel cartel: its offices were not in Berlin but in the major production complex at Düsseldorf. Krupp's main offices, he noted, were in Essen and those of the metallurgical trust in Oberhausen. Gol'tsman proposed that ob"edineniia offices, too, should be close to the major centers of factory activity.
Gol'tsman did not call for the outright elimination of the trusts, but he proposed that ob"edineniia would organize factories and trusts not by region, as was currently the case, but by industrial branch. Within the branch organization, some local trusts might remain, he conceded, but they would manage only factories specialized for the same type of production, and they were to be stripped of their old commercial and supply functions. The new branch-organized trusts were to be the technical-production centers of the industrial system, the link that would translate the planning functions of the ob"edineniia into the reality of production at the factory level.
In accordance with Party directives, Gol'tsman described the task of the new trusts as that of "technical leadership," a phrase that was often and falsely interpreted in its narrowest form. In fact, Gol'tsman conceived of the trusts' role as much broader than that of an institutionalized kind of engineering consultant. The trusts should be responsible for ensuring the most effective operation of all factors affecting production in their factories. Trusts were to ensure that each factory operated at its maximum output level, with technologically advanced equipment and a rationalized form of production organization, and within the cost-accounting figures of the industrial-financial plan, the so-called promfinplan, established by the parent ob"edinenie. In the various debates about reorganization, trust officials often voiced the fear that the Gol'tsman plan would either eliminate their trusts altogether or turn them into mere executive offices of the ob"edineniia. Gol'tsman insisted that the trusts were to play an important role in the new system. The impression persisted, however, with justification, that Rabkrin's plans certainly meant the end of the once mighty trusts.
Rabkrin officials had celebrated each step of Gol'tsman's trip to Germany with great fanfare. Periodic press releases recounted his progress through Germany and anticipated his return to Moscow. Upon his arrival in early July, Rabkrin scheduled a colloquium for 11 July to hear his preliminary report and issued several hundred invitations. In addition to Rabkrin officials, eighty-six people attended - high functionaries and factory directors from Vesenkha, officials from Gosbank, Gosplan, Narkomfin, the trade union organizations, and other economic and industrial agencies.
Gol'tsman did not present a systematic outline, but in a two-hour informal talk he compared German and Soviet industrial organization. He used his descriptions of the former to highlight shortcomings in the latter, and made clear where he and his commission would focus their attention in developing specific proposals. Although Gol'tsman was vague on many points, it quickly became clear that Rabkrin's initiative was not going to be another variation of earlier Vesenkha plans. Gol'tsman emphasized several times that he was preparing nothing less than a complete overhaul of the country's industrial administrative system.
Rabkrin officials moved quickly to capitalize on the initiative provided by Gol'tsman's trip and his report. At the conclusion of his talk, Iakovlev, the chair of the meeting, announced the formation of an interagency commission to elaborate Gol'tsman's presentation into a set of specific theses. Gol'tsman, naturally, was named to chair the commission. Rabkrin personnel were to dominate the commission, but Iakovlev presented a list of other officials whom the RKI would recommend for inclusion. Among them were N.D.Koniukov, the head of the engineering syndicate; Stepanov, the director of the Serp i Molot (Sickle and Hammer) metallurgical complex in Moscow; and A.M.Ginzburg, Vesenkha's representative. Iakovlev publicly charged the commission, in the name of Rabkrin and Sovnarkom, to prepare a set of working theses for general discussion within one month. The publicity surrounding Gol'tman's trip, his talk, the public formation and charge of Rabkrin's commission - all created an aura of expectation and allowed Rabkrin to seize the initiative from both Vesenkha and the syndicates. For several weeks Rabkrin received requests for transcripts or a summary report of the 11 July proceedings. Debate about industrial organization now focused on the Gol'tsman proposals.
Gol'tsman's call for sweeping centralization of administration aroused considerable concern. Many officials argued that Vesenkha should address questions of reorganization in each branch as problems arose. One scheme, they argued, could not be applied to all industrial branches. For a while, even Kuibyshev endorsed the idea of organizational flexibility. Others argued that Gol'tsman's theses failed to clarify the relationship between local economic organs and Vesenkha. Regional economic representatives complained bitterly that the emphasis on centralized state industry left no authority to republic or local economic councils.
