THE attacks by Soviet military units on targets in Lithuania and Latvia over the weekend of January 12/13 are only the most dramatic expression of a systematic attempt to restore bureaucratic law and order in the Soviet Union. COLIN MEADE
W ELL-KNOWN faces of the
perestroika era have been disappearing from top positions - starting with the resignation of Eduard Shevardnadze as Foreign Minister last December. Among the more striking appointments is that of KGB (secret police) man Boris Pugo to head the Interior Ministry. He, along with present KGB head Vladimir Kryuchkov — who on December 11, 1990, launched a violent television attack on independence announcing his organization's readiness to defend law and order — comprise a duo of professional hard men, disposing of immense power and resources.
### Police strengthened
These powers, indeed, are growing. Several regular army divisions were transferred to interior ministry control in early December, while the KGB has gained further personnel and command of new elite troops. These special forces are now a million strong. Control of the media — which was fully mobilized to justify the attacks in the Baltic — has been tightened, with the independent press agency Interfax being shut down on January 11, just before the fighting began in Lithuania. On January 16 Gorbachev called for the media to reflect the "objective point of view of society rather than the positions of political groups."
Another area where the KGB has been in action is against the "shadow economy", backing up the February decision to withdraw large currency notes from circulation. This measure, which is being presented as a means of combating
February 18, 1991 • #200 International Viewpoint speculation and illegally earned incomes, was explained another way by the Moscow correspondent of the Economist (February 2, 1991): "This reform makes no sense on its own, but may be a prelude to wider price change, because it limits the amount of savings that could fuel inflation if prices were liberalized." The same author suggest that preparing to combat popular protest against price rises may be the reason for the introduction of joint police and army patrols in major cities as of February 1.
All of this is being done in the name of upholding Soviet legality, in the face of an
"destructive upheaval". Certainly from the bureaucracy's point of view there is upheaval, as their powers and prerogatives are challenged more and more flagrantly by independent forces taking decisions in their
This applies both to the non-Russian republics, where issues of national independence fuel defiance of Kremlin control, and in the Russian republic under Boris Yeltsin. A dramatic expression of the rotting away of key pillars of the Soviet order, and the central role of the national independence movements in this, is the widespread failure of conscripts to turn up for service.
The vanishing army
According to the Defence Ministry, only 78.8% of conscripts reported for duty in the autumn draft, the turnout being 12.5% in Lithuania, 24.5% in Estonia, 25.3% in Latvia, 10% in Georgia and 28.1% in Armenia. The army also has to deal with the material problems and blows to morale attendant on the withdrawal of many of its forces from East European countries. Enforcing the draft was among the reasons given for the steady build up of a public military presence in the Baltic
An attempt by Moscow city council to appoint a new police chief was overturned by Pugo's interior ministry, who ordered that the directives of the new police chief should not be obeyed by rank-and-file officers. Similarly Pugo has stated that the existence in Lithuania of two police forces, one loyal to himself and the other to the elected government of Lithuania, is unacceptable.' Yeltsin's suggestion on January 14 that a Russian army should be formed was denounced by Gorbachev the following day as a "serious attack on the Soviet constitution".
Where does Gorbachev stand in this growing confrontation? At the most basic level, as president with "special powers" he is responsible for all that happens. It was Gorbachev who appointed Pugo, permitted the strengthening of the repressive forces and authorized Kryuchkov to call for a firm hand to defend Soviet law and order. Thus Gorbachev is not, as many Western observers would have it, being taken prisoner by the most bloodthirsty wing of the Soviet bureaucracy against his will. Having fixed the game to the advantage of the bureaucracy, he then puts himself forward at each moment of crisis as referee — between a state armed to the teeth and the materially weak and often politically inept national and democratic oppositions.
After the recent events in Lithuania, Gorbachev offered negotiations to the pro-independence Lithuanian ment, while at the same time condemning the Lithuanian leadership for "anticonstitutional" Lithuanians into "second-class citizens".
assaults, carried out by elite troops under the aegis of a self-appointed National Salvation Council, are then presented by him as a spontaneous outburst of rage at this inhuman treatment.?
fundamentals, remains obdurate. In particular he determined to see through his scheme for an all-Union referendum on the future of the Union to be held on March 17. The question in this referendum will be: "Do you consider it necessary to keep the Soviet Union united as a renewed federation of equal and sovereign republics where human rights and the freedom of any nationality will be fully guaranteed?" At the same time the result of the Lithuanians own republic-wide opinion poll on February 9, asking the question: "Do you want Lithuania to be an independent democratic republic?" has been presidentially ruled out of order.
