The Collapse of Stalinism (Part 1)

Historic document from International Socialist Alternative (formerly known as the Committee for a Workers’ International) now available in Chinese

The Collapse of Stalinism is an important historical document of ISA (formerly CWI) published in June 1992, which is now available in Chinese for the first time. This document provides a Marxist analysis, the most comprehensive by any left organisation at the time, of the momentous events that led to the restoration of capitalism in the former Stalinist dictatorships of the USSR and Eastern Europe.

The document emerged from a sharp factional debate inside the Committee for a Workers’ International (CWI) in which the unprecedented processes in the Stalinist states became one of the central issues, along with the character of the former mass social democratic and traditional workers’ parties, and the type of international revolutionary organisation and leadership that needed to be built. A minority subsequently split from the CWI in early 1992 (this group went on to found the IMT).

Failing to understand the huge changes taking place and instead clinging to outdated formulas, the so-called “theoreticians” of the future IMT refused to recognise that a decisive turning point had been reached and that capitalist states and economic relations had been restored in Russia and other former Stalinist states.

Others on the left, such as the Socialist Workers’ Party (IST) also misunderstood this process. They had previously characterised the USSR as “state capitalist” in contrast to Leon Trotsky’s characterisation that it was a “deformed workers’ state”. This led them to see the collapse of the Stalinist regimes and bureaucratically-strangled planned economies only as a “sideways step” from one form of capitalism (state) to another form of capitalism (free market). This head-in-the-sand mistake was not less serious than that of the 1991-92 CWI Minority (nascent IMT). Both organisations hugely underestimated the scale of the changes underway.

Chinaworker.info strongly recommends this document to a new generation of Marxist fighters in China, Hong Kong and Taiwan, three decades after its first appearance. It is a good example of the Marxist method, the approach that still distinguishes ISA and its sections around the world, for politically facing up to and analysing major new historical challenges.

Part 2, the remaining sections of The Collapse of Stalinism, will be published in Chinese at a later date.

The Collapse of Stalinism

IEC Document, June 1992

1. Perspectives for the Former Stalinist States

The International Background

1. 1991 marked a turning point in world history. With the collapse of the August coup, counter-revolution took an enormous leap forward within the Soviet Union, resulting in the break up of the USSR and the formation of bourgeois governments in all its former republics. This enormously accelerated the process of capitalist restoration already underway in eastern Europe. At differing speeds, capitalist economic relations are making headway in all the former Stalinist states. This is also true, although at a more modest pace, in the few remaining Stalinist states such as China, Vietnam and Cuba.
2. The collapse of Stalinism has a decisive bearing on world perspectives. World relations have been transformed by these events, just as the outcome of the Second World War determined the character of world relations for more than four decades. Throughout that period, class conflict and the conflict between nations took place against the background of the equilibrium established between two powerful antagonistic blocs – Imperialism and Stalinism. Despite the explosive upheavals of this period, world relations assumed a relatively settled and stable pattern.
3. The destruction of Stalinism as a powerful bloc against Imperialism has shaken the ties which held the imperialist powers together for 40 years, overriding their mutual rivalries. We have entered a more disturbed period in world history, marked by sharper inter-imperialist rivalries and a deepening capitalist crisis. This is not the place to deal with perspectives for the world economy, which are dealt with in the new World Perspectives document, however, it is clear that an explosive realignment in world relations is taking place.
4. The downfall of Stalinism presented Imperialism with an enormous ideological victory. The capitalist “market” economy appears triumphant over “socialism” and the planned economy. This in itself has had an enormous international impact, disorientating for the working class generally, and demoralising for some of the advanced layers, especially where Stalinism exercised a certain attraction in the past. Every Communist Party has been convulsed by a deep internal crisis. The vast majority are collapsing into the Second International or voting themselves out of existence.
5. The victory for Imperialism is not solely on the ideological plane. The collapse of the Stalinist planned economies opens new areas of the world to capitalist exploitation. But while world capitalism has been strengthened in the short term, this process has obviouslimits. Among the major powers there is a scramble for influence over the emerging bourgeois states of eastern Europe and the former USSR. German capitalism is attempting to transform eastern Europe into its own sphere of influence. It accounts for 80 per cent of foreign investment in Czechoslovakia and 40 per cent in Poland. But this is preparing new conflicts with Germany’s west European rivals and inevitably in the future with Russia. Reflecting the new order of alliances and counter-alliances, foreign investment in Hungary is dominated by Germany’s rivals, principally the USA.
6. At the same time the victory of bourgeois regimes in eastern Europe and the former Soviet Union placesnew strainsupon world capitalism. The upheavals in the former Stalinist states have unleashed powerful destabilising forces into the world situation. The chaos of economic collapse, ethnic conflict and civil war, threatens to spill over and affect central Europe and parts of the Middle East and Asia. Already west European states are bracing themselves for a flood of refugees from the war zones of the former Yugoslav federation. A million refugees have been displaced by the conflicts in Bosnia and Croatia, the biggest exodus in Europe since the Second World War.
7. Alongside faltering economic growth for world capitalism, these events have exposed new strains between the major capitalist powers. A recent Pentagon report reflects the alarm of US Imperialism over these developments. The document warns of Germany and Japan becoming nuclear powers, in response to the upheavals in the former USSR, and a proliferation of new nuclear-armed states in the region. It adds that US Imperialism’s “new priority”, after the cold war, is “to prevent the emergence of potential rivals in any region of the world”. Within western Europe, the juggernaut of European Union is slowing as hesitation and open divisions surface among the European bourgeois. The conflict in Yugoslavia exposed growing splits among EC states, such as the refusal of Greece to recognise Macedonia and Britain’s resistance to sending an EC military force to Croatia.
8. The experience of German capitalism illustrates the contradictory effects of the collapse of Stalinism. Of all the imperialist powers, Germany has gained the most from these events, but it also risks the greatest loss. While extending its economic base, re-unification has also precipitated an enormous crisis in German society. The costs of re-unification have grossly outstripped the original estimates of the German ruling class, placing an enormous strain upon the German state. Germany has incorporated into its foundations all the contradictions of developing processes in eastern Europe – an unresolved social crisis in the old east, and growing resistance from the working class to the rising costs of re-establishing capitalism there. The recent strike movement, the biggest since 1948, signals the end of the post war social ‘consensus’ and the beginning of an explosive new period in German history.

A Lifeline From the West?

9. If viable capitalist economies could be established in the former Stalinist states, leading to a significant expansion of world trade, this would raise the theoretical possibility of a new world capitalist upswing. But this scenario is extremely unlikely. Increasingly, it is the negative effects of the collapse of Stalinism which occupy the strategists of world capitalism, as they calculate the costs of war, mass migration, and instability spreading into areas once cut off by the iron curtain.
10. Several factors militate against a new upswing based on capitalist restoration in these societies. Firstly, the economies of eastern Europe and the former USSR are extremely weak and impoverished, and are likely to remain so on the basis of capitalism. Secondly, there are the limits of world capitalism itself. Events are confirming our prognosis that the imperialist countries aren’t prepared to provide the vast sums of investment required to develop these economies. The $24 billion aid package for the former USSR, announced by the G7 in April 1992, is puny in comparison with what is needed and contains hardly any new money. The Pentagon spends this amount every 29 days to defend US imperialism!
11. Estimates on how much needs to be invested to modernise the economies of the former USSR to west European standards, range from $76 billion to $167 billion a year. In conditions of slow world economic growth, it is utopian to think that the imperialist bourgeoisie would invest such amounts in countries where capitalism is far from securely established.
12. The Marshall Plan to rebuild west European capitalism in the post-1945 period took place under entirely different international conditions. US capitalism emerged from the war in an enormously strengthened position compared to its capitalist rivals and was able to intervene decisively to help the weakened west European regimes defeat the post war revolutionary wave. Capitalism in these states, although devastated by war, still existed. They did not therefore, face the task of re-establishing from nothing the financial, legal and managerial framework necessary for a capitalist economy to develop.
13. Today, while still the pre-eminent capitalist power, the USA is being challenged by world markets and at home by ascendant Japan and also by the EC. The continuing failure to reach an agreement at the GATT talks indicates the ferocious struggle developing as a result of the sharp slowdown in world economic growth. An agreement at GATT, which is still the most likely outcome, can increasingly be underminedin practiceby the development of a disguised trade war. Marshall aid was a response to the strengthened position of the Soviet Union and the fear that capitalism could be overthrown in western Europe. Paradoxically, with Stalinism no longer a threat, Imperialism is less likely to intervene with decisive economic aid.

