Gorbachev rode the tiger and ended up inside it
The late Soviet leader ended the Cold War, but his botched reforms opened the way to Russia’s modern crony capitalism.
So what are we to say about Mikhail Gorbachev, who passed away on August 30?
For one, the late Soviet leader triggered a process of socialist reform that ran out of control and ended up with Soviet socialism swept away. Under his successor, the drunken Boris Yeltsin, the West, and the International Monetary Fund were given a free hand to bring about the birth of capitalism in Russia.
This destructive process of sweeping away all the institutions of state socialism via radical privatization did not give birth to the free market capitalism that the ideologues of the IMF and their Russian acolytes desired. Instead, it gave way to a system where privatized assets passed into a few hands that had mastered the system of pirate capitalism.
So great was the pain, both physical and psychological, inflicted on the Russian people that when a “savior” from unbridled capitalism emerged from the ranks of the former KGB, the Soviet security agency, they embraced him. So associated in the Russian consciousness was the chaotic liberal democracy under Yeltsin with the economic shock therapy imposed by the West that they’ve tolerated Putin’s two decades of authoritarianism cum crony capitalism as a lesser evil.
The Chinese said Gorbachev’s lessons boiled down to three: 1) never trust the West; 2) reform the economy and allow the development of private enterprise, but keep the state in a leading role; and 3) make sure the Communist Party has a firm hold of the political process.
Now one may quarrel with one, two, or all three of these propositions, but it is hard to deny the results of this approach: the emergence of China as the world’s second biggest economy, the reduction of poverty to less than 5 percent of the Chinese population, and a political system that is both stable and broadly considered legitimate within the country.
To be sure, there are problems that many point to, like environmental crises and lack of democratic participation, but the ordinary Chinese would probably respond: “Sure, we have many problems, but would we exchange this system for that of the United States? Of course not.”
The U.S. infrastructure and economy overall are in such a decrepit state that some Americans say all it takes to convince an American to realize that the Chinese system is superior is to take the high speed train that travels the 819 miles from Shanghai to Beijing in just 4.5 hours. (Amtrak, by contrast, covers the 457 miles from Boston to Washington, D.C. in 7 hours — and it ain’t no point-to-point train!)
But back to Gorbachev. How should he be judged?
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Mikhail Gorbachev was one of the great failures of history
by PATRICK COCKBURN
Russia would not have become a Communist state without Lenin or ceased to be one without Mikhail Gorbachev. At either end of the 20th century, each man played a decisive role in pushing history in a radically new direction it would not have taken otherwise.
The path chosen by Gorbachev after he became Soviet leader in 1985 was in some respects more surprising than what Lenin had done in 1917. The Bolshevik Revolution was driven by a terrible war, while Gorbachev’s attempt to modernise and re-energise the Soviet Union was a voluntary choice.
A myth has since grown up that the Soviet Union was in a state of collapse when Gorbachev took the helm, but this is not correct. It was politically and economically dead in the water, but it was not falling apart and the Government faced no serious challenge to its authority. It might have continued in this semi-moribund state for decades – like the Ottoman Empire in the 19th century – if its leadership had so wished.
But Gorbachev, who was a genuine democrat, wanted far more than this as the general secretary of the Communist Party of the Soviet Union (CPSU). He promoted “glasnost” – limited freedom of expression whereby criticism of failings would propel reform. There was also to be “perestroika” – radical restructuring of an unstated kind to improve almost everything, though the mechanics of this were always vague.
What Gorbachev did not foresee was that you could not transform a party that was run and organised like an army – justifying its monopoly of power by its messianic faith in its own ideology – into something resembling a social democratic party, sharing power with others. Between 1985 and 1991, Gorbachev tried to do this, relying on his power as leader of the CPSU to drive forward change. But by diluting its authority, he was effectively sawing through the branch on which he and the reformers were sitting.
