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In this extraordinary book, Carr shows how, "The development both of agriculture and of industry stimulated by NEP followed capitalist rather than socialist lines. In agriculture it meant the encouragement of the kulak. In industry, it favoured the growth of light industries working with limited capital for the consumer market and earning quick profits rather than of the heavy industries which were, by common consent, the basis of a future socialist order, but required an initial volume of long-term capital investment; for this contingency the principles and practices of NEP made no provision. Hence the struggle in agricultural policy against the predominance of the kulak, which began in 1924 and remained acute throughout 1925, was matched at the same period by a similar struggle in industrial policy centring on the requirements of heavy industry. The history of industrial progress between 1923 and 1926 falls into three stages. In the first stage, approximately corresponding to the economic year 1923-1924, the 'spontaneous' forces of recovery stimulated by NEP were still in the ascendant, and light industries continued to advance more rapidly than heavy industry. In the second stage, running from the autumn of 1924 to the end of 1925, a confused battle was fought with varying fortunes between conflicting policies and interests. In the third stage, which began with the fourteenth party congress in December 1925, the expansion of heavy industry became the predominant aim of economic policy."
The Soviet Union chose the path of expanding industry, producing the means of production, to develop an independent and self-sufficient national economy on a socialist foundation. It rejected the option of expanding agricultural production for exports, to pay for imports of machinery and capital goods.
It financed industry from the national budget - direct subsidies to restore fixed capital, and advances of working capital, to buy raw materials - the approach that favoured heavy industry. It rejected the option of financing industry through credit from banks, on the basis of tangible security and potential profits, the approach that favoured light industry.
As Carr sums up, "In pursuance of the decision of the fourteenth congress, the expansion of industry, beginning with the production of the means of production, and leading to the development of an independent and self-sufficient national economy on a socialist foundation, was henceforth the central focus of economic policy; and this carried with it a recognition of the supremacy of planning over the forces of a 'free' market and an 'international' currency." "Industrialization was the economic corollary of socialism in one country."
Carr writes of Stalin, "He carried out, in face of every obstacle and opposition, the industrialization of his country through intensive planning, and thus not only paid tribute to the validity of Marxist theory, but ranged the Soviet Union as an equal partner among the Great Powers of the western world. In virtue of this achievement he takes his undisputed place both as one of the executors of the Marxist testament and one of the great westernizers in Russian history."
"defending the policy of 'socialism in one country' against an awkward quotation from Engels, he [Stalin] exclaimed that, if Engels were alive to see the present situation, he would only say: 'Devil take the old formulae! Long live the victorious revolution of the USSR!'"
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