Effects Upon the Working Class

14. The coming to power of bourgeois restorationist regimes across eastern Europe and the territory of the old USSR is a huge step backwards for these societies. Barbaric gangster-capitalism is creeping into the void created by the collapse of the planned economy. Clearly, the overthrow of the nationalised planned economy, despite its bureaucratic distortions, is a big defeat for the working class in these states and internationally.
15. However, this defeat cannot be compared with the victory of fascism in the 1930s, which physically liquidated the organisations of the proletariat and prepared the way for a new imperialist war. In the current situation there has been a strengthening of the working class in a number of decisive capitalist countries, such as Germany and Japan. For the proletariat in the former Stalinist states, the liquidation of the planned economy represents a terrible historical defeat, with catastrophic social effects. However, even in these states, despite enormous political confusion, the working class has not been crushed as under fascism. The paradox of the developing counter-revolution in these states is that, until now, it has accompanied and partly rested upon, the first stirrings of independent proletarian organisation.
16. These events have created enormous ideological confusion within the working class and its organisations internationally, especially among the reformist leaders. For a whole period the development of the planned economies, despite Stalinism, could be contrasted to capitalism’s record, especially in the ex-colonial world. Now the argument against capitalism must be conducted once again from the pages ofDas Kapital, rather than in the “language of iron and steel” and the achievements of the planned economy. The collapse of Stalinism as a force within the international labour movement has had a two-fold effect. In the short-term it has disorientated large sections, for whom the Stalinist planned economies were a point of reference. The apparent strengthening of Imperialism is a blow to the confidence of the proletariat in the ex-colonial countries especially. In the long-term however, the collapse of Stalinism as an organised political force is a factor of great revolutionary significance.
17. For decades, basking in the afterglow of the Russian revolution and later the struggle against fascism, the Stalinists maintained a strong position both organisationally and ideologically, within the international workers’ movement. Only the Trotskyists, the genuine Marxists, challenged them from the standpoint of defending the real ideals of October, workers’ democracy and internationalism. For decades Trotskyism was isolated as the Stalinists maintained their position. The collapse of Stalinism has removed a massive obstacle to the development of genuine Marxist ideas among the proletariat. This is especially the case among the new generation of youth.
18. Nowhere has the proletariat been more disorientated than in the former Stalinist states themselves. But while there is still tremendous confusion and uncertainty, the masses’ experience of barbaric capitalism violently challenges their illusions. At the present time the lack of an alternative, and the scale of the economic collapse, has partly cut across the development of widespread struggles. But implicit in this unfolding process, at a certain stage, are explosive movements and great shifts in consciousness, especially if a revolutionary leadership can be created. Marxism therefore faces an historic challenge in preparing its forces theoretically and practically for the inevitable battles ahead.
19. Events in the former Stalinist states have posed major new theoretical questions for Marxism. The processes involved are unprecedented in human history. Since 1989 we have had to reappraise our analysis of the world situation, especially in regard to these events, just as in the 1940s the Marxists were forced to analyse an entirely new historical situation. Theoretically, Marxism has been tremendously enriched by the lessons of the mass movements against Stalinism, their diversion into the channels of capitalist restoration, and the peculiar problems this has thrown up. The task now is to apply these lessons in the struggle to build the forces of Marxism in the ex-Stalinist states and elsewhere. This document is a contribution to this task, generalising the experience of the recent period and on that basis developing our perspectives for the future.

The Collapse of Stalinism in the USSR

20. On the basis of the social relations created by the October, despite the subsequent distortion of Stalinism, enormous economic progress was made in the USSR. Formerly backward Russia was raised, by means of the planned economy, to the level of a mighty industrial power within the space of two generations. But the regime in the Soviet Union represented an enormous contradiction. The concentration of power in the hands of a new privileged elite, resting on the backs of the working class, meant that economic development was carried through at an enormous human and material cost.
21. A planned economy requires the active participation of the mass of the working population to implement, check and regulate the plan. In the absence of this democratic involvement the massive growth of bureaucracy increasingly came into conflict with the needs of the planned economy. For a period the Stalinist bureaucracy was able to develop the productive forces, despite the waste, corruption and mismanagement that are endemic in bureaucratic rule. But increasingly, especially with the more complex requirements of a modern economy, their continued rule cancelled out the great advantages of the planned economy. From the late 1970’s the Soviet economy and the economies of eastern Europe experienced stagnation and even decline. Whereas the Soviet Union achieved an average annual growth rate of 6.5 per cent between 1961-65 and 7.8 per cent between 1986-89. The collapse of the plan meant that in 1991, Soviet GDP plummeted by 17 per cent. Without the check of workers’ democracy or even trade unions as in the capitalist democracies, the bureaucracy’s industrial policy was increasingly pursued without regard to the colossal environmental damage it was causing. The pollution of air and water has produced disaster zones which are too hazardous for people to live in. The Aral Sea in central Asia, which has been eroded by cotton production, is a monument to the destruction caused by untrammelled bureaucratic rule.
22. From the 1970’s, the development of new technology widened the economic gap between the Stalinist states and the advanced capitalist countries. While there was no shortage of scientific innovation, and while new technique was applied in certain concentrated sectors, particularly of military production, the ossified bureaucratic methods of Stalinism were incompatible with the application of new science and technique throughout the economy as a whole. Enterprises struggling to meet their targets resisted the introduction of new technology because of the disruption this caused to production during the installation of equipment, retraining of workers etc. In this way, as the tasks of economic development became more complex, the bureaucratic system faced increasing paralysis and inertia. This explains the backwardness of most branches of the economy, the emphasis on heavy industry which is highly labour intensive, and the reliance on technique which has long been discarded in the West.
23. The jointStudy of the Soviet Economyby the World Bank and IMF (February 1991) explains this, albeit from a capitalist standpoint:

“The incentives for enterprise managers to innovate, increase efficiency or improve the quality of their output were inadequate or even perverse. This stemmed in large part from the overriding emphasis in the plan on gross production targets. Innovation and the search for lower-cost techniques generally involve some short-term disruption to output, as new machinery is installed, employees are retrained and different work practices are tested and developed. But the planning system, which motivated higher production primarily by imposing increasingly ambitious targets, could not afford to allow temporarily lower output from one enterprise to jeopardize the inputs to others. Moreover, the typical regards to innovation and efficiency in a market economy – lower prices, higher market-share, increased profits – were generally of little or no interest to a Soviet enterprise for which prices were typically set on a cost-plus basis, particularly if they came at the expense of missing the annual production target (to which all bonuses were tied). Even if improved techniques were successful in raising output within a year, the payoff to the enterprise would be extremely limited, since its target for the subsequent year would simply be raised accordingly (the so-called ratchet effect).”

24. In this way the interaction and self-interest of the different levels and sectors of the bureaucracy combined to block the attempts of the top leadership to raise productivity even when incentives were offered. During the 1980’s the Stalinist planned economy began to break apart. The arbitrary targets and directions from central ministries became increasingly irrelevant. Managers of individual enterprises were forced to bypass the plan in order to obtain vital raw materials and labour to maintain production. Massive hoarding of stocks, raw materials and labour took place as separate enterprises struggled to survive. Relations between different sectors of the economy were increasingly settled through a crazy system of barter agreements rather than organised in a planned and harmonious fashion. Given the complex multi-national character of the Soviet economy, the developing struggle between rival national bureaucracies further undermined the plan. Only the intervention of the working class to free the planned economy from these bureaucratic constraints and establish a democratic plan of production, could have prevented this disintegration of the planned economy.

