Socialism: an economic experiment

Socialism: a political experiment

Soviet-style socialism and Millennial Socialism

On 28 November, the IEA organised a panel discussion on the fall of the Berlin Wall, and the rise of “Millennial Socialism” today. One of the panellists was the IEA’s Head of Political Economy, Dr Kristian Niemietz. The article below is a (slightly extended) version of Kristian’s talk.I remember ten years ago, around the 20anniversary of the fall of the Berlin Wall, I also gave a talk on socialism. That was at a smaller venue than this one, and it was quite poorly attended.At that time, it was very hard to fill a room with an event on socialism. There was very little interest in it. Socialism was seen as a topic of the past. Yes, of course, in 2009, everyone was saying that “casino capitalism” had failed, that the banking sector had to be reined in, that financial speculation had to be stopped, and so on. But this had not yet led to a renewed interest in socialism. In 2009, mainstream opinion was anti-capitalist – but it was not specifically socialist.Today, the situation is very different. Today, as you can see, you just need to stick the word “socialism” into the title of an event, and the room will fill itself. Socialism is now all the rage, and even its opponents have to engage with it. Ignoring it is no longer an option.So what are the lessons from the fall of the Berlin Wall, the lessons from the experience of the GDR and the old Eastern Bloc, that today’s Millennial Socialists refuse to learn?First of all, the division of Germany was a gigantic natural economic experiment. If you wanted to test the impact of an economic system, ideally, this is the way you would do it: you would split a country into two parts, have one set of economic policies in one part, and a different set of economic policies in the other part. Then after 40 years, you would check back, and compare the results.In this case, the results speak for themselves. Around the time of reunification, West Germany was three times richer than East Germany, in terms of GDP per capita. That is an absolutely colossal difference, if you bear in mind that the division only lasted for 40 years.If it had been a gap of 20%, or 30%, or 40%, I would have more patience with people who claim that the GDR just did socialism wrong, and that “their” version will be better. But if we’re talking about a gap of that magnitude, you cannot just brush it aside, and say, “Oh, but that’s not the kind of socialism I want! I want a nice and cuddly socialism! I want democratic socialism!” What’s that got to do with anything? The GDR’s poor economic performance had nothing to do with the fact that it was not a democracy. It had everything to do with the fact that it was a socialist economy.Secondly, the GDR was also a gigantic political experiment. Around the time the GDR was founded, a lot of Western intellectuals were falling out of love with the Soviet Union, but they could not bring themselves to give up on socialism. So they were looking for reasons to convince themselves that Soviet socialism was just an atypical example.They did so by blaming the Soviet Union’s totalitarian character on its starting conditions. The Soviet Union just shows that you cannot build a proper, democratic socialism in a country of illiterate peasants, they said. You need the right conditions. You need a highly developed economy, and a highly educated working class, with enough experience in democratic self-organisation.Well – East Germany had all that, and more. It ticked all those boxes. And look how little difference it made in the end. It turned out that blaming the starting conditions was a red herring.Of course, a Millennial Socialist would not accept that the experience of the Eastern Bloc tells us anything about socialism. A Millennial Socialist would say: no, you just don’t understand. What happened in the Eastern Bloc had nothing to do with what Marx and Engels wanted. Where did Marx ever say, “Build a wall, and shoot everyone who tries to escape”? Where did Marx ever advocate a secret police like the Stasi that spies on a third of the population? Show me the passage in Marx or Engels where they advocate Gulags, or mass executions. They never did. How can you blame them for things that people have done in their name? Do you blame your Catholic neighbour for the Inquisition, or the Crusades?This sounds superficially persuasive. But it is total nonsense.Of course, Marx never specifically advocated Soviet-style totalitarianism. But that does not mean that it has nothing to with him. Marx simply did not anticipate the difficulties that socialist projects would face; he did not anticipate the difficulties that came with implementing his ideas under real-world conditions. And it was those difficulties that triggered the totalitarian responses.Take the Berlin Wall. Did Marx advocate anything like this? Of course not. But then, he simply did not foresee the possibility of a mass exodus of workers from a “workers state”. This was just not supposed to happen. In Marxist theory, socialism is supposed to be a qualitatively higher stage of development than capitalism, in the same way in which capitalism was a step up from feudalism. If that is the case, then there can be no voluntary migration from a socialist society to a capitalist society. Why would anyone voluntarily move from a higher stage of development back to a lower stage? Did people move from capitalist societies to feudalist societies? Did freed slaves move back to a society which still practiced slavery? Obviously not.If you just assume away, or fail to anticipate, any difficulties, then it’s very easy to talk about socialism without advocating totalitarian measures. If I simply assumed that in “my” ideal type of society, nobody will ever commit a crime, then I could very easily describe a society without a police force, without a penal code, and without a prison system. Now imagine somebody tried to implement my ideas, and then found out that some people do commit crimes, and that you do need a police, laws and prisons. Would you then say that they have “distorted” my ideas? Would it be much of a defence to say “But Niemietz never advocated any of this! Niemietz specifically talked about a society without prisons, and without a police!”Socialists never specifically advocate totalitarian methods before they come to power. But in power, they learn that that is the only way to make socialism work (and I define “work” in the broadest possible sense here). Lenin did not advocate a system like in the Soviet Union either, before he, well, set up the actual Soviet Union. Just before he came to power, Lenin wrote a book in which he explained why the future Soviet state would not have to be repressive, and why it would not have to do very much at all. He said you would only need a very rudimentary state, with a few accountants and a few administrators. Otherwise, it would just run itself. The workers and the peasants will take over, and they will run the show.In power, he learned the hard way that you cannot simply abolish private property and market mechanisms, and hope that these mythological abstractions you call “the working class” and “the peasant class” will somehow spring to live, and magically sort everything out. A couple of decades later, the Socialist Unity Party (SED) of East Germany had to learn the same lessons all over again, as did their comrades elsewhere in Central and Eastern Europe, and all over the world.And maybe one day, today’s trendy Millennial Socialists will have to learn those lessons too.Recommended further reading/listening: