what's left

Seven Myths about the USSR

Posted in Communism, Socialism, Soviet Union by what's left on December 23, 2013

By Stephen Gowans

The Soviet Union was dissolved 22 years ago, on December 26, 1991. It’s widely believed outside the former republics of the USSR that Soviet citizens fervently wished for this; that Stalin was hated as a vile despot; that the USSR’s socialist economy never worked; and that the citizens of the former Soviet Union prefer the life they have today under capitalist democracy to, what, in the fevered parlance of Western journalists, politicians and historians, was the repressive, dictatorial rule of a one-party state which presided over a sclerotic, creaky and unworkable socialist economy.

None of these beliefs is true.

Myth #1. The Soviet Union had no popular support. On March 17, 1991, nine months before the Soviet Union’s demise, Soviet citizens went to the polls to vote on a referendum which asked whether they were in favor of preserving the USSR. Over three-quarters voted yes. Far from favoring the breakup of the union, most Soviet citizens wanted to preserve it. [1]

Myth #2. Russians hate Stalin. In 2009, Rossiya, a Russian TV channel, spent three months polling over 50 million Russians to find out who, in their view, were the greatest Russians of all time. Prince Alexander Nevsky, who successfully repelled an attempted Western invasion of Russia in the 13th century, came first. Second place went to Pyotr Stolypin, who served as prime minister to Tsar Nicholas II, and enacted agrarian reforms. In third place, behind Stolypin by only 5,500 votes, was Joseph Stalin, a man that Western opinion leaders routinely describe as a ruthless dictator with the blood of tens of millions on his hands. [2] He may be reviled in the West, not surprisingly, since he was never one after the hearts of the corporate grandees who dominate the West’s ideological apparatus, but, it seems, Russians have a different view—one that fails to comport with the notion that Russians were victimized, rather than elevated, by Stalin’s leadership.

In a May/June 2004 Foreign Affairs article, (Flight from Freedom: What Russians Think and Want), anti-communist Harvard historian Richard Pipes cited a poll in which Russians were asked to list the 10 greatest men and women of all time. The poll-takers were looking for significant figures of any country, not just Russians. Stalin came fourth, behind Peter the Great, Lenin, and Pushkin…much to Pipes’ irritation. [3]

Myth #3. Soviet socialism didn’t work. If this is true, then capitalism, by any equal measure, is an indisputable failure. From its inception in 1928, to the point at which it was dismantled in 1989, Soviet socialism never once, except during the extraordinary years of World War II, stumbled into recession, nor failed to provide full employment. [4] What capitalist economy has ever grown unremittingly, without recession, and providing jobs for all, over a 56 year span (the period during which the Soviet economy was socialist and the country was not at war, 1928-1941 and 1946-1989)? Moreover, the Soviet economy grew faster than capitalist economies that were at an equal level of economic development when Stalin launched the first five year plan in 1928—and faster than the US economy through much of the socialist system’s existence. [5] To be sure, the Soviet economy never caught up to or surpassed the advanced industrial economies of the capitalist core, but it started the race further back; was not aided, as Western countries were, by histories of slavery, colonial plunder, and economic imperialism; and was unremittingly the object of Western, and especially US, attempts to sabotage it. Particularly deleterious to Soviet economic development was the necessity of diverting material and human resources from the civilian to the military economy, to meet the challenge of Western military pressure. The Cold War and arms race, which entangled the Soviet Union in battles against a stronger foe, not state ownership and planning, kept the socialist economy from overtaking the advanced industrial economies of the capitalist West. [6] And yet, despite the West’s unflagging efforts to cripple it, the Soviet socialist economy produced positive growth in each and every non-war year of its existence, providing a materially secure existence for all. Which capitalist economy can claim equal success?

Myth #4. Now that they’ve experienced it, citizens of the former Soviet Union prefer capitalism. On the contrary, they prefer the Soviet system’s state planning, that is, socialism. Asked in a recent poll what socio-economic system they favor, Russians answered [7]:

• State planning and distribution, 58%
• Private property and distribution, 28%
• Hard to say, 14%
• Total, 100%

Pipes cites a poll in which 72 percent of Russians “said they wanted to restrict private economic initiative.” [8]

Myth #5. Twenty-two years later, citizens of the former Soviet Union see the USSR’s demise as more beneficial than harmful. Wrong again. According to a just-released Gallup poll, for every citizen of 11 former Soviet republics, including Russia, Ukraine and Belarus, who thinks the breakup of the Soviet Union benefited their country, two think it did harm. And the results are more strongly skewed toward the view that the breakup was harmful among those aged 45 years and over, namely, the people who knew the Soviet system best. [9]

According to another poll cited by Pipes, three-quarters of Russians regret the Soviet Union’s demise [10]—hardly what you would think of people who were reportedly delivered from a supposedly repressive state and allegedly arthritic, ponderous economy.

Myth #6. Citizens of the former Soviet Union are better off today. To be sure, some are. But are most? Given that more prefer the former socialist system to the current capitalist one, and think that the USSR’s breakup has done more harm than good, we might infer that most aren’t better off—or at least, that they don’t see themselves as such. This view is confirmed, at least as regards life expectancy. In a paper in the prestigious British medical journal, The Lancet, sociologist David Stuckler and medical researcher Martin McKee, show that the transition to capitalism in the former USSR precipitated a sharp drop in life-expectancy, and that “only a little over half of the ex-Communist countries have regained their pre-transition life-expectancy levels.” Male life expectancy in Russia, for example, was 67 years in 1985, under communism. In 2007, it was less than 60 years. Life expectancy plunged five years between 1991 and 1994. [11] The transition to capitalism, then, produced countless pre-mature deaths—and continues to produce a higher mortality rate than likely would have prevailed under the (more humane) socialist system. (A 1986 study by Shirley Ciresto and Howard Waitzkin, based on World Bank data, found that the socialist economies of the Soviet bloc produced more favorable outcomes on measures of physical quality of life, including life expectancy, infant mortality, and caloric intake, than did capitalist economies at the same level of economic development, and as good as capitalist economies at a higher level of development. [12])

As regards the transition from a one-party state to a multi-party democracy, Pipes points to a poll that shows that Russians view democracy as a fraud. Over three-quarters believe “democracy is a facade for a government controlled by rich and powerful cliques.” [13] Who says Russians aren’t perspicacious?

Myth #7. If citizens of the former Soviet Union really wanted a return to socialism, they would just vote it in. If only it were so simple. Capitalist systems are structured to deliver public policy that suits capitalists, and not what’s popular, if what’s popular is against capitalist interests. Obamacare aside, the United States doesn’t have full public health insurance. Why not? According to the polls, most Americans want it. So, why don’t they just vote it in? The answer, of course, is that there are powerful capitalist interests, principally private insurance companies, that have used their wealth and connections to block a public policy that would attenuate their profits. What’s popular doesn’t always, or even often, prevail in societies where those who own and control the economy can use their wealth and connections to dominate the political system to win in contests that pit their elite interests against mass interests. As Michael Parenti writes,

Capitalism is not just an economic system, but an entire social order. Once it takes hold, it is not voted out of existence by electing socialists or communists. They may occupy office but the wealth of the nation, the basic property relations, organic law, financial system, and debt structure, along with the national media, police power, and state institutions have all been fundamentally restructured. [14]

A Russian return to socialism is far more likely to come about the way it did the first time, through revolution, not elections—and revolutions don’t happen simply because people prefer a better system to the one they currently have. Revolutions happen when life can no longer be lived in the old way—and Russians haven’t reached the point where life as it’s lived today is no longer tolerable.

Interestingly, a 2003 poll asked Russians how they would react if the Communists seized power. Almost one-quarter would support the new government, one in five would collaborate, 27 percent would accept it, 16 percent would emigrate, and only 10 percent would actively resist it. In other words, for every Russian who would actively oppose a Communist take-over, four would support it or collaborate with it, and three would accept it [15]—not what you would expect if you think Russians are glad to get out from underneath what we’re told was the burden of communist rule.

So, the Soviet Union’s passing is regretted by the people who knew the USSR firsthand (but not by Western journalists, politicians and historians who knew Soviet socialism only through the prism of their capitalist ideology.) Now that they’ve had over two decades of multi-party democracy, private enterprise and a market economy, Russians don’t think these institutions are the wonders Western politicians and mass media make them out to be. Most Russians would prefer a return to the Soviet system of state planning, that is, to socialism.

Even so, these realities are hidden behind a blizzard of propaganda, whose intensity peaks each year on the anniversary of the USSR’s passing. We’re supposed to believe that where it was tried, socialism was popularly disdained and failed to deliver—though neither assertion is true.

Of course, that anti-Soviet views have hegemonic status in the capitalist core is hardly surprising. The Soviet Union is reviled by just about everyone in the West: by the Trotskyists, because the USSR was built under Stalin’s (and not their man’s) leadership; by social democrats, because the Soviets embraced revolution and rejected capitalism; by the capitalists, for obvious reasons; and by the mass media (which are owned by the capitalists) and the schools (whose curricula, ideological orientation and political and economic research are strongly influenced by them.)

So, on the anniversary of the USSR’s demise we should not be surprised to discover that socialism’s political enemies should present a view of the Soviet Union that is at odds with what those on the ground really experienced, what a socialist economy really accomplished, and what those deprived of it really want.

1.”Referendum on the preservation of the USSR,” RIA Novosti, 2001, http://en.ria.ru/infographics/20110313/162959645.html
2. Guy Gavriel Kay, “The greatest Russians of all time?” The Globe and Mail (Toronto), January 10, 2009.
3. Richard Pipes, “Flight from Freedom: What Russians Think and Want,” Foreign Affairs, May/June 2004.
4. Robert C. Allen. Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution, Princeton University Press, 2003. David Kotz and Fred Weir. Revolution From Above: The Demise of the Soviet System, Routledge, 1997.
5. Allen; Kotz and Weir.
6. Stephen Gowans, “Do Publicly Owned, Planned Economies Work?” what’s left, December 21, 2012.
7. “Russia Nw”, in The Washington Post, March 25, 2009.
8. Pipes.
9. Neli Espova and Julie Ray, “Former Soviet countries see more harm from breakup,” Gallup, December 19, 2013, http://www.gallup.com/poll/166538/former-soviet-countries-harm-breakup.aspx
10. Pipes.
11. Judy Dempsey, “Study looks at mortality in post-Soviet era,” The New York Times, January 16, 2009.
12. Shirley Ceresto and Howard Waitzkin, “Economic development, political-economic system, and the physical quality of life”, American Journal of Public Health, June 1986, Vol. 76, No. 6.
13. Pipes.
14. Michael Parenti, Blackshirts & Reds: Rational Fascism and the Overthrow of Communism, City Light Books, 1997, p. 119.
15. Pipes.

Do Publicly Owned, Planned Economies Work?

Posted in Communism, Public Ownership and Planning, Socialism, Soviet Union, USSR by what's left on December 21, 2012

Compared to capitalism, the USSR’s publicly owned, planned economy worked remarkably well.

By Stephen Gowans

The Soviet Union was a concrete example of what a publicly owned, planned economy could produce: full employment, guaranteed pensions, paid maternity leave, limits on working hours, free healthcare and education (including higher education), subsidized vacations, inexpensive housing, low-cost childcare, subsidized public transportation, and rough income equality. Most of us want these benefits. However, are they achievable permanently? It is widely believed that while the Soviet Union may have produced these benefits, in the end, Soviet public ownership and planning proved to be unworkable. Otherwise, how to account for the country’s demise? Yet, when the Soviet economy was publicly owned and planned, from 1928 to 1989, it reliably expanded from year to year, except during the war years. To be clear, while capitalist economies plunged into a major depression and reliably lapsed into recessions every few years, the Soviet economy just as unfailingly did not, expanding unremittingly and always providing jobs for all. Far from being unworkable, the Soviet Union’s publicly owned and planned economy succeeded remarkably well. What was unworkable was capitalism, with its occasional depressions, regular recessions, mass unemployment, and extremes of wealth and poverty, all the more evident today as capitalist economies contract or limp along, condemning numberless people to forced idleness. What eventually led to the Soviet Union’s demise was the accumulated toll on the Soviet economy of the West’s efforts to bring it down, the Reagan administration’s intensification of the Cold War, and the Soviet leadership’s inability to find a way out of the predicament these developments occasioned.

Every year, from 1928 to 1989, except during the war years, the publicly owned, planned Soviet economy reliably expanded, providing jobs, shelter, and a wide array of low- and no-cost public services to all, while capitalist economies regularly sank into recession and had to continually struggle out of them on the wreckage of human lives.

Every year, from 1928 to 1989, except during the war years, the publicly owned, planned Soviet economy reliably expanded, providing jobs, shelter, and a wide array of low- and no-cost public services to all, while capitalist economies regularly sank into recession and had to continually struggle out of them on the wreckage of human lives.

By the 1980s, the USSR was showing the strains of the Cold War. Its economy was growing, but at slower pace than it had in the past. Military competition with its ideological competitor, the United States, had slowed growth in multiple ways. First, R&D resources were being monopolized by the military, starving the civilian economy of the best scientists, engineers, and machine tools. Second, military spending had increased to meet the Reagan administration’s abandonment of detente in favour of a renewed arms race that was explicitly targeted at crippling the Soviet economy. To deter US aggression, the Soviets spent a punishingly large percentage of GDP on the military while the Americans, with a larger economy, spent more in absolute terms but at a lower and more manageable share of national income. Third, to protect itself from the dangers of relying on foreign imports of important raw materials that could be cut off to bring the country to its knees, the Soviet Union chose to extract raw materials from its own vast territory. While making the USSR self-sufficient, internal sourcing ensnared the country in a Ricardian trap. The costs of producing raw materials increased, as new and more difficult-to-reach sources needed to be tapped as the older, easy-to-reach ones were exhausted. Fourth, in order to better defend the country, the Soviets sought allies in Eastern Europe and the Third World. However, because the USSR was richer than the countries and movements it allied with, it became the anchor and banker to other socialist countries, liberation movements, and states seeking to free themselves from despoliation by Western powers. As the number of its allies increased, and Washington manoeuvred to arm, finance, and support anti-communist insurgencies in an attempt to put added strain on the Soviet treasury, the costs to Moscow of supporting its allies mounted. These factors—corollaries of the need to provide for the Soviet Union’s defence—combined to push costs to the point where they seriously impeded Soviet economic growth.

With growth slowing, and the costs of defending the country increasing, it appeared as if it was only a matter of time before the USSR would find itself between the Scylla of an untenable military position and the Charybdis of arms race-driven bankruptcy. Mikhail Gorbachev, the country’s last leader, faced a dilemma: he could either bankrupt the economy by trying to keep pace with the Americans on arms spending or withdraw from the race altogether. Gorbachev chose the latter. He moved to end the Cold War, withdrawing military support from allies, and pledging cooperation with the United States. On the economic front, he set out to transform the Soviet Union into a Western-style social democracy. However, rather than rescuing the country from a future of ever slowing economic growth, Gorbachev’s capitulations on foreign and economic policy led to disaster. With the restraining hand of the Soviet Union lifted, the United States embarked on a series of aggressions around the world, beginning with Iraq, proceeding to Yugoslavia, Afghanistan, Iraq again, and then Libya, with numerous smaller interventions in between. Gorbachev’s abandonment of economic planning and efforts to clear the way for the implementation of a market economy pushed the country into crisis. Within five years, Russia was an economic basket case. Unemployment, homelessness, economic insecurity and social parasitism (living off the labour of others) returned with a vengeance.

On Christmas Day, 1991, the day the USSR officially ended, Gorbachev said, “We live in a new world. The Cold War is finished. The arms race and the mad militarization of states, which deformed our economy, society and values, have been stopped. The threat of world war has been lifted” (Roberts, 1999). This made Gorbachev wildly popular in the West. Russians were less enthusiastic. Contained within Gorbachev’s words was the truth about why the world’s first conscious attempt to build an alternative to capitalism had been brought to a close. It was not because the Soviet economic system had proved unworkable. On the contrary, it had worked better than capitalism. The real reason for the USSR’s demise was that its leadership capitulated to an American foe, which, from the end of World War II, and with growing vigour during the Reagan years, sought to arms race to death the Soviet economy. This was an economy that worked for the bottom 99 percent, and therefore, if allowed to thrive, would have discredited the privately owned, market-regulated economies that the top one percent favoured and benefited from. It was this model of free enterprise and market regulation which made vast wealth, security and comfort the prerogatives of captains of industry and titans of finance, and unemployment, poverty, hunger, economic insecurity, and indignity—the necessary conditions of the top one percent’s riches—the lot of everyone else.

The 21 years since the defeat of the USSR have not been kind. Stalin, under whose tutelage the world’s first publicly owned, planned economy was built, once issued a prophetic warning: “What would happen if capitalism succeeded in smashing the Republic of Soviets? There would set in an era of the blackest reaction in all the capitalist and colonial countries. The working class and the oppressed peoples would be seized by the throat, the positions of international communism would be lost” (Stalin, 1954). And just as Stalin had accurately prophesied 10 years before Operation Barbarossa, the Nazi invasion of the USSR, that his country had only 10 years to prepare for an attack, so too did he accurately foresee the consequences of the Soviet Union’s falling to the forces of capitalism. An era of the blackest reaction has, indeed, set in. Washington now has more latitude to use its muscular military to pursue its reactionary agenda around the world. Public ownership and planning hang on in Cuba and North Korea, but the United States and its allies use sanctions, diplomatic isolation and military harassment to sabotage the economies of the hold-outs (as they did the Soviet economy), so that the consequences can be falsely hung on what are alleged to be the deficiencies of public ownership and planning. They are in reality the consequences of a methodical program of low-level warfare. Encouraged to believe that the Soviet economic system had failed, many people, including both communist supporters and detractors of the Soviet Union, concluded that a system of public ownership and planning is inherently flawed. Communists abandoned communist parties for social democratic ones, or abandoned radical politics altogether. Social democrats shifted right, eschewing reform, and embracing neo-liberalism. In addition, Western governments, no longer needing to blunt the appeal of public ownership and planning, abandoned the public policy goal of full employment and declared robust public services to be no longer affordable (Kotz, 2001). At the same time, privatization in the former Soviet Union and formerly communist countries of Eastern Europe expanded the global supply of wage-labour, with predictable consequences for wage levels worldwide. The Soviet Union’s defeat has ushered in a heyday for capital. For the rest of us, our throats, as Stalin warned, have been seized.

The world’s largest capitalist economies have been in crisis since 2008. Some are trapped in an austerity death-spiral, some in the grips of recession, most growing slowly at best. Austerity—in reality the gutting of public services—is the prescribed pseudo-remedy. There is no end in sight. In some parts of Europe, official unemployment reaches well into the double-digits, youth unemployment higher still. In Greece, a country of 11 million, there are only 3.7 million employed (Walker and Kakaounaki, 2012). Moreover, the crisis can in no way be traced to an outside power systematically working to bring about capitalism’s demise, as the United States and its allies systematically worked to bring about the end of public ownership and planning in the USSR. Yet, free to develop without the encumbrance of an organized effort to sabotage it, capitalism is not working. Few point this out. By contrast, the Soviet model of public ownership and planning—which, from its inception was the target of a concerted effort to undermine it—never once, except during the extraordinary years of World War II, stumbled into recession, nor failed to provide full employment. Yet it is understood, including by some former supporters of the Soviet Union, to have been unworkable. Contrary to a widely held misconception, the experience of the Soviet Union did not demonstrate that an inherent weakness existed within its publicly owned, planned economy that doomed it to failure. It demonstrated, instead, the very opposite—that public ownership and planning could do what capitalism could not do: produce unremitting economic growth, full employment, an extensive array of free and nearly free public services, and a fairly egalitarian distribution of income. Moreover, it could do so year after year and continued to do so until the Soviet leadership pulled the plug. It also demonstrated that the top one percent would defend private ownership by using military, economic, and ideological means to crush a system that worked against them but worked splendidly for the bottom 99 percent (an effort that carries on today against Cuba and North Korea.)

The defeat of the Soviet Union has, indeed, ushered in a period of dark reaction. The way out remains, as ever, public ownership and planning—which the Soviet experience from 1928 to 1989 demonstrates works remarkably well—and struggle against those who would discredit, degrade or destroy it.

What Soviet public ownership and planning did for ordinary citizens of the USSR

The benefits of the Soviet economic system were found in the elimination of the ills of capitalism—an end to unemployment, inflation, depressions and recessions, and extremes of wealth and poverty; an end to exploitation, which is to say, the practice of living off the labour of others; and the provision of a wide array of free and virtually free public services.

Among the most important accomplishments of the Soviet economy was the abolition of unemployment. Not only did the Soviet Union provide jobs for all, work was considered a social obligation, of such importance that it was enshrined in the constitution. The 1936 constitution stipulated that “citizens of the USSR have the right to work, that is, are guaranteed the right to employment and payment for their work in accordance with quantity and quality.” On the other hand, making a living through means other than work was prohibited. Hence, deriving an income from rent, profits, speculation or the black market – social parasitism – was illegal (Szymanski, 1984). Finding a job was easy, because labour was typically in short supply. Consequently, employees had a high degree of bargaining power on the job, with obvious benefits in job security, and management paying close attention to employee satisfaction (Kotz, 2003).

Article 41 of the 1977 constitution capped the workweek at 41 hours. Workers on night shift worked seven hours but received full (eight-hour) shift pay. Workers employed at dangerous jobs (e.g., mining) or where sustained alertness was critical (e.g. physicians) worked six or seven-hour shifts, but received fulltime pay. Overtime work was prohibited except under special circumstances (Szymanski, 1984).

From the 1960s, employees received an average of one month of vacation (Keeran and Kenny, 2004; Szymanski, 1984) which could be taken at subsidized resorts (Kotz, 2003).

All Soviet citizens were provided a retirement income, men at the age of 60, and women at the age of 55 (Lerouge, 2010). The right to a pension (as well as disability benefits) was guaranteed by the Soviet constitution (Article 43, 1977), rather than being revocable and subject to the momentary whims of politicians, as is the case in capitalist countries.

That US citizens had to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point.”

That US citizens had to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point.”

Women were granted maternity leave from their jobs with full pay as early as 1936 and this, too, along with many other benefits, was guaranteed in the Soviet constitution (Article 122, 1936). At the same time, the 1936 constitution made provision for a wide network of maternity homes, nurseries and kindergartens, while the revised 1977 constitution obligated the state to help “the family by providing and developing a broad system of childcare…by paying grants on the birth of a child, by providing children’s allowances and benefits for large families” (Article 53). The Soviet Union was the first country to develop public childcare (Szymanski, 1984).

Women in the USSR were accorded equal rights with men in all spheres of economic, state, cultural, social and political life (Article 122, 1936), including the equal right with men to employment, rest and leisure, social insurance and education. Among its many firsts, the USSR was the first country to legalize abortions, which were available at no cost (Sherman, 1969). It was also the first country to bring women into top government positions. An intense campaign was undertaken in Soviet Central Asia to liberate women from the misogynist oppression of conservative Islam. This produced a radical transformation of the condition of women’s lives in these areas (Szymanski, 1984).

The right to housing was guaranteed under a 1977 constitutional provision (Article 44). Urban housing space, however, was cramped, about half of what it was per capita in Austria and West Germany. The reasons were inadequate building in Tsarist times, the massive destruction of housing during World War II, and Soviet emphasis on heavy industry. Prior to the October Revolution, inadequate urban housing was built for ordinary people. After the revolution, new housing was built, but the housing stock remained insufficient. Housing draws heavily on capital, which the government needed urgently for the construction of industry. In addition, Nazi invaders destroyed one-third to one-half of Soviet dwellings during the Second World War (Sherman, 1969).

City-dwellers typically lived in apartment buildings owned by the enterprise in which they worked or by the local government. Rents were dirt cheap by law, about two to three percent of the family budget, while utilities were four to five percent (Szymanski, 1984; Keeran and Kenny, 2004). This differed sharply with the United States, where rents consumed a significant share of the average family budget (Szymanski, 1984), and still do.

Food staples and other necessities were subsidized, while luxury items were sold well above their costs.

Public transportation was efficient, extensive, and practically free. Subway fare was about eight cents in the 1970s, unchanged from the 1930s (Szymanski, 1984). Nothing comparable has ever existed in capitalist countries. This is because efficient, affordable and extensive public transportation would severely limit the profit-making opportunities of automobile manufacturers, petroleum companies, and civil engineering firms. In order to safeguard their profits, these firms use their wealth, connections and influence to stymie development of extensive, efficient and inexpensive public alternatives to private transportation. Governments, which need to keep private industry happy so that it continues to provide jobs, are constrained to play along. The only way to alter this is to bring capital under public control, in order to use it to meet public policy goals set out in a consciously constructed plan.

The Soviet Union placed greater stress on healthcare than their capitalist competitors did. No other country had more physicians per capita or more hospital beds per capita than the USSR. In 1977, the Soviet Union had 35 doctors and 212 hospital beds per 10,000 compared to 18 doctors and 63 hospital beds in the United States (Szymanski, 1984). Most important, healthcare was free. That US citizens had to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point” (Sherman, 1969).

Education through university was also free, and stipends were available for post-secondary students, adequate to pay for textbooks, room and board, and other expenses (Sherman, 1969; Szymanski, 1984).

Income inequality in the Soviet Union was mild compared to capitalist countries. The difference between the highest income and the average wage was equivalent to the difference between the income of a physician in the United States and an average worker, about 8 to 10 times higher (Szymanski, 1984). The elite’s higher incomes afforded privileges no greater than being able to acquire a modest house and car (Kotz, 2000). By comparison, in 2010, Canada’s top-paid 100 CEOs received incomes 155 times higher than the average full-time wage. The average full-time wage was $43,000 (Canadian Centre for Policy Alternatives, 2011). An income 10 times larger would be $430,000—about what members of the capitalist elite make in a single week. A factor that mitigated the modest degree of Soviet income inequality was the access all Soviet citizens had to essential services at no, or virtually, no cost. Accordingly, the degree of material inequality was even smaller than the degree of income inequality (Szymanski, 1984).

