In Gorbachev's backyard

In Gorbachev's backyard Rob Knight

certain amount of pressure from below on the burcaucracy to The encourage the implementation of economic reform.

The Soviet leadership is now grappling with the problem that after four years of Gorbachev's reforms there has been no discernible economic improvement. In fact, in many ways, things have got worse. One Soviet economist noted that national, industrial and agricultural output all fell in 1987. There were shortages of many basic consumer goods such as clothes, footwear, coffee, soap and toothpaste, not to mention sewing machines, televisions and tape recorders.?

Deepening economic crisis has stimulated more radical demands for change. Some Communist Party authorities are now openly declaring that political change is not possible without economic change. They argue that democracy can only be achieved through the restoration of the capitalist market. One leading Soviet philosopher argued recently that the absence of the market inevitably resulted in totalitarianism, in the violation of the rights and dignity of individuals, and in the creation of an omnipotent administrative and bureaucratic apparatus.

The 'new thinkers' who want to see the market reintroduced are engaged in a full-scale revision of history. The process of smashing the old icons is proceeding so fast that there are now no official history books in Soviet schools because state historians cannot keep up with the pace of change. The rejection of the Brezhnev and Stalin periods, which characterised the early Gorbachev years, has now been joined by a rejection of Leninism and Marxism. It is now possible to read official press articles by party members who argue that the Soviet Union is not socialist.

that the October Revolution was a mistake and that Marxism- Leninism was directly responsible for the horrors of the co Stalin era. New thinking is not new in any real sense. Anti-Marxism and anti-Leninism have been standard fare for bourgeois apologists and their reformist followers in the West throughout this century. What is new is that, as a result of the chronic stagnation of the Soviet system, these prejudices are now being publicly Pr endorsed by the Soviet leadership. The recent election results for the congress of deputies have added to the impetus for rethinking the past. The logical consequence of the current debate would be the restoration of capitalism. How far can this process go? What are the barriers to the penetration of the Stalinist order by capitalist relations?

28

Soviet economists now agree that it is necessary to introduce the market to overcome the inherent inadequacies of the command economy. The failures of the Stalinist system are universally *Attempts to establish 100 per cent control over everything lead to such spontaneity. to such an uncontrollable situation that all anarchy Many Soviet economists now argue that the New Economic Policy, introduced as a temporary expedient by Lenin in 1921, should never have been abandoned. There is, however, little discussion of the problems that resulted from encouraging the limited operation of capitalist relations within the framework of a centrally planned economy. This is ironic since it was the threat of capitalist forces to a bureaucracy dependent on the state sector that led Stalin to abandon the NEP in 1929.5 Nevertheless.

some form of NEP has become the intelligentsia's preferred model.

In recent years a number of measures have been proposed or implemented to extend the operation of market forces.

Introduced in 1988, enterprise reform aims to make individual enterprises more efficient by giving them responsibility for future investment. They can now go bust if they make losses.

Long leases on agricultural land were first introduced in selected regions as an experiment. A decree in March 1989 made the In an attempt to provide a wider varicty of services and consumer goods, private enterprise has been introduced in the service sector in the form of co-operatives. There is no legal limit on either the size of these co-ops or their earnings. They are The authorities have attempted to rationalise the Soviet Union's vast and chaotic system of subsidies to reveal the true value of goods. The extent of this problem was revealed after the announcement of a 14 per cent cut in defence spending last December. A top Soviet arms expert explained how difficult this was because the subsidies meant that nobody knew what was y to that 1. no rays, that here thes, wing dical , are sible only One ce of tion fan uced is of now state tion arly lIsm s by alist, Ismthe and gists this tion licly sfor for rent this the The economic debate Enterprise reform Private farming Service co-operatives Price reform 29 acknowledged: really being spent on defence."

becomes a paragon of order by comparison.* encouragement of private farming a national policy.

allowed to hire and fire waged workers.

Many attempts have been made to make foreign investme more attractive. In December 1988 the government removed th restriction. on foreign firms taking a majority stake in jon enterprises inside the Soviet Union. By the end of 1988 some 1: Soviet firms had signed declarations of intent with foreig Many foreign investors have found the Soviet Union unattracti because the rouble is not directly convertible into foreig currencies. This means that profits made in roubles are notion in value and cannot be repatriated. In December last year th government announced plans to devalue the rouble by 50 p cent in 1990. More recently it announced that, following t Chinese model, a second, "hard currency, rouble would introduced in conjunction with special economic zones.

