AN EPILOGUE AND AN ASSESSMENT

Under a system of private trade and in the normal conditions of the capitalist economy, the consumer, provided he has money, can procure whatever he wants whenever he wants it. In these matters, the socialist apparatus of distribution must be at least as good as that of private trade. But in view of the high degree of centralization, there is considerable risk that the socialist apparatus will degenerate into a cumbrous and dilatory machine in which a great many articles will rot before they reach the consumer.
—The ABC of Communism

It is necessary to recognize clearly that the creation of two markets—legal and illegal—would do more harm to the national economy than would the "recognition" of private capital.
—Ia. M. Gol'bert

Soviet historians employ the phrase "liquidation of the new bourgeoisie" to characterize the state's treatment of the Nepmen at the end of the 1920s, and as we have seen, the ranks of private entrepreneurs dwindled precipitously in these years. But a question remains, particularly in the absence of a mass emigration of the Nepmen.^[1] What became of them after they were forced to close shop? Most often the term liquidation conjures up images of arrest, imprisonment, and even execution. Though the information on this point is skimpy, it is clear that some Nepmen suffered these fates. As a general rule, large-scale entrepreneurs and anyone charged with operating surreptitiously (without a license, in a disguised business, by bribing state officials) were the prime candidates for such punishment. But as the official interpretation of "speculation" broadened by the end of the decade to include nearly all private trade, no merchant could consider himself immune from arrest by a zealous policeman.

It is nearly impossible to estimate how many Nepmen were arrested,

sent to labor camps, or shot. As we have seen, a considerable number were hauled into prisons and tortured in an effort to discover any foreign currencies and precious metals they might have hidden away. But official records detailing the number of these victims are, of course, unavailable. Many non-Soviet sources report frequent arrests of Nepmen. Sotsialisticheskii vestnik , for example, received a report from Moscow that by 1930 "the majority of private entrepreneurs have been arrested and exiled, forced by torture to surrender all their property." A Russian-American, describing the state's crackdown in 1927-28, observed:

Again, as in 1924, the victims of the terror were not as yet the Trotskyites, but the so-called Lishentsi , a newly coined name for Nepmen. . . .

At the October terminal I stood for hours watching Chekists load victims on a freight train. Though many of them were well-to-do Nepmen, they were brought to the station stripped of nearly all their belongings. Administrative arrest carried with it confiscation of all property, including what the brutal Chekists considered "excess" food and clothing.

[Although there was still snow on the ground], the prisoners were being packed into unheated boxcars which would likely become death traps as the train moved deeper into the frost-bound Siberian wastes.^[2]

Soviet sources create a different impression. A survey in 1929 of the new occupations of 148 former private traders in Rostov-on-the-Don recorded that only 7.4 percent of these people had been arrested. The same year a similar study of 34,000 former Nepmen in twelve large cities (including Moscow, Leningrad, and Kiev) and a number of other regions reported that 4.5 percent had been convicted of various crimes.^[3] Certainly the large majority of Nepmen—petty traders and artisans—were not arrested, but the figures cited above are undoubtedly on the low side. Both surveys were unable to determine the new activities of approximately 40 percent of the former Nepmen under consideration, and some of these people may well have vanished into the labor camps. Further, it is quite possible that these data do not include people detained (but not necessarily arrested), such as persons suspected of possessing foreign currencies and precious metals.

In any case, whatever the actual percentage, most Nepmen did not fall into the hands of the police, and thus we are still faced with the question of their new activities after quitting businesses that had become unprofitable or unsafe, or both. Many of these people—estimates for various regions range from 12 to 30 percent—took up small-scale handicraft work. Such a move from the category of "nonlabor element"

to that of "producer" was common at the end of NEP, because it meant reduced taxes and less harassment from the state. Similar considerations prompted other Nepmen, especially those who still had ties to the countryside and nowhere else to go, to work the land. By the beginning of the 1930s, for instance, the Crimean Jewish agricultural colonies were dominated by former private traders driven from commerce. Some ex-Nepmen managed to secure work in state agencies, and still others retired to live with relatives.^[4]

