The political climate of Europe feels uneasy as the established powers have learned– Spectres do not die. The resurgence of interest in communist ideas after a quarter of a century of supposed liberal hegemony is a significant step forward, even if we know so much more struggle lies ahead. It is now possible to talk of communism again; a first breath after the near suffocation of class politics.
After a wave of counter-revolution swept through Europe in the late 80s and early 90s, dismantling all that had been built for the working class, many Communist and Workers’ parties fell into disarray, if not complete collapse and dissolution. Some shifted to social democracy, giving up hope that capitalism could be overcome. However, in the absence of a Communist opposition, the rollbacks of social democracy began. The 1990s were dark days for the working class. There was no hope of saviour, only capitulation and surrender. Hence, why we must stress the importance and achievement in this revival alone. These have, indeed, been hopeful days.
However, in the revival of socialist ideas, there has emerged an unhelpful rhetoric. Many talk of socialism, but it is detached from the ideas of Marx, Engels, Lenin, and the successes of the communist movement of the 20th century. Many are abuzz with chatter of “democratic socialism”, “real socialism”, and “a socialism of the 21st century”. These notions are at best, ignorant, and at worst, ill-intent. The implication is that all that came before was a failure. Some are more direct and hostile in their claims, openly adversarial. These critics talk of socialism being ‘deformed’, ‘bureaucratic’, or even “state capitalist”. While these terms are ambiguous and ill-defined, it is clear their use is directed attacking the legacy of existing socialism.
While this may be tempting, especially for those who have no recollection of the past, this talk is ultimately what led to the breakdown of Communist parties following the counter-revolutions of 1989-1991. Many communist parties revised their manifestos, agendas, and principles. As aforementioned, it was embracing social democracy, i.e. capitalism, which killed the communist movement. We might infer this was the intention of party members responsible for internal party coups and external counter-revolutions. Hence, if we are to rebuild the Communist movement we must speak truthfully and not parrot back the misinformation we learned in school history classes.
There has been no more egregious misrepresentation of an idea than that of Communism. In particular, socialist economies, nations, and people have been presented unilaterally as failures which relied on brutality to enforce their will. Contrary to these claims, when one explores the history of socialism we find that socialism is not inefficient, but better provides to people. Moreover, side by side comparisons shows socialism to outperform capitalism.
Thus, it is our duty as socialists to defend the legacy of existing socialism throughout the world and not allow these claims of the pseudo-socialists to go unchallenged. As such, let us address some of these common claims.
Does socialism work?
It is often claimed that socialism is economically inefficient or that socialism collapsed in socialist countries. However, centrally-planned economies could produce: full employment, guaranteed pensions, paid maternity leave, limits on working hours, free healthcare and education (including higher education), 99% literacy, subsidized vacations, inexpensive housing, low-cost childcare, subsidized public transportation, and rough income equality. Most of us want these benefits.
The question is: Are these achievable without driving up a major deficit. The answer is yes. When under central planning from 1928-1989 the economy of the USSR grew every year without a recession. While capitalist economies plunge into recession reliably almost every 10 years, the lack of recession was a built-in feature of a planned economy. The industrialisation of backward feudal Russia into a superpower in only 12 years stands as the greatest economic growth in history. In contrast the sudden decline in Russia, due to capitalist ‘shock therapy’ which was not limited to the economy but also life expectancy, birth rates, workers rights, full employment, women’s rights, health care, and education. Similar such results can be found in every other former socialist nation, many of which have not made the same economic recovery as Russia, made possible by Russia’s natural gas supply.
This is not the only example of a successful planned economy.
After WWII, the Eastern Bloc was wrought by war and was in desperate poverty. Similarly, Russia, China, and Vietnam had all been plagued by immense feudalistic poverty before the time of their socialist revolution.
Often these countries lacked an industrial base, hence socialist central planning would play a key role in the development of industry and agriculture. A centrally-planned economy allowed socialist countries to concentrate on economic strengths that would allow the country to develop quickly and with minimum waste. Central planning authorities were able to establish fixed prices [1], eliminate inflation [2], and guarantee full employment [3] [4] due to being able to effectively avoid recession.
