based on their book, REVOLUTION FROM ABOVE: The Demise of the Soviet System (NY: Routledge, 1997).

Conventional wisdom tells us that the remarkable demise of the Soviet Union in 1991 was propelled by the collapse of its socialist economy, leading the citizenry to peacefully sweep aside the nation's Communist leadership and their misbegotten socialist system. Yet, if one inquires into the whereabouts of the allegedly deposed Communist leaders, one finds most of them not languishing in exile, but still in high-level positions in the 15 new nations that emerged from the USSR.

Furthermore, most of them are a great deal richer than they were before the Soviet Union's demise. Two years after this odd revolution, 11 of these 15 new nations were headed by former top Communists.  

In contrast to the conventional wisdom, the Soviet revolution of 1991 was made, not against the small elite that ran the Soviet Union, but rather by that elite. And it was not a collapse of the USSR's planned economy that drove this process, because no such collapse took place.

While the Soviet planned economy encountered serious problems after the mid-197Os, it was far from collapsing at the end of the 198Os. Rather, the Soviet elite dismantled their own system in pursuit of personal enrichment. 

Correctly understood, the USSR's downfall was caused by the undemocratic features of its system, not by the failure of economic planning. This interpretation provides hope that a democratic form of socialism would bring about greatly improved living conditions and economic stability for all members of society, not just an elite— whether capitalist or communist. 

For a decade after the Russian Revolution of 1917, the Bolsheviks experimented with various forms of economic organization. Not until the end of the 192Os was what came to be called "the Soviet system" put in place. It was characterized by public ownership of nearly all nonagricultural businesses and detailed planning from Moscow of productive activity across the vast country. Many Western socialists decried the extremely centralized and top-down form of economic planning adopted in the Soviet Union and condemned the authoritarian, repressive form of government that accompanied it. 

Income differences were much smaller than those in capitalist countries, and every worker was guaranteed a job. But a privileged and insulated "party-state elite" of high-level officials in the ruling Communist Party and the government ran the system and monopolized the best consumer goods. The Soviet system may have had some socialist features, but it was a far cry from the democratic system of popular sovereignty in both economy and government that socialists around the world had long imagined and worked toward. After Soviet dictator Josef Stalin's death in 1953, the brutal and murderous regime he had presided over since the early 193Os evolved into a more moderate form of authoritarianism, but the basic institutions of the system remained unchanged until the Gorbachev reforms of the 198Os. 

Despite the crimes perpetrated in its early decades and the continuing departures from the socialist ideal, the Soviet system brought rapid economic progress for some 50 years after its creation in the late 1920s. The transformation from a rural, agricultural economy to an urban, industrialized one—a process taking 30 to 50 years in other countries, was accomplished in only 12 years, during 1928-40. 

Some scholars think that Stalin's forced collectivization of the peasantry, the extreme reduction in their living standards, and the brutally authoritarian work relations in industry largely account for the rapid industrialization of 1928-40. But we believe that Stalin's atrocities, rather than speeding economic growth, instead slowed economic progress by provoking passive resistance from the population. 

It was the Soviet Union's socialist features, not its repressive ones, that deserve credit for the nation's rapid industrialization. 

Excluding the period of war and recovery associated with World War II, much of which was fought on Soviet territory, the Soviet gross national product (GNP) grew at a high average rate of 5.1% per year during 1928-75, based on Western estimates (see Table 1, p 24). Even during 1950-75, after basic industrialization had been completed, the Soviet economy still grew rapidly—much more rapidly than the US economy during those years, as Table 1 shows. 

The Soviet system had several economic growth advantages over capitalism. These included the ability of economic planners to devote a large part of national output to investment in capital goods and in education and training of the labor force, absence of the periodic recessions that afflict capitalist economies, and the achievement of continuous full employment. 

