[Ernie Tate was a leader of the British Trotskyist movement in the 1960s, where he helped to build the Vietnam antiwar movement, and where he recruited Tariq Ali among many other radicalizing students and youth. He now lives in Canada where he is employed as a skilled worker. If I get a hold of Shepherd's piece, I will pass it along as well. Shepherd was a leader of the American Trotskyist movement who was purged in the early 1980s.] === Hello Louis, This is a piece I wrote for a discussion inspired by an article by Barry Shepherd. I thought you would like to see it. It was nice meeting you in New York. Best wishes, Ernie Tate =================================== What Happened In Russia? a contribution to a discussion, December 11, 2000 by Ernest Tate I'm sure I was not alone among socialists during the period of Gorbachev and the final days of "peroistroika", thinking that this was perhaps the opening phase of the "political revolution" and that the Russian working class would not permit the bureaucracy to dismantle the gains of the Russian Revolution. The idea of "political revolution", the need for the working class to mobilize around a program of "workers control" to allow it to realize its full creative possibility to overcome the crisis of stagnation resulting from bureaucratic control, was an essential feature of the analysis of the USSR developed by Leon Trotsky. This program for political revolution, to which supporters of the "degenerated workers state" theory subscribed, encompassed some of the demands of the bourgeois democratic revolution such as freedom of speech and association, the right to strike, demands for workers control around which the working class would mobilize through workers councils, and wh! ich would pose the question of "political power". There is little evidence of political revolution in the processes of change in Russia and Eastern Europe since the collapse. Rather , the drive for change, especially political change, has tended to come from those layers in society who are outside the organized working class. Looking at some of the changes in Russia, especially in the decades before Gorbachev, we can understand why. From Kruschev in the early 1960s, social and economic changes under the bureaucracy began to cause its disintegration. Despite Kruschev's claims that they would bypass the standard of living of the capitalist countries, by the early 1970s targets of the central plan for economic growth and labour productivity were not met. Before 1960 rates of growth under the two five year plans were 14% and 11% a year, respectively, remarkably high when compared to Western capitalist economies. Projecting this growth rate into the future, Kruschev could, with some justification say the USSR would bypass capitalism. But the reality was something else. During the 70s and 80s, the Russian growth rate fell to under 4%, says David Lane in his book, The Rise and Fall of State Socialism. (1) At the same time, important demographic shifts in the population began to undermine the regime. Two thirds had become urban -- from 22,000,000 in 1922 to 186,800 in 1989. (2) In 1950, the number of employees categorized as "non-productive", that is non-manual employees, in such sectors as science, education, culture, health, insurance and tourism, totalled 6,260,000. In the space of 17 years, that figure had jumped almost four times to 23,812,000. (3) It was this demographic group that had the most important impact on the history of the last twenty years. There was the rapid growth of television and other means of communication. David Lane writes that , "The population's expectations rose: a consumer mentality matured as did the bourgeoisification of aspirations."(4) "This led to a more wide-spread receptivity to alternate conceptions of socialism at the same time as there was a pervasiveness of illegal as well as private economic activity." Among petty -bourgeois layers in the society there was an increase in the belief that they would capitalize their special skills in a market relationship. "It was a mechanism to realize intellectual capital in monetary terms." Lane says.(5) In general, there had been a deterioration in the standard of living of these layers, compared to the pre-war period. There is a lot of anecdotal evidence of truck drivers earning much more that highly trained medical specialists. Loyalty and solidarity with the regime began to break down, especially among professionals, who had become disenchanted with their status: they were in turn cultivated by the leadership. Lane gives data on the sociological shift in the membership of the Communist Party from the late Breznev period to Gorbachev, towards non-manual and professional layers and the influx of these layers into the top leadership and a simultaneous decline in the number of individuals from working-class backgrounds. "The implication here," he says, "is that a dual class structure was developing in which 'intellectuals' and professionals had much potentially to gain from a market-type system. They had marketable skills and were not dependent on a 'nomenklatura' system."