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Critique Notes 67

Published: 29 May 2014

The Critique Conference

Critique held one of its more successful conferences on 11–12 April 2014 on the subject of the Nature and Causes of the First World War.1 The interpretation of the subject was taken as deeply as possible. Whatever the accidental aspects of its timing and immediate form, the war was widely anticipated most notably by those attending the meeting of the Second International, in Stuttgart, in August 1907, where Lenin and Luxemburg successfully moved their motion on war. It stated, inter alia:

These ideas have remained critical to many speeches, articles and books since that time and were discussed throughout the conference itself.

Speakers discussed the nature of crisis from the time of the First World War to the present. On the first day, Bob Brenner discussed the present crisis, followed by Hillel Ticktin, who sought to link the nature of the decline of capitalism from 1870 to crisis and war, touching on the present, debating somewhat with Bob Brenner. That was followed by a debate around the falling rate of profit in which Guglielmo Carchedi and Michael Roberts ably defended their interpretation of the falling rate of profit as the primary cause of crises, and Hillel Ticktin and others presented their more critical viewpoint. On the second day Michael Cox presented a critical account of the contemporary orthodox (bourgeois) interpretations of the causes and course of the First World War, while Alex Marshall gave us his interpretation of Lenin’s book on imperialism, its origins and legacy. Mike Macnair produced a very useful historical description of the views of a section of left German Social Democrats, including Parvus (Alexander Helphand), on political economy in the period before and during the First World War. Thereafter the conference switched to links with more contemporary themes. Suzi Weissman described the role and career of the Stalinist spy, Zborowski, ‘Etienne’; Yassmine Mather spoke about how the Arab Spring encouraged us to look back at the fall of the Ottoman Empire; and Savas Matsas related the present crisis to the situation in the Ukraine.

The Conflict over The Ukraine

Crisis and Failed Transition

The situation in the Ukraine is part of the global crisis in terms of both the current depression and the failure of the so-called transition from Stalinism, which affects the countries of the former Soviet Union and Eastern Europe even if in different ways. For the countries involved the two political economic changes are merging into one. In so doing, they have become part of a global crisis of capitalism.

Neil Buckley and Roman Olearchyk in their article on the Ukraine in the Financial Times in February refer to a mishandled and stalled transition, which means that those in charge of the Ukraine have to start from scratch.3 If anything, they understate the reality and the problems. As implied in their statement, attempts have been made to bring the Ukraine into a capitalist reality, which have failed. The problem is not that the leaders, Presidents Kravchuk, Kuchma, Yushchenko and Yanukovich, were either stupid or corrupt, as may be alleged. Indeed the charge of corruption is now commonly thrown at many regimes in the world in order to explain their problems or crises.

Corruption has existed for thousands of years in class-based societies in the sense that bureaucrats have made decisions based on their personal interests rather than those of the society or the parts of the society for which they are responsible. The more bureaucratic the society, the greater the possibility of corruption, assuming the existence of money or a market/proto-market. Where there is no market, and the ostensible monetary unit does not play the role of money as the universal equivalent, the placing of personal interest above that of the particular collectivity, such as the ruling group, is more complex. In the former Soviet Union inter-personal favours, blat, played a crucial role in the allocation of goods and services but for most of the period it remained in a reciprocal person to person form. As no one thought through the consequences of moving to a more market-type economy, it was not realised that, without the development and extension of a modernised industry to provide both the employment and high income needed, blat would be replaced by the extensive use of bribery. Corruption would become an integral part of the new system, such as it is. Corruption is part of all capitalist societies. In developed capitalist societies bureaucrats and politicians become lobbyists and advisors for large and small companies, given their acquired contacts and knowledge. The distortion of both the economic and political processes is well known even if downplayed. The difference from former Soviet economies is both the extent of the corruption and the high level of the resentment that it engenders because of both its conspicuousness and the contrast with the low standard of living of the majority, however skilled.

