It Took 70 Years to Contain the Soviet Federation
To understand how even powerful rising centers of capital can be destroyed we will encapsulate the short 73 year history of the destabilization of the former Soviet federation.
The Soviet reorganization to unwieldy community ownership, yet sensible mutual support principles, had barely begun when 14 countries sent in 180,000 troops and armed 300,000 dissidents within Russia to overthrow that revolution.
Reclaiming this breakaway region for monopoly capitalism’s managers of state almost succeeded; nearly two-thirds of the European region of the Soviet Union came under interventionist and counter-revolutionary control before the Soviets defeated the allied invaders.
The effort was more successful than the history books acknowledge, Finland, Latvia, Lithuania, Estonia, these four countries having been a part of the Old Russian Empire for over 100 years, and the Eastern half of Poland, and Bessarabia were carved from the forming Soviet federation by that intervention.
Except for Leningrad, this barred the Soviet Union from Atlantic ports and restricted its access to world trade. Note the similarity of the carving off of these historic sectors of Russia from 1917 to 1921 to the later carving up of the Soviet federation after 1991, the carving up of Yugoslavia, still on-going covertly (2008), and the continued moving East of the line between Eastern Orthodox Christianity and Western Christianity.
As of 2008, Western successes in the Ukraine–the orange revolution–were reversed, an attempt to covertly swing the Belarus election failed, and those same covert struggles are ongoing in other former Eastern Soviet Provinces. The suppression of rising centers of capital has a long and repetitive history.
Whereas only a few thousand died in the Bolshevik Revolution, a few million Soviets died of disease and starvation in the interventionist battles between 1918 and the withdrawal of the last foreign forces in 1922.
We hear of the millions who then died from famine in the decade of the 1930s in the wake of social disruptions caused by putting farms under collective or state ownership.
But we are now alert to how intelligence services, furthering the policies of managers of state of imperial centers of capital, expand or even create these images of rising centers of capital as terrorist states.
The truth is the citizens of the former Soviet Union were fiercely loyal to, and worked hard for, their revolution and one should be very skeptical of those figures. The real threat was the potential for success of this new economic system which practiced participatory democracy (forthcoming laws were discussed in the communities and representatives were instructed how to vote).
To prevent the subjects of the West’s representative democracies from realizing the possibilities of full and equal rights under a participatory or direct democracy (Cubans discuss over TV and vote directly on constitutional changes and laws) was the primary purpose of massive perception management demonizing the Soviet federation as a bloody dictatorship.
Russian pre-WW I industrial capacity, 3% that of America, was not replaced until 1928. But, once the people were educated and the political and industrial bases were laid, the successes came quickly. In the next 12 years the Soviets soared well past France, Japan, and Italy, matched Britain, and their industrial capacity was now 25% that of the United States.
The Soviet Union’s rapid development was matched by Germany. The plans of the managers of state are too well hidden to fully document, but the similarities between the wars against these emerging centers of capital and previous such threats to imperial centers are high.
Germany’s second in command, Rudolf Hess, supposedly “fled” to England 43 days before Germany’s attack on the Soviet Union.
His lifetime incarceration at Spandau prison, where he was denied the right to speak except on the most mundane subjects, allows only a glimpse of the hopes of fascists in Germany and Britain for an alliance against the Soviet federation ruled by labor and a reallocation of the world’s industries, resources, and markets among Western powers.
The nations already overrun by Hitler were of Aryan descent and many countries of Europe had accepted fascist governments during the recent Great Depression. S
o a restructured European fascist alliance, the real purpose of Hess’s flight, would have been easily organized if Britain had agreed.
Except for German sympathizers being automatically kept out of the British government both before and during the war, a defecting Hess would have been welcomed by fascist elements in Britain.
There are no other logical reasons for his flight except to form an alliance against the rapidly developing Soviets. Hitler and Hess were taking a gamble on Britain accepting a realignment of power to avoid a long war and they lost.
There were elements in Britain amenable to such alliance plans but Germany’s fascist violence; Britain’s treaty commitments with countries invaded by Germany; the impossibility of restructuring the belief systems of the masses of Britain in such a short time; and the almost certain eclipse of British economic, financial, and military power as Germany drew on a defeated Soviet Union’s vast resources and sold the products manufactured from those resources on Britain’s historic markets, precluded any such alliance.
