This is an edited transcript of a report given on September 3, 1987 to the Workers League summer camp.

Comrades, much has been covered in the first four issues of the Fourth International magazine by the statements on Gorbachev and by the analysis of the WRP’s attitude toward the Soviet Union during its process of degeneration. It is already outlined in the Fourth International how, over the years, statements that simply could not have been made in an earlier period were being quite regularly made by Mike Banda, Healy and Slaughter. This was done sometimes openly, sometimes not so openly, but it was clear that there were many things being discussed.

There was Mike Banda’s statement in February 1984 that the nationalized property relations inside the Soviet Union were an irreversible gain. He linked that up with the defeat of German fascism in World War II, saying that the Soviet working class had rallied to destroy fascism and that this proved that these were irreversible gains and there could never be a restoration of capitalism in the Soviet Union. He was basically saying that the nature of the Soviet Union is a finished question historically. And, after saying that, it doesn’t take long to conclude that the Trotskyist movement, the Fourth International, really has no role to play in the future evolution of the Soviet economy or the Soviet state.

Certainly, Healy’s forays with regard to Soviet philosophers such as Ilyenkov and Oizerman raised numerous questions. At the same time, Banda was making statements such as: “The Soviet philosophers have been ‘forced’ to develop dialectics in order to develop the means of production.”

Comrades would leave meetings after hearing such statements and ask themselves: What is the connection? They have been forced to develop dialectics? How is he deducing that? Of course the connection couldn’t be made clear.

The analysis presented in the documents of the IC is very clear. The proletariat took power historically in a backwards country through a socialist revolution. Under the leadership of the Bolshevik Party, the working class nationalized the land, the banks and basic industry, that is, they expropriated the bourgeoisie and established soviet power. With the temporary defeat of the revolution in the West, the fact that it was not extended into Europe and the advanced capitalist countries, the subsequent isolation of the first workers’ state caused fantastic contradictions to emerge. These were most thoroughly outlined in Trotsky’s Revolution Betrayed.

While you had, and still have, nationalized property relations, at the same time, bourgeois norms of distribution were preserved. In the beginning, because of the extreme scarcity of many of life’s most basic necessities, the bureaucracy had to supervise distribution of what was produced. Those two basically contradictory aspects, which Trotsky analyzed at great length, are preserved to this day. The Soviet Union is an unfinished question because one or another of these two aspects has to triumph. Either the working class destroys the bureaucracy and advances towards socialism, an outcome which is intimately tied up with the extension of the revolution on a world scale. Or, the bureaucracy, through counterrevolution, destroys the nationalized property relations and restores capitalism and the private ownership of the means of production in the Soviet Union. It has to go one way or the other.

The Soviet Union, hence, is a contradictory, transitory, transitional social formation, state and economy. Its future development has yet to be resolved. In virtually every article or book Trotsky wrote, Towards Socialism or Capitalism, 1925; The Soviet Economy in Danger, 1932; Revolution Betrayed, 1936, etc.—he was continually developing his analysis and insisting that the Soviet Union was not a finished question; the struggles of antagonistic classes would be fought out on a world scale and very decisively in the Soviet Union itself.

Programmatically, Trotsky put forward for the Soviet working class the political revolution: the overthrow of the bureaucracy, of that bureaucratic caste, through revolution. It was not going to be a peaceful process by any means.

Early in the 1920s, in the wake of the civil war and conditions of war communism, a very important question arose, and I want to outline it briefly, as we will have to return to it with regard to the Gorbachev reforms, that is, the significance of the monopoly of foreign trade.

The issue arose in 1921-22 when Trotsky and Lenin formed a bloc on this question. There were proposals made within the party leadership (Stalin was one of the main proponents), that the monopoly of foreign trade be lifted. I want to illustrate briefly how this would work.

