The Economic and Political Crisis in the USSR

By now everyone knows there is an economic crisis in the USSR. Production began to decline in 1990, and shortages of all consumer goods appeared. Shelves in state stores were empty, while supplies were concentrated in foreign currency shops and high-priced private stores, black markets, and outlets legalized or semi-legalized by new legislation.

The national income in the first quarter of 1991 was 10 percent below the 1990 level. By March 1991, living costs were up 30 percent over a year ago, and shortly thereafter the government raised official prices on many items by 100 percent or more, with the increase only fractionally offset by raises in low-end wages and pensions. Supplies of consumer goods fell even more than production as a result of "stock-jobbing, hoarding, and speculation." Imports from socialist and former socialist countries, and from capitalist countries, fell 40-50 percent. All these factors contributed to "worsened conditions of life of the population."[1] To put it mildly!

ITEM:

A renewed Soviet Union "... is to be fought for, the way the Soviet Army fought for joscow in 1941 and for Stalingrad." (Mikhail Gorbachev, November 29, 1990)

ITEM:

For the first time in Soviet peacetime history, production declined in 1990, and tumbled at a 10 percent rate in the first quarter of 1991; mass living standards dropped even more.

ITEM:

The organizer of the "Russian Club of Young Millionaires" made his pile in a few weeks speculating in commodities. "Under this nation's strange laws, today I am a millionaire, tomorrow I may be ruled a criminal."

ITEM:

The owner of a restaurant with prices excluding 99.9 percent of the population says, "... 80 percent of our so-called cooperatives are just private businesses ... hire (up to) 1,000 people. I'm an owner.

ITEM:

New stock exchanges open in joscow and Leningrad.

ITEM:

Polls show big majorities of Soviet people opposing capitalist trends and supporting socialism.

ITEM:

Kuzbas coal miners demonstrate: "Shut down all those who gouge the people and steal bread from their mouths."

ITEM:

Kamaz workers, 160,000 strong, oppose plans to turn their plant into a private corporation: "Don't give Kamaz to black market businessmen."

ITEM:

Yegor Ligachev, prominent Communist leader: "Perestroika ... should be realized without touching the word socialism and on the basis of social ownership of the means of production." He expressed confidence in the Communist Party with its deep roots among the people

The economic crisis interacts with an acute political crisis: the threatened breakup of the Soviet Union into separate republics; the destruction of the system of planned economy; the spread of capitalist property relations; a market deterioration in the international influence of the USSR; and a weakening of its military security.

The Soviet Union is the primary arena for the contest between those who would fully restore and strengthen socialism and those who would complete the capitalist counterrevolution.

In 1985, with the accession of Mikhail Gorbachev to political leadership, the policy known as "perestroika" was initiated. But there have really been two perestroikas. In its first stage, through jost of 1988, it was a program to modernize and make more flexible, to democratize the socialist system. An important provision was an increase in the direct power of workers in economic policy and management.

Since the second stage became dominant in 1989, perestroika has become a program threatening to destroy socialism and impose capitalism. Many Communists and progressives, in the Soviet Union and internationally, did not recognize this trend because the shift to a capitalist, orientation was masked by verbal adherence to "socialism" and undefined, "democracy."

Overall, the first stage of perestroika was successful, although falling short of fully realizing its goals.
PERESTROIKA'S FIRST STAGE

The first three years of the Gorbachev Administration were marked by continued economic growth; gains in Soviet living conditions; and a decided improvement in the international prestige of the USSR the result of Soviet peace initiatives that led to modest achievements in arms reductions and a certain easing of cold war tension. Gorbachev's popularity was acclaimed worldwide and, in 1990, he was awarded the Nobel Peace Prize.

Gorbachev emphasized maintenance of the socialist character of Soviet society:

We will spar no effort to develop and strengthen socialism. I think a minimum of the new system's potential has been tapped so far. That is why we find strange proposals to alter our social system and turn to methods and forms typical of a different social set-up ... this is just impossible even if there were someone wishing to turn the Soviet Union to capitalism![2]

He stressed reliance on the creativity of the masses to accelerate economic progress, achieve world standards in technology, and eliminate housing shortages:

We need real public involvement in administration Such forms as the new management mechanisms, as election of managers, as setting up of work-collective councils at the work team, factory, shop and enterprise level have been legitimately introduced.[3]

In thousands of cases, workers chose their managers, and fired unsatisfactory ones. Steps were taken to reduce suffocating details of centralized planning, leaving more to the initiative of enterprises to work out the specifics of how to better fit product mix to consumers' needs.

