Lessons of Theory and History

Against the Current, No. 94, September/October 2001

Barry Sheppard

THE COLLAPSE OF “really existing socialism” in the Soviet Union (USSR) and Eastern Europe a decade ago came as a shock to all tendencies in the workers movement and the political representatives of the capitalist class worldwide. None predicted such an outcome before 1989 — no one alive, that is. Why was this so?

To answer this question, it would be useful to review the differing views on the character of the USSR. Stalin and his heirs claimed that the USSR had achieved socialism in the 1930s and was a classless society. The regime claimed, “We have not yet, of course, complete communism, but we have already achieved socialism, that is, the lowest stage of communism.”(1)

For Marx, Engels and Lenin, socialism, or the lowest stage of communism, would be built on the basis of the technological achievements of capitalism. From that base, it would rapidly develop the means of production to raise the level of productivity of labor beyond that in the most advanced capitalist countries.

But the revolution had occurred in the most backward European capitalist country, Russia, and did not succeed in spreading to the advanced European countries. Isolated in a hostile capitalist world, the USSR, in spite of the major strides forward it made, was never able to reach anywhere near the level of labor productivity of the advanced capitalist countries.

Soviet products were inferior and could not compete on the world market. Under constant military threat, it was forced to devote a huge proportion of its production to its military. Throughout its existence, it was a regime of relative scarcity and therefore of inequality. Scarcity and inequality led to the creation of an economically privileged bureaucracy.

Shortly before the October Revolution of 1917, Lenin wrote The State and Revolution. Drawing upon Marx and Engels, Lenin wrote, in answer to opportunist socialists who rejected the Marxist idea of the withering away of the state as the transition to communism was made:

“The proletariat needs the state — this is repeated by all the opportunists. But they `forget’ to add that in the first place, according to Marx, the proletariat needs only a state which is withering away, i.e. a state so constituted that it begins to wither away immediately, and cannot but wither away.”

This norm of socialism certainly was never met in the USSR — the state mushroomed into a monstrosity, and showed not the slightest tendency to die away.

Lenin further explained that the “workers, after winning political power, will smash the old bureaucratic apparatus, shatter it to its very foundations, and raze it to the ground; they will replace it with a new one, consisting of the very same workers and other employees, against whose transformation into bureaucrats the measures will at once be taken which were specified in detail by Marx and Engels: (1) not only election, but also recall at any time; (2) pay not to exceed that of a workman; (3) immediate introduction of control and supervision by all, so that all may become `bureaucrats’ for a time and that therefore nobody may be able to become a `bureaucrat.’”(2)

The USSR moved in the opposite direction. What does the collapse of the USSR tell us about whether it was a socialist society?

First, the bureaucracy itself — what some call the nomenklatura — now believes that capitalism is superior to what it used to call “socialism.” Its members are desperately seeking to become capitalists as individuals.

Second, the ignominious nature of its collapse, the collapse from within without a shot being fired, is the clearest demonstration that the USSR had not achieved socialism, a system qualitatively superior to capitalism. If the USSR had actually achieved the stage of socialism, it could not and would not have collapsed before capitalism. An important conclusion is that the collapse of the USSR was not the collapse of socialism.

That leaves the ideas developed by a minority in the workers movement, those groups that originated in the Left Opposition in the USSR and in the Communist International, led by Leon Trotsky. These groups were expelled in the late 1920s. In this milieu there developed, especially after the Stalin-Hitler pact in 1939, three opposing theories of the USSR that led to sharply counterposed political positions.

One view was that the USSR was a form of state capitalism. In recent decades, probably the most important group holding this position internationally was the British Socialist Workers Party and its allied groupings in other countries, led by the late Tony Cliff.

Another theory was that Stalin’s USSR was a new form of class society unforeseen by Marx and his followers, which its proponents called “bureaucratic collectivism.” In this view, the bureaucracy was a new ruling class, which exploited the laboring people, the wage workers and the peasants, in a new way.

Those who held this viewpoint were strongest in the United States and, from the 1940s, were represented by the organization led by Max Shachtman, which took various names before it dissolved into the Socialist Party-Social Democratic Federation in the 1950s and rapidly moved to the right.

Many who held this view came to the conclusion that capitalism had to be supported as the lesser evil to bureaucratic collectivism — this underlay the support Shachtman and his supporters gave to Washington in the Vietnam War.