The protagonists of repression find voice in the recently formed Soyuz (Union) group in the Soviet parliament, which groups together about 30% of the deputies. Soyuz leaders have openly called for the removal of Gorbachev — reflecting sincere hatred of the man amongst military, secret police, and Russian imperialist constituencies who have seen their sphere of action shrinking over the past years.
All power to the president
At the same time one of the main points in the Soyuz' programme is the establishment of direct presidential rule in troubled areas — a demand for more power to Gorbachev, not less.? For the time being the hard right are content to organize provocations, and Gorbachev is not unhappy to have to step in to mediate.
While the hard right put themselves forward as defenders of Socialism, this does not sum up their economic programme. Colonel Alksnis, who has stepped into the limelight as a spokesperson for Soyuz — and who put in an appearance at a pro-Union Interfront meeting in Lithuania just after the army attack — looks forward to a repeat of the Japanese experience where "The American army and its bayonets led the country on the way to its economic
USSR
The idea of a firm hand directing the transition to the market is current across the board in the Soviet bureaucracy; according to Yuri Prokoviev, the head of described as a "centrist": " In this context I will cite not only Japan and South Korea, but also Chile, where the market infrastructure was rapidly created. In all these countries this was done through state investment and state policy.". Thus the turn to the market will be maintained while the forces of disunion and chaos are Concentric circles of control
The law and order turn in the Soviet Union sent a shudder through many in the Eastern Europe. While a return of direct Soviet domination seems highly unlikely, the future for the East European countries, which, with Afghanistan and Mongolia, form an outer circle of Moscow's domain, will indeed be significantly affected by what happens in the inner circle of the non-Russian republics. The issue is not the market, but democracy.
The Kremlin wants strong states throughout the region, that will not infect its own people with radical notions about national self-determination and control from below. In this they will have the connivance — more open in Germany, more duplicitous in the US — of the Western governments, who are both alarmed by the prospect of "chaos" to their East and tempted by the dilomatic and economic opportunities that the situation in the region offers, including for pursuing competition with one another.
Furthermore the Soviet elite have become accustomed to strutting the world stage as a world power —a privilege they will not lightly surrender. From this point of view they may be hoping to be included in the post-Gulf War arrangements in the Middle East, accepted — at last! - as a responsible partner by American imperial-
Both American imperialism and, in its lesser way, the Soviet bureaucracy are on the attack at the moment. But the tide of history is against them; and they can only stem the crumbling of the postwar order for as long as no alternative presents itself.
Whatever their ideological differences, and difference in experiences — and these are vast - the movements in the West against the American intervention in the Gulf and against the new repressive turn in the East have to look to each other to arrive at an alternative to the dying system, rather than looking to its ailing protagonists to impose one. * 1. International Herald Tribune, February 5, 1991. 2. Argumenty i Fakty, no. 3, 1991. 3. Argumenty i Fakty, no. 52, 1990
Quoted by Jean-Marie Chauvier in Le Monde diplomatique, February 1991. 13 5. International Herald Tribune, February 5, 1991.
The Soviet economy:
the fight for control
International Viewpoint #200 • February 18, 1991
USSR that the elimination of state control over the economy means that "it will fall into the hands of the mafia." The term "mafia" reflects the popular perception of a growing fusion of the bureaucracy, especially the economic administrators, with the "affairistes" of the private sector. These are the people who hold power in the economy and so also in society.
Any Soviet citizen can readily offer a
"IT IS NOW OUR TURN to reject that which has not withstood the test of history.! They often try to frighten us that the market is exploitation, the restoration of capitalism, the rule of the shadow economy. In reality, we are talking about the transition to a civilized, cultured market, open to all honest and industrious people." (from the appeal of the Russian parliament to the population to support the "500-day Plan for the Transition to the Market)."2
"I recently read in your paper:....'Employees of the state sector are prepared to become hired workers only on condition that their wages rise significantly: ....| don't know of any workers in the state sector who would be prepared to become hired slaves. And what can a 'significant' increase, say a doubling, of wages give them if prices rise 5-10 times and if mass unemployment sets in? Criminals, who have amassed capital, are becoming a class of owners and rulers of the destiny of the state." (from the letter of a worker of
Kharkov region).3
Published below is the first part of a long article dealing with the current economic situation and the workers response. The second part will appear in the next issue of IV.
