All Commentary
Saturday, April 1, 1961

The Collapse of Communist Economic Theory

Mr. Sullivan is Coordinator of Information of the U.S. House of Representatives.

Communism has failed for forty-three years to produce enough goods to keep abreast of Russia‘s normal population growth.

The living standards of the great majority of the Russian peo­ple today are no more comfortable than were the mass standards of the much smaller Russian popula­tion under the Czar in the years 1900-1914.

In food supply, housing, educa­tion, transportation, and gross na­tional product, Russian per capita standards today are far and away the poorest in all Europe.

Communism—wholly lacking in the basic drives of individual in­centives and saddled by a back­breaking enforcement bureaucracy—simply cannot produce the goods and services required to sustain a flourishing and expanding nation. Inside Russia today, Marxist eco­nomic theory is under withering attack, even by certain sections of the Khrushchev high command. To refer to Russia as a first-class power is to revert subconsciously in our economic thinking to the era of the 1880′s in America.

Today’s picture of the Russian economy as is, comes from the cur­rent reports of no less than twenty-two U. S. economic survey teams sent to Russia under the State Department’s cultural ex­change program during the last two years—expert managerial teams of agricultural scientists, industrial engineers, architects, railroad men, real estate devel­opers, aircraft designers, and avia­tion experts. The essence of all these voluminous reports boils down to three terms to describe the faltering communist economy—shortages of everything, egre­gious bureaucratic fumbling, and bitter resignation by the masses of the Russian people to a drab life of oppressive and hopeless mediocrity.

Khrushchev’s personal admoni­tion to the Central Committee and the Presidium in Moscow during the nine-day January round table on food shortages fairly char­acterizes the general criticism of communist economic achievement in even the topmost Kremlin cir­cles. Chiding several large cities for having built extravagant sports stadia, Khrushchev re­minded the bureaucratic plan­ners: “Nobody denies these things are necessary, but is now the proper time to build them? No; we haven’t enough dwelling houses in the cities, and some people live in basements.”

No incident in contemporary communist history better illus­trates the failure of the Marxist economy to supply the basic needs of the people. Given food short­ages, housing shortages, and shoddy work clothing offered only at prohibitive prices, what then is left of the Marxist economy as a national productive system?

The tragedy of the Marxist fail­ure in Russia lies not only in the bitter enslavement of 210 million Russian people, but in the unbe­lievable failure of modern com­munications to transmit the true picture of this historic failure to the tens of millions of struggling people the world around who still are under Marxist siege in their own new ventures in national in­dependence. Despite the utter col­lapse of Marxism inside Russia today, much of the world still stands goggle-eyed before the fatuous boasts and flamboyant promises of Kremlin propaganda—“We will bury you!”

Failures of Marxist Theory

Reduced to man-in-the-street es­sentials, communism’s economic crisis today flows from three basic failures of Marxist theory:

1. Overly intensive urban indus­trialization has so reduced manpower in the rural areas that there is no longer suffi­cient food to sustain the bloated cities.

2. The manpower drain to staff the vast planning and com­pliance bureaus staggers the productive forces under an in­supportable burden of con­sumer demand; the bureau­cratic overhead is simply crushing.

3. Ambitious and aggressive communist imperialism has withdrawn so many military and police from the productive labor force that, in many areas of economic activity, only women remain to do the actual work of national sup­ply and maintenance.

Out of these dislocations over a period of 43 years, Russia’s planned economy now is dominated by a new class of experts, adminis­trators, and enforcers, sustained by an army of court jesters in press, radio, TV, and the cultural arts. This new class of elite law­givers and inspectors comprises at least 8 million people, or less than 4 per cent of the total population. The rest of the Russians (roughly 202 million of them) are mere lambs being led to slaughter in the toils of an archaic and discredited Marxist economy already aban­doned in ruins in the Kremlin cellars.

No Soap!

The production and distribution of soap attracted one distinguished U.S. economist during his Rus­sian survey. He discovered that all soap is produced by an autono­mous Moscow trust. It is delivered to the retail outlets and sold at a price fixed by the Ministry of Trade. Nowhere in the entire process is the consumer ever con­sulted, directly or indirectly. He simply takes what the trust de­livers—and no questions asked.

When this trust happened upon a new type of soap which could be produced cheaper, the Ministry of Trade rejected it because it called for new stock shelves in the retail outlets. So the consumer never got so much as even a look at the cheaper and better soap. Russian soap, it appears, is pro­duced and distributed at the con­venience and pleasure of the Gos­plan bureaucrats.

In every item of trade, the state planners systematically maintain a strong sellers’ market. In any commodity, therefore, anything goes Thus, all life in Russia is everlastingly dull, drab, tasteless, graceless, bitter, and boring. In­centive is dead, and hope no more. As one member of an American survey team summarized his jour­ney behind the Iron Curtain: “I was impressed by the disregard of the consumers’ sector of the So­viet economy.” And consumer, of course, means everybody.

In the heavy industries, another American observer found, there are no established channels for the consideration and testing of new ideas and new techniques. When a factory manager does, by chance, hit upon a new idea, he sends it off to Moscow for approval. It may not be applied even experimentally until approved by the top planners. As a result, all Russian industry is tooled largely by 1930 equip­ment commandeered from the oc­cupied areas of Europe in the era 1945-49.

Another U. S. survey team ex­amined personal incentives in com­munist production, as inaugurated in 1924 by Lenin’s NEP, and ex­panded in 1957 by Khrushchev’s decrees authorizing unequal condensation for superior production in selected industries. One Ameri­can economist described the incentive system as “rather bookish and sentimental, as if it had been de­vised by a progressive first-grade teacher who really didn’t like any­one to get very much ahead of anyone else, and who was uncer­tain whether to reward effort or performance.” In short, the natu­ral incentives of freedom never are permitted to find play in Rus­sia; the very limit is a planned incentive decreed by the remote Gosplan in Moscow.

