recalls the serendipitous comment by
'' It is
Molotov who observed that, once a
horse is taken away from a peasant
by a collective farm, he gets angry,
and fhen makes no effort to care for
the horse.
Another consequence of Soviet-
style agriculture is environmental
destruction. Suffice it to say that
between 1960 and 1980, some two
million hectares of new land were
added to agriculture,' while almost
four times that amount was lost in
dust storms and erosion.
It seems contradictory to claim that
despite such an economic mess, the
Soviet Union can represent a military
threat, and even more so to point to
the Soviet history of rapid growth,
particularly in 'heavy industry'. Yet,
as Goldman makes clear, there is no
contradiction.
First, simple recipes for economic
growth are not as hard to come up
with as some might think. To take a
hypothetical extreme, even in the
least developed country, if all workers
are forced to work all this year with-
out consuming anything, and if all
goods produced are held in storage,
then we can have twice as much out-
put next year as this. We don't do this
for the simple reason that not all
growth makes sense. Beyond a cer-
tain point, we would prefer to con-
sume today rather than consume even
more tomorrow.
Resource allocation in the Soviet
Union is through central command,
and no one cares if you consume less
today, as long as state priorities are
maintained. Even a grossly inefficient
economy can have an aggressive
military and large empire if enough of
its resources, however misallocafed.
get funnelled to those goals.
I have ridden in the Moscow under-
ground system as well as many
Western ones. The Moscow system is
unquestionably the best in the world.
This is because Stalin decided to
channel enormous amounts of money
into it, right down to the marble and
chandeliers in the stations. No West-
ern voting public would tolerate such
an enormous over-investment, given
the alternative uses of the same
funds. But when it came to the under-
ground, like tanks, Stalin did not need
to worry himself about any voters.
Russians winning the
wrong race
The resources for state projects were
simply expropriated from the rest
of society. They were torn away from
consumption. Worst hit were the
peasants, where collectivisation led
to a large fall in output, and the bulk
of the remainder was expropriated.
But urban consumers suffered as well.
36
Housing consfruction was ignored,
and residential crowding increased,
with lucky families having their own
single room. The 5.7 square metres
that the average Russian of 192G en-
joyed fell to 4.5 by 1940 (whereas the
official norm was the claustrophobic 9
square metres).
The emphasis in Soviet planning
has always been on 'heavy industry'.
In particular, the Soviets have had an
overwhelming steel fetish. Steel out-
put has always been thought of as the
gauge of success, and little thought
was given to what to do with it ail.
Expanding steel output is still a major
Soviet goal, even though all Western
countries, including Japan, are suffer-
ing from excessive productive capac-
ity, and are seeking politically accept-
able ways to contract their industries.
The Soviet economy is frozen into the
priority structure created in the 1920s
and '30s by Joseph Vissarionovich
Dzhugashvili, the man who re-
christened himself 'steel'.
Given enough priority, some Soviet
'heavy industries' have even pro-
duced more than their American
counterparts. Khrushchev had chal-
lenged the West to an economic con-
test. But, in Goldman's words, these
achievements really mean that the
Soviets are winning the wrong race!
Goldman's book is light and fun to
read. It has neither the journalistic
excitement of Hedrick Smith,^ nor the
depth of economic analysis of, say,
^ The Russians, BoUantine Books, New
York, 1976, 11th edn. 1980.
Agricultural Prices and
Markets - the Domino Effect
Catherine Blight
The Common Agricultural Policy of the EEC is under
increasing fire. Dr Blight applies 'Austrian' economic analysis
to show that regulation of agriculture serves neither the
efficient farmer nor the consumer.
The effecf of fhe Common Agricultural
Policy a s practised in the European
Community internal market is a vivid
justification of the Austrian argument^
that there is no such thing as perfect
market equilibrium and therefore no
role for government in correcting so-
called market failures.^ The aims of
' Norman Barry discusses this argument
further in his article on pp. 57-61. - ED.
Abram Bergson^ or Alec Nove.
disjointed in some places, reflecting
perhaps its lecture-note ancestry. Yet
the book gives an excellent non-
technical survey of the Soviet Union's
major economic and social problems.
Reading Goldman's book removes
any remaining doubt about the 'effi-
ciency' of central economic planning.
