But that "surge" was unlikely to be swift enough---certainly not to the increasingly autocratic Stalin--while Russia laboured under its traditional economic weaknesses. With no foreign investment available, capital had somehow to be raised from domestic sources to finance the development of large-scale industry and the creation of substantial armed forces in a hostile world. Given the elimination of a middle class, which could either have been encouraged to create capital or plundered for its existing wealth; given, too, the fact that 78 percent of Russian population (1926) remained in a bottom-heavy agricultural sector, which was still overwhelmingly in private hands, there seemed to Stalin only one way for the state to raise money and simultaneously increase the switch from farming to industry: that is, by collectivization of agriculture, forcing the peasants into communes, destroying the kulaks, controlling the output from the land, and fixing both the wages paid to farm workers and the (far higher) prices of food for resale. In a frighteningly draconian way, the state thus interposed itself between rural producers and urban consumers, and extracted money from each to a degree that the czarist regime had never dared to do. This was accentuated by the deliberate price inflation, a variety of taxes and dues, and the pressures to show one's loyalty by buying state bonds. The overall result, represented in the crude macroeconomic statistics, was that the share of Russian GNP devoted to private consumption, which in other countries going through the "takeoff" to industrialization was around 80 percent, was driven down to the appalling level of 51 or 52 percent.
There were two contrary, yet predictable economic consequences from this extraordinary attempt at socialist "command economy." The first was the catastrophic decline in Soviet agricultural production, as kulaks (and others) resisted the forced collectivization and were eliminated. The horrific preemptive slaughter of farm animals--"the number of horses fell from 33.5 million in 1928 to 16.6 million in 1935; and the number of cattle from 70.5 million in 1928 to 38.4 million"--in turn produced a staggering decline in meat and grain production and in an already miserable standard of living, not to be recovered until Khrushchev's time. Esoteric calculations have been attempted as to the proportion of national income which was later returned to agriculture in the form of tractors or electrification--as opposed to the amount siphoned off by collectivization and price controls--but this is an arcane exercise for our purposes, since (for example) tractor factories once established, were designed to be converted to the production of light tanks; peasants, of course, were not so useful in checking the Wehrmacht. What was incontrovertible was that for the moment, Soviet agricultural output collapsed. The casualties, especially during the 1933 famine, could be reckoned in the millions of lives. When output began to recover in the 1930's, it was expedited by hundreds of thousands of tractors, hordes of agricultural scientists, and armies of tightly controlled collectives...
The second consequence was altogether brighter, at least for the purposes of Soviet economic-military power. Having driven private consumption's share of GNP down to a level probably unmatched in modern history--and certainly far lower than, say, the Nazis could ever contemplate in Germany--the USSR was able to deploy the fantastic proportion of around 25 percent of its GNP for industrial investment and still possess considerable sums for education, science and the armed services...