A left split from Shachtman, led by Hal Draper, rejected Shachtman’s rightward course. This current was perhaps the most important tribune for the theory of “bureaucratic collectivism” from the 1960s through the present. Today it is represented by one section of the U.S. socialist organization Solidarity.

The third theory was Leon Trotsky’s; the other two theories were developed in opposition to Trotsky’s theory. This view held that the USSR from Stalin’s time on was a highly contradictory society.

On the one hand, this society preserved in a distorted form the main social conquests of the 1917 Russian Revolution, including the nationalized and planned economy, the state control of foreign trade, and a currency independent of the capitalist currency market. On the other, the bureaucracy in the government, the Communist Party and the management of industry had taken all political rights from the workers and peasants.

The USSR was a “bureaucratically degenerated workers’ state.” That is, the Soviet Union remained a dictatorship of the proletariat — a regime between capitalism and socialism. The sharpest conflicts between these tendencies occurred around the question of defending the USSR against imperialism.

The Second World War posed the issue in an acute manner. When German imperialism invaded the Soviet Union, the followers of Trotsky came out unequivocally for the defense of the USSR. Proponents of the “new class” theories believed that there was nothing left to defend in the USSR. Similar differences were expressed following the Second World War in relation to Korea, Eastern Europe, China, Vietnam and Cuba, and also in relation to the Cold War itself.

Cuba is in a separate category, in my opinion. The proponents of both the state capitalism and bureaucratic collectivism viewpoints generally believe that Cuba is one or the other, and believe that the Cuban regime should be overthrown.

I do not think that Cuba is Stalinist. I think Cuba is a workers’ state, and that its leadership around Castro is revolutionary socialist and should be supported.

All these differences were thoroughly documented and debated in the decades before the collapse of the Soviet bloc. The purpose of this article is not to rehash those debates, but to take a fresh look at these three theories in the light of the collapse. Those interested in learning about those debates can consult the literature.

A striking feature of the attempt to restore capitalism (or go back to “ordinary” capitalism for those who hold the state capitalist view) in the republics of the former USSR and Eastern Europe is the way in which privatization of the nationalized industries has occurred.

Key to this has been the scarcity of capital, noted by virtually all commentators. In an important article, “The Necessity of Gangster Capitalism: Primitive Accumulation in Russia and China,” (Monthly Review, February 2000), authors Nancy Holmstrom and Richard Smith point out, “The nomenklatura collectively monopolized control of the means of production [in the USSR] but they did not own them privately. The [new capitalist] class had to be created.”

Referring to Jeffery Sachs, one of the Harvard economists who advised the Russians to embark on wholesale and rapid privatization after the collapse, they write:

“Sachs’ protocols for the transition contain no discussions of robber barons or gangster capitalists. Fetishizing an abstract ahistoric model, Sachs imagined that once prices were freed, once private enterprise was legally permitted, `capitalists’ would somehow appear, stride forth, and take command of the economy. But where were those capitalists to come from? In 1990, no one in Eastern Europe or Russia had significant monetary wealth or private property in the means of production. There was no bourgeoisie — not even a pre-revolutionary bourgeoisie to give the economy back to. As the joke went in Poland, `What were they to do — give the Lenin shipyards back to the Lenin family?’ So no one had the means to buy the factories, the mines, the forests, the collective farms, or to hire labor.”

Further, Holmstrom and Smith point out, capitalists:

“. . . had to be created. Individuals had to take possession, privatize property, factories, mines, wells, and forests. But since no one had the money to buy these state properties from the government, there was no feasible way this could be done legally, legitimately, or morally. This class had to be hothoused, virtually overnight. And it was. In the end, a combination of elements of underground mafiosa, the nomenklatura, especially the top management of certain industries, and segments of the intelligentsia — these people were essentially drafted to privatize the economy criminally.”

In other words, there weren’t enough owners of sufficient capital to be able to buy up the formerly nationalized industries. What does this mean for the theory that these countries were state capitalist?

If the words “state capitalist” mean anything, it is that in the USSR capital accumulation should have been taking place as in every other form of capitalism. Since this capital accumulation had been going on for decades, presumably, quite a mass of capital should have been generated, and it should have been in the hands of real people.

Since in the theory of state capitalism the bureaucracy collectively exploited the working people on a capitalist basis, at least a section of the bureaucracy should have amassed enough capital to buy up the nationalized industries.

