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The Eastern countries: The crisis is irreversible, restructuring impossible

Events over the last few months in the former Soviet bloc have revealed more and more clearly the completely dilapidated state of all the East European countries and of the USSR in particular. As the reality of the situation was uncovered, the last hopes and theories about a possible improvement fell to pieces. The facts speak for themselves: it is impossible to revive the economies of these countries; their governments, whatever shape they have taken on, whether a 'reformed' version of the old apparatus, with or without the participation of the former 'opposition' parties, or based upon 'new' political formations, are all totally incapable of con­trolling the situation. Every day it becomes clearer that these countries are plunging into a level of chaos that is without precedent[1].

The western countries are not going to bail out the Eastern countries or the USSR

The debacle is complete. The Eastern countries would love to see the big industrialized coun­tries coming to the aid of their ruined economies. Walesa never stops begging for Western aid to Poland. Gorbachev has been pleading with Bush to grant his country 'most favored nation' status, a preferential trade agreement that the USA has always refused to give the USSR, though it was often given to Rumania, the poorest country of the former Eastern bloc. The GDR is waiting for reunifica­tion with West Germany to get the subsidies for those rare sectors of its economy which are not completely devastated.

But the Western countries aren't going to spend even a tenth of what would be needed, because such a venture wouldn't just be risky, it would be doomed to certain failure. There are no more illusions about the possibility of eco­nomic revival in the Eastern countries. There's no tangible profit to draw from a productive apparatus which is totally obsolete, and from a workforce that is not adapted to the draconian norms of productivity imposed by the world­wide trade war now opening up between the main Western industrial powers, essentially the USA, Japan, West Germany and the other coun­tries of Western Europe.

And even if the IMF were to hand out more credits, it would be confronted with a situation similar to that of the so-called 'third world' countries, which are completely insolvent, and have debts of billions of dollars that will never be repaid.

It is symptomatic that the Bush-Gorbachev meeting, which took place at the time of writing, didn't result in any real economic agreement, except for the timid extension of the previously existing ones. No one is counting on the success of the famous 'perestroika'. The main concern of the Western countries in their relations with the East is to find a way to prevent the generalization of the disorder which is now hitting the latter, and which no Western power is happy about. There's no question of commercial or in­dustrial agreements that could bring a shot of oxygen to the economies of these countries; they are already quite asphyxiated.

The Eastern countries can't hope for a new 'Marshall Plan' (through which the USA financed the reconstruction of Western Europe and Japan after the Second World War). If, among those who talk about the 'victory of capitalism', t here are any illusions left in the economic opportuni­ties opened up by the demolition of the 'iron curtain', these vain hopes will soon be swept away by the painful experience of the West German economy in its move towards reunifica­tion with the GDR[2]. For German capital, there may be a short term interest in exploiting the very low paid workforce of the GDR, but the overall prospect is that reunification will open up a huge financial hole and lead to an influx of millions of unemployed and immigrants[3].

At a time when the international financial system is threatening to cave in under the weight of world debt, at a time when massive waves of redundancies are already gaining force, especially in the USA, and will certainly gain in strength in the other developed coun­tries, the latter have no 'markets' or economic benefits to find in the Eastern countries, with only a few rare exceptions. Only a few out-of-­date 'theoreticians', and unfortunately some of these do still exist, even in the proletarian camp[4], have any belief in the mirage of restruc­turing the Eastern economies.

An economy in ruin

The official figures now being supplied by the USSR show that the economy is completely ex­hausted. They pulverize even the estimates that Western specialists have been making over the last few years in opposition to the institutionalized lies that passed for Soviet 'statistics'.

The new statistics admit that the economy is inexorably reaching a zero growth rate, and are thus closer to reality than the pre-Glasnost ones. However, by including in their calculations the military sector, the only sector in which the Russian economy has seen any growth since the mid-'70s, they still greatly underestimate the breadth of the crisis in the Soviet economy.

At best, the USSR is at the same economic level as a country like Portugal; according to estimates, average income is about 3000 pounds a year and that can vary from 9000 to 5400 pounds. That means that the majority of the population has a living standard closer to a country like Algeria than to the poorest regions of Southern Europe.

