Marian Tupy: Hello and welcome to The Human Progress Podcast. Today, I will be talking to Dr. Kristian Niemietz. Kristian is the head of political economy at the Institute of Economic Affairs in London. He joined the IEA in 2008 as a poverty research fellow, becoming its senior research fellow in 2013, and head of health and welfare in 2015. Kristian studied economics at the Humboldt-Universität zu Berlin and Universidad de Salamanca in Spain. During his studies, he interned at the Central Bank of Bolivia and the National Statistics Office in Paraguay. Kristian holds a PhD in political economy from King’s College, London, where he also taught Economics. And today we’ll be talking about his 2019 book, Socialism: The Failed Idea That Never Dies, and the general fascination that people, especially young people have with a system that has failed whenever it was tried. So Kristian, welcome.
Kristian Niemietz: Hello, thanks for the invitation.
Marian Tupy: My absolute pleasure. So conducting this podcast, as we do in 2022, it is perhaps valuable to go back in time and to talk about the origins of the socialist idea, its classical definition, and how, if at all, its meaning has changed over time. So let’s start with history. Where does socialism come from?
Kristian Niemietz: Oh, well, that’s hard to say. There was a socialism before Marx and Engels, and they recognized that, they talked about… They said what happened before them was Utopian socialism, and then they said, “But what we do is completely different. We’re doing scientific socialism, and this is a qualitative step forward.” So there were always thinkers, writers who talked about egalitarian societies, societies which everything is organized communally. So early Utopian literature is based on that, but they would not have a clear and precise theory how a society of that type would be organized. And Marx and Engels then changed a couple of things. First of all, they said, for them, socialism was not simply an option. They didn’t say, “Look, this is the system you have, but we have a proposal for a better one.” That’s not what they did. But they thought that capitalism would eventually get into a crisis of its own making, it would not be sustainable, and socialism would just be the logical next step, it would have to happen anyway, they saw it as something inevitable.
Kristian Niemietz: So they didn’t see themselves as the people who invented a new system and that would come about because they described it or made the case for it, but rather as something that had to happen as a law of history. So inevitability and what they brought in also was the idea of that every type of social system, economic system has a ruling class. That there’s always a group of people who are in charge. And as they saw it in antiquity, those would have been in ancient Rome or ancient Greece, these would have been slave owners. Then in the Middle Ages, these would have been the aristocracy, feudal land owners and under capitalism, they thought it’s the bourgeoisie, the people who own capital, who owned the factories. These are the ruling class.
Kristian Niemietz: The ruling class means that they’re not just economically powerful, the ruling class doesn’t just mean rich people, but Marx and Engels thought if you own the means of production, whatever that is, land under feudalism, under capitalism, whoever owns the means of production also holds political power. So it’s the idea that you cannot separate economic power from political power. If you owned means of production, the group of people who do that, they will be the ruling class, and that’s how Marx and Engels differed from more Utopian kinds of socialists. There were… Around the same time there was a movement in Britain led by Robert Owen, who was a factory owner. He set up several communities, egalitarian collective communities that he called socialists, and he called himself a socialist. And… But these were all voluntary associations. You could move to one of those places, you didn’t have to.
Kristian Niemietz: And Owens didn’t say I want to organize the whole of society in that way. And of course, Owens, Robert Owens was himself, a capitalist and in Marx’s times, he was a factory owner, so Marx and Engels would have said, “No, that’s not the way to go. This guy is himself part of the ruling class, and you’re not going to get socialism in this way. What has to happen is the working class as a whole has to organize itself, overthrow the ruling class and then establish this new system.” So a short summary, where it comes from, I can’t say exactly. I’d say that the idea of a collectively organized… A community… A communally organised economy, that’s something that’s always been with us, and probably because that’s how our ancestors lived. If you go back far enough, hunter gatherer societies, prehistoric societies, they practiced a sort of proto communism. And that’s what Marx said as well. They said this was in ancient times you had a kind of primitive communism. And one day we will replicate that just at a much, much, much higher level of economic development.
Marian Tupy: And sophistication. So in the past, like, for example, if you look at Plato’s Republic, or if you look at Thomas More’s Utopia they simply assume that the best society would be one where things are held in common, but they didn’t have any sort of scientific [0:06:49.9] ____. They didn’t have any theory about how this would work, but Marx did. Are there any intimations of central planning in Marx? Did he have a clear idea how the economy… Obviously he believed in communal ownership of property, especially means of production, but he didn’t really, as far as I know, come up with the notion of central planning yet that is where we end up, right? So was that sort of an inevitable process that central planning emerges in Central and Eastern Europe and Soviet Russia after the communists take over? Let’s think about the system as it functions in its heyday say 1960.
Kristian Niemietz: Yes. That is inevitable. And you are quite right. Marx did not spell out how exactly a planned economy should work or didn’t even use the term planned economy. He didn’t talk about five year plans or anything of that sort, and that was quite deliberate. Marx said we don’t know what socialist society will would look like in practice, and it would be futile to speculate on that. And if you think that this is just inevitable, something that is going to happen anyway, then that kind of makes sense. Then of course you don’t feel obliged to spell out exactly how it will work because it would be if I propose a particular reform, then of course you would say, “Well, you have to tell me how this is supposed to work, because you’re the one making that case.” But Marx and Engels did not see themselves in that way. They thought that they are just analyzing the laws of history and this is just what has to happen. So therefore…
Marian Tupy: And the law of history leads from sort of in slaving society in antiquities, through feudalism, through capitalism, to communism, which is the apex, the climax of human history, right?
