Introduction to Russia: From Revolution to Counter-revolution

"No matter what one thinks of Bolshevism, it is undeniable that the Russian Revolution is one of the greatest events in human history, and the rule of the Bolsheviki a phenomenon of worldwide importance." John Reed, 1st January 1919. (J. Reed, Ten Days that Shook the World, p. 13.)

There are moments in world history which represent decisive turning-points. We are living at just such a juncture. Whether you are in favour or against the October Revolution, there can be no doubt whatsoever that this single event changed the course of world history in an unprecedented way. The entire twentieth century was dominated by its consequences. This fact is recognised even by the most conservative commentators and those hostile to the October Revolution. Now, the collapse of Stalinism and the attempt to put the clock back 80 years is a transformation of no lesser significance. What is the balance-sheet of these great events? What implications do they have for the future of humanity? And what conclusions should be drawn from them?

For the best part of three generations, the apologists of capitalism vented their spleen against the Soviet Union. No effort or expense was spared in the attempt to blacken the image of the October Revolution and the nationalised planned economy that issued from it. In this campaign, the crimes of Stalinism came in very handy. The trick was to identify socialism and communism with the bureaucratic totalitarian regime which arose from the isolation of the revolution in a backward country. But these slanders are baseless. The regime established by the October Revolution was neither totalitarian nor bureaucratic, but the most democratic regime yet seen on earth - a regime in which, for the first time, millions of ordinary men and women overthrew their exploiters, took their destiny in their own hands, and at least began the task of transforming society. That this task, under specific conditions, was diverted along channels unforeseen by the leaders of the revolution does not invalidate the ideas of the October Revolution, nor does it lessen the significance of the colossal gains made by the USSR for the 70 years that followed.

The hatred of the Soviet Union shared by all those whose careers, salaries and profits derived from the existing order based on rent, interest and profit, is not hard to understand. It had nothing to do with the totalitarian regime of Stalin. The same "friends of democracy" had no scruples about praising dictatorial regimes when it suited their interests to do so. The "democratic" British ruling class was quite happy to see Hitler coming to power, as long as he put down the German workers and directed his attentions to the East. The same people expressed their fervent admiration for Mussolini and Franco, right up to 1939. In the period after 1945, the Western "democracies", in the first instance the USA, actively backed every monstrous dictatorship, from Somoza to Pinochet, from the Argentine junta to Suharto, provided they based themselves on private ownership of the land, banks and big monopolies.

Their implacable hostility to the Soviet Union was not, then, based on any love of freedom, but on naked class interest. They hated the USSR, not for what was bad in it, but precisely for what was positive and progressive. They objected, not to Stalin's dictatorship (on the contrary, the crimes of Stalinism suited them very well as a convenient means of blackening the name of socialism in the West), but to the nationalised property forms which were all that remained of the gains of October. This was dangerous. The Revolution radically abolished private ownership of the means of production. For the first time in history, the viability of a nationalised planned economy was demonstrated, not in theory but in practice. Over one-sixth of the earth's surface, in a gigantic, unprecedented experiment, it was proved that it was possible to run society without capitalists, landowners and moneylenders.

Nowadays, it is fashionable to belittle the results achieved, or even to deny them altogether. Yet the slightest consideration of the facts leads us to a very different conclusion. Despite all the problems, deficiencies and crimes (which, incidentally, the history of capitalism furnishes us in great abundance), the most astonishing advances were achieved by the nationalised planned economy in the Soviet Union in what was, historically speaking, a remarkably short space of time. This is what provoked the fear and loathing which characterised the attitude of the ruling classes of the West. This is what compels them even now to indulge in the most shameless and unprecedented lies and calumnies (of course, always under the guise of the most exquisite "academic objectivity") about the past.

The bourgeois have to bury once and for all the ideals of the October Revolution. Consequently, the collapse of the Berlin Wall signalled an avalanche of propaganda against the achievements of the planned economies of Russia and Eastern Europe. This ideological offensive by the strategists of Capital against "Communism" was a calculated attempt to deny the historical conquests that issued from the Revolution. For these ladies and gentlemen ever since 1917 the Russian Revolution was a historical aberration. For them, there can only possibly be one form of society. Capitalism in their eyes had always existed and would continue to do so. Therefore, there could never be any talk of gains from the nationalised planned economy. The Soviet statistics are said to be simply exaggerations or falsehoods.

"Figures can't lie, but liars can figure." All the colossal advances in literacy, health, social provision, were hidden by a Niagara of lies and distortions aimed at obliterating the genuine achievements of the past. All the shortcomings of Soviet life - and there were many - have been systematically blown up out of all proportion and used to "prove" there is no alternative to capitalism. Rather than advance, there was decline, they now say. Rather than progress, there was regression. "It has been claimed that the USSR in the eighties was as far behind the United States as was the Russian Empire in 1913," writes economic historian, Alec Nove, who concludes that "statistical revisions have had a political role in de-legitimising the Soviet regime..." (Alec Nove, An Economic History of the USSR, p. 438.)

Ironically, this rewriting of history reminds one forcibly of the old methods of the Stalinist bureaucracy which placed history on its head, turned leading figures into non-persons, or demonised them, as in the case of Leon Trotsky, and generally maintained that black was white. The present writings of the enemies of socialism are no different, except that they slander Lenin with the same blind hatred and spitefulness that the Stalinists reserved for Trotsky. Some of the worst cases of this kind are to be found in Russia. This is not surprising, for two different reasons: firstly, these people have been raised in the Stalinist school of falsification, which based itself on the principle that truth was only an instrument in the service of the ruling elite.

The professors, economists and historians were, with a few honourable exceptions, accustomed to adapt their writings to the current "Line". The same intellectuals who sang the praises of Trotsky the founder of the Red Army and leader of the October Revolution a few years later had no qualms about denouncing him as an agent of Hitler. The same writers who fawned on Joseph Stalin the great Leader and Teacher soon jumped the other way when Nikita Khrushchev discovered the "personality cult". Habits die hard. The methods of intellectual prostitution are the same. Only the Master has changed.

There is also another quite separate reason. Many of the present nascent capitalists in Russia are themselves members of the old nomenklatura, people who not long ago carried a Communist Party card in their pocket and spoke in the name of "socialism". In fact, they had nothing to do with socialism, communism or the working class. They were part of a parasitic ruling caste which lived a life of luxury on the backs of the Soviet workers. Now, with the same cynicism that always characterised these elements, they have openly gone over to capitalism. But this miraculous transformation cannot be consummated so easily. These people feel a compelling need to justify their apostasy by heaping curses on what they professed to believe in only yesterday. By these means they try to throw dust in the eyes of the masses, while salving their own consciences - always supposing that they possess such a thing, which is, in fact, highly improbable. But even the worst scoundrel likes to find some justification for his actions.

Against this unprecedented campaign of lies and slander, it is essential that we put the record straight. We do not wish to over burden the reader with statistics. However, it is necessary to demonstrate beyond any doubt the tremendous advances of the planned economy. Despite the monstrous crimes of the bureaucracy, the unprecedented advances of the Soviet Union represent not only a historic achievement, but are, above all, a glimpse of the enormous possibilities inherent in a nationalised planned economy, especially if it were run on democratic lines. They stand out in complete contrast to the horrific collapse of the productive forces in Russia and Eastern Europe in the recent period. The movement in the direction of capitalism has been a nightmare, rapidly impoverishing the mass of the population.

