The main point of my post about weaknesses in the Yugoslavian economy was to ask for debate about what has left it vulnerable to dismemberment by internal and external forces. The growing differences of wealth in different areas could, according to my friend in the cooperative movement, have been managed by a social market in land. One way or another left wing economists need to address the question of how divergences in rates of economic development between different regions can be managed. This implies some sort of access by the state to economic surplus. Is this to be done by taxation, by the profits (hopefully) of nationalised enterprises, by a social market in land, or by what? And how is it to be distributed, by pork barrel politics, by centralised command economy, by bureaucratic regulations, by competitive incentives? Or should nothing be done at all about regional disparities and we trust to the blind workings of the market?
The other criticisms of the flexible Yugoslavian economy do not directly relate to the apparently increasing differential in economic development between its regions. However I appreciate Doug coming back on currency boards, an issue that may at first sight appear obscure and eccentric.
>an imperial and counter-revolutionary heritage.
I understand his intuitive reservations: a combination of the British Empire, John Maynard Keynes, and the White Russians, looks like a cocktail from hell.
But why then, did Lenin adopt the system of currency boards from the system that Keynes set up for the White Russians?
There are different measures used to regulate trade, and these need to be judged in context by what classes and interests they serve. I imagine we can say the regulation of trade goes back far before the mercantilists of the 17th century. Every society that produces a surplus and which exchanges a portion of it, evolves mechanisms ultimately enforceable by those with arms, for its regulation, and often to take a portion of the surplus One example might be an early mediaeval European town where the bishop moves the salt market upstream (the origins of Munich, after the monks who had a monastery there).
The use of currency boards in the colonies of the British Empire had a class base as well as a technical base. They were to allow the colonies to trade without any risk to the imperial Bank of England. While such trade was very valuable - eg the opium trade - such measures were probably introduced more to control the riff raff of the Empire who migrated to exploit the pickings. Bounders like Nick Leeson, who did not come from the right school, and bankrupted Barings, are not a new phenomenon. The attempt to control them ideologically was a key feature of the Victorian "public" school system and its mythology. Conrad, as a Pole, had a good insight into the tacky side of the British Empire. But the currency board system was a guarantee against all 'bounders' and 'wogs' (worthy oriental gentlemen, to subscribers who are not aware of all aspects of English upper class hypocrisy).
Currency boards also had the imperial advantage of providing a free deposit with the Bank of England to the value of all the trade done by the colonies.
(Compare and contrast the free deposit the USA gets from the dollar as an international reserve currency under the present conditions of neo-liberalism. Currency boards may be terrible but if they are to be called imperialist by definition, let us at least compare them with the present imperialist situation.)
Given the imperialist history of currency boards however, why should Lenin adopt Keynes' version from White Russia? At that time, Red Russia had war communism, forced levies from the peasants, free public transport in the cities - and barter. White Russia had a market economy under the currency board.
Now you could say that Lenin was succumbing or retreating before capitalist pressure to have a market, and he should have kept war communism. But he was a shrewd judge of the balance of forces and the weaknesses of the new revolution, if Russian was to remain socialist.
Lenin was scathing about Bolshevik "grandees", "the conceited communist who is prepared at a moments notice, to write 'theses', issue 'slogans' and produce meaningless abstractions'. Instead for almost 12 months a team of experts some 200 strong worked on the preparation of a report, which came to be known as the Goelro report and which was released in December 1920. This was the basis of the NEP.
I do not know the details closely enough as to whether currency boards were discussed in this 10 year plan, but it was certainly in this context of the NEP that Lenin stabilised the currency, got the economy moving again, and unashamedly (Lenin's style) used what was valuable in the technical aspects of Keynes currency board.
That was 80 years ago.
Now in 1999, is it sufficient to look only at the imperial history and connotations of currency boards, and reject them as imperialist in essence? We should look instead at the context and the class interests who might get benefit or disadvantage from them.
As in 1919 large parts of Russia have once again been reduced to barter. Now! The strength of socialist cooperation has held through in many ways, and in some places barter has been supplemented with various barter-like units of currency such as potatoes, or chits issued by the local large factory. Informal local economic trading zones have been set up. We heard a great deal about this collapse of the market in Russia last year, during the default on the ruble. Now we hear little but the the problems cannot have disappeared so quickly.
One of the reasons we hear so little is because the compromise patched up under Primakov was to give some ground to the Russian Communist Party, but to re-negotiate with the IMF. The IMF is the modern imperialist answer, and it has done a good job for its masters. It has supervised the extraction of hundreds of billions of dollars from the Russian economy over the last 8 or so years. It has smoothed the path of capital flight.
The political costs are of increased subservience of Russia to the west. Chernomyrdin is an oligarch, one of the circle who benefitted most last year when that circle expatriated billions of dollars from the Russian banks for their own benefit and triggered the final collapse of the ruble. He was a very useful envoy for the west during the Kosovo war. What is the result? Russia has blustered publically, made a show of occupying Pristina airport rather noisily, and has just sat down to a NATO-Russia liason committee meeting again in Brussels.
I am not saying currency boards are the only answer, but at least they deserve comparison with the IMF answer, which sacrifices Russian independence farb more effectively.
Consider this not impossible counter-factual scenario. One year ago, Yelstin has a heart attack or dies, or is finally impeached, or actually resigns! He is replaced as president by Primakov, who is willing to compromise with the Communists. Instead of concentrating on bargaining with the IMF, they concentrate on building up the barter economy into an internal market economy again, with a currency not vulnerable to international speculation.
The price is high but it could be introduced gradually, and had the permission of Camdessus himself. It would have been a victory for living labour over dead labour. It would have relied on the current forces of production including the initiative, resiliance and determination of the Russian people to get their domestic economy working again. It would have opened up external trade again only on a sound basis and not prioritising a few non-essential intiatives that would be profitable for foreign investors like a MacDonald franchise chain, when Russians are quite capable of preparing food themselves.
Certainly there would be a price to dead labour, international finance capital, but this deal would have left the initiative more in the hands of the Russian people, and have permitted a turn to the left again, and a preservation and a reapplication of socialist elements in the Russian economy.
It is still possible now in Russia. The assets of the currency board would not have to be held in dollars, particularly since there is now a 300 billion deficit in US trade.
Subscribers may well know of better solutions to the rule of the IMF over Russian economic rehabilitation. But please do not dismiss currency boards. Let us at least open the debate up. And in that context I appreciate Doug coming back once again to challenge me to spell my point out.
Chris Burford
London