The preceding chapter discussed the Marxist-Leninist dogmas that, although voiced in places as distant from the Russian marketplace as Marx’s desk no. 7 at the Reading Room of the British Museum or Lenin’s University of Geneva classroom, inspired the Soviet enactment of principles such as state ownership of property, the prohibition of private property except for the few items considered “personal property,” and the prohibition of income derived from private citizens paying wages or salaries to others. Despite the untried and untested nature of these dogmas, and the imprecise nature of the slogans they engendered, these dogmas became the higher law of the Soviet Legal system, a law whose effects were neither anticipated nor discussed with those whose interests were at stake. It was an authoritarian law promulgated totally by the top and formulated by very few.
This chapter focuses on the effect of the application of “grab by the neck” slogans such as Lenin’s “He who does not work, neither shall he eat,” which as will be recalled, was promulgated as a constitutional principle by Article 12 of the 1936 Constitution.1 These slogans appeared in other higher or guiding laws or their functional equivalents as pronouncements of the supreme rulers, especially when attempting to regulate everyday contractual transactions involving both state property and the “personal property” of Soviet citizens.
The reader might ask: Why bother studying such an ineffective and discarded legal system? The main reason is, as also noted in the previous chapter, that this type of invertebrate legal system is apt to reappear at any time and place where law is applied in a totalitarian or autocratic fashion by a supreme leader and a privileged, above-the-law class of bureaucrats, regardless of their political or economic ideology or label. This type of higher law was as apparent in colonial law as it is in present day Latin America, Soviet and present-day Russia, and Imperial and present-day China.2
Those closest to the supreme ruler would try to please him by translating his slogans into legal-sounding principles, rules and doctrines of interpretation. But since the final interpreter of these slogans has always been he who issues them, a significant gap inevitably develops between what Justice Holmes referred to as the ‘molar’ and 588‘molecular’ versions of rules.3 Totalitarians such as Lenin would be surprised by this chapter because it shows that, against their beliefs, what was “private” could not be eradicated. Through corruption and invertebretation, institutions designed to protect the “mine and thine” have and will reappear—although surely in a weaker fashion—than where private property and contract are the foundation of a thriving private law. The reason for their reappearance is that once man became a trader or “exchanger of commodities” (in the Marxist vocabulary), he also became, among other things, a cooperative being; and there is no cooperation without contract, any more than there is no contract without cooperation.
Hence, in the above-mentioned totalitarian regimes, the vertebrae or links between slogans or guiding principles and the legal institutions that are supposed to implement them start to wither away from the moment the process of implementation begins. And where commerce is concerned, invertebration continues throughout the production, distribution, acquisition and consumption of goods. Consider, for example, the following transactions as gleaned from court and arbitral decisions, administrative and judicial actions, and from commercial practices in Soviet Russia.
“A,” a government official acting on behalf of Soviet Russia’s central planning agency, directs a factory manager, “B,” to produce a certain amount of a consumer goods, “C,” at a certain price. This directive is supposed to implement another of Lenin’s slogans which provided that “An equal amount of products [should be produced] for an equal amount of labour.”4 Yet, assume that once B receives his instruction from A he discovers that A did not take into account either the availability of all the raw materials needed to meet the overall production quota. He is also certain that A’s fixed price was arrived at without surveying the preferences of the likely purchasers of C. Nonetheless, B decides to produce his first monthly share of the assigned quota with the raw materials made available to him. He also assumes that in the past, there was always a certain surplus of raw materials because of the excess amount of raw materials ordered to make it possible for Central planning officials to obtain their unofficial profits from sharing the commissions for exchanging rubbles for hard foreign currencies with foreign money exchangers.
At the end of B’s first production cycle, “E,” a truck dispatcher in charge of the delivery of C to their official and unofficial outlets, assigned one third of B’s trucks to deliver C to unofficial outlets. The purchasers in these outlets were friends or relatives of B’s participants in this unofficial scheme as well as friends of friends and relatives of the latter. This diversion from the official outlets, incidentally, occurred on a regular basis with the approval and profit participation of B and the other participants in this distribution scheme, although the percentages of their profits were allotted according to their administrative hierarchy in B. In addition, the participants included policemen in charge of guarding both the official and unofficial outlets and the judges (trial and appellate) in charge of adjudicating disputes concerning the supply of raw materials among agencies subject to the regulation of A as well as the delivery and quality of B’s products.
Following the end of B’s first production cycle, it had no raw materials available with which to go on to the next production cycles. When aware of this problem, A started an inquiry on the reasons for the shortfall of raw materials. It quickly discovered that the shortage was attributable to the use of raw materials in producing goods diverted to unauthorized outlets. However, before A’s planner filed his administrative and civil complaint, he was quickly made aware by the potential defendants that A’s planners were known to have made tidy profits from the under-the-table commissions they received from the sellers of foreign exchange in return for the planners accepting to pay above-market rates of exchange.
Clearly, even if the most symmetrically hierarchical organizational chart of decision-makers had been set forth by the supreme rulers’ most trusted bureaucrats to know how to do away with private property, the eradication of what were in the final analysis private rights and duties was rendered invertebrate by the corrupt behavior of all or most all participants in the production and distribution processes. Ironically, this corruption ushered a perverse version of private law, one where the contribution to social welfare mattered less than the manner in which each participant’s take was made to appear consistent with the slogans and the higher law of state ownership. This is a lesson worth remembering by those who, mostly in their younger days, tend to be attracted by the claims to social justice of the revolutionary slogans of competing ideologies. As will be illustrated in the following sections, the cost of legal invertebration and the corruption that it feeds are simply too high for a society truly interested in its welfare and economic development.
The distinction between the private law (as just defined) and the public law (or the law that governs the relations between the state, its agencies and “the governed”) was not present, at least not officially, in Soviet Law, even though its Civil Code of 1922 acknowledged some private property rights such as a limited right to inherit family property.5 Article 10 of the 1936 constitution of the USSR defined a type of property it referred to as “personal” which included the person’s income from his work and savings, his dwelling houses and household furniture and utensils, and articles of personal use and convenience.6 Yet, for personal property to be protected by official law, it could not be used in a manner that required hiring labor or paying wages (synonymous with the Marxist version of exploitation of man by man). Furthermore, whatever income was derived from using personal property in a manner that involved paying wages qualified as “unearned income”; the earner could wind up in jail and the payments he received could be forfeited together with the personal property involved. Even as late 1986 during Gorbachev’s government, yet another official campaign was initiated against unearned income derived from the use of personal property.7 Russians 590were confronted with questions such as: “Did you get unearned income by using your “bonus” car as a taxi? Selling your homegrown cucumbers and tomatoes?”8
In addition, the sources that governed trade among state entities or with these entities and private citizens, as well as the trade among private citizens, were part of the USSR’s public law. This meant that what lawyers in western legal systems would regard as a contractual relationship governed by civil or commercial contract law would be, in the USSR, adjudicated mostly as part of an administrative action or criminal law complaint. The omnipresence of a contracting party who quite often was not only a contracting party, but also an administrator whose version of facts and law were to weigh much more than that of the contracting party, had de facto as well as de jure consequences.
Thus, an alleged breach of contract by a private consultant performing services for a state agency could easily become an administrative action or criminal law indictment against the private consultant at the instigation of his official client and co-contracting party.9 Similarly, a breach of a promise to supply raw materials at a stipulated time made by a state entity to another could be characterized by a Soviet Arbitration Tribunal as a violation of an administrative duty owed by the infringer to all the participating state entities in the central economic plan, and called for an administrative fine with little or no relationship to the damages actually suffered by any of the aggrieved parties.10 As apparent in many of the actions or disputes discussed in this chapter, the higher the political standing of the plaintiff-agent or agency, the more pre-determined was the outcome of the action or complaint. In fact, the mere characterization of the defendant’s conduct by an official plaintiff as “exploitive,” “capitalistic,” “counter-revolutionary,” etc., often foretold the outcome of the complaint.
Surely, the manner in which the sources of Soviet law were listed or referred to in official legal publications (such as constitutions, codes, statutes, decrees, decree laws and regulations) closely resembled that of civil law nations. But that is where the similarities ended. As emphasized in the preceding chapter, the writings of Marx and Lenin, despite their lack of official promulgation as laws or regulations (with few exceptions in the case of Lenin’s constitutional principles), were the living and, in many instances, the supreme law of the USSR at least for the first two decades of Soviet rule. Further, Lenin’s definition of law as nothing more than a “political measure” reinforced a climate of “legal nihilism” inspired by Marx’s prophecy of a withering away of the state during the transition from socialism to communism.11 This climate led some Soviet judges during this period to decide cases based upon what their consciences told them to do.12
However, following the chaos of the civil war of 1919–1920, Lenin decided that statutes and codes were needed to enhance the likelihood that the governmental prescriptions would be followed as dictated. Thus, he instituted a period of “legalism” or strict observance of the law. Yet, he made sure that the laws about to be enacted 591provided “escape clauses” that would make it possible for the autocrats to enforce revised versions of what they had enacted. Accordingly, the tsarist principle that conduct could be prosecuted as criminal if it was analogous to that described in codes or statutes was reenacted. Similarly, the Civil Code of 1922 allowed the judge to reject a code rule whose application was “out of keeping with the aims of the new society.”13
Lenin’s and subsequently Stalin’s legislative activism was also consistent with a tsarist tradition of centralized legal authority and distrust for customary and judicially-made law, despite some allowances for the ancient customary law of peasant groups and indigenous people.14 Leninist law distrusted customary and judge-made law because these sources provided an easy inroad for the remnants of a “bourgeois society” into the socialist system.15 Stalin, on the other hand, enabled the highest court to become a law-making body that was subject to his tutelage. Once he was satisfied that he had a pliant and faithful judiciary, his Judiciary Act of 1938 granted special authority to the Plenum of the Supreme Court “[t]o give interpretations of the laws of the U.S.S.R.,” thereby conferring upon it quasi-legislative powers.16
Few western legal scholars had the opportunity and ability to observe at close range the application of the law of the USSR, especially during Stalin’s pre-World War II reign, as did Columbia University Law School’s and Parker School’s John Hazard. As the first United States graduate law student at Moscow’s Juridical Institute in 1937, he was a witness to many of the events that shaped Stalinist law. His ability to place Soviet law succinctly in the proper socio-economic context and to shed light on the political and economic reasons behind it (and also above it) made him one of the most respected Soviet law experts in the world. In 1958, as a graduate student I attended his lectures at the Faculté International de Droit Comparé in Luxembourg and was privileged to be part of many illuminating conversations following these lectures. The following is my brief summary of what Professor John Hazard and his colleagues William E. Butler and Peter B. Maggs said about the hierarchy of the official sources of Soviet law.17 In later sections, I will summarize some of the judicial decisions they and other Soviet law scholars translated into English to illustrate the application of some of these sources.18
Despite the apparent orderly continental civil law-inspired hierarchy of the official law of the USSR, in practice this hierarchy was subject to the whims of the all-powerful executive branch. Hazard, Butler and Maggs pointed out the requirement set forth in the 1936 Constitution that only one body was responsible for legislation. This was a requirement insisted upon by Stalin, yet he among others was responsible for multi-sourced legislation—including through the issuance of numerous decree laws of pre-eminent status. Such disregard of the constitutionally-mandated hierarchy made the hierarchy of the wide array of enactments uncertain. Often, constitutional amendments initiated by executive branch bodies not authorized to do so were formally 592ratified after having been in force for a considerable period of time.19 Hence, according to these scholars, the conclusion was “inescapable that although the constitution was declared supreme in the hierarchy of Soviet sources of law, there was no adherence to the hierarchy in Stalin’s time.”20
The disregard for the promulgated hierarchy and the large variety of unranked but nonetheless pre-eminent sources of law, such as Marxist-Leninist and Stalinist writings and pronouncements, contributed to the invertebration of Soviet law. As noted earlier, not only were the various types of official and living law enactments that could be regarded as addressing the same set of facts disconnected from each other, but their hierarchy was often hard to establish because of the disconnected manner in which they were related to the sources of their authority. The result was bribery, adjudicative arbitrariness and major legal uncertainty.
