independent-presidential-candidate-t64660-15.html#p1113121
The meme that Reagan defeated the Soviets is a popular one. It goes along the lines that he outspent the Soviets and drove them to destruction.
I have a very different take on things. The Soviets were very good at metal bashing industries but woeful at the very fast moving and innovative ones like pharmaceutical and computing. The reasons the west outperformed command economies is fundamental to the stucture of both. Command economies are very good, the best perhaps, at what are called follower models. That is where a country has ground to catch up with a world leader in industry. They are able to allocate resources not based on short term capital return but in loss making fashion that allows a build of knowledge and base industry, obviously this is easily badly done and huge misallocations can happen. But when done well such as France and Germany in the mid 1800s in persuit of the UK, Stalins 5 year plans turning the economic agrarian basket case of Imperial Russia into the brutal but Eurasian dominating industrial super power of 1943. And modern Chinas catch up of the west.
The problem is that command economies have a hard time reliquishing state control. Germany and France have done this but the SU did not, hence it still retained command of the allocation of capital and feared independent thinking so supressed individual innovation.
The computing revolution really got a full head of steam in the 70s with the arrival of microprocessors. But this is a very very fast moving technology (Moores law) that no amount of central direction can possibly keep up with. Without big computers to crunch the numbers steal technology would not have been possible. It took a mountain of modelling to get the aerodynamics and the electromagnetic singals of the aircraft structure to work that it was both stealthy and stayed in the air (read up on project Have Blue), the pinpoint accuracy (20m CEP) of cruise missiles like the tomahawk were a game changer in air war. They are effectively self destroying robot aircraft that can hit targets no aircraft would get near as it would be suicide. Other technologies like phased array radars, advanced seeker computers in missiles and vehicle mounted GPS are all heavily dependent on advances in computing.
Whats more computers were also boosts to the productivity of the economy. Spreadsheets and databases reduced the number of people needing to work in accounts, ATMs produced 24 hour banking, computer games created entire new industries, robotics improved the efficiency of factories.
In 1975 the US was losing the cold war badly, it had been booted out of Vietnam, the wave of decolonisation had produced a whole swaith of left leaning new governments and the Soviets had a very clear material advantage in terms of land armies in Europe.
But the Soviet economy was collapsing internally, the inefficient allocation of capital was still being persued but disasterously. The economy was being bled dry to keep the huge land army advantage and there was little technological innovation in computing, phrama, chemistry and the like.
In the end Reagan and SDI were a non event. The Soviets simply could not keep pace with the technological innovations of the 70s. The attempt to liberate the command economy in the 80s pulled the last remaining underpinnings of it and collapse was inevitable.
No SDI and no matter who was in the White House the Soviets would have collapsed. Clearly others will disagree but I thought Id share something to think about.
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Microchips or Reagan, who won the cold war?
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Microchips or Reagan, who won the cold war?
by dorlomin » Sat 14 Apr 2012, 08:26:43
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Re: Microchips or Reagan, who won the cold war?
by radon » Sat 14 Apr 2012, 09:56:48
$this->bbcode_second_pass_quote('dorlomin', 'h')ttp://peakoil.com/forums/independent-presidential-candidate-t64660-15.html#p1113121
The meme that Reagan defeated the Soviets is a popular one. It goes along the lines that he outspent the Soviets and drove them to destruction.
I have a very different take on things.
The meme that Reagan defeated the Soviets is a popular one. It goes along the lines that he outspent the Soviets and drove them to destruction.
I have a very different take on things.
I'll tell you who won the Cold War - this was the Russian alcoholics. Russian alcoholics in the state of hangover are a deadly force. The communist saboteurs were dumb enough to disrupt the lines of vodka supply in mid-80s and suffered a lethal attack from the mighty Russian alcoholics resulting in the demise of the communist state. Out of all hydrocarbons, vodka is most powerful. Dare to imagine the consequences of peak vodka..
