Economic Theory

“But that wasn’t REAL socialism!” (Part 1: the USSR)

Between 3 – 8 July 2017, the Institute of Economic Affairs and the Adam Smith Institute jointly held Freedom Week, a series of seminars aimed at students with an interest in classical liberalism, at St Catharine’s College, Cambridge. The IEA’s Dr Kristian Niemietz gave a talk on the ongoing appeal of socialism. The article below is based on his presentation.


Socialism is a lot like the bad guy in a low-budget horror movie, who, especially towards the end of the movie, just stubbornly refuses to die. He gets shot, he gets stabbed, he gets thrown out of a window, he gets run over by a car – but every time you think he could not possibly have survived this, he gets up again. And is as lethal as ever.

Socialism is like that. It used to be a common assumption that the history of socialism essentially ended with the fall of the Berlin Wall, that no political idea could possibly survive such a crushing defeat. Far from it: in 1998, Venezuela elected a socialist president, giving socialism yet another try, and Western intellectuals went crazy about it. Now that experiment is collapsing, too. One final We-told-you-so-you-fools, you would think. Again: far from it.

Just the other week, a poll came out, asking people whether they thought that ‘a genuinely socialist government’ would make the UK ‘a better place to live’ or ‘a worse place to live’. 43% chose the former, a solid relative majority, given that 21% replied ‘not sure’ or ‘neither’. A year before, a relative majority said they had ‘a favourable view’ of socialism, and ‘an unfavourable view’ of capitalism. Socialism is extremely popular in Britain.

How can an ideology that has failed so badly every single time still be so popular?

Part of the reason has to be that socialists have been very good at distancing themselves from real-world examples of their ideas in action. Mention the Soviet Union, or Mao’s China, or any other historical or contemporary example of socialism in the presence of a socialist, and they will invariably roll their eyes, and say “Oh, come on. Now you’re just being silly.”

Noam Chomsky once described the idea “that the society created by Lenin and Trotsky and moulded further by Stalin […] has some relation to socialism” as a “fantasy”. Owen Jones recently wrote that “A socialist society […] doesn’t exist yet, but one day it must.” Stephen Resnick, a professor of – oddly enough – economics, said: “We can’t concede the end of communism. Communism hasn’t been tried on a society-wide basis.”

The claim here is that previous so-called examples of socialism had little, or nothing, to do with socialism. They were just dictatorships, which used the label ‘socialism’ to cover their lust for power. They were, at best, a perverted version of socialism, which tells us nothing about the real thing.

This claim would be slightly more credible if it had been made more consistently over time. But it hasn’t. Quite the opposite. What happens is this: Socialist experiments have often gone through brief honeymoon periods, during which they seemed to be doing rather well, or at least in some areas. During those periods, their international standing is relatively high, and even critics concede, grudgingly, that they must be doing something right.

During those periods, socialists never claim that the experiment in question does not represent ‘real’ socialism. During those periods, they want to take the credit for the experiment’s achievements. They want to claim it as ‘theirs’. It is only when these experiments start to fall apart, or rather, when their failures can no longer be denied, and when their international standing collapses, that socialists disown them, and retroactively so.

I’ll go through a few historical examples.

In the 1930s, the Soviet Union went through a period of rapid industrialisation, and rose to the status of a global superpower. Even critics of socialism conceded that the Soviet Union was becoming a force to be reckoned with.

During the ‘30s, the USSR was widely admired by Western intellectuals. Hundreds of academics, journalists, artists etc travelled there and came back full of enthusiasm, convinced that they had seen the future. For example, Joseph Freeman, an American writer, said after his pilgrimage:

“[F]or the first time I saw the greatest of human dreams assuming the shape of reality. Men, women and children were uniting their efforts into a gigantic stream of energy directed toward […] creating what was healthy and good for all”.

Alexander Wicksteed, an English writer, said

“[F]or the first time in history the common man feels that the country belongs to him and not the privileged class that are his masters. […] [T]he Marxian ideal of a classless society […] has been realized”.

