The 2 Simple Reasons the Soviet Union Was Doomed to Fail(aei.org)
aei.org
The 2 Simple Reasons the Soviet Union Was Doomed to Fail
http://www.aei.org/issue/25991
102 comments
That reminds me of the book written by W. Edwards Deming, Out of the Crisis, where he is consulting with a US auto manufacturer, and the manufacturer asks a similar question, "When will we catch up with Japan?" (paraphrased).
Because of Japanese continuous improvement, or Kaizen, it is difficult, if not impossible to do.
As long as one is constantly improving, the others cannot catch up.
http://en.wikipedia.org/wiki/W._Edwards_Deming
Because of Japanese continuous improvement, or Kaizen, it is difficult, if not impossible to do.
As long as one is constantly improving, the others cannot catch up.
http://en.wikipedia.org/wiki/W._Edwards_Deming
Interesting that both these anecdotes mirror the insight behind the OODA loop: that the tempo of decision/adaptation is key.
I believe this basic insight applies whenever your actions now influence your rate of gain in the future.
I believe this basic insight applies whenever your actions now influence your rate of gain in the future.
> Because of Japanese continuous improvement, or Kaizen, it is difficult, if not impossible to do.
Oh great point! Yeah, the problem I think in most of these type of large systems migration choices is that they view only two discrete states, the present state and the target state -- and then try and build and plan for all contingencies. Some of the smarter ones try and define the target state primed to become the next present state with an eye towards a new target state, but in practice I don't think this style of thinking works very well.
In the Soviet example, they were looking at the present state of Japanese manufacturing capability and shooting for that as a target, while the Japanese were improving it every minute of every day. There is no goal in Kaizen, all that matters is the process of improvement. It's a very Zen way of looking at the world that I think thankfully is finding it's way into more modern principles of iterative development (it's amazing how ever-present Kaizen is in Western management training -- but I never got the impression that any of the texts really "got it", instead it's lots of discussion of studying it and trying to figure out how to adapt these two state processes to Kaizen principles without ever understanding the continuous nature of it).
Oh great point! Yeah, the problem I think in most of these type of large systems migration choices is that they view only two discrete states, the present state and the target state -- and then try and build and plan for all contingencies. Some of the smarter ones try and define the target state primed to become the next present state with an eye towards a new target state, but in practice I don't think this style of thinking works very well.
In the Soviet example, they were looking at the present state of Japanese manufacturing capability and shooting for that as a target, while the Japanese were improving it every minute of every day. There is no goal in Kaizen, all that matters is the process of improvement. It's a very Zen way of looking at the world that I think thankfully is finding it's way into more modern principles of iterative development (it's amazing how ever-present Kaizen is in Western management training -- but I never got the impression that any of the texts really "got it", instead it's lots of discussion of studying it and trying to figure out how to adapt these two state processes to Kaizen principles without ever understanding the continuous nature of it).
A variation can be encountered during product management involved features and prices.
In more than a few cases, the product specifications for an update or a new product can indicate near feature parity with a current competitive product, usually with a small increment past that current product.
Not what the competitive products would offer at the completion of the development cycle you're launching; not where the competing product would be in six or eighteen months; after however long it takes to get your new product to market.
Leading a moving target by an appropriate amount is a regular challenge of product development.
And you can win against Kaizen by going asymmetric. By allowing your competitor to optimize what you cause to be the wrong problem.
In more than a few cases, the product specifications for an update or a new product can indicate near feature parity with a current competitive product, usually with a small increment past that current product.
Not what the competitive products would offer at the completion of the development cycle you're launching; not where the competing product would be in six or eighteen months; after however long it takes to get your new product to market.
Leading a moving target by an appropriate amount is a regular challenge of product development.
And you can win against Kaizen by going asymmetric. By allowing your competitor to optimize what you cause to be the wrong problem.
+1
Kaizen isn't a perpetual advantage. Just look at what demographics are doing to the Japanese economy and manufacturing base. Korea is the new Japan in many ways, and any honest Japanese manager will willingly tell you as much. Korea came from literally nowhere to catch up to Japan, despite kaizen.
Disruption, rising costs, aging demographics, etc., can easily shift industrial edge from one country or region to another.
I'm not denigrating kaizen, mind you. It's still a valuable principle, and one that will continue to confer many advantages to the Japanese industrial base. But it's not a sufficient advantage in perpetuity.
Kaizen isn't a perpetual advantage. Just look at what demographics are doing to the Japanese economy and manufacturing base. Korea is the new Japan in many ways, and any honest Japanese manager will willingly tell you as much. Korea came from literally nowhere to catch up to Japan, despite kaizen.
Disruption, rising costs, aging demographics, etc., can easily shift industrial edge from one country or region to another.
I'm not denigrating kaizen, mind you. It's still a valuable principle, and one that will continue to confer many advantages to the Japanese industrial base. But it's not a sufficient advantage in perpetuity.
>As long as one is constantly improving, the others cannot catch up.
http://en.wikipedia.org/wiki/Zeno%27s_paradoxes#Achilles_and...
http://en.wikipedia.org/wiki/Zeno%27s_paradoxes#Achilles_and...
I'm not advocating communism, but if you look at the Soviet Union as a process, it did manage to turn an agrarian society (feudal, actually) into an industrialized one in 70 years. It's quite a feat, even more so if you consider the destruction they suffered in WWII.
Two responses to that.
First, I'm not quite sure you appreciate the cost of that industrialization. The USSR achieved fast extensive growth in its early years by forcing a very high savings rate. What does that mean? They exported lots of grain to buy machinery. Where did the grain come from? The peasants. What did the peasants do after their grain was taken? They starved. The general attitude during this time (which helped the Party consolidate power) was not so much of withholding food from dissidents, but rather withholding food from anyone who couldn't make a convincing case for how they were benefiting the party or the state. So most of the progress in bring up the USSR industrial capacity per person was due to increasing industrial capacity, but a notable part of it was due to decreasing the number of people as well.
Second, forced savings is a good strategy for playing catchup industrially when there are lots of obvious ways you can invest the savings (called extensive growth). Its possible to mess this up (see the Great Leap Forward) but if the beaurocrats are competent its possible. But when you've urbanized and need to start specializing more to keep growing the economy finding efficient ways to do so becomes harder (you're in intensive growth). Its here that government directed industrial policies tend to fail (or at least work more slowly than less directed solutions) due to coordination problems.
First, I'm not quite sure you appreciate the cost of that industrialization. The USSR achieved fast extensive growth in its early years by forcing a very high savings rate. What does that mean? They exported lots of grain to buy machinery. Where did the grain come from? The peasants. What did the peasants do after their grain was taken? They starved. The general attitude during this time (which helped the Party consolidate power) was not so much of withholding food from dissidents, but rather withholding food from anyone who couldn't make a convincing case for how they were benefiting the party or the state. So most of the progress in bring up the USSR industrial capacity per person was due to increasing industrial capacity, but a notable part of it was due to decreasing the number of people as well.
Second, forced savings is a good strategy for playing catchup industrially when there are lots of obvious ways you can invest the savings (called extensive growth). Its possible to mess this up (see the Great Leap Forward) but if the beaurocrats are competent its possible. But when you've urbanized and need to start specializing more to keep growing the economy finding efficient ways to do so becomes harder (you're in intensive growth). Its here that government directed industrial policies tend to fail (or at least work more slowly than less directed solutions) due to coordination problems.
Also let's not forget labor camps. Some big industrial projects (especially in Siberia) such as dams, the Trans-Siberian railroad, factories, power lines etc., were built with slave labor.
I am not sure of the %, I imagine it is not terribly large, but it is still there.
Other projects were built with student labor. University students were encouraged to provide volunteer work on such projects. They got on a train and traveled some place wherever help was needed. My father said it was quite fun. He spent a summer in Khazakstan, then another in Siberia.
I am not sure of the %, I imagine it is not terribly large, but it is still there.
Other projects were built with student labor. University students were encouraged to provide volunteer work on such projects. They got on a train and traveled some place wherever help was needed. My father said it was quite fun. He spent a summer in Khazakstan, then another in Siberia.