In order to understand the Marxist-inspired meaning of a “civil” transaction or the typical transaction governed by Soviet civil codes, we must briefly re-visit Karl Marx’s description of a pre-capitalist exchange of commodity for money as discussed in the preceding chapter.21 Recall that Marx referred to transactions in the pre-capitalistic and capitalistic stage where the producer of goods or services sells the commodities he produces for money (“use-value money”) and then with that money he purchases other commodities needed for his own use or consumption (C-M-C). In contrast, in the transaction that fully represents the capitalist cycle (M-C-M), the merchant-intermediary buys commodities in order to resell them at a profit and thereby obtains more money with which to continue his cycle of profitable transactions.
The Soviet Civil Code of 1922 was enacted at the time of the New Economic Policy (NEP).22 This code’s principal draftsman, Alexander Goikhbarg,23 acknowledged the absence of a theoretical scheme to harmonize Marxist dogma with NEP policies and the capitalist policies of its German and Swiss models (the BGB of 1900 and the Swiss Civil Code of 1907). Goikhbarg’s reliance on these models, then, was mostly for structure and not for substance. Hence, it took him only four months to draft this code.24 Its overarching principle was formulated by Lenin in one of his often-repeated sayings: “[In the USSR] we do not allow anything private.”25
Unlike its German and Swiss models, the Soviet Civil Code of 1922 did not include chapters or sections on family law. Such a law was promulgated by the USSR in 1918 and was not made part of the civil code because of the prevailing feeling among Soviet lawyers that the laws of civil transactions, except for non-property transactions and 593pure exchange or barter of commodities, would soon wither away while the laws of marriage and family would remain.26
The presence of the NEP during most of its first decade of application did not result in rules that protected rights acquired by parties to agreements that pre-existed the code.27 Under the strong shadow of Lenin’s overarching (albeit living law) principle that “we do not allow anything private,” Article 1 only protected those rights exercised in a manner consistent with the USSR’s social and economic purposes, and Article 30 stated that transactions against the interests of the state were void.28 Thus, the authority of the code was always subordinated to that of the policies of the executive branch. In fact, even acts as brutal as the deportations of the Kulaks and the confiscations of their property from 1928 to 1931 were carried out under the authority of this code.29
With the demise of the market economy in 1929, many Soviet lawyers envisaged the disappearance of the civil law found in the Civil Code of 1922. Yet, as noted by Hazard, Butler and Maggs, the same Lenin who had opened markets to private trade had also cautiously begun the planning of national electrification. And Stalin, an innate centralizer of authority, took up central planning of the economy as soon as he thought that the economy’s most pressing needs had been met. He then extended the procedures of a planned rural electrification to the planning of an entire economy: “With this act in 1928 the New Economic Policy was phased out of existence, and the problem of public administration became as large as the economy itself, for all but minimal productive resources had been taken from private hands.”30
As discussed in the preceding chapter, Soviet central plans were, in effect, laws. The identification of economic goals, the listing and allocation of resources, the determination of costs and prices, and the orders to deliver and transport goods were mandatory laws, intended to supplant whatever remnant existed of private contract law. This cataclysmic turn in the life of the economy and society of the USSR required a legal rationalization and perhaps a new legal theory.
Evgeny B. Pashukanis was one of the USSR’s most distinguished legal thinkers during the 1920s and early 1930s. He viewed the directives that implemented central planning not so much as full-fledged laws but as administrative commands that were part of a transitional set of rules, a bridge so to speak, between the tsarist legal system 594and a communist society in which there would be no state and no law.32 Much like the French scholastics and the German Pandectists, Pashukanis did not rely on empirical facts, but rather on a mixture of legal metaphysics and formal logic to support his generalizations. The following statements made in his monograph The General Theory of the Law and Marxism (hereinafter General Theory), which was published in 1924, illustrate his methodology and the lack of empirical or factual support for his generalizations: “Only in the conditions of a commodity economy is the abstract form of a right created, i.e. the capacity to have a right in general is separated from specific legal claims.”33
In other words, abstract rights such as the right to own and dispose of property, supposedly enforceable against the world at large, had two essential components: 1) they came about in a commodity economy, and 2) they were separated, abstract or independent from pre-existing claims to the same property.34 In his own General Theory, Pashukanis repeatedly relies on Roman legal institutions to make his points on the legal consequences of a commodity economy.35 Yet, as discussed earlier in this book, the rights that Pashukanis describes as “abstract,” i.e., separated or independent from the rights acquired in pre-existing transactions as well as those causally connected with pre-existing transactions were neither in fact nor in law abstract or independent. As shown by Von Ihering, among many other Romanists, the protection of the right to possess personal or real property could not be separated from the violent (law of the booty, and far from an exchange of commodities) manner in which the Roman legionnaire had acquired such property by means of symbols such as the planting of his legion’s flag “sub hasta”; nor could the less violent form of acquisition of possession and property (usucapio) be called the result of an exchange of commodities, nor could it be separated from the use of the land or property for a designated period of time.36 And where their contractual cause was concerned, these as well as other possessory or proprietary rights were inseparable from the cause and manner in which they had been acquired. In fact, the rights obtained by the possessor of land by means of the usucapio was an enforceable right precisely because its holder had done what was necessary to have a superior right to the land he adversely possessed, despite the preexisting rights by previous holders or owners of the land.37
Hence, the economy of the civilized world’s first major legal system depended in large measure at first upon occupations and taking created rights to own and dispose of things privately—not as a result of the Marxist notion of a peculiarly capitalistic exchanges of commodities. Inexplicably, in another chapter of his General Theory, 595Pashukanis acknowledges this fact when he states: “Law historically emerged … from a claim, and only thereafter did it overlap with the earlier … relationship.”38
In another passage, Pashukanis attempts to delegitimize custom or legal tradition as a source of law and as a perennial participant in any normative universe by stating:
Custom or tradition, as a higher basis than the individual [conduct] for legal claims, corresponds to the feudal system with its limitations and stagnation. Tradition or custom is in essence something included in notoriously rather narrow geographic boundaries. Therefore, every right is thought of merely as an attribute of a specific concrete subject or of a group of subjects. In the feudal world, “each right was a privilege,” (Marx). Each city, each estate, each guild lived according to its law which followed a man wherever he was.39
Yet, cultural anthropology shows that customs and customary law as “a higher basis than the individual [conduct] for legal claims” were relied on by primitive tribes much earlier than in any European feudal period.40 The same is obviously true with any society that actively engaged in commerce, before or after feudalism.
Finally, in Chapter V, Pashukanis asserts:
The more unstable the authority of the bourgeoisie became, the more compromising its corrections became, the more the Rechtsstaat turned into an incorporeal shadow, until finally the extreme intensification of the class struggle forced the bourgeoisie completely to discard the mask of the Rechtsstaat and to reveal the essence of authority as the organized force of one class against another.41
This statement is reminiscent of “Che” Guevara’s “race of the wolves” argument used in his anti-Liberman and anti-Marcelo Fernandez tirade described in the previous chapter:42 This was a race that according to Guevara was always won by the most ferocious capitalist.43 As such, it shares the same demonological view of commercial man (or of the bourgeois) held by Marx, Lenin, Stalin and other Bolsheviks. Yet none of these demonologists paid attention to Adam Smith’s empirically verifiable observation that at least since man ceased being a hunter-gatherer (and perhaps even then), he had a propensity to trade and cooperate with fellow man. Cooperation, in fact, was recently proven to be the most distinguishing feature between man and his nearest relative in the animal world.44
Stated simply, men were much more complicated and cooperative than Marx, Lenin, Stalin, Pashukanis and “Che” Guevara, among many others, gave them credit 596for. Because Marx viewed the exchange of commodities as determinant of man’s social behavior, it was Pashukanis’s logical conclusion that once such a Marxist M-C-M exchange disappeared and everyone owned everything, there would be no need to protect the holders of the exchanged commodities and law would also disappear.
Sadly, theoreticians such as Pashukanis are not always aware of the danger they represent to tyrants and especially those who suffer from paranoia, for their propensity is always to find an enemy in someone who sounds too intelligent to be clearly understood by them. This was the case with Stalin, who by 1936 was intent on a complete centralization of his power. Yet how could he accomplish that if there is this respected law professor convincing many that law-making was only temporary and not as fearsome as during tsarist days? Or was not this intellectual aware that Lenin’s legal nihilism had to be replaced immediately by a policy of “socialist legality” which required that Stalin’s and his subordinates’ ukases had to be made widely known and obeyed by everyone, or else? Despite Pashukanis’s prominence in legal circles, in the USSR and abroad, and despite his apologies and repeated recantations of his nihilistic theories, he was made to disappear in 1937 while he continued to be labeled officially as “a dangerous deviationist.”45
The increasing centralization of economic activity and its regulation by the Law of State Enterprises confirmed Pashukanis’s prognosis of a disappearing private law and of a progressively all-encompassing administrative law taking its place as the Soviet transitional law. As an official-mandatory law, the law generated by economic plans displaced the law of contracts between or among state entities and consumers of their goods and services. Thus, while the Civil Code of 1922 remained officially in force until the 1960s, most of it was dead letter.
