The enemies of socialism try to maintain that the collapse of the USSR was the result of the failure of the nationalised planned economy, and that the latter is inseparable from a bureaucratic regime. This was answered by Trotsky well in advance in The Revolution Betrayed. He explained that a nationalised planned economy needs democracy as the human body needs oxygen. In this introduction to the Indonesian edition of Trotsky’s classic work Alan Woods explains why the Soviet Union collapsed and what the situation is today.

The publication of the Indonesian edition of The Revolution Betrayed is an important event and motive for celebration by revolutionary Marxists everywhere. With a population of 230 million people, Indonesia is the world's fourth most populous country. It has the largest population of Muslims of any country. But it also has a proud revolutionary history, marked both by great heroism and terrible tragedy.

Leon Trotsky The present work is particularly important for Indonesia, where the Communist movement was very strong, with a following of many millions of workers and peasants. The PKI was the third largest communist party in the world. Yet in the moment of truth, it was reduced to ashes. Nobody will ever know how many Indonesian workers and peasants were slaughtered in a few days in 1965. It was probably the bloodiest Holocaust ever suffered by the workers' movement in history.

The organizers of this ghastly butchery were the "democratic" imperialists of the USA. The systematic murder was planned and orchestrated by the CIA, and carried out by its local agents, the reactionary Indonesian generals, who incited the bloodlust of the lumpenproletarian mobs and directed their murderous activities. But they were not the only ones responsible.

I have explained elsewhere the fatal role played by the leaders of the PKI itself, who were faithfully carrying out the Stalinist policy of the "two stages", which subordinated the working class to the so-called progressive national bourgeoisie and Sukarno. This false policy, which led directly to the defeat in 1965, was dictated, not in Washington, but in Moscow and, particularly, Beijing.

For decades, the communist movement in Indonesia, as in all other countries, followed the Stalinist line. The leaders followed every twist and turn dictated by Moscow, and later by Beijing. The USSR and China were held up as models of "socialism". But in the end, the USSR collapsed and China has definitely taken the capitalist road.

This has led many to conclude that socialism has failed. But what failed in Russia and China was not socialism in any sense understood by Marx or Lenin, but only a bureaucratic and totalitarian caricature of socialism. Today, twenty years after the collapse of the USSR, one would look in vain in all the writings of the former Stalinists to find any coherent explanation of what happened in the Soviet Union. Yet such an explanation exists and it was written decades ago by the great Russian revolutionary Leon Trotsky.

The Revolution Betrayed is one of the most important Marxist texts of all time. It is the only serious Marxist analysis of what happened to the Russian Revolution after the death of Lenin. Without a thorough knowledge of this work, it is impossible to understand the reasons for the collapse of the Soviet Union and the events of the last ten years in Russia and on a world scale.

October justified

For Marxists, the October Revolution of 1917 was the greatest single event in human history. If we exclude the brief but glorious episode of the Paris Commune, for the first time the working class succeeded in overthrowing its oppressors and at least began the task of the socialist transformation of society.

The October Revolution has been completely justified by history. As Trotsky points out in The Revolution Betrayed, for the first time the viability of socialism was demonstrated, not in the language of dialectics, but in the language of steel, coal, electricity and cement. The nationalised planned economy established by the October Revolution succeeded in a remarkably short time in transforming an economy as backward as Pakistan today into the second most powerful nation on earth.

However, the Revolution took place, not in an advanced capitalist country as Marx had expected, but on the basis of the most frightful backwardness. To give an approximate idea of the conditions that confronted the Bolsheviks, in just one year, 1920, six million people starved to death in Soviet Russia.

Marx and Engels explained long ago that socialism – a classless society – requires material conditions in order to exist. The starting point of socialism must be a higher point of development of the productive forces than the most advanced capitalist society (the USA for instance). Only on the basis of a highly developed industry, agriculture, science and technology, is it possible to guarantee the conditions for the free development of human beings, starting with a drastic reduction in the working day: the prior condition for the participation of the working class in the democratic control and administration of society.

