A review of The Value of a Ruble: A Social History of Money in Postwar Soviet Russia, 1945-1964, by Kristy Ironside.
Money talked in the USSR. Entertaining showcases enticed citizens to blow their earnings on the lottery, while social pressure, patriotism, and financial prudence encouraged some to store away as much as a month’s worth of wages into government bonds. People watched the prices of retail commodities vigilantly, ready to hurl criticism at the government if improvements in standards of living didn’t correlate with cheaper bread. State efforts to reduce income inequality and bolster retirement benefits yielded mixed results for the most vulnerable members of society. Perhaps most remarkably, government debt and income taxes were major political issues in the Soviet Union during the late 1950s and early 1960s. Decades before Tea Party conservatives in the United States began their “march to zero” in places like Kansas, Soviet Premier Nikita Khrushchev promised that the USSR would be “the first country in history to end income taxes” (p. 251).
If all of this sounds strange to you, you are not alone. Both Marxist ideology within the Soviet Union and a lingering desire of Western scholars to portray communist economies as entirely divergent from capitalism has fogged our lens to the reality of money’s vital role in the country’s history. In a sense so too has the valuable attention paid to the second economy of informal connections (blat), patronage, and black market activities, which has caused us to somewhat overlook the functioning of the above ground economy. Even scholars such as myself, who often dwell on the parallels between the Cold War superpowers, might be surprised by how much the policy choices surrounding monetary issues mirrored those in the West, despite an often-distinctive discourse around such decisions.
Kristy Ironside’s achievement is to reveal how much money mattered to Soviet citizens and the communist leaders. She bases her study on meticulous archival research befitting of her status as one of the final students of the Sheila Fitzpatrick school of Soviet history, which has produced many of the most important historians in the field working in the academy today. Through an exploration of policy and experiences around prices, wages, pensions, taxes, bonds, lotteries, and savings accounts, she concentrates more on the qualitative “social history of money” than on classic quantitative economic history (though abundant numeric data are also presented).
This decision allows her to address head on a remarkable array of interpretive questions that concern social, political, and cultural historians of late Stalinism and the Khrushchev era. She hinges these interventions around a twofold overarching argument. Money, she contends, “became a measure of the Soviet Union’s postwar recovery and revolutionary progress, not only in economic but also in moral and ideological terms” (p. vii). Ironside also charts a shift in the Stalin and Khrushchev periods with economic relations to the state going from paternalist interactions based on supposed Stalinist “care” to an alleged partnership between the rulers and the ruled. These contentions weave through each of the dissertation’s chapters.
The work opens with an overview of the argument, a discussion of money in the Soviet Union up to the time period covered in the study, and a review of the historiographic literatures in which Ironside places her scholarship. After a fleeting flirtation with the idea of abolishing money altogether after they came to power in 1917, the Bolsheviks came to stress that somehow socialist money would differ from the exploitative function it played in capitalist countries. Stalin in particular attacked evocations of the Marxist orthodoxy against money as a “leftist deviation” as he consolidated his power. The Second World War witnessed the government printing a massive quantity of new rubles, which devalued the currency and set the stage for a reissuing in 1947. Ironside then notes that her investigation of the economic life of Soviet money builds on and contributes to a deep, though recently neglected, economic history of the USSR, newer scholarship on the social history of money, and the expanding literature on late Stalinism and Khrushchev-era Thaw. Hers is a part of a new generation of economic history—comparable in many ways to works by scholars such as Sven Beckert and Louis Hyman on American capitalism—that endeavors to reach a broader audience of historians less focused on the quantitative approaches.
The first chapter concerns prices for retail goods, especially food and household items. In the late 1940s the USSR began a practice of annually cutting prices of state supplied goods in the spring. This stimulus measure became extremely popular with Soviet urbanites who viewed it as a main way that the state showed its benevolence toward their economic well-being. The trouble began when, after seven years of reductions, Khrushchev canceled the policy in 1955. His attempts to convince citizens that his other policies would provide better assistance without the negative consequences that price cuts were having on the supply system fell flat. When the state announced an increase on the price of meat and butter in the midst of severe food shortages in the summer of 1962, a backlash erupted. Most significant was a violently-suppressed uprising in Novocherkassk during which protesters had suggested that they could solve the shortages by making sausage out of the fleshy Soviet premier.
