Subscribe for monthly SEWP email updates
Posted: October 3, 2025
This post marks the rough mid-point of the USSR’s 74 year history, culminating in a dramatic turning point, Stalin’s death in 1953. We will take this opportunity to reflect on the first half of USSR economic history, through Stalin’s final great theoretical work, Economic Problems of Socialism in the USSR (1952). It is Stalin’s response to many ongoing theoretical and practical political economic debates within the USSR and CPSU. The following are summaries of Stalin’s arguments in several key sections of this book. Please read the text in full to get his full intervention on these questions.
Capitalist propagandists claim that socialism is dogmatic. This text alone is evidence of the opposite. USSR leadership, after unprecedented industrial growth and glorious victory over fascism, remained highly critical of their own performance. These achievements were only made possible by constantly assessing the successes and lingering problems of socialist construction. Socialist economics always blends theory and practice, ceaseless effort and ruthless criticism, to achieve material success and align with socialist principles. This goes far beyond the simplistic stock price index analysis of our modern financialized economy.
The Character of Economic Laws Under Socialism: Stalin analyzes the ongoing debate about whether the USSR can ‘create new economic laws.’ His position is that natural laws (scientific or economic) remain objective, even as our understanding of them advances. He uses the example of protecting towns from flooding rivers by understanding the scientific processes that lead to the flooding; the natural process that causes floods can’t be stopped, yet we can mitigate the consequences of floods by understanding this process.
The historic task of the USSR was not just to replace one form of exploitation with another. They also had to build this non-exploitative economic system from scratch, against the inertia of the former Russian Empire’s existing economic components. Their success in achieving this goal was not due to ‘forming new economic laws,’ but recognizing the existing objective economic law that ‘the relations of productions must necessarily conform with the character of the productive forces.’
In the Russian Empire, capitalist production was increasingly socialized (industrial factories), but ownership was private, profiting the capitalist rather than the working class. From this we see that economic laws are historical (thus relatively impermanent), based on concrete social and economic conditions. Also, the discovery of, and alignment with, these laws faces powerful resistance from the regressive social classes (capitalists, landlords, clergy) made obsolete by new socio-economic structures.
Granular study of these economic laws is required to create economic plans that actually align with the law of balanced economic development. The USSR/CPSU is only as powerful as its ability to study and align their plans with objective economics laws, which cannot be transformed, abolished, or enacted. The economic base must be aligned with existing laws, creating a new, elevated economic system, with new laws to understand and align with.
Commodity Production Under Socialism: A defining characteristic of capitalist economies is generalized commodity production, where anything produced is produced for sale rather than use. Many Soviet comrades claimed that commodity production must be immediately and totally eliminated, for fear of capitalist reinstatement. Stalin disagrees, outlining the conditions required for commodity production to turn into capitalist production.
Commodity production only becomes capitalist production if: there is private ownership of the means of production; if labour power is a purchasable market commodity; and if the system of wage worker exploitation by capitalists exists in the country. These conditions didn’t exist in the USSR, so commodity production couldn’t become capitalist production.
Commodity production vastly predates capitalism, and has existed within every economic system after primitive hunter-gatherer economies. The reason it continued to exist in the USSR was because of two separate but coexistent forms of production: publicly-owned state industrial production, and non-publicly-owned collective farm production. On collective farms, the land and machines were state-owned, but the product, labour, seed, etc. was owned by the collective farms themselves, not the state (even though they could not buy/sell/lease them like capitalist private property). Thus, trade between the state and collective farms was done through commodity exchange (agricultural produce for all the goods collective farmers need).
To eradicate commodity exchange, the USSR needed to fully bring agricultural production under the state planned economy, which they unfortunately achieved. The transition from collective to public ownership in agricultural production remains an outstanding issue in socialist economics.
The Law of Value Under Socialism: The law of value is a Marxist concept stating: products’ exchange-values (expressed in money as prices) are proportional to the average amounts of socially necessary labor time required to produce them. Check out this more in-depth explanation if you’re unfamiliar with the concept.
Stalin states that the law of value still exists and operates under socialism in the USSR, in both exchange and production. However, it crucially does not have a ‘regulatory influence,’ as it does under capitalism. The USSR’s ultimate economic driver is planning through the law of balanced development, not the pursuit of profit. While it can sound strange coming from a communist like Stalin, he states that, within businesses, cost accounting, ‘profitability,’ prices, and production costs are all very important. Understanding these production elements allow for realistic plans that align with material capabilities, training industrial planners and managers on the economy’s material realities. While ‘profitability’ won’t decide whether shoes are made or not, it can be used to help align price with production cost.
The USSR’s problem was not that the law of value operated in production, but that managers and planners did not effectively understand it, and thus were not able to set optimal prices. In the USSR at this time, the law of value operated within strict limits (no private property and widespread socialized state and collective production). The law of value also didn’t affect proportion/distribution of labour. If so, more ‘profitable’ light industry would be favoured at the expense of less/unprofitable heavy industry, resulting in contractions of productive capacity in the long term, due to a lack of balanced development. This would shift favour from production of means of production to production of articles of consumption.
In our next post in this series, we will take a look at the state of the USSR economy after Stalin’s death, with Khrushchev's first rounds of reforms, in his role as Stalin’s successor.