Lines were a fact of life in the Soviet Union. Communism may be gone in Moscow, but with zero-priced admission, lines still form for Lenin’s tomb.
SEPTEMBER 2017
“This looks like any European city,” Bob said as we walked around central Moscow on an overcast, drizzly afternoon in late September. Expensive cars darted about the streets past a mix of modern glass-and-stone structures and renovated pre-Soviet buildings. The plain, gray, Soviet block-housing that many people called home in the days of the Soviet Union and Eastern Bloc were noticeably absent.
Shops were plentiful and well stocked. There was no shortage of bars, and the restaurants boasted varied cuisine, like in any major city. We had just left the Tap and Barrel Pub, an Irish joint, where we’d enjoyed a pint of Kilkenny. Try finding that in Havana or Pyongyang.
The Soviet Union broke apart politically in 1991, and after twenty-six years of reform, we can tell you that failed socialism in Moscow looks pretty unremarkable. If you closed your eyes and opened them quickly, you might think you were in Stockholm, Warsaw, or Berlin, until the onion dome spires of St. Basil’s Cathedral give away your location.
The remaining evidence of Soviet times is mostly monuments and images, like the aging art deco mural featuring a muscular Soviet cosmonaut painted on the side of a building. We’re not art critics, but all the bulging muscles in socialist art look like soft-core gay porn to us. However, there was nothing soft-core about the statue we encountered a little farther down the street, where a fourteen-foot-tall bust of Karl Marx rose out of a large gray block of stone.
Marx wasn’t the first socialist thinker, but he was certainly the most influential. His ideas inspired the movements that would ultimately establish the Soviet Union, China’s Communist government, and numerous other socialist regimes in the twentieth century. His ideas appealed to labor activists in his own lifetime and continue to influence leftist intellectuals and young socialists. Che might outsell Marx in T-shirts, but Marx is quoted far more often than Che in university lecture halls.
Tons of books have been written on Marx, and we don’t want to bore you here by going through his entire life and work, but it’s worth at least briefly reviewing his ideas on value, alienation, and history, the three big pillars of Marxism.
Even though we’re free-market economists, Marx’s labor theory of value doesn’t offend us. He was wrong, but it wasn’t until after Marx died that economists figured it out. Most economists, including the great classical liberal, Adam Smith, were mistaken in their labor, or cost-of-production, theory of value. It wasn’t until the so-called “Marginal Revolution” in the 1880s when three economists, working independently, all concluded that the value of a good is based on what people subjectively think a particular (or “marginal”) unit of that good is worth, which is exactly right. The amount of time or energy it takes to make something doesn’t really matter when it comes to determining its worth. This is tough to grasp, especially for the individuals or company that produced the good and want to sell it for a price that they think is “fair” compensation for their time and labor. But stick with us here and we’ll explain.
A good’s worth is entirely in the eye of the beholder. It might cost six times as much to produce an orange in a greenhouse in Alaska as it does to grow one outside in Florida, but Alaskan oranges are no more valuable to consumers than Floridian oranges. Costs, whether labor or otherwise, just tell us whether it makes sense to produce something a particular way given the value we expect people will pay for the good that is produced.
Marx, like most of his contemporaries, mistakenly thought the amount of labor “embodied” in a good was what determined its value. He claimed that if labor determines value, then any profits made by a capitalist must represent exploitation, because workers must not have received the full value of the good that they created.
A separate, though related, aspect of Marx’s thought is alienation. Workers are alienated because market forces, not the workers themselves, decide what will be produced, how it will be produced, and who will produce it.
This means that workers are forced to work for the capitalists who own the means of production and dictate terms to the workers, often leaving them in dull, monotonous jobs, earning unfair wages. Marx claimed that once private property in the means of production was eliminated, workers could produce for their needs, rather than for the capitalists’ profits, and thus end alienation.