As always, it is not sufficient for the ruling class to defeat a revolution. It is necessary to bury it under a mountain of dead dogs, so that not even the memory of it will remain to inspire the new generations. There is nothing new in this. After the Restoration of the monarchy in 1660, all the memories of the English bourgeois revolution had likewise to be erased from the collective memory. The monarchy of Charles II officially dated its reign from the 30th January 1649, the execution of Charles I, and all references to the republic and its revolutionary deeds were to be obliterated. The upstart Charles II, in a fit of revenge, went so far as to dig up Oliver Cromwell's corpse, which was then subjected to a public hanging at Tyburn. The self-same malice and spite, born of fear, lies behind the present efforts to bury the gains and revolutionary significance of the Russian Revolution. The systematic falsification of history now being undertaken by the bourgeoisie, although somewhat more subtle than the posthumous lynchings of the English monarchists, is in no way morally superior to them. Ultimately, it will prove no more effective. The locomotive of human progress is truth, not lies. And the truth will not remain buried for all time.

Unprecedented advance

What happened in the Soviet Union can only be explained by using the Marxist method of analysis. Already in the pages of the Communist Manifesto, Karl Marx and Frederick Engels explained that the motor force of human history is the development of the productive forces. From this point of view, the nationalised planned economy in the USSR furnished proof of the most extraordinary vitality for decades. Indeed, such a transformation is unprecedented in the annals of human history.

Only the Marxists were capable of explaining the processes that were unfolding in Russia, not ex post facto, but decades in advance. By contrast, the writings of both the bourgeois critics of the USSR and its Stalinist friends were characterised by the most complete absence of any understanding. From diametrically opposed points of view, they arrived at the same erroneous conclusion - that the Stalinist regime in the Soviet Union was a virtually indestructible monolith, which could continue to exist for as long as one could see.

Even before the second world war, when most capitalist pundits, as well as apologists for Stalin, saw no chink in the armour of the "monolithic" regime in Russia, Leon Trotsky, the Bolshevik leader exiled by Stalin, argued that either Stalinism would be overthrown by a political revolution of the working class or, under certain conditions, could revert to capitalism. While Marxists foresaw and explained the crisis of Stalinism, not even the greatest genius could have predicted how that crisis would unfold. That should not surprise us. The German poet Goethe once wrote: "Theory is grey, my friend, but the tree of life is evergreen." The actual working out of the historical process is enormously complicated, not least because it involves what Marxists call the subjective factor, the conscious intervention of human beings. To predict in detail how the historical process develops would require not just scientific perspectives but a crystal ball, something which, despite all the advances of modern science, is still not available to us.

Under frightful conditions of economic, social and cultural backwardness, the regime of workers' democracy established by Lenin and Trotsky was replaced by the monstrously deformed workers' state of Stalin. This was a terrible reverse, signifying the liquidation of the political power of the working class, but not of the fundamental socio-economic conquests of October, the new property relations, which had their clearest expression in the nationalised planned economy. The viability of the new productive system was put to a severe test in 1941-45, when the Soviet Union was invaded by Nazi Germany with all the combined resources of Europe at its disposal.

Despite the loss of 27 million lives, the USSR succeeded in defeating Hitler, and went on, after 1945, to reconstruct its shattered economy in a remarkably short space of time, transforming itself into the world's second power. From a backward, semi-feudal, mainly illiterate country in 1917, the USSR became a modern, developed economy, with a quarter of the world's scientists, a health and educational system equal or superior to anything found in the West, able to launch the first space satellite and put the first man into space.

Such astonishing advances in a country which set out from a level more backward than present-day India must give us pause for thought. One can sympathise with the ideals of the Bolshevik Revolution, or oppose them, but such a remarkable transformation in such a short space of time demands the attention of thinking people everywhere. Of course, the collapse of Stalinism is now triumphantly held up by the enemies of socialism as the final "proof" that nationalisation and planning do not work, and that consequently the human race must henceforth reconcile itself to the eternal domination of the laws of the "Market", for ever and ever, amen. This is, indeed, the essential message of the celebrated "End of History" of Francis Fukuyama. Yet history, in the Marxist sense, has by no means ended, and the future of world capitalism is no more secure now than it was before the fall of the Berlin Wall. In fact, it is much less so.

In a period of 50 years, the USSR increased its gross domestic product nine times over. Despite the terrible destruction of the second world war, it increased its GDP five times over from 1945 to 1979. In 1950, the GDP of the USSR was only 33 per cent that of the USA. By 1979, it was already 58 per cent. By the late 1970s, the Soviet Union was a formidable industrial power, which in absolute terms had already overtaken the rest of the world in a whole series of key sectors. The USSR was the world's second biggest industrial producer after the USA and was the biggest producer of oil, steel, cement, asbestos, tractors, and many machine tools. The Soviet space programme was the envy of the world.

Nor is the full extent of the achievement expressed in these figures. All this was achieved virtually without unemployment or inflation. Unemployment like that in the West was unknown in the Soviet Union. In fact, it was legally a crime. (Ironically, this law still remains on the statute books today, although it means nothing.) There might be examples of cases arising from bungling or individuals who came into conflict with the authorities being deprived of their jobs. But such phenomena did not flow from the nature of a nationalised planned economy, and need not have existed. They had nothing in common with either the cyclical unemployment of capitalism or the organic cancer which now affects the whole of the Western world and which currently condemns 35 million people in the OECD countries to a life of enforced idleness.

Moreover, for most of the postwar period, there was little or no inflation. The bureaucracy learned the truth of Trotsky's warning that "inflation is the syphilis of a planned economy". After the second world war for most of the time they took care to ensure that inflation was kept under control. This was particularly the case with the prices of basic items of consumption. Before perestroika (reconstruction), the last time meat and dairy prices had been increased was in 1962. Bread, sugar and most food prices had last been increased in 1955. Rents were extremely low, particularly when compared to the West, where most workers have to pay a third or more of their wages on housing costs. Only in the last period, with the chaos of perestroika, did this begin to break down. Now, with the rush towards a market economy, both unemployment and inflation have soared to unprecedented levels.

The USSR had a balanced budget and even a small surplus every year. It is interesting to note that not a single Western government has succeeded in achieving this result (as the Maastricht conditions prove), just as they have not succeeded in achieving full employment and zero inflation, things which also existed in the Soviet Union. The Western critics of the Soviet Union kept very quiet about this, because it demonstrated the possibilities of even a transitional economy, never mind socialism. Now that the Russian people are sampling the joys of capitalism, they are finding out what it means to have a huge and uncontrolled budget deficit, meaning that wages are not paid for months on end.

The central question, of course, is why the USSR collapsed. The author explains the whole process in great detail, and shows how in the period after 1965, the growth rate of the Soviet economy began to slow down. Between 1965 and 1970, the growth rate was 5.4 per cent. Over the next seven year period, between 1971 and 1978, the average rate of growth was only 3.7 per cent. This compared to an average of 3.5 per cent for the advanced capitalist economies of the OECD. In other words, the growth rate of the Soviet Union was no longer much higher than that achieved under capitalism, a disastrous state of affairs. As a result, the USSR's share of total world production actually fell slightly, from 12.5 per cent in 1960 to 12.3 per cent in 1979. In the same period, Japan increased its share from 4.7 per cent to 9.2 per cent. All Khrushchev's talk about catching up with and overtaking America evaporated into thin air. Subsequently the growth rate in the Soviet Union continued to fall until at the end of the Brezhnev period, (the "period of stagnation" as it was baptised by Gorbachov) it was reduced to zero.

Once this stage had been reached, the bureaucracy ceased to play even the relatively progressive role it had played in the past. This is the reason why the Soviet regime entered into crisis. This is now common knowledge. But to be wise after the event is relatively easy. It is not so easy to predict historical processes in advance. But this was certainly the case with Ted Grant's remarkable writings on Russia, which accurately plotted the graph of the decline of Stalinism and predicted its outcome a quarter of a century before the fall of the Berlin Wall. Here alone we find a comprehensive analysis of the reasons for the crisis of the bureaucratic regime, which even today remains a book sealed with seven seals for all other commentators on events in the former USSR.

