Clara Mattei, Austerity, and the Soviet Union
By Michel Wong
I am truly fortunate that another blogger has already decided to cover Clara Mattei’s book The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, because it saves me from having to introduce the text in detail (interested readers should check out Julie Birke’s article here). This blog post is therefore devoted to discussing the potential applications Mattei’s book might have to students of Global History.
Clara Mattei’s framework of austerity
In The Capital Order, Clara Mattei works from the Marxist idea that society is divided into two main classes: the working class, and the investor/exploiter class. We see this binary opposition of the classes in the short but significant chapter nine of her book, which deals with economic statistics. There, she derives her main indicators of the progress of austerity by dividing GDP into two parts: “the wage share – the portion of GDP that goes to wages (i.e., the income of the working class) as opposed to profits (i.e., the income of the capitalist class). In essence this relation is zero-sum: what is taken from one class is gained by the other.”[1]
Essentially, she defines GDP as the sum of the wages of salaried employees and of the profits gained by the employers (along with some other small sums). As Mattei describes in this chapter, the wage shares in Italy and Great Britain grew very fast during WWI but its growth slowed dramatically after the war, with the wage share reaching a plateau and then actually decreasing. At the same time, the profit shares decreased during the war but increased afterwards. This indicated that the investor/capitalist class was increasing their wealth at the expense of the working class, and therefore exploiting them. For Mattei, this was the ultimate goal of austerity: to economically and politically disenfranchise the working class.
Clara Mattei might not have set out to write a Global History of austerity politics, but as a student of Global History, I find her framework of austerity as measured by the wage share very useful and would like to apply it in my own history writing. I just have one problem with it. Mattei’s framework is a framework for analysing capitalist societies, but history – even just modern history – has many examples of societies that cannot really be called capitalist. What I want to know is: can Mattei’s framework also be applied to non-capitalist societies? In the sections that follow, I shall try to test the limits of Mattei’s framework by seeing if it can be applied to one of modern history’s more important non-capitalist societies – the Soviet Union.

Legend: “Death to capital – or death under the heel of capital!”[2]
Was the Soviet Union a non-capitalist entity?
We can begin our test of the applicability of Mattei’s idea of austerity to the Soviet Union by first asking if the Soviet Union was really not capitalist. “The Soviet Union, capitalist?” I hear you ask. To be sure, in its propaganda – as exemplified by the above poster – the Soviet Union was clearly presenting itself as the antithesis to capitalism. At the same time, even if the Soviet economy displayed many features that could be called socialist, for example the nationalisation (or if you prefer, the socialisation) of all industries, it also shared apparent similarities with the kinds of capitalist economies Mattei was writing about, such as wage labour. As an academic who was raised in the Soviet Union recounts: “Once, for example, when I was at school in a Social Science class, I asked the teacher whether the state was one big exploiter of the working people. The reason for my question was that the factories belonged to the state – so did it really matter whether the factory belongs to an exploiter in the form of the Soviet state, or to an exploiter in the form of a private individual, a notional “John Smith” or the “Sony” Corporation?”[3]
Was the Soviet Union capitalist or not? To really answer this question properly, we would first need to define what capitalism (or its antithesis/antitheses) is – and that would really be beyond the scope of this blog post. We can take the easy option instead: we can simply see how prominent economic thinkers have answered this question, then weigh up their answers ourselves. Since the theme of this post – that of the exploitation of the working class – is very Marxist in nature, I have chosen to focus only on Marxist thinkers. In the following few paragraphs, I am greatly indebted to Marcel van der Linden’s immensely helpful Western Marxism and the Soviet Union.[4]
On the side of those thinkers who answered “yes” to the question raised above were thinkers who argued that the Soviet Union was exploiting its own citizens and therefore acting in a “state-capitalist” manner. Key thinkers among them like Cyril Lionel Robert James (under the pen-name of J.R. Johnson)[5] and his intellectual partner Raya Dunayevskaya (under the pen-name of Freddie Forest)[6] in the 1940s, as well Tony Cliff (born Yigael Glückstein)[7] and his supporters, all in their own ways argued that in the Soviet Union, workers did not really have any political power. The Soviet state acted like a big, empire-sized employer of all its workers, and exploited them in order to compete more effectively with other nations. One of their key insights was that there was an exploited working class and an exploiter class in the Soviet Union – it just so happened that the exploiter was the one and the same thing as the Soviet state.