A workers' democracy

Engels long ago explained that in any society in which art, science and government is the monopoly of a minority, that minority will use and abuse its position in its own interests. Lenin was quick to see the danger of the bureaucratic degeneration of the Revolution in conditions of general backwardness. In State and Revolution, written in 1917, he worked out the basic conditions – not for socialism or communism – but for the first period after the Revolution, the transitional period between capitalism and socialism. These were:

1) Free and democratic elections and the right of recall for all officials.
2) No official to receive a wage higher than a skilled worker.
3) No standing army but the armed people.
4) Gradually, all the tasks of running the state to be carried out in turn by the workers: when everybody is a "bureaucrat" in turn, nobody is a bureaucrat.

This is a finished programme of workers' democracy. It is directly aimed against the danger of bureaucracy. This formed the basis of the 1919 Party Programme. In other words, contrary to the calumnies of the enemies of socialism, Soviet Russia in the time of Lenin and Trotsky was the most democratic regime in history.

However, the regime of soviet workers' democracy established by the October Revolution did not survive. By the early 1930s, all the above points had been abolished. Under Stalin, the workers' state suffered a process of bureaucratic degeneration which ended in the establishment of a monstrous totalitarian regime and the physical annihilation of the Leninist Party. The decisive factor in the Stalinist political counter-revolution in Russia was the isolation of the Revolution in a backward country. The way in which this political counter-revolution took place was explained by Trotsky in The Revolution Betrayed.

The collapse of the USSR predicted

In 1936, the phenomenon of Stalinism was entirely new and unexpected. It was not explained or even anticipated in the classical texts of Marx and Engels. In his last writings, Lenin expressed his concern about the rise of bureaucracy in the Soviet state, which he warned could destroy the regime of October. But Lenin thought that the prolonged isolation of the Russian workers' state would inevitably lead to capitalist restoration. This eventually occurred, but after a period of seven decades, during which the Soviet workers lost political power and the democratic regime established by the Bolsheviks in 1917 was transformed into a monstrous bureaucratic and totalitarian caricature. Only the nationalised property forms and planned economy established by the revolution remained.

In The Revolution Betrayed, Trotsky provided a brilliant and profound analysis of Stalinism from the Marxist standpoint. His analysis has never been improved upon, let alone superseded. With a delay of 60 years, it was completely vindicated by history. Trotsky warned that the bureaucracy was placing the nationalised planned economy and the Soviet Union in danger. In reply, he was subjected to an unparalleled campaign of vilification by the "friends of the Soviet Union".

Today, all those so-called Communists and fellow travellers who sang the praises of Stalin and ridiculed Trotsky, hang their heads. Most of them have deserted the camp of Communism and Socialism altogether. The few that remain have nothing to say about what has happened to the Soviet Union. Not one of them can provide a Marxist analysis of the collapse of the USSR. But this is precisely what the new generation (and the best of the old generation also) are insistently demanding. They will find no answer to their questions from their leaders. But in the pages of The Revolution Betrayed they will find that Trotsky not only predicted the outcome sixty years in advance, but analysed it and explained it from a Marxist standpoint.

Bureaucracy undermined the Soviet economy

Nowadays the enemies of socialism try to maintain that the collapse of the USSR was the result of the failure of the nationalised planned economy, and that the latter is inseparable from a bureaucratic regime. This argument was answered by Trotsky in advance in The Revolution Betrayed. He explains that a nationalised planned economy needs democracy as the human body needs oxygen.

In The Revolution Betrayed, with the aid of facts, figures and statistics, Trotsky shows how Stalinism, on the basis of a nationalised planned economy, created a colossal productive potential, but was unable to use it because of its inherent contradictions. The needs of the nationalised planned economy were in complete contradiction to the bureaucratic regime. This was always the case. Even in the period of the first Five-Year Plans, when it still played a relatively progressive role in developing the means of production, the bureaucracy was responsible for colossal waste. Trotsky said that they developed the means of production, but at three times the cost of capitalism. This contradiction did not disappear with the development of the economy, but, on the contrary, grew ever more unbearable until eventually the system broke down completely.