Hazard, Butler and Maggs point to 1927 as the year when the central economic plan became the law of the land where heavy industry was concerned:
For the massive equipment of heavy industry every detail of the relationship between the producing corporation and the consuming corporation was planned. For consumers’ goods, there was still some permissiveness, as directors were allowed to seek out their counterparts in other corporations and make arrangements for supply of the materials needed….46
Stalin could have allowed the legal relations among suppliers, manufacturers and distributors to be governed by their respective contracts. His first choice was to regulate through mandatory law. Accordingly, “[t]he planning orders were then the 597sole documents necessary to [govern] production and delivery, supplemented when necessary by agreement on minor details of specifications.”47 Yet, as the plans grew in complexity, they required greater detail and expert knowledge on production and delivery specifications, among others, and this made contracts necessary. Accordingly, a decree of February 1931 reinstated the use of contract and contract forms. To distinguish the contracts used in the production and distribution plans from all others, they were labeled “contract[s] of supply” and the remainder continued to be referred to simply as “contract[s].”48
The disputes that arose from contracts of supply were submitted at first to the ordinary courts. However, after the judicial delays threatened to undermine production and distribution goals and timetables, the Stalin administration introduced a new system of administrative courts that relied on arbitration referred to as “State Arbitration.”49 While this system was at first informal and attempted to involve the officials or directors who were parties to the dispute, eventually it became a more formal procedure that relied on the parties’ attorneys and their official sources of law, including the Civil Code and supplementary statutes. As noted by Hazard, Butler and Maggs, despite the presence of civil-law-based arguments, some of the lawyers for the state agencies preferred to distinguish between what they referred to as “economic law,” or the law and practices peculiar to the economic planning phases and contracts, and the “civil law,” or the law applied to the contractual relations between private parties.50
As inveterate classifiers and taxonomists, law professors, even in Stalin’s Soviet Union, argued for a new type of distinctly Soviet law, a law of a higher hierarchy than the civil law; they labeled this law as “economic” law. It would apply to the relations among the state entities involved in the central planning process. However, many of the proponents of a new and distinct economic law were also converts to Pashukanis’s legal nihilism. For this reason, they were also purged together with Pashukanis as enemies of Stalin’s state.
Following Stalin’s death in 1953, the proponents of an independent economic law were emboldened to try anew. The Encyclopedia of Soviet Law reports that the proposal of an independent branch of economic law with its own “Economic Law Code” was proposed by Professor V. V. Laptev following the 21st Congress of the Communist Party of the Soviet Union in 1959, and that after a debate, this new law was ordered to be codified by decrees of that party, the Council of Ministers of the USSR, and was mentioned supportively in the Soviet Constitution of 1977.51
Despite all of these signs of official recognition, economic law was never officially welcomed as a major source of Soviet law. “The Basic Principles of Civil Law and of Civil Procedure”52 (hereinafter “Basic Principles”) “combined the law of public enterprise with that of private individuals, making some exceptions but including both 598types of relationships in the same document.”53 Nevertheless, the merger continued to be severely criticized by supporters of economic law. Despite the sharply different context and possible meaning of “economic law,” a growing number of European and Latin American law professors, some of them commercial lawyers, have argued since the 1990s that a new branch of public-private law they refer to as economic law is essential for the understanding of public-private law intersections in their respective economies.
Unlike its Soviet ancestor, however, this branch of the law does not necessarily seem designed to govern the transactions connected with economic plans or contracts between state agencies and their effects upon third parties. At times these new converts to economic law seem to try to harmonize socialist or centrally-planned legal institutions with capitalist or free market contracts, and to this uneasy mix they add a component of “economic analysis” of law.
The Basic Principles were part of a set that also included the law of civil procedure. As was just discussed, their drafters were under pressure to follow Marxist orthodoxy on the importance of the exchange of commodities for money as a subject of regulation and of an economic law whose concepts, principles and rules would govern, at least transitionally (until the advent of communism), the transactions among state enterprises. Unlike the M-C-M cycle, which according to Marx led inevitably to profiteering and surplus value, state agencies and economic plans would rightfully replace the exploitive capitalist intermediaries of that cycle.
Accordingly, the Preamble to the Basic Principles explained the importance of commodity and money exchange relationships and economic law in a socialist state headed toward communist ownership of the means of production. Upon the enactment of the Basic Principles, “Soviet civil law [would regulate] the property relationships which are governed by the use of money-commodity exchange forms in the building up of communism….”54 This formulation could not be accused of deviationism because the state-managed commodity exchange would no longer be associated with private enterprise. Thus, as suggested by Rudolph Schlesinger, one of the great comparative law scholars of our time, a new “law … associated with commodity exchange need not be regarded as provisional, at least until a fully communist society has been constructed in the more distant future.”55 In relevant part, Article 1 of the Basic Principles stated: “Soviet civil law regulates property relationships and personal non-property relationships connected with them, with the aim of creating the material and technological basis of communism…. In [the circumstances provided by law] civil legislation also regulates other non-property relationships.”56
As referred to by the Basic Principles, an exchange of property is an exchange of commodities for non-commercial purposes. In this respect, the Soviet use of the term “civil legislation” was akin to that of the Code Civil, whose exchanges of property 599(including not only barters but also sales, leases and bailments) were not supposed to be for commercial profits and whose transactions also involved non-property relations (such as those involving marriage and family).57 However, as will become apparent shortly, unlike the Code Civil, the Basic Principles and related statutory Soviet law disallowed as “unearned income” the payment of wages or honoraria for services performed in civil transactions involving personal property, whereas the Code Civil and its progeny allowed and encouraged them.
Some of the provisions in the Basic Principles foreshadowed future liberalization of trade by: 1) enabling the performance of civil transactions other than those defined by it;58 2) empowering more juridical persons to participate in the socialist marketplace, such as mixed state and agricultural cooperatives (kolkhozes), and conferring property rights to trade unions and other social organizations;59 and 3) acknowledging the contractual realities of a planned economy in which the nature of the participants as state entities and their subjection to an economic plan were paramount considerations as contrasted with a policy of “mere enforcement of contracts without consideration of their [public law] origin….”60
The Basic Principles section dealing with the law of obligations makes it clear that civil law obligations may arise from, among other sources, any agreements or administrative acts which conformed to the “general spirit of Soviet civil law.”61 One such an agreement was found in Chapter IV of the Basic Principles, which dealt with the procurement of agricultural produce. As noted by Professor Schlesinger, this contract contains the usual stipulations concerning delivery dates and prices, but it also sets forth the obligation of the purchasing entity to provide assistance to state and collective farms in producing and transporting produce to the delivery points.62
Nevertheless, the liberalization of the law of contracts was still driven by the classification of property and particularly of the types of property that could be traded. Article 25 was an indicator of how far the legislature was prepared to go in embracing a numerus apertus approach. As usual, during the reign of Soviet law, “unearned income” or income derived from the payment of wages to workers or joint venturers in connection with the exploitation of “personal property” was a major concern. Based on the same restrictive approach to personal and other forms of property, the Basic Principles limited the ownership of houses to one per family.63
According to Dean Yevgeny Sukhanov of the Faculty of Law at Lomonosov Moscow State University,64 despite the attempts to liberalize some aspects of the law of contracts by the Basic Principles, it was not until the enactment of the federal 600Ownership Act of 1990 that the USSR “considerably expanded and developed the approaches [to private ownership] of the previous law.”65 Dean Sukhanov explained the federal Ownership Act as follows:
[T]he legislator for the first time abandoned the economic categories of “forms of ownership” … and the right of ownership itself became an integral part of a broader concept of rights in rem. Thus, the [Code Civil and BGB’s] concept of real rights—the right of ownership being the most important right—was established in [Soviet] law. In essence, this concept reflects a clear distinction between the economic and legal understandings of the relations to which ownership gives rise.66
Prior to this 1990 law, no classification of property was as important to the commerce engaged in by private parties in the USSR as that of personal property. After many official concessions, retractions and restrictions on what a citizen could treat as his personal property and thus set aside for his and his family’s unimpeded use and perhaps development and conveyance, Article 10 of the Soviet Constitution of 1936 defined personal property as follows:
The right of citizens to personal ownership of their incomes from work and of their savings, of their dwelling houses and subsidiary household economy, their household furniture and utensils and articles of personal use and convenience, as well as the right of inheritance of personal property of citizens, is protected by law.67
This enumeration tacitly acknowledged the residual nature of personal property; it was a “left-over” property, or one that did not belong to the Soviet state, agencies or cooperatives. Given its importance for informal and black market transactions, it should not be surprising that the enumeration of personal property in Article 10 was temporary and was followed by conflicting legislative and administrative actions. Among these actions were the socialization and “abrogation forever” of every kind of ownership in land including its minerals, waters, forests and all other natural resources; the abolition of private ownership of houses, banks and church property; or the proscription of inheritance by operation of the law or by wills.68
Still, after many years of studying Soviet legal institutions, Samuel Kucherov, a Soviet law expert at the United States Library of Congress,69 quoted his Soviet colleague Raisa Khalfina for the assertion that no other private legal institution attracted as much attention during the heyday of the USSR as personal property.70 In her words:
It is difficult to find another legal question which would attract such vivid attention of the public at the present time, as the question of citizens’ personal property. Almost in every issue of the central or local papers, articles, feuilletons, letters to the editor, reviews of these letters, concerning 601the question of personal property, inheritance, individual housing, gardening, etc., are printed.71
In addition to the economic importance of this information, there was an additional legal-cultural factor. Even a quick glance at Soviet legislation and administrative and court decisions on private and personal ownership reveals that one of the main reasons for the citizenry’s concern with the scope of personal property was its legal uncertainty. The recurring questions could not be more basic: What rights did ownership of personal property encompass? What personal property could be sold, lent, leased, exchanged or passed on to one’s heirs?
Typical of the “off and on,” uncertainty-laden approach to the scope of personal property rights was the following, among many other, governmental actions: The right of inheritance of family property was, as mentioned earlier, abolished in 1918,72 yet farmers were told in 1921 that as former house owners they could get back their houses—but this right was limited to houses with fewer than two apartments except those located in Moscow or Petrograd, which could contain as many as five apartments.73 Similarly, while private ownership of land had been nationalized, owners of small houses could still rent the plots on which their buildings rested.74 In addition, possession of land was restricted to the personal use of the former owner (the owner of record at the time of nationalization) and could not be inherited.75 As commented earlier, the Civil Code of 1922 re-established inheritance rights, although with severe limitations.76 During the 1920s, this law seemed to have been at its most uncertain point.77 It was then that “shifting economic policy led alternately to confiscation and denationalization of property on a large scale.”78 This off and on feature of the Soviet law of property led Professor Peter B. Maggs to characterize this entire field of law as complicated and vague: “One may rent out housing space that is not needed but may not profiteer; there is no clear criterion, however, of what is legitimate renting and what is profiteering.”79
Professor Maggs’ quote prompts the question: Why did such a basic question of everyday housing rentals remain unclarified? I believe that a possible answer to the continuing uncertainty on the meaning of profiteering was the difficulty in identifying the victims of such conduct. The victim could hardly be one of the parties to the transaction because, in principle, the transaction was unlawful and the parties to it 602were presumably “in pare delictu.” On the other hand, if the victim was “the state,” “the proletariat,” “the people,” or even “the masses,” then, as pointed out in the preceding chapter, a duty supposedly owed to everyone winds up being owed to none.
