Closing their eyes to the obvious
in their `Revolution from Above':

Kotz and Weir deny the economic collapse of Soviet state-capitalism

( part one)

By Joseph Green
(from Communist Voice #16, Jan. 20, 1998)



Supporting the state-capitalist regimes in order to support reformism
State socialism
An elite which is supposedly not a ruling class
The elite and the defense of the old system
State capitalism generates private capitalism from within itself
The economic crisis of state-capitalism
The great Soviet stagnation
The anarchy behind Soviet planning
The elite
Contradictory tendencies under capitalism


. The world-wide collapse of the state-capitalist regimes that called themselves "communist" demonstrated their inner corruption. The Soviet and Eastern European regimes weren't overthrown by foreign invasions, but were cast off by their own people. The division of the most powerful countries of the world into two great blocs, that of Western capitalism and that rallied around the supposed "communist" regimes, has ended with the collapse of the supposed "communist" bloc. Only a few of these regimes are left today, and all of them are either in crisis (such as North Korea) or rapidly adopting market capitalist forms (such as China, Cuba and Vietnam).

. Is this the collapse of Marxism and socialism as the Western bourgeoisie crows? This is one of the key issues confronting revolutionary activists today. If these regimes were really communist regimes, then their collapse is the death of Marxism. But we have always held that these regimes were simply state-capitalist regimes parading under a red flag. We have shown that economically they were nothing but a bureaucratic variant of capitalism, and that ideologically they had distorted Marxism beyond recognition. The collapse of these regimes is thus the collapse of revisionism. It shows that the workers' movement must reorganize on an anti-revisionist basis, repudiating the ideology and practices that led to the building and then collapse of state-capitalist regimes.

. But, surprising as it may seem, there are many who think it is revolutionary to close their eyes to the lessons of the collapse of these regimes. The revisionist regimes may be dying, but this hasn't resulted in an automatic collapse of revisionist and reformist ideas around the world. Not only former followers of these regimes, but many reformists around the world deny the reality of the collapse of the state-capitalist regimes. For example, they cling all the harder to Cuba as a model of socialism even as Castro implements one Western capitalist method after another, and fail to realize that it is quite possible to oppose U. S. savagery against Cuba without defending Castroism. And they try to prove that the fallen regimes really weren't so bad.

. One of the more interesting examples of this is the book Revolution from above: the demise of the Soviet system, which appeared last year. It is written by David Kotz, a professor of economics, and Fred Weir, a left-wing Canadian journalist working in Russia. They deny that the economic evolution of the state-capitalist regimes led to their collapse on the grounds that these countries had grown economically for many years and had higher living standards than previously. They also oppose any "interpretation of the Soviet demise [which] stresses the role of popular opposition to the system from below" (p. 3) (1) on the grounds, not of what the masses actually did in the streets or of what they supported, but on the basis of strained interpretations of one poll and one referendum in 1991. Instead they hold that Soviet state-capitalism collapsed because one fine morning the bulk of the "Soviet communist elite" decided to give up an otherwise flourishing system in order to seek their fortunes in market capitalism (p. 6), while the masses of the people supposedly still wanted something like the old economic system. To prove that the workers weren't rejecting socialism, they don't show that the Soviet Union wasn't socialist, but downplay the deep mass hatred for the old system.

. During the overthrow of state-capitalism in the Soviet Union and Eastern Europe, the working class did not succeed in developing a revolutionary trend opposed to both free-market and state-bureaucratic capitalism. Power has always passed to another capitalist elite, generally composed in large part of people from the old elite, and conservative ideologies have dominated the struggle. In this sense, one might talk of "revolutions from above". But if "revolution from above" is taken to mean that an elite brought down these systems against the will of the masses, this is a lie. These regimes usually fell to the applause of the working people, who demonstrated and fought against them. The masses won't, however, get anything but kicks and economic austerity from the new regimes until they organize a class struggle in their own defense. The sooner they are clear that the old regimes were not just oppressive but had nothing to do with socialism, the easier it will be for them to recognize the exploitative nature of the new regimes and organize an effective mass struggle against them.

Supporting the state-capitalist regimes in order to support reformism

. Yet a number of Trotskyist and revisionist activists say that defense of present state-capitalist regimes and laying flowers at the memory of past ones is a radical step. It supposedly goes beyond capitalist reformism and shows a desire for revolutionary change. But Kotz and Weir's book demonstrates the opposite. They don't defend the fallen Soviet regime out of the desire to see revolution. Instead, they defend it with the motive of defending the reformist and even "centrist" forces around the world that accept a market economy, but want some more state regulation. They regard the main struggle in the world as being between those in favor of some sort of state regulation and those in favor of "unfettered free-market capitalism". They end up portraying the struggle between reformists and conservatives as being essentially the battle between socialism and capitalism.

