U.S. Budget and Economic Policy is a study of how the world's richest state raises and spends its money, written by three Soviet economists who had plainly read almost everything the Americans themselves had published on the question. V. Usoskin, R. Entov and S. Tarasenko — specialists in Western economics, working in the tradition of Soviet scholarship that took capitalism seriously enough to master its own literature — produced a book whose two hundred pages rest on the Economic Report of the President, the annual Budget Message, the Statistical Abstract of the United States, the hearings of Congressional committees, and the academic public-finance writing of Richard Musgrave, Murray Weidenbaum, Robert Haveman and their contemporaries. It is a serious piece of work, and the first honest thing to say about it is that on its own subject — the American federal budget as an instrument of class rule and of war — a great deal of it is simply correct, and is documented from sources a reader can go and check.
For once in this series the date on the spine can be trusted. Progress translations usually lag their Russian originals by years, and several volumes we have republished carry a copyright date that belongs to a different decade than the argument inside them. This one does not. The text closes on the news of early 1973: it quotes the New York Times of 29 January 1973 and works through "the latest (1973) Presidential Budget Message" — the budget for fiscal years 1973–74, submitted that same month. It welcomes "the end of the war in Vietnam," which the Paris accords had just formalised, and "the agreements between the USSR and the USA on the limitation of strategic defensive and offensive arms" — the SALT I treaties signed in Moscow in May 1972. This is a book of the high détente moment, written in the first weeks of 1973 and printed the same year. Its real date and its stated date are the same, which makes it a cleaner historical witness than most of its shelf-mates.
That moment matters, because the manuscript was finished at the exact hinge of postwar economic history and it knows it. The subject that animates the book — over and above the tax tables and the appropriations charts — is the crisis of the dollar. The authors describe, accurately, the "massive 'flight from the dollar' which started in 1970–1971 due to fear of its devaluation," the shift of dollar holdings from private hands into the reserves of foreign central banks, and the way "a large deficit in the US federal budget serves as a sign of the further worsening in the international position of the dollar." What they were watching was the collapse of the Bretton Woods system — the postwar arrangement, built at a New Hampshire conference in 1944, under which the dollar was fixed to gold and every other major currency fixed to the dollar. On 15 August 1971 President Nixon had closed the gold window, ending the dollar's convertibility; the currency was formally devalued that December and again in February 1973, and by March 1973 the fixed-rate system was gone for good and the major currencies were left to float. The book was written into the last of that, and its instinct — that the twin American deficits, in the budget and in the balance of payments, were dragging the whole monetary order down with them — was sound. Where a reader must supply the correction is in the book's implied cause. It presents the dollar crisis as a symptom of capitalist disorder as such; the more exact account is that the crisis was the unwinding of a specifically American privilege, the right to run deficits in the world's reserve currency, a privilege that the Vietnam War and the "guns and butter" spending of the 1960s had finally exhausted.
The strongest chapters are the two that give the book its edge: the anatomy of military spending, and the class distribution of the tax burden. Neither is Soviet boilerplate. On the military side, the authors take Eisenhower's own coinage — "the military-industrial complex, for which the maintenance of military appropriations at a stable high level is of vital importance" — and fill it out with American testimony about how the complex works on the budget: the "interconnected aggregate of military men and political representatives of regions with large military bases, war industry corporations and also scientists and analysts working on military projects," each of whom "thinks that an increase in military spending is in his personal interests." They note, correctly and against their own side's practice, that military spending "by its very nature involves a waste of national wealth," and that the countries which grew fastest in the postwar decades — Japan, West Germany, Italy — were precisely those where "the arms race until now has been conducted on a comparatively smaller scale." That is a real economic argument, and it is one the book's own state could not comfortably hear.
