The Losses of Totalitarianism

The Real Losses of Totalitarianism
Brian Gongol

It's quite fashionable among many self-appointed intellectuals to caterwaul about how "capitalist" societies "exploit" the poor and how "business" always has it in for the "little guy." Unfortunately, what these self-anointed elite usually disregard is that the "capitalism" they dismiss so casually is in fact the only system yet tried that in fact has a built-in respect for individuals across the entire spectrum of economic class.

First, a pair of definitions. While imperfect, they are generally suitable for drawing a distinction between "free" and "unfree":

Open society: A society in which open markets and individual freedom predominate. The United States is in principle (if not always in practice) an open society.
Totalitarian society: A society in which political forces are routinely brought to bear upon individual freedoms and economic choice. Examples range from the Soviet Union to contemporary China and Iran.

Totalitarian Societies Need a Slave Class to Survive
Societies without freedom for the individual can only sustain themselves and achieve any measure of economic progress if the powerful can exploit a slave class. In fact, this kind of labor is virtually a hallmark of unfree societies:

Feudal European societies had serfs whose labor enriched the landed classes
The Confederacy had slaves whose labor artificially enriched rich white Southerners by inflating profits for plantation owners
Soviet Communism had political prisoners whose work in forced labor camps was little different from state slavery
Islamic fascist states, like the Taliban, exploit women by forcing them out of the labor market

By contrast, open societies don't need a slave class; they dispense with the need for abundant physical labor by developing and employing machinery and technology, which is usually more expensive in the short run than human capital, but much cheaper in the long run. It may cost a lot to purchase and install robots and computers today, but in the long run, they produce goods at much less cost. Open societies use machinery and technology because there is an incentive to create, develop, and employ it.

In the Long Run, Labor Exploitation Simply Cannot Survive
One of the few good things to be said for old-school Communism is that the leadership either implicitly or explicitly admitted that it never really worked as expected:

Mao's disastrous Great Leap Forward, itself enacted in order to speed up growth, was abandoned when Mao himself was removed from power
The Soviet Union's Five-Year Plans, also enacted in order to speed the pace of growth, never achieved their targets
Mikhail Gorbachev initiated reforms in the Soviet Union precisely because he could see that the system was failing disastrously

What the Communists inadvertently got right was that they invested heavily in capital, though they did so largely for the wrong reasons. Soviet leaders invested in physical capital because it was a matter of pride that their nation not visibly fall behind development in the open societies of the West. On the other hand, the push for capital investment didn't come from endogenous incentives, which is why it failed; envy only works as motivation for a little while before you have to grow up and start developing for your own good.

Seeing Alternative Histories As a Map to the Future
The Soviet Communists only redeemed the failures of the czars by a little bit -- instead of enslaving the entire country, they enslaved only some (political prisoners, for example). How much better it would have been if they'd had revolutionaries who would've recovered the nation's stolen capital from the czars and converted Russia into an open society. It's truly saddening to consider how much better off the entire world would have been if they'd gone with an open society in 1917 instead of adopting Communism.

The direct costs of Communism were damage enough, but the combined direct and indirect costs make the losses of the 20th Century truly depressing:

The Cold War and the arms race diverted voluminous resources from productive activity in both East and West. The Cold War was won in the long run because the West forced the Soviet bloc into bankruptcy.
The economic opportunity cost of lost trade between East and West for most of the 20th Century is staggering. One need only look at the damage done to the US economy by the Carter grain embargo to realize what advantages could have been reaped from open trade across the entire spectrum of economic activity
Had the Soviet Bloc been engaged in trade with the rest of the world, those nations would have been forced to allocate their resources toward productive activity rather than spending them on Quixotic attempts at self-sufficiency. Autarky has never worked.
Competition with trade between East and West would have led to the exchange of ideas. Instead, the free and Communist worlds inefficiently duplicated one another's research and development. The space race is a stark example.

The reason the example of Soviet Communism should still be taken seriously is that contemporary open societies need to evaluate how they will respond to the unfree societies of today. Nations like China, Iran, and North Korea still sustain themselves under the model of exploitation and slavery -- one which is destined to fail, possibly with catastrophic results.

In evaluating our diplomatic options for dealing with those nations, it would be worthwhile for the leaders of open societies to consider the relatively low costs of subsidizing opposition movements in those hostile nations, especially when compared with the enormous waste resulting from the direct and indirect costs of trying to contain those threats later on.

Open societies must be fought for, both on the intellectual and strategic planes. There is a stark tendency for open societies to forget their own imperatives and to slip toward the unfree model. It's not a pie-in-the-sky issue of philosophical superiority. Rather, it is a simple acknowledgment of the practical matter of progress across social strata versus waste. The real "exploitation" that deserves concern is that of politics against markets and freedom.