People squeezed out of business might also move into black market activity and other forms of concealed entrepreneurial endeavor. These undertakings, many of which had been officially permitted only a year or two earlier, included zagotovka operations, trade, moneylending, and currency speculation.^[5] As noted previously, investigations at the end of the decade of the new "careers" of former Nepmen were generally unable to account for 40 percent or more of these individuals.^[6] Some were doubtless involved in illicit economic activity. It was possible, for example, to conduct furtive petty trade by blending in with the peasant vendors who were allowed to hawk their goods in market squares during the 1930s.^[7] Many artisans, too, some of whom had only recently been merchants, conducted trade under the cover of this still-legal occupation. Just as in previous years, false producers' and consumers' cooperatives sprang up, partly to take advantage of the privileges bestowed on such organizations by the state, but now more than ever to mask what had become illegal private trade.^[8] Thus some entrepreneurs did not quit the field and continued at least sporadic covert trading and other activities. Chronic shortages and an inefficient state distribution system continued to provide sufficient opportunity and demand for remnants of the Nepmen who were bold, greedy, or desperate enough to conduct business on the black market. Such transactions recalled those of War Communism and marked a return to illicit undertakings as the sphere of legal private enterprise shrank after 1930 essentially to collective farm trade and some handicrafts. Since then, illegal and semilegal economic activity has swollen to enormous proportions in the Soviet Union. The seemingly limitless array of endeavors in this vast "second economy" ranges from long-familiar black market sales of state and privately produced goods to moonlighting by state employees (often with state tools, raw materials, vehicles) and to private dating services and marriage brokers.^[9] Ironically, many of the tasks formerly performed by the Nepmen are undertaken by the "second economy" today, over half

a century after the party proclaimed that private entrepreneurs had ceased to provide useful services to consumers.

As we have seen, the Nepmen played a number of significant economic roles, but nowhere else were they as important as in retail trade. Soviet consumers everywhere, especially during the first years of NEP but also throughout the decade, relied on private traders for a large percentage of their purchases. In a letter to the editor of Torgovopromyshlennaia gazeta at the end of 1924, a provincial Nepman contended that the local cooperatives were so poorly stocked that "if it were not for private trade, the population of the province would be left without the most essential goods, such as wheat flour, yeast, wooden spoons, peasant horse harnesses, and many other things."^[10] This was not a claim applicable only to the most out-of-the-way villages, for even in Moscow, where the state and cooperative trade network was comparatively dense, consumers bought over half their goods from private traders in 1925.^[11] In fact, household-budget studies conducted throughout the country in 1925 and 1926 indicate that the very backbone of the Soviet state—government officials and the proletariat—made 36 to 40 percent of their purchases from Nepmen, and a similar study in Kiev revealed that as late as 1928/29 these people obtained 44 percent of their food from private traders (51 percent in 1927/28).^[12]

The Soviet urban population was heavily dependent on the Nepmen for two of the most basic necessities—food and clothing. Muscovites, for example, bought approximately 70 percent of their bread from private traders in 1924, and reports from various regions indicate that Nepmen were generally most dominant in the trade of dairy products, eggs, meat, fruits, and vegetables, often accounting for 80 percent or more of total retail sales even toward the end of NEP.^[13] In the marketing of manufactured consumer goods, the Nepmen's share of retail sales was usually largest for haberdashery, textiles, common hardware and other metal products, and leather goods. Urban private traders around the country frequently conducted at least half the sales of these products, and out in provincial towns their market share was sometimes over 90 percent.^[14] In such localities Nepmen were often the population's only source of many essential items, and when they were forced out of business at the end of NEP, aptly termed "trade deserts" multiplied rapidly.

Given the relatively small number of state and cooperative stores in

the countryside, it is not surprising that the Nepmen played an important role here as well, a development that particularly alarmed many Bolsheviks. As we have seen, Lenin argued that the working class had to cement an alliance (smychka ) with the peasantry (and drive private trade out of the countryside) by supplying the peasants, mainly through cooperatives, with essential manufactured products in return for the peasants' grain. But this plan (or hope), reiterated frequently by party leaders and in the press, enjoyed modest success at best. According to data collected by the Central Statistical Bureau for the middle of NEP, slightly less than 60 percent of the manufactured goods (such as agricultural and construction tools, clothing, footwear, dishes, soap, and processed food products) bought by peasants were sold to them by private traders. Other studies of purchases made by peasants on shopping trips in local bazaars and larger cities and towns in the period from 1925 to 1927 support the data from the Central Statistical Bureau.^[15] In other words, the peasants seemed as inclined to form a smychka with the Nepmen as with the proletariat.

