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The New International, June 1936

Erich Wollenberg

Wages and Prices in the Soviet Union

From New International, Vol.3 No.3, June 1936, pp.70-72.
Transcribed & marked up by Einde O’Callaghan for ETOL.

I. The Leap from the One Thousand and One Types of Ruble to the Unit (Standard) Ruble.

SINCE THE inception of the “Great Plan”, from 1927-1928, the state organs of the Soviet Union no longer published price indices. The currency broke down. The purchasing power of the ruble on the “open” state and kolkhoz market, and in the “open” state stores, restaurants, hotels, etc. (i.e., those accessible to all citizens without special permits) was approximately equivalent to the purchasing power of two pre-war kopecks [ca. one cent US at par].

In addition, however, there was a vast amount of “privileged” rubles, the same paper tokens, the purchasing power of which ran the gamut of a thousandfold variations in the “closed” enterprises depending upon the industry, institution or bureau in which the particular Soviet citizen worked, depending upon the post which he occupied on the political, administrative, technical and, therefore, also social ladder. If a French paper recently called the German Reichsbank president Schacht the “Father of the Forty Types of Mark”, then Stalin in recent years could have been praised (or damned) as the “Father of the 1001 Types of Ruble”. This resulted in such social “price perversions” that the best-paid layers, especially in the party and state apparatus, as well as the highest-paid engineers, directors, architects, artists, etc., received in their “closed” stores better goods in greater variety and at cheaper prices. Similar social price perversions prevailed in the “closed” restaurants: in the factory canteen, the worker earning 120 to 200 rubles a month received for 80 kopecks a plate of watery cabbage soup, a portion of buckwheat gruel and a slice of black bread of poor quality (rye flour mixed with soy bean flour); the chief engineer with his 2,000 to 10,000 rubles a month paid one rouble and 20 kopecks for a menu of three courses, whereas the “Kremlin people” did not pay even as much as 60 kopecks a day in the Kremlin restaurant for a menu of five courses plus free drinks. These people received monthly tickets for noon and evening meals (the latter of three courses) for the total sum of 28 rubles.

Finally, there was the Torgsin ruble (Torgsin means trade with foreign tourists), which, however, we do not need to consider, inasmuch as it occupied almost no place in the budget of the broad working masses of the Soviet Union. The purchasing power of the paper ruble in the hands of a foreigner who could buy in the Insnab stores (Insnab means provisions for foreigners), was approximately equivalent to the purchasing power of the ruble in the hands of a minor state and party functionary.

With the abolition of the card system and the creation of a standard (unit) domestic ruble, with the liquidation of the Torgsin Stores, the period of the 1001 types of ruble comes to a close – at least in domestic circulation – and the unit ruble, money in the real sense of the term, is again restored to its old use (or abuse).
 

2. The 1001 Types of Ruble and the Fairy Tales of the 1001 Nights

It is said, and not without justification that statistics lie. But many more lies can be produced when depraved fantasy is not in the least bound within certain limits of statistical rudiments. The period during which there was no price index, the period when there as an untold number of prices for one and the same article, in short, the period of the 1001 types of ruble, was the boom period of the tellers of fairy tales, who told of the living conditions of the Russian toiling masses. Because of the 1001 types of ruble, each reporter, who published fairy tales from the 1001 Nights about the Soviet Union in the foreign press, could assume the air of being “objective”. He either took the real value of his own privileged ruble for the “Soviet ruble as such” or, depending upon the political aims he pursued, he simply took any one type of ruble and juggled it as if it were a “unit ruble”. In this little game the ball was batted back and forth between the so-called Friends of the Soviet Union and its Enemies. The former figured out a fabulously high standard of living for the Russian worker, and the latter an impossibly low one. The Enemy of the Soviet Union who in his Intourist hotels paid 20 rubles for a noonday meal and 35 rubles on the open state or kolkhoz market for a kilo of butter, sought to prove that the Russian worker with his average wage of 140 rubles at that time, could not even afford seven real noon day meals a month, let alone fulfill his other needs.

The Soviet “Friend” recounted, on the other hand, the well-worn fairy tale of the Soviet paradise. He abstracted away from the 1001 types of ruble, if not when it came to wages, then when it was a matter of prices, and identified Soviet prices with the commodity prices of his own capitalist country, thereby placing the Soviet ruble on the gold standard. For these story tellers, and the masses who believed them, the average wage of 140 rubles a month was approximately equivalent to the purchasing power of 290 German marks, 2,800 Czechoslovakian kronen, or 155 Dutch guilders. Thus, the notorious Münzenberg AIZ in 1933, the year of greatest crisis, published photographs depicting the life of female servants who, in addition to getting free lodging and food, earned 40 rubles a month or “85 marks”. The AIZ naturally forgot to mention that at that time in the open state stores (necessities could not be purchased in closed cooperatives by servants) a pair of shoes cost 150 rubles, a simple silk dress 300 rubles, a pair of stockings 17 rubles, etc.