Soviet leaders did not live in the opulent mansions that are the commonplace residences of presidents, prime ministers and monarchs in most of the world’s capitals (Parenti, 1997). Gorbachev, for example, lived in a four-family apartment building. Leningrad’s top construction official lived in a one-bedroom apartment, while the top political official in Minsk, his wife, daughter and son-in-law inhabited a two-bedroom apartment (Kotz and Weir, 1997). Critics of the Soviet Union accused the elite of being an exploiting ruling class, but the elite’s modest incomes and humble material circumstances raise serious doubt about this assessment. If it was indeed an exploiting ruling class, it was the oddest one in human history.

The Soviet economy’s record of growth under public ownership and planning

From the moment in 1928 that the Soviet economy became publicly owned and planned, to the point in 1989 that the economy was pushed in a free market direction, Soviet GDP per capita growth exceeded that of all other countries but Japan, South Korea and Taiwan. GDP per person grew by a factor of 5.2, compared to 4.0 for Western Europe and 3.3 for the Western European offshoots (the USA, Canada, Australia and New Zealand) (Allen, 2003). In other words, over the period in which its publicly owned, planned economy was in place, the USSR‘s record in raising incomes was better than that of the major industrialized capitalist countries. The Soviet Union’s robust growth over this period is all the more impressive considering that the period includes the war years when a major assault by Nazi Germany left a trail of utter destruction in its wake. The German invaders destroyed over 1,500 cities and towns, along with 70,000 villages, 31,000 factories, and nearly 100 million head of livestock (Leffler, 1994). Growth was highest to 1970, at which point expansion of the Soviet economy began to slow. However, even during this so-called (and misnamed) post-1970 period of stagnation, GDP per capita grew 27 percent (Allen, 2003).

The i-Phone. Produced by free enterprise? Guess again.

The i-Phone. Produced by free enterprise? Guess again.

While Soviet GDP per capita growth rates compare favorably with those of the major capitalist economies, a more relevant comparison is with the rest of the world. In 1928, the Soviet Union was still largely an agrarian country, and most people worked in agriculture, compared to a minority in Western Europe and North America. Hence, the economy of the USSR at the point of its transition to public ownership and planning was very different from that of the industrialized Western capitalist countries. On the other hand, the rest of the world resembled the Soviet Union in also being largely agrarian (Allen, 2003). It is therefore the rest of the world, not the United States and other advanced industrialized countries, with which the USSR should be compared. From 1928 to 1989, Soviet GDP per capita not only exceeded growth in the rich countries but exceeded growth in all other regions of the world combined, and to a greater degree. Hence, not only did the publicly owned, planned economy of the Soviet Union outpace the economies of richer capitalist economies, it grew even faster than the economies of countries that were most like the USSR in 1928. For example, outside its southern core, Latin America’s GDP per capita was $1,332 (1990 US dollars), almost equal to the USSR’s $1,370. By 1989, the Latin American figure had reached $4,886, but average income in the Soviet Union had climbed far higher, to $7,078 (Allen, 2003). Public ownership and planning had raised living standards to a higher level than capitalism had in Latin America, despite an equal starting point. Moreover, while the Soviet peacetime economy unfailingly expanded, the Latin American economy grew in fits and starts, with enterprises regularly shuttering their doors and laying off employees.

Perhaps the best illustration of how public ownership and planning performed better at raising living standards comes from a comparison of incomes in Soviet Central Asia with those of neighboring countries in the Middle East and South Asia. In 1928, these areas were in a pristinely pre-industrial state. Under public ownership and planning, incomes grew in Soviet Central Asia to $5,257 per annum by 1989, 32 percent higher than in neighboring capitalist Turkey, 44 percent higher than in neighboring capitalist Iran, and 241 percent higher than in neighboring capitalist Pakistan (Allen, 2003). For Central Asians, it was clear on which side of the Soviet Union’s border standards of living were highest.

US emulation of Soviet public funding of R&D

Advocates of a free enterprise economy would have you believe that public ownership and planning stifle innovation, while free enterprise encourages it. If that is the case, how do we explain:

• That the Soviet Union beat the United States into space in the 1950s, piling up a record of firsts in space exploration, and consequently setting off a panic in Washington?
• Most of the innovations in the United States, from the internet to Google’s search engine algorithm to advanced drugs and the i-Phone, are based, not on private investment, but government funding?

In fact, the truth about innovation is the exact opposite of what free-enterprise promoters would have us believe. It is not free enterprise, but planning and public funds, that drive it.

Soviet accomplishments in space, considered in light of the mistaken view that the USSR was always a poor second-best to the supposedly more dynamic United States, is truly startling. Soviet achievements include the first satellite, first animal in orbit, first human in orbit, first woman in orbit, first spacewalk, first moon impact, first image of the far side of the moon, first unmanned lunar soft landing, first space rover, first space station and first interplanetary probe. The panic created in Washington after the allegedly innovation-stifling Soviet economy allowed the USSR to beat its much richer ideological rival into space galvanized the United States to take a leaf from the Soviet book. Just as the Soviets were doing, Washington would use public funds to power research into innovations. This would be done through the Defense Advanced Research Projects Agency. The DARPA would channel public money to scientists and engineers for military, space and other research. Many of the innovations to come out of the DARPA pipeline would eventually make their way to private investors, who would use them for private profit (Mazzucato, 2011). In this way, private investors were spared the trouble of risking their own capital, as free enterprise mythology would have us believe they do. In this myth, far-seeing and bold capitalists reap handsome profits as a reward for risking their capital on research that might never pay-off. Except this is not how it works. It is far better for investors to invest their capital in ventures with less risk and quicker returns, while allowing the public to shoulder the burden of funding R&D with its many risks and uncertainties. Using their wealth, influence and connections, investors have successfully pressed politicians into putting this pleasing arrangement in place. Free enterprise reality, then, is based on the sucker system: Risk is “socialized” (i.e., borne by the public, the suckers) while benefits are “privatized” (by investors who have manipulated politicians into shifting to the public the burden of funding R&D.)

A study by Block and Keller (2008) found that between 1971 and 2006, 77 out of R&D Magazine’s top 88 innovations had been fully funded by the US government. Summarizing research by economist Mariana Mazzucato, Guardian columnist Seumas Milne (2012) points out that the

[a]lgorithms that underpinned Google’s success were funded by the public sector. The technology in the Apple iPhone was invented in the public sector. In both the US and Britain it was the state, not big pharma, that funded most groundbreaking ‘new molecular entity’ drugs, with the private sector then developing slight variations. And in Finland, it was the public sector that funded the early development of Nokia – and made a return on its investment.

Nuclear power, satellite and rocket technology, and the internet are other examples of innovations that were produced with public money, and have since been used for private profit. US president Barack Obama acknowledged the nature of the swindle in his 2011 State of the Nation Address. “Our free-enterprise system,” began the president, “is what drives innovation.” However, he immediately contradicted himself by saying, “But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need.”

All of this points to two important facts. (1) The United States kick-started innovation in its economy by emulating the Soviet model of state-directed research because free enterprise was not up to the task. (2) Rather than emulate the Soviet model for public benefit, the United States channels public money into R&D for private profit. From the second point can be inferred a third: The fact that the Soviets socialized the benefits that flow from socialized risk, while the United States privatizes them, reflects the antagonistic nature of the two societies: One, a mass-oriented society organized to benefit the masses; the other, a business society organized to benefit a minority of business owners. Capitalism, as the US president acknowledges, does not promote innovation, because “it is not always profitable for companies to invest in basic research.” On the other hand, state-directed funding is the source of innovation. Clearly, then, a political agenda has nurtured two myths: (a) That a system of public ownership and planning stifles innovation; (b) That the profit system stimulates it.

Why growth slowed

While the Soviet economy grew rapidly from 1928 to 1989 it never surpassed the economies of North America, Western Europe and Japan. Consequently, the USSR’s per capita income was always less than that of the industrialized capitalist economies. The comparative disadvantage in incomes and living standards was falsely attributed to the alleged inefficiencies of public ownership and planning, rather than to the reality that, having started further back than the rich capitalist countries, the Soviet Union had more ground to cover. When the race began in 1928, the Soviet Union was still a largely agrarian country while the United States was industrialized. Hence, the Soviet Union had to cover ground the United States had already covered when Russia was under the stifling rule of Tsarist tyranny. Moreover, it had to do so without riches extracted from other countries, as the United States, Britain, France and Japan had based part of their prosperity on exploiting their own formal and informal empires (Murphy, 2000). True, the USSR did have an empire of sorts—countries in Eastern Europe over which it exercised hegemony, but, except in the early post-WWII years, these countries were never exploited economically by the Soviet Union. If anything, the Soviets, who exported raw materials to Eastern Europe in return for manufactured goods, came out on the losing end of its trade relationship with its satellites. So long as they remained part of the Warsaw Pact—a defensive alliance formed after and in response to the creation of NATO—and maintained some semblance of public ownership and planning, Moscow allowed its Eastern European allies to chart their own course. Soviet hegemony, then, was limited to enforcing these two conditions (Szymanski, 1979).

By the mid-1970s there was serious concern in Washington that the Soviet economy was on a course to overtake that of the United States. Since Washington always pointed to the United States’ greater average income and higher living standards to mobilize the allegiance of its population to the free enterprise system, a Soviet lead would deal a mortal blow to the legitimacy of US capitalism. Careful estimates prepared in the United States showed that Soviet gross national product was gaining on that of the United States. In 1950, the Soviet economy was only one-third the size of the US economy but had grown to almost one-half only eight years later (Sherman, 1969). From the perspective of planners in Washington in the late 1950s, the danger loomed that at current rates of growth, the Soviet economy would overtake the US economy by 1982. At that point, the entire foundation of the US population’s belief in the legitimacy of free enterprise—that it produced higher living standards than public ownership and planning—would crumble. Something had to be done.

By 1975, the CIA estimated that the Soviet economy was 60 percent as large as the US economy (Kotz and Weir, 1997). However, Soviet economic growth was starting to slow. According to figures provided by Allen (2003), Soviet GDP per capita grew at an annual rate of 3.4 percent from 1928 to 1970, but at less than half that rate, 1.3 percent, from 1970 to 1989. Had the United States, alarmed at being beaten into space, and agitated by what seemed to be the very real prospect of being overtaken economically by the USSR, set out to sabotage Soviet economic progress?

The Cold War was never going to be kind to Soviet growth prospects. Soviet leaders recognized that a planned, publicly owned economy was an anathema to the captains of industry and titans of finance who use their wealth and connections to dominate policy in capitalist countries. The USSR had been invaded multiple times, and on two occasions by aggressive capitalist powers with the objective of wiping the Soviet system off the map. In order to deter future aggressions, it was necessary to keep pace militarily. Therefore, the Soviet Union struggled as best as it could to achieve a rough military parity to maintain a peaceful coexistence with its capitalist neighbours (Szymanski, 1979).

However, the smaller size of the Soviet economy relative to that of its ideological competitors created problems. The necessity of maintaining a rough military parity would mean spending a far higher percentage of GDP on the military compared to what the United States and other NATO countries spent on their armed forces. Resources that could otherwise have been deployed to industrial expansion to help the country catch up economically had instead to be channelled into self-defence (Murphy, 2000). From the 1950s through the 1970s, the Soviets spent 12 to 14 percent of their GDP on the military (Szymanski, 1984; Allen, 2003), a figure that would grow even higher later, when the Reagan administration hiked US military spending, anticipating a Soviet effort to keep up that would harm the USSR’s economy.

Another constraint imposed on the Soviet economy by the need to deter military aggression was the monopolization of R&D resources by the military. Keeping pace militarily involved an unceasing battle to catch up to US military innovations. When the United States exploded the first atom bomb in 1945, the Soviet Union raced to match the United States’ grim scientific feat, which it did four years later. The US introduction of the hydrogen bomb in 1952 was quickly followed by the Soviets exploding their own hydrogen bomb a year later. A US first in submarine-launched nuclear missiles was matched by the USSR a few years after. No major weapon was developed by the USSR first, with a single exception—the ICBM. Unlike the United States, the USSR had no military bases ringing its ideological rival, and therefore needed a way of delivering nuclear warheads over long distances. However, the aim was self-defence, and that the Soviet Union was usually in catch-up mode on weapons systems demonstrated that the United States was spurring the Cold War forward, not the USSR. For the Soviets, the Cold War was economic poison. For the Americans, the Cold War was a way to ruin the Soviet economy.

Because self-defence was a priority, the USSR’s best scientists and engineers were channelled into the military sector (Sherman, 1969). Soviet consumer goods were often said to have been of low quality, but no one ever said the same about Soviet military equipment. The reason why is clear: the military got first dibs on the best minds and best equipment and was never short of funding. There is a subsidiary point: high-quality Soviet arms were produced by a system of public ownership and planning, despite the myth that such a system is incapable of producing high-quality goods (Kotz, 2008). The necessity of channelling the bulk of, and best, R&D resources to the military meant that other sectors suffered, and GDP growth was impeded. For example, the Soviets floundered in their efforts to increase petroleum production because the metals, machinery, scientists and engineers needed to boost oil output were detailed to the military sector (Allen, 2003). Half of the machine tools produced and at least half of the R&D expenditures were going to the defence industry (Schweizer, 1994).

Another reason for the post-1975 slowdown in the Soviet economy was that the USSR had become ensnared in a Ricardian trap (Allen, 2003). The Soviet Union had an abundant supply of all the raw materials an industrial economy needed, and at first, they were easy to reach and therefore could be obtained at low cost. For example, in the early years of the USSR’s industrialization, open pit mines were dug near industrial centres. Minerals were close to the surface and could be transported over short distances to nearby factories. Therefore, production and transportation costs were minimal. However, over time, the minerals that were close to the surface were scooped out and pits became deeper and narrower. At deeper depths, the quantity of minerals that could be extracted diminished and the costs of reaching them increased. Eventually, the mines were exhausted, and new mines had to be opened, but at greater distances from industrial centres, which meant higher costs to transport raw materials to factories. The Soviet petroleum industry was equally caught in a Ricardian trap. In the early 1970s, the USSR was spending $4.6 billion per year to maintain its oil industry. As oil became more difficult to reach, the Soviets had to drill deeper and through harder rocks. Costs increased, reaching $6.0 billion by the end of the decade. By the early 1980s, costs had climbed to $9.0 billion a year (Schweizer, 1994). The Soviets could have escaped the Ricardian trap by shopping around for less expensive imports. However, that would have left them vulnerable to supply disruptions. The United States and its allies—who would always be hostile to the USSR, except when expediency dictated temporary alliances or easing of tension—could interdict raw materials heading to the USSR to bring the Soviet economy to its knees or extort concessions. In other words, given the very high likelihood that the United States would exploit opportunities to place the Soviet Union at a disadvantage, shopping around for cheap imports, rather than implementing a policy of resource self-sufficiency, was not a realistic option.

Soviet achievements in space: The first satellite, first animal in orbit, first human in orbit, first woman in orbit, first spacewalk, first moon impact, first image of the far side of the moon, first unmanned lunar soft landing, first space rover, first space station and first interplanetary probe.

Soviet achievements in space: The first satellite, first animal in orbit, first human in orbit, first woman in orbit, first spacewalk, first moon impact, first image of the far side of the moon, first unmanned lunar soft landing, first space rover, first space station and first interplanetary probe.

Another reason the Soviet economy slowed was that the costs to the USSR to support its allies began to mount to unsustainable levels. One way to bolster self-defence is to find friends who share the same enemy, and the Soviet Union set out to expand its alliance of friends by providing economic and military assistance to countries and movements hostile to the forces of reaction. In doing so, it became the banker for national liberation movements, Eastern European socialist countries, and various Third World countries seeking to escape and remain free from domination by powerful capitalist states. By 1981, the Soviet Union and its Eastern European allies had 96,000 economic advisers in 75 countries and 16,000 military advisers in 34 countries, together with a contingent of 39,000 Cuban troops in Africa, an army for which Moscow was ultimately footing the bill. At the same time, the Soviets were picking up the tab for 72,000 Third World students enrolled in Soviet and East European universities (Miliband, 1989). By 1980, Moscow was spending $44 billion a year on its allies (Keeran and Kenny, 2004). It gave $4.5 billion in aid to Warsaw from August 1980 to August 1981 alone to help contain the US-supported Solidarity movement (Schweizer, 1994). Meanwhile, the war in Afghanistan was draining the Soviet treasury to the tune of $3 to $4 billion per year. In other words, the costs of sustaining allies had grown enormous, raw material costs were mounting, the best scientists, engineers and machine tools were being monopolized by the military, and military expenditures were consuming a punishingly large percentage of national income.

A large part of the predicament the Soviets found themselves in was due to a decision the Reagan administration had taken to try to cripple the Soviet economy. In October 1983, US president Ronald Reagan unveiled what would become known as the Reagan Doctrine. “The goal of the free world must no longer be stated in the negative, that is, resistance to Soviet expansionism,” announced the US president. Instead, the “goal of the free world must instead be stated in the affirmative. We must go on the offensive with a forward strategy of freedom” (Roberts, 1999). This was a declaration of the end of détente. The gloves were off.

More formally, the Reagan Doctrine was spelled out in a series of national security decision directives, or NSDDs. NSDD-66 announced that it would be US policy to disrupt the Soviet economy, while NSDD-75 committed the United States to trying to drive up costs in the Soviet economy in order to plunge the USSR into a crisis. The Soviet economy was to be squeezed, and one of the ways was to induce Moscow to increase its defence budget (Schweizer, 1994). A hi-tech arms race would be the key. It would not only force Moscow to divert more resources to the military, but would channel even more of the USSR’s scientists, engineers, machine tools, and budget into military R&D, reducing productive investments and hobbling the civilian economy even more than the Cold War already had. The aim was to force the USSR “to expend precious lifeblood to run a race against a more athletic foe” (Schweizer, 1994), a foe which had a larger economy and more resources to last the race because it had started at a higher level of development and was plundering various countries around the world of their riches.

The Reagan Doctrine was spelled out in a series of national security decision directives, or NSDDs. NSDD-66 announced that it would be US policy to disrupt the Soviet economy, while NSDD-75 committed the United States to trying to drive up costs in the Soviet economy in order to plunge the USSR into a crisis.

The Reagan Doctrine was spelled out in a series of national security decision directives, or NSDDs. NSDD-66 announced that it would be US policy to disrupt the Soviet economy, while NSDD-75 committed the United States to trying to drive up costs in the Soviet economy in order to plunge the USSR into a crisis.

Over the first six years of his presidency, Reagan more than doubled US military expenditures, buying 3,000 warplanes, 3,700 strategic missiles, and close to 10,000 tanks (Schweizer, 1994). To keep up, Soviet military spending, previously at 12 to 14 percent of GDP, started to climb. Already twice as large as the United States’ as a percentage of national income (Silber, 1994) the defence budget grew larger still. Military expenditures increased by 45 percent in five years, considerably outpacing growth in the Soviet economy. By 1990, the Soviets were spending more than 20 percent of the country’s GDP on defence (Englund, 2011). At the same time, Moscow increased its military R&D spending nearly two-fold. In the spring of 1984, Soviet leader Konstantin Chernenko announced that ‘the complex international situation has forced us to divert a great deal of resources to strengthening the security of our country” (Schweizer, 1994).

Meanwhile, the Reagan administration had taken a page out of Che Guevara’s book. The Argentine revolutionary had called for not one, not two, but three Vietnams, to drain the US treasury. Turning Che’s doctrine against communism, CIA Director Bill Casey called for not one, not two, but a half a dozen Afghanistans. To bog down the Soviets in “their own Vietnam,” the Afghan mujahedeen were showered with money and arms. In Poland, financial, intelligence, and logistical support was poured into the Solidarity movement, forcing Moscow to increase support to the Polish government (Schweizer, 1994).

The Soviet media complained that the United States wanted to impose “an even more ruinous arms race,” adding that Washington hoped the Soviet economy would be exhausted (Izvestiya, 1986). Soviet foreign secretary Andrei Gromyko complained that the United States’ military build-up was aimed at exhausting the USSR’s material resources and forcing Moscow to surrender. Gorbachev echoed Gromyko, telling Soviet citizens that,

The US wants to exhaust the Soviet Union economically through a race in the most up-to-date and expensive space weapons. It wants to create various kinds of difficulties for the Soviet leadership, to wreck its plans, including in the social sphere, in the sphere of improving the standard of living of our people, thus arousing dissatisfaction among the people with their leadership (Schweizer, 1994).


By the mid-1980s, it was clear in both Washington and Moscow that the Soviet Union was in trouble. It was not that the system of public ownership and planning was not working. On the contrary, recognizing the advantages of the Soviet system, the United States itself had emulated it to stimulate innovation in its own economy. Moreover, the Soviet economy was still reliably expanding, as it had done every year in peacetime since Stalin had brought it under public control in 1928. However, defending the country in the face of a stepped up Cold War was threatening to choke off economic growth altogether. It was clear that Moscow’s prospects for keeping pace with the United States militarily, while at the same time propping up allies under attack by US-fuelled anti-communist insurgencies and overthrow movements, were far from sanguine. The United States had manoeuvred the Soviet Union into a trap. If Moscow continued to try to match the United States militarily, it would eventually bankrupt itself, in which case its ability to deter US aggression would be lost. If it did not try to keep pace, it could no longer deter US aggression. No matter which way Moscow turned, the outcome would be the same. The only difference was how long it would take the inevitable to play out.

Gorbachev chose to meet the inevitable sooner rather than later. His foreign affairs adviser, Anatoly Chernayaev, recalls that it was “an imperative for Gorbachev that we had to put an end to the Cold War, that we had to reduce our military budget significantly, that we had to limit our military industrial complex in some way” (Schweizer, 1994). The necessity of reining in the defence budget was echoed by another Gorbachev adviser, Aleksandr Yokovlev, who would later recall that “It was clear that our military spending was enormous and we had to reduce it” (Blum, 1995). Gorbachev therefore withdrew support from allies and pledged cooperation with the United States. This was a surrender. The capitulation was hidden behind honeyed phrases about promoting international cooperation and fostering universal human values, but the rhetoric did not hide the fact that Gorbachev was throwing in the towel. He described the surrender as a victory for humanity, declaring that he had averted “the threat of nuclear war,” ended the “nuclear arms race,” reduced “conventional armed forces,” settled “numerous regional conflicts involving the Soviet Union and the United States,” and replaced “the division of the European continent into hostile camps with … a common European home” (Gorbachev, 2011). In reducing the threat of a global nuclear conflagration, Gorbachev had indeed achieved a victory for humanity. However, the victory was brought about by caving in to the United States, which was now free to run roughshod over countries that were too weak to refuse US demands that they yield to US political, military and economic domination.

Gorbachev is still widely admired in the West, but his popularity stops at the Russian border. A March 2011 poll found that only one in 20 Russians admire the Soviet Union’s last leader, and that “perestroika,” the name for Gorbachev’s move toward a market economy, “has almost purely negative connotations.”

Gorbachev is still widely admired in the West, but his popularity stops at the Russian border. A March 2011 poll found that only one in 20 Russians admire the Soviet Union’s last leader, and that “perestroika,” the name for Gorbachev’s move toward a market economy, “has almost purely negative connotations”

On domestic matters, Gorbachev—who identified himself with the virtually social democratic position of the Italian Communist Party (Hobsbawm, 1994)—tried to turn the Soviet Union into a Western-style social democracy (Roberts, 1999). He cited the need to reverse the slowdown in the Soviet economy as his rationale for the transition (Gorbachev, 1988). Economic growth had certainly slowed, and there was indeed a danger that continued slow growth would threaten the country’s position vis-à-vis its capitalist rivals. However, Gorbachev’s solution amounted to, “If you can’t beat ‘em, join ‘em.” The planning apparatus, which had unfailingly charted a course for unremitting growth during peacetime, was dismantled, in order to move the economy toward regulation by market forces. Rather than boosting economic growth, as Gorbachev hoped, the abandonment of planning did the very opposite. The economy tumbled headlong into an abyss, from which the USSR’s successor countries would not emerge for years. As one wag put it, “Stalin found the Soviet Union a wreck and left it a superpower; Gorbachev found it a superpower and left it a wreck.” Gorbachev is still widely admired in the West, but his popularity stops at the Russian border. A March 2011 poll found that only one in 20 Russians admire the Soviet Union’s last leader, and that “perestroika,” the name for Gorbachev’s move toward a market economy, “has almost purely negative connotations” (Applebaum, 2011).

The superior system

With few exceptions, what passes for serious discussion of the USSR is shot through with prejudice, distortion, and misconception. Locked in battle with the Soviet Union for decades, Washington deliberately fostered misunderstandings of its ideological foe. The aim was to make the USSR appear bleak, brutal, repressive, economically sluggish and inefficient—not the kind of place anyone of sound mind would want to emulate or live in. Today, scholars, journalists, politicians, state officials, and even some communists repeat old Cold War propaganda. The Soviet economy, in their view, never worked particularly well. However, the truth of the matter is that it worked very well. It grew faster over the period it was publicly owned and planned than did the supposedly dynamic US economy, to say nothing of the economies of countries that were as undeveloped as the USSR was in 1928, when the Soviet economy was brought under public control. The Soviet economy was innovative enough to allow the USSR to beat the United States into space, despite the United States’ greater resources, an event that inspired the Americans to mimic the Soviet Union’s public support for R&D. Moreover, the Soviet system of public ownership and planning efficiently employed all its capital and human resources, rather than maintaining armies of unemployed workers and inefficiently running below capacity, as capitalist economies regularly do. Every year, from 1928 to 1989, except during the war years, the Soviet economy reliably expanded, providing jobs, shelter, and a wide array of low- and no-cost public services to all, while capitalist economies regularly sank into recession and had to continually struggle out of them on the wreckage of human lives.

The US National Intelligence Council warns ominously that a crisis-prone world economy could produce chaos and distress on an even greater scale than the last crisis (Shanker, 2012). Offering a “grim prognosis” on the world economy, the UN warns of “a new global recession that mires many countries in a cycle of austerity and unemployment for years” (Gladstone, 2012). Yet at the same time, we are told that the Soviet economy never worked, and that capitalism, with its regular crises, and failure to provide employment, food, clothing and shelter to all, is both the only game in town and the superior system. Clearly, it is neither superior—on the contrary, it is clearly inferior—nor it is the only choice. Not only can we do better, we have done better. It is time to tear down the wall of politically engineered misconceptions about public ownership and planning. For too long, the wall has kept us from seeing a viable alternative model to capitalism whose track record of unequalled success points to a realistic and possible future for the bottom 99 percent—a future free from unemployment, recessions, extremes of wealth and poverty, and where essential goods and services are available at no cost to all.

