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Soviet history, Red Globalization and the political
economy of global capitalism
Michael Haynes
To cite this article: Michael Haynes (2017): Soviet history, Red Globalization and the political
economy of global capitalism, Journal of Contemporary Central and Eastern Europe
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JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE, 2017
https://doi.org/10.1080/0965156X.2017.1339982
REVIEW ESSAY
Soviet history, Red Globalization and the political economy of
global capitalism
Michael Haynes
University of Wolverhampton, Wolverhampton, UK
Red Globalization. The political economy of the Soviet cold war from Stalin to
Khrushchev, by Oscar Sanchez-Sibony, Cambridge, Cambridge University Press,
2014, 294 pp., £67 (hardback), ISBN 978-1-1070-4025-0
The collapse of the USSR and its satellites in 1989–1991 had a peculiar impact on our understand-
ing of these societies and, beyond them, the nature of global capitalism as a whole. When these
self-styled socialist societies collapsed an “archival revolution led to enormous advances in our
understanding of “the facts”. But there has been no such advance in our understanding of why
these “facts” are as they are, nor which ones matter and why. Indeed in the last quarter of a century
there has been, alongside this archive revolution, something of a theoretical counterrevolution
or a least a huge regression.
This is because the collapse of these societies was taken to conrm not only the victory of “the
west” but also the adequacy of its narrative from the cold war. This analysed the USSR and its
satellites in terms of an ideologically driven, totalitarian model. The aim of its proponents was to
capture the essential nature of the Soviet phenomenon (and related phenomena) as well as to
separate them from the ostensibly more benign social, economic and political forms of “the west”.
If the cold war was a choice of two alternatives (good vs. evil, west vs. east, market vs. state,
democracy vs. dictatorship, capitalism vs. socialism, etc.) then the fact that one side all but col-
lapsed and the other claimed victory inevitability meant that the victors’ dominant ideas have
been taken up too. Within these societies the focus on analysing the old regimes as internally
driven entities whose dictators and top cliques imposed their ideological choices, and used
repression to enforce them, also serves a useful political function. It isolates the successor regimes
and their leaders from being tarred with the brush of the past. It allows them to emphasize dis-
continuity rather than continuity. Totalitarianism was, and is, a theory of absolution – we did what
we did because we had no choice.
But in the West during the cold war years the various versions of the totalitarian approach
never had it all their own way. Even within the mainstream, minority traditions doubted the
explanatory adequacy of the totalitarian model. The issue was not that these societies were not
brutally repressive – they were. It was the analytical value of this highly politicized, ideologically
driven, top down approach to how they worked. These mainstream doubters were pushed also
by the fact that to the left of them was a vibrant debate amongst western Marxists about the
nature of the USSR and its satellites as well as an underground debate in these societies them-
selves. The best analysis of this is Marcel van der Linden’s encyclopaedic Western Marxism and the
Soviet Union (2007). A measure of the scale of the debate can be gained by glancing at its bibli-
ography which runs to over 30 pages and has a thousand or so references, ranging from short
© 2017 Informa UK Limited, trading as Taylor & Francis Group
CONTACT Michael Haynes M.J.Haynes2@wlv.ac.uk
2 REVIEW ESSAY
discussions to whole books, most of which are more or less specic contributions to the question
of what the USSR really was. The sophistication of this debate on the western left also encouraged
a more serious (if still incomplete) confrontation with some of the bigger issues in political econ-
omy such as the nature of modes of production; how we are to understand basic categories like
labour, exploitation, value; the analysis of markets; the problem of the state; what constitutes an
economic system and so on. Inevitably such questions fed into, and in turn, fed o discussions
about other societies and developments.
But much of this vibrancy too has disappeared not because any of these problems were solved,
or because they became less important, but because political conditions in the last decades have
allowed the Soviet experience to be boxed and safely tucked away in a corner. It is almost as if a
theoretical cordon sanitaire now surrounds the analysis of the USSR. Within the cordon, to make
sense of “the facts”, we need highly politicized approaches to which we casually attach models
and theorems grabbed unproblematically from conventional economics. Beyond it, we can con-
tinue to analyse the wider world as if all the major theoretical problems too have been solved,
regressing to cruder theories and approaches to explain what we think we know. In this way, the
barriers around the Soviet experience help to sustain a mutual theoretical impoverishment.
Fortunately this is not complete and it should be less complete still as a result of the publication
of Oscar Sanchez-Sibony’s Red Globalization. This book poses a major challenge to our under-
standing by oering a view of the economic and political history of the USSR starkly at variance
with the dominant narratives. It does so by drawing our attention to a mass of “facts” and related
issues, forcing them to the centre of our attention in ways that will be hard to ignore even though
the pressure to do so will be considerable. It is no criticism of the author to say that (even though
he pushes his case) he may not appreciate what he has done in this book and where his arguments
may ultimately lead. Rather, in the best traditions of empirical work he has looked at the evidence,
found it doesn’t t and so asks us to reconsider what we think we know. The challenge to the
mainstream is considerable. The challenge to the dissenting traditions less so because the issues
Sanchez-Sibony discusses were alluded to in their debates albeit in more modest ways. But his
work oers an opportunity for this tradition to re-engage with the big issues discussed in Van
der Linden’s history of the debate and to think about the challenges that they still pose for our
understanding of the past and present of global capitalism.