What's more, the 'classic' characteristics of the crisis in the West, inflation and unemployment, are already beginning to ravage the Eastern countries, and at rates worthy of the worst-affected 'third world' countries. And these 'classic ' scourges of capitalism are coming on top of the equally capitalist scourges of Stalinism: rationing and a permanent shortage of consumer goods. Even the most violent oppo­nents of Stalinism, the most zealous glorifiers of western-style capitalism, are stupefied by the ruined state of the economy in the USSR: "Soviet reality is not a developed economy that needs various rectifications; it's a huge pile of bric a brac that is quite unusable and imperfectible"[5].

'Perestroika' is an empty shell and Gorbachev's popularity in the USSR is now at its lowest ever; the government's most recent 'measures' simply ratify the disaster. There will be official recognition that consumer prices have risen by up to 100%, while wages will be raised 15% to compensate ... And very soon - in five year's for the optimists, in one year for others ­there will be unemployment for millions of work­ers. The figures envisage 40, 45, 50 million un­employed, maybe more. That means one person out of five, and without any allocation of the minimal basis for survival.

And if the situation in the USSR is one of the most catastrophic, the other eastern coun­tries aren't much better off. In the ex-GDR, when monetary union comes in (July 1990), 600,000 workers will immediately be thrown out of their jobs, and this figure will reach four million in the years following, that is, one per­son out of four[6]. In Poland, after prices rose by an average of 300% in 1989, with certain products going up by 2000%, the government blocked wages "in order to deal with inflation". In fact inflation is now officially at 40% and this year the number of unemployed will rise to two million. Everywhere the balance sheet of the 'measures of liberalization' is clear: they have simply made the disaster worse.

The Stalinist form of state capitalism, which was inherited not from the revolution of October 1917, but from the counter-revolution which wiped it out, has fallen into complete ruin; the capitalist economic forms which arose in the so-­called 'socialist' countries have reached a state of total disorganization. But the 'liberal' form of Western capitalism, which is no less a form of state capitalism, but a much more sophisticated form, does not provide any alternative. It's the capitalist system as a world-wide whole that is in crisis, and the developed 'democratic' coun­tries are also faced with it. The lack of markets is not unique to the ruined Eastern countries; it's hitting at the very heart of the most devel­oped capitalisms.

The failure of 'liberalization'

The acceleration of the crisis has laid bare the total absurdity of Stalinist-style state capitalist methods at the level of economic management. It has uncovered the complete irresponsibility of several generations of functionaries whose sole concern was to fill their pockets while on paper respecting the directives of 'plans' that were totally disconnected from the normal functioning of the market. But the fact that the ruling class itself now recognizes that they have to put an end to this irresponsibility, to abandon the permanent attempt to cheat the 'laws of the market' through total state control of the econ­omy, doesn't mean that the bourgeoisie can re­vive the economy though a program of 'liberalization', or regain political control of the situation through a process of 'democratization'. All it can do is recognize the total shambles that exists at all levels. Since the Stalinist rul­ing class has for decades maintained its privi­leges through this kind of cheating, it can go no further than simply recognizing the existing state of affairs, as the last five years of 'perestroika' and 'glasnost' have shown. As we said in September 1989:

" ... just as 'economic reform' has taken on a virtually impossible job, so 'political reform' has very little chance of success. The introduction of a multi-party system, with 'free' elections, which is a logical consequence of the process of 'democratization', is a veritable menace for the party in power. As we have seen recently in Poland, and also to a certain extent in the USSR last year, such elections can only highlight the party's total discredit, and the population's ha­tred for it. Logically, the only thing that the party can expect from such elections is the loss of its own power. Unlike Western 'democratic' parties, this is something that the CPs cannot tolerate, since:

- if they were to lose power in elections, they could never, unlike other parties, get it back in the same way;

- loss of political power would mean the ex­propriation of the ruling class, since its political apparatus is the ruling class.

