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This article was posted on Jan. 31, 1994 to a few mailing lists and USENET bboards.

SPURS — Special Program for Urban and Regional Studies at MIT

This program was begun by MIT a year and a half ago to address a perceived need to train early and mid-career economics and business leaders from the "developing" countries in the intricacies of the world economy and of modern business methods. Organizationally is seems to be under the Dep't of Urban Planning with probably some input from the Sloan School of Management.

The program head, Prof. Karen Polenske had organized a three- day public forum on international development issues presented by SPURS Fellows, a group of visiting mid-career professionals and scholars. This Forum ran during the last week of MIT's annual Independent Activities period in January of 1994. There were 15 lectures in all, the final six about the former Soviet Union

What follows is my very critical review of these six lectures.

Impact of Organizational Structure On the Economy

by Vladimir Alexeev, PhD, Russia

Dr. Alexeev attempted to present an overview of the changes in corporate management in the West and their applicability to the emerging Russian capitalism.

He described the impact of new technologies — computers and communications — as they speed up and rationalize industrial research and development, introduce feedback and corrections into the process of design and do away with whole layers of management. Alexeev predicted that in view of automation and shrinking work forces corporations will pay less attention to direct labor costs in a particular location and will move production to the major consumption markets and concentrations of highly trained or trainable labor, i.e. to the developed industrial countries (USA, Japan, EEC, Brazil, Mexico, India, etc).

Dr. Alexeev admitted his shock when he found that the "free market", "laissez faire" economy described by Adam Smith in his "Wealth Of Nations" has been eclipsed by highly centralized corporate cartels and monopolies, which practice central and far reaching planning on a scale undreamt by the Gosplan.

An important factor left out by Dr. Alexeev was the development of the transnational corporation, the global economy and the global labor, raw materials, commodity and capital markets. Today's giant industrial corporations span the globe and their capital formation is international as investments move with the speed of light from one country and continent to another. Secondly, industrial production is totally eclipsed and subservient to the most speculative and volatile financial capital. Keynesian development of post WW II capitalism was based on pump priming, growth of commercial and government indebtedness, deficit budgets, illusions of permanent credit expansion and the like.

The second part of this talk (Russian development) was unsure and, frankly, non-existent. Dr. Alexeev played a recording of a BBC radio broadcast about widespread official corruption in Russia. This corruption reaches into the highest echelons of power and grows stronger with time.

In the opinion of this observer, the development or Russian capitalism may best be likened to the "progress" of an automobile falling down a ravine as first the wheels come off, then the windows and headlights are smashed in, then the engine falls off, and finally the gas tank is punctured and explodes.

Kaliningrad Region: Uncertain Future For a Russian Enclave

by Alexander Gloukhov, Diploma, Russia

Mr. Gloukhov is the Assistant Director of the Dep't for Foreign Economic Relations of the Kaliningrad City Administration. His talk and his personal past as an officer in the Soviet Navy well reflected the anomaly of this enclave's position.

Kaliningrad is a small region which served in the past as a military outpost of the USSR. Formerly East Prussia, it was annexed by Stalin at the end of WW II, its German population fled and/or was expelled and it was populated by military personnel and their dependents. The Soviet military used the region as a forward staging area for the conquest of the Baltic in a future war against NATO.

Today, out of a total population of 900 thousand, 200 thousand are military personnel, many of the rest are their dependents. The area has a small pulp and paper industry, a tiny oil-production capacity of one million tons per year and a sizable fishing and military transport fleet which is today slowly rusting in port for lack of fuel and spare parts.

Today this militarized region is an aggravating point in the unstable and volatile Eastern Baltic. The immediate neighbors — Poland to the West and Lithuania to the East — demand its demobilization. The overland connections to Russia are blocked by three or four frontier crossings. The port is fairly old and obsolete. The old Hitler-built highway through Poland to Germany and the rest of Europe is potholed and rutted; Poland is not interested in developing traffic between Kaliningrad and Europe.

Mr. Gloukhov places his hopes for development on elderly German tourists reminiscing about old Koenigsberg, on the creation of an autonomous — from Russia — "Free Economic Zone" and on a regional development by Lithuania, Poland and the Kaliningrad region under some sort of a "condominium" shared sovereignty.

