V. Pereslegin's Finance and Credit in the USSR is a primer on how socialist money was supposed to work, written at the one moment when its authors had most reason to be confident and least reason to be so. The spine says 1971, and for once the date on the spine is close to the date of the text: the latest events in the book are the Twenty-Third Congress of the CPSU of March–April 1966 and its Directives for the 1966–70 Five-Year Plan, and the budget tables run in one series from 1960 to 1971. This is not a lagged reprint of the kind that recurs elsewhere in this series. It is a genuine early-1970s book, and its subject is the reform then in progress — the 1965 measures associated with Kosygin, which promised to run Soviet enterprises on profit, profitability and khozraschot (cost accounting, the practice of measuring an enterprise's outlays against its receipts in money terms). The book teaches the financial machinery of that reform in the confident register of a system that has just modernised itself and expects the results to vindicate it. Within fifteen years the same machinery would be the object of an official diagnosis of stagnation, and within twenty the currency it describes as the soundest in the world would have collapsed. The book cannot know this. What it can do — and what makes it worth reprinting — is state, cleanly and in textbook form, the doctrine that made the coming trouble unnameable.
Its structure tells you who it was for. Every major topic is expounded three times over — under capitalism, under socialism, and "in developing countries." Public finance, state financial systems, credit and credit institutions each get their capitalist, socialist and developing-country section in turn. This is not the shape of a book written to persuade a London reader or to arm a Western Communist Party in the factional wars of the day. It is a comparative manual pitched at the newly independent states of Africa and Asia — the ones the book repeatedly calls the countries "steering a socialist course" — offering the Soviet financial system as the model a decolonising government might adopt in place of the one its former masters left behind. Progress printed a great deal of this kind of thing in the early 1970s, and the developing-country reader is written into every chapter. Pereslegin himself is not a famous name; the book carries the anonymous authority of the Soviet finance establishment rather than a scholar's signature, and it should be read as an official statement rather than an individual argument.
The doctrine at the centre of the book is that under socialism the categories inherited from capitalism — money, credit, profit, the budget — survive in name but change their nature. They are the same instruments, cleansed of the class content that made them dangerous. This is the same move the sibling volumes in this series make, and it is worth registering that they make it in concert. A Dictionary of Political Economy (Progress, 1985) defines Soviet money as something that "embodies social labour united through socialist ownership, and so cannot become a tool of exploitation"; Fundamentals of Political Economy (Progress, 1980) closes its balance sheet of the two systems with the flat boast of "no inflation." Pereslegin's finance manual is the same doctrine worked out at the level of mechanism — not what socialist money is in the abstract, but what the State Bank, the budget and the credit plan actually do with it.
On credit, the claim is put plainly. Under socialism, Pereslegin writes, credit "is not born of relations of exploitation and does not produce or deepen contradictions in society, but promotes its progressive advance." On profit — the category the Kosygin reform had just promoted to the centre of enterprise management, and therefore the one most in need of defending — the book is at pains to distinguish the socialist article from its capitalist namesake. It even names the accuser: "The statement made by the Mao Tse-tung group that 'capitalism is being restored' in the Soviet Union is equally slanderous," it says, before drawing the line that answers the charge. Socialist profit "is not the result of exploitation but of the efficient economic activity of enterprises." (The Sino-Soviet split is doing quiet work here; a Soviet finance textbook in 1971 has to explain why paying enterprises by results is not a return to the market, because Beijing was saying exactly that it was.)
And on money itself, the load-bearing claim is stability. The socialist financial system, the book holds, rests on a material basis that is stable by construction, because it is planned. Budgets "are usually drawn up and executed with a credit balance (income exceeding expenditure)," and this, Pereslegin writes, "ensures the stability and soundness of the whole financial system and of currency circulation." The ruble is not capital and cannot become capital; it is an instrument of the plan, issued and regulated from a single centre. "The USSR State Bank is the only centre for the issue of currency," and it emits and withdraws cash "in accordance with Government instructions and the relevant cash plans." Money here is not a force the state must reckon with but a lever the state holds in its hand. The whole apparatus of the book is designed to show that the lever cannot slip.
