All Commentary
Friday, May 1, 1981

Tensions in Poland

Dr. Sennholz heads the Department of Economics at Grove City College in Pennsylvania. He’s a noted writer and lecturer on economic, political and monetary affairs, and in this article recurs to the theme of his book, How Can Europe Survive?, published in 1955 but now out of print.

The workers’ revolt in Poland raises momentous questions not only about the future of communism as a political-economic system, but also on its many implications for the West. Does it signal a terminal ideological crisis that in due time will bring about changes in communist thought and practice? Is it shaking the foundation of communism as a system of political rule and oppression? Is it damaging the engine of Soviet power and influence? And how can and should the West respond to the proletarian revolution in Poland? The answers may be found in the thoughts and aspirations of the Polish workers who are voicing their frustrations about the economic order and the humiliating role they are playing in that order. In final analysis, we must search for our answer in diverse political and economic philosophies that are creating insoluble tensions and conflicts.

Communism is the most extreme form of totalitarianism. It is the root and prototype of all others, such as Nazism and Fascism that sprang from it. Since the destruction of German Nazism it is the only surviving power that constitutes a real danger to the West. In fact, it is far more dangerous than its other variations ever have been because, at this very moment, it is conquering the hearts and minds of millions of people around the globe. For Nazism and Fascism it was surely a difficult task to convince the peoples of Africa or Asia of the superiority of the Aryan race or the rejuvenation of the Roman Empire. But it is rather easy to indoctrinate them with the slogans and potions of communism.

Subjugating and Sacrificing the Individual to the State

Communism bears little resemblance to the despotic regimes of kings and dictators who continue to make their brief appearances in many parts of the world. It is totalitarian, all- comprising, subjugating the individual and sacrificing him to the State. It is the total politiciza tion of life that permits no exceptions or limits, no sphere without the state. It is a secularized faith, a religiously fervent atheism. (The writings of Alexander Solzhenitsyn are a living memorial to the untold millions of Soviet victims.)

It is built on the socialistic economic order. Economic life hinges around the omnipotent and sovereign center that can tolerate neither private property in production nor individual enterprise. Every economic transaction becomes a political transaction that aims to sustain the omnipresent state. Every trade is used to strengthen the regime and, if at all possible, to weaken the capitalistic world. Its lack of prices and markets makes it a chaotic system that stumbles through waste and corruption, from crisis to crisis.

If it were not for the capitalistic production structure and Western technology that are copied or ira-ported, the Soviet economic order would operate in utter darkness, unable to sustain its hapless population. In fact, living conditions in the Soviet Union that always have been on the level of underdeveloped countries have worsened considerably in recent years. Death rates are rising for almost every age group. There is not a country in Europe in which individual lives are so short and children’s death rates so high as in the Soviet Union.

People Try to Escape

Wherever communism comes to power, a peculiar law of population and trade takes effect: the people seek to escape wherever and whenever they can; but the authorities forcibly keep them in the country by means of high walls and barbed wire, mine fields, tanks and machine guns. While many individuals lose their lives in desperate attempts to escape, a few succeed every day in reaching safety in the capitalistic West.

The flow of goods proceeds in the opposite direction, from the capitalistic countries to communist areas. They flow as alms or extortions, through lies or deception, or as the result of credits and loans that are repayable in the distant future.

The communist economies are straining and reaching the breaking point in a desperate effort to sustain the ruling class and build a powerful military machine. While the masses of people under communist rule linger in hopeless poverty, a bloated state bureaucracy enjoys all the perquisites and privileges the system can provide. The manifest disparity between the lifestyle of the working population and that of the party establishment is a source of chronic discontent. Despite all the impudent boasts of the Soviet leaders, there is no hope whatever that socialism will ever provide the amenities of life to which the working people in the capitalistic countries are accustomed.

And yet, two circumstances come to mind that may actually give substance and truth to the communist boasts. If the West, in utter blindness and stupidity, were to destroy its own economic order by adopting the methods and policies of socialism, or by ravishing its own productivity through currency and credit destruction, the West may actually sink to Soviet levels. Moreover, if the West, for any reason, were to transfer its productive capital and technological know-how to the Soviets and modernize communist production along capitalistic lines, new life could be imparted to the barren system.

