Gorbachev's crisis deepens
By Rick Simon The Soviet economic and political system is in the grip of a series of interlocking and mutually reinforcing crises. Together they add up to a profound systemic crisis from which there appear to be few crumbs of comfort for Gorbachev.
The economy is increasingly failing to deliver essential goods; centres of power are proliferating: the nationalities question threatens the disintegration of the Soviet Union itself; splits face the CPSU at its forthcoming Congress and Soviet workers are beginning to press their demands for more goods and wage rises that can keep pace with growing inflation.
The economic crisis
The Soviet economic crisis is characterised by chronic underproduction, particularly of basic consumer goods, rather than the overproduction typical of capitalist economic crises. According to CIA estimates, only 50 out of 1200 basic consumer goods are readily available in the shops and this despite an increase of 6.4 per cent in consumer goods production in the first quarter of 1990. Overall production in the same period registered a fall of 1.2 per cent. Soviet indebtedness is also on the increase - up by 10 billion roubles in 1989 to 51 billion, and the budget deficit has increased from 18 billion roubles in 1986 to 92 billion in 1989.
Moreover, the collapse of the bureaucratic East European regimes is a good news/ bad news story for the Soviet Union. The good news is that it will relieve an economic burden on the Soviet economy more swiftly into a direct relationship with the capitalist West. The prospect of the latter appears to have accelerated the search for free market solutions to Soviet economic problems.
Previously, the East European states of Comecon acted both as a buffer for the Soviet economy against the world capitalist economy and as a proving-ground for a varicty of experiments in modifying the operation of bureaucratic planning. Thus, direct links were primarily established between Soviet enterprises and their Comecon counterparts rather than directly with Wester firms.
Debates as to whether the Soviet reform is more akin to the moderate East German or to the more radical Hungarian model appear increasingly inclevant, however, as the East European states embrace free-market economics and scek ties with the West with ever greater gusto. Soviet trade with Comecon countries declined in the first quarter of 1990. SOCIALIST OUTLOOK no 26, July-August 1990
FEATURES economic decline, despite adopting a package emergency promoted by Prime Minister Nikolai Ryzhkov at economic reform. restructuring of the economy to accelerate economic growth by giving greater independence to enterprises within the framework of the bureaucratic planned economy, are at an end. Talk is now not so much about "restructuring" as of "dismantling" the whole edifice of the nationalised economy.
Prices
Even just a year ago the key to economic reform was seen to be the pricing system. Once prices were freed from the shackles of central control, a market could be established in means of production and enterprises would be free to enter into contractual relations with each other, with Western firms and with the state to produce goods on a supply-and -demand basis.
It is no longer price reform but the development of competition in the Soviet economy and the transformation of property rights which are seen to be the key to economic refor by more radical economists. Concretely, this means denationalisation of state enterprises. Price reform is only a corollary of this process.
The star of formerly prominent reform economists, such as Abel Aganbegyan, the architect of the first phase of perestroika, is on the wane. Much more forthright liberal economists, such as Nikolai Petrakov, now have the ear of President Gorbachev.
In an interview in Moscow News, Petrakov argued that a committee should be extablished to dispose of state property, insisting that:
"Without opening out the economy, no effective reform can be carried out. When people can buy shares, the endless problems which plague joint ventures will be solved instantly. We have to overcome our dogmas: why can't there be enterprises which are wholly owned by foreign companies?*
The appearence of McDonalds in Red
Square is just a sideshow compared to the prospect of wholesale privatisation. But, as the Polish experience has demonstrated, it is one thing to proclaim a market reform, and quite another to carry it out. Nevertheless, the terms of the debate now centres on how such a reform can be implemented rather than over the principle of introducing it.
The price reforms mooted in Ryzhkov's economic programme are opposed by the radical intelligentsia because they simply increase administratively determined prices without changing in any way the basis on which they are set, It is a measure of the opposition such proposals, called by some economists shock therapy without the therapy", have encountered from all sectors of Soviet society that their implementation has once again been postponed until the autumn.
Plans are now also being drawn up to tum selected state enterprises into joint-stock companies and to create a stock market. According to Petrakov, "by the end of 1990, it will be possible to transfer 2,200 large enterprises - 70 percent of the fixed assets in industry -to a joint stock basis.". There will also be more efforts to press ahead with co-operatives and small businesses.
Such ambitious plans for a market economy assume both the support of the people of the Soviet Union and aid from the West. There is little to suggest that either will be forthcoming. There was a marked liberalisation of Soviet foreign trade in 1989, but this has only led to a hard currency squeeze and widespread defaulting on debt repayments.
Wester governments and firms want evidence of the real operation of a market economy. In a hard-nosed editorial, the Economist argued:
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"The fastest way to tutor East Europeans in the ways of free market is to make them compete against Mexicans and Malaysians for the hard-eared dollars, yen, and D-marks of westem savers". (June 16, p 19.) The crisis of the Soviet State
The loosening of political and economic ties is creating centrifugal tendencies within the Soviet Union. The recasting of the Union of Soviet Socialist Republics is on the agenda for the first time since its foundation in 1922.
Virtually all of the major Soviet republics now have powerful movements for greater autonomy. if not independence, Uzbekistan and Moldavia being the latest. However, the trouble caused by the Baltic states" unilateral declarations of independence is as nothing compared to the problems that will be created by the Soviet Union's largest and most important republic, the Russian Federation (RSFSR), seeking to develop its own independent relations.
Boris Yeltsin's election as President of the Russian Federation, apart from completing, in Soviet terms, an unheard-of political comeback, creates a massive alternative centre of power to the Soviet state.
