Test Otter.ai transcript on UC Berkeley - HIST 186 - 2012 Spring - Sargent - International and Global History Since 1945 - Lecture 16 - The Cold War Resurges - 01h 21m 20s

Daniel Sargent 0:00 Okay, it's 9:40. So it's about time for us to get going. Looking at the room, I hear that my observation on Tuesday that the weather might be your reason for not coming to lecture and staying home and listening to it on the podcast may have been taken as a suggestion. At least I hope that was the case. And that you didn't think that the lecture on Tuesday was so appalling that you weren't going to bother showing up on Thursday. Well, it wouldn't be those of you here who reached that conclusion, it would be those who aren't here. But anyway, it's nice to see those of you who made it through the rain, which is actually less rain than we had on Tuesday, but it's going to be worse tomorrow, I think. So it's good if you like skiing the precipitation. But that's not what we're gonna be talking about today. This is not a class and we're in meteorology. We're going to talk today about the transformations of the socialist world in the 1970s. And I'll try to conclude with some discussion of the sort of larger transformations of Cold War politics in the late 1970s. So having focused on sort of the high geopolitics of the Cold War, on Tuesday, on the political economic transformations of the West last week, today, we take the story to the socialist world of the Soviet Union and China, and hopefully tie this all together within an hour and 20 minutes, with the sort of resurgence of East West rivalries towards the end of the 1970s. And if we can do this, this will situate as well, to transition to the 1980s in the story of globalization next week. Okay, first, the Soviet Union. What do we need to know about the travails of Soviet style socialism during the 1970s, the Brezhnev years in the history of the Soviet Union, a period that begins towards the late 1960s. It's difficult to put a specific point on the origins of the Brezhnev era, because Khrushchev fall he was ousted in 1964. It's followed by a period of collective leadership. It's not Leonid Brezhnev, but Alexey Kosygin, the premier of the Soviet Union at the time, who meets with Nikita Khrushchev in 1967. By the end of the 1960s, the man pictured in the slide in the beautiful fur coat, Leonid Brezhnev has emerged as the singular leader of the Soviet states. The reason that I've selected a picture of Brezhnev in a fur coat is not altogether accidental. Brezhnev had a notorious taste for the good life, and for the things that affluence could provide. In the Soviet Union. Of course, affluence was more or less synonymous with political power. So Brezhnev as the supreme leader of the Soviet Union, in the 1970s, had access to quite a lot of it. And this Brezhnev's taste for the good life became the butt of popular jokes in the Soviet Union. The Brezhnev years were great years for street humor, particularly in Moscow, more urban cities in the USSR. And some of these jokes give us a pretty good flavor of the Brezhnev years, as Soviet citizens experienced them. So I'm going to try to tell you one of these jokes, okay. So, Brezhnev is showing his mother around the Kremlin around all of his sort of official apartments and limousines he shows his suite in the Kremlin. He shows his Dhaka in the countryside, he takes his mother down to the Black Sea and shows his villa, his big Soviet limousine, Zil limousine. And what is brashness brash maths mother say, just, well, dear, this is all very nice, but what are you going to do if the Bolsheviks come back? And this is a real joke that was told. Sort of in Moscow, dining rooms, Moscow apartments during the 1970s You know, the Brezhnev years, were times of cynicism in the Soviet Union. Brezhnev was himself cynical got another little anecdote this attributed to Brezhnev himself. the veracity of this I can't confirm, but it certainly attribute it to Brezhnev and a number of secondary sources. Brezhnev is reported to have said, all that stuff about communism as a tall tale for popular consumption. After all, we can't leave the people with no faith, the church was taken away, the Tsar was shot and something had to be substituted. So let the people build communism.

Whether those words are, you know, wherever spoken by Brezhnev or not is, you know, questionable, but the fact that they could be attributed to him plausibly isn't itself revelatory. Brezhnev didn't stand for ideology he didn't stand for, you know, crusade to build a new and ambitious future. He stood for stability, and he stood for the prerogatives of the bureaucracy. The Brezhnev years were a time of stasis, but also a time of stability in Soviet politics and Soviet society. That were, however, some underlying changes that occurred within the Soviet Union during the 1970s that would have consequences for the future during the 1970s members of the Communist Party including fairly high ranking members, such as Mikhail Gorbachev, become disillusioned with communism, at least as it's being presently practiced in the USSR. Despite the veneer of stability, there's a widespread circulation within Soviet society. among the ranks of the intelligentsia of dissident literature of literature that would be known in the vernacular of the time. A solid start literally means self published literature, literature critical of the Soviet party state.