Kristian Niemietz: Yes, that’s exactly right. That will would be the highest point and the end of history. Yes. So they did believe that societies have to evolve through these various stages of starting with the, at a very early primitive communism of prehistoric societies, then antiquities, slave owner societies, then to middle ages feudalism with aristocracy as the ruling class, then capitalism as a higher stage ahead of an improvement over feudalism. Capitalism would create the conditions, it would create the technologies and the required capital. And it would lead to the development of a working class. And then ultimately that working class would develop class consciousness. They would realize, “Hey, we’re all in the same boat here. And we’re all being exploited. Let’s do something about this.” And they would then become the ruling class.
Kristian Niemietz: And that would be the first step of the new society, you would have… It would still be a society with a ruling class. It’s just that the working class would then be the ruling class. But then eventually there would not be… There would be no social classes at all anymore. And in Marx’s theory, the state is always an instrument of the ruling class. You only need a state when you have a ruling class and that needs to oppress other classes, but when you have no social classes anymore, then in Marx’s theory, you don’t need a state. That’s why he thought that eventually that the final Utopia would be just a classless and stateless society. So that would not be central planning. That would just be people getting together spontaneously producing stuff. Nobody would organize this.
Kristian Niemietz: There would be no organization and there would be no police either, you wouldn’t need any state institutions, but that would be the highest stage. He thought that this new society that they were talking about would come in two stages. In the beginning, you have a state, and that state would just be a state collectively managed by the working class in Marx’s mythology. And then eventually it would just disappear. And then Lenin went changed the terminology a bit later on. He started to call this first stage the planned economy, the state that supposedly represents the working class. He called that socialism, and he called the future society, the final Utopia, he called that communism. So Marx and Engels did not see socialism and communism as separate things, but Lenin then did.
Kristian Niemietz: He said the kind of society that we’re establishing here, the early USSR that would be socialism. And the idea was that it would eventually grow into communism because the state would just be less and less needed as the working class just spontaneously self organizes. It’s just that of course never happened anywhere. Once you had a socialist state in power that claimed to be the instrument of the working class that state just never shrank. It just grew bigger or stayed the way it was and remained repressive. So that’s where… That’s one of the many things where things didn’t work out the way Marx thought. But yeah, it would be for that reason that Marx did not envision that it would ultimately be state planning. That would just be something that you’d need in the earlier early stages. And even then he didn’t talk about, he didn’t describe any specific institutions. So it’s not that the Soviets… That Lenin and Stalin could just read Marx and then create the sorts of institutions that he talked about. It was not a blueprint. But he did talk about the working class managing its affairs collectively, planning its economy.
Kristian Niemietz: So that means a five-year plan, the sort of economy that we saw in the Eastern Bloc and Mao’s China, that’s… Or Cuba today, North Korea today. That’s not at all incompatible with what Marx said. That is one way of reading it.
Marian Tupy: Right. Instead of the state, the government, the bureaucracy becoming less important leading, eventually, to the dissolution of the state under socialism, it became more and more important because the only way that you could organize the productive capacity of the economy without a fully functioning price system, without the free markets was through central planning and dictates from above. Is that… Would that be correct?
Kristian Niemietz: That’s exactly right. That’s exactly what happened. And you then got economies which quickly became very bureaucratic and hierarchical. And whenever that happens, you get the Western sympathizers looking at it… Looking at a system like that and recognizing, “Hmm, this doesn’t look at all like what Marx had in mind.” And Western socialists then conclude, “Ah, but that probably means that they just misunderstood the idea.” They didn’t take Marx seriously enough, they deviated from what Marx really wanted. But in reality, the reason why these societies turned out in that way is precisely what you described. That once you no longer have market prices, once you no longer have market mechanisms, the kinds of things that coordinate the economies that we live in today, once you no longer have that, you only have a choice between chaos and top-down planning. And faced with that choice, of course, socialist leaders choose top-down planning because they’d rather have a centrally planned economy than no economy. And that was the choice that the Bolsheviks faced. They were just completely unprepared for… They didn’t start with the intention of having five-year plans and a planning bureaucracy that comes up with these mandates and then forces everyone at gunpoint to do what the planners told them to do or set out in their plan. That wasn’t the idea.
Kristian Niemietz: But rather, they had a rather naive idea. Lenin, until just before the revolution, still talked about… Or wrote about how easy it would be once there is no capitalist ruling class anymore. The workers would just spontaneously self-organize and the state would not have to do very much. That’s what Lenin wrote in 1917, a few months before he actually came to power. That’s really how he imagined it. Lenin was a clever guy, obviously, but on those things that really matter… On the economics, he was just hopelessly naïve. He just really imagined the creation of a socialist state to be more or less like the abolition of slavery, right? If you think of the abolition of slavery there, it would also be true to say that there was no exact plan for how exactly it should happen, what exactly should happen afterwards. Because the idea was simply, well, once you’ve got rid of slavery, it’s up to the freed slaves to lead their lives in the way they see fit. It’s not the job of any political reformer to come up with any detailed plan for that. And that’s more or less, I think, how Lenin imagined the abolition of capitalism would work.
Kristian Niemietz: That you see this in the terminology today. Marxists talk about wage slavery; they really saw an analogy between actual slavery and the kind of work relationship that we see in a capitalist economy. And if you think of it in that way, then it’s kind of obvious that you would think, “Well, just get rid of that institution, or get rid of that ruling class and the rest will sort itself out.” Because if you’re talking about actual slavery, that would be the correct way to think about it. You just need to get rid of the slave owners and the rest will sort itself out. In that case, it will be correct. But to draw an analogy between slavery and capitalism and the market economy is, of course, completely wrong. And that is the short summary of why Lenin got it so wrong.
