Russia and Private Property (1990)

From the April 1990 issue of the Socialist Standard

The decision by the Central Committee of the CPSU at its February meeting to abandon its guaranteed, constitutional monopoly on power really could prove to be as momentous as the media claimed at the time. However this will not be for the reasons they gave – that it will open up a new era of freedom, prosperity and progress for Russia – but because it could lead to a change in the way that the means of production are monopolised by the minority owning class there.

Except for some of those that can be operated by individuals or by a family unit, all means of production in Russia are vested in the state which also has a monopoly in the hiring of wage-labour. This has meant that the group that has controlled the state has also controlled the means of production, has in effect owned them. However, the members of this group have not done so as individuals possessing legal property deeds in their own names, but collectively as a group. It is this group – as a group – that has been the collective owner of the means of production and the collective employer of the working class in Russia, in short the collective capitalist there.

So who are they? Who are those who make up this group that monopolises the means of production in Russia in this way? As Russia has been a one-party dictatorship since Lenin introduced this in 1921, they have been the leading members of the ruling party plus those appointed by them to key posts carrying with them a life-style based on privileged access to the best consumer goods, housing, health care, education for their children, holidays and officially known as the nomenklatura. Not possessing legal property titles in their own names, they have not been able to bequeath their privileged position to their children. So the group that has constituted the collective capitalist class in Russia has been recruited by other means than inheritance, in fact by rising up the bureaucratic hierarchy of the single party.

It is this party that has been the mechanism by which the collective capitalist class in Russia has monopolised the state and so the means of production and by which they have renewed themselves and recruited new members. This is why the political and ideological representatives of this class have proclaimed the “leading role of the party” to be a pillar of the Russian system. It is also why the decision by the Party’s Central Committee at its February meeting to abandon it could prove to be of immense importance.

Gorbachev wants a mandate
Of course abandoning a constitutional right to be the only governing party, indeed the only party allowed to exist – the notorious Article Six of the 1977 Russian constitution – is not the same thing as actually abandoning power. The leaders of the “Communist” Party still want, like Mrs Thatcher, to go on ruling for ever but from now on they hope to do so with a democratic mandate from the electorate.

There is a short-term reason for this: they feel they need popular endorsement to be able to push through the tough anti-working class measures perestroika involves. For although glasnost (openness) has progressed quite far, perestroika has not. Enterprises have been given legal independence from the government ministries that used to control them, but price reform – the key measure of perestroika and what it is all about, designed to bring prices into line with what the law of value demands – has not yet been implemented.

Price reform will involve ending government subsidies on basic consumer goods such as food, housing and transport and allowing their prices, along with those of industrial goods, to be fixed by the free play of market forces. Although the object is to get the stagnant Russian economy moving again, it is bound to mean for at least the short-term falling living standards and rising unemployment. Learning the lesson of the events in Poland, Gorbachev is clearly not prepared to launch into this attack on the working class without a mandate to do so. His conservative opponents in the Party hierarchy might not like his political reforms, but they don’t want him to go since they know that they would have even less chance of controlling the potentially explosive situation in Russia.

It is the longer-term implications of the decision to abandon the Leninist principle of one-party dictatorship that could prove to be the most significant though, as this could herald a change in the way the means of production are monopolised in Russia with the ruling class there changing itself from a class of collective owners into a class of individual owners as in the West.

Such a change has always been a possibility but until now only a rather remote one. It is a measure of the historic importance of events in Eastern Europe – which will surely have led to the liquidation of the nomenklatura system there by the end of the year – that they have forced what once seemed to be the immovable Russian Party-elite to reconsider its position.

The transformation of the Russian ruling class from a collectively-owning state bureaucracy into a class of private capitalists with private property rights vested in them as individuals certainly won’t take the form of the present members of the nomenklatura abdicating and handing over their power and privileges to the small group of privately-owning capitalists who have always led a precarious existence on the margins of the Russian state-capitalist economy. Nor would it need to take the crude form of them simply dividing up the presently state-owned industries amongst themselves. It would be more likely to take the form of the Russian government gradually introducing more and more opportunities for private capitalist investment – which only those who have already accumulated wealth would be able to take advantage of. Most of these will inevitably be individual members of the nomenklatura as the group which for years has enjoyed bloated salaries, cash prizes and opportunities to speculate on the black market.

Although there have been periodic drives against corruption, the wealth accumulated by the members of the nomenklatura has largely survived intact. Up to now, however, they have not been allowed to use their accumulated wealth as capital – as wealth invested in production with a view to profit – but have been obliged to hold it as non-productive assets such as works of art, vintage cars and cash held in low-interest bank accounts. That Gorbachev wants to remove this restriction and channel such funds towards investment in production can be seen from the reference in the new Party Platform to “the distribution of state loan bonds on advantageous terms” and to “the selling of stocks and other securities”.

Ligachev’s Fears
High-denomination state bonds were issued for the individually wealthy to purchase right up until the 1940s (when their holders were virtually expropriated when Stalin reformed the currency in 1947), but this time rich Russians are to be allowed to purchase not just government bonds but also to invest directly in particular enterprises by purchasing bonds issued by them too. It is not difficult to see how this could evolve into a system of shareholding. In addition, private enterprise in the form of “co-operatives” is to be encouraged. Such co-operatives are supposed to be collectives of self-employed workers but once again, over time, pressure to allow them to employ wage-labour and for some of their members to become sleeping partners, or non-working investors, can be expected to grow.

This whole issue of “private property” is still a subject of controversy within the Russian Party. It ought to be understood, however, that the issue at stake is not whether individuals should be allowed to own non-productive assets, sometimes considerable amounts, as private property which they can bequeath and inherit. This has long existed and all sides agree it should continue. Nor – yet – is the issue about whether individuals should be allowed to employ other individuals. It is about whether “co-operatives” of the self-employed should be allowed to own means of production and compete with state enterprises for sales and profits.

On the one side, there are the supporters of Igor Ligachev who was reported as saying at the February Central Committee meeting that “he opposed the introduction of private property with his whole soul”, adding: “I am also against turning our party into an amorphous organisation, a political club” (Independent 7 February 1990). On the other side, are those who agree with Boris Yeltsin when he says: “I am for private property, including the means of production. The limits are that it should not be sold, and not inherited” (Vancouver Sun, 21 December 1989).

The new Party Platform shows that it is the partisans of “private property” who are winning. Ligachev is nevertheless probably right when he sees “co-operative private property” as the thin end of a wedge that will open the way, despite what Yeltsin says, both to private property rights in means of production being sold and inherited and to the private employment of wage-labour. This latter is still regarded in Russia as a case of “the exploitation of man by man” – as indeed it is, though Ligachev is being inconsistent when he denounces the employment of hired labour by private individuals while accepting it by the state. Clearly, what he favours is the nomenklatura continuing to monopolise the means of production collectively as a group dictatorially controlling the state where the means of production are state-owned.

Gorbachev, on the other hand, realises that it is now no longer possible for the nomenklatura to role in the old way and that some sort of flexibility is called for, if only to be able to push through perestroika without provoking a workers’ revolt. He probably isn’t consciously working towards ushering in a Russia where the nomenklatura has disappeared as such and has succeeding in converting itself into a class of Western-type privately-owning capitalists, but it is in this direction that his reforms can now be seen to be leading.

Adam Buick