The shortage of consumer goods has prompted an attempt i shift resources from the military to the consumer goods secto This January 300 large firms in the arms sector were ordered On his trip to Britain this April Gorbachev made a strong ple for his country to be admitted into the capitalist world's ma financial institutions such as Gatt, the World Bank and the IM It is important to emphasise that at present most Sovi economists do not envisage the introduction of full-blow entrepreneurial capitalism. Their goal is to establish a modifie form of capitalism with the excesses of the free market curbed t the state. This is how Abel Aganbegyan, Gorbachev's chi •It should be emphasised that the socialist market is a regulat market: the state will assign prices to the most important types Leading Soviet economists dream of a future economic syste along the lines of the Swedish model. or even, incredib A distinctive feature of the Gorbachev period is the way li Soviet press and television have become enthusiastic car paigners for the leadership's reform programmes. The media ha Foreign investment Convertibility of the rouble Swords into ploughshares Integration into the world market 2. Barriers to change 30 companies to set up joint enterprises.?

re-equip to produce consumer goods.* economic adviser, sees the future: products centrally." Britain's post-war welfare state.

been particularly active in exposing inefficiency and corruption at the lower level of the bureaucracy, among local managers and Media campaigns have, however, been carefully controlled and have focused on individuals in preference to the bureaucracy as a whole. Gorbachev has warned newspaper editors not to target the bureaucracy as the problem. Indeed, despite glasnost in other areas, blanket criticism of the bureaucracy remains firmly beyond the scope of what is acceptable in Soviet society.

A new law was promulgated in April 1989 outlawing public insults or the discrediting of the USSR supreme bodies of state One aspect of the current system to attract much public criticism is the bureaucracy's inability to provide adequate information about economic and political affairs. Prime minister Ryzhkov recently attacked the ministry of statistics for providing less accurate information on the cconomy than the CIA. In an attempt to provide a more accurate gauge of public opinion leading economist Tat'yana Zaslavskaya has set up a special institute to conduct opinion polls along Western lines.

*Major changes are taking place in every sector, but those taking place in the arca of labour are the most complicated and difficult."

When it comes to blaming the working class for society's problems the Soviet media do not hold back. A central element of current party discussions is the recognition that the working class is alienated from the production process. There is also considerable evidence that the working class has little confidence that any good will come from perestroika. Zaslavskaya's new opinion poll found that only 41 per cent of those interviewed were in favour of perestroika. Unsurprisingly, only 16 per cent were in favour of rising prices and 58 per cent were against unemployment. The press is full of complaints about shortages of consumer goods and the high prices charged by the new private co-operatives that appeared last year. When Gorbachev goes on his walkabouts he always gets a rough ride on the state of Working class hostility to change has made the party fearful of trying to restructure the economy too rapidly. Hence, at grassroots level there is a passive coalition of interests between the bureaucracy and the working class in keeping things as they are. The pervasive inertia bred by the Soviet system is a central men: ed the joint ne 130 oreigr active oreign tiona ar the 50 per ng thi uld be mpt te sector ered te ng ple s main e IME Sovie -blowt odifiel rbed b 's chie egulated types or system redibly way th Ic cam dia have The bureaucracy The working class 31 party officials. power and government'. the economy. concern in the discussion about reform:

The insufficient effectiveness of democratic institutions and the low growth rates of production [have] promoted the dissemination of erroncous ideas that the basic advantages of socialism are expressed not in the raising of the effectiveness of production to a higher level but only in social guarantees [employment, healthcare, education, etc]."

Resistance from bureaucrats and workers has virtually paralysed the progress of reforms in the sphere of production. In response to complaints about prices, in January 1989 the state introduced price ceilings in the co-operative sector and banned the private sector entirely from certain services. The leadership has guaranteed a price freeze on basic consumer goods for the next three years, and it has delayed projected price reforms and the planned convertibility of the rouble. Gorbachev himself revealed the leve of official concern about prices when he declared on one of hi walkabouts shown on prime-time television that 'if the peopl are opposed to it, they must not be touched': 12 Rising dissatisfaction with shortages of consumer good contributed to Gorbachev's dramatic announcement of a 19 pe cent unilateral cut in conventional forces in Europe in Decembe 1988. The aim is to switch resources from military to foo production and to improve the food processing sector in particular. The central committee estimates that 40 per cent o food is lost between production and reaching the shops.!3 There is growing recognition in the party that the problem o the working class has to be tackled. More radical economists an calling for a more open offensive through the abolition of foo subsidies and the introduction of unemployment: We must have a fearless, business-like discussion of the possib benefit of a relatively small reserve army of labour...as a good remed for laziness, drunkenness and irresponsibility."* Other economists insist that as many as 16m jobs need to b shaken out of the Soviet system to make it efficient, though the qualify this drastic proposal by suggesting that more jobs can b found in the service sector to absorb the unemployed.

