29 October 2009

The Storm Breaks: The crisis in the eastern bloc , 1990


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 Elbe in the last half year. The one party political structures that dominated Poland, Hungary, Czechoslovakia, East Germany, Bulgaria and Romania for close on 45 years have collapsed under the pressure of economic crisis and popular discontent. Meanwhile no one can look at their giant neighbour, the USSR, without asking whether it might not crack apart also. The ruling party has been increasingly paralysed in the face of economic crisis, shortages of the basic goods, mass separatist movements among the national minorities and the biggest strikes by workers since the 1920s.

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 Europe directed at countries whose leaders insist they are no longer 'socialist'. But they have been able to manage the situation. They claim that the turmoil in the Eastern states proves how right they always were to insist on the inability of 'socialism' to work and on the inherent superiority of 'free market' capitalism. Academic advisers to the US government write books on 'the end of history', while the popular press announces 'the end of Communism'. Even those commentators who fear that the new order in Eastern Europe might be marked less by liberal democracy than by bitter national conflicts, populist demagogy and the sort of right wing authoritarianism that prevailed in the inter-war years see no future for those who talk in socialist terms. The crisis of the Eastern states becomes the 'crisis really like in the USSR. Reports appeared on widespread corruption, the hold of the mafia, the scale of poverty and prostitution, the deterioration of the health service, appalling pollution and immense ecological problems, and, by the summer of 1988, on the enormous privileges of the top bureaucrats. Among the writers who began to have articles in national and provincial papers were people who had been imprisoned as 'dissidents' in Brezhnev's days, while arrests of those who produced samizdat publications ceased. Gorbachev himself phoned Andrei Sakharov, the dissident physicist who had been exiled to Gorki, and invited him back to Moscow.

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 Moscow trials that was banned in January 1988 received a widely publicised television showing four months later. By the end of the year every one of the party members liquidated by Stalin in the 1930s had been 'rehabilitated'. In the course of 1989 there were even a few articles praising Trotsky's historical role. It was as if the ideology which had attempted to strangle people's minds for six decades had collapsed overnight.

The response of virtually everyone who wrote on the USSR in Gorbachev's first three years was to see him as the man who was single handedly pushing through great and progressive changes. This was just as true on the left as on the right. For the British Communist Party at the time, he was the man who was going to make socialism popular again. A book of articles from Marxism Today published in 1989 said that he, together with Alexander Yakovlev and Eduard Shevardnadze, was part of a 'more wholeheartedly democratic tendency' in the Russian leadership, 'anxious to stimulate and encourage popular initiative and individual commitment...' with an 'emphasis... on consent rather than coercion, on the creation of an active bloc of social forces necessary to overcome institutional inertia and bureaucratic resistance (an approach which clearly owes a debt to the Italian Marxist Antonio Gramsci). . .'" For Tariq Ali, Gorbachev's changes amounted to the beginning of a 'political revolution' which would give 'the socialist project.. .a tremendous boost'.12

Unqualified support for Gorbachev was also widespread among those critical of the old system inside the USSR itself. Many of the informal organisations that emerged titled themselves clubs 'for perestroika'. The group of left wing socialists around Boris Kagarlitsky (imprisoned under Brezhnev) in Moscow helped convene a conference entitled 'Social Initiatives for Perestroika'." Alexander Fedorovsky, another former political prisoner who currently edits a paper of the Moscow Popular Front, says that 'at the time we were all Gorbachev supporters'.14

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 Moscow the press was still under the control of local party bosses. 'Mr Gorbachev, sitting behind, interrupted. Perhaps, he suggested, local newspapers at least avoided the excesses he sometimes saw in the Moscow press.'"

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 USSR.

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 Afghanistan or when General Rodianov defended the brutal attack by Interior Ministry troops armed with trenching tools on demonstrators in Tbilisi.

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 USSR. As one Western reporter admitted, 'Unofficial groups complained that the reforms were timid and demanded to know why the conservatives had not been sacked.'

The USSR: the crisis in the economy

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 Moscow and party candidates were defeated in cities like Leningrad and Kiev. The decisive factor was, undoubtedly, that the economic situation, instead of improving with perestroika, seemed to most people to be getting worse. Gorbachev's adviser, Abel Aganbegyan, said early in 1989:

‘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 Vladimir, said that 'at meetings workers say indignantly, "What sort of system do we have, if there is nothing to wash with?" Kolbin, the party chief from Kazakhstan, told of his 'sense of alarm' that in parts of the USSR 'people are seething and embittered, are drawn towards demonstrations, rallies and strikes'. Almost every speaker went on to complain that the media were only focusing on 'negative features' of the situation, and that 'informal groups' and 'anti-soviet organisations' like the Democratic Union were winning increasing support among young people."

The central committee meeting took place just as a wave of strikes was sweeping the country's coal mines, from Vorkuta and the Kuzbass in Siberia to the Donbass in the Ukraine thousands of miles away. The strikes were only finally brought to an end when Ryzhkov, the prime minister, met with the strike committees in Moscow and agreed to concede their immediate economic demands. In the aftermath of the strikes, Gorbachev pushed an anti-strike law through the Supreme Soviet, arguing, 'We have already started to lose control of the economy. . . If the situation explodes out of control somewhere, it must be taken firmly in hand to ensure the normal functioning of the national economy. . .'" Ryzhkov admitted, 'The situation in the economy and particularly in the third quarter has taken a sharp turn for the worse. In September there was a serious drop in economic activity.' "

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.’

The USSR: the national question

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 USSR's population. Gorbachev was blind to the possibilities of such nationalism when he launched perestroika. He wrote in glowing terms in the summer of 1987:

Against the background of national strife, which has not spared even the world's most advanced countries, the USSR represents a truly unique example in the history of human civilisation. The Russian nation played an outstanding role in the solution of the nationality question.'

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 Armenia, Yerevan, was suddenly swept by the biggest demonstrations seen anywhere in the USSR since 1927. They were over the demand of the population of a nearby region of the Azerbaijan republic, Nagorno Karabakh, to be united with the Armenian republic. Few people outside the region had ever heard of the Karabakh, a poor mountainous region of only 180,000 people: it had, for instance, only been mentioned once in the New York Times in half a century. But it was to cast its shadow over national politics for the next two years.

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 Armenia and Azerbaijan from Moscow, and 29 plane loads of troops were flown in and deployed in Yerevan. But the demonstrations continued for several days until Gorbachev agreed to unprecedented negotiations with representatives elected at a huge mass meeting.

Meanwhile, there was a sudden—and unexplained—outbreak of communal rioting in the Azerbaijan industrial port of Sumgait, on the Caspian Sea near Baku. Azeri crowds set out on what was, in effect, a pogrom of Armenian inhabitants, killing at least 31.'; The reaction of the authorities in Moscow was to arrest a few of the Azeri rioters and bring them to trial, but also to pour troops into both Armenia and the Karabakh and to arrest leaders of the committees which had led the national agitation there. An article in Pravda alleged that the demonstrations had been taken over by 'political careerists and adventurers, among them those who proposed turning Armenia into a non party republic'.

A pattern was set which was to be repeated again and again. In March there were demonstrations and general strikes in Armenia and the Karabakh. In July there were further strikes after troops shot a picket at Yerevan airport dead.

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 Armenia, despite the fact that the main towns were under military occupation, and the Armenians began to arm themselves and talk disparagingly of Russian army helicopters as 'swallows of pcicsinnka .'" Ominously, there were the first communal conllicts between Armenians and Azeris in the Karabakh and the neighbouring A/erbajaini area of Agdam, and Armenians began to flee A/.cri areas and A/.eris Armenian areas. By the end of November there were inure than a hundred thousand refugees on both sides and general strikes and demonstrations in the Azerbaijani capital, Baku, as well as as the Armenian capital, Yerevan. Tanks were patrolling the streets ol both cities.

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 Moscow on the Karabakh, as a way of avoiding having to come down on the side of either Armenia or Azerbaijan. But it solved none of the problems. In the summer and autumn, a new, unofficial mass Azeri organisation, the Azerbaijan Popular Front, succeeded in organising strikes which stopped rail transport at the Armenian borders. Nor did Gorbachev's return of the Karabakh to Azerbaijani rule solve any problems either. Hy January 1990 there was near civil war on the borders as unofficial organisations on both sides got hold of weapons, and a renewed pogrom of Armenians in Baku.

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 Armenia and Azerbaijan were only the first of many national movements to cause Gorbachev problems. The summer of 1988 saw the sudden emergence of movements in the three Baltic republics annexed by Stalin after the Stalin-Hitler pact of 1939—Latvia, Estonia and Lithuania. A series of huge demonstrations arose as people found themselves able, for the first time, to discuss openly the enforced incorporation of their previously independent states into the USSR and the subsequent deportation of tens of thousands of people to Siberia. They formed 'movements for restructuring'—soon to be known as Popular Fronts—whose rallies attracted hundreds of thousands of people onto the streets of every major city in the area. At first Gorbachev believed he could easily contain these movements. He replaced the existing party leaders in these republics by his own nominees, usually local nationals who had made successful careers in the all-union apparatus, and urged them to place themselves at the front of the movement for national identity and change. In October 1988 the new Communist Party leaderships appeared at the founding Congresses of the Popular Fronts in each of the republics and read out statements of support for their aims, endorsed by Gorbachev himself."

But, as in the Caucasus, Gorbachev was unable to grasp the dynamic behind the nationalist movements. The sense of grievance of the indigenous Lithuanians, Estonians and Latvians was so great that the Popular Fronts underwent a radicalisation with which it was difficult for the local party leaders to keep up. Their attempts to do so forced them to concede virtually complete liberty of agitation and of the press. By early 1988 the local radio stations were broadcasting open criticisms of Soviet rule and organisations still half banned elsewhere in the USSR, like the Democratic Union or the Byelorussian Popular Front, were able to meet openly in the Baltic republics. Yet the local Communist Parties still found themselves losing support to the Popular Fronts, which took most of the local seats in the Congress of Deputies elections of March 1989. Party members sent into the Popular Front with the aims of trying to take them over ended up ignoring party directives completely and regarding themselves first and foremost as Front members. Gorbachev later complained:

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 Moscow] of the Communist Party of Lithuania. . . The process to dissolve sections of the Communist Party into the movements and organisations of a nationalistic hue began to gather strength. Party discipline fell sharply..

