We’re Back…

The Economic Roots of the Cold War Era

CAPITALISMversus

COMMUNISM

IntroductionThe Cold War lasted from 1945-1991.

During the Cold War Era, the world was divided into two main camps. The capitalist bloc of the West, led by the United States and the communist bloc of the East led by the USSR.

It should be noted, that capitalism and communism are economic systems, as they are often mistaken as representing political systems as well.

During this time period, many capitalist states practiced democracy in one form or another. While the communist states tended to have much more authoritarian systems of government.

Part I: The Roots of Capitalism

“No complaint… is more common than the scarcity of money.”

Adam Smith 1723-1790

The father of modern economic thought,but not so great at making tea.

“Man is an animal that makes bargains: no other animal does this – no dog exchanges bones with another.”

Who was Adam Smith? A Scottish intellectual who

championed liberty, reason and free speech.

He was a university professor who spent much of his life traveling and lecturing across Europe.

Published The Wealth of Nations in 1776. Coincidence? I think not.

Seen as the father of modern economic theory and capitalist thought.Why yes? I was kind of a big

deal.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

What is Capitalist Philosophy? SOME KEY CONCEPTS:

- PRIVATE PROPERTY, THE RULE OF LAW, and the LAW OF SUPPLY AND DEMAND underpin capitalist societies.

- Governments should adopt a LASSIEZ-FAIRE attitude towards the economy.

- The INVISIBLE HAND of the MARKET is self-regulating and self-correcting.

- One of capitalism’s defining characteristics is the BOOM-BUST CYCLE.

“All money is a matter of belief.”

David Ricardo’s Law of Comparative Advantage

David Ricardo was the first person to mathematically prove that two nations could benefit from trade - even if one nation was more productive in every possible area than its trading partner.

By specializing in the production certain goods, both nations will become richer through trade.

In 1846, Britain repealed the Corn Laws, which made it much cheaper to import grain. This pleased capitalist factory owners, but angered aristocrats. Great Britain was the first nation to fully embrace the principles of free trade.

David Ricardo 1772-1823Economic Rock Star

“The real tragedy of the poor is the poverty of their aspirations.”

Part II: The Roots of Communism

“From each according to their abilities, to each according to their needs.”

Karl Marx: 1818-1883

The father of communist thought

and sweet looking beards.

“A specter is haunting Europe – the specter of Communism.”

Who was Karl Marx? A German philosopher,

economist, sociologist, historian, revolutionary and avowed atheist.

Exiled twice from his home country for his revolutionary writings.

Published The Communist Manifesto in 1848 with his friend Friedrich Engels.

Widely regarded as one of the most influential thinkers of the Modern Age.

This guy was wicked smart.

“The theory of Communism may be summed up in one sentence: Abolish all private property.”

What is Marxist Philosophy? SOME KEY CONCEPTS:

- CLASS STRUGGLES have always existed.

- Views the world through a MATERIALIST lens. Economics above all else.

- The MODES OF PRODUCTION form the foundation of all societies, while politics, social relationships and morals form its SUPERSTRUCTURE.

- Sees violent REVOLUTION between the BOURGEOISIE and PROLETARIAT as the only way to end the Age of Capitalism.

“Revolutions are the locomotives of history.”

1848 – A Year of Revolutions Demand for more

democracy.

Better working conditions.

Abolishment of serfdom.

Upsurge in Nationalism. The revolutions were beaten

back by the ruling classes.

But incremental advances would be made by the middle and working classes in the decades to follow.

“The history of all previous societies has been the history of class struggles.”

How Do Marxism and Socialism Relate to our Local History? Nanaimo has long been a

centre for the labour movement in BC.

Work in the forests, mills and mines of the Mid-Island has always been dangerous, back-breaking labour.

In 1912, tensions boiled over and the miners of Vancouver Island went on strike.

The labour dispute lasted over two years, people were beaten, houses were lost and over 179 people were arrested on dubious charges.

“The workers of the world have nothing to lose but their chains, workers of the world unite!”

The Vancouver Island Strike by J. Kavanagh, 1914

Group Portrait of 6th Regiment D.C.O.R. Nanaimo Station Camp, 1913Photo by Major JS Mathews, courtesy of Vancouver Public Library

Photo courtesy of the City of Vancouver Archives, CVA 259-1

Ladysmith families try to raise money to pay bail for jailed strikers.

“The ruling ideas of each age have never been the ideas of its ruling class.”

A Return to the Big PictureBy 1914, the Nanaimo Coal Miner’s Strike had been settled and World War I had begun.

By 1917, the Russian Army had been thoroughly routed by the Germans on the Eastern Front.

Russia’s Tsar Nicholas II was no longer able to maintain control of his country.

In October 1917, the Bolsheviks led by Lenin, seized control of Russia and by 1922 had established the world’s first communist state – the Union of Soviet Socialist Republics (USSR).

“Democracy is the road to Socialism.”

Check for Understanding Who was Adam Smith?

Who was Karl Marx?

What are some of the basic tenets of capitalist thought?

What are some of the basic tenets of communism?

What were some of the factors that led to the fall of the tsars and the establishment of the world’s first communist state?