Free Enterprise and the Russians; E. von Keuhnelt-Leddihn

One of the most co:n;mon of these cliches is to the effect that the Russians are "by nature" col lectivists, that their souls are ach ing for tyranny, all of which makes them so susceptible to Com munism. Did not the large mass of the Russian people consist of serfs? The truth however is dif ferent. In old Russia, in contrast to America, slavery had never been Dr. Kuehnelt-Leddihn is a European scholar, linguist, world traveler, and lecturer. Of his many published works, perhaps the best known in America are Liberty or Equality? and The Timeless Christian. ERIK VON KUEHNELT-LEDDIHN institutionalized; the majority of the farming class had consisted of free people. As a matter of fact, serfdom as an institution had only existed in central and western Russia, but not in the far north, in the south, in the eastern part of the country, and certainly not in Siberia. (The Cossacks lived notoriously a very free life.) It is true that in large areas, as a result of the abolition of serfdom in 1861, the peasants were given land collectively which resulted in a very poor agriculture with re current famines; but Stolypin, the "arch-reactionary" Minister of the Interior, disestablished the collec tive holdings, the M irs, early in this century. The subsequent in dividual farming, together with a second agrarian reform, initiated the rapid development of Russian agriculture with the ambitious 461 462 THE FREEMAN August peasants, the kulaks, leading the nation to a new agrarian wealth.

(The final goal of the gradual re form was to have only 11 per cent of the arable area covered with large estates by 1930.) By 1916 only 23 per cent of the usable land was in the hands of big land owners, whereas in Britain this share was 55 per cent! And we ought to add to this that Russia never had a ruling nobility. Old Russian titles mean a great deal more in Hollywood than they ever meant in Russia. Social arrogance, as we know it in the West, was unknown there; it came into being only in recent decades as a result of Marxist indoctrination with the accent on class consciousness. He who knows the USSR or reads con temporary Russian plays and novels is fully aware of this rather depressing fact. Russians, indeed, are by nature great individualists; they always constituted a nation of eminent independent thinkers, poets, scien tists, philosophers, artists, musi cians, mathematicians and so forth. Edward Crankshaw ex plained in a brilliant article in In ternational Affairs (October, 1945) how precisely due to her people's individualism a purely parliamentary democracy for Rus sia is out of the question - now and forever. This might sound paradoxical to American ears but Harold Laski had previously pointed out to us that representa tive democracy, in order to be workable, has to rest on two prem ises: a two-party system and, more importantly, a common framework of reference, a common language, the thing which Walter Lippmann called a "Public Philosophy." Such a common framework has never existed in eastern or southern Europe where, for a variety of reasons, intellectual individuality and not a sentimental community spirit always prevailed. All of which moved the classic British liberal Walter Bagehot to the con clusion that democracy needs a rather "stupid people" (Letters on the French Coup-d'-Etat, 1852) .

The Russians, in other words, are too bright for their own good. They will always have a govern ment-from-above which can be spiritual or materialistic, liberal or tyrannic, benevolent or malig nant. Self-government in Russia can only be local and limited. Degrees of Government Intervention In the various forms of society, government and economics are ad mittedly interdependent, but not in a crudely automatic way. There are provider states which are not socialistic, there existed liberal as well as communist monarchies (the Empire of the Incas) and totalitarian democracies. Spain, 1972 FREE ENTERPRISE AND THE RUSSIANS 463 for instance, has a rather limited political freedom but a great deal of economic liberty. Brazil has a military dictatorship but its econ omy rests on free enterprise. Con tinental Europe before 1848 had a free market economy under royal absolutism. But the USSR boasts a democratic label and has prac tically no freedom, neither eco nomic, nor intellectual, nor reli gious. It knows not even the free dom of residence.