This is a very typical statement from that period. A common theme among these pilgrims was that even though the Soviet Union may look like a dictatorship from the outside, behind the scenes, it was actually a grassroots democracy, run by the workers, for the workers. Corliss Lamont, an American philosopher, visited a building site, and reported:

“Those workers up there, carelessly dressed, coatless and collarless […] those workers, and men like them are running the new Russia”.

And Sidney Webb claimed that the Soviet system allowed

“…the widest possible participation of the whole adult population in the public business, which includes the planned control of the whole social environment […] Power does actually emanate from the people, as Lenin insisted”.

Webb was particularly adamant to refute the idea that Stalin was a dictator. He wrote that Stalin

“…is merely the General Secretary of the Communist party […] His orders are not law […] They are not enforced by the police or the law courts. […] Nor are the decisions of “Comrade Stalin” his own autocratic commands. He is not that sort of man”.

Some of the pilgrims even waxed lyrical about the Gulags and Soviet prisons. Mary Callcott Stevenson, an American author, said that the inmates she saw were

“…talking and laughing as they worked, evidently enjoying themselves. This was the first glimpse of the informal atmosphere that prevailed throughout […] It was difficult to believe that this was indeed a prison”.

And George Bernard Shaw, the Irish-British playwright, said that the main problems the Gulags had was that their inmates refused to leave after their release. Because it was such fun to be there.

This is, of course, a selection of quotes. Not all Stalin admirers were quite so starry-eyed. Others did acknowledge some of the regime’s atrocities, but argued that, on balance, it was a price worth paying. But the point remains that the Soviet Union was widely admired by Western intellectuals throughout the 1930s and beyond. The idea that Soviet socialism was not ‘real’ socialism is a post-hoc fabrication. In Stalin’s days, nobody would have made such a claim.

Ironically, this enthusiasm for Soviet socialism only really ended after Stalin’s death, when the worst excesses were over. By the 1950s, former Stalin enthusiasts had fallen silent. From then on, Soviet socialism was increasingly presented as a perverted version of socialism.

But it did not take long until Western intellectuals discovered a new utopia: Mao’s China.


Continue to Part 2


Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

13 thoughts on ““But that wasn’t REAL socialism!” (Part 1: the USSR)”

  1. Posted 24/07/2017 at 01:04 | Permalink

    My god, what a shitshow. Anarchists like Bakunin were denouncing statist methods decades before the revolution in Russia. Left communists like Bordiga were analysing the failure of revolution in the early 1920s. Marx wrote multiple times that state planning is not a sufficient condition for socialism. The Soviet Union preserved commodity exchange, systematic dispossession (i.e. private property, with the state as owner), profit, etc. and has been criticised on this basis by socialists throughout its existence. The idea that this is just some post-hoc rationalisation of Soviet-style state capitalism’s failures is ridiculous and demonstrates a poor understanding of socialist theory and its history. To claim that ‘In Stalin’s days, nobody would have made such a claim’ is absurd.

    But regardless, even ignoring these glaring omissions, the evidence presented is pretty weak. The article says: ‘A common theme among these pilgrims was that even though the Soviet Union may look like a dictatorship from the outside, behind the scenes, it was actually a grassroots democracy, run by the workers, for the workers’. So people were holding up the Soviet Union as an example of socialism because they thought it had these features. But they were mistaken. It didn’t have these features… so by their definition of socialism, it has not yet existed, right? Did you really think this one through before vomiting it onto the page, Mr Niemietz?

  2. Posted 25/07/2017 at 05:07 | Permalink

    The stringing together of pieces of information to form a historical narrative is not a good way to criticize philosophies or social systems. Articles like is are at least part of why the “that wasn’t real socialism” argument sticks around. You will inevitably find people reading these and then thinking this is the best critique of socialism their opponents can muster, because that’s the interpretation that is most ideologically convenient to them.

    This is particularly frustrating because both “capitalism” and “socialism,” and probably even “market economy,” “command economy,” and “mixed economy” have meant a lot of different things to a lot of different people over time. That is when they have a coherent idea of those terms to begin with.

    For example, I once met a guy that seriously told me the convenience store we were in selling food for profit was an example of socialism, and he went on to say that socialism was a good thing and that most people just aren’t ready for it.

