The more things change the more they stay the same, especially in terms of the return of wrong-headed and dangerous ideas. This is certainly the case with the central planning mentality in the form of a Green New Deal or a fascist-like idea of imposed corporate social responsibility. One would think that social engineering and central planning had never been tried – and failed – before.
In my article this week, I highlight the fact that 1991 marks the 30th anniversary of the end of the Soviet Union on the political map of the world. But knowledge and understanding of its political, social and economic disaster seems to have gone down an Orwellian memory hole. To remedy this, I detail the nature and disastrous workings of the Soviet economic system – socialism-in-practice. And I do so based on my own observations and experiences traveling many times in the Soviet Union in its last years, while doing consulting work on market reforms and privatization. I offer my “testimony” as an “eyewitness.”
There are important and serious lessons to be learned. Otherwise, the same tragedies will be repeated again in our own time – even here in the United States.
by Richard Ebeling
Read the original post at AIER here…
It is amazing sometimes how really short humanity’s historical memory can be. Listening to some in American academia and on social media, you would think that socialism was a bright, new, and shiny idea never tried before that promises a beautiful future of peace, love, and bountifulness for all. It is as if a hundred years of socialism-in-practice in a large number of countries around the world had never happened.
If the reality of actual socialism in the 20th century is brought up, many “progressives” and “democratic” socialists respond by insisting that none of these historical episodes were instances of “real” socialism. It was just that the wrong people had been in charge, or it had not been implemented in the right way, or political circumstances had prevented it from getting a “fair chance” of successfully working, or it is all lies or exaggerations about the supposed “bad” or harsh” experiences under these socialist regimes. You cannot blame socialism for there having been a Lenin, or a Stalin, or a Chairman Mao, or a Fidel Castro, or a Kim Il-Sung, or a Pol Pot, or a Hugo Chavez, or . . .
Tyranny, terror, mass murder, and economic stagnation, along with political plunder and privilege for the few at the top of socialist government hierarchies were not indicative of what socialism could be. Just give it one more chance. And, then, another chance, and another.
Soviet Statistical Lies Too Often Taken at Face Value in the West
These attitudes are really nothing new. Throughout the 20th century there were apologists aplenty making excuses, and accepting at face value whatever propaganda was spewed out by the mouthpieces for the socialist regime in Soviet Russia. They closed their eyes to any facts or evidence about what was going there. Those who found ways to escape from the prison camp known as the U.S.S.R. and who told about what life was actually like in the workers’ paradise were ignored or ridiculed as people with anti-Soviet axes to grind. Why else would they have left their wonderful Soviet motherland?
Another version of this blindness was the acceptance of Soviet economic statistics at face value by many reputed Soviet experts in the West, including the “professional” analysts inside the intelligence services of countries like the United States. Both before and after the Second World War, a majority of these scholars and analysts took for granted the official statistics and related data released by the Soviet government about how wonderful and successful the Soviet centrally planned economy was. Soviet propaganda heralded the planning successes of the Soviet Union becoming an industrial country in the 1930s with the introduction of five-year central plans, including the forced collectivization of farming. Then in the years following the Second World War, Soviet state planning agencies produced massive amounts of statistical data showing that in the postwar period all was well and vibrant on the road to socialist prosperity.
Communist Party leader Nikita Khrushchev proudly announced in 1961 that in twenty years; that is, by the 1980s, the Soviet people would be living in the long-promised and awaited future of a post-scarcity communism. The noted American economist and later Nobel Laureate, Paul Samuelson (1915-2009), had even suggested in his widely used economics textbook, in the editions published in 1960s and 1970s and even into the 1980s, that it was very possible that by the early 21st century, Soviet Gross Domestic Product would overtake American GDP. Soviet socialism will have shown its economic superiority over American capitalism.
Soviet Socialism Realistically Shown by Western Correspondents in Moscow
There were notorious apologists and propagandists for the Soviet Union during the period between the two World Wars among the Western press corps stationed in Moscow. The most scandalous of them was The New York Times correspondent, Walter Duranty (1884-1957), who even received a Pulitzer Prize for his coverup reporting of the famine in the early 1930s during Stalin’s forced collectivization of the land that caused the deaths of upwards of 12 million men, women and children.
But there were solid Western truth tellers who did their reporting stints in the Soviet Union during this time; once they were home from their tour in Moscow and were free of the Soviet censors who restricted what they could send out of the country to their newspaper editors in the West, they told the reality of things in great detail. Two of the best of them, in my opinion, were William Henry Chamberlin (1897-1969) in his books, Soviet Russia: A Living Record and a History (1931), Russia’s Iron Age (1934) and Collectivism: A False Utopia (1937), and Eugene Lyons (1898-1985), in his writings, Moscow Carousel (1935) and Assignment in Utopia (1937).
It particularly became the case of revealing uncensored accounts of real life under Soviet socialism in the 1970s and 1980s. No candy-coated dry statistical data here. In the standard reporting style, the correspondents explained the logic of the planned society by telling unending tales about the absurdities of how central direction of an economy actually worked from the perspective of ordinary people going through their everyday lives. As well as about the oppressions, arrests, and torture of any and all suspected of “anti-Soviet” thoughts and actions.
