Download - Burawoy, Michael 1992 'the Soviet Transition From Socialism to Capitalism-- Worker Control and Economic Bargaining in the Wood Industry' ASR, Vol. 57, No. 1 (Feb., Pp. 16--38)

7/28/2019 Burawoy, Michael 1992 'the Soviet Transition From Socialism to Capitalism-- Worker Control and Economic Bargain

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TH E SOVIET TRANSITION FROM SOCIALISM TO CAPITALISM: WORKER CONTROL AND ECONOMIC BARGAINING

IN THE WO OD INDUSTRY*

MICHA ELURAW OY PA VE LKR OTOVUr~ i~ ~e rs it y Russian Academy of Sciet~cesf California , BerkeleyAnalyses oftlze transition from state socialisnz to capitali sm @pically ocus on political im-pedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1. Based or1a c,ase srudy c?f'theSoviet ~ ' o o dndusrr-y, we argue tlzur there Hill he no economic tr.ansitionso long as enterprises rerain two hisroric features, nanzely anarchy in pr.oduction and bar-qain it~g n exrernal r.elarions. Far. jto m consrituting a re ~ ~ ol u ti on ,lze witllerirlg away of theparty srate has esaggerared rlle parhologies of'rhe old econotnic or der . Barrer has hecomenzo1.e inzpor.tant, conglonzerates ha1.e strengrhened their mon opoly and ~ w r k e r s la1.egreat-er conrr.ol of tlze shop floor. If there is a nzolbemenr o~sar.d nzar.ket economy at al l, it isto~sar.da b1.m ofmerchant capitalisnz rlzut deepens economic und er.de~> elol~ nzet~ tnd t l z ~ ~ a r t stlze rise of nzodern bourgeois capiralism.

Whereas for the first half of the twentiethcentury socialism was regarded as a realalternative to capitalism, now it appears to be nomore than a w ill-o'-the-wisp. In advanced capi-talism. the obstacles to the transition to socialismhave been multiple and diverse: capitalism hasbeen ab le to overco me the crises it generates bycontinually revolutionizing itself as its epicen tershifts from nation to nation: the state has effec-tively orchestrated eco nom ic relations and incor-porated different groups into the capitalist order.In particular, the working class, the supposedagent of the transition to socialism, has failed tobecome a revolutionary class- it has been ei-

" Direct all correspondence to Michael Burawoy,Department of Sociology, University of California,Berkeley, C A 94720. We would like to thank theman agers and workers at Polar Furniture as well as allthe other people we interviewed in connection withthis study. We are particularly grateful to the TradeUnion Federation of the Republic of the North and toDr. Tamara Kalyanova for support throughout theresearch. In addition to the ASR editor and two a non-ymous referees we thank Kathryn Hend ley, Neil Flig-stein, Erik Wright and mem bers of the S mith Disser-tation Group - Bob Freeland, Mary Kelsey, HyunOk Park, Chris Rhomberg, Brian Rich, Suava Sal-ameh, Anders S chn eide man , Rob Wrenn, and Mon aYou nis. Their comme nts becam e the basis for rewrit-ing the paper. Burawoy's research was partially sup-ported by grants from the MacA rthur Foundation andthe Social Science Research Council, administered

ther too weak or where it has been strong it hasadvanced its interests within capitalism rather thanagainst it. The forces of international capitalismhave conspired to defeat attempts to install so-cialism through econom ic strangulation or directpolitical intervention . Finally. the unattractivenessof existing forms of socialism and the lack of plau-sible socialist alternatives have made the project-ed transition utopian.In contrast, the conditions for the transitionfrom state socialism to capitalism are propitious.First, far from overcoming the crises it generat-ed, Soviet state socialism succumbed to economicstagnation. There is general agreement that theSoviet economy began to decline in the early1970s, a decline from which it never recovered.Second, the party state not only failed to effec-tively coordinate the economy, but in the SovietUnion, at least, it also failed to develop adequateauxiliary markets that would fill the "functionalgaps" left by planning. Third, the Soviet regimehad limited success in eliciting the active con-sent of subordinate groups, including the work-ers but more importantly intellectuals, who oftenheaded opposition to the party state. As pere-stroika unfolded, large fractions of the Sovietleadership abandoned their allegiance to a so-cialist future, turning their backs on the past as anemb arrassin g failure. Fourth. international polit-ical and economic forces are conspiring to pro-mote the mo st rapid transition to capitalism po s-


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17HE SOVIET TRANSITION FROM SOCIAL1SM T O CAPITALISMes, privatizing state enterprises and bringing downtariff barriers. Fifth. even if there is no stronginternal bourgeoisie. still capitalism has a mag i-cal appeal to all strata in Soviet society - thepossible delivery from an economy of shortagesand all the deprivation and degradation that thisentails. Finally. the transition is not utopian -there ar-econcrete ex amples of "successful" cap-italist societies. from Sweden to Germany. fromthe United States to Japan, from South Korea toTaiwan. In short, if ever there were favorablecircumstances for a transition from one econ om-ic system to another, they surely exist in the newCommonwealth of Independent States.At least in their rhetoric and their programs,this optimism is echoed by the teams of Soviet"economic experts" w ho have been planning thetransition to capitalism. For example, the five-hundred-day Shatalin plan, largely designed byYavlinsky and his collaborators, left little tochance - it laid out a detailed week-by-weekprogram to be implemented during each of fourphases. Suc h programs bear the marks of the oldSoviet order, not only in their devotion to plan-ning but also in their reliance on transformingthe existing order through ideological mobiliza-tion and political decree. For seventy years ide-ology and politics were directed to the most rap -id construction of socialism, now they have be-come instruments for the most rapid transitionfrom socialism to capitalism. New legislation hasfollowed new legislation: the law on individuallabor activity (19 86), the law on the state enter-prise (198 7), and the law on cooperatives (1988 ),culminating in the law on ownership (1989) thatin principle lega lized the capitalist enterprise (P o-morski 199 1). These laws permitted new formsof organization and owne rship- from coopera-tives to small enterprises, from leasing agree-ments to companies of limited liability, from jointventures to joint stock companies.While Soviet scholars and journalists as wellas politicians riveted their attention first on thelegislative enactment of economic reform andthen on the form al dissolution of the party state,there has been little regard for the effects of thesechanges on existing social relations either withinor between enterprises. Actual economic rela-tions continue to be con fused with their juridicalexpression (Lewin 1974, chap. 8; Bettleheim1976) as if banning the party marked the rem ov-

capitalism. For exam ple. economists Sachs andLipton (1990. p. 63 ) claim that the biggest obsta-cles to the effectiveness of "shock therapy" lie ingovernment responsiveness to popular dem andsfor protectionism or reflating the econom y, andin paralyzing debate over privatization. Similar-ly, political scientist Przeworski (199 1, chap . 4)has suggested that the more radical the strategyof transition the more likely it is to succeed butthat implementation may be incompatible withliberal democracy. Again. the focus is on thepolitical conditions of transition. In a less sophis-ticated and more triumphal analysis. historianMalia (19 9 1) celebrated the collapse of theM os-cow putsch (A ugust 1991) as sweeping away thepast: "For the starkest fact of the Russian Revo-lution of 1 991 is that virtually nothing remains ofthe old Leninist system. No basic Communistinstitutions have proved salvageable for a 'nor-mal' society" (p. 28). The Revolution installedliberal democracy with the mission "to put anend to the previous regim e's equ ivocations aboutmoving toward a market system and privatizingthe econom y, and to plunge ahead. while the newgovernment has the country's confidence, with'shock therapy' on the Polish model, which is infact their inspiration"@ 27).In our view, these commentaries which focuson the political conditions of the transition to amarket economy underestimate the capacity ofthe Soviet econom y to reproduce itself and resisttransformation. Nor do social surveys designedto assess social support for and resistance toeconom ic reform give an accurate account of eco-nomic reality. These surveys may be relevant inthe fluid political sphere, but they overlook theway interests are embedded in the day to dayoperation of the existing economy. Even if allactors proclaimed themselves enthusiastic devo-tees of capitalism, still, they are locked into apreexisting system of economic relations that is"indispensable and independent of their will"(Marx [I8591 1978, p. 4).In this paper, we argue (1) that the Soviet po-litical regime w as not overthrown but that it dis-integrated: (2) that the decom position of the par-ty neither eliminated all obstacles to reform norreduced the economy to comp lete chaos; and (3)that even in the unlikely event that liberal de-mocracy should establish itself. it would not havethe capacity to transform a tenacious Soviet econ-


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AMERICAN SOC IOLOGICAL REVIEWcies and pathologies of the Soviet order but inexaggerated form. Specifically, the witheringaway of the state has given workers greater con -trol of production, has intensified the monopolyof economic conglomerates and has increasedprimitive bartering among enterprises. The gapbetween ideology and reality is as wide as ever- the posturing of marketeers hides the resil-ience of the old economic order. If a transitiontoward a market eco nom y is taking place at all. itis in the direction of merchant capitalism which,as both Weber and M arx were at pains to demon-strate, is a (real) revolution aw ay from bourgeoisindustrial capitalism.IDEAL TYPES O F CAPITALISM ANDSOCIALISMW e need benchmarks to evaluate real changes inthe Soviet econom y: ideal typical models of wherethe econom y has com e from (state socialism) andwhere it might be going (c apitalism). The m od-els draw on a metaframework that defines sys-tems of production by two sets of relations: rela-tions ofproductio n through wh ich goods and ser-vices are appropriated and distributed. and rela-tions in production that describe the productionof those goods and services (Burawoy 1985).CapitalismMarx and Engels defined capitalism as the pri-tlate appropriation of production and its prod-ucts, undertaken with a view to accumulatingprofit in a context of market competition. Capi-talists respond to market competition by lower-ing the costs of labor power (wages), by intensi-fying labor, by introducing new fosms of workorganization, and above all, by technologicalinnovations. Once one capitalist innovates, allcom petitors must innovate on pain afextinction.Th e gales of creative destruction are inexorable.Capitalists d o not know from w here the next in-novation will come; they only experience it whenfellow capitalists undercut them , forcing them tofollow suit in an attempt to survive. Thus, indi-vidual capitalists find the market to be a sea ofuncontrollable forces compelling them to focustheir entrepreneurial skills on controlling the pro-cess of production.