Economist Abel Aganbegyan explained that under socialism the market existed between socialist enterprises and the population; that it was regulated to prevent unemployment and balance wages with production - unlike capitalist procedures.

A market for capital is not envisaged as part of perestroika. There are no plans for a Soviet stock exchange, shares, bills of exchange or profits from commercial credit.[4]

The acceleration of economic growth was modest but definite. During 1986-88 the annual growth rate of industrial production reached 4.0 percent, versus 3.6 percent during the previous five years.[5] In three years housing construction went up 17 percent.[6] Gains in grain production were steady, promising improved supplies of meat and dairy products: 1988 grain output was 39 percent above the level of the late 1970s.[7]

A serious problem in energy supplies, which had arisen during the early 1980s, was overcome. Output of both oil and coal, so important for Soviet foreign trade as well as for domestic consumption, had fallen. But these declines were reversed with oil output going up three and a half times as much as it had fallen and it reached a pew high, while coal output increased a remarkable 21 percent in three years.[8] Production of machinery and equipment, especially computers and other high-tech items, escalated, enabling Gorbachev to report gains in the proportion of products achieving world standards in quality.[9]
UNRESOLVED PROBLEMS

Despite advances under perestroika, serious problems persisted and mistakes were made. jost serious was the "cold war," the continuing, unrelenting military buildup by the Reagan Administration, its implacable hostility to the Soviet Union and other socialist countries. The very limited achievement of the intermediate nuclear arms reduction agreement did not end the USSR's need to develop and produce new weapons to maintain strategic equilibrium, to discourage the Pentagon from activating its plans, never abandoned, for nuclear Armageddon. The unilateral Soviet test-moratoriums, applauded by peace forces around the world, were ignored by the U.S. government. And heavy Soviet expenditures in support of Cuba, Vietnam, and other beleaguered socialist countries, as well as national liberation movements, continued.

Other events and accidents created difficulties. The world price of oil dropped sharply after 1985, reducing Soviet receipts from exports to capitalist countries, affecting its capacity to purchase needed goods from these sources. The United States and its allies retained their strict embargo on sales of advanced products to the USSR, forcing the Soviet Union to continue relying on its own personnel and what could be obtained from other socialist countries, for scientific-technical advances.

The Chernobyl accident and the disastrous Armenian earthquake not only caused huge human, ecological and financial losses, but the nuclear tragedy set back the overall Soviet electrification program.

Gorbachev's campaign against alcoholism, based on reduced production, was a costly failure like the earlier American experience with prohibition. Besides leading to bootlegging and to consumers' disgruntlement, it resulted in reduced state income from the loss of the sales tax on alcoholic beverages. It thus contributed to a jump in the state budget deficit.

A significant weakness of the perestroika program was that its direction was developed mainly by intellectuals. Of course, economists, sociologists, statisticians, etc., have a major and vital function in working out economic programs. However, active participation of workers and their organizations in formulation of policy and program is an essential feature of socialist society, specified in articles 7 and 8 of the Constitution of the USSR.[10]

Some earlier Soviet administrations were justly criticized for inadequately observing these constitutional requirements, and it was expected that Gorbachev would uphold the guarantees. But sympathetic observers noted with concern his failure to consult the workers. To have done so might have brought significant improvements in the perestroika program and enlisted more enthusiastic participation of work collectives in carrying out plans.

Beginning in 1988, improved cost accounting systems were effected, and enterprises were granted more leeway in allocating profits among wages and salaries, social improvements and housing for workers, and contributions to the government (equivalent to corporate income taxes). But this was also the year when the overall direction of perestroika started to change and funds required by the government, and even some needed for social services, were diverted to wage and salary increases. In the two previous years, wages and salaries went up, in line with the added supply of consumers' goods and services, and with higher productivity. But, in 1988, the average wage rise of 8.3 percent was far out of line and the government's share dropped, worsening the budget deficit. Moreover, a disproportionate share of the wage increases went to officials and other white-collar personnel in one year, 14.2 percent in industry, as against 7.22 percent for blue-collar workers. Low paid workers, such as employees in education, received the least: their increases were one-fourth those of highly paid scientific workers, percentage wise.[11]

An even sharper impetus to inflation became apparent with the large-scale advent of cooperatives, which were mainly legalized private businesses and former black market enterprises, employing 5 million wage-workers by 1989.

