The Roman Philosopher Lucius Anneaus Seneca (4 BCE-65 CE) was perhaps the first to note the universal trend that growth is slow but ruin is rapid. I call this tendency the "Seneca Effect."
Showing posts with label Western Collapse. Show all posts
Showing posts with label Western Collapse. Show all posts

Monday, December 13, 2021

Lessons from the USSR Crisis - What brought down the second largest empire of modern times?


The collapse of the Soviet Union, in 1991, was seen in the West as a demonstration of the superiority of the Western economical and political system. In reality, the story was much more complex and the Soviet Union fell because of the same reasons which may cause the impending collapse of the West. This point was made forcefully by Dmitry Orlov, but he is not the only one who noted the similarities of the two systems. Here, a guest post by the Russian Scientist Svatoslav Zabelin. It is a revised and updated version of a piece that appeared in 1998. Zabelin is also a contributor of the book on the 50th anniversary of the publication of the 1972 book "The Limits to Growth," expected to appear on the market in March 2022.  

Lessons from the USSR Crisis

From “A time to seek, and a time to lose.” 1998.

 by Sviatoslav Zabelin


...there are no limits to development, but there are limits to growth.

Meadows DH, Meadows DL, Randers Y. (Beyond limits to growth. Moscow, 1994)

From the book by Donella H. Meadows et al. The Limits to Growth. New York. Universe Books. 1972.

"The world community is developing without any major political changes for as long as possible. The number of people and industrial production increases as long as the state of the environment and natural resources does not limit the ability of the industrial capital sector to provide investment. Industrial capital begins to depreciate faster than new investment flows. As its reserves decrease, food production and health care also fall, leading to a reduction in life expectancy and an increase in mortality."

1. The collapse of the USSR

The ecological and socio-economic macro-crises we are seeing are in one way or another a kind of crisis of the limits of growth. They bring a qualitative change that occurs sooner or later with any system where there is a quantitative growth of any parameter. These crises have not yet happened, in the West, and therefore for too many people remain an unknown and unimaginable danger, a speculative abstraction. 

However, how THIS happens, how IT can be, can already be studied on a concrete and recent example. The events of the 1980s and 1990s which happened to the USSR, its economy, population, and power system, are the result of the sum of several crises of growth limits in a highly isolated system from the world economy. The fact that the crisis was relatively soft can be explained considering that, with the end of the cold war, the USSR had become part of the world economic system that took care of at least some of the problems. Nobody really wanted the former USSR states to collapse completely, if nothing else because Russia was considered "the world's service station." But, if the global economic system starts collapsing, help from the Moon or Mars will not come.

First, it was the crisis of the limits to growth of the price that society can pay for the extraction of natural resources, as described as early as 1972 by the World3 model of a team of authors who prepared the report "Limits to growth" for the club of Rome.

"When the deposits begin to run out," it becomes necessary to use ever-increasing amounts of capital in resource industries, which reduces the share going to investment and growth in other industries. Finally, investment becomes so small that it can no longer cover even the depreciation of capital, and there is a crisis of the industrial production base." D. H. Meadows, D. L. Meadows, Y. Randers, V. V. Behrens III. The limits to growth.

The industrial system of the USSR "broke down" on the production of oil in the Siberian fields -- a vital export commodity on which the country survived during the era of stagnation, in the 1970s.  Then, production and proven oil reserves began to decline catastrophically, and attempts to maintain the achieved level found the USSR relying on outdated and worn-out technologies. In some industries, 70-80%, the main production tools were estimated as obsolete. 

The country's industry could not bear the memorable "acceleration" on such "horses", and in a few years Russia turned from a self-sufficient space power into a country where raw materials are exported abroad on an ever-increasing scale, and its processed products were imported from abroad. The result was that the production of consumer goods was replaced by imports, and the facilities for internal production were irretrievably lost. 

Simply put, the USSR paid for the growth of natural resource extraction by destroying the system of converting these natural resources into goods that people need, and even more simply, it paid for the destruction of most of the production itself, which resulted in unemployment, lack of funds for education, health, science, non - payment of pensions, and many other troubles that are common for all post-Soviet countries. And it is clear: where will the funds for education come from if the country's industry no longer produces something that can be sold?

Second, it was a crisis of limits to the growth of the money supply. In the U.S.S.R., the money printing press worked non-stop to pay for a huge mass of dead labor - to produce a gigantic quantity of weapons that were not sold to anyone, to dig canals that never paid off, to build reservoirs on the site of the most fertile pastures and arable land, and so on.

By the end of 1991, it turned out that they had printed several thousand times more than they "needed". And in 1992, when this money bubble burst, the country found itself without money, and every citizen had lost all the savings accumulated. In other words, the consequence of the industrial crisis left the country and its population literally left with empty pockets, without money to start a new life with.