This observer sees no factors that would support conjectures of peaceful capitalist development. Agriculture is in terrible shape since the land has been polluted by the extensive military bases; fishing in Eastern Baltic is dead because of pollution. The port is in bad shape and is inconvenient as a transshipment point between Scandinavia and Central Europe; Poland is more interested in rescuing its own dying ports in Szczecin, Gdynia and Gdansk; ditto for Lithuanian bourgeois leaders of both the nationalist and the "communist" variety. The bourgeois leaders of Russia, Poland, Lithuania and Kaliningrad will inevitably come to blows as each attempts to redirect the popular anger over the collapsing economic and social conditions and to channel this discontent into a series of regional ethnic, religious, language and civil wars.

Kazakhstan: a New-Born Country

by Alma Ourazalinova, PhD, Kazakhstan

Dr. Ourazalinova received her economic training in Moscow. Last year she worked for the Mitsubishi Corp. which is interested in the development of metal and Rare Earth extraction in the rich Kazakh subsoil. More recently she did an in depth study of the deal between the Chevron Corp. and the Kazakh gov't to develop and triple oil production in the republic.

Dr. Ourazalinova noted that there is contention between Russia and Kazakhstan over the Baikonur spaceport. She omitted to mention Russia's demands for a cut in any deal that any Central Asian republics make with the West. She said that oil production remains stable but her notes state that in general the Kazakh economy shrank by 10% in 1992 and by 14% in 1993.

This trend away from general industrial, consumer and food production and towards greater and more exclusive reliance on extraction of oil, gas and other raw materials would place Kazakhstan on a road to regressive development and greater subservience to the West and to one or another imperialist power.

Such a course would condemn the masses to Stone Age poverty, religious obscurantism, diseases, social and cultural regression. The presence of Russian plurality (according to the latest census Kazakhs formed 36% of the population while Russians formed 40.8%), especially concentrated in the northern part of the republic, would in the conditions of economic dead end and degradation lead to breakaway movements and to a series of border wars. There are, for example, plans to move the Kazakh capital from Alma Ata to the center of the republic to escape proximity to the war torn Kirghizia and the other Central Asian battlefields.

In private conversation Dr. Ourazalinova admitted that the authoritarian Kazakh leaders model themselves on China where the heirs of Mao Tse Tung preserve the system of "red" gendarmes and "communist" totalitarian control as they turn themselves and their families into legal capitalist owners of land and businesses.

Ukraine: Its History and Its Future

by Stella Tkachenko, Diploma, Ukraine

Reviewing this lecture is a particular problem. I was born in Ukraine and am somewhat acquainted with the explosive developments of the past period. After watching the explosive growth of Solidarity in Poland and the apparent weakness of the previously invincible bureaucary, Ukrainians have with shock discovered the truth about Stalin's genocidal starvation policy of 1932-33 during the early Glasnost period. Kremlin's Russification policy of past decades had provided additional impetus to reject Moscow's tutelage. Chernobyl and the callous policy of Gorbachev had added to the nationally directed indignation of Ukrainian masses.

Ukraine is in addition an extremely heterogeneous republic. Mining and heavy industry dominate in the eastern sections around Donbass and the eastern bend of the Dnieper; the central parts are agricultural; Crimea boasts of an extremely important tourist industry and specialized horticulture, viniculture, etc.; the Carpathians and Western Ukraine are another quite distinct region with important consumer industries and competing religious and cultural forces. In Western Ukraine (part of Poland until 1939) the Rukh and fascist offshoots of the nationalist movement dominate; this region was also the scene of religious wars between the Russian Orthodox and the Greek Catholic rites. The South — Odessa and the Black Sea coast — had been russified, petty bourgeois influences predominate there. The Crimea is its own cauldron of competing interests: the Black Sea Fleet with its hundreds of rusting warships and its tens of thousands of sailors, officers and their dependents; the mostly Russian population which is used to the tourist trade of the whole USSR; the Crimean Tartars expelled by Stalin in 1944 and now returning to the Crimea and presenting their own demands. On the other hand, the industrial cities between Kharkiv and the Dnieper have a mixed Ukrainian and Russian proletarian character. These millions of workers have no future in a separate Ukraine.

