Non-Capitalist Development

Non-capitalist development was a strategy promoted by the Soviet Union during the Cold War as an alternative path for newly independent nations to modernise without fully embracing capitalism or immediately transitioning to socialism. Rather than supporting revolutionary movements from below, the Soviet Union placed its faith in the leadership of states, focusing on alliances with ruling elites and national governments in the third world. This approach was often awkward in countries where the communist party was not in power. In some countries, the Soviets sought to court local elites, even when they had imprisoned and tortured activists in local communist parties. Yet, for the Soviets, non-capitalist development was the best path forward for poorer and newly independent countries. It prioritised state-driven modernisation and economic development over popular uprisings or grassroots socialist revolutions.

Under Joseph Stalin, Soviet foreign policy held that working-class revolution was to be discouraged if seen as premature in the face of imperialism. He advocated for alliances between newly independent states and so-called “national capitalists”—local elites who could help stabilise economies and manage the early stages of development. Stalin believed that most postcolonial nations were too economically “backward” to undertake socialist revolutions and should first focus on strengthening their economies through state-led industrialisation and agricultural reform, often in partnership with segments of the local bourgeoisie. There was a paradox to this position, as the Bolshevik revolution also happened in a “backward country”, but Stalin had developed his positions based on his reading of the Soviet experience during the New Economic Period after the Russian civil war, as well as on his view of geopolitics at the time.

Stalin’s vision was often a source of inspiration for many new third-world governments. The Soviet Union’s rapid industrialisation and modernisation under Stalin, despite its brutal human costs, stood as a compelling example for many postcolonial governments seeking alternatives to Western capitalist models. The USSR’s transformation from a largely agrarian society into an industrial power within a few decades showcased the potential of state-led development. Landmark projects like the GOELRO plan, which aimed to electrify the entire country, symbolised this ambition, famously captured in Lenin’s phrase: “Communism is Soviet power plus the electrification of the whole country.” By the 1950s, the USSR had not only achieved significant industrial growth but also made notable strides in science, technology, and infrastructure, including pioneering advances in space exploration. These successes—paired with improvements in literacy, healthcare, and living standards—demonstrated to newly independent nations that rapid modernisation was possible without relying on Western capitalist frameworks. For many leaders in Africa, Asia, and Latin America, the Soviet model, with its emphasis on centralised planning and large-scale infrastructure, offered a vision of development that promised economic transformation while preserving national sovereignty.

Yet many of them didn’t want to become communist nor follow the line of Moscow. Rather than imposing socialism outright, the non-capitalist development model offered a gradualist approach: helping countries build strong state sectors and enabling them to resist Western capitalist influence while maintaining national sovereignty. Over time, it was believed, these nations might eventually evolve toward socialism—but there was no expectation of immediate revolutionary change.

Non-Capitalist Development After Decolonisation 

The rapid wave of decolonisation after World War II created a host of newly independent nations grappling with poverty, underdevelopment, and the pressures of Cold War geopolitics. Many of these states sought to modernise but were wary of adopting Western capitalist models, which they saw as perpetuating economic dependency and neocolonialism. This increased especially when many of these countries came out as explicitly “non-alligned”, neither in support of the Soviet Union or the U.S. 

During this moment, the Soviet Union positioned itself as a champion of anti-imperialism, presenting non-capitalist development as a path to modernisation that preserved national sovereignty while avoiding reliance on Western powers. Non capitalist development was model designed not to spark socialist revolutions but to strengthen the role of the state in newly independent economies, enabling them to modernise on their own terms without imperialist intervention. Between 1954 and 1979, the USSR provided an estimated $18 billion in economic aid and $47 billion in military aid to 76 countries across Africa, Asia, and Latin America. This support was part of a broader strategy to cultivate alliances with postcolonial states, helping them develop state-led economies without immediately transitioning to socialism.

India: A Non-Aligned Experiment in State-Led Industrialization

India, under Jawaharlal Nehru, became one of the most prominent examples of non-capitalist development. Though India officially maintained a non-aligned stance during the Cold War, it accepted significant Soviet aid, especially in its drive toward import-substitution industrialisation—producing domestically what had previously been imported. A hallmark of Soviet-Indian cooperation was the construction of the Bhilai Steel Plant in the late 1950s. Built with Soviet funding and expertise, Bhilai became a symbol of India’s industrial ambitions and was central to Nehru’s vision of a mixed economy, where both private enterprises and state-owned industries coexisted. 

