BOOK REVIEW

Armageddon Averted: The Soviet Collapse 1970-2000
by
Stephen Kotkin

Page Contents

Cold War end

Gorbachev & Yeltsin

Russian economic collapse

FUTURECASTS online magazine
www.futurecasts.com
Vol. 5, No. 11, 11/1/03.

Homepage

The Cold War's final years:

 

 

Kotkin dispels the myths that cloud understanding.

  The history of the Cold War's final years is the subject of a remarkably insightful, fast moving little book. Stephen Kotkin, in "Armageddon Averted: The Soviet Collapse," dispels the myths that cloud understanding of the collapse of the Soviet Union and the disappointments of the subsequent transformation period. The story is carried through the first decade of the Russian transformation period.
  &
  It begins soon after the period covered by Gaddis in "We Now Know: Rethinking Cold War History," who carries it through the Cuban Missile Crisis. Kotkin portrays events worthy of Shakespearean drama. See, also, Meier, "Black Earth: A Journey Through Russia After the Fall.
  &

The political and economic environment bequeathed by 70 years of communist despotism rendered impossible the fondest hopes and dreams of the initial decade of post Soviet Russian history.

  He explains how the Soviet Empire fragmented, and how the Soviet Union imploded - not with a bang, thank god, but with a whimper. He explains the political and economic environment bequeathed by 70 years of communist despotism - and how that rendered impossible the fondest hopes and dreams of the initial decade of post Soviet Russian history. He begins with a question:

  "Beyond Gorbachev, why did the immense Soviet elite, armed to the teeth with loyal internal forces and weapons, fail to defend either socialism or the Union with all its might?"

  There were about 20 million members in the Soviet Communist Party, of which about 3 million were in the higher elite - "the party apparatus, state bureaucracy, military and KGB." There were no major mutinies in any of the military forces or civilian police; there was no "sustained civil disobedience." In the breakup, tens of millions suddenly found themselves minorities in new foreign states.
  &
  Kotkin convincingly explains why the collapse continued even after the demise of the Soviet Union - and why in certain ways that collapse continues to this day in Russia.

  "Beyond the myriad surviving agencies and ministries -- such as the State Procuracy [a prosecutorial office with much broader than prosecutorial powers] and the KGB -- one could see in newly founded institutions remnants of the Soviet era, from the Central Committee apparat [in the new Presidential Administration] to the State Planning Commission [in the new Economics Ministry]."

  The new agencies were in the same buildings as the old, frequently with enlarged staffs that included second and third echelon Communist Party members who had risen quickly amidst the chaos of Soviet dissolution.

  "[The] entire non-market Soviet economy, ten time zones of antiquated heavy industry and decaying infrastructure, was also still in place, providing the bedrock of communities as well as of social constituencies. These were the political and economic structures that had caused the Soviet Union to fall further and further behind the West starting in the 1970s, and they served as the building blocks of the new Russia, which fell even further behind."

"Give any country some 15,000 rust-belt factories, perhaps two-thirds of them non-viable in market conditions, as well as several million brigands empowered to act in the name of state, and see how quickly such a place achieves the 'transition' to paradise."

  A successful "transition," in fact, was impossible from the start. The "solemn pronouncements of [reform] intent and streams of presidential decrees" mostly went unimplemented. Kotkin draws an analogy with the difficulties experienced by Clinton administration efforts to reform the health care industry - one seventh of the U.S. economy - "against a vast array of entrenched. powerful groups."

  "Yet many - - - people assumed that Russia's ability to transform its entire economy and social structure - seven-sevenths - was merely a matter of 'will power' on the part of 'reformers' or even of a single man. Technocratic 'reform' in some other country is the opiate of experts and pundits. Give any country some 15,000 rust-belt factories, perhaps two-thirds of them non-viable in market conditions, as well as several million brigands empowered to act in the name of state, and see how quickly such a place achieves the 'transition' to paradise."

  By 2001, Russia was still a mess. However, "it was also a stable mess," and some very real institutional reforms were in fact taking place. It was also even more rapidly developing the seamier side of Western institutions - "gross income disparities, contempt for the public interest, mass corporate tax evasion, pervasive recourse to political power in the market place, hyper-commercialized media, money-besotted elections, and demagogy." (Well, nobody's  perfect!)
  &

  Kotkin wisely pays scant attention to the factors that drew most coverage in the Western media - "supposed cultural proclivities or deficiencies, imagined nationalism, evil oligarchs, or Western advice, whose significance [good or bad] has been grossly inflated." Instead, he focuses on structural considerations:

  "[A] Communist Party generation, led by Mikhail Gorbachev, profoundly shaped by socialist idealism, which emerged to the fore when the previous leadership finally died off; the world view and hopes of 285 million people living within the socialist ideological space; the planned economy and its cost-unconscious, oppressively heavy-industry physical plant; and, especially, the institutional dynamics of the Soviet state and of the Russian state."

  He emphasizes the efforts made to shape events, and the unintended consequences of those efforts, in the context of world-wide events.
  &

The Collapse of the Soviet Economy:

  Kotkin's story begins in the 1970s, when economic, political and military reversals left the Western world reeling. But for the Soviet Union, the gods of fortune were smiling in the 1970s.
  &

Soviet industry consumed energy with gluttonous inefficiency.

  Major Siberian oil discoveries came into production in the 1970s, providing the Soviets with an exportable surplus of oil just as world prices were soaring by 400%. "Without the discovery of Siberian oil, the Soviet Union might have collapsed decades earlier."
  &
  Oil exports accounted for 80% of Soviet hard currency earnings between 1973 and 1985. In addition, many Arab oil states used their sudden wealth to purchase Russian arms.

  Dependence on oil and natural resources exports actually dates from Tsarist days. Because of these easy revenue sources, Russian leaders have no need to free their economy and society sufficiently to competitively produce high value added finished industrial and consumer goods. This same curse of wealth in natural resources still afflicts many third world nations. Governments that are not dependent on the wealth of their people for their revenues frequently don't give a damn about their own people.

  For once - and for the only time - the Soviets had enough resources for lavish expenditures for both guns and butter. A huge military buildup "incredibly enabled the country to reach rough parity with the U.S." Oil revenues financed the war in Afghanistan, higher pay and perks for the Soviet elite, Western feed for expansion of livestock production, Western technology for cars, synthetic fibers and other consumer products. No wonder the Soviet people remember the Brezhnev years fondly.
  &
  However, it was a characteristic of the Communist system that almost every "success" - instead of strengthening the system - simply added additional burdens to the system and became running financial sores. (This was because the entire Communist system was economically irrational, and the more it expanded, the greater became the irrationality.)
  &
   Soviet industry consumed energy with gluttonous inefficiency. When oil prices collapsed and Soviet production declined in the mid 1980s, the Soviet oil profits were wiped out overnight. Now, finally, Soviet leadership could no longer avoid the reality of Soviet economic irrationality and the vast weaknesses spreading throughout the system.
  &

The facilities destroyed in WW-II were rebuilt in the 1950s - according to 1930s specifications.

"Post-Communist Russia would inherit, and grandly privatize, history's largest ever assemblage of obsolete equipment."

While central planning collapsed, there was still no market system to drive economic rationalization and rejuvenation. The government institutions essential for a functioning market economy didn't exist.

