Is America’s Economy Being Sovietized?

Tyler Durden's picture

Submitted by Brandon Smith of Alt-Market blog,

The foundation of the Soviet model of trade and investment was centralization under the guise of "universal public ownership". The entire goal of communism in general was not to give more social and political power to the people, but to extinguish alternative options and focus power into the hands of a select few. The process used to reach this end result can vary, but the goal always remains the same. In most cases, such centralization begins with economic hegemony, and it is in our fiscal structure that we have the means to see the future. Sovietization in our financial life will inevitably lead to sovietization in our political life.

Does the U.S. economy’s path resemble the Soviet template exactly? No. And I’m sure the very suggestion will make the average unaware free market evangelical froth at the mouth. However, as I plan to show, the parallels in our fundamentals are disturbing; the reality is that true free markets in America died a long time ago.

The Tyranny Of Planned Economy

The characteristics of a free market society defy the use of centralized planning. Adam Smith’s original concept of free market trade stood as an antithesis to what was then referred to as “mercantilism,” a select few “joint stock companies” (corporations) monopolizing production while using government ties to destroy any new competition. Unfortunately, there are to this day economists and politicians who believe that corporate centralization is a “natural” function of a free market. In reality, corporate monopolies are an unnatural creation of collusion between governments and big-money interests designed to suffocate any entrepreneurship outside of their sphere of influence. Over time, as we now see in the United States today, government power and corporate power begin to hybridize, until one can barely be distinguished from the other.

The bottom line is that you cannot have planned structures, monopolized production or controlled capital flow within an economy and still claim it to be a “free market. There are no exceptions to this rule.

The Soviet system was the ultimate in centralization. Every aspect of financial life was dictated by the communist government, from industrial input and output to investment to food production and rationing to wages and retail prices. Some people might argue that this structure is a far cry from what we now have in the United States, but let’s look at the fundamentals.

Controlled Money Creation

One of the primary tenets of The Communist Manifesto was the creation of a central bank meant to keep tight controls over currency issuance. The existence of a central bank immediately disrupts any chance of a true free market. Central banking without competition allows an oligarchy, whether corporate or political or a meshing of the two, to manipulate interest rates as well as adjust prices through inflation. Lending standards (which the central bank determines arbitrarily) built on fractional reserve banking opens the door to murky debt instruments and toxic financial products that are further used to either fabricate a “high” standard of living (as we saw in the U.S. in the 90s and early 2000s) or execute a bubble implosion causing a lower standard of living (as the U.S. is experiencing today).

Since the establishment of the Federal Reserve through subversive collusion between banking interests and corrupt politicians in 1913, America has not had a free market system. From that point forward, every boom and bust, every interest rate disaster, every inflationary increase in prices has been scientifically engineered.

Dominance Of Industry

Soviet controls on industrial output are legendary. Every part of the resource allocation process became subject to bureaucracy, and this led to stunted manufacturing growth as well as a culture of misrepresented economic data. In the United States, the establishment has taken a slightly different approach but with the same end result.

Heavy taxation on business ventures within the U.S. against entrepreneurs not lucky enough to run in elitists circles has erased incentives for manufacturing experiments within our borders. In the meantime, members of the corporate glee club receive government subsidization while they simultaneously outsource industrial projects to Third World nations. Controlled industry within communist Russia was meant to force the population to depend upon the government for every means of survival. In the United States, dependency on government has been replaced by interdependency on the globalized model in general. Necessities are now compartmentalized, and only select international businesses with cooperation from government have the ability to bring all the pieces together to keep our domestic economy running smoothly. Our society has been so distanced from self-sufficiency that many people now consider the globalist dynamic indispensable.

The next step in this degradation of free market industry is the introduction of "public works projects" by the federal government, which gives the illusion that job creation through centralization is possible.  This is the same strategy used in the Soviet Union and to this day, socialists still argue that the communist design for industrial expansion was "effective".  In truth, the soviet public works plan with all its trains and transits and bridges and buildings was an absolute failure, as the collapse of the country made clear.  Tax funded infrastructure is no replacement for free market invention, and at bottom, no public works enterprise can be undertaken without the government first stealing capital from one area in order to fund another.  Governments can never and will never create wealth or jobs.  They can only present the semblance of economic progress while siphoning wealth away from private citizens.

