Vanished hopes of perestroika: USSR: a future that never arrived

By Jean-Marie Chauvier, Le Monde diplomatique, June 2005

Twenty years ago Mikhail Gorbachev promised glasnost and perestroika, disarmament, reconciliation, no more military blocs, a world where democracy, independence and ecology flourish, and socialism is reborn’. Then the USSR broke up and the eastern bloc was dissolved.

Everything is rotten. Everything must change

Eduard Shevardnadze to Mikhail Gorbachev in 1984.

THERE was no moment of truth. Glasnost did not arrive overnight. Everything had been radically transformed during the post-Stalin period: power, the system, society, culture, minds. The USSR was not the chamber of horrors described in the western media. Within the seemingly unshakeable structure of a monolithic state, society had been developing in a subterranean way for years. Invisible to eyes blinded by anti-communist propaganda, there had been signs of change, official and unofficial restructuring, new demographic and social trends, a resurgence of national pride and religious feeling, a genuine plurality of interests, a genuine diversity in public opinion, literature, cinema, music, and spontaneous youth movements (1).

In spring 1985 the unthinkable happened: the Kremlin changed course. The regime of Leonid Brezhnev—old men seeking military adventure in Afghanistan—had been mired in conservatism and corruption since 1968. In February 1982 people at the top sounded the alarm (2). Nikolai Ryzhkov, later to serve as prime minister under Gorbachev, says that “the atmosphere in the country was appalling. It was the end . . . In 1982, for the first time since the war, there was no growth in real per capita income. Everything had stopped: no improvement in the standard of living, no new houses, shops, nurseries or schools being built. Worst of all, morale was very low” (3).

The former KGB director Yuri Andropov took over from Brezhnev in November 1982. He was acutely aware of the state of the USSR and introduced reforms. His premature death delayed the process for a year, since he was followed by a Brezhnev acolyte, Konstantin Chernenko. When Chernenko died on 11 March 1985 Mikhail Gorbachev was elected, almost unopposed, as general secretary of the Communist party of the Soviet Union (CPSU) (4). His main allies in the politburo were the new foreign minister, Eduard Shevardnadze, and the leading theoretician Alexander Yakovlev.

Gorbachev, whose actions were to change the face of the earth, had established his reputation as a reformer the previous year by calling for “a complete overhaul of every aspect of economic, social and cultural life”. In London he told the British prime minister, Margaret Thatcher, of his new credo, unexpected for a Soviet leader: “Europe is our common home. A home, not a theatre of military operations.” In Rome he witnessed the Italian people's tribute to the late European communist leader, Enrico Berlinguer. Other forms of communism could be real too.

The proposal for radical reform was approved at the plenary meeting of the central committee in April 1985 and confirmed at the 27th party congress in February-March 1986. The proposed reforms were cautious changes decided by the upper echelons of the nomenklatura (5). The brains of the party - internationally-minded members of the central committee and the diplomatic corps, and cosmopolitan economists in Siberia and Moscow—worked behind the scenes on a much bolder agenda that would not stop at small reforms.

Writers, film directors, singers and journalists publicly told many unpleasant truths. Taboos were broken, bans flouted, there was soul-searching, there were hopes for a better world. Glasnost emerged from this intense, painful and romantic atmosphere. Hundreds of dissidents still in captivity were released. Gorbachev said: “The people's dignity is restored.” In these early days before 1988 independent social initiatives bloomed (they faded after 1991) and alternative values—socialist, humanist and ecological—blossomed. But only a few petals of these flowers of glasnost survived. Depending on philosophy and prosperity, some thought them the last expressions of an illusionary utopianism, some the first expressions of freedom. The politically correct view is that perestroika was an entertaining public show put on while the USSR waited to enter the market economy.

The marketers arrived in disguise in 1985-87; they were the Communist Youth league businessmen with independent undertakings, private cooperatives, joint ventures and mafia networks. They produced an oligarchy of financiers who later took their positions in Cyprus, Gibraltar and Switzerland.

