Moscow Gangsters

Rick Solomon


Boris Kagarlitsky talks to Rick Simon about the drive towards privatisation in the Soviet Union. This interview was conducted before the failed coup and its aftermath, but most of its analysis of the dynamics of privatisation and economic change are if anything more pertinent now that these processes have been speeded up.

Rick Simon: In the past year there seems to have been a fundamental change of course in the Soviet leadership from the notion of a perestroika of Soviet economy to one of the reintroduction of capitalism. Do you think this is the case?

Boris Kagarlitsky: I don’t think there has been any really dramatic change. The Soviet leadership don’t see it this way but as a radicalisation of their course and of drawing logical conclusions from the choices they make earlier. This it how they present it to the public and I really think that it is the case. In reality, the leadership wanted the Soviet economy, from the very beginning, to be more integrated into the world economy and the Soviet ruling elite to become a more respectable and legitimate part of the world’s ruling elite.

By adopting this approach they have had to think of the consequences and the price they have to pay is to drop socialism not only objectively, so to speak, but also at an ideological level. This is not so difficult for them because, in reality, the Soviet economy never was socialist and it was always controlled by the ruling elite. So now it is only logical that the ruling elite is trying to formally privatise the state economy, which it earlier controlled informally. It is just an attempt to legistimise and stabilise the existing system of privilege and social differentiation.

Rick Simon: We know that the ruling elite has more than one programme. Could you outline the differences between them?

Boris Kagarlitsky: The differences are minimal. The differences are always stressed by the different groups, or should I say gangs, competing for power in Moscow. They use the existing differences within their programmatic texts as an explanation of their differences. In reality, that doesn’t explain anything they are trying to get more personal power and it’s just a power struggle between different groups within the elite. Of course, the Shatalin is more extreme and the Ryzhkov programme is more moderate. In that sense the Shatalin programme looks more logical and more self–sufficient. But, in both cases it is absolutely clear that such a programme cannot be realised without mass repression and probably starvation.

Rick Simon: Do Ryzhkov’s and Shatalin’s programmes represent the interests of different sections of different sections of the bureaucracy?

Boris Kagarlitsky: Yes. The Ryzhkov group has some support within the state bureaucracy and among industrial managers, who do not want privatisation to go ahead so fast. In some ways it represents sections of the elite that are engaged in some sort of constructive work, at least doing something for the country of course, from their own perspective. The Shatalin group is getting support from the new power elite which has come into the Soviets and mostly from ex–Party and Komsomol functionaries who are just privatising Party and Komsomol property and are preparing to buy state property. So, in reality, the Shatalin group is supported by more parasitic layers of the elite but differences is really minimal.

RS: How does Yeltsin’s programme compare with Shatalin’s?

BK: Yeltsin’s programme is Shatalin’s programme.

RS: They are identical?

BK: Yes. Yeltsin doesn’t have a programme of his own.

RS: Could you briefly outline what Shatalin’s programme involves?

BK: Shatalin’s programme is mostly about cutting subsidies, trying to control wages while not controlling prices from next January, closing down inefficient enterprises and selling what remains to private owners, private shareholders, who are mainly going to be the bureaucrats themselves. This is quite openly discussed.

Abolishing subsidies and dropping support to loss–making enterprises actually means destroying the best enterprises in the Soviet economy. One of the interesting paradoxes of the Soviet economy is that advanced technology enterprises are mostly loss–making, while the enterprises with very low technology, working with shovels so to speak, which have very low wages and do not need much investment are more profitable. So this about dropping the most technologically advanced sectors of the Soviet economy.

Technologically advanced sectors of the economy need additional investment to continue their modernisation and they are just caught in the trap of having begun modernisation but not being able to finish it. And that will be the position of most of the best enterprises in the Soviet Union because we have just begun the process of modernisation. So it means just stopping the modernisation of the Soviet economy and destroying the most important sectors for the future.

RS: So all future investment will have to come from private shareholders?

BK: Exactly, and private shareholders are not interested in investing. So it’s just robbery and a manifestation of the complete irresponsibility and social egoism of the ruling elite a sort of “apres moi, le deluge.&8221;

RS: What is the response of workers and trade unions to these programmes?