If we look at production in the Soviet Union, taking both agricultural and industrial production, we could show how this might work. If the peasantry were producing grain, traditionally one of the major export products prior to the revolution, one would expect that grain would continue as a field of export once agriculture recovered after the civil war, with the return to cultivating. For the sake of illustration, let us say that the price on the world market is—this is not an actual figure—40 rubles per bushel of grain, if the peasantry could sell their grain on the world market. With the monopoly of foreign trade, the peasantry would sell their produce to the Soviet state, receiving a much lower price, say 10 rubles. The state would take the grain purchased from the peasantry and sell it on the world market for the full market price. So the difference would be 30 rubles per bushel. This could then be used by the state, through the state planning commission and different ministries, to be reinvested where necessary for the Soviet economy. It could be reinvested to build heavy industry, factories, or to make it possible to produce farm implements for the peasantry, or to build houses for the working class—whatever was required. It could be decided through the Soviets.

Obviously, the peasantry would love to get access to the world market. Why sell it for 10 rubles to the state, when you can sell it for 40 rubles on the world market? So there is a tremendous tension there. Of course, the organs of state power, the organs of rule that the working class created—the Red Army, the police, etc.—guarantee that this relationship doesn’t spring up, to guarantee that the peasantry does not have direct access to the world market.

Because Russia was a backward country, the productivity of labor was much lower than other parts of the world. The indices are staggering in some areas, at least a factor of 5 or 10, and in some areas higher. Agricultural implements, farm machinery, tractors are needed. It may be that in the West, a tractor might be produced at a cost the equivalent of 400 rubles. Because of the backwardness of the Soviet economy, what it would take to produce such a tractor might by comparison cost, let us say, 800 rubles.

By dealing on the world market, the state could purchase tractors in the West at 400 rubles, and sell them to the peasantry at a price close to what it would cost to produce them in the Soviet Union, i.e., 800 rubles, and continue to sell the Soviet tractors, too, at the full price. Now if this barrier did not exist, if it was possible for foreign capitalists producing tractors to sell directly to the Soviet domestic market, if they started flooding the market with tractors that cost half as much as the Soviet tractor (because they have a higher productivity of labor and much higher quality control), obviously no peasant would buy a Soviet tractor. They would link up with the world market and buy the cheaper, better tractor for half the price. What the monopoly of foreign trade, therefore, does is make possible the continued existence of the Soviet factory. Otherwise, whole sections of Soviet industry would close down because they could not compete with the world market.

Trotsky made the statement in Revolution Betrayed, that a great threat to the Soviet Union obviously is military intervention from the capitalists, but in the long run, a far greater threat is the influx of cheap commodities from the West. What you have to have is the state standing here as the arbiter between the domestic and world markets. The monopoly of foreign trade under the control of the state is absolutely vital for the Soviet economy to develop. The investment they did make in the Soviet Union had to go heavily in the direction of basic industry, heavy industry. They had to create steel production, build hydroelectric dams, and so forth. The Left Opposition explained that you couldn’t orient yourself primarily to the countryside, but that industry in the city had to be the basis for the development of the Soviet economy as a whole.

This basic system, the state monopoly of foreign trade, has existed since the 1920s. There have been many attempts to weaken it, but it has remained. In the period after 1917, Russia was a country which was economically devastated and whose population was predominantly peasantry. So the question was: how was the state to find the resources to build up heavy industry and, on that basis, also expand agricultural production. Clearly, if the peasant can form a direct relationship with the imperialists—we’re talking of an encircled workers’ state—in that situation, not only do you have cheap foreign commodities penetrating the Soviet Union, there’s absolutely no reason for the peasant to sell his grain to the workers’ state. In fact, that actually happened by 1927, confirming a warning of the Left Opposition. The wealthier peasants went on a grain strike. They began starving the cities by simply refusing to either plant new crops or deliver what they had already harvested to the state market unless they got the price they wanted.

After 1921, with the introduction of the New Economic Policy, the state made concessions to the peasantry, entailing reintroduction of limited forms of capitalism in the countryside. Trade was conducted by Nepmen (people who would mediate between the country and the city by taking agricultural products to the cities and marketing them), but even during that period, the monopoly of foreign trade was maintained.

