Magazines: The Red Tide Ebbs


The abortive coup in the Soviet Union finally ensured the burial of communism. The system that brought the world the Gulag, the arms race, the Cold War, and some of the most brutal dictators of our savage century died not because of the fury of atomic holocaust or the extinction of capitalism, but because of the bungled machinations of what George Weigel, in the September American Purpose, called "eight drunken apparatchiks doing a pathetic comedy routine."

There was great sadness on both the left and the right on the passing of the Red Menace. In the September 16 Nation, Alexander Cockbum seemed to combine the toppling of Leninism and Stalinism with his own midlife crisis. "Like any 50-year-old I felt sad," Cockburn wrote. "The Soviet Union defeated Hitler and fascism. Without it, the Cuban Revolution would never have survived; nor the Vietnamese.…Without the threat of the Soviet Union there would have been no Marshall Plan.…There wouldn't have been the International Brigades, the workers who had crossed the Atlantic or ridden the rails across Europe to Spain." And if Adolf Hitler had never existed, we would never have had the heroic deeds of World War II.

The right, for its part, was also in shock: How could one be a stalwart anticommunist if there were no communists to denounce? In the October American Spectator, Michael Ledeen of the American Enterprise Institute used the failed coup as a weapon to bash the Democrats and the Carter administration.

In 1979, Ledeen observes, "the ideological competition between freedom and Communism was still intense." When Ronald Reagan left office in 1989, capitalism and democracy had triumphed in the marketplace of ideas. What had changed? The defense buildup of the Reagan administration, says Ledeen, was the primary reason that communism collapsed; people who "deny that we defeated the Soviets," says Ledeen, are "zealots of disinformation."

But Ledeen's analysis is incomplete. He is oblivious to the music of the marketplace; economic analysis is of little use to him. For there is increasing evidence that Ronald Reagan did win the Cold War, not by spending billions on cruise missiles and bombers, but by decontrolling the price of oil. As Stephen S. Moody showed in the September 9 New Republic, falling oil prices may have done more to hasten the Soviet Union's demise than military spending.

Recall 1979, when the Soviet empire was at its zenith. With oil at $48 a barrel, the Soviets were easily able to pay for their legions in Cuba, Vietnam, and Angola, to build high-tech military weapons (and use dollars to steal the designs they could not develop on their own), and to prop up their failing agricultural system by buying hundreds of millions of tons of U.S. Number 2 Hard Red Winter Wheat.

With the decontrol of oil prices, Soviet planners were in a bind. Strict price and exchange controls meant that they could neither raise prices to market levels nor use rubles to make the hard-currency purchases they needed. Even though the price of U.S. wheat had risen from $1.54 a bushel in 1970 to $4.45 a bushel in 1980, the price of a loaf of Soviet bread remained fixed at 20 kopecks from 1955 until April 1991. The Soviet elite had developed a taste for Gucci shoes and Levis, and, in the late Brezhnev and Andropov eras, Soviet planners spent billions importing machine tools, parts, and, on occasion, entire plants, even though the imported goods failed to ensure that Soviet factories met Western production standards. ("It remains a mystery," Moody observes, "why the world's largest manufacturer of machine tools found it necessary to import still more machine tools.") Central planners made the problem worse by ignoring consumer goods in favor of heavy industry, even in Brezhnev's Soviet Union, there were "definite limits" to the demand for industrial balers or gas turbines.

Faced with falling oil prices and rising debts, central planners attempted to obscure the problem by concealing a rising Soviet budget deficit and severely inflating the money supply. The result: Soviet citizens had plenty of rubles but nothing in the state-controlled markets to spend them on. Black markets flourished; by 1989, prominent economist Stanislav Shatalin reports, these black markets were supplying the Soviet Union with 42 percent of its meat, 75 percent of its potatoes, and 55 percent of its fruits and vegetables.

Each time a Soviet worker "voted" for capitalism by buying black market goods, Moody notes, he did two things. First, he undermined the "psychological weapons" of state propaganda: Why sacrifice for the revolution, comrade, if your reward is three hours a day in a food line? Second, he supported the black marketeers, who by supplying goods more efficiently than the government caused the whole system of central planning and command-and-control economics to tremble.

As Swedish Sovietologist Anders Åslund showed in The World Today's July issue, Mikhail Gorbachev took the economic legacy given him and made matters worse by decontrolling wages somewhat while keeping price controls rigid. The Soviet budget deficit grew steadily, reaching 10 percent of the Soviet gross national product in 1988 and 20 percent in 1991. And when the demands for democratic change increased in 1989 and 1990, Soviet planners attempted to appease dissent by spending 150 billion rubles on new price subsidies and 110 billion rubles on social programs—an amount equal to the entire Soviet budget deficit.

