The Decline & Fall of the Soviet Union

Our society seems fascinated by the decline and fall of empires and nations. You rarely see a book on the “birth” of Rome, say. It’s the collapse we care about. In this respect, I’m a bit odd. I prefer the creation period, the early years when everything goes right, to the fall, but it’s important to see that death precedes birth. The Czars fall, the Soviets rise…the Soviets fall, and after some birth pangs, Russia rises.

But when considering the fall, one should also remember the rise. We act as if the late period, which is almost inevitably full of corruption, stupidity, and foolishness is all there was. It rarely is.

In the early days, the Soviets were startlingly effective. The Soviet economy did much better during the Great Depression than most Western economies, and even after the war, the Soviet system seemed to create superior growth. American textbooks from the early fifties note the challenge of this faster growth, and that if it continued, the USSR would overtake the US.

Nothing is more inevitable than what has already happened: We look back and say that the USSR was destined to fall, it had to fail, and that our system was superior because it outlasted the Soviet system. We “won,” they “lost,” and that means our ideology and our way of doing things was the better one.

I would suggest this is a misunderstanding. I’ve written two articles before on the collapse of the USSR. One is “well, a command economy has specific pathologies which can develop.” It was based on the book Power and Prosperity, by Mancur Olson (which I recommend highly), and its thesis was that the late USSR lost control of production because the people who were sending them numbers from all the factories, shops, mines, farms, and so on were systematically lying. At the start of the Soviet system, this wasn’t possible, but over time, they organized local networks which allowed them to do so.

Faced with false production numbers, central control over the economy failed. Central planners didn’t know the real supply of anything — inputs or outputs — and couldn’t control it. Workers bunked off, managers got rewards for production totals they had falsified, and everything became false.

This argument is elegant because it also explains the early and middle successes of the system: It takes time to create local networks capable of deceiving the center, and until that happens, central control is actually very effective at certain types of economic activity. Roughly anything can be “tailorized”; if you know what inputs should produce what outputs, and you know what inputs exist, you can hold people accountable and you have a system which can directly allocate resources (i.e., people, capital goods, and inputs like minerals, fuel, and so on). There’s actually less waste and more efficiency in such a system than in a more decentralized system like western “capitalism.”

So the Soviets industrialized with what was, at the time, startling speed. But then they lost control of inputs and outputs (due to falsified information being fed to the center) and then the decisions feeding back out to the productive parts of the economy caused everything in the system to go to hell.

Now, before you get too smug about the superiority of capitalism, let me point out that incorrect feedback has been increasingly overwhelming the capitalist system, with the result that it produces the wrong things in the wrong places. This has been going on for a long time; you can see it as far back as the 60s (and obviously this is one lens through which to look at the Great Depression). This sped up when Reagan/Volcker took over and, since 2008, it’s been in overdrive, as the feedback mechanisms which drive decision making have been deliberately broken by quantitative easing and other similar policies. When you won’t let companies go bankrupt which have made bad decisions and have mis-allocated resources, you produce the wrong stuff at a massive scale.

The point of trying to understand what went wrong in various societies isn’t to pat ourselves on the back about how great we are, but to learn, so we can avoid, postpone, or maybe even fix such problems in our own societies.

The Soviets did much better during the Great Depression in part because they had a centralized system which was able to avoid all the bad feedback crippling most Western economies. They did worse near the end in part because they had more bad feedback than we did, but only in part.

Which leads us to the second article I wrote on the fall of the USSR, based largely on the work on Randall Collins (a summary article of his theories can be found in his book, MacroHistory. He predicted, in advance, the fall of the USSR, not based on any self-congratulatory notion of “our system is more wonderful than their system,” but on old-fashioned position and resource comparison.

1. The Soviet union had a central position; it had more borders than the West, especially after China became hostile.
2. It had fewer resources and people, even if you compare the alliances vs. alliances.
3. It thus had to devote a larger percentage of its resources to the military and so on, and, eventually, it collapsed because it was under increased and protracted strain.

This situation was even explicitly part of Reagan’s “Star Wars” initiative to create defenses against nuclear war. The idea was to make the Soviets spend more and more to keep up, as the US and the West could more easily afford such escalation. Add in Afghanistan, along with some other issues, and the strain helped lead to Soviet collapse.

