Socialism in Practice: The Lethal Laboratory

Mises Daily:
Monday, June 11, 2012
by Gary North

What is the longest-running socialist experiment? What has its success been?

If someone asked you to defend the idea that socialism has failed, what would you offer as your example?

Where did modern socialism begin?

In America.

That's right: in the land of the free and the home of the braves. On Indian reservations.

They were invented to control adult warriors. They had as a goal to keep the native population in poverty and impotent.

Did the system work? You bet it did.

Has the experiment been a failure? On the contrary, it has been a success.

When was the last time you heard of a successful Indian uprising?

Are the people poor? The poorest in America.

Are they on the dole? Of course.

Last year, the US Department of Agriculture allocated $21 million to
provide subsidized electricity to residents on the reservations whose
homes are the most distant from jobs and opportunities. You can read about this here. This will keep them poor. Tribal power means tribal impotence.

The tribes are dependent. They will stay dependent. That was what the program was designed to achieve.

For some reason, textbooks do not offer a page or two on the
corruption, the bureaucratization, and the multigenerational poverty
created by tribal-run socialism. Here we have a series of government-run
social laboratories. How successful have they been? Where are
reservations that have systematically brought people out of poverty?

The next one will be the first.

Workers' Paradises

The Soviet Union lasted as a socialist workers' paradise from 1917
until 1991. As a direct result of that experiment, at least 30 million
Russians died. It may have been twice that. China's experiment was
shorter: 1949 to 1978. Perhaps 60 million Chinese died.

The system failed to deliver the promised goods. I can think of no
topic more suitable for a class in economics than a discussion of the
failure of socialism. The same is true of a course in modern world
history. A course in political science should cover this failure in
detail.

They don't, of course. They do not begin with the fundamental
challenge to socialist economic theory, Ludwig von Mises's 1920 essay, Economic Calculation in the Socialist Commonwealth.
Why not? Because most social scientists, economists, and historians
have never heard of it. Among people over age 50, the few who did hear
of it heard about it from some prosocialist or Keynesian advocate, who
wrote what he had been told in graduate school in the 1960s, namely,
that the article was totally refuted by Oskar Lange in 1936.

They are never told that when Lange, a Communist, returned to Poland
in 1947 to serve in several high-level posts, the Communist government
did not invite him to implement his grand theory of "market socialism."
No other socialist nation ever did.

For 50 years, the textbooks, if they mentioned Mises at all, said
only that Mises had been totally refuted by Lange. The Establishment
academics dropped Mises down Orwell's memory hole.

On September 10, 1990, multimillionaire socialist author-economist Robert Heilbroner published an article in the New Yorker. It was titled "After Communism."
The USSR was visibly collapsing. In it, he recounted the story of the
refutation of Mises. In graduate school, he and his peers were taught
that Lange had refuted Mises. Then he announced, "Mises was right." Yet
in his bestselling textbook on the history of economic thought, The Worldly Philosophers, he never referred to Mises.

The Visible Failures

The universal failure of 20th-century socialism began from the
opening months of Lenin's takeover of Russia. Output declined sharply.
He inaugurated a marginally capitalist reform in 1920, the New Economic Policy. That saved the regime from collapse. The NEP was abolished by Stalin.

Decade after decade, Stalin murdered people. The minimal estimate is
20 million. This was denied by virtually the entire intelligentsia of
the West. Only in 1968 did Robert Conquest publish his monumental book, The Great Terror. His estimate today: closer to 30 million. The book was pilloried. Wikipedia's entry on the book is accurate.

Published during the Vietnam War and during an upsurge of
revolutionary Marxist sentiment in Western universities and intellectual
circles (see The Sixties), The Great Terror received a hostile reception.

Hostility to Conquest's account of the purges was heightened by
various factors. The first was that he refused to accept the assertion
made by Nikita Khrushchev, and supported by many Western leftists, that
Stalin and his purges were an aberration from the ideals of the
Revolution and were contrary to the principles of Leninism. Conquest
argued that Stalinism was a natural consequence of the system
established by Lenin, although he conceded that the personal character
traits of Stalin had brought about the particular horrors of the late
1930s. Neal Ascherson noted: "Everyone by then could agree that Stalin
was a very wicked man and a very evil one, but we still wanted to
believe in Lenin; and Conquest said that Lenin was just as bad and that
Stalin was simply carrying out Lenin's programme."