It is an undeniable fact that in incredible blindness the West actually has moved in this direction, giving new hope and comfort to world communism. It has severely weakened its own currency and credit structure through rampant inflation and extended massive loans and credits to the Soviet Empire.

The West Is Financing Soviet Oppression

In recent years, mostly since 1970, Western governments and financial institutions loaned the Soviet bloc countries at least $88 billion. According to some estimates that include the credits granted by suppliers and other lenders, this amount may actually exceed $113 billion. The West is bailing the socialistic countries out of their inherent difficulties through massive transfusions of capital. It is buying the bread for the restive masses and capitalist technology for socialized industries.

Why are we propping up the socialistic economies and their dictatorial regimes? Three factors may have contributed to this awful blunder: Western ignorance about the nature of communism; rampant inflation, especially in the U.S., that triggered the outflow of funds to all corners of the world; and, finally, Western euphoria about detente.

It is gross ignorance to view the relationship of a communist government and its people as normal and healthy. Communist governments are not the representatives of the people, and the people are not the constituency of the government. When we are dealing with communist officials we are not dealing with the people, but with the political agents of a monolithic apparatus of oppression that lacks any legitimate claim to represent the people. To grant a loan to a communist state is to join cause with the oppressors, to see them through their difficulties and preserve intact the dictatorship, which the people are risking their lives to dismantle. And yet, in their incredible confusion the big banks in the capitalist West, encouraged and goaded by equally confused government officials, supported the regimes to the tune of $88 billion or more.

Banks Pressed to Invest

Surely the banks were under severe pressure to invest huge funds rolling off the printing presses and credit systems of their respective governments. The 1970s were years of rampant inflation as Western governments were indulging in massive deficit spending that was financed primarily by currency and credit expansion. Commercial banks were the happy depositories of these new funds that needed to be invested securely and profitably.

To the eager bankers it was a pleasant coincidence that the communist governments were ready to receive those funds in large and convenient blocs. Moreover, the banks were obliged to “recycle” the massive influx of O.P.E.C. petrodollars that were flowing from the oil-consuming countries to Arab producers and back to commercial banks in the consuming countries. Some deposits found their way from the banks to the national treasuries that spent them on massive deficit schemes. Third World countries in Africa and Asia managed to borrow a total of $365 billion, the communist countries no less than $88 billion. Of course, this grant of loans consti tuted a huge transfer of real wealth from the capitalist West to socialist and communist governments all over the globe. It sustained and supported the oppressors and mortal enemies of capitalism at a rate and magnitude unprecedented in history.

Moscow Continues Psychological War Against the West

The euphoria that followed the detente blinded many Western leaders. Although Moscow continued its psychological warfare with all available methods, aiming at the political attrition of the capitalist West, Western neutralists and appeasers rejoiced about the detente and eagerly promoted the wealth transfer. The Kremlin continued to wage its war at alternating fronts, either psychological or economical, or military, or all together; the West simply disregarded the challenge and acted as if the incessant blows and contemptuous injuries simply did not exist.

By now the banks probably have come to realize the full meaning of lending to the Soviet bloc. But it is too late for them. The Communist debt has long since passed the point at which it could simply be written off. The magnitude exceeds by far the banks’ capital and surplus, the loss of which would bring instant ruin and bankruptcy. As they cannot cut their losses they are likely to make every effort to protect their old loans through new loans. As long as they finance the interest falling due, they can live by the fiction that the loans are realistic and secure. But the protection of loans implies the protection of the debtors, i.e., the communist states. The banks as creditors thus become partners of the communist debtors and the loans become political intervention on behalf of the communist regimes. When seen in this light, the $1 billion bank loan extended to the Polish government by West German and American banks during the present crisis is political intervention on behalf of communism.

