UC Berkeley - HIST 186 - 2012 Spring - Sargent - International and Global History Since 1945 - Lecture 10 - The Cold War and Decolonization - 01h 15m 35s

Lecture Overview: The Socialist World: the Soviet Union and Eastern Europe in the Postwar Period

[0:00]

Tuesday we talked about the capitalist world in an era of managed capitalism -- the era of sort of Keynesian ascendancy that lasted from the Second World War until the late 1960s.

[0:18]

Today we're going to talk about the socialist world. And let me just define for you how I'm using that term. When I use the term socialist world today I'm not talking about China.

[0:27]

We talked about China in the discussion on the developing world and we'll talk about China much more in due course. Today we're talking about the Soviet Union and its East European allies. So this is in a sense a discussion that parallels Tuesday's discussion.

[0:43]

This takes us into the other side of the Cold War world and asks how growth was produced in the East Bloc. How did the Soviet planned economy function?

[0:54]

So we'll start by talking about the Soviet Union itself. Then we're going to talk about the East European economies, the economies of the Soviet satellite states, and finally we'll sort of conclude with some general remarks on the socialist economy.

[1:09]

We'll ask what it was good at, what it was less good at doing, and ultimately why growth rates ended up slowing during the 1960s. So that's the agenda for today.

[1:17]

The Soviet Union, East Europe, and then the socialist economy in general.

The Soviet Union After Stalin

[1:23]

So we'll start with the Soviet Union. And we're gonna deal with the Soviet Union in the period sort of demarcated by Joseph Stalin's death in 1953 -- the Soviet Union after Stalin.

The Soviet Union Under Stalin

[1:38]

We've already had the opportunity to talk a little bit about the Soviet Union under Stalin. Now we're dealing with a sort of new phase in Soviet history. But let's start by reminding ourselves a little bit about the Soviet Union under Stalin.

[1:51]

What was the Soviet Union like as a sort of polity? How did its economy function? How was power organized?

[2:02]

Power in the Soviet Union under Stalin began with Stalin himself. It would be difficult to overstate the extent of Stalin's dominance of the society that he led.

[2:12]

Of course in recent years some historians of the Soviet Union sort of challenged traditional interpretations of Stalinism which emphasize Stalin's centrality to Soviet politics and society.

[2:25]

And there's certainly good reason to do that. To emphasize Stalin's dominance, to emphasize the totalitarian aspects of Stalinist rule, is not to say that there was no scope for civil society in the era of Stalinist ascendancy. But the fact of Stalin's dominance is well established.

[2:46]

At the time it was reflected in a cult of personality↗ that developed around Stalin himself from the late 1920s. It was implemented via an elaborate apparatus of oppression, secret police, which persecuted political opponents relentlessly.

[3:02]

Sometimes the opponents were not even opponents. They were merely people whom Stalin suspected of being opponents -- potentially disloyal elements.

[3:11]

It was a society too in which the elite was terrified of Stalin. And this is important fact to remember when we think about the post-Stalinist transition.

[3:20]

As Stalin was a very ruthless and very effective dictator, somebody who was quite adept at maintaining his own power by exercising something akin to a permanent regime of terror amongst his closest collaborators, you had more reason to fear Stalin the closer you were to him.

[3:39]

During the 1930s Stalin orchestrated a purge trial. The primary targets of which were the high ranking Bolshevik↗ leadership.

[3:49]

Particularly sort of old Bolsheviks who had a claim to legitimacy that might, as Stalin saw it, pose a threat to his own rule.

[4:00]

Even after the Second World War Stalin continues to persecute and terrorize the Soviet political elite. The wife of Molotov↗, the Soviet foreign minister for example, is arbitrarily arrested by Stalin in 1948.

[4:16]

So nobody in the inner circle is really secure so long as Stalin survives.

[4:22]

How does the character of Stalin's rule change after the Second World War? The short answer to that question is not a lot.

[4:29] What occurs after the Second World War is for all intents and purposes a return to the conditions of the 1930s albeit with somewhat less bloodshed.

[4:43]

The Yugoslavian secession of 1948, with Tito's sort of breaking from Moscow↗, and the you know sort of consequences for the unity of the East Bloc, which are troubling for Stalin, spurs Stalin to become sort of more paranoid, more suspicious of national deviationism -- that is to say you know Communists in countries allied to the Soviet Union -- who are disinclined to follow Soviet leadership.

[5:13]

Stalin conducts a new series of purges in the late 1940s in part because the specter of Yugoslavia's secession from the Soviet Bloc has been you know very troubling to him.

[5:27]

These late purges are tinged in particular by a virulent antisemitism. Stalin focuses his ire on what he calls cosmopolitan elements in Soviet society. Jews are sort of prominent among the targets of these late Stalinist purges.

[5:45]

One of the most notorious episodes, in the sort of experience of late Stalinism, is the so-called doctors' plot↗, which begins in 1952 when Stalin gets the idea that a conspiracy of Jewish doctors is plotting to sort of overthrow the regime, to poison the top leadership and so on.

[6:04]

It's fiction. But Stalin at the time of his death was, according to many historians, sort of poised to embark upon a new sort of wave of purges focused in particular upon sort of Jewish people in sort of urban Soviet society.

The Death of Stalin

[6:25]

Stalin dies in 1953, in March 1953. The circumstance of his death tell us something quite profound about the nature of his regime.

[6:35]

Stalin suffered a heart attack -- fairly sort of early in the morning. I think it was around ten o'clock. He had instructed the guards who stood guard outside of his room not to enter his room.

[6:47]

And they didn't do so. They were so terrified of him, they didn't dare defy a Stalinist instruction, that even though he didn't appear from his bedroom in the dacha where he was staying, the guards just waited outside because they were terrified to sort of disobey or challenge an order that Stalin had previously given.

[7:04]

About twelve hours later, sort of late in the evening now, the guards outside having summoned other, you know, members of the top leadership finally enter the room. And there they find Stalin sort of on the floor comatose soaked in his own urine.

[7:21]

And by that time it's too late for there to be any medical intervention and Stalin dies four days later. In an ironic sense he ends up being a victim of his own paranoia because his colleague leaders and those who guard them are so terrified of him that they dare not to violate a prior Stalinist instruction.

[7:42]

Now there's some suspicion or argument amongst historians that Stalin was poisoned. There is a sort of theory that would have it that rivals within the Soviet leadership, particularly Lavrentiy Beria↗, to whom we'll turn in a moment, sort of orchestrated Stalin's death.

[8:03]

And I don't know enough about the evidence or the arguments to have a view on that accusation one way or the other.

[8:12]

But what we can say is that Stalin's death sort of reverberates very powerfully through the Soviet Union and through the larger sort of world Communist movement.

[8:21]

Stalin had led the Soviet Union, after all, since the 1920s. This was far longer than Lenin had led the Soviet Union for. It was Stalin, to a much greater extent than anybody else, who defined the you know character and accomplishments of Soviet style Communist totalitarianism. Stalin's death will be mourned by some.

