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Collapse of Stalinism | Home | News | Donate | Join | Print The Collapse of Stalinism debate
CWI document Prospects for Capitalist Restoration58. Victory over the coup will seem easy in comparison to the tasks that now confront Yeltsin and Gorbachev on the road to capitalist restoration. They face an economic catastrophe. GNP has slumped by 10 per cent in the first six months of 1991. This follows a 14 per cent fall in 1990. Inflation is heading for an annual rate of 100 per cent. So far this year, food production has declined by 8.5 per cent. Serious fuel shortages and potential famine are predicted for the winter. This year's expected grain harvest is 195-200 million tonnes compared to 218 million tonnes in 1990. 35 per cent of the 1990 crop was lost in harvesting or in storage and processing. 60 per cent of last year's vegetable crop was lost. Harvesting problems are even worse this year. 59. Recent events undoubtedly make restoration more likely. Significant inroads could now be made into the nationalised economy. We now see the coming to power of a pro-bourgeois government as in Czechoslovakia, Poland and other countries of Eastern Europe. In addition, the state monopoly of foreign trade has been abolished and the centralised plan has broken down. This is a transitional regime heading in the direction of capitalist counter-revolution. However, this process has not been completed and certainly not consolidated. 60. The result is the emergence of a monstrous hybrid which combines the remnants of a proletarian Bonapartist regime - large elements of state ownership - but where increasingly we see the emergence of capitalist property relations fostered by the counter-revolutionaries who have taken the helm in society. Increasingly a nascent bourgeois class is developing, primarily from the ranks of the old bureaucracy. Within the state apparatus too a shift is taking place with the advancement of a younger, more pro-capitalist layer of officers. Even though, at this stage, decisive sections of the economy are still state owned, the direction in which this regime is heading is decisively towards capitalism. However, colossal difficulties lie ahead, not least of all the opposition of the huge proletariat. 61. Trotsky referred to the problems confronting capitalist counter-revolution when he said:
62. Despite their recent victory, the ascendant pro-capitalist elements do not look forward with confidence. Shevardnadze and Yeltsin warned of food riots in Moscow this winter and the danger of another coup. This is possible, even likely in the coming period. Pro-Gorbachev journalist Otto Latsis warned that hyper-inflation could bring about "not a beggarly putsch but a protest from the people". A pro-Yeltsin deputy commented after the coup, "Workers are tired of everyone, of Gorbachev, Yeltsin and me. What they want is food." 63. The restoration of capitalism will only be achieved by overcoming the resistance of the Soviet workers. As we have explained before, stable bourgeois democratic regimes are ruled out under the conditions that exist in the Soviet Union and Eastern Europe. Capitalism would rest on the super-exploitation of the working class. Western investment would primarily seek to exploit cheap labour backed up by a permanent reserve army of unemployed and the supply of raw materials. Already we see strong tendencies towards Bonapartism, not just of Gorbachev, but of Yeltsin and regional overlords like Gamsakhurdia in Georgia. Without a movement of the proletariat to seize power, new attempts to impose open military rule are inevitable. 64. Whether a new coup attempt is successful or not depends on the concrete circumstances and the degree of disillusionment that exists. The working class will not easily submit to a new openly dictatorial regime. But the situation is extremely unstable and we must be prepared for abrupt developments. Given the potentially explosive national antagonisms that exist, local coups are possible in some of the republics. The central military command too may intervene in some republics despite the enormous difficulties this would entail. The position of the Russian and other minorities would be used to justify such an intervention. A new military Bonapartist regime in Russia or the Union, rather than attempting to re-establish centralised control and planning, is far more likely to be a pro-bourgeois regime with the aim of forcing through the transition to capitalism. 65. So far foreign investment in the Soviet Union has been negligible. The latest proposal from Yeltsin's Prime Minister Silayev is to give foreign capitalists a stake in Russia's huge reserves of natural resources (oil, gas, timber etc) in return for investment in new technology. If this develops, it raises the prospect of an economy dominated by foreign capital as under Tzarism with only a small native capitalist class. Therefore, while a capitalist Russia would attempt to play an Imperialist role in relation to its neighbours, its economic base would have ma»y elements of a semi-colonial country. 