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We Lived Better Then

Posted in Communism, East Germany, German Democratic Republic, Opprobrious figures, Socialism, Soviet Union by what's left on December 20, 2011

Over two decades ago Vaclav Havel, the pampered scion of a wealthy Prague family, helped usher in a period of reaction, in which the holdings and estates of former landowners and captains of industry were restored to their previous owners, while unemployment, homelessness, and insecurity—abolished by the Reds– were put back on the agenda. Havel is eulogized by the usual suspects, but not by his numberless victims, who were pushed back into an abyss of exploitation by the Velvet revolution and other retrograde eruptions. With the fall of Communism allowing Havel and his brother to recover their family’s vast holdings, Havel’s life—he worked in a brewery under Communism—became much richer. The same can’t be said for countless others, whose better lives under Communism were swept away by a swindle that will, in the coming days, be lionized in the mass media on the occasion of the 20th anniversary of the Soviet Union’s demolition. The anniversary is no time for celebration, except for the minority that has profited from it. For the bulk of us it ought to be an occasion to reflect on what the bottom 99 percent of humanity was able to achieve for ourselves outside the strictures, instabilities and unnecessary cruelties of capitalism.

Over the seven decades of its existence, and despite having to spend so much time preparing, fighting, and recovering from wars, Soviet socialism managed to create one of the great achievements of human history: a mass industrial society that eliminated most of the inequalities of wealth, income, education and opportunity that plagued what preceded it, what came after it, and what competed with it; a society in which health care and education through university were free (and university students received living stipends); where rent, utilities and public transportation were subsidized, along with books, periodicals and cultural events; where inflation was eliminated, pensions were generous, and child care was subsidized. By 1933, with the capitalist world deeply mired in a devastating economic crisis, unemployment was declared abolished, and remained so for the next five and a half decades, until socialism, itself was abolished. Excluding the war years, from 1928, when socialism was introduced, until Mikhail Gorbachev began to take it apart in the late 1980s, the Soviet system of central planning and public ownership produced unfailing economic growth, without the recessions and downturns that plagued the capitalist economies of North America, Japan and Western Europe. And in most of those years, the Soviet and Eastern European economies grew faster.

The Communists produced economic security as robust (and often more so) than that of the richest countries, but with fewer resources and a lower level of development and in spite of the unflagging efforts of the capitalist world to sabotage socialism. Soviet socialism was, and remains, a model for humanity — of what can be achieved outside the confines and contradictions of capitalism. But by the end of the 1980s, counterrevolution was sweeping Eastern Europe and Mikhail Gorbachev was dismantling the pillars of Soviet socialism. Naively, blindly, stupidly, some expected Gorbachev’s demolition project to lead the way to a prosperous consumer society, in which Soviet citizens, their bank accounts bulging with incomes earned from new jobs landed in a robust market economy, would file into colorful, luxurious shopping malls, to pick clean store shelves bursting with consumer goods. Others imagined a new era of a flowering multiparty democracy and expanded civil liberties, coexisting with public ownership of the commanding heights of the economy, a model that seemed to owe more to utopian blueprints than hard-headed reality.

Of course, none of the great promises of the counterrevolution were kept. While at the time the demise of socialism in the Soviet Union and Eastern Europe was proclaimed as a great victory for humanity, not least by leftist intellectuals in the United States, two decades later there’s little to celebrate. The dismantling of socialism has, in a word, been a catastrophe, a great swindle that has not only delivered none of what it promised, but has wreaked irreparable harm, not only in the former socialist countries, but throughout the Western world, as well. Countless millions have been plunged deep into poverty, imperialism has been given a free hand, and wages and benefits in the West have bowed under the pressure of intensified competition for jobs and industry unleashed by a flood of jobless from the former socialist countries, where joblessness once, rightly, was considered an obscenity. Numberless voices in Russia, Romania, East Germany and elsewhere lament what has been stolen from them — and from humanity as a whole: “We lived better under communism. We had jobs. We had security.” And with the threat of jobs migrating to low-wage, high unemployment countries of Eastern Europe, workers in Western Europe have been forced to accept a longer working day, lower pay, and degraded benefits. Today, they fight a desperate rearguard action, where the victories are few, the defeats many. They too lived better — once.

But that’s only part of the story. For others, for investors and corporations, who’ve found new markets and opportunities for profitable investment, and can reap the benefits of the lower labor costs that attend intensified competition for jobs, the overthrow of socialism has, indeed, been something to celebrate. Equally, it has been welcomed by the landowning and industrial elite of the pre-socialist regimes whose estates and industrial concerns have been recovered and privatized. But they’re a minority. Why should the rest of us celebrate our own mugging?

Prior to the dismantling of socialism, most people in the world were protected from the vicissitudes of the global capitalist market by central planning and high tariff barriers. But once socialism fell in Eastern Europe and the Soviet Union, and with China having marched resolutely down the capitalist road, the pool of unprotected labor available to transnational corporations expanded many times over. Today, a world labor force many times larger than the domestic pool of US workers — and willing to work dirt cheap — awaits the world’s corporations. You don’t have to be a rocket scientist to figure out what the implications are for North American workers and their counterparts in Western Europe and Japan: an intense competition of all against all for jobs and industry. Inevitably, incomes fall, benefits are eroded, and working hours extended. Predictably, with labor costs tumbling, profits grow fat, capital surpluses accumulate and create bubbles, financial crises erupt and predatory wars to secure investment opportunities break out.

Growing competition for jobs and industry has forced workers in Western Europe to accept less. They work longer hours, and in some cases, for less pay and without increases in benefits, to keep jobs from moving to the Czech Republic, Slovakia and other former socialist countries — which, under the rule of the Reds, once provided jobs for all. More work for less money is a pleasing outcome for the corporate class, and turns out to be exactly the outcome fascists engineered for their countries’ capitalists in the 1930s. The methods, to be sure, were different, but the anti-Communism of Mussolini and Hitler, in other hands, has proved just as useful in securing the same retrograde ends. Nobody who is  subject to the vagaries of the labor market – almost all of us — should be glad Communism was abolished.

Maybe some us don’t know we’ve been mugged. And maybe some of us haven’t been. Take the radical US historian Howard Zinn, for example, who, along with most other prominent Left intellectuals, greeted the overthrow of Communism with glee [1]. I, no less than others, admired Zinn’s books, articles and activism, though I came to expect his ardent anti-Communism as typical of left US intellectuals. To be sure, in a milieu hostile to Communism, it should come as no surprise that conspicuous displays of anti-Communism become a survival strategy for those seeking to establish a rapport, and safeguard their reputations, with a larger (and vehemently anti-Communist) audience.

But there may be another reason for the anti-Communism of those whose political views leave them open to charges of being soft on Communism, and therefore of having horns. As dissidents in their own society, there was always a natural tendency for them to identify with dissidents elsewhere – and the pro-capitalist, anti-socialist propaganda of the West quite naturally elevated dissidents in socialist countries to the status of heroes, especially those who were jailed, muzzled and otherwise repressed by the state. For these people, the abridgement of civil liberties anywhere looms large, for the abridgement of their own civil liberties would be an event of great personal significance. By comparison, the Reds’ achievements in providing a comfortable frugality and economic security to all, while recognized intellectually as an achievement of some note, is less apt to stir the imagination of one who has a comfortable income, the respect of his peers, and plenty of people to read his books and attend his lectures. He doesn’t have to scavenge discarded coal in garbage dumps to eke out a bare, bleak, and unrewarding existence. Some do.

Karol, 14, and his sister Alina, 12, everyday trudge to a dump, where mixed industrial waste is deposited, just outside Swietochlowice, in formerly socialist Poland. There, along with their father, they look for scrap metal and second grade coal, anything to fetch a few dollars to buy a meager supply of groceries. “There was better life in Communism,” says Karol’s father, 49, repeating a refrain heard over and over again, not only in Poland, but also throughout the former socialist countries of Eastern Europe and the former Soviet Union. “I was working 25 years for the same company and now I cannot find a job – any job. They only want young and skilled workers.” [2] According to Gustav Molnar, a political analyst with the Laszlo Teleki Institute, “the reality is that when foreign firms come here, they’re only interested in hiring people under 30. It means half the population is out of the game.” [3] That may suit the bottom lines of foreign corporations – and the overthrow of socialism may have been a pleasing intellectual outcome for well-fed, comfortable intellectuals from Boston – but it hardly suits that part of the Polish population that must scramble over mountains of industrial waste – or perish. Maciej Gdula, 34, a founding member of the group, Krytyka Polityczna, or Political Critique, complains that many Poles “are disillusioned with the unfulfilled promises of capitalism. They promised us a world of consumption, stability and freedom. Instead, we got an entire generation of Poles who emigrated to go wash dishes.” [4] Under socialism “there was always work for everybody” [5] – at home. And always a place to live, free schools to go to, and doctors to see, without charge. So why was Howard Zinn glad that Communism was overthrown?

That the overthrow of socialism has failed to deliver anything of benefit to the majority is plain to see. One decade after counterrevolution skittered across Eastern Europe, 17 former socialist countries were immeasurably poorer. In Russia, poverty had tripled. One child in 10 – three million Russian children – lived like animals, ill-fed, dressed in rags, and living, if they were lucky, in dirty, squalid flats. In Moscow alone, 30,000 to 50,000 children slept in the streets. Life expectancy, education, adult-literacy and income declined. A report by the European Children’s Trust, written in 2000, revealed that 40 percent of the population of the former socialist countries – a number equal to one of every two US citizens – lived in poverty. Infant mortality and tuberculosis were on the rise, approaching Third World levels. The situation, according to the UN, was catastrophic. And everywhere the story was the same. [6, 7, 8, 9]

Paul Cockshot points out that:

The restoration of the market mechanism in Russia was a vast controlled experiment. Nation, national character and culture, natural resources and productive potential remained the same, only the economic mechanism changed. If Western economists were right, then we should have expected economic growth and living standards to have leapt forward after the Yeltsin shock therapy. Instead the country became an economic basket-case. Industrial production collapsed, technically advanced industries atrophied, and living standards fell so much that the death rate shot up by over a third leading to some 7.7 million extra deaths.

For many Russians, life became immeasurably worse.

If you were old, if you were a farmer, if you were a manual worker, the market was a great deal worse than even the relatively stagnant Soviet economy of Brezhnev. The recovery under Putin, such as it was, came almost entirely as a side effect of rising world oil prices, the very process that had operated under Brezhnev. [10]

While the return of capitalism made life harsher for some, it proved lethal for others.  From 1991 to 1994, life expectancy in Russia tumbled by five years. By 2008, it had slipped to less than 60 years for Russian men, a full seven years lower than in 1985 when Gorbachev came to power and began to dismantle Soviet socialism. Today “only a little over half of the ex-Communist countries have regained their pretransition life-expectancy levels,” according to a study published in the medical journal, The Lancet. [11]

“Life was better under the Communists,” concludes Aleksandr. “The stores are full of things, but they’re very expensive.” Victor pines for the “stability of an earlier era of affordable health care, free higher education and housing, and the promise of a comfortable retirement – things now beyond his reach.” [12] A 2008 report in the Globe and Mail, a Canadian newspaper, noted that “many Russians interviewed said they still grieve for their long, lost country.” Among the grievers is Zhanna Sribnaya, 37, a Moscow writer.  Sribnaya remembers “Pioneer camps when everyone could go to the Black Sea for summer vacations. Now, only people with money can take those vacations.” [13]

Ion Vancea, a Romanian who struggles to get by on a picayune $40 per month pension says, “It’s true there was not much to buy back then, but now prices are so high we can’t afford to buy food as well as pay for electricity.” Echoing the words of many Romanians, Vancea adds, “Life was 10 times better under (Romanian Communist Party leader Nicolae) Ceausescu.” [14] An opinion poll carried out last year found that Vancea isn’t in the minority. Conducted by the Romanian polling organisation CSOP, the survey found that almost one-half of Romanians thought life was better under Ceauşescu, compared to less than one-quarter who thought life is better today. And while Ceauşescu is remembered in the West as a Red devil, only seven percent said they suffered under Communism.  Why do half of Romanians think life was better under the Reds? They point to full employment, decent living conditions for all, and guaranteed housing – advantages that disappeared with the fall of Communism. [15]

Next door, in Bulgaria, 80 percent say they are worse off now that the country has transitioned to a market economy. Only five percent say their standard of living has improved. [16] Mimi Vitkova, briefly Bulgaria’s health minister for two years in the mid-90s, sums up life after the overthrow of socialism: “We were never a rich country, but when we had socialism our children were healthy and well-fed. They all got immunized. Retired people and the disabled were provided for and got free medicine. Our hospitals were free.” But things have changed, she says. “Today, if a person has no money, they have no right to be cured. And most people have no money. Our economy was ruined.” [17] A 2009 poll conducted by the Pew Global Attitudes Project found that a paltry one in nine Bulgarians believe ordinary people are better off as a result of the transition to capitalism. And few regard the state as representing their interests. Only 16 percent say it is run for the benefit of all people. [18]

In the former East Germany a new phenomenon has arisen: Ostalgie, a nostalgia for the GDR. During the Cold War era, East Germany’s relative poverty was attributed to public ownership and central planning – sawdust in the gears of the economic engine, according to anti-socialist mythology. But the propaganda conveniently ignored the fact that the eastern part of Germany had always been less developed than the west, that it had been plundered of its key human assets at the end of World War II by US occupation forces, that the Soviet Union had carted off everything of value to indemnify itself for its war losses, and that East Germany bore the brunt of Germany’s war reparations to Moscow. [19] On top of that, those who fled East Germany were said to be escaping the repression of a brutal regime, and while some may indeed have been ardent anti-Communists fleeing repression by the state, most were economic refugees, seeking the embrace of a more prosperous West, whose riches depended in large measure on a history of slavery, colonialism, and ongoing imperialism—processes of capital accumulation the Communist countries eschewed and spent precious resources fighting against.

Today, nobody of an unprejudiced mind would say that the riches promised East Germans have been realized. Unemployment, once unheard of, runs in the double digits and rents have skyrocketed. The region’s industrial infrastructure – weaker than West Germany’s during the Cold War, but expanding — has now all but disappeared. And the population is dwindling, as economic refugees, following in the footsteps of Cold War refugees before them, make their way westward in search of jobs and opportunity. [20] “We were taught that capitalism was cruel,” recalls Ralf Caemmerer, who works for Otis Elevator. “You know, it didn’t turn out to be nonsense.” [21] As to the claim that East Germans have “freedom” Heinz Kessler, a former East German defense minister replies tartly, “Millions of people in Eastern Europe are now free from employment, free from safe streets, free from health care, free from social security.” [22] Still, Howard Zinn was glad communism collapsed. But then, he didn’t live in East Germany.

So, who’s doing better? Vaclav Havel, the Czech playwright turned president, came from a prominent, vehemently anti-socialist Prague family, which had extensive holdings, “including construction companies, real estate and the Praque Barrandov film studios”. [23] The jewel in the crown of the Havel family holdings was the Lucerna Palace, “a pleasure palace…of arcades, theatres, cinemas, night-clubs, restaurants, and ballrooms,” according to Frommer’s. It became “a popular spot for the city’s nouveau riches to congregate,” including a young Havel, who, raised in the lap of luxury by a governess, doted on by servants, and chauffeured around town in expensive automobiles, “spent his earliest years on the Lucerna’s polished marble floors.” Then, tragedy struck – at least, from Havel’s point of view. The Reds expropriated Lucerna and the family’s other holdings, and put them to use for the common good, rather than for the purpose of providing the young Havel with more servants. Havel was sent to work in a brewery.

“I was different from my schoolmates whose families did not have domestics, nurses or chauffeurs,” Havel once wrote. “But I experienced these differences as disadvantage. I felt excluded from the company of my peers.” [24] Yet the company of his peers must not have been to Havel’s tastes, for as president, he was quick to reclaim the silver spoon the Reds had taken from his mouth. Celebrated throughout the West as a hero of intellectual freedom, he was instead a hero of capitalist restoration, presiding over a mass return of nationalized property, including Lucerna and his family’s other holdings.

The Roman Catholic Church is another winner. The pro-capitalist Hungarian government has returned to the Roman Catholic Church much of the property nationalized by the Reds, who placed the property under common ownership for the public good. With recovery of many of the Eastern and Central European properties it once owned, the Church is able to reclaim its pre-socialist role of parasite — raking in vast amounts of unearned wealth in rent, a privilege bestowed for no other reason than it owns title to the land. Hungary also pays the Vatican a US$9.2 million annuity for property it has been unable to return. [25]  (Note that a 2008 survey of 1,000 Hungarians by the Hungarian polling firm Gif Piackutato found that 60 percent described the era of Communist rule under Red leader Janos Kadar as Hungary’s happiest while only 14 percent said the same about the post-Communist era.  [26])

The Church, former landowners, and CEOs aside, most people of the former socialist bloc aren’t pleased that the gains of the socialist revolutions have been reversed. Three-quarters of Russians, according to a 1999 poll [27] regret the demise of the Soviet Union. And their assessment of the status quo is refreshingly clear-sighted. Almost 80 percent recognize liberal democracy as a front for a government controlled by the rich. A majority (correctly) identifies the cause of its impoverishment as an unjust economic system (capitalism), which, according to 80 percent, produces “excessive and illegitimate inequalities.” [28] The solution, in the view of the majority, is to return to socialism, even if it means one-party rule.  Russians, laments the anti-Communist historian Richard Pipes, haven’t Americans’ taste for multiparty democracy, and seem incapable of being cured of their fondness for Soviet leaders. In one poll, Russians were asked to list the 10 greatest people of all time, of all nations. Lenin came in second, Stalin fourth and Peter the Great came first. Pipes seems genuinely distressed they didn’t pick his old boss, Ronald Reagan, and is fed up that after years of anti-socialist, pro-capitalist propaganda, Russians remain committed to the idea that private economic activity should be restricted, and “the government [needs] to be more involved in the country’s economic life.” [29] An opinion poll which asked Russians which socio-economic system they favor, produced these results.

•             State planning and distribution, 58%;

•             Based on private property and distribution, 28%;

•             Hard to say, 14%. [30]

So, if the impoverished peoples of the formerly socialist countries pine for the former attractions of socialism, why don’t they vote the Reds back in? Socialism can’t be turned on with the flick of a switch. The former socialist economies have been privatized and placed under the control of the market. Those who accept the goals and values of capitalism have been recruited to occupy pivotal offices of the state. And economic, legal and political structures have been altered to accommodate private production for profit. True, there are openings for Communist parties to operate within the new multiparty liberal democracies, but Communists now compete with far more generously funded parties in societies in which their enemies have restored their wealth and privileges and use them to tilt the playing field strongly in their favor. They own the media, and therefore are in a position to shape public opinion and give parties of private property critical backing during elections. They spend a king’s ransom on lobbying the state and politicians and running think-tanks which churn out policy recommendations and furnish the media with capitalist-friendly “expert” commentary. They set the agenda in universities through endowments, grants and the funding of special chairs to study questions of interest to their profits. They bring politicians under their sway by doling out generous campaign contributions and promises of lucrative post-political career employment opportunities. Is it any wonder the Reds aren’t simply voted back into power? Capitalist democracy means democracy for the few—the capitalists—not a level-playing field where wealth, private-property and privilege don’t matter.

And anyone who thinks Reds can be elected to office should reacquaint themselves with US foreign policy vis-a-vis Chile circa 1973. The United States engineered a coup to overthrow the socialist Salvador Allende, on the grounds that Chileans couldn’t be allowed to make the ”irresponsible” choice of electing a man Cold Warriors regarded as a Communist. More recently, the United States, European Union and Israel, refused to accept the election of Hamas in the Palestinian territories, all the while hypocritically presenting themselves as champions and guardians of democracy.

Of course, no forward step will be taken, can be taken, until a decisive part of the population becomes disgusted with and rejects what exists today, and is convinced something better is possible and is willing to tolerate the upheavals of transition. Something better than unceasing economic insecurity, private (and for many, unaffordable) health care and education, and vast inequality, is achievable. The Reds proved that. It was the reality in the Soviet Union, in China (for a time), in Eastern Europe, and today, hangs on in Cuba and North Korea, despite the incessant and far-ranging efforts of the United States to crush it.

It should be no surprise that Vaclav Havel, as others whose economic and political supremacy was, for a time, ended by the Reds, was a tireless fighter against socialism, and that he, and others, who sought to reverse the gains of the revolution, were cracked down on, and sometimes muzzled and jailed by the new regimes. To expect otherwise is to turn a blind eye to the determined struggle that is carried on by the enemies of socialism, even after socialist forces have seized power. The forces of reaction retain their money, their movable property, the advantages of education, and above all, their international connections. To grant them complete freedom is to grant them a free hand to organize the downfall of socialism, to receive material assistance from abroad to reverse the revolution, and to elevate the market and private ownership once again to the regulating principles of the economy. Few champions of civil liberties argue that in the interests of freedom of speech, freedom of assembly and freedom of the press, that Germans ought to be allowed to hold pro-Nazi rallies, establish a pro-Nazi press, and organize fascist political parties, to return to the days of the Third Reich. To survive, any socialist government, must, of necessity, be repressive toward its enemies, who, like Havel, will seek their overthrow and the return of their privileged positions. This is demonized as totalitarianism by those who have an interest in seeing anti-socialist forces prevail, regard civil and political liberties (as against a world of plenty for all) as the pinnacle of human achievement, or have an unrealistically sanguine view of the possibilities for the survival of socialist islands in a sea of predatory capitalist states.

Where Reds have prevailed, the outcome has been far-reaching material gain for the bulk of the population: full employment, free health care, free education through university, free and subsidized child care, cheap living accommodations and inexpensive public transportation. Life expectancy has soared, illiteracy has been wiped out, and homelessness, unemployment and economic insecurity have been abolished. Racial strife and ethnic tensions have been reduced to almost the vanishing point. And inequalities in wealth, income, opportunity, and education have been greatly reduced. Where Reds have been overthrown, mass unemployment, underdevelopment, hunger, disease, illiteracy, homelessness, and racial conflict have recrudesced, as the estates, holdings and privileges of former fat cats have been restored. Communists produced gains in the interest of all humanity, achieved in the face of very trying conditions, including the unceasing hostility of the West and the unremitting efforts of the former exploiters to restore the status quo ante.

1. Howard Zinn, “Beyond the Soviet Union,” Znet Commentary, September 2, 1999.

2. “Left behind by the luxury train,” The Globe and Mail, March 29, 2000.

3. “Support dwindling in Czech Republic, Hungary, Poland,” The Chicago Tribune, May 27, 2001.

4. Dan Bilefsky, “Polish left gets transfusion of young blood,” The New York Times, March 12, 2010.

5. “Support dwindling in Czech Republic, Hungary, Poland,” The Chicago Tribune, May 27, 2001.

6. “An epidemic of street kids overwhelms Russian cities,” The Globe and Mail, April 16, 2002.

7. “UN report says one billion suffer extreme poverty,” World Socialist Web Site, July 28, 2003.

8. Associated Press, October 11, 2000.

9. “UN report….

10. Paul Cockshott, “Book review: Red Plenty by Francis Spufford”, Marxism-Leninism Today, http://mltoday.com/en/subject-areas/books-arts-and-literature/book-review-red-plenty-986-2.html

11. David Stuckler,  Lawrence King  and Martin McKee, “Mass Privatization and the Post-Communist Mortality Crisis:  A Cross-National Analysis,”   Judy Dempsey, “Study looks at mortality in post-Soviet era,” The New York Times, January 16, 2009.

12. “In Post-U.S.S.R. Russia, Any Job Is a Good Job,” New York Times, January 11, 2004.

13. Globe and Mail (Canada), June 9, 2008.

14. “Disdain for Ceausescu passing as economy worsens,” The Globe and Mail, December 23, 1999.

15. James Cross, “Romanians say communism was better than capitalism”, 21st Century Socialism, October 18, 2010. http://21stcenturysocialism.com/article/romanians_say_communism_was_better_than_capitalism_02030.html “Opinion poll: 61% of Romanians consider communism a good idea”, ActMedia Romanian News Agency, September 27, 2010. http://www.actmedia.eu/top+story/opinion+poll%3A+61%25+of+romanians+consider+communism+a+good+idea/29726

16. “Bulgarians feel swindled after 13 years of capitalism,” AFP, December 19, 2002.

17. “Bulgaria tribunal examines NATO war crimes,” Workers World, November 9, 2000.

18. Matthew Brunwasser, “Bulgaria still stuck in trauma of transition,” The New York Times, November 11, 2009.

19. Jacques R. Pauwels, “The Myth of the Good War: America in the Second World War,” James Lorimer & Company, Toronto, 2002. p. 232-235.

20. “Warm, Fuzzy Feeling for East Germany’s Grey Old Days,” New York Times, January 13, 2004.

21. “Hard lessons in capitalism for Europe’s unions,” The Los Angeles Times, July 21, 2003.

22. New York Times, July 20, 1996, cited in Michael Parenti, “Blackshirts & Reds: Rational Fascism & the Overthrow of Communism,” City Light Books, San Francisco, 1997, p. 118.

23. Leos Rousek, “Czech playwright, dissident rose to become president”, The Wall Street Journal, December 19, 2011.

24. Dan Bilefsky and Jane Perlez, “Czechs’ dissident conscience, turned president”, The New York Times, December 18, 2011.

25. U.S. Department of State, “Summary of Property Restitution in Central and Eastern Europe,” September 10, 2003. http://www.state.gov/p/eur/rls/or/2003/31415.htm

26. “Poll shows majority of Hungarians feel life was better under communism,” May 21, 2008, www.politics.hu

27. Cited in Richard Pipes, “Flight from Freedom: What Russians Think and Want,” Foreign Affairs, May/June 2004.

28. Ibid.

29. Ibid.

30. “Russia Nw”, in The Washington Post, March 25, 2009.

