The Wall comes down: the bourgeois counter-offensive in the west hastened the fall of the Stalinist regimes
In a previous text we examined the western bloc bourgeoisie’s counter-offensive against the class struggle in the 1980s, concluding that the result of this was a decisive shift in the balance of power between the classes even before the fall of the Stalinist regimes in 1989-91.
This text examines the economic crisis and the class struggle in the eastern bloc, highlighting the connections with the counter-offensive against the working class in the west and the closely related phenomena of globalisation and neoliberalism, with the aim of more clearly understanding the reasons for the collapse of Stalinism and the implications for the balance of class forces in the period that followed.
Due to the inherent weaknesses of Stalinist state capitalism the eastern bloc was subject to strong centrifugal forces from the beginning
Stalinist state capitalism was a product of the very specific conditions created by the first imperialist world war and the defeat of the world revolution. With the isolation of the Russian bastion the Stalinist faction took direct control of the state to become the defender of the economic and military interests of Russian capital after the private bourgeoisie had been expropriated.
Due to the weaknesses of Russian capital and the effects of the civil war, the Stalinist regime could only survive by orienting the whole of production towards building its military strength at the expense of consumption. The industrialisation of the USSR was only possible with the most ferocious exploitation of labour and use of state terror. Stalinism was able to carve out an empire in eastern Europe in WW2 by drawing on the sheer size of the USSR and its large population but it could only guarantee its survival by exerting direct political and military control over it and by partly cutting itself off from the world market.
Russian domination of the eastern European economies was based on forced exchange: the USSR sold raw materials and low-quality products at high rates and bought manufactured goods at low rates in non-convertible roubles; trade surpluses with Russia could only be used within the bloc, cutting off the more competitive eastern European economies – Czechoslovakia, East Germany, Hungary – from their traditional markets and suppliers. This attempt to prevent the free movement of capital created distortions in the working of the law of value that could only be suppressed by an extreme form of state capitalism, creating strong centrifugal forces from the beginning. These forces could only grow stronger with the return of the economic crisis and the revival of class struggle.
The return of the economic crisis and the revival of class struggle signified the crisis of Stalinist state capitalism
During the counter-revolution, the Stalinist bourgeoisie could rely on the use of state terror, where necessary granting concessions to manage open outbreaks of class struggle. But the reappearance of capital’s historic crisis, announced in the eastern bloc by economic stagnation and a rise in open class struggles and confrontations with the state, revealed the limits of this strategy:
- the necessity to prioritise military production meant the only way to avert the threat of class struggle was to increase imports from the west which had to be paid for by attacks on workers’ wages and conditions;
- the only alternative was to retreat into centrally planned autarky and introduce austerity measures, which would also provoke struggles from an increasingly confident and assertive proletariat.
The struggles in the USSR and eastern Europe, with Poland as their main centre, formed an integral part of the worldwide revival of workers’ struggles from the late 1960s. A key factor in these struggles was the new generation of proletarians who had not experienced the defeat of the October revolution in Russia and the depths of the counter-revolution that followed. However, this generation had widespread illusions in western democracy and trade unionism.
The revival of workers' struggles in the eastern bloc culminated in the 1980-81 mass strikes in Poland, which proved to be the high point of the worldwide wave of struggles since the late 1960s. Only with the vital assistance of the western bloc was the Stalinist bourgeoisie finally able to isolate the Polish workers’ struggles and prevent them spreading to the rest of the bloc – and even more dangerously to the west.
The isolation and defeat of the Polish mass strikes was a decisive victory for the world bourgeoisie:
- in the west, as we have seen, it opened the way for massive attacks on the working class and a major restructuring of capitalist production, using the threat of unemployment to reassert the power of capital and restore profitability;
- in the eastern bloc, the crushing of the Polish workers led to a deep retreat of the class struggle until the end of the decade; when it revived it was in the context of the disintegration of the Stalinist regimes and their transition to neoliberal policies and state structures.
But the Stalinist bourgeoisie was unable to launch similar attacks on the working class, or carry out the necessary restructuring to modernise its chronically uncompetitive economy, without accelerating the crisis of its political and economic system.
The bourgeois counter-offensive in the 80s increased the centrifugal forces on the eastern bloc and hastened its collapse
As we have seen, the effect of the new strategy launched by the USA at the start of the 1980s was to push the crisis onto the economies of the rest of its bloc, giving an impulse to massive frontal attacks on working class conditions by every national bourgeoisie. The main aims of this strategy – which took the ideological form of ‘monetarist’ and ‘neoliberal’ policies, ‘Reaganomics’, ‘Thatcherism’ etc. - were to restore profitability and reinforce bourgeois class domination. But it was also in the strategic interest of the American bourgeoisie to adopt policies that would economically undermine the strength of its imperialist rival.
One of the first results of the rise in interest rates and the ensuing global recession was that the eastern bloc economies were hit by a debt crisis, leaving them tottering on the brink of bankruptcy; first Poland, then Romania, Hungary and East Germany (and Yugoslavia) had to be bailed out by the IMF and western banks, especially from West Germany.[1]
As a result, the debt burden of the eastern bloc economies grew steadily in the 1980s (see Table 1).