If the Polish government should default on its debt because Western banks cease to finance it or because the Kremlin decides to rattle the financial structure of the West, the 400-500 billion dollar pyramid of debt built on the ability and willingness to repay may come crashing down on the gullible West. A communist default, which appears inevitable to this observer, would have a domino effect on those debtor countries that have virtually no chance of ever repaying their debts. It is almost certain that sooner or later the Soviets will use this threat of default to gain political concessions from the West.

Subsidizing the Banking System

Given the financial structure of the West and the dominant role of governments in those structures, it is doubtful that such a default would actually crush the debt pyramid. But it probably would alter its color and nature. No Western government would permit its banking system to collapse as a result of foreign default, with the inevitable consequences of severe depression and mass unemployment. Instead, the governments of creditor countries could be expected to issue instant guarantees for the defaulted obligations and thus assume the communist and Third World debt. The crisis would be averted by Western governments through the assumption of another $400-500 billion of debt, which in time would exert its powerful influence toward more inflation and credit expansion in the West. It would contribute its share to the gradual and ultimately total destruction of the world monetary order. Unfortunately, such a destruction would devastate the capitalistic countries without a single shot being fired.

Socialism Has Lost Its Appeal

The Polish workers’ revolt reveals the tremendous problems, tensions, and weaknesses of the communist empire. Behind the impudent speeches and boasts of the Soviet rulers lies the hopeless reality of the socialist economy, the misery of living conditions and the despair of millions of people who are chafing under harsh conditions.

The people have to stand in line for hours to buy food that is in scarce supply or for shoes and clothing that are rationed. They walk miles to work—public transportation is most unreliable, and private transportation, except for the bicycle, virtually does not exist. The private automobile lies beyond the reach of most Poles; it is reserved for members of the communist party and the ruling elite. Most amenities of life to which the workers in capitalistic countries are accustomed are not offered by the government distribution system; they may be available on “black markets” that are supplied through countless illegal channels of trade and manufacture. The frustrations that are felt everywhere continue to lead to labor protests and walkouts although, last summer, Polish workers were permitted to join an independent labor union, Solidarity.

The existence of an independent labor union violates the basic structure of monolithic communism and, therefore, is viewed with alarm in the Kremlin. It raises the crucial question of how much decentralization the Soviet system can tolerate and yet be centrally controlled. Does it constitute a serious challenge to the communist empire?

The Anomaly of Unions

To the Western observer the union movement in Poland constitutes a curious fruit of socialist thought that promises protection from employer exploitation—protection through organization and collective bargaining. In the capitalistic West, it is aimed at the private owners of the means of production whose bargaining power is said to exceed by far that of individual workers. In a communistic country that claims to represent a nation of working people, the union movement confronting the communist state obviously contradicts this claim. If a labor union is the legitimate representative of the working people, where then is the legitimacy of the state? By casting serious doubt on the philosophical and moral foundation of the communist state, this question makes the union movement a genuine threat to communism. The union will have to be crushed forcibly, or it will, in time, erode the monolithic nature of communism.

The Polish workers who courageously confront the state may be dimly aware of the philosophical implications of their challenge, as are most people who labor and suffer under a totalitarian regime. But they are grossly mistaken in their belief that a labor union can actually improve the living and working conditions of the workers.

Rising Productivity Is the Key to Progress

It is an economic error deeply imbedded in popular thought, even in the capitalistic West, that labor unions can raise the wage rates and improve the working conditions of the working population. Only rising productivity can bring this about. A labor union that raises production costs and disrupts production, tends to lower productivity and income. Through coercion or threats of coercion it may allocate larger slices of a shrinking pie to workers with union seniority—always at the expense of junior workers. But it cannot improve the economic conditions of all the people.

The Polish people will have to learn in the coming months that shorter work days, slow-downs and strikes do not raise living standards, but lower them. Economic conditions will deteriorate visibly and markedly because the socialist production order by itself is basically chaotic and unproductive. Adding militant union tactics to socialistic bungling is adding havoc to confusion. Polish standards of living will continue to fall, which may lead to more rebellion and confrontation with the communist state.