Many other theorists disagreed. They all agreed that the Soviet Union was most definitely not capitalist – but they each had their own interpretation of what the Soviet Union was. Most famously, Trotsky in his theory of the “degenerated workers’ state” argued in the 1930s that the Soviet economy was still somewhat socialist because industry and production were under the control of the Soviet state (which he refers to as a workers’ state perhaps out of his ideological convictions), but “degenerated” because real power and wealth was not held by the workers who produced the goods, but rather by the bureaucracy who managed the distribution of goods.[8] The theme of power of the bureaucracy was taken up by other theorists, disagreeing with Trotsky only in points of Marxist theory. Bruno Rizzi in the late 1930s,[9] James Burnham in the early 1940s,[10] Max Shachtman also in the early 1940s,[11] and – significantly for being a dissident from the Eastern Bloc – Milovan Djilas in the 1950s[12] all came up with theories where the Soviet bureaucracy had become a new ruling class. This ruling class was exploiting the workers by assigning more of the profits of production for themselves. To quote Trotsky: “[The bureaucracy] of course draws off the cream for its own use. Nobody who has wealth to distribute ever omits himself.”[13] Thus, the Soviet Union, despite not being capitalist, contained a similar kind of worker-exploitation to that in capitalist economies.
So according to one side, the Soviet Union was capitalist, but the workers were being exploited by the “state”. According to the other, the Soviet Union wasn’t capitalist, but the workers were being exploited by the bureaucracy. Despite their different ideological positions, many theorists on both sides agreed on the fact that Soviet workers were being exploited – a surprising fact that bears a strong parallel to the economies of Great Britain and Italy that Mattei analysed. We began this section by asking if the Soviet Union was not capitalist. As we have seen, the jury is still out on that one, but we have also learned something else: that the Soviet economy had an exploited working class, exactly as in the economies from Mattei’s framework. This implies that the framework can be applied to the Soviet Union – what remains is to see how well it fits.
Wages in the Soviet Union
So far, we have seen that there is a theoretical basis for applying Mattei’s framework to the Soviet Union – namely, that there was a working class that could be said to be oppressed by a ruling class. To quantify that in actual numbers, we can take Mattei’s metric of the wage share and try to apply it directly to the Soviet Union. Can the oppression of workers in the Soviet Union be quantified by their wages? What were wages like in the Soviet Union, and how much of it did the workers own?
Wage policy underwent several changes throughout the duration of the Soviet Union, beginning with the New Economic Policy in the 1920s, transitioning to piece rates under Stalinism between the late 1920s and the mid-1950s, and then undergoing a reform in the mid-1950s under Khrushchev. The wage system then remained more or less the same until another reform in 1986, just before the collapse of the Soviet Union.[14] It would be beyond the scope of this already long blog post to discuss the wage system of the entire Soviet Union, so the following discussion is limited to the period with the most coherent wage system i.e. the period from the 1950s to the 1980s.[15]
The wage reform in the 1950s under Khrushchev aimed at raising the minimum wage of the lowest earning bracket of workers while reducing the rate of increase of the highest wage bracket. In his research on income statistics in the Soviet Union, Alastair McAuley demonstrates that between 1956 and 1965, earnings of the lowest paid 10% increased by 144%, while earnings of the highest paid increased by only 38%, with a union-wide average increase of earnings of 60% and with virtually no increase in the cost-of-living.[16] Defining inequality as the decile ratio (the ratio of the earnings of the richest 10% to the poorest 10%), McAuley finds that this ratio definitely decreased since 1956, with inequality estimated to have fallen by 34% percent.[17]
But these numbers are deceptive: if the lowest earners weren’t earning much, then an increase of 114%, or 2.44 times that, still makes “not very much”. The minimum wage for salaried workers in the urban areas had increased to 70 rub/month in 1970, which implies that it was lower in the preceding years. Soviet authorities had defined 50 rub/month of earnings for a family as the poverty (maloobespechennyi) line, and McAuley has attempted to calculate the numbers of people earning below this line, or otherwise low incomes, finding that in 1967, if collective farm workers were also accounted for, “the true proportions of workers and their families in poverty [i.e. earning less than 50 rub/month] probably exceeds 40%”.[18] This staggering finding suggests that while earnings in the Soviet Union were actually on a trend of increasing fairness, this did not always translate to a high quality of life for all.
