Varga On Politico-Economic Problems of Monopoly Capitalism

VARGA ON POLITICO-ECONOMIC
PROBLEMS OF MONOPOLY CAPITALISM
André Mommen
May 2010
After his disgrace in 1947 Varga lost his position of leading academician. His Institute of
World Economics and World Politics was merged with the Institute of Economics of his rival
Konstantin V. Ostrovityanov. In order to correct his “reformist” leanings Varga started
working on a book on inter-imperialist rivalries. Varga was also addressing the problems of
“popular capitalism” and the phenomenon of the rising standard of living and the post-war
economic boom in the US. In his articles Varga paid attention to the theory of state-
monopoly capitalism, the development of the business cycle and Keynesian policies in the
developed capitalist countries. His understanding of recent changes in capitalism, such as the
formation of a Common Market in Europe, was however biased by his pre-war belief in
capitalism’s inability to raise the living standard of the working class and, hence, to increase
consumption, which would fatally lead to an economic slump. Finally, he rejected
mathematical approaches in economics having become popular in economic science as being
contrary to Marxist principles.
The rise of “popular capitalism”
In the 1950s Varga participated in a debate on the rise of popular capitalism in the US. He
would nonetheless never change his mind on the fact that even in the richest capitalist
country the workers were living in poverty and that the legend of “people capitalism” almost
had become the official theory of the American imperialism. Under capitalism the wages of
the workers grow in such a manner rapidly that the class differences between workers and
capitalists disappear ever more. Fur their wages chew towards the workers car, houses,
shares, make savings, in many enterprises receive them portions of the profit. The class
warfare is superfluous, since everyone, if he is industrious and economical, will become a
capitalist. How does it stand thereby in reality? For Varga, however, in capitalist countries,
like the facts are showing income differences between workers and capitalists are widening.1
Varga argued against The Voice of America’s assertion that it was ridiculous that the annual
income of an American industrial worker had a purchasing power equivalent to that of
80,000 rubles. First of all, there was no unemployment in the Soviet Union. In America, rent
absorbed from 15 to 25 percent of the worker’s income.2
The myth of people’s capitalism was not original, Varga argued, because Bernstein and other
revisionists proclaimed it, because capitalism would peacefully grow into socialism. He
quotes Harvard Professor T. N. Carver who wrote after the First World War3 about the
“permanent prosperity” of the American economy. After the Second World War, when the
ideas of socialism were blossoming, the American public was again being submerged by
panegyrics promoting “people’s capitalism”. Varga: “A man cannot be called a capitalist
simply because he has a deposit in a savings bank. A capitalist is one who owns the means of
1
Varga, ‘Old song to a New Time’, in New Times, 1957, No. 20, pp. 3-6.
2
Varga, ‘The Voice of America and “People’s Capitalism”, in New Times, 1956, No. 26, p. 7.
3
Varga is referring to Carver who wrote in his The Present Economic Revolution in the United States (Boston:
Little, Brown, and Company, 1925, p. 4) that ‘instead of the concentration of wealth, we are now witnessing its
diffusion; but the old tirades against plutocracy are still repeated. Instead of low wages for the manual trades, we
are now having high wages; and yet the old phraseology, including such terms as wage slavery, still has a certain
vogue. Instead of the laborer being in a position of dependence, he is now rapidly attaining a position of
independence. The apostles of discontent are being robbed of their thunder. Some of them are even showing
signs of resentment toward the present tendency to improve the condition of labor because it has robbed them of
a pet grievance.’
production, hires labor, exploits workers and appropriates a part (…) of the product of their
labor.”4
Varga argued that that only 3 percent of the skilled and semi-skilled workers own any shares
at all,5 and of these 1 percent hold shares to a value of less than 500 dollars, and another 1
percent to a value ranging between 500 and 1,000 dollars. Quoting Communist Victor Perlo,
he states that 65 percent of all the dividends flow into the pockets of 1 percent of the
population.6 Furthermore, indebtedness of the population was steadily increasing. Summing
up, Varga thinks that American people’s capitalism is “ ordinary common or garden
capitalism. It has no features that fundamentally distinguish it from capitalism everywhere.” 7
The workers, as a class, are still exploited and “people’s capitalism” is a false trump of
American monopoly capitalism in “its vain contest to win the world battle for men’s minds.”8
Varga: ‘Under the “people’s capitalism” of the United States, the worker remains what he
was – a slave of capitalism. The worker in the Soviet Union is a free individual.’9
“People’s capitalism” would become a hot item in 1957 when the newly founded journal
International Affairs organized a discussion on that theme. In the aftermath of the 20th
Congress of the CPSU four leading scholars, E. Korovin, A. Gruber, N. Lyubimov and A.
Manfred had signed a letter to the editor in which they opinioned that ‘new and original
scholarly works of research into the most important current international problems are not
being published.’10 Taking the 1956 book list of Gospolitizdat, they found ‘popular booklets
on general themes’ occupying a dominant position, that no monographs ‘on the basic
problems in world affairs’ were available and that these popular editions contained
‘indigesting material’ and repeated each other.11 Booklets published by Znanye Publishing
House were ‘dull and stereotyped’.12 Periodicals reviewed very irregularly books treating
political subjects. Teaching of the history of international relations and international law had
to be ‘radically improved’.13
The first subject that was chosen for debate by the Editorial Board of International Affairs on
18-19 April 1957 was a discussion concerning ‘the whys and wherefores’ of “people’s
capitalism”.14 I. I. Kuzminov15 introduced the subject. According to Kuzminov apologists of
“people’s capitalism” went so far as to assert that American capitalism had assured
‘realization of the principle of the second phase of communism – from each according to his
ability, to each according to his need.’16 The purpose of this propaganda was, of course, to
‘confuse the masses’.17 Kuzminov nonetheless admitted that wages were higher in the United
States than in other capitalist countries, but the ‘movement of the standard of living’ of the
American workers was subordinated to ‘the general laws of capitalist development’
4
Varga, ‘Old song to a new tune’, in New Times, 1957, No. 20, p. 4.
5
He confirmed this thesis in his article ‘La production capitaliste au XXe siècle’, in Cahiers d’histoire mondiale.
Journal of World History. Cuardenos de historia mundial, 1962, Vol. 7, No. 1, p. 209.
6
Ibidem, p. 5.
7
Ibidem, p. 6.
8
Ibidem, p. 6.
9
Varga, ‘The Voice of America and “People’s Capitalism”’, in New Times, 1956, No. 26, p. 9.
10
‘A letter to the editor’, in International Affairs, 1956, Vol. 1, No. 12, p. 98.
11
Ibidem, p. 98.
12
Ibidem, p. 98.
13
Ibidem, p. 99.
14
International Affairs, 1957, Vol. 2, No. 5, pp. 61-107.
15
Speakers were I. G. Blyumin, M. N. Smit, I. N. Dvorkin, I. P. Mikuson (journalist), Y. Y. Kotkovsky, A. M.
Alexeyev, Y. A. Shvedkov, V. V. Rymalov, V. P. Glushkov and V. M. Kulakov. Varga’s name was not
mentioned. Ibidem, p. 61.
16
Ibidem, p. 61.
17
Ibidem, p. 63.
engendering a downward tendency of industrial wages.18 Kuzminov opinioned that the US
rate of growth was lower than in Japan and Western Europe and that its share in world output
had been falling during the post-war years.19
I. G. Blyumin argued that the theory of “people’s capitalism” was based on several illusions.
First, the claim that the distribution of ownership had been altered and property of the
enterprises had slipped into the hands of the masses. Second, that enterprises were led by
managers and that the capitalist had been ‘relegated to the background’. Third, that the ‘share
of the workers in the national income’ had increased.20 In his lecture Blyumin argued that in
bourgeois economic theory the dominion of monopoly capital was minimized because of the
existence of “countervailing powers”.21
Y. A. Shvedkov argued that the American state machine was directly dominated by
monopoly capital.22 However, Shvedkov showed that all key posts in the Eisenhower
Administration were held by representatives of the military-industrial concern and the
wealthiest families. M. N. Smit tried to deconstruct the “myth” of the welfare state by
referring to the huge numbers of workers living in poverty and official statistics – ‘though the
latter are deliberately falsified’ -attesting that the workings of the ‘law of mass
unemployment’.23 V. P. Glushkov saw in the theory of “people’s capitalism” and the
“welfare state” an instrument of imperialist reaction, but after having debunked “people’s
capitalism” he turned to the role played by technical progress under capitalism. Glushkov: ‘It
would be foolish for us to deny technical progress in the U.S.A. On the contrary, Soviet
people show great interest in U.S. economy and study everything of value that U.S. scientific
and technical thought has to give. It will be recalled that the 20th Congress of the Communist
Party of the Soviet Union pointed to the reasons for industrial output in the U.S.A. having
increased somewhat more greatly in the post-war years than that of the other capitalist
countries.’ However, Glushkov rejected apologies of capitalism which were making ‘a fetish
of technology and its role in the development of society’.24 Glushkov referred to the
introduction of automation leading to growing profits of the monopolists combined with an
intensification of labor, increased unemployment, mental illness, accidents, etc for the
workers.25
According to Y. Y. Kotkovsky the bourgeois state was unable to regulate and plan the
economy. Reforms ‘do not touch the foundations of capitalism’, he argued and under
capitalism ‘“adjustment” is designed to ensure increased profits for the big monopolies.’26 I.
N. Dvorkin focused on Germany where the steel and coal monopolists had to accept, ‘under
pressure of the masses’27, trade union representatives in the boards. He concluded that the
aim of “people’s capitalism” was to ‘disarm the workers’28, because the ‘real owners of a
18
Ibidem, p. 63.
19
Ibidem, p. 64.
20
Ibidem, p. 65.
21
Blyumin quoted several “bourgeois economists”: E. H. Chamberlin, A. D. H. Kaplan, J. K. Galbraith, Walter
Aikan, Wilhelm Röpke, Franz Böhm, Günther Stein
22
He quoted C. Wright Mills, The Power Elite, New York: Oxford University Press, 1956.
23
‘At the very bottom levels of poverty are the Negro people with their subnormal standards regarding wages,
jobs, civil rights, housing, etc.’ International Affairs, 1957, Vol. 2, No. 5, p. 75.
24
Ibidem, p. 80.
25
Glushkov showed a pamphlet entitled People’s Capitalism to the audience in which the American way of life
was illustrated. A voice from the audience shouted: ‘That’s Doris Day.’ Apparently, in those days Hollywood
movies starred by Doris Day had been projected in Moscow. Ibidem, p. 78.
26
Ibidem, p. 84.
27
Ibidem, p. 86.
28
Ibidem, p. 87.
company are those who have a block of shares.’29 While assistant Professor A. M. Alexeyev
argued that militarization of the economy could only ‘temporarily stave off an economy in
crisis and at the same time (…) pave the way for a more acute, more devastating crisis’,30
journalist Y. P. Mikuson unorthodoxly conceded that US nominal wages had increased at an
average of 150 per cent and real wages at 25 per cent between 1941 and 1955. ‘Even if this
conclusion were correct, it would be a long way to the assertion that in the United States
“everybody is rich.” An annual increase in income of some 1.5 per cent gives no grounds for
such claims.’31 Mikuson believed, however, that real wage increases were less than half per
cent annually, which also proved that the monopolies, as a rule, had ‘failed to realize their
plans … to impose wage cuts on the workers.’32 The class struggle was helping to workers to
improve their position notwithstanding the offensives launched by the monopolies against
their standard of living. This had happened notwithstanding repressive interventions by the
government, i.e. the Taft-Hartley Act passed in 1947. According to Alexeyev pointed out that
the bourgeois state siphoned an ever-greater share of the national income for military
purposes, which led to a reduction in workers’ consumption and a ‘distorted development of
the economy, inordinate expansion of the war industry and curtailment of civilian
production’.33 Economist V. V. Rymalov linked “people’s capitalism” to imperialism and
arms exports to the underdeveloped countries, where the problem of mass poverty remained
as acute as before,34 while assistant Professor V. M. Kulakov tackled the problem of the
military and ideological preparations for aggression.35 G. Ardayev and V. Gromov
contributed to the discussion as well. The former dealt with the Austrian version of “people’s
capitalism”, while the latter supplemented the remarks of Shvedkov, pointing out how the
representatives of US business circles had been able to subordinate to their interests not only
the government, but also the US Congress.36
Concluding remarks came from V. V. Kuzminov stressing not only the very interesting
character of the discussion, but also its content. Nobody had taken “people’s capitalism”
seriously. Kuzminov happily concluded that all were ‘unanimous in viewing it as an attempt
to dress up present-day imperialism, above all American imperialism, which is preparing a
third world war in which hydrogen bombs will be employed, in the sheep’s clothing of
“people’s capitalism. ”Capitalism has long since outlived its day, it is holding up mankind’s
onward march and is causing unheard-of suffering – it is indeed an anti-popular regime. Our
task is to expose the myth of “people’s capitalism” more vigorously. (…) Our task is, making
use of the experience gained at this conference, to continue and extend the exposure in the
press of all the twists and turns of bourgeois propaganda and to show its class essence and
the untenability of its arguments when confronted by reality’.37
Varga, who had not been listed as a speaker at the conference of International Affairs in
April 1957, was not an adversary of the defended theses. In an article published in
Kommunist in 1959, Varga stressed that the theory of “popular capitalism” had gained a
considerable extension in the United States, but at the end he remarked that some categories
of workers having saved a “capital” of not more than 10,000 à 15,000 dollars were
29
Ibidem, p. 89.
