Moving the Mountain: Inside the Perestroika Revolution 
by Abel Aganbegyan, translated by Helen Szamuely.
Bantam, 248 pp., £14.95, October 1989, 0 593 01818 4
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Gorbachev’s Struggle for Economic Reform: The Soviet Reform Process 
by Anders Aslund.
Pinter, 219 pp., £35, May 1989, 0 86187 008 5
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A new plan for economic reform will shortly be decided on by the Soviet Government. It will be the fourth in less than a year: we cannot of course know whether it will last any longer than the previous three, which were withdrawn because of public criticism and divisions among the leadership. It is a common view among Soviet reformers that this is the last chance for perestroika – though there are many who believe that the last chance has gone, who no longer have any faith in perestroika, or in Mikhail Gorbachev, or indeed in the continuing existence of the Soviet Union.

A great number of those who, for the past five and a half years, have been Gorbachev’s closest supporters are turning away from him. Some are going over to Boris Yeltsin, attracted by what they see as his consistent support for democracy and market reform. (The populist bluster that characterised his time ‘in the wilderness’ is held to be a thing of the past.) Some have moved to a frankly neo-liberal position, discarding the various formulae which have sought to disguise the abandonment of Communist principles with a series of incantations about their renewal. New parties are being formed. The Democratic Party has made the biggest splash among the intelligentsia: but there are also social democrats, Christian Democrats, liberals and monarchists, as well as the ‘older’, semi-dissident groups of two or three years’ standing, such as Memorial and the Democratic Union. Many followed – or anticipated – Yeltsin’s renunciation of his Party membership at the 28th Party Congress in July. Alexander Tsipko, deputy director of the Institute of the World Socialist System, told me in August that over a two-week period all of his colleagues at this prestigious institute handed in their cards – even its prominent director, Dr Oleg Bogomolov, a former Central Committee member, the man who publicly announced the ending of the Brezhnev Doctrine.

These are therefore crucial times for Soviet reform, though the effect of so describing them is somewhat undermined by the fact that epithets like ‘crucial’ or ‘critical’ or ‘make-or-break’ or ‘last chance’ have already been used so often by commentators with little faith in the Soviet leader’s prospects of survival. Yet each time, with one bound or several, our hero has freed himself from the forces deemed to be closing in on him from all directions. What has enabled him to do this has been in part his consistently bold use of his powers of patronage and appointment; in part, a similarly audacious series of initiatives on the world stage; in part, the welcome (though less so now) effects of a much greater and more consistent liberality than ever before seen in the Soviet era. In my view, the benefit he has reaped from the collapse of true belief has played an equally important role. There are few people left in the upper echelons of the Party and the governing bodies who believe that Communism is bound to triumph over capitalism. Indeed, for the past two years, ever since the leadership pronounced the international class struggle at an end, it has been permitted to say as much when speaking in a world context. The position now is that there are probably too few who believe that Communism, or anything which could be called socialism, is capable of bringing about the economic regeneration of the Soviet Union to constitute a real alternative to Gorbachev under the present system. The old formula, about the present reforms leading to the renewal of Communism, is still de rigueur. But the wearier and wiser members of the Party leadership have been heard to say less and less about the marvels perestroika will bring.

The generation of political leaders which reached political maturity after the death of Stalin in 1953 – people who, like Gorbachev himself, are near or in their sixties – has pinned its hopes for its own continued existence on perestroika. Until now, this portmanteau word has been broadly enough defined (or undefined) to include both the more disciplined, cleaned-up and better-informed Brezhnevism of the old leftist Yegor Ligachev and the unillusioned social democracy of Eduard Shevardnadze and Alexander Yakovlev. But now – and this is another reason for calling the period ‘crucial’ – the semblance of a united front is no longer sustainable, nor is it seriously sustained. Ligachev criticises Gorbachev for betraying socialism. Gorbachev accuses his loyal prime minister, Nikolai Ryzhkov, of bungling the past year’s successive attempts at economic reform. Shevardnadze and Ligachev have publicly called each other liars. Those who profess to want democratic institutions, the rule of law, a civil society and a market system have now either left the Party or are giving its leaders ‘one last chance’ to make a determined stab at creating market relations – relations which, more than 66 months after Gorbachev’s assumption of power, are scarcely more evident than before. And all this is taking place at a time when the instability of production and distribution is so pronounced, and the zero or negative growth of recent years so resistant to cure, that, according to Professor Marshall Goldman of Harvard’s Russian Research Centre, ‘unless something changes soon, the country’s economy will break.’

