Soviet Collapse and Russia’s Path to the Present

Stephen Kotkin is a Professor of European history and Director of Russian Studies at Princeton University. He has written a two-volume study on the rise and fall of Soviet socialism as seen through the example of an industrial town—Magnetic Mountain: Stalinism as a Civilization and Steeltown USSR: Soviet Society in the Gorbachev Era. “Most empires collapse with tremendous violence. So it’s already a big achievement that the Soviet Union collapsed more or less peacefully. That’s a big achievement not just for Russia but for everybody in the world.”

Question: It seems that the debate on what/who caused the collapse of the Soviet Union has never been closed. In your book “Armageddon Averted” you focus on the internal dynamics brought about by glasnost and perestroika and their role in the dissolution of the U.S.S.R. Could you please summarize your argument for us?

Kotkin: I have two basic arguments about why the Soviet Union collapsed. The first argument is a structural argument which has to do with the competition from capitalism. Socialism was nothing except the antidote to capitalism. If socialism was not better than capitalism it had no reason to exist. Capitalism after World War II experienced a fantastic period, very much unlike the 1930s with the Great Depression and militarism. Post- World War II capitalism was characterized by consumer boom, widespread consumerism, prosperity, as well as democracy. All the militarist countries were defeated in the war and changed into democracies as they experienced unprecedented middle class boom in the 1950s and 1960s.

So it was one thing to defeat Nazi tanks in World War II, but it was another thing to provide affordable housing, low-cost and widely available consumer goods, and freedom. With all the things that make for a higher quality of life, socialism was crushed in the period after World War II. It wasn’t crushed militarily, because in fact the Soviets were competitive in the defense sphere. They were able to reach more or less strategic parity with the United States in the 1970s under Brezhnev. The problem was not an inability to compete militarily; it was an inability to compete with working class housing on the mass scale, with supermarkets and other stores that were stocked with goods, as well as self- organization, freedom of speech and of the press.

What happened was that right after World War II there was a structural change in capitalism. It went from Great Depression, mass unemployment, fascist militarism to middle class boom, consumerism and freedom. That crushes socialism because as I said earlier, socialism existed only as an antidote to capitalism. If capitalism was very good, if it was better than socialism, then what was the point of socialism? So this was the big post-World War II change, the structural change globally that hurt socialism deeply.

The second factor that I focus on in my book “Armageddon Averted” is how Gorbachev’s perestroika took the form that it did. It was necessary to do some things in this competition with capitalism. How would you react to the structural change? What Gorbachev did was something called socialism with a human face. He tried to democratize the system, he tried to loosen it up, open it up and make it more responsive. He had a vision that socialism could be made better. This was the same vision they had in Hungary in 1956, in Czechoslovakia in 1968 and that Gorbachev’s entire generation carried.

The specific nature of Gorbachev’s reform wasn’t a Deng Xiaoping reform, which says lets have a market economy but control the politics even more tightly. No, it was socialism with a human face reform, let’s democratize, let’s open up the politics, let’s loosen the system up, but we refuse to concede on the market economy. So it was socialism, not capitalism like with Deng Xiaoping but socialism with a human face, meaning that it was an attempt to make the system more open and responsive. The structural change combined with the nature of the reform destroyed the system.

Question: One of the most popular theories has to do with Reagan’s role in the collapse of the Soviet Union. Reagan’s SDI and increased military spending has been cited by many Republicans as the main reason for the collapse of the U.S.S.R. As an expert on this period, could you give us some evidence why this popular theory might or might not be flawed?

Kotkin: Many people want to take credit. The Poles like to give credit to the Pope. The Americans like to give credit to Reagan. Reagan’s plan for SDI, so-called Star Wars, and Reagan’s military spending did not play a significant role in the destruction of the Soviet Union, however, Reagan did play a role. That role involved him being responsive to Gorbachev’s initiatives on arms control. Gorbachev was attempting to lower the international temperature to reduce the tensions of the Cold War in order to focus on domestic priorities. Not very many people in the United States had the credibility to meet Gorbachev in this venture. Reagan was a long-standing anticommunist, he was the man of the hard right and there was no question about his anti-Soviet credentials. So Reagan had the moral authority and the political capital to enter into deep arms control with Gorbachev, which allowed Gorbachev the room to focus on his domestic policy, which was socialism with a human face. Reagan enabled Gorbachev to deepen his domestic reforms, but it was not the pressure of Reagan that launched the Gorbachev revolution. It was the change in capitalism in the 1950s and 1960s and it was the 1968 Prague Spring generation of people like Gorbachev with their socialism with a human face ideology. It was socialist ideology much more than Reagan’s SDI that helped to destroy the Soviet Union.

