Socialism Reexplained: Age of Reason to Cold War
Anirudh Parthasarathy, 13
History of Socialism
In order to understand socialism as a whole, we have to understand how nineteenth century capitalism worked, the critiques of uncontrolled capitalism, and the reasoning behind the call for a more equitable economic system that eventually led to the birth of both socialism and communism.
In the eighteenth and nineteenth centuries, feudalism and absolute monarchism were abolished with people wanting more liberty, self-determination, democracy, and individualism. These ideals started becoming popular during the Enlightenment of the seventeenth and eighteenth centuries, which in turn led to the Age of Reason, French Absolutism, and English Constitutionalism. In England, eventually, people were tired of being subjugated by an authoritarian government. Whether the oppressors were a monarch, members of an aristocracy, or even the parliament and government officials, the British people wanted true liberty, eventually leading to a revolution that destroyed the feudal system. England became the first democratic/republican and capitalist country the world had seen since antiquity.
Many people probably hoped this new system of governance would be better than the anti-humanistic authoritarian feudal system. They were wrong. England practiced a form of uncontrolled libertarian capitalism in which there was no government intervention. Because of this, nineteenth century England had a small, extremely wealthy capitalist class who owned all the organizations and economic resources—such as land and capital—while the majority were an extremely poor working class who worked very low-paying jobs with terrible conditions. The workers often worked in monotonous jobs for long hours and with wages so low they lived in extreme poverty, while the capitalist class got all the profits and luxury derived from the hard work of the workers!
This extreme inequality frustrated many people including many intellectuals/philosophers, who became the first socialists. Some of the very first socialists were known as utopian socialists. Such socialists advocated for things like collective ownership of the means of production and enterprises, government intervention (or sometimes even central planning of the economy and of production), solidarity among the working class, a more equitable distribution of wealth, and general empowerment of workers. Another group called the chartists advocated for universal male suffrage (not nearly as impressive as universal suffrage in which females also have a vote). Utopian socialism started with Henri de Saint Simon and then continued with Charles Fourier, Pierre Joseph Proudhon (one of the first anarchists and one who declared “property is theft”), Pierre Leroux, and Robert Owen. Another more far-left brand of socialism called revolutionary socialism believed that rather than creating a socialist system through the cooperation of the workforce, government, and the wealthy, it was up to the workers to launch a revolution in order to completely overthrow the capitalist government and replace it with a socialist system. Communism is a type of revolutionary socialism, but communism and revolutionary socialism aren’t the same because there are other types of revolutionary socialism, some of which have anarchist ideals.
A prominent socialist community was the Paris Commune created in 1871. The Paris Commune was designed to benefit the poor and working class over the wealthy. The Paris Commune secularized politics and education, provided subsidized food and housing, created a minimum wage, required private firms to have a delegation elected by the workers, recognized freedom of the press, and made all people legally equal. However, the Paris Commune only lasted for two months and ten days before it was crushed.
Despite all the confusion and varying ideas on how to implement socialism, all those socialists were opposed to capitalism and believed the economic system was fundamentally doomed. One problem they believed capitalism had is its competitive nature which led to the continual driving down of profits.
For example, suppose one business sells yogurt at $10 while a different business is willing to sell yogurt with the same or perhaps better quality at the much cheaper price of $7. Most people would buy from the cheaper business. The Socialists believed that eventually competition would lead to a decrease in profits to a level that businesses could barely eke out a profit. They also argued that businesses competed to sell their products at the same time workers competed to sell their labor. Socialists argued that this competition among workers was what caused workers to be paid only what they needed in order to afford the most basic food and housing and nothing more. They pointed out that as businesses started making less profits, they’d compensate by paying the workers even less wages until eventually only the most essential workers would be kept with the rest being laid off.
Eventually, businesses that weren't able to keep up would go out of business, causing even more unemployment among both the working and capitalist classes. At this point, socialists believed that either serious reforms or an outright revolution were needed to end capitalism and usher in an era of socialism. Among other reasons, this hasn’t happened in practice in the west because capitalism has been reformed to include elements of welfare and regulation, which has helped reduce inequality.