The only hope for genuine economic betterment lies in a return to the private-property competitive order, i.e., to capitalism. All means of production would have to be returned to private ownership, and economic production be guided again by costs and prices freely established in competitive markets. But those words cannot be spoken with Soviet commissars lurking around the corner. Moreover, it is doubtful that the Polish workers are thinking in those terms. They are watching with envy the economic conditions in the West where working people are free to unionize and engage in collective bargaining. Because there are unions there are high standards of living, most workers strongly believe, which is a logical error as old as the union movement itself.

Independent Farmers’ Union

The drive for Rural Solidarity, an independent farmers’ union, adds yet another dimension to the conflict. A consistent communistic order that tolerates no private property in the means of production has no place for independent farmers. It uses farm workers who labor from dawn to dusk on government estates or community cooperatives. The very existence of privately owned farms in Poland is a rare exception to the Soviet rule that was suspended temporarily because of transitional difficulties. But the government is asserting its ruthless control through its monopolistic position as the sole buyer of all farm products. It is setting its own prices and forcing farm producers to deliver their output to the state. Disobedience is denounced as “black marketeering” and punished severely and mercilessly.

The farmers’ drive for an independent union is an open affront to the communistic order. The farmers’ union would want to bargain for higher food prices and the freedom to sell farm produce in open markets. It would press demands that are utterly unacceptable to the holders of communist power. The confrontation is ideological and therefore insoluble. It is all the more menacing to the communistic state as it is supported by the workers’ union whose economic interests do not call for higher food prices. The strange alliance of workers’ and farmers’ union, therefore, is signalling a serious challenge to communistic principle and authority.

What are the motive powers of this challenge? This observer is fully convinced that it is Polish nationalism that is rising in defiance of Russian rule and supremacy.

Nationalism vs. Empire

Nationalism is a guiding principle or creed that permeates political thought and policies throughout the world. It undergirds all modern societies and legitimizes their claim to authority and sovereignty. It makes the nation-state the ideal form of political organization, and provides the framework for social and cultural activities. Unknown before the eighteenth century, it swept through Europe during the nineteenth century and conquered the world as a political ideology during the twentieth.

In its most popular garb nationalism raises the demand for a government of the same ethnic composition as the majority of the citizenry. Its goal is national self-determination, to be separate, independent, and equal to other nations. Seeking “national” or “popular” foundations for cultural and intellectual life, it rejects the supranational and universal elements of social life. Extreme versions of nationalism tend to drown the quest for individual liberty and seek to crush the rights and interests of other people not of the race and language of the majority group. Such has been the primary ideological force that plunged the world into its major wars.

After World War II the spread of nationalism to Africa and Asia brought an end to the European colonial empires and gave birth to a great number of national states. The same forces of nationalism are felt in the communist empire, giving rise to conflicting national interests and creating acute tensions that are gnawing at its foundation. Yugoslavia asserted her independence from Soviet Russia as early as 1948. All other satellite countries sought to regain it in vain. The popular uprising in Berlin, the revolt of Pozen, the Hungarian revolution, the Czech rebellion, and now the Polish workers’ revolt, all reveal the tremendous tensions and conflicts between the people and their communist masters.

Polish Nationalism

Polish nationalism, which during the 19th century had merely been an upper-class movement and therefore had failed to achieve national independence, is the primary political credo in Poland today. It probably received its impelling force and momentum from the immense suffering which German and Russian nationalism inflicted on many Poles during and after World War II. In 1939, Polish independence was crushed by Nazi Germany and communist Russia, acting in concert, leading to another, partition of Poland. During and after the war, more than one-third of the Polish population was driven from its homes and resettled ultimately in formerly German territory that was emptied of German-speaking inhabitants. The suffering inflicted by foreign nationalism has left a deep mark on the present generation of Poles, especially in the resettled areas. It is no coincidence that the workers’ revolt started in the Gdansk area and from there quickly spread to Silesia, areas settled by Poles only thirty years ago.

