Failed transition and crisis
The international working class must reassert itself to prevent a descent into barbarism, writes Hillel Ticktin
The situation in Ukraine can be seen as part of the global crisis in terms of both the current depression and the failure of the so-called transition from Stalinism, which affects the countries of the former Soviet Union and eastern Europe, even if in different ways. For the countries involved the two political and economic changes are merging into one. In so doing, they have become part of a global crisis of capitalism.
Neil Buckley and Roman Olearchyk, in their article on Ukraine in the Financial Times in February, refer to a mishandled and stalled transition, which means that there is a need to start from scratch.1 If anything, they understate the reality and the problems. As implied in their statement, attempts have been made to bring Ukraine into a capitalist reality and failed. The problem is not that the leaders, presidents Kravchuk, Kuchma, Yushchenko and Yanukovich, were either stupid or corrupt, as may be alleged. Indeed the charge of corruption is now commonly thrown at many regimes in the world in order to explain their problems or crises.
In this respect, I take issue with Mike Macnair, in that he has declared in a Weekly Worker article that the USSR was not a system.2
True, it was not a mode of production. Its laws were conflictual rather than contradictory - or, if you prefer, the forces governing it were conflicted - and consequently it could not last. However, forces or laws did govern it. There were reproducible social relations, including those of social control, which constituted a system of its own kind. They were exploitative and not accepted by the population. It was these forms that have to be removed. (Mike Macnair said that I used the word ‘totalitarian’, but I have never used it. Atomisation is another matter.) Unfortunately, it was the very fact Stalinism was a system that made it so overwhelmingly oppressive.
Corruption is a result, not a cause, of the present malaise, even if it contributes to discontent. The fundamental cause of the failure lies in the inability to change the nature of the political economy away from the old Stalinist forms of control to modern, capitalist ones.
The industry or institution under Stalinism was based on atomised workers, who were effectively allowed to work at their own rate in their own way, in so far as that was possible, as a trade-off for their lack of control and low wages. The need to switch to what is regarded as efficient working amounts to working at a more pressurised pace with more attention to detail. The result has to be one in which the product is not defective and is reliable, not liable to break down in a short time. Work, whether white-collar or blue-collar, is generally mind-bogglingly boring, unless highly skilled. Even then much highly skilled work, such as research, can be stressful and boring. The compensation can lie in the comradeship of the workplace, the control from below through the collectivity of a functioning union, in promotion, and in the rewards.
But the problem is that these are not present in the transition. Pay remains very low, and control is entirely from above. The compensation in ceding a limited control to the individual worker cannot be allowed in a market-based system, which is part of a global marketplace. Workers in the third world are not contented with their lot, but the very high level of unemployment and the need to earn an albeit low subsistence wage force them to work. The situation is not stable in third world countries and indeed in the first world either, but the market still rules for the time being.
The problem for the former Stalinist countries is how to get to the situation of developed countries, where discontent can be controlled through unemployment, promotion, compliant unions and political parties. Thus far the shift to the market has made things worse economically, even though direct political repression of the Stalinist kind has been removed. For those parts of the former Soviet Union where there are supplies of raw materials, such as oil, gas, metals, particularly precious metals such as gold and platinum, furs, timber, etc, the situation is less pressing. In Russia the collapse in the standard of living following the end of the Soviet Union was brought to an end with the rise in commodity prices and the use of the economic surplus so generated for the public purse. The same, however, was not true of Ukraine, although it did benefit from the export of steel.
Unfortunately, the result of the process described is disastrous. Ukraine has the lowest growth in GDP of the former Stalinist countries over the period since the end of the USSR. Labour productivity in those countries is generally low, making their industrial products globally uncompetitive. Eastern Ukraine is industrially linked to Russia, making parts for its industries - the latter are not globally competitive either. Although Putin has talked of investing in industry at various times, including the present, Russian industry of the earlier Soviet vintage (outside of military production) remains a rust belt, while the rest is limited (see below). Even in the case of the military sector, in both Russia and Ukraine it has been drastically scaled back from Soviet times.
One has also to note that the events in Ukraine were sparked from below, because of the general discontent which exists in the society (as, of course, in Russia). It was hijacked by the existing organisations, but that does not alter the fact that the population wants a higher standard of living and better opportunities in life. As everywhere else, they demand a measure of equality - rather than an end to what is called corruption, but is, in fact, part of the failure of the transition.
