[Militant International Review, No 42, Winter 1990, p. 16-27]
Lynn Walsh considers whether it is possible or even likely that Poland and Hungary could revert to the orbit of capitalism. There are many conditional factors involved.
The political revolution has begun. The earthshaking movement of the Vorkuta, Siberian and Ukrainian miners during 1989 has rocked the ruling bureaucracy to its foundations. Gorbachev’s reforms, aimed at heading off revolution from below, have neither solved the crisis of the bureaucratic economy nor satisfied the demands of the working class. Changes in the Soviet Union, moreover, have accelerated the crisis in the Stalinist states of Eastern Europe. On the streets of Leipzig, Dresden, and Berlin, millions of workers and youth have forced the ruling elite of East Germany on a sudden, unintended course of reforms. Mass demonstrations in Prague and other Czech cities have also brought down the regime of Husak and Jakes installed in 1968 in the tracks of Brezhnev’s tanks.
The bureaucracy, “a privileged and commanding stratum … (which) has expropriated the proletariat politically” (Trotsky), has steered the planned economy into an impasse. Without the democratic involvement of the workers, science, technology and production cannot be taken forward. Cocooned from society’s problems by their privileges and riddled with corruption, the bureaucrats are an immense drag on the economy. Under Gorbachev, the leadership is grasping at one expedient after another in a desperate attempt to find a way out.
For over 60 years, the Stalinist regime, through a monolithic apparatus of repression and political control, ruled society like an iron-clad monster. But the ruling caste failed to consolidate an enduring social position. Although it has built up a Byzantine superstructure of control, its strength has been eaten away by a remorseless process of decay.
The monolith is now cracking up. The deep inertia of peoples atomised by decades of political terror is giving way to a profound ferment and explosive workers’ struggles. Events have placed the political revolution on the agenda. What we have seen is only the beginning. History, however, rarely proceeds in a straight line. While the movement towards political revolution is gathering pace in the USSR, East Germany and Czechoslovakia, there appears, paradoxically, to be moves towards counter-revolution in Poland and Hungary. In both countries, reformist governments have come out in favour of large-scale privatisation of state industries and a transition to a predominantly market economy.
The question has been raised by a number of our readers: Is a return to capitalism now possible in Poland and Hungary? A second question then raised is: If it is possible, how likely is such a counter-revolutionary transition?
In Poland, the Solidarity-led government of Mazowiecki is attempting to tackle the country’s economic catastrophe with market policies, closing unprofitable factories, cutting state subsidies, and raising prices. In October, the government appointed a Minister of Privatisation, Krysztof Lis, to oversee the sale of state industries and the creation of small businesses. In co-operation with Britain’s right-wing Adam Smith Institute, merchant banks, and big accountants (like Price Waterhouse), the Polish government is drawing up plans for the denationalization of most of the state sector — to be carried through within the next two years. At the same time, the reformist wing of the Communist Party (officially the Polish United Workers Party) around Rakowski is proposing that the party should be changed into a Democratic Socialist party, with acceptance of the market as a key plank of its new programme.
My friend, all theory is grey, and green
The golden tree of life.
Goethe
In Hungary, the reform wing of the bureaucracy led by Pozsgay and Nyers advocate market policies, privatisation, and an appeal to the West for capital investment. But the Hungarian Democratic Forum and other opposition groups will challenge the Hungarian Socialist Party, the revamped Communist Party, in the general elections next year. Leaders of the Democratic Forum are even more fervently committed to a transition to a market (i.e. capitalist) economy.
Quite clearly, a section of the ruling elite is ready to abandon the centralised, planned economy and accept a return to capitalism. For 40 years the regime has rammed a distorted, statist counterfeit of socialism down workers’ throats. Now a ‘new management’ are ready to declare themselves economically and politically bankrupt and opt for voluntary liquidation. This is a new factor in the situation.
Historically, the bureaucracy’s overriding aim was to preserve its own privileges and monopoly of power. Politically, it maintained its power through control of the Bonapartist state apparatus. Ultimately, however, it defended the planned economy as the foundation of its source of income.
Under the pressure of the workers’ movement, especially the magnificent struggle in Poland in 1980-81, the ruling elite’s hold over society began to break down. Support for the bureaucracy’s ruling party and acceptance of the ideology and methods of Stalinism was eaten away. The majority of the bureaucrats lost confidence in their ability to run society. After the election in Poland, the editor of the CP Central Committee’s paper confessed: ‘Now we may as well raise the white flag of surrender. The party is exhausted, incapable of responding.‘
They abandoned all hope of rescuing the planned economy. Under their stewardship it was strangled by inefficiency, waste and corruption. But the last thing they would do is turn to the working class, who alone have the ability to take the planned economy forward. Demoralised about the nationalised economy, they have been thrown off balance by the long post-war upswing of capitalism and especially beguiled by the boom since 1981. They are deluding themselves that capitalism has all the answers. Completely lacking in Marxist understanding, the pro-capitalist intellectuals are incapable of understanding the uneven, superficial and temporary character of the ‘Reagan boom‘.
A section of the elite are ready to abandon the planned economy and return to capitalism
The reformers are not merely preparing to introduce market elements, which was attempted in varying degrees in the past. They are proposing policies which, if carried through, would mean the restoration of capitalism. How far they will go does not depend purely on the outlook and intentions of the current Polish and Hungarian leaders. But at the moment the initiative is in their hands, and it would be a mistake to ignore the possible consequences.
But, it may be raised, surely the gains of the social revolution in the Soviet Union and Eastern Europe, despite the distortions of Stalinism, are irreversible? Once landlordism and capitalism has been eliminated, surely there can be no going back? Will the bureaucracy not defend the planned economy as the basis of their privileges and power? Above all, will not the proletariat fight to defend social relations which, despite Stalinist deformities, correspond to the historical interests of the proletariat? The planned economy has ensured the development of countries like Poland and Hungary into predominantly urban, industrial societies, with basic education, health and welfare services for the workers. Would not an attempt to destroy these social achievements necessitate a counter-revolutionary assault on the working class, a civil war to smash the resistance of the working class?
