Wednesday, October 03, 2012

Foreword to The Socialist Phenomenon by Igor Shafarevich

by Aleksandr I. Solzhenitsyn

It seems that certain things in this world simply cannot be discovered without extensive experience, be it personal or collective. This applies to the present book with its fresh and revealing perspective on the millennia-old trends of socialism.

While it makes use of a voluminous literature familiar to specialists throughout the world, there is an undeniable logic in the fact that it emerged from the country that has undergone (and is undergoing) the harshest and most prolonged socialist experience in modern history. Nor is it at all incongruous that within that country this book should not have been produced by a humanist, for scholars in the humanities have been the most methodically crushed of all social strata in the Soviet Union ever since the October Revolution. It was written by a mathematician of world renown: in the Communist world, practitioners of the exact sciences must stand in for their annihilated brethren.

But this circumstance has its compensations. It provides us with a rare opportunity of receiving a systematic analysis of the theory and practice of socialism from the pen of an outstanding mathematical thinker versed in the rigorous methodology of his science. (One can attach particular weight, for instance, to his judgment that Marxism lacks even the climate of scientific inquiry.)

World socialism as a whole, and all the figures associated with it, are shrouded in legend; its contradictions are forgotten or concealed; it does not respond to arguments but continually ignores them--all this stems from the mist of irrationality that surrounds socialism and from its instinctive aversion to scientific analysis, features which the author of this volume points out repeatedly and in many contexts.

The doctrines of socialism seethe with contradictions, its theories are at constant odds with its practice, yet due to a powerful instinct--also laid bare by Shafarevich--these contradictions do not in the least hinder the unending propaganda of socialism. Indeed, no precise, distinct socialism even exists; instead there is only a vague, rosy notion of something noble and good, of equality, communal ownership, and justice: the advent of these things will bring instant euphoria and a social order beyond reproach.

The twentieth century marks one of the greatest upsurges in the success of socialism, and concomitantly of its repulsive practical manifestations. Yet due to the same passionate irrationality, attempts to examine these results are repelled: they are either ignored completely, or implausibly explained away in terms of certain "Asiatic" or "Russian" aberrations or the personality of a particular dictator, or else they are ascribed to "state capitalism."

The present book encompasses vast stretches of time and space. By carefully describing and analyzing dozens of socialist doctrines and numerous states built on socialist principles, the author leaves no room for evasive arguments based on so-called "insignificant exceptions" (allegedly bearing no resemblance to the glorious future).

Whether it is the centralization of China in the first millennium B.C., the bloody European experiments of the time of the Reformation, the chilling (though universally esteemed) utopias of European thinkers, the intrigues of Marx and Engels, or the radical Communist measures of the Lenin period (no wit more humane than Stalin's heavy-handed methods)--the author in all his dozens of examples demonstrates the undeviating consistency of the phenomenon under consideration.

Shafarevich has singled out the invariants of socialism, its fundamental and unchanging elements, which depend neither on time nor place, and which, alas, are looming ominously over today's tottering world. If one considers human history in its entirety, socialism can boast of a greater longevity and durability, of wider diffusion and of control over larger masses of people, than can contemporary Western civilization.

It is therefore difficult to shake off gloomy presentiments when contemplating that maw into which--before the century is out--we may all plunge: that "Asiatic formation" which Marx hastened to circumvent in his classification, and before which contemporary Marxist thought stands baffled, having discerned its own hideous countenance in the mirror of the millennia. It could probably be said that the majority of states in the history of mankind have been "socialist."  But it is also true that these were in no sense periods or places of human happiness or creativity.

Shafarevich points out with great precision both the cause and the genesis of the first socialist doctrines, which he characterizes as reactions: Plato as a reaction to Greek culture, and the Gnostics as a reaction to Christianity. They sought to counteract the endeavor of the human spirit to stand erect, and strove to return to the earthbound existence of the primitive states of antiquity.

The author also convincingly demonstrates the diametrical opposition between the concepts of man held by religion and by socialism. Socialism seeks to reduce human personality to its most primitive levels and to extinguish the highest, most complex, and "God-like" aspects of human individuality. And even equality itself, that powerful appeal and great promise of socialists throughout the ages, turns out to signify not equality of rights, of opportunities, and of external conditions, but equality qua identity, equality seen as the movement of variety toward uniformity.

Even though, as this book shows, socialism has always successfully avoided truly scientific analyses of its essence, Shafarevich's study challenges present-day theoreticians of socialism to demonstrate their arguments in a businesslike public discussion.


