By Jeffrey Sommers* – CounterPunch
Mikhail Gorbachev presented a figure of Greek tragedy proportions. Possessing good intentions and intellectual curiosity, Gorbachev nonetheless became the most reviled man in Russia, following the USSR’s demise. Yet, with Gorbachev, his worst qualities were connected to his best. Gorbachev was the wrong man at the wrong time to resolve the contradictions created by the Stalinist and then Brezhnev bureaucratic model of really-existing socialism in the Soviet Union. Increasingly hated at home, Gorbachev was beloved by world leaders in the “West” as the man who peacefully (at least by the comparative metrics of collapsing empires) unwound the USSR, even if trying to save its all-union character. Meanwhile, for China, Gorbachev delivered lessons in what not to do when reforming a sclerotic post-Stalinist system requiring economic reforms, if not transformation.
What happened when the USSR produced its first post-World War II leader untethered to Joseph Stalin (and those he appointed)? Answer: a liberalizing socialist seeking a return the origins of the USSR’s democratic anchoring in the spirit of the “Soviets.” Contra assertions of Friedrich Von Hayek that socialism represents the “road to serfdom,” the emergence of Gorbachev suggests the opposite. Terror and tyranny in the USSR arose more from war and the demands of state security services required to survive, and the paranoid politics it enabled, rather than any “inevitable” path from the socialist path taken. Once the USSR was passed the generation having gone through this trauma (and leaders linked to that generation), a communist party head emerged that sought a return to an ideology anchored in democratic socialism.
As with nearly all of the Soviet Union’s leadership, Gorbachev had provincial origins, in his case born in 1931 in Stavropol Krai just southeast of Ukraine. His maternal grandparents were ethnic Ukrainian. He rose through the party ranks with a reputation for hard work and finding solutions to vexing challenges. By 1979 he was in the USSR’s highest governing body, the Politburo, and by 1985, selected to the country’s highest post as General Secretary to lead the Soviet Union out of its economic stagnation.
Gorbachev was a serious Leninist, and not just a bureaucrat reciting historical materialist catechisms out of momentum or political expediency. Confirming what historian Stephen Kotkin asserted in his biographies of Stalin, Soviet party leaders were not party posers, but genuine believers in communism who often walked the talk. But, what many thought the USSR needed in its time of trouble was Lenin’s firm hand and not democratic socialist inspired experiments done on the fly.
Ironically, it was these aforementioned democratic characteristics, which ensured the failure of Gorbachev’s reforms. For every crisis, Gorbachev encountered, his go to inspiration was to be found in Lenin’s writings. Like Lenin, a provincial figure that transformed Russia, he was nonetheless not Lenin. Gorbachev focused on Lenin’s democratic message for the future, but not his decisiveness, if not brutal ruthlessness that allowed him to carry off the Soviet Revolution. By contrast, Russia’s current leader, Vladimir Putin, possesses the other half of Lenin’s personality: his ruthlessness, but bereft of any democratic purpose.
Gorbachev was too much the provincial intellectual and too little the pragmatist as he sought to salvage the USSR. Rather than address practical material approaches to Russia’s economic challenges, e.g., such as his mentor Yuri Andropov’s sensible proposal to reduce waste and make transport more efficient across the USSR’s vast expanse by improving rail rolling stock, Gorbachev’s outlook was often philosophical, focusing on democratizing civic and political life in order to unleash the dynamic economic potential of its citizens. Gorbachev’s reforms let loose creative forces alright, just not ones making the economy more productive, but rather those that gave rise to the post-Soviet oligarch and later siloviki-dominated economy.