The productive forces of Russia were artificially constrained by the bureaucratic system. They had developed to a tremendous extent thanks to the nationalised planned economy, but were effectively sabotaged by the bureaucracy. The only way the problem could have been solved was through the democratic control and administration of the working class, as Lenin had intended. This could have been achieved on the basis of the advanced economy that existed in the 1980s. But the bureaucracy had no intention of going down that road. The movement towards capitalism did not arise from any economic necessity, but out of fear of the working class, and as a way to safeguard the power and privilege of the ruling caste.

Role of the 'Communist Party'

What strikes one is the brilliant way in which Trotsky anticipated the main lines of what has been taking place in Russia in the recent period. However, in certain respects, events have unfolded differently to what he expected. In the 1930s Trotsky was convinced that a capitalist counterrevolution could only come about as a result of civil war. He wrote:

"The October Revolution has been betrayed by the ruling stratum, but not yet overthrown. It has a great power of resistance, coinciding with the established property relations, with the living force of the proletariat, the consciousness of its best elements, the impasse of world capitalism, and the inevitability of world revolution." (Leon Trotsky, The Revolution Betrayed, p. 252.)

And again:

"If – to adopt a second hypothesis – a bourgeois party were to overthrow the ruling Soviet caste, it would find no small number of ready servants among the present bureaucrats, administrators, technicians, directors, party secretaries and privileged upper circles in general. A purgation of the state apparatus would, of course, be necessary in this case too. But a bourgeois restoration would probably have to clean out fewer people than a revolutionary party. The chief task of the new power would be to restore private property in the means of production. First of all, it would be necessary to create conditions for the development of strong farmers from the weak farms and for converting the strong collectives into producers' co-operatives of the bourgeois type – into agricultural stock companies. In the sphere of industry, denationalisation would begin with the light industries and those producing food. The planning principle would be converted for the transitional period into a series of compromises between the state power and individual 'corporations' – potential proprietors, that is, among the Soviet captains of industry, the émigré former proprietors and foreign capitalists. Notwithstanding that the Soviet bureaucracy has gone far toward preparing a bourgeois restoration, the new regime would have to introduce in the matter of forms of property and methods of industry not a reform, but a social revolution." (Ibid., p. 253.)

It is not the first time in history that a profound social transformation has occurred without civil war. There have been times when a given regime has so exhausted itself that it fell without a fight, like a rotten apple. One example is what occurred in Hungary in 1919 when the bourgeois government of Count Karolyi collapsed and handed power to the Communist Party. Something similar happened in Eastern Europe in 1989.

The Stalinist regimes were so demoralised that they gave up without a fight. In Poland Jaruzelski just handed over the power to the opposition. This did not occur without the intervention of the masses, who, incidentally, did not want a capitalist restoration. But in the absence of a revolutionary party and leadership, the pro-capitalist elements were able to fill the vacuum and derail the movement on capitalist lines. In Poland and Hungary this was done with the aid of the CP leaders.

The decisive factor has been the conduct of the so-called Communist Parties. In reality, the CPSU was not a Communist Party at all, but a bureaucratic club, with a membership of millions. It was an extension of the state, composed mainly of careerists and stooges, aimed at controlling the working class and subordinating it to the ruling caste. Possession of a Party card was not, as in Lenin's day, a pledge to a life of sacrifice and struggle for the cause of the working class, but a passport for a career. For every honest worker who joined the Party, there were a hundred careerists, toadies, informers and strike-breakers. The role of a Party member was not to defend the working class, but to defend the bureaucracy against the working class.

In the moment of truth, these leaders went over to capitalism with the same ease with which a man passes from a second class to a first class compartment on a train. Overnight, the "Communist" Party collapsed like a pack of cards. When it became clear that the days of the Soviet Union were numbered, the first to jump from the sinking ship and embrace capitalism were the leaders of the "Communist Party", who rapidly transformed themselves into businessmen and rouble billionaires. Compared to this, the betrayal of the leaders of the Social Democracy in 1914 was child's play.

This colossal betrayal cannot be understood if one accepts the idea that what existed in the Soviet Union and Eastern Europe was "real socialism", as the CP leaders maintained for decades. The collapse of the Soviet Union was in reality the result of decades of bureaucratic degeneration. At a time when the Moscow bureaucracy was boasting about "building socialism" the USSR was in fact moving away from socialism. And, as Trotsky predicted in 1936, the ruling caste of officials would not be satisfied with their privileges and high salaries, but would want to secure their position and that of their children, by turning state property into private property. This was inevitable, unless the working class overthrew the bureaucracy and returned to the Leninist policy of workers' democracy and internationalism. In the end, it was exactly what happened.