The Nepmen's success raises another question: How were they able to carve out such a considerable share of the market, even in cities that had large numbers of state and cooperative stores? After all, the prices charged by the Nepmen were often substantially higher than the prices in "socialist" stores. Furthermore, a variety of observers reported that many "ordinary" (i.e., non-Bolshevik) Russians regarded private entrepreneurs, especially the larger-scale operators, with keen distaste. It is difficult to offer generalizations with any confidence concerning popular attitudes toward the Nepmen. But clearly some Russians considered private traders to be greedy, unscrupulous speculators fattening themselves on the country's misery by selling scarce commodities at exorbitant prices. In particular, many people resented the ostentatious flaunting of wealth by some of the more prosperous entrepreneurs.

The state encouraged a negative view of the Nepmen at every opportunity—in movies, literature, posters, cartoons, parades, and schools—no doubt with some effect on the population.^[16] Before long, in any event, Nepmen became the butt of many unflattering popular jokes and folk verses (chastushki ). More ominously, the stereotypical, odious private trader was often assumed to be Jewish, and thus anti-Semitism and popular aversion to the Nepmen fed on each other. The Nepmen therefore found themselves the object not only of pressure from the state but also of animosity from a portion of the population.^[17] Eugene Lyons was probably not overstating the case a great deal when he commented:

It [the "new bourgeoisie"] was a class existing by sufferance, despised and insulted by the population and oppressed by the government. It became a curious burlesque on capitalism, self-conscious, shifty, intimidated, and ludicrous. It had money, comforts and other physical advantages, yet remained a pariah element, the butt of popular humor and the target of official discrimination.^[18]

Given all this, one might wonder why so many consumers patronized private traders well past the introduction of NEP. The question was posed by the Kiev correspondent of Torgovo-promyshlennaia gazeta , who offered the following reasons for the Nepmen's success: (1) people have to waste time standing in lines at the cooperatives, one at the cashier's stand and one at the counter; (2) customers may examine the merchandise and pick out what they want in private shops, but must buy "in the dark" in the cooperatives; (3) being more numerous, private traders are sometimes much closer than the cooperatives and are sometimes willing to sell "out the back door," when by law shops are supposed to be closed; (4) many private traders offer long-term credit with no collateral; (5) private traders attract customers with their solicitousness; and (6) private shops have a better supply of desirable and essential goods than do the cooperatives.^[19]

This compendium of the Nepmen's strengths and the "socialist" sector's weaknesses is supported by reports from around the country. We have already seen that the state trade network was much less widespread than the network in the private sector, but as the correspondent in Kiev indicated, it was not simply a question of numbers. The Nepmen were more flexible in adapting to consumer demand and more resourceful in obtaining scarce goods. They had a knack for sniffing out a supply of desirable goods in a particular locality and then acquiring these wares one way or another for shipment to other regions. In contrast, state and cooperative trade agencies were often plagued by inefficiency, indifference, waste, corruption, and a ponderous supply chain.^[20]

For these reasons the selection of merchandise in private shops and markets was generally superior to that in "socialist" stores. There were numerous reports, particularly from the provinces, of shortages and even the complete absence of common consumer goods in the cooperatives and state stores, while the local private traders stocked them in abundance (though most often at higher prices).^[21] It was usually not a matter of the state and cooperative stores being completely empty, but rather of their offering wares that few people wanted. This situation was

sometimes the result of what were called compulsory assortments, that is, shipments of undesirable goods unloaded by factories, trusts, and central state and cooperative supply agencies on individual stores, particularly those out in the countryside. Given the shortage of so many kinds of consumer goods, suppliers had plenty of leverage to compel stores to accept large batches of unmarketable merchandise along with desirable products. The result, which did not escape the attention of Soviet cartoonists, was that rural cooperatives were forced now and then to offer the peasantry expensive high-heeled shoes, elegant women's hats, perfume, umbrellas, and fancy chamber pots. One village cooperative's complaint that it had been sent cigar cases, mirrors, and playing cards was answered by the declaration that it was necessary to spread enlightenment in the villages.^[22]

