There is a boundary drawn early in this book, in a single quiet sentence of the preface, and once you have seen it you cannot read the rest of the volume without it. P. Khvoinik has set out to anatomise trade among the capitalist states — the rivalry of the United States, Western Europe and Japan, the tariff bargaining of the General Agreement on Tariffs and Trade (GATT), the rise of the transnational corporation, the collision of free-trade rhetoric and protectionist practice, the whole disordered commerce of the Western world in the wreckage of the oil shocks. It is a careful, statistically literate, professionally cautious survey, and on a great deal of it he is right. But he tells the reader at the outset what he will not look at: "a study of East-West trade, which is one of the major dynamic elements of world economic relations, lies outside the scope of this book." The economist who will measure every current running through the capitalist half of the world market stops precisely at the shoreline where his own half begins. That decision is not a footnote. It is the argument.
What the book is, and when it was written. The spine reads 1982, and Progress issued the English translation, from the Russian, that year; the volume is credited to P. Khvoinik and to no institution, and I will not invent one for him. But the text is not a stale reprint dressed in a fresh jacket, the recurring trap of this series. It reads its own date. Its evidence runs hard into the early 1980s — the Tokyo Round of GATT, the recessions of the mid- and late 1970s, "a new economic decline in the early 1980s" — and it quotes the Twenty-Sixth Congress of the Soviet Communist Party, which met in February 1981, as a live event. Its own summary of the moment is that world capitalism "is experiencing its third economic recession in a decade." This is a manuscript completed in 1981, an early-1980s book about an early-1980s crisis, and it should be read as a document of that exact moment: the post-oil-shock decade, when the long postwar boom had visibly ended, inflation and unemployment had arrived together, the Bretton Woods monetary order had collapsed, and Western governments were reaching, one after another, for the tariff.
Who wrote it, and for whom? The book announces its own audience with unusual frankness. "This study is not a textbook," Khvoinik writes; it is addressed to "relatively well-informed readers" abroad, some of whom "may not share his view of the world," and it makes a deliberate effort, he says, to rely on "definitions that are frequently employed in Western economic literature." This is not a cadre manual for a party school and not a primer for the curious; it is written to be argued with by economists who read the same GATT and United Nations statistics he does. He goes further, and it is worth recording, disclaiming the very charge these volumes usually earn: the author "does not propose to renounce his right to defend his own ideological conceptions," but this "does not imply a refusal to engage in scientifically grounded polemics," and he "will greatly welcome opinions of opponents and colleagues from Western countries that are based on analytical arguments." A Soviet economist inviting his adversaries to check his figures is not the posture of a propagandist, and for long stretches the book earns the claim. Its cited Soviet sources — M. M. Maksimova on Soviet–Western economic cooperation, and the other trade specialists listed in its preface — place it in the milieu of the Academy of Sciences' Institute of World Economics and International Relations (IMEMO), the same establishment that produced the sibling volumes in this catalogue on the world capitalist economy. What it was for, in the détente years, was respectability: a demonstration that Soviet political economy could meet Western trade economics on its own statistical ground and hold its own. On the technical ground, it very largely does.
It matters to hold that moment in view, because the book is an intervention in it. The decade Khvoinik was writing at the close of had broken the certainties of Western economics from the outside in. The first oil shock of 1973–74 had quadrupled the price of crude and tipped the capitalist world into its deepest recession since the 1930s; the second, after the Iranian revolution of 1979, had done it again; the fixed exchange rates of the Bretton Woods system, which had underwritten the postwar boom, had collapsed between 1971 and 1973; and by 1981–82 the American Federal Reserve's war on inflation had driven interest rates and unemployment to postwar records across the West. To a Soviet economist this looked like vindication delivered on schedule — the "general crisis" arriving on cue — and much of the book's confidence is the confidence of a man who believes the facts have finally come over to his side. That the same years were quietly draining the confidence out of his own economy is the possibility the book is built not to raise.
The doctrine it exists to serve should be stated exactly, because Khvoinik states it exactly. Two Leninist theses organise the book. The first is the "general crisis of capitalism" — not this or that recession, but a single terminal decline. "It was noted at the 26th CPSU Congress," Khvoinik writes, "that recent years were marked by a further aggravation of the general crisis of capitalism." The second, and the one that does the real work in a book about trade, is the thesis of inter-imperialist rivalry: that the unity of the capitalist powers is always temporary and their competition always reasserts itself, so that no combination of capitalist states can ever settle into a stable, planned whole. Khvoinik draws the thesis straight from its source. Against those who imagined that the giant corporation and the trading bloc might smooth the antagonisms away, he cites the Congress: "the interimperialist contradictions are growing more acute, the scramble for markets and for sources of raw materials and energy is more frantic. Japanese and Western European monopolies compete ever more successfully with US capital, and in the US domestic market too." And he reaches back to Lenin's quarrel with Karl Kautsky — Kautsky had speculated that capitalism might evolve toward a single peaceful cartel of the powers, an "ultra-imperialism" — to insist that "monopoly under capitalism can never completely, and for a very long period of time, eliminate competition in the world market." Capitalist integration is a fraud that must break down; rivalry is the law. That is the doctrine the book is built to prove.
