Economic Update: Rise and Fall of the USSR

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[S9 E24]

This week on Economic Update, Professor Wolff goes beyond the simplistic, sterile Cold War debates of demonizers vs celebrants of the USSR as he delivers an in depth analysis of the USSR's strengths, weaknesses, successes and failures from its revolutionary beginnings in 1917 to its implosion in 1989. The first episode of a special 2-part series where Professor Wolff gives the same in-depth analysis for the People's Republic of China in the second part.

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Transcript edited for clarity.

RICHARD WOLFF: Welcome, friends, to another edition of Economic Update—the weekly program devoted to the economic dimensions of our lives: jobs, debts, incomes, our own and those of our children. I’m your host, Richard Wolff, and I prepare these economic updates each week.

Today, we’re going to depart briefly from our normal schedule to do an entire program devoted to a single topic. The topic is what happened in the Soviet Union—the rise, the growth and the fall of the USSR. Why? Well, I’ve probably been asked more than anything else to explain what in the world happened in the Soviet Union, and secondly what in the world is happening in the People’s Republic of China. These two enormous countries—Russia the largest by geography, China the largest in the world by population—have these enormous experiments in Russian in the twentieth century, an experiment in constructing in constructing socialism. In China, which started after the Russians, it’s still going on. And these have had enormous effects—now, most of the time, in the last fifty to sixty years, it was impossible to have a reasonable conversation about these things. The Cold War prevented that. In the Cold War, each side found itself to be the sum total of virtue, and the other one the sum total of evil. This kind of childish behavior was not appropriate and is certainly crazy now that the Cold War is officially over. So hopefully we can begin, what should’ve happened a long time ago, which is a balance assessment of what these enormous social experiments, past and ongoing, what they mean. And that’s what this program is devoted to, part one on the Soviet Union and part two on the People’s Republic of China.

So let’s begin. What happened in the Soviet Union? Well, in the century before their revolution—because everything was changed by that revolution, which happened in 1917—in the century before, the dominant system in what was then Russia was feudalism, lords and serfs. Feudalism was over in Western Europe, long before it was over in Eastern Europe. The Russians officially ended feudalism only in the middle of the nineteenth century. And capitalism, which grew after that, grew quickly in Russia, but was still a tiny part of their economy. The vast majority of people were rural—peasants, farmers. They didn’t have much education, there was no real school system going on, most people were illiterate, et cetera, et cetera. And that situation produced extreme poverty. Some wealth in the urban areas, where the industry and capitalism developed, some wealth among the rich landowners who dominated the countryside. But a society of extreme poverty, extreme backwardness and extreme inequality. Into that situation, this new capitalism that grew up in the last part of the nineteenth century and early in the twentieth century was a kind of implant, if you like—the French were the biggest owners of factories in Russia at the time of the revolution. But the extreme poverty, the inequality, produced a thirst to have something different from the old feudalism, but also from the new and very rapacious capitalism. Unfortunately, for the people of Russia, the tensions growing up around the capitalist part of the world—Western Europe, England, Germany, United States—produced a spectacular war among capitalists fighting over industries, fighting over markets, fighting over the colonies where each of these advanced countries was creating a kind of backstop for their own economies. They went to war. The most horrific war in the history of the world, the first war that was called a world war because it was so destructive over such an immense territory. Russia, Germany, England, the United States all participated. The Russians lost that war. They lost it mostly to the Germans, and the Russian withdrew. But in the chaos of the war, much of which was fought on the territory of Russia, there developed an anger among the people about what had happened to them, the end of the feudalism that was not wanted, the rise of a new capitalism that was so unequal and now a devastating war that you had an eruption of a revolution—a demand of the mass of people for change. In that situation, the soldiers left the front even before the war was declared over by the Russians who were defeated. They had to in part declare that because the soldiers went home—they walked back across Europe to Russia. And so in the chaos of all of this, two political parties made an alliance and called for a revolution. A lot of people don’t know this. Number one, a wing of the social democratic party, the wing calling itself the Bolsheviks, were part of this, and the other party that allied with them to make the revolution was a that party represented the poor peasants—it was called the Socialist Revolutionary Party. And these two small parties merged together for an alliance, called for a revolution and to everyone’s surprise—theirs too—they succeeded. The old government, the Czar, fell and a new revolutionary government took over. And it was heavily influenced by the leaders of the Bolshevik party, who in turn had been influenced by Marxism. They were students of Karl Marx, they had read all that stuff, they had learned about socialism from Western Europe and they were determined to build it in Russia.

