The Soviet Union was a very influential thing. It was influential to such an extent that people rarely give it credit. The first world, for instance, is a product of the Soviet Union. Examine the first world prior to the USSR and the Bolsheviks.
Examine the US, with Jim Crow, the Great Depression, Factory Girls and Dustbowl refugees. Examine Britain, with the Land Wars in the Irish colonies, the penal workers of Botany Bay, the Workhouses and the Orphan gangs.
Prior to the USSR, there was very little distinction between the East End of London, and the Favelas in Brazil. What truly changed this was the Soviet model of economics. The Soviet nations were former empires. They were rich and plentiful. They had lots of wealth, but like the US and Britain and the other first world countries, it also had lots of poverty.
Wealth was never the issue in these places, rather it was class structure. When the USSR dissolved class, it created what we now call the first world. It created the idea of household electronics, of consumer markets, of the standard of living wherein people who would otherwise live as peasants or toilers now lived in this new bubble produced by supermarkets, leisure spending, holidays, free time activities, hobbies and lifestyle marketing.
All of this came out of the USSR. Because during the time of the Bolshevik revolution, capitalism lamented the issue with how the market could not manage the contradiction of low wages and high consumer costs. When corporations ruled, they would rule with a conflict of interest. Because they had incentives to profit both from underpaying the people, and from overcharging them. Doing both is what created the great depression.
And the person who resolved this contradiction was not Rockefeller or Weber, it was Vladimir Lenin and planned economics. It was thanks to planned economics and the Soviet model that the west saw a way out of this.
But there was one distinction. In the Soviet Union, they took from the rich and gave to the poor. They collectivised farms, redistributed wealth, forgave debts, created a national banking system and also a reserve currency. The USSR was one of the last places in the first world that had a minted gold currency, and it was met with extreme hostility from the US and Western Europe who imposed what was outright genocidal sanctions in what became known as the gold blockade.
This resulted in the exacerbation of the famines that was brought on by the landlordism of the Russian empire. I’ve written about this in the past, but it is worth to keep in mind. The gold ruble was a very radical product of the Soviet model, because it was a universal currency. Almost like the Bitcoin of its time. You could use it in any country, and it would always retain its value. It could not be affected by global exchange rates, and that made it a very dangerous thing.
Because the whole point of the European central bank and indeed the US federal reserve is to be able to both value and devalue foreign exchange. This is what allows superpowers to enforce protectionism and rig market competition in their favour. When countries have control over their own currency’s value, then that means they can adjust inflation and by extension, commodity prices.
By lowering commodity prices in your country you can stimulate exports and create stronger trade networks at the cost of short term losses. It’s a way to balance your country’s revenue and GDP.
So when the Soviets created a gold currency, the US had to basically do the opposite. They had to use trade blockades in order to lower commodity value in an effort to bring down the currency value. The only way you could devalue gold is by making it impossible for anyone to purchase things with it. By banning Soviet gold on the market, and forcing the Soviets to only pay for imports with their most scarce commodities, they could in effect artificially create an economic crisis.
Which is precisely what happened, and the result was that millions of people starved.
And that in turn rigged the game in such a way as to then permit the US to do what they wanted to do all along, which in many ways was the point of the federal reserve, namely the lend and lease programme. Because of this, they could, like they have also done to so many third world countries, they could lend money to the Soviet Union which would in effect fill the Soviet reserve with US dollars.
The US dollar can be found in pretty much any poor country’s national reserves. That’s the point of the US dollar. It is the gift that keeps on taking. Because the federal reserve can now in a very devious way make it harder for other countries to pay their national debt by simply devaluing their own dollar. Each time the US dollar inflates, the value of their own debt increases. The US Federal Reserve can actually become richer in assets through inflation. By selling treasury bonds at one price point, and then buying them back at another.
So we see how the federal reserve was essentially a banking and credit system that was tailor made for loansharks, and how the objective of such a reserve is to basically put this toxic asset, namely, the US dollar, into as many national reserves as possible. In doing so, they can draw wealth from pretty much any country by regulating exchange rates and devalue national currencies in relation to national debt.
And that is precisely why in the fiat system, national debt has become its own currency. Why the US is able to actually make money through deficit spending. Because it is very easy to make money from debt when you also run and manage the company that collects the debt. You are in effect using other countries as a proxy to lend money from yourself. You get the loan, they get the debt, and then you collect interest on your own loan. The gift that keeps on taking.
And this works because at the highest level of banking in NATO countries, there is no distinction between the public sector and the private sector. The Federal Reserve is both a private company and a government agency. De jure they are a private company, but de facto, they are doing the work of the state mechanism. This means they can privatise their profits, and subsidise their losses. When they make money, it’s a private asset, when they lose money, it’s a public liability.
So I say it again, it is a banking and credit system that was tailor made for loansharks.