Even when state and cooperative stores had desirable goods, customers were often plagued by lackadaisical, rude, and sometimes even dishonest clerks. A cooperative journal conceded this point, complaining that nearly everyone "has many examples from personal experience illustrating the negative characteristics of cooperative workers." The writer continued, "These examples and complaints create the impression that such cooperative workers are degenerates of some sort, a kind of special race. And worst of all, the examples adduced by consumers are not malicious slander and invention, but the most authentic reality." In another discussion of the cooperatives, one participant remarked:

Our cooperative workers are often indifferent to everything that goes beyond the horizon of the eight-hour day or that touches their "dignity." How should it be possible for him to give himself any trouble for a customer or to move a little more quickly behind the counter? He is a complete contrast to the sellers in the private shops, who are always obliging, courteous and busy; he is always crusty, indolent and bad-tempered.^[23]

Shoppers in state and cooperative stores around the country also complained that the quality of food products was often poor and that they were not permitted to look over the merchandise and select the item or cut they wanted (which one could do in a private shop). The correspondent of Torgovo-promyshlennaia gazeta in Tver', for example, reported that the cooperative shops there seemed to operate on the principle of "take what I give you." Consumers also complained that cooperatives sometimes sold various products at different times during the day, which increased the amount of time one had to spend shopping and standing in the lines that were irritating fixtures inside and outside

state and cooperative stores. Shopping forays into the "socialist" sector were also frustrating because one could not be sure from day to day if many common products would be in stock.^[24] In the face of such lackluster competition, then, it is hardly surprising that the Nepmen were able to attract numerous customers.

But despite the problems plaguing state and cooperative trade, many consumers patronized these stores, as the ubiquitous lines there (called tails) indicated. During the course of NEP the "socialist" sector gained an increasingly large share of retail trade, so that by the end of 1926, the number of private traders and the volume of their trade began to decline in absolute as well as percentage terms. This trend is generally explained in the works of Soviet historians primarily as a consequence of the economic superiority of state and cooperative trade over private trade. I. Ia. Trifonov, for example, argues that "the socialist sector in trade defeated the new bourgeoisie thanks to its economic advantages, and not at all as the result of administrative pressure."^[25]

Certainly there were state and cooperative stores that competed effectively with the Nepmen by offering useful products at low prices.^[26] Many private entrepreneurs were undoubtedly driven out of business mainly for this reason. It is sometimes difficult, however, to be certain what constitutes fair economic competition. If the state denies goods and credit to a Nepman (or grants them only on burdensome terms) and taxes him at a much higher rate than "socialist" enterprises, and if as a result the Nepman cannot compete with state and cooperative stores, can this be considered a consequence of the superiority of "socialist" trade? It was certainly not by chance that the Nepmen's rapid decline coincided with increased pressure from the state. This, rather than economic obsolescence or inferiority, is the key to the Nepmen's demise. Anyone familiar with Soviet shops today (or the cartoons in the Soviet satirical journal Krokodil ) is aware that many of the problems that hampered state and cooperative trade in the 1920s have yet to be overcome. State trade has still not proven itself superior in every way to private trade, which is apparent from the immense "second economy" and the crowds of shoppers in the collective farm markets (rynki ) where people can sell their own produce and meat at prices higher than those in state stores.

In the heady days of revolutionary struggle, the Bolsheviks did not anticipated the need to tolerate "capitalist" elements for an extended pe-

riod after the "socialist" revolution. This did not seem a matter for concern, because the party expected its revolution to trigger other socialist revolutions in the more developed countries of the West. Then, according to the scenario, these more advanced countries would supply materiel and expertise to help revive Russia's economy and construct the industrial foundation for socialism. As revolution failed to spread westward, however, this hope became untenable, and the Bolsheviks were forced to rely on Russia's own resources and people to rebuild the shattered economy. By 1921, Lenin was arguing (much more comprehensively than in the spring of 1918) that Russia would require, first of all, a considerable period of time to prepare itself for socialism and, second, the services of the "bourgeoisie."

