SPECIAL SUPPLEMENT Upsurge in Eastern Europe: Is socialism dead?

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Are the masses of Eastern Europe fighting for the restoration of capitalism or socialist democracy? • Eastern Europe and World Revolution Today • The Stakes in German Reunification Plan SOCIALIST ACTION MARCH 1990 7 The following is a speech presented by Cliff Conner to a Socialist Action forum in New York City on Jan. 26. The speech has been abridged for reasons of space.

The dramatic events that have rocked Eastern Europe over the past few months caught almost everybody by surprise. Dictatorial Stalinist regimes that had ruled for decades—with the appearance of eternal stability-suddenly crumbled into dust in the face of some of the most massive popular mobilizations the world has ever seen. Clearly a major social transformation is under way, and every thinking person in the world is trying to understand what it means.

Here in the United States the daily press and the television news have interpreted it for us. The people of Eastern Europe are overjoyed, we are told, because they have liberated themselves from socialism and communism and Marxism.

And this, according to an op-ed article in the New York Times, has "proved beyond doubt to all (except perhaps for a handful of left-wing faculty members in our best universities) that capitalism is superior to socialism and communism. Our economy is the guiding beacon for all those countries that are ripping apart the ruthless collectivist regimes that ruined the lives of their people for so long" (Jan. 17, 1990).

This is a particularly crude statement, but it is representative of the immense propaganda barrage we've been subjected to around the theme that "socialism is dead." According to this interpretation, what we've seen is the climax of a gigantic controlled experiment in the laboratory of history, testing the relative merits of socialism and capitalism—and socialism lost.

Some have even gone so tar as to suggest that this marks the "end of history"; that the collapse of socialism means that the capitalist order has now achieved its final triumph-—there is no other direction in which historical development can proceed, and so history has reached its ultimate goal and simply ends right here.

If this is true, there is not much left to do for those of us who call ourselves socialists. It is time for us to fold our tents and steal silently into the night.

But, no, we're not quite ready for that. Our attitude, I think, was summed up in the slogan carried on the placard of a demonstrator in East Germany: "Socialism is dead! Long live socialism!"

Masses have won great victory As defenders of the interests of the working class in every country, we in Socialist Action share the joy of the East European workers who have smashed the old Stalinist regimes that have oppressed them for decades.

Make no mistake about it: It wasn't capitalists who overthrew Honecker or Ceausescu or the rest. It was the workers in those countries. It was the workers of East Berlin who tore down the Berlin Wall, and it was a general strike that shattered the Stalinist regime in Czechoslovakia.

These workers were fighting for basic democratic rights, and they have won a great deal already in the way of freedom of speech, freedom of the press, freedom of association, freedom to travel, and freedom of religion.

In Romania, women have won the right to choose to have abortions. In Bulgaria, the Turkish ethnic minority has won the right to use their Turkish names and speak their own language. The old censorship apparatuses have broken down, the right to form opposition political parties and independent trade unions has been won, and elections are being scheduled all over the place.

All of these new rights and freedoms give the working people of Eastern Europe more opportunity to defend their own interests.

We consider that they have won a great victory and we support it 100 percent.

Our movement-the Trotskyist movement—has said for more than 60 years, ever since Stalin usurped power in the Soviet Union, that Stalinism was a disease; that Stalinism was the cancer of the working class; that Stalinism was not socialism, but an obstacle to socialism; that Stalinism doesn't defend socialism, it discredits socialism.

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•History of Stalinist Repression in bastern Europe • and more Our program has always called for the destruction of that obstacle to socialism. So we haven't viewed the recent events in Eastern Europe as a setback. To the contrary, they give us hope that at long last, the way can be opened for the genuine development of socialism.

Down but not out But it is important to understand that the Stalinist obstacle hasn't been completely removed yet. The Stalinist current has been greatly weakened throughout Eastern Europe, but it still exists in all of these countries and is maneuvering furiously to make a comePetr Rosicky back in one form or another-even as part of a new capitalist class.

When I use the term Stalinist, I am not referring to people who look up to Joseph Stalin as a hero. I don't think there are many of that kind of Stalinist left any more. I am using the term in its sociological sense to mean the privileged bureaucracy that developed as a parasitic growth on the planned economies in the Soviet Union and in Eastern Europe.