(6) "It is undoubtedly the case," Lane says, "that the reform leadership of Gorbachev shifted its political fulcrum of support away from the manual working class and the traditional party and state bureaucracy to an alliance with the more technologically inclined and modernizing forces of the intelligentsia..."(7) To deal with the crisis of the economy, two sets of solutions were argued within the regime: the development of markets in Russia and "a reform of the economic mechanism." Gorbachev could have chosen to stay with the central plan and rely on the working class to make the changes necessary to overcome the crises, but instead he opted for the market solution which only accelerated the crises. In a discussion of the various theories about the nature of the Soviet state and the reason for the crises, Lane examines in detail the views of the Trotskyists. He looks to see which theory more correctly explained the crisis of the regime. He also deals with reactionary and pro-capitalist theories of some Western academics (which he says were mainly wrong about Russia). Lane, who pays tribute to Ernest Mandel's work, states that Hilel Ticktin, who Mandel debated many times, "must go down as one of the few specialists...who correctly analysed the weakness and potential disintegration of Soviet type society."(8) Tictin's magazine Critique, is published in Glasgow. In Tictin's view," writes Lane, "the dynamic of Soviet type formations has been the 'enormous levels of useless productive consumption or waste that result from the instability of the system...The central economic feature of the USSR...(was) its economic wastefulness.'" A major contradiction in the 'the system' is in the labour process: control is only partially achieved by "the elite" (Tictin's characterization) through the atomization (which originated under Stalin) of the workforce. This leaves the workers with control over the work process but causes underproduction and the production of "defective use values". Lane continues: "...a major cause of the disintegration of the system was the incapacity of 'the elite' to extract surplus, promote growth to meet needs. Also the 'elite' had no legitimate right to ownership and inheritance of property..." "In a nutshell, politically astute sections of the Soviet elite sought to introduce the market to preserve their position. If established, the market and its associated institutions of private property and exchange of labour value -- and (one might add) civil society and a bourgeois ideology -- will legitimate a new ruling class."(9) The proponents of deepening market reform became the major tendency in the government by the time Gorbachev came to power, with strong support from the administrative wing of the state apparatus from those running the large state enterprises. There seems to have been a uniform view in government circles over many years that believed the central problem in the economy was the stultifying effects the bureaucracy. It was immense, with its tentacles reaching into all aspects of the economy and life as it grew to build "socialism in one country" and as it attempted to reproduce the world division of labour within the USSR. Its authoritarian practices had their roots in the feudal relations the Bolsheviks inherited from Tsarism. It was the social basis of Stalinism, and even the Stalinists had difficulty reforming it. It grew, according to Lane, from 6,200,000 in 1922 to 118,000,000 in 1985.(10) Within the state and party apparatus various reform strategies developed which questioned the relevance of state planning to deal with the bureaucracy's suffocating weight on economic planning and its failures. These reforms challenged the central plan and gave legitimacy to the notion of "market socialism" as opposed to the capitalist market economy. The invasion of Czechoslovakia under the Breznev doctrine, put the ideas of "market socialism", on the sidelines, as the Russian leadership saw political changes there which challenged the Communist Party for political control. The planned economies, except for Yugoslavia, had been excluded by imperialism from the world economy and the world division of labour since their beginning, and starting with the 1960s were unable to compete with the capitalist economies based upon a sort of hand-me-down technology.(11) Technological change, or the lack of it was one of the main problems that Gorbachev attempted to solve. The crisis ran throughout society with shortages and a lack of consumer goods at a time when the Western capitalist societies were going through a massive growth of consumer products and technological expansion. Those around Gorbachev strove to break down the imperialist barriers to the USSR's entrance into the world economic and financial system. Their hope was to borrow from imperialism whatever was needed to close the technology gap. This was accompanied by an increase in the cultural influences from the capitalist countries through television and other modern means of communication, sources of "cultural contamination" where the intellectual elite and others aspiring to a middle class existence could see a market in operation that gave huge advantages to those who had the required skills. The "consumption effects" of capitalism were a constant reminder to this social layer of "communism's" backwardness and weakness.