Whereas in countries with a. 'liberal' or 'mixed' economy, which still have a classical bourgeois class which directly owns the means of production, a change in the ruling party (unless this means the arrival in power of a Stalinist party ) has little impact on this bour­geoisie's privilege s and place in society, in the Eastern bloc such an event would mean, for the vast majority of bureaucrats, whether big or small, loss of privileges, unemployment, and even persecution by the victors. The German bourgeoisie could adapt to the Kaiser, the social-democratic republic, the conservative re­public, Nazi totalitarianism, and the 'democratic' republic, without its essential privileges being called into question. By contrast, a change of regime in the USSR would mean the disappear­ance of the bourgeoisie in its present form, at the same time as the Party. And while a political party can commit suicide, announce its own dis­solution, a ruling privileged class cannot."[7]

In the USSR, Stalinism is, through the his­torical circumstances in which it was born, a particular form of the capitalist state. With the degeneration of the Russian revolution, the state which arose after the expropriation of the old bourgeoisie by the proletarian revolution of 1917 became the instrument for the reconstruction of a new capitalist class, over the corpses of tens of millions of workers and revolutionaries. The form taken by this state was the direct product of the counter-revolution which was at its height from the end of the 1920s to the Second World War. The ruling class was totally identi­fied with the monolithic party-state. With the downfall of this system, the ruling class has lost all control of the situation, not only its control over the other 'socialist' states, but also within the USSR itself. And it has no prospect of stopping this runaway process.

The situation in the East European countries is a bit different. It was at the end of the Sec­ond World War that the USSR, with the blessing of the 'allies', imposed on these countries gov­ernments dominated by the Communist Parties. In these countries, the old state apparatus was not destroyed by a proletarian revolution. It was adapted, bent to serve the needs of Russian imperialism; to a different extent in each coun­try, the classical forms of bourgeois domination were allowed to subsist under the shadow of Stalinism. This is why, with the death of Stalinism and the USSR's incapacity to maintain its imperialist grip, the ruling class in these countries, most of them less underdeveloped than the USSR on the economic level, has rushed to get rid of Stalinism and to reactivate the vestiges of these previous forms.

However, while in theory the East European countries have a better chance of facing up to the situation than the USSR, the last few months have shown that the heritage of forty years of Stalinism and the context of the world crisis of capitalism pose enormous problems to any real bourgeois 'democracy'. In Poland for example, the ruling class has shown that it is incapable of controlling this 'democratization'. It finds itself in the aberrant situation of having a government led by the Solidarnosc trade union. In the GDR, it's the CDU, 'Christian Democrats', who governed alongside the SED (Communist Party) for forty years, who are the main pro­tagonists of democratization and reunification with West Germany. But far from being a re­sponsible political force that can carry out some sort of political reorganization in the country, the main motivation of this party is an appetite for personal gain. And all it has done is to wait for subsidies from its big sister party in West Germany, which is the main source of funds for the whole operation.

The whole inexorable evolution that began last summer with the accession of Solidarnosc to government in Poland, and then took in Hungary's shift to the West, the opening of the Berlin Wall, the separatism of the 'Asiatic re­publics', the secession of the 'Baltic republics' and the recent investiture of Yeltsin in Russia itself, is not the fruit of a deliberately chosen policy on the part of the bourgeoisie. It is the expression of the growing loss of control by the ruling class, and points towards a dive into dislocation and chaos unprecedented anywhere in the world. There's no 'liberalization', but simply the powerlessness of the ruling class faced with the decomposition of its system.

Democratic illusions and the nationalist explosion

'Liberalization' is just empty chatter, an ideo­logical smokescreen which attempts to exploit the very considerable illusions in democracy in a population which has for forty years been shut up in the barracks of Stalinism; its aim is to make people accept a continual deterioration of their living standards. Gorbachev's 'liberalization' has already had its day; five years of speeches have given no concrete re­sults, except for an increasingly unbearable material situation for the population. And this doesn't only apply to the men of the apparatus like Gorbachev. The former oppositionists, even the most 'radical' the great champions of 'democratization', unmask themselves and reveal their real nature as soon as they take on gov­ernmental responsibilities. In Poland for example, there's Kuron, a former 'Trotskyist'[8], a radi­cal imprisoned by Jaruzelski a few years ago; when he became minister of Labor, he boasted about "extinguishing thousands of strikes" in order to able to "organize one hundred". Now he threatens the railway workers with direct repression, and shows the classic attitude of Stalinism faced with the working class. Whatever factions and cliques occupy the centers of power at one moment or another, there's no possibility of the kind of bourgeois democracy that exists in the advanced countries, still less of any kind of 'socialist' democracy.