    That the article is an ineffective critique of socialism is not to say that previous socialist systems aren’t necessarily representative of socialism in practice or that this narrative isn’t an important part of what happened. But if the past is an example of the only viable forms of socialism we have to define other forms of socialism, presumably the “real” ideologically pure socialism, and then point out what prevents those other forms of socialism from being feasible or efficient, or provide a generalizable theory on why they would inevitably be corrupted into the forms previously observed which ideally could be tested against the historical evidence we have.

    Obvious distinctions worth considering would be: socialism with a dictatorship, democratic socialism, and anarchist socialism. At least from the standpoint of true believers in socialism those specific difference in the type of government probably make a world of difference. A public economist or political scientist might also say that we need to consider democratic socialism differently depending on the voting rules or other institutional factors. Another may be “market socialism,” then of course you have quasi-socialist left-anarchist systems such as “mutualism” or “anarcho-syndicalism.” Others use different terms to imply different scales of operation such as “communitarianism” or “communalism” which people tend to say when they have a centrally planned system at the local level in mind, think a socialist city-state. Those distinctions would be important if say, the problems or benefits of a socialist system bore any consistent relationship with how large the society in question was. This could be, for example, through higher negotiating and coordination costs as the number of people to be included in the central plan increases. It may also be that smaller scale socialism is better because that still allows room for some of (but probably not all) the gains from trade present in a competitive market. Assuming of course that the benefits of trade between such quasi-socialist tribes exceed the expected costs of conflict between them.

    Given this wide variety of terms and concepts there should probably be some attempt to formulate the broad rules upon which a system in the egalitarian spirit of socialism operates, if there is a consistent set of rules to generalize, and then consider their implications in the face of real world constraints which theory and demagoguery so often assume away.

    One problem that may be present in all of them is the tragedy of the commons, where the action of rationally self-interested individuals over-use a common resource because they don’t internalize the total costs of their use of it. Similarly we have to consider problems of corruption and rent seeking that may arise when you have a central collectivized decision making process. There’s plenty of opportunity for those implementing and enforcing those decisions to turn the situation to their advantage or for others to try and influence things through backroom deals. But of course there’d have to be more detailed discussion regarding the scope and importance of expected corruption in different systems including a variety of market systems which are also susceptible to rent seeking. For my part I’d have to take Gary Becker’s position that having a greater control of resources in government, or whatever you’d want to call the collective decision making apparatus that allows for Marx’s concept of “social” ownership to exist, would lead to corruption being a bigger problem in socialist and quasi-socialist systems.

    We also have to look at the assumptions which underly socialist conclusions both about capitalism and socialism. A big one brought up in economic sociology is the problem of embededness, the idea that people may be too submersed in social norms to act autonomously, thus implying that standard conclusions from theories using homo economicus are wholly irrelevant. In my experience this tends to be used by socialists to suggest that capitalism’s existence is to blame for people’s selfishness, it has socialized them into that mode of behavior, and that there exist some other system in which selfishness could be done away with, which is in turn why someone’s particular flavor of “real” socialism is in their mind feasible. It is surprisingly rarely used to say that real people are something between homo economicus and someone just mindlessly doing what is normal all the time, like a boundedly rational person who forms habits to simplify everyday life. No the social system has to be an all encompassing mind control that determines everything you do whenever rational choice models are criticized. Generally to answer whether selfishness can be entirely socialized out of people and the extent to which humans are rational vs. socialized actors would require a deeper knowledge of human behavior than I have, probably drawing from neurology, behavioral genetics, and cognitive and social psychology, and other fields. Of course even if it were theoretically possible to create a society of perfectly socialist citizens which would allow for the operation of a socialist system we would need to consider the costs and benefits of doing it as a practical matter.

    The number of variables in play unfortunately for all these different concepts vague or clear, makes an a priori determination of what works and what doesn’t very difficult if we insist on talking about political philosophy exclusively at the level of “isms” like the above discussion. That’s probably why most political discussion and campaigning is done around specific policies. Talk of specific policies unfortunately can’t do much to sway discussion of isms because systemic differences in social systems and the constraints they face may alter their ability to a carry out “capitalist” or “socialist” policies.