Besides the circulation of indigenous dissident material, Soviet citizens during the 1970s Enjoy growing access to ideas about the external world to information about the West, the Voice of America, for example, which broadcasts into the Soviet Union is one such source of information on the external world. To some extent, the politics of detente helped to keep this sort of window onto the world open, the Soviet Union ceases blocking Western radio transmissions. As a consequence if they taunt so they Tom sort of cracks open space for Soviet citizens to learn a little bit more about the West a little bit more about the world beyond the USSR, certainly more than they had known in the Stalinist era, for example, outside of the Soviet Union, communism experience is something akin to a general crisis of legitimacy during the 1970s. It's really important to recall but in the 50s, and well into the 1960s, Western intellectuals, intellectuals of the left had been very loath to comment to criticize communism, even communism as practiced in the USSR. Probably the leading postwar French left wing intellectual John Paul Sartre remains to the very end of his life and apologist for Soviet style communism and apologist even for Stalinism. During the 1970s Western intellectuals cease to be so indulgent of the USSR. Why was this? Well, in part, the answer has to do with a growing consciousness of what we might now call human rights of what was in fact at the time called human rights. The grievous human rights violations which have occurred within the history of the Soviet Union begin to attract more attention during the 1970s. And here no single event is more consequential than the 1973 publication in the west of Alexandria social needs since book the Gulag Archipelago, have any of you had the opportunity to read the Gulag Archipelago. Okay, few of you. And this is a book that's really a couched as a history of the Gulag system. The GULAG being the immense system of political concentration camps, which Stalin constructed building upon a Leninist system of internal concentration camps, to oppress, imprison and terrify political opponents of the communist regime. So the Gulag is symbolic of the violence that the Soviet state has perpetrated against its own system against its own citizens. And Alexander Solzhenitsyn in 1973, when the Gulag Archipelago is published in the West, sort of opens a window onto this world of hidden repression, and the consequences are sort of devastating for the legitimacy of the USSR. At a time when Western intellectuals and political leaders and public opinion in general are all becoming more attentive to human rights. This Stark revelation of the political brutality that the Soviet Union has inflicted upon its own citizens is devastating to the legitimacy and credibility of communism in the larger world. And you get some sense of this from one of the readings which was assigned for, I think, this week, it could have been last week, Bernard, Henri Levy's book us barbarism with a human face is one of the texts that sort of powerfully reveals this shift in western attitudes towards the USSR. Lavie is coming out of an intellectual tradition, a French left wing intellectual tradition that has historically been indulgent towards even sympathetic to Soviet style communism. But Levee Breaks absolutely with its long sort of left wing progressive history of, you know, sympathy and indulgence, and offers a very harsh critique of Soviet style communism. The key move that lovey makes which you'll gather if you've read the piece is to conflate Soviet authoritarianism. authoritarianism, with the left with authoritarianism of the right he subsumes them both under a common category, the category of totalitarianism and philosophy there's very little difference between, you know, left wing shades of totalitarianism and right wing shades of totalitarianism, they are all to be defined by their inability to respect basic human rights, basic human freedoms. So even as Brezhnev preserves a sort of superficial political stability, the crisis of You know, the legitimacy crisis of Soviet style, socialism is proceeding a pace. And it's a crisis that has both domestic aspects and international aspects. Within the Soviet Union, ordinary Soviet citizens are becoming much more cynical about the government under which they live in the larger world, any claim that communism had to represent, you know, sort of the wave of the future, a bright, you know, future for all of humankind is being exploded by revelations about the repressive and sort of tawdry nature of the Soviet system itself. So those are the Brezhnev years, characterized by a superficial stability, underlying social and intellectual change within the USSR, and a willingness to interrogate the legitimacy of Marxism in the in the larger world. Sorry that the bullet points weren't there while I was talking, but there'll be on the beat space website.