Third, it was a crisis of the limits to growth, pollution of the environment in relation to the possibilities of human populations to tolerate it resulting in a catastrophic decline in the immune status of the population, a catastrophic increase in morbidity of newborn generations, lower life expectancy, increase in mortality and reduction in the number of Russians. The crisis caused by the placement of industrial enterprises in cities, deepened by the Chernobyl disaster, reinforced by the large-scale and stupid reliance on chemicals in agriculture and many other decisions of the Soviet government.

Fourth, it was a crisis of the limits of the increasing complexity of the managed system in relation to the control system.

The Soviet system of management was an extreme case of the 20th-century expression of a strictly hierarchical system of management of society as a whole, a management system where, in the end, the final decision depends on the ability of one person to choose the best option from the available or proposed set of options.

When it comes to accounting for the interests or managing the behavior of a hundred or a thousand subjects (people, businesses, battalions), this is still possible (provided that the decision-maker is smart and experienced, and his assistants, offering options, at least, do not seek personal gain). When subjects are numbered in the tens and hundreds of thousands, millions, and so on, no brain is able to make an objectively balanced decision. He can guess it, but the more complex the situation, the less likely it is to be guessed. As a result, in search of stability or in the name of survival of its constituent elements, the system under the leader begins to split into simpler self-managed subsystems.<>

One of the results of the crisis of the management system was the collapse of the USSR into its constituent parts, which at the beginning of the perestroika were objectively almost independent subjects with their own interests, which they defended in the fight against other similar subjects. First, there were the former republics of the USSR, whose transformation into sovereign countries was secured by the Bialowieza agreements of December 1991. Second, agencies that began to form industrial conglomerates, such as Gazprom, RAO, "EU Russia", etc. Another result of the crisis of the management system was a sharp reduction in the number of functions performed by the state, in the form of its taking care of most of the normal functions of social security of the population (education, health, etc.)...), as well as ensuring law and order.

With the country's bankruptcy, and then the persistent budget deficit, this process of simplification of state power was essentially irreversible and supported by the law of positive feedback:

  • lower budget - less ability to take care of the population, less ability to ensure order;
  • less care and order - less interest in paying taxes; worse with tax collection - less budget...

Of course, I do not pretend that the list of crises of the limits of growth in the USSR that I have given is exhaustive. But these crises are real and, from my point of view, obvious and understandable. All the causes of these crises, which led to the collapse of the "USSR" system, continue to operate in the global system, of which the fragments of the socialist camp have become an organic part.

2. The Future

The production of all types of natural resources, including energy carriers, continues to grow. And the growth of financial resources continues to outstrip the growth of production, determined by speculative play on the dynamics of the difference in the exchange rates of the world's leading currencies, the distribution of loans that have no prospects of repayment, etc.

"In the mid-and late '80s, global markets were gripped by financial fever. Financial and currency speculation carried out with the help of computer communication systems, turned into a game completely disconnected from the real economic reality." King A., Schneider B. The First global revolution. Report of the club of Rome. Moscow, 1991.

Environmental pollution from human waste continues to grow.

"Over the past 20 years, the number of natural disasters, primarily hurricane-force winds, and floods, has increased four times, the amount of material damage caused by them - eight times, and the losses of insurance companies associated with these disasters - 15 times, and this is a direct consequence of environmentally poorly controlled human economic activity," - said in one of the reports of specialists of "Munich Re", a German insurance company." Financial News. July 21, 1998

The complexity of the world economic system as such continues to grow in relation to the structures created to manage it by the UN, the World Bank, the World Trade Organization, etc. and sooner rather than later, all these crises will happen to humanity as "unexpectedly" as the ones described above happened to the population of the USSR. The World3 model predicts a resource crisis for approximately 2010-2015.

The self-destruction of the Soviet system was mainly reflected in the loss of the integrity and coherence of the system, which was replaced by the sum of economic, social, etc., subjects, who lost almost the entire set of familiar connections as they were known before.

Citizens have lost their former support and protection of the state - from crime, from diseases, from the elements, as well as pension protection, payment for public service, The same time, citizens have lost their usual connections with friends and relatives scattered throughout the crisis territory.

State authorities at all levels have lost the support of the population, lost the usual sources of income (both taxes from the bottom and subsidies from the top), and the usual levers of control.

Economic entities have lost established ties with their" neighbors " along the technological chain, with familiar consumers, sales markets, sources of investment, lost government orders, and lost ground in the form of a population able to buy.

The social consequences of an unexpected fall into crisis are most clearly shown in the example of Russia.