Growth in GNP is an imperfect indicator of economic improvement over time, but other measures confirm the USSR's rapid progress. By 1975 the formerly backward Soviet Union had surpassed the United States in output of crude and rolled steel, cement, metal cutting and metal forming machines, tractors and combines, wheat, hogs, milk, and cotton. In 1960 about half of Soviet families owned a radio, one out of 10 a television, and one out of 25 a refrigerator; by 1985 there was an average of one of each per family. By 1980 twenty million Soviet citizens had college degrees. That same year the USSR had more doctors and hospital beds per capita than the United States, and life expectancy had risen to 69 years, only five years below life expectancy in the United States. By the 1970s Soviet prowess in science, technology, and economic growth had Western governments worried. Many feared that the future might belong to the Soviet model by virtue of its economic successes, despite its many undesirable features. 

After 1975 Soviet economic growth slowed markedly and its rate of technological advance also declined. By 1985 Soviet leaders knew they had a problem. The US economy had been advancing more rapidly than the Soviet for a decade, a reversal of the past trend. Furthermore, competing with the Reagan administration's military buildup that began in 1981 placed a large burden on the Soviet economy. 

Soviet leader Mikhail Gorbachev came to power in 1985 partly due to the Soviet leadership's realization that serious economic reform was required. But Gorbachev's reforms failed to significantly improve the GNP growth rate, which rose only to 2.2% per year during 1985-89 from the previous decade's 1.8% rate (see Table 2, p 24). 

The GNP growth rate in 1975-89, while disappointing compared to the Soviet economy's past performance, was a far cry from economic collapse. The Soviet economy did not experience a single year of falling GNP during 1975-89, while the United States had three such years.

Worsening shortages arose for some consumer goods in the late 1980s, producing long lines at stores. Western observers assumed at the time that this reflected a collapse of production. But the shortages actually resulted from household income rising faster than consumer goods output. The culprit was economic reforms that decentralized control over wages to the individual enterprise level. 

In response, household money income, which had been rising by only 3% to 4% per year in the mid 198Os, suddenly rose by 9.1% in 1988 and 12.8% in 1989. With prices fixed by the central planners, cash-flush consumers quickly emptied store shelves, yet real consumption kept rising. While economic performance was lackluster in the 1980s, it was not consistent with the popular view that the Soviet planned economy collapsed. 

In 1990 and 1991, however, conditions changed. During those years Gorbachev and the Soviet government gradually lost power to the political movement led by opposition figure Boris Yeltsin. In May 1990 Yeltsin gained control over the Russian Federation, which was then a republic of the Soviet Union. As chief executive of the Russian Republic, Yeltsin was able to gradually seize political and financial power from the Soviet government. In June 1990 Yeltsin persuaded the Russian republic's legislature to declare its sovereignty over all economic resources within the Russian republic. Economic planning was dismantled during this process, and the highly integrated Soviet economy then indeed began to rapidly contract (see Table 2). This contraction, however, was not due to any inevitable "unworkability" of a planned economy; it occurred because economic planning was discontinued, leaving the economy with no effective means of coordination. 

How was an opposition political movement able to peacefully dismantle the Soviet system, which had faced no effective internal opposition since the 1920s? The answer to this question is found in Gorbachev's efforts to reform the Soviet system, and his efforts' unexpected effects on Soviet society. 

Gorbachev and his associates believed that the key flaw in the Soviet system was lack of democracy. They held this responsible both for the serious social and economic problems that had afflicted the Soviet system since the late 1920s and for the relative economic stagnation which had set in after 1975. Restructuring the Soviet system to allow real popular participation, both in the government and in economic decision making would, they argued, finally bring out the true potential of a socialist system. 

Accordingly, Gorbachev's reform program, known as "perestroika" (reconstruction), had three components. "Glasnost," which meant lifting restrictions on public debate and political organizing, would free the citizenry to participate in public affairs. Democratization of the government, through instituting free elections and eliminating strict Communist Party control over the state, would permit the people to assert sovereignty in the political realm. Economic reforms were aimed at democratizing and decentralizing economic planning. New legislation shifted some power down to the individual enterprise level, where workers were accorded the right to select the enterprise director. The reforms also introduced a limited degree of market control, giving consumers more choices and more was produced. 