The attitude of the capitalist "experts" we have already commented on. No surprises here. Socialism (or communism) failed. End of story. But the commentaries of the Labour leaders, both left and right, are not much better. The rightwing reformists as always merely echo the views of the ruling class. From the left reformists we get an embarrassed silence. The leaders of the Communist Parties in the West who yesterday uncritically supported all the crimes of Stalinism now try to distance themselves from a discredited regime, but have no answer to the questions of the Communist workers and youth who demand serious explanations. And this is absolutely necessary, for unless we understand the past and draw all the necessary lessons from it, we shall never be in a position to confront the great tasks which the future will pose. The present work not only asks questions, but provides answers.

The fall of the Berlin Wall was heralded in the West as the beginning of a new dawn. It was regarded by capitalist commentators and apologists as "the final victory" of capitalism over socialism. "The Soviet Union is no more," wrote Martin McCauley. "The great experiment has failed...Marxism in practice has failed everywhere. There is no Marxist economic model capable of competing with capitalism." (M. McCauley, The Soviet Union 1917-1991, pp. XV and 378.) "We Won!" exclaimed the editorial of The Wall Street Journal (24/5/89). According to Francis Fukuyama: "The period of post-history has arrived...Liberal democracy has triumphed, and mankind has reached its highest wisdom. History has come to an end."

The then American President George Bush triumphantly announced the creation of a "New World Order" under the domination of US imperialism. But very rapidly this initial euphoria evaporated. All that was fixed and solid in the cold war relations between the different powers has dissolved. In its place has come instability, uncertainly and conflict. In February 1990, The Wall Street Journal in a series of articles on "The 1990s and Beyond" concluded that "there is every reason to believe that the world of the 1990s will be less predictable and in many ways more unstable than the world of the last several decades".

"The end of the cold war does not mean a world at peace," stated The Economist (8/2/92), "on the contrary, it may for a time mean an even more violent place." Western leaders are terrified at the thought of the Balkanisation of the former Soviet Union, a situation the former US Foreign Secretary, James Baker, likened to "Yugoslavia, but with nuclear weapons". As one Russian commentator, Tatyana Koryagina, explained: "From the social and economic point of view, there's nothing to be glad about. The political disintegration of the Union, which now appears final, will aggravate the crisis and increase social tensions. Soon we will be facing a catastrophe." She concludes, " the confluence of these we have the makings of a social revolution". (Morning Star, 2/1/92.)

On the eve of the twenty-first century, the strategists of capital look forward to the future with deep foreboding. New economic, social and political contradictions are piling up on top of older contradictions. We can now assert with unshakeable confidence that the collapse of Stalinism was only a prelude to a new period of crisis for capitalism which will make the convulsions of the East, and what capitalism has experienced in the past, look like a Sunday tea party by comparison. "Capitalism had won, and communism had lost," stated the American magazine Newsweek (17/6/96). "Or so we had thought."

Despite all the lavish promises of milk and honey that followed the collapse of Stalinism by the Western leaders, the move to introduce capitalism into the former Soviet Union brought with it a nightmare for the mass of the population. The gains of the October Revolution are being systematically dismantled, leading to an unprecedented collapse of the productive forces. It comes as no surprise that the same Western observers who exaggerated every defect of the Soviet economy, and deliberately suppressed all evidence of its successes, remain stubbornly silent about these glorious achievements of the market economy.

Not since the Dark Ages after the collapse of the Roman Empire has Europe seen such an economic catastrophe in peacetime. In particular, the collapse of production in Russia resembles the effects of a massive defeat in war, or, more correctly, in two wars. It has no parallel in modern history. In the last six years production has plummeted by around 60 per cent. It can only be described as a historic wipe-out of productive technique and industry. The steep fall in American production of 30 per cent in the Great Depression of 1929-33 was relatively minor by comparison. Each year of life in Russia is equivalent to the deepest depression ever experienced in the West. In 1996, the GDP fell by a further 6 per cent. Industrial output was down by 5 per cent and agricultural output by 7 per cent. Output in light manufacturing plunged by 28 per cent, and in the construction materials industry by 25 per cent. Chemical and petro-chemical production declined by 11 per cent and new housing construction by 10 per cent. Russia's 1996 grain harvest was the third smallest in 30 years. Nor is Russia's decline the worse case. In the five years to 1994, the economies of the ex-republics of the Soviet Union have plummeted by up to, in the case of Georgia, an astonishing 83 per cent. Since then, there have been further falls.

A regime of decline

In 1936 Leon Trotsky predicted that "the fall of the present bureaucratic dictatorship, if it were not replaced by a new socialist power, would thus mean a return to capitalist relations with a catastrophic decline of industry and culture". (Trotsky, The Revolution Betrayed, p. 251.) The last six years have provided ample proof of this.

One of the features of the present situation is the fashion for inventing a whole new language to disguise the reality of socially disastrous policies. Thus we have "downsizing" and "outsourcing" in the West. And now we have a Big Bang in preparation in Russia. These smug euphemisms remind one of the "Newspeak" of George Orwell's Nineteen Eighty-Four, where the Ministry of Plenty presides over shortages, the Ministry of Peace wages permanent war, and the Ministry of Love represents the secret police! What this "Big Bang" would entail is the closure of all "unprofitable" plant and industry, the ending of all state subsidies, and a rapid transition to capitalism. Such a prospect would result in the closure of 40 per cent of Russian industry and around 25 million unemployed. The misery of today would be nothing compared to this scenario.

Jonathan Hoffman, international economist at Credit Suisse First Boston, adds this pearl of wisdom: "Nobody promises an easy ride. Russia, unlike any nation this century, faces the collapse of empire, the collapse of ideology, the collapse of political institutions, and the collapse of the economy. But through it all, one is going to see the economy transformed and that's going to continue."

In a gross understatement, Anthony Robinson writing in the Financial Times (11/11/94) says: "The pain has been greater than originally imagined." Nevertheless that didn't prevent this organ of finance capital demand far greater pain in its editorial a month earlier (7/10/94): "There is no middle way - only a choice between a Big Bang stabilisation and social economic collapse...Sooner or later, they would have to demand the kind of sacrifices from their people which they have not so far had to make." Keynes once remarked, when someone talked about long term solutions, "in the long run we're all dead". A leading bourgeois representative, Sergei Aleksashenko, who was deputy minister of finance, summed up their perspective: "When people ask me what will happen, I always say that in 20 years it will be all right."

The present bourgeois government will not have 20 years to complete its counter-revolution and consolidate its position. Despite the enrichment of a tiny elite at the top, the mass of the population has gained nothing from the "reforms". Opinion polls have showed big majorities against the market economy. An opinion poll in 1994, saw support for reform fall from 40 per cent five years previously, to 25 per cent then. The same poll found a majority believing privatisation to be "legalised theft undertaken for the benefit of the nomenklatura and criminals". A more recent opinion poll conducted by the US International Foundation of Electoral Systems in November 1995 found that three-quarters were deeply dissatisfied with the current situation. Only 20 per cent thought the economy would improve over the next two or three years. And significantly, more than half wanted the re-establishment of state control over the economy. (Financial Times, 29/11/95.)

Three months earlier, a poll by the All-Russian Centre for the Study of Public Opinion and the University of Strathclyde reproduced in the Financial Times (17/8/95), revealed that two-thirds assessed positively the pre-perestroika period, compared with just 50 per cent in 1992. A third wanted the return of the Stalinist regime, while 10 per cent said the return of the Tsar would be better. In an all-Russian survey published in Segodnya (24/1/97), 48 per cent of respondents agreed or were inclined to agree with the proposition that "socialism is preferable to capitalism as a system for Russia." Those that disagreed or were inclined to disagree, numbered 27 per cent, while the remainder took an intermediate position. A figure of 43 per cent agree or were inclined to agree that Russia's economy should develop mainly on the basis of state rather than private property, while 19 per cent took the opposite view. Following on from similar experiences in Lithuania, Ukraine, Poland, Hungary, Rumania and East Germany, in the December 1995 Duma elections in Russia, those parties that stood for reform were humiliated. It was a massive victory for the Communist Party and their allies, pushing the nationalists into second place. The results sent alarm bells ringing across the capitalist world.

