Was Gorbachev Mistaken in Trying to Carry Out Economic and Political Reforms Simultaneously?

“Formulating the long term and fundamental tasks, the Central Committee has been consistently guided by Marxism – Leninism, the truly scientific theory of social development…It derives its vitality from its everlasting youthfulness, its constant capacity for development…” (M. Gorbachev, Political Report of the CPSU Central Committee to the 27th Party Congress, Novosti Press Agency, 1986, p. 7) These words were not written in the revolutionary fervour of 1917, by young and hopeful Communists anticipating the construction of a new and just society, but in 1986, for an address to the 27th Communist party Congress.

In this address, Mikhail Gorbachev attempted to persuade the leaders of the Soviet Union to gain a new vitality, to “accelerate the socio – economic development of our society.” (ibid p. 7) By no means was Gorbachev looking to destroy the Communist system. Merely five years later however, in December 1991, it collapsed entirely and the USSR ceased to exist. How could have a reformist programme, which was sincere, seemingly realistic, and backed by such optimistic charisma and intelligent leadership have failed so dramatically? Was it the programme itself, its implementation or rather more systemic aspects that were to blame for the failure of Gorbachev’s reforms? Did the failure stem from a crucial misunderstanding of socio – economic and political development? Was it from trying to do too much or from doing too little?

Gorbachev’s address to the 27th Party Congress in 1986 made many references to his continuing dedication to the ideals of Marxism – Leninism, but also displays a frank understanding of the political, social and economic realities of the time. “The modern world is complicated, diverse and dynamic, and shot through with contending tendencies and contradictions.” (ibid p. 9) Although he still speaks of “…a struggle that is inevitable so long as exploitation and exploiting classes exist,” diplomacy rather than confrontation was to represent the new way for the USSR. In foreign relations, as in internal affairs Gorbachev sought a new path characterised by moderation and pragmatism rather than strict dogma.

In the ‘political’ sphere, Gorbachev’s emphasis was on the need for democracy – the embodiment of his criticism of Khrushchev. This call however was thoroughly framed within a socialist picture: “…when we say that socialism great potential is not being used to the full in our country, we also mean that the acceleration of society’s development is inconceivable and impossible without a further development of all the aspects and manifestations of socialist democracy.” (ibid p. 69) Gorbachev saw democracy, and the ability of working class people to have in say in their government, as the incentive needed for people to undertake responsibility for their actions. Inherent in this aspect of Gorbachev’s manifesto was also a call for de – centralisation, a reassertion of the importance of local Soviets, which had provided the thrust for the revolution in 1917. The Soviets were now to accommodate worker’s complaints and served an economic purpose in allocating funds and co-ordinating the service sector on a more localised basis.

The key phrase that encapsulated many of Gorbachev’s ideas on political reform was of “people’s socialist self – government.” (ibid p.69) The iron law of Moscow dictat, totally unresponsive to the needs of the population, would be replaced by sympathetic federal administration which would command legitimate respect and provide initiative. Democracy was seen as a moral and legal necessity, and “a major lever for strengthening socialist legality.” (ibid p.77) True democracy, of course, includes freedom of speech, an issue also outlined by Gorbachev. “Broader publicity is a matter of principle to us. It is a political issue. Without publicity there is not, nor can there be, democracy…” (ibid p.76) He saw this as not a fundamental departure from the established system, but a reformation of its most basic principals: “Communists want the truth, always and under all circumstances.” (ibid p. 76) Rachel Walker though is cynical of the feasibility of this half – way arrangement, “In short, Gorbachev’s solution was to try to marry two different and rather incompatible political traditions, the Soviet and the liberal democratic…” (R. Walker, Six Years that shook the World, Manchester University Press, 1993, p.121)

Gorbachev’s economic policies were also contained within the established status quo of basic ideals in the Soviet Union. Its economic problems, and they were numerous and wide – ranging, were acknowledged by Gorbachev, in contrast to his predecessors. He considered quite rightly that the Soviet economy in 1985 was at a point of pre – crisis, but the problems were notably blamed upon the fault of individuals and their negligency. There was no general criticism of the command economy, and the state bureaucracy which stagnated much of the Soviet Union’s economic and social development was blamed on Stalin’s and Breznhev’s mismanagement. There was no belief in a more systemic root of the problems at this stage.