Here’s some things they did that may surprise you. The revolutions were “Bread, Peace and Land,” the first thing they did was take the land of Russia and hand it out—this is crucial for you all—as private property to the individual peasants of Russia. The notion that the Soviet revolution was a revolution against private property is false and wrong, and comes out of that Cold War hysteria. They weren’t opposed to private property, they gave out property as private property on a scale no one has ever equaled since. They created the independent farmer who owned his or her own land—extraordinary. They also declared—extraordinary—that people would be provided, as part of the government’s commitment—the revolutionary government’s commitment—with guaranteed food, guaranteed housing, guaranteed education, guaranteed medical coverage—you get the picture. It was a socialist revolution. Over the years that followed, they tried to implement all of this. With successes along the way, and failures along the way. It was an experiment. They were flying by the seat of their pants, because no one had done this before, let alone in a big country, let alone with a history of poverty and backwardness and ignorance that had developed in a country like Russia.

They quickly discovered, as they rebuilt after the war, after the revolution, that they had enemies. And the enemies affected them deeply—again, for those of you that don’t know. In the immediate aftermath of the revolution, 1917, they were invaded by four countries who tried to put down the revolution. The four countries, all of whom sent troops that landed in Russia to fight the new revolutionary government—France, Britain, Japan and the United States. Just a little footnote. The United States landed troops on Soviet soil; the reverse never happened. You can ask yourself who’s entitled to be afraid of whom, given that history. At the same time, a civil war developed inside Russia between those who supported the revolution—the Red Army—and those who were opposed to it—the White Army. I’ll leave you to guess who the invading armies sided with—the White Army. And to everyone’s surprise, including the leaders of the Red Army—and you might be interested in the name of the man who was given the job of organizing and leading the Red Army, the man’s name? Leon Trotsky, who you may have head of. To everyone’s surprise, the Red Army won, the White Army was defeated, the civil war was over and the foreign troops were pushed out. The last Japanese troops leaving Russia in 1922, five years after the revolution. So now we have a country that’s very poor to begin with, that has just lost the world war, gone through a revolution, gone through a civil war, gone through a foreign invasion—they’re destitute. The achievement of the Soviet Union, which has to be understood, is that it went from that level of destruction in 1917 to ’22, so that fifty years later, in the 1970s, Russia had become the second-most important superpower in the world, second only to the United States. That kind of economic come-back and economic growth, because they also suffered in the Second World War, when Hitler invaded them—if I had more time, I’d do more history—but what I want to stress is they went to work to overcome poverty that was their number one goal, that’s what the number one leader for most of these years—Joseph Stalin—was committed to.

In the name of building up their industry, they did a number of things. They collectivized agriculture, the land they had given to the people, they took a good bit of it back—they left them with some, but they wanted to create a modern agriculture. The government took over industries, to make them work very hard. They built up their machines, they built up their industrial base, they didn’t spend a lot of effort on consumer goods, which is why in the Soviet Union, they were behind the West when it comes to standards of living. So they worked very hard to come out of poverty and to become an important power, and they had to because they were surrounded by countries that invaded them, hated them, opposed them, threatened them and so they built up their military for which they needed an industrial base. They couldn’t buy their weapons, they had to produce them. They couldn’t buy their ships and guns and tanks, they had to produce them and they didn’t have the economy at first to do so. So they went on a kind of forced industrialization march, led by the forcible leader Stalin. Civil liberties thrown to the side. Individual freedoms—repressed, absolutely. That’s a critique of what happened there, but it’s important to understand why it happened, and in the service of what it happened. It’s important to balance the criticisms, of what they did, the price they paid, with what it was for. And therefore, it’s important for me to stress to you that the achievement across the twentieth century from 1917, when the revolution happens, to 1975, a crucial year in Russia, was an achievement of economic growth that had never been equaled by such a large economy in such a short historical time. That’s why the Soviet Union was a model for so many poor countries who want like that to become rich, to become developed, to be able to develop an independence in the world, even when threatened the way they were. The Soviet Union was an extraordinary experiment in economic growth, both in what that can achieve and what a society can do, if committed in that way, and also an experiment that taught what the human price was of all of that. The lesson to be learned is, of course, can we can the benefits without paying the costs. And it is to that part of the Soviet experiment that I will turn next.