Can you back your claims up? In particular, say, the Trans-Siberian railroad? Its construction began in 1891, two decades before the formation of the USSR [1].
While certainly prisoners were used in its construction, saying that it was "built with slave labor" is somewhat disingenuous. Perhaps you are saying that parts of it were built using prisoners, who were not paid for their services? If so, that is certainly the case.
1. http://en.wikipedia.org/wiki/Trans-Siberian_Railway#Construc...
While certainly prisoners were used in its construction, saying that it was "built with slave labor" is somewhat disingenuous. Perhaps you are saying that parts of it were built using prisoners, who were not paid for their services? If so, that is certainly the case.
1. http://en.wikipedia.org/wiki/Trans-Siberian_Railway#Construc...
I can recommend Gulag: A History by Anne Applebaum:
http://www.amazon.com/Gulag-History-Anne-Applebaum/dp/076790...
The Gulag was created as a terrible economic experiment - that having a large body of "free" slave labour would be good for the Soviet economy.
There were huge, and often pretty pointless, projects built with slave labor and very basic tools - one example being the Baltic - White Sea Canal:
http://en.wikipedia.org/wiki/White_Sea_%E2%80%93_Baltic_Cana...
http://www.amazon.com/Gulag-History-Anne-Applebaum/dp/076790...
The Gulag was created as a terrible economic experiment - that having a large body of "free" slave labour would be good for the Soviet economy.
There were huge, and often pretty pointless, projects built with slave labor and very basic tools - one example being the Baltic - White Sea Canal:
http://en.wikipedia.org/wiki/White_Sea_%E2%80%93_Baltic_Cana...
i have personally heard anecdotes (and seen snapshots) from people in school in the late 80s, early 90s, who were regularly herded into the fields to harvest potatoes (czech republic). they too considered it rather fun for whatever reason.
In the 80s, I went on field trips to learn how to plant vegetables. This was hardly slave labor.
In the 90s in the US, I had to spend 40 hours "campaigning" for candidates, if I wanted to graduate highschool. I wouldn't really call that slave labor, but, I certainly learned a lot more by planting sprouts.
In the 90s in the US, I had to spend 40 hours "campaigning" for candidates, if I wanted to graduate highschool. I wouldn't really call that slave labor, but, I certainly learned a lot more by planting sprouts.
I'm 45 and I used to pick potatoes in the autumn in Scotland when I was at school - the holidays in October were known as the "Tattie Holidays" (tattie being Scots dialect for potato).
Not to nitpick, the Trans-Siberian Railrod was actully built before the Revolution.
http://en.wikipedia.org/wiki/Trans-Siberian_Railway
I'm not saying it was a pretty picture. It wasn't nice in other places either. In England children worked in mines for centuries.
Source: http://eh.net/encyclopedia/article/tuttle.labor.child.britai...
Source: http://eh.net/encyclopedia/article/tuttle.labor.child.britai...
Are these reports from first hand experience or can you site your sources?
In particular, I'm curious how you'll back up the "but a notable part of it was due to decreasing the number of people as well," considering USSR's population grew during the period you are describing [1].
1. http://en.wikipedia.org/wiki/Demographics_of_the_Soviet_Unio...
In particular, I'm curious how you'll back up the "but a notable part of it was due to decreasing the number of people as well," considering USSR's population grew during the period you are describing [1].
1. http://en.wikipedia.org/wiki/Demographics_of_the_Soviet_Unio...
Partially this is from reading a book by a Soviet ex-patriot (who I'll admit might be lying) and partially from the textbooks from my early Soviet history class in college. I'd give you better references, but my books are at home and I'm not right now.
The population grew from 1926 to 1937, but not from 1930 to 1937 - which is the reason the producers of the 1937 census were sent to the gulag. See: http://en.wikipedia.org/wiki/Soviet_Census_(1937) And the discussion about Soviet population statistics in this: http://en.wikipedia.org/wiki/Ukranian_famine
I should also point out that during the 1920-1940 period the USSR did a lot of territorial expansion into the lands held by the Whites, and then later into the Baltic states and grabbing parts of Finland and Poland.
I'll admit, though, that given that we're talking about the industrialization period in general I shouldn't be talking about a decreasing population since over the whole early industrialization timeframe the population did rise even without considering conquest. I would have done better to day "but a notable part of it was due to keeping population growth down with the use of famines."
The population grew from 1926 to 1937, but not from 1930 to 1937 - which is the reason the producers of the 1937 census were sent to the gulag. See: http://en.wikipedia.org/wiki/Soviet_Census_(1937) And the discussion about Soviet population statistics in this: http://en.wikipedia.org/wiki/Ukranian_famine
I should also point out that during the 1920-1940 period the USSR did a lot of territorial expansion into the lands held by the Whites, and then later into the Baltic states and grabbing parts of Finland and Poland.
I'll admit, though, that given that we're talking about the industrialization period in general I shouldn't be talking about a decreasing population since over the whole early industrialization timeframe the population did rise even without considering conquest. I would have done better to day "but a notable part of it was due to keeping population growth down with the use of famines."
If it's the famine in Ukraine [1] that you are talking about, absolutely. But, are you saying that it was done as part of industrialization?
My great grandfather was one of the peasants you describe (his land was taken away). Although the state use of land was inefficient, it was not the continual famine that you imply. Food shortages occurred, but, they occurred under the Tsars as well. The industrialization that occurred pre and post WWII in the USSR seems pretty undeniable though.
[1] http://en.wikipedia.org/wiki/Holodomor
My great grandfather was one of the peasants you describe (his land was taken away). Although the state use of land was inefficient, it was not the continual famine that you imply. Food shortages occurred, but, they occurred under the Tsars as well. The industrialization that occurred pre and post WWII in the USSR seems pretty undeniable though.
[1] http://en.wikipedia.org/wiki/Holodomor
Who got the benefits and who paid the price?
Impressively, Nazi Germany was able to invent and field ballistic missiles, and to launch them at a rate never seen since, all while under constant bombardment.
Just don't ask where they got their factory workers.
Impressively, Nazi Germany was able to invent and field ballistic missiles, and to launch them at a rate never seen since, all while under constant bombardment.
Just don't ask where they got their factory workers.
The Soviet Union was quite literally built on slave labor (http://gulaghistory.org/nps/onlineexhibit/stalin/work.php). Arguably, the Gulag system of slavery was even more brutal than that of the American South. And like the South, they ultimately fell behind technologically and industrially to a free society.
What is forgotten today is that there were men who contemporaneously made the connection between communism and slavery while advocating for it, including George Fitzhugh:
http://en.m.wikipedia.org/wiki/George_Fitzhugh
Sociology for the South, or, the Failure of Free Society (1855) was George Fitzhugh's most powerful attack on the philosophical foundations of free society. In it, he took on not only Adam Smith, the foundational thinker of capitalism, but also John Locke, Thomas Jefferson, and the entire liberal tradition. He argued that free labor and free markets enriched the strong while crushing the weak. What society needed, he wrote, was slavery, not just for blacks, but for whites as well. "Slavery," he wrote, "is a form, and the very best form, of socialism."
What is forgotten today is that there were men who contemporaneously made the connection between communism and slavery while advocating for it, including George Fitzhugh:
http://en.m.wikipedia.org/wiki/George_Fitzhugh
Sociology for the South, or, the Failure of Free Society (1855) was George Fitzhugh's most powerful attack on the philosophical foundations of free society. In it, he took on not only Adam Smith, the foundational thinker of capitalism, but also John Locke, Thomas Jefferson, and the entire liberal tradition. He argued that free labor and free markets enriched the strong while crushing the weak. What society needed, he wrote, was slavery, not just for blacks, but for whites as well. "Slavery," he wrote, "is a form, and the very best form, of socialism."
This sort of propaganda bullshit is popular in the US. That's like saying the US was built on slave and prison labor.
Sure, they contributed, but, at what scale?
Sure, they contributed, but, at what scale?