DAVID SEPPO
N EARLY DECEMBER 1990, a journalist at the liberal daily Komsomol'skaya pravda purchased a pig from a farmer and brought it to the kolkhoz (private market) to sell. The market price of meat had doubled over the last half year to 30-35 rubles a kilo* (with a 33-66% rise over the past few months alone, and he wanted to understand why.
He made the rounds of 16 of Moscow's
33 markets but everywhere was refused access to the counters where he would have been able to offer his meat for sale to
Finally, at the Riga market, Moscow's largest, after paying a "crazy" bribe to the butcher and inspector, he was given a counter among the egg dealers. He posted a sign "Cheapest Meat at the Market" and started to sell at five times below the going price. The reaction was swift. A man purchased a very large piece of meat only to run back a few minutes later shouting that the infected.
meat was
When this false accusation failed to deter the other clients, our journalist was denied access to the scales, under the pretext that his meat was dirty. He then
14 began to sell the meat unweighed, upon which four large men attempted to drag him away. "The markets of the capital", he concluded, "where, in principle free economic laws hold sway, are today completely monopolized....The mafia structure of a single market takes in several tens of thousands of rubles a day. The whole path is thickly paved with bribes."S
No power to the Soviets
Some 75% of the respondents in a survey conducted in the Soviet Union in the summer of 1990 stated that their ability increased over the past two years. In to influence political life had not another survey in Moscow in the fall, 60% claimed that "power in the localities belongs not to the soviets but to the chiefs of the mafia."
In the sixth year of perestroika, people are waking up to the realization that despite the increased freedom of speech, the competitive elections and the removal of the party apparatus from the levers political power, they themselves remain almost as powerless as ever. People who only a year ago were fervent supporters of the schemes of the radical marketeers, now typically express fear list of examples drawn from personal experience to support this view. The "mafia" has lately also become a major theme of the press, liberal as well as conservative (there is no mass socialist press). As a social phenomenon its contours are illusive and fluctuating - its shadowy character is in the nature of the beast.
But the term most often refers to the principal kinds of related activity: the creation and maintenance of shortages by monopoly structures and the illicit transfer of state resources and funds into private hands. Both involve the collusion of administrators in the state sector with the "shadow" [tenevaya] economy, itself often indistinguishable from the legitimate private sector.
The mafia was not of course born under Gorbachev, as the trials at the start of perestroika surrounding Rashidov's reign in Kazakhstan amply showed. But with the further weakening of central control and the legalization of the private sector, the "Rashidovschina" has become much more generalized. The following are a few examples of "mafia" activity that could easily be multiplied. Watermelons - the missing millions
In September 1990 a deputy of the Moscow Soviet travelled Astrakhan to find out why tomatoes and watermelons were arriving from the southern region in such small quantities. The local authorities showed him a pile of telegrams from administrators of Moscow's wholesaleretail produce network instructing them to 1. The author would like to thank Allen Fenichel, Andrea Levy, Dave Melnychuk and Leo Panitch for their helpful comments on an earlier draft of this article. 2. Sovetskaya Rossiya, October 10, 1990. 3. Rabochaya tribuna, September 4,1990. 4. The average industrial wage is about 260 rubles a month. 5. Komsomol'skaya pravda, December 12, 1990. 6. Trud, July 11, 1990. 7. Sovetskaya Rossiya, September 30, 1990. 8. A related term, less frequently used, is "bandokratiya" (from the word "banda" gang) which one economist has defined as "organized crime that has grown up on the basis of bureaucratism and merged with it economically, socially, and even politically." A Buzgalin: "est' li u nas ekspluatatsiya?— Sovetskie Profsoyuzy, no. 17-18, 1990, p. 26. 9. Many factors, of course, contribute to the shortages, but among these monopoly behaviour occupies a special place. For an analysis of the role of monopoly in the Soviet economy, see V. Bogachev, "Monopoliya v sovetskoi ekonomike," Ekonomicheskie nauki, no. 6, 1990, pp. 11-22.