Social Democracy, Soviet Socialism and the Bottom 99 Percent

Posted in Communism, Social Democracy, Socialism, Soviet Union by what's left on October 30, 2011

By Stephen Gowans

A measure of just how far to the right US electoral politics are is that the country doesn’t have a mainstream social democratic party. This absence prompted Seymour Martin Lipset and Gary Marks to write It Didn’t Happen Here (1), the “it” being a social democratic party that could count on the ongoing support of a sizeable fraction of the working class population. By contrast, Western Europe and Canada have long had such parties, and social democratic parties have formed governments in Britain, France, Germany, Italy, Spain, Greece and Canada as well as in Scandinavia and other places.

Many left-leaning US citizens are envious of countries that have strong social democratic parties, but their envy is based mainly on romantic illusions, not reality. Western Europe and Canada may be represented by mass parties at the Socialist International, but the subtitle of Lipset and Marks’ book, Why Socialism Failed in the United States, is just as applicable to these places as it is to the United States. For socialism—in the sense of a gradual accumulation of reforms secured through parliamentary means eventually leading to a radical transformation of capitalist society–not only failed in the United States, it failed too in the regions of the world that have long had a strong social democratic presence. Even a bourgeois socialism, a project to reform (though not transcend) capitalism, has failed.

This essay explores the reasons for this failure by examining three pressures that shape the agendas of social democratic parties (by which I mean parties that go by the name Socialist, Social Democrat, Labour, NDP, and so on.) These are pressures to:

• Broaden the party’s appeal.
• Avoid going to war with capital.
• Keep the media onside.

These pressures are an unavoidable part of contesting elections within capitalist democracies, and apply as strongly to parties dominated by business interests as they do to parties that claim to represent the interests of the working class, labour, or these days, ‘average’ people or ‘working families’. The behaviour and agenda of any party that is trapped within the skein of capitalist democracy and places great emphasis on electoral success—as social democratic parties do–is necessarily structured and constrained by the capitalist context. As such, while social democratic parties may self-consciously aim to represent the bottom 99 percent of society, they serve–whether intending to or not—the top one percent.

So how is it, then, that egalitarian reforms have been developed in capitalist democracies if not through the efforts of social democratic parties? It’s true that social democrats pose as the champions of these programs, and it’s also true that conservatives are understood to be their enemies, yet conservatives have played a significant role in pioneering them, and social democrats, as much as right-wing parties, have been at the forefront of efforts to weaken and dismantle them. Contrary to the mythology of social democratic parties, the architects of what measures exist in capitalist democracies for economic security and social welfare haven’t been social democrats uniquely or even principally, but often conservatives seeking to calm working class stirrings and secure the allegiance to capitalism of the bottom 99 percent of society against the counter-example (when it existed) of the Soviet Union.

Pressure to Broaden the Party’s Appeal

Social democratic parties are usually made up of core supporters drawn from the bottom 99 percent of society who are committed to an underlying set of principles that they are unwilling to move away from, and an opposing faction, also drawn from the 99 percent, that is ready to compromise on principle to make the party more popular and increase its chances of electoral success.

The latter group is typically made up of the party’s candidates and elected officials, who have a direct personal interest in expanding the party’s base of support to win public office and secure its attendant perquisites. Owing to this interest, they are often willing to sacrifice principle for immediate electoral gain.

On the other hand, supporters of core principles tend to be non-elected members. Their role is to furnish the party with cash and volunteer labour. Without a direct personal interest in sacrificing principle to broaden the party’s appeal, they insist that principle be adhered to, even at the expense of limiting the party’s popularity. To these party members, politics is about changing popular sentiment to match the party’s principles, not changing the party’s principles to match popular sentiment.

Of course, these are only tendencies. Some elected members are uncompromisingly committed to principle, while some grassroots members are prepared to sacrifice principle for electoral gain.

The conflict between the two factions is hardly an equal one. Since social democratic parties exist to select candidates and get them elected, the party’s parliamentary caucus, and its aides and advisors, wield outsize influence. The party leader and key advisers determine the party’s electoral platform, its strategy in opposition, and its agenda in government. The grassroots members of the party have little or no influence over the party’s parliamentary agenda. Except for electing candidates and a leader, they play an indirect and very limited role in setting the party’s direction.

Hence, social democratic parties are dominated by a stratum whose direct personal interests are defined by the electoral successes of the party. Since electoral success depends on the degree of overlap between party principles and popular sentiment—and since it is often easier to change the party’s platform than public opinion– this faction will often find itself ready to compromise on principle as the easiest way to expand the party’s popularity. And since it is this stratum that sets the party’s parliamentary and electoral agenda, it is almost inevitable that founding principles will be sacrificed to electoral expediency.

Avoiding War with Capital

If that weren’t enough, even a social democratic party that comes to power with undiluted reformist ambitions will find that compromise is necessary for political survival. Social democrats believe that it is possible to reform society in egalitarian directions within the context of capitalism. Even democratic socialists, who favour a radical socialist transformation of capitalist society, pledge to bring this about in a gradual, parliamentary fashion. This means working within the political institutions of capitalist society.

But egalitarian reforms are never in the direct interests of capital, although they may be it its indirect, defensive, interests, if its dominant position in society is threatened. Under these circumstances, banks, corporations and major investors—the top one percent—may, either directly, or through the governments they dominate, offer concessions and reforms to the bottom 99 percent as a necessary sop to preserve their place at the top. This only happens, however, in the face of impending revolutionary upheavals, or where an alternative system threatens to illuminate the failings of the capitalist system and undermine its legitimacy.

But absent an inspiring counter-example or threat of insurrectionary disturbance, compromises are unnecessary. And social democratic parties are nothing if not adverse to revolutionary upheavals and alternatives that operate outside a capitalist framework. Consequently, members of the top one percent have no fear that social democratic parties will seek to topple them from their privileged position at the apex of society. On the contrary, social democratic parties are more likely to strive to demonstrate that they can be relied upon to act as trustworthy guardians of the capitalist economy (and therefore of the interests of the one percent who own and control it.) The action of Greece’s Socialist government to protect the investments of lenders at a considerable cost to the Greek working class, and over the class’s fierce resistance, is a case in point.

Meaningful efforts to transfer part of the profits of capital to funds for improving the economic security and social welfare of the bottom 99 percent (that is, efforts to reclaim part of the surplus the 99 percent produce) never get very far before meeting determined resistance. And capital’s ability to combat threats to its profits and property is formidable. Its control over the media and interests in public relations firms allow it to launch public opinion assaults on egalitarian reforms to bleed them of popular support. A social democratic government might back off its reforms, reasoning that its chances of future electoral success are unpromising in the face of a harshly negative media climate.

More significantly, capital may relocate to other, more accommodating jurisdictions, or threaten to do so, thereby touching of or threatening to touch off an economic crisis, in turn destabilizing the rule of any government that challenges it. Corporations may also curtail investments, either as a punitive measure, or because reforms have attenuated returns on investment. In either case, a social democratic party that seeks to undertake reforms within a capitalist framework must bend to the logic of capitalism–and the logic is hardly friendly to egalitarian reforms.

Egalitarian reforms, however, have been achieved over the years in Western capitalist societies, despite these obstacles, and this reality would seem to call my argument into question. Yet the number and nature of the reforms have fallen short of the original ambitions of social democracy, and in recent decades, have been abridged, weakened and sometimes cancelled altogether, often by social democratic governments themselves.

The first social insurance schemes were developed in Germany, not by social democrats, but by Prince Otto von Bismarck, a conservative who understood the value of social insurance in pacifying a restive working class. The British Liberal governments of 1906-1914 followed with their own ambitious schemes of pensions and health and unemployment insurance to calm working class stirrings. (2) In the United States, the idea of social security didn’t come from unions or the Democrats but from the Rockefellers, who were searching for ways to avert labour unrest and avoid unionization. Likewise, collective bargaining wasn’t the brainchild of unions, but of corporate leaders who wanted to reduce the violence and uncertainty of labour relations. (3) Social democracy often claims credit for these gains, but it was conservatives who conceded them to protect the tranquil digestion of the profits, interest and rents of the top one percent from the disturbances of the bottom 99 percent.

Many reforms were introduced after World War II, at a time Western Europe lay in ruins, and was struggling to pick itself up from the devastation of the war. Liberal democracy had lost its sheen, and in the face of economic tribulations and the rising star of the Soviet Union, socialism had gripped the popular imagination. There was a very real possibility that Western Europeans would turn away from capitalism, and the United States, and the new Western European post-war governments, laboured to inoculate Europe against the threat of socialism. Part of the effort involved the introduction of major social welfare reforms, such as the National Health Service in Britain. True, the NHS was introduced by a Labour government, but conservative governments in Western Europe introduced similar programs at the same time—and for the same reasons. (4) It was the need to secure the allegiance of Western Europeans to capitalism against the threat of socialism, not social democratic parliamentary activism, that brought forward important concessions to the majority.

Thus, conservatives seeking to eclipse threats to the stability of capitalist society posed by extra-parliamentary agitation and the counter-example of the Soviet Union have been the principal architects of ambitious schemes of social insurance. Social democrats may have been involved, however not as instigators, but as participants in essentially conservative schemes aimed at safeguarding the top one percent from the potential revolutionary action of the bottom 99 percent. With labour largely quiescent in recent decades and far from revolutionary, and the demise of the Soviet Union (and China’s taking the capitalist road) leaving the world with few living counter-examples to capitalism, capital has been able to revoke reforms it conceded in more restive times. The Occupy Wall Street movement, and anti-austerity agitations in Europe, are early signals of a possible reversal of tide.

The Soviet Counter-Example

It is instructive to consider Soviet social welfare, to understand what capitalist democracies once competed against, and to appreciate its breadth and depth. Although it is certainly unfashionable in capitalist democracies to say so, it is true all the same that the Soviet Union was organized to serve the interests of the mass of its people, and not to enrich an elite of bankers, major investors and corporate titans, as is true in our own societies, and in Russia and other countries of the former Soviet Union today.

Some will object that the USSR was organized to serve the interests of the Communist Party elite, and that it too was divided between the 99 percent and the one percent. To be sure, the Soviet Union was not built along anarchist lines. There was an elite, but the advantages the elite enjoyed were picayune by the standards of capitalist democracies. The elite lived in modest apartments and had incomes relative to the average industrial worker that were no greater than the incomes of physicians in the United States relative to the average US industrial wage. Top Communist Party officials did not own productive property and therefore could not transfer it, and neither could they transfer position or privilege, across generations to their children. Moreover, the very mild level of income disparity in the Soviet Union was mitigated by the reality that many necessities were available free of charge or at highly subsidized rates. (5)

Employment in the USSR was guaranteed—indeed, obligated (an important point to correct one of the cruder misconceptions that socialism amounts to the unemployed collecting welfare cheques.) Work was considered a social duty. Living off of rent, profits, speculation or the black market – social parasitism – was illegal. Education was free through university, with living stipends for post-secondary students. The USSR had a lower teacher to student ratio than the United States. Healthcare was free, and drugs prescribed in the hospital or for chronic illness were also free. The Soviet Union had the greatest number of doctors per capita of any country in the world and had more hospital beds per person than the United States or Britain. That US citizens have to pay for their healthcare was considered extremely barbaric in the Soviet Union, and Soviet citizens “often questioned US tourists quite incredulously on this point.” (6) Soviet workers received an average of three weeks of paid vacation per year. Necessities, such as food, clothing, transportation and housing were subsidized. By law, rent could exceed no more than five percent of a citizen’s income, compared to 25 to 30 percent or more in the United States. Women were granted paid maternity leave as early as 1936. The constitution of 1977 guaranteed that “The state (would help) the family by providing and developing a broad system of childcare…by paying grants on the birth of a child, by providing children’s allowances and benefits for large families.” All Soviet citizens were eligible for generous retirement pensions—men at age 60, women at 55. Concerning women’s rights: “The Soviet Union was the first country to legalize abortions, develop public child care, and bring women into top government jobs. The radical transformation of women’s position was most pronounced in the traditionally Islamic areas, where an intense campaign liberated women from extremely repressive conditions.” (7) The work week was limited to 41 hours and overtime work was prohibited except under special circumstances. Night-shift workers worked only seven hours per day (but were paid for eight), and people who worked at dangerous jobs (coal miners, for example) or jobs that required constant alertness (physicians, for example) worked shorter shifts but received full pay. (8)

To be sure, life could be harder in the Soviet Union compared to what it was for middle- and upper-income citizens of the rich capitalist democracies (but not the poor of these countries nor the millions of Blacks and Hispanics in US ghettoes nor the denizens of the capitalist global south, i.e., the bulk of humanity.) Housing was guaranteed and rents extremely low, but the housing stock was limited. The Nazis had destroyed much of the country’s living accommodations, and the USSR’s emphasis on heavy industry slowed the building of replacement stock. Incomes, too, were lower, but the Soviet Union had started at a particularly low level of economic development, and despite rapid gains, had not caught up to the West at the point of its demise. Still, life was more certain. And on such human development measures as infant mortality, life expectancy, doctors per capita, adult literacy, daily calories per person, and educational attainment, the Soviet Union and other communist countries performed at the same level as richer, industrialized capitalist countries, and better than capitalist countries at the same level of economic development. (9)

But didn’t the Soviet Union come to an end because its publicly-owned and planned economy broke down? Not at all. Excluding the war years, the Soviet economy grew every year from the point socialism was introduced in 1928 until the last Soviet leader, Mikhail Gorbachev, began to dismantle it in the late 1980s. And for most of those years it grew faster than the capitalist economies of North America and Western Europe. (10) Indeed, by the mid 1970s, there was serious concern in Washington that the Soviet economy would soon surpass that of the United States. (11)

The Soviet Union’s demise is more aptly described as a capitulation (some say suicide (12)) rather than an economic collapse. The torrid pace of Soviet economic growth began to slow in the 1970s, for a variety of reasons. An exhaustive examination of all the reasons would require more space than is available here. But there is one reason worth quickly mentioning. The country’s efforts to keep pace militarily with the United States and NATO monopolized research & development, depriving the civilian economy of the fuel it needed to innovate to overtake the US economy. (13) (Complaints may have frequently been made about the quality of Soviet consumer goods, but no one complained about the quality of Soviet military hardware. (14)) If the Soviets failed to surpass capitalism, or worse, fell behind, the commitment of Soviet citizens to socialism would weaken. What’s more, the country’s ability to defend itself would either atrophy, or the country would be called upon to allocate increasingly larger proportions of its budget to defence. Neither option was sustainable.

To address these looming problems, Gorbachev formulated a two-prong solution. First, he would yield to the Americans on a number of foreign policy fronts. Second, he would reduce the role of planning in the economy in favour of enterprise autonomy and markets. The first prong would reduce military tension with the United States and lessen the burden on the Soviet economy of military spending and aid to national liberation movements and socialist allies. The second, it was hoped, would kick the economy into a higher gear. Neither worked. Gorbachev’s capitulations on foreign policy and abandonment of socialist allies emboldened counter-revolutionary forces in Eastern Europe and dispirited Communist parties on the USSR’s western borders. Eastern Europe’s governments fell. The successor governments reoriented their economies to the West, disrupting the Soviet economy, which had been tightly integrated with them. At the same time, the abrupt transition to enterprise autonomy and markets sent the Soviet economy into a tail-spin. GDP fell sharply—not because the socialist economy had broken down, but because it was being torn apart. Gorbachev’s conciliation with US foreign policy and steps toward market socialism transformed a manageable difficulty into a catastrophe. As one wag put it, Stalin found the Soviet Union a wreck and by building socialism left it a superpower. Gorbachev found it a superpower and by abandoning socialism left it a wreck.

The point, however, isn’t to explore the reasons for the Soviet Union’s demise, but to show that while it existed, the USSR provided a successful counter-example to capitalism. The ideological struggle of the capitalist democracies against the Soviet Union entailed the provision of robust social welfare programs and the translation of productivity gains into a monotonically rising standard of living. Once the ideological struggle came to an end with the closing of the Cold War, it was no longer necessary to impart these advantages to the working classes of North America, Western Europe and Japan. Despite rising productivity, growth in household incomes was capped, and social welfare measures were systematically scaled back.

Social democracy did nothing to reverse or arrest these trends. It was irrelevant. When strong social welfare measures and rising incomes were needed by the top one percent to undercut working class restlessness and the Soviet Union’s counter-example, these advantages were conferred on the bottom 99 percent by both social democratic and conservative governments. When these sops were no longer needed, both conservative and social democratic governments enacted measures to take them back.

Keeping the Media Onside

Capitalist domination of the mass media also acts to pressure social democratic parties to move toward the right. This happens because:

• The mass media define the legitimate range of policy options, and public opinion settles within it.
• Ambitious social democratic leaders shift the party’s agenda to the right to intersect with mass media-shaped public opinion.
• Party leaders keep the party’s agenda within the confines of the legitimate range of policy options to avoid negative, or no, media coverage during elections.

Since capitalist forces would use the high-profile and visible platform of their mass media to vilify and discredit any party that openly espoused socialism or strongly promoted uncompromisingly progressive policies, social democratic parties willingly accept the capitalist straitjacket, embracing middle-of-the-road, pro-capitalist policies, while shunting their vestigial socialist ambitions to the side or abandoning them altogether. They planted themselves firmly on the left boundary of the possible, the possible being defined by conservative forces.


When social democratic parties espoused socialism as an objective, even if a very distant one, the socialism they espoused was to be achieved with the permission of capital on capital’s terms–an obvious impossibility. It is perhaps in recognizing this impossibility that most social democratic parties long ago abandoned socialism, if not in their formal programs, then certainly in their deeds. That social democratic parties should have shifted from democratic socialist ambitions to the acceptance of capitalism and the championing of reforms within it, and then finally to the dismantling of the reforms, is an inevitable outcome of the pressures cited above.

But the outcome is ultimately traceable to what history surely reveals to be a bankrupt strategy: trying to arrive at socialism, or at least, at a set of robust measures congenial to the interests of the bottom 99 percent, within the hostile framework of a system that is dominated by the top one percent. The best that has been accomplished, and its accomplishment cannot be attributed to social democratic parliamentary activism, is a set of revocable reforms that were conceded under the threat, even if unlikely, of revolution and in response to capitalism’s need to compete ideologically with the Soviet Union. These reforms are today being revoked, by conservative and social democratic governments alike. The reality is that social democracy, which had set out to reform capitalism on behalf of the bottom 99 percent, was reformed by it, and acts now to keep the top one percent happy in return for every now and then championing mild ameliorative measures that conservative forces would concede anyway under pressure.

There are three lessons to be drawn from social democracy’s failure.

• Measures of economic security and social welfare within capitalism come not from social democracy but from militant, extra-parliamentary activity which threatens business’s tranquil digestion of profits.
• These measures—granted by conservative forces, not taken by the bottom 99 percent–remain revocable within capitalism, and are munificent as the degree of working class stirrings and presence of counter-examples allow.
• In absolute terms, the Soviet system of public-ownership and economic planning proved to be as successful and often more successful than the capitalism of the richest countries in providing employment and secure access to health care, education, housing and child care and was more successful relative to its level of economic development.

What social democrats claimed to achieve (but didn’t), Soviet socialism did achieve. And what Soviet socialism did achieve was lost the moment the last Soviet leader steered his country along the path of social democracy.

1. Seymour Martin Lipset and Gary Marks. It Didn’t Happen Here: Why Socialism Failed in the United States. W.W. Norton & Company. 2000.

2. Eric Hobsbawm. The Age of Empire: 1875-1914. Abacus. 1987. P 103.

3. G. William Domhoff, Who Rules America? Power & Politics. Fourth Edition. McGraw Hill. 2002. pp 164-169

4. Albert Szymanski. The Capitalist State and the Politics of Class. Winthrop Publishers, Inc. 1978. p .268

5. David Kotz and Fred Weir. Revolution from Above: The Demise of the Soviet System. Routledge, 1997, pp. 26-28

6. Howard J. Sherman. The Soviet Economy. Little, Brown and Company, 1969.

7. Albert Szymanski. Human Rights in the Soviet Union, Zed Books Ltd, London, 1984.

8. I’ve drawn from numerous sources on Soviet social welfare and employment policy. Albert Szymanski. Is the Red Flag Flying? The Political Economy of the Soviet Union Today, Zed Press, London, 1979; Michael Parenti. Blackshirts & Reds: Rational Fascism and the Overthrow of Communism. City Light Books, 1997; Roger Keeran and Thomas Kenny. Socialism Betrayed: Behind the Collapse of the Soviet Union, International Publishers, New York, 2004; David Kotz and Fred Weir. Revolution from Above: The Demise of the Soviet System. Routledge, 1997.

9. Shirley Cereseto, “Socialism, Capitalism and Inequality,” The Insurgent Sociologist. Vol. XI, No. 2, Spring 1982.

10. David M. Kotz. “The Demise of the Soviet Union and the International Socialist Movement Today”. Paper written for the International Symposium on the 20th Anniversary of the Former Soviet Union and its Impact, Beijing, April 23, 2011.11.

11. David M. Kotz. “Socialism and Capitalism: Are They Qualitatively Different Socioeconomic Systems?” Paper written for the symposium “Socialism after Socialism: Economic Problems,” sponsored by the Institute of Economics of the Russian Academy of Sciences, Moscow, December 6-8, 2006.

12.”Socialism,” Castro said, “did not die from natural causes; it was a suicide.” Roger Keeran and Thomas Kenny. Socialism Betrayed: Behind the Collapse of the Soviet Union, International Publishers, New York, 2004. P 222.

13. On the role of R&D in the slowdown of the Soviet economy see: Robert C. Allen. Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution, Princeton University Press, 2003; Peter Schweizer. Victory: The Reagan Administration’s Secret Strategy that Hastened the Collapse of the Soviet Union, The Atlantic Monthly Press, New York, 1994; and Howard J. Sherman. The Soviet Economy. Little, Brown and Company, 1969.

14. David M. Kotz. “What Economic Structure for Socialism?” Paper written for the Fourth International Conference “Karl Marx and the Challenges of the XXI Century, Havana, May 5-8, 2008.

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Socialism’s Agenda Time

Posted in Socialism, Soviet Union by what's left on August 8, 2011

By Stephen Gowans

From 1928, when the Soviet Union laid the foundations of its socialist economy, until the late 1980s, when Gorbachev began to dismantle them, the Soviet economy grew without pause, except during the period of the Nazi war machine’s scorched-earth invasion. Unemployment and later economic insecurity became ills of the past.

True, growth slowed beginning in the 1970s, but the major culprits were the diversion of budgets and R&D to the military to counter threats of US and NATO aggression, and growing resource extraction costs, not the alleged inefficiencies of public ownership and central planning, as is now widely believed. (1)

In fact, Soviet socialism—while it existed–worked better than capitalism in producing economic growth.

From 1928 to 1989, GDP per capita grew in the USSR by a factor of 5.2, compared to 4.0 in Western Europe and 3.3 in the major industrial offshoots of Western Europe—the United States, Canada, Australia and New Zealand.

And importantly, Soviet growth happened without the recurrent recessions—and their attendant pain in unemployment, hunger, and despair–that were routine features of the capitalist economies over the same period.

Indeed, while capitalism was mired in a major depression during the 1930s, leaving hundreds of millions without work, the Soviet economy was expanding rapidly, absorbing all available manpower. And while the dual ills of inflation and unemployment ran rampant in the stagflation crisis that roiled the capitalist economies during the 1970s, the Soviet economy expanded without interruption and without inflation or joblessness.

But that’s not what we’re told today. The received wisdom—rooted not in reality but Cold War propaganda—is that the Soviet economy collapsed under the weight of it inefficiencies, and that the demise of the USSR proves that an economic system based on public ownership, central planning and production for use, is unworkable. Even many Marxists believe this, touting the merits of “market socialism” as the only workable alternative.

And yet the Soviet economy’s record of peacetime expansion and full employment remained unblemished until Gorbachev began to experiment with the very same market socialism that many Marxists now embrace.

Hence, Soviet socialism’s reputation for being unworkable is underserved. A slow-down in economic growth—having as much to do with US efforts to cripple the USSR by embroiling it in a ruinous arms race as it did with internal problems–has been transformed into a myth about economic collapse.

Myths work both ways. While they can turn successes into what appear to be failures, then can also turn failures into what appear to be successes.

So it is with capitalism. With a major bank bailout needed to rescue it, the US economy in recession on Main Street, European economies falling like dominoes under the weight of stagnation and mounting debt, and long-term unemployment stuck at alarmingly high levels with no sign of improvement, few people are pointing out the obvious: capitalism isn’t working. Had the Soviet economy’s record been as bad, it would have long ago been judged, not as inefficient, but as an inhumane disaster—a pox on humanity to be eradicated as quickly as possible.

And yet, in a period of deep crisis for capitalism, many of the Marxist organizations that you would think would be hammering home the point that surely, we can do better than capitalism, aren’t. Instead—with notable and inspiring exceptions–they’re talking about other things—about how the main battle is against “the Right”, by which is meant Republicans and Conservatives, and how socialism won’t be on the agenda for another 500 years.

Another 500 years?

There’s a self-fulfilling prophesy here. Socialism doesn’t boil up spontaneously and come knocking at the door asking politely to be put on the agenda. Like any agenda item, someone has to put it there. If socialism is always deferred to a distant future, no matter how deeply capitalism sinks into crisis, no matter what toll capitalism needlessly takes on the lives of hundreds of millions, no matter how pressing the need for socialism’s arrival, it will never show up on the agenda – not in 500 years, not in 1,000.

The future—as mass unemployment, worsening economic malaise, and austerity make clear–has arrived.

Surely we can do better than capitalism. The time to put socialism on the agenda is now.

1. For discussions of Soviet economic performance see: Robert C. Allen. 2003. Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution. Princeton University Press, 2003; David M. Kotz. “The Demise of the Soviet Union and the International Socialist Movement Today”. Paper written for the International Symposium on the 20th Anniversary of the Former Soviet Union and its Impact, Beijing, April 23, 2011; and Roger Keeran and Thomas Kenny. “A Rejoinder to Erwin Marquit’s Critique of Socialism Betrayed”. Nature, Society, and Thought, vol. 17, no. 3. 2004.

The far right has a ready answer. Does the left?