Local officials from the major industrial regions were outspoken in their criticisms of Rabkrin's proposals. Indeed, they formed the most highly organized and articulate bloc of opposition to the Inspectorate. An official of the Ukrainian Vesenkha pointed out that as of 1928, over 50 percent of Soviet industrial production fell within the jurisdiction of republic or local councils, yet Gol'tsman's proposals had nothing to say about that level of organization. An official of the legal department of the Russian Vesenkha, went so far as to demand that only a few branches of heavy industryheavy metallurgy, heavy machine building, and petrochemicals - be centralized in all-union administrations. All the rest, he declared, should be administered by republic or local-level bureaucracies and cooperatives. A factory director wondered why reorganization was not proceeding in the opposite direction. In view of the government's decision to decentralize operational control in industry, he argued, the glavki should be pared down to skeleton size. Local trusts and economic organizations should be reinforced with personnel and greater authority. If Rabkrin's proposals centralized commercial and technical leadership even more than they were at present, "we in the trusts and factories will sit around like little boys with our hands in our pockets."
A.I.Ivanov, deputy head of Vesenkha RSFSR, concurred. He pointedly reminded Vesenkha and Rabkrin officials that the Party's resolution on reorganization, adopted in April 1929, called for centralization of planning but decentralization of administrative control. Some officials called for all industries, both all-union and local, to be subject to the jurisdiction of regional economic and governmental executive councils. Others argued that Rabkrin's call for elimination of many trusts would strand local enterprises. "These can't all be run from the center," a factory director said. "It's ridiculous to think so, and to try this under the current conditions of shortages will be disastrous."
Stepan Birman, too, argued that it would be "completely senseless" to administer metal production in such disparate areas as the Urals, Siberia, and Ukraine from one superassociation. It would make even less sense, he said, to undertake a root restructuring in the middle of the five-year plan. It would take years for a new administrative structure to acquire the "organic" ties to industry that had grown up within the existing trust system. Centralization of all functions, especially central control over profit, would blatantly contradict the government's policy of strengthening factory autonomy.
S.S.Lobov, chair of the Russian Vesenkha, emerged as one of the most vigorous critics of the Gol'tsman plan. He ridiculed and parodied it in every public forum. Like other local officials, Lobov demanded that reorganization decentralize the administrative system to local control, with "only a very few exceptions." At the sixth Vesenkha plenum in October 1929, Lobov warned against trying to construct a universally applicable organizational scheme for all industrial branches. With heavy sarcasm he emphasized Rabkrin's intention to centralize and plan every detail of economic life: even barbershops would be planned. Three times he repeated "even barbershops" to impress upon his colleagues the absurd lengths to which Rabkrin would go to centralize economic administration.
In late October 1929, Vesenkha RSFSR outlined its own proposals for reorganization, which emphasized decentralization and local control. In his opening remarks at a meeting to discuss the proposals, Lobov tried to play down the differences between the RSFSR and the RKI plans, claiming that Rabkrin was on the right track and that his proposals differed only in degree. This statement was clearly a rhetorical diversion, however, to mask what amounted to a renewed attack against Rabkrin. The editors of Torgovo-promyshlennaia gazeta were not fooled. On 1 November they gave the meeting front-page coverage under the headline "Vesenkha RSFSR proposal diverges from those of Vesenkha SSSR and NK RKI."
Rabkrin's plan, argued Lobov, "concentrates on structural changes, but gives no attention to actual methods of management." Lobov did not develop this thought, but it was one of his most telling criticisms. Other critics described this flaw as a lack of administrative process (planovost') or coordination (administrativnaia koordinatsiia). However the problem was described, officials who were forced to work in the new system quickly discovered that there was little substance to Gol'tsman's grandiose schemes. Once cartels were established, Gol'tsman believed, administration would take care of itself. On the contrary, as we shall see, the new system was an administrative nightmare with no established lines of communication, authority, or information flow. Syndicate officials had noted the utopian quality of Piatakov's plans for financial centralization. Lobov saw the same quality in Gol'tman's proposals.