Millions upon millions, entire cities built by gulag labor.
http://gulaghistory.org/nps/onlineexhibit/stalin/work.php
Built between 1931 and 1933, the White Sea-Baltic Sea Canal was the first massive construction project of the Gulag. Over 100,000 prisoners dug a 141-mile canal with few tools other than simple pickaxes, shovels, and makeshift wheelbarrows in just 20 months. Initially viewed as a great success and celebrated in a volume published both in the Soviet Union and the United States, the canal turned out to be too narrow and too shallow to carry most sea vessels. Many prisoners died during construction.
http://www.nytimes.com/2005/06/06/international/europe/06rus...
Vorkuta, a city built by gulag labor in the tundra 1,200 miles northeast of Moscow and 100 miles above the Arctic Circle, is slowly dying - and those who remain in many cases cannot afford to leave.
A Soviet-era sign that remains atop a central building exhorts people to mine more coal, the resource that first attracted the gulag's architects in the 1930's and resulted in forced labor by two million prisoners before the camps shut down in 1950's.
http://gulaghistory.org/nps/onlineexhibit/stalin/work.php
Built between 1931 and 1933, the White Sea-Baltic Sea Canal was the first massive construction project of the Gulag. Over 100,000 prisoners dug a 141-mile canal with few tools other than simple pickaxes, shovels, and makeshift wheelbarrows in just 20 months. Initially viewed as a great success and celebrated in a volume published both in the Soviet Union and the United States, the canal turned out to be too narrow and too shallow to carry most sea vessels. Many prisoners died during construction.
http://www.nytimes.com/2005/06/06/international/europe/06rus...
Vorkuta, a city built by gulag labor in the tundra 1,200 miles northeast of Moscow and 100 miles above the Arctic Circle, is slowly dying - and those who remain in many cases cannot afford to leave.
A Soviet-era sign that remains atop a central building exhorts people to mine more coal, the resource that first attracted the gulag's architects in the 1930's and resulted in forced labor by two million prisoners before the camps shut down in 1950's.
>in just 20 months. [...] the canal turned out to be too narrow and too shallow to carry most sea vessels.
So, did they spend some more months and modify it or did they just abandon it. I'm guessing the architect met with a nasty accident?
So, did they spend some more months and modify it or did they just abandon it. I'm guessing the architect met with a nasty accident?
And are those all of the things that were built, created in the USSR at the time? To the extent that it allows you to claim that "The Soviet Union was quite literally built on slave labor?" Were they even a fraction of a percent?
You seem to be pointing out that the GULAGs existed and are providing sources for this fact. I'm not really disputing the existence of the labor camps. Let me ask you this, do you know anyone who lived in the USSR, who worked in the USSR and who was not a convict in a labor camp? I know lots. Are you saying that they do not count?
You seem to be pointing out that the GULAGs existed and are providing sources for this fact. I'm not really disputing the existence of the labor camps. Let me ask you this, do you know anyone who lived in the USSR, who worked in the USSR and who was not a convict in a labor camp? I know lots. Are you saying that they do not count?
Compare that to the rapid developments of post-war Germany, Japan, South Korea, Singapore, then post-1990: Poland, Hungary, The Czech Republic etc. We have to look at opportunity costs, not just raw improvements.
None of those situations (which I have any knowledge about) are even remotely comparable to that of Russia at the time of revolution. Germany and Japan had been fully industrialized. Singapore basically grew by attracting capital as a tax haven.
Russia in 1917 was about as developed as Germany or Japan in 1850 - or Britain in 1750.
The funny thing is that this fact means the revolution totally contradicted Marxist doctrine, which predicts communism as a natural remedy to the excesses of capitalism. Russia hadn't even entered the captitalist "phase" yet - it was literally the least appropriate country in Europe to stage a communist revolution in.
Russia in 1917 was about as developed as Germany or Japan in 1850 - or Britain in 1750.
The funny thing is that this fact means the revolution totally contradicted Marxist doctrine, which predicts communism as a natural remedy to the excesses of capitalism. Russia hadn't even entered the captitalist "phase" yet - it was literally the least appropriate country in Europe to stage a communist revolution in.
IMO, the funny thing is the United states (1950 - 1980) is probably the closest example of the Marxist ideal you can find. After industrialization you had violent conflict between workers and factory owners that resulted in places like GM being gutted by their workers who kept the fruits of their labors. Arguably by the end of the cold war it was more a question of how you organize a communist country than would you create one.
PS: Of course with automation and computing many of the old assumptions stopped applying but it’s hard to complain when someone only sees 75 - 100 and not 150 years into the future.
PS: Of course with automation and computing many of the old assumptions stopped applying but it’s hard to complain when someone only sees 75 - 100 and not 150 years into the future.
While I see your point against those examples it's worth noting that Japan in the mid 19th century was a feudal society with hundreds of thousands of samurai, and by WWII they were fielding a massive navy with aircraft carriers capable of striking the USA. And the difference between the wealth of Americans at the beginning of the 20th century compared to the end is also larger in many ways. However, the difference between starving and a full belly is certainly something which people will pay more attention to rather than the difference between being well fed and then acquiring large houses, refrigeration, washing machines, one or two cars, mobile phones, radio, television, landing a couple of guys on the moon and getting them back, computers and the Internet. The scope of western capitalist development in the 20th century is simply staggering compared to any pissant planned economy, and it was done without the most horrific mass murders of the 20th century that we see under the communist regimes.
Also, Lenin's modification of Marxist theory is somewhat irrelevant, the Marxist foundation was entirely wrong on a number of massive points: one more wasn't going to make a difference.
Also, Lenin's modification of Marxist theory is somewhat irrelevant, the Marxist foundation was entirely wrong on a number of massive points: one more wasn't going to make a difference.
and killed millions of people and planted fear feelings in every man in these countries. I hate it. (i am from there).
The inevitable failure happened not because of particular details that the central planners disregarded, but because there WERE planners in the first place. The market has a network-optimality aspect to it that a monolithic institution cannot replicate.
Read more: http://en.wikipedia.org/wiki/Economic_calculation_problem
Read more: http://en.wikipedia.org/wiki/Economic_calculation_problem
Ah, no. The planners were fully aware of the economic calculation problem and tried to make an end run around it by building a networked real-time system for matching supply and demand (from their perspective, markets are "lossy" information transfer mechanisms that permit local inefficiencies, such as failing companies). However, they failed because of systematic falsehoods being injected into the system by managers -- who were afraid to tell the truth (in the wake of Stalin's terror). This is covered by Francis Spufford's book, "Red Plenty". Review here: http://www.guardian.co.uk/books/2010/aug/08/red-plenty-franc...
However, they failed because of systematic falsehoods being injected into the system by managers -- who were afraid to tell the truth...
Hedrick Smith gives many examples of this kind of lying in his book _The Russians_. While that's certainly part of the problem, I think you're missing the deeper issue that the parent is pointing to: the amount of bandwidth necessary to do efficient economic calculation is far greater than what can be done by a committee of nomemklatura and their computers. They simply don't have the fine level of data detail and massively parallel computing power that a distributed economy provides.
Hedrick Smith gives many examples of this kind of lying in his book _The Russians_. While that's certainly part of the problem, I think you're missing the deeper issue that the parent is pointing to: the amount of bandwidth necessary to do efficient economic calculation is far greater than what can be done by a committee of nomemklatura and their computers. They simply don't have the fine level of data detail and massively parallel computing power that a distributed economy provides.
I know this is a popular point of view, but: [citation needed].
Naked Economics[1] is a good basic introduction. Hayek's Road to Serfdom[2] is also a key text if you want a historically embedded one. An interesting point about it is that Orwell reviewed it, with qualified praise, shortly before writing 1984. Like 1984 it is wider in its scope (i.e. even if you had the bandwidth and the models, how do you stop the people running them from becoming corrupt?). Finally "From Marx to Mises: Post-capitalist society and the challenge of economic calculation"[3] has a very comprehensive review of many aspects of the debate.
[1]http://www.amazon.com/Naked-Economics-Undressing-Science-Rev...
[2]http://www.amazon.com/Road-Serfdom-Documents---Definitive-Co...