30
Ibidem, p. 95.
31
Ibidem, p. 91.
32
Ibidem, p. 93.
33
Ibidem, p. 97.
34
He quoted Gunnar Myrdal in his lectures published in Egypt about the increased inequality between the
developed and underdeveloped countries. Ibidem, p. 101.
35
Ibidem, pp. 102-105.
36
Ibidem, p. 105.
37
Ibidem, p. 106.
nonetheless obliged to sell their work force to the capitalists.38 Completely in line with
Kuzminov and his colleagues of the Academy, Varga rejected the slogan of “people’s
capitalism” as a pure swindle.
Imperialist contradictions revisited
Since 1948 Varga was working on a new book on imperialism in order to correct all the
faults he had committed in his post-war book on new trends of capitalism which had attracted
the anger of his Stalinist colleagues. Printing permission of his Basic Economic and Political
Problems of Imperialism39 was obtained on 8 August 1953. This Varga had been obliged to
rewrite it in the light of Stalin’s Economic Problems of Socialism in the U.S.S.R.40
In this book of more than 700 pages describing in extenso all developments of post-war
imperialism, Varga had also woven all Stalinist dogmas. It had become the ‘thickest and
most stupid book’41 he had ever published, but meanwhile it ‘would earn him a Stalin Prize
and allow him and his collaborators to work and write further’.42
The general theme of this book was that the general crisis of capitalism developed along new
paths as a result of the decolonization process and the weakening of the capitalist system as a
whole.43 This analysis contained nothing new on the theoretical and analytical level, but only
stressed the persistent realization problem of capitalism and the increased uneven
development of capitalism resulting in growing unemployment and sharpening class conflicts
having a ‘catastrophic character’.44 West-German economic recovery was seen as the result
of the American monopolies and their war diplomacy aiming at a full remilitarization of this
country. Varga’s concentrated his analysis on the reason why the 1949 overproduction crisis
in the US had not been followed by a general slump. Finally, after having examined
industrial production indexes, he concluded that the crisis had been postponed as a result of
the Korea War which necessitated a remilitarization of the American economy.45 A
controversial thesis was the presumed the absolute impoverishment of the proletariat Varga
tried to elude by stressing the fact that in the US ‘real wages’ had not only decreased as a
result of higher income taxes but also because of increased labor intensification, social
insecurity and bad housing conditions.46 Varga even pretended that the English working
class’s consumption of meat had fallen to one-fifth of the average pre-war consumption. Of
course, in the defeated countries misery was general, a fact that was confirmed by statements
provided by Jacques Duclos (PCF) and Luigi Longo (PCI).47
38
Varga, 1959, Kommunist, No. 17, pp. 36-52; translated as ‘La production capitaliste’, in Cahiers d’histoire
mondiale, 1962, p. 209.
39
E. Varga, Osnovnyew vorposy erkonomiki i politiiki imperializma posle vtoroy mirivoy voyny, Moscow, 1953;
translated as Grundfragen der Ökonomik und Politik des Imperialismus (nach dem zweiten Weltkrieg), Berlin:
Dietz Verlag, 1955. A Hungarian translation was published in 1954: Az imperializmus gazdaságának és
politikájának fő kérdései (a második világháború után), Budapest: Szikra. No other translations could be traced
in library catalogues.
40
Varga, Grundfragen, 1955, p. 7.
41
Kuczynski, 1992, p. 51.
42
After having met Varga in 1952 at the International Economic Conference in Moscow Jürgen Kuczynski
reported this conversation. Jürgen Kuczynski,“Ein Linientreuer Dissident”. Memoiren 1945-1989, Berlin and
Weimar: Aufbau-Verlag.1992, p. 51.
43
Varga, Grundfragen, 1955, pp. 42- 45.
44
45
46
47
Varga, Grundfragen, 1955, pp. 61-62.
Some topics like the agrarian crisis since the Second World War, inflation, the role of the
state, and the Marshall Plan Varga discussed in this book would re-examined more than ten
years later in his Politico-Economic Problems of Capitalism48 in which he also paid attention
to the role of the state under the regime of the monopolies. Varga now agreed that the state in
the actual capitalist countries was not an organization of the ‘whole bourgeoisie’, but a
‘mighty instrument for the enrichment of the financial oligarchy on the costs of other
classes’.49 He even stressed the fact that in the US many presidents and ministers had been
servants of monopolists. Varga identified the state as some kind of pump station siphoning
taxes out of the pockets of the workers and transmitting these moneys to the accounts of the
monopolies. In the Eisenhower administration, managers and owners of big firms were
occupying governmental functions. Referring to Stalin’s Economic Problems of Socialism in
the U.S.S.R., Varga concluded that the monopolies were more than ever before dominating
the capitalist state.50 He however stressed the fact that this did not mean the end of capitalist
anarchy because ‘competition and the economic laws of capitalism would remain.’51
According to Varga the Marshall Plan aimed at preparing a new world war in order to solve
the US overproduction problem. Popular Democracies in Eastern Europe had to remain
agrarian countries and producers of foodstuffs and raw materials for the industrial states of
Western Europe.52 Fortunately, the Popular Democracies opted for the socialist road. ‘The
Marshall Plan aimed at the reconstruction of the West-European capitalist economy. But in
reality American finance capital (…) was trying to prevent this.’53 He even noticed that ‘the
opposition of the capitalist countries against the economic policy of the USA was growing’. 54
48
Varga, Politico-Economic Problems of Capitalism, Moscow: Progress Publishers, 1968.
49
50
51
52
53
54
Referring to the International Economic Conference held in Moscow55 on April 3-12, 1952,56
Varga stressed that increased trade between the two world economic systems was in the
interests of everybody.57
Analyzing the general crisis of capitalism Varga concentrated first on the American situation
where the organic composition and concentration of capital had increased during and after
the Second World War. ‘Big capitalists control the state. At the same moment state bonds
contribute to an ever increasing part to their enrichment’,58 Varga argued that because of high
taxation on wages the blue and white-collar workers purchasing power was hollowed out.
Hence they were unable to consume the additional produce 59 that aggravated the realization
problem of the monopolies.60 As a consequence of the sharpening of the general crisis of
capitalism, the American monopolies were obliged to solve their problems on the costs of
other capitalist countries.61
55
The International Economic Conference took place in Moscow in April 1952. The Conference was originally
conceived in 1951 by the World Peace Council as the next installment in the communist peace movement. The
responsibility for organizing the Conference was taken out of the hands of the World Peace Council and
entrusted to a preparatory commission. More and more emphasis was laid on business contacts and trade deals
and less and less on speeches and resolutions. Western Businessmen felt little interest in speeches. 471 persons
from 49 different countries attended the conference (Alec Cairncross, ‘The Moscow Economic Conference’, in
Soviet Studies, 1952, Vol. 4, No. 2, p. 114; Louis Fleischer, ‘The International Economic Conference’, in
Political Affairs, 1952, Vol. 31, No. 5, p. 2). Businessmen, trade unionists, politicians and economists from the
west participated in their private capacity. Among the economists who attended the conference were Pierre
Trudeau (Le Devoir, Montréal), Peter Wiles (Oxford), John Cairncross (Glasgow), Joan Robinson (Cambridge),
Maurice Dobb (Cambridge), Charles Madge (Birmingham), Sir John Boyd-Orr, Sidney Silverman, Usborne,
Harold Davies, Emrys Hughes, Jack Stanley, Tate, Shorthouse (Birmingham), Charles Bettelheim (France),
Antonio Pesenti, Piero Sraffa (Cambridge) and Sergio Steve (Italy), Herman Wold (Sweden), Josef
Dobretsberger (Austria), Baron Allard and Laurent (Brussels), Jürgen Kuczynski (GDR), Gheorghe Savinnak
(Rumania), Prasanta Chandra Mahalanobis, Hiren Mukerjee and Gyan Chand (India), Ju Do Szun (Korea), Jozef
Chalasinski, Oskar Lange (Poland), Ostrovityanov, M. V. Nesterov, Strumilin and Varga (USSR) (Lists of
delegates in Szabad Nép, 2 April 1952, and in Neue Zürcher Zeitung, 4 April 1952). The delegations
from the west were drawn mainly from the left-wing or radical groups. Two regular discussions, each lasting
about two hours, between not more than four Soviet and not more than four Anglo-Saxon economists were
arranged. Peter Wiles who attended the conference recalled in Soviet Studies what Varga had told: ‘Professor
Varga told us there was no law of supply and demand in the Soviet Union. ‘What, none at all?’Well, he
admitted, there as the purely tautological law that supply equals demand. Further pressed, he admitted that the
fact still holds in the Soviet economy that less is sold of the price is raised’. (Peter Wiles, ‘Soviet economics’, in
Soviet Studies, 1952, Vol. 4, No. 2, p. 134) ‘Varga assured us that if one consumer fails to sell and another sells
well it was not the practice to lower the turnover tax on the first and raise it on the second, but to produce more
of the first and less of the second (though this was partly because the same rate of tax is levied on very broad
categories of goods and the rates are not varied on individual goods for reasons of administrative simplicity.’
(Wiles, o. c., 1952 p. 135) ‘The conviction is firm and unanimous that the West is heading for a slump – in to
years’ time unless there is a war’ (Varga). Or anyway some time (Vasutin). Rearmament alone has postponed
this slump, and Keynesian inflation cannot help’ (Wiles, o. c., 1952, p. 138). Apparently, Varga had many
private conversations with several foreign participants. In a letter of 24 September 1964 to Varga, Charles
Bettelheim referred to their conversations: ‘Je me rappelled toujours avec grande plaisir notre rencontre en avril
1952’. Professor Bettelheim asked for sending a copy of Varga’s recent book. Party Archives, Budapest, Varga
files, 783.f.ő.e, 38.
56
The international press paid some attention to lectures and speeches given by the participants at the conference
in Moscow. Varga’s presence was only mentioned by the Hungarian party papers. Neue Zürcher Zeitung, 4, 11
and 15 April 1952; Szabad Nép, 3, 10, 12 and 13 April 1952; Trud (Moscow edition), 4, 5, 6, 9, 10 April 1952.
57
58
59
60
61
Varga saw in the US a fundamentally corrupt and criminal country where a ‘capitalist
dictatorship’62 and a lynch justice had been installed. America was the foremost example of a
country characterized by the rule of a ‘new tsarism, the tsarism of the financial oligarchy’.63
However, Varga ended his long digression on American imperialism with a long paragraph
in which he analyzed the inherent ‘weakness” of the position of the most powerful country.
