Article 23
August 17, 1989



A fork in the road for perestroika? Strikes spread to railroads. A vote of no confidence in government. Economic situation worsens under Gorbachev. Reforms dilute public ownership, change social relations, bring demoralization and corruption. Gorbachev report to Congress: austerity, criticism of workers, attack on "leveling." Ratio of managers to workers rising. Context of agreement between government and miners. Workers' wages to be linked to market. Can industry be integrated and modernized under "self-financing"? Capitalist world market and the British coal miners. Bourgeois elements exploit grievances of workers. Leaders must review their strategic conception or face a struggle of the working class against the government.

The summer of 1989 is likely to go down in Soviet history as the time when the Gorbachev administration reached a fork in the road in the development of perestroika and in particular in its relations with the broad working class of the USSR.

The miners' strike has put an altogether new face on all the political and social problems. The ferment it has created has stimulated the interest of the whole working class. Suffice it to say that barely a few days after the government and the miners reached their historic agreement, the railway workers gave notice that they too would be on strike unless their demands were met.

Thus, on August 2, 1989, the railroad workers went on a brief strike on the Leningrad-Vyborg line. While it lasted for only a few hours, it was sufficient to cause Nikolai Konarev, the rail minister, to at once enter into negotiations with the workers' representatives in Moscow. Their demands, so far as one can learn at this stage, were very similar to what the miners were able to obtain.1

The miners' strike stunned virtually the entire officialdom of the Soviet Union. None of them had even hinted that such a development was in the offing. Perhaps the best way to understand why the workers suddenly and spontaneously took this massive action, on a nationwide scale that included the Donets Basin, the Kuznetz Basin in Western Siberia, the pits in Vorkuta, Rostov and others, is to examine the immediate political background. In the preceding months--May, June and July--glasnost was at its height, one might even say at its best. The new parliamentary institutions of the USSR, the Congress of People's Deputies and the Supreme Soviet, were in session. The government took every opportunity to spread its perestroika message via the media through the length and breadth of the land. These meetings were televised in full, so there could be no mistaking that the government was making every effort to bring its message to the broadest possible audience. It was even reported that production fell markedly during this period, so keen was the interest of the people in the deliberations of these bodies. Gorbachev's opening speech was heard over and over again. Certainly the masses had every opportunity to hear the message of perestroika and the debates surrounding it.

Why (Gorbachev must ask himself) did the miners then resort to this wholly unanticipated action, one he himself compared to an explosion, a virtual Chernobyl? And if the coal strike was just an accidental occurrence, why then did the railroad workers threaten to carry it even further? It would be impossible to argue that the message of perestroika, as interpreted by the deputies, officials and Gorbachev himself, had not been heard. Rather, the strike was a virtual vote of no confidence in the plans of the government.

There is a difference between the television reports of the 19th Party Conference held in the summer of 1988 and the Congress held at the end of May 1989. The 19th Party Conference was televised with a view to getting the approval of the world press, particularly the world capitalist press. This Congress, however, was calculated to reach the mass of the people at home, and received minimal attention in the capitalist press.

What, then, went wrong?

Were Gorbachev to attempt a dispassionate analysis of the basic causes for the workers' mass action and the ensuing ferment, he would be wise to go over his own speech to the Congress on May 30, 1989. He would there discover that he and the mass of the workers, in particular the miners, were at cross purposes. If he were a leader in the Leninist tradition of criticism and self-criticism, he would do what Lenin did in the early 1920s when he reviewed the need to abandon War Communism and institute a New Economic Policy. Gorbachev finds himself in a similar position. His program as elaborated in perestroika is leading to an aggravation of the economic situation. In this case, it is impelling him in the direction of eroding and nullifying socialist ownership of the means of production and plunging into the capitalist market.

Seeing that this is leading to a disastrous situation, Gorbachev should proclaim the need for not just a tactical twist and turn here and there but for a strategic retreat, an abandonment of the bourgeois character of the reforms and a return to Leninist concepts to further socialist construction and advance toward communism. The other way leads to the abyss and threatens to put the Soviet economy and those of all the other socialist countries at the mercy of the capitalist market and the imperialist monopolies.

