There’s a problem with such an immense, omnipotent, and ubiquitous organization (a problem, that is, besides the millions of people killed to create it). What is this thing supposed to do? Karl Kautsky, another leading crackpot left-wing theoretician of the nineteenth century, said, “In the socialist society, which is after all just a single, giant industrial enterprise, production and planning must be…organized as they are organized in a modern, large, industrial enterprise.” But a modern, large, industrial enterprise producing what? Game Boys? Inner peace? Blow jobs? Candy and gum? Without rational prices, how do you know what to produce? Without private property, how do you get these products? Without products, how can there be markets? Without markets, how can prices be set?
Between 1918 and 1921, the Lenin government actually attempted to develop a system of nonmonetary accounting. Try this in your bankbook. “Let’s see, I withdrew the clean dishes from the dishwasher, and I deposited my kids at day care…”
Absent the automatic commonsense mechanisms of supply and demand, what really happens is that all production and consumption decisions are made by…Joseph Stalin. Stalin went so far as to claim that economic policy was a Kremlin matter and economists should stay out of it.
The absurdity of socialism made a dog’s breakfast out of the Soviet economy, just as it continues to ruin Cuba’s. But a visit to Russia is more interesting to an amateur economist than a visit to Cuba, because the truth about how socialist thinking beggared the USSR is now being told. Even some socialist thinkers are willing to tell it. Mikhail Gorbachev, in his Memoirs, says, “The costs of labor, fuel, and raw material per unit of production were two- to two-and-a-half times higher than in the developed countries, while in agriculture they were ten times higher. We produced more coal, oil, metals, cement, and other materials (except for synthetics) than the United States, but our end-product was less than half that of the U.S.A.”
This end product was not, of course, insignificant. The Soviet Union was able to manufacture moon rockets and atomic bombs and enough AK-47s to make every shoeless jackanapes in the Third World into an NRA life member. But Soviet industrial might mostly ended up doing doughnuts on the lawn. The Russians used to say, “We build huge machines that dig coal and ore out of the ground. We burn the coal to smelt the ore to build huge machines that dig coal and ore out of the ground.”
Even when Soviet factories produced something useful or necessary, central planning bunged it up. The government in Moscow would send commands called gross-output targets to all manufacturing facilities. The gross-output target told the factory manager what to make and how much of it. Anyone who has dealt with bureaucrats who are accountable only to other bureaucrats knows what happened next.
The trouble wasn’t that the factory managers disobeyed orders. The trouble was that they obeyed them precisely. If a shoe factory was told to produce 1,000 shoes, it produced 1,000 baby shoes, because these were the cheapest and easiest to make. If it was told to produce 1,000 men’s shoes, it made them all one size. If it was told to produce 1,000 shoes in a variety for men, women, and children, it produced 998 baby shoes, one pump, and a wing tip. If it was told to produce 3,000 pounds of shoes, it produced one enormous pair of concrete sneakers.
The factory managers weren’t doing this because they were evil or stupid. They did it because their livelihoods, their futures, and sometimes their necks were at stake. They didn’t have to satisfy customers. They didn’t have to please stockholders. What they had to do was meet the gross-output target, no matter what.
Getting the raw material and machinery to meet the gross-output target was as hard on Soviet factory managers as wearing enormous concrete sneakers was on Soviet consumers. Soviet factories were not allowed to deal directly with each other. All requisitions had to go through the State Planning Committee (the well acronymed GOSPLAN) and the State Committee on Material-Technical Supply (the wonderfully acronymed GOSSNAB). These entities worked as well as everything else worked in the Soviet Union. Thus when a factory manager was told to produce 1,000 shoes, he ordered 1,000 tons of leather. That way, maybe he’d get at least a couple of pieces of cowhide. And if he got too much, great, he’d hide it.
A black market of strange bartering grew up among factories as managers traded unneeded things to make unwanted stuff. And a special class of bureaucrats called tolkachi, “pushers,” arose to facilitate these deals. Tolkachi were, essentially, hired to be white-collar criminals. Many of today’s filthy-rich New Russians were tolkachi and still are, since the Russian government has by no means untangled itself from the economy.
