Communist Countries: Crisis, Contradiction and Collapse

Introduction: A Beautiful Idea, Really?

I've often had people claim to me that communism would be a great idea, if only human nature let it work. But I don't think that Marxist communism in particular would work on even a theoretical level- the idea of a 'dictatorship of the proletariat' ever seeding power is beyond comprehension. Were then communist systems always doomed to fail, or might they have survived if not for a few historical quirks?

Marx claimed in Das Kapital that “capitalist production begets, with the inexorability of a law of Nature, its own negation”. His argument was that because capitalist societies relied on social production to create wealth but private appropriation to obtain wealth, they were fated to collapse. However, communist systems also suffered systemic crises, from the failure of the New Economic Policy to the USSR’s fall. Indeed, communist systems suffered from the same internal contradiction as capitalist systems, notably an exclusive extractive class which took profits away from socially productive workers. Communist systems in fact fared worse than capitalist economies from this because they entrenched party apparatchiks at the head of their economies and lacked the 'creative destruction' of capitalism. As a consequence,   they suffered systemic crises, to which unlike capitalist democracies, they could not adapt. I want to make two points in this post: first, that the autocratic nature of communist parties lead to the creation of a new extractive class, that of autocratic party bureaucrats and second, that this internal contradiction lead to crises in communist nations, leading to their eventual collapse. Thus, it will be proven that not only did communist systems contain internal contradictions; they suffered worse from them than capitalist systems.

Party Bureaucrats: The World's Best Rent-Seekers

Communist systems lead to the substitution of Marx and Engel’s bourgeois class who aimed for the “accumulation of wealth in private hands” for a group of party bureaucrats who were equally extractive, thus leading to an inherent contradiction. Official Soviet propaganda espoused that the regime was leading the USSR to a “brilliant future… one of liberty, equality, fraternity, guaranteed employment”. However, because of the inherent vagueness in Marx’s idea of the “dictatorship of the proletariat” which he claimed would lead to the “abolition of all classes” after a transition phase of socialist rule, all communist systems in reality did not transition out of bureaucratic socialism. As Olson notes, under Stalin this meant that the party expropriated all natural resources and capital to add to its yield to its tax collections and also directly controlled consumption and investment for its own benefit. 

Party members were rewarded from this expropriation with special stores, health care facilities and vacation spas in return for loyalty to the party. CPSU members were paid 127 per cent of the average wage of a government worker and their pay was one third of the government administration budget. Further, there was systemic soliciting of in-kind payments and direct stealing. They also engaged in what Verdery terms “political capitalism”, that is bureaucrats used the shortages inherent to the system to make a profit from selling scarce goods. Party “apparatchiks” thus became the class of rent-seekers that Marx railed against because the command economy allowed them to do so. They constituted a class both in terms of political power, economic capital and the ability to consume both more goods and those of a higher quality. Communist systems became a form of what Clark and Wildavsky call “vulgar capitalism” or “profit-making without competition… based on corrupt personal relations”. Simultaneously, bureaucrats were rhetorically devoted to “large-scale heroic means of production”, production based around work done cooperatively. Therefore, so-called communist systems suffered from the same internal contradiction as capitalist systems: while production was (at least initially- black markets eventually flourished) social and cooperative, the accumulation of wealth was private and worked by class expropriation.

Tear Down That Wall!

Further, this inherent contradiction led to inevitable crises in communist systems, to which they could not adjust unlike capitalist systems, which led to their collapse.  Marx believed that the inherent contradiction in the expropriation of workers by the bourgeoisie would eventually lead to a decline in the “rate of exploitation” because “vampire-like, the capitalist only lives by sucking labor”. His argument was that eventually this would lead to recessions and the awakening of class-consciousness. This problem was also present in the Soviet Union, where the extraction of wealth by members of the CPSU helped to slow economic growth to the point where in 1967 the GNP of West Germany was larger than the entire Soviet Bloc. In particular as Maier outlines the extractive process of the communist system hampered the social production of the workers on which it depended. 