The magazine Newsweek (17/6/96) admitted: "The harshness of the transition has produced fury. In the coalmining regions of northern Russia, men in the pits went months without getting paid earlier this year. Many pension payments have also been late. If capitalism doesn't stand for a decent day's pay for a decent day's work - or a commitment to make good on obligations to retirees - 'then what does it stand for?' asks a bitter Lyudmila Sakharova." The economic crisis has been accompanied by a frightful collapse in living standards. A large proportion of the population live in conditions of poverty not seen since the war. Wages are not paid for months on end as a result of the huge debts accumulated by state-owned enterprises and the collapse of the central plan.

In 1995 alone real wages fell by almost 20 per cent. "I already live on bread and tea. I haven't seen meat in years," says Fainia Moligina, a 67 year old pensioner who says she gets just 160,000 roubles (£22) a month. "If prices go up, there will be only starvation." A loaf of black bread then cost around 2,200 roubles (30p) in Moscow, but with the worst harvest for 30 years, experts from the Ministry of Agriculture warned that the price could quickly rise to 4,750 roubles (64p). The collapse in living standards is far from complete. Inflation continues to eat away at wages and pensions. But millions only receive them after months of delay. "Total payment of wage arrears to government workers and of back pensions is absolutely unreal," revealed the economics minister, Yevgeny Yasin. (The Guardian, 27/5/96.)

This rapid impoverishment has meant untold misery and suffering for the mass of society. During the period of "reform", real wages in Russia fell by half. Today, millions of Russians face malnutrition, if not actual hunger. According to the State Statistics Committee's annual report, almost 32 million people were receiving less than the government-defined "subsistence minimum" income of about US$75 a month at the end of 1996. The vast majority spend every waking hour trying to scrape a living, just to survive. But this is only one side of the picture. The move towards the market economy has created a rich elite of nascent capitalists, recruited from the old Communist nomenklatura, who are engaged in corruption, extortion, and the plunder of state industries.

They represent the nascent Russian bourgeoisie - the new class of spivs, black marketeers, ex-bureaucrats and the Mafia who are eager to consolidate their power, privileges and income. Rather than "good old" capitalist competition, they revert to death threats and assassination to eliminate business rivals. Their motto is: Get Rich Quick! "At the top end of the market," comments the Financial Times (7-8/10/95), "glitzy supermarkets sell live lobster and expensive champagnes for the country's new rich. There are ready buyers for $2,000 dresses in Russia's shiny new fashion boutiques, and the latest Mercedes cars and stretch limousines now cruise Moscow's streets." The desperate position of the masses contrasts with the ostentatious wealth of the nascent bourgeoisie and its hangers-on.

The fleets of cream-coloured Mercedes, the glittering fashion houses stand in insulting contrast to the majority struggling to survive. The consequences of this are not lost on the more intelligent Western observers: "The growing distance between rich and poor," writes the Financial Times (10/4/95), "is also more shocking to Russian eyes than to Western ones because it has replaced a communist order in which the currency of social status was a political power rather than money and the elites were careful to mask their privileges with paeans to the virtues of the working class.

"For these reasons, the increasingly deep divide between the winners and losers created over the past three years by Russia's traumatic economic and political transformation is emerging as the most important underlying factor in the country's struggle to determine how to move forward." The Russian government estimates that apart from the foreign bank accounts and property, there may be as much as $20 billion in US dollar bills stashed away. Reflecting this new bourgeois culture, Moscow now has the highest concentration of gambling casinos in Europe.

But there is another side to the coin. Poverty has become epidemic. In St Petersburg more than 50,000 souls are living on the streets. In the capital, Moscow, between 50,000 and 100,000 people sleep rough every night. Begging has reached plague proportions. Under present conditions the homeless are denied the right to a propiska, a residence permit, without which no person has the right to work, medical care or state benefits. These downtrodden people can still be jailed for up to two years for vagrancy, begging or "leading a parasitical life". Old age pensioners, many of whom defended the city during the Nazi siege, are so desperate that a number live on the city's rubbish dumps. A growing number have been swindled out of their homes by the Mafia. Destitution has meant unimaginable scenes of distress. Recently a homeless old woman was sentenced to two years hard labour for stealing a pair of spectacles.

The capitalist market has brought with it all the worst features of bourgeois society: destitution, homelessness, unemployment, violent crime and increased alcoholism, while destroying the welfare services. The savage cuts in funding have left the health service reeling from one crisis to another. Along with the growth of deprivation has come illness and disease. Alcoholism, which reached alarming proportions under Stalinism, has become an epidemic. Vodka consumption has risen steeply since drinking curbs were eased in 1991 and the subsequent liberalisation of trade. It has been estimated that the Russian population of 150 million now consumes substantially more vodka each year than the 280 million of the USSR in the late 1980s.

More than 25 per cent of St Petersburg's homeless admit to drinking Belaya Shapka (cleaning fluid). In winter, hundreds of these outcasts often fill up with cheap vodka and lie down in the freezing cold from which many never awake. At the same time a Korean restaurant in Alma-Ata charges $100 a table, while a four star hotel room in Moscow can cost more than $600 a night. These are the wonders that the market economy has wrought.

A harrowing picture of Russian life was vividly portrayed in an article by journalist Neil MacKay:

"In the winter of 1993, more than 1,000 homeless people were lucky. The government actually acknowledged their existence - when they cleaned their frozen dead bodies off the sidewalks... The break-up of the Soviet empire shook Russia to its foundations, the social welfare net collapsed and the ensuing chaos created the 'new poor'... Thousands of former prisoners drift into homelessness on their release from 'the zones' - Russian penal colonies - and find themselves in a twilight world of numbing degradation. Ex-convicts can be seen shivering on street corners, drinking pints of vodka with refugees of the Afghan war, runaway children and the insane and infirm." (The Big Issue in Scotland, 8-21/12/95.)

According to the World Bank's recent report, one-third of the population live below the poverty line. It says income distribution is now as unequal as Argentina and the Philippines. The 43 per cent fall in real wages between 1991 and 1993, combined with price liberalisation, has meant increasing numbers of people cannot afford the minimum subsistence basket, estimated in November 1994 at about $30 a month. Nochlezhka (Night Shelter), the organisation for the homeless, estimates that the real number of Russians living below the poverty line is a staggering 80 per cent - far in excess of the World Bank figure. It says that only 3 per cent of available housing goes to those on the waiting lists, which average a 15 year wait. The rest is picked over by bureaucrats in the know. The Mafia has a controlling interest. Nobody escapes the extortion and racketeering. Even individuals who struggle to earn a few roubles selling some pitiful possessions in the street are forced to pay tribute of 20 per cent.

At the opposite pole to the obscenely rich, a growing number are being pushed into absolute misery. "Teenage girls aspire to prostitution, and men carry guns. Everybody is suffering," writes MacKay. Destitute youth are forced into thieving Fagin-style gangs by the Mafia, with little hope of escape. Alongside the scourge of alcoholism, they are likely to fall prey to a disease few will escape: tuberculosis. "Thousands are affected with the killer disease, but treatment can do little to save them. What good is medicine, ask Nochlezhka workers, when you're sleeping in a bin-liner?"