These are vital questions. But they cannot be resolved merely by applying general principles, however correct. In 1936 Leon Trotsky wrote his brilliant book, The Revolution Betrayed, which is still the most up-to-date analysis of Stalinism. In it he warned that the transitional character of the deformed workers’ state (the Soviet Union, to which the East European states were added after 1945: states intermediate between capitalism and socialism) means that ‘finished social categories’ must be abandoned.
“Doctrinaires..would like categorical formulae: yes-yes, and no-no. Sociological problems would certainly be simpler if social phenomena had always a finished character. There is nothing more dangerous, however, than to throw out of reality, for the sake of logical completeness, elements which today violate your scheme and tomorrow may wholly overturn it. In our analysis, we have above all avoided doing violence to dynamic social formations which have had no precedent and have no analogies.” (p. 255) This is the method which must be applied to complex contemporary developments in the USSR and Eastern Europe.
No relationship of social forces is immutable
No relationship of social forces, even if they represent progressive changes in fundamental property relations is immutable. The bureaucracies in Poland and Hungary, like the Soviet elite, have defended state industry as the basis of their privileges. But like their Russian counterparts, they long ago “ceased (as Trotsky said) to offer any subjective guarantee whatever of the socialist direction of (their) policy.” Trotsky referred to Lenin’s warning in 1922 about the dangers of bureaucratisation: “‘History knows transformations of all sorts. To rely upon conviction, devotion and other excellent spiritual qualities — that is not to be taken seriously in politics. Being determines consciousness.“ (p. 251) The disintegration of the centrally planned economy, aggravated in Poland by struggles which failed to replace the degenerate bureaucracy by workers’ democracy, has generated a complex, contradictory consciousness.
Moreover, the social transformation in Eastern Europe after the war did not take place under the classical conditions of revolution envisaged by Lenin and Trotsky. They had a peculiar, Bonapartist character from the very beginning. Unlike Russia in October 1917, the elimination of capitalism was not carried through under the conscious leadership of the working class. The tradition of October 1917, together with the tradition of the Left Opposition’s struggle against Stalin’s reaction, are vital factors which still distinguish the Soviet Union from the East European states.
There were movements in Eastern Europe at the end of the war. But the struggle of class forces within the different East European countries was not, in itself, the most decisive factor. The changes within those states were dominated by the international relationship between Stalinism and imperialism. Developments in Eastern Europe cannot be understood apart from their history and the changes which have come about since 1945.
Stalinism emerged from the war enormously strengthened, while the weakened capitalist powers were forced to abandon their wartime aim of occupying Eastern Europe. (At the same time, imperialism lost China and was forced step by step to relinquish direct rule over the colonial lands; while in the advanced countries, the restabilisation of capitalism took place only on the basis of massive concessions to the working class.) The price capitalism paid for Hitler’s crimes was the loss of Eastern Europe. The old capitalist order collapsed with the defeat of Hitler and the collapse of his quisling governments. Stalin’s victorious Red armies marched into a vacuum.
The new governments installed by the Kremlin leaned for support on the workers, who initially welcomed the Soviet forces as liberators. But the might of the Red armies, quickly supplemented by a security and party apparatus, ensured the establishment of regimes based on Stalin’s own totalitarian model. The forcing through of change from above by the Russian bureaucracy added a national complication to the distorted social transformation. From the start, opposition to the totalitarian regimes in Poland and Hungary (clients of the Kremlin bureaucracy) was interlinked with opposition to national oppression. After 1956, through reforms in Poland and by the brutal crushing of the rising in Hungary, both regimes (under Gomulka and Kadar respectively) adopted a more independent national-bureaucratic course. When there was economic progress, they were able to secure a certain basis of support in society. Nevertheless, the historic connection of the regimes (especially the Polish) with Russian domination and intervention is still a powerful factor in the undermining of support for national Stalinism.
Now, the relationship between the USSR and Eastern Europe, which for decades seemed to be set in concrete, appears to be running out of the mould like sand. Under the impact of explosive events, the post-war settlement is breaking down.
The ideas of Trotsky in relation to Stalinism and the political revolution remain absolutely indispensible for Marxists to work out perspectives. But they do not provide ready-made schema into which all events can be fitted. They constitute a method which has to be applied to living reality.
It should not be forgotten that Trotsky’s perspective for the Soviet Union, formulated prior to the Second World War, was in some respects falsified by the actual course of events. His prediction proved to be premature: that either there would be a political revolution with the overthrow of the bureaucracy by the working class, or the restoration of capitalism in the Soviet Union. No more than any other Marxist, could he predict the precise course of events and especially the tempo and timescale, which are determined by the struggle of living social forces, not blueprints.
According to Marxism, the determination of all events can be traced back through chains of material cause and effect. This does not mean, however, that events are predetermined. The complexity of factors involved, including an element of accident, and above all the potentially decisive factor of consciousness which cannot be gauged precisely in advance, make it impossible to predict the exact course of events.
Marxists must base themselves on perspectives, on an evaluation of the main economic, social and political trends and their likely development. All perspectives are conditional. They must be continually tested against real processes and corrected in the light of actual events.
“The scientific task, as well as the political”, writes Trotsky, “is not to give a finished definition to an unfinished process but to follow all its stages, separate its progressive from its reactionary tendencies, expose their mutual relations, foresee possible variants of development and find in this foresight a basis for action”. (p. 256)
Militant and Militant International Review have for some time raised the theoretical possibility of a capitalist restoration in Poland and Hungary. Few Marxists would quarrel with such a ‘theoretical possibility’. But it would be a mistake merely to regard it as a purely hypothetical possibility which is ruled out in practice. Because of the conjuncture that has developed in Poland and Hungary, Marxists must examine the idea of a restoration of capitalism as one possible course of events, even if it is not the most likely.
