My name is Michael McKay and I have the privilege of delivering this paper by Dr. Yuri Maltsev
titled Unbreakable Union, Lessons Learned from the Demise of the Soviet Union.
Why did Dr. Maltsev choose this title?
Because of its irony.
The opening lines of the state anthem of the USSR went as such, an unbreakable union of
of Free Republics, Great Rus', has united forever. Long live the created by the will
of the peoples, the united, the mighty Soviet Union.
But indeed it was not unbreakable. Twenty years ago it broke apart spectacularly. I
would refer you to Dr. Maltsev's other scholarship where he talks about how the USSR was too
In those lectures, Dr. Maltsev outlines how the USSR had one-sixth of the landmass of the entire planet, covered 11 time zones, was blessed with vast and abundant natural resources, yet failed.
In this lecture, Dr. Maltsev asks, why are all of these empires, which look so formidable and insurmountable, even eternal, so fragile?
Indeed, how fragile all empires have been and are yet today.
There are many lessons the world can learn from this.
Here are some of the lessons that the wreckage of the Soviet Union leaves us to learn, ponder
and appreciate.
Lesson number one, real property rights matter.
Please note the word real.
There are many ways to trick people about property rights.
But before we examine these tricks, let us remember that true property rights means that
I can acquire, use, develop, profit from, and dispose of my property as I see fit.
But socialists have learned that they can creep up on people.
The tragedy of the Bolshevik Revolution of 1917 was not an isolated event in Russian
history.
The beginning of the 20th century was marked by encroaching socialism through the increasing
Building of Regulations as well as Social and Ethnic Engineering. The huge bureaucratic
regulatory state created by the government of Nicholas II in Russia was the direct predecessor
of socialism. The First World War led to further militarization and centralization of Russia.
Socialist leaders, Lenin, Bukharin and Larin, with great sympathy, were watching how the
The German military economic machine was replacing the market mechanism. They argued that the
combination of this type of economic organization with the socialist party in power is socialism.
Quote, here we have the last word in modern large-scale capitalist technology and planned
organization, unquote, wrote Lenin. Ludwig von Mises analyzed two patterns for the realization
for the Realization of Socialism, Russian with Wholesale Socialization, and German or
Nazi with property rights subjugated by the state and its central planners. In summary,
the fascist economic model is related to property rights in the following ways. Incrementally
regulated and restricted, which is gradual confiscation, arbitrarily imposed to apply
to one class or group and not another, total state control of private property and the
creation of a new type of property right holder, the bureaucrat.
It was and still is common in academia to identify the communists as the left and the
Nazis as the extreme right as if they stood at opposite ends of the ideological spectrum.
These definitions were first coined by Stalin himself at the 7th Congress of the Communist
International in 1935. To put these regimes in their true perspective, we should point
out that they are varying versions of the same socialist ideology. The economic policies
of Mussolini's Italy and Hitler's Germany resembled the state socialism which Lenin
wanted to institute in Soviet Russia upon coming to power, under which private enterprise
would work for the government, an idea Lenin was forced to abandon under the pressure of
the left communists. Under both fascist and communist regimes, government bureaucracy
completely controls the production, it decides what shall be produced, how much, for whom
and how. The difference between the systems is that the German and Italian patterns did
indeed allow or more accurately tolerated private property. However, it was property
in a peculiar and very restricted sense, not the virtually untrammeled private ownership
of Roman law in 19th century Europe, but rather conditional possession under which the state,
the owner of last resort, reserved to itself the right to interfere with and even confiscate
assets which in its judgment were unsatisfactorily used. But in fact, the governments of fascist
Italy and Nazi Germany directed production decisions, curbed entrepreneurship and the
labor market and determined wages and interest rates by centralized authorities similar to
that in the communist states.
Communist Russia was the first country to completely and officially abolish property
rights which were declared a sanctification of capitalist oppression and exploitation.
