late-stage communism, extra dry

Speaking of Gorbachev, the current weekend edition at Mises.org is fascinating: “The Decline and Fall of Gorbachev and the Soviet State,” written in 1992 by Yuri N. Maltsev, who worked as an economist on Mikhail Gorbachev’s economic reform team before defecting in 1989.

If you don’t read the whole thing, you should at least read the section on Gorby’s campaign against proletarian alcohol:

Gorbachev’s original theory was that the socialist system was in good working order, but the people, the cogs in the communist machine, had taken to laziness, drunkenness, and were accumulating "dishonest income" in violation of socialist ethics. His first reform was to call for "a restructuring of people’s thinking."

The anti-alcohol campaign began right away. Party bosses sternly announced that they didn’t want any "drunks" in their country. Their enforcers began a concerted effort to discover anyone with the smell of alcohol on their breath and haul them into the police station. When the police stations became overcrowded, it became routine practice to drive thousands of people about fifteen miles out of town and drop them in the cold and dark. Nearly every night, you could see armies of so-called drunks walking miles back to town in the middle of winter.

Over 90 percent of liquor stores were closed. The Party bosses did not anticipate what happened next: sugar, flour, aftershave, and window cleaner immediately disappeared from the shelves. Using these products, the production of moonshine increased by about 300 percent in one year.

The predictable result was a heavy loss of life. From 13,000 to 25,000 people died from drinking poisonous homemade alcohol. Many more died standing in lines for five hours to get the little bit of official liquor that was left. Meanwhile, Gorbachev and loyal Party bureaucrats — who said the dead deserved their fate — would get expensive liquor from the West delivered to their homes and offices. Many families would spend up to 75 percent of their official income on alcohol. But with Gorbachev’s campaign, every other household began moonshining.

Revenues from alcohol sales (taxed up to 6,000 percent) were a major source of funding for the central government, generating enough to fund the entire medical budget. The campaign ended when the government realized it was costing too much. The government’s budget began to lose 25–30 billion rubles per year. Moreover, Gorbachev learned what previous regimes had understood: it is easier to govern people who are drunk because they withstand humiliation and abuse better. When people are sober they begin to care about politics and are not nearly as passive. So Gorbachev did an about-face and ordered a massive increase in alcohol production. And he had the government make it available to be sold everywhere, even toyshops and bakeries.

The anti-alcohol campaign did irreparable damage to the economy.…

[keep reading]

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