Peter Taaffe: Russia’s agony

[Socialism Today, No 28, May 1998, p. 24-28]

Peter Taaffe reviews a recently published book, Rebirth of a Nation – an Anatomy of Russia, by the former Financial Times Moscow correspondent, John Lloyd (Michael Joseph Publishing, £20).

John Lloyd built a reputation in the 1980s as a perceptive industrial reporter for the Financial Times, particularly during the miners‘ strike of 1984-85. Unlike the correspondents of other bourgeois journals, he spoke to the miners themselves, including their leaders like Arthur Scargill, His articles in the Financial Times therefore carried some important insights on the progress of the strike. This approach, a combination of general analysis and acute personal observations, has now been brought to bear on events in the former Soviet Union in the 1990s.

As the Moscow correspondent for the Financial Times, he occupied a vantage point which allowed him, he claims in this book, to „give the first analysis of the construction of a new state on the bones of the old“. This book assumes added importance in view of recent events in Russia, particularly the dismissal of the Chernomyrdin government (see p. 5).

The background material provided by Lloyd on the rise of Yeltsin, the forces which shaped him and the emerging capitalist class, is very useful. The author shows that the wild, seemingly impulsive zigzags of ‚Tsar Boris‘ were predictable. However, the title of the book, Rebirth of a Nation, is a complete misnomer. Every page, practically every line, shows not a ‚rebirth‘ but the tragic disintegration of Russia and the other nations which made up the former Soviet Union. The first line of the author’s introduction to his book states: „Russia is free, as freedom is now reckoned in the world“. Then, in the next 400-odd pages, he shows that it is not ‚free‘ from mass unemployment, poverty, and misery. The only new ‚freedom‘ which exists is for Mafia-style capitalists who gorge themselves while the victims of ‚reborn‘ capitalism live in destitution. He writes about the ’success‘ of the project to restore capitalism in Eastern Europe and the former Soviet Union. Yet the benchmark, the viability of a system, is measured by the development, or regression, of the productive forces, science, technique and the organisation of labour.

Lloyd himself provides devastating facts and figures, some familiar, some new, charting the precipitous decline of the Russian economy while capitalism was restored. He states: „Soviet- Russian industry underwent the largest decline in the peacetime industrial world, as GNP shrank by nearly 50% from 1991 to the middle of the decade (on official figures)“, There have been attempts by bourgeois statisticians to challenge the scale of the collapse but even their figures show that capitalist restoration has meant a bigger drop in Russia than even that experienced in the US at the time of the famous 1929-33 slump. In one year alone, 1992, production dropped by 25% compared to the previous year. The tax take contracted and therefore the budget deficit ballooned to 15% while the money supply jumped by between 25 and 30% in a year, hastening the tendency towards hyper-inflation at one stage.

Corruption, according to Lloyd, was „fabulous, shameless and at the highest levels; it was the confirmation of the suspicions which hard-pressed men and women harboured as they saw the Mercedes swish by, the boss in the back, attended by crew-cut thugs. It was proof that the new power was absolutely corrupted, their dirt besmirching all, even to the presidency itself“.

The Russian capitalist class sprang from the bureaucracy. The bureaucracy of the Soviet Union was endemically corrupt. Yet this corruption, this book shows, has developed on a much wider and more ostentatious fashion with the development of capitalism. Bob Strauss, the US ambassador to Russia, who harboured great hopes for the development of capitalism. was horrified: „It’s like an old Texan boom town, a constant parade of con men, promoters and shady customers; the greatest collection of sleaze bags in the world“. Even Yeltsin, in February 1993. described his country as, „a Mafia state on a world scale“, stopping short of adding that he was the chief ‚Don‘.