Members of the Soviet managerial class were forced to become liars and thieves, and ordinary workers took the hint. The amount of on-the-job theft in the Soviet Union was astonishing. In 1990, the USSR Academy of Sciences reported that “losses of the objects of labor total approximately 70 percent” and “losses during the use of the means of labor [i.e., tools and raw materials] total 40 percent to 50 percent.”
If any of that contradicted the spirit of marxism, you’d be hard put to learn it by reading Marx, especially reading the Theory of Surplus Value. The value of a thing is, as Karl Marx decreed, determined by the labor required for its production. The amount a thing sells for, minus the amount paid to the workers who made it, equals the capitalist rip-off to which all good socialists are so strongly opposed. The Theory of Surplus Value means that anytime you hire someone, you are exploiting him. If you pay someone to fix your automobile, he has the right, by virtue of being your mechanic, to steal your car.
The terrific corruption that now exists in Russia was not caused by the collapse of Marxism-Leninism. It was caused by Marx and Lenin.
Well, sort of. Russian authorities had been inclined to steal everything in sight at least since the reign of Ivan “Moneybag,” 1328–41. Until Peter the Great, Russian officials were paid no salaries. They were expected to “feed themselves from official business.” And when the Marquis de Custine traveled through Russia in 1839, he encountered a member of the czarist aristocracy who said, “They tell me that in France, at present, the highest noble can be put in prison for a debt of two-hundred francs; this is revolting: How different from our country! There is not in all Russia a tradesman who would dare to refuse us credit for an unlimited period.”
The world’s corruption, incompetence, and rudeness can’t all be blamed on socialism. In fact, to be fair, a socialist society seems to produce solidarity among people. It does so in Sweden. And it does so in Cuba, even if that is a solidarity of suffering and anger. Socialism, however at odds with economic sense, engenders brotherhood.
Or so I was thinking as I arrived in the Siberian city of Irkutsk. The twentysomething Intourist guide who met me at the airport certainly seemed a younger-brother type. Ivor was affable, outgoing, and…
“You’ll notice there are no niggers here,” said this product of socialist childhood and schooling.
We’d been standing in the dumpy baggage hall, waiting for my suitcase and talking about the elections and Ivor’s great good fortune as a translator. He’d never even been to Moscow, and he was now going to Atlanta with the Russian Olympic team.
“Jesus Christ, Ivor!” I said. “You can’t use that word. It’s a really serious insult.”
“Don’t black people commit a lot of crimes in America?”
“Ivor, in America, everybody commits a lot of crimes. You can’t ever use that word. It has a meaning of bigotry, hatred.”
“But isn’t it true that many Americans don’t like blacks?”
“No!” I said. I scanned my conscience on that. “Americans aren’t prejudiced at all. And we’re getting over it, too.”
Ivor looked dubious. He was too Russian to believe it was really okay for some people to go around being, you know, different from other people. This is a country that considers Warsaw an exotic southern city whose hot-blooded natives are not quite to be trusted.
Capitalist or socialist, there’s a stumbling-around-i
n-the-daylight quality to the Russians. Almost 7 million square miles of territory, and still they don’t get out enough. My six-hour flight to Siberia took two days. We were lined up to board six or eight times before we finally got on the plane. Airline employees circulated with walkie-talkies. Not satisfied with individual screwups, they apparently wanted to coordinate them.
“Everything’s unready to go in the cockpit.”
“Roger that. We’ve got the baggage lost.”
“Seat selection’s a mess.”
“Wait a minute. Wait a minute. Catering’s not fucked yet.”
Fortunately, Russia is a country where you can bring your own vodka bottle, mixer, and highball glass right into the boarding lounge—bring your own dog and pony, for that matter. And, anyway, what were they going to do—send me to Siberia?
