Here’s another in our ongoing series that looks at term and ideas that were crucial in the Cold War period of Yuri’s space triumph.
Last time we tried to define ‘Communism’, the political and economic system espoused by the Soviet Union. Naturally, it’s only fair to turn our attention to the other side! The great worldwide economic system which had developed since the 19th century, and which still dominates the world today, is known as ‘Capitalism’. It works on principles which are fundamentally different to those of Soviet Communism, and it is this difference which gave the Cold War conflict and the space race between the USSR and America much of its ‘edge’. Each side was determined to prove that theirs was the best economic and political system.
So what exactly is Capitalism?
When the Industrial Revolution took off in nineteenth century Britain, it was driven by a powerful economic feedback loop: People with ‘capital’ (eg spare money), invested it in re-organising production of goods to be more efficient. This produced surplus profits, which could be invested back into improving production efficiency some more, thus generating bigger profits. This system came to be called ‘capitalism’.
The system relies on individuals establishing ‘enterprises’ that generate wealth. In turn this relies on the concept of privately owned property, the idea being that individuals have a personal incentive to generate wealth because they know they can keep it. It also requires governments not to interfere too much in business matters. Individuals are free to start any (legal) ‘enterprise’ or business they like. Hence the system is sometimes called ‘free enterprise’.
Prices are set by ‘free markets’ in which the goods go to the highest bidder, and the goods most in demand attract the highest prices. At the same time the company that can set its prices lowest, is likely to attract more customers. In most capitalist countries however, some government control is present to prevent the exploitation and neglect of the poor.
In the nineteenth century the economic theorist Karl Marx pointed out that capitalism was prone to a cycle of ‘boom’ and ‘bust’ and that every so often, because it was so dynamic and unstable, it would have periodic ‘crashes’ or depressions during which the value of money would fall, causing widespread poverty and insecurity. This certainly seems to have been an accurate prediction, given the international crisis at the time of writing this.
On the other hand, it is this very dynamism that has made capitalism a great driver of technical and social change – the kind of advances that the Soviet Union was trying to rival in its own very different system of a ‘command economy’.
So, did the fact that the Soviets were first into space mean that Communism beat Capitalism, as Soviet Leader Brezhnev liked to claim? Well, the truth is more complicated. The Soviet aerospace industry was never one monolithic, government-controlled operation. From the beginning it was a collection of separate research, development and manufacturing centres under different leaders such as Korolev, Mikoyan, Glushko and many others. These ‘OKB’s as they were known, operated in some ways like capitalist enterprises, competing with each other for government contracts and grants. In the USA on the other hand, it was arguably, not until the US government, working through NASA, began to organise and direct the work of ‘free enterprises’ in an almost ‘soviet’ way, that the Amercian space effort began to be co-ordinated enough to catch up with, and pull ahead of the USSR.
As usual, history seems to be more complicated than the propaganda of either side made out . . .
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