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Posts Tagged ‘capitalism’

State Communism was Based in Capitalism and Social Conservatism: 1

March 11, 2018 8 comments

A few months ago, I decided to write a short series about how socio-economic problems which plague post-2008 USA are oddly similar to those which brought down ostensibly “communist” countries in the late 1980s. While I did complete and post the first article in that series, a feeling that I was close to uncovering an even deeper basic similarity between the two allegedly different systems made me hold off writing the second part at that time. While I do plan to finish up that one soon, the topic I am going to discuss today is distinct enough to deserves its own separate post or two.

Let me start by making a claim, which might initially sound rather strange to most of you. It is as follows: ‘State Communism, in both, ideology and practice, is just another flavor of Capitalism in combination with a certain kind of social conservatism’. Some will counter by pointing out that state communism didn’t allow official large-scale private ownership of property or money. Others will highlight that countries under state communism were often socially more progressive than their capitalist counterparts. While both are factually correct, neither one addresses the central reasoning behind my claim.

In my opinion, the key to defining capitalism, state communism, socialism or any other ‘-ism’ lies in observing how that ideology functions in real life and what unspoken assumptions are made by its principal practitioners. With that in mind, let me ask you a simple question- Why was the quality of life for the median person living in countries under state communism in eastern Europe always inferior to those in western Europe? While a good portion of blame can be placed on the design of almost all institutions (functional monopolies) in those countries and “professional managers” who ran them into the ground, it is worthwhile to ask ourselves- How, and why, was all of this normalized and “rationalized” by those in power?

In other words, how did those in power within those countries justify their relative inability to provide their citizens with nice apartments, sweet cars and other consumer goodies? To make a long story short, such glaring deficiencies were usually explained away as being the result of “not enough resources” or “other more pressing priorities”. Oddly enough, this is the same reasoning used by politicians and establishment pundits in USA to explain how the “exceptional” country which spend trillions on useless defense related toys somehow cannot afford to provide universal healthcare, inexpensive higher education and a decent social safety net for its citizens.

So how can countries in western Europe continue to provide all of those goodies to their citizens? Also, why were they generally unable to do that before 1945? What changed? Also, why are public services in first-world countries generally of good quality, relatively inexpensive and universally accessible? Well.. the simple answer to most of those questions is that services which are considered and treated as social goods rather than as opportunities to make ever-increasing amounts of monetary profits end up being inexpensive, universally available and of high quality. Conversely, those treated as avenues for the enrichment of a select few end up becoming expensive, scarcer and of lower quality.

But how does any of this work in systems where official accumulation of wealth and property was banned? Under those conditions, shouldn’t all public services be seen as social goods and be therefore universally available and of high quality?

No.. not really, and here is why. Any official ban on private accumulation of property or money has, by itself, little impact on the practice of capitalist ideology. All laws and regulations will be compromised and circumvented by clever crooks- if they are allowed to get away with it. To understand what I am really talking about, we have to first spell out the end goal of capitalism and the ideology beyond it. The end goal of capitalism and many other -isms is to impoverish others by depriving them of resources while simultaneously accumulating resources created by the labor of others for no reason than to deprive those others.

In that respect, the only difference between capitalism and feudalism is that the later uses overt direct force and appeals to tradition and religion, while the later uses the pretense of “liberal enlightenment”, impersonal violence by a “secular” state appeals to the greed of willing idiots. Have you ever noticed that capitalism did not improve the quality of life for the median person in western countries until after WW1. So why did over a hundred years of unbridled capitalism, “free trade” and the industrial revolution have little positive effects on the lives of most people in the “west”? Maybe we should have given it more time? Perhaps it was not “pure enough”?

And this brings us to why the aftermath of WW1 and WW2 witnessed a lot of progressive and sustained improvements in the quality of life. To (once again) make a long story short, both wars and their aftermath destroyed and discredited old institutions, hierarchies and ways of thinking to the point where a lot of the previous status quo was simply unsustainable. It just happened to be the case that ethic nationalism, “free trade” and laissez-faire capitalism was the previous status quo. And that is also why ‘neoliberalism’ (aka recycled liberal capitalism) did not become respectable till the mid-1980s which is almost four decades after the end of WW2.

