CLASS STRUGGLES UNDER NEP 31 ever, is that the table shows the production of consumption goods in "All industry" increased from 14.8 percent in 1926-27 to 18.7 percent in 1927-28. In the "Vesenkha planned industry" the increase was much more.3 All in all, a state of affairs which bears no resemblance to Bettleheim's presentation. According to Bettleheim "(Ohe immediate origins of the inflationary process in USSR are not hard to detect. They lie in the increase in investments and unproductive expenditure which was both rapid and out of proportion with the "financial results' realized by the state sector.55 Bettleheim makes the allegation that because of the industrial policy of the Soviet Union the increase in cash incomes could not offset the fall in industrial production.4 But Bettleheim fails to note the fact that in 1927-28, for "the first time since 1924-25, the rise in productivity clearly outstripped the rise in wages. Productivity in Census industry had risen by 12 percent . . . and normal wages by 18 percent."5 Instead of taking cognizance of this in a straightforward way, he tries to obscure this fact by putting out statistical figures of a very dubious kind.6 Nature of Inflation He seeks to strengthen his case by showing that the fall in prices was not achieved by the reduction in wages but by other factors "external to industry (reduction in costs of raw materials or in taxes) or to account adjustments... so that the share represented by wages in cost of production tended to increase,"7 there by implying that rural producers were hit by the reduction in the cost of raw materials while the industrial workers who enjoyed a favoured status were left untouched. But the facts are otherwise, Carr and Davies, whom Bettleheim cites, show that the reduction in wages was greater than the Konjunktor factors and depreciation (Table I).8 TABLE I (in percent) 1 Konjunktor factors (factors extraneous to industry such as changes in price of raw material) 0.7 2 Consumption of material and fuel per unit of output 2.2 3 Wages 1.8 4 Depreciation 1.5 Though it is true that budgetary expenditure had doubled between 1925-26 and 1928-29, and the circulation of roubles had increased, these facts by themselves cannot be used to show that the Soviet economy was undergoing a capitalist inflationary situation. For with the increase in state budgetary expenditure, the revenue receipts of the state also more than doubled and, what is