Sanchez Sibony’s detailed argument is that the history of the USSR has to be located fully in
the history of global capitalism of which it was a constituent part. This global capitalist system
– even at the height of the cold war – was never bipolar, save at the level of the threat of mutually
assured destruction. In other respects states, including those in the third world, were far from
passive participants (he calls the idea of such passivity a racist myth). They struggled to assert a
degree of autonomy in order to defend and expand their freedom of action. As a participant the
USSR played this game too but it had to manage its intermediate position – reacting to some
states that were far more economically developed and others that were much less developed.
Its location within the global system, and the resulting pattern of linkages and delinkages, was
always central to its development. “Economic connement” in the 1930s was “unwanted” (247).
Subsequently, “autarky was never an aspiration or goal save in the cold war western imagination”.
Soviet “commercial policy bespoke accommodation and an abiding desire for participation in a
western dominated liberal world order from which the Kremlin derived tremendous material
benets”. (253)
Because it was always part of, and helped to constitute, the world economy then “the push
and pull” of that economy was always a strategic factor for the Soviet leadership and its poli-
cy-makers and strategic too in determining internal priorities – sometimes to its advantage but
latterly, in the 1980s, to its disadvantage. The evidence for these propositions can be traced in
the Soviet archives and in the analysis of economic decision-making and the status accorded to
this by those at the very top. Not the least important person here was Anastas Mikoyan
JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE 3
(1895–1978) who was the longest surviving politburo member in the history of the USSR and,
for most of his career, People’s Commissar/ Minister in charge of domestic and foreign trade –
showing the essential continuity of the underlying situation. The resulting political economy of
the USSR was less exceptional and aberrant that the cold war imagination suggested because
“liberal capitalism” also existed more in theory than in practice.
It is important to stress the depth of the empirical grounding that is the basis of these argu-
ments. But Sanchez-Sibony’s reading is extensive, not exhaustive. This perhaps reects the origins
of the book in a PhD at Chicago supervised by Shelia Fitzpatrick. The author does not seem to
be aware, for example, of the possible relevance of the debates and works discussed by van der
Linden. He misses some important work from the past that bear on his theme. When the lm
Bridge of Spies has reminded us (albeit in a heavily romanticized form) that the American econ-
omist Fredric Pryor got caught up in the cold war and that a copy of his thesis (later published in
1963 as The Communist Foreign Trade System) was briey seen by the GDR authorities as a docu-
ment of espionage, it is surprising to see no mention of this and some other pioneering works
– even if only to dismiss them. There is also Michael Kidron’s book, Pakistan’s Trade with Eastern
Bloc Countries (1972), which has an interest that goes beyond the narrowness of its title and parts
of whose discussion relate to issues that are central to Red Globalisation albeit looking from the
outside in to Soviet bloc dynamics. But if it is a reviewer’s job to carp, it is also their job to praise
the way that Sanchez-Simony has drawn not only on recently published documentary collections
but also worked in four Russian archives. He uses papers from the Central Committee, the Council
of Ministers, Gosplan, the Ministry of Foreign Trade, the Ministry of Finance, even the Ministry of
the Maritime Fleet as well as the Mikoyan archive. No less, we should recognize the way in which
he integrates both economic and political history as well as his wider sense of the global devel-
opments in the twentieth century. All of this justly merits the endorsements with which the book
comes and should make it essential for everyone interested in the USSR, for whatever reason, to
make sure that they read Red Globalization.
No doubt specialists will want to discuss detailed issues of interpretation of this evidence but
given the importance of the bigger arguments of the book it will perhaps be of more interest
here to reect on the signicance of the book for more radical debates about the nature of the
USSR. We can also draw the reader’s attention to areas of discussion that it seems to this reviewer
add to the challenge posed by Sanchez-Sibony.
Analysing the Soviet Union and the global economy
Sanchez-Sibony’s starting point is that capitalism exists as a single global economy and the Soviet
Union was always a part of it. As he boldly states, “the Soviet economy was in large measure
embedded on global economic structures at all times in its history”. (5–6) More than this the
Soviet leadership tried to operate within this system to their best advantage. They were not, as
so many accounts suggest, driven by some form of Marxist “ideological determinism. It is worth
spending a moment stressing the signicance of this argument and some limitations in the way
that Sanchez-Sibony develops it.
Sanchez-Sibony’s title suggests that he is pitching his book as a critical contribution to the
globalization debate. Much of that debate, which dominated thinking for a decade or so before
the crisis of 2008, now looks overblown. Too many were seduced by “globalaony or what Justin
Rosenberg provocatively called “the higher bullshit. (Rosenberg 2007) But the obsession with
Globalisation at least forced more radical critics of capitalism to rene their arguments about the
global and the role of the state within it as well as about such issues as uneven and combined
development. Many of these contributions have been carried in the Cambridge Review of
International Aairs.
