27 April 1990

Contradictions of Perestroyka


Introduction

The process of political and economic renewal in the USSR is, by all accounts, proceeding in rough waters. Whether it will maintain momentum or sink into chaotic convulsions is important not only for the USSR itself but also for its neighbors and for the West, particularly at a time when the latter is debating whether, how and how much to intervene to help the process. By everybody's reckoning, including Gorbachev's own, increasingly serious problems have arisen along the way than had been anticipated. The economy is still deteriorating: in 1989, Soviet leaders started referring to the "crisis" of the economy, which up to then was in a "pre-crisis". As of the Spring of 1990, there are indications that the general atmosphere of high expectations of 1986-1988 has become one of widespread disillusionment, as more and more obstacles arise on the way toward the new USSR which was charted at the XXVII party Congress.

Gorbachev is aware of these difficulties. He puts the blame squarely on the fact that the "old ways are still alive and can not be done away with overnight while new approaches are as yet unable to pick up full speed ... difficulties ... [are] a natural expression of contradictions inherent in a transition period." But difficulties are different from contradictions: to change the old ways is a difficulty, and may or may not be overcome; but contradictions are generated by the process of reform itself, and therefore are more difficult to eradicate. Gorbachev says he understands that deep contradictions plague his effort, but he does not seem to have the strength to implement the measures needed to defeat them. If anything, they are getting worse with time.

For analytical purposes, the process of perestroyka can be described as guided by three basic objectives:

1) to increase people's motivation at work,
2) to decentralize the economic decision-making process, and
3) o accept short-term sacrifices for long-term benefits. Each must be accomplished for the process to succeed.

This paper assesses the prospects for success of perestroyka by addressing three intrinsic contradictions which have emerged in the process of achieving these objectives. It will argue that these contradictions are both serious and sufficiently resilient that they will likely impair the reform process as a whole.

The first contradiction which plagues perestroyka is that its erratic development, far from stimulating the personal motivation of the Soviet citizen, hinders it at a time when such motivation would be most needed.

The second contradiction is that, while perestroyka requires a widespread decentralization of decision-making power in order to make the gargantuan Soviet economic system more flexible, ever since Gorbachev came to power he has been centralizing power in order to both dispose of personal and political opponents and push through his version of the reform process from above. The third contradiction is that, while the sheer size and comprehensiveness of the restructuring program requires that anticipation be cooled, exactly the opposite is happening today: the policy of political openness, or glasnost, is fuelling expectations and cutting people's patience short. Rampant nationalism around the country only makes these contradictions more acute.

Because of these contradictions, Gorbachev's program is contested by both the left and the right of the party. The right accuses him of leaving the old modus operandi too fast and without a clear idea of what to substitute for it. The left, on the contrary, retorts that he is being too cautious and compromising. The conclusion of this paper is that because these three contradictions are inherent in the middle-of-the-road approach of Gorbachev and his supporters, now firmly in control of the reform process, they are likely to persist. It is to be expected that they will slow down the process of perestroyka to the point that its élan might grind to a halt.

The main implication for the West which emerges from this paper is that it is no longer of paramount importance to worry about whether or not perestroyka will succeed: it is increasingly likely that it will not. Rather, the West should start thinking about what to do when it becomes clear it is not achieving its targets.

Demotivation

The cub was born in the zoo. He is aware that he is not free, but his daily ration has always been delivered to him and he can sleep securely at night. Now there is word that the management can no longer afford to keep up the zoo, and the cages will be thrown open: some already have been. His first reaction is one of excitement and anticipation. The passing of time, however, gives him a chance to reflect about his future. He begins to realize that he will be responsible for his own survival. He will have to watch out for predators and look for food day in and day out. Some among the first animals to be freed have come back with horror stories of how they were starving and preyed upon in the wilderness. The cub still knows well that he could lead a better life in the wild, but he is no longer sure he wants to try himself. Of course he would like to be free but he would rather not give up his daily ration and his secure shelter. It would be ideal if the zoo could be kept open to go there to eat and rest safely at night. No, they say that can not be done: The zoo will close down. In the meantime, he continues to wait for his turn to leave...

