Sean Gervasi: How the US caused the break up of the USSR

[ourhiddenhistory]

This is an interesting interview on the causes of the break up of the USSR with economist Sean Gervasi.

Gervasi has an excellent article entitled "A Full Court Press: The Destabilization of the Soviet Union" at CovertAction Information Bulletin here https://archive.org/details/CovertActio ... ternEurope

Gervasi also has one on the break up of the Yugoslavia here: viewtopic.php?t=28

The talk

https://youtu.be/kPQUeid4wdo

The transcript (note, the transcript is unreviewed)

PART 1 OF 4

Prof. Sean Gervasi ... been speaking a bit here and there in the last year or so about developments in the Soviet Union from the perspective of a person who follows the workings of the western intelligence agencies, something in which I was tutored while I was working at the United Nations and was on the receiving end of quite a lot of that activity. And that is an important theme that one needs to look at, the role of the West in developments which have taken place in the Soviet Union, and it's one that I've been focusing on. But of course, the wider and more important issue is how shall we understand the meaning of events in the Soviet Union in the last five, six, 10 years? That's really the critical question. As you know, the developments, particularly the end or collapse of communist rule in the Soviet Union, and finally, the breakup of the Soviet Union itself have been presented in our media, insistently and incessantly, as evidence that socialism or even social democracy, or what have you, which we'll discuss, is unworkable.

And this, of course, in tandem with the theme, which has been disseminated so energetically by the same people in the last decade, that capitalism, A, is more or less the same thing as democracy and, B, must be seen as the core and triumphant achievement of Western civilization. Hence the thesis that this is the end of history, that we have achieved everything that there is to achieve that the present system of institutions in which we live in the West represents the pinnacle of human capacities intellectually and organizationally, and is for the best of all possible worlds. Right? That's the thesis. Or those are the twin theses which surround us and which have been, I think, creating an enormous amount of confusion and consternation.

Because I think people sense that there's something wrong with this idea, and the effort to close off all discussion about alternatives to what I would term our regime in the United States today, and possibly in Western Europe, which is a moving backward from the more enlightened liberal democracy and capitalism, which evolved after the Second World War in Western Europe and the United States. I mean, we are, today, I think living in an irrational and savage capitalism of the 19th century variety which, for particular reasons, people who have power in this society either have exceeded to or have energetically worked to institute.

The question is whether this great wave of propaganda makes any sense. And so, I think we should examine whether the idea that socialism and alternatives to raw capitalism are impossible, none desirable, unworkable. I think we have to look at that in two ways. First of all, we have to examine our own situation in the United States historically, and we have also, I think, to look at what has happened in the Soviet Union. Because what has happened in the Soviet Union is really very different from what we are told by the mass media. We have not merely witnessed a collapse of communism in the Soviet Union, we have seen something really very different, but it has been systematically misrepresented in the Western media.

I would start by examining our situation in the United States today, and I'd frankly start with Charles Beard's interpretation of the American Constitution. There's a great deal of misunderstanding about the kind of society that American democracy really represents, and that misunderstanding is both historical and contemporary. There is a tremendous tension which we are all aware of in our society. It is a tension between egalitarianism and inequality. It is attention born of the evolution in the 16th, 17th, and 18th century in England, and the transfer of a particular kind of society onto American soil through British political traditions, not withstanding our rebellion as colonists in the end of the 18th century. And that is the particular set of institutions known as liberal democracy.

Liberal democracy is a combination of parliamentary government and capitalism. And liberal democracy inevitably, therefore, contains some very serious tensions, because the progressive development of parliamentary democracy has tended to give greater and greater scope to the principle of equality and human life in politics. That's why, in the course of British 19th century political development, there was a progressive expansion of the franchise. Right? And that's why, in the United States, there was also an expansion of the franchise. The United States did not have the same encumbering property qualifications in the beginning, although we did have property qualifications in the 18th century in the United States. But eventually, we had a franchise extended to all adults, and we've been redefining adults. Most recently, we've dropped the level of political maturity or political and enfranchisement to 18 years.

Now, capitalism, on the contrary, is a system of economic and social institutions based on the principle of inequality, and there's a rationale for that inequality, which also comes from the 18th century. But the idea, essentially, is that it makes sense, from the point of view efficiency and, indeed, equity given all the considerations that one must take into account, to have a society based on the unequal distribution of property, organized around that institution, to have an economy based on private property because, in the vital analysis, it is most efficient and, in the long run, holds the greatest promise of continuous progress. By the way, that's an argument that Marx made at a certain point, right? At a certain stage of history, a capitalist society is extremely progressive, that it gathers the technical capacities of mankind, personkind, develops them, and accumulates until it creates something new, which we won't talk about just now.

But historically, and currently in the United States, we very strongly sense this tension, so that we go back and forth between periods when we have enormous pressures to give predominance to the principle of inequality, to pay attention to the rights of property, and periods when egalitarian tendencies have been very strong. For instance, as in the turn of the century during the expansive phase of American Populism and during the antitrust... the great popular movements that sought, not just popular, but that sought to contain the power of the cartels and the trusts in the United States.

And today, we sense that, too. We passed the law in 1946 that's called the Employment Act. By the way, it's not called the Full Employment Act. You have to remember that legislation. And yet, we realize that our adherence to the principle of full employment was tenuous even in the 25 year, which followed the Second World War and completely spurious today. Why is that? It's because of this tremendous tension between the realities of power under capitalism and the rather fragile hold which democratic principles and institutions have on that power.

Let's go back to the Constitution and the Philadelphia Convention. I've been rereading Beard, and I'm very impressed by his grasp of who predominates, really, in this delicate balance in liberal democracy, between the principles of egalitarianism, the principles of parliamentary democracy, and the enormous concentration of power, which even then was inherent in the dominance of the institutions of private property. Beard's argument, essentially, is that in the final analysis, a small group of men whom he refers to as one sixth of the adult male population, the only people who ratified the Constitution, the participants in the ratifying conventions who voted positively for the constitution, represented one sixth of the adult male population. That is to say 8% of the adult population, in today's terms. Against our values, that represents 8% of today's population. Okay? The equivalent.

Now, what was obtained in that framing of the Constitution? What was obtained was a system of political science, a system of government, which was so structured as to ensure the dominance of private property, the power of private property, in any contention between the forces of democracy and the forces of private property and the forces of inequality, if you like. So that the structure which constitutes at the founding of this Republic, which constitutes the framework within which we operate today, is one which ensures that predominance. I know that Beard has been attacked by many people, and it's perfectly understandable when you read Beard carefully. But it seems to me that today, Beard becomes more illuminating. Why?

