This piece was written in the winter of 1989-90, soon after the fall of the Berlin Wall. It was an attempt to see what had happened not as a failure of socialism, but as a crisis of a particular form of capitalism, state capitalism, which could not be resolved by reforms that placed greater reliance on market mechanisms. Readers can judge how accurate its anslyses were. (Apologies for not having time to reinsert footnote numbers in text)
Not since 1917-18, when three great empires collapsed under the burden of four years of total war, have we witnessed such political turmoil as that east of the
Such events have challenged almost all established political analyses whether in the East or in the West. Cold War strategists, ideologues of confrontation with 'totalitarianism', long time Western worshippers of the 'socialist third of the world' and newer adulators of 'Gorby' have all had to face up to the sudden disappearance of their fixed points of reference.
The situation has been confusing for the Western right: they suddenly have to justify missiles in
The 'openness' spread from the media to cultural life. Banned novels began to appear in print and banned paintings to replace the monstrosities of socialist realism in the art galleries. Rock groups whose songs expressed undirected but bitter anger at the system were invited by sections of the official youth organisation, the Komsomol, to appear ai concerts. Economists cut through 60 years of lies about economic performance and historians began to reveal, slowly at first, truths about the Stalin period. A film about the
The response of virtually everyone who wrote on the
Unqualified support for Gorbachev was also widespread among those critical of the old system inside the
There were very few people who were prepared to argue at that time, as we did in this journal, that the left should not put their faith in Gorbachev. Yet disillusionment was not so long in coming. Gorbachev rarely criticised those who 'obstructed' perestroika and glasnost without also attacking those who sought to push them 'too quickly'. As early as the autumn of 1987 he disowned Boris Yeltsin, then head of the Moscow Party organisation, for trying to go too fast and replaced him by a more conservative figure, Zaikov. A keynote speech on the anniversary of the 1917 revolution was expected to push for more rapid changes but instead carefully balanced between those who wanted faster movement and those who wanted less. It was only when, five months later, politburo members resistant to any glasnost arranged for the paper Sovietskaya Rossiya to print an article claiming things had gone too far that Gorbachev opted for more glasnost in the run up to a special party conference in June 1988. Critical intellectuals seized the opportunity to ask questions about Soviet society and Soviet history that had not been asked before. The first open and legal demonstrations for 60 years took place in many localities, demanding that delegates to the party conference were supporters of perestroika, glasnost and Gorbachev.
Yet at the conference Gorbachev sided with the best known conservative figure, Ligachev, in response to criticism from Yeltsin. When Mikhail Ulanov, head of the newly formed theatre workers' union, complained that outside
Gorbachev's own proposals for 'free elections' to a new Congress of Deputies reserved a third of the positions for nominees of official (ie party controlled) organisations and provided a filtering procedure of constituency delegate meetings to weed out undesirable candidates. In the months that followed he signed a decree allowing the police to arrest those involved in 'unauthorised' demonstrations and made no objection as local apparatchiks did their utmost to get their candidates through the constituency meetings.
At the first session of the Congress deputies could, and did, complain about virtually anything—the privileges of the party bureaucracy, the terrible shortages of consumer goods, the vast pockets of poverty in the country, the horrific legacy of Stalin, the behaviour of the KGB, the use of special troops in Georgia, the mistreatment of national minorities, the decrees restricting the right to demonstrate and to criticise the government, even the decisions of Gorbachev himself.
But the whole proceedings were carefully arranged to stop such complaints being channelled into any democratic decision making. A meeting of the ruling party's central committee before the congress had decreed that 70 percent of the deputies who were party members should vote for Gorbachev to be elected unopposed as president. Gorbachev then insisted that he alone had the right to choose his vice-president and to nominate people for other key government posts. The electoral lists for the smaller full-time parliament, the Supreme Soviet, were drawn up in such a way as to deny any choice at all for many of the candidates.
When contentious issues arose at the Congress they were referred to commissions which had to report to the Supreme Soviet, rather than being voted on by the Congress. This is what happened over the Georgian massacre, the sacking of two state prosecutors who had alleged corruption at the very top of the party, and the question of the validity of the Stalin-Hitler pact which incorporated the Baltic republics into the
Chairing sessions, or sitting close behind the chair and interrupting the proceedings whenever he wanted, Gorbachev allowed the radical deputies to speak, but then pushed through decisions which received hearty support from the conservative majority. Gorbachev himself showed no concern when Sakharov was shouted down for a speech denouncing atrocities by Soviet troops in
Those radicals who had been most favourable to Gorbachev a year before were bitter in their attacks on him. Yuri Afanasyev, the historian, complained at the Congress itself:
“We have formed a Stalin-Brezhnev type of Supreme Soviet... the majority which has taken shape.. .at this congress yesterday blocked all the decisions of the congress that the people are expecting from us... and you Mikhail Sergeyevich [Gorbachev] are either listening attentively to this majority or else cleverly influencing it. . .let us not for a moment forget about who sent us here, to this congress.'"
Outside the Congress hall radical attitudes were even more bitter. Opinion polls showed a very large proportion of people as disappointed with the Congress, and there were almost daily meetings at the Luzhniki stadium. One report on Lithuanian radio:
“The number of participants was estimated by one speaker at 150,000—150,000 standing on a huge asphalted triangle. . . The meeting was organised by the Manorial Society and the Moscow Popular Front. . . The mere mention of Boris Yeltsin 's name sent the crowd howling and screaming. The presence of academician Sakharov electrified the crowd. . .I7
Vitaly Ponamarov of the Moscow Popular Front drew enormous applause at one rally when he declared, 'We have no confidence in Gorbachev. Gorbachev has lost his authority with the people."
The disillusionment among the radical intelligentsia was very deep indeed by the end of the year as they witnessed Gorbachev trying to sack the editor of the country's fastest growing newspaper, Argumenty i fakty, and turning off the microphones in the middle of a speech by Sakharov at the second session of the Congress of Delegates. Sakharov's last political action before he died was to issue a call for a strike in protest at limits to democratisation. The February 1990 Central Committee decision to concede the existence of other parties was much acclaimed in the Western media; it could not stop the disillusionment inside the
It was not only among the radical intelligentsia that discontent grew with Gorbachev. There was a growing mood of disillusionment among the mass of the people. This was already clear in the spring 1989 elections, when Yeltsin thrashed the official party nominee in
‘The majority of Soviet families appear not to have sensed a change for the better... The supply of goods to the consumer market 'suddenly' began to deteriorate sharply and noticeably before our eyes in the second half of 1987 and especially in 1988.'
At a meeting of the ruling party's central committee in the early summer speaker after speaker went to the platform to warn of growing popular resentment. Bobovikov, the party chief from
The central committee meeting took place just as a wave of strikes was sweeping the country's coal mines, from
In a desperate attempt to try to regain control of the situation Ryzhkov announced a series of emergency measures to the Congress of Deputies in December—measures which effectively jettisoned the move away from a centralised command economy which was supposed to be the centre of perestroika.'' Yeltsin was able to give expression to widespread popular scepticism when he told the Congress:
‘The people is losing its trust while we are constantly repeating that perestroika has embraced everyone, that it is getting deeper and wider. . . This is already the fifth attempt to reform the country's economy in three decades. Remember the reforms of 1956, 1966, 1979 and 1983. What did they lead to? Our fifth attempt has been getting nowhere for five years now.’
There was a final factor underlying the growing disillusionment with Gorbachev: his inability to deal with mass discontent, which grew as the economic crisis worsened.
The miners' strikes of the summer and autumn of 1989 were one expression of this discontent. But through most of 1988 and 1989 direct expressions of class struggle were overshadowed by an eruption of nationalism among the non-Russian ethnic groups which make up half the
Against the background of national strife, which has not spared even the world's most advanced countries, the
Those on the left internationally who lauded Gorbachev at the time could be just as short sighted." Yet the seeds of national discontent had long been present and were visible to those prepared, ideologically, to look for them.''
The general blindness to the national question persisted even after troops were sent to Alma Ata late in 1986 to deal with nationalist protests over the sacking of the local Kazakh party leader, Kunaev, and his replacement by a Russian, Kolbin. Commentators East and West accepted official claims that the demonstrators were high on drugs supplied by supporters of the dismissed leader.
Then in February 1988 the capital of
The first demonstrators carried pictures of Gorbachev and chanted slogans such as 'Karabakh is the test of perestroika . Gorbachev spoke for an hour and a half on Armenian television, politburo members rushed to
Meanwhile, there was a sudden—and unexplained—outbreak of communal rioting in the
A pattern was set which was to be repeated again and again. In March there were demonstrations and general strikes in
According to inhabitants, Soviet troops were out on the streets on Saturday with helicopters circulating over the city. Overnight heavy troop reinforcements were reported to have been flown in. . ."
In the Russian press, 'The numerous articles analysing the appeal of the presidium have all denounced the Armenian strikers... the 11 members of the Karabakh committee were described as "adventurers", and irresponsibles'."
Yet September saw still more strikes in both the Karabakh and
The communal violence and the mass strikes and demonstrations abated temporarily with the Armenian earthquake of December 1988. But the I ISSR"s leaders showed only the same inability to provide solutions as over the previous nine months. Instead Gorbachev used a visit to the earthquake zone to denounce the Armenian Karabakh committee on nationwide TV, thumping a table with his fist as he did so. While troops arrested the committee's members," the Russian press took up the message, claiming, 'The "Karabakh" leaders are active—while various corrupt operators and local mafia godfathers are skimming off the cream.""
Kventually, early in 1989 Gorbachev imposed direct rule from
Gorbachev sent tens of thousands of heavily armed troops with tanks into Azerbaijan—but not to end the pogrom, from which most of Baku's Armenian population had already fled long before the troops imposed a state of seige of the city. He explained on television he was out to stop attempts to declare the republic independent of the USSR and to take down border posts which separated Soviet Azerbaijan from Iranian Azerbaijan (what the local population referred to as the 'Azerbaijan wall').
It was a decision which earnt him little praise from any quarter. The conservative elements inside the Russian bureaucracy, opposed to any concessions to the minority nationalities, could only ask why he had not moved harder and earlier to crush dissent. The radicals pointed out he had not moved in the troops when the pogroms were at their height, but only when the Azeris began to talk of secession from the union.
The conflicts in
But, as in the
The leadership of the Communist Party of Lithuania Central Committee lacked the resolve and strength to go on the offensive... The organisational and political paralysis increased after the March elections. In April J 989 Sajudis [the Lithuanian Popular Front] adopted a resolution on the independence [from
By the end of 1989 the Popular Fronts in the three republics were openly committed to full independence from the
National movements comparable in strength with those in the Baltic states were soon firmly entrenched in
The new movements showed two sorts of dynamic. The first and most threatening to the central bureaucracy in
As the local republican bureaucracies played the national card, and especially the language card, to enhance their own popularity and standing, the conservative elements in the Russian bureaucracy were able to build up 'intermovements' opposed to change which bound Russian speaking managers and workers together. In
It is difficult to tell how widespread and deep rooted the growth of Russian chauvinism and anti-semitism really is. But there is no doubt it was producing real fears among sections of the pro-Gorbachev intelligentsia by late 1989, as was shown by a discussion between a number of them in Moscow News.
There was almost panic over the way old conservative forces were said to be agitating and whipping up support from people. Ambartsumov said that, 'Our soaring hopes at the onset of perestroika have turned to disappointment today and sometimes even to malice.. .' According to Karpinsky:
‘The conservatives point to the universally acknowledged difficulties which the country is currently experiencing—the crisis in many parts of the economy, the shortages, the unbalanced market, the collapse of old relations before new ones are in place. . . The conservative forces thrive in an atmosphere of uncertain prospects and scarcities.’. .
‘An attempt is being made to connect the interests of the apparatus with the moods of certain strata of the population. . ‘
'The train is on fire, but there's no engine to pull us.' The lyric of the
“A wave of strikes has engulfed the economy. There is continual whipping up of tension, a continual sort of blackmail along the lines of 'if you don 't solve these issues, we shall go on strike. ":
National minorities were expressing their grievances from one end of the
“The general mood and political situation in the
The head of the official state run unions in the republic warned, 'Popular discontent is rising and may lead to mass labour conflicts'' Izvestia reported 'nervous tension throughout
“I feel I am watching a repeat of a film. . . Nine years later the miners of Kuzbass and Donbass would demonstrate there were many unfortunate similarities between the
The new institutions that were supposed to hold the country together on the basis of 'consent'—the Congress of Deputies and the revamped Supreme Soviet—simply reflected the divisions in society at large, although in a way which gave an exaggerated impression of the influence of the apparatus over events. They were split between a small minority of radical reformers, and, to the right of them, equally sized groupings of pro-Gorbachev 'moderates' and open conservatives. The idea that either the Congress or the Supreme Soviet held 'all power' looked more and more vacuous as they haggled over small items of procedure but allowed the politburo to do whatever it wanted to when it came to big issues.
The malaise went to the heart of the ruling party. For more than 60 years it had imposed an iron discipline on the differing interests within the economic and governmental bureaucracies, binding them into a single hierarchy under the general secretary and the politburo. Now the ruling party itself was ceasing to function in a unified way. This was shown at the meetings of the Central Committee, which brings together those who man the apparatus of the party itself, the major enterprises and ministries, and the police and army chiefs. As a perceptive Russian sociologist has said:
‘Symptoms of.. . growing confrontation between the party apparatus locally and the central leadership bodies of the party... appeared at the April [ 19891 plenum of the CPSU Central Committee, where open dissatisfaction was expressed in the speeches of a number of members and oblast committee secretaries with what they saw as the incorrect position of the politburo and secretariat in the leadership of the processes taking place in the party and country. This dissatisfaction was manifested to an even greater extent at party activists meetings and local party committee plenums held very recently.’
The mood of the July plenum was much the same, while the discussion at the December meeting was so bitter that the party leadership broke its usual practice and did not publish the transcript of the meeting. Reports suggest, however, that Gorbachev's opening address was immediately followed by a barrage of criticism from the floor, led off by the man Gorbachev had recently put in charge of
Up to now we knew that the 'new thinking' was meeting with opposition in various localities from conservatives and dogmatists. And then I heard for the first time charges against Gorbachev, that his line is wrong and that 'it's about time we all got on the right track'."
By the close of the year 'radicals' and 'conservatives' within the party were openly abusing each other, and, increasingly, both began to direct their fire at Gorbachev. Ominously for him, the close of the year saw rival rallies in the second city of the
Nor were the armed forces immune from the feeling of disintegration of society at large. At the base rank and file soldiers were involved in the various Popular Fronts, sitting on platforms, addressing meetings and joining a reform movement, Shield." There were reports of secret delegate meetings of Azeris from different units in Central Asia;!J in
Gorbachev, from seeming like the master of events in 1987 and 1988, increasingly seemed like their prisoner. He retired a whole section of the Central Committee and reshuffled the politburo, bringing on people who owed their advance to him and removing old 'conservatives' like Schcherbitsksy and Chebrikov. But his ability to guide events still diminished. He signed a decree banning 'unauthorised demonstrations'; they took place on a greater scale than before. He outlawed 'deliberate actions aimed at inciting national or racial enmity or dissension'; 'national dissension' grew as never before. He pushed through a law on strikes; people struck despite him. Late in August he approved a letter to the leaderships of the Baltic republics warning them against giving in to nationalist pressures. It was seen by all concerned as a veiled threat to send in Russian troops. Yet faced with a decision of the Lithuanian party to declare itself independent from the CPSU in December, all that Gorbachev seemed able to do was to pass another resolution through the Central Committee and beg the Lithuanian leaders to think again.
