A People's History of the World: From the Stone Age to the New Millennium (81 page)

The crisis of state capitalism

More governments fell from power in 1989-90 than at any time in Europe since 1917-18 and, before that, 1848. The Eastern bloc was suddenly no more, and by 1991 the pillar which had supported it, the USSR, had crumbled as well. Despite postmodernist and ‘post-Marxist’ claims that such things were no longer possible, they had been pulled down by a combination of economic crisis and class struggle. If some on the left did not see this, it was because of their own illusions, not material realities. For the entire period since 1968 had been marked by deepening crises and repeated upsurges of struggle in the Eastern bloc.

The Russian occupation had succeeded in ‘normalising’ the situation in Czechoslovakia in 1968-69. But events in neighbouring Poland soon showed how widespread and deep the malaise had become. The regime had managed to crush the student movement of 1968, and attempted to use the police in a similar way against thousands of workers who occupied the giant shipyards in Gdansk (Danzig before the war) and Szczecin (Stettin) in 1970-71 in protest at price rises. The police killed a large number of workers. But solidarity strikes elsewhere forced out the regime’s head, Gomulka, and his successor, Gierek, withdrew the price increases. He borrowed from Western banks, the economy boomed, and Western journalists wrote of a ‘Polish miracle’. But increasing integration with Western markets meant that Poland was hit by the crisis in those markets in the mid-1970s. The government again tried to raise prices and launched police attacks on protestors.

The regime was not able to bury the memory of the workers’ actions this time, as it had after 1956-57 and 1970-71. Amid a sense of deepening crisis a group of intellectuals defied harassment and established a Workers’ Defence Committee and an underground paper,
Robotnik
(
Worker
), with some 20,000 readers. The once-totalitarian regime remained in power, but it could no longer impose totalitarianism.

Its weakness eventually showed in the summer of 1980. A renewed attempt to impose price increases led to further strikes and the occupation of the Gdansk shipyards. A movement grew out of the occupation that recalled the Hungarian workers’ councils of 1956. But it had a life of 16 months, not three or four weeks.

The movement proclaimed itself an independent trade union, Solidarnosc (Solidarity). But in the year and a quarter of its legal existence it was something more than a trade union. Established by a conference of delegates from 3,500 factories and soon claiming ten million members, it represented an alternative power to that of the government. It became the focus for the aspirations of everyone sick of the old society, its very existence a challenge to the regime. Yet its leaders committed themselves deliberately to avoid overthrowing the government. They accepted the view of sympathetic intellectuals that they should aim at a ‘self limiting revolution’. They made an assumption very similar to that of the Allende government in Chile: if the workers’ movement promised it would not threaten the state, the state would tolerate the workers’ movement. As a consequence, Solidarnosc suffered a fate similar to the Chilean movement. In mid-December 1981 the military leader Jaruzelski declared martial law, jammed the country’s telecommunications systems, arrested the entire Solidarnosc leadership and used troops against workers who resisted. Confused and demoralised, the workers’ organisations were broken.
³⁰⁰

However, the breaking of the Polish workers’ movement could not remove the underlying forces which had given rise to it. Rates of economic growth in the Eastern bloc were now no higher than in the bigger Western economies. What is more, the Reagan government in the US was embarking on a new arms build-up (with the stationing of cruise and Pershing missiles in Europe) which the Russian government wanted to match. But the resources simply did not exist to meet the demands this put on the economy. The state capitalist regimes had to reform or risk class confrontation and internal collapse.

Russia’s ruler in the early 1980s, Andropov, had first-hand knowledge of the challenge a workers’ movement could pose. He had been Russian ambassador in Hungary in 1956 and head of the KGB during the rise of Solidarnosc in 1980-81. He wanted to prevent the possibility of a similar challenge arising in the USSR itself and began promoting people he thought would reform Russia. Foremost among these was Mikhail Gorbachev.