By the end of 1989 the Popular Fronts in the three republics were openly committed to full independence from the USSR, and were compelling the local Communist Party leaderships to move in the same direction. What is more, the legitimation of the Baltic movements was a spur to feeling elsewhere in the USSR. Dissidents felt safe to raise demands which not long before would have earned them prison sentences, while officials of the local Republic believed that the correct tactic was to tag along with such demands so as to maintain popular support.

National movements comparable in strength with those in the Baltic states were soon firmly entrenched in Georgia and Moldavia, as well as Armenia and Azerbaijan, by the middle of 1989. And nationalist agitation was receiving a strong echo in Byelorussia and the Western Ukraine, even if its influence was not sweeping all before it. Meanwhile, scores of other national movements were emerging—among Uzbeks, Tajiks, Kazakhs, Mesketian Turks, Abkhazian, and many other groupings.

The new movements showed two sorts of dynamic. The first and most threatening to the central bureaucracy in Moscow, over which Gorbachev presided, was towards secession. The second was towards bitter intercommunal conflicts with each other.

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 Estonia and Moldavia these intermovements succeeded in 1989 in getting strike action around Russian nationalist slogans. This in turn enabled conservative elements inside the Russian speaking core of the USSR to whip up Russian nationalist agitation, feeding on deeply engrained chauvinist ideas. Both Tsarism and Stalinism had taught that the Russians were a superior people who had born the burden of bringing 'civilisation' to the other ethnic groups of the Russian Empire, while the Russians themselves had suffered from manipulation by alien, meaning Jewish, forces.

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 USSR: the sense of malaise

'The train is on fire, but there's no engine to pull us.' The lyric of the Leningrad rock group Aquarius summed up the general sense of malaise in the USSR by the beginning of 1990. It seemed to affect every sector of social life and every social stratum. The economy was out of control, with the reform economist, deputy minister Abalkin, complaining:

“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 USSR to the other. There were strikes in Latvia, Estonia, Moldavia and Georgia. Lithuania was demanding its independence. Pravda reported that 'for several months the people of Tashkent and several other towns in Uzbekhistan have known no peace.. . Unsanctioned rallies are constantly being held in the streets...'"" In Armenia and Azerbaijan there was civil war. Everywhere there was a growing shortage of the most essential items and, with it, growing discontent. In the Russian cities of Volgograd (formerly Stalingrad), Chernigou and Tyumen, a very important petrochemical centre, popular protests forced the local party committees to resign.44 Demonstrations thousands strong in Krasnodar and Stavropol forced the army to cancel its call up of reservists to go to the Caucasus.45 The Ukrainian party leader, Ivashko, warned:

“The general mood and political situation in the Ukraine could not but be affected by events in Lithuania, Transcaucasia and in Eastern Europe. People are stirred. Many factors are making them uneasy.*"

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 Moldavia.. . the example of Transcaucasia is before everyone's eyes.’ The former Warsaw correspondent of the paper Komsomolskaya Pravda wrote:

“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 Gdansk shipbuilders' protests and that of our miners."

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 Leningrad, Gidaspov. One delegate gave his reactions in Moscow News:

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 USSR, Leningrad, both organised from within the local party apparatus. The beginning of the new year saw the open organisation of a radical oppositional faction, the Democratic Platform," which joined with the radical 'informal groups' outide the party to organise Moscow's biggest yet demonstration at the beginning of February.

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 Yerevan there was a two month long 'sit in demonstration by conscripts.. . Several of the participants have been on home leave and do not want to return to their units'." At the highest level there were clear divisions between officers sympathetic to and those deeply resentful of reform. The army paper, Krasnaya Svezda, was one of the most conservative publications, but at the Second Congress of Deputies, 'the military members of parliament were particularly active. . . The rift between conservatives and the centre was apparent on all issues, but especially military ones—even among the military deputies themselves'."

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 Tbilisi; they were in operation for more than 18 months in Armenia and the Karabakh; they moved to smash up nationalist demonstrations a few days after the disruption of the 7 November celebrations in Moldavia. But the repression was no more consistent than the glasnost and 'democratisation' had been; it was severe enough to create enormous bitterness, but not severe enough to break the will to turn that bitterness into further action.

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 USSR's constitution over the leading role of the party early in February 1990. In fact it was no more resolute and no more decisive than his decision, a fortnight before, at an attempt at a military solution in the Caucasus. Both came in the midst of growing turmoil from one end of the USSR to the other. Both represented desperate attempts to patch up the cracks in the political edifice produced by this turmoil. And both could only aggravate the regime's long term difficulties.

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 Afghanistan in February 1989 without the Kabul government immediately collapsing. He had been able to make the first visit to China by a Russian leader since Khrushchev's time and to forge new links with the Iranian regime. Above all he had been able to wind down the 'new Cold War' by a series of arms limitation treaties with the US which allowed for a reduction in the military burden on the USSR's economy and, by a new policy of collaboration with the US, to diminish local confrontations in Southern Africa and Central America. He could point to popularity abroad as a way of bolstering up his position at home; anyone who overthrew him would risk unravelling what seemed to be a highly successful international strategy.

But there was a price to be paid for the strategy. It gave the Western powers, and especially the US, a partial veto over the USSR foreign policy decisions. Not only had the USSR agreed not to meddle in the US's backyard in Central America and to help the Western powers stabilise Southern Africa through a combination of reform and repression—policies which, Russian strategists argued, allowed it to reduce overseas expenditure to 'liberation movements' and friendly governments which had brought it very little return. Gorbachev had also put the USSR in the position where it had to be very careful in actions it took to defend its own sphere of influence lest these were used as an excuse by the US government to renege on the agreements and exert new pressure on Soviet military spending.

What this meant was shown very clearly in the autumn of 1989. The regimes which embodied Russian influence over Eastern Europe began to fall apart. And however much the Soviet foreign minister Shedvadnadze went on about the sanctity of Europe's post-war borders, there seemed little he or Gorbachev could do to hold their client governments together. The demonstrative, and brutal, actions which had been so effective in Budapest in 1956 and Prague in 1968 were ruled out. All that remained was to try to the put on a fine face and welcome the loss of most of the strategic gains obtained in the Second World War, notably when he suddenly did a diplomatic somersault late in January 1990 and said German reunification was inevitable. But this could not stop another even more vital question arising for the USSR's rulers. If they could not take action in Eastern Europe for fear of offending Western sensibilities, could they take action against the Baltic states? Or were Gorbachev's policies leading them towards losing their internal as well as their external empire?

No wonder that by the beginning of 1990 there was disillusionment with Gorbachev both among those who stood for a further democratisation of the USSR and those who stood for 'order' of the old sort. No wonder the main reason people suggested Gorbachev would not be overthrown was that there was no one to replace him.

Eastern Europe: cumulative collapse

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 Eastern Europe a different mode of production has existed to the rest of the world. This is true both of the 'socialist', 'degenerated workers' state', and 'post-capitalist' accounts and of the accounts, increasingly popular in recent years, which speak of a new form of class society—bureaucratic collectivism, statism, or even a modern version of oriental despotism.

But if the mode of production in Eastern Europe has been so different to that in the rest of the world, how are the changes of the last few months to be explained? How has it been possible to graft on to a completely 'non-capitalist' mode of production such features as membership of the International Monetary Fund, production for profit, the bankruptcy of enterprises that cannot sell their output at an adequate 'rate of return', the sudden growth of unemployment, and even the stock exchange?

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 USSR in the 1920s because, he claimed, there had been no such violent rupture: to talk about a change in the mode of production without it was to 'wind back the film of reformism'.

Yet the violence of Stalin's 'second revolution' in the late 1920s was much greater than anything we've seen in Eastern Europe over the last year. Stalin sent the army into the countryside to drive millions of peasants from the land, he used the police and the army to break working class resistance to wage cuts in the factories, he used the secret police, the GPU, to physically liquidate anyone who questioned any feature of his own rule inside the ruling party. In Trotsky's words, he created a river of blood between Stalinism and Bolshevism. There were millions of casualties in this civil war in which Stalin's side was armed and his opponents were not. By contrast, the transformations in Eastern Europe over the last year have been overwhelmingly peaceful, with the exception only of Romania.

The process of change began in Poland and Hungary. In Poland there had been a huge upsurge of social confrontation in 1980-1 which paralysed the activity of the state for more than a year and a quarter. But the military coup of December 1981 broke the back of the independent union Solidarnosc, even if it could not destroy the influence of underground opposition to the regime. Then in the spring and summer of 1988 two waves of strikes occurred. These surprised both the regime and most of the old Solidarnosc leadership. During the first wave there was quite a strong feeling among the intellectual advisers to Solidarnosc that the strikes were a mistake. There was not much more enthusiasm for the second wave, although Solidarnosc's best known national leader, Lech Walesa, realised that his political standing required that he be part of the occupation of the Lenin shipyard in Gdansk.

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'.

In Hungary, where the economic changes have gone at least as far as in Poland, there has been, so far, even less social confrontation. The organised opposition in Hungary was, until as late as 1987, very small. Its attempts to build support inside the working class in the early 1980s were halfhearted and unsuccessful. Its first demonstrations in 1987 and 1988 were no more than a few thousand strong and composed mainly of students."

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 Poland, bitter rows broke out among the new ruling group about which political direction to follow. One section, around Imre Poszgay, sought to strengthen its hand by collaboration with sections of the opposition.

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 changes in Hungary were the catalyst for changes in East Germany. The Hungarian government, weak and looking to the opposition for support, did not feel in any condition to prevent East Germans who had entered the country in the guise of tourists crossing over into the West. Fast Germany began to experience a haemorrhaging of skilled labour lor the first time since the building of the Berlin Wall in 1961.