Somewhat fittingly, this led to the class conflict that Marx had predicted capitalism falling prey to, especially the rise of the Polish trade union Solidarity that was integral in the USSR’s collapse. This was worsened by the chronic shortages of basic goods which led to worse recessions than those experienced in capitalist systems. Capitalist systems did not suffer as badly because, as Marx was unable to foresee, the welfare state was developed, which redistributed profits to the working class because it was in the bourgeois political class’ interest to avoid class conflict. In contrast, the extractive behaviours of communist party members were only possible through continued coercion of those they were apparently serving. As soon as communist regimes faced crises they could not adapt except by further coercion and entrenchment of expropriation behaviours. Thus, as soon as communist regimes were opened to partial openness such as under Gorbachev’s glasnost in order to create more profits to expropriate, they began to collapse under the weight of their own internal contradictions. This has occurred not just in the Soviet Union, but also in the fall of Yugoslavia, the transformation of the People’s Republic of China and recent partial reforms in the collapsing Cuban economy. Thus, the inherent contradiction in communist systems and their inability to adapt to the crises resulting from it led to their eventual total collapse. 

Conclusion and Consequences

In conclusion, contrary to Marx’s predictions, this essay has shown that the autocratic nature of communist “dictatorships of the proletariat” created the same inherent contradiction between the social production and private extraction and accumulation of wealth inherent in capitalism. Further, it has shown that this led to crisis and eventual collapse of communist systems because the extractive class in the communist system could not allow for it to be adapted unlike the capitalist bourgeois class. Thus, Marx’s proposed solution to capitalism became self-defeating in practice for precisely the reasons Marx felt that capitalism would fail.

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Dan Gibbons is a third year Bachelor of Commerce (Economics) student at the University of Melbourne. He has a forthcoming publication in Intergraph: A Journal of Dialogic Anthropology (about memory and nationalism) and is currently submitting papers on the rise of modern consumerism, the role of criminology theory in literary criticism and the institutional theory of nationalism. Dan is a keen debater and public speaker.

Review: 'What Money Can't Buy: The Moral Limits of Markets’ by Michael Sandel

Professor Michael Sandel is quite the philosophical superstar; his course on Justice at Harvard University – now available online and for free – has been viewed by millions. Compared with your average, sleep-inducing university lecture, Sandel’s course makes for compelling viewing. In 2009 he delivered the BBC’s Reith Lectures on ‘A New Citizenship’ to great acclaim. He is, without question, a brilliant communicator and a stirring intellectual.

In his latest book, ‘What Money Can’t Buy: The Moral Limits of Markets’, Sandel takes a prod to our fetish for markets and the rising tide of commodification. Some things should just never be sold, he argues, because doing so degrades and corrupts goods that are best understood in non-market terms.

It’s necessary to get something out of the way to begin with, because I can hear the indignant cries of the rampant right-wingers already: “Communist! Communist!” This is not a tract against capitalism. Sandel doesn’t question – and really, the debate is just boring now – that markets are powerful and efficient (though, imperfect) tools for the allocation of resources and the organization of productive activity. Free markets are, as Churchill said of democracy, the worst system available – besides everything else. What this book laments, is “the expansion of markets, and of market values, into spheres of life where they don’t belong,” and the fact that, “without quite realizing it, without ever deciding to do so, we drifted from having a market economy to being a market society.”

There are two arrows to Sandel’s bow; the first is an objection about inequality, and the other is about corruption. To take them in turn: in a society where everything is for sale, life is harder for those of modest means – the more money can buy, the more it matters. Secondly, some things are improperly valued or degraded (corrupted) when commodified. I don’t agree with Sandel’s approach to why some things shouldn’t be sold, but let’s give him the benefit of the doubt for now and consider some examples. Here are some things you can now buy (at least in the United States):

-  A prison cell upgrade: $82 per night. In Santa Ana, California, and some other cities, nonviolent offenders can pay for nicer accommodation – a clean, quiet jail cell, away from the cells for non-paying prisoners.