(12) Subjective evaluation of the benefits of Western! societies became the basis for a push by these forces on the regime to make concessions to their interests. Around the same time, imperialism under the leadership of Ronald Reagan and Thatcher made a switch in its cold-war policy of "containment" to a more confrontational policy of pushing for greater military superiority and militant anti-communism. All the numerous agencies of western imperialism were mobilized in a campaign for "democracy". Defense expenditures, a huge burden on Soviet society, would only increase under the threat of Star Wars, the Strategic Defense Initiative (SDI) of the Pentagon.(13) Lane quotes Richard Pipes, an advisor to Ronald Reagan, who points out that "'the systematic policy of subverting the Soviet Union, largely through the use of the CIA' made a decisive contribution to the collapse of communism.' He argues further ," Lane says, "that SDI 'accelerated the decline' of the USSR and that CIA policy succeeded in persuading Saudia Arabia to lower oil prices, which severely affected Soviet foreign currency earnings..."(14) According to Lane, the group around Gorbachev, although they supported the idea of market reform, had no clear idea of what model was required for the economy -- they saw only a "Russian" way. But the fundamental feature of "perestroika". and the policy of liberalization associated with it, was the introduction of market reforms. Instead of bringing an end to the economic crisis, this policy deepened it, ending in total failure by 1990, with mass unemployment, declining rates of economic growth and raging inflation as high as 300% a month. As Gorbachev turned to imperialism to allow the Soviet Union to enter the world market and attain membership in its financial agencies, imperialism began to raise the price of admission. Helmut Kohl demanded that East Germany be allowed to "unite" with West Germany. Thatcher demanded competitive elections in the USSR and a multi-party system.(15) Gorbachev capitulated to these demands. In foreign policy he gave assurances that the USSR would not intervene in Poland or the other countries of Eastern Europe if they should decide to leave Comecon or the Warsaw Pact, giving up what he considered to be a liability in the Soviet Union's scramble for an accord with imperialism. He agreed to reduce aid to Nicaragua. At about the same time, the USSR's trade agreements with Cuba were broken. There were deep divisions in the Gorbachev team about the way forward to deal with the economic crisis gripping the country. In the past these differences would have been settled by firing squad and murder, but under the new policy of "glasnost", this was unthinkable. Lane provides some unique data on the lack of a unified outlook in the thinking of those at the centre of power. "On the basis of interviews with 116 members of the Gorbachev elite," Lane says, "I distinguished between those seeking fundamental change of the regime and those who wanted reform. Of the political elite, 41 per cent regarded the Soviet system as 'fundamentally sound requiring reforms,' 40 per cent believed that it was 'basically flawed, though significant reforms could have been achieved' and , most important of all, 19 per cent thought the system was 'basically unsound and should have been completely replaced.' Within system reform, as contemplated by Gorbachev, could never have succeeded concurrently with political stability because the political elites were divided about the fundamental nature of the Soviet system."(16) These disagreements were finally resolved during the attempted coup by a wing of the bureaucracy who had become increasingly nervous about Gorbachev's course, resulting in the victory of Yeltsin who openly opposed the central plan, and who favoured "the organizing principles of capitalism", competitive political parties, private property and a market led economy. As part of his economic and administrative reforms, Gorbachev around 1988, had introduced measures that enhanced market forces in the economy. His policy gave support to market transactions, increased private and cooperative trade(17), and in a measure to overcome the alienation of the workers and draw private savings into capitalizing state enterprises, gave the workers the right to buy equity. At the same time he weakened the power of the central ministries, reducing staff by a third to just over half a million. This unleashed powerful forces that challenged the foundations of the society. The government issued on a mass scale, certificates to give the workers the right to buy shares. Individual directors of enterprises and consortia of wealthy individuals gained control of the most profitable state-owned enterprises. (We shall see later how these individuals obtained their wealth.) With the assistance and advice of