Those who have followed the decline of the Soviet Union will find it is difficult not to take a sharp intake of breath at the scale of gangsterism detailed by Lloyd. In East Berlin, tanks were sold or bartered for cars and electronics by officers of the Red Army: generals looted Central European bases when they were ordered to withdraw in 1989; nuclear smuggling has taken place in ‚hundreds of cases‘; the top military brass used young army recruits to build private dachas, with one officer organising a ’serf battalion‘ of conscripts to build dachas for senior officers outside Moscow, Hand in hand with corruption goes a vast increase in criminality and assassinations. Bands of armed retainers, some over 1,000 strong, exist to protect capitalist thieves who have plundered and stolen former state property.

The other side of the coin. and directly linked to capitalist thievery and the drop in production. is the massive decline in the conditions of the masses. In 1995, the All-Russian Centre for the Study of Public Opinion concluded that 88% of the population were in poverty. Some capitalist economists counter-claimed that people were ‚better off than at any time in the past‘! Yet it is indisputable that by any standard there has been a dramatic decline; infant mortality, for example, grew sharply from 17.4% to 19.9% per thousand on official figures, with death-rates rising. By the 1990s, the average Russian man (women were significantly longer-living) died before he was 60. Indian men now have a longer life expectancy than Russian men. As John Lloyd comments, „under Stalin, even with mass purges, the forced starvations, and the horrors of war, life expectancy rose from 44 to 62 – to go to 69 in the late 1950s, higher than the US at the time“.

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From planned economy to ‚frontier capitalism‘

The most interesting aspect of the book, described well by Lloyd, is how the different stages of the collapse of Stalinism, and with it the planned economy, took place. The role of Gorbachev, the political and social physiognomy of the different pro-capitalist groupings which struggled for power in the 1990s, and the position of Yeltsin as the titular Bonapartist figure, balancing between all the forces at play, are all accurately portrayed. On all these issues, Lloyd confirms the analysis made by Socialism Today and its forerunner, Militant International Review, as this process unfolded. In relation to Gorbachev, for instance, he quotes a commentator who appositely states: ‚He could never decide whether to be Luther, or the Pope‘.

Gorbachev undoubtedly wished to reform the Stalinist system from the top, but ended by opening the floodgates, first of all, to the elements of political revolution and then to a social, capitalist, counter-revolution. We argued against the notion, put forward by some Marxists from 1991 onwards, that Russia, on the basis of capitalism, would enter the first division of major capitalist powers. We pointed out that its „model would be not West Germany. as some capitalist commentators assumed, but Latin America, that is, a backward and feeble capitalism. albeit with certain ‚islands‘ of advanced industries. Now Lloyd concedes that the ‚parallel to draw‘ is with „the Mafia-dominated societies of Sicily, some Latin American states and some US inner-cities“.

Gorbachev. in seeking to find a way out of the stifling grip of the bureaucracy, tried to emulate some of Lenin’s ideas through de-centralisation and the development of ‚co-operatives‘. But these co-operatives were from the beginning „crooked, and could not have been otherwise“. The largest contribution which the cooperatives made to capitalism was as the escape tunnels for some of the earliest ‚entrepreneurs‘ as Lloyd shows:

The inaccurate and idealised view that the planned economy remained largely intact up to 1989, is completely refuted in this hook. Already the plan had been vitiated in the 1980s. Increasingly, the power resided in the individual enterprises and branches, and in the managerial wing of the bureaucracy, who benefited most from Gorbachev’s reforms. As Lloyd himself comments: „The law on state enterprises, the law on co-operatives, and the law on leasing, all passed in Gorbachev’s last period of office, were stages in the embourgeoisiment of the nomenclatura, ways in which they could complete the transfer of effective property rights to themselves“.

By the end of the ‚Communist period‘ the bureaucracy had carved out sections of industry which were, to all intents and purposes, already privatised. There were some 200,000 cooperatives, 80,000 joint stock companies, 65,000 partnerships, and over 3,000 associations. It was on these points of support that, following the political collapse of Stalinism between 1989-91, the ground was laid for a full-blown development of capitalism. Under Gorbachev, „the reformers were to find, when they came to office to transfer property to individual owners, that it already had individual owners. In this area, perhaps more than any other, their own preferences and strategics were stymied by their inheritance. To privatise, they had to engage the co-operation of the industrial nomenclatura, but to do that they had to make legal the de facto rights of ownership the latter had already seized“.