This conjuncture has come about because of (1) the crisis facing the bureaucracy in the USSR which has weakened its hold over Eastern Europe (2) the economic catastrophe together with the rotting and collapse of the bureaucracy in Poland and increasingly in Hungary and (3) the political weakness of the working-class in Poland and Hungary, above all the weakness of the subjective factor: the lack of Marxist forces capable of arming the workers with the programme of the political revolution.
If a counter-revolutionary development were to be carried through, or even partially carried through, it would undoubtedly be a complicating factor in the unfolding of the political revolution in Eastern Europe. But the programme and perspectives of the political revolution would in no way be invalidated. Capitalist restoration could only occur as a temporary setback in the revolutionary movement which is underway — as a result of the delay in the decisive movement of the proletariat in the USSR, East Germany and other states.
What conditions make capitalist restoration a possibility?
Leaving aside, for a moment, the likelihood of such a development, let us deal with the question: What are the conditions which make capitalist restoration a possibility in Poland and Hungary?
Poland is the decisive country in this potentially counter-revolutionary conjuncture. The course of events there has had a big effect on the situation in Hungary (as well as East Germany and Czechoslovakia). The workers’ struggle around Solidarity in 1980-81 was a sweeping movement towards political revolution. The upheaval in Poland crystallised the crisis within the bureaucracy in the USSR and accelerated the process which brought Gorbachev to the leadership. In Poland itself, the workers went to the brink of a struggle to overthrow the bureaucracy and take power into their own hands. The most advanced sections within Solidarity called for control of the economy and society by workers’ soviets, for the formation of a workers’ militia, and the expulsion of bureaucrats from all ruling and management bodies. This magnificent movement was betrayed by the Solidarity leadership, dominated by Wałęsa’s ‘advisers’, academics and Catholic intellectuals. They cravenly sought compromise with the Polish bureaucracy and ‘self-limiting’ accommodation with the Kremlin regime. This bankruptcy, combined with the fatal lack of an alternative Marxist leadership within the workers’ ranks, paved the way for defeat. Jaruzelski stepped in to restore the bureaucracy’s hold through military rule. Repression alone, however, proved incapable of stabilising Polish Stalinism. “No single force on the Polish political stage” admitted Jaruzelski, “is capable of solving the problems facing our country.” Independent 8 July 1989.
For so long, the Communist Party, the political front of the bureaucracy, claimed a monopoly of power, justifying this under the misappropriated banner of ‘Marxism-Leninism’. Now Jaruzelski admits that the party-bureaucracy is incapable of solving the problems. But the other key force, the working class, is also incapable of solving the problems at this stage — because of its subjective weakness, the lack of Marxist consciousness. The former military dictator, therefore, proclaimed his conversion to ‘dialogue and compromise’ and increasingly leaned for support on Solidarity, drawing Wałęsa and his advisors into the regime.
Their support for “an alliance of the democratic opposition with the reformist wing of the government camp”(Adam Michnik) allowed Solidarity to be used to hold back the workers and gain acceptance for austerity measures. “For a long time, people couldn’t strike, so someone had to fight for them” explained former dissident Jacek Kuroń, now Minister of Labour: “That’s what I did. I used to co-operate with strikes. Now I have to extinguish them.” Wall Street Journal 10 November 1989. This informal alliance culminated in last July’s elections, which resulted in an ignominious ‘crossing off of Communist Party (PUWP) candidates and a sweeping victory for Solidarity in the 35 per cent of seats they were allowed to contest. Jaruzelski was obliged to hand over to a coalition government dominated by the Solidarity leaders.
Solidarity of 1989 is not the Solidarity of 1980/81. Its membership has declined to about 2.2 million, compared to 10 million at its height. The official trade union organisation (OPZZ) claims to have seven million members. In some recent disputes, the OPZZ has been more of a vehicle for workers to defend their interests than Solidarity. Claiming to be the genuine opposition, an OPZZ leader said: “We don’t participate in government. Our demands can become more radical than those of the government trade union, Solidarity.” Wall Street Journal.
As the participation of the workers in Solidarity has fallen back, its leadership has become completely dominated by intellectuals advocating a return to capitalism. The degeneration of the Solidarity leadership was underlined by Wałęsa’s sickening performance in the USA. At home, Wałęsa has been trying to distance himself from Mazowiecki’s harsh measures. But in the USA he shamelessly proclaimed that Poland was up for sale: “We seek buyers for 80 per cent of the Polish economy. We can’t find them in Poland, because Poles are too poor.” He told businessmen: “You can make billions and billions of dollars.” Addressing the annual convention of the AFL-CIO, Wałęsa lamely tried to explain “the fate of a Polish trade unionist (who) has to launch a publicity campaign for private entrepreneurship.” Even the Financial Times commented on the contrast between “the atmosphere of militancy” at the AFL-CIO convention and “Mr Wałęsa’s appeal for US capital.” 15 November 1989.
Paradoxically leaders propelled to power by workers‘ struggle now stand for capitalist restoration
The paradox of Poland is that the leaders who were propelled to power by a powerful opposition movement of the workers are the new party of counter-revolution and capitalist restoration. Although many were formally dissidents and in some cases (like Kuroń) persecuted or jailed by the hard-line regime of Gierek and Jaruzelski, they nevertheless constitute the liberal, pro-capitalist wing of the ruling elite. They are deluded that there can be a gradual, evolutionary transition from ‘the totalitarian system of Stalinist Communism’ to ‘parliamentary democracy’ on the basis of a return to capitalism.
At the same time, Polish CP leader Mieczysław Rakowski is trying to turn the Polish United Workers Party into a Democratic Socialist Party. Before, while serving as Jaruzelski’s political henchman, Rakowski dismissed Wałęsa as “a devious and ignorant peasant” and his advisers as “little shits”. But all the bureaucratic efforts to rebuild the CP since 1981 have failed. Officially it has 2.2 million members, but the real figure is probably less than 800,000, with the average age estimated to be 47. Throughout the country, CP functionaries are being kicked out of their offices in the factories. “The party has to create a front of the social left” said politburo member, Leszek Miller, chastened by the CP’s electoral hammering. “Otherwise, we will inevitably be pushed to the margin of political life and we will be dominated and removed not only by Solidarity but by other political forces.” This is their plight after monopolising power for 40 years.
