Squeezed between the “pitchforks” and the government (see Community Reinvestment Act), the banks survived by releasing the accumulated toxic assets to the rest of the financial system, which over the years poisoned the entire world economy. Now that the crisis has propelled a former “pitchfork operator” into power, it shouldn’t surprise anyone that the new organizer in chief would try to “heal” the economy how he knows best: by continuing to squeeze businesses between the “pitchforks” and the government — a tactic that had caused the disease in the first place. Only now he is doing it on a global scale.
Once a community organizer gains control of the media and the government, the next logical step is to turn the entire nation into a mob and set them against businesses, while offering the latter government “protection.” The subsequent takeover of the economy leaves the future society reduced to the two basic elements: an authoritarian government and a compliant mob. This may be an ideal arrangement for a community organizer, but it’s a direct opposite of what the Founding Fathers had intended.
Most Americans will probably associate this trend with the protection racket that was rampant in Chicago in the 1930s. It follows the same pattern: the mob, in conjunction with the unions, would organize strikes and protests, do physical damage, and intimidate business owners. Then a mob representative would meet with the owner and offer “protection” by saying “I’m the only thing between you and the pitchforks.”
Curiously enough, at about the same time, a similar drama was unfolding halfway across the world in the Eastern Siberia — only this time the role of the mob was played by a government that claimed to act in the interests of the workers. And while the mobsters were motivated by greed and used the workers simply to milk the capitalists, a workers’ government, motivated by the common good morality, used the workers for something much more sinister and immoral.
After the Communists nationalized Siberian gold mines, the government’s incompetence and lack of incentives sent gold production into a decline. Many of the managers and engineers had fled abroad; the foreign-made mining equipment lay in ruins. But the country badly needed gold to finance industrialization and prepare for war with Western capitalism.
The popular sentiment, whipped up by the party-controlled media, was that “heads must roll.” Failing to deliver the required quotas, the remaining managers and engineers were declared enemies of the people and either executed or sent to hard labor camps. That didn’t help; the production continued to drop.
That’s when Nikolai Bukharin, a former community organizer in charge of industrial development, came up with an idea to infuse some capitalism and lease Siberian mines to British mining companies. The plan was approved by Stalin.
The lease terms were extremely favorable; before long British capitalist exploiters arrived at a few Siberian locations. They brought new equipment, trained the local workers, and quickly revived the industry. But as soon as things began to run smoothly, local unions organized strikes at all British-run mines, protesting exploitation and demanding a significant pay raise.
The strike sounded absurd as the miners’ wages and living conditions by then were among the best in the country. The foreign management didn’t realize, of course, that the strike had been secretly ordered by the party’s central committee as part of Bukharin’s clever scheme. The unions wouldn’t dare defy the party. The workers simply did what they had been ordered to do.
The British gave in and raised the wages. But a few weeks later another strike broke out, with more picketing and demonstrations, as the unions demanded another significant raise and improvement of living conditions. The British gave in again. After yet another strike the Siberian miners already had a higher living standard than any of their Western counterparts, while the mining operation was becoming barely profitable. When the next anti-exploitation strike broke out, the capitalists cried to the Soviet government for help.
Bukharin, on behalf of the party and the government, answered that he had no power over the unions. This was not a capitalist country where governments oppressed their workers. This was a workers’ state, ruled by the workers who were getting angry at capitalist exploitation, and the government had to obey their will. Long story short, and not necessarily in these words, the gist of the message was that the Brits only had Stalin’s mercy standing between them and the pitchforks, and they better not push it.
Finally the Brits fathomed the depth of the hole they’d dug themselves into. There was nothing else they could do except run away from the threat of the pitchforks as fast as they could. Shipping back the equipment would only increase their losses, so they left the machinery behind.
As a result, the Soviet government got new working equipment, trained workers, and well-organized production — all free of charge. None of the captains of socialist industry lost any sleep; it was done for the common good of the workers, and so the end justified the means. According to a witness account, members of the party’s central committee, including Stalin, laughed hysterically every time Bukharin retold the story of how the workers’ state fooled Western capitalism.
But the joke really was on the workers. As soon as the British left, the mines were taken over by the state, the wages dropped to the national average, and the usual misery ensued. The unions had done their job; there were no more strikes. Who would dare protest the party that acted in the interests of the workers? No one was foolish enough to stick his head into that noose and be declared enemy of the people. And since everyone acted smart and in the interests of the common good, the industry quickly declined to the pre-capitalist level.
In 1937, Bukharin himself was declared an enemy of the people and, after a show trial, executed on unrelated charges. The allegations against him were as bogus and far-fetched as the very system he had helped to create — and of which he later became a victim. The gold-mining episode was perhaps one of the most innocent schemes he conjured in the interests of the common good.
In the absence of economic incentives, the stagnant and unproductive industries could only be run by threats and intimidation. Those who think that the Soviet system was an aberration of socialism, please consider that it had been consistent with the principles of equality and the common good. Stalin’s reign of terror was merely an inevitable end result of a collectivist utopian theory that contradicted human nature, vilifying people for “greed” and “selfishness,” which were mere manifestations of their individuality, and punishing the desire to be free from state-run slavery.
It appears that the ultimate manifestation of the “common good” principle is an absolute power of the state. Stalinists associated the idea of “socialism with a human face” with moral confusion and ideological corruption. At least the henchmen were consistent in their beliefs.
As post-Stalin liberal reforms softened the totalitarian system, they also made it more dysfunctional. With the fear of repressions withering away, the economy slowed down to a halt. And just as the last remaining fear was gone in the years of Perestroika, the country fell apart. This was a logical conclusion of an attempt to build a “workers’ paradise” based on “progressive” collectivist morality, which turned workers into slaves and corrupted the society to such an extent that it required a partial return of totalitarian rule by Putin in order to rein in organized crime.
But American “progressives” seem to be unable to learn from other people’s mistakes, even if the former KGB officer Vladimir Putin himself is asking Obama to take a lesson from the pages of Russian history and not exercise “excessive intervention in economic activity and blind faith in the state’s omnipotence.”
I don’t often agree with Putin, but when he’s right, he’s right. “In the 20th century, the Soviet Union made the state’s role absolute,” he said at the World Economic Forum in Davos. “In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.”