After the Second World War, state socialism provided a model of socialist development for Europe and Asia. The socialist states presented a theory of how society should be organised, and the countries of the Soviet bloc offered an example of how socialism could be put into practice. These developments, economically and politically, posed a strong challenge to liberal capitalism. Socialism, as it developed in the USSR, represented an economic alternative based on the principles of hierarchy and central control. It provided a template for other societies to copy: a social system coordinated by a plan rather than a competitive market, by public property rather than private property. The major contention of its supporters is that it promoted the Marxist objective of human emancipation through the abolition of economic exploitation. In contrast, its detractors, from the social democratic and liberal traditions, have emphasised the subjugation of the individual to a state that they consider to be equally exploitative and oppressive. Others suggest that the alternative to capitalism is to be found in a form of market socialism in which economic relations are set in a market shell, and democratic participation replaces hierarchy as the organising principle.

Building the basis of socialist society

The theoretical considerations outlined in Chapter 4 guided the Soviet leaders. The Soviet system, state socialism, was a process of state-led comprehensive modernisation. It had six major components: rapid industrialisation and urbanisation; land reform (transfer of land to peasants) followed by collectivisation of agriculture (state control of peasant farms); cultural revolution, a drive for mass literacy and numeracy; centralised forms of state ownership and control and political mobilisation; state ownership and control of the productive forces financed from surpluses derived from labour; autonomous economic development coupled to relative isolation from the world economy.

In the early years following the October Revolution and the First World War, the economic and political leadership procured full state control of the economy and nationalised productive assets and land; private production for the market and for profit was forbidden. Central direction and control of the forces of production were established under the hegemony of the Communist Party. Planning determined what should and could be produced.