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November 09, 2009

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Yeah I don't buy that either. Is it supposed to be an offshoot of the more banal observation that the Soviet command economy was not sustainable?

Have you read the ascent of money? That seems like a claim Ferguson will make, but I'm only up to post-war Japan and the growth of the post-war welfare state, so I can't tell you for sure.

But were they capable of using tanks against their own people?

Romania and Czechoslovakia might have, the first much more likely than the first IMHO, but they had managed to pay off their foreign debt. East Germany had its own issues which distinguish it from the rest of the Soviet bloc, and I know nothing about Bulgaria. Let's call questions of foreign debt irrelevant to these four countries on account of low debt levels and relatively "hard" regimes.

The two Soviet bloc countries with substantial amounts of foreign debt were Poland and Hungary. In both cases, high levels of foreign debt discredited the existing political and economic systems. Neither country was democratic, but both were reasonably pluralistic.

In Hungary's case, the post-1980 economic crisis coincided both with a desire for more rapid convergence with Western living standards and a desire for a more pluralistic political system capable of the reforms necessary to give Hungarians a better life. In Poland's case, the post-1980 economic crisis discredited Communism completely and--so some have written--could have led to a democratic transition had the military not believed that the Soviets would intervene. By the late 1980s, the Polish military was unwilling to exacerbate the state-people conflict, and the Hungarian government apparently considered the idea beyond the pale. Debt defaults would just have made things so much worse, and debt concerns did influence the policies of these two countries. Hungary's role as a transit country for East Germans was precipitated by Hungary's desire to get West German loans. Non-Soviet Yugoslavia went through somewhat similar processes, the economic crisis leading to the political system's fragmentation on republican and ideological lines and working alongside a desire to get closer to "Europe."

External intervention was a possibility, sure, but the ideas of invading a EURAIL associate in the first case or starting a major war in central Europe in the second didn't appeal to the Soviet gerontocracy seems to have been willing to risk. The Hungarian and Polish governments, for all their problems, at least wanted to pay off their debts and were capable of talking about it, but I've my doubts re: much more recently Soviet-imposed regimes.

As for the special leverage over the Soviet Union, I think that it was mostly indirect in that destabilizing its satellite states would have imposed a fearful cost on the Soviet Union. The Soviets were already fighting a very controversial war in Afghanistan, but military operations in Hungary and especially Poland could have ended very badly. Oh, and there's also western European purchases of Soviet natural gas and oil, which could have been threatened in the case of a region-wise 1956.

Hmm. Does this make sense?

Noel,

I am very much not an economist, but it seems to me that the Reagan Administration's relentless drive to keep Oil prices as low as possible had a lot to do with the fall of the USSR.

How did the Reagan Administration cause oil prices to fall?

There may not be anything to it, but the basic theory as related to me has something to do with ReaganBush elder being buddy-buddy with the Saudi's, thus manipulating prices to stay high enough to keep the Saudi's happy but low enough to hammer the USSR economy. This may all be Reaganophile hogwash, but that is a story I hear a lot.

Steve

Here's oil prices for the relevant period

Y Nominal Inflation Adjusted
1979 $25.10 $73.89
1980 $37.42 $98.07
1981 $35.75 $84.93
1982 $31.83 $71.20
1983 $29.08 $63.00
1984 $28.75 $59.71
1985 $26.92 $53.98
1986 $14.44 $28.41
1987 $17.75 $33.69
1988 $14.87 $27.16
1989 $18.33 $31.88
1990 $23.19 $38.17
1991 $20.20 $31.99
1992 $19.25 $29.59
1993 $16.75 $25.02

I'd think it's hogwash; the crash in oil prices 86-87 adversely effected the Saudi economy and destroyed a lot of business, so, yeah. If you've got the option to agree to collusion or buffoonery, always pick buffoonery. Especially when it comes to St. Ronaldus Maximus.

de Tocqueville: "the most perilous moment for a bad government is one when it seeks to mend its ways." (Popkin, "A Short History of the French Revolution," p. 7.)

You want to know what caused Communism to fall in Eastern Europe? I'll tell you. It was the broadcast of "A Very Brady Christmas" on CBS on December 18, 1988. After that, Communism was doomed.

Indubitably. Good to hear from you again! Any news, besides the dogs?

No news as such. Still in Newport, still spreading the love.

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