I say I pay attention to the Constitution, to the Philadelphia Convention, to its ratification, to the members who ratified it and to the purposes which they saw themselves as furthering by their framing and ratification of this Constitution, because that is in the framework within which the United States experienced the most successful and untrammeled industrial revolution in the history of mankind. Untrammeled, I mean. We had a straight run of industrialization which was the first to transform the condition of man in human society, by which I mean something very, very specific. And here I speak to things which were said by people like Canes, by people like Schumpeter, but really ignored because they're extremely uncomfortable.

The rationalization for inequality in the institution of private property in the thinking of 18th century philosophers was that property had to be shared unequally and income had to be unequal because this inequality provided incentives which would constitute a constant assurance of the drive to the expansion of production. Right? That was the rationalization. But in the 20th century, according to the economic historians and according to people like Canes, countries like the United States and Great Britain begin to transform the historical situation within which these institutions were conceived. How? By developing such a capacity to produce that gradually more and more numbers are lifted out of anything which could be historically or comparatively called poverty. So, that scarcity which dominates the reasoning of economists is really beginning to end, in many respects.

And Joseph Schumpeter was able to say, for instance, in 1928, that if economic growth continued in the United States for another 50 years, we would see, in 1978, the end of anything that could reasonably be called poverty. Now, that didn't quite happen. Right? That didn't quite happen because of the enormous influence of inequality. Right? In the distribution of this productive abundance. But it did transform the lives of many, many people, and it transformed everyday life and the historical condition. Look, between 1870 and 1970, the number of hours that the average American works fall...

The period between 1945 and 1970, per capita production trebles just in that period, and we already have a huge industrial base at that time. So, I would argue with Galbraith who, because he was right, was vilified and ignored by the economist profession and studiously made a little of by the mass media, that indeed America began to be transformed with the success of its enormous industrial revolution by the end of the period after 1865, when the really heavy industrialization began to take place. And indeed, I would argue that the reason for the Great Depression was that the United States had lost the ability to continue to absorb everything that it could produce in an adequate way, given the institutions of the time.

So, what happened, then, was that within this framework, which is the same framework conceived by the James Madisons and the Alexander Hamiltons, to further the purposes of property and to ensure against what Madison called the leveling attacks of democracy, we have industrialization and hence the expansion of an enormous power, which is the power that controls the machinery and the resources of that productive system. That is to say large corporations. The largest 500 corporations in the United States today, plus the largest 500 banks and the largest 50 financial corporations control more resources than the Soviet planners ever dreamed of controlling. The control of those resources, which has made invisible by the clever workings of economists, inheres in the ability to make investment decisions. Investment decisions are the key decisions in any economic system. The power to make those decisions is the power continuously to transform and to determine the terms of everyday life amongst human beings in any society. That power is not only invisible in our system of thought, carefully hidden by the descendants of the 18th century philosophers, but it is also totally unaccountable.

Now, maybe you could say, and we did say this between 1945 and 1975, "Okay. This is a contradiction of democracy. This is the inheritance from the Philadelphia Convention, the Constitution and its ratification, and the dominance of this one sixth of the male adult population in 1789. But this system is so productive that we can alleviate the resulting social and political tensions by raising the standard of living of ordinary folks." And that was the whole philosophy of the sophisticated American leadership in the first generation after the Second World War. That was the philosophy of the Rockefellers when they talked about the new enlightened capitalism of the 20th century. Capitalism could deliver the goods, and hence, people would be content despite the fact that the realities of power born at the end of the 18th century and, essentially enhanced by the enormous accumulation of power represented by industrialization and the growth of large corporations and their concentrated power in the economy. We could live with that because the United States economy was so productive. All right?

Now, that's our history and the tremendous tension of our situation today as contrasted with the post-war period. Because one thing is very clear today, that for 20 years in the United States, this system has not been working. There has been a systematic retreat from full employment, high wages, advancing standards of living, security in one's job, and the advance of the welfare state. We have systematically been retreating from those things so that we have higher and higher official and real unemployment which, of course, is about double official unemployment. Again, the statisticians worked very hard to hide the realities of life.

Between 1977 and 1992, according to the Congressional Budget Office, 70% of American families have seen their after-tax income fall 70% in the lower ranges of the income distribution. Those falls are quite sharp. Purchasing power falls by 20.8% for the poorest fifth, by something like 12% for the next fifths, by something like 11% for the third fifth, and by smaller amounts for those in the middle of the income distribution system. Okay? So, I would say that that represents, and people are increasingly becoming aware, a collapse of the American standard of living, and this collapse of the American standard of living is related to a gradual economic decline which is causing the post-war system, as we have known it in the United States between '45 and '70, to begin to disintegrate. Right?

And I think this is the reality of what is happening. So that today, even according to Wall Street forecasters like the Levys attached to Bard College up here in the county, we are facing what they call a contained depression, which may be worse than the kind of depression we saw in the 1930s, because the stabilizing role of the government makes it possible, not to avoid some of the awful horrors that occurred in the Depression, but to diminish them to a degree which makes them almost invisible. Right? So, we have a very tense situation. I ask you to reflect that when we confront the enormous economic difficulties, from which there follow all kinds of social problems in our society which we face, that these are connected to and, if you like, made possible by the arrangements conceived by James Madison and Alexander Hamilton.

If this crisis which we have been living in for 20 years, and have become more acutely aware of in the last 10, is intractable, it is above all intractable, because of this invisible concentrated power which exists today after industrial growth, the rise of the large corporations in the framework conceived by Madison, Hamilton, and the other Federalists. So that if you want to argue today that we need to reconsider this framework, you run into very fundamental problems. You run into the problem that the Constitution is treated like an icon, that people are unaware that the preamble to the Declaration of Independence is not the law of the United States, that people are unaware of the fact that the Bill of Rights, which is supposed to compensate for some of the failings of our constitutional system, has been systematically shredded by the two most recent administrations. Witness William Kunstler and his remarkable talks on what has happened to the Bill of Rights in the last 10 years.

Now, let's shift to the Soviet Union, keeping in mind always that it is against this background of crisis and the intractability of crisis and it's rooting in the historical origins of the Constitution that we are invited, without anybody saying that that's the background, that we are invited to ponder the proposition that there is no alternative to the kind of capitalism that we have, and that this capitalism is the quintessence of democracy. Now, let us look at that proposition against a second set of data, if you like, which is supposed to prove the case that there was socialism in the Soviet Union, that the Soviet Union then-

PART 1 OF 4 ENDS [00:23:04]

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PART 2 OF 4

Prof. Sean Gervasi ... socialism in the Soviet Union, that the Soviet Union, then, along with its Eastern European partners, collapsed in chaos owing to the essential unworkability of this kind of a system. Let's look at that.