The coal mining industry exemplifies how perestroika is proceeding. The overall aim has always been to achieve an integrated mining industry, fully mechanized and automated with the last word in modern technology. This is what one would have expected in 1985 when Gorbachev and the other leaders presented their program to a plenary session of the Supreme Soviet. Then the masses were led to believe that perestroika meant technological restructuring, raising the productivity of labor and developing the necessary managerial skills. But now the Gorbachev group is pushing instead for a breakup of the mining industry into individual enterprises and dilution of the public ownership of one of the basic means of production in the hands of the workers' state. He is changing fundamental social relations by watering down the public sector while enhancing the private sector by various devices. This has led to demoralization of the masses and the corruption of those involved.

During the Congress sessions, the miners, like all the rest of the working class, were listening to see what in the speeches of the deputies and in particular of Gorbachev himself would speak to their anticipation of increased social benefits and relief from the hardships of consumer shortages, lack of adequate housing, unsafe working conditions and so on. However, Gorbachev's message in particular called for austerity measures of the kind constantly being brought up in capitalist countries, the kind which the Soviet press and media, especially in earlier days, widely publicized as symptoms of capitalist decay.2

Begin with the fact that the state is continuing to live beyond its means. Budget expenditures during this five-year plan are growing faster than the national economy. Hence, the budget deficit is increasing. . . .

What does that portend for the masses? An increase in social services, or possible cuts?

A situation is being created in which expenditures for wages are growing much faster than labor productivity. . . .

Isn't this what workers in the capitalist countries have had drummed into their heads day after day? Soviet workers have heard about all this. Again, what does this portend for them now?

An analysis of the causes of the current situation would be incomplete if we did not point out that the losses from mismanagement and low labor discipline continue to be great. . . .

It is small comfort to the workers that the managerial elite are being castigated along with "low labor discipline." The former are not likely to suffer at the hands of the Gorbachev administration, which has become enamored with the idea of giving the managers greater and greater freedom and independence. The complaint about low labor discipline, however, carries the threat of displacement. In connection with this, the workers have seen what happens with managerial independence and autonomy. Gorbachev admits that:

. . . the granting of economic independence is being accompanied by growth in the number of personnel. For every six workers, there is a manager or a specialist. Hence, someone is benefiting from this.

This is no revelation to the workers, for whom it means speedup and an intensification of the labor process. How can any worker become enthusiastic about that? But that is not all. Gorbachev has also come back to one of the frequent refrains that used to be heard over and over, and which has taken on an especially offensive character in the more recent period.

In solving problems of the country's social and economic development, we must proceed from the consistent implementation of the principle of social justice. It is not enough to proclaim it: It is also necessary to put into action social and economic mechanisms that will make it possible to eliminate the main hindrance to our development--leveling and the deeply rooted psychology of dependence.

Who are the levelers? Are they the top leaders in the governmental apparatus? Are they the scientific and literary intelligentsia? Are they the managers? Isn't it true that this charge is aimed solely and exclusively at the workers, who are not trying to level the higher-paid workers down to a lower level but are attempting to raise themselves to a higher standard of living? Isn't leveling an outcry against social and economic privilege? Do Gorbachev and his supporters really expect the workers to become enthused with perestroika in the face of all this?

It is hard to see how workers can draw inspiration from this rather than from the example set by the miners. The concessions the miners won in terms of immediate demands are substantial (they include extra pay for night and evening shifts, Sundays off, portal-to-portal pay, improved pensions and sick leave benefits) and it is impossible to avoid the conclusion that workers in other industries will be influenced by what has been achieved. It is a momentous beginning to a resurgence of the working class. But the immediate economic gains won by the miners were sandwiched together with a broader economic program which is part of the perestroika restructuring plans.

The contract with the coal miners can be divided into two parts: those clauses which pertain to immediate economic demands and those which are of a broader economic character, namely, the economic independence of the enterprises, a method of profit-sharing, and the right of individual enterprises to dispose of excess coal production through sale at home and abroad.

The basic thrust of the economic independence clause amounts to this: that whatever profit can be obtained by selling coal left over after government quotas have been fulfilled will redound to the benefit of the coal mining enterprise. As the text of the agreement says, "industrial enterprises are to be granted the right, as of 1 August 1989, to sell above-contract output at contract prices within the country and to other countries." 3 This may appear attractive. However, as Gorbachev himself explained in his May 30 speech to the Congress, one of the basic reasons for the crisis in the Soviet economy is "the extensive losses linked to the drop in world prices for fuel and raw materials." Coal is one of those fuels. The Soviet Union is a significant exporter of gas, oil and coal.