It became apparent that the production of society at

of socialized production was the exact opposite ofanarchy. It was the increasing organization of pro-duction, upon a social basis, in every individualproductive establishment. (Engels [I880 1 1978, p.706)Th us, anarchy at the level of the relations of pr o-duction leads to planning at the level of relationsin production.From this model of competitive capitalismMarx and Engels demonstrated capitalism's in-evitable demise. On the one hand, the pursuit ofprofit would lead capitalists to transform produc-tion, homogenizing the working clas s, creating areservoir of unemployment. lowering wages, andintensifying work. Small capitalists would dis-appear and society would be polarized into twoantagonistic classes. Class struggle would inten-sify. On the other hand. capitalists would accu-mulate and accumulate. producing more and moregoods and services which fewer and fewer peo-ple wou ld be able to afford. This would result incrises of overproduction leading to the destruc-tion of capital and its further concentration andcentralization. Crises would become deeper anddeeper as class struggle intensified.If Marx and Engels were correct in predictingthe demise of competitive capitalism. they nev-ertheless failed to anticipate the stabilization of anew form of organized capitalism in which com -petition among capitalists is regulated and classstruggle is contained. H owev er, organized capi-talism is still capitalism. Regardless of changesin the character of competition, increased statesupervision of competition, and the attempts bythe largest corporations to eliminate competition ,there are still markets. and the re is still no agentof superordinate control. In short. organized cap -italism did not eliminate the anarchy of the mar -ket but reconstructed it in different ways (Flig-stein 1990). Indeed some argue that organizedcapitalism is becoming increasingly disorganizedas production becomes internationalized and atthe same time fragm ented (Lash and U n y 1987).With the transformation of capitalist relationsof production, there have been correspondingchanges in the sphere of production. WhereasMarx viewed production planning as despoticand unidirectional, the extension of social guar-antees and political rights as well as changingtechnical requirements prompted management tointroduce new forms of labor control. Edwards


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THE SOVIET TRANSITION FROM SOCIAL1SM T O CAPITALISMrelation of domination involving bargaining andcomp romise. Defining w ork tasks in minute de-tail and then insisting on their execution is bothtechnically infeasible and politically disruptive.It is better to elicit workers' cooperation throughgranting them a degree of autonomy, even thoughthat autonomy is strictly delimited by the appli-cation of force. A dvancing this literature into therealm of management, Smith (1990) has shownhow corporate executives have tried to elicit theparticipation of middle managers in streamliningtheir own managerial labor process. Whatevertheir differences, these studies all agree on twoissues: namely the importance of hierarchicalcon trol within the enterpr ise and the m ultiplicityof its form s. In short, even though capitalism hasundergone m ajor transformations in the last hun-dred years it is still capitalism w ith anarchic rela-tions of production and planned relations in pro-duction.State SocialismClassical Marxism identified the collapse of com -petitive capitalism with the rise of communism- a new order in which planning would be re-constituted within the workplace and from therewould be extended to the entire eco nom y.' "So-cial anarchy of [relations ofl production givesplace to social regulation of production upon adefinite plan, according to the needs of the com -munity and of each individual" (Engels [I88011978, p. 7 12). Social appropriation would rep laceprivate appropriation and the plan would replacethe market, while work would be organized by"associated producers, rationally regulating theirinterchange with Nature" (Marx [I8941 1967, p.820). Com munism was to be a society in whichpeople collectively would make their own histo-ry based on their control of the means of prod uc-tion. Both relations of production and relationsin production would be subject to planning.Instead of communism the Soviet Union cre-ated an economic order that we call, followingKonrBd and SzelCnyi (1979), state socialism, asystem characterized by the central appropria-tion and redistribution of goods and services.However determined central planners were to

I Thus, Engels, Kautsky, and L uxemburg saw theproletarian conquest of po wer as coinciding with thetransition to commu nism , whereas the novelty of Le-

dictate output targets to ente rprises , the relation-ship was in reality one of bargaining in whichenterprises sough t to minimize what the state ap-propriated while maximizing what it redistribut-ed. Rather than com petition for profits in a m ar-ket place, central ownership of the mean s of pro-duction led enterprises to maximize their bar-gaining power within a hierarchy. They did thisby seeking to expand the resources they had attheir com mand. Enterprises were not constrainedso much by the need to make profit, by whatKom ai (19 80,1986) calls hard budget constraints,as they were by what the state was prepared toallocate. The insatiable appetite for resourcesunder soft budget constraints created a shortageeconomy in which enterprises were continuallyscrambling for materials, technology, and labor.Th e result was a disjuncture between the logic ofallocation and the logic of production. w he rea smanagers under capitalism can never be surewhether they would be able to sell their products,under state socialism they can never be surewhether they will have the supplies necessary forproduction. Socialist managers faced continualuncertainty both in the quantity and the qualityof materials, technology and labor. In short,plan-ning at the level of the relations of productionleads to anarchy of relations in production -the very opposite of capitalism.Of course, capitalist managers also confrontuncertainties but they are typically from the de-man d side. Managers, therefore, can respond, atleast in the short term, by expan ding or contract-ing production. Moreover, capitalist managershave the advantage of controlling the labor pro-cess. In state socialism the situation is very dif-ferent. First, supply uncertainty creates much big-ger short-term problems for work organization,since it necessitates the continua l juggling of thefactors of production. Second, and even moreimportant, state socialist managers cannot con-trol the labor process in attempts to adap t to sup-ply shortages. This is because they face not onlyshortages of materials and technology but of la-bor as well. Thus, the sanctions managem ent canwield over its work force are limited. Low leve lsof unemployment, ex tensive employme nt rights,and shor tages of labor ma ke it virtually impossi-ble for management to control production-theymust cede that control to workers (Bahro 1978,pp. 207-10; Ho luben ko 1975; Ticktin n.d.; Con -


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AMERICAN SOCIOLOGICAL REVIEWWhether or not anarchy in production givesrise to chaos depends on whether workers usetheir control in a "negative" or a "positive" way .Even m ore impo rtant, however. are the objectiveconditions of shortage. In the early period of prim-

itive socialist accumulation associated with thefirst five year plans of the 1930s and the SecondWorld W ar appropriation and redistribution weremore centralized. T o establish the S oviet indus-trial economy it was necessary to create a laborforce out of a primarily peasant population, toconstruct an infrastructure that would integratean enormous country into a single economy. andto produce basic materials for a mode m industry.It was a period of extensive development whoseaccom plishment could be measured in quantita-tive terns. Although primitive accumulationcould be and indeed was achieved through com-mand, it created extrem e disproportionalities andshortages, not to speak of appalling repression.The state reacted to the economic pathologies ithad gene rated by trying to regulate w orker activ-ities through draconian legislation or socialistemulation such as Stakhanovism . Although des-potic regimes of production were created, centralplanners were never able to turn control overproduction to managers (Filtzer 1986: Andrle1988: Siegelbaum 1988).Furthermore, the rational pursuit of plan tar-gets by enterprises generated widespread irratio-nality from the standpoint of the economy as awhole. such as the concealing of productive ca-pacity, the hoarding of resources, the productionof waste, the underestimation of investment re-quirements to hook planners onto projects, andbackward integration with a view to the duplica-such as Kornai (1980),who have viewed central own-ership of production as causing a system of shortagesregardless of the specific policies pursued by the cen-ter. Others , such as Granick (19 87), have argued thatjob rights and overfull emp loym ent are the deliberatepolicies of central planners, either as part of an im-plicit contractual relationship with labor o r as a dis-tinct comm itment to socialist principles. In Granick'sview change s in central policy could effectively erodethe pow er of workers while Kom ai would see no suchpossibility. In her recent work on transfers. Hendley(forthcoming) could find n o evidence that Soviet man-agers had taken adv antage of new and favorable chang-es in the law which, in theory, gave them greatercontrol over workers. This points to the autonomouslogic of the shortage econo my. Of course, where there

tion of supply facilities (Berliner 1957, 1976:Nove 1965. 1983; Kom ai 1959; Asselain 1981;Granick 1954, 1967; Hew ett 1988; Bauer 1978;Linz 1988: Aslund 1989 ). These irrationalitiesbecame even more harmful to the economy inthe period after Stalin's death during the transi-tion from extensive to intensive development.which required more complex production pro-cesses and more stringent quality control. Ac-cordingly, the despotic order of com mand plan-ning gave way to a system of hegemonic plan-ning-an elaborate hierarchical g am e of negoti-ated targets, prices, and sanctions governing theappropriation and distribution of resources.Enterprises were given more autonomy so thatmanagers could devote themselves to garneringsupplies some of which were used to bribe work-ers to cooperate in the fulfillment of plan targets.Unlike other countries such as Hungary.' physi-cal planning remained in place and dampenedthe incentive for enterprises to overfulfil targetseither through innovation or expansion. M anag-ers required minimal cooperation from w orkersto ensure that plan targets were met, w hile in turnworkers expected m anagers to deliver adequatesupplies and protect a minimum standard of liv-ing (Lam pert 1985, particularly c hap. 5; Lampert1986). These were the terms of what V oskampand Wittke (1991, pp. 3 6 0 4 4 ) call the "plan-fulfillment pact." which however wasteful en-dow ed work organization with the necessary flex-ibility to deal with supply shortages. Thus. man-agers could confront anarchy in production byceding the shop floor to workers and could com-pensate for their lack of control over productionby seeking to regulate external relations throughbargaining.