Even Rabkrin's supporters cautioned against overcentralization. V.Ia.Chubar' worried at the November 1929 Central Committee plenum that centralization of planning (planirovanie) could too easily turn into centralization of administration (upravlenie) - in fact, was already doing so - and that "too much hope" was being placed in centralization "as the salvation of industry." Vesenkha's higher administrative bodies were already alienated from the factories they governed, he warned. The creation of superproduction associations could result in "paper plans" with no basis in reality. Moreover, with so much talk of reorganization and detrustification, factory directors were beginning to ignore instructions from their immediate administrative superiors. Southern metal factories, for example, were looking more to Moscow for answers to production problems than to themselves or to their trusts. There was a real danger, Chubar' declared, that centralized production associations, far from strengthening technical leadership in industry, would "suction" people into the central apparatus."
If Gol'tsman's plans failed to address questions of administrative process, neither did they speak to problems of capital formation and commercial organization of the economy. Gol'tsman often referred to the merger of syndicates and glavki as the combination of commercial and regulatory functions of industrial administration; yet by divesting the syndicates of their commercial and trading function, he left the state no entrepreneurial mechanisms to reproduce capital. State industry could generate capital by trading through Narkomtorg, and Vesenkha's rationalization campaign was designed to generate capital through more efficient organization of production and labor; but neither of these arrangements held the same potential for capital accumulation as entrepreneurial trade. As syndicate officials realized, Gol'tsman was not interested in creating the mechanisms of a commercial state. His plans fitted integrally with - in fact, created the mechanisms for - mobilization of the economy in a military manner.
As charged, Gol'tsman's commission submitted its recommendations within a month of the 11 July presentation; they were published first in Izvestiia on 1 August 1929. The next day, Vesenkha, in order to regain initiative, announced the organization of its own commission to review and recommend administrative changes, under the leadership of V.N.Mantsev, a member of Vesenkha's presidium and head of the All-Union Council of Syndicates. On 8 August Torgovo-promyshlennaia gazeta reported at length on a meeting of Leningrad industrialists in which Mantsev staked out Vesenkha's organizational position. It was clear from the review, however, that Mantsev's remarks were defensive, offering less a constructive plan than a piecemeal response to Rabkrin's proposals.
Mantsev strained to reassure and regroup the conflicting interests in Vesenkha's economic bureaucracies. He promised, for example, that Vesenkha's proposals would not go to such extremes as Rabkrin in dismantling the trusts' administrative system. Coming from the head of the syndicates' governing council, however, the statement undoubtedly brought little comfort to the state's industrial producers. To counter the administrative emphasis in Rabkrin's plans, Mantsev asserted the primacy of commercial organization of the economy through the work of the syndicates. This point, too, can hardly have reassured trust officials. Mantsev also attempted, without success, to appeal to local economic interests. He said confidently that Vesenkha's proposals would redress Rabkrin's overemphasis on central authority, yet he acknowledged the need for better coordination in the administrative system and posited the formation of what he called kontserny (concerns) that would unify the functions then dispersed among the glavki, trusts, and syndicates. He neglected to explain how these kontserny would differ from Rabkrin's ob"edineniia.
Mantsevs talk to the Leningraders failed to reassure or regroup Vesenkha's fragmented bureaucratic lobbies. Officials, mostly trust and factory personnel, reacted "coolly" and with "outright skepticism." Each speaker criticized Mantsev's presentation for its lack of specifics and its emphasis on centralization. It was, as one disappointed delegate phrased it "no different than Rabkrin's proposal." A representative of the chemical trust claimed not to understand the tendency toward centralized reorganization. The existing system, he argued, was not bad. "We need to fix it, not scrap it." Creation of powerful all-union associations "will only add to our bureaucratic illness." What they should do, he argued, was restore full financial, commercial, and production authority to the regional trusts.
The tendency toward creation of all-union specialized associations, agreed Gurevich, technical director of Leningrad's Karl Marx factory, was "all wrong ... completely backward." Like his fellow Leningrad industrialists, Gurevich asserted the "primacy" of locally organized industrial administration as the only way to cope with problems of supply and commercial and technical leadership. Yet the industrialists sensed that the trend toward centralization was irreversible. Gurevich agreed that little separated Vesenkha's proposals from those published by Gol'tsman. Under either plan, he said, the trusts would be eviscerated. Still, the Leningrad trusts should fight back. Declaring that "in essence" all economic administration was local, the Leningraders voted to establish their own commission to propose a system governing regional industrial and economic relations, and relations of the Leningrad region with the Russian and all-union levels of Vesenkha.
