The economic situation was in a mess. Even the niggardly target of 4 per cent had not been met. Since the launching of the new Five-Year Plan in 1986, growth had been about 2 per cent a year. The economist Abel Aganbegyan revealed that economic growth in 1989-90 was practically zero. But per capita income actually declined. This was the death sentence of perestroika. Moreover, participation on world markets had not helped but made things worse. The bureaucracy imagined that participation on the world market would solve their problems. Foreign trade increased in a decade from 4 per cent to 9 per cent of Soviet GDP. For a while it did help them, particularly in the field of technology. But it also gave rise to new contradictions which the narrow-minded empiricists in Moscow had not foreseen. The USSR’s debt to the West, which was only £9 billion in 1983, had now doubled to £18 billion. This was still quite small in proportion to the size of the Soviet economy, but gave an alarming answer to the question “who shall prevail?”
The economic crisis made itself felt in a fall in living standards, queues and food shortages. Out of 1,000 basic goods, only four were consistently available in the shops. This was a result of bureaucratic chaos. There had been a record harvest and plenty of grain and potatoes, but they did not reach the shops. Large amounts of goods were being held back in anticipation of price rises. One million tons of food was rotting in the ports. The trade union paper Trud gave an example of shop shelves which should have been full of fresh fruit and vegetables, but which only contained tins of Bulgarian apricots. This was in spite of increased agricultural production in 1984. Subsequently the situation got worse. According to the Soviet Weekly (8/11/90): “A staggering 70 million people – a quarter of the population are now living on the breadline.”
An article in Pravda on 18 October 1990 painted an alarming picture of social and economic disintegration:
The situation continues to worsen. Output is falling, economic supply links are being broken. Separatist tendencies are growing stronger. The consumer market is in a shambles. The budget deficit and the state’s credit-worthiness has reached critical levels. Anti-social behaviour and crime have grown. Life is becoming more difficult, incentives to work have weakened, faith in the future is collapsing. The economy is in a highly dangerous condition.
Shortages of food and other goods were endemic. The discontent of the population was fuelled by the realisation that these shortages were artificial – the result of bungling and sabotage. Vodka stolen from the shops was being sold on the black market at inflated prices. There were no cigarettes in the shops but plenty in the factories. Meat was left rotting in the warehouses. Demand was only satisfied by 66 per cent. The moment goods appeared in the shops people bought them up to hoard, thus adding to the shortages. The official press admitted that “over the past four years 13,000 separate items have disappeared from the shelves”. (Soviet Weekly, 1/11/90.)
The anti-alcohol policy broke down and once again there were long queues for vodka. On 22 August 1990, the accumulated anger and frustration boiled over. There was a riot in Chelyabinsk provoked by the breakdown of alcohol supplies. When the militia arrived, the crowd attacked them and forced them to withdraw:
The militia then closed shields in the ancient Roman testudo-fashion, but even that handmade fortress could not resist the onslaught of the furious mob. Surrounding the militia on all sides, the hooligans rained cobblestones at the troops from close range. (Ibid.)
The situation in Chelyabinsk was made worse by the scandal that subsequently emerged, involving the local Communist Party – “Public catering inspectors uncovered a secret warehouse full of delicacies at the Communist Party headquarters”. The same article admitted that: “The social and political situation at the time of the vodka riot was typical of that existing in several Soviet cities today.” In other words, the temper of the masses was reaching breaking point, and that any incident could provoke an explosion. It also showed that the masses were beginning to lose their fear of the repressive forces of the state. But in the absence of a serious alternative, a revolutionary party and a programme, the discontent of the masses found no effective outlet.
Faced with the blind alley of the regime, a growing section of the bureaucracy looked for a way out to the West, which was still passing through a temporary and artificial boom. The representatives of the bureaucratic elite had occasion to rub shoulders with millionaires, diplomats and presidents on their ever more frequent visits to the West. They contrasted this glittering spectacle with the picture of impasse and stagnation they had left behind, and the comparison did not appear very flattering. In this way, gradually the idea of the West as a model began to take firm root in a section of the bureaucracy.