. They spell out their support for the trends advocating a state-regulated market economy in their book's last chapter "Lessons for the future of socialism":

. "Western advocates of unfettered free-market economies seized upon the Soviet demise as proof that, not only was Soviet-style socialism not a viable alternative to capitalism, but any form of state intervention in the economy had now been shown to be a path to economic ruin. With renewed vigor they have attacked state regulation of market activity, state provision of public services, and public-welfare programs. All these are characterized as 'socialistic' threats to the dynamism of unfettered free-market capitalism.
. "The widespread belief that the Soviet demise has demonstrated the perils of state intervention in the economy has left the defenders of such intervention very much on the defensive. It also appears that .  .  . the propertied classes in the West have been less inclined to tolerate welfare-state programs.
. "However, the conclusion that the Soviet demise demonstrated the economic non-viability of socialism rests on the untenable view that the Soviet economy collapsed due to its internal contradictions. " (pp. 225-6)

. It is true that the Western bourgeoisie has taken the collapse of the state-capitalist countries as proof of free-market economics, and it is implementing many conservative and "neo-liberal" policies. The main reason, however, for success of this bourgeois offensive today is the disorganization of the working class today and the bankruptcy of various political trends which claim to speak in the name of the working class. But instead of showing the extent of the crisis in the workers movement, Kotz and Weir want to prop up the "traditional" political trends that have led the workers to the present catastrophe. They see their book as supporting

"the traditional supporters of an active, interventionist role for the state in a capitalist economy--trade unions, centrist and social-democratic political parties, poor people's organizations, environmental movements, and so forth [who] have continued to battle against the free-market advocates. " (p. 226)

. Kotz and Weir don't describe the struggle of different trends in the trade unions and political parties and poor people's organizations and environmental movements. They don't tell the workers that it makes a difference which trend is influential in the unions and what politics the different parties and organizations stands for, nor do they call for a revolutionary trend to be built. Instead they simply lament the crisis which has overcome the reformist trends. They don't describe how the centrist, social-democratic and reformist trends have undermined and disorganized the working class, fought against the class struggle in favor of accommodation with the bourgeoisie, and persecuted and expelled any real radicals. For example, the AFL-CIO leadership is certainly among those whom Kotz and Weir regard as supporters of some government regulation. Yet the AFL-CIO leaders were strikebreakers against the Staley struggle in Chicago; called off militant action in the Detroit newspaper strike, leading to its defeat; and continue to pour money into support for capitalist politicians at elections. The AFL-CIO's path of capitulation to the demands of the bourgeoisie won't be changed by providing it with better arguments for state regulation. Instead the development of a real struggle against the bourgeoisie requires an intense struggle to break through the stranglehold of the AFL-CIO leaders; it will go hand and hand will building up real unions and an independent political struggle that are very different from the "traditional" models of the social-democratic and centrist forces.

. With respect to Russia too, Kotz and Weir can't see beyond "traditional" forces. They think that it is possible that there might be "a return to a socialist direction" if Zyuganov's "Communist Party of the Russian Federation" (CPRF) returned to power. Although Zyuganov's party adheres to the traditions of the old state-capitalist "Communist" Party, they see it as a genuine socialist party. They have little difference with "the published program and public statements" of the leaders of the CPRF, and regard them as a socialist program--their only worry is if the CPRF would really implement it. So all they have to offer the Soviet workers as the reaction to the misery brought them by the market economy is a return to the old traditions which were rejected in the past. They look not to the future, but to the fostering of a "nostalgic" attitude to the old system which, they claim, people "did not like very much when they had it but now sorely miss".(p. 221)

. So Kotz and Weir's defense of the old Soviet system does not indicate any revolutionary spirit at all. It just shows their attachment to the reformist ideology that capitalism can be tamed through some state regulation, and an inability to imagine that the workers will ever rise in struggle and develop truly revolutionary parties.

State socialism

. Kotz and Weir declare themselves on the side of those who seek "an active, interventionist role for the state in a capitalist economy". They see this state intervention, if it is extensive enough, as constituting socialism. This is their theoretical reasoning for seeing the old Soviet Union as socialist.

. Thus Kotz and Weir don't defend the old Soviet regime out of love for its political institutions. They admit that it was "a repressive one that denied the Soviet population basic civil and political rights and freedoms" and that "it was not possible for the Soviet people to have much say in the determination of state policies. " (p. 28) They admit that the Soviet Union under Stalin and his successors was not a workers' state and

"neither the working class nor the Soviet people as a whole had sovereignty in the Soviet system. Power resided at the top of the party-state bureaucracy. From the formulation of the economic plan to the operation of an individual enterprise, the workers lacked the power to make economic decisions about how the system would operate. " (p. 26)

. They argue that this system had "a superficial resemblance to capitalism" in that workers were paid a wage and had no power over any decision whatsoever. However, the role of the working class is only a minor feature for them. The main thing is that there in no "competition among independent owners of capital to make sales in the market". (p. 26) Actually, as we shall see later on, there was competition among Soviet enterprises and executives. But since these Soviet executives were managing state industry, not private industry, Kotz and Weir overlook the competition among them. This is the typical argument of revisionist apologists that so long as a state-capitalist regime doesn't have all the forms of Western capitalism, it's supposedly not capitalist.

. Kotz and Weir argue that:

. "The most useful way to understand the Soviet system is as a mixed system, with significant socialist elements, but with non-socialist elements as well. The term 'state socialism' seems to best capture this concept, since the role and nature of the state represented the most important non-socialist feature of the Soviet system. " (p. 26)

. They also describe say that the "most neutral and accurate label" for the Soviet system is perhaps state socialism, because this term

"suggests the economic institutions of public ownership and economic planning that are usually associated with socialism, combined with the extreme centralization of economic and political power in an authoritarian state that characterized the Soviet system. " (p. 2)

. So let's see. The Soviet Union was socialist except for a few minor defects:

a) it was ruled by an elite,
b) the masses has no say in anything.