Western financial institutions, market reformers at the centre of power oversaw the dismantling of state enterprises and their mass privatization at ridiculously low prices or through outright theft. In her book, Sale of the Century, Russia's wild ride from Communism to Capitalism, Christia Freeland, an editor of the Toronto Globe and Mail , who was the London Financial Times correspondent in Moscow during the period of the collapse and after, describes the privatization process once Yeltsin replaced Gorbachev. Operating under a philosophy that it was preferable for state assets to be stolen rather than remain under public ownership, and a sense that time would not always be on their side she says the "reformers" at the centre of power hurriedly dismantled key sectors of the economy. She says that by 1996, "more than 80% of Russian industry was at least partially in private hands, a higher proportion than in parts of Western Europe." (18) "By 1999, " she says, "the top 10% of the population owned half of the nation's wealth, while the bottom 40% owned less than a fifth. Between 30 to 40 million people lived below the poverty line, defined as a miserly $30 a month." (19) (She does not give any source for this data.) To overcome resistance to the privatization, workers and managers of the targetted enterprises were given "up to 40% shares in these firms." (20) A second wave of privatization allowed workers and managers to buy 51% of the voting shares at a nominal price. Freeland says that this effectively made the Soviet-era factory directors the "capitalist elite" for the new Russia. This was followed by "voucher privatization" in 1992 whereby everyone was given 10,000 rubles (then about $25) by which workers could pay the nominal fee to buy their reserve shares in their enterprises. "Street kiosks, " Freeland reports, "whose briskest business was in vodka and cigarettes began a robust trade in vouchers as well. Young hustlers went from door-to-door, buying up spare vouchers." (21) From this emerged wealthy individuals who had amassed their riches from exploiting openings in the economy provided to them under previous reforms, even under Breznev. Often in partnership with foreign financial institutions they consolidated their control over the more lucrative sectors of the economy. Most often from outside the bureaucracy -- but in active and mutual beneficial collaboration with it -- individuals who often had Party and / or Komonsol credentials, who had become wealthy in the "shadow economy" or from earlier market liberalization schemes, or who functioned in the quasi-private sector, positioned themselves to exploit the new changes. Thane Gustafson, in his book, Capitalism, Russian Style, examines how important private wealth can originate in a planned economy as a result of scarcity and the functioning of the "unofficial" market. In Russia this process had been underway especially since the time of Stalin, and perhaps even under the Bolsheviks, operating illegally but often in a corrupt relationship with the bureaucracy. There are two "informal" economies in Russia today, Gustafson says, "...The 'shadow' economy is the world of underground business, unregistered and unreported. The 'virtual' economy is the world of Soviet-era manufacturing which has attempted to shelter itself from the market pressures by retreating from it. The 'shadow economy' is at the opposite pole from the 'virtual economy' . The basis of the shadow economy is strictly cash while that of the virtual economy is barter and IOUs. The shadow economy lives by its wits; the virtual economy by subsidies (in the hidden form of unpai! d taxes and wages). The shadow economy produces services for which there is a market: the virtual economy produces physical goods for which there is none -- at least at Soviet-era cost plus pricing. The shadow economy, until the crash of August 1998, accounted for perhaps 40% of Russian GDP, the virtual economy -- essentially manufacturing and the defense- industrial rump -- barely 25%." (22) The "shadow" economy blossomed after Kruschev. Freeland describes the rise of Mikhael Khodorkovsky, in her series of biographical sketches of some of the "oligarchs" who had amassed vast wealth during this time. Khodorkovsky had risen within the Komonsol, the Communist Party youth organization, within which he and his group started a computer importing business, which "became a cooperative, then a bank as the laws governing private business developed."