Notes on the conversion of Eastern Europe and the Soviet Union
The Free Market Of Lies
I. For fifty years, the CCCP (Communist Party of the Soviet
Union) based its rule on promising work, basic equality and a
predictable existence in exchange for a dull existence slaving
for the state. The last ten years of upheaval in the Eastern Bloc
have been a desperate effort by the bureaucracy to break their
social contract with the working class and get a free hand to
II. From the end of WWII till about 1990, two factions maintained
the world order. While each bloc competed to control more of the
world, both were responsible for continuing the world economy.
The endless ties only began with the French Communist Party accepting
West Bloc rule and America selling grain to Russia.
III. The KGB and the most intelligent members of the bureaucracy
could see that the USSR was losing in the competition with the
West. Without real reform, the country was going to fall further
and further behind. It would lose the arms race and ultimately
collapse. From their efforts to change this, the USSR instead
IV. The ideology sold in both the East and the West is that
the USSR collapsed because it's state-planned economy was inherently
inefficient. This is wrong. The Eastern Bloc was the weaker section
of capitalism but it was not some stumbling backwater. The USSR
fought a world war and industrialized a continent.
The fall of the Communist Bloc is only a corollary of the contraction
of all capitalist wealth to the center of capitalist production.
The Reagan years were a period of the invisible looting of the
world to pay for a weak American recovery. Every country except
the very strongest economies in the world has suffered a massive
depression in the last ten years. The massive competition hurt
most the countries that didn't have the ability to modernize their
production processes. These were the poorer nations, especially
the USSR. Unlike other third world countries, the USSR couldn't
get much direct investment from abroad.
V. The Soviet Union seemed backward to Westerners since it
had 70 year old system of ideological domination. The USSR was
simply the first state where the logic of rhetoric came first.
The official rhetoric was comfortable, dignified slavery. While
the rulers secretly looted wealth, everything was based on the
appearance that the workers' interests came first. Everyone who
could work was guaranteed a job and shoes on their feet - even
if the job was in a slave camp. The members of the communist party
didn't rule directly by ruled by owning the "ideal"
that the country was built on.
The all powerful media that now rules this country is not a different
animal. It is simply a more up-to-date form of ideological domination.
Many rhetoric makers compete here so that none needs to be followed
absolutely by the rulers. Democracy and MTV compensates us with
the image of sex, wealth and excitement in exchange for our slavery
to the economy. Politician must still maintain the appearance
and logic of freedom and people's rule while they help corporations
trample most of "the people."
VI. Trotsky noted that the Soviet economy couldn't turn it's
collective profits into money for each bureaucrat. But from this
he drew the false conclusion that the Soviet Union was not capitalist.
The Soviet economy simulated capitalism and had the state take
the profits. Instead of Soviet bureaucrats profiting directly,
they benefitted from being on the top of the structure that profits
went to build. That few individuals received profits only became
a problem over time. The problem was resolved by having the bureaucracy
ultimately destroy the regime and get chance to gain their profits.
VII. The bureaucrats of the Eastern Bloc ruled as experts,
as collective owners of the ideology of anti-capitalism, rather
than as the official owners and rulers of their respective countries.
Their rulership implied production for production's sake rather
than for profit. This imperative reflects not the workers' interests
but the lower level factory managers' interests.
This approach to production made the Soviet Union the rulers of
the left wing of capital for fifty years. As managers of the working
class, leftist unionsists, social workers and politicians of the
west felt had a instinctive common interest with Soviet bureaucrats.
VIII. While bureaucracy made the Soviet economy inefficient,
the huge size of the Soviet Union and its conquest compensated.
The Soviet capitalist economy grew very quickly from 1930 to 1960
by having a centralized state bureaucracy give all orders for
the economic development of the country. The state economy simply
followed the patterns of Western economies but on a larger scale.
Western experts were paid to build most of the Soviet Union's
largest industrial plants. Polish bureaucratic planner Oskar
Lange admitted that this was the same as the war economy system
of Western capitalism.
The prices assigned to different goods by the central planners
were arbitrary. The central bureaucrats gave factory managers
inputs. Using bonuses, they rewarded them for producing the planned
output. This process rested on an ideology of production for production's
This system reinforced the power of the factory managers, as a
group, who gained advantage from total production rather than
from profitable production. If prices and profits became real,
the small group of managers at the most profitable factories would
get money at the expense of the mass of managers who profited
from just satisfying quotas. The interdependence of the giant
state production system meant that the mass of managers could
sabotage all the efforts at market reforms.
IX. The end for the Soviet Union came when the world economy
demanded not capitalist development but an increase in the rate
of exploitation. The IMF everywhere demanded that all countries
reduce the wage levels paid for the same level of production.