What this means, exactly, even distinguished prophets of doom do not say: but presumably a ‘broken’ economy is one which, as a result of its inability to satisfy basic needs in a regular fashion, brings people out into the streets and threatens the government itself. Soviet economists, at least as prone to doom-mongering as Western commentators (indeed, they are the Western commentators’ sources), have been forecasting this for a year or more. Vassiliy Selyunin, a widely-respected former economics commentator on the paper Sotsialisticheskaya Industria (and one of these who has come out as an economic liberal), told me earlier this year that there would be widespread rioting this summer over food supplies. There have in fact been riots in various cities – as much over the shortage of cigarettes as over food – but they have not had the depth and seriousness which Selyunin forecast. Whether doom comes or can be averted depends on the mood of the Soviet, especially the Russian, people; on the success of the nationalist movements’ demands; and (to a lesser extent) on what assistance the West can give.

Even on official figures, which no one believes, growth in National Material Product (roughly equivalent to production without services) has declined from over 7 per cent a year in the Sixties and Seventies to under 3 per cent in the Eighties. According to the CIA, the figure is under 2 per cent, and according to Selyunin and his collaborator Gregory Khanin, -4.5 per cent for 1989. Even on the official and CIA figures, the fact that military expenditure had until recently been steadily rising means that, once defence production has been subtracted, the Eighties figures were around zero for the living standards of most people. If Selyunin and Khanin’s latest figures are right, the Soviet Union is experiencing an accelerating impoverishment.

At the same time, nominal wages have shot up as ministries and managers have sought to buy off trouble from newly militant workers. With drastically fewer goods to buy, this has contributed to the vast ‘monetary overhang’ of some 165 billion roubles. As a result, the currency is seen as debauched and worthless – the situation of Poland last year. Bargaining with a taxi driver to drive me 20 kilometres in March, I offered the equivalent of half a week’s wages – or £12 to me. He literally spat on the floor. Eto bumaga (‘It’s paper’). Since he was in a monopoly position I had to get dollars before I could go. The dollars he got gave him access to the world of hard-currency goods – for which most Soviets lust with a ferocity which Westerners on good incomes cannot understand.

Estimates of Soviet living standards range from under $2000 to $8000 GDP per person a year. The median – $5000 – in theory puts Soviet citizens on the level of the Portuguese, which is quite unrealistic when one takes into account such factors as climate, pollution and availability of goods. Queuing alone must reduce the quality of life by at least 10 per cent – the minimum percentage of waking hours taken up with standing in line. This might not be intolerable if things were getting better: but they seem to be getting worse.

Every main indicator is moving against the Government. The budget deficit, only recently admitted, has grown from around 4 per cent of GNP in 1985 to around 10 per cent last year (compared with a little over 2 per cent for the US deficit, the one all the fuss is about); inflation is, on official figures, around 5 per cent and is (officially) estimated to double if and when prices are freed; exports are declining slightly, especially to hard-currency countries (where in any case they mostly consist of oil, gas and raw materials: very few Soviet goods are of world quality); debt to the West has climbed from a stable $20bn in the early Eighties to $50bn; strikes are increasing dramatically, especially in the energy and transport sectors; while the nationalist troubles, a vast and separate tale of woe, have further disrupted production. The reason for the cigarette shortage is that the plants producing acetate for the filters are in Armenia and Lithuania: the first was put out of production by the 1988 earthquake, the second by the oil embargo of earlier this year.