4 REVIEW ESSAY
But where does this leave the history of the USSR? Those on the left who have struggled to
deal with this problem can crudely be divided into externalists and internalists. Externalists argued
that the Bolsheviks had tried to challenge global capitalism but had been defeated. The USSR
had, therefore, to develop as part of the global capitalist system. But for much of the time it has
been the internalists who seem to have had the upper hand even if, as we shall argue, they have
had the poorer argument. Internalists start from the argument (often taken by assumption) that
the USSR has to be analysed separately from the rest of global capitalism (they dier on whether
this applies to other Soviet type states). Some like Stalin in The Economics of Socialism in the USSR
argued that “a single world market” was disintegrating and two systems might eventually emerge.
(Stalin 1952/1972) More common was the view that the USSR was in the global system but not
of it. It had its own internal dynamic and logic. This dynamic for some was socialist, albeit in
degenerate forms. Others came increasingly to the view that its political economy was neither
capitalist nor socialist but some alternative form – more stable for some than others. Sanchez-
Sibony does not deal with this issue but his relentless focus on the way that the Soviet leadership
tried to play the game seems to point clearly in one direction and one direction only. If the Soviet
Union was embedded in the global system then surely too it must have been of the global system?
This is a point to which we will return at the end.
But if we see the Soviet Union as part of a global capitalist system how do we make sense of
its role in this bigger whole? At several points Sanchez-Siborny notes the inuence of the inter-
national political economy school on his thinking and not least that of the East Asian specialist
Bruce Cumings. But he does not situate his discussion in any clear account built on these per-
spectives. International political economy comes in dierent forms – American and British schools
and a variety of Marxist inuenced accounts – so it would be interesting to see more where he
thinks he ts in. (See, for example, Dunn 2009; Gilpin 2011) But this omission also weakens his
account. The strength of international political economy lies in its recognition of the ways in
which the economic informs so much of global politics but also of the ways in which the global
system is made up of the competition of businesses, states, international organisations and other
actors. These engage competitively through trade and other economic means but also through
a variety of political and cultural forms and not least, from the perspective of states, militarized
competition. Any account of trade – which is Sanchez-Simony’s immediate interest- has therefore
to be related to, and situated as part of, these other forms of competition. Sanchez-Sibony’s failure
to focus more on the military side is not only important in its own right but also, we will suggest,
a missed opportunity to strengthen his basic argument about the role of the international in
determining both Soviet policy and its underlying dynamic.
International political economy also does something else. It stresses the ways in which global
competition is refracted through bigger state and geo-political structures. But again Sanchez-
Sibony says too little about the specics of the Soviet Union’s situation. Many accounts of the
countries that fell within the Soviet bloc treat them as if they were homogenous “centrally planned
economies”. Sanchez-Sibony is clear that this was not the case. The fact that their experiences
were varied, and interests often conicting, adds further weight to his rejection of ideological
determinism since they ostensibly shared the same ideology. But if policies were driven by more
pragmatic considerations then we need to know a little more about the local structural logic of
their situations. In the case of the Soviet Union, the Soviet leadership – from the time of Stalin
– recognized that it had to compete to catch up and hopefully overtake as best it could. But unlike
the other smaller centrally planned economies (and excepting China), the leadership there ruled
over an economically weak great power that was being forced to masquerade as a superpower.
Worse, from Moscow’s perspective, they were having to do this in a situation of economic weak-
ness and geo-political vulnerability. Some of this comes through in Sanchez-Sibony’s account
when he is discussing policy. He recognizes, for example, the Soviet Union’s “lack of power pro-
jection” (133). Its technology was limited (it was catching up itself); the quality of its products
JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE 5
was poor; the aid that it could give was limited and its terms not especially good. He notes that
the USA gave more to Israel alone than the total Soviet aid budget for all countries after 1945.
(138) But, helpful though this is, he does not, to this reviewer’s mind, spend enough time analysing
how the structural determinants of the bigger game in which they were players meant that the
cards the Soviet leaders held always seemed to be weaker than those of, not least, the USA.
At no point in its history did the USSR have the power, or much power, to shape its part in the
global economy positively. This was less of a problem in the 1930s when global trade, investment
and nancial relations declined. It became more of a problem after 1945 and especially from the
1960s. The cold war containment aimed not simply to restrict the USSR but also to allow the
economic structures of the global system to be constituted and dominated largely by Washington.1
The USSR was not part of the IMF or World Bank structures. It tted ill, when at all, into the GATT
trade negotiating structures that would eventually lead on to the WTO. All of this produced a
contradiction. At the one level it meant that the Soviet Union’s leaders could aspire to a degree
of independence within the global economy from “western imperialist pressures”. But it also
meant that they were cut o from some of the benets that this might bring. So, for example, as
the multi-nationalization of capital became more important, the USSR beneted less from foreign
investment into the Soviet economy. Equally “socialist multinationals” existed but they were less
able to project the interests of “Soviet” capital outwards. This compounded the problem of tech-
nology transfer into the USSR. It reduced the possibilities of trying to benet from integration
into globalizing supply chains. It also reduced the possibilities of trying to gain traction through
the development of services and nancial links. This limited the capacity of the USSR to exploit
its growth and resources to develop the most modern forms of nancial capital.