For example, Gorbachev’s Decree on State Enterprises in 1987 and Decree on Cooperatives in 1988 were conceived to unleash entrepreneurial energies and deliver greater autonomy to both managers of existing state companies as well as producing entrepreneurs. In practice, however, these measures provided structures permitting the raiding of state inventories of raw materials and often re-selling of finished goods by middlemen in cooperatives at higher prices. Worse, these decrees permitted the rise of commercial banks for the purpose of facilitating business with international customers. This gave cooperatives and state company directors the ability to create (and launder) money, which the government had to back up with real cash. This also created opportunities for early de facto privatizations of state assets. In aggregate, rather than adding new output, Gorbachev’s reforms mostly fueled even more theft. Moreover, they became the infrastructure for offshore banking and privatizations enabling the final feeding off the post-Soviet carcass during the Boris Yeltsin years. This utilization of offshore banking networks intersected with the larger global turn led by the US and the UK to financialize their economies to remain competitive in the face of global manufacturing competition. Utilizing the euro dollar offshore banking systems designed in the 1950s to avoid taxation of multinational companies in Europe, these systems were expanded in the late 1970s and 1980s for tax evasion by the rich generally. KGB trained in using these networks to move capital globally for various Soviet projects (e.g., transferring money to revolutionary movements, etc.), used their expertise in the late Gorbachev years and after to facilitate the theft of Soviet commodities by selling them at world prices and pocketing the arbitrage. All of this worked to the interests of New York and London, as their banks become the recipients of this torrent of cash. KGB agents under Gorbachev were tasked to assist Soviet cooperatives and state managers with establishing commercial banks and offshore accounts. Under Yeltsin, these businessmen created in the Gorbachev years, muscled out the KGB (Chekists). But, in the 21st century, former Chekists (Siloviki) reasserted their power, grabbed the cash and assets of select oligarchs, and began using this wealth to rebuild Russia’s military. This represented an entropy, in which the system of offshore banking that served US and UK interests through exporting post-Soviet commodities and money to points West, eventually created challenges to Anglo-American power, exemplified in part by the war in Ukraine in 2022.
But, it was not only in the economic realm that Gorbachev’s reforms caused chaos. Liberated from decades of control from an overbearing state, Gorbachev’s perestroika untied the heretofore tightly wrapped package of nationalism that Lenin and Stalin previously contained. Nationalists in the republics came to hate Gorbachev for his attempt at retaining the USSR, even a democratized one with autonomous republics. Meanwhile, Great Russian chauvinists despised Gorbachev for letting the Soviet system unwind and failing to use state power to keep the empire intact. One notable exception on the latter was in Armenia, where protests were causing an uncontrolled opening of the Soviet border with Iran. Gorbachev’s spouse, Raisa, asserted the resulting deaths of 200 Armenian protestors in a crackdown ordered by Gorbachev left him tormented and never the same. Yet, this limited use of force in Armenia was largely the exception to Gorbachev’s refusal to use violence against protestors. The Balts were also having none of Gorbachev’s attempts to reform the Soviet system. Gorbachev’s reforms gave them an opening to bolt for the exit, and they ran. Ukrainian, along with Russian, nationalists also awoke under Gorbachev. Many in the Russian and Ukrainian republics also backed independence from the USSR for economic reasons. Why? Russians assumed they were rich and were held back by parasite Soviet republics draining their wealth. Likewise, Ukrainians pitched independence as the road to milk and honey. Ukraine’s vast black earth belt and formidable industry in the Donbas surely would make it rich once liberated from the Soviet Union, so they thought. Thus, the implication of this is that the nationalist project of the 19th century which was held back by both Czarist Russia and the USSR could not be chained indefinitely, and thus, wasn’t. Add to this that many in the USSR believed they indeed were rich, but that their vast wealth was being taken by other republics, and dismemberment became compelling.
But, this begs the question of whether the USSR could have been reformed and salvaged in the 1990s under different leadership? Likely not under the existing conditions. The Soviet workforce was already urbanized. There was no ultra-cheap rural reserve army of labor to tap, as in China. Moreover, the US convinced Saudi Arabia in the 1980s to open the oil spigot to depress energy prices, thus checking Soviet power. Without access to cash, the Soviets could neither fund a transition period while modernizing or buy the technology required to do it. Unable to integrate more rapidly into the world economy, pace China, the USSR would have at a minimum needed to maintain COMECON for many years in order to enter the global economy as a producer of goods beyond commodity exports. France lobbied for keeping COMECON in the newly emerging post-Soviet bloc. The US, however, vetoed it, both to further open Russia to foreign capital, but more importantly to see its vast store of natural resources exit to global markets. Low prices for Soviet commodities in the 1980s and post-Soviet 1990s, played a significant role in restoring global profit levels after the 1970s crisis of accumulation. The post-Soviet space was a key element preventing a return to the raw materials price inflation of the 1970s economic crisis. Additionally, the US was keen to break up the Soviet bloc economies to minimize the threat of the return of a developmental state, especially one of any red and/or brown character.