Lenin pursued the expropriation of private property with fanatical zeal and unhesitatingly
Lesson number two, sound money and free banking matters. Ludwig von Mises has explained that
Social cooperation requires a division of labor since no one person can do, make, refine,
grow, cultivate, gather, foster, raise, process, enhance and deliver everything that they need
and want in their life. And there are several keys that are required for the division of
labor and therefore social cooperation to work at an optimum level. At the individual
interaction level, it is the money that is the blood that moves through the body of mankind
and makes the interaction work and workable. Without money, as the interactive medium of exchange, the division of labor cannot function beyond a subsistence level.
In fact, it is the soundness of money that allows the division of labor of people that want different things in life at different times, and that is all of us, to expand and for social cooperation to have a chance.
Lesson number three, freedom of speech, mobility and information dissemination and acquisition matters.
Lesson number four, rule of law must mean that nobody is above the law. Socialist tyranny is incompatible with the rule of law.
Lesson number five, non-centrally controlled education matters.
Central control of education leads to people learning what suits and serves those who want greater control over people.
Decentralization of education is no guarantee that proper education, learning and discerning truths that are useful and necessary in life,
but it at least makes better education possible.
The ideal goal of education is learning valuable truths such as life principles,
Lesson number six. There is a direct relationship between coercive central control and suffering
and death, and the greater the coercive central control, the greater the suffering and death.
This system was based on destruction of markets. Rationing was introduced on everything from means of production to consumer goods, and the creation of non-economic institutions of compulsion to work, mass murder, mass incarceration of millions providing cheap labor, and a ban on peasants leaving collective farms, supplemented later by a similar ban on jobs and residency changes for urban residents.
Most western historians believe that Stalin's terror took place mainly in the cities against intellectuals and political opponents.
But the great purges were really an assault on the countryside.
Over half of all the executions took place in rural areas.
The liquidation of the kulaks, which were the large landholders, ended up in tens of millions of them deported to Siberia, where most of them died.
In Ukraine alone, Stalin starved to death over 7 million peasants. Bloodthirsty communist leaders ended up deporting women, children and crippled people who were no threat to the government.
Often authorities had a different agenda, like clearing out people they might have to feed.
What else have we learned? For those who are committed to coercive central control,
1. Tactics will change, but all will involve force. 2. Incrementalization will be used. 3. Propaganda starts early and must be pervasive, from education to media to entertainment.
4. Choices in all areas of life must be limited. 5. Central controllers never can have enough control over others.
6. Fear is their best tool. 7. War works. It is, as Randolph Bourne has stated, the health of the state.
Some will say that history teaches us one thing, that we never learn anything, but this is not totally true.
Some of us learn, to be sure, not enough of us learn yet.
There are those, and there are many, that still believe that socialism is fixable,
is not fixable, that it is like a guitar that only needs to be tuned correctly and that all the socialists so far were merely imbeciles and that we new socialists can fix that.
The biggest lesson is that socialism is not fixable. Why? In The Essential von Mises, Murray Rothbard wrote,
In an environment of accelerating statism and socialism, Ludwig von Mises turned his powerful attention to analyzing the economics of government intervention and planning.
His journal article of 1920, Economic Calculation in the Socialist Commonwealth, was a blockbuster,
demonstrating for the first time that socialism was an unviable system for an industrial economy.
Vermeises showed that a socialist economy totally deprived of free market price system
could not rationally calculate costs or allocate factors of production efficiently to their most needed tasks.
Social cooperation requires the division of labor, as Mises tells us. This, in turn, is built on the bedrock of private property, sound money, rule of law, and the other integrated principles of peace, prosperity, and freedom. The linkage between human effort and the resulting product, the well-being and well-being, must be secure and stable for economic activity to flourish.
In human effort, the resulting product and well-being must be secure and stable for economic
activity to flourish.
Economic and political systems of different nations differ in the amount of planning they
do and in the extent to which they restrict private ownership of property.
Wherever you see shifting, arbitrary, or unstable property rights, you see poor, decimated societies
The absence of property rights being the mother of human rights inevitably leads to negation
of every other right, starting with the first right, a right to life. The utmost importance
of property rights for human dignity and prosperity cannot be overestimated. Unfortunately, it
is still far from being understood by the majority of people.
Thank you very much.