The Political Revolution

25. Political revolution exploded throughout eastern Europe in the late 1980s. The mass movements which toppled the dictatorships in East Germany, Czechoslovakia, Romania and the movement of nationalities in the USSR, showed the enormous power of the proletariat when it begins to move into action. The corrupt Stalinist regimes were suspended in air, unable to use their formidable armouries. Never in history has a revolutionary movement spread so rapidly from one country to another. In the sweep of revolution from one capital to another across eastern Europe, we see an anticipation of the future world socialist revolution. However, this process did not develop in the same way as the 1956 revolution in Hungary or with the same consciousness which existed in Czechoslovakia in 1968 or Poland in 1980. Our tendency had predicted the political revolution, but it developed in a way which we had not anticipated.
26. In Hungary in 1956, the working class had grown up under capitalism, experienced fascism and imperialist war, and its advanced layers had a vision of the socialist society they wanted. By the 1980s, decades of Stalinist dictatorship had had a corrosive effect upon the consciousness of the masses. The long post war upswing of world capitalism (1950-1973), followed, after a period of slumps and stagflation, by the boom of the 1980’s, at a time of economic regression in the USSR and eastern Europe, also had a decisive effect on the outlook of the working class. In conditions of dictatorship, these processes developed beneath the surface in society. Given the impasse of Stalinism, all layers of society were affected. Above all, this was the case with the old Stalinist bureaucracy.
27. Demoralised by continuing economic failure, and terrified of an uprising of the proletariat, one layer of the bureaucracy after another swung over to a pro-capitalist position. They saw this as the only way to safeguard their power and privileges. Although capitalism has outlived any historically progressive role, compared to the economic chaos of decaying Stalinism, it appeared to both the majority of the bureaucracy and, in the absence of any clear alternative, to large sections of the working class as the only way to escape the economic impasse. This combination of factors led to the derailing of the political revolution and the triumph, at least for a time, of pro-capitalist reaction.
28. The victory of counter-revolution, in the form of bourgeois restoration, was not an automatic or inevitable process. Revolution is the entrance of the masses into the political arena. Every revolution is marked by great confusion. Different ideas are taken up by the masses and tested out in struggle, in an attempt to find a way forward. In the revolutionary upheavals of 1989, while illusions in capitalism had a much wider basis in society than before, pro-capitalist groupings and ideas were justone elementof the movement, mainly based on the intellectuals and sections of the bureaucracy. To begin with, they were not the decisive element. In East Germany, Romania, and Czechoslovakia for example, there was significant opposition to bourgeois restoration at the outset.
29. However, in the absence of a conscious and organised revolutionary alternative, with the old Stalinist order collapsing, a political vacuum developed. In this situation, the masses could see no viable alternative to Stalinism, other than the ‘market’. Just as each victory of the mass movement against dictatorship fuelled the revolution in neighbouring Stalinist states, each shift towards pro-capitalist reaction reinforced the idea that this represented theonly practical way forward. In this way, illusions in capitalism became the expression, in a distorted form, of the masses’ burning hatred of Stalinism.
30. Even where the mass movements began without looking towards capitalism, as in East Germany, a combination of the above factors provided a basis for counter-revolution to develop. Again, this was not a foregone conclusion. If the Stalinists had attempted to crush the revolution as they had planned to, before retreating on the night of October 9^th1989, this could have ignited an insurrectionary movement of the proletariat. In this situation, the movement could have gone much further, with the working class smashing the bureaucratic state. While not immediately removing all illusions in the West, this would have raised much more clearly the question of completing the political revolution.
31. This counter-revolution did not simply develop in the past few years. From its very beginning Stalinism represented counter-revolution, even though for nearly 70 years it based itself on the planned economy. In theTransitional ProgrammeTrotsky explained how “the apparatus of the workers’ state underwent a complete degeneration” and became “more and more a weapon for the sabotage of the country’s economy… The political prognosis has an alternative character: either the bureaucracy, becoming more and more the organ of the world bourgeoisie in the workers’ state, will overthrow the new forms of property and plunge the country back to capitalism; or the working class will crush the bureaucracy and open the way to socialism.”
32. This perspective of Trotsky was cut across by the outcome of the Second World War. The USSR’s victory, coupled with its enormous economic progress, and the delay of revolution in the advanced capitalist countries, strengthened the Stalinist bureaucracy during the 1950’s and 1960’s. During this period support for a return to capitalism was minimal. But on the basis of faltering economic growth from the 1970’s onwards, and especially when in the 1980’s stagnation and actual regression set in, pro-capitalist tendencies began to develop within the Stalinist bureaucracies, notably at first in China, Hungary and then the USSR.
33. Gorbachev’s rise to power in 1985 was a critical turning point in the history of Stalinism. Although Gorbachev himself subsequently converted to the idea of capitalist restoration, this was not his original intention. Driven by fear that economic stagnation was preparing the way for revolutionary upheaval, Gorbachev sought to pull the system of bureaucratic rule back from the abyss. His regime began to implement the most far-reaching reforms in the history of Soviet Stalinism, in order to prevent a revolutionary explosion from below. However, as has happened more than once in history, this partial liberalisation from above opened the floodgates of popular revolt.
34. The late 1980’s saw, for the first time since the early 1930’s, an open split and public struggle between different wings of the bureaucracy. At certain periods he leant on the developing pro-capitalist wing of the bureaucracy to counter the influence of the most conservative layer, while later resting on the support of the Stalinist old guard against the pro-capitalist wing. But Gorbachev’s attempts to stimulate the economy by offering greater incentives to management and greater decentralisation, far from improving matters, actually accelerated the break up of the planned economy. The failure of reform, and the slide into economic chaos, reinforced the idea that there wasno way out under the old system. With the immediate threat of repression lifted, the masses began to press forward their demands, producing further alarm in the ranks of the bureaucracy. Because of this, pro-capitalist tendencies gained ground within the bureaucracy, to the point where even prior to Gorbachev’s downfall, these had become the clear majority.
35. Trotsky raised the perspective that Stalinism would inevitably be overthrown, either by the political revolution of the working class or by a capitalist counter-revolution. In reality the movement against Stalinism took the form of a confluence of both. Prior to the revolutionary explosion in East Germany in October 1989, the Marxists still expected that the proletariat, once it went into action, would resist capitalist restoration and move towards the establishment of workers’ democracies. Indeed before this, there had been a discussion as to whether, in the Stalinist states, a Marxist party was necessaryin advancefor the political revolution to succeed. The Marxists had considered the possibility that a revolutionary party could be forged by the working class in the course of the political revolution.
36. However, life is richer than the most brilliant of theories. As Lenin explained, in dealing with how counter-revolution could develop in the USSR, “History knows all sorts of metamorphoses”. The revolutionary upheavals in the Stalinist states, which posed the political revolution, took an unseen turn. Marxism was forced to reappraise its position in the light of the actual course of events. This correction was made rapidly, especially as our interventions in these mass movements clarified the situation. While the Marxists had already recognised in discussions in 1988-89, that capitalist restoration was no longer excluded in these societies, what was unexpected was thespeedwith which the political revolution was derailed. Also unexpected was the fact that the first steps of the counter-revolution did not encounter significant resistance from the proletariat.
37. A critical factor, explaining the suddenness of the shift to counter-revolution, is the capitulation f the old bureaucracy, its scramble to join the ranks of the capitalist “opposition”. Stalinist resistance crumbled amid the first shockwaves of the revolution. In general, instead of attempting to hold out by resorting to repression, these regimes dropped like rotten fruit. Where repression was attempted in Romania, far from subduing the proletariat, this provoked an insurrectionary movement which would have split the old state apparatus, had the generals not decided to turn on Ceausescu.
38. In all these states, former bureaucrats predominate amongst the emerging capitalists and bourgeois political parties. The speed with which these elements deserted to the pro-capitalist camp, under the pressure of the revolutionary upheavals, was determined by thebourgeoisdegeneration of the bureaucracies during the preceding period, especially the 1980’s. The role of the Soviet bureaucracy under Gorbachev, was a further decisive element in this process internationally. Their announcement that they would not intervene in eastern Europe to save the old regimes, emboldened both the masses and the pro-bourgeois wing of the bureaucracy. For the remaining Stalinist elements within the different bureaucracies, this was a further demoralising blow.
39. When Trotsky raised the prospect of bourgeois counter-revolution in the Soviet Union, he argued this could only succeed by crushing the resistance of the working class. Today however, the proletariat’s attachment to the planned economy has been eroded by decades of Stalinist rule. The working class is emerging from dictatorship in a dispersed state, requiring time and experience for its own independent organisations, self-confidence, and political ideas to develop. Among the working class there are illusions in the “market”, in bourgeois democracy, and the belief that this is the only alternative to Stalinism. This explains how thecounter-revolution has until now, been able to proceed in a “democratic” form, without encountering mass resistance from the working class.
40. Each advance of the counter-revolution has, so far, based itself upon these illusions. As these illusions break down, so the forces of reaction will meet greater resistance from the proletariat and will require greater force in order to consolidate the counter-revolution. The present “democratic” phase will break down, giving way to explosive battles at a certain stage, as workers’ expectations are not fulfilled. The masses are already tiring of the excuses of the bourgeois politician, that all society’s problems are the fault of the “communists”. However, this process will inevitably be protracted, by the disorientation of the proletariat which is the legacy of Stalinism, and the need for a revolutionary alternative which only genuine Marxism can provide.