These problems were not unique. They appeared in other semi-peripheral countries in the
1970s and 1980s which were looking to import substitution and autonomous development. But
in the case of the USSR, the cold war made them sharper and more dicult to solve. The cold war
diverted attention to the seeming equality at the level of the military balance rather than the
basic inequality of global economic power which made the USSR an “underdeveloped
superpower”.2
The Soviets in the cold war
The second big theme in Red Globalization is an attack on the story of the cold war as a bi-polar
confrontation of two intrinsically opposed systems. Sanchez-Sibony laments the fact that although
the detailed evidence is against this thesis, it continues to be the default position in major
accounts. But coming from a Latin American background he adds a visceral distaste of what he
sees the great power chauvinism involved in the dominant narrative. It “is simplistic and wrong
… (and) … infantilizes Third World societies and leaders” (157). Instead he stresses that on the
Soviet side the main need and interest was always good economic relations with the advanced
west. But “western leaders often proved less liberal in their approach to trade than the Soviets”
(123). The western camp was divided on how to respond to Soviet interests. But usually the more
hostile political vision of the USA prevailed (not least over West Germany). This enabled Washington
to dissuade its allies from becoming too close to the USSR; to enforce the various embargoes and
the CoCom system (on which he has little to say). But the position of the Soviet Union as nego-
tiating partner was also weakened by short term international factors like the depression in the
1930s and the dollar shortage in the immediate post-war years. When Moscow turned to the
Third World then it did so belatedly and very much as a second best solution to developing deeper
links with advanced capitalism.
In the Third World it encountered regimes and leaders that were independent actors in their
own right – anxious to secure the best deals that they could and to play o Moscow against
6 REVIEW ESSAY
Washington, London and Paris. Only in the cold war rhetoric and paranoia were they pawns of
Moscow. This more sophisticated story is explored in a series of a case studies of Soviet links in
the 1950s and 1960s with Japan, Cuba, Egypt, Ghana and Guinea which take up much of the
second half of the book.
He shows that, so far from Third World statism being driven from Moscow or in imitation of it,
import substitution was (quoting Jerey Frieden) “the universal post-colonial solvent” (156) –
often initiated by the departing colonial powers. Indeed he quotes evidence from the archives
that when Moscow was asked for advice it was often at a loss to give it – lacking both people
with the language skills and knowledge to help out. This lack of knowledge even extended to
Khrushchev who admitted that, prior to the development of closer relations with India, he knew
so little that he had to draw on his memory of Rimsky-Korsakov’s Sadko for some sense of what
the mysterious east might involve. But the India he found seemed a less exotic world.
Trade and the Soviet economy
The centre piece of the rst part of Red Globalization, and its wider underpinning, is an attack on
the idea that the Soviet economy was autarkic. “Soviet autarky is wrong. It is wrong as a matter
of statistical fact. It is wrong as a matter of clear and consistent intention on the part of the Soviet
leadership”. (4) Here Sanchez-Sibony draws on the work of Michael Dohan for the 1920s and 1930s
and Vladimir Treml for the post war years. But although he rightly emphasizes the extent to which
the idea of autarky or attempted autarky still dominates our (mis) understanding of the Soviet
and “centrally planned economies, he might have strengthened his argument by following up
more on some of the dissenting accounts of earlier times. For example, in 1967 a major conference
was held whose papers were published the next year. No one was quite sure what autarky meant.
There were, said the editors, “an embarrassing variety of proposed denitions”. The statistical
evidence didn’t seem to t. If trade shares had been low, they now seemed to be rising faster
than in more market-based economies. And, if there was under-trading, it was necessary to
distinguish between planners ex ante interest in self-suciency and an unplanned (ex post) out-
come which reduced trade. The latter seemed to t the evidence better. Autarky, the editors
concluded, is “a misleading oversimplication that participants in the conference had been forced
to “set aside” (Brown and Neuberger 1968, 8–13). The fact that such arguments were largely
sidelined is perhaps a testament to the power of the idea of the Soviet economy as ideologically
driven to self-suciency to override any appreciation of evidence and argument to the
contrary.
But what of the substantive claims about the facts and policy. Is Soviet autarky wrong as a
matter of “statistical fact”? The answer is yes though the story is a little more complex than
Sanchez-Sibony allows. Table 1 shows dierent estimates of the export and foreign trade share
as a percentage of output.
The argument about tendencies to autarky involves two dierent issues – one is an assessment
of what was happening. The second is an assessment of how it was dierent from what it “should”
have been if the economy had been organized on a more market basis. The rst columns of Table
1 show some of the standard export share calculations (Holzman 1963; IMF 1991; Maddison 1995).
There is some variation here but we can see that any tendency to self-suciency was very short
lived. By the 1960s trade even on this crude number was guring very strongly as a factor in the
Soviet economy. How high it would have been under a dierent system depends on how alter-
natives are modelled.3 By the 1960s Ofer suggested that the foreign trade share was some 30%
lower than if the economy had been more market oriented. If correct this would still not make
the Soviet system autarkic or even semi-autarkic. By 1980, even on his calculations, this gap had
disappeared (Ofer 1987, 1795). But other more sophisticated (or better specied models) of the
JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE 7
centrally planned economies as a whole, and the Soviet Union in particular, found smaller gaps
or insignicant gaps. (See, for example, Biessen 1991). The standard evidence can therefore be
interpreted as strongly against the autarky hypothesis as those at the 1967 conference
suspected.
