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Peter, the excellent Green Left Weekly:http:www.peg.apc.org/~greenleft/
has an archive of articles on Russia by Renfrey Clarke and Boris
Kagarlitskii. Here's an article I wrote. Its mostly descripitve but a
bit rough and not referenced properly.
Sam Pawlett
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Date: Tue, 16 Feb 1999 11:37:52 -0500
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Notes on the Further Implosion of Russia.
" the vipers, bloodsuckers, the middlemen-- that's what needs to be
rehabilitated in the
Soviet Union. That's what makes our country click!"=20
-Bruce Gelb, head of the United States
Information Agency.
In mid-august the Russian Government (Boris Yeltsin, Anatoly Chubais
and the IMF) devalued the ruble by more than 30%. Less than a month
earlier, the Russian government said it would not devalue, which says a lot
about the stability of the Russian government. The devaluation is supposed
to make the Russian economy more competitive on an international scale by
lowering wages and living standards( raising the prices of imports). The
devaluation was an indicator of the general malaise and disease infecting
the Russian economy. The Russian stock exchange has fallen by more than
80% in the past three months. The crash in East Asia has further
exacerbated Russia's problems. The Russian economy has not experienced any
real GDP growth since the end of the Soviet Union.Real GDP per capita is
said to have fallen over 50%,capital investment by 90%(!)=20
The switch to a "market" economy has,of course, been a disaster in many
ways. Only the most fervent believers in free-market theology ever believed
other wise. The conversion to capitalism in Russia was supervised and in
effect dictated to the Russian government by the IMF and a coterie of
Western advisors, mostly IVY League trained economists including most
prominently Jeffrey Sachs. Sachs has now become a critic of the IMF and its
policies, presumably to enhance his own self-righteousness. The Russian
economy at the time accepted terms that no G-7 country would ever submit
to. The conversion to capitalism was labeled "shock therapy" and was to be
carried as quickly and as drastically as possible to forestall any public
opposition that might develop. The program of "shock therapy" was
forcefully imposed,like capitalism everywhere, on the Russian people
without their being given a say in the matter. NO alternatives were
considered or debated and the past history and structure of the Russian
economy were not taken into consideration. The argument put forward was
that there was no alternative given the realities of the unfolding global
economy. At any rate, an opportunity to try different alternatives was
missed.Another argument put forward was that the peoples of Russian and the
former Soviet block states were tired of experiment and just wanted to go
with what was tried and true. Capitalism in its present modern form had
never existed in the Former Soviet Union and Eastern Europe. Elements of
capitalism existed in Russia before 1917 but Russian and Eastern Europe
were still very "backward" economically, culturally and politically. One
only has to have a slight knowledge of the debates and writings of the
Russian and European revolutionary movements of the time to realize this
point. Capitalism as an organic system is complicated and consists of many
factors. There is no guarantee that what worked in one culture will work in
another. Further the capitalism that was proposed in Russian( the pure
laissez-faire type)does not exist in any country today.
The shock therapy program consisted in the main of the following;
1) liberalization of prices=20
2)macroeconomic stabilization
A) reduction of government spending to achieve a balanced budget.
B) strict limits on the growth of money and credit.
3) privatization of state enterprises
4) abolition of the remaining elements of central planning.
5) removal of all barriers to free international trade and investment.
Shock therapy was supposed to work like any model in a first year
economic textbook. It reveals the extreme naivet=E9 of its designers of the
understanding of how actual societies work. This free-market monetarism is
supposed to more productive, efficient and to contain faster growth. This
is assumed a priori by its adherents and practitioners.=20
The results of shock therapy were disastrous. Russian GDP has fallen 50%
since 1990 as have real wages and pensions. Public health standards have
declined considerably, creating a serious problem.Diseases such as
tuberculosis which were virtually wiped out under Soviet rule have returned
to epidemic proportions. There is widespread malnutrition and starvation.
There is an estimated 1 million homeless people in Russia or 1% of the
population. Average life expectancy for Russian males has fallen from 73
years to 57. The level of alcholism,already high, has skyrocketed
contributing to the statistic cited above. The rural areas outside of
Moscow and St., Petersburg have been hit the hardest as these areas were
most dependent on the state enterprises and income redistribution between
regions. Under the Soviet system, often a whole town or city would be
dependent on one or two state enterprises, which not only provided all the
employment in the town but also provided for infrastructure, schools and
health. When these enterprises were shut down, the whole infrastructure of
the town would vanish as well. Predictably, support for todays communists
and nationalists is highest in rural regions outside Moscow and St.
