State capitalism and the Russian dissidents

According to Andrei Sakharov, a leading Russian dissident, the view that Russia is state capitalist is fairly widespread there:

“In my opinion, contemporary Soviet society can be concisely characterised as a society based on state capitalism; that is, a system differing from contemporary capitalism of the Western type by virtue of complete nationalization, a Party-State monopoly of economic affairs—and therefore in culture, ideology, and other basic aspects of life. This opinion is apparently shared by a great many people abroad and in the USSR—although in most cases the latter of course do not voice it” (My Country and the World, p. 14)

To call Russia state capitalist is to reject the claim of the Russian leaders to have established a classless egalitarian society. That there is no social equality in Russia is evident to any impartial observer. Even a superficial glance at Russian society will reveal that the mass of the people are poor and at the same time have no say whatsoever in the way society is run. On the other hand, the group which does take the key economic and political decisions can be seen to enjoy considerable material privileges too. The term “state capitalism” however conveys not only that a situation of social inequality exists in Russia but also that the society has a definite class structure and, like capitalism everywhere else, is based on the exploitation of the working class.

The Soviet oppositionists do in fact give us a fairly detailed picture of the class structure of Russia. In 1969 there appeared a samizdat document Time Does Not Wait written by two authors using the pseudonyms Zorin and Alexeyev. Here we read:

“The Party and government leaders not only possess total political power but also have at their disposal the entire economy. State ownership of the means of production and the centralized planning system mean that all the budget figures, all the surplus products created by the people’s labour, are disposed of collectively by a closed circle of people, according to each one’s rank. Here the nomenclature appears as a form of property. In reality this is a single state-monopoly trust in which positions and posts are equivalent to the ownership of shares.” (translated for the Socialist Standard by C. S.).

So the ruling class is here seen as the select group wielding, on the basis of the State monopoly of the means of production, complete economic and political power and is identified with the “nomenclatura” which is thus a legally-recognised hierarchical corporation collectively exploiting the surplus labour of the Russian people.

The “nomenclatura” is a list of posts, appointment to which is the prerogative of the Party. All the leading posts in national and local government figure in the “nomenclatura” and nearly all are filled by members of the Party. The “nomenclatura”, then, in so far as it is a list of posts the ruling Party itself considers it should fill in order to maintain its control is a reasonable enough starting point for defining the Russian ruling class. We say starting point because there are others not strictly in the “nomenclatura” who would also need to be considered part of any ruling class; the full-time bureaucracy of the Party itself for instance.

Andrei Sakharov himself, in his rather naive first public pronouncement in 1968 of his differences with the Russian government entitled Progress, Coexistence and Intellectual Freedom, made a passing reference in a footnote to the view that the “nomenclatura” constituted a ruling, exploiting class enjoying material privileges:

“It is sometimes suggested in the literature that the political manifestations of Stalinism represented a sort of superstructure over the economic basis of an anti-Leninist pseudo-socialism that led to the formation of a distinct class—the bureaucratic élite of those who figure on the nomeclatura lists and who appropriate the fruits of social labour by means of a whole series of officially recognised or concealed privileges” (Sakharov Speaks, p. 84, changed on basis of French version).

By 1975, Sakharov, without doubt because of his experiences during the intervening period, had come to fully accept this view himself. By then he realised that he was fighting not just to change the policy of the government but against an entrenched ruling class determined to defend its power and privileges. In his book My Country and the World he writes:

“Although the appropriate sociological studies either have not been carried out in our country, or have been classified as secret, it may be affirmed that as early as the 1920’s and 30’s — and definitively in post-war years—a special Party-bureaucratic stratum was formed and could be discerned. This is the nomenclatura, as its members call themselves; or the “new class”, as Milovan Djilas has named them. This élite has its own life style, its own clearly defined social status—”bosses” and “chiefs”—and its own way of talking and thinking. The nomenclatura has in fact an inalienable status, and has recently become hereditary. Thanks to a complex system of covert and overt official privileges, along with contacts, acquaintanceships, and mutual favours—and also thanks to their high salaries—these people are able to live in much better housing, and to feed and clothe themselves better (often for less money in special ‘closed’ stores or for currency certificates, or by means of trips abroad—which, under Soviet conditions, constitute the highest award for loyalty.” (pp. 25-6)

Sakharov had first used the actual term “state capitalism” to describe Russia in an interview given to a Swedish radio and television correspondent in July 1973 (see Sakharov Speaks, p. 167).

One of the weaknesses of Sakharov’s analysis and that of Zorin and Alexeyev is the way they seek to show that the “nomenclatura’s” rights are legally-based and hereditary. Both Sakharov and Zorin and Alexeyev state that the “nomenclatura’s” right to a privileged situation is “inalienable” and Sakharov adds that it “has recently become hereditary”. What they have in mind is clear: a member of the “nomenclatura” who ends up on the losing side in an internal party controversy may lose his top Party or government post but he will not be thrown out of the “nomenclatura”. The members of the “anti-party group” of die-hard Stalinists (Molotov, Malenkov, Bulganin and Kaganovich) ejected from power in 1956 were all given other, though comparatively minor, posts in the “nomenclatura” and Khrushchev died a wealthy man in his own private dacha. In describing the “nomenclatura” as hereditary Sakharov no doubt has in mind the fact that children of members of the “nomenclatura” can enter, and have been entering, its ranks without any difficulty and almost automatically.

