The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Russia:
A Regime Sinking into Instability and Chaos

Aug 15, 1997

"There is no power in Russia, there are only fights for power" – this is the opinion of someone who should know, General Korzhakov. Korzhakov, who had steadily climbed the ladder to power, moving from being Yeltsin's bodyguard finally to being commander of the presidential guard and gray eminence of the Kremlin, was toppled from power last summer in yet another top-level shake-up. He was not the only leading Russian dignitary to see his career tumble so abruptly.

Yeltsin, who had not wielded presidential power for eight months because of illness, marked his return to power in March by throwing out his whole government with the exception of Chernomyrdin. To have replaced Chernomyrdin would have provoked a new conflict between president and parliament. The fact that Chernomyrdin is seen as a representative of one of the main clans of the bureaucracy, the so-called "energy" clan, undoubtedly has something to do with his escaping this purge.

Repeated Purges

One of the few other survivors of Yeltsin's 1997 "spring cleaning" was the Defense Minister, General Kulikov.

Last year, at the height of the presidential election campaign, Yeltsin had fired his previous Defense Minister, General Grachev. His role in putting down the coup of August 1991, in the bombardment of the Supreme Soviet in 1993 and in the war in Chechnya had made him too much of a liability for Yeltsin. At any rate, he was made the scapegoat for an unpopular war in which the regime had been bogged down. Sacrificed to Yeltsin's re-election, he was also a victim of the rivalry between his ministry and other major bureaucratic bodies. To replace "Pasha Mercedes" – a pun coined by the press to condemn Grachev's corrupt and arrogant behavior – Yeltsin chose Kulikov, a man presented as being above suspicion. Nine months later, Yeltsin fired him live on television, criticizing him for his portliness at a time when ordinary soldiers were starving, for his refusal to allow cuts in the army budget and for his complicity with corrupt generals who built luxurious dachas for themselves. Of course, many of these dachas lie in the handful of reserved villages near Moscow where Yeltsin, like many other government and mafia big shots, has his own dacha.

For good measure, Yeltsin dismissed a whole array of top-ranking bureaucrats, despite having appointed them himself. Some of them are in prison, expecting to get out quickly and return to a comfortable position, as others did before them. Rutskoi and Khazbulatov, for example, former right hand men of Yeltsin, then his rivals, were jailed after the bloody battle between the Kremlin and the Supreme Soviet in 1993; subsequently, however, they were reintegrated in leading circles.

Rutskoi, Khazbulatov, Gaidar, Chubais, Korzhakov, Lebed... in the space of a few years the bureaucracy has seen a long list of people rapidly propelled into these leading circles, seemingly well established, only to be ousted shortly afterwards. This quickstep waltz of contenders for power, symptomatic of fierce top-level in-fighting, has become a mode of existence for the top bureaucracy.

The Proliferating Bureaucracy

This drunken dance of bureaucrats attacking each other around an impotent central power seems paradoxical only to those naive enough to have believed Yeltsin and the "democrats." At the end of the eighties, because of their rivalry with the last Soviet leader, Gorbachev, they may have talked about wringing the bureaucracy's neck. But the bureaucracy is prospering as never before – and not only because the losers are no longer physically eliminated, as under Stalin, or removed from power, as under Brezhnev, when the bureaucracy settles scores internally.

In some cases the bureaucrats have swapped their drab grey suits (which corresponded to their pseudo-egalitarian ideology) for the brightly-colored jackets the nouveaux riches have seen on American TV series. Those new clothes are supposed to prove the bureaucrats' conversion to Western "values." But, even in new clothes, the bureaucracy remains the dominant parasitic social layer. To guarantee its social position and income, it relies, despite its new pro-capitalist credo, mainly on positions in the countless bodies of the state apparatus, even when their income stems largely from wheeler-dealing and trafficking activities.

