The Russian Revolution and Stalinism

Graeme Gill, Roger D. Markwick, Graeme Gill, Roger D. Markwick

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000376029
• Edition: 1
• Topic: Geschichte
• Subtopic: Russische Geschichte

This book focuses upon significant aspects of Stalinism as a system in the USSR. It sheds new light on established questions and addresses issues that have never before been raised in the study of Stalinism.

Stalinism constitutes one of the most striking and contentious phenomena of the twentieth century. It not only transformed the Soviet Union into a major military-industrial power, but through both the Second World War and the ensuing Cold War, and its effect on the political Left throughout much of the world, it also transformed much of that world. This collection of papers by an international cast of authors investigates a variety of major aspects of Stalinism. Significant new questions – like the role of private enterprise and violence in state-making – as well as some of the more established questions – like the number of Soviet citizens who died in the Second World War, whether agricultural collectivisation was genocidal, nationality policy, the politics of executive power, and the Leningrad affair – are addressed here in innovative and stimulating ways.

The chapters in this book were originally published as a special issue of Europe-Asia Studies.

The Pavlenko Construction Enterprise. Large-scale Private Entrepreneurialism in Stalin’s USSR

OLEG KHLEVNIUK

Abstract

This essay reviews the characteristic features of the Soviet ‘shadow economy’ by examining the activities of a major construction enterprise headed by N. M. Pavlenko from 1948 to 1952. This was the largest currently known private illegal enterprise of the Stalinist period. Pavlenko’s organisation built dozens of roads and railways under contract to state entities. Based on newly accessible archival documents, the methods of Pavlenko’s organisational activity and the reasons for its lengthy existence are considered. The author argues that, regardless of its extraordinary scale, Pavlenko’s enterprise was in fact typical of the Stalinist ‘shadow economy’, and that future archival research would probably reveal that this shadow economy was far more significant than has been understood to date.

At the beginning of 1948, the former head of a legal construction cooperative or artel (artel’), Nikolai Maksimovich Pavlenko, established his own private, illegal construction enterprise. Using falsified documents, Pavlenko named it ‘Military Construction Administration No. 1 & No. 10’. His enterprise was allegedly under the authority of the Ministry of Military Affairs of the USSR.¹ Framing entrepreneurial activity as military in nature had several advantages. Pavlenko could easily open accounts with the state bank (private banks did not exist in the USSR), sign agreements with different organisations for the construction of roads and railways, and purchase his own construction equipment and vehicles. His enterprise grew, with new construction divisions in different cities and townships in Ukraine, Moldavia, Estonia and Russia. Altogether, in the period from 1948 to 1952, Pavlenko’s organisation maintained plants in 32 locations.² In total, 64 construction projects were contracted during this period for the considerable sum of 38 million rubles.³ Hundreds of workers were involved in these construction projects. Moreover, Pavlenko had his own armed security force.

All planned construction projects were either completed or underway when Pavlenko’s activities ceased to function. There was nothing to predict the sudden collapse of Pavlenko’s enterprise, which was caused by an insignificant matter: one of his workers, unhappy with his rate of pay, sent a complaint to Moscow. This complaint was checked more thoroughly than usual, and revealed the fictitious nature of the Pavlenko organisation.

The case came before the highest levels of the Procuracy. The General Procurator of the USSR, realising the scope of Pavlenko’s enterprise, turned for help to the Ministry of State Security.⁴ In November 1952, a few months prior to Stalin’s death, Pavlenko and some of his employees were arrested. The highest authorities, including Stalin, were informed of the arrests and the investigation of the case. The case was considered in the Council of Ministers of the USSR.⁵

The high level of attention of Soviet leaders to Pavlenko’s case would seem to suggest that such a case was an exception, and that there were no other large private enterprises in the USSR. However such a conclusion would be premature. On the one hand, because the relevant procuratorial and police agencies archives are still closed, we do not have complete information about cases of private entrepreneurial activity that were investigated by authorities. On the other hand, one can reasonably assume that for each illegal case uncovered, there were other enterprises of the same scale of which the investigating authorities were unaware. Thus, given the current state of historiography and restricted archival access, it is important to understand to what extent the case of the Pavlenko enterprise was typical and what it indicates (or not) about significant trends in socioeconomic developments in Stalin’s USSR. Such a task is important for several reasons. First, the study of individual cases deepens our knowledge of the Soviet shadow economy as a whole. Second, while documents currently available to historians have enabled them to conduct research on shadow structures in trade that were very common in the Soviet deficit economy (Osokina 2001; Hessler 2004), the Pavlenko enterprise is the only known example of a major private industrial enterprise. Hessler (1998, p. 517) noted 20 years ago, ‘the history of private enterprise must count among the biggest gaps in Soviet history today’, and this gap remains largely unfilled.

On this basis, two questions are addressed in this essay. First, what were the key trends in the development and practice of the shadow economy in the USSR during Stalin’s dictatorship? Second, in light of these trends, how typical (or atypical) was the Pavlenko enterprise in the Stalinist economy?

Elements of the secondary economy

Since the opening of the Soviet archives, the heterogeneity of the Soviet economy has became generally accepted. Undeniably, the Soviet economy was fundamentally state-centralised and planned. The lion’s share of the economy was in state hands, including the formally cooperative agricultural sector. Key material resources and labour were distributed according to the plan. The imperative of Soviet policy was the eradication or strict regulation of non-state segments of the economy. A powerful administrative apparatus of administration and numerous security apparatuses safeguarded the interests and objectives of the state (Zaleski 1980; Davies et al. 1994; Gregory 2004).