While the Germans felt for a political settlement in the West, their June 22, 1941 offensive against the Soviet federation, Operation Barbarossa, took the invading troops to the outskirts of Stalingrad and within sight of Moscow.
In desperation, the Soviets moved their industrial machinery ahead of the invading army and rebuilt beyond the Ural Mountains. Industrial technology is not only the key to a wealthy economy; it is the key to modern warfare. The Soviets, who only 13 years earlier were a minor industrial power, produced far more weapons than Germany for the remainder of the war. By the beginning of 1945, “on the Byelorussian and Ukrainian fronts alone, Soviet superiority was both absolute and awesome, fivefold in manpower, fivefold in armor, over sevenfold in artillery and 17-times the German strength in the air.”
Essentially unrecorded in Western history is what the West owes the Soviets in that war. The estimation of 85% of Germany’s firepower being expended against the Soviet Union alerts the serious researcher.
Simple history and battlefield statistics tell the story well: Once the Germans were stopped, the massive 17-month battle for Stalingrad–liberated on February 2, 1943—ended with the death or capture of 1.5 million Germans, the death of 800,000 Soviets and wounding of hundreds of thousands more.
That victory was followed by the greatest tank and artillery battle in history at Kursk and the immense battles at Kharkov and Orel, the Soviets decisively won them all.
The Soviet federation had been holding off the Germans for three years and had cleared them from half the occupied area six months before the Allies landed at Normandy on June 6, 1944.
As the Allies fought inland the last year of the war, over two German soldiers out of every three were still on the Soviet front. In a replay of their 1944 offensive to take the pressure off the West’s Normandy beachhead, the Soviets launched an all-out attack on January 11, 1945, to take the pressure off the West’s Battle of the Bulge.
The German counterattack collapsed five days later as they rushed troops to the Eastern front to stem the Soviet offensive. By the end of March, six weeks before the German surrender, there were seven German soldiers on the Eastern front for every one in the West and the Soviets would still reach Berlin first.
World War II’s Huge Costs for the Soviet Federation
But a huge price was paid for that victory. The Soviets destroyed industries, railroads, and bridges as they were pushed east and the Germans destroyed what basic infrastructure the Soviets missed, oil wells, coal mines, dams, etc, as they were forced back West.
The Germans burned the cities and villages to the ground and hauled seven million horses, 17 million cattle, 20 million hogs, 27 million sheep and goats and 110 million poultry away to feed Germany.
That the Soviet Union was scorched earth, there can be no doubt. The destruction was there for all to see and 25 million Soviets were eating sunflower seeds and living in holes in the ground. By comparison, the United States had only 12.3 million men and women under arms, lost 405,399, its homeland was untouched, and its industrial capacity had increased 50%.
The imposition of beliefs to protect power and wealth is never-ending. The first figure of 20.6 million for total Soviet citizens killed was quickly upgraded to 27 million. But Stalin’s response to Churchill’s 1946 Iron Curtain speech in Fulton, Missouri, states the true losses at seven million.
World War II was over and the Soviet Union was again reduced to less than 20% of the industrial capacity of the U.S. More importantly, social infrastructure is much more expensive to build than industrial capacity, and the Soviets had to remove all the rubble first.
In 1947, U.S. Secretary of State General George C. Marshall made a trip across Western Europe and Eastern Europe, all the way to Moscow. Western Europe—damaged possibly 20% as much as Eastern Europe and Russia–was prostrate under monopoly capitalism’s laissez-faire principles while the shattered Eastern Europeans and even more badly damaged Soviets with their community support structures were rapidly rebuilding.
Marshall rushed back to Washington to report capitalism’s security interests, meaning unearned wealth appropriated through unjust property rights descended directly from aristocratic law (see Part III), were in serious danger. His comments mirrored the concerns of all managers of state:
All the way back to Washington,” [fellow diplomat] Bohlen wrote, “Marshall talked of the importance of finding some initiative to prevent the complete breakdown of Western Europe.”… [In a speech to the nation, Marshall gave a bleak report.] We cannot ignore the factor of time. The recovery of Europe has been far slower than had been anticipated. Disintegrating forces are becoming evident. The patient is sinking while the doctors deliberate. So I believe that action cannot [a]wait compromise through exhaustion. New issues arise daily. Whatever action is possible to meet these pressing problems must be taken without delay.
Those managers of state placed the Marshall Plan into effect in 1948 and, under those Friedrich List protection principles, Europe was rebuilt in about five years. The race for industrial and technological supremacy to control the world’s resources and wealth producing process, triggering the recent world war and many other wars, was on again.