But in all seriousness, the OP is a good and accurate summary of what happened, even if not totally complete. Another important factor was the people in general (not only alcoholics) got fed up with the idiotic restrictions in place, both economic and political, and with the consequences of these restrictions.
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Re: Microchips or Reagan, who won the cold war?
by kublikhan » Sat 14 Apr 2012, 17:30:01
I've read many different theories on why the Soviet Union collapsed. The OP touches on some points I agree. I don't think it is as simple as an arms race with Reagan. Eastern Europe did not enter the arms race and yet they shared many of the same economic failings as the SU did. I have argued in the past that command economies are good at directing a nation's resources into a small handful of enterprises that can produce spectacular results. That's why when nations mobilize for war their economies are basically command economies that can churn out legions of war material likes tanks, aircraft, etc. However I think command economies do a poor job in peacetime in providing consumer goods and a high quality of life for it's citizens. Throughout the entire period if the Soviet Union, it's citizens faced shortages of goods, long lines, extreme inefficiencies, decay of infrastructure, etc. I would also argue that even in the 70s when many Soviet watchers felt the SU was "beating" the US, it wasn't.
$this->bbcode_second_pass_quote('', 'T')hrough the 1960s and the 1970s there was near unanimity among Western economists that the rate of growth in Soviet-style economies was not only positive but higher than in Western Europe or the United States. Clearly, a positive rate of growth, over a period of 40 years or so, should produce wealth, but it didn't. The mistake that was made, and pointed out by a few economists such as G. Warren Nutter, was to measure capital investment, the amount of inputs, not wealth creation. That was a big mistake. It led to what the Hungarian philosopher Michael Polanyi, a great critic of communism, called "conspicuous production"-production for the sake of production. Steel was produced to make a factory to make more steel to make more factories, but the whole process never produced any real consumer goods. It did not translate into an increase in the standard of living. And, indeed, it was often politically motivated.
Instead of growing, the capital stock of socialist countries has been declining. They've been consuming it. Most of the textile mills in eastern Czechoslovakia were built before the First World War. They still operate with the original machinery. In East Germany, many of the buildings seem not to have been painted since 1945. In some cases, no one even painted over the old and faded Nazi slogans on the walls. In the Soviet Union, there are chemical factories built 110 years ago that are still producing the same chemicals in the same way. It is a general principle that under socialism no factory is ever closed.
$this->bbcode_second_pass_quote('', 'T')hrough the 1960s and the 1970s there was near unanimity among Western economists that the rate of growth in Soviet-style economies was not only positive but higher than in Western Europe or the United States. Clearly, a positive rate of growth, over a period of 40 years or so, should produce wealth, but it didn't. The mistake that was made, and pointed out by a few economists such as G. Warren Nutter, was to measure capital investment, the amount of inputs, not wealth creation. That was a big mistake. It led to what the Hungarian philosopher Michael Polanyi, a great critic of communism, called "conspicuous production"-production for the sake of production. Steel was produced to make a factory to make more steel to make more factories, but the whole process never produced any real consumer goods. It did not translate into an increase in the standard of living. And, indeed, it was often politically motivated.
Instead of growing, the capital stock of socialist countries has been declining. They've been consuming it. Most of the textile mills in eastern Czechoslovakia were built before the First World War. They still operate with the original machinery. In East Germany, many of the buildings seem not to have been painted since 1945. In some cases, no one even painted over the old and faded Nazi slogans on the walls. In the Soviet Union, there are chemical factories built 110 years ago that are still producing the same chemicals in the same way. It is a general principle that under socialism no factory is ever closed.
The high price of oil in the 1970s allowed the Soviet Union to export oil for a tidy profit and paper over some of the economic problems it was facing at home. But when prices came crashing down in the 80s and stayed that way for a decade, it magnified the structural problems in the Soviet economy.
Even so, I think the Soviet Union could have limped along for a good while longer, if not for Gorbachev's reforms. His reforms shown a spotlight on the corruption and lower standard of living of soviet life. They also removed the fear of oppression. Fear is what held the Soviet Union together. Once that fear was gone, the genie was out of the bottle and it could not be put back in.
