What point has the crisis reached?: The Eastern bloc with both feet in the capitalist crisis

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More than all the figures and the scholarly analyses, the struggle of the workers in Poland in response to the increase in consumer prices that the state tried to impose in 1980 served to demonstrate not only that the eastern bloc had nothing to do with socialism, that the savage exploitation of the working class is the rule there, but also that, as the economic crisis deepens in Eastern Europe, the same old bourgeois solutions are put forward there as everywhere else: first and foremost, a draconian attack on the living conditions of the working class.  

The 1980s are the years of truth, and although myths have a long life, the illusion that socialism reigns in the east is collapsing under the blows of a crisis which is accelerating in the east as well as the west. The world crisis of capitalism, by its very existence in these countries, exposes the real nature of the system of exploitation which exists in the USSR and the countries under its imperialist domination.

The weakness of the Russian bloc faced with its rival

Today, we're a long way away from the blusterings of Khrushchev who, at the end of the ‘50s, in outburst of untrammeled optimism (in the service of Russian propaganda), believed that he could announce that the USSR would soon be catching up with the USA on the economic level, thus proving the superiority of so-called ‘socialism' over its western 'capitalist' rival. It's the opposite which has happened: Japan has caught up with the USSR as the second economic power on the planet. It's the eastern bloc which has become weaker in relation to its competitors: the Comecon countries (USSR, Poland East Germany, Bulgaria, Rumania, Czechoslovakia, Hungary) now only represent 15.7% of world production, whereas the USA alone represents 27.2%, and the OECD countries the crushing figure of 65.1% (1982 figures).                                                                                                       

The figures show quite clearly that the eastern bloc can't rival the west on the economic level: here the latter's superiority is overwhelming. The Russian bloc can only maintain its place on the world arena through its military power. And that means that it must sacrifice its economic competitiveness on the altar of arms production. Thus, while the Pentagon's budget represents 7% of the USA's overall budget, for Russia estimates vary from 10 to 20% of the overall budget dedicated to the military effort.

In these conditions, where the Red Army sucks the blood of the entire economy of the bloc, where its best products, its best brains are used for arms production, the rest of the economy loses all its competitiveness on the world market. In these conditions, not only do all the old traits of under-development persist in a chronic manner, but the whole bloc falls into under-development, stifled by the weight of the unproductive sectors, above all the military.

The acceleration of the crisis in the 1980s

The rates of growth which the eastern bloc countries enjoyed in the 1970s are now a thing of the past. While the USSR was able to maintain a relative growth at the beginning of the ‘80s, it was because of its position as leader of the bloc, which enabled it to push the effects of the crisis onto it weaker allies. Nevertheless, this growth clearly marked a regression in relation to the rates which the USSR usually attained in the past.






USSR's rate of growth





As for the other countries in the bloc, we saw a real recession at the beginning of the ‘80s. Take Poland: although in ‘83, the growth rate was 4.5%, this followed three years of decline:






Growth rate of Poland's GNP

(‘Annual Bulletin for Eastern Europe')





Of course, the development of the mass strike in Poland in 1980-81 was an important factor in this decline in production, but this certainly wasn't the case with Czechoslovakia, Hungary and Rumania which also suffered from the anguish of zero growth.





Growth rate of


Czechoslovakia's GNP




Rumania's GNP




Hungary' GNP




(IMF figures)


The recession in the eastern bloc has exactly the same causes as the one which hit the western bloc at the same time, the beginning of the ‘80s: it's part of the same movement of world recession.

The fall in exports of manufactured products out­side the bloc has dealt a heavy blow to the East European economies. Although trade with the west represents 57% of Rumania's exports, 35% of Pol­and's, 50% of Hungary's, the saturation of the world market and the consequent exacerbation of  competition have crushed the eastern economies' hopes of making profitable the heavy invest­ments of the 1970s. The wearing-out of the pro­ductive apparatus, the poor quality of the goods produced, the widening technological gap, have reduced to nothing all hopes of improving the situation, and the ratio of manufactured goods in exports to the west has tended to decline in rel­ation to raw materials. Thus, in Poland, indust­rial exports fell in 1981, ‘82 and ‘83, whereas coal exports increased. Today, the structure of Poland's exports to the west has returned to what it was in the ‘50s - i.e. 30 years of development have been cancelled out.

This fall in the eastern bloc's growth rate has been further accentuated by the austerity imposed by the USSR, which controls the sluice-gates of energy supplies and the deliveries of raw materials needed by the industries of Eastern Europe. Rather than being a great industrial power, the USSR is above all a great mining power. This is explicit in its trade with the west; more than80% of its exports is made up of raw materials. This expresses the relative under-development of the USSR, even in relation to the other countries of its bloc. Thus, in Czechoslovakia manufactur­ing industry constitutes 62% of the GNP as oppos­ed to 25% for the USSR. To maintain the level of its exchanges with the west and thus get back what it needs to buy the technological products it lacks so badly, the USSR has had to increase its sales of oil at a declining price. It has only been able to do this at the expense of del­iveries to its allies. Thus, in 1982, a more than10% reduction in oil deliveries to East Germany and Czechoslovakia caused serious problems for industry, while in 1985 delays in oil and coal deliveries to Bulgaria resulted in severe electricity shortages during the cold spell at the beginning of the year. ­                                  