No doubt both these facts are true, but to include them as key features of the Russian ruling class is to accept a legalistic rather than a sociological definition of class and to lay yourself open to the criticism that the individual member of the “nomenclatura’s” position and privileges are not in fact legally enforceable. From a legalistic point of view, such a criticism has some validity. The members of the “nomenclatura” have no legally-recognised and legally-enforceable right either to a post in its ranks or to transmit such a post to their children. Their position may in practice be virtually permanent and it may in practice always be possible for them to get their children a post in the “nomenclatura”, but if, for some reason, they were thrown out of the “nomenclatura” or if their children were refused entry into its ranks they could not have recourse to the courts to enforce their claim.

The legalistic definition of class suggests that, to constitute a possessing class, a group must have legal property rights over the means of production including the legal right to bequeath their property to their descendants. But this is not so. Marx’s method was to judge a society not by its political or legal superstructure but by its real social relations of production. A possessing class in the Marxist sense can be discerned in any society if an empirical investigation reveals that a distinct and reasonably stable group exerts a de facto monopoly control over access to the use of the means of production. This monopoly will always (except in periods of revolutionary social change) be backed by political power and may also be legally recognised, but this latter is by no means essential. The absence of legal recognition would not negate the existence of a possessing class.

On this definition, a ruling, possessing class, as a group exerting a de facto monopoly over the means of production, has long existed in Russia. This does not mean, however, that a class of individual private property owners might not still evolve, either from the ranks of the bureaucracy or from the at present severely restricted illegal and semi-legal private entrepreneurs of Russia.

State capitalism and private capitalism
None of the Soviet oppositionists are Socialists in the Marxist sense of the term (they do not stand for the establishment of a moneyless, wageless, Stateless society based on the common ownership and democratic control of the means of production by the whole community). So what do they stand for? What do they wish to see established in Russia in place of state capitalism?

Their key demand is for the establishment of a genuine political democracy in Russia with freedom of expression, freedom to organise in political parties and trade unions, a democratically elected parliament, etc. There can be no doubt at all that they are sincerely and courageously struggling for this aim. But since politics and economics cannot be separated it is pertinent to ask what sort of economic system they envisage, even if by default, for a democratic Russia.

Here it is hard to resist the conclusion that many of those who speak of “state-monopoly capitalism”, including Sakharov himself, are more opposed to “state-monopoly” than to “capitalism”. In a sense this is understandable in that what they are fighting against day by day is the monopoly exercised by the State in the fields of politics and ideas—the dictatorship of the leaders of the CPSU—while the term “capitalism” is not properly understood and is being used as a term to express their rejection of the claim of the CPSU leaders to have established a classless society in Russia.

However, class society in Russia has certain features in common with pre-capitalist class societies in that the privileges of the rulers—even though they derive in the end from a monopoly over the means of production—are expressed in political terms. Thus, just as in feudalism society was divided into legally-defined estates, so in Russia today society appears to be divided according to political criteria: into those in the top and middle ranks of the CPSU who, by virtue of their political status, enjoy access to the top jobs (through the “nomenclatura” system) and to the best goods and services (through exclusive shops and politically-motivated “prizes” as well as through high salaries), and into the rest of society.

This special feature of the Russian class structure has given rise to the illusion that the mere abolition of the political monopoly of the CPSU of the “nomenclatura”, of the exclusive shops and other perks would be equivalent to abolishing class privilege in Russia. But this would no more be the case than the abolition of feudal privileges established a classless society in Western Europe, as imagined by 19th century democrats.

What the abolition of these politically-derived privileges would do would be to leave no class distinction but the ownership (or non-ownership) of wealth. This is the grain of truth in the claim made by the CPSU leaders that what their opponents seek is the “restoration of capitalism” in Russia. “Restoration” is of course the wrong word since it suggests that capitalism was at one time abolished in Russia (which was never the case), but it is still true that in practice what the Russian dissidents would achieve if successful would be a transition from the existing “bureaucratic” or “state-monopoly” capitalism to a type of capitalism similar to what has emerged in the West.

Such a transition would not need to involve the complete denationalization of land and industry in Russia For, after all, a large proportion of industry in Western countries is now in the hands of the State. There is, however, a difference between Western state capitalism and Russian state capitalism in that in the West the State sector is subordinate to the private sector, whereas in Russia the state sector, the source of power and privilege for the political bureaucracy which controls it, completely dominates (but has not entirely suppressed) the private sector. The establishment of democratic political institutions in Russia would create the same sort of relationship between the private and State sectors as currently exists in the West: the nationalised industries would be run in the interests of a political bureaucracy.

But what is, or would be, the Russian private sector? There already exist in Russia today many people who are individually wealthy. Not so much those who have made money out of illegal or semi-legal private enterprise, but mainly those who. after years of privilege deriving from membership of a corporation which collectively owns and controls the means of production have amassed considerable fortunes and become wealthy individuals in their own right. But there is no legal way in which they can invest this wealth productively so it is generally hoarded in the form of dachas, precious metals and art collections. The partial denationalization of industry proposed by Sakharov in My Country and the World, as a means of weakening the “state monopoly” would provide such an outlet. For who does Sakharov think would have the money to buy the factories he proposes should be sold off? The only people who could are bureaucrats who have become individually wealthy — and others, we might add without being unfair, like Sakharov himself who became so by providing special services to the political bureaucracy in the scientific or artistic fields.

So, ironic as it might seem, the main beneficiaries of the democratic programme proposed by the Russian oppositionists would most probably be a section of the very bureaucrats they are so courageously struggling against. Which is why other dissidents like Roy Medvedev may not be entirely mistaken in expecting democratic reform in Russia to come from above, from a section of the bureaucracy itself.

This, then, is the ambiguous position of those in Russia who recognise the system there to be a state capitalism. Not being socialists, the only alternative they can offer—even if they don’t always do so explicitly—is private capitalism. The Russian oppositionists’ fight for political democracy is in effect a fight against state capitalism on behalf of private capitalism. Which is why we, as Socialists, cannot support them.


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