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BY AusTIN MuRPHY
EuRoPEAN PRESS AcADEMIC PuBLISHING
Z
"
All right n~No pan of this bkshall be reprouced, stored in a rtrieal
system, or transmitted by any means, electronic, mechanical, photoopying,
recording, or otherise, without written permission from the publisher.
l58N88-8398-002-o
2000 by European Press Academic Publishing
Via Valle Bantini,4 - Fucecchio (FI) Italy
w .e-p-a-p.com
cover design by Biz Stone
Pandia!aq
JABL OF LONTNTS
PREFACE 9
PRELUDE: "BETTER RICH AND HEALTHY . " 13
INTRODUCTION: AN OBJECTIVE ANALYSIS OF
RELATIVE POSITION IN THE HISTORY OF DELIBERATE
EXTERMINATIONS OF HUMAN BEINGS 17
EDENLE ONUSA A1KU1E5 21
Subseguent USA Killings oflnnocent Unarmed Civilians 37
O1HEK COUN1KE5 RANKED N 1HE TOF TEN N EX1EKMNA1ON5 O
FEOFLE 48
CAEA15 ON 1HE REFU1A1ON O COMMUN51 A1KU1E5 52
CONLLU5ON 57
CHAPTER : THE DOCUMENTED FACTS ABOUT
EASTERN EUROPE AND COMMUNISM: A REFUTATION
OF POPULAR MYTHS ABOUT THE TRUE GOOD GUYS 59
EcNOML PHENOMENA CON1KUU1NU 1O 1HE COLLAF5E O
COMMUN5M N EA51EKN EUKOFE
59
OTHEK FAL1OK5 CON1KUU1NU 1O 1HE COLLAF5E O COMMUN5MN
EA51EKN EUKOFE
61
The War in Afganistan
65
Minority of Leaders Dismantle Communism Against
Will of Majority of People
71
D5FELLNU OTEK COMMON MY1H5 AUOU1 COMMUN5M 72
Quality of Life, Freedom and Individuality
72
Exaggerations of Political Repression
73
Myths About Communist Economic Inefciency and
Resource Misallocation
82
Myths about Specifc Aspects of Communism Efciency 86
IMFLLA1ON5 O 1HE EMFKLAL EXFEKENLE5 O EA51EKN EUKOFE
ANU COMMUN5M
87
IV
CHAPTER Z: AN POST-MORTEM COMPARISON OF
COMMUNIST AND CAPITALIST SOCIETIES USI NG THE
GERMAN CASE AS AN ILLUSTRATION 91
DOMINATING INFLUENCE OF MANDATORY EAST GERMAN
REPARATIONS PAYMENTS 91
ADVANTAGES OF EAST GERMAN COMMUNISM 94
ADVANTAGES OF WEST GERMAN CAPITALISM 104
CONCLUSION 1 1 1
CHAPTER J: A DETAILED AUTOPSY OF THE COLLAPSE
OF THE SUPERIOR SYSTEM IN THE DIVIDED GERMANY 1 1 3
HISTORICAL BACKGROUND ON THE MOST INCREDIBLE REVOLUTION
OF OUR TME 1 1 3
SECRET POLICE AND POLTTICAL REPRESSION 1 1 5
Cow WAR ECONOMICS 1 23
THE BERLIN WALL 1 25
STATUS SYMBOLS IN EAST GERMANY 1 27
ESCAPING FROM EAST GERMANY 1 29
PRELUDE TO THE REVOLUTION 1 32
HUNGARY IN THE SUMMER OF 1 989 1 34
THE TRAIN THROUGH DRESDEN 1 36
THE LAST BIRTHDAY OF EAST GERMANY 1 37
EAST GERMAN POLICE CONTROL 1 39
THE LEIPZIG AFFAIR 1 41
THE DECISIVE DAY 143
SUBSEQUENT DEMONSTRATIONS
145
OPENING THE BERLIN WALL 146
THE COLLAPSE OF THE BERLIN WALL
149
THE EFFECT OF THE EAST GERMAN REVOLUTION 1 50
CHAPTER 4: A COMPARATIVE ANALYSIS OF EAST
AND WEST GERMAN FINANCIAL SYSTEMS IN LIGHT
OF THE NEW EVIDENCE 1 53
HISTORICAL EVOLUTION OF THE DtVEDED GERMAN FINANCIAL
SYSTEMS 1 53
A COMPARATIVE ANALYSIS OF FINANCIAL DECISION-MAKING 156
Making Investments 1 56
Funding Investments 1 59
Managing I nvestments
163
EMPIRICAL COMPARISON OF EFFICIENCY 168
Comparative Aggregate Economic Performance 169
Causes of Collapse in the East 173
N
Evidence on the Economic Inefciency of Capitalism In the
East
175
Nonfi nancial Considerations 176
OUTLOK FOR REFORM
1 80
CHAPTER : AN APPLIED INVESTIGATION INTO A
PLAN FOR EASING THE TRANSITION TO ECONOMIC
COMPETITIVENESS USING EAST GERMANY AS AN
EXAMPLE
1 81
TE PLAN FOR TANSITION TO EcoNOMIC CoMPETITIVENESS 1 82
THE EcoNOMIC MoDEL FOR EXAMINING THE 1989 EAST GERMAN
SITUATION
1 85
THE MoDELs FoRECASTED REsULTS
189
RISKS OF DEVIATIONS FROM MODEL EXPECATIONS 193
Risk of a Different Level of Western Imports Under the Plan 193
Risk ofDifferent Savings Rates
195
Risks of Currency Black Markets
197
Risk of Different Costs of Earning OM Export Revenue 199
Risk of Different Amounts of Western Investment 202
The Risk of Economic Depression in Eastern Europe 203
Restructuring Costs
204
The Risk of I nflation, Emigration, and Prouctivity
Problems
205
Diferent Spending on Infrastructure and the Environment 207
Foreign Aid and Loan Factors
210
CoNcLUSION
210
CHAPTER : A DETAILED EVALUATION OF CURRENCY
CRISES AND BALANCE OF PAYMENT PROBLEMS IN
THE NEW WORLD ORDER
21 5
CURRENCY CRISES AFTER THE CoLD WAR
217
TE SPECIAL EFFECTS OF THE DISASTROUS GERMAN UNIFICATION
POLICIES
224
THE SREADING CURRENCY CRISES
226
THE REAL EFFECTS OF CURRENCY CRISES
232
POLICY OPTIONS TO AVOID CURRENCY CRISES IN THE NEW WORLD
ORDER
236
Goto STANDARD AND CURRENCY UNIONS
236
Gold Standard and Currency Unions
236
Capital Controls
239
Changes in Relative Protectionism
241
Improving Productivity
244
VI
An Effective Solution to Current Account Problems 246
CHAPTER 7: A SUMMARY POLITICAL ANALYSIS OF
USA WORLD DOMINATION 249
GLOBAL AMERICANIZATION 249
RICH CRIMINALS' PARADISE: CAPITALISM WITHOUT GOVERNMENT 257
CONCLUDING PERSPECTIVES ON THE CAPITALIST WORLD ORDER 261
HOPE FOR THE FUTURE 267
NOTES 275
BIBLIOGRAPHY
INDEX
ABLES
Table 1 : Tally of the Unarmed Civilians Deliberately Killed
by the USA
Table 2: Annual Real Economic Growth Rates in Russia and
the USA in the Years Just Before and Afer the End of
Communism
Table 3: A Listing of the Relative Advantages of Communism
and Capitalism in Germany
Table 4: Real Economic Growth in East and West Germany
Before the End (1 980-89)
31 5
358
22
60
93
1 73
HLLLLLN
I would like to thank the editor of the European Press Academic Pub
lishing, Dr. Roberto Di Quirico, for his extraordinarly usefl help in
improving the structure of this book. I am also very grateful to my
employer, Oakland University, which provided funding for the research
needed for one of the chapters (Chapter 5). In addition, I owe my very
young children a great debt for showing me that communism, coopera
tion, and sharing are innate human characteristics, and that capitalism,
egoism, and selfishness are unnatural traits that capitalist societies force
people to lear very early in their lives (and that communist countries
can only slowly remove from human culture).
Dedicated to the knowledge that anyone who aids the USA in its
interational terrorism is committing a crime against humanity.
8
1LHLL
The Triumph of Evil represents a wake-up call to the world. Barraged
by the most efective propaganda machine in history, I myself long
believed at least partially in the make-believe world reported by the
mainstream press and the USA establishment. However, having expe
renced the opening of the Berlin Wall frst hand, I began to lear (as
explained in the prelude to this bok) that the stories told in the West
W media ofen greatly distort the tre reality of events. Having sub
sequently frther researched the facts, I now feel an obligation to cite
them for those who also wish to wake up to The Realit of the L3As
Cold War Vctor.
To begin, using a very objective measure of analysis, the Introduction
to this book documents the fact that the USA is the most evil nation
in histor. In particular, the USA has deliberately kille more unarmed
innoent civilians than any other country in the world (including even
more than Nazi Germany). This conclusion is consistent with the main
by of the book, which clearly shows that the "bad guys" won the
Cold War.
Chapter 1 conclusively demonstrates the fact that the USA propa
gada about the evils of communism is largely either greatly exagger
ated or pure myth. In fact, communism represents a ver god alter
native to the very horrible USA capitalist system, as communist coun
ties are not only more benevolent but also economically mor efcient.
Communist countries were poor relative to the leading capitalist coun
ties only beause they were relatively much porer before they became
communist, and, despite exhibiting faster economic growth than capi
tlist countries, they had not caught up by 1 990.
Chapter 2 uses the case of the divided Gerany to more exactly detail
the relative advantages and disadvantages of communism and capital
ism in practice. East and West Gerany are ideal for a comparison
10 THE TRIUMPH EVIL
because the people and culture were very similar before the division
into separate communist and capitalist countries afer World War II.
The fndings show that communism is a superior system in virtually all
respects. However, West Germany began with far greater income and
wealth than East Germany, and faster economic growth in East Ger
many had reduced this income disparity by the time of its demise in
1 990 but had not eliminated it. The higher incomes of West Germany
represented an extremely important attrac.tion by itself in making people
prefer to live in West Germany. In addition, the relative poverty of
East Germany also forced additional disadvantages on East Germans
in terms of the goverment repression needed to prevent the richer and
much more powerful West Germany from using capitalist economic
warfare, propaganda, outright sabotage, and other activities to under
mine the East German communist system.
Chapter 3 describes more details of the East German system that help
clarify exactly how and why the communist system (despite its superi
ority) was overthrown in 1 989-90. Contrar to popular belief, East Ger
mans were not seeking to rid themselves of an undesirable system but,
instead, were revolting against their relative poverty.
Continuing with the German case, Chapter 4 provides a detailed com
parison of the economic efciency of the communist and capitalist
fnancial systems. While there are similarities, the communist fnancial
system is shown to be more efective overall. Despite its superior ef
ciency, East Germany was poorer than West Germany because it had
had to pay an enormous amount of reparations to the Soviet Union afer
World War II. These reparations payments, which represented partial
compensation for all the damages inficted on the Soviet Union by Nazi
Germany as a whole, had a value equal to several times East Germany's
annual output. West Germany, on the other hand, was not only spared
from having to make such payments, but it also received substantial.
fnancial aid from the richer USA (which had been untouched by World
War II). While the greater fnancial and economic efciency of the East
German system allowed it to partially catch up for the huge difference
in incomes that existed in the two countries at their founding in 1 949, it
was not able to fully overtake West Germany by 1 989.
Chapter 5 details an economic plan for how East Germany could have
survived and prospered, even with the opening of the Berlin Wall, even
JkFF4CF l1
with forced economic integration, and even with the East Germans'
natural desire for Wester income levels. While the plan (which I cre
ated in 1 989 and presented to various leaders shortly afer the opening
of the Berlin Wall) has never been used in practice, economic analysis
indicates that it provides a viable means for countries to prosperously
survive in a capitalist world (and actually offers a very positive altera
tive to traditional forms of both capitalism and communism).
Chapter 6 explains how the USA's Cold War victor has resulted
in the world turing more and more toward fee-market systems (i.e.,
global capitalism). The defeat of the communist Soviet Union has not
only created a ver powerfl propaganda tool for the USA and its capi
talist system, but it has also removed the one world power that used
to be able to challenge USA domination and counter USA threats. The
USA's successfl push toward a world market economy (via persua
sion and extortion) is shown to have led to widespread poverty and eco
nomic catastrophes, especially related to currency crises, and especially
in the newly capitalist countries of the former Soviet Union and Easter
Europe. In addition, the economic disaster of the Geran unifcation
itself is explained to have contributed to a chain of events that has fr
ther contributed to the worldwide economic crises.
Chapter 7 concludes the book with a political analysis of USA world
domination afer the Cold War. As indicated there, the atroities of the
USA and the cruelty of the USA's capitalist system continue unabated.
Te Triumph of Evil: the Realit of the USA s Cold War Vctor is a
factual bok that leads to one implication for action: overthrow the evil
capitalist system by voting it out of power. In the hands of the people,
the facts will ensure that the Cold War victor for the USA and capital
ism was only a temporary one, and that justice will eventually prevail
via the ballot box.
12 THE TRIUMPH OF EVIL
1LLL
'BETTER RICH AND HEALTHY ...
Previous to experiencing the revolutionary events surrounding the
opning of the Berlin Wall in 1989-90, I must also admit to having
largely believed in the great USA propaganda story about how wonder
fl capi talism is compared to communist societies. However, one ofthe
frst things I leared in my visits to East Gerany was that it was dif
ferent from the roboticized, repressed, cold, and stoical stereotyping of
communist East Gerany which I had been led to believe by Wester
media to be the truth.
An early clue to the actual facts of the East German people and cul
ture occurred during my frst visit there on May 1 , 1 988. In particular,
on that festive holiday in East Berlin, I found a kiosk which sold an
assorment of interesting items, including stickers with the printed state
ment "Lieber reich und gesund als und km, which translated
to "Better rich and healthy than poor and sick." Astounded at such a
sign that seemed to advocate striving for riches in the relatively poor
(compared to the West) and reputedly repressive communist country, I
asked the kiosk saleswoman if such statements were prmitted in East
Germany. Afer some discussion with her colleagues, she explained
that the sticker had been designed as a counter to the Wester slogan
that one had to choose between being either rich and sick, or poor and
healthy. Afer all, why not have the best of all possible worlds, which
was what East Germany was trying to develop. Little did I realize at
the time that East Germans would soon be achieving access to Wester
riches far faster than they had ever believed possible, albeit at the price
of having to endure the sickness ofWester capitalism.
14
THE TRIUMH EVIL
To frther illustrate my naivety at the time, I relate another episode
from Berlin that occurred about one year later in July 1989, just before
the revolution in East Germany broke out. The event is ver trivial, but
i t does provide an indication of the biases that USA propaganda had put
into my mind, as well as something about the actual situation in East
Germany during the Cold War.
As part of my attempt to experience various aspects of East German
culture (and meet new and exciting people) in the early summer of
1989, I visi ted a local group of the Free German Youth in East Berlin
that had adverised its disco party in an East German tour guide book.
About 75% of all East German youth were members of the Free German
Youth, but only those with some interest in or support of communist
politics tended to be active in the events or disco parties of this East
German goverment organization. Afer conversing with several East
German teenagers at the disco for some time (during which they repeat
edly emphasized that they dido 't want war, although I had never brought
up the subject), one teenager asked if I wanted to hear some good
jokes. Afer I answered positively, I was asked i f I knew the diference
between neutron bombs and East German cofee. When I sid I dido 't
know, he answered that he dido 't know either, since both mercilessly
kill people without damaging cofee cups or other objects. When I,
being unaware of the poor quality of East German powder cofee, didn't
laugh, the East German asked me another question. He wanted to know
what the diference was between the East o
"
erman goverment leaders
and terrorists. When I said I didn't know, he answered that terrorists
have supporters. Shocked by the anti-goverment overone (in what
I had been led by USA propaganda to believe was a police state), I
didn't Laugh because I again wasn't even sure ifl understood the joke.
When he explained that the East German leaders were not too popular, I
asked whether it was prmitted to make such jokes in East Germany. He
laughingly said that everybody did it. Then he asked me of what crime
an East German was convicted of for calling the East German leader
an idiot. When I indicated that I dido 't know, he told me it was for the
crime of revealing a state secret. Afer he told me several more anti
goverment jokes but still failed to generate even a smile from me, he
said I dido 't have any sense of humor. When I asked where he had
leared the jokes, he told me that he had heard it fom fiends and that
JkF|0DF
l3
everbody knew the jokes. When I asked whether it was East or West
Genan friends, he said that he had heard it fom East Germans, but
that some of the jokes had probably been invented by the West Germans
ad been exported to East Germany. When I continued to express shock
at people being allowed to tell such jokes in East Germany, he assured
me it was OK to say what one wanted in East Gerany, as long as one
wasn't trying to overthrow the goverment.
Being on a research assignment in Berlin for the entire perio from
the summer of 1989 to the summer of 1990, I experienced frst-hand
(and paricipated in) what I believe to b one of the most incredible
rvolutions in history. During that time, I leaed much about the Cold
Wa, the USA, East Germany, communism, and capitalism from dirct
observations, discussions, and actions (my actions also apparently led
the East German secret police to create a fle on me in their counterintel
ligence deparment, which investigated foreigners suspected of engag
ing in espionage and subversion in East Germany).
Although my initial interest and knowledge in the subject matter of
this book grew out of fist-hand experience, I have verifed all informa
tion herein with published sources (and so I cite the relevant authors and
publication year i n parenthesis in the text or fotnotes of this bok). I
have also investigated contrary published allegations, but I have rfted
the distored opinions with facts. My experiences in 1989-90, combined
with subsequent events and research, have slowly woken me up to face
the fact that my country (the USA) is the most evil one on the face of
the earth and in the history of mankind.
16
THE TRIUMH OF EVIL
1N1LLL11LN
AN OBJECTIVE ANALYSIS OF RLATIVE
POSITION IN THE HISTORY OF DELIBERTE
EXTERMINATIONS OF HUMAN BEINGS
"I spellf JJyar and 4 months in ativ militar serice as part of this
countr 8 most agile militar fore, the Marine Cors. I servd in all com
missioned ranks from Scond Lieutenant to Major General. And during that
period I spent most of my time being a high- mucleman for Big Busi
nes, for Wall Stret, for the bankers. In shor, I W a rateer a gangster
for capitalism. I heled make Meico, eally Tampico, safe for American
oil illerts in /914. I heled make Haiti and Cuba a decent plae for the
National Cit bank bo to collet rvenue in. I helped in mraing of hal
a dozen Central America rublic for the beneft of Wall Stret. Te recor
of racketeering is long. I helpd puri Nicaragua for the interational bank
ing house of Brwn Brother in /909-19/2. I brught light to the Dominican
Republic for American sugar intersts in /9/6./n China I h to see that
Standard Oil went its wunmoleted. During those yars I had, a the bys
in the back rom would say, a swell racket. Loking bak on it, I fee/ I could
have given AI Capone a fw hints. Te bst he could do wa to operate his
racket in three districts. We Marines operated on thre continents. "
-Maj. Gen. Smedley Butler, USMC (ret.), Novembr 1 935.
Most Americans lear in schol, through the mainstream media, and
from Hollywoo that they are and have always been the "good guys"
fghting evil villains (Schulz, 1982), as symbolized by John Wayne, or
the recently deceased Roy Rogers in his old wester movies (Rickey,
1998). Most Americans are made to believe that their system stands
for democracy, freedom, human rights, and honest hard work in the
pursuit of happiness within a capitalist framework, and they are led to
see anyone who opposes their model system, espcially communists,
l
THE TRIUMH EVIL
as the "bad guys" (Zion, 1995). This attitude has resulted in the USA
being internationally perceived by some to be the "capital of global
arrogance" (Azad, 1998).
Americans' attitudes (arrogant or otherwise) are heavily shaped by a
press that has become increasingly concentrated under the control of
just a few USA companies (Foerstel, 2000). Jensen (2000) has reported
that six media firms now "control most of the world's information:
Time Warer, Viacom/CBS, Disney, Bertelsmann, General Electric, and
the News Corp." Even these few companies work together closely with
each other in many joint ventures (McChesney, 2000). As stated by
Phillips (2000), "Media is no longer a competitive industr but rather
an oligopolic collective of like-minded rich, white, upper-class elites
with shared agendas seeking to expand their power and infuence glob
ally. This concentrated media can easily manipulate (and censor) the
information provided to the public to help it achieve its capitalist goals.
For instance, in response to a question regarding the media's silence
on a paricular issue that would have portrayed corporate America in a
negative light, one television station manager bluntly stated, "We paid
$3 billion for these stations, and we have the right to make the news.
The news is what we say it is" (Clark, 2000).
''The six largest U.S. frms accounted for more than 90 percent of
U.S. theatre revenue," and "half a dozen major chains" rule "the roost"
in the newspaper industry (McChesney, 200). "More and more places
are becoming 'one-paper' towns," and "radio is now dominated by a
few mega-companies, each of which own hundreds of stations" (Jack
son, 2000), while "U.S. book publishing is now dominated by seven
frms, the music industry by fve, cable TV by six," and "nearly all of
these are now parts of vast media conglomerates" (McChesney, 2000).
"The ownership and control of news media by an increasingly small
and select group of business owners is bound to restrict the kinds of sto
ries that get widely reported" (Lewis, 2000). One jouralist put it more
subtly, "If you know that they really don't want certain stories at the
top, you're not going to do those kinds of stories" (Andersen, 2000).
While there are small and alterative media organizations (Foerstel,
2000), their credibility is often marginalized, such as by comparing
them with fantasy magazines like the National Enquirr if their views
var substantially from those of the mainstream giants, which thereby
1SIk0D0Cf|0N 1 9
set the standards. Some of the big media/enterainment conglomerates
have a signifcant amount of non-media commercial holdings (includ
ing in the armaments industry), and, in the interest of their own corpo
rate proft maximization (as well as that of their rich corporate adveris
ing clients), they have a natural pro-USA-capitalism (and even pro-war)
bias (Foerstel, 2000). Also contributing to the media's pro-USA-capi
talism prejudice is the fact that "the media corporations and the spon
soring cororations [i.e., the large corporate advertisers which efec
tively use their advertising expenditures to buy the media] are them
selves tightly interlocked" (Jackson, 2000).
The media's pro-USA bias is frher reinforced by the heavy reli
ance of the press on USA goverment sources of information for their
gathering and analysis of news, which can lead to extreme distortions
in reporting to the public (Herman and Chomsky, 1988). In particular,
with respect to interational events, the mainstream media ofen just
regurgitates stories created by tpe CIA for propaganda purposes (Gof,
200). Saadawi (2000) concludes, "Never before in histor has there
been such domination of people's minds by the mass media . . .. How can
we be free to choose if the media injects us day and night with false
information?"
While "tabloid" or ''yellow jouralism" has long existed in the capi
talist media to incite people to war and for other ends (such as to mobi
lize support for launching the War of 1898 against Spain), a form of
capitalist jouralism has developed in the USA and in Wester coun
tries that even more blatantly admits to being particularly biased and
one-sided (Piroanac, 200). This new "jouralism of attachment" is
designed to provide a type of psychological "therapy" reporing which
attempts to make the jouralists and their readers feel god about them
selves and their countr regardless of the facts (Independent Com
mission of Inquiry, 1999). It represents the philosophy of "giving the
people what they want" irrespective of factual information, or lack
thereof (Schlechter, 2000). Since the advertisers who pay for televi
sion and other media are looking for audiences with money to spend,
the "people" the press feel obligated to satisf are those with more
money, w. hose very wealth naturally makes them right-wing anticom
munists, and whom the media do not want to tum of with overly "lib
eral" reporting (Foerstel, 2000). There is thus no "market" for anti-USA
20 THE TRIUMH EVIL
and anti-capitalist facts and repors, and so capitalism naturally censors
such information (Johnstone, 2000).
Although the USA media ofen report some evil actions of the USA
and its politicians, most of the attention is focused on relatively minor
issues, such as sex scandals, which are said to represent exceptions that
can be corrected with better human morals (Zion, 1995). The worst
excesses are either ignored or distorted as a great triumph for the USA
(Foerstel, 2000). However, as a result of the criticism on minor issues,
the USA press is widely perceived as being objective and perhaps even
overly critical (Herman and Chomsky, 1 988). In fact, the USA media
covers politicians' personal lives and sexual behavior so extensively
that attention is defected fom the terrible atrocities American political
leaders have allowed the USA to commit (Foerstel, 2000).
The possibility exists that even the USA leaders have been brain
washed by the media propaganda, which itself is so powerful that it
ofen convinces even the propagandists themselves (Smith, 2000). The
result is a classic case of denial, whereby people do not want to hear,
investigate, or believe facts contrary to the "good" image crated. For
instance, within the context of comments abut a "rediscovery of our
values," the very popular President Ronald Reagan stated in Januar
1989 (a few years before he himself was aficted with Alzheimer's
related memory loss), "If we forget what we did, we won't know who
we are" (Greene, 1 999). This statement was either incredibly naive
(demonstrating extraordinary ignorance of how terrible we Americans
really have been as a people), extremely cynical (in terms of deliber
ately attempting to help dupe us Americans into a false sense of pride
in the terrorism committed by the USA), or subconsciously factual (that
we won't even realize that we represent a mass murdering nation of
zombies, unless we wake up to the historical facts and cure our nation's
sickness).
Even those who recognize that the USA has committed many crimes
against humanity typically try to justify the USA's atrocities by asserting
that the USA has not been as terrible as other countries. For instance,
the USA media is often so successfl in vilifing the USA's enemies
(like the Serbs) that even many lef-wing critics of the USA and its
policies are fooled into supporting some atrocities such as the USA's
deliberate bombings of civilian targets in Yugoslavia in 1 999 (Foerstel,
JSIk0D0Cf|0N
21
20). Despite the propaganda barrage against the enemies of the USA,
Minvestigation of the facts indicates that it is the USA which has been
ating imperialistically and immorally, engaging in actions that mlittle
diferent fom the very evil policies employed by Adolf Hitler who also
vilifed and slaughtered masses of innocent people (Johnstone, 2000).
In fact, a carefl analysis of history and current afairs indicates that
the USA has committed the worst atroities in world histor. A mere
listing of the crimes committed by the USA in its history provides edu
cational perspective on this issue, but an objective measure of atrocities
is required in order to establish unbiased evidence on the subject.
For this purpose, the estimated body count of unarmed innocent civil
ians deliberately killed by a country can be used to keep score. Accord
ing to that numeric measure, the USA is indeed number 1 , although it
may be only slightly ahead ofNazi Germany and Spain. Other countries
in the top ten are listed to provide perspective, as are a few other coun
ties with a reputation for infamous atrocities.
EVI DENCE ON USA ATROITIES
The USA has killed over l l million unarmed civilians in a long con
tinuous histor of engaging in massive extermination campaigns, ter
rorism, imperialism, and other atroities. This histor ranges fom the
genocide of native American Indians (and stealing of their land) to the
enslavement of Afican blacks; fom the imperialist invasion of Mexico
in the first half of the 1800s (enabling the USA to seize more land
fom the Indians) to the War of 1898 that was launched to permit the
USA to seize Spain's colonies; from the Monroe Doctrine (which efec
tively solidifed the USA policy of controlling or colonizing the West
er Hemisphere) to the frequent invasions of Latin American countries
that have continued throughout the 1 900s to ensure goverments there
remain largely under the control of the USA; fom the terrorist aerial
bombings of civilian targets that have killed millions of unarmed inno
cent civilians over the last 50+ years in places like Korea, Vietnam,
Laos, Cambodia, Iraq, etc. (and maimed millions more) to the murder
of millions of unarme civilians by CIA-imposed dictators such as in
Indonesia, Guatemala, El Salvador, Chile, etc. (Zion, 1 995). A more
exact breakdown of the body count follows:
22
THE TRIUMH OF EVIL
TABLE 1:
TALLY OF UNARMED CIVILIANS DELIBERATELY KILLED BY
THE USA
nRtmt0 DumBtt
L A X
Indians 5,00,00 pre-1910
Fi lipinos 1,00,00 1899-1906
Ger., Jap. 50,00 1942-45
Koreans 1,0,00 1945-53
Indonesians 50,00 1965-66
Vietnamese 1,0,00 1965-73
Cambdians 50,00 1969-73
Iraqis 1,0 ,00 1991-98
Miscellaneous 50,00 1946-98
W U AA
! U AA

Churchi l l (1994)
Schirmer and Shalom ( 1987)
Markusen and Kopf ( 1995)
Ho, Hui, and Ho (1993)
Griswold ( 1979)
Herman (1970)
Herman G Chomsky ( 1988)
lAC (1998b)
Blum (195)
Although each of the foregoing extermination campaigns is fairly
well documented in the listed references, the breadth and depth of the
USA atrocities merit provi ding more details and perspective.
The USA's Beginning Genocide
To begin the analysis with the USA's frst, longest, and largest mass
murder, it is first necessary to estimate how many Indians were in what
is now the USA before the arrival of the white invaders. This task
is especially important because USA propaganda would have people
believe that the USA was largely a vast unsettled wilderess (occupied
by only a few "non peoples called savages") before the invasion of the
whites (Jennings, 1975).
Henige ( 1998) has provided an abundance of facts indicating overesti
mation of the original Indian populations in Central and South America,
but the Indian population existing within the USA before the arival of
the Europeans has been widely underestimated by a very large amount
for much of the nineteenth and twentieth centuries (Churchill, 1994).
While the USA was originally estimated by many early observers to be
populated with millions oflndians (Thorton, 1987), even these guesses
may have been far too low (at least parially because they were lacking
in documented analysis). Nevertheless, many successive researchers
have discounted (instead of more appropriately raised) such prior esti-
iNTRODUCTION 23
mates, resulting in a compounded reduction in the already low numbers
that lack scientifc justifcation and that are unquestionably far below
the actual original level of the native American population (Churchill,
1994).
There is a very important political purpose and personal nationalistic
bias in reporting very low numbers. In particular, underestimating the
original Indian population makes the USA seem almost vacant origi
nally before white ocupation, thereby creating the impression that the
conquest of the territory was a "settlement" as opposed to an invasion
and mass killing (Johansson, 1982). There was also an imporant legal
reason for the extremely low bias in early Indian population estimates,
British colonial law only allowed settlers to seize vacant territory and
did not permit the taking of land by force or faud (Jaimes, 1992).
Jennings ( 1975) has indicated that many of the low estimates of the
original Indian population are based on "ofcial" USA goverment
sources, such as a Smithsonian Institute book listing numbers estimated
"without specifc documentation" by Money ( 1928).
1
The meaning
lessness of such goverment estimates is easily illustrated by Money's
count of only 25,000 Indians in all of New England in the early 1600s,
when one tribe living in a small 80 square mile area of New England
alone numbered over 30,00 at that time, and when there is documenta
tion of other densely settled territories of New England (numbering as
many as 100 Indians per square mile) as well (Jennings, 1975). Simi
larly, whereas Money ( 1928) estimated scarcely a million Indians for
the entire USA, archaeological evidence indicates millions of Indians
lived in the easter end of the Ohio Valley alone (Jennings, 1975). Nev
ertheless, modem authors, even those sympathetic to the Indians like
Brown ( 1970), ofen recite ridiculously low numbers based on the "of
cial" USA count. Mooney's "ofcial" ( 1928) book actually implies less
than one Indian per square mile on the 3+ million square miles of the
USA. Such a low estimate is obviously ludicrous when one considers
that there was a well-documented one Indian on average per square
mile in "one of the world's areas least hospitable to human habitation"
in a Wester Hemisphere deser (Dobyns, 1966). Even numbers below
ten million Indians in the USA appear somewhat absurd in light of
researchers estimating 8 million or more Indians on a single island
(Hispaniola) in the Caribbean. (Thomson, 1998).
Unknown
24 THE TRIUMH EVIL
A much more plausible estimate of the original North American
Indian population is provided by Domenech ( 1860), an unbiased Euro
pean, who traveled extensively among the native Americans, studied
many reports of other travelers and researchers, provided an analysis
of many of the hundreds of Indian tribes in the USA, and stated the
number of Indians north of Mexico to have been 16- 17 million in
the mid-seventeenth century. A similar estimate based on other data
is provided by Sale ( 199 1 ), who estimated 15 million Indians north
of Mexico. Churchill ( 1994) has stated the number of Indians living
north of Mexico was most likely between 12.5 million and 18.5 million
before the invasion by the whites. Because Canada was very sparsely
settled by Indians (Thompson, 1966), originally with "four or fve or
more times" as many Indians in the USA as in Canada due to the exis
tence of"four or fve times" as much land suitable for agriculture ( Jafe,
1992), most of the 12.5- 18.5 million Indians north of Mexico lived
in what is now the USA at the time of the white invasion. However,
thousands fed subsequently to Canada (Brown, 1970), which devel
oped a relatively benevolent relationship with the Indians (Daunton and
Halper, 1999), to escape the USA's attacks (Jennings, 1993).
Churchill's ( 1994) range of estimates is partially derived fom the
typically observed 90-99% "disappearance" rates for native populations
in various areas of the Wester Hemisphere cited by Dobyns ( 1966),
who suggested assuming no more than a 98% elimination rate. With the
low point for the number of Indians north of Mexico being 370,000 (of
which 250,000 were in the USA) at the end of the nineteenth centur
(Thorton, 1987), a division by one minus the maximum recommended
disappCce rate of .98 (i.e., a division by .02) indicates 18.5 million
Indians. Using the 250,000 fi gure for the continuous 48 USA states
alone in the calculation implies 12.5 million Indians there. However, it
is virtually certain that far more than 12.5 million of the 18.5 million
Indians were originally in the USA territory, since a large number of
the modem Indians in Canada were descendants of refgees from the
USA's imperialist policies (Jennings, 1993), and since the USA's geno
cidal policies (Churchill, 1994) surely made the survival rate for Indi
ans in the USA much lower than in Canada.
In any event, such population estimates based on average disappear
ance rates in various places observed in the Americas are very likely on
/NTRODUCTION 25
the low side. In paricular, there is substantial evidence (some of which
is reported subsequently in this Introduction) that the USA had a delib
erate extermination strategy that was far more efective and continuous
than the Indian policies used by the other white invaders (Churchill,
1994). As a result, it is probable that the USA had a much higher elimi
nation rate than the rest of the occupiers of Indian land (thus indicat
ing an extermination rate over 98%, and therefore implying an Indian
population in excess of 18.5 million north of Mexico).
Thompson ( 1966) has recommended an alterative metho of esti
mating the original Indian population as the number that could exist
on the land given the technology and resources (assuming the popula
tion would stabilize at that level). While Dobyns ( 1966) has indicated
that only 2 million square miles in the USA were ''ft for Indian habita
tion, Kroeber ( 1939) has estimated over 150 Indians per square mile
on various large tracks of hospitable inland and coastal USA territory.
Extrapolating those fgures implies that the USA could have potentially
suppored over { 150x2 million}=300 million Indians i f it were every
where as densely settled as in the most populated areas.
However, although about half of the 2 million square miles of hospita
ble USA territory were ferile river valleys (Dobyns, 1983), not all hos
pitable areas of the USA could have suppored 150 Indians per square
mile. For instance, Thomas ( 1976) provides widespread evidence of
typical crop yields for Indians in the USA that were high enough to
maintain populations as dense as 90 people per square mile on typi
cally hospitable land, even afer allowing for sizable felds lef unculti
vated for decades to permit soil rejuvenation (and some hunting). The
latter, more realistic fgure implies that the USA could have suppored
many as 180 million Indians.
A more conservative estimate is implied by Dobyns ( 1983), who has
cited a study indicating that ffeenth century Norh American Indian
farming methods could have supported between 10 and 25 Indians
per square kilometer of average hospitable teritory (or over 20-50 per
square mile). One reason for using Dobyns's lower fgures is that many
Indians also engaged in a signifcant amount of hunting and fi shing, in
addition to farming, and those activities tended to use up mor territor
than pure farming (Thomas, 1976).
Dobyns ( 1976) has cited one estimate of 5 purely hunter-gatherers per
26 THE TRIUMH EVIL
square mile of mountainous territory in the USA and 10 per square mile
for hunter-gatherer-fshers, but he also cites another estimate ( fom a
nineteenth century researcher) of 50 Indian hunter-gatherers-fshers per
square mile over a large 25,000 square mile stretch of Califoria terri
tory. Using the more conservative former numbers, Thompson's ( 1966)
methodology would imply only 10-20 million Indians on the 2 million
square miles of hospitable territory in the USA i f no Indians were f arm
ers. Because most Indians were engaged in agriculture as well as hunt
ing and fshing (Dobyns, 1983), the number of Indians per square mile
would actually be between 5 and 90. Thus, the estimate of 20-50 Indi
ans per square mile is very feasible, implying 40- 100 million Indians on
the two million hospitable square miles of the USA.
While even these lower fgures may seem high compared to the ridic
ulously low estimates put out by the USA goverment, an Indian popu
lation density of 20-50 per square mile is comparable to t hat of less
populated areas of Europe in the same era. In particular, the number of
people per square mile (of combined hospitable or inhospitable land)
in Europe ranged between 1 0 and 100 in di ferent countries in the late
fourteenth centur (well before Columbus "discovered" America), even
though the bubonic plague had just wiped out 1/3 of the European pop
ulation at that time ( Hobhouse, 1989) . Given t hat less efcient crops
were planted in Europ t han what the Indians historically planted in
what is now the USA (Thomas, 1976), given t hat Europe had less ferile
soil and a more inhospitable climate in many places than the hospitable
areas of the USA ( Hobhouse, 1989), and given t hat people also engaged
in an extensive amount of hunting in Europe ( Sale, 199 1 ), there is no
reason to believe that Indian population densities should be substan
tially lower t han the range of European ones. In fact, detailed empirical
research provides widespread evidence that Indians in the USA could
indeed subsist on similar acreage ( and therefore with similar population
density) as Europeans, and they could do so with less ground prepara
tion and mechanization because of their heavy use of efcient crops
like com (Thomas, 1976).2 In addition, since Indian lifespans in many
parts of the USA have been found to be similar to those in Europe at the
time (Thorton, 1987), it is very likely that they could h ave grown to a
similar population density. Moreover, it should also be mentioned that
a population density of 20-50 Indians per square mile is far less than
]NTRODVCTION 27
the 125 Indians pr square mile estimated to have originally existed in
the 200,00 square miles of Central Mexico where farming technology
was no more advanced t han t hat used at the time by Indians in what is
now the USA (Borah and Cook, 1969). An estimate of 20-50 Indians
per square mile for the USA is also substantially lower than estimated
for many other parts of Central and South America (Denevan, 1976).
It should be emph asized that the estimate of 40- 100 million Indians on
the hospitable teritory of the USA ignores the Indians on the 1,000,000
suare miles of desert in the 48 mainland USA states (MacLeod, 1928),
well as those native Americans in Alaska and Hawaii . Given th at
there were some Indians who lived in even the extremely arid USA des
ers (Domenech , 1860), and given th at Hawaii wa home to hundreds
of thousands aborigines ( Larsen, 1 994 ), 90% of whom were also exter
minated by the USA invaders (Jennings, 1975), the latter numbers may
not be trivial .
Another estimate o f the original Indian population in the USA can
b obtained fom actual sightings of Indians by settlers. For instance,
aft er the Europeans had unsuccessflly tied to colonize Virginia in the
sixteenth century (Dobyns, 1 976b), a second white invasion of the terri
tory led a Virginia colony secretary to make notes in 1612 indicating 0.7
Indi an warriors observed pr square mile on hospitable land (MacLeod,
1928). However, Dobyns ( 1966) mentions th at many potential warriors
(or young adult males) may never have been seen because they died
from disease or retreated frther inland before being sighted in battle
formation. In addition, since many Indian warriors may have engaged
in guerr illa warf are instead of deliberately forming into mass count
able groups th at could be decimated by the white invaders' superior
fipower ( Jennings, 1 975), many more warriors may not have been
counted. The number of unobserved young adult Indian males could
have been especially large in Virginia, since Indians in the southeaster
states of the USA were less likely to be organized into tibes that would
send warriors out to face settlers and soldiers ( Hobbouse, 1989). Even
the lae organized tribes of Virginia "avoided out-in-the-opn battles,"
ad retreat was ofen their only option for escaping from the deadly
settlers (Sale, 1 99 1 ). Moreover, even for Indian tribes that did fght,
milit service itself was voluntary, and so not all young Indian males
were warriors (Novack, 1972). Assuming th at 50-90% of the young
28
THE TRIUMPH EVIL
Indian males may have died or retreated inland before being observed
in massed battle formation, there would be between 1 .4 to 7 young adult
males per square mile. Assuming 4 Indians per young adult male as in
some overly conservative prior research (Denevan, 1 976), that implies
5. 6 to 28 Indians per square. Given two million square miles of hospi
table land in the USA (Dobyns, 1 966), there would be between 1 1 . 2
mil lion and 56 million Indians in what is now the USA. Since there is
evidence that there were actually five (Dobyns, 1 983) or six (Denevan,
1 996) Indians per young adult male (as opposed to the four assumed in
the calculations), and sometimes as many as twelve (Domenech, 1 860),
these figures could rationally be increased by 25-50% or more (to at
least 1 5-70 mil lion Indians in the continental USA).
Dobyns ( 1 983) has provided more detailed data indicating there were
actually 1 1 .2- 1 2. 5 Indians per warrior, as not all young males were
available to fght on the front lines, and because there were numerous
older and younger male Indians as well as females. Such a higher mul
tiplier seems especially plausible if the multiplier itself is to incorpo
rate the information provided in the previous pargraph about not all
warriors being observed. Using the lower end of the 1 1 .2- 1 2. 5 range,
the Virginia sightings of 0. 7 warriors per square mile therefore imply
7.8 Indians per square mile, or 1 5.6 million Indians extrapolated to all
2 million hospitable square miles of the continental USA. This figure
should be increased somewhat to allow for the Indians on inhospitable
lands in the continental USA, as well as on land in Hawaii and Alaska.
Moreover, given that Virginia (the basis for the extrapolated estimates)
was probably less densely settled than other areas like New England
(Hob house, 1 989), it is certainly possible that the number of Indians in
what is now the USA originally far exceeded 1 6 mil lion.
Dobyns ( 1 983) actually cites estimates of over 10 Indians per square
mile in Virginia and over 30 Indians per square mile in New England.
These fgures imply 20-60 mil lion Indians in the USA if the other of
the 2 million square miles of hospitable land in the USA were equally
densely settled. While MacLeod ( 1 928) has estimated that only 1 . 5 mil
lion square miles of the USA were originally inhabited by the Indians,
largcly because of an assumption that the mountains and vast Midwest
ern prairie lands were not cultivated by them, this hypothesis appears
to be in error. In particular, some of the mountains of the USA may
INTRODUCTION 29
have been occupied with as many as 5 Indians per square mile (Dobyns,
l976a), and archaeological evidence indicates that there were originally
a large number of actual Indian towns on the Midwester prairies (Mis
sissippi Valley Historical Review 1 925) and that the Indians on those
prairies were originally farmers who existed on diets heavy in com
(Larsen, 1994). Regardless, even making the false assumption that the
prairies and mountains were totally vacant, the numbers still indicate at
least 1 5-45 million Indians in the USA. Thus, it is pretty clear that there
were originally far more than 1 0 million Indians in what is now the
continental USA, as recent scholarly estimates indicate (White, 1 995).
By the mid-nineteenth centur, Domenech ( 1 860), an unbiased French
obserer (whose own travels as well as his study of other Indian voya
geurs led him to believe that the USA goverment estimates for the
Indian population to be only of the true total at the time), estimated
the number of Indians in the USA to have fallen to between one and
two million (as he reported that the "greater part" of the hundreds of
Indian tribes had disappeared or were "almost extinct" by 1 860). By the
time most Indians had been rounded up and sentenced to desert reserva
tions in 1 890 (or forced to fee into Mexico or Canada), their number
in the continental USA had dropped frther to only 250,000 {Thorton,
1987). Even afer having well over 95% of their population eliminated
by the tum of the century, the Indians still had to endure several more
decades in their desert concentration camps. In the meantime, most of
the remaining Indian children were separated fom their parents so that
American Christianity could be taught to them without "pagan" parent
infuence, and only aferwards were they fnally granted USA citizen
ship and allowed to leave their reservations (Churchill, 1 994). Even
afer citizenship had been granted, the Indians remained por, since the
few resoures on their desert reservations were ofen given to the "non
Indians" (who alone had sufcient capital to exploit them), and since,
outside the reservations, "those few [Indians] who do obtain employ
ment paying a decent wage or salary are ofen expected to act like
whites if they expect to be promoted or retained" (Meister, 1 976).
The disappearance of the native Americans in the USA cannot be
attributable to assimilation into white society, as marriage and assoia
tion with Indians was generally fowned upon religiously and socially
until the twentieth century (Jennings, 1 993) and was even illegal in
30
THE TRIUMPH OF EVIL
some areas of the USA (Waters, 1977). However, many of the remaining
250,000 Indians of the USA at the end of the nineteenth century were
of mixed race (Dobyns, 1983), as temporary sexual relationships had
frequently developed out of contacts with white traders (McCracken,
1959). While granting Indians citizenship in the twentieth century has
increased their assimilation into the overall USA society to the point
where the number of people with some partial I ndian ancestry has risen
to about 10 million (or less than 5% of the USA population), the number
of people in the USA with some partial I ndian ancestry outside the res
ervations was only a few hundred thousand in 1 900 (Johansson, 1982).
The latter fgure represents about 1 % of the overall combined 76 million
Indians and non-Indians living in the USA in 1900 ( World Almanac,
1998), and represents substantially Jess than 10% of the original Indian
population before the invasion of the whites. These numbers stand in
sharp contrast with those of neighboring Mexico, which immediately
granted citizenship to I ndians upon its founding (Jennings, 1 993), and
which today has a population that is 90% at least part-Indian (compared
to only 4% of the USA population having any Indian heritage) and that
includes about 30 million pure Indians (U.S. News & World Report,
1993).
While a signifcant portion of the Indians in the USA may have died
out because of diseases spread by the invading whites, researchers such
as Meister ( 1976) have documented the fact that it wasn't the contact
with the whites but the brutal practices of the white invaders (such as
removing Indians from their land, food, and water sources) that led to
the high Indian death rate from disease (and that led to the virtual exter
mination of the I ndians in the USA). Domenech ( 1860) has explained
that I ndians actually increased their population over time when allowed
to live stationarily in peace in a fertile area, but that migrations forced
upon them by the USA destroyed their morale, fequently drove them to
alcohol, and weakened their ability to resist disease. Regardless, while
a severe epidemic or widespread outbreak of disease might temporar
ily drop a poulation level by a third under normal conditions (Hob
house, 1989), it took an invasion and outright genocidal policies to vir
tually exterminate the Indians (Thorton, 1997) . In addition, although
many I ndians may have died in intertribal battles (Thorton, 1987},
such fghting had been fairly minimal until the whites employed mili-
INTRODUCTION 3 1
DQforce to push Indians tribes ever farther westward into other Indian
tribes' territories (Jennings, 1975, 1993).
Assuming at a minimum the lower end of the range of Churchill's
( 1994) possibly very low estimates (i.e., 12.5 million) for the number of
Indians originally being in what is now the USA, assuming one half of
the Indians in the USA were killed by or intermarried with the Spanish
and others who had ocupied parts of what is now the USA for a time
(such as in Florida and the Southwest), assuming an extremely high
estimate of 500,00 Indian warriors were killed while engaged in battle
with armed forces (Thorton, 1987), assuming a half million I ndians
in the USA fled to Canada or Mexico, and assuming noral popula
tion growth of 0% (due to the disease, hunger, and dislocation cause
by the white invasion potentially reducing the I ndian birth rate to the
level of the normal death rate), one arrives at an extremely conservative
estimate of 5 million Indian noncombatants killed by the USA. How
ever, given that there were likely far more than 12.5 million I ndians
originally living in what is now the USA, given that the rate at which the
Spanish and others killed or married Indians was only a small faction
of the USA extermination rate (Cok, 1943), and given that the Spanish
and others occupied only a portion of the USA and only for a time, it is
likely that the number of Indians killed by the USA far exceeds 5 mil
lion (and is probably greater than 10 million, although only the absolute
minimum fgures are included in the conserative Table 1 count).
The European "settlers" in the USA had been involved in the slaugh
tering of Indians at least since their invasions at Roanoake in 1607 and
Plymouth in 1620 (Churchill, 1994). Although Britain advised the set
tlers to pay for the land they seized, such a requirement was virtually
impssible to enforce (Chalk and Jonassohn, 1990), especially since the
colony states had been made fairly autonomous (Osgood, 1957). Even
when local British military forces formally forbade settlers from invad
ing Indian territories (in an attempt to keep the peace with the Indians),
enforcement was very difcult without more troops and more formal
British laws (Downes, 1940). As a result, until 1763, the settlers were
abl