The Soviet bureaucracy's collective profits could not be rechanelled
to make them more efficient. The Soviet Union's fake prices made
it impossible to attack the working class indirectly by modernizing
factories. Automation is raising production by replacing workers
with machines. So a manager has to know which saves more labor,
having workers or having machines. With fake prices, no manager
or bureaucrat could tell whether a modernization arrangement actually
increased the total value of goods being produced. Moreover, each
manager tried to have used production capacity to be able to satisfy
future production goals.
The Soviet System made it just as impossible to attack the working
class directly. Since the state was officially in charge of everything,
the state could not lower wages without workers seeing that it
was their rulers as a whole directly attacking them. When the
working class struck, it went on strike against the state; this
became a challenge to the entire social order. The strikes that
took place under Stalinist regimes were like earth quakes.
X. Most bureaucrats could see that the production conditions
in the USSR were too rigid. The same centralization that allowed
the USSR to build a huge industrial economy now prevented it from
reforming this economy. But no formula could be found to make
the bureaucracy more efficient or to convince the workers to sacrifice
for the socialist motherland.
XI. The post-Stalin bureaucracy only learned slowly how extreme
their attacks had to be. None of the attacks were direct enough
to cow the working class. Gorbachev's experiments with democracy
only gave the Siberian coal miners more confidence in defending
their interests. The newly democratic Supreme Soviet voted down
each effort at freeing prices, whether it came from hard-liners
Each faction of the bureaucracy was afraid to attack the working
class. Each reform was sabotaged by the sector of the bureaucracy
that would bear the brunt of the sacrifices and the working class'
anger. Gorbachev's efforts to give factory managers more initiative
didn't work. It only gave them more opportunity for corruption.
No partial system of freeing prices could succeed when food was
priced "unrealistically low" because the market couldn't
force workers to work harder.
XII. The Stalinists realized that no reforms could strengthen
the existing government's hand. So, in spite of their short term
interests, this ruling class moved to the strategy of break-down,
break-up and Boris Yeltsin.
XIII. Attempted reform itself was the process that wrecked
the Soviet economy. As soon as there was a hint that the system
would start to reward owners, each bureaucrat and shop keeper
was on his or her own. They each tried to gain a hold on as much
property as possible. Sausages rotted in storerooms as shopkeepers
waited to profiteer from higher prices. Every plant manager salted
away as much as he could, both to profit from free prices and
to protect himself from the uncertain economy.
XIV. Every modern state uses panic and despair for it's own
ends. Much of the collapse of the Soviet Union was and is ultimately
aimed at panicking the working class into letting the ruling class
extract further concessions.
XV. Chaos and collapse forced each section of the bureaucracy
to try to enforce its own solution to the crisis. The stupidest
hard-liners were paniced by the situation into their pathetic
coup and Yeltsin thus made his effective counter-coup.
XVI. The break-up of the Soviet Union and the acceleration
of nationalism and the regional conflicts was a strategy for protecting
the power of the bureaucrats in each region. Nationalism is not
opposed to Stalinist "internationalism." It uses the
same approach: divide the slaves, divide people so they can't
fight against you. The bureaucratic system of each region was
the result of Stalin's schemes to rule by exploiting the nationalism
of each group. In most republics, the local authorities have aided
"inter-ethnic" conflicts that keep any attention away
from the legitimacy of their power. The destruction of the communist
party was perfect as a means to anoint the same old bureaucrats
with a new task.
The nationalist leadership of each republic today is the rank
and file government bureaucracy of yesterday together with a few
thugs and psychopaths. They are now the defenders of the nation.
XVII. Stalinism pushed one kind of sexual repression while
democracy pushes another. The stage is set for a transition to
the more flexible western model. Under Stalin, abortion was freely
available, was the only means of birth control and was done in
terrible conditions. Women were officially equal and required
to work. But the patriarchal roles of husband and wife were maintained
in all their ugliness. The way is set for the concerned bureaucrats
to "help" the women stay at home.
Of course this concern is comming at the same bureaucrats talk
turning Budapest into the "Bangkok of Eastern Europe."
A sex industry is a natural counter-part of an ideology that
pushes women to be passive homemakers.
XVIII. It logical that Yeltsin has now gone ahead with price
hikes before privatizing the economy and freeing the market, the
measures that were expected to create a "normal economy."
The market economy is a means whereby the west can constantly
attack the working class and hide exactly where these attacks
In the former USSR, the concessions themselves are most important.
Power is now concentrated in the hands of the ruthless alcoholic
Boris Yeltsin. Yeltsin fortified his position by showing that
no coalition of forces proved strong enough to enforce a price
hike. The task must fall to one man; a fearless leader to secure
the bureaucracy's future. Yeltsin has proved himself ruthless
already. He is now willing to destroy the state and the economy
to give the bureaucracy enough flexibility for fundamental reforms.
For credibility, Yeltsin makes it clear that he is willing to
go down in flames in the process.
XIX. Today, total confusion and total attack must combined
in a ruling class that had become lazy. Yeltsin leads the bureaucracy
in directly attacking the working class. Besides raising prices,
he is trying to destroy all the concessions the bureaucracy had
given over the years.