The horizon is not so far as we can see, but as far as we can imagine

A Great Idea About Capitalism That Was Wrong

So, back in the 80s, when I was young, green and wet behind the years, one of the great thinkers about how to help poor people was a guy named Hernando DeSoto. (Great name, aces on parents!)

DeSoto, who was mostly concerned with Latin and South America had one big idea: the reason that poor people were fucked is they didn’t have clear ownership of what they actually owned: slum dwellers didn’t own their houses or the land they sat on, peasants often didn’t own their land either, and informal bus companies and the like operated without licenses or any rights to their routes.

Because they had no clear title, they couldn’t borrow against their actual property, couldn’t sell it and move, or in general use it as an asset.

This DeSoto said (and at the time, I believed, and so did many governments and NGOs and so on) was one of the reasons they stayed poor, not only couldn’t they access capital: they couldn’t even use the capital they already really owned.

The solution was to give them that clear title, which would allow a million new businesses to bloom, and so on.

Because we live in a far more cynical age (and because I gave it away in the title!) you know this didn’t work out. What happened instead, though it took a couple decades to become obvious, is that once they had title, they could lose it: sell it, have the government take it away, go into debt (which most poor people do) and have it seized in payment of debt, etc…

If you’ve ever been real poor (in the informal economy, unbanked, no assets) you know that perhaps the only good thing about it is the ability tell collection agents (generally the scum of the Earth) to go fuck themselves. “Take me to court, I have nothing you can seize!)

DeSoto managed to remove that one sliver a silver lining, so that slum dwellers could even lose their tin shacks.

Ah, capitalism! Truly the most glorious system ever developed to concentrate wealth and power in a few hands while pretending that it’s all voluntary. At least when feudal nobles or MOngols conquered you and took everything you didn’t have to pretend it was your free choice, or something.

Realism aside (I was going to say snark, but this is just how the system is meant to work) this is what happens when we are indoctrinated into thinking that capitalism is a system designed uplift everyone, and it just happens to require concentration of wealth. It’s also what happens when we assume that the uplift actually powered by industrialization happened because of capitalism instead.

It’s hard to disentangle these two because capitalism was in power when industrialization happened and the great challenge against it (state centralized “communism”) lost (largely because it had the inferior geostrategic position, I’d suggest.) So we mix the two.

But they aren’t the same, and capitalism, to the extent it has virtues, works best when it is kept under strict control and a lot of things are kept out of the market.

I assume DeSoto was sincere (though who knows), but because he bought the myth, and sold his myth so well, he wound up hurting exactly the people he wanted to help.

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Rationality Is Not A Way Out Of Group Action Problems like Climate Change and Covid


Who Goes To Prison For America’s Crimes? The Whistleblowers.


  1. Hugh

    The inequalities of capitalism are real. The limits on it are not. It is not a workable theory because it does not describe what actually happens. It is, in fact, a justification for maintaining and even increasing the inequality of the rich and powerful. Heads they win, tails we lose. Privatize their gains, socialize their losses.

  2. Ché Pasa

    Yeah, it was the Big Idea back in the day to force individual ownership, allotments, onto the Native American tribes — and oh, what a boon it was for the looters, exploiters, and profiteers. The Indians were made (land) rich, though, weren’t they? Well, for a few minutes, maybe, less than a generation.

    The whole concept of “ownership” by an individual was alien; it was easy pickings for the (Anglo) plunderers to make off with whatever they could steal and leave the Natives even poorer than before. Magic.

    Works in the favelas and practically everywhere else, too. Think back to GW’s “ownership society” and what became of it.

    It. Is. A. Scam.

    Capitalism in a nutshell.

  3. Mark Pontin

    Ian W: ‘I assume DeSoto was sincere (though who knows)….’

    De Soto is a neoliberal whose primary influences are von Hayek and Friedman. Von Hayek personally promoted him as someone whom big-money neoliberal sponsors should back, which they did, including those in Reagan-era Washington.

    I’m sure he was sincere about the virtues of markets.

  4. someofparts

    I remember thinking micro-lending was a promising idea. I think that it too has been perverted and turned into a damaging thing.

  5. nihil obstet

    At the same time back in the eighties, economists came up with the idea of microcredit to enable poor people to become entrepreneurs and start their own businesses. After all, what does a poor person need? Debt, of course.

    There was genuine enthusiasm for a while, with the usual anecdotes of brilliant success. The UN declared 2005 the year of micro credit. Then it became evident that many of the poor, mostly women, got caught in debt traps. There are anecdotes of miserable failure. While there are some success stories, in general, microcredit does not appear positive for most borrowers.

  6. Mark Pontin

    Speaking of neoliberalism, in today’s news —

    ‘Counterproductive:’ Charles Koch calls for end to marijuana prohibition’

    ‘Billionaire Charles Koch On Why Cannabis Should Be Legal’

    In your post yesterday, Ian, you argued for the primacy of ethics over rationality. It was your own highly-circumscribed definition of rationality, but I’d another reservation. You were failing to consider just how much harm has been done by idealists — the absolutely-committed workers of the Good Intentions Paving Company, so to speak.

    A while back I commented here that the Washington politicians I’d encountered were vermin — malignant narcissists and psychopaths all. Someone then countered that if the pols were such vermin, think how evil their owners must be.

    But that’s not necessarily so. I’ve been reading about Charles Koch the last couple of years, since during the last half-century nobody has done more to re-engineer American society into its present hellscape-like configurations. Interestingly, from what I read, my take on Charles Koch was that he’s (a) highly-intelligent man and (b) an idealist, who probably absolutely believes the libertarian Hayekian ideas about markets he’s promoted so assiduously for fifty years. Furthermore, if you met him in person, you might find him a courteous, even likable gentleman.

    Since I’ve a brother who used to work at MIT — from which Koch graduated with two separate Masters degrees in nuclear and chemical engineering — and has therefore encountered Koch twice (when Koch gave money to MIT programs), I asked him if that was the case. Yes, he said, in personal interaction that was how Koch came across.

    To return to today’s topic, Hernando De Soto. I would assume that, like Charles Koch, de Soto was probably an absolutely sincere ideologue, truly believing in the ‘ethics’ and the good of the ‘market uber alles’ policies he promoted.

    Food for thought.

  7. ” the great challenge against it (state centralized “communism”) lost (to capitalism)”

    Latin America started off several times richer per person than China in 1950. India started off richer per person than China as well. Now China has longer life expectancy and is richer than both those areas.
    If Latin America and India are more “capitalist” than China that means capitalisms lost in that comparison.

    Though to be fair there isn’t many clear lines between practiced capitalism and communism. One ironic current complaint about China from America is that China isn’t enforcing enough government monopolies (patents) and is instead letting free markets a spot in the sun. Can we also call the government sending trillions and trillions of dollars and euros to fraudster banks as an example of “capitalisms”?

    The European countries and America have looted the southern world for centuries, then they pretended their theft is evidence they are “great and worthy”. I’m not aware of any countries (does Tibet count?) China looted to the tune of trillions to achieve their status.

    In the last 3 decades has China or America killed more Muslims? America killed half a million Iraqi’s in the 90’s by blocking their purchased of medicine. The killed another million in a war for oil/power. No need to even add in the deaths cause b Americas other wars and actions they already beat China in Muslim killing. China bashing is used to distract the masses from how the powerful are screwing them over.

  8. Hugh

    Charles Koch is a traditional American success story. He started with nothing but a rich daddy who built oil wells for some capitalist named Stalin. Dad returned to the US to help found radical leftist organizations like the John Birch Society, and Charles and David followed in the Old Man’s fascist/libertarian footsteps. They helped fund the astroturf Tea party and climate change denial groups. They made a fortune in the tens of billions. Who seriously cares how “nice” these dog turds are?