This weakness was, however, not of an economic nature, but of a political and moral one: all
peace-loving people would increasingly hate the US. Domestic resistance would grow. ‘As in
all other countries, also the workers in the US are won over for peace’.64 Of course, the
Korean War and its outcome provided Varga with many evidences proving that American
imperialism could not hide its weakness for the outside world. The American imperialists
tried to hide their internal weaknesses by exhibiting their atomic weapons, but, unfortunately
for them, the Soviet Union acquired them as well.65
About British imperialism Varga could be clear, because liberation movements in the
colonies had swept away colonial rule in India and their control over Middle East oil. Hence,
the British ruling class was preparing for lowering wages and looking for an alliance with the
European countries against the US and the Soviet Union!66 Of course, referring to Zhdanov,
Varga claimed that the US had built up a military bloc in which Britain and the other
European countries were included under American leadership.67
When discussing the fate of Germany and Japan, Varga started with a Stalin quote referring
to the resurrection of both defeated imperialist states. Meanwhile American imperialism was
integrating Western Germany and Japan into their military alliance against the socialist
world. However, as a consequence of contradictions and inter-imperialist rivalries American
hegemony was threatened by several dangers. Of course, American imperialism was striving
for world hegemony.68 In full accord with Stalin,69 Varga detected also growing
contradictions between the main imperialist powers and their monopolies in their struggle for
raw materials. Imperialist wars would be the outcome of these rivalries. Stalin had proved
that the inter-imperialist contradictions and the struggle for markets and raw materials in
practice would be stronger than the contradictions between the capitalist and socialist world
system.70
On the role of the national bourgeoisie in the colonies Varga defended Stalin’s view that in
the era of the general crisis of capitalism the colonial big bourgeoisie had become in general
an enemy of the revolution. ‘Instead of conducting the national liberation struggle
consequently until the final victory, is she looking for an alliance with feudal lords and a
compromise with the imperialist bourgeoisie of the metropoles in order to exploit jointly the
workers of their “own” countries (India, Pakistan, Indonesia, the Philippines, etc.).’71 Hence,
he argued that India was still exploited by the British monopolies.72
In the book’s last chapter Varga repeated the main premises of the general crisis of
capitalism. He noticed that the formation of the socialist market World had now reinforced
62
63
64
65
Varga, Grundfragen, 1955, pp. 209-210
66
67
68
69
‘The economic basis of the sharpening imperialist contradictions is the outcome of the economic basic law of
modern capitalism discovered by J. V. Stalin.’ Varga, Grundfragen, 1955, p. 324.
70
71
72
the trend towards a narrowing of the capitalist world market. The foreign politics of the
United States prohibited increased trade of capitalist countries with the countries of the
socialist camp73 while socialist production increased. ‘Through their pursuit of profit the
monopolists were inevitably confronted with realization difficulties because of the constantly
shrinking share of the wages in the national income.’ 74 No real prosperity phase would occur
in the cyclical process of capitalist accumulation. Increased arms production had to solve the
realization problems of the monopolists but also caused inflationary pressures, while
unemployment would grow to a mass level.75
’The internal contradictions of capitalism, their deepening and tightening in the new phase of
the general crisis of capitalism will inevitably lead to the outbreak of a severe over-
production crisis in the whole capitalist world.’ In addition, Varga predicted that ‘this crisis
would throw back the production of the capitalist world under its pre-war level’.76
However, many of his ideas contained in this book he already published in the Soviet press,
such as Great Britain being in grips of American friendship,77 growing unemployment in the
capitalist countries78 or prospects of US economic decline.79 In these articles, Varga’s
Stalinist dogmatism is clearly confirmed by his stress on the parasitical character of
capitalism during the period of general crisis and its fatal decay. ‘Mass unemployment
becomes chronically acute in character’, Varga writes. ‘Capital is incapable of guaranteeing
an existence to its hired slaves even within the confines of their slave status. This is the best
proof that the capitalist system of production is doomed to perish.’80 Varga’s analysis of
unemployment is determined by Marx’s ’inner motivated laws of the capitalist means of
production’ showing the creation and expansion of a reserve army. ‘As was brilliantly proved
by Marx, the creation and growth of a reserve army is directly conditioned by an increase in
the organic component of capital, i. e., an increase in that part of capital spent for the
purchase of material elements of production (constant capital) and a corresponding decrease
in that part of capital spent for wages (variable capital). Competition forces capitalists to
decrease the cost of producing goods by all possible means. Hence, the capitalists spend one
part of their profits on personal consumption, while the other part is used to increase
production, especially to increase and replace basic capital. The replacement and growth of
basic capital is related to an increase in the organic component of capital, i. e., to the
introduction of new machines which are more expensive than the old ones and with the aid of
which it is possible to produce goods of the same quality with less expenditure of workers’
time than formerly. Fewer workers than before are required to produce the same amount of
goods. A displacement of workers and a relative cut in the labor force employed take place.
Some of the workers are mercilessly thrown into the street and doomed to hunger and
73
74
75
76
77
Varga in Pravda, 25 November, 1952, pp. 3. In this article Varga praised Stalin’s ‘inspired work’ Economic
Problems of Socialism in the USSR that the Americans, ‘under the guise of Marshall Plan “aid”,’ were
introducing in the economies of Britain and France and ‘attempting to transform them into appendages of the
U.S. economy. American capital is seizing raw materials and markets in the Anglo-French colonies and is thus
preparing a catastrophe for the high-profits of the Anglo-French capitalists’. Translated in The Current Digest of
the Soviet Press, 1952, Vol. 4, No. 47, pp. 23-24.
78
Varga in Pravda, 19 March, 1950. Translated in The Current Digest of the Soviet Press, 1950, Vol. 2, pp. 32-
34.
79
He predicted the end of the economic boom because of an overproduction crisis in the US in an article
published in Pravda, 18 October 1953, pp. 3-4. He stressed the validity of Marx’ main theses on reproduction
and crisis. Translated in The Current Digest of the Soviet Press, 1953, Vol. 5, No. 43, pp. 13-15.
80
Varga, in Pravda, 19 March, 1950, pp. 2-3. Translated in The Current Digest of the Soviet Press, 1950, Vol. 2,
No. 12, p. 23.
poverty. This is the inexorable law of capitalism.’ 81 Trusting on statistics ‘provided by
bourgeois statisticians’82 who underestimate the actual number of unemployed, there were
4,500,000 unemployed in the US. Of course, Varga concluded that this growing army of
unemployed was ‘the convincing proof that capitalism has completely outlived its time and
that the capitalist system is a major brake on progress.’83
Capitalism in the age of imperialism pursued ‘aggressive policies’ and repeatedly sought ‘to
destroy socialism by force.’84 Obviously, Varga was waiting for the long awaited decline in
economic activities in the US. In 1953 he analyzed the sudden recession as a crisis of
overproduction, because a considerable portion of goods produced had not been going to the
consumer. Meanwhile, prices were kept high in agriculture and in monopolistic sectors,
while consumer goods were sold on credit. But the steadily deteriorating situation on the
American market compelled American monopolies to lower prices. Then a decline in
industrial production began.85
An overproduction crisis comes always unexpectedly, Varga argued. Although capitalist
overproduction crises have always the same cause and each crisis is characterized by
particular contradictions determined by the changes in capitalism itself, transition to the stage
of imperialism and the general crisis of capitalism and by the peculiarities of the preceding
phases of the cycle.86 At home, the US crisis was leading to attempts of the monopolies to
intensify the reactionary drive. But Varga expects that “the popular mass resistance is bound
to increase, all the more so since Washington’s policies are being increasingly discredited in
the eyes of the workers, who can see that the Administration looks out only for the interests
of Big Business.”87
Varga thought that the imperialist contradictions between the big capitalist countries still
existed. In the first place contradictions between British and American imperialism were
reviving, despite the fact they were forming a united front against the Soviet Union. Varga
pointed to the fact that the US wanted to destroy the British Empire in order to win equal
rights for American capitalist groups in their struggle for world hegemony. He also thought
that the economic and political positions of Britain were steadily weakening and its economy,
finances and armed forces were falling into an ever-increasing dependency upon American
capital.
Already in 1950 he mentioned that the Second World War had hastened the decline of British
imperialism.88 He noted that the British and colonies had begun to ‘turn into markets for the
cheaper American industrial output, insofar as the limited reserves of the Empire countries
permitted. (…) American capital began strenuously to penetrate Canada, South Africa, India
and Pakistan.’89 On the other hand, the weakening of the British Empire had precipitated an
upsurge of liberalization movements in the colonies. As a result of which ‘Britain lost her
former positions and a large part of her capital investments in China, with the exception of
Hong Kong, and is under direct threat of losing hegemony over Malaya and Burma.’90 In
81
Ibidem.
82
Ibidem.
83
Ibidem.
84
Varga, ‘Forty years of socialist progress and capitalist decline’, in New Times, 1957, p. 3.
85
Varga, in the Current Digest of the Soviet Press, Vol. 5, No. 43, pp. 13-14, translated article in Pravda,
October 18, 1953, pp. 3-4.
86
Varga, ‘Die Wirtschaftskrise in den Vereinigten Staaten’ in Der Aussenhandel, 1954, No. 25, pp. 564-565.
Also in ‘Economic crisis in the United States’, in New Times, 1954, No. 23, pp. 8-12.
87
New Times, 1954, No. 53, p. 11.
88
Varga, The Current Digest of the Soviet Press, 1950, Vol. 2, No. 32, pp. 3-10.
89
Ibidem, p. 6.
90
Ibidem, p. 7.
addition, Great Britain was waging a prolonged colonial war in Burma, Malaya and other
countries. He concluded that the British bourgeoisie had gone ‘completely bankrupt in its
effort to preserve Britain as a world power.’91 He, nonetheless, stressed that Britain was
‘undoubtedly strong enough to pursue an independent foreign policy corresponding to her
interests. But the community of the aggressive imperialist aims of the rulers of Britain and
the U.S.A., their panicking fear of communism, the camp of democracy and socialism, render
Britain incapable of pursuing a policy independent of the U.S.A. (…)’.92
In a 1952 Pravda article, Varga reiterated this view. Again, he saw American capital seizing
the markets if the British colonies and even intruding in British industry. Meanwhile, the
dollar shortage wrested from Britain many of her export markets and dislodged the pound
sterling as a world currency. Varga: ‘As Comrade Stalin states in his inspired (sic) work
Economic Problems of Socialism in the U.S.S.R., the Americans, under the guise of Marshall
Plan “aid,” are intruding in the economies of Britain and France and attempting to transform
them into appendages of the U.S. economy.’93 As long as Stalin was alive, Varga concealed
his real opinions on Stalin’s ‘inspired’ work on the economic problems of socialism. At the
end of his life he would not only launch a fierce attack on Stalin ‘basic economic law’94, but
also on other Stalinist dogmas, such as the absolute95 and relative96 impoverishment of the
proletariat under capitalism or the thesis of the narrowing of the capitalist market and the
subsequently decreasing industrial output of the main imperialist countries.97
The problem of the proletariats impoverishment was an old question opposing Varga to a
number of Stalinist economists who also belonged to the group of Zhdanovists having
attacked him in 1947 during the debate on his incriminated thesis on the politico-economic
role of the bourgeois state in the era of monopoly capitalism. Among them were such
prominent men like I. I. Kuzminov and A. I. Katz who had authored studies on the ‘relative’
impoverishment of the workers in capitalism.98 Relative impoverishment posed any problem,
because real wages of workers could increase. However, Marx proceeded from the
theoretical assumption that labor power was sold at value. A decrease in labor time per
consumer gods as a result of growing labor productivity also would lead to a decrease in
labor time per consumer goods unit. Hence, a decrease in labor time per consumer goods unit
would decrease the share of the national income going to the working class and would
increase the part being appropriated by the bourgeoisie. In practice, however, Marx’s
analysis cannot be corroborated by statistical evidences: Prices of consumer goods were
constantly rising instead of dropping due to inflation and currency devaluations, high prices
fixed by the monopolies, taxes and duties.
Katz and Kuzminov tried to calculate the decrease of the factory and office workers’ share in
the US national income. Katz could ‘prove’ that the share of the proletariat in the national
income had constantly decreased between 1900 and 1956. According to Varga, Katz had
failed to demonstrate a considerable impoverishment of the working class in the post-war
years. Since 1940 he share of workers’ income had stabilized. 99 Varga found the solution in
91
Ibidem, p. 9.
92
Ibidem, p. 9.
93
Varga, The Current Digest of the Soviet Press, 1952 Vol. 4, No. 47, p. 24, transl. Varga in Pravda, November
25, 1952, p. 3.
94
Varga, Politico-Economic Problems, 1968, pp. 36.
95
Varga, Politico-Economic Problems, 1968, pp. 111-125.
96
97
98
A. I. Katz, Polozheniye proletariata SShA pri imperializme, Moscow: Academy, 1962; I. I. Kuzminov,
Obnishchaniye trudyashchikhsya pri kapitalizme, Moscow: Izd. VPSh AON pri TsK KPSS, 1960.
99
the simple statistical method for pricing the relative impoverishment of the proletariat by
calculating the growth in the rate of its exploitation. ‘Basically the two processes are
identical: the appropriation of the surplus value forms the basis for the distribution of the
national income among the classes.’100 Varga’s own calculations for the period 1899- to 1931
proved that the rate of exploitation drops I crisis years and rises in the boom years. When the
business climate improves, the profits and the rate of exploitation rise to a peak, which ‘is in
keeping with the true nature of capitalism’, 101 Varga asserted. Hence, Varga could conclude
that the degree of exploitation was increasing substantially after the Second World War and
that the ‘relative impoverishment of the working class continues’.102
This exercise allowed Varga to compare his own approximations with Katz’s ‘extremely
complicated calculations’103 and to refute criticism he had received on the part of a number of
Soviet economists104 declaring that his calculations minimized the rate of exploitation. Katz’s
mistake was that he regarded not only the profits of trading capital but also the wages of
commercial workers as deductions from the wages of the workers in the manufacturing
industry and added the resulting sum to the surplus value. Varga found that entirely
unjustified: ‘They are not deductions from wages, but a payment made by the buyer out of
his income fro trade services rendered.’105
The problem of absolute impoverishment was much more complicated than that of relative
impoverishment. Among Marxists there existed a wide divergence of views on this problem.