Nationalism is a powerful divisive force in the communist world, a force capable of producing bitter tensions and conflicts. It is resisting the centralization of all power in the Kremlin and preventing it from establishing its deadly uniformity throughout the empire. In the satellite countries it creates a wide rift between the people and the governments which receive their orders from Moscow. The Polish people reject and scorn their own government and the ruling class of communist party members who are catering to their Russian masters.

Growing Tensions of Nationalism Within Soviet Union

The Soviet Union itself consisting of nearly 180 different nationalities and tribes is suffering from growing tensions of nationalism. The Russians or Great Russians, as they are often called, merely comprise some 58 per cent of the Soviet population. Sizable minorities include the Ukrainians, Byelorussians, Georgians, Armenians, Estonians, Latvians and Lithuanians, who are praying for their day of deliverance.

When, in 1941, the German armies invaded the Soviet Union, millions of people welcomed the German invaders as their liberators. A volunteer army of Soviet subjects under a former Red Army general, Andrei Vlasov, fought side by side with the Germans to the bitter end. If the German conquest had not been marred by countless Nazi atrocities and the Hitler regime had not proven to be even worse than the Stalin reign, the national minorities might have risen in unison against their Kremlin masters. After the war, four Soviet republics and one national region were dissolved as a punishment for their defection and their inhabitants dispersed over the Union.

Behind the Iron Curtain nationalism probably constitutes the greatest challenge and danger to the communist empire. This is not to deny that in Third-World countries communism and nationalism may become uneasy allies in their attempts at overthrowing the old order. A government with nationalistic ambitions, eager to “liberate” an ethnic group or reclaim “lost territory,” may meet resistance by the Western powers, but find eager support by the Soviet Union. The Kremlin encourages and assists the national liberation movement and, whenever successful, reaps its rewards in the extension of Soviet power.

Conquer or Perish

Why are the Soviets so intent upon conquering and extending their sphere of power? Why this unflinching aspiration for unlimited world supremacy?

The communist politicians and sympathizers throughout the world have a ready answer: the need for self-defense. The decaying capitalist democracies, they proclaim, are bent on extending their spheres of exploitation. Russia is merely defending her own independence. Of course, such an answer has justified all aggressions from the beginning of time. Louis XIV and Napoleon, Hitler and Mussolini invaded foreign countries only in self-defense. For the same reason Russia annexed Estonia, Latvia, Lithuania, Bessarabia, a province of Czechoslovakia, a part of Finland, a great part of Poland, and Chinese and Japanese territories. Russia created a ring of satellite countries for which it claims exclusive concern and interest. They include the rest of Poland, East Germany, Czechoslovakia, Rumania, Hungary, Yugoslavia, Bulgaria, Korea and, since December 1979, also Afghanistan. In these countries only “friendly” governments, i.e., puppet communist regimes, are tolerated.

If the U.S.A. were to seek territorial aggrandizement in Soviet fashion, it would have annexed Canada, Mexico, and Cuba long ago, and converted all other Latin American countries to “friendly” neighbors. But that would be “capitalist imperialism” in communist terminology. When the Soviet Union embarks upon aggression it is “self-defense.”

Toward World Revolution

Russia’s aggressiveness actually is the poisonous fruit of the communist dogma that the Soviet Union is entrusted by destiny to keep the death watch of capitalism. By laboring toward the final world revolution, the Kremlin is paving the way for the new order. The Russian intelligentsia and many thought leaders who afford strength and support to the regime are flattered by the thought that they are the leaders of the world revolution. They are ready to support the Kremlin as long as the world revolution is advancing and showing promise of final success. To them the spread of communism throughout the world offers cogent proof that Marx and Lenin were right in their foreknowledge of a new order.

The Kremlin, therefore, is under continuous pressure to produce new evidence that communism is on the march and the revolution is proceeding on schedule. It must take ever new initiatives of aggression and launch new attacks in order to retain the vital support of the intelligentsia. Any break in the Kremlin momentum is inviting disillusionment and disapproval. Any setback is threatening the very foundation of the political order. Only unflinching aggression and visible success can appease the Marxian intellectuals.