  The Soviets had concentrated on developing heavy industry since the 1930s. "No other country ever had such a high percentage of its economy in big factories and mines." The facilities destroyed in WW-II were rebuilt in the 1950s - according to 1930s specifications.
  &
  Lacking the "creative destruction" processes of capitalist markets, all of this was retained into the 1990s. "Post-Communist Russia would inherit, and grandly privatize, history's largest ever assemblage of obsolete equipment." What was once the source of Soviet "strength and legitimization would become, when Russia rejoined the world economy, an enormous energy-consuming, value-subtracting burden."
  &
  Revenues from oil exports continued into the 1990s - but now - instead of supporting a vast empire and military establishment - it "would go into private offshore bank accounts and hideaways on the Spanish and French Rivieras."
  &
  But worse, while central planning collapsed, there was still no market system to drive economic rationalization and rejuvenation. The government institutions essential for a functioning market economy didn't exist. See, Government Futurecast, part I. (Also missing was the essential politically and legally empowered civil society needed for a functioning rule-of-law system of economic regulation as well as for multiparty democracy.) It was these political and institutional weaknesses that undermined the Russian transformation effort.
  &

Only Soviet military force kept the Empire together.

  Another burden was the Soviet Empire. As the West unified under U.S. leadership, shed the various burdens of its imperial systems, increasingly prospered and enjoyed political freedoms and welfare state security, the Soviets had to use force to keep its East European satellites in line. By the 1980s, Poland and East Germany were borrowing heavily to import enough consumer goods to pacify their people. Only Soviet military force kept the Empire together.

  "Even Communist China became a threat to the Soviet Union after the Chinese split with Moscow and put themselves forward as an alternative model for the Third World."

Economic growth slowed - "quality was notoriously poor requiring high rates of replacement" - environmental problems were exploding - infant mortality was rising - and life expectancy was declining.

 

Whereas the capitalist world reacted flexibly to adjust to the high energy costs of the 1970s, the Soviets were incapable of adjusting. Wastage of energy resources increased.

  The Soviet Union's disastrous run of good fortune began with the 1973 Arab-Israeli war. At first, Kotkin notes, the Soviets were fearful that the conflict would harm their interests. Brezhnev warned Nixon and Kissinger of the impending conflict. The Soviets even began moving diplomatic personnel out of the region. However, Kissinger believed that the warnings were just a negotiating ploy and ignored them.
  &
  The war came - and so did the oil embargo - which delivered vast benefits to the Soviets and widespread harm to Western economies. However, this was just the beginning of a "cruel trick" of history that served to temporarily hide the fact that the Soviet socialist revolution was already aging and decrepit.
  &
  Economic growth slowed - "quality was notoriously poor requiring high rates of replacement" - environmental problems were exploding - infant mortality was rising - and life expectancy was declining. Soon, actual economic decline set in. In toxic industrial regions, rates of cancer and children's respiratory ailments rose "phenomenally." Alcoholism and absenteeism kept rising.
  &
  Whereas the capitalist world reacted flexibly to adjust to the high energy costs of the 1970s, the Soviets were incapable of adjusting. Wastage of energy resources increased. When both energy prices and Soviet output rapidly declined in the 1980s, the bottom fell out of their rigid socialist economy.
  &
  Kotkin believes the Soviets could have nevertheless continued indefinitely on this quietly declining course (like Cuba and N. Korea). The Communist Party was in complete control. However, the new generation of Communist Party leaders actually believed the socialist propaganda, and was ideologically unwilling to accept the failure of their socialist system. (These would not by any means be the first despots to make the fundamental mistake of actually believing their own propaganda.)

  "Among Soviet elites, there was panic at the scope of Western advances as well as humiliation at the country's  deepening relative backwardness. There were, in addition, unmistakable signs of internal defection in elite ranks. By the 1970s and early 1980s, large swathes of the Soviet Union's upper ranks, including academics, were traveling to the West, and, whether patriots or cynics, they usually came back loaded down with [Western consumer goods]. The highest officials had such items discretely imported for them, while their children, the future generation of Soviet leadership, pursued coveted long-term postings abroad in the not very socialist occupation of foreign trade representatives."

The Soviet Union was being derided as a "land of kleptocracy" even before 1982.

  The Soviet Union was being derided as a "land of kleptocracy" even before 1982.  The corrupt practice of sale of official office had already become routine. 

  "Soulless indulgence, on top of a loss of confidence, had taken deep root, and this frightened loyalists most of all."

The incentives of Soviet socialist management - uninfluenced by property rights and ownership interests - were entirely towards immediate self-gratification. Corruption became so pervasive as to be coterminous with the system and thus ineradicable.

  The incentives of Soviet socialist management - uninfluenced by property rights and ownership interests - were entirely towards immediate self-gratification. Corruption became so pervasive as to be coterminous with the system and thus ineradicable.
  &
  Throughout the bureaucracy, nobody gave a damn for the system - nobody gave a thought for tomorrow. Khrushchev, Brezhnev, and in his short tenure, Andropov, struggled with the problem but could make no headway.
  &
  In the West, a scientific and technological revolution was taking place and the Soviet Union (despite large numbers of engineers and scientists -  many of great skill) was not taking part. (Without an ownership interest, nobody had any incentive to make use of scientific and engineering advances.) For the young, still idealistic cadres around Gorbachev, this meant that something drastic had to be done.

  "It was not just the superpower competition but a deeply felt urge to make socialism live up to its promises, to reinvigorate the party and return to the imagined ideals of [the October Revolution], that shaped both the decision to launch perestroika and even more importantly, the specific form it took."

The idealism of the Gorbachev leadership generation had been fed by Khrushchev's reforms, the Cuban Revolution, and periodic Soviet triumphs in space and nuclear power.

  "In a delicious irony," Kotkin notes, the Communist propaganda myth drove the new young party leaders to use the most rigid part of the system - the Communist Party itself - to shake the entire system loose from its Communist moorings - a shaking this decrepit, rigid structure could not survive.

  "What proved to be the party's final mobilization, perestroika, was driven not by cold calculation, but by the pursuit of a romantic dream." (That's all socialism - at best - really is.)

  Kotkin explains this extraordinary idealism that grew out of - and in spite of - the cesspool of Soviet reality. The Stalin-era leadership were rapidly dying off, and the next generation had been decimated in WW-II, allowing rapid advancement for Gorbachev and some other members of his generation. Their idealism had been fed by Khrushchev's reforms, the Cuban Revolution, and periodic Soviet triumphs in space and nuclear power.
  &
  However, trips to the West revealed to Gorbachev and other young rising Soviet officials the huge gap between Soviet propaganda and reality. A visit to Prague soon after the Soviet crackdown on Czechoslovakia revealed to Gorbachev the truth about the oppressive Soviet Empire.
  &

A better educated generation, with increasing access to information about the West, was unsatisfied.

 

Dissidents were few and scattered - without public impact - and were predominantly religious.

  Nevertheless, the 1970s under Brezhnev brought widespread prosperity to Soviet Russia. Millions of people got their own apartments with private bathrooms and kitchens - and many even got country dachas with vegetable gardens. Creature comforts like refrigerators, washing machines, radios and televisions, were made widely available.
  &
  On the other hand, many ordinary items - like properly sized clothes - were in short supply, requiring long waits in long lines - or dickering with gray market sources. Apartments were small and crowded with grandparents as well as parents and children. A better educated generation, with increasing access to information about the West, was unsatisfied. Western culture - including rock and roll - slowly infiltrated Soviet youth culture.
  &
  But this did not undermine the system, which was supported by pervasive propaganda, pride in their WW-II victory and subsequent achievements, and a "strong allegiance to socialism -- understood as state responsibility for the general welfare and social justice." For example, eviction from state-supplied apartments was a "near impossibility - - - whatever the circumstances." Dissidents were few and scattered - without public impact - and were predominantly religious.
  &
  More seriously, the millions of Soviet scientists, professionals and academics felt stifled by lack of access to Western publications and even basic domestic data. The Soviet elite lived apart from the masses.