The sudden weakness of the East German government gave new heart to the previously very small and easily repressed oppositional groups in the country. They staged their first demonstration, some thousands strong, in Dresden early in October, chanting, 'We're staying here', and, (iorby, Gorby'. The violence of police attacks on the protest drew thousands more onto the streets in a dozen cities in the days that followed. Suddenly the leadership of the ruling party were isolated and desperate. One grouping around the aging party leader, Honecker, began preparations to shoot on the demonstrators." Other sections of the leadership regarded this option as very dangerous. They could not rely for support on Gorbachev, who had every reason to dislike a regime which was openly critical of his policies, and mass repression would completely mess up relations with West Germany, on which the regime was increasingly dependent economically. The head of security, Egon Krenz, staged a politburo coup which ousted Honecker and then tried to placate the demonstrators by promising reform. Suddenly the opposition groups were operating legally and middle ranking party officials were joining their demonstrations in an effort to gain control of them. But the immediate effect was simply to give vast numbers of people the feeling that, for the first time, it was safe to protest. The ruling party could only keep a semblance of control by making more and more concessions promising freedom to travel, guaranteeing free elections, sacrificing growing numbers of the old leaders and arresting the most openly corrupt of them, eventually beginning to dismantle the Berlin Wall. Krenz, the ouster of Honecker, was himself ousted by Modrow as the party leadership began its own round table meetings with the opposition groups and its own former front parties, which themselves took an increasingly independent stance.

The changes were sufficient to prompt the managers of East Germany's large state owned enterprises to redouble their efforts to establish contacts with West German firms. Interflug established a joint venture with Lufthansa to develop a flight training simulator"; Friedrich Wokurka, a party member and head of the Robotron, East Germany's third biggest enterprise, signed a joint agreement with the Pilz group to make compact discs in Dresden, with Siemens and Data Print for joint software ventures'"; Wartburg was discussing a joint venture with Volkswagen to build the Polo". At a joint meeting the heads of the West German Industry Federation were told 'by their East German counterparts what an admirable model the West German social market is.'

Enterprise managers who had been members of the ruling party began to move over to its front parties, the Christian Democratic Union and the National Democrats, which in turn began to argue for incorporation into West Germany. Meanwhile, the leaders of the ruling party stepped up their own contacts at national and local level with West German politicians and businessmen. As one East German revolutionary socialist explained, these leaders' rejection of political unity with the Western state was not a rejection of integration of the East German economy into the West German economy. It was simply a way of preserving their own position as the political mediators between the two economies*'; by the end of January 1990 they were putting forward their own scheme for German unity.

The changes did not mean any great changes in the personnel running the structures of the East German society. The position of the enterprise managers went completely unchallenged, as did those of the mass of officers in the armed forces and of state bureaucrats. The media remained in essentially the same hands as before, even if the opposition were allowed access and journalists were able, for the first time, to expose many of the nastier features of society. As one East German revolutionary socialist put it:

“The former economic structures have not been touched so far. This is specially visible in factories and the institutions in charge of the economy. There are changes in the factories. For instance, the SED groups in the factories no longer play any role. But as the actual management plays the same function, so nothing changes basically.

“The people's movement has so far only been directed against some positions of political power and through the pressure of the masses one generation went away and the next generation came into power to further the interests of those who run the economy."

The dynamic of change in Czechoslovakia was, at least at first, very similar to that in East Germany. Emboldened by events elsewhere, students decided to stage a demonstration on 17 November. There had been previous protest marches—for instance on 20 August to mark the anniversary of the Russian invasion in 1968—but earlier police clampdowns had kept these relatively small." Western journalists noted that most passers by kept well away from the protesters."1 This time there was, however, a legal pretext for the demonstration: the ruling party's youth organisation had decided to commemorate the date of student protests at the Nazi takeover of the country 50 years before. The demonstration was bigger than either the government or the opposition had expected, and the government sent in a previously unknown force of 'anti-terrorist troops' to attack and beat up protesters.

The attack is now referred to in Prague as 'the 17 November massacre'. In fact no one died and the police attack was not so different to those made by the forces of 'law and order' in Western states (for instance, on workers in Britain picketing at Warrington, Orgreave and Wapping). But the sight of protesters, usually still in their late teens, suffering such an onslaught was enough to galvanise into action a much wider number of people. That weekend students right across Czechoslovakia began a strike. A decision by drama students to join this prompted actors, directors and theatre technicians to join in. Suddenly every Prague theatre was turned into a centre of discussion and oppositional activity. Hundreds of thousands of people joined in demonstrations. Impromptu teams of agitators went out to every workplace and every town and village in the country to explain what was happening in central Prague. The oppositional group, Civic Forum, was suddenly a mass movement which showed its strength on 27 November by organising a highly successful two hour strike right across the country.

As in East Germany, there were rumours that the party leadership had considered mass shootings. But, again as in East Germany, the proponents of this course were soon ousted by the proponents of conciliation. Party leaders and government ministers came and went at astounding speed before a coalition government was formed including oppositionists and 'independents', free elections were promised and former political prisoner Vaclav Havel was elected to the presidency by the old regime's own handpicked parliament.

In one sense there was a sharp contrast between events in Czechoslovakia and those in Poland and Hungary. Here there were many of the elements of a real revolution. The masses took to the streets and forced concessions from the old order. There was continual agitation on the streets. The centre of Prague, with its occupied colleges and theatres, resembled nothing so much as Paris in May 1968. Civic Forum committees and strike committees sprang up in the workplaces and the media as well as in the localities. The veteran Czech Marxist oppositionist Vladimir Riha, when asked who organised the movement, could only reply, 'No one. Every one did what they wanted to do. But it was not anarchy. It was revolution'."

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 France, when three days of demonstrations persuaded the King's generals to replace one dynasty by another, or 1848 in Berlin when street fighting persuaded the Prussian king to promise a constitution but did not destroy royal power in its entirety. Trotsky used to make the distinction between a political revolution, which left production relations unchanged, and a social revolution like that of 1789-94 and 1917. The Czechoslovak upheaval was clearly an example of the first, not the second.

The Czechoslovak revolutionary socialist Petr Kluvart, who works in the Prague heating plant, tells how little things have changed in the factories: strike committees still exist in most workplaces, sometimes operating alongside Civic Forum committees, sometimes merged with them, but few of the prerogatives of management have yet been challenged." Even the StB, the secret police and intelligence service, remains intact. 'It watched and persecuted our president—they weren't our friends. But the security of the state must be protected,' Richard Sacher, the non-communist interior minister says."

In Bulgaria the changes which took place in last months of 1989 were closer to the Hungarian events than to those in East Germany and Czechoslovakia. The party leader for the last 30 years, Zhivkov, was suddenly removed from power by rivals in the politburo who then revealed how he and his son had been defrauding the country of millions of dollars." There had been an oppositional demonstration in the streets of the capital, Sofia, a few days before—over ecology. But it does not seem to have been large enough in itself to have caused the political changes, which appear to have been the result of a combination of careerism by new leaders and fear of the consequences as interest on rapidly growing foreign debt ate up half the country's export earnings."

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."

Romania was the only country in which the political changes were accompanied by armed conflict, in which violent revolution occurred. Power was concentrated in the hands of one man, Ceausescu, on a greater scale than anywhere else. He used it to crush brutally any element of resistance. So he sent in his security police to shoot down strikers from the Red Star tractor factory in Brasov in December 1987 and repeated the tactic when the people of the town of Timisoara took to the streets in protest at the persecution of a Hungarian speaking Protestant priest in mid-December 1989.

This time, however, repression did not immediately crush the movement. In Timisoara itself workers' threats to blow up a petrochemical factory forced the army to withdraw. As rumours of disturbances began to spread through the capital, Bucharest, Ceausescu felt compelled to intervene himself. He ordered his henchmen to round up delegations from the city's workplaces to attend a rally in his support. The crowd at the rally on 21 December gathered, as so often in the past, and cheered as ordered when Ceausescu began to speak. But within minutes the cheers had turned to jeers and chants of 'Timisoara'. The live television broadcast of the rally was rapidly curtailed, while a dazed Ceausescu showed amazement and fear at the anger of the crowd as he retreated from the balcony on which he had been speaking.

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 Bucharest and the opposition parties were complaining that their access to the media was still restricted.

What occurred in Romania clearly displayed many of the classic features of a revolution. Yet the changes were still political rather than social. The control of the enterprises remained in the same hands, and decisions affecting the economy as a whole were made by people who had been leading figures in the old ruling party before falling out with Ceausescu.

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:

“The Soviet Union maintains a more or less even rhythm of economic growth, plan after plan, decade after decade, without the progress of the past weighing on the possibilities of the future... All the laws of development of the capitalist economy which provoke a slow down in the speed of economic growth are eliminated."

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 USSR's economy—Trotksy's own rendering of the degenerated workers' state position. He argued in the 1930s that the ruling bureaucracy stood in contradiction to the economic reorganisation brought about by the October Revolution. This would lead to catastrophic crisis, and not after several decades but in the very near future. He wrote that, 'The further unhindered development of bureaucratism must lead inevitably to the cessation of economic and cultural growth, to a terrible social crisis, and to the downward plunge of the entire society.'*" One of his arguments against the 'new class theory' developed by Schachtman and others in 1939 was that revolutionary socialists would:

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 USSR not only might but would have to lead to a bourgeois-Bonapartist counter-revolution.'

Such prognoses could not survive the industrialisation of the USSR under Stalin, its defeat of Nazi Germany, its establishment of control over Eastern Europe. Trotksy's 'orthodox' followers abandoned his own interpretation of his theory and adopted a view of the economies of the Eastern societies not all that different to those propagated by the Communist Parties. Both 'Trotskyists' and Stalinists pointed to the USSR's economic advance as proof that it was a superior form of society to that in the West. Where they differed was over their evaluation of the political superstructure.

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 Sverdlovsk."

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 USSR today is its enormous wastefulness and probably a tendency to increasing waste'. On occasions he has gone so far as to describe the USSR as a 'spare parts economy'.

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 Soviet Union it remains politically unacceptable to make large numbers of workers redundant.’

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 USSR's economy more than doubled in size in that 30 year period!"

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 USSR did defeat the world's second most powerful capitalist economy in all out war. It was not a 'spare parts economy' that won the battle of Stalingrad and beat the Americans at putting the sputnik into space."