When the Reagan administration came into office, we all became aware rather quickly that something new was happening. We should have known that something new was happening because, in fact, the arrival of the Reagan administration in power had been preceded by a very careful buildup, which was in part visible in the American polity, and that was the emergence, the development, and the elaboration of the power of a group which we now call the New Right. Right? People who, 20 years ago, 28 years ago, in 1964, after the Goldwater rights lost the Republican National Convention and Rockefeller took command of the party, had been relegated to what every major political commentator at the time called the lunatic fringe of the Republican Party.

These were the people who, particularly in California, were coming out of the walls in the late 1970s creating foundations, buying chairs of economics and universities. Look at it. The [inaudible 00:01:34], the [inaudible 00:24:37] with all of their contacts, these were the people who were building a new group, and the purpose of this group was to put a stop to the kind of systematic democratic entrenchment which they thought had been going on in the 1960s and the 1970s. In the 1960s and the 1970s, with three movements, the movement for workers' rights, for unionization, the expansion of unionization, particularly among city employees, and for raising wages and the tremendous industrial disruption that attended the 1960s and the early 1970s in the industrial sector; the Civil Rights Movement, which proceeded that beginning in the late 1950s; and the movement against the war in Vietnam., The war in Vietnam being one of the ways in which this society managed to utilize, in a profitable fashion, its enormous productive capacity without giving it to ordinary folks. Right? Without giving its roots to ordinary folks.

Now, the New Right was determined to do something quite new. One of the new things that it did, and Reagan really was it's... not it's spokesman because that implies a degree of activity which I think he's incapable of... Well, you could always program a spokesman. I didn't even think he had the wheels to do that. Reagan launched, as you know, a serious, intense, ugly confrontation with the Soviet Union. Ideologically, right? At the same time, we became aware that there was a significant drive on to rearm the United States, to throw enormous resources. Ultimately, it was an excess of $1.7 trillion during the 1980s, to throw enormous resources into the military sector, to throw enormous resources into shifting the technology of the military sector. War in space, SDI... You're a pal. War in space, SDI, et cetera. All of those things were on the agenda.

You really are a true friend. Thank you. But many of us at the time puzzled about this. I remember asking myself, "What is it these fellows [inaudible 00:27:17]? These fellows, they really want a world war? Can they not see that this can be the outcome?" And I remember there was discussions, and I remember when many of you and I, on June 12th, 1982 were at the demonstration of 750,000 to one million people in the center of New York City, which was an expression of the alarm that people felt at this enormous aggressive policy, which was coming out of the Reagan administration, which threatened to shred US/Soviet relations.

But in fact, retrospectively, we can see that there was something else behind it, that it was not just irrational madness. There was a bit of that, but there was a rationality to what was being done. And in fact, to understand that, it's important to see that it is connected to every single major line of innovative policy that the Reagan administration developed. It was extremely well thought out, extremely shrewd. And the military buildup and the aggressive rhetoric towards the Soviet Union, the deliberate effort to create difficulties in the relationships between the Soviet Union and the European powers... You remember that in 198, the United States tried to force the European powers not to except natural gas from the Soviet Union, to deny shipments of technology to the Soviet Union, which would make it possible for the Soviet Union to exploit that national gas to earn foreign exchange, et cetera. It was all part of a very complex strategy, but it was a very clear strategy.

Let me say that although many of us, at least I did at the time, miss that. While we didn't quite comprehend what was going on, but had in the back of our mind flickers that something was wrong. There were people who were saying or hinting clearly at what was happening, and shrewd people, intelligent people who did begin to grasp what was happening. Let me quote from one or two. Writing in 1982, Joe Fromm, who was then the editor of the US News and World Report said, "There was something behind," I'm quoting him, "the shift to a harder line in foreign policy. The US, in fact, seemed to be 'waging limited economic warfare against Russia to force the Soviets to reform their political system.'" That's a nice journalist, a reasonably liberal journalist at US News and World Report. But Joe then quoted the State Department officials saying... Actually, National Security Council, quote, "The Soviet Union is in deep, deep economic and financial trouble, by squeezing wherever we can our purpose is to induce the Soviets to reform their system. I think we will see results over the next several years." That's in 1982.

Robert Scheer wrote a book in 1982 called With Enough Shovels: Reagan and Bush in the Age of Nuclear War. I think I've got the title almost right. Very interesting book, in which Scheer saw that there was something behind this enormously aggressive foreign policy, foreign and military policy, that the Reagan administration was deploying. And he saw that the United States was not simply playing nuclear chicken with the Soviet Union, as he put it, but that it was embarked on a policy designed to create such pressure for the Soviet Union as to force changes within the Soviet Union.

Now, of course, it had always been the case that the Cold War consisted of moves designed to affect the behavior of others. Okay? The Cold War, from the point of view of the West, had always aimed at modifying, as the State Department cookie pushers like to put it in their delicate prose, the behavior of our antagonist. But this, I think you will see, went beyond that because, in fact, the Reagan administration embarked on a policy of many dimensions, which included pressure around the world on countries with close ties to the Soviet Union. Insurgencies were initiated in Mozambique, Angola, Cambodia against Vietnam, Nicaragua, Afghanistan.

I mean, I don't want to get into too many complicated discussions of Afghanistan, but I think anybody who reflects upon the United States' response to the Soviet entry into Afghanistan in 1979 must realize that the United States did not want the Soviet Union to leave Afghanistan. And in fact, the purpose of these pro-insurgencies around the world which, as you know I've expended billions of dollars, was to pin the Soviet Union down and to inflict economic costs upon the Soviet Union. The purpose of the re-militarization in the West was to force the Soviet Union, at the risk of exposing itself to the pressure of escalation, to meet our resource commitments to defend itself, or to place itself in a position to resist our pressure.

The purpose of escalating the technology of nuclear warfare, again, was to impose costs upon the Soviet Union. The purpose of every principle measure, such as withholding advanced technology from the Soviet Union, foreign assistance programs aimed not at assisting countries on the basis of their needs, but at assisting countries on the basis of the contribution they would make to putting pressure on the Soviet Union, all of these things were part of a systematic strategy designed to create havoc on the Soviet Union. Now, I'll say a little bit more about what the purpose of that was, but first, let me point out that this is a systematic strategy consisting of a number of pieces and that it does pose enormous economic and other costs upon the Soviet Union.

But who is Gervasi to say that this is so, beyond quoting Joseph [inaudible 00:11:48]? Well, let me tell you a little bit about an interesting experience I had. I had lunch one day with a friend who just was passing through the United States, had been in jail in South Africa for eight years, and had just got out. He had been engaged in planning one of the principle sabotage operations against the South African nuclear installations, and he was very happy to be out of jail. And we sat at lunch, and he said to me... We've talked about many things, mostly about Africa, which he and I had worked on together. And he said to me, "What's going on in the Soviet Union?" And I said to him, "Well, I really can't figure this out. I can't figure out what's going on." He said, "It seems to me that the Soviet Union is being destabilized." "My goodness," says I to myself quietly, "the thought had never passed my mind." But when my friend, Christie, said this, I thought, "I should look into this." And I did.