. Or to put it another way. For Kotz and Weir, the Soviet Union was socialist because of the existence of state ownership, even though "the role and nature of the state represented the most important non-socialist feature of the Soviet system. " Brilliant, no? One might think that if the state was non-socialist, if it was the tool of an a "party-state elite" to exploit the workers, then state ownership wouldn't be socialism at all, but just another form of exploitation. But no. For Kotz and Weir, there is magic in the state, any state, so long as it can provide economic growth and implement a few social welfare measures.

. It is important to note that, for Kotz and Weir, "state socialism" is a variety of socialism. Marx and Engels, on the contrary, regarded "state socialism" as a variety of capitalism. The influence of Marxism undoubtedly had much to do with why a century ago, at its Berlin Congress of 1892, when the German Social-Democratic Party was revolutionary (and not the reformist handmaiden of capitalism it became during and after World War I), it condemned the idea that the state running industry constituted any sort of socialism, unless the state itself was a workers' state. But since then social-democracy and similar trends supported by Kotz and Weir have reconciled with capitalism, and they regard state ownership as a socialist element even in a capitalist economy.

An elite which is supposedly not a ruling class

. While Kotz and Weir say that Soviet "state socialism" has various socialist and non-socialist features, they insist that overall it is socialist, and they want to cite its record of economic growth as due to socialism. They write that "The socialist institutions of the Soviet system made it a very different system from its main rival, modern capitalism. " (p. 31).

. Along these lines, they insist that there wasn't any Soviet ruling class, only an elite. The thesis of their book is that this elite was able to change the very fabric of Soviet society and tear down the supposed socialist system against the desire of the masses to uphold socialism, yet they insist that this elite can't be called a ruling class. Why? Apparently because the Soviet ruling class didn't carry out its exploitation in exactly the same way as the ruling class in Western capitalism. They write in explanation only that "we do not consider the ruling party-state elite of the Soviet system to be a ruling class in the traditional sense. " (p. 31, footnote 58) They admit that this elite determined everything that went on, both on the economic and political level and that it reaped the fruits of revisionist society, but yet it wasn't a "traditional" ruling class. It's the same circular argument that occurs over and over in their analysis. To prove that the Soviet economy wasn't a variant of capitalism, they first assume that modern capitalism must be a carbon copy of what "traditionally" exists in Western Europe and the U. S. They then demonstrate that Soviet capitalism differed in some ways from Western capitalism, and conclude that therefore it wasn't capitalism and therefore the elite isn't a ruling class. However, this conclusion only follows because they assumed at the start that capitalism can't come in different forms.

. To make their circular arguments appear more reasonable, they close their eyes to many features of Soviet society. For example, they say that the Soviet Union is socialist because of "the extensive array of public services provided for the population". They admit that some capitalist countries also have an array of public services. But, they say, in those countries "capitalist-financed conservative parties, aided by the pressures coming from international competition, continually press for the dismantling or reduction of social programs. No such challenge to social benefits ever arose in the Soviet system, and the programs did not suffer the cutbacks which they have periodically encountered in capitalist welfare states. " (p. 27, emphasis added)

. No cutbacks ever occurred in Soviet social programs? That's an astonishing assertion for authors who claim that their book is based on the observation of Soviet reality. Whether it is health care, education, or housing, Soviet public services for the masses have gone through extensive up and downs, but Weir seems to have missed this. They are content with statistics like ". . . By the 1980s the Soviet Union had more doctors and hospital beds per capita than the United States. " (p. 38) But Kotz and Weir don't give figures on the Soviet lifespan or explain why it was lower, not just than the American lifespan, but than that of almost any other European country, whether Western European or a member of the Soviet bloc. It fit, instead, somewhere in the range of Latin American lifespans. Moreover, the Soviet lifespan dropped in some of the years that Kotz and Weir present as years of rising prosperity for the masses. Infant mortality, too, was another troubling area for the Soviet Union. It was not only higher than American infant mortality, but it rose between 1970 and 1974 and then the Soviet Union stopped publishing figures. All this suggests cutbacks in some key areas of Soviet living conditions even prior to the economic stagnation that began in 1975. If Kotz and Weir had examined not just the number of doctors and hospital beds, but the fact that the Soviet health system was starved of resources, they might have started to understand some of the realities of the Soviet system.

. Only in passing do Kotz and Weir barely mention the zigzags of Soviet policy. They briefly remark that Stalin revived "conservative cultural norms" and "earlier legislation favoring workers, women, and national minorities were repealed or ignored. " (p. 25) But for some reason, they don't consider these things as cutbacks, even though they concern economic matters as well as political ones. Moreover they create the impression that these cutbacks were solved with the rise in living standards after World War II. Yet, as a minor aside, they will briefly admit that, after the mid-1970s, "there was a growing sense of alienation and aimlessness", "'corruption and cynicism spread throughout the institutions of Soviet society" and "alcoholism was on the rise".But they don't understand where these problems came from; they pretend that these trends only started after the mid-70s; and they don't stop to wonder if it might show that their picture of the happy life and growing prosperity of the Soviet masses is seriously one-sided. They certainly don't consider whether these were symptoms of a class-divided society, and in line with this, they don't study the differences in conditions faced by the different sections of Soviet society. Perhaps it's natural that, since they don't believe that they were different classes in Soviet society, they don't bother to study the class differences.