The picture is terrible, even catastrophic. The conditions for collapse are there for all to see; the danger of chaos on a vast scale is evident. Yet what seems bound to happen may not. The country still seems to work. The staples are somehow delivered; connections, corruption and crime supply the luxuries to many; there is plenty of public transport; the apartment blocks are crowded, but in winter they are warm; the freeing of public discourse, from which journalism and film-makers have benefited most, still amazes and delights. Last time I visited the Stalin-era fantasy tower which is the Soviet Foreign Ministry, a poster in the foyer announced a theatrical production of The Gulag Archipelago. To see Solzhenitsyn promoted within the Foreign Ministry – even though, no doubt, a point was being made to visitors – is a shock even now.

For all that, we are talking about the failure of an economy which not so long ago was envied or feared at least for some of its achievements. Harold Macmillan has a passage in his memoirs recalling the worries he expressed to President Kennedy over the imminent failure of the capitalist system, beaten not just by Yuri Gagarin in Soyuz One, but by the guarantee being offered to the Soviet people of a higher general standard of living. Even in the early Eighties, those who wished to be ‘fair’ to the system, or those in developing countries who wished to emulate parts of it, could point to such achievements as job security; cheap (to the consumer) housing, transport, staples and energy; universal child-care and medical provision, free at the point of use; a large degree of equality, with much much narrower income differentials than in the West; planned production and distribution. Today the continuing attraction of many of these to the Soviet people is seen as a major barrier to reform. At the same time, the merciless light which glasnost has encouraged Soviet commentators to shine on their own society has given rise to a vast literature of horrors: descriptions of social and medical care which, at best, reaches the standard of pre-war provision in the West – with the added twist that doctors, dentists and other must be paid for anything resembling adequate care; of organised mafias covering every republic and now going ‘international’ through Eastern Europe, with the assistance, it is reported, of the disbanded secret police forces; of pervasive official corruption; of massive real unemployment in Central Asia and, increasingly, elsewhere; of the squalor of the communal flats, workers’ hostels and shanty towns which are everywhere; of the disorganisation and languor of most enterprises, with their tiers of bureaucracy, efficient only in passing the buck.

Where did it all go wrong? The simplest answer, now more and more the one offered, is in the beginning, year zero, 1917. Many Soviet writers, scholars and economists believe and say this. Alexander Tsipko of the Bogomolov Institute caused a sensation when, in a series of articles in the periodical Nauk i Zhizn (Science and Life) in 1988/89, he dispensed with the approved glasnost line of blaming everything on Stalin and instead held Lenin culpable, and before him Marx. Though few have gone that far, there is almost nothing – as the Party sinks and the transmission of official Marxism Leninism becomes ever more mechanical – to stand in the way of a complete demolition of the narrow, rigid and mendacious historical-philosophical mould in which Soviets have been allowed to think about their history and their society: almost nothing except that the intellectual tools with which to effect such a demolition were themselves destroyed or drastically reduced. I would expect, however, that this work will soon gather speed.

When he wrote these articles, Tsipko was a middle-ranking ideologist on the Central Committee staff, a member of an élite, with a career in the Komsomol behind him and what would have been a prestigious and comfortable future before him: now he has left the Party and his views would be conventionally described as right-wing. Anders Aslund, the Swedish scholar-diplomat who in this book has given us the closest and best-informed investigation of the roots and progress of perestroika, has elsewhere signalled the rise to prominence of ‘political liberals’ such as Selyunin, Khanin, Oleg Pinsker and Larissa Prishayeva, who described herself in a letter to Izvestia earlier this year as a ‘consistent liberal by principle in the European sense and a conservative in the American sense’. She and Pinsker published a piece in Novy Mir last November which argued, among other things, that the Western European welfare state was a harbinger of totalitarianism. These economists see Mrs Margaret Thatcher as the leading politician of contemporary times – a view which, at least until recently, was fashionable in all Soviet reform circles. Alec Nove, British Sovietology’s doyen, has noted that both Nikolai Petrakov, Gorbachev’s economic adviser, and Nikolai Shatalin, the sole reform economist in the Presidential Council, ‘repeatedly and openly attack the existing reform programme as too little, too late, too much regulation, too little market. It is far from clear what sort of “socialist” model they have in mind, if indeed they have one at all.’ This means that President Gorbachev gets his main economic advice from men who think about the economy in much the same way as Alan Walters (a great favourite in Eastern European Finance Ministries) and Milton Friedman; and the same is true of Boris Yeltsin. In Czechoslovakia (Vaclav Klaus, Finance Minister), Hungary (Petr Bod, Industry Minister) and Poland (Leszek Balcerowicz, Deputy Prime Minister and Finance Minister) neo-liberals are already in the most sensitive economic jobs. All of them emerged after a ‘third way’ between capitalism and Communism had been tried and seen to fail – not so much, it is true, because the economic programmes themselves failed as because the reform Communists who tried to implement them had no political base, and had lost the will to rule by terror. There is every reason to believe that the same pattern will repeat itself in the Soviet Union. ‘The failures of the centralised system,’ Nove writes, ‘and of attempts to reform it have led a number of economists and publicists to abandon the very notion of market socialism and to say ... that their own earlier notions of combining plan and market were “naive”. So far this sort of view is held only by a minority in the Soviet Union, but it is a growing minority. Furthermore, it is possible and even likely that a number of prominent economists prefer not to say such things openly, or not yet, bearing in mind not only the views of the leadership but also of public opinion.’ Thus – and this is yet another important reason for regarding the present conjuncture as ‘crucial’ – we are very close to the moment when reform Communism or socialism throws in the towel, as it has done elsewhere. It has had its chance, in the five and a half years since Gorbachev’s election, and is deemed, perhaps even by Gorbachev himself, to have failed.