And the first thing I found was... I mean, I spent a little bit of time on a computer and some things came up and I said, "That looks very interesting." Within a very short time, I had discovered reams of material being generated in the end of the '70s and the early '80s by organizations like the Rand Corporation... You know what the Rand Corporation is. It's an Air Force, CIA attracting agency in Southern California, very large, very powerful, very influential in the so-called intellectual defense, intellectual community, military industrial complex, and in Washington. Okay? People go back and forth from the CIA, from the DIA, from the State Department to Rand Corporation.

And what were the chaps at the Rand Corporation? Well, they were producing very interesting studies with titles like Economic Factors Affecting Soviet Foreign and Defense Policy: A Summary Outline, The Costs of the Soviet Empire, Sitting on Bayonets: The Soviet Defense Burden and Moscow's Economic Dilemma, The Burden of Soviet Defense, Exploiting Fault Lines in the Soviet Empire, Economic Relations with the USSR. Anyway, I started reading this stuff. First of all, I started collecting it, and I started reading this stuff. And I found out something very interesting, that these fellows at the end of the '70s, and the beginning of the '80s, were clearly fashioning a plan which we began to see the pieces of in the emerging parts of foreign and military policy for our military and economic policy under the Reagan administration.

And the basic reasoning of this plan, I'll give it to you, is as follows. The Soviet Union was in a dual crisis. They knew what was going on in Soviet Union. Economic growth in the Soviet Union had begun to slow down. It had been very rapid, by the way, in the period 1950 to the early 1970s. I mean between '60 and '84, per capita income, per capita production, the Soviet Union trebled. Okay? So, it wasn't slow. That was four or 5% rate of growth, very rapid, considering that you're growing at about 1.5, which is about, by the way, equivalent to the rate of growth on average during the decade of the 1930s in the United States.

Now, what I found out was that they also understood there was a leadership crisis in the Soviet Union. The old line of principals Soviet leaders, born in the early stages of Soviet redevelopment after the revolution, formed in the Second World War, that leadership was dying out, as we all knew. And in fact, Mikhail Gorbachev, selected by Andrei Gromyko, was the first representative of a new generation of Soviet leaders. But in the late '70s and early '80s, people were dying, right? The major figures, Andropov, Chernenko, et cetera, Brezhnev, were dying, and there was a very great confusion about succession.

So, the country was in a kind of crisis. The CIA calls it a dual crisis. A leadership crisis not knowing to which new people of a new generation, the leadership of the Soviet Communist Party and the Soviet Union should pass. And at the same time, a beginning of faltering of economic growth, which was serious. Right? Because since the Soviet Union had always, like any country, to choose between investing, competing in the arms race, and raising the standard of living of its population, the fact that economic growth fell off, made that more difficult.

Now, the next step in the reasoning of the Rand Corporation, gentlemen and ladies from the Rand Corporation, let's hope there aren't too many, was that the United States and its allies could take various actions, which would force the Soviet Union to increase its defense spending and its military assistance to allies and friends. They could take measures to deny the Soviet Union credits, which they did, to deny it technology. They could also take measure, which would reduce the overall volume of resources available to the Soviet Union and hold back the growth of productivity, which would exacerbate their problems. Or force them to shift resources from consumers to investment. And that all of these effects would aggravate, to quote them, "The difficulties confronting the Soviet leadership in a stagnant economy."

So, combination of these measures, to impose costs on the Soviet Union, could be expected to lead to a fall in investment and/or living standards. And such measures, consequently, might generate pressures within the Soviet Union for withdrawing from the world stage and for political reform. So, the purpose of this operation, which we'll try to define more clearly in a moment, was to impose, in a variety of ways, enormous costs on the Soviet Union, or to reduce the resources available to them, in such a way as to exacerbate their economic difficulties. Let me quote from Abraham Becker, one of the shrewder Rand analysts, "Thus the Reagan administration sees Soviet economic troubles as an opportunity to complicate further their resource allocation difficulties and dilemma in the hope that additional pressures would result in a reallocation of resources away from defense, or would push the economy in the directions of economic and political reform." The purpose of this new aggressive multi-dimensional strategy was to force reform upon the Soviet Union. But what was that reform to be? A later chapter.

Now, it's one thing to say that these plans exist, and I'll talk about other plans for instance, I managed to pull together a collection of documents from the National Endowment for Democracy which, as you know, is supposed to be a quasi-government institution... It's not a quasi-government institution funded by Congress, it's a government institution funded by Congress, which sees it to be its business to "promote democracy outside the United States and the rest of the world," whereby democracy, one means, essentially, and when you come down to it, it's clear now in the Soviet Union, capitalism and a liberal democracy, if you like.

Now, it's one thing, of course, to talk about all this planning to try, on your own, to reason that all of these things fit together, but in fact, we began to get official indications on documentation as early as the spring of 1982, that the government had signed on to this strategy, that this was not the wild thinking of a few eager folks in a few think tanks, that it was policy and that it was policy which the American public knew very little of, did not understand the purposes and consequences of, that would nonetheless be required to pay for, to the tune of several trillion dollars, which did indeed help to create the situation in which we presently find ourselves at home, locked in the Philadelphia Convention.

In the spring of 1982, and I've spoken to two of the participants in this little meeting, a senior national security council official charged with responsibility for Soviet Affairs, called a number of influential Washington correspondents and asked them to come to the National Security Council for a briefing. Two of them told me that they left this briefing extremely shaken. They didn't want to say too much about it, but they gave me to understand that they thought that this was an extremely aggressive, dangerous, and highly risky strategy which the administration was describing, and stating that it was about to embark upon.

Helen Thomas of UPI was one of the people who was in that meeting, and she described the results of the briefing, this briefing on the Soviet Union, in the following manner. "A senior White House official said Reagan has approved an eight page national security document that undertakes a campaign aimed at internal reform in the Soviet Union and the shrinkage of the Soviet empire. He affirmed that it could be called a full court press against the Soviet Union." A little later, just a few days later, in fact, further evidence, this time quoting official documentation, not hearsay from a briefer to the National Security Council, but quoting official documentation.

