A Brief History of Capitalistic Free Enterprise

by Glenn Rogers

  Chapter 6

  The Great Socialist Experiments

  of the Twentieth Century

  Karl Marx was not a fan of capitalism as he understood it. Born during the Industrial Revolution, Marx was the son of a successful German-Jewish lawyer and enjoyed a comfortable family life. Though not religious, he “converted” to Christianity so that it would be easier for him to interact with the German middle class. He began his university education at Bonn University and from there went to the University of Berlin where he studied the philosophy of Hegel, though he did not like much of what Hagel said. In the mid 1840s, after the newspaper he worked for was shut down, Marx moved to Paris where he became reacquainted with Fredrick Engels. At that time, the two formed a close and life-long relationship.

  Aware of the challenges associated with the living conditions of the lower classes, Marx became a proponent of the working class. Engels had written The Condition of the Working Class in England in which he had described the living conditions of the lower classes—which were horrendous. Marx believed that the plight of the poor was the fault of capitalism, a system that, as far as Marx was concerned, exploited the propertyless of society only to further enhance the wealth of the already wealthy. As Marx continued to study and think, he concluded that all of history had been dominated by an ongoing class struggle—the rich versus the poor. Further, he concluded that the economic system of the society in which one lived determined one’s perspective in life. In fact, everything one thought about was, according to Marx, determined by the economic system under which one lived. And the economic system of Western society was capitalism—a system that made the rich richer and kept the poor in poverty. However, capitalism was flawed, Marx believed, and was destined to fail. Wanting to hasten the collapse of capitalism, he proposed revolution and overthrow. “Workers of the world, unite!”

  Along with Engels, he wrote the Communist Manifesto which outlined the tenants of the yet to be established communist party. Politically and socially speaking, the timing of its publication coincided with a great deal of social dissatisfaction and unrest that led to further unrest and a number of disturbances throughout Europe.

  Paul Strathern has written an excellent brief biography of Karl Marx: Marx in 90 Minutes. In it, Strathern notes that to the inequities Marx credited to capitalism, he “… proposed communism as the answer.” However, Strathern also notes that, “The twentieth-century experience has taught us in no uncertain terms that it [communism or socialism] does not work,” (8). And near the end of his book, Strathern reiterates his point: “Marx’s great venture—communism—has now all but completely failed,” (67).

  Every historian aware of the great communist experiments of the 20th century agrees with Strathern’s assessment. Marx was simply wrong about what the problem was and how to solve it. Yet Marx did raise some important questions that merit our attention. I will address those concerns in the next chapter. In this chapter, we will take a closer look at the communist (socialist) experiments of the 20th century so we can see clearly the inadequacies of socialism.

  The Relationship Between Socialism and Communism

  As we saw earlier, socialism is, “A social and economic system in which the means of production are owned collectively and equality is given a high priority, (Dictionary of Economics). The Oxford Dictionary of Economics says socialism is, “The idea that the economy’s resources should be used in the interests of all its citizens, rather than allowing private owners of land and capital to use them as they see fit.” That same dictionary also defines communism as, “A theory of a classless society with common ownership of property and wealth and centrally planned production and distribution.” According to Terence and Dagger, communism is a “political and economic doctrine that aims to replace private property and a profit-based economy with public ownership and communal control of at least the major means of production (e.g., mines, mills, and factories) and the natural resources of a society. Communism is thus a form of socialism…” (Britannica.com).

  Terrance and Dagger say that communism is a form of socialism. They are mistaken. Communism is socialism, and socialism is communism. Where the means of production are owned and controlled by the government, you have socialism or communism—whichever term you prefer. And though some sources refer to ownership of the means of production by the people, that language is simply a euphemism for ownership by the government.

  Of course the simplest way to see that socialism and communism are the same thing is to remember that the former Soviet Union, the communist star of the 20th century, was known as the USSR, the United Soviet Socialist Republic. Clearly, socialism and communism are simply different words to describe the same socioeconomic system. Societies that embrace socialism may nuance their social structure slightly, but the small differences that may exist between them do not change the fact that they are socialistic, that the government owns and controls the means of production and distribution. Consider, for example, the differences between American democracy and British democracy. Our governments are not structured the same way, but each is a democracy. Democracy does not require uniformity. Neither does socialism.

  Strathern says that what Marx was proposing was that private property be taken over by the state, which “is precisely what happened in the Soviet Union and throughout the communist world. Free enterprise was stifled in favor of state planning,” (61). Capitalism, Marx argued, and the social distinctions endemic to it, were evil and needed to be eliminated. Only communism could bring equality and justice to society. We know of course that he was mistaken.

  The Failed Socialism/Communism Experiments

  of the 20th Century

  If more high schools and colleges were still teaching 20th century history the way it actually happened, more young people would already understand what the above heading refers to. But many (perhaps even most) do not. When I was teaching sociology and we discussed capitalism and socialism, it was disconcerting how many students did not understand that socialism and communism were the same thing and that they had been tried and failed miserably in the 20th century, with many millions of people dying in the process.