[8:43]

I wanted an opportunity to share with you Pablo Neruda's↗ ode to Stalin. Which you know illustrates something of the anguish that Stalin's death caused amongst hard left ideologues the world over.

[8:58]

Neruda you know offers this you know sort of not exactly moving, except in the sense of disturbing, ode to Stalin in 1953.

(laughter from the class)

[9:09]

It is sort of worth you know dwelling upon momentarily.

[9:12]

To be men that is the Stalinist law, we must learn from Stalin, his sincere intensity, his concrete clarity and so on and so on.

[9:20]

Stalin the giant carried peace at the heights of his forehead, a wave beats against the stones of the shore, but Malenkov↗ will continue his work.

[9:30]

I love the pathos of the last line: Malenkov will continue his work.

[9:34]

And what that, you know, sort of conveys, that you know pathos in particular, is the dilemmas of succession. Right, in a social and political and economic system which has been, profoundly geared around a single totalitarian personality what do you do about succession?

[9:53]

How do you replace an all-powerful dictator like Joseph Stalin? You know it's a... very anguished problem for the Soviet elite, for the post-Stalinist elite.

[10:05]

It's certainly the case that many of Stalin's, you know would be successors, are not sorry that see him go. Lavrentiy Beria↗, who is the head of the secret police, is plausibly argued to have poisoned Stalin he was so eager to see the back of him.

The Question of Who Will Succeed Stalin

[10:23]

But the question of who will take over from Stalin is not altogether clear. And in March 1953 there seem to be sort of four plausible candidates for post-Stalinist leadership.

[10:33]

Besides Beria↗, head of the secret police, these include Gregory Malenkov↗, who is the sort of deputy leader of the Soviet Union, and the person who is sort of on the organization chart most obviously poised to take over from Stalin.

[10:51]

But there are alternative candidates too. These include Vyacheslav Molotov↗, the Soviet foreign minister, and a man who is really a Stalinist loyalist, even the fact that Stalin arrested his wife did not disrupt Molotov's loyalty to Stalin.

[11:10]

And last, sort of the last plausible candidate to take over from Stalin is Nikita Khrushchev↗, who is the Secretary of the Communist Party of the Soviet Union↗.

[11:20]

Khrushchev does not seem to be in March 1953 the most obvious candidate to succeed Stalin. Beria and Malenkov seem like more likely successors.

[11:31]

But of course Khrushchev holds the position that Stalin had himself held in the 1920s, that of Party Secretary, and as we learn in the 1920s, the position of Party Secretary, the man who sort of organizes the file card index, carries with it, sort of substantial resources of informal power and responsibility.

[11:53]

So in March 1953 there are four possible successors. This very quickly becomes three possible successors when Lavrentiy Beria is arrested in June 1953.

[12:06]

His arrest is orchestrated by Khrushchev but others in the leadership, Molotov and Malenkov support the arrest of Beria.

[12:18]

Beria ends up being shot in December 1953 at the end of the year following a show trial. It's sort of striking in some ways that the post-Stalinist era begins with a purge.

[12:29]

Why was Beria purged? And the simple answer is that as head of the secret police he was potentially sort of too powerful a figure.

[12:40]

The others were scared of him and they wanted to remove him as a possible threat not only to their power but also to their you know physical well-being.

[12:48]

Beria was not a terribly nice personality. We shouldn't feel sorry for him. He had after all been the head of the Stalinist secret police. He was also a rapist, so his death was nothing to be mourned.

[13:01]

But it at least clarified the relationship of the party to the secret police, to the state's apparatus of repression.

[13:11]

And this was the really important sort of legacy of Beria's death. Right, insofar as Beria's basic power was the secret police, the coup against Beria which was organized by Khrushchev, the arty General Secretary, established the power of the party vis-à-vis the state.

[13:28]

Had Beria prevailed over Khrushchev then the sort of political implications of that over the long term would have been very different, right.

[13:36]

Because you would have seen a state man, a man whose authority resided in the apparatus of state repression, prevail against a party man -- namely Khrushchev.

[13:46]

What you see instead is the party prevail against the state. And this is sort of consequential for the future development of the Soviet Union.

[13:55]

Following Beria's ouster and death a period of collective leadership prevails for about two years. There's no clear ascendancy between Malenkov and Khrushchev. Molotov is already you know somewhat less central than the other two.

[14:15]

But Khrushchev and Malenkov you know sort of share responsibility for a period before Khrushchev emerges in late 1955, early 1956, as the preeminent leader.

Collective Leadership Under Khrushchev, Malenkov, and Molotov and Economic Reforms

[14:27]

This period of collective leadership is really interesting and very important in terms of what comes next.

[14:34]

Because it sees the initiation of important economic reforms. And we'll talk much more about processes of economic reform but it's important to note that they begin not under Khrushchev but under Malenkov.

[14:45]

Malenkov from the very outset wants to prioritize consumer production -- the satisfaction of consumer needs rather than the expansion of heavy industry as the overriding purpose of Soviet economic planning.

[15:00]

And there's also some sort of relaxation of political repression. There is in 1955 a general amnesty for political prisoners. Of course there were a lot of political prisoners under Stalin so the amnesty is a significant move.

[15:14]

It begins the process of dismantling, at least partially dismantling, the gulag that Stalin had built.

Nikita Khrushchev

[15:21]

These accomplishments should be attributed to the collective leadership, but it is Khrushchev of the collective leadership who ends up becoming the dominant figure. So it's worth talking a little bit more about Nikita Khrushchev.

[15:35]

Who was he? What did he want to accomplish? Nikita Khrushchev was not from a Russian background. He was from a Ukrainian background. He was from peasant stock.

[15:47]

His family had grown up on the land, and Khrushchev in his bearing and you know conduct always, at least in the eyes of his critics, reflected sort of the crudeness of his peasant ancestry.

[16:05]

One of the sort of more significant facts about Khrushchev for understanding his political and ideological positioning is to, is the fact, that he came of political consciousness after 1917. Unlike Stalin, unlike Lenin, Khrushchev had no real recollection of the world before the Revolution.

[16:25]

The world that Khrushchev had always inhabited as a sort of politically sentient man was the world of the Soviet Union.

[16:33]

As such perhaps he was far less cynical about socialism than Stalin had been. Whether Stalin was ever so committed to the accomplishment of socialism as he was to the expansion of his own power is unclear.

[16:53]

You'd have to turn to a ream of Stalinist biography to answer that question. But Khrushchev, it is fairly safe to say, was a true believer in socialist dogma.

[17:01]

He believed that the Soviet Union was on the path to the construction of a socialist and then Communist utopia, and he was optimistic about Communism's historical prospects.

Khrushchev as the First Reformer in the Soviet Union

[17:14]

Khrushchev would turn out to be the first reformer in the history of the Soviet Union and this is really important.

[17:21]

Prior to Khrushchev the repressiveness of the Soviet Union had only escalated over time. Stalin had briefly sort of de-escalated repression during the Second World War.