The party leadership and the military command did not simply ignore the growing ferment below. They did take very hard action in an effort to crush movements. They did ban publications, harass opposition groups, break up demonstrations. In April the interior ministry's special forces massacred dozens of demonstrators in
The Western media have long been ardent fans of Gorbachev. They saw him as taking a resolute revolutionary stand when he decided to amend Article Six of the
International policy: a double edged weapon
Gorbachev did have one success to which he could point until the autumn of 1989. This was his international policy. He had been able to extricate the last Soviet troops from
But there was a price to be paid for the strategy. It gave the Western powers, and especially the
What this meant was shown very clearly in the autumn of 1989. The regimes which embodied Russian influence over
No wonder that by the beginning of 1990 there was disillusionment with Gorbachev both among those who stood for a further democratisation of the
Established left orthodoxy has been stunned by the collapse of the Gorbachev experiment into economic chaos, social crisis and even civil war. But the collapse of the East European regimes has also undermined this orthodoxy's most important theoretical presumptions. For the established left has always insisted that in
But if the mode of production in
Marxists have usually argued that the transition from one mode of production to another involves a violent rupture between the old and the new. Trotsky, for instance, was insistent that a social counter-revolution could not have occurred in the
Yet the violence of Stalin's 'second revolution' in the late 1920s was much greater than anything we've seen in
The process of change began in
The attitude of the Solidarnosc leadership meant that the strikes were restricted to four major centres and did not generalise to anything like the same degree as in 1980-1.The strikes were certainly not on such a scale as to break the power of the ruling class and revolutionise society. What they did, however, was to create a bitter debate within the ruling layers of Polish society on how they should safeguard their own future. In the end they adopted the strategy suggested by the interior minister, Kisczcak. They agreed to round table discussions with the opposition and with 'independents' in return for the national leadership of Solidarnosc telling workers not to strike. Out of the round table came an agreement on semi-free elections and out of these acceptance by the leaders of the old ruling party that a Solidarnosc adviser should be prime minister in a government committed to restructuring, through agreement with the IMF, the command economy, and widescale privatisation.
The same people as before remained in charge of the enterprises, the police and the armed forces. The media were purged of those who had thrown their weight behind the previous period of military rule: journalists who had been sacked for supporting Solidarnosc were reinstated, but there were few other personnel changes in the press and television; judges were simply told to be 'politically neutral' from now on. Meanwhile, managers who had risen to their positions as part of the old nomenklatura now used their influence and wealth to buy up sections of industry. An estimated 15,000 co-operatives were set up by members of the nomenklatura." It is difficult to see in this sequence of events anything that could however remotely, be called a 'revolution' or a 'counter-revolution'.
The opening towards 'democracy' came not because of pressure from below, but because growing international indebtedness and fears of economic crisis created splits among the top party leaders. A handful of these conspired at the party congress in the spring of 1988 to oust the old party leader, Janos Kadar. They believed it was necessary to push economic reform even further towards a completely market system. They all endorsed what they openly referred to as 'Thatcherite' policies. They also agreed they needed to open up the political structures if they were to get the support they needed to carry out these measures. But then, as in
In the new political climate people who had refused to join the opposition groups in the past, either out of fear or because they craved the social advance open to supporters of the ruling party, suddenly rushed to join it. The opposition political demonstrations were suddenly hundreds of thousands strong. Even government ministers joined them. A dozen new parties were formed. The ruling party's candidates were defeated in a series of by-elections. Then the party itself formally split in two.
Yet in this whole process of change without confrontation there was a strong thread of continuity. Gaspar Tamas, a leader of one opposition party, the Free Democrats, has written:
Army, police and civil service are still not politically neutral... The economy will be nominally privatised, with the same bosses as proprietors even though they will not have put any of their own wealth at risk...
The majority of opposition politicians are bogus. The loudest recriminations against the Communist past come from people who only months or weeks ago were leading representatives of the party. The number two in the Christian Democrat Party has been a state prosecutor for 20 years."'
The attack is now referred to in
In one sense there was a sharp contrast between events in
Yet, if this was a revolution, it was so only in the most narrow sense of a partial political change enforced from below. It was like 1830 in
The Czechoslovak revolutionary socialist Petr Kluvart, who works in the
But the sudden political crisis did provide the opposition with an unprecedented opportunity to mobilise. Suddenly it was able to organise legally and get some mention in the media. By the end of the year it felt powerful enough to threaten a general strike if the apparatus, which it described as 'still totalitarian', did not allow for wider democratisation. It got a promise of concessions in return for withdrawing the strike call."
This time, however, repression did not immediately crush the movement. In
There were demonstrations all that night as the crowd from the rally were joined by hundreds of thousands of people who could see from the television broadcast that the regime was in trouble. And the security police do not seem to have been able to hold the streets against them." The following day the demonstrators converged on the Central Committee building of the ruling party. Those at the front had soon pushed their way inside, seizing the weapons of security police, who fled in terror.
Ceausescu and his wife escaped from the roof of the building by helicopter, leaving the formal centre of political power in the country in the hands of the people. Inside the central committee building representatives of the crowd outside began to discuss how to fill the power vacuum.
At this point heads of the armed forces made their move. After providing initial support for Ceausescu and then adopting a studiously neutral stance as the security police battled with the demonstrators for control of the streets, they now declared for the revolution. The army began to take control from those who had actually taken all the risks in the previous two days. Soon a National Salvation Council was formally in charge. It was made up of generals, of colleagues of the old dictator who had fallen out with him before the end and of a handful of representatives of the students and street demonstrators.
The generals in the National Salvation Council ordered their troops to thwart a desperate counter-revolutionary bid by Ceausescu's security police, who had embarked on a series of terrorist attacks on civilian demonstrators. They tried and executed the Ceausescus on 25 December so as to prevent them acting as a focus for the counter-revolutionaries. But at the same time the generals also took action to weaken the strongest possible force against counter-revolution, the spontaneous popular activity that had destroyed Ceausescu's power only three days before. On the day of Ceausescu's execution a decree of the National Salvation Council declared:
“The army is the only one to possess arms. . . All those who have come into possession of arms and ammunition regardless of the circumstances must hand them in by 1200 hours. Those failing to respect these provisions will be punished most severely.”
A fortnight later the Salvation Council was banning students from holding a rally in the centre of
What occurred in
The failure of two theories
For the left to grasp what has been happening in Eastern Europe it needs a theory which can explain both the scale of the crisis affecting them and the ease with which most of the East European societies have been able to switch from describing themselves as 'actually existing socialism' to openly imitating the methods of Western capitalism.
The theory which has traditionally dominated on the left, that which called these societies 'socialist', 'post-capitalist' or 'degenerated workers' states' cannot do so. It has usually contended that their economies can expand indefinitely, something which was long regarded as gospel truth by the Western Communist Parties, including their Eurocommunist wings. I remember, for instance, attending (as a journalist) a Congress of the British Communist Party in 1977. The debate between Eurocommunists and pro-Russian 'tankies' was already raging. But no one challenged the official theses which contrasted the 'relentless advance' of the Eastern economies with the crisis in the West. It was a belief that the USSR had developed a superior economic system to that of the West which enabled the British Eurocommunist Monty Johnson to write that Stalin had been right against Trotsky in the 1920s and 1930s: 'Trotksy suffered from utmost defeatism' when he suggested 'the possibility of the productivity of labour growing faster in the predominant capitalist countries than in Russia. . .Stalin was able to say correctly after 1935 that Trotsky had been wrong and that... socialism has already been built in the main'."
The most popular version of the 'Trotskyist' degenerated workers' state account of the Eastern countries came to similar conclusions. The best known theorist of this trend, Ernest Mandel, wrote in 1956:
He repeated his claim in the first edition of his book on the world crisis in 1978. He claimed that the growth rates achieved by the Eastern states were proof of their 'non-capitalist character' of their 'qualitative' superiority 'over the capitalist market economy' in their 'ability to avoid among other things the slow down and the great economic fluctuations, unemployment."" He added that the 'non capitalist countries' suffered only the effects of the world capitalist crisis. But such reasoning simply cannot explain why they should suddenly enter into deep economic, social and political crises of the sort we've witnessed in the last four years. There has been one 'post-capitalist' theory which has stressed the crisis prone nature of the
Place ourselves in a ludicrous position if we fixed to the Bonapartist oligarchy the nomenclature of a new ruling class just a few years or even a few months before its inglorious downfall."
And elsewhere he says:
“In case of a protracted war accompanied by the passivity of the world proletariat the internal contradictions in the
Such prognoses could not survive the industrialisation of the
The revelations of the last few year about the scale of economic crisis in the Eastern states have led the leaders of the Western Communist Parties to abandon their old euphoria. And those who have tried to use Trotsky's own formulation have followed suit, switching back to his 1930s account without ever mentioning that they put the opposite gloss on the theory for 50 years. Ernest Mandel now claims that 'the entire economy' lacks 'any form of economic rationality' because 'the bureaucracy is unable to base its material privileges on the coherent functioning (ie the reproduction) of the economic system, of its role in the production process.'
But simply turning the old euphoria upside down does not explain why a general economic and social crisis should have developed in the Eastern countries in the last decade and not earlier. Nor does it provide any counter-arguments to those who claim that, whatever its faults, Western capitalism is based on economic rationality and therefore must be a superior system. The 'post-capitalist' view all too easily flips right over into acceptance of arguments which see the Eastern states as inferior to Western capitalism. So it is that even Tariq Ali, in his book which claimed Gorbachev's reforms could work, accepts that conditions for Russian workers are in some ways worse than in the poorest 'third world' countries:
“A working man in Calcutta or the woman selling pottery on a street stall in Mexico City have afar greater choice in what they buy. . . than a Soviet car worker in Togliattigrad or steel worker in
The collapse of the optimism associated with 'post-capitalist' analyses of the Eastern states has led many to support theories which see these societies as run by a 'new class', which exploits the mass of the population but which is not capitalist. Such theories were put forward by Rizzi and Schachtman in the late 1930s, Djilas in the 1950s, and in the last two decades by Ticktin, Bence and Kis, Bahro, Carlo, Kagarlitsky and many others. All these writers have poured scorn on the claim of the Eastern states to be classless societies. Yet they have not been any more successful than the proponents of 'post-capitalist' theories in coming to terms with the real dynamic of economic and social development.
The earliest version of the theory held, in fact, to the same view of the economically progressive character of the Eastern states as the post-capitalist theories. Bruno Rizzi argued that 'the economic programme' of 'the new ruling class' was 'progressive'."' This view was repeated by Max Shachtman in his writings of 1940-1. Thus he wrote that:
“.Bureaucratic collectivism is part—an unforeseen, mongrelised, reactionary part, but apart nevertheless—of the collectivist epoch of human history. The social order of bureaucratic collectivism is distinguished from the social order of capitalism primarily in that the former is based upon a new and more advanced form of property, namely state property. That this form of property— a conquest of the Bolshevik revolution—is progressive, ie historically superior, to private property is demonstrated theoretically by Marxism and by the test of practice."'
The two Hungarians, Bence and Kis, writing in the mid-seventies under the pseudonym Rakovski, believed that the Eastern states had a slower technological development than Western capitalism. But they too assumed that any economic imbalances that arise can easily be overcome. They argued that 'for the masses... basic consumer needs are relatively continuously satisfied' and that 'we have no reason on the basis of our model to predict the collapse of the economic growth of Soviet type societies must follow'."' They concluded that the working class could not organise itself until there was a split—a 'polarisation'—within the ruling class, and that 'no developmental tendencies can be deduced from the general structure of the system which might point to the growth, with time, of the probability of such a polarisation.'*8 It is not surprising that such conclusions led Bence and Kis to argue that Marxism had little to offer East European oppositionists that they could not obtain from 'social scientists coming from a different background'.""
However, most modern versions of the 'new class' theory hold that the Eastern economies are inherently less dynamic than Western capitalism. This was Schachtman's position from the mid-1940s onwards" and it was a conclusion of Djilas's The New Class. More recently it has featured in the writings of those around Hillel Ticktin and the magazine Critique. Ticktin, for instance, writes, 'The central economic feature of the
Ticktin's analysis is taken over, more or less wholesale, by another new class theorist, Furedi. For him the form of economic organisation is completely irrational:
“No mechanism exists with which to govern society's labour time. . Isolated individuals and production units make things in an increasingly random manner without any effective mechanism for regulating input or output. . . The Soviet social formation has no inherent tendency to socialise labour or to establish a national division of labour….There is simply no drive towards innovation or dynamism at the enterprise level.'*
This irrationality means 'it is the lack of a developmental dynamic that dictates the actions of the bureaucracy"; one way in which the 'social formation' differs fundamentally from capitalism, for Furedi, is that 'in the
Analyses which contend that the Eastern economies have always been in crisis can hardly explain the sudden worsening of the situation in the last few years, any more than those which have denied the possibility of crisis. What is more, they deny the crude historical fact that these societies did experience decades of economic growth. Thus Furedi claims that 'the tendency towards economic contraction has been the dominant feature of the Soviet system ever since. . . 1958'. Some contraction: CIA figures suggest that the
The state capitalist ruling classes did exhibit considerable self confidence for a whole historic period—building a degree of internal social support for their rule and creating a mixture of fear and admiration among rulers elsewhere in the world. To put the argument crudely, the
A theory of the Eastern states which does not explain both their dynamism over decades and their current crisis cannot be an adequate theory. The pessimistic new class theorists and those 'post-capitalist' theorists who have flipped over to accept their most important conclusions are popular because they go along with what is increasingly the orthodoxy of both the Western media and advisers to the Eastern governments: that Western style market capitalism is intrinsically more efficient and dynamic than any alternative.
The new orthodoxy
The claims of this new orthodoxy are so widespread that they have become almost a 'common sense' for left and right in East and West alike. Pick up almost any newspaper and you can read that 'nothing works' in Eastern Europe (have the writers ever compared travelling on the Moscow metro to the London underground?), that 'money is worthless' in the Eastern countries (so why do workers in these countries raise wage demands when they strike?), that the ecological crisis is worse there than anywhere in the capitalist world (which makes one wonder whether the Amazon forests or the steel works at Gary, Indiana are in the East or West!). What is meant to be an intelligent business magazine, the Economist, went so far in 1988 as to claim there had been no economic growth in the USSR for 20 years, ' while Martin Walker of the Guardian misquoted Gorbachev to the effect that, 'For 20 years, if you exclude the state's revenue from vodka and exporting oil, there has been no growth in the Soviet economy".
The most common claim is that the East European states would now be as advanced as those in Western Europe had they followed open market policies for the last 40 years. If they did not, it is said, it was because of 'Marxist dogma' (the right wing view) or because of the 'irrationality of the bureaucracy' (the view of Ticktin, Furedi and others). Against this any serious analysis of the Eastern states has to take into account some elementary truths.
First, as that hardly 'soft on Communism' source, the CIA, reveals, until recently the
More to the point perhaps, all the East European economies were markedly more successful in their first two decades as centralised command economies than they had been in the inter-war years as 'free market' capitalisms:
The average rate of growth achieved in the region during the first two decades of central planning (1950-70) was better than the peak rates shown in the best interwar years (1925-29). The two least developed countries grew as fast as the two fastest growing countries in the best interwar five year period,
However inept the running of the post-war Polish economy has been, no one can claim it did not experience considerable growth between 1948 and 1980. By contrast: 'Interwar Poland never seems to have regained the 1913 output on comparable territory, and a modest rise in
The Eastern system has not been an absolutely irrational form of economic organisation. It has been a form that could prompt enormous economic growth up to a certain point, but which then ran into crisis.