The oil barrel is half-full.
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Re: Microchips or Reagan, who won the cold war?
by dissident » Sat 14 Apr 2012, 18:08:37
The main failing of communism was tragedy of the commons. In capitalist economies, for example, there are concerned and active parties (owners) when it comes to goods and services. It is in their interest that goods make it to market or that customers get treated well enough that they return. In the USSR, trainloads of produce would rot in marshaling yards since no one gave a f*ck. Customer service, what's that? So it is not surprising that there were shortages when there should have been more than enough. The shortages were not just for boutique high tech products that the system failed to develop. They were for basics and for things such as apartments (they could have built many more commie blocks than they did and the ones from the 1980s were actually good quality housing). This is simply absurd for a command economy. Imagine if during WWII the frontline forces did not receive guns and bullets.
Of course the other main failure was democracy. What was promised in 1917 was power to elected councils (soviets), what was delivered was dictatorship with periods like the 1930s which were some of the worst in history.
Of course the other main failure was democracy. What was promised in 1917 was power to elected councils (soviets), what was delivered was dictatorship with periods like the 1930s which were some of the worst in history.
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Re: Microchips or Reagan, who won the cold war?
by kublikhan » Sat 14 Apr 2012, 18:11:41
I agree with dissident's point about tragedy of the commons as well.
Also, to draw a parallel to another example of poor quality of life under a command economy, you can look at life in the United States during world war II. Citizens in the US during the war years had to endure many of the same hardships described earlier. Poor supply of rationed goods, relocation, shoddy housing, and in general just "making do without." Now of course you would expect hardship during war years. Fortunately for the citizens of the US, these conditions only endured for a few years. Prosperity returned with a vengeance after the war. Unfortunately for the citizens of the Soviet Union, they were forced to endure the conditions of a command economy for the entire existence of the Soviet Union.
$this->bbcode_second_pass_quote('', 'R')elying on standard measures of macroeconomic performance, historians and economists believe that “war prosperity” prevailed in the United States during World War II. This belief is ill-founded, because it does not recognize that the United States had a command economy during the war. From 1942 to 1946 some macroeconomic performance measures are statistically inaccurate; others are conceptually inappropriate. A better grounded interpretation is that during the war the economy was a huge arsenal in which the well-being of consumers deteriorated. After the war genuine prosperity returned for the first time since 1929.
In fact, conditions were much worse than the data suggest for consumers during the war. Even if the price index corrections considered above are sufficient, which is doubtful, one must recognize that consumers had to contend with other extraordinary welfare-diminishing changes during the war. To get the available goods, millions of people had to move, many of them long distances, to centers of war production. After bearing substantial costs of relocation, the migrants often found themselves crowded into poorer housing. Because of the disincentives created by rent controls, the housing got worse each year, as landlords reduced or eliminated maintenance and repairs. Transportation, even commuting to work, became difficult for many workers. No new cars were being produced; used cars were hard to come by because of rationing and were sold on the black market at elevated prices; gasoline and tires were rationed; public transportation was crowded and inconvenient for many, as well as frequently pre-empted by the military authorities. Shoppers bore substantial costs of searching for sellers willing to sell goods, including rationed goods, at controlled prices; they spent much valuable time arranging (illegal) trades of ration coupons or standing in queues. The government exhorted the public to “use it up, wear it out, make it do, or do without.” In thousands of ways, consumers lost their freedom of choice.
People were also working harder, longer, more inconveniently, and at greater physical risk in order to get the available goods. The ratio of civilian employment to population (aged 14 and over) increased from 47.6 percent in 1940 to 57.9 percent in 1944, as many teenagers left school, women left their homes, and older people left retirement to work. The average work week in manufacturing, where most of the new jobs were, increased from 38.1 hours in 1940 to 45.2 hours in 1944; and the average work week increased in most other industries, too — in bituminous coal mining, it increased by more than 50 percent. Night shifts occupied a much larger proportion of the work force. The rate of disabling injuries per hour worked in manufacturing rose by more than 30 percent between 1940 and its wartime peak in 1943.