But there is a technical problem with calculating the trade share. The internal soviet price
structure was at a tangent to the external one. This was widely recognized but only Vladimir Treml
tried to confront it. His conclusion – which Sanchez-Sibony follows – showed even more strongly
the role of the foreign trade sector. The Treml trade share data is set out in Table 1 too. These
statistics suggest that the real question might be why was the USSR trading so much? In fact not
everyone agreed with Treml’s adjustments but if they are excessive they still point to the signi-
cance of the trade share (For a discussion of some of these issues see Smith 2002). Sanchez-Sibony
might have been wise, therefore, to have recognized this so that the unwary do not think that
his argument depends only on the Treml data.
What then of the second part of his claim. If autarky is not a “statistical fact” is he also right
that it was not an intention on the part of the Soviet leadership? Here his archival work is of major
value in showing the policy commitment to foreign trade and the lack of a domestic drive at the
top towards autarky. Any reduction in the trade share was therefore less an ex ante intention than
the ex post result of other factors. The state monopoly of foreign trade may have protected Soviet
enterprises from too much direct external competition but it was also a means of mobilizing
eorts for exports.
Sanchez-Sibony argues that Soviet policy was always pragmatic. The so-called industrialization
debate in the 1920s (which is often incorrectly seen to involve a preference for autarky on the
part of some participants) had little impact on the leadership or planners. Industrialization initially
involved a major pitch to become a player in the global economy and to integrate Russia more
closely (see Sloin and Sanchez-Sibony 2014). But this was undermined by the Great Depression
and the collapse of agricultural prices. Soviet policy-makers were soon caught in the same vicious
circle of decline that aected much of the global economy. Sanchez-Sibony quotes a striking
passage from Karl Polanyi which concludes by saying of the 1930s that, “what appeared as Russian
economic autarky was merely the passing of capitalist internationalism” (26).
The temporary pull back from linkages to other economies was ironically reversed somewhat
during the war with American aid to the Soviet Union. Then, after the war, the leadership returned
to their eorts to integrate. “Soviet leaders wished to participate fully in what they called the
international division of labour and were not the least interested in autarky” (81). Sanchez-Sibony
piles on evidence from the archives showing that the leadership, even under Stalin, recognized
the value of the USSR being part of the international division of labour and how they tried to sell
this to prospective partners in terms of mutually benecial relations. Sometimes mistakes were
Table 1.Estimates of the foreign trade share in the Soviet economy.
Source: Maddison (1995), Holzman (1963), and IMF (1991).
Estimates of merchandise exports as % output Estimates of total trade share as % output
Maddison data Holzman data IMF Treml's Estimates
1913 2.8 10
1929 1.6 3
1937 0.5
1950 1.3
1960 12
1973 3.8 15 (1973)
1980 27
1988 6.8
1992 5.1
8 REVIEW ESSAY
made, they had to learn the rule of the game but learn they did. Red Globalization unwittingly
answers a question posed by Evsey Domar in the 1960s about how savvy as traders the Soviets
really were? (Brown and Neuberger 1968) The answer would appear to be a lot more savvy than
western observers knew. Soviet leaders and negotiators were also proud of their self image as
reliable partners. Sanchez-Sibony quotes Mikoyan telling the Japanese in 1961, “You don’t trust
us? You make a mistake. For your information I’ll let you know that in 44 years of Soviet power
there has not been a single instance on which a debt has gone unpaid” (194).
Where his account falls down somewhat is in his failure to integrate intra-bloc trade into his
discussion. He notes that some have seen this as “an exchange of ineciencies” while others have
talked of it in terms of a mutual subsidy hunt but he does not seem to see that these arguments
might undermine his wider approach. (See Hanson 2003, 119–124) But this does not have to be
the case. Table 2 shows how Soviet trade shares with the dierent groups of states varied ever
time.
In making sense of this pattern we would suggest that it is important to see how intra-bloc
trade, even at its peak, was subordinated to the larger logic of the global system. Its parameters
were set in the rst place by cold war exigencies. Only once these are understood can the mutual
pressures between the partners be understood. Even here the ways in which they tried to make
use of one another “to exchange ineciencies” and maximize any subsidy elements involved
policies that were far from unique in terms of the wider history of global capitalism as again some
dissenters from the dominant approach argued at the time.
The wider logic of integration is also apparent if we look at the commodity composition of
trade where the problem seems to be less that Soviet trade doesn’t t than that it tted too well
with the basic predictions of western economic theory in terms of factor proportions. This nding
began to be noticed more in the late 1980s but discussion of it was cut short by the collapse of
the USSR and the Soviet bloc.
But if the Soviet Union was not autarkic, if it was trying to integrate, then why was it less
successful than some other industrializing economies. One part of the answer is that it was con-
strained much more by the cold war and the drive to build and maintain a huge military industrial
complex. But internal change was also aected by another factor. Sanchez-Sibony points out
that a country like South Korea lacked a strong raw material base and therefore was forced to
continually look outwards. In the case of the Soviet Union the development of oil exports from
the Tyumen oil eld at the turn of the 1960s – gave it a means of integrating that allowed it to
ride any commodity boom. By the mid-1980s three quarters of Soviet exports to the advanced
world were made up of oil, gas and gold. This reduced for a time the recognition of the relative
weakness of the USSR in the face of the unequal geo-economic structures of the global economy
and the consequent internal pressure for change. Allen has pointed out, for example, that invest-
ment in the 1970s and 1980s was used to reconstruct old industries rather than develop new
ones (Allen 2003). Although Sanchez-Sibony does not use the term, he implies that the USSR,
Table 2.Geographical distribution of Soviet trade 1950–1989.