There is one Marxist account of the East European states that can come to terms with this contradictory development. That is the theory of state capitalism—a theory developed originally to explain the character of the society over which Stalin ruled in the USSR1"' was later used to explain developments in Eastern Europe,""
The theory focused on two interconnected aspects of the Eastern states. The first was the central position which accumulation of the means of production has played in their economic developments. This is something which is either ignored by other theories of these countries" or taken for granted as a feature of all forms of society."4 The point is that compulsive accumulation is a feature of capitalism and of no previous form of society. In previous societies there could be development of the means of production. But this took place spasmodically. Only in capitalism does accumulation become, in Marx's words, 'Moses and all the prophets'. It is this which leads Marx to make a sharp distinction between what happens to a whole range of established social institutions and beliefs under capitalism and the societies which preceded it:
The bourgeoisie cannot exist without constantly revolutionising the instruments of production and thereby the relations of production and with them the whole relations of society. Conservation of the old modes of production in unaltered form was, on the contrary, the first condition of existence of all earlier industrial classes. Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast frozen relationships, with their train of ancient and venerable prejudices and opinions are swept away, all new ones become antiquated before they can ossify.'"
Marx also makes it clear that there could be no question of compulsive accumulation featuring in his conception of socialism. Compulsive accumulation is the visible expression of alienation, of the domination of human beings by the products of their labour. Socialism is the overcoming of this alienation. And so he writes in the Communist Manifesto:
In bourgeois society, living labour is but a means to increase accumulated labour. In communist society, accumulated labour is but a means to widen, to enrich, to promote the existence of the labourer.'"'
That there is a compulsion to accumulate built into the working of the Eastern economies is not difficult to prove. It is shown by the whole development of the
1928: consumer goods were 60.5 percent of output
Finally, he points out:
“The shift towards the manufacture of producer goods has put us in the paradoxical situation where accelerated rates of development and more rapid growth in national income have very little effect on the standard of living. The economy is working more and more for itself, rather than for man.”
Or, as Marx himself put it:
“So far as he is personified in capital, it is not values in use and the enjoyment of them that spurs [the capitalist] to action, but exchange value and it augmentation... Fanatically bent on making value expand itself, he ruthlessly forces the human race to produce for production's sake.. . Therefore save, save, ie reconvert the greatest possible portion of surplus value into capital! Accumulation for accumulation's sake, production for production's sake."
In the case of the Eastern European states the proportion of the national output going to accumulation has, according to official figures, usually been 25 percent or higher. ' If the figures are recalculated to take account of distortions in the official price mechanism, the proportion can rise to as high as 40 percent."1' Such a drive to accumulate affects the whole life of society. It means that living standards are continually squeezed in one way or another so as to provide the resources for accumulation. It means that the ruling class has tried through repression to discourage any independent organisation by the exploited classes:
'Western' capitalisms with a similar level of accumulation (
Finally, it is this which explains a much noted feature of the 'planning' mechanism—the fact that it draws up 'taut' plans which try to squeeze resources out of the economy that often simply do not exist and then runs into bottlenecks which bring work on a high proportion of investment undertakings to a halt, leading to widespread economic chaos. In much the same way classic 'free market' capitalism in the West tends to rapid accumulation during periods of boom which cannot be sustained, thus suddenly giving way to slump.
The empirical fact of forced accumulation cannot be separated from another feature of the Eastern economies, the way in which their development is linked to that of the wider world system around them. People often argue that the Eastern states cannot be capitalist because there has been no internal competition between enterprises. Such competition was important in Marx's account of capitalism because it compelled each individual enterprise to reduce its costs to a minimum by holding down wage rates and forcing up work speeds. It forced the enterprise to invest as much of its profit as it could on new equipment and on innovation. The development of capitalism itself in the 20th century led, as we have seen, to the state intervening to reduce internal competition to a minimum. But, as Lenin and Bukharin pointed out, far from ending competition between capitals, it shifted it to a higher level, to competition on an international scale. And this competition began to take on new forms, including armed conflict between capitalist states as well as, and sometimes instead of, purely economic competition for markets. Internal competition may decline to a near zero level—external competition takes its place.
The Stalinist states were never cut off from the rest of the world. Already in the 1950s in
Such a level of foreign trade necessarily has an enormous impact on the internal running of the economy. It means that those who control the state and industry have continually to worry about how costs of production inside the country compare with the average costs in the rest of the world: that is, they have to hold down wages, keep up a continual pressure to force speed up on workers and aim at levels of investment that will enable the national economy to match the effort of economies elsewhere in the world. In other words, although individual enterprises may not be directly involved in competition with other enterprises, the national economy as a whole is.
But it is not only competition for foreign markets which has a profound impact on the internal operation of the Eastern states. So has their participation in the military competition between the Eastern bloc and the West and
Most arms are not commodities in the pure meaning of the term. They are not sold to an unknown buyer in competition with other sellers, but rather go straight to the government which has supervised their production.'2* But arms have one very important thing in common with commodities intended for the market. Their value to whoever possesses them depends not on their intrinsic physical properties (their use values) but on how they compare, in terms of price and efficiency, with those possessed by rivals. Two countries which manufacture tanks for war with each other are, in one respect, in the same relation with each other as two countries which manufacture cars which they try and sell in competition with each other. Success depends on holding down wages, pushing up productivity as much as possible and using profits for investment to increase the level of investment in plant and innovation. It is this which explains the very high levels of accumulation in the Russian economy under Stalin: as the Russian bureaucracy saw it, this was the only way to lay down the heavy industrial base needed for military preparedness. It also explains, for example, similarities in the pattern of industrial development in post-war
State capitalism as a stage in capitalist development
Using the theory of state capitalism, it is possible to make sense of the Stalin period and the early years of Stalinist rule in
Engels could not, of course, foresee capitalist industrialisation and the suffering being imposed by a bureaucracy which tried to conceal its class nature behind Marxist phrases. The people who lost their lives in this development did so in the space of no more than 25 years. But it is unlikely that in proportion to the total population it is higher than those who died from the combined effects of the enclosures and vagrancy laws of the Tudor period, the 250 years of the transatlantic slave trade, the barbarities of the plantation system, the clearances of the 18th and 19th centuries, the shipping of grain from Ireland during the famine, the poverty into which whole areas of India were forced by British rule, and the effects of the opium trade on China.
At the same time, the tendency towards state control of the whole economy was not something unique to Stalinism. It was something which happened to varying degrees throughout the capitalist world, particularly in its weaker national elements, in the period which stretched from the First World War and the crisis of 1929-3 through to the 1970s.
Those who wanted to build up new industries in countries where capitalism was late in developing found the only way in which they could do so in the face of competition from the established capitalist powers was by using the forces of the state to concentrate the available resources. Already at the turn of the century the state played a central role in the development of large scale industry in
In the 1930s and 1940s the most efficient size for productive units was such that a handful of local firms dominated the market in manufactured goods in each of the economically advanced countries. It made economic sense to merge these into a single structure, integrated by the capitalist state, excluding foreign competitors through tariffs and quotas. Even where rival firms persisted inside the major sectors of an economy, governments saw their task as making sure domestically based firms covered the market for most ranges of goods: every capitalist country sought to have its steel industry, its shipbuilding industry, its aircraft industry, its auto industry, even its furniture and white goods industries. State capitalism corresponded to the stage of development of the productive forces when this was a conceivable goal.
The trend went furthest in countries where indigenous industrial development was weakest. In the 1930s and 1940s the state moved to the fore in the economic development of countries as diverse as Mussolini's Italy (where the two biggest conglomerates were state owned), Peron's Argentina, Vargas' Brazil, Nerhu's India (where the main industrial families had, before independence, agreed upon an economic programme based on five year plans in imitation of the Russian example), China under both Chiang Kai Shek and Mao Zedong, and, a few years later, Nasser's Egypt, the rival Ba'athist regimes in Iraq and Syria, Boumidienne's Algeria and the military regime in Burma.
The rationale for such moves was simple: in this period of capitalism it seemed possible to lay the basis for industrial development through state intervention in a way that was not possible otherwise. The economic success stories in the 'third world' were those where there was strong state intervention, not where everything was left to the market. So it was that the dominant ideologies, whether Keynesian, social democratic or Stalinist, took state intervention for granted.
In none of these cases was there a shift from 'one mode of production' to another. In each case those who had control of the existing state apparatus used it to reorganise industry, reducing internal competition to a minumum so as to accumulate in the face of external pressures. That does not mean there was never any opposition to such a move—'police' actions of various sorts were often taken against old, 'private' capitalist interests who resisted the changes. But these were possible without the mobilisation of the mass of the population for full blooded social revolution, indeed in some cases without any mobilisation of the mass of the population at all.
The origins of East European state capitalism
Eastern Europe before and during the Second World War provided many graphic examples of old state structures resorting piecemeal to state capitalist measures.
Everywhere the world crisis of 1929-34 had devastating results. All the Eastern countries except
The pre-war East European governments knew of only one way to control such tensions—to disregard their previous 'liberal' economic policies. Already before 1929 the states operated 'controls not at all, or hardly, used in Western countries'."4 The crisis of the 1930s led one state after another to intervene directly to control foreign trade, to organise directly bilateral deals with other states (especially Nazi Germany, which itself had imposed a state monopoly of foreign trade), to reduce massively the level of imports, to establish differential exchange rates for different transactions, and to take control of failing banks and industrial concerns. Thus the right wing colonels' government in
The Second World War increased the tendency to state control of the economy enormously. First, the economies of
The economic plight of most of the countries was made worse by the policies of the victors in the war. Those countries whose old rulers had supported Hitler (
Finally, in the case of East Germany, the national borders imposed by the victors did considerable economic damage: its industries were cut off from their traditional sources of fuel—hard coal—by the handing over of Silesia to Poland and the setting up of a separate West German state (which is the reason the country's power stations burn highly polluting locally mined lignite today).
Those who found themselves in control of Eastern Europe after the war were running countries which were already much more backward than Western Europe before the war, had been worse affected by the war and its aftermath, but where events had given the state the power to direct the organisation of production with very little obstruction from private capitalist interests. Not surprisingly, the leaders of all the political parties—bourgeois and social democrat as well as Stalinist—took it for granted that the only way forward for the economies was to use that state power.
Methods of highly centralised administrative planning and management widely using meta-economic coercion are not a characteristic feature of socialism, but rather a sui generis technique of the war economy""
The leaders of the Communist Parties did become the most determined proponents of the command economy after the outbreak of the Cold War and the formation of the Cominform (Stalin's organisation for coordinating the activities of the ruling Communist Parties). From mid-1947 onwards they pressed for a much higher rate of accumulation than did the social democrat and bourgeois parties.14' Again, this was not a result of some irrational ideology, but because of their commitment to building up the industrial-military potential of the Russian bloc as a whole. Significantly, those opposed to their approach were not able to develop a coherent alternative view of their own. That is why even in
Seen from this viewpoint, what happened in
The contradictions of capitalism
To analyse a society as capitalist is not only to point to the exploitative, barbaric way in which its rulers treat the rest of the population—after all, such behaviour is typical of all class societies. It is also to see that the ruling class, forced to accumulate at all costs, cannot avoid undercutting the basis of its own rule. This was certainly true of the Eastern ruling classes. They could not avoid what were, for them, a number a negative consequences of accumulation.
(i) The gravedigger. The Stalinist methods necessarily began to create a social force capable of challenging the rule of the bureaucracy. When Stalin took absolute power in 1928-9 in the
The Stalinist regimes found it relatively easy to subdue the rural populations in the early years, using armed force if necessary, as during Stalin's own collectivisation campaigns. At the same time, the initial effect of forced industrialisation was to weaken the ability of the working class to offer opposition to the regime. An important minority of 'old' workers were able to achieve upward mobility out of their class as supervisors and bureaucrats: figures for the 1960s show that 29 percent of people born into working class families in Czechoslovakia had risen into non-manual jobs and in Hungary and Poland 17 percent had done so.114 Those 'old' workers who remained found their traditions of collective action diluted by the flooding of the towns with masses of ex-peasants. As the sociologist Zygmunt Baumann has noted in regard to
A relatively meagre group of pre-war industrial workers, who remained workers in spite of all mobility opportunities.. .suffered an almost continuous deterioration in their living standards. .. But they were dissolved in a vast mass of peasant migrants to whom the living conditions they met meant a genuine improvement in the standards they had known."s
But as capital accumulation proceeded, it began to change this state of affairs. The decline in the proportion of the population in agriculture necessarily led to a decline in the number of people entering the cities from the countryside. At the same time the opportunities for workers gaining upward mobility into white collar and bureaucratic positions declined.*
A growing proportion of workers were the children of workers and had experienced no mobility in their own lifetimes. So a study of the
The level of culture which is required of the workforce also changes with capital accumulation. In the 1930s and 1940s crude threats and punishments could persuade the mass of ex-peasants in the factories, mines and construction sites to carry through the unskilled and semiskilled tasks required for basic industrialisation. By the time Stalin died in 1953 this was already changing. A higher average level of skills and more initiative were required of the workers. In 1965 unskilled labour accounted for 40 percent of workers in industry and 60 percent in construction; by 1979 the proportion had fallen to 33 and 40 percent respectively.14"
Such skilled labour could not be obtained without at least some secondary education for the great majority of workers and further education of some kind for a substantial minority. So in the Gorki region the number of workers without complete secondary education fell from 87 percent in 1965 to 52 percent in 1979, and only 20 percent among those under 30 years of age. Among young workers in the
“Many enterprises in the
(ii) Obsolescence of old forms of exploitation. The more accumulation proceeds, the less old methods of achieving it are effective. The first phase of Stalinist industrialisation could be carried through by using the most primitive methods to force unskilled ex-peasants to work. The low productivity of labour didn't matter that much, since millions of people were leaving agriculture for industrial occupations and their labour could build and work factories where none had existed before. Massive industrialisation was possible on an 'extensive' basis.
But eventually old reserves of labour and raw material began to be used up. Further industrial advance had then to be through 'intensive' development: rebuilding and reorganising existing industry so as to use labour and materials much more efficiently. This depends on a much greater exercise of care and initiative by the workers. Attempts have to be made to raise the commitment of the workers to their labour by offering them better food, more leisure and a bigger supply of consumer goods.'"
This contradicts attempts to catch up with more developed, and usually larger, economies by devoting a very high proportion of the national income to accumulation. It is all too easy for a chicken and egg situation to occur: if workers' consumption levels were increased, then over time productivity would rise. But in the interim it is only possible to raise living standards by cutting into accumulation and slowing down the growth rate of the economy compared to its major competitors. So it is that the history of the
The situation is made worse by the impact of the past subordination of consumption to production. In the
The effects of this policy have faced all of Stalin's successors with near insuperable problems. The investment of considerable sums in fertilisers, farm machinery and increasing agricultural workers' wages to near the urban level is not nearly as productive as it should be. An unnecessarily high proportion of the crop is lost due to poor transport and storage facilities. And the rural population is, on average, too old and unskilled to respond to the 'incentive' of higher living standards. Successive generations of young men and women have reacted to miserable living conditions in the countryside by heading for the town the moment they have learnt some marketable skills (like driving a lorry or repairing machinery).
Living standards do rise, but not by nearly enough to increase productivity to the levels prevailing in the advanced Western countries. If productivity does not rise fast enough, the only way for those who direct the economy centrally to obtain high levels of accumulation they have set is to switch factories producing consumer goods over to the production of means of production. But this in turn means that the amount managers pay out in wages exceeds the total value of consumer goods and food output. There are shortages of many key consumer goods and a tendency for prices to rise.
