Issue 204 of SOCIALIST REVIEW Published January 1997 Copyright Socialist Review

The reform that failed

Dave Crouch

In January 1987 Soviet leader Mikhail Gorbachev announced major changes in the running of the Soviet economy: workplace democracy, elections and economic decentralisation. Many on the left put their faith in 'perestroika', and even now Gorbachev is often remembered as a peacemaker who changed the course of history. This view is badly mistaken and prevents a clear understanding of events in Russia today.

Ten years ago the Soviet Union was approaching a deep crisis. Economic growth had slumped. Gorbachev's economic adviser Aganbegyan wrote, 'In the period 1981-1985 them was practically no economic growth. Unprecedented stagnation and crisis occurred during the period 1979-1982, when production of 40 percent of all industrial goods actually fell.'

The new surge of arms spending under US president Ronald Reagan demanded a response from the Soviet Union. At the same time Soviet troops were losing a bloody colonial war in Afghanistan, with potentially dangerous consequences for the rest of the empire.

Gorbachev sought a way out of the crisis that would restore the Soviet Union's competitiveness, head off workers' revolt and maintain the dominance of the ruling elite. At first he turned to the methods used by previous Soviet leaders. As early as 1956 Khrushchev had announced 'revolutionary perestroika'. Khrushchev exposed the extent of Stalin's crimes, permitted criticism and dissent, and experimented with market economics, introducing concepts such as sales, profit and rate of profit into economic planning. These reforms were followed by further campaigns to restructure the economy in 1966,1979 and 1983.

Gorbachev's first steps were no different. He talked not of 'perestroika' (restructuring) but of 'uskoreniye' (acceleration), ie tightening up the existing system to squeeze more out of workers. He cracked down on workers' leisure by targetting alcohol as a threat to productivity, raising the price of vodka, closing shops and burning vineyards. Gorbachev publicly exhorted workers to work harder, and even praised the Stakhanovite shockwork movement of the 1930s.

But the results of these tentative measures were insufficient. As the situation worsened, so individuals in the ruling class began to seek more extreme solutions. To understand why, we have to take a brief look at the reasons for the Soviet crisis.

The state capitalist command system suffered from two underlying difficulties: how to control the lower levels of the bureaucratic hierarchy, and how to motivate the workers themselves. These problems in turn resulted from the fundamental dynamic of the system-the rapid accumulation of capital driven principally by the arms race with the US.

Planned targets for economic output were set outrageously high. Since rewards were forthcoming only upon fulfilment of the plan, and bureaucrats' careers-even their lives-depended on meeting the plan targets, this was a recipe for lying, cheating and corruption in the state apparatus. Rigid Communist Party discipline was gradually eroded. The chain of centralised command became bogged down in bureaucracy, making the Soviet economy prone to shortages of key goods that dragged down overall growth rates.

While it was easy to set targets for gross output, quality control remained elusive. This was of little significance during the Stalin period when large quantities of crude goods such as steel or concrete were at a premium, but it became a problem when the economy demanded precise, reliable technologies.

The need to increase incentives and cut inefficiency and bureaucracy is common to any capitalist firm. And it was these factors that governed all past attempts to reform the Soviet system, including Gorbachev's. Thus decentralising economic control was an attempt to bypass the bureaucratic quagmire and place responsibility directly on local management. Privatisation and the market were the next steps along this road, as the administrative system of motivating producers was ditched in favour of unmediated economic incentives.

Elements of press freedom and scope for criticism (called 'glasnost' or openness) were essential in order to reveal the corruption and bureaucratic inefficiency clogging up the economy and workers were to feel that they had a stake in production and that their diligence would bring them corresponding rewards. Workplace elections of management, decentralisation and workers' share ownership were attempts to increase work- ers' commitment to their jobs.

Gorbachev's disarmament initiatives were closely tied to reducing the burden of the arms race on the Soviet economy. Similarly, the military support of the satellites states in Eastern Europe as a buffer to Nato was a huge drain. The Soviet Union had a direct economic interest in an end to the Cold War.

Moreover the Soviet ruling class wanted an end to economic isolation. Full integration into the world economy was a necessity if the Soviet Union was to gain access to advanced technologies that it was unable to produce for itself, and which were essential to raising productivity.

But perestroika had more than a purely economic logic. As hatred for the corrupt and bankrupt state apparatus grew among the population, so did the urgency of separating it from the economy and removing the Communist Party's dominant role in society.

None of the measures that Gorbachev introduced impinged in any significant way on the main power base of the Soviet ruling class: the bureaucracy, the police, army, judiciary and, of course, management. On the contrary, perestroika was designed precisely to strengthen these institutions. Though he obviously revelled in the praise heaped upon him for being a 'radical' reformer, Gorbachev was not motivated by ordinary people's needs. He was a ruthless and canny fighter for his class, the Soviet boss class, and as soon as events threatened to put that class at risk the smile evaporated and the gloves came off. Far from being a 'man of vision' constantly frustrated by 'reactionaries' in the leadership, he repeatedly turned to these people for support.