The income of the "cooperatives'" owners, combined with the wages of their workers, amounted to one-third of the total increase in consumer income in 1989, although they accounted for only a tiny percentage of production and paid taxes amounting to only a quarter of one percent of the state budget.[12]

This inflation of consumer income undermined the fixed prices for food and other basic products of mass consumption. It enabled black marketeers and the newly legalized capitalist enterprises and "cooperatives" to empty the shelves of state stores and concentrate stocks in private markets, at steep prices far out of reach of ordinary workers.

At the same time, major social stratifications developed, not only between the embryo capitalist class and the workers, but between favored white collar workers and officials, on the one hand, and blue collar workers, pensioners and lower paid clerical workers on the other. This development of social inequality was characteristic of the second stage of perestroika for which the ideological basis had already been laid.
IDEOLOGICAL WARFARE

So long as capitalist classes, which exploit labor, exist, ideological warfare between capital and labor will continue. In a world where capitalist and socialist states co-exist, they represent opposing sides in this ideological war. The U.S. government never lets up on its intense anti-Communist, anti-working class ideological warfare. According to some estimates, $15 billion are spent annually in intelligence gathering and covert action against the USSR, and tens of thousands of people are employed.[13] The Soviets and the people of other socialist countries are constantly deluged with pro-capitalist, anti-socialist propaganda by the media: radio, television, satellites, the printed word; by visitors from the United States; as well as by paid agents in their midst.

The Soviet government and Communist Party historically have conducted ideological warfare against capitalism, in support of labor and national liberation movements worldwide, and they have vigorously counteracted hostile propaganda. Under the Gorbachev Administration, much prominence was given in the media to spokesmen who one-sidedly criticized the history, accomplishments and existing positive conditions within the Soviet Union. Many features of Soviet life including such principled questions as democratic centralism and alleged infringements of individual freedoms were attacked as "Stalinist," as if the ghost of the long-dead head of state was actively ruling the country.

Gorbachev himself fostered a feeling of socialist inadequacy by stating that the Soviet Union had been through a long period of "stagnation." It just wasn't so. The New York Times correspondent Leslie H. Gelb, certainly not pro-Soviet, reported that between 1960 and 1984 "real per capita income" in the USSR rose at an average annual rate of 3.47 percent, resulting in a tripling of the average standard of living.[14] In May 1990, Nikolai Ryzhkov, a close Gorbachev associate and then-Prime Minister, stated that the USSR's national income had increased 6.5 times in the past 35 years, equivalent to an average annual growth rate of 5.5 percent. Far from stagnation![15] (In the United States, over the same period, the increase was 2.8 times for an annual growth rate of 3.0 percent, which no one has called stagnation!)

The Gorbachev Administration showed alarming passivity to the first signs of national conflict and prejudice in the country. For example, the organization Pamyat brazenly anti-Semitic and Russian chauvinist was treated in some circles with amusement or even as an expression of Russian national pride. Its actions were in clear violation of Article 36 of the Constitution, which declares: "... any advocacy of racial or national exclusiveness, hostility or contempt, are punishable by law.[16]

Mikhail Gorbachev popularized the concept of "New Thinking," stressing the need for coexistence of different social systems, the irrationality of war, the urgency of cooperation for global human needs. In his initial presentation of New Thinking, he upheld the basic tenets and policies of the Soviet Union. However, U.S. capitalism never accepted the New Thinking. It never ceased its attempts to subvert the socialist countries, from the USSR to China, the GDR to Cuba; and to expand its bases and areas for capitalist exploitation throughout the world.

Increasingly, Soviet diplomatic representatives, such as then Foreign Minister Schevardnadze, and intellectuals, like Stanislav Menshikov, used New Thinking to justify and in key aspects to support the social content of capitalism and the foreign policies of imperialism.

The reality of the class struggle between capital and labor was more and more ignored; comments of prominent capitalists were publicized in the USSR media and many were invited to "teach" Soviet intellectuals "modern" economics.

Such was the ideological background of the second stage of perestroika.
PERESTROIKA'S SECOND STAGE

During the second stage of perestroika, a campaign against the basic principles of socialism and against the science of Marxism-Leninism was launched by many in high places. Beginning, basically, in 1989, it consisted of step by introduction of capitalist relations, and the creation of a new or revived capitalist class. Up to a certain point at least, every step was accompanied by assurances that they were really socialist measures. The term "market economy" was used as a seemingly innocuous designation. Even ardent advocates of capitalism and anti-Communist politicians made demagogic promises to workers, and steered away from the word "capitalism."