Ukrainian political development has been explosive. Nationalist Rukh (Ukrainian word meaning movement) had captured the cities of L'viv, Ternopol and Ivano-Frankivsk quite early on. The old apparatchiks have hung on elsewhere by means of maneuvers and consessions to the rabid nationalists. They have adopted the nationalist coloration, switched languages from Russian to Ukrainian, tore down the Lenin icons and monuments and hung up the icons of Taras Shevchenko (national poet) instead.

Economically, Ukraine is a basket case. Separation from Russia dealt a death blow to industry. Even agriculture — on which the hopes of Ukrainian separatists hinged — is in a crisis for lack of fuel, machinery and spare parts. Inflation is in the hyper stage with prices increasing daily. Ukrainian oil and coal production is limited and it cannot afford to pay Russia world prices for oil and gas. It is a very cold winter for tens of millions of Ukrainians.

The actual title of this lecture was changed to Ukraine's Policy Toward Its Ethnic Minorities. Even a casual observer of the minority policy of the Ukrainian gov't would note that rational discourse and decision making has long been replaced by zigzags, knee jerk reactions, kowtowing to vocal fascist student groups, forced Ukrainization, etc. The language policy is draconian when compared to bilingual countries like Finland, Sweden, Belgium or Switzerland (trilingual). In any case, the proclaimed policy remains pure verbal trickery, any piece of legislation turns into worthless scraps of paper. The amputated Ukrainian economy continues to implode and the life of the working class grows worse from day to day. The bourgeois leadership of Ukraine and of its various minority groups attempts to redirect the resulting discontent with the consequences of capitalist restoration into the dead end channel of ethnic conflict and chauvinism. This course leads Ukraine to a three or four way split (Western Ukraine, Central Black Earth region, South and the Crimea, and Eastern industrial region and the Donbass). This way is the madness of fratricidal civil, religious and ethnic wars.

Ms. Tkachenko decided to mention none of this. Instead she talked of the liberal views of the national leadership, the democratic credentials of the Kravchuk government, the freedom loving legislation passed by the Ukrainian Parliament, etc. We were treated to a piece of government propaganda as crude and abhorrent as the infamous "Short Course on the History Of the CPSU" published by Stalin in 1938. One tended to be reminded of the Stalinists' boast that the 1936 Constitution was "the most democratic in the world". This exhibit of slavish conformism may perhaps be attributed to the fact that Ms. Tkachenko came here from the Ukrainian government "Department of Information Service". We note Ms. Tkachenko's slavishness and pass on.

Chingis Khan: His Influence on Russia

by Galina Polinova, Diploma, Kalmykia

This is a difficult subject. A satisfactory explanation of the results and influences of tribal migrations and intertribal collisions of various competing ethnic groups in their various and unequal stages of development would call for specialized knowledge in such disparate sciences as geography, archeology, climatology, political economy, linguistics, agriculture, philosophy, etc.

Ms. Polinova showed me the book by L. N. Gumiliev on which she attempted to base her lecture and I must confess that I found it difficult to comprehend the author's thesis on the evolution of the biosphere and on ethnogenesis.

The only thing that we can note in connection with this subject is the attraction which the ex-Soviets feel for ancient history. This abstruse book was published in 1992 in a 50,000 copy edition. Perhaps ancient history seems attractive because through the physical annihilation of generations of Soviet modern historians as well as the wholesale murder of witnesses and participants in the Russian Revolution, Stalin destroyed Modern History as a science. Stalinist falsification of history also had the tendency to drive any honest scientist backwards towards the relative safety of ancient times.

Russians Return To the Global Economy

by Vladimir Moiseev, Diploma, Russia

The title of this talk belied its contents. Mr Moiseev talked primarily about the forms which privatization of both land and the various production, service and trade enterprises was taking in Russia. He attempted to outline the differences among state enterprises, leaseholds, joint stock corporations, joint venture firms, foreign owned firms and other forms of more or less privatized businesses. He also gave a rather one sided interpretation for the relative success of private businesses as compared to the state run organizations: mobility, enterpreneurship, vigor, market sense, etc.

