The Problem of the Socialist Market

by Emil Bjarnason

All visitors to the USSR (and the East European socialist states) were inevitably confronted by more or less incomprehensible shortcomings, some of which appeared to contradict the very essence of socialism. I refer, for instance, to the persistent presence of the black market, manifested by seedy characters offering to buy Western currencies at exchange rates many times more favourable than the official rates and to the existence of the so-called “dollar stores” where persons with access to Western currencies could purchase goods not available to the local citizens; to the incredibly inefficient telephone system, operating without benefit of telephone books; to the facilities of Europe’s largest hotel, the Rossia, with its 26 cafeterias with cash registers consisting of a cigar box and an abacus, and this in a country that was capable of outstripping the United States in the technology of space exploration. Another phenomenon apparent to many visitors was the casual approach to work in Soviet industries.

All of these negative phenomena are attributable to the failure to develop a socialist market. That, more than anything else, is responsible for the current well-nigh universal habit of contrasting socialism with the “market system” which in the present-day literature of both East and West is treated as being the distinguishing feature of capitalism. Nowhere in the works of Marx, Engels or Lenin will one find a description of socialism which requires that all enterprise from the corner kiosk to the manufacture of space satellites should be owned and operated by the state and that all prices should be determined by decree from the centre (it is reported that the central government decreed the unvarying prices of over eight thousand commodities).

The function of market prices is to regulate the allocation of resources in an efficient manner. This means that prices must be flexible. For example, the management of a factory manufacturing widgets should be able to reduce their price or curtail their output if they find that their product is accumulating, unsalable, in warehouse inventories, or to raise prices if the demand could not be satisfied at the existing price. Instead, the production decision was governed by a central plan, which laid down an increase of x%, and if the product could not be sold at that price there was compensation by subsidies. There is no question that this practice had a great deal to do with the precipitous fall in rates of growth which began during Krushchev’s seven year plan and continued under his successors.

The failure to develop a socialist market was also responsible for the failures of trade among the socialist countries. In defiance of the most elementary principles of economics all such trade was carried on in a bilateral way. This led to the fact that banks would exchange their own currencies for those of any capitalist country and vice versa, but they would neither exchange nor accept the currencies of fellow socialist countries except in government negotiated trade deals. If Poland, for example, were to sell agricultural products to Czechoslovakia, it would receive in exchange Czech currency which would be used only to buy Czechoslovakian goods. Since it would rarely happen that Poland’s need for Czechoslovakian goods would precisely match Czechoslovakian requirements for Poland’s goods, and the excess Czech currency could not be spent elsewhere, all the socialist countries found themselves in possession of huge unusable balances of each other’s currencies. What they were doing, in effect, was turning the clock back to the primitive era when the only form of exchange between neighbouring tribes was barter. An attempt was made in 1970 to remedy that situation by introducing the “transferable ruble” as a common trade currency for all socialist countries but only with respect to capital goods. It never advanced beyond that point and all of the socialist economies suffered accordingly.

In the Marxist classics, socialism is treated as a transitional form leading eventually to communism, which would only come about when the output of goods and services had reached the level where there was no need for restrictions on consumption. Few people other than Krushchev had any illusions that the communist stage could be attained, especially in Russia, without a long transitional period. In the meantime, as Lenin clearly recognised, socialism would continue to carry some of the features of capitalism, including market relations.

This does not have to mean that all enterprise has to be privately owned and operated unless one upholds the absurd notion that the ownership of the means of production by the workers means their ownership by the state, which is ultimately fated to wither away. In socialist society enterprises could be owned and operated by cooperatives, local soviets or governments, regional governments or indeed the central government. Each such productive unit would have to be accountable for its own operation and for adjusting prices in accordance with supply and demand, subject to national regulations with respect to safety, environment, etc. Price controls could also be maintained on certain items such as milk, medicines and rents. Suffocating bureaucracy did not have to be an inevitable feature of socialism.

Spark! #10, pg. 17-19

“Free Trade”: Neither Free nor about Trade

Christopher D. Merrett, Black Rose Books; 1996

Reviewed by Emil Bjarnason

Christopher Merret has produced the definitive scholastic study of the US/Canada Free Trade Agreement and NAFTA. It is unlikely that any future writer on the subject will match it for depth of theoretical and historical exposition nor for the breadth and depth of its statistical and analytical documentation of the conclusions reached.