[3]http://www.amazon.com/Marx-Mises-Capitalist-Challenge-Calcul...
[1]http://www.amazon.com/Naked-Economics-Undressing-Science-Rev...
[2]http://www.amazon.com/Road-Serfdom-Documents---Definitive-Co...
[3]http://www.amazon.com/Marx-Mises-Capitalist-Challenge-Calcul...
So why's it work for the Chinese? A little window dressing and a slightly different organization and it's no longer authoritarian central planning?
1) The Chinese are not breaking new ground and are doing a lot of catching up. I am not saying that it's as easy as following in the path of an icebreaker that has gone before, but it is easier. When the Chinese overtake the USA in GDP terms in the next few decades it will not be in per capita terms, that will take beyond our lifetimes. This is off the shelf engineering. And a lot of the high tech stuff is being done for American companies off the back of American R&D too. But the investment of the Chinese in university league tables, and then in investing heavily in research to climb up them shows they are well aware of what they need for the next stages of their development.
2) China was centrally controlled to disastrous results for a long time but from Deng Xiaoping onwards - where we see most of the growth - there have been more and more reforms both to regulation and to government. So not only are there now a lot of capitalist-like incentives and "special economic zones" as well as partnerships with companies outside of China the regional governments have been give more power to customize things to their local conditions. That's not to say the party isn't in control and there isn't massive corruption, but it's a very sophisticated system that's entirely different to the mechanisms of government and economic calculation that the Soviets employed. The recycling of sovietology is not fruitful though. Timothy Geithner being an Asia specialist is no accident. Also, there is a significant faction in the party that wants to transition to democracy (or a "Chinese version" of it), including some in the party central think tank and former generals. It's beyond me to gauge its strength other than to say it wouldn't surprise me if they won the argument and that we'd see a transition in the next three decades to something that looks like a cross between post-war South Korean/Japanese authoritarian democracy and post-communist Russian plutocratic democracy.
All that said, it must also be remembered that the USA is not purely free markets either and has had a significant portion of the economy state-funded and directed via military and space investment; to say nothing of the unique role that universities play in all western capitalist democracies that often goes under the radar of economists. That said, look at the wikipedia list of US inventions and Nobel prizes. There is much more to that incredible record than free markets, it's common law, bankruptcy law and many democratic anti-corruption techniques. Hence Hayek's "The Constitution of Liberty"[1], and Popper's "The Open Society and its Enemies"[2] which continue the reading above to the complex of arguments about the rest of the social aspects of free societies. From across the sea, this has to be the greatest problem with a certain brand of American free marketeer that turns to Mises' work, done before Hayek, and merely sees Hayek as a regurgitation. This is not the case Hayek has a much more powerful articulation of a political philosophy beyond just an economic theory. Agree or not, it's something which needs to be engaged with. I hope these qualifications and extensions help.
[1]http://www.amazon.com/Constitution-Liberty-F-Hayek/dp/022632...
[2]http://www.amazon.com/Open-Society-its-Enemies-Routledge/dp/...
2) China was centrally controlled to disastrous results for a long time but from Deng Xiaoping onwards - where we see most of the growth - there have been more and more reforms both to regulation and to government. So not only are there now a lot of capitalist-like incentives and "special economic zones" as well as partnerships with companies outside of China the regional governments have been give more power to customize things to their local conditions. That's not to say the party isn't in control and there isn't massive corruption, but it's a very sophisticated system that's entirely different to the mechanisms of government and economic calculation that the Soviets employed. The recycling of sovietology is not fruitful though. Timothy Geithner being an Asia specialist is no accident. Also, there is a significant faction in the party that wants to transition to democracy (or a "Chinese version" of it), including some in the party central think tank and former generals. It's beyond me to gauge its strength other than to say it wouldn't surprise me if they won the argument and that we'd see a transition in the next three decades to something that looks like a cross between post-war South Korean/Japanese authoritarian democracy and post-communist Russian plutocratic democracy.
All that said, it must also be remembered that the USA is not purely free markets either and has had a significant portion of the economy state-funded and directed via military and space investment; to say nothing of the unique role that universities play in all western capitalist democracies that often goes under the radar of economists. That said, look at the wikipedia list of US inventions and Nobel prizes. There is much more to that incredible record than free markets, it's common law, bankruptcy law and many democratic anti-corruption techniques. Hence Hayek's "The Constitution of Liberty"[1], and Popper's "The Open Society and its Enemies"[2] which continue the reading above to the complex of arguments about the rest of the social aspects of free societies. From across the sea, this has to be the greatest problem with a certain brand of American free marketeer that turns to Mises' work, done before Hayek, and merely sees Hayek as a regurgitation. This is not the case Hayek has a much more powerful articulation of a political philosophy beyond just an economic theory. Agree or not, it's something which needs to be engaged with. I hope these qualifications and extensions help.
[1]http://www.amazon.com/Constitution-Liberty-F-Hayek/dp/022632...
[2]http://www.amazon.com/Open-Society-its-Enemies-Routledge/dp/...
1) Same with the Soviets, as per the original point. I'm not a big believer in communism but these 2 cases together add up to some pretty good evidence for communism when it comes to catching up industrially.
2) Like I said, window dressing. The major corporations are effectively part of the government as far as anything major goes, and internally communistic like any corp. I guess you do get the advantage of one weakened chain link from the corporate leadership to the gov't, and that's somewhat significant, but you can certainly draw parallels from the current chinese miracle to the 1950s soviet miracle -- gotta remember, they beat us to orbit.
2) Like I said, window dressing. The major corporations are effectively part of the government as far as anything major goes, and internally communistic like any corp. I guess you do get the advantage of one weakened chain link from the corporate leadership to the gov't, and that's somewhat significant, but you can certainly draw parallels from the current chinese miracle to the 1950s soviet miracle -- gotta remember, they beat us to orbit.
One thing I've wondered about is that when viewed from the inside, large organizations look like centrally planned economies - capital is allocated centrally and there is often quite strong command and control structures.
So why do large companies manage to run centrally planned systems whereas centrally planned states seemed doomed to fail?
So why do large companies manage to run centrally planned systems whereas centrally planned states seemed doomed to fail?
Part of the mythology of western capitalism (as it is practiced) is that it's 100% market based. But as you've noticed, it's actually a whole bunch of centrally planned hierarchical petty dictatorships bumping and grinding like boulders in a sea of small businesses like sand grains. Sometimes one of the small businesses will swell up and become a boulder, and sometimes a boulder will crumble.
The main advantages of the market seems to be that failure is usually localized and containable -- although we came frighteningly close to a widespread meltdown in 2008 -- and, arguably, markets are better at promoting information flow and responding to new demands (although I suspect the growth of IP law and the existence of trade secrets counteract this to some extent).
But it's worth noting that the mean life expectancy of a publicly quoted corporation is around 30 years -- and the USSR made it through just over seven decades.
The main advantages of the market seems to be that failure is usually localized and containable -- although we came frighteningly close to a widespread meltdown in 2008 -- and, arguably, markets are better at promoting information flow and responding to new demands (although I suspect the growth of IP law and the existence of trade secrets counteract this to some extent).
But it's worth noting that the mean life expectancy of a publicly quoted corporation is around 30 years -- and the USSR made it through just over seven decades.
The difference is that companies are voluntary associations of individuals. A government is a monopoly of force and justice; it can exert its authority even on those that have not explicitly (via a free contract) agreed to it.
Today that may be so; but prior to 1914 it was possible to move around anywhere in Europe (including the UK -- excluding the Russian Empire) without a passport or identity documents, and pretty much legal to settle anywhere. While the cost and difficulty of moving back then was greater than it is today, states had very porous borders and it was practical to vote with your feet (as in fact my grandparents did).
The first world war put an end to the old order and made nationality non-discretionary -- and we're still dealing with the fallout today (as witness the permanent floating founder visas thread on HN).
The first world war put an end to the old order and made nationality non-discretionary -- and we're still dealing with the fallout today (as witness the permanent floating founder visas thread on HN).
I remember that from the start of Niall Ferguson's The War of the World - in 1913 the world looked quite a bit like it does today (at least from a "globalization" perspective).
