Copyright: Искра-Research

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Capitalist restoration in Russia, two years on

Copyright: Iskra Research; August 12, 1994

Since the beginning of the Perestroika and Glasnost campaign by Gorbachev both the internal and the old foreign affairs orientation of the Soviet bureaucracy began to radically shift. To understand this shift one needs a proper comprehension of the character of the Soviet state as a transitional, contradictory and unstable structure. It had features of socialist production and central planning, but also a horribly unequal bourgeois distribution of the social product, necessitating a police state to protect the privileges of the "communist" elite.

Foreign sphere

In the previous period, roughly speaking from mid-twenties on, the Soviet bureaucratic elite positioned itself in the world so as to preserve and extend the economic and material basis for its privileged lifestyle. This involved periodic changes of tactics, sometimes military takeovers of adjacent states (Eastern Poland and the Baltics in 1939 — 40, Afghanistan in 1980), at other times arrangements with capitalist countries on the basis of the division of spheres of influence (Yalta accords). The axis of Stalinist foreign policy was to serve as the mediator on the world scale between imperialism and the world working class. This mediation preserved the primary interest of the Soviet bureaucracy — the maintenance of the material base of its economic and social privileges, allowed the members of the various Stalinist national elites to skim the cream of society's wealth. Leon Trotsky characterized the Soviet bureaucracy as a counterrevolutionary agency of imperialism within the working class.

The new policy of Perestroika — with its emphasis on transforming the Stalinist apparatus into real legal and legitimate property owning class — radically changed the foreign perspective of the ruling elite. Beginning with the accession to power of Gorbachev, the ruling elite lost the old compass of geo-political aggrandizement; its foreign policy became characterized by greater and greater adaptation to the needs and requirements of world imperialism. Having no important social base inside the country, the bureaucracy looked abroad for support. We need only consider its abandonment of old clients and points of leverage (Eastern Europe, Cuba, Iraq, African states, etc.), to see that it no longer associated its social position with the defense of a geo-political power base distinct from, and opposed to imperialism.

It was this new orientation of the Stalinist bureaucracy that gave United States the green light to invade Panama, wage a war of extermination against Iraq, issue new threats to Cuba and North Korea.

Inside the USSR, the ruling bureaucracy adopted measures of disorganizing the planned economy and promoting privatization and open restoration of capitalism. Gorbachev's Perestroika embodied the conscious preparation to transform the nature of the Soviet state, preparing the restoration of bourgeois social and economic relations. In a very real sense the Stalinist bureaucracy gave up the ghost of being "communist" or "socialist". Indeed, over decades it grew to believe in the omnipotence and permanence of capitalism, much more than did the capitalists themselves.

Cracks in the post-War foundations of the world capitalist system

Its "trouble" was that just at the point when the Stalinist bureaucracies in the USSR, China, Yugoslavia, and the rest of East Europe threw themselves into the business of becoming businessmen, world capitalism entered a new period of stagnation, instability and decay. Post WW-II expansion of capitalism was based to a great extent on the American domination of the "free" world economy, on gigantic expansion of credit and financial instruments, on coordination and cooperation of the major capitalist powers united behind the United States to oppose and defeat "world communism".

However, the past decade witnessed the appearance of cracks in these foundations of world capitalism. US, from the world's central banker became its largest debtor and its yearly budget deficits sucked up greater and greater capital resources. Cooperation among the G-7 powers has given way to confrontation and growing rivalries. The mountains of debt and the various speculative investments all require ever greater rates of profit, exploitation of labor, constant drive to rationalize production, shrink work forces and move them from high to low wage areas of the world. At the same time, the mountains of debt and the multitudes of complicated financial instruments like derivatives lend greater instability to the capitalist system.

The intensified competition leaves no room for the new kids on the block: Russian bourgeoisie has no viable perspectives of survival except as an adjunct and a compradore to the Western multinationals. These are only searching for cheap labor, new sources of raw materials and, very rarely, to buy up the remaining jewels of Soviet science and technology at fire sale prices.

The events since the break up of the Soviet Union are the final act of what Leon Trotsky described as the Stalinist betrayal of the October Revolution. Over decades, the bureaucracy derailed the workers state from the path of socialist construction, introduced more and wider elements of bourgeois inequality in distribution, undermined with its crimes the original working class support for the regime.

Now, having juridically liquidated the degenerated workers state in December 1991, the Yeltsin leadership proceeds to break up the remnants of the proletarian social order — job guarantees, free health care and public education, affordable housing, cultural and sports institutions, etc. — and to impose the bourgeois order.