Again, in my view, among the most informative accounts may be found in Hedrick Smith, The Russians (1976), Robert G. Kaiser, Russia: The People and the Power (1976), David K. Shipler, Russia: Broken Idols, Solemn Dreams (1983), Michael Binyon, Life in Russia (1983), Kevin Klose, Russia and the Russians: Inside the Closed Society (1984), David Willis, Klass: How Russians Really Live (1985), David Remnick, Lenin’s Tomb: The Last Days of the Soviet Empire (1993), and Scott Shane, Dismantling Utopia: How Information Ended the Soviet Union (1994).
The Absurdities and Corruptions of Socialist Central Planning
In state enterprises, there was the meeting of manufacturing goals by producing components parts or finished products that met quantity and tonnage quotas under “the plan” that were unusable in size, shape or functionality, but which fulfilled the targets of output insisted upon by the central planners in Moscow. There were the consumer goods that were shoddy in quality, badly worked, and mismatched in quantities with those actually wanted by Soviet consumers in terms of styles, features, or dimensions. As long as production and output targets were met, at least on paper, it did not matter how stagnant, poor and frustrated were the lives of ordinary Soviet citizens, just so the middle level Communist Party authorities throughout the country and the central planning officials in Moscow could assure those above them in the higher echelons of Soviet power that all was going according to plan.
It did not matter how economically inefficient, wasteful, and misallocated material, machinery and men may have been from a hypothetical centrally planned coordination perspective. If the quantities and types of inputs that were assigned to each production plant and factory by the planning agencies were found too little or too much to fulfill the output planning quotas, the plant production managers always had at their disposal a fix-it man on staff who bartered or bribed for needed inputs at other factories to meet the monthly production targets with surplus inputs at their disposal as means of paying for them. Not that this informal and illegal factor and resource market had anything to do with real cost-efficiencies or productivities. It all was just a matter of having what you minimally needed to make sure you met the plan target for that month.
If that did not always work out, well, fudging the figures passed on to central planning bean counters higher up just needed to be done in the right way so that nobody noticed; and if it was caught by someone further up the Party and planning hierarchy, gifts and favors could be supplied to just the right person to assure that “juggling the books” remained safe “between friends.” Prices assigned to goods were meaningless, having been fixed by the planning agencies years, if not decades before, with no relevance or reality to actual supplies and demands. Endless lines for needed goods solved the rationing problems of Soviet society. For worthless goods, well, they could just sit on the shelves of unvisited government retail stores manned by government employees who could care less, as long as they got their pay and could “disappear” from work for hours to go about doing their own shopping for what they needed to get; hence, the popular Soviet phrase, “They pretend to pay us, and we pretend to work.”
Witnessing Soviet Consumer Life in the Soviet Socialist Utopia
I was traveling frequently to the former Soviet Union in the early 1990s doing consulting work on market reforms and privatization, some of it with the Moscow city government and the Russian Parliament, but mostly with anti-Soviet members of the government in Soviet Lithuania, who were determined to reclaim their country’s national independence and reestablish a market-based economy. (See my article, “Witnessing Lithuania’s 1991 Fight for Freedom from Soviet Power”.)
Several times when in Moscow, I went to the GUM department store complex, facing the Kremlin across Red Square. Today, in post-Soviet Russia, it has been modernized with stores and boutiques not much different than any such shopping areas in Paris, London or New York. But back then, it was all owned and managed by the Soviet state and supplied by the production and quotas of the central planning agency, GOSPLAN.
The building had a U-shaped inside with three levels, on each level of which there were a variety of “people’s” retail stores. The building was old and dilapidated, with peeling paint and chips and cracks on the walls, walkways, and handrails. The place was dingy and dirty. It was an outstanding example of the achievements of Soviet socialism in service to the toiling masses in the bright and beautiful socialist paradise.
Sullen and tired-looking people walked around the three levels, passing by and giving generally empty looks as they passed one store after another with their mostly empty shelves attached to depressingly gray and bare walls. Sales personnel stood behind counters with no or few goods, glumly interrupted in their empty stares into nowhere whenever a few customers asked a question or wanted to buy something. Clearly, the Soviet socialist retail mottos were “Service with a rude frown and a harsh word,” and “The Soviet consumer is never right nor ever wanted.”
In the wisdom of Soviet central planning, there were no Western-style supermarkets. Instead, there were separate retail stores for individual or particular types of goods. I stood on a line in a “people’s” bread store, waiting and waiting to get to the counter at which I told a store employee which of the limited types of bread I wanted. I was given a ticket with the amounts desired and directed to stand and wait on a second line, at the end of which I paid for the loaves of bread I wished to buy. I was then given a receipt and instructed to join a third line from which, again after a long wait, I could pick up the bread I had paid for.