From growing at a faster rate than the Western economies in their early years the Eastern state capitalisms begin to grow at only the same speed (or even slower), and to experience acute crises in supplying whole ranges of consumer goods.
(iii) The rising organic compostition of capital. State capitalism faces the classic problem of any capitalism—as accumulation causes total investment to rise faster than the labour force, the average return on the investment tends to decline." The average annual increment of industrial output per rouble of investment in Russia" has decreased as follows: 1951-5: 6.4 percent, 1956-60: 5.1 percent, 1961-65: 4.7 percent. The trend continued through the whole Brezhnev period. In 1985 the proportion of the national product going to investment was at least as high as in 1965, but the growth rate of industry was down by between 50 and 60 percent.
(iv) Social production and national state appropriation. Finally, the very thing which made state capitalism seem a way out of the problems facing countries at one stage in the development of world system—the continual growth of the forces of production—makes state capitalism seem an impediment to economic efficiency at a later stage. The further development of the forces of production over four or five decades began to clash with any such way of organising production.
The most successful enterprises in the West became those which began not merely to sell internationally, but also to organise production internationally. Multinational capitalism began to supplant state capitalism as the vanguard of the system. National ruling classes which attempted to keep the domestic market for the whole range of goods in the hands of nationally based firms began to discover that these firms simply could not mobilise the level of resources required to match the most advanced enterprises in the world system. Production that was restricted by narrow national boundaries was increasingly inefficient and technologically backward.
This was even true for the world's biggest economy, that of the
For American capitalism there is another side to this process. At the same time as losing market share on their home ground some of the giant
The shift from national capitalism to multinational capitalism does not do away with the economic role of the national state in supporting 'national' firms. Boeing can only dominate the world civil aircraft industry because of the sustenance it gets from US military orders; Ford and General Motors have used the US state to provide them with some protection against a complete Japanese takeover of their 'home market' while they have been extending their own multinational operations and making some deals with Japanese firms. While having an increasingly multinational orientation, the privatised British Aerospace has remained dependent on British government orders and influence for an estimated 80 percent of its business. In the rapidly expanding and lucrative area of telecommunications, the ability of firms to make multinational links depends upon the extent to which they can gain the support of governments when it comes to getting orders to re-equip rational telephone systems.
World capitalism has outgrown the stage of state capitalism. But it would be wrong to label what has replaced it as 'private capitalism' or even 'market capitalism', as if the role of the state had disappeared. What exists is a combination of state capitalism and multinational capitalism. I call it 'multinational capitalism' for short, but its components develop from national state capitalist bases and never completely break from them.'"'
This new phase does, however, destroy the conditions under which the old nationally self contained state capitalisms could flourish. This was already clear more than 20 years ago from the attempts to create new state capitalisms. China and Cuba discovered they could not successfully copy the path pioneered by the Stalinists in the USSR— hence the bitter internal conflicts which led to the Great Leap Forward of 1958 and the Cultural Revolution of 1966 in China', and the crisis in Cuba which led to Che Guevara leaving the government in 1966.
The costs of starting up a whole range of industries capable of holding their own against those of the established industrial powers was now too great for the limited resources of the national ruling classes of poorer countries. This point was shown graphically when it was estimated that producing the Chinese H-bomb must have used up between a quarter and a half of the country's total electricity output. The reality was 'that the minimum cost of entry into the world market is growing every day. The resources from which to fund it in backward countries are not.The result was to:
“close the period in which a Russian-type state capitalist development could be thought feasible for backward countries... in which the bloody, treacherous forced march through autarkic industrialisation could be thought to constitute progress in some restricted sense...'
Those rulers who tried from this point onwards to implement the dream of national state capitalist development found they were embarked on a policy that led, in fact, to national crisis and even collapse. The regimes which followed the defeat of Portuguese colonialism in Angola and Mozambique were forced into a bitter retreat towards the Western powers by this prospect; the Vietnamese regime would love to make this retreat but finds its path blocked by American obduracy; the attempt of the Khmer Rouge regime in Cambodia to push ahead with old style 'development plans' led to all the old barbarism of Stalinism without the industrial advance which had accompanied it in the USSR.
This may not have been the end of economic development in the 'third world'. But from now on 'development' was only possible for state capitalisms which concentrated their resources into breaking into a very narrow range of industries, usually in collaboration with established multinationals, in the hope of breaking into one or two sectors of the world market—as some of the relatively small countries of the 'Pacific rim' succeeded in doing. Many of the countries which tried to follow this path fell by the wayside. In others, like
The crisis of state capitalism
For a time the old established state capitalisms seemed to have a brighter future than the late comers who tried to emulate them. A series of convulsions had swept the whole Eastern Bloc in 1953-6 as people reacted against the terror, the slave camps and the forcing down of popular consumption levels of the Stalinist period of primary state capitalist accumulation. In the
But the East European leaders and Khrushchev in the
Symptoms of a new cycle of crisis began to reveal themselves in the mid-1960s. Khrushchev's various attempts at reform inside the USSR could not raise the country's rate of growth to the level needed not merely to sustain itself as the second superpower, but to 'catch up and overtake' the US. The leaders of the different sections of the bureaucracy came together to overthrow Khrushchev in 1964. In
“The bureaucracy becomes entrapped in a vicious circle. Any way it attempts to solve some of its problems is likely to increase others.
“The leaders of the central apparatus will increasingly seem to be an impediment to efficient production... The bureaucracy is unable to carry through reforms on anything like a successful basis without a split of the proportions that characterised
“The chronic crisis of state capitalism will reach a nodal point at which the whole system is threatened. What happens then will depend on the ability of the different classes to mobilise around programmes reflecting their genuine interests.'
But all the regimes were able to re-stabilise in the immediate aftermath of the 1968-71 events just as they had after 1953-6. Brezhnev's
The rulers of
This was most obviously the case with countries like
A series of amendments to Hungarian law permitted the formations of hundreds of joint enterprises with Western firms and massive borrowing from Western banks. Other Eastern states were more subdued in their direct dealing with Western firms and banks. But there were still deals. Western firms were involved in the construction of the giant Russian auto plants at Togliattigrad and Kama River; in the single year 1976 the USSR bought 3.6 billion dollars worth of heavy machinery and plant from West German firms;"' the construction, with Western help, of the huge gas pipeline from Northern Russia to Western Europe was central to the USSR's economic development in the early 1980s; there was growing co-operation between East German and West German enterprises with, for example, the manufacture under licence in East Germany of car engines for Volkswagen. By mid-October 1989 there were 2,090 joint ventures registered in the
On top of this the Brezhnev leadership in the USSR had sought to make up for the ingrained backwardness of its agricultural sector by buying grain on long term contracts from the US, paying for these with the income from oil exports after the massive increases in the international price of oil in 1973-4 and 1979-80.
Such a piecemeal approach to dealing with deep seated economic problems necessarily ran into difficulties. Somehow economies which were already working at full capacity had to find the resources to pay for imports of foreign goods and technology. In the early 1970s borrowing from the Western banks seemed the way round this problem for the Polish, Hungarian and Yugoslav regimes. They assumed they would be able to pay off their debts from the proceeds of exports to Western markets. But the world recessions of 1974-6 and 1980-2 put paid to this option. As markets stagnated and interest rates soared, the rulers of these Eastern states found themselves in exactly the same position as those of 'newly industrialising countries' like Brazil and Argentina: the cost of paying for past borrowing began to cut off possibilities for further accumulation: in 1979-80 Poland entered a long period of economic stagnation, interspersed with spells of contraction; Hungary, still treated by most pro-market Western commentators as the 'miracle economy' of Eastern Europe in the early 1980s,'75 was predictably dominated by its own debt problems half a decade later.'"
Fear of such an outcome combined with conservative inertia in other states such as Czechoslovakia, East Germany and Brezhnev's USSR to put a check on the scale of the opening up to the world market; Romania under Ceausescu went from one extreme to the other, incurring huge debts in the 1970s and then cutting right back on imports of any sort (apart from luxury goods for the dictator's entourage) in order to pay them off.
The conservative path consisted of trying to hang onto the old model of nationally self contained state capitalism at a time when the recessions of 1974-6 and 1980-82 had given a massive added impetus in the West and the 'third world' to restructuring national industries to fit in with the needs of multinational production. Inevitably important sectors of the Eastern economies began to lag behind the most advanced world levels of technology. In the 1950s the
Attempts to keep up with the most advanced technology internationally were, increasingly, expensive and often ineffective. The East German firm Robotron, for instance, put an enormous effort into attempting to compete in computer technology and software with the West. Its achievements were quite considerable, but not nearly enough to keep up with the much greater resources being concentrated in such areas by certain Western multinationals. American based multinationals were in fact being driven out of the production of many sorts of basic microchips in this period by Japanese multinationals because they simply did not have the resources to compete any more. The industry of a small state like
Similarly, a Czech enterprise was competent at making the full range of electrical goods produced in the West—from refrigerators and food mixers to computers. But it necessarily did so with much greater production costs on its short production runs than the giant Western multinationals, each of which would concentrate on only part of that production range. Again the Czech or East German motor industries, producing only a few hundred thousand cars altogether each year, could not possibly afford the technological development and tooling open to the top ten Western multinationals, which produced millions each year.
The growing lag in technology had important effects in three areas. Firstly, there were deficiencies when it came to the most advanced means of production. Increasingly advanced computers and engineering equipment could only be obtained by buying them in the West. But that meant somehow getting hold of the foreign currency to buy them with— assuming they were not on the Western powers, Cocom list of embargoed exports.
Secondly, it was increasingly difficult to sustain the burden of advanced weapons production. The
Of the more than 100 countries for which there are authentic statistics only five or six Middle Eastern states spend more on defence than the
The USSR has been able to produce aircraft, tanks and guns as good any produced in the West, but only by draining away resources needed for the development of high quality output in the rest of the economy.
Finally, even where the regimes succeeded in satisfying workers' basic material requirements (food, clothing, alcoholic drink, housing), as in
The theory of state capitalism made it possible to see, as early as the mid-1970s, that neither opening up to the West nor trying to restrict such opening up was able to prevent the slide of the Eastern states towards economic stagnation and political crisis."' The Polish events of the early 1980s made the picture even clearer:
By 1981, the choice between maintaining the closed economy and opening up to the rest of the world was indeed the choice between the frying pan and
the fire. The first option meant deepening stagnation, growing waste, an inability to satisfy the demands of the mass of the population, and the continual danger of working class rebellion. The second option meant binding oneself into the rhythm of a world economy increasingly prone to stagnation and recession—and giving up the administrative means to stop recession involving contraction of the domestic economy. That is why the Polish crisis of 1980-81 was so traumatic for all the rulers of
'Pre-crisis' and perestroika
The leaders of the
The 'pre-crisis' symptoms were not just in the economy. The army had become bogged down in a war in
By the time Gorbachev took over in 1985 the symptoms of crisis were more visible than ever. He could hardly avoid looking desperately to what the party was soon describing as 'the dramatic nature of the situation in which the country found itself in April 1985.""'
Both at the centre and in the localities many leaders continued to act by outdated methods and proved unprepared for work in the new conditions.
“Discipline and order deteriorated to an intolerable level. The vicious practice of downward revision of plans became widespread."
The party described the Brezhnev period as that of 'stagnation' which had
“brought the country to the brink of an economic crisis. A far reaching, high spending system of economic management outgrew its usefulness. Its structure and expertise are at variance with modern requirements. .. Production, efficiency and living standards ceased to grow..."
In its first year the new Gorbachev leadership tried to achieve the economic 'restructuring' using the same methods which Andropov had used—single minded campaigns directed from the top, using only the existing apparatus in an effort to drive people harder. There was a campaign against alcohol's alleged detrimental effect on productivity which involved increasing the price, closing down two thirds of the sales outlets and destroying thousands of acres of the vines. There were onslaughts against corruption among many of the old generation of party bureaucrats who had held onto power through the two decades of Brezhnev's rule. There was the establishment of a central agency to check the quality of enterprise output, and to cut the pay of those who worked in low quality enterprises. There was even a call by Gorbachev for people to take up the example of Stalin's 1930s Stakhanovite movement.""
But the attempts to shake up the economy from the top down did not work. In the course of 1986 most of the group around Gorbachev became convinced that the only way to change the economy was to implement a root and branch transformation of the bureaucratic-managerial structure itself. They saw that this could not be achieved without introducing changes of a political as well as economic nature. Conservative bureaucrats, it was said, were obstructingperestroika, and their efforts had to be countered by allowing the media to throw light on their activities through glasnost.
The economic programme of perestroika involved, initially, three interconnected sets of changes. Firstly, the restructuring of production away from old plant and machinery to newer plant and machinery. This was to be achieved by factory closures and redundancies on the one hand, and the introduction of three shift working on the other. Eventually this is meant to entail 16 million sackings. So far more than three million have occurred."" Secondly, the whittling down of the size of the bureaucratic apparatus controlling industry and the replacement of bureaucrats and managers who are inept, inefficient or corrupt. The increased freedom of criticism in the media would aid in this. Finally, the replacement of bureaucratic attempts to make industry efficient by those based on market forces. The use of 'commandist' methods of 'vertical' co-ordination of the efforts of different enterprises was to be replaced by 'horizontal' links as the enterprises arrived freely at contracts for each other's output. The pursuit of maximum profits would, it was claimed, lead the managers of each enterprise to put a premium on efficient use of resources and the rapid adoption of new techniques. The three elements were meant to be dependent on each other. The move from command to market co-ordination would reveal which were the most efficient plants and give managers an incentive to concentrate production there. Trimming down the layers of bureaucratic control was a precondition for the shift to horizontal links, which would in turn throw light on the efficiency or otherwise of individual managers. But things did not turn out as hoped. The partial replacement of vertical by horizontal links in 1988 did not lead to any magical rise in the level of efficiency:
The problem of supplying the population with food has worsened.
“Everything in the economy is in short supply, concluded a report in January 1989 on Russian television from a meeting of the council of ministers. It told of a growing number of goods in short supply, two million square meters less of housing space than planned, and a fall in the number of new children 's preschool establishments opened.
And prices were rising. 'Neither the factories nor the shops have any interest in providing cheap goods—it does not pay'.' Many managers had discovered that they could increase their profits, and their own bonuses, simply by raising their prices. Where they had not been able to do this directly, they shifted from producing cheap selling ranges of goods to more expensive ones. But, since the goods produced by one enterprise were often desperately needed as inputs by another enterprise, this caused chaos all round.
What is more, the openness, which Gorbachev saw as necessary if he was to get restructuring through, increased economic problems. In the spring and early summer of 1988 Gorbachev was able to use the slogan of glasnost as a weapon against conservative attempts to limit perestroika. In the run up to the special party conference he gave the
Gorbachev's whole political career had been within the political-managerial bureaucracy. He moved upwards during the Khrushchev and Brezhnev years by learning how to ingratiate himself with those above him, to manoeuvre against those alongside him and browbeat into submission those below him. These were skills he used to the full over the spring and summer months—together with his considerable skills as a publicist. They enabled him to carry through a manoeuvre against his opponents which concentrated massive power in his own hands and, he thought, laid the basis for a real assault on those bureaucrats below who would obstruct restructuring.
Those skills did not, however, prepare him for something else—how to deal with the reactions of millions of people outside the ruling bureaucracy as glasnost gave them, for the first time since the late 1920s, the chance to discuss the conditions under which they lived. The pale promise of glasnost from above was enough to unleash a vast wave of glasnost from below.