But it turns out that that was not true. The bureaucrats clearly were not capitalists of any variety, because they didn’t accumulate capital on the scale that would have happened if the society functioned on the basis of capitalist accumulation. They are scrambling to become capitalists in the new situation — to become something they were not before. And they are trying to do it without sufficient capital beforehand, hence the theft. The theory of state capitalism collapses in the face of this reality.

The theory that the USSR was bureaucratic collectivism held that the bureaucracy had become a ruling class of a new type. It exploited the workers and peasants, but in a new way, not seen before. It wasn’t capitalist and the society didn’t function on the basis of capitalist accumulation.

According to proponents of the bureaucratic collectivist theory, Marx and his followers were wrong in thinking that the choice before humanity was capitalism (which would degenerate into barbarism if it were not overthrown) or socialism. The history of the Soviet Union and similar societies, they felt, showed that a third outcome was possible, and that this new society had some very unappealing features, such as a bureaucratic totalitarian dictatorship.

How does this theory stack up against the historical reality of the collapse of the USSR? This theory suffers from the same problem that the theory of state capitalism does, for even though it held that the bureaucracy did not exploit the working people on a capitalist basis, it did exploit them. Why then isn’t there the “bureaucratic collectivist” wealth on a scale large enough to be turned into capital to privatize the economy?

The main feature of the collapse of the USSR has been the turn of the ruling bureaucracy toward capitalist restoration. That is, they are trying to abolish the system they grew up under (the first Soviet bureaucrats are all dead), the very system under which these bureaucrats garnered their privileges.

Isn’t this one of the more curious developments in history? If the bureaucracy was a ruling class of a new type, which arose on the basis of the overthrow of capitalism, its obvious desire to transform itself into a new capitalist class is very odd indeed.

Even if we assume that the bureaucratic collectivist theory was correct for the USSR, the collapse of this system, and the desire of its ruling class of a new type to become a capitalist ruling class, demonstrates that this system was not historically viable, and its ruling class itself has come to this conclusion. The ruling class of a new type no longer wants to exist!

The time from the rise to power of Stalinism in the USSR to its fall was some six decades or so. That is not long from a historical perspective. So the “third way,” even if it existed for a brief time, was never a viable new form of society. Historically speaking, the collapse of the USSR proves that there is no basic third alternative to capitalism or socialism. Marx was right.

Holmstrom and Smith argue that Russia has had to go through a stage of primitive accumulation of capital, similar to that at the rise of capitalism, in order to restore that system. They also point to the necessity for the other class that must come into existence for capitalism to function, the propertyless proletarians. In the USSR, they write:

“Russian workers certainly did not own the means of production, but they did, and many still do, in a real sense `own’ their jobs. They had long-established rights to housing, state-provided medical care, childcare and numerous subsidies from the state. These social property rights are being destroyed in the process of transition to a ‘normal’ market economy. Divested, ‘freed’ from control, possession, or ownership of means of production, the majority of people of the former Soviet Union are forced to come to the market with, in Marx’s words, ‘nothing to sell but their skins.’”

In other words, labor power has become, or is becoming, once again a mere commodity in the newly created market. The results of the transition, Holmstrom and Smith point out, have been “an unmitigated disaster. In the first year of the reform, industrial output collapsed by 26 percent.”

This was far worse than the few percentage points drop in the last years of the USSR.

“Between 1992 and 1995, Russia’s GDP fell 42 percent and industrial production fell 46 percent — far worse than the contraction of the U.S. economy during the Great Depression. Since 1989, the Russian economy has halved in size, and continues to drop. Real incomes have plummeted 40 percent since 1991; 80 percent of Russians have no savings. The Russian government, bankrupted by the collapse of economic activity, stopped paying the salaries of millions of employees and dependents. Unemployment soared, particularly among women. By the mid to late nineties, more than forty-four million of Russia’s 148 million people were living in poverty (defined as living on less than thirty-two dollars a month); three quarters of the population live on less than one hundred dollars per month.”

The authors go on to list the drop in life expectancy, the rise in suicides and alcoholism, increased abandonment of children and similar social indicators. Clearly, the transition to capitalism has been a human catastrophe from the point of view of the workers.