The Nature of the Economic Failure

Corruption is a result not a cause of the present malaise, even if it contributes to discontent. The fundamental cause of the failure lies in the inability to change the nature of the political economy away from the old Stalinist forms of control to modern capitalist ones. The industry or institution under Stalinism was based on atomised workers who were effectively allowed to work at their own rate in their own way, in so far as that was possible, as a trade-off for their lack of control and low wages. The need to switch to what is regarded as efficient working amounts to working at a more pressurised pace with more attention to detail. The result has to be one in which the product is not defective and is reliable, not liable to break down in a short time. Work, whether white collar or blue-collar, is generally mind-bogglingly boring, unless highly skilled. Even then much highly skilled work, such as research work, can be stressful and boring. The compensation can lie in the comradeship of the workplace, the control from below through the collectivity of a functioning union, in promotion, and in the rewards. The problem is that these are not present in the transition. Pay remains very low, and control is entirely from above. The compensation in ceding a limited control to the individual worker cannot be allowed in a market-based system, which is part of a global marketplace. Workers in the third world are not content with their lot but the very high level of unemployment and the need to earn an albeit low subsistence wage force them to work. The situation is not stable in third world countries and indeed in the first world either but the market still rules for the time being.

The problem for the former Stalinist countries is how to get to the situation of developed countries where discontent can be controlled through unemployment, promotion, compliant unions and political parties. Thus far the shift to the market has made things worse economically, even though direct political repression of the Stalinist kind has been removed. For those parts of the former Soviet Union, where there are supplies of raw materials such as oil, gas, metals, particularly precious metals such as gold and platinum, furs, timber, etc., the situation is less pressing. In Russia the collapse in standard of living following the end of the Soviet Union was brought to an end with the rise in commodity prices and the use of the economic surplus so generated for the public purse. The same, however, was not true of the Ukraine, although it did benefit from the export of steel.

Unfortunately, the result of the process described is disastrous. The Ukraine has the lowest growth in its GDP of the former Stalinist countries over the period since the end of the USSR. Labour productivity in the former Stalinist countries is generally low, making their industrial products globally uncompetitive. The Eastern Ukraine is industrially linked to Russia, making parts for its industries. The latter are not globally competitive either. Although Putin has talked of investing in industry at various times, including the present, Russian industry of the earlier Soviet vintage remains a rust belt outside of military industry, while the rest is limited (discussed below). Even then in the case of both Russia and the Ukraine, the military sector has been drastically scaled back from Soviet times.

One has also to note that the events in the Ukraine did come from below, because of the general discontent which exists in the society (as of course in Russia). It was hijacked by the existing organisations of course, but that does not alter the fact that the population wants a higher standard of living and better opportunities in life. As everywhere else, they demand a measure of equality, rather than what is called corruption, but is, in fact, part of the failure of the transition.

The failure of the Russian and Ukrainian economies does not just rest on their lack of competitiveness, but the fact that, in an age of monopoly firms, global monopoly capitalist industry will not let them in. Generally, the enterprises established by Western firms are consumer goods-type firms like IKEA, financial firms or assembly industries. Even if one takes the shining example of Skoda in the Czech Republic, it is 70 per cent owned by Volkswagen and shares its parts with the VW itself. Indeed, the example of the assembly industry is that of automobile companies like General Motors and Volkswagen that have set up plants in Russia and in the Ukraine. If they had wanted to invest in heavy industry/engineering industries they have had the opportunity over two decades to do so. Obviously, Boeing or Airbus are not going to set up another plant in the former Stalinist countries, nor are General Electric. Given the dominance of Finance Capital, the Western firms would want to make quick profits, and not invest over the long term to rebuild Russian or Ukrainian industry.

The West, the IMF and its Aims

The conditions of the International Monetary Fund (IMF) that have applied, in general, to their loans to the former Soviet countries amount to an attempt to establish capitalist-type incentives within the economy and society. In the Soviet Union, rents, utilities, transport, education and health were either free or very cheap, and official taxes very low (implicit taxes are something else). In a sense, the IMF officials are only doing their job. The IMF wants to fully establish money as the universal equivalent and so an effective reward system and the basis for capital in order to establish what they see as a fully functioning capitalist system. That requires a substantial reserve army of labour, inequality of incomes among workers and high salaries for managers, with goods and services sold at cost plus profits. However, it says a lot that former Soviet countries have not achieved this so far. The Ukrainian PM did not rejoice at the IMF terms—he made it clear that he did not like them but felt he had no choice.4