The state bureaucracy may have spruced up its costume, but it is still very much in existence. The bureaucracy of the Communist Party, which was dissolved in 1991, and, to a lesser extent, that of its satellite bodies (unions, youth organizations, women's organizations, etc.) was forced to find positions in the state machinery. This presented few problems because there was at the same time a sharp increase in the number of apparatuses, given that the state was then breaking up into 15 independent republics. Moreover, the breakup of the Soviet Union has disorganized many economic and administrative sectors; to alleviate this problem, the bureaucracy could only increase the state control bodies. These bodies, which no longer have any coordination, are inevitably ineffective; to remedy this, new ones are created. Waste and bureaucracy feed on each other.

Statistics published in Russia concerning the Housing Ministry and the Saint Petersburg administration indicate that the numbers employed in these institutions have double or tripled within six years. The same is probably true of all sectors of the state apparatus divided up into numerous sub-sections. Since this process took off in the late eighties, these subdivisions have been constantly strengthening their hold over their own bastions by inflating their own administrative structures.

There is no federated republic, autonomous territory or region of Russia which does not have its own parliament, its own government, its own president (or at least a governor and a prefect), all with their corresponding administrative bodies. In March, Yeltsin had promised a "tighter" government: he began by flanking his prime minister with a first vice-prime minister and then a second, followed by ten more vice-prime ministers and a host of "mere" ministers. And, as one can never be too careful, he also strengthened his presidential administration and the Security Council. Thus, the government, the administration and the Security Council duplicated – and monitored – each other.

This phenomenon sometimes reaches unimaginable proportions. In February, Komsomolskaya Pravda revealed that the 450 deputies in the Duma have 14,835 assistants whose pay is five to seven times the average wage. The paper also found "volunteer" deputies' assistants who had paid the equivalent of $1500 to $4500 for their position! Pay is clearly not the big attraction. The real attraction is the legal immunity and access to decision-making centers which these positions provide – in other words, countless opportunities for trafficking.

Maintaining so many bureaucrats would be enough to empty the state coffers even if the bureaucrats weren't plundering state funds. The proliferation of bureaucratic staff obviously leads to conflicts which are all the fiercer because the number of institutions and people living parasitically off the state is greater while state funds are lower than ever.

Decisions to cut back on state spending, more particularly on budgets in specific sectors, have for years formed the backdrop to struggles for influence between ministries, administrations or regions. Of course, the bureaucrats who would suffer from these decisions never apply them. This occasionally comes to light when one of the top dogs of the regime is fired.

Corruption and "Right of Ownership"

The "corruption at all levels," which Yeltsin demagogically condemns, reflects the spread of the bureaucratic cancer in a decaying state.

The bureaucracy no longer bothers to disguise its parasitic living off state property as it did under Stalin or Brezhnev. Using methods which fill the crime reports of the daily papers, this swollen bureaucracy now directly plunders the national wealth. Its levies on public, privatized or mixed companies have reached heights never before seen.

The fact that nobody is sure who legally owns most of these companies obviously facilitates large-scale siphoning-off of production, illegal exports, non-repatriation of the proceeds from transactions with foreign countries and sometimes even illegal expropriation of western investors. This last problem is regularly and bitterly noted in the press, particularly in the United States and Britain.

Even in the case of Gazprom, the largest gas company in the world, the newspapers and even Yeltsin publicly questioned whether it is state-owned or privately owned, despite the fact that the state is supposed to own a decisive block of shares in this economic giant, whose stock market capitalization is said to exceed that of all other Russian companies quoted on the stock market put together! Yeltsin has asked prime minister Viktor Chernomyrdin to force Chernomyrdin himself, former director and current "godfather" of Gazprom, to pay the billions in taxes that Gazprom owes the state. Given the wealth and influence accumulated by Gazprom, that's not likely to happen, especially since one of the main financiers of Yeltsin's election campaign was Gazprom, to which Yeltsin is still obliged.

A recent economic supplement to Le Monde referred to Gazprom as a "state within the state." The same can be said of the 83 other giant companies, including the state-owned "monopolies," which have top level protectors and which refuse, like Gazprom, to pay their huge tax arrears (said to be equivalent to 40% of the total deficit of the Russian state).