  9. Dan Lynch

    I was not familiar with Desoto the economist until Ian brought him to my attention, but I think Matt Bruenig’s explanation of properties rights is more enlightening — that property rights are nothing more than a “violence voucher.” Title to property means that the government will use force to defend your property. I.e. if someone owes you money, the courts will issue an order, garnish wages, put a lien on property, send the sheriff to evict, etc.. If someone trespasses on your property the government will issue a citation, and if necessary imprison the trespasser. There’s nothing “natural” about private property — without government and without violence, there would be no private property.

    When you look at it that way, capitalism is a system created by government and totally dependent on government for its very existence. Those pro free market, anti-government types have no intention of doing away with the courts and the police that protect their violence vouchers.

  10. Hugh

    OT but perhaps Oakchair can tell us how many dead Muslims he is going to spot the Chinese before he will criticize them.

    And nice move too to ignore the tens of millions of Chinese who died during the Great Leap Forward and the Cultural Revolution.

  11. Astrid

    Perhaps Hugh can tell us how many future war deads and deaths by American sanctions he’ll spot us, before he’s willing to admit that America and Americans have no business telling any other country in the world what to do, except maybe to tell Israel to stop fucking up American politics further.

    Or maybe he and Willy and Plague Species can just migrant their mindless circle jerk to Plague Species’s Substack, where they can tell each other how they are brave moral giants and the rest of us are craven genocidal Chinese Trump supporters.

  12. Astrid

    The Chinese can take their own government to account if it fails them. They can decide if its bad enough to overthrow or good enough to tolerate. In fact they’re done it twice in the last 110 years.

    They don’t need Americans who don’t understand anything about their history (or even those who do not hold American passports) to speak for them. This is the case for all the countries in the world that are not US of A. 245 years of utter fails and destroyed countries.

  13. Astrid

    Ughh, hit post too soon.

    The Chinese can take their own government to account if it fails them. They can decide if the CPC is bad enough to overthrow, in fact they’re done it twice in the last 110 years. They don’t need Americans or Anglos or Europeans and certainly not the Japanese to play their rescuers.

    They don’t need Americans who don’t understand anything about their history (or even those who do, but hold American passports) to speak for them. This is the case for all the countries in the world that are not US of A. USA has 245 years track record of utter fails and bad faith. Calling a timeout is only fair.

  14. Hugh

    The other side of Dan Lynch’s argument is taxation on property. Don’t pay the tax and the government can take the property. This makes property a kind of rental. So violence vouchers on violence vouchers.

  15. someofparts

    Speaking of Charles Koch being pleasant in person, that is pure Reagan. The big lesson we learned from Reagan is that Americans are fine with fascism as long as it comes in a pleasant package. As far as I’m concerned talking nice and doing evil is just evil with a side of gaslighting.

    Here’s what real nice looks like from someone who walks it instead of pretending to be nice to cover their stinking crimes.

  16. Ché Pasa

    Most of the ricos I’ve known have been pleasant people to be around most of the time. That pleasantness often masked a viciousness that often enough they weren’t even aware of themselves. They’d been brought up a certain way or they’d learned certain behaviors for good or ill, and that’s the way they were, not just when they were on stage but all the time. Which meant in some cases anyway, they could and would be pleasant to your face and then rip your lungs out and eat your heart if they thought you’d crossed them.

    It’s the nature of the beast.

    And yes, as Hugh says, the Koch brothers’ father made his initial pile by serving Stalin’s petroleum interests. Such a fine family!

  17. Mark Pontin

    Hugh: ‘Who seriously cares how “nice” these dog turds are?’

    Whoosh. I’m NOT suggesting we should care how “nice” our enemies are. Rather, I’m saying the following —

    [1] Sun Tzu wrote: ‘If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.’

    We do not understand our enemies.

    [2] We need to grasp that our enemies are NOT necessarily cartoon-evil Daddy Warbucks figures. On the contrary, the most significant are ideologues with a deeply held, absolutely sincere conviction that the “markets-uber-alles” ideology they’ve promoted is The Truth, to which a recalcitrant humanity must be made to submit by any means necessary. (Not least, deception: despite what they say, true neoliberals do NOT believe in democracy, free trade, or the neoclassical economists’ fatuous notion of human individuals as rational, all-knowing utility maximizers.)

    [3] Von Hayek’s ideology — of the Market as Supreme Information Processor, whereby through the independent actions of large numbers of individuals, each with limited and local knowledge, coordinated by prices that arise from decentralized processes of competition, there emerges an order beyond the capability of any human agency to achieve — actually is a persuasive, consistent intellectual construct.

    Furthermore, the Neoliberal Thought Collective has put serious intellectual work into developing so as to extend it into every realm of human life. Horrifying as this has been, the Left — since the 1980s, anyway — has had no ideology to equal it. The American ‘Left’ is particularly pitiful in this regard.

    [4] Finally, while we do not understand neoliberals, they certainly understand us. Thus, for instance, corporations’ current promotion of nominally ‘Leftist’ identitarian agendas of ‘representation’ and anti-racism, which in reality: –
    (a) create markets for factions of the proles and underclasses to compete performatively for ‘representation’ and a few corporate bones to be thrown them;
    (b) lead to absolutely nothing in the way of actual policies that would promote a more equal distribution of wealth and power.

    As the Simpsons’ joke has it —
    Homer: ‘Five white men control 60 percent of U.S. wealth.’
    Lisa: ‘That’s terrible. It should be three women and two blacks.’

  18. Hugh

    Von Hayek is just so much carnie speak to mistreat us the rubes and justify the wealthy looting us. Markets are never free. They are rigged by and for the rich. The “local” knowledge of most Individuals is either wrong or zero. Yet massed together all this ignorance is supposed to be all wise. Yeah, right. I guess that’s why financiers call it stupid money. Competition is one of those empty economic words. No one with any power or influence would dream of engaging in it. It’s usually just a reason to lay off us rubes and keep our wages low.

    “Consistent intellectual construct?” Seriously? It’s third rate BS.

  19. … one of the great thinkers about how to help poor people was a guy named Hernando DeSoto. (Great name, aces on parents!)

    Cue Obi Wan and “that’s a name I haven’t heard in a long time … “

  20. People in 1960, “How many people do those commies have to kill before you criticize N. Vietnam?”

    People in 2002, “How many people does Saddam H. have to kill before you criticize him?”

    People in 2021 who can’t seem to ever learn, “How many dead Muslim will you spot before criticizing China?”

    China’s “Great leap forward” killed far less people than America or Europe’s economic development. Does this mean your comment about ignoring deaths is you projecting or just you flailing with various poisoning the well fallacies and emotional appeals?

  21. NL

    There is something called ‘a way of life’. As President Biden said in the July 4, 2021 remarks celebrating the Independence Day: “Each day, we’re reminded there’s nothing guaranteed about our democracy, nothing guaranteed about our way of life. We have to fight for it, defend it, earn it.” Sounds almost Goethe (paraphrasing a bit): only those deserve THEIR way of life who fight for it every day. Of course, being able to live ‘our way of life’ = freedom.

