Tony Cliff

State Capitalism in Russia

Chris Harman

Postscript 1988:
From Stalin to Gorbachev



The first edition of this book [1] appeared when Stalinism was at its strongest – after the Russian occupation of Eastern Europe and before the split between Tito and Stalin.

In March 1953 Stalin died and within months enormous cracks were visible in the edifice he had created. His former lieutenants were soon quarrelling bitterly. At first Malenkov seemed to inherit Stalin’s power, closely supported by the notorious police chief Beria. Then Beria was suddenly executed and Khrushchev displaced Malenkov from the dominating position in the leadership.

The quarrels were accompanied by sudden and sharp changes in policy. The terror machine that had been so important in Stalin’s time suddenly went into reverse. The most recently discovered conspiracy (the so-called “doctors’ plot”) was denounced as a frame-up, and those who had allegedly instigated the arrests were themselves rested. In the three years that followed, 90 per cent of those in the labour camps were freed.

The new Russian leadership publicly admitted that enormous “mistakes” had been made. For the first three years it heaped the blame for these on Beria and a “gang of anti-socialist spies” who had “infiltrated” the state machine. But then in 1956 Khrushchev denounced Stalin himself (although in secret) at the 20th Congress of the CPSU, and in 1962 made part of the denunciation public by removing Stalin’s body from the Lenin mausoleum in Moscow.

The arguments at the top of Stalin’s empire were accompanied by a sudden unleashing of discontent below. The slave labourers in the camps in Russia did not simply wait for the regime to reprocess their cases: in July 1953 the inmates of the biggest and most notorious of the camps went on strike, despite the shooting of 120 strike leaders. In East Berlin building workers reacted to an increase in work norms by a strike which turned into a near-insurrection by the whole working population of East Germany. In June 1956 this example was repeated by the workers of Poznan in Poland, and in October 1956 by the workers of the whole of Hungary.

These rebellions were put down in the bloodiest fashion. But not before they had shaken the illusions many socialists still held about Russia – and bad also challenged any view of the Eastern states as lifeless monoliths in which rebellion was inconceivable.

The belief that Russia was different from and intrinsically superior to the West continued, however, to be taken for granted by most of the left internationally. As late as 1960 the British Labour politician Richard Crossman (previously editor of the Cold War book, The God That Failed) argued [2] that the superiority of Russian “planning” over Western capitalism would eventually force Western states in a socialist direction. Further to the left the leading intellectual of the Fourth International, Ernest Mandel, argued in 1956:

The Soviet Union maintains a more or less even rhythm of economic growth, plan after plan, decade after decade, without the progress of the past weighing on the possibilities of the future ... all the laws of development of the capitalist economy which provoke a slow down in the speed of economic growth are eliminated ... [3]

Such reasoning led Mandel to express a preference for the attempt to reform the system from above by Gomulka in Poland to the workers’ rebellion in Hungary. [4] It led the biographer of Trotsky, Isaac Deutscher, even further – to support the crushing of the Hungarian revolution.

Such hopes in the reforming intentions of the rulers of the Eastern states were widespread in the years after 1956. Although they were dashed when Khrushchev was removed from power in 1964, they revived briefly during the Dubcek period in Czechoslovakia in the first half of 1968. They are now reviving again with Gorbachev’s programme of glasnost (openness) and perestroika (restructuring).



The Khrushchev period

Tony Cliff had extended his work on Stalinism with studies on the Eastern European states [5] and China [6] written in 1950 and 1957. In the late 1950s and early 1960s he set out to deepen his analysis of Russia so as to explain the reforms of the Khrushchev period and to point to their inbuilt limitations.

In 1947 he had already pointed to the central contradiction in Russia, which guaranteed growing crisis and an eventual workers’ rebellion. The bureaucracy’s role was to industrialise Russia by raising the level of productivity of labour. It could do so up to a point by coercion and the most minimal of living standards. But beyond a certain point, Cliff wrote, “in order to raise the productivity of labour the standard of living of the masses must rise, as workers who are undernourished, badly housed and uneducated are not capable of modem production.” He suggested that the failure to raise living standards might already be leading to a decline in the rate of productivity growth and to “jerky developments of production”. [7]

But the paucity of reliable information on the Russian economy and the newness of this theory of Russia meant that Cliff’s arguments here were necessarily undeveloped – as was his argument about the form taken by economic crisis in state capitalism (the latter part of chapter 7 of the present edition). By the late 1950s much more information was available, although it still took a massive labour to excavate it from the mass of official statistics, newspaper reports and leadership speeches.

This Cliff did, first in a series of articles [8] and a short pamphlet [9], then in a 140-page update for the 1964 edition of the present work, which was published under the title of Russia: A Marxist Analysis.

The additional material related specifically to the Khrushchev period, and has not been included in subsequent editions because by the time they appeared it was very dated. Yet many of the points Cliff made in it are worth summarising.

Cliffs central argument was that Khrushchev had inherited from Stalin an economy more and more plagued by elements of crisis. He had pushed through reforms because, without them, there was the danger of revolution.

Stalin’s method of approach to each new failure or difficulty was to increase pressure and terrorism. But this rigid method became not only more and more inhuman, but also more and more inefficient. Each new crack of the whip increased the stubborn, if mute, resistance of the people.

Rigid, Stalinist oppression became a brake on all modern agricultural and industrial progress.

The crisis in Russia has not been limited to the economic base, but has engulfed the cultural, ideological and political superstructures too. It has affected not only the internal situation in Russia, but also the relations between Russia and the East European satellites, and the international communist movement.

Cliff then carried through a detailed examination of each of these areas of crisis.



The crisis in agriculture

The legacy Stalin left in the countryside is an agriculture bogged down in a slough of stagnation that has lasted over a quarter of a century. Grain output in 1949-53 was only 12.8 per cent higher than in 1910-14, while at the same time the population increased by some 30 per cent. Productivity of labour in Soviet agriculture has not even reached a fifth of that in the United States ...

This stagnation became a threat to the regime for a number of reasons. First, after the hidden unemployment in the countryside was largely eliminated, it became impossible to siphon off labour to industry on the former scale without raising labour productivity in agriculture. Secondly, it became impossible beyond a certain point to siphon off capital resources from agriculture to aid the growth of industry.