Petersburg.=20
Russia's economic collapse is not that important,internationally since
the Russian economy is now smaller than that of the Netherlands. The
collapse is not a great blow to the international bourgeoisie, in strict
economic terms, yet financiers and speculators like George Soros will be
hit hard as Russian banks have defaulted on more than us$40 billion dollars
worth of loans. German banks were prime lenders to Russia and will be
caught holding a myriad of bad loans. That default will make it very
difficult for Russian to raise capital on international credit markets in
the future.=20
The principal lesson to be drawn from the Russian experience is that
Capitalism does not work. Capitalism, where successful, ( to the extent
that it has been successful in raising living standards) has been the
product of a long historical development stretching out over centuries in
some areas. Its development has been parasitic on
slavery,genocide,plunder,thievery and massive exploitation of the majority
of the population as a working class. The Russian experience shows that
capitalism cannot be reproduces a priori, ahistorically as contemporary
economic theory would have one believe. The conditions for capitalist
development cannot reproduced immediately and ahistorically. In !991,
important conditions were absent that are required for capitalist growth or
at least have been present in successful modern capitalist societies. There
was no bourgeoisie that could carry out the primary tasks in the process
of capital accumulation. Today a bourgeoisie has developed in Russia whose
prime task it has been to seize former state assets of the Soviet Union and
ferret the capital out of the country as fast as possible. Estimates range
from US$140 billion to US$300 in capital flight. Even Geoffrey Sachs
,amongst many others, has a called the process of privatization in Russia a
massive criminal operation. The main beneficiaries of the privatization
process have been former high ranking members of the CPSU and their
families as well as western "investors."This is the main reason the top of
the CPSU hierarchy decided to dismantle the Soviet Union; to get their
hands on the assets of the state,, which formally at least, under the USSR
belonged to the people as a whole. Boris 'buy me a drink' Yeltsin and his
cronies have used the central bank as their own personal piggy bank ripping
off billions in loans and aid that were supposed to go towards paying wages
and pensions that have not been paid in some cases for up to 8 months. The
billions in IMF aid which were supposed to go towards paying back wages and
pensions has either been pocketed or squandered trying to defend the ruble.
Indigenous investment in real production has been a minimal percentage
of total investment as production has declined by over 70%. Russia today
produces virtually none of its own food and consumer goods. Quite a feat
given that the Soviet Union was practically a self-sufficient society. Some
foreign multinational corporations have invested in Russia's huge natural
gas and oil reserves. Foreign investment as a whole, has been in the raw
materials sector like any other third world economy. Foreign companies are
now the majority owners of Russian media as well ,which,surprise!, trumpet
the IMF-western imperialist line about the economic reforms and shock
therapy. In the last general election, ALL of the Russian media backed
Yeltsin, continuously running favorable stories about him while maligning
his major running mate Genydi ZYuganov of the Communist Party as a monster
who would resurrect the labor camps that existed under Stalin. On this
basis, the UN observer team at the election declared the election unfair.
The election was reminiscent of the 'demonstration' elections that the US
used to sponsor in places like El Salvador, Guatemala and the Dominican
Republic.=20
Foreign companies were initially very optimistic and were licking
their lips at the prospects of plundering Russia's natural resources.
Russia has a well-trained and educated work force courtesy of the Soviet
Union. Now the place is so corrupt that even battle hardened TNC's are
either pulling out or discontinuing plans to invest in Russia. Most of the
manufacturing investment now goes to Poland,Hungary and the Czech republic
where things are a little less corrupt and a bit more stable. Major
corporations can do business there at least. The Baku oilfields and the
Caspian sea remain a prime area of interest for Big Oil with huge untapped
oil and gas reserves. Progress remains very slow though because of
corruption,nationalist and local opposition.=20
The cities of Moscow and St. Petersburg have been the principal sites
of the economic largesse.The city of Moscow comprises 70% of the economic
activity in Russia. Real incomes have grown in Moscow albeit with
tremendous inequality. American and European imports decorate the shops and
streets of some districts of these cities making these areas recipients of
glowing praise from the Western press who proffer images of these areas and
the people who consume the goods as proof that the free-market is
succeeding in Russia. Some 80 to 90% of the consumption in these cities is
direct imports from Europe and North America. Imported goods in Russia, as
in other third world societies, are status symbols. Symbols of one's wealth
and upper class status but also of one's pro-western pro-capitalist
imperialist viewpoint and lifestyle as opposed to the backward looking poor
nationalists and (gasp!) socialists who find something of value in Russian
cultural and political traditions. It should be said that nationalism is
rampant in Russia as it is throughout Eastern Europe. It is often a
particularly virulent and reactionary nationalism, full of Jewish
conspiracies, communist plots etc. The Communist party itself (at least
parts of its leadership) espouse this kind of nationalism, what Lenin
called "great Russian chauvinism" in one of his polemics against Stalin.