BK: It is interesting that both the official trade unions and the most of the newly–formed independent trade unions are equally supportive of the austerity programme and are going to co–operate in breaking strikes and so on. The new union never became really strong and even Sotsprof (a left–wing union) has been gradually hijacked by the liberals including even technically buying the union executives paying them and giving them subsidies for accepting certain political lines.
On the other hand Sotsprof is moving to the right while the oldest of the independent unions, SMOT (The Inter–Professional Association of Workers), is suddenly taking a very radical, left–wing stance. Their last bulletin said that they have to fight against the new capital and to resist the capitalist transformation of the bureaucratic economy, but SMOT is still very weak.

RS: Wasn’t SMOT originally associated more with NTS (a right–wing emigre organisation)?

BK: That’s right, some of their people did co–operate with NTS, but things are changing so fast that people from Sotsprof are talking about supporting the government austerity plan while SMOT people are suddenly beginning to speak in a class–conscious way talking about class struggle and the resistance of the workers to the coming of corrupt capitalists and so on. It shows how unstable the situation is.
Of course, in Sotsprof there are left–wing people and there are Socialist Party members. The new leadership is now trying to purge them but if they do that they will purge almost all of the workers out of the union but that is still a possibility.

RS: So the more bureaucratic elements of the unions are supporting austerity programme while the working class base is opposed.

BK: Absolutely. The same thing is happening with the official trade unions which are supporting the austerity programme just because they are the official trade unions. In both cases the unions are incapable of resisting the programme. There is a discussion taking place that probably we either have to launch new unions, incorporating some elements of Sotsprof and SMOT and also some people from the official trade unions who really want to be in a union so creating a new confederation of unions.
The other possibility is to launch the workers councils at the enterprise level, uniting people from different unions who really want to defend workers’ rights. Both things will probably be worked simultaneously.

RS: Presumably the situation of workers’ opposition at the base to the austerity programme cannot hold for very long.

BK: Well, then the alternative is repression to break the strikes. That is what is planned. There is a lot of discussion in the Moscow Soviet about having some form of emergency rule.

RS: But how keen would the military be to implement some form of market reform?

BK: That’s just not clear.

RS: They would seem to have more interest in the maintenance of a nationalised economy.

BK: Unfortunately, there are some layers in the armies especially among the officers, who are in favour of some sort of immediate solution. Paradoxically, it is not among the generals where this argument is appreciated but among the officers, who expect promotion with a new role for the army.

RS: How do the economic reforms relate to the Republic’s struggle for greater autonomy?

BK: Nobody knows. Each republic is going to have its own programme of marketisation so they will probably differ. The Russian programme is taken as the basic norm for everybody.

RS: Will this lead to the further disintegration of the Soviet Union?

BK: Disintegration is already taking place. On the other hand, the funniest thing is that, while politically disintegrating, the Union still remains as a single economic unit. After their first attempts to break their economic links with Russia, even the Baltic republics realised that the only possible market for their goods is Russia and there is no chance for them to get into the Western markets. Even the attempts to establish local currencies are not developing very fast. They haven’t dropped the idea but, on the other hand, they are being very cautious.

RS: What alternatives are Soviet socialists arguing for?

BK: We are arguing first of all for the direct control of enterprises by the labour collectives. Then we say that we must encourage private enterprise but without privatising the state enterprises. So if people want to start private enterprises they must start new enterprises, creating new jobs and new products. That must be encouraged but not at the expense of the public sector.
In reality, the position of the Shatalin group is the exact opposite. They are discouraging entrepreneurs just cannot get any credit it is quite clear that all the money will go into the privatisation schemes.
Thirdly, we need, not the abolition of state investment, but its concentration in a few key priority branches like modernising the technology of advanced enterprises, building roads, developing modern communication systems and generally developing the infrastructure, so having something like Roosevelt’s ‘New Deal’ but a left–wing version.

This article appeared in The Connexion Digest #54, February 1992.
The article originally appeared in Catalyst: Magazine of the Independent Left. Boris Kagarlitsky is a member of the Moscow Soviet and leading member of the newly formed Socialist Party. Rick Simon translated Kagarlitsky’s most recent book, Farewell to Perestroika. Subscriptions are œ from Catalyst, 25 Horsell Road, London N5 1X1, United Kingdom.

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