But once the Stalinist system and the planned economy began to be liquidated, „the managers had been let loose to become robber barons, cynical and anti-social, buying-off worker discontent and enriching themselves. The organised crime which used to be associated with the free-market reform from 1991 had, in fact, been born in the high Soviet era of Brezhnev and come out into the semi-light during perestroika‘.

It was the creatures of open capitalist counter-revolution who built on this with their inane theories of ’shock therapy‘, which meant that the masses were victims of many shocks, with no therapy whatsoever. Gaidar ‚and his gang‘ based themselves on the reactionary economist, Hayek, a hero and inspiration for Thatcher herself. It was to the leading figures of Thatcherism, such as Lord Ralph Harris, head of the Thatcherite Institute of Economic Affairs, that Gaidar, Chubais and Chernomyrdin, turned. Little notice, of course, was taken of the fact that Thatcher and her theories had laid waste to Britain. The neo-liberal economists who inspired their theories were responsible for the economic catastrophe of Chile in the 1970s and 1980s, and the economic and social plague which still blights Latin America and other parts of the colonial and semi-colonial world.

Chubais, a follower of Adam Smith, believed in the power of ‚human greed‘. This was given full reign in the process of privatisation which took place in Russia. The theoreticians and political leaders of the developing bourgeoisie of Russia (Gaidar, Chubais, Chernomyrdin) may have looked towards Thatcher’s privatisation measures for inspiration. But Thatcher’s efforts were puny compared to what confronted the bureaucracy, the nomenclatura, of transforming Russia from a largely state-owned economy to one in which private ownership predominated. The struggle, detailed very well by Lloyd, between ‚insiders‘ and ‚outsiders‘, was ferocious and conducted by different wings of the bureaucracy to see who could concentrate the most wealth and power in their hands. On the top of this pyramid of competing gangsters was, and is for the present, ‚Tsar Boris‘.

Even for those who have followed the process in general, the examples that his book gives of the plunder of state resources – on the greatest scale in human history – are breathtaking. In the city of Nizhni Novgorod, for instance, shops and workshops were auctioned-off for cash. The sale was held in the Palace of Culture, with what Lloyd describes as a ‚certain razzmatazz‘, which involved a professional auctioneer in a dinner suit, selling-off state assets while workers marched outside protesting against the process that would lead to their redundancy, and what Lloyd correctly says would „put state assets in the hands of criminals“.

But it was the managers in the energy industry who employed the most ruthless measures to ensure that they alone benefited from any sell-off of assets. They have always been a powerful group, even before the collapse of Stalinism. Chernomyrdin, until recently prime minister, was a favourite son of this group. He is a former boss of Gazprom, on some calculations now the biggest company/monopoly in the world. Surgut Oil and Gas cul phones and put armed guards on the doors of the building during an auction in which it too ‚bought itself out‘ at a low price. Its actions isolated an entire Siberian town for a day so that managers could keep out their rivals from attending the auction and bidding for its shares. Even Western capital, which salivated at the prospects of buying-up Russian industry on the cheap, was kept out by the intransigent opposition of the burgeoning bourgeoisie, particularly in key industries like oil.

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Why was there no mass revolt?

In all of this it was the masses who dramatically suffered. Why then was there not a mass revolt which stopped the process in its tracks? One of the factors, explained many times by Socialism Today, was the political effects of the collapse of Stalinism. The collapse of the vestiges of the planned economy resulted in the political prostration of the proletariat, with no real independent organisations, either unions or parties, to really represent them.