[17:33]

But after the Second World War he reverted to the practices of the 1930s. Khrushchev was the first, and arguably the only leader in the history of the Soviet Union, to leave the Soviet Union a better place than he found it.

[17:46]

A somewhat less repressive society, a society somewhat more geared to meeting the material needs of its citizens. So Khrushchev is sort of in retrospect a unique specimen: a Soviet reformer.

Khrushchev's Political Reforms and the Secret Speech

[17:59]

Let's talk a little bit about the process of political reform under Khrushchev before coming to sort of talk about his economic reforms.

[18:08]

The Khrushchev ascendancy begins with a sort of political big bang in February 1956. Wherein Khrushchev delivers a speech known as the Secret Speech↗ to the Twentieth Congress of the Communist Party of the Soviet Union.

[18:22]

This is a secret speech because it's not disseminated to the Soviet public. It's merely delivered before the party elite.

[18:31]

But it's nonetheless a shocking about-turn in the history of the Soviet Union. Because Khrushchev uses the speech as an opportunity to denounce the crimes and the excesses of Stalin.

[18:42]

Three years after Stalin's death this is a dramatic turn of events.

[18:49]

The fact that Khrushchev is denouncing Stalin does not mean that he is denouncing Lenin. It certainly doesn't mean he is denouncing Marx.

[18:56]

On the contrary Khrushchev makes adept use of Marx's writings and of Lenin's writings to denounce Stalin. He argues that Stalin has strayed from the path of true socialist orthodoxy.

[19:08]

He uses for example Marx's criticism of the cult of the individual, which Marx warns against, to assail Stalin's record.

[19:18]

But the speech is you know nonetheless a very effective one. The fact that Khrushchev is able to remind his audience, which constitutes the Congress of the Communist Party, that Stalin had over the previous you know twenty years killed about three-quarters of the people who participated in the 1934 Congress of the Communist Party of the Soviet Union undoubtedly had some effect on the audience.

[19:44]

The speech does not have much effect on sort of the larger Soviet public -- at least not initially. It's not formally published in the Soviet Union until 1989 which gives you some sense of just how explosive a moment this was in the political history of the Soviet Union.

[19:59]

The speech was however disseminated fairly quickly in the West. Western intelligence secured a copy of the speech and it was widely published and circulated outside of the Soviet Union.

[20:12]

From the West copies were translated into German, Hungarian, and Czech and so on and disseminated into Eastern Europe. So the speech will end up having an influence within the Soviet Bloc. But it has to pass via a circuitous route in order to get there.

[20:30]

Khrushchev did not intend this speech to be sort of broadly circulated as a statement of new intentions. But it nonetheless marks the beginning of a reform phase in the political history of the Soviet Union.

[20:44]

Or it might be better to say it marks the formal commitment of Khrushchev to processes of political reform. The release of political prisoners had of course preceded the Secret Speech by several months.

[21:01]

But the process of political reform in the Soviet Union involves more than simply rhetorical commitments. Besides you know sort of consequential acts, like the release of political prisoners, an expanded space for political and even cultural discourse begins to open up.

[21:18]

You know this is not to say that the Soviet Union becomes a free society or a liberal society. It does not. It remains an authoritarian and a repressive and an extremely ideological place.

[21:29]

But the domain for speech and expression does expand somewhat. Probably the most consequential marker of this is the 1961 publication Aleksandr Solzhenitsyn's↗ novel, short novel, A Day in the Life of Ivan Denisovich↗.

[21:45]

Have any of you read Ivan Denisovich?

[21:49]

Okay, so those of you have read the book will know that what this novel, really novella might an a better word is, is a lightly fictionalized account of Solzhenitsyn's own experiences as a prisoner in Stalin's gulag.

[22:04]

Solzhenitsyn, who's arguably the great Russian author of the twentieth century, spent extensive time as a prisoner of the Stalinist state. He was one of the fiercest and most consequential critics of Stalinism and of Soviet repression subsequent to Stalin.

[22:21]

And the publication of his book, with the approval of Khrushchev, who later regretted giving approval for the publication of the book, marks a sort of moment of liberalization from which the state will subsequently retreat. The Soviet Union becomes more repressive again from the mid-1960s.

[22:40]

But this brief sort of effervescence of relative, you know, free speech and free thought has consequential effects for the future history of the Soviet Union.

[22:50]

It's no coincidence that Mikhail Gorbachev comes of sort of political and intellectual consciousness during the early 1960s at the height of Khrushchev's reform era.

Khrushchev's Enthusiasm for Socialism

[23:02]

Though Khrushchev sought to make the Soviet Union a marginally more open and more humane place he never doubted that history was on the side of the socialist project.

[23:14]

He never doubted that socialism was ultimately destined to inherit the world. Indeed he bragged pretty loudly about the prospects for socialism in a global historical sense.

[23:28]

He declared that the Soviet Union would overtake the United States in terms of its wealth, its modernity, and its productivity by 1970. This was a rash boast but he seems to have really believed it.

[23:40]

Moreover Khrushchev even promised that communism would be created by 1980, or at least vital elements of a communist system. If you think back to the Marxist historical schema that we discussed, we should, you'll remember, that Marx prophesied that the establishment of a communist society would represent sort of the utopian end of history.

[24:06]

Marx posited this, you know sort of five stage grand scheme of world history, in which capitalism would be succeeded by socialism, namely dictatorship of the proletariat, ultimately to be followed by the accomplishment of communism.

[24:21]

A state in which the, in which government where there's a way, in which workers regulate their own affairs, and everybody lives happily ever after.

[24:29]

Of course it was a fairy tale, but Khrushchev believed in it. And more than that he promised that communism might be accomplished by 1980.

[24:38]

Let me just quote briefly from the 1961 party program of the Communist Party. This is a document that captures very well the ambition, even the historical hubris, of the Khrushchev years.

[24:51]

The achievement of communism in the USSR will be the greatest victory mankind has ever won throughout its long history. Every new step made towards the bright peaks of communism inspires the working masses in all countries, renders immense moral support to the struggle for the liberation of all peoples from social and national oppression, and brings closer the triumph of Marxism-Leninism on a worldwide scale.

[25:14]

So here you see something of the sort of grandeur of Khrushchev's ambition. communism as the, you know, very imminent realization of historical destiny. More than that, communism as a historical destiny that is applicable and relevant, to all human beings.

[25:33]

Whereas Stalin in the 1930s had emphasized the construction of socialism in one country Khrushchev has a far more universal agenda.

[25:42]

He seeks to make the Soviet Union not only an example to the rest of the world but also a leader of the developing and socialist world.

[25:53]

He wants to sort of transform, not just Soviet society, but the entire planet in a sort of communist image.

[26:01]

Of course these are grand ambitions. What does Khrushchev try to accomplish as a sort of more immediate or practical set of priorities?

Economic Reforms Under Khrushchev

[26:11]

Reform in the Khrushchev Era is very much focused on the Soviet economy. Khrushchev tries from the outset, sort of continuing the reforms that Malenkov has set in motion, to improve the command economy system.