But, what does any of this have to do with my claim that the ultimate failure of state communism had a lot to do with it being based in capitalist ideology?

Well.. remember how earlier on in this post, I talked about the excuses used by the elite (1%) in countries under state communism to explain their inability to provide enough quality consumer goods to their citizens. You might remember something about how they justified chronic shortages, shoddy products and general deprivation by invoking excuses about “available resources” and “other priorities”. Now tell me, why did they choose excuses that are linked to cost and utility, when the government in those countries was free to create extra money to fund building of new houses, nice apartment blocks, sweet cars and other consumer goodies?

Isn’t that what China did to build up its industrial and consumer base in the last three decades? How could a country like China see the obvious solution and implement it in a manner that eluded all the countries under state communism in eastern Europe? Why did not Russia decide to do something similar in the 1960s and create enough extra money within its border and utilize that to build nice apartments, modern cars and consumer goodies for its citizens? I mean.. they certainly did that for building lots of modern weapons systems and other prestige programs during that time period.

I think that the reason why 1960-ear Russia did not do what 1980-era China did on a large-scale comes down to that counter-intuitive fact that elites in the former believed in capitalism far more than those in the later. The former could not think in ways which violated the sacrosanct beliefs and assumptions of capitalism. The later simply saw capitalism as another make-believe ideology which could be manipulated to facilitate whatever they wanted. And that is why China was able to seamlessly pull off something which the erstwhile USSR failed at, even though it was a far better position to do so.

In the next part, I will write about my thoughts on how the strong urge to enforce conservatism and traditionalism in erstwhile USSR to maintain social harmony and conformity ended up having the reverse effect and contributed to the ultimate failure of state communism in that country.

What do you think? Comments?

Monopolies, Managerialism and the Downfall of State Communism: 1

November 23, 2017 5 comments

As regular readers of my blog are well aware of, I do not believe in ideologies of any kind since all ideologies are by definition highly compromised and simplified mental models of “reality”. These pathetic human attempts to model reality are as similar to the real thing as a photograph of a clock is to the passage of time. But perhaps the biggest reason to oppose any ideology is that every single one of them comes with its own unique baggage of unnecessary tragedies and a priestly class and elite who benefits from all that unnecessary suffering.

What I have said above holds true for every single ideology which has ever been proposed or pushed as the “only right way”. And this includes everything from polytheistic and monotheistic religions, older modes of social organization to all forms of capitalism, socialism and communism. The study of ideologies is however interesting because it provides a very useful, if cynicism inducing, insight into the nature of human self-delusion. One of the more interesting observation I have made is that ideologies created under similar conditions are more similar to each other than they are dissimilar.

The similarity between ideologies created under similar conditions also extends to their modes of failure. As I have mentioned in more than one of my older posts, capitalism and communism are far more similar to each other than is commonly understood since both are based in a particular version of post-industrial revolution social and economic organization. In other words, they are just two slightly distinct attempts to solve the same “problem”. This similarity is more obvious once you start looking at how the two types of systems work in reality, as opposed to how they are represented in literature.

But what does any of this have to do with the topic of this post? Well.. as you will soon see, a lot.

Have you ever wondered why state communism (especially in Russia) was able to survive the post-ww1 civil wars, Stalin’s despotism, ww2 and still keep making impressive gains till the 1970s- only to fall in the early 1990s? Why could a system that handily survived tons of adverse conditions which included the deaths of tens of millions start losing public support in an era of relative peace and prosperity? As I have said in older posts, there were many reasons- from ideological rigidity, institutional inertia to the apparent inability to deliver on some of the promised improvements in general quality of life.

Let us focus on the last one, because it has a lot of commonality to what we are seeing in western capitalist societies in the post-2008 era. So.. why were countries run according to the ideology of state communism unable to provide a high standard of living and comfort for most of their citizens? Why were the cars made in those countries so ugly and often hard to get? Why was the toilet paper so coarse? Why was the quality of TVs often so bad? Why was everything that most people used in their daily lives so mediocre or shoddy?