The Class Character of the Regimes in the Former Soviet Union and Eastern Europe

41. This process led to the formation of peculiar hybrid states, in which counter-revolutionary governments moving to establish capitalism, rested on the economic foundations inherited from the workers’ state. This is not the first time in history that hybrid or transitional forms of society have emerged. Under such conditions it is not always possible to apply a fixed social category: capitalist state or workers’ state. The regime of the Sandinistas in Nicaragua (1979-90) was a hybrid of a different type. A new state was created by the victory of the guerrillas over the old dictatorship, which had every possibility of moving in the direction of proletarian bonapartism and breaking the power of the capitalists. But under the influence of their Soviet advisers, the Sandinista leaders refused to complete the revolution, and for a decade the new state coexisted uneasily with an economy dominated by the capitalist class. Such a situation, however,cannot exist indefinitelyand eventually, in the case of Nicaragua, the capitalists were able to re-establish their control over the state apparatus.
42. In eastern Europe and the former Soviet Union we have seen a similar process developin the opposite direction. Following the defeat of the political revolution, for the reasons explained above, bourgeois governments came to power, resting upon wholly state-owned economies. While there are variations, with this process acquiring a more rapid tempo in some countries than in others, these are alltransitional regimes, moving in the direction of capitalism, but where capitalist economic relations are still far from firmly established.
43. Immediately after the victory of pro-restorationist regimes in eastern Europe, we characterised these asbourgeois regimes in the process of formation. Of course, in a rapidly changing situation the forces of revolution and counter-revolution do not mark time. It is therefore necessary to make a more precise definition, taking account of how this process has developed. Because of the weakness of the subjective factor and the disorientation of the proletariat, we have seen a further strengthening of the counter-revolution. This is especially the case since the collapse of Stalinism in the former USSR, which gave a further impetus to reaction throughout eastern Europe. While economically, the shift to capitalist relations is encountering enormous difficulties, a decisive transformation has taken place within the state apparatus in all these societies. The commanding sections of the armed forces, civil service, and management of state industry, have shifted over to a bourgeois standpoint. In these societiesthe foundations of a bourgeois state have been established.
44. As Trotsky explained:

“If… a bourgeois party were to overthrow the ruling Soviet caste, 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, Social Relations in the Soviet Union, page 253)

45. This process has taken place in all the former Stalinist states. The scale of actual purges of the old state officials varies, but in most countries it has beenminimal. In Czechoslovakia, within a year of the collapse of the Stalinist regime, 30,000 political officers had left the army. Most of these were demoralised ex-Stalinists who resigned or retired, rather than being dismissed. 50,000 of the Soviet Army’s former political officers were removed after the defeat of the August coup, though more than half were re-employed in other positions. In the former East Germany, a more thorough purge took place as West German capitalism installed its own officials in key positions in the state. In general though, rather than a physical purge, we have seen a shift in allegiance and class outlook within the state apparatus. The mass of the old functionaries, generals and police chiefs have gone over to a pro-bourgeois position. Moves in most of these countries to establish smaller, professional armies, abolishing conscription, are intended to underpin this transformation. In Hungary, where unlike most of eastern Europe no mass movement developed against the old regime, nevertheless the regime and its state apparatus went over, almost en bloc, to capitalist restoration.
46. Therefore these arebourgeois stateswhich have not yet succeeded in establishing viable capitalist economies. The degree to which capitalism has made inroads into these economies varies from state to state. In some, particularly Poland, Hungary and the Baltic States, the private sector already accounts for a significant proportion of GDP (30 per cent in Poland in 1991, according to the World Bank). I others, the bourgeois regimes have barely begun to dismantle state ownership. But even if decisive sections of the economy remain in the state sector, this does not exclude the predominance of capitalist relations. In Portugal, after the 1974 revolution, 70 per cent of the economy was nationalised, nevertheless it remained a bourgeois state. Given the weakness of the nascent bourgeois class, a large nationalised sector is likely to remain. Unlike under Stalinism in the past, these industries will not be integrated into a plan, and will function as individual “state capitalist” concerns, like the existing nationalised industries in the capitalist countries.
47. This is the case in many underdeveloped capitalist countries, where the state is forced to step in and run certain branches of industry. This is done on a capitalist basis, and serves the interests of developing a capitalist economy. Lenin explained, in 1921, that:

“state capitalism in a society where power belongs to capital, and state capitalism in a proletarian state are two different concepts. In a capitalist state, state capitalism means that it is recognised by the state and controlled by it for the benefit of the bourgeoisie, and to the detriment of the proletariat.” (Report on the Tactics of the R.C.P., Collected Works vol. 32, page 491.)

48. It is clear from the above that Lenin’s concept of state capitalism is not to be confused with the mistaken theory of state capitalism which argues that the Stalinist planned economies were just a variant of capitalism.
49. While capitalist relations are not consolidated in these societies, nevertheless the task facing the proletariat has now fundamentally changed. The advances of the counter-revolution mean that a political revolution is no longer in itself sufficient to bring the proletariat to power. The political revolution was posed in the past as a ‘supplementary’ revolution to clear out the bureaucracy and establish workers’ democracy, on the basis of the planned economy. The destruction of the planned economy, with the development of a bourgeois state and increasingly bourgeois property, poses the need for a newsocial revolutionin these societies, which would overthrow the bourgeois state, reverse the denationalisation of major companies and draw up a democratic plan of production. This can only be accomplished by the proletariat armed with the programme of Marxism.