The currency reform, the liquidation of the Torgsin ruble and the creation of a unit domestic ruble will put a stop to all this cheap clap-trap. A standardized currency means standard prices. Wages and prices will again become the measuring rod for the standard of living of the Russian toiling masses. The Soviet reporter, the politician and the economist will once more be forced by the currency reform to use real figures and, whether he likes it or not, to make the leap from the fairy tale of the 1001 Nights to the domain of statistics. Hie Rhodus, hie salta! Here are the prices, – here are the real wages of the Russian worker!
 

3. Prices and the Purchasing Power of the Ruble

In the following analysis of the standard of living of the Russian workers we shall use only the official Soviet figures on prices and wages in the Soviet Union. We shall compare these prices and wages with the prices and wages in Czechoslavakia.

In the following table, we list in the first column the prices in rubles for various foodstuffs per kilo, which were paid on January 1, 1935 by workers for definitely set amounts in the “closed” stores. We ought to note incidentally that in the course of the last three years these prices had risen about sixfold.

The figures in the second column show the prices per kilo of the respective commodities which had to be paid on the same day, January 1, 1935 for supplies in any desired quantity on the open state market. The figures in the third column represent the new prices after October 1, 1935. In the last column we list the prices per kilo for the same commodities in Czechoslovakia (in kronen; the Czech Krone is worth about 4.15 cents US at present exchange).

What does the above statistical comparison show? From the first three columns of figures we can see that the last year ushered in a considerable improvement only in this respect: that the bureaucratic card system has been liquidated and food supplies are once more available in any desired quantity although the prices are much higher than the prices for previously cheaper, rationed supplies. The Russian worker does not say as does the Communist correspondent, “We are living more cheaply”, but, “We must buy all goods in the expensive stores at higher prices, even though these prices are lower than the old open market prices. Therefore we must earn more, we must exceed the labor norm, work more if we want to get enough to eat.” This was also the most important driving force of the socalled Stakhanov movement.

To ascertain the buying power of the Soviet ruble only the last two columns of figures are of interest to us: the present prices for a series of the most important food supplies in the Soviet Union (in rubles) and the prices of the same food supplies in Czechoslovakia (in kronen).

As is well known, the most important Russian food even today is bread. Of the above-listed necessities buckwheat is of extremely great importance in the budget of the Russian worker or peasant. Rice, on the other hand, is a luxury food.

According to this tabulation the average purchasing power of a ruble for foodstuffs is equal to the purchasing power of 1.60-1.80 kronen (i.e., 6-7-8 cents US).

The situation is much worse when it comes to most of the commodities for mass consumption – clothes, shoes, household articles, etc. Shoes of such quality as would cost 50-60 kronen in Czechoslovakia are sold in Russia for 80-160 rubles. A pair of under-drawers costs 17 rubles there, the same quality article in Czechoslovakia is purchasable for 25 kronen. In general, prices for industrial products in Russia, as compared with pre-war prices, are twice as high as the prices for agricultural products, so that in relation to industrial products the purchasing power of the Soviet ruble is approximately equivalent to the purchasing power of 0.80-0.90 kronen.

Inasmuch as the rent paid by the Russian worker is one half to one sixth of that paid by the Czech worker (depending on whether he lives in a new or an old building), we shall come most closely to the real situation if we set the average purchasing power of the Soviet ruble as equal to the purchasing power of 1.80 Czechoslovakian kronen.
 

4. The Wages of the Russian Worker

The average wage of the Russian worker according to the official Soviet figures is 170 rubles. This corresponds to the purchasing power of 306 kronen (170 x 1.80). Thus the average wage of the Russian worker is still about 50% below the average wage of the Czech worker, which is 600 kronen per month. A monthly wage of 170 rubles, however, is still 32% below the average wage of a factory worker in Czarist Russia. The average wage of a factory worker in 1913 (Czarist statistics are confined solely to this category) was 22 gold rubles, i.e., 443.82 kronen. At 306 kronen, which are equivalent to 15 gold rubles, the present average Russian wage is about 68% of the average wage of the Russian factory worker under Czarism. The shorter working day (the Soviet worker works 7 hours a day, 6 days a week; the Czarist worker worked 12 hours a day and more, 7 days a week) is of tremendous political, social and cultural importance but plays no part in computing the standard of living.

To be sure, Russian wages have risen, as compared with the years of crisis, 1932-1933. In 1934 the then average wage of 149 rubles was equivalent to the purchasing power of the meager sum of 11 pre-war rubles. In 1932-1933 the real wage of the Russian worker had fallen as low as or even lower than the average wage during the hunger year of 1921, during which according to official Soviet statistics the average wage was equal to 6.95 pre-war rubles or 31.6% of the pre-war wage.

Whoever mechanically compares the present living standard of the Russian worker with the standard of living during the year 1921 and deduces therefrom a tremendous and steady rise of real income is committing a great statistical and political blunder. He forgets the fact that between 1921 and 1930 lies the period of the Leninist New Economic Policy (the NEP) and that in 1924 the pre-war level of the average wage of 22 gold rubles, was attained. In the following years, wages rose steadily and finally, in 1926, reached the sum of 75 rubles (nominal value), an amount equivalent to 35 pre-war rubles; that is, they were 60% above the average wage of 1913.