Marian Tupy: Under communism, the idea was that once you get rid of the managers and the owners of the means of production, the capital, then every penny that the worker produces goes in his pocket. He no longer has to share the fruit of his labor, so to speak, with the capitalist. This is the notion of… That, again, the workers are best suited to run the enterprises. Whereas, in capitalism, what we have discovered, and what still appears to be the case, is that on top of the workforce, you still need people who make decisions on what products need to be actually produced. They have to research the marketplace and see what the gaps are, and they are compensated for it. There is a role for a CEO.
Kristian Niemietz: Yes, there is a role for entrepreneurship. Once you have a factory that’s up and running and that’s working successfully, then it would be true to say, “If the managers and the owners just disappeared, wouldn’t this factory just keep going? The workers know what to do, can’t they just carry on?” Once that factory is there and you have a production concept and it’s part of a production process. Then yes, that’s true. But, of course, factories, don’t just spontaneously, spring up. Somebody has to have an idea what the market might actually want. What the best way to organize a production process might be and so forth. And once it’s there, yes you can then if the owners disappeared, it could go on for a while. But even then market conditions would change and a factory that is, or any company that is well adjusted to consumer demand as it is now doesn’t stay that way for long.
Kristian Niemietz: You still need somebody making the strategic decisions, but I can see why if you go to a company… If you visit let’s say a successful pub, a pub that’s… That has lots of customers and there’s a lot of money coming in. What… I can see why you could think, well the people pulling the pints here. They probably don’t make much more than the minimum wage. They do all the hard work. They are the ones who keep the show on the road, what does the owner actually contribute? It’s not that immediately visible and to Marxists, it was just not visible at all. They as you said, thought of capitalists as parasites or more precisely they did think that the bourgeoisie had a useful role to play in the very early stages of capitalism.
Kristian Niemietz: There in the communist manifesto Marx talks about the bourgeoisie in almost flattering terms saying that they’ve unleashed great productive potential. But in more advanced capitalist societies, they did think that the bourgeoisie has outlived its usefulness and now they’re just a bunch of parasites. If you think of them in… Of capital owners in that way then of course you would also think that removing them from the process is very easy, because if somebody is literally just a parasite, what happens if you remove them? Well, the things carry on as, before just better. And that’s why they thought that it would be just very easy to switch from a capitalist society to an, in their mythology worker run one.
Kristian Niemietz: It’s just that every time you do take the capitalist out of the equation, it turns out, oh, they actually do something useful, and now that they’re no longer there something is missing here. So, you always notice that once it’s a sort of you miss it when it’s gone thing. But it’s also, you could make the same argument in about an individual company, within capitalism. If it’s so obvious that the owners don’t add anything, if it’s so obvious that, it’s really just the workers who do everything and who create all the value, why don’t they just leave the company and set up their own collective then?
Kristian Niemietz: If the company owner doesn’t add anything, if they just sit down and collect the profits, why would you tolerate them at all? You… Wouldn’t they just… You could imagine everyone who works at Amazon, just walking out collectively and setting up the alternative the workers’ Amazon, or the people’s Amazon where they could even use a similar logo. So that for consumers, it doesn’t feel like like too much of a change. If the consumer has an attachment to the actual Amazon you could emphasize the continuity. You could tell everyone it would be like before, except the big, bad capitalists aren’t there anymore. And we’re now running the show ourselves. But the reason that that doesn’t happen is that of course, is capitalists do play a useful role. And there was… I mean, that was a… That’s an old debate between economists in the 19th century was the Austrian school of economics, which clarified that point.
Kristian Niemietz: They said, profits, are not wasted and that they’re not, there’s nothing parasitical about them. Profits are a reward for various things. First of all for risk taking that if you set up a company there is of course, a risk that you might never make any money from it. And that’s different from taking a job where you know that at the end of the month you get paid. So that’s, one reason why it’s wrong to concentrate on the successful businesses and say, “Couldn’t this business also run just with the workforce, without an owner?” Yeah. Okay. But you, also need to look at the many, many businesses that never made it to that stage because they fail early on and that’s in a capitalist economy, that’s the majority of enterprises. The majority more than half of all companies that are set up at any given time will not be there anymore five years later. So you have a huge turnover and that’s, because you can’t predict what’s going to work and what doesn’t you need risk takers. And there’s nothing wrong with risk taking, being rewarded. And then there’s of course the patience aspect, the reason why…
Kristian Niemietz: Well, if you had a choice between a $100 today or a $100 in two years, you would, of course prefer to have it now. And that’s why if I want you to be patient, I need to offer you some reward for that. I then have to say, “Okay, rather than a choice between $100 today and $100 in two years, how about the other option would be $110 in two years time.” And then you can think, “Oh, okay. If I wait a bit I get more,” then that changes the calculation. So the capitalist is not a parasite, the capitalist is rewarded for the risk taking, for the patients. And if they’re themselves actively involved with the company with… For the entrepreneurship, the having the idea…
Marian Tupy: So I think…
Kristian Niemietz: Organizing stuff, working out the production process.
Marian Tupy: So that’s all very valuable. And I think the last bit is particularly useful to understand, is that the entrepreneur has the idea. He has identified, or she, of course, they have identified a gap in the market that they want to fill with a new product or a new service. And so the Labor Theory of Value, which I think Adam Smith had, and then Marx adopted things that all value comes from the productivity of the workers. But in fact, there is also value to be derived from the discovery process of the entrepreneur, him or her searching for new ideas, and then creating those products and services. And by removing the entrepreneur from the equation, which is what the Soviets did, they could still produce. But with antiquated technology. The difference between Eastern Europe, when I lived there and Western Europe was not that we didn’t have cars, it’s just that our cars were 30 or 40 years out of date, whilst the West Germans were driving beautiful BMWs, East Germans had to drive Trabants and things like that.