The old CPSU collapsed overnight. Out of the 20 million members that were in it, only a mere 500,000 remained to form the CPRF. But this party also had nothing in common with communism except the name. Having been separated from the state, the leaders of the CPRF presented a semi-opposition to Yeltsin and the openly bourgeois wing. But in practice, they accepted capitalism and the market, and their opposition had a purely ritual and token character. The same can be said of the leaders of the official trade unions (the FNPR). Thus, the colossal anger, bitterness and frustration of the masses found no organised expression. Lacking the necessary vehicle to express itself, the discontent of the masses was dissipated, like steam without a piston-box.

It is a crushing comment on the degeneracy of the Stalinist ruling caste that, 80 years after October, they preferred to push the Soviet Union back to capitalist barbarism rather than hand power back to the working class. This was a development which the author of the present article had thought ruled out. And indeed for a whole period it was ruled out. As long as the productive forces in the USSR continued to develop, the pro-capitalist tendency was insignificant. But the impasse of Stalinism transformed the situation completely, as the economy first slowed down and then entered a period of stagnation.

Capitalist onslaught

The collapse of the Soviet Union and of the so-called Communist Party, after decades of Stalinist rule, caused tremendous confusion and disorientation. Having been fed on a diet of lies and falsification for decades, lies manufactured by a gigantic propaganda machine that taught people to believe that socialism and communism had found their highest expression in a totalitarian regime, dominated by a corrupt and degenerate caste of bureaucrats, the consciousness of the masses had been thrown far back. When the regime finally collapsed – as Trotsky had brilliantly predicted in the pages of The Revolution Betrayed – the masses were caught by surprise.

Joseph Stalin. Photo by Margaret Bourke-White. Trotsky had pointed out that whereas revolution is the locomotive of history, reactionary regimes – especially totalitarian regimes such as Stalinism – act as a colossal brake on human consciousness. To an extent which even we did not appreciate, Stalin had succeeded in utterly destroying the old traditions of October. The physical extermination of the Leninist Old Guard and the Left Opposition left the proletariat leaderless. The decades of falsification and the suppression of Trotsky's writings in the USSR destroyed the last vestiges of the democratic and internationalist traditions of Bolshevism. One by one, those workers who had survived the nightmare of Stalinism died out, leaving a colossal vacuum, with nothing to fill it. In the moment of truth, the proletariat was left without leadership, to face the capitalist onslaught.

It is necessary to underline that what failed in Russia was not socialism. The regime established by the Stalinist political counter-revolution after the death of Lenin was not socialism, and not even a workers' state in the sense understood by Marx and Lenin. It was a hideously deformed caricature of a workers' state – to use Trotsky's scientific terminology, a regime of proletarian Bonapartism. After generations of totalitarian rule, the privileged élite was completely corrupted. With astonishing ease, a large part of the former "Communist" leaders swung right over to capitalism.

A monstrous regression

Trotsky wrote in The Revolution Betrayed:

"A collapse of the Soviet regime would lead inevitably to the collapse of the planned economy, and thus the abolition of state property. The bond of compulsion between the trusts and the factories within them would fall away. The more successful enterprises would succeed in coming out on the road of independence. They might convert themselves into stock companies, or they might find some other transitional form of property – one, for example, in which the workers should participate in the profits. The collective farms would disintegrate at the same time and far more easily. The fall of the present bureaucratic dictatorship, if it were not replaced by a new socialist power, would thus mean a return to capitalist relations with a catastrophic decline of industry and culture." (Leon Trotsky, The Revolution Betrayed, pp. 250-1.)

These remarkable lines predicted the fate of the USSR down to the last detail. In the period of so-called market reform, Russia experienced the biggest collapse in world economic history. Just in the first five years, the economy contracted by a staggering sixty percent. Such a drop is unprecedented in economic history. It was like a catastrophic defeat in war. The collapse of the USSR has led to social disintegration. The elements of barbarism have begun to appear. Poverty, beggary, drunkenness, drug addiction, prostitution, crime, epidemics have spread to an unparalleled degree. Sections of the youth are affected by lumpenisation.

