Why capitalism is having difficulty sinking roots in ex-Soviet Union

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A Soviet worker operates a punch press that her entreprenurial boss "borrows" from a state factory.

"The preconditions for capitalist production are yet to be achieved, and the economy, now neither planned nor yet market-driven, 12 SOCIALIST ACTION APRIL 1992 Former President Richard M. Nixon hit the front pages early last month when he criticized President Bush for failing to respond vigorously enough to an historic opportunity to guarantee the successful transition from "communism" to capitalism in the former Soviet Union. This "elder statesman's" warning—that world capitalism may have won the cold war but is in danger of losing the peace has been increasingly sounded in many capitalist quarters in recent months.

Clearly, the former Soviet economy's resistance to capitalist restoration has exceeded anyone's expectations. Although the Stalinist bureaucracy retains control over all the key positions of power, their efforts to make the transition to capitalism has so far led mainly to deepening unemployment, inflation and mass misery. Along with this has come an orgy of unrestrained plunder of public property by bureaucrats and other hopeful entrepreneurs aspiring to become members of a new class of capitalists.

Nixon only underscored the obvious with his warning that "a new despotism" will take hold if Russian President Boris Yeltsin fails to get positive results. But hardly anyone will take this at face value the record of U.S. support to brutal dictatorships is well known. The "new despotism" they fear is not a new Stalinist dictatorship but, rather, the inevitable entry by the working class into the center of politics in their own name and in their own class interests.

Already, there is ample evidence of a growing loss of faith by masses of workers in the promised miracle of capitalist prosperity. Meanwhile the highly touted system of parliamentary democracy in the former Soviet Union lies dead in the water and Yeltsin and his counterparts must rule essentially by decree, albeit with the consent of the republics' parliaments.

The deepening crisis engulfing the former Soviet Union and the rest of Eastern Europe poses two momentous questions:

• Why is it proving so much more difficult to go back to a market-driven economy than it was to establish a new social order based on a planned economy?

• And, second, why have the workers, who mobilized by the millions to overthrow the political dictatorship of Stalinism, stopped short, so far, of finishing the job and resuming their march toward world socialism begun on October 25, 1917?

Barriers to capitalist restoration The answer to the first question is partly contained in the very posing of it. Never in the past has a newer form of social organization returned to an earlier form. No country which had developed from feudalism into capitalism, for instance, has ever reverted back to feudal property relations.

Moreover, the development of the market was and remains an essentially unconscious process—it can't be simply legislated. The evolution from episodic, accidental forms of exchange to an institutionalized, highly fluid one based on money—a universal equivalent capable of expressing the values of the world of commodities-is a prolonged evolutionary process and takes place behind the backs of society.

Now, as a result of this long historic process, it is possible for billions of exchanges to take place every day in the capitalist world. Billions of people buy and sell everything they need for daily life including labor power. The value of each class of competing commodities is discovered and rediscovered daily through these Jaines Hiller/N.Y. Tìm continues to decline."

billions of essentially free transactions. Without this fundamental mechanism a "freely" functioning market system-and thus capitalist production—s impossible.

Of course it will not require a thousand years of commodity exchange to reestablish the free market in the bureaucratized workers' states. A highly developed market system is in place throughout the capitalist world and technically, at least, can be quite swiftly transplanted inside these transitional societies. But this can happen only on the highly unlikely condition that workers will meekly accept the consequences the abolition of guaranteed jobs, minimum living standards, and of an advanced system of free social services.

Capitalist-style "free labor," after all, means labor that has no such guarantees, and thus is terrorized by the ever-present danger of joblessness and impoverishment. And whenever, in the course of unending class struggle, workers are able to get the upper hand over their employers, the capitalist state finds the first opportunity to use its lawmakers, courts and cops to restore the fullest domination of capital over "free In exactly the same spirit, after Russian workers conquered the heights of governmental and state power in their October Revolution, their state intervened on their side against the capitalists. The new state created by the Soviet workers immediately authorized armed workers and farmers to exercise exclusive democratic control over the means of productioneven though still under private ownership.

Russian capitalists, naturally, resisted. The revolutionary workers, therefore, proceeded before very long to smash the source of the social power of the capitalist class: They expropriated the means of production from the capitalists and established a planned economic system to serve humanity, not private profit.

Consequently, from the first day of the Russian socialist revolution, commodities, including labor power, no longer exchanged strictly in accord with the laws of commodity exchange. The workers' used their state to intervene in favor of the great majority. Wages and prices were no longer set by the market. They were more or less arbitrarily set to guarantee that everyone could at least receive the necessities of life.

For reasons this newspaper has explained many times before, the Soviet state came under the domination of a privileged bureaucratic caste. This caste had to crush workers' democracy in order to defend and advance its privileged position. But without democracy, without the conscious participation and control over the economy by millions of workers at every level of the productive and distributive process, catastrophic bureaucratic inefficiency was inevitable.

The bureaucracy makes its move By 1985, the bureaucratic system of command over the planned economies was in serious trouble. Production in all the bureaucratized workers' states was declining at an increasing pace. Workers were reaching the end of their patience. Even in Poland, where the Stalinist rulers had cracked down on Solidarosc four years earlier, the Polish workers' movement was again on the rise and threatening a new revolutionary upsurge.

The Mikhail Gorbachev-led Communist Party of the Soviet Union, seeing the handwriting on the wall, took the only course open to it. They made the decision to chart a course toward the restoration of capitalism.

The bureaucracy had long known that it could not democratize the economic system and also hold on to its elite life-style. They could preserve their privileges only by transforming themselves from a caste of self-serving managers into a class of private owners of the means of production. Moreover, they calculated that this would win them the wholehearted support of world capitalism, and with that, the material aid necessary for stabilizing their dominant position on the new class basis.

Now, after seven years of intense efforts to tear down the conquests won by workers in the October Revolution, the workers continue to resist; the preconditions for capitalist production are yet to be achieved, and the economy, now neither planned nor yet market-driven, continues to decline.

Moreover, because prices of commodities still have little relation to their values, a real currency able to serve as a reliable measure of value remains beyond the reach of the capitalist restorationists. By the same token, convertibility of the ruble with other currencies also remains beyond reach.

Consequently, without such a stable means of exchange and measure of value, the buying and selling of everything from hamburgers to steel mills is so hobbled that establishing capitalist relations of production remain impossible. And the repatriation of profits from foreign investment remains a formidable task yet to be achieved.

Furthermore, how will the nationalized economy be privatized? Who will buy the giant factories? The bureaucrats and other aspiring capitalists have nothing approaching sufficient capital to operate them, much less pay more than a token price for the state-owned means of production. Meanwhile, the piecemeal sneak-thieving of the publicly-owned means of production is already provoking mass outrage.

Foreign investors, of course, have the wherewithal to buy these industries. But why would they? Where would they sell the products of these obsolete industrial dinosaurs? Why would they spend the billions it would require to modernize and make them efficient producers, able to compete on the world market, when they are already being plagued by a developing (continued on page 14)