Abel Aganbegyan is himself very much part of the first, failed wave of economic reform. He was of critical importance because, with his then associate Tatyana Zaslavskaya, he produced a series of reports from the Academy of Science’s Siberian division in Novosibirsk in the late Seventies and early Eighties which pointed to the gathering crisis in the economy. It was these materials, together with others provided to him by the KGB, which Gorbachev drew on when he was making his run for power in the years before 1985. The domestic decline which Aganbegyan had tried to convince an indifferent Brezhnev leadership could become terminal was made more acute by the increasing demands of the arms-race. Aslund, giving credence to the view that the Reagan-inspired US arms buildup of the early Eighties was an important progenitor of perestroika, quotes Gorbachev as saying in December 1984 that ‘only an intensive, highly-developed economy can safeguard a reinforcement of our country’s position on the international stage and allow her to enter the new millennium with dignity as a great and flourishing power’: ‘this,’ Aslund comments, ‘was an apparent recognition that the USSR was losing out in the arms race with the US because of insufficient economic strength.’ Aganbegyan faded some two years ago: the slogan he coined for Gorbachev – uskorenie –(‘acceleration’) – proved to be so hollow that it was hung round his neck when it became obvious that deceleration was in progress. In addition, as a patriotic Armenian, he had spoken of the need for a commission to examine the status of the Armenian enclave of Nagorno Karabakh and was afterwards blamed for raising hopes, and the violence that followed. It may have been natural for an Armenian to speak in this way, but it was thought unsuitable for a high Soviet official to do so. Leonid Abalkin, head of the Economic Institute at the Academy of Sciences, who had been his junior, replaced him as chairman of the economic reform commission and Deputy Prime Minister, while Shatalin and Petrakov emerged as Gorbachev’s closest economic advisers. For all that, Aganbegyan has had a second coming: he chairs a committee charged with producing one of several variants on economic reform, due to report about now – though this may be more of a route to oblivion than a reinstatement.

Aganbegyan’s aim in Moving the Mountain is to provide an account of perestroika, but he darts this way and that, now claiming that the main problem has been ‘a lack of democratic discussion’ to acquaint ordinary people with the need for and nature of reform, now that the main problem is a lack of understanding among policy-makers of ‘how deep a hole we were in or how steep the sides we had to scramble up were’. When he offers a solution, it is nearly always with the mind-set of the enlightened planner, with little sympathy for initiatives from below. To solve the housing problem, he proposes juggling with rent levels and space allocations so that space above a norm of 20 square metres per person would be charged at the price it cost the state to build it. This is a good idea, but no consideration is given to private or co-operative building, or to making DIY materials (now unobtainable except corruptly) generally available, or indeed to any scheme which would gather its dynamism from people’s own efforts. Again, after arguing for greatly-increased car production (the USSR 1988 car registration per 1000 people was 42, against a US figure of 572), he proposes that ‘the state could sponsor a nationwide programme to build and set up filling-stations and garages to meet the demands generated by the increased number of car owners.’ Anyone who visits a Soviet petrol station would find it incredible that such a network should be extended under existing management.

