Thursday, April 18, 2013

What Defeated Soviet Sphere Communism?

Britain lost one of their great figures of the 20th century recently as Margaret Thatcher passed away. Slowly but surely, the world is losing the Cold War figures who defined the end of that era, causing the media and history fans to review the figures and issues. Now that we are 20 years on from the end of the Cold War, we can review consequences no one would have seen in 1990. Thatcher is one of the primary figures associated with the confrontational stance towards Communism of the '80s that receives credit for defeating Communism. What or who defeated Soviet sphere communism? Individuals serve as rallying points and can guide a policy, but it is more what. Bad post-WW2 geopolitical moves, an underdeveloped consumer goods manufacturing economy, oil, and the US taking out a huge loan to defeat them in the 1980s defeated the USSR.
During WW2, Stalin was keen on securing a buffer zone of states between Germany and Russia. Hard to blame him considering the German invasion of Russian territory twice in 30 years. A problem created was a group of client states that drained resources out of the mother country. They were also off the wall at times, and required an armed presence to keep in line. This also opened them to publicity problems like the Polish Solidarity movement and the odd election of a Polish Pope who took the offensive. The Soviets then doubled down on this stupidity by seeking clients throughout the 3rd world. The Commies didn't learn from the Sino-Soviet split, and at every opportunity, they tried to develop clients in the 3rd world. Many of these 3rd world revolutionaries were Marxist men trained in American universities who went back home to start independence movements. They usually pledged their allegiance to the highest bidder. During and after the Vietnam War, the Soviets spent tons of money on 3rd world countries. Many of these loans went unpaid, the Soviet arms industry did well, and the rest of Soviet industrial firms could not extract natural resources from those nations at efficient rates. The Soviets expanded these efforts all over Africa and Asia in the 1970s as oil prices rose, and could afford losses then. As oil prices came back to earth, the Soviets bad loans built up and hampered their overall economic situation. They got entangled in bad situations, with Afghanistan just the best and last example of their careless, unnecessary decisions.
The Marxist bastards in charge of the USSR were just as obsessed with economic production as the West. Their problem was an economy that was largely agrarian before Soviet takeover and excluded from foreign investment in other ways. They could never properly manage their economy and the decades of destruction with their farming base left them in a grain deficit, which left them exposed to food price spikes despite having productive farmland under their control. Soviet economic leaders often remarked in amazement at how the US could have a functioning economy with proper resource allocation and optimization efforts, and even speculated that there was one office in DC or NYC that handled it. They just did not have a history of industry like the USA, and never could envision one properly within their Marxist framework. Their lack of consumer goods and food production issues while spending billions on defense was a problem. For the people and some of the leadership of the USSR, there was always a ready made system they could jump to: western capitalism. They even had an immense national treasure of a needed commodity to trade with that would fix all of their problems: oil.
Nixon closed the gold window and unleashed a decade of WTF with commodity prices. The Russians did benefit from this as their hard currency reserves increased with oil's spike up and elevated levels. This is how they funded many 3rd world idiots. It was a protection racket scheme, and oil was their revenue source. Kissinger set up the petrodollar system, but this doesn't explain the inflation. The US wouldn't reduce government spending, but the FED wasn't ratcheting up rates to cool the economy down. Losing the link to gold, everything went up to find solid footing (cotton especially, which is why people wore polyester clothes). Oil was subject to that influence, benefiting the Soviets, but it was also subject to the Arab's power with OPEC. Texas has ceased to be the swing producer, and Saudi Arabia had picked up the slack. The rising oil prices inspired the Soviets to spend more money, invest more in oil exploration and production and ramp up production. This took years, but changed in the early '80s. Volcker raised rates to the teens, forced a recession, and made investors and people trust the dollar again. Reagan's economic team realized the US economy did best with oil around $20, and realized that the Soviets were extended with the high oil prices. Reagan's foreign policy team worked the Saudis to clean up their finances, sell them some weapons to use against the Iranians if need be, and then to keep pumping oil and create a cap on the price. This screwed over the Soviets with their hard currency reserves as well as total revenues. This was also in the wake of many of their 3rd world loans rolling in worthless.
The US and UK, with Reagan and Thatcher as the course shifters, did change things by their confrontational stance. After the '70s US military draw down and aversion to foreign involvements, Reagan's commitment to an arms buildup did spook the Soviets. After a decade of Nixon's detente, Carter's softness, and the New Left running amok in the US, it was a drastic change to see Reagan shaking his fist at the Commies and promising lasers in the sky. This is over simplistic, but the USA's government deficit might as well be seen as a corporate restructuring on generous terms. To help reduce the demand side of the oil equation, the US went to more fuel efficient cars and switched the focus of our economy to use less oil for industrial purposes. The USA switched from a manufacturing focused economy to a finance focused economy, took on immense debt to build up a military, reduced taxes to free up their citizens and corporations and dared the Soviets to play catch up. As the money ran out for client states (East Germany nearly went broke in the early '80s if not for a Western German loan), the dominoes kept falling until finally the big domino fell. It cost the US a couple trillion, but there is a cost to becoming the world's hyperpower.
To step out of this subject, for a couple of sentences: we get it Foseti, they are all communists. The US left, the USSR, the Chinese etc. are communists. We get it. I hate the cathedral, too. The Soviets and Cubans tried true economic communism, but America's economy was too established to do so, and China junked it to grow and stay in power. This is why the ruling oligarchy's tastes matter, and why capitalism was so appealing. Many little people of the Eastern Bloc miss the guaranteed crap they got from their communist governments, but the connected folks knew who was getting better stuff and knew that capitalism offered even better goods. Like stressing that they are all commies, I could stress how Karl Marx came up with a system for overthrowing the contemporary, heavily Christian, and capitalist European society as an educated intellectual member of a minority (and sometimes heavily persecuted) religion that was not fully emancipated. Jeez, wonder what Marx's motives were.
View these groups as mobsters running a country by deciding who lives, dies and gets favored or punished. I'll argue that in reality they are all power hungry maniacs who realized that Marxism is a convenient and flexible philosophy to manipulate people to your side as you grab power. It is classic middle class uses magic promises to get lower class to throw out ruling high class, but suddenly the middle class is now the high and becomes a vicious ruling elite. Marxism allows these silver tongued snakes to craft their language to meet their specific national needs. The Chinese + Vietnamese used anti-colonialism and nationalism as their rallying cry. The Russian Bolsheviks had European roots, and while Russia had an underdeveloped manufacturing sector, they could rally the rural poor, the veterans, the newer worker class, etc. to their side and control the means of production as it was being built nearly from scratch. The USA had too developed of a productive economy for the US commies (progressives) to use the same shtick. The end was still power, so yes, they did have that in common. Even as the US progressives came to see the Soviets as Russian focused, it was because they were to bent on emancipating the oppressed groups that they believed would give them power in America. Defeating Soviet sphere of influence Communism was a multiperson, multivariable process. It took arms, money, an alternative system available, paranoid fears of armed invasion because they didn't know the power nuclear weapons would have as a deterrent, and self inflicted wounds for the Russian Bear to change his fur. The bear never dies, he only changes.

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