Posted in Communism, Marxism, Moderate Left, Racism, Socialism, Soviet Union, Xenophobia by what's left on September 25, 2010

By Stephen Gowans

“The search for scapegoats has started,” observes German magazine editor Michael Naumann, alluding to growing anti-immigrant sentiment throughout Europe. The Swedes “elected an anti-immigrant party to Parliament for the first time, and the French are busy repatriating Roma” while “Germans continue to debate a best-selling book blaming Muslim immigrants for ‘dumbing down society’.” (1) Complaints are heard in England that England is no longer for the English, while a paroxysm of Islamophobia marks a US campaign to block a Ground Zero mosque, which is neither a mosque nor at Ground Zero. Naumann’s point is taken, but he misses the reality. The search hasn’t just begun, it’s complete.

These days, the paradigm for scapegoating is provided by the Nazis’ blaming Jews for the ills of the inter-war years, a period of intense capitalist crisis. The parallel is the latest crisis, with its mass unemployment, insecurity, stagnant and shrinking incomes, and in some places, fiscal austerity. The real blame lies with capitalism–a system whose internal dynamics regularly produce wrenching downturns, making life uncertain, challenging and sometimes cold, bleak and humiliating for countless millions. How many people 50 years of age and older live, either without hope of ever again finding work, or in fear they’ll lose their jobs and never work again? How many young people have failed to land a first job, or are forced to navigate an uncertain world of low-paying, part-time, contract or temporary positions? How many are working harder, for less? In times of crisis the desperate, the humiliated, the frightened, look for an explanation for their situation.

They don’t have to look far. The far right has a ready answer—that immigrants are stealing our jobs and freeloading on social services. The first part has a ring of truth to it. Governments, after all, do use immigration policy to manage labor market flexibility, a euphemism for a pool of employees large enough to meet capital’s current demand for labor with a reserve army of job seekers left over. The reserve army–eager to take the place of those who already have work– maintains downward pressure on wages and keeps those with jobs in line. Without keen competition for employment, the price of labor would rise, eating into profits, possibly so much that capitalists would no longer invest, and the system would come to a halt. Labor market flexibility, then, is necessary to the smooth functioning of the system. But because people compete for jobs, any measure which increases the intensity of competition is hostile to their interests. It limits their bargaining power and increases the chances someone else will get the job they hold or want.

In the competition of all against all, those who bear the greatest burden are the workers who fill the ranks of the reserve army, or go from one low-paying job to another, denied any form of economic security. It’s easy for them to blame their plight on the immigrants they see working in jobs they want (though regularly in jobs they would disdain to hold), because it is often with them they compete. It’s true, they also compete against people of the same ethnicity, color and national origin, but don’t hold them to blame. But differences in skin color, accents, cultural practices and religion facilitate the creation of in-group-out-group divisions, making it easy to mark out the competition.

At the same time, the non-immigrant working poor often live side by side with newly arrived immigrants, some of whom have no work, and get by on welfare payments and sometimes criminal activity. Their presence is a source of confusion and resentment to the working poor, who question the wisdom of their governments’ accepting new immigrants–whose upkeep can be subsidized in part by the working poors’ taxes–at a time of economic downturn.


Crises, you would think, would provide opportunities to transcend the capitalist system. At these times the system’s problems are encountered the most acutely and therefore the motivation to overcome them ought to be greatest, but crises paradoxically have often led to the rise of far right parties and anti-immigrant sentiment. The reason why is two-fold: The far right’s seemingly plausible explanation for the insecurity many people are forced to bear; and the left. When the left provides a compelling alternative explanation and mobilizes mass energy around it and thereby threatens to take power, charismatic far right leaders are provided with money to rally public support for a nationalist cause and vie with the left for power. When the left fails to offer a compelling alternative explanation, the far right movement remains limited, poorly organized, and largely spontaneous; it’s not needed to protect the system from challenge, and so is left in its inchoate state. The far right isn’t pressed into service and built up as a major force unless the left is strong.

The dominant left response to the recent rise of xenophobic sentiment has been moral suasion and anti-racism demonstrations, a strategy that possibly owes more to satisfying the psychological needs of the practitioners than concern over efficacy. It fails to attack the root cause of the disease, trying to suppress the symptoms instead. Campaigns of anti-racism offer their practitioners cathartic opportunities to express moral indignation (which may be the underlying motivation for carrying them out), but their effectiveness is questionable unless accompanied by an assault on the root causes. The recent wave of anti-immigrant sentiment didn’t arise in a vacuum. Its momentum comes from economic crisis, and if one wants to mobilize the energy that far right explanations attract, a credible solution must be offered to the critical underlying problem: economic insecurity. Against the far right’s explanation that immigration is the cause of joblessness, the left could point out that insecurity is caused by the failure –indeed refusal–of capitalism to offer secure employment to all; that the solution is to transcend the capitalist system; and that where it has been transcended in the past, secure employment has been made available to all, along with guaranteed healthcare, security in old age, subsidized housing, free education, and a raft of other mass-oriented reforms. There is no freeloading in a socialist society. Work is an obligation. But at the same time, employment is guaranteed. Against the pseudo-explanation: immigration is the cause of your problems, must be counterpoised an accurate explanation: capitalism is the cause of your problems; it can’t—won’t—guarantee a secure life for all; socialism can.

The problem is that much of the left, even that part of it that traces its origins to revolutionary Marxism, has given up on both revolution and socialism, defined here as production for use (not profits), governed by a plan (not markets), and carried out in publicly owned (not private) enterprises. Socialism in contemporary usage has come to refer to a mixed economy presided over by an elected government that calls itself socialist. Production is governed by markets, much of the economy remains in private hands, the commanding heights of the economy are brought gradually under public control, and the exploitation of man by man is accepted as necessary, desirable, and the key to efficiency. But markets—which almost everyone now thinks are an unavoidable necessity–inescapably mean recurrent economic crises, unemployment, and inequality. In other words, socialism, as it is defined by 21st century socialists, offers no solution to the economic insecurity that regularly flares up and drives the insecure into the arms of far right campaigns to scapegoat immigrants and foment xenophobia. Sweden, often celebrated as a social democratic paragon and held out as an attractive alternative to Marxist-Leninist-style socialism, has proved no less vulnerable to outbreaks of recession-induced xenophobia than bastions of neo-liberalism have. And that’s because 20th century social democracy and its equivalent, 21st century socialism, don’t transcend capitalism, but embrace it, and therefore accept its destructiveness (in crops, products, factories, and gainful employment eliminated during regular downturns), inefficiencies (capitalism regularly operates below capacity and well below during downturns), wars (to pry open closed markets and secure new investment opportunities) and blighted lives.

No one in Germany “is predicting the rise of a successful right-wing party,” remarks New York Times reporter Michael Slackman, “but that is because the main ingredient is missing: a charismatic leader to rally the public. With such a leader, and some financial support, the prospect could take on a life…” (2) Perhaps. But there is also one other ingredient missing: a compelling left alternative explanation of people’s distress. Without one, there’s no need to find, and provide financing to, a charismatic right-wing leader to transform a spontaneously arising, minority, anti-immigrant movement into a mass movement capable of vying for power to do what far right mass movements have been historically mobilized to do: block the rise of a revolutionary left movement. That the rise of a far right demagogue is unlikely can perhaps be looked at as a good thing (and in one sense it is), but in another sense it is far from good, for it means capitalism is safe, despite what one might think about capitalism’s current tribulations creating an opportunity for change. The opportunity may exist, but who is there to seize it?

It used to be that the role of a revolutionary Marxist party was to set forth an alternative explanation to the dominant ideology, one that would supply an essential ingredient to the project of transcending capitalism at a time of crisis. People’s troubles with unemployment, under-employment and poverty, it would be explained, are systemic, not personal or immigrant-related; they are remediable, not inevitable. Freedom from the ills of capitalism, it would be shown, is possible and realistically achievable through collective action. Nationalism, xenophobia and social democracy would be revealed to be pseudo-solutions, offering the illusion of change but no real redress of capitalism’s ills. No longer. Nowadays, everyone has shifted to the right. Liberals are conservatives, social democrats are liberals, and communists are social democrats, if not liberals in practice with a vaguely radical rhetoric.

With a void having opened up in the space once filled by alternative left explanations, the current capitalist crisis is proving to be a fertile ground for the growth of far right pseudo-explanations of what are properly systemic problems. With the left having embraced markets, and thereby all that markets imply (regular crises, unemployment and inequality), it no longer has a solution to offer for market-induced plights. Having capitulated, it has reduced itself to the role of uttering pious expressions of benevolence.


Many people who were once communists drew strength from the knowledge that communism represented a mass movement. Perhaps it remained marginal (or more aptly, suppressed) in their own country, but it had been embraced by a substantial fraction of the world’s people and seemed to be getting stronger. With the demise of communism in Eastern Europe and the Soviet Union, and China’s journey down the capitalist road, all that changed. Now, really-existing socialism had all but disappeared, hanging on, sort of, in a few outposts: Cuba, where parts of the socialist model had to be dismantled to survive, and North Korea, where the Juche philosophy supplanted formal adherence to Marxism-Leninism. Communism now seemed largely discredited, and to cling to it, was to mark oneself as peripheral and locked in the past.

Desperate to reconnect to a mass movement, many embraced the only mass working class movement they could find, which in many Western countries, was social democracy. But the corruption that had led the Bolsheviks to break away from social democracy to form the communist movement in 1917 had intensified, and by the time the Soviet Union was dismantled, social democracy had nothing anymore to do with socialism; it had become capitalism with a friendly face, and at times, not so friendly.

In Marx’s and Engel’s day, there were periods when a meeting of every socialist in Europe could have been easily held in a mid-sized hall. Until 1917, the Bolsheviks—whose ideas and organizational forms would eventually guide the economic and political organization of a majority of the world’s population–remained a political party of limited significance without a mass following. The need to be connected to a popular movement—and the practice of linking up with a cause on the basis of its popularity and not the ideas and aims that inspire it– would have led many latter day communists to shun Marx, Engels and the Bolsheviks had they been contemporaries.

One reason Marxism-Leninism commands little authority nowadays is that it seems to have been rejected by its practitioners. Glasnost and Perestroika and the eventual dismantling of communism in the Soviet Union, followed by communism’s collapse in Eastern Europe, and the turn to capitalism in China and Vietnam, appear to be admissions that Marxism-Leninism doesn’t work and that capitalism is both inevitable and the end of history. Cuba’s recent decision to expand its private sector by cutting loose 500,000 state employees—and Fidel Castro’s remark to Atlantic journalist Jeffrey Goldberg that “The Cuban model doesn’t even work for us any more” (3)—seems to underscore the point. All this, however, misses a few significant points.

First, communism arose under inauspicious circumstances. It took root where capitalism was weak, and therefore without the strength to smother the infant in its cradle. In 1917, Russia’s Tsarist ruling class was demoralized by war and the capitalist class too small, weak and disorganized to put down revolutions in March and October. But capitalism being too weak to block the rise of revolution meant that the revolution would have to take hold in a country where the working class was small and the industrial base–necessary to progress toward a communist society of plenty–was rudimentary at best. Lenin believed his revolution would spark working class revolutions in Germany and elsewhere in Western Europe, and that the working class in those countries would come to the Bolshevik’s aid, providing the necessary capital Russia would need to build its own socialist society. He judged wrong. While the Kaiser’s rule was overthrown in Germany, the Social Democrats–who disagreed with Bolshevik’s revolutionary methods and refused to break decisively with capitalism and its rulers –came to power. Revolutions elsewhere were stillborn or not in the cards. After a period of waiting, the Bolsheviks realized that if socialism were to come to Russia, they would either have to first shepherd the country through a long period of capitalist development, actively intervene in Western Europe to foment revolutions there, or undergo a program of rapid industrialization and forced agricultural collectivization at home. After a period of conflict about which path to pursue, the Bolsheviks decided to build socialism in one country. This decision was reinforced by the expectation that the capitalist powers would attack the Soviet Union within a decade, and that an industrial base was urgently needed to build a modern military for self-defense.

Second, communism had not a moment’s rest from attempts by the capitalist countries to destroy it. Blockades, sanctions, trade embargoes, sabotage, subversion, diplomatic isolation, military intervention, war (both hot and cold) and ideological warfare were pressed into service with the aim rolling back—and ultimately destroying– communism. The chances of communism surviving the onslaught were far from sanguine. Attributing the demise of really-existing socialism to internal failings, and ignoring seven decades of efforts to exterminate the communist challenge—a practice of both the right and left–is a peculiar form of blindness. As William Blum observes: “It’s as if the Wright brothers’ first experiments with flying machines all failed because the automobile interests sabotaged each test flight. And then the good and god-fearing folk of the world looked upon these catastrophes, nodded their heads wisely, and intoned solemnly: Humankind shall never fly.” (4)

Third, it wasn’t because communist countries rejected markets that they failed. It was because they backed off of Marxist-Leninist principles, and conciliated with capitalism, that they collapsed. Poland, for example, ran into trouble because it failed to collectivize agriculture and provided implacable enemies of socialism, including the Catholic Church, space to operate. Rather than using agricultural surpluses to pay for industrialization, Polish communists subsidized food prices and emphasized light industry and the production of consumer goods and foot the bill by borrowing heavily from Western banks. Burdened with debt, the government was eventually forced to allow Western banks to dictate economic policy. The banks demanded the government remove its food subsidies to pay interest on its debt. This led to spikes in food prices, sparking strikes and ultimately the development of a working class strike movement. The strike movement was hijacked by anti-socialist ideologues linked to the Catholic Church and the CIA who eventually managed to force the government to step down when it became clear that the Soviet Union, under the leadership of Mikhail Gorbachev, would not intervene.

Gorbachev was dismantling the Marxist-Leninist basis of the Soviet state and experimenting with market mechanisms in response to a slow-down in the Soviet economy. The slow-down had a number of causes. The Soviets had been forced to adopt a policy of self-sufficiency to protect the country from the possibility of imperialist countries manoeuvring to strangle it economically by cutting off its access to vital raw materials. This led to a situation where the Soviets paid more to extract some raw materials internally than they would have paid had they imported them. Another factor was an increase in raw materials costs. As easy to reach mines were depleted, deeper mine shafts had to be dug, and longer distances had to be travelled to reach new mines.

Planning had its own problems. Enterprises hung on to employees to ensure they had sufficient staff to meet planned production targets. This led to over-staffing, and to the less than efficient deployment of manpower. The Soviet commitment to full employment also meant that retrofitting factories—in order that they could continue in operation with layoffs avoided—was favored over building new factories based on new technology. As a result, the industrial base became a patchwork of new grafted onto old.

At the same time, the need to keep pace with NATO put a severe strain on the Soviet economy. Despite its rapid growth, the Soviet economy was still much smaller than that of the United States. To come anywhere close to matching NATO expenditures, the Soviets had to allocate a crushingly large percentage of their GDP to the military. Although necessary for self-defense, this was wasteful, since it diverted resources away from the productive investments that were needed to raise living standards. US cold warriors figured that if they could stall the growth of the Soviet economy by locking the Soviet Union into an arms race, they could weaken attachment to Marxism-Leninism, both among the Soviet citizenry and in the Kremlin. With living standards failing to converge on those of the advanced capitalist countries, Eastern Bloc populations might sour on the socialist model and look longingly to the West. At the same time, it might occur to Soviet leaders that their only hope was to compromise on Marxism-Leninism and open up the Soviet economy to market mechanisms and the world capitalist economy.

There were other strains. In order to win allies and expand socialism to other countries, the Soviets shipped aid to countries and movements struggling to free themselves from colonialism. Most of these countries were desperately poor, and profited from transfers and subsidies from the Soviet Union, while returning little in exchange. For example, the Soviets bought Cuban sugar and nickel at above world prices, getting little in return from Cuba. Cuban military intervention in southern Africa on behalf of the liberation movements there–ultimately paid for by the Soviet Union–and the intervention in Afghanistan on behalf of a modernizing and secular revolutionary government, put further strain on the Soviet economy. In the end, Gorbachev decided to pull troops out of Afghanistan, cut Cuba loose, and not intervene to protect Warsaw Pact allies from counter-revolutionary movements. He also moved the Soviet Union toward a Scandinavian-style social democracy. Far from invigorating the Soviet economy, the attempt to make over the USSR pushed the economy into collapse. As the economy imploded, the economies linked to it through the socialist community fell like dominos. By embracing capitalist methods, Gorbachev had turned a set of manageable problems into a catastrophe. Communism’s collapse was not due to public ownership, central planning, and production for use, but the abandonment of socialist practices in favour of markets and capitalist methods. The problem wasn’t that there was too much socialism; there was too little.


The capitalist class in imperialist countries is a formidable enemy. Except for the period of the Great Depression and the chaotic aftermath of the two world wars, it has not been weakened, demoralized and disorganized—a condition that would need to prevail if revolutions were to come about. What’s more, both world wars led to a stronger, more confident, and assertive class rule based in US finance and industry. The opportunities for Marxist-Leninists to lead new revolutions were, therefore, limited. At the same time, the space for socialist countries to develop was systematically impeded by a United States immeasurably strengthened by WWII, whose rulers committed themselves to wiping the communist foe from the face of the earth, a campaign that carries on today in efforts to bring down the Cuban and North Korean systems. (By comparison, the Soviet Union was immeasurably weakened by the same war.) That the communist movement should be bloodied, bruised and knocked to the mat should come as no surprise. The opponent was formidable. But does that mean the towel must be thrown in? It would appear that for communists who were accustomed to being linked to mass movements, the answer is yes. But the movement of revolutionary socialists has been tiny and peripheral before. Had there not been a core of revolutionaries who remained dedicated to Marxist-Leninist principles and refused to sacrifice fundamental principles for immediate gains and popularity, the first attempt at building socialism would never have come off. Capitalist crises and war are inevitable and recurrent. Opportunities for transcending capitalism and liberating mankind from its scourges are therefore, inevitable and recurrent as well. When they arrive, a Marxist party capable of offering an explanation of people’s unhappiness, showing that another way is realistically achievable, and revealing the pseudo-solutions of nationalism, religion and social democracy to be dead-ends, can lead a renewed attempt to move humanity forward.

1. Michael Slackman, “Rightwing sentiment, ready to burst its dam”, The New York Times, September 21, 2010.
2. Ibid.
3. Jeffrey Goldberg, “Fidel: ‘Cuban Model Doesn’t Even Work For Us Anymore’” theatlantic.com, September 8, 2010. http://www.theatlantic.com/international/archive/2010/09/fidel-cuban-model-doesnt-even-work-for-us-anymore/62602/
4. William Blum, “The Anti-Empire Report,” September 2, 2009. http://killinghope.org/bblum6/aer73.html


Robert C. Allen, Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution, Princeton University Press, 2003.

Bahman Azad, Heroic Struggle, Bitter Defeat: Factors Contributing to the Dismantling of the Socialist State in the USSR, International Publishers, New York, 2000.

Roger Keeran and Thomas Kenny, Socialism Betrayed: Behind the Collapse of the Soviet Union, International Publishers, New York, 2004.

Melvyn P. Leffler, The Specter of Communism: The United States and the Origins of the Cold War, 1917-1953, Hill and Wang, New York, 1994.

Irwin Silber, Socialism: What Went Wrong? An Inquiry into the Theoretical and Historical Sources of the Socialist Crisis, Pluto Press, 1994.

Albert Szymanski, Class Struggle in Socialist Poland With Comparisons to Yugoslavia, Praeger, 1984.

Albert Szymanski, “Crisis and Vitalization: An interpretive essay on Marxist theory,” in Rhona F. Levine and Jerry Lembcke (Eds.), Recapturing Marxism: An Appraisal of Recent Trends in Sociological Theory, Praeger, 1987.

A failed system’s failed promises

Posted in Communism, Cuba, north Korea, Socialism, Soviet Union by what's left on May 9, 2010

By Stephen Gowans

With Communism’s demise, and the return of Warsaw Pact countries to the capitalist fold, the world was promised a new age of peace and prosperity. The shadow of war would lift. Military expenditures would be cut back, and troops would be brought home from Cold War postings. There would be more money for new wars — on poverty and homelessness, this time. And capitalism, the single sustainable model of success (it had, after all, emerged triumphant in a decades-long battle with Communism) would deliver the poor from poverty, and bless the world with a bonanza of consumer goods.

Talk about failed predictions.

In place of peace, we got the lone remaining superpower waging war to sweep up the few remaining stragglers that continued to resist integration into the US dominated global economy. Iraq was conquered, at the expense of countless dead, homeless, mangled and ruined; campaigns of intrigue and bombing in the former Yugoslavia pushed the region into the US orbit; and a war on Afghanistan continues to blast away thousands of peasants but cements a US military presence in a Central Asia pregnant with the promise of oil and gas wealth. Wars on Iran and north Korea are real possibilities.

Today, the United States is asserting its military might over the face of the globe more audaciously than ever. There are 368,000 US troops deployed in nearly 130 countries around the world. (1) US citizens think their military protects their interests abroad and defends host countries from threats. They rarely pause to wonder whether what’s called “their” interests are really their own personal interests or those of people who live in bigger houses and get bigger tax breaks and have sizeable investment portfolios. Nor do they make a habit of wondering how it is that with the US exercising a virtual military monopoly over the world, host countries could be under a threat so imminent they would require a US force presence. Exactly which of the tiny collection of countries not hosting US troops are threatening the remaining 130?

Could it be that US troops gird the globe to enforce the access of US firms and investors to the land, labor, markets and resources of others? Do “our” interests equate to Iraq’s oil, Indochina’s tin, Central Asia’s natural gas, Kosovo’s mines, the Balkan’s pipeline routes, Africa’s treasure trove of minerals and oil, and Indonesia’s sweatshops? “A lot of people forget,” remarked Alexander Haig, former Supreme Commander of NATO and Secretary of State in the Reagan administration, that the presence of US troops in Europe is “the bona fide of our economic success…it keeps European markets open to us. If those troops weren’t there, those markets would probably be more difficult to access.” (2) A lot of people forget, because they were told something quite different: That US troops were stationed in Europe to deter a Soviet invasion, not to put a gun to the head of Europeans to keep their markets invitingly open to US firms and investors. The obvious question, With the threat of a Soviet invasion long passed, why are US troops still there?, is rarely asked. So it doesn’t really matter that we’ve forgotten. The most blatant of Washington’s latest exercises in imperialism run amok has a similar character. It was said that the Iraqi government of Saddam Hussein was hiding banned weapons. None were found. But US forces stay in Iraq anyway, to ensure the conquered country remains the refashioned paragon of free markets and free trade Washington’s policy makers have turned it into.

Which is to say, the emergence of US capitalism triumphant hasn’t given us peace, as promised; it has given us a bold US military prepared to wage war. And it seems to be waging war to facilitate US capital settling everywhere, nestling everywhere and establishing connections everywhere, to paraphrase a shockingly topical passage from the Communist Manifesto of Karl Marx and Friedrich Engels, a document whose irrelevance was said to have been established beyond a shadow of a doubt when the Berlin Wall was razed to the ground. Yet, today, it seems to be more relevant than ever; certainly more relevant than when a competing ideology forced the stewards of capitalism to tidy up the image of their vaunted system lest the rabble get it into their heads that they could do better. It’s said in newspapers and on TV that Washington’s wars have to do with fighting terrorism, but the documents which define the US national security strategy are long on paeans to free markets and free trade and capitalism and short on concrete measures to protect the lives of US citizens from attacks by radicalized West Asians bearing legitimate grievances against the United states. On the contrary, the strategy is a recipe for provoking terrorist attacks.

Marx and Engels: While the irrelevance of Communist Manifesto was said to have been established beyond a shadow of a doubt when the Berlin Wall was razed to the ground, today it seems to be more relevant than ever

Bourgeois society,” to use Marx’s and Engels’ phrase, hasn’t given us prosperity either, unless by “us,” you mean the people who own and control the economy. For the bulk of humanity things are a lot worst materially than they were when communists, socialists, and nationalists kept upsetting the capitalist apple cart by bringing vast tracks of national economies under public control, and putting the public welfare ahead of the profit interests of bondholders and investors.

According to the United Nations, 54 countries are poorer today than they were in 1990, about the time Communism was declared failed, and capitalism lionized as the single sustainable model of success. More children under the age of five are dying in 14 countries, and enrollment in primary schools is down in 12. Extreme poverty remains the fate of over one billion people. And in former Soviet republics — cradle to what has been dismissed as a failed system — poverty had tripled one decade into their liberation from Communism. Seventeen countries in Eastern Europe and the countries that made up the former Soviet Union have hardly become dynamos of prosperity, which should leave anyone with an ounce of gray matter wondering by what standard success is measured; surely not by the majority’s well-being. (3)

After having been demonized for decades by a capitalist establishment bent on making Communism radioactive (along with anyone so cavalier about their standing in polite society to utter a kind word about it) it’s sometimes forgotten, if ever apprehended in the first place, how impressive Communism’s economic achievements were…and still are, considering the barren and poisoned ground in which the lone holdouts have been forced to eke out precarious existences.

Let’s start with the most reviled of the hold-outs: north Korea. The idea that north Korea is a threat to the United States is about as believable as the idea that a colony of ants is a threat to the elephant whose foot hovers three inches over its hill. North Korea hasn’t a single solider stationed outside its borders. Washington, on the other hand, has 37,000 troops deployed, on, or near, the north Korean border, 65,000 troops stationed in nearby Japan, the Seventh Fleet lurking in nearby waters, and bombers within striking distance. It has dismissed Pyongyang’s pleas to sign a nonaggression treaty, declaring bizarrely that it will not succumb to blackmail. And what has north Korea done to threaten the United States (or to blackmail the country)? It has fired up a mothballed nuclear reactor capable of producing weapons grade material, and withdrawn from the Nuclear Nonproliferation Treaty, but only after Washington reneged on an agreement to build light water reactors and provide fuel oil shipments. And only after Washington issued a virtual declaration of war, designating north Korea part of “an axis of evil.”

Could a north Korea with one or two crude nuclear bombs pose much of a threat to the United States poised to strike with overwhelming force? Quite the other way around. Indeed, north Korea’s pursuit of nuclear weapons can be said to be a rational response to an overwhelming US threat. And there have been plenty of signs the threat is real.