  "Elite hospitals, resorts, supply networks, and schools were closed affairs; even the maids of the elite were usually KGB employees who reported on their masters' lives only for secret dossiers. Russia's socialist revolution, having originated in a radical quest for egalitarianism, produced an insulated privileged class increasingly preoccupied with the spoils of office for themselves and their children."

There was no mechanism for self correction in the Soviet system.

  There was no mechanism for self correction in the Soviet system. Brezhnev became increasingly enfeebled with serious ailments throughout the 1970s, but he was propped up and kept in office by his small ruling clique. Afghanistan began as an effort to prop up a threatened Soviet client - without much discussion outside the top elite.

  The Soviets were routinely propping up weak clients all over the third world by that time - especially in Africa and Latin America - and probably saw no difference in Afghanistan. With oil revenues flooding in, they had the resources at hand for the effort. Kotkin, unfortunately, provides no estimates for the financial, material and manpower resources draining into these running financial sores in the 1970s and 1980s. These burdens were being greatly increased by increasing attacks from insurgencies that were receiving some support from the U.S.

The roots of reform:

  The world outside the Soviet Empire changed drastically in the 1980s. Socialism was crumbling in obvious failure everywhere - including in China. Capitalism was achieving remarkable successes everywhere - including in China.
  &

In the KGB - where analysts had long known the true state of affairs - there was hope that the next, younger generation of leaders would retrieve their socialist ideals.

 

"Belief in a humane socialism had re-emerged from within the system, and this time it would prove fatal."

  The Soviet gerontocracy began to die off, but a bedridden Yuri Andropov - his vital organs shutting down one after the other - had the interest and foresight to look for competent, comparatively youthful hands in which to place the future of Russia. Gorbachev, Nikolai Ryzhkov, and Yegor Ligachev were placed in positions of influence in the party. They began the process of retiring those they didn't favor and promoting those they did. It was then just a matter of time.
  &
  In the KGB - where analysts had long known the true state of affairs - there was hope that the next, younger generation of leaders would retrieve their socialist ideals. Kotkin explains how the ultimate power shift occurred. Ultimately, with only two of the gerontocracy left, Andrei Gromyko stepped aside and threw his support to Gorbachev.

  "Far from an aberration, Gorbachev was a quintessential product of the Soviet system, and a faithful representative of the system's trajectory as it entered the second half of the 1980s. His cohort hailed him as the long-awaited 'reformer,' a second Khrushchev. They were right. Belief in a humane socialism had re-emerged from within the system, and this time, in even more politically skillful hands, it would prove fatal."

Reform:

  Gorbachev attacked the problems vigorously in the Soviet style - with propaganda - personnel changes - and appeals for support and greater effort from the party rank-and-file, intelligentsia, and workers generally.
  &

When the Communist party proved itself too weak a reed to generate the multifarious actions needed for economic regeneration, Gorbachev began to empower those outside the party.

  However, he also invoked "glasnost" - personally campaigning all across the country, freeing dissidents, and liberalizing censorship somewhat. However, the nuclear disaster at Chernobyl and the failure of selected industries to respond to efforts to intensify growth indicated that more had to be done - and quickly. An anti-alcohol campaign just drove production underground, deprived state coffers of revenue, and caused widespread public resentment.
  &
  The Communist party had proven itself too weak a reed to generate the multifarious actions needed for economic regeneration, so Gorbachev began to empower those outside the party.
  &
  He began "perestroika." Enterprise "autonomy" allowed management to take initiatives without party direction. Democratization - not just of workplaces, but also of Communist party posts - was resorted to as a means of pushing aside the inept functionaries who had risen to their positions through bureaucratic politics rather than on merit. There was even some social liberalization.
  &

Previous attempts at energizing sclerotic Soviet enterprises had crashed on the rocks of inflexible labor and pricing systems. Maintenance and modernization lagged drastically in the absence of ownership incentives.

  Gorbachev brought the Cold War confrontation to an end to free dwindling resources for domestic purposes. About 25% of GDP had been dedicated to military spending. In 1986, after one final offensive in Afghanistan had failed, Soviet forces began withdrawing. Western investment and advice thus became available.

  "[Gorbachev] 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."

  Nevertheless, nothing worked.
  &
  Previous attempts at energizing sclerotic Soviet enterprises had crashed on the rocks of inflexible labor and pricing systems. Maintenance and modernization lagged drastically in the absence of ownership incentives. Using examples from the absurdly dysfunctional steel industry, Kotkin explains the failures of socialist planning. (This is a good read for those who need an antidote for the decades of praise heaped on Soviet management by John Kenneth Galbraith.)

  "[The] logic of the planned economy was devastatingly simple: quantity ruled. And by the 1970s and early 1980s, after decades of extensive growth, even quantity was becoming a problem." (Of course, in socialist economies, quality and variety are alien territory.)

Without real markets (and real ownership interests), incentives remained perverse, and prices remained unrealistic and powerless to efficiently allocate scarce resources.

 

There followed in 1990 a panicked effort to restore full central planning - that predictably was disastrous.

  Gorbachev renewed his attack on these problems with policies of even greater autonomy, "profit-loss calculation," and "joint ventures" to attract foreign capital and expertise. Service companies were legalized as "cooperatives." Such reforms had worked in Eastern Europe - in Yugoslavia and Hungary.

  However, the Soviet Union had labored under autocratic socialism for well over half a century. There remained no human capital - no management know-how - only a twisted, dysfunctional society traumatized by Stalinism, WW-II, and Communist Party rule.

  Without real markets (and real ownership interests), incentives remained perverse, and prices remained unrealistic and powerless to efficiently allocate scarce resources. Soviet service enterprises gained a reputation for shady dealing - criminal groups inside and outside government began extorting "protection" payments - and the industrial bureaucracy dug in to protect its prerogatives. Massive centrally planned investments in plants and equipment were wasted.
  &
  With the drop in oil revenues, imports of consumer goods were inevitably curtailed, exposing the decades of failure to develop consumer goods light industries. Initially, military demobilization was very expensive, as soldiers were decommissioned and client states were hurriedly armed to better take care of themselves. It was a perfect storm of halfway measures and outright blunders.

  "That a concerted, expert-advised reform had made matters worse, came as a shock."

  There followed in 1990 a panicked effort to restore full central planning - that predictably was disastrous. "Shortages and queues became more severe than during wartime." Large Western loans were used to secure consumer goods, but were largely wasted - leaving a large foreign debt.
  &

  Secrecy and censorship remained huge problems. "Widespread fictitious economic accounting was foiling planners to the point where the KGB employed its own spy satellites" to evaluate harvests. But the KGB itself was riddled with self deception. (Without ownership interests, there was no interest in the truth. Bureaucratic interests, self-interest, and propaganda incentives ruled.)
  &
  Secrecy was maintained even over material long exposed to Western spy satellites. (But the Communist Party was more in conflict with its own people than with the capitalist West - and the people didn't have spy satellites.) "Glasnost remained mostly a slogan."
  &

 Investigative reporting exposed - and sensationalized - closets full of grizzly skeletons. "All previous life was revealed as a lie."