The second factor (1918) was Conquest's sharp criticism of Western
intellectuals for what he saw as their blindness towards the realities
of the Soviet Union, both in the 1930s and, in some cases, even in the
1960s. Figures such as Beatrice and Sidney Webb, George Bernard Shaw,
Jean-Paul Sartre, Walter Duranty, Sir Bernard Pares, Harold Laski, D.N.
Pritt, Theodore Dreiser and Romain Rolland were accused of being dupes
of Stalin and apologists for his regime for various comments they had
made denying, excusing, or justifying various aspects of the purges.

The Left still hates the book, still attempts to say that he exaggerated the figures.

Then came The Black Book of Communism
(1999) which puts the minimum estimate of citizens executed by
Communists at 85 million, with 100 million or more likely. The book was
published by Harvard University Press, so it could not be dismissed as a
right-wing fat tract.

The Left tries to ignore it.

Blind Men's Bluff

The response of academia has been to dismiss the entire experiment as
misguided, but not inherently evil. The cost in lives lost is rarely
mentioned. Before 1991, this was even more rarely mentioned. Prior to
Solzhenitsyn's Gulag Archipelago
(1973), it was considered a breach of etiquette for an academic to do
more than mention it in passing, limiting it to Stalin's purges of the
Communist Party in the late 1930s, and almost-never-mentioning forced
starvation as a matter of public policy. "Ukraine? Never heard of it."
"Kulaks? What are kulaks?"

The decrepit state of all socialist economies from start to finish is
not mentioned. Above all, there is no reference to critics in the West
who warned that these economies were large-scale Potemkin villages
— fake towns created by the government to mislead the leftist faithful
who came to see the future. They returned home with glowing accounts.

There is a book about these naive, trusting souls, who were taken in completely, Paul Hollander's Political Pilgrims: Travels of Western Intellectuals to the Soviet Union, China, and Cuba, 1928–1978. It was published by Oxford University Press in 1981. It was ignored by the intelligentsia for a decade.

The best description of these people that I have ever read comes from
Malcolm Muggeridge, who spent the early 1930s as a reporter for the Guardian in Moscow. Everything he wrote was censored before it was sent to England. He knew this. He could not report the truth, and the Guardian would not have reported it if he had. This is from volume 1 of his autobiography, Chronicles of Wasted Time.

For resident foreign journalists in Moscow the arrival of the
distinguished visitors was also a gala occasion, for a different reason.
They provided us with our best — almost our only — comic relief. For
instance, when we heard [George Bernard] Shaw, accompanied by Lady Astor
(who was photographed cutting his hair), declare that he was delighted
to find there was no food shortage in the USSR. Or [Harold] Laski
singing the praises of Stalin's new Soviet Constitution.… I have never
forgotten these visitors, or ceased to marvel at them, at how they have
gone on from strength to strength, continuing to lighten our darkness,
and to guide, counsel and instruct us; on occasion, momentarily abashed,
but always ready to pick themselves up, put on their cardboard helmets,
mount Rosinante, and go galloping off on yet another foray on behalf of
the down-trodden and oppressed. They are unquestionably one of the
wonders of the age, and I shall treasure till I die as a blessed memory
the spectacle of them travelling with radiant optimism through a
famished countryside, wandering in happy bands about squalid,
over-crowded towns, listening with unshakeable faith to the fatuous
patter of carefully trained and indoctrinated guides, repeating like
schoolchildren a multiplication table, the bogus statistics and mindless
slogans endlessly intoned to them. There, I would think, an earnest
office-holder in some local branch of the League of Nations Union, there
a godly Quaker who once had tea with Gandhi, there an inveigher against
the Means Test and the Blasphemy Laws, there a staunch upholder of free
speech and human rights, there an indomitable preventer of cruelty to
animals; there scarred and worthy veterans of a hundred battles for
truth, freedom and justice — all, all chanting the praises of Stalin and
his Dictatorship of the Proletariat. It was as though a vegetarian
society had come out with a passionate plea for cannibalism, or Hitler
had been nominated posthumously for the Nobel Peace Prize.

This phenomenon did not end in the 1930s. It went on to the last gasp
of the Soviets' economic deception. The long-term moral and
intellectual bankruptcy of the West's intellectual leaders was finally
exposed in 1991 by the acknowledged economic bankruptcy and tyranny of
the Marxist regimes that the West had accepted as a valid alternative to
capitalism.