Capitalism and Economic Crisis

50. Marxists completely reject the idea that capitalism is capable of playing a progressive role in these societies, by developing the productive forces. On the contrary, the return to capitalist relations is wreaking a trail of economic destruction across eastern Europe and the former USSR.In eastern Europe as a whole, GDP declined by 15 per cent in 1991. Poland’s GDP has slumped by 30 per cent since 1989. Unemployment in Poland now stands at 12 per cent and is forecast to reach 18 per cent since 1989. Unemployment in Poland now stands at 12 per cent and is forecast to reach 18 per cent by the end of 1992. Even in Hungary and Czechoslovakia, with stronger economies, GDP has fallen by 15 per cent and 25 per cent respectively during the last two years.
51. The prospects for economic development in the former Stalinist states are tied inextricably to the perspectives for world capitalism. If a new period of capitalist upswing, on the lines of 1950-73 was in prospect, then it would be entirely possible for at least some of these states to overcome their problems and establish viable capitalist economies. However, this is an extremely unlikely perspective. Against a background of deepening international capitalist crisis, these fledgling capitalist states face a desperate future as weak, semi-colonial economies.
52. The new bourgeoisie is drawn primarily from the ranks of the old bureaucracy and the mafia of former black marketeers. These are the only sections in a position to profit from the plundering of state assets. The former mayor of Moscow, Gavriil Popov, for example, is now the fifth richest man in Russia. Far from developing productive forces, this emerging capitalist class plays a completely parasitic role. In Poland, 87 of every 100 new businesses are trading companies which do not themselves produce anything. Likewise, most foreign investments and acquisitions have not led to any real development or increased production. For many, the aim is simply to establish an outlet within the national market for part-assembled imports to be finished by cheap local labour.
53. These societies do, of course, offer a reservoir of cheap skilled labour for world capitalism. Wage levels in Poland are now, according to theEconomist(21.9.91), half the level in Mexico at current exchange rates, while wage levels in Bulgaria have actually fallen behind India! But despite this, foreign investment has been negligible. In the case of Poland, less than $1 billion has been invested since 1989. Even Hungary, which has attracted more foreign investment than any other country in eastern Europe, has only received $2.5 billion. A supply of cheap labour is not enough for the capitalists. They will only invest if they can make profits and if there is a market for their goods either in these societies or in an expanding world market. These low wage economies offer an extremely limited market for capitalism. In Czechoslovakia, for example, consumption fell by 23 per cent last year, as the government’s savage monetarist policies took effect.
54. In addition to the limits of the domestic market in these states, the capitalists face a problem of excess industrial capacity in the West and the likelihood, at best, of low growth in the world economy. All these factors limit the scope for major investment in Russia and eastern Europe. Alongsideeconomicfactors, there are important political factors which act as a disincentive to foreign investment, namely the extreme instability of these regimes, and the fear that this transition can be reversed. There is growing popular resentment towards foreign capital making off with the “family silver”. This is also connected with historical factors such as Czechoslovakia’s domination by Germany and Austria in the past. This pressure prompted the government in Czechoslovakia to make an appeal for “non-German investment”.
55. This is not to say that further foreign investment is excluded. Especially in more developed sectors, in Hungary, the Czech lands, the Baltics, parts of Russia, there will be a certain degree of investment. But in general, the character of this investment will be ‘colonial’, with the aim of exploiting cheap labour in order to export back to the western market. The acquisitions of Hungarian electrical producer Tungsram by General Electric, and Skoda cars in Czechoslovakia by Volkswagen, are typical of this kind of investment.
56. As the biggest investment project in eastern Europe, the example of Skoda is instructive. Skoda sales last year (1991) fell to 30,000 against a target of 123,000. Production has been cut from 930 to670 cars a day and 1,800 production workers have been sacked. While VW have not announced any plans to introduce new technology, their first act was to close all Skoda’s export contracts. While in future it can’t be excluded that VW may modernise its Czech plants and even shift some production from Germany, the aim of this takeover was clearly predatory – to transfer Skoda’s market share to VW with a minimum of new investment.
57. Therefore, even with certain pockets of foreign investment developing, especially in the most technologically advanced sectors of the economy, this willnot have a decisive effect on the economy as a whole. In the former Stalinist economies, production is concentrated in outdated, technically obsolete branches of industry, where no private investment is seriously in prospect. The limited foreign investment of the last period is miniscule in comparison to the sums needed to modernise and re-equip industry. While private capital has generally been reluctant to intervene, western governments and their agencies have been forced to offer certain concessions in the form of aid and loans to prevent further destabilisation threatening Imperialism’s worldwide interests. However, these sums in no way meet the requirements of fledgling capitalism in eastern Europe and the former USSR.
58. Consequently, even according to the most optimistic assessments of western economists, these countries face years of deep recession. The World Bank predicts that output per head in eastern Europe will not return to its pre-1989 levels until 1996 or later. According to the Institute for International Economics in Washington, to catch up with average incomes in the EC in the next ten years, the six countries of eastern Europe (including the former Yugoslavia) wouldrequire $420 billion a year of investment. Nothing like this sum is being offered by world capitalism.

The Fast Track

59. Realisation of the enormity of the tasks confronting nascent capitalism has already divided these regimes and their imperialist advisors. The “fast track” school argue that a “big bang” is necessary to break up the old structures as quickly as possible in order to lay the basis for capitalism. If the state continues to play an economic role and the nationalised industries are not privatised then, they argue, there is the continuing danger that the restoration process can be reversed. Their opponents argue that the “big bang” itself threatens the restoration process by plunging the economy into chaos. This runs the risk, sooner or later, of provoking mass opposition to capitalism.
60. At this stage the protagonists of the “fast track” school clearly have the upper hand. This school rejects Keynesianism and state intervention and espouses rapid privatisation of state enterprises and the freeing of trade. Various schemes have been unveiled for sweeping privatisation of the economy. It has become clear, however, that this approach is already encountering massive problems.
61. Firstly there is the sheer scale of the privatisation which has been proposed. As theEconomistsurvey on eastern Europe explained (September 21^st 1991):

“The biggest privatisation effort in history has been Chile’s disposal of 470 enterprises, producing 24% of the country’s value-added and employing 5% of its workers, between 1973 and 1989. Even this was accomplished only because many of the firms were simply handed back to previous owners… By comparison, Hungary has about 2,300 state-owned firms, Poland 7,500, Czechoslovakia 4,800, Bulgaria 5,000 and Romania 40,000.”

62. Secondly, there is the evident reluctance of foreign capital to invest. Again, according to theEconomistsurvey:

“Undoubtedly sales to foreigners will continue. But many of the most promising firms, those with a recognised brand name such as Skoda, the Czech car maker sold to Volkswagen, have already been snapped up. Even wild optimists expect only 15-20 firms a year to be sold to foreign investors.”

63. Given this, where is the capital to come from to finance these grandiose privatisation plans? In Poland, the entire stock of personal savings is equivalent to less than 10 per cent of the estimated value of Polish industry. The only sections of society who have been able to but up newly privatised companies, and these have mainly been in the small business sector to date, are the ex-bureaucrats and black marketeers. This is producing apolitical backlash, as workers see these crooks profiting from the privatisation process.

Privatisation Vouchers

64. In order to quickly circumvent these barriers to rapid privatisation, and to overcome the resistance of the working class, many of these bourgeois regimes have opted for voucher schemes, either sold cheaply or given free to every citizen. In return for vouchers, each citizen is promised a certain number of shares in the future, creating the impression of shared ownership and a form of ‘popular capitalism’. In Czechoslovakia over 8 million people, assured that a US $35 stake now will be worth US $4,150 in two years’ time, have bought the vouchers.
65. But despite the apparent success of the Czechoslovak scheme, with workers taking out insurance against the hard times ahead, these voucher schemes are deeply flawed. Most of the industries in these societies are simply not viablewithout massive investment and modernisation. According to the most optimistic assessments, 20 per cent of companies in Czechoslovakia will go bankrupt this year (1992) andonly 35 per cent are likely to survive the next 5 years. Again, as the Economist survey pointed out:

“Many east European firms are also “value subtractors” – that is, at world prices the value of the resources they consume is worth more than what they produce… According to one recent study, 20-25% of manufacturing industries in Poland, Czechoslovakia and Hungary could be value subtractors.”

66. The Achilles’ heel of all the proposed voucher schemes is that they only signal a transfer ofownership. They do not create any new wealth forinvestment in new technology. The revenue from vouchers, if there is any, goes to the government not the companies concerned. It does not therefore directly generate any new investment, which is the main barrier to economic development in these states.
67. At this stage, given the confusion within the working class and its organisations, these schemes can delay and complicate the task of mobilising mass resistance to privatisation. Sections of the workers’ movement have advocated participation in the schemes, arguing that at least this will enable workers to exercise some influence over the privatisation process. Partly as a reaction to bureaucratic control under Stalinism, the idea of employee shareholding schemes, and the confused concept of ‘self-management’ has support among leftward moving workers. But experience will demonstrate that this is a trap for the proletariat, an attempt to neutralise its opposition to the plundering of state assets. The Russian government, for example, are proposing to give workers in large enterprises 25 per cent of the shares. But as elsewhere, these will benon-votingshares, with real control passing to the banks, investment funds and big shareholders. When the inevitable bankruptcies and redundancies take place, these employee-held shares will be show to be worthless.
68. All the current attempts to provide a cushion against popular resistance to privatisation could turn into their opposite. Mass opposition could develop, not just as a result of redundancies and closures. The funds which are to administer the new vouchers or shares are extremely shaky. When the wild promises of big dividends fail to materialise, this itself could provoke a movement. Also the issue of foreign ownership and control is highly controversial in these societies. In Poland, 20 funds have been established to manage the shares created by the new scheme. While nominally run by Polish directors, these funds, which will control 25 per cent of total industrial output and 12 per cent of industrial employment, are to be manages by western companies and banks. This idea is already inflaming mass opposition.
69. If, as is entirely possible, one or a number of the funds crash, swallowing the life savings of tens of thousands of workers, this in itself could provoke a social crisis. In Czechoslovakia, there has been blatant criminal involvement in the newly established Investment Privatisation Funds (IPFs). Government advisers warn that only 30-60 of these funds are themselves likely to survive the next two years. They have already raised the scenario of re-nationalisation to prevent mass closures and strikes.