(23) The company became Menatap, until recently one of the largest private banks in the country. Another large bank, belonging to the Most group had similar origins, beginning with capital that came from Komonsol. It is worth quoting Freeland at length, because her book describes so well how a new wealthy class grew up in the midst of the planned economy and how it increased its power as the crisis unfolded. "Their business started with factories that were having a hard time extracting credits or payments from the collapsing Russian state. Like a cheque-cashing company, Menatep gave the enterprises their money up-front and then collected the payment they were owed from the central government, taking a hefty cut in the process. Before long Menetep began to perform the same service for regional governments waiting for rubles from Moscow. >From there it was a short step to the real klondike -- handling the federal government's own finances, through a plethora of schemes ranging from servicing fat bank accounts of government departments to becoming a conduit for money which needed to travel from one branch of the federal government to the other." Aside from making money, his business b! y its very nature put this oligarch into intimate contact with key individuals in the bureaucracy. (24) The Komonsol had vast holdings in entertainment, travel, holiday camps and even provided high-tech consulting to industry. It actively promoted the market reform process. Freeland quotes a Khodorkovsky associate: "To a certain extent Khodorkovsky was sent by the Komonsol and the party (into the private sector)." The party establishment protected and supported him with the ostensible objective to break the grip of the state ministries over the economy. Surrounded by a "hostile, inefficient and endemically corrupt" apparatus, according to Freeland, the "reformers" in the government turned over the former functions of the bureaucracy to "the nation's plucky new band of capitalists, young men who belonged to their generation and shared their mindset." (25) Menatep moved to gain control of some of Russia's largest factories that were put on the auction block in a mass privatization scheme to help remedy earlier "voucher" privatization failures by providing funds to companies desperate for capitalization. They gained ownership of the enterprises at bargain basement prices, but often reneged on their re-capitalization promises. Then there was the infamous "loans for shares" program, designed by a consortium of the most powerful "oligarchs" to facilitate the transfer of some of the major resource industries into private hands in exchange for loans to the government. These capitalists met in a cartel to plan their attack and "quickly agreed on a rough and ready division of Russia's most valuable companies... We reached an agreement on who would take what, " one of the participants told Freeland. "We agreed not to get in each others way." It took a number of months for the program to work its way to success when the number of targetted companies was reduced to twelve. The Yeltsin administration carried out the transfer in two stages, first turning the companies over to this group of capitalists "in trust" in early 1995 and finally giving a transfer of ownership in 1997, after the Presidential election. The cartel had actively campaigned for him. Norilsk Nickel, for example, one of the largest nickel producers in the world, if not the largest, was transferred out of public ownership through the fiction of allowing Vladimir Potanin, one of the wealthiest men in Russia to manage the state stake in this enterprise in exchange for loans to a government desperate for funds. Yukos Oil, a large Siberian oil company met a similar fate as did Unified Energy Systems, the national power company. Smaller enterprises went to more junior players.(26) The stated motivation of the government in agreeing to this process was the need to defeat the "red directors", who effectively controlled the enterprises, and to raise "non-inflationary" revenues to overcome its financial crisis resulting from budgetary short-falls. For roughly $2.25 billion, the deal was completed. As Freeland says, Russia's crown jewels were given away for kopeks.(27) "It was the act of a desperately enfeebled state, so anaemic it was unable to perform basic functions such as collecting taxes or maintaining its monopoly over coercive force. Although this shadow state formally 'owned' the companies which were ultimately sold off, the Kremlin had little political or economic control over them. "This meant that the 'loan-for-shares' was not quite a straightforward giveaway. Instead the Kremlin basically gave the future oligarchs a federal mandate to try and wrest control of some choice assets away from the red directors who were effectively the owners...". As this privatization process unfolded, there was a big expansion throughout the country in commercial banking, that began with Gorbachev's break-up of the USSR state bank into five separate entities. Within four years, there were 1600 private banks , some with many branches throughout the country, to facilitate the payment and settlement systems for many enterprises and to finance the privatization program. They "were created by the Soviet state bureaucrats, acting in their own interests as the regime weakened," says Gustafson in his Capitalism, Russian Style. He quotes one Western specialist who says that "Ministries, state committees, large state enterprises, government organs, state financial institutions, the Communist Party and its affiliates -- these were the entrepreneurs of the new banking sector."