  The United Soviet Socialist Republic—The USSR

  We will begin with the Soviet Union. In 1917 Vladimir Lenin led the Bolsheviks against the Russian provisional government that had replaced Tsar Nicholas II during the first world war. The Soviet Union came into being formally in 1922 with the Treaty on the Creation of the United Soviet Socialist Republic, the USSR. Lenin had studied Marx’s work and found it compelling. Based on Marxist theory, Lenin developed his own socialist economic and social theory that became the foundational beliefs of communism in the new socialist republic that existed as the USSR from 1922 until 1991.

  The two most infamous leaders of the Soviet Union were Vladimir Lenin and Joseph Stalin. Under their regimes, in addition to the millions of people who were murdered—well in excess of 20 million—privately owned property was confiscated by the state. Homes, farms, and businesses were taken over by the state in order for the state to remove the profit motive of the formerly capitalistic society, managing resources and redistributing assets so that everyone would share equally in the wealth that had been produced. Churches were closed in an attempt to eliminate religion from society. In a socialist society the state is supreme. There is no room or need for God.

  Under Lenin and Stalin, many millions of people were arrested, jailed, exiled, or killed. There was a great deal of oppression and fear, no freedom, no incentive for excellence and achievement for working class people (which they were all supposed to be), and there were often shortages of food and other necessities.

  The obvious question is, so how come the mighty Soviet Socialist Republic lasted for only 69 years? In the book, The Collapse of Communism (edited by Lee Edwards) a number of scholars who are specialists on the Soviet Union answer that question. Here are some of their answers.

  “A single crucial fact is the key to understanding the
fall of communism in Eastern Europe: Marxism-Leninism was an alien doctrine imposed on the region by an imperial power whose was culturally repugnant to the dominated people,” (Zbigniew Brzezinski, The Collapse of Communism, 21). What had the previous socioeconomic doctrine been? Capitalism. Freedom.

  Martin Malia notes that, “… the perverse genius of Marxism is to present an unattainable utopia as an infallibly scientific enterprise,” (71). In other words, there was no way Marxism was ever going to be attained. The whole concept was simply not possible. But Malia has more to say.

  To understand the Soviet collapse, therefore, it is necessary to go back beyond Red October to the emergence of generic socialism in the aftermath of the French Revolution. For socialism came into the world in the 1830s as the expectation of a Second Coming of 1789-1793, a new and final revolution to achieve full human equality and social rationality. Given such aspirations, when this fantasy at last came to power in 1917 it inevitably took itself as the millenial culmination of history, the revolution to end all revolutions. It is only with the fall of the Berlin Wall in 1989, and the collapse of the Soviet system itself in 1991, that it became clear that the communist specter had all along been an insubstantial mirage, and the revolution to end all revolutions had in fact been modern history’s most colossal fraud,” (The Collapse of Communism, 71-72).

  The United Soviet Socialist Republic was doomed to failure from the beginning because the very notion of socialism is fundamentally flawed. That’s a polite was of saying it is just a silly idea. Trying to create an artificial equality of economic sameness is as unnatural, and in the long run, as impossible to accomplish as using genetic engineering to create a talking gorilla with an IQ of 170. It just isn’t going to happen no matter what you do.

  The People’s Republic of China

  Another of the great socialist experiments of the 20th century took place in China. Mao Zedong, who had been leader of the Chinese communist party since 1927, led a revolution, defeated the Nationalist forces, and on October 1, 1947, declared the creation of the People’s Republic of China.

  The history of China is complex, and explaining what led to the establishment of communism in China is beyond the scope of this brief study. However, when communism came to China, there was a great deal of suffering, as there had been in Russia and Eastern Europe. Private property was confiscated from legal owners and “redistributed” as communal property to people who otherwise had no legal right to it. Religion was driven underground. There was widespread poverty and food shortages, and millions of people died. When Mao Zedong died in 1976, Deng Xiaoping took over and instituted many reforms, one of which was something called market socialism. Market socialism is a highbred economic system where the means of production might be owned by the state or by the people who work in the factory or business. It involves a form of profit sharing. It is interesting that in any form of socialism there would be a concern for profits and a plan for sharing them with the workers. Profit sharing is much more than simply wages paid. Profit sharing provides an incentive for working harder and being more productive, which leads to higher profits, which are then shared among the people who created the higher profits. Sounds an awful lot like capitalism, doesn’t it? In fact, many of the reforms enacted by Ding Xiaoping and his successors have created a very successful market economy, that is, a capitalistic economy. People in China may own private property, and there is a successful and growing entrepreneurial class in China.

  Even though China is still officially a communist country, they have had a market economy for a long time now and embrace a capitalistic approach to business. Why? Because socialism doesn’t work. One of the differences between China and the Soviet Union is that China realized that socialism wasn’t working, at least economically, and began moving toward a market economy. The Soviet Union did not. The Soviet Union no longer exists. China does. Communism simply doesn’t work.