But socialism is unsustainable over time.
Drawbacks of Socialism
Overall, proponents of socialism argue that it leads to equality, economic security, production for use rather than profit, and the kind of system in which people selflessly contribute to society according to their ability and receive all their needs. As a famous socialist slogan says, “From each according to their ability, to each according to their needs”. However, critics of socialism argue that the system is based on faulty principles and is too utopian to actually happen, and that ultimately the inherent inefficiencies of socialism will lead to major economic problems, with socialism suffering mainly from the motivation and knowledge problem.
First, we must understand the motivation problem. One major problem with socialism is that it doesn’t truly reward people with tangible rewards for going beyond the minimum. For example, most people aren’t JUST working in their jobs because they enjoy it. Deep inside, almost everyone wants to be rewarded! Sure, people can earn more money as they work physically harder, but people wouldn't be rewarded for their creativity, for making a new discovery, for innovating, for creating a more efficient energy source or a more efficient transportation vehicle, or a new medicine, or even for working in a difficult position such as a computer engineer or possibly in a dangerous position such as a skyscraper washer or a doctor.
Socialist economies can’t reward such activity without creating income inequality and therefore choose not to. This same problem also applies to the managers and even government officials. Since profits are not a priority in production, the business managers and government officials responsible for both production and possibly even deciding the central plan have little to no motivation to contribute more than what is required to secure their own place. They have little motivation to make comfortable housing, to cook tasty or healthy food, to build good quality cars, to make good television, or even to adjust prices.
Socialism also often leads to high corruption. Politicians acting in their political self-interest can lead to power struggles that often impose harmful social costs. After all, it was a power struggle at the very top that started the Cultural Revolution! And many times, in socialism, political motivations are prioritized over basic needs.
The motivation problem of socialism even includes what’s known as the tragedy of the commons. Since under socialism all the economic resources and infrastructure are owned collectively and operated by the government, these things are universally accessible to the general public, which can lead to everyone using it without exclusion. Because of this, everyone tends to extract as much value as they can from any given resource out of fear that it won’t be available to them later, which leads to the expedient draining of all resources and infrastructure, while nobody bothers to invest in preserving them. Thus, economic resources and infrastructure tend to break down under socialism.
Another equally serious critique of socialism is the calculation problem. Critics such as Ludwig von Mises argue that socialism creates a largely inefficient bureaucracy that can’t adequately react to market cues. Under socialism, everyone is solely reliant on the government for everything from food to cars to even their electronics!! And, deciding the pricing levels of production, not to mention allocation, is a mountainous task.
Most importantly, the economy is so complicated and there are so very many variables influencing demand. Many of these variables are also nearly impossible to predict in the long term. In market economies, business owners don’t need to perform strenuous economic calculations because market forces—such as the interaction of supply and demand as well as market prices for various objects—drive production allocation and pricing levels. Under socialism, without free markets, such market forces don’t emerge naturally and the government has to analyze enormous amounts of data at macro and micro levels before making any one choice for production.
Essentially, it’s almost impossible to make economic decisions with so many complex variables because the smallest mistake can lead to huge consequences. For example, power cuts can occur due to there not being enough working power plants, or certain people might not receive water because those resources were spent elsewhere. Ultimately, critics predict the motivation and knowledge problem under socialism will kill the economy.
As you can see, socialism and capitalism are almost diametrically opposed economic systems. However, despite each side claiming the other isn’t efficient, most of the time, capitalism and socialism coexist in the form of a mixed economy.
A mixed economy is an economic system which, like its name says, is a mixture of different economic systems. Almost no modern day country is purely capitalist, purely socialist, or even purely communist. The most capitalist countries are Singapore and Hong Kong, the most socialist countries are Cuba and North Korea, and the most communist countries are Cuba and China.