And this is what solved the crisis of capitalism. Because now you can be poor on a whole new level. Thanks to the federal reserve, you can have less than nothing. That was the issue of the great depression, you could only underpay and overcharge people to the point of having nothing. But now? Thanks to debts, people can have a negative income. Thanks to debts, they can have a negative income and still pay for food and shelter using credit.
This means that while you are in theory losing some asset value from extending credit, you are also gaining asset value from market speculation. The debt becomes its own commodity. Which means you do not only profit from the interest of the debt, but also from the speculative value of the debt which elevates your primary market evaluation. The more debt you have, the more lucrative your bonds are.
This means that each individual person under capitalism have potentially infinite value, because you can now not only screw them over in the present day, but also in the future.
And some argue that this is not true because lending causes liability when it is done without due diligence, but in practice we see the opposite. Because all this does is drive the asset prices down, which makes them more viable in comparison to the high speculation.
But we’re getting ahead of ourselves. Because first we need to examine how the USSR became a first world country.
And this happened in the same way as it did in the US, namely, following WW2, the governments of both respective nations pumped lots and lots of money into the bank accounts of ordinary citizens.
In the US this was due to the post-war boom, which was caused by the economic stimulus that compounded itself due to how everyone in the US labour market during the war had manufacturing jobs for the armed forces with good federally regulated wages, and yet nothing to spend them on due to wartime scarcity. Everyone in the whole country were in effect on a government mandated savings plan, and then suddenly after 1945, they released the floodgates of all this disposable income.
And in the USSR, the exact same thing happened.
So in their own ways, both the US and the USSR began experimenting with planned economics.
Because the USSR kept this going. They kept mandating income, and they kept using the people as a source of economic stimulation. The USSR would also use subsidies in order to regulate commodity prices.
And so would the US, but they would do it for very differing reasons. To this day, the US federal government pays farmers to basically burn their crops and destroy their food. This is to keep food prices high so that agrobusiness can make profits. The USSR did the opposite. They paid the farmers for the difference in market costs so that consumers could enjoy low prices for food.
So one side invested in scarcity, and the other side invested in abundance. But both sides were planning the economy. The USSR benefitted from commodity inflation, because that was good for the consumer. That’s why, for instance, the average Soviet citizen in the 1970s paid maybe 20 USD or so in monthly rent, utilities included. They could have the same standard of living as an ordinary person in the US, but it cost them roughly 200–300 USD per month. Same nutritional data, similar apartments, etc. etc.
But the US of course invested in destroying the surplus to maintain scarcity, because they were investing in speculation. As a result, corporate profits skyrocketed, but real wages adjusted for inflation and spending power, quickly sank.
So the average US citizen had much more money in their bank account than that of a Soviet citizen, but also drastically less spending power. Because in effect, 70 cents on each dollar that a US worker earned belonged to the landlord and the bank.
But this would not be the case had it not been for planned economics and the Soviet model. The US simply applied this model in reverse. The Soviets sacrificed market speculation to improve the spending power of their citizens’ incomes. The US did the opposite, they sacrificed spending power in order to bolster speculation. But both sides did it by investing public money into the private market.
But one problem with this, or, at least it is a problem if you’re a regular tax payer, is that speculation is like a game of limbo. Each cycle of speculation adjusts its expectations accordingly. Each time, you must clear a more difficult bar.
And now speculation is at such extremely elevated levels that you cannot use market forces. This is what makes first world living conditions possible. Without the federal government using not only US taxes, but also that of people all over the world who are part of the US credit system, then there are no first world living conditions. All those companies that produce consumer goods, and not to mention pay consumer salaries, would crash overnight. Without the federal regulation of high prices and high speculation, we basically rewind 100 years back to the great depression.
No iPhones, no personal automobiles, no restaurants, no Xboxes, no nothing. Without the subsidies of risk, no corporation is going to invest its production and assets into ordinary people. Without that element of how our personal worth can now drop to less than nothing, no billionaire is ever going to want to do business with us regular people unless the exchange involves a 14 hour shift in a coalmine.
And the reason why I mention this is because I want to point out what a useless appendage capitalism is to this process. Because even capitalism cannot exist without the Soviet model, and since that’s the case, why bother? Why bother using this new post-bankruptcy economy to make bankers richer and speculation higher and higher to the point of where it cannot be sustained, when we can use it to actually gain a return on those investments our taxes pay for?
Why not plan the economy to the benefit of democracy instead of to the benefit of oligarchy?
Since we need to use planned economics either way, why not invest in lower rents, affordable medicine, good education, viable infrastructure and future technologies?
The answer to that is of course simple, we’re not in charge. Rich people are in charge.
But then another question arises, one that only Marx and Lenin had a good answer to, which is, if we’re paying for everything, how come they’re the rich ones?
