Communism as Producer . . .

August 6, 1956

Last week I commented here upon two articles by Harry Schwartz in The New York Times of June 25 and 26 which, in spite of many qualifications, left the impression that Communism had a good chance of winning the “economic race . . . by beating capitalism at its own game—production.” I pointed out that the articles mainly relied upon Soviet official statistics, and that there was no reason for supposing these propaganda figures to be true.

A conviction in the West that Communist “planning” and production methods can beat free enterprise in overall production would have such disastrous consequences that it calls for further scrutiny. I must again make clear that I am not talking (nor was Schwartz) of production purely for war purposes, upon which the Communist world concentrates, but of total production, including production for consumer welfare.

FOOD AND HOUSING

That the recent riots in Poland were precipitated by an actual food shortage is now admitted even by Communist officials. Thus Edward Ochab, “regarded as Moscow’s principal representative in the Polish Communist Party,” confessed on July 20 last that Poland’s Six-Year Plan not only had failed to produce enough coal and food but also had fallen short by 50 percent of its goal to raise wages. He conceded that while the Polish Bureau of Statistics reported to the Central Committee that real wages had increased 27.6 percent during the Six-Year Plan, the committee’s own investigation showed that the increase was only 13 percent. There is no good reason for trusting even this “correction.”

Yet American officialdom today seems to regard Russian statistics with respect and even awe. On Oct.

10 last, Secretary Dulles declared that U.S. production, at about $400 billion, was “three times that of the Soviet Union.” A writer in the National Review estimated that Russian production was only about half that claim. After thumbing through some old clippings, I incline to think this lower estimate much nearer the truth.

A study released by the U.S. Labor Department on July 12, 1947, estimated that the standard of living of the average American, in terms of what his weekly wages would buy, was almost 1,000 percent higher than that of the average Russian worker. A detailed comparison of food costs by the department in 1951 showed that it took the average Russian worker 769 minutes to earn enough to buy the same “food basket” as the American worker could buy with 100 minutes’ work. In The Times of Oct. 24, 1950, an article by Harry Schwartz himself pointed out that “available data suggest that the typical Soviet housing pattern is still that of one family to a room”; that “the present crowding of housing in Moscow is appreciably worse than it was in 1939”; and that in Leningrad there was “an average of about twelve persons for each apartment.”

Alfred Kohlberg recently presented strong reasons for doubting Russian statistics even on steel production. If the figures on steel production should prove to be fictitious or inflated, the whole set of Russian claims of expansion even in the heavy industries would be thrown in doubt.

COSTLY ERRORS

And yet, rushing in on the basis of unestablished and highly improbable Russian boasts, a letter writer to The Times of July 8 last (a professor of economics!) triumphantly contended that the example of Soviet Russia disproved the Mises-Hayek thesis that a centralized tyranny cannot maximize or balance production because it can neither calculate comparative costs nor know consumers’ wants. In a country like Soviet Russia, “still short of everything it needs,” the letter writer argued blandly, “errors in planning are not fatal” because a wrong investment “is at worst premature and will soon be utilized.” Yet it is, of course, precisely a country “short of everything it needs” that can least afford errors. If it builds giant power dams and steel plants by diverting labor and capital from food production, a few million citizens may starve before the “wrong investment” is “utilized.” This is precisely the kind of thing that is still happening behind the Iron Curtain.