[26:25]

Remember that the command economy under Stalin had been overwhelmingly weighted towards the production of heavy industrial goods -- towards the production of steel, coal, oil, you know sort of basic, industrial production had been the priority during the 1930s and 1940s.

[26:45]

Khrushchev, following Malenkov, argues for refocusing industrial energies on the production of consumer goods. It's time to give the people some of the things that you know they've been working so hard to make for decades. That's the basic sort of notion underlying the shift from heavy industry to light consumer industries.

[27:06]

Khrushchev also tries to invigorate agricultural production. We'll talk a little bit more about that in just a moment.

[27:12]

But first let's think about what Khrushchev does not try to do.

[27:17]

He tries to refocus the overarching objectives of Soviet economic planning on agriculture and light consumer industry. But he does not try to reform the basic apparatus of planning itself. The reforms are not to be reforms of the system. They are to be reforms within the system.

[27:36]

And this is a really crucial point. Khrushchev does not envisage for example the creation of market incentives. Something that Deng Xiaoping↗ will do in China from the late 1970s.

[27:48]

Rather Khrushchev operates within the basic paradigm of a planned command economy and simply tries to, you know, sort of reconfigure the purposes of economic planning, to direct the plan towards a new and distinctive set of objectives.

[28:05]

Agriculture is an important priority, and in part this reflects the legacies of the Stalinist era.

[28:14]

How did Stalin work to produce an agricultural surplus? What was Stalin's relationship to the peasantry?

(student response)

[28:26]

That's right: collectivization. And what are the implications of collectivization for peasants? What does it mean if you are member of a collectivized farm?

[28:38]

(student response)

[28:42]

Absolutely. You have to give surplus production to the state, and the state defines production targets, that surplus production that you have to hand over, in very onerous terms. So collectivization in practice is about squeezing production out of the peasantry.

[29:00]

You know Stalin didn't give a damn about the peasantry. He wasn't concerned with the well-being of the peasantry. But he understood that squeezing surplus production out of the peasantry was vital to the accomplishment of the larger economic project of crash industrial modernization.

[29:16]

In order to modernize you have to have grain to feed factory workers. Where are you going to get grain from? You steal it from the peasants. And that's essentially the logic of Stalinist agricultural collectivization.

Agricultural Reforms Under Khrushchev

[29:28]

Khrushchev who, himself hailed from a peasant background, wanted to do things differently. He wanted to expand agricultural production and he wanted to treat the peasants more generously than Stalin had done.

[29:42]

Of course that's a very low bar, but the intentions were, you know, nonetheless decent ones.

[29:46]

So far as the expansion of agricultural production was concerned, Khrushchev from the early 1950s, even before he became sort of the sole leader of the Soviet Union, led a campaign known as the Virgin Lands Campaign↗ to bring new lands under the plow.

[30:02]

During the 1950s around 35 million hectares of new lands were subjected to cultivation. This is a really impressive amount of land, 35 million hectares, that's more or less equivalent to the total agricultural acreage of Canada.

[30:21]

So this was a substantial expansion in the expanse of land farmed in the Soviet Union. However these were lands which for the most part had not previously been farmed for good reason.

[30:32]

Because they were on the edge of the Siberian permafrost. Or on the edge of the you know Kazakhstani desert. And so on and so forth. These were marginal lands. Not really subject, not really suitable, for mass agriculture production.

[30:46]

But Khrushchev nonetheless exhorted, you know, Soviet citizens to participate in the Virgin Lands Campaign.

[30:54]

Some two hundred thousand students volunteered to participate in the harvest typically each year. Participation in the Virgin Lands Campaign was couched by Soviet propaganda as the dischargement of profound patriotic duty.

[31:10]

So far as existing agricultural production is concerned: Khrushchev sought to transform collective farms into state farms -- to transform sort of peasants who had previously been you know herded into collective farms by the Stalinist state into state employees, salaried employees, working on farms that are owned by the state.

[31:35]

You know sort of similar in essence to the status of employees in state factories.

[31:42]

Ultimately the creation of the state farm system fails to meet the grand ambitions that Khrushchev sets for it. In part because the state doesn't pay state farmers enough to incentivize the kind of increase in agricultural production that Khrushchev envisages.

[32:01]

Khrushchev hopes to, according to the you know seven year plan which is initiated in 1958, to expand agricultural production by about 70% over the next ten years.

[32:13]

If you look at the output, which this chart presents, you'll see that the accomplishments are nothing like that. Agricultural production increases very, very marginally over the period of the seven year plan initiated in 1958.

[32:27]

So Khrushchev's efforts to increase agricultural production by reconfiguring the relationship of peasants to the state, and by bringing new lands under the plow, is ultimately unsuccessful -- does not succeed in increasing, in achieving its targets.

[32:47]

The reasons for this are complicated. The climate had something to do with it. There was a severe drought in the late 1950s which set back agricultural production, but weather is insufficient explanation.

[33:02]

A more persuasive explanation would emphasize the failure of the state to provide sufficient incentives to agricultural labor to produce more grain, to produce more livestock.

[33:14]

So we have an incentive problem which is you know sort of representative of the problems that the command economy must deal with in general.

Industrial Production Under Khrushchev

[33:24]

So far as industrial production is concerned Khrushchev sticks with the Malenkov shift to emphasize consumer production and light industry over heavy industry.

[33:38]

Once again the goals changed but the system in a sense stays the same. The inefficiencies of the command economy endure. There's a lack of incentive to innovate. There's a lack of incentive to improve productivity.

[33:55]

The fundamental reason for this is the lack of a market mechanism. There are no price signals. State enterprises, state factories, are told what to produce by the central planning office.

[34:06]

Their production is not determined by you know consumer demand. Rather it is determined by what bureaucrats sitting in Moscow tell the factories to expect to produce.

[34:16]

And we'll talk more about this when we sort of conclude with some general remarks on the socialist economy. But it's important to remember that Khrushchev does not try to reform the basic apparatus of command economic planning.

Projects Under Khrushchev to Improve the Well-Being of Soviet Citizens

[34:28]

Khrushchev does do things to try to make life better for ordinary Soviet people. You know one of the major accomplishments of the Khrushchev Era is the pursuit of a massive program to build housing for Soviet families.

Housing for Urban Soviet Citizens

[34:45]

Under the Stalinist era the typical sort of form of accommodation for urban Soviet citizens had been the communal apartment. Families had shared apartments with other families.

[34:57]

Khrushchev was eager to give Soviet families apartments of their own. Which you know of course there's all kinds of benefits in that it expands the scope for private family life.

[35:09]

These apartments were constructed quickly and on a large scale. Their construction quality was not always very impressive. In fact the quality was so poor that these apartments were you know nicknamed by Soviet citizens: "Khruschoby" ("Хрущобы").

[35:24]

Which is a play on the Russian word "trushchoby" ("трущобы") which means shoddy.

[35:30]

Of course the "Khruschoby" ("Хрущобы") conflates Khrushchev's name with the word for shoddy to come up with a sort of nickname for the apartments of the late '50s and early 1960s.