'Capitalism can seriously damage your health'

As a direct corollary of the collapse of living standards, we witness a sharp decline in health for the mass of the population. Newsweek described life expectancy as "the ultimate indicator of a nation's overall economic health". Russia's present level is even worse than India, Pakistan and other developing countries and it still continues to fall. By comparison, at the height of the crisis under Stalinism, life expectancy for USSR in 1987 still averaged 65.1 years for men and 73.8 for women. In Britain, by comparison, the present male life expectancy is 74 years. It is not surprising that the Financial Times (14/2/94) carried a front page article with the title "Russia faces population crisis as death rate soars". The article explains that "in the past year alone, the death rate has jumped 20 per cent, or 360,000 deaths more than in 1992. Researchers now believe that the average age for male mortality in Russia has sunk to 59 - far below the average in the industrialised world and the lowest in Russia since the early 1960s".

An article in the US magazine Time (27/6/94) commented:

"For many East Europeans the age of freedom is turning into the worst of times since the second world war. Eastern Europe is going through a health crisis of dire proportions: demographers and health officials report rates of death and childlessness on a scale normally seen only in wartime. Ailments of both body and mind are near epidemic magnitude. In several countries, including Russia, the population is actually shrinking. 'The drop is catastrophic,' says Regine Hildebrandt, a minister in the state government of Brandenburg, 'it is like war.'

"In Russia, Bulgaria, Estonia and Eastern Germany, deaths are outnumbering births, in some areas 2 to 1. Life expectancy in nearly every part of the East is dropping, especially among men, at a time when even the poorest third world countries are recording steady increases. In Hungary the average is 65 for men and 74 for women, in contrast to 67.3 and 75 in 1975 and 73.4 and 81.8 for French men and women today. Death rates in Russia have soared 30 per cent since 1989, with men bearing the brunt, says demographer Murray Feshbach of Georgetown University. By his estimate, life expectancy for Russian men has fallen to 59, about the same as in Pakistan." And it goes on to quote Nicholas Eberstadt, a researcher at the American Enterprise Institute in Washington: "In the past, such abrupt shocks were observed in industrial societies only during wartime."

These figures are all the more appalling when we bear in mind that the Soviet Union attained levels of health care and life expectancy as good as many advanced capitalist countries. In order to prove this assertion we do not even have to cite the USSR. To see the contrast with a planned economy, even one with a relatively backward economy, just compare the situation in Cuba which Time mentions. In spite of the criminal blockade by which Washington seeks to throttle Cuba, the Pan-American Health Organisation (PAHO), a branch of the World Health Organisation, describes Cuban health care as "better than that provided by the rest of the Americas". In fact, people come to Cuba even from such countries as Sweden to obtain treatment in certain fields of medicine.

Although it suffers from a critical shortage of medications and medical supplies as a result of the blockade, Cuba can still boast of having 51,000 doctors - 1 for 231 inhabitants. "Despite the difficulties, however," Time admits, "Cuba's mortality rate for infants and children under five continues to improve. At 9.4 deaths per 1,000 infants last year, Cuba's rate is surpassed only by Canada's (7 per 1,000 in 1992) and the US's (9 per 1,000) in the western hemisphere, according to PAHO."

The situation in Russia at the present time is very different. Disease, suicide, murder, inadequate food, despair, have combined with the demolition of the health service to reduce Russia to third world levels of health. According to Rabochaya Tribuna: "The majority of Russians are chronically undernourished. The deficit of high quality protein is 25 per cent and vitamins up to 50 per cent. The energy deficit is around 20 per cent." The death rate for Russian males is related to suicide, murder, bad food and bad conditions and also to the general lack of perspectives and loss of hope for the future.

Diseases that had been previously eliminated have began to reappear: cholera, diphtheria, dysentery, anthrax and Siberian malignant anthrax. "These infectious diseases, which have sprung up everywhere from Leningrad region on Russia's north-western rim to cities on the Pacific coast, have become so prevalent that one Moscow newspaper has created an 'epidemics' column, which informs readers of the day's newest sickness," reveals the Financial Times (14/9/94).

The World Health Organisation (WHO) announced that there was an alarming epidemic of diphtheria in the former USSR. "Diphtheria, regarded as a childhood disease, appeared to have been defeated in Europe after widespread immunisation from the late 1940s. In 1980 only 623 cases were reported. The latest outbreak began in Moscow and St Petersburg in 1991, but by 1994 the epidemic, which kills between 5 and 10 per cent of its victims, had infected almost 48,000 people in nearly all regions of Russia, Ukraine, Belarus, Moldova, Azerbaijan, Armenia, Georgia, Kazakhstan, Tajikistan and Uzbekistan," reports the Financial Times (20/6/95). Dr Jo Asvall, European regional director for the WHO warned that "this is the biggest public health threat in Europe since world war two".

Medicines are in short supply, while those available are prohibitively expensive. Under the old system, Soviet-produced medicines were sold practically at cost. In 1992 the price of drugs began to outstrip the price rises in other goods. As early as February 1992, cheap medicines had disappeared from the shelves. The trade union newspaper Trud at the end of 1992 reported: "The pharmacies are finding deals with commercial structures especially profitable. They buy medicines abroad for dollars, and sell them at hard currency prices." (Quoted in Russian Labour Review, No. 2, 1993.)

According to Dr Boris Storozhilov, the head doctor at Moscow's Municipal Hospital No 32, privatisation of state medicine is proceeding by stealth. He says that "because of the wild capitalism which is developing all around us and the inability of doctors to do well in this new environment, some doctors take money on the side from their patients for what they should be doing for free". (Financial Times, 14/9/94.) When their often delayed wages were paid, doctors earned a miserable 85,000 roubles a month, and nurses earn 65,000 roubles a month. "It is impossible for us to find new young employees at these rates," says Dr Storozhilov. "Everyone is throwing themselves into commerce."

An article written by E.M. Andreyev of the State Committee for Statistics tries to minimise the seriousness of the health crisis, but is compelled to admit that the life span for a Russian male, on the present trends, will be only 50 by the end of the century, and 63 for women. And he is also forced to recognise that the root cause is economic:

"In 1993, the amount of funds allocated for public health continued to decline. The actual utility of hospital treatment further dropped because of the shortage of modern medications and the wear of obsolete medical equipment. The salary levels in Russian public health service in 1992 (the data for 1993 are still unavailable) were lower by a factor of 1.7 than in the economy at large. In the conditions of a market reform one can hardly expect efficient services by poorly paid medical personnel." In addition to poverty and cuts, the all-pervading sense of insecurity and fear causes all kinds of psychological problems. The same author admits that the upheavals and conflicts caused by reform create "increased social instability and general level of neurosis". (Khimiya y Zhizn', No. 10, October 1994.)

The introduction of market principles into medicine has had devastating results. In the words of the Moscow journalist, Irina Gluschenko:

"A year or so ago earnest, sincere people were explaining on Russian television that the state system of pharmacies was stifling the initiative of the workers. Excessive centralisation was said to be creating shortages of medicines and making effective work with patients impossible. Then, as economic reform gathered pace, the pharmacies were turned into commercial operations, whose aim was to make money. If they earned more, that meant their work was successful, even if more people died...

"The assault on the pharmacies began earlier than the commercialisation of other spheres of the economy, due largely to the hatred the new authorities felt for free medical care as one of the pillars of socialism. Large numbers of pharmacies were not privatised, remaining municipal enterprises. However, their functions were completely altered; the pharmacies were obliged both to sustain themselves and to bring profits to the city treasury." (Russian Labour Review, No. 2, 1993, p. 42.)

In 1993, with the collapse of free health care, private medical schemes were introduced, but are not within the grasp of a large bulk of the population. It has been estimated that only 10 per cent of Russians are covered by private insurance, which gives them the right to treatment at the elite Kremlin hospitals previously used by top Party bureaucrats.

Given the sky high prices, consumption of medicines declined by 30 per cent in 1992 alone. According to Gluschenko, "what has happened with the pharmacies is typical of what is now occurring with the health system as a whole. In 1991 3.4 per cent of Russian GNP went to health care. In 1992 this figure was cut by half. There is a lack of money not just for updating equipment, renovating hospitals and performing research, but even for doctors' wages". (Ibid.)