Throughout the 20th century (especially near its end), nearly all countries realized that pure uncontrolled capitalism and pure centrally planned state socialism/communism were unsustainable in the long run. One right-wing economist named Hans Hermann Hoppe argued that ultimately all economic systems and ideologies are subsets of two main economic systems—capitalism and socialism—and that every country practices a mix of these two economic systems. While he does make some very good points, almost all economic systems from libertarian capitalism to state capitalism, and market/democratic socialism all the way to communism, can be traced to either capitalism and/or socialism. However, not all countries are mixed economies. For example, late eighteenth and early nineteenth century Britain and America practiced pure libertarian capitalism, while the Soviet Union, Maoist China, and Cuba practice[d] pure communism.
Socialism in Russia
When most people think of socialism, we think of communism, we think of totalitarian single-party dictatorships, we think of government ownership of essentially all the formal organizations and productive resources, we think of the Eastern Bloc, we think of the Cold War, we think of the Berlin Wall, we think of economic failure, of large famines, of people lining up for food, and, of course, we think of the former Soviet Union, China under Mao Zedong, Cuba under Castro, and North Korea.
Because of this, socialism is an extremely heated and frankly controversial word in today’s politics. Identifying as or to even have ideas leaning towards socialism, communism, or even liberalism (which is center left) can make certain people hate you and others love you. But this left-right divide is more than just an ideological battle. It has some very real history behind it. It’s the history of an ideology that was hostile towards individual liberties and economic and personal freedom. An ideology that seemed promising at first, rivaling the liberal democratic West in economic and military strength until the economic system faltered due to high amounts of stagnation, low productivity, mass poverty, and high levels of political violence that eventually got so bad in 1989-1991 that the citizens of the Eastern Bloc revolted, breaking a status quo that existed for the majority of the twentieth century. Today, we call this event the collapse of the Eastern Bloc, the revolutions of 1989, the fall of communism, or the fall of socialism.
It all started towards the end of World War I. World War I was a long, exhausting, devastating, and quite meaningless war. However, Russia was hit especially hard. It’s ruler, the tzar, wasn’t exactly popular among the Russian people. The last tzar, Nicholas II, failed to appeal to the Russians, who were angered by Russia’s participation in World War I. It led to large shortages and poverty at home. The Russians were also angry about a lack of land reform redistributing land to the peasants.
In the Russian revolution, the tzar was overthrown, killed, and replaced with a provisional government, who were then in turn overthrown by the Bolsheviks and its Red Army. After this, a coalition of people who opposed the communist party called the White Army fought an extremely brutal, bloody civil war against the Red Army. This war is called the Russian Civil War. The Red Army won, and the Soviet Union was established.
The Soviet Union was governed by the Marxist brand of revolutionary socialism called communism. However, its new leader, Lenin, was just as horrible as his predecessors. While Lenin did redistribute all the land to the peasants after all the landlords and aristocracy either fled or were executed, during the Russian civil war, Lenin and the other Bolsheviks instituted war communism. The Bolshevik regime took complete control of the economy, nationalizing all the country’s industries. Lenin also ordered peasants to pay high amounts of their produce to him for little to no pay in order to feed the soldiers and sell the produce abroad to raise money.
However, the peasants were mad about this undemocratic weakening of their property rights as well as the coercion by the central government to practically give away the harvest they had worked hard to produce. Thus, crop production fell dramatically, triggering massive famines, most notably the Russian famine of 1921, which alone killed five million people!
This time was also plagued with violence. Now that Russia had become a communist nation, the peasants began to use this as an opportunity to finally take out long-held anger against the wealthy members of the aristocracy. Lenin channeled this anger to launch a despicable program of systematic murder called the Red Terror. You can tell it’s bad news right from its name.
Lenin created a police state in which police agencies were given the privilege to arrest and execute people as they saw fit without even having trials! People were arrested and sent to Slave labor camps called GULAGs where they were tortured and executed for showing dissent, all due to vague suspicions, for being outed, or even just being at the wrong place at the wrong time! Lenin knew what was going on and how bad it was, but he kept the Red Terror going anyway! Around 500,000 people died.