[35:44]

There are in some interesting sort of political consequences to Khrushchev's housing program. By providing families with autonomous living space: the creation of sort of mass, the construction of mass scale apartment complexes, also increases the space for political dissent.

[36:04]

You know during the 1970s and 1980s, for example, dissidents within the Soviet Union will meet in each other's apartments. This would have been harder to do had people still been living in communal apartments.

[36:16]

So one of the unintended consequences of Khrushchev's housing construction program is to expand the domain for sort of private life and by consequence for political dissent.

Free Public Education for Soviet Citizens

[36:29]

There are you know other programs that are initiated to sort of improve life for ordinary Soviet citizens. Education is sort of worth mentioning in part because of our own circumstances in California and the debates over tuition fees here.

[36:44]

Let me just point out that Stalin didn't much like the idea of educating people -- at least not too much. Elementary education might be necessary in order to equip Soviet citizens to serve the purposes of the Stalinist state. Educating people beyond that was less desirable because those people might grow up to become you know critical -- dissenters. So what did Stalin do to disincentivize education?

[37:08]

He implemented fees, and made people pay to be educated. Khrushchev abolishes fees on higher education and secondary education too, which had been implemented under the Stalinist system, so that Soviet citizens can attend school for free.

[37:25]

That's one of the more positive things that Khrushchev does.

The Soviet Space Program

[37:29]

Besides these programs, which are you know sort of intended to make life better for ordinary Soviet citizens, and in some ways, you know, end up contributing to the rise of a new era of reform in the 1980s under Gorbachev which we'll talk about much later, the Soviet Union you know maintains high level of military spending and embarks upon new prestige projects -- none more spectacular nor more prestigious than the Soviet space program↗.

[37:57]

This is worth talking about just for a moment. The Soviet Union ratchets up a number of important firsts, victories, in the space race that develops with the United States from the late 1950s.

[38:10]

In 1957 the Soviet Union launches the first artificial satellite: Sputnik 1↗. This is a major event. It's a major event in the history of the Cold War, it's a major event in the history of space exploration.

[38:22]

It's a tiny little metal ball with a radio transmitter on it that emits a sort of beep as it passes through the sky: beep, beep, beep. And that's all it does.

[38:31]

It doesn't serve any other purpose. It doesn't gather meteorological data. It doesn't contain spy cameras. It's just a satellite that goes beep.

(laughter from the class)

[38:40]

But it is the first artificial satellite that human beings ever put into earth orbit, and Americans are just terrified by this.

[38:49]

The beep is powerfully symbolic because Americans can tune into it on their transistor radios and listen to this thing going through the...

(laughter from the class)

[38:55]

Night sky...and Sputnik seems to bolster Khrushchev's belief that the Soviet Union is edging ahead of the United States. That history is on the side of socialism and that capitalism is destined to be surpassed by the Soviet system.

[39:15]

So the space race is important because of the symbolic and propaganda value of its accomplishments. Following the launch of Sputnik 1 in 1957 a whole series of new achievements follow.

[39:28]

In later that year the Soviet Union lifts the first dog into space: Laika↗. This is a sad, sad story.

(laughter from the class and the professor)

[39:38]

It's in a class in which we deal with you know genocide, war and you know all manner of horrible, horrible events.

[39:46]

It seems students seem ordinarily most moved by the sad plight of little Laika.

(laughter from the class)

[39:52]

A stray dog from the streets of Moscow who was enlisted against her will into the Soviet space program. Laika is blasted into space never to return.

(laughter from the class)

[40:04]

And her sorry fate actually becomes an international controversy. Protests... (laughter from the professor)

[40:11]

At the Soviet embassy in the United States and Great Britain are one of the consequences of the Laika episode. Seriously.

[40:20]

These are people who didn't protest over you know the Ukrainian famine in the early 1930s or the purge trials, but the plight of Laika becomes a major sort of international event.

[40:33]

Later in 1959 the Soviets land the first probe on the moon. This is a major accomplishment, technically really difficult, much, much, harder than lifting a satellite or even a dog into orbit.

[40:46]

Getting a space vehicle to hit the moon and land a probe on its surface -- in 1959 that's very impressive. In 1961 Yuri Gagarin↗ becomes the first man in space.

[40:57]

Fortunately he does come back. He dies in a car crash during the 1960s but he is quite safe in his space exploration, and in 1966 the Soviet Union makes the first orbit of the moon.

[41:09]

So the Soviet Union really leads the space race, pretty much all the way until 1968 and 1969, when the United States leapfrogs the Soviet Union and succeeds in landing the first man on the moon: Neil Armstrong↗.

[41:23]

But the space race is a very, very specialized sector of the Soviet economy. Right, it looks from the example of the space race as if the Soviet Union is mastering new technologies -- as if it's doing a, you know, really good job of moving up the technological ladder to gain you know sort of mastery over, you know, more and more complex and high level you know technologies.

[41:55]

And of course the propaganda value of these accomplishments will be exploited vigorously by the Soviet state.

[42:02]

But the appearance is very deceptive. Where it really counts the Soviet Union is not innovating. It's not innovating in terms of consumer production. It's not innovating even in agricultural production. There will be major gains in agricultural production during the 1960s. But they happen elsewhere in the developing world with the Green Revolution↗ which we'll come to in due course.

[42:26]

Space in a sense is a chimera. It distracts attention from the fact, the real fact, that the Soviet economy in the 1960s is standing still. The sort of explanation for that we'll you know come to in just a moment.

[42:43]

Space of course is a frontier of conflict in the Cold War. But it's very much an arena for symbolic conflict. It's not as if you know American and Soviet rockets are shooting at each other -- though of course the technology that propels dogs and men into space can also be used to launch intercontinental ballistic missiles across continents.

[43:07]

But the space race is a symbolic race. And in that respect it's powerfully you know sort of representative of what the Cold War became under Khrushchev.

Khrushchev's Belief that Command Economies would Surpass Market Economies

[43:16]

I don't want to talk too much about the Cold War today because we're coming back to the Cold War next week. But it's worth, you know, sort of, in the context of a discussion of Soviet economy and society in the late 1950s, to emphasize just how concerned Khrushchev was with capitalism and with the surmounting of capitalism, which he believed to be socialism's historic destiny.

[43:39]

In 1956 Khrushchev famously proclaims, "we will bury you"↗, to a group of Western ambassadors at the...Romanian embassy I think...Or it could be the Polish embassy or the Hungarian embassy in Moscow -- one of those embassies.

[43:55]

But there's a meeting there and Khrushchev says, "we will bury you". The precise location is not important. What's important is what he says.

[44:02]

And it's important because at the time it's misconstrued. The Western spin on this is that, "we will bury you", signifies aggression -- military aggression.

[44:13]

In fact what Khrushchev is trying to do is to warn the West, you know, our system is more advanced than your system. We produce more. We produce better. We will bury you not under a fusillade of missiles but we will bury you, you know, because we're so much better than you are at producing color televisions, refrigerators and so on and so forth.