Bureaucracy And Food Production

U.S. Environmental Protection Agency and U.S. Food and Drug Administration regulations, based on dubious junk science and often instituted on high without congressional oversight, further erode business possibilities, especially for young companies as well as private agriculture, while giving free reign to elitist entities like Monsanto, an organization the government actually PROTECTS through specialized legislation making it nearly immune to civil litigation.

While farms in the United States are not exactly “controlled” by the Federal government in the Soviet sense, many of them are subsidized through welfare on the condition that they grow only particular kinds of crops, raise particular animals or grow nothing at all. This subsidization is an indirect form of price control, creating engineered scarcity or abundance. At the same time, agricultural empires like Monsanto make private farm ownership increasingly difficult by using their government protection to harass and squeeze out independent food producers.

This destabilization of private resource management by common citizens has culminated in the passage of President Barack Obama’s executive order National Defense Resource Preparedness, which allows under a “national emergency” (which the President can declare for any reason) the confiscation of any and all private resources, including farms and businesses, to be redistributed by the government to ensure security conditions. This is the Stalinist model, pure and simple.

Centralized Control Of Investment

We now know that since at least 2008, the U.S. stock market, often presented by the mainstream as a paragon of free market prowess, has actually been propped up and inflated by Federal Reserve fiat. Both former Fed Chairman Alan Greenspan and current branch head Richard Fisher have openly admitted in separate news interviews that the central bank spends considerable energy in “artificially sustaining” equity markets. This has been done, I suspect, with full knowledge of the U.S. Treasury and the Obama Administration.

The Soviet model for investment was to remove all uncertainties from their domestic markets, often in the name of preventing manipulation by “speculators.” The speculator rationale was generally a distraction away from the attempt to dictate the natural forces of supply and demand. The idea was that if the government could dismiss legitimate demand or lack of demand or hide excess supply or lack of supply, the perception of a balanced economy could be conjured for the population. This led to strict redirection of capital to areas where manipulation was needed to artificially pump up (or deflate) a particular part of the economy. The government became the sole investor of the Soviet system and, thus, the sole determinant of the success or failure of any particular market.

This is EXACTLY what is going on in America today, in what mainstream economists now call "the new normal". Federal Reserve fiat is being printed and dumped into every financial mechanism that supposedly maintains our country’s fiscal health, including stocks, Treasuries and municipals, while trade volume remains low and private investment disappears. The Federal government now owes its very existence to the continued support of central bank dollars, and the Dow Jones does as well. If this is not the Soviet ideal, then I don’t know what is.

Labor Oppression, Dismal Living Standards And Government Dependency

Poverty levels within the United States are at record highs. Nearly 50 million Americans are now dependent on government-subsidized food stamps for their survival. Nearly 100 million Americans receive welfare (or Social Security) in one form or another from the establishment. That is almost one-third of our entire population that relies on the system for at least a part of their sustainment. If Obamacare is fully realized, millions more Americans will also be conditioned to become dependent on government-designated healthcare providers. The point is not to pass judgment on those people who get money or services from the government, only to make clear our progression away from freedom and into centralized servitude.

For a Soviet structure to thrive, poverty among common citizens has to be institutionalized. Dependency requires a constant state of desperation. In America, this has been accomplished through a combination of inflated prices and reduced wages in conjunction with the destruction of labor options.

At the height of the communist machine in Russia, employment was ample; but the kind of employment one could apply for was dependent on bureaucratic red tape and availability based on a worker’s record. Only the academic “elite” within the government-run cesspools of Soviet universities and military schools had their choice of employment; even then, they were often pressured into particular specialized fields, depending on the kind of labor the state needed done at that particular time.

In the United States anyone can certainly aspire to do whatever job he hopes to do. But again, options have been removed economically; and the same academic elitism pervasive in Soviet Union labor markets exists in America today. In a recent installment of his weekly radio show, New York Mayor Michael Bloomberg said it was better for “so-so” high school students to pursue a career in plumbing rather than go to college.

Though I rarely agree with Bloomberg on anything, my initial reaction was surprise at his willingness to steer American youth away from university indoctrination centers. However, upon further examination, it became clear that Bloomberg was not trying to save the next generation time and money. Instead, he is promoting a shift in the labor dynamic of the U.S. economy toward a Soviet-style foundation. Bloomberg knows well that the U.S. labor market will never return to its former glory, partly because he is a supporter of the globalist policies that ruined our economy in the first place. Instead of suggesting ways to reverse the trend of progressive poverty and the lack of high-end jobs that engender ingenuity and invention, elitists like Bloomberg are saying “forget your dreams and get used to being a drone.”