The Japanese Road?

70. Why then, have the fledgling capitalist class embarked upon this course? Partly because they are under the sway of the prevailing Reagan-Thatcher ideology of the bourgeois in the West. But a further decisive factor is the need to create a new capitalist class as quickly as possible and thereby create asocial basefor these unstable bourgeois regimes. At this stage, in so much as a bourgeois class actually exists in these societies, it is little more than the ‘shopocracy’ of small businessmen and traders which Engels described in Prussia during the 1840s. Rapid privatisation, despite all its obvious drawbacks, also reflects the desire of the ex-bureaucrats and black marketeers to legitimise the source of their wealth and income, in the form of capitalist property relations.
71. Even from a bourgeois standpoint, it ishard to conceive of a worse approach to re-establishing capitalism on a viable basis. It completely ignores the experiences of Japan in the post war period, or South Korea in the 1960’s and 1970’s where thestate played the decisive role in developing these capitalist economies. The state developed the necessary infrastructure, where private capital refused to invest, and directed investment into key sectors of the economy. Both these economies also developed on the basis of protectionism, the opposite of what is now taking place under the bourgeois regimes of eastern Europe and the former Soviet Union. While trade between the old Comecon partners has collapsed, for some east European countries there has been a marked growth in trade with the West. Czechoslovakia increased its exports to the OECD by 39.2 per cent in 1991 while Hungary achieved a 20;8 per cent export rise, and Bulgaria 30.2 per cent (Financial Times11.5.92). The EC new accounts for 54 per cent of Polish exports and 48 per cent of imports. But on the basis of the abandonment of all trade and exchange controls, this will mainly benefit western companies with vastly higher productivity, at the expense of domestic industry.
72. Even if the nascent bourgeois were to abandon this approach and adopt the methods of Japanese capitalism in the period after the Second World War, this would not solve their problems. In Japan, and later South Korea, these policies succeededwithin the framework of the prolonged upswing of world capitalism. This is the decisive difference with today’s situation.

Prospects for Russian Capitalism

73. In the short term, the idea that capitalist Russia will emerge as a new economic giant is utopian. Despite its mineral wealth, Russia will be economically dominated by world imperialism. On the basis of present market exchange rates, Russia’s annualised GNP in the first quarter of 1992 wassmaller than Belgium’s. Therefore, capitalist Russia is likely to develop as a dependent economy, closer in character to semi-developed Brazil than an advanced capitalist country such as Japan or Germany. In Russia, however, society will be overwhelmingly industrialised, without the large rural population and feudal relations which in part, still exist in Brazil today. Militarily, a capitalist Russia would still be a mighty power, especially in its own spheres of influence.
74. Russia will face enormous disadvantages both because of its low productivity and also because of the tendency for the price of raw materials, on which it will be heavily reliant, to fall against the price of manufactured goods. Even its massive oil reserves do not assure its economic future. Russia already faces the loss of its former markets, as Ukraine and other republics and the countries of eastern Europe turn towards the Middle East for oil supplies. In addition they are encountering enormous production problems because of outdated technology and a collapsing infrastructure. Whereas Soviet oil output was nearly 570 million tonnes four years ago, Moscow economists are predicting that this could halve by the mid-1990’s. They warn that on present trends Russia could stop being an oil exporter.
75. Without huge foreign investment the introduction of new technology, on the scale needed, is impossible. There can be a combined and uneven development with islands of high-tech industry, mostly foreign dominated, surrounded by a sea of industrial backwardness. In addition to economic factors, flowing from the limitations of world capitalism, there are importantpoliticalfactors precluding modernisation on the scale required. A huge proletariat is concentrated in heavy industry and other sectors which face rationalisation or closure. A regime of workers’ democracy would have to confront the problem of modernisation of production, though this would be accomplished democratically, with the full involvement of the workforce.
76. Carried out under the blind play of market forces, this would mean a social catastrophe. The modernisation and reduction of heavy industry accomplished by the bourgeois in the USA, and western Europe, during the 1980’s took place in conditions of boom. Even then, this wholesale destruction of productive forces provoked massive social upheavals, such as the British miners’ strike and the US steel strike. These problems are dwarfed by the task confronting nascent capitalism in Russia.
77. Russia and the other regimes to emerge from the USSR are experiencing an unprecedented economic collapse aggravated by the break up of the Union and the resulting disintegration of the mutual economic relations. Far from arresting the economic decline, savage pro-capitalist policies have aggravated the situation. In Russia during January, the first month of Yeltsin’s “shock therapy”, coal output fell by 10 per cent, oil output by 12 per cent and steel production fell by 27 per cent. Yeltsin’s deputy Prime Minister, Yegor Gaidar, predicts an overall fall in production of 12 per cent in 1992.
78. As the Marxists warned, far from leading to Western living standards, the switch to capitalism is inflicting the conditions of the ex-colonial world upon the masses. Since January 1992 there has been a 40 per cent fall in living standards. 90 per cent of the population of Moscow have been driven below the poverty line by Yeltsin’s price rises. This catastrophe has resulted in Moscow street traders selling meat from slaughtered dogs and cats.
79. Capitalism is emerging amid an orgy of criminality, speculation and gangsterism. In Murmansk, the mafia, working through former bureaucrats, has acquired most of the newly privatised shops, allowing it to create artificial shortages and thereby rig prices. The senior police officer claimed that “the city has practically been bought by the Azerbaijanis”. As elsewhere, organised crime is dominated by gangs from the southern republics of the Caucasus and Central Asia. This undoubtedly introduces a further complicating factor, as workers’ hostility to the speculators assumes a racial form and provides a breeding ground for Great Russian chauvinism. The recent Moscow taxi drivers’ strike, as well as opposing price rises, demanded the expulsion of people from the Caucasus from the city.