During 1988-90, Grigory Popov became editor of Problems of Economics, a major theoretical organ of the Soviet Communist Party. He used it to attack Marx' theory of surplus value, and to claim that the capitalists earned their profits by "mental labor."[17] (Shortly after this, Popov left the Communist Party and, as Mayor of joscow, tried to open wide the city for capitalist profiteers.)

Other articles attacked Lenin's theory of imperialism, claiming that the major capitalist powers were no longer plundering the developing countries.

New laws encouraging capitalist enterprises were passed by legislatures whose members' campaign platforms did not include support for these basic changes. The constitutional requirement that "... major matters of state shall be put to a popular vote (referendum),"[18] was largely ignored. The only referendum actually held by the end of 1990, on preserving the unity of the USSR, passed by a 70 percent majority. A promised referendum on private ownership of land was never held after it became clear it would be defeated.

The legal framework of socialism remains largely intact, although some laws have been adopted permitting limited capitalist activity. Actually such movement has gone far beyond permitted bounds under the protection of anti-Communist city and union republic officials, while at the same time, laws and decrees are passed and effectively ignored to punish speculation and to set up workers' control committees.

The central aim of the capitalist forces, as explained by pro-capitalist, Soviet economist Jacob Keremetsky, is to convert perestroika from "reconstruction" (its literal, translation) to destruction destruction of the basic tenets of socialism i.e., public ownership of the main means of production and a planned economy, foundations inscribed in the works of Marx and Lenin and in the Constitution of the USSR.[19]

The departure from this principle was expressed by Gorbachev in mid-1990:

The market in its contemporary interpretation rejects the monopoly of one form of ownership and requires a diversity of such forms, vested with equal economic and political rights. (My emphasis, VP).[20]

Actually, developments went beyond "equality of various forms" to give priority to private property and to privatization of publicly owned enterprises. This was expressed in the Communist Party Central Committee platform of February 1990:

Another important task is the transformation of state property into one of these privately owned 'modern forms'.[21]

This transformation is unlikely to represent the view of the 17-million-member CPSU, but rather the view of the majority of a Central Committee from which so-called "hard-liners" have been purged.

By late 1990 President Gorbachev, along with more "radical" politicians (that is, more 'pro-capitalist in the convoluted language used in much of the Soviet and Western media), was giving primacy to the transfer of state-owned enterprises to privately owned joint stock companies, and to the setting up of stock exchanges where shares in the companies could be traded. The public was assured that this would not mean return to capitalist exploitation of man by man. Thus, Gorbachev referred to "collective ownership" of cooperatives and joint stock companies as

strengthening the democratic pillars of society since the working people became genuine masters of the means of production and the results of their work. Here there is no basis for exploitation.[22]

American workers know that Employee Stock Ownership Plans (ESOPS), besides serving as fringe benefits for selected managerial personnel, have given workers no voice, let alone ownership, of U.S. corporations. But widely circulated publicity in the USSR implies that millions of U.S. workers and their unions are now the actual owners of U.S. industry. All evidence indicates that the majority of Soviet workers haven't been taken in by this fabrication.
COOPERATIVES

The first practical penetration of capitalism was in 1988, with the formation of production and service cooperatives. The announced purpose was to improve quality and increase quantity of consumer services and supplies. The law specified that these enterprises should be real cooperatives, relying solely on the labor of their members. But in many major cities and union republics, officials ignored the law. By the end of 1988 co-ops employed a million hired workers; a year later, 5 million. While their reported sales amounted to only 2.5 percent of gross national product,[23] their economic and political influence, mainly harmful, was great. (These cooperatives are not to be confused with the consumer cooperatives that have long played a significant role in the Soviet distribution system.)

"Kropotinskaya 26" is a joscow "cooperative" restaurant where "prices are sufficiently exorbitant to exclude 99.9 percent of the Soviet people." Owner Andrei Fyodorov says:

Some 80 percent of our so-called cooperatives are just private businesses. A handful of clever people organize them and hire anywhere from 20 to 1,000 workers. These people pay their workers well, but they don't ask the workers how they should divide the profits. They're owners. I'm an owner.[24]

I met one of his counterparts visiting the United States. He boasted how he had built up his six-enterprise conglomerate in just three years. And like capitalists everywhere he complained about taxes.