In a 70% service and retail economy, where job availability is increasingly degraded and independent business is discouraged, Americans will have two choices:  Excel in the world of federally funded and propagandized education and sell your soul just for a chance at obtaining a professional career in a field of influence, or, settle for the leftovers.  Modern socialists often sing the praises of the soviet educational model for raising the literacy rates of once agricultural and isolated people to 98%, but what they fail to mention is that this literacy was only encouraged in order to create a more efficient servant class that was easier to propagandize.  The U.S. is moving into a similar paradigm.  For some people, being a plumber is a fine thing; but it should not be the only thing. In a true free market, a smart man can make his own way, even if he does not conform to the ideologies of the educational racket. In a Sovietized market, a smart man is prohibited from accomplishing anything unless he conforms to the ideologies of the educational racket.

Some people may respond that the centralization conspiracy within the American economy is an obvious thing today, and that there is little need to expose it any further.  I would point out that centralization is not the only issue here; the guidebook by which that centralization is being implemented is also important.  This has all been done before on the other side of the world only decades ago, and the end result was a horrifying cascade of social enslavement and mechanically inclined death.

In the end, the Soviet economy was so utterly fraudulent that the final breakdown of the system came as a complete surprise to many in political and economic fields of the era.  This is what happens when governments control all source data for financial statistics; transparency dies and collapse creeps in. Centralization is an absolute affront to the natural laws of supply and demand and an oppressive hindrance to the innovation that humanity thrives on. Such systems require constant theft from the populace in the form of reduced employment, reduced wages, reduced resources, increased taxes, increased price controls and a highly ignorant citizenry in order to function even for a short time. Sadly, the United States is well on its way in all of these areas, emulating a poisonous fiscal system and lending itself to a global economic tyranny in which all of us work much harder, for much less, and all for a government that seeks to use our very labor against us.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
jbvtme's picture

check out vernon herschberger's trial in wisconsin for selling milk w/o a liscense

drdolittle's picture

saw that. Good job. Want to work on the e coli H0157 from factory farming next?

Precious's picture

Sovietized?  You must mean Sodomized.  And we know by whom.

Thomas's picture

Givrnment evolves to consume. This is the natural order. We will then consume ourselves into economic oblivion, dust ourselves off, and start over....but it's gonna suck.

flacon's picture

@Thomas, but... but... but Keynes' equation says 'consumption = production (GDP)', so the more we consume the better off we are. And Keynes had a pH Dee from an accredited Ivy League university, AND he had a British accent. 

spine001's picture

Most corporations are great examples of centrally planned productions, that is exactly what happens when goods and services move from one area to the next inside a corporation. And it can work extremely efficiently.

The problem with central planning is that you CAN NOT mix it with competition and freedom. They don't go together. It is an either or.

What we are probably living is the transition from Freedom to Central Planning in slow motion to try to avoid revolutions and wars if at all possible.

Is this an achievable goal? I personally doubt it. Why? Chaos theory: the trajectory of the shift from one attractor to another one is impossible to control or time, since it is infinitely dependent on the value of the initial conditions. That simply said means that the flap of a butterfly wings could dramatically change the trajectories followed. It is only HUBRIS to think it can be done.

But at the same time, can we blame them for trying?

And if we are libertarian, like I am and don't believe in Central Plannning? We are screwed... But not for a while yet

MajorWoody's picture

Sovietized? are you kidding me?  This country went downhill the minute people stopped giving a shiette

and started feeling good all over with toys and drugs, say ....about 1959.

It has always been a corporate state, yet even here the sheeple who think they are most independent still see

everything as black and white, Marxist and Capitalist.  BS, it's always been rigged, stop blaming some phony socialist non existing conspiracy, get your fat lazy ass to work

Almost Solvent's picture


I can still get left & right boots at the store. 



Everything is built to fail.

dark pools of soros's picture

Gov'ment creates lots of 'security' jobs and manufactures fear endlessly

the Absurd's picture

United States Balance of Trade

You can discuss philosophically whether or not material wealth is a bad thing or a good thing, but most people seem to like having stuff. And America has plenty of stuff.

It's really just an empire in decline, which occurs must faster in an electronic world. If you go back and look at it historically, it almost seemed like it was destined to rise to this position.

There's always been a dominant empire or two regionally or globally. Seems human nature lends itself to such when conditions are favorable.

Oh, we bitch about things while sitting in front of our computers in air conditioned rooms, though.

