Hungarian Stalinists leading charge for return of capitalism

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party priviligentsia is trying to move over bad thing?" The Economist (Aug. 26, SOCIALIST ACTION DECEMBER 1989 11 "Enter comrade capitalist. The old the Is this entirely a While the world's attention focuses on East Germany and Czechoslovakia, Hungary has quietly maintained its position in the front lines of Eastern Europe's drive toward capitalist restoration.

On Oct. 23, Hungary's new constitution was unveiled, declaring that now in Hungary "the values of bourgeois democracy and democratic socialism will prevail in equal measure." This move followed the ruling Hungarian Socialist Workers Party's decision on Oct. 7 to reconstitute itself with a new name and a new program favoring a multiparty political system and a market economy.

These events put a label on changes that have taken place in Hungary over the past two decades. Since the 1960s, Hungary's ruling bureaucracy has looked to limited privatizations of the nation's wealth and market reforms to attract Western capital. But the pace of reforms increased dramatically over the past year as the bureaucracy struggled to keep up politically with the economic chaos it had unleashed.

For instance, the Oct. 7 congress which decided to reform the ruling party declared that the party would maintain its factory cells which police the workers and continue the existence of the Workers' Guard which serves as the party's private army. These steps were designed to guarantee the party's domination of political life, despite projected free elections.

Less than a week after the party congress, the Hungarian parliament overturned both of these decisions.

This action by parliament (ratified in a national referendum on Nov. 26) extends to all parties seeking to organize workers. It amounts to throwing the baby out with the dirty bathwater by abolishing the basic democratic right of workers to organize in the factories and to bear arms.

Provoking strikes and protests The Hungarian bureaucracy is trying to win over intellectuals and workers with political reforms to compensate for a rapidly declining standard of living. A $20 billion foreign debt, 20 percent inflation, and a wage freeze have combined to futher embitter Hungarian workers toward a ruling party which remains in power today thanks to the Soviet crushing of the independent Hungarian workers' councils' movement in 1956.

Strikes and demonstrations have increased along with overwhelming opposition to the effects of the government's introduction of capitalist economic mechanisms. The average annual income in Hungary now stands at $2200half of the same figure for South Korea.

On Aug. 2, 1989, the Workers' Commission of the dissident Association of the Left Alternative called on all Hungarian workers to support a protest march by the mineworkers in the southern town of Pecs. Their call reveals the growing working-class opposition to the bureaucracy's pro-capitalist reforms:

"The process of 'resolving' the economic crisis is taking place against the interests of the majority of the working class. The economic bureaucracy, intent on reinforcing its positions in power, is pushing the privatization scheme in its own interest; it is consciously introducing unemployment, which already affects half-a-million workers.

"The first victim of this policy is the Hungarian mining industry. They want to shut down the mines, supposedly because into 1989)

they are non-profitable, without offering the miners any new jobs or possibilities for job retraining. Massive unemployment has nothing to do with economic reforms; it only means economic and social catastrophe."

The beneficial reforms of free elections and legalization of independent political parties have not been accompanied with curbs on an incipient exploitative economy. On the contrary, Hungary now has an active stock market and more state firms are passing into private hands every week.

"Enfranchising the nomenklatura"

Shouldn't the ruling bureaucracy be threatened by the restoration of capitalism and an end to the nationalized economy? Wouldn't such a development mean an end to their special privileges? Not entirely.

A process has begun in Hungary and other deformed workers' states which in Poland is called "enfranchisement of the nomenklatura." Essentially, the goal is to transform the ruling bureaucrats of these countries—or at least major sectors of the bureaucracy-from administrators to owners of industry; i.e., to create a capitalist class.

The form this process takes in Hungary is a new law which would allow individuals to buy controlling stock of 200 to 300 of the country's largest companies. This Conversion Law gives state managers decision-making power concerning when and whom to sell the company to, and on what terms.

The inevitable result will be a series of managers wheeling and dealing ownership of industry, driven by the prospect of keeping the profits rather than turning them over to the state. The final shape of the law will probably be determined after next year's elections, but the economic plans of the bureauThe biggest hitch in the economic reforms has been the Western capitalists' lukewarm support to these policies. Foreign investors have sought more guarantees that the Hungarian government's commitment to free enterprise is sincere.

But apparently they have now been convinced.