    Capitalism is our way of life, and ‘our’ means ancestral, we invented and we live it. My view is this: capitalism is our American way of life. It is (quoting from memory someone else) “our and homegrown”, and we have to fight for it, because of those very reasons. Capitalism and then the American society sprung out of nowhere almost fully formed and has barely changed since the beginning in the fundamentals, e.g., private property, pursuit of individual wealth, etc. We claim on occasion that this is a universal and best economic system that all people should adopt, but this is not really true, because it is ours and no one else’s. My view is that fundamental reforms of capitalism are impossible, because it is equivalent to denying ourselves and because we really do not know and cannot imagine any other way of life. When capitalism ends, the people will end (not physically but economically, culturally, in terms of identity). The new people will have a new way of life, a new name and a new identity. They will have little affinity with us. Where does capitalism come from? Who knows: tradition, unique history, ideology, religion, etc, etc — it could be simple mental representations in our mind driven by our unique and random genetics. There is a fascinating phenomenon in the round worms (nematodes): in the same species, there are worms that live gregariously together in clumps (communism-like) and worms that live individually spread-out (capitalism-like) — the difference between the two varieties is a single mutation in a single gene. Maybe we just happened to have more of the individualistic mutations in us than the rest of world people.

  22. Thomas B Golladay

    Important break down of who is dying from Covid and why.

  23. Astrid

    I think the plus of sincere ideologues is that you typically know the rules of engagement and sometimes you can present a sufficiently persuasive case to change their minds. Some people do make it a practice to constantly question their understanding of the world and can truly change their minds. Others might be persuaded if they see a loved one struggle with their sexual identity or go through a personal bankruptcy.

    The problem is that people typically wear blinders, especially as they get older and now invested in their ideology. Plus billionaires (and even the American PMC) live such a ratified life that they never get exposed to anything disagreeable. So they never see or hear about any of the damage wrought by their shitty ideas, and what might come through are statistics that can be waived off as acceptable casualty of progress.

    As a demographic or social force, nice sincere ideologues are terrible. But they can be pleasant enough company if you steer away from certain topics.

  24. Plague Species

    China’s “Great leap forward” killed far less people than America or Europe’s economic development.

    And in that grand tradition of murderous economic development, China will ultimately kill many more than that. They will have the ignominious record. Time is not over. Not yet. But soon enough. China is the poison pill that will end it all. All those obedient lives vanquished in the tunnel makes for great, albeit tragic, metaphor.

  25. Plague Species

    The CCP are great admirers of Desoto as the following article reveals. Marx and Engels are blushing in the great beyond. But hey, at least they’re no longer impoverished agrarian peasants, right?

    Come in here dear China have a cigar, you’re never gonna die, you’re gonna make it if you try, they’re gonna love you.

    For years, China’s financial system grew rapidly, but most bank credit was allocated to state-owned enterprises. Loans were generally backed by fixed assets as collateral or government guarantees, and the proceeds were invested in new fixed capital rather than consumed. As a result, even though credit expansion was extremely fast, China’s credit growth was thought to be different in nature from the consumer debt bubbles that had produced financial institution defaults and insolvencies in developed markets when they finally burst. Corporate leverage to fund new investment was generally viewed as more stable than household leverage to fund consumption.

    What a difference five years makes. From the end of 2014 to 2019, China’s corporates added an astonishing 37.9 trillion yuan in new formal borrowing ($5.5 trillion). But China’s households joined in the party for the first time, adding 32.2 trillion yuan in debt from banks alone ($4.6 trillion). The surge in China’s household borrowing is comparable in size to the runup in US household debt in advance of the global financial crisis (although household debt was not the only factor involved in that crisis, of course). US household debt rose by $5.1 trillion from Q3 2003 to Q3 2008.

    Simply put, the structure of China’s debt has changed significantly in the last five years, and risks from both corporate and household borrowing are now prominent. There are already limits to how much new debt corporates can add, given the rise in defaults, the declining marginal returns to new credit and investment, and the rising proportion of credit used to service older debt. The historically underleveraged household balance sheets were the last frontier of China’s historic credit expansion.

  26. someofparts

    Well, this is a good look at the view from the rarefied world of dynastic wealth.

    I obviously have all the trouble in the world controlling my emotions on these topics because I see the suffering of those I know and care for all around me and it stokes my rage to a white hot pitch.

    M Pontin – Much to think about in your post. Quite helpful and much appreciated.

    So now I ask myself, what about that coherent ideology that my side of the argument lacks? Where is it to be found and what would it look like?

    For the time being I would argue against Von Hayek with something akin to the Madison papers, arguments that explicate the long-standing corruption of economic man.

    For a fully realized counter-ideology of the humanists I would start by bringing back concepts of life-affirming female divinity and work to marginalize the current worship systems that promote domination of the natural world. Maybe that is not a fully-realized ideology in a strict sense, but it might be a good start in the right direction.

  27. bruce wilder

    Von Hayek’s ideology — of the Market as Supreme Information Processor

    That was a critically important idea, according to multiple critics and historians of neoliberal thought.

    If you go back and read Hayek’s seminal paper, you will find a highly intelligent and even self-critical treatment. What made it seminal and so powerful were 1.) subsequent acceptance of a cartoon version that failed to acknowledge either subtleties or weaknesses; 2.) the absence of engagement from an intelligent left.

    Hayek himself acknowledged that actual observed prices did not have enough info to function as he suggested a theoretical market system could. No one subsequently even noticed the qualification or thought to explore why.

    Really bad ideas advance because the nominal liberal progressive opposition acts dumb.

  28. Astrid

    In terms of what wise Rick people do with their money, reading this NC linked Vanity Fair article provided me equal parts fury and schadenfreude:

    Think of how their lives could be simplified and improved if they were given the lucky ducky incomes of minimum wage workers!

  29. Hugh

    Really bad ideas advance because liberal progressives don’t challenge them, but even if they do, it’s not going to change the minds of anyone advancing them. The object is to sell them regardless because they promote an agenda.

    I also have a problem with the CYA hidden in the footnotes. So Hayek puts out this whole grand theory with an Oh BTW, it doesn’t work lost in the verbiage.

    And yes, I think the rich and politicians should be forced to live on minimum wage with dicey or no healthcare and treated as they treat us.

  30. DMC

    You want to know what the Koch’s REAL agenda is? Read up on this guy, James McGill Buchanan:

    Also reflect that Mises’ and Hayek’s views formed the economic basis for the 3rd Reich. Then reflect that 75-80% of reactionary organizations in the US are partly or wholly funded by the Kochs(136 and counting), every thing from the Cato Institute to ALEC, to Americans for Prosperity to the Heritage foundation. Then look up the term “Plutonomy” and realize that is what the .001% are striving for, via Buchanan’s blue print. A system where Property has ALL THE RIGHTS and individuals without property are not even serfs.

  31. Plague Species

    I wonder if Chairman Cao, the billionaire leader of Fuyao Glass America, is a member of the Mont Pelerin Society. If not, he should be.

    DMC, where do you believe McDonald Trump comes into play with Buchanan’s and Koch’s grand plan for society? An unexpected aberration? An expected feature?

  32. Hugh

    One of the major themes/cons in US politics and economics is the idea of equal opportunity. Its attraction is that it sounds so reasonable and defensible. I would put DeSoto’s ideas in this same general area. Make everyone an economic player. The flaw is equal opportunity doesn’t exist. As Ian points out, making a lot of little people economic players is just setting them up to be crushed.

    It’s like the old joke about George Bush: he was born on third base and thinks he hit a triple. If equal opportunity existed, he would have been lucky to have gotten into one of the lesser second tier state schools before being shipped off to Vietnam. Equal opportunity is yet another empty phrase. What we and DeSoto should be looking for is equality of results because no matter how good, smart, meritorious, whatever any of us are we are never going to make it to home plate before all those born on third base. Equal opportunity just makes the third basers feel better about their advantages.

