Lenin sold himself on Comunism, partly because he believed that it would turn Russia into a modern economy. He also believed that communism was a more efficient system than capitalism, and would result in no poverty.
My question: Czarist Russia in 1918 was a pretty underdeveloped country. It was at the beginning stages of industrialization, and its larger cities were fairly comparable to other western cities (Moscow and St. Petersburg had public transist and electric lighting).
If you extrapolated a Russia under capitalism. what kind of GNP per capita would it have had by 1980 or so? How did the Communist system compare?
Of course, WWII did a tremendous amount of damage to the country.
Was communism as bad as we in the West assume? The old USSR was able to become an industrial giant in the years 1920-1939; but this was achieved at great human cost. Soviet industry was also pretty inefficient-its record of making consumer goods was poor.
Had Russia stayed a cpaitalist country, would it likely be on par with the USA, UK, Germany, etc., today?
So much of the USSR’s capital improvement was the result of the revolutionary spirit which genuinely galvanised much of the populace to higher levels of production. I just don’t see that level of development happening under the czarist regime.
Stalin also created the penal/slave labor system that dug canals and other huge development schemes. The Czars were not shy about sending folks to the gulag, but Stalin raised it to a whole new level and purposely used it for capital improvements.
Lenin sold himself on Communism in Russia because he was sure that it would be the first step in a fairly rapid world-wide communist revolution. He never expected to have to build socialism in one country.
Would a non-Communist Russia have developed as quickly? Look at it this way:
World War I and the the Russian Civil War devastated the country, so the Soviet state started from a very low level. IIRC, many economic indicators did not reach 1913 levels again until way into the 1930s. Lots of qualified engineers and technicians were either dead or in exile, which didn’t help human capital. After that you have a series of economic and social disasters, mostly self-inflicted.
For example,
Collectivization was supposed to allow the extraction of resources from the agricultural sector to pay for industrialization. Instead, after mass slaughter of draft animals the agricultural sector required industrial inputs.
The Gulag and its projects were all a dead weight on the economy, not a benefit.
The list could go on and on.
Without the disasters of the first half of the 20th century, of course a non-communist Russia would have developed better than the Soviet Union did. How much better would have to be pure speculation.
A lot of this is speculation, but…
It takes some certain philosophical ideals to be commonplace among the people of a country for a capitalist system to work. Theoretically, Greece, Mexico, etc. are capitalist countries, yet they don’t seem to modernize with the rest of the world really because there isn’t the ideas of truly personal property and meritocracy. Knowing that Russia wasn’t modernizing with the rest of Europe, it seems likely that the country was in a similar state to someplace like modern day Mexico. There’s no particular barrier to becoming a nation on the edge of technology, except that the people just don’t try to do it.
I suspect that regardless of whether he had tried to use communism or capitalism back at the beginning of the 20th century, Lenin would have been screwed. The only way to modernize the country would have been to round up the people and work them as slaves – which is what happened. He couldn’t have simply pronounced that they were now a capitalist country, and suddenly entrepreneurs and corporations would have risen all on their own. If it was going to happen, it would have happened on its own. And there wouldn’t have been enough support in the country for a socialist revolution.
But, on the other hand, communism reinforces ideas of shared property, and a philosophy that people aren’t worth how hard they work, but whether they have the right connections to get you what you want. So while I assume that early 20th century Russia wasn’t ripe for a capitalist revolution, it’s entirely possible that capitalist philosophies could have slowly permeated the culture over the last hundred years. The best case scenario, I would guess, would be someplace like India – it took a while to get into the swing of things, but they’re quickly catching up. The worst case scenario would be that Russia would simply still be a place like Mexico or Greece. Either of those options would be better than what the Communists went through.
Since the answer to this is necessarily speculative, I think this is better suited to GD than GQ.
Colibri
General Questions Moderator
Even the Stalinist model of totalitarian socialism does work – for limited purposes, i.e., heavy capital formation. In 1924 Stalin took control of a backward, agrarian country, marginally industrialized by the onset of WWI and that little industry devastated by that war and the Russian Civil War, and – by methods which were bloody, brutal, repressive, wasteful, but effective – by 1939 had turned it into an industrial power capable of going head-to-head with Hitler’s Germany; and Germany had always been at the leading edge of the Industrial Revolution. No way could that have happened, if Russia had had a free-market system during that period.
OTOH, central economic planning, lacking the constant corrective feedback of competitive market performance, is spectacularly inept at any kind of fine-tuning. Moreover, it does not encourage innovation very well. No state planner would ever have thought of something like the Sony Walkman, or the Pet Rock, or fabric softener. (Whether that is an argument for or against Stalinism is open to debate.)
