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The Collapse of Stalinism

IEC Document

June 1992


Part I

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 obvious limits. 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 places new strains upon 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 undermined in practice by 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 of Das 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 joint Study of the Soviet Economy by 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 just one element of 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 the only 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 9th 1989, 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 the Transitional Programme Trotsky 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 was no 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 necessary in advance for 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 the speed with 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 the bourgeois degeneration 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 the counter-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.





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