Now the credit, and it is due at length, because a reader told the whole book is worthless learns nothing from it. Where Khvoinik describes the actual structure of capitalist trade in his decade, he is often precise and almost always worth reading. His central map is the one Western trade economists were themselves drawing: the "triangle" of the United States, the European Common Market and Japan, "whose rivalries define the major centres of contradictions in world capitalist trade." He tracks the relative decline of American commercial primacy with real figures — West Germany overtaking the United States as an exporter in the early 1970s, Japan passing France in 1968 and Britain in 1971 to become the capitalist world's second economic power. He watches the European Economic Community (EEC) thicken into a bloc: the share of trade EEC members did with each other rising from 34.5 per cent of their exports in 1960 to 50.1 per cent in 1970 and 52.6 per cent in 1973. His account of the transnational corporation is structural, not decorative — he estimates that international monopolies already controlled close to three-fifths of capitalist world trade and that nearly a third of international commodity exchange had become intra-firm transfers "essentially of a non-market character," a genuinely important observation about how much "trade" had ceased to be trade in any market sense. He is good, too, on the financial machinery inside the corporation, citing with only mild dissent the banker's maxim that "in a global context, the free movement of funds is the bloodstream of the corporations," and documenting how firms shifted profits across borders to dodge devaluations. And his chapters on trade policy are the strongest in the book. He follows the Kennedy Round tariff cuts and the stalling of the Tokyo Round; he documents the "trade wars" of the period, down to the "Chicken War" between the United States and the Common Market; he is sharp on GATT as an instrument the rich built for themselves, quoting the Western press's own name for it, a "rich men's club." He is careful, against his own polemical interest, not to overstate the case — noting that it "would be an oversimplification" to conclude from the trade wars that liberalisation "has collapsed," and warning that the low tariff averages of the 1970s hide "extremely harsh duties" on particular goods, so that, in the words of a GATT official he quotes, "an overall summary of the situation camouflages the high tariffs which remain." Crucially, he reads his opponents in the original — Galbraith on the corporation, the Dutch economist Jan Tinbergen on the Common Market's discriminatory tariffs, and the Western financial press turning on the EEC as "a tight little protectionist club, instead of the free-trade champion it once claimed to be." This is what honest work under constraint looks like on the economics of the West, and the sourcing is generally good enough to follow up. Mine it for exactly that.
And yet the book keeps documenting, against itself, the opposite of what its doctrine requires — and this is the first of its two reflexive faults. The inter-imperialist-rivalry thesis predicts fragmentation: capitalist unity must dissolve back into conflict. But the phenomenon Khvoinik spends most of his pages measuring is integration — the deepening, thickening, institutionalising of exactly the capitalist unity the doctrine says cannot last. Postwar trade grew, on his own figures, some twenty-two-fold. The EEC did not fly apart; it enlarged, and its internal trade rose toward and past half of its members' commerce. Tariff liberalisation, he is honest enough to write, "already appears to be irreversible in the long run, for it has developed as far as has the process of internationalization of economic life on which it rests." The postwar capitalist world was not fragmenting under the weight of its contradictions; it was knitting itself together into the interdependent trading system we now take for granted. Khvoinik sees this clearly — he has the data in front of him — and he resolves the tension the only way the doctrine allows: by asserting that the integration is real but "does not overcome" the underlying antagonism, that liberalisation "generally intensifies rather than alleviates interimperialist differences." The trouble is that this move cannot be wrong. Whatever the powers do — quarrel, and it confirms the rivalry thesis; cooperate, and the cooperation is declared a mere truce that "does not overcome" the rivalry underneath. A law that is confirmed equally by conflict and by its absence has stopped being a finding about the world and become a fixed point of belief. The same closure runs through the general-crisis schema. Even the Party document Khvoinik quotes feels the strain: the Twenty-Fifth Congress conceded that "it is farthest from the Communists' minds to predict an 'automatic collapse' of capitalism. It still has considerable reserves. Yet the developments of recent years forcefully confirm that capitalism is a society without a future." A system with "considerable reserves" that has been in its "general crisis" since 1917, transforming the productive forces of half the planet as it dies, is a system whose obituary needs at least re-dating. The crisis is asserted as a law of history and then illustrated by whatever happens.
