Money in the early years of the Soviet Union: Barter and back again - A short-lived experiment of transformation

Ruziev, Kobil

Abstract

In the earlier drafts of the General Theory, Keynes explicitly argued that the classical tradition of distinguishing between real and monetary variables was not helpful in analysing capitalist economies. While developing his ideas about a monetary economy, Keynes agreed with Marx’s analysis that parting with money (M) for a commodity (C) in order to earn more money (M′) reflected the true nature of production in capitalist economies. Although the early Soviet economists were inspired by Marx’s writings and might not have read the early drafts of the General Theory, they seemed to agree with Keynes’s observation that capitalist economies were inherently unstable precisely because of the role of money in the economic process. Since the Soviet authorities were committed to perpetual full employment, they attempted to abolish money and banks from the economic process altogether in the early years of the Soviet Union. Indeed, it is reported that by the early 1920, the Soviet economy became effectively a barter economy as the exchange of goods between enterprises was measured in physical terms, more than 93% of all wages were paid in kind, and all assets and liabilities of the banking sector were transferred to the Central Budgeting and Accounting Department of the Commissariat of Finance. This chapter analyses the theoretical and philosophical foundations behind the short-lived radical experiment with a moneyless society in the early years of the Soviet Union.

• Online Publication Date: Dec 1, 2022
• Publication Date: Dec 19, 2022
• Deposit Date: Dec 8, 2022
• Publicly Available Date: Jun 2, 2024
• Publisher: Taylor & Francis (Routledge)
• Pages: 187-200
• Series Number: Routledge Studies in the History of Economics
• Edition: 1st
• Book Title: Monetary Economics, Banking and Policy: Expanding Economic Thought to Meet Contemporary Challenges
• Chapter Number: 13
• ISBN: 9780367695651
• Keywords: Money, barter, Soviet Union, Economy, Trade
• Public URL: https://uwe-repository.worktribe.com/output/10223925
• Publisher URL: https://www.taylorfrancis.com/books/edit/10.4324/9781003142317/monetary-economics-banking-policy-penelope-hawkins-ioana-negru
• Related Public URLs: https://www.routledge.com/Monetary-Economics-Banking-and-Policy-Expanding-Economic-Thought-to-Meet/Hawkins-Negru/p/book/9780367695651; ; https://www.routledge.com/Routledge-Studies-in-the-History-of-Economics/book-series/SE0341