After the Russian civil war ended and the Soviet Union was fully established and stable, Lenin relaxed the iron fist rule of war communism. After this, in order to bring the economy back from economic ruin, Lenin established the New Economic Policy. This new policy allowed for private ownership and semi-private markets as well as private ownership of small businesses. Farmers were now able to coordinate production, allocation, and pricing levels in semi-private agricultural markets. This would inevitably lead to income inequality as some farmers would have better luck than others. The new economic policy also led to small industrial and retail businesses such as tailors, bakeries, furniture makers, and retail shops.
There also came a class of brokers called NEPmen who connected the urban and rural workers. Such NEPmen would buy the crops from farmers and sell them to bakers and millers. Many NEPmen, successful business owners, and successful farmers were all able to accumulate in wealth. This accumulation distressed the Bolsheviks who, as communists, wanted to create a society based on equality and government ownership.
Irrespective of the communist party’s skepticism, many people took advantage of the NEP in order to have political and intellectual debate, and to focus on their own individualism and creativity. For example, Sergei Eisenstein was radically transforming film making and Kasimir Malevich was making prominent contributions to architecture. There was a lot of experimentation, new thinking, and debate during this time. Two people were even writing modern poetry! However, this openness would not last for long. When Lenin died in early 1924, a power struggle began in which the Bolsheviks developed two separate wings. The left opposition was led by Leon Trotsky and the right opposition was led by Nikolai Bukharin. This conflict among the two opposing Bolshevik groups was called the great industrialization debate.
The right opposition believed that the New Economic Policy should continue for decades to come. Bukharin, who was one of the most knowledgeable Bolsheviks about economics, claimed that the Soviet Union should “shuffle towards true communism on the back of a Mule”, take it slow, and not hastily speed up. The left opposition, however, argued that it was already time to advance towards true communism. They argued that wealth inequality was emerging and that farm prices were increasing, and that eventually the “kulaks” (the name the communists gave for wealthy farmers) would keep getting richer, gaining wealth and power until they overthrew the communist party and created a capitalist society. They also argued that Russia was behind the rest of the World and that as a lone communist country surrounded by capitalist countries, the Soviet Union didn’t have time to wait for the slow, gradual advancement of market economies; they needed to speed up the industrialization process through central planning in order to create a military strong enough to fend off its many enemies.
However, there was a third party both sides were underestimating. Lenin put him in charge as the general secretary, a position both sides discounted.
Stalin’s Rise to Power
Lenin had made Stalin the general secretary, a position which at that time most people didn’t take very seriously. He was heavily underestimated and wasn’t nearly as popular as the other major intellectuals and theoreticians such as Trotsky and Bukharin. And, he wasn’t even an economist, philosopher, intellectual, or theoretician. However, he was extremely cunning and a master of infighting and manipulation, and he used his position to place his political allies in high important positions and offices that offered food, housing, and luxuries that the general populace didn’t have access to.
In this way, Stalin made his appointees beholden to him and demanded their complete loyalty. He also took advantage of the fact that he wasn’t very well known or popular, with people often underestimating his skill and ambition. Trotsky was the most popular Bolshevik after Lenin, had a good reputation among communists both at home and abroad, and was a major figure in the Bolshevik revolution. Stalin therefore decided to target him, pretending to side with Bukharin and the right. With the help of the right opposition, Stalin isolated and exiled Trotsky. While in Mexico, Trotsky was assassinated by members of the NKVD, one of the Soviet Union’s secret police agencies.
By removing his biggest rival, Stalin suddenly had almost complete control over the direction of the Soviet Union! Using this newfound power, Stalin would begin his horrible, cruel reign that would begin with collectivization, and that would provide a template for nearly all communist nations in Eastern Europe, Asia, and Cuba. Stalin’s ultimate goal for the Soviet Union was to create a communist nation that could rival great powers such as the USA and Great Britain. To achieve this goal, Stalin focused on heavy industry to rapidly advance the nation and rocket it from an agrarian society all the way to the Socialist mode of production. In order to achieve this goal, Stalin sought to advance agriculture through collectivization, in which farmers suddenly lost their land and instead had to live and work on state farms or collective farms. This collectivization also provided objectives required for industrialization.