  33. someofparts

    Okay, here’s our proper left-wing analysis contrary to Von Hayek.

    “Capital in the Twenty-First Century, published in 2013, focuses on wealth and income inequality in Europe and the US since the 18th century. The book’s central thesis is that inequality is not an accident but rather a feature of capitalism that can be reversed only through state intervention.[49] The book thus argues that unless capitalism is reformed, the very democratic order will be threatened.[49] The book reached number one on The New York Times bestselling hardcover nonfiction list from 18 May 2014.[50] Piketty offered a “possible remedy: a global tax on wealth”.[51] “

  34. Willy

    Really bad ideas advance because liberal progressives don’t challenge them…

    Partially true. They do challenge them but usually play by debate rules. The really bad ideas people know full well that they’re really bad ideas, and couldn’t care about being honestly challenged because they play to win. See the ongoing capitol insurrection investigation for examples.

  35. Hugh

    I don’t know how a global wealth tax would work. How do you get tax havens to give that up? How do you get a globally acceptable value for an asset? Who gets and collects the tax?

    In the past I have advocated national wealth and estate taxes. Establish bounties on tax cheats, confiscate undeclared and mis-declared wealth with real jail time, establish an agency to put a value on assets, prohibit or place a heavy wealth penalty on anyone changing their citizenship to avoid the tax, etc.

  36. DMC

    The part people can’t seem to get over is that Trump was only ever supposed to be the shiniest object in the room. He was supposed to be the doomed Republican to run against HRC. We’ve danced all those dances already and Trump is not really going to stand out from Presidents of the last 40 years, save stylistically. Quiet parts out loud, etc. What Buchanan had in mind does away with the state, save as enforcer of contracts and , possibly, defender of property, although that could be handled just as well by private entities. Think handful of wolves in a world of sheep.

  37. Willy

    handful of wolves in a world of sheep
    The goal of power players worldwide. What would mitigate them? A global wealth tax? But that would require a respected institution to maintain. And respected institutions are under so many wolf attacks these days that they almost seem disrespectable to even the more respectable folks.

    I realize that I repeat repeat myself. I still hope that stirring that pot will bring good ideas to the surface.

  38. “grand tradition of murderous economic development, China will ultimately kill many more than that”

    China forced America, Japan and Europe to consume all those fossil fuels? Pretending China has contributed more to climate change than America, or Europe is a nice way to absolve the guilty and blame those less guilty.

    “Marx and Engels are blushing in the great beyond. ”

    They predicted that one group would use appeal to the workers and masses to gain power and act just like the people they overthrew. They aren’t blushing, they are shaking their heads that their cynicism was accurate.

    “that inequality is not an accident but rather a feature of capitalism that can be reversed only through state intervention.”

    Wealth inequality is primary caused by power inequality of which power is something granted and enforced by governments. Marx and Engles were little interested in wealth equality but instead on power equality.

  39. Plague Species

    DMC, what about the military? The military is the government/state too and its budget is burgeoning and growing. If Koch’s ideal society is proceeding as planned, how does that explain the military which is the state by the way, or a large part of the state.

  40. Plague Species

    If Marx and Engels predicted the end result of their inspiration, perhaps they never should have published their inspiration. They should have served soup in a soup kitchen instead. If they had, China would have one third the population it has today which is still too many people.

  41. Plague Species

    If Buchanan wanted to do away with the state, then Trump is a feature, not an aberration. Trump equals the end of the state. Being a fascist through and through, the only thing left of the state would be the enforcement of wealth.

  42. Mark Pontin

    DMC wrote: ‘You want to know what the Koch’s REAL agenda is? Read up on this guy, James McGill Buchanan:

    Yes, that is correct, as far as I’ve been able to tell.

    With neoliberals, there’s always a difference between the things they say for different levels of public consumption and what they truly believe.

  43. Mark Pontin

    Yes, the article linked to has this:

    ‘I think too many people on the left have really underestimated Koch’s intelligence and his drive, and also misunderstood his motives. There’s been brilliant work by journalists, really good digging on the money trail and the Koch operations, but much of that writing seems to assume that he is doing this just because it’s going to lower his tax bill or because he wants to evade regulations, personally. I think that really misgauges the man. He is deeply ideological and has been reading almost fanatically for a very long time. I see him as someone who’s quite messianic. He’s compared himself to Martin Luther and his effort being like the Protestant Reformation. When he invested in Buchanan’s center at George Mason University, he said he wanted to “unleash the kind of force that propelled Columbus.”

  44. Mark Pontin

    DMC wrote; “Also reflect that Mises’ and Hayek’s views formed the economic basis for the 3rd Reich. Then reflect that 75-80% of reactionary organizations in the US are partly or wholly funded by the Kochs(136 and counting), every thing from the Cato Institute to ALEC, to Americans for Prosperity to the Heritage foundation.”

    Yes, to this too, ultimately. The primary influence on von Hayek’s thought was the Vienna of his youth: the go-go years after Franz Josef surrendered to the Hungarians, created the dual monarchy, and the great cultural efflorescence of Vienna occurred that preceded the Austro-Hungarian empire’s collapse.

    Two ideologies emerged after WWI from Austria in reaction to the traumatic experience of that collapse -– ideologies formulated by Austrians that then deeply damaged the rest of the world.

    Neoliberalism was one, of course. As for the other, someone once asked Ernst Hanfstaengl aka Putzi, Hitler’s confidant, what caused Hitler’s antiSemitism.

    Hanfstaengl replied: ‘Anyone who did not know Vienna before 1914 cannot understand.’ Hanfstaengl then explained that before WWI Vienna was full of beautiful people, the soldiers in their uniforms, the Hapsburg Empire’s citizens in their local traditional clothes etc and ‘then these strange people came from the East all dressed in black and speaking a strange kind of German’. These were the Orthodox Jews from Silesia, a part of the Austro-Hungarian Empire. Kaiser Franz Josef had done much to emancipate and help the Jews, so many crossed over to Vienna to start a new life.

    To further put Hitler and Nazism’s policies in their historical context, it’s necessary to understand the German situation prior to their appearance.

    In 1871, Bismarck had nationalized healthcare, making it available to all Germans, then provided old-age pensions as public social security. Child labor was abolished, public schools were provided for all children, and the Kaiser implemented worker protection laws in 1890. After WW I, the Social Democrats’ influence had remained strong; Germany had an active union membership. An official “Decree on Collective Agreements, Worker and Employees Committees and the Settlement of Labor disputes” enabled collective bargaining, legal enforcement of labor contracts as well as social security for disabled veterans, widows, and dependents. In 1918, unemployment benefits were given to all German workers.

    In the 1932 elections, the Nazi Party didn’t have an outright majority. According to the Nuremberg Trial transcripts, on January 4, 1933, German bankers and industrialists had a secret backroom deal with then-Chancellor Von Papen to make Hitler Chancellor in a coalition.
    According to banker Kurt Baron von Schröder:
    “In February 1933, as Chancellor, Hitler met with the leading German industrialists at the home of Hermann Goring. There were representatives from IG Farben, AG Siemens, BMW, coal mining magnates, Theissen Corp, AG Krupp, and others bankers, investors, and other Germans belonging to the top 1%. In this meeting, Hitler said, “Private enterprise cannot be maintained in the age of democracy.’”

    In 1934 the Nazis outlined their plan to revitalize the German economy with the reprivatization of significant industries: railways, public works project, construction, steel, and banking. Hitler guaranteed profits for the private sector; many American industrialists and bankers flocked to Germany to invest.