In other respects, however, the 1970s are bountiful years for the Soviet Union. To explain this, we need to think about what's going on in the global oil economy during the 1970s. We've already talked at some length about the energy crisis of the 1970s, the fourfold increase in the price of oil that occurs during the fall of 1973. The causes of the oil crisis we've talked about, it has to do with supply and demand and the trigger event that is the 1973 Arab Israeli war. But the consequence as of the oil crisis, and not restricted to the Middle East and the West, the Soviet Union is also powerfully implicated by the energy energy shocks of the 1970s. And this reflects the basic reality that the Soviet Union is in the 1970s, a major exporter of energy to global markets, the Soviet Union began shipping oil to the world market in the mid 1950s. By the turn of the 1970s Energy is the Soviet Union's largest export item. Indeed, energy exports account for about 80% of Soviet export earnings by the early 1970s. This is a big deal. It's not only that the Soviet Union benefits directly from the export of energy. There are also indirect benefits to the Soviet Union of rising energy prices. military hardware is another major item that the Soviet Union exports, as Arab and oil exporters enjoy sort of more and more Petrodollar revenue, they have more money to spend on Soviet military equipment, so indirectly as well as directly the soviet union benefits from rising energy prices. Indeed, Russia, the primary successive state of the Soviet Union continues to benefit from high energy prices through to the present day. Why do you think that Russia has been so recalcitrant on the issue of Iran? might it have something to do with the fact that the rising energy prices this is a that as a consequence of this prolonged diplomatic wrangling over Iran's nuclear program has some material benefits for Russia? That may be too cynical, but it should illustrate the basic point, which is that the Soviet Union benefits from rises increases in the global price of oil?

What are the consequences of the petro dollar bounty that the Soviet Union experiences during the 1970s for the Soviet economy itself? Obviously, a rise in oil prices fourfold rising oil prices in a space of about six months, means a substantial increase in export earnings for the USSR. That's obvious enough. But what is this increase in export burning earnings, this petro dollar bouncy mean for the Soviet economy. It has important consequences insofar as oil revenues work in the 1970s. to prop up a failing economic system, the Soviet Union is able to use the money that it earns from exporting oil to the world economy to finance imports of Western technology. If you can finance imports of Western technology, then the imperative to develop high technology yourself is diminished. The Soviet Union can also finance grain imports from the West, insofar as Soviet agriculture is woefully inefficient by comparison with say American agriculture. Oil Helps to disincentivize reform. Rather than making domestic agriculture more productive, the Soviets are able simply to import agricultural produce grain from the west instead, cheap energy incentivizes industrial inefficiency, when it comes to the things that the Soviet Union does make them cheap and abundant energy makes it you know, less advantageous for the managers of state owned enterprises to devise ways to manufacture more stuff with less energy inputs. Right in a world in which energy is scarce. You have to figure out how to be more ficient in your utilization of energy, this is something that we've sort of begun to do in the, you know, West since the oil crisis, we've got better at, you know, reducing energy inputs to to increase the productivity of our industries in relation to energy. But the Soviets don't have these incentives during the 1970s. As a consequence, abundant cheap energy for Stolz sort of any prospect of undertaking serious structural reform. Let's pose a counterfactual question, how plausible is it that the Soviet Union might have reformed its economy in a serious way, in the absence of rising energy prices? It's really hard to say, but what I can tell you is that there is a serious debate at the beginning of the Brezhnev era as to how ambitious the Soviet Union ought to be in undertaking structural economic reform. Alexey Kosygin, who is the main rival to Leonid Brezhnev, aligns himself with a with an economic reform agenda, because Seguin argues that the Soviet economy is faltering, that it needs to learn from the West that it needs to become more efficient, perhaps that there needs to be expanded scope in the Soviet system for market incentives. Even Brezhnev is a conservative, he repudiates conseguenze reform agenda and says, Well, we should just carry on doing things the way that we've been doing them. Oil makes it possible to do that, or at least oil makes it easier to carry on doing things the way that we've just been doing them. It forestalls reform. And here, I'm going to draw an example, or draw make a counterpoint with the experience of Japan in the 1970s. Japan's economy after the Second World War is not a centrally planned economy. But it's an economy in which the government exerts a substantial direction over sort of capitalist free market economic development. Japan's Ministry of Industry and Trade Mitty is a very powerful force in Japan's economic life. And Mitty responds to the oil crisis in a US a proactive dynamic way. Japan has a very different kind of relationship with the global oil economy from that that the Soviet Union has Japan produces no oil and imports all of its oil from abroad. As a consequence, Japan is very seriously afflicted by the energy crisis. The energy crisis is bad news for Japan. But Mitzi the Japanese Ministry of Industry and Trade uses the oil crisis as an opportunity to push forward a very ambitious agenda, the structural economic reform, what Japan does in the 1970s is to invest in less energy intensive technologies, particularly in energy in to invest particularly in industrial

