Flutterby™! : Kremlin Minutes 2006-11-27 19:19:13.946289+00

Kremlin Minutes

2006-11-27 19:19:13.946289+00 by Dan Lyke 7 comments

I've long thought that those who credited Reagan with the fall of the Soviet Union cannot be true believers in capitalism: the failed notions of communism had lead the USSR to being long past ready to collapse and that, in managing to bring that about peacefully, Gorbachev was the true hero of that era, actually accomplishing what Khruschev had started so many years before. But such speculation will only ever remain speculation; those in high places in the Politburo were the ultimate players in what an intensely political process had evolved

However, given that the citizens of the United States are increasingly willing to endow the state with powers, it doesn't hurt to see more of the perspectives of what lead up to those historic changes, and Spiegel Magazine: The Kremlin Minutes: Diary of a Collapsing Superpower is fascinating.

I took a class in basic Political Science with Fouad Mograbhi at UTC a few years ago (he's one of the gems at UTC with whom everyone should take a class). He was in some program in the early 70s where he spent a few months in the USSR. He has trouble holding back the laughter when people talk about Reagan or Reaganomics having anything to do with the fall of the Soviet Union. In the early 70s, people were lined up for blocks outside shops to get staples like bread and toilet paper. The problems of distribution of goods was enough to wipe out the USSR. In fact, it wasn't so much communism as it was inefficiencies of distribution in a really vast country that made sure things were never going to work. Cuba works a little better because distribution isn't a problem.

Fouad's take also was that Reagan probably screwed things up by accelerating the fall of the communist party. As you mentioned, Khruschev started a process that Gorbachev was trying to manage as the disintegration accelerated. The plan was a staged transition out of communism, much like what we are seeing in China today. Reagan screwed it up and now we have thousands of nukes floating around and bunches of pissed of nuclear engineers.

Cuba also works better because there are a lot of expats sending money back home and because there's tourism, and as an extension of that, according to two separate people I know who've been there recently, the long-term prostitution business is aggressively pursued.

Cuba gets a lot from the economies of the U.S. (despite the sanctions) and Canada.

I am convinced that Fidel Castro has been able to hold on to power in Cuba for so long because of the US sanctions.

In fact, it wasn't so much communism as it was inefficiencies of distribution in a really vast country that made sure things were never going to work.

Yes. Where do those "inefficiencies of distribution" come from though? My understanding is that "inefficiencies of distribution" are an inherent feature of socialist economies, not something that is independent of them.

"The problem with socialism, Mises insisted, is that it short-circuits the "economic calculation" process. And it does so by abolishing private ownership of the means of production and eliminating peaceful, voluntary exchange. With no legal right of ownership, there is neither ability nor incentive to buy and sell; with nothing to buy and sell, there are no bids and offers for commodities or resources; with no bids and offers, there are no consummated exchanges; with no consummated exchanges, there arise no market prices; and without market prices expressing the relative values of commodities and resources, there exists no rational way of knowing what they are actually worth to people; therefore, businessmen cannot know how they should economically and efficiently be used to satisfy the wants and desires of the consuming public.

The socialist planner, therefore, is left trying to steer the collectivist economy blindfolded. He cannot know what products to produce, the relative quantities to produce, and the most economically appropriate way to produce them with the resources and labor at his central command."

Until the collapse of communism in the USSR, Cuba's economy was also heavily subsidized by the Soviets.

I agree with Larry that U.S. sanctions have probably helped Castro stay in power, by giving him a ready explanation for Cuba's crappy economy, and a common enemy against which to rally his people.

My comment was along the same vein as the premise that the South lost the Civil War because of a lack of standards in rail widths. It's fairly well known that the Union had standardized rail lines such that trains (and goods) good easily move from one part of the country to another. In the south there were three or four competing "standards". Good could rarely be shipped directly from point a to point b. generally, they had to be shipped from point a to point c, transferred from one train to another, then shipped from point c to point b.

And I think Mises implies this with "He cannot know what products to produce, the relative quantities to produce, and the most economically appropriate way to produce them with the resources and labor at his central command."

Mougrabhi's point was that goods, like toilet paper, were being produced in adequate quantities but they were not being distributed properly. So one city had an over abundance of TP while another got to use their hands for a while. Per Miles, the central command lacked efficient communication and distribution to direct goods based on needs.

And I hate to stand in argument with great thinkers like Mises, but I don't believe that communism (or socialism) is "impossible". I do believe that communism is not as efficient in most ways as capitalism. But I also believe that there are some "markets" that are not served by absolute market-driven efficiency.

Further, both communism and capitalism are corrupted by avarice. The difference is that in one (communism), greed becomes a wrench thrown in the gears of the machine whereas in the other (capitalism) it can act as a lubricant.

I think you nailed it with that last paragraph, Eric. And I think that greed is an essential human quality, and that systems which work around how the world is, rather than how some would like the world to be, are the ones which'll be successful.

But I think it's also pretty plain that many of the shortages were also deliberate tools of state control. Stalin used famine extensively to keep the Ukrainians in line.