The main component of the reform strategy for curing the ills of the Soviet economy is the tapping of human resources--too often abused, underutilized or wasted in the past. This is to be achieved by means of a greater motivation of the individual: perestroyka aims at giving people greater motivation to put in their best effort for the development of the socialist economy through increased material incentives.6 Specifically, competition, freedom of economic choice, participation in the decision-making process at the workplace, risk-taking, individual enterpreneurship are much talked about components of the process of motivation. There is widespread consensus in the USSR that, in principle, change in this direction is needed.

The problem with the current approach to economic reform is that it is being conducted exclusively from above. The majority of the people whose motivation should be stimulated have no voice in deciding its course; they do not know where it is leading; no-one has the faintest idea of when it will reach the goal. In a word, they do not know what they are supposed to strive for. They are simply asked to bet on a better future. This is not much different from what their fathers and grandfathers had been asked by the Communist party since 1917 and it can hardly be the best the way to inject new motivation in the disillusioned minds of the Soviets.

Most Soviets do not know quite what to do to contribute to the realization of perestroyka. A common answer one gets when one asks a Soviet how he thinks he will contribute to the restructuring is "I will try to do my job as best I can". But how is this different from what they were doing before? How will this help "restructure" the system? Such an attitude might at best reduce waste and bring about some acceleration of growth. It was initiated before Gorbachev during Andropov's short interregnum. Uskorenje, or "intensification", was indeed the first international neologism that came out of the Gorbachev era, as early as 1985, before perestroyka and glasnost. But intensification is not enough. It can yield at best a one-time booster through the elimination of waste and an increase of discipline, but will not eliminate the bottlenecks which vitiate the system.

Nor do Soviets quite know what to expect from the possible success of such restructuring, or when to expect it. The only target which has been set before their eyes is a highly inchoate prospect of a better living standard to be achieved at some uncertain point in the future. What they do know is that perestroyka will chip away at their cradle-to-grave security, and in fact it is already beginning to do so.

Most in the USSR and abroad agree that motivation is the most needed ingredient for perestroyka to succeed. But few would argue with the observation that the pervasive mood in the USSR today, quite to the contrary, is one of indecisiveness and insecurity. Few dispute that perestroyka is good for the country; no-one denies that it will involve necessary hardship. This indecisiveness is flanked by great insecurity: not only do Russians not know how to go about implementing the reforms, they are not ready to accept all that comes with them. They hope that not everybody will be better off at the end of the process. In fact, they know that the criteria for coming out on top are being changed, and some kind of meritocracy will be introduced. Not surprisingly, this has already produced much resentment among those who can not take advantage of the new opportunities, by far the largest part of society. In practice, the consensus in principle on the need for reform breaks down.

This is the attitude produced by Soviet socialism, and it is a far cry from Stalin's "new Soviet man", the enthusiastic and inspired shock-worker he had in mind in the late twenties as he went about constructing the command economy.

The experience to date of the many new cooperatives which have been allowed to operate precisely with the aim of stimulating motivation is illustrative of this contradiction. Though they have been allowed to operate, government regulations do not make life easy for them. For example, unlike state enterprise, they must pay income taxes; they are obligated to purchase their raw materials in the free market, where it is many times more expensive than at the subsidized wholesale state stores. Finally, they are heavily charged for utilities, rent, operating licenses, etc. Because of these high operating costs, they charge high prices for their meals, up to 5-6 times what one would pay for comparable service at a state enterprise.

The future brings much uncertainty and few guarantees of professional stability for these entrepreneurs. Many of these private enterprises work in a low-profile mode, almost in hiding. One of the best cooperative restaurants in Moscow, is officially the "waiting room" for a tailor's shop! They have an individually selected and trusted clientele, and they have chosen to minimize their visibility, yet they are always fully booked.