The present set-up in Russia manages to combine all the worst features of the old system with all the worst features of capitalism. True, the old totalitarian state has dissolved under the weight of its own contradictions, but the old state bureaucracy remains very much in place. In fact, the weight of bureaucracy has actually grown. There are 1.7 times more officials now than in the USSR, which had about 100 million more inhabitants. Corruption on a scale infinitely worse than even that of the old Stalinist bureaucracy now exists at all levels. The police, which is supposed to combat crime and corruption, is itself riddled with corruption in its own ranks.

It is true that in the Stalinist Soviet Union there was national oppression, but the break-up of the USSR has produced a nightmare situation of wars, terrorism, and a colossal exacerbation of national tensions, hatred and racism. The invasion of Chechnya had the effect of destabilising the whole Northern Caucasus, dragging in Ingushetia and Dagestan, which were previously peaceful regions. There have been wars between Armenia and Azerbaijan, armed conflict between Russia and Georgia over Ossetia and Abkhazia. There is the unresolved conflict between Moldova and the Trans-Dniester Republic and so on.

The general disorientation, the decline of culture, the throwing back of consciousness as a result of decades of Stalinism, and above all the lack of the subjective factor – all this combines to produce the most grotesque and disgusting throw-backs: Great-Russian chauvinism, mysticism, the Orthodox Church, Black Hundred fascism, anti-Semitism, and even monarchism. Recently, the Russian President Dmitry Medvedev and his French counterpart Nicolas Sarkozy opened "Holy Russia", a vast show of icons, reliquaries, psalters, chasubles and other sacred objects in St. Petersburg, and the Louvre in Paris. To show his firm belief in the God of Peace, the Russian leader also took advantage of the occasion to purchase four French amphibious assault ships. All this shows how far back capitalism has thrown Russia. This monstrous Russian gangster capitalism is incapable of playing any kind of progressive role.

Prospects for the Russian economy

Trotsky explained the colossal achievements made by the nationalised planned economy over decades, in spite of the bureaucracy. By 1980, a tremendous productive potential existed, which the bureaucracy was unable to develop. This is our starting point. The question that arises is: is the bourgeoisie capable of realising that potential?

Naturally, the steep economic fall could not continue indefinitely. No economy can permanently move downwards. After the 1998 collapse, the Russian economy experienced a certain recovery. But, in the first place, any growth must be set against the horrendous collapse of the ten years that followed the collapse of the USSR. Secondly the Russian economy, heavily dependent on oil and natural gas, is subject to the vicissitudes of the capitalist world market. Ten years ago I wrote:

"The defenders of capitalism point to the recent recovery of the Russian economy, but this was not the result of an organic improvement, but the consequence of episodic developments: the sharp devaluation of the rouble that followed the 1998 crisis, and the recent steep rise in oil prices. However, the effects of the devaluation have already evaporated, while the rise in oil prices seems to have been detained. If, as seems likely, the present slowdown in the USA proves to be the prelude to a world recession, the price of oil will experience a sharp fall, which will bring the period of partial recovery in Russia to a shuddering halt."

That is just what happened, albeit with a slight delay. In 2009 the Russian economy fell by ten percent, although it has partially recovered, reflecting the weak recovery of the capitalist world economy. This recovery, however, has a very unstable character and may well be only the prelude to a new and even deeper slump. The unemployment rate in Russia was 9.2 percent in January of 2010. However, in reality the figure is much higher as many Russians do not claim state benefits, which are generally extremely low.

Marxism explains the historical process ultimately in terms of the development of the productive forces. The only way that a capitalist regime could achieve consolidation would be through the development of the economy. Marx explains that this is the only way in which a given socio-economic system can maintain itself. In the words of Engels, "We regard economic conditions as that which ultimately conditions historical development." (Marx and Engels, Selected Works, Vol. 3, p. 502.)

