Wednesday, January 12, 2022

Deaths vs. the economy: an unexpected reversal

 Every decision to impose a lockdown in a pandemic is a decision to sacrifice the economy in order to save lives, at least in the short-run. The lockdown decisions may prove, over the longer term, even good for the economy—but it clear that every government, at every administrative level, has since the very beginning of the pandemic weighed its lockdown decisions that would save lives against the costs they would impose on the economy.

            Now, assume that you do not know anything about how different countries have handled the pandemic so far and are given the following exam questions: there is a very rich country with a democratic government, and there is a significantly less rich country trying to catch up with the richest (but still at 1/3 of the richest country’s per capita income level) with an authoritarian government. Which government is more likely to use lockdowns to stop the spread of the disease?

            I assume that you are a very good student. You would say the former. And would explain it on several grounds. First, richer countries, in principle, value human lives more than poor countries. Not only if we look at individuals as economic producing machines: a person living and working in a rich country will during his/her lifetime produce X amount of real goods and services, while an equivalent person living and working in a poor country would produce a fraction of X. (Consequently, the death of the former would reduce output by more than the death of the latter.)  Likewise, you could add, supporting this argument, when people from rich countries are killed by people from  poor countries, the compensatory payments are much greater than when people from rich countries kill people from poor countries.

Second, as countries get richer, they tend to become “nicer”: there are greater social spending as a share of total income, more attention is being paid to the handicapped and sick people, there are more days of vacation, sick leave is compensated fully etc. It follows that in the case of a pandemic too, the rich country will tend to care more for its people---because it can afford it, and because there is a greater demand for such protection.

            Third, our good student will write that democracy as such will care more about the lives of its citizens than an authoritarian regime that can leave them out to die. He could easily give numerous historical examples that support his case.

            Finally, the student could provide yet another argument: if the authoritarian government is obsessed with catching up with the democratic country in terms of its GDP,  will it not be additionally loath to sacrifice economic growth.

            He would thus conclude that on all reasonable grounds, rich democratic country should impose lockdowns more frequently. And he would probably get an A.

            But this pandemic has shuffled cards in very unexpected ways. When we look at the reality around us, we see rich democratic countries averse to lockdowns and quite willing to run a huge bill in terms of human casualties. And we see an authoritarian government in a less rich country that is in the grip of an ideology of “GDP-ism”,  much more willing to impose lockdowns, protect lives and sacrifice the economy.

            So we have to ask another student to give us his answer.

            Now, the iconoclastic student might answer as follows. The authoritarian county’s government finds its legitimacy in showing that it is much more efficient than a democratic government. It thus has to fight all the time. It has to be on its toes permanently. So if it sees saving lives to be an indicator of its efficiency (and if people seem to agree) it will apply lockdowns whenever it thinks they are needed.

            But a democratic government is an elected government. It knows that the elections are far away. It is not well organized; different parts of the government think differently; they often work at cross-purpose. The central part of the government might also think that, by the time the elections are called, many people will have forgotten about the pandemic and even about  the dead. (And the dead, as we know, do not vote.) But people  might not have forgotten about having lost their jobs and slid into poverty, even if temporarily. So the government might lose more votes by being seen as callous about people’s jobs than by being callous about people’s lives

            The iconoclastic student might continue: if individuals tend to underestimate their risks of getting the disease and dying, while the risks of losing income and jobs are quite clear and obvious, would not this add to the pressure on the government to refrain from lockdowns? And since it is a democratic government, would not that government listen to the voice of the people, and keep the economy going?  

            The iconoclastic student would have made some good points too. But before the reality was revealed to us, we would have probably given him a B: good but not wholly persuasive, especially when compared with our hard-working first student.

            Would our grading be right?

Sunday, January 9, 2022

Trotsky on the class structure of Soviet socialism

For the reasons that are too complicated to explain here (and perhaps also because you can read about them in my forthcoming book on how income inequality was studied from Quesnay to the fall of the  Berlin Wall), I reread some of the literature that looks at the class structure of socialist societies. Most of that literature is obviously Marxist or close to Marxism because anti-Marxists were busier showing that capitalist societies were not class-based than arguing that socialist societies were class societies.

            I found particularly useful the work of Branko Horvat (whom I had the  privilege of knowing personally) who had argued about the class character of state socialism from his early work in the 1960s. Moreover, Horvat did this using data on incomes, position in the process of production, transmission of advantages across the generations etc.—i.e. on the factual basis and not merely as definitions or tautologies. Szelényi and Konrad were also useful even if their approach is slightly different. And then very much so, the surveys of class perceptions/divisions that were carried out by sociological institutes in Yugoslavia, Poland, the Soviet Union (in the 1960s), and probably in Hungary (although I have not found the data).

            But among the very early writers who argued that state socialism is, or comes close to, a class society Trotsky obviously stands out. He was not among the very first, because when the first, like Pannekoek and Labriola, appeared, Trotsky was actually in power. (One should not forget that Emma Goldman also described well many class features of early socialism.)

            So I read again Trotsky’ classic “The revolution betrayed”. I wrote recently about the very negative view that Kolakowski had of Trotsky. I find that view largely justified (on the topics Kolakowski criticized Trotsky), but there is no denying manifold qualities of Trotsky as intellectual, writer, organizer and military leader. It was his arrogance and hubris that did him in, but that’s a different topic. So, how does Trotsky approach the Stalinist state in “The Revolution Betrayed”?