The next day the editorial board of Torgovo-promyshlennaia gazeta expressed the jaded feelings of many officials. The front page of the 9 August 1929 issue displayed a rare editorial cartoon depicting an evil-looking dragon, labeled "Kontsern," devouring syndicates and trusts. Kontsern was a transliteration of the German word used to describe a corporation or a military base. Gol'tsman never used the word; he preferred the more prosaic Russian proizvodstvennoe ob''edinenie, or production association. Mantsev and other Vesenkha officials, however, used the German word often, especially when they were attempting to distinguish their proposals from Rabkrin's. Unfortunately for Mantsev, the term quickly became associated with the worst features of bureaucratism and with things foreign. Ironically, it was Gol'tsman who made explicit references to German models of organization, but it was to Vesenkha's proposals that the foreign stigma came to be attached.
When it became known that Vesenkha's commission, too, favored centralized administration, other regions followed the lead of the Leningraders. Republic, regional, and local-level economic councils in the major industrial areas began to draw up their own proposals, some patterned after the Gol'tsman or Mantsev model but many incorporating some measure of regional or local autonomy. The pressure by local and regional councils and interest groups was so strong that Mantsev felt compelled to remonstrate against it publicly. At a meeting on 23 August 1929 to discuss reorganization, the issue of local control arose again. This time the attack against the center was led by one of the main sponsors of the meeting: the Moscow regional economic council.
At the time of the debate, the Moscow council was fighting to keep control over its last prize factory, the Krasnyi Proletarii machine building complex. The Krasnyi Proletarii was slated to be included in an all-union trust and the Moscow Machine Building Trust, the factory's parent organization, was scheduled to be reduced to a local organization of repair shops. The Muscovites lost the fight, and in October the factory was reorganized into the all-union Stankotrest under the direct control of Vesenkha's chief administration for machine building, Glavmashinstroi. In August, however, the council was in the midst of its vain struggle with Vesenkha and this situation gave a sense of urgency to local criticisms of Rabkrin's and Vesenkha's reorganization plans.
Delegates at the meeting offered the same arguments that had been raised in previous forums and showed no signs of willingness to mute their criticisms. Both Gol'tsman and Mantsev gave presentations, but their bickering only confirmed the audience's worst suspicions. One local trust representative declared that he saw no difference between the two presentations; both were "muddled" (tumano). Neither addressed issues of local concern, and the only point on which they were clear was that both favored extreme centralization. Both plans, therefore, violated the government's instructions to decentralize operational control in industry. "Everyone knows," another delegate said, that central organs were "rotten through and through." A third delegate criticized the plans as nothing more than a legitimation of the centralizing trends that had been paralyzing industry for years. Either plan would return factories and local organs to the state of "vassalage" they had endured at the end of the Civil War.
Mantsev was not prepared for such vigorous criticism from Vesenkhas own organs. As he began to name the industrial branches that should come under central control - metallurgy, machine building, ferrous and nonferrous metallurgy, mining, oil - someone called out, "What will be left for us!?" Mantsev, clearly caught off guard, replied that he didn't know, exactly, but he thought "there must be a lot left - light industry, and the processing of agricultural raw materials." The stenographer who was recording the exchange used punctuation marks to reproduce Mantsev's verbal floundering, and one gains a strong sense from the transcript that Mantsev was not adept at thinking quickly on his feet. To the Moscow delegates, about to lose a major industrial enterprise, such a reply must have served only to heighten frustration.
Recovering his composure, Mantsev launched into a criticism of what he described as a widespread local movement toward organization of the economy in the form of regional communes (oblastnye kommuny). He acknowledged that this term was used by many people who favored full decentralization of the economy. Mantsev also noted its origin in Lenin's writings on the state and revolution, and he acknowledged that "many comrades" were using this authority to attack the move toward centralization. He cautioned, however, that the communal system Lenin described was to come about at the end of the period of socialist construction. In current circumstances, Mantsev argued, centralization was required to ensure the "coordination" (sochetanie) of all interests, local as well as allunion. Local officials, however, understood what talk of coordination meant. Coordination, declared one delegate, was another word for centralization.