 

Except for those castigated as Stalinists, "there seemed to be no one ready to defend socialism or the Union."

  Chernobyl - in April, 1986 - provided the impetus to break the log jam. The media was freed to expose one taboo issue after another. Censorship was substantially lifted.
  &
  "That so much had been hidden and banned greatly magnified the reaction to each new offering." Widespread disillusionment was the inevitable result. Press circulation boomed, and a flood of letters to the editors indicated public response. Investigative reporting exposed - and sensationalized - closets full of grizzly skeletons. "All previous life was revealed as a lie."
  &
  Meanwhile, the Gorbachev government remained enmeshed in its economic problems and its struggle against the Stalinist bureaucracy. It was hard to generate public support to undermine Stalinist socialism without also generating disgust with socialism in general.
  &
  Worse, nationalist efforts to right the Stalinist wrongs quickly generated centrifugal forces in Armenia, the Baltic states, Ukraine and Belarus. Nationalism, democracy, private property and capitalism found increasingly vocal supporters. But, except for those castigated as Stalinists, "there seemed to be no one ready to defend socialism or the Union." Moreover, those in high position who sought to defend the old system were boxed in and beaten back by the politically brilliant and energetic maneuvers of Gorbachev.
  &

The end of Communist Party rule:

  Gorbachev's response to doubts rising in the party about his reforms was to widely argue "that not to take the risks of political reform would be even more dangerous."
  &

In the guise of rejuvenating the old "soviets," a series of elections were held resulting in the formation of a new parliament.

  He opened the party up to democratic elections to attack recalcitrance within the party. In the guise of rejuvenating the old "soviets," a series of elections were held resulting in the formation of a new parliament - a Congress of People's Deputies. Similar elections occurred in the republics.
  &
  Unused to seeking public approval, Communist party members failed miserably in the elections. Even those that supported perestroika found little support among a public suffering from rapid economic decline. Only the top leadership had been exempted from the elections.
  &

The Secretariat - the instrument of power that had brought down Khrushchev - was reorganized to disperse its power.

 

Accustomed to powerful central control, Gorbachev apparently knew not that he had thereby dismantled the only source of that control.

  These efforts were accompanied by party reorganization to disperse the power of the Communist Party Secretariat. Thus, Gorbachev protected himself from the only political body that could threaten his position. The Secretariat had been the instrument of power that had brought down Khrushchev.
  &
  However, by thus weakening the party apparatus, Gorbachev also weakened central control of the vast Soviet Union itself. Without realizing it, he was turning the centralized Soviet Union into a federal system - but unlike the U.S., this was one that included 15 republics based on ethnic lines. Only the pervasive organization of the Communist Party had held it all together.
  &
  Kotkin notes that, after Stalin's death, Lavrenti Beria - the brilliant, murderous KGB leader and leader of the military-industrial complex that had won WW-II - also tried to free the state administrative apparatuses from their parallel Communist Party shackles. But Khrushchev and the other party leaders reacted effectively to this attack on their power base in the party. As a result, the party's role was further enhanced (and Beria was executed for treason).
  &
  Gorbachev succeeded where Beria had failed - but accustomed to powerful central control, he apparently knew not that he had thereby dismantled the only source of that control. There was nothing left to take its place, and Gorbachev made no move to replace it.

  "Now, with the party's central control mechanism shattered and its ideology discredited, and the tentacles of the planned economy disrupted, Gorbachev discovered that the Supreme Soviets of the republics began to act in accordance with what he had unintentionally made them: namely, parliaments of de facto independent states. In March 1990 -- the fifth anniversary of his ascension to power -- he maneuvered the politburo into authorizing, and the USSR Supreme Soviet into voting, an executive presidency for him. But central power had been dispersed, and the survival of the Union was in doubt."

Gorbachev couldn't understand that his real problem was the impossibility of achieving the productivity of capitalism without the instruments - the maligned "exploitative" instruments - of capitalism.

  The plot that brought down Khrushchev had been orchestrated by Mikhail Suslov - the party's influential ideologue. His position was now filled by Yegor Ligachev - who had serious doubts about Gorbachev's maneuvers. But Ligachev, as Kotkin points out, was no Suslov. He confined his actions to a series of letters to Gorbachev -- who filed them in the archives without response.
  &
  There remained the army, the interior ministry ("MVD"), and the KGB. But these were blunt instruments - no adequate substitute for the pervasive party structure. There were a couple of military actions against secessionist republics, but these just caused bloodshed and increased opposition - and the reforms had undermined the KGB's ability to intimidate.

  "Their use, moreover, was now subject to debate in the revamped Soviet parliament as well as in the republic legislatures."

  As late as 1990 - even after the fall of the Berlin Wall - Gorbachev was still fixated on his struggle with the conservatives. He couldn't understand that his real problem was the impossibility of achieving the productivity of capitalism without the instruments - the maligned "exploitative" instruments - of capitalism.

  "The conservative 'resistance' during perestroika - - - was inept, while Gorbachev's 'sabotage' of the system, though largely inadvertent, was masterly. Thus, the 'real drama of reform,' obscured by fixation on the conservatives, featured a virtuoso tactician's unwitting, yet extraordinarily deft, dismantling of the Soviet system -- from the planned economy, to the ideological legitimacy of socialism, to the Union."

The end of the Soviet Empire:

  The Communist East European States were advised by Gorbachev as early as 1985 that they were on their own. Gorbachev simply had too many domestic problems on his plate to worry about them. The ability and will to use force to maintain the Empire was exhausted.
  &

  Gorbachev liquidated the Cold War and urged economic reforms in Eastern Europe. Poland and Hungary responded positively. For four years, Gorbachev "strut the world stage like a grand statesman," achieving widespread popularity in the Western World. Then, it all caved in.
  &
  This story is now familiar, and Kotkin adds nothing new, here. A cascade of collapsing communist regimes - like falling dominoes - swept away the Soviet Empire. A clueless Gorbachev kept the Soviet Army out of the picture, and then pulled it back. He made feeble diplomatic efforts to minimize the damage, but was without strength to affect the results. Germany reunified on its own terms - and the newly free satellites, with a few exceptions, rushed to obtain the security of NATO and the prosperity of Western Europe.
  &
  But the rot didn't stop there. In 1990, the Russian Republic, under Boris Yeltsin, declared its "sovereignty" vis--vis Moscow. The Soviet Union, itself, was becoming unhinged.
  &
  Gorbachev frantically tacked between conciliation, confederation, and market mechanisms on one side, and the mechanisms of central control and order on the other. Like the Sorcerer's apprentice, he could no longer control what he had loosed upon the scene. Only a massive resort to force - in a region awash in nuclear, biological and chemical weaponry - could now have restored central control. Stalin would have had no trouble with this. But Gorbachev was no Stalin.
  &

  Boris Yeltsin was a natural populist who - unlike almost all of the other party apparatchiks - loved mixing with and playing up to the crowds. As a provincial first Secretary, he achieved notable results and was duly brought into the Moscow government where he quickly rose to boss of the Moscow party committee.
  &
  Yeltsin quickly made enemies within the Moscow and Soviet party machines, and soon was reduced to a secondary post. But his baiting of prominent apparatchiks made him widely popular with the public, and he was elected to the Congress of People's Deputies with a landslide 90% vote. He quickly became the unofficial leader of the "democrats." The televised proceeding of the Congress made him a national figure.
  &
  By May, 1990, Yeltsin had also been elected to the Russian Congress, and was then elected chairman of its Supreme Soviet. Gorbachev ruled the Soviet Union - but Yeltsin ruled Russia.
  &

The coup leaders were not Bolsheviks. They were not a resolute and ruthless Leninist revolutionary party. They were just a bunch of party hacks.

