Lessons of Greece

Soviet communism was a failure.  In particular, it failed by the most basic of measures.  You wouldn’t want to live there.  By the time it ended just about everyone was fed up of it and it has subsequently had few mourners.  Certainly nobody is likely to get very far trying to bring it back. But I think that even though it basically didn’t achieve what it set out to do – which was improve the standard of living of the average worker – the story of the USSR isn’t quite as bleak as most people think of it.

The standard story is that the Russian revolution was hijacked by some gangsters who set about creating a police state.  For some unaccountable reason they decided at the same time to adopt socialism, in particular a highly centralised version of socialism.  This was an economic failure and ended up bankrupting the country and as a result collapsing.

This is all true enough, but it leaves a big question.  How did it last for seventy years?  If the socialist planning model was so bad shouldn’t it have fallen apart in a decade or so?

The answer is that the Russian addiction to centralised planning was not a purely ideological one.  There were periods in Soviet history when the planning worked just fine.  The collectivisation of agriculture was a disaster and led to disastrous food shortages.  But it wasn’t a complete right off – it did free up labour for industrialisation.  The USSR had started life with very little in the way of industry so it was basically an agricultural country.   And in the thirties and forties, and even in the fifties, you could argue that the rapid development of the economy was in some senses worth the sacrifice.  If nothing else it meant that the Soviet Union was able to beat off Hitler in the war and maintain its position as a superpower until the eighties.

But as the economy grew the shortcomings of centralised planning grew as well.   It is all very well getting the offices at Gosplan to decide where steel works and coal mines were needed – they might well do better than the market would for that kind of strategic decision.  But coping with consumer goods was beyond anyone.  In the end, it was just too obvious that over the other side of the Iron Curtain everyone was doing much better.

But while it all seems obvious in hindsight, for the people actually in the system it must have seemed like there was a way out.  If they could just get the five year plan right, and tighten up on the organisation a bit it would all work out.  After all, it had seemed to be working at one stage.  Maybe a new technology like computers would come along and make the whole thing feasible.  (I wonder if that is why the Soviet Union produced so many top mathematicians?)  The thing nobody suggested until the very end, was to just let the whole lot go to the wall and start again from scratch.

Which brings me to Greece.  I don’t follow the ins and outs and twists and turns of the financial crisis.  I wouldn’t understand them if I did.  I can’t even work out my mobile phone tariff.  But I wonder if in thirty years time people will look back and wonder how so many crazy people thought they could keep a system going when it must have been obvious all along it wasn’t going to work.  Maybe the ultimate irony will be that the free market system goes exactly the same way as the Soviet one did.

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One Response to Lessons of Greece

  1. Chris

    Bizare as it sounds I think you are correct. The western economic system is driven by endless greed. While there is no stopping the greed, the world's ability to fulfill that greed has boundaries. This is what will bring the whole system crashing down, whether this is now or in 30 years.

    I only say 30 years because the vested interests (finance, energy etc) will try to hold on by their fingernails. At first, with improvements in efficiency, they may see some improvements, but this will only delay the crash, a bit like panicked attempts to help the Euro will only delay the collapse of the currency.

    I'm not a socialist but I do believe that we are seeing the end of an era.

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