to feely steal fom the Indians and kill any of them who got in the
way, and, even in instances of actual settler purchases of land from the
native Americans, fraud was normally involved (Chalk and Jonassohn,
1990).3 Within such an environment, fghting naturally broke out fre-
32
L LmL(
quently (Utley and Washburn, 1985). In an attempt to help protect both
themselves and their land from the invading American settlers, many
Indians allied themselves with the French in various wars, as well as
politically with Britain in some of the continuous disputes over settlers
stealing Indian property (Chalk and Jonassohn, 1990).
Finally, Britain, which sought to exploit the Indians via trade as
opposed to land thef (Jaimes, 1992), established in 1763 a blanket proc
lamation that formally forbade American settlers fom stealing more
land fom the Indians, setting a boundary at the Allegheny mountains
(Smith, 200). While frontiersmen like George Washington saw the
proclamation as a "temporary expedient to quiet the minds of the Indi
ans," and while there were numerous attempted breaches of this law
(including an outright military invasion of Indian territor by Virginia
militia in 1774), the Indians (with some British encouragement in the
complex political environment) had some success in enforcing the proc
lamation (Downes, 1940). In fact, the 1763 legal infingement on set
tlers ' "right" to steal Indian lands was one of the primary motivating
factors in the American settlers' revolution fom British rule 12 years
later (Novack, 1972), although important tax and trade issues were
also involved in the confict (Smith, 2000). Most Indians quite natu
rally sided with the British against the USA in the American Revolu
tionar War (which lasted until at least 1782 west of the Allegheny
mountains), as, despite some French political assistance later in the war,
USA attempts to win Indian neutrality with treaties promising to steal
no more Indian land and to engage in friendly trade (through which
the Indians hoped to obtain the weapons needed to defend against set
tler encroachments. on their land) were foiled by continued USA settler
invasions of Indian territor and by the USA's failure to pay for gods
traded with the Indians (Downes, 1940).
Afer the USA victory over Britain, the white American settlers were
"freed" from British legislation prohibiting the thef of more land from
the native Americans. As a result, it became possible for more USA
territories and states to be created out of frther areas stolen from the
Indians. The USA initially claimed all Indian territory as its own, arro
gantly announced that the Indians as a whole had no rights whatsoever
to their own land, and ofered the Indian nations the choice of various
small reservations under USA dominion or the "destruction" of their
/NTRODUCT/ON 33
''women and children" (Downes, 1940). However, USA military inva
sions of Indian territory wer initially defeated in the early 1790s, and
so the USA resorted thereafer to using loal military superiority to
force indivi dual Indian tribes/nations to enter into treaties to give up a
portion of their land in retur for the USA agreeing to stop its attacks
(Jennings, 1993). Such treaties were similar to those entered into by the
USA in the 1775- 1782 war (Downes, 1940), although this pacifcation
strategy was not completely successfl in holding all Indian military
forces at bay in the American Revolutionary war or in subsequent con
ficts such as in the War of 18 12 (Utley and Washbur 1985).
The USA pacifcation traties with the Indians were substantially dif
ferent from those typically entered into earlier by the European colonial
powers. In particular, the European colonists had generally engaged in
teaties with Indians merely in order to form alliances with them to
promote trade, although it is true that allied Indians were ofen encour
aged to fght other tribes who were cooperating with competing Euro
pean powers (Jennings, 1975). In contrast, the USA's strategy was to
use each successive treaty to "keep the natives quiet" on the frontier
until the newest conquered possessions could be flly absorbed and
"resources could be mustered and organized" to allow armed settlers
and soldiers to invade other Indian territories that the USA had guar
anteed by treaty not to seize (Jennings, 1993). Grinde ( 1975) provides
an illustrative case study whereby settlers in the 1800s invaded Chero
kee land guaranteed by federal treaty and engaged in widespread kill
ing of lndians there, but Federal ofcials generally allowed such behav
ior, legally asserting in the Cherokee case that the Federal treaties were
overridden by local goverment rights (such as that of the state of Geor
gia here) which invariably sided with the settlers and lef the Indians
with no rights.
USA purchases of land fom European powers, as well as the USA's
seizure of territory from Mexico in an imperialist war that the USA
launched in the middle of the nineteenth century (Zinn, 1995), enabled
the USA to carry on its strategy of engaging in pacifcationextermination
of ever more Indians. Frequently, afer settlers had invaded the Indian
territories guaranteed by prior treaties (and had begun taking or destroy
ing Indian foo sources on the Indian lands), the Indians were paid a
nominal amount for the lands they were forced to give up (under threat
34
THE TRIUMH OF EVIL
of more violent expulsion) in a new treaty that would also be broken by
the USA at some point thereafter (Domenech, 1860). The USA eventu
ally signed over 350 treaties with various Indian tribes or nations and
it broke each and every one of them (UAINE, 1998). Only thereb,was
the USA able to expand westward.
While the American Revolutionary War had freed the USA from the
all-important British infringement on the country's "right" to steal more
land, the original 13 USA states generally maintained most of the same
laws that they had created when they were autonomous states under
British colonial rule. These laws included providing rewards for the
extermination of Indians. In paricular, the state goverments set up
by the settlers had begun in 1641 to establish legislation that ofered
rewards for the killing of any and all Indians (including men, women,
and children, although special rewards were ofered for Indian boy
scalps), with such legislation continuing in efect into the late nine
teenth century (Waters, 1977). Note that these laws and killings could
scarcely be blamed on European countries, since the colony states had
had full autonomy in setting such Jaws. In particular, the American set
tlers had locally elected their own legislatures and many other gover
ment ofcials (generally exhibiting even more democracy than existed
in England itself), and "the common people probably had a stronger
voice in their goverment in the English colonies than they did in any
other part of the world at that time" (Chitwood, 1948).
Having seen the prior "success" of the extermination laws in the east
em states, many of the new territories seized by the USA also adopted
legislation paying for the killing of any and all Indians. Over ten territo
ries and states with such extermination laws, including Califoria, Col
orado, Connecticut, Georgia, Indiana, Kentucky, Massachusetts, New
York, North Dakota, Oregon, Pennsylvania, South Dakota, Texas, and
Virginia, are listed just as examples by Waters ( 1977) and Churchill
( 1994).
Although the individual states and territories were allowed to set up
their own decentralized reward system for killing Indians, the genocide
campaign was national in scope. The country's frst president, George
Washington, told his fellow Americans that Indians were to be "hunted
like beasts," and the USA hero Thomas Jefferson said that the USA
should "pursue [the Indians] into extermination" (Churchill, 1994). As
[NTRODUCION
35
a result, Indians were hunted like animals, and their springs were delib
erately poisoned (Waters, 1977). Their villages were bured, their crops
were destroyed, and successfl eforts were undertaken to keep them
from obtaining fsh for food (Craven, 1968) . In addition, diseases were
deliberately spread among the Indians, and force was fequently used to
drive the Indians from their hunting and crop lands (Thorton, 1987).
Cook ( 1943) wrote that, to USA citizens, "all Indians were vern, to
b treated as such .. .. Since the quickest and easiest way to get rid of his
toublesome presence was to kill him of, this procedure was adopte
standard for some years. Thus was carried on the policy which had
wiped out 8H 0O558 tribe afer tribe across the continent." Stannard
( 1992) reported, "In 1784 a British visitor to America obsered that
'white Americans have the most rancorous antipathy to the whole race
oflndians; nothing is more common than to hear them talk of extirpat
ing them totally fom the face of the earth, men, women, and children."
This attitude eventually resulted in the "American aphorism 'The only
god Indian is a dead Indian"' (Brown, 1970) .
Besides being ofered cash rewards for killing Indians, USA citizens
were also given a strong incentive to kill (or disprse or otherise dis
pose of the native American Indians in order to be able to seize their
land that the USA goverment claimed and "sold" ver cheaply (Stro
bel and Peterson, 1999). Miller ( 1975) has documented one case where
a few USA settlers shot thousands of unarmed Indians (possibly over
10,000, including many on a reservation designated by the whites) from
one peaceful tribe alone (the Yuki) over a short period of a few years
in the mid-nineteenth century, and, despite the successfl slaughter of
virtually the entire tribe with almost no settler casualties, the murder
ers actually protested formally to their state goveror when soldiers
refused to help with the massacre. While the speed of the genocidal
actions of this case (with over 90% of the tribe being directly murdered
in less than a decade) may have exceeded the norm, the latter settler
protest provides evidence that such genoidal acts were not only nor
mally sanctioned but also expected.
However, not all 5+ million Indians were shot. In true capitalist
fashion, the USA succeeded in its genocide at a minimum cost in
terms of resources expended, as those Indians who fed the livable land
seized by the USA with its guns ofen died of starvation and disease
36
THE TRIUMH OF EVIL
( Jaimes, 1992). To frther expedite the extermination process at mini
mal expense, dogs were ofen used to hunt down the Indians (to save on
the labor costs of hunting them), and, once caught, Indian children were
sometimes killed by bashing their heads against t rees to save gunpow
der costs ( Waters, 1977). Few Indians put up a fght, since 70% of the
Indian tribes were outright pacifists (Sale, 199 1 ), and since most of the
rest also realized that they could not win against the superior fi repower
of te white killers (Merriam, 1905). In this extermination campaign,
stattonary Indtan farmers had little chance of survival and so some
.
.
lndtans attempted to escape fom the USA's New Order by becoming
sritly mobile hunters of bufalo and other game (Hobhouse, 1989),
gtvmg up their extensive agricultural pursuits even on the breadbasket
f the Midwest (Larsen, 1994). Although this non-stationary form of
hfe was contrary to most Indians' nature (Domenech, 1860), a number
of Indians were able to successflly adapt to this environment, with
one t ribe (the Navajo which had historically been composed of nomadic
hunters) even being able to prosper under these conditions, more than
doubling its population between 1600 and 1860 (Meister, 1976). None
theless, in the end, few were able to escape f rom the genocidal policies
of the USA, which reacted to the Indian hunting strategy by deliberately
killing tens of millions of their bufalo food (and other game) in a delib
erate attempt to starve the remaining Indians into extinction (Thorton,
1987) .
Nevertheless, because even these efcient extermination procedures
were not fast enough for some white invaders, the USA f requently
resorted to deliberately spreading diseases, such as by having items
(li ke blankets) known to be infected with deadly germs put in or near
Indian settlements (Stannard, 1992). Jennings ( 1988) documents allega
tions that ofering Indians "gifs" infected with smallpox was a "wide
spread" practice on the wester f rontier in the 1800s as well as earlier
( Jennings, 1988) . There were also very serious Indian accusations of the
USA infecting Indian prisoners with smallpox prior to releasing them
back into their tribes to cause epidemics (Mississippi Valle Historical
Review 1925) . Evidence exists that the deliberate spreading of disease
by USA settlers began in the 1600s (Jaimes, 1992) and continued into
the late 1800s (Stear and Steam, 1945). Although "such things . . . were
not likely to be advertised to the world by the perpetrators" (Misissippi
/NTRODUCTION
37
Valley Historical Review 1925), concrete evidence has ben uncovered
for at least some of the terible deeds (Jennings, 1988) . In just one such
campaign alone in the mid-nineteenth century, the USA may have killed
several hundred thousand Indians by giving them blankets known to be
infected with smallpox ( Jaimes, 1992). Perhaps, parly as a result, there
were Indian religious movements that preached a refsal to accept any
gifs, tradable goods, or other items that had been in contact with the
white settlers (Downes, 1940).
Although other European invaders, especially the Spanish, also delib
erately slaughtered many Indians (Stannard, 1992), the USA was by
far the most atrocious. Just for instance, according to Cok ( 1943), the
Indian population in Califoria fell by only 33% between 1770 and
1848 during Spanish and Mexican. rule, but it fell by over 800/ fom
this lower level during the frst 32 years of USA rule fom 1848- 1880.4
In addition, in contrast to the fact that a signifcant prtion of the drop
in Indian population under Spanish and Mexican rule was due to Chris
tian conversions and interracial marriages assimilating a number of the
Indians into the "civilized" society, virually all of the decline in Indian
ppulation under USA rule was caused by extermination plicies that
did not allow interracial marriages and assimilation until much later. In
the USA, not just the military but virtually all who came into contact
with the Indians were involved in the genocide, as the various loal
goverments themselves had not only legalized the slaughter, but they
also paid rewards for the killings (Waters, 1977) .
While the exact number of Indians slaughtered by the USA is not
known, the evidence is to overwhelming to seriously question the
deliberate and extensive nature of the genoide. The evidence also pro
vides substantial suppr for a hypothesis that the number of unare
innocent Indians deliberately killed by the USA far exceeds the ver
conservative 5 million estimated here.
Subsequent USA Killings of Innocent Unarmed Civilians
Scarcely had the USA's virtual extermination of the Indians been
accomplished, and the USA sought out more lands to steal and more
people to slaughter. Afer attacking and defeating Spain in the War of
1898, the USA proceeded to seize some of Spain's former colonies
such as the Philippines ( Copeland, 2000). Although the people in many
of the new lands now claimed by the USA did not conduct any major
38 THE TRIUMPH OF EVIL
rebellion against their new rulers, a large Filipino resistance army had
seized almost the entire Philippines from the Spanish before USA troops
arrived, and the USA invaders had to wage an outright war against the
Filipino pople until 1902 (and fght off sporadic Filipino resistance
until 19 15) in order to subdue the native population ( Agoncillo, 1969).
In retaliation for the resistance to the USA's colonial conquest, the USA
directly massacred hundreds of thousands of Filipino civilians, while
hundreds of thousands more died of starvation and disease trying to
escape the massacre-- over 600,000 were killed on the Luzon island
alone by early 190 1 according to the commanding USA general there
(Franklin Bell), and that was before numerous subsequent massacres, in
one of which over 100,00 more Filipinos on Luzon were killed accord
ing to statistics compiled by USA government ofcials ( Schirmer and
Shalom, 1987). A USA Congressman who observed the "pacifcation"
of the Philippines stated that the USA army "simply swept the country
and wherever and whenever they could get hold of a Filipino they killed
him" ( Kamow, 1989).
The USA frst began its newest form of terrorism through aerial bom
bardments of civilian targets in a war against enemies almost as atro
cious: Nazi Germany and fascist Japan. Although the Germans and Jap
anese also committed terrible extermination campaigns in World War
II, there is little moral diference between the German and Japanese
killings of unarmed ci vilians percei ved to be enemies and the USA's
slaughter of unarmed innocent German and Japanese ci vilians in its
deliberate terrorist bombardments of civilian targets, especially given
the many USA aerial attacks that were deliberately aimed at civilian
living quarters (Markusen and Kopf, 1 995). It should also be mentioned
that Churchill ( 1994) has uncovered documents indicating the Nazis
were merely following the USA's role model with respect to exter
minating unwanted people. While fgures provided by Markusen and
Kopf ( 1995) indicate only 500,000 civilians killed by USA bombings
in World War II, Webster s ( 1992) reports well over ,000,000 German
and Japanese civilian deaths in World War I I. Since the USA dominated
the aerial teror bombing campaign (with the only other major player,
Britain, engaging in much smaller operations), most of those civilians
must have been killed by the USA (Markusen and Kopf, 1995).
As for more moem atrocities through USA aerial terrorist bomb-
iNTRODUCTION 39
ings, the slaughter of over 250,00 unarmed Laotian civilians during the
period 1965-73 and of over 50,000 innoent unarmed Cambodian civil
ians during the 1969-73 interval (as estimated by the Finnish Inquir
Commission) is indicative ( Herman and Chomsky, 1988). These exter
minations occurred at a time when there were no Cambodians or Lao
tians fghting Americans in any form. Given the fanatical anticommu
nism of many brainwashed Americans who do not perceive communists
people worthy of life, it should also be mentioned that few if any of
the Cambodians and Laotians were even communists initially.
Although in Vietnam there were indeed armed communist guerrillas
fghting Americans, they were actually only strggling for the right to
the fee elections that the French bad promised upon their departure
fom the colony (Blum, 1995). Slaughtering possibly as many as ten
innoent civilians with terrorist aerial bombings for ever one "enemy"
soldier killed (successflly exterminating an estimated 1,000,000 civil
ians by 1970) seems to represent deliberate murder, especially if these
ations are considered in the light of the various extermination state
ments made by American leaders at the time ( Heran, 1970). To try
and justif such actions as being part of normal warfare is tantamount
to trying to justif Hitler 's mass murder of the Jews because a small
ftion might have taken up arms against him ( Markusen and Kopf,
1995).
Thayer ( 1985) cites estimates of only 200,000-400,000 civilians
having died in Vietnam, but his fgures are based on the number Qf civil
ians being admitted to South Vietnamese hospitals, and these numbers
ignore the massive number of civilians killed in remote or communist
controlled areas where USA air attacks were concentrated. While an
exact fi gure for the number of Vietnamese civilians murdered by the
USA is not known, McNamara ( 1999) bas cited Vietnamese goverment
evidence of over one million Vietnamese civilian and militar casual
ties per year, implying that millions of civilians were killed during the
p
0
oof the heaviest USA involvement between 1965 and 1973, since
estimates of military deaths (which may be more accurately measured)
are only a million or so for the whole war (Bums and Lei ten berg, 1984) .
Vietnam ofcially reports 2 million ci vilian dead (C,2000b), which
would imply far more than 1 million maliciously murdered by the USA,
given that Thayer 's ( 1985) data imply collateral civilian casualties from
40 THE TRIUMPH OF EVIL
actual military battles between opposing ground forces numbered far
less than 400,000, and given that the communists themselves delib
erately killed only about 40,000 civilians (Lewy, 1 978). Herman and
Chomsky ( 1 988) report the total number of Vietnamese killed in the
USA's war against Vietnam to be about 3 million, but all these fgures
may underestimate the true total, especially if one considers not only
the direct murdering of civilians via USA aerial bombings bt ' ia
t raditional executions (by USA and puppet South Vietnamese ground
forces) but also those killed indirectly as a result of the USA's deliber
ate attempts to murder millions by starvation through the destruction of
food supplies (Zinn, 1995).
Even in Iraq, where the USA might have seemed justifed in fghting
the Iraqis who had seized Kuwait in an almost bloodless invasion, it
should be mentioned that Kuwait was an artifcially created monarchy
(Salinger and Laurent, 1 991 ), which continues to maintain a repressive
rule of that area of the world even afer its "liberation" from I raqi rule
(Associated Press, 2000b). In paricular, Kuwait was carved out of a
larer Iraq shortly afer World War I by the British (and made formally
"independent" in 1 96 1 }, so that the vast oil resources there could con
tinue to be controlled by capitalist companies subsequent to Britain
giving up its Middle Easter colonies (Blum, 1 995). There is also some
evidence that the USA plotted to encourage/provoke Iraq into its inva
sion in 1 990 to retake the territory (Salinger and Laurent, 1 991 ). Regard
less, for purpose of the body count, the USA's terrorist aerial bombard
ments on I raq attacked mostly civilian targets (including civilian air raid
shelters deliberately), directly resulting in the death of approximately
50,000 Iraqi civilians (Clark, 1 992) and almost completely destroying
the civilian economy (Lafn, 1 994). Moreover, the USA bombings
deliberately and systematically destroyed vital civilian targets (such as
irigation systems, power plants, and sewage disposal systems), and this
destruction combined with the continuing embargo against Iraq have
resulted in extremely poor sanitary conditions, inadequate medical ser
vices, hunger, and related disease that has killed over one million Iraqi
civilians, a ver large number of whom are children according to a
United Nations (UN) study (Flounders, l 998b). In addition, the USA's
use of depleted uranium weapons in the 1 99 1 war continue to cause
tens of thousands of cases of terminal illnesses (such as leukemia and
INTRODUCTION 41
cancer) for those who live near to where such weapons were used (lAC,
1 998b).
Although the USA was able to use the L as a cover for its military
attacks on Iraq in 1 99 1 , the USA alone was responsible for its massive
bombing of civilian targets, and although the embargo of lraq was origi
nally agreed to by the L in 1990 afer Iraq occupied Kuwait, it has
been the USA vetoes (with British supprt) of UN proposals to lif the
trade sanctions that have perpetuated the embargo long afer the I raqi
withdrawal (Flounders, 1998b ). While the USA has agreed to loosen
the trade sanctions in recent years to allow the impor of some nutri
tional items (including alcohol) and luxur gods (like cars), many
necessities (like parts to rebuild Iraq's power and transportation infra
strcture, agricultural and medical equipment or components, and even
medicines) are still held up by the USA, as the USA continues to try
to terrorize the Iraqi people into overhrowing their leader, whom the
USA goverment leaders just happen not to like (King, 2000). Even a
USA congressional representative has recently called the USA-led (and
USA-enforced) embaro against Iraq "a horrendous plicy-it's infan
ticide" (CNN, 2000a). USA Secretar of State Madeleine Albright's
statement that the mass killing of civilians in Iraq is "worh it" as a
means to achieve the desired political goal of removing Saddam Hus
sein fom power verifies the deliberate nature of the USA's extermina
tion of innocent Iraqi civilians (lAC, 1998b ).
As for the crimes of the CIA and its controlled leaders, I ndonesia is a
god example. There in 1 965, the CIA had one of its allied Indonesian
military leaders (Suharo) overthrow the elected goverment in a coup
and then proeed to murder close to one million unared communists
and other civilians, who had been part of, or identified with, a previ
ously elected coalition goverment (Griswold, 1 979). While the CIA
gave the Indonesian goverment a great deal of latitude in slaughtering
virually any people with lef-wing opinions, the CIA also provided lists
of thousands of specifi c Indonesians to be exterminated (Blum, 1 995).
The communists here, like the Jews under Hitler, ofered virtually no
rsist ance as they were killed by combinations of army trops, police,
and gangs or paramilitary forces that were specifcally armed by the
CIA for the task (Levene and Roberts, 1 999). In addition, the same
CIA
ally (Suharo) slaughtered hundreds of thousands of innoent
42
THE TRIUMH OF EVL
people in one of his annexed provinces (East Timor) in the 1 970s and
1 980s (Blum, 1 995). While some of the estimates of the number killed
exceed a million in the 1 965-66 blod bath alone (Levene and Roberts,
1 999), Amnesty International estimates between 500 000 and 1 000 000
1
,
1
were murdered in the 1 965-66 extermination campaign, while a frher
200,000 have been killed in East Timor (Blum, 1 995). Although some
might not blame the USA in cases like this indirect mass murder, to
exonerate the USA here would be equivalent to excusing Hitler for most
of his murders, because he had foreign fol lowers and "protectorate"
goverments in Croatia, Ukraine, Lithuania, Poland, Romania, Austria,
and other counties carry out much of his slaughter, and because most
of his victims (including most Jews) were foreigners in terms of never
having resided in Germany (Markusen and Kopf, 1 995).
The larest extermination campaign not yet mentioned occurred in
Korea. In paricular, the South Korean militar dictatorship that was put
into power by the USA afer World War II was busy kil ling unarmed
civilians with lef-wing opinions in South Korea even before the Korean
War broke out in 1 950. Ho, Hui, and Ho ( 1 993) estimate that about
1 00,000 unarmed South Korean civilians were executed by the South
Korean goverment before 1950, while Scheffer ( 1 999) cites a South
Korean army veteran's estimate of several hundred thousand. The
Korean war itself (provoked by frequent South Korean military inva
sions ofNorth Korea) gave the South Korean goverment the ability to
greatly increase the number of executions without attracting too much
interat.ional notice (Blum, 1 995). In addition, early in the war, the
U.S. military ofcially ordered all civilian refgees to be shot ( Work
ers World 2000b). Ho, Hui, and Ho ( 1 993) estimate that one million
South Korean civilians were murdered by USA and South Korean forces
during the 1 950-53 war, while several hundred thousand North Korean
civilians were slaughtered during the short time of occupation by USA
and South Korean forces (ofen via gruesome procedures such as by
burying masses of people alive, buring large groups of civilians alive in
locked buildings, and even pouring gasoline down the throats of babies
screaming for milk). Until recently, any South Korean who talked about
these crimes (including victims or relatives of victims) faced a prison
sentence in their country (Griswold, 2000).
Halliday ( 1 98 1 ) indicates the extent of such USA atrocities in Korea
INTRODUCTION
43
to b "probably true," and he reports specifc evidence such as a USA
diplomat admitting to the killing of over 1 00,000 South Korean civil
ians afer the USA reocupation of South Korea, and the sending of
thugs and dispossessed landlords to North Kora during the temporar
USA occupation of that country in 1 950. Besides these mass murders,
the USA slaughtered many more Norh Korean civilians in its teror
bombings ofNorh Korea that destroyed virually all civilian buildings
there during the Korean War (Smith et al., 1 996). As a result, demo
graphics indicate that the North Korean male (
f
emale) ppulation fel l
fom4,782,00 in 1 949 t o 3,982,00 i n 1 953, while the female popula
tion fel l from 4,840,000 to 4,509,000 over the same time interval (Hal
liday, 1 98 1 ). These numbers, which are consistent with those estimated
by McCormack and Selden ( 1 978), indicate over a million North Kore
as lost even assuming the birth rate actually fel l K the normal peace
time death rate during this stressful period (the 33 1 ,000 drop in the
Norh Korean female population imply that a large prtion of those
killed were indeed innocent civilians). A plausible estimate is that
1 2- 1 5% of the Norh Korean people (or 1 .2 to 1 .4 million people) alone
were killed during the Korean War (Smith et al., 1 996), not to mention
the million or so South Korean civilians killed by the USA and its pup
pets, for a total of about 2 million civilians (Ayling, 200) .
A general source of details on the crimes ofthe USA since World War
II is Blum ( 1 995). The list of mass murders committed by USA bomb
ings or CIA puppets includes dozens of additional countries, among the
most infamous of which were the slaughtering of over 1 50,000 Guate
malans in what Amnesty Interational has called a "program of politi
cal murder" (Harbury, 1 994), at least 75,00 El Salvadorian civilians
(Blum, 1 995), at least 40,000 Colombians (Mcinerey, 1 998), and at
least 10,00 Chileans (Sandford, 1976),5 not to mention the thousands
of civilians who have been killed by USA ations in many other coun
tries such as Iran, Nicaragua, and Angola (Blum, 1 995).
6
The body count in Table 1 does not incorrate any USA crimes
which may have been committed but for which there is curently little
or no evidence. For instance, Keeler ( 1989) repors that the CIA had
M Operation Pique that was designed to afect the mental attitudes and
bhavior of employees at nuclear power plants in communist Easter
Europe, implying some intent to cause a nuclear meltdown/holocaust.
44
THE TRIUMH OF EVIL
Given the very bizarre and otherwise virtually inexplicable behavior
of the employees who caused the nuclear disaster at Chemobyl in the
Soviet Union in 1 986 (Medvedev, 1 99 1 ), it is possible that the USA's
Operation Pique may have had something to do with it (and therefore
may be responsible for the thousands of deaths which resulted but which
are not counted here).
In addition, because the focus is on the deliberate murder of unared
civilians, Table 1 does not count the many unarmed Japanese POWs
who were slaughtered by the USA (Dower, 1 986). Nor are all the people
ki lled by USA embargoes counted in Table 1 , as only the million Iraqi
civilians clearly and deliberately killed by the USA through a combina
tion of blockade and terror bombing of civilian tarets m included in
the 1 1 + million fgure.7 Nor does this analysis count the efect of the
USA's use of modem US biological weapons, some of which may have
been deliberately launched against countries like Cuba (Franklin, 1 992)
and North Korea (Ho, Hui, and Ho, 1 993), and others may have just
"escaped" the laboratory (Horowitz, 1 997).
This analysis also does not incororate some of the other atroities
deliberately committed by the USA, in which there may have been a
substantial amount of harm and torture inflicted but few dead bodies.
For instance, there is some evidence that the CIAINSA dos engage
in mind control torture (ofen through cults and other front organiza
tions), and even estimates as high as 1 0 million victims (many of whom
may, as a result, have their lives wasted in mental asylums or be lost
through suicide and other unnatural deaths) have been cited in a 1 995
Texas conference on the subject (sponsored by the Freedom ofThought
Foundation) in the video "The Rosetta Stone to the Unconscious." Note
here that the NSA stands for the National Security Agency, about which
most Americans knew nothing for decades, although it was the largest
"intelligence" organization in the USA (Bamford, 1 983), thereby pro
viding an indication of the enormous potential for secret undisclosed
crimes of the USA secret police (since most Americans had never even
heard ofthe NSA much less knew of its covert actions). Some interest
ing sources on the CIA/NSA crimes committed in the USA m Bowar
( 1 978), Stich ( 1 994), and Constantine ( 1 995), who also document some
of the cooperation between the USA "intelligence" agencies and orga
nized crime, including joint efors to sell narcotics. The latter activi-
INTRODUCION
45
ties may not really b so surprising given that the drug trade was actu
ally instrumental in the spreading of British capitalism and colonial rule
(ho'Mas, 1 997). While some of the repors on the activities described
in this paragraph (but not countable in the aggregate doumented boy
count reported in Table l ) may be exaggerated (or distored in some
way, as would be expected in mind torture activities), they merit men
tion because of the paucity of mainstream media coverage of the evi
dence on these issues and because of the lack of evidence rfting the
claims.
The foregoing measurement of the USA's mass murders also does not
include its part in one of the worst atroities in histor: the enslave
ment of millions of Africans. Tens of millions of Africans died (mostly
on land) while being forceflly transported to their new "homes" in
Aerica (Stannard, 1 992). Capitalist countries spread a belief that Afi
cans were "half-animal" in order to "justif" their crel enslavement
(Chin, 2000), at the same time that they spread the gospel that free
te (including in people) would beneft all. However, the facts indi
cate that_ "there can be no doubt that the level of culture among the
masses of Negres in West Afica in the ffeenth centur was higher
than that of norher Europe, by any standard of measurement-homes,
clothes, artistic creation and appreciation, plitical organization and
rligious consistency" (DuBois, 1 965). Africans were also way ahead
of the whites in many areas of technology, astronomy, and navigation at
the time, pssibly even having "discovered" America a centur before
Columbus bungled into it (Chin, 2000).
However, despite the cultural superiority of African culture, the Euro
colonialists had superior weapnry through which they were able
to win control of Africa by application of direct military fore and by
paying and arming Afican "allies" (Davidson, 1 961 ). The African pup
of the whites were manipulated (through intrigues, bribs, and
threats) into sering the will of their European masters to have the
human "goos" delivered (in retur for more weapons and luxur items)
into the middle of the nineteenth century (lsaacman and lsaacman,
1 983 ) The slave trade itself robbed Afica of its prime workers and cre
ated a chaotic society that focused on obtaining slaves for expor instead
of on domestic production of real goods (DuBois, 1 965). In particular,
cAfrican economic and soial system was destroyed by Europeans'
46
THE TRIUMPH OF EVIL
proftable use of exploitative trade strategies, which involved selling
mas

produced luxury goods to the African rich (especially to the slave
tradmg puppets themselves) in retur for slaves and other commodities
thereby reducing the demand for traditional Afican production for th
-lack masses and hu
.
s bankrupting local African producers. This system
IS actually very snrular to the methods utilized by the USA today to
destroy foreign economies and to economically enslave much of the
world, as will be explained later in Chapters 6 and 7.
Alt?ugh te USA was not the only country involved in committing
atroc1t1es agamst slaves, the USA treatment of Africans was in many
respects worse than the other major players such as the Spanish. In

articular
:
there were less slaves brought to the USA than to the Span
ISh colomes (at least parially because the USA had less people and
money than the Spanish colonies initially), and so the USA was not
able to murder, rape, and torture as many as the Spanish. However, the
USA slaver laws were much more atrocious insofar as they made the
blacks and their descendants slaves forever, whereas the Spanish did
not enslave the ofspring and even al lowed most of their existing slaves
to ear or buy their freedom eventually (Teepen, 1 998). For instance, in
contrast to the early nineteenth century USA where blacks were almost
always slaves, the proportion of the African population that was free
had risen in 1 808 (afer only I 00 years of slavery) to over 75% in one
Spanish colony of the Wester Hemisphere (Sharp, 1 976).
In addition, many think slavery ended in the USA in the 1 860s, after
the norther USA states executed a plan to fee the slaves in the south
em states (formally announced in 1 863) as part of a successful mil itary/

litical effort to win (by 1 865) a very bloody civil war, which began
(m 1 861 ) when the norher states tried to impose a protectionist tarif
system on the country as a whole, and the souther states (which wanted
"free trade" in both gods and people) seceded fom the union in pro
test (Copeland, 200). However, after the souther whites lost the civil
war, they created a form of neo-slavery by forcing blacks to sign work
contracts that essentially sold their freedom and lives to white owners in
return for being allowed to live (Lewis, 1 998). Because the blacks had
no money, no food, and no land, they bad no other choice (Zinn, 1 995).
This "efcient" system (which provided capitalists not only with the
advantage of cheap black labor and lowered the cost of agricultural raw
]ODUCTION
47
materials for industry but also drove down the cost of competing white
labor and thereby made USA industr even more competitive) lasted
into the 1 900s (Finkin, 1 997).
As documented by Patterson ( 1 970), such explicit forms of slaver
have been replaced with more subtle forms of racism and wage slavery
in the twentieth century that are similar to those used by Nazi Gerany
against the Jews before their extermination in World War II, and data
indicate that this system has resulted in the early death of over 30,00
blacks per year in the USA (cumulating to millions of deaths over time).
The signifcantly higher death rates for USA blacks have continued into
the twenty-frst century, with USA blacks still having a life expectancy
over fve years less than for USA whites (mostly because of pvery),
and with blacks therefore continuing to have to pay higher life insur
ance premiums (Paltrow, 2000) that (among many other biases) frther
impoverish them (and therefore actually contribute to the higher death
rates themselves in a typically circular capitalist process of making the
por ever poorer). Perhaps fttingly, the USA continues to honor explicit
slaveowners on almost all of its paper money (including George Wash
ington, Thomas Jeferson, Andrew Jackson, Ulysses Grant, and Benja
min Franklin), with even the exception of Abraham Lincoln (on the $5
bill) having once said, "I do not stand pledged for the prohibition ofthe
slave trade between the states. I, as much as any man, am in favor of
having the superior position assigned to the White race" (Cosby, 1 998).
With many of these slaveowners (such as Andrew Jackson and George
Washington) also having been mass murderers of Indians (Churchill,
1 994), it seems appropriate to honor them on the ver money and wealth
which was derived in large par from the policies of black slavery and
Indian genocide.
Te Table 1 count also does not include the many millions of other
people who died in the USA in the past as a result of the capitalist eco
nomic system. Besides slavery, this system caused harsh working con
ditions (as exemplifed by many male and female children as young as
6 years old having to work 1 00 hours per week just to survive), unem
ployment, poor living conditions, and general poverty (Zinn, 1 995). The
resulting deaths do not appear to be deliberate, even though the only
crime for which these millions were killed was that they were bor poor
in a capitalist society.
48
THE TRIUMPH OF EVIL
Nor does this analysis of USA mass murders incorporate any of the
repressive aspects of the formal plice state that exists in the USA itself.
In particular, the USA is a leader in the number of police per capita and
in the percent of the population locked up in prison, with 5 times
many prisoners per capita as the rest of the world (Buttereld, 2000).
The per capita prison population in the USA in the 1 980s (and today)
was actually more than twice as high as that in what the USA used to
refer to as the Easter European communist "police states" (UN, 1 994).
In addition, the total number of uniformed, undercover, private, secret
police, and related administrative personnel in the USA is about 1 % of
the population (Reynolds, 1 994) and even exceeds the per capita num
bers of 1 988 East Germany, which was reputed to be among the most
notorious of the "police states" ofEaster Europe (Diedrich, Ehlert, and
Wenzke, 1 998).
OTHER CouNTRIES RANKED IN THE ToP TEN IN
EXTERMINATIONS OF PEOPLE
While other countries have also committed mass murder on a grand
scale, their atrocities rank lower than the USA in all cases. Only two
other countries even come close to the USA in terms of the magnitude
of their extermination campaigns.
Germany ranks number 2 in mass murders largely because Nazi
Germany under Hitler's capitalist rule in the 1 933-45 interval delib
erately killed over 1 0 million civilians (most during the war years of
1 941 -45), including over 5 million non-Jewish Soviet civilians, 5 mil
lion Jews, and hundreds of thousands of others (Markusen and Kopf,
1 995). Many were executed directly, but mill ions of others were delib
erately slaughtered more indirectly through hunger and disease in con
centration camps or in scorched-earth ocupied territories (Elliot, 1 972).
The Nazis actually used the USA as a role model in some of their racial
policies and extermination campaigns (Churchill, 1 994) that so greatly
enhanced the profits (and stock prices) of the German corporations,
which had been instrumental in fnancing Hitler's democratic election
to power (Feinberg, 1 999). For instance, a December 2, 1 941 German
Economic Armament Staff report stated the objective of the scorched
earth policies in the occupied teritories as "the elimination of the sur
plus eaters (Jews and the population of the Ukrainian ities such as
INTRODUCTION 49
Kiev, which receive no food rations at all)," indicating deliberate mass
murder (Wytwycky, 1 982). Slightly less than half the Soviets and only
about half the Jews were killed with poison gas or executions (Elliot,
1 972). The number of civilians (especially the number of Soviet and
Polish civilians) killed by Nazi Germany would be even larer if all
those who died of exploitation (i. e. , overwork and underourishment)
were included, as Elliot ( 1 972) and Wytwycky ( 1 982) have indicated.
The Nazi holocaust was not the frst mass murder committed by
Germany. In particular, German troops had previously used a practice
of violently forcing "undesirable" natives in their South West Afican
colony in the late nineteenth centur into an unlivable desert (and firing
at any Africans trying to ret to their own land), thereby exterinat
ing tens of thousands of the Herero people there (Levene and Robers,
1999). Eventual ly, some of the remaining natives were allowed into
concentration camps, where harsh conditions killed thousands more.
There are cerainly similarities here to the USA's genocide of the native
Americans, although it is clearly on a far smaller scale and did not
employ all the gruesome tactics used by the USA (e.g., the GeOs did
not ofer rewards for the killing of any and all natives, did not deliber
ately spread disease, and did not deliberately destroy native foand
water resources-moreover, the Germans always allowed the live cap
ture of female natives and spoke of the "annihilation" of the Herero
nation as opposed to the extermination of the people themselves, pro
viding for some possibility of an "enslavement" alterative). Regard
less, Germany's killings of the Soviets, Jews, Herero, and others are not
sufciently large to put the country into first place, especially since the
eleven million estimated killed by the USA represents an extremely low
estimate (as previously explained) and may greatly understate the true
numbr of victims (which may very well exceed 20 million).
Spain ranks number 3 in terms of mass murders because it commit
ted genoide of Indians in its conquest of Central and South America in
the middle of this millenium, with many Indian noncombatants being
slaughtered with a combination of weapons and dogs, and many more
dying indirectly through starvation and disease as they fled the massa
cres (Stannard, 1 992). While some have estimated a "disappearance" of
tens of millions of Indians fom Spanish colonies in the Wester Hemi
sphere (Stannard, 1 992), estimates of initial Indian ppulations in Ceo-
50 THE TRIUMPH OF EVIL
trl and South America may have been way too high, as explained in
Denevan ( 1976) and Henige ( 1998). In addition, ofthe millions oflndi
ans who did once live in Spanish America, many were killed in battle
and fom related causes (such as from starvation and disease on the
front lines of military sieges of fortifed cities defended by ared com
batants), and many more died as a result of the harsh living and working
conditions they had to endure as Spanish slaves (Chalk and Jonassohn,
1990) or as overaxed serfs (Borah and Cook, 1969).
A large portion of the Indians in Spanish America died of disease,
which spread rapidly in the environment of Spanish conquest (Stan
nard, 1992), but Spain's ofcial policy was one of forcing the conver
sion of the Indians to Christianity and subservience as opposed to out
right genocide (Jaimes, 1992). As a result, except for the deaths result
ing fom some of the initial genocidal policies followed by the Spanish
Conquistadors, who may have engaged in willfl extermination poli
cies that contributed to the spreading of disease (Larsen, 1994), most of
the Indian deaths are not counted as deliberate murders. In particular,
the Spanish generally sought via slavery (and extracting raw materials
like gold fom their land) to economically exploit the Indians (and not
kill them), and, in contrast to the USA policy of ofering rewards for
the killing of natives, Spain even punished "heroes" like Columbus just
for excessively exploiting the Indians (Chalk and Jonassohn, 1990). In
addition, a signifcant portion of the decline in the Indian population of
Central and South America can be attributable to the Spanish policy of
separating the Indian male slaves fom the females for substantial peri
ods of time and by working them so hard even when they were allowed
to meet that they had "little inclination for marital communication; in
this fashion they ceased procreation" (Cook, 1998). Moreover, a large
par of the reduction in the pure Indian population in the Spanish colo
nies was due to interracial mating, as many Indians were assimilated
into soiety via Christian conversions, and most Spanish freely mar
ried with the Indians (Driver, 196 1). Although Spain has also commit
ted atroities against non-Indian peoples, such as during the Inquisition
(which mostly involved the Christian murder of non-Christians), it has
not been involved in any material atroities in the last few decades. An
exact number of noncombatants deliberately killed by the Spanish is
not known, but it may exceed 5 million (Stannard, 1992).
INTRODUCTION 5 1
The remaining counties in the top ten killed far less pople. For
instance, number 4 Pakistan murdered as many as O million Benga
lis in 1971 (Chalk and Jonassohn, 1990), numbr 5 Japan slaughtered
over a million Chinese civilians in its invasion of China in the 1930s
ad 1940s as well as conducted several lesser atities (Markusen and
Kopf, 1995), numbr 6 Turkey exterminated over a million unare
Aenian civilians btween 1915 and 1922, as well as thou of
pople in the Balkans in prior years (Levene and Robrs, 1999)
thounds of Ku in subseuent years (Andrepulos, 1994), numbr
7 czarist Russia slaughtered over a million people in a purge ofCircas
sians fm its Caucasus provinces (Levene ad Robers, 199), m
8 Nigeria kille over a million of its ethnic Ib civilians (via flagt
mass murder, blatat aerial bmbings of civilians, and delibrate efors
to prevent Re Cross and other relief supplies fom reaching a sting
civilian ppulation) in a war against its seessionist Biafra province
(orsyth, 1969), numbr 9 France masacre over 50,00 in its colo
nies (Smith, 20), ad numbr 10 Britain legaliz the killing of hun
of thousds of pple, including over 20,0 abrigines in
Australia afer rling the county to b ''uninhabite" in 1788 (Reyn
olds, 195), and over 30,00 Irsh in the seventeenth century (Leven
ad Robrs, 199) in a pliament-apprve campaig that
all setions of Irish as if they were, not humans but basts," and that
impsed the death pnalty for Irsh found rly communicating
with Catholic priest or fai ling U leave land seiz by British sldiers
(MaManus, 1973). " It is inWing to obsere mwith the exception
of Japan, all of m counties in the top ten m religiously Christian O
Moslem.
.
In addition, all of the cunties in the top Ujust happn to b capital
ISt one, even though "crit" is bing given here for the millions
who have die of statio di$ as a rsult of colonialism
other methos of cit eonomic exploitation, as thos pople like
the millions who pshe in the slave trade) die 8 a result of the cr
ety of the capitalist ec system 8 oppsd U bing delibrately
ktlled (mand Engels, 1988b ). Te criteria w in this study U D
sthe magitu mm Cinations ignores all such d
which not clerly dlib. Fo instance, the deaths of millios 0f
slaves who die in trsit Afica were not by delibrat
52 THE TRIUMH OF EVIL
extermination policies, but instead by por living conditions that can
be attributed to the capitalist system which put a positive value on the
slaves' lives but not high enough to provide them with adequate foo,
water, quarters, medicine, and sanitary conditions (Miller, 1 988). To
provide perspective here, it should be mentioned that there is some evi
dence that the death rate of the "free" white crew members who trns
pored the slaves was about as high as that of the slaves (Curtin, 1 969),
providing an indication of the relative value (and the kill rate) of work
ers in general under capitalism (but not implying a general intent to kill
them).9
From a legal perspective, the primary reason for not including deaths
related to pure economic exploitation in the atrocity count is the fact
that deli berately killing workers (even one's own slaves), was generally
against the law, even though such murder was only a misdemeanor in
the USA when the victim was a slave (Nicholson, 1 994). Thus, under
this legal framework, the massive deaths resulting from capitalist eco
nomic exploitation are not considered intentional kil lings. However, the
executions of runaway slaves are (although the numbers are too small
relative to the other USA mass murders to be listed separately in Table I
and are instead essentially incorporated into the "Other" account), just
as the mass slaughter of civilians of specifc countries with bombings
and embargoes is counted as deliberate murder because it was not only
allowed but even ordered by the USA (and killing Indians in any fash
ion was obviously even more deliberate insofar as it was not only legal
but also encouraged by the USA with rewards of money and land).
CAVEATS ON THE REPUTATION OF COMMUNIST ATROCITIES
Given the distorted reputation of communist countries in the capital
ist press (Herman and Chomsky, 1 988), some may fnd it surprising that
no communist countries made the top ten, especially since even many
skeptics of the mainstream media (and lef-wing critics of the USA)
often recite the anticommunist propaganda they hear in the mainstream
press, such as by referring to the Union of Soviet Socialist Republics
(USSR) as "one of the twentieth centur's most bloody dictatorships"
(Str

bel and Peterson, 2000). However, the widespread belief that com-
. mumst governments have killed mil lions is largely a myth that is spread
by th

capilist press, which is heavily infuenced by the CIA and its
fanatical anticommunist allies (Blum, 1 995). ' 0
INTRODUCTION
53
For example, many blame Pol Pot for the deaths of millions of his
own people during his rule of Cambodia between 1 975 and 1 979, with
some being executed for collaborating in the USA's murder of a half
million Cambodian civilians through aerial bombardments, and with
many more being killed for attempting a coup against him in reaction to
his military attacks on Vietnam revolving around a border dispute (Kier
nan, 1 996). However, the neutral Finnish Inquiry Commission investi
gated and found that the number executed by Pol Pot was onl between
75,000 and 1 50,000 (Herman and Chomsky, 1 988).
While it is true that hundreds of thousands of Camboians died of
starvation and disease under Pol Pot's regime, these deaths do not
appear to be any more deliberate than the poor who die of similar causes
under capitalism. In fact, many of these deaths were the result of the
USA bombings themselves, which had destroyed Cambodian agricul
ture (via the destruction of 75% of its draf animals and substantial
amounts of rural housing, a well as the depopulation of the country
side that resulted from millions feeing to the cities to escape the USA
bombings). Despite a forecast by sources close to the USA goverment
that a million people would die in 1 975 if Camboia were deprived
of USA aid (which had been partially feeding the stg, refgee
swollen cities before Pol Pot seized pwer), the USA not only stopped
aid afer Pol Pot became rler but also imposed an embargo against the
country it had so terribly bombed (Herman and Chomsky, 1 988). Some
imports of food from communist China and Pol Pot's forcing of the city
dwellers to the farms shortly afer his takeover in 1 975 prevented the
disaster from being any worse (Kieran, 1 996).
It should also be mentioned that, subsequent to Pol Pot's removal
fom power (which occurred afer the Vietnamese ary counterattacked
and ocupied Cambodia in 1 979), the USA supported Pol Pot in his
guerilla war against the ocupying Vietnamese trops (Blum, 1 995). In
adition, given the USA history of using diplomacy, bribes, and extor
tion to stir up tensions between communist countries (Griswold, 1 972),
it is possible that the USA itself had played a part in promoting the
deadly rivalry between Cambodia and Vietnam that motivated many of
Pol Pot's killings (Klinghofer, 1 998). Regardless, Pol Pot's execution
of 75,000- 1 50,000 people is a horible crime, although it is not enough
to make the top ten.
| I
54 THE TRIUMH OF EVIL
In a simi lar grotesque exaggeration of the trth, Rummel ( 1 991 ) and
others claim that communist China murdered tens of millions of pople,
especially during the perio 1 950-52 (shortly afer the communist sei
zure of power) and during the Cul tural Revolution in the 1 960s. How
ever, such estimates are larely based on various sources that are either
unpublished or published for propaganda purposes by the Anti-Com
munist League of Nationalist China on the island of Taiwan, which
appears to have completely fabricated the numbers (Teiwes, 1 997), in
an apparent attempt to ')ustify" its military attacks on communist China
that continued long afer the communists' seizure of power (Associ
ated Press, 1 950). Schuman ( 1 9 56) even saw and talked with some spe
cifc people in communist China afer they were alleged to have been
executed.
More accurate figures are provided by Chinese goverment sources. In
paricular, Grunfeld ( 1 996) has found a substantial amount of evidence
indicating that Chinese goverment reports in such matters (despite
being cloaked in ideological verbiage) are fairly reliable, especially in
comparison to Wester estimates that are ofen based on limited and
biased refgee claims, "wild exaggerations," or even outright fabrica
tions. 1 2 For instance, in the 1 950-52 interval (at a time when China
was fghting the USA in Korea in a war that threatened to escalate into
China itself, the Chinese goverment publicly reported (and displayed)
its executions, many of which were also publicized in the USA press at
the time (Associated Press, 1 95 1 ).
The local Chinese goverment announced a total of 28,332 execu
tions for one province (Kwantung) during the 1 950- 1 95 1 interval, and
if that fgure were extrapolated proprtionally to the rest of the countr,
i t would imply about 400,000 ofcial deaths (Stavis, 1 978). However,
that province was a coastal one near Hong Kong and may have had an
abnormally high number of executions. Other information provided by
Chinese goverment leaders indicates 1 35,000 executions nationwide
based on 800,000 ofcial trials and a reported 1 6.8% execution rate of
"counterrevolutionaries" at the height of the death sentence campaign in
1 95 1 (Meisner, 1 999). In addition to the ofcial goverment death sen
tences, there were also many executions carried out independently by
the local peasants, who may ver well have killed tens of thousands of
landlords (in retaliation for the prior decades of mass starvation inflicted
INTRODUCTION 55
upn them) and other perceived enemies such as agents or supporers of
the forer Nationalist Chinese goverment on the mainland (Teiweis,
1997).
There is one Chinese source estimate of 71 0,000 victims between
1950 and 1952 (Gong, 1 994), but that fgure may refect a speech made
by Mao in the 1 950s that referred to so many "liquidations" (Stavis,
1978), which the anticommunist propagandist Rummel ( 1 991 ) himself
admits "could simply mean to remove, deactivate, or make inefetive,
rther than kill." In addition, since there was still some fghting going
on with as many as 400,000 Nationalist Chinese guerrillas or bandits
at the time (Gong, 1 994), and since the wester and southwester
parts of mainland China remained under Nationalist Chinese rle until
1951 (Kwong, 1 997), it is possible that some of the 71 0,00 "liquida
tions" were related to the killing (or disbursing) of soldiers and armed
guerrillas, and some of the actual executions may have been of nonci
vilian POWs. Moreover, fear of arrest during the 1 950-52 strife may
have motivated as many as 500,000 people to commit suicide (Teiweis,
1997), and these deaths may have been included in the 7 1 0,000 "liqui
dations." While the suicides were certainly caused by the communist
Chinese seizure of power and subsequent campaign of public trials,
they could not b considered willfl murders (especially given the fairly
low rate of death sentences in the trials). As a result, the tre number of
deliberate killings of unarmed civilians is likely to have been far below
71 0,000 during the 1 950-52 interval.
Gong ( 1 994) cites an ofcial Chinese report of 230,000 people put
under public surveillance and 1 ,270,00 imprisoned by the communist
P
arty in the 1 950-52 interval. lfthe ofcially cited ratio of about 1 exe
cution for ever 6 convictions were applied to that data (with the other
5 of 6 convicted people being put under surveillance or imprisoned), it
would indicate about 30,000 executions during that perio. However,
even that number may be an overestimate, as the ofcial rate of sentenc
ing "counterrevolutionaries" to be put under public surveillance (32%)
doumented by Meisner ( 1 999) was much higher than Gong's ( 1 994)
fgures indicate. The diferences m the imprisonment rates may b due
to the fact that the latter fgures include many people imprisoned for
P/plitical corrption (Schuman, 1 956) as opposed to "counterrevo
lutionary" activities. Applying to Gong's ( 1 994) data Meisner's ( 1 999)
50 THE TRIUMH OF EVIL
0 N Suth America may have ben way U high, as explaine in
Devan ( 1 976) ad Henige ( 1 998). In addition. of the millions oflndi
W who did once live in Spanish America. many were killed in battle
N fm relate C (such as fom staration and disese on te
fnt line of military sieges of fore cities defended by ared com
bt), and may more died as a result of the harsh living and workg
conitions they hto endure as Spanish slaves (Chalk and Jonashn
1 9) or a overaxe serfs (Borah mCok, 1 99).
A lare prion of the Indians in Spanish America died of dise,
which spread rpidly in the environment of Spanish conquest (Sta
192), but Spain's ofcial plicy was one of foring the conver
sio of the Indians to Christianity and subserience as opposed W out
right genoide (Jaimes, 1 992). As a rsult, except for the deaths result
ing fm sme of the initial genoidal plicies fol lowed by the Spish
Coquistador, who may have engage in wil lfl extermination pti
cie mcontibute to the spreading of disese ( 1 994), most of
th I deths W not counte as delibrate murder. In paricula,
th Spansh generally sught via slaver (and extcting rw materials
l ike gold fm their land) to economically exploit the Indians (and not
M thm), and, in contrast to the USA plicy of ofering rewars for
the killing of natives, Spain even punishe "heros" like Columbus just
for excessively exploiting the Indians (Chalk and Jonassohn, 1990). In
adition, a sigcat prion of the deline in the India ppulation of
Cetl South America can b attributable to the Spanish plicy of
sn g the Indian male slaves fom the females for substantial p0
mof mby working them so bard even when they were allowe
to met that they m "little inclination for m communication; 0
fshion they cease proreation" (Cok, 1 98). Morever, a lae
of the reuction in the pure Indian ppulation in the Spanish colo
nie W due to interracial mating, as many Indians were assimilate
into siety via Christian conversions, and most Spanish feely
rie with the Indians (Driver, 1 961 ). Although Spain has also co

lt
te atities against non-Indian poples, such a during the Inquisiuon
(which mstly involved the Christian murder of non-Christias), it ha
not b involve in any material atroities in the last few decades.
exact numbr of noncombatants deliberately killed by the Spanish l
not known, but it may exceed 5 mil lion (Stannard, 1 992).
INTRODUCION 5 1
The rmaining countries in the top ten killed far less people. For
instce, number 4 Pakistan murdered as many as three million Benga
lis in 1 971 (Chalk and Jonassohn, 1 990), numbr 5 Japan slaughtered
over a million Chinese civilians i n its invasion of China in the 1 930s
ad 1940s as well as conducted several lesser atroities (Markusen and
Kopf, 1 995}, number 6 Turkey exterminated over a million unarmed
Anenia civilians between 1 91 5 and 1 922, as well as thousands of
pple in the Balkans in prior years (Levene and Robers, 1 999) and
thousands of Kurds in subsequent years (Andreopoulos, 1 994), number
7 czist Russia slaughtered over a million people in a purge of Circas
sias fom its Caucasus provinces (Levene and Robers, 1 999), number
8 Nigera killed over a mil l ion of its ethnic Ib civilians (via fagnt
mas murder, blatant aerial bombings of civilians, and deliberate efors
to prvent Red Cross and other relief supplies fom reaching a starving
civilia ppulation) in a war against its seessionist Biafa province
(oryth, 1969), number 9 France massacred over 50,000 in its colo
nies (Smith, 200), and number 10 Britain legalized the killing of hun
of thousands of people, including over 200,000 aborigines in
Austrlia afer ruling the country to be ''uninhabited" in 1 788 (Reyn
olds, 1 995), and over 30,000 Irish in the seventeenth century (Levene
ad Robers, 1999) in a parliament-approved campaig that ''treated
||sections of Irish as if they were, not humans but beasts," and that
psed the death penalty for Irish found repeatedly communicating
With Catholic priests or failing to leave land seized by British soldiers
(MaManus, 1 973).8 It is interesting to observe that, with the exception
of Japa, all of the countries in the top ten m religiously Christian or
Moslem.
.
In addition, all of the counties in the top ten just happn to be capital
Ist ones, even though no "credit" is being given here for the millions
who have died of staration and disease as a result of colonialism and
other thos of capitalist economic exploitation, as those pople (like
the mtlhons who perished in the slave trade) died as a result of the cr
ety of the capitalist economic system as opposed to being deliberately
killed
0g
and Engels, 1 988b ). The criteria use in this study to mea
the magnitude of human exterminations ignores all such deaths
lch not clearly deliberate. For instance, the deaths of millions of
aves who died in transit fom Afica were not caused by deliberate
52 THE TRIUMH OF EVIL
extermination policies, but instead by por living conditions that can
be attributed to the capitalist system which put a positive value on the
slaves' lives but not high enough to provide them with adequate fo,
water, quarters, medicine, and sanitar conditions (Mil ler, 1 988). To
provide perspective here, it should be mentioned that there is some evi
dence that the death rate of the "free" white crew members who trns
pored the slaves was about as high as that of the slaves (Curin, 1 969),
providing an indication of the relative value (and the kill rate) of work
ers in general under capitalism (but not implying a general intent to kill
them).9
From a legal perspective, the primary reason for not including deaths
related to pure economic exploitation in the atrocity count is the fact
that deliberately killing workers (even one's own slaves), was generally
against the law, even though such murder was only a misdemeanor in
the USA when the victim was a slave (Nicholson, 1 994). Thus, under
this legal framework, the massive deaths resulting from capitalist eco
nomic exploitation are not considered intentional kil lings. However, the
executions of runaway slaves are (although the numbers are too small
relative to the other USA mass murders to be l isted separately in Table |
and are instead essentially incorporated into the "Other" account), just
as the mass slaughter of civilians of specifc countries with bombings
and embargoes is counted as deliberate murder because it was not only
al lowed but even ordered by the USA (and killing Indians in any fash
ion was obviously even more deli berate insofar as it was not only legal
but also encouraged by the USA with rewards of money and land).
CAVEATs oN THE REPUTATION oF CoMMUNIST ATROCITIES
Given the distorted reputation of communist countries in the capital
ist press (Herman and Chomsky, 1 988), some may find it surprising that
no communist countries made the top ten, especially since even many
skeptics of the mainstream media (and left-wing critics of the USA)
ofen recite the anticommunist propaganda they hear in the mainstream
press, such as by referring to the Union of Soviet Socialist Republics
(USSR) as "one of the twentieth centur's most bloody dictatorships"
(Strobel and Peterson, 2000). However, the widespread belief that com-
. munist governments have killed millions is largely a myth that is spread
by the capitalist press, which is heavily influenced by the CIA and its
fanatical anticommunist allies (Blum, 1 995).
| 0
INTRODUCTION
For example, many blame Pol Pot for the deaths of millions of his
own people during his rule of Cambodia between 1 975 and 1 979, with
some being executed for collaborating in the USA's murder of a half
million Cambodian civilians through aerial bombardments, and with
many more being killed for attempting a coup against him in reaction to
his milit attacks on Vietnam revolving around a border dispute (Kier
na, 1 996). However, the neutral Finnish Inquiry Commission investi
gated and found that the number executed by Pol Pot was only between
75,00 and 1 50,000 (Heran and Chomsky, 1 988).
While it is true that hundreds of thousands of Camboians died of
staation and disease under Pol Pot's regime, these deaths do not
appear to be any more deliberate than the poor who die of similar causes
under capitalism. In fact, many of these deaths were the result of the
USA bombings themselves, which had destroyed Cambodian agricul
ture (via the destruction of 75% of its draf animals and substantial
aounts of rural housing, as well as the deppulation of the county
side that resulted fom millions feeing to the cities to escape the USA
bombings). Despite a forecast by sources close to the USA goverment
that a million people would die i n 1 975 if Camboia were deprived
of USA aid (which had been parially feeding the stg, refgee
swollen cities before Pol Pot seized pwer), the USA not only stopped
aid afer Pol Pot became ruler but also imposed an embargo against the
count it had so terribly bmbed (Herman and Chomsky, 1 988). Some
imprts of food from communist China and Pol Pot's forcing of the city
dwellers to the farms shortly afer his takeover in 1 975 prevented the
disaster from being any worse (Kieran, 1 996).
It should also be mentioned that, subsequent to Pol Pot's removal
from power (which occurred afer the Vietnamese ary counterattacked
ad ocupied Cambodia in 1 979), the USA supprted Pol Pot in his
gerilla war against the ocupying Vietnamese trops (Blum, 1 995). In
dition, given the USA history of using diplomacy, bribes, and ex tor
lion to stir up tensions between communist countries (Griswold, 1 972),
it is pssible that the USA itself had played a part in prmoting the
dedly
rivalry between Cambodia and Vetnam that motivated many of
Pol Pot's killings (Klinghofer, 1 998). Regardless, Pol Pot's execution
of 75,0- 1 50,000 people is a horible crime, although it is not enough
to make the top ten.
I I
54 THE TRIUMPH OF EVL
In a similar grotesque exaggeration of the trth, Rummel ( 1 991 ) and
others claim that communist China murdered tens of mil lions of pople,
especially during the perio 1 950-52 (shortly afer the communist sei
zure of power) and during the Cultural Revolution in the 1 960s. How
ever, such estimates are largely based on various sources that are either
unpublished or published for propaganda purposes by the Anti-Com
munist League of Nationalist China on the island of Taiwan, which
appears to have completely fabricated the numbers (Teiwes, 1 997), in
an apparent attempt to ustify" its military attacks on communist China
that continued long afer the communists' seizure of power (Associ
ated Press, 1 950). Schuman ( 1 956) even saw and talked with some spe
cifc people in communist China afer they were alleged to have been
executed.
More accurate fgures are provided by Chinese goverment sources. In
paricular, Grunfeld ( 1 996) has found a substantial amount of evidence
indicating that Chinese government reports in such matters (despite
being cloaked in ideological verbiage) are fairly reliable, especially in
comparison to Wester estimates that are ofen based on limited and
biased refgee claims, "wild exaggerations," or even outright fabrica
tions. '2 For instance, in the 1 950-52 interval (at a time when China
was fghting the USA in Korea in a war that threatened to escalate into
China itself, the Chinese goverment publicly repored (and displayed)
its executions, many of which were also publicized in the USA press at
the time (Associated Press, 1 95 1 ).
The local Chinese goverment announced a total of 28,332 execu
tions for one province (Kwantung) during the 1 950- 1 95 1 interval, and
if that fgure were extrapolated proprtionally to the rest of the country,
it would imply about 40,000 ofcial deaths (Stavis, 1 978). However,
that province was a coastal one near Hong Kong and may have had an
abnormally high number of executions. Other information provided by
Chinese goverment leaders indicates 1 35,000 executions nationwide
based on 800,000 ofcial trials and a reported 1 6. 8% execution rate of
"counterrevolutionaries" at the height of the death sentence campaign in
1 951 (Meisner, 1 999). In addition to the ofcial goverment death sen
tences, there were also many executions carried out independently by
the local peasants, who may ver well have killed tens of thousands of
landlords (in retaliation for the prior decades of mass starvation inflicted
INTRODUCTION
55
upn them) and other perceived enemies such as agents or supporers of
the forer Nationalist Chinese goverment on the mainland (Teiweis,
1997).
There is one Chinese source estimate of 71 0,000 victims between
1 950 and 1 952 (Gong, 1 994), but that fgure may reflect a speech made
by Mao in the 1 950s that referred to so many "liquidations" (Stavis,
1 978), which the anticommunist propagandist Rummel ( 1 991 ) himself
aits "could simply mean to remove, deactivate, or make inefective,
rther than kill." In addition, since there was still some fighting going
on with as many as 400,000 Nationalist Chinese guerrillas or bandits
at the time (Gong, 1 994), and since the wester and southwester
pats of mainland China remained under Nationalist Chinese rle until
1 951 (Kwong, 1 997), it is possible that some of the 71 0,000 "liquida
tions" were related to the ki l ling (or disbursing) of soldiers and armed
guerrillas, and some of the actual executions may have been of nonci
vilian POWs. Moreover, fear of arrest during the 1 950-52 strife may
have motivated as many as 500,000 pople to commit suicide (Teiweis,
1 997), and these deaths may have been included in the 7 10,000 "liqui
dations." While the suicides were cerainly caused by the communist
Chinese seizure of power and subsequent campaign of public trials,
they could not b considered wil lfl murders (especially given the fairly
low rte of death sentences in the trials). As a result, the tre number of
deliberate killings of unarmed civilians is likely to have been far below
710,000 during the 1 950-52 interval.
Gong ( I 994) cites an ofcial Chinese repor of 230,000 people put
under public survei llance and 1 ,270,00 imprisoned by the communist
P
arty in the 1 950-52 interval . lfthe ofcially cited ratio of about 1 exe
cution for ever 6 convictions were applied to that data (with the other
5 of 6 convicted people bing put under surveillance or imprisoned), it
would indicate about 300,000 executions during that perio. However,

ven that number may b an overestimate, the ofcial rate of sentenc

m"counterrevolutionaries" to be put under public surveillance (32%)
doumented by Meisner ( 1 999) was much higher than Gong's ( 1 994)
fgres indicate. The diferences m the imprisonment rates may b due
to the fact that the latter fgures include many people imprisoned for
P/plitical corrption (Schuman, 1 956) as opposed to "counterrevo
lutionary" activities. Applying to Gong's ( 1 994) data Meisner's ( 1 999)
56 THE TRIUMH OF EVIL
cited ratio of about l execution for every 2 people put under observation
would imply less than 200,000 executions over the 1 950-52 period.
Mao did clearly admit that several of his leaders killed 35,000 people
through crel treatment in prisons during the Cultural Revolution during
the 1 960s, but it should also be mentioned that he had those leader
responsible tried and executed (MacFarquhar, 1 993). While there was
some violent fghting during the Cultural Revolution (Dietrich, 1 994),
and while MacFarquhar ( 1 993) cites some estimates of the number
of killed in the hundreds of thousands, he admits such high numbers
are based on fimsy evidence that extrapolates potentially exaggerated
guesses of killings fom refgees feeing areas with a greater amount of
disorder. As Deleyne ( 1 974) indicated, the rhetoric during the Cultural
Revolution was very violent, there were a signifcant number of arrests,
and two hundred thousand people were thrown out of the Communist
Party, but there was very little actual violence, and the number of people
actually killed in the 1 960s probably approximates the Chinese gover
ment estimate of 35,00. The total number of people killed by com
munist China is therefore probably low enough to keep the countr out
of the top ten in mass murders, although more evidence on the issue is
certainly needed to be sure of the exact number. 13
Rummel ( 1 991 ) and MacFarquhar ( 1 993) have also blamed Mao for
tens of millions of Chinese deaths during a famine in 1 958-61 , but the
magnitude of such deaths may be overstated, and they cerainly do not
represent deliberate kil lings. In particular, managerial errors (especially
with respect to a rapid attempt to attain huge economies of scale without
adequately addressing small group incentive and initiative issues), a rel
atively greater investment fous on industry (for national security rea
sons related to ongoing USA Cold War threats), and very poor weather
caused the catastrophe (Meurs, 1 999). In addition, it should also b
mentione that, even if there had been as many as 1 0 mil lion addi
tional deaths annually (compared to 6 million ofcially recorded by the
Chinese goverment) during that 3-year disaster (Aston et al., 1 984),
it would not have even brought the death rate up to the level of the
pre-communist era. For instance, Deleyne ( 1 974) states that the annual
death rte in China had ben 3.4% in normal peacefl (and "prosper
ous") times in the 1 930s under capitalism, whereas the death rate had
fallen to 1 . 1 % by the mid-1 950s under communism. 14 Applying the dif-
INTRODUCTION
57
ference of 2.3% to a population of 600 million Chinese, yields a fgure
of over 10 million lives saved per year by Mao's communist policies
that both increased incomes in the aggregate and equalized them across
the ppulation. Even if a catastrophic extra 1 0 million deaths did occur
annually in the famine of 1 958-61 , the annual death rate was still below
that of pre-communist China during noral times, and so Mao's poli
cies saved few lives even in the years of his worst mistakes and misfor
tune.
The Soviet Union is also reputed to have murdered tens of millions
of people, mostly during the period of Stalin's rle between 1 930 and
1 953 (Rummel, 1 990). In the frst chapter of this bok, this allegation
along with many other myths about Easter Europe, communism, and
its collapse, will be shown to be untre. 1 5
CONCLUSION
This objective investigation indicates that the USA, which has had
the most continuous, widespread history of committing atrocities of
any countr in the world, is trly number 1 in exterminating innocent
unarmed civilians. Although this fnding is in contrast to the opinion
held by so many Americans that the USA is the "good guy," it is con
sistent with the perception of parts of the rest of the world that ofen
view the USA and its world policeman plicies as hypocritical (Tha
dani, 1 998). The measured discoveries of this research are also consis
tent with the opinion of some that the USA is "the biggest terrorist in
the world" (Moorehead, 1 998).
58
THE TRIUMPH OF EVIL
LH11L 1
THE DOCUMENTED FACTS ABOUT EASTERN
EUROPE AND COMMUNISM: A REFUTATION OF
POPULAR MYTHS ABOUT THE TRUE GOOD
GUYS
While most have a false impression of USA benevolence or "kind
ness," many believe that the former goverments of Easter Europe (and
other communist states) were (and are) horribly totalitarian, economi
cally inefcient societies that collapsed because they did not serve the
people of those countries (Pipes, 1 993). This chapter explains the true
causes of the disintegration of communism in Easter Europe, provides
facts refuting the popular myths surrounding Easter Eurpe and com
munism, and clarifies why the USA won the Cold War despite having
an inferior system.
ECONOMIC PHENOMENA CONTRIBUTING TO THE CoLLAPSE
OF COMMUNISM IN EASTERN EUROPE
The virtually bloodless collapse of communism in Easter Europe
,
.caused many to conclude that the communist system was removed
there largely as a result of its own economic failure to improve the stan
dard of living of the people (Campbell, 1 92). While it is true that eco
nomics did play a roll in the fall of communism, the communist system
itself was actually reasonably efective economically, as is indicated
by the higher average real economic growth rates experienced by East
U Europe under communism (compared to capitalist countries) from
1 946-89, as well as before that time interval in the Soviet Union where
communism took hold earlier in 1 91 7 (Murphy, 1 998). In fct, Easter
60
THE TRUMH OF EVIL
Europe enjoyed higher growth rates than Wester Europe even in its
fnal critical years (IMF, 1 993), and the fall of communism in Easter
Europe can be mor attributed to the economic failure of the system in
existence there prior to communism than to the mistakes and problems
of communism itself.
In particular, prior to communism, Easter Europe had had substan
tially lower economic output per capita than Wester Europe and the
USA (Mead, 1 994). For instance, the gross national product (GNP)
per capita of Russia was about 1 0% of that of the USA during peace
time before communism in 1 91 3 (Gregory, 1 982), and GNP per capita
was even lower by the time of the communist revolution there in 1 91 7
(Hutchings, 1 982). Thereafer, real GNP per capita i n the Soviet Union
under communism caught up signifcantly, rising to 31 % of USA GNP
per capita by 1 991 (, 1 994 ).' That performance occurred despite
the very destructive Foreign Interventionist Civil War of 1 91 8-22 (Kri
vosheev, 1 997), which reduced Soviet output by about half (Hutch
i ngs, 1 982), and despite the almost as destructive Nazi invasion of
1 941 -44, which reduced Soviet GNP by over 20% (Maddison, 1 969).
2
Afer growing faster than the USA in all peacefl decades up to the
political collapse of Easter Europe in 1 990,3 Russia's economy dete
riorated enormously following the capitalist takeover by Yeltsin, with
real GNP falling by about 50% between 1 991 and 1 996 (IMF, 1 997a).
A comparison of real economic growth rates in the Soviet Union and
the USA shortly before and afer the collapse of Easter European com
munism in 1 990 is provided in Table 2:
TABLE 2
ANNUAL REAL ECONOMIC GROWTH RTES IN RUSSIA
AND THE USA IN THE YEARS JUST BEFORE AND AFTER THE
END OF COMMUNISM
WW \
Annual
Countr: 1 . . . .8 . . 19 -
Soviet Union 4. 1 % I . 3.6% 2.8% 5.3% 3.0/ -2.3%
Russia -7 . 9"/
USA 2.5% 3. 2% 2.9/ 3. 1 % 3. 9"/ 2.5% 1 .2% 2.5%
Soure: IMF ( 1 993, 1 998).
Cb+rrsk J
6 1
Similarly, real economic growth i n all of Easter Europe under com
munism was estimated to be higher than in Wester Europe under capP
talism (as well as higher than in the USA) even in communism's final
decade (the 1 980s), and real economic otput fell by over 30% in East
em Europe .as a whole in the 1 990s afer the reimposition of capitalism
(IMF, 1998: 1 7 1).
So why was communism overthrown in Easter Europe, i f real eco
nomic growth was higher than under capitalism? One answer can be
found in the area's historic pverty. Although communism had partially
bridged the huge gulf in standard of living diferences between Easter
Europe and developed capitalist countries, it had not completely done
so, and many people began to incorrectly assoiate communism with
povery. Increasing contact and communication with richer capitalist
countries contributed to this feeling.4 As a result, many Easter Europe
ans (including many of their leaders) began to falsely perceive capital
ism to be a get-rich-quick scheme to bring their standard of living up to
the level of the developd capitalist countries (Marcy, 1 990).
OTHER FACTORS CONTRIBUTING TO THE COLLAPSE OF
CoMMUNISM IN EAsTERN EuROPE
There were, of course, other factors that reduced pople's suppr for
the communist system in Easter Europe and therefore contributed to
its demise. Many of these other fctors related back to the economic
problems in Easter Europe. However, the Soviet participation in a civil
war in Afghanistan may have played a role independent of economics
in reducing support for, and confdence in, the communist system.
General Problems Relating to the Economy
The efciency of communism may have enabled Easter Europe to
overtake the richest capitalist countries by 1 989 (and may have thereby
avoided communism's undeserved reputation for economic inefciency)
if it had not sufered so much destruction fom war and had not there
fore also felt the need to expend enormous resources on defense. In
Particular, the Soviet Union had been invaded militarily by over a dozen
countries in the frst 25 years of its existence (including by the very
pwerful capitalist countries of the USA, Britain, Germany, and Japan).
Subsequently, it had been subjected to various threatening Cold War
acts by the USA, including a massive number of militar flights over
62 THE TRIUMH OF EVIL
Soviet territory, as well as frequent attempted assassinations and sabo
tage by USA spies and infltrators (Smith, 2000). Many of those infl
trators and others seeking to instigate armed revolution in the Soviet
Union had earlier collaborated with the Nazi invaders during their tem
porary occupation of a portion of the USSR in World War II, and some
of those terrorists preaching "freedom, democracy, and other humani
tarian concers" had even been members of Nazi extermination squads
(Blum, 1 995). Although the absolute amount of military spending was
lower in the Soviet Union than in the USA, the Soviet leaders felt it
necessary to spend a larer porion of their smaller GNP in order to
maintain relative military parity as a deterrent to more attacks (Camp
bell, 1 974). Without this higher percentage of GNP alloated to defense
spending, a larger amount of resources would have been available for
consumption and productive investment, and the Soviet Union no doubt
would have come closer to catching up with the USA in terms of satis
fing consumer desires by 1 989.
In addition, the technological embargo imposed by the richer West
em countries against Easter Europe contributed to the inability of that
area to fully meet its consumers' demand for high-tech goods. Just
for instance, the cost of producing modem semiconductors was over
20 times higher in Easter Europe in 1989 than it would have cost to
purchase them on the "fee" world market (Krakat, 1 996). Despite the
embargo, Easter Europe was able to attain a level of technology that
was at least on par with that of many capitalist countries with similar
GNP per capita, and less than a decade behind that of the USA (Smith,
2000), but the embargo certainly increased the cost of technology and
inhibited the ability of Easter Europe Union to satisf their consum
ers' wishes (Parott, 1 985).
The inability to satisf consumer high-tech demand as well as rich
Wester countries also contributed to a perception that communist sys
tems were backward and uninnovative because they are goverment
O (as opposed to systems that theoretically concentrate innovation in
the private or corprate sector). Despite this false perception, there is
actually some evidence that goverments encourage more long-ter
innovation than rich capitalists or corporate bureaucrats who are more
risk-averse and focus more on short-term profts (Der Spiegel, 1 998),
and it was not the innovation of the capitalist countries but their riches
CHAPTER J
63
that allowed them to be able to aford the investments needed to develop
the leading technologies. The greater wealth of capitalist countries not
only enabled them to spend a far larger absolute amount of money on
rsearch and development, but also generally a larger percent of their
much higher income (DeBlasi, 2000). The capitalist riches themselves
ase through centuries of colonialism, imperialism, slavery, and other
fors of foreign exploitation (which were enforced via strong military
forces that were able to increase their relative strength as the relative
income disparities between the countries grew), as explained by Bittorf
(1992) and Darity ( 1 992). Exploitation in the form of horrible work and
living conditions for the domestic masses (that included forcing 6-year
old children to work 1 00+ hour weeks just to survive) also contributed
to the capitalists' accumulation of wealth and technology (Ma and
Engels, 1988b ). Despite the riches of private capitalist individuals and
businesses, it has actually been goverments that have originally been
respnsible for many of the major innovations in the world, such as
rlated to computers, electronics, the interet, space exploration, and
atomic energy (Marcy, 1 990). Even communist China, despite its very
low level of income per capita (that still has far to go to catch up with
te West), has managed to become among the world leaders in inno
vation in many areas, such as in gene research (Leggett and Johnson,
20) and in the development of imporant practical agricultural pro
cesses or new plant stains (Meurs, 1 999).
Although economic misconceptions directly contributed to the col
lapse of communism, there were cerainly other factors involved as
well. For instance, a desire for the political freedoms of the developed
cpitalist countries, not just their riches, played a part in Easter Europe
ting away fom communism. However, to some extent, it was the
gater wealth of the developed capitalist countries that enabled them
to en
.
gage in the many threatening actions and wars that motivated com
muntst repression to restrict some political freedoms (Blum, 1 995).
Similarly, the Easter Europan people's desire for geater travel free
1om, especially in East Germany, also motivated them to overthrow
COmmunism. However, it was the relative economic poverty of Easter
Europ
that heavily contributed to the restrictive travel policies which
were implemented to combat the drain of important skilled workers (like
1tors and nurses) to the higher incomes of Wester Europe (Apel,
64
THE TRIUMPH OF EVIL
1 966). East Germany had the most restrictive travel policies becaus
West Germany tried to entice its skilled workers to emigrate not only
through much better-paying jobs (easily obtainable because of similar
culture and language and, more i mportantly, because ofWest Germany's
ofer of i mmediate and automatic citizenship to East German immi
grants) but also with sizable cash payments and many other benefts
(Der Tagesspiege/, 1 990f.5 West Germany could aford to be so "gen
erous" to East German immigrants because it had impoverished Et
Germany after World War I I by forcing it alone to pay the entire amount
of the enormous reparations to the Soviet Union that was contracted for
Germany as a whole by the USA at Potsdam in 1 945 (Apel, 1 966).
Other forms of economic warfare and extortion (where the far greater
wealth of the capitalist countries gave them pwerfl advantages)
also played a part in communist Eastern Europe moving toward capi
talist systems. In particular, lucrative trade, loans, and aid were ofen
ofered to communist countries i f they conducted capitalistic economic
"reforms", while "non-reforming" communist countries were typically
confonted with trade barriers. Moreover, the threat of an escalation of
the arms race, which was especially counterproductive to the porer
communist countries that had to expend a larger percent of national
income to defense as a result, also produced motivation to appease
Wester demands for capitalist reforms (Marcy, 1 990).
In addition, ethnic, cultural, and religious diferences were a factor
in the break-up of the Eastern European communist bloc. In particular,
many people in Easter European countries and in the former Soviet
Union had resented being dominated by Russians since the pre-com
munist days of czarist Russia (Matlok, 1 995), especially afer Russia
killed or exiled millions fom the Caucasus in the 1 800s (Levene and
Robers, 1 999). However, economic subsidies and investments in the
non-Russian republics of the Soviet Union (as well as the grant of some
political autonomy) had greatly reduced such tensions under commu
nism (Marcy, 1 990) and eliminated the need for ethnic-related repres
sion (Getty, Ritterspor and Zemskov, 1 993). The ethnic problems
reemerged only under Gorbachev's capitalist reforms in the mid- I 980s
under Perestroika, as those free market policies resanctifed the quest
for personal or regional gain (at the expense of others), which encour
aged ethnic or nationalist movements (Marcy, 1 990). For instance, an
CHAPTER
65
earlier Soviet policy of investing substantial sums into less developed
areas of the Soviet Union (in order to bring their income closer to that
of the historically richer Russians) was drastically cut back under Pere
stroika for reasons of economic efciency, and those who opposed such
reforms under Gorbachev were purged from power, thereby magnif
ing the resentment of Russian domination and causing a reawakening of
the nationalist or independence movements (Marcy, 1 990). The Soviet
Union's decision to charge its Easter Europan allies capitalist market
prices for oil in the late 1 980s also contributed to the 1 989 revolutions
among its Easter European allies, as the resulting slowing of eco
nomic growth there increased the people's dissatisfaction with the com
munist system (and their Russian defenders), especially in East Ger
many (Ritschl, 1 996) where the original revolution broke out. The Joint
Economic Committee ( 1 988) of the USA Congress itself was well
aware of the fact that the capitalist reforms whicn the USA was pres
suring Easter Europe to undertake quite naturally increased income
inequality, which caused "tensions among the nationality groups."
The War in Afghanistan
Also ptentially contributing to unrst among ethnic groups in the
Soviet bloc (especially in the Moslem republics of the USSR), and to
dissatisfaction amongst the Soviet people in general, was the 1 979-89
militar participation of the USSR in a civil war in Moslem Afghani
stan, which provided some evidence of actual Soviet atroities that led
many people in the Soviet Union to question the legitimacy and moral
ity of their goverment and leaders (Kuperan, 1 999). The confl ict
stared when CIA-fnanced rebels began terorist attacks against a com
munist goverment (Blum, 1 995), which bad (completely independent
ofthe Soviet Union or its agents) overthrown a feudal dictatorship ear
lier in 1 978 (Rodman, 1 994). This goverment then invited Soviet mili
OQforces into the country to aid in stopping the CIA-sponsored terror
ism (Blum, 1 995). The rebel terrorists were being led by ''Ultra-conser
vative"
Moslem religious leaders and landowners, who initially were
laely supported by bandits and smugglers (especially on the border
with
Pakistan), and later by many Afghan males (espcially in rural
areas)
who opposed the communist goverment acts which decom
modifed women (i.e., forid their sale) and which ofered education
(including literacy) and other rights to Afghan females (Uran, 1 990).
66 THE TRUMH OF EVIL
However, the Soviet Union refained from sending more than mili
tary advisors to help out until late December
.
l 979 (Zeloga, 1 995). The
communist Afghan leader who had requested Soviet support was over
thrown and murdered by a USA-educated extremist, whom the Soviets
believed was a CIA agent attempting to discredit communism (Rodman,
1 994). Before signifcant Soviet militar forces arrived, the Afghan
extremist (whom the Soviets themselves executed in their "i nvasion")
had ordered the killing of thousands of civilians, and many Afghan sol
diers (and entire goverment military units) had defected to the rebels,
exasperating the level of violent confict (Girardet, 1 985). l t should be
mentioned that violence in Afghanistan did not really star with the
communist seizure of power in 1 978, as there had been widespread
tribal feuding in Afghan rural areas before 1 978 that was not relate
to the communists or Soviets and that had created over a hundred thou
sand refgees at one point in the mid- l 970s (Urban, 1 990).
Even afer the removal of the extremist Afghan ruler, Amnesty Inter
national reported that hundreds more civilians were subsequently exe
cuted or tortured to death in prison under the more moderate commu
nist goverment installed by the Soviets (U. S. Dept. of State, 1 988).
Nonetheless, it should be emphasized that the communist repression in
Afghanistan was motivated by possibly even more horrifing actions
conducted by the foreign-supplied rebels, who themsel ves had long
engaged in widespread murderous acts of terrorism against civilians
in Afghanistan (Blum, 1 995), and who later (beginning in the 1 980s)
launched numerous terrorist attacks against civilian targets within the
Soviet Union itself (Amstutz, 1 986). In reaction, the communists made
many successfl attempts to infltrate and disrupt rebel forces or peace
fully bribe them into defection or cease-fres (Girardet, 1 985), but they
also conducted military raids and aerial attacks on rebel positions that
killed tens of thousands of people, including many civilians (Amstutz,
1 986). In addition, although Soviet soldiers were forbidden fom even
arresting civilians unless there was evidence of them having weapons
or breaking laws (and although they even allowed many anticommunist
civilians to keep weapons if they were thought to be needed to defend
against rebel terrorist attacks), Soviet troops did fre back directly when
fred upon, no doubt killing many civil ians in the process (Tamarov,
1 992).
CHAPT]
67
Tere is also some evidence that communist troops did deliberately
shot innocent Afghan civilians on numerous diferent occasions, mur
dering hundreds of them (U. S. Dept. of State, 1 985). While not justif
ing such murders, it must be mentioned that motivation for some of the
Soviet atrocities was related to the killing of Soviet soldiers by civilians
(even communist civilians), to whom the CIA-fnanced rebels paid cash
rwards for each Soviet soldier murdered (Tamarov, 1 992). Also con
tributing to some Soviet atrocities was soldiers' frustration with civil
ias' refusal to provide information on the perpetrators of rebel crimes
(Reese, 200). Regardless, it must be emphasized that Soviet soldiers
involved in committing atrocities were "harshly disciplined" (Urban,
1 9),and there was never any systematic or premeditated efor to kill
civilians. Moreover although there is evidence that some Soviet soldiers
egaged in robbing Afghan civilians, Soviet soldiers were also very fre
quently involved in stealing from their own military (largely to fnance
the purchase of narcotics that substituted for the normal voka to which
Sviet soldiers had better access in the USSR}, and, in any event, any
illegal "freelance" actions against civilians was "punished severely," as
amitted even by Soviet soldiers who had defected to the USA (Alexiev,
1988). The Soviet army behavior in Afghanistan actually compares
favorably to that of the USA army in its most recent major action,
the 1 99 1 Persian Gulf War, which is glorifed in the USA despite war
crimes such as ground troops committing mass murder of defenseless
Irqi POWs and civilians (even though USA troops were hardly ever
treatened in the entire war and mostly only by fiendly fre and never
bycivilians or POWs}, and which created a promoted hero out of a gen
ral who deliberately slaughtered Iraqi trops while they were retreat
ng exactly as they had agreed to do afer an armistice had been enterd
mto (Herh, 2000).
.
Spcifc evidence on the extent of civilian killings in Afghanistan
l$