Politically, this takeover of the movement from below was expressed in the way that the rightwing political parties - who had been holding their meetings/demonstrations at European Square, as opposed to the ordinary population, who met at the Maidan - themselves moved over to the Maidan, where they assumed control. It has also been pointed out that those taking part there were not, by and large, ordinary blue-collar workers. Since there is a concentration of industry in the east, this is significant.
The failure of the Russian and Ukrainian economies does not just rest on their lack of competitiveness, but the fact that, in an age of monopoly firms, global monopoly capitalist industry will not let them in. Generally, the enterprises established by western firms are of the consumer-goods type like Ikea, financial companies or assembly industries. Even if one takes the shining example of Skoda in the Czech Republic, it is 70% owned by Volkswagen, with whom it shares its parts. Indeed, the example of the assembly industry is that of automobile companies like General Motors and Volkswagen that have set up plants in Russia and Ukraine. If they had wanted to invest in heavy or engineering industries, they had the opportunity over two decades to do so. Obviously, Boeing or Airbus are not going to set up another plant in the former Stalinist countries, nor is General Electric. Given the dominance of finance capital, the western firms would want to make quick profits, and not invest over the long term in order to rebuild Russian or Ukrainian industry.
The conditions that the International Monetary Fund has applied, in general, to its loans to the former Stalinist countries amount to an attempt to establish capitalist-type incentives within the economy and society. In the Soviet Union, rents, utilities, transport, education and health were either free or very cheap, and official taxes very low (implicit taxes are something else). In a sense, the IMF officials are only doing their job. The IMF wants to fully establish money as the universal equivalent and so an effective reward system and the basis for capital in order to establish what they see as a fully functioning capitalist system. That requires a substantial reserve army of labour, inequality of incomes among workers and high salaries for managers, with goods and services sold at cost, plus profits. However, it says a lot that former Soviet countries have not got there till now. The Ukrainians did not rejoice at the IMF terms - they made it clear that they did not like them, but felt they had no choice.3
The upshot of this discussion is that the Ukrainian population is being set up to endure 10 to 20 years of misery in order to establish a capitalist form, which, even in the best case, cannot compete on the world market. This situation has been clear for some time. Attempts by successive governments in Ukraine to implement IMF-type reforms, which would inevitably lead to a declining standard of living, have been jettisoned after protests. As a result Ukraine has a chequered history with the IMF.4 Given the need to win electoral support, governing parties have refused to implement IMF conditions.5 IMF demands include a reduced deficit, higher energy prices and a declining exchange rate.6 Assuming that the Ukrainian ruling group manages to pull together through the current crisis, it will need to find a way of persuading the population to accept the punishment they will suffer. They already have far-right ministers in critical departments - security, army, communications - and it does not take much imagination to see that a dictatorial form, however cloaked, is on the cards. This is not to say that the Ukrainian government is itself fascist.
However, it is not possible to disregard the role of Pravyi Sektor and Svoboda, as if anti-Semitism and support for a nationalist grouping which dealt with the Nazis is of no importance. President Vladimir Putin did score a point when he referred to the silence of Israel in regard to these manifestations of anti-Semitism. It is clear that there is no anti-Semitic pogrom in sight, but none of the groups victimised by the Nazis can sleep easy in Ukraine today. The west as a whole is tarnished by its self-evident need to accept the help of the far right in order to establish control over the population of Ukraine.
On the one hand, the population itself is very worried by what has happened and what might happen and, on the other, the current governing group is being forced to admit to a very problematic future. The big advantage of the far right is its internal discipline and willingness to use force and fear as modes of action. Its nationalist appeal, combined with the use of centuries-old anti-Semitism, provides a convenient mask for what is being imposed. At the same time, the dominant party of the right, that of Tymoshenko, can appear as the sensible and moderate nationalists, who have vetoed the downgrading of the Russian language and opposed anti-Semitism.
The Ukrainians have no monopoly on anti-Semitism. The revived Cossacks have not been backward in that sphere, starting immediately after the end of the USSR.7 The issue in Russia has been more general, in that the Stalinist system was itself anti-Semitic from its inception, so that both the present regimes, in Ukraine and Russia, have to be judged in that context, not simply in terms of Ukrainian nationalism.