Russian factories are “uniform­ly dirty and overcrowded, with in­ternal safety mechanisms virtually unknown.”

With a total population of 210 million, against 180 million for the U.S.A., Russia produced in 1959 barely one-third our total electric energy; barely one-third our pe­troleum; only two-thirds our total steel tonnage. In the same year Russia turned out 125,000 pas­senger automobiles, against 5,591,­000 in the U.S.

Factory managers in Russia are examined once a year on political theory. To hold his job, a manager must qualify anew every year in “Dialectical and Historical Ma­terialism,” and in “The History of the Communist Party.” His com­pulsory reading list includes 64 of­ficial textbooks, plus 93 selections from Lenin, 11 from Engles, 24 from Marx, 13 from Stalin, 14 from Khrushchev, and one from

Mao Tse-tung. It is easy to im­agine what happens to Russian production when every factory manager is occupied with these predetermined studies as the prime vehicle of his bureaucratic advancement.

Every factory manager has but one aim in life—to make this month’s production quota. His en­tire career, and all his incentive bonuses, are based on annual quota accomplishment. On this score, another reputable American economist reported:

“The incentive system also en­courages falsification of records, the hoarding of labor and supplies, and numerous unusual activities such as working employees on a Sunday and giving them a day off in the following month…”

This general pattern of phony quota-making has resulted in a broad panorama of totally unre­liable production statistics from every sector of the Bolshevik economy.

Manpower Shortage

Russian labor is regimented in a measure which kills all striving for excellence. Trained workers are in short supply in every line of production, and in-plant incen­tives often are discouraged by meticulously designed production norms delivered by Gosplan, Mos­cow, for every factory operation.

“The urgent need to provide better rewards to labor in order to elicit a higher level of worker productivity presents the Soviet economic planners with a serious challenge,” one visiting U.S. ex­pert reported.

As a measure to expand the labor force, the primary school program was modified beginning in 1958, to bring the youngsters through the eighth grade at 15 years of age—ready to go to work in the factories. Through various other revisions of the school pro­gram, roughly 5 million young­sters were added to the labor force under 18 years of age. Still the 1960 labor force—mainly be­cause of war losses during the years 1940-45—was 3.5 million short of the number already as­signed to the national production schedules for 1961 by Gosplan. Radio Moscow will blare to all the world in the coming months the fabulous production quotas to “catch up to the U.S.A.” The fact is that these quotas, whatever they may be, will not be accom­plished. They will be short by the production of 3,500,000 man years!

On the other hand, if labor is to be found for the production schedules of the madcap design­ers of the current Seven Year Plan, the workers must come from slaves impressed from the new African satellites, from further curtailment of agricultural man­power inside Russia, or from the present 5-million-man standing army throughout Iron Curtain Europe. For all its presently planned chores, Gosplan needs now roughly 2.5 million industrial workers and 1 million additional farm workers.

Over all Russian industry, man-hour production per worker meas­ures about one-third that of U.S. factories. These figures mean that, over all, Russia at present would need to expand her labor force at least six times to achieve total U.S. production volume. Such is the real muscle of the “industrial giant” which so many free men fear throughout the world. This, in fact, is the papier mache bear which Khrushchev says will cause our grandchildren to live under communism.

Trouble Everywhere

In housing, Russia hopes to give every city dweller 80 square feet of living space by 1965. The minimum standard, fixed by Marx­ist doctrine some thirty years ago, was 90 square feet per person. New housing is coming along so slowly in Russia‘s cities that more than 55 per cent of each year’s construction is swallowed up by population growth.

Throughout Moscow today, there are almost exactly the same number of grocery stores—in re­lation to the city’s population—as in 1930, and none of the retail grocery stores in Russia boasts refrigeration for meats, fruits, vegetables, or dairy products.

By all of these 22 reports, Rus­sia is distinctly a backward, sec­ond-rate economic power, hope­lessly bogged down in Marxist theory.

In all her industrial plant, in all her agriculture, in all her mili­tary establishment, communist Russia today is dependent entirely on machinery and equipment stolen or copied from the U.S.A. or Western Europe. The same ap­plies to everything in the realm of Russian scientific achievement—from atomic energy to radar guid­ance systems and rocket thrust. Moscow stole atomic energy and radar bomb sights from the U.S.A., and commandeered rocket thrust from the Peenemuende POW’s fol­lowing the German surrender in 1945. Her big espionage show to­day is focused on the Polaris mis­sile. She probably will have that secret in five years, and be able to produce the weapon in ten. That will be another great triumph for Marxist economic theory!

A wholly romantic appraisal of the communist economy by the West has misguided world opinion for an entire generation, and served at the same time to tighten the grip of the Moscow Presidium on its millions of disenchanted victims.

The recent U.S.A. survey teams now beckon the whole world to a more realistic estimate of the Marxist accomplishment. Forty-three years in a land of 210 mil­lion people is a fair testing time for any theory.

If all our relations with com­munism were to begin with the fact that the socialist economy simply cannot deliver the goods, and Russia is therefore a second-class power, the whole world soon would be on the mend. Hope would breathe again, and the Rus­sian people would be encouraged to strive for freedom. Little by little and bit by bit, the Iron Curtain would be lifted. A free society then would be offered at least a chance to “help the many who are poor.”

A Russia busy catching up on a half-century of pie-in-the-sky promises to the consumer would be too completely occupied at home to attempt intervention, subversion, and revolution in Asia, Africa, and Latin America. Capitalism, the creator, would go back to work for human progress. For all hu­mankind, a new birth of freedom would dawn.