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 USSR's economy was growing at a speed comparable with many West European ones—at an average rate of about 2.6 percent a year through the 1970s. The most comprehensive recent history of the East European economies tells that in the years 1948-68 'the two least developed' East European countries, Bulgaria and Romania, grew at 6 and 7 percent a year. Between 1950 and 1970 the other centrally planned economies clustered around the 4.5 percent growth rate. This range was comparable to that in Western Europe, where the British economy averaged 3 percent growth, the French 5 percent, the Italian 6.5 percent, the West German 7.5 percent. The East German economy actually grew slightly faster than the West German in the decade and a half after the building of the Berlin Wall had halted the outflow of young and skilled labour: East Germany grew by 4.5 percent, West Germany by 3.8 percent.

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, Czechoslovakia and Hungary.

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 Albania was well behind the rate of growth of the population'.

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.

State capitalism

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,"" China"' and various 'third world' countries."

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 USSR's economy since 1929. So, for instance, the Russian economic journalist Selyunin has estimated, 'The consumption fund accounts for 60 percent of income and the savings fund for 40 percent"."7 He notes that 'such a high composition of savings is, essentially, a wartime standard' and gives figures showing how the proportion of the national product devoted to accumulation has grown at the expense of that devoted to consumption:



1928: consumer goods were 60.5 percent of output

1940.........................................39 percent

1960..........................................27.5 percent

1985...........................................25.2 percent

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 (Taiwan, South Korea) have often been dictatorships with their own single party structures.

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 Hungary 'about a fifth of the national income was realised through the intermediary of markets"21; 15 years later the majority of its national income depended on foreign trade. In the case of Czechoslovakia, by 1965 the per capita level of foreign trade was 2,758 Czech crowns. This compared with a world average of 842 and an average for all advanced countries of 2,750." Another estimate for 1965 shows that per capita foreign trade was greater for Hungary, East Germany, Bulgaria and Czechoslovakia than for Italy, and only slightly lower than for France.1"

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 China. This is most important in the case of the USSR where arms expenditure amounts to between 12 percent (the post-glasnost Soviet estimate)14 and 16 percent (the CIA estimate)1" of national income. This is about twice the American level, about four times the average West European level and about 14 times the Japanese level.

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 East Germany, Hungary or Czechoslovakia with that in the wartime years when they were part of the Nazi war economy. War and preparation for war—military competition—forces modern ruling classes to impose on their economies the same dynamic of capitalist accumulation as market competition does. It compels them to organise their apparently 'planned' economies according to the rationality of commodity production. In particular, it forces them to treat labour power as a commodity, to pay their workers no more than the culturally and historically determined minimum needed for them to be able and willing to work. In other words, the state capitalist ruling class, by its drive to accumulate, creates a class of workers.'"

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 Eastern Europe. The ruling class of an economically backward state which was determined to engage in military-economic competition with a more advanced state sought to do so by copying the methods by which the advanced capitalisms had industrialised. British capitalism had used the enclosures to drive the peasantry off the land, had used slavery in the Americas to accumulate wealth and to provide itself with cheap raw materials, had annexed and plundered half of Asia, had used vagrancy laws and the forced labour of the workhouse system to compel those driven from the land to offer their services as wage labourers, had used a military force and network of spies against those who tried to resist, and had disregarded completely the health of the mass of the population as it profited from the labour of children from the age of five or six upwards. The Stalinist ruling classes followed suit with 'collectivisation', the gulag, the shooting of strikers and demonstrators, the laws against 'parasitism', and the all pervasive networks of secret police informers. The Stalinist ruling classes wanted to achieve in a couple of decades what had taken British capitalism three centuries. The Stalinist barbarity was a more concentrated barbarity, causing ten, 20, or even, on extreme estimates, 30 million deaths.I2S On the basis of the British experience, Engels had predicted:

Insofar as Russia is the last country to be conquered by capitalist large scale industry and at the same time is also a country with an incomparably larger rural population... the revolutionary change caused by the economic revolution must be much deeper and more acute than anywhere else. The process of the replacement of no less than 500,000 large landowners and approximately 80 million peasants can only be accomplished at the cost of terrible suffering and convulsions. . .over mountains of corpses.'

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. Britain's rulers tried to justify their barbarity in the name of religion and civilisation. Stalin justified his in the name of socialism. But the methods and the goal were essentially the same.

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 Japan and Tsarist Russia. The two world wars and the crisis of the 1930s led to a massive degree of fusion between the state and the giant enterprises in the advanced capitalisms: this was the major point made as early as 1916 by Bukharin and Lenin in their studies of imperialism.m By the late 1930s the scale of state control of industrial activity in Nazi Germany was such as to persuade the famous Austro-Marxist economist Hilferding that capitalism had been replaced by a new mode of production.1" And even in the most 'free market' of the Western countries, the US, the state built and controlled most industrial capacity in the years 1941-4.'"

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 Czechoslovakia were dependent upon the export of crops and raw materials. The crisis reduced what they could earn from these exports by between 30 and 50 percent'" and pushed the majority of the population dependent upon agriculture into dire poverty. The result was to create bitter antagonisms between the classes and between different ethnic groups, and to give rise to right wing authoritarian governments. Even in the most developed country, Czechoslovakia, a drop in the gross national product of 14 percent between 1929 and 1933 meant very high levels of unemployment among the large German speaking minority in the population, pushing most to look to Nazi Germany for succour. Massive impoverishment afflicted the Slovak speakers of the eastern half of the country, fuelling an anti-Czech nationalism.

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 Poland took a state holding in the largest steel firm to stop it going bankrupt and was the first outside the USSR to embark on a long term investment plan."5

The Second World War increased the tendency to state control of the economy enormously. First, the economies of Eastern Europe were directly or indirectly incorporated into the German war economy, which imposed direct controls on output levels, prices, raw material allocation and wages. Secondly, 'Germanisation' and anti-semitic measures destroyed the economic base of much of the old native capitalist classes. Thirdly, the war distorted the economic development of each country completely. Enormous resources were transferred to the German military machine at the expense of living standards and basic investment. In Eastern Germany, Hungary and the Czech part of Czechoslovakia there was an accelerated development of heavy industry without concern for the needs of the indigenous populations; there was the sheer devastation wrought by the war itself in the countries where there was heavy fighting—in Poland, Hungary, Eastern Germany and Romania. So Hungarian output in 1947 was 27 percent below the 1937 level, in Romania between 20 and 40 percent below, in Bulgaria 16 percent below, and in Czechoslovakia 17 percent below. In Poland the fall was to about 22 percent below a level which was itself below that for 1913!"*

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 (East Germany, Romania, Hungary) were compelled to pay reparations (mainly to the USSR). In East Germany these used up about the same amount of resources as did the extensive war damage: a third of the plant and equipment of the country's biggest factory, the Leuna works near Halle, was destroyed by the war, and another third carted off to the USSR by the Russian forces of occupation; even in the early 1950s 'reparations plus Soviet demands on uranium mining and occupation costs amounted to rather more than one fifth of the net national product at factor cost.""

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.

In Czechoslovakia, where 80 percent of industry was already in state hands before the Stalinisation of the country after February 1948, the planning commission in 1947-8 'was composed of members of all parties, with a chairman from the former private sector Zbrojovka, the vast armaments firm!"18. In Poland and Hungary social democrats as well as Communists were involved in planning the economies. The result was that the Nazi directed wartime command economies often passed straight over into the 'planning' of 'the People's Democracies': 'many market relations suppressed by the price and quantity controls of 1939- 45 never re-emerged."" As Oscar Lange, the social democrat turned Communist who helped draw up the Polish plans, later recognised:

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 Czechoslovakia, where there were at the time no Russian troops, the bourgeois and social democrat parties could mount no real resistance to the Communist coup of February 1948. All that was required for these parties to collapse was for the Communist Party to concentrate border troops in Prague, to parade its supporters through the centre of the city and to organise a one hour general strike (a level of mobilisation probably lower than that which brought about the collapse of one party rule in November 1989). So lacking was the Czechoslovak bourgeoisie in alternatives that its president, Benes, agreed to the changes demanded by the Communist leaders and the son of the state's founder, Masaryk, remained as a minister (although he fell to his death, probably murdered, soon after).

Seen from this viewpoint, what happened in Eastern Europe is not something qualitatively different to what happened elsewhere, but simply the quantitatively most extreme expression of a general trend. Hence the ease of transition from the pre-war and wartime economic organisation; hence too the ease of the further transition we are seeing at the moment.

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 USSR, 80 percent of the working population were peasants. The first two five year plans reduced the figure to 60 percent by the outbreak of the Second World War. The process resumed after the war. By the time Stalin died in 1953 nearly half the Russian population were urbanised and by 1985 two thirds of the population was urban and only a third rural, with only one eighth classified as 'collective farmers' (the successors to the peasants).142 In the pre-war Eastern European states 65 percent of the working population were in agriculture and only 14 percent were workers. By 1980 60 percent were wage earners.14'

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 Poland:

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 Sverdlovsk wood industry in the late 1960s showed that 60 percent of workers in their early 20s were of a working class origin as compared to less than 40 percent of those over 46 years old. Another study, of a mining complex in the Kuzbass, shows that 80 percent of those in their early 20s came from the working class as against only a quarter of those over 46.47

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 Kama industrial complex two thirds 'felt that their educational level was higher than that required by their work." These workers were much less likely to be intimidated by their bosses than were the ex-peasants of earlier years. As a Pravda commentator noted in 1983:

“Many enterprises in the Sevastopol region go on stubbornly filling their ranks with rural people instead of city dwellers, even though they have to 'pay' for this by building dormitories, paying for private apartments, etc. But plant managers contend they get something for their money: the workers work harder, more of them stay at the plant and they 're less apt to change jobs:-"

(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 USSR and the East European states is of promises to increase the output of consumer goods compared with means of production followed by a sacrificing of consumer goods production to further growth in the means of production. This was true, for instance, of the USSR under Khrushchev and Brezhnev, and of Poland under Gomulka (1956-70) and then again under Gierek (1970-80).

The situation is made worse by the impact of the past subordination of consumption to production. In the USSR under Stalin 'collectivisation' of agriculture led to a fall in total agricultural output. What is more, very little investment in the rural infrastructure (roads, railways, food storage facilities) took place. None of this worried Stalin, since collectivisation achieved two goals—it forced millions of peasants to work as wage labourers in the towns" and allowed the state to get its hands on a big enough portion of the diminished harvest to provide a minimal level of subsistence for those who toiled in its new industries.