This general point—that a lengthy transition period, including private economic activity, would be necessary between the "socialist revolution" and the actual attainment of socialism—has been made by communist revolutionaries in other economically backward and ravaged countries, most notably China. Unlike many Bolsheviks during War Communism, Mao and other Chinese Communist leaders did not seriously entertain the hope of plunging immediately into socialism upon assuming power. In an important essay titled "On the People's Democratic Dictatorship," written in June 1949, a few months before the proclamation of the People's Republic (and sounding much like Lenin in 1921-22), Mao stated the need to cooperate with the bourgeoisie in order to rebuild the economy.

To counter imperialist oppression and to raise her backward economy to a higher level, China must utilize all the factors of urban and rural capitalism that are beneficial and not harmful to the national economy and the people's livelihood; and we must unite with the national bourgeoisie in common struggle. Our present policy is to regulate capitalism, not to destroy it.^[27]

The spectacle of a legal and flourishing private sector, however, proved so unpalatable to many in both the Soviet and Chinese Communist parties that harsh campaigns were launched against private entrepreneurs after what turned out to be rather short transition periods (the crackdown in China coming in the mid-1950s).^[28] In neither country, though, did the "socialist" sector of the economy manage to provide all the goods and services formerly offered by private entrepreneurs, and in the decades thereafter party policy toward the remaining legal private economic activity (mainly kitchen-garden commerce) fluctuated between sharp disfavor and comparative leniency. Such policy changes have been

most evident recently in China and reflect continuing disagreement in the party on the question of whether private enterprise should be extirpated or harnessed. At present, with the ascendancy of Teng Hsiao-p'ing and the "experts" at the expense of the "reds" in the party, private trade has experienced a revival strikingly similar to that during the Soviet New Economic Policy of the 1920s. Not surprisingly, though, some Chinese officials are dismayed by Teng's encouragement of a "market system." Certain senior party members have warned of the spread of "money worship" and corruption, and officials in various localities continue to harass private entrepreneurs.^[29]

The leaders of some Eastern European socialist states seem quite willing to accept a considerable private sector for the foreseeable future. Here there is a mutual dependence between the public and private sectors, with neither struggling seriously to eliminate the other. In Hungary, for instance, the state often rents out its smaller, less profitable retail stores and restaurants to private businessmen, who are generally able to run them more effectively. Besides freeing the state of some marginal operations and permitting more private enterprise, this policy helps ensure continued service to consumers in localities where it otherwise might have been reduced.^[30] Referring not just to rented businesses, a Hungarian economist with a seat on the Central Committee remarked: "We will never be able to replace this private sector entirely. It has become an integral part of our economy."^[31]

Although a similar acceptance of permanent participation by the Nepmen in the Soviet economy was anathema to the Bolsheviks in the 1920s, it was clear to all that private entrepreneurs, for better or for worse, played an important role in the economy. Nor was it only consumers who depended on the Nepmen. As we have seen, many state enterprises and agencies relied, at least in part, on private zagotovka agents, middlemen-contractors, and retail distributors. This interdependence was much more widespread in the first half of NEP than in the second, though even at the end of the decade some state concerns used (now more discreetly) the services of private entrepreneurs. Further, as supporters of the "new trade practice" contended, the development of private trade (besides providing more tax revenues) effected a division of labor with the state, permitting the state to concentrate more of its personnel and resources on the primary goal of industrialization. Much the same argument was advanced in some Soviet economic journals in support of small-scale private manufacturing of consumer goods, which, it was noted, freed the state to focus its attention on heavy industry.

