Post by Origanalist on Jul 6, 2014 5:22:56 GMT -8
I'm not sure I'm fully on board with this because of the damage being done daily, but he makes an interesting point.
Gary North - July 05, 2014
At the age of 72, I look back at my life, and I ask a question: "What was the most significant event of my lifetime?"
I go back and forth between two events, but in fact they were the same event. The first was the decision of Deng Xiaoping in 1979 to begin to remove economic controls over agriculture in China. That led to the greatest period of economic growth over the largest area in the history of man.
The second was the collapse of the Communist Party of the Soviet Union in late August 1991. This was followed by the decision of the Soviet government to shut down the Soviet Union in the final week of 1991. This was the largest empire in history geographically. The Russian component spanned 11 time zones. Through its satellite nations, it extended into Western Europe. It had been in operation for over 70 years. It had the most extensive system of control over thought and activities of any large society in the history of man. Yet, in one week, without any bloodshed, the leaders of the USSR simply abandoned it. Nothing like this had ever happened before.
Those of us who lived through it could barely appreciate the magnitude of it. That is because it was bloodless. There was almost no warning. The West had been involved in a great competition between the two systems from 1946 until 1991. Then, without warning, that competition ended. It caught Russians by surprise. It caught Westerners by surprise.
Communist China and Communist Russia were loosely connected by ideology. Each system was far more rigorous than anything in the West. The West was committed to a vague faith in democracy as a political system, but with all kinds of economic opinions and religious opinions tolerated or promoted. The Communists were very different. They had a consistent ideology. It involved a specific view of God, man, law, causation, and the future. There was no toleration of supernatural religion. There was no official toleration of capitalism, although the black market was always allowed to exist, because without the black market, both systems would have completely collapsed. There was a name for it in the USSR: "blat." There was also a phrase: "Blat is higher than Stalin." Yet for all of the centralization, for all of the tyranny, and for all of the interference with civil liberties, both systems ended. They did not end with a bang. They ended with a whimper.
There was no collapse. The Chinese economy began to boom almost immediately in 1980. The Russian economy did go through some withdrawal pains, and these lasted for about 10 years. But it has recovered remarkably. Today, Russia is the dashboard camcorder capital of the world. When we watch YouTube videos of spectacular car crashes, a large percentage of them took place in Russia.
MISES PREDICTED THIS
All of this was predictable in general. More to the point, all of it had been predicted. It was predicted in 1920 by Ludwig von Mises, in an essay: Economic Calculation in the Socialist Commonwealth. In 1922, he extended that essay into a comprehensive treatise, Socialism. Mises made it clear that it would not be possible for any socialist commonwealth to implement its theory of socialism. If any government attempted this, the economy would end in chaos and economic breakdown. Without capital markets, and without the private ownership of the means of production, it is not possible to find out what anything is worth or what anything costs. Without a price system, there is nothing but economic blindness.
The socialists did their best to ignore this essay for the next 70 years, but in the end, it was obvious: Mises was right. The socialist multimillionaire economist Robert Heilbroner finally admitted it in an article in The New Yorker in September 1990. He literally said it: "Mises was right."
What we have here is a combination of general theory and events in history. From the standpoint of general economic theory, the breakdown of both the Soviet Union and Red China was inevitable. In the case of China, there was no collapse, because the economy was so poverty-stricken in 1979 that the reform instituted by Deng Xiaoping could not possibly have collapsed it. In the case of the Soviet Union, which was a far more advanced economy, and which had been copying Western prices for half a century, just as Mises said socialist planners would have to do, the transition was more painful economically. But it was a major recession, not a collapse.
In Ernest Hemmingway's novel, The Sun Also Rises (1926), we read this:
"How did you go bankrupt?" Bill asked.
"Two ways," Mike said. "Gradually and then suddenly."
That was what happened in the Soviet Union. It was bankrupt morally and spiritually from the October Revolution of 1917. But it took 74 years for the implications of that bankruptcy to play out.