Escalating violence at all levels - from domestic to state, violence becomes the main lever of control: the power of law is everywhere replaced by the power of force, including the power of money, which is absent from the majority of the population.

The loss of science is not so much as a complex of knowledge, but primarily as a tool in demand by society for organizing life, interacting with the environment, etc., including in the field of health and education. Discontinuation of high-tech production, discontinuation of production of complex equipment.

Disruption of communications, primarily systems for the physical movement of raw materials, goods, and people. The safety of electronic communications turned out to depend on the production or purchase of computer equipment abroad that ensures their functioning, so it is also questionable.

Mass unemployment, the transition to pre-industrial forms of self-sufficiency in food and basic necessities, and life support in general. A sharp drop in living standards.

The increase in morbidity and mortality is most noticeable among young and middle-aged people: from stress, accidents, armed conflicts, and epidemics.

Of course, we would like to see developed countries, whose behavior largely determines the timing and scale of upcoming global crises, try this scenario on themselves. And if they don't want to do this, they would draw conclusions. But this is unlikely.

"In other words, a dispassionate person might have noticed that in a certain sense the nineteenth century in the West is still going on. In Russia, it ended; and if I say that it ended in tragedy, it is primarily because of the number of human victims that the social and chronological change brought about. In a real tragedy, it is not the hero who dies - it is the chorus that dies." Joseph Brodsky. Nobel lecture. 1987.

3. Lessons from the Soviet Collapse

From my point of view, it is important for residents of post-Soviet States to understand the following.

First, the "USSR" system did not lag behind, but overtook the so-called civilized world, becoming the first industrially developed country to survive the crisis of growth limits predicted by the experts of the club of Rome in all its various aspects.

Therefore, it is initially pointless to look for a way out of the crisis in the past or in the "West", since this has not happened before with industrialized countries. And the countries that reached the limits of the growth of natural resource exploitation at earlier stages of development simply disappeared from the face of the Earth long ago, leaving descendants only picturesque ruins.

That is why the sincere advice and recipes of leading Western economists, to their and our surprise, did not work for the former USSR republic, even if you cry, even if you laugh. And the economic revival is being pushed back and back to an uncertain day after tomorrow.

"Blind copying by developing countries of the path that the Western economy has taken is not a viable strategy, both from the point of view of ecology and for other reasons." King A., Schneider B. The First global revolution. Report of the club of Rome. Moscow, 1991.

Secondly, all the factors and causes that led to the crisis of the USSR are present and active in the global economic system. The crisis of the USSR is misunderstood as the defeat of one of the management systems (socialism) in competition with another management system (capitalism), and not as the defeat of the way nature is managed (including the use of human resources) inherent in our civilization.

Therefore, the global systemic crisis of growth limits should be considered an inevitable event in the near future, which should be prepared for in order to minimize suffering and losses. There is no reason to expect universal economic prosperity in the twenty-FIRST century. This century will be no less difficult than the twentieth. And it depends only on us how difficult it is.

Third, the population of post-Soviet States objectively finds itself in a winning situation, which it may or may not take advantage of.

In fact, due to external investment and foreign trade in raw materials, the decline in living standards was not so terrible. And at the stage of pre-crisis growth of the global economy, the standard of living in post-Soviet countries will grow or stabilize.

The relatively high average intellectual level of the population in principle allows you to understand what happened and draw constructive conclusions from it, that is, to learn from your own experience, which is incomparably easier than from someone else's.

External and internal resources, if desired, can be used to create infrastructure and production facilities that allow us to meet the global crisis more prepared (including significantly more prepared) than our own domestic one.

Fourth, in our experience, there are many forces for which the predicted development of events in the crisis scenario is objectively acceptable and even favorable.

These are almost all structures of organized crime. Perhaps with the exception of the drug mafia, whose profits are directly proportional to the strictness of prohibitions on the production and consumption of drugs.

These are manufacturers of low-tech battlefield weapons, the demand for which will grow.

These are any organized structures and groups focused on establishing authoritarian control over the population, including some associations that call themselves "green".

This also needs to be remembered by ourselves and reminded by others.

Fifth, looking at fifteen to twenty past years of crisis, we have every reason to say that the next wave of the crisis can be overcome if most of the population will be aware of the reasons for the crisis. If socially active citizens will understand that given the past you can come to a crisis armed with new connections, new relations, such that will help to overcome the crisis, preserving the best of our civilization.

You don't need to work miracles to do this. The elements of the constructor from which a new civilization is being built are scattered on the ground: you only have to bend down to pick them up, you only have to unite, reach out to each other to put these elements together.

If everyone adapts, we may not notice how the waves of history will carry away the mistakes and errors, the dirt and pride of our world, as one morning we will find ourselves on the other side.