The CP bureaucracy controlled not only political life but literature, the theatre and other cultural activities, science, education, sport, and many other aspects of society. Yet the July election results and opinion polls show that only three per cent would vote for the CP in totally free elections. That is why Rakowski and his cohorts have turned, at least for the time being, to the path of reform.
A similar development is taking place in Hungary. There is strong opposition among sections of workers to both the hardline Stalinists who ruled under Kadar and to the pro-capitalist reformist wing around Pozsgay. But at this stage the opposition has not been crystallised or organised around a clear Marxist programme. The defeat of Solidarity after 1980-81 and the subsequent chaos in Poland have had a big effect on the Hungarian workers: ‘If we move into struggle, won’t we just end up like Poland?’ The bloody repression which followed the 1956 uprising and the harsh repression in the early years of Kadar’s government was a crushing blow to the Hungarian proletariat. The Stalinist reaction after 1956 still weighs like a nightmare on their consciousness. Lacking clear Marxist perspectives to inspire and guide a struggle, there is a reluctance among many workers to move into struggle at this stage.
Gorbachev has stated that the Kremlin will not intervene in Poland or Hungary. The Brezhnev policy of military invasion, as in Hungary and Czechoslovakia in 1968, has been repudiated. When Mazowiecki recently visited Moscow, Gorbachev appeared to express approval for the Solidarity government’s sweeping market policies. He is prepared to let Poland cross over into the capitalist orbit. He is bowing to the pressure of imperialism — a reflection of the political degeneration of the Kremlin leadership.
Gorbachev’s immediate policy in Eastern Europe is to support the reformers against the old guard who were installed in the Brezhnev period. In the longer term, it is doubtful whether Gorbachev has any clear policy at all. If there are upheavals of the workers in Eastern Europe, military intervention by the Kremlin bureaucracy cannot be ruled out, whatever Gorbachev says now. At the moment, however, the reform wing in the USSR, grappling with economic crisis, is not prepared to commit massive resources to bailing out the nationalised economies in Poland or Hungary.
Nobody denies that Poland faces an economic catastrophe. The heavy industries, mostly very outdated, are going backwards. Many shipyards, steelworks, and factories are virtually idle, or grossly under-utilized. Coal production, lacking modern equipment, is declining. When Balcerowicz announced austerity measures, he admitted that Polish workers had already suffered 10 years of declining living standards.
Home produced consumer goods are notorious for their poor quality and chronic short supply. Food is very scarce in the shops and markets. Three-quarters of agriculture is private but higher fertilizer and fuel costs have led farmers to cease production or put their prices up. Cuts in government subsidies and black market prices have pushed inflation up to over 850 percent, and it is expected to exceed 2000 percent by next year. Some workers now change their wages into dollars on pay day, changing it back later to take advantage of a better exchange rate as the złoty continues to fall against the dollar.
Economic disintegration has undermined workers’ support for Stalinist ‘socialism’
The disintegration of the planned economy and the collapse of living standards have undermined the workers’ support for ‘socialism’ which is equated in their experience with a bureaucratically mismanaged economy.
The government’s budget deficit is zl. 3,600bn (£930m), and Poland owes £39bn to foreign lenders. The Stalinist functionaries have exhausted all the economic remedies known to bureaucratic ‘planners’, and have now been replaced by the reformist opposition leaders. Ensconced in their ministerial chairs, their solution, is to make the workers pay through savage deflationary measures for all the accumulated mistakes of the bureaucracy. They are ready to abandon the social gains of the last 30 years and open the doors to the horrors of capitalism.
Already, bureaucrats in Poland and Hungary have taken over smaller state enterprises or started their own private businesses. It is as if they have taken to heart Marx’s ironic parody of Goethe: ‘My worthy friend, grey are all theories, and business alone is green.’ (Letter to Engels, 20 August, 1862) The Adam Smith Institute notes that “Under the Rakowski Communist Government some ‘corrupt’ privatization was allowed in which party appointees were able to make enterprises private and strip assets.”
More recently, “there has been a flurry of resignations as apparatchiks move hotfoot into private companies, or, in a few cases, buy shares in newly privatized state companies they used to run.” The Times 12 September 1989.
Now the Mazowiecki government is preparing a massive sell-off of state enterprises. The myth is being peddled that new businesses will be owned by millions of workers. “However,” admits the Adam Smith Institute, “it is clear that Polish citizens do not have large amounts of spare cash which they are just waiting to splash out on shares in state enterprises.” In reality, the ownership will rapidly be dominated by the bureaucrats who have the necessary expertise, connections, and power to acquire assets, and international banks which would dominate a weak Polish capitalism.
Outlining the possibility of a move back to capitalism in Revolution Betrayed, Trotsky wrote: “The planning principle would be converted for the transitional period into a series of compromises between state power and individual ‘corporations’ — potential proprietors, that is, among the Soviet captains of industry, the émigré former proprietors, and foreign capitalists.” (p, 252) Today the former Polish proprietors are no longer waiting in the wings, but otherwise the point applies exactly.
One supporter of a transition to a market economy in Poland, Professor Bartłomiej Kamiński, recently warned that without “prior de-concentration and de-monopolisation”, the “economic dictatorship of a communist state will be replaced by the dictatorship of the privately held monopolies.” The “industrial structure is highly concentrated … the share of large enterprises in various industries is incomparably higher than in the Western developed economies.” Financial Times 28 September 1989.