I n Hun gary, starting with the new econom ic mech-anism of 1968, fiscal planning replaced physical plan-ning and gave enterprises more autonomy to producewhat they wanted and buy what they needed. Manag-ers, therefore, had an interest in extracting m ore fromtheir workers. But they were also in a better positionto exert control. On the one hand, shortages wereoften less severe so manag ers could m ore easily ratio-nalize work organization. On the other hand, theycould exercise more control over the labor processbecause workers could be mobilized on the basis ofeconomic incentives. This was all possible becausethe expansion of the consu mer market and the secondeconomy made it possible to buy almost anythingwith local currency. However, we should be careful


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--HE SOVIET TRANSITION FROM SOCIALISM T O CAPITALISM 2 1Relations of ProductionRelationsin Production Planning AnarchyPlanning Communism( 1 )

StateAnarchy Socialism

Figure 1 . Four Systems of Production

T~.ansitionto u Merch ant Capiralisnz?Figure 1 summarizes the distinctions we havemade between capitalism, state socialism andcommunism. In Lenin's model state socialismwas to evolve into communism. Although the"dictatorship of the proletariat" has withered awayas Lenin anticipated. the current transition is nottoward communism. In the official plans of theleaders of Russia and the other nations of theCom monw ealth. the desired transition is towarda Western style "market economy," and as be-fore the objectives of the planners are at odds withreality. From the view point of citizens their soci-ety is moving neither toward communism norcapitalism but toward a universal halzlak (cha-os). But is a new o rder taking shape despite cha-os, or even through chaos? W e suggest that if thereis such an emergen t order, it is to be found in cell4 of Figure 1 where anarchy prevails in both re-lations in and relations of production. T his is notnecessarily universal cha os, even if that is how itappears to the participants. Anarchy simply meansthe absence of any agent of superordinate control-it does not necessarily entail the absence of allcoordination.What then is this new order depicted in cell 4?What happens when the party state first with-draws from the econ omy and then disintegratesleaving enterprises with greater autonom y? W ebelieve that this withering away of the state leadsneither to communism nor to bourgeois capital-ism but to a form of merchant capitalism. Wepropose four theses:

( 1 ) Self-generated. lateral linkages between

Capitalism( 2 )

MerchantCapitalism

(2) As political bodies reconstitute themselvesas "parastatal" centers of economic power, re-gional monopolies intensify whose com mon ob -jective is the maximization of profits rather thanthe satisfaction of som e socially defined need.(3) The source of profits is based on trade.speculation, or even extortion rather than on thetransformation of production. the "rational capi-talistic organization of (formally) free labor"(We ber [I92 01 195 8, p. 21).(4) Worker con trolo f production deepens asmonopolies become stronger and supply short-ages intensify. In effect these monopolies con-trolling resources become large trading compa-nies which "put out" production to worker col-lectives located w ithin enterprises.We develop these theses through a case studyof a single enterprise-Polar Furniture Factoryin Arctic City. We believe that the systemic fea-tures of an econo my and how it changes can bestbe grasped by studying enterprises from the stand-point of what defines and determines success.Polar Furniture is such a successful enterprise.Our explanation for its success is, in part, in-formed by a com parison with an equally unsuc-cessful enterprise-- Rezina, a rubber factory inMoscow (Burawoy and Hendley forthcoming).Our field work in Arctic City took place fromthe end of March 1991 to the end of July 1991.During May and June Burawoy worked as a ma-chine operator at Polar Furniture Factory. while

Krotov condu cted interviews with the factory'smanagers.' In April and July we conducted inter-'T o convey the participatory character of Bura-woy's research he is referred to in the first person as


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views with managers in many different enter-prises and cooperatives connected w ith the woodindustry as well as with trade union officials,governm ent officials, politicians in the Republicof the North, and executives of the Northern T er-ritories Wood Association. Following the theo-retical fram ewo rk set forth above. our analysis ofPolar begins with the relations in production andfrom there "extends out" to the complex bargain-ing relations that emb ed the enterprise within theRepublic of the North 's wood industry.WORKER C ONTROL O F PRODUCTIONTh e main division of Polar Furniture lies towardthe outskirts of Arctic City, the capital of the Re-public of the North, and has about 1300 employ-ees. It specializes in the production of c ustom er-assembled wall units - set combinations ofshelves and cupboards made out of pressed wood.In addition the enterprise has three smaller sub-divisions.' Th e first subdivision, which is also theoldest, is also in Arctic city. It produces soft fur-niture for living rooms (550 employees). The oth-er two subdivisions are in different towns-onesubdivision produces bed units (170 employees)and the other kitchen furniture (170 employees).Polar is the only enterprise in the Republic of theNorth to mass produce these items. During 1990all these categories of furniture became "deficit"items and virtually unobtainable through statestores.

By all appearances, the main division of Polarhas been very successful. Its workers were amongthe highest paid in the city. They received gener -ous :uka,-i (orde rs) and could buy additional pro-visions from the factory shop.' The changingif they were under pressure from within their enter-prise, as was often the case (c .f. Burawoy and Hend-ley forthcom ing). What distinguished Polar was theself-confiden ce and cohesiveness of its top managers.The General Director was one of the grand old men ofthe Northern Republic's wood industry - he hadlittle to lose from Buraw oy's presence.Although we refer to Polar Furniture as an enter-prise, technically it is a "production association"(proi:i,odsr\tenrzoe oh"edii~enie)-an organizationalform created by the economic reforms of 1973 (Hew ett1988. pp. 245-56).

AMERICAN SOCIOLOGICAL REVIEWrooms were spacious and clean. The modernbuildings were easily accessible from the mainroad where signposts boasted the previous year'sproduction figures. A quick tour around the fac-tory with the polished trade union chairman gaveus the impression of efficiency and rationality.Th e workers were young and busy. The plan ofproduction from one sh op to the next appeared tobe well-organized. It was very noisy and work-ing conditions. particularly in the use of lacquer,were hazardous. Wh en we asked ab out this, therewas a shrug of shoulders -managers said thatworkers were free to leave, or that workers gotused to the lacquer fum es and didn't notice themafter a few years.The Polar Furniture showroom suggested aprosperous enterprise that changed its productsregularly. The enterprise even sported its ownmuseum that traced its history from the first artelof furniture ma kers beginning in 1939 to themodem enterprise of today. Gone were the trap-pings of communism - there were no photo-graphs of Lenin besides the still obligatory onein the General Director's O ffice.' Gone were theplacards celebrating the virtues of communism.There w as no party com mittee. The last postingon the Dartv notice board-who was to succeed,whom in the pyramid of power - was dated1989. The notice boards for socialist competi-tion, the youth organization, and labor disciplineand political obligations were either empty orcontained out-of-date decrees that no one hadgoods in short supply such as clothes. cars, televi-sion s, and furniture, but in the Spri ng of 1991 themain queue was for apartments. Employees who re-ceived housing in July 199 1 had been waiting 12 years,a much shorter time than the average wait of 20 yearsat other enterprises. Food was available in parcelsknown at Polar as /la bor (se t). During the two monthsI worked there I was able to buy two packages, eachof which contained 1.5 kilos of sausage and 5 eggs.On other occasions I was able to order honey andtinned meat. Because our work was "dangerous" wereceived coupon s for milk, but i t was not always avail-able. On one occasion we w ere able to buy our monthlyration of sugar ( I .5 kilos per person) at the enterprise.The city council distributed ration coupons (tulor~i)but there was no guarantee that we would ever findthe rationed food in the stores. so allocation at theenterprise was cruc ial.'Actually. I did discover another photo - a verydusty one on top of my drilling machin e. When I askedmy workmate Sergei what Lenin was doing up therehe just s hrugged his shoulders as if he had never even