But, as the phrase goes, man does not live by bread alone. So, I went in search of the dairy and meat retail stores, which were not necessarily near where I had obtained the bread. And at each of these I repeated the pattern of line one, line two, and line three. Now, with bags containing whatever I was fortunate enough to actually find in supply at these stores, I finally found a store where bottled water and the Soviet version of soda drinks might be purchased. I got on a line that stretched well out into the street, and when, after a long, long wait, I had almost reached the counter inside the store, it was announced that they had exhausted their day’s supply and told everyone to come back tomorrow. But even in the socialist paradise, there were possibilities for a happy ending. From a corner inside the store a black marketeer shouted out that she had plenty of everything; of course, at a Soviet version of a “market” price. I had earlier noticed that this same woman now offering a plentitude of what people wanted had been standing in a doorway inside the store leading to the backroom where the bottled water and soda inventories were kept. What a coincidence!
Under the Watchful Eyes of Servants of the Soviet State
I often stayed in Moscow at the Cosmos Hotel, which was reserved for foreigners and into which Soviet citizens were barred, unless, of course, they were among the Party-approved prostitutes sharing their profits with their Party pimps and/or spying on selected foreign visitors about whom the Soviet authorities were especially interested. I once went out and did not return to the hotel that evening. When I came back the following morning, I took the elevator up to my floor, and when the doors opened I was greeted by one of the Soviet matrons assigned to each floor and grilled as to where I had been all night, since “It had been noticed” that my bed had not been slept in, and my movements needed to be accounted for. As the old song says, “Someone to Watch Over Me.”
I rented a car at this Moscow hotel so my future wife and I could drive to Leningrad for a long weekend, and she would show me the city where some of her friends lived. I was warned by everyone that whenever I parked I needed to remove the windshield wipers and lock them in the car if I did not want them to be stolen. I was told by several people that I better make sure that I had filled up the gas tank and had borrowed several portable gasoline canisters to refill the tank along the way, since there were almost no gasoline stations along the 500 miles of road between the two cities. In the socialist wonderland there were also few gasoline stations even in Moscow. After locating one, I had a two-hour wait on a line to finally get the car up to the gas pump. In addition, my fiancé made a point of packing plenty of food and drinks for the trip because there were neither restaurants nor rest areas (other than just pulling off the road into the forest) along the road. And this, on the main thoroughfare between the two showcase cities of the Soviet Union!
I also experienced the delight of being stopped by a militiaman (policeman) for a traffic violation near the Lubyanka, the headquarters of the KGB, and I practiced the art of cash bribe-giving, even though I had done nothing wrong in my driving. I had the pleasure of attempting to get needed medicines in the socialist society of “free” health care when it was difficult to find the right person at a “people’s” clinic and for the right price; and even if you found such a person and you have the money to pay the bribe, the chances were that the needed antibiotic was simply unavailable. I also had the chance of trying to go out for dinner at a restaurant, and finding that socialist Moscow had very few open for the general public, and the few that there were required you to bribe the doorman to gain entrance to then find out that 90 percent of anything on the printed menu was actually not available.
In the lobby of the old Russiya Hotel not far from the Kremlin I was having coffee with my future wife, when I noticed a hotel matron sitting on a bench along the wall pull out a small camera from under the coat on her lap and quickly take a picture of us before hiding the camera back under her coat. Somewhere in the archives of the secret police is the first-ever photo of the two of us together; if only I could get an 8×10 glossy! When we decided to get married, an official at the one marriage license office in Moscow that married Soviet citizens to foreigners told me that I would need a notarized document from the attorney general’s office in each of the 50 United States that certified that I was not married in their jurisdiction; in other words, I needed to prove a negative 50 times, and before any of the documents had expired. We were finally married in the U.S.
What a world was that of socialism-in-practice! A world of what the Austrian economist, Ludwig von Mises, titled one of his shorter books, Planned Chaos (1947). But even more, Soviet socialism was an upside-down Alice-in-Wonderland Through the Looking-Glass world of literal planned madness.
When the French sociologist, Gustave Le Bon published The Psychology of Socialism in 1899, he feared that, “One nation, at least, will have to suffer it [the establishment of a socialist system] for the instruction of the world. It will be one of those practical lessons which alone can enlighten the nations that are bemused with the dreams of happiness displayed before our eyes by the priests of the new [socialist] faith.” Is it really necessary to go through it all again? Let us hope not.
Dr. Richard Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel, in Charleston, South Carolina.
Dr. Ebeling is the author of Austrian Economics and Public Policy: Restoring Freedom and Prosperity (2016); Monetary Central Planning and the State (2015) as well as the author of Political Economy, Public Policy, and Monetary Economics: Ludwig von Mises and the Austrian Tradition (2010) and Austrian Economics and the Political Economy of Freedom (2003). And the editor of the three-volume, Selected Writing of Ludwig von Mises, published by Liberty Fund.
He is also the co-editor of When We Are Free (Northwood University Press, 2014), an anthology of essays devoted to the moral, political and economic principles of the free society, and co-author of the seven-volume, In Defense of Capitalism (Northwood University Press, 2010-2016).