Unfortunately, I had not packed the two-day-sized bottle. I tried to order a drink on the plane.
“Vodka.”
“Huh?”
“Vodka. You invented it. Vod-ka.”
“Water?”
I consulted my Berlitz. The Russian word for vodka is vodka.
She brought me a hard candy and a lime drink.
Ivor showed me around Irkutsk, a city of half a million people that is 2,600 miles east of Moscow and still only two-thirds of the way to the Pacific. The modern parts of town were a mess, but the dumpy, old, run-down neighborhoods were fine. The nineteenth-century houses are log cabins, but on Beverly Hillbillies scale. The trunks of straight Siberian larch were so perfectly squared that the joints are almost invisible. The copper roofs are capped by ornate brick chimneys. Elaborate fretwork embellishes the doors and windows. This is the kind of place where Abraham Lincoln would have grown up—if his mother had been Martha Stewart.
A frontiersman like Abe would recognize Siberia. Russia’s far east is our Wild West—the same fur traders, gold rushes, homesteadings, and murders of the people who lived there originally—always, however, with the slightly off-center Russian spin. For one thing the settlers still haven’t settled the place. Only the strip of land along the Trans-Siberian Railroad has a population density of more than twenty-five people per square mile. And the Russian version of Wagon Train has been going on since a cossack high-plains drifter named Yermak chased away the pesky Tartars in 1582.
There’s also a whiff of the highbrow in Siberia. For a hick town, Irkutsk had too many opera houses, theaters, museums, and academic institutes. This is because, for hundreds of years, the smarty-pants reformers, annoying idealists, and know-it-all do-gooders were sent here for life. It’s as though everyone who voted for George McGovern was packed off to Lubbock, Texas. A mixed blessing for the locals, as you can imagine.
Ivor was a local, and he considered the vast surrounding wilderness to be another mixed blessing. We drove for an hour southwest along the Angara River toward Lake Baikal, to a craggy overlook above a thousand square miles of virgin conifer forest. I was experiencing the egotistical swelling that comes upon urbanized man facing vast, uninhabited spaces. I was thinking, “There’s nothing! There’s nothing here! There’s nothing here but ME!”
“There’s nothing here but bears,” said Ivor. “We call it Bear Angle.”
Actually, Debris Corner would have been more like it. Trash lay all over the clearing. The largest rock on the hillcrest was covered halfway to its top with broken glass.
“Did the place look like this under communism?” I asked.
“Sure,” said Ivor. So there is no correlation between socialist systems and tidiness.
Also, the surrounding bushes and trees were covered by small strips of cloth, tied to almost every branch and twig.
“What’s that about?” I asked.
“Oh, this place is sacred to the Buryats; they are of Mongolian type,” said Ivor, eyeing me carefully to see if “Mongolian type” was another of the terms that might set me off.
Some visitors—of Russian type—arrived at the overlook. There were a dozen of them in three cars. They were young and dressed for a ball, although it was 11 in the morning. They took dramatic and gurgling drinks of vodka and champagne, threw their bottles at the big rock, got back in, and drove away at high speed. One of the car roofs was decorated with a pair of pizza-size gold-foil rings.
“A wedding,” explained Ivor. “When people here are getting married, they drive around the countryside very fast and have drinks.”
Which is also what they do when they aren’t getting married. We were doing it ourselves. We drove to Lake Baikal, very fast, and had drinks.
An impressive chaser is Baikal—395 miles long and 50 miles across at its widest point. Eighty percent of Russia’s freshwater is here, and 20 percent of the world’s—more than the Great Lakes put together. Baikal’s water is famously pure and so clear that you can look all the way down to…nothing, because the water is almost a mile deep.
Cows were sleeping on the highway by the shore. “There’s not much to do in Siberia,” said Ivor.
“But it’s beautiful,” I said.
“Mmm,” said Ivor.