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 US. In 1948 total foreign trade equalled only 12.8 percent of the country's output and even in 1965 only 13.7 percent. But by 1979 the figure had risen to 31.7 percent.'" Competition had hardly existed in a whole number of major industries for 30 or 40 years; the major firms had taken for granted an established division of the market between them and neglected innovation so long as their profits rolled in."" Suddenly, in the 1970s and 1980s this changed as foreign firms, especially Japanese, began to challenge the established American firms in key areas such as steel, motors, electronics.

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 US corporations have been able to maintain and extend their dominating role as producers inside other national capitalisms. Boeing produces no fewer than 80 percent of the world's civil aircraft; in the last 20 years Ford and General Motors have taken complete control of their European subsidiaries, bought up other local firms and integrated their continent wide operations. They are now better placed than most European firms to do well after 1992. Even one of the smallest and weakest of the Western capitalisms, Ireland, has a couple of multinationals that have been successful carving out space for themselves across Europe and North America.

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 India and post-Mao China, substantial development in some sectors and regions was accompanied by stagnation elsewhere and deepening social tensions. Only in a handful, like South Korea, have the advanced sectors been able to pull the rest of the economy forward with them.

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 USSR there were strikes in the great slave camps. In East Germany and Pilzen in Czechoslovakia in 1953 and in Poznan in Poland strikes led to bitter clashes with police and troops. In Hungary a spontaneous insurrection swept the old government from power and was only suppressed after massive repression by Russian troops.

But the East European leaders and Khrushchev in the USSR were able to contain the revolts by a combination of repression and reform. The period of primary accumulation had created sufficient economic reserves for concessions to be made to the mass of the population and for there to be a relaxation of the old methods of total mobilisation for accumulation. By the late 1950s all the regimes had regained their stability and were achieving levels of economic growth comparable with those of their western competitors.

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 Czechoslovakia a slowdown in economic growth gave way to recession in 1962-3. Rows among different sections within the bureaucracy and pressures for economic reform led, at the beginning of 1968, to the removal of the old party chief and president, Novotny, and to a period of liberalisation under Alexander Dubcek. This was only brought to an end by a Russian invasion of the country in August. In Poland student protests in March 1968 were followed by workers' demonstrations and strikes in the Baltic cities of Gdansk and Scezczin in the winter of 1970-1 which led to the replacement of Gomulka by Gierek."* The Czechoslovak and Polish events were particularly ominous for all the rulers of the Eastern countries. Poland was the largest of the East European states and Czechoslovakia the most industrially advanced. If they could suddenly enter a new phase of crisis, then the long term prospect elsewhere must be grim. Those of us who held to theory of state capitalism were able to conclude after the suppression of the Prague spring:

“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 Hungary in 1956 and Czechoslovakia in early 1968. Such a split could be the prelude to an immense crisis throughout the USSR and Eastern Europe in which the extra-bureaucratic classes would mobilise behind their own demands.

“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 USSR continued to expand economically at a respectable pace, achieving military parity with a US which was prepared to enter into 'detente'. It was also able to grant improvements in living standards to the mass of the population. In these years most families in the USSR began to possess refrigerators and television sets and a minority began to own cars. There was a considerable lag in conditions compared with the most advanced Western countries, but it did seem that Soviet workers were experiencing the same 'consumer revolution' as West European workers had done only 15 years earlier. In Czechoslovakia the dire warning of the reform economists seemed disproved, as the economy resumed its upward path—from an average growth rate of 1.8 percent in 1961-5 to 5.7 percent in 1971-5. Living standards rose as well: by the end of 1976 virtually all households had washing machines, radios and televisions, kin rout of five had a refrigerator, one in three a car.'68

In Poland predictions by both government"* and dissidents alike that living standards could not grow were invalidated as the economy went into a boom. By 1975-6 Western journalists were talking about a 'Polish miracle' as official figures claimed a 30 percent improvement in living standards in three years.171 In each case the expansion continued through the recession which hit Western capitalism in 1974-6.

The rulers of Eastern Europe had reason to be proud of themselves...except that the figures for economic growth concealed a mass of problems. Investment continued to grow much more quickly than economic output. And technological advance on a world scale continued, increasingly, to depend on a mobilisation of resources that transcended national boundaries. Realisation of these long term problems had led to successive schemes for economic reform in the main Eastern European countries. Everywhere apart from Hungary and Yugoslavia these schemes were quietly abandoned in the aftermath of 1968. But this did not eradicate all change in the running of the economies. Measurement of plan fulfilment by enterprises—and the bonuses of enterprise managers— depended much more than in Stalin's days on control over labour costs and quality, even if often ineffective control: economists no longer denied that the 'law of value', the measurement of output taking in terms of the average amount of labour needed to produce it on a world scale, had to be taken into account. And the number of direct connections of enterprises with the rest of the world system grew ceaselessly.

This was most obviously the case with countries like Poland and Hungary which borrowed massively from Western banks to finance their investment booms. Under Gierek virtually every major project involved Western technology and money: the Ursus tractor factory outside Warsaw was financed by Barclay's and built by Massey Ferguson; the Polski-FIAT plant in Silesia was designed by the Italian firm and supplied parts for its Milan factories; a consortium of German companies led by Krupp supplied half a billion pounds worth of equipment for chemical plants and planned a joint marketing operation with the Polish government; the expansion of Polish copper production depended on a quarter of a billion pound deal with a consortium of Western banks."2

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 USSR, Hungary, Poland, Czechoslovakia, Romania and Bulgaria. "

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 USSR had been able to catch up with the US in terms of nuclear technology and to get ahead of it, briefly, in the space race. By the late 1960s it was clearly beginning to fall behind in key sectors like computers.

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 East Germany stood no chance of competing in such a situation.

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 USSR succeeded, at least until the mid-1980s, in matching Western military technology, but only by raiding the rest of the economy for resources. As the Soviet economist Zaichenko recently pointed out:

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 USSR. The long striving to make our country more influential in the international arena increased defence potential to a level that could only be ensured by straining to the utmost all financial and economic efforts..."'

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 East Germany and Czechoslovakia, they could not prevent growing dissatisfaction over the cost and quality of consumer durables.17"

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 Eastern Europe. It proved there was no easy solution to the problems besetting every state.

'Pre-crisis' and perestroika

The leaders of the USSR now tell us that when Brezhnev eventually died in 1982 the economy was already in a 'pre-crisis' condition. The official measure of the growth rate had fallen 5.7 percent in the first half of the 1970s to 4.3 percent in the second half of the 1970s and to 3.6 percent in the early 1980s; Western calculations put the fall as 3.1 percent to 2.2 percent to 1.8 percent. In either case, far from 'catching up' with the most advanced Western economies it was beginning to fall behind. Yet the external pressures on it were growing—from increased US arms build up during the early Reagan years, and from the fall in the international price of oil and in the revenues with which the USSR could buy grain and advanced machinery abroad.

The 'pre-crisis' symptoms were not just in the economy. The army had become bogged down in a war in Afghanistan which it could not win. Cynicism and corruption were rife within the bureaucracy, including members of Brezhnev's own family. The party cadres had lost the last vestiges of that pioneering commitment to state capitalist construction that was still to be found in Khrushchev's time. The depth of the alienation of the mass of the population was shown by the spiralling consumption of alcohol and, among the most active members of the younger generation, by the growing following for bitterly nihilistic rock music. The dangers in the situation were already recognised by the KGB chief, Andropov, who took over from Brezhnev in 1982. That is why he brought a new generation of party apparatchiks from the provinces into the party leadership in Moscow, of whom Gorbachev was to become the most prominent.

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 Moscow media a free hand to expose corruption, brutality and inefficiency. Such pressure caused the re-election of a few of the delegates to the conference. It caused many more to pretend enthusiasm for restructuring. Gorbachev emerged triumphant from the conference, with the conservative, Ligachev group in the politburo dependent on his good will—as was shown graphically a couple of months later when the Central Committee moved them out of key positions and gave Gorbachev himself the state presidency.

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 Moscow intelligentsia. They were important insofar as they influenced the contents of all-union newspapers, television and radio stations, and the policies of the film studios. But they are also a relatively privileged group and quite cut off from the mass of people even in Moscow, let alone throughout the rest of the USSR. The Sovietskaya Rossiya incident showed how easily most of them could be subdued: they were suddenly forced into three weeks of silence by a hostile move from just one section of the leadership. Gorbachev made his own moves to quieten them down after his successes at the party conference. The allegedly 'liberal' politburo member Yakovlev told media chiefs to ensure 'responsible' reporting and to prevent 'attempts to kindle emotions, to heat passions, to sow national or social suspicion and to cause different social groups to collide'. He urged resistance to 'approaches from unrealistic, maximalist positions' which were 'a very dangerous form of social parasitism'. A newly formed police detachment was used to break up demonstrations such as that of the Democratic Union on 7 August, and a new decree enabled the authorities to imprison organisers of 'unauthorised demonstrations'. Then 'newsprint shortages' were used as an excuse to restrict the print runs of the reformist section of the press, such as the weekly magazine Oganyek.

These were attempts to limit the influence of radical opinion in Moscow, not to stop it in its tracks. Gorbachev clearly felt he could not do that without encouraging a revival of his conservative opponents. He still needed to discredit them with the dirty truth about the Stalin and Brezhnev periods. And that meant allowing the media to print a torrent of revelations about what life in the USSR had really been like—about the executions and the labour camps, the deportations and the famines, the show trials and the mass executions of the Stalin period, the wholesale corruption and incompetence of the Brezhnev years.

More important, though, was what had been happening outside Moscow, in towns and cities throughout the USSR. Thousands of small informal groups were already organising at the end of 1987, often centred around individuals imprisoned or victimised for 'dissent' in the 1960s and 1970s. They would agitate round local issues—pollution from a local factory, the dangers from a nuclear power station, the corruption of local political boss, discrimination against a local language, the fate of local people during the Stalin years. On occasions they drew hundreds or even thousands of people onto the streets and forced the local press to acknowledge their existence.

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 Russia and those elsewhere in the world economy could force managers to be efficient and to produce the things that are needed.