  To gain a public mandate for the Soviet Union, Gorbachev tried a referendum. Yeltsin appended a second question to the referendum - approval of a Russian presidency. Both won, and Yeltsin won the Russian presidency in 1991.
  &
  Now, with a weakened hand, Gorbachev entered into negotiations with the various republics over the shape of things to come. The resulting secret Union Treaty "dropped the word 'socialist,' devolved most ministerial functions to the republics, upheld the supremacy of republic laws, called for the dissolution of the USSR Supreme Soviet, and made clear that Union membership was voluntary." The negotiations also called for the removal of every top Soviet Union official.
  &
  The KGB - ever efficient - knew all, and chose to leak all. Their own positions now at risk, the top party apparatchiks finally decided to act.
  &
  However, these were not Bolsheviks. They were not a resolute and ruthless Leninist revolutionary party. They were just a bunch of party hacks. Several of the coup leaders went home and got drunk. Troop deployments were timid and uncoordinated. The coup leaders timidly attempted to stay within the confines of the Soviet constitution.
  &

  Yeltsin was able to return to the White House - the center of Russian government - and energetically rally support. The troops that had surrounded the White House received no further orders from the coup leaders, and their officers were soon in talks with Yeltsin. Media coverage soon revealed the ineptness of the coup leaders, and showed the rising opposition in Moscow and Leningrad. No attempts were made to control telephone and other communications.
  &
  Yeltsin officials were quickly in contact with military and KGB officials, urging them not to get involved. Most took that advice. At a televised press conference, the irresolute and shaken coup leaders succeeded only in convincing most people that they couldn't succeed. On 21 August, 1991, the military leaders ordered the troops back to barracks, and the coup collapsed.
  &
  Yeltsin publicized the involvement of the Communist party in the putsch - decreed an end to its existence - and left Gorbachev as the head of --- nothing. Gorbachev acceded to Yeltsin prodding to disband the Soviet parliament and to grant independence to the Baltic states.
  &

This was no victory for the forces of democracy. It was the victory of Yeltsin and similar politicians who had the courage, energy and political savvy to make the right moves at the right time.

  Republic leaders like Yeltsin in Russia and Kravchik in Ukraine had been energetically gaining widespread support, while Gorbachev's world kept disintegrating. Even Soviet Communist party officials joined the Russian republic Communist party and supported Yeltsin in the hope of unseating Gorbachev and maintaining their influence.

  Ultimately, party apparatchiks just wanted to keep their jobs and perks. They reacted like ordinary politicians threatened with loss of incumbency - or like a professorate threatened with loss of tenure.

  This was no victory for the forces of democracy. It was the victory of Yeltsin and similar politicians who had the courage, energy and political savvy to make the right moves at the right time.

  "[As] Yeltsin's success in fortifying alternative Russian republic institutions became manifest, his constituency at the top expanded beyond a small group of nave, inexperienced 'democrats' to officials of the USSR state, who saw a chance either to preserve or to increase their power."

"Thus, the larger truth about 1991 was that the triumph of 'democracy' involved a bid for power by Russian republic officials, joined at various points by patriots and opportunists from the all-Union elite -- a process paralleled in Ukraine, Kazakhstan, and other national components of the Union."

  The Soviet Union's demise was "national in form, opportunistic in content." Separatist movements quickly swept the Central Asian republics.
  &
  Kotkin convincingly contrasts the actions of India - which had used force ruthlessly and decisively - killing thousands of separatists in the 1980s - without tarnishing its democratic credentials. Gorbachev's irresolute use of force in Georgia and Lithuania was worse than doing nothing. It fed the opposition and demoralized the military and KGB. Even right up until the end, many of the republics were more intent on autonomy than on sovereignty.

  It is possible that, by this time, the Soviet economy was incapable of supporting widespread military actions and occupations. Even now - with coffers once again filled with oil revenues - Russia has its hands full just in little Chechnya, where ruthlessness - albeit not on a scale that Stalin would have employed - has clearly not been enough. However, fortunately, few leaders have the stomach for the Stalin level of ruthlessness.

  After the coup failed, the rats left the sinking Soviet Union ship in droves. Hundreds of thousands joined Yeltsin's Russian Federation government - many others joined governments in Ukraine, Kazakhstan, and other republics.

  "Thus, the larger truth about 1991 was that the triumph of 'democracy' involved a bid for power by Russian republic officials, joined at various points by patriots and opportunists from the all-Union elite -- a process paralleled in Ukraine, Kazakhstan, and other national components of the Union."

  After the coup failed, those republics that had not yet declared independence did so. Yeltsin and Kravchik led the way in taking charge of those Soviet institutions and facilities on their soil. The military was informed that there would be drastic cuts in their budget.
  &

Gorbachev unwittingly created the conditions for Yeltsin's sudden, spectacular success in peacefully bringing down the Soviet Union.

  The Commonwealth of Independent States ("CIS") was cobbled together on December 9, 1991, and the military recognized Yeltsin as their civilian leader the next day. Yeltsin's authority was firmly rooted in the ballot box, and he was the leader most likely to be able to keep things from falling even further apart.
  &
  On 21 December, 1991, the leaders of the eleven CIS member republics met and formally dissolved the USSR. Gorbachev acquiesced two days later. The Evil Empire was dead.
  &
  Kotkin concludes that Gorbachev unwittingly created the conditions for Yeltsin's sudden, spectacular success in peacefully bringing down the Soviet Union. Gorbachev - fixated on the threat from party conservatives - brilliantly defanged the party and then refrained from instituting martial law. The party apparatchiks - (bureaucratic placemen now, rather than Bolshevik revolutionaries or Stalinist toughs) - hated Gorbachev for what he was doing, but "were petrified of being left without him."

  "Flabbergasted by the fact that his socialist renewal was leading to the system's liquidation, Gorbachev more or less went along. In sanctimonious, selective, and occasionally distorted reminiscences, he presents this acquiescence as an activist strategy -- a disingenuous and, ultimately, superfluous exercise. Yugoslavia's bloody break-up, as well as the careers of Slobodan Milosevic, Franjo Tudjman, and their tinpot henchmen, will forever provoke additional shudders over how events might have turned out across northern Eurasia and the satellites of Eastern Europe."

The Collapse of the Russian Economy:

  Yegor Gaidar was appointed by Yeltsin to head the Russian government, and moved quickly to replace central planning with market reforms.
  &

Everyone in positions of authority rushed to claim possession of the state assets under their jurisdiction.

  A feeding frenzy was ushered in by the collapse of Soviet authority. Everyone in positions of authority rushed to claim possession of the state assets under their jurisdiction. For the people, the great socialist experiment - in its collapse - delivered yet one more cruel disillusionment.
  &

The planned economy and below-market pricing had been an invitation to corruption, theft of public assets and black market activity.

 

Legitimate business was impossible in a totally corrupt and lawless environment.

 

Everything needed for a modern economy - maintained roads, a well regulated banking and credit system, effective anti-monopoly regulation, effective law enforcement, reliable regulatory agencies - was lacking.

  Not only was the market incapable of delivering immediate economic and welfare miracles - it hardly worked at all under the conditions then existing.