With growing debt came pressure from western governments and banks for economic and political reform, forcing the Stalinist regimes to attempt the same kind of massive attacks on the working class as those in the west. But even modest attempts at restructuring tended to fail due to resistance within the Stalinist nomenklatura, sharpening internal struggles between ‘reformers’ and ‘hardliners’ and accelerating the political crisis of the Stalinist regimes. In the case of Hungary this eventually led to the emergence of a neoliberal faction defending avowedly ‘Thatcherite’ policies; in Poland, the recognition that democratisation would be more successful in imposing the necessary ‘liberal shock therapy’ finally led the Jaruzelski regime to co-opt Solidarnosc into a coalition government.
When the US bourgeoisie abandoned Keynesianism and turned off the taps of the state money supply it simultaneously opened the way for the massive funding of debt by private finance through the market. The flight of capital from unprofitable industries in the capitalist heartlands, together with the massive mobilisation of global finance capital in search of speculative investments, especially in areas of low labour costs, had the effect of breaking down all 'Chinese walls' that prevented the free movement of capital and commodities, leading inexorably to the end of all attempts at national autarky, not only in the eastern bloc but also in India, China, etc.
All this helps to explain why, with the exception of Romania, the fall of the Stalinist regimes in eastern Europe took the form of a ‘peaceful’ transition - in bourgeois terms - to the kind of neoliberal policies and state capitalist structures that were being adopted in the advanced economies of the western bloc from 1980.
The collapse of the eastern bloc was accelerated by the aggressive imperialist strategy of the USA in the 1980s
In 1979 the USSR invaded Afghanistan. At the time, this aggravation of inter-imperialist tensions, which provoked war-like ideological campaigns by the rival US bloc, appeared to be a qualitative step in the bourgeoisie’s preparations for a third world war. With hindsight we can see this was a last desperate throw by the Stalinist bourgeoisie to strengthen its position in a strategically vital region, where instead it became bogged down in a nine-year guerrilla war.
Rather than leading to world war three, the invasion of Afghanistan hastened the collapse of Stalinism. The worsening economic crisis and the revival of open class struggle, together with the enormous burden of unproductive spending involved in ensuring the USSR’s military superiority, control of its satellites and the pursuit of its imperialist interests in Asia, Africa, etc., all exposed the underlying weaknesses of its economy, which increasingly fell behind in key areas like computerisation.
The Stalinist bourgeoisie was faced with a fundamental dilemma: retreat into autarky, boost military spending and risk an explosion of class struggle; or give up the arms race, carry out fundamental political and economic reforms in order to attract western investment and integrate itself fully into the world market.
At the same time the American bourgeoisie adopted a new aggressive strategy towards its imperialist rival, deliberately escalating the arms race while doing everything it could to convince the Stalinist leadership that the US was prepared to use its military superiority to launch a pre-emptive nuclear strike. This strategy, which included the deployment of ballistic missiles in Europe capable of hitting Russian cities, culminated in the announcement in 1983 of the Strategic Defense Initiative (SDI); the "Star Wars" programme was not so much a proposed space-based missile defence system (its feasibility was questionable) as a statement of intent by the USA to escalate the nuclear arms race until it bankrupted the USSR.
Faced with increasing the burden of military spending and the risk of provoking social convulsions, in 1985 the new ‘reformist’ leadership around Gorbachev decided to cut the anti-ballistic missile programme Russia's own military-industrial complex had begun in response to the SDI. In effect, the Stalinist bourgeoisie conceded the Cold War.
But opening up to the west meant exposing the USSR's already weak economy to the deepening global economic crisis, while reforms, if carried too far, would threaten the loss of its status as a world power, along with its eastern European empire, the break-up of the USSR itself along national and ethnic lines. and the loss of the power and privileges of the Stalinist ruling faction – which of course is exactly what eventually happened in 1989-91.
The ‘reformist’ policy pursued by the Gorbachev from 1985 was deliberately intended to steer a ‘centrist’ course to avoid this outcome, but the depth of the economic crisis in the USSR and the decomposition of the regime - which was well advanced by the middle of the decade - made this impossible.
References
[1] In the case of Poland, which threatened to default on over $25 billion in loans, negotiations with western banks and governments formed an essential part of the strategy of the world bourgeoisie to isolate and defeat the mass strikes; clearly one of the conditions for western help was the restoration of ‘order’.
[2] Taken from Adam Fabry, “End of the liberal dream: Hungary since 1989”, International Socialism 2:124, 2009.
Main sources
Gareth Dale, A short autumn of utopia: The East German revolution of 1989”, International Socialism 2:124, Autumn 2009.
Adam Fabry, “End of the liberal dream: Hungary since 1989”, International Socialism 2:124, 2009.
Chris Harman, “The Storm Breaks: The Crisis in the Eastern Bloc”, International Socialism 2:46, Spring 1990.
“The crisis of Comecon”, Revolutionary Perspectives no. 7, 1977.
“The capitalist crisis in the eastern bloc”, International Review no. 23, 1980.
“The class struggle in Eastern Europe”, International Review nos. 27,28, 29, 1981-2.
“World economic crisis: After the East, the West”, International Review no. 60, 1990.
“Theses on the economic and political crisis in the eastern countries”, International Review no. 60, 1990.
“Collapse of the USSR: Discussion on State Capitalism and lmperialism”, Communist Review no. 10, 1992.