Kristian Niemietz: Yeah.
Marian Tupy: So in a way, I think one could also think about socialism as a very static idea of the economy. Well, we’ve already discovered cars. We have already discovered bicycles. We have already discovered how to grow potatoes. So we just now give it to the workers to do. But there are also other things that could be discovered in the future, like SpaceX or the internet that the communist could never do, because precisely they didn’t have those entrepreneurs. So we get into, let’s say the 1970s and the 1980s and this centrally planned economic model, which is prevalent throughout the Soviet Block, begins to sputter. It’s obvious that it is not growing as fast as the communist would like. So, by 1989, when communism collapses… I would say at what point do you think people started to realize that socialism was not the way forward? Because in 1960 it was clear that people still thought communism worked, but by 1989 it had collapsed. So what was the period of kind of realization that socialism was not going to be the wave of the future?
Kristian Niemietz: Unfortunately there was never a widespread realization of that. There was a realization at some point in the cold war that Eastern Block socialism was not the way to go. But by then, Western socialists had already quite successfully distanced themselves from that but in the ’60s, it was Soviet Eastern Block socialism was already very much per se, had fallen outta fashion. That was the heyday of third worldism where they romanticized regimes in China, Vietnam, and Cuba instead, rather than saying the Soviet Union is the load star of the future. When exactly that had happened. And yeah… I dunno, it differs a bit from place to place. There was… In the ’50s, I think there still were Western economists who thought the Soviet economy would… Was actually doing very well, was catching up with the West, and they would eventually catch up completely. It had somewhat fallen outta fashion because people had realized that it was bad in other ways. And because of the repressiveness and all that. But I think the economy as such still had a fairly high… A fairly good reputation.
Kristian Niemietz: What must have changed that was that wherever you had an economy like that, people were running away, that was the big issue. So the Berlin world was not just about… It’s not that everyone just enjoyed the greater freedom that I had in West Germany, although that was a factor. But there were the people who escaped until 1961, a lot of them, I would imagine were quite apolitical. They didn’t necessarily care that much about whether they can read dozens of newspapers or whether they can only consume state controlled information, but it was more, they clearly had materially higher living standards in the West. And I don’t want to dismiss that there’s absolutely nothing wrong with valuing a nicer standard of living.
Kristian Niemietz: And it was clear at the time that they weren’t getting it in that system, and I’m… Yeah, people must have realized then if you have to build walls and fences with barbed wire to keep people in, then there must be something amiss with a system of that kind. But I think it was only in… It was only a brief period in the ’90s that this was generalized, that most… That it was a widespread opinion that planned economies per se are a bad idea. Because that was…
Marian Tupy: That’s a very good segue to my next question. So in its heyday socialism is about central planning, it is about shortages because central planning doesn’t work, they need to put up watchtowers and barbed wire to keep people from escaping, it all comes down… What do you think that socialism means to people today?
Kristian Niemietz: That’s part of the problem. It’s a bit more confused than it would have been in the ’60s or ’30s. Because these earlier waves of socialism enthusiasts, how to clear model that they were looking at. In the ’30s, lots of western intellectuals were idolizing, lionizing the Soviet Union. The student radicals of the ’60s, early ’70s were glamorizing Maoist China, North Vietnam. They have to… They may not have known a great deal about them, but they at least from afar admired those societies, would have said, “That’s socialism, that’s the thing we want.” Now socialists can’t point to anything, there was until a couple of years ago, there was Venezuela, but of course, we know how that ended, and then therefore that also as always became not real socialism as they always do after a while. It’s a bit confused. I think nowadays socialists just describe the ideas in very abstract terms. And so… So they talk about a society that’s democratically run by the workers.
Kristian Niemietz: It’s often… They often emphasize that democratic aspect, they would say in the current economy you have you have people like Elon Musk and Jeff Bezos in charge and they are like Aristocrats in the Middle Ages, they have the feudalists, essentially capitalist, feudalists, and we will replace all that with democracy. And just have this rhetoric, “Wouldn’t it be lovely if we planned everything together?” And… Yeah, run things democratically, collectively without hierarchies, that’s the kind of idea, that’s the kind of rhetoric that you get. And… But few of them spell out, how that’s supposed to work. I mean, in my book, I tried to be as fair as I can, and I think we can we can afford to be fair because our ideas are clearly… The better ones are clearly right, so I have no need to straw man anyone. I’ve no need to pick on the weakest case for socialism. Our case is so much stronger than that, I can pick the strongest case, I could… That I can find and still say, okay, just go as far as it goes, but liberal free marketism is still vastly better than that.
Kristian Niemietz: But the problem I had was that, even though I did try to find a good description of how the new wave of socialists imagined the future socialist society I didn’t find it, and then didn’t change in the years since. There have been a couple of books which came out since then, some just after my book, some year or two after. So there is for example, there’s the Socialist Manifesto written by Bhaskar Sunkara who is the founder of Jacobin Magazine. You’ve probably come across the Jacobin, they are part of this millennia socialism wave.
Kristian Niemietz: And then there’s current affairs magazine, which it’s also part of that millennial socialism wave. And their editor and founder Nathan Robinson, he also wrote a book called, Why You Should Be a Socialist, and there’s a couple of those. There’s Fully Automated Luxury Communism, by Aaron Bastani, who is from Novara media, which is sort of the the UK equivalent of of Jacobin. So there’s there’s several of these outlets, and the people who are big in that movement write their manifestos. I’ve read several of those, but what I said in the book, I think still stands. And none of them can really describe how their socialist society is supposed to operate. It’s all… They talk in highly abstract terms, they escape into abstraction. They talk about the outcomes they would like to see, rather than any mechanisms for delivering that, and even then only in very vague general terms. So the use of…
Marian Tupy: It’s like, I have an idea, then a bit of sprinkling of magic dust.