    A term probably worth attacking the use of outright is “Scandinavian socialism” because people like to group those countries together, treat their policies as homogeneous when they aren’t, and then act as if their success is sufficient to say that “socialism” works anywhere despite the fact that different countries may face different constraints and have different preferences. A policy needs to have a certain “cultural fit” and as I’ve been told, they may only be able to afford high levels of government service because they have lots of oil and are very small. So then how can that be generalized to countries which are large and not endowed with the same resources?

    To me it seems that term is uniquely effective at dumbing down the debate and encouraging intellectual laziness on the part of egalitarians and socialism sympathizers.

    For the record I am a technocratic neoliberal utilitarian capitalist who makes an effort to moderate themselves towards the “center” usually as it is defined in US politics generally to counteract my own right-libertarian tendencies which make government intervention a bitter pill to swallow for me. I do believe there are welfare gains to be made by reducing income inequality, at least partially through direct redistribution through taxation and transfer payments, even though I reject the importance of class conflict relative to other forces in determining the impact the income distribution has on welfare. Hopefully that is enough description to give you an idea of which isms to apply and how angry you should be about the above passage.

  3. Posted 25/07/2017 at 11:12 | Permalink

    Oh Err!

    I look forward to Part 2 in the hope that it will provide a balancing view acknowledging that the cry

    ” . . . . has never been properly tried . . . ”

    is often heard from other parts of the political spectrum.

    I have often challenged my socialist friends with providing a set of examples where socialism has actually worked. Perhaps Innsurrexit can oblige, along the way he will clearly be able also to provide a list of the measures of success. (I, too, can be considered as someone who has a poor understanding of socialist theory ).

    It is my understanding that capitalism / neoliberalism / free markets etc. quite often makes mistakes but the mistakes are swiftly eradicated by the process known as “creative destruction” which also sometimes means that (Caution: mixed metaphor ahead!) babies are thrown out with the bathwater. Political systems based upon Utopian ideals tend to be quite resistant to change and therefore generally decline and rot along the way causing great misery.

    In essence the question is not “What is the best?” but rather “Which system has the least worst outcomes?”
    (Whilst, of course, struggling to “square the circle” that is avoiding the tyranny of democracy)

    Plymouth Sid

  4. Posted 04/08/2017 at 09:40 | Permalink

    I have been pondering on is if an expectation of altruistic behaviour (ie working towards a greater public good rather than individual benefit) the underlying assumption of Marxist economics?

    A discussion paper by Jonathan F. Schulz on The Churches’ Bans on Consanguineous Marriages, Kin-networks and Democracy notes:
    “The well-established and empirically supported biological theory of kin-selection or inclusive fitness (Hamilton, 1964) predicts that altruistic actions are more frequently directed towards genetically related individuals”.

    If so, is Marxist economics constructed on an unrealistic expectation of human behaviour? There will be exceptions but by by an large I believe human beings will only put society ahead of self within immediate family/social circles.

  5. Posted 23/01/2019 at 15:43 | Permalink

    can’t say if you’re a reactionary bootlicker or a so-called “ultra-leftist”, but goes to show both categories work as tools of the bourgeoisie.

  6. Posted 24/02/2020 at 05:04 | Permalink

    Interesting how violent the language is from those who disagree.

    The abandonment of Stalinism in the wake of his death has many analogues within Soviet society, such as the adoption (and then abandonment) of various “scientific” principles that had little to do with science and everything to do with propaganda value. As has been said, names fall out of favor, and when that happen, they fall very far.

    Those who love socialism appear to be blinded by assumptions (quite aside from their own astounding economic and societal ignorance): that a policy that has good intentions must have good results, and that a policy’s *stated* intentions are its *actual* ones. They further assume that we can design society, that we have arbitrary control over our social environment, and that human nature is “infinitely malleable,” all premises shown to be badly in error.

    Collectivism was a fairly natural way for people living in a foraging society to behave, given the close relationship between all members of the group. Kin selection favors cosanguinal relations. But scale up the numbers, and the diversity, to the size of a nation-state, and kin selection ceases to be effective, and in-group identification ceases to suffice at promoting altruism. Collectivism was selected for extinction by the onset of civilization, but these guys are still clinging to a system thousands of years out of date.