Varga believed that the per capita income per head of the population was falling in the
developed countries. But he was also interested in the question of whether absolute
impoverishment was a constant, irreversible process similar to that of relative
impoverishment, or whether it was neither constant nor irreversible.106 Varga noticed that in
the program of the CPSU was said that crises and stagnation led to a ‘relative, and sometimes
an absolute, deterioration of the condition of the working class’.107 Basing himself on the new
program of the CPSU, Lenin and Marx, Varga castigated the “dogmatists” for having
defended the point of view that the position of the working class worsened all times and not
at times.108 Varga attacked the “dogmatists” who ignored the warnings of Marx against the
dogmatic, mechanical reiteration of the law on the polarization of capitalist society and the
growth of poverty as a result of the accumulation of capital. The Soviet dogmatists of the
Economics Institute had adopted the view ‘that the absolute impoverishment of the working
class was constant throughout the capitalist world.’109 According to Varga, Marx and Engels
had pointed out the root factors modifying the operation of the law of the impoverishment of
the proletariat and adopted a ‘very flexible approach to the problem’.110
100
Varga, Politico-Economic Problems, 1968, p. 107.
101
102
103
104
Varga names V. Motylev, M. Smit-Falkner, A. Katz, people who had attacked him during the 1947 debate.
105
106
107
The Road to Communism. Documents of the 22nd Congress of the Communist Party of the Soviet Union.
October 17-31, 1961, Moscow: Foreign Languages Publishing House, pp. 452-453.
108
Especially his attack on Kuzminov’s book on real wages in Britain and America was a real hit. Kuzminov had
declared that the impoverishment of the working class during crises was a fact, but also during booms.
Kuzminov, o. c., 1960.
109
Varga: ‘At that time I wrote that even a very small progressive impoverishment, i. e., of a progressive
decrease in real wages. At that time I wrote that even a very small progressive decrease in real wages would in a
comparatively short historical period reduce wages to zero (as can be seen from a very simple mathematical
calculation), but my objection went unnoticed’. Varga, Politico-Economic Problems, 1968, p. 114.
110
Varga’s attacks on his old enemies could not have been ignored or unnoticed by his
contemporaries. These attacks had largely contributed to the success of it and a second
printing. However, Varga’s attacks went beyond this reckoning with his old enemies
Kuzminov and Katz. When admitting the possibility of real wage increases above the level
inspired Varga to reconsider the influence of technological progress on worker’s family
consumption. American workers were purchasing cars, radios, television sets, etc. and they
spent their money on ready-to-cook foods. The average American ate more beef and chicken
and less potatoes. On the other hand, American and British workers were living in slums and
were undernourished. But this did not mean that the bulk of the workers were worse off than
in the 19th century. Varga even admitted that working conditions in capitalist factories had
undergone an embetterment. Hence, he called for a ‘truly scientific analysis’ 111 of these
phenomena. Why? According to Varga ‘our dogmatists” had divorced ‘economics from
politics’ by stressing ‘the constant and inevitable absolute impoverishment of the working
class’.112 They had forgotten Lenin’s definition of politics as ‘a concentrated expression of
the economy’ and ignored ‘the new political conditions in the fight between labor and
capital’.113
Referring to a tactical point of view, Varga argued that Communists could not mobilize the
working class if they stated that the deterioration in their living conditions was inevitable. 114
On the other hand, in the highly developed capitalist countries higher salaries were paid in
order to avoid labor conflicts, a phenomenon Varga also accredited to the strengthening of
the socialist world system.
Finally, Varga castigated the “dogmatists” for having discredited Soviet economic science
abroad. He remarked that many Marxist scholars there had made a ‘thorough study of the
working class’s position by combining statistical methods of research’ that contradicted ‘the
views of our dogmatists’.115 In addition, Varga concluded that a growth in real wages was not
the same as a growth in the welfare of the workers. Studying profits the monopolists made at
the expense of the consumers, Varga remarked that it was unfounded that monopoly capital
always paid for labor power less than its value. Varga asserted that in all highly developed
capitalist countries workers were striving ‘to obtain jobs in large enterprises’ and that wages
in highly monopolized branches were higher than ‘those of workers in the non-monopolized
branches’.116 At any rate, in spite of all management techniques, the American monopolies
paid often twice as much as non-monopolized enterprises. Varga’s conclusion was that the
essence of monopoly superprofits required the application of method ‘which are no less
consistent than those Marx applied in his analysis of profit.’ This conducted him to the final
conclusion that ‘in a pure capitalist society monopoly superprofits can evolve only as a result
of an irregular distribution of the aggregate surplus value or aggregate profit, i.e., a
distribution according to which profit does not correspond to the amount of capital
invested’.117
Varga argued that the redistribution of the aggregate profit in favor of the monopolies was
effected through the mechanism of prices. Modern capitalist society comprises also millions
of small independent producers playing a part in the formation of monopoly profits. About
90 per cent of industrial production was concentrated in Western Europe, North America and
Japan. The unequal exchange was a means by which the rich capitalist countries extracted
111
112
113
114
115
116
117
superprofits from the less developed countries where nobody was protecting the small
commodity producers against the high monopoly prices charged by the monopoly capitalists.
‘The tribute exacted by the monopolies from small commodity producers through
unequivalent exchange flows first and foremost from the less developed countries to
monopoly capitalist countries’.118 Varga admitted that the price of labor power fluctuated
around its value. But in countries in which the agrarian overpopulation was creating an
enormous surplus for the supply of labor power and where no trade unions to fight the
capitalists who squeezed the price of labor power to a level below value, the price of labor
was regulated by the market.
In his analysis Varga apparently returned to the debate he had with Henryk Grossman in the
period of the Comintern. Indeed, under monopoly capitalism ad under non-monopoly
capitalism, the rates of different branches tended to equalize and form an average profit. But
the monopolies were also making additional profits which did not tend to equalize, ‘and
hence there is no such thing as an average rate of monopoly profit’.119 But he also conceded
that it was difficult ‘to draw a line between the monopoly and average rates of profit’. Firms
making today superprofits could be the losers of tomorrow! Again Varga criticized Stalin. ‘In
our analysis we have intentionally avoided Stalin’s definition of maximum profit. Stalin’s
assertion that “it is not the average profit, that modern monopoly capitalism needs for more
or less extended reproduction” is entirely unfounded. Even the term “maximum profit” which
Stalin substitutes for Lenin’s term “monopoly superprofit” (…) is ambiguous and
inaccurate.’120 According to Varga, the striving for maximum profits applied also to the
Phoenician merchants. Marx mentioned in his Capital that capital was ready to commit any
crime for the sake of maximum profit in its pre-monopoly stage. Hence, Varga could qualify
Stalin’s “basic law” useless: ‘Stalin’s “basic economic law” is an efficacious political
indictment of monopoly capitalism but not a result of a Marxist analysis.’121
State-monopoly capitalism
Though Varga contribution to the theory of state-monopoly capitalism was finally

recognized, he owed in the first place to Jürgen Kuczynski who corresponded122 and regularly
visited him in Moscow. Kuczynski would develop a pathological admiration for the great old
man. In addition, Kuczynski would pretend later on that there existed a “Varga School” of
economic thought in Moscow.123 When the Humboldt University in Berlin (GDR) celebrated
on 12 November 1960 its 150th anniversary, Varga received a PhD honoris causa for ‘his
exceptional merits’ he had earned doing research on the problems of the capitalist world
economy and state-monopoly capitalism.124
118
119
120
121
122
Kuczynski always sent his birthday greetings to Varga. See Kuczynski’s letter to Varga, 31 October 1959. In
this letter he remembered that he had been lodged in 1935 at Varga’s apartment. Collection of Mária Varga
Private Archives, Moscow.
123
Göncöl would deny the existence of a presumed "Varga School". Georg Göncöl, ‘Lebensweg und
Lebenswerk von Eugen Varga (1878-1964)’, in E. Varga. Wirtschaft und
Wirtsschaftspolitik. Vierteljahresberichte 1922-1939, Herausgegeben von Jörg Goldberg,
Vol. 1, Berlin: Das europäische Buch, 1977, p. 8.
124
The German text could have been authored by Kuczynski. ‘Herrn Professor Eugen Varga/Moskau/ im
Würdigung um seiner aussenordentlichen Verdienste um die Entwicklung einer marxistisch-leninistischen
Wirtschaftswissenschaft, die er durch seine Forschungsarbeiten über die Probleme der kapitalistischen
Varga’s views on capitalist development did not change that much in the period after the
Second World War. He repeatedly argued that the alliance of the monopolies and the state
was effected primarily in the form of a merger between the monopolies and the state
machinery. The alliance also takes the form of joint decisions on important economic issues.
In various ways the state helps the monopolies fix high monopoly prices on the home market.
State-monopoly capitalism is extremely reactionary, he asserted, because it defends a social
system doomed to collapse.125 He proudly mentioned that his former colleagues S. A.
Dalin,126 Y. A. Pevzner,127 and E. L. Khmelnitskaya128 had recently contributed in a number
of writings to the analysis of state-monopoly capitalism.129 Obviously, these studies had
allowed Varga analyzing the internal contradictions of state-monopoly capitalism as it
developed after the Second World War in full accord with Lenin’s teachings and the Program
of the CPSU.130
That Varga was recognized as a theoretician of state-monopoly capitalism and its internal
contradictions was mainly due to his pre-war writings on monopoly profits, 131 but also with
his rejection of Stalin’s formula of the “subordination” of the state to the monopolies. After
Stalin’s death Varga returned to the old problem of the role of the state in capitalism. In
conformity with Marxist-Leninist theory he regarded ‘monopoly capital as single force and
the whole monopoly bourgeoisie as a class or as the layer of the capitalist class with common
class interest.’132 Thus, the coalescence of these two forces, the monopolies and the state, are
forming the basis of state-monopoly capitalism. Varga stressed nonetheless the fact that
monopoly capital and the state were forming ‘independent forces’.133 There could not be no
unilateral subordination of the state to monopoly capital, ‘as asserted by Stalin’ and some
Soviet economists dogmatically continue to assert to this day’.134
Varga argued that one could encounter in Soviet writings the ‘erroneous tenet declaring that
in every monopoly capitalist country there exists a center which represents the interests of the
monopoly bourgeoisie and gives directives to the state apparatus’.135 But Lenin had
emphasized that competition remained under monopoly capitalism, which excluded a
complete community of interests among the bourgeoisie. Marx had pointed out that the
bourgeoisie was united in its attempts to squeeze out the working class surplus value as much
as possible, but that the bourgeoisie’s unanimity disappeared when it came to the distribution
of the surplus value. Varga even singled out that there were ‘constant’ contradictions among
Weltwirtschaft und durch Arbeiten zu den Problemen des staatsmonopolistischen Kapitalismus begründet hat,
den Grad eines Doktors der Wirstschaftswissenschaften ehrenhalber, Berlin, den 12. November 1960. Party
Archives, Budapest, Varga files, 783.f.13.ő.e.
125
Varga,Twentieth Century Capitalism, Moscow: Foreign Languages Publishing House, 1962, pp. 112-116.
126
S. A. Dalin, Voyenno-gosudartsvenny monopolistichesky kapitalizm, Moscow: Izd-vo Akademii nauk SSSR,
1961.
127
Y. A. Pevzner, Gosudartsvenno-monopolistichesky kapitalizm v Yaponii, Moscow: Akademiya Nauk, 1961.
128
E. L. Khmelnitskaya, Monopolistichesky kapitalizm v Zapadnoi Germanii, Moscow: IMO, 1959.
129
130
The Programme of the CPSU stressed the fact that state-monopoly capitalism combines the strength of the
monopolies and that of the state into a single mechanism whose purpose is to enrich the monopolies, suppress
the working-class movement and the national liberation struggle, save the capitalist system, and launch
aggressive wars.
131
Petra Gansauge, ‘Eugen Vargas Beitrag zur Gestaltung der marxistisch-leninistischen Monopoltheorie
innerhalb der Kommunistischen Internationale’, Dissertation zur Erlangung des akademischen Grades Dr. Oec.