“This is just the beginning,” a Bush administration official told the New York Times, after US and British troops marched on Baghdad. “I would not rule out the same sequence of events for Iran and north Korea as for Iraq.” (4) The Pak Tribune cited CIA sources that revealed a “list of countries where replacement of government has been declared essential.” (5) The list included north Korea. US undersecretary of state for arms control and international security, John Bolton, warned Pyongyang to “draw the appropriate lesson from Iraq.” (6) It has. “The DPRK (north Korea) would have already met the same miserable fate as Iraq’s had it compromised its revolutionary principle and accepted the demand raised by the imperialists and its followers for ‘nuclear inspection’ and disarmament,” declared the official daily of the ruling Korean Workers Party, Rodong Sinmun. (7) Later, the government issued this statement: “The Iraqi war teaches a lesson that in order to prevent a war and defend the security of a country and the sovereignty of a nation it is necessary to have a powerful physical deterrent.” (8)

Washington ultra-hawk, Paul Wolfowitz, anticipating similar words US Secretary of state Hilary Clinton would utter seven years later, warned, “north Korea is headed down a blind alley. Its pursuit of nuclear weapons will not protect it from the real threat to its security, which is the (internal) implosion brought about by the total failure of its system. Indeed the diversion of scarce resources to nuclear weapons and other military programs can only exacerbate the weakness of the (government).” (9) So what’s the choice? Head down a blind alley, or turn over the country to Washington, and the multinational corporations it represents? Who’s the blackmailer?

History has not been kind to the tiny country. The mountainous north was once the center of the peninsula’s heavy industry, the south its breadbasket. The Korean War, which saw US bombers destroy every building in the north over one story, changed that. The north was reduced to rubble. But it rebuilt, and until the 1980s, outpaced the south economically. By 1961, it was self-sufficient in agriculture. North Korean children were better vaccinated than their counterparts in the United States, according to the World Health Organization and United Nations, who commended the country for its delivery of health care. And life expectancy was higher than in the capitalist south. (10)

Then disaster struck. The socialist trading bloc collapsed, depriving Pyongyang of its major trading partners. Oil subsidies from Russia ended. And if that weren’t enough, floods and droughts ravaged crops. Famine followed. But, for a time, the country had enjoyed impressive material gains, an affirmation of what can be achieved outside the capitalist system, even where resources are diverted to defense against an unrelenting foe than remains poised on your borders to strike. Imagine what the country could have achieved without the United States breathing fire down its neck.

Cuba, in many respects, fits the same mold: Astonishing social and economic gains under a communist government, the implacable and unrelenting hostility of the United States, and some backsliding after the collapse of its major trading partners. (The United States has maintained an economic blockade for half a century.) Still, despite these challenges, Cuba is a much kinder and egalitarian place today than it was before the revolution, under the rule of the US-backed Batista regime, when the country’s economy was an appendage of that of the United States. The United States fears Cuba, journalist Seamus Milne observes, not because it is a threat to the safety of US citizens, but because it’s an example of what can be accomplished outside the US dominated capitalist model. (11 )

In 1953, the illiteracy rate in Cuba exceeded 22 percent. Today it is under one percent. Three percent of those over the age of 10 had a secondary school education. Today, almost 60 percent do. Back then, at the height of the sugar harvest, when unemployment was lowest, eight percent were jobless. Today, the unemployment rate is three percent, making Cuba one of the few countries in the world to boast full employment.

Well over 80 percent own their own homes, and pay no taxes. The remainder pays a nominal rent.

No other country has as many teachers per capita. Education is free through university. The country also provides free university educations to 1,000 Third World students every year. And classroom sizes put those of Western industrialized countries to shame.

Health care is free. And while the United States has deployed over 300,000 troops in almost 130 countries to keep markets open to US investment, Cuba has sent 50,000 doctors to work for free in 93 Third World countries to heal the sick. (12)

Infant mortality is lower than in any other Third World country and even some Western capitalist countries (it’s higher in Washington, DC.) Life expectancy is 76 years, and is expected to rise. (13) By comparison, the return of capitalism has pushed life expectancy down in former communist countries.

These gains, seldom mentioned in the United States, place the country head and shoulders above other Latin American countries firmly ensconced in the US orbit, for which Washington’s single sustainable model of success continues to deliver grinding poverty, misery, and gross inequality, but the profits necessary to keep the capitalist system afloat and the capitalist class awash in mansions, retinues of servants, stables of luxury cars, exclusive schools and private clubs.

There are elections, and, contrary to Washington’s anti-Cuba propaganda, Cubans do vote. But they don’t choose among two largely identical parties, as in the United States, where the parties, and their candidates, are almost invariably in thrall to, or are representatives of, the capitalist class. As for human rights, Cuba stands as a model of what can be achieved by way of economic and social rights, the basic rights to food, housing, clothing, health care, education and jobs, enshrined in the Universal Declaration of Human Rights, but not recognized as human rights in the United States. (14) Washington, on the other hand, has made a fetish of civil and political liberties, which, in the case of its relations with Cuba, has everything to do with giving its agents in the country, mistakenly called “independent” journalists and “independent” librarians (they’re not independent of Washington, which bankrolls their activities), room to maneuver to organize destabilization, with the object of overthrowing the revolution and banishing economic and social rights in favor of investors’ rights. That Cuba, a poor country, has been able to guarantee the right to food, clothing, shelter, health care, education and jobs, despite trying economic circumstances and US hostility, can be seen as extraordinary, or simply what can be readily accomplished outside the strictures of capitalism. If a poor Third World country, harassed by a powerful neighbor, can deliver high quality health care and education for free, why can’t the world’s richest country do the same? The answer: Capitalism drives towards better profits, not better lives.

Ever since the US-dominated global economy has, with the collapse of Eastern Bloc Communism over 10 years ago, more boldly sought purchase everywhere, US military imperialism has run amok, wars of aggression have been started, and poor, and formerly communist, countries have become poorer. The leaders of the Western world declare capitalism to be the single sustainable model of success, but countries that rejected capitalism, and committed to egalitarianism, have done better in terms of guaranteeing economic and social rights than comparison countries, despite difficult circumstances. Meanwhile, those that have rejected egalitarianism in favor of a return to capitalism have regressed. The promises of peace and prosperity that attended Communism’s collapse were a fraud based in the self-interest of a narrow band of wealthy people in the world’s richest countries. That it is a fraud is richly evident in the failed promises and dismal record of the post-communist era.

1. “Where are the Legions? Global Deployments of US Forces,” GlobalSecurity.Org, http://www.globalsecurity.org/military/ops/global-deployments.htm)
2. UPI, January 7, 2002.
3. “UN report says one billion suffer extreme poverty,” World Socialist Web Site, July 28, 2003.
4. “Pre-emption: Idea With a Lineage Whose Time Has Come,” The New York Times, March 23, 2003.
5. “Iran to be US next target: CIA report,” Pak Tribune (Online) March 24, 2003.
6. “U.S. Tells Iran, Syria, N. Korea ‘Learn from Iraq,” Reuters, April 9, 2003.
7. “North Korea vows to make no concessions,” Agence France-Presse, March 29, 2003.
8. “Administration Divided Over North Korea,” The New York Times, April 21, 2003.
9. “Wolfowitz Visits US Military Base In Korean Buffer Zone,” AFP, June 1, 2003.
10. “Peace, the real resolution to famine in North Korea, ZNet, July 23, 2003.
11. “Why the US fears Cuba,” The Guardian, July 31, 2003.
12. Ibid.
13. Speech by Fidel Castro on the 50th anniversary of the attack on the Moncada barracks, July 26, 2003.
14. Karen Lee Wald, “Democracy, Cuba-Style,” Canadian Dimension, July/August, 2003.

Originally written in August 2003, revised and updated May 2010.

The Limits of Progressive Thought: A Review of Donald Gutstein’s Not a Conspiracy Theory: How Business Hijacks Democracy

Posted in Liberals, Moderate Left, Propaganda, Socialism by what's left on December 31, 2009

By Stephen Gowans

Progressive media analyst Donald Gutstein, a professor in the school of communication at Canada’s Simon Fraser University, and a former co-director of Project Censored, has written what appears to be a promising analysis of the state in contemporary capitalist society. Not a Conspiracy Theory: How Business Hijacks Democracy, examines the role of business in shaping public opinion, but is a disappointing farrago of misconceptions, faulty logic, and contradictions, whose prescriptions offer the left no way out of the cul-de-sac it finds itself in. Gutstein, a liberal with a hazily radical air, argues from a vaguely Marxist and radical standpoint, but his horizons are limited to targeting “radical” conservatives in an effort to restore the social welfare gains of the post-war period. Gutstein wants to relegate business to the role he imagines it once played: as just once voice in a pluralist society presided over by a neutral state.

In short, Gutstein’s argument is that “In Canada and the United States, corporate power and the free market were reined in after the Second World War” [1] in favor of building a mixed economy. “Business signed on to the welfare state because it feared working class activism and a return to Depression-era conditions. It supported nearly-full employment for males, expanded trade union rights and the construction of a social safety net.” [2] The mixed economy produced “unprecedented growth and prosperity,” but “in the 1970s…profits declined and inflation rose” [3] as oil prices skyrocketed and competition from a revived Japan and Western Europe intensified. This prompted business to launch a counteroffensive to restore profits. Business recruited and funded “radical” conservatives to build a propaganda machine to change people’s attitudes and beliefs about unions, the mixed economy and the welfare state. The propaganda worked astonishingly well, allowing business to hijack the media and government, both of which have become instruments of corporate power. Business needs to be reined in so that it is only one of many voices in a pluralist debate (as it was in the post-war period.) The way to accomplish this goal is for progressives to build their own propaganda machine to restore the credibility of the mixed economy and welfare state, relying on grassroots donations and funding from wealthy liberals.

Has business propaganda been successful?

Gutstein argues that business propaganda is used to shape public opinion in ways that favor the interests of business owners against the majority. Propaganda, in his view, keeps the majority from using its numbers to pressure governments to adopt policies that encroach upon business interests.

“A democratically elected government with a mandate from voters to protect jobs, regulate environmentally destructive industry and ensure business pays its fair share of taxes, presents great risks to businesses, limiting a company’s ability to produce ever increasing profits for its share-holders. The risk to business is that…the public…will conclude that business is too powerful and needs to be reined in. The purpose of business propaganda is to ensure that these ideas do not arise.” [4]

Has business propaganda worked? While Gutstein says it has, the examples he cites show it hasn’t. For instance, while he argues that one of the goals of business propaganda is to persuade the public that business isn’t too powerful, he writes,

“A poll commissioned by (Business Week) found that 72 percent of Americans said business ‘had gained too much power over too many aspects of their lives.’ Surprisingly to the Business Week editors, respondents seemed to agree with the sentiments expressed at the 2000 Democratic convention, when presidential nominee Al Gore declared that Americans must ‘stand up and say no’ to ‘Big Tobacco, Big Oil, the big polluters, the pharmaceutical companies, the HMOs’.” [5]

Gutstein argues that the business “propaganda machine…was astonishingly successful in reversing the gains of the welfare state.” [6] But if business propaganda works by changing people’s attitudes and beliefs, it could only have achieved astonishing success in reversing the gains of the welfare state by changing the attitudes and beliefs of the majority about the welfare state. And yet, as Gutstein himself shows, the majority’s support of the welfare state has never wavered. “Despite thirty years of (business) propaganda for tax cuts,” he writes, “people still want spending on social programs.” [7]

In Gutstein’s view, if the majority recognizes that business is too powerful, it will act to rein business in. But popular action doesn’t always or even often follow a correct understanding of a problem. That’s because more than a correct understanding is needed before people take action. Also important is motivation, understanding of what action can be taken, and a belief that the action will make a difference. Furthermore, the action of the majority doesn’t always or even often change public policy. A majority of the world’s population opposed the US-UK invasion of Iraq, and filled the streets in protest on the eve of the invasion in the largest demonstrations in human history. Public opinion was elevated to the status of a second superpower. Yet public opinion turned out to be a rather feeble superpower. The invasion went ahead. Seven years later, Iraq remains under military occupation. Polls show a majority in Canada, Italy, France, Germany, Spain, Britain and even the United States either oppose deployment of their countries’ troops to Afghanistan or favor withdrawal [8], and yet the missions continue, and the U.S. mission will likely continue indefinitely. It could be argued that U.S. President Barack Obama was elected by voters because they believed he was committed to ending the war, yet there are more U.S. troops deployed abroad in combat zones today than under former U.S. president George W. Bush. Public policy seems to have little to do with the attitudes and beliefs of the majority, much less its actions, or votes. Gutstein’s belief that putting the business genie back in the bottle depends on the majority recognizing that business is too powerful is unduly optimistic.

What’s more, a majority of the world’s population already favors progressive policies, despite decades of business propaganda, and yet progressive policies continue to be dismantled. A GlobeScan poll conducted in 27 countries from June to October, 2009, and representing 70 percent of the world’s population, shows that most people in the world are social democrats, while a sizeable number are anti-capitalist, in their attitudes and beliefs. The poll found that a clear majority of the world’s population favors policies traditionally associated with socialism, including public ownership of major industries, redistribution of wealth, and an active role for government in regulating enterprises. [9] Gutstein himself acknowledges that “most people believe…that the acquisition of civil, political, and social rights is an inherently good thing”, [10] and that despite intensive propaganda against Medicare, “the public still backs the system.” [11] Business propaganda, it seems, has been astonishingly unsuccessful. All the same, the welfare state in advanced capitalist countries has been greatly weakened. To understand why, we have to look beyond business propaganda.

Is business propaganda new?

Gutstein can’t seem to decide when business propaganda began. Was it in the 1970s, when declining profits galvanized business to try to get out from under the burden of the welfare state, strong unions and rising popular demands, or did it begin earlier? The answer depends on which page of Gutstein’s book you consult. At one point he writes that the business propaganda machine was first established in the early seventies [12] but points to earlier business-directed campaigns aimed at winning support for a public policy climate favorable to business. He cites a 1949 American Medical Association campaign “to defeat attempts to create universal, federally-insured health care” [13] and a “massive, pro-capitalism grassroots campaign” carried out by “the Advertising Council and the PR industry” between 1945 and 1950. [14] “In 1947 alone,” he writes, the Advertising Council “spent over $100 million to ‘sell’ the American people on the wonders of the American economic system. The campaign, which continued into the 1950s, had two aims: to re-win the loyalty of the workers who had switched to the union, and to halt ‘creeping socialism.’” [15] Gutstein also points out that after World War I many people involved in the propaganda effort to mobilize support for the U.S. entry into the war “turned their efforts to a new crusade: making the world safe for business.” [16] According to Gutstein’s own review, then, the origins of business propaganda date to the period immediately following World War I and not the seventies. [17] If business propaganda has been around since at least the end of World War I, could it be that the domination of government and the media by business began much earlier than 30 years ago?

Have the media and government been hijacked?

Gutstein seems to think that the media and government have been hijacked by corporate interests, rather than created by them (the media) or dominated by them (government.) He misrepresents Noam Chomsky’s and Edward Herman’s propaganda model, outlined in their Manufacturing Consent, as one in which “the prevailing power elites co-opt intellectuals and large media companies and transform them into instruments of shaping public opinion.” [18] (Chomsky and Herman describe media corporations as businesses, whose very nature as businesses, structure their reporting. They have not been co-opted.) Similarly, Gutstein speaks of the corporate agenda becoming the government agenda, as if governments in capitalist society are capable of escaping the imperative of aiding business in its pursuit of profit. Gutstein’s thinking, then, implies that the media and government are capable of playing a neutral role in the clash of labor and business, with government mediating the conflict and the media siding with neither labor nor capital. But the media, for one, are clearly not independent of corporate interests, a point Gutstein himself makes: Media corporations, he writes, are “profit-seeking businesses owned by very wealthy families and by other companies. Owners are generally very conservative politically and favour the dominant North American private enterprise ideology.” [19]

For all of his optimism that business can be relegated to the role of one of many participants in a pluralist debate, [20] Gutstein recognizes that business “has significant influence over government, and controls the debate” [21] because it is able to use its wealth to press for a public policy climate favourable to its interests. Business-sponsored think-tanks, he writes, have,

“greater financial resources. Business sponsored think-tanks can hire more staff, fund more scholars, cover a wider range of topics and produce more studies and reports (than progressive think-tanks, with more limited financial resources, can.) They are also more effective because they have the ear of a sympathetic corporate media far more frequently than progressive think-tanks.” [22].

However, Gutstein focuses too much on the role business think-tanks play in shaping public policy, and too little on the movement of the same individuals back and forth between top corporate and government jobs, [23] the overwhelming role corporations and the wealthy play in funding major political parties, and the work of lobbyists on behalf of individual corporations and business as a whole. [24] He also ignores the limited room for manoeuvre of governments that work within the framework of capitalism. Unless they mobilize the energies of a significant portion of the population to overthrow the system, governments in capitalist society are constrained to act in ways that do no harm to the interests of business. If they do cause harm, business will stop investing, either because it is no longer profitable to do so, or to sabotage the government’s anti-business policies. Capital strike, or the flight of capital to business-friendly jurisdictions, will either bring the government back in line, or prompt voters to change the government. Either way, no government that willingly works within a capitalist framework can privilege lower classes at the expense of business for long without being reined in or replaced. It’s highly likely that governments in capitalist society would act to continue to defend and promote business interests whether business think-tanks – and business propaganda — existed or not.

The counteroffensive

At times, Gutstein seems to paint a picture of a world in which ideas are disconnected from the material world. At other times, he seems more firmly grounded in reality. But always ideology has primacy in his analysis. Ideas, if skilfully expressed by able and well-funded propagandists, have the power to compel action. For example, he attributes the Canadian government’s abandonment of social welfare policies and adoption of a neo-liberal program to a single report by Harvard professor Michael Porter. “After the Porter study (on Canada’s competitiveness in the world) made the rounds of senior officials, the corporate agenda became the government agenda.” [25] This supposes that the government’s agenda hadn’t always been the corporate agenda. An alternative view is that the Porter study didn’t cause the Canadian government to adopt a new agenda. The imperatives of the capitalist system did. What the Porter study did was justify the new agenda.

Gutstein’s emphasis on ideology is also expressed in his discussion of class conflict. Progressive movements, he notes, have “been followed by ideological counterthrusts of extraordinary force … sponsored by the entrenched interests of the day, fighting to protect their privileges and wealth, block progress toward a more just, equal and enlightened society, and undo the reforms already achieved.” [26]

It’s true that progressive movements have been followed by ideological counterthrusts, but more importantly, they have been followed by changes in policy. These changes have occurred when business’s ability to turn a profit has been damaged by a crisis of the capitalist system or by the insupportable encroachment of the demands of progressive movements on business interests.

Social welfare capitalism succeeded laissez faire capitalism as a result of the Great Depression, (though it was the massive spending on the war that brought the United States out of the crisis.) North America’s post-war growth and prosperity was largely caused by pent-up demand following the restraint and shortages of the war, the Marshall Plan, the Cold War, the space race and the rise of the automobile industry, (with its ramifying effects in touching off the growth of steel, glass, petroleum and rubber industries, and the construction of highways and the suburbs.) [27] Additionally, having escaped any major war damage, North American industry enjoyed a virtual monopoly for the greater part of the post-war period, as its competitors rebuilt. At the same time, ideological competition with the Soviet Union dictated that the working class in North America be granted concessions to meet the social welfare standards set by the Communist countries, with their full employment and robust social wage. [28] Strong unions and expanding social programs were easy for business to tolerate as the economy expanded, the price of raw materials was low, and foreign competition was modest.

By the mid-1970s, growth was slowing, the creation of the OPEC cartel sent oil prices skyrocketing, labor had become increasingly militant, and popular demands were being made for further expansion of the welfare state. The top shareholders and executives of major corporations decided that social democracy had gone too far. They used advances in transportation and telecommunications to shift production to non-union areas and later to low-wage countries, to escape the limits strong unions and minimum wage laws imposed on capital accumulation. Publicly-owned assets were sold off, generating new opportunities for profitable investment. Corporate taxes were slashed to fatten bottom lines, reducing the tax revenue base needed to fully support social programs. The welfare state capitalism of the post-war period was being dismantled. But the reason it was being dismantled was not because “radical” conservatives had organized themselves into corporate-funded think-tanks, which had then hijacked the media and government, but because business interests could no longer tolerate the social welfare gains of the post-war years. It was this that caused business to use its agents to both implement and justify a new agenda.

A false solution

Gutstein believes that progressives can achieve success by aping conservatives. Where conservatives identify liberals and leftists as their enemies, “progressives have to make…radical conservatives…the enemy” [29] abandoning their historical focus on “poverty, homelessness, inequality, poor healthcare, racism and sexism.” [30] These evils should never be lost sight of, he writes, but at the same time, they shouldn’t get in the way of targeting “radical” conservatives.

One of the implications of targeting “radical” conservatives is to vote strategically to stop their rise to elected office. But strategic voting by left-wing voters strengthens conservatives by pushing politics increasingly to the right. This happens in two ways. First, those who would otherwise vote for an authentic left alternative throw their weight behind a party which represents a position to the right of their views, in order to defeat conservatives who are even further to the right. This alone represents the skewing of political positions in electoral contests to the right of the base of political positions held by the voting population. Second, the parties that receive the votes of left-wing strategic voters (Labour in Britain, the Democrats in the United States, the Liberals and NDP in Canada), are given permission to move further to the right, in an effort to expand their appeal to cover right-wing voters, since they know that no matter how far right they move, left voters will move with them, so long as there are conservatives even further to the right who must be blocked. Targeting “radical” conservatives, then, rather than promoting authentic left-wing positions, is a self-defeating strategy that only guarantees further migration to the right.

In elaborating this approach, Gutstein urges progressive foundations to take a leaf from the playbooks of conservative foundations. Progressive foundations, he says, spend their money on “thousands of grassroots groups disconnected from one another and from national politics,” while conservative foundations fund a smaller number of “well-chosen think-tanks and advocacy organizations.” [31] Conservatives have “demonstrated that a successful political movement required building multi-issue organizations,” while progressive foundations spread their resources thin, distributing their more limited funding on “organizations engaged in one or a few issues.” [32] Gutstein assumes that once this truth is apprehended, progressive foundations will change their funding practices. But what he misses is the possibility that progressive foundations fund a multiplicity of disparate, single-issue organizations, by design. What wealthy liberals want no more than wealthy conservatives is an effective multi-issue political movement capable of challenging the privileges of corporations and the wealthy. Keeping the left fractured and disorganized, by doling out small donations to disparate groups working on single issues, is one way of preventing the rise of an effective, multi-issue organization. [33]

A multi-issue movement of the left that united its fractured parts would be more effective than the current agglomeration of single-issue groups, but what would it be united in pursuit of? In Gutstein’s view, it would unite to discredit “radical” conservatives, an enterprise which, if successful, would force governments to see the light and rein business in, so that business would be forced to return to the status of equal player in a pluralist debate mediated by a neutral government. This, however, flies in the face of reality. Business has always dominated the state in capitalist society. It may have appeared at certain points to many members of the corporate elite that the state was encroaching upon business interests more than was necessary to stabilize the society and secure the support of the working class, and at the same time, it may have appeared to members of the working class that the state was trying to balance the interests of labor and business, but there has never been any doubt that in a capitalist society the interests of capital are pre-eminent. There may be disagreements among the top shareholders and key executives of major corporations about the best way forward. Some may favor government intervention to stabilize the economy and to secure a basic level of economic security for the working class in order to build a stable society conducive to capital accumulation. Others may regard these interventions as unnecessary and prohibitively costly. Still others may look to permanent war, the mobilization of society against external threats (real or fabricated) and the promotion of religion, nationalism, racism and patriotism as alternatives to class, as the best way to stabilize society and perpetuate the rule of business. But in all cases, it is capital that is the dominant force.

Who is in the driver’s seat – and who ought to be?

Gutstein believes that there has been a fundamental shift in the balance of power over the last 30 years, where business, once reined in by government, has since slipped its reins, hijacked the government and media, and turned the corporate agenda into the government agenda. Let us accept Gutstein’s view for the moment, that it is indeed only in the last three decades that business has emerged to dominate government and the media. Whether corporate domination is inherent in capitalist society or only of recent origin, it remains the case that the present reality, as Gutstein notes, is that “Corporate power is in the driver’s seat. It has the money, organization and access to the media.” [34] How, then, does Gutstein propose that business be pushed from the driver’s seat? And who should replace it?

It would seem that the surest way to solve the problems of “poverty, homelessness, inequality, poor healthcare, racism and sexism” that Gutstein lists as the historical concerns of the left, is to replace business in the driver seat with the class that suffers most from these afflictions: the working class. Indeed, where the working class was, and currently is, in the driver’s seat, these evils were and have been nearly eliminated, if not abolished. In Cuba today and the socialist bloc before its demise, homelessness, poor healthcare, racism, sexism and extremes of income were largely eliminated, if not eradicated altogether. Since it is in the interest of the working class to deal with these problems but not in the interests of business to do the same, (except insofar as these problems threaten to destabilize society and business’s ability to accumulate capital), it would seem that the working class is the agent for this change. But that is not Gutstein’s view. As a pluralist, he wants to replace business in the driver’s seat with “neutral” elected politicians who will reconcile the clash between labor and capital. But can politicians be neutral in capitalist society? Since electoral success is highly sensitive to how much money and media support a candidate for elected office can command, and because business is in the best position to furnish candidates with the resources and media support they need to get elected, the capitalist system does not tend toward the production of neutral politicians. On the contrary, it tends toward the production of errand boys for business. What’s more, as already mentioned, politicians who operate within the framework of capitalism have no option but to make capitalism work, and that means, in the first instance, ensuring that the profit-making requirements of business are met above all else. This is true whether the government is conservative, centrist or social democratic. No government that operates within a capitalist framework is neutral.

If business is in the driver’s seat, “the money, organization and access to the media” that allowed it to move into the driver’s seat in the first instance, allows it, at the same time, to maintain its position and beat back challengers. How then does Gutstein propose that business be forced from its commanding position at the apex of society? The answer he offers is for progressives to unite to discredit “radical” conservatives and restore the credibility of the mixed economy and social welfare. This is shallow.

We have already seen, and Gutstein himself has shown, that social welfare, regulation, and public ownership never lost credibility with the bulk of people in capitalist society. The majority continues to regard these things as desirable, and yet these things are no longer part of the government agenda. This is so because public ownership, regulation and social welfare, lost credibility with business, and with its media and government agents, beginning in the mid-1970s. Indeed, the fundamental shift in the balance of power that Gutstein claims happened 30 years ago was really the loss in credibility of the welfare state among business and its representatives who dominate the state. This is why a conservative agenda was implemented despite continuing popular support for social welfare. Calling for a campaign to restore the credibility of the mixed economy and the welfare state can only mean restoring the credibility of social welfare capitalism among members of the ruling class, since this is the only class for which the credibility of public ownership, income redistribution and regulation, was lost. In other words, what Gutstein is proposing is that the public petition business and its agents in government to recreate the world as it was in North America from the end of World War II to the mid-1970s.