The book examines in depth the following matters:

1. Free trade and social change

2. Continentalism versus Nationalism

3. The Canadian Economy and Free Trade

4. Canadian labour and free trade

5. The Canadian Welfare State and Free Trade

On the first point above, Merrett develops in outline the relationship of free trade doctrines to the dynamics of North American economic and political relations. Here he introduces a concept which he calls “Fordism” – a term he attributes to Gramsci – which many readers will probably object to while agreeing with its content. He explains that Henry Ford “introduced the radical idea that mass production of automobiles or any other product could be sustained only if accompanied by mass consumption. In order to have mass consumption, the minimum wage had to be raised to allow workers to buy more than just the bare necessities.” Having thus established its definition, throughout the book he uses the term Fordism to refer to the Welfare state and in particular to the social legislation that sustained relative capitalist prosperity during the first thirty postwar years.

He goes on to argue that United States “Fordism” begins with the Wagner Act of 1935 which gave workers the right to organize in exchange for non–interference in the realm of production. The ruling class was willing to accept such a bargain to save capitalism from the consequences of the great depression, but only with the caveat that labour’s traditional militancy must be curbed. This was accomplished by McCarthyism, the Taft Hartley Act and other anti-labour measures designed to curb radicalism.

However, even the welfare state could not forever contain the contradictions of capitalism and from the point of view of the capitalists, by the 1970’s new ways had to be found to nourish the profits of capital. Thus the Keynesian economics of Fordism had to be abandoned in favour of traditional free enterprise doctrines for which government interference , regulation of business, environmental controls, health and safety standards and all other impediments to investment were anathema. For both Canada and the United States, free trade was a subtle strategic approach for achieving these goals.

In the chapter on Continentalism versus Nationalism, Merrett discusses in depth the “genealogy” of free trade theory, pointing out that while its proponents have been more or less consistent in upholding the doctrines of Adam Smith and David Ricardo, their objectives have been political rather than economic and their advocacy of the classical theories directed to political ends. Moreover, however true the theory of comparative advantage might be, it rested on assumptions of perfect markets and other conditions that are rarely found in practice. In the specific case of Canada, for example, it is easily shown that Canada has a “comparative advantage in the extraction of minerals and other raw materials and therefore rigorous adherence to free trade could only reduce Canada to a country of hewers of wood and drawers of water.

Apart from that there is the fact that Canada, as a country, has always been critically dependent on an east to west orientation of trade. Once free trade is adopted, it is replaced by a north south orientation which is a recipe for the fragmentation of Canada. Free trade also means the abolition of the subsidies to transportation and regional development as well as interregional transfers of income, which have held the country together, but which in American eyes are regarded as subsidies and therefore as impediments to free trade.

The propaganda which led up to free trade featured smooth–talking lies about the objectives of free trade and the supposed protections built into the agreements which in practice have been repudiated as rapidly as they were raised. It is not easy to forget Simon Reisman’s assertion that the opponents of free trade were Nazis who used Goebbel’s technique of the Big lie to spread anti-FTA propaganda nor Mulroney’s assurance that Canada’s welfare legislation was a sacred trust.

The Canadian Economy and Free Trade

It is one thing to draw conclusions about what would be the consequences of a particular set of policies. It is usually more difficult to prove one’s conclusions. Merrett has done yeoman work in testing and demonstrating everything he has said about the subject of free trade and in particular about its effects on Canada. He begins this chapter with the assertion that “In seeking and negotiating the Canada-United States Free Trade Agreement (FTA), the Progressive Conservatives initiated a process whereby Canadians voluntarily surrendered broad powers to control their economy, maintain the Welfare State and promote cultural sovereignty without gaining commensurate supranational power at a continental level. The FTA opened up the less efficient Canadian private sector to possible takeover by American competitors. Free trade also initiated a process whereby Canadian economic and social policy could be harmonized with that of the United States.”

The concessions to U. S. capital began even before the agreement to negotiate free trade. In Mulroney’s determination to implement continentalism, he had already given in to U.S. demands 1)to revalue the Canadian dollar to make Canada’s exports less competitive with the U. S. 2) to dismantle the Foreign Investment Review Agency, under which foreign investors were required to show how many jobs would be created by their investment, and what expenditures they intended to make for research and development and 3) to abolish the National Energy Policy which laid down rules for the development of Canada’s oil resources, including requirements of Canadian ownership. In short Mulroney set out to convince the U.S. that it would be an obsequious partner in a free trade pact. But the pact itself opened the way to unrestricted takeovers of Canadian industries and resources. Already by 1989, the percentage Canadian control of resources had dropped from 48 percent to 42 percent. After the adoption of FTA mergers and takeovers proceeded apace. An appendix to Merrett’s book lists 196 takeovers involving job relocations from Canada to the United States and Mexico, involving a total of 42,062 jobs. That process continues unabated.