Eingereicht dem Wissenschaftlichen Rat der Karl-Marx-Universität Leipzig, Fakultät für Wirtschafts- und
Rechtswissenschaft angefertigt bei Karl-Marx-Universität Leipzig, Sektion Wirtschaftswissenschaften, 1989.
132
133
134
135
the different factions of the various monopolies in a single branch. However, the monopoly
bourgeoisie as a whole had several interests in common such as the safeguard of the capitalist
system or keeping wages at a low level. Or in obtaining government orders or tax breaks.
These conflicts, explained the fact, Varga asserted, that ‘under state-monopoly capitalism the
state represents the common interests of monopoly capital’136 sometimes contradicting the
particular interests of the monopoly bourgeoisie. ’This shows that the definition that the
definition of state-monopoly capitalism based on Stalin’s conception (”state-monopoly
capitalism implies the subordination of the state apparatus to the capitalist monopolies”) is
wrong.’137 According to Varga there was ‘no “one-sided subordination” but a joining of
forces, which, in spite of this merger, still maintain a certain autonomy.’ 138 Varga rejected
any one-sided “subordination” in name of Marxist philosophy: the dogmatists had forgotten
‘that all capitalist laws’ were no more than ‘tendencies always opposed by counter-
tendencies’139 Varga admitted that the parliamentary system complicated the problem and
that the contradictions between the monopolies and their interests. Hence, the monopoly
bourgeoisie created conditions for the formation ‘of a broad anti-monopoly-capital front
embracing the working people and those layers of the bourgeoisie whose interests have been
harmed by the monopoly bourgeoisie’.140 The fusion of state power and monopoly capital
proceeded ‘dialectically’ and could not be reduced according to Stalin’s formula of a
“subordination” of the state to monopoly capital.141
This criticism of Stalin and the “dogmatists” Varga combined with a strong believe in a
growing opposition in the capitalist countries to the monopolies and in the final collapse of
capitalism. Varga’s analysis of monopoly capitalism was in full accord with the new program
of the CPSU of 1961 stating that in the interests of the financial oligarchy the bourgeois state
had instituted various types of regulation and accelerated the development of monopoly
capitalism into state-monopoly capitalism.142 The monopoly bourgeoisie had but one way
out, ‘that of strengthening the capitalist system through state-monopoly capitalism.’143 Varga
pleaded for a fight by the ‘revolutionary proletariat’ 144 for nationalizations because this
helped to enlist into the struggle against the monopolies not only factory and office workers,
‘but also broad layers of the peasantry and the petty urban bourgeoisie, who are similarly
oppressed by the monopolies. Moreover, they realize that a democratic management of the
nationalized enterprises can alleviate the conditions of the working people.’145
The capitalist cycle
Apart from the problems of state-monopoly capitalism, Varga remained especially interested
in the capitalist cycle. He argued that the capitalist cycle would show a tendency to become
shorter because of the rapid technical changes. Thus economic crises would also become
more profound. The general crisis of capitalism had not emerged in connection with a world
war, but in conditions of the competition between the two systems, with the balance of forces
136
137
138
139
140
141
142
The Road to Communism, o. c., 1961, p. 471.
143
144
145
changing more and more in favor of socialism. The world socialist system as a whole would
surpass economically the capitalist system. Historically, the fate of capitalism was already
sealed with a socialist system superior to capitalism. In a number of countries the transition
to socialism might be relatively peaceful, he concluded, but the 20th century will go down in
history as the century of the death of capitalism and the triumph of communism. 146 But at the
beginning of the 1960s Varga admitted nonetheless that the reproduction cycle after the
Second World War differed substantially from that of the interwar period.147 Moreover, there
existed striking differences between the business cycle in Britain and the continental
European countries, where no crises of overproduction had occurred. Fortunately, the laws of
the reproduction cycle, ‘like all laws’, were no more than ‘scientific abstractions’, and they
were determined by ‘the different tendencies and counter-tendencies at work in capitalist
economy’.148
‘Though the capitalist system can record a measure of success in developing the productive
forces, it has not undergone any essential change. Present-day capitalism is the same
imperialist, moribund capitalism of the pre-World War I years, the only difference being that
its domination extends to a considerably smaller area, and that it is considerably weaker.’149
Varga argued that post-war production growth was not the result of industrialization in the
less developed world, but was almost entirely due to economic growth in the developed
capitalist world. The cyclic movement of world capitalist production was feeble. The crisis of
1958 was not the beginning of a depressing either, because in 1959 the 1959 output level was
considerable above the preceding peak.150 How could one explain the fast recovery of the
Japanese, German, Italian and French economies, while American and Britain industrial
input indexes only showed slow economic growth? And what about the course of the post-
war cycle? The main function of the cycle, he asserted was to create ‘the conditions for a
crisis of overproduction’. During the war no such conditions had been created and for this
reason, he argued, periods of ‘prolonged war must not be included in the cycle’.151
Of course, Varga knew that Soviet economists had objected to this argument, because the
general laws of capitalism were still operating in times of war and that this was the reason the
cyclic course of reproduction continued even during the world war. He found that approach
too dogmatic, because it lacked a ‘concrete analysis of a concrete situation.’152 Varga argued
that 1947 should be regarded as the beginning of a post-war cycles lasting from 10 to 11
years. The disintegration of the colonial system also had a telling influence on the course of
the cycle. ‘The war weakened all the imperialist powers with the exception of the United
States. They could no longer hold all the colonial nations in subjection by armed force.’153
Due to the Cold War the capitalist countries, notably the US, could take up large-scale arms
production soon after the end of the Second World War. Thus, even in peacetime the US
monopolies could get new and highly profitable orders. At the same time there were no idle
production reserves and the final result was ‘an overstrained and unbalanced economy
similar to that in times of war.’154 But on the other hand Varga explained Japan’s and West
Germany’s economic recovery because of their comparatively low war expenditures and to
an expansion of the fixed capital. He concluded that ‘war production’ was able to ‘lengthen
146
Varga, Twentieth Century, 1962, pp. 152-157.
147
148
149
Varga, ‘Forty years’, o. c., 1957, pp. 5-6
150
151
152
153
Varga, ‘Forty years’, o. c., 1957, p. 6.
154
the upward and overstrain phases, and hence the whole cycle, but cannot avert a crisis of
overproduction, as has been conclusively proved by the 1957-58 crisis’.155
Varga gave the chief distinctive features of the new era that began after the Second World
War: (1) Contraction of the capitalist world as a result of the appearance of new socialist
states. (2) Sharpening of the contradictions in some of the capitalist countries; strengthening
of the Communist parties and weakening of the Social-Democratic parties of these countries.
(3) Disintegration of the colonial system of imperialism. He optimistically added: ’Now that
several European and Asian countries have withdrawn from the capitalist system, the Soviet
Union is no longer the world’s only socialist state. There is now a world system of socialist
states with a total population of almost 1,000 million.’156
Varga: ‘In rate of economic development the Soviet Union is far ahead of the capitalist
world. True, industrial output has increased in the capitalist world too, particularly in the ten
years following the war. But the gain has been chiefly in production of weapons for another
war, and in meeting the pent-up demand for new equipment. Moreover, it should be
remembered that under capitalism increased output leads to overproduction crises. The
symptoms of such a crisis are already apparent, and when it comes it will hurl the capitalist
economy back several years.’157
Varga argued that the Soviet industry was in a position to supply the underdeveloped
countries with every type of producer goods they require. The Soviet Union could grant
credits on favorable terms and it could supply arms. The imperialist monopoly is a thing of
the past.158 ‘The decline of capitalism is now obvious; its doom is only a question of time. It
has lost control of a third of the world’s population. Many of the former colonies regard the
socialist nations as their natural allies against imperialism. The process of capitalist decline
and collapse is proceeding apace. And like every transition from one social system to
another, it is proceeding unevenly, by stages, and in hard-fought battle. But it is subject to the
laws of economic development, and the final collapse of capitalism is only a question of
time. From the historical standpoint – a question of the not too distant future.’159
‘But the people of the underdeveloped countries have no desire to replace British, French or
Dutch tutelage with American. They are successfully resisting imperialist encroachments and
steadily extending the Zone of Peace.’160
According to Varga, economic rivalry invariably still led to political conflicts. In of his many
writings on international politics, he referred to these so-called rivalries caused by inter-
imperialist conflicting interests. One of his favorite themes was British foreign policy and the
decay of the British Empire. He even could see in American and British rivalry the principal
contradiction in the imperialist camp, ‘despite their military alliance’.161 On the one hand
Britain remained an American ally, but on the other hand London was unable to bear the
burden of the military expenditure demands by the United States. That was the reason why
Washington and London could not formulate a common policy towards China.
France was in a similar position after having lost in 1940 the battle with nazi Germany. After
1945 the French Empire got in trouble because of national liberation movements attacking
French colonial rule. In 1954, France was overtly ousted from South Vietnam by the United
155
156
Varga, ‘Forty years of socialist progress and capitalist decline’, in New Times, 1957, 45, p. 5.
157
158
159
160
Varga, ‘Black year for imperialism, in New Times, 1958, No. 1, p. 9.
161
Varga, ‘The Atlantic Bloc’, in New Times, 1956, No. 6, p. 7.
States, while in the same year Paris wrecked the European Defence Community (EDC),
because similar contradictions existed between France and Western Germany.162
Marshall Aid and Keynes
Varga’s relation with Keynes had always been strained. In July 1947, he had called Keynes a
‘false prophet’ in an article he published in World Economy and World Politics. Though
Keynes’ works were studied at Varga’s institute, Keynesianism soon would become the
worst enemy of Stalinism. Later, at the end of his life, Varga would that the ‘reformist
leaders value Keynes particularly highly because he (…) does not attempt to refute Marx or
argue with him, but simply ignores him.’163
Varga did not link Marshall Plan to Keynesianism or any form of macro-economic
management. For Varga, the Marshall Plan was a trap. In Pravda of 5 August 1947 he wrote
that the aims of the Marshall Plan were the formation of a Western bloc under American
control, the conversion of Western Germany into a military base, the alienation of Eastern
European States from the USSR. In September 1947 he wrote in New Times that the real
objective of the Marshall Plan was to establish political and economic domination over the
world and, in the first place over Europe. But at the same time the Marshall Plan was an
attempt to stave off the looming economic crisis in the United States.
Varga: ‘The Marshall Plan is incapable of solving the problems of European recovery’, in
New Times, 1 December 1947. Was the Marshall Plan only a recovery plan or, instead, the
starting point of a new era of state-led investment policies?
However, at the end of his life Varga would revise his initial appreciation of the Marshall
Plan and Keynesian theory. In 1964 he remarked that the Marshall aid had as a result that the
countries were able to rebuild their industries and regain the prewar level. ‘In France and
Britain this came in 1948; in Italy in 1949; in West Germany and Greece in 1950, and in
Japan somewhat later. And once they surpassed the prewar level, they continued to boost
production. Now, none of these countries need American “aid”.’164 However, how that
“miracle” could have been worked out Varga did not explain.
At the end of his life Varga would return to the problem of Keynesian theories and precepts
contained in Keynes’s The General Theory.165 Maybe he had noticed that his colleague I. A.
Trakhtenberg had started studying and discussing the Keynes’ theory of full employment and
the role of credit in post-war capitalism.166 Varga noticed that the Kennedy Administration
paying tribute to Keynes’s theory had opted for deficit financing.167 At the end of his life
Varga was very critical to Keynes. In his view Keynes, who was a ‘typical eclectic’,168 dealt
only ‘with the superficial phenomena of capitalist economy.’169 In addition, Keynes’s
162
Varga, ‘The Atlantic Bloc’, in New Times, 1956, No. 6, pp. 4-8.
163
164
Varga, ‘America’s weakening position in world power’, in New Times, 1964, No. 8, p. 6.
165
John Maynard Keynes, The General Theory of Employment, Interest, and Money, New York, Chicago and
Burlingame: Harcourt, Brace & World, Inc.1964 (1936).
166
I. A. Trakhtenberg, Kapitalisticheskoe vosproizvodchesvo i ekonomicheskie krizisy, Moscow:
Gospolitizdat, 1954; Kreditno-donesnaya kapitalizma posle vtoroy mirovoy voyny, Moscow: Izd.
A.N. S.S.S.R., 1954; ‘Keynesian theory of full employment’, in Keynesian economies. A Symposium,
Delhi, 1956, pp. 211-215.