GE leads the pack This year, General Electric bought a controlling interest in the Tungsram Co., a lightbulb manufacturer. (The deal will result in 4000 layoffs.) That transaction is worth $150 million. General Motors is close to signing a $200 million deal to build engines in northwestern Hungary. Japan's prime minister will visit Hungary in January, reportedly to discuss plans for an automobile factory.

The capitalists of the United States, Western Europe, and Japan are aggressively probing the openings into the economies of Eastern Europe. Their intentions are not to develop this region into a self-sufficient economic unit free of repression.

Rather, the capitalists seek the extension of the "Third World" into the "Second World." They hope to convert Eastern Europe into a dumping ground for Western goods and a source of cheap materials and labor.

The existence of nationalized economies and a state monopoly of foreign trade has prevented capitalism from exploiting the Eastern European workers' states. The restoration of capitalism in these countries would remove any barriers to imperialist plunder and would lower the standard of living for working people even further.

The bureaucracy in Hungary is committed to the project of dismantling the workers' state. Prime Minister Miklos Nemeth stated boldly on Oct. 9 that he "hope[d] to remain at the head of the government until May 1990 to carry out the economic reforms and fully privatize the economy."

The only force that can fend off the restoration of capitalism is the working class in its massive numbers.

Every reason for optimism There is every reason to be optimistic about the prospects of a workers' political revolution in Eastern Europe. The massive demonstrations for democratic rights sweeping East Germany, Hungary, and Czechoslovakia have been accompanied by strikes in Poland, the Soviet Union, and Hungary in which the workers have supported the demands of the demonstrators and raised their own economic demands.

The bureaucracies are trying to stay ahead of these movements, but the total destruction of the planned economy would lead to actions that would make today's actions seem small.

The element needed to take advantage of the tremendous political openings in Eastern Europe is a revolutionary party with a program of socialism and democracy. Such a party could turn the overwhelming sentiment of the Hungarian workers for democracy and against austerity into resolute political action.

Hungary's rulers have dropped the banner of socialism (which they soiled and trampled upon for four decades). The Hungarian workers are in position to pick it up.

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... Eastern Europe East German border guards assumed postures of benign resignation to tearing down of Berlin Wall.

(continued from page 11: “American victim describes bombing of Salvadoran union headquarters”) is why imperialism has not leaped to take advantage of Gorbachev and Co.'s plight. They are for the moment compelled to assist his efforts to restabilize bureaucratic control.

That's the meaning of President Bush, Western Germany's Chancellor Kohl, and other Western leaders' declarations of solidarity with the Stalinist leaders and their hints of substantial material assistance in the offing. Of course, these Western heads of state insist that acceptable terms for both sides first be worked out.

In short, the ruling capitalists throughout the world are profoundly aware that Gorbachev is the best ally they have, today, for achieving their ultimate goal of reconquering Eastern Europe for capitalism.

Attempts have not paid off In the meantime things are not going too well for Gorbachev and Co. The attempts to institute capitalist market relations inside Eastern Europe have not paid off in any improvement in productivity or in workers' living standards.

Furthermore, the experience with the wave of entrepreneurs who have enriched themselves by price-gouging has served to generate a nearly universal hostility to this incipient capitalism. After all, it's not as if East Europeans know nothing of the evils of capitalism.

But the cynical lament of bureaucrats and capitalists alike is that if workers can't be made to face the ultimate discipline of unemployment and hunger, there can be no "incentive" to work hard and produce more and better quality commodities.

But Stalinist bureaucrats need to be able to show some results before they can get their workers to accept the austerity that must be in place before a system based on such brutal economic pressures can have any chance of spurring production.

That's the meaning of Lech Walesa's plea to America's capitalists to stop patting him on the back and come up with a program of capital investment in Poland on the scale of the Marshall Plan. The Soldidarnosc/Stalinist coalition knows that Polish workers will not accept "reforms" that undermine their living standards.

The only way this Polish ruling bloc can inveigle the workers to accept a little more hunger and hard times is if they can show them tangible evidence that it would be temporary and that capitalist incentives promise to bring real improvements down the road.

Some obvious differences Of course, there are some obvious differences between the Europe and Japan of postWorld War II and Eastern Europe today which militate against a commitment by imperialism to invest their money in Eastern Europe on a scale approaching that of the Marshall Plan.

In post-war Europe, U.S. imperialism could buy into and strongly influence the business enterprises and the economic infrastructure of these countries with the full protection of the existing laws, the courts, and the law-enforcement agencies of these capitalist states.