The following discussion on the effect of tenancy duties in housing law during the 1960s is based upon two studies by distinguished Soviet law experts: one by Bernard Rudden Senior Researcher at the University of Leiden80 and the other by Samuel Kucherov at the United States Library of Congress.81
Article 131 of the Constitution of 1936 provided:
It is the duty of every citizen of the U.S.S.R. to safeguard and strengthen public, socialist property as the sacred and inviolable foundation of the Soviet system, as the source of the wealth and might of the country, as the source of the prosperous and cultured life of all the working people. Persons committing offense against public, socialist property are enemies of the people.82
Article 283 of the Civil Code of 1964, in turn, stated: “The tenant is bound to use the property in accordance with the contract and the purpose of the property.”83
In principle, the preceding and other duties were owed to state-appointed landlords and other administrative authorities, including the Procurator of Justice and communal bodies and parties directly or indirectly related to the use of the premises in accordance with the contract or the purposes of the property as expressed in an economic plan.84 As the reader will discover in a future section,85 the USSR was not the only jurisdiction to distinguish between purpose of the property as expressed in a contract and in other documents.
When central economic plans in the USSR listed the property to be used for “plan purposes” (a frequent specification in economic plans), the purpose could not be altered by the parties to the plan without the permission of the planning agency. The effect of the listing of such property was to create duties to an unidentified number of administrative authorities (national and local) as well as to producers, suppliers, distributors and consumers of the goods and services of the plan.86 Assume, for example, that property “A” was listed in a national plan to serve as a warehouse for the storage of products “B.” Assume that “C,” the state entity that produced B, found a better place to store it and decided to use B as housing space to be rented to a group of needy employees “X-Z.” C’s decision could trigger actions by administrative claimants who would allege the infringement of the plan provisions, and by other state entities that could trace the tardiness of delivery of B to the decision to change their storage. Meanwhile, if the change of warehousing space to housing was set aside by the administrative authorities, X-Z would likely file a claim against B for breach of their rental agreement.
As if the number of possible claimants of tenancy duties were not large enough, Bernard Rudden notes that in 1957 the Communist Party’s Central Committee urged the importance of involving the community and the trade unions in the grant of living space, which would also enable these entities to claim tenancy duties. This directive was subsequently adopted by a number of Soviet republics.87
In a 1957 article for the Soviet newspaper Pravda, Nikita Khruschev set forth the merit criteria for the allotment of dwellings:
In building and allotting dwellings we mustn’t simply think—because a man is alive, give him a good apartment. You have to take a look at what he’s doing, what he’s giving to society. In our socialist society, each must give something to the general welfare of the people, must carry a certain load. Only then does he get the right to use the fruits of his labour which are created by society.88
This pronouncement was followed by the Housing Ministry’s Ministerial Instructions for assessing need and merit and included, as one factor, the applicant’s “socially useful work.” Yet, soon thereafter, each economic sector started relying on its own indices of housing merit. For example, in the industrial sector reliance was placed on the workers’ “productive indices,” and this meant that the leaders of production were to be preferred.89 Yet, who was to be preferred if all of the leaders of production had received their housing or were not interested in the housing available? The following administrative practices illustrate the lack of precision of the archetypes chosen to include or exclude a certain archetypal behavior in an evaluation that was supposed to replace market forces as the adjudicators of the entitlement to apartments.
Assume that a list of applicants for housing existed and one Zamchenko had gradually reached the highest rank. Would a statement by his plant manager that Zamchenko was “a loafer” be enough to: 1) totally bar him from appearing in the list; 2) lower his rank; or 3) send him to the bottom of the list? Or, would an investigation of his productivity be in order? In Zamchenko’s case, the answer was to send him to the bottom of the list.
After this decision, those tenants who could not claim that they were leaders of productivity must have been wondering whether they could also be characterized as loafers or whether they had to prove that to housing adjudicators and unidentified claimants of tenant duties. Please notice that this is not a very different characterization from that of the “profiteers” that concerned Professor Maggs.
Rudden referred to another municipal regulation according to which adjudicators, presumably implementing Khruschev’s pronouncement, had to take into account the social usefulness of the work they did. Then a local twist was added that required that 604in order to register, the applicant had to have lived in the city for more than five years; and finally, the regulation required that “[p]ersons not engaged in socially useful labour are denied registration or removed from the list.”90 Clearly, major uncertainty prevailed in this municipal regulation as well.
On the other hand, apparently once a tenant had qualified for his or her tenancy, then his or her status was highly protected. Thus, Article 328 of the 1964 code provided that;
The tenant of living accommodation in the building of a local Soviet of Workers’ Deputies, or of a State, co-operative or public organisation … [had the right] on the expiry of the term of the contract, a right to renewal [for a similar period]. This right may be challenged in court by the landlord only if the tenant has systematically failed to fulfill his duties under the contract.91
Rudden refers to this tenant as “the virtuous tenant.”92 I do not know if he used this term ironically, for the diligence required of such a tenant was minimal—all he had to do was not engage in a systematic breach of his duties under the contract. Moreover, the implicit policy of protecting those who had initially qualified was extended to members of their families as well. Accordingly, Article 301 of the same code provided:
Equally with the tenant[s] … the members of his family who live with him acquire the rights and duties which flow from the lease…. The following are regarded as members of the tenant’s family: his spouse, children and parents, and also other relations and dependants who are unable to work, if they reside with him and carry on a common household.93
An everyday lawsuit illustrates the standard required of a tenant to preserve his status as a “virtuous tenant” and the role of third parties in helping to apply this standard. Goremkyna, wife of Goremkin, brought an action to evict her husband “for making life impossible.”94 The lower court held for her, but the Supreme Court remanded to the lower court:
The basis for evicting the defendant was that twice he started a fight with the plaintiff … His conduct was not considered by the community, either at his place of work or at his residence. Nor was he warned by the court. At work he was classified as satisfactory. His work character was positive … The decision of the People’s Court to evict the defendant without applying educative measures to him was taken without sufficient foundation.95
Rudden’s correct conclusion was that “[t]he Russian lease … straddles contract and delict [and that] [t]he tenant’s duties and liabilities are owed, not merely to the lessor, but to third persons….”96
Rudden calls attention to the “unimportance of the regulations on rent”97 and also quotes a section of the Civil Code that starts out by saying: “Until the establishment of rent-free accommodations….”98 Thereafter, he refers to supplementary legislation that provided for low rent whose amount depended upon the amenities of the premises and inequalities of social status. For example, Moscow priests had to pay five times the average rate.99
The Civil Code’s prefatory statement, “Until the establishment of rent-free accommodations,” reflects the effect that Lenin’s legal nihilism (inspired by Marx’s prophecy on the withering away of the state and its law) had upon the law and economics of tenancy. Why bother with careful, equal and detailed regulation if all of the regulation, including perhaps the five-fold extra charges to priests, were bound to disappear in the foreseeable future? The reader will recall that a variant of this view was expressed by “Che” Guevara in the previous chapter.100 Recall that he dismissed the need for cost accounting and self-sustaining state enterprises or of demanding payment from delinquent state agencies because all that liability structure was soon to disappear when all of the property in society would be in the hands of the state and when such a state would be populated by the “new socialist man.” The effects of this attitude upon the legal and economic well-being of a society are not hard to discern: Deferred obligations are less likely to be performed; defaults will proliferate; and credit contracts and, even from a planning standpoint for those so inclined, estimates of prices for supply and final products, are much more difficult to predict for planning and living purposes.
Official building statistics indicate that in 1959 the largest percentage of the entire dwelling space available in the USSR was personal property which consisted of houses built with state authorization by private citizens.101 Although these homes and dachas (country houses) were built mostly in the outskirts of the big cities and in the countryside, the shortage of dwelling space in the USSR continued to be its “everlasting plague.”102 As an illustration of the “appalling shortage of dwelling space,” Rudden quoted a 1960 letter of the hundreds written each day to the editors of newspapers throughout the Soviet Union: “Our family consisted of four persons: father, mother and we two brothers. We lived all four in one room. My brother and I married and got children but we live still in the same room.”103
As had its predecessors, the Civil Code of 1964 attempted to clarify the scope of the rights of owners of private homes and dachas: 1) the owner had the rights to their possession, use and disposition; 2) he could not use those rights to obtain income derived from the work of others, even if he paid wages or shared profits with these others (unearned income); 3) he could only own one dwelling-house or part of one house; and 4) the maximum size of a dwelling-house or parts thereof could not exceed sixty square meters of living space.104
Yet, these rights presupposed that the builder of the house or dacha had obtained permission for the proposed plan. If he had not done so or deviated substantially from what was allowed, he automatically lost his right of disposition or to the building or parts thereof.105 The Executive Committee of the local Soviet of Workers’ Deputies could order that the house or dacha or part thereof be destroyed at the expense of the builder, or a court could decree its confiscation.
Similarly, “[i]f a house, dacha (or part thereof) … is systematically used by the owner for the extraction of unearned income, then that house, dacha (or part thereof) is liable to confiscation without compensation by court procedure at the suit of the Executive Committee of the local Soviet of Workers’ Deputies.”106
The following sub-sections illustrate the everyday application of an invertebrate law whose drafters could be many and unexpected.
Lemdyanov owned a sizeable garden and built on it a greenhouse in which he installed a convection stove and an electric heater which enabled him to produce large quantities of vegetables, plants and flowers. In addition, he modernized a hen-house, and kept an average of 100 hens for sale.107 He sold the vegetables and hens at “speculative prices” and used the proceeds of their sale to build a house and garage. He was accused before the Peoples’ Court of un-socialist behavior.
The People’s (trial) Court confiscated the above-described properties.108 The court held that the house and garage he acquired from the proceeds of the sale of vegetables and hen were the product of un-socialist behavior, and were dealt with under another law.
QUESTIONS
What made Lemdyanov’s use of the greenhouse and hen-house a source of unearned income? Rudden’s translation of this case refers to the defendant’s use of a “convection stove and an electric heater” to enable him to produce large quantities of vegetables, plants and flowers. Could these machines be the culprits of the production of “unearned income”? Was the rationale of such an income that only a citizen’s physical and mental efforts could be the producers of earned income? Even though Lemdyanov had likely paid wages for work related to his garden and hen-house, Rudden’s translation does not refer to such payments, but refers to the defendant’s sale “at speculative prices.” What would you say is a “speculative” price? Is there any connection here with Marx’s appropriation of “surplus” value or with the medieval doctrines of the just price, as discussed in the preceding chapter? Could the defendant be guilty of both charging speculative prices and unearned income?
Lemdyanov’s case does not clarify the range of a speculator’s prices, or the meaning of “unearned income,” “behavior unbecoming a party member” and so on—products all of the Marxist-Leninist conceptual demonology. Hopefully, the following deliberations during a meeting of a local communist party concerning the behavior of one of its members and the following court decisions will clarify the meaning of these accusatory concepts.