At one point, Aganbegyan describes a meeting with Milton Friedman in San Francisco, where the latter now works. He calls him a ‘great thinker’, and says that in many concrete instances, ‘his theories ... can be of great use to us.’ Then he writes, almost as an aside: ‘I do not accept his view that the socialist countries should transfer their property into private ownership.’ Yet Friedman’s work is entirely dedicated to the absolute necessity of private ownership. He, more than any other contemporary writer, has made the equation between capitalism and freedom. You cannot, if you are planning for an avowedly socialist economy, get anything from Milton Friedman – as you could, say, from Paul Samuelson or John Kenneth Galbraith, two US economists who are well-known in reformist circles and the availability of whose work in translation pre-dates Gorbachev. Does Aganbegyan not understand this? Or is he, in the Soviet way, inscribing his support for Friedman’s ideas between the lines of a perfunctory dismissal?

What kind of future does he think will work? He devotes a relatively lengthy section to praising early experiments by companies in issuing shares to their workers (the first such was in the city of Lvov, now a self-proclaimed ‘free’ city run by a council dominated by the Ukrainian independence movement Rukh). These experiments have allowed enterprises access to extra capital, drawn resources away from the sock under the bed (the 2 per cent interest at the state saving bank is so pitiful that many don’t bother to join another interminable queue to bank their surplus), and increased workers’ interest in their companies’ efficiency. The line is drawn, however, at issuing shares more widely. It is not very firmly drawn: there is a suggestion that a real share-owning society might not be ruled out for ever. But the objection that the share income of people who do not work in the enterprise ‘will not be earned’ is enough to move Aganbegyan to defer such a prospect indefinitely.

The vision of the future is thus rather like the present and the past. The state owns everything, except those parts of those enterprises which have been sold to their own workers. Prices are free, except the most important – which means vast subsidies continue to be paid. Unemployment remains formally forbidden – which means loss-making enterprises remain open. I agree that full employment has been a triumph of the Soviet system: we have too much experience of the misery unemployment brings not to look with envy at that part of the system. But it is not credible that a move to a market economy can be made without it.

Aslund’s narrative, by contrast, is of immense value for those who seek to understand the most thoroughgoing economic experiment of modern times. He has done a great deal of work to make comprehensible the otherwise impossibly obscure and involuted nature of Soviet policy preparation and implementation; and by closely studying the statements and actions of the leading actors and institutions, he has produced an unrivalled who-does-what of perestroika. He has the instincts and the practice of a good journalist and a good academic, despite the fact that his most sustained period in the USSR, from 1984 to 1987, was spent as economics counsellor at the small and highly efficient Swedish Embassy in Moscow.

His main conclusions are these: first, that perestroika is the latest of a series of attempts to reform the Soviet economic system, of which the previously most serious was that undertaken by Prime Minister Alexei Kosygin in 1965 and closed down by Brezhnev in 1968. The Kosygin reforms, Aslund reports, were more superficial because the self-satisfaction engendered in the Soviet leadership at the end of the Sixties by the collapse of the Americans in Vietnam and the apparent advance of socialist ideas, especially among the Western young, put a low premium on change. Now, ‘Communist illusions have faded away.’