Free contracts are a fiction.
Everyone has obligations that tend to reduce their freedom. The ones who think they don't are called psychopaths.
In personal development, an early stage is to understand that you can be independent. E.g. you can choose how to act and how to react to the outside world.
A higher level of development is to realize that we're inter-dependent. No man is an island.
There will always be constraints on our options. I don't like it, but I'm getting used to it.
There is no absolute freedom, and there are no truly free contracts.
Everyone has obligations that tend to reduce their freedom. The ones who think they don't are called psychopaths.
In personal development, an early stage is to understand that you can be independent. E.g. you can choose how to act and how to react to the outside world.
A higher level of development is to realize that we're inter-dependent. No man is an island.
There will always be constraints on our options. I don't like it, but I'm getting used to it.
There is no absolute freedom, and there are no truly free contracts.
Creative destruction, as in the Austrian school, should be a major factor.
Think evolution of organizations, economically inefficient ones die. People learn (in the Lamarckian way, too) what works best at the present time.
Also...
To quote an argument from your blog, there are many tens of millions of people needed to keep our civilization working efficiently (some specialized jobs might only have a few dozen practitioners, according to you).
And to keep up with research and new methods, in every decade a large percentage of all those jobs will be totally different.
Centrally planned system just can't touch that -- they can't even avoid traffic jams with a few million cars! (And those cars aren't [yet] genetically and culturally programmed to optimize their behavior individually and in groups.. and change a lot culturally every generation.)
Own petard, etc. :-)
Edit: A bit clearer, hopefully. Non-native language.
Think evolution of organizations, economically inefficient ones die. People learn (in the Lamarckian way, too) what works best at the present time.
Also...
To quote an argument from your blog, there are many tens of millions of people needed to keep our civilization working efficiently (some specialized jobs might only have a few dozen practitioners, according to you).
And to keep up with research and new methods, in every decade a large percentage of all those jobs will be totally different.
Centrally planned system just can't touch that -- they can't even avoid traffic jams with a few million cars! (And those cars aren't [yet] genetically and culturally programmed to optimize their behavior individually and in groups.. and change a lot culturally every generation.)
Own petard, etc. :-)
Edit: A bit clearer, hopefully. Non-native language.
If you look at global markets the same way, the fall of the Soviet Union was also remarkably localized, it's just that the Union and its Satellite states covered so much of the planet.
At that scale, this starts to be an abuse of the word "localized". If you look at anything from far enough away it seems insignificant.
Scale matters. Most of the time when companies in a market system collapse, very few people starve or die.
Scale matters. Most of the time when companies in a market system collapse, very few people starve or die.
But cstross, the Soviet Union shot you
and your family in the back of the head if you tried to leave! And there were entire agencies devoted to getting persecuted minorities out of the USSR, including Sergey Brin's parents. It is not exactly comparable to what happens when you leave a company (the occasional Ballmer chair throwing fit notwithstanding).
As a Soviet immigrant, I take issue with the realism of your claim.
Yes, the country effectively had closed borders, and yes, it was downright impossible for most people to leave. A trickle of emigrants who were begrudingly permitted to leave officially began in the 1970s owing to international Jewish repatriation policies and so on, but that was not an option for most people.
Nevertheless, to suggest that people were simply shot for attempting to leave is an absurd level of hyperbole. They weren't shot, they were just prevented from doing so via the usual bureaucratic means.
There is the small number of people who attempted a beeline across the border - similarly to the Berlin Wall climbers - past the spotlights and the guards and all. Thankfully, there were not many of them, as this is a very stupid approach to crossing any national border anywhere. The American-Mexican border may prove to be an unusual exception.
Yes, the country effectively had closed borders, and yes, it was downright impossible for most people to leave. A trickle of emigrants who were begrudingly permitted to leave officially began in the 1970s owing to international Jewish repatriation policies and so on, but that was not an option for most people.
Nevertheless, to suggest that people were simply shot for attempting to leave is an absurd level of hyperbole. They weren't shot, they were just prevented from doing so via the usual bureaucratic means.
There is the small number of people who attempted a beeline across the border - similarly to the Berlin Wall climbers - past the spotlights and the guards and all. Thankfully, there were not many of them, as this is a very stupid approach to crossing any national border anywhere. The American-Mexican border may prove to be an unusual exception.
So like a prison with life sentences! You could theoretically get out by a pardon -- but the only realistic way was to sneak out while hoping the guards missed, if they saw you...
The constant comparisons to a prison reflect the theoretical reality of leaving the country accurately, but poorly reflect the psychological perception of the issue by most citizens. The USSR was a vast, vast country, spanning 11 timezones horizontally as the Russian Federation does now. It contained 15 ethnically and culturally diverse republics, practically every far-northern, tundra, sub-tropical and tropical climactic region imaginable, and manifold examples of every kind of landscape and topography. In addition, travel to the Eastern European socialist republics was quite possible and routine for many people.
My point is, there was a lot to see inside the country. Were we technically "trapped" there? Absolutely. But to grok the actual significance of this, consider the single-digit percentage of Americans that hold foreign passports. Vanishingly few Americans have ever traveled outside the country, and a non-trivial number have never left their state or been beyond a neighbouring one.
So, while the fact that the borders were closed is important, and if that's your sole point, well, sure, but if you're likening it experientially to a prison, I think that's a little over the top. There were certain people who really wanted to leave and for whom that was undoubtably true. But as with most Americans, most Soviets were somewhere in the middle on that.
This is not an apologia or a whitewashing of the fact that our borders were closed, but an attempt to convey the human factor in a more nuanced, perceptive way.
My point is, there was a lot to see inside the country. Were we technically "trapped" there? Absolutely. But to grok the actual significance of this, consider the single-digit percentage of Americans that hold foreign passports. Vanishingly few Americans have ever traveled outside the country, and a non-trivial number have never left their state or been beyond a neighbouring one.
So, while the fact that the borders were closed is important, and if that's your sole point, well, sure, but if you're likening it experientially to a prison, I think that's a little over the top. There were certain people who really wanted to leave and for whom that was undoubtably true. But as with most Americans, most Soviets were somewhere in the middle on that.
This is not an apologia or a whitewashing of the fact that our borders were closed, but an attempt to convey the human factor in a more nuanced, perceptive way.
I get the human factors (i.e. the jail was big).
>>The constant comparisons to a prison reflect the theoretical reality of leaving the country accurately, but poorly reflect the psychological perception of the issue by most citizens.
Of course, with information control from the cradle...
>>Vanishingly few Americans have ever traveled outside the country, and a non-trivial number have never left their state or been beyond a neighbouring one.
I thought Soviet didn't allow people to move to the place they wanted? Or was that just the big cities?
But sure, people traveled in the military service...? :-)
>>The constant comparisons to a prison reflect the theoretical reality of leaving the country accurately, but poorly reflect the psychological perception of the issue by most citizens.
Of course, with information control from the cradle...
>>Vanishingly few Americans have ever traveled outside the country, and a non-trivial number have never left their state or been beyond a neighbouring one.
I thought Soviet didn't allow people to move to the place they wanted? Or was that just the big cities?
But sure, people traveled in the military service...? :-)
The Soviet Union shot you and your family if you tried to leave? Huh, that didn't happen to me or my family. Or any other person I know. I guess it's popular to spout bullshit like that though.
Your family might have been part of the nomenklatura. But it is pretty indisputable that they gunned down Soviet Bloc defectors trying to escape.
The Soviet Union was a prison state.
http://en.wikipedia.org/wiki/List_of_Soviet_and_Eastern_Bloc...
Soon after the formation of the Soviet Union, emigration restrictions were put in place to keep citizens from leaving the various countries of the Soviet Socialist Republics,[1] though some defections still occurred. During and after World War II, similar restrictions were put in place in non-Soviet countries of the Eastern Bloc,[2] which consisted of the Communist states of Eastern Europe.[3][4]
http://www.nytimes.com/2010/06/18/opinion/18beckerman.html
Most in the group were pessimistic about their chances — but none more than Mr. Mendelevich. He felt sure they would get caught, but to his mind, a group suicide was preferable to a life of waiting for an exit visa that would never arrive. Even a botched attempt, he figured, would at least attract the eyes of the world.