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 Poland in 1970, 1976 and 1980 led to huge workers' revolts. As Gorbachev's adviser, Agabegyan, put it early in 1989, 'reform of retail prices.. .is necessary', but because of 'social consequences' it should be postponed for three or four years.’

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.'"

Internal disintegration

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 USSR for the last two years. And the most powerful symptom of loss of faith in Gorbachev is the trend towards internal disintegration of the USSR—the national question.

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 Russia itself and that the nationalism of peoples like the Armenians is 'utterly irrational'.""

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 Caucasus were local nationals."6 He physically liquidated their intelligentsia and deported whole nations thousands of miles. Krushchev was less brutal,'" but did remove many local party leaders for 'petty bourgeois nationalism'."* Under Brezhnev the leaders of some of the republics were allowed to play on certain cultural features of the local dominant nationality but not to question the overall domination of the USSR by Russian bureaucrats, expressed locally by the presence of party second secretaries who were almost invariably Russian. The right to use the non-Russian languages had been trampled on from the late 1920s onwards, and toleration of minority languages under Brezhnev certainly did not restore them to equality with Russian: the majority of the population of the Ukrainian capital, Kiev, gave Ukranian as their native tongue, yet only a fifth of the schools taught in it; in Kirgizia there is not a single kindergarten using the local language in urban areas; in Moldavia people were forced to write and read the language using the Russian alphabet, not the Roman alphabet which had prevailed until the late 1930s and which was still used for the same language in neighbouring Romania.

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 Russia itself. In the 1970s living standards were only 76 percent of the average for the USSR as a whole in Azerbaijan, 76 percent in Uzbekistan and 91 percent in Kazakhstan.'"' Although the infant mortality rate was lower in Latvia than in the Russian republic, it was 80 percent higher in Azerbaijan and 40 percent in Armenia. The rate was twice as high in Tbilisi, the capital of Georgia, as in Leningrad.2""

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 Moscow.

It was precisely the coming together of national and social grievances that produced the most bitter expression of nationalism in Armenia and Azerbaijan. For conditions in the Karabakh, in Azerbaijan as a whole and in Armenia are all considerably worse than the average for the USSR as a whole. In July 1988:

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 Sumgait in February 1988. They lived either in barrack like hostels or in third world style shanty towns.

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...

A Baku paper noted that there are 250,000 people in Azerbaijan as a whole 'not engaged in socially useful labour' [that is, unemployed].2" Baku radio reported on an official party conferencenabout discrimination against the Azeri language in favour of Russian:

“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 Academy of Science, its departments, creative unions, the ministries of education and culture, main directorates and service sections show negligence in implementing practical measures.. ."

The first protests in Armenia in 1987 were not over the Karabakh but against the appalling pollution in Yerevan caused by two chemical factories and leaks from a nearby nuclear power station. In Armenia as a whole, one meeting of the ruling party was told that 'per capita consumption of meat and meat products is 24 percent behind the union average and the consumption of whole milk products total only 50 percent of the prescribed nutritional norm', that each year 12,000 fewer homes than necessary were built, and that consumer good production was 80 million roubles a year below the plan targets.2'" The standards of building in the republic were exposed in the most horrifying way by the devastation of the earthquake in December 1988.

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 Kazakhstan.”

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 USSR as a whole seem, the more secession, or at least economic autonomy, seems like a life-raft to get away from the sinking ship.

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 Azerbaijan that sections of the local party apparatus sought to exploit these antagonisms. The language question in particular provided an opportunity to do so. Those sections of the bureaucracy who spoke the local language themselves could take up the issue, get popular support by fighting a very real form of oppression, and then turn it into a weapon for enhancing their own careers at the expense of those who did not speak the local language, whether speakers of Russian or of other, minority local languages. This in turn could play into the hands of Russian speaking bureaucrats. There were Russian speaking minorities in almost all the republics—and although these included highly privileged apparatchiks and enterprise managers who would lord it over those below them who spoke the local language, they also included many Russian speaking workers holding some of the most miserable jobs in heavy industry.

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 Baltic states. As we have seen, Gorbachev had to replace old rulers who would not make concessions to national movements that were already flourishing! In Byelorussia, the Western Ukraine, Armenia, Moldavia, Kirgizia or Georgia the bureaucrats did not jump on the bandwagon until it was already moving. True, once on it they tried to direct it away from the hard option of confrontation with the Kremlin to the soft option of picking on minority local nationalities.

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 Azerbaijan to secede from the USSR and of Nargono Karabakh the right to secede from Azerbaijan) and could not solve a single one of the urgent social problems plaguing people's lives.

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 Iran were more important for the all Russian bureaucracy than any talk of democracy or national rights. Not until there is a government in the USSR prepared to let people take down such border posts if they so wish—and a social revolution will be required to achieve that—will there be a government which the people of the minority nationalities will freely choose to live under.

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 USSR's armed forces. This is a weapon that still exists, as the onslaught on Baku in January showed only too vividly. But its cutting edge has been corroded by defeat in Afghanistan and glasnost among some of its ranks. It is unlikely that it can be used effectively to reimpose order right across the USSR until the ferment in society at large subsides. That has not happened yet.

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 North Sea oil revenues.

The USSR's economy is much larger than Britain, and its enterprises have been much more insulated from the rest of the world for 60 years. The proportion that would be destroyed by an immediate opening to international competition is correspondingly greater. This, in turn, could do considerable damage to the remaining, competitive enterprises as they lost suppliers of material and components and buyers for their output. Such restructuring, far from providing room for 'enterprise to flourish' (as the marketeers put it) might well simply open up a series of black holes in the world's second biggest economy. That would feed social and national discontent on a much greater scale than any we've seen so far—unless it was accompanied by a scale of repression closer to that of Stalin's time than that of Brezhnev's.

The reformers in the USSR had little choice but to attempt to introduce internal market mechanisms while maintaining protection against outside competition. But that left the giant Soviet enterprises in a monopolistic or semi-monopolistic position, able to dictate to the market, to produce what they wanted to produce, not what was needed by the economy as a whole, and to raise prices. The attempt at reform inevitably led to inflation, worsening shortages and to an administrative curtailing of reform.

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 USSR and why the Russian bureaucracy, far from being stronger, is actually weaker than during the period of 'stagnation'.

Moving sideways in Eastern Europe

It used to be said in the mid-1950s that when Russia got flu, the East European states caught pneumonia: mild reform in the USSR gave way to armed revolution in Budapest. In 1989-90 it seemed the other way round. Bitter convulsions right across the USSR, leaving hundreds dead, were accompanied by peaceful reform in Poland, Hungary, East Germany and Czechoslovakia. Once the state capitalist character of these societies is understood, it is possible to understand the ease of the political transition in much of Eastern Europe.

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 Czechoslovakia after 1968.

Yet all the time the needs of capital accumulation were pushing its individual members in the enterprises and the governments of Eastern Europe to establish closer ties with Western firms and states. The successful Eastern European businessman began to look and think like the successful Western businessman, even if the formal ideology remained different. And the businessmen, running huge enterprises which held a monopolistic position inside relatively small economies, increasingly determined what the central 'planners' did. An account of the Czechoslovak economy, part written by the country's new finance minister, tells how from the 1950s onwards:

“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 USSR. It was not the bureaucrats who took to the streets. They would always side with the regime when workers struck, as in Poland in 1980-1. But increasingly they privately viewed the ruling neo-Stalinist ideology as an irrelevance to which they would do no more than pay lip service.

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 Czechoslovakia, which had been in an ideological straitjacket since the events of 1968, had an Institute for Forecasting of the Czechoslovak Academy of Sciences at hand to provide an alternative way forward for the country's managers.

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 Germany, Italy, Portugal and Spain after the fall of their fascisms. The formal networks binding police chiefs, army officers, government ministers and industrialists together disintegrated. But informal networks remained, and so did the drive to accumulate which gave them a common class goal against those below them. It was not long before they were able to build new ruling parties just as capable of defending their interests as the old ones had been.

In Eastern Europe over the last six months we have seen the cumulative collapse of the old ruling parties. But the enterprise heads, the ministry officials, the generals, even most of the police chiefs, remain in place, untouched by the changes, discussing which of the new parties to back and dominate, trying to ensure that they get new governments to push their new models of capital accumulation.

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 Poland, Leszek Miller, has spelt out the logic of giving government seats to Solidarnosc:

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 Poland and of the 'normalisation' in Czechoslovakia talked in terms of genuine socialism as opposed to the fake socialism of the ruling order.2"

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 Eastern Europe from the mid-1950s onwards. And the argument about 'geo-political realities' has collapsed with the erosion of the ability of Russian forces to intervene. What really happened was that a large section of the opposition began to see a new alternative to the existing order of society, an alternative which substantial sections of the existing rulers could be persuaded to accept. The alternative was, of course, one in which those who ran the enterprises would compete nationally and internationally without the mediation of the party and state bureaucracies. What was meant, although no-one put it quite as openly as this, was that the old nomenklatura state capitalist method of accumulation had to give way to the new multinational-market method.

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 Warsaw. Already in the hectic days of 1980-1 there was a meeting of minds among the intellectual oppositionists who advised Solidarnosc and those who advised the government. Jadwiga Staniszkis, who was present at the first negotiations in Gdansk in August 1980 between the two sides, has told how:

“The experts on both sides... were more or less members of the same Warsaw milieu. The government experts were rather critical but basically loyal professionals. We were more openly critical, but still acceptable within the framework of [party secretary] Gierek's 'window dressing' liberalisation. If it had only been a matter of political attitudes, we could very easily have changed places.!"

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 Prague's huge CKD heavy machinery conglomerate. . . Then there are those whom I christened the Prognostics, that is the members of the Institute for Forecasting of the Czechoslovak Academy of Sciences. ..

“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 Czechoslovakia unless he had been willing to denounce the reform movement of 1968 and Charter 77. Anyone else with such a background would have been greeted with enormous suspicion by the students, but not economists who seemed to offer a magic remedy for overcoming the economic and political crisis. Komarek has not made it to the premiership—yet. But he has become deputy premier in charge of economic affairs, from which position he tells Czechs and Slovaks that the solution to their housing problem is to copy the methods used by Thatcher in Britain."7

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.

