Who Killed Socialism?

  IN response to the repeated failures of socialist countries - whether from economic or political crises - the favorite rescuing device of far-left apologists is to cry, “It wasn’t real socialism!” Since it, ostensibly, wasn’t true, orthodox socialism, then we don’t know what it’s like for true socialism to be implemented, meaning we can’t critique practical (in contrast to theoretical) socialism. This recourse is, of course, fallacious, and can be refuted in three easy ways:

1. Noting how socialists, in other contexts, will refer to these countries as sources of socialist pride.

2. Noting how historical socialists, contemporaneous with these regimes, affirmed their socialist nature.

3. Responding in kind, “Well, they certainly weren’t capitalist!”

The final point is my favorite, especially since I made it. Socialist apologists might assert that these nations had capitalist characteristics, or were forms of “state capitalism”. However, you either have - exclusively - capitalism or socialism, as Professor Hans-Herman Hoppe showed in his book A Theory of Socialism and Capitalism. Furthermore, “state capitalism” is an oxymoron, for, as I have put it, “If the State expands itself, the market must contract; if the market expands itself, the State must contract.” State capitalism is nothing more than a more state-oriented form of mixed economics, which is fundamentally non-capitalist.

Now, where this recourse fails, or when the socialist needs a second argument, they indeed have another one in stock. This one derives from the victim mentality/martyr complex at home to many socialists. This rescuing device goes along the lines of, “Evil capitalists starved that nation!” What this recourse entails is the idea that, through the levying of sanctions and other economic warfare, capitalist nations weakened the economic integrity of socialist countries, causing them to fail (and, as a corollary, this economic weakness led to political instability that led to the numerous socialist tyrannies).

Now, we can refute this view simply by exposing the logic behind it, namely, that sanctions would have an effect on socialism. Numerous early socialist movements were proponents of autarky/economic self-sufficiency, and autarky was a goal of the early USSR (Dohan 1976). Marx likely also had this view, with his desire for intense industrialization and automation that would produce a post-scarcity society (if everyone had everything, there would be no need for trade, meaning being banned from trading would have no consequence). Socialism was supposed to be isolated from the international capitalist economy, and should have been able to remain sufficient when being blockaded by it. Ultimately, autarky is a bad system and we can attribute socialism’s economic issues in light of sanctions - or even without them - to that flawed system.

Now, let us speak about facts, history. Historically and factually, did economic sanctions levied on socialist regimes lead to their economic hardships? Disregarding the conversation above on the underlying logic of such an assertion, I will endeavor to show that there is no such relationship, between capitalist “oppression” of a socialist country and that country’s economic hardships. In order to prove this I will analyze four major socialist regimes: Venezuela, China, the USSR, and North Korea. Each of these countries have suffered severe economic downturns, and socialist apologists have often pinned these downturns on the actions of the international bourgeoisie. What is the truth?

Let us begin with Venezuela, since it is one of the most prominent examples, as both an extant socialist state and one in the Western hemisphere, making it closer to home to Americans. Venezuela is especially one of the targets of the claim that capitalist economic sanctions ruined this proud socialist experiment, not socialism itself. For example, mainstream media outlet USA Today published the article “Fact check: Socialist policies alone did not destroy Venezuela's economy in last decade” back in August of 2020. In it, the author attempts to pin the blame on the nation’s oil policy, but by doing so she refutes herself. If it wasn’t for Chávez’s socialist command economy and economic ineptitude (“His was a completely encyclopedic ignorance,” as one expert quoted in the article put it) Venezuelan businesses would never have overemployed and overinvested in oil; only a bureaucratic regime makes the dumb mistake of putting all its eggs in one basket, the free market doesn’t.

In any case, let us focus on sanctions exclusively. The truth is that sanctions on Venezuela did not begin until 2014, with Obama’s Venezuela Defense of Human Rights and Civil Society Act, and were intensified by Trump’s 2019 embargo, which means the majority of socialist Venezuela’s history was spent unsanctioned. Before 2014, the only sanctions put on Venezuela were small-scale ones that focused on Venezuela’s crippling drug trafficking issue. The question, now, is simple: How economically unstable was Venezuela before 2014?

Before 2014, Venezuela was on the brink of economic crisis, as a Forbes article from that year explained. Out of control prices, economic mismanagement, inflation, all these things were debilitating the Venezuelan economy. However, another rescuing device the socialist apologists might use in response is the assertion that, “Oh, this was after the Great Recession, which put a bunch of economies into bad health!” This usually comes with the [false] assertion that the Recession was a “crisis” of “late-stage capitalism”, and honestly would make some sense, if - again - practical socialism wasn’t supposed to be self-sufficient. Nonetheless, let us look before 2008 and analyze the state of Venezuela's economy then.

When we narrow our range to before 2008, we still see much of the same! In February of 2007, The New York Times reported on the economic situation in the country: accelerating inflation, rising prices, food shortages, collapsing foreign investment, and intensifying socialism. In order to control runaway inflation (which had reached rates of 20%), Chavez ordered that zeroes be cut off the denominations of the bolivar (showing off his “completely encyclopedic ignorance” of economics), this in early-2008 (the inflation from 2007). Furthermore, all the way back in 2003, Venezuela was in a recession that lopped off 10% of the nation’s economic growth. All in all, what we see is that Venezuela’s economy was being impeded long before the Great Recession or Western sanctions, and the blame is strictly on its strict, socialist economy.

