Chapter 1



Factors in the post-war growth of the capitalist economies. Isolation of the USSR. U.S. efforts to sabotage gas pipeline. Hewett on the "mystery" of Soviet success. Why are imperialists today positive about perestroika? Regressive changes in economic system. Glasnost today and in the Lenin period.

It is impossible to isolate any single phase of Soviet history without distortion; it must be put in its world historic context. The Soviet reforms today take place in the context of the worldwide restructuring of capitalist industry on the most intensive scale ever undertaken. This is driven at breakneck speed by the scientific-technological revolution, which has been in progress for some ten or more years and has enabled the monopoly capitalists, from Japan to Finland to the U.S., to rationalize their industry.

From the point of view of its growth rate, the USSR was way ahead of the capitalist countries in the 1930s and '40s, and was still growing strongly in the '50s and '60s. However, beginning in the late '70s, it is now admitted (perhaps even overstated, for factional reasons we will explain later), the growth rate in the USSR began falling steadily while at the same time capitalist industrial activity took on a new momentum.

It should be stated at the very outset that the reason the U.S. capitalist class was able to extricate itself from the 1979-82 economic crisis was due most of all to the passive character of the U.S. labor movement, and most importantly to the accommodating and class collaborationist role of the labor leadership which allowed the ruling class full sway. In Britain, the coal miners at least put up a fight, but they lost out. On a world scale, the ruling classes in this period were able to improve their situation and launch a momentous campaign to restructure their industry.

It should also be remembered that in some areas of the capitalist world, the restructuring began much earlier. After the Second World War, the victorious imperialist Allies, particularly the U.S., gave the German and Japanese imperialists an enormous advantage. They helped them to not only rehabilitate their industry but to rationalize it with the deliberate aim, clearly stated, of making their industries competitive in the world market. This was done not out of generosity, humanitarianism or good will. It was done with the avowed aim of strengthening the ruling classes of those countries against their own working classes and with a view towards bringing these erstwhile antagonists of the U.S. into a military alliance against the USSR.

This was doubly true with respect to Japan. After obtaining unconditional surrender from the Japanese imperialists, the U.S. made absolutely certain to reassure the Japanese bourgeoisie that it would open all the markets in the U.S. to them. This was the real quid pro quo for Japanese imperialist acquiescence and extraordinary subservience. Why do the bourgeois historians never bring this up? Why do they always seem perplexed by it? Certainly, from the Japanese imperialist point of view, there was nothing they wanted more than an open door to all markets, which Britain, France and the U.S., as imperialist competitors, had previously closed to them. The U.S. open door enabled the Japanese bourgeoisie as well as the Germans (and also the British, Belgians and French) to modernize their industries after the destructive effect of the war.

The USSR was shut out from all this, and had to make do with whatever it had. During the entire so-called "peaceful" period from 1945 until today, there has been a near-complete blockade of the USSR economically. The USSR is prohibited from membership in the General Agreement on Tariffs and Trade (GATT). It is prohibited from dealing on an equal basis with the European Economic Community (EEC), either as an individual country or as part of the socialist bloc. It is not even allowed observer status at the present time. A trade treaty between the U.S. and the USSR was ready to be signed, sealed and delivered in 1972, but collapsed because of the Jackson-Vanik amendment (which we discuss in the next chapter). During Reagan's presidency, he boasted that the only way the USSR could do business with the U.S. was if it put up "cash on the barrel head," an exceptional requirement in international trade. Above all, there is an enforced ban on high technology, supposedly to restrict the sale of militarily sensitive items. However, the military aspect is vastly exaggerated.

The Gorbachev administration, while embarking on a vast restructuring effort, characterizes the Brezhnev period in particular as one of stagnation and decline in the economy, and its political methods as guided by administrative and command strategy. But to paint the whole era as one of decline because of this is just not true.