Secondly, the structures which were locked into place under Stalin and modified under Brezhnev remain supremely resistant to change. Thus the critical pieces of legislation so far – the Law on State Enterprises and the Law on Co-operatives of 1988 – have in their quite different ways triggered reactions to mute them and render null their intended effects. The Law on State Enterprises, designed to put these enterprises on a self-financing, profit-and-loss basis, has worked only superficially. The reform of foreign trade, for example, has released it from the exclusive control of the Foreign Trade Ministry only to let it be captured by the monopoly branch ministries, while disorientating the battle-scarred band of Western traders who had got used to the people they dealt with. The reformers themselves – as we have seen in Aganbegyan’s case – used ludicrously optimistic rhetoric inherited from Brezhnevite and Stalinist times – but with less justification (large parts of Stalin’s industrial expansion were successfully implemented, leaving one of the largest rust belts in the world for his successors). Thus Lev Zaikov, in 1986 Central Committee secretary in charge of economic affairs and a Politburo member, backed the creation of Gospriemka, the state quality-control inspectorate, as a way of effecting the transition to ‘the production of machines, instruments and equipment that correspond to the highest world standard in 1991-3’. Gospriemka did its work too well: in some cases it rejected up to 60 per cent of the goods produced by bad plants, it cut bonuses, caused even greater shortages and was killed off in a few months – with no observable effects on quality. In 1985 Aganbegyan himself forecast that ‘by the year 2000, our country will surpass European capitalist countries in terms of labour productivity’ – it has been falling steadily since. Gorbachev, in his early speeches, used similar, if less precise language. Only now are people coming to the fore with a dispassionate – sometimes savagely so – view of their country’s backwardness. In this past year, every visit to a Soviet policy adviser has produced a notebook full of phrases like ‘we are in a Third World country’; ‘we are a hopeless society’; ‘our power is shrinking.’

Thirdly, all decisions are compromises. This is a legacy of the Brezhnev era, when a ruthless and dynamic autocracy, already undermined and disrupted by the erratic Khrushchev, was replaced by a stable, baronial structure, still with power at the centre but with de facto bargaining between Party, Government and regional bosses, and academic and institutional advisers. ‘All reform laws are compromises,’ Aslund writes. ‘The overall conclusion is that Gorbachev pushes energetically for reform, but does not control its design. The Soviet Union is actually controlled by a collective leadership.’

This has meant that Kremlinology, the ‘science’ of which Aslund is one of the outstanding contemporary practitioners, cannot be considered dead or redundant, though its rules are greatly changed. We need to know the nuances and the bases of the positions taken by the reformers: to know, for instance, that the man still nominally in charge of implementing reform, Premier Nikolai Ryzhkov, is a pleasant, hard-working man who, from the careful evidence Aslund assembles, sees change as merely institutional rearrangement, the replacement of bad cadres by good ones and the improvement of planning. Like most ministers and – until last July’s downgrading of the Politburo – most Politburo members, Ryzhkov is an engineer: Aslund, following Nove, reminds us that the Soviet system is designed by and for engineers, interested in output and technique, not in finance, markets or the consumers. Until now, Gorbachev has been surrounded by engineers: Yegor Ligachev, for long the bearer of the old leftist banner; Yuri Maslyukov, chairman of Gosplan and, with Ryzhkov, the most important agent of economic reform (and like Ryzhkov, a brake upon it still); Nikolai Slyunkov, Central Committee Secretary for Economic Affairs. It is these last two, with the Prime Minister, who have been responsible for the abortive reforms of this past year: only now are they being pushed aside, as Gorbachev apparently decides that he must present the next package.

Fourthly, politics remains in charge. Aslund believes that, ‘unlike China or Hungary, the Soviet Union appears unable to reform any branch of its economy without ideological revision and political reform.’ For much of the Gorbachev period, public debate has been set on proving that perestroika conforms to the basic tenets of Leninism – in particular, to the ideas Lenin had in the last years of his life when he wrote on co-operatives and on the New Economic Policy. These efforts to justify moves towards a market, entrepreneurship, and co-operation with foreign partners by reference to the ambiguous writings of a man violently against all of these are inevitably comic. More serious has been the realisation, from the end of 1987 on, that economic reform of any real depth was impossible without political reform. It was the self-deprecating, sardonic, endlessly hard-working Leonid Abalkin who, at the 19th Party Congress in June 1988, asked if the ‘democratic organisation of social life’ would be possible within a one-party system. Only now, it seems, is the obvious negative answer to that question generating serious extra-Communist Party activity: only from now can we hope to see a real public clash of economic programmes and proposals, of the kind adumbrated in the on-off struggles between Gorbachev and Yeltsin. It is unlikely, however, that these programmes will be very much more than rhetorical, utopian and fragmentary. An important theme in Aslund’s work has been the low technical quality of Soviet economists. Shatalin, the lonely reformer on the Presidential Council, said earlier this year: ‘What worries me? First of all, the extremely low level of our economic science and economic education in general.’