One of the essential factors in the pricing mechanism was that the expense of goods was calculated by their cost rather than a preference for profit. As a result, purchasing power for necessities greatly outweighed that for luxury items. According to Austin Murphy, “the prices of goods or services of the same type and quality were the same everywhere”. [5] Furthermore, prices for perishables, consumer durables, and services between 1960-1973 varied less than one percent while wages increased 50% over the same period.[6] The capitalist pricing system, conversely, has numerous issues. Prices were more heterogeneous and arbitrary in capitalist countries. The “lack of perfectly competitive markets” [7] under capitalism results in arbitrary high prices which fail to clear stock inventories. Hence, waste and inefficiency, i.e. the failure to use available materials and labour which result in unpurchased/spoiled goods and unemployment, are inherent to the market pricing system.
The German Case
Many compare the wealth of socialist countries with the wealth of capitalist countries. Critics of socialism often point to centrally planned economies and compare them to richer capitalist economies. However, these comparisons lazily omit the benefits reaped from imperialism, making any juxtaposition between the two given examples highly inaccurate. Often the countries that had socialist revolutions were under imperial oppression (Cuba, China, Korea, Vietnam, etc,) and often the richest of capitalist countries were imperial powers (USA, Spain, UK, France, Japan, etc.,). Hence, it would be more accurate to compare nations of similar levels of economic development, e.g. the development of Tsarist Russia to the USSR to that of several South American countries from 1917-1989.
Perhaps the best example would be that of the FRG and GDR as both countries were once part of the German Empire. The German example is as close as the world will get to a laboratory experiment with regard to the two economic systems.
To preface, of the 100 billion Deutsche Mark paid in war reparations, 98 percent was paid by the GDR.[8] This took an enormous toll on the economy which resulted in East German income per capita being only 40 percent of the West German level. Despite this setback, by 1989, due to successful economic strategies, the East German income per capita had risen to 66% of the West German level for that same year.[9]
As a result, “aggregated statistical evidence indicates that the East German system was more efficient in spurring economic growth”[10] than West Germany. In the period of 1961-1989, when East Germany economy was not hemorrhaging from factors such as war reparations and brain drain, the Net National Product per capita increased on average 4.5% per annum while in West Germany this figure was only 2.7%. [11] What is particularly significant is that both of these countries were developed industrial states by 1961, meaning there was no industrialisation process that would account for a disproportionate and illusionary economic growth.
The achievement of a 4.5% growth rate in a developed country compares incredibly to market economies.
When we look into this further we find that wage differentials in East Germany were 1:3 while in West Germany they were 1:20, thus GDP per capita more accurately reflects average incomes in East Germany than in West Germany. Hence, working wages were much closer in the two territories than the initial GDP per capita numbers suggest. Furthermore, it is worth noting that in many respects, the centralised nature of VEBs (publicly owned enterprises) in East Germany economic system was similar to that of large scale industry in West Germany, with the major exception of profit from industries funding social services in the state, rather than being allocated to shareholders.
Given the economic superiority of the centrally-planned economies in terms of economic growth, ‘price-clearing’, the ability to supply necessities at cheaper rates, the elimination of inflation, and the overall reduction of waste and inefficiency, the claims that socialism is inefficient are shown to be highly lacking.
In 28 of 30 comparisons between countries at similar levels of economic development, socialist countries showed more favorable on Physical Quality of Life outcomes.
By 1990 all Eastern European socialist countries ranked in the top 40 of the Human Development Index, with the DDR sitting at 20th place. For comparison, Japan 1st, Canada 5th, West Germany 12th, Ireland 17th, and the U.S. 18th.
Ultimately, socialist central planning compares quite favourably to the capitalist market economies. The only considerable difference is who benefits.
Workers or Shareholders?
If Socialism has been a success why did it fail?
Explaining the end of socialism in eastern Europe and the USSR is complicated and multi-faceted, yet often we hear the same phrases repeated ad infinitum. “Communism collapsed”, “the economy failed”, and “it was unsustainable”. The reduction of a deeply political shift, which affected the entire world, to mere phrases should be an indication that there is something more to this story.
Furthermore, we should question who is benefiting when the majority of the adult population is walking around like zombies making very political, historical, and economic claims without evidence or research in a society that supposedly values critical thought.
Exploring all the factors behind the 1989-1991 counter-revolutions is a topic worth several books of its own. Here one could only highlight a few reasons. Additionally, covering factors behind counter-revolution in the eastern European socialist republics would be exceedingly difficult, so perhaps it is best to focus on the USSR here as the major socialist superpower. While nowhere near exhaustive there appeared to be several factors behind the beginning of the end of the USSR.
Firstly, resources were being monopolised by the military. The best of everything was being put to use for the military. No one needs to be an economist to see how that might have a negative impact on the economy.