processes that produce consumer goods. Consumer Electronics, for example, become a priority for Japan in the aftermath of the oil crisis. And this reflects the experience of the oil crisis. Japanese economic planners and ministers conclude that in a world of high energy prices, Japan has a comparative advantage in specializing in less energy intensive production and special in specializing in producing, you know, Sony Walkman, for example, in producing less fuel, thirsty automobiles. So Japan does very well as a consequence of the energy crisis. Because Japanese industrialists and economics ministers realize what the long term consequences of the oil crisis are likely to be, and take appropriate action in the Soviet Union. On the other hand, the petro dollar bouncy, forestalls the prospect of structural reform, and this will be consequential for the long term history of the Soviet Union. When global energy prices fall in the 1980s. The predicament for a Soviet economy which has come which has become dependent on expensive oil, even addicted to the export earnings that expensive oil provide will be very serious indeed. Let's talk now about Eastern Europe talked a little bit about the Soviet Union and its relationship with the global energy economy. What happens in Eastern Europe during the 1970s. We've already talked about Eastern Europe's history of rebellion against Soviet leadership against the strictures of socialist domination. Hungary revolted in 1956. Czechoslovakia revolted in 1968 Poland scene sees an uprising in 1970. In Eastern Europe, the legitimacy of communist systems is always fragile. These are not democratically elected systems. These are systems throughout Eastern Europe that are essentially Soviet impositions that lack basic sort of popular legitimacy. The fundamental dilemma for East Europe the Eastern Europe's communist governments is always this how to rule how to maintain control over populations that do not accept For the most part, the legitimacy of communists domination. And there are basically two strategies that East European communist governments can deploy in order to maintain political control. And the first is repression. And you see exemplary models of this, in the experiences of Romania and Albania. These are two repressive, sometimes violent regimes regimes that depend upon brute force more than upon, you know, consensus to maintain their basic political integrity and purpose. But repression is not always a palatable option. Sometimes communist leaders disdain repression, on the basis you know, only of principle, it's not very nice to depend upon repression in order to maintain political order. So application becomes an alternative strategy for maintaining control in Eastern Europe. And what does application involve? Essentially, it involves buying off populations, providing sufficient increases in material well being sufficient supplies of consumer goods. In order to maintain the basic, you know, satisfaction of poppy or of ordinary people, you provide material things in order to maintain the legitimacy of the system. This is what a hungry does in the aftermath of the 1956 uprising in Budapest, Hungary is so called reformed communist leaders develop a strategy that provides material goods in exchange for political acquiescence on the part of the population. This formula becomes known and hungry as goulash communism, you provide the people enough stuff that they can enjoy it to eat reasonably well and hungry will remain relatively stable within the communist paradigm.

This is a strategy for placating unrest through the provision of material abundance works elsewhere. Poland's communist leaders pursue much the same basic concept, so to do East Germany's communist leaders. The East Germany, in some ways is a particular case. Because East Germany's leaders pursue a sort of mixture of repressive and applicators strategies at the same time, East Germany is both the materially richest state in Eastern Europe and one of the more repressive countries elsewhere. These two things repression implication exist in a sort of an inverse correlation. Poland and Hungary are among the less repressive countries in the Soviet bloc. But they're also among the richest Romania and Albania, though Albania is not really in the communist bloc. So it's a particular case in and of itself, let's just talk about Romania. Romania is both poorer and more repressive than Poland and Hungary. So, repression implication of the two strategies AMS, you know, to some extent, they can substitute for each other. East Germany deploys a mixture of both. But in order to placate your populations, through the provision of material abundance, you need to be able to finance your consumer production. And this is costly for communist regimes. Of course, if you're financing consumption, the money you're not financing, what's the trade off if you're consuming? That's right development investment. If you're consuming stuff, then you're not investing in expanding production for the future. So there's always a trade off to be made between consumption and investment. And this is a difficult trade off for regimes that are committed ideologically to a long term agenda of communist development. It's also the case, you know, particularly once we get into the 1970s, that communist industries are simply not capable of producing the kinds of consumer goods that Eastern Europe subject populations are coming to demand. East European automobiles, for example, are shoddy and by comparison with Western automobiles are inefficient and expensive to manufacture. In order to sort of continue to duplicate subject populations, East European communist governments end up during the 1970s, turning more and more to the west to imports from capitalist Western Europe in order to provide the consumer goods on which the sustenance of political legitimacy depends. foreign imports are really, really important to the political survival of East Germany, Poland, Czechoslovakia, Hungary, and so on by the end of the 1970s. The sort of opportunities for East West opening that detente and Astra politic and the Helsinki settlement provide are then conducive from a certain point of view to the south. Students have communist led political systems in Eastern Europe, by opening up opportunities for trade of economic exchange, detente, helps to sort of bolster the practical legitimacy of communist governments. And this is one of the reasons that some conservatives in the United States a critical of detente at the time, they argue that the West Western Europe and the United States are helping us sort of communist governments to stabilize themselves by enabling them to provide western goods for their citizens. But it's important, you know, to think about the role of western goods in the East Bloc during the 1970s. And after, not simply in terms of consumption, and its political consequences. We should also think about the financial aspects of these transactions, how are Easton? How are western goods to be paid for?