Let us recall that in the USSR unemployment did not exist. Now millions are without work or else working in the "informal" economy. The situation is not so bad in Moscow and Petersburg, but in the provinces things are much worse. Yevgeniy Gontmakher, a member of the board at the Institute for Contemporary Development (INSOR), told European businessmen (4 March) that Russia finds itself in the same position now as the USSR did in the last years of high oil prices and on the eve of its collapse:

"The current oil price is reassuring again," he continued. "A year ago it was about 30 dollars per barrel, and there was panic – what should we do, how can we manage?! And now prices are high again, and there is no need to think about development. So we have got into a situation of new stagnation."

Whereas the Soviet Union, with a nationalized planned economy, enjoyed a high rate of growth for decades, with full employment, no inflation and a regular budget surplus, the capitalist economy in Russia is heavily dependent on the export of raw materials and particularly energy. President Dmitry Medvedev, a former Gazprom chairman, has called Russia's dependency on energy prices "humiliating". The government is seeking to narrow a budget gap that may reach 7.2 percent of gross domestic product this year, after plunging oil prices and the economy's worst contraction on record left a deficit of 5.9 percent, or 2.3 trillion rubles ($77 billion), in 2009. The eastern Siberian oil export tax exemptions alone may cost the budget $4 billion this year.

What future for Russia?

After the collapse of the USSR, the bourgeois passed through a phase of manic euphoria. They felt they were no longer threatened by "Communism". The capitalist system (the "free market economy") ruled supreme. The ruling class felt confident. They dreamed of an economic boom that would last forever. These illusions were boosted by the upswing in the US economy in the second half of the 1990s. But the collapse of 2008 exposed the hollowness of these boasts. New shocks are being prepared.

The key element in the equation is the Russian working class. After a severe defeat, the movement was inevitably thrown back. Decades of Stalinism produced enormous confusion and disorientation in the Russian workers. The economic catastrophe that followed the collapse of the USSR and the dash to "market economics" led to mass unemployment and terrible privations. That temporarily stunned and disoriented the workers. But the main factor was the role of the so-called Communist Party and its leaders, who eagerly embraced the "market".

The old genuine traditions of Leninist Bolshevism have been buried under a mountain of filth and falsification. It is no accident that in the recent period Putin has been attempting to restore the image of Stalin at the same time as he strengthens the grip of the reactionary Russian oligarchy. This is a kind of insurance policy to prevent the Russian workers from finding a way back to Leninism, diverting their anger into the blind alley of nationalism in order to enslave them to the Russian oligarchs.

Strike at the Ford plant near St. Petersburg in 2008. But this attempt cannot ultimately succeed. After a period of quiescence, the Russian workers are beginning to find their feet. The economic revival has given new heart to press their demands. The strike at the Ford plant near St. Petersburg, and other strikes since, are an early sign that the patience of the Russian workers is coming to an end. Initially, these will inevitably have a mainly economic character, but later they must become political, since the link between big business, the state and the government is evident to all.

In retrospect, the fall of Stalinism will be seen to be only a prelude to a far greater event: the fall of capitalism. The facts speak for themselves. Not one of the fundamental problems facing humanity can be solved on the basis of the private ownership of the means of production and the nation state. The continuation of the rule of Capital signifies the inevitability of new crises and convulsions that will endanger the jobs, livelihoods and the lives of millions. The future of the planet, the environment, democracy, culture – even the future of our species – will be placed in the gravest danger.

Only the restoration of a nationalised planned economy can create the conditions for a revival of Russia's colossal productive potential. But this cannot mean a return to the old Stalinist regime. Only a regime of real workers' democracy, on the lines of October 1917, can provide Russia with a way out of the present impasse. As Trotsky points out in a most graphic and profound passage from The Revolution Betrayed, a nationalized planned economy needs democracy as the human body needs oxygen.

Napoleon used to say: "defeated armies learn well." There have been many defeats in the history of the workers' movement: from Spartacus to the Paris Commune, from Indonesia 1965 to the fall of the Soviet Union. In every case we have the responsibility to analyze, explain and draw the necessary conclusions. The bureaucratic degeneration of the Soviet Union and its eventual fall must be carefully studied by the Indonesian Marxists, if they are to be able to answer the questions of the workers and youth. And the best explanation that can be found is in the pages of this wonderful classic of Marxism.