From The National Review
By Shawn Regan
And markets are much better
As the Soviet Union began to collapse, the socialist economist Robert Heilbroner admitted that central planning had failed economically but said we needed “to rethink the meaning of socialism.” Now it was the thing that had to emerge if humanity was to cope with “the one transcendent challenge that faces it within a thinkable timespan.” Heilbroner considered this one thing to be “the ecological burden that economic growth is placing on the environment.” Markets may be better at allocating resources, Heilbroner thought, but only socialism could avoid ecological disaster.
Not long after, however, it became clear that the socialist economies of Eastern Europe and the former Soviet Union were not just economic failures; they were also environmental catastrophes. Economist Jeffrey Sachs noted at the time that the socialist nations had “some of the worst environmental problems in the entire globe.” Air and water pollution abounded. By one estimate, in the late 1980s, particulate air pollution was 13 times higher per unit of GDP in Central and Eastern Europe than in Western Europe. Levels of gaseous air pollution were twice as high as this. Wastewater pollution was three times higher.
And people’s health was suffering as a result. Respiratory illnesses from pollution were rampant. In East Germany, 60 percent of the population suffered from respiratory ailments. In Leningrad (now St. Petersburg), nearly half of all children had intestinal disorders caused by contaminated water. Children in Poland were found to have five times more lead in their blood than children in Western Europe. Conditions were so bad that, as Heilbroner acknowledged, the Soviet Union became the first industrialized country in history to experience a prolonged peacetime decline in average life expectancy.
As the Iron Curtain lifted, socialism’s dirty environmental secret was exposed: Eastern Europe and the Soviet Union were the most polluted and degraded places on earth. “When historians finally conduct an autopsy of the Soviet Union and Soviet Communism,” economist Murray Feshbach and journalist Alfred Friendly Jr. wrote in 1992, “they may reach the verdict of death by ecocide.”
Consider the destruction of the Aral Sea between Kazakhstan and Uzbekistan, which has been called “one of the planet’s worst environmental disasters.” Once the world’s fourth-largest inland body of water, it shrank to less than half its original size because of Soviet economic policies. Fixated on making the USSR self-sufficient in cotton production, central planners mandated industrial agriculture throughout the arid region. Massive water diversions for irrigation reduced the sea’s inflows to a trickle, causing the biggest manmade loss of water in history. Fishing villages became dry and landlocked. Some, such as the former port city of Muynak, now lie more than 75 miles from the sea.
The desiccation of the Aral Sea also caused severe health problems throughout the region. As the waters receded, the sea’s salty floor was exposed, along with pesticides that had accumulated from agricultural operations. All this was then carried by strong winds to nearby communities. Respiratory problems, throat cancer, and other illnesses became more common as the pollutants were deposited in the lungs of millions. The human and environmental consequences are still being felt. Today, infant-mortality rates in the Aral Sea region remain significantly higher than the national average in Uzbekistan, and children there experience similarly high rates of anemia, diarrheal diseases, and other illnesses caused by exposure to toxic contaminants.
How can this be? “Environmental deterioration was not supposed to occur under socialism,” Cuban-American researchers Sergio Díaz-Briquets and Jorge Pérez-López wrote in a detailed study of Cuba’s environmental legacy. “According to conventional Marxist-Leninist dogma, environmental deterioration was precipitated by the logic of capitalism and its relentless pursuit of profits.” Socialism, on the other hand, would avoid capitalism’s excesses. “Guided by ‘scientific’ principles, socialism’s goal was a classless and bountiful society,” they explained, “populated by men and women living in harmony with each other and the environment.”
But this was clearly not the case in the Soviet empire. Nor was it in Cuba, whose environmental record after decades of socialist control was described by Díaz-Briquets and Pérez-López as “far different from the utopian view.” The West, meanwhile, had not only the consumer goods that socialist societies lacked but also a cleaner environment.
One explanation for the disparity is that central planners, unlike markets, grossly misallocate resources, as a matter of routine. Energy prices, for example, were highly subsidized in the socialist economies of Eastern Europe and the Soviet Union. As a result, industrial production was far more energy-intensive throughout the socialist world than in Western European economies — five to ten times higher, according to one estimate — leading to more pollution. A 1992 World Bank study found that more than half of the air pollution in the former Soviet Union and in Eastern Europe could be attributed to subsidized energy pricing during this period.
A related problem was the fixation of socialist planners on heavy industry at the expense of the environment. “The singular dominant fact of the Soviet economic strategy,” Jeffrey Sachs has noted, “was the subordination of all human and economic goals to the development of heavy industry.” Industrial pollution from factories in Eastern Europe was so bad that Time described it as the region “where the sky stays dark.” Acid rain in Krakow severely damaged the city’s historic structures and buildings, some of which required renovations, and even corroded the faces of many centuries-old statues.
Of course, industry behind the Iron Curtain was anything but efficient, and central planning caused excessive use of natural resources. A 1991 study by Mikhail Bernstam found that market economies used about one-third as much energy and steel per unit of GDP as did socialist countries. Likewise, Polish economist Tomasz Zylicz found that the non-market economies of Central and Eastern Europe required two to three times more inputs to produce a given output than did Western European economies. (The former Soviet world, as well as China, also emitted several times more carbon per unit of GDP than the United States did — a trend that continues today.) Simply put, market economies make more with less and are therefore better for the environment.
Socialist planners, on the other hand, lack the knowledge necessary to rationally coordinate economic activity. Moreover, bureaucratic constraints make accurate price-setting impossible. In their 1989 book The Turning Point, Soviet economists Nikolai Shmelev and Vladimir Popov offered an illustrative example. To bolster the production of gloves, the Soviet government more than doubled the price it paid for moleskin. Warehouses soon filled with mole pelts, but glovemakers were unable to use them all, so many rotted. As the economists explained:
The Ministry of Light Industry has already requested Goskomtsen [the State Committee on Prices] twice to lower the purchasing prices, but “the question has not been decided” yet. And this is not surprising. Its members are too busy to decide. They have no time: besides setting prices on these pelts, they have to keep track of another 24 million prices. And how can they possibly know how much to lower the price today, so they won’t have to raise it tomorrow?
Therein lies a crucial flaw in socialist economic logic, and one that has real environmental consequences: Whereas a capitalist firm has ample incentive to act on such information to economize on the use of natural resources, socialist planners have no such motivation — Soviet bureaucracies, Shmelev and Popov noted, were “able only to correct the most obvious price disproportions several years after” they appeared — nor do they have the knowledge needed to accurately set millions of prices at once. And if there are no market prices to convey accurate information about the value of scarce natural resources, there is little chance of conserving them.