The elite and the defense of the old system

. Moreover, Kotz and Weir insist that the old Soviet elite wasn't defending the old system. They write at the beginning of chapter 7 of their book that:

. "According to the received wisdom, during 1989-91 the democratic majority in the Soviet Union defeated the party-state elite. .  .  . On one side was the old elite, fighting to maintain its privileges by trying to save the system upon which those privileges were based. On the other side was the majority of the people who, having come to loathe the old system, threw their support to the political opposition, led by Boris Yeltsin. The opposition won the elections and stared down the tanks of the old regime, finally achieving their goal at the end of 1991. .  .  . The party-state elite had resisted and finally had lost. " (p. 109)

. Of course, the majority of people did loathe the old regime; the opposition did stare down its tanks; the opposition was unfortunately led by bourgeois politicians like Yeltsin; and the decisive defeat of the old system was achieved by the end of 1991. (The extreme free-market "shock therapy" in Russia began in January 1992. Its devastating results on the livelihood of the Russian people and even on industrial production gave rise to massive discontent and dramatic events, including Yeltsin sending his own tanks to attack parliament, but these events only concerned the exact shape and policies of the market capitalist regime that was being built. The old regime was not going to be restored, even if parliament had defeated Yeltsin rather than Yeltsin defeating parliament. Perhaps some parliamentarians might have called their proposals "democratic socialism", but this wouldn't have changed their capitalist nature. )

. So what do Kotz and Weir object to in the supposed "received wisdom"? It is that the "party-state elite resisted". But if the diehards of the old ruling class weren't resisting, then who did in 1989-91?

. True, the elite was united on market reform, but this was not something new that began in 1987.The official policy of Soviet revisionism for decades had been to seek market reform, and Gorbachev's aim was to accelerate this. So in the crisis during Gorbachev's rule, from 1985 to 1991, they divided: not on socialism versus capitalism, but on how far to go and on whether to preserve the old economic and political apparatus of state capitalism. The diehards fought for maintaining their privileges and the old state-capitalist setup right up to the end, and the masses hated the diehards. The workers' misfortune was that they were unable to constitute a revolutionary trend independent of the free-market trend.

. But Kotz and Weir imply that no one resisted the breakup of the old system. They claim that the "extremely rapid, and relatively peaceful, character of the process" proves the lack of resistance (p. 7). This is a remarkably complacent description of a turbulent process which blew apart the Soviet Union and left Russia destabilized even now, more than a decade after Gorbachev's reforms marked the beginning of the end for Soviet state-capitalism.

. Moreover Kotz and Weir concrete observations contradict their own theories when, at the end of the chapter 7, they remark that the majority of the party-state elite didn't jump ship until after 1991. They write that a shift started in the Soviet party-state elite in 1987, but that "most members of the elite did not personally make this shift during 1987-1991". (p. 128) This would mean that the bulk of the Soviet bourgeoisie didn't abandon the old institutions until after the system had been irreversibly defeated.

, Kotz and Weir seek to obscure the resistance put up by the old apparatus by relying on the fact that so many leaders of the new system, such as Yeltsin and many businesspeople, came from the old Soviet bourgeoisie. As the old system broke up, more and more members of the old Soviet bourgeoisie sought to make their fortune by becoming political or economic figures in the new system. All this is true and deserves to be stressed in order to get a clear picture of what the old Soviet bourgeoisie was. But it doesn't prove that the diehards of the old system didn't resist its breakup. (2) What the moving over of the state-capitalist bourgeoisie to private business does show, however, is that the change in the Soviet Union wasn't from socialism to capitalism, as Kotz and Weir say, but from one form of capitalism to another. This is why a good part of the old state bourgeoisie found it relatively easy to find places in the new bourgeoisie. This shows that revisionist state-capitalism generates powerful forces of private capitalism from within itself. Private capitalism spring from the very pores of the old state-capitalist economy, something which Kotz and Weir deny.

. But Kotz and Weir's insistence that the entire Soviet elite abandoned the old system, if factually inaccurate, nevertheless reveals where their attention centered. They are upset that the diehards of the old ruling class proved so weak in the decisive years of 1985-91. Ironically, since Kotz and Weir center their attack on the evils of a "revolution from above", they seemed to have pinned all their hopes on the favorable outcome of a "reform from above". Insofar as their book has any hero, it is Mikhail Gorbachev, who attempted to reform state-capitalism by using its own apparatus. Kotz and Weir praise Gorbachev as a sincere socialist whose market reforms appeared in the late 80s to them to "be giving birth to the world's first democratic socialist system". (pp. ix, 4) Kotz and Weir speak in the name of masses against the elite, but really they are simply disappointed with the elite for having deserted Gorbachev. Their book is in part an apology for a man who was the most elite politician of all, the last head of the "Communist" Party of the Soviet Union, despite the fact that Gorbachev is now arguably the politician with the least support of any among the masses. He is so unpopular these days that, although Pizza Hut recently signed him up for ads, they are making sure to circulate these ads only outside Russia--Gorbachev may be popular in the West, but an endorsement by Gorbachev would be the kiss of death for pizza in Russia.