The industrialization debates raged within the Bolshevik Party throughout the 1920s, during the entire NEP period. By 1927-28, the peasants’ grain strike occurred because there was not enough of a development by then in their favor. They reached a point where they would just as soon destroy their crops than trade them unfavorably to the city. At that time, Stalin bureaucratically introduced some of the policies advocated in the program of the Left Opposition, claiming there could be very rapid industrialization and complete collectivization of the small private farms almost overnight, within a single five-year plan. During the previous several years, Stalin had been ridiculing the industrial growth rate that the Left Opposition had projected. The Left Opposition had said that 15-18 percent growth would be quite possible with a planned, centralized economy, a figure which many of the doubters within the Bolshevik Party had said was absolutely impossible. After the fact, even with the distortions of the first five-year plan as it was carried out by Stalin, the growth rates were much higher. Of course, there was very uneven growth in the economy, with heavy industry emphasized as against light industry; consumer products were not important.

In the 1930s, you had the frantic attempts on the part of the Stalinist bureaucracy to intensify labor with the Stakhanovite movement, trying to squeeze more production from the working class through relentless speedup and the introduction of piecework. This whole process was savagely accelerated during World War II, with the invasion of the Nazis. Fantastic destruction took place. Twenty million people were killed in the Soviet Union; 32,000 enterprises were wiped out in the course of the war. The figure the Soviets give for the cost of the war in rubles is 2.6 billion rubles, but it is really incalculable. A huge section of the industrial base had to be picked up from the European part of the Soviet Union and moved over the Urals or into Central Asia, the biggest mass migration in history. After the war, obviously, was a long period of recovery. But there was still considerable economic growth and rates of 10-15 percent were maintained right into the 1960s and 70s, when it began to slow down.

I mentioned there were fantastic imbalances in the Soviet economy. There was an attempt by the Stalinist bureaucracy to build “socialism in one country,” which was supposedly relatively self-sufficient economically; as comrades have spoken earlier, this has nothing in common with Marxism, and was repudiated and fought by the Second and Third Internationals until Stalin by 1924 was able to develop those policies. Even with all the deformations introduced by the Stalinist bureaucracy, by the 1970s and 80s, the Soviet Union had emerged as one of the most powerful economic forces on the world scale. The figures are quite staggering: in cement, steel, oil, timber and various other sections of industry, the Soviet Union is the world’s largest producer, outstripping the US and Japan. But there is a great scarcity in many consumer products and this has very strange effects.

The average Soviet worker earns 220 rubles a month. Even with what is considered a relatively low wage and a relatively low standard of living, the average worker saves approximately one-third of his paycheck. About one-third of his earnings go into savings because there simply are not enough consumer products available for purchase, or, if they are available, they are usually of such low quality that they are not worth buying.

Gorbachev recently has been complaining very loudly about the large amount of production—and he won’t give an exact figure—that goes straight to the warehouse. He is complaining: Why should we pay workers who produce goods of such low quality that the products go into storage and are never sold?

As far as the low quality, approximately 17 percent of Soviet production meets world standards. But the actual figure is probably around 7-8 percent. This shows enormous problems in the development of the economy. It is one of the prices that has been paid for the fact that the revolution has not been extended into the West, where there’s much higher technology and much higher productivity.

There are many indices of production that are very skewed, that have led to fantastic waste. The classic example is the “Stalinist lamp” as it is called. The quota in the Gosplan at one time for lamps was according to tonnage. So a whole series of older hotels and buildings in the Soviet Union have massive light fixtures that weigh something like 400 pounds. They can’t be screwed into the ceiling. They have to drill up through the floor and run wires underneath the rugs on the next floor to the four corners of the room and bolt them down. Yet the minister in charge of lighting met the quota he was assigned for so many metric tons of lamps.

There are many examples of this in the Soviet economy. The bureaucracy has found incredibly diabolical ways of introducing chaos into economic relations.

This is sometimes disguised by massive subsidies in the Soviet economy. Approximately 13 percent of all industrial enterprises today operate at a loss. Does this mean that they are closed down when they don’t make a profit? No, they’re subsidized. In some areas, the ensuing problems become extremely sharp.