Another problem with the data on wages in the Soviet Union is that we cannot really compare them to the kind of data that Mattei had. McAuley was not working with income distribution tables that let him say: “the poorest 10% held x percent of total GDP; the richest 10% held y percent”; instead, after painstaking reconstruction he was only able to say “people earning 25-30 rub/month were a percent of employees, earners of 30-35 rub/month were b percent, earners of 35-40 rub/month were c percent”. For the kind of data that is more comparable to Mattei’s charts, we can look at the work of Novokmet, Picketty and Zucman, who find that in terms of income, the top 10% held less than 22% of total income in Russia from the 1960s until 1980, while the top 1% held 4% of total income in that same time.[19] These surprising numbers seem to match with what McAuley has proposed: together, they allow us to conclude that that Soviet wages were remarkably equal.
To sum up, we might say that wages in the Soviet Union were actually quite equal, even though large portions of the population were still quite poor in absolute terms. Poor, but equal – these are after all not mutually exclusive. But even if wages were equal, does that mean that quality of life in Soviet Union was therefore equal?

Wages, access to goods, austerity
The problem with income statistics in the Soviet Union is that in actual day-to-day life, income was not really what counted in acquiring a decent quality of life. The archetypal image of Soviet citizens standing in long lines and of empty shelves in shops really did had its basis in fact – the Soviet Union greatly prioritized making producer goods (raw materials, tools, machinery) over making consumer goods,[21] meaning that the supply of consumer goods was never enough to meet demand. For example, you could be a miner in Siberia earning 600 rubles a month, which was also the salary of the position of the first Party secretary of Georgia (who of course held other positions at the same time/received other benefits from his position, and therefore ultimately had higher earnings),[22] but it didn’t matter how much you earned if the shops never stocked anything besides the most basic necessities.
In hand with the scarcity of consumer goods available to the public, there also existed in the Soviet Union a parallel distribution system generally serving privileged members of the elite. If you were part of this elite, you would be able to shop at a network of shops and distributors for goods like groceries, clothes, medicine, books, and even imports like American cigarettes and whiskey. These shops didn’t look like shops outside – they might even have a fake doorplate – and so, one of the privileges of the Soviet elite was the insider knowledge and the necessary credentials to shop at these places. What made these shops special was that they were well stocked and usually did not run out – meaning that elites who could shop there enjoyed stable access to consumer goods.[23]
Both workers and the elite had money in the Soviet Union, but the key difference was that elites were able to spend it. The low supply of consumer goods to the public – and the exclusive access to goods enjoyed by a small part of the population – invalidates the usefulness of wages as an index of equality. The metric of the wage share used by Mattei ends up as a bad indicator for exploitation in the Soviet Union because while its wage statistics seem quite equal, life in the Soviet Union in reality was not actually equal.
Conclusion
Global History, as a method of releasing history-writing from the confines of the nation state and of national histories, employs various modes of analyses to get at transnational phenomena or at making transnational comparisons. As such, while Mattei may have developed her framework from her research on capitalist economies in Western Europe, namely Great Britain and Italy, I was interested in seeing whether it could be applied to contexts beyond that narrow sphere. The aim of this blog post has therefore been to investigate the applicability of her framework to the Soviet Union. Mattei used her framework to analyse capitalist economies, but we have seen that it could theoretically also apply to Soviet Union where there, too, was a division between the working class and the elite. Moving on from theory to practice, directly applying her framework and analysing Soviet equality in terms of the wage share shows that the Soviet Union enjoyed high levels of equality in wages; however, research on privilege in the Soviet Union shows that such wage data is in fact deceptive. Austerity was in fact present in the material aspects of day-to-day life.
What conclusions can we make about the methodological usefulness of Mattei’s framework of austerity? As we have seen, Mattei’s metric of the wage share is ultimately not applicable to the Soviet Union, and presumably not to other Communist economies either. Paradoxically, however, the core insight underpinning her framework of austerity – that workers were disadvantaged in favour of the elite – remains very true in the case of the Soviet Union. I therefore argue that Mattei’s idea of austerity in the broader sense – not so much “budget balancing” per se as the persistent under-privileging of the working classes to the benefit of the elite – remains a useful heuristic in historical inquiry.