No-one on the left can support Putin and the ruling group in Russia. Working class activists are victimised, beaten up or even killed. The imprisonment of Pussy Riot for their protests was only one of the forms of state repression now current. Various people have pointed to the changing economic situation in Russia as the reason for the political shift to still greater repression. Matters are not made easier by the way opposition demonstrations have been controlled by the right, which on one occasion at least refused to allow the left to join in.
It is precisely the failure of the transition in Russia, and not just the Ukraine, that forces Putin to adopt both increased repression and more intense levels of nationalism. Putin himself is identified more with the protectionist sector of the Russian elite, which wants to revive and develop industry behind the necessary tariff barriers and with the required subsidies. Historically, such political stances have been associated with a nationalist programme.
While the Putin regime has been explicit about its selection of strategic industries required to be held in Russian hands, and something like 62% of GDP comes from government-controlled entities, there has been no clarity as to which way it will go from here. It is clear that the elite is divided between those who want privatisation and those who want to use the state, and it is also clear that the division has existed throughout the last two decades. The descendants of the old Stalinist apparatus continue to play a crucial role both in the economy and in politics.
The problem here is that Russian industry remains uncompetitive, while Anglo-American capital remains globally dominant. As a result, attempts to complete the transition are doomed, unless the elite wants to subordinate itself to US finance capital. Logically, a section clearly does want to do so, but that leaves little scope for the remainder of the elite, most particularly that associated with the bureaucracy. Putin, himself, has played to both sections of the elite, with a clear bias towards the apparatus. The issue is not resolved and western capital is keen to force the question. This is not something where the left can take sides, since we are talking of two sections of a ruling - exploiting - group. There is always a possibility that the regime will tilt further towards state control in order to stabilise its political economy.
IMF reports demand more privatisation and the question is whether such pressure will not ultimately be successful. Capital has been leaving Russia, on and off, ever since the end of the USSR, as the rich take their money out of the country. Some of it has been re-imported under the guise of loans or using other forms which ensure an easy return for the west. Much emphasis has been placed on the loss of money from Russia in the present period. Some $64 billion left the country in the first quarter of 2014 alone,8 and there are predictions of the outflow reaching $100-150 billion in 2015 - made by Yevgeny Yasin, a former economy minister under Boris Yeltsin. He said that this was the result when investors and business do not trust the political system.9 He then went on to say that this has to change.10
There is a clear possibility, given the view just quoted of the liberal wing of the regime, that it will prefer to do a deal with the west and go for further privatisation and full incorporation into the world market, and so full subordination to US finance capital. However, if that does not happen and capital flight combined with sanctions continues, it will drive Putin or his successor to introduce strict exchange control and the use of various forms of economic and political coercion to retrieve as much as possible from the various havens in the west.
Russian nationalism is the ideology for the implementation of this policy. In principle, it would be popular, in that it would control the oligarchs and possibly even redistribute income, while driving towards genuine full employment. This would be similar to the Chinese model and, as with the Chinese economy, it would retain a subordinated market. It would have the advantage of avoiding the worst of the problems outlined for the future of Ukraine.
The point of showing the possible evolution of the Russian regime is to indicate that it remains undetermined and historically unstable, but with a drive towards nationalism as a mode of control. The liberal alternative, while theoretically possible, has already been tried and failed. That is why Putin is in power. It is a wonder that these liberal economists have learned nothing from their earlier failure, which will be repeated if they come to power under the influence of the west and internal failure.
Behind the conflict
The above argument has an implicit corollary, in that western policy continues to be one in which it pressurises all regimes towards private enterprise and the contemporary form of finance capital. Ruling class ideologists in the west portray all regimes which have not taken this road in a negative light. However much the left itself might excoriate these same regimes, the reasons are very different.
As far as one can see, US policy towards Russia and China is one in which it is trying to be both formally friendly, but also highly critical, to the point where it finances and assists oppositions, both legal and illegal. Historically, the USA has supported authoritarian regimes of the worst kind - most particularly in South America but also elsewhere. The authoritarian nature of Russia and China is not in question, but the antagonism towards Russia remains constant. At first sight this is not consistent. After all, Putin is a Christian with his own personal chapel and he rejects Marxism and the Soviet Union. He supports the market. Russia does not support the left. It persecutes militant socialists internally and is critical of anything on the left internationally. What then is the issue?
We have implied above that it is the question of the role of the state or central administration. It is also the relative independence of Russia and China from the imperial power, both politically and economically. Colonialism may have been phased out, but imperialism remains in its modern, more complex form, and that is the ultimate answer.