And yet, reason and virtue have not perished in the satellite countries, nor in Russia itself. To the intelligent and sensitive minds communism has ceased to constitute a faith that satisfies their souls. Many millions of victims of communism tear at the hearts and weigh on the consciences of those who still can feel and think. Other millions of victims who endured sadistic brutality in labor camps are finding their moral strength to resist the darkness. Although still imbued with the doctrines and theories of Marxism or other brands of socialism, many thinkers are rediscovering the intellectual and moral roots of Western civilization. A large number of Russian writers are consciously Christian. To them Christianity is often perceived to be the alternative and main competition to Marxism-Leninism. They are emerging From Under the Rubble, as Alexander Solzhenitsyn and a group of intimates describe it in a ringing testament.

When given the opportunity, the great minds of Russia are escaping to the West. The communist regime kept in place by brute force is suffering from ideological subversion that is gnawing at the foundation of the empire. The entrenched ruling class of the Soviet Union as well as those in all its satellites have much to fear from their long-suffering subjects. Chronic discontent with working and living conditions are sparking sporadic rebellions. The Polish troubles are an early indication that the Soviet system is weakening in its ideological and moral foundation.

It would be wishful thinking that the communist regime in Poland is about to collapse, pulling down communist rule throughout the world. But it is certain that whatever is happening in Poland is shaking the empire and frightening the Soviet rulers. They may have to call on the Soviet armed forces for their “defensive” service in the name of the socialist world order. But the effectiveness of the armed forces depends on their fidelity and loyalty to a system that is decaying in its core. It is not surprising that the Kremlin is hesitating to order the Red Army to march.

How Can the West Respond?

Recent events in Poland reveal the tremendous tensions and paradoxes of the Soviet system. They manifest again that the empire structure is resting precariously on a decadent foundation that is crumbling bit by bit. When a few thousand desperate slaves are rattling their chains the whole slave plantation must brace itself for an earthquake. The Polish workers who, with incredible courage, are tearing at their shackles, are speaking louder than the gibberish of Marxist-Leninist propaganda that pours from the Kremlin. They may fail in the end because the Red Army may yet hold together in a skirmish with ancient neighbors, the Poles. But their sacrifices may reveal and widen the fractures and ruptures of the whole system. For the final day of liberation they may have to wait a little longer until the whole structure comes tumbling down.

To the West, the Polish unrest may serve as a timely occasion for re-evaluating its basic position and policy. Should we continue to come to the support of the communist states through the transfer of massive capital and modern technology—in return for a few more moments of detente? Should we help the ruling classes of the Soviet empire to weather one crisis after an other? Or should we pursue a policy of containment that affords new hope and strength to the countless rail-lions of communist oppression? If we have faith in the intellectual and moral values of the West, the answers are very simple.

The Kremlin leaders are devoting all their energies to the building of armed forces of a size the world has never seen before. Counting their numbers many Western observers are despairing, talking about defeat and surrender and preparing for the worst. They are alarmed about our “missile gap,” the “fighter gap,” the “bomber gap,” and so on, which we are urged to bridge at once. All their facts and figures may be true. But they are completely ignoring the moral coefficient that is most important in the determination of who is superior. According to a famous dictum by Clausewitz, we must multiply the military strength of the enemy by his moral coefficient in order to arrive at his strength in battle. That is, we must multiply the Soviet legions by the universal tyranny and oppression of the Soviet system in order to estimate its actual strength. Such a calculation must fill us with new hope and confidence in the ultimate outcome of a collision.

Surely we must not allow ourselves to be lulled to sleep, act cowardly, be confused and indecisive. We must be strong not only politically and militarily, but also intellectually and morally. We must have faith in our values, in the intellectual and moral heritage of the West.

  • Hans F. Sennholz (1922-2007) was Ludwig von Mises' first PhD student in the United States. He taught economics at Grove City College, 1956–1992, having been hired as department chair upon arrival. After he retired, he became president of the Foundation for Economic Education, 1992–1997.