A case of wasted potential, rent-seeking, and corruption
by Diego Ramiro Lattes
I sometimes wonder about the Soviet Union, what if history had been different? A myriad of scenarios come to my mind, but no easy answers. To venture into a realm of honest possibilities – plausible courses of action – requires a more thorough look at history than random newspaper articles allow.
Bad Science and Economics, Back in 1953
After the largely forgotten reigns of Malenkov and Bulganin, Nikita Khrushchev ascends as leader of the USSR. For the next 11 years he would focus on a series of reforms which, while not damning the USSR, would certainly unlock the doors to its eventual and ungraceful fall.
There is no doubt that the hero-worship of Stalin was ill-conceived, and any argument trying to paint the man as a saint was bound to fail by a passing glance at a history book. But the fact is that once Stalin’s reforms were in place the country managed not only to provide for its citizens’ basic services, but also muster the strength to push the Nazis out of Stalingrad and ultimately occupy Berlin itself. Khrushchev disagreed, however, with keeping such a centralized economic model: The war was won, and now the USSR could afford to abandon its famed “Command and Conquer” economic system in favor of a more decentralized, autonomous one.
The first of such reforms took place in 1955, after Khrushchev visited an Iowa corn farm in the USA. Khrushchev, inspired by the corn field of the rival country and under the advice of none other than the creator of Lysenkoism – Trofim Lysenko – embarked on an agricultural reform which emphasized minimal state investment and farm-owned machinery, all the while research on genetics halted to a standstill. When these policies failed, Khrushchev’s answer was to raise prices in response to short supply, culminating in the Novocherkassk riots in 1962 – and when a drought hit the very next year Khrushchev’s answer was to purchase food from abroad. It should come as no surprise that following these events, Khrushchev was forced to resign in ‘64.
Brezhnev’s rise, Liberman’s Reform, Rent-Seeking against Cybernetics
To deny that Soviet politics were corrupt would be an understatement, but then again so are politics in general. Ignorance and dogma are the rule and not the exception, and when Brezhnev took over he not only permitted these reforms but supported them, leading to the so-called “Era of Stagnation”. But to say that this was caused by centralized economics would be a tremendous mistake, especially if we consider that Liberman’s ideas can be summed up by one of his suspiciously neoliberal quotes: “What is profitable for society should be profitable for every enterprise.”
Ignoring whether this is the case or not (I personally disagree), the fact remains that until the late 1980s this is the kind of economics that would define soviet planning. Gradual decentralization and a view of “investments and profits” over innovation.
Liberman’s reform had its opponents, not the least of which were the supporters of the emergent science of Cybernetics: scientists Glushkov and Kitov, and for a time the statesman Alexei Kosygin. The cyberneticists proposed a different approach to economic management: The problem of central planning was not that it was such, but that it was extremely bureaucratic. By utilizing technology, the management of the economy could not only be more easily directed but also streamlined and bureaucratic meddling massively reduced. Glushkov himself admitted such a project would have been of greater difficulty than the space and nuclear programs combined – but also that the proposed OGAS (Russian for “Nation-wide Automated Control System”) would more than make up for it within 5 years of operation.
It was not to be, however, and under the auspices of the Minister of Finance Garbuzov, ultimately even Kosygin was turned against Glushkov, who would face even assassination attempts during his travels. The USSR continued on the path of Neoliberalism, slow as it was, and was rewarded with the Era of Stagnation.
Brezhnev’s answer from then on would be to simply “invest more” after the measures of liberalization were taken, to allow other Eastern Bloc economies to “westernize” to various degrees (as the USSR itself had done), and to use international trade to supplement failings in the USSR’s economy. This policy would continue up until his death in 1982.
Of those two names, most people only know the latter. But it was these two men who paved the way for Gorbachev, starting with the first. Andropov began working against Brezhnev and his supporters through his KGB contacts shortly before the still-incumbent leader of the USSR died. Andropov continued the Soviet trend of authoritarianism by introducing the use of psychiatry for political purposes, but otherwise supported Gorbachev in his efforts to reform the Soviet economy. Despite his political maneuvering, he held the view that “social parasites” had to work – not too different from the still-popular view in the USA that “welfare is for the lazy.”
Chernenko did less than Andropov as leader of the USSR and could accurately be described as Gorbachev’s puppet, his boldest move being a counter-boycott of the Summer Olympics after the US did the same to the Warsaw Pact leader.
Both Andropov and Chernenko only ruled for two years each, from 1982 to 1984 and from 1984 to 1986 respectively.
Perestroika and the fall
Gorbachev’s leadership continued, rather than changed, the positions of his predecessors. He saw the USSR just as your average fiscal conservative would – cumbersome, slow, inefficient, centrally-planned mess where the state controlled every single facet of life but especially the economy, and this was going to be the cause of its fall.