But this was a minority view in the party. To many Bolsheviks, impatient with Bukharin's gradualism, the presence of private entrepreneurs seemed incompatible with an all-out industrialization campaign and served as an irritating daily reminder that the Revolution had yet to be completed. In 1929 the ideological and economic menace that many party members saw in the Nepmen far outweighed anything that could be said in their favor. At the Fifth All-Union Congress of Soviets (May 1929), for example, a delegate from the Moscow Commodity Exchange suggested that Nepmen loyal to the state be used in industry. He was interrupted by laughter from the floor and cries of "There are no loyal chastniki [private entrepreneurs]."^[32] Such sentiment in the party, combined with Stalin's political dexterity, vanquished those Bolsheviks—the Right Opposition—who favored a less turbulent construction of socialism and a long-term toleration of the private sector. With the fall of the Right, the Nepmen found themselves the victims of an official campaign every bit as relentless as that directed against private entrepreneurs during War Communism.

The portion of Soviet society (other than the entrepreneurs themselves) most directly hurt by the "liquidation" of the Nepmen was not the government or the party but Soviet consumers. This was not because of any altruism of the Nepmen but because of the shortcomings and lack of resources in the "socialist" consumer goods sector. The Bolsheviks had always been most keenly perceptive of the greed and other abuses that could accompany private trade (and industry) and felt confident that all of this would be eradicated with the coming of socialism. In theory, socialist trade seemed far more desirable—a public service supplying goods at the lowest possible prices—compared to the anarchy of unscrupulous "speculators" extorting the highest prices the market could bear. But in practice, as we have seen, the problems besetting state and cooperative trade prevented it from eliminating its rival in the private sector. Consumers were (and still are) often faced with the choice of either buying a scarce item at a high price from a private entrepreneur or not finding it (or only finding it at the end of a long wait in line) in a state store.

The inability of the state to satisfy consumer demand has left private entrepreneurs ample opportunity for profit, from the black market of War Communism to the "second economy" today. This economic activity has presented the party with a thorny dilemma ever since the Revolution, the same dilemma with which the Chinese Communist party is now grappling. Private business transactions, although ideologi-

cally grating on the one hand, have, on the other, proved an effective means of stimulating the production and distribution of essential commodities. Little wonder, then, that in the years after 1917 the state's policies toward the private sector have fluctuated between concern for ideological purity and emphasis on economic expediency. Today, once again, Mikhail Gorbachev is recruiting private enterprise to breathe life into the Soviet economy. Recalling the dawn of NEP, thousands of new ventures have sprung forth, now bearing the name "cooperative." Terms such as "capitalist"—applied by Lenin to the Nepman—are no longer officially acceptable for legal private undertakings. Nearly three-quarters of a century after the Revolution, the time has passed for "building communism with bourgeois hands." But, sanitized in their cooperative labels, the new entrepreneurs have produced a range of responses powerfully echoing debate in the 1920s. Critics associate cooperatives with high prices, profiteering, exploitation, and the appearance of gaudy new millionaires, while defenders stress the need to encourage private endeavor in order to boost productivity above the dismal level endemic in the state sector. A recent column in the Moscow News exudes the practical spirit of NEP. "Today we invite people to form cooperatives, tomorrow we blast them to hell. As a result, we are unable to feed ourselves."^[33] At the same time, the Party First Secretary in Krasnodar Territory voiced sentiments dominant at Party meetings in 1929. "Cooperatives are a social evil, a malignant tumor. Let us combat this evil in a united front. . . . We can't remain inactive when people are protesting against this vandalism and shamelessness."^[34]

Currently, with little but deepening hardship to show for Gorbachev's economic policies, hostility toward cooperatives appears widespread. The new private entrepreneurs, commonly viewed as fattening themselves on an economy of scarcity, have drawn strong disapproval in public opinion polls and speeches in the Supreme Soviet. Predictably, both foes and promoters of cooperatives enlist the past to support their views. Critics often seek to "rehabilitate" accomplishments of the Stalinist command economy, or attack "speculators" by arguing that shops were full before cooperatives appeared. Advocates have defended the unleashing of private initiative by asking: "Hasn't our mistake of abolishing NEP served as a lesson?"^[35] There seems little doubt that the Soviet Union's economic disarray, ethnic unrest, and political ferment promise a turbulent interval in which people of diverse outlooks will continue to search the past for guidance. Amidst their cries of peril and promises of reform, it will be interesting to observe what "lessons" they choose to derive from NEP.