Armageddon Averted: The Soviet Collapse, 1970-2000 (11 page)

resources for peaceful economic reconstruction and to attract Western investment. After the USSR had begun a phased withdrawal from Afghanistan in the autumn of 1986, arms negotiations still dragged on. Soon, however, 61

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international public opinion, and a shared desire for a place in history, led to a number of breakthrough agreements as well as promises of ‘aid’ and ‘partnership’.

That, in a nutshell, was it—perestroika. Gorbachev initiated an imperial retreat, which was cast as a deepening of the USSR’s long-standing ‘peace’ policy, and revolutionized the USSR’s relationship with the West. He also began a serious, if difficult attempt to unblock the Soviet economy. And he secured the politburo’s approval to open the system to scrutiny by the domestic and foreign media, goad the Communist Party to earn and better exercise its vanguard role, and invite social activism and associations outside the party. Thus did the occupant of Brezhnev’s old office captivate the world and confound the experts. What went wrong?

Just about everything.

Economic halfway house

Frustration with the planned economy had been a topic of internal wrangling for decades. A confidential report in June 1965 by the Soviet economist Abel Aganbegyan— later a top Gorbachev adviser—pointed out that the Soviet growth rate was slowing, just as the US rate seemed stronger, and that key sectors for the Soviet standard of living (housing, agriculture, services, and retail trade) were especially backward. By way of explanation, Aganbegyan singled out the exorbitant resources devoted to the 62

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military and the extreme centralism of economic management. He further noted that the Central Statistical Administration did not have a single computer or any prospect of acquiring one. His report was not published—self-defeating hyper-secrecy had been another of Aganbegyan’s culprits—but in September 1965 Prime Minister Aleksei Kosygin did launch a major economic reform. It was aimed at improving planning, by allowing greater flexibility for enterprises, and at redressing the imbalance between the military and consumers.

Predictably, ministries and parallel CC departments resisted ceding authority to enterprises, while the military baulked at sacrifices to increase consumer goods. Even without such resistance, a little flexibility proved useless, since managers wanting to cut costs were not allowed to dismiss workers. Nor could costs be factored into prices, since repercussions from raising prices frightened the leadership even more than unemployment. The Kosygin reforms failed even before the 1968 Prague events undercut the will for experimentation. Instead, the Kremlin decided in the 1970s to pursue the computerization of production and planning, and to import Western technology. To overcome a cold-war ban on technology transfers, the KGB set up foreign front companies and conducted remarkably successful industrial espionage, but few of their acquisitions paid off. Soviet factories proved unwilling or unable to introduce the new technologies, particularly information systems. By the 1980s the entire Soviet Union had just 200,000 microcomputers, leaving 63

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aside their quality, while the US already had 25 million, and that number was about to skyrocket. The very engine that had powered a peasant society to superpower status— the industrial planned economy—seemed increasingly to be exerting a severe drag.
2

Consider the Soviet steel industry, which produced 160

million tons annually, far more than any other country.
3

By the 1980s, Soviet manufacturers used more than one million sizes and shapes of rolled steel. Since it was impossible to predict the proportions of each size or shape to be needed by each firm, the planners provided a range to producers. But since every plant’s performance was measured by the weight of its output, a producer got more ‘credit’ for heavier strip. There was, however, a greater need for the thinner varieties. With no choice, firms took the thicker strip. Perhaps they could barter it on the vast internal black market among firms. If not, they would machine it down to the desired thickness. Perversely, the sheared-off metal counted in the Soviet GDP, even though it was discarded and made the production of finished goods more costly. Furthermore, although manufacturers were forced to shave off a significant portion of metal they received, Soviet machines, cars, and refrigerators were far heavier than Western counterparts. Durable-goods factories were also rewarded not for profits but for output tonnage. In short, the logic of the planned economy was devastatingly simple: quantity ruled. And by the late 1970s and early 1980s, after decades of extensive growth, even quantity was becoming a problem.