Since the negative attitude of the imperial hegemon is shown in a thousand ways, the Russian regime is placed in a position where it must defend itself. This is all the more the case because the USA has shown itself untrustworthy in relation to its allies. Saddam Hussein was supported by the USA in the 1980s, but then attacked in the 90s and overthrown in the Iraq war. Muammar Gaddafi gave up nuclear weapons and showed he was willing to cooperate with the west, but was overthrown and killed. Both China and Russia worry that they could also be put on the list of regimes which are expendable. Inevitably, they have reached the conclusion that they cannot support the further undermining of the formal independence of countries, however limited that might be.
Effectively, the Blair-Bush doctrine threw out the rights of nations to self-determination, as propounded originally by US president Woodrow Wilson during World War I. By so doing, they destabilised the situation of national ruling classes and elites throughout the world. Inevitably those national ruling classes and elites sought to shore up their defences through a variety of devices and forms.
The possession of an atomic bomb then became the ultimate defence, even if it could not be delivered with any accuracy, or at all. Russia, of course, has an arsenal of nuclear weapons, while Ukraine gave them up. The latter decision showed a degree of naivety which is hard to credit. However, the essential point is that the ruling class/elite in Russia, not just Putin, is not eager to be placed in a position where it is subordinate to the control of the imperial power of the United States, the finance-capitalist hegemon. The shift in Ukraine from being in the shadow of Russia, even if not under direct control, to becoming part of the alliances connected or controlled by the United States does threaten that position.
When we consider the case of the annexation of the Crimea by Russia, it has to be seen in this context. It is great power politics, even if Russia may not be such a great power itself. Looked at from the point of view of the left, or of the working class, it is not something over which to fight. Abstractly considered, the annexation of territory of another country has to be opposed. The referendum in the Crimea was not held under reasonable circumstances, so cannot be taken seriously. The reason for the Russian action is a rational form of self-defence for the ruling class - but socialists cannot support the defensive actions of the ruling class, especially when it is at the expense of another country.
Relations between national sections of the ruling class have taken warlike forms over centuries, but the aim of the working class is to abolish the ruling class, and with it all wars and annexations. It is equally rational for the Ukrainian ruling class or a section of it to seek succour in the arms of the west. It is a paradox that formerly Stalinist countries should become the global defenders of the right of nations to self-determination in this skewed way.
Ukraine and so the Ukrainian population is in a tragic situation for which the only solution is socialism. The tragedy arises out of its history, in which its people were effectively colonised, subordinated and exploited by the Russian tsarist system for centuries.
Their liberation began with the Russian Revolution of 1917, where they were effectively conquered in the course of the civil war. The Bolsheviks, who had little support in Ukraine in October 1917, took power and changed their policy under Rakovski, when they realised after some time that they had to adopt a policy of Ukrainianisation: ie, undo the subordination to Russia both in culture and in the economy.
The question of political independence was another issue, but the matter was resolved by the Stalinist counterrevolution, which led to a policy of Russianisation of the constituent parts of the USSR as a whole. The debates on the nature of the initial Bolshevik attempts have been irrelevant as a result. The disastrous famine of the early 30s, which led to millions dying, particularly in Ukraine, remains a major issue, especially for Ukrainian nationalists. The appalling Stalinist policy, in place until the end of the USSR, is enough reason to understand those who take a strong line on the independence of Ukraine itself. One should note, however, that the deaths from the famine in Kazakhstan accounted for a higher proportion of the population than in Ukraine, and that the suffering of the peasants and workers of Ukraine was not unique in the USSR.
There is also an unfortunate, centuries-old history of anti-Semitism. However, in regard to the latter the nationalist movement which emerged on the fall of the Soviet Union did condemn it. The present revival of anti-Semitism is part of the continuing tragedy, reflecting the inability of the working class to put forward its own internationalist and humanitarian programme as part of its overall demands.
Unfortunately, the tragedy has the potential to become a disaster in the not too distant future. Already, we have had the killing and injury of dozens of people in Odessa in and around the trade union building at the hands of the far right. The latter involved most particularly an organisation called Borotba, which had split off from the youth league of the Communist Party. (It retains a Stalinist mindset and many Ukrainian leftwing organisations came out with a combined statement critical of it. Obviously they are confused, but that does not justify the horrifying torching and the killing of those who jumped out of the building.)