How do the supporters of the state capitalism and bureaucratic collectivism theories explain this? Was state capitalism or bureaucratic collectivism superior in some aspects to capitalism? What were those aspects? Weren’t things like job security, pensions, free health care, subsidized housing and free education, based upon the nationalized and planned economy and other social conquests of the revolution the very things those who held to Trotsky’s theory thought were worth defending?

Let’s turn now to Trotsky’s view. In 1938 Trotsky summed up the prospects for the USSR:

“The Soviet Union emerged from the October revolution as a workers’ state. State ownership of the means of production, a necessary prerequisite to socialist development, opened up the possibility of rapid growth of the productive forces. But the apparatus of the workers’ state underwent a complete degeneration at the same time: it was transformed from a weapon of the working class into a weapon of bureaucratic violence against the working class, and more and more a weapon for the sabotage of the country’s economy. The bureaucratization of a backward and isolated workers’ state and the transformation of the bureaucracy into an all-powerful privileged caste constitute the most convincing refutation — not only theoretically but this time practically — of the theory of socialism in one country.

“The USSR thus embodies terrific contradictions. But it still remains a degenerated workers’ state. Such is the social diagnosis. The political prognosis has an alternative character: either the bureaucracy, becoming ever more the organ of the world bourgeoisie in the workers’ state, will overthrow the new forms of property and plunge the country back into capitalism; or the working class will crush the bureaucracy and open the way to socialism.”(3)

Isn’t the first alternative exactly what is happening? Sections of the bureaucracy began to be attracted to the West. The more privileged layers of intellectuals — scientists, engineers, artists and so forth — looked with longing at their counterparts in the advanced capitalist countries, who had more freedom and better lives than they did. The same was true among managers in the state enterprises.

The official state ideology that the USSR was a classless society, without a privileged bureaucracy, was so at variance with the bureaucratic reality that the privileged themselves became cynical. They no longer believed in socialism, even as a far-off goal. We need only reflect that Yeltsin was a member of the Political Bureau of the Communist Party of the Soviet Union to see what an anti-communist outfit it really was.

But most of these things had been true for some time, decades in fact. What happened to finally lead the bureaucracy to take the plunge toward the restoration of capitalism? I think that to answer this question it would be useful to look at some of the shortcomings among those who supported the theory of the bureaucratically degenerated workers’ state.

The horrors of the Nazi invasion in the Second World War were countered by a great mobilization of the Soviet people. Through immense sacrifice (some 20 million dead) they stopped and then smashed the German war machine. Following the war, another great mobilization of the Soviet people occurred in the rebuilding of the country. The inherent power of the planned economy in furthering both these achievements was clear and understood by the Soviet masses.

In the postwar period, the isolation of the USSR was partially broken. The revolution was extended into the countries occupied by Soviet troops in Eastern Europe, although in a very bureaucratic and controlled way, in reaction to the West’s unleashing of the Cold War. The Chinese Revolution was a massive breakthrough. The upsurge in the colonial world as a whole brought new nations into at least friendship with the USSR and its bloc.

While there were no breakthroughs of the revolution in the imperialist West, which would ultimately be decisive in the collapse, it appeared to many that history was on the side of the USSR. The leadership of the U.S. Socialist Workers Party and of the United Secretariat of the Fourth International came to the conclusion that the alternatives proposed by Trotsky in 1938 had been bypassed.

I was part of those leaderships and thought so too. While this view was not explicitly written down, our documents just dropped the alternative possibility of capitalist restoration. The achievements of the planned economy were impressive. In spite of its backwardness, the Soviet Union had been able to develop a powerful military that held imperialism in check.

The USSR had the atom bomb. Science in the Soviet bloc took big strides forward, as did basic education and the arts. China and North Korea had fought Washington to a stalemate in the Korean War. We thought that the working class had grown strong enough, and socialist consciousness was deep enough, that the bureaucracy couldn’t possibly overthrow the nationalized and planned economy.

We of course knew that the planned economy was warped by the fact that it was the bureaucracy that did the planning, and could not reach its full potential with<->out the input of the workers, which was impossible without workers’ democracy. But we failed to give sufficient weight to something that Trotsky had pointed out: that bureaucratic planning could have successes, even some big successes, as long as it was copying techniques of mass production developed in the West.

“It is possible to build gigantic factories according to a ready-made Western pattern by bureaucratic command<197>although, to be sure, at triple the normal costs,” he wrote in 1936.