According to the advance propaganda, free trade was supposed to improve Canada’s foreign trade balance by opening up the U. S. Market to Canadian goods. Actually, Canada’s balance of payments with the U. S. is shown in the book to have been lower in every year from 1985 to 1994 than in the last year before FTA. On the other hand it is shown that for 19 leading industries, the U.S. share in the Canadian market increased between 1987 and 1991 by percentages ranging from 1 to 20 percent.

Contrary to the claims of proponents of free trade, Canada’s growth rate of industrial production which, until 1988 had been consistently above that of either the United States or the average of the OECD countries, began a precipitous fall until by 1993 it had dropped to about one percent while both the U.S. and OECD averages were up by 16 percent.

The sad fact is that free trade has trashed Canada’s manufacturing industries which, in index form are down two percent since the beginning of free trade, while in both the U.S. and OECD manufacturing had increased by 20 percent. In 1989 employment in Canadian manufacturing was 1,900,000 persons and only three years later it was down to 1,493,000, a reduction of 21.4 percent.

Contrary to the assurances that were given to Canadians before the FTA was signed, the American government has with considerable success targeted our steel industry, auto industry, softwood lumber, agriculture and fishing industries as victims of its tactics under the umbrella of the FTA.

Canadian Labour and Free Trade

It is by now perfectly clear that the main purpose of FTA and NAFTA has been to raise the profitability of capital at the expense of labour. In the United States that has been much more easily accomplished than in Canada, since the American labour force is only 15% unionized compared with 35% in Canada. Moreover, after being lashed for fifty years by anti-communist, anti-labour and anti-welfare legislation the US labour movement has been thoroughly cowed. The objectives of both U.S. and Canadian capitalists are therefore to use the provisions of FTA and NAFTA to impose American standards on Canadian labour.

Unemployment rates have usually been somewhat higher in Canada than in the U.S.A. But the difference has widened drastically since the adoption of the FTA. Merrett refers to the fact, well–known in Canada, that the Bank of Canada under both John Crow and Gerald Bouey promoted high interest rates for the explicit purpose of increasing the rate of unemployment. The bank has been quite open about the fact that it uses high unemployment to curb wage increases and keep them below the rate of inflation.

Not only does “free trade” result in lowered wage rates in Canada, but it also encourages further processes by which the earnings of Canadian workers are depressed: These are encompassed in the innocuous sounding phrase Job Flexibility. This includes the promotion of part-time work and home work, both of which are important ways of saving money at the expense of workers. But more devastating than either of these is the restructuring of the economy from goods-producing to service-producing industry. The statistics quoted in Merrett’s book show a roughly 20 percent transfer of jobs from the former to the latter. Since goods producing jobs are relatively high-paid and a considerable proportion of service jobs are either at or near minimum wage levels, the result is a drastic fall in overall average wages.

The Canadian Welfare State and Free Trade

“With its more overt focus on capital accumulation, the State has allowed greater social inequalities to develop in the name of economic growth”. Following this statement, Merrett goes on to develop his theory that economic crisis beginning in the late 60’s undermined the foundations of the welfare state as a mechanism for mediating the class struggle. Monetary policies designed to control inflation, operated mainly through high interest rates. This made it difficult to continue legislated full employment and other social security guarantees. Within the North American context Canada found itself especially targeted for the new paradigm, because of its much more highly developed welfare institutions. Nothing but “free trade” would suffice to “bring down the ‘social wage’ and create a more flexible and compliant workforce”.

The book then goes into great detail to describe the cuts to social programs of health, unemployment insurance, education, etc. Accompanying such cuts was a restructuring of the taxation system to greatly increase its regressive nature. There is no mystery about the coincidence of the GST with the FTA. Nor is there any mystery about the fact that the Liberals, having attained power by attacks on the Mulroney free trade and GST policies, proceeded to carry them forward and accompany them with even more savage cuts in social programs. They are, after all, simply the alternative wing of the capitalist ruling class. What confuses innocent voters is the fact that provincial NDP governments have largely bought into the new “economic reality.”

Christopher Merrett’s book is, of necessity a gloomy read, but it is a necessary one for all who desire to develop Marxist answers to neoconservative continentalism, and to arm themselves with the facts and arguments to support such answers.

Spark! #10, pp.45-49

Workfare: Ideology for a New Under–Class

Edited by Eric Schragge, Garamond Publishers. Paperback $21.95

Reviewed by Barbara Moore

Eric Shragge of the School of Social Work, McGill University, has brought together academics, action-researchers and front-line anti-poverty workers in this edited contribution to the debate surrounding the controversy of workfare in Canada and the United States. The authors provide readers with a range of definitions of workfare, case studies of actual workfare programmes and their political analyses of state social assistance policies in New Brunswick, Quebec, Ontario, Alberta and the United States. Each chapter gives documented evidence that workfare programmes are not an effective strategy for full employment, particularly in the long-term. The main point all the authors present comprehensively from their different experiences and perspectives is that even with solid evidence pointing to the dismal failures of workfare programmes, governments continue to pursue these punitive social policies.

