For a Lasting Peace, For a People’s Democracy!
No. 12 (72), Friday, March 24, 1950

Financial Policy of the People’s Democracies

Vasile Luca

Secretary, Central Committee,
Rumanian Workers’ Party

Utilising the great experience of building Socialism in the U.S.S.R., and after having nationalised industry, transport, banks, and financial establishments, the People’s Democracies passed over to the Socialist system of planned economy. Under the system of people’s democracy the State became the instrument of the dictatorship of the proletariat, fulfilling not only the function of suppressing the resistance of the overthrown classes, of defending national independence and security of the country against imperialist aggression, but also of organising, directing and planning national economy.

The financial policy of bourgeois States, particularly in the epoch of imperialism, is determined by the expansionist policy of monopoly trusts aimed at economic enslavement or military seizure of other countries. Every year the budgets of capitalist countries show ever smaller allocations for education, public health and social services. The main source of their revenues is the ever growing taxes levied on the population, and also loans.

Altogether different is the financial policy of the People’s Democracies.

Although the People’s Democracies are only in the process of accumulating experience arising from the first years of planned economy, they have, during the post-war years, achieved successes in stabilising their economy and finances of which no bourgeois-landlord State can boast. Output in the People’s Democracies has not only reached pre-war level but has surpassed it. The currencies of these countries are stable; the rate of exchange was not affected by the devaluation carried out in Marshallised countries on the order of U.S. imperialism.

The close economic bonds existing between the People’s Democracies and the U.S.S.R. and also the great economic successes achieved by the Soviet Union influence favourably the economy of the countries of people’s democracy. The increased purchasing power of the rouble and the transfer of the rouble to a gold basis will contribute to the stability of the currencies in the People’s Democracies and, to an even greater degree, will safeguard those countries from the effects of the economic crisis in the capitalist world with its depreciated currency.

The budget revenues of the People’s Democracies reflect increasingly the results of the economic activities of State enterprises, and are accompanied by ever bigger reductions in taxes paid by the population. For example, in the Rumanian People’s Republic income from State enterprises and the other economic organisations in the form of profits and the trade tax accounted for 70 per cent of the budget revenue in 1949.

The financial policy of the People’s Democracies is determined by the concern shown by the Party of the working class for a steady advance along the pathway of building Socialism. Its aim is to secure the industrialisation of the country, to improve the conditions of the working people and ensure a steady advance in their living and cultural standards; to provide the necessary resources for carrying out the tasks of the State in safeguarding peace and the freedom of the working people.

In capitalist countries a considerable part of the national income is taken by landlords and capitalists in the form of rent and profits. In these countries the greater part of State funds are spent on armaments and preparations for a new world war; the remainder is used to maintain the State apparatus for suppressing the working people, and only an extremely small part is spent on education, public health and other socio-cultural services.

In the People’s Democracies a large part of income is earmarked for extended Socialist reproduction, for raising the living and cultural standards of the working people and for defending the national independence of the peoples. The share of the national income accruing to non-working elements is steadily diminishing: a fierce and violent struggle between the Socialist and private capitalist sectors for the restriction, and then for complete elimination of the capitalist elements, is under way.

The national income of the People’s Democracies, due to Socialist ownership of means of production, to the steady expansion of production, to reduced production costs arising from higher labour productivity and strict economy, is growing at a rate unknown in the history of capitalist countries.

In the 1949 State budget of the Rumanian People’s Republic revenue exceeded expenditure by nearly 36,000 million lei. The draft budget for 1950 reflects the growth in the national income. Compared to 1949 revenue will show an increase of 60,000 million lei, or 23 per cent, without any increase in taxes.

In Bulgaria fulfilment of the Two-Year Plan raised the national income from 47,300 million leva in 1939 to 51,800 million leva in 1948. In Poland the national income rose more than 33 per cent and in Hungary by 24 per cent compared with 1938.

Relying on the steady expansion of production and the growing national income, on the ever increasing purchasing power of the working people in town and countryside, on mutual economic co-operation, on aid from the Soviet Union – based on the Stalin principle of equality and mutual respect between large and small nations – the People’s Democracies are pursuing a sound financial policy of budgetary stability. Though unequally developed economically, the People’s Democracies are having a more and more balanced trade turnover. In their relations there is no tendency for one country to exploit and economically oppress another as is the case in the imperialist world with regard to the more industrially backward countries.

