** The Cold War -- economic trends








The Cold War: Economic Trends


Figure 1.--Here we see a scene at a market somewhere in Soviet controlled Eastern Europe, perhsps Poland. All we know for sure that it was taken in 1953, some 8 years after the genie of socialism was suposed to transform the region into a workers' paradise. But what do you see, factory workers, some quite young, lining up to purchase turnips or what ever vegetable they are selling. Can you imagine workers from an American steel mill or car factory lining up to buy turnips after a hard days work?

Cold War histories are generally written in military and political terms. The Wikepedia page is a good example, but most Cold War histories are basically the same. This is generally the case of most war histories and the Cold War is no exception. Yet the it was economic trends that would prove decisive in the Cold War, largely because of the massive destructive power that both major protagonists, the United States and the Soviet Union, amassed and that both sides understood. War was averted primarily because the leaders of the Soviet Union were convinced that history was on their side and possessed with a superior economic system--socialism. And that the economic power generated by socialism guaranteed victory without reliance on potentilly catertrophic military action. It was what General Secretary Khrushchev meant when he proclaimed, "We will bury you." He was not talking about militarily, but economically. And when he visited the United States (1959), he got very angry when journalists and others would bring it up. The Soviet Union as NAZI F�hrer Adolf Hitler and the German Wehrmacht learned was capable of amassing formidable military force. In one of the greatest miscalculations of history, Stalin and his successors like Khrushchev were willing to rely on the the productive force of socialism to win the Cold War. They would have preferred a faster path to victory, but because of the development of nuclear weapons, the economic path was seen as longer, but still assured. What Stalin as well as their successors includuing General Secretary Gorbechev did not understand is that socialism had inherent inefficencies which would bve Soviet Achilles' heel. The weakest aspect of the Soviet system was their economy. And they thought it was their strongest asset. Incredably, the value of the products manufactured by Soviet factories were worth LESS than the manufacturing inputs (labor, raw material and energy) that went into their factories. It is no accident today thst tge modern Russian economy is based primarily on exporting raw materials. And that it was capitalism which was the efficent economic system capable of generating incredible economic power. Lenin was forced to essentially admit that early on when he introduced the Soviet New Economic Policy (1921). So it was that Chinese Communist Party ecventually decided to adopt capitalism, a stunning development. (The Chinese had been even more fervent believers in the mircle of scocislism than the Soviets.) China along with the Asian Tigers and other Third World countries adopting capitalism have succeeded in thrusting some 1 billion people from abject poverty to the prosperous middle-class, the greatest generation of well being in all of history. And this was the critical factor in the victory of the West in the Cold War. It is ironic that with a Marrxist ideology based that puts economics as the driving firce of history, it would be the socialist economy thst woukld fail the Soviets.

Normal Wars

War histories are generally written in military and political terms. The Wikepedia page is a good example, but most Cold War histories are basically the same. This is generally the case of most war histories and the Cold War is no exception. Often the stress is on military confrontations. And while there were many military conflicts during the Cold War, there was no direct military conflict between the Unired States and the Soviet Union.

Uniqueness

Yet the it was economic trends that would prove decisive in the Cold War, largely because of the massive destructive power that both major protagonists, the United States and the Soviet Union, amassed and that both sides understood. No atagonists in all of history amassed the raw destructive power that the United States and the Soviet Union amassed during the Cold War. The Soviets had the edge in convdentional forces, escpecially in Europe. And eventually they acquired a larger nuclear force. But both countries amassed a nuclear force that could destoy each other many times over. This dynamic had never before existed in all of history.

Marxist Doctrine

A castertrophjic shooting war was also averted because the leaders of the Soviet Union were convinced that history was on their side and possessed with a superior economic system--socialism. This a shooting war was unecessary and would only interupt, disateroudly the triumph of the inevitable socialist triumph. They truly believed that the economic power generated by socialism guaranteed victory without reliance on potentilly catertrophic military action. It was what General Secretary Khrushchev meant when he proclaimed, "We will bury you." He was not talking about militarily, but economically. And when he visited the United States (1959), he got very angry when journalists and others would bring it up.