The heroes of this nationalism are not Lenin or Bukharin but individuals
like Yuri Gradenko the cosmonaut who was the first man in space(he beat the
Americans, the nationalists would emphasize.) The Communist party,the
largest political party in Russia with over 500,000 members, is as
aforementioned rife with nationalism leading some commentators to call it a
"red-brown synthesis." Its ideology while progressive in some respects (it
wants to re-institute free education and health care and give the emphasis
on domestic industry) reflects some of the worst aspects of Stalinist
ideology e.g. the nationalism,chauvanism,anti-semitism, xenophobia and
ignorance with regards to national minorities. The party may be trying to
improve on these issues as it attempts to better its public image. Again,
this is not to cast aspersions on the party as a whole, but merely the
leadership who are the sources for most of these accusations. Zyuganov and
his cowardly deputies in the Duma are by far the most conservative faction
in the Russian communist party. Other factions in the party who espouse a
more traditional Marxist internationalist perspective have criticized the
leadership along the lines I suggested above and also accuse it of being
merely social-democratic. There are basis for this criticism since when
pressed Zyuganov is willing to talk to the IMF and other representatives of
Western Imperial interests. There are also a myriad of smaller political
parties in Russia ranging from outright fascist to trotskyist. Many of the
smaller far-left parties have been leading and coordinating the current
strikes and railroad blockades that have been occurring over the past year
or so as a result of unpaid wages and other grievances. Radical slogans are
appearing( one slogan at a miners strike read Capitalism=3DShit) and the
hitherto dormant giant ,the Russian working class, shows signs of
developing a mass movement for change. What has been most puzzling is the
docile nature of the Russian workers. Just now things are starting to heat
up in the class struggle after millions of workers have not been paid for
up to 6 months. Can you imagine what would happen here if millions of
workers were not paid for 1 month let alone 6! The future of Russia lies in
the hands of its workers and it is up to them to decide in which direction
the country will go.=20
There seems to be an inter-class conflict between sectors of the
Russian bourgeoisie. One faction seems wedded to riding on the coattails of
Western Imperialism hoping to get the spin-off from the multinational
corporations and is dedicated to riding the course set up by the IMF and
Ivy League economics professors as well as the U.S. Treasury. The other
faction is an indigenous bourgeoisie who have arisen in the last few years.
The indigenous want to plunder Russias raw materials rather than have
foreign companies do the job.=20
Right now the IMF and other agents of imperialism have thrown up their
hands in frustration as if to say "we ruined your country and stole all its
wealth now its up to you to deal with the consequences." Russian effective
demand has declined dramatically as real incomes have fallen over 50% in
the last 5 years. Imports become more expensive as the ruble falls against
the dollar. Russia thus has not turned out to be the market that many
western companies were hoping it to be. One gets the feeling that many
foreign exporters and companies have given up on Russia because of the lack
of an internal market and the costs of doing business there. The much
ballyhooed Russian Mafia is said to control most of the domestic economy.
The Mafia, closely linked to the domestic bourgeoisie in many instances,
arose because of its links to the Communist party. Further, the Mafia
consists of many experienced black marketers who operated under the old
Soviet regime. As far as organized crime goes, the Russian Mafia are as
ruthless as any. The murder rate throughout Russia has risen dramatically
as has the crime rate and the suicide rate.=20
Perhaps what is most depressing about the current state of affairs in
Russia is the state of its youth and the state of the arts and sciences.