Confronted with the chronic near-bankruptcy of the state which deprives him of all means of action, Yeltsin decided to take steps this spring to bring in the taxes. His new first vice- prime minister, Nemtsov, was given this task as a priority, even if he had to break the "monopolies" to bring them into line. The IMF, which had made this one of the conditions for resuming its monthly extension of "jumbo credit" to Russia, warmly approved. It declared itself fed up with bailing out a state which was incapable of getting its most prosperous debtors to pay, especially since these debtors were dependent on the state.

Gazprom simply threatened to "regionalize" its structures; it proposed to bring the authorities in the places where gas is extracted, transported and supplied into the direct management of this gold mine. In other words, the whole of the bureaucracy, apart from the top level, was to be associated with Gazprom. Nemtsov and the wishes of the IMF were no match for such a coalition.

Head of State and "Chief of the Opposition"

Reforms are abandoned as soon as they are announced; state decisions are not applied by the administration; the bureaucracy, which openly holds "its" state ransom and uses its positions within the state to plunder the economy, is proliferating; the uncertainty about the legal status of property which is no longer state-owned but which still does not operate on a private basis is deliberately maintained. In his annual speech on the "State of the Federation" in March, Yeltsin did not mince words: "The population has no confidence left in the authorities. Its patience is at an end." He added that he understood workers' going on strike to demand an end to an "intolerable situation," that is, the non-payment of their wages. Acknowledging that "the standard of living of the population is going down," he declared that he was going to "put things back in order." To begin with, the big companies were going to have to pay their taxes. As for the well-known corruption of the authorities, there were to be "no more untouchables."

Noting that this was not the first time Yeltsin had made such promises, the Le Monde correspondent compared Yeltsin's speech to that of a "leader of the opposition." It's obvious that if Yeltsin seriously intended to implement the vast program he proposed, he would necessarily have to confront the majority of the clans, groups and sub-cliques of the whole bureaucratic/wheeler-dealing pyramid. The nominal leader of the bureaucracy is indeed its chief opponent inasmuch as he defends its general interests against the individual interests which increasingly undermine and weaken its state. But for years now this leader has not had the means to fight the battle he is supposed to be fighting.

This inability on the part of the chief bureaucrat goes back at least to the early eighties, at the end of the Brezhnev era, when the top levels of the bureaucracy carried out increasingly open power struggles.

Since then, the authority of the political leaders of the bureaucracy has been constantly flouted by the numerous regional, political and economic apparatuses of this same bureaucracy. The leaders of these apparatuses have turned them into private kingdoms, defending to the last their prerogatives and above all their sources of income against any encroachment by what remains of the central government. These confrontations did not take place over "ideological reasons." Although parts of the bureaucracy may have taken their stands under competing political banners ("socialism" or "the market") for awhile, the bureaucracy now unanimously claims to stand for the "the market." The basic motive of all sides in these struggles has been the bureaucrats' desire to appropriate an ever-increasing share of the national income by turning "their" region or "their" company into a private stronghold.

The "Russian chaos" referred to by commentators is the result of a generalized scramble for the spoils. Rival plunderers are united in their wish that the central government not be reinforced. Any re-establishment of the central power would come at their expense.

In mid-March, Le Monde described Yeltsin as "a head of state without a state. He can issue one edict after another – and he does not hesitate to do so – but most remain unenforced because there is no administration worthy of the name to apply them." The nouveaux riches and the former members of the nomenklatura – often one and the same – block all reforms. According to Le Monde, the people supposed to be promoting the "reforms" are the leading culprits and beneficiaries in the catastrophic economic state of Russia. The new head of the economy, the first vice-prime minister Chubais, for example, is known for "his links with the least reputable financial circles."

A Country Reduced to Ruins by the Bureaucracy

The Financial Times, the British business daily, recently ran an article titled, "A people on the brink of the abyss."According to this article, "Russia has developed into an anarchic free-for-all in which might is right and in which an endemically corrupt bureaucracy acts more often on its own behalf than as an arbiter.... The redistribution of wealth by the Russian state to a fortunate minority ... is still without any guarantee. The result is that the nouveaux riches behave more like looters than property-owners." The paper cites the "problem of the flight of capital, a good indication of the state of a country." The article notes that the flight of capital in 1996, estimated at 25 billion dollars, "exceeded direct foreign investment in Russia by a ratio of ten to one..., representing 5% of GNP. This reveals both the corruption of the rich and their lack of confidence in their government. What is more, so long as the Russians are reluctant to keep their wealth at home, foreigners will refuse to make substantial long-term investments in the country."