Question: Another popular argument is that the collapse of the oil prices in the 1980s fatally weekend the U.S.S.R.’s already struggling economy. Could the current financial crisis and the collapse of the oil prices affect Putin’s Russia in the same way?

Kotkin: Yes it’s clear that the oil prices were big trouble for Gorbachev. In 1985-1986 the global price of oil fell to about $10 a barrel. That’s because Saudi Arabia increased tremendously the amount of oil available on the world market, they did this intentionally to reduce the price and in part it was directed at the Soviets. So a major source of revenue was reduced right at the time when Gorbachev was launching reforms. So yes, that was definitely a factor.

Today of course it’s a factor as well. But let’s not overestimate the oil factor in accounting for Russia’s current troubles. The price of oil in 1999 when Russia began its ten year boom was only $32 a barrel. Today the price of oil is $45 dollars a barrel and Russia is in crisis. The price of oil between 2000 and 2004, that is to say the middle five years of Russia’s Putin boom, was the same as the price of oil is today. It averaged between $40 and $50 a barrel. It was only after 2004 that the price of oil hit over $50 a barrel, and especially after 2007 that the price of oil went really high. The price of oil is a factor in Russia’s current situation, but more important than the price of oil is the economic model. This model does not sufficiently encourage small and medium business and relies too much on large-scale business, whether it is state-owned or oligarch-owned.

Question: Your book also seems to point out that the reforms initiated by Yeltsin might be better viewed not as reforms at all but as still ongoing structural and institutional decay of the old system. The book was written in 2003, in your opinion is Russia in 2009 still undergoing this process or was Putin able to successfully stop and perhaps even reverse this?

Kotkin: Yeltsin was certainly well intentioned, it was his intention to rebuild Russia and achieve a higher standard of living. However, he had the misfortune of coming to power during the Soviet collapse, which continued after 1991. Russia inherited the Soviet collapse and that collapse was in part the expropriation or theft of all the property of the Soviet era. Once Gorbachev had destabilized the system a lot of opportunism took place. Factory managers, bureaucrats, people in positions of controlling or being close to resources began to steal everything in sight. This was called “reform” during the Yeltsin period, but it was a kind of cannibalization of the Soviet era. Now this resulted as we all know in the 1998 default. It was a default on debts and it was also a psychological default. It was a default on the notion of reform and the idea that reform was over.

Yeltsin had the misfortune of inheriting the collapse, he participated in it and this was the main dynamic of Russia throughout the 1990s, but something very unusual happened after that. What happened was that the default and the ruble devaluation made Russia’s goods much cheaper on export markets. There was a tremendous amount of unused capacity from the Soviet era, so what Russia had went up in price relative to the cost on global markets and there was a lot of capacity there. When the Chinese boom became enormous especially in the period after 1998 that fueled global demand for everything that Russia produced. So the combination of a devalued ruble and the Chinese boom, meaning lower costs at home and higher prices abroad, meant that Russia after 1998 could partake in globalization and have this 10-year fantastic boom, which was the end of the Soviet collapse.

There was a role that Putin played. There were certain structural reforms, tax reforms, and the new law on land. There were a number of things that Putin did in his first term that enhanced the effect of the insatiable Chinese demand and the devaluation of the ruble lowering the cost for the Russian producers. Putin’s policies were certainly helpful. It was this unexpected post-1998 end of the Soviet collapse that enabled Russia to get back on its feet. Russia got back on its feet and got back to the point just about where it has been before the Soviet collapse. That is to say it regained a lot of its industrial capacity.

The problem is that this recuperation model was already exhausted before the summer of 2008 when Russia again began to experience difficulties. The global financial crisis was not the only cause of Russia’s current crisis. Another cause was the model that Putin had introduced. The model of recuperation, extensive growth, regaining Soviet capacity, producing commodities for export, that model had become exhausted just before the global financial crisis hit. So the global financial crisis is causing a lot of pain in Russia but it’s an opportunity to change the model which had become exhausted.

Question: In your opinion how is Russia today different from that of the U.S.S.R. 20 years ago with regard to its economy, internal/external politics, and the mood of the people? What has changed and what has remained the same?

Kotkin: There have been enormous changes. The biggest change is that Russia is a market economy, there are real prices. A market economy of course means that you have to be competitive in the market place. It’s not enough to have a lot of oil and gas - you have to be able to extract oil and gas at a reasonable cost in order to sell it to costumers in various markets. You have to be good at the market in order to survive. So the market is a great opportunity for Russian companies, but it’s also a tremendous challenge. This is something that the Brezhnev-era generation never experienced. If the businesses were badly run, if they were run into the ground, if things were wasted, nobody paid a price. Today the market is ruthless. It’s unforgiving and merciless. If Rosneft or Gazprom operations lose efficiency, become unprofitable, experience poor investment, are unable to satisfy its customers or meet market demand, then they will suffer globally because the market is unforgiving. So this is the main change. Russia now lives by the market and dies by the market. This is something that the Soviet Union did not have.