            His main argument is quite persuasive. First, he believes that the Soviet state is a proletarian state because private ownership of  means of production has been abolished. Second, he believes that it is a state where bureaucracy has built itself into a new stratum that has vitiated the original (“democratic”) objectives of the revolution in its superstructure (politics), but has not fundamentally managed to alter the infrastructure (that is, property has not been returned to private owners). It is (as he writes) like Caesarism that changed politics in Rome but did not affect the underlying slave-owning relations of production, or the Thermidorian reaction in France that undid the Revolution politically, but did not erase economic gains (e.g. distribution of land to small-holders).

            This view leads Trotsky to two positions. First, in some parts of the book he extols the achievements of “Stalinist Thermidor” hardly less than the Soviet press of the time. He reels off with pride enormous increases in industrial output, multiple new combinates that have been built etc. He does mention lack of workers’ freedom (no free trade unions) and that most of the technology was imported. Trotsky, like Lenin, is a modernizer who sees Russia as economically backward, but thanks to its having become socialist being in the process of the catch-up with the West. So, he regards the new system as self-evidently more productive than the old.

            Second, he calls only for the revolution in politics, not in economics. The new revolution, Trotsky writes, must be very different from the October revolution that overthrew the very bases on which the society was built. The new revolution needs only to overthrow the new ruling stratum (Trotsky avoid the term “class” because he believes that the term should be reserved for societies with private ownership of capital), and to reestablish the original pristine character of the revolution.

            There are many problems with this view. For example, Trotsky’s present acceptance of free trade unions (for whose abolishment he argued when in power), and of the multi-party system which he also helped abolish, including all the left-wing parties, not to mention that he directed the pitiless military assaults on anarchists and on Kronstadt rebels. Even more naïve is his view that such parties, when the hypothetical Leninist-Bolsheviks (i.e. Trotskyists), return to power would not play any substantial political role because the basis of their power (private ownership of capital) has been forever withdrawn from them. Thus he has an extremely reductionist view of politics where politics is entirely determined by economic interests. Once there are no large landholdings and private companies, there is no longer any basis for conservative or right-wing political parties. Such parties might perhaps garner 1 or 2 percent of the vote (this is why Trotsky would allow them to exist), but they are, by the nature of things, always to stay marginal and irrelevant.

            On Stalinist workers’ policies, Trotsky is remarkably inconsistent. On the one hand, he brilliantly exposes how little power many workers have. He even discusses the reasons why the quality of Soviet products is the worst for the products of mass consumption and the best for the products where the State is the ultimate purchaser like the armaments whose Stalinist developments he discusses with some unconcealed pride and, I presume, with quite a lot of knowledge. This was the first such analysis where the quality of workmanship is related to the power of those who consume it, and thus in itself helps us gain insight into the relations of power which exist in a society. It is, I think, brilliant. (The workmanship used in a Michelin star restaurants exceeds many times the workmanship used in McDonalds’  franchises  because the patrons of the former do have political and economic power—and would sue the hell out of a Michelin star restaurant's owner if he food-poisoned them while the buyers of big Macs cannot complain much—nor would anyone care if they did.)  

            But, on the other hand, he criticizes material incentives paid to stimulate harder work even if in an unrelated sentence he acknowledges that too much of leveling during the War Communism had destructive effects on economic productivity. He reserves his animus for Stakhanovist workers who, Trotsky holds, have become a new workers’ aristocracy. He lists high salaries they receive, numerous benefits in kind (vacation, top sanatoria), and in some cases even automobiles. He probably righty sees them as the base of support for Stalin amongst workers. But Trotsky’s view that one could increase production without providing material incentives is unfortunately wrong. He also fails to recognize a strong element of upward mobility which Stakhanovism allows to a part of the working class: where else could –according to Trotsky’s own examples—a worker expect to have a higher standard of living than the director of a company, or a former owner? In a nod to what would become a standard practice during the Cultural Revolution in China, Trotsky singles out for praise Stakhanovists who were (allegedly) embarrassed by the showering of such privileges. They worked simply out of necessity (pleasure) that, in a society without exploitation of labor, labor acquires for free men and women. For them, work was totally devoid of disutility; it was simply a free expression of one’s desire to do things well and is not stimulated by material incentives.

            It is noticeable that Trotsky does not admire such work on the grounds of selfless dedication to socialism but rather, following Marx, believes that in a non-class-based society work will become the expression of our desire to do things well, that the homo faber has the need for self-realization in his work, and that that need can be expressed freely only when he is not a hired labored ordered around by capitalists.

            These are only some of the insights provided by this small volume. I did not discuss Trotsky’s well-known attacks on the ways of life of the new Stalinist stratum, their access to domestic help and chauffeur-driven cars, nor his equally well-known acerbic attacks on the political police, torture of the Old Bolsheviks, concentration camps etc. He uses (several times) the term “totalitarian.” There is also a most interesting discussion of foreign affairs, the rise of Fascism, the wrong-headedness of Stalin’s policies of conciliation with England and France, and abandonment of pro-proletarian policies in favor of pro-bourgeois foreign stance.  May I also mention that Trotsky even discusses what would happen if the Stalinist system evolved toward reintroduction of private property and allowed for  “denationalization” spearheaded—he writes incredibly presciently—by the new Stalinist stratum and by foreign capitalists.  Writing of that in 1936, that is sixty years before “loans for shares” happened, is not a small feat. But this may be a topic for another post.