Stalin’s method of “primitive accumulation” from being an accelerator became a brake, which slowed down the entire economy. [10]

Khrushchev attempted to deal with this crisis in two ways – “the carrot and the stick”. The carrot involved reforms which raised the prices paid to agricultural producers, increased state investment in agriculture, giving the collective farms greater freedom to plan their own production and relaxing controls on production through the peasants’ private plots of land. But such reforms were “fraught with difficulties”:

There have been some 25 years of Stalinist disincentives ... It is very probable that a moderate rise in capital resources for agriculture, in consumer goods for agriculturalists, in prices paid by the state for agricultural output may for a time – perhaps for an extended time – have a disincentive rather than an incentive effect on the peasants. With higher prices, the will to work may decrease. Only massive incentives supplied over a very long period can overcome the past and spur agriculturalists on to increased activity. Unfortunately, Khrushchev lacks both capital surpluses of any size and also time; and their acquisition is rendered impossible by the international situation which causes a fantastic waste on armaments and the bureaucratic management of the economy (of which the crisis in agriculture is one of the most important aspects). [11]

It was this which led Russian leaders to resort repeatedly to the stick of greater central control, even if’ this contradicted their attempts to supply greater incentives. So the move to give peasants greater freedom on their private plots was followed by a tightening squeeze on these plots; the move to collective farm autonomy was followed by a campaign to build up the highly centralised state farms. And as both the stick and the carrot failed to deliver the goods, the leadership would storm round the country pushing great campaigns which were supposed to allow Russian agriculture to catch up with America overnight, such as the Virgin lands and maize campaigns of the mid-1950s.

But there was no way out of the crisis. Grain output was supposed to rise by 40 per cent between 1956 and 1960; instead it rose a mere 2.7 per cent and then stagnated so much that in 1963 the Russians had to buy millions of tons of grain from abroad. Meat production in 1960 was little more than a third of the original target.

“Solving the agricultural crisis,” Cliff wrote of Khrushchev, “is meant to be the main plank in his programme; failure to deliver the goods may be his undoing.” [12] A few months later Khrushchev was removed from power by the rest of the politbureau, who complained of “hare-brained schemes” that never worked.



The crisis in industry

Industry, unlike agriculture, bad expanded massively through the Stalin period – and continued to grow under Khrushchev. But the rate of growth declined. And productivity, which had grown more rapidly than in the West in the 1930s, was now stuck at a considerably lower level than in the Russian bureaucracy’s major rival, the United States. As Cliff noted:

At the end of 1957 the number of industrial workers in the USSR was 12 per cent larger than in the USA ... Nevertheless, even according to Soviet estimates, the product turned out annually by industry in the USSR in 1956 was half that in the USA. [13]

Because of the crisis in agriculture, the lower level of productivity in industry could no longer be compensated for by a massive growth in the number of industrial workers. So the Russian bureaucracy had to pay increasing attention to the proliferation of waste and low-quality output within the Russian economy.

Cliff spelt out several of the sources of waste: the compartmentalism that led enterprises to produce internally goods that could be produced more cheaply elsewhere [14]; the hoarding of supplies by managers and workers [15]; the tendency of managers to resist technological innovation [16]; the stress on quantity at the expense of quality [17]; the neglect of maintenance [18]; the proliferation of “paper work and muddle” [19]; the failure to establish the efficient and rational price mechanism which managers required if they were to measure the relative efficiency of different factories. [20] He concluded:

If by the term “planned economy” we understand an economy in which all component elements are adjusted and regulated into a single rhythm, in which frictions are at a minimum and above all, in which foresight prevails in the making of economic decisions, then the Russian economy is anything but planned. Instead of a real plan, strict methods of government dictation are evolved for filling the gaps made in the economy by the decisions and activities of this very government. Therefore, instead of speaking about a Soviet planned economy, it would be much more exact to speak of a bureaucratically directed economy ... [21]

There had been accounts of the inefficiencies of Russian industry before Cliff, and there have been many since. They have provided the empirical “evidence” of all those – on the left as well as the right – who claim that the Russian system is qualitatively inferior to the Western one. What characterised Cliff’s account was not the stress on waste and inefficiency, but rather the way he saw these as following from the state capitalist nature of the system.

The immediate cause of the various sorts of waste was the way in which the planners set targets for production higher than what could easily be achieved. In order to protect themselves from these pressures, managers hoarded materials and supplies of labour. And in order to protect themselves from suddenly increased pressures from managers, workers worked at much less than full tempo. Awareness that this was happening throughout the economy led planners, in turn, to impose deliberately high targets. As Cliff put it:

What are the basic causes for anarchy and wastage in the Russian economy?

High targets of production together with low supplies – like two arms of a nutcracker – press upon the managers to cheat, cover up production potentialities, inflate equipment and supply needs, play safe, and in general act conservatively.

This leads to wastage and hence to lack of supplies, and to increasing pressure from above on the manager, who once more has to cheat, and on and on in a vicious circle.

High targets and low supplies lead to increasing departmentalism. Again a vicious circle.

High targets and low supplies make necessary priority awareness on the part of managers. But this priority system and “campaign” methods, lacking a dear quantitative gauge, lead to wastage and hence to an increasing need to refer to priority schedules. Again a vicious circle.

All these requirements necessitate a multiplicity of control systems, which are in themselves wasteful and in their lack of systematisation and harmony make for even more wastage. Hence the need for more control, for paper pyramids and a plethora of bureaucrats. Again a vicious circle.