Subsidies in food run, depending on your source, from 50 billion to 75 billion rubles a year. Last week in the New York Times, a leading economist being promoted by Gorbachev said the meat subsidy alone exceeds $120 billion per year. I’m not sure if this is a typo or not, since the whole Soviet economy is about $1 trillion. But they are undoubtedly carrying out massive subsidies to keep some prices artificially low. This reflects their fear of the working class.

In agriculture, there are staggering problems. At least 15-20 percent of all production is lost in transit from the field to the marketplace because they don’t have proper roads, refrigeration, storage, and there are tremendous weaknesses and bottlenecks in transportation. Even though agriculture has received massive subsidies, there is 15-20 percent being lost.

There is a massive housing shortage, and to defuse the crisis somewhat, rents are kept extremely low through huge subsidies. In fact, for these two areas the bureaucracy is discussing lifting subsidies: food and housing. I’ll go into some of their rationale in a minute.

There were attempts at reforms in the economy in the 1960s, a whole series of attempts. The first one was by Khrushchev focusing on agriculture, generally turning out disastrously; and then in 1965 by Kosygin, who changed the ministries and made considerable changes in organizational procedures. Today, Soviet economists are saying they didn’t go far enough at the time, and they left certain vital sections of the economy untouched: construction, transport, trade and nonproduction branches of the economy. Now they are going much, much further.

You have a very powerful working class in the Soviet Union. There are approximately 96 million workers engaged in what they call material production, including 24 million agricultural workers and approximately 70 million industrial workers, out of population of 280 million. This is a massive and powerful working class, heavily concentrated in urban areas. (There are 26 cities with populations over one million.) There are an additional 30 million more workers in services and transit. So this amounts to a work force of over 100 million workers.

There are approximately 48,000 enterprises. You should keep that in mind because we have read that one of the major reforms being proposed is that 20 ministries and approximately 70 enterprises are going to be able to link up directly to the world market. In other words, the monopoly of foreign trade is at an end, as far as the bureaucracy is concerned. Approximately 10 percent of the Soviet national income is engaged in foreign trade, and they intend to increase it. These 70 enterprises will be engaged in direct contact with the world market, and comprise about 20 percent of that world trade. So about 2 percent of the national income is to be engaged in the Gorbachev changes. It may seem like a small beginning, but it sets in motion irreconcilable social forces.

By the 1980s, the growth rate in the Soviet economy was about 2 percent, almost total stagnation. With the outbreak of the Solidarity movement in Poland, it is very clear that Gorbachev and those around him, that whole layer of the bureaucracy, knew that they had to propose certain reforms to try to stimulate the economy and head off an explosion in the working class. So they began these policies and things are developing at breakneck speed. All the Gorbachev policies are supposed to be in place by the beginning of the next five-year plan, the thirteenth five-year plan of 1991. Since all these plans are supposed to be in place and operating by 1990, within a two to three-year period, there will be fundamental changes in the nature of Soviet economy.

I wanted to profile very briefly and introduce some of the language of some of these reforms. Two of the main advisers to Gorbachev, Tatyana Zaslavskaya and Abel Aganbegyan, who come from the same institute in Siberia, have said the following. This is the article a comrade referred to, a nine-page section in the Wall Street Journal of August 24 called, “USSR: New Opportunities for Cooperation.” There is a small quote from Gorbachev, a message from the Ministry for Foreign Trade, an article by this leading economist, Aganbegyan, and then another article from the council of ministers for foreign trade trying to explain to US capital why they now need to invest in the Soviet Union.

Aganbegyan says the “present radical reform in the system of management differs from the previous one in many respects. First, the present reform is mainly aimed at creating mechanisms in our natural economy that would make producers fully oriented to meet public demands. It would do away with the supremacy of the producer over the customer and would liquidate the deficit.”

This phrase “do away with the supremacy of the producer over the customer” means they are openly saying that one of the big problems is the strength and power of the working class. The fact is that workers have become accustomed, even with the modest standard of living they have, to having subsidized food, subsidized housing and full employment. That is not exactly true. There are many ways to disguise unemployment in the Soviet Union, but a worker is guaranteed a job. It may be a job that is virtually useless from a social standpoint. There are many ways of padding the work force. Nevertheless, no worker has been subjected to official unemployment. One of the major obstacles to all progress now, according to the bureaucracy, is the dictatorship or the supremacy of the producer over the consumer.

