The "But Communism Was Bad" Argument

Lately, when debating matters of economics, people that I will broadly call "small government advocates" (usually hardline fiscal hawk conservatives and libertarians) will inevitably start throwing about the argument that "communism is a failed ideology" when they are challenged directly about the specifics of what they would cut from government, or on the flaws in their understandings.  In the last week, I ran into one of these arguments when discussing (or trying to) several implicit assumptions in a libertarian's argument that governments have no right to levy taxes.

The Arguments

Argument 1

The first form that these arguments often take is a consumer argument.  More or less, it boils down to "if you looked in a Soviet era grocery store, there was very little product available.  Therefore, the system was a failure.

For example:

What he's referring to are pictures like this from the late 1970s / early 1980s Soviet countries:  

... and yes, by the late 1970s, the consumer side of the Soviet economy was clearly in deep trouble.  

Argument 2

The second argument basically involves pointing to Venezuela, a country which is currently in the midst of economic collapse.  Of course, as the linked article points out, Venezuela's economic collapse is much more than a simple matter of having a "socialist" government (I'll come back to this in a little while).  Not unlike Alberta, Venezuela has relied for far too long almost exclusively on resource revenues.  When that sector tanks, so does their economy.  

Argument 3

The third argument is basically "communists have killed way more people than capitalists".  Yes, it's certainly true that Stalin in the USSR murdered millions, Pol Pot in Cambodia oversaw the so-called killing fields, and so on.  I don't think anyone can defend the actions of these dictators in any reasonable way, nor do I intend to.  However, the argument that this shows that communism is fundamentally a bad way to run a country's finances is also problematic.  

In Canada, we have seen the federal conservatives use this as a propaganda tool, often to rail against any kind of social policy.  (Government anything = socialism = communism, more or less).  

This argument is particularly annoying because it is fundamentally an emotional argument to start with, and one which is based on a resurrection of McCarthy era "red scare" propaganda.  

What's Wrong With These Arguments?

Communist Dictatorships

I'm going to go through these in almost reverse order.  First, let's start off with the basic assumption that "communism is bad".  The examples cited for why communism is bad are almost all better understood as totalitarian dictatorships.  Whether we talk about Stalin, Pol Pot or even Cuba's Fidel Castro, is that they were all fundamentally totalitarian dictators.  Dictators, regardless of their political stripe are prone to being deeply destructive as they struggle to hold on to personal power.  Whether we are talking about dictators the US supported for years like Panama's Manuel Noriega, or the monarchy in Iran, there were many abuses of power, both human rights, and greed focused.  

One only has to look at the history of American political interventions in Central and South America throughout the Cold War era, or in the Middle East since WWII to recognize that political expediency has ruled the day, with the government supporting governments that are ideologically aligned with them, even when that government is engaged in horrendous actions against its own people.  The history of "capitalism" when it comes to human rights is just as dark as the communist dictators, the only significant difference is that it was largely done through proxy states.

Communism = Socialism

This is a perplexing equivalence.  Anybody who has been through Canada's grade school system in the last fifty years would have gotten a pretty good dose of the different political "isms" that have been predominant since WWII.  As economic theories, Capitalism and Communism are often held up as being diametrically opposed to each other, and Socialism is often portrayed as many variations in between.  In Western countries, Capitalism is broadly understood in the context of greater individual liberty, where Communism is associated with high level economic planning being done by the central government.  

In North America, the so-called "Red Scare" era of the 1950s in the United States (peak Cold War) laid out a cultural framework in which US politicians drew an increasingly frightening picture of communism as the absolute withdrawal of personal liberties, and an overt attack on everything good that American life stood for.  The McArthy era in the US built on the existing mistrust of government in general that is pervasive in American culture, and used broad accusations to attack anyone who had even remotely "left-leaning" political ideas.  We see modern day conservatives in both countries attempting to leverage the resulting fabric by equating any kind of government intervention in society (including social safety net programs) with the extremes of the totalitarian dictators who led certain communist governments.   

