Life in Socialist Countries and the Fight against Inequality
By Max Lawson
My friend Olga Ghazaryan was born in 1962 in Yerevan, the capital of Armenia, a small mountainous country in the Caucasus, and that time one of the republics that made up the USSR. I have known Olga since around 2003, when we worked together on Oxfam governance programming in Armenia and Georgia. I visited Armenia with her several times which was a great privilege. She is an amazing woman from whom I have learned so much.
Olga is one of a number of friends and colleagues I have worked with over the years who grew up on the other side of the iron curtain, and she was immensely patient with me and my multiple questions about life in ‘former Soviet times’.
I have always been fascinated by the reality of life in the Soviet Union and Eastern Bloc, and at the same time appalled by the way the history of those times is written, with a bias that undermines any pretence at an objective assessment. It is also a bias and a revisionism that seems to get worse as time passes.
That was why I have always been keen to talk to people who grew up in that world, as that seems the only way to get anything like a balanced perspective.
The only leading mainstream economic thinker of whom I am aware that also helps in giving an objective assessment of the life and economy of these socialist countries is Branko Milanovic, who grew up in Yugoslavia.
In his wonderful book from some years back, ‘The Haves and the Have Nots’ he tries to answer the question as to whether socialist countries were more equal, and why. I was rereading this recently, and I was also meeting up with Olga in Oxford where she has lived for many years, so I thought I would ask her a few more specific questions and write it up to do my small bit to redress the balance.
Branko’s simple answer, looking at the data, is that socialist countries were significantly more equal. Not just more equal than they are today, but more equal than comparable countries in Western Europe at that time. He concludes that, on average, these countries were around 25% more equal than the likes of West Germany, France, or Denmark, and far more so than the United States. There was inequality of course, but significantly less.
This certainly accords with Olga’s memory: “Of course there was inequality Max, but not like in the West. I remember we had a relative, who was in charge of a factory. He was corrupt and had amassed some wealth; everyone knew he was rich. But despite this wealth, he lived in an apartment the same size as ours, he did not have any flashy things like cars or second homes; no one did. Everyone had more or less the same.”
Branko goes on to lay out some of the main ingredients that contributed to this greater equality. The first was the massive expropriation of wealth and land under the Bolsheviks, and its redistribution. This included the nationalisation of mineral wealth and its extraction too.
Olga’s family had first-hand experience of this, having had land taken from them: ‘‘We didn’t believe any of that Marxist stuff no! My adopted grandmother, who looked after my father and then me, she had had a lot of land taken from her family by the Bolsheviks. So did my father’s family, leaving them poor. We grew up hearing those stories, told to us secretly.’
Universal health and education, and guaranteed employment.
The second factor was the availability of work for all; everyone was guaranteed a job. Wages were low but employment was guaranteed. Thirdly, education was free and compulsory, and students were supported to go to university. Healthcare was also universal, public and free.
“We had amazing benefits from the state. First of all, everyone had a job. Everyone. We all had healthcare. Before the revolution the healthcare situation in Armenia was terrible. You could only get treatment if you were rich, and even then it was not great. The revolution changed all that.
‘We all got the same education, and the opportunity to go to university. The state paid you to go to university and every student received a stipend to study.”
Olga was particularly good at English and her membership of the English club at school led her to travel all over the Soviet Union to different competitions, which she remembers fondly:
“It was so exciting. I travelled to places like all the central Asian countries. Moscow was the best though, it was the coolest place and I had an aunt who lived there I could stay with. As long as you were within the Soviet Union you could travel anywhere.”
One really interesting additional impact of the universal nature of benefits, including housing and the very low wage differentials, was that there was relatively little economic benefit to being more educated. Those with a higher education enjoyed greater status but were not significantly wealthier, unlike in capitalist societies where higher levels of education are strongly correlated with higher earning.