In a country where industry and state were bound closely together, the shift to the market economy has brought unforeseen consequences. At the other end of the scale, the federal government finances the state hospitals' operating costs, but local factories in the past bought most of the equipment. With the factories facing bankruptcy, this link has broken down. "Now the factories are poorer than we are," says Dr Storozhilov. "They are working at half capacity and laying workers off, so our medical equipment is rusting away." Another effect he has noticed is the fear of workers to admit they are sick in case they are laid off. "They work until they drop and only then do they come in to hospital." (Financial Times, 14/9/94.)

Under the old system at least the workers had a free health service and relatively stable conditions. In the words of Julika Lukacs, a Hungarian pensioner: "Society was not divided under the Communists. There was no crime or poverty and we lived happily." That may be an indulgent memory, but it is shared by many. Another miner from Vorkuta said he was "voting for Zyuganov, because I felt safe under the Communists". Another Russian person who was interviewed about democracy, revealing the psychology of millions at the present time, gave the following reply: "Freedom? Yes, we have it. But freedom for what? To die of appendicitis? To buy a Western anorak for 200 Deutsch Marks, when the average wages are 5 Deutsch Marks per week. Freedom to bribe teachers $1000 a year to teach our children or to pay $50 to see a decent doctor?"

The position of women

The great French utopian socialist Fourier saw the position of women as the most graphic indicator of the progress or otherwise of a social regime. The attempt to introduce capitalism in Russia has had the most calamitous consequences in this regard. All the gains for women made by the Russian Revolution, which, incidentally, was begun by striking textile workers on International Women's Day, are being systematically eliminated. The reactionary face of the pro-bourgeois regime is graphically revealed in the position of women.

The Bolshevik Revolution laid the basis for the social emancipation of women, and although the Stalinist political counter-revolution represented a partial setback, it is undeniable that women in the Soviet Union made colossal strides forward in the struggle for equality. "The October Revolution honestly fulfilled its obligations in relation to woman," wrote Trotsky. "The young government not only gave her all political and legal rights in equality with man, but, what is more important, did all that it could, and in any case incomparably more than any other government ever did, actually to secure her access to all forms of economic and cultural work." The October Revolution was a milestone in the struggle for women's emancipation. Prior to that, under Tsarism, women were regarded as mere appendages of the household. Tsarist laws explicitly permitted a man to use violence against his wife. In some rural areas women were forced to wear veils and were prevented from learning to read and write. Between 1917 and 1927 a whole series of laws were passed giving women formal equality with men. The 1919 programme of the Communist Party boldly proclaimed: "Not confining itself to formal equality of women, the party strives to liberate them from the material burdens of obsolete household work by replacing it by communal houses, public eating places, central laundries, nurseries, etc."

Women were no longer obliged to live with their husbands or accompany them if a change of job meant a change of house. They were given equal rights to be head of the household and received equal pay. Attention was paid to the women's childbearing role and special maternity laws were introduced banning long hours and night work and establishing paid leave at childbirth, family allowances and child-care centres. Abortion was legalised in 1920, divorce was simplified and civil registration of marriage was introduced. The concept of illegitimate children was also abolished. In the words of Lenin: "In the literal sense, we did not leave a single brick standing of the despicable laws which placed women in a state of inferiority compared with men..."

Material advances were made to facilitate the full involvement of women in all spheres of social, economic and political life - the provision of free school meals, milk for children, special food and cloth allowances for children in need, pregnancy consultation centres, maternity homes, créches and other facilities. True, the emergence of Stalinism ushered in a series of counter-reforms in the social sphere, which drastically affected the position of women. But with the death of Stalin, the postwar economic growth allowed a steady general improvement: retirement at 55 years, no discrimination in pay and terms of employment, and the right of pregnant women to shift to lighter work with fully paid maternity leave for 56 days before and 56 days after the birth of a child. New legislation in 1970 abolished night work and underground work for women. The number of women in higher education as a percentage of the total rose from 28 per cent in 1927, to 43 per cent in 1960, to 49 per cent in 1970. The only other countries in the world where women constituted over 40 per cent of the total in higher education were Finland, France, and the United States.

There were improvements in pre-school care for children: in 1960 there were 500,000 places, but by 1971 this had risen to over five million. The tremendous advances of the planned economy, with the consequent improvements in health care, were reflected in the doubling of the life expectancy for women from 30 to 74 years and the reduction in child mortality by 90 per cent. In 1975 women working in education had risen to 73 per cent. In 1959 one-third of women were in occupations where 70 per cent of the workforce were women, but by 1970 this figure had climbed to 55 per cent. By this time, 98 per cent of nurses were women, as were 75 per cent of teachers, 95 per cent of librarians and 75 per cent of doctors. In 1950 there were 600 female doctors of science, but by 1984 it had climbed to 5,600!

The movement toward capitalism has rapidly reversed the gains of the past, pushing women back to a position of abject slavery in the hypocritical name of the "family". The biggest part of the burden of the crisis is being placed on the shoulders of the women. Women are the first to be sacked, in order to avoid paying social benefits, like child and maternity benefit. Given the fact that women made up 51 per cent of the Russian workforce a few years ago, and that 90 per cent of women worked, the growth of unemployment has meant that more than 70 per cent of Russia's unemployed workers are now women. In some areas the figure is 90 per cent.

The collapse of social services and increased unemployment means that all the benefits of the planned economy for women are being systematically wiped out. The growth in unemployment will sentence many more people to poverty in Russia than in the West because many benefits are provided direct by the workplace: "Unemployment still carries a deep stigma in Russia. Only in 1991 did it cease to be a crime. For those without jobs, absolute poverty threatens. Unemployment benefits are linked to the minimum wage of 14,620 roubles a month, a third of the official subsistence level and about one-seventh of the average wage. The jobless are often even worse off than these figures imply because most of the basic social services - such as health, schools and transport are provided by companies rather than local government, and hence are only available to people in work," reports The Economist, (11/12/93).

Under the previous regime, women received 70 per cent of men's wages. The figure is now 40 per cent. Keeping a family on one wage was difficult enough in the old USSR. Now, with the dramatic rise in poverty, it is virtually impossible. Thus, women are the main victims of this reactionary regime. Prostitution has increased enormously, as women try to survive by selling their bodies to those with money to buy them - mainly the despicable "new rich" and foreigners. Even here they fall prey to the Mafia which demands at least 20 per cent of all businesses. In Western magazines, Russian women are advertised alongside women from third world countries as prospective wives for men who, for reasons that one can only guess at, are unable to find a partner in their own country. In the humiliating slavery of women, reduced to the status of commodities, is encapsulated the humiliation of a land that is being compelled to submit to the yoke of exploitation in its most naked and shameless guise.

On the 10th February 1993, the then labour minister, J. Melikyan announced the government's solution to unemployment. In a language that would do credit to any rightwing bourgeois politician in the West, he said he saw no need for special programmes to help women return to work. "Why should we try to find jobs for women when men are idle and on unemployment benefits?" he asked. "Let men work and women take care of the homes and their children." Such language, which would have been unthinkable in the past, is now evidently regarded as something normal and acceptable. Here, more clearly than anywhere else, we see the real face of capitalist counter-revolution - crude, brutal and ignorant - a monstrous throwback to the days of Tsarist slavery in which each slave was allowed to lord it over his wife and children in compensation for his own degrading condition.

The government's attempt to implement a "back to the home" policy was reflected in several drafts of a new law that was under consideration. The first draft would potentially have nullified women's right to abortion, and banned women with children under 14 from working more than 35 hours a week. Following protests, the most controversial clauses were dropped. The law now does away with the obligation of the state to provide day care for the children of working women. As compensation, women with three or more children are offered benefits to stay at home and look after them. This will put the position of women back more than seventy years. Thrust back into the dark recesses of the family, they are made to pay a terrible price. In 1993, 14,000 Russian women were murdered by their husbands or boyfriends - a figure 20 times higher than in the USA.