In order to show the dynamics of the average wage scale we reproduce the following statistical table:

On the same day, on January 1, 1936, a Stakhanovist earned 1,500-2,000 rubles or 136-182 pre-war rubles, thus earning 560%-830% of the average wage of the factory workers in 1913.

To summarize briefly: the present average wage of a Russian worker is 32% below the pre-war wage of a Russian factory worker; the average wage of a Stakhanovist is 6-8 times above the average wage of 1913 and 9 to 12 times greater than the average wage of the Russian working class as a whole. According to official Soviet figures over 12,000,000 Russian workers receive a wage of 170 rubles or less. Among them there are extremely low wages of 60-80 rubles, especially for women doing unskilled work. In addition, there are over half a million invalids and pensioners who, according to the statistics of the Commissariat of Labor, receive less than 40 rubles, that is, less than 72 kronen a month. We have left out of our analysis the standard of living of the special “reserve army” which the Russian state has created.

At the beginning of the Russian industrial revolution (the realization of Stalin’s “great Plan”) the ratio between the lowest and the highest wages was 1 to 6; the ratio between the dole to the unemployed which in the Moscow zone, for example, was 15 to 20 rubles a month, and the maximum wage was 1 to 10. The party maximum, i.e., the highest wage which a party member could receive, regardless of his position in the state apparatus, in industry, in the party or in the trade unions, amounted to 176 rubles at that time. In 1932 the party maximum was abolished. Today, the ratio between the minimum and the maximum wage in the working class between 60 rubles and 1,800 rubles is 1 to 30; between the most poorly paid workers (60 rubles) and the most highly paid government officials, engineers, etc. (8,000 to 20,000 rubles per month) it is 1 to 300 and greater.
 

5. Who is the Beneficiary?

A glance at the above differentiation in present-day Russian society shows who has become the beneficiary by the new Stalinist system. In 1921 Lenin said the following about drawing bourgeois specialists into industrial construction:

“The best organizers and the most outstanding specialists can be made use of by the state either in a bourgeois way as hitherto (i.e., at high salaries) or in a new proletarian way (i.e., by a system of planning and control from below which embraces the entire country and which inevitably and by itself will subordinate and draw in the specialists). We now find ourselves compelled to resort to the old bourgeois method and are forced to assent to extraordinarily high salaries in return for the ‘services– of the most outstanding bourgeois specialists.”

The Soviet government has now given up utilizing its statesmen, party officials, engineers and Red officers, i.e., all the supporters and beneficiaries of the regime, in a “proletarian way”, and utilizes them instead – to use Lenin’s expression – in the “old bourgeois way”, that is, in capitalist fashion. The Russian proletariat has been deprived of the creative right of participating in decisions (“control from below” – Lenin). In 1932, the trade unions were practically liquidated by their merger with the People’s Commissariat of Labor. After the abolition of the last rights of democratic centralism the party has been turned into an apparatus which merely executes blindly, dumbly and uncritically the commands of the highest bodies. The Soviets have been rendered completely impotent. Molotov recently complained of the “bureaucratic degeneration” of the Soviets and posed as their real task the care of the cultural needs of the masses, and the words of this highest statesman of the Soviet Union depict most clearly the complete political disfranchizement of the Soviets.

In modern Soviet society a new class is crystallizing ever more sharply: the class of the beneficiaries of the New Course. Between it and the proletariat – for several months now – stands, as the social support of the ruling stratum, a new labor aristocracy in the factories, the Stakhanovists.

Whither is Soviet society heading? The struggle of the workers against the Stakhanov movement marks the stages through which the Russian labor movement will pass. When the official trade union paper, Trud, in its November 12, 1935 issue, complains of the bitter struggle of the Russian worker against the Stakhanovists and states that “one is reminded at every step of the class struggle”, it is unconsciously expressing a great social and political truth. With great speed the Russian working class is again passing through all those stages for which the Western European working class required decades of bitter experience and struggle in the ninetenth century. If at the beginning of the industrial plan, especially in 1931-1932, the Russian workers “smashed the machines”, destroyed parts in huge quantities, cut the belts and threw stones and sand into the machines until the Soviet government introduced the death penalty for damaging machinery; if today the method of individual terror is being used against the Stakhanovists, the new labor aristocracy, the “labor lieutenants in the factories” then, according to reports from various parts of the Soviet Union there are also signs of the first beginnings of the building of an independent Marxian labor movement in the Soviet Union. From the Utopia of machine-smashing, from individual terror against the Stakhanovists, the Russian worker, who has not forgotten the mighty experiences of the Revolution of I905, and especially of 1917, and who has passed through decades of Marxian schooling, will quickly find the way to science, to the formation of an illegal socialist labor party.

Prague, April 1936

 
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