This is a far cry from the triumphant cheers with which the exalters of the imperialist world greeted, not so long ago, the noisy pro-market declarations of the former Soviet bureaucracy.

Just ten years ago, the West applauded Gorbachev when he passed the first laws authorizing the emergence of a private sector, at the time limited to so-called individual or cooperative companies. The capitalist world saw this as a step towards the restoration of capitalism in the Soviet Union. It certainly was a step in this direction, even if Gorbachev was focussed more on the short term than the long term, and was more concerned with reinforcing his own power than with consciously conducting a bourgeois counter-revolution. As soon as he became leader of the Communist Party, his power was immediately contested by the leading clans of the bureaucracy. To try to reinforce his position against the threat of revolt, he sought support from those layers of the petty bourgeoisie and the bureaucracy who wanted to legalize the "shadow economy" in which they had long been trafficking. Added to the "legal" parasitic use of state property by the bureaucracy, this trafficking was one of the main causes of the increasing difficulties of the Soviet economy.

The rest is history. The struggle for power at the top took an explosive turn, leading to the implosion of the Soviet Union, the breakup of the state and of the state-run planned economy spanning the biggest country in the world. But while the "elites" of the former Soviet Union now profess a pro-capitalist ideology, this has not led to the emergence of a bourgeoisie which is anything more than marginal. The bureaucracy remains the dominant social force of former Soviet society.

The October 1917 revolution opened the way for the old property-owning classes to be expropriated and for the economy to be collectivized and planned; they transformed Russia into the second biggest economic power in the world. But, this transformation was held back by the blows dealt to the proletarian revolution by the monstrous bureaucracy which developed as a consequence of the revolution's isolation in a poor country with archaic social structures. This bureaucracy, through its dictatorship, deprived the working population of the right and the means democratically to decide on the direction society would take.

By the end of the twenties, Trotsky and his comrades, the very people who fought against this degeneration of the workers state, already considered the degeneration to be an established fact. But this process of decomposition continued for decades.

During the last ten years, it underwent a sudden acceleration. The Soviet Union disappeared; the state disintegrated; the planned economy was destroyed; the links between former Soviet regions were broken; companies were throttled by the disorganization of economic circuits; exchanges between companies were carried out overwhelmingly by barter; public funds were ransacked. All of this reduced the vast majority of the population to dire poverty. And it set in motion perpetual conflicts within each government apparatus, or even between the states which emerged from the Soviet Union. The post-Soviet period marks a decisive step in the bureaucracy's work of destroying what the workers revolution of 1917 had made possible. Today, ten years after the start of "perestroika," the bureaucracy continues its work of destruction. But the destruction has not produced something new. The bureaucracy has succeeded only in plunging the country ever deeper into crisis, and its population into poverty. The bureaucracy now lives completely parasitically off the ruins of the former planned economy.

In a recent article entitled "Can Russia get well again?," the Moniteur Officiel du Commerce International, the French government review intended for exporters, made the following assessment: "sudden collapse of industrial production – down at least 50% according to official figures – and of gross national product (down nearly 40%).... Agriculture is also going through a very serious crisis despite the conversion of 22,000 kolkhozes and sovkhozes into private companies or cooperatives. The privatizations begun in 1992 have not led to the restructuring of big companies, even though this is vital for the recovery of the economy. They have allowed the former Soviet nomenklatura to appropriate capital goods and create powerful monopolistic groups.... Tax revenue is catastrophic. To appease the wrath of the International Monetary Fund ... the authorities have created ... a 'tax discipline commission' (the initials of which are reminiscent of the Bolshevik police), but this is not enough to intimidate the oil and gas barons Lukoil and Gazprom, which have close links with the existing authorities.... Given this situation, the budget deficit has got even worse. The IMF loan to finance the Russian budget deficit came at just the right time last year. Throughout the country the astronomical wage arrears are leading to unprecedented strike movements.... Alongside the dire poverty of a large proportion of the population, Russia is ringing with the footsteps of businessmen who now swear only by the Internet and the dollar."