There is enough known today about
the experiences of 'socialist regimes'
to convince one that 'scientific social-
ism' is simply a contradiction in
terms, like dry water or cold fire. The
imposition of Soviet-style socialism
on any people represents the ultimate
form of economic exploitation. One
can only ponder the senselessness of
various 'socialist' reformers in the
West who would have us adopt selec-
tively from the economic character-
istics of Soviet socialism, even
without any of the accompanying poli-
tical oppressions. |^
^ Planning and Productivity under Soviet
Socialism, Columbia University Press,
New York, 1968; Economic Trends in the
Soviet Union, Harvard University Press,
1963; Economics of Soviet Planning, Yale
University Press, 1964.
•* Political Economy and Soviet Socialism,
Allen and Unwin, London, 1979; The Soviet
Economy, Praeger, New York, 1969; and,
most recently. The Economics of Feasible
Socialism. Allen and Unwin. London, 1983.
Note: Two further books by long-stay
journalists are Philip Short, The Dragon
and the Bear: Inside China and Russia
Today, Hodder and Stoughton, London,
1982, and Michael Binyon, Life in Russia,
Hamish Hamilton. London, 1983. - ED.
the policy, as set out in the Treaty of
Rome (Article 39 (D), have an ominous
sound:
The objectives of the common agri-
cultural policy shall be:
(a) to increase agricultural produc-
tivity by promoting technical prog-
ress and by ensuring the rational
development of agricultural produc-
tion and the optimum utilisation of
economic affairs - april-june 1984
 the factors of production, in particu-
lar labour;
(b) thus to ensure a fair standard ot
living for the agricultural commun-
ity, in particular by increasing the
individual earnings of persons en-
gaged in agriculture;
(c) to stabilise markets;
(d) to assure availability of sup-
plies;
(e) to ensure that supplies reach
consumers at reasonable prices.
The economic problem of agricul-
ture has for long been defined as that
of a market where supply is more
elastic than demand in response to
changes in prices which leads to wild
fluctuations in production and price,
and thus to high risk for the producer
and uncertain supplies for the con-
sumer. Management of the market by
the government, either directly or by
agencies, has been the conventional
solution. It has been implemented by
intervention buying of surplus pro-
duction (as in the cereal market), price
supplement (as in beef and sheep) or
in attempts to control supply (as in the
potato market). What has happened
instead is that the orderliness of the
market has been replaced by the
vagaries of political exchange, in-
cluding the infinite demands of con-
sumer organisations and the dynastic
ambitions ot administrators.
The most serious effect has been
that the function of price as a trans-
mitter of information has been blur-
red, to varying degrees in different
products. The result has been not only
the disruption of the inter-relation
among first-stage producers (farmers,
breeders, etc.) but also a damaging
domino effect on the food and proces-
sing industries. So, agricultural mar-
kets continually transmit false in-
formation. For instance, increase in
cereal production, generated by
heavy protection and high prices, has
led to over-supply, massive invest-
ment in storage facilities, importation
of cheaper substitutes for inclusion in
compounds, an inhibiting effect on
export potential and so on. (Between
1972 and 1983, total UK production of
wheat, barley and oats grew from
almost 15m tonnes to almost 22m,
although total UK grown up-take was
fairly static at around 17m to 19m
tonnes, and yet European prices were
consistently higher than the world
market price,) Efforts to contain the
increase in production by regulation
have resulted in the cereal regime
becoming more and more managed.
Pork producers, who benefit from a
comparatively light regime, argue
that they suffer from 'unfair' competi-
tion from heavily subsidised sheep
and the artificially high price of feed. Agricultural Policy) is another policy
Intervention in the carcase meat
^ W. D. Reekie, Industry. Prices and Mar- consumer protection. Non-tariff bar-
kets. Philip Allan. Oxford, 1979.
economic affairs - april-june 1984
market has dramatically raised the
cost and also reduced the supply of
beef ior the meat processing industry.
At the same time, more butcher meat
is being supplied at a price the con-
sumer will not pay. On the other
hand, pigmeat and poultry produc-
tion, less subject to intervention and
therefore more responsive to con-
sumer demand, have increased their
market share.
The Sorcerer's Apprentice effect is
not confined to the cereals industry. In
the UK milk and milk products indus-
try, the Common Agricultural Policy
has increased supply beyond, de-
mand, but the industry is so highly
regulated, not only by the EEC, but
also by the Milk Marketing Board and
the Ministry of Agriculture, Fisheries
and Food that normal competitive
trade is blocked. New products
appear, such as Muslim cheese, which
depend on export refunds, while
developments with more consumer
appeal, like soft butter and aerosol
dairy cream, are delayed. All this is
taking place against a background of
increasing demand for processed and
prepared foods.