The containment of the Soviet federation and the simultaneous suppression of the world’s break for economic freedom were going to require an enormous amount of expensive arms.
The Korean War and the CIA’s Mighty Wurlitzer were to lock society within the belief system that the West was under imminent threat of attack from the Soviet Union.
The increasingly tensed citizens of the West would then support the expensive arms race and the violence required to suppress breaks for freedom all over the world.
Monopoly capitalism’s philosophy of giving nothing to anyone is why Western Europe at first was not rebuilding as addressed above. Each person and each country are to succeed on their own in competition with all others and the fittest accumulate the wealth.
The West has long been boasting their welfare capitalism as superior to the Soviet federation’s communism. Not only was that not true, they fail to mention that welfare capitalism only exists because the West needed a philosophy to counter the obvious superiority of a cooperative-sharing philosophy over raw capitalism’s winner take all.
Thus the unwritten contract in the West between labor and capital that organized labor would be well paid to fight capitalism’s battle.
Without the threat from the East, labor in the West would not have been given the high wages which provided the quality life they came to believe was normal and their right. A
s demonstrated by the steady loss in wages of American labor since 1973, with only occasional gains, as soon as capital was sure they would win this battle, they immediately started lowering labor’s share of the wealth produced.
All labor throughout Europe and America are watching their earnings decline and structural adjustments throughout the world are forcing the same race-to-the-bottom logic of lowering the pay of labor that market competitions require.
After WWII, the West continued with their plans of destroying the Soviet Federation which had just saved them, and the world, from German Fascism.
Peter Gowan, senior lecturer in European politics at the University of North London, describes the neo-mercantilist policy towards the East which eventually shattered the Soviet Bloc:
[I]n the closing decades of the Cold War, the Atlantic Alliance had combined a formidable economic blockade against Eastern Europe…. The West possessed two principal means of control. Through the IMF, it exerted political control over international finance and currency matters. Furthermore, it could restrict commercial access to Western markets through bilateral export policy, through the Coordinating Committee for Multilateral Export Controls (Cocom) on high technology, and through import duties, largely imposed by the European Community (EC), on ECE goods…. It is scarcely an exaggeration, therefore, to say that following the upheaval of 1989 the West had the capacity to shape events in ECE to an extent comparable to that enjoyed by the Soviet government in the region after 1945. In field after field the ability of governments to deliver to their people depended on the intervening decisions of the G7 [the seven, now eight, leading Western countries]. Employing this power, Western policy makers could shape the destiny of the region according to a very particular, and very political, agenda. The Western powers did not respond to the challenge of 1989 in a piecemeal fashion. Although the form and speed of the collapse [destabilization] took most policy makers by surprise, the G7 had, by the summer of 1989, established new machinery for handling the political transformation of Poland and Hungary and had worked out both the goals and the means of policy. Even before the region’s first noncommunist government … took power in Poland in September 1989, the G7 framework was in place…. Coercive diplomacy, not persuasion, became the tool by which the West established market economies in the East. Peter Gowan explains further how coercion was practiced by outside powers: The EC, the G7 [now G8], and the IMF treated each country separately according to its domestic program, setting off a race among the governments of the region to achieve the closest relations with, and best terms from, the West…. The economic “liberalization” measures urged upon the new governments of ECE by Western agencies were bound to push these economies into serious recession, a situation only made worse by the disruption of regional economic links and the collapse [successful destabilization] of the Soviet Union. The result has been less a move to the market than a large-scale market destruction…. G7 experts were well aware that the drive for social system change would thoroughly destabilize ECE economies. The East was destabilized; the Soviet system did not just collapse. The above destabilizations were the policy decisions of America’s 1982 National Security Council Directive 54 (NSD-54) to destabilize all East European countries except Yugoslavia. Throughout the Cold War that nation was provided financial aid, and some access to markets, so as to wean it away from the Soviet Union and they prospered. They had a respectable standard of living, education and medical care were free, and each citizen was guaranteed a job and 30 days vacation with pay. This multi-ethnic melting pot was provided cheap transportation, cheap housing, and inexpensive utilities. Such a wealthy socialist society could not be permitted.  Peter Gowan, “Old Medicine in New Bottles,” World Policy Journal (Winter 1991-92), pp. 3-5.  Gowan, “Old Medicine in New Bottles,” pp. 6-8, 13.