No better example of this intellectual self-deception can be found
than the case of Paul Samuelson, economics professor at the
Massachusetts Institute of Technology, the first American to win the
Nobel Prize in economics (1970), former Newsweek columnist, and
the author of by far the most influential economics textbook of the
postwar world (1948–present): at least 3 million copies, 31 foreign
languages. He announced in the 1989 edition of his textbook, "The Soviet
economy is proof that, contrary to what many skeptics had earlier
believed, a socialist command economy can function and even thrive."

Mark Skousen found that gem. He also found this one, far more damning.

The Soviet Experiment

Felix Somary records in his autobiography a discussion he had with
the economist Joseph Schumpeter and the sociologist Max Weber in 1918.
Schumpeter was an Austrian economist who was not an Austrian School
economist. He later wrote the most influential monograph on the history
of economic thought. Weber was the most prestigious academic social
scientist in the world until he died in 1920.

Schumpeter expressed happiness regarding the Russian Revolution. The
USSR would be a test case for socialism. Weber warned that this would
cause untold misery. Schumpeter replied, "That may well be, but it would
be a good laboratory." Weber responded, "A laboratory heaped with human
corpses!" Schumpeter retorted, "Every anatomy classroom is the same
thing."[1]

Schumpeter was a moral monster. Let us not mince words. He was a
highly sophisticated man, but he was at bottom a moral monster. Anyone
who could dismiss the deaths of millions like this is a moral monster.
Weber stormed out of the room. I don't blame him.

Weber died in 1920. That was the year in which Mises's essay appeared: Economic Calculation in the Socialist Commonwealth. Weber gave it a footnote in his masterpiece, published posthumously as Economy and Society
(p. 107). Weber understood its importance as soon as he read it.
Academic economists did not. Even today, there are few references to it.

Mises explained analytically why the socialist system is irrational:
no capital markets. No one knows what anything should cost. He said that
the systems would either violate the commitment to total planning or
else fail totally. He has never been forgiven for this breach of
etiquette. He was right, and the intellectuals were wrong. The socialist
commonwealths have collapsed, except for North Korea and Cuba. Worse,
he was right in terms of simple market theory that any intelligent
person can understand. That article is a testimony to the West's
intellectuals: "There are none so blind as those who refuse to see."

The Proof of the Pudding

Mises believed that the proof of the pudding is in the recipe. If it
adds salt instead of sugar, it will not be sweet. But academia is
committed officially to empiricism. It thinks statistical tests should
confirm theory. But the tests came for decades. The socialist economies
failed them and then published fake statistics. But still the West's
intellectuals insisted that the socialist ideal was morally sound. They
insisted that the results will eventually prove the theory right.

Nikita Khrushchev was famous for saying this to Nixon in the famous
"kitchen debate" of 1959. He had been a bureaucrat who survived under
Stalin by overseeing the murder of tens of thousands of people in Ukraine. He told Nixon, "We will bury you." He was wrong.

College students are not informed of either the theory of socialism
nor the magnitude of its failures, both economically and
demographically. In the pre-1991 era, this was easier than it is today.
The intelligentsia now has to admit that capitalism is more productive
than socialism. So, the tactic now is to say that it is morally
deficient. Worse, it ignores ecology. This was Heilbroner's recommended
strategy in his 1990 article. He said that socialists would have to
switch from charging capitalism with inefficiency and waste to charging
it with environmental destruction.

Conclusion

The comprehensive nature of the failure of socialism is not taught in
college textbooks. The topic is glossed over wherever possible. It was
easier to impose sanctions against anyone in the related worlds of
academia and journalism before 1991.

Deng Xiaoping announced his version of Lenin's New Economic Policy in 1978. But that did not get much publicity.

In 1991, Humpty Dumpty fell. All the kings horses and all the king's
men could not put him together again. Gorbachev presided over the final
gasp in 1991. He received Time magazine's "Man of the Decade" in
1990. In 1991, he became an employed ex-dictator. Socialism failed —
totally. But the intelligentsia still refuses to embrace the free-market
social philosophy of Mises, the man who predicted the failures of
socialism, and who provided arguments to support his universal
condemnation.

That is why it is a good idea to predict the demise of bad economic
policies, along with your analysis. "I told you so, and I told you why"
beats "I told you so."

Gary North is the author of Mises on Money and Honest Money: The Biblical Blueprint for Money and Banking.
He is also the author of a free 20-volume series, An Economic Commentary on the Bible.
Visit his website: GaryNorth.com.
Send him mail. See Gary North's article archives.

You can subscribe to future articles by Gary North via this RSS feed.

Copyright © 2012 by the Ludwig von Mises Institute. Permission to
reprint in whole or in part is hereby granted, provided full credit is
given.

Your thoughts?