The trouble with a doctrine of guaranteed stability is that it forbids the vocabulary you would need to describe instability, and this is where Pereslegin's book gives itself away most completely. In a full-length manual on Soviet finance and credit, running to some forty-four thousand words and narrating the entire monetary history of the Soviet state, the word inflation does not appear once. Not as a Soviet phenomenon, which the doctrine rules out — but not even as a capitalist one, though the book has ample occasion for it: it discusses the "currency-financial crisis" of the capitalist world, the depreciation of the pound and the franc, the "currency war," the printing of "large amounts of new paper money" to cover Western budget deficits. It describes inflation in the capitalist countries in every particular and never names it. The concept has been so thoroughly quarantined that the term itself has dropped out of the working vocabulary.
The companion word, deficit, survives — but only where the doctrine permits it. Budget deficits are "becoming habitual" in the capitalist countries; some thirty-five of forty surveyed developing countries run them; the young Soviet state ran one in the early 1920s until, by 1925, "the budget deficit had been wiped out." After that the Soviet budget is always in surplus, always "executed with a credit balance," a yearly increase of income over expense. This is the finance-manual version of the pattern the Dictionary draft found across the whole lexicon: the words for economic malfunction exist, and are defined so that they can be predicated of everyone except the USSR. Shortage, deficit, depreciation, inflation — each is a capitalist disease, or a memory of the pre-socialist past, never a present fact of the system the book describes.
The suppression shows most sharply in what the book does with the currency reforms it is proud of. Pereslegin narrates three of them — 1924, 1947 and 1961 — as milestones of stabilisation. In the early period, he writes, "Emission of money had to be reduced and ultimately discontinued," and "the old depreciated paper money was replaced by new Soviet treasury notes." After the war, a reform in 1947 restored the real value of wages. And "on January 1, 1961, new money was issued, worth ten times as much as the old." Each of these is presented as an achievement, a straightening of the accounts. But a reform that replaces depreciated money, or reissues the currency at a tenth of the old face value, is a response to something — to a monetary overhang, to prices the ruble could not honour, to the accumulated pressure that a planned economy relieves not by open price rises but by shortage and periodic recalibration. The book shows the cures and never once names the disease. It describes the redenomination of 1961 as a simple ten-for-one exchange, an administrative convenience, when it was among other things an acknowledgement that the unit of account had drifted from what it could buy.
Every Soviet consumer knew what the manual could not say. The queue and the empty shelf were permanent features of the planned economy; defitsit — the good that was chronically "in deficit," unobtainable at the official price — was a fixture of everyday Russian precisely because suppressed inflation and chronic shortage were structural, not accidental. The pressure the reforms kept mopping up was real enough that it would erupt into open, catastrophic inflation the moment price controls were lifted at the end of the 1980s. A finance manual adequate to its object would have had a theory of this. Pereslegin's does not lack it by oversight; the doctrine of guaranteed stability has defined the phenomenon out of existence before the description can begin.
There is one place where the book comes nearest to describing the real mechanism, and characteristically it does so without seeing what it has described. Pereslegin explains that most payments between enterprises pass through the State Bank "in the form of paper transfers and this considerably decreases cash requirements," while a separate "cash plan" and a "planned balance of the monetary incomes and expenditures of the whole population" govern the notes that reach workers' hands. This is the famous two-circuit ruble — the wall the Soviet system built between non-cash money, which circulated among enterprises as a pure accounting entry, and cash money, which alone could buy consumer goods. That wall was the device that made the plan enforceable and, not incidentally, kept enterprise "money" from ever chasing goods in the shops. Pereslegin sets out the two circuits as an administrative fact of banking technique. He does not present them as what they were: the structural reason a Soviet ruble in an enterprise account and a Soviet ruble in a worker's pocket were not, in any economically meaningful sense, the same money.
None of this had to wait for hindsight to be answered. In 1936, in The Revolution Betrayed, Trotsky devoted the fourth chapter — "The Struggle for Productivity," with its sections "Money and Plan," "'Socialist' Inflation" and "The Rehabilitation of the Ruble" — to exactly the categories Pereslegin's manual would later render harmless, and reached the opposite conclusion on each. The chapter is the direct reply to this book, written thirty-five years before it, and the sibling introductions to the Dictionary and the Fundamentals rest on the same text; a reader who wants the argument in full will find it there and in chapters 5 and 6 on the Soviet Thermidor and the growth of inequality.