However, most people who advocate for things like single payer (socialized) health care, are not arguing for the government to take over control of the economy.  Their ideals are often inspired by the successful governments in Europe which are largely Social Democracies.  The argument that somehow this represents an unwarranted intrusion by the state into the lives of individuals is at best hyperbole, at worst it represents a classic example of the Slippery Slope fallacy by drawing Socialism as being far closer to Communism than it actually is.  

Failed Economies

The failed economy argument is a more complex one to address. Usually the argument goes something along the lines of "government cannot / should not borrow money because communist regimes suffered economic collapse".  Superficially, this almost seems reasonable. The collapse of the Soviet Union is fairly well documented, and the relative lack of consumer goods in Soviet Russia is pointed to as a primary example of how central planning failed.  

A failed economy is a disaster for the people who live in the country.  This is unquestionably true. One only has to look at the regional failures in North America to understand a "closer to home" example - the Rust Belt.  The decline of industrial production in North America gutted regional economies which had previously relied on local heavy industry to sustain them.  While this hasn't resulted in the outright collapse of the US economy, it has caused a major exodus of population, and at least one municipality has had to declare bankruptcy and abandon providing infrastructure services to major areas.  

Generally, a robust economy will survive one or two segments experiencing a downturn.  So, why did  the Soviet Union's economy collapse so thoroughly? The simplistic answer is to claim that central planning is an inherently flawed way to run an economy, and the bureaucrats simply couldn't see what was happening through their own fantasies.  However, such a claim is both overly simplistic, and it ignores a lot of context.  First, we cannot ignore that the Soviet Union had been largely isolated in many ways.  Much of its trade was within the confines of its allied countries and vassal states under its direct control. China was, at the time, not the industrial power it has become in the last few decades, and the Soviet Union found itself trapped in a cycle of competing demands which it could only meet some of.  In many respects, the Cold War became a proxy war for control over client states.  The US was able to force the Soviet Union to expend significant resources in that conflict while limiting the ability of the Soviet Union to acquire cash reserves needed to support their efforts in a world that was using the US dollar as a reserve currency.  In short, the Soviet Union's economy collapsed from a series of internal and external pressures which the US economy has never faced to date.  

External pressures like sanctions, or volatile resource prices play a significant role in the collapse of an economy.  Venezuela is one such example, where its dependence on oil prices at a time when other players in the oil market decided to increase production caused a major drop in government revenues.  Coupled with US economic sanctions and political upheaval in the wake of Chavez's death, the government has floundered with the economy.  Remove the sanctions and political uncertainty, and one might well see a substantially different outcome. 

Again, one might well look to how various states that are nominally allied with the US are doing in various regions of the world and ask whether those states have prospered under governments that the US has backed. The answer here is more mixed. Some, like South Korea, certainly have. Yet others, such as some Central American nations, have suffered under the yoke of brutal dictatorships.  Yeah - there's that dictator word again - it's important, isn't it?  

Consumer Economy Versus Other Models

It is also quite important to recognize that there are significant differences between a "consumer economy" such as the United States has fostered, and other models.  The consumer economy looks at everything through the lens of consumption.  Basically, the function of the economy is solely measured on the basis of product sales.  Nobody pays attention to other factors like whether the product is necessary, or if the price is fair (the magical "invisible hand" of the free market corrects this ... right?), or whether a given product or service needs to be universally accessible (e.g. healthcare).  So ... what does all this mean?  

The Soviet Union opted for a centrally controlled model which did not emphasize the consumer.  However, it's important to recognize that it did work reasonably well for the Soviet Union until the 1970s.  Further, in the wake of the Soviet Union's collapse, it has become much clearer that the Soviet Union cannot be seen as a simple economy. The ability of that country to create its own variations on many Western consumer goods (e.g. Russian versions of numerous western home computers from the 1980s) suggests that the centralized planning only went so far.  We who live in the western countries need to be cautiously skeptical about the picture that was painted for us in the latter years of the Soviet Union.  