Another area where the revolution and its aftermath were transformative was on the role that women played:
“Progress in gender equity was one of the biggest achievements of the Soviets with that introduction of progressive property rights, education of women, quotas in political offices etc. The laws were progressive but of course like elsewhere the patriarchy and everyday misogyny was still rife.”
“There was also free childcare available for women. Kids were sent to nurseries at a young age (and free of charge) so that women could work outside of the house.”
An incredible transformation in a generation.
Something else Olga speaks about, something that Branko does not so much in his analysis, is the speed of the transformation, especially for those parts of the Soviet Union, like Armenia, that were among the poorer regions at the time of the revolution:
‘‘Max as I always told you, I don’t know why people have written books about it. To make such a transformation in a generation - it was an amazing achievement. You had situations where parents were illiterate and their sons became university professors.”
So why don’t we hear more about this history, the positive impact it had on so many lives? For Olga this is clear:
“I can think of two reasons. One, there was high political price for ordinary people to pay for the social benefits. The lack of political freedom, the uniform nature of society that didn’t encourage creativity or dissent. And second, of course, the story doesn’t fit the narrative of the market orthodoxy.”
It is certainly the case that this incredible progress in the fight against inequality in such a short time is rather an inconvenient truth, given the dominant narrative that the Soviet Union was an aberration and a failure, best consigned to the ‘dustbin of history’ to use the famous phrase of Trotsky.
Is there a political or economic price that must be paid for greater equality?
But it is not clear to me that suppression of political freedoms was somehow the price that had to be paid for greater equality, although that is something that is often implied. As countries like Sweden have shown, such progressive policies are very possible whilst protecting cherished political freedoms too. The fact that socialist countries were so politically repressive is not the reason for – and nor does it detract from – the equally progressive nature of many of their economic and social policies in terms of people’s lives, and indeed freedoms, from ignorance, ill health, or destitution.
Branko’s analysis is different and based on economics. He thinks that instead there is a clear link between the high levels of equality under socialism and the economic failure of these societies. He feels that because the financial incentive to do better was removed, then productivity and innovation was much lower in these societies.
I am a huge admirer of Branko, but I do think that is very much an economists view of human motivation. The idea that people would simply choose not to learn or get educated because it would make no difference to their future earning capacity seems a rather negative interpretation of human nature. And we know from the work of Mariana Mazzucato that some of the most productive and most innovative ideas in our societies, like the technology behind the i-Phone or Google, came from the public not private sectors.
Even if we do assume that weaker safety nets, private rather than public services, and greater wage and wealth differentials in more capitalist countries drive greater innovation and growth (and that is indeed a very big assumption), we need to ask the mirror question: at what point is that greater innovation and productivity worth paying the price of far greater inequality, with all the poverty and insecurity that brings for ordinary people? Not to mention the abusive extraction and destruction of our planet?
And is the monetization of almost everything in our modern lives now a good thing, even if it is one route to innovation? I think of the appalling situation with COVID-19 vaccines as a classic example. Maybe it is just me, but when did scientists stop being public servants, committed to human progress, and start becoming billionaire entrepreneurs who lock their innovations behind obscenely lucrative private monopolies? Isn’t it better to have our best and brightest scientists incentivised by a desire to discover and to help all of humanity to progress rather than to become vaccine billionaires?
These are complex questions. But what is certain to me is that a failure to properly learn from the past, whether it is from more progressive moments in the history of western nations, or in this case from the incredible social achievements in socialist countries, makes our ability to fight inequality all the more difficult.
Featured Image: Zhitlukhin/TASS. Accessed on 07 February 2022 at https://www.rbth.com/history/328721-education-in-ussr-the-best
My friend, Olga
Symbol for the Soviet Socialist Republic of Armenia. TheSign 1998, CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0 via Wikimedia Commons
T. Ananiina/Sputnik. Accessed on 04 February 2022 at https://www.rbth.com/history/328493-why-was-soviet-medical-care-best
Mikhail Potyrnike/TASS. Accessed on 04 February 2022 at https://www.rbth.com/history/328721-education-in-ussr-the-best