Ploughmq up
It is not only by interference in the
price mechanism that government in-
tervention creates distortions. EEC
structural policy is intended to im-
prove agricultural production by pro-
viding aid for investment and exit, but
the decisions are made by admini-
strators, who surely do have 'power
without responsibility'. (Directives 72/
159 and 72/150 respectively provide for
help to increase incomes and for
elderly farmers to leave the industry.
Directive 75/2G8 is concerned with
'less favoured areas').
There is no structural policy for the
food and processing industries, apart
from Regulation 355/77 which pro-
vides assistance for marketing im-
mediately aiter leaving the farm. On
the arguments put forward above, any
attempt to balance the scales by intro-
ducing a regulatory regime for these
industries should be resisted.
Again, harmonisation of food law
(under the general terms of the Treaty
of Rome rather than the Common
which has created problems for pro-
cessors, expecially in demands for
riers in restraint of trade are erected
where member states insist on nation-
al standards oi labelling and content.
This is despite the ruling in the Cas-
sis de Dijon case where it was held
that provided a product conformed
with the requirements of the country
of manufacture, it may be admitted to
the market of any other member state.
Many other arguments couid be
made and other examples drawn to
illustrate further the inhibiting effect
of the CAP on industry. What is clear
is that government management (both
domestic and EEC) of the market has
proved faulty. Funding the policy
from yet more tax revenue will
become increasingly onerous. Piece-
meal regulations will proliferate.
There will be unexpected withdrawal
of anticipated support. The less politi-
cally powerful sectors of the industry
will suffer first.
Alterations to the system would
benefit the supplier and the consumer
alike. Free operation of the market
would allow technical innovation to
interact on production and consumer
choice. This proposal is in direct
opposition to the argument that the
solution to over-production lies in
lower inputs to agricultural produc-
tion and reduced technology. Such
over-production arises here because
the lead which the UK possesses in
the science of agriculture is now
channeled towards maximum produc-
tion, encouraged by protected mar-
kets, rather than to servicing the
demands of the consumer. 'Optimal
utilisation of the factors of producfion'
(Article 39, ia) would allow supply to
adjust to market requirements, in tim-
ing supply, harvesting, storage and
distribution. On the demand side, be-
cause of the high degree of interven-
tion in fhe market channel, the delay
in passing on the message from the
consumer to the producer is magni-
fied. This last argument is implicitly
acknowledged in the attempts by gov-
ernment and its agencies to publish
information on agricultural market
demand. Such macro-aggregate data,
however, hide the micro-minutiae of
decisions made by each producer
acting in the light of his own know-
ledge and experience and by each
consumer exercising his own choice.
It is by the modern communications
system of today's market that such
information could be more effectively
37
and more rapidly transmitted.
Thus the simple principle of dimi-
nishing marginal utility (i.e., each
additional unit of a good is devoted to
a use that is less urgent than the use
to which the preceding unit was
applied^) would operate, and the con-
sumer would be better served by
being able to express his effective
demand (that is, what he can afford).
The producer would be encouraged to
apply new developments to meet it.
The incentive of dampening down
fluctuations in price and production
would bring about the most efficient
use of scientific advances. Techno-
logy could also be applied in reducing
uncertainty for the producer, at least
as concerns the risk which could be
accommodated in future markets.
Is there then no role for government
^ The principle is elegantly (and appro-
priately) illustrated by Eugen von Bohm-
Bawerk (in Capital and Interest. 1884,
reprinted by Libertarian Press, South
Holland, Illinois, 1959): a pioneer farmer
with a harvest of five sacks of grain allots
one sack ol grain to his food supply for
survival, the second sack for complete
health, the third to raise poultry, the fourth
for distillation of brandy, and the fifth for a
group of parrots 'whose antics give him
pleasure'. (I am concerned that the farmer
was so improvident as to forget an allow-
ance for seed corn!)
Bottom Marx
Chris R. Tame
Much ofthe economic analysis published in recent years has
been Marxist in flavour. The publication of a dictionary of
Marxist thought offers a guide to its various schools. Chris
Tame dissects the contrasting interpretations of its numerous
contributors.
Edited by Professor Tom Bottomore of
the University of Sussex, A Dictionary
of Marxist Thought (Blackwell.