February 18, 1991 • #200 International Viewpoint stop shipment because of an in
Moscow, over-supply which, of course, did not exist. "Prices are now most-
"by agreement' ly
"The less goods, the higher the prices can soar. Who profits from the reduced supply of vegetables? Those who sell them. I consider that mafia links along the lines warehouse-shop-speculator are real! "10 As for dry goods, the director of a Moscow department store chain estimates that only 18% of the goods in high demand that are produced and imported actually mer." Enormous lines stretch around state shops, while at
- and sometimes only a few yards from the door of the state shop itself - one can purchase the same goods without any wait for several times the state price.
Union
The
Soviet has imported hundreds of millions of dollars worth of medicine over the past two years.
Yet even simply aspirin has become a rare find in the pharmacies. According to the director of a Moscow pharmaceutical trading firm, most of the imported drugs are not those that are in most demand and no one consulted her about this.!2 bundle in payoffs from the exporters.
Anyone with enough money can obtain needed drugs by bribing the pharmacy or warehouse manager on the black market now quite legal foreign currency drug store.
According to one report, the volume of is already approaching that of the state pharma-
Shortages act as political tranquilliser
Besides economic gain, shortages also play a useful political role for those interested in maintaining popular quiescence.
People are so preoccupied with the material struggle for survival that they have little time or energy for sustained political activity (this is not, of course, to claim that the shortages are the result of a political conspiracy, though in some cases, even this hypothesis should not be dismissed. In any case, one can argue with confidence that, were it not for the political role played by the shortages, efforts to deal with them would be more intense and successful.)
And when political ten-
Sions rise dangerously,
"defitsit"
(a collective for term scarce goods)
is suddenly
"thrown" onto the market. According to a resident of the industrial town of
Sverdlovsk, after soon a mass political demonstration, the authorities "began to
'throw out Austrian boots,
Romanian blouses and deoderant from somewhere or other." Naturally lines spring up, then lists, guardians of the lists and guardians of the night lines. The committee elected at the demonstration found itself isolated soon from the rest of the popula-
As shortages grow more serious, the practice of selldirectly in the has expanded.
This is a commonly used and quite widespread tool in the hands of the administration for reinforcing the workers' dependence. A worker who speaks up against ment might miss out.
At the same time, there are never enough goods to go round, and the squabbling over who is to receive what can seriously undermine solidarity within the collective.
This practice also has a deeply corrupting influence on workers, since the goods that are sold are often not scarce basic consumer goods but items such as cars, electronic equipment,
French perfumes, which the workers then resell at a large profit. Management is, of course, perfectly aware of this.
Shortages also serve as a political football for conservatives and liberals who want to discredit each other. With the potato crop rotting in the fields, party officials accused the "democrats" elected to the soviets in the spring of 1990 of doing nothing to mobilize their constituents for the harvest (this used to be the role of the party apparatus until it was stripped of its administrative functions in the economy).
The liberal press, in its turn, blamed the
10. Kuranty (Moscow), October 4, 1990.
11. Rabochaya tribuna, October 9, 1990.
12. Vechernaya Moskva, September 27, 1990.
13. "Apteka gde est' vse", Nedelya, no. 41, October 8,
1990, p.5.
14. G. German, "Ochered", Rabochii vestnik (Perm'), no. 5, May 1990, p.3.
15. Central Soviet television, September 21, 1990. At the same session, Sukhov also called on the leadership to be honest enough to admit that the better life they are proposing is one that will take place under capital-
USSR conservatives for sowing panic in order to discredit the "democrats". These latter pointed their finger at the central economic apparatus for failing to take measures in time, when the problem was foreseeable even a year ago. Indeed, the first reaction of Gavril Popov, Moscow's liberal mayor, was to refuse to mobilize his constituents, suggesting instead that the incompetent ministerial apparatus be sent to the fields.