I was in Moscow as a foreign correspondent between 1984 and 1987, but I certainly did not take on board the revolutionary outcome of what Gorbachev was doing. The ailing and mostly invisible Konstantin Chernenko was Soviet leader when I arrived and the promotion of Gorbachev as his successor on his death was a great relief. Soon, there were interesting speeches, articles, interviews to read, rather than tedious outpouring of official blather. Moscow became an extraordinarily interesting place to live and work, leading to a procession of world leaders heading for the Kremlin to be told about “the new thinking”.
There were many others at the time who said that what Gorbachev was saying about “perestroika” and “glasnost” was all a put-up job by the KGB to give the Soviet Union a better image. Journalists and diplomats in Moscow who took all this seriously were denounced as credulous suckers. Sceptics soon fell into an embarrassed silence as it became clear that Gorbachev meant what he said. But the doubters did have a point that, if Gorbachev was genuine about real political, social and economic change, then the system would not be able to take the strain without cracking up.
Gorbachev wanted less resources allocated to the Soviet armed forces and they no longer received the undiluted patriotic plaudits they were used to. When a light plane penetrated Soviet air defences unnoticed and landed in Red Square, the incident was an excuse to change the military leadership. But very large armed forces were needed to hold onto eastern and central Europe which had been conquered by Soviet armies in the Second World War. Only the threat of the massive use of armed force could sustain this imperial control and, as soon as Gorbachev made clear in 1989 that he was not prepared to use it, Soviet rule collapsed in ruins.
Much is being made in the immediate aftermath of Gorbachev’s death about how well he got on with Margaret Thatcher and Ronald Reagan. This is perhaps less surprising than it looks, since he was essentially ceding victory to them in the Cold War and telling them what they wanted to hear. The mood music was good, but how realistic it was was another matter. I went with Gorbachev to Iceland for the Reykjavik summit with Reagan in 1986 and it was difficult not to feel relieved as they talked of abolishing nuclear weapons – ambitions swiftly curtailed in the aftermath of the meeting.
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How Mikhail Gorbachev became the most reviled man in Russia
by JEFFREY SOMMERS
Mikhail Gorbachev presented a figure of Greek tragedy proportions.Possessing good intentions and intellectual curiosity, Gorbachev nonetheless became the most reviled man in Russia, following the USSR’s demise. Yet, with Gorbachev, his worst qualities were connected to his best. Gorbachev was the wrong man at the wrong time to resolve the contradictions created by the Stalinist and then Brezhnev bureaucratic model of really-existing socialism in the Soviet Union. Increasingly hated at home, Gorbachev was beloved by world leaders in the “West” as the man who peacefully (at least by the comparative metrics of collapsing empires) unwound the USSR, even if trying to save its all-union character. Meanwhile, for China, Gorbachev delivered lessons in what not to do when reforming a sclerotic post-Stalinist system requiring economic reforms, if not transformation.
What happened when the USSR produced its first post-World War II leader untethered to Joseph Stalin (and those he appointed)? Answer: a liberalizing socialist seeking a return the origins of the USSR’s democratic anchoring in the spirit of the “Soviets.” Contra assertions of Friedrich Von Hayek that socialism represents the “road to serfdom,” the emergence of Gorbachev suggests the opposite. Terror and tyranny in the USSR arose more from war and the demands of state security services required to survive, and the paranoid politics it enabled, rather than any “inevitable” path from the socialist path taken. Once the USSR was passed the generation having gone through this trauma (and leaders linked to that generation), a communist party head emerged that sought a return to an ideology anchored in democratic socialism.
As with nearly all of the Soviet Union’s leadership, Gorbachev had provincial origins, in his case born in 1931 in Stavropol Krai just southeast of Ukraine. His maternal grandparents were ethnic Ukrainian. He rose through the party ranks with a reputation for hard work and finding solutions to vexing challenges. By 1979 he was in the USSR’s highest governing body, the Politburo, and by 1985, selected to the country’s highest post as General Secretary to lead the Soviet Union out of its economic stagnation.
