Akmal A Gafurov. International Journal on World Peace. Volume 36, Issue 2, June 2019.
Introduction
I was recently asked by an American scholar about the difference between the development of the Soviet and Chinese economies. He had commented that both economies were rooted in communist revolutions, but the Soviets had never abandoned the idea of a centralized state economy, whereas Deng Xiaoping had introduced a market economy. The Chinese economy took off and is now challenging the West, while the Soviet system collapsed. The fact that I was asked such questions shows that the widespread political rhetoric that simply promotes one type of society over another is not sufficientiy convincing. I will try first to clarify the problem in general and then answer with application of knowledge from the exact sciences, like mathematics, rather than through ideological beliefs.
The Disaster of the Russian Revolution(s)
I grew up under the Soviet system, and from my youth I had a negative attitude to the Marxism-Leninism doctrine, to the Communist party, and its leaders. Communist revolutionaries took away my parents’ property and left them homeless and did many other things that mistreated us. As many other people in the Soviet Union, I thought that if we got rid of the Communist Party, we would live like people do in the USA. When the economic system collapsed, I expected that the 1990s reforms would bring us the long-expected prosperity we awaited. Then I saw that the Communist leaders renounced their previous oaths of loyalty to the Party, burned their party membership cards, seized power as reformers and stole all state property for their private gain, without much concern for average citizens, and I realized we would not get the economy we were expecting. Next came unimaginable corruption, criminal gangs, bad staff selection, and the complete destruction of the economy. In terms of living standards, we were not moving towards America, as we had dreamed, but in the other direction, towards destitution. Contradictory information and propaganda was coming from everywhere, and I decided for myself, from the standpoint of system analysis, to understand step by step, starting with elementary and uncontested facts, what was happening earlier and is happening now, considering all the pros and cons, looking for an answer to the question “Why?”
In the world, there are 32 developed democratic countries, constituting 16.3% of the total number. These countries produce most of the world’s goods and dominate in the world markets. They are followed by countries with authoritarian rule (25.5%). And pseudo-democratic countries have the worst situation (57.2%). Crimes, corruption, economic crisis, and unemployment prevail in those countries. They mainly supply cheap labor and raw materials to the market.
Distinctions of Economic Structures
In analyzing the reasons for our situation, we can make a comparative analysis of the reliability and efficiency of different types of productive-economic structures (PES), knowing that a country’s economy consists of a mix of governmental productive-economic structures (GPES) and private productive-economical structures (PPES).
GPES includes government-owned workshops, factories, and state ministries. Players consist of chiefs and subordinates. Relationships are based on subordination from the bottom vertically to the top on the basis of compulsion by an administrative (A)-motives of sociobehavior. Therefore, these program-controlled structures can also be called vertical.
PPES are private enterprise, a firm and an association. The operating units are owners and employees. Their relationship is voluntary, based on the economic incentive (E)-motives of sociobehavior. These adaptive, self-adjusting structures can be called horizontal.
GPES prevail in the countries with centralized (authoritarian) management, and PPES prevail in the countries with democratic management. The exceptions are the communist states, where private production is strictly prohibited. An optimal ratio and perfection of GPES and PPES structures depends on the level of cultural and socio-political development of the society. The stability of these combinations, in all likelihood, is determined by the conditions inherent in one or another social formations.
Therefore, it can be deemed that social formations are certain stable combinations of GPES and PPES, which are much more important for the economy than the country’s natural and other resources.
In order to solve the pragmatic problems of planning and managing the economy, it is advisable to abstract from those or other features that are ambiguously and contradictorily described in the humanitarian sciences and refer to their analogues in the exact sciences. According to them, the subjects of GPES function as parts of technical multi-link chains of parallel action, and those PPES—of sequential action.
This analogy allows us to analyze the reliability of functioning, which is one of the important indicators of their perfection. We consider people as the links of the system in this case, and as “reliability”—responsibility, commitment, diligence, and predictability. The resulting indicator can be considered as a statistical probability to fulfill an assigned task with proper quality and in time.