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23HE SO VIET TRANSITION FROM SOCIALISM T O CAPITALISMbothered to take d ow n. Th e busiest notice boardwas titled "Information on Economic Education"- it displayed articles on market research andannounced seminars on the "ABC of the mar-ket," offered by a local consulting firm. The en-terprise sent its deputy director for economic af-fairs to a two-week business school run by A mer-ican academ ics and businessmen.Th e enterprise possessed a com puter system torecord levels of daily production. It had recentlyobtained modem German production equipmentat a cost of 12.5 million marks that was intendedto replace older machines and enable the enter-prise to develop a new line of fum iture made fromsolid wood. The chief engineer outlined ambi-tious plans for the reconstruction of the entireenterprise to accommodate the new productionproc ess. There was even talk of Polar taking overthe neighboring wood processing plant to assureitself of essential supplies for the new fumiture.Such mov es toward rationalization were not dic-tated by a state planning agency or by the Minis-try but were the initiative of a seemingly d ynamicteam of Polar's managers. The enterprise hadconsiderable autonomy to set its own prices andits own production profile. It had moved ontoarendu (lease) which meant that the enterprisewas leased from the state, supposedly a transi-tional step to full privatization. Far from beingstuck in a rigid bureaucratic hierarchy the enter-prise appeared to be an independent center ofentrepreneurial activity. From this world of ap-pearances let us step into the real world of pro-duction.The Labor. P~.oc,ess nd Un cl~ en c c,hn olog ~I (Buraw oy, see note 4) worked for two monthsin Shop 3, the heart of the factory , drilling holesin panels that would become the "uprights" and"horizontals" of the wall systems. Like everyoneelse, I was a member of a team and a brigade.There were three teams in my brigade- the drill-ing team, the team of men who ran the four linesof machines that trimmed the panels to size andtaped the edges with veneer and the team of wom-en who cleaned the panels with acetone beforesending them on to the next shop. With fortymem bers mine w as the biggest brigade in Sh op 3but there were two other small ones. In Shop 2the major surfaces of the panels were covered with

four parallel line mac hines, which took the pan-els from S hop 2, occupied alm ost half the floorspace in our shop. From the line machines ope r-ators stacked the panels into banks and pushedthem on rollers to the four electronic drills situat-ed opposite the line machines. Each drill wasitself set between rollers so that operators hadeasy access to the banks of panels. W e worked inteams of two: one person fed the panels wh ile theother removed them from the conveyor after drill-ing. We could process a bank of 100 panels inten minutes. On average we drilled between 1,000to 1,500 panels in each shift, two to three hourswork. Th e skill lay in setting up the drills so thatthe holes, up to eleven to a panel, were in exactlythe right position, the right size, and the rightdepth. An experienced operator could set up themachine in twenty minutes. Since we changedthe set up only twice or three times a shift, thiswould add only a bout another hour to the threehours of drilling.When we were not setting up or drilling wemight engage in chit chat or g o to the bathroomfor a smoke, but for the most part we dislikedbeing unoccupied. Indeed, to be wanderingaround the shop floor with nothing to do was amark of low status. So we would help out with aseries of auxiliary operations on smaller shelvesor on do ors performed on a line of smaller, anti-qua ted, foot driven drills, set up permanently fo rsingle operations. Some parts of the wall units,such as the "wing shaped" shelves which oftenwere touched up with a dom estic iron, called fordelicate atte ntion . Th e panels that came from theline mach ines needed to have their edges scrapedclean with a knife. Members of the women'steam took turns doing this arduous work.'

Uneven technology is one of the hallmarks ofsocialist production. E nterprises used to be givenmachines by the All-Union ministry or the furni-ture association to which they belonged. These"gifts" were often inappropriate to the produc-tion exigencies of the particular firm and theycould be more trouble than they were worth. Butenterprises had to accept them if they were everto receive additional machinery . The m ain en ter-prise of Polar Furniture began as an experimen-tal plant in 1978 to test specially designed S ovie tXT h e rewas a strict gender division of labor - themajor exception being our brigade leader. a woman


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mach inery. But the machinery did not live up toexpectations- it produced only ha lf the plannedou tput. In an attempt to make up the los s, the All-Union ministry gave Polar some German ma-chines in 1980. On that occasion managementwas lucky - the machines worked extremelywell. Among the electronic drills, for example,although the German machine was twice as oldas the Soviet and Bulgarian machin es, it was stillthe mos t ef fic ie nt and reliable. During the tw omonths I worked o n this machine it was down ononly t w o occasions and each time only for a fewhours.W hi l e I was working at Polar in 1991, long-awaited new machines arrived from Germany.Th ey had been chosen by the enterprise as part o fits reconstruction. Even so, problems o f unevendevelopm ent remained. Th e full potential o f thenew machinery for Shop 3 could not be realizedwithout a considerable increase in the supply o fpanels fro m Shop 2, which looked un likely. More-over, the new line o f German-made m achinerywas so advanced that it could ef fe ct iv el y do thework o f all the existing mach ines in Sho p 3. Y e tmanagement did not plan to discard the old ma-chinery becau se there was no guarantee that theycould buy spare parts for the new ma chine ry andbecause spare parts made domestically oftenfailed to meet foreign machine specifications.Even before the new machines arrived there weretw o Soviet-m ade drills in the shop that were per-manently out o f com mission and simply gather-ing dust.Regardless, unevenness in technology did notusually intesrupt the flow o f work. This w as be-cause workers, at least within a single brigade,were prepared to m ov e from job to job and m a-chine to machine to pick up the slack. Ho wev er,worker control over production did not alwaysenhance efficien cy.Th e Accl*tnulation of Scr-upTh e lay out o f machines in Shop 3 was indeedefficie nt; but the resulting distribution o f scrapwas not. Orderly banks o f panels were everywherestacked on the floor. But m any o f these bankswere d efe ct ive panels that stayed there as scrapfor wee ks or even m onths at a tim e, and inter-fered with the work flow. Production was some-times held up at the beginning o f the sh ift be-

AM ERICAN SOCIOLOGICAL REVIEWto make space on the floor for the new G ermanmachines.Th e accumulation o f scrap was a two-fold prob-le m : scrap generation and scrap remova l. Th eoff icia l rate o f scrap generation in the plan was 2percent. The nachal'nik (ch ief)' o f the shop saidthat in reality it was m ore like 10 percent. It mayhave been ev en higher, so lax was the attitude o fmanagement toward quality control. For exam-ple, there were t w o inspectors at the d rills, bothunassertive wom en with no sanctioning power.In a single shift they might c om e around once ortwice (or sometimes not at all) to see i f our holeswere in the right place and at the right depth. I fthey discovered a problem a joking discussionwould ensue between them and my workmateSergei, but the panels would of te n continuethrough the plant. In ef fe c t,workers themselveswere responsible for the quality of the product.Indeed, Sergei regularly checked the holes and i fthey were out o f alignment he would spend co n-siderable time readjusting the drills. I alwaysmarvelled at his skill and h is determ ination to geteverything just right, even though there was nopressure from above to do so. I f we producedscrap, i f we mined an entire bank o f panels, i f ourdrilling was im pe rfe ct, we were not punished oreven w arned. T he scrap simply piled up on thefloor between the machines. Sometimes it wasrecorded as waste by the quality control depart-ment but just as o ft en it was not.But why was the scrap simply le ft to accumu-late in the shop'?Managem ent. claimed there wasnow here to put it. But in reality the scrap problembecame particularly acute when managementdecided to stop selling the scrap for firewood,wanting to sell it instead as finished wood for hom euse. Management w as trying to make a second-ary business out o f scrap panels but workers werenot prepared to collect the scrap unless the y re-ceived a cut o f the profits. Indeed the workerswanted to organize the sale o f scrap themselves .At first management was reluctant but as I wasleaving at the end o f June the ntrchtrl'/iikwas cre-ating a special scrap brigade that would collectusable items and send the m on to Sho p 4 for lac-quering before selling them to stores. Becausethere were no set prices for scrap and because

'1 charge of each shop was a iltrc iitrl'iiik, the equiv-alent of a general foreman. Each shift had its own


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THE SOV IET TRANSITION FROM SOCIALISM TO CAPITALISM shelving was in such short supply, one nachal'niksuggested they could make more money fromscrap than from the completed wall unit kits.Another suggested that managem ent had an in-terest in declaring a wa ll unit defective because itcould then use it for barter. There were definitefiscal advantages to the accumulation of scrap,but the realization of profits required the cooper-ation of workers who demanded extra pay for workthat was no t strictly within their job description.Th e generation of sc rap in Shop 3 created dif-ficulties for Sho p 2 since their plan was based o na 2 percent scrap rate. At the end of every monthShop 2 was under pressure to produce consider-ably more than planned to make up for the partswasted in the shops following it in the produc-tion process, particularly Shop 3. Tensions inten-sified because w aste in Shops 3 and 4 mean t thatworkers in Shop 2 had to work longer hours tokeep up w ith the dem and for panels. O n secondshift, for example, the workers in Shop 2 oftenworked until midnight when Sho p 3 had alreadyknocked off at 11.00. The cooperation of w ork-ers within shops did not extend to relations be-tween shops.Top management was aware of the tensionscreated by its lax control over quality but didnothing. The director for quality control had g iv-en 3 0 years of service to the enterprise, and untilrecently had been the director for production.She regarded her present position as a sinecureand was pessimistic about any improvement inquality control. She blamed the Soviet systemfor the lack of interest in quality, the poor paygiven to inspectors, and managerial indulgencetoward waste makers. She added that high ratesof scrap were also a consequ ence of "declining"discipline of workers and the weakness of thenachal'nik. She herself took no responsibility.Of course, for managers in a shortage economywaste is not as problematic as it is for managersin a surplus economy. Still, the abdication ofmanagerial control over production is part of abroader pattern, epitomized by worker regula-tion of time.Flex T ime , Soviet StyleAt Polar there was no system of clocking in orout. I began on day shift and quickly learned thatwork ended before 3:00 p.m. rather than at the