Following Stalin’s death, small plots of land were allocated by the Soviet government to homeowners. Some were given as rewards for productive work and others were given to encourage the growing of fruits and vegetables to increase the nation’s short supply.109 This next case pertains to a Professor Dembinsky of the Faculty of the Industrial Institute of Kuybishev. He decided to become such a gardener, but in the opinion of his colleague Professor Grigor’yev, he had stretched too far the authorization of home gardening.110 During a meeting of the Industrial Institute faculty in December of 1960, Grigor’yev accused Dembinsky of hiring workers to help him turn his garden into a profitable venture.111 The following is an extract of the accusation hurled at Professor Dembinsky during a communist party meeting by some of his faculty colleagues:
Dembinsky was accused of speculation with the products of his huge garden, cultivated with the help of hired workers; the selling of products of the garden permitted him to make a living without having written a line of scientific work within the last twenty years…. “in consideration of the question of cars and dachas such as Dembinsky possesses, it must be said that he is a new kulak and it is we who raised this kulak.”112
This accusation must have sent shivers up Dembinsky’s spine as not too many years earlier, “millions of ‘kulaks’ were completely dispossessed, physically annihilated, or sent to concentration camps….”113 Yet, what made Professor Dembinsky a kulak? 608Was there any basis for this accusation in Lenin’s dogma? If so, which dogma was it, that of the New Economic Policy? Or was it the need to repress “profiteers,” “speculators,” and “bloodsuckers” that Lenin also proffered during his three-year interaction with the NEP? Can you distinguish among these anti-socialist types? What was the behavior typical of these “demons”? Would any of them be protected by the provisions of the Civil Code of 1922, the 1936 Constitution or the Basic Principles discussed in the present and preceding chapters?
A decision of the USSR Council of Ministers of December 1960 forbade the allocation of plots to ordinary citizens for the construction of personal summer homes (dachas) in the outskirts of cities.114 At the same time, a system of incentives and rewards for high-powered communist party officials was put in place. It granted Comrade Zikeyev, the director of a machine building plant and member in good standing of the Communist party, one such a plot. Zikeyev lacked the necessary construction materials, and with help from his colleagues (other plant directors), he collected his construction materials. His dacha was built and, according to witnesses, he and his family enjoyed it much.115
During one summer while Zikeyev was on travel, his wife rented a part of Zikeyev’s dacha for a significant number of rubles. However, the Zikeyevs had not counted on the militant party loyalty of their daughter-in-law, a member of the Communist party. She denounced him to the Oblast Party Committee for betraying the party’s ideals. According to her, the betrayal started with the building of the dacha. Building materials not available to ordinary citizens were available to him. She testified that he once boasted that electric wire and oil that could not be found by others was obtained for him by a plant director friend.116
At the meeting of the Party Oblast Committee, several opinions were voiced that criticized reliance on personal property to undermine the party’s ideology.
As stated by an exemplary party member identified as “A”:
[H]e too dreamed of a dacha for himself and his family. “But then I would be a house owner” thought A. “The word itself is disagreeable … though a small landlord, [I would] still [be] a landlord … and I have a Party card, I am building Communism….” [Thus A] abandoned his “dream.”117
Similarly, “B,” another highly respected party member, announced that he too had intended to build a dacha. But after looking closer into it, he decided that:
[A]ccording to the opinion of a majority at the meeting, Zikeyev had become such a money-grabber. Although no formal decision was taken, the chairman informed Zikeyev that he would be excluded from the Party. In order to avoid it, Zikeyev presented to the Party his dacha which he had built himself at his personal expense. 609[S]ince the story was published in the organ of the Central Committee of the Soviet Union Communist Party, the solution of Zikeyev’s case [was regarded as] a semi-official one.118
Do the accusations by the “exemplary” party members help you connect or “vertebrate” Marxist-Leninist dogma with behavior that Zikeyev was supposed to follow? If so, which exemplary party behavior was the most compatible with Marxist-Leninist dogma? If he could prove that in order to satisfy his family’s needs he had to engage in activities that his colleagues said violated the Marxist-Leninist dogma of not being a “money-grabber,” would any of the Soviet constitutional provisions transcribed in the present or previous chapter have protected Zikeyev? Had the NEP been in force at the time of his accusation, would he have been authorized to do business as a Nepman? What Marxist-Leninist dogma made the Nepmen lawful during 1921–1929 in the USSR?
Despite the insults and penalties directed at the alleged kulaks, money grabbers and other “profiteers” and “exploiters” of personal property, the economic significance of their transactions could not be ignored by Soviet officials. A mere glance at the statistics provided by the USSR’s own Statistical Handbook on Agriculture for 1959 showed that: “The production of … individual plots equals and sometimes exceeds the socialized production of animal food, vegetables (45%) and potatoes (70%), and amounts to 82% of the entire egg supply, about [half] of the meat and milk production of the country….”119
Samuel Kucherov’s analysis of the Soviet policies during the period of collectivization (roughly from 1928 to 1940) is instructive.120 On the one hand, some policies allowed the building of personal homes, the ownership of personal cars and the cultivation of productive gardens, thereby alleviating the endemic scarcities of housing, transportation and the meager official diet. On the other hand, they imposed severe limitations upon the proliferation of dachas, automobiles and productive personal gardens which in the end were counter-productive. Kucherov concludes that the only parties who benefited from the official restrictions were the existing owners of personal property to the detriment of the rest of the population. As stated by a letter of a Communist party member printed by the journal Kommunist:
“The fewer citizens who have their own cars, the more possibilities for automobile owners of receiving unearned income. The fewer citizens who have their own dachas and gardens, the more money the owners of dachas and gardens will receive by renting the dachas and selling vegetables, fruits, and flowers on the market,” …. Indeed, restrictions will only increase speculation with personal property and foster bribery, which already now is extensively used in matters of allocation of plots for personal housing and gardening.121
The sale of manufactured articles to the public by artisans could be observed during most of the existence of the USSR. Perhaps to acknowledge the inevitable, a Statute on Artisan Handicraft Businesses, enacted on May 3, 1976, defined this activity as “making manufactured articles for sale to the public….”122 It forbade, however, the employment of wage labor as well as the sale of valuable items whose sale or distribution required state identification marks or certifications.123 What follows are my brief summaries of Soviet court decisions on the rights and duties of artisans and merchants as translated by Hazard, Butler and Maggs.
Fadeev, a seller of wagon wheels, was sentenced by a District People’s Court to one year of corrective labor, a monetary fine of ten percent of his wages, plus restitution to the state of the proceeds of his sales to the public. The law that he was said to have violated was Article 153 of the section on Private Enterprise and Commercial Activity Intermediaries of the Criminal Code of the USSR. Specifically, he was found guilty of not registering his status as a seller of wagon wheels. This decision was reversed on appeal. The appellate court held that Article 153 only forbade the sale of handicrafts using certain types of business forms, e.g., state, cooperative or other authorized “social forms,” whereas Fadeev did not use these forms and acted in a private capacity.
To a western capitalist observer such as me, the logic employed by the appellate court seems confusing, if not paradoxical. On the one hand, the state only authorized certain forms of doing business, i.e., as a state, cooperative or other authorized form. On the other hand, the defendant disobeyed that requirement and acted as a private, unregistered entity. Yet, he could not have registered without violating Article 153, for he was neither a state nor a cooperative entity. Could the reader draft a coherent, principled and thus predictable commercial rule that would enable him to lawfully sell his handicrafts without violating Marxist-Leninist dogma? How common was Fadeev’s predicament in the post-Stalin years of the USSR?
Shorin was convicted by the trial court under Article 153 Paragraph 1 of the Criminal Code of the RSFSR and ordered to pay a large fine. He contracted with two collective farms to conduct glass-blowing workshops. In addition, he agreed to receive five percent of the proceeds of the sales following his workshops. On the other side, the workers would receive thirty to thirty-five percent of the remainder. As the organizer of the workshops, he recruited assistants, collected raw materials, got purchasers for the products and established prices. The trial court found that he deliberately hiked the 611prices of the glass sold to increase his pay. He was accused of engaging in private entrepreneurial activity using a socialistically accepted form of doing business. The appellate court held that Article 153, Paragraph 1 punishes engaging in private entrepreneurial activity using the form of a state or cooperative entity. From its text, it follows that one of the essential elements of the crime is the use of one of the indicated forms of organization of private entrepreneurial activity and the illegal extraction of profit. However, the fulfillment of a labor contract with a collective farm regarding tasks connected with the output of a given type of product cannot by itself be regarded as a private entrepreneurial activity that entails criminal liability. It was factually established that Shorin conducted glass-blowing workshops under a labor contract concluded with the managers of the collective farms and that Shorin conscientiously fulfilled the obligations placed upon him. All of the funds received from the sale of goods produced in the glassblowing workshops were paid to the collective farms. The administrations of the collective farms later paid Shorin the wages due to him. In managing the glass-blowing workshops, Shorin acted in the best interests of the collective farms and fulfilled his labor contract; and these facts do not support the lower court’s conclusion that the activity was criminal.
One does not have to be a specialist on legal simulation126 to see through the utilization of “workshops” and “labor” agreements by Shorin and the collective farms as generators of additional income for themselves. In western capitalist terms, theirs was a plain and simple joint venture agreement in which he supplied his glass-blowing expertise and raw materials and the collectives supplied their premises, the workers and their business form or corporate shell that enabled the joint venturers to sell their goods and services profitably to the public in exchange for a division of the profits. The lower court chose to characterize this agreement for what it was—a private entrepreneurial activity. The appellate court decided to look the other way. Why do you think it did so? Could it be that, as in the Fadeev case above, it was aware that too many forms of private entrepreneurship were being practiced by the Soviet citizenry to improve their standard of living? Yet, what were the socio-economic costs of not knowing when a trial or appellate court would be as strict in its Marxist-Leninist or Stalinist approach to private entrepreneurship as was the lower court in this case and when a court would be willing to look the other way?
The facts found by the trial court showed that during 1961–1965, Utekeshev was engaged in speculative activities by buying automobiles and motorcycles and reselling them for an illegal profit of 1670 rubles. He was sentenced to two years in jail, but this sentence was suspended in favor of a two-year probation. Upon review, the Deputy President of the Supreme Court protested before the Judicial Division for Criminal Cases and sought the reversal of the probation arguing that the punishment was unjustifiably soft. According to the Deputy President, the record showed that while the defendant was a foreman at a state entity he engaged in the illegal buying and selling of motorcycles and automobiles to pocket unearned income, failing to register the motorcycles and automobiles as required by law. Further, he bypassed the state stores 612and sold them privately for a profit. Upon remand, the People’s Court sentenced Utekeshev to an even lighter sentence. The lower court justified its leniency by referring to the fact that this was his first conviction, the (precarious) position of his family, his positive character references and a petition by the members of a collective division of the state agency in which he worked that he be transferred to a re-education facility. The Supreme Court disagreed and sentenced him instead to a punishment in accordance with Article 154 Paragraph 2 of the Criminal Code of the RSFSR.
The trial court’s description of Utekeshev’s behavior sounds more than vaguely familiar. Does it remind you of the Soviet and Cuban factory dispatchers described in the preceding chapter?128 What do you think made Utekeshev such a sympathetic character to the judge or judges that decided in such “an unjustifiably soft” manner in his favor?