How is trade usually financed? That Well, in this case, the trade is to be financed with debt. But that's because the East European countries are not capable of manufacturing or growing the kinds of products that would balance their imports from the west. If Eastern European economies were producing, you know, the kinds of things that the West wanted, then they might be able to sustain balanced trade relations with the West. But in the absence of desirable East European exports, or East European exports that are desirable in the West, the only way to finance imports from the west is by borrowing money. So the east Europeans borrow money from the West in order to finance imports of consumer goods on which political legitimacy depends. Now there's even a aspect of the story that ties back into the oil crisis. And I can try to tell that if it doesn't make the whole story even more complicated than it already is. One of the consequences of the oil crisis is to vastly expand the value of sort of short term capital circulating in the global economy. And part of this has to do with the petro dollar bouncy, that the oil exporting States enjoy your Saudi Arabia, for example, and you experience over a period of about six months, a four fold increase in your export earnings. What are you going to do with that money? It's easier to answer that question if you're Iran, because Iran is a big populous country. Its leadership under Shah Pahlavi has big developmental aspirations. So if you're Iran, it's easy to spend the money you just spend it on domestic infrastructural development, you build nuclear power stations and so on, which is what Iran does. But if you're Saudi Arabia, or if you're Dubai, if you're one of the little Gulf Emirates, you have a small population, your territory is basically desert. What are you going to do with that money?

Unknown Speaker 27:54 That's in Japan?

Daniel Sargent 27:56 That's right, you bank it, but not necessarily in Japan? Because Japan by this point, is a fairly developed economy. It's capable of providing its own investment capital, you bank it. If you're Saudi Arabia, what kind of investor Are you? Are you an aggressive investor? Are you a conservative investor? That's right, you're conservative investors. So you don't do direct investments. You instead you put it with banks, you place it for the most part with you place your money with Western banks. And this means that Western banks during the 1970s experience sort of a massive influx in in deposits. There's a great deal of money in the global financial system during the 1970s. And some of this can be lent to sovereign borrowers, including the sovereign states of Eastern Europe. This is a similar story that plays itself out in Latin America, which we're going to talk about next week. But in Eastern Europe, the petro dollar led transformation of the global financial system helps to sustain economic strategies that will use imports from Western capitalist economies in order to preserve political legitimacy. But ultimately, this strategy has serious flaws. It doesn't prove capable of preventing of staving off political unrest, communist planners continue to confront, you know, serious economic dilemmas and probably not is more consequential during the 1970s. Then the issue of inflation. Prices are sort of controlled in the Soviet bloc, but central planners have to set prices at such a level as to be able to sustain relatively high sort of rates of investment over the long term. If you set prices to too low, then you're incentivizing consumption that will occur at the expense of long term investment. So controlling prices is a really delicate act for central planners to perform. Because if you set prices too high, then you're going to incentivize political unrest, populations will recoil from hybrid prices, they might demonstrate in the streets. So high prices are a recipe for political destabilization and tumult. But setting prices too low, encourages more consumption, then your economy will likely be able to sustain it will probably produce, you know, disruptions in supply, as available demand exceeds supply and so on. This is basic market economics. And the rules are not all that different, even in the context of a socialist society. Because consumption is never something that socialist societies can plan, right? Socialist societies plan production, but they can't plan for consumption, the only way that they can control consumption is by adjusting the prices of commodities that consumers purchase. So it's always a very delicate sort of act, that that has to be performed. And the case of Poland is illustrative of some of the, you know, difficulties that are inherent in the performance of this act. So we should talk about it, you in particular, I'm going to sort of couch the next couple of minutes with particular respect to Poland, not with respect to the communist system writ large. In the late 1970s 1978 1979, the Polish government decides that it has to sort of increase prices because the cheap use of prices for food and consumer goods, which have been sustained through most of the 70s. In order to stave off popular unrest following the 1970 uprising are unsustainable. This is really important. Price increases are sort of politically unpopular. The Polish system experiences an economic crisis, born of the basic unsustainability of low prices for consumer goods, other factors to stimulate dissent and unrest in Poland in the late 1970s. In 1978, a Polish national is elected Pope becomes Pope John Paul the Second, and this stimulates a sort of Polish nationalism, Polish anti Soviet ism, even Polish anticommunism admits this is a

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