Fictional Missile Gaps were Strategies of Tension
Professor George Kistiakowsky’s impeccable credentials as head of the explosives division for the Manhattan Project building the atomic bomb, professor of chemistry at Harvard University; and science advisor to Presidents Eisenhower, Kennedy and Johnson; had a rude awakening as he observed the workings of the “defense” planners from the inside.
I attended all the National Security Council meetings, by order of the President. I began to realize that policy was being formed in a way which really was quite questionable. It was being formed by people who didn’t really know the facts and didn’t have time to learn them because of bureaucratic preoccupation…. But it took time for all this to sink in. And then I began to see all of the lies, such as the so-called missile gap. I knew there was no missile gap, because our U-2 reconnaissance flights over the Soviet Union could not find any missile deployment. This was 1958—after the U-2s began flying. We put a lot of effort into detecting possible deployment sites. And we could find only one, north of Moscow. This was really a test site. … Those first ICBMs were so huge that you couldn’t hide them.
With full knowledge that the Soviets had no missiles pointed at anyone, the managers of state requested the CIA crank up their Mighty Wurlitzer and propagandize American citizens that the Soviets had them targeted with 50 intercontinental ballistic missiles (ICBMs).
The truth of the arms race was that the West led the Soviets by five to ten years in the development of every super weapon and that the devastated Soviets, who desperately both wanted and needed peace, who were encircled with immense firepower by many of the very nations that had invaded them in 1918 in an attempt to overthrow their government and that still loudly proclaimed they were evil and should be destroyed.
The Soviet federation had paid a huge price and was owed an enormous debt for saving the world from fascism.
The imperial centers of capital repaid that debt by encircling the Soviets with steel, embargoing them from technology and trade, and vilifying those great and highly moral people throughout the world through the CIA’s Mighty Wurlitzer and those of other Western intelligence services.
The basic principles of world trade had not changed. A rising center of capital may take over scarce resources and markets, the base of wealth and power of established imperial centers of capital.
Further proof of this analysis is the West’s military actually expanding since the Soviet Union’s successful destabilization.
Twelve years after that success, America alone was spending as much for arms as the entire rest of the world and the most powerful of those nations are allied with America as one imperial center of capital.
The combined military power of the allied, but not federated, centers of capital is truly immense. This 16th and 17th year after the Cold War ended (2007-08) military expenditures are rising rapidly as, under the flag of the War on Terrorism, the struggle for control of crucial resources and markets continues.
The Massive Resources of the Soviet Federation and the More Massive and Cheaper Resources of the West
Soviet successes under extremely harsh conditions were what was worrying Western managers of state. Covering one-sixth of the world’s land surface, the Soviet Union had massive natural resources.
However, its citizens lived primarily in Europe while its major natural resources were in Asia 3,000 miles away, and much it under frozen tundra. To mine and process those resources, entire cities had to be built in a cold and hostile climate.
Shipping those raw materials to Soviet industries in their West and supplies from those industries to those new cities in their Eastern tundra required construction of expensive roads and railroads.
Transportation is a major part of production costs, the Soviets estimated their costs of production at 1.8-times those in America, and Americans and other Western nations obtain much of their resource needs from their even cheaper periphery of empire.
Britain’s rich coal and iron ore deposits during her industrial development were only 15 miles apart she had cheap water transportation to anywhere in the world.
Those largely unspoken-of advantages allowed Britain to produce more cheaply, sell more cheaply, and thus accumulate more capital and industrialize more quickly, than other nations.
The entire West had the same advantage over the Soviet Union and that advantage over that region continues to this day.
Not only were the natural resources of America closer to population centers and cheaper to mine and process, their roads, railroads, and factories were already in place.
And the West has advantages far beyond that. Paying equally-productive developing world labor 20% of the wages of developed world labor denies buying power to the periphery of empire. This leaves the only market for resources and products in the well-paid developed world and effectively gives the West title to the richest resources all over the world.
The harvesting of Soviet resources and the production of Soviet wealth was far more labor-intensive than in the West.
Even with those higher production costs, the Soviets provided resources and industrial technology to the periphery of their sphere of influence—Eastern Europe, China, Cuba, etc—at 20%-30% of world values. Thus the Soviets denied themselves a large share of the wealth produced by their own labors.