Extras appeared in the show: the US presi- dent, Ronald Reagan, launching his Strategic Defence Initiative (SDI) against the “evil empire” and swearing to bring the USSR “to its knees”; the US State Department and Congress, the CIA, Radio Free Europe, Svoboda, and other forces fighting communism. The National Endowment for Democracy, the US-based institution that facilitated recent “revolutions” in Georgia, Ukraine and Kyrgyzstan, was set up in 1983. Eastern dissidents, the Solidarity movement in Poland, the Afghan resistance movement and its Islamist networks, all received moral and financial support under the strategy devised by Zbigniew Brzezinski, President Jimmy Carter's foreign policy adviser. Pope John Paul II had a historic role. The World Anti-Communist League, nationalist exiles from the Baltic states and Ukraine, the Reverend Sun Myung Moon's religious sect and rightwing fringe groups were all recruited.

Western media were mobilised in the cold war, which had been worsened by the conflict over Euromissiles. The USSR was demonised, described as an “Orwellian” system, the greatest power of all time, ready to swallow the planet, a totalitarian society and culture in which change was inconceivable. So the myth of Gorbachev the reformer could only be an invention of agents in the pay of the KGB. However, the “illusion” of reform that the press attacked was taken seriously by advocates of liberal reform. The economist Anders Aslund, later a prime mover, with Jeffrey Sachs and the International Monetary Fund, in Yeltsin-era reforms, was in the Soviet Union in 1984. The financier George Soros set up his first establishment in Moscow in 1987, two years before the Berlin Wall came down.

The USSR's situation made change imperative. Raw materials were running out. Oil production was at a standstill and the price of oil falling; its price in the USSR was 20% of world market price, and deliveries to socialist countries were at well below the international rate. It was tempting for the - mainly Russian—owners of this valuable commodity to increase exports to hard currency areas at world prices. Investment, needed for modernisation, was prevented by US trade embargoes, especially the Jackson-Vanik amendment making commercial deals contingent on permission for Soviet Jews to emigrate, and by the USSR's refusal to admit foreign capital.

Manpower was in short supply. The flow of people leaving the land for cities (93 million between 1926 and 1979) had dried up. Population growth had slowed in Slavonic republics and risen in Muslim republics, where it was accompanied by underemployment. The birth rate was unpredictable, as were the movements of the workforce.

The dream of opening up the Siberian far east had come to nothing, and there was not enough labour for major projects such as the new Baikal-Amur line on the Trans-Siberian railway. Migration east was cancelled out by migration west. Pioneering had lost its romantic appeal and high wages were no longer an incentive.

The planned economy was destabilised by the underground economy, unregulated deals (trade or barter), pilfering of public property, and “black labour”. This unofficial world, run by gangs and criminal networks, undermined the state and later took over in Russia under Yeltsin (6). It had become financially impossible to sustain the arms race conducted by the US, particularly as it was clear from SDI that Washington had the technological edge.

The great period of development was at an end. The system could no longer control the way society was going. The authorities could not keep up. Moscow could not go on supporting Cuba, and communist and anti- imperialist movements.

Yet the USSR in 1985 was not, as its detractors claimed, undeveloped—“Upper Volta with rockets”. It was a developed country in primary sectors (coal, steel and hydrocarbons), more advanced sectors (aerospace industry, nuclear power and electricity), and basic research, patents for industrial technologies, education and training, public access to education and culture. There was nothing imaginary about the aircraft, rockets, weapons, machine tools, agricultural machinery, books, films, scientific communities, and schools with a worldwide reputation for mathematics, physics and agronomy.

A unified system of electrification supplied 220 out of its 280 million people, and 800 towns provided central heating. By the 1980s 48% of workers were in industry, compared with 30%-35% in the 1950s (7). By the 1980s the USSR was also a mostly urban society, although a rural way of life continued in smaller towns. There was universal secondary education. Levels of consumption, ownership of household equipment, family life and leisure activities were different from the frugal postwar period (8).

Growing material prosperity did not prevent deep moral unease, seen in the work of writers, film directors and musicians. Citizens were guaranteed basic social security, free education, a minimum health service, some transport facilities, water, heating and electricity. Rural society emerged in the 1970s and 1980s from decades of material and social underdevelopment, during which country people were treated as second-class citizens (9). A high degree of social mobility, intellectual freedom, a passion for reading, a taste for art and research, came with modernisation (10).

But the tremendous social advances and improvements in health were slowing. Life expectancy had risen from 34 in 1923 to 64.6 for men and 73.3 for women in 1965, bringing the USSR to western Europe's level. After 1965 it remained static, then fell, then rose in 1987, before dropping dramatically in the 1990s along with other public health indicators. A falling birth rate combined with a sharp rise in the death rate then caused a steady decline in population (11).