State capitalism generates private capitalism from within itself

The economic crisis of state-capitalism

. One of the reasons that Kotz and Weir are so determined to prove that the collapse of the Soviet Union was just a plot by the elite is to deny the economic problems of state-capitalism. As we have seen, they deny that "the Soviet economy collapsed due to its internal contradictions. " (p.226)

. Actually, they don't think any social change in any social system whatsoever can be explained by the internal contradictions of the economy. In their view, such a materialist explanation of class struggle and historical change

"assumes that an economy can suddenly become 'unworkable,' at which point a social revolution to replace it with an alternative economic system becomes inevitable. Such a theory is often called a 'mechanistic' one, since it draws inspiration from the realm of mechanical devices. An automobile engine can at some well-defined point become unworkable and cease functioning, leaving the hapless owner with no alternative but to replace it with a new engine or even an entirely new automobile.
. "However, the same cannot be said of an economic system. Economic systems, whether socialist, capitalist, or another variety, do not suddenly become unworkable due to their own internally generated problems. An economic system may work well in its own economic terms at certain times, meeting the expectations which it generates among the population. Such performance tends, of course, to contribute to social and political stability. At only times it may not work so well, producing dissatisfaction. .  .  .
. "All economic systems have powerful institutions that tend to preserve them in hard times, even in time of severe economic crisis. Whether economic crisis leads to reform or revolution is no simple question. During the 1930s many radical critics of American capitalism fervently believed that the 'unworkability' of the system had been amply demonstrated, yet no revolution took place. .  .  .
. "No purely speculative analysis can tell us in advance whether an economic system can, or cannot, be reformed under a given set of circumstances. Most economic systems are surprisingly adaptive. " (pp. 73-74)

. Based on this reasoning, Kotz and Weir claim that anyone who notices that economic stagnation and internal contradictions undermined the Soviet Union must really be claiming that the system became absolutely unworkable, like an automobile with a blown engine that simply can't go another mile under any conditions whatsoever. For them, to say that the Soviet economy fell due to its internal contradictions means that there is a certain figure, say a contraction of x% of the gross domestic product over y years, that means an automatic revolution. This is an absurd parody of the materialist view concerning the importance of the economic base.

. Kotz and Weir think that Marxist materialism is refuted by the simple observation that most social systems are "surprisingly adaptive". No doubt this observation is true. But it is Kotz and Weir who are guilty of forgetting this point when, in discussing the crisis of Soviet state-capitalism, they deny that the old elite was trying desperately to be "surprisingly adaptive" and save the old system. The state-capitalist system didn't simply surrender, but tried to save itself, and until 1992 many people in the Soviet Union were worried that it would succeed.

. But while the relationship between history and economics isn't mechanical, it is still is the economic system which creates the conflicting classes in a society. This doesn't mean that one can mechanically translate x% of growth or y% of contraction to this or that political event. Nor does it mean that every crisis necessarily deepens into a revolutionary crisis, or that every revolutionary crisis inevitably leads to revolution. Long before Kotz and Weir, Marx and Lenin--who believed strongly in the ultimate economic basis for politics and revolution--had strongly opposed the idea that a revolutionary situation automatically led to revolution.

. But in the name of opposing mechanical ideas, Kotz and Weir denounce the idea that there was any profound economic basis to the Soviet political crisis of 1985-1991. Any analysis of the class struggle and the politics of a class society that ignores the internal economic contradictions of that society is inevitably narrow and superficial. So it is not surprising that Kotz and Weir put forward the most superficial theory of all--the old elite just gave up and decided to abandon the state-capitalist system. Moreover, according to Kotz and Weir, this decision had nothing to do with the crisis of the Soviet economy, but occurred because the elite just happened to notice in 1985-91 something they had overlooked before--that the Western bourgeoisie was so wealthy--and their mouths began to water. Presumably, if they had noticed this in 1975 or 1965 or 1955, they would have overthrown the state-capitalist system back then. But supposedly it wasn't until 1985, due to the new freedom under Gorbachev's policy of "glasnost" or openness, that they really began to travel abroad in sufficient numbers. This fairytale is what scholars are reduced to when they deny the role of the economic base in politics. This is the old style of history which reduced it to a chronicle of the doings and sayings of kings and presidents and CEOs.

The great Soviet stagnation

. Besides their general argument against "mechanical" views of politics, Kotz and Weir also argue that the collapse of the Soviet Union had nothing to do with economic contradictions because the economy had grown so much. They stress over and over that the Soviet economy achieved remarkable growth between 1928 and 1975. Most of their material is not new, but they do have an interesting discussion of the changes during the late 80s and the 90s in Western views of the Soviet economy. There is a tendency to declare that the Soviet economy was really only a small fraction of what it had seemed to be. A major part of this debate centers on the CIA's assessments of the Soviet Union, which are held by some to be vastly overestimated, while Kotz and Weir argue in favor of the CIA's claims. They point out that many of the economic methods used to downgrade the size of the Soviet economy would also produce lower estimates of Western economies, if, say, applied to estimating German or American growth. (pp. 38-40)

. However, even Kotz and Weir admit that "the performance of the Soviet economy dramatically deteriorated after 1975", and that no one knew how to overcome this. Still, they don't think that this was a real crisis. In their view, it only gave rise to a "sense of crisis". (p. 34)

. But how couldn't it be a crisis when they themselves admit that the economic methods used in the Soviet Union "appeared to have reached the end of their ability to provide rapid economic progress" and, moreover, "all of the long-standing problems of the Soviet system appeared more serious"? (p. 53) What good is it to boast of previous economic growth if one admits that the system had reached an impasse? Kotz and Weir don't see this impasse as relevant to the Soviet collapse. It's just that the economy felt apart when Gorbachev tried to reform it (although Kotz and Weir argue that it wasn't their hero Gorbachev's fault); it finally began to shrink; just about no one thought the status quo was tolerable; even Kotz and Weir believe that the old methods used in the Soviet economy had lost their effectiveness; but don't blame the Soviet collapse on internal economic problems!

