Unbreakable Union: Lessons Learned from the Demise of the Soviet Union
[This week marks the one-year anniversary of the death of Yuri Maltsev. Dr. Maltsev had been an economist in the Soviet Union under Gorbachev, and defected to the United States in 1989. This article is an adaptation of a lecture written by Dr. Maltsev for the 2011 Austrian Scholars Conference in Auburn, Alabama.]
The opening lines of the state anthem of the USSR went as such: “An unbreakable union 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. Why do empires like the Soviet Union look so formidable and insurmountable—and even eternal—yet turn out to be 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 twentieth century was marked by encroaching socialism through the increasing 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 and Bukharin with great sympathy were watching how 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. “Here we have the last word in modern large scale capitalist technology and planned organization” wrote Lenin. Ludwig von Mises analyzed two patterns for the realization of socialism: Russian, with wholesale socialization and German or Nazi with property rights subjugated by the state and 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 c
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