Kristian Niemietz: Yes.
Marian Tupy: Prosperity.
Kristian Niemietz: Yes. Details to be confirmed.
Kristian Niemietz: They use all these buzz words about the workers and everything will be run democratically, and it will be empowering and driven by the people, and all of those fashionable buzz words. But I have yet to find one that really goes a bit beyond the platitudes, and I’ve really looked at… Not some crank French figures. I could quite easily read something from the socialist workers party, which is one of our far left French parties. And say, “Haha, look at how silly this is.” But I’ve tried to be fair. Look at what the more mainstream figures are saying the ones who seriously think about this and who write books about it and who clearly think about these issues every day. You would think these… If there’s anyone who has come up with a concept of what millennial socialism actually is, it would be one of those figures. None of them can. I mean, that’s the whole problem with the socialism wave, that it is very confused.
Marian Tupy: So in a way we are back to Lenin before 1917 in a sense that, you know, the idea is there, but how you get to prosperity is still very much to be determined. Now you said in your previous comment that you tried to be very… You know, that you tried to be very correct not to pick on strawman and etcetera. So let’s look at one example. Throughout the socialist days, the four decades of socialism in Central and Eastern Europe, East Germany was always seen as the, sort of the best performing communist country, which probably had to do something with that, you know, Germans being very productive people. But be it as it may let’s look at the German performance on the east and the west side from say the end of second world war until 1990. What were the practical consequences of West Germany having a sort of mixed almost capitalist system and then East Germany having a communist system? How did it translate into standards of living in GDP?
Kristian Niemietz: Oh, well that’s easily summarized because we have very good data from the time of reunification because they have… Eastern Germany just became part of the well, West German or now unified German system of national accounts. And their GDP per capita was about, or just over a third of the Western level. And that means that even if you look at the poorest region in the old West Germany, which was I think Schleswig-Holstein and in the north [0:40:51.2] ____ Altrip, Beilingen area that would’ve been the poorest part of West Germany. And you compare that to the richest part of East Germany, which was the state of Saxony the old industrial center even then the poorest part of West Germany was still two and a half times as rich as the richest part of East Germany.
Kristian Niemietz: And that is also why if you talk to any East German, let’s say from my age upwards, meaning they have at least childhood memories of reunification or more than that, or clearer memories they will all remember the first time they set foot into a Western supermarket or they bought Western products that they will still remember that even the ones who were nine years old at the time. I mean, I studied in East Berlin and a lot of the people I studied with were from there or around there originally. And they would’ve been nine, 10 years old around the time that the wall came down and they still… They all remember that. And how amazing that was, unfortunately, that hasn’t made them more capitalist you should… Logically they should be fierce defenders of capitalism, but they also buy into this idea that the socialist unity party just did it in the wrong way and that it could have been completely different again, in a details to be confirmed way.
Kristian Niemietz: But yeah, that would be an example where you have perhaps the best starting conditions for socialism doubt, a socialist could ask for. Because in the Soviet case a lot of socialists would say that there, it just degenerated because they… Well, because that they were poor to begin with, and supposedly Marx said, you have to start when capitalism is already very advanced. And that was not the case in the old Russian empire. Now, you couldn’t say that about East Germany, which was highly developed and industrialized long before it became socialist. The industries the all of that, that was I mean, Saxony. And I mentioned Saxony that was an old industrial heartland. You really had all the productive potential there. And just as importantly for… Just for the socialist theory there, you had a highly educated working class because a lot of… Well, Western socialism apologists later said it failed in the Soviet Union because there was no self-organized working class.
Kristian Niemietz: They didn’t have that tradition. They weren’t educated enough. They didn’t have the capacity for self-management and all that. Well, okay. If that were true, then clearly Eastern Germany or any part of Germany would’ve been the ideal test case because they had working class organizations since the… At least the mid-19th century and a very highly developed culture of working class, self-management self-organization. I mean to this day, there are lots of organizations around that date from that period when you had a well developed culture of working class people getting together, running things together.
Kristian Niemietz: It’s just that in practice these types of organizations were suppressed in the GDR, whereas it was in West Germany that they were allowed to thrive again. After the war there, there was a comeback where a lot of the old associations came back. And it was in East Germany that they were suppressed. Now this having working class self organization, doesn’t help if you want to build up a planned economy because you, yes, you have some organizations that exist for a particular purpose. Let’s, say a center for adult education run by volunteers by working class people for those who didn’t have the opportunity to get a good school education. They would organize libraries and book clubs and so forth, making it easier to learn, to read and write and learn about abstract ideas, that kind of thing that was all going on in 19th century Germanys and survived until… Yeah. Until into the 20th century.
Kristian Niemietz: Now you can’t use those organizations to run socialism because they exist for a particular purpose. They run a community library, they run forest chalets for hiking trips and things like that, but they don’t, they’re not there to draft five year plans. They’re not there to run the steel sector, they’re not there to come up with production figures for the for the Trabant. So therefore the idea that just because you have working class self-organization now you can somehow transform that into socialism is completely wrong. But the East German case is as favorable as it gets for socialists and still the result, even though, as you said it may have been the best example of its kind, but still far worse than the relevant counterfactual.