Although China is a communist country, it is a much different conceptualization of communism, and one that has adopted a much different model of market economics in the last thirty years.  It is "neither fish nor fowl". It has a strong, often overbearing it seems, central government but this is contrasted with an economy that has adopted much of the principles of the western market economy (and often without the controlling regulations we have added).  It is perhaps the unique pragmatism of the Chinese approach that makes me skeptical about blithely condemning approaches to politics and economics in other countries.  Often, we only have a partial picture painted for us by those who sit in positions of power. 

However, there is a big difference between the command-and-control economy of the Soviet Union and the more market driven economies of democratic socialist countries like Norway or Sweden.  These are countries with comprehensive social programs for all of their people, and yet you cannot by any means argue that they are centrally planned.  They tend to have a greater emphasis on government delivery of key services like health care, and regulation of industry compared to the market fundamentalism that we have seen in the United States.  Does that make them bad countries?  Not at all - in fact they are stable nations which have relatively content populations.  To conflate government intervention in domains intended to protect the people of a nation with the centralized "command-and-control" model of the Soviet Union is at best a stretch, at worst a false analogy.  

Conclusions

For the most part, the "but, but ... Communism!" cry often heard from the libertarian influenced right is nonsense.  It is, at its heart, an attempt to resurrect the zombie of McArthyism.  McArthy was a terrible human being who used the politics of fear to forward his personal agenda for greater power.  We should fear those who would resurrect his politics far more.  

Labour Exploitation In The Knowledge Economy

The basis of the economy has changed over the last fifty years, and with it has come a change in how companies operate.  Arising from these changes is a new form of exploitation that affects workers at all levels.

Through the industrial revolution, we moved from artisan labour producing most products to an environment of mass production.  Artisans became factory workers, and when the predations of employers became too much, organized into labour unions to have the collective strength to fight back and gain better treatment for workers.  (This is a bit of an oversimplification, but for the purposes of this essay, it sets out the basis from which I will be building an analysis of today's issues)

Since sometime in the 1980s (especially in the wake of Thatcher's efforts in the UK), Neo-Conservatives around the world have been working actively to weaken the power of the trade unions.  This has resulted more recently in so-called "right to work" laws in the United States.  Laws which clearly undermine the effectiveness of unions and collective bargaining.  Superficially, these laws only appear to affect traditionally organized labour groups - manufacturing, government services and so on.

However, that is far from the full picture.  In fact, it is miles from it.  Conservatives have spent a great deal of time in the last forty years painting unions as slothful, entitled and wasteful in their efforts to undermine them.  The net effect has become that the balance of power has once again shifted heavily in favour of the employers.  Many unionized labourers find that their unions are of limited help when it comes to addressing grievances related to working conditions, pay or other workplace issues.  Contractual negotiations have turned again to a situation where the employer is dictating terms to the unions and so on.  In Alberta, for example, the government has just legislated the "agreement" with teachers in the province without actually negotiating with the ATA and other related bodies.  This is not an agreement, it is something else entirely.  Whether the ATA and its members agree with the imposed settlement is moot.

Now, as we turn from the labour economy to the so-called information economy, we find a new problem arising - and it is an ugly one indeed.  Knowledge workers, whether in IT or other domains, are highly skilled, highly intelligent people with extensive backgrounds in a myriad of areas.  They often hold advanced degrees as well as professional certification as engineers.  These people are used to being treated similarly to other professionals such as lawyers or doctors.

Unfortunately, the world has been changing dramatically since the early 1990s.  First of all, the rise of the multi-national corporation has begun to present a serious challenge.  Most countries have some kinds of laws which regulate corporate activities and place boundaries around them to some extent or another.  These laws are not, however, consistent across nations.  So, Canada has one set of laws, the United States another, and India another set of laws entirely.

