The Bear’s Lair: Did the West lose the Cold War?

All of us who are old enough can remember where we were when it happened – the fantastic sight of demonstrators breaking down the Berlin Wall that had divided Germany and mankind for several decades, apparently marking the death-knell of the evil Communist tyranny. But a generation later, the question has to be asked: did the West actually win? Did the free market actually triumph over the miseries of central planning? Or was Communism simply transmogrified into a form that, promulgated through the universities and the media, is now dominant and repressive throughout the West?

Some definitions are in order here. Clement Attlee’s Labour government of 1945-51 was highly collectivist, but Socialist, not Communist. It did a great deal of economic damage and made use of property-restricting regulations such as exchange controls that had been mistakenly introduced during World War II and should have been removed immediately that war was over. However, it was entirely democratically elected, it allowed a fully independent judiciary to check its excesses where necessary – indeed it was exceptionally scrupulous in its adherence to the law – it compensated victims of its nationalization policies and its rationing and controls were applied equally to friend and foe alike, in pursuit of openly avowed, mostly apolitical goals. There were no gulags for dissidents. The dividing line between Communism and Socialism is a fuzzy one, but the Attlee government, despite the excessive wartime controls it inherited, mostly fell safely on the right side of that line.

The Soviet Union, the Eastern Bloc and Mao Zedong’s China were on the other side of the line, even in their more benign forms such as Mikhail Gorbachev’s Soviet Union and Josep Broz Tito’s Yugoslavia. There was little or no private property ownership. With no ownership, there was no market – prices were set by state bureaucrats – in Russia through GOSPLAN, the Soviet planning agency. This system was economically very inefficient; it had some successes early on, when the Soviet Union was simply copying Western developments, but once the flow of Western aid and technology dried up after World War II, economic progress ground to a halt, with misallocation of resources notorious. Meanwhile in the West, moderate forms of Socialism were delivering higher living standards to their people, for example in Britain in the years to 1970.

In the early years after the Wall fell, it appeared that the world had united on democratic capitalism, albeit of a mushy, undynamic kind with lax monetary policies. The “Washington Consensus” propounded by John Williamson really did seem to be a kind of consensus. Nevertheless, to the more critically anti-corporatist of us this system appeared to rest on agreement between the corporate behemoths, the larger governments and the international agencies, leaving little room for the true free-thinkers and entrepreneurs in the small-scale private sector.

Since the Bush administration and the 2008 financial crisis, the Washington Consensus has broken down, and has been replaced by a system that is very clearly not capitalism, although until 2020 it appeared that the replacement ideology was merely socialism rather than something worse. The Ben Bernanke policy of holding interest rates far below market levels, allowing negative real rates that led to a tsunami of dopey real estate and tech investment, distorted the economy in the same way as GOSPLAN’s dozy maunderings, but did not directly affect individual freedoms. Even in this period however, the policies of Angela Merkel (German Chancellor, 2005-21) reflected her past in the Komsomol youth wing of the East German Communist party and in their moral authoritarianism, illiberalism and disdain for public opinion were Communist, not socialist.

As of early 2020, the global economy was operating far below its potential because of crazed monetary policies, but states were not allocating investment or jobs, and individuals remained free to seek their own destinies, albeit in the unattractive world funny money had created. Since 2020, that has changed. There are several causes for the change, none of which are overwhelming: one can mention the COVID restrictions and associated state slush funds and corruption, the inept and anti-capitalist Joe Biden and Rishi Sunak governments and above all the restrictions brought about through the climate change mania. As a result, however, we are clearly now on the wrong side of the line between socialism and Communism.

One symptom of this in the United States has been the collapse in the rule of law. The use by the Biden administration of the court system to harass his political opponent and that opponent’s followers, including the grotesque prison sentences inflicted on many of the J6 demonstrators, clearly crosses the line into Communism, albeit at a Brezhnevite rather than Stalinist level. The arbitrary and total disregard of border laws, inflicting millions of unpleasant often criminal “asylum seekers” on American and European cities and, one suspects, allowing unscrupulous Democrat activists to give them votes in 2024, is also a Soviet-style technique, although to be fair not one the Soviets actually used (the pressure being to get out of domains they ruled rather than to enter them). The “bipartisan” Senate bill to which Senator James Lankford (R.-OK) so foolishly gave credence was an attempt to legalize the invasion retroactively, disguising tyranny with a quick pseudo-democratic whitewash. For the commissars, if elections threaten to go the wrong way, they must be stolen.

The erosion of property rights, and in some cases their destruction, is another symptom of Communist takeover. Here the most egregious example was the Biden administration’s seizures surrounding the Ukraine war from a country with which the United States is not at war and from U.S. investors in that country. The increasingly more widespread criticism of Ukraine’s corruption and authoritarianism are showing it to be a Communist tyranny of the old fashioned sort, economically and otherwise. Vladimir Putin’s Russia, whatever its affronts to civil liberties, is largely on the capitalist side of the line in its economic policies, with a 13% flat income tax introduced by Putin in 2001. The dynamism that capitalism generates is why Russia’s economy has held up so well to Western sanctions.

Russia also has a number of attractive publicly traded companies such as the nickel miner Norilsk Nickel and the gold miner Polyus with many foreign investors including at a very modest level this columnist. The Biden administration’s effective seizure of those investments was matched by its seizure of Russia’s $300 billion in foreign exchange reserves, a violation of international norms that is largely responsible for the recent continued rise in the gold price as other countries diversify their reserves out of dollars. Socialist countries do not seize their citizens’ assets except in case of outright war; Communist ones do.

International agencies are themselves tools of Communist takeover as they have no semblance of democratic control. To the extent they are allowed influence, they become instruments of Soviet-style takeover, as transparent as the Warsaw Pact. Whether it is the International Criminal Court demonizing freedom-fighters while letting terrorists off scot-free or the World Economic Forum attempting to abolish private property and force us to eat bugs, they are wholly malign and should be wiped out of existence (very difficult, as I have argued previously).

However, perhaps the most drastic example of Sovietization of our economy and daily lives is the climate-change scam. New research and new temperature observations have definitively proved that the climate change hypothesis is at most only marginal and can optimally be ignored for the next several decades. Accordingly, the “net zero” regulations and electric car mandates that have been imposed on so much of the civilized world are mere attempts to control and impoverish us, similar to Joseph Stalin’s campaign against the kulaks – if we are allowed our own property and modest prosperity, we endanger the totalitarian regime. Notable also, is that several European countries including “Squishy Rishi” Sunak in his election manifesto, are now attempting to reintroduce conscription, allegedly because of the Ukraine conflict. That is a further instrument of government control, snuffing out the freedoms of ordinary individuals to live their lives as they see fit.

The Covid-19 lockdowns and mandates for vaccines of doubtful efficacy and potentially serious side-effects were used to accustom us to obeying the dictates of Big Brother; the “Net Zero” regulations, if not thrown off by an outraged public, will make that control eternal and snuff out the final glimmers of human freedom. We are not there yet, but we are well on the way.


(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)