To the extent that the Gorbachev administration is attempting to democratize the organs of the state and afford the mass of the people greater freedom to criticize and present an independent point of view, that of course is unassailable. However, the struggle against the previous administrations, not to speak of the Stalin period, is conducted in the spirit of a vendetta rather than an attempt to objectively analyze a period in history. Widely publicizing corruption cases, removing statues of Brezhnev and renaming streets, casting him into purgatory, so to speak, are done without taking into account some of the very important struggles against imperialism in that period, particularly against U.S. efforts to sabotage the economy of the USSR and its relations with the West European countries.

For example, in the early 1980s the Reagan administration thought they had hit on a spectacular idea that would deal a body blow to the Soviet economy when they imposed sanctions and prohibited U.S. companies from selling gas turbines and blades to the USSR. These were important for the huge gas pipeline project that was projected to bring natural gas from Siberia all the way to Russia proper and even to Western Europe.

Such European capitalist governments as France, West Germany and others had already made significant agreements to purchase the gas from the USSR. It was not anticipated by the USSR that after these deals had gone through, the U.S. would suddenly prohibit sales of some of the compressors and turbines needed. Reagan thought the whole project would collapse without U.S. technology, and that European objections would be overcome by general U.S. dominance of the Western alliance.

This development posed a technical, economic and above all political problem for the Brezhnev government. It first tried to influence the Europeans to assert their independence, but this failed in view of the intransigence of the Reagan administration. Faced with this problem, the Brezhnev administration began to mobilize all its political, technical and industrial possibilities. It set in motion a mighty effort to overcome this imperialist attempt to sabotage the economic plans of the USSR and to raise the Cold War to a new pitch. This effort was described in Reforming the Soviet Economy by Ed Hewett, a specialist in Soviet energy policy:

The Soviet response to this action was to mobilize local party and government organizations in an all-out effort to meet the goals of the pipeline expansion program by relying almost exclusively--contrary to the original strategy of the ambitious plans--on Soviet turbines and compressors. That is precisely what happened, and more. The entire pipeline expansion program was completed ahead of schedule, and without further imports of Western turbines and compressors beyond those few purchased before the Reagan embargo.

This was no mean feat, and how the Soviets managed it is still somewhat of a mystery. What is clear is that the Soviet leadership responded to the Reagan threat by mobilizing the entire system through the party, signaling to all levels that the gas pipeline program was a first priority. . . . Local party officials all along the route of the lines were mobilized to see that construction moved on schedule, ministries were mobilized to see that they contributed their part in the supply of necessary equipment and where possible Eastern European technology was substituted for what were to have been imports from the West. This is but one example of an important source of strength in the system. . . .1

Why doesn't the Gorbachev administration ever allude to this example of a real victory over imperialism by means of mobilizing the progressive masses of workers, the state apparatus and the technical intelligentsia? We're not denying that there have been undemocratic practices throughout most of Soviet history, but what about such victories just a few years ago in the face of an ultra-reactionary U.S. administration? Hewett admits in a footnote that earlier, when he wrote Energy, Economics, and Foreign Policy in the Soviet Union,2 he had "concluded from an analysis of Soviet capabilities in turbine and compressor technology [which the Reagan administration had undoubtedly relied on--S.M.] that the Soviet Union would not be able to bring the new lines up to full pressure as quickly as it did. . . . They clearly have done it, but there are many unknowns on how and at what cost." 3 This is a "mystery" to Hewett, a phrase that is endlessly repeated, as when Churchill described the Soviet Union as a "riddle wrapped in a mystery inside an enigma." This has never stopped the Churchills and the Hewetts from recognizing their own class interests and combating the Soviet Union.

So there is an international dimension to the restructuring which cannot be overlooked. The USSR is the most self-sufficient country in the world in many ways, but as late as the 1970s it had to in effect surrender some of its sovereignty in order to effectuate a series of grain agreements with the U.S. The U.S. renunciation of the grain deal in 1979 again proved the need for the USSR to rely on itself.

The other international aspect, of course, is armaments. The Reagan administration, supported for the eight years it was in office by both houses of Congress, went all out and spent more than $2 trillion to overwhelm the USSR. Previous agreements on nuclear treaties, which seemed to have stabilized the situation, were undermined by the Reagan administration. This forced the USSR into a race which to this day may not have ended.