. Moreover, Kotz and Weir have no real idea of what could have been done to overcome the Soviet stagnation. They call for democracy; they rail against centralism; and they suggest that some methods have to be found, they know not what, to "forestall the development of a privileged and dominant elite". But what precisely is to be done? How are all these good intentions to be achieved? They don't know.

. True, they think the answer is "democratic socialism", but they don't know what "democratic socialism" really is. At the end of their book they can only say that "The best way to design a socialist economy that is decentralized and non-hierarchical is a controversial matter. There are two main schools of thought on this among Western socialists. " One is "market socialism", which is simply the marketplace with some government regulation, and the other is "democratic, or participatory planning", which in their description might well be just another variant of market socialism. Indeed, they say that "it is difficult to imagine how a large-scale, interdependent economic system could possibly function fully satisfactorily without some elements of both public regulation and market forces. A future democratic socialism would have to incorporate both kinds of institutions. " (pp. 229-231) In short, they haven't gotten beyond the market socialist ideas of the old Soviet elite or of their hero, Gorbachev.

. But if they can't really say what "democratic socialism" is, then what argument can they give in favor of it? They admit that they have few answers to this question, and that their view "leaves many questions unanswered. Would a democratic socialist system be economically workable? . . . Could it match and surpass the rival system of capitalism?" (pp. 231-2) So what can they say to advocate a system that, for all they know, is unworkable?

. Their answer is to cling to the record of Soviet economic growth in 1928-1975. So they can't admit that the Soviet economy was state-capitalism, nor can they admit that the Soviet economy's internal problems gave rise to its collapse. Nor can they look too closely at what happened to the masses in this period. Instead they insist that the Soviet Union was socialist, albeit state socialist, and they claim its growth as a proof of socialism.

. As a result, Kotz and Weir's book is full of crying contradictions: much of their book is devoted to rationalizing away the significance of economic and political facts that are mentioned, if only in passing, in their own account of events. Their theories about why the Soviet Union collapsed keep contradicting their description of how this collapse took place. This is why anything they say on one page is likely to be contradicted on another.

The anarchy behind Soviet planning

. Thus Kotz and Weir not only refuse to admit the existence of a crisis in the Soviet economy, but they overlook the deeply rooted problems of the Soviet economy that led to this crisis. This can be seen in their discussion of planning. In their view, it's simple: since there were state ministries, the economy must really have run according to overall planning, it had overcome the anarchy of production, and "there was scope for kinds of cooperation not found under capitalism, such as the sharing of information about technologies and organizational techniques. " (p. 27) This is in accord with their view that the issue in the world today is simply more or less state-regulation.

. But a serious study of the Soviet economic system shows that it was not able to overcome the anarchy of production. This was not just a matter of some errors in planning or a few bad apples among the administrators. There was in-fighting between and among Soviet enterprises and among Soviet ministries that resembled the competition among Western businesses, although it manifested itself in somewhat different forms. Like his Western counterpart, the Soviet executive had his "bottom line", and he (it generally was a "he") ran the economy according to what benefited him and his enterprise, and let the rest be damned. He did this to enrich himself, and moreover, he had to do this to survive at all. He was assigned plans and goals that were often based on fanciful figures, and in turn he provided fanciful figures to the ministries. He could not necessarily obtain all the necessary raw materials and tools to carry out his plan, so he developed his own informal networks of suppliers and he hoarded goods, however much they might be needed by other enterprises. He maximized the fulfillment of certain numerical goals of his plan, even when he knew that he was producing goods that were shoddy or not exactly what was needed. Nor were the overbloated ministries in Moscow what they appeared to be. Instead of being virtuous representatives of the general good, seeking to rein in the centrifugal tendencies of the enterprises, they competed among themselves, covered up for the enterprises under their control, and were pulled in various directions by the different special interests that managed to get represented in their staff. Kotz and Weir's description of the idyllic cooperation of Soviet enterprises is sheer fantasy.

. This is discussed in detail in an article in last year's Communist Voice. (3) This competition and anarchy are used to demonstrate that the Soviet ruling elite were in fact a ruling class. Soviet state-capitalism may have lacked a stock market and had other differences with Western capitalism, but the Soviet bourgeois did seek to enrich himself and his own circle. The economy was not run according to the general interests of the population, and not even simply according to the overall interests of the Soviet bourgeoisie, but according to the multitude of conflicting private and small-group interests among the Soviet ruling class.