rovided by the U. S. Deparment of State ( 1 987), which repored

untdentifed sources indicating as many as 1 5,000 civilians killed during
e frst 8 months of 1 987, during which time it was state that "civil
tan
casualties were enormous" as a result of Soviet counterinsurency
o
prations that were launched as reprisals for rebel raids into the Soviet
Union
.
itself. If 1 987, which was a year of average Soviet military
csualties but less accurate aerial bombings due to rebel acquisition of
68 THE TRIUMH OF EVIL
Stinger missiles (Zaloga, 1 995), had been an average year for civilian
deaths in the 1 979-89 war, the total would be 225,00 civi lians kil led
in the war. Since the USA-reported reported civilian kill rate in 1987
was probably very biased upward (given that it no doubt includes civil
ian death tolls grossly exaggerated by the rebels for propaganda pur
poses), and since civilian casualties may have been abnormally high in
1 987 due to decreased accuracy of Soviet aerial bombings that year,
the number of civilian deaths was unquestionable far less than 225,000,
but that figure can be used as an upward bound. Since the rebels did
engage in widespread bombings of civilian targets that had destroyed
over a thousand schools and hospitals in rural areas covering 90% of
the country in the frst few years of the war (Bradsher, 1 983), since the
rebels frequently conducted rocket attacks and bombings on residential
areas of heavily populated cities (Blum, 1 995), since the rebels assassi
nated virtually every goverment ofcial and communist party member
they could (as well as most communist supporters and sympathizers,
and frequently any unknown or uncooperative people), with one unit
of 1 200 rebels in one Afghan city assassinating 600 people in a 2-year
period alone (Girardet, 1 995), since the rebels even murdered Wester
jouralists in order to be able to steal their cameras (Urban, 1 990), since
the rebels had such heavy weaponry that they could not even be labeled
a traditional guerrilla force (Jalali and Grau, 1 995), since the rebels had
about as many soldiers (approximately 200,000) as the Soviet/Afghan
communists (Girardet, 1 985), and since the rebel s ofen engaged in
inter-group feuding that may have directly led to the deaths tens of
thousands of people (Urban, 1 990), it is likely that the rebels may have
ki lled at least half of the civilians, leaving the communists with rspon
sibility for less than 1 1 5,000 civilian deaths.
Given survey evidence (of Afghan refugees in Pakistan) indicating
that aerial bombings of civilian targets caused the deaths of under 50%
of the civilians killed by communist fre (U. S. State Dept., 1 987), and
given that most of the remaining deaths were likely to have been unin
tentional battlefeld casualties (i.e., the result of ground forces actually
fghting armed rebels), it is probable that the communists deliberately
killed less than half the civilians for whose deaths they were respon
sible. Because many of the reports of heavy communist bombings of
civil ian areas in Afghanistan had no truth to them, being clearly fabri-
CHAPTER J
69
cted by the rebels for propaganda purpses (Urban, 1 990), and because
may of the other stories of alleged communist atrocities were also
invented by the rebels and their CIA supporers (Blum, 1 995), it is
likely that the number of civilians deliberately killed by the communists
in Afghanistan was only a ver small fraction of 1 1 5,000 (and defnitely
far less than 60,000).
Furher evidence on this issue is provided by the fact that it wasn't
until l 984 that the communist air force uti lized any high-level strategic
bmbers such as TU- 1 6 aircraf (Girardet, 1 985), which, like the USA
B-52 bombers in Vietnam, result in more indiscriminate killings via
sturation bombings. Communist air power in Afghanistan, which con
sisted largely of about 1 000 helicopters, MIG fghters, and SU-25 tacti
cal bmbers (McMichael, 1 999), was generally used to suppor gound
tops (Girardet, 1 985). Even the Soviet strategic bombers were efec
tively used to assist combined ground/air ofensives as opposed to
egaging in mass killings/terrorizing of civilians (Urban, 1 990). Some
Wester analysts were astounded that the communists rarely even made
pure aerial attacks on supply lines, which were vital to the rebels (Girar
det, 1985), or on other targets far in the rear of enemy toops (Kuper
man, 1 999). The fai lure of the communists to use air power alone to
attck such important targets, which were so imprtant to the Afghan
rbels, and which the Soviets did instead block or ambush with air-life
gund forces at various times (Girardet, 1 985), provides evidence of
the inhibitions the communists had about potentially attacking innocent
civilians. Even in cases where pure aerial attacks were launched against
rebel-controlled villages in reprisal for rebel atroities, there is evidence
(fm anticommunist sources) that the Soviets had a standard policy of
waring the civilians (by loudspaker) to leave the villages before-hand
(Alexiev, 1 988).
.
Similarly, despite allegations of some limited communist use of chem
Ical weapons in the war and despite a Wester perception that chemi
cal weapons would have been ver efective militarily in the Afghan
terin if widely employed against populated rebel positions, the Sovi
ets
.
aparently believed they created too much risk of "many collateral
ctvthan and friendly casualties" (McMichael, 1 991 ). A leading British
exper jouralist has called the allegations of any Soviet use of chemi
cl weapons "a complete lie . . . a CIA fabrication" (Urban, 1 990). All
70
THE TRIUMH OF EVIL
the evidence therefore seems to imply that communist air pwer W&
mostly directed against mil itary targets (i. e. , areas with armed rebls
generally engaged in combat), and that most of the civilians killed by
communist aircraf (as well as ground forces) represented true uninten
tional battlefeld casualties. The nwnber of civilians deliberately kil led
by the communist forces may have therefore amounted to only a few
thousand, especially since the total number of civilian killings is prob
ably greatly overestimated (as mentioned previously}.6
Communist trops in Afghanistan did conduct raids to methodically
destroy villages and farms in order to inhibit their use as rebel supply
centers (in a scorched-earh policy designed for rebel-controlled rl
areas), but there was no actual attempt to kill civilians or commit geno
cide. In fact, afected residents were welcomed into goverment-con
trolled cities (Bradsher, 1 983}, and displaced people were even ofered
rewards for settling in goverment-protected rural areas (Urban, 1 990).
Hundreds of thousands of people did move to goverment-controlled
cities, although more (millions) preferred to fee into refgee camps in
neighboring countries like Pakistan, which were safe from the continu
ous rebel terrorist attacks on government-protected areas in Afghani
stan (Girardet, 1 985) and which were also almost never attacked by the
communists (Urban, 1 990). At least partially contributing to the fact
that so many refugees chos.e resettlement in neighboring countries wM
the heavy outside humanitarian aid provided to ensure tolerable living
conditions in the foreign refugee camps (Amstutz, 1 986). Regardless,
within this civil war environment, many civilians may have died |
health reasons, although there was no mass starvation like there was tn
peacefl times during the prior rule of the Afghan feudal dictatorship |
the early 1 970s (when as many as 1 00,000 Afghans died of hunger tn
the peacefl 1 971 -72 period alone before the communists took power),
and the biggest health hazard of the 1 980s in Afghanistan was induced
by an extreme shortage of medical personnel in rebel-controlled are
that was largely caused by Afghan doctors leaving for higher pay tn
foreign capitalist countries (Girardet, 1 985).
Although the actual extent of communist atrocities in Afghanistan
was no doubt far less than widely claimed, publicity about them cer
tainly caused some Soviet citizens to question the validity of thei r coun
tr's ofcial policy of benevolence (Kuperman, 1 999). This reduced
Cb+rrsk
7 1
confdence in their goverment and leaders may have led many to year
for a change.
Minority of Leaders Dismantle Communism Against Will of
Majority of People
While there were numerous factors that contributed to a desire among
some to UOaway from communism, it is especially imporant to point
out that the majority of the Easter European people did not want
to eliminate their system (although they may have wanted to reform
aspects of it). Communism was actually dismantled by various Easter
European leaders who acted against the will of the people.
For instance, the Soviet people (including a majority in the subse
quently independent Caucasus and South Asia) had vted overwhe
ingly (over 70%) in favor of preserving the system m early 1
.
991
a free plebiscite on the issue (Becker, 1 999a). However, desptte t1s
vote, the "free-market" advoate Yeltsin led the dissolution of the Sovtet
Union later in 1 99 1 in a major power grab (Wayland, 2000a). Somewhat
later in 1 996 the dissolution of the Soviet Union was voted to have
beeunconst.tutional by a Russian parliament elected under Yeltsin 's
new constitution ( Wall Stret Journal, 1 996), but it was to late because
the continuing, hostile capitalist Prsident Yeltsin had already creat

d
dictatorial powers for himself (Wayland, 2000a). Nevrth
.
eless, stte
heavy marketing and positive media coverage of capttalist polihctans
in Russia in the 1 990s (and virtually no efective marketig by com
munists there), one survey indicated that 58% of thRusstan popula
tion believed in 1 999 that "it would have been better tf the country had
stayed as it was before 1 985," and only 27% of the Russians disagreed
with that opinion (Economist, 1 999c ).
Similarly, the majority of the people in East Gerany (the county
that had led the 1 989-90 revolution in Easter Europe) wanted to pre
sere a reformed version of their communist countr. In particular, an
unbiased survey conducted by East and West Ge

s in December
1989 (shortly afer the opening of the Berlin Wall} 1

d1ca that over

71% of East Germans wer in favor of keeping therr sotahst system
and 73% were in favor of maintaining a separate country (Ba a
and Links, 1 994). However, as will be explained in Chapters 2-4, va

ous East German leaders gave in to Wester pressure to open

.
up thetr
economy and political system, thereby enabling an overhelmmg com-
72 THE TRUMH OF EVIL
bination of West German bribes, extortion, and marketing to destroy the
East German economy and the people's will to preserve their system
and independence.

It should also be noted that the people in some Easter European
countries, such as Serbia (Economist, 1 993) and Bulgaria (Economist,
1 990), actually voted to maintain rule by reformed versions of their
communist parties even afer opening up their political system to West
er-style elections that permitted manipulation by Wester media and
economic extortion (lAC, 1 998a). Despite the fact that anticommunist
capitalists exercise a virtual monopoly over the media in some countries
like Russia (Associated Press, 1 996a) and threaten to "resist" (imply
ing economic boycotts and even civil war or other "upheavals") if the
people vote communism back into power (Associated Press, 1 996b),
many Easter Europeans continue to vote for lef-wing political parties
that are reformed versions of the communist parties which previously
ruled Easter Europe (Murphy, 1 995). Such parties have been elected
into power in Hungary, Poland, Bulgaria, and Lithuania in the mid-
1 990s (Economist, 1 995), as well as in Yugoslavia (Economist, 1997)
and Mongolia (Associated Press, 2000).
DISPELLING OTHER COMMON MYTHS ABOUT COMMUNISM
Many people have many other misconceptions about communism and
the causes of its collapse. These misconceptions are spread by the myths
and strong anticommunist bias that exists in the mainstream press which
is controlled by concentrated capitalist money and is heavily infuenced
by the CIA (HeO and Chomsky, 1 988). As stated by Ralph "McGe
hee, a highly decorated CIA veteran, ' Disinformation is a large part of
[the CIA's] covert action responsibil ity, and the American people are
the primary target audience of its lies"' (Gof, 2000).
Quality of Life, Freedom and I ndividuality
Due to the widespread existence of a dominating one-party rule and
more leveled income under communism, there is ofen the perception
that normal life was harshly regimented under communism (Pipes,
1 993). In fact, communism freed people from unemployment, poverty,
crime, major money anxieties, excessive soial frictions, and economic
inequalities and thereby actually created the opportunity for a higher
quality of life (Falck, 1 998), as Marx and Engels ( 1 988a) predicted.

.

t -

.
CHAPTER
73
Some evidence on the relative value of rights and feedoms under
communism is provided by a recent 1 999 Russian survey (Whitehouse,
1 99). This survey found that 68% of the Russian people felt "the right
to fee education, medical help, and financial support in old age" to b
aong the most important human rights, and 53% indicated as impor
tant "the right to a well-paid job in one's area of experise," whereas
only 14% and 8% mentioned "feedom of speech" and "the right to
elect one's leaders", respectively, as important. In addition, even though
only 23% listed "the right to private property" to be important, a sepa
rte question found 40% wanting a Wester-style capitalist/democratic
system, perhaps because they still associated a higher standard of l iving
with such systems (and incorrectly assumed, as so many do, that the
capitalist system was the cause of Wester wealth). Despite the latter
perception among a signifcant number of Russians that is perpetuated
with Russian capitalist political slogans like "Don't you want to live as
in Europe?", an even more recent survey indicated that 48% of the Rus
sian people prefer "state planning and distribution" compared to only
35% of Russians favoring "private propery and the market" (Econo
mit, 1999).
Further evidence on the value of the various benefits of communism
is available fom a ver limited surey that I conducted of Germans
who had emigrated from communist East Germany to capitalist West
Gerany before unifcation in 1 990. The survey found that the emi
grnts would have been willing to give up 2 1 .04% of their West
Geran income to have the communist advantages of virual elimina

ion of unemployment, drugs, crime, uncertain prices, and life-sustain

Ing money anxieties. The survey also indicated that these same Ger
mans would have been willing to give up 6.69% of their income to
avoid
having the East German political system and secret police. A
separate and more thorough survey of East Gerans in the 1 990s indi
cated that they had fel t overall feer fom goverment interference in
th 1980s in communist East Germany than they did in the united capi
hst Germany in the 1 990s (Norhof, 1 995). This latter fnding is espe
ctally imporant for putting the relative value of communist freedoms
ad repression in an interesting perspective.
Exaggerations of Political Repression
Much of the USA goverment and mainstream press propaganda
74 THE TRIUMH OF EVIL
about political repression and secret police in Easter Europe was exag
gerated (Marcy, 1 990). Just for instance, i n December 1 989, it was
reported worldwide in the mainstream press that Romania had killed
over 60,000 peacefl demonstrators, when i n fact a thorough investiga
tion by the goverment that overthrew the communists indicated only
1 42 demonstrators were kil led and only afer they had violently attacked
police forces and indicated their intention to overthrow the goverment
(Ratesh, 1 991 ). Exaggerated claims of communist atrocities (which in
the case of Romania led to a brief civil war that did kill hundreds of
armed soldiers and police) ofen result fom CIA disinformation, which
is spread through press sources in countries allied with the USA against
communism, or through private organizations and individuals fnded
(overtly or covertly) by the CIA (Blum, 1 995).
The claim that Stalin and other Soviet leaders kil led mil lions (Con
quest, 1 990) also appears to be wildly exaggerated. More recent evi
dence fom the Soviet archives opened up by the anticommunist Yeltsin
goverment indicate that the total number of death sentences (includ
ing of both existing prisoners and those outside captivity) over the
1 921 - 1 953 interval (covering the period of Stalin's partial and complete
rule) was between 775,866 and 786,098 (Getty, Ritterspor, and Zems
kov, 1 993). Given that the archive data originates fom anti-Stalin (and
even anticommunist) sources, it is extremely unlikely that they underes
timate the tre number (Thurston, 1 996). In addition, the Soviet Union
has long admitted to executing at least 1 2,733 people between 1 91 7 and
1 921 , mostly during the Foreign Interventionist Civil War of 1 91 8-22,
although it is possible that as many as 40,000 more may have been
executed unofcially (Andics, 1 969). These data would seem to imply
about 800,000 executions.
The fgure of 800,000 may greatly overestimate the number of actual
executions, as it includes many who were sentenced to death but who
were not actually caught or who had their sentences reduced (Getty, Rit
terspor, and Zemskov, 1 993). In fact, Vinton ( 1 993) has provided evi
dence indicating that the number of executions was signifcantly below
the number of civilian prisoners sentenced to death in the Soviet Union,
with only 7305 executions in a sample of 1 1 ,000 prisoners authorized
to be executed in 1 940 (or scarcely 60/ ).
In addition, most (681 ,692) of the 780,000 or so death sentences
CHAPTER J
75
pssed under Stal in were issued during the 1 937-38 perio (Getty, Rit
terspom, and Zemskov, 1 993), when Soviet paranoia about foreig
subversion reached its zenith due to a 1 936 alliance between Nazi
Gerany and fscist Japan that was specifcally directed against the
Soviet Union (Manning, 1 993) and due to a public 1 936 resolution by
a group of influential anti-Stalin foreigners (the Fourth Interational
which was allied with the popular but exiled Russian dissident Leo
Trtsky) advoating the overhrow of the Soviet goverment by i llegal
means (Glotzer, 1 968). Stalin initially set a cap of 1 86,500 imprison
ments and 72,950 death penalties for a 1 937 special operation to combat
this threat that was to be carried out by local 3-man tribunals called
''trikas" (Getty, Ritterspom, and Zemskov, 1 993). As the tribunals
passed death sentences before the accused had even been arrested, loal
authorities requested increases in their own quotas (Knight, 1 993), and
there was an ofcial request in 1 938 for a doubling of the amount of
prisoner transport that had been initially requisitioned to carr out the
original campaign "quotas" of the tribunals (Getty, Ritterspom, and
Zmskov, 1 993). However, even if there had been twice as many actual

executions as originally planned, the number would still be less than
1 50,000. Many of those sentenced by the tribunals may have escaped
cture, and many more may have had their death sentence refsed or
rvoked by higher authorities before arrest/execution could take place,
especially since Stalin later realized that excesses had been committed
in the 1 937-38 period, had a number of convictions overured, and had
many of the responsible local leaders punished (Thurston, 1 996).
Soviet records indicate only about 300,00 actual arrests for anti
Soviet activities or political crimes during this 1 93 7-3 8 interval (Davies,
197). With a ratio of 1 execution for every 3 arests as originally speci
0mby Stalin, that fgure would imply about 1 00,00 executions. Since
sme of the people sentenced to death may have already been in con
fne
ment, and since there is some evidence of a 50,000 increase in the
total number of deaths i n labor camps over the 1 937-38 interval that
was probably caused by such executions (Getty, Ritterspom, and Zem
skov, 1 993), the total number executed by the troika campaign would
prbably be around 1 50,000. There were also 30,5 14 death sentences
pased by military cours and 4387 by regular courts during the 1 937-38
P%,but, even if all these death sentences were carried out, the total
76
THE TRIUMPH OF EVIL
number remains under 200,000. Such a "low" number seems espcially
likely given the fact that aggregate death rates (from all causes) through
out the Soviet Union were actually lower in 1 937-38 than in prior year
(Wheatcrof, 1 993).
Assuming the remaining I 00,000 or so death sentences passed in the
other years of Stalin's reign (i . e., 1 92 1 -36 and 1 939-53) resulted in 8
60% execution rate, as per the Vinton ( 1 993) sample, the total number
executed by Stalin's Soviet Union would be about 250,000. Even with
the thousands executed between 1 91 7 and 1 92 1 , it is plausible that the
number of unarmed civilians killed between 1 91 7- 1 953 amounted to
considerably less than a quarter mil lion given that thousands of these
victims may have been Soviet soldiers (Freeze, 1 997), given that some
may have been armed bandits and guerri llas (Getty, 1 985), and given
that at least 1 4,000 of the actual executions were of foreign POWs
(Vinton, 1 993). A USA forer attache to the Soviet Union, Geore
Kennan, has stated that the number executed was real ly only in the tens
of thousands (Smith, 200), and so it is very likely that the true number
of unared civilians ki lled by the Soviet Union over its entire histor
(including the thousands killed in Afghanistan more recently) is to
small for the countr to make the top ten in mass murders.
There were no doubt many innocent victims during the 1 937-38 Stalin
purge, but it should also be mentioned that there is substantial evi
dence from the Soviet archives of Soviet citizens advocating treason
able offenses such as the violent overthrow of the Soviet goverment
or foreign invasion of the Soviet Union (Davies, 1 997). In addition,
the Soviet Union felt itself so threatened by subversion and imminent
military invasions by Japan and Germany (which ocurred in fll force
in 1 938 and 1 941 , respectively) that it perceived a need to underake a
nationwide campaign to eliminate potential interal enemies (Manning,
1 993). Moreover, these exteral threats were further fueled by the fact
that the Russian nobi lity and czarists (over a million of whom had emi
grated afer the communist revolution in 1 9 1 7) had given fnancial aid to
the German Nazis in the 1 930s for the purpose of using them (once they
had successflly taken power in Germany) to help them overthrow the
Soviet goverment (Feinberg, 1 999). Forged documents and misinfor
mation spread by Nazi Germany to incriminate innocent and patriotic
Soviets also contributed to Soviet paranoia (Andrew and Gordievsky,
CHAPTER
77
1990). It must also be rememberd that Soviet fear of foreign-sponsored
subversion in the 1 930s existed within the context of guerrilla warfare
fought against the Soviet Union by some of the same groups of people
who had fought with the foreign i nvaders against the Soviet Union in
the 1 91 8-22 Foreign Interventionist Civil War (Conquest, 1 986).
While the 1 937-38 purges were very repressive and tragic by almost
any measure, they may have helped prevent the fascists fom inciting a
successfl rebel lion or coup in the Soviet Union (Thurston, 1 996). Such
a threat was a very real one given that the Geran Nazis did succeed in
using political intrigues, threats, economic pressure, and ofers of ter
ritorial gains to bring other Easter European countries into their orbit,
including Bulgaria, Romania, and Hungar, as well as Yugoslavia for
a short period of time (Miller, 1 975), given that the Soviet Union had
been subjected to a brutal 1 91 8-22 civil war which was launched by
rbels who were suppored by over a million foreign invading troops
from over a dozen capitalist countries (Schulz, 1 982), given that there
was a large amount of sabotage committed by Soviet citizens in the
1930s (Conquest, 1 986), and given that there were a signifcant number
of Soviet dissidents who were in favor of overhrowing the Soviet g
o
v
erment even i f it required an invasion by Germany or some other for
eign power (Davies, 1 997). It is also pssible that the Germans and
Japanese had spread sufcient misinformation to lead many people to
believe in the existence of an alliance between the exiled Trotsky and
the fascist countries that ofered Germany and Japan some Soviet ter
ritories in return for helping the Russian dissident take power in the
remaining par ofRussia (Glotzer, 1 968). In addition, many people may
have worked independently to sabotage the Soviet Union in the hope
that they would thereby contribute to a foreign overthrow of the Soviet
Union (Ritterspom, 1 992), espeially since Nazi Germany did make
extensive eforts to incite uprisings, cause subversive actions, and create
ethnic conficts in Easter Europe and the Soviet Union (Schulz, 1 982).
Although the Soviet Union may have falsely blamed Trotsky for avo
cating cooperation with the fascists, even Trotsky admitted that some
of the victims of Stalin's repression may have indeed ben German or
Japanese agents (Glotzer, 1 968). Despite the Soviet Union's success in
defeating the subsequent invasions by fascist Japan (in 1 938) and Ger
many ( 1 941 -44), the danger posed by the Nazi spies and saboteurs in
78 THE TRIUMPH OF EVIL
Easter Europe is illustrated by the fact that the CIA considered them
so efective that it adopted virtually the entire Nazi network into its own
system of terrorism in Easter Europe afer World War II (von Schnit
zler, 1 992). The CIA also extensively used Trotskyites and other anti
Stalin lefists in its very powerful anticommunist propaganda machine
(Saunders, 1 999).
Evidence fom the Soviet archives indicates that the ofcials respon
sible for the political repression of the 1 930s sincerely felt the victims
were guilty of some crime such as sabotage, spying, or treason (Thur
ston, 1 996), and many of the executions of the Great Purge were
reported in the local Soviet press at the time (Conquest, 1 990). Even
when there was proven to be no direct connection between the accused
and the fascist foreign powers, there was ofen a strong belief that the
suspcts were foreign sympathizers who were working on their own
(without formal direction) to contribute to the overhrow of the Soviet
Union (Ri tterspom, 1 992). It should also be noted that much of the
1 937-38 repression, often called the Great Purge, was actually directed
against the widespread banditry and criminal activity (such as thef,
smuggling, misuse of public ofce for personal gain, and swindles) that
was ocurring in the Soviet Union at the time (Getty, 1 985). In addition
to the executions, there were also many imprisoned, and hundreds of
thousands of people were expelled from the Communist Pary during
the Great Purge for being incompetent, corrupt, and/or excessively
bureaucratic, with such tareting of inept or dishonest Soviet bureau
crats being fairly popular among the average Soviet citizens (Davies,
1 997).
Like the myths of millions of executions, the fairy tales that Stalin
had tens of millions of people arrested and permanently thrown into
prison or labor camps to die in the 1 930-53 interval (Conquest, 1990)
appear to be untrue. In particular, the Soviet archives indicate that the
number of people in Soviet prisons, gulags, and labor camps in the
1 930s, 1 940s, and 1 950s averaged about 2 million, of whom 20-40%
were released each year, (Getty, Ritterspor, and Zemskov, 1 993). This
average, which includes desperte World War II years, is similar to the
number imprisoned in the USA in the 1 990s (Catalinotto, 1 998a) and is
only slightly higher as a percentage of the population.
It should also be noted that the annual death rate for the Soviet
CHAPTER !
79
intered population was about 4%, which incorporates the efect of
prisoner executions (Getty, Ritterspor, and Zemskov, 1 993). Exclud
ing the desperate World War II years, the death rate in the Soviet pris
ons, gulags, and labor camps was only 2. 5% (Getty, Ritterspom, and
Zemskov, 1.993), which is even below that of the average "free" citizen
in capitalist Russia under the czar in peacetime in 1 91 3 (Wheatcrof,
1993). This fnding is not very surprising, given that about 1/3 of the
confned people were not even requird to work (Bacon, 1 994), and
given that the maximum work week was 84 hours in even the harshest
Soviet labr camps during the most desperate warime years (Rummel,
1990). The latter maximum (and unusual) work week actually_ com
pares favorably to the 1 00-hour work weeks that existed even for "free"
6-year old chi ldren during peacetime in the capitalist industrial revolu
tion (Ma and Engels, 1 988b ), although it may seem high compared
to the 7 -hour day worked by the typical Soviet citizen under Stalin
(Davies, 1 997).
In addition, it should also be mentioned that most of the arrests under
Stalin were motivated by an attempt to stamp out civil crimes such as
banditr, thef, misuse of public ofce for personal gain, smuggling, and
swindles, with less than 1 0% of the arrests during Stalin's rule being for
plitical reasons or secret police matters (Getty, Ritterspom, and Zem
skov, 1 993). The Soviet archives reveal a great deal more political dis
sent permitted in Stalin's Soviet Union (including a widespread amount
of criticism of individual goverment policies and local leaders) than is
normally perceived in the West (Davies, 1 997). Given that the regular
police, the political or secret police, prison guards, some national guard
troops, and fre fghters (who were in the same ministry as the police)
comprised scarcely 0.2% of the Soviet ppulation under Stalin (Thur
ston, 1996), severe repression would have been impossible even if the
Soviet Union had wanted to exercise it. In comparison, the USA today
has many times more plice as a percentage of the population (about
x,not to mention prison guards, national guard troops, and fre fght
ers mcluded in the numbers used to compute the far smaller 0.2% ratio
for the Soviet Union.
In any
event, it is possible that the communist countries of Easter
Eupe would have become politically less repressive and more demo
cratic (especially over time), if there hadn't been over and covert eforts
80 THE TRIUMH EVIL
by capitalist powers to overthrow their goverments (Blum, 1 995),
including subversion conducted in the USSR as late as the 1 980s that
the USA goverment admi tted to in the 1 990s (Chossudovsky, 1 997).
These eforts at violent subversion were initially carried out mostly
by the British (before World War II) and then later more so by the
USA through the CIA, which did succeed in one case in violently over
throwing a very democratic communist goverment in Chile in 1 973
(Blum, 1 995). I f the communists had truly been as evil and dictatorial
as they are porrayed to be in the capitalist press, the peacefl revolu
tion of 1 989 in Easter Europe (with virtually no related deaths except
in Romania) could never have occurred.
Moreover, it is far from clear whether the communist countries acted
more repressively against people with capitalist views than capitalist
countries have acted against communists (Schulz, 1 982). Most who are
not communists are probably not aware of the harassment, economic
penalties (such as loss of a job for political reasons), torture, impris
onment, and murder that even goes on in developed capitalist coun
tries, not to mention the atrocities that occur in less developed capitalist
countries like Greece, Zaire, post- 1 973 Chile, etc. (Blum, 1 995). Just
"ordinary Germans" in Hitler's Nazi Germany (i.e., those who weren't
communists or other people that Hitler hated) "had little to fear from
the Nazis" (Associated Press, 2000h), those who don't have communist
views are ofen not afected by capitalist goverment repression, and
so most don't feel threatened by it in any way. Nonetheless, despite
the fact that political repression by moder capitalist states does not
directly afect the majority of the population (ust as Hitler's capitalist
German government directly repressed only a minority of the German
population), political repression by capitalist goverments has claimed
millions of victims, such as close to a million unared civilians with
lef-wing political views killed by a dictator put into power in Indonesia
by the CIA in 1 965-66 (Griswold, 1 979), as previously mentioned in
the Introduction.
In stark contrast to capitalism, there is long-term evidence fom ear
lier cultures such as the North American Indians that communist soci
eties can be very natural, fe, and democratic (Novack, 1 972). Some
evidence on the relative attractiveness of these societies can be found
fom the fact that a large portion of white people taken prisoner by the
CHAPTER 1
8 1
Indians in the USA willingly stayed with them and refused ofers to
rtr to the white capitalist society (Downes, 1 940). Some of the initial
Spanish explorers/conquerors of the Wester Hemisphere reported that
many of the Indians lived i n a virual communist paradise without shor
ages, money, goverment, or violence (Sale, 1 991 ). Although some of
the communist Indian tribes did engage in some limited fghting, espe
cially when invaded, attacked, or threatened (Churchill, 1 994), there
were also many earlier communist peples, such as the aborigines of
Australia (Reynolds, 1 995) and 70% of Indian tribes (Sale, 1 991 ), who
wer almost completely pacifsts. Even the Indian tribes that ocasion
ally fought other tribes did so much less feroiously than capitalist soi
eties and were "interally more peacefl" with far less crime (Jennings,
1993).
Ancient communal societies show that violence, crime, and wars are
not innate to human nature but are instead the product of egotistical
ideologies and systems such as capitalism (Marcy, 1 990). For instance,
cpitalism in the USA promotes an unnatural self-centeredness that
has resulted in a long history of engaging in extermination campaigns
and other atrocities, as documented in the Introduction. In contrast,
evidence of a modem communist country that remains somewhat dem
oratic (despite the USA's enormous eforts to use virtually all pos
sible means to overhrow it) is provided by the Cuban political system.
Cuba not only allows free voting, but also has a procedure to allow for
the recall of elected ofcials (that is ofen used efectively in practice
against unpopular politicians), has the Cuban people themselves make
P
l

tical nominations (instead of political parties or the CIA), and pro

hiJts candidates (or the CIA) from spending money on electoral cam
paigns (Schefer, 1 998).
Some evidence that capitalist countries are also far more imprialistic,
militaristic, intolerant, and evil than modem communist countries has
discussed in the Introuction. A general analysis of these issues,
espcially with respect to the political repression of the capitalist super
pwer, the USA, is also provided by Schulz ( 1 982}, who documents
sme of the terorism carried out by the nearly one million CIA agents
worldwide that engage in scores of covert action each year to ensure
the widespread existence of capitalist goverments fiendly to the USA.
Furher evidence is provided by Blum ( 1 995}, who describes the events
82 THE TRUMH OF EVIL
around dozens of the over 400 mil itary invasions and bombings con
ducted by the USA just since World War II (Wilson, 1 999
a
) that have
often led to severe political repression. That these imperialist actions
are nothing new is documented by the World Almanac ( 1 998) itself,
which lists 23 separate USA military actions or "interventions" (mostly
periodic Latin American invasions) that occurred in the 1 900s before
World War II (and that excludes the World War I related actions). Even
before 1 900, the USA had engaged in over l00 invasions to ensure USA
control of (or infuence over) many countries (Zion, 1 995).
In contrast to the widespread imperialism of the capitalist USA alone,
there have been a mere 0 communist invasions of other countries. In
addition, the USA's imperialist actions themselves at least partially jus
tify four of the invasions by communist countries, with the only excep
tions being Cambodia's invasion of Vietnam in the late 1 970s (which
was described earlier in the Introduction)/ and the Soviet Union's inva
sion of 5 Baltic countries in the 1 939-40 period as part of a deal with
capitalist Germany for the USSR to reclaim land (and a defensive
perimeter) lost in the 1 9 1 8-22 Foreign Interventionist Civil War (Bull
ock, 1 992). For instance, the Soviet invasions of Hungary in 1 956 and
Czechoslovakia in 1 968 were motivated by paranoia surrounding the
CIA's attempts to instigate revolts in those countries (Blum, 1 995), while
North Korea's invasion of South Korea in 1 950 represented merely an
escalation of the open border warfare that had been initiated by the
South Korean dictatorship created by the USA (Ho Hui, and Ho, 1 993).
In addition, as previously mentioned, the Soviet invasion of Afghanistan
in 1 979 was conducted only afer a terrorist war was launched against
the established communist goverment by CIA-fnanced rebels, who
were bought by the USA with billions of dollars in cash, additional drg
trading profits, and a promise of a retur to a fanatically religious feudal
tyranny in order to deliberately provoke Soviet intervention (Feinberg,
1 998). Longer-term evidence that capitalism in general has been caus
ing an ever-increasing number of people to die in wars, even as a per
cent of the population, is provided by Urlanis ( 1 97 1 ).
Myths About Communist Economic Inefciency and
Resource MlsaHocation
Besides falsely believing that communist countries violently kill far
more people than capitalist countries, a large number of people (includ-
CHAPTER ] 83
ing many academics) also believe that communism has caused poverty
ad resource misallocation which are responsible for massive numbrs
of deaths relating to starvation and disease (MacFarquhar, 1 993). In
fact, the reverse is far closer to the truth. In particular, communism has
sved hundreds of mi l l ions of l ives through not only faster real income
growth but also greater income equality. For example, not only did com
munist Easter Europe grow more rapidly than capitalist countries (at
the same time it had less income ineualities than capitalist counties),9
but communist China has grown faster economically than any countr
in the world for some time. In particular, the average annual rate of
gowth in China was 1 2. 1 % for the perio 1 992- 1 996 and 7.3% for
1975-91 , compared with an average of about 3% for capitalist countries
(JMF, 1 997b ). 1 0 In addition, despite real income per capita still being
only 1 17 that of the USA in 1 99 1 , less than 10% of the Chinese popula
tion lives in pvery (U, 1 994) compared to about 20% of the popula
tion in the much richer USA according to the U (Assoiated Press,
1997). As a result of such successes, the annual death rate in China
atually fell to about 1% of the population shorly afer the communist
rvolution in China in 1 949, which was far less than the 3% annual
death rate that had previously existed in peacefl and famine-free times
under capitalism (Deleyne, 1 974). As documented in the Introuction,
munism therefore actually resulted in the saving of over ten mil
bon hves per year in China, and the only exception was the interval
1958-61 when, due to horrible weather that caused a terrible famine, the
death rte temporarily rose back close to the same level as it had previ
ously been in normal times before communism. It should be mentioned
that Chinese death rates during the 1 95 8-61 catastrophe rmained far
below those reported by Ho ( 1 959) for China during capitalist famines.
Although inadequate storage and some mistakes made during the Great
L

p Forward contributed to the human disaster in 1958-61 , it is inter

estm

that so many authors such as MacFarquhar ( 1 993) blame com
mumsm for these deaths but ignore the fact that the death rate in these
worst years under communism was comparable to the level in normal
Y=under capitalism in China. Such biased authors also tend to igore
the
.
r
ac_ that 35 million pople die of hunger each year in the current
capitahst world order (Flounders, 1 998b ).
Similar to the case of communist China, many falsely blame Stalin's
84 THE TRUMPH OF EVIL
Soviet Union for over ten million famine-related deaths in the Soviet
Union in the 1 930s (Conquest, 1 986); although the facts indicate Stalin
and the Soviet Union actually saved the lives of millions of people. The
1 930s in the Soviet Union represented a time of severe civil strife, wide
spread banditry, and even guerrilla warfare (Getty, 1 985), which started
when rich Russian farmers and rural merchants (called kulaks), who
controlled most of the agricul tural machinery and capital in the 1 920s,
and who ofen charged peasants interest rates of 1 00% or more for use
of the needed equipment, sought to increase their profts by refsing
to supply food to the cities at prices set by the goverment (Meurs,
1 999). Stalin countered this attempt to extort higher prices with a col
lectivization of the farms that many farmers resisted. 1 1 The rich farmers
and rural merchants themselves were initially allowed to join the col
lectives, but their resistance to the proess later caused the goverment
to assign most of these millions of people to jobs elsewhere (Conquest,
1 986). Many were sent to other provinces, or to work camps, such as
in Siberia, especially i f there was evidence they been involved in the
widespread activity of destroying food or committing sabotage in pro
test against col lectivization (Campbell, 1 974). Farmers indeed commit
ted about 1 0,00 separate acts of terrorism (about half being violence
against people and the other half being destruction of property) in each
of the years 1 929 and 1 930 alone (Meurs, 1 999).
Meanwhile, because of the frequent practice of farmers refsing to
work and even destroying food, and because of bad weather, many
farmers did not have enough food to make the mandatory sales of grain
to the state at a fxed price (Conquest, 1 986), with such sales repre
senting a sort of land tax except that consumer goods were provided
in retur for the tax payment. Although the goverment proured less
food than it had in the late 1 920s to keep the city dwel lers fed (Meurs,
1 999), there was insufcient grain lef for some farmers, and hunger and
related disease existed in this environment, especially in the Ukraine
in the early 1 930s (Koenker and Bachman, 1 997). Nevertheless, Tottle
( 1 987) has doumented an enormous body of evidence indicating that
much of the information on the famine-related deaths are completely
faudulent or wildly exaggerated, with the soures of the false propa
ganda being Nazi Germany in the 1 930s, rich anticommunist Americans,
and various Ukrainians who fled to the West after collaborating with the
CHAPTER
85
Nazis during Hitler's occupation in the early 1 940s. For instance, many
pictures alleged to have been taken of victims of the 1 932-33
.
amine
wer actually from the famine that resulted from the 1 91 8-22 clVll war,
ad many of the stories were made up by people who had never even
visited areal they claimed to have witnessed.
Despite these facts, Conquest ( 1 986) claims that Stalin is responsible
for about 15 million deaths in the 1 930s. He bases his numbers on his
citation that the Soviet population grew fom 1 58 mil lion to about 1 69
million between early 1 930 and early 1 939, whereas a ppulation of
1 8 million would have been expected with a more "noral" popula
tion growth based on the growth rates of the late 1 920s. 12 However, this
computation ignores the fact that birh rates tend to be lower during
priods of rapid. industrialization (Schmid, 1 998), such as during the
1930s in the Soviet Union. The eroneous population growth extrapola
tion also does not flly take into account the lower birth rate that can be
expected to occur during periods of civil strife, famine, hunger, disease,
ad massive displacement of people, it fails to take into consideration
the deaths stemming fom armed confict which included widespread
guerrilla warfare and even an invasion by Japan in 1 938 that had to be
defeate by the Soviet Union (Conquest, 1 986), and it ignores the fact
that many lef the Soviet Union as refgees fom this situation (Nove,
1 93). Wheatcrof ( 1 993) provides concrete information on newbors
in the Soviet Union, indicating that birth rates were about 1 .5% lower
in the 1932-36 interval than in the 1 920s and were about 0.5% lower
during the other years of the 1 930s. These lower birth rates alone
e
xplain all of the lower growth in the population during the 1 930S
. 13
With the exception of 1 933, documented death rates in the Soviet
Union averaged less than 2% per year in the 1 930s and were even lower
Wthe approximate 2% average death rate repred for the late 1 920s
(which was a time of relative tranquility), and the death rate of 3.7%
rpred for the catastrophic year of 1 933 was ver close to the annual
deth rate (also over 3%) in Russia under capitalism in 1 91 3 (Wheat
crof,
1 993), which had been a year of peace and abnorally abun
dat harvest there. 14 Thus, it appears that, despite the tragic executions
and famine, Stali n and communism actually saved millions of lives.

86 THE TRIUMH OF EVIL
Myths About Specific Aspects of Communist Efciency
Besides the widespread false impressions that exist about the generl
efciency of communist countries like China and the Soviet Union,
there seems to be a popular misconception about specifc aspects of the
economic efciency of communism. In particular, many people mis
takenly believe that the communist economies must be inefcient based
on an assumption that they do not allow for decentralized decision
making and result in long waiting lines and shortages. Waiting lines,
shortages, and waste did ofen exist in communist countries because the
goverment purosely set the prices of many gods too low to clea
(and also because richer capitalist countries placed embargoes on the
expor of the high technology goos to communist countries). However,
the low fxed prices (and the right to a job with income) did ensure
that everyone in communist countries had the right to essentials like
food, housing, medicine, and clothes (aus erster Hand, 1 987), unlike in
capitalist countries where a large portion of the population do not have
access to such essentials (Chossudovsky, 1 997) even in far richer capi
talist countries such as the USA (Strobel and Peterson, 1 999). Also, the
centralized fxing of prices greatly reduced the amount of time spent on
wasteful tasks performed in capitalist countries of price shopping, price
negotiation, and attempts to avoid marketing manipulation and fud
(Furlough and Strikwerda, 1 999). The relative efciency of central ized
goverment administration can be seen by comparing goverment and
private systems in the USA itself. For instance, in the insurance indus
tr, expenses (administrative, marketing and other costs) as a percent
of collected insurance premiums are only I % for centralized gover
ment social security, whereas they amount to 50% for private insurance
companies (Smith, 1 994). The fact that private capitalist systems 4
actually outright counterproductive is easily illustrated with examples
like chemical/pharmaceutical fs making money on treatments for
cancers they themselves cause by failing to remove carcinogens fom
their chemical products (Phillips, 2000). Note that these inefciencies
and counterproductive activities enhance the reported income levels of
the capitalist countries (since the extra insurance costs, sale of carino
gens, and cancer treatments all go into GOP income statistics), just 4
do the costs of the higher crime rates in capitalist countries that amount
to about 1 0% ofGDP in the USA ( US News World Reort, 1 994).
CHAPTER J
87
Te overall relative inefciency of capitalism was especially well
demonstrated by Gorbachev's own capitalist reforms of the Soviet
Union in the late 1 980s under his Perestroika plicies, which resulted in
a increase in the number of administrators, greater white collar crime
(as well as geater crime in general), 16 and lower economic growth
(Marcy, 1 990). The planning and administrative advantages of commu
nism, combined with fll employment and some economies of scale
and scop, represent some of the reasons why communist countries did
grw faster in real terms than capitalist countries, despite all the wars
ad other obstacles put in their way by the exteral environment. More
specifc analysis of these issues are provide later in Chapter 4 in a
direct comparison of communist and capitalist fnancial systems mGer
may.
IMPLICATIONS OF THE EMPIRICAL EXPERIENCES OF
EASTERN EUROPE AND COMMUNISM
Overall, the facts indicate that communist systems sere their people
fa better than most give them credit. Despite their accomplishments,
the communists lost the Cold War essentially because they started out
M much porer than their rich capitalist adversaries, and a few people
tok power who efectively surrendered.
Although there are only a few communist countries lef in the world,
the empirical experiences of Easter Europe and other communist coun
es can be usefl for providing some perspective on what might happen
tf a communist goverment were elected in a rich country such as the
SA. In particular, given the prior accomplishments under commu
msm, one might expet higher real income growth and less povery.
In addition, over 95% of the pople would be better of if the transi
tor fonn of communism that existed in communist Easter Europe
wer applied. For instance, in te USA, dividing 1 999 Gross Domestic
Product (GOP) by the number of people employed, the average income
would be about $70,000 pr worker.
In addition, under communism, taxes would probably be much lower,
because there would be no need for the huge militar spending now
used to maintain USA world domination (Blum, 1 995),
1
7 and because
cmmunist goverments tend to be more efcient than their bureau
crtic capitalist counterparts.& As in communist Easter Europe, higher
88 THE TRIUMH OF EVIL
pay would be available to the most productive and skil led (implying
over $ 1 50,000 in annual income being available to the most ski lled in
the USA), and so only the mill ionaires and billionaires would be eco
nomically worse of. The advantages of communism to an extremely
large portion of the population becomes even more apparent when one
considers the fact that it is substantially more likely for a middle class
American to fall into poverty than to rise into the upper class (Strobel
and Peterson, 1 999), thus implying that communism may be desirable
not only because it increases i ncomes for almost all Americans but
also because it greatly reduces the undesirable downward component of
income variation. 1 9
Communism was theoretically and ideally designed to eventually
eliminate the need for goverment, as capitalistic egoism was sup
posed to be slowly deleamed after potentially hundreds of years of tran
sitory communism or socialism, at which time all could share equally
in consumption/income according to their need (Hahn, Kosing, and
Rupprecht, 1 983). If such a purer form of communism were applied
that distributed GNP equally among all USA residents (not just the
employed), each person would be entitled to about $35,00 pr year,
or about $1 40,000 annually for a family of four. Note that this latter
calculation incorprates social security and simi lar transfer payments
to retirees and others not working, and so an even smaller percentage of
this latter income would be taken away in taxes. In addition, the latter
fgure might easily be l 0-20% higher because cheap child care faci lities
and the availability of jobs for all under communism would increase
employment and GOP. Some might assert that output might actually
decline under pure communism without material incenti ves for harder
work and productivity, largely because capitalist economists tend to
view work as "i rksome, involving 'disutility' that must be overcome
by wages to secure the labor needed for prouction," but, in contrast,
anthropologists (recognizing past cultures such as the aborigines and
Indians to have thrived without such incentives) perceive work as "the
fundamental condition of human existence . . . through which the indi
vidual is able to defne himself as a full and valued member of society"
(Strobel and Peterson, 1 999). One can observe from youth engaged in
sport activities how natural it is to exhibit extreme exertion and enthusi
asm without monetar rewards, so that it is certainly possible that sev-
CHAPTER
89
era! hundred years of communist society in transition would allow us
adults to lear what is natural to youth (and past soieties).
Regardless, through a great reduction in unemployment, povery,
crime, money anxieties, and social fictions, communism can permit a
higher quality of life, more freedom, and greater individuality, just a it
did in earlier communist societies (Zion, 1 995). A detailed, doumented
aalysis of the advantages of communism (in transition) in the moem
world (and a comparison with capitalism) i s provided in the next chap
ter using the German case as an empirical example.
90
THE TRUMH OF EVIL
LH11Lz
AN POST-MORTEM COMPARISON OF
COMMUNIST AND CAPITALIST SOCIETIES
USING THE GERMAN CASE AS AN
ILLUSTRATION
Many believe the collapse of East Germany represented evidence that
the country's communist society was inferior to the West German capi
talist one, insofar as the East German people did vote to replace their
own system with the West German one in 1 990. However, the voting
was heavily biased by the greater riches ofered by West Germany,
and, contrary to popular myth (Christ, 1 991 ) and related propaganda
(Summer, 1 994), these superior riches were not derived fom the capi
talist system itself but from the postwar treatment of Germany. This
chapter uses the most recent data and information to show that, despite
its ver serious disadvantage of staring with much less wealth, the
communist East German society was superior in many respects.
DOMINATING INFLUENCE OF MANDATORY EAST GERMAN
REPARATIONS PAYMENTS
Real income per capita stared at a far lower level in East Germany
because of reparations payments it had to make shortly afer World War
II, and, despite faster real economic growth in East Germany, it had
not yet caught up with West German levels by 1 989. In particular, in
the 15 years afer World War II the Soviet Union extracted over 50
bil
.
l ion Marks in reparations froEast Germany than West Germany
Patd (Apel, 1 966). More recent West German goverment estimates of
total East German reparations and other payments to the Soviet Union
92 THE TRUMH OF EVIL
indicate a fgure over 1 00 billion Marks (Merkel and Wahl , 1991 ),
which represented severl times tiny East Germany's National Income
or annual output at the time of the payments (most of which occurred
between 1 945 and 1 953). While West Germany also made some postwa
payments related to Nazi Germany's atrocities and war defeat (includ
ing compensation to war victims), they were largely ofset by Marsha11
Plan aid given to West Germany by the USA shortly afer World War 11
{Apel, 1 966). If East Germany had instead been able to invest the 1 0
billion Marks i n reparations (staring in 1 953 and reinvesting all capitl
and earings each year) at its average 1 8% rate of retur on investment
(Naumann and Truempler, 1 990), it would have compounde to give
East Germans income per capita equal to about 1 5 times the level in
West Germany in 1 989. 1
Instead, however, the enormous reparations caused East Germa
income per capita to be only about 2/5 that of West Germany in the
1 950s (Merkel and Wahl, 1 991 ), although it had risen to 2/3 of the West
GeO level by 1 989 (Gregory and Stuart, 1 995). It was the discre
ancy in personal income arising fom diferences in reparations that
had caused East Gerany to build the Berlin Wal l in 1 961 in order
to prevent its skilled workers (such as essential dotors and nurses)
from being "bought" by the richer West Germany (Ape1, 1 966). In fact,
before the Berlin Wal l was erected, severl million East Germans ( espe
cially skilled workers like doctors and engineers) moved to West Ger
many for the higher incomes available there, and this migration resulted
in a large loss to the East German economy (Apel, 1 966). Besides the
lare net migrations of people, black market activities and outright sab
otage by both the CIA and West Germany also helped motivate the
building of the Wall (Blum, 1 995).
Given that East German income would have been higher than in West
Germany without the reparations payments, it can be deduced that it
would not have ben necessar for East Germany to have the Berlin
Wal l if West Germany had made its share of the reparations payments
for Nazi Germany's war crimes. In particular, the burden to East Ger
many would have thereby been enormously reduced and would have
allowed its income to be substantially higher. At the same time, West
Germany's income would have been reduced by it making its share of
the payments. In this situation, it probably would not have been nee
CHAPTR 2
93
essa for East Germany to have slightly longer work weeks (since
it would not have been necessary to catch up with the West), nor to
have such severe shorages (that could have been alleviated with greater
wealth), nor to spend so little on pollution control (that refected East
Germany's relative poverty), nor to restrict political freedoms (that East
Gerany did not want the richer West Germany to take advantage of,
nor to have such an obnoxious secret police (whose primary purpose
was to keep East Germans fom leaving the countr for the geater
riches of West Germany). All the relative disadvantages of communism
in Eat Germany may therefore derive, at least parially, from its post
war reparations (and not from communism). Thus, it is possible to con
clude that communism in ast Germany was suprior to capitalism in
West Germany in all respects (except of course for the super rich, who
would become less wealthy and powerful under communism).
A list of the relative advantages of each system is provided in Table
3, followed by a more general discussion.
TABLE 3
A LISTING OF THE RELATIVE ADVANTAGES OF
COMMUNISM AND CAPITALISM IN GERMANY
Ma
I . No unemployment
.No infation
3. No life-sustaining anxieties
.More rights for women and children
5. Eual educational opprtunities
6. Soially mor just
7. More natural
K.Much less crime
9. Lsoverll plice control
I 0. Not harasse by Wester $plice
I I . Not a manipulate by the Wester press
. Not manipulated by Wester marketing
J No Mto shop around for the best price
. Simpler tax system
I S. Faster economic growth
a
I . Shorer work hours"
2. Fewer shorages"
3. Lower pollution
4. Political fredom faade'
5. More trvel freeom
6. Less transparent plice'
7. Greater wealth, i.e.,

a. Note that all of the advantages of capitalism in Germany stem at least in
Pfm (or were made pssible by) the greater bginning wealth of West Ger
many.
94 THE TRIUMH EVIL
ADVANTAGE OF EAST GERMAN COMMUNISM
.No unemployment. The right to work at a job of one's own choice
was guaranteed by the East German constitution (Aus erster Hand,
1 987). While there were some (mostly alcoholics) who conti nuously
refsed to show up for jobs ofered by the state, their numbers rep
resented only about 0.2% of the entire East German work force, and
only 0. 1 % of the scheduled work hours of the rest of the labor force
was lost due to unexcused absences (Kakat, 1 996). These fndings ar
specially noteworhy, given that people were generally protected fom
being fired (or otherwise penalized) for failing to show up for work
or for not working productively (Thuet, 1 985). The i mporance of the
communist characteristic of full employment to workers is reflected in
a 1 999 survey of eastern Germans that indicated about 70% of them felt
they had meaningfully less job security in the unifed capitalist countr
in the 1 990s than they did in communist East Germany (Kramm, 1999)
Z. No infation. While there was a slight average annual infation rate
of 0.5% in the aggregate economy between 1 960 and 1 989, consumer
prices were held constant over the 1 960- 1 989 interval (Statistische
Amt, 1 990). Even the i nfation rate in the aggregate economy was 0% in
East Germany's final decade, as admitted by the final East Geran gov
erment (Statistisches Amt, 1 990),2 which was both strongly anticom
munist and formally allied/unifed with the West German goverment
(having been "elected" under heavy economic and political pressure
from the West German goverment). While West German propagan
dists like Schwarzer ( 1 999) admit that East German aggregate accounts
were as accurate as West German ones, they ofen try to fabricate infa
tion in East Germany by citing the depreciation of the East German cur
rency in the 1 980s on the black markets (or in the context of a very nar
rowly traded basked of goods). Basing an aggregate infation rate on
such prices of a limited amount of goods in a very narrow market is
not only absurd, it is also totally inconsistent with data on East German
aggregate purchasing power, as reported by the West German gover
ment and various West German banks (Welfens, 1 992), which indicate
East German inflation figures to be accurate (as will be explained in
more detail in Chapter 4).3
3. No life-sustaining anxieties. Food, apartments, chi ldren's cloth
ing, day care, and mass transportation were heavily subsidized and
CHAPTER 2
95
therefore very cheap regardless of income (Collier, 1 985). Work with
income was guaranteed by the state as were living quarters (Aus erster
Hand, 1987), and a person could not be thrown out of an aparment
even if the person didn't pay the very trivial rent (Filmer and Schwan,
1985). All also had the right Kfee medical car, disabil ity income, and
retirement income (Aus erster Hand, 1 987), and so it was not neces
Wfor those needing round-the-clock care to burden relatives as 80%
mWest Genany do (Meyer and Schulze, 1 998). A surey of easter
Gerans indicated that 58% of the people felt soial security is signif
cantly worse in the united capitalist Germany than it had been in com
munist East Germany (Kramm, 1 999).
4.More rights for women and children. Women had initial access to
jobs at least as good as those of men in East Germany, although family
considerations and other factors may have resulted in them not advanc
ing far as males later on in life (Voelker and Flap, 1 999). Regard
less, female employees were about 3 times more likely to hold skilled
or white-collar jobs than working women in West Germany (Meyer and
Schulze, 1998).
There existed extremely cheap day care in East Germany (open up
to 12 hours a day), with 80% of East German children under 3 years

fage, 95% of all 3-6 year-old and 80% of 6- 1 0 year-olds (when not
mrgular school) being in nursery schools, kindergarens, or child care
groups (Meyer and Schulze, 1 998). Although it was not necessary for
women to work (and a signifcant minority did not), the availability
of reasonable child care made it much more feasible with most moth
edoing M in order to generate extra spending incme for the family
(flmer and Schwan, 1 985). Also contributing to more East Genan
women working was the fact that mothers were given one work day a
month of to do housework, and women were allowed unlimited work
leave to take care of sick children (Meyer and Schulze, 1 998). More
over, a paid materity leave of 6 months was available afer the birh of
the ft child and up to one year for the second child (Falck, 1 998). The
mat
1
e

em

ty eave
mcreased to 1 8 months for the third and all subsequent
c
h
ldren (Schwarzer, 1 999). In addition, the work week was shortened
w
de vacaf

