Tuesday, November 3, 2009
A Kind of Anarchy
This blog is about the Russian Revolution of 1917; however, the Soviet Union’s 70 year history represents the Revolution’s reflection or shadow and is therefore also worthy of study. And if you have a hard time analyzing the Soviet Union’s 70 year history with any degree of confidence, look at the preceding centuries, or the whole of Russia’s long history, to make sense of it. Or look at the recent past, especially the collapse of communism and the transition to a market economy, to see what 1917 was really all about.
It’s an open question whether it’s easier to analyze the years preceding the Revolution or following it. If you wonder what happened to set the stage for the Russian Revolution, you open yourself up to the murkiness of old sources and long centuries. If you look at the transition to a market economy, you get lost in a superabundance of detailed sources and dissenting opinions.
There is no consensus about what should have happened after communism. Walter Adams and James Brock’s Adam Smith Goes to Moscow: A Dialogue on Radical Reform is a commentary on the confusion that still surrounds the end of the Soviet Union and its client states. The two economists simulate the general debate about what should have happened to help the people of these troubled regions. The two authors create a fictional East European politician to argue with a hypothetical radical economic reformer.
The dialogue is an odd stylistic choice for a monograph, but seems to capture the tentative conclusions commentators were able to offer in 1993, to say nothing of 2009.. The essence of the overall argument—the synthesis that arises out of the clash between the political thesis and the economic antithesis--seem to be that capitalist shock treatment should have been tempered by the imperatives of societal stabilization. But aside from the specific analysis of the jolting integration into global capitalism, Adam Smith Goes to Washington illuminates just how fantastic the Soviet economy really was. It’s easy to say that the Soviet Union had a planned economy. That sounds simple enough. But what did that actually mean?
In practice, it meant that government planers attempted to coordinate “50,000 industrial inputs, raw materials, and intermediate goods.” It meant that monstrous agencies like Gosplan had responsibility over huge sectors of human activity and could produce detailed demands that were followed in every corner of the country. It meant the production of “7 million documents” and the performance of “83 million calculations.” It meant scarcity, pent up demand, irrational quotas, oversized factories, excess money that could not really be spent by consumer, as well as a State Pricing Committee that set “over 200,000” specific prices each year. It meant redundant workers, weak consumers, and redundant factories. It meant that over one fourth of all goods produced in the Soviet Union had “negative” value. That is to say, their worth was actually less than the worth of their separate components. It meant inventory lists “four times” higher than those in the West, and lethargic production cycles, and workers who produced roughly half of that which their American counterparts could produce in similar circumstances.
It meant all these things and worse. However, as Adams and Brock point out, the spectacular failure of communism as an economic system had its silver lining even from the perspective of capitalism: Citizens who lived under Communism learned to be resourceful, resilient, flexible, and capable of achieving their goals in the black market whenever necessary.