. Despite their repeated pose as people who are debunking the conventional views, Kotz and Weir ignore the anarchy of production in the Soviet economy and accept the conventional idea that the issue was mainly overcentralism. They also accept the conventional solution, which is the use of market forces. They don't look more deeply into the Soviet economy to see what the class forces were and how this affected whether planning was effective or not. Such an examination shows that the key problem is which class is in control. It's not that the Moscow ministries weren't overgrown and bloated and they didn't interfere in everything: they did. It's that their role, and the cure for it, can only be understood if one understands the class structure of Soviet society and the nature of the state. In the Soviet Union, the workers were only a passive factor of production, while the system was run by and for the new bourgeoisie. Thus, whatever the goals of the Soviet planner--whether increasing the amount of production or improving quality or innovating--he was forced to rely on providing incentives to the managers. The planner would set the indices in the state plan for an enterprise in a way to reward the manager for doing the right thing, and was constantly amazed when the manager would frustrate this plan by finding ways to maximize his gain according to this or that incentive while ignoring the overall needs of the economy.

. In a truly socialist system, the centralism looks different because it is based on a different class reality. When the working class really runs the economy, the goals and their implementation depend on the consciousness and initiative of the workers. It is only on the basis of the workers' ability to build class-wide political and economic organizations that are truly linked to the masses, their class consciousness that allows them to take overall decisions about the entire economy, their vigilance at each workplace to ensure the fulfillment of these decisions, and their local initiative that a fully effective central planning can be built up. In these conditions the overall figures of a plan can become a reality, and it isn't necessary for the central apparatus to become overbloated and oppressive in a constant struggle to frustrate local centrifugal forces. Thus, a truly planned economy must be a socially-planned economy, a planning by and for the working masses.

. Kotz and Weir don't realize there is a connection between whether central planning can really run an economy and the class structure of society. For them, state regulation is a good feature of Soviet society, and that the workers weren't involved in decisions was a bad feature, but it was only another feature of the system, no more important than any other. Kotz and Weir may make a value judgement about involving the workers in decisions and favor "democratic socialism", but they don't see the relation of the workers' role to the economic structure of society.

. So they see the problems in Soviet planning from a technical angle (it was overcentralized), rather than from the class angle (there was a bureaucratic bourgeoisie that exploited the masses, and the party, the trade unions, and the factory management all sat on the workers rather than being instruments of the workers). They don't realize that Soviet state planning only provided a facade under which different private interests inside the Soviet ruling class clashed, and that the problems of Soviet planning were connected to the class struggle in Soviet society. Instead they echo the analysis of bourgeois economists and market advocates about overcentralism, and they become skeptical of centralism in itself. Ultimately, their prescriptions for how to reform the Soviet economy are just variants of those of Gorbachev. This is why they close their eyes to the fiasco of Gorbachev's market socialism by assuring themselves that the Soviet elite as a whole never really gave Gorbachev's plan a fair chance.

The elite

. The anarchy in the Soviet economy as well as their own search for personal advantage led the Soviet bourgeoisie to a constant preoccupation with market reforms. The evolution of the Soviet elite, and its very creation, was just as much a product of the Soviet state-capitalist system as was wheat and cars and guns. Yet a central theme of Kotz and Weir's book is that the decisions of the elite and the evolution of the economy are two entirely separate things. They believe that if they can attribute, rightly or wrongly, certain historical events to decisions by the elite, they have thereby shown that these events have nothing to do with the "internal contradictions" of the economy. Hence they don't recognize the class struggle in the old Soviet Union, its relation to the fundamental features of the economy, and its role in the political decisions that have been taken.

. This key viewpoint of Kotz and Weir is that of an enlightened government bureaucrat who believes that correct state regulation can solve any problem. It doesn't strike this bureaucrat that the limits of this regulation as well as the very possibility of implementing it are connected to deeper economic factors and to the class struggle. Instead, the bureaucrat sees the problem as simply ensuring that the state has the wisdom to create good regulations and the power to enforce them. For Kotz and Weir, "democratic socialism" gives the wisdom needed to conceive the right regulations, and defeating neo-liberalism will provide the power needed to implement and enforce them. The idea of organizing the proletariat for a class struggle on its own behalf is remarkably foreign to their book.

Contradictory tendencies under capitalism

. But when one looks at the economic factors that Kotz and Weir brush aside, one sees that the forces corroding Soviet state-capitalism grew up within state-capitalism itself. The anarchy of production, the contradiction between the working masses and the Soviet elite, the development of this elite and its preoccupation with market reform, and the great Soviet stagnation were precisely manifestations of the internal contradictions of state-capitalism. The collapse of the Soviet Union thus illustrates the strong economic forces for private capitalism that grow up within the bosom of state-capitalism. This is not just a peculiarity of the Soviet Union or even of revisionist regimes. The South Korean state, for example, has been particularly interventionist on economic matters, and it sought to foster and strengthen the chaebols, or Korean monopolies. But the very growth of these monopolies has led to pressure for the relaxation of Korean state tutelage, as the chaebols wanted access to credit and other resources beyond what the state could provide and the section of the Korean bourgeoisie outside the chaebols resented their monopolization of state resources. The IMF is ruthlessly utilizing the Asian financial crisis to insist on a much more immediate and drastic restructuring of the Korean economy, but a certain amount of restructuring was in the works anyway.

. Overall, present-day capitalism is seeing the growth and predominance of large-scale production and monopoly. But this doesn't proceed by the monopolies growing larger and larger in a straight line until a single monopoly firm takes over the whole world. In general, modern capitalism harbors tendencies both towards monopoly and state monopoly and towards their breakup. In one situation or another, at one time or another, one or the other tendency will dominate. But the breakup of one monopoly system creates the grounds for the growth of another. The breakup of revisionist state-capitalism because of its internal decay shows one tendency, but it creates the basis for reintegrating the enterprises that arise from the breakup of revisionist monopoly into new and more effective private monopolies. Meanwhile in the western economies, small firms are being continually generated in large numbers, while similarly large numbers of them are continually being wiped out, others struggle on but are subordinated to the big firms, and a lucky few grow large themselves.