The reader is now encouraged to refer back to the preceding chapter, which describes the manner in which economic plans were drafted.129 Meanwhile, remember the differences on the specifications of the economic plan’s details depending upon the nature of the goods produced. If the goods were the massive tools and equipment of heavy industry, every aspect between the producing and consuming corporations had to be planned in the greatest of detail. If the goods were for consumer use, “there was still some permissiveness, as directors were allowed to seek out their counterparts in other corporations and make arrangements for [the supplies] needed….”130 Two different types of centralized planning contracts eventually emerged. One was an ordinary contract between parties to the plan, simply referred to as a contract; and the other was one that contained numerous details and specifications on delivery dates, spare parts and payments. The latter contract required expert knowledge both as to the elements of the contracts and its legal format. A decree of February 18, 1931 referred to it as a “contract of supply.”131
Article 44 of the Basic Principles defined these contracts as follows:
Under a contract of supply the supplying organization obligates itself to transfer to the purchasing organization (the buyer) within a given period of time or on a certain date title to, or, in accordance with the provisions of Arts. 21 and 30 of these [Basic] Principles, the right to dispose of a specific product in accordance with a planning order binding on both organizations and relating to distribution of the product concerned; the purchasing organization obligates itself to accept the product and to pay for it at the established prices. A supply contract is also an agreement concluded between organizations in the exercise of their own judgment by which the supplier obligates itself to deliver to the buyer at a time that does not coincide with the 613moment of conclusion of the contract a product that is not distributed in accordance with a plan.
The supply of a product without conclusion of a contract shall occur only in those circumstances established by the Council of Ministers of the U.S.S.R. or by the Council of Ministers of a union republic.132
Please note that the latter supply contract is one entered into by the parties outside the scope of the plan or delivery plan order.
The Moscow Wool Outlet (MWO), a wholesale outlet, filed a claim with the State Arbitration attached to the Council of Ministers of the USSR to obtain a sanction against the Troitskaia Cloth Factory (TCF) for its breach of the contractual obligation to deliver wool fabrics during the second quarter of 1965. TCF reported that the fabric involved was not supplied to the claimant-buyer because of the lack of raw material for the manufacture of that fabric, and requested a finding of an exemption of the duty to pay sanctions, based on the defense of “absence of fault” on its side. The State Arbitration rejected this defense. It stated that the specifications of the fabric were agreed upon by the parties in a 1965 wholesale fair. TCF was obligated to take all necessary measures to take care to obtain the necessary materials. TCF did not take such measures and was not able to deliver the promised wool; and only after the filing of a claim did it disclose the reasons why it was not able to supply the materials. Moreover, it did not present documentary evidence to the State Arbitration showing that it did take all the necessary measures to be able to perform its obligations. Thus, the State Arbitration found no grounds to relieve TCF from the obligation to pay sanctions.
“K” A Kharkov consumer goods distributor filed a State Arbitration claim for the recovery of a 7,500 ruble penalty from the Chernivets Chemical Consumer Products Factory “F” for failure to supply plastic products worth 280,000 rubles in October 1965. F answered that the claimant had overstated the amount of the penalty since the goods were delivered to K albeit with some delay. The delay was due to the fact that F had only fifty to fifty-five percent of the vinyl film needed for the fulfillment of its own plan of production. For this reason, the respondent, citing its absence of fault, asked to be excused. The State Arbiter decided that the measure of damages should be determined according to Article 57 of the Statute of Supply of Consumer Goods. Taking into account the reduction of the production plan for the factory, the claim was allowed in the amount of 1,827 rubles. On appeal, K argued that although the total amount of production for that factory had been reduced, the supply contract of which it was the promisee had not been changed. The Chief Arbiter affirmed the previous decision and 614pointed to Article 209 of the Civil Code of the Ukrainian SSR, which imposed a state contractor’s liability only in an instance of fault, which in the present case was absent since the failure to supply was the result of non-issuance of allocation permits for raw materials.
Notice that in the Wool Outlet Case TCF was designated as the sole supplier of the wool needed by the claimant. TCF’s defense showed an unwillingness to accept responsibility for employing its best efforts in acting as a sole source supplier. In effect, TCF’s attitude was: “I will supply what I have and if I do not happen to have the wool at the time that I am supposed to supply it, it is not my fault.” TCF’s attitude was not: “I better employ my best efforts in obtaining substitute raw materials in a timely manner or I will risk losing my client and pay substantial damages reflected in my profit and loss statement.” What duty of diligence does your law of commercial contracts demand from your sole source suppliers? Do you believe that TCF was responsible for damages that it should have foreseen as a result of its failure to supply in time? Or, does the law of administrative sanctions disregard foreseeability? How would you compare the duties of diligence of an economic plan supplier such as TCF (let me refer to him as an average socialist supplier) and that of a reasonable prudent merchant or bonus vir? Would any of these archetypes bear the burden of proving that as sole source suppliers they were presumed to know the present and likely availability of what they promised when they promised it? Which is the more predictable amount, that of an administrative sanction or that of damages awarded pursuant to your law of commercial contracts?
Shortly after the fall of the last Marxist-Leninist government of Bulgaria in 1989, I was invited to lecture on international commercial and banking law topics at Sofia’s (then-labeled) Karl Marx Institute for Economics. My baggage was lost by the air carrier, and I had to buy replacement clothes. It was an eye-opening adventure. The only undershirt I could find (even though I visited each of the stores open for business in central Sofia in the company of high government officials) was a colorful tee-shirt that pictured beach volleyball players under a large sign that read “Malibu Beach,” a sign so colorful that it could be seen through my white dress shirt. This locally-made t-shirt was sold in a small government shop for the local currency equivalent of fifteen United States dollars. My hosts then took me to the largest government department store in Bulgaria where I found no underwear or shirts, but was able to buy a serviceable three-piece blue suit identical in shape and color to the hundreds on display. Its price was the local currency equivalent of ten United States dollars.
I asked my hosts, all economists, how they could explain: 1) the absence of everyday items such as underwear and dress shirts in the center of Sofia, and 2) an identical price for resplendent colored tee-shirts and for a tailored three-piece suit. In their response, they blamed these “anomalies” on poorly-implemented economic plans. One of them hinted that the equivalence in prices was caused by a vast supply of suits and a demand for tee shirts that outstripped their supply. He added that this should have been anticipated by the drafters of the economic plan. I asked them how it could 615have been anticipated if the drafters did not have an idea of what the potential purchasers of tee-shirts and three-piece gabardine suits were willing or able to pay for these products.
One of them smiled and asked me if I was referring to the Lieberman debate during the Khrushtchev days. I answered that perhaps I was, and asked him if he agreed with Lieberman. He smiled again and then he said:
I do. If I did not, why were you invited to teach us about international commercial law, sales, sales financing, negotiation and financing of letters of credit and so on? None of these transactions can work unless they are as self-supporting as Lieberman’s state entities and also subject to transparent and rigorous cost-accounting standards.
He added:
When buying capital goods in capitalist countries, we had to pay with hard currency which we could only acquire with work or commodities whose value was appraised objectively (what participants in a true marketplace were willing to pay for them); but when we were supplying goods and services at home and getting paid for them, the value of these goods had no objective appraisal, and they were worth whatever value someone with the power to do so assigned to them. Each day that went by we kept on losing true value until poverty was too much to bear, especially after we saw how well our capitalist neighbors were doing.
My eye-opening experience continued. A few days later, at the end of one of my lectures, one of the attendees, a government official, asked me to help him invest funds that were deposited in a state Bulgarian bank in a United States bank or banks. He proposed to transfer these funds (which had recently been converted from levas to United States dollars) to an investment (investitions) account in banks in which I was a legal advisor. I told him that I was an advisor to an umbrella organization for banks but not to a single bank and politely declined his offer. In parting, I asked him whether these funds belonged to the state or to private parties. He quickly answered: “The funds were deposited by state agencies but now there are no more state depositors; now state and private deposits are practically the same.” His answer reminded me of a favorite appellation used by some of my Mexican friends disenchanted with their revolution of 1910. Instead of referring to it as “la revolucion” (the revolution) as did many others, they called it “la robolucion,” an intentional mispronunciation that alluded to the widespread governmental robbery (robo) of state and private assets in the name of the revolution.
At first glance, the Civil Code of the Russian Federation (Parts 1 and 2)135 (hereinafter Civil Code 1995) appears to be a hybrid civil and commercial code much 616like the Swiss Civil Code and Code of Obligations (1907, 1912)136 and the Italian Civil Code of 1942.137 It also has provisions derived from the more traditionally civil Code Civil of 1804 and the BGB of 1900.138 Its treatment of the many commercial contracts it includes varies in quantity and quality. Its sale provisions, for example, are as comprehensive as those of any traditional or contemporary civil code and seem influenced by the United Nations Convention on Contracts for the International Sale of Goods (CISG),139 cited and transcribed frequently in this book. Other subjects are not covered as extensively, as I will discuss shortly. Its organization seems influenced by the BGB and its division into a general section that lays out the basic principles of the code followed by specific sections on each of the selected contracts or transactions. Thus, Article 1, titled the Basic Principles of Civil Legislation, reads:140
1. Civil legislation is based on the recognition of the equality of the participants in the relations regulated by it, the inviolability of ownership, freedom of contract, the impermissibility of arbitrary interference by anyone in private affairs, the necessity of the unhindered realization of civil law rights, ensuring the restoration of violated rights and judicial protection of them.
3. Goods, services, and financial assets may be moved freely about on the whole territory of the Russian Federation.
Another basic principle and major scope provision is found in Article 2, which in relevant part reads:141
1. Civil legislation determines the legal position of the participants in civil commerce, the grounds for the origin and the procedure for realization of the right of ownership and other rights in things … regulates contractual and other obligations and also other property relations and related personal non-property relations based upon equality, autonomy of will and the property independence of the participants.
Citizens and legal persons are the participants in relations regulated by civil legislation. The Russian Federation, subjects of the Russian Federation, and municipal formations may also participate in relations regulated by civil legislation (Article 124).
Civil legislation regulates the relations between persons engaging in entrepreneurial activity or with their participation, proceeding from the position that entrepreneurial activity is independent activity done at one’s own risk directed at the systematic receipt of profit from the use of property, sale of goods, performance of work, or rendering of service by persons registered in this capacity by the procedure established by a statute.
3. Civil legislation shall not be applied to property relations based on administrative or other authoritative subordination of one party to another, including tax and other financial and administrative relations, unless otherwise provided by legislation.
These basic principles reveal the Code’s epistemology (or theory of knowledge). To the questions “What is the mission of this code and where do its fundamental concepts come from?”, Article 2.1 answers that the mission of the Russian Federation’s civil legislation is to determine the legal “position” (perhaps meaning “status”) of the participants in civil commerce, the grounds for the origin and the procedure for the realization of the right of ownership and other rights in things. In addition to reflecting the difficulty of translating very abstract concepts, it alludes to the paramount position of the concept of ownership in the edifice of the Russian Federation’s private substantive and procedural law. From it spring the rights and duties of private law and procedure. Please recall that according to Evgeny Pashukanis, the concept of ownership, in turn, stemmed from the seminal legal relationship involved in the exchange of commodities.142
If Pashukanis’s ideas provided in his day and place an interesting hypothesis on the origin and eventual disappearance of private law, this is no longer the case. Many of the contemporary commercial transactions do not originate from the need to protect the right of property in the commodities bought and sold, exchanged, lent or used as security by the parties. As discussed in the preceding chapter,143 ownership of commodities, business assets and even controlling interests in business associations has a very different meaning today than it had for Marx and Engels. In addition, important areas of the law of commercial contracts, such as secured lending, among others, are more dependent upon possessory than upon ownership or title rights. And possession is frequently centered not on tangible assets, but on incorporeal ones, such as the debtor’s “streams of income.” As stated by U.C.C. § 9–202, with respect to secured lending collateral, it is immaterial who holds title, the debtor or the creditor.144 Thus, for a commercial code to ascribe superiority to rights of ownership of commercial assets as a basic principle would be, in my opinion, dysfunctional.