In the Middle East, Egypt under Gamal Abdel Nasser embraced elements of non-capitalist development following the Suez Crisis of 1956 as well. After nationalising the Suez Canal, Egypt turned to the Soviet Union for both economic and military support. One of the most significant outcomes of this alliance was the construction of the Aswan High Dam, completed in 1970 with Soviet financing and technical assistance. The dam became a symbol of Egypt’s modernisation, providing hydroelectric power and improved irrigation. It also reinforced Nasser’s policy of Arab socialism, blending state control of key industries with a strong nationalist agenda. While the dam boosted Egypt’s energy supply and agricultural output, it also led to environmental and social challenges, including the displacement of the Nubian community and ecological changes to the Nile.

Third World Development Under Stalin

Under Joseph Stalin, Soviet foreign policy toward the Global South was marked by caution and pragmatism. An enthusiastic supporter of decolonisation, he nevertheless emphasised:

• Economic Modernisation Before Socialism:
  Rather than pushing for immediate socialist revolutions, Stalin urged postcolonial states to focus on reconstruction and agriculture as the first steps toward modernisation. He advised leaders like Mao Zedong to adopt a mixed economy, similar to Lenin’s New Economic Policy (NEP), where state-owned industries coexisted with private enterprise.
• Minimal Engagement:
  Despite ideological solidarity, Stalin was reluctant to provide significant aid to countries he deemed unprepared for socialism. His primary focus remained on consolidating socialism within the USSR, and his engagement with the Global South was limited to cautious, strategic alliances.

Khrushchev’s Optimism: Expanding the Non-Capitalist Model

The death of Stalin in 1953 brought a significant shift in Soviet foreign policy. Under Nikita Khrushchev, the USSR embraced a more optimistic and proactive approach to the Global South. Khrushchev believed that peaceful coexistence with capitalism was possible and that newly independent nations could gradually move toward socialism through non-capitalist development.

Key changes under Khrushchev included:

• Massive Expansion of Aid:
  The Soviet Union significantly increased its economic assistance, funding large infrastructure projects and sending thousands of technical experts abroad. Projects like the Bhilai Steel Plant in India and the Aswan High Dam in Egypt became symbols of this new, ambitious approach.
• Stage-Based Development:
  Soviet theorists refined the idea that non-capitalist development could serve as a stage-based process. Countries would first focus on strengthening their state sectors and achieving economic independence before gradually moving toward socialism. This approach appealed to many postcolonial leaders who sought modernisation while maintaining political sovereignty.

Brezhnev’s Pragmatism: From Ideology to Geopolitics

By the late 1960s, Soviet enthusiasm for non-capitalist development began to wane. Under Leonid Brezhnev, the USSR adopted a more pragmatic and conservative approach, focusing less on ideological transformation and more on maintaining geopolitical influence.

Factors driving this shift included:

1. Economic Stagnation:
   The Soviet economy began to slow in the 1970s, limiting resources for large-scale aid projects. Costly endeavors like the Aswan High Dam and the Bhilai Steel Plant often faced delays and overruns, leading Soviet officials to become more selective in their foreign investments.
2. Geopolitical Priorities:
   The intensifying Cold War led the USSR to prioritise military aid over economic development. In countries like Angola and Ethiopia, Soviet support focused heavily on military assistance to ensure the survival of allied governments rather than long-term economic growth.
3. Disillusionment with Non-Capitalist Development:
   Many recipient countries showed little interest in moving toward socialism. Instead, they used Soviet aid to bolster nationalist or authoritarian regimes, often diverging significantly from Soviet expectations. This led to a growing recognition within the USSR that non-capitalist development was not producing the ideological results initially hoped for.

The soviet union collapsed in 1991, and with it, an alternative economic model to neoliberal capitalism. Nevertheless, non-capitalist development represented a serious attempt to chart a third path between capitalism and socialism for postcolonial states. Its history offers valuable insights into the possibilities—and limitations—of state-led development models that prioritise sovereignty and social equity over pure market logic.