[44:34]

In fact the truth is very different. But the boast is that the Soviet command economy represents a more efficient, more economical way of making things than does the capitalist market economy. And Khrushchev wages the Cold War as a war of production.

Khrushchev's Visit to the United States in 1959

[44:51]

He will be taken aback when he visits the United States in 1959. Goes to a supermarket in San Francisco for example and sees the abundant plenty that is available to ordinary American citizens.

[45:01]

It doesn't really shake his faith in the Soviet system but it's a, you know, hilarious episode in the life of the Cold War.

[45:08]

I have a video that I found on YouTube that's a sort of mini-documentary on Khrushchev's trip to the United States. I really want to show it to you today but I'm worried that if I do so now I'm not going to have time to finish the lecture.

[45:20]

It's about five minutes. So I'm going to skip over it. And I'll come back to it if I can finish the lecture.

[45:26]

(moaning from the class)

Do you really want to watch it?

(affirmatives from the class)

Okay, we'll watch this.

(laughter from the class)

[45:31]

This is, it's based on a book. There's a journalist. He's not a historian. A journalist wrote a terrific book on Khrushchev's visit to the United States.

[45:40]

It's one of the most engaging and entertaining books on Cold War history that I've ever read, so I heartily recommend it. The person who wrote the book is the narrator of this video. So I encourage you to buy his book if you like the video because it's really good.

[45:51]

Okay, we'll watch this and then we'll go really quickly.

[45:54]

(laughter from the class)

[45:55]

(extended silence till 51:34)

[51:34]

In the United States he would have been a great retail politician.

(laughter from the class)

(student question)

[51:42]

There was a famous incident where he didn't...

(laughter from the class)

[51:43]

When he came to California he was desperate to visit Disneyland...

(laughter from the class)

And the visit had been scheduled, but it was called off for security reasons. The US government didn't feel that it could assure Khrushchev's security in Disneyland.

[51:58]

And he threw a tantrum, (laughter from the class) and threatened to go back to Russia because he wasn't allowed into Disneyland (laughter from the class) so...

[52:03]

(laughter from the class)

The book on which this little clip is based details that episode in some length. So it's like the best episode in the whole Cold War and it should be a movie (laughter from the class).

[52:15]

It would be a wonderful movie. So if any of you have any influence in Hollywood: make this happen (laughter from the class).

Soviet Support for Developing Nations Under Khrushchev

[52:20]

Okay, Khrushchev besides engaging in a kind of fierce ideological rivalry with the United States also reaches out to the developing world whereas Stalin had sought to build socialism in one country Khrushchev favors socialism in one planet.

[52:39]

China is the primary beneficiary of Soviet assistance in the early 1950s. Thereafter the reach of Soviet aid to the developing world expands greatly.

[52:50]

India and Egypt by the mid-1950s are both taking economic aid from the Soviet Union. Cuba of course gets missiles from the Soviet Union after the Cuban Revolution of 1959↗ producing the Cuban Missile Crisis↗ in early 1962.

[53:04]

We're going to deal with the Cuban Missile Crisis at much greater length but the photograph here in the slide of Khrushchev bear hugging Fidel Castro tells you all that you need to know about Khrushchev's sort of romantic enthusiasm for socialist revolution in the developing world.

[53:20]

He was you know ebullient upon meeting Castro. It took him back to his youth.

Historical Assessment of Khrushchev

[53:27]

What to make of Khrushchev in retrospect? You know Khrushchev was removed from power in 1964. His removal was orchestrated in part by conservatives who thought that his reforms had gone too far.

[53:40]

When I say conservatives in the Soviet context by the way I'm referring to, you know, Stalinists not to you know sort of people on the right -- people on the far left.

[53:50]

But he was removed in a sort of coup orchestrated by conservative opponents. His removal had to do in part with the debacle of the Cuban Missile Crisis which we will come to next week.

[54:00]

But interestingly Khrushchev was not taken out back and shot. He was put under house arrest where he remained for the rest of his life. He dictated his memoirs which were smuggled out of the Soviet Union in secret and published in the West.

[54:15]

But he was not physically harmed. In his memoirs Khrushchev offered an epitaph of his own on his accomplishments as leader of the Soviet Union, and this is what he had to say:

[54:25]

Perhaps the most important thing I did was this: that they were able to get rid of me simply by voting. Stalin would have just had them all arrested.

[54:35]

And it's actually a pretty astute testament to what Khrushchev accomplished in the Soviet Union. He didn't liberalize the Soviet Union. He didn't really invigorate its economy. But he created enough space for pluralism.

[54:49]

There wasn't much space for pluralism by comparison with the West. But he created enough space that when the backlash against him came it did not result in a massive bloody purge like the purges of the 1930s.

[55:03]

Rather he was simply put under house arrest where he remained for the rest of his life.

[55:09]

A more eloquent testimony perhaps is the memorial by Ernst Neizvestny↗ presented in the slide here. During the 1950s Khrushchev had harangued Neizvestny over what he considered to be the sculptor's degenerate art.

[55:27]

Khrushchev was a traditionalist in matters artistic and he didn't much like this kind of modernist sculptor. But Khrushchev nonetheless invited Neizvestny, who was one of the most prominent sculptors in the Soviet Union, to design a memorial to Nikita Khrushchev.

[55:44]

And this is what Neizvestny came up with. And he explained the memorial by saying that it represented in the dark and light marble the good and the bad that Khrushchev did.

[55:55]

It sort of tried to encompass the whole of the man and the whole of his legacy. There were bad aspects but also good aspects. And that may be sort of the most fitting tribute that there could be for Khrushchev.

[56:07]

You know undoubtedly a lot of what Khrushchev did was you know bullheaded and foolish but he left the Soviet Union a somewhat more plural, a somewhat more liberal place, than it had been before he became its leader.

Eastern Europe in the Postwar Period

[56:21]

Let's turn now to Eastern Europe. Here we I'm afraid encounter some of the bad of Khrushchev's legacy.

[56:28]

And we'll talk about Eastern Europe with a particular sort of attentiveness to the issue of sort of economic growth and the relations between the East European satellites and the Soviet Union itself.

[56:39]

After the Second World War Eastern Europe is catastrophically damaged by the war. In some of the most war ravaged countries like Poland GDP is about half of what it had been in 1939.

[56:52]

The war takes a very heavy toll. Moreover Eastern Europe is by comparison with Western Europe underdeveloped. Outside of Czechoslovakia the prewar industrial base is limited.

[57:02]

Institutions, institutions of governance, the rule of law, are weak. And the consequences of that for economic growth are severe.

[57:13]

After the Second World War the Soviet Union will be sort of the predominant influence on Eastern Europe, but not until the late 1930s. Immediately subsequent to the war coalition governments take hold in most of the countries of Eastern Europe.

[57:29]

And they pursue developmental strategies that involve a mixture of public and private ownership.