Left out of this presentation was an explanation of the real driving forces and the realities of the wholesale plunder of the economy which is going on across Russia and the other states of the former Soviet Union.

The same Stalinist bureaucrats who were running (and ruining) the Soviet economy for decades have now joined in a symbiotic (albeit at times competitive and acrimonious) relationship with the enterprising black marketeers, gangsters and speculators and with the foreign corporations and international banks. These elements are conducting a wholesale plunder and auction of the accumulated wealth of the Soviet economy. The output of the oil, gas and mining industries is being diverted to the international market while the domestic industries have been starved of fuel, raw materials and financial resources. World Bank estimates that 90-95% of the foreign currency earned from these fire sales of oil, gas, aluminium and other raw materials flow out of Russia to safe havens in the numbered accounts of the various Western banks.

This plunder and destruction of the economy are carried out at the expense of the working masses of Russia and the other republics. According to official government statistics over 35% of the population has sunk below the poverty level. Masses of workers and their families are reduced to lives of poverty and degradation as both jobs and the basic social services are being wiped out.

The emerging Russian bourgeoisie has no future, no long range plans, no outlook, no historic perspectives. It is characterized by greediness and rapaciousness; it lives for today. Historically speaking, Russian bourgeois development came to a dead end in 1917. The mission of this Russian bourgeoisie, insofar as it has one, is to be the slave driver and manager on behalf of the multinational corporations, banks and the imperialist governments tearing into the body of Russia.

This addendum to my original article about SPURS was posted on May 3, 1994 to a few mailing lists and USENET bboards.

SPURS graduates three months later

Dear readers,

some of you probably remember my extensive review of the presentations given by six SPURS fellows this past January. SPURS (Special Program for Urban and Regional Studies) is a new MIT inter- departmental program which brings economics professionals from "developing" countries for a year's study at MIT's Sloan School of Management, Economics and Urban Studies dep'ts. Afterwards, these professionals are expected to go back to their countries and contribute to their economic development.

It has been brought to my attention that most of the SPURS Fellows from the former USSR are now in the process of trying to prolong their stay in the USA, searching for internship positions and various other means to delay their return. A discussion with three of them revealed that they do not see a possibility of applying Western business techniques back home, that business structures in Russia are ephemeral at best, criminal at worst.

I do not raise the question of the personal decisions of these individuals. Every human on this planet should have the right to live and work anyplace he/she pleases.

Rather, what interests me is to make an evaluation of this particular program and similar programs. What lessons for the future of Russia can be drawn from the mass migration of educated Russians to the West? What is the future of Russian capitalism? Finally, what of the working class in Russia and the other republics? They cannot migrate to Sweden or the United States.

Posed in this way, we see that the schemes of turning the post-Soviet economy into a "normal market economy" result in exactly that: the normal working out of the laws of competition, the forces of world market are driving the Soviet industry and the whole economy into extinction.

The plain fact is, Russian capitalism reached a dead end back in 1917. October revolution and the dictatorship of the proletariat were the historically necessary and legitimate consequences of the impossibility of developing the Russian economy and culture within a world economy dominated by more advanced capitalist rivals. Russian capitalism collapsed in 1917 and it is bound to collapse at the end of the 20-th century.

For the mass of the population, the working out of the laws of capitalist competition imply destruction of the whole basis of existence. The giant industries, the cities built around them, the culture developed on their basis, all these are destined for destruction. The automobile plants, the chemical plants, electronics factories, any industry you care to name, is uncompetitive on the world market. Masses of workers and their families are being surplussed; they are no longer needed in the process of capitalist profit production.

The Trotskyist movement was the only one which struggled against the transformation of the world revolution program of the Bolsheviks into the Stalinist program of nationally isolated "barrack socialism". It foresaw that unless regenerated by a world socialist revolution, the USSR would slide back into capitalism (see Trotsky's book "The Revolution Betrayed") and it said ahead of time that this restoration of capitalism would result in a social catastrophe.

The alternatives are clear: fascist barbarism or the world socialist revolution.