This is one of the points offered by Aganbegyan: “Under the new radical reform of management, enterprises and associations will work under a self-sufficient basis. The main point of which is as follows: money received by the enterprises for the products they sell covers not only the current production expenses, but also capital allocations for expanded production, technical updating and plant overhaul. Fourth, the material production supply of the enterprises and associations in cooperation with suppliers and consumers will be arranged on an entirely new basis. Compared with the 1965 reforms, which practically improved the existing multi-story system of fund supply of enterprises with resources, this reform envisages ample restructuring of the whole system of material and technical links, wide transfer of wholesale trade and direct commercial ties between enterprises and associations. Fifth, the results of economic activity of enterprises and associations, their wages, their system of benefits and payments are to be closely intertwined. An important element of the 1965 reform was to address directive planning on the wage fund. Now it will be canceled and substituted for by the wage fund economic norms designed for five years ahead.” Then he says, “The economized wage fund of the enterprise remains at its disposal, can accumulate and does not in any way affect the wage fund plan of the next year. Simultaneously, leaders of enterprises are given broad rights to use the economized wage fund for additional increase of tariffs and wages up to 30-50% for various categories, for premiums, etc.”

Then, they refer to the democratization and glasnost which Gorbachev has been pushing. “The radical reform of the national economic mechanism calls for a wider democratization of economic activity, such as involving workers in management on a more actual basis, or transferring management to the workers. The 1965 reform did not envisage such measures.”

Enterprises that have been subsidized, which is 13 percent of all industrial enterprises in the Soviet Union, will no longer be subsidized. If they can’t show that they’re making a profit, they can be shut down.

The big question looming behind that is unemployment. What do you do with workers engaged in 13 percent of the industrial base, if these enterprises can’t be shown to make a profit at the end of the year? They’re saying they’re going to let them go.

They’re going to establish joint enterprises. A former president of the US Chamber of Commerce pointed out in a recent article that in 1972, when he went over there and tried to get a discussion on this question, he was told that this was a capitalist measure and there would be no further discussion whatsoever. In 1987, we have a full page ad in the Wall Street Journal begging US capital to engage in joint enterprises. How would this be set up?

Up to 49 percent of one of these joint enterprises may be owned by a foreign country; 51 percent will be Soviet owned. Thirty percent of the profits will be taxed, and 70 percent will be divided based upon the agreement between the capitalists, the Soviet management and the workers. One of the provisions of the joint enterprise legislation is that the president and the main managers must be Soviet citizens. Trotsky warned that the captains of Soviet industry are all potential proprietors. If they could get ownership of the means of production, which they don’t have, they would be glad to do so.

This is why Trotsky was so careful about saying that the bureaucracy is not a capitalist class. The bureaucracy enjoys special privileges and is a definite social layer. But as far as its relationship to the means of production, it doesn’t own them at the present time. But what is being said here is that these potential proprietors, potential property owners, will be able to link up through joint enterprises directly with world capital and to begin to sell what is produced on the world market, not through the Gosplan, the state planning commission. Then the profits they get can be divided. And, of course, there’s going to be a two-year moratorium on taxes.

But what is this going to do? This will lead immediately to a stratification within the working class itself, with some workers making much higher wages than others. At the beginning, it’s supposed to be all for export to the world market to earn Western currency. But already, there are discussions that they want to have things produced to be sold domestically on the Soviet market.

With the pricing mechanisms presently in place in the Soviet Union, virtually all the prices of things produced are about one-third to one-half, perhaps two-thirds at best of what they would go for on the world market. If the joint enterprises are expanded and allowed to play a very rapid major role in the economy, and that’s certainly the perspective of the bureaucracy, it will play absolute havoc with all the pricing mechanisms, exchange, the wage scales, etc. in the Soviet Union.