Shragge begins the book with a brief historical overview of social assistance and welfare reform going back to the Elizabethan Poor laws of 1601 and forward to the current devastation of the Canada Assistance Program, which was scuttled by the Chrétien government on April 1, 1996. The Canada Assistance Program was introduced by “the Just Society” in the mid-1960s as a means to distribute welfare as a human right. There were five national standards guaranteed under CAP:

• the right to income when in need;

• the right to an amount of income that meets basic requirements;

• the right to appeal a welfare decision one feels is wrong;

• the right to income when in need regardless of the province you’re from;

• the right not to have to work for welfare.

With the loss of CAP, most of these rights were eradicated, leaving Canada and the provinces in violation of the United Nations Covenant on Economic, Social and Cultural Rights, which Canada and the provinces signed in 1976. Yet, even before CAP was destroyed, the right not to have to work for welfare had already been challenged by the McKenna government in New Brunswick as early as 1987, when Canada and New Brunswick signed their first five-year “Employability Enhancement Agreement”. That CAP was not ever properly enforced within provinces and municipal units while it was official federal policy is not something addressed to any real extent by the authors and could have been a welcome addition for the sake of a full comprehension of the very real problems associated with the administration of social programmes since 1966.

Shragge does include in his overview of workfare Marxist analysis of the unemployed as part of the “reserve army of labour” tied into the labour process as a relative surplus population. Shragge offers,

Workfare policies tie this surplus population to the discipline of the labour market, and workfare is the means of marshaling them towards it.... Workfare can therefore be understood as the contemporary means of attaching those on welfare to the labour market. The central contradiction is that the number of jobs is scarce relative to the increasing number of people dependent on welfare. Why, then push people into the labour market? (page 30)

Shragge contends that due to this fixation on workfare, the state is ignoring the fact that we are actually facing a crisis of work – that is, rising structural unemployment. He also points out that the state is also ignoring the central issue of the redistribution of income and wealth. That is hardly a surprise given that our capitalist state is structured to legitimate capital accumulation.

Under the title, “The Politics of Workfare: NB Works”, Robert Mullaly builds on his previously published work with Joan McFarland (1995) regarding the reality of New Brunswick’s workfare program. NB Works is described as a work/learnfare project which is financed and administered by the federal government and New Brunswick with the province in charge of its delivery. Mullaly examines the New Brunswick experience along two dimensions: the program’s service functions and its political functions. In its service function, the McKenna government was careful to project the main problem to be the unemployed and not unemployment per se. Those targeted for NB Works are those who: a) have been in receipt of social assistance for at least six months; b) are entitled to a higher range of income support (e.g. single mothers and two-parent families); c) have less than grade twelve education but at least grade seven; d) have little or no labour force attachment; and e) are assessed as having the greatest potential for success in the program. NB Works is shown to be a very expensive program to administer. Of the 3,000 participants targeted for the program, a budget of $177 million over six years was allocated (or $59,000 per person). Because a whopping two-thirds of participants have already dropped out of the program, there is strong doubt that the program will ever produce successful results of long-term employment. Mullaly includes a section giving participants’ own views of NB Works; the reasons for the program’s failures becomes evident in their complaints.

The political function NB Works was to achieve for the McKenna government was image building for the Premier and the province. New Brunswick holds an image in Canada as a poor, depressed and stagnant ‘drive-through’ province which McKenna was anxious to change in order to attract more big business and economic development. Mullaly delves into the “McKenna magic” image machine, which kept McKenna popular with business and the public alike. Reforming welfare with NB Works actually reduced the Province’s short-term welfare costs and brought in new federal funds while giving McKenna an image of “being innovative and progressive” with respect to getting recipients off social assistance and into waged work. In reality, the only jobs actually created were for the service providers who administered and worked for NB Works. One could assume that with the high failure rate of the program, those service providers may be in danger of losing their jobs as well.