By that definition, Stalinists are not only the so-called "hard-liners" like Honecker and Ceausescu, but also the reform bureaucrats, like Mikhail Gorbachev or Hans Modrow, the new prime minister in East Germany.

The tendency Gorbachev represents is not attempting to get rid of the privileged bureaucracies that control Eastern Europe, but to reform them—so that they can survive the crisis they've got themselves into.

So although the old Communist parties have been dealt a harsh blow, and they are shrinking and splitting and changing their names, they haven't been completely knocked out. They still control the armies, (continued on page 8)

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ntroduction of market mechanisms per se bu 'oduction of market mechanisms per se from the proposed changes in property (continued from page 7)

and that is no small matter.

What they've lost is their absolute monopoly of power. They have been forced to give up their legally guaranteed right to run the governments of Eastern Europe without opposition. And in all six of these countries, elections are scheduled to be held over the next few months—which will probably deal them some more blows.

But as the old representatives of the privileged bureaucracies are swept aside, the important question is: Who is going to replace them? What social forces are going to flow into the void? Will the vacuum be filled by representatives of the interests of the working people, or will it be filled by the growth of a new capitalist class?

And here we come to the heart of the propaganda barrage we've been subjected to. The daily press in this country simply assumes that the only alternative to Stalinist rule is capitalism.

Run aground by bureaucracy When the editorial writers say that socialism is dead, their primary meaning is that the economic structures of Eastern Europe are no longer viable and must be done away with. By this they mean that the system of planned economy based on nationalized property has failed, and must be replaced by the system they call a "free-market" economy, based on private property.

There are some problems with this coun terposition of planned economy and free-market economy. First, with regard to the planned economy, the editorial writers say: planned economy equals socialism and socialism equals planned economy. That's not true.

The planned economy is part of the socialist program—but there's much more to socialism than that. When we speak of planned economies in Eastern Europe, we have to qualify that and say bureaucratically planned economies-that is, planned economies with serious distortions.

These bureaucratically planned economies are characterized by a rigid form of centralization, where all of the commands flow from the top of a bureaucratic hierarchy downward, and there is no input into the planning by the workers themselves.

If the economies of Eastern Europe have failed in the 1980s—and I would agree, in a sense, that they have—it is not because they are planned economies, but because they are bureaucratically planned. The bureaucratic distortions are what have caused them to run aground.

For example: Eastern Europe made big industrial gains in the 1950s and '60s, but these were achieved on the basis of relatively simple technology-big steel mills, big chemical plants, and so forth. But the 1980s demanded a much more sophisticated level of technology. For one thing, it required a high level of computer literacy in the population as a whole.

But the Stalinist bureaucrats didn't trust their own people with computers. They had nightmares of dissidents with word processors and modems spreading subversion everywhere.

The lack of democratic rights prevented the countries of the Soviet bloc from developing a "hacker culture." In the United States, there is a 14-year-old computer whiz on every block. In the Soviet Union and Eastern Europe, those talents were repressed, and that had a great deal to do with the technological malaise that afflicted them. The problem was not in the economic structure per se—it was in the undemocratic political system.

The bourgeois propagandists tell us that there's no such thing as a planned economy that isn't rigidly centralized and commanded from the top down. Socialists point out, however, that planned economies don't have to be bureaucratized, that they can exist in a context of political democracy, and that they can be operated by a system of democratic workers' control. We believe this represents the only way out of the present dilemma in Eastern Europe.

What role for market mechanisms?

There has been a great deal written about the "introduction of market mechanisms" into the East European economies—usually with the implication that this represents the antithesis of socialism. That's a red herring.

The goal of socialism is to eventually create an economic system that is so productive that the laws of market economics will sim8 SOCIALIST ACTION Mikhail Gorbachev Armenians demanding self-determination relations...

ply fade away; because they meaningless.

The laws of the market-that is, the law of supply and demand—apply only in a context of economic scarcity. If productivity increases to the point where the supply of commodities permanently drives their prices down to the vanishing point, then the law of supply and demand becomes useless.

