Policy Analysis No. 87

Communism Between Marx and the Marketplace: Implications for U.S. Foreign Policy

By Thomas M. Magstadt
June 2, 1987

Executive Summary

Are winds of change sweeping across the Eurasian landscape? Or are the reforms occurring in the People’s Republic of China, the Soviet Union, and Eastern Europe merely gentle breezes, strong enough to stir the interest of the West but unlikely to uproot the economic structures of the East? It seems likely that the allure of the marketplace, evident in several Eastern European states for decades now, will become increasingly irresistible to all but the most incorrigibly Stalinist regimes throughout the communist world.

A closely related (perhaps even inseparable) question is whether, or to what extent, economic liberalization in China and the Soviet bloc will lead to democratization. Moreover, what impact will those nations’ internal political and economic reforms have on international politics, particularly relations between the East and the West?

For the East, the growth of “market Marxism” has potentially far-reaching implications, not least because of the intimate relationship between politics and the economy. In adopting market-oriented reforms, Communist party leaders are sailing into uncharted waters. How far can economic reforms go, they must ask, without creating popular demand for political rights? Allowing pockets of capitalism to develop and grow is bound to bring into being an entrepreneurial class whose interests are at odds with those of a privileged party elite determined to perpetuate its power monopoly.

The dilemma that Communist party leaders face can be expressed as a paradox: the more effective the economic reforms (measured by the commercial success of the new or renascent private sector), the shorter the likely life span of the Stalinist party-state. In the course of a recent assessment based on an extraordinary interview with Mikhail Gorbachev,

Heidi and Alvin Toffler—authors of The Third Wave and Future Shock—noted:

An advanced economy requires incessant technological innovation. But technological advance in today’s world is ever more closely tied to culture and to social structure. To generate a lot of new ideas, even technological ideas, the system must permit the expression not simply of alternative scientific theories and hypotheses, but of “crazy” social notions, offbeat art, controversial economic theories, errors, and even ideological dissent.[1]

According to the Tofflers, that is why so many Soviet scientists favor glasnost (openness) and “want even more freedom.”[2] That is also why “it will be necessary [for Soviet leaders] to think the apparently unthinkable—that many of the Soviet Union’s most critical ‘contradictions’ arise from the monopoly of political power by a single party.”[3]

For the West, the economic reform movements in the Soviet bloc and China hold out the prospect of unprecedented opportunities—not only for trade liberalization but also for progress in such areas as arms control and regional-conflict management. But the prospect is far from being a reality. The West’s response could play a significant role in determining the pace and direction of the market-oriented programs now under way.

The following analysis is divided into four sections. Considered in the first and the second are the context and the content, respectively, of recent economic reforms in certain communist states; in the third, the inherent tension between individuals’ economic rights and the collective ethos enshrined in Marxist-Leninist ideology and institutionalized in party rule; and in the fourth, the implications of the trend toward reform for U.S. foreign policy.

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Thomas M. Magstadt is chairman of the political science department at Kearney State College.