Early the next day, as the plotters walked onto the tarmac, they were, indeed, caught. The K.G.B. had known of their plan for months. And the two leaders were later sentenced to death.
But Mr. Mendelevich was also right that their desperate act would make their demand for free emigration impossible to ignore. Now largely forgotten, this planned hijacking, and the Soviet government’s overreaction to it, opened the first significant rip in the Iron Curtain, one through which hundreds of thousands would eventually flee. With great drama, it undermined Communist orthodoxy. After all, if the Bolsheviks had built the perfect society, why would any well-adjusted citizens want to leave, let alone risk their lives to do so?
The essential weakness of the Soviet Union was exposed: to survive, the regime had to imprison its own population. This would be the beginning of the end.
Jews were understandably at the forefront of the emigration battle. Even as they were forbidden to exercise any kind of Jewish identity, they also had no option to assimilate in Soviet society. Their internal passports were stamped “Jew,” a word that three generations after the 1917 revolution signified little more than their status as outsiders. Many had come to feel that their existence inside the Soviet Union was untenable, that the only way to escape this paradox was to move away. But the doors were firmly shut; those who requested permission to leave were refused and then ostracized.
The push to emigrate, which had begun in the early 1960s as an underground movement, had grown by 1970 into an open campaign. Letters to the United Nations were signed by hundreds of Soviet Jews. Only a few months before the hijacking attempt, the Kremlin had called for a public relations counteroffensive that would paint Zionism as “a vanguard of imperialism.” A large press conference was arranged with “acceptable” Jews, including the prima ballerina Maya Plisetskaya and the comedian Arkady Raikin, vowing loyalty to the Soviet Union and denouncing Zionism as expressing “the chauvinistic views and racist ravings of the Jewish bourgeoisie.”
The Soviet Union was a prison state.
http://en.wikipedia.org/wiki/List_of_Soviet_and_Eastern_Bloc...
Soon after the formation of the Soviet Union, emigration restrictions were put in place to keep citizens from leaving the various countries of the Soviet Socialist Republics,[1] though some defections still occurred. During and after World War II, similar restrictions were put in place in non-Soviet countries of the Eastern Bloc,[2] which consisted of the Communist states of Eastern Europe.[3][4]
http://www.nytimes.com/2010/06/18/opinion/18beckerman.html
Most in the group were pessimistic about their chances — but none more than Mr. Mendelevich. He felt sure they would get caught, but to his mind, a group suicide was preferable to a life of waiting for an exit visa that would never arrive. Even a botched attempt, he figured, would at least attract the eyes of the world.
Early the next day, as the plotters walked onto the tarmac, they were, indeed, caught. The K.G.B. had known of their plan for months. And the two leaders were later sentenced to death.
But Mr. Mendelevich was also right that their desperate act would make their demand for free emigration impossible to ignore. Now largely forgotten, this planned hijacking, and the Soviet government’s overreaction to it, opened the first significant rip in the Iron Curtain, one through which hundreds of thousands would eventually flee. With great drama, it undermined Communist orthodoxy. After all, if the Bolsheviks had built the perfect society, why would any well-adjusted citizens want to leave, let alone risk their lives to do so?
The essential weakness of the Soviet Union was exposed: to survive, the regime had to imprison its own population. This would be the beginning of the end.
Jews were understandably at the forefront of the emigration battle. Even as they were forbidden to exercise any kind of Jewish identity, they also had no option to assimilate in Soviet society. Their internal passports were stamped “Jew,” a word that three generations after the 1917 revolution signified little more than their status as outsiders. Many had come to feel that their existence inside the Soviet Union was untenable, that the only way to escape this paradox was to move away. But the doors were firmly shut; those who requested permission to leave were refused and then ostracized.
The push to emigrate, which had begun in the early 1960s as an underground movement, had grown by 1970 into an open campaign. Letters to the United Nations were signed by hundreds of Soviet Jews. Only a few months before the hijacking attempt, the Kremlin had called for a public relations counteroffensive that would paint Zionism as “a vanguard of imperialism.” A large press conference was arranged with “acceptable” Jews, including the prima ballerina Maya Plisetskaya and the comedian Arkady Raikin, vowing loyalty to the Soviet Union and denouncing Zionism as expressing “the chauvinistic views and racist ravings of the Jewish bourgeoisie.”
Heh, I've heard that argument before, my family and everyone I knew was "elite" somehow. No, we were certainly not. Or are you saying my problem is being Jewish?
Sergei Brin, who you mention, was his family also shot? If you applied for the paperwork properly you were allowed to leave.
Sergei Brin, who you mention, was his family also shot? If you applied for the paperwork properly you were allowed to leave.
Excellent - you've made my day - one of my favorite authors replying to a comment of mine on HN (pity it took me 8 hours to notice!).
Large companies are not total systems. The auditors and the setting of accounting standards are external. The police, courts, and law making are external.
In the 90's big companies developed the technique of paying the big accounting firms for consultancy work which subverted the independence of the auditors and paved the way for Enron. The accounting treatment of leases and uncancellable suggests that there have been similar "successes" in subverting the setting of accounting standards.
Elsewhere we see big companies having sufficiently close ties to political power that they can subvert the police and the courts and even the law making process. This also ends badly.
I don't see any prospect of researching how large companies work and then turning that into a blue print for socialism 2.0. Large companies seem to be viable because of a separation of business and government that is fundamentally incompatible with the common ownership of the means of production.
In the 90's big companies developed the technique of paying the big accounting firms for consultancy work which subverted the independence of the auditors and paved the way for Enron. The accounting treatment of leases and uncancellable suggests that there have been similar "successes" in subverting the setting of accounting standards.
Elsewhere we see big companies having sufficiently close ties to political power that they can subvert the police and the courts and even the law making process. This also ends badly.
I don't see any prospect of researching how large companies work and then turning that into a blue print for socialism 2.0. Large companies seem to be viable because of a separation of business and government that is fundamentally incompatible with the common ownership of the means of production.
The command structure may be there, but not the element of control.
An employee is free to resign if he would prefer to work for someone else. He can't be sent to a gulag. Customers aren't forced to accept a company's product or service, and can choose a competitor instead. Managers can fire incompetent or insubordinate workers. Customers can criticize a product without fear of being shot.
Customer, manager, employee, investor -- everyone is in the situation voluntarily, so they must negotiate on the basis of mutual self-interest. The company as an entity is more stable because its constituents aren't essentially at war with one another.
An employee is free to resign if he would prefer to work for someone else. He can't be sent to a gulag. Customers aren't forced to accept a company's product or service, and can choose a competitor instead. Managers can fire incompetent or insubordinate workers. Customers can criticize a product without fear of being shot.
Customer, manager, employee, investor -- everyone is in the situation voluntarily, so they must negotiate on the basis of mutual self-interest. The company as an entity is more stable because its constituents aren't essentially at war with one another.
Unless the market conditions are such that workers cannot move from one place of employment to the other due to collusion between capitalists or if the economy is such that it's impossible to switch jobs.
Let's be honest, job mobility even in market economies is a difficult affair for everyone but highly qualified professionals. The fact that IT workers can get a new job in a month is not indicative of the economy at large.
Let's be honest, job mobility even in market economies is a difficult affair for everyone but highly qualified professionals. The fact that IT workers can get a new job in a month is not indicative of the economy at large.
That is because they are, but in my country 99% of the business number and 70% of the economy are small and medium companies. When MS wants to make kinect or Apple wants to add sound recognition to the Iphone they buy it from small companies.
GM should have collapsed, all the megabanks and companies that were too big to fail show us how central planning works without control.
Some things need central planning(mass production), communism is state capitalism with only one megacompany. That is a supermonopoly.
I have friends that were in communist Russia, if you made -talked something that upset some member of the party(they were God), depending on the offense, you, your sister, your son won't be able to work anywhere(there is only one company after all). Nothing else was needed to control every one.