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Gorbachev’s 1987–8 economic reforms sought to address both the underlying logic and the recent negative trends. His programme introduced what by Soviet standards was unprecedented autonomy and ‘profit-loss calculation’ for large enterprises across the whole economy, as well as ‘joint ventures’ (a revival of Lenin’s 1920s concession policy) to attract foreign capital. Gorbachev also sought to improve the outlook for consumers by legalizing service companies under the guise of ‘cooperatives’.

This bold strategy (by Soviet standards) combined and reworked the major economic reforms of Eastern Europe: the Yugoslav self-management system in industry and Hungary’s private service sector. But, immediately, Soviet cooperatives suffered from a reputation for shadiness, and from criminal groups extorting ‘protection’ payments. In industry, Gorbachev, like Kosygin before him, found himself relying on a recalcitrant ministerial bureaucracy to implement an improbable decentralization that would entail a significant loss of ministerial authority. Also like Kosygin, Gorbachev stopped short of permitting real (market) prices for inputs and output, undermining the effects of whatever autonomy enterprises did manage to exercise. Going halfway towards the benefits of market criteria turned out to be no way.

Such recurring contradictions in the Sisyphean attempts to have the planned economy reform itself, without undoing planning or socialism, were compounded by miscalculations. In a blitz to re-equip obsolete manufacturing plants, while also trying to force them to 65

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increase output, huge investments were sunk into machine building and engineering industries. The funds were wasted. At the same time, after world oil prices had sharply dropped in 1986, and devastated hard-currency earnings, Soviet imports of consumer goods were curtailed without new investments in domestic light industry, thereby putting tremendous pressure on the standard of living, even as perestroika raised expectations. Also, the economy’s most advanced sectors (defence), whose exports might have paid for purchasing consumer goods, were targeted for drastic downsizing. Worst of all, imperial retrenchment—Gorbachev’s ace in the hole—
cost
money, to pay for decommissioning Soviet troops and arming former clients to defend themselves. Like the self-inflicted financial debacle that resulted from the anti-alcohol campaign, these blunders, the work of the country’s top economists, were devastating.
4

That a concerted, expert-advised reform had made matters worse came as a shock. Prior to 1985, the planned economy—greased with extensive black marketeering, choked by phenomenal waste, and increasingly dependent on key foreign imports—had stagnated, but it had functioned. Compared with their parents and grandparents, the Soviet population was better fed, better clothed, and better educated. Comparisons, however, were made not with the Soviet past, or developing countries, but with the richest nations in the world, and both the leadership and population expressed increasing impatience.
To compete with advanced capitalism
the only 66

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recourse seemed to be going beyond partial reforms and introducing the very mechanisms, private property and the market, whose suppression constituted the essence of socialism—in short, undoing the revolution and the regime’s identity. Gorbachev, understandably, hesitated.

But the relaxation of controls had created an economic halfway house. A desperate attempt at restoring fully centralized planning in 1990 proved utterly unworkable.

Output plummeted. Shortages and queues became more severe than during wartime. The Soviet government solicited and received large Western loans, which were called ‘aid’ and earmarked to purchase Western goods, but many of the imports proved to be cast-offs, for which the country sank into deep foreign debt.
5

Ideological self-destruction

Glasnost remained mostly a slogan right through 1986.

Even geographical locations that
could
be indicated on Soviet maps were still being shown inaccurately, to foil foreign spies, as if satellite imaging had not been invented, while many cities were entirely missing (one could read about them in foreign publications). Widespread fictitious economic accounting was foiling planners to the point where the KGB employed its own spy satellites to ascertain the size of the Uzbek cotton harvest, but the spy agency itself suffered from internal falsifications. Clearly, some measure of openness was needed for the operation of the 67

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system, let alone for the people’s dignity. This became very painfully clear in April 1986, when the world’s worst nuclear catastrophe, at Chernobyl, demonstrated the depth of the Soviet Union’s problems and the dangers as well as the increasing impossibility of hyper-secrecy. The radiation cloud, which made a mockery of the reflexive denials by Soviet officials, forced a tragic breakthrough.