(28) Almost every large enterprise organized its own bank under the"liberalized" banking laws. The private banks, because of their contacts in the bureaucracy and through speculation and foreign trade, grew rich and powerful. As the state's monopoly of foreign trade and its tight control of foreign currency disappeared, they took over many of the functions that involved cash flow. They handled much of the finances of the various ministries and facilitate payment systems, internally and abroad. "More than any other post-Soviet institution, the new banks symbolized the vast transfer of wealth from the state private hands and the return of money to centre in the Russian economy," says Gustafson. They became the most powerful institutions in Russian society. In the inflation frenzy of the early 1990s, the banks made vast profits from borrowing from the state at low interest rates and lending very high. Gustafson quotes a 1996 Russian study of the phenomenon : "...the private banks appropriated most of the 'inflation tax' levied on the Russian economy, practically without opposition."(29) At one point, he says, their profits amounted to 10% of the Gross Domestic Product. Ordinary Russians, unused to high inflation and unable to protect themselves, saw their savings disappear. Between 1991 and 1995, prices increased 10,0000-fold. Inflation, one of the greatest re-distributors of wealth there is, on a par with wars of conquest and revolutions, gave a huge boost to capital accumulation, in what became known as the "golden age"of the Russian banking system. It is important to have a sense of proportion however, about the actual size of these banks when compared to their Western counterparts. "By world standards", Gustafson say, "even the largest Russian banks were small, and their impact on the Russian economy was modest. On August 1, 1998, on the eve of the collapse, the total assets of the approximately 1600 Russian banks (state and private combined) were generously estimated at $125 billion, of which nearly two-thirds were held by the top 20 banks. In 1997, 60% had capital of less than $1 million and 90% had less than $3 million. Only 124 banks (about 6% of the total number) had capital greater than $5 million."(30) By world standards they were pygmies, but compared to what existed in the USSR before the collapse, they were giants. The new capitalists, often with Western partners, naturally concentrated their efforts in those areas of the economy where there was cash flow, such as banking, telecommunications and energy (both "natural monopolies" which have now been privatized), and on natural resources and commodity exchange. Gazprom, the natural gas distribution and energy company, which is Russia's richest and largest company is run by "insiders" from the old energy ministry and is partly owned by the government. The state's role in the enterprise is managed by these "insiders". In the 1980s, it invested heavily outside Russia, forming an alliance with a Germany company to become very profitable and the largest supplier of natural gas to Western Europe. In Russia, it used its profits to subsidize companies and individuals who were unable to pay their energy bill. In the early 1990s, it used its power to buy or take over many enterprises through debt-for-equity swaps. Today, its shares are listed! as Depositary Receipts on the New York Stock Exchange. Gustafson says that Gazprom is a powerful force pulling Russia into the money economy.(31) In the food industry, according to Gustafson, today's Russian producer "is frequently a subsidiary of an international group. Western companies, finding it more profitable to produce through local plants than to import, have invested heavily in the Russian food sector, buying scattered Russian plants and consolidating them into larger conglomerates. 'Outside takeovers' have become routine, and the result is a growing concentration of production around a few leading producers."(32) In beer production, four foreign groups control more than half of the market, often in competition with large state-owned breweries. This process of capital accumulation, privatization and consolidation in the economy continued until the ruble crisis of August, 1998, when the government defaulted on its bonds and in effect went bankrupt in the midst of country wide strikes that caused disruption of the country's rail lines. (If it was possible for a country to go bankrupt, then Russia certainly met the criteria.) Commodity prices had dropped, especially oil from which the government got 40% of its revenues. "The top twenty commercial banks, which had two-thirds of the assets of the new banking sector, were reduced to empty shells."(33) There was a massive flight of capital out of the country. Estimates range from $100 billion to $150 billion. The privatization process either stopped or simply slowed down. The dismantling of the economy and it reorganization around capitalist norms during the crises of the last decade or so has been paid for by the working class in a rapid deterioration of its living standards, with reduced wages often held back for many months. In so far as there has been political action by some of the trade unions, they have tended to ally themselves with this or that wing of the regime, should it be a General Lebed or even Putin. This has been the history of the class struggle under the regime ever since the crisis erupted in the mid-eighties. "No evidence is given (and none exists) to show the rise of working-class political consciousness as an instrument to overthrow the system."