Gorbachev promised significant improvements with the economy under his leadership: “By the end of this century we intend to increase the national income nearly twofold while doubling the production potential.” (M. Gorbachev, Political Report of the CPSU Central Committee to the 27th Party Congress, Novosti Press Agency, 1986, p. 32) Changing the patterns of investment, diverting money from the vast military for example towards the consumer sector, and improving efficiency were to be the themes of Gorbachev’s program. He continually emphasised also the need for the Soviet Union to develop technologically and scientifically and in fact strangely saw these advances the bedrock for socio – economic change. “The way out, as we see it, lies in thorough modernisation of the national economy on the basis of the latest scientific and technological advances…” (ibid p.36) Collective ownership too (or more strictly speaking, state ownership) was to remain intact, but with more direct control by the people who worked in these industries.

Here was a policy where democratic principles were applied to the economic sphere: “You cannot be a master of your country if you are not a real master in your factory or collective farm, in your shop or livestock farm.” (ibid p. 72) This idea is representative of, in my opinion, the crux of Gorbachev’s basic reforming philosophy, and embodies the fundamental misunderstanding wherein the crux of his failure lies: although Gorbachev may have reformed many of the imperfections of the system, his continuing insistence of working within the boundaries which already existed prohibited real development. The use of politics to attempt to improve the economy, the tactic which characterised much of the perestroika programme, was flawed from the beginning, Gorbachev displaying a naivet� which many observers have noted as crucial.

Economic policy in Gorbachev’s Soviet Union did however progress through a number of marked stages as circumstances changed. The first stage was referred to as Uskoreniye, or acceleration. Walker calls this period merely a “prelude to reform,” and involved measures such as re – directing investment, a modest increase in the private sector and moral campaigns such as improved discipline at work (which Andropov had begun) and combating alcoholism, a major problem in the USSR. The idea was to drive the USSR away from the inertia which had set in since Khurushchev had left office in 1964. This however intrinsically involved an upset in the comfortable familiarity which today many Russians long for, as necessary as the upset may have been. There was a degree of improvement in this period, growth of around 2 – 3%, but nowhere near the rate of 45% his promises I referred to earlier required. The prohibition of alcohol had a major effect in reducing state revenue however, and falling world-wide oil prices too played a significant part, meaning the increased investment in agriculture and other failing sectors could not be maintained.

The second phase of economic reform then had to drive deeper at the root of the USSR’s problems. These more fundamental changes intrinsically required a simultaneous political dimension if they were to succeed. Political and economic reform at this stage were not only both mutually necessary and beneficial, but practically inseparable. Foreign trade began to be introduced on a much wider scale from early 1987, a move that would have been impossible without Gorbachev’s skill in foreign relations and his shrewd diplomacy. His 1984 visit to Britain for example had greatly impressed Prime Minister Thatcher. “Someone we can do business with,” was her estimation, all the more striking for her and her government’s particularly unsympathetic view of the Soviet Union and its ideology. This groundwork was essential for The USSR’s gradual integration into the capitalist world economy.

The Law on State Enterprises, which came into operation in January 1988 greatly reduced the power of state planners and allowed company directors to tailor their production, via the discipline of the marketplace, to the demands of consumers. Profit could be controlled at the boss’s discretion, a crucial shift from the downward flow of directives and output targets from Moscow that had characterised Soviet business practise previously. Nevertheless, the system was still inherently ‘Soviet,’ albeit in a slightly modified way. The ‘commanding heights’ of the economy, to use Lenin’s phrase, were still state controlled, as were elements of business such as the hiring and firing of staff. Gosplan, the body which developed the plans and directives for the economy, still existed in 1987 and was continuing to develop plans for the economy. “These plans, however, were to be indicative rather than directive, that is to say, a somewhat flexible target, seeking to reflect both industrial and consumer demands.” (M. Crouch, Revolution and Evolution, Philip Allen, 1989)

