At first sight it is surprising that Russian industry should have collapsed as badly as it has done, and still more surprising that the efforts of the Communists have not been more successful in reviving it. As I believe that the continued efficiency of industry is the main condition for success in the transition to a Communist State, I shall endeavour to analyse the causes of the collapse, with a view to the discovery of ways by which it can be avoided elsewhere.

Of the fact of the collapse there can be no doubt. The Ninth Congress of the Communist Party (March-April, 1920) speaks of "the incredible catastrophes of public economy," and in connection with transport, which is one of the vital elements of the problem, it acknowledges "the terrible collapse of the transport and the railway system," and urges the introduction of "measures which cannot be delayed and which are to obviate the complete paralysis of the railway system and, together with this, the ruin of the Soviet Republic." Almost all those who have visited Russia would confirm this view of the gravity of the situation. In the factories, in great works like those of Putilov and Sornovo, very little except war work is being done; machinery stands idle and plant is becoming unusable. One sees hardly any new manufactured articles in Russia, beyond a certain very inadequate quantity of clothes and boots—always excepting what is needed for the army. And the difficulty of obtaining food is conclusive evidence of the absence of goods such as are needed by the peasants.

How has this state of affairs arisen? And why does it continue?

A great deal of disorganization occurred before the first revolution and under Kerensky. Russian industry was partly dependent on Poland; the war was conducted by methods of reckless extravagance, especially as regards rolling-stock; under Kerensky there was a tendency to universal holiday, under the impression that freedom had removed the necessity for work. But when all this is admitted to the full, it remains true that the state of industry under the Bolsheviks is much worse than even under Kerensky.

The first and most obvious reason for this is that Russia was quite unusually dependent upon foreign assistance. Not only did the machinery in the factories and the locomotives on the railways come from abroad, but the organizing and technical brains in industry were mainly foreign. When the Entente became hostile to Russia, the foreigners in Russian industry either left the country or assisted counter-revolution. Even those who were in fact loyal naturally became suspect, and could not well be employed in responsible posts, any more than Germans could in England during the war. The native Russians who had technical or business skill were little better; they almost all practised sabotage in the first period of the Bolshevik régime. One hears amusing stories of common sailors frantically struggling with complicated accounts, because no competent accountant would work for the Bolsheviks.

But those days passed. When the Government was seen to be stable, a great many of those who had formerly sabotaged it became willing to accept posts under it, and are now in fact so employed, often at quite exceptional salaries. Their importance is thoroughly realized. One resolution at the above-mentioned Congress says (I quote verbally the unedited document which was given to us in Moscow):

Being of opinion that without a scientific organization of industry, even the widest application of compulsory labour service, as the great labour heroism of the working class, will not only fail to secure the establishment of a powerful socialist production, but will also fail to assist the country to free itself from the clutches of poverty—the Congress considers it imperative to register all able specialists of the various departments of public economy and widely to utilize them for the purpose of industrial organization.

The Congress considers the elucidation for the wide masses of the workers of the tremendous character of the economic problems of the country to be one of the chief problems of industrial and general political agitation and propaganda; and of equal importance to this, technical education, and administrative and scientific technical experience. The Congress makes it obligatory on all the members of the party mercilessly to fight that particular obnoxious form, the ignorant conceit which deems the working class capable of solving all problems without the assistance in the most responsible cases of specialists of the bourgeois school, the management. Demagogic elements who speculate on this kind of prejudice in the more backward section of our working classes, can have no place in the ranks of the party of Scientific Socialism.

But Russia alone is unable to supply the amount of skill required, and is very deficient in technical instructors, as well as in skilled workmen. One was told, over and over again, that the first step in improvement would be the obtaining of spare parts for locomotives. It seems strange that these could not be manufactured in Russia. To some extent they can be, and we were shown locomotives which had been repaired on Communist Saturdays. But in the main the machinery for making spare parts is lacking and the skill required for its manufacture does not exist. Thus dependence on the outside world persists, and the blockade continues to do its deadly work of spreading hunger, demoralization and despair.

The food question is intimately bound up with the question of industry. There is a vicious circle, for not only does the absence of manufactured goods cause a food shortage in the towns, but the food shortage, in turn, diminishes the strength of the workers and makes them less able to produce goods. I cannot but think that there has been some mismanagement as regards the food question. For example, in Petrograd many workers have allotments and often work in them for eight hours after an eight hours' day in their regular employment. But the food produced in the allotments is taken for general consumption, not left to each individual producer. This is in accordance with Communist theory, but of course greatly diminishes the incentive to work, and increases the red tape and administrative machinery.