What has been said about the vicious circle resulting from the conflict between over-ambitious planned targets and low supply basis applies, mutatis mutandis, to the effect of the poor price mechanism. Thus for instance, the poor price mechanism leads to departmentalism, priority campaigns and a plethora of controls. And these lead to increasing faultiness of the price mechanism. Again a vicious circle. [22]

Cliff’s “vicious circle” has been described on innumerable occasions since 1964 by East European economists. [23] Some of these have made the connection between the over-high targets (sometimes referred to as “overinvestment”), shortages (sometimes referred to as the “inflation barrier”), the hoarding of supplies, and companmentalism in the economy. A few have even gone further than Cliff in one respect by depicting how these different factors fit together into a cycle of investment and production somewhat akin to the classic boom-slump pattern of Western capitalist development. [24] But they miss one all-important point made by Cliff. The vicious, apparently irrational, cycle of inefficiency and waste has what is, from the ruling bureaucracy’s point of view, a rational starting point. “Overinvestment” is itself a result of the insertion of the bureaucratically run economy into a competitive world system:

The great impediment on the path of lowering output targets are the world competition for power and the tremendous military expenditure. [25]

The Russian system cannot be regarded, as many of those who emphasise its waste today regard it, simply as a great failure:

One should, however, avoid the mistake of assuming that the mismanagement corroding Russia’s national economy precludes very substantial, nay, stupendous, achievements. Actually, between the bureaucratic mismanagement and the great upward sweep of Russia’s industry, there is a tight dialectical unity. Only the backwardness of the productive forces of the country, the great drive towards their rapid expansion (together with a whole series of factors connected with this) and, above all, the subordination of consumption to capital accumulation, can explain the rise of bureaucratic state capitalism.

The efforts and sacrifices of the mass of the people have raised Russia, despite bureaucratic mismanagement and waste, to the position of a great industrial power.

However, state capitalism is becoming an increasing impediment to the development of the most important productive force – the workers themselves – which only a harmonious socialist society can liberate. [26]

To what extent low productivity is a result of mismanagement and blunders at the top or of resistance of workers from below cannot be estimated. The two aspects naturally cannot be divorced. Capitalism in general and its bureaucratic state capitalist species in particular is concerned with cutting costs and raising efficiency rather than satisfying human needs. Its rationality is basically irrational, as it alienates the worker, turning him into a “thing”, a manipulated object, instead of a subject who moulds his life according to his own desires. That is why workers sabotage production. [27]

As in agriculture, so in industry Stalin’s heirs tried to deal with this problem by the carrot, found they could not succeed like that and returned at least in part to the stick.

The dismantling of the giant labour camps after Stalin’s death was followed by the annulment of laws which had made workers liable for legal penalties if they were absent or late for work. Cliff compares these changes with what happened in the course of the development of Western capitalism: in the first stages of the industrial revolution all sorts of compulsions (the vagrancy laws, the workhouse system) were used to compel people to accept factory discipline; but once the new capitalist system had taken root, these tended to retard labour productivity and gave way to purely “economic” forms of compulsion. [28]

But there were tight limits on the size of the carrot that could be used to entice workers to higher productivity. In 19534 the first post-Stalin prime minister, Malenkov, promised an increased output of consumer goods at the expense of means of production. But the honeymoon period for light industry was short-lived. In the framework of international economic and military competition, the subordination of consumption to accumulation is unavoidable. As early as the autumn of 1954 an offensive led by Khrushchev, Bulganin (then Minister of Defence) and Shepilov was launched against the “pampering” of the consumers, and sought a return to a greater emphasis on heavy industry. In January 1955 Khrushchev declared that:

The paramount task, to the solution of which the party devotes all its efforts, has been and remains the strengthening of the might of the Soviet state and, consequently, the accelerated development of heavy industry.

A fortnight later Malenkov was forced to resign as prime minister. The share of light industry and the food industry in state industrial investment, which had been between 16 and 17 per cent in the five-year plans of the 1930s and 12.3 per cent in the second half of the 1940s, fell even lower in the 1950s and early 1960s – to around 9 per cent. [29]

Without any solution to the agricultural crisis and without any big increase in investment in consumer goods industries, there was a limit to the possible rise in workers’ living standards in the Khrushchev years. By 1963,

In absolute terms consumer goods output has improved. However, on the whole the results have not in many cases reached the targets of even the first five-year plan as regards output per head ... In spite of all the changes, living standards in Russia are still far below those in Western Europe and only marginally above those in Russia in 1928 (prior to the plan era). [30]

So even though things were much better for workers by the end of the Khrushchev period than they had been under Stalin (after all, they had fallen to only about three-fifths of the 1928 level in the mid-1930s), the improvements were by no means sufficient to produce massive increases in labour productivity. Cliff concluded his chapter on the Russian worker:

A central worry for the Russian leaders today is how to develop the productivity of the worker. Never has the attitude of their worker meant more to society.

By the effort to convert the worker into a cog in a bureaucratic machine, they kill in him what they most need, productivity and creative ability. Rationalised and accentuated exploitation creates a terrible impediment to a rise in the productivity of labour.

The more skilled and integrated the working class the more will it not only resist alienation and exploitation, but also show an increasing contempt for its exploiters and oppressors. The workers have lost respect for the bureaucracy as technical administrators. No ruling class can continue for long to maintain itself in the face of popular contempt. [31]



Changes in the “superstructure”

Cliff’s diagnosis of the Khrushchev period did not restrict itself to the economy. He went on to show how changing economic needs were reflected in the social and political “superstructure”.

The most notable feature of the post-Stalin period was the relaxation of terror. Most of the labour camps were closed don and the mass purges became a thing of the past. Important elements of the rule of law were restored, with the police losing the power to imprison and execute people without judicial verdicts.

For Cliff, the main reason for these changes was that they were the other side of the shift from “primitive accumulation”, based on a great deal of forced labour, to “mature state capitalism” based on free labour. But they also fitted in with the individual desires of the members of the bureaucracy:

The ruling class in Russia, for its own sake, wants to relax. Its members want to live to enjoy their privileges. One of the paradoxes of Stalin’s regime was that even the socially privileged bureaucrats were not at one with it. Too often the MVD (the old name for the KGB) laid their bands even on the exalted bureaucrats. It was estimated that in 1938-40 some 24 per cent of the technical specialists were imprisoned or executed. The bureaucracy sought now to normalise its rule. [32]

Yet just as there were limits to the “carrot” in the economic sphere, there were limits to the reduction in the power of the police. The KGB continued to be a very important centre of power within the state. Numerous laws remained in effect to punish people for any serious questioning of the power of the ruling class or for organising strikes and demonstrations. “Comrades’ courts” were set up to deal with “infringements of soviet legality and code of socialist behaviour”. By this was meant a range of activities which challenged the bureaucracy’s monopoly of state property or the obligation of the rest of society to work for the bureaucracy – “illegal use of state or public material equipment or transport ... shirking socially useful work and living as a parasite ... poaching ... damage to crops or plantations by animals ... petty profiteering ... drunkenness ...bad language ...” [33]

For Cliff, further reduction in the arbitrariness of state power was ruled out because of the general scarcity of goods, the inability to deal with “bureaucratic arbitrariness and administrative fiat“ in the economy, and by “the fact that the state is the repository of all means of the production, the centre of educational and cultural organisation” and so, the focus for “all criticism, of whatever aspect of the system”.

