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The Berlin Wall: Doomed by Economics

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11/27/2019

The Berlin Wall — not the hammer and sickle — will be etched forever in history as the symbol of the failed ideologies of socialism and communism. The concrete barrier aimed to keep people in and freedom out, but after decades of misery, suffering, and ineptitude, the Soviet bloc cracked into the shattered rubble on the ground that separated East and West Berlin. Man’s inherent desire for freedom and the basic principles of economics eventually claimed victory in a 45-year-long Cold War. What took so long? How could such an odious, destructive, and failed philosophy persist for so many years?

Capital

Let’s say the United States adopted the entirety of the socialist system — classical or modern. Would the richest economy in the world cease to exist overnight? No. Under the current structure, the US economy is about capital accumulation. However, were it to transition into the fantasies of Sen. Bernie Sanders (I-VT) or Rep. Alexandria Ocasio-Cortez (D-NY), it would transform into a state of capital consumption, eating away at all its resources. Considering the United States has trillions of dollars in capital, it might take a long time for the Land of the Free to crumble to nothing.

This happened in the Union of Soviet Socialist Republics. The Soviet planners did not preside over nations beginning from scratch. Russia, Poland, Ukraine, and other satellite states had accrued centuries’ worth of savings and investments by citizens and businesses. The Soviet Union had access to vast amounts of assets, which were redistributed until the coffers were drained since it failed to produce sufficient new wealth.

Moreover, these jurisdictions already had resources, from highways to communications networks, that were developed and funded through capitalism. So, the Soviet leadership was not forced to tap into reserves to pay for such expensive endeavors.

It should also be pointed out that the Soviets earned enough money to keep the charade going in the 1970s and early 1980s by selling crude oil in international markets. It started in 1974 when crude prices began their ascent, going from $47 to as high as $114 (adjusted for inflation). Were it not for the global oil crisis, the Berlin Wall may have been dismantled a lot earlier, perhaps during the era of President Jimmy Carter.

Ashes

The Soviet Union failed to generate wealth because it abandoned rudimentary market principles. In addition to sucking the well dry, Soviet socialism abolished private property for capitalist purposes, neglected the pricing system, and ignored scarcity. The ideologues believed that replacing executives with worker councils would lead to immense prosperity, while the chief fatal conceit-possessing communists just desired power. The results were dreadful: shortages, poverty, and gulags.

When your government needs to rely on the Sears catalog to determine the prices of furniture or clothing, then you know that your government has abandoned reason.

The “Mr. Gorbachev, tear down this wall!” line will be remembered forever. But every remnant of the Soviet bloc eventually would have been torn down — with or without President Ronald Reagan’s famous words. The façade of communist power could not have lived on in perpetuity. The Soviets, the Nazis, the Khmer Rouge — these totalitarian regimes would have been conquered, not by standing armies but by economics.

A Fatal Disease

Venezuela’s descent into a full-blown humanitarian crisis took 20 years, while Africa’s socialist states have been in perpetual chaos since they embraced Karl Marx. The Mao Era of China slipped into destitution within just two years of the Great Leap Forward, but the dictator held on to power from the barrel of a gun for a long time. Like any fatal disease, various symptoms of socialism kill you. You might perish in several months or years; it can be instantaneous or a torturous death by a thousand cuts. Socialism always gets you in the end, no matter the timeframe.

[Originally published by Liberty Nation.]

Author:

Andrew Moran

Andrew Moran is the Economics Correspondent at LibertyNation.com and is the author of The War on Cash. You can find more of his work at AndrewMoran.net.

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