National Disintegration

80. The disintegration of the former Soviet Union raises a nightmare scenario for world capitalism. The uncontrollable separatist tendencies which have been unleashed threaten to destabilise bordering countries and world relations as a whole. From an economic, military and even ecological point of view, these developments have alarmed Imperialism. West European capitalism fears a potential flood of refugees fleeing economic collapse and civil war in parts of the former USSR and the Balkans.
81. Wrangling over the division of the Soviet nuclear arsenal has raised the possibility of some of the central Asian republics retaining their nuclear capability, and the possibility of the sale of nuclear weapons and technology to other countries. For these reasons, initially, the imperialists backed Gorbachev in his attempt to hold together a looser union structure. When this failed they supported the formation of the CIS (Commonwealth of Independent States), as an attempt to arrest the tendencies towards complete economic and national separation. From its inception, however, the CIS began to break apart.
82. These developments demonstrate that capitalism is incapable of playing a progressive role. The shift towards capitalism has resulted in the resurrection of countless small and economically unviable nation states. Lenin and Trotsky explained that, from the late nineteenth century onwards, capitalism faced two fundamental obstacles to the development of the productive forces: the private ownership of the means of production and the narrow limits of the nation state. Both these barriers were partially overcome, although in a distorted form, under Stalinism, at least inside the borders of the USSR. The failure of Stalinism, given Imperialism’s continued domination of the world economy, is the final answer to the Stalinist theory of “socialism in one country”.
83. In the early 1920s, on the basis of Lenin’s policy towards the different nationalities, the Soviet Union grouped together the oppressed nations of Tsarist Russia in a voluntary federation. This was an enormously progressive historical achievement, even despite the subsequent crimes of Stalinism in the field of the national question. But although the basis for solving the national question was laid in the October Revolution, this could only ultimately be resolved by the victory of socialism internationally. Even then national divisions will not automatically disappear. This will require the conscious intervention of the working class of all nationalities to develop an internationalist policy.
84. The exhaustion of the Russian revolution and the resulting victory of the Stalinist bureaucracy ensured the survival of the national question within Soviet society. The authoritarian rule of the bureaucracy inevitably came into collision with the national aspirations and cultural demands of the peoples and nations of the USSR. For an entire historical period the national question seemed to be held in check by a combination of rapid development of the productive forces on one hand and repression on the other. The period of Stalinism’s decay and disintegration, however, unleashed powerful and uncontrollable centrifugal forces in the Soviet Union.
85. With a strong independent workers’ movement and a revolutionary leadership sensitive to their national demands, the movement of the nationalities of the Soviet Union could have developed towards the political revolution and the re-creation of a genuinely free and voluntary federation of workers’ democracies. Such a leadership, while standing for the maximum integration of the economies of the USSR, and explaining the advantages of federation, would have implacably defended the right of all republics to self determination.
86. The diversion of the political revolution onto the road of counter-revolution has given a savage twist to the national question. Among the non-Russian masses, hatred of Stalinism inevitably acquired a national colouration. The desire to be free from the Great Russian bureaucracy’s domination, without a lead from the working class, led to the growth on national independence movements increasingly dominated by bourgeois counter-revolutionaries including many last minute defectors from Stalinism.
87. Today the situation is more complicated even than under Tsarism because, despite Stalinism, the very development of the USSR created new nations out of tribal societies. The national question is further complicated by the monstrous crimes of Stalinism. The bureaucracy cynically played the divide and rule card, mimicking the bourgeois in the imperialist countries. Whole populations were transported from their home territories and ethnic Russians were settled in the cities of other republics.
88. On a capitalist basis, Russia and the other republics of the CIS face “Indianisation” – with inevitable outbreaks of national, ethnic and religious conflict. There is not a single uncontested border in the territory of the old Soviet Union. Eastern Europe will not be far behind this process as events in the old Yugoslavia demonstrate. The Mad House of Europe, to which Trotsky referred in the 1930s, has been rebuilt on the ashes of Stalinism. National conflicts are looming in Czechoslovakia, Hungary, Romania and Bulgaria. There are disputes between Poland and Lithuania over borders and the rights of Poles living around Vilnius. Every reactionary movement in Germany raises the question of the “lost” territories in the east. The continuing weakness of workers’ organisations and the moves towards restoration have strengthened nationalism and led to a resurfacing of old prejudices. Jews, Gypsies, and other minorities once again face the horror of pogroms.
89. The formation of the CIS failed to arrest this process. In reality the CIS is no more than an agreement to meet and disagree about a series of contentious issues. All the members of the CIS are forming their own national armed forces, some to fight wars against fellow CIS members, as in the case of Azerbaijan and Armenia. A conflict is rapidly developing in Trans-Dneistr where the ethnically mixed population is opposed to the Romanisation of Moldova. At its May summit, only 6 of the 11 CIS heads of state bothered to attend. While a defence agreement has been reached between Russia and most of the central Asian republics, who need Russia to counterbalance the new Afghan regime and China, this agreement is unlikely to be joined by all the CIS republics.
90. With a ferocious trade war developing between its members, the CIS does not even function as an effective trading bloc. Conditions of virtual economic siege exist between some republics, such as Russia and Ukraine, Azerbaijan and Armenia, Russia and Estonia, Turkmenistan and Ukraine. Not surprisingly, Gorbachev has likened the atmosphere in the former USSR to a lunatic asylum. The nascent bourgeois understand that these developments are enormously aggravating the economic crisis, but the process has acquired an uncontrollable momentum.It is hard to imagine worse conditions in which to re-establish capitalism.
91. The old USSR was economically organised as a single unit. The shattering of these ties has dislocated economic life in all the former republics. In Moscow, for example, the ambulance service is breaking down from a shortage of spare parts. Supplies of tyres from Armenia, electrical wiring from Azerbaijan and headlights from Lithuania no longer arrive.
92. This break up reflects the final shattering of the old Soviet bureaucracy on national lines. A frantic struggle is taking place between the rival national groupings to secure for themselves the most advantageous position in the new capitalist order. Outside Russia, the new bourgeois governments are attempting to maintain their position by basing themselves on the nationalist sentiments of the non-Russian masses, determined to be free of Russian domination. Each of these unstable bourgeois regimes invariable tries to divert the mounting anger of the population against other nationalities or local minorities.
93. At the same time these regimes are attempting to play off the imperialist countries against Russia in the struggle for markets, investment and new sources of raw materials. Increasingly, the Russian regime will emerge in an imperialist role towards the weaker former Soviet republics, using its enormous economic weight to dominate them. While the Great Russian bureaucracy dominated the old USSR, Russia actually subsidised most of the other republics, mainly with cheap raw materials. To a lesser extent, Uzbekistan, Turkmenistan and Kirghizia were also net subsidisers of the other republics. Russia’s decision to charge world prices for its oil and gas exports has already dealt a crippling blow to most of the other republics.
94. The southern republics are increasingly looking to Turkey, and to a lesser extent Iran, to develop economic links. Turkmenistan, for example, has agreed a deal with Iran for the import of crude oil, as has Ukraine. Turkey, Pakistan and Iran have revived their regional trading bloc (ECO), which has drawn in Azerbaijan, Turkmenistan and Uzbekistan. The Turkish bourgeois are exploiting the common Turkic language in most of the southern republics to establish a role in the region.
95. At the same time the threat of social upheavals in the southern republics has ominous implications for neighbouring states. Full-scale war between Azerbaijan and Armenia would inevitably have repercussions inside Turkey, which already faces a growing rebellion from its Kurdish population. Iran would also be affected because of its ten million-strong Azeri minority. The US secretary of state Baker’s visit to the central Asian republics was an attempt to counter Iran’s increasing approaches into the region. Though not immediately posed, US imperialism fears the growth of “radical” Islamic fundamentalist regimes coming to power in the future. The victory of Islamic reaction in Afghanistan and the possible break up of the country along ethnic lines, is a further destabilising force in the region.
96. At this stage, however, most of the central Asian republics look to Turkish capitalism, rather than its Islamicised neighbours. The main reason for this is the pro-capitalist position of the central Asian regimes and the fact that popular illusions in the marker are much greater than the growth of support for Islam at this stage. Turkey is seen as a bridge to the West and the EC. The more secular character of the Turkish state has a greater appeal to the masses, especially the women who stand to lose most in a society dominated by Islamic fundamentalism.