167
168
169
explanations were defined as superficial and ‘confused rag-tag’170 for not having created an
economic theory of his own or having refuted the ‘teaching of the founders of bourgeois
political economy.’171
Varga’s main charge against Keynes’s ‘muddled thinking’172 was that any class analysis or
historical approach was absent in his writings.173 Obviously, Keynes had forgotten in his
‘pseudo-psychology’ that competition forced ‘the individual capitalist to make a profit or
perish’.174 Keynes’s abstract economic man and his psychological laws had no validity in the
‘real capitalist world’ in which there were at least ‘a thousand million people whose incomes
are so low that they are forced to live in perpetual hunger’ or people whose incomes ‘are so
large that it would be simply impossible to spend them on consumer goods’.175 Hence,
Keynes’s policy of overcoming the narrowness of the market by increasing unproductive
consumption among the non-working classes was ‘not as absurd as it would seem at first
glance’.176 Deficit spending was intended to justify the expenditure on arms as well.
Varga attacked Keynes’s unemployment theory. According to Keynes unemployment
emerged because the more workers an employer hires, the less profit he could expect as a
consequence of the working of the law of diminishing returns. Keynes’s second reason for
unemployment was that not all people wanted to spend their whole income on consumption
or on investment. ‘Every Marxist realizes that the principal cause of unemployment is the
capitalist system itself-the contradiction between the social character of production and
private capitalist appropriation, or to be more concrete, the contradiction between the striving
of capital for unlimited expansion of production and limited consumption, the so-called
“enduring narrowness of the capitalist market”.’177 According to Varga, permanent
unemployment was due to agrarian overpopulation and periodic unemployment during
industrial crises, which was aggravated by rationalization, mechanization and automation of
production.
Keynes’s popularity was mainly due to his recommendation that state intervention in the
economy could avoid crises of overproduction and mass unemployment, which was in
‘complete harmony with the interests of the monopolies.’178 Varga noticed that the union
between reformism and Keynesian theories was based on the fact that Keynesianism suited
‘the requirements of these reformists’ and that ‘the reformist leaders value Keynes
particularly highly because, he (…) does not attempt to refute Marx or argue with him, but
simply ignores him.’179 However, neither the capitalists nor the reformists knew how to fight
growing unemployment. ‘It was at this point that Keynes produced his universal cure-all. He
declared that government measures, such as public works financed at the expense of a large
deficit in the state budget, the maintenance of low-interest rates, etc., would abolish
unemployment.’180
Varga’s criticism of Keynes’s General Theory was intimately related to social-democratic
reformism and deficit spending and as such linked to Varga’s anti-reformism, V. A.
Cheprakov remarked that ‘a complete denial of the role played by Keynes in working out
170
171
172
173
174
175
176
177
178
179
180
recommendations for capitalism, and his (Varga’s) view that Keynes has done no more than
to place the actual policy of monopoly capitalism on a pseudo-scientific basis, are an
oversimplification of the relations now existing between bourgeois policy and bourgeois
science’.181 Especially neo-Keynesian thinking on economic growth had got some influence
in Soviet economic thought in order to explain post-war capitalist development. Hence,
Varga’s radical denial of Keynes’s merits was not followed by Soviet economists paying
much attention to Keynes’s demand management and the role of the multiplier and neo-
Keynesian growth theories.
The same fate received Varga’s considerations on the labor aristocracy in post-war
capitalism. The data Varga had collected showed that the position of the labor aristocracy
had been weakened because of the deskilling process and the diminishing pay differences.182
Varga defended Lenin’s view that the privileges of the British labor aristocracy had been
financed out of colonial and monopoly profits. Thus the labor aristocracy was divorced from
the mass of the workers and exerted an anti-revolutionary influence on them. But he asserted
also that the principal source of funds for bribing a considerable portion of the working class
was the rapid growth in labor productivity which was not accompanied by a corresponding
shortening of working time.183 The function of the labor aristocracy was expected to
safeguard the capitalist system and disseminate bourgeois ideology among the workers s as
to keep them from the revolutionary road and to struggle against Marxist or communist
ideology.. These tasks were taken over by the growing workers’ bureaucracy created by the
numerous working-class organizations (Social-Democratic parties, trade unions, co-operative
organizations). However, Varga did not produce new data or facts supporting his previously
defended views on this problem. V. A. Cheprakov remarked in his introduction to Varga’s
book that the privileged section of the working class nowadays consisted of workers with
high technical qualifications and not of highly skilled manual workers.184
Peaceful coexistence
At the end of his life Varga officially adhered to Khrushchev’s foreign strategy of peaceful
coexistence and collaboration with progressive nationalist regimes in the developing world.
Also the old Comintern theory that the colonial bourgeoisie was mainly a reactionary force
that would not participate in the anti-imperialist struggle should be considered as entirely
wrong. The events of the post-war years had shown that the national bourgeoisie was able
and willing to head the liberation struggle.185 At any rate, the newly free countries were
playing a ‘progressive role’ in international politics even under bourgeois rule. They were
forming together with the socialist countries an anti-imperialist front. Hence, Varga thought
that the existence of the world socialist system strengthened the progressive and weakened
‘the reactionary role of the colonial bourgeoisie’.186
The theme of peaceful coexistence in Varga’s texts emerged already in 1954. Two different
social systems were developing according to their own ‘intrinsic laws of development’.187 In
181
Cheprakov in Varga, Politico-Economic Problems, 1968, p. 10.
182
183
184
Without naming them, Cheprakov’s remarks certainly referred to the recently published studies on the “new
working class” in France.
185
186
187
Varga, ‘The problem of peaceful co-existence’, in New Times, 1954, No. 41, p. 4.
addition, Varga argued that countries with different social systems could durably live
together in peace, a fact that was abundantly demonstrated by past history. The Soviet Union
was not out to overthrow the capitalist regime in other countries by force of arms, because
Marxists knew that the capitalist mode of production was a transitional form in the historical
development of mankind. Moreover, Stalin had put it tersely: ‘Exporting revolution is
nonsense’.188
In a polemic Varga had with Ernest J. Salter of the German weekly Das Parlament, he even
stated that Marxists opposed the idea of exporting revolution. ‘Peaceful coexistence of
countries with different social systems is an immutable principle of Soviet policy’. 189 Thus it
was ‘the cardinal duty of all who treasure human life and culture not to allow this peaceful
economic competition and ideological contest to develop into armed struggle’.190
Mutual development of trade was Varga’s main concern in 1954 when writing these lines in
New Times. A good reason for increased trade with the capitalist world was that the ‘rapid
economic progress and industrialization of the socialist countries create the most favorable
opportunities for enlargement of their trade with capitalist countries, provided the artificial
obstacles hampering normal exchange between the two world markets are removed’.191
The European Common Market
The Treaty of Rome establishing in 1957 the European Common Market had attracted the
attention of Soviet academicians. On 15 April 1957, the Department of Political Economy of
the Academy of Social Sciences of the Central Committee of the CPSU organized a debate
on this issue. The meeting, which was attended by economists, representatives of publishing
houses, journalists, post-graduates and lecturers on international problems, discussed the
present situation in the capitalist world. Though Varga’s name was not on the speakers list,
he may have been invited to attend the lectures of which an abstract was published in the
newly founded academic journal International Affairs.192 However, though Varga’s
absence always could be explained by frequent health problems, he had not been invited at
the moment of the foundation of this journal specializing in articles for an international
public and edited by a team of young journalists and academicians.193 Marking the “thaw” of
the first part of the Khrushchev era, International Affairs organized a readers’ corner in
which the recently established Institute of World Economics and International
Relations was debated.194
188
189
Varga, ‘History and policy. Reply to Herr Ernest J. Salter’, in New Times, 1956, No. 9, p. 14.
190
191
192
I. I. Kuzminov, S. L. Vygodsky, B. M. Pichugin, A. M. Sharkov, M. N. Smit, V. V. Rymalov, A. I.
Shneerson, Y. Y. Kotkovsky and A. M. Alekseyev had given a lecture. International Affairs, 1958, No. 5,
pp. 76-102.
193
This journal, carrying the rather pretentious subtitle Monthly Journal of Political Analysis, was a clear
product of Khrushchev’s new course. The initial editorial board consisted of E. M. Zhukov, V. Y. Vasilyeva, A.
A. Kononenko, V. P. Glushkov, E. A. Korovin, V. V. Mayevsky, Y, Z. Viktorov, P. V. Milogradov, E. M.
Primakov, V. B. Lutsky, A. F. Sultanov and L. N. Vatolina. Varga would never have access to the pages of
International Affairs.
194
Letter from V. P. Glushkov (Foreign Economics Chair of the Economics Department of the Moscow State
University). He even wanted a Union-wide conference on the planning of the study of international relations and
the making of a “good” textbook on the history of international relations. V. Shurshalov en G. Zhukov
(International Law Department of the Institute of Law of the Soviet Academy of Sciences) proposed the funding
of a publishing house specializing in publiscations on interational relations. International Affairs, 1957, Vol.
Important for Soviet analysts were the inter-imperialist contradictions which had taken
another form than Stalin had predicted. Especially supra-national cooperation and the rise of
the European Common Market was received in the Moscow Kremlin as a sign that monopoly
capitalism attempted to overcome the dividedness of the world market. However, inter-
imperialist contradictions could not be solved by monopoly capital, but only postponed. The
program of the CPSU said that imperialism was incapable of solving the market problem.195
The studies Varga made on international capitalist development, especially the European
Common Market, were not received with much respect and even disqualified as inadequate
or abstract. Varga’s first article on the Common Market Plan was published in New Times in
March 1957 in which he expressed his doubts about the project of creating an integrated
European market. ‘If the ruling element in these six countries wanted to establish a real
common market, and were in the position to do so, it would be enough to set out in a few
pages the basic provisions for abolition of customs tariffs and other trade impediments,
unification of taxes, repeal of export subsidies, etc.’.196 He noted increasing military,
financial and economic dependence on the part of France and Britain vis-à-vis America. The
increase in dollar reserves was bought at the price of military submission to the United
States. Because of the presence of American troops, dollar expenditures amounted to nearly
US$2,000 million a year in the period 1953-55. Therefore, a common market would not free
Western Europe of economic dependence on the United States. A Common Market might
help to increase trade between the six founding states, but it would change nothing in their
economic relations with the rest of the world. That state of affairs would remain until the
West-European nations abandon their American-instigated Cold War policy.
According to Varga, a radical change in foreign and economic policy was the only solution,
which will require a genuine peaceful coexistence, an expansion of foreign trade with the
socialist countries and an all-European collective security system embracing both capitalist
and socialist countries.197 Varga refrained from analyzing Germany’s particular position in
the integration process or the role of US diplomacy198 and he does not pay any attention to
the important differences between a common market and a free trade area. The European
Common Market Plan envisaged gradual abolition of customs frontiers, repeal of tariffs and
quantitative quotas within the establishment of a common tariff against outsiders, while
British diplomacy promoted, on the contrary, a free trade area. Varga: ‘A common market
might help to increase trade between its six continental members, but it would change
nothing in their economic relations with the rest of the world. (…) They are all greatly
dependent on imports for their supply of raw materials and food. And no common market nor
free trade area can alter that.’199
Later on, he would admit that the Common Market was a new and ‘important phenomenon in
the development of supra-national state-monopoly capitalism.’200 However, he also saw the
Common Market as a ‘return to the conditions that existed before the First World War’, thus
as ‘an attempt to overcome the dividedness of the world market by uniting the markets of six
countries’.201 Equal conditions for competition, however, served ‘primarily the interests of
the big monopolies’ and the Common Market was also ‘an attempt on the part of the West
1, No. 5, pp. 135-136.

195
‘Monopoly capital has, in the final analysis, doomed bourgeois society to low rates of production growth.’
The Road to Communism, o. c., 1961, p. 473.
196
Varga, ‘The Common Market Plan’, in New Times, 1957, No. 10 (March), p. 11.
197
Ibidem, p. 12.
198
In Moscow, specialists of international affairs thought that the US was guiding the integration process.
199
Ibidem, p. 12.
200
201
European imperialist powers to consolidate their position following the political liberation of
the colonial countries, to enable them to conduct a vigorous policy of neocolonialism and to
compete with the United States’.202
He saw the Common Market as a politically ‘desperate attempt to resolve imperialism’s
inevitable internal contradictions and to oppose the socialist world system by a single
imperialist front’.203 Only for political reasons US diplomacy backed the formation of the
Common Market. But he also saw the Common Market as ‘a house divided against itself.’204
President de Gaulle had blocked Britain’s entry into the Common Market. Meanwhile, US
monopoly capital was rapidly setting up subsidiaries in Western Europe in order to penetrate
the local markets. The Institute of World Economy and International Affairs in Moscow
became nonetheless more and more interested in this phenomenon of regional economic
integration which went well beyond the project of a free-trade association. An international
conference of Soviet and foreign communist economists was held between August 27 and
September 3, 1962, in Moscow on initiative of the Institute of World Economy and
International Affairs and the Prague-based journal World Marxist Review. It was presided
over by director A. A. Arsumanyan205 and academician A. M. Rumyantsev, two important
economists of the Khrushchev era having access to the Kremlin.