shop floor, workers might straggle in later with-out any punishment or even comment. Th ere wasa half-hour break at 9:45 a.m. The lunch hourfrom 12:00 to 1 00p.m. often began at 11:45 a.m.and if the card game was exciting it might go onuntil 1:15 p.m. That made the actual work dayless than 6.5 hours. Afternoon shift alternatedweekly with day shift and began at 3:30 p.m. Itended at 11:00 p.m. rather than the official mid-night, which together with the dinner hour andbreak made the working day a maximum of sixhours.There were also short shifts. Before holidaysworkers would leave an hour early and Fridayswere often cut short by half an hour - evenlonger if it was second shift and work was slowbecause it was the beginning of the month. Forexample, on the first Friday of June workers hoseddown their machines three hours early at 7:45p.m. Sergei turned to me and said we'd better dothe same or we'll be the only ones left. Whenev-er there was n o work a t our individual machinewe felt entitled to leave early. This was one sideof the picture. On the other side at the end of themonth, we might work intensely, spending a nightor two or a Saturday in the factory without over-time pay. Still, the time we "made up" am ountedto only a fraction of the time we "cut out" the restof the month.The control workers exercised over their owntime became clear when the nachal'nik in Shop4 attempted to fire a worker for absenteeism.According to the law absence without permis-sion for more than three hours was punishable bydismissal. But management m ust first secure thesupport of the trade union committee. Th e work-er in question had been absent without permis-sion for two days. At the trade union meeting,which Krotov and I attended, he claimed in hisdefence that he couldn't find his master to in-form her, that his brigade knew he was absent sowhy did he have to tell anyone else, that he hadworked through breaks and dinner periods onprevious days to earn the time off, and finally heasked rhetorically what all the fuss was aboutsince his brigade always mad e the plan. In otherwords, what he had done was all quite normal.Indeed, when I asked my fellow workers how torequest time off they told me to g o to the brigadeleader rather than Sve ta, my master.In this case the nachal'nik wanted to dismiss


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According to her he had a bad record of disci-pline and was abusive to master- and nachal'nik.In testimony to the influence of the brigade onthe shop floor, she defended her action by sayingthat other brigade members wanted to evict himtoo. The trade union com mittee, made u p of rep-resentatives from the shops, were inclined to sup-port the nachal'nik and approve the dismissal.One representative, however, argued that thenachal'nik should also be disciplined for allow-ing bad time keeping in her shop. The trade unioncommittee chair agreed and took the view thatboth worker and supervisors should be disci-plined. Thus, the nachal'nik was first criticizedfor not exercising discipline on the shop floorand then disciplined for trying to enforce a dis-missal. This paradoxical state of affairs was anattempt by both management and trade union toundermine the power of shop floor supervisorsin favor of wor ker control.Ceding S ho p Floor Contr.01 to Briga desBrigade control of the shop floor was strength-ened by the payment system." The wage fundfor each brigade was based o n the number of partsits members produce. T he fund w as divided upby leading members of the brigade according totheir assessment of eac h mem ber's "coefficientof labor participation." The premium for planfulfillment was an additional 75 percent of thisbasic pay. Shop floor management had no au-thority to interfere with this distribution, althoughmanagement might be consulted. This paymentsystem strengthened the autonomy of the brigadesthose who are dismissed are seen by managem ent as'troublemakers' in a broad sense - either becausethey have flagrantly neglected their work duties andfailed to meet their side of the bargain or else becau sethey have fallen out with their superiors and have thusbecome an em barrassment" (1986, p. 260).Brigades are not new to the Soviet shop floor.However. in 1979 a resolution was passed to encour-age the formation of brigades with greater autonomyto organize. distribute. and remunerate work. In the1980s the system spread to most industries so that bythe end of the decade over two thirds of workers wereenrolled in brigades (Lane 1987, pp . 182-2 13; Yanow-itch 1991, pp. 2G 2 4 ; Slider 1987; Connor 1991, pp.179-84). A t Polar they introduced the brigade systemin 1988. Rather than careful observation of the opera-tion of the brigade sys tem in different settings. Soviet

A M E R I C A N S O C I O L O G I C A L R E V I E Wvis-a-vis the master and nachal'nik who were al-ready cast adrift without support from ente rpriseadministration. But it also fostered the parochialinterests of each brigade and thus reinforced un-productive competition and conflict on the shopfloor.For example, poor coordination between S hops2 and 3 at Polar led to a "war" betwe en shifts inS h o p 3. Until the introduction of a new wall unitin 1990 work was coordinated across shops sothat the first shift of S ho p 3 processed the panelsproduced by the first shift of Shop 2. When thenew wall unit was introduced there were fewerparts but their piece rate prices varied consider-ably. Rather than pay the tw o shifts very differentrates, the nachal'nik and mastera of Shop 3 de-cided to amalgamate the work of both shifts, sothat each shift processed all the type s of panels.However. Shop 2 continued to divide the produc-tion of panels between th e two shifts. This me antthat one of the shifts in Sh op 3 had to w ait for thedelivery of s om e of the parts at the beginning ofeac h shift makin g it more difficult for that shift tomake the plan each month. This was one sourceof conflict between the shifts in Sh op 3.The conflict intensified when the nachal'nikdecided to redistribute the work completed bythe two shifts so that both mad e the plan- notjust one. M y shift appeared to work harder andmore efficiently than the other shift. W e alwaysmade the monthly plan. When the other shiftfailed to make the plan in May the nachnl'nikgave them credit fo r the excess production f romour shift. This led to a walkout by the womenworkers w ho formed a tightly organized team inmy brigade. Wh y should they work for the othershift 's prem ium? They were furious.

Hostilities between shops and shifts were pub-licly displayed when a t the beginning of July thedeputy director for production posted a publicattack on the work patterns of Shop 3. The at-tack, initiated by the supervisors of S hop s 2 and4, accused the supervisors of Shop 3 of allowingbad labor discipline, bad time keeping, a nd theaccumulation of scraD. The nac*hal'nikand themaster of my shift were given a disciplinary wam-ing while the master of the other shift was threat-ened with demotion, which in fact later becamereality. Rather than try to coordinate relationsbetween shops and regulate conflict betweenshifts, the administration abstained from inter-vention, allowing each shop and shift to carry on


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27HE SOVIET TRANSITION FROM SOCIALISM T O CAPITALISMistration publicly hum iliated them in front of theirown work force. This lack of adm inistrative sup-port for the nachal'nik and mastera was also re-flected in the low pay they received- less thansom e of the workers they supervised. Already inmy first month I earned almost as much a s Sveta.Under these circumstances it was naturally veryhard to find workers willing to fill these manage-rial positions. In earlier times the party wouldcall on its members to b ecome shop floor super-visors but w ith the party defunct recruitment fromthe shop floor was alm ost impossible. Either su-pervisors cam e from outside the factory, as wasthe case for the nachal'nik of Shop 3 (who camefrom the construction indu stry) and Sveta (whohad com pleted five years in an institute in Mos-COW),or they were elected from within the bri-gade (like the master on the other shift). In thecase of recruitm ent from outside, they didn't knowthe details of the production process. When an-other of my workmates, Sasha, who had neverrun the drills, had to take o ver from Sergei, theusual operator, he never dreamt of asking forhelp from the master or nachal'nik. Mastera, whowere elected from the brigade ranks, pooled theirincome with the other members of the brigadewhich then collectively decided how much eachreceived. It was not surprising that the master onthe other shift was demoted since he had no sanc-tions with w hich to exercise control over the bri-gade that elected him. Only with difficulty couldnachal'niki an d mastera elicit respect from w ork-ers. At best they could try to coordinate relationswithin and defend the interests of their respec-tive shift or shop.I2Management deliberately undermined the po-sitions of master an d nachal'nik. They w ere sac-rificial lamb s, punished for not maintaining dis-cipline on the shop floor but at the same timedenied the supp ort and resources to maintain thatdiscipline. Rather than agents of higher manage-ment in the exercise of control ovCr the shopfloor, supervisors were forced to cede power to

'* In heir study of Rezina, a Moscow rubber plant,Burawoy and Hendley (forthcom ing) describe a dif-ferent situation in which nachal'niki and masfera triedto take advantage of their autonomy to establish co-operatives in their departments. They were able tooffer extra pay to selected workers, three times theusual rate. Th e nachal'niki could use competition forsuch lucrative after-hours work t o discipline workers

the brigades in the hope that peace would prevailwhile management got on with the task of pro-viding the materials of production. As one chiefengineer said, "We are frightened of workers. Atany time they can stop work and we can do noth-ing." To give more support to nachal'niki andmastera would be to risk rebellion from the shopfloor.Governing Through the PlanTo the extent that enterprise management gov-erned at all it was through the plan. Even thoughmanagement didn't interfere in the process ofproduction on the shop floor, it was neverthelessinterested in the fulfillment of its plan. Brigadeshad no interest in exceeding the plan because anyexcess might be given to other brigades o r mightlead to a tighter plan the next month. In this con-text flexible working hours and autonomous workorganization made a lot of sense- they wereeffective adaptations to a shortage economy. Flex-ibility and autonomy on the shop floor are neces-sary when supplies are uncertain, the performanceof m achinery is erratic, and, most im portant inthis case, when the technology is uneven. In ad-dition, shorter working hours concealed excesslabor capacity of the brigade which was easilymobilized when ex tra effort and longer hours w ereneeded at the end of the month.Since workers were fired only for either grossviolations of the disciplinary code o r for makingtrouble for their bosses (Lampert 1985)and sinceworkers controlled their own pay, mastera weremo re or less bereft of disciplinary pow er. If bri-gades worked an extra shift or two at the end ofthe month it was usually a decision made by thebrigade itself in the light of plan targets. Masteraand even nachal'niki were powerless if the bri-gade decided otherwise. In Sh op 4, for example,toward the end of one month workers threatenedto stop work until they were given an extra bo-nus. Shop floor management opposed the de-mand and so workers appealed directly to thehighest levels of m anagement which granted themtheir bonus. In exchange fo r plan fulfillment man-agem ent ceded control of production to workers,even if this was at the expense of the authority ofmastera and nachal'niki.But in one area shop floor supervisors did exer-cise influence. Each month production targets