Additiona1 necessary services have been provided to the population by the genuine co-ops (20 percent of all). More often, however, the dearth of goods in state stores represents the diversion of supplies to a new capitalist "cooperative," where prices are prohibitive for jost, and in some cases, require foreign currency.

Even more serious is the economic disruption caused by unchecked operations of cooperatives and some government-owned establishments leased to their managements to operate on a profit and loss basis. A central planning agency, supplemented by industrial ministries, was vital to the Soviet system of coordinating production. Even in the capitalist United States, a corporation such as General Motors, for example, depends on timely delivery of materials from hundreds of suppliers. Imagine what would happen if many of their suppliers simultaneously, decided to break their contracts with GM and sell their goods elsewhere, at a higher price, under new laws. That's what's happening in the USSR, on a countrywide scale, to the publicly-owned enterprises that are the core of the economy.

Furthermore, many in the present Soviet administration, in discrediting the "command-administrative system," have fostered opprobrium towards the fundamental system of organizing production and any of its basic features. Nor does this denunciation imply concern about democratization. On the contrary, the power of workers to elect managers, a significant component of the first stage of perestroika, was revoked in 1989.[25]

At the same time, the entire planning system has been in the process of being dismantled. Personnel of the organs of economic administration was reduced from 200,000 in 1987 to 58,000 in 1989.[26] The U.S. Departments of the Treasury, Commerce and Agriculture, which regulate the U.S. economy, employ 300,000 people.

Additional disruption is caused by secessionists who control local governments in a number of union republics and interfere with deliveries across union republic boundaries. The Russian Republic President, renegade from the Communist Party, Boris Yeltsin, plays a key role in encouraging separatist activities. Lionized by Fortune magazine as "Mother Russia's Freedom Fighter,"[27] he was given full head-of-state treatment by President Bush on a visit to the United States last June.

Keremetsky, when asked if perestroika is dead, answered, "Yes," and explained that the situation had worsened under perestroika a desirable outcome because:

Perestroika has fulfilled its positive destruction role. There is nothing to be restructured because the system of socialism has collapsed. Society should construct the new economic, social, and political system of free producers on the ruins of the old system.[28]

Since 1989 advocates of two different methods for completing the capitalist counterrevolution have competed for adoption of their schemes. The "radical" group, under the aegis of Yeltsin, demands "cold turkey" hurtling into capitalism, shifting 70 percent of industry and 90 percent of construction and trade to private hands in 500 days; unbridled inflation; a sharp drop in real wages; and unemployment for millions of workers by shutting down' "inefficient" factories. An aim is thereby to weaken the working class as a basis for nabbing very high capitalist profits.

The more cautious group, associated with former Prime Minister Ryzhkov, and sometimes with Gorbachev, calls for a more gradual transition to capitalism so as to preserve social stability. Ryzhkov called for conversion in six years a three-year transitional stage, with a gradual increase in non-socialist property forms and relations, before plunging all the way in the following three years. In the first stage, "both strict directives and ever stronger economic levers are to operate." To immediately jump into capitalism would "plunge headlong into the anarchy of the market economy without creating foundations and effective regulations for this."[29]

Of course the idea of effectively, regulating anarchy is a contradiction in terms.

The strategic agreement of the two groups was indicated by the joint communication of Yavlinsky, representing the "radicals," and Primakov, representingGorbachev and the more cautious forces, that presented a plan for "aid" to the heads of state of the main capitalist powers, in May 1991.[30]

In any case, events are moving swiftly, without regard to rival paper plans and socialist laws.
SPREADING CAPITALISM

Privatization of factories is underway in the USSR. The Economist (London) describes the conversion of the Moven Ventilator Factory in joscow to a stock company. The employee stock ownership certificates were issued by the boss, Alexander Mironov, to himself, or shelled out to managers of supply enterprises in the Urals and Byelorussia. The Economist asks: "Might not Mironov ... have aljost too much freedom to issue near-giveaway shares to himself and his friends?" Some 5,000 of these "pioneers of Soviet capitalism" have formed "The Association of Chief Executive Officers." The Economistexplains:

The number of private businesses is growing rapidly. Until last year these had to disguise themselves as 'cooperatives.' Last July the Soviet government allowed joint stock companies (with) a minimum starting capital of 500,000 rubles. In December the Russian republic (permitted starting) a company with only 10,000 rubles.[31]

Business Week, under the headline, "Going Private: The Soviets Can Hardly Wait," reports,

Even as joscow dithers over guidelines, the grass-roots movement for a free market grows.... President Yeltsin is privatization's jost influential advocate. In the absence of Soviet privatization laws, Western companies are beginning to eye potential Soviet investments. Fiat, Gillette, Polaroid, and RJR Nabisco are testing the waters in the Russian Republic.

