861.50/3–1549: Airgram

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

confidential

A–267. Reference is made to the Embassy’s despatches no. 21 of January 10, no. 85 of February 14 and no. 102 of February 18, 19491 concerning developments in regard to the Varga “affair”. The publication of an abbreviated transcript of Varga’s remarks at the October 1948 meeting of the Institute of Economics, the criticism directed at him by K. V. Ostrovityanov, the Director of the Institute and the article entitled “Perversions of Marxism–Leninism in the Works of the Academician Varga”, which was published in the journal Planned Economy No. 6 have led the Embassy to modify its original estimate of the probable outcome of the dispute now going on in the Soviet economic circles. They have not, however, led to any revision of the Embassy’s estimate of the importance of this dispute as a reflection of fundamental uncertainties assailing planners in the Kremlin.

In the Embassy’s original estimate of the significance of the recrudescence of the Varga dispute reported to the Department in Embtel 2850 December 6, 1948,2 it was stated:

“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 battle has been blown away by a Politburo decision and official public shift of party line.”

In the light of the fuller knowledge now available of what Varga said in October 1948 and of the criticism directed against him, the Embassy is now inclined to the conclusion that Varga and his group, should they persist in their present line, will definitely not re-emerge as the leading economic theorists of the Party and that it is unlikely that on the great majority of the points for which Varga is being criticized, there will be any revision of the Party line. The deviations from Marxism–Leninism of which Varga now stands condemned are so numerous and so far transcend in importance Varga’s views on the timing of the “inevitable” postwar capitalist crisis and the possibilities of the stabilization of the capitalist system that they would necessitate an impossibly complete revision of the Party line, however correct his prognostications on the latter may turn out. His heresies on the role of the state vs. the monopolies in the capitalistic countries, on assigning the economic factor as the principal reason for the submission [Page 591] of the Marshall Plan countries to the dictates of the United States, on the unlikelihood of a future war between the imperialistic countries and on postwar changes in the status of certain former colonial areas strike too deeply at the roots of Communist theory and dogma.

It is of course possible that with the recovery of western Europe aided by the European Recovery Plan and growing economic and political stabilization in other parts of the world, the Kremlin will publicly admit the temporary stabilization of the capitalist world and in accordance with Stalin’s doctrine that the revolutionary movement alternates between ebb and flow announce the dawn of a period of “equilibrium of forces” and consequentially of a period of the “peaceful co-existence” of the two worlds. Varga’s ideas and observations may well influence the Kremlin in reaching such a decision. But unless Varga and his colleagues recant and confess their errors on the other major points of which they have been accused of serious deviations from Marxism-Leninism, that decision will have to be voiced by other spokesmen.

Nevertheless the continued public airing of this dispute (it is now almost two years since the May 1947 meeting at which Varga and his colleagues were first criticized) involving such serious accusations against the Varga group and the fact that they have not been completely silenced suggests the probability that Varga’s voice is still heard within the highest councils of the Party, at least as regards practical estimates of the strength of the capitalist system in the outer world. Therein, as it appears to the Embassy, lies the significant import of the Varga affair.

Kohler
  1. Not printed, but see despatch No. 85, February 14, footnote 3, p. 572.
  2. Foreign Relations, 1948, vol. iv, p. 940.