Wages come next in the dissertation. Again one of the radical, yet basic, promises of communism—equality—got pushed aside. Lenin and Stalin had developed a pronounced opposition to the idea that wages should be doled out simply according to one’s need. Instead, Soviet leaders wanted to use them to incentivize productivity. By the Khrushchev era an elaborate system of wage scales for different types of employment and added benefits awarded to productive workers had created striking inequality in income. It also had led to de-facto gender discrimination in pay, since workers in light industries, who were disproportionately women, made much less than those in fields like mining or metallurgy. Khrushchev decided to try to rectify the former problem, while ignoring the latter. He raised the minimum wages and placed stricter caps on high earners. Yet Ironside shows that this reform failed to achieve its intended result because the “government did not substantially reduce the combined monetary and non-monetary privileges elites enjoyed over ordinary workers, nor did it address the inequality that existed between” male and female wages (p. 121).
In the middle of so much folly and fleecing, one of Khrushchev’s measures can be seen as a qualified success: the restructuring of the Soviet pension system so that it provided improved guarantees to citizens that they would avoid poverty after their working years. A big problem that had plagued the pension system was that it had become a bureaucratic nightmare for many would-be retirees to demonstrate continuous employment during their work lives. Despite records being destroyed in bombings during World War II, Soviet paper-pushers made it exceedingly difficult for retirees to prove that they had put in adequate work-time to receive sufficiently generous pensions. A 1956 law standardized a piecemeal pension system in the USSR. It sought to better provide minimal financial security while maintaining, and indeed enhancing, the incentive for lifetime employment in a single industry. Though the reform maintained pre-existing social hierarchies, it also served as bedrock for the late socialist sense of economic security.
On taxes, however, loftily justified changes ended up being abandoned. Eliminating the income tax was billed as a Marxist accomplishment and Khrushchev promulgated a law in 1960 to do just that by 1965. He also promised to rid the country of a hated “bachelor tax” on the unmarried that Khrushchev himself had earlier helped develop. Ironside largely agrees with 1950s analyst, Franklyn Holzman, that this program to abolish “taxation of the people” neglected many of the sources of state revenue from the population, including the “turnover tax”— a commodity tax built into the price of goods. After two rounds of cuts, Soviet government officials abandoned the plan to eliminate income taxes. Beyond creating a larger financial burden than anticipated, the tax reductions undermined other social and economic objectives of the state. Namely, in abrogating the reform, officials opted to maintain promoting labor productivity and stable families as a priority over scoring additional ideological points for low taxes.
The dissertation next moves from reforms to outright expropriations. At issue in the fifth chapter are the mass subscription bonds that Khrushchev unceremoniously canceled in 1957. These bonds dated back to the onset of the Stalin era in the late 1920s. In theory they were voluntary investments made by average workers who wanted to assist in the project of developing socialism in one country. In practice, a huge degree of social coercion existed in the workplace that succeeded in getting the vast majority of workers to fork over a month or more of their annual wages for low interest, long-term, and capriciously adjusted investments. But as Ironside notes, until 1957 the Soviet government had never officially abandoned its promise to pay back the loans to contributors. At that point some 260 billion rubles of savings were tied up in the bond fund. The cancelation of the bonds, though it freed younger workers from making contributions, meant that lifelong investors would not receive payouts, at least not until after a twenty-year freeze by which time many would be dead. Because of this de-facto writing off of debt, Ironside treats the end of mass subscription bonds as a default of the Soviet government and demonstrates that many Soviet citizens felt deeply betrayed by it.
Lastly, Ironside discusses the efforts to compensate for the loss of mass subscription bonds with actually voluntary fund-raising methods and investments. “[F]ree-circulating [market] bonds, long associated with wealth and relative stability, were promoted as helping to finance and secure a comfortable lifestyle, lottery tickets offered the chance to win disproportionately large cash prizes or coveted consumer items that were difficult to procure in an economy of shortages, and savings deposits helped workers to gradually accumulate the necessary funds to buy big-ticket consumer items” such as automobiles (p. 312). In many ways, these investments directed individual expenditures toward the accumulation of personal wealth. Yet Ironside argues that the new consumerism that the Khrushchev government intended was still supposed to be “limited and ‘rational’” (p. 313). Elite privilege remained more determined by political and social connections than the amount of money one acquired.
By the end of the work, Ironside has clearly demonstrated her case that “money factored into the relationship between workers and the state” despite supposed communist antagonism toward money (p. 367). But just as much as the reader will appreciate the ubiquity of money’s relevance to social life in countries as far removed from the capitalist world-system as the USSR, she will also gain a deeper understanding of its varied functioning in diverse economies and societies.
Department of History
Northern Illinois University
State Archive of the Russian Federation (GARF)
Russian State Archive of the Economy (RGAE)
Russian State Archive of Social and Political History (RGASPI)
Russian State Archive of Contemporary History (RGANI)
University of Chicago. 2014. 390pp. Primary Advisor: Sheila Fitzpatrick.
Image: 1950 propaganda poster. The caption says: “I saved up and bought a car!” Permission to use the image from the NeBoltai propaganda collection.