Marx’s theory of history was the final pillar of his system. He believed the collapse of capitalism and transition to socialism was inevitable. His brand of “scientific socialism” dictated that history is a series of struggles between the privileged and exploited classes. Under capitalism, the bourgeoisie (the property-owning middle class) exploited the proletariat (the workers). Marx believed that capitalist competition would inevitably lead to financial losses, business failures, and then monopoly, and that as industries became more concentrated, many of the former bourgeoisie would be forced into the exploited proletariat. This would further depress wages and increase alienation. Ultimately, the masses would overthrow the capitalists and collectivize the means of production.
As we paused to look at the statue Bob said, “I bet there’s never been a guy who has been so wrong about every major thing he wrote about and who still has as many followers as Marx.” Bob’s right. Profits don’t represent exploitation, because the labor theory of value is wrong. Instead, at least in a free market, profits represent created value. Capitalism can’t be the cause of alienation because workers inevitably do better under capitalism than under socialism, and market prices provide a higher standard of living and more economic opportunity. Finally, industries haven’t become more concentrated and wages haven’t been pushed down under capitalism. Instead, capitalism has been the engine of prosperity, innovation, new industries, and rising wages, while socialist economies have stagnated or even regressed.
“Yeah, there’s only one great Marx,” I said. “Groucho.” Groucho’s definition of politics is Marxism in a nutshell: “Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.”
We continued our usual walk/drink/walk/drink routine until we reached Red Square. Growing up, this was the enemy’s ground zero, and standing in Red Square felt odd. Saint Basil’s dominated the far end of the square. To our right was the long red stone wall that encloses the Kremlin. The middle of Red Square was where the Soviet military paraded its might. Straight ahead, near the Kremlin wall, was the mausoleum of Vladimir Lenin, the first leader of the Soviet Union.
Many socialists today concede that Lenin’s successor, Stalin, was a tyrant. But they often try to deflect blame from Lenin and socialism in general. The truth, however, is that Lenin was as evil as Stalin, just on a smaller scale. He was a dictator. He created the secret police, the Cheka, which would eventually become the KGB. He sent his political opponents to slave labor camps. He ordered mass executions and intentional mass starvation.
The Black Book of Communism, which details the many atrocities committed by socialist regimes, notes that it is “impossible to come up with an exact figure for the number of people who fell victim to this first great wave of the Red Terror. . . . [T]he total reported in the official press alone suggest that at the very least it must be between 10,000 and 15,000 . . . summary executions in two months. In the space of a few weeks the Cheka alone had executed two to three times the total number of people condemned to death by the tsarist regime over ninety-two years.”1
The Cossack people in southern Russia and southeastern Ukraine had opposed the Bolsheviks (the Communists) in the Russian Civil War and resisted Lenin’s demands to give up their food and collectivize their farms. So Lenin embarked on a campaign to eliminate the Cossacks. They were classified as “kulaks” (a term for wealthier peasants) and “class enemies.” The Black Book reports that “on the principle of collective responsibility, a new regime took a series of measures specially designed to eliminate, exterminate, and deport the population of a whole territory,” and that these were not “heat of the battle decisions but planned by the highest authorities including Lenin.”2
Land belonging to Cossacks was confiscated. The president of the Revolutionary Committee of the Don, who was in charge of imposing Bolshevik rule in Cossack territories, reported that “what was carried out . . . against the Cossacks was an indiscriminate policy of massive extermination.”3 Ultimately, “The Cossack regions of the Don and the Kuban paid a heavy price for their opposition to the Bolsheviks. According to the most reliable estimates, between 300,000 and 500,000 people were killed or deported in 1919 and 1920, out of a population of no more than three million.”4
The great Russian famine of 1921 and 1922 was also largely Lenin’s doing, as he requisitioned grain from peasant farmers who were left to starve. As reported in The Black Book, “Though perfectly well informed of the inevitable consequences of the requisitioning policy, the government took no steps to combat these predicted effects. On July 30, 1921, while famine gripped a growing number of regions, Lenin and Molotov sent a telegram to all leaders of regional and provincial Party committees asking them to ‘bolster the mechanisms for food collection’ ” or, in other words, to press the farmers even harder.5 Ultimately, at least five million people died during this man-made famine.
