Foreign Relations of the United States, 1949, Eastern Europe; The Soviet Union, Volume V

800.50/2–1449

The Chargé in the Soviet Union ( Kohler ) to the Secretary of State

restricted
No. 85

Moscow , February 14, 1949.

With reference to previous Embassy reports concerning the “Varga affair”, the Charge d’Affaires ad interim has the honor to transmit herewith a translation¹ prepared in the Embassy of E. Varga’s speech made at the meeting of the Enlarged Session of the Learned Council of the Institute of Economics of the Academy of Sciences of the USSR held October 2–5, 1948. This speech was published in the magazine Questions of Economics No. 9, 1948, as the concluding section of a report entitled “On the Shortcomings and Tasks of Scientific Research Work in the Field of Economics”. According to the first section, appearing in Questions of Economics No. 8 (see Embassy’s Airgram No. A–29, January 11, 1949¹) this report constitutes an “abbreviated stenographic account” of the proceedings at the meeting of the Learned Council.

In addition to the speeches of Varga and other delegates, Questions of Economics No. 9 prints the concluding remarks of K. V. Ostrovityanov, Director of the Institute of Economics, in which he repeated in general the themes mentioned in his opening address concerning Varga (Embassy telegram no. 2850, December 6, 1948²) but added some pointed words of advice directed squarely at Varga himself. These reveal, perhaps more clearly than many of the previous remarks regarding Varga, the extent to which the latter has defied attacks from the Party and the press against his unorthodox views. After saying that Varga’s speech had shown that he did not wish to acknowledge his mistakes honestly, as befits a Bolshevik, Ostrovityanov made the somewhat menacing statement “You should know from the history of our Party to what sad results a stubborn insistence on mistakes leads”. Further in this vein, the Director said “… if Comrade Varga continues stubbornly to insist on his reformist mistakes, then no good can come from his further works. The necessary condition for the success of his future scientific work is the decisive, bold and honest review of his reformist positions and work on the problems of imperialism in the spirit of Marxist-Leninist methodology”.

The report of Varga’s speech in Questions of Economics No. 9 indicates that, while admitting his incorrect stand in some things, namely in regard to the existence of state capitalism in the countries of the people’s democracies and in his statement that agricultural production in the periphery countries had suffered as a result of the agrarian reform, the economist refused to recant his theories concerning the importance of government planning in bourgeois states during a war period and the existence at certain times of a conflict between the interests of the state and of separate monopolies which compell the state to proceed against the latter. He questioned the possibility that a war between the imperialist states is imminent, pointing out that the economic and military supremacy of the United States, the war of the colonial peoples against the imperialists, the fear of defeat and of the possible involvement of the mighty Soviet Union in the opposition camp, all combine to slow down the forces working for an inter-Imperialistic war.³

Turning to specific criticisms of his book, Changes In The Economy Of Capitalism As A Result Of The Second World War, Varga admitted that the very “tone” of the book was at fault, saying: “… on it lies the imprint of the times, since the book was written in the period of the war, when special conditions dictated a certain moderate tone. Therefore, it does not have that sharp critical tone which is demanded today”. He acknowledged also that it would have been preferable to have made a joint development of economic and political problems in his work and that the use of the word “planning” with regard to the economy of capitalist countries was an “unsuccessful expression” which could lead to confusion. In standing his ground on the question of the possibility that a capitalist state in war-time can act against individual monopolies, however, the economist claimed that this was not a perversion of Marxism but a subject which “must be calmly considered within the bounds of Marxism”.

Other evidences of Varga’s recalcitrance are seen in his insistence that the submission of the Western European countries to the dictates of the United States is caused by economic reasons, and his statement that India’s position underwent a significant change following the withdrawal of the British troops which altered its colonial status. In expressing his disagreement with his critics, Varga is reported as having said “I cannot follow the advice to recognize all criticism of my work as correct. This would signify that I deceive the Party, hypocritically saying ‘I agree with the criticism’ while I am not in agreement with it.… I honestly acknowledge much of that for which I have been criticized, but there are things which I cannot acknowledge”.

As previously indicated in Planned Economy No. 5, 1948, L. Ya. Eventov was the only one of the Varga adherents who came forth at the October Session with a complete recantation of his previously-held views. The version of his speech as given in Questions of Economics No. 9, the first full account which has come to the Embassy’s attention, reveals that, unlike Varga, he acknowledged in toto the correctness of all the criticisms levelled at him in the press and by the Institute of Economics. Admitting that his fundamental mistake lay in not recognizing that the struggle between the two camps of socialism and capitalism did not cease during the war, Eventov went on to blame himself for having mistakenly estimated in his works on England the role of the class struggle, the traitorous machinations of the Laborites—supporters of the anti-Soviet Churchill⁴ line during the war—and the future economic development of England. He recognized the a-political character of his writings and said that “this sad lesson” shows to what result the ignoring of Bolshevik Partyism and ideological principles leads. Eventov finished his speech of self-condemnation by calling for close ties between research and the policy of the Party, together with a deeper study and application of Marxist-Leninist methodology, as the best guarantee of scientific production corresponding with contemporary demands.

Questions of Economies No. 9 also prints the Resolution adopted by the Learned Council of the Institute following the October Session. This resolution hits the reformist work of the Varga economists, naming, besides Varga, Trachtenberg, Eventov, Bokshitski, and Lan, stating that some of these authors have failed to come forward with criticisms of their mistaken line. Concerning Varga himself, the resolution confines itself to saying that his speech at the session reveals that he continues to stand on his grossly-mistaken positions and that he is committing a series of new errors.

1. Not printed.
1. Not printed.
2. Foreign Relations, 1948, vol. iv, p. 940.
3. The Embassy added further illustrations of the criticism of Varga’s views on some of these subjects as had been developed in an article in Planned Economy (No. 6, November–December 1948), the organ of the State Planning Commission of the Soviet Union (Gosplan), in despatch No. 102 from Moscow on February 18, 1949: “Varga’s overall anti-Marxist tendency is seen as a constant inclination to blur the sharp distinctions between capitalism and socialism and minimise the basic cleavage between the two world systems, even to the point of asserting that the struggle between them can be halted under certain conditions and furthermore that this actually took place within the wartime anti-Nazi coalition. This in turn is found to lead Varga to the acceptance of the possibility for peaceful evolution from capitalism to socialism and of class collaboration, both within a given country and on a world scale. Such views are considered directly contrary to the Leninist thesis of the basic irreconcilability of the two systems and the inevitability of revolutionary upheaval.” At this point Planned Economy exclaimed: “It is amazing how much all this recalls the time worn views of the Mensheviks!” (861.50/2–1849)
4. Winston S. Churchill was British Prime Minister and Minister of Defence, 1940–1945.