[57:36]

Strategies that in some ways resemble the postwar growth strategies that West European countries like Great Britain and Sweden pursue. They pursue sort of mixed economic policies that combine an expansive role for the public sector with a basic commitment to private ownership and the market.

[57:53]

This all changes after 1948 with the Sovietization or Stalinization of Eastern Europe. Agriculture outside of Poland is collectivized. Industry is nationalized. Private enterprise is abolished.

[58:07]

So in a very short span of time the economies of Eastern Europe are subject to much the same kind of convulsive transformation that the Soviet Union had itself been subjected to in the 1930s.

[58:21]

In Eastern Europe however the opposition to this imposed transformation, a transformation being imposed from the outside, not from within, remains substantial throughout the entire Communist period.

[58:33]

Sort of the history of Eastern Europe under Communism cannot be reduced to the history of revolts. But they were sort of a major theme in that history and the ongoing effort by the Soviet Union and its local Communist allies to stay on top of public dissent, to keep revolt under control, will be a sort of crucial theme in the history of Eastern Europe in the second half of the twentieth century.

[58:59]

There was a revolt in East Berlin as early as 1953 when workers went on strike -- dissatisfied with price increases and stagnant wages under the sort of Stalinist system. The most dramatic revolt; however, at least in the 1950s, comes in 1956 in Hungary↗.

The Hungarian Revolution of 1956

[59:19]

The origins of this revolt have in part to do with Khrushchev's Secret Speech, which is disseminated via the West into Eastern Europe including Hungary.

[59:27]

There it encourages liberals who begin to protest in late, in the late 1956, in October. Students are at the vanguard of anti-Soviet protest in Hungary. They call for multiparty democratic elections. They demand that Hungary leave the Warsaw Pact↗ -- the military alliance that the Soviet Union created in 1955.

[59:52]

Some Communist officials are beaten up and even lynched by student demonstrators. This is a fairly violent protest. Not like the kind of thing you see on Sproul Plaza↗, but a real you know sort of revolutionary protest.

[60:05]

How does the Hungarian Communist regime respond to this sort of bubbling up of revolt from below? Initially it tries to co-opt student protest.

[60:16]

A reformer, Imre Nagy↗, becomes Prime Minister of Hungary. And he refuses to allow Soviet troops in Hungary to quash the revolt.

[60:27]

He says, you know, Hungary is going to follow its own direction. It will not subject itself to military discipline from Moscow. But Khrushchev takes a very different perspective. He sees Hungary's experiment in sort of democratic socialism as a potential threat to the unity and integrity of the East Bloc.

[60:45]

And in the fall of 1956, later on in that October, Khrushchev decides to send the Red Army into Budapest.

[60:52]

The Hungarian Revolution will be put down by force. Fighting ensues between Hungarians and Red Army forces.

[61:02]

This all occurs of course in a very fraught international context. The fall of 1956 is the fall of the Suez Crisis↗.

[61:11]

If you were to ask why Khrushchev is able to send troops into Hungary without there being much of a reaction on the part of the United Nations -- well, the first part of that answer is that Hungary is part of the Soviet sphere of influence and the West recognizes it at such.

[61:26]

But the second part of the answer is that the world is very much distracted in the fall of 1956 by the Suez Crisis.

[61:33]

In the absence of the Suez Crisis it's possible that the United States would have taken a more forthright position in defense of Hungary. But it does not.

[61:44]

Imre Nagy appeals to the West. He appeals to the United Nations for support, but the West doesn't answer.

[61:52]

The Hungarian Revolution is suppressed fairly brutally. Tens of thousands of Hungarians are arrested, hundreds are executing, including Imre Nagy, who is arrested in the end of 1956 and executed by the Soviet Union some two years later.

[ 62:07]

His execution is intended as a warning to other East European, to the leaders of other East European nations.

[62:12]

The implication is this: you know stray too far from the path of socialist orthodoxy and you will meet a similar end.

[62:21]

But of course dissent cannot be suppressed by force alone. And one of the consequences of the Hungarian Revolution will be that the Hungarian Communist government after 1956 works hard to satisfy the basic material needs of its population.

[62:42]

A sort of new strategy for maintaining control of a fractured society is implemented. It becomes known as Goulash Communism↗. And it's a strategy for in essence buying off the populace through the production of material goods.

[62:57]

So consumption becomes an essential sort of aspect of the Communist regime's strategy for staying in power -- how to provide the people with enough goods that they will be satisfied and not riot.

Communism in Other East European Countries

[63:10]

The experiences of Communist rule in Eastern Europe very, very broadly, we don't have time to go in great detail into the different national experiences today, but it's worth pointing out at least the range of experiences that East Europeans have.

Albania

[63:24]

Probably the most extreme is the Albanian experience. Albania is the most ideological, the most Stalinist of the East European Communist regimes. The leader of the Albanian Communist state is Enver Hoxha↗.

[63:40]

A true believing Stalinist ideologue who breaks with Moscow in 1956 over Khrushchev's Secret Speech. He sees the denunciation of Stalin in the Secret Speech as a, you know, unacceptable move.

[63:53]

And shifts his allegiance from Moscow to Beijing. So Hoxha becomes this very unusual thing: a European Maoist.

[64:03]

Indeed Moscow cuts off its support for Albania after 1956 and Albania becomes in essence a ward of China for the next twenty years.

[64:07]

It receives material aid, it's a very poor country, and it receives material aid from Beijing.

[64:21]

This material aid will include technical assistance. In an effort to diversify Albanian agriculture the Chinese government sends experts in rice farming to Albania.

[64:32]

Albania is in southeastern Europe. Rice has not historically been farmed there. But China dispatches, in this photograph, a North Korean expert on rice farming to teach Albanian schoolgirls how to farm rice.

[64:46]

So this is a really, you know odd bizarro kind of place. (laughter from the class). It's a little bit like you know sort of Myanmar or Burma, like a truly autonomous, truly, you know, kind of weird, you know, Communist society, ultra-ideological, absolutely disconnected from the larger world. It represents one very extreme example of the East European Communist experience.

[65:09]

Somebody had a question?

[65:11]

(student question)

[65:18]

No, that's a really great question. Well, I think that Albania's departure from sort of Moscow's umbrella is less threatening because Albania is going to the left not towards the West.

[65:33]

And of course the example of Maoism is not a particularly appealing one for you know kind of Eastern Europe's subject populations. Rapprochement↗ with the West, market reforms, are much more appealing than is the harsh Maoism that Albania experiences.

[65:54]

So it doesn't represent, you know, a kind of example that other East European countries might be inclined to follow. Whereas an East European country that opens to the West, that leaves the Warsaw Pact, that expands relations with, you know, West Germany, France, Britain and so on, will be a far more sort of appealing model for other East European countries to follow.

[66:13]

So that's I think why the Albanian case is not particularly, you know, intimidating from Soviet perspective.

Poland

[66:22]

Poland, you know represents sort of a middle course; there's little indigenous support for socialism in Poland. But the transformation of Poland's society and economy are you know kind of strategically limited by the Communist Party.