    The Nazis had a thorough plan for deregulation. The Nazi’s chief economist stated,” The first thing German business needs is peace and quiet. It must have a feeling of absolute legal security and must know that work and its return are guaranteed.” Likewise, businesses weren’t to be hampered by too much “regulation.” On May 2, 1933, Hitler sent his Brown Shirts to all union headquarters. Union leaders were beaten, and sent to prison or concentration camps. The Nazi party expropriated union funds –- money workers paid for union membership –- for itself. On January 20, 1934, the Nazis passed the Law Regulating National Labor, abrogating the power of the government to set minimum wages and working conditions. Employers lowered wages and benefits. Workers were banned from striking or engaging in other collective bargaining rights, and worked longer hours for lower wages. Their conditions so deteriorated that when the head of the AFL visited Nazi Germany in 1938, he compared an average worker’s life to that of a slave.

    The Nazis also privatized medicine. One of Hitler’s economists was the head of a private insurance company. These private for-profit health insurance companies immediately started to profit from Anti-Semitism. In 1934, they eliminated reimbursements for Jewish physicians, which allowed them to profit further.

    And so on. Philip K. Dick once wrote a novel whose particular ontological riff was that the Roman empire never really ended and in the 20th century people lived in an imposed illusion under the same elite, or their heirs, that had headed the Roman empire.

    That sort of science-fictional novel could be written based on our own reality, riffing on the theme: The Nazis won.

    (Though come to think of it, Dick did write his version of that, too.)

  45. Mark Pontin

    DMC wrote: ‘Then look up the term “Plutonomy” and realize that is what the .001% are striving for.’

    Yes, again. Except striving for? I’d say that they’re there, at least in the US.

  46. somecomputerguy


    Have to disagree on two counts. The Soviets didn’t lose the cold war, their system collapsed, and the west had almost nothing to do with it. I am still struck by the tone of helplessness in discussions of late Soviet infrastructure; as though train tracks were created by geology. That has serous implications for an all-in command economy.

    The Soviet system was constructed by dogmatic assholes, high on their own supposed brilliance and virtue, who very early became addicted to coercion and indifferent to democracy. The Soviet’s had elite accountability to spare, the trouble is that is was in the wrong direction. Here’s a hint; don’t shoot people for telling the truth. Making it a requirement, won’t help, if you are still shooting them.

    When your social theory starts telling you to destroy large amounts of the most valuable asset in the universe, human beings, that should tell you that your theory has passed the limits of its usefulness, and it is time to put it in a box and start using common sense and experimentation.

    The larger implications of the Soviet collapse, for alternatives to capitalism are zero; capitalism has been every bit as brutal. Marx’s replacement cost of labor constraint has been routinely ignored. Vast swaths of indigenous people were kidnapped, and simply worked to death, because it was more profitable than hiring someone. Oh, and let’s not forget the system that made their land valuable.

    Good thing about the zero implications too; my second point of disagreement; capitalism can’t be reformed. That is what the past 70 years has taught us. The New Deal reforms created the most prosperous society in human history, it was obvious to all, and they were still rebelled against, subverted, and destroyed by capitalism.

  47. Hugh

    Upside/down, I mean Oakchair, wonders if China forced the West and Japan to consume all those fossil fuels. Are we forcing China to use all those fossil fuels now?

    As for Columbus and Koch, yes, both are driven by genocidal empire-building. Still there is a huge difference in the damage they can do between being a true-believing drunk at the end of the bar and a megalomaniacal multi-billionaire fascist.

  48. bruce wilder

    Hugh: Really bad ideas advance because liberal progressives don’t challenge them, but even if they do, it’s not going to change the minds of anyone advancing them. The object is to sell them regardless because they promote an agenda.

    Yes, I think you are closer to my real point than I was: the people who play “liberal-progressives” on teevee and in op-ed pages and (especially) in academia portray “seriousness” in their rhetoric and manner, but act the part of the shill in a game of three-card monte. They may profess to differ, but choose to preferentially engage with and legitimate what are often defective or dishonest arguments.

    A great example was the way Robert Nozick [ Anarchy, State, and Utopia (1974) ] achieved fame and fortune and great establishment cred (Harvard prof, National Book award, President of the American Philosophical Association) with arguments that were usually lazy and flimsy and easily refuted, as well as being pathologically anti-social at their core.

    Milton Friedman, back in the day, was treated with a great deal of respect, which he mostly did not deserve. A lot of Friedman’s power of argument came from the way his interlocuters accepted his facile framings (e.g. the notion that there was “an issue” with the “size” of government, when any idiot should see that the issue of politics is always the distribution of risk and income, period). There are a lot of liberal econ bloggers who for years could not get enough of arguing with Tyler Cowen, who trolled them with great skill, and chose his issues and assumptions, and was often praised for abstract assertions that were flat out untrue.

  49. Astrid

    Well, considering that a good chunk of the Chinese consumption of fossil fuel goes to manufacturing for export, I would say the West and especially USA certainly played a role in the size of China’s carbon footprint. And even with that expert manufacturing footprint and infrastructure development, China’s per capita carbon footprint is less than half that off the US. And again, the US shouldn’t be dictating what other countries do on climate change, especially when it sabotaged all global efforts to limit carbon emissions.

    If Hugh actually cared about pollution and fossil fuel, maybe he could tell us what the hell he’s been doing to lower his personal carbon footprint and how he push for actual green policies in a place with the lowest hanging fruit, the USA. I admit that the latter seems pretty futile to me without a collapse and revolution (that I personal don’t look forward to, because it’ll probably kill me), but I didn’t procreate or fly long distance multiple times a year or demand fresh towels everyday or vote for anyone with a clearly anti-green voting record.

  50. nihil obstet

    I suspect that a lot of Friedman’s success comes from his embracing a world view that the professional managerial class experience. As the workers in Free to Choose‘s sewing factories compete individually, so do college students/TAs/professors. No solidarity, no sense of we’re all in this together. (Defending the profession privileges differs from defending your individual colleague.)

    The PMC has been unwilling to drop the hierarchical point of view based on a belief in the fantasy of meritocracy, and they will have to do that in order to respond solidly and nimbly to the Friedman fantasies.

  51. Hugh

    Reinhold Niebuhr in his 1932 Moral Man and Immoral Society observed that our ruling classes spent much of their time coming up with reasons to justify why they merited their bloated privileges, and why the common good just happened to coincide with whatever was good for them.

  52. “If Marx and Engels predicted the end result of their inspiration, perhaps they never should have published their inspiration. If they had, China would have one third the population which is still too many people. ”

    If you want to discuss Marx perhaps you should come back when you’ve read what he wrote.
    Can you first decide if you want to moan that China kills people or moan because they didn’t kill enough people because you can’t claim both are things you find bad.

    “Are we forcing China to use all those fossil fuels now?”

    Whining because China does something you do multiple times more of is what is called hypocrisy. I think republican’s would call it virtue signaling.

  53. someofparts

    To make the most important point last, no one can claim with a straight face that what the economy does at this point is determined by markets. If markets actually ruled, all of the too-big-to-fail banks would be good and dead by now. Instead, we have state support of the biggest financial predators at a level that would make the most ardent socialist swoon with envy.

  54. Plague Species

    No, I am not going to read Marx, or Engels. They’re now irrelevant so what’s the point. They predicted they would create monsters and they did. Serving soup in soup kitchens would have been more noble and a better use fo their time.

    You’re not comprehending. It’s not so much a matter of how many China has killed so far, it’s a matter of how many they will kill when it’s all said and done.

    Yes, America created the Golem that is China, but that Golem is now its own thing and it is set loose to devour the living planet under the aegis of prosperity.

