Lenin sets out Struve's criticism of the Narodniks based upon their counterpositioning of economic and social progress. Struve argues that economic progress is the basis of social progress, and the two become interdependent.
“Speaking generally, this is, of course, a perfectly true statement. But it indicates the tasks of criticising the sociological rather than the economic principles of Narodism: in essence, it is a different way of formulating the doctrine that the development of society is determined by the development of the productive forces which we discussed in chapters I and II. It is, however, inadequate for the criticism of the “economic principles of Narodism.”” (p 441)
The question must be addressed concretely, Lenin says, examining progress not in the abstract, but the progress of capitalist society in Russia. An analysis of the progress shows the errors of Narodism, and the illusions it was led to create in attempting to reconcile its ideas formulated on the basis of abstract schemas, with that reality.
Struve bases himself on Marx's theory of the predominant role of productive relations over distribution relations, including a reference to that effect from Marx's comments in The Critique of the Gotha Programme.
“This idea, as the author quite justly remarks, runs through the whole of Marx’s theory, and is extremely important for an understanding of the petty-bourgeois content of Narodism.” (p 442)
Indeed, it is important for understanding the limitations of all the petty-bourgeois ideology, including social-democracy. The foundation of the redistributive elements of social-democracy, of welfarism, and the idea that wealth and power can somehow be shifted in the interests of workers via the tax and benefits system is precisely that “vulgar socialism” that Marx talks about in The Critique of the Gotha Programme. It is precisely those kinds of reforms, appeals to the capitalist state that Marx was opposed to. Both he and Engels opposed welfarism, because it undermined workers' independence, self-activity and self-government. In the programme he developed for the First International, Marx set out that his reason for supporting direct as against indirect taxation had nothing to do with any redistributive function, but was based only on the fact that direct taxes are more transparent, so that workers could see how much the state was leaching off them, and would, thereby, act as an incentive for them to counter its expansion.
“No modification of the form of taxation can produce any important change in the relations of labour and capital.”
Indirect taxes should be replaced by direct taxes,
“Because indirect taxes conceal from an individual what he is paying to the state, whereas a direct tax is undisguised, unsophisticated, and not to be misunderstood by the meanest capacity. Direct taxation prompts therefore every individual to control the governing powers while indirect taxation destroys all tendency to self-government.”
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