Vesenkha's revolt against its own leaders culminated at the agency's sixth plenum meetings in October 1929. Most of the thirty-five delegates who attended were hostile to Mantsevs proposals. I.V.Kosior tried to clarify aspects of the proposals: "How is the relationship between union and republic levels formulated?" he began. Before he could continue, however, S.S.Lobov cut in: "It's not formulated in any way at all!" Lobov led the plenum's delegates in their resistance to the presidium. When he pleaded in defense of local interests, he received extended applause. One delegate shouted, "You keep them from laying their hands on us!" (Ty za to, chtoby ne trogali nas!). Lobov likened the Rabkrin-Vesenkha plans to Trotsky's Civil War schemes to militarize economic and labor organization. "Schematically," Lobov said, "this is all very beautiful, but Trotsky also drew pretty pictures that turned out to be useless. With forty-two industrial branches plus subbranches planned, we'll have hundreds of ob"edineniia, and all of them will sit on Vesenkha's shoulders." Republicand oblast-level bureaus would just sit and "waste their people." Under the ob"edinenie system "we'll no longer have a republican union, but the geography, once again, of an undivided Russia. We got rid of that during the October Revolution. We don't need to go back to it." Lobov's comments were greeted with cheers and applause. They exposed the real purpose behind Rabkrin's plans: not to resolve economic problems but to build a powerful Russian industrial state, the state dreamed of by Trotsky, Piatakov, and others of the bureaucratic left during the Civil War and early NEP years.
Despite strong resistance, it was clear that the old system was doomed when even Kosior, the staunchest defender of trust and regional rights, refused to champion the cause of the southern regional bloc. In a surprising turnaround, Kosior identified himself with Vesenkha's centralizing plan by presenting it to the sixth plenum meeting. As one of Vesenkha's vice chairs, Kosior was a logical choice for the assignment, but Kuibyshev could just as well have given it to Mantsev, chair of Vesenkha's organizational commission, or to Rukhimovich, the other vice chair and a supporter of centralizing reforms. Tapping Kosior to be the presidium's spokesman was no doubt a conscious decision to demonstrate the unity of Vesenkha's leaders. In outlining the plan, Kosior was forced to defend it over the strong objections of the delegates.
The presidium members must have placed a great deal of pressure on Kosior, but his turnabout may also have had something to do with Rukhimovich's speech to the plenum. Rukhimovich began with a scathing attack on the southern regional bloc: in resisting the Rabkrin-Vesenkha plan, the "southern comrades" were interested only in what served their own narrow interests. They were "divisive ... selfish ... parochial"; they wanted reform only so long as it "all lay in their own hands." To highlight the narrowness of their interests, Rukhimovich presented a bizarre picture of a united industrial Europe. Whether this would be a Soviet Europe he did not say, but he held out (in words that were "not for print") a vision of a Europe-wide "metal" cartel with headquarters in Berlin and branch offices from Alsace to the Urals. This, he declared, was very likely the future of Europe, "possibly in the next few years." In that context, Rukhimovich argued, the Ukrainian interests seemed small indeed. It was time, he said, for them to rise above their petty local concerns.
It is impossible to know whether Rukhimovich concocted this image to make a rhetorical point or whether he believed in the future he predicted. Such a belief may not have been as improbable in 1929 as it appears in retrospect. It_is quite possible that Gol'tsman's negotiations in Germany involved topics of mutual cooperation, even discussions about organizational consortium. Such agreements would have looked beneficial to the Soviets, starved for capital at the beginning of their industrialization drive. The prospect of consortium agreements may also have looked promising to German industrialists. By the middle and late 1920s, German heavy industry was overcapitalized and actively seeking new markets in Soviet Russia. In late 1929, especially, German capitalists faced the first slowdowns that presaged the onset of the Great Depression.
Discussions about consortium arrangements would have fitted easily into the articles of secret industrial and military cooperation already established between the two countries. Gol'tsman was certainly not high enough in the government to negotiate any agreements, but the status of his commission was certainly high enough to permit him to broach the subject and have it taken seriously by his German counterparts. Both Rukhimovich and Kosior, as Central Committee members, were in a position to hear of such discussions, even if they were still at an informal stage. The possibility of such an international consortium might have been enough to effect Kosiors turnabout on the issue of reorganization. [Rukhimovich's slip and what it may have revealed about ongoing negotiations by the Soviet government may have been the reason these stenographic records were classified "secret" and placed in the "special" Vesenkha files of RGAE. They were declassified in 1992.]