During the period known as War Communism, Lenin presided over a comprehensive program to nationalize the means of production. It was a disaster. Production plummeted, famine spread, and there were widespread revolts. Lenin ultimately introduced the New Economic Policy (NEP), which was a step back from socialism, in 1921. It reintroduced money, legalized small-scale private industry, and allowed peasants to sell food on the open market. Socialist governments often bail themselves out with limited capitalist reforms before returning to their old ways, which is exactly what happened in 1928, when Stalin repealed the NEP.
With Lenin’s mausoleum in front of us, Bob said, “Let’s be tourists and go see the old bastard.” After a long, socialist-style wait, we saw the murdering son of a bitch (who was also a prohibitionist—another reason to hate him) lying in a dimly lit room with Russian soldiers solemnly standing guard.6 Visitors are supposed to walk slowly around the room in single file with heads down: no taking photographs, talking, smoking, wearing hats, or putting hands in pockets—so I put my hands in my pockets and got shouted at by a guard.
Lines were a fact of life in the Soviet Union. Communism may be gone in Moscow, but with zero-priced admission, lines still form for Lenin’s tomb.
That was enough commie tourism for us. We moved along to the Hotel Metropol. The hotel, which opened in 1907, is a grand structure with beautifully ornate granite carvings, tiled images of princesses on its exterior, fine marble columns, and a stained glass skylight above the chandeliers in the lobby. Of course, the Bolsheviks nationalized it in 1918 and turned it into offices and living quarters for bureaucrats, but by the 1930s, they had converted it back to a hotel.
The Hotel Metropol was a big part of Moscow’s Soviet history. S. J. Taylor, author of Stalin’s Apologist, a scathing biography of New York Times reporter Walter Duranty, noted that “The New York Times man in Moscow could usually be found among the throngs at the bar of the Metropol Hotel.”7 In the early 1930s, the bar was the “focal point of a glittering bourgeois society in a dull setting of Proletarianism. It was little more than an alcove off the main dining room, yet sooner or later, practically every American who visited the Soviet Union made his way there.”8
Not surprisingly, Bob and I found our way there too. It was still just a small rectangular bar in an alcove, but it was well stocked with vodka. We had a few and talked about how the Times, in its year-long series of columns on “The Red Century,” never once mentioned how its own notorious Moscow correspondent in the 1920s and 1930s was a mere mouthpiece for Soviet propaganda.
Walter Duranty lived a privileged life in Moscow. He had a nice apartment, a car with a driver, a secretary, and could afford to eat and drink well and take frequent trips to Berlin, Paris, and St. Tropez. He was regarded as the leading foreign correspondent in Moscow, but far from being an honest, unbiased reporter, he saw his role as promoting the Communist regime.
Duranty won a Pulitzer Prize in 1932, with the prize committee praising him for his “scholarship, profundity, impartiality, sound judgment, and exceptional clarity. . . .”9 In his acceptance speech, Duranty stated that, “I discovered that the Bolsheviks were sincere enthusiasts, trying to regenerate a people that had been shockingly misgoverned, and I decided to try to give them their fair break. I still believe they are doing the best for the Russian masses and I believe in Bolshevism—for Russia.” S. J. Taylor quotes Duranty’s approval of the “planned system of economy” and his “respect” for “the Soviet leaders, especially Stalin, whom I consider to have grown into a really great statesman.”10
A year later, his admiration for Stalin and the Bolsheviks would lead him to cover up what was, perhaps, the greatest atrocity Stalin committed. After repealing the NEP, Stalin redoubled efforts to collectivize farmland. Peasant farmers understandably resisted, stashing grain and eating their own farm animals before they could be confiscated. S. J. Taylor noted that “by far the most common method of resistance had been the peasants’ slaughter of their own livestock in order to prevent collectivization by the State. . . . In February and March of 1930 alone some fourteen million head of cattle were destroyed, one-third of all pigs, one-quarter of all sheep and goats. During January and February, around ten million peasant households were forced to join the collective farms. By 1934, the Seventeenth Party Congress announced that more than 40 percent of all cattle in the country had been lost, together with well in excess of 60 percent of all sheep and goats. Western estimates were even higher.”11