The farms had to provide food for factory workers as factory labor was hard and taxing work, requiring high muscular strength. It also served to provide food to farmers who would join the industrial workforce. In essence, collective farm workers had to provide more food to more workers who would join the industry. The collective farms also had to provide raw materials required for production. For example, collective farms had to provide wool which would then be used to produce more sophisticated clothing.
Aside from Trotsky, other opponents such as Nikolai Bukharin, Grigory Zinoviev, and Lev Kamenev, who would oppose Stalin in the wake of the collectivization, would all be purged from the party.
At this point, Stalin had complete control over the country economically, socially, and politically. No dissent would be tolerated, there would be no independent media, no checks and balances, no political pluralism, and not even any independent cultural institutions. Everyone was totally and completely subservient until the Gorbachev era.
Initially, as they had lost significant political and military personnel in Stalin’s purges, the Soviet Union was unprepared and suffered heavy losses when Hitler declared war on them. However, as Nazi forces began occupying parts of the Soviet Union and invaded Stalingrad, Stalin ordered the soldiers to defend the city at all costs. Any soldier who tried to spread panic or flee was killed or executed. As the Red Army drove away Nazi forces from the Soviet Union, with their newfound strength, they eventually liberated Eastern Europe!
By the end of world war II, all the territories of the axis countries were divided among the allies. Countries liberated by America such as West Germany, South Korea, and Japan would go towards America, who would attempt to establish democracy and, arguably, successfully manage to rid West Germany and Japan of fascist authoritarian elements and transform them into prosperous, modern, thriving democracies. Eastern European countries such as Poland, Hungary, Yugoslavia, Albania, East Germany, and North Korea would go to the Soviet Union, which would then establish communist governments in each of these countries.
The Cold War had begun.
Now that the Cold War had begun, both the Soviet Union and United States wanted to get more allies. America wanted to rally more countries towards liberal democracy, while the Soviet Union wanted to rally more countries towards communism. The Western Bloc countries under the American sphere of influence formed a military alliance called NATO, an acronym for the North Atlantic Treaty Organization. The purpose of the alliance, as stated by its first secretary general, Hastings Ismay, was to “Keep America in, Russia out, and Germany down”. The alliance formed a collective military and if one NATO country was attacked, all NATO countries would rush to the country’s aid, therefore creating a defense against the Soviet Union.
Countries that joined NATO initially included the United States and Great Britain, France, Norway, Iceland, Denmark, Canada, Luxembourg, Italy, Portugal, Holland, and Belgium. This collective military structure gave a stronger defense against the USSR, provided military support to smaller countries now defended by larger countries such as the United States and the United Kingdom, and allowed countries a lesser need to spend large amounts of money and economic resources on the military, as NATO provided a collective military funded by all the member countries. More countries would join NATO later, such as Greece and Turkey in 1952, and West Germany in 1955.
In retaliation to NATO, the Soviet Union now formed its own socialist equivalent of NATO called the Warsaw Pact, which was dominated by the USSR. The Warsaw Pact members included Poland, Hungary, Czechoslovakia, Romania, East Germany, Albania, Bulgaria, and, obviously, the Soviet Union. This created a counterbalance to NATO because if any of the Eastern European nations were attacked, all the Warsaw Pact nations would defend that country. The Warsaw Pact was also a tool used by the USSR in order to crush dissent within the Eastern Bloc.
For example, when the Hungarians and Poles staged uprisings against Soviet control over their countries, and the Hungarian Government began to desire autonomy from the USSR, Warsaw Pact troops were sent to crush such uprisings. Another example was the Prague spring in 1968.
In 1949, the same year NATO was formed, the Kuomintang was overthrown, and a communist government was established in China, causing fear among the Western Bloc. A year later, North Korean dictator Kim Il Sung declared war on South Korea, seeking to reunify the Korean peninsula under North Korea’s socialist regime. North Korea took control of virtually all of South Korea, including its capital, Seoul, leaving only Pusan. Harry Truman was frightened this would lead to the spread of communism, which he wanted to contain. In response, Truman pushed a resolution through the United Nations security council to order North Korea to back off.