While their number has steadily increased, cooperatives are still relatively few. They have not taken off in agriculture, where, if the Chinese example is of any usefulness, their contribution to society might have been faster and most efficient. They have been allowed only in a few industries, small manufacturers and services and are strictly regulated and often harassed by local party organizations, which resent the formation of economic entities they do not control. The local party organizations have many supporters in their obstructionist tactics against the cooperatives. Most Soviets can neither afford the expensive services of the cooperatives, nor can they hope to ever make as much money themselves. Quite naturally, these people believe they will not be the best at playing with the new rules, and resist changing the old ones. Not surprisingly, sometimes these are the same people who are among the best at playing with the old rules. Most, however, are not so sure either way. They may sincerely believe that change is necessary for the country, but they also know that does not mean it will necessarily improve their lot, or even that of their children.

In these conditions, the enterpreneurs fear that they will "live one day", and this makes them rather unscrupulous in trying to amass as much money as possible as fast as possible, even if resorting to dubious means and bribery. The only way to avoid this would be to provide iron-cast long-term guarantees that their entrepreneurial freedom will not be hampered with for the indefinite future, but this has not been done. Even if it were, it would take some time for any official pledge to acquire the necessary credibility.

In other words, the introduction of some enterpreneurial freedom has created an ugly vicious circle, whereby the problems and the uncertainty of managing private enterprises generate the need to resort to illicit means and high prices. The latter, in turn, generate suspicion and hostility on the part of those who can not do the same. In spite of all obstacles, cooperative restaurants are highly profitable. This has generated much envy, jealousy and resentment among the people who see this new brand of capitalists make a lot of fast money by "taking advantage" of the problems of the state sector, the limping flagship of socialism from which almost four generations of Soviets have come to expect their livelihood. This hostility, in turn, generates further uncertainty in the cooperative enterpreneurs, and so on.

The above discussion highlights the first contradition of perestroyka: economic emergency dictates economic reforms, but the success of these reforms requires the Soviets to take over precisely the kind of initiatives, responsibilities and associated risks which they have never had, or even known, and which many fear. Gorbachev is asking them to take the initiative through uncharted waters, and he is not providing navigation charts. Only a few, such as the cooperative enterpreneurs, see a credible chance to improve their lot in the short term, and take the plunge. Most others simply and genuinely do not know where to start. They know something has to be done. They find it difficult to argue against the leadership when it speaks of the need for radical transformations. No comprehensive alternatives to the program of perestroyka have been proposed by anyone and this is perhaps the greatest strength of Gorbachev. But they have only faint ideas on how to go about following through with it, and they deeply resent that only a few are visibly gaining, at least for now. The long forgotten witch-hunt for kulaks and "exploiters of the people", the motors of perestroyka, is in the making again.

Centralization

Excessive centralization of the administrative-command economy was recognized to be the most crippling heritage of the Stalinist system. Centralization exists both in the state apparatus and, most importantly, in the party which has controlled it. Democratic centralism has ensured that the party organs have performed throughout the economy the role of transmission belts for orders emanating from Moscow. A major aspect of perestroyka is the decentralization of economic decision-making power, and ir order to do so Gorbachev has indeed moved to break-up some of the traditional power conglomerates both in Moscow and in the periphery, e.g. the ministries (whose power grew enormously during Brezhnev's time) and especially the regional and local party cliques. But this kind of operation can obviously only be done from the pinnacle of power in Moscow: the very democratic centralism which should be dismantled prevents any reform initiative from the bottom.

In addition, in cases where power has indeed been decentralized, it has provided ammunition to hundreds of thousands of state and party bureaucrats who have both an interest and the capability to stop the reforms which might hurt their personal status. A major factor in the outcome of the struggle for decentralization will in fact be the perceptions of various categories of actors of what the power shift will mean for themselves. With few potential gainers in the short term, many potential losers and most genuinely confounded, the struggle for and against the implementation of perestroyka is taking place at all times, in the fog. While reforms are pushed from the political pinnacle, and passively awaited by those who are either economically desperate or idelogically disillusioned, an immense and shapeless middle stratum, which cuts across age, professional and ethnic groups, puts up a highly effective resistance.