Varga’s contribution to the debates consisted of a long intervention on some ‘theoretical
problems’ of the Common Market economy206 was nonetheless published in extenso in his
institute’s journal.207 Again, Varga argued that the Common Market was nothing else than a
plan of capitalist integration, an attempt to perpetuate the economic exploitation of the
former African colonies and to unite the forces of West European monopoly capital against
the economic supremacy of the US. He remarked that labor productivity was much lower in
Europe than in the US and that only an increase in demand could expand production, but that
the laws of capitalism and imperialism nonetheless would operate. Thus, Varga foresaw an
increased centralization of capital in combination with a decrease of real wages and a
shrinking market of consumer products.208 Summing up, Varga argued that ‘capitalist
integration would be incapable of liberating capitalism from its internal and external
contradictions and that it would be impossible to save capitalism’.209
Some were not charmed by Varga’s rather abstract analysis. E. Sereni representing the Italian
Communist Party (PCI) at the conference argued that Varga’s abstract schemes were wrong,
but also that ‘they had an exaggerated static and no dynamic character’. 210 Varga had omitted
that integration of markets also would mean a change in the international division of labor.
Centralization of production units in the automobile industry would engender a lowering of
all costs in combination with increasing volume of cars yearly produced in the countries of
202
203
204
205
Arsumayan distributed a polycopied report Problèmes du capitalisme contemporain to the participants.
206
His contribution was published in the official congress book in 1963 (Russian edition) and in its German
translation Probleme des modernen Kapitalismus und die Arbeiterklasse, A. A. Arsumanian and A. M.
Rumjanzew (eds), Berlin: Dietz Verlag, 1964, pp. 324-332.
207
Varga, 'Teoreticheskie problemy ekonomiki "Obshchego rynka"’, in Mirvaya Ekonomika i Mezhdunadnye
Otnoshenya, 1962, No. 10, pp. 49-59; article was also published in Varga’s collection of articles Politico-
Economic Problems, 1968, pp. 286-303.
208
See Varga, in A.A. Arsumanjan and A. M. Rumjanzew (eds), Probleme des modernen Kapitalismus und die
Arbeiterklasse. Materialien eines Meinungsaustausches, der von der Zeitschrift “Probleme des Friedens und des
Sozialismus” und vom Institut für Weltwirtschaft und internationale Beziehungen der Akademie der
Wissenschaften der UdSSR durchgeführt wurde, Berlin: Dietz Verlag, 1964, pp. 325-327.
209
Ibidem, p. 332.
210
Sereni in ibidem, p. 335.
the Common Market. Finally, the accumulation process of capital would create an expanded
market because of growing production in other sectors of the economy.211
Varga did not explicitly respond to this critic in that article he published after the conference
in his institute’s journal. He only examined the question whether the Common Market would
be able to expand the West European capitalist market at all. Varga argued that a Marxist
should formulate the question as follows: ‘can such an association lead to a constant, or
enduring non-cycle expansion of the population’s consumption capacity?’212 His answer was
negative, because ‘an expansion of the market for Department I goods cannot ensure an
enduring upswing of production as a whole. If the demand for goods produced by
Department II is not high enough, the production of Department I goods is bound to
decrease. Only adherents of Tugan-Baranovsky’s theory can believe that a constant
expansion of fixed capital can ensure a steady crisis-free upswing of capitalist production.’213
Varga thought that economic consequences of a Common Market would be insignificant
because there would be no changes in the operation of the ‘objective laws of capitalism’.214
Therefore, Varga predicted that no constant or even ‘protracted expansion of the market for
consumer goods’215 could be expected for a more or less enduring period! Like in the 1920s,
he predicted a contradictory development with the largest monopolies attempting to corner
the newly acquired markets. Intensification of the competitive struggle would bring certain
structural changes. In addition, because social labor productivity would grow and the socially
necessary labor time embodied in a commodity unit would decrease, while all other
conditions being equal, less workers would be needed in a decrease of total wages. Even if
the size of real wages of every individual worker would remain unchanged, the market for
commodities produced by Department II would shrink. Hence, Varga concluded that the final
result of the Common Market would be diametrically opposed to that predicted by the
advocates of the Common Market.216
Varga tempered this fatalistic approach by referring to possible gains to be made in the class
struggle. The most pressing question was who could reap the fruits of technological progress
and growing labor productivity. Increase in the demand for consumer goods would be
essential. Market expansion ultimately depended on a redistribution of the national income in
favor of the working class. However, Varga did not believe in this possibility. On contrary,
the intensified competitive struggle, the ousting of weaker competitors, the rapid
centralization of capital, the concentration of industrial production, etc. would all tend to a
decrease of real wages, with ‘a resulting drop in the demand for consumer goods, and hence
an aggravation of the market problem.’217 Hence, Varga argued that the future of the
European Economic Community (EEC) hinged on whether the capitalist market would
expand or shrink. Varga also pointed to the fact that the EEC was harping on prospects for
greater exports, which he qualified as a renascence of ‘mercantilist ideology’.218 Incomes
from exports were regarded as the main factor favoring an active balance of payments, which
incited governments of almost all capitalist countries to consider an increase in export as the
key to a stable economy. Hence, export credits and subsidies had become a source of
‘additional monopoly profits’.219 However, Varga was not able to give a ‘concrete appraisal
211
Ibidem, p. 336.
212
213
214
215
216
217
218
219
of the EEC’s export prospects’, because they depended on ‘a multitude of factors, as yet
unknown’.220
On the other hand, he remained nonetheless pessimistic about the real chances of the EEC’s
export-led strategy. An increase in exports by 50 per cent would expand the general market
capacity by even less than 7.5 per cent, he argued. Why? His reasoning was the following:
‘First of all, a country exporting commodities receives reimbursements for their value from
abroad. These reimbursements predominantly take the form of other commodities, since no
country is bale to pay for all its imports in gold. Moreover the imports often consist of
commodities which are also produced in the country in question. This naturally results in a
narrowing of the market for domestic goods.’221
Finally, Varga warned his readers that his analysis was ‘abstract and theoretical’,222 because
did not touch on the concrete historical conditions, but referred to the theoretical assumption
that if full economic integration could be realized, the problems capitalism was facing would
not be solved. According to Varga, a complete economic union would mean ‘a single
currency, a single budget, a single state, i.e., complete political integration, the rejection of
all individual sovereignty by the countries in question’.223 Varga predicted that the chances of
this happening were ‘so slight as to be neglible’.224
Varga on cyclical crises
In 1954, Varga, who was still waiting for the outbreak of a new economic slump in the
United States, saw an economic crisis maturing.225 Output of consumer goods had begun to
decline while stocks were growing. Varga’s analysis of the coming crisis was that a vast
surplus of loanable money was causing inflation. In addition, there were big surpluses of
basic production facilities in the war industries. High monopoly profits had kept the
purchasing power of the population low. The claim that there was no crisis but only a slight
recession stemmed from the fact that the monopolies had not as yet felt the impact of the
crisis as long as they can maintain high prices. But the lesser monopolies had been forced to
cut down investments. As a result of mass unemployment the purchasing power of the
working class had declined and farmers and office workers had seen their income declining.
However, Varga refrained from forecasting an economic slump.
Varga identified the 1958 cyclical slump in the United States not as a short-term transient
crisis similar to those of 1949 and 1954, but as a cyclical crisis of overproduction. There
were no signs of improvement and he thought, judging by all the available evidence, the
crisis to be long.226 The U.S. monopolies, he argued, know only two methods of combating
the crisis: more spending and less taxes. This policy only can prolong the crisis, render it
more severe and impair the interests of the country and business community. ‘But the
American capitalists believe it will pay off in the long run,’ Varga concluded. He identified
General Motors as the leader of an anti-labor offensive wanted by monopoly capitalists in
order to undermine or at least weaken the American labor movement. 227 But in 1959, Varga
220
221
222
223
224
225
Varga, ‘Economic crisis in the United States’, in New Times, 1954, No. 23, pp. 8-12.
226
Varga, ‘Cyclical crisis’, in New Times, 1958, No. 24, p. 6.
227
Ibidem, p. 6.
had to admit that the monopolies had lost some of their profits, but there had been practically
no decline in prices and only a temporary drop in share prices, followed by a pickup.
Manufactures were selling at 10 percent above 1955 price levels. Varga concluded that
intensive re-equipment had caused higher productivity, so that the labor costs had dropped.
Steel prices were 15 percent higher than before the crisis. Even automobiles, notwithstanding
cutthroat competition, were higher priced than before the crisis. The population of the
economically backward areas had been hard hit along with the proletariat of the industrial
countries. There, in the former colonies and semi-colonies, the crisis began earlier than in the
developed industrial nations, because the latter reduced raw material imports.228 The drop in
primary goods prices meant extra revenues for the capitalist economies. However, less export
revenues means smaller purchases of industrial goods, which accentuated the economic crisis
in Western Europe. The biggest sufferers were the old industries (coal, steel, cotton textiles
and leather), while the new industries had suffered only slight damage.229
In reality, Varga was more interested in the development of the capitalist world system, inter-
imperialist rivlaries and the disintegration of the colonial system.How to explain that any
economic crisis of some importance had been postponed? Varga’s explanation of this new
phenomenon that contradicted Marx’s accumulation schemes was not convincing and mainly
built up out of several ad hoc factors. For instance, he noticed that the export of all capital to
the former colonial and semi-colonial countries which had embarked on the socialist road
had stopped. Thus capital export was now limited to a few numbers of politically and
economically stabile countries. However, this tendency was not hastening the process of
imperialist breakdown as long as large-scale export of capital could continue in the form of
economico-military aid.230 Obviously, this new tendency had brought ‘a temporary expansion
of the market and, all other conditions being equal, a lenthening of the trade cycle’. 231 No
predictable breakdown of imperialism could be expected because of shortages in some raw
materials created by the extension of the socialist world. Modern technology had helped the
capitalist countries to open up many new deposits or develop sources of raw materials.232
Varga explained the long post-war boom in the US as a result of postponed consumer
demand for durables and ‘a tremendous unsatisfied demand for means of production for the
“peaceful” branches and for consumer goods’.233 He admitted that the well-to-do and even
some categories of industrial workers had to wait until de post-war period for spending their
savings because of the shortage of consumer goods and that by the end of the war the
postponed demand had become ‘fully effective’.234
Varga mentioned three factors being responsible for the lengthening of the post-war cycle.
First of all, there was the expansion of fixed capital until 1957. Second, commodity stocks
had been accumulated because of the Cold War, which had contributed to the lengthening of
the post-war cycle. Third, there was the artificial expansion of the consumer market by the
considerably extending comsumer credits.235 Varga noticed that in the case of this increased
additional demand the ‘future purchasing power’ had been used ‘to save the present
228
Varga, ‘The capitalist economy in 1958. Some characteristic features’, in New Times, 1959, 5, pp. 10-11.
229
Ibidem, p. 12.
230
Varga recognized that in the 1960s US aid had changed. It was no longer, as in the 1940s directed to countries
with preconditions for capitalist development. US aid flew to developing countries which for long years were
under imperialist domination. Varga. ‘America’s weakening position as a world power’, in New Times, 1964,
No. 8, p. 6.
231
232
233
234
One should notice this Keynesian slip of the pen. Varga, Politico-Economic Problems, 1968, p. 224.
235
situation’.236 But he could not explain the 1957-58 overproduction crisis in the US had not
spread to the other capitalist countries.237 Varga remarked that a crisis of overproduction
could spread to new countries only if the conditions for a crisis have ‘matured in their
domestic economy’!238
Finally, Varga became obessed by the distinguishing features of the post-1945 cycle. He
noticed that the economic supremacy of the US over all other capitalist countries had
decreased considerably. The US were suffering from a constant drain of their gold reserves.
In spite of high labour productivity based on up-to-date equipment, the US were unable to
play the role of the sole defender of capitalism on a world scale. American goods do not
dominate the world market. Even complaints about dumping were heard. Meanwhile,
structural unemployment was growing in a period that economic growth rates were slacking
down in the US and Britain, but not in the countries of continental Europe. Varga thought it
would be illogical that two different cycles could be exist in the future. ‘Sooner or later a
cycle of a single type will be established throughout the capitalist world. In our opinion this
cycle will resemble the post-war development of the USA’.239 During the post-war boom this
renewal and expansion of capital was, according to Varga, characterized by new factors such
as the speedy methods of factory construction, the rapid technological progress making
equipment sooner than beofre obsolte, the rapid replacement of equipment, capital
investment in the modernization of operating factories, etc. All these factors would accelerate
the break-out of an overproduction crisis and shorten the cycle in all developed capitalist
countries.