(F |
on hme was lengthened for mothers w1th more chtldren
ck1998). Also, the state bank ofered cheaper credit to families
Wl
three or more children, with an interest rate of between 0% and 3%
96 THE TRUMH OF EVIL
dependi

g on the number of children (instead of 4% to 6% otherise),

along With a standard 0.2% fee to cover defaults (i.e., a form of crdit
insurance), although 2% was added to the interest rate for late payment
(Autorenkollektiv, 1 988).
For older chi ldren, there were many sports, cultural, and study activi
ties organized by East German goverment-sponsored groups like the
young pioneers and the Free Geran Youth. In addition, special holi
day facilities existed for chi ldren. Afer unifcation, these oranizations,
activities, and facilities were closed down (as such unproftable things
do not exist in the united capitalist Germany), and "children are ofen
lef on their own in the afemoons and during the holiday perios"
(Meyer and Schulze, 1 998).
.Equal educational opportunities for all. There was no tuition for
college, and a living allowance was provided by the state to student
without any fture debt obl igations (Aus erster Hand, 1 987). While
a small minority of East Germans feel that the educational system is
better in the unifed Germany, far more easter Germans (more than
double) believe the educational system under communist rule was sup
rior (Kramm, 1999).
. Socially more just. The diference between high and low wealth
levels was much lower than in capitalist countries (thus resulting in
no major diferences in soial class based on wealth), at least partially
because of state regulation of wages, which along with all the forego
ing social security benefts ensured no true povery in East Gerany
(Dietz, 1 983). In addition, it was generally almost impossible to become
extremely wealthy in East Germany because of 90% U rates on high
levels of profts and because of restrictions on the size of private fr
(Buero des Mini sterrates, 1 970). Such restrictions might represent t
disadvantage for a small minority of super rich, but it would not be n
evant to the vast majority ofpeople.4
7. More natural. The communist system resulted in more naturl
human relationships. This greater naturalness was refected in the results
of a survey of eastern Germans, who indicated that most felt more com
forable under the old communist system there than under capitalist
unication (Kramm, 1 999). In particular, the communist East German
society was not so plagued by the capitalistic characteristic of personal
greed above everthing (Aus erster Hand, 1 987).
CHAPTER 2
97
However, relationships were sometimes arificially used for material
gain to obtain goods and services in short supply in East Germany,
M noted by Voelker and Flap ( 1 997), who conducted a survey that
touched on this issue. Their survey indicated that both relatives and "co
worers" actually provided more such material access than "fiends."
If fiendship had truly been based on such material advantages, then
the result would have been the opposite (as more fiends would have
been deliberately chosen that provided such material advantages). This
fnding is consistent with the hypothesis that any material advantages
of true fiendship in East Germany may have been the byproduct of
the fiendship as opposed to the cause. The survey also indicated that
pople considered to be mere supercial "acquaintances" or "neigh
brs" played a much smaller role in assisting with access k goods and
serices in short supply, as would be consistent with a hypothesis that
East Germans did not cultivate supercial relationships to gain material
avantages.
It should be mentioned that the primary purpse of Voelker and Flap
(1 997)'s survey was apparently to support a biased opinion/hypthesis
that East Gerans were unfriendly to their neighbrs. However, the two
Wester researchers were only able to provide supporing evidence for
their ridiculous hypothesis by efectively having any neighbrs consid
ered to be friends removed frm the sample of neighbors (as they them
selves admitted in a footnote).
"Friendliness" was generally not a commoity that was "sold" in East
Gerany, and M East German cashiers, waiters, waitresses, and sales
ple in general were actually considered to be rude by foreigners
(Filmer and Schwan, 1 985), at least partially because of their honest
naturlness and lack of superciality. Perhaps in refection of this fact,
a suey asking East Gerans which of 1 6 diferent characteristics that
ey fnd most important in a partner (such as "loving father/mother,"
oyalty," and "has intellectual i nterests," all three of which ranked
htghly)
indicated the attribute of "has a highly paid job" ranked the
absolute lowest in imporance, while "has an attractive appearance"
rnked fourh fom the bottom (Edwards, 1 985).
Morover, Falck ( 1 998) reports in a well-doumented book that the
gater equality of treatment of men and women in East Germany, and
a more natural set of ofcial morals with respect to sex resulted in
98 THE TRUMH OF EVL
less confict between men and women, virtually no prostitution, far less
incidence of sexual perversion, and women who were considerd b
y
many foreigners to be bth more pleasant and more intelligent than |
capitalist countries. Also contributing here was the lack of stress wit
respect to job security, fewer fnancial worries, and no life-sustaining
money anxieties, which also resulted in the well-documented fact tt
East Germans engaged in sex much more fequently (and with mor
sexual partners on average) than West Germans (dpa, 1 990b). Another
study indicated that East German women typically enjoyed sex much
more (with a 70% orgasm rate), at least partially because communism
al lowed East German women to feel equal, far more independent, M0
far less oppressed (Kleinschmid, 1 985).
. Much less crime. Narcotics were almost nonexistent in East Ger
many, although there were some i llegal homemade drug concoctions,
such as combining legal alcoholic beverages with legal tranquilizer
and even mixing a detergent with cola (Leopold, 1 985). Regardless,
murder and violence were D and thef was much less prevalent than
in the capitalist countries (Diedrich, Ehler, and Wenzke, 1 998). For
instance, in 1 988, there were 7 criminal acts per thousand residents
in East Germany compared to 7 1 per thousand residents in West Ger
many (Norhof, 1 995). As a result, a 1 999 survey of easter Gerans
indicated that 81 % felt less secure fom crime in the unifed capitalist
Germany than in communist East Germany (Kramm, 1 999). An Ameri
can woman visiting East GeMy in the 1 980s was astounded that she
could actually walk the streets alone at night without any fear (Filmer,
1 985a).
9. Less overall pollee control. For instance, the amount spent p
capita on police, secret police, and public security was less in East Ger
many than in West Germany. In particular, such spending by East Ger
many was $225 per East German citizen in 1989 (Diedrich, Ehlert, and
Wenzke, 1 998), using the ofcial exchange rates which approximated
purchasing pwer exchange rates (Coll ier, 1 985), while spending by
West Germany on interal security was about $264 per citizen in the
same year (Statistisches Bundesamt, 1 996).
It should be mentioned that about t/5 of the total plice, secret plice,
and public security personnel in East Germany were actually heavily
armed mil itar troops (primarily trained to fight armed enemy infi ltra-
CHAPTER 2
99
tors, paratroopers, and sabteurs), whereas all West German military
forations are paid for out of defense spending as opposed to public
security spending (Diedrich, Ehlert, and Wenzke, 1 998). In addition,
the East Geran fgures include foreign espionage spnding, which is
included in. West Germany as a separate (and secret) budgeted amount
estimated to be abut $8 pr capita (Schmidt-Eenboom, 1 995). Thus,
pr capita spending fgures for East Germany that would b more com
pable might b $225x{ 1 -.20}=$ 1 80, or about 2/3 that of West Ger
mny's $264+$8=$272. Given that East Geran income per capita was
abut 2/3 that of West Germany's in 1 989 (Gregor and St 1 995),
it Cbe concluded that East Gerany spent about the same percentage
of National Income as West Germany.
It should be mentioned that over half of East German spnding on
interal security was for secret police (Diedrich, Ehlert, and Wenzke,
1 98), which was pereived to be needed to defend against the state
intent of the much larger and richer West Germany to take over East
Gerany (von Schnitzler, 1 992). As a result, there were more secret
plice than other police in East Gerany (Diedrich, Ehlert, and Wenzke,
1998). In particular, in 1 987, there were 91 ,01 5 secret police compared
to 1 5,646 regular police, 6226 plice liaisons with neighborhoo watch
gups, 8294 criminal police, and 621 2 trafc cops (with all these fg
us including supporting administative personnel). Also included in
the East German interal security fgures were 31 ,555 fll-time national
gard troops (consisting of 1 1 ,0 members of a Stasi "Wachrgiment"

!rady included in the 91 ,01 5 secret police population, 14, 1 1 5 "Bere

ltschafplizei," and 6400 "Transprtpolizei"). There was a total of
8526 prison guards and 3377 immigration ofcer (as well as almost
10,00 more of the 91 ,01 5 secret plice who were directly involved in
emigration/immigration tasks) also in East German interal security.
1O were 1 5, 1 29 security guards (and supprting administrative pr
snnel) in East Germany whose costs are not include in the interal
""
0

spending Gust as amounts for security guards in West Germany

ae separately budgeted, there as private business expenditures). Over
all, acal secrt and other police, prison guards, security guards, and
suppormg administrative personnel represente about 0.8% of the East
Genan population (with national guard troops and immigration of
Mrep
resenting a frther 0.3% of the population).
1 00
THE TRIUMPH OF EVIL
. Not harassed by the Western secret police. The all-powerfl
West German secret police (which inherited Hitler's organization,
people, and laws) harassed many people (especially West Germans) with
lef-wing political opinions, using tactics like entrapment, spreading
false rumors, and causing people to lose their jobs (Schulz, 1 982), but
the East German secret police severely restricted these i llegal, harassing
activities against East Germans in East Germany. However, the West
German and allied secret police were able to tap some phones and
open some mail in East Germany (Staadt, 1 998), and the East Germa
secret police itself did harass many of its own citizens, especially if
they applied to emigrate to West Germany (Henke and Engelmann,
1 995). 6 In addition, for a large number of the annual 1 5 million visits
of East Germans to West Germany in the late 1 980s (Murphy, 1992b),
a secret police security check was required (Diedrich, Ehlert, and
Wenzke, 1 998). Nonetheless, it must b emphasized that the tactics of
the East German secret police generally consi sted of openly attempting
to persuade people not to take actions that damaged the State (Riecker,
Schwarz, and Schneider, 1 990), and that tactic was in stark contrast |e
the West German secret police strategy of doing everything possible te
penalize people for any anti-goverment opinions (Schultz, 1 982).
. Not as manipulated by the Western press. The Wester press
is heavily influenced throughout the world by the CIA and rich capital
ists (Blum, 1 995), but there is an especially strong manipulation by the
CIA in West Germany (Agee and Wolf, 1 975). I n addition, the German
media is strongly tied to the big-business-oriented Christian Democratic
Party (Der Spiegel, 1 994). While the East German press was strongly
ideological and controlled by the goverment (and thus had its own
manipulative bias), that press provided an alterative to the propaganda
of West German television, which could b watched by most East Ger
mans, except soldiers and about 1 5% of East Germans who were out of
the West German television range (Filmer and Schwan, 1 985).
Z.Not manipulated by Western marketing. Prices were determined
in East Germany by administrators largely based on cost, although
unmanipulated demand and need factors were also considered for many
products (Steudtner, Hempel, and Ulrich, 1 988). As a result, there were
more rational and objective prices, since the people were not manipu
lated by the adverisements and marketing gimmicks of capitalism.
CHAPT 2
1 01
In comparison capitalist value and price, are determined by how much
someone can be convinced to pay for something. For instance, if some
one prsuades another person to pay $1 000 for something totally worh
less like a handfl of pebbles, the value of this worthless item in capi
talism is $1 000 regardless of whether the buyer later figures out the
stones are worthless. Although capitalist swindles mcommon, 8 much
more subtle for of distoring value occurs even more frequently (and
almost continuously) in capitalism (Furlough and Stikwerda, 1 999). In
paicular, through advertising, sales people, and marketing, it is pos
sible to get consumers to pay much more for the same product, or even
buy an inferior (or worhless) product for a higher price. One classic
illustration of this phenomenon that is glorifed a a genius of capitalist
marketing (and even taught in marketing classes at USA universities)
is the case of Gary Dahl selling 1 . 3 million worthless pebbles for $
a piece as "pet rocks" (Scripps Howard News Service, 1 999). Another
example is with breakfast cereal. The major brandname cereals usually
cost far more than for a generic breakfst cereal of approximately the
same type, and these high-priced brandname cereals have about V
of the market share (Gibson and Ono, 1 996). So the market "value" of
a good in capitalism can be greatly increased by adverising and other
psychological manipulation (Green, 1 999), with such mareting strate
gies being so efective that over 90% of the people are willing to pay
the higher "value".
As a result of such potential to exploit consumers and confscate
their money through excess chares (Furlough and Strikwerda, 1 999),
a enormous amount of resources is spent in capitalism for marketing
that manipulates people and distorts reality, with marketing (including
rtail ing) expenses making up half of the cost of the average consumer
(Pride and Ferell, 1 997). While marketing can provide valuable

nformation, entertainment, and even psitive psychological feelings, it

|sofen difcult, time-consuming, annoying, and mentally disturbing
to try to diferentiate the manipulative and reality-distorting aspects of
meting from its positive characteristics. Thus, it is unclear whether
capitalist marketing creates any net positive value much less covers its
enormous cost. Nonetheless, this cost is incororated into the price of
s and is therefore efctively paid for by consumers whether they
hkcIt or not (unless they are willing to expend the enorous amount of
1 02
THE TRIUMPH OF EVI
time and energy required to sif through the distortions, fnd and inves
tigate alteratives, and take risks with unfamiliar products/companies).
Some evidence of the net negative efect crated by capitalist ma
keting is provided by the great efort and cost so many people incur
to avoid advertising, telephone sales pitches, and general marketing
manipulation (Kaufman, 200). A more subtle (and potentially mor
damaging) negative efect of capitalist marketing is the "pushing" of
products with actual negative long-term value, as exemplified by the
unhealthy obesity which is rapidly growing in the current capitalist
marketing environment that "encourages us to eat food high in calore
and fat" (Winslow, 1 999). The fact that capitalist marketing also has the
negative efect of keeping good products out of the market is il lustrated
by the statement made by manager Mark Greenberg, "You can have t
good product, but if you don't have god marketing and a good brnd
name, your'r toast" (Kiplinger's, 2000).
J.No need to shop around for the best price. The prices of gos
or services of the same type and quality were the same everywhere in
East Germany. Although it was ofen necessary in East Germany to shop
around for available goods (Filmer and Schwan, 1 985), although use
goods were sometimes the only ones that could be found, and althoug
lines to buy gods at East German stores were typically longer than the
check-out lines at West German stores, many of the new goods in shor
supply were readily available without waiting at the very expensive East
German exquisite shops (Falck, 1 998). Whenever East Germans had the
choice of paying higher prices or waiting in line, the latter choice wa
usually considered superior, especially since it was possible to read or
socialize while waiting in line (whereas it is more difcult to engage
in other activities simultaneously when engaging in the price/quality
shopping necessary in capitalism that requires greater concentration ad
efor).
4. Simpler tax system for individuals. The state withheld about
1 5% fom wages (up to a maximum of 25% for higher wage-earer)
without the need for fling a tax form (Buer des Miniterates, 1 966).
On the other hand, for private companies, which could exist with 10 or
fewer employees, taxes on profts were levied at a steeply progressive
rate that reached 90% for income over 250,000 Marks (Buero des Min
isterrates, 1 970), which was about $1 50,000 at ofcial exchange rates.
CHAPTER 2
1 03
5. Faster real economic growth rate. East Germany's national
income grew in real terms about 2% faster annually than the West
Geran economy between 1 961 and 1 989, as documented in Chapter
of this book.7 However, because the ver large reparation payments
made by East Germany to the Soviet Union afer World War II had
caused it to star at a much lower level, it had not yet caught up by
the 1980s, being only about 2/3 that of West Germany's at that time
(Grgor and Stuart, 1 995).
ADVANTAGES OF WEST GERMAN CAPITALISM
. Shorter work hours. The West German work week was 2 hours
shorer, and the West Germans had slightly more paid vacation days and
holidays per year (Osmond, 1 992). However, it should be mentioned
that the East German workers actually had more free time than the aver
age worker in the far richer USA (largely because Americans gener
ally have fewer paid vacation days). I n addition, even the apparent rela
tive advantage for capitalist West Germany here may in fact be only on
paper, as a 1 999 survey indicated that, despite the high level of unem
ployment in the unifed country, more easter Germans felt they had a
grater amount of fee time under the old communist system than they
do in the unified capitalist Germany (Kramm, 1 999). This confl icting
surey result may stem fom "voluntary" overime, work brought or
conducted at home, and other activities (including work planning and
woring, as well as very stressfl job searching) that is not counted in
the ofcial work week.
.Fewer shortages. Waiting lines at West German stores tend to be
shorter than those that existed in East Germany. However, one needs
to have more money to buy the goos in West Germany, and ofen it
is necessary to do a lot of time-consuming price shopping in order to
kep the price fom bing even higher (Statistisches Bundesamt, 1 996).
iilarly, in East Germany, there were exquisite shops where goods
|r short supply elsewhere were easily obtainable at very high prices
(Falck, 1998).
Some evidence on the relative time costs of shopping for the best
Price and availability does exist. For instance, the unifed German gov
e
rment has estimated that, under the capitalist system, shopping alone
tkes up about 1 5 minutes per day of the average German's time (Statis-
1 04
THE TRIUMPH OF EVIL
tisches Bundesamt, 1 997), which comes k almost 1 00 hours per ye.
This fgure approximately equals the average number of hours that wa
spent per capita waiting in line in the communist Soviet Union (Freze,
1 997). It should also be mentioned that the highly centralized and regu
lated German capitalist system has less competitive pricing practices
than more decentralized capitalist systems like in the USA (and W
shopping probably takes less time in capitalist Germany than in othe
capitalist countries), while the Soviet Union probably had longer wait
ing lines than more efcient and more prosperous communist system
like in East Germany (and so shopping in the communist Soviet Union
probably took more time than in other communist countries like Eat
Germany). Thus, it is far from clear that shopping takes mor time
under the average capitalist system than under the average communist
system (without even considering the advantages of communist market
ing systems in avoiding the manipulation and fraud that exists in capi
talist systems).
Some evidence on this issue directly comparing communist East Ger
many with capitalist West Germany is provided by Meyer and Schulze
( 1 998). These researchers found that East German families spent les
time on housework (including normal shopping but excluding child car
upon which East Germans spent substantially less time) than West Ger
mans, despite the fact that East Germans tended to have less access to
some household automation (like microwave ovens) and personal trans
portation (although they did have greater access to inexpensive meals at
work which reduced household tasks related to preparing meals). One
of the primary time-consuming activities avoided in East Germany was
the need to "bunt for bargains and compare prices, quality, and quan
tity."
A much more imporant diference existed with respect to the short
age of specifc goods and services in East Germany. In particular, there
was at least a l 0-year waiting time between ordering and receiving a
new car (Filmer and Schwan, 1 985), and there was a similar wait with
respect to a telephone connection i n East Germany (Schwarzer, 1 999).
The system was not actually as incredibly inconvenient as it seems, as
it was always possible to buy a used car in East Germany, and there
were also ways to obtain a new car in a timely fashion by ordering it l 0
years before one had the money available (or having relatives or friends
CHAPT 2
1 05
do so 10 years before a child was of driving age). Given that a 25%
subsidy from the state signifcantly reduced the cost of new cars (ADN,
190), and given that East Germans had about half as many cars as West
Gerans (Mueller, 1 996), the shorage of cars was not nearly as terrible
it may have seemed, especially since East Germany had an extremely
cheap but efective mass transporation system (Welfens, 1 992). Although
the telephone shortage created a more difcult problem, East Germans
were able to use inexpensive public pay telephones somewhat efec
tively, and the cost of telephone service (when fnally obtained) was
ranably cheap in comparison to the capital costs of supplying it
(Schwarzer, 1 999).
It should also be mentione that many services like repairs had to
b reuesed weeks in advance in East Germany (Filmer and Schwan,
1 985). The latter situation motivated many to lear to perform their own
srvices and repairs Gust as the high cost of services and repairs in West
Gerany motivated many to do their own work in those areas).
J. Lower levels of pollution. Because of its relative pvery, East
Geray spent less on pollution control than in the richer West Ger
may (Gregory and Leptin, 1 977), as is typical of poorer countries
(such Mexico and Hong Kong) whose people norally value higher
consumption of goods over a cleaner environment (Robitaille, 200).
Just for example, one study indicated that the workers of the most pl
luted city of easter Germany (Bitterfeld) were ready "to accept envi
rnmental pollution" as a price for maintaining their jobs, and the uni
fed capitalist German goverment itself placed very low priority on
pllution problems in easter Germany, as illustrated by it budgeting
only 671 million Marks on pollution control in easter Germany in the
t year afer unifcation, compared to East Germany spending over 2
billion Marks on pollution control in its fnal year (Welfens, 1 992).1 In
fat despite the closing of so much of East German industry shorly
afer unifcation in 1 990, the pollutant most dangerous to local human
helth
(sulfur oxide) actually rose in easter Germany in 1 991 fom the
'
evel in 1 989 even though some higher spending by East Germany in
Its
fnal year had signifcantly reduced the emissions in 1 990 from the
1 99 1evel (Buck, 1 996). 9 It should also b mentioned that there is little
evtdence that the pollution in East Germany had a deadly impact, given
that the death rates in the most polluted areas of the county were lower
1 06 THE TRUMPH OF EVIL
than in the less polluted areas (Der Tagesspiege/, 1 990m).
4. Political freedom faade. The West German system created |ht
fafade of democracy by publicly allowing the formation of difernt
political parties, and that appeared to compare favorably with East Ger
many, where one needed to obtain permission from the goverment
to star a new political party. However, the West German goverment
can and has outlawed some peaceful political parties and organi zations
that ar not perceived to be consistent with the capitalist order, such
as numerous pacifst groups and a fairly popular West German com
munist party in the 1 950s (Angenfort, 1 996). Thus, despite the faade
of greater political freedom in West Germany, there is a trivial difer
ence in practice between East Germany's requirement to obtain permis
sion to form a political party and West Germany's right to disallow
any political parties or organizations it chooses (except that the West
German system creates more risks to founder activists with respct |u
expending the time/money in starting up an organization that is only
later ruled to be "verboten").
For instance, in anticipation of unifcation, the former communist
pary of East Germany (relabeled the Party of Democratic Socialism
from the Socialist Unity Pary) revised its platform to meet the con
stitutional requirements of the united Germany that were the same as
in West Germany, which merely annexed East Germany in 1 990 (von
Schnitzler, 1 992). Despite the changes made by the party to be in
favor of a market-oriented economic system, to respect private propery,
and to endorse capitalist-style elections, many German anticommunist
believe the party should be outlawed (Economist, 1 996). The primar
reason appears to be because a fraction of the members of the Pa
of Democratic Socialism (PDS) are openly communists (Autorenkol
lektiv, 1 995), and because fnancial and other harassment has failed to
eliminate the party's popularity (Economist, 1 995).
Simi larly, West Germany also appears freer with respect to making
or writing statements about the goverment, but there are actually laws
in West Germany that prohibit slandering goverment rlers, just a
such laws existed in East Gennany but were rarely enforced. In addi
tion, although demonstrations are widely thought of as being tolerated
in West Germany, there is substantial evidence of police and social
repression of demonstrations in West Germany (Hamburer Abendb-
CHAPT 2
1 07
/att, 1992). On the other hand, the massive pacefl demonstrations in
East Germany in the fal l of 1 989 (as will be describd in Chapter 3)
indicate substantially less repression there than is normally assumed,
ad dissent on particular issues was freely allowed in East Germany
insofar as petitions could be (and ofen were) collected and sent to the
Et German goverment for action (Philipsen, 1993}.10 It should also
be emphasized that, in capitalist West Germany, only the rich have suf
fcient money to make their statements or writings sufciently publi
cized to have a widespread efect on others' opinions, and it has been
well-established that West German elections mcontrolled by market
ing, money, and personalities (Schumacher, 1 998).
Moreover, communists are not legally allowed to have jobs in the
West German goverment bureaucracy (von Schnitzler, 1 992), and West
Geran businesses {being invariably owned by rich anticommunists)
ofen follow the goverment's example, thereby virtually prohibiting
working people fom publicly stating communist opinions in capitalist
West Germany (unless there were a few tolerant rich business owners
with job openings). 1 1 A more general form of extorion also exists inso
far rich capitalists ofen threaten to eliminate jobs (by taking capital
out of the country) if a socialist goverment is elected, and this threat
of unemployment i s made very clear to the working masses in capitalist
sieties (Copeland, 2000).
Despite these facts, and despite the fact that the established, ruling
West German political parties are widely perceived to be "clubs for
a
plitical class that makes its own rules" (Rohwedder, 200}, West
Geran elections are generally held to be more democratic than East
German ones. Nevertheless, it should be mentioned that East Germany

lso had multiple plitical paries, although they voluntarily formed

Into
.

united National Front shorly afer World War I I k create a
coahtton blo designed to prevent a reelection of the capitalist Nazis
(Weber, 1 988). East Gerany also permitted voters to cast secret bal-
1?ts and always had more then one candidate for each goverment posi
tion (Honecker, 1994). Although election results typically resulted in
over -,
of all votes being for candidates or parties that did not favor
vout10nary changes in the East German system (ust as West G
.
erman
lechon results generally resulted in over 99% of the people votmg for
non
-
revolutionary West Geran capitalist parties}, 12 it was always pos-
1 08
THE TRUMH OF EVIL
sible to change the East German system from within the established
political parties (including the communist party), as those parties wer
open to all and encouraged participation in the political proess (Filmer
and Schwan, 1 985). The ability to change the East German system from
withn is best illu

ted by the East German leader who opened up the

Berhn Wall and mataated many political reforms in his less than me
months in power (Kenz, 1 990).
The East Geran political system was actually more democratic tha
the West German one i n at least two respects. In paricular, only East
Germ
y allowed voters to cast votes against the system, and thou
sands dtd so at each election (Weber, 1 988). Moreover, only East Ger
many had a fee referendum approving its constitution (von Schnitzler,
1 992). I

addition, the East German political system may have actually
resulted D less corruption, since, despite a great deal of West Ger
propaganda to the cont the opened East German records indicate
f
W
les

evidence of briber and use of a position for personal gain than
extsts m West Germany (Honecker, 1 994). u
Nevertheless, afer being bombarded with capitalist propaganda (and
welfare) for almost a decade, only 20/ ofEast Germans believe the old
communist political system was superior, although over 30% believe
they are about the same, and less than a majority believe the "democ
racy" of unifed Germany is better than the communist system (Kramm,
1 999). Overall, there is actually some question as to whether there is
ore honest freedom from repression in capitalist Germany, especially
gtven a 1993 survey which indicated that more East Germans felt safer
from state infringements in their lives in 1 988 under the communist
East German goverment than they did in the 1 990s under the united
capitalist rule (Northof, 1995).
.More travel freedom. West Germans had greater freedom to travel
to more countries, at least for those West Germans with sufcient money
to be able to aford to travel. However, East Germans had a substantial
amount of travel feedom within the vast expanse of Easter Europe,
wher

travel costs were subsidized by the East German goverment,
espectally for youth (A us erster Hand, 1 987), and where vacation travel
within East Germany was very heavily subsidized for workers (Filmer
and Schwan, 1 985). It should also be mentioned that most East Ger
mans were allowed to travel to the West afer a long application pro
CHAPTER 2
1 09
cess and security check (Diedrich, Ehlert, and Wenzke, 1 998). In addi
tion, the delay and security check for such travel did not exist for retir
ees (over 65), who were allowed 30 days of unrestricted stay in the
West annually (Filmer and Schwan, 1 985). Nevertheless, over 90% of
East Germans feel they have greater freedom of travel in the unifed
Gerany than under communist rle (K 1 999), with this clear
incrase in feedom stemming not only fom the opning ofthe Wall but
also fom the higher level of income (derived via the huge transfer pay
ments from western Germany) that makes travel mor feasible fnan
cially.
0. Less transparent police. Although the West German secret police
is scarely noticeable to those with conservative or no political opin
ions, the West German secret police can be at least as harassing as the
Est Geran one for people with the "wrong" lef-wing opinions, ofen
inficting serious damage such as causing a person the loss of a precious
job (Schulz, 1 982). It should also be mentioned that the regular West
Geran police had such a close relationship with the main brnch of the
West Geran secret police (the Verfassungsschutz or "Constitutional
Prtetion") that one West German police insider stated, "One never
ses the borders between the Constitutional Protection and the regular
plice" (Der Spiegel, 1 992b ).
It should also be mentioned that stories related by victims indicate
that the rpression of the East German secret police was not nearly as
terible as its reputation and generally only occurred i n cases of clear
law violations or repeated attempts to underine the East German gov
mment (Furian, 1 991 ). Most of the East German secret police's activi
ties wer related to security checks involving applications to visit West
Gerany (Diedrich, Ehler, and Wenzke, 1 998). In fact, of the arests
mae by the East German secret plice btween 1 985 and 1 988, about
'Twere for illegally attempting to emigrate to West Germany, about
20 were for threatening East Germany and its employees (mostly for
delaying or refsing an application to emigrate), and about 20% were
for working with West German organiztions (ofen to publicly embar
rss or otherwise pressure East Germany into allowing them to emi
t), while only about 5% were for treasonous ofenses (such as com
nuttmg
sabotage or spying for West Gerany), and only 1 1 (about 0. 1 %
of a ests) were for making public slanderous statements against East
1 1 0 THE TRIUMH OF EVIL
Germany or its leaders (Henke and Engelmann, 1 995).
Some East Germans actually felt they had more feedom of speech
under communism because, unlike in capitalist West Germany, they felt
they could say whatever they wanted without fear of losing their job
(Eckart, 1984). However, a majority of East Germans believe they have
greater feedom of speech in the unifed Germany than they did in com
munist East Germany (Kramm, 1 999). The latter survey results wer
probably at least partially related to the deliberate transparency of te
East German secret police methods which made more people aware of
the restrictions on freedom of speech (and possibly also related to the
fact that many people in easter Germany don't have a job and don't
realize the job-related penalties which can occur when one says the
"wrong" thing).
7. Higher Income and wealth (i.e., escaped reparations). As pr
viously mentioned at the beginning of this chapter, West Gem
an

was richer than East Germany. This advantage (like the others mdJ
rectly) derived directly fm the relative post-war treatment of the two
Germanies and not from the type of economic system. In particula,
West Germany escaped fom having to pay reparations for the crim
.
e
committed by capitalist Nazi Germany as a whole against the Sov1et
Union.
The dominating importance of this factor can be seen fom the fat
that the flow of people fom easter to wester Germany continued
unabated even afer West Germany annexed East Germany in 1
(Statistisches Bundesamt, 1 9%), even afer the two areas became vu
tually identical except in terms of relative income, and even afer the
massive welfare payments made to the easter Gerans narrowed te
income diferential. Because capitalist unifcation in 1 990 had destroy
e
the East German economy, reducing gross national product (GNP) b)
over 40% (Osmond, 1 992), and putting over half the population ther
out of work, wester Germany had to make enormous transfer pay
ments to the easter part to keep incomes above the levels under co
munism (Rohwedder, 1 996). As mentioned in the introduction to thiS
chapter, the communist system could have grown to being vastly richer
than the West German capitalist one if it had not h to make the enor
mous reparations payments to the Soviet Union, and it certainly could
have created far more wealth and income with the large transfer pay-
CHAPTER 2
ments of the 1 990s than has been the case under capitalist transforma
tion of East Germany (as will be documented in Chapters 4 and 5).
CoNCLUSION
Given that virually all the advantages of West Germany stem fom
te exteral postwar treatment of Germany (and given that some of
te West Geran advantages are mere faades ), communism dominates
cpitalism in virually all respects. This hypothesis
.
is cniste
.
nt with
a suey finding 10 years afer the Berlin Wall opemng mdtcatmg that
ea|
)45% of easter Germans in 1 999 feel that capitalist "democracy"
is btter than the old communist system (Assoiated Press, 1 999c),
despite the massive transfer payments (or bribes) to easter Germans
ad despite the fact that the capitalist German propaganda machine has
continuously blamed communism for East Germany's relative poverty
while larely ignoring the true cause (i. e., the massive post-war repara
tions forced on East Germany alone).
14
Nevertheless, it is possible that the average East German is at least
intuitively aware of the long-term superiority of their system. For
instce, a 1999 survey indicated that 67% of East Germans feel the
NNperspective for the coring generations was better under commu
nism than it was under the unifed capitalist Germany (K, 1 999),
even though 70% of East Germans believe the advantages of unifcation
c
urtly outweigh the disadvantages, mostly because of the improved
living standards brought on by the merer with (and welfare payments
cm)the richer wester Gerany (Associated Press, 1 999c).
Fuer evidence on this issue is provide by the unbiased survey con
dut in mid-Decembr 1 989 afer the East Germans had been well
O[to the riches of the West without having the reparations reason
crtheir
rlative poverty explained to them. At that time, the
ast
.
ajor
iq (over 70%) of the East Germans were in favor of mamtammg a
sialist system and of
m
aintaining a separate East German country
(B
a
ann and Links, 1 994). Only afer the East German economy and
mcrt|cWWdestroyed by a 3: 1 exchange rate (that was arifcially cre
ate
cnJanuary I , 1 990 and that was ridiculous in comparison to the
&ter purchasing power of the East Geran currency) and only afer
te West German currency and riches were promised immedat
ly to
te Eat Germans in ret for a unifcation vote, did the maJonty of
1 1 2
THE TRIUMPH OF EVI
East Germans favor unifcation and capitalism. A detailed analysis u|
the events of 1 989-90 that led to German unification is provided in ||t
next chapter.
LH11LJ
A DETAILED AUTOPSY OF THE
COLLAPSE OF THE SUPERIOR SYSTEM IN
THE DIVIDED GERMANY
Before describing the incredible events of 1 989-90 that resulted in the
collapse of East Germany and the defeat of communism in the Cold
War, it is frst necessary to provide some historical background on the
situation. Germany had been split into two parts since World War II, and
this division was to continue until the revolution of 1989.
HI STORICAL BACKGROUND ON THE MOST INCREDIBLE
REVOLUTION OF OUR TIME
In World War II, Nazi Germany fought a two-font war against the
communist Soviet Union on the easter font and against the capitalist
USA and its allies on the wester font. Fighting between the capitalist
USA
and the capitalist Nazis was fairly limited until very late in the
war, and Nazi Germany committed 80% of its military strength on the
ter Front (Becker, 1 997a) where over 3 million of its own soldiers
dted (well over 80% of its total losses in the war) along with approxi
mately 1 million soldiers of its satellite allies (Krivosheev, 1 997). While
the war never even touched any formal state of the USA, and while the
number of Americans who died in that war was counted in the hundreds
of thousands, approximately 20 million Soviets lost their lives in the
f
ghgainst
Germany, and their country was badly destroyed by the
N
at Invasion.
|
1 1 4 THE TRIUMH OF EVI
By the time the war had ended in 1 945, Soviet troops had occupied the
easter part of Germany, while the Americans and their capitalist allies
(primarily the British and the French) had occupied the wester pr
tion of Germany. Because of diferences in the ideologies of the USA
and the Soviet Union, the two major occupying powers were unable
to agree on a peace treaty that would unite Germany back into one
country (Autorenkollektiv, 1 966). Instead, the easter portion of Ger
many developed into a countr with its own communist goverment,
while the wester portion of Germany developed into a country with its
own capitalist goverment. The easter German countr was called the
German Democratic Republic (GDR), or East Germany for short. The
wester German country was called the Federal Republic of Germay
(FRG), or West Germany for short.
West Germany was several times the size of East Germany in ters
of land and population. In its constitution (which was created under
USA supervision and never approved by German voters), West Ger
many claimed that it was the sole legitimate goverment ofthe Gera
people, which included people in both East and West Germany (von
Schnitzler, 1 992). According to the West German constitution, East
Germany did not exist as a real country, but instead was merely an are
of their countr that was temporarily under Soviet occupation (Apl,
1966).
Although East Germany was labeled communist, the country would
probably be more accurately called a socialist nation i n transition to

ard
communism. According to the philosophy of Karl Marx, commumsm
represents a system where wealth is distributed according to nee+, d
such a system can be achieved only afer a long period of soc1a1sm
where the central goverment controls all wealth but distributes 1t to
people based on work performance (Hahn, Kosing, and Rupprecht,
1983). There were numerous political parties represented in the
.
st
German parliament, but the leadership role of the East German Soc1ahst
Unity Party was grounded in the East German constitution which had
been approved by East German voters (Dietz, 1 983).
Despite East German ofers to create a united neutral confederati
n
between the two German states in the 1 950s (such as on the same bIS
as had been successflly implemented for the united neutral Austna),
West Germany refsed to compromise on its goal for outright annexa
CHAPTER 3
1 1 5
tion of East Gerany (Hofan, 1 990). As a result, the two Germanies
rmained separate for over 40 years. Their separation was a product
cfthe Cold War between the capitalist Wester countries (led by the
United States) and the communist Easter countries (led by the Soviet
Union). In fact, Germany served as a main battlefront for the Cold War,
which was waged with economic and plitical weapons as opposed
to milita means.2 Both sides i n the Cold War used ever available
plitical and economic tool to improve their own situation and reputa
tion, but the capitalist Wester countries had (and employed) far greater
rsources to damage the economy and political position of the other
side.3
SECRET PoLICE AND PoLITICAL REPRESSION
The Cold War resulted in the use of various nonlethal weapons such
M spradi ng propaganda, inciting people to riot, sabotage, and spying,
with the USA being overwhelmingly the most aggressive (Blum, 1 995).4
As a result of these activities, both sides in the Cold War developed
strng secret police forces, whose job it was to prevent the other side
fom overhrowing their goverment although the USA also utilized its
scrt agents to engage in much more ofensive and violent operations
(Schulz, 1982).
In East Germany, the secret police force was known as the State Secu
nq,crStasi, which coperated with Soviet intelligence liaisons or advi
sor but which was pretty much lef on its own to maintain interal

nq(Henke and Engelmann, 1 995). In East Germany's fnal year,

this oranization had 91 01 5 ofcial members and support staf (about
9
.
:xof the 1 6.5 million population of East Germany), who were gtven
.task of protecting goverment leaders and buildings, administering

prant sprts programs, providing national guard services, uncover

ng plots to overthrow the goverment, collecting information, conduct-
,statistical analysis, performing passport and emigration control ser
VIces, and spying in the West (Diedrich, Ehlert, and Wenzke, 1998).
One of the larg
e
st functions of the Stasi was to conduct security checks
erthose who applied for perission to visit or emigrate to West Ger
many
(Henke and Engelmann, 1 995), as West Germany's constituion
ally stated
intention to annex East Germany automatically made tt an
enemy of the
East German state (von Schnitzler, 1 992). Given that
ther were over 20 million letters, over 20 million phone calls, and
1 1 6 THE TRIUMH OF EVIL
close to 1 0 million visitors fom West Germany each year in the . -:.
(Edwards, 1 985), the Stasi actually had the resources to monitor only a
very small portion of these contacts with the "enemy."
The 91 ,01 5 Stasi roster included many purely administrative person
nel, including cooks, medical personnel, and others who provided sup
port services to the Stasi that were not directly related i n any fashion
to the aforementioned tasks. In addition, over 1 0,000 of the 91,015
represented heavily armed military formations largely trained to 6g|
enemy infi ltrators and paratroopers, and almost 1 0,000 others were uni
formed ofcials directly controlling border crossings (Diedrich, Ehler
and Wenzke, 1998). Of the total 91 ,01 5, only 1 41 8 were underove
agents domestically active in early 1 989 (and many of these were used
to observe foreign diplomats and tourists), although a frther 2232 held
full-time civilian positions, such as high-level ofces in industr, gov
erment, or defense (Wiedmann, 1 996).
There were 1 380 fl l-time agents (including some undercover agents)
and ofce personnel involved in observing and controlling religious,
cultural, and unusual political activities in East Germany, with some of
these Stasi members involved in censorship (Wiedmann, 1 996). Besides
the several hundred organizations recognized by the East German state
(Rein, 1989), there were also over 1 00 unofcial East German "cul
tural" groups or organizations with their own ''underround" printed
periodicals or press, and there also existed a total of 1 60 underground
political groups, with about 2500 active participants, of which only
about 60 people were considerd by the Stasi to be pure enemies of
socialism (Henke and Engelmann, 1 995).
Stasi members were, on average, paid about I 0% more than the aver
age East German at about 22,00 Marks annual ly, although generals
made two to three times that amount (Gauck, 1 991 ). However, Stasi
agents were also required to work long hours and were prohibited fom
having capitalist friends, except for the purpse of gathering infona
tion (Riecker, Schwarz, and Schneider, 1 990). The entire budget for the
Stasi (including wage and other costs) was slightly over 1 % ofNational
Income in 1 989 at 3. 5 billion Marks, which included only 34 million in
West German Marks (Diedrich, Ehlert, and Wenzke, 1 998).
For many of their information-gathering activities, the Stasi used
informants. The number of people who had knowingly provided in for
CHAPTER 3
1 1 7
mation to the Stasi at some time during the histor of East Genany
was abut 60,0 (which i s equivalent to about 4% of the East Gennan
ppulation), although only 1 74,000 were l isted as infonnants in 1 989
(Mueller-Enbergs, 1 996). The 1 74,000 fgure includes a significant
number of the over 2 million communist pary members, who bad
merly agreed to cooprate with the Stasi if needed (and ofen only in
spcial circumstances that might be restricted to providing some overall
opinions on worker morale, etc.), but who were rarely if ever contacted
(Henke and Engelmann, 1 995). Some of the informants hadn't even
forlly agreed to work for the Stasi but were contacted for informa
tion at some point, and many of the informants who were contacted
only provided ver general information on events, the economic situa
tion, ad the overall political climate or mood of the people (Mueller
Enbrs, 1996). Much of the information on individuals was collected
with respect to a security clearance check, such as for someone who
wished to visit the ideological enemy West Germany. Investigations of
ose with ofcial business dealings with West Germany were espe
Cially strict and thorough to reduce the possibility of taking bribes or
other coruption.
Aut 80/ of the informants were listed as gathering general infor

ation of the type ofen provided publicly in West Germany by joural

... their contact sources (such as surveys and repors on businesses

hv1ttes not covered in the goverment-controlled press), 1 8% of the

mfo

ats merely ofered facilities (such as their apartents) for the

metmgs between informants and the 1 3 000 fll-time Stasi members
who c
.
ordinated their activities, and onl2
%
(or under 4000 people)
wer mvolved in observing people suspected of engaging in spying,
_bverion, illegal political activities, sabotage, attempts to overthrow
1

gov
e
ent, or other treasonous activities (Henke and Englelmann,
').Over 90% of the informants were male, and 99% were adults
ueller-Enbergs, 1 996).

D
tail
e
research on the motivation of Stasi informants has been con
.
ucted by M
ueller-Enbergs ( 1 996). Most informants were not paid but
Instead acted o t f
e +
+
'th
t
u o patnottsm, a sense of duty and cooperation w1
_
.a

thorities, the expctations of their position at work (or in the com

ti

st
l
and social pressure. Some, however, provided informa-
n tn RMmfor a specifc reward, such as very small amounts of addi-
1 1 8 THE TRUMPH OF EVIL
tiona! income, the hope of better career opportunities, and, in much less
frequent cases, a reduced jail sentence afer having committed a crime
like thef. The Stasi considered informants acting out of self-interst
as opposed to political conviction to be unreliable and preferred not to
have to rely on such people. About a third of those asked to serve as
informants refsed, and there was generally not any attempt to penalize
those who did not coperate with the Stasi, other than the withdrawal of
any rewards ofered or hoped for.
The Stasi used telephone taps and room bugs when sufcient infor
mation existed for a formal report of suspected criminal activity to b
approved (Riecker, Schwarz, and Schneider, 1 990). While random bug
ging was not al lowed, technological capacity existed to listen in on up
to 20,000 phones in East Berlin alone (Diedrich, Ehl ert, and Wenzke,
1998). Only 430 personnel were involved in telephone or room hug
gings, however, and many of these were spying on foreign embassie
and missions.
A total of 530 agents had tasks related to opening mail (Wiedmann,
1 996). Although subjective opening of correspondence based on the pr
sonal interest of a Stasi agent was prohibited, random opening of mail
from West Germany was al lowed (Riecker, Schwarz, and Schneider,
1 990). Many of those involved in postal intereption were merely con
trolling interational mail for smuggl ing activities related to attempts to
avoid impor duties and attempts to bring in i l legal goods like weapons,
narcotics, and right-wing propaganda, and only about 1 % of the 30 mil
lion packages that were mailed into East Germany each year were inter
cepted in part or in whole by the Stasi (Diedrich, Ehlert, and Wenzke,
1998).
The Stasi conducted over l 00,000 security checks of East Germans
each year (many related to applications to visit West Germany), and
almost 30,000 people were put under close observation by the Stasi
annually, about l /3 of whom for their activities relating to a delay or
refsal of an application to visit or emigrate to West Germany (Henke
and Engelmann, 1 995). About 2500 people per year were arrested by
the Stasi, about 95% of these were convicted of some crime, and most
of those convicted were sentenced by East German courts to multiple
years in prison (Diedrich, Ehlert, and Wenzke, 1 998). Although these
conviction and imprisonment rates may seem high, they are actually
CHAPTER 3
1 1 9
similar to the rates for Federal crimes in the USA, where "Federal
defendants were convicted 87% of the time in fscal 1 998 and nearly
tree out of four of those found guilty ended up in prison, a Justice
Depament reprt says" ( Wall Stret Joural, 2000.
About half of those convicted ofStasi-related crimes in East Germany
had actually been completely investigated by the regular East Geran
plice without any Stasi paricipation whatsover, although they were
forlly listed as Stasi arests/convictions because the nature of their
crime (such as threatening an East Geran goverment ofcial) was
listed M being under Stasi jurisdiction (Henke and Engelmann, 1 995).
With the exception of about one hundred people arrested annually for
teasonous crimes (such as committing sabotage or spying for West Ger
many), most of the Stasi convictions were related k attempts to emi
gte to West Germany (including over half for actual i llegal attempts to
emigte to West Germany, and including many others for threatening
Est German ofcials or working with West German organiztions to
pressure East Germany into allowing them to emigrate, as documented
in Chapter 2). Although about one hundred people were arrested annu
ally for publicly slandering East Germany in the 1 970s, there was a total
of only l l people arrested for that crime between 1 985 and 1 988.
An interview conducted by Opp and Gem ( 1 993) afer unification
provides N interesting perspective on the extent of the East German
ople's prception of secret police activity under communism. In par
ticular, the two investigators asked residents of Leipzig (the capital
of East German political demonstrations at least since 1 982) whether
they had had contact with the police or security forces for plitical rea
ns in terms of { i } being watched, { i i } being questioned, {i i i } bing
mstrcted, or {iv} being taken to the police station, with each "yes"
aswer having a survey value of 1 .0 (cumulating to a score ranging
b
een 0.0 and 4.0 per interiewee). The survey yielded an average
ore
of 0.20, implying that many had never experienced any such
repression" (e.g., if people who had had contact with the secret police
experienced all 4 forms of such "repression," the survey would
unply that only 0.20/4=5% of the population had experienced any con
tt whatsoever with the security forces).
While complete information on West Geran secret police methos
are not available, their numbers have ben estimated to also be about
1 20 THE TRIUMH OF EVIL
1 00,000, the majority of whom are undercover agents (Schulz, . -s:,
Undercover agents are paid up to 1 00,000 West German Marks (about
$60,000) annually tax-fee (Der Spiegel, 1 993b) as well as sometimes
ofered a good job subsequently in the West German goverment
bureaucracy and/or the dropping of criminal charges or deportation
proceedings for criminals and foreigners, respectively (Schulz, . -s:,
These numbers do not even include the massive army of regular police
in West Germany, whose numbers per capita far exceed those of Et
Germany, and which worked ver closely with the West German secret
police (Der Spiegel, 1 992b ).
According to one estimate, there were an additional one hundred
thousand secret police in West Germany controlled by the occupying
USA, British, and French allied troops (Schulz, 1 982). In addition, the
USA had many agents in East Germany who managed to open mail and
listen in on private telephone and other conversations of both average
East German citizens as well as the top East German leaders (Staadt,
1 998).
Al though these fgures appear to be lower per capita for West Ger
many given its larger population, it must be remembered that the Stasi
rosters included many people in tasks assumed by others in West Ger
many, such as suppor, passport and immigrtion control, providing
interal security against armed infltrators and paratroopers, etc. It is
also important to recall that West Germany spent more per citizen than
East Germany on overall internal security, as doumented in Chapter 2.
Moreover, whereas the occupying forces in West Germany (especially
the USA) have tens of thousands of people engaged in secret police
activities, only several hundred Soviets were involved in such opra
tions in East Germany which was largely tusted to do that work itself
(Andrew, 1 999).
The number of West German informants is unknown, but gi ven the
fact that companies, unions, and police frequently report on (or are
reported to) about political activists, the number may be very large
(Schulz, 1 982). While existing evidence indicates some West German
secret police tactics that are similar to those conducted by the East
German secret police with respect to the use of informants, huggi ngs,
and mail opnings, the extent of such activities may be much greater in
West Germany, where superior resources and technology exist (Riecker,
CHAPTER 3
1 21
Schwarz, and Schneider, 1 990), and where there is evidence of millions
of pieces of mai l being seized in one year alone (Schulz, 1 982).
Perhaps the biggest diference between the two countries' secret police
forces may lie in philosophy. The East German secret police had a
philosophy that attempted to restrict anyone who didn't love the East
Geran people from beoming a Stasi agent. As a result of this phi
losophy, the Stasi ofen tried to talk people out of taking fture actions
against the state, instead of tring to prove them guilty and send them
to prison (Riecker, Schwarz, and Schneider, 1 990). This phi losophy
of emphasizing prevention instead of punishment permeated the entire
Est German police system and was even grounded in the East German
constitution (Weber, 1 988). The philosophy was also entrenched in the
Est Geran method of raising children, insofar as in communist coun
tries (like East Germany and the Soviet Union) both parents and child
care centers were encouraged to lead by example, persuasior, love,
prise, non-monetar rewards, habit, and social pressure as opposed
to veral or physical punishment (Autorenkollektiv, 1 973). One partial
byrouct of this system was the existence of crime rates in East Ger
many that were l / 1 0 those in West Germany-- also contributing to the
far lower crime rates was a general environment of greater social secu
rity ad equality in East Germany (Norhoff, 1 995).
On the other hand, West German secret police is more geared toward
the goal of punishing, imprisoning, or terminating enemies of the state,
4 Schulz ( 1 982) documents. For instance, the West German secret
plice ofen try to infiltrate radical lef oranizations and then entice
them
with drugs in order to disorient and discredit them and to justif
= u.The West German secret police infltrators have even provided
rdical lef groups with bombs and weapons in an extreme attempt to
bth win their trust and entrap them, and some of these weapons have
bn then used to actually kil l innoent people (Schmidt-Eenboom,
.

Attempts are also usually made to disrupt groups through divi

s . ve discussions of unimportant topics and personality conflicts, while
hes and rumors are ofen spread to create personal problems that dis
(and demoralize) members (Schulz, 1 982). The most powerful
tctic typically used by the West German secret police, however, is to
pr

ent those with radical lef views fom obtaining or keeping a job,
which they do by indicating to employers that the individuals are dan-
1 22 THE TRIUMH OF EVIL
gerous. Just labeling them communists is usually enough, since most
employers are fairly afuent, very anticommunist, and averse to having
communist workers, especially given the fact that the West German
goverment even made i t illegal for those with communist views to
work for the goverment in any way (von Schnitzler, 1 992). The number
of victims ofWest German secret police surveillance and harassment is
estimated to be in the millions (Schulz, 1 982).
The diferences in phi losophy may have made the East German secret
police more transparent, while many people (except those with radical
lef views) are not even aware of the existence of the West German
secret police. In addition, like their USA counterparts (Stich, 1 994),
the West German secret police actively engages in weapons and nar
cotics smuggling as well as other i llegal activities (Schridt-Eenbom,
1 995), and the supplemental income from these activities combined
with higher goverment spending per capita on security cerainly could
help the West German secret police to afford the technology needed to
engage in their tasks more secretly. Moreover, I have also been in con
tact with several West Gerans who allege that the West German secret
police, like the USA secret police, engages in brainwashing and torure
through the use of drugs, hypnosis, and electronic equipment, which
ideal methods for secret repression because they are extremely difcult
to prove or fnd evidence of, and the very damage to the victim's mental
health inficted by this form of repression represents a perfect means of
discrediting the victims and their stories as well as distorting their own
memories (Bowart, 1 978).
To assist the secret plice forces, various laws were passed in both
East and West Germany to permit the imprisonment of anyone per
ceived to be an enemy of the state (Furian, 1991 ). These laws as well
as other plitical legislation, were

used in varing degrees to maintain

establishment control of the system.
For instance, the West German goverment outlawed numerous orga
nizations that promoted opinions which i t did not want the people to
have, including various antiwar groups and a popular communist party
that had fought against (and had also been prohibited by) Hitler (Anger
fort, 1 996). West Germany also made membership in (or assistance to)
any political organization connected with East Germany to be il legal
.
The latter prohibition was extended not only to the East German com-
CHAPTER 3
1 23
munist p but also to the Free German Youth, which was a cultural
oranization charged with the goal of ensuring the East German youth's
right to "happiness" (among other socially constrctive goals), and to
which about 75% of all East German youth belonged (Edwards, 1 985).
Morver, the candidate lists fom which West German voters are actu
ally allowed to choose are undemocratically selected by bureaucrats
N te established, rich, and powerful West German political parties
(ohwedder, 20 ), and write-in votes, or otherwise voting against the
sstem, have never been permitted in West Germany.5 In addition, the
West German people were never even allowed kvote on their own con
stitution which was efectively imposed on them by their USA ocu
pier afer World War II (and they still haven't been able to).6 As if
all tese things were not enough, West German laws exist tat essen
tially allow the West German secret police to engage in absolutely any
activity (no matter how illegal or immoral) without fear of any chance
of prscution, and this power has efectively given the West German
scrt plice the right to control even the "elected" goverment ofcials
4opsed to vice versus in East Germany (Schulz, 1 982).
As documented in Chapter 2, despite being perceived as much more
ttalitrian than West Germany, East Germany had many demoratic
ch
ateristics, including some attributes of democracy that West Ger
may didn't have, such as the legal right to cast a secret ballot against
all te
.
diferent candidates of the established political parties. The rules
for domg

were publicly written at all East German polling loations,

M0tho
unds did register a recorded vote against the party slate in each
Et Gera election (as will be explained in this chapter, this right to
_te
against the system was not meaningless). In addition, there were
.
easpcof East German democracy that were to be particularly
_t mthe peacefl revolution of 1 989: the right to engage in lim
M0
t (as
long as one was not trying to overthrow the goverment)
pliti
e ngbt make changes to the country fom within the established
cat prties and goverment.
COLD wAR ECONOMICS
T
e
most im
.
it
all'
prtant tool used by the USA H the Cold War was to help
,_
.
_

and prosper economically. By making West Germany

cpital'
East Germany, the USA was able to suppor its position that
sm was better. Financial aid and capital from the USA was espe-
1 24 THE TRIUMH OF EVIL
cially important in the economic reconstruction of West Germany in the
years following World War I I (Apel, 1 966).
On the other hand, the much poorer Soviet Union did not have suf

fient ealth to ofer such noble assistance to East Germany. Insted
With the1r own countr wrecked by World War I I , the Soviets requir
te East Germans to make enormous reparation payments as compensa
t1n for all the damage and killing that the unifed Germany had com
m1tted. In and apar from the diferences in damage inficted by World
War I I on the Soviet Union and the USA, the Soviets had inherite 4
desrately poor countr in 1 9 1 7 when they frst took pwer from the
previous feudal leaders of Russia (with national income per capita equal
to |/1 2 that of the USA at that time, as documented in Chapter |),1 and
they never could have offered the assistance that the USA provided to
the West Germans.
s a result of the difernce in the post-War foreign economic
ass1staace/reparations, West Germany very quickly became the much
walth1er country (Apel, J 966).8 This situation provided West Germany
With an excellent economic weapon with which to strike at East Ger
many. In particul ar, the West German government provided working-age
East Germans who moved to West Germany with signifcant amounts of
money and other benefts in order to emigrate to West Germany (retir
ees were not given such incentives). For instance, free loans and other
state assistance of up to 1 60,000 West German Marks (about $1 00,00)
were ofered to each East German emigrant worker, along with a scarce
apartment and reimbursement for any property that remained behind in
East Germany (Der Tagesspiege/, I990t. In addition, East German emi
grants to West Germany were also provided with instant West Germa
citizenship,

hich allowed them to obtain West German jobs. Being

much
.
wealthier and much larger (and being supported by their USA
occupiers), West Germany could provide such incentives almost with
out limit. I n
.
oer a decade's time, the result was a large net exous
of several m1l hon people out of East Germany, which, net of the sev
eral hundred thousand West Germans who emigrated to East Germany,
represented a oss of over 1 0% of the East German population (Apl,
I 966). Acordmg to West German propaganda, this population move
me
?
t provided est Germany with evidence of the "superiority" of
their country, their goverment, and their economic system. In addi
CHAPTER 3
1 25
tion, many of the people who lef East Germany were highly skilled
individuals (like doctors, nurses, and engineers), who were very dif
fcult and costly for East Germany to replace (Diedrich, Ehler, and
Wenzke, 1 998). The East German morale and economy sufered as a
result (Apel, 1 966).
Besides engaging in a deliberate policy to buy up East Germany's
skille work force, the economic war was also fought with other tols.
For instance, West Germany was also able to utilize its superior wealth
to promote extensive i llegal black market curency trading and smug
gling operations that also contributed to damaging the East German
economy (Murphy, 1 992b ). Many such operations were conducte by
the West German secret police itself (Schmidt-Eenboom, 993).
THE BERLIN WALL
This situation continued until 1 961 , at which time the East German
goverment came to the conclusion that the proess of damaging their
economy and emptying their country of skilled workers could no longer
continue.9 In 1 961 , East Germany set up rules that forbade their citi
zens fom traveling to West Germany without special permission. In
addition, travel restrictions were placed on West Gerans going into
East Germany in order to prevent a continuation of the black market
currency trading and smuggling that were damaging the East German
economy, to inhibit spying by Wester secret plice, and to stop out
right sabotage activities committed by Wester secret police ( Blum,
1 995). Because of the economic crisis caused by the emigations and
black market trading, many East Gerans supprted the govCent's
restrictive policies at the time (Lahann, 1 998).
The travel restriction rles were enforced by barbe wire, minefelds,
walls, and soldiers along the entire border with West Germany. Although
many of these barriers had existed since the early 1 950s (and about 1 50
ple had been killed in the border area prior to 1 961 ), the fnal bar
ncr between the two countries was erected in 1 961 in Berlin (Diedrich,
Ehler, and Wenzke, 1 998). Berlin was a large city of several million
p
eple that was partially in West Germany and parially in East Ger
any. The par in West Germany was cal led West Berlin, while the par
East Germany was called East Berlin. Afer 1 961 , the city was not
only
divided politically by diferent ruling goverments, it also was
1 26 THE TRIUMPH OF EVIL
split physically in two by a large wall that separated East Berlin from
West Berlin. This wall built on August 1 3, 1 961 was called the Berlin
Wal l .
It was forbidden for East Germans to try to cross the Berlin Wall, just
as it was forbidden for East Germans to enter West Gerany thrugh
any other border point (which was mined in many places). East Genna
soldiers patrol led the border points constantly, and they were given
orders to shoot anyone who tried to cross the border until early in 1 989.
Over the 28 years from 1 961 to 1 989, 756 East Germans lost their lives
trying to "escape" to the higher income in West Germany, including
239 around the Berlin Wal l. Many of the 756 martyrs were shot, while
others died from mines and drowning (and some commi tted suicide
when caught). Many more were wounded. It should be mentioned that
the average number of about 30 kil led per year is fairly small in com
parison to, for example, the hundreds of Mexicans who die on average
each year trying to "escape" into the United States (Reifenberg, 1 996),
which does absorb 300,000 Mexican immigrants annually (Millm,
2000). However, the 756 German deaths do represent a human tragedy
nonetheless (it should also be mentioned for comparison purposes that
fewer Mexicans have been shot by USA border guards, as most M0x|
can "refgees" trying to "escape" to the higher pay in the USA have
died from drowning, cold, starvation, and other "natural" causes while
trying to pass through less well-guarded but inhospitable border areas).
Between 1 961 and 1 989, about 50,000 East Germans (averaging over
one thousand annually) were apprehended alive for attempting to escap
and put into East German jails for one or more years. Over 90% of
all attempts at il l egal border crossings failed (Diedrich, Ehlert, and
Wenzke, 1 998), with most being discovered by East German security
forces while still in the planning stage (Herle, 1 996).
In the frst few years of the Wall, only a few thousand East Germans
were al lowed to legally cross over into West Germany, and most of
these people were loyal communist party members on political and
business endeavors. Afer a few more years, the East German govem
ment relaxed its restrictions and al lowed more frequent entries by
West
Germans and permitted its own senior citizens to freely cross over if
they were over 65 years old (Merritt and Merritt, 1 985). Travel fee
dom was markedly increased afer 1 972 when West Germany formally
CHAPTER 3
1 27
rcognized the existence of a separate goverment in the East Genan
zone, although it continued to refse to recognize the legitimacy of
a separate East German state or acknowledge its existence with an
embassy (von Schnitzler, 1 992). By the 1 980s, trips to West Gennany
wcrc pssible for East German citizens who were over 50 years old, or
who had relatives in West Germany, and some others were also allowed
to visit West Genany afer a long bureaucratic wait of several years
ad a security clearance fom the Stasi. In 1 987, although 30,00
applications for visits to the West were refsed by the East Genan
goverment, 1 ,297,399 East Germans under the retirement age were
grnted the legal right to visit West Germany (Hertle, 1 996). In 1 988,
the number of visits by East Genans into West Germany was over
1 5 million, over 99.9% of whom reted to East Genany (Murphy,
1 992b).
Nevertheless, the Wall remained successful in inhibiting most activi
Icthat were damaging to the East Gennan economy. For instance, far
less than 1 % of those East Germans who visited West Genany chose
to stay there (Hertle, 1 996), and i llegal smuggling operations remaine
curtailed (Murphy, 1 992b). However, to be able to minimize such activ
ities in the face of relaxed travel restrictions (as well as to inhibit the
spying and subversion that more contacts between East and West Ger
mans allowed), increased security checks were required, especially on
those seeking to visit West Germany, and so the Stasi had doubled its
nubers from 1 972 to its peak level of 1 989 (Diedrich, Ehlert, and
Wenzkc, 1 998). Although East Germany had managed to survive most
of the 1950s before the Wal l with less than 20,000 Stasi members, it
preived greater Stasi control as a means of allowing more travel free
dom while simultaneously preventing the resulting economic damage
that Ocurred in the 1 950s.
STATUS SYMBOLS IN EAST GERMANY
O

espne mcreased travel feedom in the 1 980s for some, many young
t
.
Ger
ans without West German relatives were still forbidden fom
|!|h0gWest Genany, and this situation caused jealousies and discon
tent
These
1

th th
f
Y

Jea ous1es were heightened by the fact at e existence o
cIGeran relatives (and/or fiends) ofen meant presents and oppor
I90|hc8to receive West German goods (Whetten, 1 980).
1 28 THE TRIUMPH OF EVIL
A few dozen of the top leaders in the East German goverment
and numerous East German business travelers were among those who
received Wester gifs via their business dealings and/or who could
access such goods in Wester shops or in a "ghetto" for the East Ger
elite in Wandlitz (Schabowski, 1 991 ). However, most communist par
members and Stasi agents were greatly disadvantaged in this respect M
they were strongly discouraged from having any West German friend
(Keithly, 1 992). In fact, many East Germans saw no advantages to being
in the communist party and instead only disadvantages, which include
having a sigifcant amount of time used up in Party meetings and t
percentage of income deducted for Party dues (Eckart, 1 984). Althoug
moral pressure was put on East Germans in more responsible positions
to join the communist party, a belief in its purpose must also have
played a part in over 2 million East Germans (over l 0% of the total
population) joining the Party (Dietz, 1 983), since they thereby gave up
time, money, and potentially even access to West German goods.
West German goods were a big status symbol in East Gerany,
because the East German government severely restricted imports fom
Wester capitalist countries (Murphy, 1 992b). Restricting imports fom
West Gerany had helped protect the East German economy fom
unemployment (as explained in more detail in subsequent chapter)
and had allowed the East German economy to grow faster than We

t
Germany in the years since 1 961 (as documented in Chapter 4 of this
book). However, because the East German economy had not grown f

t
enough to make up for the pre- 1 961 diference in economic prospenty
and was still only 2/3 the size of West Germany's per capita by 1 989
(Gregor and Stuar, 1 995), many of the goods in East Germany wer
of lower quality, being on the same level as inexpensive West Geran
goods. For example, the most prevalent East German car (the Trabant)
was simi lar to the VW Beetle with respect to reliability, durabi lity, easy
repairs, inexpensive cost, good gas mileage, small size, low maximum
speed, some safety problems (in a crash), and old design (Wodrf,
1 997). Besides generally having less luxurious and less modem
g

s
,
there was an especially serious scarcity of high technology goods hK0
computers in East Germany because of the Wester technology embar
o
against communist countries (Herle, 1 996). The higher standard a|
living in West Germany combined with a reputation for high quahty
CHAPT 3
1 29
ad high tehnology made pssession of West German proucts a ver
prstigious belonging.
As a result, some categorized East Germans into two classes. The
upper class had West German relatives with conseuent opprunities
to travel to the West and obtain Wster gos (Keithly, 1 992}, whC
the lower class, which comprise about 500/ of the East Geran ppu
lation (Fi lmer, 1 985a), had no West GC relatives.
The jealousy, fustration, and disontent cby this "two class"
system were magnifed by other problems in LGCy. In paricu
la, there was a shorage of some consumer gos like C (Filmer
Schwan, 1 985) and telephones (Schwarer, 1 99) tht resultd in a wait
of over 1 0 years afer ordering. In addition, sme gos (such a fesh
topical fuit like bananas and pineapples) were rarely available (like
only around Christma) ad/or obtainable only afe physically waiting
in line for hours, and many service (like reirs) h U b reu
weeks in adY an/or reuire pyment of 8 negotiable tip (Fi lmer
and Schwa, 1 985).
Some of the negative efes of the ss cold b or
eliminated in various ways, as previously mentio in C2. Fo
instance, it W always pssible to buy sond-hd go. T w
o
prunity was espially usfl for obtaining a C wit W CW
sive wait, although mny EGeM als gy min
venience of the nOl 1 0-ye wait for a new C hving rlive
orer a new C 10 years bfore a child was of dving ae M 0 S
time mthe bgin sving for th gn U W timly p
for delive. Neverheless, althoug mwe 225 C g Hri
dents of m Ge in } 988 (Mueller, 1 9), 0 sll m
smewhat uvobly wit N 1 Cg2 cit WmG
(Kusch C a, 1 91 )g the overall m8m m L
Gerans fel thir OOy syste Ub mm m
ror th W Ger system (Film mSm l WS).
L9Ar|NC kDv LAL
a result my EGe b a dm M