Since business and its agents will only implement a welfare state if it’s in their interests to do so, and since objectively, it’s not always or even often in their interests to grant a full panoply of concessions and reforms, the likelihood of this approach being successful is entirely dependent on the interests of business. If there are times when it would suit the profit-making imperatives of business to strengthen social welfare, concede advances in unionization, and allow a measure of public ownership, these reforms and concessions will be made…but at the discretion of the same business interests that are in the driver’s seat. Reform and concessions will, therefore, be contingent and revocable, and will be taken back at the earliest moment the welfare state is no longer judged by business to be in its interests. The lesson of the last three decades for the left is not to work to restore the credibility of social welfare capitalism, but for the working class itself to take control of the economy and to replace business in the driver seat. This is the only way to permanently end the evils that Gutstein calls the historical concerns of the left.

It should be noted that Gutstein’s views are representative of those of progressives who aim to persuade business and its agents that income redistribution, strong unions, and robust social programs are a pathway to growth and prosperity, not burdens which reduce profit-margins. This Panglossian view, which also seeks an equal status for, or partnership between, labor and capital, holds that social democracy is a win-win for both classes. This view carries little weight with business, which recognizes that an irreconcilable antagonism exists between its interests and labor’s, and that if it can get away with paying less tax and lower wages, so much the better. The progressive argument that business could reap higher profits if it paid more taxes and raised wages is, not surprisingly, dismissed by business as nonsense. As to the view that a partnership between business and labor is democratic, this can be dismissed as nonsense too, for even if we were to suppose that labor and capital could have an equal status in capitalist society, it would be a strange democracy in which the 90 percent or more of the population that makes up labor had a voice only equal to the 10 percent or less that constitutes capital.

The limits of progressive thought

To summarize the problems with Gutstein’s analysis:

1. The post-war period may have been a time of robust growth and prosperity in Canada and the United States, but it does not follow that robust growth and prosperity were caused by a mixed economy, expanded union rights and the construction of a social safety net. What’s more, the United States economy has never been mixed, and the Canadian economy has only ever been mildly so. Pent-up demand following the restraint and shortages of the war years, the stepped up military spending of the Cold War, the space race and the expansion of the automobile and allied industries, contributed to making the post-war period a time of growth and prosperity. The role these factors played in creating growth and prosperity, alongside the industrial monopoly enjoyed by North American business for the greater part of the post-war period, allowed a social safety net to be built. The ideological imperative of meeting the social welfare standards established by the Communist countries provided the impetus to do so. The smaller size of the global capitalist workforce prior to its doubling with the collapse of the socialist bloc and the opening of China and India to foreign investment, checked the strong downward pressure on wages that would soon follow. The location of production in advanced industrial countries prior to the advances in telecommunications and transportation that allowed production to be relocated to non-union areas and low-wage countries also supported strong unions and higher wages.

2. While business recruited “radical” conservatives to promote neo-liberal and neo-conservative ideologies, the business propaganda machine has not been the astonishing success Gutstein say it has been. On the contrary, it has failed miserably in changing the beliefs and attitudes of the majority about social welfare, regulation and public ownership. And yet, the social welfare state has been largely dismantled and unions weakened. Business and is errand boys in government didn’t manufacture consent among members of the working class for these changes; they simply went ahead and made them.

3. Business did not hijack the media and government after profits declined and inflation rose in the 1970s. Media corporations, business themselves, are by their very nature corporate agents, while governments have long acted in the interests of business, because they have regularly been led by ambitious lawyers (typically), recruited, trained and financed by the corporate rich, and often by the corporate rich themselves, and because any government that willingly works within the context of capitalism must accommodate the profit-making interests of business, or risk its rule being destabilized.

4. By virtue of its ownership and control of the economy, business is in a position to use its immense wealth to undermine laws intended to rein in it, and to tilt the playing field in its favor. In a capitalist society, business wields too much power for it ever to be but one voice in a pluralist contest mediated by a neutral state. Business control of the economy and the wealth it allows it to accumulate furnishes business with the means to buy the media, lobbyists and politicians to undermine regulation.

5. Wealthy liberals are no more interested in building effective movements to challenge their wealth and privileges than wealthy conservatives are. While a coordinated, organized and disciplined multi-issue organization is necessary to successfully advance left-wing goals, the role traditionally played by liberal philanthropists in their relationship with the left has been one of co-opting moderates and splintering the left into disparate, single-issue groups, organized around concerns other than class (gender, race, poverty, environmentalism, and so on.) Any serious effort to secure advances for the working class will not be funded by those most likely to be adversely affected.

While each of the above issues is important alone, all can be more readily addressed within a publicly-owned, rationally planned economy than within the framework of capitalism. Progress in eliminating racism, sexism and in providing basic economic security came much faster and went much further in the Soviet Union and other socialist countries than in advanced capitalist countries. While progress toward the resolution of important problems does happen within capitalism, it happens in a slow, fitful manner, without the determined energy that has characterized the history of socialist countries. A commitment to building socialism is a more certain and rapid path to eliminating these scourges than attempting to secure gradual, piecemeal change within capitalism. With the world being driven headlong into environmental disaster by the competitive lash of capitalism, gradual, piecemeal reforms are not an option.


Contrary to Gutstein’s thesis, government and the media weren’t hijacked three decades ago. They have always been agents of corporate rule. However, three decades ago, the welfare state lost credibility with business and its representatives in government and the media because it no longer served business interests. Strong unions, labor militancy, rising popular expectations and demands for the expansion of the welfare state, and the crisis of stagflation, combined to encroach upon business interests to a degree business was no longer willing to tolerate. In a backlash against labor, unions were attacked, social safety nets were shredded, and the taxes of corporations and the wealthy were slashed. The backlash was facilitated by advances in shipping and telecommunications, which allowed production to be relocated to non-union areas and low-wage countries. The doubling of the global capitalist workforce, which occurred as a result of the opening of China and India to foreign investment, and the collapse of the Warsaw Bloc, helped to drive wages down. [35] The ideology propagated by “radical” conservatives who organized themselves into corporate-funded think-tanks justified the new agenda, but didn’t cause it.

Gutstein and other progressives think it’s possible to turn back the hands of time. They want to return North America to a post-war capitalism. But returning to the post-war welfare state means recreating the material conditions of the post-war years, something no amount of counter-hegemonic progressive propaganda can achieve. Those days are gone, and while they may have been comfortable for white, male workers in the United States and Canada, they were not a nostalgic period for women and racial minorities in the global north, nor for the greater part of humanity in the global south whose oppression the social welfare gains of the north partly defrayed.

The lesson of the last three decades for the left is not, as Gutstein concludes, to work to restore the credibility of welfare capitalism, but to face up to the reality of what happens when working class movements fail to take the driver’s seat themselves, and allow business to keep its hands on the wheel. Left in place to drive the car, the major shareholders and board members of the top corporations steer in the direction that suits themselves, veering only slightly off course when the passengers, or the conditions of the road, leave them no other choice. But the road of capitalism is narrow, and business absolutely will not steer off the road, though it is in another direction that the interests of the car’s working class passengers lie. As Gutstein points out, “poverty, homelessness, inequality, poor healthcare, racism and sexism” are the traditional concerns of the left, and it is in societies in which the working class has come to power that these evils have been greatly reduced, if not eradicated altogether. By contrast, in societies in which business has been left in the driver’s seat or where labor attempts to share power with business, progressive gains, if they’ve gone far at all, are almost always temporary, revoked the moment business needs to take them back and is strong enough to do so. No, the lesson of the last three decades for the left is not to work to restore the credibility of social welfare capitalism, but for the working class itself to take control of the economy and to replace business in the driver seat. This is the only way to permanently secure the benefits business temporarily ceded to one section of the global working class during the post-war period, and to make them a reality for all.

1. Donald Gutstein, Not a Conspiracy Theory: How Business Hijacks Democracy, Key Porter Books, 2009, p. 315.
2. Gutstein, p. 59.
3. Gutstein, p. 57.
4. Gutstein, p. 17.
5. Gutstein, p. 315.
6. Gutstein, p. 58.
7. Gutstein, p. 304.
8. Jennifer Agiesta and Jon Cohen, “Public opinion in U.S. turns against the war,” The Washington Post, August 20, 2009; John F. Burns, “Brown pledges to maintain Britain’s Afghan forces,” The New York Times, September 5, 2009; Julian E. Barnes, “Doubt raised on troop boost in Afghanistan war,” The Los Angeles Times, September 11, 2009; Linda McQuaig, “NATO is an unwelcome wedding guest,” The Toronto Star, July 28, 2009; “Just 40% of US back Afghan conflict,” The Morning Star (UK), October 8, 2009; Eric Schmitt and Steven Erlanger, “U.S. seeks 10,000 troops from its allies in Afghanistan,” The New York Times, November 26, 2009.
9. GlobeScan, “Wide Dissatisfaction with Capitalism — Twenty Years after Fall of Berlin Wall,” November 9, 2009, http://www.globescan.com/news_archives/bbc2009_berlin_wall/bbc09_berlin_wall_release.pdf
10. Gutstein, p. 80.
11. Gutstein, p. 303.
12. Gutstein, p. 58.
13. Gutstein, p. 66.
14. Ibid.
15. Gutstein, p. 92.
16. Gutstein, p. 63.
17. Ibid. One of the people involved in the post-World War I campaign was Ivy Ledbetter Lee who “helped John D. Rockefeller clean up his reputation.” This was done by establishing the Rockefeller Foundation. Being liberal, Rockefeller’s philanthropy escapes Gutstein’s critical gaze.
18. Gutstein, p. 70.
19. Ibid. It’s curious that Gutstein considers private enterprise ideology to be uniquely dominant in North America. While it’s true that social programs and unions are stronger in other places (Western Europe, for example), it would be an exaggeration to say that private enterprise ideology isn’t dominant among mainstream journalists and media commentators, top level civil servants and political parties, including labor, socialist and social democratic parties, outside of North America. It is not, however, dominant among the majority, as shown above.
20. Gutstein, p. 315.
21. Gutstein, p. 11-12.
22. Gutstein, p. 73.
23. Paul Sweezy, “Power elite or ruling class?” Monthly Review Pamphlet Series, No. 13.
24. G. William Domhoff, Who Rules America? Power, Politics and Social Change, McGraw-Hill, 2005.
25. Gutstein, p. 30.
26. Gutstein, p. 56.
27. Paul A. Baran and Paul M. Sweezy, Monopoly Capital: An Essay on the American Economic and Social Order, Monthly Review Press, April, 2009.
28. Fred Goldstein, Low-Wage Capitalism: Colossus with Feet of Clay, World View Forum, New York, 2008.
29. Gutstein, p. 309.
30. Ibid.
31. Gutstein, p. 318.
32. Ibid.
33. Joan Roelofs, Foundations and Public Policy: The Mask of Pluralism, State University of New York Press, 2003; See also Michael James Barker’s web-log, http://michaeljamesbarker.wordpress.com/. Barker has written extensively on liberal philanthropies and their role in manipulating democracy.
34. Gutstein, p. 292.
35. Goldstein.

Polls show a spectre is haunting Europe…and much of the rest of the world

Posted in Communism, Socialism by what's left on November 15, 2009

By Stephen Gowans

Just two months before the West celebrated the 20th anniversary of the events that would lead to the collapse of communism in Eastern Europe, the Pew Global Attitudes Project, a polling organization funded by a tax-exempt trust established by the founder of the Sun Oil company, conducted a poll that showed that Eastern Europeans are decidedly gloomy about their lives under capitalist democracy.

While Western media and politicians spoke glowingly of Eastern Europeans embracing freedom and regular multi-party elections, Russians, Poles, Bulgarians, Ukrainians and other residents of former communist states complained to the Pew pollsters about being worse off today than under communism, about their dissatisfaction with capitalist democracy, and about the transition from communism to capitalism benefiting business owners and politicians, not ordinary people.

The poll revealed that what Eastern Europeans really think about life under capitalism is a far cry from the picture painted by US and British journalists, who, in their celebration of the 20th anniversary of the opening of the Berlin Wall, mostly presented the events of 1989 to 1991 through the eyes of dissidents and business owners rather than ordinary people. “Our voice, the voice of those whose lives were improved by communism,” remarked Zsuzsanna Clark, who has written a book about her life growing up in communist Hungary, “is seldom heard when it comes to discussions of what life was like behind the Iron Curtain. Instead, the accounts we hear in the West are nearly always from the perspectives of wealthy émigrés or anti-communist dissidents with an axe to grind.” [1]

The poll of 14,760 Eastern Europeans was conducted in August and September in eight countries: Bulgaria, the Czech Republic, Hungary, Lithuania, Poland, Russia, Slovakia and Ukraine. [2]

According to the poll, one-half of Eastern Europeans say they’re worse off today than they were under communism. Only one-third say they’re better off. [3]

The chief beneficiaries of the collapse of communism, according to eight of 10, have been business owners. More than 90 percent say politicians have also benefited. But less than one-quarter say ordinary people have reaped any advantage.

Other findings:

• Only one-third of Eastern Europeans believe their country is run for the benefit of all people.

• Only one in three is satisfied with capitalist democracy.

• Only one-quarter believes that most elected officials care what ordinary people think.

The failure of Eastern Europeans to laud their retrogression from full employment and freedom from economic insecurity under communism to high rates of unemployment and the tyranny of the market under capitalism was chalked up to cultural retardation in one New York Times article. “We have created democratic institutions, but we are missing the democratic-political culture to make them effective,” a Bulgarian academic explained. [4]

Rather than being a neutral observer, the Pew Global Attitudes Project is an integral part of a public relations program of imbuing Eastern Europeans with the right culture – a public relations project that has failed miserably.

Funded by the wealth sweated out of oil industry labor by Sun Oil Company founder, Joseph Pew, the Pew Charitable Trust channels money to organizations and individuals that work toward propping up, legitimizing and disseminating capitalist ideology and weakening capitalism’s opponents.

The Pew Global Attitudes Project is part of this wider project. It monitors global attitudes, as an early warning system, to detect growing dissatisfaction with capitalism so that defensive measures can be taken to pre-empt possible challenges to the capitalist state. It also sets benchmarks, to monitor progress in inculcating global populations with attitudes favorable to capitalism.

What is likely to trouble the poll’s sponsors is the continued commitment of Eastern Europeans to the values of solidarity and welfare that characterized communism. Two-thirds of the residents of the former Warsaw Pact countries continue to cleave to one of the defining values of communism: that it’s more important that the state play an active role in guaranteeing that nobody is in need than it is for everyone to be free to pursue their life’s goals without interference from the state.

If the Pew poll points to the tenacity of pro-socialist values in Eastern Europe, a GlobeScan poll conducted in 27 countries, representing 70 percent of the world’s population, shows that most people in the world are social democrats, while a sizeable number are anti-capitalist. [5]

One-half of the world’s population living in areas in which capitalism is the dominant economic system hold social democratic views, believing that capitalism’s problems can be solved through reforms and stricter regulation, while one in five are radicals, believing capitalism is fatally flawed and a new economic system is required. The remainder, 30 percent, hold laissez-faire capitalist views, believing capitalism works well and should not be subject to reforms and government oversight. [6]

GlobeScan is a strategic issues management firm that provides public relations advice to governments and transnational corporations. To survey global attitudes toward capitalism, GlobeScan partnered with the Program on International Policy Attitudes, an organization funded by the Ford, Carnegie, Rockefeller and other capitalist foundations, which largely exist to burnish the reputation of capitalism. GlobeScan also does work for the World Bank and World Trade Organization.

The poll found that a clear majority of the world’s population favors policies traditionally associated with socialism, including public ownership of major industries, redistribution of wealth, and an active role for governments in regulating businesses.

According to the poll, 62 percent of adults living in the world’s capitalist areas would like governments to play some role in owning or controlling major industries, while 44 percent believe governments should play an even more active role than they play today.

At the same time, three-quarters want governments to distribute wealth more evenly and 60 percent favor governments being more active in redistributing income.

Seven of 10 of the 29,000 people polled by GlobeScan say governments should play at least as much of a role in regulating businesses as they play today, while 55 percent believe governments should play an even stronger role.

The poll, which sampled opinion in the Americas, Europe, Asia, Africa and Australia, revealed that the greatest percentage of radicals is in France, where 43 percent believe capitalism should be replaced by a different system. (Three-quarters of French citizens, according to the Pew poll, believe that government providing for the basic needs of all is more important than ensuring individuals can pursue personal goals without government interference.) By contrast, Japan, Germany and the United States have the smallest percentage of radicals. Only 10 percent in these countries believe capitalism is fatally flawed and needs to be replaced.

On balance, the GlobeScan survey of world opinion shows that in the world’s capitalist areas, a majority remains unwilling to write capitalism off as fatally flawed, but recognizes the system’s problems are severe enough to warrant public ownership, income redistribution and regulatory measures as correctives. While this may appear to be a pessimistic finding to those who favour a clear break with capitalism, public ownership, regulation of enterprises (through central planning) and a sharp reduction in income inequality were central planks of the economic policies of countries that broke decisively with capitalism after 1917 and World War II. Despite a reluctance to reject capitalism entirely, the world’s majority favors decidedly socialist policies.

Taken together, the two polls show that the political attitudes of the world’s population reflect the majority’s position in the world economy as sellers of their own labor, vulnerable to the vicissitudes of the labor market and faced by growing economic insecurity. Eastern Europeans recognize that capitalist democracy benefits business owners and politicians, not ordinary people, and that elected officials are not responsive to the majority. They are also dissatisfied with capitalist democracy and believe that life was better under communism. A majority of the world’s population favours a traditional socialist policy of government ownership and control of the commanding heights of the economy and calls for governments to play more of a role in distributing wealth evenly, an expression of a commitment to egalitarian values. And while half of the world’s population believes that capitalism’s flaws are remediable, a large majority, 70 percent, recognizes that capitalism is a flawed system.

The polls suggest that most people are socialists, whether they recognize themselves as such, or would use the word to describe their core political values. That they routinely vote for parties of private property is not indicative of the majority’s political orientation. A substantial number of people don’t vote, recognizing, as Eastern Europeans do, that elected officials do not work on behalf of the interests of ordinary people and that the state operates in the interests of business owners. Those who do vote, often vote against parties and policies they don’t want, finding no parties that advocate policies they do want, settling for the lesser evil. Pro-capitalist parties command a virtual monopoly on the resources required to run the marketing campaigns necessary to win elections, meaning they are often the only choice voters are aware of. And many people shy away from parties that advocate anti-capitalist positions for fear that if the parties come to power they will provoke businesses to move elsewhere or curtail investment, thereby touching off an economic crisis, leading to the loss of their jobs.

The polls underscore that the goal for those who advocate a radical solution to capitalism’s problems is to show that the widely-favoured policies of public ownership, income redistribution and tighter regulation, without a wholesale rejection of capitalism, cannot bring about the intended benefits in any lasting way.

The Pew poll also shows that history’s lone top-to-bottom alternative to capitalism, the socialist states of Eastern Europe, were not rejected holus-bolus by the people who lived in them, and that the popular reaction to the successor capitalist regimes does not warrant the celebratory retrospectives on the “fall of the Berlin Wall” and the collapse of communism favoured by the Western media.


1. Zsuzsanna Clark, “Oppressive and grey? No, growing up under communism was the happiest time of my life,” The Mail on Sunday (UK), October 17, 2009.

2. The Pew Global Attitudes Project, “Two decades after the Wall’s fall: End of Communism cheered but now with more reservations,” November 2, 2009. http://pewglobal.org/reports/pdf/267.pdf

3. All figures represent averages weighted by country population.

4. Matthew Brunwasser, “Bulgaria still stuck in trauma of transition,” The New York Times, November 11, 2009.

5. PIPA and GLobeScan, “Wide Dissatisfaction with Capitalism — Twenty Years after Fall of Berlin Wall,” November 9, 2009, http://www.globescan.com/news_archives/bbc2009_berlin_wall/bbc09_berlin_wall_release.pdf

6. All figures represent averages weighted by country population.

Democracy, East Germany and the Berlin Wall

The GDR was more democratic, in the original and substantive sense of the word, than eastern Germany was before 1949 and than the former East Germany has become since the Berlin Wall was opened in 1989. It was also more democratic in this original sense than its neighbor, West Germany. While it played a role in the GDR’s eventual demise, the Berlin Wall was at the time a necessary defensive measure to protect a substantively democratic society from being undermined by a hostile neighbor bent on annexing it.

By Stephen Gowans

While East Germany (the German Democratic Republic, or GDR) wasn’t a ‘workers’ paradise’, it was in many respects a highly attractive model that was responsive to the basic needs of the mass of people and therefore was democratic in the substantive and original sense of the word. It offered generous pensions, guaranteed employment, equality of the sexes and substantial wage equality, free healthcare and education, and a growing array of other free and virtually free goods and services. It was poorer than its West German neighbor, the Federal Republic of Germany, or FRG, but it started at a lower level of economic development and was forced to bear the burden of indemnifying the Soviet Union for the massive losses Germany inflicted upon the USSR in World War II. These conditions were largely responsible for the less attractive aspects of life in the GDR: lower pay, longer hours, and fewer and poorer consumer goods compared to West Germany, and restrictions on travel to the West. When the Berlin Wall was open in 1989, a majority of the GDR’s citizens remained committed to the socialist basis of their society and wished to retain it. [1] It wasn’t the country’s central planning and public ownership they rebelled against. These things produced what was best about the country. And while Cold War propaganda located East Germany well outside the ‘free world,’ political repression and the Stasi, the East German state security service, weren’t at the root of East Germans’ rebellion either. Ultimately, what the citizens of the GDR rebelled against was their comparative poverty. But this had nothing to do with socialism. East Germans were poorer than West Germans even before the Western powers divided Germany in the late 1940s, and remain poorer today. A capitalist East Germany, forced to start at a lower level of economic development and to disgorge war reparation payments to the USSR, would not have become the social welfare consumer society West Germany became and East Germans aspired after, but would have been at least as worse off as the GDR was, and probably much worse off, and without the socialist attractions of economic security and greater equality. Moreover, without the need to compete against an ideological rival, it’s doubtful the West German ruling class would have been under as much pressure to make concessions on wages and benefits. West Germans, then, owed many of their social welfare gains to the fact their neighbour to the east was socialist and not capitalist.

The Western powers divide Germany

While the distortions of Cold War history would lead one to believe it was the Soviets who divided Germany, the Western powers were the true authors of Germany’s division. The Allies agreed at the February 1945 Yalta conference that while Germany would be partitioned into French, British, US and Soviet occupation zones, the defeated Germany would be administered jointly. [2] The hope of the Soviets, who had been invaded by Germany in both first and second world wars, was for a united, disarmed and neutral Germany. The Soviet’s goals were two-fold: First, Germany would be demilitarized, so that it could not launch a third war of aggression on the Soviet Union. Second, it would pay reparations for the massive damages it inflicted upon the USSR, calculated after the war to exceed $100 billion. [3]


Courtesy of Brendan Stone

The Western powers, however, had other plans. The United States wanted to revive Germany economically to ensure it would be available as a rich market capable of absorbing US exports and capital investment. The United States had remained on the sidelines through a good part of the war, largely avoiding the damages that ruined its rivals, while at the same time acting as armourer to the Allies. At the end of the war, Britain, France, Germany, Japan and the USSR lay in ruins, while the US ruling class was bursting at the seams with war industry profits. The prospects for the post-war US economy, however, and hence for the industrialists, bankers and investors who dominated the country’s political decision-making, were dim unless new life could be breathed into collapsed foreign markets, which would be needed to absorb US exports and capital. An economically revived Germany was therefore an important part of the plan to secure the United States’ economic future. The idea of a Germany forced to pour out massive reparation payments to the USSR was intolerable to US policy makers: it would militate against the transformation of Germany into a sphere of profit-making for US capital, and would underwrite the rebuilding of an ideological competitor.

The United States intended to make post-war life as difficult as possible for the Soviet Union. There were a number of reasons for this, not least to prevent the USSR from becoming a model for other countries. Already, socialism had eliminated the United States’ access to markets and spheres of investment in one-sixth of the earth’s territory. The US ruling class didn’t want the USSR to provide inspiration and material aid to other countries to follow the same path. The lead role of communists in the resistance movements in Europe, “the success of the Soviet Union in defeating Nazi Germany,” and “the success of the Soviet Union in industrializing and modernizing,” [4] had greatly raised the prestige of the USSR and enhanced the popularity of communism. Unless measures were taken to check the USSR’s growing popularity, socialism would continue to advance and the area open to US exports and investment would continue to contract. A Germany paying reparations to the Soviets was clearly at odds with the goals of reviving Germany and holding the Soviet Union in check. What’s more, while the Soviets wanted Germany to be permanently disarmed as a safeguard against German revanchism, the United States recognized that a militarized Germany under US domination could play a central role in undermining the USSR.

The division of Germany began in 1946, when the French decided to administer their zone separately. [5] Soon, the Western powers merged their three zones into a single economic unit and announced they would no longer pay reparations to the Soviet Union. The burden would have to be borne by the Soviet occupation zone alone, which was smaller and less industrialized, and therefore less able to offer compensation.

In 1949, the informal division of Germany was formalized with the proclamation by the Western powers of a separate West German state, the FRG. The new state would be based on a constitution written by Washington and imposed on West Germans, without their ratification. (The GDR’s constitution, by contrast, was ratified by East Germans.) In 1954, West Germany was integrated into a new anti-Soviet military alliance, NATO, which, in its objectives, aped the earlier anti-Comintern pact of the Axis powers. The goal of the anti-Comintern pact was to oppose the Soviet Union and world communism. NATO, with a militarized West Germany, would take over from where the Axis left off.