  "[Instead], the people got an economic involution and mass impoverishment combined with a headlong expansion of precisely what had helped bring down the Soviet Union -- the squalid appropriation of state functions and state property by Soviet-era elites. Some functionaries ripped out the phones, carpets, and wood paneling before fleeing. But most returned to their old desks, or reshuffled to new ones, and used their official duties -- licensing power, affixing of state seals, authorizing or blocking investigations - to enrich themselves far more than they could or would have under Communism."

  Kotkin provides interesting detail about how - well before the Soviet collapse - "officials used their positions of public power to pursue their private interests." Those engaged in exports to foreign markets soon had vast fortunes squirreled away in foreign bank accounts and shell companies. The planned economy and below-market pricing had been an invitation to corruption, theft of public assets and black market activity.
  &
  By the mid 1990s, capital was flooding out of Russia far faster than it could be replaced by IMF loans. Phony charities and unaccountable duty-free zones were the source of fortunes that escaped taxation.

  "Staggering fortunes were amassed, beginning at the top and extending down intricate 'loot chains' to the lowliest beneficiaries."

  Legitimate business was impossible in a totally corrupt and lawless environment. "In 1994 alone, more than 600 businessmen, journalists, and politicians were murdered." Protection rackets were run by gangsters and officials - which were frequently one and the same.
  &
  Everything needed for a modern economy - maintained roads, a well regulated banking and credit system, effective anti-monopoly regulation, effective law enforcement, reliable regulatory agencies - was lacking.

  "Russia, paradoxically, needed both far, far deeper economic liberalization, and much better government regulation."

Bank accounts and property that the state owned on paper were now in the hands of "unrestrained actors."

 

There was a "ten-time zone Russian rust belt, whose combination of economic deadweight and scavenging opportunities defined the decade of the 1990s."

  The author heaps appropriate scorn on critics who blame "monetarist reforms" - derided as "Thatcherism" and "market Bolshevism." There were, in fact, no reforms. There were simply no possibilities for such reforms -- or any other "pie-in-the-sky alternatives."

  "Critics of Russia's rhetorical neo-liberalism failed to specify who was supposed to have implemented their suggested state-led 'gradualist' policies -- the millions of officials who had betrayed the Soviet state and enriched themselves in the bargain?"

  Bank accounts and property that the state owned on paper were now in the hands of "unrestrained actors." Yeltsin's inner circle in fact made no effort to halt the mass appropriations of state property. (What everyone owns, nobody owns.) Instead, they joined the self-enriching feeding frenzy.
  &
  Instead of a market economy, there was a vast expansion of black market activity and theft of public assets - without the semblance of discipline previously imposed by the Communist party. There was a "ten-time zone Russian rust belt, whose combination of economic deadweight and scavenging opportunities defined the decade of the 1990s."
  &

Gaidar's "shock therapy" was at most just a recognition of the institutional dissolution around him, and even so left basic food and fuel prices fixed.

 

 All 15 republic central banks busily created roubles and rouble credits for immediate needs.

  The problem was not one of erroneous reforms or cultural inadequacies or bad foreign advice or a small band of thieving oligarchs. It was a problem of economic institutions. It was a problem of political and legal bureaucracy.
  &
  The author explains the incredibly decrepit conditions in Russia in 1991. "Before Gaidar had lifted a finger, Russia was utterly broke and in chaos." His "shock therapy" was at most just a recognition of the institutional dissolution around him, and even so left basic food and fuel prices fixed.

  • Legalization of the "black market" overnight transformed the streets into bustling bazaars and eliminated shop queues - instantly overcoming "the goods famine."

  • However, the monetary situation lost all discipline. All 15 republic central banks busily created roubles and rouble credits for immediate needs.

  • Trillions of roubles in "inter-industry debts" quickly engulfed inefficient Soviet-era industry.

  • "Trapped," Gaidar caved in and granted vast new subsidies that blew giant holes in his budget.

"In a great irony, it was not the Soviet past but 'reform' that was compelled to stand trial."

 

There were in fact few strikes or public disruptions. It was the managerial elites who caused all the problems.

 

Chernomyrdin tried a more gradual, planned approach - and failed miserably.

  As a result, "monetarism" was quickly abandoned - with the predictable result - soaring ruinous inflation. Savings, pensions, fixed salaries quickly became worth less.

  "In a great irony, it was not the Soviet past but 'reform' that was compelled to stand trial. And, even before the IMF fiscal stabilization loans came through, belatedly, in June [1992] -- despite Russia's failure to meet the conditions set down -- critics bitter about the fall of the Union accused Washington of a second 'global plot,' this one to strangle Russian industry."

  Gaidar lasted just one year. He was forced out in December, 1992. Kotkin finds that most of the criticism of Gaidar's efforts were poorly informed.

  • The advocates of "shock therapy" complained that it was not in fact totally implemented. However, even its advocates admitted that there were "real-world obstacles" in Russia that would prevent success.

  • Advocates of "social safety nets" asserted that they were needed to pacify the public during the hardships of transformation. However, there were in fact few strikes or public disruptions. It was the managerial elites who caused all the problems, and who used their connections and organizational powers to obtain preferential treatment that the system couldn't afford.

  • Advocates asserted the superiority of a more gradual - planned approach - using such industrial policy tools as "directing credits to priority industries." However, Victor Chernomyrdin - Gaidar's successor - tried that approach and failed.

"Comprehensive economic "reform" was always an "illusion." "And therefore, Western advice, whether misguided or sensible, was largely inconsequential."

  It was not until July, 1993, under Chernomyrdin, that Russia issued a new rouble and finally took away from the other republics the power to issue rouble credits.

  "Chernomyrdin discovered that neither the government nor the Central Bank had sufficient authority to enforce investment priorities at the level of enterprises. He also came to understand that free-flowing state credits -- 'the opiate of industry' -- caused harmful inflation. And so, with the assistance of the finance minister, the personification of the industrial lobbies embraced a policy of tighter credits and fiscal stabilization."

  Inflation - running at about 2,250% in 1992, declined to near zero in 1996. Indeed, monetary and budgetary discipline was all the Russian government could provide. Comprehensive economic "reform" was always an "illusion." "And therefore, Western advice, whether misguided or sensible, was largely inconsequential."

  "Russia's was not, and could not have been, an engineered transition to the market. It was a chaotic, insider, mass plundering of the Soviet era, with substantial roots prior to 1991, and ramifications stretching far into the future."

Privatization:

Chubais tried to "institutionalize and rationalize" the theft of public assets.

  Anatoly Chubais knew that his small group could not reverse the orgy of "mass opportunism and self-privatization," so he decided to "institutionalize and rationalize" it. He concentrated on the large firms, and delegated oversight of the privatization of the hundreds of thousands of small firms to the regional and municipal governments.
  &

  There were about 15,000 large state enterprises - and no domestic sources of private investor capital. A voucher scheme was implemented.

  "Shrewdly adapted to circumstances, privatization was also, by design, a mad rush. In the chaos that constituted the still forming Russian state, Chubais, like Gaidar, believed he had a unique chance to knock out Soviet-era economic structures, and that such an opportunity was destined not to last."

  Leftist ideology remained an expensive problem. Foreign capital was kept out to defuse complaints of a sale of Russia's "patrimony" to foreigners. This was essential politically, but it was costly economically. It drastically reduced the purchase prices at the voucher auctions.