When corporations have become so large as to span many nations, they become a law unto themselves at the moment.  If they don't like the conditions in one country, they simply move the bulk of their operations to another country where it is more favourable.  More favourable could mean anything from cheaper labour to fewer restrictions on how business is conducted or lower taxes.

The problem for Knowledge Workers has become one where their skills are emerging in more and more markets.  IT skills have become "commonplace" in the minds of many employers, with the consequence becoming that suddenly the notion of hiring skills locally has been replaced by "offshoring" - hiring expertise from India or some other country where "you can hire 10 programmers for the cost of one in North America".

The same thing is emerging in other "knowledge" domains such as engineering.  Building bridges is rapidly becoming something which is done "offshore", with only local labour being used for final assembly.  The design can be exported to an engineering firm in India, the manufacture of segments could happen elsewhere in the world.  As we found with the Temporary Foreign Worker program recently, this can result in local talent being shut out of the work simply because they are deemed (arbitrarily) more expensive.  In the case of the TFW program, Canadians are being obliged to train their replacements in how to do their jobs which will then be shipped off to another country.

What does all this suggest?  First, we have to recognize that money is fundamentally psychopathic.  It has no moral or ethical framework which bounds it.  Only individuals can bound money with ethical and moral considerations.  As corporations grow, they eventually expand to a point where decision making at the top is only bounded by profit considerations.  The impact on people becomes a secondary consideration.

As an example, when a company I used to work for moved to new facilities in the 1990s, the company was comparatively small.  A lot of decisions were made in terms of working environment that specifically accounted for the needs of the staff, and respected the input received from the staff.  More recently, I have heard that the same firm is moving into new facilities.  However, it is now part of a much larger multinational entity.  The new facilities are designed around minimizing the costs of office space per employee.  In fact, staff weren't even consulted about the working arrangements during the planning process.  The message?  Staff don't matter - even specialized knowledge is deemed to be replaceable by cheaper labour abroad if necessary.

The upshot is that there is nothing that obliges a company to utilize local talent in the course of business.  In fact, because the multinational company is able to sidestep local labour laws and suchlike, they can move business wherever they see maximum profit.

Because professional workers are not accustomed to having the "weaker hand" in negotiating with employers, they are only just beginning to recognize what is happening to them.  It used to be that having significant skills and depth of knowledge was a significant bargaining lever.  It still is, except that for a lot of knowledge domains, the competitor isn't down the street, but halfway around the world living in dramatically different circumstances.

What is happening is a two-ended exploitation.  Knowledge workers are being pressured to do more work for less money and in ever deteriorating conditions on one side of the equation, and on the "receiving side" of the offshoring discussions, the workers are being exploited with lower wages and no doubt poor working conditions as well.

The problem really boils down to there being a lack of effective tools for restricting the money-centered predations of large companies.  Local unions have limited leverage simply because much of the work can be moved elsewhere so easily, and the fact that work can be moved around with such minimal consequences for the employer further compounds matters.

I do not know how long it will take for knowledge workers to begin to recognize the degree of exploitation that they are currently experiencing.  I do know that the recognition of that exploitation is emerging and it will take some significant organization and change in the world in order to overcome this.  It will take more than just a trade union like construct to start to change this.

A part of the solution may well involve some kind of international union construct.  Another part will be the creation of a form of legal and regulatory environment that overcomes the ability of a multi-national company to sidestep local labour laws by shuffling the deck of cards as they are currently able to do.

The construct of corporate boards to oversee and guide the management of a corporation is no longer an effective tool in managing large organizations.  They are too far removed from the local consequences of their decisions to understand those effects on people and regions.  The construct of the board has become a means for the elites to communicate and share information, rather than a means of guiding a company with respect to ethical considerations.   This too may yet need to change in order to balance off the otherwise predatory nature of a company's desire to acquire more wealth.

In essence, we need to reinvent the notion of capitalism so that it works at a global scale, and the relationship between capitalism and labour must also be revisited.  Corporate accountability at the level of the nation-state is far too easily sidestepped.