Richard Halloran, the Defense correspondent at New York Times, published an article in that paper on May the 30th of 1982, just a few days, really, after Helen Thomas sent out her UPI dispatch. Halloran quoted from the fiscal year 1984 and 1988 defense guidance, of which the Times stated that it had a copy. The secretary's guidance document recommended what Halloran called a major escalation in the nuclear arms race. Part from that, it indicated that a number of other measures were being taken "to impose costs" on the-

PART 2 OF 4 ENDS [00:46:04]

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PART 3 OF 4

Prof. Sean Gervasi "To impose costs" on the Soviet Union. Note, the language is the language of the RAND planners, right? Some of the same people, probably, wrote the document. I quote from Halloran's direct quote from the national guidance document of the Secretary of Defense. "As a peacetime complement to military strategy, the guidance document asserts that the United States and its allies should, in effect, declare economic and technical war on the Soviet Union." Interesting. "And so, I think," it went on, "They were to put as much pressure as possible on a Soviet economy already burdened with military expenditure. They should develop weapons that are difficult for the Soviets to counter, impose disproportionate costs, open up new areas of major military competition, and obsolesce," nice English, I put "sic" in my article, "precious Soviet investments."

So I think it's safe to say, and a number of people prove it to us a little later on, that this policy was instituted, let me just raise a hand to one of the more recent proofs. David Ignatius, who is a correspondent at the Washington Post, published a very remarkable article about spyless coups not long ago, in October, if I'm not mistaken. Perhaps it was September. Ignatius is a correspondent with very close ties to the intelligence community, to be very polite about it. I quote from his article. "Preparing the ground," this is immediately after the double event of August, 1991, in which Mr. Gorbachev was seemingly threatened by a coup, and in which Mr. Yeltsin did not seem to take power, but did.

He described the event in this way. "Preparing the ground for last month's triumph was a network of overt operatives who, during the last 10 years, have quietly been changing the rules of international politics. They have been doing in public what the CIA used to do in private, providing money and moral support for pro-democracy groups, training resistance fighters working to subvert Communist rule." Oh la la. Could we have written that in the Washington Post in 1982? Difficult, I would have thought. Might not have passed muster. Some people might have noticed. But in 1991, evidently, it was all right to say that this is what we were doing.

Now, a large number, if you look very carefully, you can find many traces by officials stating that the United States had embarked upon a strategy which, retrospectively, it is very clear, was nothing more and nothing less than a strategy to destabilize the Soviet Union. Mr. Casey's magnificent and expansive imagination had carried covert operations beyond the narrow confines of third world countries and aimed them at the Soviet Union and Eastern Europe. If you go back and look at the history of these events in this perspective, reading some of the documents, you'll see things very differently, I think.

Now, I take Judge Clark, for instance, speaking at a private conference, a private seminar, at Georgetown University, again, around 1982, said, "We must force our principal adversary, the Soviet Union, to bear the brunt of its economic shortcomings." Well, that's slightly veiled language, means the same sort of thing as everybody else is saying. It wasn't, though, until 1985, that the redoubtable and incomparable Jeane Kirkpatrick appeared on the stage with the full text of the play in hand, and she gave a speech, not surprisingly, in front of the Heritage Foundation, at a conference room on Capitol Hill in which she said, "The Reagan Doctrine, as I understand it, is about our relations with the Soviet Union." She then described every principal element of the strategy which Helen Thomas, in 1982 called, repeating the NSC briefers' statement, "A full-court press against the Soviet Union."

If you read her speech to the Heritage Foundation, which everybody should read, because it was 1985, she was saying that the United States is bent upon a strategy aimed at overthrowing the Soviet Union through internal and external pressures. She principally described the external pressure. I want to say a little bit about the debate over the internal pressure.

Again in 1982 there was a nasty little debate between some members of Congress and the then Secretary of State, General Alexander Haig, and Mr. Haig was very anxious that the United States should embark upon the program which Ronald Reagan was going to describe before the British Parliament in June, 1982 at just about the time most of us were going to be in the streets of New York to protest some of the things that he was doing. And Haig said, in the debate over the creation of the National Endowment for Democracy, which the Congress had insisted should not spill over into efforts to meddle in the internal affairs of the Soviet Union. Mr. Haig said, "Just as the Soviet Union gives active support to Marxist-Leninist forces in the West and the South," because it owns Newsweek, for instance, and manipulates the Columbia Broadcasting Company. Enormous power the Soviet Union has in the West.

"We must give vigorous support to democratic forces wherever they are located, including countries which are now Communist. We should not hesitate to promote our own values knowing that the freedom and dignity of man are the ideals that motivate Alexander Hamilton, sorry, the quest for social justice. If free press, free trade unions, free political parties, freedom to travel and freedom to create are the ingredients of the democratic revolution of the future, not the status quo of a failed past."

The founder of the Central Intelligence Agency said that propaganda is the first arrow of battle. A statement by Alexander Haig in 1982 to the Congress signals what the United States would attempt to do with the National Endowment for Democracy, that it would try to participate in the creation of a failed past in the Soviet Union. And, in fact, as you know, all that went ahead. Now, let's look a second.

I know that it's very difficult to believe this. I ask you to look at the second of the articles which I read, or search, which I have written, or even read it, or search for some of he documentation easily available. You will find that the mission statement of the National Endowment for Democracy, which functions as a kind of consortium, bringing many of the pressures of the US government to bear inside the Soviet Union, destabilization requires external pressure and a manipulation of the internal situation to move political developments in the direction you desire. That's what targeting a country for destabilization involves. We deprived Cuba of sugar, of medicines, etc., etc., and that creates internal pressure, and, utilizing the internal pressure, you insert yourself, create groups, diffuse ideas which are inconsistent with those prevailing and suitable to power, and you begin to work on that discontent. If the discontent deepens and spreads, you get better and better odds.

Because the Soviet Union was already in a kind of crisis, which, as Abraham Becker of the [inaudible 00:54:47] said, the United States then systematically sought to intensify and exacerbate the National Endowment for Democracy and literally dozens and dozens and dozens of pseudo-private foundations, which I'll talk about in a second, went into the Soviet Union under the new umbrella of glasnost, created academic presses, created newspapers, created radio stations, and began to mobilize and to work upon the natural dissent and discontent that existed in the Soviet Union, not only because of the historical past, but also because of the difficulties of the present as exacerbated by the United States and its Western partners.

If you look at how much money, I'll just give you an idea of some of the projects that were involved and how early, and this is just one agency. You have to recognize that, if this was going on in the National Endowment for Democracy, that there were many, many other channels of finance and influence into the Soviet Union that were working on this. For instance, in 1984 the NED gives $50,000 to a book exhibit in the Soviet Union: America through American Eyes, at the book fair. 1985, I'm just selecting. $70,000 via the Free Trade Union Institute, which is part of the National Endowment, to Soviet labor review for research and publications on Soviet trade union and worker rights. 1986, $84,000 to Freedom House to expand the operations of two Russian language journals published in the US and distributed in the higher levels of the Soviet bureaucracy and intelligentsia. Already an arresting description, right? Imagine the Soviet Union publishing two English language journals in the Soviet Union during the 1980s and having them distributed and eagerly read in the highest levels of the United States bureaucracy and intelligentsia. I don't think that would have stuck very well in the United States.