Old Imperial ("Czarist") Rus sia, however, had a far-reaching economic freedom. Of course, we always ought to distinguish Rus sia before the liberation of the serfs from the Russia between 1861 and the issuing of the Con stitution (1905), and the latter from the liberal monarchy between 1905 and the Revolution. The free dom of expression during this "terminal" period was nearly com plete. In 1912 the Pravda" founded in broad daylight, violently attacked the government. There were, moreover, Bolshevik dele gates in the Duma (Diet), but no Anarchists ("Social Revolution aries"), a party which indeed rep resented total individualism, but also murder and arson. (It was banned by law, but Kerenski se cretly adhered to it). As a matter of fact, the government favored the Social Democrats, with their menshevik and ',:~olshevik wings, over the Anarchists, the latter claiming not Marx, but Bakunin (a nobleman) and Prince Kropot kin, who died in 1921, as their founding· fathers and spokesmen.

(Incidentally, the great bolshevik leaders beginning with Lenin were frequently members of the no bility.) Progress through freedom It was thanks to economic free dom that Russian industry, though late getting started, enjoyed a fabulous development in the quar ter century before the Red Revolu tion. The annual increase of Rus sia's industrial output and capacity in those years was far larger than that of any other modern nation, including that of the United States. Evidence may be found, of all places, in the Illustrated His tory of the Russian Revolution (New York, 1928), a Communist publication. Obviously, Russian labor, largely lacking skills, dis cipline, and the famous "Protes tant work ethics," could not be well paid any more than in any other "emerging nation" in the first phase of industrialization when heavy investments are nec essary and the purchasing power of the masses is still exceedingly low. The new class of Russian en trepreneurs, needless to say, were not members of the old upper lay ers, but homines novi - industri464 THE FREEMAN August ous blacksmiths, bright peasant boys, aggressive skilled workers with foreign experience. Small amounts of capital allowed mira cles to be worked, and soon Russia became Europe's "Eastern America," brimming with Horatio Alger stories.

One has to admit, however, that the newly rich often displayed their freshly acquired wealth in rather crude fashion. Thus, today a foreign embassy in Moscow is housed in the palace of a sugar king's mistress - but this particu lar millionaire was the son of a serf. Yet, we may be sure that his income, if .spread· evenly among his workers, would not materially have improved their lot, which surely worsened after 1917. At the outbreak of World War II the wages paid to workers were lower than before the Revolution. One has only to read the splendid work of Manya Gordon, Workers Before arnd After Lenin (New York, 1940), to get the relevant data. Of course, the illusion that a radical redistribution of income fundamentally improves the Iiving standards of the lowest classes is still general among loose-thinking sociologists. Socialism also feeds on this erroneous belief. It is, however, the bigger cake, not the reslicing, which improves the lot of the many. And the bigger cake requires. wise reinvestments, good management, and a high ethical concept of work.

With the Communist Revolu tion, Russian industry and agri culture took a nose dive. The peasant class, at first, did not· re sist Communism, because the re mainder of the large and medium estates was distributed among them. Lenin also permitted during several years a minor trade which quickly started to bloom. These, even to Lenin's mind, were only temporary concessions. Stalin liquidated not only the "New Economic Policy" (NEP) but also the independent peasantry. First the kulaks were expropriated and partly exterminated; then·the rest were crushed and collectivized. The Five-Year-Plans were put into action. Since then, a dark night had settled over the Russian economy. A Low Standard of Living Today, we might get impressive (but who knows how. accurate?) statistics about production but we do know that East German aid to the space program has been sub stantial. We also k'now that ma chinery imported from Czecho slovakia and Hungary abounds in the USSR, but we fully realize that the living standards of the masses, including the professional class (other than a tiny top sec tor), are truly miserable. Assum1972 FREE ENTERPRISE AND THE RUSSIANS 465 ing that the rouble is US $1.20, the salaries and wages for work ers, doctors, factory directors are not so terribly bad by West.;.

European standards. But let us remember that the rouble can be bought in Vienna or Zurich for 19 cents, and this gives us a far more accurate picture of condi tions in.side the Soviet Union. One must admit that medical services (of a modest nature) are gratuitous. Also, :rents are very low, but not so if we consider them in relation to space; then, indeed, they are very high. Only univers ity professors, members of the Academy of Sciences, directors of leading theaters, writers, prima ballerinas, and certain very highly placed civil servants live well; but we should not believe that thereby they are all "bought" and really believe in Communism. The purely managerial class is not at all well off. A factory director usually could not feed his family. His wife would have to work as well. Yet, socially speaking, he would ar rogantly look down on teachers, engineers and so forth. Status and income are by no means identical.