The mass murder of the demonstrators and others who had joined in indicates the current development of the governing group in Ukraine. It seems that the people involved in the attack related not just to the far right, but had been sent out by the authorities. Now that it is clear that the USA has supplied advisors and mercenaries who are trying to suppress the uprising in the east by force, the way is open for open warfare. It is unfortunate there is no influential leftwing organisation (although the miners took a more proletarian stance) and grievances have expressed themselves in the form of nationalism.
The west has placed all stress on the idea that Putin will invade the east of the Ukraine. That is not at all clear, although it is always possible. It has been pointed out that the Russian oligarchs who own many of the factories in the east of Ukraine do not want Russia to take control, so as to avoid the problems that would then ensue. Indeed, any invasion would have to deal with the majority in the east who do not want to be part of the Russian republic. Looked at from a Realpolitik point of view, it would be stupid of Putin to invade. He can get far more by not invading and watching the failure of Ukraine. The money projected so far from the IMF and the European Union, which could get up to $30 billion, remains below the figure projected as necessary by the previous regime in Ukraine.
History knows of voids in the progress of humanity. When society went from feudalism to capitalism, there were parts of the world where the old system ceased to exist without the new coming into being, plunging the population into a political and economic void. We have already seen the utter confusion and mess which resulted after the Soviet Union ceased to exist. In effect, the people of the former Soviet Union are still living in that period. What makes everything more complicated is that the global power, the United States, is itself in decline and unable to manage a transition away from its direct domination without leaving disorder, confusion and a muddle, as is evident in the Middle East.
If we then look at the probable result of an independent Ukraine, helped by the west, it is hard to be optimistic. The world is in transition from capitalism, the old order is in decline and so its leading power heads that decline. The attempt to restore the market in the former Soviet Union countries has not succeeded until now and we might ask whether it can ever succeed. Unfortunately, the working class in both Russia and Ukraine has not been able to act as a class in the classical sense. Effectively, however, it has acted, albeit unconsciously, as a class, in helping to stall the transition, by refusing to accept the worsening conditions demanded of it.
Unfortunately, this leaves the unresolved set of social relations we see today, which in its worsening threatens to dissolve into ethnic war, as it did in former Yugoslavia, or into demands for independence of entities too limited to sustain a viable economy without being supported externally.
The transition from feudalism to capitalism involved wide-ranging wars, vicious anti-Semitism, the spread of plague and other fatal diseases, not to speak of famine. We need the reassertion of the common humanity expressed in the international working class to prevent a repeat of that past catastrophe or a descent into the barbarism we saw during the inter-war period, and which is now beginning to show itself in Ukraine l
1. The reference to the Ukraine transition is on February 27, by Neil Buckley and Roman Olearchyk: ‘Ukraine: on the edge’ (www.ft.com/cms/s/0/897c3cac-9fb4-11e3-94f3-00144feab7de.html#axzz2zFZH5lsn): “Its situation is not as dire as in central Europe in 1989. Ukraine has not had communism since the Soviet Union collapsed 23 years ago. A market economy, although flawed, is in place. Ukrainians are freer and wealthier. But a mishandled and stalled transition means it must in some ways start from scratch.”
2. ‘Nothing but bathwater’, May 8.
3. Heather Saul: “PM-designate Arseniy Yatsenyuk has warned ‘extremely unpopular steps’ would need to be taken to stabilise Ukraine’s economy and politics” (The Independent February 27).
4. “The IMF loaned newly independent Ukraine about $3.5 billion in the mid-1990s, several years after the collapse of the Soviet Union, and another $2.2 billion in 1998, an amount it later increased. Another one-year $600 million loan followed in 2004, and a two-year $16.4 billion loan was provided in 2008. The IMF last agreed to loan Ukraine $15 billion in 2010, but froze the deal in 2011 after Kiev failed to implement the required reforms, including removing gas price subsidies. After reviewing why the last bailout went off track, the IMF’s board in December said Kiev should get less money in any future bailout, and should be required to implement more economic reforms before it gets any IMF money.” Reuters, Factbox: ‘Ukraine’s history with IMF bailouts’, February 25: www.reuters.com/article/2014/02/25/us-ukraine-crisis-imf-idUSBREA1O1DT20140225.
7. Tony Barber The Independent October 20 1992.
8. Jack Farchy Financial Times April 26.
9. John Lloyd Financial Times April 26.