(thread title currency boards and Russia)
some bold statements, the essence of which were correct, particularly about the situation in Russia today where there has to be an alternative to continued servitude to the IMF.
If have been checking with my cooperative friend various references and using volume 9 of the 12 volume 1937 Selected Lenin, and the volume by Progress Publishers and Lawrence and Wishart 'Lenin on the Foreign Policy of the Soviet State'.
I wrote earlier today:
>But why then, did Lenin adopt the system of currency boards from the system
>that Keynes set up for the White Russians?
>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.
I cannot substantiate the claim that Lenin consciously adopted Keynes currency board from the Northern White Russian area. Nevertheless even the collected Lenin represents perhaps only 1/3 of his written work, he regarded trade and money as very important and he had a high opinion of Keynes. I wish to maintain he was at least unconsciously influenced by this policy.
He referenced Keynes authoritatively several times at the Second Congress of the Communist International 1920 not just as an acknowledged bourgeois, a ruthless opponent of Bolshevism and a British philistine, for courageously announcing the impending bankruptcy of all imperialist debts.
"As you know, however, these debts do not disturb us, because we followed Keynes's excellent advice just a little before his book appeared - we annulled all our debts." (Stormy applause)
"Incidentally, I do not think a single manifesto, communist or revolutionary in general, could be compared in forcefulness to those pages in Keynes's book in which he depicts Wilson and 'Wilsonism' in practice."
Describing Keynes as a learned economist, Lenin praised his resignation from government service: "Is it not a fact that the bourgeois Keynes says that in order to save their lives, in order to save the British economy, the British must secure the resumption of free commercial intercourse between Germany and Russia? How can this be done? By cancelling all debts, as Keynes proposes."
It is therefore highly likely, especially in view of his concern for economic detail shortly before the start of the NEP, that Lenin noticed Keynes's stabilisation of the currency in the northern Russian Murmansk region. This was backed by gold deposits in the Bank of England. Indeed England lost some of its outlay with the collapse of white Russia.
The term currency boards has only relatively recently taken on a specialised meaning. Originally it did not mean more than currency committee.
World Bank definition of a currency board in the context of a recent review article about their use in Latin America:
>A currency board issues money that is converted into a foreign reserve
currency at a fixed exchange rate. This independent institution takes over
the central bank's role as the sole issuer of base money. It also manages
the exchange rate to keep the currency stable and convertible.<
I am not maintaining the relevance of this particular kind of currency board.
The system in the British Empire is described in "Banking in the British Commonwealth" by RS Sayers, Oxford 1952.
There is substantial evidence from Lenin's speeches that he regarded the stabilisation of national and international trade as crucial to the New Economic Policy. As described by Staphanie Griffith-Jones in the Role of Finance in the Transition to Socialism, Francis Pinter, London 1981, the Bolsheviks has balanced the budget by 1923-4, and had defeated inflation with a convertible currency backed by gold, the shervonets roubles.
"it is absolutely clear that it would be to our advantage to ransom ourselves from European capital with a few score or hundreds of millions, which we could afford to pay, in order in the shortest possible time to augment our supplies of equipment, materials, raw materials, and machines for the purpose of restoring our large scale industry." (Report on the Food Tax, May 1921).
"We must not regret having to give the capitalists several hundred million kilograms of oil on condition that they help us to electrify our country." (Tactics of the RCPB, July 1921)
Reply to Questions put by a correspondent of the New York Evening Journal, Feb 1920.
"Q: What would be the basis of peace with America?
A: Let the American capitalists leave us alone. We shall not touch them. We are even ready to pay them in gold for any machinery, tools, etc., useful to our transport and industries. We are ready to pay not only in gold, but in raw materials too."
While adamantly refusing to pay old debt, Lenin was clear about drawing foreign traders into exchange through real exchange of real use values. Including gold for its use as money. The state had a monopoly of foreign trade till at aleast 1924 (Carr, The Bolshevik Revolution Vol 3) but it is clear that every trade deal was backed by real exchange. That was the only way the capitalists of the west could be drawn into trade.
It had growing success.
In December 1921 at the Ninth All-Russia Congress of Soviets he said of international economic relations:
"The great difficulty here has been the absence of definite relations with the capitalist countries, which has made it impossible for us to establish stable economic relations."
In March/April 1922 at the 11th Congress of the RCPB he was more optimistic:
"I cannot vouch for the date; I cannot vouch for success; but at this gathering we can say with a fair amount of certainty that regular trade relations between the Soviet Republic and all the capitalist countries in the world are certain to continue developing."
By November 20th 1922 he could say:
"economic relations, followed by diplomatic relations, are improving, must improve, and certainly will improve. Every country which resists this, risks being late, and, perhaps in some things, quite substantial things, it risks being at a disadvantage."
So international trade was increasing by the Bolsheviks meeting the hard material interests of the capitalists, which was essential for success. No hint of funny money for them.
It is logical then that back to November 1921 he was fighting for The Importance of Gold:
"When we conquer on a world scale I think we shall use gold for the purpose of building public lavatories in the streets of several of the large cities of the world....
But however 'just', useful, or humane it would be to utilise gold for this purpose, we nevertheless say: Let us work for another decade or so with the same intensity and with the same succes as we have been working in 1917-21, only on a wider field, in order to reach the stage when we can put gold to this use. Meanwhile, we must save the gold in the RSFSR, sell it at the highest price, buy goods with it at the lowest price. 'When living among wolves, howl like the wolves.'"
So it is absolutely clear that Lenin had a high regard for Keynes, that he took most seriously the need to initiate the NEP well and get trade moving, and that he believed that hard-headed international trade had to be backed either by gold or by exchange of equivalent products. Meanwhile he annulled past international debts.
This is the essence of what could be progressive about the currency board option versus the IMF option for left wing politics in Russia today. Except that the currency board could be backed by the Europ rather than with gold or the dollar.
Past IMF debts should be annulled. There is in any case a credible argument among the servants of world capitalism that the lenders should suffer penalties and not just the debtors, on an insolvency crisis.
There is absolutely no doubt that less developed countries are at a great disadvantage in trying to develop in an imperialist world, and all measures in some way or another have to acknowledge that power relation, but let us discuss options other than endlessly forward-rolled IMF loans. Let us discuss compromise reforms, that at least to some extent aid living Russian labour in the battle with dead labour.
Chris Burford
London
>
>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).
>
>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.
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>London
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