GM should have collapsed, all the megabanks and companies that were too big to fail show us how central planning works without control.
Some things need central planning(mass production), communism is state capitalism with only one megacompany. That is a supermonopoly.
I have friends that were in communist Russia, if you made -talked something that upset some member of the party(they were God), depending on the offense, you, your sister, your son won't be able to work anywhere(there is only one company after all). Nothing else was needed to control every one.
That may be the reason that large organizations are difficult to maintain. How many of the Fortune 500 companies today were still there 4 years ago?
As an organization grows, it requires people in support structures that are less linked to the ultimate bottom line. Ludwig von Mises proposed the idea that an organization requires a level of bureaucracy, in the absence of market signals. So to the extent that an employee is removed from from the direct market operations of the company, a bureaucracy is required.
Now, the reason companies don't outsource all their work to bidding contractors is that there is some value in holding resources in reserve. A bid-contractor is only as good as the next assignment, he may leave for another company when you need him the most. The solution is to have a contract where the particular individual will reserve his time and energy to one company (a.k.a. an employee). The employee will be effectively "slacking off", but will be on call for when his resources are needed.
As an organization grows, it requires people in support structures that are less linked to the ultimate bottom line. Ludwig von Mises proposed the idea that an organization requires a level of bureaucracy, in the absence of market signals. So to the extent that an employee is removed from from the direct market operations of the company, a bureaucracy is required.
Now, the reason companies don't outsource all their work to bidding contractors is that there is some value in holding resources in reserve. A bid-contractor is only as good as the next assignment, he may leave for another company when you need him the most. The solution is to have a contract where the particular individual will reserve his time and energy to one company (a.k.a. an employee). The employee will be effectively "slacking off", but will be on call for when his resources are needed.
Because a single large companies can fail, without destroying society.
Imagine if the company was all of society.
What I'm more interested in is this idea of democracy (inefficent, but least of a number of evils) vs. enlightened dictatorship (efficient, sucks if your priorities are different from leader's).
Small is beautiful in part because you don't need to convince a lot of people with disparate motivations to do something.
The same pattern arises in startup vs. bigco, and visionary CEO vs. design by committee.
Imagine if the company was all of society.
What I'm more interested in is this idea of democracy (inefficent, but least of a number of evils) vs. enlightened dictatorship (efficient, sucks if your priorities are different from leader's).
Small is beautiful in part because you don't need to convince a lot of people with disparate motivations to do something.
The same pattern arises in startup vs. bigco, and visionary CEO vs. design by committee.
Recent history suggests that this isn't true - the "too big to fail" banks.
The answer is that most large companies aren't run like centrally-planned economies. Executives may imagine themselves as generals at the head of an obedient army, but they are in reality deeply dependent on the actions of middle managers and employees. In fact, real generals are just as reliant on independent decisions of their officers and troops. Successful executives (and generals) are the ones who learn to balance top-down and bottom-up decision-making. The largest companies are perpetually engaged in a game of consolidation and reorganization into more independent entities.
First, they do often fail and are replaced by new companies where sclerosis hasn't set in yet.
Second, even huge megacorps are tiny compared to countries. Microsoft is about the same population as Antigua and Barbuda, and if Antigua and Barbuda tried to go the Soviet state controlled economy route I predict that they would be much more successful at it than the Soviets were because its much easier to govern a smaller country.
Second, even huge megacorps are tiny compared to countries. Microsoft is about the same population as Antigua and Barbuda, and if Antigua and Barbuda tried to go the Soviet state controlled economy route I predict that they would be much more successful at it than the Soviets were because its much easier to govern a smaller country.
Because they do, indeed, fail quite often.
Examples abound in the last economic downturn.
Examples abound in the last economic downturn.
I agree with you there, because of the inefficiencies of the system they were in, they were bound to make a fatal mistake. Once they had, these two problems made the collapse inevitable, no matter what Garbachov or the counter revolutionaries did. I find the inevitability of the fall very interesting. Reminds me a little of Hari Seldon's psychohistory from his Foundation Series.
http://en.wikipedia.org/wiki/Foundation_series
There is a theory (can't remember where I head or read it) that one of the main reasons the soviet union fell apart was that the number of phones installed in private homes increased to a point where it was impossible for the KGB to monitor and therefore to suppress with propaganda.
I have tried to see if I could find any numbers on phone installations up to the fall but haven't found any.
Also according to one of the main KGB execs the SDI program was when they realized that they weren't able to compete with the US anymore.
Ironically the SDI project besides from it being impossible to implement, had it been fully implemented, it would have cribbled the US economy too.
There is also a nice quite from Arthur C. Clarke about the SDI project in which he observed that any system as powerful as the vision of the SDI project would be more dangerous in itself than the dangers it was supposed to protect against.
I have tried to see if I could find any numbers on phone installations up to the fall but haven't found any.
Also according to one of the main KGB execs the SDI program was when they realized that they weren't able to compete with the US anymore.
Ironically the SDI project besides from it being impossible to implement, had it been fully implemented, it would have cribbled the US economy too.
There is also a nice quite from Arthur C. Clarke about the SDI project in which he observed that any system as powerful as the vision of the SDI project would be more dangerous in itself than the dangers it was supposed to protect against.
This theory is patently absurd. Moscow alone was about 10-12 million people in 80s, virtually all residing in apartment buildings with each apartment having a phone line. Do consider how many man-hours it would've taken the KGB to monitor phone conversations in this city alone. Absurd theory.
The question is how many they had in the 70s.
How are 70s relevant?
In any case you seem to be mistaking Soviet Union for Mongolia or some other equally well-developed country. Moscow stats - http://mgts.ru/company/about/foundation - 162K new lines in 1970, 89K - in '71, 130K - in '72, etc.
In any case you seem to be mistaking Soviet Union for Mongolia or some other equally well-developed country. Moscow stats - http://mgts.ru/company/about/foundation - 162K new lines in 1970, 89K - in '71, 130K - in '72, etc.
Relevant because the theory talks about an increase in phone lines. To talk about increase you will need to see the progression over time. The soviet union fell apart late 80s early 90s. What's up with the attitude?
For that theory to work there has to have been a point where they could monitor all the phone lines.
Parent poster is making it clear that such a point was well over decades before the soviet union fell, so it's hard for the theory to explain the fall.
Parent poster is making it clear that such a point was well over decades before the soviet union fell, so it's hard for the theory to explain the fall.
That's like saying there need to be a policeman for each citizen. Things don't work like that. The system isn't in one to one relationships.
Anyway it's a theory I heard somewhere I make no claims about it's validity. However I do believe there is something to it which explains why North Korea is so gong ho about controlling information (and being so successful at it)
There is a reason why they weld the radio station to one frequency and why the the US is trying to smuggle radios over the border.
Anyway it's a theory I heard somewhere I make no claims about it's validity. However I do believe there is something to it which explains why North Korea is so gong ho about controlling information (and being so successful at it)
There is a reason why they weld the radio station to one frequency and why the the US is trying to smuggle radios over the border.
[deleted]
Richard Rhodes book "The Arsenals of Folly" covers the lead up to the fall of the Soviet Union from the perspective of the leaders negotiating to reduce levels of nuclear weapons. It also covers some of the fundamental economic problems the Soviets had:
http://www.amazon.com/Arsenals-Folly-Making-Nuclear-Vintage/...
http://www.amazon.com/Arsenals-Folly-Making-Nuclear-Vintage/...
Good article, misleading title. Lots of interesting information.
The article is fairly serious, but has some dry humor mixed in. This line was the funniest:
> In the 1970s and early 1980s, the Soviet leadership, however, was not intellectually prepared to heed lessons from the School of Salamanca. The shortest quotation about the intellectual capacity of the Soviet leadership came from the Politburo minutes: "Mr. Zasiadko has stopped binge drinking. Resolution: nominate Mr. Zasiadko as a minister to Ukraine."
The article is fairly serious, but has some dry humor mixed in. This line was the funniest:
> In the 1970s and early 1980s, the Soviet leadership, however, was not intellectually prepared to heed lessons from the School of Salamanca. The shortest quotation about the intellectual capacity of the Soviet leadership came from the Politburo minutes: "Mr. Zasiadko has stopped binge drinking. Resolution: nominate Mr. Zasiadko as a minister to Ukraine."