The Soviet regime gave great prominence to the arts and sciences. The
quality of Soviet artists and scientists was first-class. The USSR had at
one time the most doctors and scientists per capita in the world. Now there
is longer any funding for the arts and sciences resulting in a massive
cultural and scientific decay. The once great and proud Soviet ballets and
symphony orchestras are now either non-existent or the artists are forced
to work second jobs and live in terrible living conditions.Russian culture
today consists of the worst of recycled North American popular culture.
Funding for Russian science has also dried up with the many world class
research institutes of the USSR
closing their doors. With no work for them, many Russian scientists,social
scientists and engineers have emigrated, causing a great brain drain in the
country. This does not bode well for the future of the Russian economy as
technological advancement requires well-educated scientists and engineers.=
=20
The state of Russian youth is sad. Nihilism and consumerism as well as
apathy mark the contemporary Russian youth. Many are turning to
violence,crime and fascism as all other opportunities vanish. Young Russian
women are particularly vulnerable as many have ended up working as
prostitutes or dome other aspect of the sex industry. Young Russian women
have been showing up in droves in the red light districts of European and
increasingly, North American cities. A great opportunity exists for the
political left in Russia, as it must be an organizers paradise. Whether the
left takes advantage of this opportunity remains to be seen. I am pretty
skeptical with experiences of the youth in this country.
Serious crisis has also hit the once mighty Russian military. The army
has shrank considerably with only 450,000 soldiers, 150,000 of those being
conscripts. The army was humiliated in the bloody secessionist war in
Chechnia where, because of Yeltsin's stupidity, 150,000 people died and
dozens of towns and cities were completely destroyed. Russian soldiers
,like Russian workers, have had serious difficulties in getting paid. Many
survive by hunting and foraging and live like most Russians in substandard
housing. The Russian armaments industry is still going string and
represents one of the country's top export industries. It represents some
12% of the worlds arms market down from a high of 39% in Soviet times. It
exports to the so-called "rogue" states like Iran,N.Korea,Libya and Syria.
They basically sell to anyone who will buy--not a comforting thought. As in
many of the former Socialist countries the army is(was) the main pillar of
the regime ideologically and politically. In Cuba for example, Members of
the army are held in very high esteem even if they did not participate in
the original revolution. The ideological and political situation of the
Russian army today is uncertain. While the army may not be a threat on a
conventional basis internationally, it will still reign supreme in any
civil conflict within Russia itself (although the Chechenya fiasco would
might change someone's mind on the topic of starting a guerrilla war in
Russia.) Most of the Generals were educated under the old Soviet system and
probably still hold to remnants of the old, crusty Marxist-Leninist
ideology. However, Yeltsin will need only a few divisions to support him
and keep him in power. Which direction the army goes in the class struggle
or any civil struggle may ultimately prove to be the decisive factor.Also
of interest, is Russia's large stockpile of nuclear warheads estimated to
be around 16,000. Much has been made of this in the western bourgeois press
yet,admittedley, the likes of a Vladimir Zhironovsky with his finger on
the nuclear button is not soothing. These military weapons may act as a
bulwark against any US imperialist military intimidation which they are now
more prone to in the "post-cold war" world.=20
Options for Russia;The Crystal Ball Outlook.
As of Sepetember 1998, Russia is a terrible mess that, barring
significant drastic action, is only bound to get worse. Many observers in
and outside Russia have compared the current situation as one of the worst
in the countries history comparable to Stalin's 1930's or the second world
war. Indeed, the survival strategies of Russians is similar to the
Stalinist era, with the cultivation of the small garden plot which provides
the food and nutrients for the majority of Russians. The situation in
Russian will get worse because of the decaying capital stock,lack of
capital investment, high foreign debt, limited export potential, high
unemployment, decaying infrastructure, severe housing crisis, collapse of
the financial sector and epidemics of disease. The economic structure of
Russia today is that of a primitive third-world monoculture economy.
The Western press has been prognosticating that a return to a Soviet
style economy or elements thereof is inevitable.This is probably untrue.
Rumors around Moscow have it that the government is planning a
re-nationalization of key sectors of the economy. This means,probably,
oil,gas,minerals, food production, clothing production, health,education,
basic infrastructure and what's left of the banking sector. This will give
the Russian state effective control of the private sector. The central bank
may try to print rubles and impose price controls to re-flate the economy.
