Soviet Union’s Fatal Flaw Is Repeated Here

Soviet Union’s Fatal Flaw Is Repeated Here
December 24, 2011

Even today, almost exactly 20 years after it happened, Westerners asked to explain the rapid collapse of the Soviet Union tend to serve up theories that flatter preconceived ideological biases. Old-school leftists contend the Soviets simply perverted the noble ideals of socialism. More modernist progressives cluck their tongues at the Soviet Union’s parasitic, cynical, ruling class that enriched itself at the common person’s expense. Dedicated market capitalists point to communism having made entrepreneurship a crime. Civil libertarians make much of the Soviet government’s denial of freedom. And so on.

All these theories can contribute something to the debate, but none of them really tells the full story of the Soviet Union’s collapse. While it can’t explain everything, one theory that flatters neither Left nor Right seems to offer the best way of thinking about the Soviet collapse: The biggest reason the communist empire fell was centralization.

More than anything else, the Soviet Union of the Khrushchev-Brezhnev era strove for central control. Gosplan in Moscow made the major decisions, and nearly every field of human endeavor was organized for the administrative convenience of these central planners. A single corporation owned every airplane, from jumbo jets to crop dusters. One massive plant manufactured almost every civilian automobile. A government ministry even told restaurants what recipes to use.

In the decade before its collapse, the Soviet Union had the world’s largest bank, the biggest newspaper, and the largest hotel. And it didn’t stop there. Despite paying lip service to the preservation of local customs (peasant dance festivals were big), Moscow tried to make everyone in the vast multinational empire learn Russian and adhere to the same Marxist,/materialist worldview.

Convenient as it was for those in charge, this absolute insistence on central control proved disastrously inefficient. While planners with slide-rules and hulking mainframe computers might determine, in theory, that one big auto plant would have lower production costs than a variety of small ones, even a small slip-up (say, a shortage of screws) could put the massive plant down for the count.

Even worse than its obvious inefficiencies, rigid centralization squelched human creativity: Good ideas were worth nothing unless one had the political connections to make them happen. Going off to start a business, write a play, or solve a social problem was forbidden. Under the thumb of aging technocrats who liked military parades and classical music, the nation stagnated, declined, and collapsed.

This state of affairs carries some pretty obvious lessons for those who want to further solidify Washington, DC’s role as the chief arbiter of all things in the national economy: Centralization of economic authority is not only inefficient but, by reducing the number of people in authority, actually tends to increase the likelihood of the genuine catastrophic failures they seek to avoid.

There’s also plenty to take heed of regarding government promotion of business: Bigness does not equate with virtue. Mega-retailers, farmers, trade associations, and corporate tycoons aren’t intrinsically any more--or less--virtuous than urban small businesses, union workers, or single mothers living in public housing. And ideologues on both sides of the political spectrum need to remember that efforts to enforce ideological conformity are inconsistent with the diversity that characterizes a free society.

No single theory, of course, can fully explain why the Soviet Union collapsed so suddenly, but a look at its deeply centralized nature surely explains a great deal--and sends an important warning.


Eli Lehrer (elehrer@heartland.org) is vice president of Washington, DC operations for The Heartland Institute and national director of its Center on Finance, Insurance, and Real Estate.