If Vesenkha officials expected a vigorous syndicate-led or Vesenkha-led campaign against Rabkrin's proposals, they were disappointed. Vesenkha established the Mantsev commission with great publicity, but little came of it. Throughout August and early September, the Vesenkha and Rabkrin commissions met several times for public debate, but Mantsev's commission never formulated a coherent set of proposals. As a result, Vesenkha officials were placed on the defensive, able only to criticize Rabkrin's plans. On several occasions Gol'tsman even ridiculed Mantsev and his commission for having no plan. At best, the Mantsev commission suggested amendments to Rabkrin's plan. Its most substantive recommendations were efforts to protect their own republic-level and local interests. The commission suggested decentralization of some of the administrative authority that Rabkrin proposed to concentrate at the state level, but these were minor matters; otherwise, the Vesenkha commission took little initiative.
In joint meetings held on 9 and 13 September, Kuibyshev announced that Vesenkha would make no substantive recommendations, only minor alterations to Rabkrin's basic proposals. To give the appearance of unity, a joint Rabkrin-Vesenkha commission was established to make final recommendations for organizational restructuring. Rozengol'ts chaired the commission, whose findings were due in early November. Recommendations of the joint committee did little to change Rabkrin's basic formulas. These recommendations became the basis for the order, issued on 5 December 1929, that abolished the old regionally organized Vesenkha system. In its place, Vesenkha's officials established branch organizations dominated by the all-powerful production ob"edineniia.
Gol'tsman intended the new production associations to form the basis of a unified administrative and planning system to replace the hodgepodge of chief administrations, trusts, and syndicates that had evolved over the course of the 1920s. The ob"edineniia were to reintegrate the functions of investment planning, commercial organization, and accounting control that had been dispersed among the state's different economic and administrative bureaucracies. Through centralizing reforms, Gol'tsman and his Rabkrin colleagues also hoped to overcome regional divisions in the country's trade and commercial networks, and they believed that the new system would finally break the hold of local councils and powerful regional trusts on the economy.
Gol'tsman's organizational reforms laid the foundation for a new industrial state system. Ironically, however, his plans had little to do with organizing an effective economy to accomplish the tasks of industrialization. In fact, Rabkrin's reforms threatened to exacerbate the two most serious problems facing the Soviet economy in the late 1920s. A severe shortage of capital hampered the regime's ambitious plans for new industrial investment and placed a tremendous strain on operating budgets and production programs. And despite expansion throughout the 1920s, the industrial economy at the beginning of the first five-year plan was plagued by increasingly serious shortages of goods and resources and by an inability to coordinate supply and demand between industrial producers and consumers. Vesenkha's various rationalization campaigns had failed to generate the kind of savings necessary to finance large-scale industrialization. Rabkrin's numerous mobilization campaigns, while extorting some supplies, disrupted normal industrial administration and strained already scarce factory and trust inventories.
As many participants in the organizational debates observed, Rabkrin's proposals not only threatened the state's commercial economy but violated Party and government instructions to decentralize economic administration. To some it may have seemed curious that Gol'tsman never acknowledged the economic flaws in his proposals or addressed the charges that his organizational schemes contradicted government directives. Yet these lapses were curious only to those who assumed that Gol'tsman's proposals were designed to resolve the salient economic problems affecting the Soviet industrial system. Solving the economic problems of industrialization was not Gol'tsman's principal concern. His primary goal was to enhance the state's power. He saw centralization of industrial administration as the most effective means to achieve that goal. That state power might come at the cost of severe economic, social, and financial dislocation was a point made numerous times and quite forcefully by syndicate leaders, as well as by other economic officials. Gol'tsman was not moved by those arguments. Nor was Piatakov, the architect, with Rabkrin's assistance, of the centralizing financial reforms of 1930. The reforms put forward by Rabkrin and Gosbank were designed to create the financial and organizational mechanisms by which the state could most directly and effectively extract and use social and economic resources. They were designed to mobilize the economy and society in the service of the state.
Syndicate, trust, and local economic leaders were appalled by those plans and fought a bitter but losing battle against them. Yet these were not the only battles to be fought over Rabkrin's policies. Those policies held implications for other groups in the Soviet industrial system. Many production managers, engineers, labor economists, trade unionists, and workers' organizations opposed Rabkrin's plans for modernizing the industrial economy, but many others supported and helped shape the RKI's policies on issues of technological reconstruction, productivity, labor organization, and managerial strategies. Their struggles to influence policies contributed as much to the formation of the Soviet industrial state as the organizational battles fought at the level of Vesenkha's central administration.