When Gorbachev took over as head of the USSR in 1985 he seemed all-powerful—and, when he spoke in 1987 and 1988 about the need for openness (
glasnost
) and reform, he seemed popular, too. But when he lost power in 1991 he had a popularity rating close to zero. His call for reform had created confusion in the police apparatus of the USSR and raised people’s hopes so that they began to challenge the exploitation and oppression of the previous 60 years. But his commitment to do no more than restructure the state capitalist organisation of production prevented him finding the resources necessary to satisfy those hopes. By the end of the decade the economic stagnation of the early 1980s had become economic contraction.

The spring of 1988 saw the first mass protests since the 1920s which were not immediately crushed by the police—first in Armenia and then in the Baltic states, movements of minority nationalities demanding greater rights. Gorbachev did not have the strength to repress them as his predecessors would have done. But he did not have the means to buy them off either. Vicious but incomplete repression gave way to half-hearted concessions. It was the classic formula by which regimes have often helped ignite revolt.

Gorbachev made moves to stabilise his position by reliance on conservative forces in the summer of 1989 and the spring of 1991. On each occasion he was stopped in his tracks by huge miners’ strikes which came close to shutting off the country’s energy supplies. In particular, the strike of summer 1989 showed more than a passing resemblance to the first great workers’ protests in Poland. Gorbachev had to make concessions to the various opposition movements if the whole regime was not to risk being engulfed from below, and as he did so his own power to control events evaporated.

The impact was devastating for the regimes installed in Eastern Europe 45 years earlier. The various rulers had lost their ultimate fall-back position in the face of revolt—the threat of Russian intervention. Already, a year earlier, the hard man of Poland, Jaruzelski, had settled a series of miners’ strikes by agreeing to negotiate with the leaders of Solidarnosc—although the underground organisation was a shadow of what it had been in 1980-81. In the summer of 1989 Kadar’s successors in Hungary agreed on similar ‘round table’ negotiations with the country’s considerably weaker dissident groups.

In September and October a wave of demonstrations swept East Germany, and its government conceded negotiations and began to demolish the Berlin Wall which cut it off from West Germany as a token of its sincerity. Later in November it was the turn of Husak in Czechoslovakia to fall, amid enormous street demonstrations and a one hour general strike. Bulgaria followed suit. An attempt by Romania’s dictator to resist the wave of change by shooting down demonstrators led to a spontaneous uprising in the capital, Bucharest, and his execution by a firing squad under the command of his own generals. In six months the political map of half of Europe had been redrawn. The only Stalinist regime left in Eastern Europe was Albania, and this collapsed early in 1991 after a general strike.

No imperial power could avoid being scathed by such an upheaval in its empire. The national movements inside the USSR felt increasingly confident, and the divisions within the ruling group grew ever wider and its control over society ever more precarious. Gorbachev made a last attempt to take a hard line against the opposition currents, only to be thwarted in the spring of 1991 by a second great miners’ strike and a huge demonstration in Moscow. That summer, conservative forces in his government attempted to take a hard line without him. They used troops in Moscow to stage a coup, and held Gorbachev under house arrest. Other military units refused to back them and, after a stand off, power fell into the hands of a group of reformers around Boris Yeltsin, president of the Russian republic and former party boss in the industrial city of Sverdlovsk. Yeltsin agreed on the formal dissolution of the links between the national republics, and the USSR was no more.

The upheavals of 1989-91 were on a much greater scale than those which shook Eastern Europe in 1953, 1956, 1968 and 1980-81. Yet there was a sense in which the changes which occurred were not as fundamental as those that began to occur on the previous occasions, especially in 1956 and 1980-81—for the leadership of the movements of 1989-91 went to people determined to avoid any glimmer of workers’ power. People who had risen through the old ruling bureaucracies moved, at decisive moments, to align themselves with groups of dissident intellectuals around a programme of limited reform—and so pre-empt the possibility of real revolution. They followed a strategy of what the Italian Marxist Antonio Gramsci had called ‘passive revolution’—pushing through change from above in order to prevent it happening from below.

In each case it involved agreeing with the dissidents on programmes which combined various elements—a greater opening to the world market, abandonment of the old command economy, a move to relatively free parliamentary elections, and a new stress on nationalism. As sections of the old official media and former dissidents repeated the same message, the mass of workers were persuaded that the market and democracy were natural twins and could satisfy their aspirations. In the atmosphere of 1989-91 it was difficult for anyone who argued otherwise to gain a hearing, for the pre-emptive moves from above kept class movements by workers to a minimum.

