Professor Sir James Ball, distinguished economist and father of economic modelling, finds a new book prompting him to reconsider the collectivism versus liberalism debate liberalism debate in a new light.
The World After Communism: A Polemic for Our Times By Robert Skidelsky Macmillan; 224pp £16.99
The second world war and the collapse of the Soviet empire constitute the two most dramatic events of my generation. Whereas many predicted the first, few predicted the second.
The economic disintegration of the Soviet Union came as a surprise to most people.
The speed with which Germany reunited itself - and with which that symbol of the division between East and West, the Berlin Wall, came down - confounded those who, even during the Reagan years, were still weaned on a CIA diet of misinformation about the economic condition of the world's second superpower. As Jeffrey Sachs, the Harvard economist, has written, 'The communist system did not merely end, it imploded.' Robert Skidelsky has written one of the greatest biographies of the century - the life of John Maynard Keynes, 15 years of work and scholarship to produce the first volume, a further nine years to produce the second. We are still waiting for the third. Meanwhile here comes his new book, The World After Communism, subtitled 'A Polemic for Our Times'. It seeks to interpret the fall of Soviet Communism 'in terms of a single organising idea which I call the rise and fall of collectivism' (page xiii).
As Skidelsky records, there is little doubt about the cloud that the Soviet Union cast over the economic world in the post-war period and into the 1960s. It frightened the United States in Kennedy's time. Khrushchev's promise that 'we will bury you' with rapid growth and advancing technology (as exemplified by the space race) was taken with all seriousness both in Washington and in the other capitals of the West.
But it is arguable that by the early 1980s (pace the concerns of President Reagan) the threat of aggrandisement based on a coming economic superiority had been substantially reduced. It is undoubtedly true that the apparent economic success of Soviet Communism provided hope and support for those who wished to see the establishment of what they regarded as 'genuine socialism' in the West. But by the 1980s many of these fellow travellers had fallen strangely silent.
As explained, Skidelsky considers the implications of the fall of Soviet Communism as part of the story of the struggle between collectivism and liberal democracy. 'The great ideological struggle of the 20th century has been between collectivism and liberalism' (page 17). Moreover, 'with the collapse of Communism we return to what the Czech prime minister Vaclav Klaus calls the "enduring question of how far the state should regulate the lives of free and responsible individuals".' The issue was highlighted by the great political theorist Edmund Burke over 200 years ago. 'One of the finest problems in legislation, namely to determine what the state ought to take upon itself to direct by the public wisdom, and what it ought to leave with as little interference as possible to individual exertion.' As I have understood him, the author believes that the collapse of the Soviet empire has materially altered the terms on which the debate takes place. But in an intellectual sense is it really so? Surely, in such a sense, although debates raged in the inter-war and early post-second world war periods, the intellectual basis for Marxism had been seriously discredited by the turn of the 1980s. The focus of the debate has not been polarised by a choice of some form of 'communism' on the one hand and a form of 'capitalism' on the other. The political world lies on a spectrum between the dictatorships of the left and the dictatorships of the right. The critical issue lies in the shifts that take place in the middle ground.
From this point of view, in an intellectual sense, the collapse of Russian Communism has achieved little. It has settled nothing other than to pull the rug from under a minority whose contribution to the discussion was already not taken seriously. Movements away from some central position may seem undramatic, but they may have major effects when translated into policies enacted by the state.
This leaves the conclusion that the principal effect of the demise of the Soviet Union is on the redrawing of the geopolitical map of the world. As Skidelsky is at pains to point out, history need not repeat itself.
But the fact is that the balance of power in the world and the striking of attitudes, both economic and political, have been profoundly affected by the tension created by the special circumstances of the world war. As a result of change, the world has become unglued.
One way of putting it is that the collapse of the Berlin Wall meant that the second world war was at last over. This leaves the principal world players in the free world - Germany, Japan and the United States - with a range of new options. Traditional forms of nationalism have now re-emerged. There must be a serious danger that some of the historic patterns of the political past will also re-emerge, cutting across the global institutions and inter-country relationships that have been built up in the last 50 years.
And what of the author's prognosis? Of course he is fully aware of the issues just raised, but his position on both the future of eastern Europe and the outcome of the debate on collectivism versus liberalism is not always clear. 'There are plenty of problems. But as the basis for prophecy they reveal little more than the power of dramatic events to unlock the pessimistic imagination' (page 162) '... all (his italics) the problems thrown up by the collapse of Communism, the end of the Cold War and the de-collectivisation of economies will be more tractable if they can be dealt with in a context of economic prosperity.' But that prosperity is not guaranteed by something called the 'market' (page 163). 'Even in the Western world, the future of liberal democracy is not assured: it is highly dependent on a favourable economic context, which is not fully guaranteed by capitalism but has to be secured by policy' (page 165).
A little further on Skidelsky writes, 'The question mark over Russia today is the future of the state' (page 183). 'There is really no alternative to taking the gamble on the new Russia. That gamble must be made generously' (page 185). 'The prospects for economic liberalism are ... tied up with the fuller or better utilisation of resources, including human resources, in both Western Europe and the United States' (page 188).
Finally, 'The practical task of a revised liberal project is to repair state damage after the ravages of collectivism. In Russia this means equipping the central government with the resources to enable it to provide the basic public goods of a liberal state: in Western Europe it means restoring the state's credibility as an economic manager' (page 195).
If, for the sake of argument we accept all this, we are faced with a most difficult agenda which may justifiably lead to some pessimism. It is of course nonsense to believe that economic growth in the mature West will come to an end. But whether it will be fast enough, and of a character, to achieve what has been set out is questionable.
Skidelsky himself says 'no-one knows how to make societies grow faster. The only safe rule is to create an environment in which enterprise can flourish' (page 90). Agreed - for the most part. But as far as Western Europe is concerned, the continued existence of high unemployment, and the pressures arising from the need to provide for old age, education and healthcare will all put a tremendous strain on politicians seeking to reduce the share of spending attributable to the state.
Moreover, it is not simply the share of public spending in gross national product that reflects the presence of the corporate state. Both Europe and North America have extended the power of the state, and will undoubtedly extend it further, by means of various forms of regulation. As Skidelsky points out, 'It is perhaps the characteristic form of collectivism in the United States. Another potent contemporary source of regulation is the Brussels bureaucracy' (page 21). Indeed. And it will get worse.
The World After Communism is a starting point for an intense discussion of the future of liberal democracy. It provides an agenda for such a discussion. But before he takes it further, perhaps Robert Skidelsky would let us have the third volume of John Maynard Keynes which is so eagerly awaited.
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