Varga foresaw a period of economic stagnation in the near future in the US with available
equipment constantly underemployed and ‘a general intensification of the class struggle’.240
He adivised researchers to pay nonetheless attention to the fact that some peculiar changes in
the crisis phase over recent years had occurred. ‘Formerly the crisis gneerally took the form
of an explosion – there was a sudden transition from the boom to the crisis phase. In America
and Britain we now see that the outburst is delayed, that instead of an outburst there is often a
makring time on the achieved hitgh level of production, which lasts for months’.241
Of course, a general aggravation of the contradictions of capitalism had to be expected. The
laws of competition operating under monopoly capitalism were forcing capitalists to renew
and expand their fixed capital. The ‘reproduction cycle is’, Varga argued, ‘determined by the
fixed capital, or (…) every crisis is the starting point for a mass renewal and expansion of
fixed capital undertaken for the purpose of lowering production costs’.242
Obviously, some extra-economic factors could be invoked in order to explain the long post-
war cycle with growing prosperity. Varga noticed that the capitalists ‘now have a far deeper
knowledge of the overproduction following a boom and also of world market conditions than
they had in Marx’s time or even 30 years ago’. 243 He noticed that efficient ‘projected
statistics’244 existed in combination with market-research reports enabling capitalists ‘to pre-
gauge consumer demand and thus avoid an overproduction of commodities’.245 In addition,
236
237
Varga argued that the 1957-58 overproduction crisis in the US was not accompanied, like in 1931, by a credit
crunch in Austria and Germany.
238
239
240
241
242
243
244
245
Varga noticed that the state could increase ‘effective social demand’. But on the other hand
Varga refused to believe in demand management under capitalism. ‘Under capitalism there
can be no state planning, no crisis-free capitalist reproduction’,246 he asserted. Hence, he
predicted that in the future the long and powerful growth in output would come to a
standstill. ‘The deepening of the general crisis of the capitalist system is expressed by the
growth in the number of industries which are in a state of perpetual crisis, such as coal,
textile and ship-building industries, and those being gradually drawn into this state – the iron
and steel and motor industries’.247
In 1962, he noticed that since 1955 cyclical economic upsurges had not led to a full-fledged
boom and that US production was stagnating ‘just barely above the growth of the
population.’ Varga noticed that the dialectics of the general crisis of capitalism was such that
its effect was ‘greater in the richest capitalist country’.248 He argued that the American
economy was caught in a ‘vicious circle’ of undercapacity operation resulting from low
purchasing power, low invest and competition compelling the entrepreneurs ot modernize
and autromate their factories.249 Varga’s analysis was still the same: underconsumption could
not be solved under capitalism because of the low purchasing power of workers and office
workers.250 And that was why US capitalism could not make use of its complete productive
capacity, because lack of effective demand was a built-in feature of capitalism. However,
Varga also remarked that productivity in American enterprises was rising. This could only
lead to mass unemployment, also among white-collar workers after the intriduction of
‘computing machinery’.251 Of course, there was no prospect for any serious improvement in
the employment situation. Monopolies were dictating their will on the population. But were
the monopolies entirely free to increase prices at any moment? Concerning the 1962 “Steel
Case” when the American steel producers increased prices and the Kennedy Administration
forbade this practice, Varga, noted that this decision had also been inspired by the fact that
with Arthur Goldberg on the Department of Labor industrial wages had been frozen. Varga:
‘In short, we have one more confirmation of Lenin’s thesis that monopoly spells the end of
the competition, but by no means the end of all competition’.252
Summing up, Varga’s views were the following: 1) the period of the Second World War
should be excluded from the cycle; 2) 1947 should be considered the beginning of the post-
war cycle; 3) the first post-war cycle continued to the 1957-58 crisis of overproduction; 4)
the second post-war cycle began after that crisis. In addition, Varga believed that sooner or
later a single cycle would establish itself for capitalism as a whole and that it would be
similar to the post-war cycle in the US and Britain, i.e., would be sharter than it was before
the Second World War.
Cheprakov writing a comment on Varga’s analysis of the cyclical course of reproduction in
Politico-Economic Problems of Capitalism admitted that there were ‘many views among
Marxists’253 on the post-war cycle and he also accepted Varga’s warining against ‘an
overestimation of the “anti-crisis” measures taken by the capitalist state.’254 But then he
added that ‘it is undeniable that state activities can influence the factors determining the
intensity and duration of the upward phase and the depth and duration of the crisis phase in
246
247
248
Varga, ‘Trying to solve the insoluble. Notes on the U.S. economy’, in New Times, 1962, No. 32, p. 5.
249
Ibidem, p. 5.
250
‘No capitalist is going to raise wages in order to enable the worker to buy more goods.’ Ibidem, p. 5.
251
Ibidem, p. 6.
252
Varga, New Times, 1962, 20, p. 13.
253
Cheprakov, in Varga, Politico-Economic Problems, 1968, p. 8.
254
Cheprakov, o. c., 1968, p. 9.
future cycles.’255 With this opinion Cheprakov articulated the already predominating Soviet
view that the role of the capitalist state had to be reconsidered in the light of recent
developments and that with respect to the capitalist reproduction cycle Varga’s analysis was
one-sided or not sophisticated enough in order to grasp the role of demand management in
modern capitalist development.
These nasty remarks have certainly contributed to the popular success of Varga’s last book.
A second printing of such a book was not usual in the Soviet Union. Cheprakov must have
been unaware of the fact that with the help of Khmelnitskaya Varga’s grumblings had been
removed from the original manuscript.256 These insufficiencies could also be identified in
Varga’s rather descriptive method of analyzing economic development and processes. In
addition, Varga remained an ardent opponent of econometrics, a new direction in economic
science having developed in the western capitalist world. Its leading journal was
Econometrica and most of its adherents were economists with a mathematical background
studying macro-economic phenomena such as consumer preferences, monetary problems or
the general equilibrium. After Stalin’s death, a mathematical approach to macro-economic
planning gained some influence in the Soviet Union and with the advent of Kádár in Hungary
as well.257 Varga was aware of the danger this new approach could have for the survival of
Marxism-Leninism in Soviet economics. Therefore, he pleaded for a ‘detailed Marxist
analysis and criticism of econometrics, the definition of the extent to which mathematics can
be applied to a research of the anarchically developing capitalist mode of production. The
problem of whether the reasoning and behavior of the individual is decided only by his social
being or also by other factors (biological, genetic, etc.). In other words, whether Marx’s
theory of the dependence of human consciousness on social being refers to classes or to
every individual.’258
Varga’s fears were not unfounded. Until Stalin’s death in 1953, Marx had provided the
Soviet economists with certain conventions in conceptualizing economic phenomena, but
there was a trend in Soviet economic thought to displace Marx’s analytical apparatus. In the
1950s and 1960s there was a trend in Soviet economic science favoring mathematical model
building. One of its pioneers was academician Leonid V. Kantorovich259. The “reformist”
Kantorovich School adopted Marx’s fundamental framework, i.e. a two-sector, two-product
system.260 Marx’s analytical apparatus was still de rigueur in specific fields, such as the
theory of income distribution and capital formation or in the theory of the collapse of
capitalism. The latter controversy, initiated by Tugan-Baranovskiy, continued to preoccupy a
fair number of economists.
255
Cheprakov, o. c., 1968, p. 9.
256
Jürgen Kuczynski, Dialog mit meinem Urenkel. Neunzehn Briefe und ein Tagebuch, Berlin and Weimar:
Aufbau-Verlag, 1987, p. 119.
257
I. Vajda, “Economic science in Hungary and the “Acta Oeconomica”’, in Acta Oeconomica, 1966, Vol. 1, No.
1-2, pp. 3-17.
258
259
Leonid V. Kantorovich (1912-1986) worked at the University and at the Mathematical Institute of the USSR
Academy of Sciences, heading the Department of Approximate Methods. In 1939, the Leningrad University
Press printed his book The Mathematical Method of Production Planning and Organization which was devoted
to the formulation of the basic economic problems, their mathematical form, a sketch of the solution method, and
the first discussion of its economic sense. In essence, it contained the main ideas of the theories and algorithms
of linear programming. He headed the department of mathematics and economics in the Siberian branch of the
U.S.S.R. Academy of Sciences from 1961 to 1971 and then served as head of the research laboratory at
Moscow's Institute of National Economic Planning (1971-76). Kantorovich was elected to the prestigious
Academy of Sciences of the Soviet Union (1964) and was awarded the Lenin Prize in 1965. In 1975, he received
together with Tjalling Koopmans a Nobel Prize.
260
Oskar Lange was the first to re-work Marx’s model in Wassily Leontief’s static terms.
The orientation of Soviet mathematical economics was focused on numerical methods of
optimization arising in economic planning and operational research.261 Various methods were
evolved in special fields of technology based on the classical calculus of variations. The
critical year was 1953 when a joint seminar of engineers and mathematicians, presided over
by Lev S. Pontryagin262 was held at the Institute of Automation of the Academy of Sciences.
The impulse came from the new interest in the mathematics of rocket motion. Alexander A.
Feldbaum’s263 papers on a controlled system’s maximum velocity proved to be the creative
stimulant. Traditionalist like A. I. Katz criticized the Kantorovich-Makarov264 model. Its
substance was that the dynamic treatment of the normative rate of efficiency should rely on
the ‘basic objective causal laws’ rather than a probabilistic approach entailed logically in
Kantorovich-Makarov. The traditionalists’ argument of the ‘objective laws’ was not
unfamiliar; the question, however, how to detect them was left unanswered.
An outsider?
At the end of his life, Varga had developed into an opponent of any form of modernization of
Soviet economic science. He rejected mathematical methods tainted by “revisionism” as
contrary to Marxism-Leninism. Since Nikita S. Khrushchev had transformed economics into
a management science at the service of his state planners, Varga’s crude criticism was met
with little deference. At the Extraordinary 21st Party Congress of the CPSU (January 27-
February 5, 1959) Ostrovityanov265, Vice-President of the Academy of Sciences read a report
on the activities of his Institute of Economics.266 He told the audience that the work of the
economic research institutes and of the economic faculties of the higher school did not meet
the heightened requirements of the extensive building of Communism and that very few
monographs, pamphlets or articles devoted to economics were of real help in the practice of
communist construction. In addition, the work of his institute on economic problems of
agriculture had been especially weak. More effective ties with practice had to be found and
research had to consist of projects directly assigned by the planning agencies and the
economic councils. In international economic relations he stressed the necessity of the
development of commodity-money relations in the economic relationships among the
countries of the socialist camp would create a need for a single yardstick with which to
compare the costs of production to a given country with costs in other countries in the
socialist system and also to compare the results of the competition of the two systems,
socialism and capitalism. Optimistically he referred to the role of the ruble. Ostrovityanov:
‘You may be certain that as we achieve further successes in communist construction the
Soviet ruble will emerge in the world market, gradually forcing out the dollar.’267
Obviously, Varga had become at that very moment an outsider having lost contact with
Soviet policy, especially with Khrushchev’s so-called ‘creative development of Marxism,
261
Alfred Zauberman, Mathematical Theory in Soviet Planning. Concepts, Methods, Techniques (The Royal
Institute of International Affairs), London, New York and Toronto: Oxford University Press, 1976.
262
Lev. S. Pontryagin (1908-1988).
263
A. A. Feldbaum, Optimal control systems, New York: Academic Press, 1965. Translated by A. Kraiman.
264
Valerij L. Makarov.
265
In 1956, a debate on Ostrovityanov's revised version of his handbook Political Economy revealed that nobody
reacted enthusiastically. Proceedings of the Moscow University in Philosophy and Economics Law Section,
1956, No. 2, translated in Sowjetwissenschaften, July 1957 and in Political Affairs, Vol. 36, November 1957, pp.
40-45. People participating in were A. V. Bakhurin, Gluchkov, S. B. Lif, N. S. Spiridonova and N. V. Chessin.
266
Pravda, 6 February 1959, p. 9.
267
Current Soviet Policies, III. 1960, The Documentary Record of the Extraordinary 21st Congress of the
Communist Party of the Soviet Union, New York: Columbia University Press, p. 195.
and the replacement of obsolete propositions by new ones that meet the requirements of the
political struggle of the proletariat’.268
268
B. N. Ponomaryov, History of the Communist Party of the Soviet Union, Moscow: Foreign Languages
Publishing House, 1960, p. 749.

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