“But the farther you go, the more the economy runs into the problem of quality, which slips out of the hands of a bureaucracy like a shadow. The Soviet products are as though branded with the gray label of indifference. Under a nationalized economy, quality demands a democracy of producers and consumers, freedom of criticism and initiative — conditions incompatible with a totalitarian regime of fear, lies and flattery. Soviet democracy is not the demand of an abstract policy, still less an abstract moral. It has become a life-and-death need of the country.”(4)

The result of the lack of socialist democracy was that by the 1970s, the Soviet economy stagnated, and then actually contracted a bit, for the first time since the Second World War. More far-sighted people in the bureaucracy began to see that more openness and transparency in society and in economic planning were necessary.

Among the masses, especially in Eastern Europe but also in the USSR, there were movements toward more democracy. The successes in the USSR and in Eastern Europe in the fields of education and industrialization meant that working people and the middle layers were far above the cultural level of the masses of the USSR when Stalin consolidated the power of the bureaucracy in the late 1920s.

This process culminated in Gorbachev’s campaign for glasnost and perestroika (openness and restructuring). It should be noted that Gorbachev’s proposals went in the direction of introducing gradually aspects of bourgeois democracy, not workers’ democracy. That is, his proposals didn’t go in the direction of empowering the workers and peasants to democratically run their enterprises, or of reviving the soviets as real workers and peasants committees to democratically run the government and the economic plan.

Undoubtedly, Gorbachev’s campaign was welcomed not only by the more farseeing sections of the bureaucracy, but by the Soviet masses as well, who wanted to break out of the stifling bureaucratic straitjacket and achieve more democratic rights and democratic functioning of the government. These aspirations were progressive and had to be supported.

Under Gorbachev, central control over economic administration was dismantled, but it was not replaced by popular control from below. The result was that the center became powerless. It turned out that the relaxation of the bureaucracy’s totalitarian control over political debate, information and activity led to calling into question the power and privileges of the bureaucracy itself.

The Gorbachev reforms failed. The only way to preserve the bureaucracy’s privileged access to consumer goods and services, in the face of the disintegrating “command” system, was to “go legit” and link those privileges to private property.

How could the bureaucracy embark on this road without unleashing a civil war? When Trotsky outlined the two possible political outcomes for the USSR in 1938, he thought that either course would entail a violent struggle. In 1938 this was undoubtedly true. Among the workers were still the generation of 1917. The great majority of the population believed in socialism, even though they chafed under the yoke of the Stalinist dictatorship.

It is clear now that the consciousness of the Soviet working class in 1989 was not as it was in 1938 in spite of the Stalinist terror. After forty more years of stultifying bureaucratic rule, socialist consciousness had ebbed, especially in the context of the economic difficulties the Soviet Union was facing.

Moreover, there was no political party that stood for the rebirth of the Soviet Union on the basis of Leninism, unlike in 1938, when there were still tens of thousands of Bolshevik-Leninists alive, even if they were in prison. The living link of cadre going back to the revolution had been lost. The workers were politically leaderless.

Thus the counter-revolution, having begun back in the 1920s when the bureaucracy usurped power, reached its culmination in the bureaucracy’s project to restore capitalism, and this happened without a civil war.

The process has not been without resistance by the workers. There have been regional and local strikes and demonstrations, some that have resisted police violence. There are indications that worker resistance is becoming more organized, but it has yet to take on a nationwide character.

The transition to capitalism in Eastern Europe has not been as catastrophic as in Russia, but it too has been marked by great losses for the working class. Workers in the republics of both the former USSR and Eastern Europe remember the social conquests they used to take for granted. They will resist more and more what the transition to capitalism is bringing and will bring down upon them.

It is through these struggles that socialist consciousness can once again emerge, and new revolutionary socialist parties built. The workers of the former USSR and Eastern Europe know they do not want to go back to Stalinism. They are learning and will learn that capitalism is not the answer.


  • Quoted by Trotsky in The Revolution Betrayed (New York: Pioneer Publishers, 1937).
    back to text
  • Lenin, State and Revolution, Lenin Collected Works, Vol. 25, (Moscow, Progress Publishers, 1977).
    back to text
  • Trotsky, The Transitional Program for Socialist Revolution, (New York: Pathfinder Press, 1973).
    back to text
  • Trotsky, The Revolution Betrayed.
    back to text
  • from ATC 94 (September/October 2001)