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AMERICAN SOCIOLOGICAL REVIEWand how we were doing in relation to the plan.Th e targets were sub ject to renegotiatiofl through-out the month, which could cause fluctuatingnorms fo r daily outpu t and contradictory requestsfor parts, particularly at the end of the month. Atthe end of June 199 1,for example, there was somehard bargaining between the nachal'nik of Shop4 and the production manager. The original planhad called for 3,000 wall units. In the middle ofthe month it was clear we were not going to makethe plan, so it was ag reed to adjust the plan dow n-ward to 2,700. At the end of the month even thisadjusted figure was unrealistic. The productionman ager relented and gave us the figure of 2,500.In fact the month was particularly bad and weonly made 2,036 units. But we still received o urpremium for making the plan! It was a rare eventthat workers didn't receive the premium.How was it possible to not make the plan andstill receive the premium? There were actuallytwo plans: a financial plan in rubles se t in negoti-ation with external planners and a productionplan set by the enterprise in numbers of wallunits and handed down to the shop. Because offluctuating prices the number of wall units thatcorresponded to the financial plan varied but itwas usually about 1700. The premium was paidwhen we ma de this number although the produc-tion plan target for any given month might bemuch higher- from 2 ,500 to 3,000. In bargain-ing with outside bodies managem ent w orked withthe financial plan while it dem anded that the shopfloor meet the production plan.There is an analogue here with the piece rategame of "making out" under capitalism-a gameplayed by dependent individuals under relativelystable conditions (Burawoy 1979). "Making theplan," on the other han d, was played by relative-ly autonom ous worker collectives operating un-der unstable conditions. The autonomy of theshop floor was secured on the one side by delib-erately undermining master0 and ndchal'niki andon the other side by a pay ment system regulatedby the brigade and based on plan fulfillment. Atthe same time, the weakness of shop floor super-visors, the abstention of management, and thebrigade system of payment led to conflicts be-tween shifts and shops. Management was con-tent with this "plan-fulfillment pact" (Voskampand W ittke 19 91, pp. 360-64 ) as long as mini-mal plan targets were met and workers' opposi-

lead to an enterprise as successful as Polar Furni-ture. The sec ret of the capitalist enterpris e lies inmanagerial control over production, a controlentirely absent a t Polar. In contrast to the capital-ist ente rprise , the secret of the successful Sovietenterprise lies in its bargaining relations with ex -ternal organizations. "The successful 'entrepre-neu r' in this [Soviet] system is not a person w hodevelops new products and new technologies, butone w ho successfully develop s a workable rela-tionship with the governme nt and party authori-ties supervising his enterprises" (Hewett 1988, p.199). Here, Polar w as clearly successful.BARGAINING W ITH EXTERNALORGANIZATIONSIn a shortage econom y the most important con-straints on an enterprise are from the supply side-material resources, human resources, and in-vestment resources. In the Soviet Union the or-ganization of supply operated at three levels. Atthe first level were All-Union ministerial orga ns,at the second level were government and partyorgans of the Republic of the North, and at a thirdlevel were direct contractual relations betweenenterprises, based on barter. Under the old sys-tem, that is to say until 1987 when the Law onthe State Enterprise introduced "state orders" asa substitute for rigid plan targets (Osborn 1991;Kushnirsky 1991; Pomorski 1991), All-Unionministries were most important in guaranteeingsupplies. Territorial organs played a similar rolebut were subordinate to central ministries andbartering, where it existed, was regulated by theparty. Tod ay in the wood industry the All-Unionministry has become a parastatal "concern" thatis a business a ssociation of its own and has cededcontrol of most enterprises to territorial organs,particularly to the regional wood industry con-glomerate, the Northern Temtories' Wood As-sociation (N TW A) , but also to the R epublic'sCouncil of Ministers. At the sam e time enterpris-es barter on their own behalf or through coopera-tives to obtain products they cannot get throughthe territorial organs.

Factnr.s Cnnrr.ihuting m Success: Supply,Bur.ter., Prices, ancl InfluenceThe basic material for the production of wall units,


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TH E SOVIET TRANSITION FRO M SOCIAL ISM TO CAPITALISMriver to wood processing plants. Polar Furnitureused pressed wood obtained from two factories-the better quality wood cam e from an auxilia-ry plant of the local paper mill. Textile paper w asalso relatively easily obtained, either from St.Petersburg or imported. According to the Direc-tor for Supplies the most serious problems wereposed by shortages of the high quality plywoodveneer that came from outside the Republic ofthe North, of imported lacquer and of mirrors thatcame from Baku. For Polar, then, the first condi-tions of success were met-major raw materi-als were readily accessible and its supply profilewas relatively simple. This already put Polar Fur-niture at an adva ntage relative to other enterpris-es such as Rezina.13A second factor that favored Polar Furniture isthe "barterability" of its product. D uring the yearprevious to our field work, wall units had com-pletely disappeared from the shops and so theywere in particularly high demand. As an essen-tial part of every apartment, they could be usedas hard currency when things were needed, be itfood provisions fo r workers, places in kindergar-ten, holiday homes for employees, or m irrors fromBaku. Both the finished wall units and stocks of

pressed wood were bartered for things urgentlyrequired. It appeared that all Polar's major de-partment heads were involved in bartering wallunits to get what they nee ded, although the entireprocess was regulated by the General Director.Responding to the pressures of a shortage econo-my the General Director himself took every op -portunity to demand that in return for fulfillingstate orders the government guarantee not onlyPolar's supplies but also that 20 percent of itsproduct be available for barter.Th e third factor favoring Polar was the pricingof its product. Polar was not de pendent on fixedstate prices but negotiated "contractual" pricesbased on a system of cost plus profit. When m an-agers wanted to increase the price of a particularwall-unit or introduce a new one they submittedan account of the new costs to the governm ent ofthe republic. It was generally approved withoutquestions and by the middle of 1991 Polar couldincrease the wages and prem iums of its workers" Our theory of success, in part, derives from thestudy of this Moscow rubber enterprise which was inperpetual economic crisis. Rezina's production wasdependent on a vast array of chemical supplies, its

by an equivalent amount. Other enterprises, suchas the logging enterprises, faced regulated stateprices for their product and they had much lessroom to maneuver. Increasing product prices hadimplications for plan fulfillment since the plan,and therefore the amount Polar had to give up tothe state, was based on rubles rather than thevolume of production. Increasing prices whilekeeping the volume of output fixed enabled Po-lar Furniture to increase the amount of furnitureit could barter since fewer units would be com-mitted to the state.Th e fourth factor that favored Polar Furniturewas its influential position within the regionalwoodconsortium, the NorthernT emtories' WoodAssociation (NTW A). M ost enterprises connect-ed to the wood industry belonged to NT WA , fromthose that cut and processed wood to those thatmade furniture. NTWA was like a large tradingcorporation, buying products from its memberenterprises at one price while selling them at ahighe r one. Its control over the sale of wood prod-ucts depended upon its control over supplies need-ed by m ember enterprises. Until 1989 Polar Fur-niture was part of a huge furniture consortiumwhose center was in St. Petersburg. When it cameto obtaining supplies and particularly new invest-ment Polar was always last in line. Based on itsmonopoly of the mass production of furniture inthe Republic of the North, Polar's situationchang ed dramatically after it joined N TW A. Theassociation helped Pola r obtain supplies not onlyfrom within the Republic of the North but alsofromoutside. For example, when a Moscow-basedwood consortium failed to supply Polar with highquality plywood , Polar managem ent went imme-diately to NTWA to request that it cut off thatconsortium's considerable supply of wood fromthe Republic of North. NTWA also provided itsme mber enterprises with goods that could be usedfor barter. Polar, for ex ample, bartered unproc-essed wood for needed supplies-wood it ob-tained through NT WA . Finally, NTW A w as ableto accumulate foreign exchange from the exportof wood and with this bought Germ an machineryfor Polar to produce solid wood furniture. Con-trolling all foreign sales, NTWA hoped to reapthe dividends from this machinery w hen (and if )Polar exported this furniture.Corporate Strategy