Leonid Sukhov, a taxi driver from Kharkov and member of the USSR parliament expressed a widespread view when he suggested that "someone" is consciously creating a desperate situation with the aim of preparing the workers psychologically to accept any reform, including the market.'5 The "democrats" argue that they lack real power to change the situation. And while there is much truth to this claim, they have done little to mobilize the population in order to change the correlation of forces. Mafia - vanguard of capitalist civilization
There is a general reluctance on the part of the liberals, stemming from their ideological orientation, as well from more concrete political considerations, to apply "administrative methods" — the only ones that could be effective against monopoly — to rein in the mafia. For, as the Russianborn American economist Vasily Leontieff has argued, today's mafia is tomorrow's class of "civilized" capitalists.
Direct robbery of the consumer is only one source of "mafia" profits. Parallel to this, and sometimes overlapping, is theft from the state. Workers tell of the "pocket" cooperatives!6 and joint ventures set up by enterprise management for the illicit sale abroad or to the private sector of raw materials and semi-manufactured goods. In a typical case, research and manufacturing association Gidrolizprom authorized the creation the cooperative Khimtekhnika and transferred to it — free of charge — the association's large store of defective titanium hydrolysis apparatuses.
Khimtekhnika traded these for from six to nine million rubles worth of computers and video players, of which Gidrolizprom had none. After several narrow escapes from the economic police and tax inspec tors, Khimtekhnika's directors transferred these assets to a joint Soviet-Swiss venture, Intercomplex, created specially for that purpose (joint ventures enjoy a two-year tax holiday). ism. In that case, he suggested, the Communist Party's name should be changed to the Capitalist Party. 16. Soviet cooperatives often ordinary private enterprises that employ hired labour. Asked in September 1990 what would happen if the state legalized private property, Artem Tarasov, vice-president of the Union of Cooperators, answered: "Nothing. We would simply get rid of the camouflage and call things by their names...[My cooperative would become] a company with private capital." Rabochaya tribuna, Sep. 15 tember 4, 1990.
International Viewpoint #200 • February 18, 1991
USSR
Since then, the Gidrolizprom association has been disbanded. Its former institutes and factory, now independent, face large debts and bleak futures. Not so the former director of Gidrolizprom, who now stands at the helm of Intercomplex.!
Sub-contracting work to cooperatives is a common way of turning non-cash credits into cash. In the Soviet economy monetary exchanges between state enterprises take the form of bookkeeping transactions between the State Bank accounts of the different enterprises. In such exchanges, no cash changes hands.
Big profits in computer
On the other hand, in transactions between state enterprises and cooperatives, which are non-state enterprises, cash is paid out of these accounts, allowing state managers to receive kickbacks or salaries as members or employees of the cooperative. There are also fortunes to be made in foreign dealings. Most of Moscow's joint venture construction companies are too busy importing and selling computers to put up any buildings. And why should they, when their profits can reach 4000%?18
As a minister in the Latvian government put it, "cooperatives and joint enterprises are often oriented not towards the production of consumer goods but towards their redistribution. From the state's pockets into their own. If we are to call things by their name, they are involved in speculation on a very large scale."19 Under Brezhnev, a "gift" of jeans or whisky helped to seal foreign export deals to the Soviet Union. Under perestroika, when foreign currency dealings have been decentralized, large cash sums of foreign currency have become the norm. 2
Mention must also be made of the party apparatus, many of whose former and current members are using their connections and illegally accumulated wealth to go into business. In Leningrad, for example, the once mighty regional party apparatus has been reduced to 37 people. But they keep busy renting out offices to cooperatives, private banks and foreign companies in the Smolny Institute, a historic landmark and prime piece of real estate that rightfully belongs to the people. They have also turned one of the committee's hotels into a joint venture."