Stalin blamed the kulaks and cracked down on them. “The kulaks were not to be admitted to the collective farms; instead, they were to be ‘liquidated as a class.’ This was to take the form of exile either to Central Asia or to the timber regions of Siberia, where they were used as forced labor in the most dire of circumstances.”12
The result was a massive famine. Two journalists had the courage to report what was going on. In March 1933, Malcolm Muggeridge wrote in The Guardian that people were starving. “I mean starving in the absolute sense; not undernourished as, for instance, most Oriental peasants . . . and some unemployed workers in Europe, but having had for weeks next to nothing to eat.” There was an “all-pervading sight and smell of death.” “To say that there is a famine in some of the most fertile parts of Russia is to say much less than the truth; there is not only a famine but—in the case of the North Caucasus at least—a state of war, a military occupation.”13
A similar eyewitness report by Gareth Jones followed in The Guardian. He stayed with peasants who were running out of food. Jones reported that they were “waiting for death” and told him to “Go farther south. There they have nothing. Many houses are empty of people already dead.”14
Reporters had been barred from traveling to the starving regions, and Soviet officials were furious that these reports by Muggeridge and Jones got out. They threatened to take away reporters’ press credentials if these stories were not repudiated. In a New York Times article titled “Russians Hungry but not Starving,” Duranty took the Soviet line, asserting that “There is no actual starvation or deaths from starvation but there is widespread mortality from diseases due to malnutrition.”15
Duranty admitted some mismanagement of collective farms and conspiracies by wreckers and spoilers that “made a mess of Soviet food production” but continued that “to put it brutally—you can’t make an omelet without breaking eggs, and the Bolshevik leaders are just as indifferent to the casualties that may be involved in their drive toward socialism as any General during the World War who ordered a costly attack.”16
A few months later, Duranty wrote a colleague that “the ‘famine’ is mostly bunk” and later that year would go on to write columns with titles like “Soviet Is Winning Faith of Peasants,” “Members Enriched in Soviet Commune,” and “Abundance Found in North Caucasus.”17
The reality was quite different. No one knows the precise number of people who died. In his book, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine, Robert Conquest estimates that eleven million people died of starvation in 1932–33 and that seven million of those deaths were in the Ukraine.18 Most other estimates vary between seven and fourteen million lives lost. This was a predictable consequence of Stalin’s policies of agricultural collectivization and forced industrialization.
In a capitalist economy, rising agricultural productivity leads to industrialization. When increases in farm productivity outpace increased demands for food, fewer workers are needed on the farms. Slowly but surely, farm workers find better-paying opportunities in the growing, industrializing cities.
Stalin’s economic plan of collectivizing agriculture, exiling Russia’s most productive farmers into gulag labor camps, and forcing rural workers into cities to work in state-run industries was a predictable catastrophe. Food production plummeted, and Communist planners gave priority to feeding party members and urban workers, leaving peasants to starve. Communist regimes, from Stalin’s to Mao’s, have repeatedly followed this disastrous course.19
Bob brought up one of the craziest columns in the New York Times’ Red Century series entitled, “Why Women Had Better Sex Under Socialism.”20 The author, Kristen Ghodsee, cited a 1990 study finding that East German women had twice the number of orgasms as West German women. Apparently, easygoing socialism lent itself to romance while dog-eat-dog capitalism left women too tired to enjoy a healthy sex life. Or so the argument goes.
Francine du Plessix Gray’s book, Soviet Women: Walking the Tightrope, paints a rather different picture. Gray interviewed hundreds of Soviet women in the late 1980s. Rather than relaxed women enjoying sex thanks to socialism, as the New York Times describes, she found women who were worn out, often from working in physically demanding jobs while still trying to manage their homes and children.