Workfare in Quebec is reported by Shragge and Marc-Andre Deniger and is characterized as a shift from welfare to workfare, a reduction in social spending, an increase in the complexity and bureaucracy of the social assistance program, and the erosion of collective rights and freedoms. They report on the evaluations of workfare programs such as Rattrapage Scolaire, EXTRA (Expérience de travail) and PAIE (programme d’aide à l’intégration en emploi) which demonstrate that the results are no more than “a way of rearranging the order in the lineups of the unemployed”. They state:

Workfare therefore functions in the short term as a form of direct subsidy to private employers and in the long term as a weapon to reduce labour costs, degrade working conditions and weaken trade unions. Whether or not these programs were designed with these goals in mind is not really relevant. The fact is that they provide these functions very effectively by mobilizing (in Marxist terms) the reserve army of labour. (pg. 81)

Shragge and Deniger do admit that some community groups have actually made gains from the workfare programs. For instance the Notre-Dame de Grace Anti-Poverty Group was formed by people on welfare to protest against the Bou–Bou Macouttes and Bill 37, the 1988 welfare reforms in Quebec. Once the bill was passed, the NDG-APG sponsored an EXTRA project which brought in some needed funds and a way to work closely with those on social assistance. The training provided to recipients actually created social solidarity and produced some creative programmes which could be advantageous to those receiving assistance. This could also mean that when community-based social programmes receive adequate money to support their needs, creative experiments can be successful in producing long-term employment and advantages for the workforce overall.

In reviewing the workfare programmes in Ontario and Alberta, Ernie S. Lightman and Jonathan Murphy give an in-depth look at the politics in each province which produced the punitive social programmes there. In the case of Ontario, the failure of the Rae NDP government to follow through on promises to welfare recipients set the stage for the conservative agenda of Mike Harris’s Common Sense Revolution, which promised to give people on social assistance “a hand-up rather than a hand-out”. Shaped entirely by a right-wing ideological agenda, the Harris approach is shown as nothing more than the work-relief programs of the 1930s, with a nasty edge. In Alberta, the litany of ‘work or starve’ programmes have meant unbelievable hardships for those needing assistance. For instance, presently in Alberta, single parents with children over the age of six months are now required to look for work ­– in the past, they has been exempted until their youngest child was two years old; 2,600 welfare recipients between the ages of sixty and sixty-five have been forced to take their Canada Pension Plan benefits early meaning a permanent 30 per cent loss in the value of their pensions; and special food allowance for diabetics and pregnant women have been reduced. While touting the success of their workfare programmes to get people off of welfare, the Alberta government refuses to monitor their programmes or allow in-depth evaluations to reveal whether there are really successful or not.

Workfare in the U.S.A. is described by Donna Hardina as a product of political rhetoric based on the assumption that most welfare recipients are teenage mothers, primarily African Americans, who do not value work. As Hardina asserts,

“Culture of poverty” ideology has also been used to justify social engineering programs that provide a system of benefits and sanctions designed to enforce low wage work; there is no empirical evidence that supports the notion that most welfare recipients do not wish to work. Researchers have not found differences between welfare recipients and non–recipients in attitudes toward work nor have major differences in attitudes toward work been found among members of diverse ethnic groups. (page 133)

Hardina also shows that welfare benefits are now being downloaded from the federal government to the individual states. In many states, eligibility for assistance is at the whim of state legislators. As seen earlier in the New Brunswick examples, most workfare programs have not placed people in long-term jobs. Instead, women who are heads of households are being forced into the low-wage labour market, their care giver role as a single mother is being devalued and there is a steady promotion of having women return to traditional two-parent households. Hardina describes this as a “victim blaming” ideology where “low income single women will continue to be oppressed by patriarchy for perceived immorality and lack of a work ethic”.

The most interesting contribution to this book is by Jean Swanson, who has long been associated with the National Anti-Poverty Organization in Canada and is a strong advocate for the poor. Ms. Swanson directs us to “resist workfare” in order to challenge the most fundamental myths that our economic system is based on. She aptly describes the myths and the “social policy newspeak” that justifies workfare, such as “breaking the cycle of poverty”, “disincentive to work”, “training for the jobs of the future” and the phrase the “truly needy” as she reminds us that “lost in the dialogue is the status of the truly greedy, who continue to use their tax breaks and incentives to accumulate wealth”. By turning the social policy newspeak phrases on to the wealthy, she shows how ridiculous they really are in examples like, “Would the wealthy have more self-esteem if they worked for their money, rather than inherit it?”.

Swanson calls for more education to challenge the myths so many have accepted and she asserts that all groups in Canada who are seeking social justice must get actively involved in putting an end to poor-bashing. She also calls for resistance against workfare at the United Nations level as well as in local, regional and national arenas, and her ‘transformative’ idea of resistance suggests a humane alternative to the exploitation of workers and the unemployed alike by building a broad social movement for a just society “where decent jobs at decent pay exist for all who need them, and where people who can’t take paid work will be supported adequately and with respect and dignity”.