1987, Freedom House for the [inaudible 00:57:04] Press are rushed $55,000 for a Russian language publication house in Paris to publish unofficial research conducting in the USSR by established scholars writing under pseudonyms. Now, what does that mean? If you get down to 1989, we're talking already in the $200,000 category. For instance, the Center for Democracy, which is related to the National Endowment for Democracy, began to create a center for assistance to independent and nationalist groups, including the Crimean Tartar movement, for human and national rights. In other words, begin to finance ethnic and nationalist separatism, begin to finance separate trade unions, begin to finance your own academics, etc., etc. This is open, okay? But it's very large-scale. Very large-scale.

I've done a little calculation, and I can tell you that very large amounts of money were being spent, probably on the order of, by all the Western allies, minimum, inside the Soviet Union, in the period from the mid- to the late-'80s, $100 million a year. $100 million a year to finance organizations which might begin on like Westpac, but would then grow, develop, have outreach, which would become extraordinary with that kind of funding, and did, finally, change things.

If you look at perestroika, in the Soviet Union, Mr. Gorbachev becomes the Soviet leader. This is a background to the two stages in which we must understand perestroika. In the first stage, it was clear that the Soviet leadership was desperate to find a way to renew socialism, that Mr. Gorbachev was bent upon the reformation of socialism, and that he had widespread support inside the Soviet Union. There were genuine economic improvements which took place between 1986, and, say, the end of 1988 in the Soviet Union as a result of those efforts, but the principal question we have to ask ourselves, since today we confront a fragmented or, if you like, disassembled Soviet Union, the supremacy of nationalism, ethnic conflict, and Mr. Yeltsin, who represents an extremely right-wing constituency at the present moment, and the supremacy of capitalism, a capitalist society is now being created in the Soviet Union, ending Mr. Gorbachev's experiment.

The crucial question to ask ourselves is a very simple one: how is it that, between 1985 and 1990, a movement which began as an attempt to transform and renew socialism in the Soviet Union was supplanted by a right-wing movement aiming at the creation of a capitalist society in the Soviet Union? That is the key question. That is the key question, because that's what's happened, and it's strange. That's why many of us were puzzled about the contradictory evidence coming out of the Khrushchev era. It was very difficult to understand. At first, it seemed very positive. Then, from the end of 1988, the fall of 1988, it became increasingly clear that things were going to pieces. That Mr. Gorbachev was either not able to control the forces which he had unleashed, or that, indeed, he was bent upon creating, as I heard on the French radio in 1988, for the first time stated very clearly, it arrested my attention.

The purpose, said Mr. Aganbegyan on the radio, in his not-bad French, was to create a regulated market economy. That was the purpose of perestroika. Not when it began, but somehow, something had happened. In fact, there's a lot of very interesting information out there now on the whole process. There was clearly a large, dissatisfied set of strata in the Soviet intelligentsia. What has happened in the Soviet Union is more complex than the collapse through its own internal contradictions of the system of socialism in the Soviet Union. I really don't want, I think, to talk very much about whether the Soviet Union was a socialist society. There are people who say it was, there are people who say it wasn't. It's a long discussion between Trotsky and Stalin and etc.

But, for my part, I would say this: that the Soviet Union began as a genuine attempt to establish socialism. There were always, in the Soviet Union, people genuinely seeking to further socialism, and people who didn't give a damn. On balance, the thing we have to ask ourselves, is whether the existence of the Soviet Union, as an apparently, perceived socialist society, was a positive thing in the world equation at this particular time of history? I, on balance, having spent years in the United Nations, seeing that, under the attacks of the Western countries, which, in many cases, were very ugly, most of the third-world countries which emerged in the late '50s and '60s and early '70s were really only barely saved by the few sources of support which they got in the socialist world, and when the Soviet Union went down, they went down too. Angola, Mozambique, Nicaragua, etc.

So, in many respects, I would have thought that the Soviet Union, for all its defects, stood as a positive development in history, with all of the horrors that took place. The United States has had its horrors, right? The question is this: did the Soviet Union collapse because socialism is unworkable, central planning doesn't work? No, it didn't. There was a crisis in the Soviet Union. I would argue that, in the absence of the kind of pressure...It's very difficult to weigh the balance. How important were the internal forces? How important were the difficulties experienced internally? And how important was the external pressure and the externally intervening force? That balance is very difficult to get. We'd have to read through a lot of intelligence to understand that, to begin to get a grasp of things. But that's our duty, as people who are living history, who seek to understand history, we have to try to do that.

My basic conclusion still, at this moment, is this: the Soviet Union today, in the absence of this extraordinarily crafty, well thought out, extremely costly strategy deployed by the Reagan administration would be a society struggling through great difficulties. It would still be a socialist society, at least of the kind that it was. it would be far from perfect, but it would still be there, and I think, therefore, that Western intervention made a crucial difference in this situation. That's a judgment, all right?

The question is: irrespective of that, what does it mean that the Soviet Union now has disappeared as a result of the kind of process that I'm talking about? A combination of external difficulties and external pressure and intervention. Does it mean that socialism doesn't work? Does it mean that the kind of capitalism that we live in today, which I think increasingly of as a return to irrational and savage 19th century capitalism. If you walk through the Bronx and Brooklyn and Harlem, how can you not conclude that we are living in an irrational and savage capitalism, in which the leveling attacks of democracy have been dealt with, in which the possibility of remedying that situation by the constitutional means which exist in the normal political channels of our government are very small. That electoral changes, in other words, are not going to be very significant until there's a mass mobilization of American people to make something happen.

Now, if this is so, if this is so, then the fact that what has happened in the Soviet Union has happened as it happened has no bearing whatsoever on our problems and we should not be confused or pushed into consternation by it. Why? Primarily for a very simple reason. The Soviet Union was conceived at a time when, in Marxist terms, it was not ready. The Soviet Union did not have the material base of abundance which would make it possible to create a society at once egalitarian and democratic, because the struggle to create that base would require a degree of repression and authoritarianism particularly heightened by external intervention and attack, which inevitably would distort the nature of socialism.

I sympathize with Isaac Deutscher, but I think it's too simple when he says socialism in a backward country is backward socialism. But the critical fact for us is this: the Soviet Union was a society conceived as a socialist society prior to the creation of the economic base which would permit the creation of a socialist society with ease. We live in a society whose capacity to produce, whose potential abundance is so great that the inability to make use of it is literally tearing this society apart.

