Socialist ViewPoint and analysis for working people

January 2005 • Vol 5, No. 1 •

Russia Following China’s Example?

By Nat Weinstein

The contrast between China and Russia’s economic growth is glaring. The reasons for China’s resulting economic growth and Russia’s decline and the direction in which Russian President Vladimir V. Putin is taking post-Soviet Russia helps explain the sudden eruption of Cold War-style, anti-Stalinist rhetoric against Putin in the U.S. mass media.

Putin, of course, knows far better than any of his critics why American imperialism is so adamantly opposed to his campaign to undo the massive rip-off of the Soviet Union’s state-owned industrial, commercial and natural resources by the likes of ex-Stalinist bureaucrat, Mikhail B. Khodorkovsky.

But it’s important to understand that Khodorkovsky’s and other Russian entrepreneurs’ successful raid on the Russian people’s natural and industrial resources could not have been accomplished without the financial and technical assistance of American imperialism.

Putin’s Soviet predecessors, Mikhail Gorbachev and Boris Yeltsin, had invited U.S. experts to the Kremlin to show them how Soviet Russia can best make the transition from a planned and nationalized economy to a market-driven, privately owned capitalist economy. And they certainly knew how to do it without providing compensation anywhere near its real market value. They used methods like those used by capitalism’s most notorious big-time swindlers.

Thus, it has come to pass that corporations like Exxon Mobil, Royal Dutch/Shell, BP and other major imperialist industrial and banking institutions, ended up with the lion’s share of privatized Russian state assets. Imperialist lenders had provided the Russian robber barons with the initial capital needed to pay thousands and millions of dollars for billions or perhaps up to a trillion dollars worth of assets in Soviet oil, gas and other valuable state-owned property.

American financial “advisors” also helped teach the eager Khodorkovskys the intricacies of capitalist financial skullduggery that allowed them to become owners of Soviet basic industrial assets at considerably less than fire-sale prices. But it was U.S. industrial and banking interests that ended up with billions of dollars in Soviet assets as their “just fee” for services rendered.

Putin learns from the Chinese

There can be little doubt that Putin had made a careful study of where Gorbachev and Yeltsin went wrong and how their Chinese counterparts charted a course toward opening their economy to foreign investment. It was, however, designed from the first to make sure that the commanding heights of China’s state-owned economy remained firmly in the possession and control of the Chinese Communist Party’s state and government bureaucratic apparatus. Besides, circumstantial evidence has recently come to light suggesting that representatives of China’s leaders advised Putin directly on how to rectify the mistakes of his Soviet predecessors. It appeared in a news article in the December 31, 2004 New York Times under the title, “China May Be Offered Stake in Yukos Subsidiary.”

The fact that no such offer had been made to American or other imperialist investors is an indication that Putin was not interested in letting China, America and other interested parties in Europe and Japan, bid against each other so as to get the best possible deal for Russia. It would appear that Putin believed Russia’s interests would be best preserved in a deal with leaders of China’s mixed economy.

Given Putin’s continued pursuit of rectification of the mistakes made by his Soviet predecessors and ex-comrades—Gorbachev and Yeltsin—it’s fairly safe to predict that relations between Russia and China can only grow closer in the immediate period ahead, as they are drawn together by their common interests as hybrid species of a social order, incorporating powerful elements of both socialistic and capitalist systems.

The first thing on Putin’s agenda, evidently planned long before he catapulted himself into head of state, was to silently concentrate the power of the bureaucratic state apparatus into his hands. It is likely that he was able to accomplish this feat by quietly lining up selected, and strategically placed members of the still existing state bureaucracy by laying out his plans to restore post-Soviet Russia’s former status as a super-power, perhaps in alliance with China. Such a plan, Putin knew would be sure to meet with the warm approval of the once highly privileged and still powerful former Soviet state and party apparatchiks; at least those that have not become a part of the billionaire oligarchy.

Putin’s ascension to power, now solidly supported by an important sector of the state bureaucracy suggests our hypothesis is correct. At any event, it can’t be doubted that gathering the support of the bureaucracy and the power it gave him was a necessary prerequisite for executing the rest of Putin’s plan.