None of the standard macroeconomic theories employed to account for the wartime experience provides an acceptable explanation. The models cannot do the job because they do not pertain to a command economy, and the United States between 1942 and 1945 had a command economy.
In sum, the economy during the war was the exact opposite of a free market system. Every part of it was either directly controlled by the authorities or subject to drastic distortion by virtue of its relations with suppliers and customers who were tightly controlled. To suppose that the economy allocated resources in response to prices set by the unhampered interplay of demands and supplies in the markets for commodities, factor services, and loanable funds is to suppose a complete fiction. Clearly, the assumptions that undergird standard macro models do not correspond with the empirical reality of the wartime economy.
Meanwhile, as shown above, real personal consumption declined. So did real private investment. From 1941 to 1943 real gross private domestic investment plunged by 64 percent; during the four years of the war it never rose above 55 percent of its 1941 level; only in 1946 did it reach a new high. Notwithstanding the initial availability of much unemployed labor and capital, the mobilization became a classic case of guns displacing both butter and churns.
When the controls began to come off and the war ended more quickly than anticipated in 1945, consumers and producers launched eagerly into carrying out plans based on rosy forecasts and, by so doing, made their expectations a reality. Probably the most solid evidence of expectations comes from the stock markets, where thousands of transactors risk their own wealth on the basis of their beliefs about future economic conditions. (See Table 5.) Evidently investors took a dim view of the prospect of a war economy. After 1939, stock values dropped steadily and substantially; U.S. entry into the war in December 1941 did not arrest the decline. By 1942 the Standard & Poor’s index had fallen by 28 percent, and the market value of all stocks on registered exchanges had plunged by 62 percent in nominal terms. (Adjustments for price level changes would make the declines even greater.) The declines occurred even though current corporate profits were rising steadily and substantially. In 1943, as the tide of war turned in favor of the Allies, the stock market rallied and small additional advances took place in 1944. Still, in 1944, with the war economy operating at its peak, the stock market’s real value had yet to recover to its 1939 level.
By early 1945, almost everyone expected the war to end soon. The prospect of a peacetime economy electrified investors. Stock prices surged in 1945 and again in 1946. In just two years the Standard & Poor’s index increased by 37 percent and the value of all shares on registered exchanges by 92 percent, despite a decline of current-dollar after-tax corporate profits from their peak in 1944. Did people expect the end of “wartime prosperity” to be economically deleterious? Obviously not.
Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940sAlso, to draw a parallel to another example of poor quality of life under a command economy, you can look at life in the United States during world war II. Citizens in the US during the war years had to endure many of the same hardships described earlier. Poor supply of rationed goods, relocation, shoddy housing, and in general just "making do without." Now of course you would expect hardship during war years. Fortunately for the citizens of the US, these conditions only endured for a few years. Prosperity returned with a vengeance after the war. Unfortunately for the citizens of the Soviet Union, they were forced to endure the conditions of a command economy for the entire existence of the Soviet Union.
$this->bbcode_second_pass_quote('', 'R')elying on standard measures of macroeconomic performance, historians and economists believe that “war prosperity” prevailed in the United States during World War II. This belief is ill-founded, because it does not recognize that the United States had a command economy during the war. From 1942 to 1946 some macroeconomic performance measures are statistically inaccurate; others are conceptually inappropriate. A better grounded interpretation is that during the war the economy was a huge arsenal in which the well-being of consumers deteriorated. After the war genuine prosperity returned for the first time since 1929.