The Brezhnev era saw the arrival of private housing, materialism, the erosion of traditional peasant communities and collectives. A would-be consumer society, fascinated by the success of the West, came into being. The special demands of mining and industry, the delays in introducing industrial farming, backwardness in chemistry, electronics and computerisation, were seen as handicaps in this badly controlled economy. It neglected the environment, causing as much damage as had western industrial complexes between 1930 and 1950 (12). Exports of machinery and equipment fell from 20% of total exports in the 1960s to 15.5% in 1987, while exports of fuel and energy rose from 20% to 60% (13).

The glasnost years produced many economic indicators. A drop in the rate of growth of national income and productivity, lower returns on capital investment, more uncompleted industrial projects, delays in complex mechanisation and automation, in computerisation (the USSR had only tens of thousands of personal computers in 1985, compared with 17m in the US). Mountains of obsolete machinery accumulated (14). There were ecological disasters, both predicted, such as the pollution of the Volga river and Lake Baikal and the aridisation of the Aral sea, and unexpected, such as Chernobyl in April 1986.

The crisis had reached the heart of the system “in an economy that had almost all the features of a developed industrial economy. It was the culmination of a review of the Stalinist system that had started in 1953 but had never been completed” (15).

Top of the list of things that had gone wrong was the labour crisis: low productivity; absenteeism; sick leave; union meetings, sports and cultural events held during working hours; the unreliability of the workforce. The reasons for these included lack of incentives, low wages, overmanning and guaranteed employment. Of 131.5 million workers, 10 million were surplus to requirement, yet elsewhere there were shortages of labour with up to 25% of posts vacant. The Taylor doctrine on the scientific organisation of work was disregarded in the USSR, as was the Ford doctrine. Higher wages were no incentive with consumer goods in short supply. There were twice as many goods available in 1985 as in 1971, but three times as much money in circulation. Workers looking for better jobs did not just want higher wages; they chose the firm that offered the best in accommodation, childcare and nursery facilities.

The balance of power had shifted against the employers. But in 1985 they claimed the right to dismiss employees. A law proposed in 1984 was passed, reforming the mostly general secondary education and introducing vocational training. Since the reforms introduced by Prime Minister Alexei Kosygin in 1965, leading technocrats had quietly demanded and experimented with capitalism: profit and profitability, release from centrally imposed low wages, a genuine jobs market and publication of unemployment statistics, US-style management, owner-bosses, personal enrichment, free competition, advertising, work for young people, open borders and an end to social welfare.

For most people, wages were the only income (16). The period of growth had ended and social progress was blocked. The solution was to allow people to own property and make plenty of money. Workers, lured by false promises of joint control and group ownership, were left out in the grand redistribution of wealth. The middle class of teachers, engineers, doctors and research workers, who had not been well paid but enjoyed prestige under a socialist ideology that prized non-commercial, cultural values, fared worst. Liberalism looked to new businessmen, media intellectuals and modernising members of the nomenklatura for support.

The 1986-88 reforms opened firms and cooperatives to private enterprise. They gave the underground operators an opportunity to launder money and spirit proceeds to offshore tax havens once the state monopoly on foreign trade had been broken. Soviet lands were plundered, robbed of raw materials and territorial integrity. Yeltsin's team were eager to break up the Soviet Union and encouraged nationalist and separatist movements within its borders. Liberalisation of prices, mass privatisation and control of oil revenues were essential for a complete break with the past and a handover to the new Russian elite. The impediments that had prevented progress in 1985 were replaced by the incentives of inequality, the race to make money, the struggle for survival; the problem of surplus population was solved by a high death rate in industrial and other accidents and a new generation of go-getters emerged.

The labour crisis was settled by a shift in the balance of power, in which the workforce was obliged to accept flexibility. In 2005 an advertisement for the Moscow Business Journal summed up the new philosophy in the words of Henry Ford Sr: “There are two ways of getting people to work: the appeal of a good wage and the fear of losing it” (17). The key factor in the switch was the transformation of the nomenklatura who, together with the new business community and its official backers, were now in control.