The great political changes which occurred were a result of class struggle, but it was
deflected
class struggle that did not find expression in the throwing up of mass democratic organisations of the exploited classes on the lines of workers’ councils. They were political revolutions, more akin to what happened in France in 1830 than to the great social revolutions of the past, a fact demonstrated by the way the same people ran the major industries and banks after the changes as before.

Shock waves from the collapse

The crisis in the Eastern bloc was part of a much wider crisis affecting all sorts of countries which had adopted the state capitalist model. Nowhere did it seem capable of providing the high growth rates of earlier periods. At the same time it cut off national industries from the new industrial innovations—especially those connected with microchip technology and computer software—being pioneered, on the basis of enormous investment, by the industrial giants of the US and Japan.

Across Asia, Africa and Latin America, bureaucrats and politicians who had made their careers sponsoring versions of state capitalism switched over to praise ‘free’ markets and make deals with Western multinationals. Congress governments in India, the former Maoist movement which won a civil war in Ethiopia, the Algerian regime and the successors to Nasser in Egypt all followed this path to a greater or lesser degree. In the vanguard of the new approach was Deng Xiaoping’s China, where adoration of the market and profit-making went hand in hand with formal adherence to the cult of Mao.

Most Third World governments showed their commitment to the new approach by signing up to the ‘structural adjustment programmes’ of the World Bank and the International Monetary Fund (IMF). There is little evidence that these could overcome the problems of low growth rates and poverty. Some 76 countries implemented adjustment programmes designed by the World Bank on ‘free market’ criteria in the 1980s. Only a handful recorded better growth or inflation rates than in previous decades. Of 19 countries which carried through ‘intense adjustment’, only four ‘consistently improved their performance in the 1980s’.
³⁰¹
In 1990 some 44 percent of Latin America’s population was living below the poverty line according to the United Nations economic commission for the region, which concluded there had been ‘a tremendous step backwards in the material standard of living of the Latin American and Caribbean population in the 1980s’.
³⁰²
In Africa more than 55 percent of the rural population was considered to be living in absolute poverty by 1987.
³⁰³

What happened in Eastern Europe and the former USSR in the 1990s was just as devastating. The ‘economic miracles’ promised by the reformers did not take place. In 1999 only two countries, Poland and Slovenia, had a higher output than in 1989. The Czech Republic and Hungary were both slightly poorer than ten years before. The economies of Bulgaria, Lithuania and Russia had shrunk by 40 percent or more.
^303a

The cold statistics translated into the destruction of the hopes of millions. Most people in the major Russian cities like Moscow and St Petersburg became dependent on what they could grow on small allotments and preserve to supplement meagre supplies of bread and potatoes. Whole communities in arctic regions lived in fear of the power failing each winter. Miners and steel workers were not paid for months at a time, health services fell apart, diseases like tuberculosis became common and life expectancy fell.

Circumstances were a little better in the northern belt of Eastern Europe. But even in the Czech Republic and Hungary living standards were lower than in the late 1980s: there were more goods in the shops, but few people with the money to buy them. East Germany, incorporated into the German Federal Republic, continued to have unemployment rates of 20 percent and higher. In south east Europe, in Bulgaria, Romania and Albania, conditions were as bad as in Russia. In the southern belt of the former USSR they were much worse. No wonder the optimism among many intellectuals in 1989 had turned to despair by the late 1990s. The famed Czech poet Miroslav Holub went so far as to say, ‘If we knew that this was the price we would have to pay, then we would gladly have put up with not having our work printed and not selling our paintings’.
³⁰⁴
The Eastern European country which suffered most was that which had maintained its independence from the USSR all through the Cold War—Yugoslavia. The Western powers no longer considered it worthwhile to provide loans on favourable terms as a counterbalance to Russian influence in the region. The IMF imposed a debt repayment programme which halved living standards in two years and produced astronomical levels of unemployment in the poorer parts of the country, and a series of bloody civil wars resulted as different political figures tried to maintain their own positions by setting national groups against one another while Western powers intervened to bolster those most friendly to them.