Furthermore, there was a broad social base of petty, medium, and large capitalists numbering in the millions throughout Europe upon which they could depend to help them protect their property rights. This is patently not the case in Eastern Europe today.

The capitalists also know that Poland and other countries in the East went on an orgy of borrowing to develop their industries in the 1970s, which ended in disaster for East European borrowers and a possible disaster for imperialist investors.

Poland alone owes $39 billion to foreign bankers and has not been able to repay its debt on schedule. Prospects for ultimate repayment are equally gloomy. Imperialist bankers don't trust the bureaucrats to make wise enough use of their capital so that they can be repaid, and at a rate of interest called for by the high risks.

Thus, Congress and President Bush have a far more modest aid package in mind, given present circumstances. They are reluctant to give the go-ahead to their class to risk massive investment before "irreversible" guarantees for private property are put in place in the bureaucratic workers' states. They fear any deal that risks giving a boost to an essentially socialized economy that could be reversed and that could leave these states economically stronger and world capitalism empty handed.

For the time being, the objective pressures 12 SOCIALIST ACTION to make concessions bears down primarily on the Stalinist regimes. Their current economic crises have precipitated political turmoil which is breaking out of their control. It is no exaggeration to say that history has never witnessed such a widespread objectively revolutionary movement of hundreds of millions of people in such a short space of time!

Neither is it likely that Gorbachev and Co. have yet made a decision to put all their bets on capitalist restoration-ultimately transforming their elite social status from one based on bureaucratic privilege into one based on capitalist property rights.

But the long-term trend of the Stalinist bureaucracy has been toward accommodation to capitalism. And whatever their current intentions may be, the course now being followed will end in the restoration of capitalism if a workers' revolution doesn't first sweep the bureaucrats into the dustbin of history.

Unified Europe, unified Germany Participation by West Germany, as one among equals, in the attempt by European capitalist states to create a common market was grounded in the post-World War II division of Germany. The allied powers' division of Germany after the war was intended in part to prevent such a third resurgence of Germany at the head of a major imperialist economic, political, and military bloc, and to strategically tie it to Western Europe.

But the growing contradictions temporarily hidden beneath the unity of the capitalist world have been sharpened by the possibilities opened up by the collapse of the wall between the two Germanys. The reunification of Germany is now in the cards. It would open the possibility of German imperialism going its own way to take full advantage of its imposing economic power in Europe.

It is even more accurate to say that the utopia of a unified Europe scheduled to be cemented together by 1992 is in danger of being ruptured by new opportunities difficult for West German capitalists to resist. The two Germanys, which already had been major trading partners, will be driven by the force of possibilities inherent in the new situation into an intensified link-up of their economies.

Some authoritative bourgeois spokespersons go so far as to predict that the unification of Germany, like it or not, is inevitable. West Germany's Chancellor Kohi, knowing the fears of his allies, has sought to reassure them by announcing conditions for unity which East German Stalinists can hardly accept; there would be major consternation and opposition from East German workers which could prematurely scuttle such a project.

But Kohl knows that the logic of more flexible terms for collaboration will drive the Eastern bureaucrats into his grasp anyway. He is therefore likely to make a more acceptable offer to his counterparts on the other side of the wall at a more propitious time.

On the other hand, West German capitalism will not fail to demand more favorable conditions for itself from its Western partners for remaining committed to the Common Market. The outcome of these maneuvers are impossible to predict.

The Western European countries, which have set 1992 as their target date for establishing the basic rudiments of a common market, had seemed to be coming close to realizing the goal of a European-wide, tarifffree, integrated economic system.

If they could reach this goal, they believed, DECEMBER 1989 it would open up a new era for European capitalism. They would then become a united economic entity capable of competing on much better terms with Japanese and U.S. imperialism for a greater share of the world market.

But a major stride toward establishing a capitalist United States of Europe is being hobbled by many intractable obstacles. These obstructions to a unified European economy can be boiled down to a reluctance by each imperialism to yield control over its own state apparatus to a super-European state.

Each national capitalism fears domination over a super-state by one of its stronger components, which might then use the new state as its own special instrument to gain extra advantage for itself when national interests come into sharp conflict.

While the Common Market states have been able to go further down this path than some realists expected, they have been able to do so primarily because of the prolonged period of prosperity which has permitted competition between imperialist rivals to stay within moderate limits.