Shragge has greatly added to social policy debates with the contribution of this book to the study of workfare. This work will be invaluable in the analysis of social welfare policies in Canada at the university level. Yet the book uses clear language to discuss the theoretical arguments as well as actual case studies, which should be of interest to all progressive thinkers. Anyone who is a member of an active social movement in Canada would greatly benefit from the historical documentation to the challenges given us by Jean Swanson and her challenge to unite against our oppressors.

Spark! #10. pp.40-44

Revolution From Above: The Demise of the Soviet System

David Kotz with Fred Weir; Routledge: London & New York; 1997, 302pp
Reviewed by Roger Perkins

This valuable book does not give all the right answers; nor does it even ask all the right questions. But it does convincingly refute claims by capitalist ideologies that the Soviet economic system was not viable and had to eventually collapse due to fatal economic contradictions. Nor were the party and state inundated by an upsurge of the populace demanding “freedom and free markets.” The vast majority of Soviet citizens remained loyal to socialism. However, according to Kotz and Weir the top leaders of the CPSU and the top holders of governmental power (The “party-state elite,” but not Gorbachev personally) consciously decided to transfer their allegiance from one socio-economic formation to another, in other words the Soviet Union was betrayed at the very top by leaders who preferred capitalism to socialism. Astounding as this conclusion may seem to Western anti-communists and many socialists, the authors persuasively document this process. The book provides a chronology of events – who did what, where, when and why. It also supplies extensive tables, charts and graphs which indicate a slowing (but not collapsing) Soviet economy. Such data is absolutely necessary when analyzing socio-political events.

The authors are not Marxist-Leninists. Kotz is a university professor of economics with sympathies for “democratic market socialism.” Weir is an ex-member of our party, an admirer of Gorbachev, and former Moscow correspondent for the Tribune. Weir writes well, is a perceptive observer of social and political detail and has extensive connections to many of the ex-Soviet Komsomol (YCL) leadership from which many of the new capitalists emerged. In the introduction it is observed that:

The sudden demise of such an economically and militarily powerful entity as the Soviet Union, in the absence of external invasion or violent internal upheaval, is unprecedented in modern history.

The appearance of this qualitatively new social phenomenon is not further developed by the authors but present and future revolutionaries should take note that a relatively “peaceful” transition from socialism to capitalism is possible under certain conditions if revolutionary vigilance and class struggle against the internal enemy is not maintained. But why Kotz and Weir characterize this phenomenon as a “revolution” instead of a counter-revolution is puzzling. Perhaps their ideological spectacles have been misted over by a gloomy “post-modernist” fog and they no longer view history as having directional qualities.

But revolutions do not happen without the fruition of a revolutionary situation. The same rule should apply to counter-revolutions. To the authors’ credit they do set the Soviet demise within such a framework and write:

...The particular form of economic administration adopted in the Soviet Union ... did have severe flaws, which grew more serious over time. The soviet people’s yearning for freedom and democracy did play an important role in the demise of the system. So did Western pressure. And if not Gorbachev himself, some of his top aids did abandon any belief in socialism while occupying influential positions. However none of these factors individually or together can adequately explain the course of events. (p.4)

In the authors’ view the counter-revolutionary situation was created when

...A new leadership under Mikhail Gorbachev set off on the path of major structural reform, the aim being to democratize and renew Soviet socialism. However, unforseen by Gorbachev and his fellow reformers, the economic, political, and cultural reforms they carried out unleashed processes that created a coalition of groups and classes that favored replacing socialism with capitalism” (pp.4-5)

In other words, Gorbachev’s perestroika and glasnost created the counter–revolutionary situation!

Once the future course of the Soviet Union was opened to serious internal debate by the policy of glasnost (openness) support for capitalism grew with astonishing speed within this elite, because that path appeared to offer the only way to maintain, and even increase, its power and privileges. (pp 5-6)

The authors conclude that:

The ultimate explanation for the surprisingly sudden and peaceful demise of the Soviet system was that it was abandoned by most of its own elite whose material and ideological ties to any form of socialism had grown weaker and weaker as the Soviet Union evolved. (p. 6)

But what exactly was the “party-state elite”? Was it a Soviet “bourgeoisie”? Although owning no capital, did it nevertheless exist somewhat like a national minority living within another nation – the source of its identity and culture being external? Or was it an entirely new class similar that long ago postulated by many anti–communists including the Yugoslav revisionist Milovan Djilas or the Trotskyite/conservative James Burnham? Or was it not a class at all but a bureaucratic stratum, a caste or an estate? Was the Soviet “party-state elite” made up of “deformed workers” and the Soviet Union a “deformed workers’ state”, as most Trotskyites maintain? Or was the Soviet “party-state elite” a nomenklatura/intelligentsia conglomerate containing various chunks of the above, but cemented together by an anti-working-class world outlook? Kotz and Weir don’t elaborate, confining their analysis to the concept “elite”, but do estimate its size at about 100,000 people. The closest we get to an answer is the statement that the Soviet Union was overthrown by a pro-capitalist “coalition of groups and classes”. But which were groups and which were classes? Because the authors never did an adequate analysis of the class structure of the USSR under Gorbachev, we are left with the knowledge that at least two classes participated in the overthrow of Soviet socialism without having those classes named or identified as a class.