Military Power

The Soviet Union as NAZI Führer Adolf Hitler and the German Wehrmacht learned was capable of amassing formidable military force. The Red Army survived the shock of Barbarossa and priceeded to tear the heart out of the invading German Whermacht. The German generals after the War in memmoirs proclaimed their superior military competence, claiming that they were only defeted by the winter and superior Soviet mumbers. This was partly true. The German generals and their Blitzkrieg tactics destroyed whole Soviet armnies. No country has ever experienced this level of losses and survived. The Red Army's poor performance in Finland (1939) and Brabarossa (1941) was in part do to Stalin's Purges in which he had many of the most competen Red Army commanders either shot or sent to the Gulag. After surviving Barbarossa, the Red Army steadily replaced the losses and gained in professional competence. Major Soviet victories were not just due to the wearer andnd hunab wave attacks, but carefully Red Army planning and German planning incompetance. By the time of Kursk the Red Army backed by reestablished Soviet industry and Anmerican Lend Lease was able to go tioe-to-toe with the Germanns (July 1943). The Germans could not even win a single battle where they concentrated their forces. The Red Army had become an unstopable, powerful military force driving west and bent on revenge.

Miscalculation

One of the great miscalulations of military history was Hitler's decision to invade the Soviet Union. But he might have succeded--the Wehrmacht came very close. It did not prove to be, however, the greatest miscalculations of history. The greatest miscalculation of history proved to be the Cold War decision of the Soviet leadership. Stalin and his successors like Khrushchev were willing to rely on the the wealth generation force of socialism s predicted by Marx to win the Cold War. They would have preferred a faster path to victory, but because of the development of nuclear weapons, the economic path was seen as longer, but still assured path to victory. What Stalin as well as their successors includuing General Secretary Gorbechev did not understand is that socialism had inherent inefficencies which would prove to be the Soviet Achilles' heel.

European Integratgion

The Cold War was basically bout the future of Europe. Hitler had based his conquests on picking off one country after another. Stalin hoped to do the same and there was some prosdpect for this. Germany before the War had a very poweerful Communist Party and the Socialist Pary was the country's largest party. In adition, both France and Italy haf lrge vocal Communist parties. And as result of the War, the Germsn nd Italians economies wer wrcked leadung to debilitating poverty--fertile ground for the growth of Communism. No European country coul hve resisted the Soviet Union. The American response was to support European recovery and integration. The result was the Marshall Plan to fire up the engine of capitalism in Europe (1947). And key to this was the revovery of Germany. And here the Germans took the lead beginning with currenvcy reform. Stalin not fully understanding the economic forces, knew that currency reform would significantly undrmine his influenc in Germany. His response was to blockade West Berlin leading to the Berlin Air Lift. The first preliminary steps had alreay been taken toward integrsation. The Berlin Air Lift in large measure sesled the deal and signled espcially to the Germns that America was not going gp leave Europe as it had done after World War I. This meant that there would not be a Soviet conquest and the Cold War would be settled by an economic competition -- the relative ability of socialism and capitaslism to generate wealth and prosperity.

Basic Failure of Soviet Socialist Economy

Stlin and other Soviet leaders were convinced after World War II that vthey would win an economic competition with the West because they believed that Socialism was based on scientific principles. Only the Western capitalist states prspered after the Warr while the Soviert Union lagged behind. Soviet indusdtrial workers were only paid a fraction of Western workers. And the workers on the collective farms faued even worse. There were reasons fior this. It is not that Soviet officials did not want to pay workers decent salaries. On factor was that Soviets officials commited a huge portion of the economy to military spending. There are a rangev of reasons why the Soivuet economy was so unproductive. Socialism was such a failure, but it all came down to to thev simple back that Sicialism is inherently inefficenct. The Soviet Socialist economy was so inerfficient that it did not produce the income needed to pay workers decent salaries. Incredably, the value of the products manufactured in Soviet factories were actually worth LESS than the manufacturing inputs (labor, raw material and energy) that went into their factories. Soviet mnufctureing actually destroyed value. There was no price disdcivery (accounting) in the Soviet Union. Factory manufacturers requested needed raw materilas and they were delivered. There was no assessment as to the value of the manufactured produced. Or comparison with the value of the raw matrials delivered. This is the primary reason meant that countries with Socialist economies could not afford to pay workers the high salaries that capitallist corporation in the West could pay. Nor did they have free trade unions that could engage in real collective bargaining. There were unions in the Soviet Unioin, but the unions were controlled by the state, the same state that owned and operated the factories. A standard Soviet joke was, "They pretend to pay us and we pretend to work." One authior explains, "This half-serious summary of communist economics contained a kernel of truth: for Soviet workers, the freedom to pilfer and dawdle made up, to some extent, for empty shelves and wretched wages." It is thus not surprising that badly paid workers tuened against the socialist werkers paradice. This began early on with East German workers, but erre brutally supressed (1953). Finally Polish workers organized Solidarity--the first free trade unioin in the Soviet empire. Solidarity was able to confront Communist control (1980s). The whole Soviet system began to unwravel after Polish industrial workers began to strike, demanding decent wages (1980). Industrial workers were suposed to be the bulwark of the proletarit supporting Communist governments. They playefd aleading role in bringing the system down.