The second big change has been the abolition of ideological pretending. There is no more Marxism/Leninism where people have to pretend that there is some type of scientific answer to all questions and they live within this crazy ideological straitjacket. For many people it was a real belief system and they actually did believe, for others it was just a charade, nonetheless, that’s all gone. So the termination of this crazy ideological system has been very important. However, Russia has still not achieved a government that is accountable to the public. Officials in the government are not accountable in any way for their actions. So the political system has definitely lost the ideology but it’s not yet become transparent and accountable. You could say that Russia has an open society, but a closed political system.

Question: What are Russia’s major achievements since its independence? What are its major failures?

Kotkin: Putin achieved two things under his leadership. One was the restoration of Russia’s sovereignty. This was very important because in the 1990s under Yeltsin when Russia was weak, Russia’s sovereignty was infringed. Various multinational agencies, corporations and countries, especially the United States, pushed Russia around, told Russia what to do and Russia did not always have the capacity to resist and pursue its own interests. So the restoration of sovereignty has been a major achievement. That’s not to say that the restoration of sovereignty has been only a good thing, because as we know it has come with the loss of some freedoms which were introduced in 1990s. Nonetheless, the restoration of sovereignty is one achievement.

The other achievement has been the creation of the middle class. There are about 40 million people in Russia’s middle class today, some 30 percent of the population. That’s 40 million more than there were in 1998 during the Yeltsin-era default. It’s very important that the Russian authorities maintain this very wide growing middle class. That middle class is a stakeholder in Russia’s current system. The system, with Putin as the prime minister and Medvedev as president, is dependent on this middle class. These two achievements, the restoration of sovereignty and the creation of the middle class, both of them are under a certain amount of stress right now, especially the middle class. It’s clear that Putin and Medvedev are very concerned about losing the middle class. They don’t want to see the middle class shrink or grow fearful of the future, which would be a big psychological shift from the sense of a better future that people had only last year.

With regard to the weaknesses of Russia’s course since independence in 1991, the main weaknesses have been an inability to find an appropriate place in the international order. Russia is not a very good joiner and it doesn’t really belong to very much. It’s European but not Western. It doesn’t belong in the West and it doesn’t belong anywhere in the East. It hasn’t found a place in the international order where it can pursue its own interests and enhance its interests in partnerships with other countries. The Shanghai Cooperation Organization (SCO) is really the only organization that Russia has successfully joined, but it’s a China-dominated organization and the organization has an unclear future. So Russia’s relations with Europe, Asia, and relations with multinational or global institutions, these are all still unclear and uncertain. Who are Russia’s partners? Who are Russia’s friends? Who are Russia’s allies? Which countries help Russia, not because they are afraid of Russia but because they have common interests and common destiny with Russia? That is the main weakness in the post-1991 Russian course.

Question: How is Russia’s post-imperial course similar to other empires, British, French, German and Japanese, that have collapsed in the past?

Kotkin: Most empires collapse with tremendous violence. So it’s already a big achievement that the Soviet Union collapsed more or less peacefully. That’s a big achievement not just for Russia but for everybody in the world. The second point I would like to make is that it’s hard to lose an empire. It’s hard psychologically and economically, there are many consequences to loosing an empire and these consequences take a long time to play out. However, what we have seen of the successful post-imperial cases is that the country that used to be the imperial master regained its strength in most of its former colonies, but that regaining of its strength is not a neo-imperialism, it is more of a deep and shared interests, economic interests and political interests. For example, the Japanese have a huge amount of power throughout Asia, in almost all of the countries where they used to have their empire. It was a nasty empire while it lasted, but today the Japanese are able to have economic and political relations, and deep fundamental relationships with many of their former colonies. The same is true of the British Empire around the world, and the same is true to a certain extent of the French Empire.

So the hope is that while pursuing its interests in a post-imperial way Russia will come to have prosperous, mutually respectable economic and political relations with all of its former territories. The process so far has been mostly nonviolent, so that’s a big achievement, but going forward there is a big question about just how stable these relationships will be. The problem is that there is a tendency to see them as either/or. Either Russia is gaining influence or the United States is gaining influence. This either/or problem makes it seem as if only one country can have influence in these territories. That is a mistake. I don’t think we want to pursue a policy on either side that is a zero sum, one winner and one loser. I think countries like Ukraine, Georgia and the Central Asian states should have a mutually beneficial relationship with Russia if they want, with the United States if they want, with China if they want. I think that is to the benefit of these countries themselves and it’s also to the benefit of the big players because there is some balance. 

-- 03/13
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