The example of agriculture: symbol of the economic weakness of the USSR

In 1983, the USSR had accumulated the highest agricultural deficit of all time, over $16 bill­ion. The USSR is the leading agricultural power in the world: the first producer of grain, oats, wheat, rye, barley, beet, sunflower, cotton and milk, no less; and yet agriculture is the Achilles heel of the eastern bloc, putting it under the threat of famine. On this level, its dependence on the west is accentuating. The failure of the agricultural sector in the USSR is a significant expression of the problems which the Russian economy suffers in general. When you learn that the production of combat tanks is entered into the Russian accounting system under the category of the production of agricultural material, you can get some idea of the huge diversion of productive activity into the military apparatus, at the expense of modernizing the agricultural sector.

The extremely low yields express the archaic character of agriculture in the eastern bloc: in the USSR, the cereal yield is 1464 Kg per hectare, compared with 4765 in France. In Rumania a milk cow produces 1753 liters of milk per year, compared with nearly double that in France, 3613 liters. But the consequences of this poor productivity are considerably aggravated by lack of equipment and the weight of the bureaucratic apparatus which hinders the functioning of the economy. Thus, cereal crops are often left to rot due to a lack of harvesting machinery and when they are harvested there is a shortage of silos to conserve them. And even when that is done, there are still further obstacles: the means of transport are insufficient, bureaucratic para­lysis weighs things down so much that a major part of grain production is wasted, often being used for animal fodder, for which it isn't best suited, while food rationing reigns in the towns. Russian agriculture is an example of the gigantic waste of productive forces which prevails in the entire Russian economy, and this shows how the war economy develops at the expense of the economy as a whole. There are more and more guns and less and less butter. But this gigantic waste pushes Russian capitalism, just like its western rival, into even more insurmountable contradictions.

A redoubled attack on the proletariat's living conditions

As in the west, the crisis expresses itself in the eastern bloc through the adoption of dracon­ian austerity programs, through an attack on working class living standards on a scale not seen since the ‘50s.

The suppression of the state subsidies which, up until the end of the ‘70s, had made it possible to hide inflation, has resulted in a cascade of price rises. In Poland, price rises of over 100% on food products provoked the explosion of class struggle which marked the eastern bloc's entry into the ‘80s, and demonstrated the reality of inflation in the eastern countries. In Poland inflation went as follows:











In Rumania in 1982 it stood at 16.9%, while in Hungary increases in foodstuffs reached 20%, in coal, gas and petrol 25%, in transport 50-100%. Western economists estimate that every extra 10% of inflation per year is equivalent to a 3% red­uction in buying power. This gives an insight into the level of the attack being mounted on the proletariat of Eastern Europe, which is comparable to what the workers of Latin America are facing.

The present slow-down in inflation in the eastern bloc in no way signifies a slow-down in the attack on working class living conditions. In fact the contrary is indicated by the extension of the working week to six days in Poland and Rumania, and the development, in the name of the struggle for productivity, of campaigns against ‘absenteeism', ‘alcoholism' and ‘hooliganism' by Andropov and Gorbachev, which have the aim of justifying greater levels of control and repression at the place of work. The speed-ups in the mines in Poland resulted in a doubling of work accidents in1982.                                              

In the USSR, the ‘fatherland' of the workers, between 1965 and 1982, the average life expectancy went down from 74.1 to 73.5 for women and66.2 to 61.9 for men, according to a study by the World Health Office (Geneva). For its part the USSR has long ceased to publish statistics of this kind.                              

What perspectives?

The world economy's slide into a new phase of recession, announced by -the slow-down in the US recovery, does not augur well for the economy of the eastern bloc, which is finding it harder and harder to export its products.

Moreover, the constant fall in investment since the beginning of the ‘80s, at a time when 84% of the shipyards planned in the USSR at the end of the ‘70s remain uncompleted, shows just how somber the future is. The eastern bloc is hard-pressed to avoid bankruptcy: 27% of the investments envisaged in its plan by the USSR are devoted to the deficit-ridden agricultural sector, while in Poland, investments in machinery and equipment has gone from 46 to 30%. The crisis expresses itself in a movement towards the deindustrialization, under-development and impov­erishment of the eastern bloc, a movement that is accelerating all the time.

The coming years will also see the USSR having the greatest difficulty in balancing its imports and exports, in that oil, its main export, is drying up in Russia's European fields, and the exploitation of the Siberian fields is uncertain because of the lack of the required capital and technology. The perspective is towards a reduction in trade with the west, and towards the eastern bloc turning in on itself in a forward flight into the war economy.

As for the workers, Gorbachev announced what is in store for them when he said: "the traditions of the Stakhanovite movement are not dead ....but correspond to the needs of our time." Like Stalin, Gorbachev has to replace the capital he lacks to invest in and modernize industry with ‘human capital', having no alternative but to raise productivity by intensifying and increasing exploitation in its most brutal forms. The workers' hands must replace the absent machines. But such a policy and the resulting reduction in living standards runs the risk of provoking proletarian revolts and struggles in the same mould as those of the Polish workers in 1980.

In the east as in the rest of the world, the alternative is posed: socialism or barbarism.



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