More simply, this is a “guns and butter” question. Ever since the introduction of capitalism, the smart, longer term money has been to not engage in military over-spending, in favor of growing the economy, because “guns,” understood broadly, are unproductive. An economy which grows faster eventually leads to a significant military advantage. Adam Smith makes this argument in The Wealth of Nations. This idea is not new, and it includes things like foreign aid, subsidies, and so on, that aren’t productive for the home economy, but are necessary as part of the Great Power competition.

So, we have the “breakdown of feedback” argument, and we have the “worse position and fewer resources” argument as the two basic threads. I think both have truth to them, but I think the resources/position argument is a LOT stronger and more important.

The systems argument is weaker because every system rots and goes through cycles. There are times when the system works well, and times when the system works badly, and many of empires, nations, and societies go through cycles, with periods of rejuvenation.

If your system is under added pressure during a period when it needs rejuvenation, its odds of collapse increase if there’s a strong, high-prestige alternative, and one can simply look at the collapse of the USSR and the release of the Warsaw pact through that lens.

All that said, however, systems can take longer to decay and there are methods of rejuvenation which can make the troughs less dangerous and less likely bring down the entire system. The Chinese Communist Party, we know, has studied the collapse of the USSR intensively, because they don’t want to lose power.

Which leads us to mistakes, stupidity, and historic specificity. In the Soviet situation, there were a few more factors.

The first is the failure of collective agriculture. Unlike in industry, which worked well for multiple generations, collective agriculture was never effective — either for the Chinese or the Soviets. It’s easy to see how true this is by looking at the fact that the USSR had chronic food shortages, whereas post-USSR Russia has massive food surpluses.

No one’s quite sure why collective agriculture doesn’t work. The standard argument is that, here, the profit motive works better. In the West, up until about the 70s, smaller farmers were as or more productive than large corporate outfits. Since then, the corporate outfits have done better, but it’s odd that factories worked and farming didn’t, as corporate mega-farms are now working well — if one ignores certain environmental costs and problems with monocrops and so on (which are also affecting small farmers).

But whatever the reason, no one’s made collective farming work at scale, including the Israelis, who made a hard run at it for a few decades.

Essentially, the first thing the Chinese communists did when they started moving towards a mixed (not market, but mixed) economy was to progressively dismantle the cooperative farms. This led to higher agricultural outputs, including per person, and allowed them to move people into factories, service jobs, and into cities. This allowed them to industrialize and also helped increase the level of consumer consumption, which is necessary for creating a consumer society, which is further necessary as part of industrialization for large nations. (The other usual trick is to conquer places and force the natives to buy your goods. See British capitalism and imperialism.)

Regimes also tend to have prestige based on their foreign affairs. Winning wars and imposing themselves on foreigners non-violently increase prestige internally, as well as externally, and losing wars and being otherwise humiliated reduces prestige. Lose foreign wars and domestic legitimacy collapses. Russia became Communist after the Czars were humiliated in WWI, as the most obvious example, and losing in Afghanistan cost Communism a lot of legitimacy, on top of the drain on resources.

One can also bring up the consumer goods issue: jeans and rock and roll. The USSR was bad at producing consumer goods. It’s hard to disentangle this issue: How much was based on “guns and butter,” and how much was based on markets actually being good at producing many different goods? Combined with constant food shortages, late-stage USSR simply couldn’t argue that the West wasn’t better at providing material benefits to its population.

Because the argument of Communism’s legitimacy lay in the argument that it was a better way to provide for ordinary people, for workers, its failure at doing so was devastating. As one anecdote, there came a point where Soviet computer scientists were told to just copy Western designs and stop working on Soviet alternatives. This was devastating to morale in the Soviet computer industry.

But let’s move to more specific problems — to fuckups and dysfunction caused by history and specific decisions. Much is based on an article by Georgi Derluguian in the book, Does Capitalism Have A Future?

The USSR had three main institutional tiers: the Party, the Secret Police (KGB), and the Red Army. All three had significant problems, which increased as time went by.

The biggest issue was with the Party, the main control organism. It was a gerontocracy, corrupt, and unwilling to take action. The modern CCP is full of technocrats of various varieties, but the Soviet Party was in conflict with its technocrats, specialists and was full of hacks who didn’t want to change anything.