Hence state capitalism by its very nature, unlike private capitalism, excludes the possibility of wide, even if only formal, political democracy. Where the state is the repository of the means of production, political democracy cannot be separated from economic democracy. [34]

Behind the limitations on political reform lay the fact that power continued to lie with a narrow bureaucratic class:

The monopoly of power is not less the prerogative of the CPSU under Khrushchev than it was under Stalin. Its social composition has not changed much either. And the concentration of the commanding heights of the party in the bands of the bureaucracy is even more the case than under Stalin ... Ordinary workers and collective farmers probably do not comprise more than a fifth, certainly no more than a quarter of the party membership. The higher one rises in the party hierarchy, the more scarce are workers and collective farmers. [35]

The tensions between Khrushchev’s attempts at pushing through reform and his inability to do so beyond a certain point found expression in the relations between the different nationalities inside the USSR.

Stalin’s death occurred at the height of the Russification campaign ... Stalin’s heirs had to decide whether they should continue these policies or offer concessions to the national minorities. [36]

At first concessions seemed on the cards:

The self-assurance of the non-Russian peoples of the USSR following their economic and cultural advance must lead to increasing opposition to national oppression ... Where the retreat from Stalin’s overcentralisation in economic management was made ... the harshness and extremism of Stalin’s nationalities policy became intolerable ...

Pointers to change began to appear shortly after Stalin’s death.

Cliff gave a number of examples of party leaders in the different republics who had been demoted for too zealous an identification with Stalin’s nationalities policy and of others who were acquitted of previous accusations of “bourgeois nationalism”. Khrushchev, in his 20th party congress speech, went out of his way to denounce Stalin’s deportation of whole nationalities, and soon afterwards a number of them (but not the Crimean Tartan and the Volga Germans) were rehabilitated.

But “the main lines of the nationalities policy have not really changed radically ... In the governments of the Asian republics newly appointed in 1959, of the 118 ministers no fewer than 38 were Europeans” – and these usually held key portfolios such as those of state security, planning, and chair or deputy chair of the council of ministers. The idealisation of the Tssrist annexations continued, and “the Russian language continues to edge out the national languages, even in the schools of the national republics”.

Although non-Russians constitute about half the population of the USSR, the circulation of newspapers in non-Russian languages constituted in 1958 only 18 per cent of the total circulation. [37]

Those who resisted this trend might not be taken out and shot as in Stalin’s time, but they would find their careers ruined. “Anti-nationalist” campaigns continued to take place in the different national republics, and continued to lead to widespread sackings and demotions.

The Russian leadership faced a “national” problem outside as well as inside the borders of the USSR. In Stalin’s time Moscow had been the centre of an international Communist movement that held power ins third of the world and had the support of many of the most militant sections of workers elsewhere. This was doubly useful to Stalin. The foreign Communist Parties could be used as counters in diplomatic games with the Western powers. And their praise for Russia could be used as an ideological weapon in the battle to keep control of Russia’s workers and peasants – what better proof could there be of the correctness of Stalin’s methods than that workers throughout the rest of the world praised them?

But the ability of Russia to control the other Communist Parties depended on it being the only independent Communist power:

For a long time ... the international Communist movement ... has suffered one setback after another: in Germany from the defeat of the revolution in 1919 to the rise of Hitler; in China the defeat of the revolution in 1925-27; the defeat of the Republic in the Spanish Civil War; the debacle of the People’s Front in France, etc. The only Communist Party maintaining power was in Russia.

If man’s weakness in the face of the forces of nature or society lead to his imbibing the opiate of religion with its promise of a better world to come, Stalinism certainly became the opiate of the international labour movement during the long period of suffering and impotence. [38]

Things changed after the Second World War. First in Yugoslavia and Albania and then, much more importantly, in China and later Cuba and Vietnam, Communist regimes came to power which were not dependent on the Russians. Cliff showed in a number of books and articles [39] that these were propelled by the same logic of state capitalist accumulation as Russia. But this very logic inevitably led them into bitter conflicts with Russia’s rulers.

Tito broke with Stalin in 1948 because Stalin attempted, in the interests of Russian capital accumulation, to impose policies which were detrimental to building an independent national state capitalism in Yugoslavia. Twelve years later Khrushchev was faced with a much more important split – that with the rulers of the giant Chinese People’s Republic.

Cliff traced the roots of this split to the differing economic needs of the two ruling classes. The Russians were concerned with attempting to catch up with the US in productivity – and that involved concentrating investment in their own already relatively advanced industries and using what resources were left to try to raise Russian living standards. The Chinese, by contrast, were desperate for the investment needed to build new industries from scratch, using the most primitive methods if necessary, and needed to keep living standards as low as possible. Divergent interests led to increasingly bitter rows over the allocation of resources; and out of the economic divisions grew ideological divisions. The Russian leadership, making the transition from primitive accumulation to mature state capitalism, required an ideology which boasted of the immediate benefits to living standards of its policies. It needed to turn its back sharply on the Stalinist ideology of never-ending sacrifice and relentless mobilisation. The Chinese, still at the primitive accumulation stage, required that ideology more than ever:

For China to belong to the same bloc while getting less and less materially from her rich partner is bad enough in itself. But as a morale-buster, the effect on Mao’s highly disciplined camp can be catastrophic in the long run. [40]

Cliff’s conclusion was that the split between Russia and China was not just a passing phase, but permanent. This meant, “whichever way the conflict between Moscow and Peking develops, one thing is certain – the international Communist monolith has crumbled.” [41]

Again, it is a conclusion which may not seem particularly profound today. But in the early 1960s it was very much a minority view. On both the right and the left in the West the general view was that eventually Russia and China would soon mend their quarrel. Isaac Deutscher gave expression to the view of most socialists when he said that what the two had in common was so great the division could not last for long. [42]



The Brezhnev years

Nikita Khrushchev was removed from power by the Russian politbureau in the autumn of 1964 and died in official obscurity. His successor, Leonid Brezhnev, ruled for 18 years, twice as long as Khrushchev, and died in office. Yet hardly was his body cold than the Russian press were stigmatising the Brezhnev years as a period of “stagnation”.