Ukraine

97. The secession of Ukraine delivered the final blow to the USSR and now threatens the survival of the CIS. With 18 per cent of the population of the former Soviet Union, Ukraine has a powerful industrial base which accounted for 17.2 per cent of the total Soviet industrial output. The nascent Ukrainian bourgeois have aspirations to become a European power and are increasingly pulling away from their former ties with Russia, turning to the West for support. The decision to launch a separate Ukrainian currency and the developing trade war with Russia shattered hopes for a new form of economic union. Now Ukraine has struck a deal with Iran for imports of oil and has to reduce its dependency on Russia. Kravchuk has raised the idea of a regional economic bloc with Poland, Hungary and Czechoslovakia as a step towards greater integration with the EC.
98. However, the ferocious trade war with Russia is exacting a massive toll on Ukraine’s economy. Despite his comfortable victory in the presidential election in December 1991, Kravchuk’s position, like all the post-Soviet rulers, is precarious. Plummeting living standards following January’s price rises, have provoked enormous dissatisfaction. To head off opposition to his economic policies, Kravchuk is banging the drum of Ukrainian nationalism and leaning on his former opponents in the nationalist movement. But this is an extremely dangerous position, especially because of the 12 million ethnic Russians living in Ukraine. In Ukraine’s referendum a majority of the ethnic Russians voted for independence. A big factor in this was the belief that the Soviet Union was bankrupt, and that independence would lead to an improvement in Ukraine’s economic position. As these workers feel the brunt of redundancies, closures and collapsing living standards. Kravchuk risks inflaming nationalism among the Russian minority.
99. Without a powerful proletarian movement to cut across these developments, the shift to capitalism has set the two most important republics of the former Soviet Union on a collision course. This conflict is developing with an explosive logic of its own. While all-out war between them is unlikely because of the existence of nuclear weapons in both countries, and the catastrophic human and economic cost of even a conventional war, increasing economic and territorial disputes and even military skirmishes could not be ruled out. In some respects there are parallels with the position of India and Pakistan, where an uneasy armed truce, with recurring border skirmishes, has existed since the 1971 war.
100. Kravchuk’s decision to establish a separate Ukrainian army, wrecked attempts to preserve a unified CIS military structure. Russia has recently responded by announcing the formation of a Russian army which will comprise the bulk of the old Soviet forces. A chaotic scramble has developed between Russia and Ukraine for control of decisive military units, such as the Black Sea Fleet. The Ukrainian regime has succeeded in wooing important sections of the officer caste, sanctioned there, including many ethnic Russian officers who see a more secure economic future for themselves in Ukraine. Of 17,000 former CIS officers serving in the Kiev military district, 13,000 agreed to join the new Ukrainain army.
101. The dispute over Crimea is symptomatic of these increasing tensions. To exert pressure on Ukraine, the Russian regime has questioned the status of the Crimean peninsular which has ceded to Ukraine in 1954, and where ethnic Russians are in a majority. The Crimean population is tiring of being used as a bargaining counter between the two republics, and support for a referendum on independence is growing. Nationalists in Russia, however, are undoubtedly attempting to manipulate this. This is being fiercely resisted by the Kravchuk government, especially because of the military importance of Crimea as the base of the Black Sea Fleet. The Ukrainian regime is now raising the idea of retaining Sevastopol as a Ukrainian controlled enclave, if Crimea secedes from Ukraine.
102. On a capitalist basis, therefore, the tendencies towards national disintegration have clearly not played themselves out. Further disintegration, beyond the formation of fifteen separate republics is possible, paralysing economic life and raising the spectre of a hundred Yugoslavias. Even within Russia, separatist movements are gaining momentum, for example, in Chechen-Ingushetia, Tatarstan and Udmurtia. An attempt by the latter two regions, with their major oil reserves, to break away, would deal an enormous blow to the Russian economy and clearly the Russian regime would not take this lying down.
103. These events illustrate the complexity of the national question in the modern epoch. This is not just the case in the former Stalinist states, but in the ex-colonial countries and increasingly in the advanced capitalist countries. The proletariat will not be able to take power without a correct programme and great skill and sensitivity in approaching the national question. In the former USSR, while the danger of national and ethnic divisions poses an enormous problem for the workers’ movement, the national question also enormously aggravates the problems of emerging capitalism. Movements which begin around national demands can under certain conditions acquire a revolutionary, class character. Therefore in appraising these movements, it is necessary to determine their main direction, and separate out what is progressive and what is reactionary within them. In the conflict in Trans-Dneistr, for example, there are elements of a proletarian movement, of workers’ militias involving different ethnic groups, against the Moldovan regime and perceived Romanian domination. How far this will develop in the direction of an independent proletarian movement depends upon the subjective factor and whether a Marxist leadership can be created.
104. The task of building workers’ organisations in the former USSR is inextricably linked to the development of the national question in all its different forms. When the working class moves forward in struggle, the national question will tend to recede as the class strives for unity. Whereas setbacks, defeats and demoralisation will generally act to strengthen national divisions. The task of Marxism is to fight to overcome these divisions with the programme of workers’ democracy and international socialism. This is based upon unity in struggle of workers of all nationalities; opposition to all forms of national oppression; and a steadfast defence of the right of nations to self-determination.

The Armed Forces

105. The army is a mirror of society, and developments within the former Soviet armed forces reflect the twin processes of economic collapse and national disintegration. The military high command represented the last element of the old Soviet state to hold out against the centrifugal forces in society. At a military conference in January 1992, 71 per cent of the 5,000 officers present voted for the restoration of the borders of the old Soviet Union. This did not reflect a desire to return to the old system based on the planned economy, but a desire to restore their former power and status. The vast majority of senior officers have moved over to a pro-capitalist position.
106. This was already underway before last August’s coup. The crushing victory of US forces over Iraq, with their ‘smart bombs’ and other hi-tech weaponry, accelerated this process. Like every other section of the old bureaucracy they are intent on preserving their privileges and status, which they conclude is only possible on the basis of bourgeois property relations. The shift has been especially sharp among the officer caste because of their humiliation after the retreats from eastern Europe and Afghanistan. Conscious of the colossal weakening of their position relative to US imperialism, they have drawn the conclusion that capitalism represents the only way to rebuild their position.
107. This does not just signify a shift in ideological outlook. The former Red Army has been plunged into a situation of near anarchy with its own infrastructure breaking down under the impact of the economic crisis. 300,000 soldiers are living in temporary accommodation, many in tent cities and disused railway carriages. In Baikonur there was a mutiny by troops at a former Soviet space centre over abysmal living conditions and ill treatment by officers. 35,000 roubles were stolen and three soldiers were killed. Faced with this collapse, sections of the officer caste have attempted to overcome their problems, like every other section of the former bureaucracy, by turning to the ‘market’ – selling military equipment, medicines and even food. One Moscow company, run by serving naval officers, has already sold 15 submarines belonging to the Black Sea Fleet. In Poland, huge amounts of military equipment have been systematically siphoned off and sold by the CIS forces stationed there. Hundreds of officers serving in Poland have enlisted on private business courses.
108. This process, and the undermining of morale within the armed forces explains why they weren’t able to intervene to prevent the break up of the USSR. Despite constant warnings of a new coup attempt from the high command, they have so far been restrained on one hand by fear of the reaction of the masses, with the example of the failed coup still fresh in their minds, and on the other hand because of the explosive force of the national question and its effects within the army itself. To re-establish the old borders would involve the army in countless military conflicts in the republics, leading to splits along ethnic lines within the army. In particular, Ukraine’s declaration of independence and its decision to form a separate armed forces, changes the whole equation. Ukraine’s size and 55 million population, and the fact that a significant section of the army would have gone over to its defence, meant that an attempt to force it back into a union with Russia would have posed a full scale war.
109. This explains the shift by the military high command and the decision to form a Russian army. This does not mean that intervention against former Soviet republics is excluded. On the contrary, the Russian state has replaced the old central bureaucracy as the decisive power in the region. Military intervention cannot be excluded where the decisive economic and political interests of the nascent Russian bourgeois are threatened. A survey in February 1992 showed that 57 per cent of army officers believe armed conflict is possible between Russia and other republics.
110. They will attempt to camouflage their imperialist aims behind a defence of the 25 million Russians living in the other republics. Not for nothing did Yeltsin offer Russian citizenship for ethnic Russians. It is impossible for the vast majority to return, especially now with the collapse of the Russian economy. But, the fact that these Russian communities occupy areas of key economic importance in the breakaway republics will undoubtedly be exploited by the emerging Russian capitalists. Yeltsin’s vice-president, Alexander Rutskoi, has already warned the Baltic republics over their treatment of the Russian minority. In this way, the position of the Russian minority will be used to justify economic and even military sanctions by Russia.
111. While still nominally a unified CIS force, the army was withdrawn from Nagorno-Karabakh in March 1992, despite the protests of the Armenian regime. The Russian officer caste sought to extricate themselves from the developing war between Armenia and Azerbaijan which they feared could bog them down in a new Afghanistan. However, where significant Russian minorities are involved, as for example in Moldova, it is a different question. At this stage, rather than open military involvement by Russia, Cossack volunteers have moved in to support the Russian and Ukrainian minority there. But Yeltsin’s announcement that all former CIS forces, including the troops in Moldova, are now under Russian control is an indication that if necessary, the Russian regime will intervene directly to protect its interests. In this case, while acting ostensibly to defend the Russian minority, the aim of military intervention would be to secure Russian control of the enclave of Trans-Dneistr, the industrial power-house of Moldova.

Part 2, the remaining sections of The Collapse of Stalinism, will be published in Chinese at a later date.