Spufford, who teaches writing at Goldsmith’s College in Britain, is not an economist, but he has a real grasp of what economists call the “calculation problem.” Early in the last century, Ludwig von Mises and later Friedrich Hayek pointed out that in a centrally planned economy, the planners lack the information they need to manage a successful economy. They argued that only a decentralized price system—i.e., the free market—can provide that information; but, of course, abolition of the price system was the essence of communist economics. Ultimately, Mises and Hayek won the “socialist calculation debate,” as even lifelong socialist Robert Heilbroner admitted in two stunning articles in the early 1990s.
Spufford weaves this lesson into a series of vignettes that track the fictional and nonfictional characters from 1938 to 1970. The last book on the economics of communism that I enjoyed even close to as much was Scott Shane’s Dismantling Utopia: How Information Ended the Soviet Union.
Human story | But Spufford’s book is so much more because it is, essentially, a novel. He takes a sympathetic look at what the best-intentioned communists were trying to achieve. That makes communism’s failings all the more poignant. So, for example, we see fictional character Galina, who, as a loyal communist, gets to attend a 1959 exhibit in Moscow in which Americans show off some of the latest fruits of capitalism. Her job is to refute American propaganda and spout communist propaganda. But she finds herself marveling at “little plastic beakers” that she believes, however hard she tries not to, an average American family can afford. Moreover, she is convinced that Americans can own the beakers “without having to do anything to deserve them.” They can own them “[w]ithout having to part with anything except banknotes. Just by going shopping.” Galina, who has already spent a large part of her life in queues for goods in short supply, notices that the American demonstrating these things “talked about the money things cost as if that were the only consideration.”
For women who have given birth and men who have been with them during the process, the vignette on how health care providers in the communist system care for patients is chilling. In 1966, when Galina goes to the hospital to give birth and complains about the pain, she is asked if she has taken the psychoprophylaxis classes. Psychoprophylaxis, Spufford explains in a footnote, was the dominant doctrine on childbirth in the Soviet Union at the time. It turns out that Galina hadn’t taken the classes, but when she talks to another woman giving birth, she learns that the classes were mainly about how to prepare baby food and why one should take lots of walks. Says the other expectant mother, “[T]hen there were five minutes at the end about labour pain being an illusion promoted by capitalist doctors, and how it was really only messages from the subcortex of the brain which you could turn off by stimulating the cortex.” When Galina replies, “I don’t know what that means,” a teenager in the bed on the other side says, “I do. It means they’re not going to give us any painkillers.” She does get morphine, but only by pulling rank: threatening the midwife with consequences because of her husband’s high-level position in the Communist Party.
Capitalism vs. central planning | Although the idea of taking childbirth classes in which you learn almost nothing may sound strange to Americans—my wife and I learned a lot in ours—the key is that the people taking the classes didn’t pay for them. When you don’t pay, you’re not the customer. So the supplier has little incentive to provide something useful.
The fact that customers had no power was the problem economy-wide. In one scene that takes place in 1962, a fictional character—an attractive 30-something female biologist named Zoya—meets some flirtatious, idealistic 20-something male graduate students in economics who are excited about their ability to improve what they agree is a messed-up economy. One of the students, Kostya, asks Zoya, “Did you know that last year more than half of the hosiery delivered to shops was sub-standard?” Zoya replies, “Let’s say that I had an anecdotal appreciation of that fact, from trying to put some of it on.”
Kostya thinks this can be solved under communism. “What we need,” he asserts, “is a planning system that counts the value of production rather than the quantity. But that, in turn, requires prices which express the value of what’s produced.”
“The value to whom?” asks Zoya.
Kostya replies: “Not just the value to the producer, or even to the consumer, because that only gives you capitalism again, surging to and fro, doing everything by trial and error. It’s got to be the value to the whole system; the amount it helps with what the whole economy is trying to do in the present planning period.”
Kostya then goes on to assert that the whole problem can be solved by complete centralization combined with high-powered computers. This view was widespread at the time, both in the Soviet Union and elsewhere. Polish socialist economist Oskar Lange, who was on the losing end of the socialist calculation debate but didn’t admit it, called the free market “a primitive pre-electronic calculator.” Of course, it turned out that it was central planning that was primitive.
Meanwhile, Soviet citizens had to live with what was already a highly centralized system. Because the central planners classified the city where Zoya, Kostya, and the others lived as a college town, food was allocated to it based on the assumption that college students, lifting pencils and wiping blackboards, did not need much food. But the “college town” also contained 40,000 industrial workers. Spufford writes, “[A] locust would have been hard put to find a spare crumb,” and, “Sausages were as rare as comets.”
In the early 1960s, many economists, including MIT’s future Nobel laureate, Paul Samuelson, thought that Soviet economic growth would so exceed U.S. economic growth that the USSR would become the dominant economic power. But that, as Spufford points out, is because of how Soviet growth was measured. Here’s Spufford’s comparison of the measurement of growth in market and socialist economies:
It wasn’t in the essence of a market economy that it should always do a little more this year than it had last year. The planned economy, on the other hand, was created to accomplish exactly that. It was explicitly and deliberately a ratchet, designed to effect a one-way passage from scarcity to plenty by stepping up output each year, every year, year after year. Nothing else mattered: not profit, not the rate of industrial accidents, not the effect of the factories on the land or the air. The planned economy measured its success in terms of the amount of things it produced. Money was treated as secondary, merely a tool for accounting.… By counting actual bags of cement rather than the phantom of cash, the Soviet economy was voting for reality, for the material world as it truly was in itself, rather than for the ideological hallucination. It was holding to the plain truth that more stuff was better than less. Instead of calculating Gross Domestic Product, the sum of all incomes earned in a country, the USSR calculated Net Material Product, the country’s total output of stuff—expressed, for convenience, in roubles.
Do you see any room in there for Joseph Schumpeter’s creative destruction, by which people got not just 10 percent more “stuff,” but different things that are worth more and, sometimes, require fewer materials? Me either. As Spufford points out in a footnote, industrial growth “in the USSR did not carry over into general prosperity.” A big part of the reason is that value was often measured by weight. One of the characters in the book doesn’t want to sell a machine that another factory desperately needs because the factory that produces the new machine will be paid less than was paid for the old, inferior machine. The reason? Equipment is priced mainly according to weight. The new, superior machine weighs less.
Wait! It gets worse! Spufford points out that one economist found the Soviet economy actively destroyed value. He gives an example of some awful Soviet shirts that no one valued, produced from valuable cotton that could have been sold on the world market. (He footnotes a nonfiction book that tells that story.)
Facts behind the fiction | That brings me to the footnotes. They are truly spectacular: I read every single one. Reading the first pages, I found myself wondering about the historical accuracy of Spufford’s many claims. After checking the first few footnotes, I quit wondering. When he makes true claims, he gives the citations. When he takes poetic license with his work of “faction,” he cites the sources on which he bases that license. Were I putting together a syllabus on Soviet economic planning, I would start by just working through his footnotes.
The book ends with a sympathetic portrayal of Nikita Khrushchev in 1968. Khrushchev, who was forced into retirement in 1964, looks back, sadly and angrily, at the huge amount of blood spilled for communism. He had thought the losses were worthwhile because he and his comrades were creating paradise. But here are his actual words, which Spufford tells us in a footnote were on tapes that Khrushchev recorded but that were held back from the memoir his son smuggled to the West:
Paradise is a place where people want to end up, not a place they run from. What kind of socialism is that? What kind of s**t is that, when you have to keep people in chains? What kind of social order? What kind of paradise?