But in the context of economic scarcity, the laws of the market cannot be ignored. The Stalinist bureaucrats have often tried to pass laws abolishing market relations, but they might just as well have tried to abolish the law of gravity. It can't be done.

The introduction of market mechanisms per se is not incompatible with planned economies. Market mechanisms for the distribution of goods are necessary to allow prices to accurately reflect costs of productions. This means allowing prices of commodities to rise when shortages of those commodities develop. Without that, immense waste occurs from a misallocation of resources.

It is not true, then, that market mechanisms have no legitimate place in planned economies. On the other hand, we are against the dictatorship of the market. It is necessary for the planners to regulate the market in the interests of the population.

The point for socialist planners is to utilize market mechanisms as a means of measuring real production costs, in order to increase productivity and gradually move toward socialism; that is, toward the day when the law of supply and demand is nothing but a bad memory. Meanwhile, subsidies and price controls on the basic necessities of life must be defended.

The threat to the planned economies in Eastern Europe comes not from the introduction of market mechanisms per se but from the proposed changes in property relations— that is, from the move toward denationalizing the industry and converting to a system of private ownership.

That is what the American, West European, and Japanese capitalists are pushing MARCH 1990 Chris Niedenthal Zaven Hachikjan/LIHTIKUVA OY SABA planned economies in comes not from the for-and that is what Gorbachev's perestroika program is paving the way for in the entire region.

The process of dismantling the planned economies, in fact, has begun-and if it does eventually succeed in accomplishing its purpose, it would constitute a genuine counterrevolution—a major historical step backward for the people of Eastern Europe, and for the working people of the whole world.

More than new laws needed When the media announce that socialism is dead, they try to give the impression that this process is virtually complete-that Eastern Europe has all but accomplished the transformation to capitalism. General Electric is manufacturing light bulbs in Hungary, and Rupert Murdoch has just bought two newspapers there. Volkswagen is moving into East Germany, and the golden arches of McDonald's will be springing up everywhere.

But if you look closer, you see that the economies of Eastern Europe are still predominantly under state control, and will be for some time to come, even if the capitalists' most optimistic dreams come true.

This transformation cannot occur simply by passing a new set of laws. Working people will be powerfully and negatively affected by this process, and can be expected to offer resistance. So while this counterrevolutionary process has begun, its outcome has yet to be decided—and it will certainly be decided in struggle. Working people of Eastern Europe over the last few months have demonstrated a fighting mood, a desire to defend their interests.

So when the newspapers say "socialism is dead," if by socialism they mean the planned economy, we can respond that in fact the struggle has only just begun, and there are some aspects of the situation that are encouraging from the socialist point of view.

On the other hand, we shouldn't kid ourselves-the planned economies of Eastern Europe are definitely under heavy attack, and we need to be aware of the dimensions of this attack.

One of the key weapons in the propaganda war against the planned economies is the charge that they deserve to be scrapped because they have failed. Planned economies are less productive, they say, and the evidence lies in the fact that the standard of living of people in Eastern Europe is lower than that of people in Western Europe.

It is true that the East European economies have stagnated in the 1980s, while Western Europe was experiencing an economic boom. But to generalize from this limited period that the whole historical experience of planned economy has been a failure is simply absurd.

The New York Times says that the problem has been "four decades of stifling central planning" (Jan. 11, 1990). A look at statistical data reveals, on the contrary, that the planned economies outperformed the advanced capitalist economies from 1950 to the early 1980s. It is only in recent years that the planned economies' annual rate of growth has slowed down.

This helps to explain why the Stalinist regimes have begun to crumble now rather than 10 or 20 years earlier. They were relatively stable because their planned economies were able to deliver the goods reasonably well.

A misleading comparison It should also be noted that those who compare Eastern and Western Europe simply assume that they are comparable and can therefore be measured with the same yardstick. Before World War II nobody would have imagined such a thing. Western Europe was industrialized, modern, and advanced. Eastern Europe was agrarian, feudal, and backward. Nobody would have thought to compare them on an equal basis.

But after World War II ended, Eastern Europe wound up with planned economies [see article on page 14]-and far from stifling productivity, an immense burst of productivity occurred. In just a few years, Eastern Europe was transformed from agrarian economies into modern industrialized economies. This meant, among other things, great steps forward in the literacy and the health and nutrition of the people of those countries.