STEP BY STEP...
continued at....www.garynorth.com/public/12642.cfm
Gary North - July 05, 2014
At the age of 72, I look back at my life, and I ask a question: "What was the most significant event of my lifetime?"
I go back and forth between two events, but in fact they were the same event. The first was the decision of Deng Xiaoping in 1979 to begin to remove economic controls over agriculture in China. That led to the greatest period of economic growth over the largest area in the history of man.
The second was the collapse of the Communist Party of the Soviet Union in late August 1991. This was followed by the decision of the Soviet government to shut down the Soviet Union in the final week of 1991. This was the largest empire in history geographically. The Russian component spanned 11 time zones. Through its satellite nations, it extended into Western Europe. It had been in operation for over 70 years. It had the most extensive system of control over thought and activities of any large society in the history of man. Yet, in one week, without any bloodshed, the leaders of the USSR simply abandoned it. Nothing like this had ever happened before.
Those of us who lived through it could barely appreciate the magnitude of it. That is because it was bloodless. There was almost no warning. The West had been involved in a great competition between the two systems from 1946 until 1991. Then, without warning, that competition ended. It caught Russians by surprise. It caught Westerners by surprise.
Communist China and Communist Russia were loosely connected by ideology. Each system was far more rigorous than anything in the West. The West was committed to a vague faith in democracy as a political system, but with all kinds of economic opinions and religious opinions tolerated or promoted. The Communists were very different. They had a consistent ideology. It involved a specific view of God, man, law, causation, and the future. There was no toleration of supernatural religion. There was no official toleration of capitalism, although the black market was always allowed to exist, because without the black market, both systems would have completely collapsed. There was a name for it in the USSR: "blat." There was also a phrase: "Blat is higher than Stalin." Yet for all of the centralization, for all of the tyranny, and for all of the interference with civil liberties, both systems ended. They did not end with a bang. They ended with a whimper.
There was no collapse. The Chinese economy began to boom almost immediately in 1980. The Russian economy did go through some withdrawal pains, and these lasted for about 10 years. But it has recovered remarkably. Today, Russia is the dashboard camcorder capital of the world. When we watch YouTube videos of spectacular car crashes, a large percentage of them took place in Russia.
MISES PREDICTED THIS
All of this was predictable in general. More to the point, all of it had been predicted. It was predicted in 1920 by Ludwig von Mises, in an essay: Economic Calculation in the Socialist Commonwealth. In 1922, he extended that essay into a comprehensive treatise, Socialism. Mises made it clear that it would not be possible for any socialist commonwealth to implement its theory of socialism. If any government attempted this, the economy would end in chaos and economic breakdown. Without capital markets, and without the private ownership of the means of production, it is not possible to find out what anything is worth or what anything costs. Without a price system, there is nothing but economic blindness.
The socialists did their best to ignore this essay for the next 70 years, but in the end, it was obvious: Mises was right. The socialist multimillionaire economist Robert Heilbroner finally admitted it in an article in The New Yorker in September 1990. He literally said it: "Mises was right."
What we have here is a combination of general theory and events in history. From the standpoint of general economic theory, the breakdown of both the Soviet Union and Red China was inevitable. In the case of China, there was no collapse, because the economy was so poverty-stricken in 1979 that the reform instituted by Deng Xiaoping could not possibly have collapsed it. In the case of the Soviet Union, which was a far more advanced economy, and which had been copying Western prices for half a century, just as Mises said socialist planners would have to do, the transition was more painful economically. But it was a major recession, not a collapse.
In Ernest Hemmingway's novel, The Sun Also Rises (1926), we read this:
"How did you go bankrupt?" Bill asked.
"Two ways," Mike said. "Gradually and then suddenly."
That was what happened in the Soviet Union. It was bankrupt morally and spiritually from the October Revolution of 1917. But it took 74 years for the implications of that bankruptcy to play out.
STEP BY STEP...
continued at....www.garynorth.com/public/12642.cfm