Glasnost led to a flowering of many different political groups holding various viewpoints about the best future for the Soviet Union. Three positions found the greatest support. One was the leadership's program of building a restructured and democratic socialism. The second was a call to return to the pre-reform authoritarian system. The third was an increasingly open advocacy of abandoning socialism in favor of capitalism. Glasnost made it possible to advocate viewpoints in opposition to the leadership, and the democratization of Soviet politics made it possible for newly formed opposition groups to legally contend for power. The economic disruptions occasioned by the economic reform efforts tended to undermine public support for Gorbachev and his associates. However, the pro-capitalist grouping, led by Boris Yeltsin, emerged victorious mainly because it won the support of the overwhelming majority of the party-state elite—the most powerful group in Soviet society. That the party-state elite would opt for capitalism seems at first glance implausible. It is as if the Roman Catholic Church hierarchy suddenly converted to atheism, or the US Chamber of Commerce called for the nationalization of private business. Yet just such a remarkable turnabout took place in the Soviet Union. By the 198Os most members of the Soviet party-state elite—the high officials in the Communist Party, the state, and the system of economic management—had long since ceased to believe the ideology of the system. As studies by Western Soviet specialists such as Alec Nove, Mervyn Matthews, and Kenneth Farmer discovered, the post-World War II Soviet elite consisted largely of ambitious individuals, lacking any strong personal conviction, who had risen into the elite in search of power, prestige, and material privilege.

When in July 1991 one of the authors asked Nikolai L., a longtime member of the Soviet elite, whether he was a member of the Communist Party, he responded, "Of course I am a member of the Communist Party— but I am not a Communist!" As Gorbachev's reforms opened the future direction of the system to debate, the members of this opportunistic elite evaluated the alternatives based on their own interests. Most of the elite concluded that the democratized socialism advocated by Gorbachev offered no advantages for them. Democratic socialism threatened to eliminate the arbitrary power they had exercised over the citizenry and to reduce their material privileges. The Soviet elite included some genuine believers in the ideals of socialism, including Gorbachev himself, but they turned out to be a small minority. 

Some opposition groups called for returning to the pre-reform Soviet system. But surprisingly few members of the elite found this a persuasive position. While the pre-reform system had promoted them into the elite, their material privileges were nevertheless restricted by the socialist pretensions of the old system. They were forbidden to own property or accumulate wealth, and their privileged lifestyle depended entirely on their position in the hierarchy. Displeasing a superior could lead to demotion and loss of the luxuries to which they had become accustomed. When a dozen high-level supporters of the old system tried to pull off a coup in August 1991, it quickly collapsed as the would-be new leaders found almost no support within the Soviet elite for their attempt to reinstitute the old system. 

By contrast, capitalism held great appeal for most of the elite. They noticed how much richer their counterparts in the West were than they, not only absolutely but relative to the average living standard of their country. The Soviet system had enormously valuable assets, and they realized that, if the system were converted to capitalism, they would be the best positioned to become the new owners of these assets. 

Indeed, that is just what happened. Russia's Prime Minister since December 1992, Viktor Chernomyrdin, was Minister of Natural Gas in the Soviet days. Today he is believed to be the largest shareholder of the privatized company Gazprom, which controls the Soviet Union's 20% to 35% of the world's natural gas reserves, and appears to be one of the world's wealthiest individuals. One survey found that 62% of the 100 richest businessmen in Russia had previously been members of the Soviet party-state elite (most of the other 38% apparently came from organized crime backgrounds). It also found that 75% of high-level political leaders in President Yeltsin's administration in post-Soviet Russia came from the Soviet elite. 

The Soviet elite was not defeated by a democratic revolution from below in 1991. Rather, they remained in power, discarded their Communist identity, and proceeded to divide up the wealth of the Soviet system among themselves. 

A study of the Moscow elite in June 1991 by Judith Kullberg, an American political scientist, confirmed that the conversion to capitalism was widespread within the top layer of Soviet society. Of the sample of the elite studied, 77% supported capitalism, 12% democratic socialism, and 10% held a "Communist or Nationalist" position. 