With adequate resources within their borders, the Soviets were taxing their center to build their periphery while, through underpaying and overcharging, the West, through underpaying for periphery labor and resources, taxes their periphery to provide wealth for their imperial centers.
This is exactly the opposite of what we are told. We now know that the Soviet system was not an empire. It was instead a federation of diverse people who had broken free of the world monopoly control system and intent on building their society primarily utilizing their own resources.
Efficiencies and inefficiencies in Soviet Planning
Thirty percent of Soviet industrial capacity and an even greater share of Soviet infrastructure and social wealth were destroyed in WW II. As soon as Germany was defeated, the Soviets started rebuilding.
By the 1980s Soviet industrial production was approaching that of the United States and pulled ahead in steel, oil, coal, and a few other industries. In only 70 years the Soviets had moved from the bottom among industrial nations to number two and they had accomplished this while fighting off the four year effort of 14 nations to overthrow her, under the massive losses of WW II, and while being forced to arm to offset the ring of steel being placed around her by the West.
One can only wonder at the amenities of life the Soviet Union could have provided its citizens if it had been left in peace. Of course the specific purpose of the massive destabilizations is to prevent those examples from emerging and the purpose of massive perception management worldwide is to prevent the world, both the masses and the intellectuals, from seeing the great gains possible within any economy, rich or poor, whenever a society breaks out from under the imposed belief systems protecting wealth and power.
The economic classics and all their derivative works are central to imposing the beliefs of the efficiency of monopoly capitalism while the truth is that any cooperative system, and especially honest capitalism as we are laying out, is many times more efficient (see The simplicity of eliminating poverty and war will stun you).
But an initial efficiency in Soviet planning resulted in later inefficiencies. Some 77% of manufactured products were produced by only one or two huge factories for each consumer product.
If technologies were equal, these huge factories could initially produce consumer products more cheaply than many competing companies, each with separate production, publicity, and distribution networks.
But they could not keep up with ongoing technological developments. Retooling factories is expensive. When there is no competition, managers will not retool a huge factory while market capitalism, with it’s virtually hundreds of initial producers, will typically shake out to three competing producers of roughly equal economic strength and each with several factories. The others disappear from the scene.
But those three or more remaining competing producers innovate, develop, retool, produce, distribute, train repair people, and receive feedback from all elements of society for further innovation and retooling, and the cycle keeps repeating itself. Thus, in a competitive society, factories become ever more efficient.
Soviet industry did not have that technological innovation and retooling cycle. Without feedback from society, productivity through innovation and retooling did not keep pace with the West. The Soviets could analyze this but, as addressed below, destabilization short-circuited their plans to restructure to the highly productive Norwegian/Swedish economic model.
Containing the Soviet Federation through forcing it to Waste its Industrial Production
The original efficiencies of those huge factories freed labor and capital for rebuilding their shattered nation. The rubble of WW II had to be cleared away and homes, stores, and their complete economic infrastructure had to be rebuilt to the level of a modern nation. The Soviets had made the decision to sacrifice the present to build for the future.
But the arms race short-circuited those plans. We must remember British Prime Minister Churchill’s warning that Britain and Western Europe could not rearm quickly without facing poverty and starvation.
Britain and Western Europe were damaged less than 20% as badly as the Soviet Union and Eastern Europe. Offsetting the ring of steel being placed around the Soviet Union while simultaneously cleaning up the rubble, building homes, 25 million were homeless, repairing the damaged original infrastructure and then building new dams, highways, railroads, and industry was a monumental task.
The estimate of a Soviet economist is that “51.4% of total Soviet industrial investment between 1950 and 1985 went into military production.” A large share of the rest, roughly 43%, was going into building and rebuilding infrastructure while providing industry and resources to the embattled periphery, China, Eastern Europe, Cuba, etc, and a minuscule 5% was left for producing consumer durables.
Any serious study of economic growth rates will conclude the Soviet socialist system as having accumulated capital and industrialized far faster than any capitalist country except those essentially given capital and technology after WW II so as to contain fast expanding socialism.
Before they were successfully destabilized in 1990-91, the Soviets were able to raise their technology to about 1982-83 U.S. levels.
But their expenditure of labor and resources toward rebuilding from the rubble of WW II, their building of expensive infrastructure, the necessity of turning their industry to producing arms to offset the West’s determination to destroy them, and their transfer of a share of their production to the periphery denied them the opportunity to apply their technology and labors to consumer production.