The "Theory of Convergence" Curiously enough, there is in the Western world, and especially in the United States, a rather widely-held belief that the radical differences in social structure and economics between East and West are gradually disappearing, that the West is becoming more and more "socialistic" and the Soviet Bloc more and more "capitalistic," thus eventually ensuring peace. This is the famous "theory of convergence", a very soothing theory indeed. Andrei Amalrik, the brilliant (and again jailed) author of Will the Soviet Union Survive Until 1984? has rightly ridiculed this notion because he knows only too well that prac tically aU Russians are absolutists, that institutions in the East are not bent but broken, that dog matism and revolution, not rela tivism and evolution, dominate Eastern life. English-speaking na tions, to the contrary, are enam ored of the notion of evolution, of nice, little, painless, gradual changes. In addition, they mistake welfarism for socialism. The latter means the ownership of the means of production by the state. Of course, in practice all socialist countries are "welfarist" (and stand for the Provider State), but not all Provider States are social istic. (In Sweden 90 per cent of economic resources are still pri vately owned, though this might change in the near future. Of course, "welfarism" in the West ern world is on the rise, but this itself will never close the gap be tween East and West.) Even the 466 THE FREEMAN August undeniable convergence between Russia and Red China does not particular ly make for peace.

The only socialist country in Europe which has made ideolog ical compromises on the economic front is Yugoslavia, which from the Muscovite point of view is a heretical outsider. It still has a free peasantry and small private enterprises with up to fifteen em ployees. But the future of Yugo slavia nationally and economically is dim. Economically, this is the case because free enterprise is a system which walks on long legs and socialism on short legs. What happens if one leg is long and the other one short? Such an economy will be prone to fall on its nose. And besides Yugoslavia, only Poland has, a non-collectivized peasantry. No More Private Enterprises When I first visited the USSR in 1930 at the age of twenty, I was even then struck by the fact that the only surviving free en trepreneurs were the watch-repair men, the bootblacks, cobblers and a few tailors. I saw no private stores left. At my later visit in 1963, "socialization" was total and complete. Bootblacks received a salary and that was it. As far as the Soviets were concerned, there was and there still is no sign of an economic "convergence". (There is, however, a fair amount of neo Stalinism in the domains of in tellectual and religious life). It is , tru e that there are a few eco nomic theorists (like Liberman) who, though not dreaming of a renewal of private enterprise, are attracted by the idea of competi tion. But it is impossible to see how one could have genuine com petition when the economy iscen~ trally planned and rests squarely on state monopolies (dragging along totally uneconomic indus trial enterprises) .

A return to private enterprise and private ownership is, above all, ideologically out of the ques tion. It is significant that the micro-elite with their very sub stantial incomes squander them almost planlessly because they cannot buy anything of permanent value - real estate, houses, preci ous metals, bonds with a fixed value. The datcha (country house) which, after a fashion, they "own" stands on state ground and could be "removed" any time. They spend vast sums on good food, expensive drinks, pictures (also from officially proscribed painters) and - perhaps the only genuine piece of real estate - on pompous mausoleums in exclusive cemetery sections. There won't be and there cannot be in this domain a gen uine change, because communism's most fundamental dogma is state 1972 FREE ENTERPRISE AND THE. RUSSIANS 467 ownership of the means of pro duction, and the Kremlin's. crucial strategy is the utter material de pendence of its subjects upon the state. (That the state one nice day should wither away, nobody while of sound mind takes seri ously.) Is there a hankering of the Rus sion people for personal indepen dence and private enterprise? A genuine yearning? Or is the Rus sian underground opposition mere ly hostile to the most tyrannical aspects of the present govern ment while accepting in its heart a socialist order? There isa wide spread belief in the West (in America, probably, more than in Europe) that the memory of per sonal property and free enterprise in the USSR is dead as a door nail and that what the Russians today desire is merely a bit more privacy, freedom of expression, and a chance to read flashy Ameri can periodicals. By and large this view is not true to fact. To the contrary, the critique of the to tali tar ian excesses of the regime is more and more being supplanted with a mounting protest against the system itself. The once so meekly expressed preference for a "genuine Marxism-Leninism" to Stalinism or Neo-Stalinism is in creasingly replaced with violent attacks against Marxism. I think there would be an even more general attack in the underground publications against all forms of socialism if there were a better understanding of the nature and possibility of private enterprise on a large scale.