If you really, truly believe ending the Fed will magically fix everything, then go stand in front of a Federal Reserve Bank and hold up a sign that reads "End the Fed". Posting it in the internet comments section is like protesting the Vietnam war because you didn't want to be drafted, except much lazier.

Buckaroo Banzai's picture

We have more and more stuff that is shittier and shittier.

the Absurd's picture

Sorry, but the 1950s powerhouse manufacturing of the United States is not coming back, especially with US oil production peaking in the 1970s and an abundance of cheap labor with the fall of the Soviet Union and China opening up.

It was really an anomaly due to several circumstances falling into place, also world population was much lower at the time.

I agree that quality has gone down but there are better synthetic materials now too.

Why do you think someone like Ron Paul doesn't win high office (for the record, I voted for Gary Johnson)?

Most people really do just care about bread and circuses.  You see calls for "leadership" - they want to be ruled over.  You can't deny that it works.  Just look at Obama's easy win.  Bush passed out plenty of goodies too.  Remember IRS refund checks to "keep America rolling"?

nofluer's picture

they want to be ruled over.

And it has always been so. Read I Samuel, chapter 8. And God even warned the people what the king would do to them - but they wanted one anyway.

Slightly Insane's picture

But Komrade, boots made in asia, and mexico-  except Redwing.  Redwing boots very, very expensive.  Wokingclass have no money for expensive boots.

tango's picture

We were in Russia right after the fall of Marxism and perhaps the most common phrase used in explaining that dismal country and its unworkable products, services and institutions was the popular catchphrase "soviet".   Bad food, bad clothes, broken applicances, creaking doors, horrible bathrooms - all were called "soviet" because, you know, folks expected anyting with the stamp of the State to be non-functioning.  They didn't even ask why - just abject acceptance of the rotten mess.

THAT'S the real fright, that we accept the Statism, endless directives and rules, crazy laws and insane prosecution with a shrug.  What's so insane is that folks know that freedom and liberty lead to greater productivity and a better life and yet they CHOOSE this route that can only lead to destruction. 

PT's picture

Almost Solvent:  "Chinaized?  Everything is built to fail."

That's their trade / defence plan.  You can't compete with them because everything is too cheap  (Actually, you could if you eliminated debt and crashed the price of real estate, but anywayz ... ) .  Eventually there will be no US manufacturing, infrastructure and know-how.  But you won't be able to stop buying Chinese or threaten them in any way because everything breaks so fast.  If they stop selling it to you then you'll have to do without.


strayaway's picture

Add Smart Growth Comprehensive Planning to the list of rural Sovietization. "Comprehensive plans" are little more than local governments transferring their power and the property rights of residents to non-elected "stakeholders" and bureaucracies. 

krispkritter's picture

 'I should have posted "Foarward Soviet!"' he remarked sheepishly...

jerry_theking_lawler's picture

if you are gonna be least you could lead with:


Silver Bitchezzzz!

The Alarmist's picture

Appropo, Does a bear shit in the woods?

Slightly Insane's picture

Komrade the bear of which you speak, shits in the Oval Office, and the bathrooms in the Congress annex.


moar beer..'s picture

Better question, does the pope shit in the woods?

Skateboarder's picture

I'm sure the pope's bathroom is decked out with bling. Blang.

drdolittle's picture

ah, the alarmist, so much better than my simple yes.

dolph9's picture

What is worse is that America made itself into the focal point of the entire global economy, and the Soviet Union did not.  The rest of the world agreed to this, thinking that America was a noble, well meaning country full of noble, well meaning people.  They were wrong and are now regretting it.

As such, the collapse of America threatens to undo the entire world order, and the collapse of the Soviet Union was never going to do that.

The Alarmist's picture

"... America made itself into the focal point of the entire global economy, and the Soviet Union did not. "

Not for want of trying ... our advertising was much better.

TrustWho's picture

Cold war dude had countries on both sides. The countries in eastern Europe suffered more than the people of Greece today--even the Cuban people suffered when the barter trade between Soviet Union and Cuba almost stopped--when Soviet Union collapsed.

In fact, the countries on the USA side will suffer if USA has similar collapse, but will not be as severe, because Russia controlled most of the central resources. You need to talk to someone from Ukraine who lived through the crisis that lasted at least a decade, especially one retired on the Soviet Union system living in Ukraine or other like country or independent Republic.

The only difference I predict is America will not go done without nuking something?