-  The services of an Indian surrogate mother to carry a pregnancy: $6,250. Western couples seeking surrogates increasingly outsource the job to India, where the practice is legal and the price is less than one-third the going rate in the United States.

-  The right to shoot an endangered black rhino: $150,000. South Africa has begun letting ranchers sell hunters the right to kill a limited number of rhinos, to give the ranchers an incentive to raise and protect the endangered species.

Of course, some of these things are a little pricey. But no worries – you can always raise some extra funds by:

-  Renting out space on your forehead to display commercial advertising: $777. Air New Zealand hired   thirty people to shave their heads and wear temporary tattoos “Need a change? Head down to New Zealand.”

-  Stand in line overnight on Capitol Hill to hold a place for a lobbyist who wants to attend a congressional hearing: $15-20 per hour. The lobbyists pay line-standing companies, who hire homeless people and others to queue up.

-  If you are a second grader in an underachieving Dallas school, read a book: $2. To encourage reading, the schools pay kids for each book they read.

Sandel’s book is great value for its panoply of jaw-dropping and often hilarious examples alone. The ones I’ve outlined here are by no means the most unusual (for the truly tragic, wacky and outrageous, you’ll have to get yourself a copy of the book).

Take the phenomenon of hired line-standers. What should we make of this practice? My guess is that most people would think that paid line standing, at least on Capitol Hill, is objectionable. But why? One reason is that Congress is a democratic institution, and when well-heeled lobbyists buy their way into hearings, it undermines the public nature of the forum. If allowing this practice would make congressional hearings the exclusive purview of the rich, I think we’d have a pretty good reason not to allow it.

In his book the ‘The Gift Relationship’, the British sociologist Richard Titmuss showed that paying people decreased both the quantity and quality of blood that a blood bank would receive (unless a very large amount of money was at play). The payment converted what had been a donation into a transaction, and eroded the moral aura that had been associated with the act. A market culture, just as here, changes how we view a whole multitude of goods, and not always for the better.

Sandel walks a fine line in this book between playing the moralist, and the conversation starting provocateur. It’s difficult to know which examples he supports and which he doesn’t. Let’s take another one from above: paying $150,000 to kill an endangered black rhino. No doubt there is an emotional knee-jerk, or ‘yuck’ reaction against this. It seems base, or uncouth, to kill such a beautiful creature if the only reason is that it’s for what might, generously, be described as ‘sport’. But it’s not clear why we shouldn’t allow it if it does in fact lead to less black rhinos dying overall. The empirical evidence Sandel discusses indicates that it has indeed had this effect; the new monetary incentive to preserve rhinos has been, apparently, enormously effective. If what we care about is outcomes, we should (assuming there are no viable alternatives) allow the hunters their bloody indulgence.

I’m not convinced by Sandel that we need to philosophize to figure out the ‘nature’ of goods. We can, and should, be less highfalutin and more consequential in our analysis. A decision not to allow something to be sold is best reached after concluding that doing so will have bad consequences, not because it is somehow inconsistent with it’s ‘nature’. Sandel is right to challenge the market fundamentalists, but I am concerned that he seeks to replace it with a fundamentalism of his own; namely that some things should just never be sold, no matter what.

It is in enunciating the various ways in which market culture has degraded and debased society (most particularly in the United States), and in its vigorous call for a more robust public debate, that the value of this book chiefly lies. Sandel is never less than highly entertaining, and even if you don’t agree with him, this book won’t fail to induce some seriously enjoyable cogitation.

Here is an interesting interview of Sandel on this book. And for those who haven’t heard of his course at Harvard on Justice, it is well worth taking a look.

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William Isdale is a law and arts (politics and philosophy) student at the University of Queensland, where he is an Academic Excellence Scholar and TJ Ryan Medallist and Scholar. He is the President of the Australian Legal Philosophy Students' Association and Editor of the Justice and the Law Society's journal 'Pandora's Box'. In early 2012 he was a visiting student at Oxford University's Uehiro Centre for Practical Ethics.