    I’m not advocating for sanctions. I’m not telling the Chinese what to do. That is futile. What is done is done and what will be done will be done and nothing I say or do or you say or do will change that. My crticism is for posterity because posterity is all I have, we have, at this point.

  55. Plague Species

    Note the goal of the Chinese propagandists is to ensure no one criticizes China. China is so insecure and fragile in this way. It simply cannot handle criticism of any kind. So much so, it sends out armies of cyber warriors to protect an honor it does not possess and will never possess.

    I can’t wait for the Chinafication of the Taliban. This is something I wholeheartedly support considering the Taliban are scum rot knuckle-dragging cave dwellers. Hopefully the fate of the Taliban is the fate being visited upon the Uyghurs.

  56. Hugh

    Oakchair believes what he believes, and then rants about it. He invokes various rules of logic and argument randomly and which he himself doesn’t follow to criticize others. So he gives us the appearance of a common ground for discussion without actually providing or adhering to it. He’s just a different kind of troll, but still a troll.

  57. somecomputerguy

    I thought I should try to detail my disagreement on geopolitics and the USSR.
    I am rambling and long-winded here, but hopefully there is something useful.

    I am not an expert. My background is after I left the military, I was taking undergraduate courses about the soviet and east European politics and economics from about ’89 through ’94. My view is far from being the last word on anything. If you have an interest in that period, “The Americans” is really good, except for the body count.

    I have always wanted to ask the Soviets why they never built a national highway system. Google ‘Amur Highway’ if you like; it’s the only road east and it wasn’t paved until 2004. Resources don’t matter if there are no people there to look for them, and no way to transport them if you find any.

    For that matter, in 2011 the U.S. rail system was roughly twice the track mileage of the  Soviets’, for a country a fraction of the size, after many decades of decline. 
    You read about the Soviet rail system being stressed by steadily increasing traffic on the same stock of track, as though it were a fixed natural resource, like oil or arable land. As though the premier command economy of world history was helpless. 
    One thing my teachers didn’t talk about much was the level of coercion in the Soviet system as it existed in the ’80s. They probably figured we were already getting more than enough of that already. What they talked about instead was the abundant evidence that large numbers of people supported the Soviet system because it was delivering for them. A former journalist from communist Poland told me that there were certain subjects you stayed away from, other than that it was a normal life.  By contrast, he indeed loved the land of the free. He would have loved to discuss it more but he had to shut the fuck up and get back to work. He also told me there were no television shows running 24/7 extolling the kindness, heroism, and nobility of the state security organs. No cop shows in other words.

    So, overt coercion was less important in people’s daily lives. But I suspect that part of the Soviet answer to my highway question above, would go something like this; how many people do you think want to live on a collective farm?

    Historically, Soviet leaders routinely overestimated popular resistance to their policies, underestimated the willingness of the population to endure sacrifice, used a whip when a bullhorn was all that was required. Used a level of violence that was grotesquely disproportionate to the intended objective.

    How much of the Soviet system’s failure can be laid at the feet of central planning, and how much to an incentive system incorporating that level of unnecessary, superfluous coercion? In the end not even the people who ran it wanted to live in it.

    Left to themselves, corporations grow, diversify, and internalize markets as they do so. You start with a company that makes railroad cars, and you end up the Soviet Union in miniature, in the 19th-century company town. (A chief Marxist criticism of Soviet “socialism” is that since exploitation never ceased, it is better understood as state capitalism.) Point being, if central planning is the culprit, why does it occur as a seemingly natural tendency?
    Then there is the unambiguous success of the U.S. experience with a full-on command economy just like the Soviets during WW2. Maybe there is an expiration date.

    The U.S. role in Soviet decline;
    I have a hard time believing that anything we did made more than a dent in U.S.S.R., while it existed.

    So let’s go down the list;
    Actually invading the U.S.S.R. was tried, multiple times. Japanese and Chinese border incursions on the other side of the planet, practically, were easily repelled.
    When the German army reached the outskirts of Moscow, the Soviet Union should have been finished. If it had been any other state it absolutely would have been. How did they recover? The brilliant leadership of the people who murdered most of their officer corps just before the war started? The Soviets won in spite of their political leadership. What is left other than people, resources and territory?

    All U.S. efforts to insert saboteurs or would-be insurrectionists ceased in the fifties because none of them lasted more than a week on the ground. So, subversion, tried.

    Not trading with them?
    As a rule of thumb, the larger the country, the smaller the role of foreign trade. This is because internal markets are more self-sufficient, and it is harder for outsiders to penetrate those markets. Of all the polities that have ever existed, the USSR probably had the least inherent need for trade. The Soviets bought substantial resources and technology, and easily stole what they couldn’t buy, in terms of technology. I am less knowledgeable about trade, however, problems with Soviet agriculture were surely a product of the Soviet system; Canada harvests wheat at the same latitude, and exports it.

    Sanctioning Soviet elites’ access to luxury goods and foreign cash? They weren’t “corrupt” in that sense.
    Was there a nomenklatura? A patronage system? In the U.S. we call them “mentors”. The most luxurious dacha of the highest Soviet official barely compared to an upper-upper middle-class McMansion. They got better apartments and got to shop in better stores. They didn’t get palaces and legions of servants. 
    If you want to know what the nomenklatura looked like, they looked a lot like people who run things in the United States; the sons and daughters of the people who ran things 25 years ago; the professional managerial class.
    “Corruption” wasn’t bankrupting the Soviet system by filling Swiss bank accounts. And there were norms and mores intended to counter this tendency. The Communist Party attempted to recruit bright dedicated people from diverse backgrounds, and membership was a major personal commitment, not a ticket to easy street.
    The most significant “corruption,” the systemic stuff like the black market, may have actually been helping–“lubricating” the system–compensating for deficiencies in The Plan.

    Harsh language?  Check.

    Did we fool the Soviets into over-spending on their military?

    Forget secret weapons and commandos. The kind of military capabilities that really matter (for an invasion threat) are how many tanks and ships and aircraft and soldiers you have, and where they are. 
    With a little work, the Soviets could walk right up and see everything we had that was relevant. The U.S. wasn’t exactly a challenging intelligence target.
    But on top of that, the foreign intelligence department of the KGB was simply the best espionage agency in the world. Maybe the best that has ever existed. The KGB consistently out-performed their adversaries by huge margins. They kicked everyone’s ass.

    They did it by being good at recruiting, training, and employing spies, decade after decade. In the 50’s the CIA trained infiltrators for weeks or months before parachuting them in to be captured. The Soviets trained their deep cover illegals for ten years before they deployed them.

    The only people capable of fooling the Soviets about U.S. military capabilities were the Soviets themselves.

    What’s left?

    The Soviets knew their system was in serious trouble by the mid-’70s, but made the very ominous decision to continue their high level of military spending. It is possible the Reagan administration’s military build-up deterred the Soviets from doing something desperate.

    When the Soviets tried to reform, that is when the U.S. played a role.

    After WWII, Hans Morganthau proposed that we demolish Germany’s industrial infrastructure, and plow it under, so that it would never recover. A policy of deliberate externally imposed de-industrialization called pastoralization.
    Morganthau was one of the prominent advocates of ‘Realpolitik,’ his book “Politics Among Nations”, is one of Condelliza Rice’s favorites. I stopped reading it after the page where Morganthau contrasts the wimpy idealist Chamberlain, with hard-nosed realist Churchill; Chamberlain gave away someone else’s country to avoid a war he had to believe he could win. Churchill continued a war that Britain had clearly lost.