When North Korea refused, Truman sent a United Nations army comprised of sixteen nations and commanded by General Douglas McArthur. The army held a defense perimeter in front of Pusan to protect it from North Korean soldiers until reinforcements arrived. As more soldiers were sent to Pusan to fight in the Korean War, the UN army advanced beyond Pusan, driving away North Korean soldiers all the way to the border and recapturing all of South Korea. After this, Macarthur wanted to go beyond the objective of containment, and capture North Korea for South Korea. Truman agreed, despite being afraid of a Chinese or Soviet response. Eventually, nearly all of North Korea, including its capital Pyongyang, was captured by South Korean and UN troops, all the way up to the border with China.
China, which felt threatened, sent troops to fight on the side of North Korea, driving back the UN and South Korean soldiers. Eventually, all of North Korea and even Seoul was captured by Chinese and North Korean troops! MacArthur wanted to use the atom bomb, but Truman refused, wanting to go back to a policy of containment. When MacArthur complained, he was fired. UN and South Korean soldiers recaptured Seoul and once again drove back North Korean soldiers to the border. After this, a stalemate was created, and peace talks started. However, the peace talks didn’t work out so well and fighting continued; American air force pilots fought Soviet air force pilots by pretending to be Chinese air force pilots! These air fights were the main feature of the last few months of the Korean war.
On March 15, 1953, nearing the end of the Korean War, Joseph Stalin died of a stroke just after he ordered the head of the secret police, Livrenti Bariah, to carry out another purge of the communist party. This purge never happened due to Stalin’s death. After Stalin’s death, a power struggle emerged over who would be the next leader of the Soviet Union. Ultimately, Nikita Khrushchev succeeded Stalin as the general secretary.
At the same time, Eisenhower won the presidential elections and sought an end to the Korean war. On July 27 1953, the demilitarized zone was created on the 38th parallel, creating a stalemate that has lasted all the way to the present. Since no peace treaty has been signed, the war is technically ongoing.
During the Korean war, North Korea suffered heavy losses, countless civilians were killed, and many villages, factories, and farms were destroyed. It’s estimated that nearly every important building in North Korea was destroyed. The North Koreans had had enough and were tired of being attacked. North Korea completely isolated itself from the outside world in almost every practical way, striving to be totally self-reliant economically, militarily, and ideologically. North Korea continues to be vicious towards the outside world, especially America and Japan, and internal propaganda is full of racism. Kim ll Sung, paranoid and losing trust in the USSR and China, used the Korean war and the grief North Koreans were going through to take complete control of the economy and society, utilizing cradle-to-grave propaganda. The tiniest form of dissent was punished, including up to three generations of the perpetrator's relatives.
A caste system was created that organized everyone into a social class based on their ancestors’ actions, which they virtually could not get out of. North Korea, as a socialist nation, would stick to the label of communism until 2009, when all communist phrases and references, including the word communism itself, was dropped. However, by the 1960s, despite being a part of the Eastern Bloc and an ally of the USSR, North Korea had aborted communist practices and instead began practicing an ideology called Juche, which is fascist in nature, not communist. So, if North Korea is one of the countries you use as an example to show how communism doesn’t work, think again. You’re better off referencing Cuba, the USSR, East Germany, Poland, or any other communist country. North Korea is a poor example.
In 1954, Vietnam got independence from France, and the Geneva accords was created. Like Korea, Vietnam was divided into a capitalist South and a communist North. Meanwhile, Nikita Khrushchev denounced Stalin and began a process called de-Stalinization, in which he argued Stalin’s practices were contradictory to the principles of communism and socialism. He sought to rid the Soviet Union of Stalinist practices. Many Gulag prisoners were released, and the prisons were less harsh. Many displaced ethnic groups were also allowed to leave the forced settlements and return to their homeland. Regardless, the Gulags themselves would exist until the Gorbachev era.
History of Socialism
Drawbacks of Socialism
Stalin’s Rise to Power