Lloyd shows that the Russian Communist Party, led by Zyuganov, was and is not a genuine workers‘ party. Despite its title its leaders are neither ’socialist‘ nor ‚communist‘. The author quotes the speech of Zyuganov to the American Chamber of Commerce: „We know what prevents you from making investments. Many things: first of all the absence of sophisticated legislation, taxes, the high level of corruption, absence of guarantees of personal safety. We have already drafted documents that would allow business people to safely invest their capital here in the hope of reaping profits, without having to fear for their personal safety“. He then went on to lord his connections and „conversations with Clinton, Christopher, Gore. Sam Nunn and a number of other senators“. Lloyd himself comments: „I heard Zyuganov give a stump speech in Orel, his home city, a few weeks before the 1995 elections. I had interviewed him a few days before, and had found him relatively jovial and self-controlled. I asked him if he thought himself still as a Marxist. He smiled. and said: „You know, they say Jesus Christ wits the first Marxist‘. A colleague then asked if he were a religious man. „You know. Christianity is very close to socialism in many ways‘.“

Of course when speaking to the masses, who were repelled by the introduction of capitalism, Zyuganov struck an entirely different note. In Orel Lloyd heard him say to a mass meeting: ‚We had a common right to the wealth we had, and now we see it sold to criminals and to foreigners‘. Zyuganov and the great bulk of the leaders of the Russian Communist Party in effect represent the wing of the former Stalinist bureaucracy which was elbowed aside in the plunder of state property. One of Zyuganov’s economic aides, Yuri Maslyukov, had „taken time to visit Germany at the invitation of the social democratic Friedrich Ebert Foundation“, which prompted him to praise the German ‚model‘ for Russia. The Russian Communist Party talks about a ‚mixed economy‘, sometimes arguing for renationalisation, but at the same time Zyuganov spoke soothingly at the Davos World Economic Forum to foreign businessmen and politicians in 1996.

Nor have the unions developed as yet into viable strong organisations of the working class. It was sections of the working class, particularly the miners, beginning in 1989, who, utterly repelled by Stalinism, had deep illusions in the benefits that would accrue to them from the restoration of the market. To begin with the tendency was for workers to push aside the official unions with a rash of independent unions developing, the largest of which, according to Lloyd, was SotsProf. To begin with the official union bureaucracy could do nothing but grumble, the bulk of them coming out in favour of the attempted coup of August 1991. Subsequently however the independent unions tended to collapse, merging with the remnants of the old ‚unions‘ who then, according to Lloyd, „spruced themselves up, and stole from their split and disorganised rivals the title of independent – the Federation of Independent Unions of Russia“. Old leaders were pushed aside, elections took place and new leaders were elected. But given the economic dispersal of the working class and the lack of a clear ideological alternative to the market by the ‚leaders‘ of these unions, they could not adequately defend their members.

An additional factor, however, which Lloyd brings out very well, which muffled the revolt of the masses, lay in the tendency, despite the economic collapse, for workers not to be sacked but to be retained in the factories, albeit with little or no wages.

Such a situation could not last. The revolt of the Russian masses, as well as those in the nations which formerly made up the Soviet Union, is inevitable and is shown in the movements that are taking place in Russia this year. Lloyd’s book is very good as a description, both historically and also of the contemporary situation. But no perspective is really elaborated, even in broad outline, as to how events are likely to develop in the future. He clearly looks forward to a certain stabilisation of capitalism in Russia but all the evidence he furnishes, together with the development of world events, particularly a new world economic recession, points in the opposite direction.

He shows the powerful nostalgia which exists for the security provided by the planned economy, which is now shared probably by a majority of the population. He also shows, as Socialism Today has indicated, that the resistance to capitalist counterrevolution is stronger in Russia than in Eastern Europe because consciousness, even today, of the gains of the October revolution is still alive in the minds of the masses. These traditions which appear not only to be dormant but almost to have disappeared, will be fanned into life in the inevitable movements which will take place in the coming period. The new Russian bourgeoisie is unfortunate to be born at a time when its system, capitalism, is rotted and decaying on a world scale. Looked at from an historical point of view, its life expectancy is very limited. All the evidence to show that this is so is carried in Lloyd’s book. The ideas of genuine Marxism, of Trotskyism – kept alive in the former Soviet Union by the Russian section of the Committee for a Workers‘ International, Workers Democracy – will grow and gain in strength in the period we are entering.