Comparing them today is like comparing two runners, one of whom gets a one-mile head start in a two-mile race and then goes on to win. This doesn't prove that the runner with a head start is a superior athlete.

Two sides of a single coin There is another major reason why it's false to compare Eastern Europe with Western Europe, or the Soviet Union with the United States. When you do that you're weighing one economic system against only part of another.

By using Western Europe and the United States as a basis of comparison, you're selecting only the richest capitalist nations and measuring them against the Soviet bloc as a whole. It leaves the underdeveloped world— the so-called Third World-out of the picture, and that is extremely misleading.

The great wealth of Western Europe and the United States wasn't created in a vacuum-their great productivity depends upon the poverty of Latin America and Africa and Asia. It is a parasitic relationship. The affluence of some countries in the capitalist world and the poverty of the others can't be separated: They are the two sides of a single coin.

The economic relationship of the United States to the countries of Latin America, for example, consists of a continuous, one-way flow of profits from the south to the north. It is an imperialistic relationship that enriches the United States at the expense of its client states.

But what about the Soviet Union's relationship to Eastern Europe? Isn't that an imperialistic relationship, too?

While the Soviet Union has exercised political domination over Eastern Europe, the economic relationship is another matter altogether.

The recent news stories about the negotiations in COMECON, the Soviet bloc's counterpart to the Common Market, make that clear. All of the new reform governments of Eastern Europe have said they want out of COMECON; they're tired of being pushed around by the Kremlin and want to be free to trade with Western Europe on their own.

To have to make their cur"For the first time in 40 years, unemployment will be legal in Poland.

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It is predicted that up to 1 million workforce-will soon be out of work? rencies convertible and exchangeable in the international currency markets. So what was Gorbachev's response to this demand? He seemed overjoyed. He said that the Soviet Union would gladly exchange all its goods with Eastern Europe on the basis of world market prices.

But then the East European finance ministers suddenly had second thoughts. It dawned on them that they had been buying their gas and oil from the Soviet Union at prices way below market value-and had been selling their products to the Soviet Union at prices way above market value.

So the net flow of economic benefits had been going from the Soviet Union into Eastern Europe. Not only that, but several of the East European countries have a standard of living above that of the Soviet Union.

This adds up to a very peculiar kind of "imperialism." While the Soviet Union did oppress the East European countries politically and militarily, it did not drain them economically; in fact, it was subsidizing their economies.

Qualitatively different systems That points to a major difference between the two economic systems: Under capitalism, the strong economies exploit the weak. The planned economies do not exhibit that kind of exploitation. It's not built into their economic machinery. This has been the case in spite of Stalinist rule in the Soviet bloc.

The two economic systems are qualitatively different. The capitalist machinery is geared to producing profits for individual bankers and industrialists. The normal working of the machine produces social differentiation—which is just a compact way of saying "the rich get richer and the poor get poorer."

The planned economies, on the other hand, are geared primarily to fulfilling human needs. The New York Times gave this reasonably good description of the benefits of the East German planned economy:

"Until the current upheaval, East Germany was tenacious in preserving central planning, with all its trappings of full employment, free medical care, low-cost housing, free education, and price controls that make the staples of life affordable even on East Germany's low wages" (Dec. 11, 1989).

There is social differentiation in Eastern Europe, of course. The bureaucrats have a higher standard of living than the working people. But this represents a distortion of the planned economy, not its normal operation.

In East Germany recently, there was a massive cry of outrage throughout the whole country when the Wandlitz compound-the living quarters of a few of the top party leaders—was opened for the first time to public inspection. The houses there were large and well furnished, but they certainly weren't opulent, at least not by American standards.

The important thing to notice is that the bureaucrats took great pains to keep their privileged community hidden from public view. In our society, great extremes of wealth and poverty are considered normal, and rich people flaunt their affluence. The stretch limo has become their symbol. But in Eastern Europe, the bureaucrats' privileges were considered to be against the rules—illegitimate-something to keep hidden.