In East Germany the majority of those who took the risks in the first demonstrations in October 1989 were extremely distrustful of the West. But they took it for granted that there had to be a move to a market economy. This, apparently, was even true on the left of the movement— 'most people in the United Left say we need some degree of market and foreign capitalists. The market socialist current is very strong'.2'" Their ideas put them in a very weak position to argue back when social democrats from West Germany, members of the old front parties and East German business chiefs all told workers that incorporation into the West German state would produce magical answers to everyone's problems.

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 Paris in 1830 and February 1848, in Petrograd in February 1917, in Berlin in November 1918, in Lisbon in April 1974. So it was also in the capitals of Eastern Europe in 1989.

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 Poland it is the intellectual advisers to Solidarnosc who influence the government, not the workers who risked long jail sentences spreading the strikes of 1988. In East Germany those who made safe careers in the front parties of the old regime or who were technocrats sent across the border by the West German Social Democratic Party are making the political running, not the old activists of the New Forum or the United Left. In Czechoslovakia economists who did not leave the ruling party until the battle was decided run the ministries, not the students who were batoned on the streets. In Romania generals and former party apparatchiks who did not join the revolution until Ceausescu had fled are already threatening prison sentences for those involved in unauthorised demonstrations.

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 USSR. There are many industrial sectors in each of the East European countries that simply cannot survive a complete opening up to the world market. And it is by no means certain that those which do flourish in the new circumstances will be able to grow fast enough to make up for the gaps in the national economy caused by the collapse of the others.

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 Poland and Hungary. Interest repayments will eat up most of their exports unless these grow at an inconceivably fast rate. And much of the 'aid' they are offered from the West takes the form of further loans, on which further interest will have to be paid. This leaves them little choice other than to prepare for the transition to multinational capitalism with austerity programmes which entail extraordinary hardship for the great mass of the people. Political weakness has stopped the Hungarian government putting its plans fully into effect yet. But the Polish government has already taken measures by agreement with the International Monetary Fund which aim to increase food, fuel and housing costs to 'economic levels' many times higher than before, to cut real wages by 25 percent and to create half a million or more jobless. Already reports say that queues have disappeared from the shops because people cannot afford to buy what is in them; meanwhile, the farmers complain bitterly that falling demand for food is driving many of them towards bankruptcy.

When one party rule collapsed East Germany did not have a debt problem like that of Poland and Hungary. But the prospect of economic crisis, already forecast 18 months before by Russian economists,'" soon became a bitter reality as services deteriorated and shortages appeared with the departure of 2,000 skilled workers aday to the West. The mass of people came to see incorporation into West Germany as the only answer, an attitude encouraged by the way the heads of the country's most successful Kombinate (giant enterprises) have been stepping up their own direct links with Western companies. But unification can only create enormous discontent among the very workers who clamour for it now. East German food, transport, fuel and housing prices would have to rise several times over to reach West German levels, but West German capital is not going to want to pay workers in what it sees as obsolete and inefficient East German factories enough to keep abreast of those price rises. Its favoured option would be to butcher those factories, just as it has done with factories of a similar age in the Ruhr, turning their workforces into a pool of cheap labour for the rest of the country. So it is that a European Community report: foresees unemployment in the first year of 15 percent, but adds that it might be considerable higher. It also warns of adjustment problems in East Germany being exacerbated by a surge of imports from the West. . . Average wages in the East after price reforms could reach DM1,400 a month, compared with DM2,400 in West Germany. An additional DM300 income transfer from the West for each wage earner could bring pay up to 70 percent of West German levels. . .

Such transfers, although not high, would inevitably strain West German finances. [There would be the danger] of serious social and budgetary risks for both Germanys and the European Community as a whole.1*1

Even the West German finance minister believes 'the introduction of the Deutsche Mark into East Germany would increase unemployment, force factory closures and require the creation of a social security system'.'"

Romania and Bulgaria barely get a mention in the schemes of most Western industrialists and financiers. They regard them as too backward and too remote from major markets to be of substantial interest.

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 Czechoslovakia 'needs a Mrs Thatcher'. It remains to be seen who is right. The country has a relatively small population and may be able to find niches within the Western economies into which its exports can expand. But even in that case, the Czechoslovak enterprise bosses are going to put pressure on the workers to bear the costs of restructuring, and a wave of resistance is likely.

The pygmy state capitalisms of Eastern Europe have cracked apart in the face of competition from the new giants of the world order. But this does not mean they can successfully turn themselves into giants or even manage to adjust successfully to serving at the giants' feet.

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 Eastern Europe. They have somehow to try to reconcile workers who would not any longer put up with old forms of exploitation and oppression to accept the new forms. Often they have to do so when workers face conditions of extreme privation. It is by no means certain that they will succeed.

The country where the objective problems in making the transition from state capitalism to multinational capitalism are greatest is the USSR. It cannot even accomplish the political changes which were so easy in Eastern Europe without the bureaucracy tearing itself apart. The country, and therefore the bureaucracy, is much larger than those of Eastern Europe. Its enterprises have been more protected from direct outside competition and for a longer period of time. This has led to a complex inter-twining of the minority of firms which are efficient by world standards with the majority which are inefficient. Its rulers have, in the past, been able to compensate for economic weaknesses with military might, and so have bailt up an armaments sector comparable to that of an economy twice the size, that of the US. Attempts to dismantle such a structure simply leave its individual parts hanging in the air. Economic and political crises erupt simultaneously.

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 Western Siberia in the next ten years.

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 Eastern Europe, see the shift to multinational capitalism as providing an easy guarantee against changes which they fear. A government like Gorbachev's, which seeks to change the USSR from the top down, cannot dispense with them or with the party structures they dominate. But these structures increasingly lack influence over the new forces inspired by glasnost from below— the national movements, the strike committees, the ecology protests. They alternate between threatening and appeasing the movements that arise. And in the process the different bureaucratic interests begin to pull in different directions, producing a sort of internal disintegration of the party until it cannot exercise any real control over social development.

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 USSR and, say, Czechoslovakia. In Czechoslovakia the party collapsed and society proceeded very much as before, with an increased level of integration of its enterprises with the West. In the USSR the party has not yet collapsed, but society becomes increasingly more disorganised and directionless.

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 Hungary under Janos Kadar or in China under Deng Xiaoping.' And Klyamkin asks:

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.

In Romania there have already been bitter clashes between those who made the December revolution and those who took power. In Poland there are repeated clashes on the streets between the police and youth influenced by a mixture of pacifist, anarchist, green and Polish nationalist ideas. In Czechoslovakia many rank and file Civic Forum activists have taken the slogan of radical democracy too seriously to accept the words of leaders like Petr Pithart, who in a TV broadcast appealed to 'Civic Forums in workplaces and localities to avoid any pseudo-revolutionary methods' such as 'using pressure to obtain the right to sign all economic contracts together with the managing director'."' In East Germany activists in the old opposition groups like New Forum are bitter as they see the nomenklatura form links with West German capital while the apostles of integration into the West German state take over the street demonstrations. In Hungary the radical democrat pro-marketeers of the Free Democrat Party have reacted bitterly as political parties with a more authoritarian pro-market ideology have manoeuvred with the former members of the nomenklatura.

Things are more complicated in the USSR because the old ruling party still dominates, and the radical democrats are a minority within the existing national structures of both the party and the Congress of Deputies. Disillusionment with Gorbachev more often than not still takes the form of people demanding a more radical shift towards the market. This is the position both of the deputies grouped around Yeltsin and of the semi-legal opposition party, the Democratic Union. Yet even in these cases, people must sometimes ask themselves why those who would benefit most from the market, the heads of the big enterprises, lean towards authoritarianism, not democracy, and why the Western leaders have done their utmost to keep Gorbachev in power.

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, Yugoslavia: per capita national income is twice as high in Slovenia, on the Italian and Austrian borders, as in Serbia, and three times as high in Serbia as in Kosovo in the south. The same logic of economic development would lead the Slovak speaking areas of Czechoslovakia to suffer, along with the southern republics of the USSR (from Armenia to Kazakhstan) and wide swathes of its Russian speaking heartland. It would also lead to some of the East European states doing much worse, comparatively, than others: already Western enthusiasts for the European Community are making a distinction between those relatively advanced states which might possibly be 'fit' to join it (usually East Germany, sometimes Czechoslovakia) and those which can at best aspire, as slow developing regions, to 'associate' status.

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 USSR and Yugoslavia this will lead both to nationalist revolts against the central power and to communalist attacks on minority nationalities.

The third, and potentially most important, resistance will come from the workers. Yugoslavia, where marketisation is most advanced, saw a massive wave of strikes in 1987 and 1988. In East Germany strikes are inevitable as the regime (whoever runs it) tries to raise the price of essential goods towards West German levels. In Bulgaria there was 'a surging wave of strikes' in January, with a 'miners' strike which spread like an avalanche'/4" In Czechoslovakia the deputy federal premier, Carnogursky, warned of 'alarming reports of anarchy in many enterprises'.' In Poland there was still enormous faith in the Solidarnosc ministers at the beginning of the year; nevertheless, there was a spate of strikes, for instance in the mines.

The most important strikes were those in the USSR's mines in the summer of 1989. The initial demands at the Shvyaskov pit in Mezhdurechensk, where the strike began, were immediate economic ones—for a proper canteen service at the pit, for warmer working clothes in the winter, for 800 grams of soap a month. But as the strikes spread they became a focus for much more wide ranging discontent. This discontent arose both from the limitations of Gorbachev's reforms and from the direction they were taking. As the chair of the Kemorovo action committee, an electrician at Volkov mine, put it, 'with the new economic management conditions, working conditions for workers have not changed and yet the work has become more intensive—pay which was supposed to go up with physical labour expended has not gone up in such a proportionate way..."42 Posters combined economic and more political demands: 'Down with the bureaucrats', 'Give 40 percent for nights, 20 percent for evenings'.24' Soon other demands were being thrown up as well: for better pensions, for extra holidays, for longer maternity leave. There were bitter complaints from miners interviewed on the official media about the contrast between their conditions and those of their bosses: miners never got travel passes, while 'the whole administrative apparatus travel very often';244 'the party leaders of the oblast live in fine buildings', while the miners have 'wretched hovels downwind of the chemical discharges'.245 By the third week some of the strikers in the Donbass were demanding the immediate end of all official privileges, such as special shops for party officials, a new, more democratic constitution for the country, and the right to form their own independent union.