The leadership's delay in confronting working class resistance to 3. A breathing perestroika has led to a growing recognition that the process o space reform is going to be protracted. Leonid Abalkin, anothe economist close to Gorbachev, recently indicated how earl expectations have been modified by experience: 32

'Two years ago I would say: "We will have success in perestroika by the year 2000" and everyone said: "Abalkin? what a pessimist." Now I still say we will have a successful perestroika by the year 2000, and they Given that economic restructuring is now expected to take decades, external aid has become more important. Foreign investment, foreign loans and the import of technology and consumer goods are all short-term measures now seen as essential for the long-term success of perestroika. Together with the strategy of reducing military spending, these policies require To justify a more positive approach to the West Gorbachev has developed a new version of the Stalinist theory of peacetu coexistence. Soviet experts now argue that the international class struggle is a thing of the past and they accept that the biggest danger to the Soviet Union comes from its cconomic weakness, not from the West. The risk of mutually assured destruction' as a result of nuclear war is no longer seen as possible, except by accident. The Soviet Union hopes to avoid this by reducing international tension through disarmament and diplomacy. This policy is the result of a combination of the leadership's preoccupation with domestic problems and wishful thinking. Yet it has already led to a complete surrender by Moscow on the international stage and a staggering series of Despite its crucial strategic importance the Soviet Union has pulled its troops out of Afghanistan with no guarantees from the The Soviet Union has given the West a free hand to impose its solution on Namibia, while South African forces continue to devastate Angola and Mozambique and slaughter Swapo While the Palestinian intifada on the West Bank continues to take a heavy toll of lives, Moscow has recognised the state of Israel and encourages the opportunist diplomacy of Yassir The Soviet Union gives no significant support to the Sandinista regime in Nicaragua to assist its resistance to US-backed e low in of d not only lysed OnSc luced rivate aranthree Inned : leve of his cople goods 19 per ember food or in ent oi em ol sts are f food ossible emedy to be h they can be ince to cess of nother early Afghanistan Southern Africa The Middle East Central America 33 guerrillas. say: "What an optimist." *15 the cooperation of the West.

destabilisation and insurgency.

concessions to the imperialist world order: West about the nature of the future government.

Arafat's Palestine Liberation Organisation.

Disarmament Gorbachev has agreed to eliminate intermediate nuclear weapon despite the West's overall nuclear superiority. He has als announced cuts in conventional forces in Western Europ without any indication that the West will follow suit.

The Kremlin's relations with the Eastern bloc have been dictate by its policy of trying to reduce tension with the West. The fa that the Soviet Union has renounced any intention of militar invasion and has significantly reduced its troop numbers Warsaw pact countries has accelerated the pace of politica reform in the Eastern bloc. Gorbachev has attempted to turn thi situation to his advantage by deliberately encouraging th Hungarian and Polish parties to experiment with new forms o democracy. Soviet authorities have even gone so far as to sugge that it is theoretically possible for a country like Hungary t become a Western-style "bourgeois democracy" and still rema a member of the Warsaw pact' This process works to some extent both ways: the Sovie leadership was undoubtedly shaken by the Polish events in 198 and this has contributed to the process of rethinking and refor in the Soviet Union. 4. What now? The theme of recent leadership pronouncements on the econon is that things are in an even worse state than had been though The political shocks emerging from the recent elections and th effects of continuing economic stagnation have combined i produce louder calls for more rapid changes in the system.

Many recent developments have an ambiguous characte instead of stabilising the system, reforms have increase aspirations that could prove impossible to satisfy. Take, fo example, the unprecedented liberalisation of the cultural spher the relaxation of censorship and the opening up of clection This process has given the party greater legitimacy, particularl among intellectuals: the proportion of party members in th congress of deputies actually increased in the recent elections Liberalisation has also had contradictory effects. Problem facing society that would never have been acknowledge openly in the past are now publicly exposed through the media This has served to undermine the unity and cohesion of societ The dull certainties of the long Stalin-Khrushchev-Brezhne years have given way, over the past four years, to widesprea doubt and questioning of the very fundamentals of Sovie society. There is a real danger that limited democratic reform 34

could raise expectations that the regime is incapable of fulfilling.

The Boris Yeltsin phenomenon is a good illustration of the problems facing the Soviet leadership. While remaining a party member, he has become spokesman for the dissatisfied Moscow working class and has even won grudging support from veteran dissidents like Andrei Sakharov. But it is noticeable that mass popular support has pushed him in a more radical direction.

