January 13, 2020


The Soviet Economy Was Not Growing; It Was Dying (Phillip W. Magness, January 10, 2020, AIER)

At the midcentury mark, economist G. Warren Nutter (1923-79) provided one of the lone dissenting voices to challenge what had become a matter of conventional wisdom among Sovietologists. Whereas others perceived vibrancy and vitality in the socialist society's industrial growth, Nutter recognized its long-term economic decline concealed behind a politically crafted veneer of propaganda about socialist industrial prowess.

From 1956 onward, he labored on providing a statistical corrective that painted a picture of a society gradually succumbing to the weight of its own central planning and the wasteful accretions of a graft-riddled and politically repressive bureaucracy.[2] The early reception of Nutter's work expressed doubt about its accuracy compared to more optimistic portrayals from the textbooks and accompanying Sovietology literature, yet history proved him right. Nutter had scooped the field and accurately identified an economy with deep structural problems--most of them directly traceable to its destruction of a functional price mechanism through the tools of state management.

Nutter's assessment was no abstraction, but rather the result of years of close study of the relationship between state policy and industrial concentration in the United States - the subject of his dissertation at the University of Chicago. But he also possessed an uncommonly keen eye for extracting observations from his surroundings. He deployed the latter during a twenty-eight-day visit to the Soviet Union in 1956 as a self-described "tourist" researcher, which he contrasted with other American experts whose longer visits occurred under the heavy scrutiny and management of handlers from the Soviet government[3].

Whereas others largely picked up on what the Soviets wanted them to see and incorporated curated factory tours and contrived statistical claims into their assessments, Nutter apparently had a knack for looking beneath the surface through everyday observations of his surroundings - simply by keeping an eye on the types of goods in the shop window, the patterns of workers entering the factory in the background, and the way that the people he encountered described even the most mundane economic transactions of their daily lives.[4]

He had no formal training in Russian and does not appear to have claimed fluency, describing his tour as having taken place "under the severe handicap of not knowing the language."[5] Yet Nutter was also something of a linguistic autodidact--an ability he realized in the US Army during the liberation of Europe a little over a decade prior. In reading his travelogue, one gathers that he may have gleaned more from observing the surrounding conversations than he let on - more than, importantly, his Soviet guides realized at the time.

While many of us are old enough to recall the Kitchen Debate, many have forgotten that Khruschev and other Soviet leaders genuinely did not comprehend how far behind ours their economy was, so a basic American kitchen seemed like fantastical propaganda.  It took the rise of the head of the KGB before they had a leader who understood how desperate the situation was and he died before he could do much more than promote a few reform minded leaders, but even they  did not comprehend.  Thus, Gorbachev did take power but still thought Communism could succeed with a few tweaks.

Posted by at January 13, 2020 6:46 PM