  "The investigators noted that the voucher value of all Russian industry -- including some of the world's richest deposits of natural resources -- came to about $12 billion, less than the value at the time of Anheuser-Busch. Russian state property was given away for small beer, to make privatization an 'irreversible' political reality."

Remaining socialist political influences twisted privatization into predictably inferior forms.

  Socialist political influence created other expensive problems. It twisted privatization into predictably inferior forms. Governments at all levels retained large interests in key companies. Majority employee ownerships frequently hindered essential market-oriented restructurings that required mass layoffs.
  &
  Nevertheless, at the end of the process, "Russia had never had so much private property in its thousand-year existence."
  &
  The subsequent "loans for shares" privatization was even worse. By this scam, Russia's financiers "loaned" the government its own money that had been placed in their institutions. When the loans could not be repaid, they conducted rigged auctions of the collateral - more than two dozen of Russia's most strategic and lucrative industries. These financiers were Yeltsin supporters, and they paid Yeltsin back for their fortunes by helping him win reelection.
  &

Where the state retained ownership and control, the assets were looted.

 

The economic collapse - as serious as it was - was nowhere near the 50% collapse indicated by official figures.

  Where the state retained complete ownership or majority interests, the national interest faired no better. These industries were routinely looted by their managements - thus privatizing the value where the corporation wasn't privatized.

  "Privatization did little to enable rank-and-file shareholders to defend their paper property rights. But larger institutional investors were winning some property rights battles, and the increasing public outcries over the need to guarantee property rights testified not only to the distance Russia still had to go, but also to how far it had come."

  The result was that the needed restructuring of industrial dinosaurs didn't take place. Official GDP figures dropped an astounding 50% in 5 years. GDP figures, of course, had been grossly overstated in Soviet times - and they were being grossly understated now to escape taxes.
  &
  Gray market activity blossomed
- guesstimated at about 50% as much as the measured economy. Neither electricity consumption nor unemployment reflected so major an economic decline as did the official GDP figures.
  &

Small business suffered from bureaucratic barriers and a lack of access to credit - as well as harassment by corrupt officials and extortion by criminal gangs.

  The lack of small business growth was the real failure. The rapid proliferation of small business had been a key to economic rejuvenation in Poland. In Russia, the environment was hostile to small business. Small business suffered from bureaucratic barriers and a lack of access to credit - as well as harassment by corrupt officials and extortion by criminal gangs. Thus, the economy remained substantially dependent on its industrial dinosaurs.

  Russia had suffered under socialism for too long. Unlike in Poland or Hungary, there was no essential human capital left - no "know how" - for running businesses, financial institutions or the many government institutions required for a functioning market economy. The only way to get ahead in a communist economy is to steal government property - and people in Russia simply continued to do what they knew how to do.

In East Germany, it had been found cheaper to abandon socialist industries and build new ones nearby rather than attempt to renovate them.

  Almost half of Russia's towns had only one major industrial firm - three quarters had no more than four. As in China, these industries provided not only employment, they also provided a wide array of municipal services. All this was kept afloat by mass subsidization and cross financing so that the whole system kept sinking further into debt and obsolescence.
  &
  In East Germany, it had been found cheaper to abandon socialist industries and build new ones nearby rather than attempt to renovate them. Kotkin concludes that Russia's rust belt industries could only have been "restructured" if they had been bombed.
  &

  Nevertheless, some progress was being made. The military's share of GDP was cut drastically and shifted into the energy sector, which along with other raw materials producers, provided the vast majority of Russia's exports, foreign currency revenues and federal budget revenues. Russia was still essentially living off of its oil and gas. Cuts had also been made in government civil budgets, but much of this was being looted by government favorites.
  &
  Perhaps $150 billion of domestic capital fled Russia during the 1990s - an amount close to four times the IMF loans extended as "aid." Into this hostile environment, only a dribble of foreign capital dared to venture.
  &

The fundamental factor was the Soviet bequeathal, one side of which was a socioeconomic landscape dominated by white elephants that consumed labour, energy, and raw materials with little regard for costs or output quality. The other side, remarkably, was even more ruinous: unfettered state officials whose larceny helped cashier the Soviet system.

  A "Marshall Plan" is the standard remedy advocated by Western critics in such circumstances. Kotkin heaps appropriate scorn on such ignorance. These advocates clearly have no clue as to how and why the Marshall Plan worked. The conditions in Europe during the Marshall Plan were far more favorable than in Russia during the 1990s. The lack of accountable authorities, basic functioning institutions, human capital, or even a civil society made Russia a financial black hole.
  &
  Mistakes were undoubtedly made in dealing with these unprecedented conditions, but all European transformation economies suffered severe economic declines no matter which transformation route they took. Policy weaknesses did not cause the problems.

  "Rather, the fundamental factor was the Soviet bequeathal, one side of which was a socioeconomic landscape dominated by white elephants that consumed labour, energy, and raw materials with little regard for costs or output quality. The other side, remarkably, was even more ruinous: unfettered state officials whose larceny helped cashier the Soviet system, and whose bloated ranks swelled with many grasping newcomers."

The collapse of government:

  The failure to control communists was one of the greatest failures of Communism. These hoards of corrupt officials remained to afflict the newly elected governments that succeeded the Soviet Union.
  &

"How was the incoherent Russian state going to solve the country's problems when the state was the problem?"

  Without rule of law, effective checks and balances, a politically and economically empowered civil society, and effective opposition parties, democracy leaves elected officials free to act like dictators. These essentials of political "liberalism," as Kotkin calls it, were entirely absent in Russia in the 1990s.
  &
  These weaknesses are also a disaster for market economies. As stated above, a wide array of government functions are essential for a properly functioning market economy. Russia was a grotesque democracy. Executive power had in many ways been fortified, "and reduced Russian politics to a scrum to acquire and benefit from executive office, irrespective of ideological tilting."
  &
  Kotkin asks: "How was the incoherent Russian state going to solve the country's problems when the state was the problem?"
  &
  Kotkin explains the dysfunctional government headed by Boris Yeltsin. With all the political reorientations, no substitute was found for the defunct Communist Party as a means of extending control pervasively through all levels of government across ten time zones. By 1994, Yeltsin had disbanded his obstreperous legislature and reorganized his government, placing vast powers in his own hands, and taking control of vast properties.
  &
  Nevertheless, Yeltsin failed to use these powers effectively. His administration never gained effective control over Russia's 89 subunits - including 32 national republics or districts - spun off on autonomous courses of their own. Only Chechnya, however, sought - and fought for - independence.
  &

Almost all the powerful Soviet officials remained in place in the new political units - all of whom were underpaid - and almost all of whom were for sale to the highest bidder.

  Local governments throughout Russia quickly adopted autocratic presidential governments like that of Yeltsin. This was not driven by Yeltsin - who was otherwise preoccupied - or by national oligarchs - who had personal fish to fry. It was rather the natural result of a Soviet legacy devoid of civil society or the institutions needed to support liberal democracy.
  &
  Hydra like - the KGB reemerged - under different names - into a 100,000 strong Russian force, with a variety of agents hiring out for a special Presidential force and various agency and private forces. Then, there was the 40,000 strong tax police "whose power flowed from the rich ambiguities of Russia's prolific tax regulations and lethal rates." Also, there were powerful judges and prosecutors inherited from the Soviet Union.
  &
  Almost all these officials were underpaid - and almost all were for sale to the highest bidder. In spite of this, pressure for effective court reform has been coming from various business and legal sources, and some progress has been made. However, Russia's fragmented judiciary remains unpredictable, and enforcement of its decisions remains dubious.
  &

The Soviet bureaucratic machinery just changed titles and political masters and kept on functioning. Some agencies even expanded.