Thus, the very idea of linking the wages and benefits of the workers in a coal mining enterprise to the capitalist world market, which at the present time is glutted, portends not higher benefits but lower ones. Moreover, competition among the various coal mining enterprises can result in overproduction, if the product is destined for the world capitalist market. It has been difficult enough for Soviet coal to compete on the world market as an integrated industry, but then at least the Soviet government could offer one uniform price. However, if each mining district is to offer its own price, they are in effect bidding against each other in the capitalist market.

What good can possibly be derived from competition in the domestic market if, in the world market, competition forces them to accept lower prices? With the coal destined for socialist countries, if competition is to be the driving force, then it pits the Soviet miners against the miners of Poland or Yugoslavia. What does socialist solidarity or Comecon planning mean then?

It's difficult to know in the final analysis what is meant by cost accounting and self-financing, two of the cardinal features of perestroika. Self-financing widens the latitude of each enterprise's managerial group in the use of its financial resources, but at the same time limits the ability of the enterprise to draw on the resources of the central government. By breaking up an integrated industry like coal into various independent enterprises, it is assumed that the savings of the enterprise would result in social benefits for the workers in it. Instead, however, as we already quoted from Gorbachev, "the granting of economic independence is being accompanied by the growth in the number of personnel. For every six workers, there is a manager or a specialist." Doesn't such an enormous development nullify the whole scheme for managerial independence? Nothing could be more damning than such an admission. The whole program is promoted as one where the heavy weight of bureaucracy is to be reduced. But it turns out that, at least on a managerial scale, it has vastly increased.

Moreover, the funds saved by operating as an independent unit were supposed to then be available for social services or wage increases. Instead, however, large sums are accumulating in the treasuries of these enterprises. Since the managers are free to use them more or less as they see fit, they are being invested in areas which produce a quick profit but do not necessarily have any value for the socialist economy or the workers. Indeed, such independence in the financial field is the cause of overblown personal gain and even a vast increase in corruption on a managerial level.

Gorbachev told the Congress:

In connection with the radical economic reform, financial and material resources are being accumulated at enterprises and in local administrative agencies. It seems to me that labor collectives could pool their efforts to expand the base of medical service for the population. . . .

First, he wants to break up an integrated industry for the purposes of distribution and sale, and then he brings in through the back door a form of collectivism, the pooling of efforts, which is the very opposite of what he is trying to stimulate. It's no wonder, then, that improved health care is one of the pressing demands of workers in all communities, as reflected in the Soviet press.

Gorbachev has again restated his reforms, this time as:

. . . a radical updating of relations of socialist ownership and the development and combination of its various forms. We favor the creation of flexible and effective relations with respect to the use of public property, so that every form of ownership demonstrates its vitality and right to exist in lively and fair competition.

These are disguised efforts to undermine socialist ownership in favor of some form of private ownership. After four years of perestroika, of private cooperatives, of leasing the land, of legislation favoring individual entrepreneurs, he now wants to embark on a program of further destabilizing elements of public ownership. There is public ownership and private ownership. Creating some mythical hybrid form is mere deception. Socialist ownership has proven itself superior to capitalism. How else could the Soviet Union have become second in the race between the so-called superpowers? What does this "fair competition" among forms of ownership signify to the miners, for instance? The mines are public property owned by the state in accordance with the Constitution of the USSR. Does he now want to release them to private ownership under the guise of some form of cooperative enterprise? Calling it a flexible and effective use of public property is a coverup. It is plain that the Gorbachev reforms are heading away from socialization, away from advancing toward communism, and back toward the older forms of bourgeois and petit-bourgeois private ownership.