PPES’s are distinguished by the fact that their main target function is profit maximization, or economic efficiency. All members in them are materially interested in introducing the most advanced production and management technologies and their inventions to meet the market needs and maximize profits. They provide prompt and simple utilization of the creative potential of both owners and employees. Therefore, such structures, in average, can be economically much more efficient than GPES.
And at the same time, PPES have two disadvantages, due to which their scope of application is severely limited. They function effectively in the conditions when it is reliable, profitable and convenient, i.e., in a lawful society as clean as possible from corruption and crime. This condition can only be ensured in a democratic state with a strong civil society that can function reliably in the presence of more than 50 percent of the middle class of owners (MCO).
The second condition for success of PPES is the need for absolutely reliable participants, since according to mathematical calculations, the reliability of each link in a sequential chain must be no lower than 0.99. Hence, there are very high requirements for the reliability of links, i.e. companions and employees. Even those who allow 1 percent of task failures cannot participate in them. In addition, each production link is fully responsible for the results of its activities in the form of penalties that could devastate it.
Hence the high responsibility of workers, ensuring high reliability of a very economical system, in which they strive not to contain any single redundant link (employee) that does not meet the most stringent requirements of reliability and responsibility, which require good knowledge, property, reputation and experience. Only few people can meet these requirements. And what should all the rest do?
The GPES’s are convenient for them, since they do not require high reliability of ordinary performers. It can be equal to 0.5 and even lower. According to the mathematical formula, high reliability of these schemes is achieved due to parallel connection of many links with low reliability. i.e. redundancy. High economic efficiency is also not required here. The target function of these structures is to fulfill the plan. They are less economical, compared to the PPES, but they almost always work failure-free.
Thus, in the socialist system of the former USSR, for example, a team of ten persons, including several irresponsible workers, in most cases could successfully fulfill a task due to the fact that the foreman along with the rest of team members were responsible for entire team, backing up each worker. Due to redistribution of functions and such back-up, the team leader ensured fulfillment of a task. A workshop could also fulfill a scheduled task despite several divisions or sections that did not fulfill it.
If we go higher in the hierarchy, a factory, a ministry or an industry fulfilled a common task despite internal failures. All this was due to the duplication of functions, responsibility, which allowed slackers to have a job as well.
The economic interest (E-motive) that is almost absent here and equalization both would not stimulate development of such important employee qualities as inventiveness, responsibility, competence, accuracy, and, on the contrary, would contribute to their degradation and extinction if there was no “moral code of a builder of communism.”
In other countries, the force that kept these structures from collapsing, forcing them to work successfully, were responsible managers authorized by the state, especially reliable bosses who assumed full responsibility.
Implementation of targets assigned from above depended on them. In the USSR, members of the Communist Party of the Soviet Union, in which the code was particularly strong, played this role.
Distinctions of Political Systems
This analysis reveals the reason why, with all its economic advantages, the democratic system could not immediately and everywhere displace the less economical and negatively reputed authoritarianism. Without highly skilled, reliable, and self-supporting people, an uncorrupted authoritarian state provides a way for uncompetitive workers to survive.
The negative reputation of authoritarian power is associated with the subjective factor and the loss of freedom. When the leader’s power is unlimited, both much good and evil, depending on the leader’s personal qualities, is possible. Since ideal leaders with outstanding positive qualities are very rare, and narrow-minded despots are plentiful, society prefers democracy, where the effects of leaders’ personalities are limited.
Let’s consider examples of influence of the role of individual in the same state of the USSR with the same ideology, but with different leaders.
The Role of the Personality of the Leader in the Development of the USSR
In the last century, everyone knew of the leader of the USSR, Josef Stalin, who in 1920-1950 created one of the most powerful states in the world. This genial leader who presented outstanding intellectual, organizational, and moral qualities, developed a far-sighted comprehensive strategic plan for restoration after the revolutionary and military ruins of the country.