The emergence of Mafia capitalism

"Moscow today is a metropolis in the grip of gangsters, drug pushers and pimps. A society where the state once ruled by fear and commerce was a crime, has been replaced by a jungle in which commerce is ruled by fear and anyone who indicts crime is blown away by a shotgun-wielding hitman on his doorstep... Meanwhile, the wages of sin are good enough for the new rich of Russia; on a late mid-week evening in the Teatro Grill... sharp young men in designer sports jackets brandishing mobile phones like the fly-whisks of oriental despots are ordering Canadian lobster and French champagne... They share their table with burly minders in leather jackets. The moll is there too... The cynical view is that not only has Russia's moral and social switchback ride made the Mafia inevitable, but also in the medium term, it may even be necessary. Its single minded dedication to the individual profit motive makes it an armed and lethal force against those who would restore state collectivism." (The Sunday Times, 8/5/94.)

The above lines provide a graphic picture of the type of capitalism that is emerging in Russia today. One of the main accusations levelled at the old regime was that it was endemically corrupt. That is true, and was one of the main causes of the dissatisfaction of the masses. But the experience of six years of a movement in the direction of capitalism has shown that the new order is vastly more corrupt than anything that has gone before. The illusion that Russia could develop into a classical form of "democratic" capitalism as in Western Europe or America has been completely destroyed. The Mafia gangs, directly linked to this emerging capitalism, and often indistinguishable from the nascent bourgeoisie, have sprung up everywhere. Their tentacles penetrate into every corner of the state, business and politics. The Russian Mafia is linked to its counterparts in Italy and elsewhere.

"There are signs that [the Russian Mafia in] the former Soviet Union is using the Italian Mafia to build itself up economically just like the US [Mafia] did earlier in the century," said Major General Giovanni Verdicchio, a senior figure in anti-Mafia operations of the Italian Guardia di Finanza. These criminal elements are regarded by the nouveaux riches as the guarantors of the new Russia. But they have a price for their services. In a report prepared for Boris Yeltsin, the Analytical Centre for Social and Economic Policies claimed that three-quarters of private businesses are forced to pay 10-20 per cent of their earnings to criminal gangs; 150 such gangs control some 40,000 companies, including most of the country's 1,800 commercial banks. According to Newsweek: "The Russian Mafia has practically turned the motherland into a thug-ocracy."

Russia's new elite represents a gangster capitalism, permeated by corruption from top to bottom, and, in one elegant phrase, "as graceful as Frankenstein's monster". Russian capitalism is even more corrupt than the notorious "crony capitalism" of Marcos in the Philippines. The French nineteenth century socialist Proudhon invented the celebrated phrase "All property is theft". From a strictly scientific point of view that is incorrect, but in present day Russia it comes close to the truth. One Western financial strategist, returning from Moscow, confessed that he was "saddened by the pervasive sordidness and decay, the rampant corruption masquerading as capitalism... I left with a palpable sense of foreboding", he added "that sinister events are waiting to happen". This was a matter of months before Yeltsin's bloody assault on the White House and the crushing of parliament in November 1993.

In Russia, attempts to resist the power of the Mafia are exceedingly risky. Here, paraphrasing Clausewitz, murder is the continuation of economics by other means. In 1993 alone, the interior ministry reported the murder of 94 people described as "entrepreneurs". The ministry recorded two attacks involving explosives every day, almost one-third of them against rival businessmen. In August 1995, on the day of the bloody Moscow Metro bombing, a demonstration of members of the Association of Bankers and the Business Roundtable took place. They were surrounded by bodyguards, and claimed that 85 murder "contracts" had been taken out against their members in the last three years - and 47 had been assassinated.

One of Russia's top 100 millionaires, Ilya Mitkov, was gunned down as he left his office. According to the Daily Express (21/9/93): "By the time he died he had a private jet, an office in Mayfair, and a penthouse and Ferrari in Paris... He built a business empire with two banks and a host of other commercial interests... Yet in Moscow's business jungle, no one seems safe. Newspapers say he was killed in a feud over forged payments involving one of his banks." Unlike in the West, Mafia capitalism deals with rivals in a direct simple fashion, murder. "Entrepreneurs wanting protection recruit their own gangs, which come in useful for debt collection too." (The Economist, 19/2/94.)

This is no exception, but is endemic in Russia. "In larger companies," reports the Financial Times (2-3/9/95), "armies of hundreds of guards provide security for top managers, act as debt collectors, protect customers and even gather intelligence. They're the modern equivalent of the retainers of a medieval lord, or the retinue of a nineteenth century US cattle baron." Pyotr Filippov, an economist with the Analytical Centre, writes in his report: "An entire generation is growing up for whom this situation is normal and who in such circumstances will not turn to official authorities, but to unofficial ones. These people are more likely to hire a murderer to punish a guilty or even an unpleasant partner than to go to court or arbitration." (The Economist, 19/2/94.)

Russia's interior minister Anatoli Kulikov estimates contract killings, among them some Americans, down from 530 in 1995 to 450 in 1996 and now admits that "businessmen have hidden between $150 billion and $300 billion elsewhere over the last five years". He estimates 40 per cent of the country is owned by criminals. Pending legislation would impose fines on these tax evaders of between $862 and $2,000. He says, in a masterpiece of understatement: "I have some misgivings (!) about all those people, who used to be derelicts four to five years ago but who have now become billionaires."

The blackmarketeers and Mafiosi, who have contacts at the highest level of the government, are engaged in plundering the state. This business Mafia has grown fabulously rich by every means at its disposal. Most banks are controlled by the Mob, with their Western luxury cars, elegant girlfriends and packs of muscular bodyguards. By this means money from prostitution, drugs, and the black market is laundered. "The situation in Moscow is like it was in New York City in the 1920s and 1930s," said Jim Moody of the FBI. Hundreds of contract killings take place each year. Typical prices are said to be between $1,000 and $5,000 per hit.

According to The Economist, the area where reform and crime most glaringly overlap is the privatisation programme. "This is a bonanza for racketeers." The same journal gives the example of the privatisation auctions at Nizhni Novgorod, where armed riot police protected potential investors from armed gangsters, keen to intimidate competitors for cheap assets. "At an auction in Saransk," it states, "in the middle of European Russia, the police were not on hand to discourage gangsters from 'advising' rivals not to bid; those who persisted were, it is said, mutilated."

The most vulnerable sections of society are preyed upon by the Mafia gangs in search of rich pickings. Moscow's Criminal Search Department estimate that up to a fifth of premeditated murders in the capital are committed to get access to a victim's home. The aged, out of desperation, are lured into signing over their accommodation for cash, with the agreement that it is only given up after their death. They are subsequently murdered. Pensioners living alone are the prime target. More than 3,500 bodies "likely to be those of missing apartment owners" lie in the city's morgues. "A few weeks before [the Metro bombing]," states the Financial Times (2-3/9/95), "three corpses, shot and decapitated, were found in refuse bins in the road next to the Metro. The word was: They hadn't paid their rent." The article continues: "Business people and company executives refer to the gun as a debt collector, not even of the last resort." It concludes: "There is no effective law on debt collection."

About the present work

The fall of the Berlin Wall and the collapse of Stalinism has led to widespread questioning, not least of all in Russia itself. It is the purpose of this book to clarify these questions, and answer the propaganda of the enemies of socialism, basing itself on facts, figures and arguments. It is a task that is long overdue. This is no academic exercise, but a preparation for the future. What was the Soviet Union, why did it collapse and where is Russia now heading? These were the questions which Trotsky asked in his masterpiece The Revolution Betrayed written in 1936, which even today retains all its original vigour and relevance. No one who seriously wants to understand what has happened in Russia can ignore this great work of Marxist analysis, which is the starting point for the present book. It is also the aim of the present work to shed light on the nature of the regime that emerged from the October Revolution, to analyse its contradictory tendencies, to plot its rise and fall, and, finally, to point the way forward.