Neither is it entirely accidental that he chose as his first target the most visible of the billionaire robber barons, Mikhail B. Khodorkovsky, the hated symbol of the oligarchy, who spearheaded the looting of the 70-year heritage of cradle-to-grave social security stolen from the Soviet working class. Khodorkovsky served Putin’s purposes as the personification of all that is bad about the reckless path his Stalinist predecessors had taken toward the restoration of a market-driven capitalist economy.

And it is no small matter that in the eyes of the disenfranchised laboring masses, the oligarchy is primarily responsible for their catastrophic descent into the lower depths of capitalist insecurity, pauperization—and making bad matters worse, a sharply reduced life span for the average worker.

According to the Council of Europe, male Russians live an average of 61.3 years, and women 73 years. This is much less than under Soviet rule when the average life expectancy among men in 1994 exceeded 70 years and the average woman expected to live to the age of 78.

Thus, it should be no surprise that Putin’s assault on the oligarchy—the billionaire robber barons that stole Soviet state property on a scale rivaling that of America’s great robber barons of the late 19th century—has won him, for the time being, the support of the Russian working class.

The first step in Putin’s plan after gathering state and government power into his hands and then seeking election as Russian president, was his initiation of a campaign to regain the hundreds of billions of dollars-worth of Russia’s stolen industrial and natural wealth—not the least of which are its proven rich deposits of oil and gas.

That’s why the American capitalist media monopoly began its campaign to demonize Putin—including the invocation of Cold War-style, anti-Communist rhetoric against the new president’s campaign to concentrate state power into his hands. The understandable fear of the U.S. ruling class and its bipartisan government is that Putin won’t or will simply be unable to stop with merely repossessing the loot taken by Russia’s robber barons, and go on to the nationalization of state assets now in the hands of U.S. and other imperialist corporations and banks.

This explains the media’s painting of Putin in the worst possible light as it did when America’s top decision makers signalled it to do so—as was done to the Taliban in Afghanistan and Saddam Hussein in Iraq. It is the standard operating procedure of the U.S. mass media when the ruling class signals its intention to prepare American and world public opinion for new sanctions against both Russia and China. However, the possibility of an attempted “regime change” in these nuclear-armed world powers is highly unlikely.

Until Putin’s arrival on the scene, the Russian government—an unstable alliance of ex-Stalinist bureaucrats, newly rich billionaires and middle-class entrepreneurs—had been unable to defend their country from becoming a nation permanently held captive by imperialism’s most powerful international bankers and capitalists. In fact, the oligarchy, along with the rest of the newly created capitalist class of Russia is already dependent, and therefore subordinate to imperialist banking and industrial capitalism.

In fact, before Putin had taken command of the Russian government and much of the state apparatus, his country had also lost a large part of its independence and was headed toward becoming a semi-colonial power like Imperial Russia was under the last czars.

Just a glance at recent relations between the U.S. and Russia shows that their “alliance” served the interests of Washington and Wall Street for the most part. Meawhile, world imperialism has been busily engaged in the business of slicing off parts of historic Russia, as well as the Soviet Union’s former client states in Eastern Europe; much as a cook would slice salami for a meal.

The latest slice of “salami” swallowed for a recent lunch by imperialism was the Ukraine—a country that had been a part of old Imperial Russia for centuries. And now imperialist cooks are well on their way to slicing off the oil rich nations that were among the southern republics of the Soviet Union for future meals.

Nevertheless, Putin has taken the greatest care to conduct his new policy in a manner intended to reassure Washington and Wall Street that he will continue to honor imperialist property in Russia. Moreover, he has done his best to give the impression that Russia under Putin will remain Washington’s most reliable ally against its main competitor for the moment—the European Union (EU). However, it is already clear that imperialism has not been fooled. And on his part, the new Russian president will as a matter of course attempt to play the EU and the U.S. against each other.

“Balance of power” tactics have always been used by history’s major world imperial powers. Besides, before China had emerged as a major contender for domination of the global marketplace, imperialism had the world divided into spheres of influence largely under the control of the European Union, the U.S. and Japan—the three main contenders for market share until China had become a fourth.