Believing the imminent danger of such a thing to be avoidable, Gorbachev decided that the policies of his predecessors were not bad but simply not properly implemented. A bit restrained during his first years, by the time the USSR was about to fall he was negotiating in full the privatization of oil fields to American companies. And oil is not only important physically but also metaphorically here. Gorbachev thought that if he “oiled up” the Soviet economy, it would fix itself. The system, then, was in place; it just needed oil – in other words, he needed to “free the markets.”
Such an open disregard of tradition was bound to attract opponents, but when combined with his Glasnost doctrine and a too-late coup in 1991, the USSR finally disbanded. To add insult to injury, Yeltsin would implement the so-called “shock-therapy” program in the newly named Russian Federation, which would not only lead to mass starvation and the creation of “The Mafiya”, but it would also allow the same KGB officials who supported Gorbachev to seize power for themselves.
No greater example exists of this than the still incumbent Vladimir Putin – former KGB official and now President of the Russian Federation with several terms under his belt. In effect, we see that the USSR did not so much “collapse” as much as it was “dismantled from within.” The same people who used to win in the political field during the 1980s are still winning today, sans the ever-popular scapegoat Gorbachev. They are what the Russian people call “The oligarchs” – the de facto leaders of the country, of which Putin is a part of.
A different future – China, OGAS, Heterodox USSR
Having gone through the actual causes of the collapse of the USSR, it is now possible to actually imagine how things would have been truly different – not merely if Gorbachev had been removed through a coup as the Communists would have liked, but if the USSR had taken a different approach to its economic reforms entirely. I would like to explore the three possibilities already named above.
The easiest – albeit most bloody – way to reform the USSR and keep it intact would be to take China’s course. Maintain the authoritarian attitudes of Maoism (or in this case Stalinism) but forego the decentralization policies in favor of corporatism. Many enterprises would be privatized, yes; but the state would still remain a key factor in the economy, this would not be questioned and would remain a necessary element to ensure prosperity. This approach would have prevented the catastrophic humanitarian crisis that followed the USSR’s demise, but would have ensued an epoch of even greater authoritarianism and xenophobia – not unlike what has happened in China. The economy would flourish after the reformation period, but corruption and party-oligarchy would still be a problem even to this day, and the military would likely be the only way out of poverty for the downtrodden. I do not favor this course of action.
The second approach would be to go with Glushkov’s cybernetics. Implement OGAS, the “Soviet ARPANET” which would have not only granted the Soviet Union the seeds for an Internet of its own, but also gone further and made the first step towards a society where people begin to control machines instead of other humans for labor. Certainly I would be exaggerating if I said this would have ushered in paradise, but would it have hurt to try using science and technology to overcome the flaws of central planning instead of resorting to (the now) tried-and-failed Neoliberalism? Much has been said of the end of the Cold War and how good it was, but I hear almost no mention of the many lives that were lost due to economic dogma. OGAS is easily compatible with programs like a Job Guarantee and a Universal Basic Income, and in essence the dream of “machines freeing us from toil” would have been one step closer. Everyone would have reaped the benefits and would likely have encouraged western cyberneticists to pursue similar projects in their own countries.
But suppose that such a program was never made; that Glushkov had been born in America and helped make ARPANET instead. Why didn’t the Soviet economists understand that there was no need for “profit as a social motive” for their nation to prosper? In the USSR, especially the late Stalin era, there was no doubt that the state was the most important economic force – the furnaces which Stalin so vigorously sought to make were fueling the economy, and there was no reason for the other branches not be fueled with similar vigor via economic heterodoxy without resorting to oligarchic models. If privatization was still desired, there was no need to “sell” anything. Farms and industries could have been granted freely to the people operating them, and a land tax would ensure productivity. Regulation and guidance of the market – which the state apparatus was already inclined to do – would have resulted not in a handful of already-enriched people gaining more wealth at the expense of the majority, but in the very goals that the Kosygin reform tried and failed to achieve. Those goals were for enterprises to operate for the benefit of the population, obeying state-defined parameters. Once this was achieved, even foreign businesses could have been allowed in. With rent-seeking being fought so openly, corruption and bribes would be able to achieve little. A Job Guarantee (JG) and Universal Basic Income (UBI) could also be implemented, throwing another wrench at the Western Neoliberal approach. While the 1990s would bring economic crises for nations following those antiquated models, the Soviet Union would shine as a viable alternative.
But yet, as I return from the realm of possibility to the real world, I look around and see a world where Neoliberalism is still dogmatically followed and where the USSR was dismantled for the benefit of a few oligarchs, a world where all those potential and highly rewarding choices for the USSR were never explored or properly considered. You know what? Taking up the mantle of an alternative to the void left behind by the Soviet Union is a surprisingly appealing offer now. As I think this, I understand how Glushkov felt when he uttered the phrase, “Send me a tank!” Ultimately, so long as dogmatism and corruption dominate, rent-seeking will always look as a desirable alternative to actual innovation, no matter how promising that innovation may be.
Diego Ramiro Lattes is from South America, Argentina, and has a low tolerance for nonsense, be it left wing or right wing. He can be reached over Twitter and is open to direct messages. https://twitter.com/JStockDesign