Source: Spulber (2003), 245.
1950 1960 1970 1980 1989
% Exports to
“Socialist” states 84 76 65 54 62
Developed capitalist 15 18 19 32 24
Developing capitalist 2 6 16 14 14
% Imports from
“Socialist” 78 71 65 53 62
Developed capitalist 16 20 24 35 29
Developing capitalist 6 9 11 11 9
JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE 9
amongst other things, became a victim of the natural resource curse which became evident when
prices plunged in the late 1980s. But, this too was far from unique to the USSR. Other countries
had the same experience and it has been that of Russia since 1991.
The missing element of the force of militarized competition
But trade is only one part of the capitalist system. In a global economy organized on a state basis,
competition necessarily takes both economic and political-military forms. Gilpin, a more conven-
tional international political economy specialist, called the intimate relationship between eco-
nomic and military competition “reciprocal”. (Gilpin 2011, 23). A Marxist might prefer the term
“dialectical”. Either way, militarized competition has always existed alongside commodity com-
petition, supporting it and, not least in war, acting as a substitute for it (we would prefer to say
a higher form of it). In the twentieth century these forms of militarized competition became an
even bigger part of global capitalism as wars became world wars and total wars. In the USSR,
once the aim of world revolution had been abandoned in favour of a national development
project, its leaders had to deal with the problem of survival not only economically but also in a
hostile geo-political climate. All states to some degree feel the pressure of the axis of militarized
forms of competition but in the case of the USSR this was an especially powerful coercive force
aecting the pattern of its development.
But when it came to analysing the USSR then, as with trade, the internalists tended to eschew
consideration of the bigger role of militarized competition in global capitalism and to assume
again that the USSR had a separate political economy. It might be subject to militarized pressure
but they did not see this as the primary constitutive element of the system. Externalists on the
other hand insisted on the centrality of militarized forms of competition. To understand the
dynamic of the USSR, its nature, the pattern of its development, and its priorities it was necessary
to start from the totality – from its competitive insertion into the global capitalist system. Without
a sense of the importance of this, it was impossible to explain the accumulation drive, the invest-
ment level and pattern, what was produced, how it was produced, where it was produced, etc.
as well as the extent to which the rest of the economy served as a poor relation, and buer, for
the priority sectors.
It would have been helpful for Sanchez-Sibony to have referred to these issues because if we
add together the two forms of competition – trade and military- and their logic and weight in
the internal relations of the USSR, then this would seem to broaden his argument about Red
Globalisation. In fact since 1989 a mass of data and argument has emerged that adds to this
debate. This work tracks historically how militarized competition became central, from the late
1920s, to the system as a whole but it also explores its function through to the collapse of the
USSR and, indeed, beyond.
In a number of papers published in English Kontorovich has drawn attention to the ways in
which many of those writing about the economics of the USSR sidestepped the bigger issue of
the dynamics of the Soviet system by simply talking of “planners preferences”. Alec Nove captured
this manoeuvre when he said that the planners preferred what they preferred. If “why they pre-
ferred what they preferred” did not need to be considered then it was possible to focus in abstrac-
tion on the alleged inner workings of the system – looking at how sectors or enterprises functioned
or failed to function. (Kontorovich 2014; Kontorovich and Wein 2009). But Kontorovich has also
outlined how the military dynamic emerged and how it came to play such a central role from the
1930s though to the collapse of the USSR (and implicitly afterwards too). (Kontorovich 2015)
More detailed still has been the work of western economic historians and new generations of
Russian historians. The result is that we now have a very clear picture of how the military sector
came to play such a central role and how it functioned both internally and in relation to the
10 REVIEW ESSAY
economy as a whole. Indeed some of these accounts are almost encyclopaedic in scope. One
collective work, for example, runs to near 800 pages (Baklanova and Rogozina 2013).
From the late 1920s the aim was to build the industrial base to support a strong military in
the future. However from 1936 the priority became more immediate military production until
war itself made survival the all-consuming issue. In the post war years a large militarized economic
complex then became permanent, supporting the USSR’s “defence”, its overseas adventures and
the selling of arms. Table 3 shows some of the estimates of the scale of the military eort. If we
put together the foreign sector and the military sector then the external coercive pressures of
these axes of competition were considerable.
Bystrova (2011) argues that a mature “military industrial complex was in place by the 1960s.
It then involved 9 ministries and ten related ministries. The most secret parts of the complex were
hidden in “closed cities” (behind a second iron curtain) but the sector as a whole was closely
integrated into the economy at large which had to live with the strain this created. At its peak
this militarized sector produced some 25% of GDP of which just under half went directly to the
military [i.e. as in the west the militarized sector produced both military and civilian goods – think
Lockheed Martin]. It absorbed some three quarters of R & D funding and it drew on the best
technical and scientic personnel and had the best managers and administrators including Dimitri
Ustinov (1908–1984) who had been appointed People’s Commissar of Armaments in 1941 at the
age of 32 and became eventually Minster of Defence (1976–1984).