We live in a society which is ready, and, when I say that, I want to go back to the terms of the discussion in the constitutional conventions. Why can't we have economic democracy? What does economic democracy mean? Economic democracy inevitably would mean a number of these things: the accountability of the enormous, concentrated power which exists in our society today to public, democratic institutions. The planned, rational use of resources at the public level, with democratic participation, in the same manner that that planned rational use is conceived within the framework of the corporations where the exercise of those decisions is not accountable. So it seems to me that, in our day, when our society is riven by its contradictions, unable to use its abundance, unable to use its productive capacity in a rational, humane-

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PART 4 OF 4

Prof. Sean Gervasi Unable to use its productive capacity in a rational, humane, and democratic manner, that what is on the agenda today is the democratization of economic power, the rendering accountable of the enormous economic potential and power that exists in our society, to make this a better, and decent, and democratic world. Voila.

Well dear friends, first of all, we have to have this serious debate, because the real terms of the debate are rendered invisible by the absurd rhetoric and the absurd in which we speak about ourselves and, by the mass media, whose power and determination is to keep that, the real terms of the debate, invisible. The real terms of the debate are, why is this society collapsing? Why does this economic machine not work? Who was responsible? If the people who are responsible are not going to do something about it, let them get the hell out.

Moderator I know there's got to be lots of questions, and we'll allot a certain amount of time, and we'll try to recognize everyone.

Audience You've analyzed it, and I agree, but what does one do to change?

Prof. Sean Gervasi Well, I think part of the problem is, I don't mean to be repetitious, but I think that people are clearly immobilized and confused at the moment. I think one of the reasons that people are immobilized and confused is that the proper debate is not out there. It's not possible for people to express what they know from their experience to be true, to assert its truth. The public debate rejects our experience and understanding, because the public debate is designed to contain us. To make us accept, and even to believe in the superiority of this situation.

I think people know what needs to be done, that in a sense, the quintessential problem confronting our country is the enormous concentrated power to shape, mold people's lives, to define discourse as Mark [inaudible 01:11:43] pointed out. Which is accountable to no-one; the democratization of that power means, I think, certainly radical changes in the structure of our society. But once, for which in many respects, people are ready, and which indeed are supported by most of the values that this society has lived by historically, and attests too.

It seems to me it's really quite simple. We don't have democracy in the sense in which we normally understand ourselves to have democracy, in which people often speak of us as having. We don't have that. Why do we not have it? Because of this eternal and now much more intense tension that exists from the beginning between property and democracy, between popular majority's as, the Federalists called them disdainingly, and the rights of property. This now has become an enormous incubus on American society. We have enormous concentrated power for which nobody is accountable. And this is not acceptable. Roger and me, is a reflection of a sensitivity that says, we got to talk about this, Roger. You're you're responsible for this.

So I really think, how not knowing these things, not changing the discourse of our lives and the discourse in the public arena, coming to agreements amongst one another by hard work, by hard discussion, how can we... It's true. It is at first a philosopher's...

And by the way, I don't think this can be done in the absence of action. That is to say, in a haltingly naive phase of my recent existence, I tried to convince some people in the Congress that we were headed into a really horrible situation. And they didn't want to know. They don't want to believe what is uncomfortable for them to believe.

So my decision was that, you have to go into the trenches. That you have to work on projects that are going to materialize these ideas, that you have to work against plant closings, that you have to work for measures that alleviate the social burdens that exist in a city like New York, that you have to work for things while articulating these ideas, because it's only, it seems to me, in the combination of action and debate of ideas that people will begin to understand the relevance and the necessity of a new discussion.

You can't have, in that sense I cede your point, you can have a drawing room discussion, which will prevail. Well, certainly the people of the National Endowment for Democracy believe that. They don't just sit back and spend millions of dollars on printing books, and making radio tapes, and television shows. No, they created new political institutions. They then created new political parties, financing people like Arkady Morozov, the inter-regional group in the Soviet Parliament until recently. Of course, it exists no more. The inter-regional group was the group of pseudo Democrats, pro Capitalists, speaking in many respects for the interests represented in the agglomeration of Black Market operations in the Soviet Union.

Arkady Morozov was systematically costed, financed, and trained by an organization in Washington very closely to certain agencies whose names we don't want to pronounce in the present circumstances. Morozov was a liaison man between Washington and Yeltsin. The National Endowment for Democracy gave $40,000 just for the faxes, and the printing machines, and the telephones in the Initiatives Foundation, which was the organization that the inner regional group used to put out its messages, get itself organized, make contacts, et cetera. The United States was financing that operation. Arkady Morozov is now the Chief of Police of the City of Moscow. Ho, ho, ho. Heavy stuff, heavy stuff. I mean, it's really, it's incredibly dramatic and incredible stuff. We mustn't go on in this vein, because there are questions to be answered.

Moderator Yes. Are you the second?

AudienceYes, yes. You said, according to Marxism, that Russia wasn't ready for socialism, does that mean that you think every backward country has to go through this the period of savage capitalism, before they become, so-called [crosstalk 01:17:04].

Prof. Sean Gervasi I don't believe that, no.

Audience Or is there another way of reaching that, or could they have done it on a more social way? I want one more, I think, I sort of felt that Bush liked Gorbachev, or that most of us liked Gorbachev, and were sorry to see him to death. Was I wrong in thinking that way? Was Gorbachev very foolish, was he taken for a ride in those years between '85 and '86?

Prof. Sean Gervasi These are the great mysteries. As you know, there are different theories about that. One of them is that Gorbachev was a mole. A mole. That Gorbachev was a deep cover Western Intelligence Agent. I believe that's exaggerated. I believe that's off the wall, but I do believe that there's an element here that's important to understand.

There was in the Soviet Union as a result of the very success of the industrialization of the Soviet Union, an enormous, large, alienated, sat up straighter amongst the educated population. Because the Soviet elite absorbed people at a very small rate. It didn't reach out to large numbers of people. They took it, they were educating enormous numbers of people, okay? Professional scientific workers, managers, right? And these people were mostly urban people. They were the fruit, in many respects, of industrialization.

At the same time, being urban people, they found themselves trapped in the most difficult conditions in the Soviet Union because in its industrialization, the Soviet Union really ignored a lot of prop, found itself in many respects in similar situations in the United States, where the decay of urban areas, the lack of equipment, the lack of infrastructure, the lack of adequate facilities for health or education, et cetera, became a real problem.

They didn't have the resources to industrialize to raise the standard of living in the really poor republics of the Soviet Union, and to deal with the urban problem as we call it in the United States. So these people were imagined, all educated people, earning this educated and looking upon themselves as deserving, at least, of the advantages and prerogatives of their Western counterparts. Living in the equivalent of New York city, but earning the wages of a skilled worker. They didn't like it. They felt shut out. They were angry. And it's those people where the neoliberals were recruiting, not just the American neoliberals, but their own neoliberals. There were neoliberals in the Soviet Union, there were reactionary people in the Soviet Union. The [Saslatskaya 01:20:06] operation out in Siberia, the so-called sociological think tank area.