Regarding China, Gorbachev proved a study for their leaders in how not to reform. Deng Xiao Ping held Gorbachev and his reforms as a study in how not to transition China out of its old Stalinist economy. But, could Gorbachev have succeeded had he moved straight away to economic reforms and used the fist to enforce them as did China in 1987 at Tiananmen? The answer, I think, is no. China’s good relations with the United States were a necessary condition for its economic miracle. The US opened to China under Nixon to further split it off from the USSR. Next, China was perfectly positioned to help the US make its supply-side, neoliberal turn in the 1980s to address its crisis of profitability of the 1970s. Moreover, in the 1980s/90s China was at the beginning of its urbanization. Its massive reserve army of labor powered the offshoring and outsourcing of manufactured goods that applied downward wage pressures sought by capital in the US. Meanwhile, in the 1980s, the process of urbanization in the USSR was done. There was no huge rural labor force that could have been exploited to make the USSR competitive in global labor markets. Soviet wages were too high and its brownfield industries were mostly uncompetitive. And, where Soviet and Warsaw Pact industries were competitive, Western multinationals sought to either buy and operate them or purchase them in order to remove competition. Meanwhile, resource extraction and surviving heavy industry were seized by Russia’s new oligarchs in the 1990’s “loan for shares,” and under Putin slowly clawed back by the siloviki. China, by contrast, was an economic tabula rasa with ultra-low wages and a strong state that kept labor discipline intact while building modern infrastructure as needed. Unlike the USSR, China was at the right place at the right time with the right global conditions to develop. The United States needed exactly what China had, and China knew what to do with that need.
On foreign relations, Gorbachev is viewed fondly in the US as the figure who advanced nuclear disarmament, while dissolving the Soviet Bloc. But, Russians thought Gorbachev was naïve in his dealings with the United States. Gorbachev basked in the acclaim of his Western partners, and increasingly took refuge in them as his domestic situation deteriorated. As the disintegration of USSR accelerated, it became psychologically too easy to take shelter in the praise offered by the West while the storms of protest hit ever harder at home.
Gorbachev seized the initiative to advance nuclear arms reductions early on, thus catching both the US and his own people off guard. Yet, his Western counterparts eventually accepted some of these initiatives. Winding down the Cold War, Gorbachev became a cause celeb in the West. Gorbachev also eventually failed as a negotiator with his Western counterparts. Desperate for cash by 1989-91, Gorbachev went hat in hand to the US and Germans. Had he asked for more earlier in exchange for his troops exiting the Warsaw Pact, he would have received massive financial assistance. But, in asking too late, his Western counterparts, while sometimes sympathetic, were disinclined to help as the game was already largely over. Not asking for money after the Warsaw Pact was already dissolving erased whatever leverage Gorbachev had. As Gorbachev was too late in negotiating for money and security guarantees on NATO, he was too early in dismantling the powers of the central bank and state enterprises financing his government. But, it wasn’t only with foreigners that Gorbachev misplayed his hand, but at home with Boris Yeltsin as well. Boris Yeltsin consistently outmaneuvered, if not humiliated, Gorbachev. Meanwhile, by 1990/91, Gorbachev’s only remaining state power resided with the state security forces, which in the main he rejected use of.
Gorbachev went from leading the only country rivaling the United States in power, but when the edifice of the failed state quickly collapsed, he was left only with a foundation in his name. The Gorbachev Foundation carried some marginal weight in the 1990s, but really none by the 21st century. The past two decades largely saw Gorbachev silent. At a few brief moments he pointed criticism at Vladimir Putin, but very rarely, and largely ignored. And, thus, by his death on August 30, 2022, he had been already quiet for many years.
Parts of this essay will appear in the Fall issue of Journal of Contemporary Central and Eastern Europe.
*Jeffrey Sommers is Professor of Political Economy & Public Policy in the Department of African &African Diaspora Studies and a Senior Fellow, Institute of World Affairs, University of Wisconsin-Milwaukee. His book on the Baltics (with Charles Woolfson), is The Contradictions of Austerity: The Socio-economic Costs of the Neoliberal Baltic Model.