From the standpoint of the widely-accepted civil-commercial dichotomy, the concept of “civil commerce” is confusing because it suggests that there is a commerce that is not civil, in which case it is not clear what the code means by “civil.” Could it mean a unilateral commercial act where a merchant sells consumer goods to a consumer? Yet that is not the meaning one obtains from looking at the vast number of 618purely or bilateral commercial contracts, such as for the carriage of commercial goods, freight-forwarding, commercial credit, assignment of accounts receivable, etc. Would “private” perhaps be a better term?
Similarly, the focus of Article 2 on “the relations between persons engaging in entrepreneurial activity or with their participation” is equally troublesome, particularly because of the imprecise and confusing nature of the root term “impresa” or “enterprise” as the determinant of the scope of codes such as the Italian Civil Code of 1942 or the Honduran Commercial Code of 1952.145 The term “enterprise” opens up the question of the status of micro- and small businesses. Surely, micro- and small businesses would not qualify for the status of one of the three “sticks” in the same fascist bundle (fascio) that included the state and labor unions in the Italian Civil Code of 1942. At a minimum, small merchants would have had to comply with the often costly requirements of licensing and registration. Was this the entrepreneurial requirement desired by a surely non-fascist Russian Federation? Did it not wish to encourage as many potential micro- and small merchants or “effective owners of businesses” as possible?
In addition, the definition of entrepreneurial activity in Article 2 requires that the enterprise evince an “independent activity done at one’s own risk directed at the systematic receipt of profit from the use of property, sale of goods, performance of work or rendering of service by persons registered in this capacity.” Yet it does not clarify the meaning of some of its essential components. Take, for example, “independence.” Does it mean that a corporation that is part of a conglomerate or holding company but otherwise has a good deal of autonomy running its business is not an entrepreneur? Or, take the requirement of a systematic receipt of profits. Does it mean that one of the largest virtual bookstores in the world, such as Amazon.com, was not an entrepreneur during its first few years of existence when it was not systematically or otherwise earning profits?
On the other hand, there is nothing ambiguous or uncertain about the political ideology of the Civil Code of 1995. It is anti-Marxist and pro-free market economy, as made abundantly clear by Article 1, among many others. The equality of all of the participants in civil code relations is part of a venerable tradition associated with the promulgation of the Code Civil of 1804 and, at a much earlier age, with the international commercial fairs and their principle of “peace of the marketplace.”146 The same is true with Article 1’s embrace of the inviolability of ownership, freedom of contract and the impermissibility of arbitrary interference by anyone in private affairs. All of these are highly welcome statements for an aspiring free marketplace of goods, services and ideas.
While neither time nor space allow a detailed analysis of the commercial contracts enabled by this code, its treatment of the various types of sale agreements is, as mentioned earlier, among the most comprehensive found anywhere. The same cannot be said, however, about other contracts whose treatment remains anachronistic and harmful. Take, for example, the contract of sale with retention of title. Consistent with 619the Civil Code’s epistemology of ownership as a seminal concept, Article 491 makes the retention of ownership by the seller of goods sold on credit dispositive of the seller’s right to recover the goods sold and unpaid, regardless of possibly superior claims by other creditors.
Assume, for example, that a bank “C” helped finance that acquisition of the goods sold on credit by “A” to “B” and that those goods would be temporarily stored in country or jurisdiction “D,” where the bank filed its security interest in those goods in a local public registry. Article 491 completely disregards the effects of an earlier and valid registration of a security interest in the same goods. Thus, by allowing the retention of title of Article 491, the Civil Code of 1995 is creating a “secret” (unregistered or recorded) lien which ultimately impedes the access of Russian Federation merchants to a modern and much less expensive commercial credit system than that of the retention of title. The same is true with Article 501 (on the contract of hire-purchase) and with Article 665 (on the contract of financial leasing). Anytime these two transactions are used to disguise their true purpose, which was to lend money to the lessee-purchaser and secure its repayment by using the thing supposedly leased but in reality bought on credit, uncertainty is injected into the system of secured transactions, for these secret liens can defeat recorded ones. Accordingly, the bank C’s of this world rightly feel unprotected and would not want to finance such transactions. It would have made much more sense from the standpoint of facilitating commercial credit to do what was done by the OAS Model Inter-American Law on Secured Transactions in 2002: Unify all of the transactions intended as security interests, such as conditional sales or sales with retention or reservation of title, chattel mortgages or mortgages of movable property, pledges of commercial or agricultural assets, hire purchases, financial leases and others, under the category of security interests (garantías mobiliarias) in movables and subject them all to the same requirements of notice via registration in a public registry or, in some instances, creditor or third party possession.147
Similarly anachronistic and harmful are the provisions on letters of credit. Several of the present provisions (Articles 867–873) ignore, for example, the all-important presence of standby letters of credit (commercial, financial and other) in today’s national and international financial markets. Contrary to the widely-observed Uniform Customs and Practices for Documentary Credits of the International Chamber of Commerce (ICC), the Civil Code of 1995 assumes that revocable letters of credit are still in common use and are governed by a presumption of revocability.148 Further, the Civil Code of 1995 needs to provide a stronger support for widely-observed commercial and especially international customs and practices than provided by its Article 5.
Article 5 presently states that custom and usage of trade is subordinate to an obligatory contractual stipulation by the parties to that contract. Yet what contract is Article 5 talking about? Is it the contract that underlies the issuance of a letter of credit, for example, a contract of sale that specifies a certain number of goods and documents that must be presented by a seller-beneficiary of a letter of credit to a paying bank? Or is it the letter of credit itself? Once a letter of credit has been issued, 620it governs the relationship between the parties to the letter of credit, especially when it contains its own terms and conditions and is made subject to the Uniform Customs and Practices for Documentary Credits of the ICC (presently the UCP 600). In such a case, the parties to that letter of credit are subject to the terms and conditions of the letter of credit and of its customs and usages, even though some of them are parties to the underlying sale agreement and this agreement will govern their purchase and sale (as opposed to their letter of credit) relationship.
The Civil Code of 1995 contains helpful provisions in its general part and in the various sections on some of the most common contemporary commercial contracts such as sale agreements that can certainly encourage the Russian Federation’s creation of a viable national and international marketplace. It also contains terms, concepts, principles and rules that are inconsistent with such a goal. In its attempt to generate such an encouragement, the code should empower commercial associations to promulgate sets of standard and best practices for the various sectors of the economy. The empowering provision should enjoy a high-enough hierarchy to make courts, lawyers and, last but not least, merchants observe them as the living law of commercial contracts. One such provision can be found in the Colombian Commercial Code currently in force. Article 3 of that code states:
Commercial customs shall have the same authority as commercial statutes, provided that they are not expressly or tacitly contrary to the latter, and provided that the facts that create such commercial customs are public, uniform and recurring in the place where the obligations are to be performed or where the parties’ relation arose.
In the absence of local customs, the country’s general customs shall apply, provided that such customs meet the requirements established in the previous paragraph.149
Yet, how effective would such a provision be under an otherwise authoritarian and corrupt regime? A recent book by Gregory Feifer, a journalist and keen observer of Russia’s mores,150 confirms the connections among Russia’s authoritarianism, corruption and legal invertebration highlighted in the present and previous chapter. In a recent interview,151 he pointed out that many Americans cannot understand why Russians:
[C]ontinue to support their president, the authoritarian Vladimir Putin, who’s destroyed democracy along with his political opponents, overseen an explosion of corruption and threatened to direct nuclear missiles at Western Europe. Does that mean e they learned nothing from their very painful past?152
He suggests that part of the answer lies in Russia’s all-pervasive corruption which provides a relatively easy way for the leaders to exert power by coopting the Russian people “by giving them a feeling they have a stake in the system—because they’re 621getting something in return—and by coercing them because it enables the authorities to prosecute almost anyone.”153 Thus, he concludes that:
Where we would see corruption and curbs on individual freedom as a threat to our society’s viability, many Russians see Putin’s presidency and its shortcomings as necessary for providing at least some measure of stability.154
As made clear in the present and previous chapter, as well as in Chapter 14 on Latin America’s codification of commercial law and in the following chapters on Chinese commercial contract law, what the bribers get in return for their bribes is a monopoly over a piece of the marketplace whose size varies with the size of the bribe and the political or military power of its recipient. But this monopoly can disappear at any time that another briber gives the corrupt official a larger bribe or the corrupt official decides that the bribed arrangement is no longer profitable or convenient. Such are the hallmarks of the predictability y of legal invertebration. Paradoxically, then, legal invertebration is associated with authoritarian attempts to govern the production and distribution of goods and services, regardless of political ideology and geography. Thus, it has been as apparent under Latin American capitalist or fascist dictatorships as it was under the Marxist-Leninist Soviet Union and-as will now be discussing= under Confucian and Neo Confucian Imperial China and under the “socialist market economy” of the Peoples Republic of China.
__________________________
1 USSR Const. art. 12 (1936); see also V. I. Lenin, The State and Revolution 55, (Kessinger Publ’g 2004) (1918).
2 See, e.g., infra §§ 17:4 & 18:3.
3 S. Pac. Co. v. Jensen, 244 U.S. 205, 221 (1917) (Holmes, J., dissenting) (noting the difference between “molar” (whole body of matter) and “molecular” (atomic components of matter) motions, illustrating the gap between principles and the concrete facts of a case).
4 Lenin, supra note 1, at 80.
5 Samuel Kucherov, Property in the Soviet Union, 11 Am. J. Comp. L. 376, 377, 382 (1962) (quoting from a 1918 decree that abolished the right to inherit; and from the RSFSR Civil Code (1922) for the reinstatement of this right subject to severe limitations).
6 USSR Const. art. 10 (1936). See infra note 67 and accompanying text (citing full text of art. 10); see also infra § 16:4(C) (discussing personal property disputes).
7 David E. Hoffman, The Oligarchs: Wealth and Power in the New Russia 38 (2002).
8 Id.
9 John N. Hazard et al., The Soviet Legal System 189 (3d ed. 1977). See also infra § 16:4(F)(1) n.124 and accompanying text.