But since these "businessmen" also swear by the "right" of their muscle, while Russia is a "legal and fiscal system still under construction" which offers few guarantees, the Moniteur advises adventurous exporters: "Whatever you do, do not set up in Moscow without being informed of the different ways to react when people come to see you.... Finding a 'roof' (paid protection, through official or mafia channels) must be one of your first concerns."

Faced with the Breakup of Society

Today, few people dispute this view of the situation. Indeed, some are even asking how all of this still hangs together.

In fact, while the former Soviet Union is exhausting itself going round and round in the vicious circle wherein the bureaucracy has trapped it, society, the economy and the regime continue to function. They are doing so much more feebly and with increasingly visible failings, but the economic achievements inherited from more than seventy years of existence of the Soviet Union still provide them with the means to keep going. The fact that the economy continues to function owes nothing to the genuinely private sector, which is marginal and in any case concentrated in services, commerce and finance, the areas where there are quick profits to be made. Nor does it owe anything to foreign capital which is also very marginal.

Production may have fallen 50% in five or six years, but this means 50% is still being produced. And to produce this remaining half, there must be factories which are still running, even if inefficiently. These factories must have partners who are also active. How are links set up between suppliers and customers? Judging from what is said, and in particular from what is said by western capitalists who are looking to try their luck in the former Soviet Union, these links do not usually involve the market.

The production links inherited from the Soviet period, although strained, have not all been broken, at least at company level. In places where they were broken – for example between Russia and Ukraine at the height of their dispute – metallurgical and chemical combines and coal derivative processing plants on both sides of the border renewed their links and restored some interdependence.

There is nothing surprising about this. The planned economy in its bureaucratized form – i.e. deformed – would not have been able to function without a strong dose of "arrangements" involving personal links, based on common interests and the need to "sort things out," between the people in charge of companies, industrial branches and kolkhozes. The famous "tolkachi" or "business pushers" were responsible for establishing contacts between directors who could provide each other with needed services. This obviously escaped any official accounting long before Perestroika.

The networks thus set up made it possible to by-pass the rigidities of the plan, and often the plan itself, by a system in which barter – the very same thing whose generalization is now condemned by the authorities – already played a very important part. This, of course, no longer had much to do with planning, but it was not, and still is not, the market. The market presupposes monetary relations, which in this case are absent or non-decisive. It also requires property relations, consolidated and ratified by laws and defended by the state, and a general economic context which do not exist (at least not yet) in Russia.

One aspect of the Russian financial crisis is the growth of debts between companies. Faced with the reduction or cancellation of state orders and subsidies, companies managed to go on functioning by providing each other with "credit." Faced with a defaulting state, companies create their own scrip, on the basis of bilateral barter in which money is largely absent. They are merely prolonging the relationships inherited from the Soviet era in which inter-company relations had little or no financial content but were balanced at the end of the year by playing around with entries in account books.

Moscow and to a lesser extent St Petersburg live mainly off the spin-off from international trade and all the different kinds of trafficking carried on by the central bureaucracy. But these towns, which western press correspondents call the showcases for "modern Russia," represent only a tenth of the Russian population. The other nine-tenths have to survive without counting on crumbs from the table of the more or less westernized nouveaux riches. Companies in these other towns function to some degree or another. Of course, they don't pay their workers regularly – especially when the directors and their associates in the local or branch authorities embezzle wage funds. But workers still obtain a minimum degree of social protection, or at least the means to avoid starvation, through these companies.