There are people who, I don't know why, but perhaps when you become very isolated from the world and separated from reality, you conjure up the most amazing dreams in your mind. I think Mark's called it idealism. In any case, these people were very much Western idealists and they came, frankly, into Moscow and Leningrad fervent believers in the need to embrace Western institutions. Because of their frustration, because of their understanding of their own past, whether it was distorted or not, it's not for me to say, but because of the way they viewed and felt about their past, because of their own personal frustration, because of the problems, which were very real that they saw, experienced by the Soviet leadership, the Soviet economy and society.

They were alienated and that's where there was recruitment. When economic growth slowed down, it made it much worse and it spread the basin of recruitment very effectively. There is a collection of essays which I think is quite remarkable and valuable, which gives you some background about the incredible contradictions in the Soviet Union and how the Soviet Union, in fact, more than a decade and even two decades ago, was in fact being prepared for what has happened. I mean, it was ripening for some big bull shaking the tree, which is eventually what happened. That's the collection that the Monthly Review has published recently. After The Fall, something like that. After The Fall of The Soviet Union. It's a very valuable collection of essays on the Soviet Union or whatever it is after communism. Very useful stuff. Yes. [crosstalk 01:22:05].

I'm sorry. Forgive me. About Third World countries, that's a really hard question. It's a really hard question. I've worked in Third World countries, which were socialist countries and which were under attack. I worked in Mozambique in the beginning of the '80s when the South Africa and Western CIA operations were really beginning to tell when people were dying by the 10s of 1000s, because the roads had been cut and the supplies had been cut and the health stations blown up. And I think that it was very hard for them to survive that. Socialism proved very frail in Mozambique, even though Mozambique, the leaders of the revolution had been born in armed struggle really and formed by armed struggle, we're dedicated to armed struggle. But the society just couldn't withstand that kind of pressure. And in some ways I think that's true of Soviet Union.

There was a war in the shadows waged against the Soviet Union on a massive scale. And what these events prove is the Soviet Union was insufficiently strong to stand up to those pressures. And I think this is all the more true in the Third World. I don't know... But I don't want to say that I know the answer, whether they should try to make that jump or not. I think that will depend on what happens in the Western world. I don't see any reason why the jump couldn't be made if the West, Western Europe and the United States in particular, North America, saw significant transformation of the present system of power. I don't see. Then it's not a problem. But with this massive opposition coming from the West, it's very difficult to survive. Yes.

Audience I have two questions, one more specific, another more general.

Prof. Sean Gervasi These same people today, and we we're talking about within a few months within the end of the year, there being not 50,000, but between six and eight million unemployed people in Russia, 130 million people, labor force of 65, 70 million. And I saw the same thing happening in East Germany. I was very briefly in Humboldt University in 1989 or 1990. I can't remember now. And the whole situation was in upheaval and I saw many intellectuals genuinely enraged by the arrogance of the Honecker regime. And at the same time, unfortunately, completely aware of what would happen if that regime went down, taking everything really existing, "Socialism", in quotes, with it.

unfortunately, completely aware of what would happen if that regime went down, taking everything really existing, "Socialism", in quotes, with it. And my question would be, the old version of this question used to be, What about Stalin?" But this is a little different now. My problem is this: let's look at it in human terms. Okay? Just forget ideology. What has happened as a result of the materialization of the dreams of the so-called reformers and Democrats in the Soviet Union? What has happened is what has happened in Poland and worse, that the standard of living of ordinary people is going to collapse. That old people will be destitute. That children will be without healthcare. That the transportation system is collapsing. That there will be no food distribution by spring. That people will start. That there is continuous ethnic conflict.

Now, the Soviet system of prices and the raw material supplies was such, that the supply system worked in a way which led to the waste of vast quantities of raw materials and semi-finished products. I mean, vast quantities, okay? So the idea was to go in, to work at the enterprise level to create incentives, to create better accounting, a system of prices, which would reflect the real value of these raw materials, and not the fact that they could be replaced anytime you wanted, because all you have to do is put an order in, and it didn't matter what you did with them. It was focused on the enterprise, on profit incentives and loosening of the tight bonds on the enterprise really did lead to a record desinence of output.

For instance, between '86 and '88, there was a 17% increase in housing production, in the Soviet Union. There was a 30% increase in overall production. I mean, the economy accelerated in the period, '86, '88, okay? In those three years, the economy accelerated, right? But as I said, there were two stages of Perestroika. There was a stage of Perestroika where the effects were quite beneficial, where it was clear that Perestroika and Glasnost were aiming to energize, and develop, and free, and move forward with the Soviet Union. As a friend of mine said, "The only way to ensure the social development of the Soviet Union is to undertake these reforms." Okay?

But there was another stage, a second stage beginning in late '88 to obviously the end of '91, where the forces that were unleashed utilized the reform program to destroy socialism. Clearly to destroy socialism. And Mr. Gorbachev was either helpless before that, or a willing apprentice of that process; I could not pretend to pronounce which of those was the case. It's very difficult to say.

On the other hand, I really don't know how anybody in his right mind could have conceived of the notion that... And this was the quintessential statement of Perestroika by the principle Soviet leaders in the mid eighties, the way forward for the Soviet Union was to integrate the Soviet Union into the world economy. I mean, to an economist with any degree of sophistication and critical approach, that is sheer unadulterated madness. It's like saying that-

The North American Free Trade Agreement will lead to real economic development in Mexico. It's absurd. We know what those processes are. How can a much weaker, less industrialized Soviet Union hope to stand up against the economic forces arrayed against it and capable of penetrating it, once it declares its intention to integrate itself into the world economy? When I heard that, I said, "It's all over boys. These people don't know what they're doing."

And indeed, listening to Soviet economists as I did when I was still teaching in Paris and meeting with some of these people, til '89, '88.

I got the impression, two things: they had not the least factual understanding of what was going on in the West, and that their theoretical conceptions were taken out of a handbook by Voltaire, making fun of the French aristocracy.

Audience Sometimes the papers have said that they could have avoided extending themselves to death [inaudible 01:30:12] defense, a military budget instead of seeking parity with the United States, seeking sufficiency for their own purposes from the United States. You describe the history as cultivating highs and lows, hiding Democratic [inaudible 01:30:32].

Can you see these things as being the highs and lows as being merely a reaction to one another? Or is there a historical or economic basis between the fluctuations?

Prof. Sean Gervasi Are we talking about the movement of the economy or the play of political forces in this last question?

Audience I'll leave it up to you.

Prof. Sean Gervasi All right. Your question really is, how in American history is the play of political forces which change

PART 4 OF 4 ENDS [01:31:14]