This kind of resistance is possible because, despite democratic centralism, a sort of "negative" power is held at varying levels of authority by both state and party bureaucrats. They can not initiate policies nor even ensure the implementation of policies coming from above and handed down to them. What they can do rather well, however, is to stop, impair, dilute or otherwise neutralize those policies when it is in their interest to do so.
This kind of power is already diffusely disseminated throughout Soviet society. Numberless bureaucrats or simple workers and employees at all levels have the power to stop the reform, all in their own little niche of power. This is possible in a country where all too often nobody is responsible and nobody is guilty for what goes wrong. Rarely able to hold anybody accountable for slackness, mistakes or outright insubordination, the top leadership is not always able to influence the outcome of this struggle.

All of this results in a very tardy and sluggish response of the periphery of the Soviet system to stimuli coming from the top. This is often referred to as a problem of "inertia" of the system. In reality, it is not a question of inertia, because the latter would presuppose that some kind of direction has been taken and the system were moving at a certain speed, however difficult it may be to change either or both. The Soviet economy, on the contrary, has no definite direction and no constant speed. It is drifting, and the rudder of perestroyka is steering in fits and starts.

In sum, to implement perestroyka, widespread decentralization would be indispensable. But to decentralize, at this time, means to give additional veto power either to those who oppose change or to those who are simply indecisive because they do not know where their interests will lie in the future setting. The former group is already powerful, and the latter is enormous and unpredictable. This illustrates the second contradiction of the reform process. On the one hand the Soviet leadership needs to decentralize decision-making power in order to improve efficiency. On the other hand, the implementation of the program requires an immediate increase in centralization so that those who are capable of defeating thousands of concrete reform initiatives are blocked. Gorbachev is now doing the former; whether he will subsequently be able to do the latter, however, remains to be seen.
A comprehensive program for true and faster decentralization had been devised by Deputy Prime Minister Abalkin in December 1989. It was not approved by the second session of the Congress of People's Deputies. Instead, the Congress passed a bill based on the more cautious approach favored by Prime Minister Ryzhkov, which postpones the introduction of widespread market mechanisms until 1993. The debate on the issue is continueing both in Congress and in the Supreme Soviet, but it seems that effective legislative decentralization will have to wait.

That the centralization of power has in the last year or so been accompanied by the building up of a kind of personality cult around Gorbachev only makes one worry that, after the definitive departure of the Brezhnevite gerontocracy from the political scene, a new personal autocracy will rule over a party organization in disarray. In certain ways, Gorbachev might be trying to do what Khrushchev tried (and failed) to do: use a pretense of decentralization in order to divide the party apparatus and rule over its fragments. That gamble cost Khrushchev his post. His successor tried in turn to break up existing power conglomerates, but also in this case the result was greater centralization. Whether Gorbachev will succeed remains to be seen. Be that as it may, so far his approach has hardly been a headstart for the healthy economic decentralization required by perestroyka.

Expectations

It is undeniable that the extent to which the peoples of the USSR can express their ideas today is astounding when compared with only a couple of years ago. Glasnost, understood as freedom of political expression, is without a doubt the main result of the Gorbachevian "new political thinking" so far. In fact, perhaps the most palpable reality which strikes observers of Soviet politics today is that there is a large and widening gap between the results obtained in this process of political liberalization and those thus far achieved in the economic sphere. Soviet media today routinely discuss fundamental political, economic, ideological and historical issues which until a few months ago were simply off-limits; on the other hand, shops are as little stocked as ever, and getting emptier.

As of early 1990, glasnost is developing quickly, though at an irregular, indeed mercurial, pace. Few seem to have clear ideas of whether and to what extent it should be limited. It is growing in several different directions simultaneously, and it allows for criticism of domestic and foreign policy, history, ideology and, most importantly, of the current government and of Gorbachev himself. There is virtually no one and nothing that is spared by the trenchant articles appearing on the national press. Long-repressed frustrations are finally being vented with force. In the process, glasnost is quickly catalizing the growth of economic expectations, but this, in turn, makes the problems of implementing the economic reforms worse because it shortens people's patience.