Yeltsin's programme for Russia is a double-edged sword. On the one hand, it has an appeal to the most chauvinistic elements in Russian society (Yeltsin is reported to have met with representatives of the neo-fascist Pamyat organisation when lobbying for the Presidency). On the other, it contains the genuinely progressive demand that the USSK should be based on voluntary relations between constituent republics.
Yeltsin's first action in this regard was to meet with Lithuanian President, Vytausas Landsbergis. Russian control of basic energy sources such as oil coal and gas could easily cut across Moscow's efforts to impose an economic blockade on the Baltic states. This has prompted a renewed search for a compromise solution.
But such a solution to the independence of the Baltic States will only temporarily remove one thom from the side of the body politic. There are many others to create a festering wound.
The crisis inside the Party
The days of the outwardly monolithic Party have long since departed. Under Brezhnev, the CPSU was a mechanism for the accomodation of the main institutional interests in Soviet society - the military, industrial managers, and so on, and for transmitting the decisions of the Party into the deepest recesses of Soviet society. To this end it required a massive membership: approximately 19 million people - or a tenth of the adult population.
As the crisis deepens, public support for both the CPSU and Gorbachev is declining and the broad spectrum of views within the Party is becoming more apparent. Under considerable pressure, the next Congress of the Page 10
FEATURES Party has been brought forward 6 months to debated the proposed advance to a market economy. This has provoked the appearance of two public factions for the first time since the 1920s.
The first of these, "Democratic Platform' (DP), is closely associated with the InterRegional Group in the Congress of People's Deputies. It has a number of leading individuals in common, including Yeltsin.
DP's programme is broadly democratic, arguing against the long-term goal of communism and for a multi-party parliamentary system in which the CPSU would cease to play a vanguard role, but it is not a homogencous tendency. Its membership ranges from extreme marketisers to those who support the Committees of New Socialists associated with Boris Kagarlitsky.
It seems a foregone conclusion that many of DP's supporters will leave the CPSU at the 28th Congress in July. DP claims the support of 40 percent of the Party rank-and-file, but only 2 percent of Congress delegates are DP supporters. A majority at its second conference agreed that, unless radical changes in the CPSU's organisation and functioning were agreed at the Congress, they would leave and for probably more than one new party. According to a recent opinion poll, only two-thirds of Party members said they would remain after the Congress
A second faction has recently emerged in the shape of the 'Marxist Platform" (MP), MP puts great emphasis on workers' self management and argues that, depite the degenerate and bureaucratic character of the CPSU, there is still a need to regenerate the communist
The battle over the CPSU and the forces which emerge from it are crucial to the development of a socialist alterative in the Soviet Union. The CPSU still plays a pivotal role as the instrument of the bureaucracy's domination of Soviet society and, as the recent experience of the foundation of the Russian Communist Party indicates, the apparatus still retains a firm grip within the CPSU.
The crisis inside the trade
unions
Soviet trade unions have traditionally served the function of a "transmission belt" for instructions from the highest economic organs to the workforce and as instruments of social and cultural policy inside the workplace by providing health and holiday facilities, insurance, housing and so on.
Gorbachev's policies have shifted some of the emphasis away from trade unions as ap pendages of the state, and verbal emphasis has been placed more on carrying out traditional trade union functions such as defending workers' interests against management. When the crunch has come, however, the attitude of the official unions has been found wanting.
In last year's miners* strike, the official unions were conspicuous by their absence
from the organisation of any action. They were completely by-passed by rank-and-file strike committees which linked up to co-ordinate the strike. The official union leaderships did try to jump on the bandwagon as the breadth and power of the strike became ap parent - but this was to derail it and prevent the advancing of political demands.
The failure of the govemment to honour its promises, embodied in Resolution 608, which brought the strike to an end, has led to the threat of new action. At a congress of the official miners' union in March, the apparatus was so dominant, however, that only 20 percent of delegates were rank-and-file miners. The latter walked out and refused to participate in any of the union's deliberations. The upshot was the calling of a genuinely rep resentative conference which has delayed the founding of an independent union until a second conference in Moscow in August.
That conference also reflected, however, the confusion which reigns among even the most advanced sections of the Soviet working class. A resolution demanding the resignation of the present Ryzhkow government argued that "the main thing...is to form a government which will have enough determination and skill to end state control over the economy and carry out a real transition to a market economy and democracy"
A strike scheduled to go ahead on the anniversary of last year's strike now appears to have been postponed following appeals to the miners" leaders from Boris Yeltsin. Yeltsin is anxious to buy time for his programme to be implemented and, at present, he commands sufficent popularity among the workers to be able to do so. Rapid improvements in the supply of consumer goods will be essential if his credibility is not also to suffer.
Since the end of the strike there have been significant developments in the formation of other independent trade unions. SOTSPROF. the first such organisation of any real size and influence has continued to grow, drawing in small emergent groups under its umbrella; and there has been the convening of the Confederation of Labour, of which the miners are again the backbone.
Conclusion
The crisis of Soviet socicty is reaching explosive proportions, and no section of society appears to have the leadership to impose its solution. It would be folly to predict an outcome to a process with so many variables. As control from the centre disintegrates, however, the possibility of an authoritarian solution, involving sections of the military and security forces, can not be ruled out.
The need for the Soviet working class to develop a programme and organisation to combat the crisis and the threat of reaction is pressing. Socialists in the West should do everything possible to assist this process. SOCIALIST OUTLOOK no 26, July-August 1990