At first this seemed mainly a phenomenon confined to the
These were attempts to limit the influence of radical opinion in
More important, though, was what had been happening outside
The arguments in the run-up to the special party conference suddenly gave them an opportunity for real mass activity as sections of the apparatus gave the go-ahead to campaign against the appointment of particularly corrupt or unpopular figures as delegates. Small groups who took advantage of the opening could suddenly find themselves leading protests thousands strong. As the left wing oppositionist Kagarlitsky'"" noted, 'A wave of demonstrations swept the country.' And protesters almost everywhere began to raise questions which went beyond the question of who was the delegate. So for instance, at a meeting of 5,000 people in Yaroslav,
‘The stream of speeches at the rally seemed unending. People were talking not just about party conference electoral procedure, but also about poor supplies in the town, about the acute shortage of hospitals and housing and about instances of violation of principles of social justness. Many personal grievances were also aired. The heap of requests for permission to speak grew higher and higher.’
When the party leadership had told the conference there had to be 'a permanent mechanism for comparing views, for criticism and self criticism in the party and society' it had hastened to add, 'Discussions.. .mustn't lead to political confrontation, to disunity of social forces'. But confrontation there was. As well as the explosion of discontent among the non-Russian nationalities there was a continuing rash of protests right across the country. There was also a scattering of little publicised, and usually quite short, strikes over wages and working conditions.
Without a firm hand from the centre holding everyone down, those bureaucrats running enterprises and local government felt that the only way to maintain their control over those beneath them was to give in to at least some of these pressures. Promises were made to grant greater national rights, to close down the most polluting factories, to increase wages, housing, education and health spending.
So while reform failed to increase the output of the economy, the amount of spending by government and enterprises shot up. In 1988 incomes rose by about 8.5 percent, industrial output by only 3.5 percent. A meeting of the council of ministers early in 1989 was told:
“Over the three years of the plan budget spending exceeded income by 184,000 million roubles. The money supply has reached critical dimensions, the volume doubled in comparison with the previous year, and exceeded by four times the average figure for the 11th five year plan... There has been a growth in the balance of payments deficit. .. “
Such a sudden intensification of the economic crisis produced confusion among the ranks of those committed to reform. On the one hand, there is pressure from the very many conservative minded bureaucrats in government and industry to return to the old methods of centralised control, using bullying from above to make managers in each enterprise produce the inputs needed by managers in other enterprises. The party leadership made a limited shift in this direction by imposing new price controls on many goods and banning the export of certain consumer goods.
On the other hand, there was pressure for increased reform from economists who claimed that only more competition between enterprises and, eventually, direct competition between firms inside
The leadership did not know which way to turn, for it could see immense problems with either approach. It knew that the system of centralised bullying had led to the 'pre-crisis' situation. But it also knew that to make a radical turn towards the market could devastate whole sections of industry. Even the more limited 'market' policy of allowing all prices to rise faced an immense obstacle: such price rises in
The replacement of old, inept and corrupt bureaucrats did not even lead to any fundamental change in the functioning of the bureaucracy as a whole. As Gorbachev himself complained:
Some 66 percent of our ministers, 61 percent of oblast party committee first secretaries and chairmen of oblast soviet executive committees, and 63 percent of town and rayon party committee first secretaries are new.. . But the past has left its mark on them. .. Their first concern is for a direct government telephone line, good premises, a car and so forth.. . Many people are pursuing their own selfish egoistic interests, but want to promote them in the convenient disguise of concern for the people and socialism.'"'
Eighteen months later nothing had changed. Gorbachev's own appointees stood up and criticised him at Central Committee meetings for not providing 'stability'. And in order to stop economic collapse, Ryzhkov introduced emergency measures for the next two years which gave the centre enormous control over enterprises' investment plans, pricing powers and foreign trade. The pro-market economists immediately denounced him for going back to 'vertical' and 'commandist' methods of economic direction.'"
When the elements who make up any great bureaucratic machine lose faith in their leaders they turn in on one another. As they do so, those they have dominated in the past begin, in a what is at first a confused and bewildered way, to push their own claims. This has been happening in the
It is a question over which the left internationally is often hopelessly confused. Eric Hobsbawm, for instance, has argued that 'all the other parts of the Russian Empire are generally better off than
This is to ignore the way Stalin systematically pushed through a policy of Russification of the non-Russian peoples as part of the process of consolidating the hold of the central, Russian speaking bureaucracy. He purged the minority nationalities from positions of power, so that in the late 1930s only 17 out of 1,310 officials in the northern
But nationalism did more than provide a means for people to protest at national oppression. It also served to heighten their feelings of alienation from those who ran the central state and the giant enterprises. The all-union institutions which dominate the country are overwhelmingly made up of Russians and, to a lesser extent, other Slavs. Only two members of the politburo are non-Russian. Russians make up just under half the population yet they are 59.7 percent of the party membership of 18 million. And non-Russians who want to make a career for themselves have to do so by adapting to the dominant nationality and accepting what, is for them, a foreign language.
What is more, conditions are on average worse in most of the republics—although not in the Baltic states—than in
Under such circumstances, it is very easy for people to see social problems as resulting from national discrimination. What is more, the existence of republic level 'ethnic' institutions provides an easy focus for agitation: a local demonstration might be able to pressurise a local republican Soviet or Central Committee into taking action in a way which was not possible with the central power in
It was precisely the coming together of national and social grievances that produced the most bitter expression of nationalism in
Izvestia reported that the Karabakh protests began as protests against catastrophic mismanagement and miserable economic conditions. Only later did it take a nationalist turn.. .
The newspaper said meat and butter have been rationed for a long time, even though it is a farming region. Half the peasant families have no cows, and a third have no animals at all... People in Stepanakert have had running water only one hour a day, because of insufficient supplies.. .2I"
A report in Moscow News described the living conditions of those who took part in the anti-Armenian riots in
There were 55 hostels in one small town. And they were the lucky ones, because others had to make do with shanty towns made out of old tin plates, cockleshells and defective concrete blocks next to plants belching smoke, soot and dust... If it had not been for laundry hanging on ropes and TV aerials sticking out of the ground we would never have guessed that people existed there...
“Many problems in the field of the language, history, culture and spiritual life of the people have for a long period of life been neglected. .. There was harsh criticism of some Soviet farms and organisations that artificially contract the field of the use of the Azeri language. The preparation of official papers in the Azeri language and the organisation of business correspondence is lax... The
The first protests in
The best comment on conditions in these republics is the figures on unemployment. Pravda has revealed that the most recent figures (for 1986!) show 27.6 percent unemployed in Azerbaijan and 18 percent in Armenia—and this was before the 'transition to financial autonomy' had caused three million people in the USSR as a whole to lose their jobs." Altogether there are six million young people without jobs in the central Asian republics and
It is hardly surprising that the national movements have grown larger and more radical as people in the poorer regions have lost any illusions that perestroika can improve their economic and social conditions. In the richer republics, the more intractable the problems of the
But nationalism has not just been a spontaneous expression of popular discontent. It has also provided a way for the local sections of the ruling bureaucracy to try and deflect critiscism away from themselves, onto other ethnic groups. At the time of the Sumgait pogrom early in 1988, reports in the Russian press suggested that local party leaders and police chiefs had deliberately encouraged people to attack the city's Armenian population; at the beginning of 1990 Western papers quoted leaders of the Azerbaijani Popular Front as claiming that it was local party officals, not themselves, who were urging attacks on Armenians—a claim which is accepted by the radical left in Moscow.20' In a republic where the problems of unemployment and appalling housing conditions were compounded by the arrival of 200,000 refugees, who could find neither homes nor jobs, it was all too easy to direct anger against the tens of thousands of Armenian workers and away from the privileges of the local bureaucracy.
Stalin had consolidated his power by a divide and rule policy which allowed the dominant nationality in each republic to oppress minority nationalities while itself suffering at the hands of the central Russian speaking bureaucracy. Now the awakening of the oppressed minorities easily takes the form of them directing their resentments against each other, as when Georgian nationalists fought to suppress Abkhazians while protesting against their own oppression by Moscow, or when Uzbeks launched pogroms against Mesketians who had been deported to Uzbekistan by Stalin.
It was not only in
The ability of the local bureaucracies to exploit nationalism for their own ends has led some people on the left to see this as the main factor at work.2" The end result of such an argument can be to oppose the right of self determination for the minority nationalities on the grounds that, 'if the Soviet Union were to fragment into its constituent nationalities it would create a situation far worse than that which currently exists... it would unleash a process of Balkanisation and confuse the class struggle',"9 or that the only outcome can be an endless bloodbath.21"
This argument is completely upside down. The local bureaucrats can exploit feelings of national disadvantage because these feelings exist. It was not the local republican rulers who intitiated the national movements in the
Responsibility for the danger of inter-communal bloodshed has to be placed on those whose actions over 60 years have encouraged national antagonisms—the central, mainly Russian speaking bureaucracy. If Armenians and Azerbaijanis turned on each other, it was because the ruling bureaucracy would not grant either ethnic group full national rights (including the right of
One thing stood out about Gorbachev's behaviour through all his twists and turns. For all his talk of 'democratisation' he saw trying to block the development of a secessionist movement in the industrially important Baku area as the most important single thing, reasoning that geography would always prevent secessionist talk among outraged Armenians from turning into action. This explains why for so long his repression was directed against the democratic demands of the majority in the Karabakh. It also explains why he redirected his bloody repression at Azerbaijanis the moment a real secessionist movement developed among them. The border posts with
Why perestroika is failing
Gorbachev's failures are not a product of personal deficiences. They have been inbuilt from the beginning into the task which he set himself.
Politically, perestroika rested on a contradiction. The biggest bureaucracy in the world had to be shaken up, and this could not happen without allowing pressure on it from outside its ranks. But that bureaucracy was still expected to impose the demands of the central government on the rest of the population. It is hardly surprising that Gorbachev upset both the ranks of the bureaucracy and those of the masses who began demonstrating, his picture in hand, two years earlier. He was following the pattern of East European reform governments of the 1950s and 1960s:
"The failure of the economy. . . results in a split in the apparatus. One section begins to demand wholesale reform. . . At a certain point the reforming bureaucracy calls in certain extra-bureaucratic layers (intellectuals, journalists, students) to help it paralyse the apparatus and let it take over. But this permits, even encourages, extra-bureaucratic classes (above all the workers) to mobilise, at first behind sections of the reforming bureaucracy, but increasingly on their own account. . .
"The reformers... try to ride the storm. But they can only do so by reasserting the basic class structure of society. This means destroying whatever gains the workers have made. At first the 'cold' method of ideological hegemony is tried (eg Gomulka successfully, and Nagy, not so successfully in 1956, andDubcek in 1968); if this fails then the 'hot'method of armed repression... follows (Kadar in 1956, Husak in 1969).. .
"In any case the reforming section of the apparatus is forced to come to terms with its enemies, internal and external, and their methods if it is to avoid complete dissolution by the forces it itself has unleashed. It is forced to reimpose relations of production that, despite modification, are in contradiction to the maximal development of the national economy." [This was a quote from myself from a decade and a half earlier]
But the problems besetting Gorbachev—or anyone who might replace him—are worse in two ways than those which beset that East European precursors. First, they had at hand a powerful, external weapon if they chose the path of repression: the massive power of the
Second, the failure of economic reform has not just been a failure of implementation. There is a flaw in the very notion of the reform itself. The aim is to restructure the Soviet economy so that those sections of it capable of adjusting to the current international level of the forces of production expand, while others close down. But this is bound to be an enormously painful undertaking, not just for those workers who suffer in the process but for the mass of the individual members of the bureaucracy as well.
Restructuring the British economy between the mid-1970s and the mid-1980s involved shutting down about one factory in three and destroying capital on such a scale that gross industrial investment in 1990 is still no higher than in 1972. It is very doubtful if it could have proceeded smoothly if British capitalism had not had the lucky bonus of enormous
The reformers in the
Marx once wrote that mankind only poses itself problems that it can solve. But that is not true of individual human beings or of exploiting classes. They are driven to attempt to achieve goals that they do not have the capacity to reach. This has been the case with Gorbachev and Russian state capitalism. The ruling bureaucracy can neither abandon economic reform nor make it succeed. That is why perestroika has changed from an inspiration to a joke for all classes inside the
Moving sideways in
It used to be said in the mid-1950s that when
The ruling parties in all these countries were parties of the managerial bureaucracy. Only 6 percent of Prague workers were party members in 1970, and three years later only one party member in eight was in manual employment.'12 A sociological study in the late 1960s concluded that 'members of the party are mainly officials or belong to independent professions.'
Even where sections of the cultural intelligentsia were oppositional, what was sometimes called the 'technical intelligentsia' which ran the apparatus of the party, the state and the enterprises was deeply conservative.214 Its conservativism was a key factor in allowing the old ruling parties to re-establish their hold after the trauma of 1956. This was also to be the case in
Yet all the time the needs of capital accumulation were pushing its individual members in the enterprises and the governments of
“Big, monopolistic firms began to use their newly achieved power to dictate plans to the central planners.., For more than two decades Czechoslovakia experienced a mere 'playing at planning'"
The Eastern European businessmen did not care too much about ideology, providing they could run their enterprises successfully, accumulating capital to protect their own very substantial privileges. They would hold party cards because party membership helped them to succeed—and because the party helped stamp out dissent among the workforce. But they did not take the party's avowed beliefs seriously. The Slovak former dissident, Simecka, has told how that even before 1968 it was possible to find inside the Czechoslovak Party 'committed anti-communists, the enthusiastic admirers of Western consumer society'.
In this way the ground was slowly laid for a sudden switch in the loyalties of key cadres in the ruling party and the government bureaucracy the moment society entered into a deep political crisis. Not that top managers ever went into opposition. There is not, to my knowledge, a single instance of that anywhere in Eastern Europe or the
But there was a small section of the intelligentsia whose function it was to worry about the long term economic and social trends—the regime's academic, economic and sociological advisers. In the 1950s and 1960s these had accepted the regime's own models of economic development. While the world wide trend was still to varying degrees of state capitalism, all the economic advisers took 'planning' and state ownership for granted. The more far sighted saw that the existing structure was prone to various sorts of crises (particularly repeated crisis due to over-accumulation and the investment cycle) and waste. Their solution was to reform the command economy, to opt for 'reform communism', and not to dash in the direction of a Western capitalism which itself was increasingly using the language of 'planning'.
Over time attitudes began to shift. Groups of economists emerged who gave a theoretical expression to the new trends emerging in the world system. They saw that what mattered for a successful ruling class was its ability to swap state capitalism for multinational competition. Their theory turned to worship of the untrammelled market. From the Stalinist model of society they moved on to what they called 'market socialism'. Soon they insisted that the 'socialism' (ie state control of any sort) was itself an impediment.
The economic advisers could not determine how the ruling class would behave. But they could present it with options which would enable it to cope when an economic and social crisis actually erupted. The Hungarian establishment economists were all thorough going proponents of 'market socialism' from the mid-1960s onwards. The crisis of the late 1970s pushed Polish economists, who had previously included such notable adherents of planning as Kalecki and Lange, in the same direction. Even
So it was that it required very little outside pressure for the edifice of East European 'communism' to collapse. The old people at the top, the Kadars, the Honeckers, the Jakes, people whose whole lives had been dedicated to the old methods of accumulation based on nationally enclosed command economies, ranted and raved about betrayal and even on occasions fantasised about telling their police to open fire. But key structures below them were already run by people who, at least privately, accepted the new multinational capitalist common sense emanating from the economists. All that was required was the prospect of economic crisis combined with various degrees of peaceful mass protest for hastily convened Central Committees to remove the old guard—and for regional and national party meetings then to remove the Central Committee members.