Marian Tupy: Yeah. I mean, if I recall correctly in the early 20th century, people assumed that if socialism was to be born and implemented, it would be done in Germany precisely because it was such a sophisticated economy with such a great sense of working class consciousness. But of course, socialism had to wait. I mean, socialism was eventually implemented in Soviet Russia and when it eventually came to Germany after the Second World War in the form of the German Democratic Republic. It turns out that in a scope of 40 years the west German capitalist model people there earned 66% more than in East Germany, in other words, it failed. Do you have any favorite examples? I mean, you’ve written a book about the catastrophe, which was socialism, wherever it was tried. Do you have any examples that are particularly jarring, particularly silly examples of socialist dysfunction that you’ve encountered in your research?
Kristian Niemietz: Well, my favorite anecdote even though it doesn’t really say much is that when the Soviet Union was finally dissolved that final conference where that was decided, and they wanted to sign… Gorbachev wanted to sign the treaty that would finally dissolve it the pen didn’t work and they had to… [laughter] Borrow a Western made pen from, I think, a TV crew. Now, okay, to be totally fair it could be that the pen just went dry and that of course happens with the best pens in the world, but I still think it’s nice symbolism and it’s kind of fitting that even a system so useless that it cannot even dissolve itself in peace.
Marian Tupy: Now, one of the great attractions, I think, to young people today who don’t think about economics is that socialism has this aura of a society, which has a number of sort of moral elements that are perceived as being desirable. We already talked about the labor theory of value that it’s the workers who should keep the money that the company produces rather than capitalists or entrepreneurs. But for some reason, especially the youth had come to associate socialism very often with things like equality human dignity, female empowerment, even things like gay rights.
Marian Tupy: It’s not that difficult in the United States to see a lot of people sort of equalizing or trying to make a… Make the case that a socialist society would be good for the minorities. What was the actual practical effect of socialism when it was tried for minority position in those societies. For example, I know for a fact that no woman in Eastern block has ever ascended to the position of power, unless you think about Ceausescu’s wife. All of these societies were run by by men. So first of all, where does that tying together of socialism and good things in life come from and did the socialists actually make any progress on those things?
Kristian Niemietz: Okay. I think it’s… It simply comes from the fact that in Western countries, the type of person who would describe themselves as a socialist it is, will almost always be someone who is also a fan of Black Lives Matter and who is just a woke progressive, and who is very much in favor of trans rights. And they would probably just think, okay, if these things come as a package deal here in the West, then maybe that says something about the system, maybe the system itself is therefore somehow more progressive. So it may come from that whereas in reality, some socialist societies were of course, very, quite socially conservative. That’s one of the things that we get some socialists here who sometimes gleefully talk about surveys in Eastern Europe where fairly a high proportion of people say they want the old system back. And they then say, our socialists then say, “Oh, look, the people who have experienced it actually like it.”
Kristian Niemietz: So it isn’t just Western hipsters, but the trouble is that is often… It’s often not specifically the socialist aspects that they’re missing. But it could be the conservative aspects. It could be someone who associates the old system with tough policing tough on crime. Or just, I think this is particularly true in Eastern Germany, that some people associate the GDR with low levels of migration, which was of course true, because why would you migrate to the GDR, West Germany was much more a multicultural society because it had people… Because it was just a magnet, it was this sort of place that people wanted to move to, which East Germany wasn’t.
Kristian Niemietz: But there is… I remember, that used to be the case for a long time, that journalists were always perplexed by the fact that you often saw a lot of voter migration between, from the far left to the far right and in the opposite direction. And I’ve seen lots of articles by journalists that are puzzling about that, saying, “How can this happen? Why would you move from one extreme to the other?” What actually happens is that, some socialist societies, were actually quite socially conservative in some ways, it’s not that they were progressive throughout the board.
Kristian Niemietz: I mean, in Eastern Germany, for example, for a while, they tried to keep out rock music because they thought that was Western bourgeois degeneracy. There’s a movie set in I think the… It must be the ’60s, about someone who smuggles Rolling Stones records from from West Berlin to East Berlin. And it was in a lot of ways, far more socially conservative, than the Western counterpart. And it’s therefore particularly strange that self described progressives would identify with such a system and think that their values would prevail in such a system.
Marian Tupy: If I recall correctly, Hitler once said that a communist makes the best Nazi. And I think that one of the… I think it’s very important, what you said about people not necessarily longing for the shortages of the central planning and the socialism. But they may be longing for other things such as homogeneity, the stasis, the sense of stability, which obviously stagnation brings with it, that may be one of the things that they are looking forward to.
Kristian Niemietz: Yes, although we have to be totally fair here. There are examples where if you care about things like women’s equality and rights for minorities, you can also find positive examples from socialist societies. And that will be because it always depends on what socialism replaces, depends on what the alternative is. So if you have, for example, perhaps here the best case one can find there would be Afghanistan. They had the Soviet backed socialist regime before the Taliban take over or for a while, literally Soviet occupied.
Kristian Niemietz: And we have social indicators, of course, went into reverse after the Taliban take over. So there you could say, if the choice is between socialism and western style liberalism, then of course, Western liberalism is always preferable in every way. But if it’s a the choice between socialism and the rule of the Taliban, then well, even I might say, and then I’d actually prefer the socialists.
Marian Tupy: I see. So for example, when the feudal society, pre Soviet invasion was removed and girls, for example, were allowed to go to school for the first time, that would clearly be an improvement on the previous regime. I think that’s… I mean, that makes a lot of sense.
Kristian Niemietz: Yeah. China similar case. If you have very socially conservative societies, and then you have a socialist regime taking over, then you can see social improvements, in some respects.