In fact, conditions were much worse than the data suggest for consumers during the war. Even if the price index corrections considered above are sufficient, which is doubtful, one must recognize that consumers had to contend with other extraordinary welfare-diminishing changes during the war. To get the available goods, millions of people had to move, many of them long distances, to centers of war production. After bearing substantial costs of relocation, the migrants often found themselves crowded into poorer housing. Because of the disincentives created by rent controls, the housing got worse each year, as landlords reduced or eliminated maintenance and repairs. Transportation, even commuting to work, became difficult for many workers. No new cars were being produced; used cars were hard to come by because of rationing and were sold on the black market at elevated prices; gasoline and tires were rationed; public transportation was crowded and inconvenient for many, as well as frequently pre-empted by the military authorities. Shoppers bore substantial costs of searching for sellers willing to sell goods, including rationed goods, at controlled prices; they spent much valuable time arranging (illegal) trades of ration coupons or standing in queues. The government exhorted the public to “use it up, wear it out, make it do, or do without.” In thousands of ways, consumers lost their freedom of choice.
People were also working harder, longer, more inconveniently, and at greater physical risk in order to get the available goods. The ratio of civilian employment to population (aged 14 and over) increased from 47.6 percent in 1940 to 57.9 percent in 1944, as many teenagers left school, women left their homes, and older people left retirement to work. The average work week in manufacturing, where most of the new jobs were, increased from 38.1 hours in 1940 to 45.2 hours in 1944; and the average work week increased in most other industries, too — in bituminous coal mining, it increased by more than 50 percent. Night shifts occupied a much larger proportion of the work force. The rate of disabling injuries per hour worked in manufacturing rose by more than 30 percent between 1940 and its wartime peak in 1943.
None of the standard macroeconomic theories employed to account for the wartime experience provides an acceptable explanation. The models cannot do the job because they do not pertain to a command economy, and the United States between 1942 and 1945 had a command economy.
In sum, the economy during the war was the exact opposite of a free market system. Every part of it was either directly controlled by the authorities or subject to drastic distortion by virtue of its relations with suppliers and customers who were tightly controlled. To suppose that the economy allocated resources in response to prices set by the unhampered interplay of demands and supplies in the markets for commodities, factor services, and loanable funds is to suppose a complete fiction. Clearly, the assumptions that undergird standard macro models do not correspond with the empirical reality of the wartime economy.
Meanwhile, as shown above, real personal consumption declined. So did real private investment. From 1941 to 1943 real gross private domestic investment plunged by 64 percent; during the four years of the war it never rose above 55 percent of its 1941 level; only in 1946 did it reach a new high. Notwithstanding the initial availability of much unemployed labor and capital, the mobilization became a classic case of guns displacing both butter and churns.
When the controls began to come off and the war ended more quickly than anticipated in 1945, consumers and producers launched eagerly into carrying out plans based on rosy forecasts and, by so doing, made their expectations a reality. Probably the most solid evidence of expectations comes from the stock markets, where thousands of transactors risk their own wealth on the basis of their beliefs about future economic conditions. (See Table 5.) Evidently investors took a dim view of the prospect of a war economy. After 1939, stock values dropped steadily and substantially; U.S. entry into the war in December 1941 did not arrest the decline. By 1942 the Standard & Poor’s index had fallen by 28 percent, and the market value of all stocks on registered exchanges had plunged by 62 percent in nominal terms. (Adjustments for price level changes would make the declines even greater.) The declines occurred even though current corporate profits were rising steadily and substantially. In 1943, as the tide of war turned in favor of the Allies, the stock market rallied and small additional advances took place in 1944. Still, in 1944, with the war economy operating at its peak, the stock market’s real value had yet to recover to its 1939 level.
By early 1945, almost everyone expected the war to end soon. The prospect of a peacetime economy electrified investors. Stock prices surged in 1945 and again in 1946. In just two years the Standard & Poor’s index increased by 37 percent and the value of all shares on registered exchanges by 92 percent, despite a decline of current-dollar after-tax corporate profits from their peak in 1944. Did people expect the end of “wartime prosperity” to be economically deleterious? Obviously not.
The oil barrel is half-full.
