Armando Liwanag, Chairman, Central Committee, Communist Party of the Philippines

January 15, 1992

Perestroika in reality meant capitalist restructuring and the disorganization and breakdown of production, despite the avowals of renewing socialism and raising production through better management, a campaign against alcoholism and absenteeism, higher wages and availability of domestic and imported consumer goods, higher profits for the private entrepreneurs, the expansion and retooling of the means of production and the conversion of military enterprises to civilian uses.

The main line of perestroika is the privatization and marketization of the economy by domestic and foreign investors. One plan after another (the 500-day Shatalin Plan, the Grand Bargain, etc.) was considered and made dependent on foreign direct investments and loans as domestic savings disappeared and the real income of the people was cut down by inflation due to the wanton printing of money by Moscow and the price gouging in the free market. The free marketeers bought cheap or stole from the state enterprises and emptied the state stores. Thus, the people were compelled to buy from the free market.

The most favored among the private businesses were the joint ventures (joint stock companies) with foreign investors and the private cooperatives. Going into joint ventures with foreign investors mainly in the importation of consumer goods and in the repackaging or assembly of these, the high bureaucrats of the ruling party and the state and their family members appropriated for themselves state assets and drew from foreign loans in what may be considered as one of the biggest insider operation and management theft in the entire history of capitalism. These joint ventures were no different from the big comprador operations of high bureaucrats in the Philippines and many other countries in the third world.

However, the most widespread form of business was the private cooperatives of varying scales in industry, agriculture and services. Their operations included the rechanneling of goods and services from the state to the private sector, small and medium private manufacturing and the private export of whatever Soviet goods, including oil and weapons, and the importation of high-grade consumer goods like cars, computers, videorecorders, etc. At least 50 million people out of a population of 290 million were registered as members of small, medium and big private cooperatives. Many people joined these private cooperatives if only to gain access to basic commodities which disappeared from the much cheaper state stores.

The capitalist restructuring or economic reforms did not stimulate production and improve the quality of goods but aggravated the breakdown of production and brought about scarcity of the most essential goods. Yet, it was the long-dead Stalin who got blamed by revisionist and imperialist propaganda for the economic chaos brought about by perestroika. The corrupt bureaucrats who continued to call themselves communists connived with private businessmen more scandalously than ever before in plundering the economy.

From 1988 to 1990, Gorbachov increased the money supply by more than 50 percent even as from year to year production had fallen by 10 to 20 percent or worse and in 1991 alone he increased the money supply by more than 100 percent amidst a production fall of more than 20 percent. The Gorbachov regime had to keep on printing money to maintain the central bureaucracy and the military in view of inflation, corruption, the nationalist refusal of the republics to send up taxes and foreign exchange to the center, the ethnic conflicts and the justifiable workers' strikes.

At the beginning of the Gorbachov regime, the Soviet foreign debt was only US$ 30 billion. The previous regimes had not been able to borrow more because of the U.S.-Soviet rivalry in the Cold War. But in the period of only six years, the Gorbachov regime was able to raise the foreign debt level to US$81 billion (according to the Soviet Central Bank report to the International Monetary Fund) or to US$ 100 billion (according to the Soviet Central Bank report to the Group of Seven). In the final year of 1991, the Soviet Union borrowed US$44 billion.

In view of the production breakdown, the foreign funds were used mainly to finance the importation of consumer goods and the sheer bureaucratic thievery under the cover of the joint ventures. The Soviet Union practically became a neocolony of Germany which had become its main creditor and supplier. Germany accounted for the biggest bulk of foreign supplies and investments (at least 30 percent as of 1991) in the Soviet Union and Eastern Europe. The ghost of Hitler can never be more happy with the success of the German big bourgeoisie.

There was a chain reaction of closures of state enterprises due to the lack of fuel, spare parts and raw materials; the diversion of funds to import foreign products; the lack of purchase orders; and the private appropriation of state assets and funds through real or fake joint ventures. Agriculture also suffered from the lack of inputs and transport. Conversion of military to civilian enterprises was negligible. The military-industrial complex continued to suck up large amounts of resources. As in Eastern Europe, the economy fell apart in the Soviet Union, with each part throwing away past advantages of cooperation and trying to strike disadvantageous deals with the bourgeoisie abroad.

Massive unemployment surfaced. Hyperinflation started to run at more than 200 percent before the break up of the Soviet Union and was expected to run faster after the decontrol of prices scheduled by Yeltsin for January 2, 1992. Even then more than 100 million Soviet people were living below the poverty line. Most victimized were the pensioners, children, the youth, the women, the unemployed and the low-income people. The shortage or absence of basic necessities was widespread. As in 1990, the leaders of capitalist restoration shamelessly begged for food aid from abroad in 1991. On each occasion, the handling of food aid was attended by corruption as the food was diverted to the free market.

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