The second reflexive fault is the boundary we began with, and it is the deeper one. Return to the excluded subject: East-West trade, "one of the major dynamic elements of world economic relations," ruled outside the scope of the book. The stated reason is that it deserves separate study, and in a narrow sense that is fair. But look at what the exclusion accomplishes. The Council for Mutual Economic Assistance — the CMEA, or Comecon, the trading community of the Soviet bloc — is the one large economic grouping in the world whose trade performance this book about world trade never has to measure. Every instrument Khvoinik has sharpened — the analysis of trade shares, of stagnation and dynamism, of a bloc's internal cohesion, of the drift toward protectionist autarky (self-sufficiency, an economy walled off from the world market) — is available to be turned eastward, and none of it is. This is not Khvoinik's personal evasion; it is the house rule of the whole series, and its sibling volumes let us watch it operate. V. V. Rymalov's The World Capitalist Economy (Progress, 1982), written in the same institute in the same year, diagnoses Western stagflation exactly while presenting CMEA as "the most dynamically developing economic community in the world" — published, as its own introduction notes, in the terminal stagnation of the Brezhnev years. G. Chernikov's The Crisis of Capitalism and the Condition of the Working People (Progress, 1980) reserves the entire vocabulary of crisis, shortage and stagnation for the West. Irina Osadchaya's Keynesianism Today (Progress, 1983) anatomises the collapse of Western economic policy while insisting that genuine planning "cannot be practised in the capitalist countries." Same house, same instruments, the same silence drawn in the same place. The general crisis is a law that only ever points one way across the map.
And here the answer is not merely old but eerily exact, because a founder of the Soviet state had already named this precise prohibition — the refusal to measure the socialist economy against the world market — as the characteristic lie of the bureaucracy. In The Revolution Betrayed (1936), Trotsky argued that the real strength of the Soviet economy could be established only in one way: by comparing it, on the world market, with the capitalism it claimed to be overtaking. "The strength of the Soviet structure," he wrote, "is measured in the last analysis by the productivity of labor. And that, under a market economy, expresses itself in production costs and prices. The difference between domestic prices and prices in the world market is one of the chief means of measuring this correlation of forces." And then the sentence that could serve as an epigraph to Khvoinik's excluded chapter: "The Soviet statisticians, however, are forbidden even to approach that question." Elsewhere in the same book Trotsky put the material fact behind the prohibition with brutal economy — "For the world market the ruble does not exist." That is the buried reason East-West trade "lies outside the scope of this book." It is the one comparison the doctrine cannot survive, the point where the socialist economy would have to submit to the same measure Khvoinik applies so ably to everyone else, and it is fenced off in a single preface sentence half a century after Trotsky predicted it would have to be. Khvoinik's exclusion is not a scholar's modest division of labour; it is the old prohibition, still holding.
The reply from Khvoinik's own decade rested on the same foundation. The Fourth International's economist, Ernest Mandel, was writing full-length Marxist analyses of exactly Khvoinik's subject in exactly these years — Late Capitalism (1972; English, 1975) and The Second Slump (1978) — and reaching many of the same conclusions Khvoinik reaches about the West: that the postwar boom was over, that the crisis was structural rather than a passing dip in the cycle, that the recessions of the 1970s were moments of a longer downturn. But Mandel's framework did what Khvoinik's could not: it treated the world market as a single unit and the socialist economies as proper objects of economic analysis, subject to their own contradictions of scarcity and bureaucratic mismanagement, rather than as the serene daylight against which the capitalist night is measured. That is the whole distance between the two Marxisms. Khvoinik and Mandel studied one world economy, in the same years, with overlapping tools — and only one of them was permitted to point his tools in every direction. Trotsky's larger insight in The Revolution Betrayed was that the world division of labour is primary: no national economy, planned or not, stands outside the world market, and the pretence that the socialist bloc constituted a self-sufficient world apart was a fiction that the ruble's non-existence on that market exposed. Khvoinik's book, which measures the capitalist half of that single world with such care and refuses even to glance at the seam where the two halves meet, is the fiction made into a table of contents.
So the verdict divides, and the division is the reason to reprint the book. As a survey of trade among the capitalist powers in the early 1980s — the American–European–Japanese triangle, the mechanics of GATT and the tariff rounds, the discriminatory tariff of the Common Market, the rise of intra-firm trade inside the transnational corporations, the tug of war between liberalisation and the returning protectionism of the slump — this is a competent, well-documented, frequently shrewd book, and its author reads the Western economists he criticises rather than relaying them at second hand. Read it for that and it repays the reading. But read it as a document of its moment and it records something its author did not intend: a Soviet economist given a first-rate instrument for measuring the trade of nations, and permitted to measure every nation on the map but his own. The rivalry he insists must fragment the capitalist world was, on his own figures, integrating it; and the one trading bloc he was forbidden to weigh on the world market was the one standing behind his chair. Trotsky named the prohibition in 1936. Khvoinik was still observing it in 1982, in a single sentence of a preface, and the decade that followed — the CMEA's unravelling, the ruble's collision with the world market it had been told did not want it — turned that sentence into the truest thing the book contains.