A spectacular and almost empty locale like Baikal should maybe be kept as some kind of public property—a park or nature preserve. And yet, the capitalist in me agreed with Ivor. Looking out at the smooth, vacant waters of a lake bigger than Belgium and almost as dull, I kept having visions of Hobie Cats, cabin cruisers, float boats, outboards, and Jet Skis.
I went down to the stony beach and put a toe in the water. Yow! Christ! Brr! The place should be a nature preserve.
We drove up a hill to the Baikal Hotel, which has one of the world’s spectacular views, and its restaurant and bar are in the basement.
At lunch I talked to some other Intourist clients, four Russians on a day trip from Irkutsk. They had a lot of questions. What was my opinion of the current intrigue in the Duma? What were my thoughts on local government reform? What did I believe was Russia’s proper geopolitical posture? These were beyond me. But I guess when your nearest world capital is Ulan Bator, any wandering rubberneck is worth pumping. Besides, I was an American and was supposed to know all about the problems of liberty. “You have had over two-hundred years of democracy,” said one of the Irkutsk men, sighing as though self-rule were something that had to be achieved by Darwinian selection, like an opposable thumb.
The Russians did have queries I could answer, however. “Are there really cowboys in America?” (They were delighted that it’s so.) “Do you still use coins in the U.S.?” (The largest Russian coin was, at the time, worth 1/50th of a cent.) And I had something just as naive to ask them. “How is Russia doing?” I said. “I mean, you know…Are people better off? Worse off?”
Because I really couldn’t tell. I’d heard disaster stories about the Russian economy, but Moscow and St. Petersburg appeared prosperous. On the other hand, these were the wealthiest places in the country and, as a tourist, I’d spent my time in the best parts of town. Judging Russia by a couple of weeks of sightseeing in its two principal cities would be like judging America by walking up Madison Avenue from Fifty-seventh Street to the Whitney Museum.
Irkutsk looked more like the old Soviet Union, shabby and drab, but tokens of economic success were scattered around. Some decent apartments were being built. There were Japanese cars on the streets. The Intourist Hotel offered actual hospitality, and its restaurants served real food. Dozens of privately owned stores had opened, including a grocery next to one of the Martha Stewart log cabins. And that grocery could have been stocked by Martha herself: ten varieties of Hong Kong tea biscuits.
As for the Russian countryside, I’m not sure it ever looks different. Genghis Khan probably saw the same things in the Russian countryside that I did, although he stopped to burn them.
I was flummoxed. Russia was richer than it was when I’d been there in 1982 and 1988. But experts and statistics said just the opposite. According to the Russian State Committee for Statistics, the gross domestic product was only 61 percent of what it had been i
n 1989. Russians couldn’t have more stuff and less stuff at the same time, could they? The World Bank estimated that one-third of Russia’s population had an income below the minimum sustenance level: One out of three people was keeling over from hunger. This wasn’t happening. Indeed, three out of three Russians could use some time on a StairMaster. Tatyana Y. Yarygina, deputy chairwoman of the State Duma’s Committee on Labor and Social Policy, claimed that a full quarter of Russians couldn’t find employment. Thirty-eight million or so folks were sitting on their duffs—yet the day-trippers from Irkutsk were almost the only Russians I saw doing nothing.
What did they think? “Oh, things are better now.” “Much better.” “Better, better, better now.” Of course, a whole bottle of vodka had been drunk at lunch, and things were better. But, in fact, the Russians told me what I wanted to know by asking another question of their own, a question that only the citizens of a few nations would bother to ask. “Tell me,” said one, in the serious and important manner that comes with drinking too much in the daytime, “where is life harder? In the U.S. or in Russia?”
Measuring the current Russian economic situation against the old Soviet economy is like trying to do arithmetic by tasting the numbers. The Soviets invented statistical methods that were almost as strange as Lenin’s nonmonetary accounting. Instead of using the definition of gross domestic product accepted by every Western nation—the value of the production of all labor and property located in a country—the Communists had something called gross material product. To oversimplify, gross material product ignored services and counted products every time they moved.
Eat the Rich: A Treatise on Economics Page 18