As of early 1990, Soviet peoples have very little patience left; they want results immediately. Glasnost is appreciated because for all too long so many have yearned to speak out against the system without fear of retribution; now they can and are even encouraged to do so. But the policy of restructuring is admittedly designed to improve the system in the long-term and manifestly requires (often painful) adjustments in the short-term. It is beyond question, and it is well known to the leadership, that things must get worse, perhaps much worse, before they can get better. The success of the reform, therefore, requires that the Soviet peoples accept sacrifices for a while, perhaps a long while, and reduce expectations for improvement in their standard of living. For a people which already for seventy years has been promised the communist Eldorado and required to make hard (and, as it turns out, useless) sacrifices to get there, this is not easy to accept.

Thus, glasnost generates the third contradiction in the process of perestroyka: while there is a clear necessity to postpone political as well as economic expectations, it is contributing to make people even more impatient. Glasnost is an indispensable nourishment for perestroyka: without it it would not be possible to tap the creative potential of those who are called to change the system. But at the same time it allows the development of a chain reaction of protest and impatience which is highly deleterious to reform.

Moreover, glasnost makes it possible for those who stand to lose from the change to defeat it by powerful obstructionist operations. As discussed above, in the short run these forces might include, in one way or another, the majority of the Soviet people, who see the risks but not the benefits of change; it certainly includes all those in the establishment who stand to lose their old privileges.

In other words, while conceived as a means to foster the "new thinking", glasnost is a powerful instrument in the hands of egalitarian and pro-status quo political forces which oppose the introduction of greater amounts of meritocracy. These forces are well entrenched in their power slots and are now even represented at the highest level, since Veniamin Yarin, a metallurgical worker from the Ural region and a prominent member of the egalitarian United Workers' Front, was selected as a member of the Presidential Council in March 1990. This opposition, paradoxically, is all but consistent with the normal democratic political rules, but it is nonetheless incompatible with the necessary and painful restructuring of the Soviet system.

Nationalism

There is one additional problem which compounds the three contradictions of perestroyka discussed here: nationalism--both Russian and non-Russian--is building up on a long-term pattern everywhere around the Soviet Union. Taking advantage of Gorbachev's call for more decentralized and widespread participation in politics, and fuelled by glasnost, nationalism has become a disruptive force which is complicating Gorbachev's work considerably. Awakening nationalism fuels impatience with the progress of reform as it is directed from Moscow. As long-repressed national aspirations can now be voiced Gorbachev is seen less and less as the initiator of change and more and more as the impediment to greater national self-determination.

Gorbachev has been ambiguous with respect to the role of regional autonomy in the process of reform. He has written that "our fundamental principle of a strong center and strong republics reflects the will of all Soviet peoples." In a macroscopic way, the first part of this statement is but another manifestation of the contradiction between the need to decentralize power to gain the support of the periphery and the need to centralize in order to implement reforms against the will of recalcitrant actors.

The danger for Gorbachev is that the current partial and indecisive democratization of his nationalities policy may bring him to a no-win situation. If he lets the Republics move on toward ever greater autonomy or even independence, he will be an easy target from conservatives who will be able to accuse him of presiding over the disintegration of the Soviet state. If he represses them, he may find himself contradicting his "new thinking" and thereby killing his perestroyka as a whole.

There is another more serious,if less immediate, danger associated with nationalist movements in the USSR: the widespread tendency to blame every ill in their economies and polities on Moscow. This fuels the (false) expectation that, once greater autonomy or even total independence is achieved, these ills will soon be cured. After years of centralized and inefficient direction from Moscow, the economies of the various republics will need major adjustments before the benefits of greater autonomy from the Soviet state plan could be felt. The process will take years and, as economic restructuring in the country as a whole, will not be painless. Thus, it is advisable for nationalists around the USSR to postpone expectations for improvement. However, contrary to logic, the opposite is happening today. Therefore, even assuming that greater regional decentralization is achieved in the near future, peacefully and without endangering perestroyka, it might soon produce bitter disillusionment as it becomes clear that economic and inter-ethnic problems will not disappear with it.