The active, courageous initiative of students, intellectuals and, above all, workers, who risked the vengeance of the police by taking to the streets, precipitated a passive and cowardly, but decisive, revolt of a ruling class against its old ruling party. This made the mass of people feel they had won everything, and very easily. But the central power of the ruling class was untouched.
A ruling class and a ruling party are never quite the same thing. A ruling party represents a ruling class, binding its members together in a common discipline which helps them achieve their common goals against the rest of society. But the class can preserve the real source of its power and privileges, its control over the means of production, even when the party falls apart. This was shown in
Multinational capitalism and the East European oppositions
The smooth transition from one form of capitalist rule to another never depends solely upon the attitude of the ruling class. There is only pressure for the transition because the crisis of the old forms of rule is creating enormous popular discontent. Yet the transition itself involves disruption to the mechanisms which have kept the discontent in check in the past— the political and ideological apparatuses of the ruling class. The greater the level of accumulation and the levels of repression needed to sustain it, the greater the possibility of the mass of people taking advantage of this disruption to give expression to accumulated bitterness in a huge explosion of anger and action which throws into disarray all the schemes of the ruling class reformers. That is why at decisive moments they hope to get the backing of sections of the very opposition they previously persecuted. For only the oppositionists have the popular prestige to control the masses and ensure the transition is a smooth one.
A leading member of the old ruling party in
The Solidarity government will have to close down some big enterprises where its own organisations are strong. This will produce sharp protests from the workers. We tried to do this several times ourselves, but put it aside every time fearing the response. Masowiecki will have to cope with this problem. The situation in the economy may become worse, extremist elements will surface, riots will start, the country will become paralysed and violence will be the only way out. . . A situation is possible in which prime minister Mazowiecki would ask general Jaruzelski to introduce martial law."1
The Russian pro-market reformer, Klyamkin, argues continued authoritarian rule is still necessary precisely because there do not exist alternative structures capable of controlling an explosion from below: 'We do not have a so called civil society, that is a society separate from the state.. .and therefore nowhere to transfer power to.'21" In other words, it is not good enough for the ruling class to be permeated with people committed to the new form of capitalist rule; the masses must also be permeated by 'informal', oppositional structures committed to the same goals. The ideology that has conquered the state capitalist ruling class must also conquer those who have been its most bitter enemies. Hence the changes in the dominant ideas inside the oppositional groupings in the Eastern states between the 1960s and the 1980s.
In the revolts of the mid-1950s the opposition forces were led by people who talked in terms of some sort of alternative 'socialist' model of society to the Stalinist one. In the Hungarian revolution almost no one called for a restoration of the pre-war state of affairs or for an imitation of Western property forms. Those forces grouped round the government of Imre Nagy stood for a reformed version of the existing system; the more radical street fighters and workers council delegates distrusted this model. They demanded direct democratic control over the state and the enterprises. They did not talk about private property (except on the land, through a division of the 'collectives' among the toilers). In the Polish 'October' of 1956, the supporters of both the new Gomulka government and of the 'left' opposition to it, centred round the publication Po Prostu, stood for 'reformed communism'. Even at late as 1968 the most radical opponents of neo-Stalinism in
The only viable alternative to the existing state capitalisms seemed to be societies in which planning and state ownership of the main means of production were combined with some radical form of democracy. The arguments within the oppositions were over the degree of radical democracy, over whether workers' councils should advise or control, operate alongside the existing state or seek to supplant it.
This changed in the course of the 1970s. In Poland Kuron and Modzelewski, after two long spells in prison and a period of enforced inactivity, returned to oppositional politics but abjured their previous revolutionary positions in favour of a 'self limiting' revolution; Adam Michnik wrote a long study, The Left and the Church, which argued for a dropping of old left-right arguments in favour of a common platform of defence of civil rights."" In Hungary a 'new left', which placed itself in the Marxist tradition, was central to the re-emergence of open dissent in the early 1970s, but a few years later most of them broke decisively from a socialist perspective and today seem mainly to be found in the Free Democrat Party, which sees an untrammelled market economy as the only one compatible with liberal democratic values. In Czechoslovakia, individual revolutionary socialists like Petr Uhl continued to play a prominent part in the oppositional movement right up the collapse of one-party rule, but the shift of the general attitude of the opposition is well summed up by Vaclav Havel, who says that he ceased to regard 'socialism' as a meaningful term in the mid-1970s.
The opposition would justify their ideological shift by pointing to the horrors of Stalinism as proving the dangers of 'Utopian' programmes’ or the need to take account of geo-political realities (ie Russian power) . But neither argument really explains the change. The horrors of Stalinism were well known in
Here was a prospect for political change which would not involve all the dangers of violent confrontation, in which a very limited exercise of mass pressure could combine with negotiations to prise apart the old one party structures.
Such an approach was pioneered in intellectual circles in
“The experts on both sides... were more or less members of the same
As the country's crisis worsened in the course of 1981, Solidarnosc's most influential leader, Lech Walesa, endorsed the idea of collaboration with the old rulers' 'reforms'. But key figures in the ruling class understood that the union's membership were too bitter and too confident to swallow the cost to themselves of the economic aspect of such an agreement. In December 1981 they resorted to a military takeover to break the union's power. But the military takeover could not bring the economic crisis to an end, and by 1987 both within the regime and within the opposition there were important forces pushing for an 'anti-crisis pact'. On the regime's side pragmatic adjustment away from state capitalism towards 'multinational market capitalism' had gone so far that the minister of industry was a former nomenklatura manager who had turned himself into a successful private entrepreneur. On Solidarnosc's side a union leadership which had lost confidence in the likelihood of the workers who had once been members of the union fighting again were prepared to look seriously at such a deal and welcomed as advisers economists who preached a completely Westernised economy.
Most members of the oppositions did not think things through in so open or cynical a manner. Among the approximately 200 hardened dissidents in each country, most were motivated by a deep hatred of the repressive one-party system and simply wanted the easiest alternative to it. And the economics of 'the market', of pushing nomenklatura capitalism to transform itself into an adjunct of multinational capitalism, seemed to promise this. A Western journalist, Timothy Garton Ash, was present at the daily organising meetings of the Czech Civic Forum in the second half of November 1989. He tells how the decisions on economic policy were made:
“Most of those present have been active in opposition before, the biggest single group being signatories of Charter 77. Twenty years ago they were journalists, academics, politicians, lawyers but now they come here from their jobs as stokers, window cleaners, clerks, or, at best, banned writers.. . A few have come straight from prison.. . Politically they range from the neo-Trotskyist Petr Uhl to the deeply conservative Catholic Vaclav Bena. ..
“In addition there are representatives of significant groups. They are The Students... The Actors... Then there are The Workers, mainly represented by Petr Miller, a technician from
“The Prognostics are in fact economists. Their particular mystique comes from knowing, or believing they know, or are least, being believed to know, what to do about the economy—a subject clearly high in the minds of the people on the streets, and one in which most of the philosophers, poets, actors, historians, assembled here have slightly less expertise than the ordinary workers on the Vysocany tram. . . Dr Vacklav Klaus, as arrogant as he is clear, favours the solutions of Milton Friedman. His more modest colleague, Dr Tomas Jezek, by contrast, is a disciple of Friedrich von Hayek. . .
“It was not long before one of the economists was making what people saw as a bid for the premiership at a mass meeting in Wenceslas Square:
“A student reads out a letter from the students asking the president to replace Adamec with Komarek. 'Pan Docent Komarek, Dr Sc,' she says, 'has a programme ready '—so to everyone standing in the square it is clear that the Forum has just proposed a candidate for prime minister. Go to the Magic Lantern, however, and you discover than the Forum didn't mean that at all”
The interesting thing about this incident is that all this occurred without anyone remarking that Komarek was a long time member of the ruling party—something virtually impossible in
In a similar way, extreme 'free market' advisers to Solidarnosc occupy the economic ministries in Warsaw, taking advice from the American economist Jeffrey Sachs—and leaving the social democrat inclined Kuron the ministry of labour, from which he tries to stop worker resistance to the effects of such policies.
Prospects for the nineties
There is euphoria whenever a mass oppositional movement achieves its initial goals. The less the bloodshed involved in the victory, the greater the euphoria. So it was in
The euphoria rarely lasts. The ease of the victory is a result of a temporary coincidence of goals between the mass of the exploited classes and a section of the exploiting class. Adherents of reform within the old regime stopped the troops from opening fire at a vital moment and so ensured bloodless change. But the reform they want takes for granted a continuation of the old methods of exploitation, while the mass of people want, as a minimum, an amelioration of those methods. The general euphoria of the first revolutionary days gives way to bitter dispute and deep disillusionment.
The bitterness and disillusionment are, at first, deepest among those who took the greatest risks in opposing the old order. They find that those who were the last to jump onto the revolutionary bandwagon have taken control of its steering wheel, while they themselves are forced back to the margins of political life. In
It is all too easy in such a situation for the old oppositional activists to feel betrayed, not merely by the late comers to the revolution, but by the mass of people. Already you hear Polish and East German activists bemoaning what they see as the great lost opportunity to carry through a real revolution, as if the period of social and political turmoil has come to an end. Such feelings can lead in two equally futile directions, towards a demoralised withdrawal from activity or towards heroic attempts to take on the new order with deeds which do not have mass support.
What is forgotten, in either case, is that the ruling class still faces immense problems of its own. It has governments intent on making the transition from state capitalism to multinational capitalism, but such a transition is far from easy. The period of transition is likely to be one of repeated economic and social confrontations, although the seriousness of these will vary from country to country.
There are economic problems to be confronted similar to those which have beset Gorbachev's economic reforms in the
The economists in the new governments look to Western investment to help them. But this, so far, has been on quite a small scale, despite the great publicity given to promises by the European Community and the Japanese premier. As the Financial Times recently noted:
“Western businessmen caution against an East European assumption that money will flood in as soon as the door is opened. Despite wage levels a third of those prevailing in the West or even less, East bloc countries still have to compete with other parts of the world for investment. According to an executive of one West German multinational, it is not easy to persuade board members of the merits of the East European case.
The result is that the overall pot of available investment is still likely to remain small. A relatively small number of high profile, big ticket deals such as the recent £150 million purchase by General Electric of Hungary's Tungsram cannot mask the fact that most Western investments in the East bloc involve only small amounts of capital.
“Western investors are not convinced that the period of political instability is over, and fear that factories they finance in Eastern Europe may have difficulties selling the goods they produce in the West—exactly what happened to the great investments in Poland in the 1970s."'
Even the low wages are not always as a big an attraction as they might seem. There are other places in the world with even lower wages. And what is more, the buying power of the wage packets might be low in terms of consumer durables and electronic goods, but it is not nearly so low when it comes to basic items like food, accommodation, heating and fuel. Part of opening up to the world market involves raising these prices towards international levels. But that in turn can lead workers to use their freedom from one-party domination to insist on wage rises.
Lech Walesa may tell American businessmen they can employ Polish workers for ten dollars a week, but that is because the dollar will buy about ten times as much basic foodstuffs and services in Warsaw as in New York—a state of affairs the Polish economic ministers intend to change quickly.
The economic problems involved in the transition are general to all the East European countries. But they are much more acute in some than in others. Past indebtedness is a huge burden for the ruling classes of
When one party rule collapsed
Such transfers, although not high, would inevitably strain West German finances. [There would be the danger] of serious social and budgetary risks for both
Even the West German finance minister believes 'the introduction of the Deutsche Mark into
Some of those who now run economic ministries in Czechoslovakia claim that the country's problems are not nearly as severe as in, say, Poland, and that restructuring is compatible with maintaining full employment and a full welfare system. Another prominent reformer, by contrast, says that
The pygmy state capitalisms of
Regardless of the situation in individual countries, one thing stands out in any objective examination of reality: the gap between what the great mass of workers expect from the changes and what they are actually likely to get. The East European countries border on the most prosperous of the West European states and people have come to equate the Western form of capitalism with Scandinavian or West German living standards. But such living standards are just not on the cards. A clash is inevitable, at some point, between raised expectations and harsh reality.
The East European economists preach that the market is the magical solution to all problems, that the era of multinational capitalism is one of unlimited and ever widening economic expansion, bringing prosperity—although in different degrees—to all classes. Nothing could be further from the truth. The competition of giant firms on a world scale leads them to build in certain sectors of national economies and leave others to fester. It leads them to periodic bouts of restructuring, suddenly shutting plants, discarding workforces and devastating whole regions. It leads them to engage in frenetic bouts of competitive accumulation (booms) as they scour the world for raw materials and skilled labour, followed by sudden spells of stagnation (recessions), during which the most modern plants stand idle and immense construction projects are left unfinished. It leads them to apply to industrial societies the methods of shifting agriculture, cutting and burning old working class communities in the endless search for more profitable locations.
All this can create untold difficulties for the new political leaders of
The country where the objective problems in making the transition from state capitalism to multinational capitalism are greatest is the
The economic dilemma is summed up by a debate which has been taking place for the last year over plans for the building of a new petrochemical complex in
The deepening crisis in the production and availability of consumer goods in the Soviet Union has prompted a group of senior Soviet scientists to call for the scrapping of one of the country's biggest investments—the construction over the next decade of five petrochemical projects in the oilfields of Western Siberia, planned as joint ventures with US, Japanese, West German and Italian companies.
The scientists claim the project will cost double the projected 41 billion roubles investment. . . when on stream, [it will] force down the world price of plastics and polymers. .. Above all they claim that the investment will starve the rest of the chemical industry of much needed funds, inhibit the adoption of energy saving strategies and exclude any possibility of reorienting the economy to social needs."
The interesting point is that the logic of the chemical project is not that of the old, self contained national state capitalism, but of trying to build up production linked to multinational capitalism. The result, the critics are saying, will be a huge investment that distorts the rest of the internal economy of the USSR, pushes other sectors of production backwards, disrupts the links between different industries and causes further downward pressures on living standards—all without any guarantee that changes elsewhere in the world economy will not cause it to operate at a loss.
The political dilemma is shown by the way in which the old party structure and the new parliamentary structures of the Congress of Deputies and the Soviet co-exist, without either being able to cope. The old party structure is still the main co-ordinating centre for those who run the enterprises, the armed forces, the police and KGB, and local and national government. A survey in Brezhnev's time showed 40 percent of top party apparatchiks were former industrial managers and another 25 percent former agricultural bosses, as against only 12 percent who had risen from the ranks of the party bureaucracy alone."' The 'conservative' party chiefs are not dinosaurs, cut off from the reality of managerial life, but representative of those who run the great enterprises. Their conservatism is that of a class whose members are much more dependent upon their links with each other than with Western corporations. They therefore do not, as in much of
The Congress of Deputies and the Soviets have a greater hold on the allegiance of the mass of people than does the party. But they are in no condition to replace it as a centre for co-ordinating the actions of the different sections of the ruling bureaucracy. Hence the contrast between the
This is producing a strange series of ideological divergences among the reformers. The best known of the radical democratic leaders—like those grouped around Yeltsin in the Congress of Deputies—identify with the market and democracy. But some of the extreme marketeers are now coming to the conclusion that authoritarian rule is needed.