. For the bourgeois economists, the free-market is the very antithesis of monopoly; free-market reforms are supposed to have nothing whatsoever to do with monopoly. But Marxism notes that the freer the market, the faster it gives rise to giant firms and, eventually, to monopoly. The free market does not simply grow calmly, but goes through booms and devastating crashes, periods of growth and depression, and these cycles are one of the factors helping to wipe out the weak firms and push towards monopolization. The present period of neo-liberal freeing of world markets from local regulation and protection is creating the field on which bigger and bigger monopolies can develop. For example, the agribusiness giant ADM boasts of being the "supermarket to the world", which is too close to the truth for comfort, while even the distribution of popular music is being standardized and monopolized on a world scale.

. Moreover, this tendency to monopoly also leads towards state-monopoly. The dominant bourgeoisie is today pressing for neo-liberal reforms and downsizing of the state sector all over the world, but it is doing so in part through utilizing world institutions to create compulsory trading rules. There are attempts to build regional blocs, from a united Europe to large trade zones, and to strengthen world capitalist institutions. What policy the bourgeoisie implements in these regional and world mechanisms has changed over time and may change again. At one time state regulation and the fostering of the state sector for various purposes, such as laying the basis for new industries in developing states, was fashionable among large sections of the world bourgeoisie and in the world economic institutions. The bourgeoisie may find these tools of use in the future as well, when it is faced with repeated economic crises like the current crisis in East Asia. It may take a few catastrophes before the bourgeoisie decides to act, but the environmental challenges, depressions, and other global economic issues facing the world in the 21st century may result in attempts at strict global regulation as well as great clashes among rival economic blocs.

. But it is wrong to dress up the capitalist trends to monopoly as socialism. The growth of large-scale production does show the increasing feasibility of social control of all production and is thus a powerful argument for socialism, but capitalist monopoly remains capitalism. Instead of downplaying the crimes of large monopolies and state-monopolies, the militant proletariat should denounce these crimes and use them to prove that the massive forces of modern production must be taken over by society as a whole. With respect to the collapse of revisionism, the task of revolutionary socialism is thus to expose the state-capitalist nature of revisionist economy, and not to foster nostalgia for the supposed good old days of revisionist tyranny. This is the only way to encourage the development of a new proletarian movement for socialist revolution.

(End of part one)


(1) All page references in the text are, unless otherwise specified, to Kotz and Weir, Revolution from Above, London and New York: Routledge, 1997. (Return to text.)

(2). Kotz and Weir make it sound like the entire elite just moved over and constituted the new private elite, but the facts they provide tell a different story. For example, they refer to a study of "the top 100 Russian businessmen" in 1992-1993. But if one examines carefully the figures they cite from this study, they show that at most about a third of the these people came from the top executives of the old regime. (pp. 117-124)

. Almost two-fifths of these private businessmen, 38, definitely came from way outside the old elite, ranging from criminals to scientists. That leaves 62 of them that Kotz and Weir claim are from the elite. But only 37 of these 62 are former state-capitalist industrialists or bankers. It is among these 37 that one would presumably find the phenomenon of leading executives in the state sector simply moving over to being leading executives in the private sector. (Unfortunately, although they give some interesting individual examples, Kotz and Weir don't give figures on how many of these executives were really high up. ) Another 25 individuals are labeled as from the elite, but it is doubtful whether they were part of the elite as defined by Kotz and Weir earlier in the book, when they talk of about 100,000 people constituting this elite. (p. 31) Eight are from "elite" families, which undoubtedly gave them great contacts, but the fact that they are listed as children of the elite rather than under their own accomplishments makes one wonder how far up they really were. And 17 came from the Komsomol, a major organization numbering in the millions. Perhaps few of these 17 came simply from the rank-and-file of the Komsomol, but insufficient information is given concerning them.

. So it looks like at most a third of the 100 richest businessmen came from top state-capitalist executives; almost two-fifths from totally outside the elite; another quarter came from people who may have had connections but weren't particularly high up themselves; and the remainder were at best peripheral to the elite. This still shows that the old Soviet bourgeoisie and Soviet professionals (which is a far broader category than the ruling elite) generated much of the new private bourgeoisie from within themselves, but it also suggests that the breakup of the state-capitalist system resulted in a massive reshuffling of who was on the very top and who wasn't. This suggests an economic base to the sharp antagonisms and struggles within the Soviet bourgeoisie.

. Moreover, the picture of a changing elite is reinforced if one considers that the question is not just how many of the top 100 businessmen came from the elite, but what percentage of the former top 100 elite turned into the top businessmen. Kotz and Weir don't give any statistics on this. But the richest businesspeople of 1992-3 would mostly be among those who started their private business careers by the end of the 1980s, although Kotz and Weir report that the majority of the elite hadn't yet shifted to private business until after 1991. (Text)

(3) See "Did the Soviet economy run like a single workshop?" in the article "The anarchy of production beneath the veneer of Soviet revisionist planning", which is part 2 of the series "State capitalism, Leninism, and the transition to socialism" (Communist Voice vol. 3, #1, March 1, 1997). (Text)

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