To cut to the conclusion of Shafarevich's book, he argues that socialism is basically nihilistic.  It aims only at destruction


Dancing on the Grave of Keynesianism (money printing)

The alternative is "Austrian" economics  -- the view that government meddling in the economy is always bad and that economic decisions  should be left up to the individual

The collapse of the Soviet Union in December of 1991 was the best news of my lifetime. The monster died. It was not just that the USSR went down. The entire mythology of revolutionary violence as the method of social regeneration, promoted since the French Revolution, went down with it. As I wrote in my 1968 book, Marxism was a religion of revolution. And Marxism died institutionally in the last month of 1991.

Yet we cannot show conclusively that "the West" defeated the Soviet Union. What defeated the Soviet Union was socialist economic planning. The Soviet Union was based on socialism, and socialist economic calculation is irrational. Ludwig von Mises in 1920 described why in his article, "Economic Calculation in the Socialist Commonwealth." He showed in theory exactly what is wrong with all socialist planning. He made it clear why socialism could never compete with the free market. It has no capital goods markets, and therefore economic planners cannot allocate capital according to capital's most important and most desired needs among by the public.

Finally, when it became clear in the late 1980s that the Soviet economy was bankrupt, a multimillionaire socialist professor named Robert Heilbroner wrote an article, "After Communism," for the New Yorker (September 10, 1990), which is not an academic journal, in which he admitted that throughout his entire career, he had always believed what he had been taught in graduate school, namely that Lange was right and Mises was wrong.  Then, he wrote these words: "Mises was right."

The Soviet Union was always economically bankrupt. It was poverty-stricken in 1991. It was, in conservative journalist Richard Grenier's magnificent phrase, Bangladesh with missiles. Outside of Moscow, Russians in 1990 lived in poverty comparable to mid-19th-century America, but with far less freedom. Yet this was never told to students during the years that I was in school, which was in the 1960s. There were a few economists who did talk about it, but they got little publicity, were not famous, and their books were not assigned in college classrooms. The standard approach of the academic community was to say that the Soviet Union was a functioning economy: a worthy competitor to capitalism.

Paul Samuelson was the most influential academic economist of the second half of the 20th century. He wrote the introductory textbook that sold more than any other in the history of college economics. In 1989, as the USSR's economy was collapsing, he wrote in his textbook that the Soviet Union's central-planning system proves that central planning can work. Mark Skousen nailed him on this in his book Economics on Trial in 1990. David Henderson reminded readers in the Wall Street Journal in 2009.

Samuelson had an amazingly tin ear about communism. As early as the 1960s, economist G. Warren Nutter at the University of Virginia had done empirical work showing that the much-vaunted economic growth in the Soviet Union was a myth. Samuelson did not pay attention. In the 1989 edition of his textbook, Samuelson and William Nordhaus wrote, "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."

The creator of the so-called Keynesian synthesis and the first American winner of a Nobel Prize in economics was blind as a bat to the most important economic failure of the modern world. Two years later, the USSR was literally broken up, as if it had been some bankrupt corporation. Samuelson never saw it coming. People who are conceptually blind never do.

The Keynesian Era Is Coming to a Close

I say this to give you hope. The Keynesians seem to be dominant today. They are dominant because they have been brought into the hierarchy of political power. They serve as court prophets to the equivalent of the Babylonians, just before the Medo-Persians took the nation.

They are in charge of the major academic institutions. They are the main advisers in the federal government. They are the overwhelmingly dominant faction within the Federal Reserve System.

There was no overwhelming outrage among staff economists at the Federal Reserve when Ben Bernanke and the Federal Open Market Committee (FOMC) cranked up the monetary base from $900 billion to $1.7 trillion in late 2008, and then cranked it up to $2.7 trillion by the middle of 2011. This expansion of the money supply had no foundation whatsoever in anybody's theory of economics. It was totally an ad hoc decision. It was a desperate FOMC trying to keep the system from collapsing, or at least they thought it was about to collapse. The evidence for that is questionable. But, in any case, they cranked up the monetary base, and nobody in the academic community except a handful of Austrians complained that this was a complete betrayal of the monetary system and out of alignment with any theory of economics.

The problem we are going to face at some point as a nation and in fact as a civilization is this: there is no well-developed economic theory inside the corridors of power that will explain to the administrators of a failed system what they should do after the system collapses. This was true in the Eastern bloc in 1991. There was no plan of action, no program of institutional reform. This is true in banking. This is true in politics. This is true in every aspect of the welfare-warfare state. The people at the top are going to be presiding over a complete disaster, and they will not be able to admit to themselves or anybody else that their system is what produced the disaster. So, they will not make fundamental changes. They will not restructure the system, by decentralizing power, and by drastically reducing government spending. They will be forced to decentralize by the collapsed capital markets.