He mobilized all the material, labor and intellectual potential of the country and directed it toward the solution of the vast set of development problems. By his self-sacrificing labor and whole-hearted devotion to the interests of the people, he managed to win the trust and ignite the enthusiasm of many people who, sparing no effort, worked to fulfill the strategic plan.
On the basis of this plan, a system of wide and deep development of public education, unprecedented in the world, was created. Thanks to this, in the shortest possible time, the uneducated people of Russia turned into the most educated people in the world. The education system provided science and the national economy with the most powerful personnel and scientific and technical potential. As a result of this program, advanced science, powerful industry, defense industry, and a powerful army were created.
The country, under this popular leader, defeated German fascism, for which the industry of the entire democratic Europe, then conquered, was working. Further, the scientific and technical potential developed from personnel trained by Soviet schools, created an atomic bomb and launched the world’s first artificial satellite.
The leading impulsive force in this economically productive movement was responsible dedicated leaders. They were the members of the Communist Party, educated by his example. It was a special caste of people with communist morality, ready to give all the benefits, inhuman labor and life itself, to fulfill the ideological tasks of this party at any cost in order to remain in its ranks.
Theses members, perhaps like ancient secret societies, made an oath upon their entry into its ranks. They strongly believed in the absolute truth of the teachings of their ideologues and leaders. In the office of each leader was a cabinet filled with the writings of communist leaders, whom they quite seriously believed, constantly read, and quoted as Christians do the Bible.
Almost the same communist parties existed in all countries of the communist bloc. They were trusted by hundreds of millions of people all over the world. And, in China, this type of system still exists.
The GPES’s created by the Bolsheviks, together with their inherent deficiencies, had a sufficiently high reliability and produced a certain amount of benefits, which were enough for the maintenance of the whole people, although at the minimum necessary level. Although they did not produce diverse, fashionable, and competitive goods, they provided their people with all they needed.
In the 1920s to 1950s, the leader of the Communist Party not only addressed such formidable tasks as providing all people with free education and healthcare, but also partially solved the program for providing free housing. This proved that a trusted leader of a country with the help of GPES can achieve what is impossible and unacceptable for democracy and PPES. His outspoken opponent, W. Churchill, who was forced to become an ally in the war against Germany, recognized his great accomplishments and later said about him: “He received the country with a wooden plow, and left with an atomic bomb.”
What explains the mysterious phenomenon of nationwide love for this leader, who had unlimited power and who controlled everything? He was the first leader known in history to give it all to the people! He did not allow any privileges for himself and his children; he took only as much pay as a simple worker, and he demanded the same from those surrounding him. He cruelly dealt with all enemies of this strategy and the state. The prominent political scientist, Robert Dahl, called such a feat of self-denial a “superhuman.”
This leader became the embodiment of the unrealizable age-old hope of the most of the absolutely poor, illiterate, and powerless people of the former Russian Empire. Hence this supernatural love for him.
He understood that there are many people in the world who did not like his activity and said once: “After my death, a pile of garbage will be dumped on my grave, but the winds of history will scatter it over time and my name will be clean again.” Indeed, the documents have been found now showing that the abuses attributed to him were mostly made by the officials striving for power and fighting more against their personal enemies than against the people’s enemies.
The Economic Decline of the USSR and Its Satellites
For the worthy continuation of his mission after death, leaders of the same scale were needed. But, unfortunately, others did not appear. In the 1960s-1970s, narrow-minded, mediocre people began to come to the country’s leadership, incapable not only of such accomplishments, but did not well understand the previous era and the irreplaceable role of a genial leader in it. They were not free from such ignoble human qualities, unfit for leader of country, deeply hidden by them, like selfishness, greed, and the desire for privilege. They began their work with criticism of the popular leader who in the past did not allow them to satisfy their greed. They did everything for discrediting his role in the country’s success, calling it “unveiling the personality cult.”
As a result, the dogmatic ideology based only on the theory of Marxism-Leninism, which excludes the PPES, had exhausted itself. And the country’s economy, controlled only from these positions, had become unable to meet the needs of the country.