This view was put clearly by A Migranyan and I Klyamkin of the Institute of the World Socialist System late last year. Migranyan argues, 'It would have been better if our leader [Gorbachev] had strengthened his hand in an administrative way, as took place in
What if a reformer declares himself in favour of introducing the market ? Can this be done by relying on the market? Obviously not, since 80 percent of the population would not accept it. The market, after all, denotes stratification, differentiation according to income... Therefore a serious reformer cannot rely on the masses for success.''"'
Boris Kagarlitsky had called this 'market Stalinism'.2" But the ideological guise taken by new attempts at authoritarian solutions is unlikely to be an outright Stalinist one. The reaction against the old order is too great. There are, in any case, many other ways in which authoritarian restructurers can try to build a base for themselves. The past weighs like a nightmare on the brain of the living, and the past contains a mass of prejudices of which unscrupulous political forces will attempt to take advantage—anti-Turk feeling in Bulgaria, anti-Magyar feeling in Romania, anti-'gypsy' feeling in Hungary, Great Russian chauvinism in the USSR, anti-semitism almost everywhere. New political combinations might well emerge, preaching a message that is anti-Communist, but also authoritarian, and prepared to work with the remnants of the old security forces to impose 'order'.
The building of socialist oppositions
Throughout the Eastern states the popular identification of Stalinism and socialism has made it very difficult for genuine socialists to receive a hearing. Workers who have seen the red flag flying over a concentration camp do not automatically wave it with joy. What is more, the socialist oppositions usually suffered much more under the old one party states than did liberal forces receiving some degree of aid and protection from the West. And so, although groups of genuine socialists exist, their numbers and influence remain small for the moment.
Yet resistance to the grafting together of state capitalism and multinational capitalism is inevitable everywhere. It will come from three main sources. First, there will be resistance from many of the radical democrats who have born the brunt of the challenge to the old one-party regimes. They will not be happy to see people who gained their positions through the nomenklatura retain them simply by dropping one ideological guise for another. They will continue to demand the disbanding of the political police and they will not be happy to see the old party structures which controlled the media give way to new structures in which old party nominees join up with multinational capital to exercise just as tight a control."" It will not take long for those influenced by pacifism and green ideas to discover that the new form of capitalism will be determined to hang on to the old armies and to pollute the environment in the interests of profit.
Things are more complicated in the
Second, there will often be a nationalist reaction among minority ethnic groups to the new form of capitalism. The coming together of state capital and multinational capital can only exacerbate the unevenness of economic development within each country. Effective multinational competitiveness involves a concentration of production in certain geographic regions— usually those that are already most advanced or closest to foreign production facilities and markets—at the expense of others. The result can be seen in the Eastern state which has been most open to multinational links,
The result, inevitably, will be to create strong feelings of national disadvantage among those in the areas that fall further behind. There can be wide disillusionment with the market among the masses of the population; there can also be attempts by local sections of the ruling class and the intelligentsia to use these feelings to advance their own position. As with the wave of nationalism current today in both the
The third, and potentially most important, resistance will come from the workers.
The most important strikes were those in the
It would be wrong to think that the strikers immediately came to a clear, class conscious perspective. Many saw miners as somehow different and better than other workers. An early demand which received a lot of support in the Kuzbass was for financial autonomy for individual pits or individual mining regions, so that they could use the profits directly to improve wages and conditions—a demand which attempted to challenge their exploitation but which could also, in part, be directed against workers in less profitable enterprises and miners in the older and less efficient mines of the Donbass.
Boris Kagarlitsky, who sat in on some strike committee meetings in
“You mustn 't exaggerate the level of class consciousness of the working class. We 're only going through the first steps of the working class movement. Sometimes miners were quite sectional, in the sense that strike committees rejected solidarity from other groups of workers, for example. But on the other hand it was quite impressive how people learnt.
“One of the most important things is that now miners, after going on strike, are beginning to realise that they are very strong. That will make them less and less moderate, more and more able to use their strength politically, economically and socially.
“That is a great change. For many years working class people were not able to achieve anything. Now they can achieve things, while Gorbachev and the leadership cannot achieve anything.'"
The strikers eventually went back to work in return for promises from Gorbachev and Ryzhkov which were not met. When miners in
“This is perhaps the worst ordeal to befall our country in all four years of restructuring. There has been
It is the inevitability of such workers' struggles that provides the greatest hope for socialists in the Eastern states. Not that the workers will initially start off with socialist ideas. Many will identify initially with the radical democrats (and with nationalist movements among the national minorities); a few might even fall for the demagoguery of the party conservatives (although this is a danger much exaggerated by the reform minded intelligentsia). Their hatred of the old order will often make them distrustful of those who call themselves socialists.
Yet the attempts of the radical democrats to build organised support among workers will continually be damaged by their own commitment to linking state capital to multinational capital through the market. This leads the radical democrats to accept that there must be huge inequalities between those who run enterprises and those who work in them; their only objection to the old inequalities is that they have come from nomenklatura connections, not the market. It also means that they do not believe the resources exist to improve workers' material conditions,'4" and so are hesitant to support strikes over such questions, saying that workers should be struggling just for political demands. Their approach to workers' problems is to begin by saying that workers must work harder (often accepting the myth of the middle classes everywhere in the world that 'our workers do not know how to work'), and that this will eventually lead to a rise in living standards.
So it was that the Solidarnosc advisers were opposed to strikes before as well as after the formation of the coalition government in
The gap between the radical democrats and the workers' struggles is brought out most vividly in the case of the
Strikes over economic issues also cause special problems for those who endeavour to channel people's frustrations in purely nationalist directions. The workforces of large enterprises are almost invariably of mixed nationality,"' and workers' struggles can unite them around strike committees which cut across ethnic divisions, raising the prospect of a genuine internationalism which takes account of the rights of national minorities.
However, before socialists in the Eastern states can take advantage of the factors in the situation which favour them, they themselves have to be clear about certain important points.
First, they have to grasp that the transition from state capitalism to multinational capitalism is neither a step forward nor a step backwards, but a step sidewards. The change involves only a shift from one form of exploitation to another form for the working class as a whole, even if some individual groups of workers (skilled workers in expanding industries) find themselves better placed to improve their conditions and others (those in industries subject to 'rationalisation') find their conditions worsened.
Unfortunately, there are still socialists in the Eastern states who have not fully grasped this. Some mistakenly identify the Western form of capitalism with 'consumerism' and 'democracy' (as if either term applied in the vast mass of 'free market' capitalisms of the 'third world' and the newly industrialising countries!) and so see the market as something to be embraced, albeit with reservations. Others see the nationalisation of industry as something to be defended in its own right and the main task as being to resist the selling of 'national property' to Western multinationals'—or, in the case of
But state capitalism did not come into being because of workers' struggles. It corresponded to the needs of accumulation in a certain phase of capitalist development which has now exhausted itself. Nor does the new turn to multinational capitalism have anything to do with democracy or consumers' needs; it takes place because there is no other way the state capitalist nomenklatura can sustain itself against international competition. The task of socialists is not to defend one phase of accumulation against another, but to take advantage of the political and social instability produced by the attempt to shift from one to another to press our own revolutionary demands.
Concretely, that means supporting every struggle by workers, intellectuals, students or oppressed nationalities against the old state capitalist order, while at the same time resisting the attempts to take over these struggles by those who want to transplant multinational capitalism into state capitalism.
It also means resisting the rationalisation imposed by the new forces of multinational capitalism, without falling into the trap of forming alliances with the old state capitalists. These will try to lure workers into dropping demands over wages and conditions inside nationalised industries and to collaborate in pushing up productivity, claiming this is the way to ward off the 'danger of privatisation' or of the country becoming a 'neo-colony'. If workers fall for this, they will merely be permitting intensified exploitation in order.. .to prevent intensified exploitation. It is worth remembering the experience of restructuring in the last 16 years in Britain: top managers in British Airways, British Aerospace, British Steel, British shipbuilding and Austin Rover all urged workers to 'participate in making nationalisation work'; it was only after pushing through massive closure and redundancy programmes on this basis that they then made very large sums for themselves out of privatisation. And, in
Part of taking advantage of the political crisis of the transition is pushing to the limit the democratic demands of the radical democrats: not restricting them just to the question of free elections, but also raising the question of free trade unions, of the unimpeded right to strike and to demonstrate, of the complete disbanding of the repressive forces (political police, security police, secret services), of the purging from the organs of the state and from enterprise managements all those who collaborated with these in the past, of control over the media by those who work in them and not by government, nomenklatura or big business appointees. It means turning the democratic struggles against state capitalism into democratic struggles against multinational capitalism— and, in the process, winning some of the best sections of the radical democrats to see multinational capital as an enemy.
Linked to this is the question of the character of the state. Many socialists in
Only if the character of the state is understood, can a correct understanding of the national question be arrived at. Socialists who identify in one way or another with the existing state end up, necessarily, seeing demands of minority nationalities to break from that state as leading to 'division within the working class'. Socialists who want to smash the existing state as a class state, by contrast, are indifferent as to whether it remains as a single capitalist state or breaks into two capitalist states. We do not worship a Russian national state called the
But we recognise that if a national minority feels oppressed, there is only one way to get its workers to identify with the struggle of workers in the majority nationality. The majority workers, or at least the conscious socialists among them, have to make it clear they do not want to continue that oppression. They have to stand by the right of the national minority to form its own state if it wants to, regardless of the form of state the minority chooses to establish.
The minority nationality may well be under the influence of petty bourgeois (or petty bureaucratic) leaders who are attempting to lead it into a blind alley. But the only way workers among the minority nationality will break from this leadership is if they see a socialist workers' movement among the majority nationality 'which is prepared to fight, in a more effective way than these leaders, against the reality of national oppression.
The reform governments and the radical democrats in the Eastern states believe the transition from the moribund state capitalist form of exploitation to the multinational capitalist form will be accompanied by social stability and widespread prosperity. They are wrong. The first step in overcoming the resistance of the old one-party apparatus to the transition may have been taken in a number of East European states, but that still leaves a long period of economic adjustment and, therefore, social and political adjustment. There is no guarantee that even before that period is over there will not be a new spate of capitalist restructuring on a world scale, and new pressures leading to economic, social and political turmoil.
Meanwhile, in the
Parties which eulogise the 'free market', multinational form of capitalism already exist openly throughout Eastern Europe and semi-openly in the
1 Financial Times, 24 January 1990.
2 Yeltsin quoted in Financial Times, 19 January 1990.
3 Independent on Sunday, 4 February 1990.
5 Quoted in Guardian, 13 January 1990.
6 Morning Star, \ 9 January 1990.
7 'Themes', New Left Review 178, November-December 1989. Rumour has it that Perry Anderson, the intellectually most eminent member of the editorial board, is deeply gloomy at what he sees as a world wide shift to the right.
8 First presented in a coherent form by Tony Cliff in The Nature of Stalinist Russia (
9 Z Medvedev, Gorbachev (
10 For an account of Andropov's role by the
11 J Bloomfield, ed. The Soviet Revolution (
12 T Ali, Revolution From Above (
13 Report in Labour Focus on
14 Interview in
15 Independent, 30 June 1988.
16 Speech to Congress of Delegates, 26 May 1989.
17 Transcript of broadcast in BBC monitoring service reports, May 1979.
18 Report from Boris Kagarlitsky in Socialist Worker, 29 May 1989.
19 See transcripts of interviews with editor of Argumenty i facty in BBC monitoring reports, 8 December 1989.
20 Report by Helen Womack, Independent, 9 February 1990.
21 Pravda, 6 February 1989.
22 Central Committee plenum of 18 July 1989, transcript translated in BBC monitoring reports, 24 July 1989.
23 Supreme Soviet, 2-3 October 1989. Interestingly, the Soviet's debate on the issue was not televised, see Moscow News, 22 October 1989.
24 Pravda, 21 October 1989.
25 Congress of Deputies, 13 December 1989, see also 15 and 16 December. Transcript to be found in BBC monitoring reports December 1989.
26 Transcript of speech in BBC monitoring report, 20 December 1989.
27 On page 119 of his book, Perestroika.
28 So Tariq Ali's book. Revolution From Above, written early in 1988, does not deal with the national question until the last 15 pages—which gives the impression of having been tacked on to end after the sudden upsurge of nationalism in Armenia. Tariq describes 'the break up of the
29 See, for example, the discussion on these questions in all editions of Tony Cliff's State Capitalism in Russia, op cit, and in my own 'Prospects for the 70s: The Stalinist States', in 42 (old series) February/March 1970.
30 These claims were, for instance, printed without critical comment by the Guardian's Martin Walker. See the issues of the Guardian for the third week of December 1986.
31 See G i Libaridian, The Karabagh File (Cambridge Mass, 1988).
32 TASS report, quoted in Independent, 5 March 1988.
33 Quoted in Independent, 3 April 1988.
34 Independent, 16 July 1988.
35 Le Monde, 26 July 1988.
36 Quoted Times, 3 September 1988.
37 TASS, 16 December 1988.
38 Pravda, 16 December 1988.
39 There are full reports on the proceedings of the founding Congresses in the BBC monitoring reports for October 1988.
40 Gorbachev, speech to Central Committee of CPSU, 25 December, op cit.
42 TASS, 25 October 1989.
43 Pravda, 2 October 1989.
44 hvestia, 5 February 1990.
45 Soviet TV, 19 January 1990, in BBC monitoring report, 22 January 1990.
46 Kiev Radio, 15 January 1990, quoted in BBC monitoring reports, 17 January 1990.
47 TASS, 1 February 1990.
48 hvestia, 2 February 1990.
49 Komsomolskaya Pravda, 11 January 1990.
50 N Mikhailov, Moskovksaya Pravda, 18 August 1989.
51 D Granin,
52 Soviet TV, 19 January 1990, in BBC monitoring report, 27 January 1990.
53 I was present as an observer at a congress of the Moscow Popular Front chaired by a soldier in uniform.
54 Krasnaya Zvezda, 3 November 1989.
55 Yerevan Radio, 29 September 1989, in BBC transcripts, 3 October 1989.
56 A Gelman, in
57 For full accounts of the strikes, based on discussions with Polish socialists who were active in them, see Socialist Worker, 27 August 1988, 3 September 1988, 10 September 1988.
58 I owe this figure to a member of the Polish Socialist Party (Democratic Revolution) from
59 The then dissident Miklos Haraszti told Socialist Worker Review (July 1988) that 10,000 took part in the demonstration of 15 March 1988.
60 Article in Sunday Correspondent, 17 September 1989.
61 For an account of their preparations see Stern, 25 January 1990.
62 Financial Times, 15 January 1990.
63 Financial Times, 15 January 1990.
64 Independent, 2 February 1990.
65 Financial Times, 15 January 1990.
66 Interview in
68 An eyewitness report of the demonstration to mark the 21 st anniversary of the Russian invasion estimated there were 7,000-8,000 people present, see Socialist Worker, 26 August 1989.
69 See, for example, 'Czech protestors fail to involve silent majority', Financial Times, 30 October 1989.
70 Interview in
72 Interview in Independent, 31 January 1990. See also the report that the state security system had been both 'abolished' and 'reorganised', Prague Radio, 1 February 1990, in BBC monitoring report, 3 February 1990.
73 For an account of what happened in politburo and Central Committee, see Moscow News, 7 January 1990.
74 For the new leadership's account of the economic crisis, see article from Trud, 1 December 1990, translated BBC transcripts, 14 December 1989.
75 For accounts of what occurred see BBC monitoring service for
76 There were no Western journalists in the country at the time and there are various contradictory reports in the Western media of what exactly happened. I am relying here mainly on the testimony of a Romanian who used his video camera to film the events of 21 -22 December, as recounted in a BBC Panorama programme of 8 January 1990.
