Back in the early 1980s
Mikhail Gorbachev visited the United States, presumably to learn why
we seemed to be much more prosperous than his communist dictatorship.
If I remember correctly, he was shown through a few stores and was
'blown away' by the cornucopia of goods available to the US consumer.
He returned to the USSR with a determination to try to apply what he
had seen to improving the lot of the Russian people. The problem
was, he went away with the wrong impression.
Gorbachev mistakenly
believed that the success of the US and the rest of the West was due
to the fact that they were 'Democracies'. Apparently this was in
part due to an overwhelming majority of Westerners also believing the
same, so much so that leaders such as George W. Bush have tried to
export Democracy to the Third World, mostly with disastrous results.
Gorbachev returned to the USSR with the intent of moving toward a
Socialist Democracy. This had in part the positive result of the
collapse of the Communist Soviet Union, but did not lead to the
economic results he had hoped for.
What Gorbachev and the
others do not seem to appreciate is that it is Capitalism and the
Free Market (CFM) that is the secret behind the overflowing shelves
of the Walmarts and the like of the Western World. Exactly which
form of government is most compatible with CFM is certainly
debatable, and may yet to be determined, but Democracy has been shown
to be only MORE compatible with CFM than Communism, at least in the
short run. China's economic success as a result of embracing more
CFM in spite of retaining a totalitarian government illustrates my
point. However, the degree to which China's rulers interfere with
the Free Market may yet be its undoing.
The point to be made here
is that Democracy is not the source of wealth and prosperity, nor is
it even a guarantee of such that comes with CFM. In fact, pure
Democracy may tend to destroy CFM in that allowing universal suffrage
seems to engender anti-capitalist government. The envy of the lower
classes of those that succeed in CFM leads to legislation and
regulation that ultimately stifles economic activity. The egocentric
nature of the individual that, because of Adam Smith's "invisible
hand", produces the benefits of Free Markets is very detrimental
to the same when lumped together to produce governmental laws and
regulations. It is not unrelated that the West, as it has become
more democratic, has also become more socialistic.
Austrian economic theory
points out that economic control of production by a governmental body
is a guarantee of disaster because, as Ludwig Von Mises noted, it
cannot solve the problem of what he termed 'economic calculation';
i.e., it fails to properly ascertain what products to produce in what
quantities. In the extreme case of such control as was the case in
the Communist USSR, the result was disastrous. Unwanted goods piled
up while the populace stood in lines for bread.
It is very unfortunate
that, as the Western Democracies become more and more socialistic,
the economic failures are blamed on Capitalism and Free Markets.
This is the basic flaw with Democracy, in that when the mob is in
control they will never admit that the problems they create are their
own doing, and only total collapse will end the errors.