Gennany bt M U live m. Wm G m
ad other mbUB well W 0qWp1
swe go m we m availle L O
1 30 THE TRIUMPH OF EVIL
of East Germans who wanted to leave their countr indicated that .s
desired to emigrate because of the shortage of consumption goods in
their country, while 27% stated that they wanted to leave primarily to
attain greater freedom to travel (Falck, 1 998).
Detai ls and statistics on emigration attempts are provided by Eisen
feld ( 1 996). Thousands of East Germans applied to their goverment
for permission to emigrate each year, with the numbers rising to tens
of thousands by the late 1 980s. Only a fraction of the applications wer
granted, and there was generally a fairly long waiting period (of severl
months to years) even for the emigration visas eventually obtained. For
instance, there were 284,700 new applications for emigration between
1 980 and June 1 989, but only 1 58,800 were al lowed to leave, while
87, 00 withdrew their applications ''voluntarily" during this time. 1
June 30, 1 989, there were a total of 1 25,400 unflled applications (up
from 1 1 3,500 on December 3 1 , 1 988).
Applicants for emigration visas were generally subjected to consider
able pressure to cancel their requests to leave the country. While gentler
means of persuasion were ofen used, the applicants were also subjected
to a thorough Stasi investigation that sometimes proved to be harassing.
Several hundred of the applicants each year were arrested and found
guilty of various crimes as a result of such investigations, and thousands
more were subjected to warings. In addition, the applicants were gen
erally informed of the risk of possibly never being allowed to reenter
East Germany and the resulting difculties of seeing their fri ends and
family again. Many responded negatively to this pressure (with tens of
thousands complaining each year to the head of the East German gov
emment about their treatment), thousands quit their jobs, and some even
began voicing vocal opposition to East Germany in an attempt to pres
sure the government into seeing their continued stay as not only useless
but even counterproductive for the country. Those actually allowed to
leave were subsequently denounced publicly as agents offoreign power
and even traitors, and although East Germany made some modest (and
somewhat inconsistent) eforts to encourage the emigrants to retur,
only a few hundred decided to do so each year.
To avoid this uncertain and often undesirable application procedur
for emigration (or to circumvent it when months or years passed with
out the application being granted), some chose to try to emigrate ille
CHAPTER 3
1 3 1
gally. However, because of the Wall and other barriers between the two
Gennanies, only a few people succeeded each year. There were hun
drds of illegal plans or attempts at "escape" each year, but most were
foiled by the Stasi even before the border area had been reached.
Besides trying to break through the armed border, there were other
ways to emigrate i llegally. For instance, a handfl of those who visited
West Germany each year (less than six thousand in 1 988) decided to
stay there and not retur to East Germany. More might have done so,
except such emigration without permission was a violation of East
Genan law and meant not being able to visit East Germany again. In
addition, the East German authorities made it clear prior to each visit
that it would be unlikely that the fiends or families of an illegal emi
grnt would ever be allowed to visit West Germany. As a result, an
emigration made it difcult to be able to see one's East German rela
tives and friends again (Hertle, 1 996). Although meetings between emi
gnts to West Germany and their East German families and fiends
ofen occurred while on vacation in other communist Easter European
countries such as Hungary, the Stasi sometimes used their own network
of informants to disrpt such contacts (Eisenfeld, 1 996). These tactics
helped successfully inhibit well over 99% of East Geran visitors from
staying in West Germany, although the percentage remaining in West
Gennany had been trending upward at 0.22% in 1 987, 0.35% in 1 988,
and 0. 61 % in the first half of 1 989 (and reaching the 1 % mark in August
1989), with most of those staying being vital skilled workers like doc
tors (Krenz, 1 990).
Another way of il legally emigrating was to seek refge in the West
Genan consulate ofce in East Berlin. West Germany did not have an
actual embassy because it did not ofcially recognize the legal existence
of a separate East Gerany), or to seek plitical asylum in the USA
embassy there (Keithly, 1 992). Once inside, diplomatic immunity laws
prvented the East Geran police from entry, and papers were gener
ally negotiated for the refugees to emigrate legally (to avoid adverse
pulicity and other hassles). The problem here was that East German
hce stood outside the West German consulate ofce (as well as out
SIe the various foreign embassies) and norally did not allow anyone
Without prmission to enter. Only an unexpected rsh by a large group
of East Germans had ever succeeded in emigrating this way.
1 30 THE TRIUMH OF EVIL
of East Germans who wanted to leave their countr indicated that 42%
desired to emigrate because of the shortage of consumption goods ia
their country, while 27% stated that they wanted to leave primarily to
attain greater freedom to travel (Falck, 1 998).
Details and statistics on emigration attempts are provided by Eisen
feld ( 1 996). Thousands of East Germans applied to their government
for permission to emigrate each year, with the numbers rising to tens
ofthousands by the late 1 980s. Only a fraction of the applications wer
granted, and there was generally a fairly long waiting period (of severl
months to years) even for the emigration visas eventually obtained. For
instance, there were 284,700 new applications for emigration between
1 980 and June 1 989, but only 1 58,800 were allowed to leave, while
87, I 00 withdrew their applications "voluntarily" during this time. On
June 30, 1 989, there were a total of 1 25,400 unflled applications (up
from 1 1 3,500 on December 31 , 1 988).
Applicants for emigration visas were generally subjected to consider
able pressure to cancel their requests to leave the country. While gentler
means of persuasion were often used, the applicants were also subjected
to a thorough Stasi investigation that sometimes proved to be harassing.
Several hundred of the applicants each year were arrested and found
guilty of various crimes as a result of such investigations, and thousands
more were subjected to warings. Jn addition, the applicants were gen
erally informed of the risk of possibly never being allowed to reenter
East Germany and the resulting difculties of seeing their friends and
family again. Many responded negatively to this pressure (with tens of
thousands complaining each year to the head of the East German gov
erment about their treatment), thousands quit their jobs, and some even
began voicing vocal opposition to East Germany in an attempt to pres
sure the government into seeing their continued stay as not only useless
but even counterproductive for the country. Those actually allowed to
leave were subsequently denounced publicly as agents offoreign power
and even traitors, and although East Germany made some modest (and
somewhat inconsistent) eforts to encourage the emigrants to retur,
only a few hundred decided to do so each year.
To avoid this uncertain and ofen undesirable application procedur
for emigration (or to circumvent it when months or years passed with
out the application being granted), some chose to try to emigrate ille-
CHAPTER 3
1 3 1
gaily. However, because of the Wall and other bariers between the two
Geranies, only a few people succeeded each year. There were hun
drds of illegal plans or attempts at "escape" each year, but most were
foiled by the Stasi even before the border area had been reached.
Besides trying to break through the armed border, there were other
ways to emigrate illegally. For instance, a handfl of those who visited
West Germany each year (less than six thousand in 1 988) decided to
stay there and not retur to East Germany. More might have done so,
except such emigration without perission was a violation of East
Geran law and meant not being able to visit East Germany again. In
addition, the East German authorities made it clear prior to each visit
that it would be unlikely that the fiends or families of an illegal emi
gnt would ever be allowed to visit West Germany. As a result, an
eigration made it difcult to be able to see one's East Geran rela
tives and friends again (Hertle, 1 996). Although meetings between emi
gnts to West Germany and their East German families and fiends
ofen occurred while on vacation in other communist Easter European
cuntries such as Hungar, the Stasi sometimes used their own network
of informants to disrupt such contacts (Eisenfeld, 1 996). These tactics
helped successfully inhibit well over 99% of East German visitors from
staying in West Germany, although the percentage remaining in West
Gerany had been trending upward at 0.22% in 1 987, 0.35% in 1 988,
M00.6 1% in the first half of 1 989 (and reaching the 1% mark in August
1989), with most of those staying being vital skilled workers like doc
tor (Krenz, 1 990).
Another way of illegally emigrating was to seek refuge in the West
Geran consulate ofce in East Berlin. West Germany did not have an
atual embassy because it did not ofcially recognize the legal existence
of a separate East Germany), or to seek plitical asylum in the USA
embassy there (Keithly, 1 992). Once inside, diplomatic immunity laws
P

vented
.
the East German police fom entry, and papers were gener
a
u

go
hated for the refugees to emigrate legally (to avoid adverse
P ctty and other hassles). The problem here was that East Geran
...stood outside the West German consulate ofce (as well as out
8I
.
th
e the
various foreign embassies) and normally did not allow anyone
Wt
out p
ofE
rmtsston to enter. Only an unexpected rush by a lare group
t Germans had ever succeeded in emigrating this way.
1 32 THE TRIUMH OF EVIL
Another way to il legally emigrate to West Germany also existed.
In particular, although East Germans could not visit West Germany
without permission, they could travel almost without restriction (ad
fairly cheaply) throughout the expanse of Easter Europe, including
into Czechoslovakia, Hungary, Poland, Romania, Bulgaria, Russia, and
other communist countries (aus erster Hand, 1 987). While these allied
countries also had strict border controls with Wester countries (ad
would not allow East Germans into Wester countries without vis
from the East German goverment), it was possible to seek refuge in
the West German embassies in those countries. Although East Germany
had made some arrangements with its allies to try to control entry to the
West Geran embassies in those countries more strictly in an attempt
to stop the several dozen East Germans who successfully emigrated in
this manner each year (Eisenfeld, 1 995), police control of these emba
sies was not as strong as in East Germany.
PRELUDE TO THE REVOLUTION
In the mid- 1 980s, Michael Gorbachev became the new leader of
Soviet Union, and he initiated many capitalist reforms under his Per
estroika policies and also announced an ofcial program of greater free
dom of speech i n a policy called Glasnost (Marcy, 1 990). Although
some of the other Easter European countries (like Poland and Hun
gary) followed the Soviet lead, East Germany and others (like Roma
nia) continued their hard line against capitalist propaganda and reforms
(Mittag, 1 991 ).
This situation led to i nteral inconsistencies within Easter Europ.
For instance, in 1 988, one Soviet publication, Sputnik, began making
such open statements about reforms in communist countries that it was
no longer imported into East Germany (Arold, 1 990). Subsequently
in early 1 989, an ex-spy chief from East Germany published a b k
that raised some questions about the history of the Soviet Union in the
1 930s when it was under the leadership of Joseph Stalin. Printing of
this book was discontinued in East Germany afer only a few copies ha
been sold (Wolf, 1 99 1 ).
As an expression of discontent against the continued hard-line pol
icies in East Germany, a signifcant number of East Germans voted
against the communist pary slate in an election there in May of 1 989.
CHAPTER 3 1 33
Although the East German goverment repore the party slate to have
won over 95% of the votes (ust as it had in all previous elections over
the prior 40 years), a number of East Gerans claimed election faud
(Krenz, 1 990). In paricular, some East Germans counted the number of
their fiends who claimed to have voted against the pary slate, and that
numbr exceeded the ofcial number of"no" votes reported in some of
the loal districts, such as in the East German city of Dresden. In actual
fact, many of the votes against the pary slate were not counted because
the list of party candidates had been crossed out with an "X", and East
German election rules required each candidate's name to be crossed out
with a line for a "no" vote to be registered. 10
The new feedoms opening up in the communist world had also hit
Red China. There, thousands of students demonstrated openly against
the goverment for several months in 1 989, with the protests being con
centrated on demands for higher pay for intellectuals, lower inflation,
ad less corruption, although there were also more minor demands for
gater plitical freedom that were advanced for propaganda purposes
(Keidel, 1 991 ). However, afer the demonstrators called for the over
throw of the goverment and attacked goverment security forces, the
Chinese army was sent in to restore order, and several hundred dem
onstrators were killed in June 1 989 in what was called the Tiananmen
Square massacre (MacFarquhar, 1 993). Despite worldwide outrage at
the incident, the East German goverment stated its suppor for the Chi
nese goverment 's actions, and many began to fear a similar incident in
Est Germany (Krenz, 1 990).
Meanwhile, on May 2, 1 989, a potentially even more revolutionary
event had ocurred in Hungary, one of East Germany's communist
allies in Easter Europe. On that day, Hungary had eliminated some
barbed wire on its wester border with neutral Austria to symbolize the
toning down of the Cold War (Krenz, 1 990). Hungarians (who were not
oted the immediate Wester citizenship, money, and jobs that emi
grting East Germans were) had long been able to travel into Wester
countries, and so it was larely a symblic event for them. It also did
not change the fact that East Germans still could not cross the Austrian
rder (397 of 607 East Germans tring to do so in 1 988 were caught by
.Hungarian border trops and reted to East Germany for prosecu-
tion),
but the symbolic border opening was widely publicized on West
1 34 THE TRIUMH OF EVIL
German TV stations that East Germans were able to watch (Herle,
1 996). Hungary had always been a favorite summer vacation sptfer
many East Germans (Krenz, 1 990), with 800,000 East Germans visiting
the countr each year, and with several hundred thousand more travel
ling through the country on the way to other Easter European destina
tions (Hertle, 1 996). An especially large number typically did so afe
school ended in East Germany in early July (Krenz, 1 990), and ther
were about 200,000 East Germans in Hungary in the summer of 1 989
(Keithly, 1 992).
HUNGARY IN THE SUMMER OF ! VV
The explosive effects of the events i n Hungary i n the summer of 1 989
are documented by Hertle ( 1 996). A small number of East German tour
ists in Hungary had already taken advantage of the more open borde
there to have themselves smuggled out i n the trunks of the cars of A U
trian or West German tourists in May and June of 1 989, but nothing
earhshattering happened in those two months. However, in mid-July
1 989, a few dozen East German tourists in Hungar attempted to drive
their own cars opnly through the border gate into Austria, having sud
denly heard rumors that the border was now "open." Although they wer
tured away by Hungarian border guards without prosecution, some
feared penalties when they retured to East Germany because their
passports were stamped as having permission to visit Austria denied.
As a result, over 50 East Germans sought refge in the West Gera
embassy in Hungary.
The existence of refugees at the West German embassy brought inter
national press coverage. Increased press coverage resulted in many pr
sonal ofers to individual East German tourists by West German a
nd
Austrian tourists who promised to smuggle them out. In addition, West
German and Austrian tourists feely provided advice on how to seek
refge at the West German embassy in Hungar, which was fnally
closed on August 14 with 1 7 1 East German refgees. Many more Fs|
Germans seeking to emigrate camped out in the yard and on the side
of the street nearby. To relieve the problem, the Hungarian goverment
built some refgee camps where the East Germans could stay until the
problem was resolved. Although Hungary had a treaty with East Ger
many to repatriate anyone trying to il legally cross over into the West,
the Hungarians wanted to maintain good economic relations with the
CHAPTR 3
1 35
West Germans in order to continue to be able to access West GeO
cdit, capital, and high technology gos.
As the number of refgees gw, so did the press coverage. More
prss coverage brought more smuggling ofers and more advice fm
|emsts to go to the refgee camps, and the whole process stared to
fee on itself. Some Austrian and West Geran tourists even began
spring written leafets to East German tourists i n Hungary informing
them how to emigrate.
On August 1 9, 1 989, one rich Austrian aristorat (a descendant of the
old Austrian Emprr's family) even held a large party on the Hungar
ian brder and conspired with a non-communist member of the Hungar
ia goverment to allow 600 invited East Germans in Hungary to use
the opprunity to fee through the Austrian brder in mass. Three days
later, spurred on by this event, and realizing that the few brder guards
could not have stopp a large number of people except by shoting
them, 240 mor East Gerans crossed the brder into Austria. The
feing East Germans gambled correctly that the Hungaians did not
wat to risk such an interational incident for an East GeO problem.
However, subsequent attempts in August wer stopped by strengthened
brder trops, who wounded several East Germans attempting to emi
gte illegally.
Finally, afer thousands of East German refgees had flled the area
aound the West German embassy and other living quarters provided to
tem by the Hungarian goverment, afer numerous incidents, and afer
my East Germans had already been smuggle through the borders,
te Hungaria goverment negotiated a deal with West Gery to let
te rfgees enter West GeMy via the Austrian brder in ret for
- of50 million Deutsche Marks (about $30 million) and some
ptt li suppr. On September 1 1 , Hungary announce that it was
ring its treaty with East Germany on repatriating refgees, and over
:East Germans were allowed to emigrate immediately from Hun
tnto
West Germany, while more East Gerans still on vacation
er chose to emigrate through the open border later in the month.

a
rsult, the East German goverment terminated unrestricted
el to Hungary. Thereafer, travel to Hungar by East Germans would
er
Yb allowed with spcial permission.
1 36 THE TRIUMPH OF EVIL
The interational publicity had made it known to all East Germans
that there were reasonably safe ways to emigrate to West Germany. Et
Germans could watch both East and West German television channels,
and so news of the emigrations through Hungary could be seen fom
both points of view. Those who had been most interested i n emigrating
now saw a favorable chance, and, although most had initially sought
refge in Hungary, dozens of other refugees had meanwhile also broken
their way i nto the West German embassy of Czechoslovakia and into
the West German consular ofce i n East Berlin itself.
THE TRAIN THROUGH DRESDEN
After trips to Hungary were no longer freely al lowed in Septembr
1 989, East Germans seeking to emigrate began concentrating on the
other West German embassy targets. For instance, by the end of Se
tember, hundreds of East Germans had taken refge in the West German
embassy in Poland, and many more were breaking into the West German
embassy in Czechoslovakia again.
Czechoslovakia was the most popular travel destination for East Ger
mans (9 million East Germans visited Czechoslovakia in 1 988) becaus
it was nearby and no special visa was required (Bahrmann and Links,
1 994). For those seeking emigration from East Germany, Czechoslova
kia was also now an attractive destination because they could not only
enter the West German embassy there, but they could also conceivably
travel through the lightly guarded Czech border with Hungary, from
which they could freely emigrate via the open Hungarian border
with
Austria. By the end of September, the number of East Germans who had
emigrated via Hungar over the prior few months exceeded 20,000, and
the West German embassy in Czechoslovakia was son f lied up with
thousands of East Germans (Goertemaker, 1 994). The East German
goverment then negotiated a similar solution as was imposed on it in
the Hungarian case. It "temporarily" terminated unrestricted travel to
Czechoslovakia but decided to formally al low the legal emigration of
all East German refugees in the West German embassy i n Czechoslo
vakia (Bahr, I990). As part of the emigration agreement in the Czecho
slovakian case, over ten thousand refugees around the West German
embassy in Czechoslovakia were to travel by train through the souther
part of East Germany before reaching West Germany (Keithly, I 992).
CHAPTER 3
1 37
One set of trains fi lled with refgees was scheduled to ride through
the East German city of Dresden early in the moring of October 5,
1 989 at about 1 :30 A.M., and details of the events that fol lowed are
rpored by Bahr ( 1 990). To prevent any East Germans i n Dresden
fom climbing aboard the trains in transit to West Germany, the East
Geran police closed of the train station in Dresden late in the night of
October 4, 1 989. Notified by West Geran television of the trains that
were to pass through, over fve thousand East Germans came to look
on Nd complain, frequently claiming to suddenly want to take a train
ride somewhere. As the complaints became heated, violence erpted as
normal Dresden people (mostly teenagers and very young adults) tried
to break into the train station, and others threw rocks at the train sta
tion windows. The police counterattacked. Hundreds of people were
clubbd and/or arrested by the plice.
THE LAST BIRTHDAY OF EAST GERMANY
Meanwhile, in East Berlin, prparations for the 40t anniversary of
the founding of the East German goverment were being made. The
brders to tourist trafc were temporarly closed to reduce the possi
bility offoreign-instigated disorder (preventing myself fom meeting a
cute East German woman with whom I had an evening rendezvous! ),
ad known East German dissidents were put under especially close
observation, as was usual during such times (Riecker, Schwarz, and
Schneider, 1 990). Communist leaders and sympathizers all over the
world were going to attend the October 7 ceremonies, including the
leader of the Soviet Union (Michael Gorbachev), and the East German
goverment did not want any embarassing riots.
On October 6, on the eve of the celebration, over one hundred thou
snd members of the East German youth oranization (the Free German
Youth) marched through the center of East Berlin holding torches i n
demonstration of their support for their country, just as they had on this
day
for the last few decades. There was one major diference in their
paceful demonstration this time, however. On October 6, 1 989, instead
of sho
uting in support of their own country's leader, the Free German
Youth chanted "Gorbi, Gorbi, Gorbi" (Krenz, 1 990).
be
As re
prted by Bahrmann and Links ( 1 994), the ceremonies on Octo
r 7 1 989 went smoothly for most of the day. However, early in the
1 38 THE TRIUMH OF EVIL
evening, a number of people on a central plaza (Alexanderplatz) in Et
Berlin indicated their intent to express their support for their communist
ally, Gorbachev, and the group started walking toward a building (Palast
der Republic) where he was meeting with East German leaders. As the
group continued across the rest of the plaza and crossed a central pa
where people ofen strolled, the crowd grew. Once in front of the build
ing, the crowd shouted chants in support of Gorbachev and sang com
munist songs. Police were stationed in front of the building, but they
and the building were separated fom the crowd by a narrow river
(with bridges over it blocked by police). Nothing earthshattering hap
pened until plainclothes police began arresting a few people for making
remarks that they perceived to be anti-government. The arrests in plain
view of the crowd were not popular, and the secret police was jeer.
The crowd had grown to over ten thousand people by this time, and they
began to lose their fear of the secret police and to feel power in their
numbers and in their complementary opinions.
Somewhat later, the crowd began moving back toward the residential
section of East Berlin, and the chanting became more militant, with
jeers of "Secret police, get out!" The crowd gathered more strength in
the residential section, as the demonstrators called on those watching
from balconies to join them by chanting "Onto the street. " The demon
strators also soon ran into crowds of people returing home fom an
ofcial fireworks ceremony (celebrating the 40th anniversary of East
Germany), but many of these celebrants merely wanted to go home.
Meanwhile, the secret police chief (Erich Mielke) had ordered the
police and security forces to hinder the spread of the demonstration
(Schabowlski, 1 990). Police barriers were set up, but, with many people
(including many fireworks celebrants) needing to get to their homes,
the various crowds of people began to force their way through the
barriers (Riecker, Schwarz, and Schneider, 1 990). The crowds wer
then surrounded by troops and pushed back in a direction away from
their homes (Schnauze, 1 990). With thousands of people being pushed
against one another in an unknown direction, and with many people
angr at not being allowed to return to their homes, violence broke out
(Riecker, Schwarz, and Schneider, 1 990), chaos ensued, and the police
clubbed and arrested hundreds of demonstrators as well as innocent
bystanders (Schnauze, 1 990).
t
CHAPTER 3 1 39
Tere were also numerous other much smaller demonstrations on
Otober 7, including in other cities of East Germany, such as in Leipzig
ad Potsdam (Bahrmann and Links, 1 994). However, there had been
prior publicity (including circulating fyers) about these events from
well-known and well-observed East German dissident groups such as
"Neues Forum." Neues Forum was one of the newest, most popular,
ad most famous dissident groups in East Germany that had been cre
ated a new form for promoting plitical discussion, but it had not
been formally authorized by the state because the group openly sought
to "break the state's power monopoly" to reform the system instead of
going through the 20 diferent organizations already authorized (and
encouraged) by the East German goverment to express their opinions
ad initiate reforms (Rein, 1 989). As a result of the prior information on
these demonstrations sponsored by renowned dissidents, the Stasi bad
ben well-prepared for them and had easily broken them up with a few
ar ests that included several West German, Polish, and other foreigner
demonstrators in Potsdam (Maximytschew and Hertle, 1 994).
EAsT GERMAN PoucE CoNTROL
Te police patrols, arrests, and clubbings continued through the night
of October 7 and the next day in Berlin as the security forces sought
to restore order in a situation they did not understand and for which
they were ill-prepared (Riecker, Schwarz, and Schneider, 1 990). The
Et German police and troops had been trained to fght criminals and
foreign infi ltrators but not innocent demonstrators and their own people
(Dierich, Ehler, and Wenzke, 1 998). The East Geran secret police
ha put all the well-known East Geran dissidents under close obsera
tion
.
and had quietly dispersed or kept under control the small demon
strtions that they had called (as they had always done in the past). The
demonstration in the center of Berlin, however, appeared to be sponta
neus and without leaders.
.
In
East
Germany, demonstrations were i llegal unless they were autho
nzed by the goverment. However, as previously mentioned, East Ger
mny had laws guaranteeing freedom of expression (Philipsen, 1 993),
,there was nothing il legal in a group of people wandering some
-to express suppor for their goverment or their communist allies
th
ecker, Schwarz, and Schneider, 1 990). Only when some people in
e
goup made anti-goverment statements or slandered goverment
1 40 THE TRUMH OF EVIL
leaders was police action allowed (Rein, 1 989). By the time this hap
pened in Berlin, there were already over ten thousand people in the
crowd (and they were mixing with another group that was returing
fom a goverment freworks festival).
People arrested for making public statements against the goverment
or for leading unauthorized demonstrations were usually released wit
a waring for fist ofenses (Riecker, Schwarz, and Schneider, 199).
However, serious and subsequent ofenses could be penalized with sev
eral years in prison (Furian, 1 991 ). A statement against the goverment
or its laws was considered serious only if the police perceived the action
to be threatening to the goverment and/or to have been initiated by
foreigners or others seeking to overthrow the goverment (Rein, 1989).
For instance, jokes about the goverment were allowed to be told in
bars and private gatherings as long as there was no perceived intent
to overthrow the system (Schlechte and Schlechte, 1 993). Normally,
the police (usually the secret police) attempted to persuade any ofend
ing individuals from furher public anti-goverment action (Riecker,
Schwarz, and Schneider, 1 990). In the October 7-8 events in Berlin,
however, there were simply too many to persuade, including many
who were arrested or inured without having made any anti-goverment
statements and without having been involved in the unauthorized "gath
ering" at all (Schnauze, 1 990).
Although no one died in the actions in Berlin on October 7 and 8,
there were quite a few hospitalized (including some police troops).
The interational press came out strongly for the demonstrators and
expressed shock at the police brutality (Schumann, 1 990). To provide
some perspective here, however, it should be pointed out that the Est
German laws against publicly slandering the country were similar to
some American laws (existing in 48 of the 50 USA states) prohibiting
fag-buring (Greene, 2000). In addition with respect to laws on dem
onstrations, it should be mentioned that even in the "free" USA, dem
onstrations are only al lowed if permits (which 8 not always granted)
have been obtained from the government, and masses of intimidating
police are ofen present even when a demonstration is peritted (lAC,
1 998a). Moreover, it should also be noted that demonstrators in the USA
are ofen chased down and clubbed, arrested (for "unl awful assembly
and crossing police barricades''), and sprayed with harmfl chemicals
CHAPTER 3
1 41
just for engaging in peacefl protests against the world povery caused
by capitalist globalization (Associated Press, 2000g). Goverment ordi
nances are also sometimes imposed in the USA to prohibit demonstra
tors fom wearing helmets, gas masks, or other protection fm police
asaults (Szczesny, 2000b ), thereby ensuring police brtality has the
maximum efect.
At any rate, since most East Germans watched West Geran TV,
their opinions of the events were strongly influenced by the Wester
anticommunist interpretation of the actions of October 7-8 (that nat
urlly emphasized police repression and put East Germany in a nega
tive light). As a result, many East German supporers of the demonstra
tors attended candle-laying ceremonies to show their solidarity against
violent attacks on innocent people, and the movement began to gain
momentum (Bahrmann and Links, 1 994).
THE LEIPZIG AFFAIR
Shortly thereafer, on Monday, October 9, 1 989, one of the stranger
events of this weird episoe ocurred. On that day in a town with over
four hundred thousand residents in the southwester prtion of East
Gerany, there was a threat of another large demonstration, and the
akgund to and actions of that day remain a mystery to most inves
tigators (Joppke, 1 995).
Since 1 982, small demonstrations had periodically occurrd around a
church (Nikolaikirche) i n the center of Leipzig at approximately 6 P.M.
Monday (Scheider, 1 990). For many years, young East German dis
stdents had fgured out that the East German goverent's guarantee
of religious freedom allowed them some rights to freedom of assem
bly and expression there, afer a "peace prayer" was issue at 5 P.M. I
myself interviewed some of the participants who indicated that most of
the demonstators had no religious beliefs but merely used the church
a protective cover for expressing their discontent. Such demonstra
ons usually consisted of several dozen dissidents at the most, and the
S
e
monstrators were always dispersed shortly afer leaving the church.
uspcted ringleaders of the demonstrations were usually arrested and
meti

es given jail sentences of up to several years for slander or plot

tng
agatnst the state.
September 4, 1 989, in keeping with this tradition, several youths
142 THE TRIUMH OF EVIL
began to demonstrate with placards "For an open country with B
people," as reported by Tetzner ( 1 990). Their signs were tom dow
immediately by secret police but not before Wester reporters had taken
pictures. On September 1 8, 1 989, this action was followed up with 8
demonstration of several hundred people, with some demanding the
right to leave the country. This demonstration was also quickly dis
persed by plice, and approximately one hundred people were arrested.
These incidents were followed by a similar demonstration of oVc|8
thousand people on September 25. As usual, this latter demonstration
was also broken up by police, and numerous suspected ringleaders wer
arrested for taking actions against the state (Schumann, 1 990).
On Monday October 2, 1 989, another demonstration ensued in the
center ofLeipzig, as also reported by Tetzner ( 1 990). This time the dcm
onstrators did not yell anti -goverment slogans. Instead, they chante
Gorbachev's name to demonstrate their support for their communist
ally. They also shouted "We're staying here" to show that they were
not people who wanted to il legally emigrate. Such slogans did not give
the police adequate cause to make arrests and disperse the demonstra
tors. The failure of the police to act and the supportive nature of the
slogans also gave the demonstrators a sense of legitimacy. As a resut,
as the demonstrators walked peacefully around the plazas and parks B
the center of Leipzig, many other people who were strolling in the ara
joined the group. The crowd soon grew to approximately three thou
sand people. Although police cordoned of some areas and roads to pre
vent the demonstration from blocking all trafc, no violence or arrests
occurred. The slogans remained supportive of Communism (as opposed
to demandi ng reforms), with the most militant cries to the police on that
day being "Shame on you for not letting us through. " Only afer mosof
the demonstrators had gone home did verbal and physical provocatiOn
of the police occur, which resulted in a few arrests.
On October 7, 1 989, normal ofcial festivities were held in Leipzig
to celebrate the 40th anniversary of East Germany. Several well-known
dissidents used the opportunity to speak to masses of people gatherd
for the festivities. The East German police were already prepared and
quickly dispersed the crowds with water cannons and numerous arrests
(Schnauze, 1 990).
CHAPTR 3
143
THE DECISIVE DAY
Renewed arrests and violent dispersal of demonstrators in Leipzig
on October 7, combined with the news of violence in Dresden on Octo
N4 and in East Berlin on October 7, led many to fear the worst for
0c Monday October 9 demonstration in Leipzig (Bahrm and Lks,
1994). As a precaution, a large number ofEast German phce, soldters,
ad tanks had been called into the city, and orders had been issued
by the East Geran leader (Erich Honecker) and by the secret police
chief (Erich Mielke) not to allow the demonstration to occur (Kuhn,
192). There were rmors in Leipzig that a slaughtering of demonstra
tors might occur, as it had in communist China i n June of 1 989 (Bah
mand Links, 1 994). People were wared not to go toward the center
of the city afer 5 P.M., and some schols and businesses in the center
of the city were closed early to allow the people to go home before then
(Kuhn, 1992). In this situation, there may have been only a ver small
00m0ct of people brave enough to join in the demonstration on that
day, and the police might have been able to disperse the few courageous
demonstrators as usual.
However, a series of events then occurred that dramatically changed
0c course of histor but has rarely been reported by anyone except
Kuhn (1 992), who interviewed many of the key paricipants. To begin,
early on the moring of October 9, Walter Friedrich, a professor for
youth culture at the University of Leipzig, drove to East Berlin to confer
with his old friend Egon Krenz, who held an important position in te
Est German goverment's policy-making committee called the poht
buo. In
addition to his position in the plitburo, Egon Krenz was also in
chare of security and was the head of the East German youth organiza
tion called the Free German Youth. Friedrich convinced Krenz to check
to make sure that the police and other trops had been given orders not
to shot. In addition, he pleaded with Krenz to ty and have the security
ta-show restraint, unless the demonstration tured destructiye or
Vtolent. He also suggested that Krenz replace the old sick leader of East
Gennany (Erich Honecker) and take chare of the county himself.
Aer
Friedrich lef, Krenz attempted to contact the East Geran
'

0
t the old man was in meetings all day. Because Krenz was
00a0cto reach Honecker, he called the various ministers of the central
goverment in charge of the various police forces (such as the secret
1 44 THE TRUMPH OF EVIL
police chief Mielke) and convinced them not to employ violence.
Afer talking with Krenz, Friedrich retured to Leipzig and spoke
with his friend Roland Woetzel, who was a communist party member
with an infuential political position in Leipzig. I n conjunction with
fve other local dignitaries, Woetzel then recorded an announcement
requesting the demonstrators in Leipzig to remain nonviolent and prom
ising to have the government listen to the opinions of the demonstr
tors. The cassette with the recording was given to various administra
tors in the center of the city, as well as to the Leipzig radio station, with
instructions to play the cassette on the radio in the aferoon and on the
city's loudspeakers at the time of the church "peace prayer" between !
P. M. and 6 P. M.
There were several thousand people gathered around the centrl
church for the "peace prayer" between 5 P.M. and 6 P.M. Include
among them were over a thousand communist party members who
had been ordered by the local communist party to inhibit a demonstr
tion from occurring aferwards. Because of the large number of people
attending the church ceremony, many had to stand outside the church,
even though three nearby churches had been opened up to handle the
overow. Afer the church ceremony ended peacefully (around 6 P.M.),
the church leaders recommended that the people go home in a direction
away from the city center i n order to avoid a confontation. However,
this recommendation was ignored in the face of the public announce
ment condoning a demonstration that was being broadcast on local
loudspeakers and on the radio. The thousand communist party member
in attendance at the "peace prayer" also perceived the public announce
ment played on the loudspeakers to be a rescinding order of the com
mand to break up any pst-ceremony gathering. As a result, after the
prayer services were over, many people moved uninhibited through the
central plaza toward the main train station in the city center. They were
observed there by an estimated thirty thousand people, many of whom
were merely on their way home from work, school, or shopping.
About this time, Woetzel was busy explaining the unauthorized public
announcement to his superior Helmut Hackenberg. Hackenberg was the
overall political leader in charge of Leipzig and, as such, was respon
sible for coordinating the various police and other forces that wer
available to break up the anticipated demonstration. Faced with a loal
CHAPTER 3 1 45
public announcement condoning the demonstration that conflicted with
the order from the central East German goverment not to allow the
demonstration, Hackenber called the head of the central East German
goverment, Erich Honecker, for instructions. Because Honecker was in
a previously scheduled meeting, Hackenberg was only able to talk with
Knz. Kenz said to wait until he had checked with Honecker, afer
which he would call back. An hour passed without ofcial orders. In
the meantime, the police forces were frozen, the public announcement
condoning the demonstration had greatly reduced tensions in Leipzig,
many observers and bystanders joined in the demonstration, and about
seventy thousand people peaceflly demonstrated in Leipzig that day. ' '
SUBSEQUENT DEMONSTRTIONS
On the following Monday (October 1 6), there were over one hun
dred thousand demonstrators in Leipzig (Bahrmann and Links, 1 994).
Although demonstrations in the rest ofthe country had been inhibied by
the arrests and violence in the early par of October, they bad not been
completely stifed, and the prior week's peaceful, semi-authorized dem
onstration had given the people in Leipzig renewed courage. On Octo
ber 1 8, 1989, the previous leader of East Germany (Erich Honecker)
was replaced by Egon Krenz, the man who had efectively allowed the
crcial October 9 demonstration in Leipzig to occur without arests
(Krenz, 1 990).
With Leipzig as an example, and with a new leader who had shown a
willingness to allow demonstrations to ocur, a larger wave of demon
sttions broke out across East Gerany in both large and small towns,
ith
over a half million people paricipating in 1 45 diferent demonstra
tion across East Germany i n the week of October 23-30 (Herle, 1 996).
These as well as the regular Monday demonstrations in Leipzig contin
Ued in ever growing numbers (Bahrann and Links, 1 994). On Novem
br 4, 1989, a demonstration was even formally authorized in East
Berlin, and a crowd of over a half million people attended (Hertle, 1 996)
tat was broadcast on East German goverment television (Frankrter
Rundchau, 1999). On November 6, 1 989, a peacefl demonstration
Ocured in Leipzig with over four hundred thousand people present
(Tetzner,
1990), which was approximately the number of residents in
tat city, although many of the demonstrators came fom other East
Ger

n Clhes to participate.
1 48 THE TRUMPH OF EVIL
before work the next day, the guards at one of the Berlin Wall crossings
indicated that they could no longer peaceflly contain the crowd ad
obtained telephone permission to open up the border gate completely
without any controls. Other uncontrolled border crossings into West
Berlin were also subsequently made available prior to midnight, while
additional gates into other parts of West Germany opened up somewhat
later. By 4 A.M. on November 1 0, about 70,000 East Germans had
crossed over into West Berlin (and 5000 into other West German cities),
but more than half of these had already retured to East Germany by
that time.
Although there were celebrations on the night of November 9- 1 0, the
bigger party occurred on the night of November 1 0- 1 1 when mi llions
of now informed East Germans entered West Berlin and other cities
in West Germany on the originally scheduled date (Hertle, 1 996). The
West German leader (Helmut Kohl) came to make a nationalist propa
ganda speech to the celebrants, but he was drowned out by hecklers and
jeering from the crowd of people who preferred to celebrate (Bahrman
and Links, 1 994 ).
The celebrations continued throughout the month of November and
into the early part of December. After an initial massive wave of emi
grations in November, the average number of East Germans immigrat
ing daily into West Germany fell in December to about one thousand,
which was substantially lower than the rate just before the building of
the Wall in August 1 961 and was not that much higher than the levels of
the 1950s that East Germany had previously survived (Murphy, 1 990b ).
The average annual number of emigrations in the 1 950s was 220,3 1 1 ,
but there was a high point in 1 953 of 33 1 ,390 emigrations, which
was
approximately the same as the 343,854 East Germans who emigrat
legally or i l legally in 1 989 (Hertle, 1 996), with many of the 1 989 emi
grants being people who would have emi grated in prior years but wer
prevented from doing so by the Wall.
While the parties continued, the politicians in East and West German
Y
continued to rant and rave throughout this period about issues of little
immediate concer to the celebrating Gerans. Many scarcely even
noticed in late November when the West German chancellor Kohl indi
cated that any increase in aid and economic cooperation was dependent
on East Germany initiating capitalist economic reforms and Wester-
CHAPTER 3
1 49
style elections ( dpa, 1 989). Most were also not concered when, in early
December the East German parliament (without consulting the East
Gennan ople) succumbed to the pressure by removing the arti

le of
the East German constitution that guaranteed concentrated power H the
hads of the communist party and by replacing Krenz with a more pli
ale economic reforist, Hans Modrow (Bahrmann and Links, 1 994).
Although West Germany initially respnded somewhat positively by
ofering some limited fnancial aid (Der Tagespiege/, 1 989c ), a deci
sion was made before Christmas that would end the celebration and t
the widely-welcomed opening of the Wall into a catastrophe.
THE COLLAPSE OF THE BERLIN WALL
E
ven afer the November 9 event, the East Germans had always main
tined strict control of West German tourist trafc into their countr in
order to protect their products fom being smuggled out at cheap black
maret prices (Murphy, 1 992b ). However, afer opening up the Wall
for East Germans, the West German goverment was putting extreme
plitical pressure on the East German goverment leaders to reduce
controls on West German travel to East Germany. The East German
go
verment was also being pressured into allowing West Gerans to
feely convert their curency into East German money at an incredible
exchange rate of 3 East German Marks per West German Mark. This
exchange rate was absurd because te purchasing pwer of the East
ctma0 Mark was approximately equal to that of the West German
Mar. I
n fact, for many items (like foo, boks, clothing, roms, and
other consumer staples), the East German Mark could actually buy 5
to 1 0 times more consumer goods in East Germany than the West Mark
could buy in West Germany (Collier, 1 985). The 3: 1 exchange rate
Dctc0y made i t 1 5 to 30 times cheaper for West Germans to shop in
Et Germany than in West Gerany, and such inexpensive purchases
rrsented a for of legalized shoplifing that efectively reduced the
East Geran standard of living by over 2/3.
Although the removal of controls on smuggling and the legalization

fa ridiculous exchange rate would efectively make it possible for the

ncher West
Germans to steal from the poorer East Gerans (Arold,
1
9
), the
new, economically naive East German leader, Hans Modrow,
succumbd to West German pressure in late December 1 989 and agee
to
the
new plicies along with other capitalist demands in ret for
1 50 THE TRIUMPH OF EVIL
West German fnancial aid (Der Tagesspiege/, 1 989c). January 1 , 1 990
was set as the date on which the new 3: 1 exchange rate (Der Tagess
piegel, 1 989t and open borders with no visa fee, no minimum ofcial
money exchange, and no security check for visi tors to East Gennany
(Hertle, 1 996) were to go into efect. Prior to that, an unbiased mid
December survey of East Germans had indicated that over 70% wer in
favor of both soialism and the maintenance of a separate East Gena
state (Bahrmann and Links, 1 994).
There was one fnal enormous party on New Year's at the Branden
burg Gate with about a half million people enjoying the festivities and
freworks there (Bauer, 1 990). Afer that celebration, the new economic
reforms proceeded to destroy the East German morale, economy, and
society. Already in early January 1 990, the number of East Gennas
emigrating to West Germany had doubled from a somewhat manage
able one thousand per day (Murphy, 1 990b) to over 2000 per day ( dpa,
l 990a). By February 1 990, most East Germans were in favor of uni
fcation as a means to avoid a frher deterioration of their economy,
although the majority still preferred a more lef-wing goverment (Dcr
Tagespiegel, 1 990g). However, by promising a 1 : 1 exchange rate |
their East German representatives won an election scheduled for Marh
1 8, 1 990, the conservative West German coalition parties were able to
win the votes of a narrow majority of East German voters and impose
their system on the East Germans (Der Tagesspiegel, l 990o ).
It should be emphasized that the political collapse of East Germany
was not inevitable. A more repressive goverment would have never
allowed the demonstrations nor undertaken reforms of the system. In
addition, a benevolent but more prudent goverment would have never
have succumbed to Wester pressure to open up their economy to a
ridiculous and destrctive exchange rate. Moreover, before adopting )
Wester-style elections (that enable the rich to buy the plling result),
a wise East German leadership would have waited until reparations
induced wealth disparities had been eliminated (as could have been
achieved within 2 years using the economic plan described in Chapter
5).
THE EFFECT OF THE EAST GERMAN REVOLUTION
The demonstrations and reforms in East Germany that occurred in the
CHAPTER 3
1 5 1
fall of 1 989 spread quickly to the other communist countries of Easter
Europe. As the people in these countries saw that demonstrations could
be successflly undertaken even against the most hard-line communist
goverment (i.e., the one in East Germany), they followed suit (Weiss,
19). Except in Romania, the goverments of the remaining Easter
Europan countries gave in to the demands of the demonstrators with
out fng a shot (Ratesh, 1 991 ). By the end of 1 989, fture Wester
style elections had been declared in all of the previous communist coun
tes of Easter Europe in alliance with the Soviet Union, including East
Gerany, Poland, Czechoslovakia, Hungary, Bulgaria, and Romania
(Weiss, 1 990). Shorly thereafer in early 1 990, constitutional reforms
wer also initiated in the Soviet Union (without the consent of the
pple) that permitted Wester-style elections (Serice, 1 998). Such
rfors opened up their countries to Wester media manipulation (lAC,
1 98a) and led to the break-up of the Soviet system the following year
(Serice, 1998), despite the fact that the Soviet people had voted earlier
in 1 91 to presere the Soviet Union (Becker, 1 999a).
East Genany had been the hardest and most crucial piece of armor
in the Soviet Union's bloc of nations (Goeremaker, 1 994). East Ger
many had the second largest army, the highest standard of living, and
the strngest economy in the Soviet blo (Krenz, 1 990). And East Ger
many was at the forefront in high technology goods like electronics
ad computer chips (Mittag, 1 991 ). The Soviet bloc desperately needed
such products in order to survive in the Cold War against the capitalist
nations which had restricted the expor of high technology goos to the
Soviet blo (Parrott, 1 985). Without East Germany, Easter European
l
ers surndered to Wester pressure and allowed the Soviet bloc to
stmply collapse (Frankurter Rundchau, 1 999).
collapse of the Soviet Union resulted in many former republics
bing tr
nsfonned into outright capitalist dictatorships (Whalen, 2000).
Even Easter European countries such as Russia that have attempted
t
o c

te a faade of political feedom have tured the words "democ

rcy mt
.
o a farce by banning opposition parliament, political parties,
=medta (Ignatius and Rosett, 1 993), by allowing organized crime to
stze @ :
b
e e
onomtc and plitical power (Raith 1 994), and y engagmg m
outrght
h
. -
1
pure
ases of people's votes m elections (Hearst Newspapers,
9
)
.
1
2
1 52 THE TRIUMH OF EVIL
In addition, the transformation of Easter Europe into capitalist coun
tries did not bring the desi red economic prosperity. Instead, the pressur
that the capitalist West put on the Eastern European countries to destroy
all vestiges of Communism merely brought unemployment, infation,
poverty, fnancial uncertainty, crime, and chaos (Cox News, 1 995).
And Egon Krenz, the East German leader who had acted so quickly
upon the demands oft he peacefl demonstrators to open up the Wall and
initiate plitical reforms i n East Germany, was convicted and impris
oned in the united Germany for deaths at the Wal l (Associated Press,
1 999d). That conviction occurred despite the fact that Krenz (as an East
German goverment minister merely carrying out the orders of the East
German leader Erich Honecker at the time) was far less responsible
than the West German goverment itself for the Wall and the tragedies
there (Murphy, 1 990b ).
The economic destruction resulting from unifcation was to create
social and economic divisions between East and West Germany that
would take decades to mend (Dumas and Dumas, 1 996). Al though the
diferences between the two Germanies were not that great at the end of
December 1 989, the policy of unifying the countries by destroying East
Germany greatly magnified those diferences (Frankfurter Rundchau,
1 999) and also contributed signifcantly to various economic crises of
the 1 990s, as will be explained later in Chapter 6.
Before engaging i n a thorough analysis of the aggrgate new world
order in the post-cold-war era i n Chapters 6 and 7, however, the German
case is studied in greater detail in the next two chapters to provide mor
concrete perspective on communism. In particular, a comparative anal
ysis of the East and West German fnancial systems prior to the 1989
revolution is conducted in the next chapter. This analysis demonstrtes
not only the simi larities of the two systems and their potential com
pat
ibility (implying that the destruction of the
.
East German system wa
unnecessary) but also shows that the East German fnancial systm a
actually superior and more efcient in many respcts. One implication
of these fndings is that it was the capitalist West German system that
should have been changed, not communist East German soiety. At the
ver least, the advantages of the East German system should have been
presered, as Chapter 5 shows was indeed possible.
LH11L 4
ACOMPARATIVE ANALYSIS OF EAST
ANDWEST GERMAN FINANCIAL
SYSTEMS IN LIGHT OF THE NEW
EVIDENCE
Te political reforms in the communist world led to a popular demand
for m0importation ofthe economic and fnancial system ofthe capital
ist West. This plitical demand for capitalism was stimulated by aca
0000propaganda on the theoretical efciency of capitalism (e.g., Taga,
1984; and Goldfeld and Quandt, 1 988). Unfortunately, such simplistic
teories igore many practical fnancial issues, and the result of the
eonomic reforms in Easter Europe since 1 989 has been deprssion
i
ntead of the promised prosperity. For example, the IMF ( 1 996) reports
that Gross Domestic Prouct fel l by over 40% in Easter Europe over
the interal l 990-95. A realistic appraisal of diferences between capi
tlist and communist business fnancial systems is usefl in order to
mitigate fture economic catastrophes.
HISTRICAL EVOLUTION OF THE DIVIDED GERMAN
FINANCIAL SYSTEMS
_
As a divided
country, East and West Germany prior to unifcation pro
VIde
an interesting example for 8comparison of East and West business
P

1
l i
Ci a
decision-making systems. Although Germany was a cap1ta st
countr
prior to its capitulation in World War II, the easter portion
of the countr
was put under Soviet occupation afer the war, and this
stor developed into communist East Gerany.
1 54 THE TRIUMPH OF EVIL
Despite specifying four separate zones of occupation for USA, French,
British, and Soviet ocupation forces after the war (and four separte
zones of Berlin which was isolated within the easter zone), the origi
nal plan of the victorious allied countries (stipulated at Yalta in early
1 945) was for a united Germany to be created out of the defeated Na
country and for that united nation to pay reparations to the USSR for
war damages (Harmssen, 1 95 1 ). The exact amount of the reparations
was set according to an agreement between the Soviet Union and hr
Western occupying countries at Potsdam in July 1 945 (with $1 0 billion
contracted to be paid to the USSR as partial compensation for the enor
mous destruction that Nazi Germany had inficted on it during World
War I I), but the USA violated this agreement in May 1 946 when it
began to prohibit the Soviet Union from taking any reparations from
the wester sectors of the ocupied country (Apel, 1 966). As a result
the Soviet Union had to extract the entire amount from its tiny easter
sector of Germany, and the resulting reparations payments from that
area averaged about 25% of its national income each year between
1 946 and 1 953 (Stolper, 1 960). Other expropriations of wealth by the
Soviet Union (to cover other war-related costs) made the total amount
taken from East Germany sum to over 1 00 billion Marks (Merkel and
Wahl, 1 99 1 ), which represented many times tiny East Germany's annual
output at the time. For instance, most of the capital stock in easter Ger
many had been seized by the Soviet Union by the end of I 946 (Harms
sen, 1 95 1 ), including about 40% being carted of to the USSR (Apl,
1 966) and a further 20% being kept in eastern Germany but under
Soviet ownership (Ritschl, 1 996).
By 1 948, reparations-induced money printing and inflation in the
Soviet sector caused the USA and its allies (Britain and France) to for
a separate West German currency for its wester zone of Germany and
Berlin (Schwarzer, 1 999). The Soviet Union reacted with a blockade of
wester Berlin which was isolated from the rest of wester Gennany
(Apel, 1 966). After the USA airlif had succeeded in "saving" wester
Berlin from having to pay its share of the reparations, the USA bad a
German goverment formed for the wester sector of the country (also
including the isolated West Berlin) in 1 949. This West German go
.
v
erment's constitution mandated the annexation of the eastern Sovtet
sector whenever possible (Ritschl, 1 996). I n reaction, the Soviet Union
CHAPTER 4
1 55
allowed a separate communist country to form in East Germany later in
1 949 ( Autorenkollektiv, 1 966).
Meanwhile, the wealth of Geran war criminals and former Nazis
ha been expropriated by the goverment in East Germany over the
period 1 945-46 (Adler, 1 980). As a result, much of the private capital
there not seized by the Soviet Union had been put under loal East
Geran goverment ownership, including a large amount of industr
as a result of a June 1 946 referendum in which 72% of the people in
the industrial Saxony portion of East Germany voted for nationalization
(Ritschl, 1 996). Later in 1 946, local elections in all of East Germany
rsulted in slightly over 50% of the people there voting for the Soial
ist Unity Party, which represented a merger of the Soial Democratic
and the Communist Paries (Andrew and Gordievsky, 1 990). Also in
the meantime, large private landholdings had been nationalized (and
rdistributed to smaller farmers) during this immediate post-war perio
(Burant, 1 987), although agriculture was not collectivized until the
1958-60 interval (Ritschl, 1 996).
Most of the remaining major businesses in East Germany were nation
alized by the state in subsequent years, with a large section of pri
vately owned capital bought out by the goverment in 1 972 (the year
afer Erich Honecker assumed power), at which time state ownership
of industr rose from 82% to 99% (Weber, 1 988). By the 1 980s viru
ally all land and businesses with more than 1 0 employees were owned
by the state (with most conglomerated into huge state businesses called
kem6aate in the 1 970s), which thereby directly controlled decision
making, and the state also regulated wages, prices, and many other
business decisions in the rest of the economy (Behr, 1 985). The of
cial plicy with respect to the remaining private enterprises was that
thy
were allowed only if they served the better community inerest
(Ftlmer, 1 985b ). Other than having one state owner, which theoretically
aempted to act in the best interests of all the people in the countr
(tnstead of for the god of a rich minority of shareholders), the East
Geran fnancial system was similar to that of West Germany in many
rs
pcts
(with the stock market i n East Germany existing solely in the
|:-rthe goverment having the right to buy up any private cm
ants that grew to over 1 0 employees, with the "buyout" price bemg
pcifed to be a legal formula based on profits).
1 56 THE TRIUMPH OF EVIL
A COMPARATIVE ANALYSI S OF FI NANCIAL
DECISION-MAKING
To facilitate the comparison of the fnancial systems, business fnan
cial decision-making activities can be divided into several semi-separate
functions, including making, funding, and managing investments. A
comparison of how each of these functions was practically carried out
in East and West Germany prior to unifcation is conducted separtely
in diferent subsections. This analysis is followed by an empirical eval
uation of the relative efciency of the two systems.
Financial decision-making in East and West German frms prior to
unifcation was fairly similar in many respects. Diferences in invest
ment, fnding, and control fnctions existed largely because of the dif
ferences in the fnancial environment.
Making Investments
In both East and West Germany, investment decisions were typically
centralized for large organizations but decentralized for smaller invest
ments. In East Germany, the fnal decisions for large investment projects
were made by a centralized State Plan Commission (Staatliche Plank
ommiion). However, the management of the East German economy
was divided among a number of diferent frms that included People's
businesses called volkeigene Betriebe (VEB) and VEB conglomerates
(Kombinate), and each ofthese frms had some degree of independence
in investment decision-making. For example, decisions on smaller proj
ects, such as those under million Marks in value and some fnanced
within the individual frm from interally generated profts and cash
fow, were made by the frm's management (DIW, 1 989). Such a com
bination of centralized and decentralized investment decision-making
was similar to that employed in frms in West Germany. In West Ger
many, lower-level management makes decisions on projects up to a spe
cifc maximum value, and top management makes the fnal decision on
larger investments (Perridon and Steiner ( 1 988: 27).
In addition, the criteria used to make investment decisions were si mi
lar, with the payback period of the investment and/or the internal rate of
retur (IRR) being widely employed in both countries (Knauf, 1 983).
The payback period (called the Rueckussdauer der einmaligen ^
wendungen in East Germany) is computed as the time required for the
CHAPTER 4
1 57
expected cash infows from the investments to pay for the initial out
fow. For investments with perpetually constant cash flows, investments
with payback periods less than the inverse of the required retur on the
funds tied up in the investment are considered worhwhile. The IRR
(called the .Grundfondsrntabilitaet ir East Germany) is computed as
the discount rate that sets the sum of the present value of the cash fows
from the investment equal to the initial investment. Projects with IRRs
geater than the required retur are optimally accepted. However, other
factors are also considered, such as type and quantity of inputs, type and
quntity of outputs, and environmental factors (Knauf, 1 983).
For both the payback period and the IRR, the cash fows from the
investments have to be forecasted. In East Germany, prices for goods
ad services were centrally controlled and determined, and so cash
fows were more easily forecast. Thus, there was less chance of eror
of making an investment that should not have been made, as well as a
lower probability of not making an investment that should have been
made. In West Germany, where prices are deterined by the market
ad fuctuate greatly, the probability of making an investment that does
not subsequently ear the required ret (or of not making an invest
ment that would have eared a retur over that required) is greater. In
adition, the price uncerainty in West Germany requires more forecast
ing and analysis, and thus more time spent on making investment deci
sions.
Investments in East Germany were also made with fll knowledge

f other investment and fture resource allocation plans, and so excess

mvestment that might have resulted in redundant capacity or dual
rsearch and development programs were minimized. Gorbachev's
expriments with a market economy in the Soviet Union in the late
l 980s also illustrated the fact that investment decisions tend to be sub
optimal when made by the individual businesses without central gov
eent planning (Marcy, 1 990).
Moreover, central fnancial planners were able to avoid the costs and
gency problems associated with bankruptcy risk that can cause capital
Ist browers to make excessively risky, imprudent investments and to
ne
glet more proftable, prudent investments (Myers, 1 977). An exam
ple of capitalist incentives to make imprudent investments is the case
of a 0m ga
mbling its last fnds on a project with extremely high risk
1 58 THE TRIUMH OF EVIL
and very low (or even negative) expected returs but the remote ps
sibility of a very large retur that would save the company from failur
(Murphy, 1 992c ). An example of a capitalist company being unable to
make a prudent investment with a high expected retur is the case of a
company that has no funds lef to initiate the investment and has such
shaky credit that it can' t even win the trust of potential customers much
less suppliers or creditors (Frankurter Allgemeine, 1 998b).
While the advantages of central planning supervision of fnding and
investment for fnancially troubled frms would be lost i f failed fr
were allowed to make investments that were economically unviable
(Goldfeld and Quandt, 1 988), heavy interest penalties and stringent
administrative interference by the state in cases of insolvency did create
incentives and opportunities to minimize wasteful activity, as Granick
( 1 974), Melzer and Stahnke ( 1 986), and Autorenkollektiv ( 1 988) docu
ment
.
Apart from being more efcient in mitigating agency costs, the
communist system also avoids both the legal costs of bankruptcy and
the negative domino efects of bankruptcy that lead to layofs, frther
bankruptcies, and lower economic growth (Hudson, 1 992).
One problem ofen mentioned with investment i n centrally planned
economies is that decisions were based on centrally planned prices
i nstead of"market-clearing" prices determined by consumer purchases.
As a result, prices and cash flows did not "efciently" refect true "ratio
nal" values (Erdmann, 1 983). However, it is not clear that prices 4
more efciently and rationally determined by a large mass of unin
formed West German consumers who must spend a considerable amount
of time price-shopping and who can be manipulated at great cost by
expensive advertisements and highly paid sales people motivated to sell
any goods at a price as high as possible (as explained i n Chapter 2).
In East Germany, a small group of well-informed East German cen
tral planners, who had access to information on the East German supply
and demand situation as well as on West GeO prices, established
diferent prices for diferent levels of quality and service. Flexibility in
pricing some gods was provided to many East German frms throug
the issuance of price range guidelines (i nstead of fxed prices). Adjust
ments in both fxed prices and price ranges were also permitted at the
frm level in order to better balance supply and demand (Steudtner et al.,
1 988). Although East German central planners maintained fairly static
CHAPTR 4
1 59
prces (or price ranges) for consumer goods that did not fully refect the
spply-demand situation, a complex system of subsidies and transfer
prcing adjustments were made in East German businesses in order to
ajust prices toward value for purposes of measuring costs, profts, and
fn cash fows (Erdmann, 1 983).
Wile the East German transfer pricing system required a sigifcant
aount of administrative time, greater efor for accounting, valuation,
ad tansfer pricing is required in West Germany. In West Germany,
there M many more frms and product brands, and there are at least
W separate bookkeeping systems in each m. one for fnancial
rring, one for interal puroses, and one for taxes (Matz, 1 975).
Within the paperork maze of the cumbersome West German bureau
m,West Germans expend an extraordinary amount of time to merely
ad fgure out (as well as avoid) tax liabilities (Der Spiegel, 1 992a),
which were computed more automatically in East Gerany.
Funding Investments
Fuding for investments came from sources interal and exteral to
the f in both East and West Germany. In both countries, interally
generated funds came fom business profts afer taxes and afer divi
deds to the owner(s) of the business, where the business owner in East
Gen any was the goverment (Steudtner et al., 1 988). East Geran
fs wer automatically forced to pay 50% of net profts as dividends
t their central goverment owner, and the goverment could also
ctrl the investment of the remaining profts as well (Melzer and
S
tke, 1986). The actual amount of fnds retained i n East German
inesses was set as a function of both the proftabi lity of the frm and
ts mvestment needs (Steudtner et al. , 1 988). On the other hand, in West

e
n
y
,
amounts retained i n businesses could be arbitrarily set by
owners based on their idiosyncratic consumption and investment
dess, with this decision being made for consumers by professional
mager in lare West German corporations (Perridon and Steiner,
1988: 302-3 19).
or decisions on interal fnancing, one advantage of the East Ge

an
_
was

hat the central planners did not have the same

apa

1ty to
_ .
e
x
cess1ve amounts of interally generated fnds retamed m
the
I
i
ness to fnance suboptimal investments, which Jensen ( 1 986) has
1 60 THE TRUMPH OF EVIL
cited to be a major problem for managers of Western corporations. This
problem is present in all capitalist economies because managers M
motivated to inefciently hoard assets to protect their salaries and jobs.
The problem is compounded in West Germany because West Gennan
banks, as the major stock brokers who vote most shares owned by retil
customers, and as equity investors (Whitney, 1 994), tend to control the
voting shares of many large industrial frms to which they also make
large loans. To protect their loans from default, German bankers have
an incentive to force the corporations they control to hold on to far mor
assets than are optimal for maximum productivity.
If more fnancing was needed, exteral fnding was available in both
East and West Germany. In East Germany, the exteral fnding market
consisted of a state bank (Staatsbank) that issued credit (Autorenkol
lektiv, 1 988) and a state planning commission (Staat/iche Plankom
mission) that provided equity capital (Melzer, 1 983). The interest rate
charged on credit from the Staatsbank was 5% (for both private and
public frms), although a subsidized rate of 1 .8% was ofered for invest
ments in technology (or other areas deemed to be vital to the economy),
and the rate increased 2% (or more, up to a maximum of 1 2%) in any
case of late payments (Autorenkollektiv, 1 988). The retur on the equit
capital investments of the Staatliche Plankommission was set as a mini
mum of 6% (which automatically had to be paid annually to the state
owner as a sort of preferred stock dividend that was deducted befor
computing the state's efective common equity claim or net proft) and
was allowed (via the setting of prices controlled by the state) to be a
high as 1 8% for the most efcient frm in an industry (Melzer, 1 983)
.
On the other hand, in West Germany, exteral fnding comes from
rich individual and institutional investors, to whom frms sold securi
ties (debt and equity) that had to ofer the expected returs arbitrarily
demanded by those investors (Perridon and Steiner, 1 988). In both coun
tries, the pricing of the securities was important for allocating funds
at the appropriate cost to the businesses, so that they could make their
investment decisions rationally using this cost of funds.
Because exteral funding in East German frs came from a central
planning body that had access to full inside information, the cost of
funds could be more precisely priced, and funds could be allocated to
the most efcient users of the fnds. On the other hand, in the capitalist
CHAPTER 4 1 61
West Gennan securities market, prices difer from value by a random
eror tenn that may be known only to insiders (Myers and Majluf,
1 984). The size of this error term and the corrspnding diference in
rtional fnds allocation to the most efcient users can easily be quite
lare (Summers, 1 986). Causes of discrpancies include excessive secu
rities price speculation through technical analysis (Beja and Goldman,
1980), price manipulation that "Wall Street insiders readily concede ...
is rpant" (Stem and Fritz, 1 987), mafa fraud and extorion in the
scurities industry (Smith and Schroeder, 2000), large security order
imbalances (Blume, Mackinlay, and Terker, 1 989), inadequate fn
daental valuation analysis due to investor incompetence, neglect,
ador emotional swings (Oppenheimer, 1 984), investor overconfdence
ad regret (Barber and Odean, 1 999), biased reporting on companies
buse outside (and allegedly "independent") security analysts are
uer constant threat of companies withholding usefl information (and
even launching libel lawsuits) if negative statements about companies
ae made (MacDonald, 1 999b ), a short-sighted perspective on the part
of investors (Zarowin, 1 989), and general institutional psychological
factor that cause market prices to deviate from intrinsic value (Haugen,
'9). According to Summers ( 1 986), corrective arbitage of such situ
ations might prove unsuccessfl even in a wel l-developed securities
et. As a result of such mispricings, fnds are alloated irrationally
!0capitalist economies, instead of to the most efcient users.
To the situation of reduced rationality of funds allocation in the West
G

an securities market i s added the problem of increased resources

b
mg applied to security analysis (and fnds allocation) than were nec
es in the centrally planned communist capital market. A centrally
planned economy permitted decisions on fund alloation in East Ger
many t be made by a small, well-informed group of analysts, who were
teorttcally well-trained in socially usefl fnancial analysis (Auto
nkollektiv, 1 988). That compares favorably to the situation in West
e ny, where fnds are channeled to businesses by a large, less

el
.
l-nformed group theoretically composed of price speculators and

diVIduals who happen to have large amounts of wealth (through inher

ce, crime, sales ability acting ability etc ) Even when ''profes-
Sional"