The first clear example of this was in the Soviet Republic of Kazakhstan in December 1986, when the Kremlin's summary imposition of a Russian to replace the local republican leader sparked riots that were dealt with ruthlessly. It was a sure sign that the Soviet Union was a tinder box The talk of glasnost by the leadership was the spark that set off mass movements demanding democracy from below.

Soviet leaders since Stalin had reimposed the dominance of Russia over the former Tsarist empire, Russifying language and culture and pitting smaller nationalities against each other in a game of divide and rule. Now millions of non Russians came out onto the streets of Armenia, the Baltic States, Ukraine, Georgia and elsewhere to demand national self determination. Gorbachev's answer was armed repression. In the spring of 1988 he flooded the Armenian capital with troops and arrested leaders of the national rights movement.

In Georgia in April 1989 Soviet troops attacked and killed women independence demonstrators. In Baku in January 1990 after pogroms against Armenians had ceased- Soviet tanks crushed the Azeri independence movement, and a year later Russian troops invaded the capital cities of Lithuania, Latvia and Estonia with the loss of dozens of lives.

In Russia itself there was a flowering of 'glasnost from below' -from the myriad of discussion groups to the big Popular Fronts that mobilised hundreds of thousands. For the first time since the Russian Revolution strikes shook the country when half a million miners came out in the summer of 1989. Initially provoked by the absence of soap, their demands rapidly grew to include an end to the one party state, better childcare facilities and an end to pollution.

The miners' action sparked a massive wave of strikes throughout the Soviet economy and led to the first independent trade unions. Gorbachev's reaction was to slap a ban on strikes-which was entirely ineffectual. The situation in the economy had become desperate, with chronic food shortages, rationing, and riots over the lack of cigarettes. Rather than improving economic discipline, decentralisation had only accelerated the growing chaos in Industry, making the situation even worse. By now Gorbachev was universally hated by the population, and at the May Day parade in 1990 he was forced to slink off his platform on Lenin's mausoleum as marchers demanded his resignation.

With workers fighting back and the economy spiralling into recession, the stage was set for a crackdown. Having largely backed perestroika at first, the bureaucracy split. On the one hand there were those who believed that the only way out was to accelerate market reform, either sugaring this bitter pill for workers with greater glasnost or smashing all dissent. On the other hand there were those in favour of a return to centralised state control to force change through.

From mid-1987 voices in the ruling class calling for an end to perestroika grew louder. In November Gorbachev humiliated and sacked the Moscow Party boss, Boris Yeltsin, for calling for a quicker pace of change.

The question of an end to all strikes and demonstrations was debated at a politburo meeting in December 1990. The January 1991 invasion of the Baltic States was a dress rehearsal for what was to come. Gorbachev decreed himself unprecedented powers, announced he would not shrink from the use of force, kicked out his liberal allies and packed the leadership with conservative hardliners such as KGB chief Kryuclikov, interior minister Pugo and defence minister Yazov. In August 1991 these men organised a coup attempt, which was defeated when tens of thousands of Muscovites built barricades to stop the tanks.

Significantly, the coup leaders were not opposed to market reforms. As one of their number, finance minister Pavlov, later wrote, they had a definite plan for introducing the market sector by sector, but were worried at the scale of strikes and the breakup of the empire.

The failure of perestroika to make Russia a fairer society or improve workers' living standards has important lessons for socialists. Firstly, the Soviet Union was not a socialist state whose defects could be reformed away. It was an exploitative class society. Any attempt at reform without tackling the power of the state was bound to collapse.

Secondly, it was not because of Gorbachev, but despite him, that workers won national liberation, the right to organise and protest. It was the struggle of millions of ordinary people, often at great risk to themselves, that broke the back of the Soviet dictatorship.

Thirdly the collapse of the Soviet system shows not the bankruptcy of planned economy, but the failure of planning imposed on workers in the interests of the ruling class-not the crisis of socialism, but the crisis of bureaucratic state capitalism.

That crisis continues to this day. Russia's current leaders are almost without exception former high ranking Communist Party bosses who have changed their slogans but stuck to the same old methods. The deep and explosive divisions in the leadership today are not between socialism and capitalism, or even democracy and dictatorship, but between state capitalist and market capitalist solutions to the crisis.

The tragedy is that workers so hated the old system that they put their faith in market capitalism. In the space of just five years that faith has been seriously. undermined as workers' living standards have dropped through the floor. But the Russian working class is the only force that can wipe away the memory of Gorbachev and Yeltsin. and clear the way for the revolutionary socialist restructuring of Russian society.

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