“They felt capitalism’s gravity in their bones”
But if the Soviet Union’s location in a competitive global economy was so important then how
did this manifest itself internally? In earlier debates those who insisted that the political economy
of the USSR was dominated by the logic of economic and military competition were attacked for
getting it wrong theoretically and empirically. Theoretically, it was argued, it was necessary to
start from the inside out. Empirically the external forces were not strong enough to play the
determining role internally. In the analogy of earlier times, the external was the tail and the
internal was the dog. And everyone knows that it is the dog that wags the tail and not the tail
that wags the dog. In respect of trade and the general orientation towards the global economy,
Sanchez-Sibony seems to reject this. In a striking phrase he says that Russia’s leaders “felt capi-
talism’s gravity in their bones” (175). But he is also hesitant and does not explicitly follow through
the logic of this claim, suggesting that “in the Soviet Union there was no incentivizing structure
Table 3.Estimates of the % share of military expenditure in Soviet output.
Source: Compiled from Kontorovich and Wein (2009) and Davis (2002).
(a) 1913–1940 in current prices save USSR
USSR Germany Japan Italy UK USA
1913 5
1928 2
1933 3.0 1.0
1937 6
1939 23 22 8 15 1.3
1940 15
(b) 1951–1989 % share in constant and current prices
Constant Current
1951 24.2
1960 14.5
1970 15.4 12.2
1980 15.3 14.7
1989 14.3 15.6
JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE 11
for enlisting the co-operation of industrial managers in the export of products” (179). Although
his position seems to have shifted from an earlier paper that he wrote on trade and the economy
at the turn of the 1960s (Sanchez-Sibony 2010) such a comment will endear him to those who
see the political economy of the Soviet Union as separate and internal. But this comment is wrong.
The incentive structure may not have worked as well as it did in western economies. It may have
involved a lot of top down political pressure, but it was clearly there otherwise how could the
USSR have exported as much as it did?
So let us push the logic of Sanchez-Sibony’s argument further, even if he ghts shy of going
this far himself. In respect of the dog and its tail – the evidence of trade and military linkages that
we have reviewed here seems to suggest that it was a pretty big tail and a pretty small dog. Or
better it is the “internal” economy that should be thought of as the tail. The dierent external
imperatives forced their way through the Soviet system – determining priorities and constraining
choices. Other factors were present, they always are, but the bigger logic was always clear and
this was understood at the top so that Sanchez-Sibony is right when he says those that who led
Russia “felt capitalism’s gravity in their bones”.
In dealing with the question of how the Soviet system worked the analysis of the means cannot
be separated from the ends to which they were put. But the post-collapse economic writing,
whether conventional or more radical, has continued to be focus on the issue of means and the
ineciency of the system rather than what it was trying to do. So why do these accounts get it
wrong? The answer diers depending on who we are looking at.
We owe a huge amount of knowledge, for example, about the inner workings of the Soviet
economy to economic historians in the west like Paul Gregory and Mark Harrison. But they come
from a background in conventional economics. As historians they are vitally interested in ends
but as economists they are much more concerned with means (Gregory and Harrison 2005). To
the extent that the economist in them overrides the historian then they are led to sideline even
their own historical work on ends to better prove their economist credentials in the analysis of
means. In another essay Sloin and Sanchez-Sibony call Paul Gregory – perhaps not completely
accurately – neo-Hayekian (Sloin and Sanchez-Sibony 2014, 12) Mark Harrison certainly began
as a Marxist but now works so centrally in conventional economics that he sits on the board of
Economic Aairs. In their analytical work on the Soviet economy we, therefore, nd a strong
emphasis on models based on forms of methodological individualism. They focus on rational
choices – incorporating elements of public choice economics – and are especially concerned
with principal-agent problems. It is possible says Martin Kragh, writing in this tradition, to under-
stand behaviour in the USSR “as the outcome of people making bounded rational choices under
conditions of shortage” (Kragh 2013, 13).
This enables them to draw a contrast between the formal structure and the reality of the Soviet
system. In theory the Soviet system was a rigid hierarchy whose structures, and the balance of
power within them, had been institutionalized in the 1930s. But the messy reality allowed a huge
amount of opportunist behaviour by agents who competed and bargained to maximize the
interests of their own regions, institutions, enterprises and personal positions. This could only be
limited by attempts at strong coercion by “principals” which eventually began to fail in the late
1980s. But as Gregory, Harrison and others elaborate on these arguments so the dynamic purpose
of the system tends to disappear. This is akin to trying to focus on handling problems in a car and
friction issues in its engine. They may be major issues in explaining performance but they are not
very helpful in enabling us to understand why the car is being driven in the direction that it is.
More, the emphasis on opportunistic behaviour in the abstract ignores the fact that such behav-
iour could serve dierent needs. Some was system subverting; some was system neutral and
some, de facto, was system supporting. And even when it was system subversive such behaviour
may have seemed tolerable, a price worth paying, to meet bigger goals.