. . .
t
.
managers are chosen to invest money in capttahst countries,
e evidence does not indicate more intelligent investment decisions,
1 62
THE TRIUMH OF EVIL
as money managers are generally selected based on sales ability ad
personal contacts (O' Barr and Conley, 1 992). Such a situation implies
even less rtional and less efcient investment in West Germany.
In addition, in Wester capital markets, the costs of trading and ana
lyzing the value of a security ofen result in i nvestors requiring a pre
mium retur over that normally required (Halle and Stoll, 1 989). This
liquidity premium is larger for smaller frms because of the inability to
spread fxed costs of trading and analysis over a large trding volume
(Dubosfsky and Groth, 1 986). The existence of liquidity premiums in
Western capital markets implies a higher cost of capital, especially for
smaller frms (Stoll and Whaley, 1 983 ). 1 In an efort to reduce these
liquidity premiums, an extensive fnancial infrastructure can be built
up, but the fees and commissions from the banking, brokerage, and
insurance components of that infastructure alone exceed 5% of
in some countries (Stopa, 1 999), and these deadweight costs don't even
include other major costs of liquidity trading (like diferences between
buying and selling prices), nor do they include all the costs of shopping
around for the best deal and analyzing i nvestments (Murphy, 2000).
Moreover, because of the existence of central planning in East Ger
many, greater stability in consumption there might have been expected
than in West Germany. As a result, a lower retur premium could 0
required for systematic risk as measured by a consumption beta (Ahn,
I 989), thereby magnifying the discrepancies between the costs of capi
tal in the two countries
.
It should also be mentioned that required risk premiums on securi
ties fuctuate wildly in Wester capital markets (Chan, Chen, and Hsieh,
1 985). The result is uncertainty as to the cost and availability of funds,
socially unproductive speculation on the fture course of the risk pre
mium, and more mispricing and wasted analytical resources (Mur
hy,
2000). In addition, a frther risk premium may be. required in Westem
capital markets for the variation in the risk premium (Chan, Chen, and
Hsieh, 1 985). The resulting higher cost of capital results in less invest
ment projects being acceptable and therefore lower economic grow
in capitalist countries (although the higher returs required mean faster
income growth for the rich).
There is also some evidence that rich capitalists and corporate bureau
crats are more difcult to persuade to fund innovative and productive
CHAPTER 4 1 63
long-ter investments than goverments (Der Spiegel, 1 998), as previ
ously discussed in Chapter I. In paricular, the desire to protect jobs,
sla, and the status quo contributes to the fact that capitalist corpora
tions "don't tend to be great foundations of i ndependent thinking" in the
USA (O' Barr and Conley, 1 992) or in Germany (Rhoads, 1 999). More
over, "innovative" capitalist heroes (such as Bi l l Gates) glorifed by the
Wester press often create nothing on their own but instead copy the
innovations of others and then monopolize the market through special
deals ar nged through rich relatives (and social contacts), buyouts, and
prdator pricing made possible only because of their riches (Wilson,
198a). Even tre innovators and entrepreneurs are not really made
appy by enorous amounts of accumulated personal wealth but are
mtd motivated more by the lure of "creating something," "having a
MISSion," and "connecting with other people . . . in a team" ( Wal Stret
Jeema/, 200a). Further evidence on this issue is provided by the fact
despite technology embargoes and despite having less capital,
te communist countries were fairly successfl in staying fairly close
the technological level of the richest capitalist countries (Smith,
w),ofen strictly through local development because ofthe technol-
pembaroes (Parrott, 1 985). An example of East German techno
logtcal
.
advances can even be found in their much maligned auto indus
,Whtch developed a world class car (the Trabant) in the late 1 950s
(Schroeder, 1 995), and which also designed a new car moel that was
Ye ahead of West German development in the 1 970s although East
"en
ny did not have the resources to justify frther development for
ts small market (Bauer, 1 999). Adler ( 1 980) has cited evidence indicat-
(
IDg that communist countries were able to motivate more innovation
and

.
ICtpahon) among workers, and he logically drew the conclu-
s
t
on that "
th
m
e type of production technology associated with the com-
tec

st
l
m

e of production is being engendered in the scientifc and

ogtcal revolution."
Managing
Investments

O
nce
an investment decision is made and fnanced, the project must
l
e
_anag,
cfnancial management requires monitoring of prob
--
rakmg adJustments to the plan because of changes in the envi
tives
ad undertaking proper measurement of, and setting i ncen-
or, gO
d prformance.
1 64 THE TRIUMH OF EVIL
It is ofen assumed that efciency in monitoring and changing plans
was lower in East Germany. In particular, because pricing was mor
static and centralized in East Germany, shortages were more fequent
than in West Germany, where frms often have more fexibility to corect
problems of being out of stock with marketing manipulation (McCar
thy, 1 975) and changes to the usual cost-based prices (Erdmann, 1983).
Burant ( 1 987) has also mentioned the problems in the East Germ
system of fxed prices that did not readily adjust for technological and
factor cost changes. Product black markets, hoarding, speculation, wast
age, and production stoppages (caused by machi nery breakdowns and a
lack of spare parts) thrived in this environment. Subsidies and transfer
pricing corrections were often to complicated and inflexible to com
pletely remedy these problems (Melzer, 1 983).
However, there is little evidence that the supply-demand imbalances
in East Germany caused more inefciency than the potentially more
onerous problems in West Germany. As explained in Chapter 2, the
more flexible West German pricing system created problems such a
product price uncerainty, extra time spent planning for an unknown
future, decisions made incorrectly due to lack of knowledge regarding
future prices and the aggregate economic situation, time lost shopping
around for the best price, inconvenience associated with the fnancial
incentives to wait for the next "special" or coupon, and misleading
marketing tactics that create annoying disinformation and discrepancies
between price and rational value (Furlough and Strikwerda, 1 999). A
particularly lare amount of time is lost in capitalism while negotiat
ing or bartering over the price that can range widely depending solely
on relative negotiating skills. Although some laws restricting the size of
discounts in West Germany reduce some of this inefcient use of time
for consumers, such time expenditures are still requi red for the ver
frequent inter-business purchases in order to maximize the chance of
negotiating the best possible price.
In addition, the lack of perfectly competitive markets in capitalist
countries results in prices being chronically too high to clear. As a
result, waste and inefciency such as unused industrial capacity, unem
ployment, aparment vacancies, and unpurchased and spoiled goods
historical norms (Marx and Engels, 1 988b ). The current existence in the
USA of an extraordinary number of homeless not geographically dis-
CHAPTER 4 1 65
p from a large oversupply of housing is a typically perverse case of
citalism in practice (Johnson, 1 990). A similar example of the perver
sion caused by capitalism i s the perceived need to reduce agricultural
output (or even destroy food "surpluses"), so that agricultural prices
(and profts) can be increased (with the help of a capitalist goverment),
even when there are domestic citizens sufering from hunger and mal
nutrition (Hobhouse, 1 989).
Berliner ( 1 957) bas mentioned problems i n socialist enterrises aris
ing fom managers having incentives and capacity to conduct unre
pred transactions and falsif records (MacDonald, 1 999a). However,
similar problems exist i n capitalist corporations and are likewise mini
mized in soialist enterprises with proper auditing and control through
inter comparisons (e.g., Steudtner et al., 1 988). In addition, the
oraniztional and human problems of bureaucracy, waste, and judg
mental erors existing in socialist societies (Shmelov and Popov, 1 989)
N eually prevalent in capitalist firms (Schwarz, 1 990). Moreover,

,
.corruption and bribery may ocur in goverment operations of all
ps, most such bribery is initiated by rich capitalist businesses brib
mg p r countr ofcials (Tanzi, 1 998). In addition, such activity may
ally be much more prevalent in capitalist systems, given that brib
btween business representatives is rarely prosecuted, is not always
Illegal, and is "just accepted" as a noral business activity even in well
developed (and allegedly less corrupt) economies like the USA (Gerlin,
'"
and given that "fagrant" cases of extorion (including death
P0Ufor failure to do deals) also exist even among the largest and most
P

tigious companies (Simpson, 2000). Corruption may b far more

Widespread in West Gerany where bribery (literally translated from
te Gera word "Schmiereld" as "lubrication money") i s not only
legal but also tax-deductible (Celarier, 1 995). The capitalist reforms of
Gorahev's Perestroika in the Soviet Union in the late 1 980s indicated
t
te capitalist system of controls tends to be inferior

as indicated

e larger number of administrators required, the h1gher amount

ce that results, and the compounding of problems compared to
_
.
the earlier,
more centrally-controlled gverment system (Marcy,
In add.

,
Ili
on, in East and West Germany except for small companies

!0
Ma ptentially more serious prblem of overall management
1 64 THE TRIUMH OF EVIL
It is ofen assumed that efciency in monitoring and changing plans
was lower in East Germany. In particular, because pricing was mor
static and centralized in East Germany, shortages were more fequent
than in West Germany, where frms often have more fexibility to corect
problems of being out of stock with marketing manipulation (McCar
thy, 1 975) and changes to the usual cost-based prices (Erdmann, 1983).
Burant ( 1 987) has also mentioned the problems in the East Germ
system of fxed prices that did not readily adjust for technological and
factor cost changes. Product black markets, hoarding, speculation, wast
age, and production stoppages (caused by machi nery breakdowns and a
lack of spare parts) thrived in this environment. Subsidies and transfer
pricing corrections were often to complicated and inflexible to com
pletely remedy these problems (Melzer, 1 983).
However, there is little evidence that the supply-demand imbalances
in East Germany caused more inefciency than the potentially more
onerous problems in West Germany. As explained in Chapter 2, the
more flexible West German pricing system created problems such a
product price uncerainty, extra time spent planning for an unknown
future, decisions made incorrectly due to lack of knowledge regarding
future prices and the aggregate economic situation, time lost shopping
around for the best price, inconvenience associated with the fnancial
incentives to wait for the next "special" or coupon, and misleading
marketing tactics that create annoying disinformation and discrepancies
between price and rational value (Furlough and Strikwerda, 1 999). A
particularly lare amount of time is lost in capitalism while negotiat
ing or bartering over the price that can range widely depending solely
on relative negotiating skills. Although some laws restricting the size of
discounts in West Germany reduce some of this inefcient use of time
for consumers, such time expenditures are still requi red for the ver
frequent inter-business purchases in order to maximize the chance of
negotiating the best possible price.
In addition, the lack of perfectly competitive markets in capitalist
countries results in prices being chronically too high to clear. As a
result, waste and inefciency such as unused industrial capacity, unem
ployment, aparment vacancies, and unpurchased and spoiled goods
historical norms (Marx and Engels, 1 988b ). The current existence in the
USA of an extraordinary number of homeless not geographically dis-
CHAPTER 4 1 65
p from a large oversupply of housing is a typically perverse case of
citalism in practice (Johnson, 1 990). A similar example of the perver
sion caused by capitalism i s the perceived need to reduce agricultural
output (or even destroy food "surpluses"), so that agricultural prices
(and profts) can be increased (with the help of a capitalist goverment),
even when there are domestic citizens sufering from hunger and mal
nutrition (Hobhouse, 1 989).
Berliner ( 1 957) bas mentioned problems i n socialist enterrises aris
ing fom managers having incentives and capacity to conduct unre
pred transactions and falsif records (MacDonald, 1 999a). However,
similar problems exist i n capitalist corporations and are likewise mini
mized in soialist enterprises with proper auditing and control through
inter comparisons (e.g., Steudtner et al., 1 988). In addition, the
oraniztional and human problems of bureaucracy, waste, and judg
mental erors existing in socialist societies (Shmelov and Popov, 1 989)
N eually prevalent in capitalist firms (Schwarz, 1 990). Moreover,

,
.corruption and bribery may ocur in goverment operations of all
ps, most such bribery is initiated by rich capitalist businesses brib
mg p r countr ofcials (Tanzi, 1 998). In addition, such activity may
ally be much more prevalent in capitalist systems, given that brib
btween business representatives is rarely prosecuted, is not always
Illegal, and is "just accepted" as a noral business activity even in well
developed (and allegedly less corrupt) economies like the USA (Gerlin,
'"
and given that "fagrant" cases of extorion (including death
P0Ufor failure to do deals) also exist even among the largest and most
P

tigious companies (Simpson, 2000). Corruption may b far more

Widespread in West Gerany where bribery (literally translated from
te Gera word "Schmiereld" as "lubrication money") i s not only
legal but also tax-deductible (Celarier, 1 995). The capitalist reforms of
Gorahev's Perestroika in the Soviet Union in the late 1 980s indicated
t
te capitalist system of controls tends to be inferior

as indicated

e larger number of administrators required, the h1gher amount

ce that results, and the compounding of problems compared to
_
.
the earlier,
more centrally-controlled gverment system (Marcy,
In add.

,
Ili
on, in East and West Germany except for small companies

!0
Ma ptentially more serious prblem of overall management
1 66 THE TRIUMPH OF EVIL
skills), there existed the agency problem of motivating non-owner man
agers and workers to achieve organizational goals such as improving
efciency (Jensen, 1 986). In both East (Steudtner et al., 1 988) and West
(Perridon and Steiner, 1 988: 344-367) Germany, simi lar variables wer
used to measure, motivate, and reward good performance. For instance,
actual revenue and proftability levels achieved were exami ned in bth
countries, and special emphasis was placed i n East as well as West
Germany on cost reductions (Kostensenkungen) and retur on invest
ment (Rentabilitaet). I n addition, in both countries, the performance
measures were compared to past performance, to competitors' perfor
mance, and to targeted results. Actual performance above expectation
was ofen rewarded with bonuses and recognition, while sub-par per
formance could result in demotion.
In East Germany, the ability to compensate managers for goo perfor
mance was limited by ideological directives that restricted diferences
in pay (Hof, 1 983). I n addition, job security rules inhibited laying of
managers and workers for poor performance (Thuet, 1 985). However,
similar limitations also existed in most companies i n West Germany,
where the labor force is heavily unionized (including a large porion
of white-collar workers).
Where incentive systems do exist in capital
ist frs, they are usually of a monetary form that can be manipulated
for personal gain to the detriment of business or soiety as a whole
(Schwartz, 1 991 ). For instance, employees ofen have a greater incen
tive to play ofce politics than perform productive work in capitalist
systems (Sherman, 1 993). In addition, commission salespeople ofen
"push" overpriced, unnecessary, and poor quality products that fe
quently have no positive value to the consumer (e.g., Shapiro, 1 994).
One German high-tech industri alist bluntly summarized the capitalist
world with the statement, "Life is selling" (Orth, 1 998).
The ofen somewhat arbitrary nature of capitalist pay-incentive
awards can cause wasteful frictions, rivalries, jealousies, frustration,
and short-sighted behavior that is counter to both company and soietal
interests in the long term (Murphy, 1 989). Al though the existence of
stock incentive plans in West Germany can theoretically help to enhance
the motivation to work toward a common goal of maximizing the com
pany's stock price (Diamond and Verrechia, 1 982), it is not clear that
maximization of stock price maximizes company value and efciency.
CHAPTER 4 1 67
For instance, DeFusco, Johnson, and Zor ( 1 990) have found evidence
that stok option plans only provide an incentive to transfer wealth from
bndholders to stockholders and do not result in any increases in frm
efciency. In addition, Larcker ( 1 983) has found empirical evidence
that stock incentive plans are no more efective than other long-term
incentive plans in increasing stock prices.
Moreover, because stok prices are not determined by insiders with fll
inforation, stock prices ofen behave extremely irrationally (Krueger
ad Kennedy, 1 990), may fluctuate around short-ter events and igore
long-ter prospects (e.g., DeBondt and Thaler, 1 985, and Jacobs and
Lev, 1 988), can deviate greatly from true value for signifcant periods
ttime without detection (Summers, 1 986), and can therefore provide
distorted signals for performance puroses (Froot, Scharftein, and
Stein, 1992). Because such distorions in stock prices exist in Germany
4 well as in other countries like the USA (Schiereck, De Bondt, and
Webr, 1 999), compensation based on such prices can lead to distorted
prorance by employees. Even i fthe common goal of company valu
ation maximization could be attained, individual company maximiza
tion is ofen inconsistent with value maximization of a larger whole
(Eiteman, Stonehi l l, and Mofett, 1 998) and is frequently at odds with
the welfare of society (Marx and Engels, 1 988a ). For instance, even the
capitalist philosopher Adam Smith stated that proft-maximizing busi
ness owners are ofen naturally engaged in a "conspiracy against the
public, or in some contrivance to raise prices" (Strobel and Peterson,
1999).
Regardless of whether employees are paid in stock or cash, it should
':b
mentioned that promotions and the highest compensation in cap
Ita
hst countries are ofen allocated to those who are best at playing ofce
plitics as opposed to those who are the most prouctive (Schwarz
iWhat club(s) a person belongs to can also factor in as being very
_

nt in determining pay and employment status (Knight, 1 983).

P
ll
a
hsm, jobs themselves can take a great deal of time just to fnd
||
they can be found at all) and are typically alloated based on physical
uty, sales skill, self-promotion, and personal contacts instead of on
.
ad productivity (Los Angeles Tmes, 1 996). 1t isn't what you know
ut who you know that ofen counts most in capitalism (Sesit, 1 995).
Although West German capitalism was somewhat more regulated than
1 68 THE TRIUMPH OF EVIL
in other countries (like the USA), about 40% of all West Germans got
their jobs through social connections such as via relatives (Wegener,
1 991 ), with the percentage being significantly higher for private com
pany positions than for goverment jobs (Noll, 1 985), and with better
positions being obtained by those who used their social connections to
obtain their jobs (Noll, 1 984).
Although about 40% of all East Germans also used social contacts
to choose where they were going to work, there was no signifcantly
higher prestige and pay for employment obtained through connections
i n East Germany (Voelker and Flap, 1 999). Since jobs (and regulated
wages) commensurate with a person's skill and education were efec
tively guaranteed by the East German state (so that there were no addi
tional job search costs associated with not having social contacts in
the right places), the capitalist concept of "social capital" and artifcial
"contact networking" had far less material employment value in East
Germany (as contacts in East Germany were used merely to allow
people to work with others they already knew and liked, and not to
ration of scarce jobs). Perhaps as a result of knowing that they wer
working for the good of society as a whole (as opposed to slaving to
maximize the profts of the rich), social pressure and awards to work
together for a common goal were stronger in East Germany (Hof, 1 983).
As a result, an atmosphere existed that permitted greater cooperation
among workers than in West Germany, with most East German work
ers welcoming innovation and new technology, and with 5 times M
many East German workers fnding their work increasingly interesting
as those fnding it less so over time (Adler, 1 980).
EMPIRICAL CoMPARISON OF EFFICIENCY
The analysis of practical fnancial decision-making indicates that the
East German system may have been superior for purposes of investment
decision-making, funds alloation, and fnancial management efciency.
Some evidence on the overall comparative efciency of the two systems
can be obtained from national economic growth statistics reported
in
Das Statistische Jahrbuch der Deutschen Demokratischen Republik and
in the I MF's Interational Financial Statistics. As explained by Stolper
( 1 960), "the diferences in the concept ofnational income between East
and West Germany are surprisingly small."
CHAPTER 4
1 69
Comparative Aggregate Economic Performance
In 1 989, Net National Income per capita in West Germany was 3 1 ,774
West German Marks, while Net National Income per capita. in East Ger
many was 1 6,7 1 2 East German Marks. Although the East German Mark
was inconverible, research indicates that it had a purchasing power
eual to between 75% (for the reasonably afuent) and 1 50% (for the
less afuent) of the West Geran Mark for average consumers in the
ely 1 980s (DIW, 1 984). The average higher purchasing power of the
Est German Mark was confrmed when average prices rose by about
13.8%-8.6%=5.2% more i n easter Germany between 1 989 and 1 99 1
when the East German Mark was replaced with the West German Mark
(ad prices in easter Germany moved close to the market levels in
wester Germany), as doumented by various West German profes
sional research estimates (Osmond, 1 992). Given the subsequent phas
ing out of rent controls, and given other factors that caused consumer
prices in easter Germany to rise another 1 6% more than in West Ger
may between 1 99 1 and 1 996 (Statisticshes Bundesamt, 1 997), it can
Massumed that the average purchasing pwer of the East German Mark
was e
qual to at least 1 . 1 5 West German Marks in 1 989.
2
Defating the 1 989 West German incomes by the average 1 5% higher
prices that existed in West German Marks, East German income per
cpita appeared to be about 40% lower than in West Germany in
1989.1 However, since the East Geran National Income fgures do
not include some ''unproductive" services that mincorporated into the
West German fgures, as noted by Stolpr ( 1 960), a more comparable
National Income for East Germany might be over 1 0% higher than
P[m(Collier, 1 985), making East Geran income per capita about
213 that of West Germany. On the other hand, given that a larger number
:|East
Germans were in the work force because a larger percentage
:|the females (over 60% of the female population) was employed
(Schwarer, 1 999) and given that unemployment did not exist in East
Gerany, the disparity in income per employed worker was p

obably
gter at about 50%. A simi lar conclusion was reached by a maJor eco
nomic research institute in West Germany (Handelsblatt, 1 990).
G
Neve

e1ess, the cause of the disparity between East and West

era mcomes was a fnction of the post-war treatment of the two
Ger th antes and can not b traced to diferent levels of efctency H e
1 70 THE TRIUMH OF EVIL
two systems. As previously mentioned, East Germany had to pay ove
1 00 billion Marks to the Soviet Union after the war (Merkel and Wal,
1 991 ), while West Germany was receiving substantial foreign aid (Ma
shall Plan) fom the USA that largely ofset its minor payments for Nai
Germany's war crimes (Apel , 1 966). Studies have indicated that rpa
rations (such as those paid by France afer that country's defeat in N
1 871 war that helped fnance Germany's industrialization) do lead to
a permanent decline in the relative level of economic prosperity of the
paying country, as well as typically inhibiting economic growth rte
because of lower levels of investment and depressed morale (Gavin,
1 992).
With income levels in West Germany already substantially higher
than in East Germany, approximately 1 5% of the population of Et
Germany, or about 3 mill ion people, chose to move from East to West
Germany in the 1 950s, while only about a half million Germans move
from West Germany to East Germany (Apel, 1 966). The emigrants pr
vided fher wealth gains in the West and losses in the East (Beh,
1 985), with the cost to East German soiety as a whole of the net emi
grations (in terms of lost taxes and investment, i. e. , the output that the
emigrants otherwise would have created for East German society M
a whole net of the emigrants' own expected consumption) being esti
mated at another 36 billion Marks (Apel, 1 966). This fgure combined
with the reparations losses of I 00 bil lion Marks represented an enor
mous value in the 1 950s and would have grown to an even larer sum
today i f invested at normal rates of retur.
In particular, given an average real growth in Net National Product of
4.5% on an average aggregate investment equal to 27% of Net National
Product between 1 961 and 1 988,4 East Germany was able to ear a
rte
of ret on its investments equal to 1 7%, which is similar to the
East
German retur on investment estimated over diferent time priods by
Mueller, Murphy, and Sabov ( 1 993), Naumann and Truempler ( 1 990),
and Mueller ( 1 978). Assuming that East Germany had been able to
invest the 1 36 billion Marks at that normal 1 7% rate of ret staring
as late as 1 961 , it would have grown to a value of 1 36( 1 . 1 7)28= 1 1 ,034
billion Marks by 1 989, or over 1 1 tri llion Marks (over $6 trillion).
Assuming just the 1 7% interest rate on this money was fnally paid to
its people in 1 989, Net National Income per capita in East Gennany
CHAPTR 4
1 7 1
would have been higher by 1 1 .034x. l 7/.00001 6= 1 1 7,236 Marks annu
ally therafer. As a result, East German incomes would have then been
over four times the level of West German incomes per capita in 1 989, if
ter had been nominal compensation in 1 961 for all the diferent costs
asoiated with post-war reparation payments (i.e., if West Germany
ha pid East Germany for the share of the reparations payments that
it was rally morally obligated to pay). If compensation had only been
made for the nominal reparations payments (and not for the emigration
rlate losses), East German income per capita would have still grown
to over 3 times that of West Germany by 1 989.
Another way to evaluate the efect of reparations is to assume that the
average annual 1 00 billion/9=1 1 billion Marks ofEast German National
Income paid in reparations between 1 945 and 1 953 (see Chapter 2)
was invested each year at a ra/ 1 7% interest rate (which is well below
what it probably could have eaed given the severe shortage of capi
tl in East Germany at that time caused by the reparations), and then
asume a 1 7% rate of retur on this extra wealth accumulated by 1 953
wa eared and paid out to East German citizens as higher wages that

ould b consumed and saved in normal proportions thereafer (so that

It would also grow afer 1 953 at the same rate a the rest of East Geran
National Income). The resul t would have been East German National
Income per capita in 1 953 that would have been about 2. 5 times high
M
.
otherwise and would have thereby resulted in East German wages
bmg similar to (and perhaps slightly in excess of those in West Ger
my
at the time. That fact would have likely resulted in far less East
Ge

s emigrating to West Germany, thus enabling East GeOy to

avo substantial prtion (if not all) of the emigation-related loss of
hlhon Marks. Because real economic growth was historically faster
Est Germany than in West Germany in the 1 950s even with those
-Est German income per capita would have no doubt been higher
.
n lWest Germany in 1 961 , especially since West Germany's own
10
.
me per capita would have been lower as a result of it not having the
MI lions of valuable East German emigrants they were able to exploit.
ven faster economic growth in communist East Germany thereafer

se of
!
he greater efciency of the system, as will be documented
to
Pl
r
l
call
y P this section for the post- 1 961 situation that was not dis-
by reparations and emigration losses), East Geran income per
1 72 THE TRIUMH OF EVIL
capita would have far exceeded that in West Germany by 1 989 (almost
double). In that situation of fairness in reparations payments, West Ger
many might have been motivated to build a wall to keep its own work
ers from emigrating to the higher incomes of East Germany (especially
given the higher quality of life in East Germany with respect to nonf
nancial factors, as documented in Chapter 2).
However, East Germany was never compensated for i ts huge repar
tions-related losses, and so it constructed the Berlin Wall in 1961 to
stem its already considerable economic losses. As a result, the resettle
ments stopped after 1 961 , and the diferent economic systems in the two
Germanies were al lowed to fnction semi-isolated from each other.
In this separated environment between 1 961 and 1 989, real Et
German Net National Product per capita increased by an average 4.5%
whereas real West German Net National Product per capita increased by
only 2. 7% per year. For this comparison, the National Income accounts
reported in constant prices were used,5 so that the nominal growth fg
ures were efectively deflated by infation (averaging 0. 5% and 4.0%
for East and West Germany, respectively). 6 Backcasting the 1 989 esti
mated value of the East German Mark (at 1 . 1 5 West German Marks in
1 989) by the relative aggregate economic inflation rates repored for
the two countries (the 0.5% and 4.0%, respectively) indicates that the
East German Mark had aggregate purchasing power equal to 0.44 West
German Marks in 1 961 . 7 These results imply per capita East German
income was about 2/5 that of West Germany in 1 961 compared to
almost 2/3 in 1 989. The latter two ratios are identical to those reprted
by the Wester researchers Merkel and Wahl ( 1 991 ) and Gregory and
Stuart ( 1 995), respectively, for the two diferent time periods. 8
Analysis of Variance (ANOVA) tests revealed that the higher eco
nomic growth rates for East Germany between 1 961 and 1 989 were st
tistically signifcant from those of West Germany at the .00 I level (with
a t-statistic of 4.4). In addition, as previously hypothesized, income and
consumption per capita in the planned East German economy had I0wr!
annual standard deviations (of 1 . 1 % versus 2. 1 % for income, and 2. 1 %
versus 2.6% for consumption), with Chi-squared statistics of 53.5 and
43.9, respectively, indicating the diference to be statistically signifcant
at the .005 and .05 levels.
Moreover, even in the I 0 years before its collapse, East German eco
CHAPR 4 1 73
nomic growth was faster than in West Gerany, at 4.0% versus 2. 0%,
rspctively. A listing of economic grwth rates in East Germany in its
fnal decade is provided in the following Table 4 along with the com
pative numbers for West Germany:
TABLE 4
REAL ECONOMIC GROWTH IN EAST AND WEST GERMANY
BEFORE END ( 1 980-89)
D W W W 1 W 1 W W
Est 4.4% 4.8% 2.6% 4.6% 5.5% 5.2% 4.3% 3.3% 2.8% 2. 1 %
West 1 .8% 0.0% -1 .0% 1 .9% 3. 3% 2.0/ 2.5% 1 .5% 3.7% 4.0
Sue: Statistisches Amt (1 90) and Statistisches Bundesmt (1 992).
These aggregated results occurred despite higher soial spending and
lower investment spending in East Germany than existed in Wester
cpitalist countries (Schwarzer, 1 999), despite the advantages that West
Gen
y
had in superior access to the capital, trade, and technology
of the richer Wester countries, and despite the substantially higher
milita expenditures that East Gerany felt obliged to make (6-8%
ofNational Income versus only 3% in West Germany) to defend itself
(Merkel and Wahl, 1 991 ).9 Thus, aggregated statistical evidence indi
cates that the East German system was more efcient in spurring eco
nomic growtb.
1o
Causes of Collapse in the East
Like the Berlin Wall, the cause of the col lapse of East Germany can be
ted to the income disparities in the two countries (Dieckmann, 1 991 )q
\:e
x
plained in the previous subsection, the income disparities resulted
om
.
the contrasting postwar treatment by the ocupying victors (i.e.,
epte aster economic growth, East Germany never caught up). Even
&realer mcome disparities existed for skilled positions, and heavy ceo-
no

.
filc mcenhves were provided by the much larger and wealthter West

e
rma
n
y
to East Germans for migrating to the West (like above-average
IDcome,
.
preferential housing, and enormous guaranteed loans). This
t
h
eono
m
c situation not only induced massive migrations to the West and
ereb
y sabota b) b

ged the East German economy (Murphy, 1 990 , ut tt

en

bled West Germany to market capitalism as the religion of pros

ty,
Just as it continues to do (Christ, 1 991 ). With the use of heavy
est Geran propaganda that porrayed the communist system as infe-
1 74 THE TRIUMH OF EVIL
rior, enough East Germans were convinced to vote in March 1 990 for
an end to their system. The ruling conservative parties in West Germany
also used a combination of promises and threats to ensure electoral suc
cess. For instance, 1 0% annual real economic growth in the frst two
years afer unifcation was forecast i f the conseratives won (8erhact
Allgemeine, 1 990b ). In addition, because the prmission of the conser
vative ruling parties in the West German parliament was needed for
any unifcation agreement or aid ( Wal Street Joural, 1 990), they had
a great deal of leverage to ofer rewards (like a I : 1 exchange rate) for
a vote favorable to capitalism and "free trade" (Nelson and Du Bois,
1 990). 1 1
A fnal factor infuencing the March 1 990 election results was a ver
destructive West German currency strategy. In retur for limited eco
nomic aid, the West German goverment persuaded the East German
goverment to change the ofcial exchange rate from 1 : 1 to 3 East
German Marks for 1 West German Mark in January 1 990 and to elimi
nate strict import and export controls. This action efectively reduced
East German wealth and income by 2/3 (Murphy, 1 992a) and totally
demoralized the East German population, as Cote ( 1 990) illustrates.
Then, in the week before the March election, the ruling West German
party promised a return to the 1 : 1 exchange rate, if it was elected (Fisher,
1 992). ' Many lef-wing East Germans indicated that they voted for the
right-wing political parties merely so that the money would come (Dcr
Tagesspiegel, 1 990d).
The importance of expensive marketing in defeating communism
should not be underestimated. Through efective advertising, di stribu
tion, sales manipulation, and economic clout (Von Dohnanyi, 1 991 )
and through gross exaggeration of any quality problems for commu
nist products (Zeitmagazin, 1 992), a superior "Wester" image was cre
ated (Fox, 1 991 ). As a result, despite the fact that East German pro
ucts were frequently demonstrated to be superior in unbiased scientifc
analysis (like taste tests without brand names), more expensive West
German products were preferred (Labs, 1 991 ). Also contributing to the
rapid increase in West Germany's market share of the East Germa
market shortly afer it was opened up in 1 990 was the normal practice of
capitalist penetration pricing (McCarthy, 1 975), whereby West German
exports to East Germany were priced low enough to bankrupt their
CHAPTER 4 1 75
Et German competition (Der Spiegel, 1 993a). Once the East German
fins (which, in addition to sufering image problems, also had inad
euate liquidity, experience, and preparation for the capitalist competi
tion) were bankrupted, prices were raised to West German levels (in
orer to maximize West German corporate revenues and profts). Some
evidene of this phenomenon can b found in the fact that prices rose
less rpidly in easter Germany than in wester Germany in 1 990,
whereas infation in easter Germany was over 1 3% in 1 991 compared
to just 4% in wester Germany afer the widespread bankruptcy of East
Geran frms, which was refected in the 40% decline in economic
output in easter Germany in 1 990 and 1 99 1 (Statistisches Bundesamt,
.,
Evidence on the Economic Inefciency of Capitalism In the
East
Despite their current popularity, past capitalist reforms in poorer
cuntries have never produced any evidence of a material increase in
efciency (Seib and Muray, 1 99 1 ), neither for Easter Europe (Gey
ad Quaisser, 1 989) nor for other areas of the world like Latin Amer
ica
{bisch, 1 982). The indications from the most recent capitalist
rfors in Easter Europe have demonstrated even more negative indi
ctions. In paricular, as previously documented, GOP fell by over 40%
over the interval 1 990-95 in the former communist countries of Easter
Eurpe and the USSR.
In

ter
Germany, the capitalist rforms also led to a catastrophe
desptte hundreds of billion of Marks in aid fom wester Germany.
F
.
e
or mstace, output was estimated to have fal len by about 1 0% H
ter
Germany in 1 990 (Kempe, 1 99 l a) and substantially more in

(Aeppel and Roth, 1 991 ), although transfer payments (like unem

p oyment checks) fom the wester German goverment amounting to
`'
of the output of easter Germany (Kempe, 1 99 1 b) increased their
mcome substantially above the level under communism (and thereby
k
et

em content enough not to rebel). Production fel l by more than

l0 the
1 990-91 interval (Kempe 1 99 1 b) GNP fell by over 40%
ov t
'
'
.
_r
at short time period (Osmond, 1 992), and unemployment H
Germany reached 40% if the mass of par-time workers were
_a unemployed. In addition, despite sizable unemployment
k
s and higher wages for those able to fnd work, early surveys indi-
1 72 THE TRIUMH OF EVI
capita would have far exceeded that in West Germany by 1 989 (almost
double). In that situation of fairess in reparations payments, West Ger
many might have been motivated to build a wall to keep its own wor
ers from emigrating to the higher incomes of East Germany (especially
given the higher quality of life in East Germany with respect to nonf
nancial factors, as documented in Chapter 2).
However, East Germany was never compensated for its huge repar
tions-related losses, and so it constructed the Berlin Wall in 1961 to
stem its already considerable economic losses. As a result, the resettle
ments stopped afer 1 96 1 , and the di fferent economic systems in the two
Germanies were allowed to function semi-isolated from each other.
In this separated environment between 1 961 and 1 989, real b|
German Net National Product per capita increased by an average s
whereas real West German Net National Product per capita increased by
only 2.7% per year. For this comparison, the National Income accounts
reported in constant prices were used, 5 so that the nominal growth fg
ures were efectively deflated by infation (averaging 0.5% and -
for East and West Germany, respectively).6 Backcasting the 1 989 est
_
I
mated value of the East German Mark (at 1 . 1 5 West German Marks I
1 989) by the relative aggregate economic infation rates repored for
the two countries (the 0.5% and 4.0%, respectively) indicates that the
East German Mark had aggregate purchasing power equal to 0.44 West
German Marks in 1 96 1 . 7 These results imply per capita East German
income was about 2/5 that of West Germany in 1 961 compared to
almost 2/3 in 1 989. The latter two ratios are identical to those repre
by the Western researchers Merkel and Wahl ( 1 99 1 ) and Gregory
and
Stuart ( 1 995), respectively, for the two diferent time periods.8
Analysis of Variance (ANOVA) tests revealed that the higher eco
nomic growth rates for East Germany between 1 961 and 1 989
were s
tistically signifcant from those of West Germany at the .00 l
_
level (wit
a t-statistic of 4.4 ). In addition, as previously hypothesized, mcome 8
consumption per capita in the planned East German economy had lowr
annual standard deviations (of 1 . 1 % versus 2. 1 % for income, and 2.
versus 2.6% for consumption), with Chi-squared statistics of 53. 5 8
43.9, respectively, indicating the diference to be statistically signifcan
t
at the .005 and .05 levels.
Moreover, even in the 10 years before its col lapse, East German eco-
CHAPTER 4
nomic growth was faster than in West Germany, at 4.0% versus 2.0%,
rspctively. A listing of economic growth rates in East Germany in its
fnal decade is provided in the following Table 4 along with the com
pative numbers for West Germany:
TABLE 4
REAL ECONOMIC GROWTH IN EAST AND WEST GERMANY
BEFORE THE END ( 1 980-89)
D O L Q ]O W D D
East 4.4% 4.8% 2.6% 4.6% 5.5% 5.2% 4.3% 3.3% 2.8% 2. 1 %
West 1 . 8% 0.0% -1 .0% 1 .9% 3.3% 2.0/ 2.5% 1 .5% 3.7% 4.0/
Source: Statistisches Amt (1 990) and Statistisches Bundesmt (1 992).
These aggregated results occured despite higher social spending and
lower investment spending in East Germany than existed in Wester
capitalist countries (Schwarzer, 1 999), despite the advantages that West
Gennany had in superior access to the capital, trade, and technology
of the richer Wester countries, and despite the substantially higher
militar expenditures that East Gerany felt obliged to make (6-8%
of National Income versus only 3% in West Germany) to defend itself
(Merkel and Wahl, 1 99 1 ). 9 Thus, aggegated statistical evidence indi
cates that the East German system was more efcient in spurring eco
nomic growth.

Causes of Collapse in the East

Like the Berlin Wall, the cause of the collapse of East Germany can b
trced to the income disparities in the two countries (Dieckmann, 1 991 ).
As explained in the previous subsection, the income disparities resuted
from the contrasting postwar treatment by the occupying victors (t.e.,
despite faster economic growth, East Germany never caught up). Even
grater income disparities existed for skilled positions, and h

vy OU
nomic incentives were provided by the much larger and wealthter West

e
n
any to East Germans for migrating to the West (like above-avera

e
mcome, preferential housing, and enorous guaranteed loans). Thts
economic situation not only induced massive migrations to the West an
thereby
sabotaged the East Geran economy (Murphy, 9-0b ), but tt
also enabled West Germany to market capitalism as the rehgton of pros
prity, just as it continues to do (Christ, 1 991 ). With the use of h

avy
West Geran propaganda that porrayed the communist system as mfe-
1 76 THE TRIUMH OF EVIL
cated only a third of the population in easter Germany felt better of
economically than before (Junge Welt, 1 991 }. ' Even afer wester Ger
many had poured over $1 00 billion annually into eastern Germany fom
1 990-96 (equal to about half East Germany's pre- 1 989 Gross National
Product), the economy of easter Germany remains a disaster zone that
requires simi lar continued high welfare payments from the west just t
maintain a minimum standard of living (Rohwedder, 1 996).
Despite the ending of the lare special subsidies paid to easter Ger
mans for fleeing to wester Germany and despite the heavy economic
aid now being given to easter Germany, the number of Germans fee
ing fom the easter part to the wester part continued to run ove
1 0,000 per month into the early 1 990s (which matches pre- 1 960 levels),
and this figure did not include the nearly one million easter Gennas
who commuted to jobs in wester Germany daily in the early 199s
( Wochenpost, 1 992b). However, noneconomic factors as well te
dismal economic conditions contributed to the dissatisfaction and desir
to leave the easter par of Germany. For instance, Garrettson (1991)
compared the situation in easter Germany in the early 1 990s to the
souther United States afer the American Civil War: the area wM
fooded with opportunistic West German "carpetbaggers" (like consul
tant and fnancial swindlers) seeking "shameless exploitation" of te
easter Germans, who had limited knowledge of the New Order ad
who were persecuted for any part they may have played in the old
system.1 4
Nonfnancial Considerations
The analysis in this chapter so far has focused totally on fnancial
efciency. However, a complete comparison of two systems and living
standards should include not only monetar and consumption fgur
s
but also qualitative factors like political freedom, environment, and
other factors not incorporated into economic output (Lipp and
Hees,
1 983).
For instance, the higher level of pollution in East Germany (Buck,
1 996) should be accounted for. One possible methodology is to t
e
into consideration the fact that West Germany typically spent about 1 %
more of National Income on the environment than East Germany (Welf
ens, 1 992), assume this 1 % diferential could be eliminated by reducing
CHAPT 4 1 77
pructive East German investment by that 1 %, and then reduce real
Est Genan economic growth by the 1 % times the typical 1 7% retur
on Est German investment. The impl ication is that real East German
gw may have been overstated by about 1 %x. 1 7=. 1 7% per year
(although it would remain almost 2% higher than in West Germany).
The social disutility of consumption good shorages and black mar
kets in East Germany should also be considered. Although some of this
disutility could b avoided through the use ofExquisit shops where high
quality goods in short supply were sold for high prices denominated in
Est Genan Marks (Der Spiegel, 1 962, 1 987), some negative util ity
may have remained as a result of deviations between price and value
(Feiwel, 1980). However, as explained in Chapter 2, these qualitative
disvantages of communism were probably more than ofset by vari
ou oious capitalist factors such as general consumption uncertainty
rlated to marketing manipulation. For instance, price bickering, price
shoppi
ng, and waiting for the next "spcial" or coupn may create the
se (or even a higher) level of disutility as product shortages in East
Genany. Although there was less time wasted on price negotiation in
est Gennany than in other countries like the USA for big ticket items

car sales (Sedgwick, 1 993), capitalist marketing still created sig

f
lcant annoyances to consumers. In paricular, the negative utility of
nusleading marketing tactics that can create undesirable disinformation,
urainty, and discrepancies between price and value in capitalism
(F

lo

g
h
and Stirkwerda, 1 999) is so great that many people expend
a Signifcant amount of efor and money to avoid it (Kaufman, 200).
l

hough some West Germans may enjoy price shopping and adver
hsm g, It l5 also tre that some East Germans enjoye searching for
(ad fnding) scarce items, playing the black markets, and innovating in
cs
es of shorages.

,
unl
la
r
ly, the freedom from high rates of crime and drg usage, the

om fm unemployment anxiety, and the freedom fom life sus

mmg
money anxieties {through low stable prices for essentials, fee
b
elt
h
c
a
, and a secure soial security system) in East Germany should
_
measured against the limited political feedom there (Burant, 1 987).
t

-
1 990, I conducted a limited surey of emigrants fom East

est
Germany in an attempt to compute values for the some of
quarta

hve factors. However, harassment and threats from the West

1 78 THE TRIUMPH OF EVIL
German secret police hindered eforts sufciently to prevent prour
ment of a large enough sample to conduct statistical analysis (only !
surveys were completed before I was blatantly told that there would b
no further cooperation, and that I was endangering myself and anyone
involved in the survey). The l imited sample collected did indicate emi
grants would on average be willing to pay 3 . 1 3%, 6. 1 5%, 6. 82%,
1 . 89%, and 3.05% (cumulating to 21 .04%) of their annual West Geran
income to eliminate unemployment, drugs, crime, uncertain prices, and
life-sustaining money anxieties (like for food and shelter) in West Ger
many, respectively. 15 The emigrants were found on average to have been
willing to have paid 3. 06% of their East German income in retur for
free elections in East Germany according to Wester standards.
Separately, the emigrants also were found to have been willi ng to pay
an average 3.63% of their East German income to eliminate the Est
German secret police. This number may be much higher than for most
East Germans, most of whom were not harassed by the Stasi for want
ing to leave the country (Henke and Engelmann, 1 995). In addition, a
similar question on the West German secret police was unfortunately
not included in the survey (my own neglect in this respect resulted from
me still being partially under the incredibly strong infuence of Wester
propaganda about the "ki ndness" of the West).
From my personal experiences in East Germany prior to and during
the revolution, from stories from individuals, and from anticommunist
books on the subject, such as by Gauck ( 1 991 ) and Furian (1 991 ), the
East German secret police appears to b less heinous than the West
German secret police, whose organization, leaders, agents, and laws
were inherited from Hitler's fascist Germany (Schulz, 1 982). Although
both secret police forces tend to come into play only when one bas
the "wrong" political opinion, the West German secret police probably
operates more negatively, as explained in Chapter 3. For instance,
the West German secret police may be much more active in opening
mail without justification (Berliner Allgemeine, 1 990a) than their East
German counterparts ever were (Diedrich, Ehlert, and Wenzke, 1 998
)
.
In addition, the total extent of their other il legal activities like engaging
in arms smuggling activities ( Wochenpost, 1 991 ) and harassing peaceful
environmentalists and lefists in West Germany (including tailing, infl
trating organizations with spies, and spreading information to da
mage
CHAPTER 4
1 79
te caers and personal lives of people with the "wrong" political opin
ion) is unknown (Der Spiegel, l 992b, l 993b ), but the number of vic
tims of West German secret police harassment is defnitely in the mil
lions (Schulz, 1 982). It is possible that domestic spying, harassment,
ad assassinations by the secret police in "fee" countries like West
Gerany may exceed that of the former easter bloc countries, just as
it may in the USA itself (Cockbur, 1 993). A 1 993 survey is consistent
with the latter hypothesis, as it indicated that more East Germans felt
sfe fom encroachments by the state in their lives in 1 988 under East
Gern goverment rle than they did under united West German gov
erment rle in the 1 990s (Northof, 1 995).
Moreover, the socially undesirable predominance in pure capitalism
of naed self-interest and monetarization of personal worh, family,
huma relationships, and life itself should also be factored into the anal
ysis (Marx and Engels, l 988a). Besides contributing to huge black mar
kets for sex (Falck, 1 998), narcotics (Dietz, 1 983), weapons (Schmidt
Eenbom, 1 995), and tax evasion (McGee, 1 999) in West Germany,
tes factors also contribute to a much higher level of social dissatis
faction, sexual misuse of children and women, and violence in capital
ist countries (Noreutsche Neueste Nachrichten, 1 992). Although some
of these capitalist variables might have positive utility to some pople
(sch as to perverts and criminals), and although monetary consider
atto
.
ns also existed to a lesser degree in East Geran life, the relative
deirbility of such variables might signifcantly afect conclusions on
relative quality of life and living standards. In addition, a nonfnancial
a
alysis of relative living standards should also incorporate an evalua
.of the fact that the communist East German system created a "nour
lhm

" cultural life about which Olshausen ( 1 996) states, "Those who
hved 1t do miss it."
.
The superiority of the communist system with respect to nonfinan
Ciaconsiderations is frther verifed in a 1 999 survey of East Germans
which indicated that, despite a signifcantly higher standard of living
afer the
merger with the richer West Germany (and despite greater
tvel fedom), over 40% of East Germans were happier under the old
cor .
.
unlst system (CNN, 1 999a). The superiority of commurnsm on
nofnanc
1
1

'ty 'f

Ia
ISSues would have reinforced its financta supenon t
t
Gerany
had not had such adverse postwar treatment.
THE TRIUMH OF EVIL
Outlook for Reform
An alterative to the capitalist solution for Easter Europe might be
politically-reformed socialist system. Political reforms relating to pres
and election feedoms actually might further enhance the efciency of
a centralized system. Such reforms mi ght stimulate the fow of innova
tive ideas and reduce the possibility of an inept and/or corrupt cental
planning commission fom becoming entrenched and/or working for
personal gain as opposed to societal goals (Gey and Quaisser, 1 989)
. 1
6
Such political reforms would, however, also necessitate some eco
nomic reforms. For instance, the opening of the borders in East Ger
many i n 1 989 created a ver real danger that the countr would 0
cheaply sold to West Germany through the migration of welt-trined
and well-educated East Germans to the higher-paying jobs in the West
and through the sale of subsidized East German goods and wealth via a
ridiculously cheap exchange rate. As a result, a wage and price refor
of the East German system was unavoidable. The lifing of some restric
tions on wage diferentials might have also enhanced incentive systems,
and a more fexible pricing system might have also created the ground
work for a more efcient fow of goods and services. The possibility
of expanded trade, capital, aid, and technology from the West becaus
of such reforms might have provided a further impetus to growth (Dct
Tagesspiegel, 1 990a). However, the fact that reforms cause uncertainty
and thereby inhibit the infow of benefcial foreign capital should also
have been considered (Reuter, 1 989). An efective framework for refor
that would have preserved stability (and the advantages of communism)
has been described by Murphy ( 1 992a), and details for the German case
are provided in the next chapter.
LH11LK J
AN APPLIED INVESTIGATION INTO A PLAN
FOR EASING THE TRNSITION TO ECONOMIC
COMPETITIVENESS USING EAST GERMANY AS
AN EXMPLE
Although the West German goverment originally forecast economic
prosprity for all (including equal wages and very low unemployment)
a rsult of winning the vote for the annexation of East
.
Ge

any
.
on
1ts own tenns in 1 990 ( Ostseeeitung, 1 990a), the economtc mfchn
of Gerny in 1 990 actually led to a large drop in econonuc achvt
by over 40/ in the easter part of the county (Kempe, 1 991 b). In addi
ton, despite wealth transfers from the wester par of Germany that
have accumulated to almost one trillion Marks (over $500 billion), the
prblems continue, with nearly half of easter German income still rep
rting transfer payments fom wester Gerany in 1 996 (Rohwd
der,
1996). While real output per capita in East Germany before unifi
ction wa 2/3 of that for West Germany (Gregor and Stuar, 1 99},
ad
may even have been over 80% of West Geran output per captta
acoring to some estimates (Summers and Heston, 1 988), output per
cpita in the
easter part of Germany is now only about 1 /2 thaofwet
Gerany,
and many believe that such large difencs wtlt

rslst
Into the long-term fture and may even b magnifed stgmfcantly If the
tfer payments are reduced (Der Spiegel, 1 997b )
White many
now claim that there was no way to avoid the e

ormous
eonomi
c difculties of unifcation (Ritschl, 1 996}, there was H fact a
1 82 THE TRIUMH OF EVIL
realistic economic plan available at the time that could not only have
avoided the catastrophe (Murphy, 1 990a) but that could have actually
led to the prosperity which many (including the West German leader
Helmut Kohl) were forecasting in 1 990 (Ritschl, 1 996). As the desiger
of the idea, I gave copies of the plan to various media and goverment
ofcials in December 1 989, although the plan was not published until
1 990 (Murphy, 1 990a) and did not appear in an academic joural until
1 992 (Murphy, 1 992a). The plan essentially focused on a transition
from a state-controlled protected economy to a competitive market
oriented economy and fom an inconverible currency (the East Gennan
mark symbolized by M) to a convertible one (the West German mark
symbolized by OM). As stated by Czege ( 1 989) and many others, bth
previously and subsequently, alterative plans to i ntegrate a protecte
economy into the world market have generally been counterproduc
tive.
This chapter simulates the economic events that would have trns
pired if the Murphy plan had indeed been used. The results of the inves
tigation are imporant for demonstrating how useful the plan can 0
to ease a country's transition to economic competitiveness and how
unnecessary economic catastrophes like the one that ocurred in easter
Germany in the 1 990s really are.
THE PLAN FOR TRANSITION To EcoNOMIC CoMPETITIVENESS
According to the plan, the subsidized prices of East German goos
could be kept in a market economy by giving each resident a limited
amount of a special currency every month (perhaps called the Karl
Mark and symbolized by KM) that would efectively allow them to pay
for things like rent, food, monthly mass transportation tickets, some
cultural events (such as theater, sports, and vacation trips), child car,
and children's clothing at very low M prices. Sel lers of necessities pr
duced in East Germany would be able to price their gods in M at
higher market-clearing prices, but they would be required to accept K
for up to 90% of the price fom East Germans who purchased such
goods produced in East Germany (and the selling state businesses would
then be able to exchange their KM so received for an equal amount of
M from the East German central bank). This system is similar to giving
all residents coupons or food stamps, except that these coupons could
CHAPTER 5
1 83
b used to pay for any necessities (the hcould also be made more like
fo stps by allowing 1 00% of the price to be paid in K).
In adition, the plan called for the state to agree to exchange M
for DM at a set exchange rate like the 1 : I ratio estimated to be appro
prate given the relative purchasing power of the two currencies (Col
lie, 1985).2 However, a shortage of capital in East Germany (stemming
fom the enormous reparations payments it had to make, as previously
explaine in Chapters 2-4) made its industry to uncompetitive relative
to other countries like West Gerany to ear enough DM to be able
to aford an unlimited amount of exchanges at that rate. As a result,
te plan mandated restricting the exchanges only to cases where an
individual or business agreed to invest a fxed number of M into sav
ings acounts in state banks, such as M5 saved per Ml exchanged into
DM. Withdrawals fom the savings accounts might be resticted for a
0Mnumber of years, which was set as 5- l 0 years in the original plan
(although the number of years could be varied between 2 and 1 0 years,
d
ending on the amount of foreign capital and financial assistance that
culd b obtained). Given limited wealth and income in East Gerany,
the aount that could be exchanged would be severely resticted by
such a rle.
Te money from the special long-term savings accounts could then
usd by East Germany to invest into modem capital, either through
tt goverment investment or indirectly through the govemmeat
mvesting into private businesses just as Japan has successflly done 1
0
te past (Blejer and Cheasty, 1 986). Such investment would allow t
Ger
industr to become more competitive. The rate of ret patd
on
te savings accounts could be contracted at 3%, which was 0.25%
l
es tha the rate available on East German cheking accounts, and
Which
would represent very cheap financing for the capital. The ratio
of echanged M to mandatory saved M could b reduced in subsquent
fWdepending on the success of the plan in promoting domestic pro
duct' IVtty
and
production.
Tis curency
exchange system would encourage the purchase of East
goods, since necessities produced in East Gerany ould be
eaply
Priced in K. In addition, excessive spending on tmpored
8s would require prohibitively high levels of savings that would
gve East
Gerans an incentive to buy "East German" as opposed to
1 84
THE TRIUMPH OF EVIL
West German goods, which were more prestigious and better markete
but not necessarily better, as documented by Von Dohnanyi ( 1 991 ),
Fox ( 1 991 ), Zeitmagazin ( 1 992), and others. The restricted demand for
impoed goods would require foreign firms to produce in East Ger
many
_
I f they wanted to generate significant profi ts fom that potentially
lucrative market. The plan would thereby prevent the large decline in
East German output and employment that resulted from the actual eco
nomic unifcation. Moreover, the freezing of prices for necessities using
KM

ould
_
reduce infationary pressures, while stil l permitting market
cleanng pnces for foreigners and excess domestic demand so that ther

ould be less waste. The overall system would also promote confdence

n the East German economy and thereby enhance morale, which wa

Important not only for productivity but also to motivate workers to sty
in East Germany (as opposed to emigrate to West Germany, where they
were freely welcome as citizens).
In addition, the Murphy plan also called for putting East Germany's
state businesses into a mutual fund owned by all citizens of the countr.
The citizens could vote for management of the mutual fund but shares
.
1
m th

mutual fnd could be sold only after 2- 1 0 years (and perhaps
only mcremental ly and/or with a sales fee) in order to prevent a cheap
sell-out of the nation's wealth (Murphy, 1 992a).l The book value of
East German capital was over M 1 00,000 per capita (Statistisches Amt,
i990), and so the market value of each share would clearly be nontrivial
m a healthy local economy (and might be far in excess ofthe book value,
especially if the shares paid an annual growing dividend). The possi
bility of accessing cash in the fture from such shares might provide
furter encouragement for East Germans to stay in their country, since
leavmg would result in forfeiture of shares. Once domestic and foreign
investment had generated sufcient economic growth and competitive
ness, unrestricted sale of securities and currencies could be allowed
to ocur (at future market prices that would obviously give East Ger
mans communal motivation to work productively). The East Germa
people could then vote independently on whether they wanted to pre
serv

some or al l the advantages of their socialist society without eco
nomic pressure/blackmail.
CHAPTER 5
1 85
id| ECONOMIC MODEL FOR EXAMINING THE 1 989 EAST
GERMAN SITUATION
To evaluate what would have happened if the Murhy plan had indeed
ben used, a basic economic model is employed by applying well
acepted th.eor (Byrs and Stone, 1 995) to the situation in East Ger
may at the end of 1 989. In particular, National Income is set equal
to gross East German disposable income (that equaled Ml 68 billion in
1989) plus goverment revenue fom taxes and profts to East Geran
goverment-owned frms (that equaled Ml 07 billion in 1 989), which
smmed to M275 bil lion in 1 989. National Income, plus any change in
crdit issued to East German entities or any net withdrawal fom East
:sasavings (which consisted of M1 60 in money market checking
accounts in 1 989}, is spent as consumption (for both domestically pro
duced goods and for net imports) and investment (goverment spend
ing is incorporated in the form of consumption or investment here).
National Income in the fol lowing period equals consumption plus net

xprs (i.e., expors minus impors) plus investment plus the retur on

vestment. The general framework of this simple economic moel and

-
pareters/fnctions are described in this section, while the exact
matematics will b delineated in the relevant subsequent empirical
stions for ease of understanding the discussion as it goes.
|ssi.aaequals last year's price increase plus any grwth in National
Income that is not eaed by retu on investment or by an increase in
he nuber of workers employed. Because East German frms rn
Yte stte, there can also be a trdeof between profts to East Geran
frs and infation. Since there was actually defation of 1 . 1% in East

in 1 989 (as compute from the fact that real and nominal eco
lc growth

ere 2. 1 % and 1 .0%, respectively, in 1 99),

_
and since
stte can simply avoid frther defation by not havmg Its owned
p
aies lower prices, infation at the beginning of the simulation (at
end of 1 989) can be assumed to be 0%.
Wages determined by the number of workers and the annual wage
Porker. The annual wage per worker can be increased with eco
nomic growth. In addition wage increases above the economic gowth
cn be ofered in orde,to keep labor in East Germany and possibly
t motivate workers to greater productivity imprvements (albeit at
1 86 THE TRIUMH OF EVIL
the cost of lower investment). On the other hand, lower wage increaes
might not only increase the chance of labor strife and strikes but would
also motivate more workers to leave East Germany.
Because there was no net population growth in East Germany (wher
the birth rate approximated the death rate), the number of workers M
a fnction of the ability of the East German economy to keep its cur
rent labor force. The number of workers are therefore afected by rl
income levels in East Germany relative to West Germany (as weB by
fture expected income and wealth), which in turn are afected by any
subsidization of East German consumption goods.
Consumption is a function of East German wages, the historic savings
rate from East German wages, and the real interest rate (i.e., the yield
above inflation rates) paid on savings. However, consumption is also
a fnction of the amount of goods imported from West Germany, with
higher imports forcing increased savings under the Murphy (1 990a)
plan. Impors are a function of relative prices in East and West Ger
many (given any subsidization of East German products) at the given
exchange rate.
Investment in East Germany equals savings from wages plus profts to
East German frms plus net foreig investment. Non-foreign investment
can be made into low-technology capital using East German prouc
tion or high-tech capital imported from Wester industrialized coun
tries. The amount of foreign capital coming into East Germany is set
as a function of the proft that can be eared there relative to what ca
be eared by exporting to East Germany (e.g., if exports to East Ger
many are restricted by goverment policy, there will be increased capi
tal investment into East Germany). The amount of high-tech capital that
East German frms can import equals the Jesser of zero or exports plus
foreign loans and transfer payments minus consumption impors.
Exchange rates are determined by the supply and demand for foreig
currency. The supply offoreign currency is initially given as the amount
of East German exports, but this amount can be increased with higher
capital investments, loans, and transfer payments fom other countries
such as West Germany. The demand for foreig currency is set at the
point where it is cheaper or more desirable to purchase foreign go
os
at the margin, but relative cheapness must also incorporate government
restrictions on foreign curency purchases, which can actually be
used
CHAPTER 5 1 87
to hthe exchange rate and restrict imports as in the proposed plan.
Paeters and fnctions for the model can be estimated using actual
historical information, with much of the raw empirical data on East
Genan national accounts being obtainable fom various years of
te annual Das Statistische Jahrbuch der Deutschen Demokratischen
8cpe|/ik. Use of parameter estimates based on the actual economic
events that did occur should ensure that the simulation results are con
sistent with reality and should avoid the problems associated with other
simulations of Easter European economies that employed unrealistic
asumptions about parameter values and that were therefore far too
optimistic in predicting capitalist reform would result in high psitive
gwth in pst-revolutionary Easter Europe (Cohen, 1 991 ).
For purposes of estimating profits to East Germany, the historic aver
age rtur of 1 8% earned by East Germany is assumed on old capital
investments, while the average retur of21 % eared by West Germany
is use on new capital imported by East Geran frms fom Wester
industrialized countries (Naumann and Trempler, 1 990). These rates
of rt
fgures are probably fairly reliable, given similar numbr
Qnm over diferent time intervals by Mueller ( 1 978) and Mueller,
Muhy, and Sabov ( 1 993), and given a similar estimate for East Ger
my derived from dividing that country's real economic gowth by its
average gross investment (as explained in Chapter 4). Although foreig
cpi

J investment into East Germany is assumed to ea the rate avail

le l0 West Germany (21 % ), the retur will be split among the foreign
mvestrs and East Germany according to rules that must be relatively
at ttve to the foreign investors.
Net e
x
prs equal exprts minus imports of bth consumption goos
ad
capttal. East German expors can continue to b encouraged through

o
ee
t subsidization of expor industries (Kusch et al., 1 991 ),
(
ch on average needed M4.4 to generate DM1 of exports in 1 989
|e
Marktwirtschaf, 1 990). This expenditure of M4.4 to ea DM1
+ reduced through capital investments in expor industries that
eual normal 1 8% rates of retur on East German investments.