First, a few words about the methodology which underlies the present work. Needless to say, the method used here is that of Marxism, dialectical and historical materialism, because this alone provides us with the scientific tools necessary to analyse complex and contradictory processes, to separate the accidental from the necessary, to distinguish between what men and women think and say about themselves and the material interests which they ultimately represent. Only by such means is it possible to understand what occurred in the Soviet Union, and thus comprehend what is happening now, and, at least tentatively, establish a prognosis for future developments. The author of the present work has spent most of his life studying the Russian question, and is uniquely qualified to provide a Marxist analysis of it. An active follower of Trotsky since the days of the International Left Opposition, Ted Grant can be considered the leading living exponent of the ideas of Trotskyism today. Indeed, a large part of the present work is based on the wealth of material written by Ted over a period of over 50 years, above all, his analysis of the nature of the new Stalinist regimes in Eastern Europe and China, and his creative and original development of Trotsky's theory of proletarian Bonapartism in relation to the colonial revolution.

The first part of the book deals with the Russian Revolution and draws an historical balance sheet of October, answering many of the criticisms, distortions and misconceptions that have surrounded it for decades. In the course of this section there are a number of chapters which provide a detailed exposition of the Marxist theory of the state in relation to the transitional regime that emerged from the October Revolution. The rise of the bureaucracy and the Stalinist political counter-revolution is traced through all its stages. This part, especially the critique of the theory of "state capitalism" (including a valuable appendix on the law of value in the transitional period) presents more difficulties for the reader than other parts of the book. But it is essential to grasp these points in order to understand the process as a whole. It should be pointed out that these sections were originally published in the late 1940s in an important work by Ted called The Marxist Theory of the State. In order to make this and other material available in book form, a considerable amount of editing was necessary. The bulk of this was done by Rob Sewell and myself. Any variations in style which the reader may notice is entirely due to this.

It is worth recalling that 25 years ago Ted Grant had correctly analysed the reasons for the crisis of Stalinism, and predicted its collapse. Moreover, he was the only one to do so. Every other tendency, from the bourgeois to the Stalinists themselves, took for granted that the apparently monolithic regimes in Russia, China and Eastern Europe would last almost indefinitely. To this day, one would seek in vain for an explanation of the real causes of the crisis of Stalinism in all the writings of the bourgeois, reformists and ex-Stalinists, not to speak of the myriad sects on the fringes of the labour movement. Yet they were analysed in advance in the documents written by Ted in International Perspectives, as early as August 1972. Unfortunately, at the time this material was read by only a small number. The present work will make this detailed and profound analysis available to a wider public for the first time.

In the light of subsequent experience, it is not necessary to alter what was written at the time concerning the reasons for the crisis of Stalinism, and the inevitability of its collapse. This analysis follows the same method that was used by Trotsky. The only correction that has to be introduced concerns the perspective for a return to capitalism in Russia. For a long time, the author considered that such a development was ruled out. That has been shown to be incorrect, although at the time, the same opinion was firmly held by virtually all commentators, whether Stalinist or bourgeois. It is a measure of the extraordinary genius of Trotsky - alongside Lenin, one of the two great Marxist thinkers this century has produced - that he proved to be right on this question also. However, it is the contention of the author that the movement towards capitalism in Russia has not yet been carried to a definitive conclusion, and may yet be reversed. The different possibilities are elaborated in the last section, which explains the dialectical relationship between Russia and the rest of the world.

Given the impasse of the present pro-bourgeois regime in Russia, what is likely to happen? The collapse of the Soviet Union and the move towards capitalist restoration has opened up a new contradictory chapter. Trotsky's prediction that the Stalinist bureaucracy in order to preserve their privileges "must inevitably in future stages seek support for itself in [capitalist] property relations", has been realised. The disgusting spectacle of long-standing Communist Party leaders, managers and officials tearing up their Party cards and openly transforming themselves into "entrepreneurs", with the same ease as a man moving from a smoking to a non-smoking compartment on a train, shows how far the Stalinist regime was from genuine socialism. In the last part of his work, the author poses the question of the future of Russia and gives a number of different possibilities. This flows from the fact that the movement towards capitalism still has an unfinished character. Different outcomes are possible.

Marxism is a science, but it is not an exact science, like mathematics or astronomy. An astronomer can establish the position of a galaxy millions of light years away, often with absolute certainty. But there are sciences and sciences. Medicine is also a science, but not an exact one. Basing himself, on the one hand on his knowledge of medical science, and, on the other, on all the available symptoms, a doctor arrives at a diagnosis. There are always various possibilities: for example, a stomach pain may signify an ulcer, colic or stomach cancer. But, at the end of the day, the doctor must decide which is the most likely, because he must pass from theory to action, in order to cure the disease.

A perspective is, by definition, of a conditional character. Perspectives are not a blueprint for what will happen, but only a working hypothesis, which must be constantly revised, filled out and checked against the actual developments. It is, therefore, a mistake to demand of the present work that it should deal exhaustively with every aspect of the situation. By their very nature, perspectives must deal with general processes. The present situation is a transition between two epochs, displaying all the instability of such periods. The task of working out perspectives is made more difficult - but not impossible - by the rapid changes which are taking place. When dealing with complex situations, with many variables, it is necessary to explain the different variants which exist, pointing out the consequences of each one. But at the end, it is necessary to point out which variant is the most likely.

Of necessity, perspectives have an algebraic, not arithmetic, character. The unknown quantities must be filled in on the basis of actual experience. Perspectives can be added to, modified, or even rejected if they are falsified by events. Mistakes are inevitable in working out perspectives. But for a Marxist, even a mistake can be turned to good account, on condition that it is identified, explained and corrected. In the same way, in the history of science, an experiment can be of great utility even when it does not yield the desired result, since it serves to point the way to a more fruitful avenue of investigation and increases the sum total of our knowledge, albeit in a negative sense.

To state the purpose of this book, we can do no better than to echo the words of Trotsky in the introduction to his monumental work on Stalinism, The Revolution Betrayed: "The purpose of the present investigation is to estimate correctly what is, in order the better to understand what is coming to be. We shall dwell upon the past only so far as that helps us to see the future. Our book will be critical. Whoever worships the accomplished fact is incapable of preparing the future... We intend to show the face and not the mask." (Trotsky, The Revolution Betrayed, pp. 3-4.)

This year marks the 80th anniversary of the October Revolution. The apologists of capitalism, and their faithful echoes in the labour movement, try to comfort themselves with the thought that the collapse of the USSR signified the demise of socialism. Not so! What failed in Russia was not socialism, but a false model, a caricature of socialism. In many ways, the Stalinist regime was the antithesis of the democratic regime established by the Bolsheviks in 1917. The downfall of Stalinism was predicted and explained in advance by the Marxists. To this day, we would look in vain for a coherent analysis of this process in the writings of any other tendency on a world scale. In retrospect, the fall of Stalinism will be seen, not as the end of socialism, but only as an episode in the movement towards the socialist transformation of society on a world scale. The demagogic attacks on socialism/ Marxism/ communism have an increasingly hollow ring, because they are made against a background of the deepening crisis of world capitalism. Falling rates of growth, permanent mass unemployment, attacks on living standards, vicious cuts, the abolition of the welfare state - this is the reality of capitalism in the advanced countries in the last decade of the twentieth century. This is the real background against which the attempt is being made to restore capitalism in Russia. What are its prospects for success? It is too early to give a definitive answer. But one thing is abundantly clear from the failure of "socialism in one country". The destiny of Russia today more than ever will be determined by events on a world scale.

London, 8th March 1997.