77 New Left Review 50 (1967).
78 Quatrieme International, annee 14 (1956), nos 1-3.
79 E Mandel, La crise, 1978, ppl61-5.
80 Trotsky, 771c Class Nature of the
81 Trotsky, In Defence of Marxism (New York, 1973), p 14.
82 'The War and the Fourth International', in Writings 1939-40 (New York, 1973).
83 E Mandel, Beyond Perestroika (
84 T Ali, Revolution From Above, p80.
85 B Rizzi, The Bureaucratisation of the World (
86 M Schachtman, The New International, October 1941, p238, and Workers Party, Historic Documents Bulletin I, 1944, both quoted in R Dunayevskaya, State Capitalism and Marx's Humanism or Philosophy and Revolution (
87 M Rakovski, Towards an East European Marxism (
88 Ibid, plOl.
89 G Bence and J Kis, 'After the break', translated in F Silnitsky, L Silnitsky and
Karl R Reyman, Communism and
90 M Schachtman, The Bureaucratic Revolution.
91 'Towards a political economy of the
92 In debate with Alex Callinicos at the Socialist Workers Party annual school, Marxism, in 1981.
93 In The Soviet Union Demystified (
94 F Furedi, ibid, plOO.
95 Ibid, pl02.
96 Ibid, pi 17.
97 Ibid, pl72.
98 Ibid, pl59.
99 Ibid, p67.
100 CIA Directorate of Intelligence, Revisiting Soviet Economic Performance Under Glasnost: Implications for CIA Estimates (
101 Someone should remind Ticktin of the ditty from 1958, 'Catch a falling star and put it in your pocket, send it to the
102 Economist, 9 April 1988.
103 M Walker, 'What is to be done?', Marxism Today, June 1988, reprinted in J Bloomfield, ed, The Soviet Revolution, op cit, p97.
104 CIA, op cit.
105 'Introduction', in M C Kaser, ed, An Economic History of Eastern Europe, vol 1 (
107 Estimates quoted by Kaser, ibid, p9.
109 T Cliff, Slate Capitalism in
110 T Cliff, The Class Nature of the Peoples Democracies (London, 1950) reprinted in Neither Washington nor Moscow (London, 1982), Y Gluckstein (T Cliff), Stalin's Satellites in Europe (London, 1952) and Chris Harman, Class Struggles in Eastern Europe (London, 1989, previous edition titled Bureaucracy and Revolution in Eastern Europe, London, 1974).
111 Y Gluckstein (T Cliff), Mao's
112 T Cliff, 'Deflected Permanent Revolution', in Neither Washington Nor Moscow, op cit.
113 For Trotsky it was what happened in the sphere of consumption that produced a division between a 'ruling caste' and the mass of workers. For Mandel 'the Soviet bureaucracy. . is under no economic compulsion to maximise output. . .' The Inconsistencies of State Capitalism (
114 Mandel contradicts his own claim that the bureaucracy is under no compulsion to maximise output by claiming that 'the inner logic of a planned economy calls for maximising output and optimising deployment of resources', and furthermore argues that accumulation occurred in societies before capitalism and will occur under socialism (Mandel, ibid). Ticktin sees a high rate of accumulation as an important feature of Russian society, but denies this is a capitalist feature.
115 K Marx and F Engels, Manifesto of the Communist Party, in Collected Works, Vol 1 (Moscow, 1962), p37.
117 V Selyunin, Sotsialistischeksaya industria, 5 January 1988, translated in Current Digest of the Soviet Press, 24 February 1988. See also A Zaichenko, 'How to divide the pie', Moscow News 24, 1989.
118 K Marx, Capital, vol 1 (
119 See, for instance, G R Feiwel, 'The Standard of Living', in Osteuropa Wirtshaft, February 1980.
120 For an explanation of the recomputation of the figures, see Kaser and Radice, op cit.
121 J Fekete in Gossman (ed), Money and Plan.
122 Figures given in introduction to C Boffito and L Foa, La crisis
123 Figures given in M Kaser, Comecon (
124 According to Col-Gen Babyev, quoted in BBC monitoring report, 4 February 1990.
125 CIA, op cit.
126 This is true as much in the
127 Those who see the
128 The highest estimate is that by the former dissident and now Gorbachev supporter, R Medvedev.
129 F Engels, 'Letter to Danielson', quoted in Rosdolsky, The Making of Marx's Capital, vol 2 (
130 N Bukharin, Imperialism and the World Economy (
131 Quoted in M Haynes and P Binns, 'Eastern European Class Societies', 7, winter 1979.
132 A D H Kaplan, The Liquidation of War Production (New York, 1944), p91.
133 Kaser, op cit, p4.
134 G Ranki and J Tomaszewski, 'The Role of the State in Industry, Banking and Trade', in M Kaser and E Radice, eds, Economic History of Eastern Europe, vol 2, p4.
135 Ranki and Tomaszewski, ibid, pp29 and 45-7.
136 Kaser, Introduction, op cit, p7.
137 A Zauberman, Industrial Growth in
138 Kaser, Introduction, op cit, pl90 cf also Brus, in Kaser and Radice (ed), op cit pp 612-4.
139 Kaser, Introduction, op cit, pi.
140 Oscar Lange, '
141 For an account of these arguments see Brus, op cit, pp612-614.
142 Figures given in B Arnot, Controlling Soviet Labour (
143 Kaser, Introduction op cit, pi. NB His figures exclude
144 Figures given in W D Connor, Socialism's Dilemmas: State and Society in the Soviet Bloc (New York, 1988), pl44.
145 Quoted in Connor, ibid, pl49.
146 For estimates for
147 Studies quoted ibid, p89.
148 Figures quoted ibid, p96.
149 Studies quoted ibid, p97.
150 Quoted ibid, p98.
151 In Marx's terminology, the historically and culturally determined cost of reproducing labour power rises.
152 In Marx's terms, it turned them into labourers who were 'free' of any control over their own means of livelihood.
153 Or, as Marx put it, the rising organic composition of capital causes a tendency for the rate of profit to fall. For an account of the various discussions of Marx's writings on this question, C Harman, Explaining the Crisis (
154 Figures given in K Fitzlyon, Soviet Studies, Summer 1969, pl79.
155 Official figures and Western estimates both given in CIA, op cit.
156 This cumbersome phrase was used by Bukharin to describe the contradictions of the world system of state capitalisms. See his Economics of the Transformation Period (New York, 1971).
157 Figures from N M Bailey, 'Productivity and the Services of Labour and Capital", Brooking Papers, 1981:1, p22.
158 It was empirical observation of this phenomenon which underlay contemporary theories about 'stagnation' in the US economy, such as J Steindl, Maturity and Stagnation in American Capitalism (London, 1955) and P Baran and P Sweezy, Monopoly Capita/.
159 For discussion over this question see the articles by M Kidron and myself in (first series) 100.
160 For accounts of these using an early version of the present analysis, see T Cliff, 'Crisis in
161 See C Harman, '
162 Calculations in M Kidron, 'Memories of Development', in Capitalism and Theory (
163 Ibid, pl71.
164 Ibid, pi72.
165 As Kidron mistakenly concluded from an overwhelmingly correct argument, ibid, pl73.
166 For full accounts of these events see my Bureaucracy and Revolution in Eastern Europe reprinted in an updated edition as Class Struggles in Eastern Europe (the chapters on
167 C Harman, 'Prospects for the Seventies, the Stalinist States', op cit.
168 Figures given by Jiri Kosta, in Nove, Hohmann and Seidenstecker (eds), 77i<> East European Economies in the 1970s (
169 Gierek, transcription of speech in Gierek, Face aux grevistes de
170 Kuron and Modzelewski, A Revolutionary Socialist Manifesto (Open Letter to the Party) (1965 edition), pp37 and 30.
171 For an article I wrote in the mid-1970s I had to plough through detailed official statistics to prove how limited the improvements in living standards really were: see note 5 to my 'Poland and the Crisis of State Capitalism: part two', in (first series) 94.
172 For details of these ventures see ibid, p29.
173 According to International Herald Tribune, 17 August 1976.
174 Figures given in Financial Times, 19 January 1990.
175 See, for example, Alex Nove, The Economics of Feasible Socialism (
176 For such predictions, see references in Class Struggles in Eastern Europe (
178 In recent weeks the Western press has been full of quite absurd comparisons of East European and West European living standards, based on comparisons of wages at 'real' (ie, unofficial) exchange rates. But in terms of important items of consumption, like many basic foods, beer, housing and heating costs, workers in East Germany and Czechoslovakia come quite well out of any comparison: for beer, for instance, the East German mark is worth about three Deutschmarks, as opposed to the 'real' exchange rate which values it as between an eigth and a twelfth of the Deutschmark. Where the East German or Czech workers lose out is in terms of things like clothing and, above all electrical goods and cars, which take many more hours of work to buy than in the West. Things are much worse, of course, for the Russian worker who has difficulty getting hold of alcoholic drink and meat as well as good quality clothing and electrical goods.
179 This was the central argument of my article, '
180 C Harman, Class Struggles in
181 Pravda, 5 April 1988.
182 N Ryzhkov, Report on draft guidelines for economic and social development given to 27th congress of CPSU, March 1986.
183 Resolution for the 19th Party Conference on perestroika from the Central Committee of the CPSU.
184 Pravda, 22 August 1985.
185 The estimate for the total number of redundancies due under economic restructuring is from Pravda, 21 January 1988. The figure for redundancies so far comes from Moscow News, 3 September 1989, which quotes a Pravda suggestion that total unemployment in the central Asian republics and
186 Transcript in BBC monitoring reports, January 1989.
187 BBC monitoring reports, February 1989.
188 Pravda, 14 July 1988.
189 In an interview in the London Review of Books, November 1988.
190 hvestia, 10 1988.
191 Central Committee resolution to special conference, in BBC monitoring reports, June 1988.
192 Report on Soviet TV, 17 January 1989, transcript in BBC monitoring reports, January 1989.
193 Pravda, 11 May 1988.
194 For the government's measures, see Ryzhkov's report on the Soviet economy to the Congress of Deputies, TASS, 13 December 1989. For the criticisms of Ryzhkov for 'consolidating commandist methods' see the statement by 23 people's deputies in Komsomolskaya Pravda, 12 December, and the speeches by Popov, Chernyakov and Yeltsin to the Congress of Deputies, TASS 14 December 1989 and Soviet TV 15 December 1989, in BBC monitoring reports. 16 and 20 December 1989.
195 Independent on Sunday, 4 February 1990. The claim about the non-Russian being worse off is accepted by Neil Ascherson in the Independent on Sunday, 11 February 1989.
196 Yakov Roi (ed) The
197 Although he did send in troops to shoot down some hundreds of people in
198 For details see T
199 Y Roi, op cit.
201 Guardian, 13 July 1988.
202 Kommunist, 29 September 1988.
203 22 October 1988, in BBC monitoring reports, October 1988.
204 Kommunist (
205 Pravda, 31 October 1989, summarised in BBC monitoring report, 2 November 1989.
206 Pravda, quoted in Moscow News, 3 September 1989.
207 Oleg Voronin of the independent socialist trade union Sotsprof says he has seen documentary proof of the involvement of the
208 This was very much the interpretation put on what was happening by Boris Kagarlitsky in interviews when he was in
209 R Knight, a follower of Frank Furedi, in The Next Step, 26 January 1990.
210 The argument for supporting Gorbachev put by Jeremy Lister of Labour Focus on Eastern Europe, at the Campaign for Solidarity with East European Workers conference,
211 C Harman, 'Prospects for the Seventies: the Stalinist States', op cit, pl7.
212 Figures quoted in P Hruby, Fools and Heroes, the Changing Role of Communist Intellectuals in
213 Quoted in Hruby, ibid, pi43.
214 For a perceptive contemporary account of this grouping in Poland see Byrski, The Communist "middle class" in the USSR and Poland', Survey, autumn 1969.
215 Financial limes, 13 December 1989.
216 M Simecka, The Restoration of Order (
217 Interview in
218 Quoted in Financial Times, 26 January 1990.
219 For Poland, see the 1965 Open Letter to the Party by Jacek Kuron and Karol Modzelewski, republished recently as Solidarnosc: The Missing Link, the account of the opposition in Warsaw at this time in N Karsow and S Schechter, Monuments Are Not Loved (London, 1970), and for Czechoslovakia, see Boffito and Foa, op cit; P Broue (ed) Ecrits a Prague sous la censure (Paris, 1973); Committee to Defend Czechoslovak Socialists, Voices of Czechoslovak Socialists (London, 1977).
220 See L 'eglise et la gauche (Paris. 1979). Part of this is translated as 'The church and the left, a dialogue", in F Silnitsky, L Silnitsky and K Reyman, Communism and Eastern Europe (
221 In the series of essays 'Marx in the Fourth Decade', referred to in F Silnitsky, ibid.
222 This is essentially the position of Haraszti in 'What is Marxism', reprinted in F Silnitsky, ibid, pl48-159.
223 The main argument of Kuron for 'self limited revolution' in the late 1970s and early 1980s.
224 Quoted in C Barker, The Festival of the Oppressed (
225 'The revolution in the Magic Lantern', The
226 Ibid, p48.
227 Prague Radio, 3 January 1990, translated in BBC monitoring report, 5 January 1990.
228 Bjon Kruger of the United Left, interviewed early December 1989.
229 Financial Times, 21 December 1989.
231 See report in Financial Times, 3 June 1988.
232 Report quoted in Independent, 10 February 1990.
233 Quoted Financial Times, 13 February 1990.
234 Financial Times, 5 April 1989.
235 Figures in M P Gehlen, 'The Soviet Apparatchiki', in R B Farrell (ed), Political leadership in Eastern Europe and the Soviet Union (London, 1970), pi47.
236 Quoted in Financial Times, 26 January 1990.
237 In his Issac Deutscher Memorial Lecture in
238 Robert Maxwell, long time apologist for Brezhnev, Jaruzelski, Zhivkov and Ceausescu, now owns a 50 percent share in the 'privatised' Hungarian government paper, while Murdoch has bought control of the main opposition paper and has been in Warsaw seeing which papers he can get control of there.
239 Czechoslovak television, 19 January 1990, transcript in BBC monitoring report 22 January 1990.
240 Sofia Radio, 26 January 1990, transcript in BBC monitoring report, 29 January 1990.
243 Soviet television, 13 July 1989, transcript in BBC monitoring service report, 15 July 1989.
244 Interviews on Soviet television, 17 July 1989, transcript in BBC monitoring service report, 19 July 1989.
245 Soviet television, 21 July 1989.
246 Interview in
247 Speech to Supreme Soviet, 24 July 1989, in BBC monitoring report, 26 July 1989.
248 A claim I've heard from at least one leading
249 Soviet television, 21 July 1989, transcript in BBC monitoring report, 25 July 1989.
250 Which does not, of course, mean managements have not consciously given workers from certain ethnic or regional origins worse jobs inside the factories than others: temporary workers ('limitchiki') from elsewhere in the USSR in Moscow factories, 'gypsies' in Hungarian enterprises, Vietnamese and Poles in East Germany, Russian speaking immigrants in some plants in the Baltic republics.
251 For some of the arguments that arise see the interviews with members of the PPS-DR in 'Solidarity at the Crossroads', in 41.
252 This was very much the tone of a number of speeches from delegates from the
centre' at the December 1989 congress of the PPS-DR in
253 Even in the
254 Independent, 5 February 1990.