Coming economic storms

The antagonisms that can be contained during good times are exacerbated during bad times, eventually breaking up the peaceful coexistence of rival capitalist states. A Nov. 19 New York Times commentary by writer Alan Riding summarizes the complex status of European unity in the aftermath of the momentous events in East Germany. He writes:

"Today, not a few Western Europeans secretly wish Eastern Europe had postponed its peaceful revolution until after 1992. By that time, the European Community would have created a single economic market and perhaps put aside its members' differences and set a course toward political integration.

"The community, the thinking goes, would by then be strong enough politically to deal with sudden change in Eastern Europe. Above all, with West Germany firmly tied to the West, any moves toward German reunification could take place in a thoroughly Western context.

"But with Western Europe still unsure about its own shape of things to come, events in Eastern Europe have only sown disarray. France was already facing resistance from Britain and West Germany to its plan to accelerate moves toward economic and monetary union at next month's European Community summit. Now France believes it is more important than ever to extract a deeper West German commitment to integration."

Which way will West Germany go? Will it go toward the Common European market and a later collaboration with its Western allies in the attempt to absorb East Germany, or will it steal a march and seek to unilaterally absorb the other Germany?

In the latter case, this would lead toward the establishment of a "MiddleEuropa" Germanimperialist-dominated bloc. This would enable West Germany to more effectively compete with the rest of its imperialist rivals. (This certainly is a thought that has crossed the minds of Gorbachev and his East German henchmen.)

But which course capitalist Germany takes depends to a great extent on two important objective factors:

1. How soon will economic conditions in the capitalist world undermine this system's relative harmony and impel each state toward internecine struggle, on the principle of "each man for himself," and;

2. How quickly and how far can East European workers proceed toward the establishment of a consciously revolutionary socialist proletarian leadership, one which can carry the struggle to overthrow the Stalinist dictatorships to a successful conclusion.

This latter point is an absolute pre-condition before the bureaucratic caricature of "socialism" in Eastern Europe and China can be transformed into a revolutionary, democratic confederation of workers' states. Without a revolutionary party in the workers' states, world capitalism will be the ultimate beneficiary of Stalinism's current turmoil.

Conclusion

The political revolution is an objective process set into motion by the incapacity of bureaucratic planning to take the nationalized economies to higher levels of productive efficiency. Bungling bureaucrats compound the drain on the resources of the planned economy by the inordinate share of society's wealth they consume to maintain their highly privileged life-style.

History teaches that revolutionary situations arise from the unconscious movement of history. But revolutionary opportunities are easily lost if there is no conscious leadership built in time that can take the revolutionary class safely through the many pitfalls and traps set for it by those ruling classes and castes that benefit from the status quo.

impact Visuals A mass revolutionary party, one based on the accumulated lessons derived from class-struggle experience throughout modern history, is necessary to transform objective revolutionary possibilities into reality.

We believe that these accumulated lessons, which apply in all three spheres of the modern world (the imperialist countries, the neocolonial countries, and the bureaucratized workers' states), already exist. These lessons go by the name of "The Transitional Program for Socialist Revolution." This document was written by Leon Trotsky, who, along with V.I. Lenin, led the Russian workers to victory in October 1917.

The October Revolution, Lenin and Trotsky taught, was not the end but the beginning of the struggle for a socialist order that could only be realized on a world scale. The Soviet Republic, they explained was essentially the "advance outpost of the coming world revolution."

Stalin became the recognized representative of the privileged bureaucracy which sought to defend its privileges at any price. He soon abandoned the Leninist perspective of world revolution, opting instead for "Socialism in One Country."

After Lenin's death in 1924, Trotsky carried on the struggle for world revolution, the only road by which socialism can be reached, and became the principal adversary of the Stalinist degeneration of the first workers' state.

Those who want to understand the revolution unfolding in the bureaucratized workers' states, and beyond, will be well served by studying the illuminating writings of Leon Trotsky, who stood on the shoulders of those outstanding proletarian thinkers and fighters who came before him.

Nothing could be more important to anyone who is aware of the threat to the very existence of civilization, and even life on earth, posed by the continued domination of world society by capitalism.

There is reason for optimism. We are on the threshold of a new resurgence of world revolutionary opportunities. But a revolutionary party which knows how to fight is nécessary for victory. When workers are forced by, circumstances to begin a struggle in earnest, the revolutionary party and the working class will find their way to each other.