The GDR was founded in 1949, only after the Western powers created the FRG. The Soviets had no interest in transforming the Soviet occupation zone into a separate state and complained bitterly about the Western powers’ division of Germany. Moscow wanted Germany to remain unified, but demilitarized and neutral and committed to paying war reparations to help the USSR get back on its feet. As late as 1954, the Soviets offered to dissolve the GDR in favour of free elections under international supervision, leading to the creation of a unified, unaligned, Germany. This, however, clashed with the Western powers’ plan of evading Germany’s responsibility for paying war reparations and of integrating West Germany into the new anti-Soviet, anti-communist military alliance. The proposal was, accordingly, rejected. George Kennan, the architect of the US policy of ‘containing’ (read undermining) the Soviet Union, remarked: “The trend of our thinking means that we do not want to see Germany reunified at this time, and that there are no conditions on which we would really find such a solution satisfactory.” [6]

This placed the anti-fascist working class leadership of the GDR in a difficult position. The GDR comprised only one-third of German territory and had a population of 17 million. By comparison, the FRG comprised 63 million people and made up two-thirds of German territory. [7] Less industrialized than the West, the new GDR started out poorer than its new capitalist rival. Per capita income was about 27 percent lower than in the West. [8] Much of the militant section of the working class, which would have ardently supported a socialist state, had been liquidated by the Nazis. The burden of paying war reparations to the Soviets now had to be borne solely by the GDR. And West Germany ceaselessly harassed and sabotaged its neighbor, refusing to recognize it as a sovereign state, regarding it instead as its own territory temporarily under Soviet occupation. [9] Repeatedly, West Germany proclaimed that its official policy was the annexation of its neighbor to the east.

The GDR’s leaders faced still other challenges. Compared to the West, East Germany suffered greater losses in the war. [10] The US Army stripped the East of its scientists, technicians and technical know-how, kidnapping “thousands of managers, engineers, and all sorts of experts, as well as the best scientists – the brains of Germany’s East – from their factories, universities, and homes in Saxony and Thuringia in order to put them to work to the advantage of the Americans in the Western zone – or simply to have them waste away there.” [11]

As Pauwels explains,

“During the last weeks of the hostilities the Americans themselves had occupied a considerable part of the Soviet zone, namely Thuringia and much of Saxony. When they pulled out at the end of June, 1945, they brought back to the West more than 10,000 railway cars full of the newest and best equipment, patents, blueprints, and so on from the firm Carl Zeiss in Jena and the local plants of other top enterprises such as Siemens, Telefunken, BMW, Krupp, Junkers, and IG-Farben. This East German war booty included plunder from the Nazi V-2 factory in Nordhausen: not only the rockets, but also technical documents with an estimated value of 400 to 500 million dollars, as well as approximately 1,200 captured German experts in rocket technology, one of whom being the notorious Wernher von Braun.” [12]

The Allies agreed at Yalta that a post-war Germany would pay the Soviet Union $10 billion in compensation for the damages inflicted on the USSR during the war. This was a paltry sum compared to the more realistic estimate of $128 billion arrived at after the war. And yet the Soviets were short changed on even this meagre sum. The USSR received no more than $5.1 billion from the two German states, most of it from the GDR. The Soviets took $4.5 billion out of East Germany, carting away whole factories and railways, while the larger and richer FRG paid a miserable $600 million. The effect was the virtual deindustrialization of the East. [13] In the end, the GDR would compensate both the United States (which suffered virtually no damage in World War II) through the loss of its scientists, technicians, blue-prints, patents and so on, and the Soviet Union (which suffered immense losses and deserved to be compensated), through the loss of its factories and railways. Moreover, the United States offered substantial aid to West Germany to help it rebuild, while the poorer Soviet Union, which had been devastated by the German invasion, lacked the resources to invest in the GDR. [14] The West was rebuilt; the East stripped bare.

The GDR’s democratic achievements

Despite the many burdens it faced, the GDR managed to build a standard of living higher than that of the USSR “and that of millions of inhabitants of the American ghettoes, of countless poor white Americans, and of the population of most Third World countries that have been integrated willy-nilly with the international capitalist world system.” [15]

Over 90 percent of the GDR’s productive assets were owned by the country’s citizens collectively, while in West Germany productive assets remained privately owned, concentrated in a few hands. [16] Because the GDR’s economy was almost entirely publicly owned and the leadership was socialist, the economic surplus that people produced on the job went into a social fund to make the lives of everyone better rather than into the pockets of shareholders, bondholders, landowners and bankers. [17] Out of the social fund came subsidies for food, clothing, rent, public transportation, as well as cultural, social and recreational activities. Wages weren’t as high as in the West, but a growing number of essential goods and services were free or virtually free. Rents, for example, were very low. As a consequence, there were no evictions and there was no homelessness. Education was free through university, and university students received stipends to cover living expenses. Healthcare was also free. Childcare was highly subsidized.


Courtesy of Brendan Stone

Differences in income levels were narrow, with higher wages paid to those working in particularly strenuous or dangerous occupations. Full gender equality was mandated by law and men and women were paid equally for the same work, long before gender equality was taken up as an issue in the West. What’s more, everyone had a right to a job. There was no unemployment in the GDR.

Rather than supporting systems of oppression and exploitation, as the advanced capitalist countries did in Africa, Latin America and Asia, the GDR assisted the people of the global South in their struggles against colonialism. Doctors were dispatched to Vietnam, Mozambique and Angola, and students from many Third World countries were trained and educated in the GDR at the GDR’s expense.

Even the Wall Street Journal recognized the GDR’s achievements. In February, 1989, just months before the opening of the Berlin Wall, the US ruling class’s principal daily newspaper announced that the GDR “has no debt problem. The 17 million East Germans earn 30 percent more than their next richest partners, the Czechoslovaks, and not much less than the English. East Germans build 32-bit mini-computers and a socialist ‘Walkman’ and the only queue in East Berlin forms at the opera.” [18]

The downside was that compared to West Germany, wages were lower, hours of work were longer, and there were fewer consumer goods. Also, consumer goods tended to be inferior compared to those available in West Germany. And there were travel restrictions. Skilled workers were prevented from travelling to the West. But at the same time, vacations were subsidized, and East Germans could travel throughout the socialist bloc.

Greater efficiencies

West Germany’s comparative wealth offered many advantages in its ideological battle with socialism. For one, the wealth differential could be attributed deceptively to the merits of capitalism versus socialism. East Germany was poorer, it was said, not because it unfairly bore the brunt of indemnifying the Soviets for their war losses, and not because it started on a lower rung, but because public ownership and central planning were inherently inefficient. The truth of the matter, however, was that East German socialism was more efficient than West German capitalism, producing faster growth rates, and was more responsive to the basic needs of its population. “East Germany’s national income grew in real terms about two percent faster annually that the West German economy between 1961 and 1989.” [19]

The GDR was also less repressive politically. Following in the footsteps of Hitler, West Germany banned the Communist Party in the 1950s, and close tabs were kept by West Germany’s own ‘secret’ police on anyone openly expressing Marxist-Leninist views. Marxist-Leninists were barred from working in the public service and frequently lost private sector jobs owing to their political views. In the GDR, by contrast, those who expressed views at odds with the dominant Marxist-Leninist ideology did not lose their jobs, and were not cut off from the state’s generous social supports, though they too were monitored by the GDR’s ‘secret’ police. The penalty for dissenting from the dominant political ideology in the West (loss of income) was more severe than in the East. [20]

The claim that the GDR’s socialism was less efficient than West Germany’s capitalism was predicated on the disparity in wealth between the two countries, but the roots of the disparity were external to the two countries’ respective systems of ownership, and the disparity existed prior to 1949 (at which point GDP per capita was about 43 percent higher in the West) and continued to exist after 1989 (when unemployment – once virtually eliminated — soared and remains today double what it is in the former West Germany.) Over the four decades of its existence, East German socialism attenuated the disparity, bringing the GDR closer to West Germany’s GDP per capita. Significantly, “real economic growth in all of Eastern Europe under communism was estimated to be higher than in Western Europe under capitalism (as well as higher than that in the USA) even in communism’s final decade (the 1980s).” After the opening of the Berlin Wall, with capitalism restored, “real economic output fell by over 30 percent in Eastern Europe as a whole in the 1990s.” [21]

But the GDR’s faster growth rates from 1961 to 1989 tell only part of the story. It’s possible for GDP to grow rapidly, with few of the benefits reaching the bulk of the population. The United States spends more on healthcare as a percentage of its GDP than all other countries, but US life expectancy and infant mortality results are worse than in many other countries which spend less (but have more efficient public health insurance or socialized systems.) This is due to the reality that healthcare is unequally distributed in the United States, with the wealthy in a position to buy the best healthcare in the world while tens of millions of low-income US citizens can afford no or only inadequate healthcare. By contrast, in most advanced capitalist countries everyone has access to basic (though typically not comprehensive) healthcare. In socialist Cuba, comprehensive healthcare is free to all. What’s important, then, is not only how much wealth (or healthcare) a society creates, but also how a society’s wealth (or healthcare) is distributed. Wealth was far more evenly distributed in socialist countries than it was in capitalist countries. The mean Gini coefficient – a measure of income equality which runs from 0 (perfect equality) to 1 (perfect inequality) – was 0.24 for socialist countries in 1970 compared to 0.48 for capitalist countries. [22]

Socialist countries also fared better at meeting their citizens’ basic needs. Compared to all capitalist countries, socialist countries had higher life expectancies, lower levels of infant mortality, and higher levels of literacy. However, the comparison of all socialist countries with all capitalist countries is unfair, because the group of capitalist countries comprises many more countries unable to effectively meet the basic needs of their populations owing to their low level of economic development. While capitalism is often associated with the world’s richest countries, the world’s poorest countries are also capitalist. Desperately poor Haiti, for example, is a capitalist country, while neighboring Cuba, richer and vastly more responsive to the needs of its citizens, is socialist. We would expect socialist countries to have done a better job at meeting the basic needs of their citizens, because they were richer, on average, than all capitalist countries together. But the conclusion still stands if socialist countries are compared with capitalist countries at the same level of economic development; that is, socialist countries did a better job of meeting their citizens’ basic needs compared to capitalist countries in the same income range. Even when comparing socialist countries to the richest capitalist countries, the socialist countries fared well, meeting their citizens’ basic needs as well as advanced capitalist countries met the needs of their citizens, despite the socialist countries’ lower level of economic development and fewer resources. [23] In terms of meeting basic needs, then, socialism was more efficient: it did more with less.

Why were socialist countries, like the GDR, more efficient? First, socialist societies were committed to improving the living standards of the mass of people as their first aim (whereas capitalist countries are organized around profit-maximization as their principle goal – a goal linked to a minority that owns capital and land and derives its income from profits, rent and interest, that is, the exploitation of other people’s labor, rather than wages.) Secondly, the economic surplus the citizens of socialist countries produced was channelled into making life better for everyone (whereas in capitalist countries the economic surplus goes straight to shareholders, bondholders, landowners and bankers.) This made socialism more democratic than capitalism in three ways:

• It was more equal. (Capitalism, by contrast, produces inequality.)

• It worked toward improving as much as possible the lot of the classes which have no other means of existence but the labor of their hands and which comprise the vast majority of people. (Capitalist societies, on the other hand, defend and promote the interests of the minority that owns capital.)

• It guaranteed economic and social rights. (By comparison, capitalist societies emphasize political and civil liberties, i.e., protections against the majority using its greater numbers to encroach upon the privileges of the minority that owns and controls the economy.)

As will be discussed below, even when it came to political (as distinct from social and economic) democracy, the differences between East and West Germany were more illusory than real.

Stanching the outward migration of skilled workers

Despite the many advantages the GDR offered, it remained less affluent throughout its four decades compared to its capitalist neighbor to the west. For many “the lure of higher salaries and business opportunities in the West remained strong.” [24] As a result, in its first decade, East Germany’s population shrunk by 10 percent. [25] And while higher wages proved to be an irresistible temptation to East Germans who stressed personal aggrandizement over egalitarian values and social security, the FRG – keen to weaken the GDR – did much to sweeten the pot, offering economic inducements to skilled East Germans to move west. Working-age, but not retired, East Germans were offered interest-free loans, access to scarce apartments, immediate citizenship and compensation for property left behind, to relocate to the West. [26]


Courtesy of Brendan Stone

By 1961, the East German government decided that defensive measures needed to be taken, otherwise its population would be depleted of people with important skills vital to building a prosperous society. East German citizens would be barred from entering West Germany without special permission, while West Germans would be prevented from freely entering the GDR. The latter restriction was needed to break up black market currency trading, and to inhibit espionage and sabotage carried out by West German agents. [27] Walls, fences, minefields and other barriers were deployed along the length of the East’s border with the West. Many of the obstacles had existed for years, but until 1961, Berlin – partitioned between the West and East – remained free of physical barriers. The Berlin Wall – the GDR leadership’s solution to the problems of population depletion and Western sabotage and espionage — went up on August 13, 1961. [28]

From 1961 to 1989, 756 East German escapees, an average of 30 per year, were either shot, drown, blown apart by mines or committed suicide after being captured. By comparison, hundreds of Mexicans die every year trying to escape poor Mexico into the far wealthier United States. [29] Approximately 50,000 East Germans were captured trying to cross the border into West Germany from 1961 to 1989. Those who were caught served prison sentences of one year. [30]

Over time, the GDR gradually relaxed its border controls, allowing working-age East Germans to visit the West if there was little risk of their not returning. While in the 1960s, only retirees over the age of 65 were permitted to travel to the West, by the 1980s, East Germans 50 years of age or older were allowed to cross the border. Those with relatives in the FRG were also allowed to visit. By 1987, close to 1.3 million working-age East Germans were permitted to travel to West Germany. Virtually all of them – over 99 percent – returned. [31]

However, not all East Germans were granted the right to cross the border. In 1987, 300,000 requests were turned down. East Germans only received permission after being cleared by the GDR’s state security service, the Stasi. One of the effects of loosening the border restrictions was to swell the Stasi’s ranks, in order to handle the increase in applications for visits to the West. [32]

Pauwels reminds us that,

“A hypothetical capitalist East Germany would likewise have also had to build a wall in order to prevent its population from seeking salvation in another, more prosperous Germany. Incidentally, people have fled and continue to flee, to richer countries also from poor capitalist countries. However, the numerous black refugees from extremely poor Haiti, for example, have never enjoyed the same kind of sympathy in the United States and elsewhere in the world that was bestowed so generously on refugees from the GDR during the Cold War…And should the Mexican government decide to build a ‘Berlin Wall’ along the Rio Grande in order to prevent their people from escaping to El Norte, Washington would certainly not condemn such an initiative the way it used to condemn the infamous East Berlin construction project.” [33]

GDR sets standards for working class in FRG…and abroad

Despite its comparative poverty, the GDR furnished its citizens with generous pensions, free healthcare and education, inexpensive vacations, virtually free childcare and public transportation, and paid maternity leave, as fundamental rights. Even so, East Germany’s standard of living continued to lag behind that of the upper sections of the working class in the West. The comparative paucity and lower quality of consumer goods, and lower wages, were the product of a multitude of factors that conspired against the East German economy: its lower starting point; the need to invest in heavy industry at the expense of light industry; blockade and sanctions imposed by the West; the furnishing of aid to national liberation movements in the global South (which benefited the South more than it did the GDR. By comparison, aid flows from Western countries were designed to profit Western corporations, banks and investors.) What East Germany lacked in consumer goods and wages, it made up for in economic security. The regular economic crises of capitalist economies, with their rampant underemployment and joblessness, escalating poverty and growing homelessness, were absent in the GDR.

The greater security of life for East Germans presented a challenge to the advanced capitalist countries. Intent on demonstrating that capitalism was superior to socialism, governments and businesses in the West were forced to meet the standards set by the socialist countries to secure the hearts and minds of their own working class. Generous social insurance, provisions against lay-offs and representation on industrial councils were conceded to West German workers. [34] But these were revocable concessions, not the inevitable rewards of capitalism.

East Germany’s robust social wage acted in much the same way strong unions do in forcing non-unionized plants to provide wages and benefits to match union standards. [35] In the 1970s, Canada’s unionized Stelco steel mill at Hamilton, Ontario set the standard for the neighboring non-unionized Dofasco plant. What the Stelco workers won through collective bargaining, the non-unionized Dofasco workers received as a sop to keep the union out. But once the union goes, the motivation to pay union wages and provide union benefits disappears. Likewise, with the demise of East Germany and the socialist bloc, the need to provide a robust social safety net in the advanced capitalist countries to secure the loyalty of the working class no longer existed. Hence, the GDR not only furnished its own citizens with economic security, but indirectly forced the advanced capitalist countries to make concessions to their own workers. The demise of the GDR therefore not only hurt Ossis (East Germans), depriving them of economic security, but also hurt the working populations of the advanced capitalist countries, whose social programs were the spill-over product of capitalism’s ideological battle with socialism. It is no accident that the claw back of reforms and concessions granted by capitalist ruling classes during the Cold War has accelerated since the opening of the Berlin Wall.

The collapse of the GDR and the socialist bloc has proved injurious to the interests of Western working populations in another way, as well. From the Bolshevik Revolution in 1917 to the opening of the Berlin Wall in 1989, the territory available to capitalist exploitation steadily diminished. This limited the degree of wage competition within the capitalist global labor force to a degree that wouldn’t have been true had the forces of socialism and national liberation not steadily advanced through the twentieth century. The counter-revolution in the Soviet Union and Eastern Europe, and China’s opening to foreign investment, ushered in a rapid expansion worldwide in the number of people vying for jobs. North American and Western European workers didn’t compete for jobs with workers in Poland, Romania, Slovakia and Russia in 1970. They do today. The outcome of the rapid expansion of the pool of wage-labor worldwide for workers in the advanced capitalist countries has been a reduction in real wages and explosive growth in the number of permanent lay-offs as competition for jobs escalates. The demise of socialism in Eastern Europe (and China’s taking the capitalist road) has had very real – and unfavourable – consequences for working people in the West.

Going backward

Since the opening of the Berlin Wall and the annexation of the GDR by the FRG in 1990, the former East Germany has been transformed from a rapidly industrializing country where everyone was guaranteed a job and access to a growing array of free and nearly free goods and services, to a de-industrialized backwater teeming with the unemployed where the population is being hollowed out by migration to the wealthier West. “The easterners,” a New York Times article remarked in 2005, “are notoriously unhappy.” Why? “Because life is less secure than it used to be under Communism.” [36]

During the Cold War East Germans who risked their lives to breach the Berlin War were depicted as refugees from political repression. But their escape into the wealthier West had little to do with flight from political repression and much to do with being attracted to a higher standard of living. Today Ossis stream out of the East, just as they did before the Berlin Wall sprang up in 1961. More than one million people have migrated from the former East Germany to the West since 1989. But these days, economic migrants aren’t swapping modestly-paid jobs, longer hours and fewer and poorer consumer goods in the East for higher paying jobs, shorter hours and more and better consumer goods in the West. They’re leaving because they can’t find work. The real unemployment rate, taking into account workers forced into early retirement or into the holding pattern of job re-training schemes, reaches as high as 50 percent in some parts of the former East Germany. [37] And the official unemployment rate is twice as high in the East as it is in the West. Erich Quaschnuk, a retired railroad worker, acknowledges that “the joy back then when the Berlin Wall fell was real,” but quickly adds, “the promise of blooming landscapes never appeared.” [38]

Twenty years after the opening of the Berlin Wall, one-half of people living in the former East Germany say there was more good than bad about the GDR, and that life was happier and better. Some Ossis go so far as to say they “were driven out of paradise when the Wall came down” while others thank God they were able to live in the GDR. Still others describe the unified Germany as a “slave state” and a “dictatorship of capital,” and reject Germany for “being too capitalist or dictatorial, and certainly not democratic.” [39]

Much as the GDR was faulted for being less democratic politically than the FRG, the FRG’s claim to being more democratic politically is shaky at best.

“East Germany…permitted voters to cast secret ballots and always had more than one candidate for each government position. Although election results typically resulted in over 99 percent of all votes being for candidates of parties that did not favour revolutionary changes in the East German system (just as West German election results generally resulted in over 99 percent of the people voting for non-revolutionary West German capitalist parties), it was always possible to change the East German system from within the established political parties (including the communist party), as those parties were open to all and encouraged participation in the political process. The ability to change the East German system from within is best illustrated by the East German leader who opened up the Berlin Wall and initiated many political reforms in less than two months in power.” [40]

West Germany outlawed many anti-capitalist political parties and organizations, including, in the 1950s, the popular Communist Party, as Hitler did in the 1930s. (On the other side of the Berlin Wall, no party that aimed to reverse socialism or withdraw from the Warsaw Pact was allowed.) The West German parties tended to be pro-capitalist, and those that weren’t didn’t have access to the resources the wealthy patrons of the mainstream political parties could provide to run the high-profile marketing campaigns that were needed to command significant support in elections. What’s more, West Germans were dissuaded from voting for anti-establishment parties, for fear the victory of a party with a socialist platform would be met by capital strike or flight, and therefore the loss of their jobs. The overwhelming support for pro-capitalist parties, then, rested on two foundations: The pro-capitalist parties uniquely commanded the resources to build messages with mass appeal and which could be broadcast with sufficient volume to reach a mass audience, and the threat of capital strike and capital flight disciplined working class voters to support pro-business parties.


No one would have built a Berlin Wall if they didn’t have to. But in 1961, with the GDR being drained of its working population by a West Germany that had skipped out on its obligations to indemnify the Soviet Union for the losses the Nazis had inflicted upon it in World War II, there were few options, apart from surrender. The Berlin Wall was, without question, regrettable, but it was at the same time a necessary defensive measure. If the anti-fascist, working class leadership of the GDR was to have any hope of building a mass society that was responsive to the basic needs of the working class and which channelled its economic surplus into improving the living conditions and economic security of all, drastic measures would have to be taken; otherwise, the experiment in German democracy — that of building a state that operated on behalf of the mass of people, rather than a minority of shareholders, bondholders, landowners and bankers — would have to be abandoned. And yet, by the history of drastic measures, this was hardly drastic. Wars weren’t waged, populations weren’t expelled, mass executions weren’t carried out. Instead, people of working-age were prevented from resettling in the West.

berlin mural

Courtesy of Brendan Stone

The abridgment of mobility rights was hardly unique to revolutionary situations. While the needs of Cold War propaganda pressed Washington to howl indignantly over the GDR’s measures to stanch the flow of its working-age population to the West, the restriction of mobility rights had not been unknown in the United States’ own revolution, where the ‘freedoms’ of dissidents and people of uncertain loyalty had been freely revoked. “During the American Revolution…those who wished to cross into British territory had to obtain a pass from the various State governments or military commanders. Generally, a pass was granted only to individuals of known and acceptable ‘character and views’ and after their promise neither to inform or otherwise to act to the prejudice of the United States. Passes, even for those whose loyalty was guaranteed, were generally difficult to acquire.” [41]

Was the GDR worth defending? Is its demise to be regretted? Unquestionably. The GDR was a mass society that channelled the surplus of the labor of all into the betterment of the conditions of all, rather than into the pockets of the few. It offered its citizens an expanding array of free and virtually free goods and services, was more equal than capitalist countries, and met its citizens’ basic needs better than did capitalist countries at the same level of economic development. Indeed, it met basic needs as well as richer countries did, with fewer resources, in the same way Cuba today meets the basic healthcare needs of all its citizens better than the vastly wealthier United States meets (or rather fails to meet) those of tens of millions of its own citizens. And while the GDR was poorer than West Germany and many other advanced capitalist countries, its comparative poverty was not the consequence of the country’s public ownership and central planning, but of a lower starting point and the burden of having to help the Soviet Union rebuild after the massive devastation Germany inflicted upon it in World War II. Far from being inefficient, public ownership and central planning turned the eastern part of Germany into a rapidly industrializing country which grew faster economically than its West German neighbor and shared the benefits of its growth more evenly. In the East, the economy existed to serve the people. In the West, the people existed to serve the minority that owned and controlled the economy. Limiting mobility rights, just as they have been limited in other revolutions, was a small price to pay to build, not what anyone would be so naïve as to call a workers’ paradise, but what can be called a mass, or truly democratic, society, one which was responsiveness to the basic needs of the mass of people as its principal aim.

1. Austin Murphy, The Triumph of Evil: The Reality of the USA’s Cold War Victory, European Press Academic Publishing, 2000.
2. Henry Heller, The Cold War and the New Imperialism: A Global History, 1945-2005, Monthly Review Press, New York, 2006.
3. Jacques R. Pauwels, The Myth of the Good War: America in the Second World War, James Lorimer & Company Ltd., Toronto, 2002; R. Palme Dutt, The Internationale, Lawrence & Wishart Ltd., London, 1964.
4. Melvyn Leffler, “New perspectives on the Cold War: A conversation with Melvyn Leffler,” November, 1998. http://www.neh.gov/news/humanities/1998-11/leffler.html)
5. Heller.
6. John Wight, “From WWII to the US empire,” The Morning Star (UK), October 11, 2009.
7. John Green, “Looking back at life in the GDR,” The Morning Star (UK), October 7, 2009.
8. Shirley Ceresto, “Socialism, capitalism, and inequality,” The Insurgent Sociologist, Vol. XI, No. 2, Spring, 1982.
9. Dutt; William Blum, Killing Hope: U.S. Military and CIA Interventions Since World War II, Common Courage Press, Maine, 1995.
10. Pauwels.
11. Ibid.
12. Ibid.
13. Ibid.
14. Murphy.
15. Pauwels.
16. Green.
17. Ibid.
18. The Wall Street Journal, February 22, 1989.
19. Murphy.
20. Ibid.
21. Ibid.
22. Ceresto.
23. Ibid.
24. Green.
25. Murphy.
26. Ibid.
27. Ibid.
28. Ibid.
29. Ibid.
30. Ibid.
31. Ibid.
32. Ibid.
33. Pauwels.
34. Fred Goldstein, Low-Wage Capitalism, World View Forum, New York, 2008.
35. Ibid.
36. The New York Times, December 6, 2005.
37. The Guardian (UK), November 15, 2006.
38. “Disappointed Eastern Germans turn right,” The Los Angeles Times, May 4, 2005.
39. Julia Bonstein, “Majority of Eastern Germans felt life better under communism,” Der Spiegel, July 3, 2009.
40. Murphy.
41. Albert Szymanski, Human Rights in the Soviet Union, Zed Book Ltd., London, 1984


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