The end of economic reform is always and everywhere held to be the improvement of living standards; and it is, at least in one way, more important for today’s Soviet Communists than it is for, say, Mrs Thatcher or Chancellor Kohl: today’s Soviet Communists are more frightened than their ‘bourgeois’ counterparts of their own working classes.

The collapse of belief in the Party’s mission has led to a feverish attempt to produce what the people want and an equally feverish recoiling from what might provoke widespread opposition. Evidence for this abounds, but it is most notable in the leadership’s response to the miners’ strikes of the summer of 1989. Although miners are already at the top of the wages league, the strikes were settled by a promised state expenditure of four billion roubles on extra wages and better conditions and supplies – all of this at a time of great financial stringency. Nowhere was force or even the threat of force used – in contrast to the response to the miners’ strike in Britain. Theodore Friedgut and Lewis Siegelbaum, writing in New Left Review about the strike in the Donbass, the main coal-producing area, conclude that ‘the fact that ... Soviet workers can no longer be considered as merely the passive objects of reformist models’ is the most important outcome of the strikes. There is some sense in this but, in seeking to elevate the importance of a certain kind of working-class activism, they overstate the obvious point that the Soviet authorities fear mass strikes, especially in the energy sector, and have made all sorts of concessions to put an end to them. In fact, the leadership has not treated the Soviet workers as ‘passive objects’ for some time – certainly not since, in the summer of 1988, Gorbachev was confronted with angry crowds during walkabouts in Siberia. One could say that the Soviet leaders have tended to be rendered passive, transfixed with fear before the masses’ lack of passivity.

At least as important a test of the peoples’ attitudes to the effects of perestroika has been the response to the co-operatives. Co-ops are essentially private enterprises (though without the security of full ownership); under the 1988 law, co-operators were allowed to be independent of the state administration, to hire labour and operate on market principles. They were explicitly meant to provide not just scarce goods and services but competition for the sclerotic state. Unlike the law on state enterprises, that on co-ops has worked. Their number has grown from nought to nearly 200,000 by the end of last year, employing five million people (35 per cent of these part-time) and producing 4.4 per cent of GNP, or 40 billion roubles. Co-ops produce only 2 per cent of consumer goods, but 15 per cent of services. There are some famous co-operators – like the eye surgeon Federov, whose clinic has made him a dollar millionaire and a deputy to the Supreme Soviet. But most are craftsmen (mechanics, plumbers) or teachers, or good organisers (including a number of former Party officials) who have seized at the chance of self-enrichment: co-operators make at least double the average monthly wage of 250 roubles if not (e.g. in restaurants and language schools) more, sometimes in hard currency.

Soviet citizens, not surprisingly, see co-operators as exploiters: a poll earlier this year showed two-thirds of those who had an opinion taking that view. Everyone I have heard talk about co-operators grumbles about them, especially about the shashlik-sellers who cluster around railway stations (where it is often impossible to get anything edible quickly) and charge as much as two roubles for a stick or two of meat that would have cost 30 kopeks in the state store. A recent joke tells of villagers out on the street, celebrating merrily. A Party official, passing through, asks why: perhaps perestroika is working at last? ‘The co-operators’ plant has just burned down,’ he is told. When I first worked in Moscow, I invited a fairly senior Soviet journalist to lunch in the Kropotkinskaya co-operative restaurant, then still quite new: his manner was cold, he kept glancing about him irritably and was rude to the waiters. Only later did he tell me that he disliked co-op restaurants for the vast profits they made and their criminal links.