The USSR can retool and overhaul its entire infrastructure by its own efforts. But it could do it much more easily by enlisting the support and cooperation, or at least the non-obstruction, of the imperialist powers. They control most of the world's technology, not to speak of the world markets. The ruling group in the USSR is keenly aware of the problem.

Inasmuch as the objective is to overhaul the industrial-technological infrastructure, that can only meet with the greatest approval from all groups and tendencies in the world movement which look forward to the USSR successfully rebuilding its material base for the development of socialism. On the other hand, however, if that were all that were involved, it is hard to imagine that the capitalist world would react with anything but fear and scorn, coupled with destructive boycotts and restrictions. They would not only continue but intensify past and present policies. Why would they be interested in the USSR successfully increasing its growth rate and modernizing its plant? Why should they help build socialism?

Of course, they may not always be able to help themselves when it comes to trade and commerce. For instance, the North Sea oil is being depleted. The imperialists may need Soviet oil and gas, notwithstanding what is available in the Mideast and elsewhere. They also may need to trade in some industrial and technological products and even sell consumer goods as a matter of dire necessity. But they have a committee, the Coordinating Committee on Export Controls, as important as any military committee of NATO, that carefully sifts what to sell and how to buy. This is not to say there aren't times when even the strictest agreement among the imperialists is broken, as when Toshiba of Japan clandestinely sold some of the most forbidden technology to the USSR.

The "free trade" that is repeated so monotonously in the bourgeois texts is at least in part a fraud. What is the very existence of such an agreement as GATT but a form of restricting the freedom of trade? It's a way to include some countries and exclude others from a particular arrangement among the monopolistic groupings in the imperialist world. How much free trade can there be if they are bound by such agreements, not to speak of the secret understandings among the leading imperialist countries directed against the oppressed peoples?

It suffices only to mention the trading axis among Britain, the U.S. and Canada directed against the European Economic Community, as well as the growing collaboration, both secret and open, between the Japanese imperialists and the European community, particularly the German imperialists--a revival of an old friendship.

Needless to say, there is no free trade, to say the least, between the USSR or the socialist alliance and the imperialist countries.

From the point of view of the revolutionary working class movement, any effort of the Soviet Union to solve the problem brought about by the restructuring of world industry and the boycott of the USSR is legitimate. They should do whatever they can. However, what the Gorbachev administration has embarked on is not only the overhauling of the technological infrastructure of the USSR. They are also attempting to fundamentally transform the entire economic system, not only in industry but in agriculture as well, to bring in what they call economic accountability, self-financing, the decentralization of some aspects of industry, and the virtual dismantling of the foreign trade monopoly, breaking it up into what appear to be autonomous units that would deal with foreign governments on a profit-and-loss basis. This is bound to have a deleterious effect on developing countries, particularly socialist countries like Cuba, and seems ominous.

In order to change the economic system, the Gorbachev regime says it is necessary to first overhaul the political system. This is done under the sign of glasnost. If glasnost means reopening the democracy which existed and flourished during the period when Lenin was alive, when the Bolshevik Party continually engaged in open discussion on even the most critical issues, that of course is most welcome. Yet it is extremely instructive to note that when an unlimited, free press existed in the short period between the overthrow of the Kerensky regime and the onslaught of the full-scale civil war by the imperialist-aided counterrevolution, the bourgeois press as a whole never seemed to take notice of this or credit it as a demonstration of democracy and freedom. Their hostility to the revolutionary government was unmitigated.

To the extent that there is now a revival of democratic procedures, that of course is very welcome. But along with it are other aspects and problems which may very well bring the Soviet Union into an era of both economic and political regression. The deeper question is, are there other causes, besides external ones, for the loss of momentum in the USSR? What the world ruling class is hoping for and praising are precisely those developments which, from a working class point of view, would be altogether counterproductive.


1. Ed Hewett, Reforming the Soviet Economy (Washington: The Brookings Institution, 1988), pp. 169-70.

2. Ed Hewett, Energy, Economics, and Foreign Policy in the Soviet Union (Washington: The Brookings Institute, 1984).

3. Hewett, p. 169.

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