We've been led to believe that the East German workers broke down the Berlin Wall because they were clamoring for capitalism. But the outrage they expressed over Wandlitz suggests just the opposite. It showed a deep attachment to the ideals of social justice and equality—an opposition to social differentiation. How can it be supposed that they would welcome a transformation to capitalism, which would bring with it far more social differentiation?

The example of Poland The attempt to dismantle the planned economy has gone farthest in Poland.

The hatred that the masses felt toward the old repressive Stalinist regime has led them to want to wipe the slate clean—to get rid of everything associated with the old undemocratic methods of control, including the centralized control over the economy. But in doing so, they're running the risk of throwing the baby out with the bath water.

Near the end of December, the Polish government—now led by people in and around the leadership of the Solidarity trade-union movement—announced a new economic program that would attempt to reintroduce capitalism to Poland in a dramatic way.

And they meant it to be dramatic. The finance minister—a Solidarity economist— said that Poland had to go cold turkey; that it had to take an ice-water plunge into free-market economics; that this was the only ure for its ills. What this meant, first of al was doing away with government subsidies for foods, housing, and heating fuel.

The working people of Poland took a plunge, all right. They woke up on Jan.. 1990, the day the new program went into effect, and found their bread now cost 38 perent more, their ham 55 percent more, an heir electricity 400 percent more. If the wanted the luxury of heating their homes in January, their coal would now cost them six times what it cost the day before! Welcome to capitalism!

And guess what? In the face of these price rises, the new economic program freezes wages! And that's not all. For the first time in 40 years, unemployment will be legal in Poland. It is predicted that up to 1 million workers—15 percent of the workforce—will soon be out of work.

And don't forget-all of these blessings of capitalism are being bestowed on a country where a considerable part of the population was already living at a subsistence level. These price rises will mean that a lot of people will be driven below subsistence; they'll be going hungry.

How will the Polish people react to all of this? It must be remembered that the powerful decade-long struggle of Solidarity against the Stalinists very often focused upon opposition to price increases for the basic necessities of life. Every major battle was initiated by a rise in the price of bread or milk or meat or heating oil. And those price rises were peanuts compared to this!

So far there hasn't been a massive response. There was a report that 35,000 miners went out on strike in Silesia in protest over the wage freeze. Then it was reported that the strike had been settled, but the government refused to say what concessions they had made.

The reason the Polish workers have remained relatively quiet isn't hard to figure out. It's because this economic program has been imposed by a government that they consider their own: the Solidarity government that they brought to power and mistakenly believe is bound to represent the best interests of the workers.

But the new Solidarity-led government is misleading the people they're supposed to represent. An editorial in the Jan. 3 issue of the New York Times described this situation: "There is no certainty that the brazen plan to revive the economy will work. Success depends on the willingness of the Polish workers to swallow severe short-term losses because they trust that their new govemment is working for their long-term benefit."

The Times editorial goes on to explain that the Polish workers have to "swallow bitter medicine" if they want to cure Poland's economic sickness. The pain will not last long, the editorial states. Polish workers have to grit their teeth and wait it out.

It all sounds a bit like the old song: "Work and pray, live on hay, You'll get pie in the sky bye and bye."

But it's a lie! This is the central falsehood of the whole ideological campaign. The Polish workers will find no pot of gold at the end of this process. They will not be better off for all the pain they're enduring now. They'll be worse off.

If the Polish workers think that the new economic program will bring them a lifestyle full of the consumer goods they see advertised on West German TV, they're in for a rude awakening.

If they want to see what the future holds for them if they join the capitalist world, they should not look at France or West Germany; they should look at Bolivia or Brazil. That's what the imperialists have in store for Poland, and it's really not very difficult to see.

The Solidarity-led government is counting on foreign investment pouring in soon to expand production and provide work for the unemployed. But here is the catch. The massive infusion of capital that they're hoping workers-15 percent of the for has to be organized by financial institutions like the International Monetary Fund and the World Bank.

New loans to Poland have already been arranged by the IMF. But the IMF does not lend out money for the asking. To borrow money through the IMF, Poland is required to agree to meet certain economic conditions.

First, it has to take steps toward dismantling the planned economy. And second, it has to impose conditions of economic austerity on the Polish population. As a matter of fact, Poland's new economic program was submitted to the IMF, and it was approved.