Notes
[1] Clara Mattei, The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism, (University of Chicago Press, 2022), 273
[2] Viktor Dent,“Death to capital–or death under the heel of capital!”, Views and Re-Views, Brown Digital Repository, Brown Digital Library (1920) Accessed Sep 22, 2024. https://repository.library.brown.edu/studio/item/bdr:89366/
[3] Shamil Shikhaliev, “Dagestan 1991: The Madrasa and the Wahhabis”, Study of Islam in Central Eurasia Blog, no date (accessed September 22, 2024). https://www.oeaw.ac.at/sice/sice-blog/dagestan-1991-the-madrasa-and-the-wahhabis
[4] Marcel van der Linden, Western Marxism and the Soviet Union: A survey of Critical Theories and Debates Since 1917 (Brill, 2007).
[5] van der Linden, Western Marxism, 110–114; also J.R. Johnson [C.L.R. James], “Russia – A Fascist State”, New International vii no.3 (1941): 54–58. Accessed Sep 22, 2024. https://www.marxists.org/archive/james-clr/works/1941/04/russia-fascist.htm
[6] van der Linden, Western Marxism, 114–116; see also Freddie Forest, “An Analysis of Russian Economy” part 3, New International ix no.2 (1943): 52-57. Accessed Sep 22, 2024. https://www.marxists.org/archive/dunayevskaya/works/1942/russian-economy/index.htm
[7] van der Linden, Western Marxism, 119–122; also Tony Cliff [born Yigael Glückstein], The Nature of Stalinist Russia (1948). Accessed Sep 22, 2024. https://www.marxists.org/archive/cliff/works/1948/stalruss/index.htm
[8] van der Linden, Western Marxism, 65–66; see also Leon Trotsky [born Lev Davidovich Bronstein], The Revolution Betrayed (1937), chapter 5. Accessed Sep 22, 2024. https://www.marxists.org/archive/trotsky/1936/revbet/index.htm
[9] van der Linden, Western Marxism, 77; see also Bruno R[izzi], The Bureaucratisation of the World (1939). Accessed Sep 22, 2024. https://www.marxists.org/archive/rizzi/bureaucratisation/index.htm
[10] van der Linden, Western Marxism, 83; see also James Burnham, The Managerial Revolution (1941), 220–221.
[11] van der Linden, Western Marxism, 85; see also Max Shachtman, “Is Russia a Workers’ State”, New International vi no.10 (1940):195–205. Accessed Sep 22, 2024. https://www.marxists.org/archive/shachtma/1940/12/russia.htm
[12] van der Linden, Western Marxism, 164–166; see also Milovan Djilas, The New Class: An Analysis of the Communist System, (Praeger, 1957), 38–59.
[13] Trotsky, The Revolution Betrayed, chapter 5.
[14] Donald Filtzer, Soviet Workers and the Collapse of Perestroika (1994; digital repr. Cambridge University Press, 2003): chapter 2
[15] For example, the Stalinist period was characterised by low rates per piece of good produced, leading to workers over-fulfilling their norms to earn a livable wage. Paradoxically, factory managers – to ensure that their workers could survive in this oppresive system – would also end up deliberately setting low norms for their workers to over-fulfill. For more information see Filtzer, Soviet Workers, chapter 2; and Hillel Ticktin, Origins of the Crisis in the USSR (1992; repr. Routledge, 2015).
[16] Alastair McAuley, “The Distribution of Earnings and Income in the Soviet Union”, Soviet Studies vol. 29, no. 2 (April 1977): 224
[17] McAuley, “The Distribution of Earnings”, 226–227.
[18] Ibid, 229.
[19] Filip Novokmet, Thomas Picketty, and Gabriel Zucman, “From Soviets to Oligarchs: Inequality and Property in Russia, 1905–2016” (Cambridge, MA: National Bureau of Economic Research, 2017): 32
[20] Novokmet, Picketty, Zucman, “From Soviets to Oligarchs”, 64.
[21] Ticktin, Origins, 19, 148, and basically throughout the whole book.
[22] Anna Ivanova, “Rich hairdressers and Fancy Car Repairmen: The Rise of a Service Worker Elite in the USSR and the Evolution of Soviet Societ in the 1970s”, Journal of Social History vol. 56 no. 4 (2023): 866–869.