Brezhnev had been able to take power in 1964 because Khrushchev’s succession of reforms and counter-reforms had upset a sizeable layer of the bureaucracy without producing outstanding economic results. It was easy to bring together a coalition of different bureaucratic interests opposed to any more “hare-brained schemes”. By manoeuvring between these, the new leader was able to gain increasing control for himself until, combining the offices of party secretary and state president, he was unchallengeable.

He had to pay a price for his success, however. He bad to placate all those who had helped him to rise, and that meant leaving established bureaucrats in their place, regardless of how well they did their jobs. The Stalin period had been cbaracterised by massive, bloody purges, the Khrushchev period by bloodless ones. The Brezhnev period lacked both. It was a long period of bureaucratic stability, in which only death removed many top bureaucrats from office. When Stalin died in 1953 the average age of politbureau members was 55 and of Central Committee secretaries 52; by the time of Brezhnev’s death the average had risen to 70 and 67.

At first there were token efforts to continue with reform. Brezhnev’s first prime minister, Kosygin, tried to introduce a new system by which the success of factory managers was measured in terms of profitability, not just quantitative output. In 1967 the success of the Shchekino chemical combine in raising output while reducing the workforce was highlighted as an example for other enterprises to follow. But the new reforms soon petered out. Tinkering with the system did not produce the expected benefits, and the opposition of entrenched bureaucratic interests prevented more than just tinkering.

For a dozen years, it seemed that the problems that had so haunted Khrushchev could simply be ignored. The growth rate of the USSR’s economy might be falling, but it was still faster than most Western states. The sheer size of the USSR and the continued existence of considerable mineral resources enabled it to ignore the weakness of whole sectors of its economy. If investment in agriculture and consumer goods was retarded by the pressures of military competition, it was still possible to raise output – and living standards. The average grain harvest in the Khrushchev years was 124.4 million tonnes; it was 176.7 million tonnes in Brezhnev’s first decade in office. [43] In 1965 only 24 per cent of Soviet families had a TV set, 59 per cent a radio, 11 per cent a fridge and 21 per cent a washing machine; by 1984 the figures had risen to 85 per cent, 96 per cent, 91 per cent and 70 per cent. [44]

While things improved in this way, it seemed that all the problems that had so obsessed Khrushchev could be ignored. But they began to re-emerge with a vengeance in the late 1970s. The rate of economic growth began to decline precipitately. The 1976-80 plan set the lowest growth targets since the 1920s – and was still not fulfilled. If the annual growth rate bad averaged 5 per cent in Khrushchev’s last five years and 5.2 per cent in Brezhnev’s first five years, it was only 2.7 per cent in 1976-80 (according toUS estimates [45]; official Russian figures are a little higher, but show the same trend).

The trend to stagnation hit particular industries very hard: electricity and oil output was growing by 1980 at only about two-thirds of the rate of five years earlier, and coal, steel and metal-cuffing machine tools output actually fell a little. [46] Even worse, the relatively good harvest of 1978 was followed by poor harvests in 1979 and 1980 and a disastrous one in 1981.

The Russian leadership say today that:

The unfavourable tendencies that surfaced in economic development in the 1970s grew sharper in the early 1980s rather than relaxing. The slowdown of the growth rates continued during the first two years. The quality indicators of economic management deteriorated. In 1982 the increment rate of industry was 33.4 per cent below the average of the period of the past five-year plan. [47]

The reaction of the Brezhnev generation of ageing bureaucrats was to try to evade all the problems the economic downturn posed. They tried to continue in the old way and to use political influence to protect their own little empires. Again, as the leadership now tells:

Both in the centre and the localities many leaders continued to act by outdated methods and proved unprepared for work in the new conditions. Discipline and order deteriorated to an intolerable level. There was a fall in exactingness and responsibility. The vicious practice of downward revision of plans became widespread. [48]

In the Stalin and Khrushchev periods bureaucrats at all levels could have a certain sense of pride in their achievements. They might have lived in fear of Stalin and have resented Khrushchev’s chopping and changing of policies, but at least they saw the economy grow under their collective control, and with it their individual prestige. They could believe in “the relentless advance of communism” – not in the sense of the advance to human liberation preached by Marx and Lenin, but of the growth of Russian state capitalist power.

Under Brezhnev pride gave way to cynicism and cynicism easily spilled over into blatant corruption. At the top Brezhnev’s on family was implicated in this: his daughter was suspected of involvement in a scandal concerning stolen diamonds and his brother-in-law, the deputy head of the KGB, in covering up for her. [49] A little further down the bureaucratic hierarchy, the national leaderships of a number of republics seem to have built a base for themselves by covering up for semi-criminal elements: accusations to this effect were thrown at the Kazakhstan, Uzbekistan, Georgian and Armenian leaderships after Brezhnev’s death.

The cynicism of the bureaucracy was clearly matched by continuing mass alienation at the base. Drunkenness rose to record level. The quality of output from the factories did not improve. Productivity in industry remained at 55 per cent of the US leve [50] and was rising only slightly faster than wages. [51]




Yuri Andropov took over the leadership on Brezhnev’s death. As head of the KGB he might have been expected to be conservative in his approach. But in a totalitarian state it is often the secret police who are most in touch with the real mood of the mass of the people: they have a network of informers who will report on what their neighbours are really saying, while members of the regime’s party report only what those above them want to hear. So Andropov was aware of the cynicism, the corruption and the depth of popular alienation. He had also been Russian ambassador in Hungary in 1956 and had learnt how rapidly such ingredients could ignite into popular insurgency – a lesson reinforced by the sudden rise of Solidarnosc in Poland in 1980. He set out on the path of reform, as Khrushchev had 30 years before, to reduce such dangers to bureaucratic rule.

Andropov lived only another 14 months, and the conservative, Brezhnevite forces were still strong enough on his death to ensure that one of themselves, the ageing Chernenko, took over. But Andropov had managed to shift the balance of power to some extent. When Chernenko in turn died after 13 months in office, Mikhail Gorbachev was appointed general secretary.