Marian Tupy: Makes sense. So in 1989, most people thought that socialist experiment was over. And we already touched on this subject. Today socialism is experiencing something of a resurgence. So what explains that especially when it comes to Western societies. For example, is there something inherent to human nature that makes socialism attractive? You already talked about the hunter gathering societies, small communal living off the land, sharing of meat, very egalitarian, in terms of hierarchy. Is it genetic? These… Are we genetically pre programmed to find the idea of socialism appealing?
Kristian Niemietz: Probably, yes. I discussed that I think in the final chapter of the book. And even though I make clear that this isn’t my area of expertise. And I don’t wanna make any definitive statements here, but I know that people have made that argument that we find capitalism counterintuitive, because we are just not well adjusted to the kind of economy we have today based on a division of labor and impersonal mechanisms. And you can also see that we often talk about economic outcomes.
Kristian Niemietz: As if we imagine that somebody plans them when we say, “But isn’t it unfair that this group earns less than that group,” which is a kind of logic… Okay, if you had a central planner who decided wages, and who says, “Okay, I want this group to earn this much, that group to earn that much,” then you could say, “Wait, why did you make that choice? Isn’t that unfair?” Whereas if it’s just brought about by an impersonal mechanism, then you can’t really apply that logic of fair or unfair. But we seem to struggle with that concept, we talk about economic outcomes as if somebody had implement… As if somebody had decided them, as if somebody had imposed them. We look for someone with… For some agent, somebody who makes decisions, and in a capitalistic economy where there clearly is no person who is in charge overall, we attribute human characteristics to capitalism. You can see this, anti-capitalists often talk about capitalism the way you would talk about a person, capitalism does this, capitalism does that, capitalism thinks that, capitalism promotes materialism, capitalism thinks that only cash incentives matter, that kind of thing. That’s the way you will talk about a person and a fairly unpleasant person, I guess.
Kristian Niemietz: But that is probably that bias, that our moral impulses are just not well adjusted to the kind of economy that we live in today, and part of us longs for that communal economy. And that’s what socialism is. Or supposed to be… That wouldn’t explain the recent resurgence because if you talk about something that’s part of human nature, you would expect it to be constant, and support for socialism isn’t exactly constant, it’s more… It does come and go in waves. So you need something else as well, but yes, I do think there is a predisposition towards… Well, it doesn’t have to be socialism, but some kind of collective decision-making, some kind of communal ethics, and that just makes liberalism… The liberal market economy, very counter-intuitive.
Marian Tupy: So maybe the way to reconcile those two positions would be to say that we are exactly a generation after the end of the Cold War and the dissolution of the Soviet empire. In other words, the memory of what life under socialism really was like is now dissipating, it is amongst people my age and older, and somebody in their teens, would not necessarily know what the whole thing was all about. And therefore, what I’m suggesting is that the waves that you talked about could be explained by what people have experienced. Had they actually seen socialism collapse in practice, and then if that memory goes, then the proclivity toward socialism, which may be innate, reasserts itself, would that be a way to reconcile those two?
Kristian Niemietz: Yes, absolutely, I think that’s exactly what’s happening. And last year, we commissioned a survey on attitudes to socialism and capitalism among younger people. I wrote a report about this where it was not just our survey, but the various surveys of that kind that already existed. So I tried to come up with the most complete summary of attitudes to socialism, capitalism, that you can find. And what I found was that it’s fairly consistent that there’s strong support for socialist ideas, however vague, among people in their 20s and 30s and maybe early 40s. And then around mid-40s or so, there comes a cut-off point, almost. A cut-off point sounds too drastic, but that’s where you start to see a real change. People older than that, this socialism revival clearly hasn’t reached them very much.
Kristian Niemietz: It is almost exclusively something that’s driven by people in their 20s and 30s, and I think that is explained by the lack of that memory that I remember that… I was born in 1980, which means I don’t specifically remember anything about a Cold War. I have early childhood memories of adults talking about it, but I can’t say that I understood any of it at the time. But what I do remember is that in the ’90s, if you talked about socialism and capitalism, economic ideas, the impression of the recent failure were still very much present. It was not something that happened ages ago, but something thats still influenced and informed day-to-day discussions. And there was this end of history feeling that a lot of people would have said it would probably always a mainstream opinion to say, “We’ve tried all that and it failed everywhere, so… Move on. Forget about all this stuff,” that doesn’t mean to people at the time were super pro-capitalist, the idea was always, yes, capitalism is also flawed, we need to come up with a reformed capitalism or something, but it was still very much… You had even people who were quite anti-capitalist would not say, “I want to replace it with socialism,” and that’s something that somebody growing up…
Kristian Niemietz: In political terms in the ’90s would remember, and that’s why I think you do see, this cutoff point that people who are younger than that for them, that’s no longer the case. They formed their political opinions at the time when the memory of Eastern block socialist failure had already faded. And that doesn’t mean that they know nothing about it they can probably give you the dates. And they know what they learned in the history classes it’s just something that doesn’t really connect very much, it’s something… It’s as if we talked about Napoleonic Wars. Yes, we know that that happened and we may remember the names of some battles of it also, but we have no emotional connection with it either way. It doesn’t shape the way we think about anything and in that sense, it’s gone and you no longer get that immediate reaction that if somebody says I’m a socialist that they wouldn’t get the response but that’s been tried and failed, which in the ’90s, yes, that would absolutely have been the answer if you had said, “I’m a socialist,” that’s what your opponents would’ve said, they would’ve said, “Yeah, tried failed.”
Marian Tupy: When you were a young person, did you and your parents ever drive from West Germany to East Germany in the ’90s and could you still see the difference in, standards of living the quality, and the quantity of infrastructure, things like that, was it obvious?