In the autumn and winter of 1986–7, the Soviet media, with the general secretary’s encouragement, set out to demonstrate an imperative for change by seizing upon issue after issue that had been taboo: the abortion epidemic, poverty, drug addiction, the Afghanistan War, Stalin-era deportations of entire nationalities. Long-banned films, plays, and books were unblocked, galvanizing the state-supported intelligentsia. Each step fanned speculation about how far it would go—would Solzhenitsyn’s
Gulag Archipelago
, a literary indictment of the entire Soviet system, including Lenin, see the light of day? It did.

That so much had been hidden and banned greatly magnified the reaction to each new offering in what was, after all, the official Communist Party media (non-state newssheets were started, but their circulation remained minuscule). The weekly newspaper
Arguments and Facts
, launched in the late 1970s, achieved a circulation above thirty million during perestroika—the most of any paper in the world—and its editors received 5,000 to 7,000 letters per day. The exhilaration—truth!—was widely and deeply felt.

By 1989, however, readers’ letters bespoke the profound 68

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disillusionment characteristic of defectors. ‘What sort of a government is it [that] allows only selected people to live normal family lives?’ wrote M.F., from the city of Kharkov.

‘Why is it that people in authority have everything, flats, dachas, and money, and others have nothing? . . . I am a simple woman. I used to believe in our government. Now I no longer believe.’ A teenager warned not to let our young people go to capitalist countries. Why? I had the chance to go to the United States on an exchange basis. I used to be a true patriot of our country and I turned into something really horrible. I became a human being. I think; I have my own opinions; it’s a nightmare. After what I saw in the USA, it’s impossible to live here . . . I sympathize with Gorbachev, but deep in my heart I am no longer a Soviet citizen and I don’t care what’s going on in the USSR and I don’t believe in anything in this country.
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To be disillusioned, of course, one has to have had illusions. Glasnost demonstrated that, before 1985, most Soviet inhabitants, despite limitless grievances, accepted many of the basic tenets of the system. No longer. Peoples’

identities, all the sacrifices, were betrayed—right when expectations had been raised.

Glasnost turned into a tsunami of unflattering comparisons because of past censorship, the obsession with the capitalist world, and the intelligentsia’s apocalyptic inclinations—it beat itself into hysteria with a competition to appear the ‘most radical’. The smash Friday night television variety show,
Vzglyad
(
Viewpoint
), portrayed the 69

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Soviet people as utterly destitute and exploited, while the West came across as paved with gold and unreservedly free. A print journalist who had written one of the fiercest anti-American diatribes prior to 1985 became the editor of the mass-circulation illustrated magazine
Ogonyok
(
Flame
), and promptly turned it into the most widely read source of investigative reporting and a billboard of exaggerated pro-Americanism.
7
Grisly new details about Communist repressions further undermined the allegiance to socialism, and raised moral dilemmas. Mass graves were described by the very policemen who had dug them. Prosecutors who had destroyed innocent people were still on the job or enjoyed comfortable retirements, while their victims were dead or suffered meagre pensions. Journalists who had hounded ‘enemies’ for anti-Soviet agitation now hastened to publish those views. All previous life was revealed as a lie.

Under Khrushchev, the ‘revelations’ had come to a generation of Stalinists, people who saw the formerly concealed information not as discrediting socialism but as discrediting Stalin, and inspiring them to a renewal of socialism, a return to its ‘Leninist roots’. At least initially, that is how much of the Khrushchev generation interpreted Gorbachev’s glasnost. Indeed, in economics and politics, many of the ideas that came forward had first been developed in the 1960s—as if Sleeping Beauty had awoken after a twenty-year nap.
8
But soon the same process that had targeted Stalin began desanctifying Lenin, meaning the Soviet system in toto. A tiny group calling 70

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itself the Democratic Union, one of the new ‘informals’ or civic associations that had arisen, invited arrest by declaring itself a political party, against the Communist monopoly, waving the red, white, and blue flag of the (pre-Bolshevik) February 1917 revolution, and demanding the restoration of private property and the ‘bourgeois order’.