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sue a mo re ambitious strategy with respect to itsthree smaller subdivisions- soft furniture, bedsets and kitchen cu~boards. efore 1987 thesethree subdivisions were administered by the mainplant which negotiated with the state on their be-half. In 1987 the subdivisions went on khon.as-che f (self-financing) which gave them their ow nbank accounts and more autonomy to developtheir own contacts with both suppliers and buy-ers. The main division continued to obtain thebasic supplies required by all subd ivisions, suchas pressed wood , but the subdivisions had to findthe supplies specific to their production profile.In 1990 Polar Furniture becam e an arenda(lease) enterprise, which meant that its propertywas leased from the state. But it also meant thatthe subdivisions would be leased from the maindivision. Arenda itself gave rise to few changessince the advantages that it once offered in termsof taxation and wage funds had been eliminated.However, it did become the pretext for puttingrelations between the main ~ l a n tnd its subdivi-sions on a more economic footing. The maindivision insisted that the subdivisions pay fo r ser-vices provided by the center. Usually aretldaagreements w ould be welco med by subdivisionsof large enterprises since they offered the subdi-vision more autonomy. But in this case arendustrengthened the position of the main plant w hichcould impo se more stringent conditions for con-tinued affiliation. The subdivisions had to com-ply because they depended on the sponsorship ofa major enterprise and because NTWA was notwilling to deal with them as independent firms.The soft furniture subdivision in Arctic Citywas the exception that proved the rule. The adop-tion of kho:raschet (self-financing) in 1987 co-incided with the election of a new subdivisiondirector. The successful candid ate was sponsoredby the party. He had been the trade union chair atthe main ~ l a n t , ften at odds with the GeneralDirector who was not unhappy to see him leave.Th e subdivision grew under the new director buthe continued to be a controversial figure fromthe st an d ~ oi n t f both his subordinates and theman agem ent at the main plant. After Polar joinedNTWA, top management at the main plant be-gan to develop plans to modernize the soft furni-ture subdivision, the oldest subdivision in theenterprise. But the subdivision's director wouldn'tgo along with the plans - he was opposed to

AMERICAN SOCIOLOGICAL REVIEWThe events leading up to the absorption illus-trate the pressures enterprises faced in the uncer-tain Soviet economic and political enviro nm entsof 199 1. Unlike the production of wall units, softfurniture production was dependent on supplies

from outside the Republic of the North - steelsprings were brought from Cherepovets, clothfrom Cheb oksari, foam rubber from D zerzhinsk,and glue and latex from abroad. For these sup-plies the subdivision had previously relied onsupport from the A ll-Union M inistry, but as thisMinistry began to dissolve supplies were moredifficult to obtain. Moreover, the state was alsotrying to impose limits on the amount of fumi-ture that could be bartered. In this bleak situa-tion, the chaotic econom ic conditions during thewinter of 1991 precipitated a rapid decline ofproduction. There were a numb er of w ork stop-pages du e to shortages of materials.Employees at the soft furniture subdivisionbegan to criticize their managers for not dealingwith the crisis. The y were spurred on by ma nag-ers from the main plant who told them that iftheir subdivision became a department of the mainplant working conditions, pay, and food provi-sions would improve. For workers at the softfurniture division this was an attractive prospectthat had the added advantage of removing theirunpopular director. In March 199 1 employeesvoted overwhelmingly to become a departmentof the main plant. Soo n afterward d isillusion setin when workers began to hear rumors of lay-offs that would result from proposed reorganiza-tion. In being relegated to the status of a depart-ment of the main enterprise employees had lostmuch of their independence.In terms of our four conditions for economicsuccess, the situation at the soft furniture subd i-vision was mixed. On the one hand it produceditems that had good barter value and w hose pricewas not state-regulated. On the other hand, itssupply situation was precarious because it de-pended on materials from outside the Republicof the North in a situation where the All-UnionMinistry could be of less help. The subdivisionwas indeed dependent on the main plant whichwas interested in maintaining its monopoly ofboth hard and soft furniture production.The situation at the bed set subdivision wasdifferent. Here the move to kho;rasc.het (1987)became the occasion for managers to reduce the


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THE SOVIET TRANSITION FROM SOCIALISM TO CAPITALISM 3 1expand and become m ore autonomo us from headoffices. Being further from the head plant withlooser connections and having potential accessto large conglomerates in the local gas and oilindustries managers could take a more indepen-dent route. But there were limits to that indepen-dence because NTW A and Polar's m ain divisionstill controlled access to the supplies of wood.When the main plant instructed the subdivisionto stop producing wall units and concentrate onbed sets they had no alternative but to comply.A similar situation existed at the third subdi-vision, seven hundred k ilometers north of A rcticCity. In 1991 this subdivision switched from theproducing wardrobes to producing kitchen cup-boards-a more lucrative venture, not only be-cause no kitchen furniture was produced in theRepublic of the N orth, but also because the pric-es of wardrobes were firmly fixed by the statewhereas prices for kitchen cupboard s were "con-tractual" and thus followed a cost plus profit for-mula. When we visited this subdivision in July1991, the director was energetically involved ina major reconstruction of its social infrastruc-ture (apartments, hostels, houses) and of the plantitself. The subdivision had managed to establisha direct relation w ith NTW A which financed theconversion to kitchen cupboards and the impor-tation of special plywood and plastic. However,rampant price inflation, particularly in buildingmaterials, had drained away profits and as a re-sult wages had suffered, workers had left, andthe trade union was fighting the director. In thewinter of 1991 when shortages were at theirheight, top management at Polar's main plant inArctic City had appropriated for itself pressedwood destined for this subdivision. Accordingto the irate director the subdivision lost twentydays of production due to the shortage of mate-rials. As ever, lack of control ove r supp lies lim-ited the independence of the subdivision.Thus, the move to arenda became the occa-sion for the Polar main division to adopt a dualstrategy toward its subdivisions. On the one hand ,top management at Polar's main plant used thesupposed "autonomy" of the subdivisions as apretext to reduce its obligations and put relationsto subdivisions on a more econom ic footing. Onthe other hand , it used its control o ver supplies torein in, and if necessary ab sorb, subdivisions that

lationship between the enterprise and the consor-tium. NTWA .Rising Power of Parastatal ConglomeratesAs the central Soviet state became paralyzed bypolitical movements for regional autonomy andas it withdrew f rom d irect regulation of the econ-om y, economic power was decentralized to largemonopolistic concerns that controlled local ac-cess to resources. NT WA was one such monop-oly concern or "parastatal" organization that con-trolled the wood industry from the logging vil-lages to the logging enterprises to the wood pro-cessing plants. In 1988 Polar Furniture and Pitir-im Plywood Company joined NT WA and in 1991the huge paper plant in Arctic City applied formem bership (see Figure 2).It was no easy task for NTWA to manage allthese links in the chain of wood manufacture.Most important were the logging enterprises thatactually supplied the wood. In 1991 these log-ging enterprises faced a difficult situation- theNorthern Republic's Forestry Ministry controlledthe amount of wood that could be cut and work-ers were leaving due to low pay. These loggingenterprises, therefore, tried to circumvent NTW Aby entering into their own agreements directlywith coop eratives , joint ventures, a nd othe r or-ganizations that paid higher p rices for their wood.They were supposed to supply NTW A with about70 percent of their wood a t state-regulated pricesbut in fact they didn't fulfil their contract. Fig-ures we were given showed the supply of woodto NTWA to be falling every year: from 15.5million cubic meters in 19 89 to an anticipated 10million cubic meters in 1992. Th e logging enter-prises claimed that since NTW A did no t fulfil itspromises to provide m achine ry, spare parts, foodand so on, they couldn't fulfil their side of thecontractual agreement. On the other hand, NTW Astill commanded econom ic resources and politi-cal power sufficient to ensure the subordinationof the logging enterprises. By cutting off resourcesNTWA could make life very difficult for enter-prises seeking to erode its monopolistic controlof wood.While the logging enterprises were probablytoo small to stand up to NT WA , larger enterp ris-es might have been able to do so . One enterprise,the Pitirim Plywood Com pany, had a large appe-


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32 AMERICAN SOCIOLOGICAL REVIEWAll-Russian Wood "Concern"

(Ex-All-Union Ministry)

I taper Plant I-z;ii{liyi$5;- Northern Republic Ministries? orthernLine of formalauthority- - - ProposedmovesL o g g i n g V i l l a g e s 1Figure 2. Chain of Wood M anufacture (July 1991)

City. It had been attached to the great paper plantin Arctic City but then became a member ofNTWA in 1988. Pitirim management soon be-cam e disillusioned with NTW A because NT WAhad reneged on its promise to help set up a fum i-ture factory at Pitirim. Ind eed, compared to PolarFurniture, Pitirim had received little support inthe way of new m achinery. NTWA had also failedto organize the delivery of the right quality wood.In 1990 MC I, a powerful M oscow based consor-tium of the machine construction industry, be-cam e interested in having Pitirim Plywood as amember enterprise. MCI made some attractiveproposals to Pitirim, including an offer of newSoviet-made m achinery, lower tax rates, and high-er retums from wood exports. The managers ofPitirim organized a meeting in November 1990at which the employees voted to leave NTWAand join M CI. NTW A immediately threatened tocut off Pitirim's wood supplies. Undaunted, Pitir-im Plywood sent the resolution to the NorthernRepublic's Council of Ministers which deniedthe enterprise permission to leave NTWA. At thetime of our research, MC I was trying to overturnthe decision at the level of the All-Union C ouncilof Ministers. Although it was uncertain that moreresources would flow to Pitirim Plywood under