The Bolshevik government declared women’s emancipation and employment as one of its goals and passed laws to enforce equal pay for equal work. The reality, Gray found, was quite different. Women earned only about two-thirds of what men did, despite being better educated. Meanwhile, they performed demanding physical labor, the kind usually done by men in market economies. Ninety-eight percent of the janitors and street cleaners in the Soviet Union were women, as well as one-third of railroad workers, and more than two-thirds of highway construction crews and warehouse workers.21
Gray noted that while American feminists did not want to be “stuck at home” and were “striving for the right to work in coal mines, firefighting units, police brigades,” and other male-dominated occupations, Soviet women were put into these and other arduous jobs, and by the late 1980s, after seventy years of Communism, wanted to be freed from them.22
If anything, Soviet women in the 1980s were overworked, and they had a lower standard of living, worse health care, and far more limited options for contraception than women in capitalist countries. A doctor who ran a maternity clinic explained that “unfortunately our condoms are of wretched quality, and the production does not equal the demand . . . all this contributes to the tragic amounts of deaths we’ve had from illegal abortions, of which one out of five is fatal.”23
It’s not just that condoms were in short supply. Only 18 percent of women used any method of birth control, and only 5 percent used a modern method, such as the pill or an IUD.24 As a result, Soviet women had an astounding number of abortions. The Soviet gynecologist Archil Khomassuridze estimated that women in the Soviet Union had between five and eight abortions for each birth.25
The Soviet Ministry of Health estimated that there were between two and three abortions for each birth, and even that was five to six times higher than the rate in the United States at the time. But the Ministry of Health statistics only accounted for legal abortions, whereas Khomassuridze was including illegal abortions. His estimates are closer to the United Nations numbers.26
Why would women pay bribes for illegal abortions when legal ones were free? Although free, the government-provided ones were gruesome. Olga Lipovskaya, who had two children and seven abortions and was an editor for a feminist magazine, described the process to Gray:
You go into a hall splattered with blood where two doctors are aborting seven or eight women at the same time; they’re usually very rough and rude, shouting at you about keeping your legs wide open et cetera . . . if you’re lucky they give you a little sedative, mostly Valium. Then it’s your turn to stagger out to the resting room, where you’re not allowed to spend more than two hours because the production line, you see, is always very busy.27
None of this sounds good for women. But what about the better sex part? According to Dr. Khomassuridze, 70 percent of Soviet women had never had an orgasm and “over half of the Soviet women polled outrightly state that they detest sexual contact.”28
When Gray interviewed Dr. Lev Shcheglov, a sexologist in Leningrad, he explained how cultural factors coupled with the socialist system led to bad sex for women:
Soviet women may well have the highest rate of culturally repressed orgasm in the world. . . . Look, what kind of orgasms do you expect in a society which, on top of all the shame we’ve loaded on sex, lived for decades in communal apartments? I have one couple for whom I’ve found no solutions; the mother-in-law still sleeps behind a screen in the same room, the young wife can’t allow herself to make one moan, one cry. . . . How, how to make love that way . . . the mother-in-law lying there hearing every creak of the bedding.29
The Soviet socialists promised equality and a better life for women, but just like they failed to deliver on promises of general prosperity and economic equality, it seems that they failed to deliver in the bedroom too.
After downing a few more vodkas, we packed it in for the night so we could get up for our flight the next morning. We flew to Kiev at what Bob called “some stupid-early hour of the morning” to attend the annual meeting of the Economic Freedom Network (EFN), and since he was more awake than I was, I’ll let him tell you about Kiev and our follow-on trip to Georgia.
* * *
Thanks, Ben—now maybe we can get some serious economic content into this book. Let me start by saying that the Economic Freedom Network is a regular meeting of academics and policy analysts who work with, and promote, the economic freedom index published in the annual Economic Freedom of the World report. This particular meeting attracted about two dozen people from about as many countries to talk about the index and the research that is being done with it.
We were hosted in Kiev by the Bendukidze Free Market Center, a newly formed Ukrainian think tank named after Kakha Bendukidze, a statesman who championed liberal reforms in Georgia. Bendukidze was encouraging similar reforms in the Ukraine at the time of his premature death in 2014.
For twenty-five years I’ve attended meetings like this, answering questions about the economic freedom index and hearing stories from economists who sometimes face government repression and threats. At this meeting, Jaroslav Romanchuk, an economist from Belarus, mentioned that iPhones are banned from his office, because “You can’t take the battery out of an iPhone—and we have to do that so the government can’t know our whereabouts.” The Ukrainians—none of whom, I noticed, had iPhones—nodded knowingly.