At the same time, Gorbachev has introduced other reforms, which sounded innocent at the beginning. They said they would have private family enterprises, individual incentives, the family will be able to open up hair-dressing shops, barber shops, restaurants, TV repair shops, any small business. There was an article this week in the Canadian newspapers about someone who opened his own wind surfing store on the coast. In fact, after these proposals were made, the bureaucracy was quite upset because in Moscow, only 5,000 licenses were taken out in the first few months. They said: We have a population of nine million, why don’t more of you apply? You can actually run these businesses; it will be legal; you can keep the profit; you’ll be able to employ members of your family.

There are certain limitations, for you cannot employ anyone under 16 years of age. But immediately, there has been a discussion as to whether that age limit should be lowered so that child labor can be reintroduced in order to create higher profits for what will be a new petty-bourgeois stratum in the Soviet Union.

Tatyana Zaslavskaya has two main planks in her economic program that she’s willing to talk about. She says the USSR has to lift the food and housing subsidies, and it has to allow for the enormous wage differentials that come about through these private enterprises. She was interviewed in a Soviet newspaper and the journalist noted, “A growing gap in the population’s income can now be observed. We’re talking about Soviet millionaires, on the one hand, and, on the other, about low-income population groups with an average per capita income of less than 50 rubles a month. What factors are involved in this gap?”

She gave few answers, but you get an idea of what is being discussed. She said, “It seems to me that the excessive differentiation in the standard of living in our country is formed primarily by unearned income. The emergence of a sizable stratum of people which live on unearned income was a consequence of the suppression of democracy in the absence of openness, corruption of some officials in the field of justice and the safeguarding of law and order, and the removal of managerial personnel from people’s controls and criticism, etc.”

The correspondent was not happy with her answer. He replied, “Isn’t the changeover, the self-financing of enterprises and family contracts leading to an ever greater gap in the population’s income? Under these contracts, a family can receive 40,000 or even 50,000 rubles in a season.” This is quite possible with laws already set up. Then the correspondent said, “But after all most of the population does not have the conditions needed to obtain that kind of earnings.” The economist then said, “The measures you have named certainly should increase the differentiation of earned incomes, but this is nothing to be afraid of. Seasonal construction brigades of migratory workers, families working on contract, and those in gold prospecting [a ridiculous example, I don’t know how many gold prospectors there are]—already are making some very large sums as of now ... they work with no days off, 13 or 14 hours a day, and the quality of work is far higher than that in the public sector. However, the development of such groups including the levels of incomes and the growth of their well-being should be monitored to keep them from becoming a petty-bourgeois stratum, Nepmen as it were, with the proclivity for a life of luxury. The incomes of workers in the individual sector per unit of labor can exceed that of wages in social production by 100% to 300%, but a gap of say, 900% is clearly excessive and unwarranted.”

This is what she feels today; tomorrow 900 percent may be perfectly warranted, and perhaps 3,000 percent will be excessive. She goes on: “At present the leveling tendencies in our national economy are too strong, high earnings are condemned, and then they are credited to the lowering of wage rates. The implementation of such a policy slows the growth of labor productivity.”

Every one of these economists is complaining that the working class resents the fact that sections of the working class and these petty bourgeoisie are making incredibly high wages. There’s another economist who just wrote an article. He said, “We must finally decide what is most important to us: have enough of bulk agricultural commodities or to eternally pacify the loudmouths who would see us all equal in our poverty.”

According to the Stalinist bureaucracy, it must encourage the growth of wage differentiation inside the working class. This is clearly one of the policies that the bureaucracy is consciously embarking on, because it fears its own isolation. The bureaucracy sees 70 million workers, and having seen the rise of Solidarity, it feels extremely isolated and feels the need of a very definite buffer, a layer between it and working class.

It is deliberately seeking to create this petty-bourgeois stratum to be used as a social force against the working class. That is why it tinkers with such things as joint enterprises and the monopoly of foreign trade. It is opening up the door to direct links with the world market. It is pushing as hard as it can, as Trotsky said there are only two ways to go, either counterrevolution and the reintroduction of capitalism, or the working class will destroy this bureaucracy and advance towards socialism as part of the world revolution. And the bureaucracy is moving very fast to create this new social layer. In the beginning, of course, the private family enterprises are relatively small scale. They are not releasing percentages of how many people are engaged in them. But clearly, it has a potential for very fast growth.