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Vesenkha and the Politics of Modernization
Numerous specialists, of course, opposed Rabkrin's plans. They included some of the most distinguished engineers and economists in Vesenkha, among them N.F.Charnovskii, head of the Rationalization Bureau. Charnovskii had been a distinguished engineer-economist since before the Revolution and had written several theoretical works on the relation of economic principles to engineering practice. In the mid-1920s he headed Vesenkha's Scientific-Technical Section before his appointment as head of its Rationalization Bureau. Charnovskii belonged to no professional union and was not a Party member, but he worked loyally for the Soviet regime and attempted to separate his political views from his work as a professional engineer. All the same, Charnovskii became a prominent defendant in the Industrial Party trial in late 1930. It was the price he paid for opposition to Rabkrin's line.
L.Ia.Shukhgalter was another of Vesenkha's leading engineer-economists who publicly criticized Rabkrin's industrial policies. S.Veitsman and B.N.Dobrovol'skii worked as chief engineers in the state's design office, Gipromez, one of Rabkin's favorite targets in 1928 and 1929. M.L.Kheifets and M.F.Orentlikher worked for VMTS, the engineering syndicate. Kheifets was a leading industrial economist and a frequent contributor to the journal Metall, a syndicate journal and key organ of anti-Rabkrin professional opinion. He often wrote substantive reviews of current developments in engineering practice and the economics of machine building industries in foreign countries. Orentlikher was the syndicate's chief engineer and also a well-known contributor to Metall. He used the journal and his position at VMTS to promote development of an indigenous engineering tradition and criticized Rabkrin's enthusiasm for the latest Western technologies.
These specialists favored modernization, as did Vesenkha officials in general, but not Rabkrin's overambitious plans for large-scale mass production and centralized administration. Although Vesenkha and syndicate officials had their quarrels with the trusts, economists and engineers in those bureaucracies united in their opposition against the RKI's strategies. Their criticisms focused mainly on what they charged was an uncritical adaptation of American production methods. Ford-style mass production technologies, Charnovskii wrote, should not be introduced simply because they promised greater production capacity. They were appropriate for automobile and tractor production, he acknowledged, but the nature of the product and its market requirements also had to be considered, even within a planned economy.
In fact, Charnovskii wrote, mass production methods in some areas of machine building required a flexible, individualized style of production in other areas. Charnovskii did not explain the reasoning behind his argument, but it was well known to his readers. For mass production to work properly, the manufacturing process had to be broken down to single-task operations, and machines had to be developed that could perform each of these operations in a repetitive, standardized manner. Operations for this kind of manufacture could number in the hundreds or even the thousands. Each operation required either a specialized machine or special tools that could be adapted to machines used for similar operations. Thus mass production of automobiles or tractors required machine tool factories to supply a broad range of specialized cutters, shapers, and other kinds of instruments. Those machines and instruments could not themselves be mass produced; each had to be individually designed and machined for its intended purpose. Clearly, as Charnovskii argued, mass production of machine tools was inappropriate, even as mass production methods were being introduced in other areas of machine manufacture. Without mentioning the RKI by name, Charnovskii cautioned that those who advocated mass production technologies without regard to economic constraints and consumer needs were ill advised.
Kheifets echoed Charnovskii's criticism in a review of the German and American machine tool industries. The American engineering industry, he wrote, consisted of nonspecialized, small to medium-sized shops. Employing highly skilled workers, these shops maintained a broad product range to satisfy the specialized needs of a variety of industrial customers. The secret of their success, Kheifets argued, was that they not only produced machines to their customers' specifications but acted as engineering consultants. American companies supplied advice and equipment for tooling up and integrating their equipment with existing production processes. Such flexibility and sensitivity to the client's needs resulted from the close relations the machine builders maintained with their clients, a collaboration that was possible mainly because the industry was not centralized. An American machine tool shop maintained its own sophisticated design and research facilities; it had no need to deal with a faraway national design bureau. This arrangement stimulated new technical ideas "at the crucial juncture of design and production"
In Germany, Kheifets noted, though the average size of machine tool works was not large, production was dominated by a consortium of manufacturers. By controlling market competition, the consortium could coordinate the specialization of factories in the production of two or three basic types of machines. Such specialization permitted the use of long-run production methods hitherto considered inappropriate to machine tool building. These techniques increased the productive capacity of particular types of machinery enormously, but they reduced the industry's ability to adapt to the increasingly specialized and rapidly changing technological structure of the domestic and world engineering market. Kheifets produced statistics to show that German firms were having trouble selling their machinery both at home and on the world market. As a result of their extreme rationalization policies, Kheifets wrote, German machine building firms now found themselves overcapitalized with conservative technologies, burdened with high amortization costs, and losing profits to American firms.