But it is not only members and former members of the bureaucratic clans who are involved in these activities. A scandal broke out in the Moscow Soviet when a deputies' club by the name of Stolitsa (capital) tried to oust the local temperance society from its premises on Chekhov St. It was discovered that this club's goals are "production and commercial activities." Further inquiry revealed that its founders work in the Soviets' Commission on Eco16 nomic Policy and Entrepreneurship. Komsomol'skaya pravda remarked:
example of Stolitsa, unfortunately, is not unique, but is even typical of the existing structure of society: different commissions of local soviets often create various commercial organizations and pay part of their profits, not to the local budget, but directly to their founders. And the founders, of course, repay the kindness. "22
In December 1990, 35 members of the Oktyabr'skii District Soviet in Moscow publicly accused its chairman, Ilya Zaslavskii, a liberal luminary, of "organizing monopoly structures, as similar to classic "shadow" formations as two peas in a pod.... Judge for yourselves: the chairman of the District Soviet, the chairman of its executive committee, and almost all his deputies, having become heads of the district's political structures, are at the same time directors of cooperatives, commercial banks and firms. [There follows a long list of these firms] Exceptionally favourable conditions are created for the activity of all these firms, and tens of thousands of rubles are being pumped at intensive rate into their financial accounts from the basic budgetary funds of the district executive committee, that is, they are openly robbing you and me of funds intended for the socio-economic development of the district. " Vegetable harvest sabotaged
The deputies went on to accuse the executive, busy with realizing Zaslavskil's conception of the "market economy and financial independence of the district" of sabotaging the district's vegetable harvests campaign. The housing programme, they argued, was also failing: while the executive was selling state apartments primarily to occupants who openly stated their intention of leaving the country and reselling the apartments for foreign currency or renting them out to foreign companies, 60,000 people in the district still lived in communal apart-
These developments - the "transition to the market" as the uncontrolled sway of monopoly formations and the illicit transfer of public wealth into popularly termed ization" of the economy, do not come as a surprise to Soviet Marxists, who are the only ones even to attempt a serious analysis of the underlying causes of the "com17. T. Bogacheva, "Rasgosudarastvelenie
Pravitel' stvennyi vestnik, no. 50, Decem18. Such is the finding of a Moscow research institute. Personal communication by M. Malyutin, director of the sociological service of the Moscow Soviet.
"Zaslon spekulyatsi", Nedelya, no. 20. Private communications from German and Italian 21. From Leningrad TV, November 5, 1990. Smolnyi, once a school for girls of the nobility, was seized by the Bolshevik and other revolutionary organizations in 22. Komsomol' skaya pravda, October 3, 1990.
mand" system's failure. 2 They have always insisted that the basic issue in economic reform is power, that is a social issue, and that the market-versus-plan debate is about mechanisms of regulation that in and of themselves do not determine the nature of a social system.
No more "one big factory"
The failure of the "command" system cannot be explained by simply citing the
"utopian nature of a planned economy," though selves call for a revision of the old model of "one big factory", including a significant expansion of the role of market relations in the Soviet economy. But this task, however important, cannot be resolved successfully in the interests of the great majority without directly confronting the issue of power.
For the Marxists, the underlying social cause of the crisis of the old system is the absence of control over the economy's administrators, who after the revolution usurped the power of the economy's official owner, the people, without becoming full owners themselves.
Under Stalin, at the origins of the "comeconomy, some control from above did exist. A manager who failed to carry out assigned tasks knew that he or she would be sanctioned, often in a drastic manner. Khrushchev eliminated the terror but did not replace it with democratic control from below. He merely played with democracy.
But even his timid reforms provoked the opposition of the bureaucracy that was able to find allies in the majority of the political leadership. Brezhnev thus came to power as the candidate of the bureaucracy. What Soviets today call "the period of stagnation" was probably the purest expression of the rule of the bureaucracy increasingly free of outside political control. During this period administrators especially at the top and middle levels, did not need particularly to fear punishment for failing to carry out official duties. Real sanctions were reserved for those who violated the informal rules, the esprit de corps, of the bureaucratic caste mired in
From this point of view, Gorbachev, though himself a reformer, has favoured the process that he inherited from Brezh23. Rabochaya tribuna, December 9, 1990. 24. Non-Russian readers will find Soviet analyses that share this basic framework in D. Mandel (ed): La perestroika: économie et société, Québec: Presses de 'Université du Québec, 1990 (articles by V. Bogachev, V. Dementev, Yu. Sukhotin) as well as in the review Alternatives (Montréal and Moscow) No. 1, forthcoming, spring 1991 (articles by V. Buzgalin, B. Kagarlitskii, A. Kolganov, Yu. Sukhotin, G. Rakitskaya, B. Rakitskii). For an attempt to briefly summarize the position common to many of the Soviet socialists see D. Mandel, "A market without thoms: the ideological struggle for the Soviet working class", Studies in Political Economy, Ottawa. no. 38, autumn 1990, pp. 30-36.