Whatever the nature of the Soviet “party-state elite” (much more theoretical work is necessary), it seems to have had determinative power. When the elite switched sides capitalism replaced socialism. The conclusion inferred is that the working class did not have state power (when did it lose it?). Nor were the “people as a whole” sovereign, as Khrushchev once claimed. In the authors’ view not only was the “party-state elite” sovereign, but it also ruled in an authoritarian, undemocratic manner. This undemocratic trend, they claim, is traceable to Lenin and the Bolshevik Party with its democratic centralism. While parties of this type

...were able to mobilize masses of workers... to fight for power, they were not conducive to constructing a democratic state after the old regime had been vanquished.

and

....the democratic centralist party, with its military–like structure, had a tendency to produce a top–down structure of power in the new state. The principle of setting policies by the top leadership, with the rank and file expected to carry them out without question, was extended from the party to the entire society. (p. 19)

Perhaps Kotz, but certainly Weir who was once a Communist, should know better than to approach the democracy question in the abstract. There is no such thing as “democracy” taken out of class context. Either through ignorance or design they further cloud the issue by referring to the practice of “setting policies by the top leadership, with the rank and file expected to carry them out without question” as “democratic centralism”. Anyone who reads Lenin knows that this is not a description of democratic centralism but of bureaucratic centralism. Democratic centralism requires the widest and most free discussion possible followed by a majority decision, followed by a unity of action in carrying out the majority decision, followed by re-evaluation, questioning and criticism of results obtained through practice. Whatever the errors of Soviet socialism regarding proletarian democracy, and there were many, including bureaucratic centralist deviations, the USSR for most of its existence was a million times more “democratic” than the most “democratic” bourgeois republic. The authors fail to grasp this concept.

As to the declining Soviet economy, Kotz and Weir point out that the rate of growth was slowing down but at no time did it become negative, at least until the very end when the policies of perestroika and glasnost took full effect. They believe that some decline in the rate of growth in newly industrializing countries (socialist or capitalist) is inevitable. In their opinion this natural trend was exacerbated by over-centralization, bureaucratism and lack of motivation. Their solution to this problem was more material incentives, decentralization and “market reforms” – i.e., a bigger, better perestroika! Kotz and Weir’s affection for Gorbachev and his reforms seem to override the presentation of evidence that such a policy could work.

Politics is concentrated economics; but economics is also concentrated politics. Would not a revitalized workers’ movement with a meaningful form of workers’ control go a long way to invigorate the Soviet economy? Would not a re-affirmed socialism with improved central planning have worked better than perestroika? After all, advances in digital information technology now make it possible to determine at 08:00 each morning the exact number, size, type, colour, style, price, material composition and regional sales trends of all shoes sold in the USSR the previous day. The authors do not seriously explore this option.

On the question of external pressure, Kotz and Weir convincingly disprove the widely held view that the “arms race” bankrupted the USSR. In fact Soviet military expenditures had declined slightly from 17% of Soviet GNP in 1950 to 16% three decades later. The authors reject any and all conspiracy theories. Even though it is widely believed by many in the former USSR that the CIA was heavily involved in the unfolding of events, Kotz and Weir give little weight to such possibilities. Apparently neither did Gorbachev. When Alexander Yakovlev, Gorbachev’s closest adviser and Politburo member, was accused of having been on the CIA payroll since his days as an exchange student at Columbia University in 1958­-59, Gorbachev is said to have ignored the evidence presented and done nothing. In any case, the importance of ideological subversion has been underestimated by this book.

The authors are correct about some sort of “party-state elite” changing sides. They are also right that perestroika and glasnost unleashed “unforseen processes.” But the dichotomy of the “good” Gorbachev who wanted renewed socialism versus the “bad” capitalist-roader Yeltsin is a much more dubious contention. Differences did indeed exist within the “party–state elite,” particularly regarding the pace of perestroika. Some even remained loyal to socialism. Gorbachev, however, was not among them if the word “socialism” has any Marxist­-Leninist content at all. Gorbachev’s “socialism” was the capitalism of right-wing social democracy. He believed (or at least stated publicly) that the concepts “socialism” and “capitalism” no longer had relevance in the modern world, a merging of the two systems was taking place. As commodity relations in the USSR increased, treachery itself became a commodity. Its level in the market place did not stop at Gorbachev’s social-democratic Sweden, but plunged to Yeltsin’s Russia with Third World qualities. Whether Gorbachev was objectively or subjectively a counter-revolutionary is of secondary importance to those ex-Soviet citizens now living under the horrors of capitalism restored.