Unless the monopolies are broken up, writes Kamiński, the nomenclatura, the top layer of the bureaucracy, will not be dispersed but simply reappear as the new ‘private enterprise’ management. “Since the pathological tendencies of monopolies include gross incompetence, padded payrolls and the outright looting of enterprises, there is no reason to suppose the Polish economy will abandon its chronic inefficiency,’ warns Kamiński But the professor’s antidote of ‘autonomisation’ or the breaking-up of the monopolies into smaller enterprises is just as futile.
Those active within Fighting Solidarity are bitterly opposed to the policies of Mazowiecki and company. Even wider sections of workers would be pushed into struggle by sweeping capitalist measures, which will inevitably mean mass unemployment, soaring free market prices, and savage cuts in welfare. services. Leszek Balcerowicz, the new finance minister, has already warned that “living standards will collapse.” The Times 12 September 1989. While prices would be allowed to find their own level, wages would be curbed through an incomes policy.
There is a mood of confusion and despair among many workers
But would the Mazowiecki government be able to go so far? Some advanced layers of workers have undoubtedly drawn far-reaching conclusions from the defeat of 1980-81, and the period of military rule and economic crisis which followed. But among wider sections, the massive set-back of the struggle and the social chaos has led to confusion and despair.
“Tens of thousands of Poles travel to West Germany and other Western countries annually to seek work … ” Wall Street Journal 10 November 1989. Many now prefer to settle in the West. With the exodus from Eastern Germany, hundreds enquired after jobs in the GDR. Without Marxist leaders who can explain events and give a perspective for renewed struggle, such moods are inevitable.
Many workers regard Mazowiecki and Wałęsa as traitors. But there are also widespread illusions in the present Solidarity leadership, including among sections of the workers. According to opinion polls, four-fifths approved Mazowiecki’s choice of ministers for his cabinet. Two-thirds of those polled gave the government a ‘good chance’ of overcoming the crisis. Such polls may not be representative, and must be treated with caution. But these indicators cannot be entirely ignored. Such findings no doubt reflect ‘hope against hope’ that there ‘must’ be a way out. A local Solidarity activist, an older worker who went through the struggle of 1980-81 and the period of underground resistance, says “There’s a limit to endurance. But we have to support this government.” Wall Street Journal 10 November 1989.
The mismanagement, inefficiency and waste in industry under the direction of the bureaucracy, have swung sections of the workers over to support for privatisation. Workers at the Ursus tractor factory near Warsaw, which employs 10,000 and was prominent in the development of Solidarity, have threatened to strike. They are demanding “a form of privatisation … and have declared a vote of no confidence in the management for failing to introduce radical change.” Independent 20 November 1989. They want an Ursus joint stock company: “Maybe a mixture of employee ownership and state ownership would be best.”
Again, Trotsky brilliantly anticipated such a development. In the event of a collapse of the planned economy: “the more successful enterprises would succeed in coming out on the road to independence. They might convert themselves into stock companies, or they might find some other transitional form of property — one, for example, in which workers should participate in the profits.” Revolution Betrayed p. 251. The Ursus Solidarity leaders said: “The new management might not pay us more than the old management, but this is an investment in the future.” Because Stalinist mismanagement has demonstrated that it has no future — and in the absence of the subjective factor: an alternative Marxist programme for developing. the economy — workers are desperately grasping at the illusion of capitalist salvation.
Moves towards a rapid, all-out transition to capitalism will undoubtedly be met by a struggle of the workers. But because of the defeat after 1980-81, and without Marxist leadership, further defeat of the workers cannot be ruled out.
If the bureaucracy succeeds in privatising most state property, it would in the process adapt the state to the new social relations. A ruling caste, where there is already an hereditary element with positions and privilege being passed from parents to children, would become a property-owning class. The directors of the trusts, as Trotsky put it, would transform themselves into stockholders too.
Ties would develop with capitalism in the West, with Polish capitalists occupying a subordinate position as clients of their more powerful foreign patrons. An emerging capitalist class would utilise the Bonapartist state in order to force through the transition and bolster its new position. If a possessing class were to replace the ruling caste, Trotsky wrote, “it would find no small number of ready servants among the present bureaucrats, administrators, technicians, directors, party secretaries and privileged upper circles in general. A purgation of the state apparatus would, of course, be necessary in this case too. But a bourgeois restoration would probably have to clean out fewer people than a revolutionary party.” Revolution Betrayed p. 253.
The Solidarity leaders, cheered on by capitalist leaders in the West, argue (like Professor Kamiński) that ‘without establishing a market economy, the transition to democracy will not materialise.’ This is completely false. Nothing could be further from the truth. Has the market guaranteed democracy in South Korea, in Taiwan, or in Brazil — in other words, even in the fastest growing of the ‘newly-industrialising’ countries? In Chile, free-market monetarist polices were combined under Pinochet with brutal military dictatorship.
Nevertheless, the experience of Stalinism, which is connected in the consciousness of the Polish people with historic national oppression by Russia, has helped to feed widespread illusions in the myth that the West means freedom, and the market guarantees democracy. For many workers ‘Marxism’ is equated with Stalinism, ‘workers’ democracy’ with its totalitarian perversion, ‘internationalism’ with Russian intervention.
In its paper Helping Poland, the Adam Smith Institute admits that privatisation would have dire social consequences. Millions would be unemployed, and would find it impossible to meet their most basic needs for food, clothing, housing and heating. The high priests of free enterprise generously propose a ‘social fund’ to “play a role in the distribution of food aid, establishment of food kitchens, etc.” But such aid “should be seen as temporary.” The horrendous social effects of capitalism, however, would be far from ‘temporary’, especially when the world economy moves into recession or slump in the next period.
A capitalist Poland would be like Argentina not Sweden
The idea of a Polish ‘Sweden’, with an affluent welfare state, is a delusion. Sweden, for instance, allocates 10 per cent of its budget to health compared with only three per cent in Poland, where the health service is in a state of collapse.