This showed the complete ideological bankruptcy of the leaders of the Soviet Union and the CPSU. Shallow impressionists like Gorbachev and Shevardnadze were taken in. Like all bureaucrats, they had picked up bits and pieces of the garbled nonsense which passed for Marxism-Leninism in the USSR in their student days. But real Marxism was for them a closed book. Their complete lack of a class standpoint was shown by Gorbachev’s typically philistine remarks that the capitalists were ‘also human beings’. In other words, one could converse with the Western leaders ‘man to man’ and iron out one’s differences round the fireplace, as if it was all a question of ‘personal chemistry’ and not the irreconcilable differences between two incompatible social systems!
They were not the only ones who had jumped ship. The Bulgarian ‘Communist’ leader Todor Zhivkov admitted in 1990 that he had believed for a long time that socialism was dead and impractical. Jaruzelski, the author of the Stalinist coup, now said that it was all a terrible mistake and apologised to the Polish people! He too suddenly realised that “capitalism was the only way”. Such apostasy was only a logical step for these people. After all, they had broken with socialism in practice a long time before. This had been predicted by Trotsky half a century before, when he wrote that the bureaucracy would not be satisfied with their usurped power and privilege, but would seek to secure their position, and that of their children, by transforming themselves into private capitalists.
At first, Gorbachev attempted to resist the radicals’ demands for a quick movement towards capitalism. Ryzhkov had a similar position, in favour of maintaining the basic core of the economy in state hands but with elements of a market. Gorbachev continually vacillated between the opposing wings of the bureaucracy. In the meantime, the generals were getting increasingly restless about the Union treaty, and the threat to the USSR. Finally, towards the end of 1990, Gorbachev published the outlines of his plan. This was a hopeless mishmash of good intentions and contradictory ideas.
The stabilisation of the currency was to be achieved by a hard currency fund to finance foreign trade. There would be denationalisation, but only of small businesses, and only by degree; price flexibilisation; decentralisation (but maintaining the USSR); and, of course, deregulation of wages. Last but not least, a balanced budget of less than 3 per cent of GDP (this is what the Maastricht conditions stipulate for the EU states, who are finding it all but impossible to meet) through stringent credit controls. His conclusion was typically optimistic – “A balanced economy should emerge, with a market saturated with consumer goods and services”. But it was the optimism of a man walking off the edge of a cliff.
Gorbachev continued to pay lip service to ‘socialism’ and ‘communism’, but his entire conduct indicated that he did not believe a word of it. This was shown by one interview which he gave on British television when he repeated the absurd myth that all would have been well in Russia, if only the February Revolution had succeeded! This shows his complete lack of understanding of either the February or the October Revolution. We have dealt with this question elsewhere, so it is not necessary to expand on it. But what a condemnation when 70 years after October, the General Secretary of the CPSU could repeat such arrant nonsense.
While publicly lionising Gorbachev, Reagan and the other Western leaders must have had a good laugh behind his back. The cold, calculating American politicians and diplomats must have rubbed their eyes in disbelief! This accidental petty bourgeois element was rapidly drawn into the logic of capitulation by these nice human beings, who were intent on throttling the Soviet Union, and bringing it to its knees. To this day, Gorbachev continues to harbour illusions in ‘Western democracy’, or, to be more accurate, in ‘democracy as such’, typical of a middle-class reformist who imagines he can reconcile antagonistic class interests. And as with the latter, the appearance of ‘practical realism’ is only a fig leaf to cover the most pathetic impotence.
In all probability, Gorbachev did not want the restoration of capitalism in Russia, yet he prepared the ground for it and was duly thrown to one side by the faction of the nascent bourgeoisie, led by his protégé Yeltsin, once he got into the saddle. Nevertheless, he is quite prepared to accept the fait accompli of the so-called reform, while impotently whimpering about its ghastly consequences. In this respect, also he is a faithful copy of the Social-Democratic leaders in the West, who are ready to embrace capitalism, but do not like the things which inevitably flow from it.