The Collapse of Communist Economic Theory
APRIL 01, 1961 by LAWRENCE SULLIVAN
Mr. Sullivan is Coordinator of Information of the U.S. House of Representatives.
Communism has failed for forty-three years to produce enough goods to keep abreast of Russia‘s normal population growth.
The living standards of the great majority of the Russian people today are no more comfortable than were the mass standards of the much smaller Russian population under the Czar in the years 1900-1914.
In food supply, housing, education, transportation, and gross national product, Russian per capita standards today are far and away the poorest in all Europe.
Communism—wholly lacking in the basic drives of individual incentives and saddled by a backbreaking enforcement bureaucracy—simply cannot produce the goods and services required to sustain a flourishing and expanding nation. Inside Russia today, Marxist economic theory is under withering attack, even by certain sections of the Khrushchev high command. To refer to Russia as a first-class power is to revert subconsciously in our economic thinking to the era of the 1880′s in America.
Today’s picture of the Russian economy as is, comes from the current reports of no less than twenty-two U. S. economic survey teams sent to Russia under the State Department’s cultural exchange program during the last two years—expert managerial teams of agricultural scientists, industrial engineers, architects, railroad men, real estate developers, aircraft designers, and aviation experts. The essence of all these voluminous reports boils down to three terms to describe the faltering communist economy—shortages of everything, egregious bureaucratic fumbling, and bitter resignation by the masses of the Russian people to a drab life of oppressive and hopeless mediocrity.
Khrushchev’s personal admonition to the Central Committee and the Presidium in Moscow during the nine-day January round table on food shortages fairly characterizes the general criticism of communist economic achievement in even the topmost Kremlin circles. Chiding several large cities for having built extravagant sports stadia, Khrushchev reminded the bureaucratic planners: "Nobody denies these things are necessary, but is now the proper time to build them? No; we haven’t enough dwelling houses in the cities, and some people live in basements."
No incident in contemporary communist history better illustrates the failure of the Marxist economy to supply the basic needs of the people. Given food shortages, housing shortages, and shoddy work clothing offered only at prohibitive prices, what then is left of the Marxist economy as a national productive system?
The tragedy of the Marxist failure in Russia lies not only in the bitter enslavement of 210 million Russian people, but in the unbelievable failure of modern communications to transmit the true picture of this historic failure to the tens of millions of struggling people the world around who still are under Marxist siege in their own new ventures in national independence. Despite the utter collapse of Marxism inside Russia today, much of the world still stands goggle-eyed before the fatuous boasts and flamboyant promises of Kremlin propaganda—"We will bury you!"
Failures of Marxist Theory
Reduced to man-in-the-street essentials, communism’s economic crisis today flows from three basic failures of Marxist theory:
1. Overly intensive urban industrialization has so reduced manpower in the rural areas that there is no longer sufficient food to sustain the bloated cities.
2. The manpower drain to staff the vast planning and compliance bureaus staggers the productive forces under an insupportable burden of consumer demand; the bureaucratic overhead is simply crushing.
3. Ambitious and aggressive communist imperialism has withdrawn so many military and police from the productive labor force that, in many areas of economic activity, only women remain to do the actual work of national supply and maintenance.
Out of these dislocations over a period of 43 years, Russia’s planned economy now is dominated by a new class of experts, administrators, and enforcers, sustained by an army of court jesters in press, radio, TV, and the cultural arts. This new class of elite lawgivers and inspectors comprises at least 8 million people, or less than 4 per cent of the total population. The rest of the Russians (roughly 202 million of them) are mere lambs being led to slaughter in the toils of an archaic and discredited Marxist economy already abandoned in ruins in the Kremlin cellars.
The production and distribution of soap attracted one distinguished U.S. economist during his Russian survey. He discovered that all soap is produced by an autonomous Moscow trust. It is delivered to the retail outlets and sold at a price fixed by the Ministry of Trade. Nowhere in the entire process is the consumer ever consulted, directly or indirectly. He simply takes what the trust delivers—and no questions asked.
When this trust happened upon a new type of soap which could be produced cheaper, the Ministry of Trade rejected it because it called for new stock shelves in the retail outlets. So the consumer never got so much as even a look at the cheaper and better soap. Russian soap, it appears, is produced and distributed at the convenience and pleasure of the Gosplan bureaucrats.
In every item of trade, the state planners systematically maintain a strong sellers’ market. In any commodity, therefore, anything goes Thus, all life in Russia is everlastingly dull, drab, tasteless, graceless, bitter, and boring. Incentive is dead, and hope no more. As one member of an American survey team summarized his journey behind the Iron Curtain: "I was impressed by the disregard of the consumers’ sector of the Soviet economy." And consumer, of course, means everybody.
In the heavy industries, another American observer found, there are no established channels for the consideration and testing of new ideas and new techniques. When a factory manager does, by chance, hit upon a new idea, he sends it off to Moscow for approval. It may not be applied even experimentally until approved by the top planners. As a result, all Russian industry is tooled largely by 1930 equipment commandeered from the occupied areas of Europe in the era 1945-49.