Furthermore, it has long been standard practice for all trading nations to make alliances in the struggle for shares of the world market. But at most major turning points in world history, such competition by the world’s major powers has been decided by war. Both World Wars I and II were basically fought to gain greater control of world markets.

China, which was allowed to become a full member of the World Trade Organization (WTO) in December 2001, had until very recently subordinated its own expansive ambitions to maintaining close cooperation with the one remaining military and economic superpower. But China has lately begun flexing its economic muscle by making inroads on U.S. markets in Southeast Asia, and more recently in Latin America.

Putin sees China’s economic future as brightest of all

China, in fact, is becoming the American empire’s principal competitor in today’s intensifying struggle among the great powers for as large a share as possible of the world market. And with Russia now heading toward modeling its economy after China’s, a close political and economic alliance between the two seems inevitable.

An additional factor is important to note that will aggravate existing competitive relations among all capitalist nations as well as with China and Russia. That is its tendency toward ever-sharper and deeper crises of overproduction. And the one now clearly imminent will make the Great Depression look like the good old days. It will be far more destructive because it promises to be accompanied by a collapse of the global monetary system and a runaway inflation such as occurred in post-World War I Germany when it took a wheelbarrow full of marks to buy a can of sardines— but this time on a global scale.

Even some of the most knowledgeable bourgeois economists—not those wearing rose-tinted glasses—have made known their conviction that a day of economic reckoning is rapidly approaching. The declining dollar is the harbinger of the collapse of the already unsustainable indebtedness of the whole capitalist world. After all, no social order can maintain its equilibrium indefinitely if all its component nations are indebted to banks and other private financial sharks.

An alliance between China and Russia would not only increase their combined economic might but would also constitute a formidable nuclear-armed military force as well. And because the U.S. had decided to go it alone in Iraq, in order to keep a large share of the spoils of conquest for itself, it now has a much harder job pacifying their Iraqi victims without the help of its imperialist allies. This mistake means, therefore, that the U.S. today is a little less of a superpower than it was prior to the dissolution of the Soviet Union when it had the full support of its imperialist allies.

But the most important consequence of the global economic crisis now rapidly approaching, is its inevitably negative impact on the world capitalist economy, while the two hybrid economies of China and Russia, part market-driven and part nationalized and planned, may well be relatively unaffected and will continue to grow.

In the 1930s the world capitalist economy sharply contracted, while the Soviet planned economy—despite the Stalinist bureaucratic dictatorship—grew by leaps and bounds by virtue of its over-fulfilled 5-year plans. We can be sure that there are still a small number of workers in Russia who lived through a part of the Depression’s last years, who remember this most graphic demonstration of the superiority of its socialistic planned economy over the profit system.

And because of the growing affinity of interests of the workers of China and Russia, this lesson of Soviet history will be absorbed by all of China, not only its workers and farmers. Moreover, the contrast between Soviet expansion and capitalist economic contraction in the Depression years had an enormous impact on more than a few intellectuals and, of course, the considerable layer of thinking workers who often see further than their class as a whole.

Why China and Russia took the capitalist road

There are still important questions, however, that still need to be answered that will help explain recent developments in Russia and China. The first is the matter of why China in 1980-81, followed a half-decade later by the Soviet Union, felt it necessary to introduce capitalist market mechanisms by opening their economies to capitalist investment? It was simply because without access to the world division of labor, nations, regardless of their social system and their competitive capability, are severely handicapped.

That is, a nation’s exclusion from the right to trade in the world marketplace means that they are barred from the opportunity to buy such things as bananas, wheat, tin, nickel, oil or machines of all kinds, wherever in the world these things can be produced more cheaply than at home. After all, it’s not a special privilege demanded by workers states, each nation gladly sells its surplus product to any other nation wishing to pay the price, and pay for these necessary products by selling to whoever will buy what it can produce most cheaply.

Without the right to trade with other nations, especially in the capitalist world given its far greater size and mass of products, nations would be forced, instead, to try growing bananas and wheat in unsuitable climates or extract from the earth such things as tin, nickel, iron ore and oil, where there is little—or simply do without these commodities without which the construction of a modern industrial society is impossible. Any nation denied access to the world division of labor, therefore, is severely undermined.