Gorbachev was a serious Leninist, and not just a bureaucrat reciting historical materialist catechisms out of momentum or political expediency. Confirming what historian Stephen Kotkin asserted in his biographies of Stalin, Soviet party leaders were not party posers, but genuine believers in communism who often walked the talk. But, what many thought the USSR needed in its time of trouble was Lenin’s firm hand and not democratic socialist inspired experiments done on the fly.
Ironically, it was these aforementioned democratic characteristics, which ensured the failure of Gorbachev’s reforms. For every crisis, Gorbachev encountered, his go to inspiration was to be found in Lenin’s writings. Like Lenin, a provincial figure that transformed Russia, he was nonetheless not Lenin. Gorbachev focused on Lenin’s democratic message for the future, but not his decisiveness, if not brutal ruthlessness that allowed him to carry off the Soviet Revolution. By contrast, Russia’s current leader, Vladimir Putin, possesses the other half of Lenin’s personality: his ruthlessness, but bereft of any democratic purpose.
Gorbachev was too much the provincial intellectual and too little the pragmatist as he sought to salvage the USSR. Rather than address practical material approaches to Russia’s economic challenges, e.g., such as his mentor Yuri Andropov’s sensible proposal to reduce waste and make transport more efficient across the USSR’s vast expanse by improving rail rolling stock, Gorbachev’s outlook was often philosophical, focusing on democratizing civic and political life in order to unleash the dynamic economic potential of its citizens. Gorbachev’s reforms let loose creative forces alright, just not ones making the economy more productive, but rather those that gave rise to the post-Soviet oligarch and later siloviki-dominated economy.
For example, Gorbachev’s Decree on State Enterprises in 1987 and Decree on Cooperatives in 1988 were conceived to unleash entrepreneurial energies and deliver greater autonomy to both managers of existing state companies as well as producing entrepreneurs. In practice, however, these measures provided structures permitting the raiding of state inventories of raw materials and often re-selling of finished goods by middlemen in cooperatives at higher prices. Worse, these decrees permitted the rise of commercial banks for the purpose of facilitating business with international customers. This gave cooperatives and state company directors the ability to create (and launder) money, which the government had to back up with real cash. This also created opportunities for early de facto privatizations of state assets. In aggregate, rather than adding new output, Gorbachev’s reforms mostly fueled even more theft. Moreover, they became the infrastructure for offshore banking and privatizations enabling the final feeding off the post-Soviet carcass during the Boris Yeltsin years. This utilization of offshore banking networks intersected with the larger global turn led by the US and the UK to financialize their economies to remain competitive in the face of global manufacturing competition. Utilizing the euro dollar offshore banking systems designed in the 1950s to avoid taxation of multinational companies in Europe, these systems were expanded in the late 1970s and 1980s for tax evasion by the rich generally. KGB trained in using these networks to move capital globally for various Soviet projects (e.g., transferring money to revolutionary movements, etc.), used their expertise in the late Gorbachev years and after to facilitate the theft of Soviet commodities by selling them at world prices and pocketing the arbitrage. All of this worked to the interests of New York and London, as their banks become the recipients of this torrent of cash. KGB agents under Gorbachev were tasked to assist Soviet cooperatives and state managers with establishing commercial banks and offshore accounts. Under Yeltsin, these businessmen created in the Gorbachev years, muscled out the KGB (Chekists). But, in the 21st century, former Chekists (Siloviki) reasserted their power, grabbed the cash and assets of select oligarchs, and began using this wealth to rebuild Russia’s military. This represented an entropy, in which the system of offshore banking that served US and UK interests through exporting post-Soviet commodities and money to points West, eventually created challenges to Anglo-American power, exemplified in part by the war in Ukraine in 2022.