The Political Situation

The upshot of this discussion is that the Ukrainian population is being set up to endure 10–20 years of misery in order to establish a capitalist form which, even in the best case, cannot compete on the world market. This situation has been clear for some time. Attempts by successive governments in the Ukraine to implement the IMF-type reforms which would inevitably lead to a declining standard of living have been jettisoned after protests. As a result, the Ukraine has a chequered history with the IMF.5 Given the need to get electoral support, governing parties have refused to implement the IMF conditions.6 The IMF demands include a reduced deficit, higher energy prices and a declining exchange rate.7 Assuming that the Ukrainian ruling group manages to pull together through the current crisis, it will need to find a way of persuading the population to accept the punishment they will suffer. They already have far-right ministers in critical ministries—security, army and communications— and it does not take much imagination to see that a dictatorial form, however cloaked, is on the cards. This is not to say that the Ukrainian government is itself fascist.

However, it is not possible to disregard the role of Pravyi Sektor and Svoboda, as if anti-Semitism and support for a nationalist grouping which dealt with the Nazis is of no importance. Putin did score a point when he referred to the silence of Israel in regard to these manifestations of anti-Semitism. It is clear that there is no pogrom in sight, but none of the groups victimised by the Nazis can sleep easy in Ukraine today. The West as a whole is tarnished by its self-evident need to accept the help of the far right in order to establish control over the population of the Ukraine. On the one hand, the population itself is very worried by what has happened and what might happen, and on the other the current governing group is being forced to offer a very problematic future. The big advantage of the far right is their internal discipline and their willingness to use force and fear as modes of action. Their nationalist appeal, combined with the use of centuries-old anti-Semitism, provides a convenient mask for what is being imposed. At the same time, the dominant party of the right, that of Tymoshenko, can appear as the sensible and moderate nationalists, who have vetoed the downgrading of the Russian language and opposed anti-Semitism.

The Ukrainians have no monopoly on anti-Semitism. The revived Cossacks have not been backward in that sphere, starting immediately after the end of the USSR.8 The issue, in Russia, has been more general in that the Stalinist system was itself anti-Semitic from its inception so that both the present regimes, in the Ukraine and Russia, have to be judged in that context, not simply in terms of Ukrainian nationalism.

The Russian Situation

No one on the left can support Putin and the ruling group in Russia, on the other hand. Working class activists are victimised by being beaten up or even killed. The imprisonment of Pussy Riot for their protests was only one of the forms of state repression now current. Various people have pointed to the changing economic situation in Russia as the reason for the political shift to still greater repression. Matters are not made easier by the way the opposition demonstrations have been controlled by the right, which on one occasion at least refused to allow the left to join in.

It is precisely the failure of the transition in Russia, and not just the Ukraine, that forces Putin both towards increased repression and also to ever higher levels of Russian nationalism. Putin himself is identified more with the protectionist sector of the Russian elite, which wants to revive and develop Russian industry behind the necessary tariff barriers and with the required subsidies. Historically, such political stances have been associated with a nationalist programme. While the Putin regime has been explicit about its selection of strategic industries requiring to be held in Russian hands, and something like 62 per cent of the gross domestic product comes from government controlled entities, there has been no clarity as to which way it will go from here. It is clear that the elite is divided between those who want privatisation and those who want to use the state, and it is also clear that the division has existed throughout the last two decades. The descendants of the old Stalinist apparatus continue to play a crucial role both in the economy and in politics. The problem here is that Russian industry remains uncompetitive, while Anglo-American capital remains globally dominant. As a result, attempts to complete the transition are doomed unless the elite wants to subordinate itself to US finance capital. Logically, a section clearly does want to do so, but that leaves little scope for the remainder of the elite, most particularly that associated with the bureaucracy. Putin, himself, has played both sections of the elite, with a clear bias towards the apparatus. The issue is not resolved and Western Capital is keen to force the question. This is not an issue where the left can take sides since we are talking of two sections of a ruling— exploiting—group. There is always a possibility that the regime will tilt further towards state control in order to stabilise its political economy.

