When Communism dissolved and the Berlin Wall fell, the rush to capitalism began in the East.  In some Communist countries, whatever bounds there were on ethical behaviour also fell with the wall.  The old mores had been imposed by The Party.  Now all bets were off.

In some countries, like Poland, there were other ethical frameworks that had existed, like religion.  But in others, like Russia, the political sea change created a free-for-all with apparatchiks and gangsters grabbing assets like kids in candy stores.

Some of them got filthy rich but many more people many were left eating nothing but potatoes through the cold winters, receiving no payment for their work and with few prospects.  A huge disparity was created from a society where (at least in theory) everyone shared equally.

We have heard this story before and probably sit back and feel superior that our society isn’t like that.

At the same time that this economic revolution was taking place in the east, the United States also was going through an economic grab fest that resulted in huge income disparities.  It was a slower process and it is still on going.

Both events ended up with crashes and economic disorder.  The US one was more dramatic because the economy started at a much higher point.  The US crash didn’t change the trajectory of the economic transformation to a  more lopsided wealth distribution, it seemed to accelerate it by bludgeoning the lower and middle classes.

The question, then, is did the fall of Communism help create the wealth disparity in the US?

A couple of factors to consider in answering this:

Did the strength of Communism in the East provide some measure of requirement for capitalism to be on good ethical behaviour?  If the US had slipped back to the economy of the robber barons while Communism was thriving, would there have been a propaganda backlash that would have benefitted Communism’s supporters?   If poor people in the US had gone hungry, without a vote or without education, would the US have been fertile ground for Communism to take hold in the US?  The opposition movements, like those of Martin Luther King, exposed some of these problems and brought down heavy scrutiny and political pressure by the FBI and other US government agencies.

Then, after the fall of Communism, was the US set free to try to “out-capitalist” the fallen communist states with unfettered cash grabs by bankers and investors?  It looks that way – with the severe wealth disparity that we see today.

In many ways, this discussion is academic.  No one supports Communism and it can no longer be a damper on rampant capitalism. And more and more, the public is becoming suspect of excessive capitalism.  Even the Pope recently knocked on that door.

So does having an operating economic counter argument create an invisible hand to control excesses?  Without that, do we need some other invisible hand?

What capitalists need to appreciate is the long term, not immediate profitability.  But that doesn’t provide shareholders the results they want since we all live in the short term.

What do you think?  Were the 1% the happy beneficiaries of the wall coming down?

  • Share/Bookmark

Leave a Reply

Powered by WordPress.
Calotropis theme by itx