But, it was not only in the economic realm that Gorbachev’s reforms caused chaos. Liberated from decades of control from an overbearing state, Gorbachev’s perestroika untied the heretofore tightly wrapped package of nationalism that Lenin and Stalin previously contained. Nationalists in the republics came to hate Gorbachev for his attempt at retaining the USSR, even a democratized one with autonomous republics. Meanwhile, Great Russian chauvinists despised Gorbachev for letting the Soviet system unwind and failing to use state power to keep the empire intact. One notable exception on the latter was in Armenia, where protests were causing an uncontrolled opening of the Soviet border with Iran. Gorbachev’s spouse, Raisa, asserted the resulting deaths of 200 Armenian protestors in a crackdown ordered by Gorbachev left him tormented and never the same. Yet, this limited use of force in Armenia was largely the exception to Gorbachev’s refusal to use violence against protestors. The Balts were also having none of Gorbachev’s attempts to reform the Soviet system. Gorbachev’s reforms gave them an opening to bolt for the exit, and they ran. Ukrainian, along with Russian, nationalists also awoke under Gorbachev. Many in the Russian and Ukrainian republics also backed independence from the USSR for economic reasons. Why? Russians assumed they were rich and were held back by parasite Soviet republics draining their wealth. Likewise, Ukrainians pitched independence as the road to milk and honey. Ukraine’s vast black earth belt and formidable industry in the Donbas surely would make it rich once liberated from the Soviet Union, so they thought. Thus, the implication of this is that the nationalist project of the 19th century which was held back by both Czarist Russia and the USSR could not be chained indefinitely, and thus, wasn’t. Add to this that many in the USSR believed they indeed were rich, but that their vast wealth was being taken by other republics, and dismemberment became compelling.
But, this begs the question of whether the USSR could have been reformed and salvaged in the 1990s under different leadership? Likely not under the existing conditions. The Soviet workforce was already urbanized. There was no ultra-cheap rural reserve army of labor to tap, as in China. Moreover, the US convinced Saudi Arabia in the 1980s to open the oil spigot to depress energy prices, thus checking Soviet power. Without access to cash, the Soviets could neither fund a transition period while modernizing or buy the technology required to do it. Unable to integrate more rapidly into the world economy, pace China, the USSR would have at a minimum needed to maintain COMECON for many years in order to enter the global economy as a producer of goods beyond commodity exports. France lobbied for keeping COMECON in the newly emerging post-Soviet bloc. The US, however, vetoed it, both to further open Russia to foreign capital, but more importantly to see its vast store of natural resources exit to global markets. Low prices for Soviet commodities in the 1980s and post-Soviet 1990s, played a significant role in restoring global profit levels after the 1970s crisis of accumulation. The post-Soviet space was a key element preventing a return to the raw materials price inflation of the 1970s economic crisis. Additionally, the US was keen to break up the Soviet bloc economies to minimize the threat of the return of a developmental state, especially one of any red and/or brown character.
Regarding China, Gorbachev proved a study for their leaders in how not to reform. Deng Xiao Ping held Gorbachev and his reforms as a study in how not to transition China out of its old Stalinist economy. But, could Gorbachev have succeeded had he moved straight away to economic reforms and used the fist to enforce them as did China in 1987 at Tiananmen? The answer, I think, is no. China’s good relations with the United States were a necessary condition for its economic miracle. The US opened to China under Nixon to further split it off from the USSR. Next, China was perfectly positioned to help the US make its supply-side, neoliberal turn in the 1980s to address its crisis of profitability of the 1970s. Moreover, in the 1980s/90s China was at the beginning of its urbanization. Its massive reserve army of labor powered the offshoring and outsourcing of manufactured goods that applied downward wage pressures sought by capital in the US. Meanwhile, in the 1980s, the process of urbanization in the USSR was done. There was no huge rural labor force that could have been exploited to make the USSR competitive in global labor markets. Soviet wages were too high and its brownfield industries were mostly uncompetitive. And, where Soviet and Warsaw Pact industries were competitive, Western multinationals sought to either buy and operate them or purchase them in order to remove competition. Meanwhile, resource extraction and surviving heavy industry were seized by Russia’s new oligarchs in the 1990’s “loan for shares,” and under Putin slowly clawed back by the siloviki. China, by contrast, was an economic tabula rasa with ultra-low wages and a strong state that kept labor discipline intact while building modern infrastructure as needed. Unlike the USSR, China was at the right place at the right time with the right global conditions to develop. The United States needed exactly what China had, and China knew what to do with that need.
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