Oxford, 1983) is part of a strong, and
growing, stream of Marxist works
emanating from leading British
publishers (such as Routledge, Mac-
millan, Croom Helm, Allison and
Busby, Allen and Unwin, etc.). It is a
compilation of entries on the major
concepts of Marxism ('abstract labour',
'surplus value', 'alienation', etc.), and
its major theorists (Lenin, Mao,
Habermas, Adorno, etc.). The entries
are written by a combination of
Marxist-oriented academics or
'Marxist scholars' (Bottomore, Lukes,
Stanley Diamond, Desai. McLellan),
outright Marxist publicists (Mandel,
Miliband, Sweezy) and Communist
activists (like Monty Johnstone, des-
cribed in the list of contributors as 'of
economic affairs - april-june 1984
in agriculture? This has already been
defined by Hayek'' as responsibility
for research, which is (partly) a public
good. Individual farmers have neither
the resources nor the technical know-
ledge to conduct research individually
but it is essential to have a lead in
technical innovation to allow the mar-
ket to develop and to respond rapidly.
This argument applies not only to
research in production but also to
market research and information
transmission.
Governmental or quasi-governmen-
tal managements of agricultural
markets should be removed. What is
urgently required instead is an active
policy of deregulation to free EEC,
and then world, trade in agricultural
products. Modern scientific develop-
ments in production techniques and
in market communications could
adjust supply and demand more effic-
iently to each other, and future markets
could cover producer risk. Mistakes
would continue to be made, by some
producers and comsumers, but not by
all, as they trade in the market. Such
misjudgments would have a less cata-
strophic effect on society as a whoie
than mistakes made by regulators
managing the 'common market'. ™
•* The Constitution of Liberty, Routledge
and Kegan Paul, London, 1960.
London', but actually a major activist
in the British Communist Party, and a
member of its Theory and Ideology
Committee).
The volume is highly representative
of the character of the new apolo-
getics for Marxism and Communism.
The crude, vulgar approach of old has
largely been abandoned (left to sects
like the New Communist Party or the
Spartacist League) for a more subtle,
and more insidious form of what,
despite its academic credentials,
remains propaganda.
Intellectual gymnastics and discreet
understatement abound throughout
the book. Although one contributor,
Steven Lukes, is prepared to admit
that Marxist denigration of the 'formal
freedoms' of bourgeois democracy con-
stitute 'formulations . . , theoretically
in error and . . . practically disastrous'.
a veil of silence descends on the
reality of the millions slaughtered
and oppressed by such mistaken
'formulations'. That Marx's vehement
anti-individualism, his opposition to
'atomistic' egoism and self-interest,
might be challengeable and might
have something to do with the horrors
of Marxist practice are thoughts appar-
ently beyond the pale. Indeed, Lukes
even speaks of Marx's opposition to
individual freedom as a 'wider and
richer view of freedom'.
Even when an apparently critical
stance is taken, the full horrors of
Marxism are not allowed to impinge
upon the sensibilities of the reader.
'Frictions were unavoidable', writes
V. G. Kiernan, Professor Emeritus,
University of Edinburgh, regarding
Soviet nationalities policy. What a
splendid synonym for brutal mass
coercion and genocide. While it is
permissable to criticise Stalin as a
'ruthless and unscrupulous politician',
Lenin's role in the creation of the
machinery of totalitarian oppression,
and his repeated approval of mass
murder and repression, are com-
pletely glossed over by Neil Harding
(University College of Swansea). In-
stead, his alleged 'disturbance' at the
tsarist-style abuses are noted, and he
is described as a 'dedicated' and
'extraordinary' man.
In some cases it is impossible for
the contributors to ignore criticisms.
In the entry on 'Asiatic Society',
Wittfogel's classic Oriental Despotism:
A Comparative Study of Total Power
(1957, current edition Vintage Books,
New York, 1981), and the importance
of its analysis of despotic regulatory
states which are not based on a
system of private property rights, can
hardly be ignored. But the full extent
of Marx's, Engels', and subsequent
Marxists' 'sin against science' (in
Wittfogel's phrase) is insufficiently
emphasised.
In other entries real intellectual
scandals are swept under the carpet
oi history. The entry on 'Darwinism'
correctly admits (an admission still
not widespread in the Marxist and
even general literature) the myth con-
cerning Marx's alleged attempt to
dedicate Capital to Darwin. But it
discreetly ignores the scandal of Marx
and Engels' hypocritical attempt to
cash in on the prestige of Darwinism,
and of the continuation of this practice
by subsequent Marxists, such as
Maurice Bloch and Steven Rose, up to
this day. Nor does the entry mention
the erratic and frequently idiotic
directions of Marx's anthropological
thought. {A definitive analysis of this
issue has recently appeared in Leslie
Page's Marx and Darwin: The Unveil-
ing of a Myth. Centre For Liberal
Studies, London, 1983.)
Particularly scandalous, however,
is the entry on 'Judaism'. Julius