Trotsky's starting point is that socialist money is still money, and cannot be wished into a mere token by decree. "Money cannot be arbitrarily 'abolished,'" he wrote; its elementary functions "as measures of value, means of exchange and medium of payment, are not only preserved, but acquire a broader field of action than they had under capitalism." Far from being a docile instrument of the plan, money was the indispensable check on the plan — "a financial lever, in the form of a real testing out of a priori calculations with the help of a universal equivalent, a thing that is unthinkable without a stable money system." And a stable money system, he insisted, could not be conjured by administrative fiat: "the sole authentic money is that based upon gold. All other money is only a substitute." The ruble, cut off from that basis and printable at will, had "a shut-in character. For the world market the ruble does not exist" — a judgement Pereslegin's own book quietly confirms when it explains that the State Bank alone sets the ruble's foreign exchange rates and that a separate "transferable ruble" had to be invented for trade within the socialist bloc.
Against the very boast Pereslegin makes — stability guaranteed by the plan — Trotsky set the identical boast in the mouths of the men who first made it, and showed what it concealed. "The stability of the Soviet valuta," Stalin had said in 1933, "is guaranteed primarily by the immense quantity of commodities in the hands of the state put in circulation at stable prices." This is Pereslegin's doctrine word for word, forty years early. Trotsky's answer was to trace the inflation of the first Five-Year Plan through the regime's own currency figures — the note issue swelling from 1.7 billion rubles in 1928 to 8.4 billion by 1933 — and to name the effect the official theory forbade: "currency inflation, inevitably producing a credit inflation, entails a substitution of fictitious for real magnitudes, and corrodes the planned economy from within." The Left Opposition had put the same point as a slogan it proposed the State Planning Commission hang on its wall: "Inflation is the syphilis of a planned economy." When the People's Commissar of Finance announced in 1936 that the Soviet ruble was more stable than any currency in the world, Trotsky did not call it a lie; he called it "an inflation of optimism," and set beside it the fact that the printed ruble was backed twelve and a half per cent in gold.
The precise thing Pereslegin's manual cannot do, Trotsky's chapter does on every page: it describes the actual behaviour of Soviet money — its issue, its depreciation, its recalibration, the gap between its face and its purchasing power — and it identifies the beneficiary of the confusion. By manipulating the ruble's real value across different sectors and strata, Trotsky wrote, "the bureaucracy deprived itself of the necessary instrument for objectively measuring its own successes and failures." The category the finance manual has no room for — a bureaucratic stratum with interests of its own, standing between the plan and the people — is the one that makes the monetary history legible.
That the doctrine is unfalsifiable does not make the book useless, and a reader told that everything in it is worthless would learn nothing true. Stripped of its guarantees, Pereslegin's manual is a lucid and, so far as it goes, accurate description of how the Soviet monetary system was actually plumbed — and that description is not easy to find stated so plainly elsewhere in English. The account of Gosbank (the State Bank) as a monobank is genuinely informative: a single institution that issued the currency, held the accounts of every enterprise, cleared all inter-enterprise payments by debiting one account and crediting another, supplied the cash to pay wages and execute the budget, and through all of this exercised what the Soviets called control by the ruble — using the flow of payments through its own ledgers as a continuous audit of whether enterprises were meeting their plans. The book explains why a system with no capital market needs its bank to do the disciplining that markets do elsewhere, and it explains it clearly.
So too with the budget. Pereslegin lays out the two pillars on which Soviet state revenue rested after the 1930 tax reform — the turnover tax, a levy built into the price of consumer goods, and deductions from enterprise profits — and shows the budget doing the work the book's doctrine most wants credited to it: redistributing the surplus product of the whole economy, financing capital investment, education, health and defence out of a centrally pooled fund rather than out of borrowing. The mechanics of the 1930–31 credit reform, which abolished the commercial credit enterprises had extended to one another and replaced it with direct, planned, secured bank credit routed through the State Bank, are set out with real clarity; so is the logic of the Kosygin reform's new financial levers — the charge for productive assets, the material incentive funds, the reworked wholesale prices meant to reflect "socially necessary costs of production." As an exposition of the levers, the accounts and the institutions, the book holds up. What it cannot do is describe how those levers behaved once the plan they served began to seize — and that limit is not a gap in Pereslegin's competence but a consequence of the doctrine he was commissioned to teach.
Read it, then, as the clearest available statement of a settled position: socialist money as a mastered instrument, socialist finance as a system without crises, the ruble as the soundest currency in the world. Then read the fourth chapter of The Revolution Betrayed, which had described the real thing — a currency the state kept printing and denying it printed, a plan corroded from within by the fictions its own money smuggled into the accounts — a full generation before this book assured its readers that none of it could happen.