The IMF reports demand more privatisation and the question is whether such pressure will not ultimately be successful. Capital has been leaving Russia, on and off, ever since the end of the USSR, as the rich take their money out of the country. Some of it has been re-imported under the guise of loans or using other forms that ensure easy return to the West. Much emphasis has been placed on the loss of money from Russia in the present period. Some US$64 billion left Russia in the first quarter of 2014 alone,9 and there are predictions of the outflow reaching US$100–150 billion in 2015, made by a former economy minister under Yeltsin, Yassin. He said that this was the result when investors and business do not trust the political system.10 He then went on to say that it has to change.11 There is a clear possibility, given the view just quoted of the liberal wing of the regime, that the regime will prefer to do a deal with the West and go for further privatisation and full incorporation into the world market and so full subordination to US finance capital. However, if that does not happen and capital flight combined with sanctions continues, it will drive Putin or his successor to introduce strict exchange control and the use of various forms of economic and political coercion to retrieve as much as possible from the various havens in the West. Russian nationalism is the ideology for the implementation of this policy. In principle, it would be popular in that it would control the oligarchs and possibly even redistribute income, while driving towards genuine full employment. This would be similar to the Chinese model, and like the Chinese economy, it would retain a subordinated market. It would have the advantage of avoiding the worst of the problems outlined as the future of the Ukraine.

The point of showing the possible evolution of the Russian regime is to indicate that it remains undetermined and historically unstable but with a drive towards nationalism as a mode of control. The liberal alternative, while theoretically possible, has already been tried and has failed. That is why Putin is in power. It is a wonder that these liberal economists have learned nothing from their earlier failure, which will be repeated if they come to power under the influence of the West and internal failure.

What Lies Behind the Conflict Between Western Capitalism and the Ruling Group in Russia?

The above argument has an implicit corollary in that Western policy continues to be one in which it pressurises all regimes towards private enterprise and the contemporary form of finance capital. Ruling class ideologists in the West portray all regimes that have not taken this road in a negative light. However much the left itself might excoriate these same regimes, the reasons are very different. As far as one can see, US policy towards Russia and China is one in which it is trying to be both formally friendly but also highly critical to the point where it finances and assists oppositions both legal and illegal. Historically, the USA has supported authoritarian regimes of the worst kind, most particularly in South America but also elsewhere. The authoritarian nature of Russia and China is not in question but the antagonism towards Russia remains constant. At first sight this is not consistent. After all, Putin is a Christian with his own personal chapel and he rejects Marxism and the Soviet Union. He supports the market. Russia does not support the left. It persecutes militant socialists internally and is critical of anything on the left internationally. What then is the issue?

We have implied above that it is the question of the role of the state or central administration. It is also the relative independence of Russia and China from the imperial power, both politically and economically. Colonialism may have been phased out, but imperialism remains in its modern more complex form and that is the ultimate answer.

Since the negative attitude of the imperial hegemon is shown in a thousand ways, the Russian regime is placed in a position where it must defend itself. This is all the more the case because the USA has shown itself untrustworthy in relation to its allies. Saddam Hussein was supported by the USA in the 1980s and then attacked in the 1990s and overthrown in the Iraq War. Gaddafi gave up nuclear weapons and showed he was willing to co-operate with the West, but was overthrown and killed. Both China and Russia worry that they could also be put on the list of regimes that are expendable. Inevitably, they have reached the conclusion that they cannot support further undermining of the formal independence of countries, however limited that might be.

Effectively, the Blair–Bush doctrine threw out the rights of nations to self- determination, as propounded originally by President Wilson during the First World War. By so doing, they destabilised the situation of national ruling classes and elites throughout the world. Inevitably those elites, national ruling classes, sought to shore up their defences through a variety of devices and forms. The possession of an atomic bomb then became the ultimate defence, even if it could not be delivered with any accuracy or at all. Russia, of course, has an arsenal of nuclear weapons, while the Ukraine gave them up. The latter decision showed a degree of naiveté that is hard to credit. However, the essential point is that the ruling class/elite in Russia, not just Putin, are not eager to be placed in a position where they are subordinate to the control of the Imperial power of the USA, the finance-capitalist hegemon. The shift of the Ukraine from being in the shadow of Russia, even if not under direct control, to becoming part of the alliances connected or controlled by the USA, does threaten their position.