So
m
e o
f
the other parameter values or ranges can be estimated from
e results
of the actual unifcation plan that was used. The imple
ll
h
ted economic policy immediately replaced the M with the DM and
ex
c
aged bo e
x
tstmg M at a 1 : 1 exchange rate (although amounts a ve
1 88 THE TRiUMPH OF EVIL
M600, M4000, and M2000 per person had to be exchanged at M2:DM
for East Germans aged over 60 years old, 1 5-59, and under 1 5, respec
tively). While domestic wages and investment followed normal patters
of increase (relative to aggregate income) afer unifcation, there was a
drastic change in net exports, which tured into a huge negative as Et
Germans used over half their OM to import previously forbidden gos
from the Wester industrialized countries, mostly from West Germany.
For instance, in 1 99 1 (the frst fll year afer unifcation), imports fom
wester Germany amounted to DM207 billion, which was only minorly
ofset by OM38 billion in easter German exports to weste Germany
(Osmond, 1 992). Thus, it can b assumed that East Germans will spnd
over half of their money on imports i f their currency is made conver
ible.
The result of the use ofthe actual disastrous unifcation plan was over
a 40% drop in National Income in the annexed provinces of easter
Germany in 1 990-9 1 as there was little demand for East German gos,
and employment fell over 50%.4 Although output in easter Germany
did eventually increase from this low level in subsequent years, as West
em capital fnally spured some production, the country has still not
flly recovered fom the economic shok of 1 990 that the head of the
West German central bank indicated was entirely predictable given the
catastrophic plan that was employed (Osmond, 1 992). A decade later,
easter Germany's output still remains below that of 1 989, despite the
fact that the united German federal goverment provided OM 1 91 bil
lion in infastructure investments (including OM 1 46 billion for roads
and railways, and OM45 billion for the telephone system) to easter
Germany over the frst 6 years afer unifcation, and despite the fact
that it provided OMI O billion in investment assistance which attracted
DM500 billion in private investment into easter Germany, in addition
to DM20 billion invested there without state assistance (Der Spiegel.
1 997b ).As a result of the economic collapse in East Germany, another
DM899 billion fom the unifed German goverment was spent (net of
taxes col lected from easter Germany) as social transfer payments to
the unemployed, early retirees, and similar distressed people in easter
Germany (Frankfurter Allgemeine, 1 998a).6
Because of these historical facts, it is assumed that private foreig
investment equals DM700 billion in the frst 6 years, just as it actual ly
CHAPR 5
1 89
WM,Mlong as there are incentives to invest. As found empirically by
Wheler and Moy ( 1 992}, direct goverment incentives provided to
eourge investment provide much less motivation to private investors
Wa gwing market that can only be accessed by investing there.
0,the plan's indirect incentives to foreign investment (by restricting
A to the market except for those producing in East Germany) are
likely to draw at least as much foreign private capital as the German
goveent subsidies wer able to solicit in the actual depression sce
no that unfolded with the disastrous unifcation plicies. In order to
illustte that the plan is not dependent on foreig goverment assis
W of any g, no foreign goverment infastrcture investments,
forig aid, or additional foreign loans are assumed initially.
Except for the initial shock year when restrictions on imprts of West
Pconsumption goods are removed, and income spent (and/or saved)
for impr is assumed to rise to over 50% ofNational Income, intema
onal te will have stable relationships to the prior year. In addition, it
a umed that, barring exteral infuences or spcifc plicy variables,
mtGea consumption, wages, profts, and investment all rise with
National Income gowth, and that al l other domestic parameters values
will b the same as in 1 989.
Wrsults based on these assumptions are repor in the next sec

Te e
f
ects of alterative pssibilities (and other parameter values
Wfctions) are explored (and analyzed) in the subsequent section.
THE MoDEL's FoRECASTED REsuLTS
mentioned m the prior section, the empirical fnding from the
al unifcation plan implies that East GeOs prefer to spend at
l
e half their money on Wester goos and serices at a 1 : 1 exchange
W With
East Genan National Income at M275 billion in 1989, it
c b estimated thalDM 1 38 bil l ion is spnt on impors in 1 990. How-
P '
e
' UStng the
Murphy plan the need to save MS for ever Ml that ts

@ '
.
l

g
m
to DMI to purchase impored gos would result m a tota
o
only
M138 billion/( 1 +5)=M23 bil l ion
avilable
.

e
M23-M 1 1 5
b'
lli
actua
U
yexchange mtoDM wtththeotherM1 38-
-
|
wg

.
vmg kb put into the special savings accounts.
W tt tok M4.4 to ea a OM of expors in 1989, East Genany
1 90
THE TRIUMPH OF L|h
would have to

xpend DM23(M4.4/DM)=M I 01 billion to generate such

expors. Of thts amount, M23 billion was expended by the imprer
themselves at the 1 : 1 exchange rate, leaving M 1 0 I -M23=M78 billion
of the exports to be subsidized, so that M 1 1 5-M78=M3 7 bil lion of |t
M 1 1 5 billion in savings would be available for investment. Given b
Germany's average 1 8% rate of retur on invested capital, it would wt
about 9 years to ear the necessary amount to pay back the savings
accounts in ful l, with M37( J . I 8)9 - M1 1 5( 1 .03)9 = Ml 4 billion being
lef over for additional wage or proft increases at that time.
Goss investment in East Germany normally averaged about 27% of
National Income, or M74 billion, in 1 989. I f this amount were f
neled in the fture entirely into export-oriented industries, the savings
on exported goods would be M74( . 1 8)=MI 3 billion. Assuming that
impos and this type of investment both grew with the economy to
1 99,

t would take about 6 years to permit a termination of the expr

substdtes. These savings could be passed on to those who imprt
West German goods in the form of lower required amounts that had to
be put int
_
o M savings accounts after the frst year, so that there might
be no savmgs requirements for money exchanged afer 6 years.
I

the meant
_
ime, given the foregoing investment policies of concen
tratmg

n making the export industries competitive enough to enable N

unrstncted 1 : I exchange rate in 6 years, East German National Income
avatlaIe f

r equal distribution to workers would only grow to the extent

of foretgn mvestment. In addition, the change in wages would actually
be somewhat less in the frst year because the difference between the
assumed 27% gross investment fgure and the actual 22% net
|nve:|
ment undertaken by East Germany in 1 989 (net of depreci ation or the
replacement of depreciated fxed assets) would reduce real wages by
.05xM275=M1 4 billion that year ( 1 990). This reduction would b
|
least partially implemented by the increase in prices for all purcha
es
b

yond those paid for with KM, with such efects only being felt by |e
et gners and excess consumers of essentials, so that most domestic re
dents would not be materially afected. However, if additional amounts

ere needed, a spcial tax (such as an additional payroll or consump

tiOn tax, or s

m

special soial security withholding designed to enable
greaer pensiOn mcome at retirement) could also be levied to transfer t
pOOlOn of National Income from consumption to investment (perhtp:
CHAPTER 5
1 91
explained to the public as a tax to pay for the prior year's defation as
well to enable the investment needed for interational competitive
ness and fture rapid growth in wage and pension incomes).
While a reduction i n real wages in the frst year of the plan is not
ruired for its success, i t could help enable movement to an unre
stricted 1 : 1 exchange rate i n a faster time perio (6 years). This pos
sibility might ofset the disutility of the real wage decline sufciently to
inhibit emigrations. Alteratively, any such amount taken out of wages
could be set up as a form of forced savings that could go into private
investment or into a public mutual fnd. Regardless, emigrations would
still b inhibited by the fact that emigrants would automatically forfeit
teir right to sell, or receive dividends fom, their mutual fnd shares in
existing East German industry. Although wages could only grow to the
extent of foreign investment in the frst 6 years, it is likely this gowth
would actually b very high (including in the frst year). In paricular,
if te assumed 21 % retur on foreign capital were taxed at a 50% tax
rte (competitive with the 56% corporate tax rate in West Germany),
hlf of this amount would accrue to East Germany in the form ofhigher
tes, which could be passed on to East Geran workers in general in
te for of higher wages and salaries. It seems reasonable to assume
tat at least DM700 billion in private capital would be invested in the
ft 6 years, as happened in actual fct under much more adverse eco
nomic circumstances relative to those that would exist under the Murphy
plan where there are far greater incentives to invest just to access the
&wing East German market. This amount of about DM1 1 7 billion
' Y
ear would permit an annual increase in distibutable National
Incme ofDM1 1 7x.21 x.50=DM1 2 billion, which represents an annual
.
121275=% growth in income at a } .1 exchange rate. Given that such
...-...would crate products that could either b exported or sub
Shtute for imported Wester goods, they would permit East Germany to
even more on export subsidies, as much as DM1 2(M4.4/DM)M53
lhon, which represents 1 90/ ofNational Income. Such savings would
allow ouut for domestic consumption and real National Income to
&w at high
double digit rates (as that M53 billion not expended for
+subsidies could be consume domestical ly) although consump-
^
. '
b
f
grow at a lower rate (at about 1 3%) m the frst year cause

te
assumed increase i n the net domestic investment rate.
1 92 THE TRIUMH OF EVIL
The extremely high economic growth would slow as the number ofM
required to generate a DM of exports fell. In particular, afer the most
modem and valuable Wester capital was impored (that had a value
equal to at least 4.4 times that of domestic East German capital}, the
marginal value of the Western capital (relative to East German capital)
would decline. Given that there were an annual M78 billion in expr
subsidies needed without foreign investment, the annual M53 billion
in savings related to exports created by foreign investment replacing
domestic exports would disappear in about 1 .5 years. At that point,
every DM 1 of Western capital would have the same value as M 1 of East
German domestic capital, and the multiplicative efect would dissipate
(although the slight 21 %- 1 8%=3% diference in rate of retur might
persist).
In any event, modem Wester capital could have easily been use
to replace the expensive East German investment required to make
East Germany's export industry competitive at a far lower cost, thereby
allowing the country's normal domestic investment to alone keep the
East German economy growing at its past average rate of 2% higher
than in West Germany, plus possibly an extra 1 % more because 0I
the higher domestic investment rate assumed (27% versus 22%). At
the same time, the enormous Wester investment (whether invested
for export-related production or for domestic consumption) would
increase this growth rate by at least 4% (as previously explained). The
resulting real East German economic growth rate would be a minimum
of2%+4%+ 1 %=7% higher than existed in West Germany.
Given that East German per capita National Income was already Iw0
thirds that of West Germany's in 1 989, even the lower 7% higher real
economic growth rate would allow East German income per capita to
catch up to the level in West Germany in about 6 years. However, this
computation does not consider the very powerfl efect of the poten
tial savings in export subsidies (from the DM 1 1 7 billion in foreign capi
tal possibly producing export goods or impor-substituting goods that
would replace imports). lf the East German economy grew 1 9% faster
for 1 . 5 years (as is more likely given the aforementioned savings in
export subsidies) and then 7% faster for the next 1 . 5 years, it would
catch up in just 3 years. Since all these calculations are based on a poten
tial underestimate of the true amount of Wester investment (OM 1 1 7
CHAPTER 5
1 93
billion annually), it is possible that the East German economy would
ctch up fster than in 3-6 years.
Under these circumstances, the high unemployment rate, the inequal
ity in incomes, and the enormous West German transfer payments (that
hvr aveged DM 1 50 per year through 1 996 with no end in sight)
never would have been necessary. In present value, the plan could have
eily saved Germany over $ 1 trillion.
RISKS OF DEVIATIONS FROM MODEL EXPECATIONS
The forgoing results assume specifc values for various pameters.
Wile the estimated parameter values are based on historical data (and
N therfore probably consistent with reality), the implementation of
WW economic plicy can change parameter values, and such devia
tions frm assumed parameter estimates can cause diferent economic
0U.However, as the subsequent analysis shows, the initial assump
tons employed are reasonable even within the context of a change
eonomic plicy, and many possible deviations fom assumptions may
tully have a psitive efect on the foregoing results repored. In addi
tion, y negative efects can possibly be ofset by other policy vari
ale to keep the economic results at least as favorable as found in the
prvious section.
k|sk of a Diferent Level of Western I mports Under the
l8q
f

rgoing results were based on an assumption that the East Ger

Will spend slightly over half their income on Wester gods and
Ices under the plan. Although this assumption may b conserative
tha each OM 1 of impors essentially mandated M6
.
in reduce
dif
Uphon, e mandator savings accounts could ceramly lead to
et Spendmg decisions.
If geater amount were spent on Wester impors, East Germany
__
Oi
d have to transfer even more resources fom prouction for domes
-
c consum t
.

P
t
on to
.
roduction for exprt. However, as shown
.
ear 1er,
el
datory add1ttonal savings conditional on such ester

rs

Est
Germany to subsidize production of sufc1ent addt10nal
for Wester exprt to cover the cost of the higher impors.
It is
rall
Y
m
ore probable that the impr of Wester goos would b
1 94
THE TRIUMH OF EVL
lower than originally assumed. For instance, 39% of National Income
was directly controlled by the East German state through goverment
and goverment-owned business sjending (for public consumption ad
investment), and the porion of that income which was used to purcha
DM could b simply directed to be below 50%, if desired. Only if it
was more efcient in the aggregate sense to import for public consump
tion and investment purposes would this income be directed at all to
impors.
Moreover, it is very i mprobable that the East German people would
spend mor than 50% of their income on the purhase of DM. Insted,
it is likely that the typical East German would only purchase the most
wanted Wester imports of luxury goods (or services such as tourism)
that were either extremely expensive or unavailable in East Germany. In
particular, if it were assumed that East Germans would spend about half
their disposable income of Ml 67 billion on imports, that would leave
about M83 bi ll ion for consumption (plus the M84/M6/DM=DM1 4 bil
lion in luxur gods/serices that would be imported). With 1 6. 4
mil
lion pople i n East Germany, that would come to scarcely M5000 (and
less then DMl OO) in spending pr person (which represented about
$3000). Although the prices of essentials such as food and rents wer
low enough in East Germany for retirees to live comforably on te
minimum annual pension of M4800, it would b difcult for the aver
age East German to live on much less, and so most would probably
choose to spend more than half their disposable income on East German
goods and services to maintain a reasonable standard of living.
As a result, it is probable that East Germany would have had to tra
.
n

fer far less resources into expensive production for expor than ongt
nally assumed. Moreover, although East German consumption in total
Marks would still be less to the extent that there were some of e
1 : 1 exchanges that mandate increased savings, total consumption util
ity would undoubtedly increase. In particular, each East German would
only voluntarily conduct the 1 : 1 exchanges if the satisfaction from
purchased impors more than ofset the lost utility resulting from hav

g
to replace some current domestic consumption with future consumptton
(because of the mandatory savings required for each 1 : 1 exchange).
CHAPTER 5 1 95
kskof Diferent Savings Rates
Oe risk is that the M 1 60 billion of savings accounts existing in
Est Gennany in 1 989 could be drawn down, such as for consumption
:to invest into the new savings accounts to access more OM. East
Geran savings accounts consisted solely of their money market check
|-acounts that allowed unlimited withdrawals and paid 3.25% inter
et anually (there were no other checking or savings vehicles in East
Gerany).
If all M 1 60 billion in savings were used to purchase impors, East
Gerany would need M1 60/(5+1 )=DM27 billion in exteral fnding.
A prian of the needed amount could come fom Wester industrial
ized counties (especially West Germany and the European Commu
-||,seeking to suppor the political and economic refonns mEst Ger
=aad the opening of the Berlin Wall (Der Tagesspiegel, 1989c,
l9a). The rest could be fnanced by the sale of assets in East Ger
many, such as real estate (which would reduce the claim of East Ger
=a:aatheir own countys capital, thereby possibly having a collec
tive impact on inhibiting excessive savings withdrawals). For stance,
eisting apaments could be sold to Wester investors or countnes who
migt b enticed by a stable revenue stream derived fom low rents that
wer
strongly supplemented by guarantees of continuing Est Ger

goverment subsidies. Alteratively, par of the amount could b pa

d
fr by the previously mentioned private capital infows of OM 1 1 7 tl
||:-a year, although this amount is uncerain, and any use of a prtton
.such fows to pay for consumption imports would reduc

the other
Wise extremely high real gowth rate that would arise fom tt.
It is atually unlikely that much of the M 1 60 billion in savings ould
b drwn
down, since everyone needs some liquidity. The ratio
?
f
e
Est Gennan checking/savings accounts combined wit M1 7 btl
||:-currency in circulation totaled only M1 77/M275=64Y of East
National Income in 1989. This ratio is lower than the level of
liquidity
available even in Wester industialized countries that have
tmore
developed financial system with far easier access to lan

d
^Wq
sales,
which can substitute for some of needed cash bqUldtty.
|::|-:uae-,the ratio of checking and shor-term savings a
.
ccounts _
Natioal Income was 65% in West Germany in 1 989 accordmg to 0
"0Min
the IMFs Interational Financial Statitics.
1 96
THE TRUMH OF L|h
The hypothesis that withdrawals from East German savings accounts
would be l imited is buttressed by the behavior of East German accounts
in 1 989-90. For instance, although the openin,of the borders in Novem
her 1 989 al lowed unlimited East German purchases of West Gennan
goods for the frst time i n decades (albeit at high black market exchange
rates), there was only a M2. 5 billion increase in withdrawals from Est
German savings accounts in November 1 989 compared to Novembr
1 988 (and only a M2. 1 billion increase in withdrawals compared to
October 1 989), and the amount of currency in circulation actually fell
MO. l bi l l ion from the prior month. In December 1 989, there was only 4
M0.8 bill ion increase in withdrawals compared to the prior Decembr,
and the amount held in savings accounts actually increased net of thes
wi thdrawals (as a resul t of a higher level of money deposited into sv
ings). Even the complete replacement of the M with the DM in July
1 990 resulted in East Germans withdrawing only DM4.5 billion in the
frst week of the event ( Ostseezeitung, 1 990b) and, overall, did not led
to a enormous spending spree or a sizable decline in savings balances
in East Germany (Osmond, 1 992).
However, if there was perceived to be a need to bolster savings (pr
haps because too much was withdrawn in the early months of the plan
implementation), it would be possible to ofer new and more attractive
savings accounts (Murphy, 1 992a).8 One such account could be set up
to pay 3.25% plus 0.5% times the number of years the account was to 0
frozen (e.g., 7.75% for a 9-year savings account). In addition, to attrct
speculative money, a special 1 0-year account could offer to pay J.2!7
plus 75% of real National Income growth. This additional interest cost
would essentially transfer a portion of National Income from
pro
f

s
and wages to savings account holders, who at the maturity of their
savings accounts might consume the amount and lower fture invest
ment. Nonetheless, in the meantime, their balances and i nterest would
be invested, and, even at maturity, they might be more likely to reinvest
their money than to spend it, especially i f they are richer individuals.
Besides increasing the savings ofEast Germans, the existence of such
new savings accounts that pay higher i nterest rates in M than exist on
DM accounts in West Germany might attract a signifcant amount

f
money from West Germans, who might be willing to exchange the

r
DM for M to get the higher interest rate if they perceived the likeh
CHAPTER 5
1 97
ho of an eventual 1 .1 converibility of the M to be fairly high. Since
ech DM so exchanged would save the M4.4 that is nonally required
for ech DM in export revenue (at least initially until East Genany
culd ear DM at more competitive M costs), such deposits would be
especially useful to East Germany's economy. As a result, even if such
accounts were not needed to prevent a decline in East Gennan savings,
they could be ofered to West Germans and other foreigners (who might
b enticed not only by the speculative value but also by feeling a soial
obligation to invest in and help out a refonned East Germany).
An alterative risk with respect to East Genan domestic savings
acounts would be that too much money would be saved. However,
such a scenario would permit greater investment and therefore faster
economic growth and wage increases, although there might be some
short-tenn costs associated with the transfer of resources from domestic
consumption good industries to other industries.
ksksof Currency Black Markets
Some East Germans might prefer to exchange their M on the black
marets for DM with West Germans and other foreigner, as oppsed
to lok up so much money for so long. However, such exchanges would
merely substitute for the East German goverment's requirement to pa

for OM1 of imports with M4.4 of East Geran prouction expendi
tres. If a black market exchange rate of less than M4.4/D exist
tere would be a lower cost of fnancing DM impors in this fashton
thn with normal East German export production. In addition, if some
of the M
obtained by foreigners on the black market were instead held
by
foreigners as an i nvestment or for future possible purchases, the
amount so held would be like an interest-fee loan that would allow t
Gerany to invest the money as opposed to create goods for foreig
consumption.
Given that East Germans could legally purchase DM1 with M6, th

black market exchange rate could never be worse than M6/DM, and It
would likely be far less than that amount since M5 of the M6 would b

plus 3% annual i nterest in 9 years if legally exchanged.

ven
for an East
German who could otherwise invest his/her net cash savgs
fro

1
tent (hke
-usmg the black markets in some real commercia mves
=ice
cream stand) at the same 1 8% rate as the East German gover-
1 98 THE TRUMH OF EVIL
ment (which strictly controlled prices, wages, and therefore retur on
investment), the maximum black market exchange rate X would have to
satisf the constraint
(6-X)( l . 1 8)9 g5(1 .03)9, or
XM4.5/DM. (B- 1 )
If the exchange rate were i n excess of M4.5/DM, the cash savings
of M6-MX from using the black market, i nvested at 1 8% for 9 yea,
would not grow to an amount in excess of what could be eared k0m
the alterative strategy of exchanging at the ofcial I : I exchange rate
and putting the mandatory M5 in the 3% savings account.
Thus, the black market exchange rate would be close to or less tha
the all-important cost of earing a OM in exports. This hypothesis is
supported by Murphy's ( 1 992b) empirical fnding that, even without the
unrestricted opportunity to exchange money legally, the black market
exchange rate was strongly afected by the cost of earing a OM expor.
In addition, while Murphy ( 1 992b) also found evidence that the black
market value of the East German mark was negatively infuenced 0y
higher prices in West Germany (implying a high degree of inelasticity
of demand for West German goods relative to price due to the existence
in East Germany of a shortage of modem Wester goods), such an efect
might be alleviated under the current plan that allowed greater impors
of Wester goods (as the same Murphy study found that the demand
i nelasticity problem had been alleviated in the past by enhanced politi
cal recognition for East Germany, which opened up the opportunity for
greater importation of high-tech Wester goods, and by increasing the
amount of legal imports from West Germany in general).
It is quite possible that the black market exchange rate in equation
(B- 1 ) greatly overestimates the number of East German Marks that
would be needed to buy OM. In particular, a high tax rate was levied
on profts in East Germany, whereas interest on savings accounts was
not subject to tax (Der Tagesspiege/, 1 989e), and so the retur on a
commercial investment would have to be put on a comparable after-taX
basis. For instance, with a tax rate of 50% levied on profts in excess

f
M25,000 in East Germany (Buero des Ministerates, 1 966), the maxt
mum exchange rate from the adjusted foregoing inequality would 0
X 6 - [5( 1 + . 03)"/( 1 + { . 1 8x.5 } )) = M3.0/DMI . (B-2)
CHAPTER 5 1 99
Even the M3.0/0M exchange rate might overestimate the true black
met rate that would exist. In particular, the tax rate on domestic
t0mny profts was as high as 90% on profts in excess of M250,0,
which might be relevant to the richest East Germans who might be
te ones most likely capable of investing their money commercially.9
Et Gerans faced with that marginal tax rate would optimally invest
Mymoney saved fom using the black market into the traditional tax
Wm0ncy market checking accounts earing 3.25% (since the afer
wyield on commercial investments would be only 1 8%{ 1 -.90}=1 .8%,
which is lower than 3.25%). As a result, the boundar exchange rate
migt b as low as
^ 6 {5( 1 + .03)9/( 1 + .0325)9} Ml . l /DM. (B-3)
Thus, black market exchanges might b ver close to the 1 : 1 ofcial
exchange rate. In addition, because most East Germans did not have the
oprnity, know-how, or desire to conduct lucrative investments on
thir 0wn, and because black market exchanges would be illegal (creat
in
g risk of imprisonment and/or fnes, as well as possibly resulting in
a WgatiVe criminal status and psychological worries), there might be
ve little black market activity at all. West Germans and other foreign
0ight therefore encounter some difculty in fnding East Germans
whom they could buy M, and so they (being also subject to simi
|ensks) might decide instead to exchange their money legally with
a Et German bank at 1 : 1 when making purchases inside East Ger
" }'

These extra OM so obtained would reduce the amount needed

sbsidize East German imprs and therefore increase the amount

available for East German investment.
k|sk
0fDiferent Costs of Earning DM Export Revenue
^in-depth time-series study by Murphy ( 1 992b) indicated that the
Ct of

0
.

.
tng a M m expors was unafected by mcreases m expo
or ;
0gg
(
d b

|
rom
nest Germany, as well as unafecte y mcreases m

t
e in the aggregate. As a result, the constant M4.4 assum

nded to generate each additional OM 1 .0 in export revenue H

g;nal model seems reasonable. However, it is possible that a very

. "
in foreign trade (possibly mandated by excess demand at
_ .
e
x
change rate) might result in additional costs, such as increased
'si
b
ution
d '

11 1 1 S h an
resource reallocation expenses, at least tmh
a

uc
200
THE TRIUMH OF EVIL
a situation would slow the ability of the East Geran goverment to
phase out the mandatory savings assoiated with OM exchanges. For
instance, if the amount needed to ear a OM of exports rose to M!,
there would be required expo11 costs of OM23 { M5/0M}=Ml l 5 bil
lion in the frst year to pay for the originally assumed DM23 billion
in imports. With the East German goverment receiving M6 for eYer
OMI in impors, only Ml 38-Mi l 5=M23 billion could be investe in
the frst year to reduce the cost of future export revenue generation. If
the higher cost to generate a OM of expor revenue were not a one
time expense and instead continued, it would take 1 2 years of noral
East German investment to enable the goverment to remove the pla's
mandatory savings requirement associated with East German imprts.
On the other hand, it is also possible that the enhanced capacity to
import goods fom West Germany would raise productivity and actu
ally decrease the amount needed by East Germany to ear a M .
of export revenue. In particular, East German frms would have greate
fexibility to buy capital equipment from West Germany that co

ld
moderize East German industry and greatly cut the costs of emg
export revenue. The probable elimination of the Wester embaro on
high-tech exprts to East Germany (as a result of the opening of the
Wall and the reduction in political tensions) might be especially im

r
tant here (Parrott, 1 985). For instance, despite investing over Ml O btl
lion in prior years into microelectronics, East Germany had in 1 989
a cost of producing 256K semiconductors of M534 compared to the
OMS cost for such chips available on the "fee" world market to Wes

em countries (Herle, 1 996). If East Germany's political and economtc
reforms were rewarded with the removal of the embargo on computer

h the
chips, East Germany would be able to replace the M534 cost wtt
cost of DM5x[ M4.4/DM]=M22 needed to generate the exprts to pay
for the import of such high technology goos and thereby save over
95% on the production costs of that important component of the moder
economy (thus freeing up substantial sums of money, which
could
used to cover additional export costs associated with the plan, as we
e e
tect
as to increase investment or wages). Apar fom any postttve
e
,
resulting from greater productive imports, the increased impors of

sumer goods from West Germany might also enhance the morale
East German workers and spur productivity improvements. Such pro-
CHAPTER 5 201
ductivity increases would lower costs frther.
In addition, the opening up of the East German economy and politi
cal system would probably reduce many of the goverment trade bar
0U set up against East German gods and thereby frther facil itate
N expansion of exports at a lower cost, especially to the European
Community (EC), which included the richest countries of Wester
L0mQ. In paricular, although East Geran exports to all EC mem
n except West Germany had previously faced signifcant tarif barri
O,and although West Germany itself had employed signifcant quota
barers that efectively prohibited East Germany fom obtaining more
ta 5% of the market in any industry (Melzer and Stahnke, 1 986), EC
membership was ofered to East Germany shortly afer the opening of
the Berlin Wall (Der Taggesspiege/, 1 990a). Such membership would
gatly reduce tari ffs and thereby faci litate East German expor sales at
a lower cost to a larger market and enable East Germany to concentrate
its exQrs in areas where it had a competitive advantage, such as in
he
v
machinery, auto parts, porcelain, salt mining, and food prouc
tion where the cost of earing OMl .O was less than M3.0 (Mueller,
1 989). East Gerany might also be able to realize frther eonomy of
sale cost reductions as 8 result of such increased production in spe
cifc industries, especially i f it were able to expand exports of the vari
ous gods for which it already had production costs less than Ml . O for
ever DMI .O eared (Schwarzer, 1 999).
Also within this environment, Wester distribution barriers and con
sumer biases against East German goos might evaporate, especially in
West Germany where the goverment trade quotas might even b elimi
nate. ' 2
The resulting increased exports might lead to furher economies
of sc
ale in both general distribution and manufacturing, especially as
Et Gerany became more integated with the entire world economy.
.
Besides a reduced cost of earing OM expor revenue, an increase
N tourst trafc, which would likely result fom a reduction in Cold
War tension and fear as well as from a heightened curiosity and desire
to assist
(brought on by East Germany's reforms), might also facilitate
the
ng of hard currency revenue. For instance, without the plan,
forerg
ers spent billions ofDM in East Germany in the frst 2 months of
19 alone, although a lack of controls against black market exchanges
r
esulted
in few of these OM being exchanged ofcially with the gov-
202 THE TRIUMPH OF EVIL
crnment (Der Tagesspiegel, 1 990i). In addition, without the plan, the
cost of earing a DM equaled the exchange rate, which was 3: 1 for of
cial exchanges and 7: 1 for black market exchanges (Der Tagesspiege/,
1 990d), times the unsubsidized price divided by the subsidized price
(which often implied a high double digit M cost for earning a single
DM). Given the plan to raise prices to market-clearing levels for for
eigners, and given the greater likeli hood of ofcial 1 : I exchanges and
very low black market exchange rates (as explained earlier in the sub
section "Risks of Currency Black Markets"), the cost of earing the bil
lions in DM sales to tourists would be greatly reduced. It is also very
probable that far more in hard currency tourist revenue would be eared
by East Germany since goods and services would no longer be efec
tively given away for almost free at the subsidized prices and exchange
rates (i. e. , at such low prices, demand would likely be extremely inelas
tic with respect to price). As a result, it seems probable that the pla
overall would decrease the cost of earing hard currency revenues a
opposed to increase it. 1 3
Risk of Diferent Amounts of Western Investment
It is possible that if there were not political support from West Ger
many or another Wester country, the amount of Westem investment
might not even be as high as under the catastrophic economic scenario
that actually developed. In that case, the great rise in output caused by
such investment would not happen. However, if the Western capital that
fowed into East Germany was only a third as much as the investment
that indeed occurred, that should be enough to generate double digit
growth rates for years.
In addition, even if East Germany had chosen a path politically inde
pendent of West Germany, its economic and political reforms would
probably have been sufcient to attract a substantial amount of Wester
investment, as long as the economy were just reasonably healthy. The
EC had indeed promised both political and economic support following
the opening of the Berlin Wall in 1 989 (Der Tagesspiegel, 1 990a), and
the USA had expressed its readiness to make substantial investments
(Der Tagesspiegel, 1 9901). It is therefore probable that, with strong
interational political support, with the strong incentives incorporated
into the proposed economic plan for foreigners to produce in the coun
try instead of just export to it, and with a healthy economy, East
Ger-
CHAPTR 5 203
@
}would have attracted far more Wester capital than it actually did
wi

|
the depression scenario and limited i ncentives for productive for
:ipinvestment that unfolded without using the Murphy plan. Just to
prvide an example of the imporance of a healthy economy and incen
tve for loal prouction, communist China has attacted more direct
foreign investment than any other count in the world (except the very
nthUSA) over the last few years (Wei et at., 1 999), despite having far
'
:ssinterational political suppor than East Gerany in late 1 989 and
depite having a closed communist economic system for most of the
cntry. Greater foreign investment would only add to the incredibly
high double-digit growth rates projected in the original model (ust as it
Waded to communist China's very high real growth rate).
10tRisk of Economic Depression in Eastern Europe
Peaps the greatest risk to the plan came exterally fom Easter
|,with which East Gerany conducted much of its trade (M60
bilhon in exports and M57 billion in impors i n 1 989). If this area of
te world sufered the over 40% decline in real GNP over the early
19 that indeed did happen (IMF, 1 996), there would likely be a com
mensrte decline in trade with this area. The actual 60% decline in
Et Gennan exports to Easter Europe that occurred in the early 1 990s
(Osmond, 1 992) would represent a M36 billion drop in demand for
Et German goods (representing over 1 0% of East German National
that would reuire East Germany to replace this loss of pro
on ad gods with other markets.
H

wever, the plan's 1 : 1 exchange rate with the DM would actually

=a change-over to greater production to meet the demands of
_ter
trade with the Wester Europeans. The decreased demand for

_."'
sto the Easter European market would fee up resources for just
IS
Pl
e (whi le the domestic East German demand for impored
--Easter Europ would b replaced by increased saving and

IDg on imprts from Wester Europe). Although this shif in pro

b

hon would entail signifcant restructu

ring expenses, the costs might

bcause of the centralized control and planning that exist in the
GPn
l
'
Sia 1st system.
In
ad itio ` '
wold
n, It l5 also pssible that a robust East German economy
hve helped prevent the huge economic catastrophe from ocur-
204
THE TRUMH OF L|l
ring in Easter Europe, both by providing greater demand than actu
ally ocurred for Easter European products (fom higher East Gena
income) and by serving as an example to the other countries of Et
em Europe on how a successful transformation of their economies O
occur. For instance, it might have been possible to avoid the disastrou
policy of changing Easter European trade from a system of multi
lateral barter on December 3 1 , 1 990 to a system where all trade *u
paid for strictly in hard currencies like the OM (Sabov, 1 991 ). Beside
thereby avoiding the resulting huge decrease in trade between Easter
European countries, the catastrophic policy of depreciating the Russian
ruble enormously in 1 991 to make it convertible (as will be discussed in
Chapter 6) might also have been avoided (Hays, 1 991 ).
Restructuring Costs
The analysis so far has not explicitly considered any special fictions
or restructuring costs (including retraining expenses) assoiated wit
shifting investments and resources from one sector to another. Instead,
any such costs have been assumed to have been incorporated into th
e
rate of retur on investment, which are measured net of such
cost.
However, in the case of massive investments in some sector or indus
tries, such as the export sector, restructuring costs might be higher than
normal . Such additional costs would reduce the retur on investment.
East Germany would incur such costs for its own investments,
while,
for foreign investments, East Germany would have to decide whether to
bear the costs in order not to di scourage foreign capital or suffer a lower
level of foreign investment as a result of the lower level of proftabi lity
available to foreign investors.
Because there was no unemployment in East Germany, and worker
were in fact guaranteed the right to a job for l i fe, the costs of restruct

ing might be highest in terms of labor due to the lack of slack in thts
resource input. To attract workers into growing industries such 4
the
export sector, it might be usefl to have most of the wage increases con
centrated in those industries (and especially for needed skilled worker
to keep them fom emigrating). In addition, a special payroll might
be levied on all workers that could be used to further increase wage
in critical industries with labor shortages and to pay for any needed
additional training. This real location of wages might reduce the
costs of
restructuring born by the entire economy.
CHAPTER 5 205
It should also be emphasized that incororated into the historical 1 8%
RmHon investment are the costs of restrcturing normally incured by
Et German investments in the past. These restructuring costs include
tose assoiated with about 2% of the population moving annually
bteen the 1 5 diferent sectors or states of East Germany (Statistisches
Amt, 1 990). In addition, Easter European soialist countries typically
wer involved in retraining over 5% of the work force each year in
noral times (Marcy, 1 990).
In any event, the costs of restructuring would only penalize the retur
on investment in the initial year and therefore would not materially
afect long-term growth or long-term investment decisions. Even if the
aount of such costs were as high as 30 of the frst year's proft fom
eh investment, that would only reduce National Income growth by
abut 2%, which is fairly minor compared to the double-digit National
Income growth that would be expected to b caused by the massive
investments.
In addition, it is likely that East Germany
'
s greater opnness to trde
migt actually increase the retur on investment more than enough to
fset any restructuring cost problems. In particular, expanded intera
honal trae allows a country to spcialize in producing the goods and
srices that it produces most efectively and thereby perits concen
tte investment in the sectors where it can ear the highest rets
(Eitern, Stonehill, and Mofett, 1 998). For instance, the ret on East
Geran investment in the textile consumer goo, and electical indus
tes exceeded 40, compared to
'
under 1 A in enery and constrcti
.
on
(Mueller, 1 978). Concentrated investment can also enhance economtes
of sle and scope, thereby lower costs, and frther enhance returs.
1be
k|kof Infation, Emigration, and Productivity
|00|eq
As previously mentioned to inhibit foreigners fom being able to
Puhase East German pr~ucts at subsidized prices, the prices of all
&Os and services in East Germany would b allowed to nwto market-
t|

ta'

e
ann
g
levels that cover costs. However, to avoid infation, ma
m
onsumer confdence in the economy (and thereby increase morale,
`
to
experiencing the productivity decline and emigtion that
atully
ocurred i n early 1 990 without the plan), avoid
pvery, and
206
THE TRIUMPH OF L|l
encourage the consumption of East German products by East Geras,
each East German citizen would b paid a fxed amount each mont
into special KM checking accounts. These checks could be written to
cover 90% of the price of specifed subsistence goods such as k
chi ldren's clothing, day care, monthly mass transportation tickets, cul
tural events, and housing. The annual amount paid into each person's
KM account would be set to equal the per capita amount of subsidie
paid out by the East German goverment in 1 989, which approxi mated
the M70 bil lion/1 6.4 million people=M4268 in per capita subsidie
reported to be paid in 1 988 (the M70 billion in subsidies would coo
ti
?
ue to b fnanced by higher prices for nonessential goods and ser
vtces that are essentially taxed more heavily by the goverment).
Although the existence of the additional . currency/account/pricing
would create some administrative costs and bureaucratic difculties,
such problems would probably be far less than those imposed by com
mercial coupons (of which there are so many different types in capitl
ist societies) and likely even less than with buyers' clubs or coopertive
which also give a select group of people special discounted prices (Fur
lough and Strikwerda, 1 999). Because the K coupons could only 0
used by East German citizens, the subsidies would not be available to
foreigner tourists, whose cheap purchases of gods and services in Eat
Germany in 1 987 were effectively subsidized by an estimated M 1 .3 bil
li

(Schwarzer, 1 999), and who were in the process of stealing many

btlhons more in the frst 2 months of 1 990 alone afer the removal
of efective border controls (Der Tagesspiege/, 1 990i). Thus, the plan
al lows the M price of essentials to rise to market-clearing levels while
still permitting limited subsidized purchases for domestic residents to
shield East German citizens from the efect of the one-time infation.1 4BY
thereby maintaining such advantages of living in East Germany (i.e., a
very low and stable cost of living), this policy should keep the morale of
the East German workers high. As a result, there should be no decline
in productivity, and the incentive to emigrate to higher-paying jobs in
West Germany should b reduced. The vast majority of East Gerans
were very content with their socialist system, and, only once it became
clear that the January 1 , 1 990 opening to West German exploitation
would destroy the system economical ly, did the East Germans decide to
vote with their feet and bal lots for West German capitalism.
CHAPER 5
207
Teprovide an example of the i mportant interaction of these factors,
it Wb observed that East German real economic output actually rose
2% in 1 989 despite the emigration of 343,854 East Gerans (over 2%
vlthe ppulation) during that time period as travel restrictions were
eliminated (Bertie, 1 996). The productivity of the remaining East Ger
mns was so boosted by the positive morale efects of the opening of the
Berlin Wall that the disruptive influence of the movement of so many
Et Geran workers was partially ofset. In addition, by December
1 989 the initial food of emigrations had subsided, daily East Gera
eigrtions had fallen drastically to a much more manageable level of
one thousand per day, which was significantly less than the rate just
bfor the building of the Berlin Wall in 1 961 and was similar to that
eprienced by East Germany in the 1 950s (Hertle, 1 996) when annual
rl gwth in National Income averaged over 1 0% (Statistisches Amt,
19). East German production first declined signifcantly in 1990 when
tvel restrictions and border checks of West Geras were eliminated,
a ofcial M3:DM1 exchange rate was established, and West Gerans
tereby not only received the same opportunities for bargain purchases
with Mas East Germans but efectively only had to pay 1/3 of their own
|M.Within this environment, daily emigrations doubled (to an annual
rte of over 500,000) in early 1 990 despite continuing political reforms
ad prmises of a unifed economy (Murhy, 1 990b ).
.
Witout the proposed plan to maintain East Geran m
_
orale, it is quite
likely that productivity would drop and some disrupttve efects of a
h'
'
e
NP
,level of emigations would occur possibly reducmg G g
o

' J'gbtl
'"
much as several percent. While such problems would only s
1 Y
ruc the very high growth rates possible under the narrower aspects
vlq
e
'p for
e plan, lower growth rates would increase the t1me reqUJ
.
-Gera incomes to reach West German levels, thereby prlongmg
negative efects.
V the other hand by combining the advantages of East Ge

an
cnunism with th-right to a 1 : 1 exchange rate and all the postttve
apcts of a very rapid economic growth rate (which includes goo

`
e
J ' k 1 that
P
o
yment opportunities and an optimistic outlook), tt ts 1
.
e
Y
te
numbr
of net emigrations would have tapered of constderab1
;
epially as time, confdence foreign investment, and incomes

ew.
Als C t
b
. ' . .
ld be th allowance m the
n
utmg to lower emtgrahons wou
e
208
THE TRIUMH OF EVIL
plan for direct ownership of shares in East German state enterrises that
would be lost upon moving to the West. Emigrations would b esp
cially inhibited i f West Germany discontinued its program of ofering
i
and loans totaling over DM 1 60,000 to each immigrating worker, u
It mdeed fnally did early in 1 990 (Der Taggespiege/, 1 990t. This situ
ation would compare ver positively to the ver large number of P|
Germans (an average of over 200,000 annually) who, in the depression
scenario that actually unfolded, continued to move to wester Gennay
long afer the actual unifcation of the two Germanies in 1990 (Statist
isches Bundesamt, 1 996).
The maintenance of low prices in East Germany, along with expanded
employment opporunities and other advantages associated with the
broad plan, might not only stem the outflow of East German emigrnts
but actually entice many West Germans into moving to East Gennany.
As infrastructure and incomes became more equal, there might have
been a net infow of people into East Germany.
Diferent Spending on Infrastructure and the Environment
Although the results discussed so far have assumed ordinar infr
structure investments by East Germany into industries such as comu
nications and transportation, it is possible that Western European (or
USA) telephone companies, railroads, and other infrastructure organi
zations might have been attracted enough by the proft potential in a
more open and vibrant East Germany to undertake important invest
ments. Such capital could have modernized the East German telephone,
rail, and road system within a few years (as the West German inf
strcture investments actually did) and could have furher increased the
productivity and growth of the East German economy. In addition '
increasing prouctivity, the retur on investment, and therefore National
Income growth (even more so than estimated originally), such invest
ments would improve the quality of life for the average East Gennan
(and thereby lower emigrations and even increase immigrations).
The East German goverment had estimated that its telephone system
could be expanded and brought up to a standard comparable to that 0I
West Germany for M 1 2 bil lion (Der Taggespiegel, 1 989b ),which
would
also meet the backlogged demand for about one mi l lion new telephones
(Schwarzer, 1 999). However, East Germany had forecast that it did
00|
CHAPTER 5
209
have enough construction capacity to completely satisfy all demand for
phones at least until 1 995 (Der Tagepiegel, 1 989b ). As a result, a deal
wth a l0n0telecommunications fin might be usefl in order Kbe
able to imprt some additional foreign materials, machiner, and ser
vce neeed to moerize the phone network more quickly, with the
forig fr being ofered fture telephone revenues in retur.
Since the cost of DM45 bil l ion that was actually incurred to total ly
rbuild the East German telecommunication system was unnecessary,
it migt have been possible to have the foreign telephone frs paid
with higher telephone charges on new installations. Assuming OM 10
billion in foreign investment needed to meet all backlogged demand
immediately, and assuming a 21 % required retur on that investment,
there would have to be an annual DM2. 1 billion increase in telephone
rtes to satisf all current demand. With the backlogged demand for one
million new phones i n East Germany, the annual telephone fees would
have to be about two thousand marks (or just under DM200 per month).
Buse the fee was only about M200 per year for those who waited
for Et Geran telephone constrction (Schwarer, 1 999), it is likely
that most would choose to continue to wait, and only the most urent
eman
d for telephones would b met with foreign investment. Alter
hvely
,
the East German goverment could subsidize telephone usage D
orer to improve the quality of life there (with the cost being DM2. 1
anually, which would replace other productive investent and thereby
drse economic growth by 0.6% initially and 0. 1 % therr as the
shrge 0lOM was alleviated).
SimIly, repored in Der Taggesspiegel ( 1 990h), a West Gean
OpsJtton party (the SPD) estimated that it would cost DM2 billion
anually to upgrade the East German transpration system to a reason
level of quality. Since it was not necessary to spen
thDMl46
lhon actually
incurred k overhaul the whole system, It might
.
have
been pssible to obtain attractive fnancing (using gasoline and ratlway
4 collateral) from Wester infastrcture frms seeking the M
bJibon in
annual business but only to the extent that the ret on such
tspration system iovstments (or the quality of life improvement)
w
a expected to be high enough.
addition, it is possible that East Germany would chose to spend
ll r on the environment to i mprove the quality of life there. In 1989
21 0
THE TRIUMH Ll
East Grmany spent only 0. 5% of National Income on environment
otectton, co

pared to 1 .6% for West Germany. Increasing the spend-

g on the environment to the same level as in West Germany would
have c
_
ost East Germany . Ol l xM275=M3 billion. Investing M3 billion
more mto the environment would have reduced productivity |0Vo|
ets and therefore real economic growth by . l 8xM3 billion275
bilhon=0.2%. Although this efect on growth would be fairly smll,
the East German government estimated a need to spend as much M
M I 00 billion long term (half for air and about half for water pllution

lean-up) because of past neglect (Der Tagespiege/, 1 990k). However,

If the extra M 00 billion in pollution control spending were spread ove
0 y

ars, the Impact woul d remain fairly limited, with a furher rc0t
hon m annual economic growth of less than 0.3%.
1 6
Foreign Aid and Loan Factors
The original modeling results assumed no net exteral fnancial aid,
and s

deviations from assumptions for this fnal factor could only
have
ontnbuted to the success of the plan. I n fact, some amount of aid WM
hkely just to encourage the political and economic reforms in East Ge
many. I ndeed, shortly afer major political reforms were announce in
aster Europe, the EC proposed a 5- l 0 year program of giving aaase|
aid of
_
DM39 billion to East Germany and 5 other Easter Europen
c
_
ountnes (Der Tagesspiege/, 1 990a), which comes to about DM6
bil
!ton per year to East Germany if split evenly. Such a grant would have
saved East Germany over M20 billion initially in expor subsidies (or
over 5% ofNational I ncome).
With respect to loans, East Germany already had hard currency 0c|
of about DM20 billion that cost it under DM2 billion in interest py
ments annually (Der Tagesspiege/, l 990b }. 1 7 The modeling results
haVr
assumed

o net foreign loan payments, but this assumption seems re

sona

le

Iven that Wester commercial banks had rated East Gerany

as bemg m good enough credit standing to merit additional credit (0cr
agesspiege/
:
1 990j) and would have been wil ling to loan it the annual
mterest due (If not far more). The World Bank also indicated its willing
nes

to loan Easter Europe billions ofDM, which East Germany could
tap
_
I

t

along with Interational Monetary Fund (IMF) loans 4 so
n
t ]om0 that org

ization (Der Tagesspiegel, 1 990c). In addition,

rtly afer the openmg of the Berlin Wall, West Germany offere East
CHAPTER 5
2 1 1
Gerany DM1 2 billion in additional credits on favorable terms (Der
Tagespiegel, 1 989c ), which could have been drawn down if there were
ay short-term problems with the plan. Additional net loans, especially
ones at subsidized rates, might have helped signifcantly if used to
impr Wester capital, thereby supplement private Wester investment
|0 East Germany, and thus frther increase East Geran economic
grwh rates.
In addition, hard currency loans would have permitted a more gradual
orentation of production toward expor industries and thereby reduce
sme of the costs associated with a rapid restructuring. For instance,
te DM 12 billion in loans from West Germany would have enabled
Eat Gerany to avoid having to reallocate DM1 2xM4.4/DM=M53 bil
lion to ea the export revenue otherise necessary to pay for much
of the imprts that would occur under the 1 : 1 exchange rate plan. The
loans could then be paid back afer East Germany had time to gradually
rstture and invest enough into the expor industries to drive down
te cost of earing hard currency exports.
Fa larger and longer aid programs were very possible, given that
wester Germany in fact has already given about DM 1 trillion to easter
Gerany (and continues to give about DM1 50 billion per year). Even
without West Germany's support, many of the other Wester European
countries themselves were delighted enough with the ending of the
Cold War (which the opening of the Berlin Wal l symbolized) and fear
fl enough of a reunited Germany that they appeared ready to provide
extensive fnancial help (which they could justif fnancially insofar as
tey
felt the need for less military spending in a more friendly exteral
world). Combined with the plan, a signifcant amount of aid and loans

uld have easi ly helped East Germany grow fast enough to catch up
WJ West Germany within a matter of 2 years (instead of the original
etimate of3-6 years, depending on the productivity and amount of pri
vate foreign investment). In fact, the initial 1 989 Murphy plan called
for a total of DM40 billion in aid or loans (to expand the telephone net
Wor, impor up to a million inexpensive used cars, improve pollution
cntrl, purchase technology, and buy foreign machinery to enhance
expr
and import-substituting production). When combined with the
apts of the plan described in this chapter DM40 billion could have
!tentially accomplished in 24 months wht it might, at current rtes
2 1 6 THE TRIUMPH OF EVIL
same time that "free market" chares are levied on health care, educ
tion, and other essentials that make it impossible for the poor to met
their most basic needs (Chossudovsky, 1 997). While some of these
changes have promoted greater economic efciency short-tenn, ad
while the privatization of many goverment-owned frms bas indeed
tended to make the privatized companies themselves more proftable
(D' Souza and Megginson, 1 999), the gains have generally accrued to
the richer elements of the world and been at the expense of the pr,
especially in less developed countries (Chossudovsky, 1 997).1 Pvca
within the victorious USA itself, the gulf between the rich and the p r
has widened significantly, as most if not all of the spoils of the USA's
Cold War victory have accrued to the rich (Teepen, 1 999), and even the
USA middle class has experienced a large reduction in their share of
the loot (Strobel and Peterson, 1 999). In addition, the efects of global
capitalism on macroeconomic growth or efciency have ofen ben
quite negative (Friedland, 1 999), as the case of Russia so clearly shows,
where aggregate productivity and output have dropped about 50/ since
the introduction of a free market system in the early 1 990s (Whalen,
1 999).
Potentially one of the most explosive efects of the trend toward freer
markets has been related to the removal of goverment restrictions
on international trade and currency markets (Cbossudovsky, 1997).
Although the elimination of such restrictions can cause an expansion in
trade and capital investment, which in tum can promote greater world
wide efciency and output (Soedersten and Reed, 1 994 ), it can also lead
to currency crises and large pockets of economic chaos and destruc
tion, as the 1 990s clearly demonstrate. While there are other attributes
of capitalist globalization, such as the spreading of megamergers and
stock option plans, as well as a "reverse Robin Hood" soiety (Kamm
and Vitzthum, 2000), currency crises have been especially notable for
the widespread sufering that they have imposed on the world.
The various currency crises of the 1 990s, especially those in South
east Asia in 1 997 (Lim, 1 997), have brought these issues to the for

front of relevance (Gibson, 1 999). Attempts have been made to explam

at least some of the events that represent catalysts for, or sympto

s
of, interational currency crises (Miller, 1 998), but existing theones
have not been very successfl in explaining even more stable situations
CHAPT 6 21 7
(aDnald, 1 990), much less the root strctural causes of the cur
rnc
y
volatility of the 1 990s (Ber and Pattillo, 1 999). Because these
crises cause so much economic sufering, especially for the less foru
nate, ad because they are not well-explained or understoo by capital
ist eonomists, they merit detailed study here. A general evaluation of
cency
crises (and solutions thereto) is provided in this chapter.
Cur ncy crises are caused by balance of payments problems that
generall
y
related to trade and curent account imbalances. Such crises
have ocurred fequently since the USA won the Cold War, as more
cuntries have been "persuaded" to follow the "free" market moel
"rmmended" by the victors and have found themselves with severe
balance of payments (BOP) problems. Such problems, and especially
imblaces in the interational currnt account (which include the net
bce on trade, services, investment income, and transfer payments),
rrt a serious situation that must eventually be addressed (Root,
1 9)
.
One classical solution to a curent account deficit is to allow the
dmestic curency to fal l in value and thereby discourage imprs
Wencourge expors to eliminate the imbalance (Afesoglu and Dut
o

sk
y
, 1997). Unfortunately, this solution ignores two problems: elas
tc
t
t of demand (Hufauer and Schott, 1 992) and infation induced
qcur ncy depreciation (Abuaf and Jorion, 1 990). Various alterative
slutios designed to avoid these problems exist, but some merely post
ad magnif the negative efects of curent account defi cits, while
*may not b feasible i n the New World Order.
CURRENCY CrusEs AFTER THE CoLD WAR
1990s have been mared by one currency crisis afer the other.
Alt
oug
there were interational economic crises prior to the 1 990s,

the tin merican debt crisis of the 1 980s (Witcher, 1 99),

W
nothmg hke the frequency and severity of the curency cnses

1990s, largely because of the existence of goverment regula-

tions
.
on
mtemat
tonal trade capital movements and curency exchanges

th
' 1
en
(Soedersten and Reed, 1 994). However, as goverments
e world began to reduce or eliminate their regulation of th
.
e
t

tonal
markets afer the USA's Cold War victory, trade and cap
l

0Was
well as exchange rates were allowed to fuctuate more freely
2 1 8 THE TRIUMH OF EVIL
(and ofen completely) at the whims of the marketplace, and the 199s
have demonstrated that free markets can cause large fluctuations in cur
rency values which can have very serious efects on the interational
balance of payments, inflation, and economic output.
A good example is provided by Yeltsin's capitalist Russia, which (at
the suggestion of its primary USA economic advisor, Harvard Univer
sity Professor Jefrey Sachs) made its currency, the ruble (Rb), frely
convertible in December of 1 99 1 (Hays, 1 991 ). Although the averae
purchasing power of the ruble in terms of what it could buy in real gos
and services was approximately the same as the dollar before 1991 (ad
therefore approximated the ofcial goverment exchange rate between
dollars and rubles that was about 1 : 1 at that time), Russia did not have
the products, reputation, and distribution system to be competitive in
interational markets (Williamson, 1 991 ). In addition, there was enor
mous pent-up Russian demand for foreign products, including not only
for electronics goods that had long been in short supply in Russia unde
communism but also for foreign brand-name versions of what W&
much more cheaply available in Russia such as blue jeans, cigarettes,
and cola.
This situation represented one of extreme inelasticity of demand rla
tive to price for Russian imports and expors (Caves, Frankel, and Jones,
1 996). In particular, Russians were willing to pay almost any price for
foreign gods in 1 991 , and the demand for (or addiction to) foreig
goods continues strong even many years later (Associated Press, 1 998).
On the other hand, foreign countries were unwilling to pay any price
for Russian goods, which had not yet been adapted to sell in foreign
markets, which had a poor reputation (from Cold War propaganda) if
they were known about at all, and which were not even being intera
tionally distributed yet on any large scale (with the marketing necessa
to "sell" and distribute proucts in capitalism being a ver costly and
time-consuming process).
As a result, when the ruble went fom being almost fully inconver
ible (in terms of severe restrictions on any currency trading) to sud
denly being fully converible in December of 1 991 , there was an enor
mous demand for foreign curencies like dol lars and almost no demad
for rubles. Not surpri singly, the currency immediately fell from abut
Rb l /$ to about Rb 1 00/$.
CHAPTER 6 21 9
Such an enormous devaluation had an efect similar to making the
cu ncy worhless, which would reduce hard curency exprts to $0
if prices in the domestic currency remained the same. For instance, a
voka exporter selling bottles at Rb5/bottle would have the amount of
dolla eared per bottle fal l from $5 to $.05 when the exchange rate
changed from Rbl /$ to Rbl O/$. At the same time, the dollar retail
price in an export market like the US might only fall by about a third
bus tansportation costs, tarifs, l i. uor taxes, and distribution costs
sch M dealer mark-ups typically make up more than 2/3 of the fnal
rtil price, and these costs may be largely independent of exchange
rtes-as is also typical for many other products (such as textiles) pro
dued in less developed countries, where even non-transportation dis
tbution costs (i.e., rent and capital costs incorporated into wholesale
ad retail mark-ups) easily make up over 2/3 of the retail value (Chos
sudovsky, 1 997). Even !f the 33% drop in the retail price could lead to
doubling of sales to 2 million bottles from 1 million, the amount of
expr revenue would fall from $5 million to 2,00,00x$.05=$1 00,00.
D_ te meantime, "needed" technology and Wester brand-name imprs
ougt only be halved despite 9900% higher Rb costs (caused by the
99 devaluation), resulting in a 4900% increase in Rb imports that can
10b paid for with a 1 00% increase in Rb exports. In this situation,
te W virtually no exchange rate that would balance the payments
for te (or the interational current account). Only investors seeking
to
.
buy up Russian real estate and fxed assets at some extremely low
pnces (like 1 11 00 of the prior cost) could bring the supply and demand
for rbles into the equilibrium at 1 00 rubles per dollar.
However, such a situation could not and did not last long. Exprters
prefer not to maximize revenue in a worthless currency, and so they
1N|Iyincrease their domestic currency prices in such a predicament
M

ps using collusion), unless there is both perfect competition and

cJent capacity to meet the higher unit demand. With importers also
vmg to raise ruble prices to pay the same dollar price but with far
or

bles (and with those competing with imporers doing likewise),

t trediate hyperinflation in Russia was the natural result, with

_on rising fom 5.4% in 1 990 to about 1 00/ by the end of 1991 and

ut 13

% in 1 992 (IMF, 1 993). At the time of the devaluation in

' the
chatrman of the Russian central bank (who disagreed strongly
220 THE TRIUMH OF L|l
with Yeltsin and the imposed policy) predicted the effect "would 0
something much more destrctive than an atomic bomb" (Hays, 1 991).
In fact, the resulting chaos permitted organized crime to seize a vast
portion of the economy in Russia, as such rich criminals were among
the few willing to take the risk and enter into the uncertain Russian
market to seize many assets whose prices were close to zero at |t
going exchange rates for those with foreign currency (Raith, 1 994).
Organized crime in the form of drug trafcking and black market activi
ties (including in previously i llegal foreign currency transactions)
|
si
already begun to seize signifcant economic power in the Soviet Union
under Gorbachev's market reforms in the late 1 980s (Marcy, 1 99),
with a claim on annual revenue in excess of $ 1 00 billion by 1 99 (0cr
Tagesspiegel, 1 990p ). However, Russian mafa groups were able to uti
lize the chaotic economic environment of the 1 990s to greatly expand
their activities and wealth. For instance, afer the convertibility of |r
currency in late 1 991 , they i ncreased their smuggling activities o

a
potentially far grander scale than was possible under communism, o
the proftable purpose now being the avoidance of goverment mns
(Davis, Cloud, and Becker, 2000), as opposed to the avoidance of
currency controls under communism. In addition, organized criminal
groups in Russia have begun to extort most businesses in that cou0|Q
(including foreign ones) to pay them 1 5-30% of their revenues as "pro
tection" against violent attacks and murder (Roth, 1 996). As a result
of this huge increase in income, the Russian state prosecutor's ofce
estimates that mafa wealth has grown to the point where about h
.
altof
the entire Russian economy is now under "mafa control" (Dommwn,
1 999).
Besides causing hyperinfation and laying the groundwork for mafa
seizure of economic pwer, the removal of currency controls also cre
ated the opprtunity for imports from Western countries to win a ver
lare share of the Russian domestic market. While the Wester gos
were ver expensive at the ridiculously low market exchange
rte,
the pent-up demand for such goods (along with their quality ima

e
and superior technology) motivated signifcant purchases. Much ofthts
demand for foreign impors came from the growing Russian
mafa,
whose criminal activities gave them an ever-increasing share of disps
able income in Russia, and whose riches enabled them to pay almost
CHAPTER 6
221
}price for foreign l uxury goos. The increased demand for foreig
luxu impors reduced real demand for domestically produced goods,
terby forcing many Russian companies to cut back domestic prouc
tion ad employment (thus creating unemployment in Russia). With
gssrevenues for Russian companies reduced by falling demand for
teir production and with their net revenue further rduced by the mafa
extorion payments, the amount of money lef to pay wages and gov
ement taxes was greatly reduced. The result was lower real wages
ad even a suspension of wage payments altogether at many Russian
cmpanies (Economist, 1 998), while the drop in W revenues reduced
te fnancial power of the goverment to provide economic aid to the
incrasingly large number of poor Russians at the same time that it
ruced the ability of the goverment to fght the mafa which was caus
ing many of the problems.
In actual fact, the growing economic power of the mafa increased its
plitical infuence to the point where it virtually controls an increasingly
crpt Russian goverment (Roth, 1 996). 2 The goverment therefore
cn no longer even make a meaningfl attempt to terminate the crminal
cycle of reduced domestic demand causing reduced domestic income
cusing reduced domestic demand. I t would have theoretically been
psible to stop such a vicious circle (even without goverment inter
vention) if sufcient private investments had been made into new Rus
sia pouction facilities that would have domestically met the demand
|:luxur goods in the new capitalist order (i . e., if new factories ad
be n crated to produce for those with a signifcant amount of spendtble
icome and wealth, which is concentrated in the hands of rich Wester
:

+:and the mafa). However, the economic chaos, crime, and cor
rption in Russia scarred of most investors, including not only West
Pcompanies but also to some extent the Russian mafa itself, which
invested an estimated $500 bi llion of its loot outside of Russia in the
1
9 (Barn s 1 999).
economic chaos, crime, and related cycle of ever-falling real
and for domestic goods certainly contributed greatly to the prouc
ltvtt
and output decline in Russia that approached 500/ in the 1 990s