(34) In the current crisis in Yugoslavia where powerful strikes by workers and mass mobilizations in the streets, finally ousted Milosevec, we possibility will see a similar pattern. If we go by what has happened elsewhere, we can expect that the coalition of political forces which recently took over, will not reverse the "market reforms" which began under Tito. Nor will it implement a new monopoly of foreign trade or reverse the privatizations that took place in the 1960s. Instead, I suggest, it will move the country into the imperialist financial system, if not sooner, then later, giving even more freedom to market forces to penetrate economy. What at first puzzled me -- and I'm sure a lot of others -- about the changes taking place in Russia was the lack of an organized presence of the working class as a factor in the various crises which wracked the country. There were some heroic strikes, especially of the miners over such basic demands as payment of back pay, but after some promises from the regime, sometimes false, the workers retreated and seem to be no longer players in the open political life of the country. At least, that is what it appears from reading the local press. We have yet to see the working class play a significant independent role, and in so far as it politically expresses itself today, it tends to do that through the Communist Party, as discredited as that organization may be. But I think this is logical and somewhat inevitable if we look at how the organized working class developed and functioned in Russia over the past eighty odd years. The unions did not have the right to strike. They were not independent and were in varying degrees controlled by the regime, which continues even today. They participated in the running of the enterprises -- and still do -- which often provided medical care, food, housing, and vacations in special holiday resorts. In the past, this buffered them from the economic deprivation suffered by other social layers. Unlike in the capitalist world, there was no "reserve army of labour", a mass of unemployed workers. This beneficial position in the society can be seen in the relationship of the wages of manual workers to that of non-manual technical employees and office workers. If manual workers' wages are seen as fixed relative to others at a constant 100, from 1932 to 1985, non-manual technical employees' wages fell! from 265 to approximately 115 and office workers' wages fell from 150 down to approximately 80.(35) The working class functioned in a culture of "making things work", of being integrated into the administration of the enterprise. Their"privileges" meant they tended to be the last to feel the crisis of the regime. Unlike the workers in capitalist countries, the working class's political formation and education was based upon being "owners of the means of production". This probably explains the phenomena of many workers accepting for long periods, the non-payment of wages. This is changing however. David Mandel, in Socialist Register, 2001 , gives some important information on changes in working class consciousness as workers struggle with their "corpratist" union leaderships, many of whom now support a "patriotic bourgeoisie" in a blurring of class lines over the possibility of the country being colonized by foreign powers. There has been a low level of solidarity that is the result, not only of the "partnership" strategy, but of acute poverty, social uncertainty and the conservatizing effects of the depression. Nevertheless, the workers are relishing their new found freedoms of association and speech, the main constitutional benefits they achieved with the defeat of Stalinism and the removal of the Communist Party from power. Struggles by workers have broken out in some work-places to transform their unions into meaningful vehicles for economic struggle, with the setting up of some industry-wide or regional shop floor committees to defend their interests. Mandel describes the setting up of a totally different kind of union for Russia in the Edinstovo car plant, which although small (3500 members out of 120,000 employees), and suffering persecution and discrimination, is made up of the more and active and socially committed workers in the plant. Politically confused, its leadership at one ! point supported Yeltsin, then General Lebed and later it participated in Putin's election campaign committee. But it is completely independent from management and actively supports outside labour struggles.