Gorbachev as counter-revolutionary is, of course, not explored by Kotz and Weir. The now multi-millionaire Gorbachev has been rewarded with six figure fees for delivering one–hour speeches to assembled conservatives in the West. In the U.S. he flew from one speaking engagement to the next aboard Fortune 500 Steve Forbes’ private plane, appropriately named “The Capitalist Tool.” In an interview on PBS (96-10-23) Gorbachev revealed that the two historical figures he identified with and admired the most were Margaret Thatcher and Tsar Alexander II (no Marx, no Lenin?). Whether Kotz and Weir are habitués of Pizza Hut now that Gorbachev has signed a lucrative advertising contract with that firm is not known. But their characterization of Gorbachev as a sincere, honest socialist, at least during the Soviet period, has come under increasing attack by many knowledgeable observers, including the Soviet economist Stanislav Menshikov, who once worked in the International Department of the Central Committee of the Communist Party of the Soviet Union. Menshikov, reviewing Revolution From Above in the October 1997 issue of Monthly Review, claims to have personally heard that post-Soviet Gorbachev admit that he deliberately plotted to obtain the post of General Secretary by stealth, keeping his real views and intentions secret, with the goal of destroying the Soviet system. While such braggadocio could reflect the embellishment of reality by a late convert to capitalist counter-revolution, Menshikov believes Gorbachev was telling the truth.

Whatever the facts about Gorbachev, he could theoretically have been ousted, as was Khrushchev a quarter-century earlier. The bourgeois results of perestroika and glasnost could have been reversed if there had been a Marxist-Leninist core at the highest levels of the party supported by a rank-and-file proletarian democracy infused with Marxism-Leninism. Unfortunately this was not the case. Yeltsin, Shevardnadze, Yakovlev et al wanted a quicker pace to capitalism. The disorganized bunglers of the inept “Gorbachev-friendly” pseudo–coup wanted the pace of perestroika to slow but succeeded only in speeding things up by creating the conditions for the Yeltsin forces to stage a real coup. The opposition of “left” Politburo critic Yegor Ligachev proved more verbal than concrete. Kotz and Weir describe all this, but because they don’t believe in Marxism-Leninism they therefore are unable to classify what they observe as revisionism (or worse). It is the lack of this theoretical framework that is the major weakness of the book. The index lists “working class” seven times and not once past page 26, “Marxism-Leninism” four times and “revisionism” not at all. Class dynamics were forgotten; nor was the failure of the Soviet working class to alter the course of events focussed on. At least half of the forty-five volumes of Lenin’s Collected Works are polemics against revisionism of various sorts. The CPSU during the last period of its existence and the authors’ description of events are almost devoid of such concepts. The old Russian saying, “A fish first starts to rot at its head”, applies both to the CPSU as well as Kotz and Weir.

So what could have saved the Soviet Union? The last chapter of Revolution From Above entitled “Lessons for the Future of Socialism” is addressed to this question. Unfortunately the authors devote most of their exposition to the merits of “market socialism” in its several variations. The fact that the Soviet Union collapsed and disappeared immediately after the introduction of market reforms is not favourable to their position. Would not an earlier and more intensive “market socialism” in the USSR have created even more advantageous conditions for the “party-state elite” to restore capitalism? The authors seem to view the collapse as due to mistakes, uneven application and incorrect timing or pace which resulted in “unforseen events” that “unleashed processes.” In other words, the failure of perestroika was due mostly to happenstance. Perhaps under more propitious conditions it could have worked, they ponder.

The fact that the CPSU had been hollowed out by the cancer of revisionism and was no longer a Marxist-Leninist party did not strike Kotz and Weir as particularly important. But any revolutionary not in an ideological coma knows instinctively that the only way out of the terminal Soviet dilemma would have been the re-establishment of Marxism-Leninism with the working class asserting its power, if it still theoretically had it, or taking power if this power had been lost. Whether this was possible as late as 1989 can be debated by future socialist historians. Perhaps the Soviet Union had already gone past the qualitative point of no return – like a jet liner in irreversible stall. Fortunately, the rebuilding worldwide Communist movement still has time to study and learn the lessons of the Soviet demise. Revolution From Above provides data and chronology but must be judged defective due to faulty methodology and conclusions.

Spark! #10, pg. 34-39