Progressive Fantasies in 1927

I'm now reading Amity Shlaes' The Forgotten Man: A New History of the Great Depression (Harper Perennial, 2007). I've decided that my education was lamentably deficient in economics and it is time to do something about it. (Up next is Thomas Sowell's Basic Economics.)

This book is readable, insightful and interesting. I'm always impressed when academic experts produce works that are helpful to the non-expert who is willing to do a little work. Shlaes is senior fellow in economic history at the Council on Foreign Relations and a syndicated columnist at Bloomberg.

In July of 1927, a group of American progressives - labor leaders, academics, journalists - boarded a steamship aptly named The President Roosevelt after America's first progressive president for a trip to Europe that would ultimately take them to the promised land: the Soviet Union. The group would eventually meet for six and a half hours with Joseph Stalin himself, which was the highlight of their trip. During the trip, one of the members of the group, Stuart Chase, was deeply impressed with the Russian method of state planning of the economy. Shlaes quotes him and writes:

The official goals of the Russian state planning commission impressed him deeply. This was "the attempt to do away with wastes and frictions that do such dreadful damage in Western countries." The scale of management took his breath away: "Sixteen men in Moscow today are attempting one of the most audacious economic experiments in history . . . they are laying down the industrial future of 146 million people and of one-sixth of the land area of the world for fifteen years." Chase continued, "These sixteen men salt down the whole economic life of 146 million people for a year in advance as calmly as a Gloucester man salts down his fish." And, Chase noted with enormous admiration, "the actual performance for the year 1928 will not be so very far from the prophecies and commandments so calmly made . . . One suspects that even Henry Ford would quail before the order." Perhaps the United States could organize its economy in similar fashion. Chase, like Steffens, believed he saw something that worked.

Several thoughts occurred to me when I first read this passage.

1. These were the kind of people who were led by Roosevelt to implement the New Deal in the 1930s and their degree of openness to collectivism is amazing. There can be no doubt that many of them would have gladly turned America into a socialist state if they had had the power to do so. For them, sixteen men in Moscow making economic decisions for 146 million others was not totalitarianism, but efficiency.

2. About this time, Aldous Huxley was writing his dystopian novel, Brave New World, which would be published in Great Britain in 1932. What aroused Chase's breathless admiration represented a nightmare of soft totalitarianism to Huxley.

3. The common factor between the New Dealers and the Soviet Communists was not government ownership of the means of production, but something more fundamental though it is not usually considered to be the difference between socialism and capitalism. What united them was a faith in the ability of bureaucratic experts under the control and direction of a highly centralized and powerful head to do what the market and individuals could not do. They were, above all, modern in their worship of bigness, technocracy and centralization. The fact that after 75 years the USSR collapsed under its own weight as a massive economic failure is an damning indictment of this modernist faith, not just Communism.

The application of these lessons to the current political situation in the United States is obvious.