The reality would be a Polish ‘Argentina’, with millions of impoverished workers fighting for survival. Poland — and Hungary, if it followed the same course — would repeat, under new circumstances, the experience which followed their independence in 1918 following the First World War. Far from becoming flourishing capitalist democracies, they were torn by deep crisis and dominated by Bonapartist regimes. Piłsudski in Poland and Horthy in Hungary resorted to semi-fascist methods and antisemitic pogroms to crush democratic rights. If capitalism were to establish itself for any length of time, today’s liberal Solidarity leaders would be replaced by hard-nosed representatives of big business and agents of the multi-nationals. In striving to defend their newly acquired gains the capitalists would prove to be every bit as ruthless and brutal as the old Stalinist leaders.
The working class of Poland and Hungary would once again be forced to struggle against capitalist reaction. They would fight to reconquer the social gains lost in the transition back to capitalism. They would have to fight once again for the nationalisation of big business. But this time, it would be under workers’ control and management, with the implementation of democratic planning. Such a struggle would unavoidably be interlinked with both the unfolding political revolution in the USSR and the social revolution in the West.
The international balance of forces is crucial
A restoration of capitalism in Poland and Hungary may be possible: But is it likely? There are a number of factors which weigh against a return to capitalism.
The international balance of forces is crucial. As a result of the upswing since 1981, world capitalism appears strengthened in contrast to a crisis-torn Stalinism. All the indications are, however, that the capitalist boom is exhausting itself and will give way to recession or slump within the next one, two, or three years. The only real questions are ‘When?’ and ‘How deep?’ Even in the last two or three years, the enthusiasm of the Western capitalists for reforms and privatisation in Eastern Europe has not been matched by aid or the injection of capital resources. In Bush’s own words, the USA has ‘more will than wallet.’
True, after 1980-81, when the capitalist class feared the repercussions of the workers’ movement, the Western banks stepped in to reschedule the huge loans of Poland, Hungary, Yugoslavia etc. However, while they have applauded the pro-capitalist leaders of Solidarity and the reformist leaders of the Hungarian Socialist Party, what they have offered in material aid is extremely limited. On his visit to the USA, Wałęsa appealed for at least $10bn to finance the reforms in Poland. But after squabbling between Bush and Congress, the legislature has approved an aid programme of $938m for Poland ($852m) and Hungary ($86m). The European Community has pledged about $350m. Part of this consists of grants for food, but some of it is credit. West Germany, the IMF and the World Bank together are offering about $1bn, but in the form of credits which will incur interest charges or investment guarantees for Western investors.
In addition, the US and EC governments are contributing to a $1bn fund to cushion a ‘big bang’ devaluation of the Polish złoty. There have been more than a dozen official devaluations of the złoty in 1989. A condition of Western business investing in Poland is the free movement of capital, but this is of little value unless funds can be changed between the złoty and other currencies at world market rates.
The Mazowiecki government is proposing a drastic currency reform, attempting in one go to fix the złoty at a sustainable world-market level, and issuing new banknotes with several noughts taken off their denominations. One effect of this would be to push up prices in Poland, especially of imported goods.
While there is talk of new ‚Marshall Aid‘ , nothing like this is on offer
There is much talk of a new Marshall Aid programme, similar to the US aid to Western Europe following the Second World War. Between 1948-52, the USA provided $13bn ($69bn at today’s values), and another $2.6bn ($13.9bn today) during 1951-53. This European Recovery Programme was aimed at keeping Western Europe within the orbit of US capitalism, and mostly consisted of grants which underwrote the purchase of about a quarter of Europe’s imports.
Nothing remotely like this in scale is on offer today. Bush is offering peanuts in US government aid, and even the packages being pushed by more ‘generous’ senators are still very limited. With a massive federal budget deficit, government aid on a ‘Marshall Aid’ scale might well be one expenditure programme too many, posing the need for tax increases. Bush would prefer big business to find the capital for Poland and Hungary.
But the big banks and corporations are extremely cautious about committing large amounts of investment (or even loans) — just as US big business was after the war, before the injection of Marshall Aid created favourable conditions for investment. While Wałęsa was offering US investors the ‘business deals of the century’, Washington’s Institute of International Finance was issuing a warning about the high risk of failure in Poland. “While the potential pay-off of successful stabilization (of a devalued convertible złoty) followed by structural reform is extraordinarily large, so is the risk of failure, which would be viewed as a political failure as well.” Financial Times 6 November 1989. A director of the International Finance Corporation added: “Until those macro changes are made, you have got to be very careful about what you invest in.” An IMF official commented: “It’s complicated: it’s complicated politically, complicated economically, and complicated in human terms.” Wall Street Journal 26 September 1989.
For big business in the West, it is not just a question of acquiring assets, which they could probably obtain very cheaply. Last summer, an Austrian banking consortium bought a 49 per cent share in Hungary’s electrical manufacturer, Tungsram AG, for $110m. “If half of one of Hungary’s biggest and most successful factories can be bought for $110m”, commented a Budapest economist, “West Germany alone can buy the whole country.” Wall Street Journal 28 September 1989. But investors also need a viable economic framework in which they can make profits.
Large-scale privatisation and the creation of a fully fledged capitalist economy require an economic infrastructure — an adequate road and rail network, telecommunications, and banking and other commercial services. Unlike Russia after 1917 or Eastern Europe after 1945, there are now relatively few dispossessed landlords or capitalists waiting in the wings ready to move in to grab property. If that was the situation, the restored capitalists would gradually set about creating all the commercial links necessary for the development of the market.
Today, after 40 years of a centralised, planned economy, Poland and Hungary are dominated by large-scale industry. Although they have fallen behind the West in technology and production methods, they still require a modern infrastructure of services to function.
There are some advocates of pro-capitalist policies, including The Guardian 31 August 1989, who are advocating giving the assets away to workers, managers, co-ops, etc.: “…it will be swifter and more sensible to give assets away than attempt to sell them.” But merely handing over bankrupt factories, loss-making shipyards and mines, etc., would not be a solution from a capitalist point of view. Without the injection of massive amounts of capital into the economy through the sale of assets and the issuing of shares to bring in new capital, there would be no capital resources for the modernisation of the infrastructure, the development of industry with new technology, and the rapid creation and improvement of a service sector catering for both industry and consumers.