The perestroika leadership initially put all its weight behind the co-operatives; and reformist journals, Moscow News and Ogonyek especially, were full of them (and continue to champion their cause). Lower-level Party and state functionaries have a more complicated attitude. On the one hand, the co-operators are seen as inconvenient because of the demands they make for extra supplies. On the other hand, they are treated as milch cows for levies and bribes. Some act as fronts for organised crime; and there is evidence to suggest that they also function as launderers of mafia money. One thing is certain: the co-operatives have touched on one of the rawest nerves of the Soviet people – their dislike, amounting to hatred, of others’ material success. Writers like Tibor Szamuely ascribe some of this to the forced levelling of the oldest and most extensive slave-owning society in the world; and to the legacy of that serf-peasant tradition which Soviet Communism has used to stimulate hatred of capitalists and profiteers (Russian anti-semitism is most commonly ignited by any situation that equates Jews with exploiters). Co-operatives are not seen as providers, but as the means whereby a few people have enriched themselves. The fact that many co-op services are too expensive for the average citizen (restaurants) or remote from his interests (language schools) or both (computer maintenance) has only made matters worse.

The consequence of this has been very substantial back-pedalling: in the last 12 months co-operatives have been hedged about with restrictions on the services they can offer, with higher taxes, increased inspections and reduced access to supplies. (One of the demands of the striking miners had been that action should be taken against the co-ops. Another, interestingly, was for full self-government of their pits, and another for higher prices for their coal.) At the beginning of this year, earlier prohibitions on medical and trading co-ops were enforced: the first because of the drain of trained medical staff from the state sector, the second because of disapproval of speculation. In many areas, politicians – especially Communists – running for office in unfamiliar contested elections sought popularity and often gained it by attacking co-ops (though others, like Federov, have been elected on pro-co-op platforms). In February, the First Secretary of Krasnodar said on TV that the co-op movement was ‘a cancer – a social evil’. These attitudes get full support from the official trade-union movement, desperate to find a popular base after years as the supine transmission belt of the Party; from much of the Party itself; and, it seems, from the majority of the population, especially the older people, and those on below-average earnings. For them, perestroika’s most conspicuous fruit is poisonous.

This public mood has the most serious consequences for economic reform. Already, it has been three times proposed and three times delayed. Almost a year ago, soon after his appointment as Deputy Prime Minister, Abalkin produced a document which wholly endorsed market mechanisms: adding that ‘we must not stop halfway ... the market is only capable of effectively exercising its functions in conditions of free prices and economic competition.’ It was widely assumed that a reform plan based on this document would be approved: instead, Ryzhkov delayed reform until 1992 and instituted a hopeless effort to improve supplies by administrative means. Its failure produced a new plan, which was never instituted: and then a third, also produced by Ryzhkov, whose most conspicuous feature was a raising of prices. Gorbachev himself killed this one, probably out of fear of the outrage it would cause but also because, as his advisers argued, the only beneficiaries from the price rises would be the monopoly suppliers: no pro-market changes would occur.

Everyone in power is aware of how critical the position is, of the need for haste, of the thinness of public trust. Yeltsin, commanding the biggest and richest state of the Union, has mapped out a radical programme which will be instituted over a period of 500 days, and will see very large privatisations. If Gorbachev does not come with him, he will, he has said, go it alone.

We shall see. Radical reform, at least at the All-Union level, is being attempted by leaders whose power is ebbing as the Party splits and is drained of its bolder spirits, whose confidence has been sapped and who admit openly that they dare not do what the Polish Government is doing because they do not have the support of the people. Yet although they are aware of the fact that the Soviet people are sullen and restive, they also know that they have not allowed the development of any alternatives to Gorbachev at national level: and alternatives are thus bound to function at the level of the republics, with nationalism filling the vacuum. There is still a hopeless search for a ‘socialist’ solution, in large part dictated by the need to placate such powerful vested interests as the trade unions. The West, now counting up the bill for opposing Iraq, will not do much to help.

Of the 280 million Soviet people, only some eight million Balts have experienced anything other than autocratic, often cruel domination. Throughout the modern period, they have been subjected to a battery of experiments from Tsar and Commissar designed to make their state the wonder of the world. Now, under Mikhail Gorbachev, the state confesses its failure, and modestly shrinks its ambitions to attempting to construct a tolerable life for its own citizens. Now, in conditions of greater freedom than before, the people are being asked to extend their trust to a Party which in the course of its 73 years in power has murdered and destroyed, repressed and humiliated on an unrivalled scale – to produce a country as relatively backward as it was in 1917. Will they go for it? Or is the Soviet Union over?

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