Of course, those companies which still function seem to be driven more than anything by the force of inertia, by what remains of the momentum given to them 10 ... or 80 years ago. This has less to do with the market than with the social and production relations inherited from the Soviet period, including, and perhaps especially, the personal relations between bureaucrats and companies which were the basis of the "shadow economy" under Brezhnev. How can one speak of a "market"? Russian and western commentators all agree that at least half the exchanges between regions and companies take the form of barter. Tens of thousands of legally privatized sovkhozes and kolkhozes have not attracted private investors, even on an individual basis. They continue to subsist as cooperatives. Less than one percent of farms are run by private farmers.

What we see right across the former Soviet Union, as in the kolkhozes, are reflexes for survival. This automatic social behavior still forms the warp of the economic fabric, even if it is badly torn. Woven in a different era, the Soviet period, this fabric is falling to pieces. And, because society has no fabric to spare, it can only be patched up.

In this situation of generalized dilapidation, the bureaucracy seems to have found a new, precarious equilibrium.

With "neighboring foreign countries" (the rest of the former Soviet Union), the Russian bureaucracy has, for want of anything better, maintained or re-established certain complementary economic relations created by decades of the Soviet regime. Imperialism had nothing better to offer. These independent states are hardly more independent than the many "autonomous regions" which have planted their flags in the former Soviet union. Each local part of the bureaucracy justifies its selfishness by "national" or simply regional claims. And the Russian state, the Ukrainian state, the Georgian state, etc., all have to live with this because the bureaucracy as a whole benefits from its different autonomous sections' withdrawing into "their" republic or "their" region.

Most financial or commercial operations are now conducted on a regional basis, between these "foreign countries," neighboring or otherwise. The central power in Moscow no longer has the means to claim its share, and even less means to play a coordinating or directing role.

Deterred by the "generalized shambles" – the title of a recent best-selling Russian political thriller – from investing in the former Soviet Union and trying to compete with the bureaucracy on its own ground, the international bourgeoisie contents itself with what lucrative business the authorities are willing to let it conduct. The international bourgeoisie gives the local "elites" a share in its profits from Russia, leaving them to run their section of this "generalized shambles."

And the bureaucrats do run it, in their own way. The mines of Russia and Ukraine, described by both the authorities and the IMF as unprofitable according to capitalist criteria, have not been closed despite decisions to close them. The economic officials and their cronies in the local administration, or the Moscow or Kiev administration, prefer to allow mines and factories to run at a slower speed rather than risk a social explosion. Workplaces, even if they are in a sorry state, are still the few places where workers, even if they are not paid, can find the means to survive. No matter how much the IMF and the World Bank rant and rage and invoke the orthodoxy of management according to market laws, it makes no difference. And they seem to be resigned to this, just as they are resigned to the fact that the much-vaunted "credit of the century" granted to Russia simply serves to maintain a greedy bureaucracy and ensure the belated payment of the wages the bureaucracy has embezzled: but how else can one prevent the Russian chaos from becoming explosive. Given the choice, imperialism prefers to put up with a bureaucracy which imposes a shaky order rather than have no order at all.

How much longer can this situation of precarious instability go on?

Leon Trotsky, who was the first to analyze and combat the degeneration of the workers' state in the name of working class interests, noted the extremely precarious nature of a degenerated workers' state. He expected this situation to be resolved one way or the other, either by a triumphant bourgeois counter-revolution or by a revival of the consciously organized and revolutionary activity of the working class. Neither of these possibilities unfolded in Trotsky's lifetime. More than half a century after his death, history still has not delivered its verdict. What remains of the degenerated workers' state is now rotting at the root. But like many other fruits of a society marked by the bourgeoisie's continued domination of the world, this decay, with its resulting economic and social collapse and political instability, may persist for some time, causing former Soviet society to sink even lower.

Today's Russia, the present manifestation of bureaucratic degeneration, is the monstrous product of a global society in which the proletarian revolution is slow in coming.

We are obviously unable to predict how long it will take before a new wave of working class revolutions will rise. All that we can say is that the renewal of society, in Russia as elsewhere, can come only from the proletariat and its victorious revolutionary activity. This idea is neither original nor very new, but that is the way it is. When will this happen? Only time will tell. But society and humanity have no other future.