The tax analysis is better still, because it is quantitative and it is turned against the official American self-image. The authors show that the federal income tax, which in 1913 "was paid only by a very small part of the population (less than 1 per cent)," had by the 1970s reached "about four-fifths of all Americans," and that each upward step in the tax curve coincided with a war. They trace how the burden was pushed downward. Citing the American economist David Davies, they show that sales taxes on food take 2.14 per cent of the income of a family earning under a thousand dollars a year and only 0.69 per cent from a family earning over ten thousand — so that "the burden of these taxes borne by the poorest population is 2–3 times heavier than by rich families." Drawing on the estimates of R. Herriott and H. Miller, who added up all federal and local taxes together, they reach the finding that damns the system's own claim to fairness: "the actual tax burden more often does not increase but decreases as the economic possibilities of the taxpayers rise." And they see clearly that the social-insurance payroll tax — "one of the most regressive forms of taxation" — was being raised precisely as income-tax relief was handed to the top, so that "the basic change in the system of individual income tax rates … adds up to increased taxes paid by the mass of working people, while the rise in taxes on big incomes performs the function of a political 'safety valve'." A reader who wants a Marxist account of why the American fiscal state distributes its costs downward and its reliefs upward will find one here, sourced and numbered.
Underneath the detail runs a general thesis, and it too is worth taking seriously. The book treats the budget not as neutral housekeeping but as "a condensed expression of the government's policy," a document that "reflects as a mirror the changing pattern of socio-economic priorities." Its account of state-monopoly capitalism — the Marxist term for the merging of the largest corporations with the power of the state into a single mechanism — is not a slogan but a description of something real: the postwar American state had indeed become, as the authors put it, an apparatus that "ultimately ensures the interests of the ruling upper crust of the capitalist class." Their reading of Keynesian economics is unusually fair for a Soviet text. They grant that the market "in principle cannot ensure either an adequate (optimal) distribution of resources and incomes," concede that this is now admitted by "the overwhelming majority of economists, with the exception of the most conservative wing," and locate the real function of Keynesian management with precision: government intervention "makes it possible to impose on the entire society economic decisions which are especially beneficial in the first place to the capitalist class." The conclusion quotes, as a confession, the Presidential Budget Message's own admission that "for almost two postwar decades the US economy had been unable to achieve the goal of high employment and prosperity for American citizens without inflation and war." That is a genuine indictment, drawn from Washington's own paper, of the political economy of the warfare state.
So the book does real work, and this introduction is not written to take that back. It is written because of what the book cannot do, and the limit is not a matter of this or that error of fact. It is structural, and it is the same limit that runs through every volume in this series that turns a Marxist X-ray on the United States. The instruments are excellent. They are pointed in one direction only.
Consider what the whole argument depends on. The book can dissect the American budget — can show where the money comes from, whose shoulders it rests on, how much goes to arms, how the priorities are set and by whom — because the United States publishes the documents that make such dissection possible. The Budget Message, the Economic Report of the President, the Statistical Abstract, the Congressional hearings, the studies by Musgrave and Weidenbaum and Haveman: every one of these is a public record, produced by the state under examination or by scholars free to examine it, and every one is cited by name in the notes. The authors' method is entirely parasitic on American fiscal openness. Their two hundred pages are, read a certain way, a two-hundred-page tribute to the fact that in the United States the budget is a public quarrel conducted in public documents that a foreign critic can buy and quote.
Now ask the question the book never asks of itself. Was the Soviet budget such a document? It was not, and the authors knew it was not. The Soviet state budget was among the most opaque fiscal instruments of any major power. Its true military share was concealed inside a single undifferentiated line — the published "defence" figure understated real military outlay by a large multiple, with the remainder scattered through the civilian ministries and the investment accounts, as the Soviet government itself would begin to admit only under Gorbachev at the end of the 1980s. There was no Budget Message setting priorities open to challenge, no Council of Economic Advisers publishing its forecasts, no Congressional committee taking adversarial testimony, and — decisively — no legislature with the power to reject the budget put before it. The Supreme Soviet ratified; it did not decide. The fiscal transparency that this book implicitly demands of Washington, and relies upon to write a word of its own analysis, is exactly the transparency the Soviet Union denied its own citizens.
The book does not merely omit the comparison; at one point it steps up to the line and turns away. In its survey of Western theories of planning it notes, with a flick of disapproval, that Western writers find it "the proper thing" to "regard with disapproval the system of planning existing in socialist countries." The authors defend Soviet planning against that disapproval. What they never do — what the genre forbids — is subject the Soviet budget to the class analysis they have just performed so ably on the American one. The tools that reveal whose interests the American budget serves are laid down at the border. The one budget in the world that this Marxist study of budgets will not read as "a condensed expression of the government's policy," reflecting "the acuteness of class and social conflicts," is the Soviet one.