A Cruel System of Controls In the mid-nineteen-thirties a Hungarian Communist writer. Erwin Sinko, settled for more than a year in Moscow. In his brilliant account of that period published in German, Der Romarn eines Romans (Cologne, 1962 and 1967), he provides us with a great many interesting observations and insights. (Sinko died as a Titoist in Yugoslavia only a few years ago). He was in the USSR at the beginning of the Big Purges but shamefacedly admits that he was not aware of them. He saw that the USSR was pro ducing goods far more expensively than Western Europe (largely on account of poor work ethics and the frightening bureaucracy) and quotes his Jewish landlord to the effect that he would never become a Bolshevik because Socialism is intrinsically cruel. He also offers us a wonderful, lively portrait of a cobbler who then still was able to pur,sue his humble trade on a street corner almost literally crushed by taxes designed to ruin his business. But the man held out heroically to keep his precarious 468 THE FREEMAN August freedom and independence. Stub bornly he refused to join the state owned shoe repair workshops.

Today, needless to say, nothing of the sort would be tolerated for a moment. All that remains of private enterprise is the gray mar ket for agricultural products pro visioned from the small personal plots of the farmers (always sub ject to recall and cancellation), a very limited market without which the Soviet population would have died of starvation years ago. (The misery of a peasantry con stituting over 30 per cent of the total population of the country, which in spite of excellent soils is unable to feed the USSR properly, is really the scandal of the cen tury.) Socialism Easy to Explain During my stay in the USSR I often talked with people about their country's economic problems. Thanks to a variety of sources (among which Western radio stations figure prominently) the masses of the Russians do realize that our living standards are much higher than theirs and many of them, in a way, are puzzled by this state of affairs. "Here," they said, "everything is carefully cal culated and planned in advance, and you in the West are subject to the chaos of a free competitive enterprise. How then is it possible that you are so much better off than we are?" This surprise is simply due to the fact that Social ism is what Tocqueville called une !ausse idee claire, a false, but clear idea.

One can explain socialism to anybody in ten minutes, giving him the essence of that doctrine in a nutshell. Free enterprise, which is far more progressive and sophisticated, needs a great deal more time and effort for its ex position. (Socialism, one ought never to forget, exists in many a primitive society with very little stress placed on human personality and therefore it appeals so strong ly to people in the Third World.) Of course, the value of small personal enterprise was quickly grasped by my interlocutors. "But do you think it to be just if a single person has millions of rou bles or owns a huge factory em ploying hundreds of workers they would then be at his mercy, wouldn't they?" Such arguments arise because among the Soviet citizens there no longer exists the memory of a free laboring class (or of collective bargaining) . The real surprise to most of my acquaintances came when I told them about the workings of a stock company. "Yes, fine, but who is permitted to buy these stocks?

What party affiliation must he have?" The idea that simply any19'72 FREE ENTERPRISE AND THE RUSSIANS 469 • body can buy stocks and thus get a share in the enterprise came as an added shock, but once a man pointed an accusing finger at me and said: "What you tell us can't be true arid I'll tell you why. If your representation is correct then a worker could buy shares of his own factory and get the dividends of his own labor and thus become employer and employee in one person - the boss of his manager - and that's patently impossible." When I explained to him that it was quite feasible and occasionally does happen, everybody was non plussed and one person declared that such state of affairs was "exceedingly democratic" (which in a certain way it is). Signs of Opposition Yet "capitalist thinking," with out the slightest chance of being adopted by the government, is gaining growing adherence in op position circles. The excellent work by Cornelia 1. Gerstenmaier, Die Stimme der Stumm en (which will soon be published in the United States) shows a real change of mind. The author, who is a serious German scholar and has spent considerable time in Russia, is the daughter of a form er chairman of the Bonn Diet. She had and still has access to the typed and retyped publications of what one jokingly calls Samizdat, the "Self-Publishing Company".