But before I do, please remember with me that it is an important way for you to partner with us, to look at us on YouTube and sign up as a person who gets notification of every one of these programs that we put up on YouTube, to follow us on our websites, rdwolff.com and democracyatwork.info, where you can follow us on Facebook, Twitter, Instagram—communicate to us via email and so on, and share with us and help us get these kinds of messages across. And as always, a special thanks to the Patreon community that supports us and encourages us. You can find us at patreon.com/economicupdate. Stay with us, we’ll be right back.

Welcome back, friends, to the second half of today’s Economic Update. We’re talking about the Soviet Union and what happened there—the revolution, the consequences of the revolution, the achievements, the criticisms, the failures, all of it. But I want to mention, before jumping back in, that if you’re interested in all of this, what I am presenting here is a kind of summary of something developed in great detail in a book published a few years by my frequent colleague Stephen Resnick and myself. So, the authors of this book are Stephen Resnick and Richard Wolff. The title of the book is the following—Class Theory and History: Capitalism and Communism in the USSR. It was published in 2002 by Routledge publishers, London and New York. It’s available through the usual mechanisms, and if you’re interested it’ll give you the detailed analysis that we’re summarizing here.

OK, I want to look now at the Soviet experiment, particularly with how it ended, why it ended and what the lessons are that we should draw from it. The Soviet Union grew spectacularly after the revolution. It recovered by the late 1920s and entered the ‘30s with a renewed economy, having recovered from the war and determined to build up their industry, and they spent the 1930s doing that. That was the period of Stalinism, of the repression of all criticism, of all opposition and a furious—you might even say hysterical drive to industrialize. No sooner had they made the kind of spectacular growth that the 1930s saw in the Soviet Union then they were once again threatened, as I remembered and as I told you about in the first part of our show today, they were attacked right after the revolution by those four countries. Now it was a different country that attacked in the end of the 1930s and beginning of the ‘40s, they were menaced by a country in Europe called Germany, who leader at that time, Adolf Hitler the fascist, said that the Soviet Union was the number one enemy and target of fascism. And true enough, after some games of diplomacy had been exhausted, the Nazi government of Germany attacked the Soviet Union and by that time the Germans had re-armed, after World War I, which the Germans also lost, they had re-armed and they directed their fury against the Soviet Union, marching across the Soviet Union all the way to Moscow, a long distance from Germany. Tremendous destruction of life and property and the little developed economy that Russia had, in fact, by then produced—a devastating blow.

Again, to the surprise of many, the Russians held at Moscow and the Second World War changed when Hitler could not succeed and the Russians began driving him back. Hitler made a big mistake by opening a second front against Britain and Western Europe and the United, so now he had to fight a war on two fronts—against the Russians, coming at him from the East, and Western Europe and United States coming at him from the West. And so the Nazi threat was defeated but at the price of, for example, more Russians died in World War II than any other nationality because it was fought so bitterly on their territory. So, again they were destroyed, having barely had fifteen, twenty years of being able to recover and grow. And still, despite all that, they kept going and became, as I said, the second industrial superpower after the United States by the 1970s. The concentration on economic growth, on industrialization, was the hallmark of what they did. And they did it brilliantly and effectively, against two world wars and a revolution and a civil war and a foreign invasion. Extraordinary—really is extraordinary. But they paid a heavy price.

Early in the immediate aftermath of the revolution, they had tried all kinds of very ambitious socialist experiments. Communes in households, where everybody—men and women—shared all the household tasks, an amazing change from the patriarchal system that they had inherited from before the revolution. There was a freedom for women, a notion that women were to be equal to men, that public daycare was to take care of childcare, public canteens were to take care of the cooking, so that women would be free to work outside the home, jus as men were—extraordinary openings to feminism and a revolution in the conditions of women. A reaching out to all the ethnic minorities that made up the Soviet Union—remember, Russia is only one party of it and it was called the Union of Soviet Socialist Republic, because the other ethnic groups were given status as in independent, quasi-independent republics and so on. Extraordinary experiments, many of those were pushed aside. And one of those that was pushed aside, and there were some experiments in the the ‘20s, that the socialism that they were constructing would have to also mean the revolution inside the workplace—in the factory, in the office, in the store—where a socialist principle, that we are all equal, that decisions are made democratically, not just in the political realm, but in the economic realm, which means not the government makes all the decisions, and we do all the work, but we run the enterprises. This idea, which was talked about at great length, was pushed aside, as were the notions of women’s equality, as were a lot of other revolutionary impulses under this drive to industrialize, which was always defended the grounds that if we don’t, we will be overwhelmed by our enemies. Those who attacked us after the revolution, and now those who attack us from the fascist side of the political ledger.