In the interim, economic stagnation had continued: output of a whole range of goods from steel to fertilisers was actually lower than a year before. The new leader could hardly avoid leapfrogging backward over the Brezhnev years to the talk of reform and change that had been buried with the ousting of Khrushchev.

Gorbachev coined the slogans perestroika (restructuring) and glasnost (openness). He spoke of the need for a “peaceful revolution”. He encouraged reform-minded economists to highlight faults in the organisation of industry and agriculture. He spoke of the need to replace corrupt local leaders and inefficient managers.

And talk of economic reform spilled over into talk of political reform. There was a reconciliation with the best-known of dissidents, Sakharov, who was allowed back to Moscow from exile in Gorki. There was renewed criticism of Stalin and the rehabilitation of Bolshevik leaders who had been executed by him, especially Bukharin. There was toleration of independent informal discussion groups. There was a change in the electoral system to allow for more than one candidate in certain cases. There was talk of allowing the secret ballot in internal party elections. There was even a promise of the election of factory managers by the workforce.

All this led many people on the left to develop the same sort of faith in Gorbachev’s reforming zeal that people like Deutscher bad shown in Khrushchev 30 years earlier. But, like Khrushchev, Gorbachev has shied away from the radical reform implied in some of his words. His economic reform is, like Khrushchev’s, a case of the stick as well as the carrot.

Gorbachev has pointed enthusiastically to the Stakhanovite movement of the 1930s and 1940s as an example to be copied. [52] He told a meeting in Khabarovsk: “The main thing needed now, and I say this to you and ask you, is: Work, work, work!” [53] His first major action to deal with economic inefficiency was to try to stop workers drowning their sorrows; he issued a decree restricting the sale of alcohol and raising its price 30 per cent. Indeed, for many workers the stick far outweighs the carrot: where the reform has been applied at the enterprise level it has led to wage cuts – and to strikes, as with the tram stoppage at Chekhov [54] and what Izvestia referred to as a “wild demonstration” at the Kama River truck plant. [55] Gorbachev himself has admitted that there have been several “work stoppages” over quality control measures which have lowered workers’ bonuses. [56]

The promises of glasnost have not turned into even the very limited democracy known in the advanced Western states. There was a choice of candidates in the 1987 elections – but in only 5 per cent of constituencies, and even here there was no open campaigning for different policies.

The rules for the elections of managers made it clear that workers will not have real control. The workers do not themselves determine who is on the short list of candidates that is voted on. The successful candidate has to be approved by the “superior organ” in charge of the enterprise [57] and it is not just the workers, but all employees (including managers, supervisors and foremen) who vote. Finally, in the elections that have taken place so far workers have not been allowed to campaign for or against an individual candidate (as workers in the Latvian factory of RAF cars complained in 1987). [58] It is easy to see how, in such conditions, the only group allowed to campaign within the enterprise, the party cell, will effectively be able to determine who wins. And statistics show that only 16.7 per cent of those in key positions in local party cells are workers. [59]

Alongside the alleged election of managers, elected enterprise councils have been set up. But again, the rules for elections make it clear that this is not an example of real workers’ democracy. The councils’ primary sphere of authority’ is the monitoring of worker performance and the promotion of enterprise productivity:

... the council concentrates its main attention on the development of the initiative of the working people and on the contribution of each worker to the common cause, and implements measures to achieve high end results ... and to earn the collective economically accountable revenue. [60]

The first election campaigns were based entirely on candidates’ records of promoting efficiency and productivity and their adherence to “norms of socialist legality and morality”. [61] These bodies are clearly much closer to quality circles than to real factory councils!

If there were any doubt on the matter, article 6 of the new law spells out that the party organisation “directs the work of the organisation of collective self-management”.

The same combination of talk of reform and real control from above is shown over the nationalities question. Many of the oppressed ethnic groups that make up more than half the USSR’s population have taken glasnost to mean they can speak out for the first time in 70 years about the discrimination they face. In 1987 there were demonstrations in the Baltic republics and by the Crimean Tartan. February 1988 saw a million- strong demonstration in the Armenian capital. Yet the actions of the Gorbachev government have involved centralised direction from Moscow rather than reliance upon local initiative. At the end of 1986 a Russian was imposed on the Asian republic of Kazakhastan as first secretary in place of an allegedly corrupt local leader – and many thousands of Kazakhs poured into Alma Ata and clashed with the police in protests. The regime turned a blind eye to the protests in the Baltic republics and by the Tartan. When Gorbachev met a delegation elected from the mass demonstration of Armenians, he told them they would have to wait some years for satisfaction of their grievances. As with Khrushchev 30 years ago, Gorbachev’s promise of reform is contradicted by his drive to make Russian industry more efficient – and that means a central, rather than a local direction of resources.

Again like Khrushchev, Gorbachev’s period of rule has been marked by sudden chopping and changing. In 1984-86, he talked of reform but concentrated mainly on changing personnel, so as to replace former Brezhnev supporters with his own men. Then in the first ten months of 1987 he began to urge rapid change in a series of speeches and in his book Perestroika. But in October of that year there was a sudden shift back to older methods.

In the forefront of the campaign for reform had been Boris Yeltsin, the recently appointed leader of the Moscow party organisation. He introduced the October plenum of the Central Committee with a speech which, apparently (we don’t know the exact contents of his speech, since glasnost does not amount to openness about such proceedings), involved swingeing attacks on those obstructing perestroika.

There followed attacks on him by no fewer than 26 speakers from the floor and the meeting then unanimously passed a resolution “qualifying his statement as politically wrong”. The foreign press were told of the arguments taking place, but not the people of the USSR. The first they heard officially came three weeks later when a special meeting of the Moscow City party voted to sack Yeltsin.