Secondly, and linked to the first, military spending had increased to match U.S. military spending. The U.S. was uncompromising in any and all negotiations with the USSR with regards to nuclear weapons. While the U.S. spent more in absolute terms but less in proportion to GDP.
Thirdly, the USSR was exhausting its own easy to reach supply of raw materials to stay self-sufficient in order to avoid dependence on foreign imports.
Fourthly, the USSR had spent a lot on supporting its allies and potential allies worldwide.
Fifthly, in the 1980s, the USSR lost three of its leaders in the first 5 years. The loss of Brezhnev, Andropov, and Chernenko, along with many of the old guard in the party, allowed for less desirable members of the Party to be elected to key positions.
Relatively unheard of party members, like Mikhail Gorbachev, were able to rise to prominence in light of the chaotic political situation. Gorbachev introduced the Perestroika reforms which focused on introducing market reforms to put an end to the Cold War. Only anti-revisionist countries, such as Cuba, GDR, Albania, and Romania resisted the reforms. As it transpired, these hardliners were correct, the reforms started taking a toll on the economy. Gorbachev further capitulated to the U.S. bringing on one of the most severe financial shocks the world has ever seen. The end of socialism in the USSR in 1989 resulted in the much talked of food shortages many people associate with socialism. There was, of course, resistance to Gorbachev but the Marxists failed to overthrow him and thus the USSR was ended on 26 December 1991.
Today, public ownership and planning hang on in Cuba and the DPRK, both of whom face severe sanctions. The People’s’ Republic of China, Vietnam, and Laos have allowed for market reforms in order to boost their economies. Other nations which did not capitulate were dismantled, meddled with, and dismembered, such as Yugoslavia. Belarus, who refused to abandon key benefits of socialism, has faced repeated allegations of being a dictatorship, despite being proportionately more economically and politically stable than any other country in the former USSR. Despite these major setbacks and the loss of most trading partners these countries have still managed to avoid capitulating to the hegemony of capitalism.
Conclusion
To all detractors, to neigh-sayers, to all non-descript anti-capitalists, to democratic socialists, to neo-Marxists, and to all others, the message is simple: Communism works.
It has worked for hundreds of millions of people and continues to work in socialist republics today. It turned desperately poor societies into places where everyone had decent food, medical care, and education. This is not a system of failure but rather something that imperial forces have attempted to suffocate since its beginning. For those of us who come from poor families; who know the struggle of poverty, who know the myth of social mobility, and who will always be working class: We are very impressed by these achievements and will not dismiss them for the false prophets. The working class needs what works not more idealism and wishful utopias.
We need Communism.
[1] Prices were dictated by central planners, who had access to statistics on both GDR and FRG prices. While most were fixed, not all prices were fixed but were rather in accordance to price range guidelines offering flexibility to GDR firms (mostly VVBs and Kombinates.
[2] “While there was a slight average annual rate of inflation between 1960 and 1989 was 0.5%, consumer prices remained the constant over the 1960-1989 interval”.
Murphy, A. (2000). The Triumph Of Evil. Fucecchio (Firenze), Italy: European Press Academic Pub. p.94
[3] “From 1950 onwards, there was a guaranteed right to work”
Green, J. and De La Motte, B. (2015) “Stasi State or Socialist Paradise?: The German Democratic Republic and What Became of It.” p.45
[4] “The 8,883,900 employed persons included here distributed 8,545,400 (96.2%) employed and
338,500 (3.8%) apprentices. By the professionals were 12,550 people (0.2%) are not permanently employed, d. H. you worked with fixed-term contracts of less than 6 months”.
[5] Murphy, A. (2000). The Triumph Of Evil. p.102
[6] Hell, A. (1974). How do people live in the GDR. Berlin: Panorama DDR. p.55
[7] Murphy, A. (2000). The Triumph Of Evil. p.164
[8] Siegfried Wenzel: What was worth the GDR? And where has this value remained? 7th edition. The New Berlin, Berlin 2006, p. 43
“Die Reparationen der DDR betrugen insgesamt 99,1 Mrd. DM (zu Preisen von 1953) – die der Bundesrepublik Deutschland demgegenüber 2,1 Mrd. DM (zu Preisen von 1953). Die DDR trug damit 97–98 % der Reparations Last Gesamtdeutschlands – pro Person also das 130-fache”.
[9] Gregory, P. and Stuart, R. (1995) Comparative Economic Systems. Houghton Mifflin: Boston.
[10] See table on page.(17?) for 1980s comparison
[11] Murphy, A. (2000). The Triumph Of Evil. p.172