 

There is simply no substitute for forms of an effective regulatory civil service, a strong judiciary capable of enforcing rule of law, property rights, and accountable officials. There is no substitute for reliable and readily accessible financing institutions.

  The Soviet state had not in fact been demolished. As the author points out, its machinery just changed titles and political masters and kept on functioning. Some agencies even expanded.

  "[Just] as the nature of the collapse profoundly shaped the entire post-Soviet environment, so Soviet-era institutions and officials, as formidable 'facts on the ground,' exerted immense influence on the scope and pace of any directed change."

  Even the new executive institutions staffed with new personnel "bore the unmistakable stamp of the Soviet epoch, and even of the tsarist period."
  &
  One line of criticism alleges the failure of Western reforms and recommends that Russia should just "follow its own path." This misses the obvious point that that is exactly what Russia did. At no time did it effectively adopt Western reforms.
  &
  And while Russia should definitely adapt systems for its own cultural peculiarities, there is simply no substitute for property rights, forms of an effective regulatory civil service, a strong judiciary capable of enforcing rule of law, and accountable officials. There is no substitute for reliable and readily accessible financing institutions.
  &
  Kotkin explains a Russian society
that is thoroughly dysfunctional and corrupt. Somehow, it keeps having reasonably free elections - although subject to various forms of manipulation. Under Vladimir Putin, chaos has at least been restrained and some reforms are taking effect. However, the future depends on the development of forms of governance essential for the development of an economically and politically empowered civil society, and a prospering market economy.
  &

Conclusions:

 

&

  The author concludes that the Soviet collapse - and especially the peaceful nature of that collapse - was due entirely to domestic factors as described in this book. The only outside influence of importance was the 1980s successes of welfare state capitalism that undercut communist dogma about the capitalist West.
  &

  Gorbachev's idealistic drive to recapture the Communist ideal was the driving force behind the collapse - and was in no way influenced by Reagan and Bush (Sr.) administration policies. Three U.S. presidential administrations, during the 1980s and 1990s, tried to take credit for events in the Soviet Union and Russia, and blame for the failures of reform was cast on the IMF. All this was greatly exaggerated.

  Kotkin is certainly correct that Soviet and Russian institutions and leadership played by far the predominant role in the breakup of the Soviet Union and the subsequent course of economic and political transformation in Russia. Russia is too weighty a vessel to be controlled by outside factors.
  &
  Nevertheless, Kotkin clearly overstates his case. His refusal to credit Reagan and Bush (Sr.) administrations for even the slightest role in these events is clearly ideological. Reagan, English prime minister Thatcher, Bush (Sr.), and Clinton all deserve some credit for their pertinent policies during this period.
  &
  Kotkin, himself, wisely indicates the importance of placing these events in their worldwide context. That context included the weak leadership that afflicted the major Western powers during the 1970s, and the sudden arrival of strong leadership in all the Western powers in the 1980s. It included the Keynesian inflation of the 1970s that permitted the oil cartel to sharply raise oil prices, and the political willingness to suffer higher than normal real interest rates throughout the 1980s that brought inflation under control and allowed oil supplies to outrun demand.
  &
 Gorbachev may have acted out of mere idealistic disappointment with economic developments. However, as Kotkin points out, he could never have acted the way he did if many influential members in the Communist party, the military and KGB were not in fact alarmed at growing Soviet weakness in the face of a rapidly strengthening West. They had to be equally alarmed at the evident Soviet inability to continue supporting weak clients in the face of insurgencies that were increasingly receiving U.S. support.
  &
 The Russian leadership was shocked by the size of the Reagan military buildup. The successful sweep of capitalism across the world in the early 1980s - inspired by Thatcher and Reagan - must have had an impact on Gorbachev and his leadership group. Gorbachev, himself, has admitted that Reagan did influence somewhat the course of these events. Some authorities have even reported that it was Reagan influence that induced the Saudis to keep oil production high during the dramatic decline in oil prices in the 1980s.
  &
  That the Soviet Union was spending at least 25% of GDP on its security forces - with a lopsided heavy industry economy dedicated primarily to support of its domestic and foreign defense needs - was no accident.
  &
  Of course, as Kotkin points out, there were undoubtedly many Soviet officials who just didn't give a damn any more - many apparatchiks who knew nothing but obedience to central authority. But there must have been many who backed Gorbachev's reforms out of shear desperation and an inability to figure out anything better to try.

Western commentators have had no clue "about the institutional dynamic that tied the fate of the [Soviet] Union to the fate of socialism -- the party's simultaneous redundancy and indispensability to the federal Soviet state."

  However, the illusions held by Western ideologues on both political flanks are correctly criticized by the author.

  "Neither had a clue about the institutional dynamic that tied the fate of the Union to the fate of socialism -- the party's simultaneous redundancy and indispensability to the federal Soviet state."

  He fires a broadside at an easy target - the Sovietologists who - (now admittedly) - totally missed the ideological and political dynamics at work in the Soviet Union and Russia during the last two decades of the 20th century. (Didn't we all!)

  "There was a Shakespearian quality to the system's surprising, yet ultimately logical self-destruction, inaugurated by romanticism and consummated by treason."

  It could easily have all been different - like Yugoslavia - but on a grand - and nuclear armed - scale. Some putative Stalin could easily have arisen to use the formidable and still loyal Soviet security forces to ruthlessly attempt the restoration of central authority.
  &
  Kotkin draws a contrast with the situation in China - where 80% of the population was still on the land instead of dependent on industrial dinosaurs (and where socialism had been in existence for just three decades). Nevertheless, while the Chinese Communist party remains in undisputed control, China suffers from many of the same problems as Russia - industrial dinosaurs, corruption, vast indebtedness, widespread institutional weaknesses, a weak legal system, and lack of a legally and politically empowered civil society.
  &

  Liberal reform was simply not possible in Russia, "given the social and institutional landscape inherited from the Soviet period, as well as the loss of the limited constraints that had been in place on state officials."

  "Ultimately, it was 'reform,' rather than the Soviet inheritance, that took the blame for the country's lingering woes."

  Outside Moscow, the collapse continues, as already inadequate facilities keep decaying, and even the Russian people decline in health, vigor, morale and numbers. Monumental environmental problems remain unaddressed.
  &

  Ultimately, movement towards Europe is Russia's best hope, Kotkin correctly notes.
  &
  However, he ends this otherwise remarkably insightful book with some gratuitous left wing rants against the U.S. commercial and geopolitical "empire" (an obvious misuse of the term "empire" currently popular in left wing circles), its "titanic national security establishment not demobilized after the Cold War" (a blatant factual error), and its "mixture of arrogance and paranoia in response to perceived challenges to its global pretensions, - - -." (Perhaps it would be better if the U.S. just let China and Russia handle problems with North Korea. After all, the problem is in their backyard - they have the most influence with North Korea - and if they have any trouble, France would undoubtedly be able to give them the correct advice.)

  Today, there is not one European government that wants U.S. troops removed from Europe. The U.S. Army is widely viewed as a force for stability and security rather than empire.

  Whenever the world rings 911 - except in the most minor instances - if the U.S. doesn't respond - nobody does!

Please return to our Homepage and e-mail your name and comments.
Copyright 2003 Dan Blatt