There she tells us, among others, of the famous programmatic pamph let of Alekseyev and Zorin, "Time Does Not Wait," where these two authors - the pseudonyms cover a technologist and an educator - in form us that "the deadly grip of the government on economics must come to an end." A manifesto of the so-called "Democratic Move ment of Russia, the Ukraine and the Baltic Nations" - this label itself tells a story! - insists that state, group, and private enter prises ought to get the same rights in managing the means of production. Growing Appreciation for Freedom Probably the most moving doc ument in this book is that by Boris Talantov, an outstanding underground leader who early this year died in a Kirov (Vyatka) prison. Talantov was a layman and a mathematician but the scion of a family of priests. Himself a profoundly religious person, he de nounced the Moscow Patriarchate for collaborating in an abject way with the Soviet government, an accusation widely printed in the West and forcefully repeated by Alexander Solzhenitsyn in an open letter. (Archbishop Nikodim - a most disreputable character as we can see from Andre Martin's book on religion in Russia - thereupon 470 THE FREEMAN Au.gust declared that Talantov "never ex isted" but had been invented by anti-Soviet propaganda.) The testimony of Talantov is all the more valuable because religi ous groups in the Old World (un der monastic influence) have tra ditionally shown very little inter est in the burning question of private property and free enter prise. But Talantov, in whom we have to see primarily a religious martyr of the Eastern Church, as the author of a widely circulated pamphlet entitled, "The Commun ist Party of the Soviet Union as Ruling Class in Soviet Society,"

knew the real nature of the evil. Here he gave us a precise analysis why there can be no freedom, no respect for the dignity of the per son in a socialist system. He even strongly emphasized the economic superiority of free enterprise over state capitalism. The latter insures the total enslavement of the work ing class and, incidentally, also the economic enforcement of atheism by a methodic discrimination against religious workers. Private Service enterprise, Talantov insisted, not only guarantees a minimum of freedom, but also produces goods of greater quality with fewer economic inputs. Has the Russian underground embraced Adam Smith? It would be premature to answer this ques tion in the affirmative. It is cer tain, however, that a chance for sound economic thinking exists, not, of course, within the Soviet government, but among its in ternal enemies who are all very much aware of the West's ma terial superiority. As a matter of fact, religious, political and eco nomic truth in the Soviet Union is engaged in a heroic uphill fight; whe:weas in the West, truth, due to mental sloth, envy, jealousy, and the masochistic denigration of one's own traditions, is slipping and sliding, is obscured and for gotton. Under these circumstances it would be a real shame for us, who had all the breaks, if the Light again would be coming from the East. t) IDEAS ON LIBERTY WHOEVER could make two ears of corn, or two blades of grass, to grow upon a spot of ground where only one· grew before, would deserve better of mankind, and do more essential service to his country than the whole race of politicians put together.

JONATHAN SWIFT CLARENCE B. CARSON THE FOUNDING OF THE AMERICAN REPUBLIC 13 The American Triumph THAT THE AMERICANS were even tually.triumphant in the War for Independence is a matter of rec ord. The triumph was military, diplomatic, and big with portent for the future of republics. That the triumph could have come ear lier, could have been more decisive, and could have involved the United States in fewer entanglements, is speculation. George Washington thought that the victory could have come much sooner. In his circular letter to the governors of the states in 1783, he declared that if he had sufficient space he "could demon strate to every mind open to con viction, that in less time, and with much less expense than has been incurred, the war might have been brought to the same happy con clusion, if the resources of the continent could have been properly drawn forth. ! ••"1 Speculation is not history of course, but it does sometimes help to shed light on history. The prolongation of the war due to the failure to muster American resources effectively brought in its train a host of consequences, some of which en tangled America with European powers at just that time when they were effecting their inde pendence of England.