12 REVIEW ESSAY
Many more radical accounts unfortunately also continue to assume that the Soviet system
was dierent from, and more or less detached from, the wider world so that they too can focus
on what they see as its internal “non capitalist” relations. Although they couch the argument
dierently they also end up with a bottom up perspective which fails to address the purposes of
the system. Donald Filtzer, for example, in his valuable accounts of the history of the Soviet
working class and work-place sees the system as being chronically inecient. This is partly
because central direction created a “bureaucratic planlessness” and, in the workplace, otherwise
atomised workers exercised negative power to disrupt the system. But again – even if all this is
true – none of it explains why the goals of the Soviet Union were as they were and what its real
dynamic was. In one of his earliest accounts Filtzer suggested that “the Stalinist regime was at
war with its own society” which might prompt the question at least of what were their war aims?
(Filtzer 1986).
What we need to do is to trace how the external imperatives worked through and how those
at the top balanced the competing demands on them. The Soviet system functioned as a whole
but the degree of subordination to economic and military competition varied across the system.
It was greatest where the pressure of external coercion was most intense. Some two decades
ago, Simon Clarke, an internalist, admitted that in respect of trade
Soviet foreign trade could only be conducted at world market prices, with settlements in gold or convertible
currencies. This meant at the very least, that the international operation of the law of value impinged on
the Soviet economy at the level of the macro-economic balance, and so had to be taken into account in
drawing up the plan … (Clarke et al. 1993, 9)
But this point can be made with equal force about the pressure of military competition. We now
know better that talk of the system being planned does not capture how this worked. Rather the
system was driven from the top down based on rules of thumb. These were institutionalized over
time but were also continually reinforced by the structural and competitive positions in which
Soviet leaders found themselves. These rules of thumb determined the high level of accumulation.
They were the basis of the allocation of resources for investment and the output of nal goods
which stressed the role of the military, heavy industrial products and products for exports. They
were supported by quantity and quality checks, sticks and carrots, that that fell more heavily on
the areas closest to the dynamics of the dierent forms of external competition. As Kragh sum-
marizes, the military side of this process:
what made the military dierent from other buyers was its readiness to employ thousands of ocial agents
regardless of the expense, for the purpose of winnowing out products deemed to be of inferior quality. This
contrasted sharply with the civilian sectors, which usually had to comply with allocation plans and which
were unable to simply reject goods. (Kragh 2013, 10)
This did not always work well, but it worked well enough for very long periods despite those
features that allowed enterprise managers to try to play and subvert the system to their own
advantage. Indeed Sanchez-Sibony at another point recognizes some of this when he writes in
respect of trade that “the domestic challenges concerning managerial recalcitrance, low-quality
production and inadequate infrastructure were the wages of success”. (184)
In those parts of the system that were more removed from external pressures than others the
system allowed enterprises to continue to function, “zombie” like, with weaker demands for quan-
tity and quality. However dysfunctional this appeared from the point of view of the consumer
this was not the point of the system. Moreover we need to ask whether this is a dierence of
degree or kind from what is found elsewhere. Janos Kornai, for example, has long recognized
that “soft budget constraints” can exist in “the west” as well as “the east” (Kornai, Maskin, and
Roland 2003). The degree of market discipline on capital always varies not least with regard to
large rms. And since the crash of 2008 we have seen whole sections of western capitalism further
protected from market discipline as for example in the nancial sector.
JOURNAL OF CONTEMPORARY CENTRAL AND EASTERN EUROPE 13
Constituting the global
Sanchez-Sibony’s account is provocative. Perhaps, as we have suggested, more than even he
thinks. Reintegrating the history of the USSR into the history of the global economy is not simply
an issue for historians or Soviet specialists. It also reopens debates about the nature of capitalism.
The conicts over what the USSR was were only ever partly about that country – they were also
debates about what capitalism was, what it is and what it might be. But in using Sanchez-Sibony’s
book to make this point we should leave the last words to him.
The idea that the Soviet Union aspired to be self-reliant, an alternate universe in the liberal world order, has
made the country a Rorschach bloc. Unmoored from the world, its history becomes a journey away from
and back into the (civilised/rational?) world. But the Soviet Union never left. It shadowed the trajectory of
the world economy and participated in all the world’s economic trends – and we should not be surprised to
nd that it participated in cultural ones as well. We must recover the Soviet Union not just as the important
constituent of the global that it was, but also as an inveterate and enthusiastic participant. (253)
Notes
1. I am indebted to Gareth Dale for encouraging me to think more about this aspect of the USSR's weakness.
2. See Luke 1985 for a good historical survey of “Russia in this context.
3. It is important to remember that larger countries generally have smaller trade shares. Maddison gives the
export share for the US in 1913 as 3.7%. For 1950 it is 3.0%, rising to 5% in 1977 and 8.2% in 1992.
Notes on contributor
Michael Haynes is an economic and social historian who has written widely on Russia and taught at the University
of Wolverhampton in the UK for many years. He is currently researching the role of the state and inter-state com-
petiton in capitalist development with a special focus on Russia and the European periphery.
ORCID
Michael Haynes http://orcid.org/0000-0002-5250-7271
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