A sharp bout of inflation would also help with the ridding of the mountain
of foreign debt. The above strategy might work even undertaken thoughtfully
with extreme care and caution. There will probably be little opposition
from Western imperialism provided the government does not make a sharp
ideological and political turn to the left. However, action must be taken
soon to prevent the already, tragic and catastrophic situation from getting
any worse, before millions starve to death or something similar.
The Russian intelligentsia(or what's left of it) and people in
decision making places in Russia would do well to study their own countries
history, particularly the !920's when the country was facing a similar
situation. The 1920's were the time of what is called "the Great Debate", a
huge debate involving Lenin,Trotsky,BUkharin, Preobrazensky as well as
great numbers of Bolshevik economists,social scientists and scientists on
which direction the economy should go and what should be done. The
substance of the debate was one of the great intellectual debates in the
history of economics and contains many insights and instructional material
for students and policy makers today. The debate revolved around markets,
state involvement in the economy, technology, foreign investment, regional
inequality, class structure, agriculture, the structure of heavy and light
industry and the "scissors crisis" that emerged out of the contradictions
between the urban and rural regions. What the Bolsheviks came up with was
the New Economic Policy or NEP. What Russia needs is a NEP for today and
solid objective thinking and a great deal of commitment to build a dynamic,
egalitarian society that involves all of the Russian people.
Further Reading.
The writings of Lenin,Trotsky,Bukharin and Probrazensky are essential for
an understanding of the genesis of the USSR as well as its early years.=20
Deutscher, Isaac. The Prophet Armed.(V1), The Prophet Unarmed(V2), The
Prophet Outcast(V3). This biography of Trotsky is one of the greatest
biographies written in the english language. Beautifully written, it is one
of the books that one cannot put down after one has started reading.
Valuable for its biographical and psychological insight as well as its
analysis of the politics, history and problems of the USSR.
Deutscher,Isaac. Stalin. A biography of ol' Uncle Joe himself. Also
valuable for its analysis of Stalin's policies and politics.
Medvedev, Roy. Let History Judge. The first attempt at a marxist analysis
of the rise of Stalinism. Written from inside the USSR. The manuscript was
smuggled out as Roy sat in jail.
Kagarlitsky, Boris. The Disentegrating Monolith , The Thinking Reed, Why
Capitalism Failed in Russia, The Mirage of Modernization and Square Wheels.
Kagarlitsky was a member of the dwindling band of Soviet marxist critics
of the USSR. His books are all well written, informative and well argued.
He writes with an excellent sense of humor making many of the above books
hilarious to read.Boris did time in Soviet jails.
Nove, Alec. An Economic History of the USSR. Standard economic history
written from a leftish western perspective.=20
Kornai, Janos. The Socialist System. A Former Hungarian marxist turned
Thatcherite writes an interesting analysis of "the system", combining the
insights of Marx,Keynes and Hayek.
Ticktin,Hillel. The Crisis of the USSR. A fiercely critical Trotskyist
analysis of the Gorbachaev years.
Kotz,David with Weir,Fred. Revolution From Above; The Demise of the Soviet
System.
The best critical analysis so far of "shock therapy" and its aftermath by
American economics professor and a Canadian journalist residing in Russia.=
=20
Gowan,Peter "Neo-Liberalism for Eatern Europe" in New Left Review 56.
Excellent analysis of the reforms in Russia and Easten Europe.
Williamson, Anne. How The West Created the New Russian Oligarchy. Former
Wall Street Journal reporter gives all the lurid details on the corruption
and criminality involved in the transformation of Russia.
Parenti,Michael. Blackshirts and Reds. A well written and informative
account of the "New Russia" by the veteran American marxist.
Carr E.H. A History of Soviet Russia. 14 volumes.
This massive and definitive history of the USSR migght best be used as a
reference work. Magisterial scholarship from the late great English marxist.
=20
Lewin Moshe. Lenin's Last Struggle. A passionate study of Lenin's struggle
against Stalin in his dying days. Lewin's other books are well worth
reading as well.
Mandel,Ernest. The Gorbachaev Years. Excellent study of the Gorbachaev
reforms from the legendary marxist economist, concentration camp escapee
and leading member of the European underground. Mandel was for many years
the leader of the world Trotskyist movement. He has authored more than
thirty books and never earned a living as a university professor.
Mandel David.ed. Looking Left Eastwards. Ernest's son conducts interviews
with Russian working class activists and union leaders.=20
Louis Proyect
(http://www.panix.com/~lnp3/marxism.html)
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