When we consider the case of the annexation of the Crimea by Russia, it has to be seen in this context. It is Great Power politics even if Russia may not be such a great power itself. Looked at from the point of view of the left, or of the working class, it is not something over which to fight. Abstractly considered, the annexation of territory of another country has to be opposed. The referendum in the Crimea was not held under reasonable circumstances, and so cannot be taken seriously. The reason for the Russian action is a rational form of self-defence for the Russian ruling class, but socialists cannot support the defensive actions of the ruling class, especially when it is at the expense of another country. Relations between national sections of the ruling class have taken war-like forms over centuries; the aim of the working class is to abolish the ruling class and with it all wars, and annexations. It is equally rational for the Ukrainian ruling class or a section of it to seek succour in the arms of the West. It is a paradox that formerly Stalinist countries should become the global defenders of the right of nations to self-determination in this skewed way.

The Particular Tragedy of the Ukraine

The Ukraine and so the Ukrainian population is in a tragic situation from which the only solution is through socialism. The tragedy arises out of its history, in which its people were effectively colonised, subordinated and exploited by the Russian Tsarist system for centuries. Their liberation began with the Russian Revolution of 1917, where they were effectively conquered in the course of the civil war. The Bolsheviks, who had little support in the Ukraine in October 1917, took power and changed their policy under Rakovski when they realised after some time that they had to adopt a policy of Ukrainianisation, that is, undo the subordination to Russia both in culture and in the economy. The question of political independence was another issue but the matter was resolved by the Stalinist counter-revolution that led to a policy of Russianisation of the constituent parts of the USSR as a whole. The debates on the nature of the initial Bolshevik attempts have been irrelevant as a result. The disastrous famine of the early 1930s that led to millions dying, particularly in the Ukraine, remains a major issue, particularly for Ukrainian nationalists. The appalling Stalinist policy, in place until the end of the USSR, is enough reason to understand those who take a strong line on the independence of the Ukraine itself. One should note, however, that the deaths from the famine in Kazakhstan were a higher proportion of the population than in the Ukraine, and that the suffering of the peasants and workers of the Ukraine was not unique in the USSR. There is also an unfortunate centuries-old history of anti-Semitism. However, in regard to the latter, the nationalist movement that emerged on the fall of the Soviet Union did condemn it. The present revival of anti-Semitism is part of the continuing tragedy, reflecting the inability of the working class to put forward its own internationalist and humanitarian programme as part of its overall demands.

A Void in History

Unfortunately, the tragedy has the potential to become a disaster in the not too distant future. History knows of voids in the progress of humanity. When society went from feudalism to capitalism, there were parts of the world where the old system ceased to exist without the new coming into being, plunging the population into a political and economic void. We have already seen the utter confusion and mess which resulted after the Soviet Union ceased to exist. In effect, the people of the former Soviet Union are stilling living in that period. What makes everything more complicated is that the global power, the USA, is itself in decline and unable to manage a transition away from its direct domination without leaving disorder, confusion and a muddle, as is evident in the Middle East.

If we then look at the probable result of an independent Ukraine, helped by the West, it is hard to be optimistic. The world is in transition from capitalism, the old order is in decline and so its leading power leads that decline. The attempt to restore the market in the former Soviet Union countries has not succeeded until now and we might ask whether it can ever succeed. Unfortunately, the working class in both Russia and the Ukraine has not been able to act as a class in this situation. Effectively, the class has acted, albeit unconsciously, as a class, in helping to stall the transition, by refusing to accept the worsening conditions demanded of them.

Unfortunately, this leaves the unresolved set of social relations we see today, which in its worsening threatens to dissolve into ethnic war, as it did in former Yugoslavia, or into demands for independence of entities too limited to sustain a viable economy, without being supported externally. The transition from feudalism to capitalism involved wide-ranging wars, vicious anti-Semitism, the spread of plague and other fatal diseases, not to speak of famine. We need the re-assertion of the common humanity expressed in the international working class to prevent a repeat of that past catastrophe or a descent into the barbarism we saw during the interwar period.


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