The next country we will tackle is the USSR, the most infamous example of practical socialism. As noted earlier, the Soviet Union had an early policy of economic autarky (Dohan 1976), and so blaming its economic problems on external actions is illogical. Nonetheless, we will consider those external actions for the sake of the argument. US sanctions against the USSR did not begin, from what I can tell, until the late-40s, after the two nations emerged from WW2 as the only two superpowers in the World with diametrically opposed ideologies. What was the economic condition of the USSR before the Cold War?

Dismal! Absolutely dismal! Millions in Russia were afflicted by death or pain by the Soviet’s collectivization of agriculture (á la Holodmor) and fueling of industrialization by penal labor. Life in the Soviet Union was awful, and many of these ills can be dated far before our terminus ad quem of the late-40s. From the very, very beginning of the USSR, these problems occurred. This is touched on briefly in certain World history classes, but from 1918 to 1921, Lenin and the Soviet government fiddled with “war communism”, which was just communism with a fancy prefix. The consequences of war communism was economic devastation (Richman 1981), as even Trotsky had to admit (Richman 1981, p. 89). Things got so bad that Lenin had to reintroduce a little bit of capitalism to restabilize the economy!

Let us return to the present day as we shift our focus onto North Korea. North Korea is a subject of fascination for many Westerners, as a grotesquely totalitarian wasteland and a fervently socialist regime. However, are its issues the fault of capitalist interference, is Juche a practical ideology, simply marred by bourgeoisie imperialism? Ignoring the fact that Juche is openly autarkic (Jong-il 1982, pp. 42-52), let us examine the relationship between economic sanctions and North Korea’s economy.

From what I can tell, the United States is the only country that imposed sanctions on North Korea until recently, those sanctions beginning after the Korean War in the 1950s. The only exception to this I could find was in 1987-1988, when the Japanese government imposed and then lifted sanctions on North Korea after the bombing of Korean Air Flight 858. Even if there were more sanctions on the nation during its history I cannot find, North Korea would still have had its close benefactor China to engage in socialist camaraderie with.

I think the economic condition of North Korea throughout its history goes without saying. Back in the ‘90s, North Korea suffered an infamous famine that killed hundreds of thousands, and most certainly derived from socialist mismanagement. In 2003, Jude Blanchette detailed the economic condition of North Korea further, highlighting years-long GDP stagnation and out-of-control price controls. North Korea has long been an economic wasteland, far before “capitalist” sanctioning. The hardships it is facing today are simply extensions of preexisting crises.

Now, we reach our final nation, which is China. China is the successor of the USSR, and one of the most powerful economies (thanks to some capitalism). Note, powerful, not successful. Now, for many years China was subject to a trade embargo by the US, but this was lifted by Nixon during the opening of China, and the only thing to follow was Trump’s trade war. In any case, China’s economy was closed off until the 1970s, and afterwards it became involved in the international market but with a socialist command economy. Any failures, therefore, have their liability fall back on the CCP. 

A note about China’s economic performance, however. For some time now, it has been known that China manipulates its economic data, likely to make it seem more successful and its Maoism more valid. So, we don’t know exactly how good or bad China is doing, but we can be sure - from what we do know - it is pretty bad. Historically, it’s been very bad. Decades ago, from 1958 to 1961, economic and agricultural mismanagement/collectivization led to a horrendous famine that killed tens of millions (Smil 1999), and has caused long-term economic troubles for China (Gooch 2017). Purging, collectivization, central planning, the PRC’s history has been full of textbook socialist programs that have impoverished and killed millions, all by its own hand and not some nebulous capitalist enemy.

The opening of China in the 1970s, after Mao, that saw economic liberalization and decentralization - much like the New Economic Policy of the early USSR - shows where the blame lies, in collectivist economics. The alleviation of mass poverty in China was due to market economics, and covert privatization saved one village from the CCP’s agricultural disasters. Overall, however, capitalism and socialism are incompatible, and it is ultimately the socialist features that take over (since they are backed by organized State power versus the decentralized voluntaryism of the market), which is why China’s economy is suffering. As Daniel Lacalle, Ronald-Peter Stöferle and Mark J. Valek, and Daniel Lacalle again have shown, China’s economy is stagnating, and is possibly on the brink of collapse.

So, in conclusion, what we can see is that there is no correlation between the failure of socialist nations and the “interference” of capitalist ones, simply because those failures occurred before that interference began. In all four of the countries above we see that the economies of socialist countries were in ruins before any factors outside of their control began. While we covered only four nations and there a number of others we could look at, past or present, like Cuba, these four are some very prominent examples, whether because of their currentness (Venezuela) or prestige (USSR), and it is hard to imagine they are exceptions rather than the rule (especially China and the USSR, which were the trendsetters for other socialist regimes in their spheres of influence).

Who killed socialism? None other than the socialists themselves!

BIBLIOGRAPHY

• Dohan, Michael R., “The Economic Origins of Soviet Autarky 1927/28-1934.” Slavic Review 35, no. 4 (Cambridge University Press, 1976): 603-635.

• Gooch, Elizabeth, “Estimating the Long-Term Impact of the Great Chinese Famine (1959–61) on Modern China.” World Development 89 (Elsevier, 2017): 140-151.

• Jong-il, Kim, On the Juche Idea (Pyongyang, NK: Foreign Languages Publishing House, 1982).

• Richman, Sheldon L., “War Communism to NEP: The Road from Serfdom.” The Journal of Libertarian Studies 5, no. 1 (Ludwig von Mises Institute, 1981): 89-97.

• Smil, Vaclav, “China’s great famine: 40 years later.” BMJ 319, no. 7225 (British Medical Association, 1999): 1619-1621.