Economic Authoritarianism (Part 1: The Socialism Myth)

In 1976, while I was serving a mission in West Germany, I was told about an East German official who appeared on television and gave the standard communist party line in trying to explain the reason for the Berlin Wall. He apparently insisted with perfect sincerity that the Wall hadn’t been built to keep the East Germans in. It was there to keep capitalism out. When I heard of this I laughed, of course. But in the intervening years I have decided that, as with most lies, this one also contained a shred of truth. And that shred of truth concerns the real nature of what came to be called the Cold War.

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One sunny afternoon in August 1984, my wife and I wandered the streets of East Berlin. We witnessed the somber, hopeless faces of the city’s few pedestrians. We marveled at the cheap-looking Trabants that motored loudly up and down the streets and farted foul fumes out of their tailpipes. We passed soldier after soldier, each fully armed, each exuding an almost tangible assurance that the Cold War was as real as any hot one. We watched people stand in lines a block long to buy produce. We tried to spend our allotted fifty Ostmarks in the city’s most prestigious department store but couldn’t find even a souvenir we wouldn’t have thrown away. We finally bought a cheap noodle press and a metric measuring cup. We ate at a cafeteria where the food tasted as unappetizing as it looked, then stopped at an ice cream parlor on Unter den Linden that was already out of practically everything on the menu by 4 p.m. By evening we were more than eager to return to the hustle and plenty of West Berlin. We left with most of our Eastern currency and absolutely no illusions about communism.

I can still remember later that evening visiting a little Slavic restaurant in a quiet corner of Neukölln and how ecstatic I was over a tossed salad with tomatoes and green peppers. “I could never get a salad like this in East Berlin!” I exulted. That one afternoon behind the Iron Curtain had made me see the world with new eyes. I marveled at how many stores and shops there were in the West, and at how fully stocked they were. In fact, because of that one afternoon, I can perhaps dimly imagine what the East Germans must have felt that November day five years later when the Wall came tumbling down. I can understand their desires for reunification and prosperity. I can understand their naïve assumption that capitalism is right—because communism is definitely wrong.

I watched with intense interest during the latter part of 1989 as Eastern Europe retreated from communism and authoritarianism. Having lived for four months in West Berlin, that one-time island of hope in a sea of despair, I was overwhelmed by what I witnessed on television on November 9, 1989—East and West Berliners dancing atop the Wall of Shame, holes being pounded in that concrete barrier by people wielding everything from sledge hammers to ice picks, the suddenly released floods of revolution flowing through those gaping holes like water through a burst dam, the giddy intoxication of reunion as long-oppressed East Germans clasped hands once again with their prosperous West German brothers and sisters.

And yet in the ensuing weeks and months, many in the East, not entirely convinced that materialism was more noble than poverty, criticized the masses, suggesting that they were motivated not by love of freedom, but by greed. Now, this was an ugly accusation, yet it is an accusation that all believing capitalists must repeatedly explain away. “Is it wrong to have enough to eat?” they exclaim incredulously, misunderstanding the accusation. “Is it wrong to be able to purchase a few luxuries? Is prosperity bad?” they mock. “It’s certainly not as bad as poverty!”

But the question is not whether wealth and prosperity are better or worse than poverty and destitution. The real question is whether our modern form of capitalism is right simply because communism is wrong. And, oddly, in all the celebrating over the demise of communism, few in the United States seemed willing to question the fundamental moral validity of America’s version of capitalism, which can more accurately be labeled corporate capitalism. Certainly communism and corporate capitalism are opposites. But two opposites can both be wrong. Just because stealing from the sick is detestable doesn’t make stealing from the healthy commendable. Stealing of any kind is wrong.

For some reason, though, the triumph of the democratic West in the Cold War seems to have rendered this question immaterial. Of course capitalism is right, we naively boast. Freedom and democracy triumphed, didn’t they? Capitalism conquered Eastern Europe and even killed the Soviet Union. And capitalism is the economic manifestation of freedom and democracy, isn’t it? Isn’t the free-market system synonymous with freedom?

Perhaps, but only on a very superficial level. The simplistic nature of these questions can be illustrated by looking more carefully at the recent conservative campaign in the United States against socialism. Republicans, who are religiously devoted to free markets, deregulation, corporate welfare, and tax cuts for the wealthy, have also sounded the warning cry against socialism, particularly any tampering with the health-care industry that approaches socialized medicine. How many times have we heard that socialism is evil, just one step, or perhaps even a half-step, away from communism? How often have the conservatives lashed out loudly but irrationally against the government takeover of the automobile industry, against the bailout of Wall Street, against Obamacare?

But is socialism really just a half-step away from communism? Remember the contrast I drew between the scarcity of goods in East Berlin and their abundance in West Berlin, between the oppression in the dismal East and the freedom in bustling West? Yes, this was a contrast between two opposing systems. But it was not a contrast between East Germany and America; it was a contrast between communist East Germany and socialist West Germany. West Germany in the 1980s was a solidly socialist country, with socialized medicine, high marginal tax rates, a statutory guarantee of four weeks’ paid vacation every year (compared with none in America), and a substantial social safety net. Yes, West Germany was a welfare state. It also had one of the strongest economies and highest standards of living in the world. It was strong enough to absorb the crumbling mess that was East Germany and still remain the strongest economy in Europe. Even today, Germany is strongly socialist and yet has only recently been overtaken by China in total exports; and, like China, Germany is a net exporter.

I have lived in Germany. I have friends there. They do not consider themselves deprived of freedom or democracy. They are prosperous. Their country has less income inequality than ours, and comparatively little poverty. Indeed, they would probably argue that because of their socialized health care, they are more free than we are—free to get the care they need, free from worry about high costs, free to go to any doctor they choose, free from the prospect of bankruptcy due to a serious illness or tragic accident. They would never trade their socialized medicine for the American health-care system (if we can even call such chaos a system), for their system ranks higher in quality than ours while costing only half as much as a percentage of GDP. And now you can even get tomatoes and green peppers on your salad in East Berlin. Socialist East Berlin.

So, to return to the question at hand, did freedom and democracy really win the Cold War? Or were they merely secondary issues in the real conflict? And anyway, does winning prove anything about rightness or wrongness? I suppose before we tackle these questions, we first ought to take a closer look at the nature of the Cold War, because our misunderstanding of its outcome has validated in most American minds the moral correctness of our current system of corporate capitalism. That will be the topic in part 2.