(36) It is a process that continues to evolve, despite huge difficulties amidst the shock and paralysis of one of the deepest recessions in the history of the world. Some unions are beginning to function as if they are in a capitalist environment. Workers in Yaroslavl Motor Builders, four diesel with 40, 000 workers, have a history of militant action going back to Gorbachev. During the "shock therapy" period around 1994, when workers saw their standard of living take a further nose-dive, they were relatively passive as were most workers, but in 1995 and over the next couple of years, a series of strikes were organized, one lasting five weeks, which included the tactic of blocking highways. More conservative union committees were replaced with strike committees, with changes being made in the unions of other associated plants to make them more responsive to the membership. These were some of the forces, says Mandel, which blocked the country's rail lines during the crisis in Se! ptember, 1998, to support the more than 200 miners who were living in a tent city outside the White House (seat of the presidency) during that summer, and even though the tent city got little or no support from the official unions, it inspired activists throughout Russia to support it.(37) A consequence of the rise of Stalinism in Russia was the virtual extinguishing, through political and bloody purges throughout society, of any conceptual framework that tended to a critical appraisal of the role of the bureaucracy, especially criticisms that went towards the concept of political revolution. Regaining its place as a force for social change in the life of the country means the working class will have to raise its political consciousness to recapture through its new freedom of association and speech some of the ideas of workers' democracy that came out of the 1917 Russian Revolution. It must overcome the break in the political continuity from that time. This is now easier than at any time during the past seventy-five years. It will also have to overcome some of its conditioning to throw off the political shackles imposed on it over several decades and re-enforced by the notion of being "owners of the means of production" to come to an understanding of the true nature of the regime at the state and enterprise level. The process of political change, since the collapse of the regimes in Easter Europe and the USSR, has been to electoral systems based upon bourgeois forms of government, with varying degrees of authoritarianism. We have seen parliamentary forms of government take the place of the old Stalinist regimes, often with either the passive or active support of the working class. And some logical questions are posed: how can we have a form of bourgeois democracy without a bourgeoisie? How does the world ruling class mediate its influences in these countries? Do native capitalists already control these governments? If so, what will be the length of their ascendancy? The capitalists are a class that Marxists believed had outlived its historical usefulness. Is it possible that this is a stage through which these societies will have to pass as the working class develops generalized class and political consciousness? These question have yet to be answered. I have little information about what is happening today in Russia. Recent press reports of the flight of some of the larger capitalists out of the country under fear of arrest and threats from the Putin government to investigate some of the property transfers with a view of taking them back under state control, suggests that the regime is attempting to get control 12 Lane, p 178. 13 Lane, p 179. 14 Lane, p 180. 15 Lane, p 186. 16 Lane, p 129. 17 Thane Gustafson, Capitalism Russian Style, Cambridge University Press, p 116. The author says that "the first and most fateful of the Gorbachev reforms" was the "decision to authorize private 'cooperatives'. Young Russians, especially in the cities rushed to take advantage of the opening. By official reckoning, they produced nearly 3% of all consumer goods, but an astonishing 18.4% of all services, and the real unreported numbers were undoubtedly much greater...". "Many cooperatives turned out to be little more than a siphon to divert state resources into private hands. A state manager would create a 'cooperative', owned by relatives or friends, to sell the output or inventory of his enterprise out the back door, preferably abroad for hard currency. The state enterprise absorbed public credits but secreted private profits." 18 Christia Freeland, Sale Of The Century, Russia's wild ride from Communism to Capitalism, Doubleday, Canada, p 13. 19 Ibid, p 16. 20 Ibid, p 55. 21 Ibid, p 57.. 22 Gustafson, p 117. 23 Freeland, p 115. 24 Ibid, p 117. 25 Ibid, p 117. 26 Ibid, p 26. 27 Ibid, p 167. 28 Gustafson, p 81. 29 Ibid, p 84. 30 Ibid, p 87. 31 Ibid, p 55. 32 Ibid, p 51. 33 Ibid, p 78. 34 Lane, p 146. 35 Ibid, p 192. 36 David Mandel, "Why is there no revolt?", p 191, in Working Classes, Global Realities -- Socialist Register, 2001, Merlin Press 37 Ibid, p 45. 38 Olivia Ward, Toronto Star, December 9, 2000. 39 Freeland, p 116. 40 Gustafson, p 175. 41 "U.S. Imperialism Has Lost The Cold W", New International, No. 11, September, 1998, p 191. 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