Conclusions

As of the spring of 1990, there are unmistakable signs that the process of perestroyka in the USSR is in jeopardy. These signs point to contradictions which are intrinsic to the process of restructuring itself, quite aside from the debates and personal juxtapositions at the top of the Soviet leadership.

While the vast tasks of perestroyka require high motivation on the part of all concerned in its implementation, the contradictory nature of the reform initiatives undertaken by the government send ambiguous signals to those who could best contribute to its realization. In a condition of legislative and economic insecurity, most Soviets do not know whether they stand to gain from perestroyka, nor whether it will succeed at all. As one deputy from Kazakhstan put it during the debate over Gorbachev's election to the presidency in the Congress of People's Deputies, he is "putting his foot on the brake and on the accelerator at the same time." Needless to say, this is hardly a prescription for the success of an ambitious reform plan.

Second, while perestroyka requires widespread decentralization of decision-making power, the Kremlin is now centralizing power in order to push reforms through bureaucratic resistence. This approach is not new, and can be rationalized by keeping in mind that a negative power of obstruction is already widespread throughout the state and the party machines, and needs to be constrained. However, in what amounts to a vicious circle which will be difficult to break, delaying actual decentralization blocks the development of the creative forces which should produce the restructuring of the system.

Third, the sheer size and comprehensiveness of the restructuring program will make it difficult to produce results before the process is well along its way. This, in turn, requires that expectations be cooled and postponed. However, thanks to the policy of political openness, or glasnost, exactly the opposite is happening today. Freedom of speech is, predictably, producing fast rising economic as well as political (including nationalist) expectations.
The latter is in fact one additional problem which compounds all three other paradoxes: nationalism--both Russian and non-Russian--is on the rise. These nationalist forces operate beyond the struggle for power in the Kremlin, and can hardly be controlled from Moscow. Taking advantage of Gorbachev's call for popular participation, nationalism risks becoming a highly disruptive force which complicates Gorbachev's work considerably.

As of the spring of 1990, the process of Soviet reform is beginning to look more and more as if it is drifting. Barring unforeseen--and, from Gorbachev's point of view, welcome--developments, it is increasingly unlikely that the program of restructuring as it was formulated at the XXVII Congress will be carried out.

In that case, two possibile results are the most likely. The first is that perestroyka will be abruptly defeated by a sharp downturn of some of the major economic indicators, by an uncontrollable outburst of nationalism, or by a combination of the two. In these circumstances, a reaction of conservative elements is likely, and is probably inevitable if secessionist nationalism spreads from small peripheral republics to the Ukraine, whose loss could hardly be absorbed by Moscow.

Alternatively, like other Soviet reform initiatives in the past, the Gorbachev attempt will slowly run aground. The USSR could then continue to muddle through economically and to decline politically until either the next reformer or the next major crisis will come about and shake it anew. The synergy between glasnost and nationalism makes the latter possibility less likely: their mutual reinforcement increases the danger of an internal explosion. It is not clear how much time is left for Gorbachev and his allies to produce concrete results before too many people lose what little patience they have left, but it is probably not much.
The third possibility is that Gorbachev will come around to radicalize reforms, as requested by the leftist wing of the party and of the Congress, to the point where the USSR will effectively cease to be a socialist society. This would require a multi-party polity and the dismantlement of most central planning. It is early to say whether the advocates of this option might prevail, but it is certain that, if they should, they would do so only after strenuous resistence, and the process would not be smooth.

So far, the West has worried about whether and how to help the process of change in the USSR. A new and more difficult challenge for the West is soon likely to be how to maintain a stable and peaceful relationship with the Soviet Union while the latter is undergoing a process of rapid economic deterioration, social unrest and nationalistic outbursts around its periphery.

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