Was the collapse of the system and the break-up of the USSR inevitable? Viktor Danilov, a historian specialising in Stalin's programme of collectivisation in the 1930s, thinks not. In his view “the economy did not collapse, nor did society, and the USSR did not break up, at least not until autumn 1988. The chaos was caused by certain groups selfishly pursuing their own interests.” According to Keynesian critics, Gorbachev missed the chance of making a gradual, state-controlled transition advocated earlier by economists such as Abel Aganbegyan, Leonid Abalkin and Nikolai Petrakov. It would have taken 10 to 15 years. Market practices would have been introduced while preserving the state and the Soviet social guarantees. “Perestroika was still highly regarded, people were optimistic, the USSR was intact. The forces of democracy were winning. And Gorbachev could have extended his social base by establishing a new, reforming Communist party” (18).

But Yegor Gaidar and his advisers, Anders Aslund and Jeffrey Sachs, decided the USSR needed shock treatment. The history of perestroika should include an account of the reforms and political decisions that led to the final outcome; and the international pressures. Foreign debt rose from $28.9bn in 1985 to $54bn in 1989. In 1990-91 the G7 and the IMF indicated the steps that must be taken, especially a programme of privatisation. They are now widely held to have been illegal. Yeltsin accepted the loans and the terms on which they were granted. The Russian government was put under supervision and the transition to democracy and a market economy began.

The redistribution of wealth and power and the unfair and divisive manner in which it was conducted, combined with the break-up of the Soviet Union and an open invitation to foreign adventurers, brought more crises, increasingly acute. The revolutions in Ukraine, Transcaucasia and Central Asia echo perestroika—they are an extension of the break-up and the result of new situations in which local tensions are skilfully exploited by western advocates of democracy.

Who would have thought in 1985 that the Soviet leadership was already converted to capitalism? In a note to Gorbachev on 3 December 1985, the leading CPSU theoretician Alexander Yakovlev recommended that the market economy be restored, with freedom to own property, economic management based on banking, a capital market and an end to party monopoly, which he described as the “order of the sword-bearers” (19). Yakovlev was known as the architect of perestroika.

Notes

(1) For an account of the 30 factors that changed the USSR after Stalin's death in 1953, see URSS: une société en mouvement, l’Aube, La Tour-d’Aigues, 1988.

(2) Economist Abel Aganbegyan, Pravda, 14 February 1982.

(3) Nikolai Ryzhkov, Perestroika: istoriya predatelstv, Novosti, Moscow, 1992.

(4) On a proposal from the head of the diplomatic corps, Andrei Gromyko, the last of the historic leaders still in power. His word was enough to silence potential rivals.

(5) The nomenklatura (lists) of authorities are controlled by the party/state at all levels of the hierarchy. They are often confused with the bureaucracy in general and do not include the intelligentsia.

(6) See Nadine Marie-Schwarzenberg, La Russie du crime, PUF, Paris, 1997.

(7) Including semi-rural conurbations and country towns.

(8) See Basile Kerblay, La société soviétique contemporaine, Armand Colin, Paris, 1980.

(9) In this period people living on a kolkhoz were issued with internal passports, documents enabling Soviet citizens to travel freely within the union.

(10) For an account of the modernisation of the USSR, see Moshe Lewin, Le siècle soviétique, Le Monde diplomatique-Fayard, Paris, 2003.

(11) See Claude Cabanne and Elena Tchistiakova, La Russie: Perspectives économiques et sociales, Armand Colin, Paris, 2002.

(12) See “Du communisme fictif au capitalisme réel” in Les conflits verts, GRIP, Brussels, 1992.

(13) Abel Aganbegyan, Soulever les montagne: Pour une révolution de l’économie soviétique, Laffont, Paris, 1989.

(14) The problem is worse now. Everything, equipment, infrastructures, public transport, housing, is ageing.

(15) Jacques Sapir, Les fluctuations économiques en URSS 1941-1945, EHESS, Paris, 1989.

(16) A distinction must be made between workers on state farms (sovkhoz) and members of cooperatives (kolkhoz) who live on the produce of their own farms, on income in cash and kind depending on the harvest, and social security benefits.

(17) Isvestia, Moscow, 28 December 2004.

(18) L la Kosals, RV Ryvkina, Sotziologiya perekhoda k rynky v Rossiyi, Editorial URSS, Moscow, 1998.

(19) Alexander Yakovlev, Gorkaiya Tchacha, Yaroslav, 1994.