This was an attempt at the ‘third way,’ in-between capitalism and socialism. As realistic and workable however as it seemed on paper, from the 1st of January 1988, the performance of the Soviet economy plummeted to new lows. Inexperienced directors, over – ambitious promises (Gorbachev had intended 60% of business to change over to his new system), spiralling prices thanks to monopoly domination and rapidly increasing unemployment (virtually unknown in the old Soviet Union) created an atmosphere of confusion and dislocation reflected in high inflation and stunted economic growth. The utter failure of this period was acutely illustrated by the ridiculous anachronism of ration cards and serious food shortages in 1990 – 91. The economist Anders Aslund quotes from a Russian study of foodstuff availability, which illustrated that “…the general availability of basic foodstuffs fell from 90% in 1983 to 22% in 1989 and to 11% in the middle of 1990.” (A. Aslund, Gorbachev’s Struggle for Economic Reform, Pinter, 1991, p. 183) The budget deficit was growing at speed and the USSR was fast approaching bankruptcy.

The absolute failure then of this third way in the Soviet Union, stemming from internal contradictions in the economic system and its radical and unprecedented departure from the norms of the Soviet experience thus far, encouraged the third and ultimately final step away from Communism. Even as early as June 1988, government economist Leonid Abalkin considered that “a radical breakthrough in the economy has not occurred and [the economy] has not departed from its state of stagnation.” (Pravda, 30th June 1988, quoted ibid, p. 203) It took another two years however until Gorbachev accepted this failure, formally announced at the 28th Party Congress in June 1990.

A group of radical (i.e. liberal / capitalist) economists, chaired by Shatalin and adopting his name, was assembled to prepare a plan for the Soviet Union to become a market driven liberal democratic society. This is considered by Aslund as the real turning point for Soviet economic policy. “…the USSR had never seen a reform programme that was as concrete, comprehensive or radical. The word socialism was not even used.” (ibid, p. 209) The 400 – day programme (known publicly as the 500 – day programme because it sounded better) which they produced included plans for a convertible rouble and a speedy push towards a capitalist economy. Conservatives (read old – style – Communists) had by August however successfully pushed for a watered down version of the programme, which involved state intervention in keeping prices artificially high in an attempt to reduce the USSR’s budget deficit. By 1992 however, when the economy was supposed to have improved, it was still in a dire state.

Boris Yelstin’s understanding of the problems encouraged lead him to argue for tighter political control while economic reform was taking place – the Shatalin programme would inherently involve a temporary (it was predicted) decline in living standards, something that Gorbachev in the new USSR of glasnost would have to answer for. Others too do not see the two elements as necessarily opposed. Peter Hauslohner postulates that “…a substantially more decentralised, deregulated and market – reliant economy…[does] not neccessarily mean a retreat from socialism, an outcome better described as revolution rather than reform.” (P. Hauslohner, Gorbachev’s Social Contract, in The Gorbachev Debate, Humanities Press International, 1989, p. 85)

As Archie Brown argues however, this is a flawed argument. ‘Socialism’ as understood in the Soviet Union however required an overhaul in political culture, it required an instinctive feel for freedom and democracy that demanded substantially more radical change. It was rather the entrenched old guard in the Soviet Union who held reforms back and stopped them from working effectively, or, in an essentially similar vein, that problems in the USSR were too systemic – it required political and economic overhaul if not a liberal revolution. Without Gorbachev’s democratisation of Soviet society, the conservatives in the party (who occupied the peak of the Communist political hierarchy and were therefore very powerful) may have crushed the reforms completely – I will discuss these reforms in the next section. A shift of power, from the government and bureaucracy to the people, was the necessary remedy – economic and political reforms had to go hand in hand if either was to succeed properly.