When the Soviet Union collapsed, academics in the West could not explain why. They could not explain what inherently forced the complete collapse of the Soviet economy, nor could they explain why nobody in their camp had seen it coming. Judy Shelton did, but very late: in 1989. Nobody else had seen it coming, because the non-Austrian academic world rejected Mises's theory of socialist economic calculation. Everything in their system was against acknowledging the truth of Mises's criticisms, because he was equally critical about central banking, Keynesian economics, and the welfare state. They could not accept his criticism of Communism precisely because he used the same arguments against them.

The West could not take advantage of the collapse of the Soviet Union, precisely because it had gone Keynesian rather than Austrian. The West was as compromised with Keynesian mixed economic planning, both in theory and in practice, as the Soviets had been compromised with Marx. So, there was great praise of the West's welfare state and democracy as the victorious system, when there should have been praise of Austrian economics. There was no realization that the West's fiat-money economy is heading down the same bumpy road that led to the collapse of the Soviet Union.

The present value of the unfunded liabilities of the American welfare state, totaling over $200 trillion today, shows where this nation's Keynesian government is headed: to default. It is also trapped in the quagmire of Afghanistan. The government will pull out at some point in this decade. This will not have the same psychological effect that it did on the Soviet Union, because we are not a total military state. But it will still be a defeat.

The welfare-warfare state, Keynesian economics, and the Council on Foreign Relations are going to suffer major defeats when the economic system finally goes down. The system will go down. It is not clear what will pull the trigger, but it is obvious that the banking system is fragile, and the only thing capable of bailing it out is fiat money. The system is sapping the productivity of the nation, because the Federal Reserve's purchases of debt are siphoning productivity and capital out of the private sector and into those sectors subsidized by the federal government.

After the Crash

There will be a great scramble ideologically among economists and social theorist as to why the system went down, and what ought to replace it. On campus, there will be no coherent answers whatsoever. The suppression of the truth has gone on so systematically on campus for half a century, as manifested by the universal praise of the Federal Reserve System, that the reputation of campus will not recover. It shouldn't recover. The entire academic community has been in favor of the welfare-warfare state, so it will not survive the collapse of that system. It will become a laughingstock.

It is not clear who is going to come out the victors in all this. That could take a generation to begin to sort out. There will be many claimants, all pitching their solutions, all insisting that they saw the crisis coming. But that will be hard to prove for anybody except the Austrians.

The analysts with the best arguments are the Austrians. As to whether they are going to be able to multiply fast enough, or recruit students fast enough, or train them fast enough, with some of them going into positions of authority, is problematical. But we do know this: there has been no systematic criticism of Keynesian theory and its policies except by the Austrians over the past 70 years.


I offer this optimistic assessment: the bad guys are going to lose. Their statist policies will bring destruction that they will not be able to explain away. Their plea will be rejected. "Give us more time. We just need a little more time. We can fix this if you let us get deeper into your wallets."

In the very long run, the good guys are going to win, but in the interim, there is going to be a lot of competition to see which group gets to dance on the grave of the Keynesian system.


I have savagely simplified both Keynesian and Austrian thinking in my headings above but for those not familiar with the ideas concerned it should be a useful guide


Democrat Senate Hopeful Warren Exposed As Complete Fraud

Democrat Elizabeth Warren has framed her race in Massachusetts against Sen. Scott Brown around integrity and intellect, as if she's a cut above other pols. In fact, she's beneath even the sleaziest.

On top of fraudulently claiming minority Indian status without any documented ancestry, the Harvard law professor has now been busted practicing law in Massachusetts without a state license.

Worse, her client list includes the type of corporations that Ms. Populist has demonized on the campaign trail as greedy polluters and exploiters of the "little guy."

Turns out working-class champion Warren in 1995 hired herself out as a legal gun for LTV Steel to help the conglomerate fight thousands of retired coal miners who wanted more health and pension benefits, the Boston Herald says. She pocketed a cool $10,000 in the case. Records show in 2009 she also defended insurance giant Travelers against asbestos victims.

She's also written scholarly papers on health care and bankruptcy without showing her data, and crafted federal health and banking regulations without a brain. Warren is the intellectual architect of the massively unpopular Dodd-Frank Act and ObamaCare, both of which are dragging down the U.S. recovery.

She's been accused by several law professors of "repeated instances of scientific misconduct" in authoring papers that have provided the academic underpinnings for financial and health reforms. Peer reviews have dismissed her research as "deeply flawed."




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The Big Lie of the late 20th century was that Nazism was Rightist.  It was in fact typical of the Leftism of its day.  It was only to the Right of  Stalin's Communism.  The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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