Though he began by merely denouncing the privileges of the nomenklatura he now calls for the formation of an opposition The status of the national minorities within the Soviet Union is another social problem that has been exacerbated by the Gorbachev reforms. For years the bureaucracy has exploited local national sentiment to consolidate Soviet rule over minority populations. But in the new climate of reform and liberalisation, demands for national autonomy have acquired such momentum that they now threaten central control. In the Transcaucasian republics of Georgia, Azerbaijan and Armenia the rise of nationalist sentiments has provoked sectarian strife and bloody riots. On the Baltic coast, Estonia has more or less made a unilateral declaration of independence from Moscow, and Latvia and Lithuania are moving in the same direction.

Up to now local Communist Party machines have largely succeeded in staying in the forefront of movements for national autonomy. However, this has necessitated major accommodations to nationalist sentiment; in Latvia, for example, the local party has gone so far as to split itself into separate ethnic factions. The result is that the overall cohesion of the Soviet Union has been jeopardised. As each local Communist Party has made more concessions to nationalism in an attempt to retain control over the popular movement the Communist Party itself has become fragmented and its capacity to act as a unifying force within the Union of Soviet Socialist Republics has been As a result of the pressures unleashed on the Soviet Communist Party under Gorbachev it has come to reflect a wider range of social forces and opinions than at any time since the twenties. At the top level the heterogeneity of the party is apparent in the results of the elections for the central committee nominations to the congress of deputies. The two candidates most associated on the one hand with reform and on the other with conservative resistance to change, Yakovlev and Ligachev, Different sections of the party are becoming associated with apons also игоре tated e fact ilitary ers in litica in this g the rms of ary to emain Sovic n 1981 eforn nomy ought nd the ned te m. racter reased ke, for phere ctions. cularly in the tions, blems ledged media ociety ezhnei spread Sovie eforms 35 bloc in the new congress of deputies.

gravely weakened. both lost votes.

different interest groups. The pan-Slavic, anti-Semitic Pamyat organisation draws support from all layers of the party. The co-operative movement tried to draft Nikolai Shmelyev and other radical party economists as its representatives in the congress elections. Yeltsin and Sakharov agreed not to stand against each other in the same election. We have already noted the tendency for parties in the nationalities to split along ethnic lines. Yeltsin's proposal for an opposition bloc in the congress of deputies indicates the furthest point so far reached by the process of fragmentation in the Soviet Communist Party.

How much further can it go? There is no doubt that criticisms of the system are becoming more radical. It is only a matter of time before some party members follow the Hungarian example and publicly disown the revolution itself. This was signalled by Georgy Shakhnazarov, one of Gorbachev's foreign policy advisers during his British trip, when he called for a reconciliation between social democratic and Communist parties: *The great split which began during the First World War and was exacerbated by Stalin will be very complicated to overcome. Stalin's slogan was that the social democrats had betrayed us. He saw everything as treachery, and great tragedy came from that,""?

The quickening pace of political developments at a time of deepening economic stagnation exacerbates social tensions in Soviet society and particularly in the party. The barriers to real change are immense. The bureaucracy in general is in favour of change, but each bureaucrat wants to defend his own position The working class is alienated from the system, but sees the prospect of change as a greater threat, at least in the short term The stage is set for a sharpening of the Soviet Union's social crisis. Notes 1. R Evstigneev, Problems of Economics, October 1988.

2. Gaider, ibid, September 1988.

3. A Tsipko., Report on the USSR. No 8, 1989.

4. N Shmelyev, Problems of Economics, February 1988.

5. See F Füredi, The Soviet Union Demystified. 1986, pp39-42.

6. Financial Times, 19 January 1989.

7. Q Peel. 'No meeting of minds yet, Financial Times, 36 15 December 1988.

yat The and the and oted hnic ss of the isms er of mple d by olicy ation i was alin's saW ne of ins in o real ur of ition. is the term. nion's 42. 37 8. 9. 10. 11. 12. 13. 14. 15. 16. Guardian. 2 March 1989. Shmelyev, op cit. 17. Guardian, 8 April 1989.

Financial Times, 14 January 1989.

Problems of Economics. September 1988.

V Kostakov, Soviet Economy, January 1988.

Dementev, Problems of Economics, August 1988.

BBC Monitoring Service, 22 February 1989.

Financial Times, 12 December 1988.

O Bogomolov, quoted in Report on the USSR, No 7, 1989.

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