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 Karaganda, said:

“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 Vorkuta struck in protest again in November they did not get active support elsewhere in the country and their strike eventually crumbled in the face of Gorbachev's new anti-strike law. But the summer strikes were seen by Gorbachev himself as a bigger threat even than the struggles of the minority nationalities. He told the Supreme Soviet::

“This is perhaps the worst ordeal to befall our country in all four years of restructuring. There has been Chernobyl, there have been various other misfortunes. Nevertheless I am singling this out as the most serious and most difficult."

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 Poland. So it was that during the political changes in Czechoslovakia in November, the most prominent figures in the Civic Forum only called for a two hour general strike and asked workers to make up lost production in their own time. So it is that the attitude of the Congress of Deputies group round Yeltsin to the miners' strike in the USSR was not that different to Gorbachev's—Yeltsin was prepared to denounce the conditions which had given rise to the strike, but then called on television for the miners to 'display a special feeling of responsibility to people and to the country' and to return to work.'4"

The gap between the radical democrats and the workers' struggles is brought out most vividly in the case of the USSR over the question of co-operatives. The radicals see these as a magical cure for the country's problems, embodying as they do the ideals of small business and individual enterprise. Yet in practice the USSR's co-operatives provide very expensive services for the middle classes that workers cannot afford. They are only able to do so because of their ability to get hold of things that are not even to be found in the shops frequented by the masses. No wonder the mass of workers regard the co-operatives with nearly as much distaste as the special stores to which the party elite have access.

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 East Germany, the defence of the state as a whole against its absorption into West Germany.

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 Poland, for example, this is the way the pro-market ministers intend things to go. 'They intend', an interview with one of their advisers, Stanislaw Gomulka, states, 'to begin with small privatisations and to steadily extend the process on the British model.'"4

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 Eastern Europe get trapped into putting forward schemes for making existing society more just and more efficient. They discuss endlessly how industry could be reorganised in a less wasteful manner, how workers could be persuaded to work better, how to get the right combination of market and plan. Yet they do so without starting from the most basic truths: that they live in a class society where one class lives a very comfortable life at the expense of the other class (hence the tendency to talk about a 'self managing society' not a society under workers' control), that such a society has a state cut off from the rest of society and absorbing an enormous portion of the social output, and that any talk of 'the nation's interest' or 'society's interest' conceals these facts.

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 USSR and we would not worship, say, a Latvian national state either.

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 USSR even the first step has not been taken. Fearing the chaos the group around Gorbachev have hesitated to move forward, yet at the same time they know they cannot move back. But if state capitalism cannot transform itself into multinational capitalism, then we are in for a very long phase of bitter social struggles and the forces of genuine socialism, although small, have everything to play for.

Parties which eulogise the 'free market', multinational form of capitalism already exist openly throughout Eastern Europe and semi-openly in the USSR. The remnants of the old political apparatuses of state capitalism are creating new parties of their own, hoping to restore their political fortunes by demagogy designed to make those who suffer under restructuring forget the suffering they endured under the old order. The propagators of racism and communal hatred stand in the wings, ready to seize on disillusionment. The urgent task for genuine socialists is to build parties of their own, standing in revolutionary opposition to both the old and the new versions of capitalism.


1 Financial Times, 24 January 1990.

2 Yeltsin quoted in Financial Times, 19 January 1990.

3 Independent on Sunday, 4 February 1990.

4 As Yorkshire organiser Ramelson was directly responsible for their expulsion from the Communist Party. Nineteen years earlier, in May 1937, Ramelson had been among the troops sent by Stalinist leaders to deal with the anarchists and the POUM in Barcelona.

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 (London, 1948) reprinted in a slightly amended form as Stalinist Russia: A Marxist Analysis (London, 1955) and State Capitalism in Russia (London, 1974 and 1988).

9 Z Medvedev, Gorbachev (Oxford, 1988).

10 For an account of Andropov's role by the Budapest police chief in 1956, see S Kopacsi, On the Side of the Working Class (New York, 1987).

11 J Bloomfield, ed. The Soviet Revolution (London, 1989).

12 T Ali, Revolution From Above (London, 1988) pxiii.

13 Report in Labour Focus on Eastern Europe, July/October 1987.

14 Interview in London, January 1990.

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 USSR' as 'one of Washington's crazier projects' in his introduction. See T Ali, op cit, pxiii. How perceptive Tariq is of Soviet reality was shown three years earlier when he wrote, after an official visit to Tashkent, 'I saw absolutely no evidence of a revival of religion in Soviet Central Asia. . . Western "analysts" who have been talking of Khomeini type stirrings are wide of the mark.'

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.

41 Moscow News, 25 October 1989.

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, Moscow News, 17 December 1989.

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 Moscow News, 31 December 1989.

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 Warsaw.

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 East Berlin, 22 December 1989.

67 Ibid.

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 Prague, 11 December 1989.

71 Ibid.

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 Eastern Europe, 19 and 28 December 1989.

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 Soviet State (London, 1962).

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 (London, 1989), p34.

84 T Ali, Revolution From Above, p80.

85 B Rizzi, The Bureaucratisation of the World (London, 1985), p87.

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 (Detroit, 1967) ppl8-J9.

87 M Rakovski, Towards an East European Marxism (London, 1978), pl03.

88 Ibid, plOl.

89 G Bence and J Kis, 'After the break', translated in F Silnitsky, L Silnitsky and

Karl R Reyman, Communism and Eastern Europe, pl40.

90 M Schachtman, The Bureaucratic Revolution.

91 'Towards a political economy of the USSR', Critique, no 18, spring 1973, p22.

92 In debate with Alex Callinicos at the Socialist Workers Party annual school, Marxism, in 1981.

93 In The Soviet Union Demystified (London, 1986).

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 (Washington, 1989), plO.

101 Someone should remind Ticktin of the ditty from 1958, 'Catch a falling star and put it in your pocket, send it to the USA.'

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 (London, 1986), p8.

106 Ibid.

107 Estimates quoted by Kaser, ibid, p9.

108 Ibid.

109 T Cliff, Slate Capitalism in Russia, op cit.

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 China (London, 1957) and N Harris, The Mandate of Heaven.

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 (London, 1969).

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.

116 Ibid.

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 (Moscow, 1961), pp648-652.

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 del modello sovietico in Cecoslovacchia (Turin, 1970).

123 Figures given in M Kaser, Comecon (London, 1967), pl40.

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 US, where competition between arms manufacturers is a myth, as in the USSR. At the same time a portion of the USSR's arms are sold—the country is the world's second largest arms exporter.

127 Those who see the USSR as 'non-capitalist' usually talk about the 'working class' without being able to explain why, since a working class is a specific product of capitalism and no other mode of production. If they were logical the 'new class' theorists would use a term such as the 'state slaves'.

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 (London, 1989), pp463-4.

130 N Bukharin, Imperialism and the World Economy (London, 1972) and V I Lenin, Imperialism, the Highest stage of Capitalism.

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 Poland, Czechoslovakia and East Germany 1937-62 (London, 1964).

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, 'Belgrade lecture of November 1957', quoted in Kaser, ibid, pl5.

141 For an account of these arguments see Brus, op cit, pp612-614.

142 Figures given in B Arnot, Controlling Soviet Labour (London, 1988), pp25-26.

143 Kaser, Introduction op cit, pi. NB His figures exclude East Germany.

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 Eastern Europe see ibid, pi49.

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 (London, 1984), ch 1.

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 China', (first series) 29, 1966, reprinted in Neither Washington Nor Moscow (op cit), pp 143-165.

161 See C Harman, 'Cuba, the End of a Road', (first series) 45, November/December 1970.

162 Calculations in M Kidron, 'Memories of Development', in Capitalism and Theory (London, 1974), pi72.

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 Czechoslovakia in the 1982 edition of the work occur in an abridged form).

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 (London, 1982), p36.

169 Gierek, transcription of speech in Gierek, Face aux grevistes de Szczecin (Paris, 1972) p37.

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 (London, 1983).

176 For such predictions, see references in Class Struggles in Eastern Europe (London, 1983).

177 Moscow News, No 24, 1989.

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, 'Poland and the Crisis of State Capitalism', (first series) 93 and 94.

180 C Harman, Class Struggles in Eastern Europe, op cit, p332.

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 Kazakhstan alone is six million.

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 USSR and the Muslim World (London, 1984), pl33.

197 Although he did send in troops to shoot down some hundreds of people in Georgia in 1956. There was a full account of this in Literaturli Sakartvelo (Tbilisi), 8 April 1988, translated in BBC monitoring service, April 1988. There is also a reference to it in Kopacsi, op cit.

198 For details see T Cliff, Russia: A Marxist Analysis (London, 1964), pp327-333. (The more recent editions, under the title State Capitalism in Russia, do not contain these sections of the work.)

199 Y Roi, op cit.

200 Ibid.

201 Guardian, 13 July 1988.

202 Kommunist, 29 September 1988.

203 22 October 1988, in BBC monitoring reports, October 1988.

204 Kommunist (Yerevan), 29 September 1988, translated in BBC monitoring report, 12 October 1988.

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 Azerbaijan party leaders in the pogroms: speech in London 12 February 1990.

208 This was very much the interpretation put on what was happening by Boris Kagarlitsky in interviews when he was in London in autumn of 1989: for a published version of his argument see New Statesman and Society, 10 November 1989.

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, London, 27 January 1990.

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 Czechoslovakia (Oxford, 1980). pl48.

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 (London, 1984).

217 Interview in Moscow News. 29 October 1989.

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 (Brighton, 1979).

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 (London, 1986), p26.

225 'The revolution in the Magic Lantern', The New York Review of Books, 18January 1990.

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.

230 Ibid.

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 London, September 1989.

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.

241 Prague Radio, 27 January 1990.

242 Quoted, Moscow home service, 14 July 1989, in BBC monitoring report, 17 July 1989.

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 London, October 1989.

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 Moscow radical since the miners' strike.

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 Wroclaw.

253 Even in the USSR, the biggest extension of state ownership was during the 'Stalin revolution' over 1928-9, and not the workers' revolution of 1917.

254 Independent, 5 February 1990.