  Cuba

  Cuba provides an excellent example of what is wrong with socialism, as does North Korea. But we will take a closer look at Cuba. On July 26, 1959, Fidel Castro and his forces overthrew the forces of the corrupt Cuban leader Fulgencio Batista. About two years later, in December of 1961, Castro, in a television speech, removed all doubt about his political views when he said, “I am a Marxist-Leninist and shall be one until the end of my life.”

  Anyone paying attention for the past sixty years is aware of the almost constant stream of people, perhaps a million or more, risking their lives to make the difficult ocean crossing from Cuba to Florida. Why do they do this? If socialism is the utopian panacea Marx and his followers claimed it would be, why would people risk their lives to leave a socialist country? In a 2014 article in The Washington Post, Ilya Somin explains why. Somin visited Havana. Moving outside the tourist sector to the real Havana, he describes what he saw:

  Outside its small tourist sector, the rest of the city looks as though it suffered a catastrophe on the scale of Hurricane Katrina or the Indonesian tsunami. Roofs have collapsed. Walls are splitting apart. Window glass is missing. Paint has long since vanished. It’s eerily dark at night, almost entirely free of automobile traffic. I walked for miles through an enormous swath of destruction without seeing a single tourist. Most foreigners don’t know that this other Havana exists, though it makes up most of the city—tourist buses avoid it, as do taxis arriving from the airport. It is filled with people struggling to eke out a living in the ruins … In the United States, we have a minimum wage; Cuba has a maximum wage—$20 a month for almost every job in the country. (Professionals such as doctors and lawyers can make a whopping $10 extra a month) … Even employees inside the quasi-capitalist bubble [that serves the Western tourists] don’t get paid more. The government contracts with Spanish companies such as Meliá International to manage Havana’s hotels. Before accepting its contract, Meliá said it wanted to pay workers a decent wage. The Cuban government said fine, so the company pays $8-$10 an hour. But Meliá doesn’t pay its employees directly. Instead, the firm gives the compensation to the government, which then pays the workers—but only after pocketing most of the money … the regime’s “free” health care is of very low quality, and still requires patients to purchase their own medicine, iodine, and even bedsheets—items that are usually available only on the black market.

  Doesn’t sound like a utopia to me.

  The idea of a propertyless society of complete equals without social class where everyone is happy with what the state gives them, and everyone works hard for the betterment of society and their fellow human beings is a naïve pipedream.

  [T]wenty-three centuries ago, Aristotle saw the benefits of private ownership. “Property should be as a general rule private,” he wrote, “for when everyone has a distinct interest, men … will make progress, because everyone will be attending to his own business.” Adam Smith elaborated the same theme, in depth and rich detail, showing how self-interest, in a competitive private market, becomes the beneficial force and a source for progress, (Andrzej Brzeski, The Collapse of Communism, 121).

  Summary

  The 20th century was the century of the great socialist experiments. Marx and Engels published their Communist Manifesto in 1848. By the early 1900s there were revolutionaries who were intent on establishing the kind of classless society Marx had postulated. The two biggest were the United Soviet Socialist Republic and The People’s Republic of China. North Korea and Cuba were much smaller but still crucial experiments demonstrating the foolishness of the supposed utopian fantasy.

  While some people today try to differentiate between the terms communist and socialist, the two are essentially the same. This is easily seen in the name Russia adopted for its new society—the United Soviet Socialist Republic. All four experiments with communism were failures. None of them came close to the utopia Marx described. There was (is) poverty, unrest, and death on a grand scale. The Soviet Union no longer exists; China now has a market economy, and Cuba and North Korea, though they continue to
exist, provide marvelous examples of the injustice and poverty socialism brings to a society.

  It is a shame that 20th century history is not taught accurately in most high schools and colleges. If it were, fewer people would be led astray by the lies socialists tell today.

  Chapter 7

  Which Socioeconomic System, Socialism or Capitalism,

  Helps People Achieve Their Full Potential

  The need to achieve is part of our human nature. It doesn’t have to be a Plato, Mozart, or Einstein kind of an achievement; it can be something more mundane. But learning, growing, and achieving are part of what we do and need to do as human beings. The young child wants to be able to feed himself, to dress himself, to tie his shoes. Kids assess themselves by comparing themselves to other children their age. Other kids can do arithmetic. Can I? Other kids can read. Can I? Why would such questions concern a child? Because children need to learn, to grow, to excel, and to achieve. Adults do the same thing. We compare ourselves to others to monitor how we’re doing in life. Why? Because achievement is important. We need to achieve our potential as human beings. To use our creativity, our imagination, our intellect, our drive, our skills—to become the best we can be at whatever it is we decide to be.

  To aid us in our quest for achievement and hopefully excellence, we need a socioeconomic system that will help us instead of hinder us. How so? The socioeconomic system we live in impacts features of our personality such as responsibility, creativity, drive, productivity, and excellence—things that will help us achieve. One of the things I hope to accomplish in this chapter is to demonstrate that capitalism, because of how it works, is a socioeconomic system that helps us achieve and excel.

  Equality and the Social Justice Issue