Ask the nations of Latin America, Africa, and Asia how IMF loans have helped them? These loans don't solve their problems. They simply sink the debtor nations into debt bondage; into a deeper cycle of poverty and deeper dependency upon the imperialist banks.

What the IMF and their sponsors have in mind is the "Latinamericanization" of Eastern Europe. They want to open up the whole region as a field of private investment for themselves.

What worries the capitalists But there is one factor that might prevent them from accomplishing their goal-and that is resistance on the part of the workers themselves. This is what the capitalist bankers and the reformist Solidarity leaders in the Polish government are worried about.

One of them, Adrian Wozniakowski, an economist at the Labor Research Institute in Warsaw, said: "We don't know if there are going to be 100,000 or 1 million unemployed.... I'm worried that it will produce strong social pressures." Another economist, Eva Kulesza, says, "I'm worried about an explosion of malcontent" (New York Times, Dec. 26, 1989).

Now consider the worries of one Jaroslav Pietras, a 34-year-old University of Warsaw professor: "The transition," he says, "will inevitably bring irrational behavior from people not used to the unemployment and dislocation that come with free markets" (Ibid., Dec. 30, 1989).

That's really adding insult to injury. If the workers resist being thrown out of work, they will be acting irrationally, according to this arrogant yuppie.

We socialists are not worried that the workers will resist. We say they should resist! They should tear up this program and throw it back in the face of the IMF and their Polish collaborators. It's not in their interests to suffer in silence and allow the imperialists to regain control of their country.

Are the Polish people going to allow their nation to be sold to the imperialists? I don't think that's what they have in mind. As the New York Times put it, oh so delicately, "[M]any Eastern Europeans are not eager for their economies to become wholly owned subsidiaries of the West" (Dec. 17, 1989).

Historic struggle under way The East European masses are presently engaged in a historic struggle for democratic rights. That fight isn't over yet, but now they have to combine it with the struggle to defend the social gains represented by the planned economy. There is no question of going backward to Stalinism, but rather going forward to economic democracy and to workers' control of the planned economy.

And there are some positive signs that this will happen.

In East Germany there is a strong wing of the popular movement that has clearly stated its intention to resist the return of industries to private ownership. In Czechoslovakia, opinon polls show a large majority opposed to the privatization of the economy. And as for Poland, the Times quoted the editor of a new business magazine as saying: "Our people hate Communism, but when you start talking about privatization, many of them act like Communists" (Nov. 30, 1989).

So while the words "socialism" and "communism" may be temporarily repugnant in Eastern Europe, in an objective sense the desire for socialism-for social justice and equality—is far from dead.

The leaders of Polish Solidarity are leading in the wrong direction, but there is no telling how far the millions of rank-and filers will follow them. The tradition of this mass workers' organization in Poland is a positive asset for the battles that lie ahead. The big question is whether an alternative leadership will come to the fore.

In Hungary there has been some motion toward the formation of workers' councils in the factories—not a mass movement as yet, but one that points the way forward toward a form of democratic workers' government, and a means of democratically managing a planned economy.

In Czechoslovakia there are more than 10,000 strike committees in existence that could become the basis of a system of workers' councils.

Also, for the first time in more than 40 years, the program of the Fourth International can be openly published and circulated and discussed in Eastern Europe. The Fourth International represents the most consistent historical opposition to Stalinism within the socialist movement. Its ideas are sure to get a hearing, and its members will be working to bring a revolutionary socialist leadership to the workers' struggles.

Join us in fight for socialism!

In summary-speaking for socialists everywhere, I'll close by paraphrasing Mark Twain: The reports of our death are greatly exaggerated.

Socialism is alive in Eastern Europe, and it is alive here in this country, too.

The lesson of what happened in Berlin is that a mass workers' movement can bring down walls. It is only a matter of time before workers in other parts of the world follow their example-and their purpose will to get rid of capitalism.

The full development of socialism can only be achieved on a worldwide scale, not in one country or all of the countries of Eastern Europe—not even together with the Soviet Union. Above all socialism requires a revolutionary transformation of the imperialist colossus, the United States.

So I appeal to you to consider becoming part of the socialist movement yourself. • ITION MARCH 1990 9

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