Mounting Proof That Socialism Does Not Work

Lenin's New Economic Policy and Stalin's resort to terror were vboth bearly admissions that socialism does not work. The use of powerful secret police proved to be a necessary tool to maintain a socialist economy. Stalin's assult on the peasantry resulted in another failure. Soviet agriculturev would never fully recover from the murde bof the country's best farmers. World War II left Europe split by the Soviet imposed Iron Curtain. This created an economic experimtal field with socialism in the East competing with capitalism in the West. The results asonished the Soviets. The capitalist bloosomed with a series of ecomoic miracles beginning with West Germany. The socialist East controlleb the Soviet Union could not compete with the success of the West. The develoos in East and West Hermany and North and South Korea was paricularly instructive. As a result of World War II, the Soviet Union and socialism gained enormous prestige, not only in Europe, but throughout the Third World where new independent countries came into existence as a result of de-colomization. As a result these counties adopted various socialist and central planning economic policies. The result was abject failure. In sharp contrast, the few new countries which adopted capitalist economies within a single short genrration had taken their economies from third world to Europoean levels. Four countries were involved which became known as the Asian Tigers. If the meteiric success of the Asian Tigers was not enough proof, the pièce de résistance occured in of all plces Communist China. The Chinese did what the Soviets refused to do--look at the facts. The Chinese economy languished under Mao. The Cultural Revolution was designed from stooing this. In the aftermnath of the Ccultural Revolution, Deng Xaoping began asking why Taiwan and the other Asian Tigers were florishing and China was not. After a visit with Lee Kuan Yew in Singapore, becagan to intoduce market reforms (capitalism) to China (1976). In only a single generation some 300 million people in China were thrust from abject poverty to the prosperous middle class.

Weakness of Terror

To the astonishment of Soviet leaders, the weakest aspect of the Soviet system proved to be their economy. And they thought it was their strongest asset. Almost from the beginning, it was obvious that socialism was not working. Lanin has to resort to capitalism to save the Revolution. He introduced the New Economkic Policy (NEP) (1921). The NEP was market reforms meaning capitalism. And it worked. Lenin was forced to essentially admit that early on when he introduced the Soviet New Economic Policy (1921). Stalin put an end to the NEP (1928). His Collectivization program decimated Soviet agriculture. Stalin increased Soviet industrial production, but not the efficeny of Soviet industry. This could be tolerated in a military struggle, but not an econoic struggle which the Cold War proved to be. So why did the Soviets not look at the economic numbers like the Chinese. The anser is simple. The NKVD/KGB. While Stalin lived, any one suggesting that socialism was inefficent would be arrested and either sumarily shot or sent off to the Gulag. If socialism was shown to be inefficent than the whole ideological edifice of the Soviet Union was undone. The Stalinist Terror had ensured that no one would dare ask the needed questions. And while Khruseshev ended the Terror, the KGB continued to fight the ideological war, albeit with a substanially lesser degree of brutality.

Modern Russia

It is no accident today thst the modern Russian economy is based primarily on exporting raw materials. And that it was capitalism which was the efficent economic system capable of generating incredible economic power. So it was that Chinese Communist Party ecventually decided to adopt capitalism, a stunning development. (The Chinese had been even more fervent believers in the mircle of scocislism than the Soviets.) China along with the Asian Tigers and other Third World countries adopting capitalism have succeeded in thrusting some 1 billion people from abject poverty to the prosperous middle-class, the greatest generation of well being in all of history. And this was the critical factor in the victory of the West in the Cold War. It is ironic that with a Marrxist ideology based that puts economics as the driving firce of history, it would be the socialist economy thst would fail the Soviets.







CIH






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Created: 1:23 AM 10/29/2018
Last updated: 12:36 PM 10/20/2021