The views of ordinary Soviet citizens were vastly different. In May 1991 the Times-Mirror Center for the People and the Press, an American survey research firm, conducted a large-scale public opinion survey in European Russia. It found that, as in the above elite survey, only 10% favored the pre-reform system. But 36% in the public opinion survey favored democratic socialism and another 23% favored the Swedish model of social democracy. Only 17% wanted "capitalism such as found in the United States or Germany" (14% had no opinion). Thus, a large majority (69%) of the public apparently wanted some kind of socialism or social democracy, and few wanted Western-style capitalism. Other public opinion surveys conducted at the time found even less support for capitalism than did the Times-Mirror poll. 

But despite the significant democratization of the Soviet system during 1985-91, most ordinary citizens remained politically inactive. The party-state elite, positioned at the pinnacle of the social pyramid, had the power to overcome the resistance of Gorbachev and his associates, despite the public support for Gorbachev's aims, and turn the Soviet Union toward capitalism. Because the leader of the pro-capitalist movement, Boris Yeltsin, won institutional power within the Russian republic, while Gorbachev retained control of the central Soviet state, the pro-capitalist movement's achievement of full state power required dismantling the Soviet state. Such a move had no legal or constitutional basis, and a 1991 referendum found that more than three-fourths of Soviet voters opposed it. Separating Russia from the Soviet Union was the only feasible way for Yeltsin and his movement to pursue a capitalist transformation. 

The demise of the Soviet system does not show that a system based on public property and economic planning is unworkable. It does show that a relatively egalitarian planned economy run by a privileged elite is, in the long run, an unstable system. Once the founding generation of revolutionary believers passes away, the ruling elite will eventually realize that maintaining the socialist elements of such a system is not in their interests. In the Soviet Union, this process occurred amidst the turmoil of an attempt to transform the system into a democratic form of socialism. In China, the party-state elite is also pursuing their economic self-interest, but by a different path. Instead of jettisoning Communist Party rule, they are using it to build a rapidly growing capitalist sector of the economy, which will eventually displace the planned, publicly owned sector. The children of top Chinese party officials are using their connections to establish themselves in lucrative positions in the new private businesses that have emerged.

Only a democratic form of socialism, based on popular sovereignty in the economy as well as in the state, would be viable over the long run. An empowered population in such a system would resist any attempt by a minority to gain control of the wealth created by the people. We believe that democratic socialism, lacking the distortions that ultimately weakened the Soviet system and left it open to capitalist transformation, would be superior in economic performance, as well as social justice, to either a Soviet-type system or capitalism. 

Through economic planning, democratic socialism can assure full employment, avoid recessions, and invest heavily in developing human capacities as well as new technologies. Having no class of wealthy property owners, income would be distributed much more equally than under capitalism. In contrast to capitalism's blind drive for profits, democratic socialism would empower people to guide economic development along a path of sustainable economic progress. Such a path would increase living standards, reduce the time devoted to undesirable forms of labor, avoid degrading the natural environment, and fairly share the fruits of economic improvement.

Soviet history does show that economic planning and public enterprise, even in the distorted Soviet form, can bring rapid economic progress. The belief that democratic socialism would do even better cannot be proved by reference to any historical example, since it has not yet existed on a large scale anywhere. But nothing in the Soviet experience, accurately understood, undermines the promise of democratic socialism. 

Resources: The Economy of the Former USSR in 1991, International Monetary Fund, 1991; "Is There a Ruling Class in the USSR?", Alec Nove, Soviet Studies, 1975; The Soviet Administrative Elite, Kenneth C. Farmer, 1992.

Period USSR USA

1928-40 5.8% 1.7%

1940-50 2.2% 4.5%

1950-75 4.8% 3.3%

1975-85 1.8% 2.9%

Source: Revolution from Above: The Demise of the Soviet System, Kotz with Weir, Figures 3.1 and 3.2. Original sources: The Real National Income of Soviet Russia since 1928, Abram Bergson, 1961; Measures of Soviet Gross National Product in 1982 Prices, Joint Economic Committee, US Congress; others.

TABLE 2: SOVIET GNP GROWTH 1986-91

Year GNP Growth Rate

1986 4.1%

1987 1.3%

1988 2.1%

1989 1.5%

1990 -2.4%

1991 -12.8%

Source: Kotz with Weir, Table 5.1. Original sources: Measures of Soviet Gross National Product in 1982 Prices, Joint Economic Committee, U.S. Congress; others.