[66:39]

The Communist Party in Poland does not attempt to implement agricultural collectivization. The Catholic Church is left fairly well alone. So concessions are made to the sort of anti-Communist and anti-Soviet impulses of most Polish citizens, which to some extent succeed in keeping a lid on dissent, but never entirely so. I mean Poland is a fractious place under Communism.

[67:05]

This is a sort of revolt in the fall of 1956 -- the Polish October↗ -- which parallels the Hungarian uprising even if it doesn't go so far. Poland experiences a, you know, prolonged period of political unrest during the 1970s.

[67:21]

And in the 1980s Poland is sort of the epicenter of organized resistance to Communist rule in Eastern Europe. So Poland represents a sort of effort to achieve a middle way between communization and liberalization that...succeeds to some extent, but not very far in stabilizing the basic framework of you know socialist rule in that country.

East Germany

[67:50]

East Germany, represents, I've already talked a little bit about Hungary's Goulash Communism, East Germany has a somewhat different experience. East Germany is subjected to a very harsh political discipline. The secret police in East Germany↗ is larger on a per capita basis than it is anywhere else in the East Bloc even in the Soviet Union itself.

[68:10]

The East German government keeps a very careful eye on its subjects. But at the same time East Germans enjoy relatively good living standards. So it's a regime that is you know punitive, and intrusive but at the same time, provides somewhat more for its citizens in terms of their material well-being than do other East Bloc governments.

Comparison Between East Bloc Nations

[68:34]

The fact that the experiences of the East Bloc regimes are different is fairly obvious when we compare their economic performance from sort of 1950 through to 1980.

[68:46]

As you can see living standards in the most developed of the East European regimes, Czechoslovakia for example, remain far higher than do living standards in the poorest East Bloc countries: Albania and Romania.

[69:00]

Czechoslovakia enjoys, or Czechoslovakians, enjoy standards of living that begin to approach less developed capitalist countries like Greece. Albania's standards of living are much closer to those of a Third World country.

[69:15]

So there is a substantial diversity of economic experience in the Eastern Bloc. But there is also, you know, kind of general trend line. And this is towards, you know, kind of tailing of off growth from the 1960s onwards.

The Slowing of Economic Growth in Eastern Europe

[69:29]

Indeed growth rates tend to slow in Eastern Europe after the 1950s. This chart shows annual GDP change. There are a lot of data points there. This it kind of confusing, so let's simplify it a little bit by showing average, GDP change average over five year periods. Sorry over ten year periods.

[69:51]

During the 1950s and into the 1960s East European countries continue to grow at a fairly impressive clip. But growth rates slow in the 1970s and then collapse in the 1980s.

[70:05]

Eastern Europe sort of doesn't grow for more than about two decades under socialist rule. Why not?

Economic Malaise in Socialist Economies

[70:13]

To answer this question I have to get through a general discussion of the socialist economy in about four minutes but I'll blame the movie which you made me screen for that.

[70:22]

(laughter from the class)

[70:22]

Why doesn't, why don't, socialist economies grow for longer? They grow impressively in the 1950s and then tail off? Why is this?

[70:30]

To answer that question we have to return to the distinction between extensive↗ and intensive growth↗. What are these?

[70:37]

Extensive growth. Extensive growth is simply growth that is driven by the addition of more factors of production. More land. More workers. More capital. These are the things that drive extensive growth.

[70:50]

Intensive growth is growth that is driven by rising productivity: making more with constant inputs to the productive process. This is a key distinction. We will come back to it.

[71:00]

The prospects for extensive growth in Eastern Europe and the Soviet Union itself are pretty good in 1945. The Second World War creates a lot of destruction. The starting point is low.

[71:15]

The state is able to command and produce extensive growth: by collectivizing land, and by forcing investment, by imposing punitively high rates of taxation, by forcibly mobilizing savings, capital can be mobilized which will sustain high rates of extensive growth at least for a period of time.

[71:33]

Of course agricultural collectivization produces surplus labor, which, or surplus agricultural labor, which can then be used to sustain extensive industrial growth.

[71:44]

This phase of extensive growth begins by the 1960s to run into natural limits. In short the available labor supply is finite. Right -- once you've collectivized agriculture and taken surplus peasants off the land and turned them into factory workers there aren't anymore.

[72:02]

So there's no more surplus agricultural labor to industrialize. Once you've made women into factory laborers, which the Communist regimes do, there are no more you know available women to transform into factory laborers.

[72:15]

To add to the limits, the natural limits that extensive growth encounters, the Communist regimes in Eastern Europe, and to some extent in the Soviet Union too, have to walk a very delicate walk between the production of growth via investment in heavy industry and the production of consumer goods.

[72:39]

And this is a very difficult thing to do because it's a political balance. Right -- insofar as maintaining the political stability of socialist regimes depends upon satisfying consumer demand, at least to some extent, you have to give the people some material goods if they're not going to revolt, you need to divert resources to consumption.

[73:00]

But when you divert resources to consumption you're not using those resources for investment. So this sort of trade-off between investment, which was obviously the priority during the Stalinist era when rates of investment were very high, and consumption, which becomes more and more of a priority as the legitimacy of socialist regimes is challenged, becomes in essence the fundamental dilemma that the socialist regimes of Eastern Europe have to face.

The Lack of Market Incentive in a Communist System

[73:27]

Let's just talk really briefly about sort of the planning system. Why was it so efficient? Why was it so inefficient? Why couldn't these regimes make the leap to extensive growth?

[73:39]

In sum, you know we need to begin with the acknowledgment that in the planning system, in the planned economy, demand is not an independent variable. Production is determined by a political center -- by planners sitting in offices in Moscow, East Berlin, Budapest, and so on.

[73:59]

These planners tell enterprises, businesses, factories, how much stuff they are to produce. They also tell the enterprises what they are to produce. This leaves very little scope for market demand to act as a sort of determining variable in the definition of production priorities.

[74:17]

There are limited incentives to innovate. There are limited incentives to become more productive in the planned economy system.

[74:25]

Probably the best way of illustrating this is to put yourself in the hypothetical situation of a factory manager in the Soviet Union.

[74:31]

Let's say that your factory manufactures refrigerators, right, and you have to meet a planning target. Say you have to produce a hundred thousand tons of refrigerators each year. And that's what you have to do in order to do your job. How do you do that?

[74:45]

You do it by making the refrigerators heavier. You don't do it by making the refrigerators better. You don't do it by making the refrigerators more reliable. You don't install like ice makers, or anything fancy like that.

[74:58]

Because what does that do for you? I mean doing stuff like that is difficult. There's no incentive to make a better refrigerator if you are the boss of a refrigerator making factory. All you have to do is meet your allocated production target which is defined in weight.

[75:11]

So you make the damned thing heavier. And that's why Soviet output is so cruddy.

[75:18]

Because the planning system, in a sense, demands that of factory managers. Okay, that's about all we have time for today. But that's really all that we had to get through and we can come back to some of the finer points if you have questions in due course.

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