No nation, even the most advanced industrial power, could successfully compete for very long if excluded from trading in the world marketplace and was forced to depend exclusively on its own resources. But when industrially underdeveloped nations that remained capitalist, as well as those that took the road to socialism, are barred from the right to freely trade in the world marketplace, their potential for development is severely constricted.

It’s no less difficult for post-capitalist countries—despite the far greater efficiency of their socialistic planned economies—to realize their intrinsic capability to catch up with and surpass the forces of production of the capitalist world’s most advanced industrial countries.

The fact is that world imperialism would never have ended its 70-year-long exclusion of the Soviet Union—and all other workers states from access to the world division of labor so long as imperialist capital was barred from penetrating and overwhelming these socialistic economies. This exclusion was enforced by world imperialism despite the right of nations to control their own internal affairs—supposedly recognized by all nations.

Underdeveloped industrial countries who are denied the right to control their internal economies can be swamped by the power of advanced industrial societies to pour a flood of cheap commodities into these countries. This makes it impossible for indigenous producers to sell their products driving them them into bankruptcy.

That’s exactly what happened to all workers states that opened their doors without limit to an imperialist takeover.

That’s why all nations, strong enough to exercise their right to erect tariffs to protect their agricultural and industrial producers, do so. Except of course when they agree to so-called “free-trade” treaties. But imperialist nations don’t hesitate before using whatever means necessary—including military force—to bar their victims from defending their right to impose tariff’s on selected imported goods in order to enable their countries to develop a modern industrial economy.

That is why among the first things all workers states do immediately after their socialist revolutions is take full control over foreign trade. That is, they reserve the right of the state to bar the buying and selling of imports and exports with capitalist nations, and also insist on their right to bar foreign corporations from buying and selling exported goods directly to individual consumers. Neither are they allowed to unilaterally set up distribution centers for the sale of goods produced in capitalist states to individuals.

Even the Soviet Union during Lenin’s time was nevertheless willing to sign treaties permitting Ford Motors, to build trucks and tractors in Soviet Russia, providing that they pay the prevailing wages and benefits for Russian workers and also provide the Soviet state with a share of profits earned from factories in the Soviet Union.

Without such controls the imperialist nations would swamp the workers states with a flood of cheap goods leading to the destruction of their internal agricultural and industrial economies—as has been done time and again in the colonial and neocolonial world. And after they have forced indigenous farmers, craftspersons and manufacturers out of their own marketplace, they buy up native land and industry at pennies on the dollar.

The beginning of such a process was well underway in Russia when Putin came to power with the apparent intention to stop the transformation of Russia into a dependent nation. But such a process continues unabated in the formerly independent workers states in Eastern Europe as well as in the neocolonial and semicolonial nations of the capitalist world

And finally, to answer the question posed at the outset of this section of our analysis: Why did China and Russia’s ruling bureaucratic dictatorships open their economies to capitalist investment? They did so in exchange for gaining access to the world division of labor.1

Which way forward for China and Russia

Putin has assumed a political role in Russia today that historians call Bonapartism. But whether he turns out to play the role of a Bonaparte based on socialist property forms, as did Stalin and those that succeeded him as head of the Soviet party and state, or one based on capitalist property forms, are questions yet to be answered.

What can be excluded, however, is any possibility of the current leaders of China and Russia carrying out a thorough reform of their bureaucratic system and re-instituting soviet workers’ democracy such as was in force before Joseph Stalin and his bureaucratic caste erected an iron dictatorship over the soviets, transforming them into rubber stamps for the decisions of its “infallible” leader.

Moreover, the Bonapartes in the epoch of imperialist decline are qualitatively different from the Bonapartes in the epoch of capitalism’s rise.

The original Bonaparte, history tells us, served as the sword of the French Revolution that routed the armed forces of France’s Louis XVI.

Even later, when Napoleon set about the conquest of Europe, he advanced the bourgeois democratic revolution against the aristocracies of Europe by calling on the social layers that would benefit by the overthrow of the feudal aristocracy to help in the overthrow of their oppressors. Moreover, Napoleon Bonaparte inspired the merchants and manufacturers and the popular masses by promoting the democratic principles of revolutionary France: Liberty, Fraternity and Equality. To be sure, he later went the way of all Bonapartists by making himself Emperor of France and reverse some of the conquests of its democratic revolution.