The mining of resources and land transportation in the arctic tundra thousands of miles away from their population centers were simply too expensive to overcome those hurdles.
Though it ended up a close race militarily and technologically as the Soviets fought for survival, the enormously expensive arms race imposed by the very wealthy and undamaged United States precluded the development of a Soviet consumer economy.
Wasting the resources of the entire world building arms has been very profitable for corporate imperialists in a system that, as acknowledged by America’s President Eisenhower, in the final analysis is paid for by the world’s poor.
Where building arms is highly profitable for capitalists, both in the actual production and in those arms being used to maintain control of others’ resources, processing their own resources into arms is always an enormous loss to a socialist economy attempting to live on its own resources.
Through the multiplier factor, fully 30% of American jobs were attributable to arms expenditures. Thus the waste of the arms race was a wealth distribution mechanism for citizens in the West even as it greatly reduced real wealth throughout the world.
Making a Deal With the Corrupt of Russia
The majority of the Russian people wanted change, but only slowly and carefully. They were not so foolish as to throw away their livelihood and the natural wealth of their nation.
But Russian powerbrokers were given the opportunity to immediately own the vast natural wealth of that nation. Fifty percent of Russia’s GDP came under the control of what became known as the “Russian Mafia.”
These thieves sent the money out of Russia as fast as it came into their hands. Thousands of mansions were purchased with this money in Spain, France, Cyprus, Austria, and many other countries and purchasers of each of these homes had many times that value stashed in overseas bank accounts. Fidel Castro estimates that 200 to $500 billion fled Russia; former President Gorbachev estimates $1 trillion.
When the Soviet borders crumbled, subversive funds flowed in, much of them from the National Endowment for Democracy (NED) and George Soros, and other, destabilization foundations, political allies were organized, those heavily-funded politicians won enough control to pass the necessary laws, corrupt oligarchs gained title to valuable properties by various subterfuges, predatory capital came across the border to buy up resources at a fraction of its value, and massive consumer products produced in the West were sold to Russian citizens to return to the Western imperial centers of capital even the small amount of money created within that defeated nation.
Western managers of state made the same alliance with powerbrokers of the defeated former Soviet Union as they had with corrupt leaders throughout the former colonial world. The wealth and power of those corrupt leaders were protected so long as the West had access to their nation’s resources at a fraction of its value and so long as there was access to their markets for the wealthy world’s manufactured goods. Economic shock therapy in the Russian sector of the former Soviet Union was an attempt to compress the 70 years of America’s age of the robber barons into 10 years.
What is important to understand is that no one within the Soviet Union had the training or knowledge to establish those huge economic empires let alone run them. That knowledge was supplied by the west, the Russian Mafia was put together to claim that wealth, and they were coached how, and supported in the process, of moving possibly a trillion dollars outside of Russia.
Russia is untangling those stolen property rights today but it is being reported in the West as government theft of private wealth. When or how this drama plays out will be largely unknown in the West.
Though recovering the funds having fled across the border will be problematic, Russians will again collectively own their natural wealth.
This is an example to the impoverished world as to how they can gain their freedom and full and equal rights through conditional titles stating that society shall collect the rental values to nature’s resources.
This outlines clearly why the imperial monopolists so violently and tenaciously protect their current unequal property rights, the heart of the monopoly system.
On an evening news show, Harvard economist Jeffrey Sachs, who was in charge of the U.S. economic team coaching the former Soviets in their shock-therapy economic collapse, said, “the problem is they do not yet have enough free enterprise.”
Having just cut economic arteries in Russia with abandon, this same economist, in a later statement, had deep concerns over the “fragility of the world economic system” and expressed fears about U.S. efforts to penetrate the Japanese market which he describes as “reckless.”
Simultaneously advocating opposite policies for the destabilized East as under which the wealthy West’s economy operates indicates the economic health of the Russians was of no concern.
Sachs was in charge of the Harvard Institute for International Development which oversaw their destabilization. We do not know if there is a connection between the CIA hiring economists during the middle and late 1980s and the Soviet destabilization.
Nor do we know if that institute was one established by the CIA as discussed in Perception Management (Propaganda) Encasing Society within a Belief System and Perception Management (Propaganda) Encasing Society within a Belief System that they have done all over the world.
But consider these points:
1 The wholesale shutdown of Russian industry was done following the advice of that institute.
2 These same economists would surely not offer the same advice to an allied nation as the history of these allied imperial centers of capital demonstrates.