Jaroslav, who served in the Soviet military and is now in his early fifties, is the president of the Scientific Research Mises Center. In the early 1990s, he participated in a student exchange program and came to the United States. A fellow student gave him a copy of Atlas Shrugged. He sent in the card that came with the book to the Ayn Rand Institute, which then sent him ten more books, including Human Action, by Ludwig von Mises. That’s how Jaroslav learned about free-market economics and classical liberal ideas, which he found not only interesting but convincing.
He half-joked to us that Soviet socialism didn’t collapse—it just shrank into Belarus. He might be right. Like North Korea and Cuba, Belarus is one of the few countries where I can’t find enough reliable data to rank it in my index. He also told us how poorly women were treated in the Soviet Union, which, for all its vaunted feminism, was a totalitarian state—neither men nor women could escape its repression. Ben asked Jaroslav if he missed anything about the Soviet days. He got a pretty blunt answer: “No. There was nothing good about the Soviet Union. Everything was bad. The army even sent me to Siberia.”
Aside from the few breaks in the conference schedule, we had little time for on-the-ground research. After the conference ended, we strolled the streets of Kiev, more in search of a cold beer than more socialism stories, but we couldn’t help but comment on how busy people seemed.
Economically speaking, Ukraine is not doing well. It ranks 149th out of 159 countries on the economic freedom index, lower even than Russia (100th). Its estimated average income is $2,100 per person, which is only about 4 percent of the U.S. average. Kiev seemed prosperous, but Kiev is the exception, because Kiev, like Moscow, is a capital city. While the Ukrainian economic reality is probably better than the official figure, there’s no question that Ukraine is very poor. The Ukrainian government is corrupt, and it centers a monopolistic economy on benefiting the elites who live in the grand old city of Kiev.
After the fall of the Soviet Union, vast numbers of state-owned assets, ranging from residential buildings to huge industrial factory complexes, needed to be sold off to private owners. The so-called oligarchs, connected friends to the new leadership and old-fashioned mobsters alike, swept in to grab the best assets at rock-bottom prices.
Once the oligarchs got ownership of these state assets, many successfully lobbied to maintain the same monopoly status the firms had enjoyed in Soviet times. State-owned monopolies were replaced with privately owned monopolies. It’s understandable that so many Ukrainians felt betrayed after independence.
Kiev seemed prosperous because it is the home of the oligarchs and their minions. We didn’t have time to survey the impoverished hinterlands, so we had to be content with surveying central Kiev from fancy bars and restaurants. On our last evening in Kiev, we went to a ridiculously fancy Ukrainian restaurant in an upscale shopping mall in the city center. The mall was next to Independence Square, where demonstrators violently protested the pro-Russian government in 2014. This ultimately led to the installation of the current anti-Russian government. Rows of flowers and pictures of the dead protestors line the square to this day.
Alas, they appear to have died in vain. The new government, while anti-Russian, is arguably as corrupt and authoritarian as the old one, and the local liberals are afraid not only for the country but for themselves personally.
Mikheil Saakashvili (or Misha, as he is called) is the former president of Georgia, and he joined our group for dinner. Since leaving Georgia, he has led the liberal opposition to the current Ukrainian government. Just before Ben and I arrived in Kiev, the Ukrainian government had revoked Misha’s visa, only to return it to him when the incident became a media story. A few weeks after our visit, Saakashvili was accused of colluding with the Russians to undermine the Ukrainian government, arrested, and deported—which was ridiculous, because Misha favors Putin about as much as Ben favors prohibition.
Members of the Economic Freedom Network were joined by former Georgian president Mikheil Saakashvili during a nice meal in Kiev. Saakashvili, who wants to promote liberal reform in Ukraine, was arrested and deported by the authoritarian Ukrainian government shortly after our visit.
But truth doesn’t much matter when a socialist government declares you an enemy of the people. When George Orwell wrote his dystopian novel 1984, it is said that he had the BBC in mind, but he also had Soviet Communism in mind. And for all the “privatization” that has taken place in Russia and Ukraine, both of these countries suffer from a big Communist hangover.