The short-sighted leaders of the CPSU did not understand the urgent need for reforms aimed at developing the economic interest of the working people, attracting the creative potential of the people into the country’s economy, that is, the E-motive of sociobehavior.
The economy declined, due to a lag in competition with capitalism, and eventually collapsed. People lost faith in the CPSU. And its members, themselves, began to lose faith in Marxism-Leninism. With the destruction of the CPSU, the centralized power of the state weakened and the only motive of the economy that existed in society, the administrative (A) was lost. In the country there were no conditions for the functioning of economic (E) and moral (M) motives.
After “perestroika” (the late 1980s reforms under Gorbachev), the GPES began to be dismantled. Since after discrediting the name of the leader, the “moral character of the builder of communism” no longer worked. The principle of “take away and divide” and wage-leveling annoyed everyone, as there was nothing to divide that could satisfy people’s needs. The permission was given to create PPES.
But people did not have material or intellectual resources necessary for that. For 70 years they were fundamentally destroyed by the Bolsheviks. Moreover, the legal environment for safe existence of PPES was not created. The new liberal government was not able to overcome the crimes and corrupted officials who robbed and completely devastated everyone who tried to create their own business. All public and private wealth had been concentrated in the hands of the oligarchs. The people had been completely impoverished.
And the whole country, with its satellites, fell into the group of pseudo-democratic states, where criminality, corruption, unemployment, lawlessness, and poverty prevailed. There was an understanding in society that complete corruption and crime are worse than the personality cult, and according to an opinion poll by the Levada Center, 66 percent now miss that time.
The same picture was observed in the countries of the communist bloc after its collapse. This is especially manifestly seen by the example of the reunited Germany. The industry of even that developed country, which existed only 50 years in the conditions of GPES, so dramatically fell behind that it appeared to be incompatible with the FRG where PPES dominate. About 80 percent of enterprises of GDR after the reunion with FRG ceased to exist as non-profitable and non-satisfying the requirements of the Western market. For the majority of former GDR citizens, honest and conscientious workers, who partially acquired the “socialist mentality” for those years, the reunification, despite of the great social aid from the hand of FRG, had become almost a tragedy equivalent to, as they say, “loss of motherland.”
Undoubtedly good and historically fair merging of forcedly separated parts of one country turned out to be extremely painful for a certain part of citizens. It is also clearly seen here that the losses caused by destruction of a huge well-established management system are comparable to the consequences of massive natural disaster or military destruction.
For the reorganization and modernization of the economy of the GDR during only the first 10 years, the Federal Republic of Germany invested more than 100 billion dollars. It took several more of these injections before the GDR gradually restructured and later took its rightful place. For the CIS countries riiat do not have such generous donors, this process will take much longer.
The New Way and Rise of China
All of the above discussion was necessary to explain that the new post-revolutionary leader of China, Deng Xiaoping, earlier and better than any other leader of the communist parties, understood the indispensable role of the first leader of the CPSU in the heyday of the USSR and the cause of the decline of its economy. He did not make the mistakes that were made in the USSR from the 1960s-1980s. He did not abandon the previous course of the country, or the Communist Party of China, or the introduction of private sector into the economy.
Convinced of the limits of the former course of China, he smoothly introduced PPEC into its economy, and turned the economy towards capitalism, while maintaining strong GPES and a powerful, popularly supported and disciplined Communist Party of China. They kept continuity with the Party name and the teachings of Mao Zedong, while transforming the economy. Like no other party in the world, this party showed its firmness in combating corruption. It proceeded with severe measures, even shooting corrupt officials of any rank.
This allowed maintaining social stability, avoiding civil war, and keeping the A-motive while introducing the E-motive. This new CPC leader turned out to be an innovator, modernizing Marxism, and removing the prohibition on private production from it.
Deng Xiaoping combined the best sides of capitalism with the best provisions of Marxism. Thanks to this, the conditions for achieving the economic success unprecedented in the world were provided in modern China. He proved that at a certain stage of capitalism is quite compatible with the goals of the country’s economic development, which, as they say, is building socialism the Chinese way.