This is precisely the finding that the answering tradition had reached forty years earlier, and reached about the Soviet budget itself. In The Revolution Betrayed, written in 1936, Trotsky made the concealment of fiscal reality the very centre of his account of what the ruling stratum in the USSR — the bureaucracy, the caste of privileged officials who administered the state and lived off it — actually was. His complaint against official Soviet literature was not that it lied about this or that figure but that it refused to open the books at all: "what you cannot meet anywhere," he wrote, "is an investigation of the bureaucracy as a ruling stratum — its numbers and structure, its flesh and blood, its privileges and appetites, and the share of the national income which it swallows up." And he named the mechanism of the concealment exactly. When the Left Opposition had tried, in 1927, to estimate how much of the national income the apparatus consumed, "the authorities took the necessary measures to make such estimates impossible." The bureaucracy, he concluded, "conceals its income; it pretends that as a special social group it does not even exist." A state that will not let its own surplus product be counted is telling you something about who disposes of it.
Trotsky, notably, used the budget itself as a class instrument — the same move Usoskin, Entov and Tarasenko make against Washington, turned the other way. He observed that the first Soviet five-year plan projected a state budget of only 16 per cent of national income, "whereas the budget of tzarist Russia, which had no intention of creating a socialist society, swallowed 18 per cent" — a single comparison of ratios made to expose the timidity and the priorities behind the plan. The method is identical. What separates the two books is not analytical power but the direction each is permitted to face. Trotsky could turn the fiscal microscope on the workers' state and its rulers because he wrote from outside and against them, at the cost of exile and, in 1940, his life. The three Soviet economists could turn the same microscope on the United States because their state wished it turned there, and only there.
None of this is peculiar to the budget. It is the signature of the whole Soviet Americanist enterprise, and the sibling volumes in this series show the identical shape. B. Pyadyshev's study of the American military-industrial complex (1977) is built out of Senator Proxmire, Fulbright, the Pentagon Papers and a former Assistant Secretary of Defense — "a small monument," as this series has said of it, to documents the author's own state did not produce. Georgi Tsagolov's War Is Their Business (1985) sets out the American critics' case with scrupulous accuracy and then abolishes it by decree, because he had no Fortune, no Proxmire and no Armed Services Committee of his own to cite. Radomir Bogdanov's The US War Machine and Politics (1986) writes the institutional history of the American national-security state and omits the armed institutions of its own. And in the volume closest to this one, Irina Osadchaya's Keynesianism Today (1983) reads Western economics with real competence and never once turns its instruments upon the one economy it was written from. U.S. Budget and Economic Policy is the fiscal member of that family. The same brilliance, the same blind spot, produced by the same conditions: an intellectual free to examine the accounts of a rival and forbidden to examine his own.
The reader who wants the counter-analysis of the Soviet budget that this book will not perform should go to The Revolution Betrayed, and in particular to its sixth chapter, "The Growth of Inequality," where the concealment of the bureaucracy's share of the national income is examined at length. For the same period's own record of the arms economy on both sides of the Cold War, R. Faramazyan's Disarmament and the Economy (1981), also in this series, tabulates the American military burden carefully and passes over the Soviet one — the mirror-image silence, worth reading beside this book precisely for what the two leave out together.
Read U.S. Budget and Economic Policy, then, for what it genuinely contains: an intelligent, well-sourced Marxist account of how the American federal budget militarised itself, of how it shifted its costs onto working people through the most regressive taxes it could reach for, and of how Keynesian economic management served, in the end, "the ruling upper crust of the capitalist class." The critique is real and it is documented, and a reader is right to take it. But hold in the other hand the one document the book never cites and never could — its own country's budget — and the volume becomes something more instructive than its authors intended: a demonstration, in two hundred numbered pages, that fiscal openness is a virtue best analysed in someone else, and that the surest measure of a state's fear of arithmetic is the arithmetic it will not print.