Another U. S. survey team examined personal incentives in communist production, as inaugurated in 1924 by Lenin’s NEP, and expanded in 1957 by Khrushchev’s decrees authorizing unequal condensation for superior production in selected industries. One American economist described the incentive system as "rather bookish and sentimental, as if it had been devised by a progressive first-grade teacher who really didn’t like anyone to get very much ahead of anyone else, and who was uncertain whether to reward effort or performance." In short, the natural incentives of freedom never are permitted to find play in Russia; the very limit is a planned incentive decreed by the remote Gosplan in Moscow.
Russian factories are "uniformly dirty and overcrowded, with internal safety mechanisms virtually unknown."
With a total population of 210 million, against 180 million for the U.S.A., Russia produced in 1959 barely one-third our total electric energy; barely one-third our petroleum; only two-thirds our total steel tonnage. In the same year Russia turned out 125,000 passenger automobiles, against 5,591,000 in the U.S.
Factory managers in Russia are examined once a year on political theory. To hold his job, a manager must qualify anew every year in "Dialectical and Historical Materialism," and in "The History of the Communist Party." His compulsory reading list includes 64 official textbooks, plus 93 selections from Lenin, 11 from Engles, 24 from Marx, 13 from Stalin, 14 from Khrushchev, and one from
Mao Tse-tung. It is easy to imagine what happens to Russian production when every factory manager is occupied with these predetermined studies as the prime vehicle of his bureaucratic advancement.
Every factory manager has but one aim in life—to make this month’s production quota. His entire career, and all his incentive bonuses, are based on annual quota accomplishment. On this score, another reputable American economist reported:
"The incentive system also encourages falsification of records, the hoarding of labor and supplies, and numerous unusual activities such as working employees on a Sunday and giving them a day off in the following month…"
This general pattern of phony quota-making has resulted in a broad panorama of totally unreliable production statistics from every sector of the Bolshevik economy.
Russian labor is regimented in a measure which kills all striving for excellence. Trained workers are in short supply in every line of production, and in-plant incentives often are discouraged by meticulously designed production norms delivered by Gosplan, Moscow, for every factory operation.
"The urgent need to provide better rewards to labor in order to elicit a higher level of worker productivity presents the Soviet economic planners with a serious challenge," one visiting U.S. expert reported.
As a measure to expand the labor force, the primary school program was modified beginning in 1958, to bring the youngsters through the eighth grade at 15 years of age—ready to go to work in the factories. Through various other revisions of the school program, roughly 5 million youngsters were added to the labor force under 18 years of age. Still the 1960 labor force—mainly because of war losses during the years 1940-45—was 3.5 million short of the number already assigned to the national production schedules for 1961 by Gosplan. Radio
On the other hand, if labor is to be found for the production schedules of the madcap designers of the current Seven Year Plan, the workers must come from slaves impressed from the new African satellites, from further curtailment of agricultural manpower inside Russia, or from the present 5-million-man standing army throughout Iron Curtain Europe. For all its presently planned chores, Gosplan needs now roughly 2.5 million industrial workers and 1 million additional farm workers.
Over all Russian industry, man-hour production per worker measures about one-third that of U.S. factories. These figures mean that, over all, Russia at present would need to expand her labor force at least six times to achieve total U.S. production volume. Such is the real muscle of the "industrial giant" which so many free men fear throughout the world. This, in fact, is the papier mache bear which Khrushchev says will cause our grandchildren to live under communism.
In housing, Russia hopes to give every city dweller 80 square feet of living space by 1965. The minimum standard, fixed by Marxist doctrine some thirty years ago, was 90 square feet per person. New housing is coming along so slowly in Russia‘s cities that more than 55 per cent of each year’s construction is swallowed up by population growth.
Throughout Moscow today, there are almost exactly the same number of grocery stores—in relation to the city’s population—as in 1930, and none of the retail grocery stores in Russia boasts refrigeration for meats, fruits, vegetables, or dairy products.
By all of these 22 reports, Russia is distinctly a backward, second-rate economic power, hopelessly bogged down in Marxist theory.
In all her industrial plant, in all her agriculture, in all her military establishment, communist Russia today is dependent entirely on machinery and equipment stolen or copied from the U.S.A. or Western Europe. The same applies to everything in the realm of Russian scientific achievement—from atomic energy to radar guidance systems and rocket thrust.
A wholly romantic appraisal of the communist economy by the West has misguided world opinion for an entire generation, and served at the same time to tighten the grip of the Moscow Presidium on its millions of disenchanted victims.
The recent U.S.A. survey teams now beckon the whole world to a more realistic estimate of the Marxist accomplishment. Forty-three years in a land of 210 million people is a fair testing time for any theory.
If all our relations with communism were to begin with the fact that the socialist economy simply cannot deliver the goods, and Russia is therefore a second-class power, the whole world soon would be on the mend. Hope would breathe again, and the Russian people would be encouraged to strive for freedom. Little by little and bit by bit, the Iron Curtain would be lifted. A free society then would be offered at least a chance to "help the many who are poor."
A Russia busy catching up on a half-century of pie-in-the-sky promises to the consumer would be too completely occupied at home to attempt intervention, subversion, and revolution in Asia, Africa, and Latin America. Capitalism, the creator, would go back to work for human progress. For all humankind, a new birth of freedom would dawn.