Russian humour has always been very dry. My favourite type of Russian humour is called anekdoty, one of my favourite Russian jokes:
A night watch spots a shadow trying to sneak by. "Stop! Who goes there? Documents!" The frightened person chaotically shuffles through his pockets and drops a paper. A soldier picks it up and reads slowly, with difficulty: "U.ri.ne A.na.ly.sis"... "Hmm... a foreigner, sounds like..." "A spy, looks like.... Let's shoot him on the spot!" Then reads further: "'Proteins: none, Sugars: none, Fats: none...' You are free to go, proletarian comrade! Long live the World revolution!"
A night watch spots a shadow trying to sneak by. "Stop! Who goes there? Documents!" The frightened person chaotically shuffles through his pockets and drops a paper. A soldier picks it up and reads slowly, with difficulty: "U.ri.ne A.na.ly.sis"... "Hmm... a foreigner, sounds like..." "A spy, looks like.... Let's shoot him on the spot!" Then reads further: "'Proteins: none, Sugars: none, Fats: none...' You are free to go, proletarian comrade! Long live the World revolution!"
One of the lessons of the USSR, your leader saying something is so and shooting / exiling everyone who says different does not make for a prosperous, sustainable government.
Counterpoint: China
While China today isn't nearly as bad as the USSR was, their authoritarian government that still jails and executes political opponents hasn't stopped their political stability and economic success.
While China today isn't nearly as bad as the USSR was, their authoritarian government that still jails and executes political opponents hasn't stopped their political stability and economic success.
It was the ignore reality part that USSR did so wrong (with shooting/jailing being a result). China doesn't seem to have a problem with ignoring reality.
The US jails far more people today than the USSR ever managed to. It seems to be working out okay for us.
> The US jails far more people today than the USSR ever managed to. It seems to be working out okay for us.
Who you jail and the effect that said jailing has on other people also matters.
Who you jail and the effect that said jailing has on other people also matters.
So, it's fine to jail millions, as long as they're people who sell or smoke pot and not people who you consider important?
I didn't say that either jailing system was good. I said that they had different properties.
But, now that you've brought it up, do you think that they're equally bad? (Note - "both bad" doesn't imply "equal".)
But, now that you've brought it up, do you think that they're equally bad? (Note - "both bad" doesn't imply "equal".)
Amazing that the propaganda campaign has been so successful that people make idiotic statements like that.
So, what was the actual death toll from purges in the USSR?
Wikipedia says the Great Purges had over a million and a half victims, with close to seven hundred thousand shot.
This was in the 1930s under Stalin. USSR has more history than that; when I lived there, no one I knew was shot, no one was exiled; nor was anyone afraid of being shot or exiled (I can tell you what they were afraid of, though). My great grandmother's generation certainly remembered those times though.
Your statement plays on the perception that I have seen in the US that the USSR was this terrible place and all of its citizens hated it. I don't know if you are from the US, so, I will not make any assumptions. I can tell you that the propaganda machine here in the US is at least as good as it was in the USSR.
This was in the 1930s under Stalin. USSR has more history than that; when I lived there, no one I knew was shot, no one was exiled; nor was anyone afraid of being shot or exiled (I can tell you what they were afraid of, though). My great grandmother's generation certainly remembered those times though.
Your statement plays on the perception that I have seen in the US that the USSR was this terrible place and all of its citizens hated it. I don't know if you are from the US, so, I will not make any assumptions. I can tell you that the propaganda machine here in the US is at least as good as it was in the USSR.
Actually, my original statement was based off the reappearing theme in many governments of "shoot the messenger". They're model was wrong and they didn't want to see what the correction was. I actually really had no comment on the populace in general and it seems they had their own disagreements.
For the purpose of the article (and my comment) it really doesn't matter how the populace felt. My second comment had some snark due to your "idiotic statements" comment. But, there is a lot of reported history of purges, removal from film (had an article right here on HN about that), and exile of people whose opinions didn't jive with the current regime.
For the purpose of the article (and my comment) it really doesn't matter how the populace felt. My second comment had some snark due to your "idiotic statements" comment. But, there is a lot of reported history of purges, removal from film (had an article right here on HN about that), and exile of people whose opinions didn't jive with the current regime.
Saying something very contrary to the establishment always had consequences (and still has, even in the US). Under Stalin, the consequences were lethal. At other times, plenty of people disagreed with the establishment and were just fine. My problem with your original statement was that it was very much a blanket statement. It applied to some parts of USSR's history and less to others.
In USSR, I recall propaganda that said that everyone in the US was racist and that blacks were uniformly mistreated. Of course, the reality is that there was slavery, there was the civil rights movement and that now things are different. Broad statements like that smack of propaganda.
In USSR, I recall propaganda that said that everyone in the US was racist and that blacks were uniformly mistreated. Of course, the reality is that there was slavery, there was the civil rights movement and that now things are different. Broad statements like that smack of propaganda.
"My problem with your original statement was that it was very much a blanket statement. It applied to some parts of USSR's history and less to others."
I am pretty sure the statement applied to the whole run of the USSR. Maybe more in parts and less in others, but they ignored the reality of their situation.
You seem to be trying to add things to what I said that have nothing to do with the statement and truly I am never happy with the "well your just as bad/worse" argument. It really doesn't have anything to do with what I said or prove me wrong. For example, the whole second paragraph of the above post has nothing to do with what I said.
I am pretty sure the statement applied to the whole run of the USSR. Maybe more in parts and less in others, but they ignored the reality of their situation.
You seem to be trying to add things to what I said that have nothing to do with the statement and truly I am never happy with the "well your just as bad/worse" argument. It really doesn't have anything to do with what I said or prove me wrong. For example, the whole second paragraph of the above post has nothing to do with what I said.
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1. Socialism
2. Totalitarianism
Totalitarian societies have existed for thousands of years in Europe. Socialism seems to be pretty popular in the US (Medicare, SS) and seems to be working out okay in EU.
The article basically says that the Soviet economy was broken by bad bets on two commodities. Very hard to bet the whole country if you don't have a command economy.
Yegor Gaidar's book is on Amazon:
"Collapse of an Empire: Lessons for Modern Russia" http://www.amazon.com/Collapse-Empire-Lessons-Modern-Russia/...
The description and reviews are very comprehensive.
"Collapse of an Empire: Lessons for Modern Russia" http://www.amazon.com/Collapse-Empire-Lessons-Modern-Russia/...
The description and reviews are very comprehensive.
Fixed prices and a layer of red tape that caused resources not to be managed efficiently.
Sometime in the 80's, the Soviets brought in some Japanese industrial consultants as part of a modernization push for Soviet factories -- they had started to become aware that the sophistication of their industrial capabilities had more or less stagnated somewhere in the 1940's or 50's. Feeling pressure from an increasingly sophisticated U.S. and Europe, they wanted to know what it would take to catch up with the Japanese, then widely considered to have the best, most sophisticated manufacturing processes in the world.
The consultants came and toured some of the major manufacturing cities and facilities, taking notes, interviewing workers and managers, testing final output and raw materials quality, crunching numbers, analyzing the supply chain, that sort of thing. Finally they met with the Soviet leadership in Sverdlovsk (now Yekaterinburg), home of some of the major industrial capacity of the Union.
After reviewing the findings for several hours, one of the Soviets, impatient with all the details finally spoke up, "yes yes yes...we know all this...what we want to know is, how long will it take, if we put all of our national resources behind it (meaning, a space race level effort), for us to catch up with the Japanese?"
Their reply?
"Forever"
Their analysis revealed that the systemic and social issues in the Soviet Union (as well as a combination of material resources and other odds and ends) were so bad, that no matter how much effort the Soviets put into upgrading their manufacturing processes, and no matter how long they put that effort forward, the Japanese would always be ahead.
The consultants were quickly rushed out of the country and the study was never spoken of again.
Within the decade, the Union had fallen and it was all a moot point anyway.