Social counterrevolution

It is a basic postulate of Marxism that social revolutions (or counter-revolutions) do not occur peacefully, slowly, incrementally, in an evolutionary manner. A transformation in which one class passes state power to another must require violent and catastrophic measures. Time and time again Trotsky argued in the 1930's that despite the bureaucracy's political monopoly, suppression of workers' democracy, mismanagement and abuse of the socialized economy and counter-revolutionary collaboration with imperialism, the Soviet state remained a deformed and degenerated workers' state.

Despite this stranglehold on power, mass terror and totalitarian control over the press, radio, TV, civic and cultural institutions, the Stalinist bureaucracies could not root out certain tangible institutions of proletarian social order, established by the October Revolution: the right to a job, public education, free health care, public access to sports and cultural institutions, etc.

(The various proponents of theories of "state capitalism" should ask themselves: why should a totalitarian capitalist state expend a large part of its surplus value on subsidizing cheap workers' housing or free education?)

Juridical liquidation of the Soviet Union did not present great difficulty. Due to the fatal popular identification of socialism and Stalinism, the working class did not rise to the defense of this degenerated, thoroughly discredited and anti-worker workers' state. We may draw a legitimate analogy with the collapse of the Romanov dynasty in February and of the bourgeois regime of Kerensky in October 1917. The de-jure liquidation of tsarism and capitalism in Russia was practically speaking quick and painless, since no social strata rose to defend it.

On the other hand, the de-facto transformation of the tsarist-bourgeois social order into a proletarian dictatorship was accomplished by way of a three year Civil war, bloody struggle, social convulsions and mountains of corpses on both sides.

But if the degenerated workers' state was juridically liquidated in December 1991, the transformation of a proletarian social order (albeit a vile degenerated form of it) into a bourgeois social and economic order cannot be accomplished overnight, with the stroke of Gorbachev's or Yeltsin's pen. Since the Soviet industry is with few exceptions less efficient than its competitors in the US, Japan or Germany, the logic of bourgeois economic relations means that the majority of Soviet industry and agriculture — gigantic industrial cities and their millions of workers — are unprofitable and, therefore, have to be exterminated.

What we have been witnessing in the past period, is the process of social counterrevolution throughout the gigantic stretch of Earth's land mass, from Berlin to Beijing.

This counterrevolution is characterized by liquidation of all the social benefits gained by the working class in the countries of East Europe, the former USSR and China. The formal rights to jobs, free education, public health care, equality for women, cultural and sports institutions, etc. have been taken away either directly, through mass closings of these institutions and passage of reactionary social legislation (like the outlawing of abortions in Poland and East Germany), or indirectly, through the mechanism of hyper inflation and the decimation of the budgets for these activities. And, as the Marxists contended, a social counterrevolution (or revolution) cannot take place in a peaceful, controlled and incremental manner. This radical social transformation works itself out in brutal violence, all the more terrible, because masses of people are condemned to non-being by the logic of bourgeois economic laws. One needs only to look at Yugoslavia to see what terrible forms restoration of capitalism can take.

Perestroika towards capitalism

In general, the whole period since Gorbachev's accession to power was characterized by the bureaucracy desperately trying to turn itself from a parasite on the body of a sick and mutilated workers' state into a real and legitimate property owning class. The struggles within the Gorbachev administration reflected the competing interests of the various layers and factions of the Party and state bureaucracy to control the disposition of the valuable state properties. As planning and central control broke down, the various mafias, republican nomenclatures and extra-legal entrepreneurs, traders and speculators entered the fray, each group trying to grab the choicest pieces of the Soviet economy.

The August 1991 coup attempt was a last desperate throw of the dice for the old style all-Union Party mafia against the nimbler and younger predators, both in the center and in the provinces, who backed Yeltsin and the "democrats".

We can see now the true nature of the fight between Gorbachev, on the one side, and Yeltsin, Kravchuk, Khasbulatov, and the other republican "nationalists". The nationalist demand for "sovereignty" and "independence" was a naked power grab to control the biggest fire sale in history — the sell off of the assets of the Soviet economy. This sale is now reaching its final stages: the industry is in ruins, infrastructure is beginning to implode from neglect, production is in free fall.

Economic collapse

The economies of the former Soviet republics proceed to collapse and decay, although, of course, at different rates. In general, the smaller a given republic, the more its enterprises depend on inter- as opposed to intra-republican exchange of supplies, raw materials, semi-finished and finished goods, migration of labor, etc. Since Russian enterprises suffered relatively less from the rupturing of the inter-republican trade than those of Ukraine or Turkmenistan, Russian economy looks relatively healthy when compared to the Ukrainian, Estonian, Kyrgyz, etc.