    Complex-adaptive systems cannot be designed. They cannot be controlled. They evolve over time from simpler systems and maintain their own internal status along rule sets that cannot be artificially imposed on them. We are not the authors of society, nor of our economic system. We can either adapt to them, or fail to do so, and then gnash our teeth at the unfairness of it all and call for violent revolution.

    The world is a far better place without Marx, without Lenin, without Stalin, et al. It will be a better place still when their bootlickers have all died out.

  7. Posted 20/04/2020 at 23:41 | Permalink

    I can’t help but notice how this article fails at pointing at any specific policy, definition, or idea. It is devoid of any argument. What exactly does this man think socialism’s inherent problems are? Very curious. Not that anything is being presented in full context or without dishonesty here, either. What a display of complete ignorance.
    To the bootlickers above who like to defend capitalism so much, they tend to forget that in a socialist society, there are no wages or living paycheck to paycheck-every individual’s needs are covered first, and in such a scenario, there is no reason for the individual not to give back some of their time to the community (LESS than in capitalism, because work is distributed equally). Humans are not so lazy that we wouldn’t give back a small portion of our time in exchange for a life of commodity. Call it altruism if you want, it is clearly a better basis for a society than the exploitation of capitalism.

  8. Posted 19/05/2020 at 10:35 | Permalink

    this gave me brainworms

  9. Posted 28/06/2020 at 17:07 | Permalink

    I think you’ll find that Trotsky was fairly insistent at the time that the USSR under Stalin wasn’t ‘real socialism’. That opinion would also have been held by his many thousands of followers around the world as well as by the former “Left Opposition” who felt that even Lenin had got it wrong. And many many others. If this is the level of historical ignorance the “IEA” is prepared to display on its website, it plainly isn’t a serious operation.

    The question of whether an economic system based on need not profit can ever be made to work is another question, but with this level of intellect on display I doubt we’re going to get much insight here.

  10. Posted 28/01/2021 at 00:21 | Permalink

    To answer to some of the more belligerent and supposedly scholarly responses against the empirically and irrefutable failure of socialism that prefer to move towards the theory which in its pure state is apparently unquestionable, let’s talk while that theory is flawed and unscientific. Because is an Utopian theory that relies in two principles: a perfect human being free of its nature, its inherent drivers, and the system would perform within the establish parameters without external or internal deviations. The two are false and the entire logic of the theory then collapses. Human nature triggers several reactions under an egalitarian socialism system, nonetheless, the theory of the minimal effort. Productivity in every social collective that does not reward unequally higher performers ends in reductions of output. Because socialism is centrally planned and more rigid, lacks the ability to adapt to ever changing wants and needs and lack the feedback element that makes a free-market economy great. Finally, empirical evidence along non-related and independent societies offer a good scientific evidence. Every single time the system has been set in place has ended in totalitarian regimes, because as Hayek correctly pointed, socialism can’t function in a democratic state.

  11. Posted 10/03/2021 at 22:45 | Permalink
    25 members of the Central Committee of the Communist Party in 1917.
    Eight were shot, six died of natural causes, one strangled,one assassinated, a few committed suicide, some died in prison or in the Civil War. Stalin survived.

    For me the likes of Stalin, Mao, Kim dynasty and Castro have given Socialism a bad name. You have to remember that for the working class ‘progress’ is quite a modern idea. They’ll get there eventually as the old capitalist empires collapse and can no longer drop bombs or throw millions of dollars in trying to undermine their advance.

  12. Posted 23/04/2021 at 02:42 | Permalink

    “The idea that Soviet socialism was not ‘real’ socialism is a post-hoc fabrication. In Stalin’s days, nobody would have made such a claim.”

    That is not true. In fact, there were people criticizing Soviet union’s system already in the first years after the Bolshevik revolution… as far as I know even Bertrand Russell, as early as around 1920, during Lenin’s era.

    I see what you are trying to say with this article though, and in certain aspects one could agree or sympathize with its message, but really, some arguments are very questionable

  13. Posted 30/06/2021 at 11:01 | Permalink

    You wrote an entire article criticizing an ideology that never existed. Where in the world has there EVER been Social ownership and management of Capital, NOT state ownership or private ownership as the primary economic driver?

Leave a Reply

Your email address will not be published. Required fields are marked *