3 Any student of mercantilism would have recognized these suggestions would destroy Russia’s industry and commerce and create a dependency.
4 Any economist could analyze there was virtually nothing anywhere to replace the industry being defunded and shut down except imports from the West.
5 And we know imposing beliefs to protect an imperial nation’s “national interest” (the way Adam Smith free trade was imposed upon the world) is an oft-used tactic of managers of state of already developed nations.
So, how else can the guided rapid collapse of the Russian economy and the dissolution of the Soviet Union by decree by Yeltsin (See Naomi Klein’s Shock Doctrine) be interpreted?
Any nation which tried such a thoughtless plan would revert to developing world status with its wealth essentially confiscated by intact imperial centers of capital.
As would be expected, the Soviet collapse rapidly worsened as industries were shut down and massive amounts of minerals and oil were shipped west to run the booming economies of monopoly captialism.
The Russians figured that out after it was too late and those advisors were expelled from Russia.
When the Soviets were successfully destabilized in the 1990s, imports rose to an unsustainable, officially-acknowledged, 39% of Russian consumer products imported in 1996. It then climbed to an official 50%, and an estimated 60%, by 1998, with no compensating manufactured exports.
Documentaries showing both impoverished Russian soldiers begging for food and other soldiers unloading cases of food with American labels on them unwittingly expose the cause of Russia’s impoverishment.
The second most powerful country in the world, totally self-sufficient, except for bananas, coffee and coconuts, was quickly impoverished through massive consumer imports.
A country’s economic multiplier is its economic health and Russia’s economic multiplier collapsed when its operating currency (base money) was spent on importing 50% of its consumer needs. There simply was too little money left in Russia to run their economy.
Couple the impoverishing 50%-60% consumer product import statistic with the fact that Russia had a $35 billion per year trade surplus at the same time its industrial production had fallen 80% and capital investment nearly 90%. This touted Russian success was really an enormous success for the West’s Grand Strategy for destabilization of its feared enemy.
Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism, especially chapters 11 and 12, is the book to read to understand the many ramifications of the destabilization of the Soviet Union.
It seems Jeffrey Sachs was sincere and only realized the errors of economic shock therapy after that experience. Perhaps he now understands that the purpose of the managers of state was to open up the wealth of the Soviet Union to the wealth appropriation principles of monopoly capitalism and simultaneously destroy that threat to monopoly capitalism.
Most Soviet citizens had money in the bank and, considering all we have outlined above, were reasonably comfortable. If that federation had been permitted to restructure to the Norwegian/Swedish economic model as they were planning, their 8-year shortfall in technological inequality could have been quickly closed. There would have been no effort to disturb the basic equality of rights firmly in place. Their rapid rise in living standards would be noticed by all and that was the threat that had to be destroyed.
Before their successful destabilization, one Ruble equaled $1 in value and would buy more than $1 could within the Soviet Union. The ruble then would buy breakfast, lunch, and dinner with change left over. After the destabilization, it required 6,000 rubles to buy $1.
The Russians traded those old rubles for new ones at the rate of 1,000 to 1 and that brought the exchange rate down to six of the new rubles for $1. Then the value of the new ruble fell by two-thirds. Most Russian savings were wiped out in the first currency collapse and the second collapse took two-thirds of what was left.
One of the old rubles now would not buy a cup of tea. Ten years later, 2008, Russians are many times better off but have still not reached the security the Soviet Union had in 1985.
A healthy economy requires faith in a nation’s currency. Without trust in a nation’s banks, the money will flee which is exactly what it did in Russia.
Worse yet, once a population has lost their money they thought safely stored in the bank, trust in a nation’s banking system cannot be restored for at least one to two generations.
Loss in faith in banks means efficient capitalism cannot be established in Russia for a very long time. This is the outline of a very successful periphery destabilization policy for imperial centers of capital.
This has all the marks of a planned destabilization. Jeffrey Sachs knew Russian citizens had massive savings in the bank. In any other society this would be considered a big plus.
But, in hindsight and not realizing his errors, Sachs referred to those savings as that “pesky overhang.” Those private funds would have been a natural to purchase shares in Russian Industry.
But the goal was to transfer most social wealth to Russian oligarchs; the rights and well-being of the masses were to be ignored.
To eliminate that pesky overhang it was necessary to collapse Soviet industries and flood the markets with imported products. That, and the resulting inflation addressed above, stripped Russian citizens of their “pesky” savings.