66. This is also clear when we consider that Silayev's proposals would not benefit manufacturing industry where a massive technological gap must be overcome. There are some potentially profitable and technologically advanced sectors such as the aircraft industry which could attract foreign investment or partnership. But these are few, while most sectors would collapse without continued state support. This again suggests that a capitalist development of the economy would lead to a heavy reliance on exports of primary goods and a corresponding dependence on imported manufactured goods. A new era of world relations67. While Imperialism has scored a massive propaganda bonus from these developments/ the crisis in the Soviet Union and Eastern Europe raises grave new problems for world capitalism. The West will be forced to intervene with emergency aid if severe food shortages develop this winter. But while they are forced to take such measures, for fear of a flood of refugees and the further destabilisation of the situation/ they cannot provide the resources needed to eradicate the economic crisis. 68. Huge sums are required to modernise and re-equip Soviet industry, as well as stabilise the rouble and provide a certain social security cushion for the effects of restructuring industry. Gorbachev's proposal to the G7 for a 'Grand Bargain' of $150 billion over 5 years has been turned down. Nothing like this sum is on offer from the West. Even this proposal, at $30 billion a year, is less than half the amount which German capitalism is spending on East Germany - with a population of 16 million as against 285 million in the USSR. 69. There are fundamental differences in the position of world capitalism compared with the end of the Second World War. At that time US capitalism resorted to a huge Keynesian spending programme because of its fear of revolution in Europe. This, and especially the growth of world trade allowed capitalism to rebuild the ruined economies of Western Europe. Today, world capitalism does not have the resources for such a massive injection of capital. The US is now the world's biggest debtor. In addition to its budget and current account deficits, the US now has a host of state and city administrations which are technically bankrupt. US Imperialism faces a $100 billion bill for its war in the Gulf. There has been a turn around in the position of German capitalism, the world's biggest creditor in 1989, but now carrying a huge deficit because of reunification. Japanese finance capital has been switching back towards domestic investment since the large falls on the stock exchange in 1990. Who then will finance the 'Grand Bargain'? 70. For three years (1949 to 1951) the US spent two per cent of its national income, equivalent then to one per cent of world income, on the Marshall Plan. A comparable figure today would be at least $200 billion. This dwarfs the figures so far mooted by the bourgeois. The EC's European Bank for Reconstruction and Development has a total budget of $12.4 billion. Given the critical role of the expansion of world trade in the post war boom, what are the prospects for the Soviet Union on the world market? Already there are increasing trade tensions between the capitalist states and the outline of future trade wars. But also the obsolete nature of much of Soviet manufacturing means they will have great problems competing on the world market. A drive to export fuel and raw materials would open fierce competition with other oil producing and third world countries. 71. The break up of the Soviet Union threatens dire consequences for world capitalism economically, politically and militarily. It would enormously destabilise the world situation, making Yugoslavia look like a sideshow. On the other hand, the emergence of an Imperialist Russia or 'Union of Sovereign States' would also have ominous implications for world capitalism leading to new strains and conflicts in international relations. This would be an inherently unstable capitalist power, struggling with enormous economic and social problems and at the same time possessing a massive military machine including over 25,000 nuclear warheads. 72. Far from signalling the end of the cold war, capitalist restoration would open a new era of inter-imperialist rivalries. We currently see increasing tensions among the advanced capitalist countries with the development of three major blocs (North America, Western Europe and Japan). The dispute over the stumbling GAIT talks is a warning of the bitter economic disputes that can develop between the major powers in the future. 73. If a new Russian Imperialism emerges it will enormously complicate the situation. German capitalism hopes to utilise the collapse of Soviet influence in Eastern Europe to secure its own domination of the region. They see these events as a historic opportunity to subjugate the region from the Baltics to Croatia, converting these weak and ruined economies into semi-colonies. For this reason Kohl and the German banks are in the forefront of demands for greater Western aid for the Soviet Union. A new German-Soviet or German-Russian axis may emerge, with German capitalism exploiting its position in negotiations over aid and investment, to gain advantages over its rivals. 