The conventional explanation for this phenomena involves some hand-waving about “capitalism being better” and “market economy”. But is that really true? Think about it this way.. the soviet union had no problem building excellent rocket launchers, spacecraft, aircraft, ICBMS, tanks and weapons of pretty much every other kind. They were very clearly capable of manufacturing high quality items on very large scales- if doing so was deemed necessary. So why did that ability not translate into the manufacture of high-quality cars, TVs, toilet paper and other consumer goods? And why did they experience chronic shortages of even those consumer goods?

The answer, in my opinion, comes down to the downstream effects of what were essentially monopolies run by incestuous cabals of power-hungry professional “managers”. To appreciate what I am saying, ask yourself the following question- How would the process of buying a car and the choices differ between a person in USA and USSR in 1970? Let us start by considering the issue surrounding the ability to buy one in both situations. For starters, average wages in 1970-era USA were high enough to make it possible for almost anyone to buy a half-decent new car.

But do wages really matter? I mean, it was perfectly feasible for a nation as big as Soviet Russia to create a different currency for internal use only. In other words, if they wanted to make sure that every adult in that country could buy a car- they could just pay part of the wages in such a restricted currency or just distribute one car to every adult once every few years. It is important to note that every material and labor input (plus fuel) to create something as technologically simple as automobiles was present within in large quantities within that country. So why did that not occur?

Once again, there a bunch of closely related reasons but it mostly comes down to availability of manufactured cars. As many of you know, state communism was a top-down system of governance in which most consumer products were produced by companies that were, for all practical purposes, monopolies. Consider the sheer number of car models from competing corporations vying for the money of a car buyer in USA in 1970. Now compare that situation to a person in a similar position in 1970-era Russia. I should also point out the system in 1970-era USA tried to prevent the formation of monopolies and oligopolies.

To make a long story short, people involved with the production of cars (or other consumer goods) under state communism did not have to worry about whether consumers liked their products or whether they made enough of them. It simply did not matter because they were the only game in town and they had the full backing of the government behind them. They could produce ugly and often crappy cars, unreliable TVs and toilet paper full of wooden splinters and guess what.. the people who has to use them had no option.

In contrast to this state of affairs, failure to make decent ICBMs, airplanes, spacecraft, tanks, guns etc was severely punished by the state. Also, unlike for consumer goods- different companies, design bureaus and groups competed against other to develop and manufacture excellent products. It was as if the mechanisms to ensure effective innovation and production were present for products required by the state but absent for those required by the average person. But why does any of this matter to us in 2017, except perhaps as a historical curiosity?

Well.. because post-2000 era USA has undergone a similar change in almost every sector of the economy. The buzzword and operative principle of most businesses in USA today is profit through consolidation leading to what is basically monopolization and monopolization. Compare the number of department stores in 1980 with 2017 (including their relative market shares). Do the same exercise for for banks, pharmaceutical companies, hospitals, newspapers, TV and radio station ownership, internet providers etc. I could go on and on.. My point is that consolidation of smaller corporations into ever larger oligopolies and monopolies have resulted in a concurrent deterioration of product quality, demise of real innovation in addition to an increasingly poor consumer experience.

The oligopolies and monopolies which increasingly dominate the commercial landscape in USA have far more in common with state-sanctioned monopolies in communist countries that their predecessors from the era when anti-trust laws and regulations were actually enforced. It is likely that the outcome will be the same and USA will be known as the land of shittier, costlier and scarer products. In case you haven’t noticed- it is already happening in sectors as diverse as banking, telecommunications, pharmaceuticals and household appliances. Then again.. similar systems reach similar end points, even if some may reach it faster that others.

In the upcoming part of this series, I will talk about the remarkable similarity between the type of people (under capitalism and communism) who end up in important positions in state-sanctioned monopolies and oligopolies- and how they speed up rate of overall crapification and hollowing out of the system.

What do you think? Comments?