The tone of the meeting was set by Gorbachev himself, who claimed that Yeltsin had “adopted high-sounding statements and promises from the very beginning which were largely nourished by his inordinate ambition and fondness for staying in the limelight”. The language was not that different from that used by Stalin against his opponents in the late 1920s and early 1930s (before he turned to calling them “agents of imperialism”). And Yeltsin’s own response showed how little room there is in the glasnost-inspired leadership for open debate. Instead of defending himself, Yeltsin responded with a confession that could also have come from the Stalin era:

I must say that I cannot refute this criticism ... I am very guilty before the Moscow City Party organisation, I am very guilty before the City Party Committee, before the Bureau and, of course, before Mikhail Gorbachev whose prestige is so high in our organisation, in our country and throughout the world. [62]

The Yeltsin affair was no isolated occurrence. It marked some sort of turning point in the drive for glasnost. This is shown by a shift in Gorbachev’s own approach. Before the Yeltsin affair, in the summer of 1987, he wrote his book Perestroika, which demands radical reform. After the attacks on Yeltsin at the Central Committee he gave a speech marking the 70th anniversary of the October revolution. This was widely expected to urge a speed-up of perestroika and glasnost. But instead it laid as much stress upon the “dangers” of “going too fast” as on the dangers of resistance to perestroika.

Such sudden reverses of policy are not accidental. The stagnation of the Russian economy produces pressure for reform. But that pressure encounters massive obstacles from inside the bureaucracy itself. It is not only that millions of individual bureaucrats are committed to the old ways of organising things; it is also that the whole bureaucracy fears that bitter arguments with each other might open up a space for millions of people below them to take action on their own accord.

It was precisely such splits within the bureaucracy which laid the ground for the East German rising of 1953, the Poznan rising of June 1956, the Hungarian revolution of October-November 1956 and the Czechoslovak events of 1968. [63] On each occasion what began as arguments between different sections of the bureaucracy partially paralysed the machine of repression and allowed students, intellectuals and finally workers to mobilise.

There have already been the first signs of such moves as a by-product of the arguments over glasnost. There was the clash between demonstrators and the police in Alma Ata in 1986, the nationalist demonstrations in the Baltic states in 1987, the huge demonstration in Armenia in late February 1988. Outside the USSR itself, in its sphere of influence in Eastern Europe, there have been signs that things might get completely out of control, with strikes and demonstrations in Hungary, a near-uprising in the Rumanian town of Brasov, and continuing discontent in Poland and Czechoslovakia.

What is more, those who resist reform have one very powerful argument: it is by no means self-evident that economic reform will solve the problems of the economy. In two East European countries, Hungary and Yugoslavia, far-reaching reforms in the direction of what is sometimes called “market socialism” have been carried through. For a time these reforms received enormous praise in the Western media. Yet today the Hungarian and Yugoslav economies are in no better shape than that of Russia. Both are suffering from industrial stagnation, high levels of inflation and big foreign debts. Both are attempting to impose wage cuts and unemployment on their workers, creating growing discontent which led, in the Yugoslav case, to a massive wave of strikes in 1987.

The point is that reforms cannot deal with the root cause of the USSR’s economic failings. This lies, as Cliff argued 40 years ago, in the way the ruling bureaucracy subordinates the whole economy to military and economic competition with the West (and, today, with China). This compels a level of accumulation which cannot be sustained by resources. And it leads the mass of the population – the workers and collective farmers – to such a deep alienation from their own work activity as not to care about the quality of their output.

The faults which the economic reformers focus on – the waste, the shoddy character of a lot of goods, the lack of interest of shop-floor workers in their work, the giant projects which rust, unused – are all matched within the giant corporations of Western capitalism. The disaster of the nuclear power plant at Chernobyl was matched by Three Mile Island in the USA and, before that, by the Windscale accident in Britain in 1957. The waste in Russian industry is matched by the idle modern steel and chemical plants scattered through Western Europe and North America, victims of the market which so many of the reformers see as Russia’s salvation.

Russia may suffer from shoddy output. But so do whole industries of the West – witness the experience of countries like Britain where the system-building boom of the 1960s and early 1970s produced hundreds of thousands of flats and houses that were virtually unfit for human habitation less than 15 years later. If Russian bureaucrats try to dump low quality goods on an unsuspecting public, so did Western salesmen who pushed the drugs thalidomide and opren, who urged women to use the Dalken shield and who lured people onto the cross-Channel ferry Herald of Free Entetprise. Far from the market punishing the giant firms involved, it has often enabled them to reap massive profits.

Even firms that are inefficient in narrow cash terms are rarely driven into outright bankruptcy under conditions of modern Western capitalism: the state moves in to bail them out, as it did with Chrysler in the US, AEG in West Germany, Massey Ferguson in Canada and Britain. The units of modern capitalism are so large that the devastation threatened by leaving everything to the play of free market forces is too great even for the most market-oriented of governments, such as Thatcher’s in Britain and Reagan’s in the US. As a result measurements of in-firm inefficiency (baptised by one economist “x-inefficiency”) suggest that many firms could be working at double their present productivity. [64]

The Russian economy is half the size of its main competitor, the United States. It cannot afford to operate with smaller units of production than its rival. So the concentration of production is proportionately higher, and the impact of particular cases of inefficiency and waste proportionately bigger. And Russia’s rulers certainly cannot deal with these simply by using the market to drive major units out of business, since the devastation caused would be so much greater than in the US.

The Russian leadership today is therefore caught in a terrible dilemma. It dares not leave things as they are any longer. Economic stagnation, it fears, could suddenly lead to the same sort of popular insurgency that gave birth to Solidarnosc in Poland in 1980. Yet it is afraid to push reform through consistently and does not even know if reform will work. It swings from one policy to another and back again, to the accompaniment of bitter rows inside the bureaucracy itself. These can make it increasingly difficult for the bureaucracy to impose its will on the rest of the population. Such were the ingredients which opened the way for the events of East Germany in 1953, Hungary in 1956 and Czechoslovakia in 1968.

Marx wrote in 1859 that “from forms of development of productive forces”, existing “relations of production ... turn into fetters. Then begins an epoch of social revolution.” The relations of production established by Stalinist bureaucracy have quite clearly become such fetters. Russia could well be on its way to a new “epoch of social revolution”.

Marx warned that it is impossible to “determine with the precision of natural science” the “legal, political, religious, aesthetic or philosophical – in short, ideological, forms in which men become conscious of the conflict and fight it out”. We certainly cannot foresee either the speed at which the new period will develop in Russia or the political and ideological formations which will be thrown up. What we can say, with certainty, however, is that the bureaucracy faces a period of very grave crisis. This crisis has already seen the biggest nationalist demonstrations since the 1920s and a proliferation of reformist arguments. Working-class struggles are likely to follow. But if workers are to impose their solution to the crisis they will need to have a clear understanding of where the system comes from and what its dynamics are – an understanding that can only come from a theory of state capitalism like that developed by Tony Cliff forty years ago.