Kristian Niemietz: Sadly, I didn’t go there until, I think 2000 or ’99, but I moved to East Berlin in 2001. So, 11 years after reunification, 12 years after the fall of the wall. Yeah, you could absolutely still see it, economically there had been a lot of catch-up growth it didn’t feel like being in a desperately poor place, but, it still looked very socialist. There was the Alexanderplatz in the center old center of East Berlin, still had, these Soviet type blocks and then this horrible cladding around them that they had at the time. And just next to the university department they had these larger than life Lenin, not Lenin, Marx and Engel’s statues, that’s still there, they’ve been a bit removed because of some infrastructure project, but the statues are still there.
Kristian Niemietz: There was a stained glass window in the university where, which has Lenin’s head in it. And the kind of socialist realism, art that was still everywhere. I think even today you will still see a lot of that. What’s changed in the meantime is that if you go to that specific area, now, you wouldn’t immediately recognize that you’re in the old East, because there’s been a lot of redevelopment and well, Western hotel chains and supermarkets and whatever. But at the time there was relatively little off that. So if you had wanted to do a movie, well like Good Bye Lenin, I would imagine the filming for Good Bye Lenin would’ve been very easy. Of course you have to get, rid of some logos so there were Western supermarkets you could, from that you could tell, some things changed here, the cars were different, but, otherwise it’s still, you still had to backdrop. It’s if, if I had fallen into a time-hole and come out under real existing socialism, I would not have immediately noticed, I guess.
Marian Tupy: So we spent about an hour talking, so let’s try to, end on the following note. From your experience, what is the most powerful tool or argument to convince the young people that socialism is a bad idea? We have already discussed that, the lack of historical memory plays a role in reviving, socialism as a serious idea. But if we are going to succeed in preventing it from becoming a reality again, what argument should we use, especially with regard to the young, do you think?
Kristian Niemietz: Yeah well, first of all, if I knew how to prevent it, if I had a good, successful way of persuading people to abandon socialism then I would have done, it already, I would then be more successful at it than I am. So, so far yeah not very much, unfortunately. And that’s partly because, socialism has also quite apart from whatever the attraction of the ideas, maybe socialism has also become a fashion statement. It’s now… It’s cool and hip to be a socialist, and that makes it particularly hard because convincing someone that they are wrong about a political idea is hard enough. But if you try to convince a socialist that they should not be a socialist, you’re not just asking them to abandon an idea that they may like and feel comfortable with. You’re also asking them to get rid of something that’s for them is a source of their social image, something from which they derive their image of being hip and cool.
Kristian Niemietz: And that’s just something that’s very hard to argue with. It would be… I mean, imagine you are a socialist in a trendy part of town and you go to all the hipster bars there, and everyone is sort of a leftist, everyone is sort of a socialist. And you suddenly… You are the one who says, “Oh, actually I’ve read Hayek and now I think maybe capitalism isn’t so bad.” I mean, your social reputation would just drop like a stone. You would now be one of the uncool people and, that makes it harder to convince, to talk people out of socialism. It’s not just about ideas it’s about fashion statement. It’s signaling things about yourself and to… The projecting, an image of the kind of person you want to be.
Kristian Niemietz: The only thing that I’ve found works a little bit is you have to show, socialists how similar they sound to the people, they would dismiss as not real socialist. So the people involved with earlier socialist projects. That’s why in the book I tried to come up with some Chavez quotes, which from the early stages of Venezuelan socialism that, if you read that, what Chavez said 17 years ago, it just sounds so much alike what a young socialist, a millennial socialist would say today. It’s the same rhetoric, it’s the same… Chavez also went on about how previous socialists were not real socialists, they just misunderstood Marx. That’s not at all what he was trying to do and his version would be totally different, and we have to reinvent it. And none of all that horrible bureaucracy and that authoritarianism, none of that will matter. We will do it totally differently. And if just show a socialist, a text of that kind, and you show them and they realize, “This guy sounds a lot like me,” then you get a bit of a moment of self-doubt, or even, I mentioned Lenin, even old Lenin texts.
Kristian Niemietz: I mean, these people wouldn’t read Lenin, they just think Lenin is some guy who misunderstood socialism, or he’s some guy who had, didn’t care about socialism, just wanted political power, and just used socialism as a tool. So therefore, that’s why millennial socialists would think there’s nothing to learn from these earlier failures. These were just people who either cynically used the term socialism without actually meaning it or people who didn’t understand it. Whereas if you show them what those people actually said and you show them that it’s not true that they came up with the idea of creating a horrible dictatorship.
Kristian Niemietz: If you show them that these people actually did think that their revolution would lead to a democratic worker-run self-organized society. And that they were rhetorically indistinguishable from today’s millennial socialists. Then I’m hoping at least some people will recognize, “If these people sound so similar to me, how can I really claim that I’m the one who has magically reinvented socialism and transformed them to something totally different?”
Marian Tupy: Well, that’s a great way to end on. Perhaps another way to try would be to offer the most radical students in our colleges a ticket to Venezuela for a week or two to go and check it out, and experience on their own skin what real life under socialism is like. I wonder how many…
Kristian Niemietz: Well, until a decade to go, you didn’t have to offer tickets. A lot of them would have gone there voluntarily, and come back and say, “This is the real thing. This is brilliant.” It’s just that now Venezuela has moved into this, “Ah, that wasn’t socialism. You just don’t understand it,” to that stage.
Marian Tupy: Understood. So once again, the book is Socialism: The Failed Idea That Never Dies by Kristian Niemietz, from the Institute of Economic Affairs. I want to thank you very much for spending an hour with me. It was absolutely fascinating. We’ll post the podcast. We will tweet out your book and hopefully, fingers crossed, a lot of young people will buy it and learn from it. Thank you very much.
Kristian Niemietz: Thank you.