The apostles of the ‘free market’ forget the role played by the state in the post-war reconstruction of capitalism in Western Europe. Transportation, basic industries (like coal, steel and utilities), and research and development were all rebuilt by the state. The provision of education, health and welfare services, vital for the reproduction of a modern labour force and the expansion of the consumer market, was also the responsibility of the public sector. Post-war Marshall Aid helped Europe’s capitalist governments to finance public expenditure to create the framework for a renewal of capitalism.
The main sources of the massive volume of capital required must inevitably be from abroad. There are strict limits to the amount that could be raised from the privileged layers within Polish and Hungarian society. But the Western banks, financial institutions, and multinational corporations will not invest vast amounts of capital unless certain conditions are fulfilled. They will require clearly defined rights of ownership, guaranteed contracts, the free movement of capital, and acceptable conditions under which they can operate their businesses. Otherwise their assets would not be secure and they could not be sure of long term profit-making opportunities.
However, the Adam Smith Institute, which enthusiastically advocates privatisation in Poland, has pointed out that the country is almost completely lacking in the necessary services. “The Poles”, says the Adam Smith Institute, “are starting from zero, in that they have no stock market, no private banks, no insurance industry, no brokers, no proper accounting procedures, no commercial law firms, no public relations or advertising firms, and no experience of operating a market economy.” Large scale acquisitions by foreign corporations would require valuations and the restructuring of firms and business operations.
The meagre resources of the Ministry of Privatisation itself are symptomatic: it has only four full-time workers, one phone line, one typewriter, and two computers. With massive injections of capital, sustained over a period of years, there would not be insurmountable difficulties in creating such a framework for capitalism. But the capitalists, on the basis of their current assessment of the prospects in Eastern Europe and for the world economy, do not appear to be willing to put up the vast amounts of finance required.
“I don’t know whether we will save ourselves from civil war.” Wałęsa
Western capitalists are also already apprehensive about the reaction of the workers to current measures which threaten to create mass unemployment, cut living standards and add to the already spiralling inflation rate. When the government raised prices in September, Wałęsa denounced the government as ‘incompetent‘ and warned that the situation was ‘getting hot’. “I warn that if there are more price rises, we will not be able to keep the people working normally.”
Wałęsa played no small part in pushing the Solidarity leaders into the government, but has already been trying to distance himself from their unpopular economic measures: “The system has cornered us in a cul-de-sac and I don’t know whether we will save ourselves from civil war.” Guardian 29 September 1989. There have already been strikes, including by miners, which the Solidarity leaders attempted to undermine. Even Wałęsa is aware of the contradiction of his position. Early in November, he warned that if the government forgot about society, “there will be a clash and I will be on society’s side. I’m helping the government. I wish it well. But I must not forget where I hail from.”
The government has enjoyed a fragile honeymoon period. One younger, local leader of Solidarity expressed criticism of Wałęsa’s support for Mazowiecki: “We are a trade union. Our leadership should be unionist. We are too close to the government, too entangled. Our interests are completely different. Government is an employer in this country!” Sweeping privatisation and unrestrained free market measures will provoke an economic and social crisis. This in turn will inevitably provoke convulsive movements of the workers.
In Hungary, the workers have not yet had their say. There are a number of reasons for this. One is the relatively high level of economy and standards of living in Hungary until the recent sharp decline. The Stalinist repression after the 1956 uprising still weighs on their consciousness. At the same time, the workers have watched the events in Poland. The struggle of Solidarity, because of the role of its leaders, has not gained success for the working class: on the contrary, it appears that it has plunged the Polish economy into chaos and opened the door to market policies.
Among the workers, there is a profound mood of distrust of both the old Stalinist and the reformist wings of Hungary’s ruling elite. In an opinion survey carried out by Gallup in August, only 35 percent expressed confidence in the Communist Party. But only 35 percent had confidence in the new parties like the Democratic Forum. Reflecting the fact that socialism is equated with Stalinism, only 19 percent believed that ‘socialism had a future.’
The bureaucracy, particularly in Poland, appears .to have abandoned the defence of the nationalised economy. But the Mazowiecki government, currently in the driving seat, does not represent the bureaucracy as a whole.
Forced by the tide of support for Solidarity to give way to the Mazowiecki government, Rakowski raised a question mark over its future: “In my opinion, Polish society is not prepared to make sacrifices of this kind. You have this horrible contradiction: you need radical moves but you need the support of the people. Poles would like to work in Socialism but live in capitalism.” He predicted that “after the first radical steps and the subsequent reaction, the new government will retreat.” Writing in Solidarity’s newspaper in the summer, Rakowski warned against the dangers of ‘uncontrolled democracy.’
Jaruzelski is still commander-in-chief and holds decisive reserve powers. The question is: How far will the hardliners within the bureaucracy allow the process to go? At the moment, the balance of forces is against them. They have been forced to take several steps backwards. Military rule failed to revive the economy or stabilise the political situation. For the time being, they must hesitate to intervene with the forces of the state against the workers’ movement. But if the country is plunged into chaos, as a result of sweeping privatisation, rampant inflation, and big strike movements, the bureaucracy could move in the other direction.
Acknowledging that Solidarity is different from 1981, Jaruzelski supports the Mazowiecki government. But the general is unrepentant about martial law: “Without martial law, we would not have got the round table, there would not have been elections … Sometimes you need a shock.” Independent 8 June 1989. The time may come when the strongmen of the ruling elite decide that another ‘shock’ is required to curb the ‘excesses’ of the working class. A strata of the bureaucracy who are now turning towards capitalism may draw back when it is brought home to them that capitalism offers no way out.
The paucity of aid from imperialism and a recession or slump in the West could drastically change their outlook. The hard-liners, basing themselves on the hardcore of apparatchiks, whose positions are also threatened by market policies, would attempt to reassert control of society through the apparatus of the Bonapartist state.