1. Tony Cliff, The Nature of Stalinist Russia, duplicated, London 1948.

2. In a Fabian Society pamphlet.

3. E. Germain (Ernest Mandel), in Quatrieme International 14, 1956, Nos.1-3.

4. In Quatrieme International, December 1956.

5. Tony Cliff, The Class Nature of the People’s Democracies, 1950, reprinted in Neither Washington nor Moscow, London 1982, and Ygael Gluckstein (Tony Cliff), Stalin’s Satellites in Europe, London 1952.

6. Ygael Gluckstein (Tony Cliff), Mao’s China, London 1957.

7. Cliff, The Nature of Stalinist Russia, pp.134-5.

8. Some of which were reprinted in A Socialist Review, London, no date (1965), and Neither Washington nor Moscow.

9. Tony Cliff, From Stalin to Khrushchev, London 1956.

10. Cliff, Russia: A Marxist Analysis, London 1964, p.198.

11. Cliff, Russia: A MarxistAnalysis, p.209.

12. Cliff, Russia: A Marxist Analysis, p.234.

13. Cliff, Russia: A Marxist Analysis, p.240.

14. Cliff, Russia: A Marxist Analysis, p.254.

15. Cliff, Russia: A Marxist Analysis, p.256.

16. Cliff, Russia: A Marxist Analysis, p.256.

17. Cliff Russia: A Marxist Analysis, p.254.

18. Cliff, Russia: A Marxist Analysis, p.255.

19. Cliff, Russia: A Marxist Analysis, pp.248-9.

20. Cliff, Russia: A Marxist Analysis, pp.250-4.

21. Cliff, Russia: A Marxist Analysis, p.274.

22. Cliff, Russia: A Marxist Analysis, pp.262-3.

23. See a summary of accounts by J. Pajetska, Goldman and Korba, Basked, Bence and Kis, Branko Horvat and others, in Chris Harman, Class Struggles in Eastern Europe, London 1983, pp.288-96.

24. See for example Branko Horvat, Trade Cycles in Yugoslavia, special issue of East European Economist, Vol.X, Nos.3-4, and Goldman and Korba, Economic Growth in Czechoslovakia, Prague 1969; see also summary of these accounts in Human, Class Struggles in Eastern Europe.

25. Cliff, Russia: A Marxist Analysis, p.263.

26. Cliff, Russia: A Marxist Analysis, p.274.

27. Cliff, Russia: A Marxist Analysis, p.283.

28. Cliff, Russia: A Marxist Analysis, pp.284-5.

29. Figures given in Cliff, Russia: A Marxist Analysis, p.291.

30. Cliff, Russia: A Marxist Analysis, pp.289 and 295.

31. Cliff, Russia: A Marxist Analysis, pp.309-10.

32. Cliff, Russia: A Marxist Analysis, p.318.

33. Quoted in Cliff, Russia: A Marxist Analysis, p.315.

34. Cliff, Russia: A Marxist Analysis, p.319.

35. Cliff, Russia: A Marxist Analysis, pp.223-4.

36. Cliff, Russia: A Marxist Analysis, p.327.

37. Cliff, Russia: A Marxist Analysis, pp.329-31.

38. Cliff, Russia: A Marxist Analysis, p.333.

39. The Class Nature of the East European States, 1949, reprinted in Neither Washington am Moscow; Stalin’s Satellites in Europe, 1952; Mao’s China, 1957; and Deflected Permaneni Revolution, 1963, reprinted as a pamphlet with the same title, London 1986.

40. Cliff, Russia: A MarxistAnalysis, p.336.

41. Cliff, Russia: A Marxist Analysis , p.337.

42. I rely here on my memory of a talk he gave at the London School of Economics in 1965.

43. Figures given in M.I. Goldman, Gorbachev’s Challenge (Ontario 1987) pp.32-3.

44. Figures from Narodnoe khouiastw (various years), quoted in Mike Haynes, Understanding the Soviet Crisis, in International Socialism 2:34, p.18.

45. Figures from US Congress Joint Economic Committee, USSR: Measures of Economic Growth, Washington 1982, quoted in Goldman, p.15.

46. Figures from Narodnoe khoziastvo, quoted in Goldman, p.66.

47. Nikolai Ryzhkov, Report on Draft Guidelines for Economic and Social Development, given to 27th Congress of the CPSU, March 1986.

48. Ryzhkov, Report to 27th Congress.

49. There are a number of accounts of this story; see for example C. Schmidt-Hauer, Gorbachev, the path to power, London 1986, pp.72-3.

50. Speech by Gorbachev, quoted in Financial Times, 12 June 1986.

51. Figures from E. Rusanov show that in Stalin’s last years a 0.3 per cent rise in wages produced a 1 per cent increase in productivity; by the late 1980s it took a 0.9 increase in wages to do so (quoted in Goldman, p.29).

52. Pravda, 12 December 1984 and 22 August 1985, quoted in Goldman, p.23.

53. Quoted in Goldman, p.30.

54. For accounts, see Andy Zebrowski in Socialist Worker Review, December 1987, and Anthony Barnett, Soviet Freedom, London 1988, pp.216-7.

55. Izvestia, 4 December 1986, quoted in Goldman, p.78.

56. The Russian news agency TASS, 27 January 1987, quoted in Zebrowski.

57. Law on State Enterprise Associations, in Izvestia, 1 July 1987.

58. Quoted in Zebrowski.

59. Partiinaya zhizn, No.5, 1969, p.5, quoted in Mervyn Matthews, Class and Society in Soviet Russia, London 1972) p.224.

60. Partiinaya zhizn, quoted in Matthews, p.224.

61. Details in Pravda, 15 February 1987.

62. This account is based on The Guardian, 12 November 1987, and Barnett, pp.174-7.

63. For a full discussion of these events see Harman, Class Struggles in Eastern Europe.

64. Harvey Liebenstein, Allocative inefficiency versus “X-inefficiency”, in American Economic Review, June 1960.


Last updated on 7.9.2002