The Cold War: Economic Trends--Mounting Proof That Socialism Does Not Work

Figure 1.--The American capitalist econoimy after World War II offered unprecedented prosperity. The average American family had an increasingly luxurios car. This is an add for the 1949 Frazer. Soviet propaganda promissed that socialaism would create workers' paradises, but Soviet workrs did not have cars, refigerators, wahing machines, or homes with spacious yards. It was in the West that average peoole led prosperous lives. At first this was in America, but we see the smae thing in Western Europe as countries began recoveing from World War II. This began with the German Economic Miralcle. In sharp contrast the socilaist countries in Eastern Europe languished. This is not what Marx predicted or Soviet propagandists promised.

Lenin's New Economic Policy and Stalin's resort to terror were bothbearly 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 controlled by the Soviet Union could not compete with the phenomnal success of the West. The developments in East and West Germany 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 pi�ce de r�sistance occured in of all palces Communist China. The Chinese did what the Soviets refused to do--look at the facts. The Chinese economy languished under Mao. The Cultural Revolutiin was designed from stooping this. In the aftermnath of the cultural Revolution, Deng Xaoping began asking why Taiwan and the other Asian Tigers were florishing and Chuina 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.

Pre-War Era (1917-39)

Before World War II, the Soviet Union was the only country that had a socialist country. Lenin's New Economic Policy and Stalin's resort to terror were both early admissions that socialism does not work. The use of powerful secret police proved to be a necessary tool to maintain a socialist economy. And the Soviers had very effective secret police foeces (the Cheka and the NKVD). This would prove to be the case in every country which built a scocialist economy. This of course speaks eloquently about the effectiveness of socialism mas an economic system. Stalin's assult on the peasantry resulted in another failure. Soviet agriculturev would never fully recover from the murder of the country's best farmers. This was not well known in the West at the time. The Cheka and NKVD very effectively sealed the borders. Thus even massive actions like the Ukranian Genocide was not widely known. At the same time the NKVD was murdering Ukranian peasants by the millions (early-1930s), Socialists and Communists in the West were convinced that Stalin was creating a peasant and worker paradise.

Post-War Era (1945-91)

As a result of World War II and the Cold War, the Soviet Union was no longer the only Communist country. It was the most powerful Communist and controlled most other Communist countries, but there are many more socialist countries to assess. The Soviet economy after the War was presented by Soviet propaganda as a world leader. The Soviets reported strong growth numbers. Living standards did rise, but never approached those of the West. The huge growth numbers reported would suggest that Soviet living standards would narrow the gap with the West. This never occurred. Now we are not sure about the accuracy of Soviets statistics, but we do believe that impressive rates of econmomic growth probably did occur in the 1950s and 60s. But a range of factors were working against them. There were very high rates of military spending and unlike the West the scientific advances associated with weapons develooment and the Space Race were not allowed to filter down into the consumer economy. More importantly was the massive inefficency of Soviet industry. Basically the value of manufactured products coming out of Soviet factories were worth less than the value of the raw materials and other inputs going into the factories. Thus the more the Soviet economy grew, the greater the economic losses. So by the mid-1970s, the Soviet economy began to stagnate. For some time the Soviet propaganda machime manage to hide the stagnation from the outside world. As a result, the American press and Central Intelgence Agency (CIA) were surprised as the Soviet Union began to unravel (late-1980s). World War II affected the entire world. So we see Socialists economies created in many other countries. The War left Europe split by the Soviet imposed Iron Curtain. This created an economic experimtal area 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 controlled by the Soviet Union could not compete with the phenomnal success of the West. The developments in East and West Germany 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 pi�ce de r�sistance occured in of all palces Communist China. The Chinese did what the Soviets refused to do--look at the facts. The Chinese economy languished under Mao. The Cultural Revolutiin was designed from stooping this. In the aftermnath of the cultural Revolution, Deng Xaoping began asking why Taiwan and the other Asian Tigers were florishing and Chuina 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.

Famine and Repression

One very important development to note is that unlike capitalism, Socialist economies can not exist without a brutal secrey police force to force the population to comply and accept socialism. The Soviet secret police, the NKVS and KGB i th most famous, but every socialist economy had a secret police force behind it to enforce compliance. The result was often mass murder as we see in the Soviet Union, China, North Korea, Cambodia, and Vietnam. Killing was more limited in other countries with socialist economies, but still in sharp comtrast to life in Western demicracies with capitalist economies. Now one country which attempred to build a socialist economy did not have a brutal secret police. That was Britain. But the Labour Party which atrempted build a socialist economy were voted out when their efforts resulted in economic failure. Another notable development of socialist economies was famine. Most of the major famines of the 20th century occurred in countries with socialist economies.

Created: 6:30 AM 10/23/2019
Last updated: 5:46 PM 10/23/2019