Over at r/Anarcho_Capitalism, writer EpicPhil outlined several objections to my critique of Rothbard’s proposal for the dismantling of the Soviet state planned economy. The gist of his argument seems to be that my plan for reduction of hours of work was not a reasonable alternative to Rothbard’s, and that the utter collapse of the economy was, in fact, an improvement in the living standard of that nation.
This writer is making no sense.
Like Rothbard, I thought a plan of action should be undertaken quickly; but unlike Rothbard, I proposed to start at the bottom of society, not the top.
OK, fair enough.
So, I proposed a simple reform:
Reduce hours of labor by forty percent.
Huh? That’s a top down solution like Rothbards! It requires the state to decree that working hours are reduced by 40 percent.
More importantly, if working hours were reduced by 40%, then MILLIONS of people would have perished. Not only were they already perishing due to the woefully inadequate productivity of labor that existed at the time, but if that low productivity of labor was utilized on a reduced number of hours worked, then productivity would have declined even more.
The problem of the late Soviet Union was not the lack of markets, money or property rights; it was the vast accumulation of superfluous working time embedded in the economy by a rather startling increase in the productivity of labor in the decades following Stalin’s rise to power.
This statement makes it seem like the USSR was an industrial powerhouse that could afford a reduced number of hours worked. The exact opposite was the case.
Events brought Jefferey Sachs, then at Harvard University, to “advise” Boris Yeltsin on the economic policy of the new Russian government. While differing significantly from either Rothbard’s approach, and my own, I think it is fair to say, Sachs proposed a solution a magnitude closer to Rothbard’s than my own. In place of the then existing centrally planned economy, Sachs’ plan sought to establish a working market economy in one bold move.
It was a fucking disaster! — a cruel and unmitigated catastrophe for a nation of honest working people who had no inkling what was about to hit them. A crippling generational cataclysm, from which Jefferey Sachs emerged with his reputation intact, while women were reduced to prostituting themselves for food. Almost immediately the entire wealth of the nation fell into the hands of a tiny oligarchy of former managers of the old state-run economy.
The standard of living of the average Russian increased upon the collapse of communism. The writer thinks that women prostituting themselves for food was a step down? How about women EATING dead people? That’s what many did under Stalin.
That a large proportion of the nation’s wealth ended up being owned by former managers of the state run economy does not in any way represent a step down either. For these managers owned and controlled near 100% of the wealth under communism anyway! The only difference is that they could not be legally competed against economically. After the collapse of communism, they COULD be competed against economically, but there are still remnants of communism in Russia, which has made it a country more along the lines of America: Crony capitalism.
To summarize EpicPhil’s objections:
- My solution is not bottom up, but top down
- Fewer hours of work would have only increased mass poverty in an already impoverished nation
- The Soviet Union was not an industrial powerhouse
- The collapse of the Soviet planning mechanism improved the average Russian standard of living.
- The rise of the Russian oligarchy represented no real change in economic relations, but actually improved the situation, since now the was competition, however limited by crony capitalism.
If I could generally classify these objections, they seem to fall into these categories: first, how do you implement any stateless society? Second, what are the actual facts regarding the specific circumstances surrounding the collapse of planning in the Soviet Union? Third, what were the actual economic and political relations established by the collapse of Soviet planning?
With regards to EpicPhil’s first objection, I think it is pretty clear that when I argue reform should have started at the bottom and not the top, I was referring not to how these reforms should have been implemented, but whose situation should be considered first and foremost when undertaking the transition. I think I made this pretty clear in my argument. EpicPhil, however, wants to deliberately confuse this point with an entirely separate point: How do we actually achieve any reform? How do we actually effect the abolition of the state?
My argument was simple: Do you start reforming a system by creating an elaborate structure of rules detailing how something as complex and sophisticated as a full fledged market economy is to function, or do you begin by insuring that the transition to an economy with no centralized management and control doesn’t leave people starving for food and unable to find basic necessities of life. For instance, how long can people wait for potable water while — from your perspective — the new owners of the water system figure out how to run things profitably? I would say probably three days — and that is a very steep learning curve even for EpicPhil’s preferred model of organizing society.
Even if we assume the replacement of a centralized state economy by an anarcho-capitalist one, it has to be acknowledged that such things do not emerge overnight. Yes, you can end centralized management and control of the economy simply by not telling people what to do, but now they have to figure it out on their own. And, under Rothbard’s plan, they would have had to do it essentially within an incredibly small window. To be absolutely clear, we are not talking about whether a worker shows up for work the next day, but how you secure all the requirements of a massive and sophisticated steel producing enterprise — raw materials, financing, markets for output, wages, pensions, etc. — all this is now your problem on day one, Mr. Manager. Plus, you have to make sure the Mafia is not selling off the company’s assets out the back door. And, no. The central authority is not there to get your back when your projected output misses the target and you are now so deep in the red you contemplate bankruptcy — in a nation that, owing to the history of planned production, only has one or two suppliers of your goods.
EpicPhil, can I just suggest you stop playing revolutionary for a moment and seriously think about the implications of such a transition?
With regards to EpicPhil’s second group of objections: To assert, as he does, that the standard of living for the average Russian citizen improved after the collapse of the central planned economy is laughable. By every standard of measurement, Russian life spiraled into a cesspool. The death rate jumped as the nation was plunged into an economic catastrophe broadly estimated to have been twice as deep as our own Great Depression. If we cannot agree on the facts, we can’t have a debate on the question. So, my suggestion is for you to go out and find evidence that Russian life improved. Then we can debate the issue.
With regards to EpicPhil’s third objection: Even if we assume your argument: that power remained in the hands of a tiny handful of top managers, who after reform organized themselves into an oligarchy, we only admit that Jeffrey Sachs’ shock therapy was a complete failure from our point of view — i.e., from the point of view that wants to see, not oligarchy replacing state control, but the abolition of both oligarchy and the state. What your objection offers as a suggestion in this regards is not at all clear to me.
I was trying to critically examine Rothbard’s rather bold “thought exercise” on how one goes about actually dismantling the state, what EpicPhil gives anti-statists instead is a plan for doing nothing, but sitting around bitching about it.