800.50/12–648: Telegram
The Ambassador in the Soviet Union (Smith) to the Secretary of State
2850. Soviet economic journals have recently reflected continuance of confusion and conflict among Soviet economists. Faced with need of interpreting postwar economic developments, particularly in USA and Western Europe under ERP, in light of Marxist economic dogma, members of Academy of Sciences Economic Institute appear to have split into two groups—orthodox Marxists who postulate that capitalism is dying force entering last stages of its general crisis and Varga group who more realistically admit possibility of change within capitalist system which might prevent “intensification of general crisis [Page 941] of capitalism,” particularly in form new American depression or wars within capitalist world.
Planned Economy, No. 5, 1948, reveals Varga group was again put in dock at October 2–5 session of Learned Council of Economics Institute, called to consider “shortcomings and tasks of scientific research work” in economics. Group is accused of “teaching bourgeois theories of ‘planned nature’ of capitalist economy, soft-pedaling class conflict of capitalism and its general crisis, admiring ‘successes’ of capitalist technique, adopting a conciliatory attitude toward bourgeois theoretical apologetics, and, ‘as a whole’ of non-party, un-Bolshevist attitude towards criticism and self-criticism.”
“Varga in his speech recognized only some secondary mistakes …1 as for example … in predicting dates of onset economic crisis in the USA. He attempted to defend another section of his errors on grounds that his position was correct in relation to corresponding period and became incorrect only subsequently.…
“He once more repeated his assertion bourgeois state allegedly plans its economy under wartime conditions, defending interests of bourgeoisie as whole as opposed to those of capitalist monopolies … was absolutely silent on number of principal errors, e.g., his position regarding view basic conflict of capitalism between social character of process of production and private appropriation by capitalists will begin to function ten years after war. In same way he passed over in silence reformist thesis class warfare in capitalist lands is being exchanged for a struggle for a ‘share in participation by working class and bourgeoisie in direction of bourgeois state’ …
“He committed new errors which are direct continuation of reformist position … expressed doubt about possibility of wars in future between imperialist states thus revising teaching of Lenin-Stalin on imperialism and imperialist wars …
“K. V. Ostrovityanov in long concluding speech focused attention on criticism of reformist mistakes of Varga and on his unparty-like arrogant attitude toward criticism.”
. . . . . . . . . . . . . .
At a time when current overhauling of research institutes in most sciences has generally produced drastic disciplinary action, Varga’s successful weathering, still relatively intact and intransigent, of over a year and a half’s violent criticism certainly indicates fundamental uncertainty in the highest levels of the Soviet regime. Evident they are being forced at least contemplate possibility of temporary stabilization of capitalist world and reconsider their estimates on possibilities extending [Page 942] still further Soviet power and influence.2 Ultimate fate of Varga group may therefore well serve as weathercock of party attitudes toward western world and be dependent on party decision whether theoretical restatement of party line toward postwar capitalism is not called for perhaps by higher authority than Varga. Under this interpretation, it is possible that Varga may eventually re-emerge as the hero of Soviet economic theory after the smoke of the battle has blown away by a Politburo decision and official public shift of party line.
- All ellipses indicated in the source telegram.↩
- During 1948 the British Embassy in Moscow maintained an active interest in the treatment accorded Varga. In a despatch of May 31, a copy of which was sent to the Department in despatch No. 495 on June 21, not printed, the British view was that Varga had been muzzled but not liquidated as a leading economist. If he should be restored to real authority, or to remain active, that could suggest that the Soviet government looked for a temporary stabilization in the capitalist world with the possibility of an equilibrium of forces and a period of peaceful co-existence. (861.50/6–2148)↩