Economic co-operation and trade between the Soviet Union and the People’s Democracies develop on the basis of mutual assistance for the Socialist industrialisation of these countries. Relying on this disinterested assistance, particularly the assistance of the Soviet Union, the People’s Democracies are developing their economy along new Socialist lines, despite discrimination in trade relation by the U.S. and certain Marshallised capitalist countries. In the People’s Democracies new plants and factories, heat and power stations, are being built, new coal and ore mines sunk, agriculture re-organised, hospitals, sanatoria, houses for workers and new cultural establishments erected.

Allocation of income and expenditure in the State budget best reflects the financial policy of each country. An examination of the budgets of bourgeois Governments completely exposes their policy of exploiting and oppressing the working people, their policy of armament and preparation for imperialist war.

As before, the U.S. budget for 1950-1951 provides only for insignificant expenditure on education, social insurance, health services and other public needs. Expenditure on education, for insurance, comprises only one per cent of the budget, and on health services less than one per cent. One million dollars only is allocated for the exercise of the so-called civil liberties of which Truman talked at such length. On all other social needs the amounts spent constitute only 5.1 per cent of the budget. In his message to Congress, Truman admitted that the expenditure on “defence” together with that of past wars, comprises 71 per cent of the entire budget. Actually, for the 1950-51 fiscal year, the U.S. in preparation for a new war (financing imperialist aggressive blocs, atom bomb production, upkeep of military schools, establishing military bases) has appropriated a sum in excess of 32,000 million dollars, that is 76 per cent of the entire budget.

Expenditure on war preparations in the U.S. and in the Marshallised countries explains the immense budget deficit and inflation, the aftermath of which undermines the economy and finances of these countries and hits primarily the working class and mass of the people. The U.S. budget for 1950-1951 envisages a deficit amounting to more than five billion dollars.

The budget of the People’s Democracies reflects a healthy financial policy, based on increased production, on the rehabilitation and consolidation of national economy which secure a balanced budget and a stabilised currency.

Without enslaving loans, without betrayal of the national interests of the people, as is the case with the reactionary bourgeoisie and its servants – the Right Social Democrats and the espionage Tito gang of assassins – the working people of the People’s Democracies, guided by the Communist and Workers’ Parties, are marching along the road of development and economic prosperity.

State budgetary expenditure of the People’s Democracies reveals the concern of the State for economic development and improvement in the life of the working people.

For example, in Czechoslovakia total expenditure envisaged by the State budget for 1950 is distributed as follows: 32.7 per cent for industrial development, 26.3 per cent for social services and public health, and 11.9 per cent for cultural requirements.

In the People’s Republic of Bulgaria, 35 per cent of the 1950 budget is allocated for the development of the national economy and 30 per cent for social and cultural requirements.

In Poland 43.5 per cent of the budget will be spent in 1950 on the development of the national economy, and 32.6 per cent on education, public health and other social services.

The state budget of the Rumanian People’s Republic for 1950, provides for an investment of 131,300 million lei for the development of national economy, i.e., 37.5 per cent of the total expenditure. Allocations for social and cultural needs total 24.8 per cent. Expenditure on social insurance has increased by 55 per cent compared with 1949. Expenditure on public education and cultural development has increased by nearly 40 per cent. Expenditure on health services provides for an increase of 16 per cent; 9,534 million lei have been allocated for social insurance (pensions for invalids, dining hall subsidies and kindergartens, and for mothers with large families).

Such are the figures which characterise the financial policy of the People’s Democracies, a policy based on the labour and struggle of the working class in alliance with the working peasantry for the consolidation and economic prosperity of their countries; on the solicitude displayed by the Party of the working class and the Government in raising the living standard and cultural level of working people; on the struggle of the whole people against the instigators of war – the imperialists and their agents; in the struggle for peace, freedom, security and the national independence of the peoples.

The financial policy of the People’s Democracies serves the aim of securing economic prosperity; it serves the cause of the working people, the cause of strengthening the whole anti-imperialist camp.

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