From Economics Explained, by Robert Heilbroner and Lester Thurow:
I’ve read this over and over and over again through the years but it’s never offered with any proof other than “the Soviet economy fared worse and that’s why.” What’s a good treatment of this theory?
I’m not saying that it doesn’t make good common sense, but rather that I’ve seen a lot of common sense that turned out to be wrong; if I’m going to take the inefficiency hypothesis at face value I’d like to have as many facts as possible to go behind it. Without an evidence trail, it just seems made up after the fact because it’s plausible.
So does anyone here know any article, book, or data that refutes or supports the theory that specifically central planning inefficiency was a major contributor to the economic collapse?
IMO, that's the most likely explanation. As detailed in BrainGlutton's link, becoming an industrial giant is not that hard if someone else already did the R&D for you. After all, in the 20's and 30's everyone knew that you need railroads, a power grid, steel, roads, cement, etc for a successful industry. And, more important, everyone knew how to build them, simply because there were already plenty of those in Western Europe and US. So it was obvious (especially for a centralized economy) how and what to do in order to get a working infrastructure. The problem is, once you've got it, what's the next step? And it seems that the next step requires a lot of initiative and innovation, which the centralized system fails to provide.
My guess is that a centralized economy may work better on very short time scales, but in the long run capitalism rulz. The most striking example may be North Korea: IIRC, in the 60's their economy increased at a huge rate, clearly superior to South Korea's growth at the time. But this didn't last for long; at some point the growth stopped suddenly and today they're on the brink of starvation. South Korea, on the other hand, seems to do slightly better... :) I'm not sure what you're asking here... if the central planning was inefficient or if the inefficiency was the reason for the colapse? If the latter, I think the case is quite clear: EVERYTHING (food, transportation, heating, healthcare, etc) was produced and distributed according to the central planning. If the central planning is inefficient, you end up with a lot of frozen, sick, starving people.
Now, was central planning inefficient? I guess there are plenty of books and articles about the availability of food, medicaments, electricity and other basic necesities to the average citizen in centralized economies, but I am fairly sure that everything was more abundant and of better quality in capitalist countries. ;)This is partly true. China, Russia, and NoKO were all able to post huge “growth rates”. But in all cases, that growth was based on several factors: massive disorganization in their respective post-civil war eras, much more experimentation and variability because the political climate hadn’t hardened as much, and an initally positive public reaction because repression hadn’t started so seriously. China and NoKo had the addition of Russian technical advisors handing out goodies for power over the new regime (which didn’t last forever).
This can’t last, and much fo the growth was illisory in the first place. In fact, after a mere few years, the growth virtually stopped except for big, expensive showpiece projcets which went unused. They were never efficient, and they were ineffficient in three ways: First, because of Communism, they could not predict whether a project was useful or not. Second, they ignored scientific and technical knwoledge which could have easily multiplied productivity, instead opting for weird ideological concerns. Third, you ignore the terrible price paid for those projects - the Communists never considered what else they could have used that labor for.
In Russia, for isntance, they destroyed the ermerging Kulak class. These were prosperous freeholders, who emerged very quickly after the revolution and land reform. Not good enough for the Communists, though - so off they went. This, of course, helped destroy agricultural productivity in an already poor nation. It never occurred to the leadershiop to consider that this was an awesomely useful event: they were getting more efficient production and a class deeply invested in agricultural productivity. But, no, the essence of Societ Industry was grinding seed corn.
Russia was a major industrial power in WW2, true, but that wasn’t really how they beat the germans. They did the old-fashioned way with human wave tactics. With America supplying truly vast quantities of industrial and miltiary gods, they were able to keep up a pretty fair supply. But the contradiction between the was immense. They never fought as an industrial power because they couldn’t. They had to hoard their war machines until they were really needed.
I’m not going to try and predict all the way to the 1980’s. That’s nuts. But let’s say up to WW2. I’ll assume an authortarian but not brutal regime.
First, Russia will probably have a fair amount of industrial production. It won’t have grown so much, but it will be there, and it will be a lot more efficient and effective when ti has to be. The cities are likely to have grown considerably with the death of serfdom. Agricultural prosperity means there’s tons and tons of food. The big downside of the cities is the massive unemployment rate: all that improvement means that even with the hugely increasing national exports (the profits of which are tending over time to get invested in industry, which produces higher returns), there’s just not enugh work being created. But nobody’s starving because food is cheap. It’s just that surplus labor is coming faster than it can be put to work.