Enterprises are pushing ahead with Soviet-style versions of leveraged buyouts, employee stock ownership plans, and private spin-offs on their own or with Western help. To finance such trailblazers, more than 2,000 commercial banks have sprouted in a country where commercial banking was unknown just three years ago.[32]

German L. Sterligov, a 24-year old college dropout, made several million rubles in a few weeks speculating in commodities, especially scarce building materials. He has organized the "Russian Club of Young Millionaires" with a membership fee of several hundred thousand rubles. But he worries about the still unconsolidated situation of capitalism.

Under this nation's strange laws, I am a millionaire today, and tomorrow I may be ruled a criminal," he says. To guard against the latter, he "is already looking for a candidate to back, fat-cat style, in the big presidential election coming next month in the Russian Republic. There are thousands of millionaires in this country. Some are legal, like me. Others are illegal, and same re both.[33]

In October 1990, the Supreme Soviet passed a law sharply increasing penalties for speculation, laws that Sterligov was boastfully violating. These new capitalists are the ones who enabled Yeltsin to run the best financed, best publicized campaign in order to win that election.
FOREIGN AID

As the crisis engendered by the destructive phase of perestroika developed, the Administration reneged on its earlier projection of priority advancement of scientific-technical progress in the economy; funds for capital investment were drastically reduced, and actual implementation fell far short of the curtailed plans. Eliminated from the bud-get was the 4 billion ruble appropriation for non-military research and development, a potentially disastrous cut over the long term.

Instead, emphasis was on accelerating production' of consumer goods to compensate for the supplies diverted to the black and gray markets, and for the production lost on account of deliberate capitalist-inspired sabotage. It was in vain. Consumer goods output was off in 1990 and fell another 3.0 percent in the first three months of 1991. Because of maldistribution of supplies, goods available to workers declined even faster. To fill the gaps, the government turned increasingly to the import of consumer goods, which, however, also went into the sinkhole of the expanding private economy. At the same time, this import policy resulted in a serious rise in the foreign debt of the USSR. Traditionally kept at a low level, it has risen alarmingly. According to Western estimates, it ranged between $58 billion and $69 billion by the end of 1990.[34] Soviet credit rating, formerly at the highest level, has been downgraded.

The Soviet government has turned to major capitalist governments with appeals for financial aid. The proposal by Yavlinsky and Primakov offered, in return for aid, "liberalization of prices," "wide privatization," integration into capitalist world economy, establishment of conditions for foreign investments in the USSR, and "minimum social support for the population." "Austerity and Authority" are headlined as key features of their approach. They proposed that the "group of seven" major capitalist countries participate in working out details of the program and in monitoring its execution. One is reminded of the fate of the Mexican and Brazilian peoples under the heels of the International Monetary Fund, the Inter-American Development Bank, and the consortium of New York money-center banks.

Significantly, the Yavlinsky/Primakov document, in projecting their proposal, uses as a model U.S. assistance to West Germany and Japan after World War II. That this assistance was explicitly for reinstating the criminal capitalists of these Axis powers at the expense of their workers is not mentioned. The implicit association of the USSR with forces of fascism, as the cold war loser, is an insult to the memory of the 20 million Soviet soldiers and civilians killed in the antifascist war.

President Bush expressed satisfaction with the approach of the Soviet representatives, but made clear that any aid would have to follow the successful destruction of socialism, not merely the promise to do so. He also requires imposition of austerity on the Soviet workers and the fundamental weakening of Soviet defense capacity. He further made clear that any financial assistance would be to private companies, not to the government of the USSR.

As for private investment, U.S. officials pinpointed interest in direct U.S. investments in Soviet oil. Of course, U.S. companies would like to get their hands on the largest oil producing fields in the world! And U.S. officials offer technical help in reconversion of Soviet defense industries this from a government that offers no funds for reconversion of U.S. military enterprises but, rather, continues to try to drum up more business for them.