So, all those experiments were pushed aside in order to focus on one thing: they did that one thing extraordinarily well—well enough to survive. But they paid a price, and let’s look at that price in some detail. First, by repressing the independence and freedom of women, they kept alive the old family structure in the household—the dominance of the male, the subordination of women and children, and that kind of inequality ate at the socialist principles they talked about, but did not institute in the home. Ditto in the workplace; they left that a place of hierarchy. Government officials replaced the private boards of directors, the private capitalists, but it was still a handful of officials sent from Moscow, members of the Communist Party, who told everybody what to do, where to work, how to work, what to do with the results of their work, how to use whatever profits their enterprise produced. It was still that old capitalist-style of internal organization of the enterprise, and that created tensions between the government officials running it and the workers doing the work, kind of like you have in capitalism—the endless struggle and tensions between those who run the show and those who do the work, the minority at the top and the majority at the bottom. This was not only the end inability of the Russian socialist experiment to go beyond rebuilding a country and becoming a beacon for economic growth for the mass majority of poor people in the world, it was something that ate at the viability of the Soviet Union itself.

Let me add a couple more. The Soviet Union in the ‘30s, ‘40s, ‘50s, ‘60s was also committed in a remarkable way to holding on to the industrialization as the focus, as the World War Two and they entered the Cold War with the United States, they were caught up in an arms race. Remember, the Second World War ended with the United States dropping two atomic bombs in Japan, the only country ever to do that—to drop nuclear weapons, but it was a message not to the Japanese, who were already beaten, but to the Russians as to what the Americans were prepared to do, and as the Russians became the new enemy after Japan was defeated, they felt they had to therefore build a nuclear industry, a nuclear weapons manufacturing capability so they had to keep on with their focus on industrialization and postpone the development of the consumer, so that became their weak point. The mass of Russian people noticed, with modern radio and television communications, that their standard of living was repressed relative to what was normal in the West. They were jealous, they were envious, they wanted to live at that standard too, and the West used that for all the obvious benefits. Yes, we had become a rich country, not a poor one, but our standard of living didn’t show it. And then, also to defeat the United States or at least to prevent themselves from being surrounded—I should mention after World War II that the United States military did surround Russia with military bases at every country around it—the anxiety of the Russians meant that they tried to do a little bit like that too, such as invading Afghanistan in order to make that less of a threat to them, to have some room, like they did in Eastern Europe, between their border and where the enemy might come from yet again. And all of that took resources, the resources to have a nuclear military, the resources to invade other countries and manage them at a distance, et cetera. And it turned out the Russians couldn’t do all they set out to do. They couldn’t create a consumer industry big enough. They couldn’t create an economy rich enough to support an arms race with the richest country on earth. They couldn’t do it. But they kept trying and as they tried and people’s anger—add to that the absence of civil liberties, the absence of civil rights, looking to the West as a place where these things they could not have in Russia were had—they became critical of the Communist Party as a party that wasn’t doing enough, and the Party became very defensive. Yes, it had produced the miracle of economic power and growth, but they had paid that big price. And eventually, between inability to do it all and the bitterness built up, the Russian Revolution of 1917 came apart and crashed in on itself in 1989. The irony is revolution survived and grew stronger with the invasions and the civil war and the world wars. But what it could not solve were its own internal contradictions, the contradiction between socialist images, socialist ideas, socialist hopes and the reality of family life that hadn’t changed from what it had been for centuries, from a workplace that was organized in an undemocratic way that created therefore tremendous tensions between the dominant state and party on the one hand and the mass of working people on the other. These failures—and that’s what they have to be called—undermined their successes. It’s not that they didn’t have success, I’ve stressed to you they did—extraordinary ones—but you have to do more than that to survive. They didn’t learn that lesson.

Last point, they did it all on their own. They could not cut deals with the West which was their implacable enemy and therein lies one of the most fundamental differences between Russia and the People’s Republic of China, because they did cut a deal with the West—that’s why we’re wearing Chinese clothing and using Chinese appliances and driving Chinese-produced cars. The difference, as you will see, is very powerful. I hope this attempt at a balanced sense of what Russia achieved and what it didn’t achieve under their Soviet experiment was interesting to you. The lessons—plus and minus, good and bad—will shape struggles against capitalism for decades to come. Thank you very much. I look forward to speaking with you again next week.

Transcript by Christian L. 

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