Ths is important, because that means that, along with the total lack of repression, vast prison colonies, huge numbers of executed peoploe, and no terrible war with Finland, there are a lot more Russians around anyway. So when Hitler doesn’t roll across the border, Russia will have even more manpower ready to not deal with him.
Wait, what? Well, yeah. Without Lenin’s takeover, I seriously doubt Hitler would ever have gained power in Germany. The Communists in Germany were especially powerful and dangerous in singificant respects because of the Soviet Union’s emergence (who quietly but potently backed them). Those same Communists are the group who worked with Hitler to break down and overthrow the State. No Russia, probably no Spartacists, no ongoing simmering near-rebellion, no Hitler. If Weimar is dismantled, it probably is because people don’t like it and opt for a more centrist Constitutional monarchy.
Russia won because Germany was stupid enough to fight at the end of a long supply line without adequate (or really ANY) preparation for the winter. Even then, Russia had massive amounts of supplies sent to them from the US. Their soldiers were frequently poorly trained and poorly armed compared to the Germans. They were able to move their industry across the Urals and beyond attack while Germans industry was heavily bombed. And, of course, Germany split it’s forces along two fronts while Russia only had one. Also look at the casualties, Russia had 27 million dead or wounded. Germany had 8 million dead or wounded. Russia survived because it had several tactical advantages, allies, an enemy that at times was just plain stupid, and waves and waves of meat shields.
Now I ain’t trying to take away from Russia’s performance in the war. Russia proved, if nothing else, that they have some of the hugest balls ever seen on a battlefield. The Allies may not have won, and definitely would have taken far heavier losses even if they did win, without Russia. OTOH, Russia wouldn’t have won without the allies either. Which right there should tell you, they weren’t equal to Germany in capabilities.
As for the OP question, it’s very difficult to say. Too many variables in the equation. However, if the USSR embraced a totalitarian quasi-capitalist model, similar to China’s current model, then I strongly suspect the cold war would still be going on today. I dunno if they would truly be equal to the US, UK, etc, but they would be close enough that they wouldn’t have gone through a ‘closing everything must go’ sale on a national scale in the 90’s.
Also note, it’s often said that invading Afghanistan is a large part of what drove Russia into economic collapse. That invasion is also often compared to America’s involvement in Vietnam. Notice that the US didn’t go belly up because of Vietnam? That may tell you something about capitalism vs communism and give a hint as to how things would have gone.
This is exactly what I’m not asking for. “Economy better off in capitalist economies. Central planning must be to blame.”
There must be steps in between the central planner and the starving citizen. Enumerate those steps. For bonus credit, you could document the intermediate steps actually happening in the USSR, and not happening in capitalist societies.
The reason I ask is that I’m on the home stretch of a Russian major in college, have taken a large handful of Russian/Soviet history, and I’ve seen the “central planning bad” argument in pretty much all the literature ever but never with documentation. There are possibly trillions of reasons the Soviet Union collapsed. Bad geography. Bad politics. Military overextension. Lead in the pipes. Shorter average height. None of these reasons is any good without any evidence that they actually happened and contributed the factor that they’re claimed to have.
I should perhaps draw the distinction between faulty priorities and faulty management. I certainly don’t need convinced that consumer goods were in short supply in Moscow 1984. Priorities yes. But the central planners were bad at making what they set out to do? That is, heavy industries, materials extraction, military items, etc.
It’s been repeated to us over and over again that central planning was just intrinsically inefficient compared to other modes. Then in the same breath (because that’s how short the explanation always is), we’re given some fluff about the USSR undergoing “feast and famine.” Sounds suspiciously similar to the business cycle.
Don’t get me wrong. Obviously the USSR was poorer than the United States and living there was a bummer economically (don’t even ask about the rest).
I’d rather know the real reason why the Western system prevailed (so far) instead of just patting ourselves on the back and saying ours is just better like that. I’m not convinced of this piece of conventional wisdom.
Let’s have a cite for that, please.
Basically, we pay people money to figure out how to make other people happy. If someone is altruistic then that’s not necessary, of course. But most of aren’t. We only worry about ourselves and our family unless we are given an ulterior motive to care about others.
Well, I have to acknowledge that I don’t know much of the economic part of the history of the Soviet Union, but I wonder if the command economy did laugh in the face of the great depression, if that is so, then it is no wonder many saw that and thought then that Capitalism was indeed in its death throes.
Of course, that works only if one does not know about the repressive measures used to get that result. Eventually their command economy fell off the tracks, but it is an interesting bit that should be taken into account as a partial answer. I could say that it delivered then, but at at a hefty price.