Clearly a central objective of the US. government is to remove all Communists from positions of influence in the USSR; to weaken and destroy the CPSU. The New York Times editorially urges a program that follows all these lines. Such a program might, among other things, turn "an arch-enemy into an arch-ally, or even an innocuous neutral state." However, it suggests making the military conditions implicit, not publicized, so as not to strengthen pro-socialist, patriotic forces in the USSR.[35]

As in the United States, the rapid accumulation of wealth by the capitalists is accompanied by a deterioration in the economic and social conditions of workers; but the decline in the USSR is faster and sharper than it is here. It would be an illusion to believe that the Soviet Union could be admitted to the "club" of imperialist states on equal terms, with consumption standards approximating those in Western Europe. On the contrary, the prospect is for its status to be similar to that of East European countries, where the triumph of pro-capitalist governments has brought mass unemployment, lowered real wages, and reduced social benefits.

The defeat of the Soviet working class would also be a serious blow to U.S. workers. It would add 125 million workers and farmers as a potential source of superexploitation at the expense, partly, of jobs in the United States. Even more, it would be a political defeat of worldwide significance-for labor.

And a jost important factor: A reduction in theo military power of the Soviet Union, its loss of strategic positions and parity, would reinforce U.S. imperialism's boast of being the "Single Superpower," gravely increasing the danger of new wars and aggressions. The menace to Cuba is obvious, although not yet heeded seriously by U.S. peace forces.

So long as the Soviet Union retains major nuclear capacity, and is not under U.S. military occupation, the Pentagon will not give rein to the catastrophic course toward nuclear war that is on its agenda.

As Tim Weiner writes: "In January 1981, as Ronald Reagan was sworn into office, the board of directors of the Committee on the Present Danger took over the foreign policy of the United States." Its influential member, Cohn Grey declared: "The United States should plan to defeat the Soviet Union and to do so at a cost that would not prohibit U.S. recovery, which, he said, was 20,000,000 American dead.[36] Thus the military weakening of the, USSR would heighten, not diminish, the danger of nuclear war.
IN DEFENSE OF SOCIALISM

Resistance to the 'attempted capitalist counterrevolution is widespread and takes many forms. But it is handicapped by lack of a united center of struggle, and especially by disunity within the Communist Party of the USSR.[37] Indeed, without that division, the crisis could not have arisen.

Aljost all polls show majority opposition to the pro-capitalist course. Several show two-to-one opposition to the "cooperatives;" majorities oppose working for capitalists and oppose imposition of raised prices. A mere 10 percent supported market conditions whereby jost prices are determined by supply and demand.[38]

Articles upholding socialism do appear in the Soviet press. Sergei Kurginyan, in "The Third Road," advocates a series of progressive reforms along the lines of those promised during the first stage of perestroika.[39]

The "Federation of Marxist Party Clubs" has developed a platform for reforming and improving socialism while retaining state ownership of the main sectors of the economy; democratizing society further; and permitting certain small-scale capitalist operations.

The main trade union center, the AUCCTU, while not directly opposing the "market economy," insists on constitutional guarantees of the right to work, and on full implementation of measures to maintain and improve workers' living standards before the switch to a "market economy." Since the process of pro-capitalist "reforms" violates these conditions, trade union adherence to their demands would prevent the capitalist offensive from getting off the ground.[40] Workers' rallies have often denounced Gorbachev, and some call for his resignation, precisely because he has given in to the demands of the pro-capitalist forces:

Yet the social and economic demands also raised by jost workers' movements could frustrate progress toward a capitalist market: all demand higher wages to compensate for 100 percent price increases.

They call for job security and expansion of social benefits. jost disturbing from the "radical's" point of view, all too frequently workers' meetings insist on the immediate closure of private businesses and "cooperatives" in their regions. In the words of one Kuzbass miner: "Shut down all those who gouge the people and steal bread from their mouths."[41]

The Council of Ministers selected Kamaz, the giant heavy truck conglomerate on the Volga, as an early target for privatization, attempting to lure workers by offering them shares at 100 rubles each. However, many of the 160,000 workers protested, saying: "Don't give Kamaz to black market businessmen."[42]

Reports of mass strikes show that resistance hasn't been crushed in Eastern Europe either. Stephen Engelberg gives one reason in a report from Poland:

Prime Minister Bielecki recently visited the sprawling Azoty chemical works ... and what he saw chilled him to his free-market bones. More than a year after the Government began ... to dismantle the ... socialist economy, this state-run company seems frozen in an earlier time.