But modern Bonapartism has, throughout the 20th century, never failed—in the end—to serve the totally reactionary class interests of its master, imperialist capitalism.

Joseph Stalin, Bonapartist

The essential character of Stalinist Bonapartism as a unique political phenomenon was captured in the following paragraph from Leon Trotsky’s The Revolution Betrayed:

“Caesarism, or its bourgeois form, Bonapartism, enters the scene in those moments of history when the sharp struggle of two camps raises the state power, so to speak, above the nation, and guarantees it, in appearance, a complete independence of classes—in reality, only the freedom necessary for a defense of the privileged. The Stalinist regime, rising above a politically atomized society, resting upon a police and officer corps, and allowing of no control whatever, is obviously a variation of Bonapartism—a Bonapartism of a new type not before seen in history.”

That leads us to drawing the tentative conclusion that Putin today is playing the role of Bonaparte in post-Soviet Russia. But while it appears that he has one foot planted in the camp of the Russian workers and the other in the camp of Russian capitalism, which has sunk deeper roots in Russian society than their feebler counterparts in China have done, it is not yet clear how far the new president of Russia will go toward reestablishing the kind of strategic control over the Russian economy now exercised by his Chinese Stalinist counterparts or, perhaps, toward, a more extensive variety of state capitalism than has long been a characteristic of capitalism in the underdeveloped colonial world.

The last thing on the minds of the likes of Putin and his Chinese counterparts is the best interests of the masses of workers and farmers who produce all the wealth of nations. The only concern of all of history’s ruling castes and classses is the defense of their own privileges and/or property rights. Consequently, it is excluded that Putin can or will take Russia all the way back to what Russia was before Gorbachev and Yeltsin, much less, all the way to a socialist world.

Rather, it will be up to the working class of both countries—and of the world—to accomplish that historic task.

Which way forward for China and Russia?

From the point of view of historical necessity, the best way forward for the laboring masses of China and Russia is toward the original goal of the early Soviet Republic headed by the Bolshevik Party of V.I. Lenin and Leon Trotsky. And that is toward the goal of a world socialist society, a world without borders and without capitalist social, economic and political injustice.

This is the way forward for the workers of the world and for all humanity. Moreover, it is not simply to make a better world. It is, in fact, the only way to avoid the ultimate destruction of our species in the epoch of thermonuclear weapons of mass destruction .

More than a few sober social commentators, independent-minded scientists and other thinking people have suggested that the chances of intelligent life on the planet Earth surviving past the 21st century in this epoch of nuclear weapons and ecological devastation are less than 50 percent.

However, the odds favoring our survival are a matter subject to human intervention and can be substantially increased. Consequently, the primary task facing the working class in what is left of the still existing workers states is to reestablish the rule of “the most democratic of all parliaments in the world’s history,” the soviet form of workers’ democracy.2

The indispensable instrument for carrying forward such a course of action requires the formation of a new leadership of the workers of China, Russia and everywhere else in the world.

Much more can be said on this historic problem of constructing a revolutionary working-class leadership, and will continue to be discussed in future editions of this magazine.

Historical necessity, like all other processes in the natural world and in human society has a logic of its own. And the workers in China and Russia will find their way toward achieving a better life, a better world and the indispensable means toward that end—a revolutionary workers’ party.

But the new generations of working-class leaders will need the help of the rich accumulation of lessons drawn from the history of class struggle by the outstanding giants of scientific socialism—Karl Marx, Frederick Engels and those thinkers and doers that followed in their footsteps and by standing on their shoulders were able see further ahead and pass on what they learn to future generations.

1 For a detailed accounting of China’s road to capitalist restoration see “Has China Gone Capitalist” and “In Response to Monthly Review on China,” by this writer in the July/August and September 2004 editions, respectively, of Socialist Viewpoint.

2 Leon Trotsky: From his History of the Russian Revolution, Vol. 3, Chapter X, “The Congress of the Soviet Dictatorship,” page 302, Simon and Schuster, New York, 1937.

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