But they also won because Stalin’s system was very good at moving massive amounts of things and people around. That was what made it possible for Stalin to retreat east of Moscow, build and equip a whole new army out of the people and resources of unoccupied Siberia, and send it west all the way to Berlin. That’s what Stalinism is good at – mass mobilization of mass resources to get things done on a massive scale.
Of course, sometimes it fucks up even that job, and when it does, the damage is massive, see the Ukraine Famine. Or the early days of the war, when Stalin’s senior officer corps was decimated by his own purges, and he could not effectively bring to bear on the Germans the vast forces he commanded.
Well, the essence of it is:
In a centralized economy you have a small number of planners and they have a number of ideas about how to run the show. Some ideas are good, some are bad. All of them are applied, regardless of how useful they prove to be, with mixed results. The feedback is weak or non-existent (and anyway, how could a bunch of people take into account 300 milions of individual feedbacks?), and the system never self-corrects quick enough.
In a capitalist economy, everyone has an idea (or several). Everyone can try his own ideas. The feedback is almost instantaneous. Good ideas (meaning the ones which end up in an useful product/service) will be applied further on, bad ideas are discarded pretty quick. In this context, ‘idea’ could simply mean what kind of job one wants or a small business, not inventing earth-shattering concepts. You love dogs and want to start a pet-grooming business? In a capitalist economy all you need is a dozen of dog-owners interested in your services and you’re on. Good luck in convincing one of those planners that he should allocate precious resources for a dozen of dogs. 
Several examples (from communist Romania, since that’s the only first hand experience I have with centralized economy):
How to sell unwanted products: the planners decided that Dear Leader’s last book (a masterpiece on the next five year plan in the context of marxist dialectic) will have a circulation 100.000 . Problem is, only 20.000 are sold. That’s bad, cause the bookstore has a sale plan to fulfil. So they’re doing the following: “Oh, you want this Shakespeare edition? Sure, but you’ll have to buy Comrade Ceausescu’s brilliant writings too”.
This method works for everything else. Do you want to buy some ribs (for which you stood in line for about 3 hours) ? Of course, but it comes with a tuna can. Oh, yeah, tuna…how come there is an excess of tuna cans but not enough pork ribs? Well, some planner decided that the Socialist Republic of Romania needs an oceanic fishing fleet ('cause the fish is good for the brain, or something). So Romania built such a fleet, and there is tuna everywhere. No one wants it, but it must be sold, otherwise some people will be unemployed and the planners don’t like that. Only those pesky capitalists have unemployment.
So then, why there are not enough pork ribs? Well, this brings us to agriculture, which works like that: the central planners decided what must be produced, when it should be harvested and what quota of fuel each county gets for the harvest. Problem is, harvests have the nasty habit of not being ripe at the same time all over the country. But the planners insist that the schedule must be respected, so you end up having to harvest prematurely. Or, if you exceed your fuel quota, the harvest may be left to rot on the field simply because you have no means of transporting it. Remember, there is no fuel available anywhere else, cause the planners have already calculated everything and everyone around you is using his own quota.
Speaking of fuel, this raises an interesting problem for the planners: how much fuel should they send to each fuel station? They know how many cars are in each city, but what happens when people travel somewhere else? How can the planner know how many people will travel to a given destination at any given time, so that the fuel stations in that area are adequately supplied? In practice they didn’t. There was a quota for private users (8 litres per week, IIRC), and when going on vacation one had to store fuel in advance. Fun times.
Add a fair share of communist ideology to the mix, and things become quickly really interesting (read bad). And all this covers only the production and distribution part, but I think one can see that innovation and initiative don’t really belong in this system.
Let me explain it in a different way. The critical problem with any socialized, centralized, or communist economy is an information problem. There can be other issues, including the spurring or not of intiative among the people, the proper using of new ideas and innovation, and incentive to perform. But the information problem always exists.
The more controlled an economy becomes, it neccessarily becomes less open to varying plans and RECEIVING INFORMATION. I typed that all caps because it’s absolutely critical to making an economy run. Economies are built on information, not on natural resources, manufacturing, or even trade - those are ways of using information. Period.
But guess what? As you centralize you concentrate power in the hands of fewer and fewer people - and it is impossible for them to process the information usefully. Even if they wereall genius saints who never needed sleep they could not possibly manage an economy usefully. You can, if people are very dedicated, keep things going for a while (this happened in the U.S. in WW2).
Moreover, the centralizing forces tend also to destroy information before could have reached the planners anyhow. Once people no longer have the option to say “No.” - then they stop bothering to say anything. They don’t really care. There has never been a better method of alienating people from the governemnt than those regimes who demanded devotion at every moment.
Was it any better than capitalism, though? I mean, look at the mass emigration to America pre WW1. Or the Berlin Airlift?