74. But inevitably a conflict of interests will develop between German capitalism and a capitalist Russia or confederation. At a certain point a ferocious struggle could develop between these two giants for hegemony in central and eastern Europe. New Imperialist alliances and counter-alliances would take shape, possibly with some EC states such as Britain, France and Italy attempting to bloc with Russia to thwart German capitalism's increasing domination of Western Europe. Far from a new world "order", we are entering a new period of enormous instability in world relations. Can the Union survive?75. The economies of the republics in the Soviet Union were integrated to an unparalleled extent. Seventy years of planning, even bureaucratic planning, produced one vast interdependent economy stretching across two continents with an enormous division of labour between republics and regions. The economies of Eastern Europe, by contrast, were hardly integrated at all. As we have explained before, this was a conscious policy of Stalin in order to assure the dominant position of the Soviet bureaucracy. This complex multinational character of the Soviet economy is a critical factor complicating the attempts to restore capitalism. 76. Georgia exports 53 per cent of its production to the rest of the Soviet Union. It has no food processing industry, virtually no electricity generating capacity and imports all its coal, paper and televisions. The Asian republics are the main producers of cotton, but most is transported to Moscow and Leningrad where 80 per cent of the Soviet Union's textiles are manufactured. In Byelorussia the chemical industry is a major employer but it is heavily dependent on cheap Russian oil. Byelorussia is the biggest producer of trucks in the Soviet Union but imports nearly all its steel from Russia. Therefore for Byelorussia and the other republics, as the Guardian commented "independence could be an act of economic self-immolation". At the same time, despite the towering trade surplus enjoyed by Russia and the Ukraine, they too would lose out from such a development. The switch to world prices for trade with Eastern Europe is a big factor in the slump in Soviet exports by 23.4 per cent during the first six months of this year. By placing the other republics on rations, the Ukraine and Russia would also inflict enormous damage on their own economies. 77. Disentangling this economic structure will not be easy. The various pro-capitalist groupings within the bureaucracy and the international bourgeois have come to realise this. The idea of fifteen separate central banks, currencies, tariff regulations etc. is a horrific scenario for any potential Western investors. The Boston Consulting Group argues that the Soviet economy is "so completely interdependent, it is a nightmare. If it disintegrates into autarchy, production will go down by 50 per cent". 78. Because of the economic and political consequences. Imperialism is exerting enormous pressure to prevent a further break up of the Soviet Union. Kohl has called for the retention of the Soviet Union as a state entity that alone should negotiate with the West on aid and should control the nuclear arsenal. Kohl warned there was no prospect for Western aid unless a new Soviet economic and monetary union is formed. 79. The German capitalists, who are the Soviet Union's biggest lender accounting for 56 per cent of total loans, are terrified that the tendencies towards national disintegration threaten their repayments. It is proposed that from January 1992 the $62 billion foreign debt will be divided among the republics. The Russian federation, with 80 per cent of the Soviet Union's hard currency reserves, announced it would only accept responsibility for 50 per cent of the foreign debt. The head of Deutsche Bank warned that disbanding the Soviet central bank would jeopardise the chances of foreign aid. 80. These fears have also concentrated the mind of the leaderships in the republics. After the initial rush to declare independence most have subsequently retreated. Yeltsin was forced to tone down his earlier confrontational approach over borders. Mayor Sobchak was dispatched to Kiev to calm the nerves of the Ukrainian leadership. All sides peered into the abyss and have drawn back in horror. 81. Kravchuk, who days before had proclaimed the Ukraine's independence, pleaded that "Everything must be suspended. If we do not maintain the status quo and do not stick to today's borders, terrible political and economic conflicts could result." This explains the fresh attempts to arrive at a new, albeit looser, confederation rather than see the total break-up of the Union. 82. These pressures explain how Gorbachev continues in office despite his unpopularity among the masses and within the state apparatus. Despite the heavy blow suffered by the centre, a vacuum exists which for the time being at least, only Gorbachev can fill. Yeltsin needs Gorbachev as a cover. He does not want to assume sole responsibility for the economic crisis. Also Yeltsin's push to replace the central Union bureaucracy produced a reaction from the republics which threatened to shatter the Union. So the de facto coalition forged between Gorbachev and Yeltsin before the coup continues. Yeltsin's rise has been partly checked. Gorbachev can continue balancing, albeit precariously, utilising the fact that his opponents fear the alternatives to Gorbachev more than they hate Gorbachev himself. 83. While this will be an extremely unstable arrangement, a new confederation of "Sovereign States" could survive for a period, precisely because the alternative would be an economic and political catastrophe. However, the moves to restore capitalism, and a further collapse of state ownership and planning, will enormously aggravate the rivalries between the republics and nationalities, placing this agreement under enormous strains. Ultimately, unless the proletariat intervenes to cut across this process, these explosive tensions could prepare the way for civil war and new military coups.
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