Dewey Cheatum Howe's picture

Speaking of marxist oppression, Obamacare the gift that keeps on taking. Wait until your employers find out it is cheaper to drop your current plans for 'skinny' plans plus obamacare fine. That is how marxist left leaning fabian socialist affordable health care works, affordable means less not the same but cheaper. Typical inversion tactic of using affordable to justify giving less.

Some companies are avoiding Obamacare penalties by offering "skinny" insurance plans that provide employees with minimum coverage such as preventive care but little else, including benefits to help cover hospitals stays.

Minimum coverage qualifies as acceptable under the new healthcare-reform law, so benefit advisers and insurance brokers are pitching minimum plans nationally, reports the Wall Street Journal.

Employers are recognizing they can avoid a $2,000-per-worker penalty by providing such policies, even though the plans often don't cover basics such as surgery, X-rays, or prenatal care, let alone hospitalization.

The employers still could face penalties, but they expect them to be less than the the $2,000 per worker for opting out of Obamacare. As a result, the Journal reported, more companies are seeking minimum-coverage plans and creating what amounts to a new industry of basic-insurance brokers and benefit administrators pushing the plans to clients.

Some low-benefit plans will cost employers as little as $40 to $100 per employee monthly, the Journal noted.

"For certain organizations, it may be an ideal solution to minimize the cost of opting out," David Ellis, chief executive of Youngtown, Ariz.-based LifeStream Complete Senior Living, told the Journal.

Ellis said his firm, which employs about 350 people, may consider the low-benefit plan in order to comply with the law.

Department of Health and Human Services officials say they have seen little evidence of companies switching to the skinny plans, and that most employers are choosing to provide better benefits.

In addition, the limited plans may not appeal to all workers – and could backfire on employers.

While they would avoid the $2,000 fine, they still could be fined $3,000 for each employee who chooses not to take the company coverage and buys insurance through a state healthcare exchange.


I prefer to call it what it is not 'skinny' but 'subprime' insurance. But it is "affordable" even though your employer usually splits the cost of a private insurance plan they offer with you. A plan that will now offer less than you had before for coverage.

worldtraveler's picture

The choice should not be weather the employer provides skinny healthcare or nor. It should just be any individual's choice to choose from what kind of healtcare insurance he or she wants, or prefers to opt-out of it. If any individual chooses to live and invest in a healthy lifstyle, eats more veggies rather than processed foods etc. and is prepared to accept death at a later age without expensive "end of life care", then that choice should be respected and rewarded. Unfortunately that does not work well for big Government and big corporate interests in a corrupted system. Here is a 91 year old that proclaims: I take no drugs, no insurance and I have no doctor! see:


tango's picture

There is a very strong case for stripped down plans.   Health insurance should be for catastrophic reasons only.  It's how insurance once worked and still works for anything other than health care.  You don't use insurance  if your car needs a new transmission or if you get a flat tire.  You don't call insurance for a leaky faucet or if your AC goes on the blink.  So why pay thousands to savd a few hundred for colds, scrapes, bumps and shots?

We (wife and I and 25 year old son) pay 18k/yr.  Great plan but with deductibles and co-pay it's easily 22K.  Only one year in our 30 years of marriage has our medical bill matched what we pay. (And like many couples we had double coverage much of the time.)  

A Lunatic's picture

Everything's better with Blue Bonnet on it...........

DeliciousSteak's picture

CBA to read the whole thing, but after a quick peek it seems that rather than a "Soviet system" the US is becoming Nordic. Or maybe Nordic countries became Soviets.

Buckaroo Banzai's picture

Disagree. Nordic countries are ethnically homogenous and do not have pretensions to empire. Nordic socialism is a special case. Thanks to the inherent stupidities of the socialist ideology, they have lately undermined their ethnic homogeneity by letting the Musloids invade them. The Musloids will destroy them.

By contrast, the US and the soviet union were both ethnically heterogenous empire builders. They are much more similar to each other than either one is to the Nordic countries.

Vlad Zerox's picture

Good point.  Speaking of muslims destroying the Nord's - day 4 of the Stockholm riots are in swing as we post! 


Buckaroo Banzai's picture

Here's another essay that comes at the same topic from a completely different direction. Discusses the rise of the American Nomenklatura (although the author never uses that exact term).

Go Tribe's picture

Good grief, of course it's being sovietized. You need an article to prove it?

Wise up whitey!

The Alarmist's picture

You forgot the MIC and the vast State Security Apparatus.  Now the analogy is complete.

overhere2000's picture

End stage capitalism is corporatocracy which is just another flavor of centrally planned economy.