We continue with the story of how The First Destabilization of Afghanistan was Aimed at the Soviet Federation
Those crucial 170 words describing an honest, efficient, capitalist economy. Does anyone have the ear of President Barack Obama’s Economic Recovery Team?
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 Castro, Capitalism in Crisis, pp. 42, 104.
 John Gray, False Dawn (New York: The Free Press, 1998), chapter 6; Alexander Buzgalin and Andrei Kolganov, Bloody October in Moscow: Political Repression in the Name of Reform (New York: Monthly Review Press, 1994); Boris Kagarlitsky, Square Wheels: How Russian Democracy Got Derailed, (New York: Monthly Review Press, 1994). The tables of contents of most good magazines, mainstream and alternative news.
 Janine R. Wedel, “The Harvard Boys Do Russia,” The Nation. June 1, 1998, pp. 11-16.
 Castro, Capitalism in Crisis, pp. 99-104.
 Ann Williamson, “An Inconvenient History,” run a Google search
 Lloyd C. Gardner, Safe for Democracy (New York: Oxford University Press, 1984), pp. 197-8; Philip Knightley, The First Casualty (New York: Harcourt Brace Jovanovich, Publishers, 1975), chapter 7; Mikhail Gorbachev, Perestroika (New York: Harper and Row, 1987), p. 33, note 2; Edmond Taylor, The Fall of the Dynasties (New York: Dorset Press, 1989), p. 359; Ernest Volkman, Blaine Baggett, Secret Intelligence (New York: Doubleday, 1989), chapter 1.
 Walter Isaacson, Evan Thomas, The Wise Men (New York: Simon and Schuster, 1986), p. 150; Michael Kettle, The Allies and the Russian Collapse (Minneapolis, University of Minnesota Press, 1981), p.15; Taylor, Fall of the Dynasties, p. 381.
 Philip Knightley, First Casualty, p. 138; D. F. Fleming, The Cold War and its Origins (New York: Doubleday, 1961, 2 vols.), pp. 26, 1038
 Paul Kennedy, The Rise and Fall of the Great Powers, (New York: Random House, 1987), pp. 321, 323.
 James Douglas-Hamilton, Motive for a Mission: The Story behind Rudolf Hess’s Flight to Britain, (New York: Paragon House, 1979). As it does not even mention the “Clivedon Set” of Britain who were supporters of fascism, this book’s analysis is far too soft. There is a serious school of thought on the pre-World War II worldwide alliance of fascists but that history is too well hidden and unsure for us to address
 Vilnis Sipols, The Road to Great Victory (Moscow: Progress Publishers, 1985), pp. 109, 132, 179-80; Kennedy, Rise and Fall, especially pp. 321, 323, 352, in part quoting J. Erickson, The Road to Berlin (London: 1983), p. 447.
 Jeffrey Jukes, Stalingrad at the Turning Point (New York: Ballantine Books, 1968), p. 154; National Geographic TV (August 23, 1987); Fleming, Cold War and its Origins, p. 157; Kolko, Politics of War, pp. 19, 351, 372.
 Kennedy, Rise and Fall, pp. 357-58; David Mayers, George Kennan (New York: Oxford University Press, 1988), pp. 190-91; Oleg Rzheshevsky, World War II: Myths and the Realities (Moscow, USSR: Progress Publishers, 1984), p. 175.
 Lens, Permanent War, pp. 20-21; Williams, Tragedy of American Diplomacy, pp. 208, 235.
 Don Cook, Forging the Alliance, (London: Seeker and Warburg, 1989), pp. 78-9.
 E.P. Thompson and Dan Smith, Protest and Survive, (New York: Monthly Review Press, 1981), p. 123.
 Lester Thurow, The Future of Capitalism: How Today’s Economic Forces Shape Tomorrow’s World (England: Penguin Books, 1996), p. 56; Lester Thurow, Head to Head (New York: William Morrow and Company, 1992), pp. 92, 95; David Kotz, “Russia in Shock: How Capitalist ‘Shock Therapy’ is Destroying Russia’s Economy,” Dollars and Sense, June 1993, p. 9.
 Patrick Flaherty, “Behind Shatalinomics: Politics of Privatization,” Guardian. Oct. 10, 1990, p. 11.
 Rich Thomas, “From Russia, with Chips,” Newsweek, August 6, 1990.