This idea of 'socialist democracy', according to which all you have to do is get rid of the bureaucrats in power in order to allow a flow­ering of the 'socialist relations of production' that are supposed to exist in the East, is a particular favorite of the Trotskyist sects, who thus reveal themselves to be nothing but the last salesmen of Stalinism.

All the 'oppositionists', whether made up of elements who have come out of the apparatus, or of entire former apparatuses that have re­pented of their past deeds, or of personalities who have been converted by circumstances to putting themselves at their country's service, all of them are defenders of their feeble na­tional capitals, all of them use the democratic illusions held by the great majority of the Eastern populations in order to maneuver themselves into power. But only the big devel­oped countries can really afford the luxury of 'democratic' forms of capitalist class rule. The latter countries' relative economic strength and their political experience enable them to maintain the whole apparatus, from the media to the po­lice, required to impose a grip on society that hides its totalitarianism behind a veil of 'freedom'. Stalinism, which is state capitalism pushed to the absurd point of attempting to negate the law of value, has given rise to a ruling class that is totally inept, ignorant of the ABC of this law, even though its class rule is founded upon it. Never has a ruling class been so weak.

And this weakness also leads, with the dislo­cation of the Eastern bloc and the USSR, to the explosion of the various nationalisms that were only tied to the USSR through military repres­sion, and which have automatically come to the surface as soon as the big boss showed itself unable to maintain its domination by force of arms.

At one time Gorbachev may have given the impression that he was in favor of the expres­sion of 'nationalities' in the USSR. In fact, the central Soviet power cannot use these nation­alisms to strengthen itself. On the contrary, the outbreak of nationalisms, regionalisms, and par­ticularisms at all levels is an expression of the impotence of the Russian regime and the defini­tive loss of its status as head of an imperialist bloc, of its place among the 'great powers'[9]. It's the current conditions that are feeding na­tionalism: without Moscow and the Red Army, the local cliques in power are left naked, and the door is open to the inrush of all the particu­larisms that were only kept out by military ter­ror. The dire consequences of this collapse are only at their beginning. The logic of the situation is the kind of 'democratization' we've seen in Colombia or Peru, or even more likely, the 'Lebanonization' of the whole former Eastern bloc and the USSR itself.

Western ‘liberal' capitalism in turn enters into crisis

In the last instance the crisis in the USSR is the expression of the generalized economic crisis of capitalism, one of the manifestations of the historic crisis of the system, of its decomposi­tion. There's no possibility of any restructuring of capitalism in the East, any more than any 'developing' country has been able to detach itself from 'underdevelopment' since the term 'third world' was invented. On the contrary, the perspective is of an irreversible and world-wide economic collapse.

Since it opened up at the end of the 1960s, the world economic crisis has led:

- in the years 1970-80 to the inexorable downfall of the countries of the 'third world', bringing the most black misery to an immense proportion of the world's population

- at the end of the '80s, to the definitive death of Stalinism, the capitalist regime inher­ited from the counter-revolution of 'socialism in one country', which has similarly plunged the majority of the population of the so-called 'Communist' countries into a state of absolute pauperization that is just as bad if not worse.

During the 1990s the crisis is going to bring this absolute pauperization to the heart of the 'first world' to the industrial metropoles that have already been ravaged by 20 years of mas­sive and long-term unemployment, of insecurity and precariousness at all levels of social life. There will be no‘restructuring'' of capitalism, either in the East or the West.

MG, 3 June 1990



[1] See the analysis of the collapse of the Russian bloc and its implications for the world situation in nos 60 and 61 of this Review.

[2] See ‘The Situation in Germany' in this issue.

[3] Certain elements in Russian government have envisaged a way of restocking the USSR's coffers: sending 16 million Soviet immigrants into Western Europe so that they can send back currency to the USSR...

[4] See the article on the proletarian milieu in this issue.

[5] Le Point, 9-10 June 1990

[6] See ‘The situation in Germany' in this issue.

[7] IR 60, ‘Theses on the economic and political crisis in the Eastern countries'

[8] Cf the ‘Open Letter to the Polish Workers Party' by Kuron and Modzelewski, published in Britain by the International Socialism group, now the SWP.

[9] See the article ‘Nationalist barbarism' in this issue.