In the Soviet Union, again, there are tremendous imbalances. You have strong heavy industry, but one of the weakest sections of the economy are services, repairs, not only consumer production, but TV repair, hairdressers. There are tremendous shortages in these areas. Then, in many areas of the economy, where there is technically no unemployment, you have a situation like in restaurants.

It is well known that when you go to a Soviet restaurant, a meal takes a minimum of two hours, usually three hours. The reason is that the average Soviet meal has six courses. If a waiter goes to the kitchen to begin to assemble the six courses, he has to stand in a separate line and cashier for each of the separate six courses. So with 20 waiters in a restaurant, you have 20 people waiting in line for the salad, then 20 waiting in line for the soup, 20 people then go for the main course. This creates extra jobs that are socially completely unnecessary. Six cashiers sit there and give a receipt to the waiter, who then goes from the line to the counter where the salads are, presents his receipt to the salad chef and then can take the salad to the dining hall. These six jobs are totally unnecessary, but provide a job for someone who would otherwise be unemployed.

Soviet industry is much worse, because bonuses and wage scales have often been tied to the number of workers working in a factory. Any enterprising manager who knows anything and wants to loot a larger section of the bonus for himself will double the size of the work force. He doesn’t care if there are 30 people standing around doing nothing, or not, as long as they are on the payroll. This situation can readily be drastically transformed into major unemployment. You have jobs which fill no social function. Changes here will have a fantastic impact. One of Zaslavskaya’s main claims is that the Russian work force is endemically lazy and poorly skilled. Then the other economist is saying that the workers are a bunch of “loudmouths” who want equal but lower wages. This is just a small sign of the hostility which they have for the working class.

Here is a statement which appeared in one of the most prestigious journals: “The state of the economy satisfies no one. Its two chief defects are clear. The monopoly enjoyed by the producers [once again, the workers are to blame] given a general shortage of goods and the lack of interest on the part of manufacturers and scientists in technical progress, persistent long-term efforts to overturn the objective laws of economic life, crush the age-old natural incentive to work, have brought results directly opposite to those anticipated. We have now an economy which is out of whack, plagued with shortages, an economy which rejects scientific and technical progress and which is unplanned and, if you want to be totally honest, unplannable.”

What they’re saying is that centralized planning is completely impossible. So what does this mean? Go to the marketplace. Allow the invisible hand of the market that thrives so much in the Western world to be permitted to come in through these petty-bourgeois layers, with the potentially more explosive intervention of foreign capital, and begin to completely reshape industry and the economy.

The working class has been trampled upon by the bureaucracy, faces incredible shortages, etc. Alcoholism is not a surprise. Of course, they’re blaming the working class. A noted Soviet economist, Shmelyov wrote, “The real possibilities of losing one’s job, of being shifted to a temporary employment subsidy or to be forced to move to a new place of employment is not at all bad medicine to cure laziness and drunkenness.” When Gorbachev was asked by a correspondent, do you agree with this article, he said he agreed with the first part describing the difficulties of the economy. But as for the second part, it seems that Shmelyov is for unemployment, but that’s not for us.

So Gorbachev is saying that he’s not going to go that far yet.