10 Hazard et al., supra note 9, at 252–53, (Moscow Wool Case).
11 See infra § 16:2(B)(1).
12 Hazard et al, supra note 9, at 5.
13 Id. at 6 (citation omitted).
14 Id. at 47.
15 Id.
16 Id. at 48.
17 Hazard et al., supra note 9, at 47–50.
18 See infra § 16:4.
19 Hazard et al., supra note 9, at 49–50.
20 Id. at 50.
21 See infra § 15:3(C)(2).
22 Hiroshi Oda, Russian Commercial Law 65 (2d ed. 2007).
23 Id. at 65.
24 Id.
25 Id. at 66 (emphasis added).
26 Id. at 65.
27 Id. at 66.
28 Id.
29 Richard Pipes, Russia Under the Bolshevik Regime 402 (1995).
30 Hazard et al., supra note 9, at 185.
31 See Evgeny B. Pashukanis, The General Theory of the Law and Marxism, ch. IV (Commodity and the Subject) (Peter Maggs trans., 2004) (1924) (on file with author) [hereinafter Pashukanis IV] available at http://www.marxists.org/archive/pashukanis/1924/law/ch04.htm (discussing the following excerpts).
32 See Evgeny B. Pashukanis, markists.org, http://www.marxists.org/archive/%upashukanis/ (English translations of Pashukanis’ most important writings, including State and Law Under Socialism (1936)).
33 Pashukanis IV, supra note 31.
34 See supra § 11:2(G).
35 See, e.g., Pashukanis IV, supra note 31, at n.37 and accompanying text. Pashukanis states: “The title of ownership in ancient Roman law, mancipatio per aes et libram, shows that it was born simultaneously with the phenomenon of internal exchange.” Id. Query: Can one say that the notion of title or ownership is abstract from the legal claim by someone who asserts his ownership? How did he know that? Note that this is an anthropological, rather than legal, datum for which no evidence is offered.
36 Kozolchyk & Furnish, A Comparative Analysis, at 252.
37 Berger defines usucapio as an: “Acquisition of ownership of a thing belonging to another through possession of it … for a period fixed by law.” Berger, Encyclopedic Dictionary, at 752.
38 See Evgeny B. Pashukanis, The General Theory of the Law and Marxism, ch. III (Relationship and the Norm) (Peter Maggs trans., 2004) (1924) [hereinafter Pashukanis III], available at http://www.marxists.org/archive/pashukanis/1924/law/ch03.htm.
39 Pashukanis IV, supra note 31.
40 Id. See also generally Hoebel, Primitive Man; Bronislaw Malinowski, Crime and Custom in Savage Society (1926) (discussing the peculiarities of the observance of custom in primitive societies).
41 Evgeny B. Pashukanis, The General Theory of the Law and Marxism, ch. V (Law and the State) (Peter Maggs trans., 2004) (1924) [hereinafter Pashukanis V], available at http://www.marxists.org/archive/pashukanis/1924/law/ch05.htm.
42 See supra § 15:4(H).
43 Id.
44 See supra § 1:2(D) (discussing human versus animal cooperation).
45 I had a strange encounter with Pashukanis’ theories while attending the 1958 Comparative Law Congress in Brussels, Belgium. Knowing that I would be attending this Congress, the Cuban Bar Association, of which I was a member, asked me to present a resolution condemning the Batista Government for its repeated violations of the rule of law to a Rule of Law Committee chaired by Professor C.J. Hamson of Cambridge University Law School with Professor John Hazard as Reporting Secretary. Upon my reading a two paragraph motion which requested the condemnation of a dictatorial government that had repeatedly violated the human rights of its citizens and thus the rule of law, a Professor Stefan Feodorovich Ketchiakom stood up and proffered endless insults at me, including that of propagating slanderous lies authored by none other than Professor Pashukanis. Fortunately, Professors Hamson and Hazard quickly intervened and reassured me that Ketchiakom was doing a bit of acting for the benefit of a likely “elder brother” present in the audience.
46 Hazard et al, supra note 9, at 242.
47 Id.
48 Id.
49 Id. at 243.
50 Id.
51 Encyclopedia of Soviet Law 268 (Ferdinand Joseph Maria edlbrugge et al. eds., 2d rev. ed. 1985). See also Hazard et al., supra note 9, at 274–76.
52 R. Schlesinger, The Basic Principles of Civil Law, 13 Soviet Studies 447 (1962).
53 Hazard et al., supra note 9, at 244.
54 Schlesinger, supra note 52, at 447.
55 Id.
56 I International Encyclopedia of Comparative Law: National Reports U-28 (Viktor Knapp, ed., 1976).
57 See supra § 8:4(D)(5).
58 Schlesinger, supra note 52, at 448 (citing art. 1).
59 Id. (citing arts. 20 & 24).
60 Id.
61 Id. at 449.
62 Id. (citing art. 52).
63 Id.
64 See Yevgeny Sukhanov, The Concept of Ownership in Current Russian Law, VI Juridica Int’l 102 (2001), available at http://www.juridicainternational.eu/public/pdf/ji_2001_1_102.pdf.
65 Id. at 102.
66 Id.
67 USSR Const. art. 10 (1936).
68 See Kucherov, supra note 5, at 376–77 (citing legislative and administrative decrees).
69 Id. at 376, for his comment.
70 Please note that Mr. Kucherov wrote his Comment in the early 1960s.
71 Kucherov, supra note 6, at 376.
72 Decree of August 20, 1918, cited in Kucherov, supra note 5, at 376 n.2. For a list of property that could be privately owned in the USSR until the end of the Second World War, see John N. Hazard, Soviet Property Law, 30 Cornell L.Q. 466 (1945).
73 Kucherov, supra note 5, at 376.
74 Id. at 377.
75 Id.
76 Id. at 382.
77 Peter B. Maggs, The Security of Individually-Owned Property Under Soviet Law, 1961 Duke L.J. 525, 528 (1961).
78 Id. at 525 (citation omitted).
79 Id. at 528.
80 Bernard Rudden, Soviet Housing and the New Civil Code, 15 Int’l & Comp. L.Q. 231 (1966).
81 Kucherov, supra note 5, at 376
82 USSR Const. art. 131 (1936).
83 Rudden, supra note 80, at 234.
84 Id.
85 See infra § 23:9(D) (Teófila Astorga Viuda de Aceves case).
86 Rudden, supra note 80, at 235.
87 Id. at 236.
88 Id. at 231 (discussing the Pravda publication) (citation omitted).
89 Id. at 236.
90 Id. (citation omitted).
91 Id. at 236–37.
92 Id. at 237.
93 Id.
94 Id. at 242 (citing original Russian sources on the Goremkyna v. Goremkin case).
95 Id.
96 Id. at 242.
97 Id. at 288.
98 Id. (citation omitted).
99 Id. at 238–39.
100 See supra § 15:4(H)(2).
101 Kucherov, supra note 5, at 385.
102 Id. at 386.
103 Id. (citation omitted).
104 Rudden, supra note 80, at 247 (quoting various articles of the Civil Code of 1964). Rudden also notes:
[A] citizen with a large family or a right to extra living space may be allowed by the Executive Committee of the … borough Soviet of Workers’ Deputies to build, acquire or keep as his property a house, or part of a house, of a larger size. In that case, the living space of the house, or part of a house must not exceed the size determined for the given family according to the norms for tenants in the houses of local Soviets of Workers’ Deputies….
Id.
105 Id. at 248 (quoting art. 111 of the Civil Code of 1964).
106 Id. at 249.
107 Id.
108 Id.
109 Kucherov, supra note 5, at 386.
110 Id. at 388 (citing Literaturnaya Gazetta (Dec. 20, 1960)) (reporting on this faculty dispute).
111 Id.
112 Id.
113 Id. at 385.
114 Id. at 386 (summarizing the Decision of the USSR Council of Ministers of December 30, 1960).
115 Id. at 386.
116 Id. at 387.
117 Id.
118 Id.
119 Statistical Handbook of Agriculture in 1959 (1960), cited in Kucherov, supra note 6, at 381.
120 Kucherov, supra note 5, at 390–91.
121 Id. at 390.
122 Hazard et al., supra note 9, at 187.
123 Id.
124 This author’s summary of the Fadeev transcript cited by Hazard et al. Hazard et al., supra note 9, at 189.
125 The following is my summary of the transcript of a decision by Kalinin County People’s Court of 1967. Id. at 189–90.
126 See supra § 14:4(A)(3)(c)(iii).
127 Hazard et al., supra note 9, at 190–92 (extract of this opinion transcribed by Hazard).
128 See supra § 15:4(D)(6).
129 See supra § 15:4(E).
130 Hazard et al., supra note 9, at 242.
131 Id.
132 John N. Hazard & Isaac Shapiro, The Soviet Legal System: Post-Stalin Documentation and Historical Commentary 107 (1962).
133 Hazard et al., supra note 9, at 252–53.
134 Id. at 253–54.
135 See The Civil Code of the Russian Federation, Parts I & II (Peter B. Maggs & A.N. Zhiltsov eds. & trans., 1997) (1995) [hereinafter C.C. (Russia)]. The first part of the Code went into effect on Jan. 1, 1995. The second part of the Code went into effect on March 1, 1996. I thank my former student Ana Sokolova for her gift of this code.
136 The Swiss Civil code: of December 10, 1907 (effective January 1, 1912) (Robert P. Shick trans., The Boston Book Co., 1915); I Swiss code of obligations: English translation of the official text (4th ed., Swiss-American Chamber of Commerce 2003). The Swiss Civil Code of 1907, together with a separate Code of Obligations, went into effect in 1912. See Fridolin M.R. Walther, Introduction to the Swiss Legal System: A Guide for Foreign Researchers, LLRX (Nov. 15, 2000), http://www.llrx.com/features/swiss.htm (an online introduction to the Swiss legal system, including its codes).
137 CC (Italy) (1942), available at http://www.jus.unitn.it/cardozo/Obiter_Dictum/codciv/Codciv.htm.
138 See supra chs. 8–12 (discussing the features of these codes).
139 United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, 19 I.L.M. 668, 1489 U.N.T.S. 3.
140 C.C. (Russia), supra note 184, at 1.
141 Id. at 2.
142 See supra § 16:2(B).
143 See supra § 15:3(D)(3) (discussing Marx’s mistaken notion of ownership).
144 Kozolchyk & Furnish, A Comparative Analysis, at 249.
145 See supra § 14:5.
146 See supra § 9:2(B).
147 See Kozolchyk & Furnish, A Comparative Analysis. See also OAS, Model Inter-American Law on Secured Transactions (2002), http://www.oas.org/dil/Model_Law_on_Secured_Transactions.pdf.
148 Compare, e.g., C.C. (Russia), supra note 184, at 293 (Article 868(3), which adopted the presumption of revocability) with UCP 500 art. 6(c) and UCP 600 art. 2 (2007) (defining credit, which does away with revocable credits).
149 C. Com. (Colom.) art. 3 (2010) (this Code is currently in effect).
150 See Gregory Feifer, Russians; The People behind the Power (2014).
151 Justin McDonnell, Life Under Putin, The Diplomat (Feb. 19, 2014), available at http://thediplomat.com/2014/02/life-under-putin/.
152 Id.
153 Id.
154 Id.