Kheifets extracted the lessons from his review tactfully but clearly. Whether the economy was planned or capitalist, he argued, most manufacturing firms had to respond to the specialized and changing needs of their industrial consumers. The Americans' nonspecialized, decentralized, medium-scale production strategy provided the flexibility needed to do so. Kheifets distinguished this style of production from the Fordizm of the popular imagination: large-scale, single-type, integrated mass production technologies. Like Charnovskii, Kheifets did not specifically mention Rabkrin, but the implications of his review clearly amounted to a criticism of the RKI campaign to convert Soviet industry to mass production.
Charnovskii and Kheifets focused on the economic constraints to developing mass production; Shukhgalter emphasized Russia's cultural limitations. He insisted that continuous flow and mass production methods were appropriate only in "rare cases," not only because of market considerations but also because of the need to concentrate the country's scarce technical and labor talent. The relatively simple tasks of mass production might be appropriate for Russia's vast semiskilled working population, Shukhgalter argued, but the need to coordinate primary and auxiliary production processes required a "highly advanced economic, technological, and organizational culture." Such characteristics were hard to find among Russia's few professional engineers and skilled workers. Shukhgalter and like-minded labor economists considered the training of managerial and technical cadre to deal with the organizational problems of mass production to be the single greatest hindrance to the introduction of this type of manufacture. It would require, Shukhgalter declared, at least a generation to overcome Russia's backwardness in this area."
Orentlikher, Kheifets, and other syndicate engineers and economists played central roles in shaping Vesenkha's five-year plan for machine building, adopted in the spring of 1929. They worked closely with a group of specialists around A.F.Tolokontsev, the head of Glavmashinstroi, which included Shukhgalter and Charnovskii. The Vesenkha-syndicate proposals called for an increase in manufacturing capacity through greater specialization, but Vesenkha's specialists stopped short of calling for the introduction of mass production methods. "Realization of specialization in this branch," they wrote, "requires great circumspection in view of the diversity of types, the large number of models, and the vast assortment of machines required by Soviet industry." While it called for greater specialization in all areas of machine building, the plan advocated production flexibility, especially in the area of machine tools.
The five-year plan produced by the Vesenkha-syndicate engineers did not provide for any radical break with current trust practice. Rabkrin officials characterized it as conservative-indeed, as "backward" and therefore politically suspect - because it did not envision the kind of instant modernization that supposedly would bring Soviet technology up to German or American standards. Yet the politics of backwardness was a tricky game, and what appeared conservative from one point of view could look radical from another. Rabkrin officials always cast themselves in the light of radical modernization and Vesenkha in the gloom of stagnation and conservative backwardness. Occasionally, however, Vesenkha officials were able to point up the conservative underside of Rabkrin's boasts. I.I.Matrozov, a Vesenkha economist, responded to Rabkrin's accusations in Torgovo-promyshlennaia gazeta: The RKI's strategies, which Matrozov equated with bureaucratization and detrustification, "are rejected by all industrialists. They lead to extreme complications in planning and administration, to the dissipation of economic experience, a demand for huge increases in circulating capital, and the loss of production advantages through narrow specialization and standardization of factories."
Trust leaders understood that, despite Rabkrin's claims to being the true revolutionary modernizers of industry, mass production and centralization would have an ultimately conservative effect on production. Specialization threatened to lock factories into the manufacture of a narrow range of items, thereby reducing trusts' production flexibility and limiting producers' ability to respond to trade and market fluctuations. Just as important, Rabkrins drive toward administrative centralization and massive industrial reconstruction threatened to undermine the network of economic, technological, and commercial structures that had formed the basis of the trusts' autonomy. No single trust could amass resources for industrialization on the scale Rabkrin anticipated. Only the combined resources of powerful central bereaucracies could mobilize society and the economy on that scale. Rabkrin's plans required complete reconstruction of the state and the end of the regional party system.