Gorbachev’s reforms of the Soviet Union’s political structure however did not, to begin with at least, represent a basic political turnaround in who controlled the USSR. He was of the view, in Walker’s characteristically sarcastic turn – of – phrase, that “…the Soviet system was basically sound. The problem was that people were not behaving as they were supposed to.” (R. Walker, Six Years that shook the World, Manchester University Press, 1993, p. 77) Political reforms, in fact, did not accompany economic ones until approximately 1988, despite Gorbachev’s earlier promises. The period between 1987 and 89 can be characterised as one of ‘revolution from above.’ Glasnost (openness) was the essential element in process of political reform, opening up opportunities for genuine criticism of the government and society. It did not entail however, an entirely tolerant Communist Party. Glasnost was to provide an incentive for people to work towards the Soviet ideal, “…but he intended that the whole process should still remain within limits set by the party and, in particular, by himself.” (ibid p. 136) The media silence in the USSR in 1986 concerning the Chernobyl nuclear disaster was demonstrative of the very gradual nature of the implementation of a culture of democracy and free speech.

As was hinted at in the way in Gorbachev became such a media personality both in the Soviet Union and in the West, the power of the leader was greatly increased with the creation of the post of executive President. Although this may have been in the name of democracy and reform, by reducing the power of the bureaucracy and the entrenched Soviet old guard, it was constitutive of a half – baked attempt at ‘modernisation’. It is notable that although Gorbachev may have done a great deal in turning the USSR towards popular democracy, he himself never stood for election. As with his economic reforms, there were inherent contradictions between elements of his political changes. The staid institutions of the Soviet Union, the monopoly of the Communist Party, its clumsy and extensive bureaucracy clashed with a freedom of expression that unleashed years of repressed angst against the culture of secrecy, suspicion and ‘doublethink’ that had castrated society for decades.

“The media – newspapers, television, journals – which had always painted a rosy picture of society, began to fill up with horror stories about crime, corruption, disasters, prostitution, drug taking, poverty, rape, murder, hooliganism, appalling environmental pollution, the irresponsibility of state officials…” (ibid p. 137 – 8)

Gorbachev’s naive understanding of liberal societies, no doubt influenced by the culture of homogengy and centralised control under which he had grown up, led him to believe he could still control the reform process even after granting the people the freedom to disseminate ideas and organise outside of the gaze of the party. Once glasnost was in place, although for example the Law on Press Freedom was not introduced until June 1990, the ‘revolution from below’ had begun. Continuing desires of Gorbachev’s to protect elements of the old system – the elections of 1989 for example which were far from democratic – only served to frustrate public opinion further. He could not succeed in pursuing intrinsically opposed ideas simultaneously.

I have attempted to argue throughout this essay that the problem was not that Gorbachev tried to carry out political and economic reforms simultaneously, but that many areas within his political and economic polices were simply not compatible. The command economy could not accommodate democracy, and the social democratic model in politics would not function without an overhaul in the thinking behind the economy. Gorbachev was in many ways a product of the Marxist tradition – he did not believe that many elements of the Soviet system were incompatible with the ‘best practise’ of the liberal nations; freedom of speech, the rule of law etc. He nevertheless failed to adhere to Marx’s most basic assertion the humans will behave only as their circumstances force them to.

“It is not consciousness that determines life, but life that determines consciousness.” (K. Marx, Capital, The Modern Library, 1932, p. 10) Russian political culture would not be changed merely by an insistence from Gorbachev for increased responsibility; it required an economic, not political or moral incentive. Gorbachev succeeded in many areas, or at least laid very substantial groundwork to an eventual solution to the USSR’s problems, but he failed in a fundamental sense because of his attempt to introduce aspects totally alien to the Soviet experience, into that very society which itself continued. I am not trying to argue the contradiction between democracy and socialism; capitalism has as many undemocratic elements, but the country that Gorbachev attempted to reform was very much a ‘Soviet’ one, undemocratic, oligarchic, inefficient and ultimately unmemorable.