These mistakes of the Soviet planners ensured that the Soviet economy, bad as it was, was headed for disaster. The most vivid illustration of that disaster, however, was not to be found in the foreign-policy quarterlies or on the op-ed pages, but in the pages of Spy.

In Spy's June issue, Anne Williamson describes an experiment she conducted in December 1990 with the International Association of Cultural Workers (a Soviet artists' organization). What would happen if someone held an American-style garage sale on the streets of Moscow?

This is harder than one might expect. At the time, private property was still illegal; selling anything—"even a broken shower radio or old TV Guides"—would lead to swift arrest by state militia. But babushki (grandmothers) are allowed to "sell pathetic castoffs" to supplement their pensions. After creating a "flowery, convoluted request" and promising the head of the local militia office that he would certainly be welcome at the liquor-drenched "office party" they would hold with the profits, Williamson and her colleagues finally gained permission.

Soviet citizens, Williamson reports, have a tremendous appetite for Western junk. They "love to display empty Marlboro cigarette packages and Western perfume boxes alongside their crystal and china." Given this hunger for Western goodies, Williamson et al. were easily able to sell their trash for huge profits. In a land where the average daily wage was 14 rubles, they sold a broken shower radio for 200 rubles, a T-shirt that said "Caramba" for 100 rubles, and a "faded quilted Christmas wreath" for 30 rubles. Even a Van Halen cassette (without its box) sold for 10 rubles. Within an hour, they had made 5,000 rubles, equal to a Soviet engineer's salary for 18 months.

With her wad of rubles, Williamson tried to find party supplies. Even though she had plenty of money, goods were hard to find. It took a day and numerous tips, rumors, and semilegal marketplaces to come up with a party's worth of gin, bourbon, cola, and vodka. (Even the black marketeers could not come up with beer.) At 2 p.m. the following day, they still could not find paper plates, cups, cutlery, or mineral water. Giving up their experiment, they proceeded to buy the remaining goods with dollars at a hard-currency store.

"Though our shopping took the better part of two days," wrote Williamson, "it was easy compared with what the average Soviet citizen would have endured." At one state-owned store Williamson visited, the only items for sale at regulated prices were chickens and "odious Turkish tea." Another store had only tea, Yugoslavian cigarettes, and unroasted coffee beans.

Certainly the economic conditions Williamson reports have not improved since her article; indeed, with the harsh winter approaching, the Soviet economy can only worsen. Anders Åslund predicts that Soviet GNP will fall by at least 35 percent before stabilization takes place.

What can be done to reform Central and Eastern Europe? I offer two suggestions for Americans interested in helping the salvageable portions of the former Soviet bloc move toward stable democracies.

First, don't worry too much about nationalism. In the July 20 Spectator, Noel Malcolm observes that national pride is a normal part of a healthy democracy. Certainly we should frown on fanatics (such as the Serbs) who use force to expand their frontiers. But pride in their past and their culture did much to sustain the Poles, Czechs, Slovaks, Hungarians, Lithuanians, Latvians, and Estonians during the long night of communist tyranny. We should not think these newly free nations foolish or reactionary if they want to restore a heritage denied them by Stalin or Brezhnev.

Second, keeping the price of oil low will do more to stabilize Poland, Czechoslovakia, and Hungary than any foreign aid program. In the May–June Problems of Communism, John M. Kramer, a political scientist at Mary Washington College, notes that those nations are still trying to free themselves from dependence on Soviet oil. Stalinist planners assumed that the way to ensure economic growth was not by increasing productivity, but by building factories that would consume massive quantities of raw materials. The result is that Central Europe is burdened with aging factories that consume huge amounts of Soviet oil. Indeed, last winter Czech-Slovak Finance Minister Václáv Klaus claimed that a "war economy" might have to be imposed if Soviet oil exports fell below 10 million metric tons.

The danger still persists; eventually, Kramer says, Central Europe will have "to go 'cold turkey' and end its addiction to Soviet energy." But low oil prices will do more to help those nations than high ones.

The legacy of misrule, both in economics and politics, has done much damage and little good to Central Europe and the Soviet Union. But that legacy, briefly brought to life by the tyrants of August, has finally died. There is much hard work to be done, and a quarter of the globe is still in the iron grip of communism. But the world will be a better—and safer—place as the red tide ebbs.

Contributing editor Martin Morse Wooster is writing a book about American high schools.