    Ironically, no one else back then thought an initiative to turn a modern industrial country like Germany into a giant potato patch could be described as “realistic”. “Crazy” was considered a better descriptor. This is a common problem with “realist” policy initiatives (see Mearshimer’s nuclear peace). So we did the Marshall Plan instead, the logic being that ignoring the pain of a prostrate former enemy, was what had gotten us the Third Reich.

    I don’t have much patience with creative interpretations of the Marshal Plan and it’s results, by either righties (it was an unnecessary waste of money–Milton Friedman). Or lefties–that it was brutal self-serving U.S. imperialism. For the same reason I don’t take the words “the New Deal failed” seriously. The raw evidence of general prosperity before and after. We are now seventy-six years and counting without a significant European war.

    Well, who wanted to repeat stunning success? In the case of the former Soviet Union, this time ‘Morganthau’ won.

    The first Bush administration decided early on that Soviet reforms were not real, but even if they were, they were irrelevant. Regime type doesn’t matter. All nation-states are the same. This is a fundamental tenant of Realpolitik (It is also simply empirically wrong).

    There was an article in the NYT at the time about a Commerce Department initiative to buy Soviet high-tech firms (they were ahead in materials science for one), shut them down so they wouldn’t recover. I don’t know if that went anywhere. But we weren’t really in a position to impose pastoralization, so malign neglect would have to do.

    If Gorbachev had offered to make the U.S.S.R. go away, beforehand, for a price, what fraction of our defense budget would that have been worth?

    The first and only official discussion of possible aid in the wake of The Fall was of its obvious futility and impossibility. Trillions of dollars, and oceans of blood for the cold war, but now supporting democracy in Russia was just too expensive, and ridiculously unserious. Continuing cold war levels of defense spending, in the complete absence of the original threat, or for that matter, any plausible threat at all, on the other hand, was sensible and obvious.

    And it was completely at odds with another “realist” initiative; the opening to China.

    The point of Nixon’s opening to China was triangular diplomacy; we partner with China while China was weak and the Soviets were strong to balance the stronger power. Now China was surging economically, and the Soviets were dissolving as a threat, and incidentally, a lot more democratic.

    We could have had an ally. As a NATO member Russia would have had the distinction of being the only member facing a plausible external security threat (China). 

    We might at least have had a balancing partner against China. Instead, we have a nuclear-armed potential adversary–Oh, wait, I mean a second nuclear-armed potential adversary, taking account of the utter failure of autocratic engagement in China. 

    The cleverness of this escapes me.

    Clinton supported just enough assistance to pretend we were doing something. Coddling tyranny and snubbing democracy while making pretty speeches about the importance of not doing that. Phil Knight making money by shipping jobs to China was the priority.

    Then every libertarian ideologue with a degree went over there to tell the Soviets, not how a modern mixed economy really works in the real world, but their fantasy of how the U.S. economy should work if they were in charge. It was a nightmare.

    I think Vladimir Putin was a desired outcome. The limit of the ‘realist’ imagination is a weak enemy.

  58. nihil obstet

    somecomputerguy, that is interesting. When I got past the “godless Commies are hiding under your bed” phase of American propaganda, I noticed that the Soviet Union went from a virtually third world country with an impoverished illiterate population in 1914 to a world power with an educated population with adequate housing, health care, and the like by the late 1950s. The price paid by many was pretty bad, but I still wonder if it was worse that what other poor countries paid with their people when they adopted the first world’s recipe for governance.

  59. Mark Pontin

    @ somecomputerguy —

    You make intelligent points. Keep commenting here.

    As Nihil Obstet points out, the Soviet Union went from a virtually third world country with an impoverished illiterate population in 1916-18 to a world power with an educated population with adequate housing, health care, and the like by the late 1950s.

    It was a science and technology leader, too, as Sputnik and Yuri Gagarin and the presence of minds of the caliber of Andrei Sakharov’s testified to. Though, simultaneously, there was nonsense like Stalin’s promotion of Trofim Lysenko, which basically blocked molecular biology in the USSR for a generation and a half (though some of the molecular biologists didn’t get purged, but went underground in the KGB and thought up bioweapons ideas for Biopreparat, when that got rolling around 1970-71).

    But, yeah, the Russians had and have a superior education respects in many respects. Nowadays, everyone on the MIT staff who has kids, for instance, sends them to fancy private schools but still hires Russian maths tutors for them, because even US private schools are worthless in that regard.

    As far as 90s-era US administration’s mishandling of the post-USSR situation, that’s down to the usual American clownish corruption. When you dig you find out that a lot of Clinton-era policy was driven by things like rich Polish-Americans making campaign contributions.

    Likewise, the “every libertarian ideologue with a degree went over there to tell the Soviets, not how a modern mixed economy really works in the real world, but their fantasy of how the U.S. economy should work” was ultimately only a cover for the usual American short-term looting and theft.

    I do NOT think Vladimir Putin was a desired outcome from the US POV. I think the US really expected that they’d be able to continue to carry on permanently as they did in the 1990s. Because, yes, they were and are precisely that stupid and short-termist.

  60. Mark Pontin

    Sorry. I meant ‘But, yeah, the Russians had and have a superior education system in many respects.’

  61. Plague Species

    The Soviet System in the 80s was not delivering for them and had not been for quite some time. A massive “black economy” had evolved that was largely delivering for them where the Soviet system had failed to deliver. That “black economy” with its psychopathic former Gulag thugs and bandits was in a prime position to capitalize when the Soviet Union finally collapsed entirely.

    All Putin did was take the place of Wall Street in the privatization of the states assets and the management of the consequent oligarchs created by that process and created by the legitimization of the former “black economy.”

    Let me guess at the response to the WP article. It’s Jeff Bezos propaganda, right? Even though Bezos was a youthful Bozo at the time and merely an aspiring capitalist icon.

    Let’s not forget also, the Soviet Union was always helped along as is witnessed by the Kochs and their business in Russia. America’s attitude towards the Soviet Union was much like the Democrats attitude towards the Republicans, at least in the halls of governance if not the private sector and at that time there still was somewhat of a division between the two. They, the Dems, don’t want the Republicans to collapse and disappear. Instead, they want them to be a permanent foil because it helps maintain their power.

  62. Hugh

    US policy at the end of the Cold War was to keep the USSR and subsequently Russia as weak as possible while promoting at the same time the most radical and kookiest ideas of capitalism. This policy was a stupendous failure but typical. American Cold Warriors could not give up their Cold War or its goal of defeating the USSR/Russia even after the end of that war, or adapt to any new realities.

    I would just note that the US and its foreign policy Establishment learned nothing from any of this and repeated many of the same mistakes in the Iraq war and Occupation.

  63. DMC

    Mark, thanks for al the leg work fleshing out my brief little Koch “we’re through the looking glass, here..” post. You go into that expecting it to be bad but it’s just so MUCH WORSE than you would have thought. And on multiple levels.

  64. Astrid

    Mark, nihil, somecomputerguy,

    Thanks so much for the discussion on USSR. Very educational!

    I don’t know that much about 1980s/90s Russia (was sadly in thrall of all the main Neoliberal rags at the time) but my knowledge of China of that period suggests that moral corruption of the nomenklature was a significant contributor to the decline of the USSR. The intellectuals and officials saw how much better their counterparts were doing in the west and lost interest in doing their jobs. The fact that they typically couldn’t change job easily or at all meant that people get stuck in positions that made them personally unhappy. I think there was enough petty corrupting behavior that it filters down and corroded the fabric of that society. Incidentally, the worsening US job market after 2008 produces similar kinds of behavior where unhappy people stayed in jobs they hated and made everyone around them miserable, and where any efforts to improve and innovate goes out the window at most mature organizations.

