But note that until money and prices are stabilized, the federal issue is resolved, and the legal underpinnings of private business are further secured, private money will continue to shun long-term, illiquid investment and to seek the quick and easy deals. We must not be misled by stories of successful new Soviet entrepreneurs. Few of them are long-term investors.
Needless to say, large personal gain frequently derives from
There may be nothing wrong with the propriation of the nomenklatura or the use of 'dirty money' to buy the state's assets - and indeed this may be the quickest road to privatization - but is this the kind of privatization we have in mind when we list the conditions for Western assistance, such as marketization and privatization of the economy and democratization of the polity? Do we want to see a market economy of sorts ran by cartels of the same old communist bosses and the same lords of corruption and organized crime in a new guise?
If privatization by quick and dubious appropriation be ruled out, how many decades will it take to marketize and privatize the Soviet economy? In the meantime, will democracy develop and survive? Some other economic arrangement would have to be in place. Would it be largely the old command system - thus foreclosing hope of both economic progress and democratic revival? Or will there be a protracted interim phase of state-owned firms operating in a market context, i.e. a socialist market economy (to use an old term)? Indeed, for the reasons just suggested, and despite its disadvantages, the latter may yet have a lease on life in the USSR and in Eastern Europe as an alternative to something less attractive.
What will the USSR be like five years hence? Indeed, what will it be like five months hence? In 1986 who could have foreseen the USSR of 1991, the world of 1991? I suspect that it will be more decomposed (in various ways) than democratic, with an economy still as much administered as marketized, an economy still more chaotic than capitalistic, with great private-profit opportunities precisely for these reasons rather than despite them.
The reasons are that the economic problems are too deep, the political and national problems too acute, the legacy of the old days too tenacious. The process of privatization of state assets will be too slow (if not too threatening, in the way described above). And most of all, after everything else is set aright, the physical capital stock will have to be rebuilt almost from scratch. This rebuilding and re-equipping, its technical upgrading, and most of all, its re-orientation toward new social objectives and toward the outside world, will be protracted and enormously costly. As will be the management of the accumulated environmental destruction and toxic contamination.
The country will remain poor for a long time; and it will be in need of an expensive social safety net to avert or contain political disasters. Consequently, for some time the role of the state (or most successor states) will remain large, the tax burden heavy, and the rate of investment (private and public) in GNP will continue to be high. The day of a Soviet Thatcher may yet come, but not very soon. The United States should have no illusions on these scores.
It was in this situation of economic, social, and political flux that it was announced on August 19, 1991, that Gorbachev had relinquished, for reasons of health, his high government and Party posts. The rightist coup appeared to be, at least initially, successful. Yet it collapsed within three days because of the popular opposition led by Yeltsin, poor organization, and, apparently, the refusal of key military and police units to execute the orders of the leaders of the coup. The results of the collapse of the coup included the return of Gorbachev, a great enhancement of Yeltsin's position, the arrest of the leaders of the coup, and the discrediting of many more government, Party, and military leaders - indeed of the Party and the police themselves - with Gorbachev leaving the Party and Party activities being 'suspended' pending investigation. Also, the process of the dissolution of the U.S.S.R. gathered great momentum. Lithuania, Latvia, and Estonia declared immediate independence, which received international and even Soviet recognition. Most other republics, including Ukraine, also proclaimed independence, although, on the other hand, plans and negotiations continued for a new confederation or perhaps commonwealth, if not an effective federation. In fact, after a negative vote and subsequent modifications, the All-Union Congress of People's Deputies approved on September 6 Gorbachev's 'transitional' plan of governing the Soviet Union, which gave more power and authority to the republics, but still provided for some central institutions, including the State Council to deal with foreign affairs, military matters, law enforcement, and security.
On December 25, 1991, Gorbachev resigned. All the Union republics declared their independence, although most of them indicated their willingness to form an undefined loose association which came to be known as the Commonwealth of Independent States. Boris Yeltsin stood out as the central figure in a new and highly unsettled situation.
The disappearance of the Soviet Union proved to be at least as unexpected and sudden as its appearance, and as controversial. Bitterly hated as well as enthusiastically admired during three-quarters of a century of its existence, the U.S.S.R. seemed to receive a universal recognition of its might and its durability after the victory over Germany in the Second World War and its attaining the position of one of only two superpowers in the world. Worshipful communists and related
elements aside, numerous more judicious observers interpreted Soviet history in terms of continuity and stabilization bringing it closer to Western nations whether after the inauguration of the N.E.P., the cultural 'great retreat' of the 1930's, the gigantic war itself and the victory over Germany and Japan, the death of Stalin, or the ascendancy of Khrushchev. Although none of these varied developments proved to be a decisive turning point, it was within that framework that many in the West welcomed perestroika and glasnost: The Soviet Union would join democratic states as a major partner, perhaps even with much to offer. Very few expected total unraveling and collapse.
Yet some did. In addition to the unreconciled Whites and other dedicated enemies, who, however, rarely engaged in academic analysis, the most far-reaching critical school or schools arose among the economists. As early as the first years of the Soviet regime, certain economists pointed to the basic flaws of the Soviet economic system, and that initial critique was continued by such specialists as Janos Kornai who worked within the system in Hungary and Gregory Grossman and Vladimir Treml, who studied the second, unofficial, Soviet economy from the vantage point of American Universities. Parts of Grossman's critique can be read in his testimony above. Indeed it became a commonplace to claim that whereas the Soviet Union did well in terms of a traditional industrialization based on coal and iron, it could not keep up with the West in cybernetics, computers, and in general the new communication technology. As Manuel Castells and Emma Kiselyova formulated it:
Thus, at the core of the technological crisis of the Soviet Union lies the fundamental logic of the statist system: the overwhelming priority given to military power; the political-ideological control of information by the state; the bureaucratic principles of the centrally planned economy; the isolation from the rest of the world; and the inability to modernize technologically some segments of the economy and society without modifying the whole in which such elements interact with each other.
And modern technology made isolation always more difficult, and Soviet citizens better acquainted with the rest of the world. The armed race continued to cost the Soviet Union twice the percentage of its much smaller productive capacity than in the case of the United States. Grossman pointed out repeatedly that only a massive export of oil and natural gas kept the Soviet economy for fifteen years, 1970-1985, from sliding downhill rather than being merely in a kind of cul-de-sac. Behind the strange course of the Soviet economy, as of the Soviet policies in general, was the Utopian Marxist vision perhaps analyzed best in Andrzej Walicki's brilliant
The mistakes were many. Possibly the worst was the inability through the prism of ideology to see reality. Nationalism was misjudged until it destroyed the Soviet Union. Indeed Gorbachev apparently believed that he could go to Vilnius
and persuade the Lithuanians not to secede. But the understanding of Russia itself was not much better, and Russian interests and Russian nationalism played their major role in the abolition of the U.S.S.R. As to Gorbachev's contribution, it was extremely important from any point of view, although it was not what Gorbachev had planned.