This is particularly devastating for the coal industry when it must compete on the world market. The capitalist markets of France, Britain and West Germany are integrated industries that have been rationalized and modernized at the expense of brutal onslaughts against the working class, particularly in Britain, so that they have been able to reduce the price of coal. What the Gorbachev administration wants to do is avoid taking the blame for the losses sustained in competition with the capitalist countries. Instead of letting the all-union socialist government foot the bill, if that becomes necessary, he'd rather make it appear that the losses are incurred as a result of poor management of the individual enterprises. All this might make some sense if the capitalist coal industry were broken up into small units, but this is not likely because the mines in the capitalist countries are if anything more integrated and rationalized and are managed by a combination of bankers and industrialists. It's not at all a case of the old free market, as it presumably existed in the 19th century. This is finance capital, where competition is not only of a predatory character but is more destructive in relation to any rivals, especially those from a socialist country.

It is no wonder, then, that Valentin Medvedev, secretary of the Central Committee of the Coal Miners' Union, said recently, "Many problems have been aggravated since the introduction of cost accounting and self-financing on January 1 of this year." 4

Gorbachev told the Congress that "Considerable resources can be freed up by sharply reducing the volume of capital investments in the construction of production facilities." Capital investment means the construction of plants and equipment--in Marxist terminology, the means of production. The Gorbachev regime is headed in the other direction at a time when the imperialist bourgeoisie is speeding up capital investment, enlisting the support of the entire capitalist establishment. In the U.S. the government wants to support capital investment by generous tax credits. For instance, the New York Times of August 7, 1989, stated editorially that the most effective way to get corporations to invest more is to reimburse them for a part of the cost of investment. The only point of contention in the bourgeoisie is how to apply the tax credits; some say they should be advanced only to those who are introducing more modern equipment. It indicates how deeply concerned both segments of the capitalist establishment, liberals and conservatives, are about uniting to spur capitalist investment in order to compete on the world arena.

Gorbachev told the Congress he favors "the inclusion of the Soviet economy in the world economy," in other words, the integration of the USSR into the world capitalist market. Regardless of the merit of this scheme, how can that be done when his aim is to cut down on capital investment? It is of course possible that in the USSR some industrial and technological facilities have not proven economical, or have become so-called white elephants. But that only means that the planning has to be perfected, not abandoned. That this should have to be discussed in the year 1989, after so many decades of rich experience in the Soviet Union, speaks ill of the Gorbachev administration.

There has to be a balance, of course, between planning for consumption and production. During the difficult years of World War II and especially the Cold War, when the Soviet Union was virtually blockaded economically as well as politically, the rate of building consumer industries declined, both absolutely and in relative numbers. In order to catch up, it was necessary to pay the greatest attention to them. However, instead of proceeding with a more comprehensive plan to develop consumer industries, Gorbachev has now embarked on a plan to change the relations of production, to reduce socialist planning, to bring about capitalist competition. And what has all this amounted to? Disorder and chaos in the economy.

This holds great danger for the Soviet Union. As the miners' strike shows, the outright bourgeois elements, who have now officially organized themselves as a grouping in the Congress, are able and willing to exploit the grievances of the workers and try and turn them in an anti-socialist direction. All the newspapers in the Soviet Union carried news of how a great number of agitators descended upon the coal miners with advice on building independent unions. Independent of whom? Not of the bourgeoisie, not of the imperialists, not of the capitalist market.

Already the workers are endangered ideologically when they see the Gorbachev administration sanctifying the coalition in Poland between the imperialist-supported, CIA-constructed Solidarity leadership and the Polish United Workers Party based on a program which can only antagonize the majority of the workers. What are the Soviet workers to think when they see what is happening in Poland?

Any way one views it, the time has come for even the staunchest supporters of perestroika to admit that they have to review their strategic conception. The strikes of coal miners and other workers make it very clear that the issue for the leadership now is whether to serve the interests of the working class or to dissipate and erode the achievements of the socialist revolution in the interests of petit-bourgeois schemes to change the property relations in the Soviet Union. This could only provoke civil conflict and ultimately a struggle of the working class against the government as such.


1. See the Washington Post, August 4, 1989.

2. Mikhail Gorbachev, report to Congress of People's Deputies, Moscow, May 30, 1989, published in Pravda and Izvestia, May 31, 1989. Translation of condensed text in Current Digest of the Soviet Press, July 19, 1989. (Columbus, Ohio), Vol. 41, no. 25. Extracts below from pp. 2-9.

3. Sovetskaya Rossiya, July 22, 1989.

4. People's Daily World, July 28, 1989, p. 6.

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