The example of Pitirim Plywood raises thequestion of the distribution of resources withinNTW A. An executive board, which included thedirectors of all the major member enterprises,controlled NT WA 's bank and much needed for-eign exchange. Which of NTWA's enterprisesreceived resources? It is instructive to comparethe fortunes of Polar Furniture and the neighbor-ing wood processing plant, Northern Wood -one of the oldest enterprises in A rctic City. North-em W ood exported its wood and thus brought inforeign exchange for NTWA . Foreign exchangewas redistributed within NT WA so that, for ex-ample, Northern's neighbor Polar Furniture(which exported nothing) could receive new Ge r-man-m ade machines. Occupying adjacent areasin the city, the contrasts between the two enter-rises were evident. Th e one was mod em, com -pact, and well organized while the other usedunevenly developed technology scattered over ahuge complex. In one wages were high, provi-sions were relativelv lavish, and workers wereyoung whereas in the other wages were low,workers w ere older and in the previous year therehad been a strike over poor conditions of w ork.How was it that Polar Furniture did so muchbetter than Northern W ood in extracting resourc-


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33H E SOV IET TRANSITION FROM SOCIAL1 SM TO CAPITALISMSecond, the General Director of Polar Furniturehad a long history of managing enterprises inNorthern Republic's wood industry. He had es-tablished ties of patronage and an impressivemanagerial team that NTWA trusted. The Gen-eral Director of Northern Wood, on the otherhand, came from the Re g~ on al arty Committee,had much less experience in the wood industry,and on top of that faced a divided mana geme ntteam. Third, NTW A regarded Polar Furniture asa better investment than Northern W ood simplybecause exporting furniture would be more l u -crative than exporting wood. The m anagerial teamat Polar had managed to convince NTWA thatthey wou ld be able to comp ete in the internation-al furniture market. Fourth, furniture was moreprofitable than wood domestically because itsprices were unregulated. Moreover, NorthernWood faced competition from the logging enter-prises that supplied it with wood. These enter-prises had begun processing wood themselveswith saw mills they had managed to buy. It wasnot only more lucrative for the logging enterpris-es but it was also more efficient to process woodwhere it was cut. Th us, in supporting Polar ratherthan Northern Wood, NTW A behaved like a com-mercial bank investing its money where the re-turns were likely to be greatest.Nevertheless NTW A was also a large tradingorganization that affected every enterprise con-nected to the wood industry. Take the local trac-tor equipment factory, Northern Star, which w asnot a mem ber of NTW A. With 2,000 workers itwas one of the biggest fac tories in Arctic City . Itproduced special equipment used in the loggingvillages for cutting and hauling logs. The e quip-ment was attached to tractors imported from an-other territory. Northern Star monopolized theRepub lic's production of this equipment, whichit sold directly to the logging en terprises at "con-tractual prices." In 1991 the central Ministry ofthe Russian Federation w as still trying to dictatethe distribution of the equipment but it could nolonger guarantee supplies. This meant that North-ern Star had to barter its equipment for wood,wood that was then used to buy new m achinery,obtain steel supplies, and so on. At the sametime, the state ordered fewer and fewer tractorsinstalled with the equipment (the number pro-duced a year dropped from I100 to 710) as thelogging enterprises themselves becam e both more

waiting list for apartments was 17 to 22 years,twice as long as at Polar Furniture. Northern S tarhad begun producing trailers for cars and its man-agers were thinking about manufacturing sawmills. But no one knew where the necessary cap-ital investment would come from to reconstructan old and disorganized plant. Without a wealthysponsor the situation at the plant would only de-teriorate. NTWA was an obvious candidate-but why would this already overstretched con-glomerate find Northern Star an attractive invest-ment?The most surprising testimony to NTW A's ris-ing power was the desire of Arctic City's hugepaper plant to become a mem ber. The paper planthad alwa ys prided itself in its independence f romNTWA. It had been established directly by theAll-Union ministry to produce quality paper forbooks and journals throughout the Soviet Union.It used ex ~ e n si v e inish and Austrian technolo-gy. In 1991, reflecting its own weaker position,the central Ministry cut its orders for paper by 5 0percent. Tak ing advantage of this turn of events ,NTW A threatened to reduce the paper mill's sup-ply of wood by a corresponding amount. SinceNTWA had a virtual monopoly over the distri-bution of wood , the paper mill found itself underconsiderable pressure to join N TW A and surren-der its independence. For NTWA the accessionwould create many headach es, particularly withrespect to the supply of wood and maintenanceand replacement of foreign machinery, but NT-WA's bartering power would be considerablyenhance d. Again, the withdrawal of sup port fromcentral state organs led even the largest enter-prises to seek affiliation with parastatal cong lom-erates who thereby became even more pow erful.The co llapse of the party state, rather than cre at-ing markets and comp etition, strengthens hierar-chies and monopolies.FROM STA TE SOCIALISM TOMERCHA NT CAPITALISMDo all the proclamations and all the plans for atransition to a market economy mean that theSoviet system is actually moving toward capital-ism? To answe r this question requires going be-yond political decrees or ideological mobiliza-tion to examine real changes in economic rela-tions. The dynamics of capitalism rest on the con-


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AMERICAN SOCIOLOGICAL REVIEWtransformation of production. On the other han d,in state socialism, supply shortages and w orkercontrol make managerial control of productionimpossible - so management concentrates onbargaining with the state. The successful enter-prise is one that succeeds in such bargaining andis thereby able to forge a stable comprom ise withits workers. T o what extent has this changed?Amplifying the PastOur case study suggests that with the witheringaway of the party state the Soviet economy, farfrom collapsing or transforming itself, has as-sum ed an exaggerated version of its former self.I4Th e dislocation between the shop floor and ex-ternal bargaining remains. What has changed isthe form of the external bargaining. Whe reas pre-viously the enterprise bargained through hierar-chical channels with regional ministries, the re-gional party comm ittee, territorial conglomerates,and All-Union ministries, now the number ofchannels is reduced, in our case study primarilyto the single conglomerate, NT WA . Th e collapseof the party state has led to the consolidation ofmonopoly associations into parastatal conglom-erates that se ek to control all transactions.However, in substituting themselves for theparty state in the hierarchical ord er, the parastat-als have not actually been able to maintain thesam e monopoly over lateral ties. The parastatalsdo not comm and the power necessary to guaran-tee supplies to their members who are thereforecom pelled to use a portion of their production toobtain supplies directly through barter. Often themost intense negotiations concern the percent-age of production that the parastatal could claimas "state orders" and how m uch would b e left forbarter at the discretion of the enterp rise. As para-statals fail to deliver what enterprises n eed, bar-ter increases which in turn further underminesthe strength of the parastatal.Of cou rse, barter relations between enterprisesexisted under the old regime, but these were m e-diated either through tolkachi (pushers) who o p-erated semilegally between enterprises or through

'"ased on our surv ey of enterprises in Arctic City,we believe our conclusions can be generalized. Butwe only examined civilian production. Military en-terprises are known to have strict discipline, effectivework organization and few chronic supply problems

regional party secretaries who would call theircounterparts in other regions to help obtain ur-gently required supplies (Hough 1969; Hewett1988,pp. 162-70; Zasla vskay a 1990, pp. 60-73).So, although lateral exchange did exist, it wascarefully monitored. The party state limited theauton omy of enterprises through its control of thepromotion and dem otion of enterprise directors.If manage rs did not comply with plan targets, theycould lose their jobs or even be asked to "put theirparty card on the table." Now managers have great-er autonomy to bargain laterally which in turngives them more leverage vertically.One should not exaggerate the effects of thecollapse of the party state. True, in our case studythe all-important d epartment for wood and for-estry in the Regional Party o ffices was liquidatedat the beginning of 1991, and across the centralsquare of Arctic City at the Council of Ministersa completely new m inistry was created. And true,this fledgling ministry is less effective than theprevious department in the Regional Party offic-es in controlling the production chain of the woodindustry. It does not, for exam ple, have the pow-er to remove directors from their positions. Atthe sam e time, many of the key party bureaucratshave foun d their way into new positions of pow-er where they can reproduce their control overthe economy. T he plethora of co operatives thathave sprung up to mediate the bargaining andtrading between enterprises are often establishedand run by former party se cre tar ies . 'W ha t theydid before in the name of "communism" theynow do as self-proclaimed "business men." Theideology may have changed but the basic func-tions are the same.

I s Similar reorganization of old relations into newforms hav e been found in P oland (Staniszkis 1 99 1)and Hungary (Stark 1990 ; Burawoy and Luki cs 1992,chap. 6). Interestingly, the literature on Soviet coop-eratives tends to focus on bureaucratic resistance totheir formation (Jones and Moskoff 1991 Slider 1991)and overlooks the way the party has been able toreconstitute itself throug h cooperatives. In 1991 co-operatives occupied the bottom floor of the Region alParty headqu arters in Arctic City . One of them, called"Prognos," was a sociology cooperative organized toundertake surveys of public opinion to foster demo-cratic responsiveness of leaders. Its president had beenthe first party secretary for ideo logy. In many quar-ters sociology has become the new ideology to suc-


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THE SO VIET TRANSITION FROM SOCIAI ISM TO CAPITALISM To be sure economic relations are less politi-cized. They are also increasingly carried out w itha view to augmenting "profit." Parastatal con-glomerates such as NTWA conduct their bar-gaining in the language of profitability. But the

profits com e from monopoly, from barter, fromvaluta (foreign currency) and not from produc-tion. The newly created banks loan money fortrading ventures