Meanwhile, Gorbachev’s chief economists are calling for unemployment and lifting the subsidies. They might temporarily conceal it with more useless jobs, but unemployment is clearly on the order of the day when they start shedding nonprofitable enterprises. One of the proposals they have is to shift 20 million workers from production into services. They haven’t come up with a plan to do that, except that they’re saying through the free market and the possible reintroduction of hated labor exchanges. They’re saying this must take place in the very near future. Once again, as far as the subsidies, they say, why underpay for meat when overpaying for yard goods and shoes? The meat subsidy is a particularly painful question. In 1962, they lifted the meat subsidies in one city, Novocherkassk. There are several different accounts that reached the West. It’s hard to tell how reliable they are, but apparently there were ·demonstrations of workers in the main square and the town was encircled by tanks. They called in the KGB and sections of troops and they massacred workers. One account said there were 150 killed. Another said 300 were killed. This was under Khrushchev. Again, if the New York Times article is to be believed, $120 billion worth of meat subsidies has to go. Other articles describe a total of $70 billion in food subsidies. Nevertheless, there is a massive amount of food and meat subsidies. This will have to provoke a social explosion in the Soviet Union, where the working class comes up against the bureaucracy very directly and very rapidly. The American bourgeoisie is enthusiastic about the possibilities. The Chamber of Commerce president raises a question, saying, “Fundamentally the Soviets are trying to reconcile market forces with the planned economy. They are seeking a modernized economy of the kind that was tried in the 1920s. There is no question that the market is going to start driving them in one way, in resource allocation, while central planning and their concept of social values, as they put it, will drive them in the opposite direction. Gorbachev knows the vast built-in subsidies amounting to hundreds of billions of rubles are a drain on the economy and must he substantially reduced. Yet these subsidies, one might call them entitlements, embody the social contract between citizen and state to ensure employment and very cheap necessities. Consumer goods of high quality tend to be in abort supply. This may he one of the reasons as I was told that Soviet citizens save about one-third of their incomes.”

Thus, he concludes, the economic reforms may well come in conflict with the social contract and add “potentially explosive elements to the Soviet political equation.”

One final quote from the head of the Council of Ministers Economics Department: “As far as the international situation is concerned, we promote the concept of international economic security. By this we mean that all countries should cooperate, maximize the benefits of the international division of labor and to minimize external trade shocks. We are of the opinion that, as a result, every national business community and every government can again be the master of its own economy…”

So the Soviet bureaucracy says, come and invest and we will guarantee to the utmost our ability to make sure there are no horrible things such as trade shocks, monetary crises. Then we will guarantee that every nation can then be the master of its own economy!

Accompanying this are the statements from economists saying the whole concept of the planned economy is a historical misunderstanding. They ridicule people who have read Marx and interpreted him to say that it would be desirable in the future under socialism or communism to have “From each according to his abilities, to each according to his needs”—that is, the non-commodity distribution of the social product, which you don’t receive according to the number of hours you worked or your wages, as money withers away like the state. Shmelyov says that this is sheer fantasy and has nothing to do with the direction the bureaucracy is going. This has to provoke fantastic social explosions and the Soviet working class has not faced these type of changes before in its history. Gorbachev says they will start putting things into effect in the next two to three years.

I have not touched at all on their complete revamping of the monetary system. The ruble is not convertible on the world market. There has been a long debate as to whether the law of value applies to the Soviet economy. For many years, the official position of the bureaucracy was that it had no relationship at all, as there was no commodity production. Now they’re saying that the laws of the market are basic fundamental laws that have to be obeyed. They’re going over and examining the role of the market as opposed to centralized planning.

Several theoreticians are saying that the entire monetary system based upon the ruble has to be completely revamped. This is now a ferocious debate within the bureaucracy. They haven’t decided amongst themselves and they don’t even know what will be the impact of any of the measures that are being proposed. One described it as “a leap into the unknown.” So there’s a certain amount which they know they will be doing, but there are other measures which they are being driven to. One could describe this bureaucratic layer as “losing its head.” They are being objectively driven to link up with world capitalism.

Some comrades asked earlier, has capitalism been restored in the Soviet Union. Obviously not, that can only be done through bloody counterrevolution. The working class will not accept it. That opens up historic possibilities for the International Committee, because once this working class begins moving in the Soviet Union, it’s going to dwarf the movement of Solidarity.

In Poland, there are many more intermediate social layers; the Church has a much more deadly role, the national question is not as sharp as it is in the Soviet Union, etc. So if anything, the polarization or starkness of social relations will be even greater in the USSR than in Poland. Certainly, the Stalinist bureaucracy is moving toward taking on the working class. That’s where it is going, and its policies will lead to great social upheaval. That is why the Soviet working class is such a decisive component part of the world revolution.