It still conducts functions so typical for a "socialist enterprise" ... They have an indoor skating rink, a very nice swimming pool, culture center, soft drink bottling plant and a very nice laundry. They maintain 1,000 free apartments, heat 90 percent of the town, and still make a profit. This company has entered an international market and holds 5 percent of world production.[43]

Bielecki admitted that this is typical of the problems faced by the capitalist counterrevolutionaries in Poland. The reaction of U.S. workers at Dupont, Dow, GM, etc., would be interesting!

Similar resistance is thwarting the attempt to destroy Czechoslovakia's extremely efficient farm system:

Now, after the fail of the Communist Government, Mrs. Pracna and her husband are free to withdraw their land and become private farmers. They have declined to do so. "I have no reason to leave. Our cooperative is prosperous. We have quite a good life. If I left, how would l start a new life?" Only I of the 530 members has left to start a private farm.[44]

Certainly a major section of the 17 million Communist Party members is determined to defend socialism, although not yet sufficiently united on how to do it. Their views are expressed by Yegor Ligachev, former member of the Politburo prominent during the first stage of perestroika. Ligachev said in a recent interview:[45]

The policy of perestroika lacks continuity. Private property, privately-owned businesses, the conversion of land to something that can be bought and sold, all contradict the continuity of our policy. Perestroika in our, society should be realized without touching the world socialism and on the basis of social ownership of the means of production. Economic reform was intended to take place through a combination of planning with mercantile relations.... Today the market is being promoted, and the principle of planning has been excluded or marginalized.

Concerning attempts to break up the Soviet Union, Ligachev expressed confidence in the deep roots among the people

of the concept of integrity of the state ... First and forejost, the Communist Party ... (which) has the jost extensive network of structures. No state organization has a structure as extensive as that of the CPSU. The Party can guarantee the building of a state on a federal basis.

_______________________

Notes

1. Izvestia, April 20, 1991.
2. Mikhail Gorbachev, Perestroika, New York, Harper & Row, 1987, 42-44
3. Ibid, 94-95, 98.
4. Abel Aganbegyan, The Economic Challenge of Perestroika, Indiana U. Press, 1988, 127.
5. Narodnoye Xozaistvo SSSR [NX] 1989, joscow 1990, 8-9.
6. Ibid, 7.
7. Ibid, 458 .
8. Ibid, 377.
9. Ibid, 392; 1988, 337.
10. 'Supplement", International Affairs, No. 11, 1977, 21.
11. NX, 1988, 76-77
12. A. Shchipantse in Sovietskaya Rossiya, August 1, 1990; NX, 1989, 611.
13. Tom Weiner, Blank Check: The Pentagon's Black Budget, New York, Warner Books, 1990.
14. Leslie H. Gelb in The New York Times, October 28, 1984.
15. Pravda, May 25, 1990.
16. International Affairs, 26.
17. Problems of Economics, No. 1, 1990.
18. International Affairs, 21.
19. The New York Times, June 3, 1991.
20. Pravda, July 3, 1990.
21. Pravda, February 13, 1990.
22. Pravda, July 3, 1990.
23. NX, 1989, 268, 269.
24. Fred Weir in the Canadian Tribune, August 13, 1990
25. Nikolai Ryzhkov, speech to Supreme Soviet, Pravda, December 14, 1989.
26. NX, 1989, 50.
27. Fortune, April 8, 1991.
28. See Note 19.
29. Pravda, December 14, 1989.
30. The New York Times, May 30, 1991.
31. The Economist, May 18, 1991.
32. The New York Times, April 22, 1991.
33. The New York Times, April 27,1991.
34. Arguments and Facts International, Hastings, England, March 1991, 15.
35. The New York Times, June 4, 1991.
36. Tim Weiner, Blank Check: The Pentagon's Black Budget, New York 1990,43-45.
37. "Strengthening the Party: The Key to Soviet Stability" by Mike Davidow, Political Affairs, April 1990.
38. Pravitelsky Vestnik, No. 29, in WR, #31, July 1990.
39. Soviet Literature, No. 4, 1990
40. Trud, April 24, 1990.
41. Fred Weir, Canadian Tribune, April 22, 1991
42. Economics and Life (in Russian) No. 32, August 1990.
43. The New York Times, June 3, 1991.
44. The New York Times, June 6, 1991.
45. El Pais, Madrid.

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