    The Chinese market reforms freed up some of this energy and diverted it productively, at the cost of really high levels of corruption (as in US politics and police departments, you are not seen as a reliable official until you have engaged in career ending level of corruption so that the other corrupt officials know they can hold that over you) and a toxic low trust culture (very low regard for welfare of people outside of their personal “in” group) that they only started to really recover from in the last ten years. I think Putin and his close circle engaged in a similar project in the last twenty years to patch up the psychic damage from late Communism and the Harvard Boys. They’re still corrupt in many ways and the family members of high officials (or even mid level officials) can do remarkably well, but it’s going back to a more traditional

  65. Astrid

    So while I don’t think the US actions directly caused USSR collapse, I think that there is a competition of systems occurring in the hearts and minds of nomenklature in Communist countries. By 1980 or even 1968, the material difference for their class was clear. They stopped defending and improving their system and easily transferred their allegiance when the break came.

    The leadership of the Chinese and Vietnamese communist parties, who were always more nationalist than Marxist, were more pragmatic and lucked into this knowledge earlier in their statehood. They were also strongly anti-imperialist and thus their first interest is to become strong enough to repel traditional imperialists (including USSR for China and China for Vietnam).

  66. Astrid

    So the question of why the Chinese are so threatening to the Anglo-European oligarchy, the question is whether they fear the Chinese did to projection (of what they would do in the Chinese’s position), trying to teach a lesson to uppity non-whites (excluding select melanin endowed PMCers within their borders and honorary second class whities in Japan, ROK, ROC, Singapore, and Hong Kong) to keep the rest in line, or if they’re aware of this competition of systems, similar to what was waged 2 generations earlier, where they’re starting to lose the hearts and minds of their own nomenklature.

  67. nihil obstet

    Astrid, I don’t think there was a “competition of systems” in the hearts and minds of the Russians. The West had an unusual outpouring of cultural energy in the 60s and 70s, which appealed to young Soviets as much it did to other young people around the world. There was an increasing sense that the Soviet Union and the West could live together peacefully. Soviet leaders relaxed the ban on foreign cultural imports.

    What the leaders couldn’t do was figure out how to transition from an industrialized society to a consumer society. We can all see how distribution works through markets, but how are decisions about what to produce made in a centralized economy? The Western model depends on things that the Soviets didn’t want — poverty, employment, rationing of good things by wealth.

    The Soviet people weren’t getting the good things they could see. The leaders were caught in always praising the achievements of socialism. The distance between what was desired and what was real produced cynicism throughout the society. Gorbachev was moving to open up the society, but the West jumped in to support the less principled and competent Yeltsin. Then the Harvard boys arrived to help the Russians. It was just one more item on the list of why we ought to destroy Harvard and plow the ground with salt.

  68. Astrid


    Thanks very much! This is fascinating. I remember reading Arthur C. Clark sci-fi stories that assumed that the two sides learnt to live with each other. Even as a child, it felt like a more comforting and friendly vision than the world I actually inhabited.

    Admittedly in the 1970s and 1980s, the downsides (housing insecurity, lack of universal healthcare, lack of free post secondary education, lack of universal secure pensions, lack of guaranteed affordable childcare and eldercare) were not obvious. whereas availability of blue jeans, cars, miniskirts, and televisions must be tempting for people used to counting up their ration cards and queuing for daily goods. Funny how 30 years later, we’re doing the same thing unless we can afford Instacart or a personal shopper to wait in line for us.

    I’ve spoken with older Chinese people who speak of their first trip abroad as transformational. During the 80s, when there was some market liberalization, it was still amazing for them to see no lines and fully stocked shelves. People whose relatively comfortable lives were bounded by their monthly food vouchers and queuing for everyday goods, being able to talk into a store and use money to buy whatever they want, was remarkable. Yet it’s remarkable how long it takes for prosperity to final erode away the queuing having. Elderly Shanghai ladies are still happy to queue for small freebies like discount vegetable oil or detergent or free tickets, even though they are now easily worth more than me due to ridiculous Shanghai real estate appreciation.

    Happy to agree with you on Harvard. Actually, toss in the MIT economics department in the project. There’s a couple not terrible graduates and faculty sprinkled in there, but humanity would be better off without it. In fact, just move the MIT engineering (non-media lab) portion to Santa Barbara or Boulder and dig a big lake where Cambridge used to be.

  69. Astrid

    I probably projected far too much based on conversation with my Jewish Russian emigre friends and what I saw in China. I tend to forget that immigrants often become superpatriots in their new home and turn against their old country, especially if their previous country treated them poorly or disappointed them in some way.

    For the mainland Chinese, I think there was a very real disillusionment during and after the Cultural Revolution. Old timers talk about how much better behaved and publicly minded people were in the 1950s and 1960s, though of course that’s when they were also beating up and killing people for being landlords and counter-revolutionaries.

  70. somecomputerguy

    Plague Species,

    Great article. However, the article is telling a very coherent, straight-forward story to summarize  experiences and events in country of hundreds of millions of people, over a period of twenty years.

    Nothing that big is ever that simple. Making things easy is how you sell newspaper articles and keep your job, lurid anecdotes help as well. This is the same media complex that has made Americans afraid to let their children out.

    If it were always that bad everywhere, how could anything at all function? During the same period, the population of the USSR actually increased by 40 million people. Soviet life expectancy was still higher in 1990 than it was in 1970, didn’t nose-dive until the Soviet system collapsed, and took 20 years to recover to Soviet levels.

    What fundamentally, is “corruption” in system where there is hardly any way to express wealth? As far as I remember, the way you got important government positions corruptly was through nepotism and cronyism.

    I could be wrong, but I don’t recall any way to turn rubles into political power. I have the impression that the best you could do from crime was a semi-covert upper middle class life-style. What Soviet official turned out to be a secret millionaire? I can’t recall any. Matt Tiabbi would have a handle on this.

    I notice the Soviet cop in the article didn’t simply confiscate every penny they had as civilly-forfeited drug proceeds, the way U.S. cops commonly do now. I am pretty sure he didn’t target them because they looked poor.

    More interestingly, how is the market for funeral services in the article, in the USSR in 1990, corrupt in comparison to the market for medical services/housing/college in the U.S. right now? Because Soviet citizens weren’t “supposed” to be bankrupted by paying for those things, and we are?

    Where did the shortages that caused the corruption come from? A command economy is supposed to be a solution. That is why you fight world wars with one. The Soviet Union was built from almost nothing, and recovered from military disaster with one. They should have been able to simply redirect resources where needed. Making their own blue-jeans shouldn’t have required a famine. Why couldn’t they?

    The Soviet Union probably set back the search for alternatives to capitalism by a hundred years. I enlisted in military to oppose it. But would anyone have thought to try to reform capitalism if the USSR hadn’t existed? The Polish journalist in my earlier post was certain the answer was no.

    I am fascinated by it, but at the same time I can’t bear to read about it. The few Soviet citizens I met were outstanding people. Nobody dared hope that the cold war would end the way it did, without mushroom clouds. They did that, not us.

    When elites are facing the demise of the system that gives them power, their response is almost always to try to preserve that power at any cost. Leveling entire cities for example, or starting a diversionary war.

    Soviet elites had access to more tools and more effective tools to keep themselves in power using violence, than any other regime ever, including nuclear weapons. They also had abundant historical precedents for using those tools.  They let their system go, instead.

  71. Astrid


    Thanks so much for this!

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