At the same time, the scope of public ownership was a cause of its ineffectiveness. Through the concentration of resources on the development of priority sectors (military projects in particular), the state depressed and ruined agriculture provoking a sharp decline in living standards and periodic outbreaks of hunger. In conditions of acute crisis, the state had to rely upon private initiative and a relatively free market to feed the country’s population. Moreover, suffering from excessive centralisation, bureaucracy and the constant disruption of economic relations from above, state enterprises often used their own semi-legal and entirely illegal market approaches to resolve economic problems (Berliner 1957). As a result, the Soviet economic system, including its most strictly centralised and coercive Stalinist variant, encompassed numerous market or quasi-market elements and private entrepreneurial activity. These elements could be called ‘non-systemic’ in the sense that they contradicted the intentions of the system, which aimed to maximise nationalisation and the replacement of commodity and money relations by the direct barter of products. However, it is equally reasonable to consider these components as systemic, insofar as they were an integral part of the Soviet economy. The available literature and archival sources enable us to describe the basic elements of this secondary (fully shadow or semi-legal) economy and its practices.

First and foremost, it is important to note the retention in the Soviet economy of a large-scale, private, peasant sector. This was a considerable concession by the Stalinist state, which in principle pursued the general socialisation of agriculture through the kolkhozy and sovkhozy. Collectivisation had produced terrible famine at the beginning of the 1930s. Peasant household production was an important, although by no means guaranteed, insurance against hunger. Despite the insignificant size of each household, they were more productive than the kolkhozy and provided a significant proportion of the food supply. Thus according to official data, in 1938 the sown area of household plots of collective farmers amounted to a mere 4.6% of the total sown area of collective farms. Despite this, in 1937 household plots were responsible for 25.4% of total collective farm production, including 38.4% of vegetables and potatoes and 67.9% of meat and dairy produce (Davies et al. 1994, p. 127).

The logic of entrepreneurial activity pushed farmers to extend their private farms beyond the limits stipulated by law. The illegal lease of kolkhoz lands to private farmers was common, with farmers reimbursing the kolkhoz with agricultural products. This sort of contract arrangement within the collective economy provided a strong motivation for peasant farmers to maximise their productivity.⁶ However the state, mostly for ideological reasons, considered such economic relations unacceptable. Periodic campaigns were conducted against the so-called ‘squandering of kolkhoz lands’ which were a significant blow against individual peasant agriculture and reduced the amount of food in the country.⁷

An important role in the production of consumer goods was played by producers’ cooperatives. At the same time a significant number of artisans ran their own individual businesses rather than participating in the cooperative sphere. Many private entrepreneurs used their formal membership of production cooperatives as a legal cover. Resources and materials were often stolen from state enterprises for use by private productive enterprises. Demand for the products and services of private entrepreneurs increased significantly during the war, when the state sharply reduced its involvement in the production of goods for general consumption. Small private entrepreneurs partially filled this market demand by producing clothing, shoes and some food products. In the republics of Central Asia and the Caucasus, small cafés and hotels were common. All these types of small entrepreneurial activity became so widespread that, after the war, central and local financial agencies started to lobby for their legalisation in order to tax them. However, these projects did not receive the support of the higher leadership of the country who condemned them as politically harmful (Hessler 1998; Chudnov & Osipov 2008). The purging of private entrepreneurs and the leaders of the cooperatives that gave them cover became a common feature of the Soviet system. In 1948, after the government had issued a special order, more than 25,000 licensed private concessions, along with businesses that were functioning without a licence, were closed. Around 18,000 entrepreneurs, who were condemned as ‘speculators and cooperative administrators’, were given prison sentences, and more than 5,000 cooperative administrators were dismissed (Hessler 1998, pp. 539–40). These numbers reveal the significant scale of private entrepreneurial activity in the post-war USSR. Such purges continued through the Soviet period. However, illegal production for mass consumption could not be completely rooted out because it played an important role in satisfying the market in the Soviet deficit system.

A considerable part of the production of peasant farms, production cooperatives and private artisans was distributed through the so-called kolkhoz markets, which operated on the basis of free prices and were only partially controlled by the state. These markets were an inevitable concession on the part of the Stalinist state to the realities of Soviet socioeconomic development. Their legalisation was closely connected to the intensification of the crises in the country (Moskoff 1990; Barber & Harrison 1991; Davies 1996, pp. 201–28). In turn, kolkhoz markets were an important basis for the development of one of the most common types of Soviet entrepreneurial activity: trade. After the liquidation of private trade in the period of the Stalinist leap forward (skachka) from the end of the 1920s to the beginning of the 1930s, state shops were unable to handle even the insufficient amount of consumer goods that was in the hands of the state. The goods deficit was worsened both by the inflexibility of the state trade and rationing systems, and by violations of these systems that led to goods being misappropriated (Khlevniuk & Davies 1999). Under such conditions, private trade became hidden, but it did not disappear.

Private traders were mainly active in three areas of the Soviet economic system: the sale of goods from peasant farms, producers’ cooperatives and private artisans; the resale of goods from the state trading network, which brought enormous profits as a result of significant price differences between state and free market trade; and the sale of goods stolen from state enterprises. In official Soviet language, the activities of private traders were called ‘speculat...