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Re: Microchips or Reagan, who won the cold war?
by Wootan » Sun 15 Apr 2012, 04:35:22
The high-tech/low-tech picture is too simplified. The SU had not economic resources to build a carrier fleet. Instead they focused on missiles. The Sunburn (http://en.wikipedia.org/wiki/P-270_Moskit) is a naval missile said to be 10 years ahead of anything from the west. It is a high-tech one million § gadget that can take out a one billion § carrier - which is mainly a lot of pounded metal. The missile has violent last-minute evasive maneuvers to avoid countermeasures.
Reagen schemed with the Saudi Kingdom, and they increased production (SA obviously had reserve capacity back then). As mentioned above, cheap oil was good for the US, but killed the economy of the SU. (They had enjoyed high prices after the -73 arab oil embargo.) The SU collapsed in a very short timeframe. A lot of experts were baffled at this, as they had considered the SU system rather stable and resilient. The quick demise of an empire is difficult to explain. Economy does the trick, I'm sure there's a lesson here for other nations as well.
There is a close connection between the Saudi and the US elite. In a way they patronize each other.
Reagen schemed with the Saudi Kingdom, and they increased production (SA obviously had reserve capacity back then). As mentioned above, cheap oil was good for the US, but killed the economy of the SU. (They had enjoyed high prices after the -73 arab oil embargo.) The SU collapsed in a very short timeframe. A lot of experts were baffled at this, as they had considered the SU system rather stable and resilient. The quick demise of an empire is difficult to explain. Economy does the trick, I'm sure there's a lesson here for other nations as well.
There is a close connection between the Saudi and the US elite. In a way they patronize each other.
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Re: Microchips or Reagan, who won the cold war?
by Sixstrings » Sun 15 Apr 2012, 14:30:36
$this->bbcode_second_pass_quote('radon', 'A')nother important factor was the people in general (not only alcoholics) got fed up with the idiotic restrictions in place, both economic and political, and with the consequences of these restrictions.
I think it all started with East Germany. Once the Berlin wall got torn down.. once East Germans started tentatively streaming over that wall, not quite sure if they'd be shot dead or not, and enjoyed a bit of the fruits of the West.. it was sort of like the genie out of the bottle. That was when the entire thing fell apart, the Soviet Union and the Warsaw Pact -- the moment when for the first time the guards didn't shoot the people escaping out from behind that wall. It's called a "velvet revolution."
People are so repressed under communism. You give them a little bit of freedom and then lightning fast the whole thing flies apart. Gorbachev tried to manage liberalization, he tried "Glasnost" etc. but it didn't matter, all the Eastern Europeans wanted what the East Berliners had. They wanted consumerism, nice things in stores, things in stores at all
, no more depressing communist gray boxes to live in and depressing little gray cars and depressed alcoholic gray people.Regarding Reagan.. I read somewhere that Reagan coordinated something with the Saudis to get oil prices very low which helped bankrupt the USSR. So it was a two-prong attack, their oil revenue was debased and they were being outspent on military tech.
Looking back, it was all rather silly. What was the point of that Berlin Wall? I mean really. What was ever the point of shooting people who tried to escape from behind the iron curtain? Other than what I said above ^^, they knew that if given even a little freedom the whole damn thing would fly apart.
To say some good things about the USSR.. at least Russia wasn't a mafia state back then. There was more rule of law. And I have to say, somebody like a Putin is scarier than Gorbachev. The latter-day Soviets seemed more responsible and cautious than Russian leadership. You didn't have things like Chechnya and the Georgia invasion. Putin's Russia looks fascist to me. Gorbachev's USSR seemed cautious, responsible in comparison.
Probably not fair to knock the Russians for behind technologically behind, let's not forget they've always had a smart class of physicists, scientists, engineers. In the space race, we had the former Nazi rocket team helping us out whereas the Russians were more on their own. Soviets put the first satellite in space, and the first man in space.
Oh, and who can forget, the Yugo!
^^ that was the price of a higher end desktop computer at that time.
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