Faced with economic collapse, they could resort once again to strong centralisation, reinforcing state direction of the planned economy.
They would drive the workers into the state-owned or re-nationalised factories, mines, transport, and services. Market methods would be abandoned in favour of a return to squeezing production out of the workers through state coercion. This would not provide a way out. A return to Stalinist methods would drive the economy even further into the impasse of bureaucratic mismanagement. The tasks of the political revolution would be posed even more clearly.
The policy of the bureaucracy in the Soviet Union also has a crucial bearing on developments in Poland and Hungary. Gorbachev is not Brezhnev and his leadership marks a shift in the policy of the bureaucracy.
In 1968 Russian forces were sent into Czechoslovakia to crush the reform wing of the Czech bureaucracy around Dubček which was trying to implement reforms more limited than Gorbachev’s own present policies. The Kremlin installed a hard-line repressive regime under Husak, which is now being swept away by the mass movement.
According to Gorbachev, the Kremlin has ruled out intervention in Hungary, Poland, and other east European states. The USSR’s internal crisis enormously complicates the bureaucracy’s policy towards the former satellites. The Russian elite faces a revolt of the nationalities in the Baltic states, Azerbaijan, Georgia, Moldavia, etc. Under Brezhnev, the bureaucracy could ignore ‘public opinion’, which was virtually non-existent. Now they have to take account of the political reaction at home to any intervention abroad. This began to develop, to a limited extent, even in relation to Afghanistan. An intervention in Poland or Hungary along the lines of 1956 in Hungary, or 1968 in Czechoslovakia, would have big repercussions at home.
However, it would be wrong to rule out the possibility of intervention by the Russian bureaucracy in the future. The strategists of capitalism are even now raising the question: How long will Gorbachev last? The reform wing in the Kremlin does not have unlimited time. Failure to reverse the economic decline, improve living standards, and resolve the crisis of the nationalities could produce a swing back to the hard-liners around figures like Ligachev. Who can doubt, that if they felt their power and privileges to be fundamentally threatened, they would resort to force? By the same token, they would also be ready to contemplate military intervention in Eastern Europe, if they considered developments in Poland or Hungary threatened their bureaucratic rule.
Mazowiecki and Pozsgay are adamant that their countries will not leave the Warsaw Pact. But the logic of a return to capitalism is a break from the Stalinist bloc in foreign and military, as well as economic, relations. A position like that of Finland, a capitalist state but with major trade links with the USSR and ‘neutral’ between the Warsaw Pact and NATO, would be theoretically possible for Poland or Hungary for a limited period. But for two strategically important central European states to occupy for a prolonged period a ‘neutral’ position between two blocs based on antagonistic social systems would be impossible.
In reality, any serious attempt by governments in Poland or Hungary to withdraw from the Warsaw Pact would be seen by the Kremlin bureaucracy as a threat to the strategic security of the USSR. With hard-line Stalinists back in the leadership, military intervention could not be ruled out. Intervention would undoubtedly provoke a massive reaction by the working class in Eastern Europe and the USSR itself — but it would clearly cut across a movement back to capitalism in Hungary and Poland. There are parallel processes of revolution and counter-revolution unfolding in the Stalinist states which to some extent are intertwined. Marxists cannot avert their eyes from the current trend towards capitalist restoration in Poland and Hungary. But the overwhelming movement is towards the political revolution.
Indicting Stalin for his monumental crimes, Trotsky warned: “The vengeance of history is more terrible than the vengeance of the most powerful general secretary.” Stalin p. 358. With recent events the reckoning has begun and one general secretary after another has been toppled. In a revolution “crowds fill the arena. They decide, they act, they legislate in their own unprecedented way.” Stalin p. 404. This is what has been happening on the streets of Berlin and Prague, and tomorrow it will be Leningrad and Moscow and the other great cities. The miners’ struggles are just the overture to the movement of the Soviet Union’s mighty proletariat.
The tasks of genuine Marxists, Trotsky wrote in the darkest days of Stalinist reaction, was “the preservation of revolutionary traditions … the preparation for the future revolutionary upsurge on the world arena as well as in the USSR.” Stalin. The upsurge has begun and Trotsky’s ideas are once again coming into their own as an indispensible guide to action.
The trend towards capitalist restoration in Poland and Hungary appears to contradict the fundamental trend in Stalinism. The workers of Poland have suffered a defeat, while the Hungarian proletariat has yet to move. This has at least half opened the door to counter-revolution. In the West, the bourgeois media are hailing this as a ‘triumph for capitalism.’
But their self-congratulation is premature. Even if the reaction under the Mazowieckis and Pozsgays is carried a long way down the road to capitalism, that will be far from sealing the fate of Poland and Hungary. Capitalism can offer no way out. The impoverished, starving masses of the under-developed lands offer no recommendation for the ‘miracle cure’ of the market. Convulsions now being prepared in the advanced capitalist countries, of which the October 1989 Wall Street spasm was a warning, will fundamentally change the outlook for a ‘capitalist renaissance’ in the East. Serious recession or slump will have a profound effect on the consciousness of the workers in the USSR and Eastern Europe, shattering their illusions in capitalism and bourgeois democracy. They will be looking, not to the alluring splendours of the consumer markets, but to the struggles of workers fighting to abolish capitalism.
The consciousness of the mass of workers in Poland and Hungary, for the reasons outlined, is lagging behind the real development of the crisis in Stalinism. Great events on the world arena, however, together with the bitter medicine of market policies at home, can rapidly transform consciousness and at a certain stage propel workers into action and provoke a renewed struggle. More than anything else, the dynamic advance of the political revolution in the USSR, the GDR and Czechoslovakia will inspire the workers of Poland and Hungary.
It may be a protracted and at times circuitous route because of the subjective factor. An absolutely vital ingredient is the intervention of the forces of Marxism to ensure that the movement is armed with the programme and perspectives, the strategy and tactics, to secure the earliest possible victory of the proletariat.
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