Looking at this, Gorbachev did something foolish: He tried to work around the Party instead of fixing it. He created councils and groups with authority that circumvented the Party and took power away from the Party. He deliberately put people in charge who were not dedicated to Communism and whose continued power relied on Communist Party weakness. This undercut the system, and because Gorbachev’s power was based on his position in the Party, it appears to have undercut his personal power, as he doesn’t seem to have been good at picking people who were loyal to him. (Even if he had been, if his desire was to keep Communism strong, he needed to fight and win the battles inside the Party. See what Xi in China has done. Deng did the same in different ways.)

The second issue was the Communist Party’s (CP) fear of the KGB. If you have a massive problem with people lying to you, with the periphery acting against the center, the solution is to have the secret police find out the truth and get rid of the people and groups who have been conspiring against you.

But the CP apparatchniks were terrified of using the KGB. Remember they were a gerontocracy. They remembered the Stalin years, and the terror Stalin had unleashed using the secret police. The lesson that should have been learned wasn’t, “never use the secret police,” it was how you should use the secret police. But paralyzed by fear, the CP kept the one institution which could have solved their information problem, and thus a large chunk of their production problem, on a leash. Scared to use it against themselves at all, they couldn’t get the information they needed to fix the Party’s own internal issues.

The third pillar was the army. It was damaged by the Afghan war, but the generals and colonels were also deliberately kept weak, and popular (and often effective) leaders were also sidelined and kept ineffective. The army, as a whole, was kept weak, so it could not challenge the CP. Authoritarian states are always scared of the military taking over — and for good reason. But when the Warsaw Pact and the USSR started collapsing, part of the reason why the military wasn’t used is that no one trusted it, and it wasn’t trusted in part because treating it badly had made it untrustworthy. (Another reason why the army wasn’t used was also ideological collapse. Gorbachev and other CP leaders no longer believed in the USSR enough to feel they should use military force. That hadn’t been the case even two decades earlier.)

Looked at dispassionately, from outside and with the distance of time, its clear that Gorbachev’s particular reforms and other policies actually weakened Communism. Gorbachev may or may not have sincerely wanted to fix Communism to save it, but he undermined the sources of its institutional power. Previous leaders had done the same, but it was Gorbachev specifically who damaged the Communist Party itself by going around it, a strategy which both further de-legitimized and weakened the Party in formal terms.

So when push came to shove, none of the three pillars, the Party, the Secret Police, or the Army could (or in the case of the Army and the Party) would save the USSR.

Much of this debacle seems to have been driven by fear. Rather than seeing the KGB and the Red Army as sources of strength, they were viewed primarily as threats. The Party needed to learn how to use them in ways that were safe, because both institutions had genuine functions required for the system to work. But the Party itself was dysfunctional, and none of the late Soviet leaders were able to fix that either.

Late in any cycle, systems become sclerotic; most of the people in charge are incompetent, corrupt, and so on. Successful systems renew themselves, and another cycle ensues until eventually a renewal cycle fails. Renewal cycles lead to sub-ideological changes: The US after FDR is different from the US before FDR in real ideological and systemic ways. The US after Reagan is very different from the US before Reagan.

But the Soviet system didn’t manage this. As with the US, it had “original sins”: For the US, one was slavery; in the USSR it was purges and gulags. The US has gone through at least two crises related to slavery, the most significant of which was the Civil War. The USSR failed to deal with its legacy of purges, which effected all three tiers and civil society in different ways. Its failure to find a new equilibrium which allowed for the efficacy of all three tiers meant it couldn’t deal with its production problems, its weak geopolitical situation, and it ultimately failed to survive an end of cycle through renewal.

And so it fell.

Don’t be smug, and don’t take this as vindication of our system. One bitter Russian joke of the 90s was, “Everything the Communists told us about Communism was a lie. Unfortunately, everything they told us about capitalism was true.”

We simply survived longer, but we are in a period in which we must either renew the system and transform it into something quite different, or the system will fall. Our original sin, in this case, is treating the natural world as a resource which does not need renewal, as though it is inexhaustible. This sin is not unique to capitalism, but our system has taken it to extremes.

We have not managed even one renewal cycle which deals with this problem. Meanwhile, the Western system is now close to the position in which the Soviets found themselves; we have an opponent with more resources and a higher population, and our system has a massive feedback and information problem, in which we’ve lost control of production to the extent that we are producing too much of what is bad for us and too little of what we really need, while simultaneously destroying the very basis of both our existence and economic model. As for our elites, they are easily as corrupt and incompetent as the late Soviet party bosses.

Plus Ca Change.

DONATE OR SUBSCRIBE