It is from this point of view that we can understand the recent popularity on the part of the populations of Crimea, Moldova, Belorussia, Georgia to either rejoin Russia or to somehow reattach the severed links with Russia.

But Russian economy seems stable only from the point of view of the outright basket cases like Ukraine or Georgia. In real terms, all ex-Soviet republican economies have been collapsing at an accelerating rate. Russian industrial production has shrunk by about half in the past three years. Recent IMF and World Bank estimates foresee a contraction of another 20% in 1994. New reports ("Financial Times" May 4, 1994) indicate that industrial production in the first quarter of 1994 has fallen by 25% compared to a year ago. It is not only the military-industrial complex which has collapsed; even agriculture, consumer goods and the export oriented industries of metal extraction and oil production are now experiencing a dramatic collapse. Whole factories and sections of industry are forced to shut down for long periods because of lack of supplies, fuel, credit, etc.

Agriculture is suffering from: shortage of fuel, lack of chemical fertilizers, breakdown and non-replacement of machinery. The mining and energy sectors are run down and worn out. The gangs of managers, government and private mafias have been basically running these sectors into the ground in the hopes of making a quick killing. Repairs and reinvestment have been neglected, workers were palmed off with some imported consumer goods or terrorized with threats of layoffs. Recent news reports speak of the shutdown of aluminum smelters and 8 — 10% drops in oil production.

There are two major schemes to counter this collapse. The first idea was popular among the Gorbachev era reformers and among the intellectuals: after breaking the Iron Curtain, opening the economy to the West, shedding the defense industry and privatizing enterprises, the Soviet/Russian economy would find a comfortable niche on the world market. That idea has been proven bankrupt. Its adherents (Gorbachev himself, "reformers" like Gaidar, etc.) have accumulated their nest eggs and had been kicked to the sidelines.

The opposite idea of rebuilding the Iron Curtain and the empire (under a tsarist instead of a red flag), and running the economy along fascist, corporatist lines is just as illusory. Its main advantage, which gives it popularity in the present political climate of Russia, is that it has not been tried yet. In this sense, Zhirinovsky's star is still on the rise. Yeltsin is eclectically moving from his yesterday's position of pro-Western "openness to the world market" to the monarchist fascism of "Greater Russia". We can now understand the real dangers of chauvinist and fascist propaganda: it is a tool to split the Soviet working class along ethnic, religious, language or cultural lines, allowing the petty-bourgeois demagogues to dominate.

The resulting government policy is characterized by wild shifts from one opposite to the other. To get another billion dollar loan from the IMF, Chernomyrdin will tell Western officials one thing today, Yeltsin may pass a corresponding decree. Next week the government will reverse itself and print up a few more trillion rubles to restart some factories and pay some workers.

Political and social reaction

The Soviet working class is paying for the betrayal of its fake leaders, from Stalin to Gorbachev and Yeltsin. It is living a hand to mouth existence of accelerating inflation, stopped wages, forced unpaid leaves, layoffs and threats of layoffs, collapsing urban infrastructure — electric power grids, transportation, water and sanitation are all decaying and beginning to collapse.

As usual, the weaker sections of the working class: women, the elderly, children, bear the brunt of these social attacks. Women are the first to be laid off. With the closing of child care facilities and the decay of schools, cultural and sports institutions, they are forced back into the kitchen, into the patriarchal degradation of the family and the church. Prostitution is rife. The "New York Times" recently ran an article detailing the sex exploitation of women in the workplace: job ads routinely advertise openings for women "without inhibitions", i. e. sex with the boss is a precondition of employment.

The elderly cannot adjust to the rat race of the new predatory capitalism. As their pensions and savings get wiped out by inflation, masses of pensioners are reduced to begging, as they wait for death and hope that their children will scrape up enough money to buy them a coffin. There is a new meaning of the word "refusenik", it is a corpse of an elderly person, whose relatives refuse to pay for burial expenses.

The children and the youth face a hopeless situation. Schools don't have money for books, for pens or notebooks, for teachers' salaries, for heat. Russian cities are filling with young beggars, thieves and child prostitutes. Child abandonment is on the rise. Stories abound of children being sold to foreigners for adoption (or worse). Cynicism and fear of the future feed the spreading crime wave, turning it into an epidemic of antisocial atavism.

The working class is still suffering from the fatal confusion of socialism with Stalinism. The only possible scientific program of opposition to the market forces is a socialist program. But this decades-long confusion is preventing the masses of workers from asserting their might in an independent class movement.

It is up to the Trotskyist movement to educate the Soviet working class as to the real nature of Stalinism, to again link it with the history of unadulterated Marxism.