[23] Mervyn Matthews, Privilege in the Soviet Union: A Study of Elite Life-Styles under Communism (1978, repr. Routledge, 2011): 38–43.
References
Bergson, Abram. “Income Inequality Under Soviet Socialism”. Journal of Economic Literature vol. 22 no. 3 (September 1984): 1052–1099.
Burnham, James. The Managerial Revolution. 1941.
Cliff, Tony [born Yigael Glückstein]. The Nature of Stalinist Russia. 1948. Accessed Sep 22, 2024. https://www.marxists.org/archive/cliff/works/1948/stalruss/index.htm
Dent, Viktor.“Death to capital–or death under the heel of capital!”. Views and Re-Views, Brown Digital Repository, Brown Digital Library (1920) Accessed Sep 22, 2024. https://repository.library.brown.edu/studio/item/bdr:89366/
Djilas, Milovan. The New Class: An Analysis of the Communist System. Praeger, 1957.
Filtzer, Donald. Soviet Workers and the Collapse of Perestroika. 1994; digital repr. Cambridge University Press, 2003.
Forest, Freddie. “An Analysis of Russian Economy” part 3. New International ix no.2 (1943): 52–57. Accessed Sep 22, 2024. https://www.marxists.org/archive/dunayevskaya/works/1942/russian-economy/index.htm
Ivanova, Anna. “Rich hairdressers and Fancy Car Repairmen: The Rise of a Service Worker Elite in the USSR and the Evolution of Soviet Societ in the 1970s”. Journal of Social History vol. 56 no. 4 (2023): 856–881.
Johnson, J.R. [C.L.R. James]. “Russia – A Fascist State”. New International vii no.3 (1941), 54–58. Accessed Sep 22, 2024. https://www.marxists.org/archive/james-clr/works/1941/04/russia-fascist.htm
Mattei, Clara. The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism. University of Chicago Press, 2022.
Matthews, Mervyn. Privilege in the Soviet Union: A Study of Elite Life-Styles under Communism. 1978, repr. Routledge, 2011.
McAuley, Alastair. “The Distribution of Earnings and Income in the Soviet Union”. Soviet Studies vol. 29, no. 2 (April 1977): 214–237.
McAuley, Alastair. Economic welfare in the Soviet Union (University of Wisconsin Press, 1979).
Novokmet, Filip, Thomas Picketty, and Gabriel Zucman. “From Soviets to Oligarchs: Inequality and Property in Russia, 1905–2016”. Cambridge, MA: National Bureau of Economic Research, 2017.
R[izzi], Bruno. The Bureaucratisation of the World. 1939. Accessed Sep 22, 2024. https://www.marxists.org/archive/rizzi/bureaucratisation/index.htm
Shachtman, Max. “Is Russia a Workers’ State”, New International vi no.10 (1940: 195–205. Accessed Sep 22, 2024. https://www.marxists.org/archive/shachtma/1940/12/russia.htm
Shikhaliev, Shamil. “Dagestan 1991: The Madrasa and the Wahhabis”. Study of Islam in Central Eurasia Blog. no date (accessed September 22, 2024). https://www.oeaw.ac.at/sice/sice-blog/dagestan-1991-the-madrasa-and-the-wahhabis
Ticktin, Hillel. Origins of the Crisis in the USSR. 1992; repr. Routledge, 2015.
Trotsky, Leon [born Lev Davidovich Bronstein]. The Revolution Betrayed. 1937. Accessed Sep 22, 2024. https://www.marxists.org/archive/trotsky/1936/revbet/index.htm
van der Linden, Marcel. Western Marxism and the Soviet Union: A survey of Critical Theories and Debates Since 1917. Brill, 2007.
About the Author
Michel Wong is a student in the M.A. Global History programme at the Freie Universität Berlin. He is interested in the history of Central Asia.
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Citation: Michel Wong, Clara Mattei, Austerity, and the Soviet Union, in: TRAFO – Blog for Transregional Research, 20.05.2025, https://trafo.hypotheses.org/59012
OpenEdition suggests that you cite this post as follows:
Forum Transregionale Studien (May 20, 2025). Clara Mattei, Austerity, and the Soviet Union. TRAFO – Blog for Transregional Research. Retrieved June 19, 2025 from https://doi.org/10.58079/13yfu