1 998). More specifcally relatively greater income in the hands

1the
mafa reduced the demand tor (and output of Russian industries
Pucing non-luxury goods for the masses (and thus impoverished
222 THE TRUMPH OF EVIL
most Russians, whose own limited purchases of imported goods als
contributed to the decline in domestic demand, output and income). This
uncertain and depression-like environment geatly decreased domestic
i nvestment into new productive capital assets, thereby resulting in a
reduction in demand for (and output of Russian heavy industries that
not only caused a frther reduction in demand but also led to a signif
cant decline in productivity and competitiveness.
There was also a serious worker morale problem, which caused a fr
ther deterioration in productivity. The morale problem was associated
not only with an inability of frms to pay wages but also by a worker
realization that wealth was obtained via crime and not by productive
activities. As one of the largest Russian businessmen, Boris Berezovsky,
stated, "There is no doubt that any person who did business in Russia
over the last 1 0 years broke the law" (Cullison, 2000c).
The chaotic mafa-controlled economy also made possible (and
encouraged) a fraudulent decline in tax payments (Himes, 1 999). The
resulting decrease in goverment tax revenues (combined with outside
pressure from the IMF and others to reduce goverment budget def
cits) reduced the ability of the Russian goverment to create much real
domestic demand via transfer payments or spending on the Russian
defense/aerospace industries (the latter of which also reduced Russia's
ability to resist foreign pressures for further destrctive reforms).
The large real i ncome declines in Russia were also partially caused by
the Russian central bank's successfl attempts to eventually bring the
devaluation-induced infation under control with monetary tightening,
dropping it from 1 353% in 1 992 to under 1 5% by 1 997 {IMF, 1 999). In
paricular, monetar tightening increased interest rates, thereby reduced
borrowing for purchases, and therefore frher decreased domestic
demand for real output that in tum reduced real incomes and increased
unemployment (at the same time that it successflly contributed to the
central bank's goal of lowering infation via reduced upward pressur
on the prices of real goods and services).
Besides being used to help stop the infation caused by the currency
depreciation, the very large real income decline in Russia also solved the
balance of trade problem. In particular, it reduced the demand for for
eign products (as people had less income with which to import goods)
and made Russian exports more competitive (as unemployment drove
CHAPTER 6
223
down real wage demands). This patter of reducing real income in order
to solve infation and balance of payments problems (which themselves
wer caused by opening up the domestic market to foreign impors) had
als ben followed in other formerly communist counties of Easter
Eurpe (such as Poland and Hungar) that had been transforming them
slves into capitalist societies, albeit generally in a less rapid fashion
ad therefore also on a less extreme scale (Will iamson, 1991 ).
|+addition, because the Easter European countries had previously
(under communism) conducted most of their interational trade (via a
qof multilateral barer) with each other (Gwiazda, 1 986), the decline
.+rl income in each countr contributed to a decline in demand for
imprs from the other Easter European countries and frther magni
PMthe depth of the economic depression throughout the area. The pro
Wof opening up their economies to Wester imports, thereby causing
delining economic output and declining trade with each other (which
cu frher declines in economic output), had actually begun in 1 990
Nthe other Easter European countries with the election of capitalist
goverments there in that year, but the Soviet Union had also already
cntributed to frthering this reduction in trade and real income in early
191 (even before it made its currency flly convertible in December
91) when it switched from a system of multilateral barer trade with
ts Easter European neighbors to a system of requiring hard currency
pyments, which few there could aford to make (Williamson, 1991 )e
!ma seizure of economic power in most of the other Easter Euro
[countries was a natural ocurrence in this environment, just as in
R
ussia
(Raith, 1 994)
.
Tresult has been a long-lasting decline in real annual economic
ot and income in this area of the world of almost 50%, as previ
Oly mentioned in this book. Although some modest economic growth
Wrecorded in some Easter European countries in the late 1 990s
(SUch g
in Poland, Hungary, and the Czech Republic, which have suc
fly attracted significant amounts of real foreign investment}, the
leion $ real output remains very far below that of the level of 1 989

1
998: 1 7 1 ).
economic crisis in Easter Europe in the 1 990s is actually ver
lar
to that in other countries around the world (bth bfore and
1
9), with crime and povery increasing signifcantly afer an ini-
224 THE TRUMPH OF EVIL
tial opening of the domestic market to impors forced a lare curncy
devaluation (Chossudovsky, 1 997). The major reason for the growing
frequency and intensity of the currency crises of the 1 990s is the fact
that the Cold War winners (the USA and its allies) now have relatively
greater political, propaganda, and military power to put more pressur
on countries with protected markets to open up their markets faster.
In addition, the sheer magnitude of the Easter European catastrophe
itself contributed in part to the currency crises in the rest of the world in
the 1 990s. For instance, while the opening up of the Easter Europ
markets to foreign imports initially increased demand for production
outside that area, the subsequent drop in real income in Easter Eurp
eventually resulted in a decrease in demand that contributed to a world
wide economic slowdown in the early 1 990s that was most deeply felt
in Wester Europe and that eventually spread. In addition, the reduction
i n real wages in Easter Europe made exports from that region mor
competitive in comparison to the production ofless developed countes
whose real wages and income also had to fal l to remain competitive in
a cycle that spread the crisis and income decline far beyond the initial
time and place (Chossudovsky, 1 997).
THE SPECIAL EFFECTS OF THE DISASTROUS GERMAN
UNIFICATION POLICIES
Perhaps the economic catastrophe in Easter Europe that had the
greatest negative efect worldwide was that in East Germany. In pa
ticular, a significant contributor to the various economic crises of the
1 990s was Germany's disastrous unifcation policy, which resulted in
the destruction of the East German economy.
Under the terms of the 1 990 unifcation treaty, the united GermanY
efectively had to pay for any resulting unemployment and soial costs
resulting from the capitalist unifcation policies. Those policies indeed
caused unemployment in East Germany to efectively rise from to
about 40% (Sherref, 1 996), and Germany was thereby sacked with an
enormous debt load to pay the welfare benefts of over $1 00 billion
per year (Aalund, 1 999). To maintain a stable currency value for the
German mark in this situation, the German central bank had to raise
real interest rates to their highest levels since the country's founding in
1 949.
CHAPT 6 225
Incrsed rates in Germany pressured interest rtes higher throug
h

out te rest of Europe, as a European curency treaty (the Eurpean

Monet Union) obliged other Wester European countries to maintain
e
xchange rates within a fxed 2.25% band against the German mat
tat te (Eiteman, Stonehill, and Mofett, 1 998). These higher interest
rts slowed economic growth in Wester Europe so much that specula
ton ase about the ability of some of the countries to maintain such
high ral interest rates and keep their currencies within the contractual
2.25% band. This speculation was concentrated on countries whose cur
rt acount defcits had to be fnanced with the capital iows of inter
nional investors. As currency investors and speculator demanded to
b co
m
pensated for the increasing risk of the currency values falling
blow their lower bound in the European Monetar Union, interest rtes
rse even higher in such countries. With interest rates being force ever
higer in the countries with the weak currencies, the pereived likeli
of them being able to maintain the high interst rates (which wer
de ning an economic slowdown) was reduced frther still. As the
prbility of devaluation rose, so did interest rates and vice versus in
tnever ending spiral, until, despite single-digit iation, interest rtes
rche 100% and higher in some countries in the face of enorous
sulative attacks. Finally, i n this European curency crisis of 1992,
tnumber of countries (e.g., Britain and Italy) droppd out of the cur
rc
y ageement, while the other countries were forced to widen their
echage rte band to 1 5%.
.
Although European i nterest rates subseuently fell, rtes bad been
,enough for long enough to force interest rates higher in Jaan (to

top excessive capital outfows there) and to cause a general recession

Euop m the early 1 990s. The higher Japanese interest rates (com
bmed later with the recession in Europe which reuced the demand
o Jaese exports) caused a recession in Japan that burst its specula
ve
stok
market and real estate bubble (Peterson, 1990). Despite much
_
wer Japanese interest rates subsequently (falling even to 0%
in the
l99
0s), Japan has been remained mired in a serious economic slow
te
wn t
h
r
ughout the 1 990s as a result. At least par of the reason for

prolonged nature of the economic slowdown in Japan has to do with

ft that Japanese bank lenders have been unable to foreclose on or
ls
ss
many of the recession-related bad real estate assets because
226 THE TRiUMPH OF EVIL
about 40% are controlled by Japanese organized crime, which pur
chased them on credit i n the 1 980s speculative bubble (Kaplan, 1 998),
and which has gained enormous power through violence and threats,
including extorting major Japanese companies for over $ 1 billion a yea
in retur for just not disrupting their annual meetings (Becker, 1 997b).
Without being able to obtain a liquid recovery of their enormous bad
debts, whose book value i s estimated to be about $ 1 trillion (Desmond,
1 996), the banks have been reluctant to lend money to productive enti
ties, and so the economy has stagnated without the domestic investment
of an adequate amount of capital.3
In tum, the economic slowdown in Japan negatively afected expors
from Southeast Asia (both through reduced Japanese imports from
Southeast Asia and through greater competition from Japanese frms
seeking to export their excess production to the rest of the world) and
therefore contributed to the balance of trade problems there that led to
the Asian currency crisis of 1 997 (Henderson, 1 998). The Asian cur
rency crisis in tum led to the Russian currency crisis of 1 998 and the
Brazilian curency crisis of 1 999 by slowing world economic growth
and by making the production of countries like Russia and Brazil rel
atively less competitive (i. e. , countries like Russia and Brazil were
pushed over the brink, as they already were only marginally competi
tive interationally before the crisis, and the devaluation of the Asian
currencies made their products even less competitive). Even the cur
rency crisis in Mexico in 1 994 could be partially blamed on this chain
of events as the economic slowdown in Europe and Japan (as well as
lower priced competition from Easter Europe) had a negative impact
on that country's interational current account, which in tum led to the
collapse of the Mexican peso in 1 994.
THE SPREADING CURRENCY CRISES
In and apart from the fact that the major currency crises later in the
1 990s at least partially spread fom the initial Easter European crisis
of the early 1 990s, these later crises also had other simi larities in terms
of being fndamentally caused by the same economic forces (which in
tum related to the imposition or existence of global free markets or cap
italism). In particular, in all the crisis countries but Russia in 1 998, the
current account defcits had for years been very large as a percentage
.
of
GOP (8% in Mexico and Thailand, 5% in South Korea and Malaysia,
CHAPR 6 227
3% in Indonesia, and 4% i n Brazil), while the current account defcit in
Russia had just ted negative before its newest curency crisis in 1 998
(to Mannualized amount equal to 4% of its GOP in the second quarter
v998). In all but Malaysia, the current account had deteriorated in the
ye before the crisis, at least in some cases beause of an earlier reduc
ton in relative protectionism in the crisis countes (ust as in Easter
Eup in the early 1 990s). For instance, Mexico had long had a rela
ti
v
ely higher level of protectionism compared kits major Norh Ameri
Wting partners, and it had been reducing this level gradually (and
signifcantly) in the years prior to 1 994 and then proeeded to do M
mor quickly with the imposition of the Norh American Free Trade
Agement (NAFTA) in 1 994 (Murphy, 1 995)." In addition, the increase
in the curent account defcits i n Asian countries prior to their crisis in
197 was at least partially caused by increases in protectionism (espe
cially by the developed countries) against their imports (Chandrasekhar
WGhosh, 1 998) at the same time that a prior world trade ageement
(under GAIT), along with a local trade agreement (ASEAN), had forced
to opn up their own markets more (Vatikiotis, 1 995).
A lae decline in the currency value or real income was therefore
=mto bring the account back into balance. In each situation, high
Minterest rates (over 5% above the domestic inflation rates) had been
ptning a needed devaluation until there ocured some event or
clyst, which signifcantly raised investors' subjective estimate of the
proaility that a currency devaluation would be used to solve the BOP
pblem
. The interest rates required by investors to compensate them
lv! the higher risk of the expected devaluation-related losses therefore
":ad the crisis countries were forced to devalue because they could
Wmaintain such prohibitively high interest rates.
While the fundamental economic situation prior to each crisis was the
,the
catalyst that triggerd the crisis was diferent in each case

-
,
the event that motivated investors to greatly raise the interest rate
} to fnance the current account defcit varied). In Mexico, a
lg politician's statement in late 1 994 indicating an intention of the
-

..

-gove
rent to crack down on organized crime resulted in a

h
ea
v outfow of mafa capital fom Mexico (Murphy, 1 995) that

leted Me

ico's foreign exchange reserves (

hich

ere exp
d

to
Mthe capttal outfow from causing a large 1mmedtate devaluation)
228 THE TRUMH OF EVIL
and caused investors to question whether Mexico could continue to b
able to aford to postpone a devaluation solution to its enormous curent
account defcit (Agenor and Masson, 1 999).5 In Southeast Asia, it wa
1 997 revelations of excessive bad loans at many local banks (which had
increased with the rising current account defcits) that caused investor
to question whether the high real interest rates needed to postpone an
immediate devaluation could be maintained in an environment where
cleaning up the large banking problem might result in substantially
reduced lending and economic growth (Mil ler, 1 998). In Russia, it was
widespread production stoppages and political unrest in 1 998, caused
by an inability to pay current or past wages for a large numbr of work
ers (Economist, 1 998), that reduced investor confidence in Russia's abil
ity to solve its growing BOP problem without a devaluation. In Brai
although real interest rates in excess of 30% and sizable IMF financing
had protected the currency fom a devaluation for some time despite a
severe BOP problem (Bennett, l 999a), a January 1 999 default of a local
Brazilian goverment on its debts to the national goverment virtually
eliminated any investor confdence in the country's ability to avoid

n
immediate devaluation solution to its current account deficit (Goldstem,
1 999).
Once the catalyst created the first signs of capital fight (as evidenced
by declining foreign exchange reserves for the country with the c-
problem, for instance), herding behavior amongst investors magmed
the efect, as a belief spread that the initial capital flight was bemg
undertaken by knowledgeable investors (Calvo and Mendoza, 1 994). As
some investors increased their estimate of the probability of a devalua
tion, downward pressure on exchange rates occurred that could only
.
b
stopped with higher interest rates and/or expenditure of frther for

tg
exchange reserves to prop up the currency value. These events provtd

d
a signal to other investors to raise their own estimates of the probatl
ity of devaluation, furher raising investor expectations of a devaluation
being used to solve the BOP crisis (which in tum put frther pressure on
exchange rates in a rapid cycle). Once the perceived probabi lity of M
immediate large devaluation increased toward 1 00%, the interest cost
of funding the current account deficit became prohibitively large from a
domestic economic and political perspective, and the countries allowed
their currencies to fall substantial ly. Thus, investor expectations of an
CHAPTER 6 229
id chance of devaluation essentially resulted in a self-flflling
phey.
|+addition, devaluation in one or more countries increased the likeli
that competitor countries would also have to devalue just to pre
vet their own current accounts from deteriorating, and so the crises
sd. For instance, the 1 997 Asian crisis actually began in Thailand
W then spread to other competing Asian countries. Moreover, the
csis in Russia in 1 998 and in Brazil in 1 999 were partially caused
qthe 1997 Asian currency crisis, as the devaluation of the Asian com
pitor led to larger curent account defcits for Russia and Brazil. In
w where competitor countries did devalue, the size of the devalu
W neded to solve the BOP problem in the original crisis country
Ncountries increased, and this cross-contagion efect also contributed
te lae size of the currency declines (which equaled over 500/ in
M
e
xico, over 70% in Indonesia, over 40% in South Korea, over 30% in
Tland and Malaysia, over 70% in Russia, and over 40% in Brazil).
|+eh of the devaluing countries, interest rtes had to be raised sig
nifctly afer the currency depreciation to prvent hyperinfation and
Ncur ency declines, and, as a result, a signifcant real income
dline ocured (which reduced the need for frher currency devalua
IFor instance, the monetary tightening caused real GDP to fall by
sin Mexico in 1 995, while real GDP also fell by over 5% in Thailand,
Kora, and Indonesia in 1 998.
_ ! curency crises, and subsequent economic decline, caused an
`
in bank
rptcies and loan defaults that exasperated any existing
bg prblems in the countries, which in tum magnifed the extent
|Weconomic downt as banks saddled with bad debts were not
ma
g
o
.
.
psttton to lend and suppor economic @W. Banking prob-
,
*
f
her magnifed in this environment if the banks had been
.
vtly ficed with foreign currency debt that rose in value in domes
cr cy ters as the domestic currency depreciate (Henderson,

I. ln cases where the banking system had been relatively healthy

__
of foreign curency debts to begin with, the real income
W
wer not as severe. For instance, before the 1 997 currency

te Philippi
?
es had a large current account defcit of 4.8% but a

ste
r Wt(h fewer bad loans and foreign currency debts tan
Asta countries (Tanzer, 1 999). While it sufered a devaluatton
230
THE TRUMH OF EVI
of over 35% during the 1 997 curency crisis, its real GOP fell b
y
}
0.5% thereafer. The developments in the Philippines provide pac
larly stong evidence that the banking problems were not the cau of
the Asian crisis but merely a catalyst (and were perhaps also a smptom
that magifed the negative efect on real GOP, which was natul
reduced as the curency crisis intensified the lending problems of te
banks with foreig curency debts). Morever, although the bg
and debt problems of many of the devaluing Asian countries have still
not ben solve, and in some cases have intensified (Or, 1 999), O
rencies have stabilized (and even reversed their declines) as the ve
Large devaluations have enabled the current account defcits to dis
Q(or even t into surpluses).
The Asian crisis also afecte countries without extremely large c
rnt account defcits but proprionally less. For instance, even India
with a minor current account defcit of only 1 . 5% sufered a mild cur
rency devaluation of abut 1 5%. Although capital controls in India my
have aide that country in avoiding an aifcial curency decline relate
to spculative cpital flows, the fairly small curent account defcit did
require sme exchange rate adjustment. L the other hand, an Asia
comptitor like communist China with a current account surplus did 0
sufer any devaluation at all, even though it m very serious bg
problems and even though the widely touted currency controls in L
were not strict enough to prevent a capital outflow of over $10 billio
there (Lachica, 20).
In sme of the crisis countries (such as in Asia in 1 97), the c
rency diated more thn enough to balance the current '
White thes counties Mminterest rates sigcantly mO
causd a dep eonomic downt in their countries, the gov
et
of nations did no fel it plitically feasible to raise intert M
to the level need to maintain an exchange rate that would just bla
the cUa t. mparicular, capital otflows ad the probabil
ity
of
the initial dvaluation causing a ver rapid incree in domestic infa
tion (ad foring devalutions) ro so much afer the devalu
ation m the interet O reuire to maintain an exchange rate Np
enough to just b the cUt account bm prohibitively Np
For mM, m Indoesia, a plitical crisis (caus by the
itiO
and rel mm lO that were brought on by the deval
uation itlf
CHPR 6 23 1
it sially impssible k raise interest rates sufciently to stop the
daluation-inflation-devaluation spiral, as the plitical crisis itslflow
minvestor expctations that the cycle could b avoided (although the
ccle w eventually stoppd, and hyprinfation avoided, by a demo
ctic slution to the plitical crisis and a creible mon tighten
ig
)
cr cy crisis in Malaysia deviated slightly mthe rest baus
of a pcla plicy option it selete. In paricular, Malaysia imp
citl conls afer the onset of its currency crisis in 197 that allowe
it rt to fll more rapidly than otheris (at the sme time that
Wc c diation was minimized to the approximate pint ne
just elte the Ct t decit), ad the countr
t minimize the shor-ter negative M of the crisis on real
W(Phillip, 1 9).
Russian crisis of 1 98 develop chistics similar to tho
ofb Inesia and Malaysia. The 1 98 Russia crisis was pariall
0Wthe erlier devaluationya tion csis there 0 m
wwcpitalist Yeltsin goveent Um the inconveible
Rus i ruble into a coveible curecy in 1 91 . Although infation
stabilit wee eventually containe Russia's tight mn
plc in the mid- l 9, the O account wet into decit in
+the Asian O m (and daluations) slowe wold
p and demand (and mae Russian pro less co

lof the pior hynation a b the continu

-
io in Russia m O a ve plitiil
9mVM
pe 0 plity of an immiate devaluation
N=bWBOP problem in Russia to b s high mqc was
M kKm0sitution ee Wrel int ove 1 A
w
sial fg instittio mthe IMF. In p
Ppoblems in Rmm invC=s

sigs O feof aluatio a infatio (O, 1 98).

Wcotinuing dsio msial cha M
^of 0 abilit of O H M
^ W of ovedu u W@Mm~

0of W govCt uing gW h

*Mpg g@0mW@MwI

1
9). Im
ilaici of qrlative Hechge M
232 THE TRIUMH OF L|l
changes (Associated Press, 1 998) and capital fight (Economist, 1998)
made the needed currency decline especially large. Fol lowing the :s
devaluation in 1 99 1 , Russia has used capital controls to stabilize the
situation (Economist, 1 999b ), insofar as excessive currency deprecia
tion was avoided. As a result, while GDP in Russia fel l initially afer its
crisis in 1 998 (Barlay s Economic Review, 1 999}, it has since rcov
ered strongly for the frst signifcant uptur since the 1 980s.
Although Brazi l was widely expected to fal l into the same patter M
the other crisis countries, with a decline in its GDP initially expecte
to be over 5% in 1 999 shortly afer its currency devaluation (Bennett,
1 999b ), 7 it underook an alterative strategy that led to signifcatly
diferent results. In Brazil, the replacement of the central banker with
someone with close connections to lare foreign i nvestors resulted in
such enhanced investor confdence that the country was able to avoid
having to raise interest rates as much as otherwise (Katz and Cohn,
1 999), at least not to the level needed to cause a deep recession and rel
GDP decline of sufcient size to eliminate the current account defcit.
As a result, Brazil was the only country in the group of examples whos
current account defcit continued as a signifcant percent of GOP (Wal
Stret Journal, 2000b }, as opposed to turing into a balanced or surplu
current account in the case of the other crisis countries. Note, however,
that Brazil bas merely succeeded in postponing a solution to the curnt
account problem into the future, and, in the meantime, the real interest
rates charged to consumers are over 1 00% (Fritsch, 2000).
THE REAL EFFECTS Of CURRENCY CRISES
Current account defcits are endemic to global capitalism for reans
related to heterogeneous preferences for the timing of consumptiOn
(Obstfeld and Rogof, 1 995), changes in the terms of trade (SIz,
1 988), temporary productivity and goverment spending shocks (Ghck
and Rogof, 1 995}, and optimization of investment outlays (Dcllas ad
Gal or, 1 992). Regardless of the cause, current account defcits must 0
reversed so that the fnancing for the defcits can be repaid (Obstfeld
and Rogof, 1 995}, and chronic current account defcits represent 4
especially serious situation that has to be addressed (Yusof, 1 997).
The
classical capitalist solution to a current account defcit can only lead to
devaluation-infation-devaluation cycle that must eventually be stopped
with a real income decline in the country with the BOP problem.
CHAPTER 6 233
Te decline in real income necessary to balance the interational trade
ad curent accounts in free market capitalism is invariably concen
trted in the lower income groups (Catalinotto, 1 998d). For instance, in
Eter Europe, unemployment rose fom 0% to about 1 0%, and it is
etimated that 50-80% of the population have fallen long-ter below
te pvery line (Becker, 1 997a). Real wages fel l by about 500/ in
Mexico afer its crisis in 1 994 and still have not completely recovered
(Wall Stret Journal, 1 999). This concentration of the negative efects
on the poor is ofen considered to be economically neessar because
uppr income groups tend to be more mobile interationally, and so a
ruction in their i ncome can lead to the emigration of the most skilled
labr and capital fight (Bhagwati, 1 977), which can cause real pro
ductivity declines and result in furher BOP problems (Soedersten and
Re, 1994).
To make the necessary income losses for the poor politically more
palatable, evidence is ofen spread purporting to suppor an assertion
tht the richest are entitled to an even large share of the pie because they
N the most productive and employ their wealth in the wisest fashion,
allegedly for the beneft of all (Strobl and Peterson, 1 999). This aru
mnt (esides being socially undemocratic) breaks down in the cases
of pple who obtain their riches via inheritance (Morgan, 1 999}, via
cre (Kiebnikov, 1 999) or via other unprductive and counterprouc
tive means. This argument also ignores the fact that the rich get richer
simply bcause they save and invest mor (Deardorf, 1 994). Never
teless, the trickle-down elitist dotrine is heavily marketed by those
with
more wealth (Foerstel, 2000}, even in countries with enormous
crt account surpluses (like Japan) where fear spread of fture
BOP
prblems (Blomberg, 1 999). To diver the attention of the prer
member of society fom the reality of their O impverishment
|wthereby make the rich stealing from the poor more politically pal
atble), racial/ethnic/religioussex conficts ofen stired up, so that
te attention of the less afuent elements is distracted by pure non
eo ic issues and/or by competition on how the small portion of the
GOp Pie allotted to them i s divided up (Strobl and Peterson, 1999).
Even without a deliberate i ntent to force the most negative efects of a
rl income decline on the por, tight monetary policies by themselves
nt
ully have an especially negative efect on the prer member of
234 THE TRUMH OF L|L
society. In particular, tight monetary policies tend to increase unem
ployment (and create more por people) and thereby also lower labr
demands and real wages (Chossudovsky, 1 997). Al though this unbal
anced efect on the poor is typically explained, or disguised, a col
lective efort to stop infation, more overt measures to soak the |
are frequently undertaken in conjunction (such as to reduce welfare, or
"reform the labor market" via a reduction in the pwer of labor union),
even though empirical evidence indicates that it is tight monetary plicy
and the reduction in real economic growth alone that usually slow infa
tion (Leyboure and Mizen, 1 999).
The heavy concentration of negative efects on the por and les
mobile elements of soiety is also ofen facilitated by policies suggeste
(or mandated) by the IMF (Chossudovsky, 1 997). The IMF, which is
controlled by the superior voting rights of the developed countries that
provide most of the fnding for the organization, " ofers loans to coun
tries with balance of trade and current account problems (Eitema,
Stonehill, and Mofett, 1 998). It thereby permits countries to delay the
currency devaluation-infation-depression spiral. However, IMF loas
have to be paid back and therefore only delay the occurrence of that
spiral, and they actually eventually magnif the problem as the br
rowed amount has to b paid back plus interest (Chossudovsky, 1997).
Moreover, the IMF typically provides loans to temporarily fnd 8 cur
rent account problem only i f the recipient country increases regressive
taxes (such as sales or value-added taxes), decreases benefits to te
poor (such as reduced welfare payments and goverment subsidies for
essentials), and reduces regional wealth realloations to porer W
(Mufson, 1 992). Ofen enough, the IMF has even mandated restrictions
on nominal wage increases in the debtor country (IMF, 1 986)e A_ a
result, these measures tend to increase poverty and sufering even I
showcase countries where some real overall economic growth is eventu
ally exhibited (Konadu-Agyemaog, 1 998). IMF lending conditions
.
can
have especially dire consequences on average people's lives in U8ll0P>
that are already aficted with extreme poverty and that can ill-aford the
typical real income decline which IMF policies typically cause (Chos
sudovsky, 1 997). In addition to their negative efect on the
welfar
of capitalist countries (or countries in transition to capitalist systems),
IMF-imposed conditions have also been ver successfl in causing
ver
CHAPTER 6 235
sous eonomic problems in communist countries, such as Poland
bfore its collapse (Marcy, 1 982) and more recently in countries like
Vietnam and Yugoslavia (Chossudovsky, 1 997).
An alterative (or supplement) to delaying the resolution of a bal
ace of trade problem with an IMF loan is to attract foreign capital
fnding for the payments defcit. However, like the IMF, private inves
tor rquire repayment, and generally at a real market rate of ret in
excess of what the IMF might charge (Root, 1 990). This rate of retur
my b fairly high because it must compnsate the investors for the
expcted eventual depreciation of the curency (King, 1 998). Even if
foreig investors reinvest their capital and investment income in the
cunt, the efect is merely pstponed and compounded to some future
date when real payments (such as in exprts) begin to be required. The
dy of rckoning can not be postponed indefnitely, as eventually the
foreign providers of fnancing will efectively own the entire country,
Wthere will be no more capital or collateral to ofer them.
lo addition, although private investors might have less clout to directly
force draconian policies on a country within a loan contract, they can
iditly create the need for such plicies by refsing to provide (or
=)creit at a reasonable rate (or at all) unless such policies (ofen
laled "fscal and monetary responsibility") are indeed fol lowed (Solo
1 9). To appase foreign investors, many countries even appoint
ple to key positions of pwer (such as central bankers and ministers
of fnance) who have been indoctrinated with a USA education in capi
list economics (Torres, 1 999), who have connections with large for
t|ginvestors (Katz and Cohn, 1 999), and/or who have actually come
frm prior employment at foreign creditor institutions like interational
=t:(Chossudovsky, 1 997).
.
Reless of whether exteral fnancing is obtained from private
mvestors, foreig goverments, or interational lending agencies like
WlMF, it can only postpone the negative efects assoiated with a
phaving to eventually reverse a current account defcit, at which
the negative efects will occur in a magnified form. However,
f Sh fnancing reduces the need for (and chance of an immediate
dealuation, real interest rates do not have to be excessively high, and
=
necessary devaluation and real income decline (required to even
tlly slve the BOP problem) can be made gradual ly. Such a gradual
236 THE TRIUMPH OF L|L
solution can easily result in 0. 5% lower annual real economic grow
for many decades (and may thereby be worse than an immediate deval
uation solution).
PoLicY OPTIONS TO PVOID CuRRENCY CRISES IN THE NEw
WoRLD ORDER
The negative efects of BOP problems, and the resulting currency
crises, are not necessarily inevitable, even in a capitalist world, &
numerous policy instruments can be employed in an attempt to avoid
or mitigate those efects. However, the standard policies for doing W,
including adopting a rigid monetary policy (l ike a gold standard or cur
rency union), imposing capital controls, increasing relative protection
ism, and improving productivity, are ofen inefective or can not b
implemented in the new order of global capitalism. On the other hand
the economic plan proposed in Chapter 5 may represent a viable solu
tion to BOP problems even in the USA's New World Order.
Gold Standards and Currency Unions
One proposal for directly avoiding currency crises is to eliminate fuc
tuations in exchange rates through a rigid currency system, such via
a gold standard or a curency union (whereby diferent countries or
regions adopt the same currency). A simi lar monetary policy that is not
supposed to permit exchange rate fluctuations can be imposed by estab
lishing fxed exchange rates between paper currencies and/or defning 4
precise anti-infation monetar policy (Flood and Garber, 1 984).
One major touted advantage of rigid currency systems is that a cu
rent account defcit can be theortically fnanced with an infnitesim
ally
small increase in domestic interest rates in such a situation (Ishiyama,
1 975). In particular, with all countries efectively using the same c
rency, it is not necessar for a countr with a current account defctt
(and a weaker currency) to pay investors higher interest rates to C
pensate them for the risk of a curency devaluation (King, 1 998). How
ever, such fnancing can only continue until foreigners efectively have
a claim on all the capital in the countr, at which time the real incom
consumption decline (needed to balance the current account) would sttll
have to fnally occur if the monetar policy is to be continued. Thus,
while a rigid system may lower the costs of fnancing a curent account
defcit (and may therefore not result in as lare a magnifcation of the
CHAPTER 6 237
prblem as without the rigid system), the overall efect is not materially
diferent fm subsidized IMF fnancing.
In adition, as explained by Flood and Garber ( 1 984), despite prom
ises ad guarantees, goverments historically have quit gold standards
ad other rigid monetary policies (like maintaining fxed exchange rates
bween currencies), usually well before the ending pint of having no
frther capital or reserves to pay of investors speculating against the
rgid system. The mere possibility of such a devaluation at any time can
Qm investors to require a signifcantly higher interest rate to continue
fe a current account defcit. If the needed increase in interest
rtes is extremely large because investors believe the probability of a
daluation is very high (as happens whenever the central bank lacks
sufcient credibility, and i nvestors engage in a "speculative" attack
..the cuncy), the goverent is ofen "forced" (efectively by the
in
vestor expectations of a devaluation) to abandon the rigid monetary
plicy (as the alterative of a deep economic depression caused by pro
hibitively high interest rates might be politically infeasible).
s.
-
that the probability of a devaluation in a fxed exchange rate
sstem, is afected by the legality of a devaluation (as is therefore
Btexistence of signifcantly higher interest rates). For instance, states
ue one federal goverment such as the 50 states of the USA are
W ve likely to be able to change from the use of a common cur
cy because it is not lawflly possible without a revolution or seces
...fom the system. However, it should be mentioned that revolutions
ad sions do occur even in a ver fxed federal system, as history
mdtcated in the USA in the 1 860s and in the Soviet Union more
rtly. In addition, it is more feasible for a currency change in a loser
fertion, such as in the 1 1 states of the European Monetary Union
|i,20), and completely separate nations can do M even more
tly. Moreover, countries with separate currencies C readily break a

e exchange rate system and foat or devalue their curencies. Thus,

does a common currency or fxed exchange rate completely

^
-the chance of a devaluation.
over, even with a common currency, diferences in default pre
~aherefre interest rates can ocur to the extent that the

-
of
tnd
iVidual states and entities within the curency union are
8anteed by the centralized federal system (Sims, 200 ). Such
238 THE TRIUMPH OF L|L
higher interest rates in one area can force real income declines there
earlier than otherwise, as in the case without a currency union. Regard
less, unless a current account defcit is permanently subsidized by other
states in the currency union with surpluses, or unless some other solu
tion to a BOP problem is employed (such as the one explained in Chap
ter 5), a current account deficit must eventually be addressed with a
decline in income/consumption (with the decline still being magnifed
by postponing it.
It should also be mentioned that, even without any devaluation and
even with approximately the same interest rates throughout a curency
union, use of the same currency does not naturally lead to equal pros
perity across the union
.
In particular, once an income diferential exists,
it can persist over many decades (or even centuries) even within a
common currency area, as the porer sections of the USA and Italy
so well i llustrate empirically (and as easter Germany is expected to
further verify with the disastrous unifcation experiment). One reason
income diferentials tend to persist is because income-raising invest
ment tends to b more attracted to areas nearest to the bigger markets,
which consist of people with higher incomes, as such nearby produc
tion facilities reduce the transportation/distribution costs of delivering
the products/services to those areas of high demand. Although capacity
increasing investment might be attracted to the lower income areas,
this income-narrowing process would cease once the wage diferentials
declined to the point where they no longer ofset transportation cost
diferentials. Another reason for persistence in income differentials is
that productivity-enhancing investment and mechanization tends to be
especially concentrated in areas with higher incomes, as the benefts
of such investment is higher in the wealthier areas with higher wage
costs. Finally, the most valuable "human capital" (i.e., the most skille
workers) is attracted to the areas of higher wealth, which can afford
to provide higher wages, more skilled jobs, and better living condi
tions through more investment in mechanization and infrastrcture
(thereby leaving mostly the less skilled and lower-paid workers in the
poorer areas and thereby "naturally" magnifing diferences in regional
incomes).9 While some of these problems can be miti gated with centrl
goverment subsidy, tax, and other policies, it is important here to point
out that a currency union (or other rigid monetary policy) does not solve
CHAPER 6
239
BOP prblems and, by itself, dos not represent an optimal metho of
avoiding curency crises.
LpIaIControls
A

other solutio

to a otproblem ofen proposed is to impse
cttal controls (Gtovanmm, 1 992). Capital controls were extensively
e

ployed y

ost all countries afer World War II to restrict capital

f|t (

d mhtbtt e
.
resuling downward pressure on exchange rates
-

mtght result minflation or require higher domestic interest rates

conteract), although these controls have now been removed in many

de

eloped countries that have accumulated sufcient capital to be

mtemattonally competitive (Dooley, 1 99
6
).
10
ita! controls can be used to stop the investment outows that
Wtll norally occur when investors perceive an increased chance of a
cu ncy depreciation, as so ofen happens afer an initial devaluation
(Age

or and Masson, 1 999). In paricular, capital controls are usefl for

t||e
*mga country to maintain interest rates below those that would oth
ewise b rquired to prevent a currency depreciation beyond the mini
mum devaluation necessary to create a balanced current account. As a
rult, an excessive devaluation (and the resulting infationar spiral)
Wbe avoided without incurring the excessive real income losses that
caused by extremely high interest rates. In addition, if currency con
ls ae used to restrict capital outfows while at the same time incen-
t
, ,
_
v

(such as M breaks, contracts guaranteeing investors access to

vW|@
exchange for repatriation purposes, trade barriers that encour
:local prduction, etc.) are provided for direct foreig investment,

may be possible to fnd a current account defcit with private capital

_etr

nt without having to raise interest rates (thus without immedi-

rl mcome losses) and without having to allow an immediate cur
Qdecline (thus without increasing ftur infation near-te
r
)
.
1 1
t
'
ital
controls are also useful for stemming capital fight for factors
not directly related to a curent account defcit. For instance,
__

.
controls can be used to prvent arifcial curncy devaluation
c ts caused
e
e
|t|
mstead by exogenous shock (such a random OI-
b
v
o
t
fow).
While an artifcial devaluation in such a situation might
r
ly
a temporary
efect (as the resulting fal l in the exchange rate
c
rate a current account surplus which would eventual ly pressure
238 THE TRIUMPH OF L|L
higher interest rates in one area can force real income declines there
earlier than otherwise, as in the case without a currency union. Regard
less, unless a current account defcit is permanently subsidized by other
states in the currency union with surpluses, or unless some other solu
tion to a BOP problem is employed (such as the one explained in Chap
ter 5), a current account deficit must eventually be addressed with a
decline in income/consumption (with the decline still being magnifed
by postponing it.
It should also be mentioned that, even without any devaluation and
even with approximately the same interest rates throughout a curency
union, use of the same currency does not naturally lead to equal pros
perity across the union
.
In particular, once an income diferential exists,
it can persist over many decades (or even centuries) even within a
common currency area, as the porer sections of the USA and Italy
so well i llustrate empirically (and as easter Germany is expected to
further verify with the disastrous unifcation experiment). One reason
income diferentials tend to persist is because income-raising invest
ment tends to b more attracted to areas nearest to the bigger markets,
which consist of people with higher incomes, as such nearby produc
tion facilities reduce the transportation/distribution costs of delivering
the products/services to those areas of high demand. Although capacity
increasing investment might be attracted to the lower income areas,
this income-narrowing process would cease once the wage diferentials
declined to the point where they no longer ofset transportation cost
diferentials. Another reason for persistence in income differentials is
that productivity-enhancing investment and mechanization tends to be
especially concentrated in areas with higher incomes, as the benefts
of such investment is higher in the wealthier areas with higher wage
costs. Finally, the most valuable "human capital" (i.e., the most skille
workers) is attracted to the areas of higher wealth, which can afford
to provide higher wages, more skilled jobs, and better living condi
tions through more investment in mechanization and infrastrcture
(thereby leaving mostly the less skilled and lower-paid workers in the
poorer areas and thereby "naturally" magnifing diferences in regional
incomes).9 While some of these problems can be miti gated with centrl
goverment subsidy, tax, and other policies, it is important here to point
out that a currency union (or other rigid monetary policy) does not solve
CHAPER 6
239
BOP prblems and, by itself, dos not represent an optimal metho of
avoiding curency crises.
LpIaIControls
A

other solutio

to a otproblem ofen proposed is to impse
cttal controls (Gtovanmm, 1 992). Capital controls were extensively
e

ployed y

ost all countries afer World War II to restrict capital

f|t (

d mhtbtt e
.
resuling downward pressure on exchange rates
-

mtght result minflation or require higher domestic interest rates

conteract), although these controls have now been removed in many

de

eloped countries that have accumulated sufcient capital to be

mtemattonally competitive (Dooley, 1 99
6
).
10
ita! controls can be used to stop the investment outows that
Wtll norally occur when investors perceive an increased chance of a
cu ncy depreciation, as so ofen happens afer an initial devaluation
(Age

or and Masson, 1 999). In paricular, capital controls are usefl for

t||e
*mga country to maintain interest rates below those that would oth
ewise b rquired to prevent a currency depreciation beyond the mini
mum devaluation necessary to create a balanced current account. As a
rult, an excessive devaluation (and the resulting infationar spiral)
Wbe avoided without incurring the excessive real income losses that
caused by extremely high interest rates. In addition, if currency con
ls ae used to restrict capital outfows while at the same time incen-
t
, ,
_
v

(such as M breaks, contracts guaranteeing investors access to

vW|@
exchange for repatriation purposes, trade barriers that encour
:local prduction, etc.) are provided for direct foreig investment,

may be possible to fnd a current account defcit with private capital

_etr

nt without having to raise interest rates (thus without immedi-

rl mcome losses) and without having to allow an immediate cur
Qdecline (thus without increasing ftur infation near-te
r
)
.
1 1
t
'
ital
controls are also useful for stemming capital fight for factors
not directly related to a curent account defcit. For instance,
__

.
controls can be used to prvent arifcial curncy devaluation
c ts caused
e
e
|t|
mstead by exogenous shock (such a random OI-
b
v
o
t
fow).
While an artifcial devaluation in such a situation might
r
ly
a temporary
efect (as the resulting fal l in the exchange rate
c
rate a current account surplus which would eventual ly pressure
236 THE TRIUMPH OF L|L
solution can easily result in 0. 5% lower annual real economic grow
for many decades (and may thereby be worse than an immediate deval
uation solution).
POLICY OPTIONS TO PVOID CURRENCY CRISES IN THE I|W
WoRLD ORDER
The negative efects of BOP problems, and the resulting curency
crises, are not necessarily inevitable, even in a capitalist world, M
numerous policy instruments can be employed in an attempt to avoid
or mitigate those efects. However, the standard policies for doing W,
including adopting a rigid monetary policy (like a gold standard or cu
rency union), imposing capital controls, increasing relative protection
ism, and improving productivi ty, are ofen inefective or can not b
implemented in the new order of global capitalism. On the other had,
the economic plan proposed in Chapter 5 may represent a viable solu
tion to BOP problems even i n the USA's New World Order.
Gold Standards and Currency Unions
One proposal for directly avoiding currency crises is to eliminate fuc
tuations in exchange rates through a rigid currency system, such via
a gold standard or a currency union (whereby di ferent countries or
regions adopt the same currency). A similar monetary policy that is nt
supposed to permit exchange rate fluctuations can be i mposed by esta
lishing fxed exchange rates between paper currencies and/or defning a
precise anti-infation monetar policy (Flood and Garber, 1 984).
One major touted advantage of rigid currency systems is that a cur
rent account defcit can be theoretically fnanced with an infni tesimally
small increase in domestic interest rates in such a situation (Ishiy
aa
1 975). In paricular, with al l countries efectively using the same cw
rency, it is not necessary for a countr with a current account defcll
(and a weaker currency) to pay investors higher interst rates to com
pensate them for the risk of a curency devaluation (King, 1 998). How
ever, such fnancing can only continue until foreigners efectively have
a claim on all the capital in the country, at which time the real incom
consumption decline (needed to balance the current account) would still
have to fnally occur if the monetar policy is to be continued. Thus,
while a rigid system may lower the costs of fnancing a curent account
defcit (and may therefore not result in as large a magnifcation of the
CHAPTR 6 237
prblem 8without the rgid system), the overall efect is not materially
diferent fm subsidized IMF fnancing.
In adition, explained by Flood and Garber ( 1 984), despite prom
ises ad guarantees, goverments historically have quit gold standards
ad other rigid monetary policies (like maintaining fxed exchange rates
btween curencies), usually well before the ending pint of having no
fer caital or reseres to pay of investors speculating against the
rgid system. The mere possibility of such a devaluation at any time can
Qm investors to require a signifcantly higher interest rate to continue
t fnance a current account defcit. If the needed increase in interest
rtes is extremely large because investors believe the probability

of a
dealuation is very high (a happens whenever the central bank lacks
sufcient credibility, and investors engage in a "speculative" attack
on the currency), the goverent is ofen "forced" (efectively by the
investor expectations of a devaluation) to abandon the rigid monetary
plicy (as the alterative of a deep economic depression caused by pro
hibitively high interest rates might be politically infeasible).
Note that the probability of a devaluation in a fxed exchange rate
system, is afected by the legality of a devaluation (as is therefore
e:existence of signifcantly higher interest rates). For instance, states
U one federal goverment such the 50 states of the USA
W ver likely to be able to change fom the use of a common cur
cy because it is not lawfully possible without a revolution or seces
Sion fom the system. However, it should be mentioned that revolutions
ad scessions do occur even i n a very fxed federal system, 8 history
ha indicated in the USA in the 1 860s and in the Soviet Union more
retly. In addition, it is more feasible for a currency change in a looser
feertion, such in the 1 1 states of the European Monetary Union
|i,20
), and completely separate nations can do M even more
eily. Moreover, countries with separate currencies Creadily break a
exchange rate system and foat or devalue their currencies. Thus,

.W
does a common currency or fxed exchange rate completely
fl|g`
mate the chance of a devaluation.

M
o
r
over, even with a common currency, diferences in default pre

_
us

herefore interest rates can ocur to the extent tat the

ebts
of IDdlVidual states and entities within the curency umon are

ganteed by the centralized federal system (Sims, 2000). Such

240 THE TRUMH OF Ll
the currency back up), an inelasticity of demand can sometimes rsult
in a currency devaluation actually causing a deterioration of the cur
rent account situation (Goldstein and Khan, 1 978), as explained earlier
in the chapter with the Russian ruble devaluation in 1 991 . In addition,
the infation induced by the currency depreciation (Abuaf and Jorion,
1 993) may eventually offset any competitive advantage created by the
initial devaluation, so that the same devaluation-infation-devaluation
cycle explained earlier may occur (even when the initial devaluation
happens in a situation with a healthy current account). As a result, capi
tal controls can be ver usefl for avoiding such negative effects in these
cases, just as they can be employed to inhibit capital fight which some
times arises fom investor fears of capital controls themselves (Delta
and Stockman, 1 993)
Malaysia has provided an empirical example in the 1 997 Asian cur
rency crisis that at least some form of restriction on capital movements
can reduce the severity of a currency crisis (Phil lips, 1 999), just a
Russia had some success in averting another major economic catastro
phe by using informal capital controls afer its second currency crisis in
1 998 (Economist, 1 999b ). China has demonstrated that currency crise
may be avoided altogether with permanent capital controls as long M
there is not a defcit in the balance of trade or current account (Roach,
1 999).
However, under normal circumstances, capital controls only postpone
a real income or currency decline to a future date when the controls ae
removed (or when al l the local capital is owned by foreigners), and they
generally can not be used to solve the problem of an existing current
account defcit. In the meantime, capital controls may create inefcien
cies in capital allocation and counterproductive black markets as
well
as discourage some productive foreign investment (Sheikh, 1 976). As
result, capital controls can also cause an increase in the current account
defcit longer-term.
Changes in Relative Protectionism
One possible way to avoid a currency or real income decline when
the current account is in defcit is via a change in relative protectionis

(Borkakoti, 1 998). Protectionism incl udes not only the classical barn
ers of tarifs and quotas (Winkelmann, 1 998), but also currency con-
CHAPTER 6
241
tis imposed for trade trnsaction purposes, multi-tiered exchange rates
(designed to discourage the impors of non-essentials), and subsidies
provided to domestic businesses competing against foreig competi
tors (Kindleberger, 1 968), as well as technical standard requirements
ad business/legal systems that inhibit the distribution of imports (Hine,
1
94). The developed countries of Wester Europe (as well as Japan)
used protectionism (especially currency controls) very efectively
afer World War I I to generate fast economic growth without sufering
te negative side efects of current account defcits (Williamson, 1 991 ),
but they have now achieved a level ofwealth that enables them to have
sufcient capital and mechanization to be interationally competitive
without needing such severe restrictions on impors (and have there
fore rcently moved to a system of fully converible currencies). On the
oter hand, the level of protectionism for less developed countries that
have not yet achieved an adequate level of interational competitive
ness (bause of inadequate wealth and capital rsources) remain gen
elly higher than for developed countries (Anderson, 1 995). In order to
lve a BOP problem in those less developed countries, such trade bar
ne must be increased relatively frther (or be reduced relatively less
in their exprt markets).
T removal of trade barriers is usually negotiate multilaterally
tgh oranizations such as the World Trade Organization (WTO),
te Europan Union (EU), and NAFTA, or bilaterally (Bowen, Hol
lander, and Viaene, 1 998). Such negotiations generally result in greater
vral reductions in protectionism (which increase tade and prouc-
_ i tn the aggregate world economy) than would unilateral actions
Bagwell and
Staiger, 1 999).
Countries with lower levels of protectionism bneft more fom any
gerl agement to proportionally reduce trade, but, since such coun
have less in trade barier reductions to ofer, they have less bar
Ping wer in instituting such agreements. A goo example of this
7oh
ahng
problem is provided by New Zealand, which has been one
the least protectionist countries in the world since the mid-1 980s
_
L
ughlin,
1 993). As a result of New Zealand's fee trade policies,
Zl.
:
reques

to join NAFTA was rejected by the USA beca

se New

d essent
ially had nothing to put on the table or ofer 0 rtr

~
In other words, the reduction in North American trde
242 THE TRIUMPH OF EVIL
barriers against impors from New Zealand that would ocur if it joine
NAFTA would be far larger than any reduction in New Zealand's bai
ers against imports fom North America because New Zealand already
has removed most of its barriers.
Bargaining power in negotiating advantageous changes in protection
ism is also afected by country size, wealth, and mil itary power. Access
to the expor markets of larger and richer countries is relatively mor
important to smaller and porer nations (for whom each dollar of te
represents a larger portion of their smaller incomes), and so the smaller,
poorer nations are willing to ofer such countries more concessions to
obtain access.
In addition, a strong military can always provide the last word in
any political negotiations. Perhaps as a result, the major multi laterl
trade organization, the WTO, is widely perceived to be controlled by
the USA (Cooper, 1 999), which attempts to open up trade in industries
where it is competitive while keeping other industries protected, just a
other countries such as the European nations and Japan also to do
(Economist, 1 992). For instance, while the USA maintains tade bar i
ers in many industries against imports from poor less developed coun
tries with serious BOP problems (Mofett, 1 997), it uses its clout to
have the WTO force some of those same less developed countries to
open their markets to exports fom the USA in some of those sae
industries ( Wall Stret Joural, 2000e).
While a country can undertake a uni lateral increase in protectionism
against imports, there exists a signifcant risk of retaliation from trding
partners or other penalties according to bi lateral or multilateral agre
ments especially in the 1 990s (Wong, 1 997). Even attempts to exclude
products with scientifcally proven health risks can result in retaliation
under the WTO system (Reuter, 1 999).
A benefcial unilateral reduction in trade barriers is sometimes under
taken by a foreign country (or countries), but such reductions usu
ally l imited. One example is provided by the USA, which unilater
lly
lowerd subsidies to sheep farmers i n the early 1 990s. This reduction
in subsidies allowed New Zealand to double its real expors of sheep
meat to the USA by the mid- 1 990s (de Lacy, 1 999). However, market
share increases beyond this point led to USA threats of retaliation, 1
there is little prospct that signifcant unilateral reductions in protec
CHAPR 0
243
toism would ocur in potentially more imporant industries such as
USA dair farming (de Lacy, 1 999) or European farming in general
Nem, 1999).
Tus, although a relative i ncrease in protectionism against impors
ei:a count compared to any change in protectionism against that
cunt's exports may seem to be a painless way of correcting a cur
rt account problem (and avoiding the negative efects of a currency
or rl income decline), this solution requires the cooperation of trad
ing pers and is ofen not feasible (Staiger, 1 995). In addition, as
Blte ad Millman ( 1 999) have practically pointed out, even for
cuties with a current account problem, there is always the risk of
a
v
e chages in rlative protectionism due to the political economy
ofbusinesses lobbying for protectionism only in industries where they
Ndirctly hur by impor competition, while local businesses naturally
lobby for more fee trade (and less domestic protectionism) in indus
te where they beneft fom cheaper imported compnents and prod
(e.g., industries that serice foreign tourists like motels would gen
elly lobby for more free trde to lower both their own costs ad those
of teir customers). Business enterprises can apply a signifcant amount
of plitical pressure to ensure that their interests (for or against fee
i ,
served (Rodrik, 1 995). When a change in relative protection
misavorable (due to a poor negotiating position or sttegy, or due
bumess pressure put on political negotiators), it C magnif a BOP
plem (g
has happened over the last 1 5 years in New Zealand, which
=ruc its trade barriers both absolutely and relatively more than
countries).
Impr
ving Productvit
_
A
er way to avoid an immediate (or eventual) currency deprecia
Vrl income loss is to improve the productivity of exporers or
.
I
Dses that compete against impors. Such an increase in prouctiv
It
l
y
b
attained via increased investment in these industries, which
b encouraged with M policies in capitalist countries and with
gover
ment capital allocations in socialist countries. Special
es such as i n China that attract foreign investment for exprt

(trough U
breaks and other incentives) are also ver usefl

a
d
Khan, 1997).
244 THE TRIUMPH OF EVIL
However, excessive investment subsidies or encouragement to busi
nesses that compete with frms in foreign countries could lead to retali
ation by those foreign countries in the form of protectionism or ofset
ting encouragement for their own businesses (Wong, 1 997). Anis and
Ross ( 1 992) have noted cases where export subsidization can beneft
both the importing and exporting countries, but they also admitted that
retaliation may occur in many circumstances.
To reduce the chance of some form of protectionist retaliation, pro
posals are sometimes made to increase investment and savings in the
economy as a whole, such as with tax policies to encourage general
investment in capitalist countries or direct increases in allocations of
GOP to investment in socialist countries. Such policies will have a psi
tive efect on the trade sector to the extent that they also improve the
productivity of industries which compete in international trade. How
ever, such policies can also increase real GOP growth, and the resulting
higher real income can increase the demand for imports, therefore of
setting the productivity efect and sometimes even exasperating a BOP
problem (Obstfeld and Rogof, 1 996).
In addition, the policies that encourage investment in capitalist sys
tems are ones that tend to make the wealthy investors richer and so
may cost the less forunate shorter-term, especially since the increase in
investment is at the cost oflower current consumption. Moreover, while
investment can also be increased by attracting foreign capital, Wheeler
and Mody ( 1 992) have empirically found that merely ofering foreign
investors tax and other incentives has relatively little efect on foreign
investment decisions, as the factors of most concer to foreign inves
tors are good infrastructure, special input advantages, and an expanding
domestic market.
It should also be mentioned that simply lowering income tax rates
and imposing a free market economy in a country are ofen especiall
counterproductive solutions to a BOP problem. For instance, such poli
cies may simply result in increased consumption spending (including
on imports) and thus increase a curent account defcit (Peeters, 1 999).
In particular lower personal income tax rates decrease the incentive to
engage in business investment (Gordon, 1 995) and provide less incen
tive for the rich to engage in tax dodges that require investment (such
as purchasing real fixed assets to obtain depreciation tax deductions
CHAPTR 0 245
miengaging in buy-and-hold strategies with reinvestment of earings
Tavoid taxes on investment income and capital gains ). ' 2 Moreover,
M(1995) and Strobel and Peterson ( 1 999) have repored evidence
fm the USA of a positive relationship between cororate income taxes
winvestment, implying that lower corporate taxes may merely permit
0consumption of rets to capital. Privatiztion of state assets can
dK rduce the level of investment if the proeeds fom the sale are
cumed by the goverent, or by individuals if rebated to them in the
.-of M reductions (Mackenzie, 1 998). In fact, there is actually little
eidnce of the efciency and productivity of the overall economy being
ipved by imposition of fee market systems, a real gowth has his
tlly been higher in socialist counties (Murphy, 1 998), implying
the synergy of state control tends to enhance productivity more
market decentralization.
For instance, New Zealand has underaken a free-market, low-tax
ste since the mid- l 980s (Quaintance, 1 998), and the result has
eonomic stagnation, with very low capital foration, low R&D
sg, and low infastrcture investment (McCoughlin, 1 993). At
#Mtime, there has been a lare increase in New Zealand's curent
ac t defcit, which has been magnifed by the county's own uni
4roval of protectionist bariers in the 1 980s. The m market
tlhas actually resulted i n the New Zealand goverment reducing
sing in prouctive areas like education and infstrcture at the
time it provides none of the taditional productive business sub
t|i.tslike expr fnancing (Barber, 1 996) and general business assis
"
(Brokett, 1 999).
|1adition, New Zealand's movement toward the privatization of
comies has led to myopic business plicies that do not bneft

eomy or its BOP. For instance, the privatization ofNew Zealand's

et airlines has resulted i n air faes tat make it far cheaper

NtwZealanders to travel abroad tha for foreigners k visit New
Assumedly, the airlines have set prces that maximize their
H0U irrespective of the efect on New Zealand as a whole (as
l for a private company). As a result, there as many New
S
pending their tourist money in foreig countries as there
tourists in ew Zealand (Mse Nes, 1 99
.
9), desite te
N
e Zealand ts one of the most attrctive tounst loations 0
246 THE TRUMH OF L|l
the world (Turer et al., 1 998). Given that the high cost of trvel to
New Zealand is one of the most important deterrents to greater tour
ism revenues for the country {Al lpor, 1 999), given that tourism is
New Zealand's biggest export industry (with foreign currency revenues
approximately equaling New Zealand's current account deficit), ...
given that there exists sufcient capacity for the number of tourists to
New Zealand to double from its present low level of just over one mil
lion (Purdue, 1 999), the opportunity cost of lost tourist business M.
result of arti fcially high ai rfares to New Zealand may be enorous.
Moreover, as previously explained, New Zealand's uni lateral rduc
tion in protectionism could only cause the current account situation to
deteriorate. New Zealand's overall fee market activities are well sum
marized by a Brazilian minister seeking to avoid similar mistakes, "One
thing is opening the economy; another thing is being a sucker" (Mof
fett, 1 997).
An Efective Solution to Current Account Problems
While most of the widely proposed methods of resolving a BOP prob
lem (including capital controls, increased protectionism, and improving
productivity) may not be feasibly employed to cure a current account
defcit in today's world, there is one solution that can be efectively
implemented, as explained in Chapter 5 of this book. The economic
plan explained there can be adapted to any country by merely ofering
domestic consumers coupons that give them the right to purchase
domestic goods at a discounted price (or giving them the right to pur
chase goods from a particular area of the country with relatively low
income). By also allowing the consumers to tum the coupons into the
country's convertible curency in exchange for a fxed number of such
coupons being invested into a long-term government savings account, .
convertible currency can be maintained (for trade purposes) at the sae
time that domestic savings and consumption is encouraged. This f
n
of protectionism may be subtle enough to avoid retaliation by tradmg
partners, as some domestic policies, which are efectively protectionist
but are considered more of a domestic policy issue, are allowed by the
world's major multi lateral trade regulator (Hufauer and Erb, 1 984)Y
In addition, if a country's current account defcit is large, even the
WO
does allow some unilateral increases in protectionism (Edlin, 1 999)
.
CHAPTER 0 247
Once a current account problem has been solved, a country can lower
domestic interest rates and thereby spur faster real economic gowth
without causi ng a devaluation and currency-related infation. L the
other hand, if the domestic central bank wanted to maintain high real
interest rates even afer the BOP problem had been solved, it would
continue to attract net foreign capital infows and thereby permit m
acumulation of foreign exchange reserves if it chose to maintain a
stable currency value with open market purchases of foreign currencies.
Malterative to accumulating foreign exchange reseres in this situa
tion would be to allow the currency to appreciate. The latter option of
incrasing the interational purchasing power of the domestic currency
would help the country in its battle against brain drain and domestic
infation. Although the latter strong-currency plicy might also cause a
shor-ter retur of a current account defcit, the downward pressure
on domestic prices caused by an appreciation in the domestic currency
would eventually result in a balancing of the current account.
Tus, while the standard policies for dealing with a BOP problem
W}ofen not be feasible or efective, a viable solution dos exist. This
slution provides some hope for avoiding some of the negative aspects
of the post-Cold-War era of USA world domination.
248
TE TRUMH OF LI!l
LH11L /
ASUMMARY POLITICAL ANALYSIS OF
USA WORLD DOMINATION
Tis book has conclusively demonstrated that the "bad guys" won the
Cold War, resulting in a far more evil world that is both crueler and
mor inefcient than before. This fnal chapter provides more facts on
te resulting New World Order and briefy describes the outlok for
changing it.
GLOBAL AMERICANIZATION
Te triumph of the USA and capitalism in the Cold War has cleared
e way for undisputed world domination by the countr documented
m the introduction to this book to be the most evil on the face of the
er. The Cold War victor has indeed enabled the USA to even more
c
essflly portray "fee markets" as a superior religion and to paint
|ts
Ideol
ogical communist enemy as the "evil empire." The ter "evil
eire" was originally applied by USA President Reagan to the Soviet
n
on, which did indeed conduct some killings of civilians in a brtal
lVII war in Afghanistan (Cordovez and Harrison, 1 995), as documente
I C
ter 1 . However, even a peacefl priest like President Aristide
o
HaJtJ has recently been widely labeled "a psychopath" and "bloo
minqlittle socialist" by USA capitalists for refsing to go along with
uA
exploitation of his country (Dupuy, 2000) and for ofering resi

to a USA-backed dictatorship that murderd 50 innocent Hal

civilians (Dunkel, 2000). Although it is pretty clear
.
ly docented
.
hapter 1 that communism did not collapse bcause 1t was evil (but
IDt
e bcause it took root in poorer countries with less resources and
250
THE TRIUMPHOF L|l
power), and although Chapter 2 documents the fact that communism
is superior to capitalism in virtually all respects for virually all people
except the super rich, most are still swayed by the very successful USA
propaganda to the contrary. 1
In addition, the USA propaganda is so powerfl that many ignore the
fact that the USA itself only advocates "free market" capitalism when
it is to its own advantage to do so. For instance, the USA itself was his
torically one of the most protectionist countries in the world (Bairoh,
1 993), and its protectionist unfair trade strategy (combined with its suc
cessful imperialist policies) greatly facilitated its wealth accumulation
(Smith, 2000). Now that it has accumulated such a large amount of
capital from plundering the world for so long (through both trade and
military conquests, which complemented one another), the USA cur
rently advocates "fee markets." I n particul ar, the USA's higher prouc
tivity per worker (relative to that of most workers of less developd
countries, whose lack of loot results in them having far less capital
and technological equipment with which to operate) enables USA cor
porations to be extremely competitive in most industries (insofar M
the greater mechanization of production in the USA enables it to have
lower overall costs even with much higher hourly labor costs). Nev
ertheless, even today, whenever USA industries are threatened by for
eign imports, the USA government either subsidizes its domestic indus
try (Matthews, 1 999) or engages in all kinds of protectionist policies,
including imposing quotas, tarifs, and artifcial technical standards
against foreign imports in many diferent industries like citrus, sugar,
meat processing, steel, and textiles (Mofett, 1 997).
There i s therefore a great deal of hypocrisy in the USA advocating
free trade at the same time that it itself employs protectionism, includ
ing against imports from countries that are more oriented to free mar
kets than the USA and that have larger balance of payments problems
(Hi lsenrath, 1 999). Such unfair trading practices are engaged in not
only by the USA but also by other wealthy countries (like
Westem
Europe and Japan), and they are typically directed against even ||r
poorest countries (whose income per capita is less than 1 /60 that of the
richest countries), which are thereby hindered from earing the expor
income they need to finance growth and attract foreign investment

:
technology (Economist, 1 992). Although the WTO is supposed to
CHAPTER 7
25 1
worldwide organization that represents the world in terms of promoting
ad enforcing fair trade practices, the WTO is widely acknowledged to
b rn by the USA, albeit with some minor input fom its Wester Euro
pand Japanese allies in worldwide exploitation (Coper, 1 999). One
USA think tank itself has stated, "There is a widespread view abroad
tat globalization i s being forced on the world by American corpora
tios, that globalization is Americanization" (Washington Post, 1 999).
Beides serving as a very valuable tool for the USA to propagandize
te supriority of its capitalist system (and motivate its globalization
to the USA's advantage), the USA's Cold War victor now enables the
USA to more easily slaughter people of countries that refse to submit
to USA wishes and demands (such as nations refsing to submit to
cpitlist globalization), as there is little hope of outside help fom
a more benevolent, balancing power like the Soviet Union. Although
ter is some competition for economic power in some regions from
oter exploitative capitalist countries such as those of Wester Europe
(Griswold, l 999a), the USA's strategy for world domination was con
fne in a Febrary 1 8, 1 992 policy statement issued by the Pentagon
i cnjunction with the National Security Council and in consultation
with the USA President (Tyler, 1 992). Reflecting on "the fundamen
tlly new situation which has been created by the collapse of the Soviet
Union . . . and the discrediting of Communism as an ideology," the Pen
tagon doument states, "our strategy must now refocus on precluding
te emergence of any potential fture global competitor," and "we will
rin the pre-eminent responsibility for addressing selectively those
ngs which threaten not only our interests, but those of our allies or
fends, or which could seriously unsettle interational relations" (Ne
0rtm&, 1 992). Secretary of Defense William Perry spoke even more
PWpint in 1 997, "Since we 8 the only superpower in the world,
t\tq
countr is in our national interest" (lAC, 1 998a), and there are
" SA occupation troops and military bases in more than half the
Cties of the world (Catalinotto, 1 997).
USA's world dominance is ofen subtly refered to as a man
=|interationalism which however is very one-way insofar as
Aicas "fnd it quitnatul to presse the Japanese to make
_
life
for their consumers the South Koreans to abandon crony capltal
|
the Russians to coll-ct taxes" (Grunwald, 2000), but it gos with-
252 THE TRUMH OF L
out saying that no countr can put pressure on the USA to change it
system or to rectif its wrongs (some ofthe most atrocious of which M
mentioned in this book). The USA empire has become such an accepted
fact that one Wa/ Stret Journal writer forecasts much of the world will
become ever more like "little Americas," with foreign middle classes
being totally "Americanized" (even speaking English and "consuming
the same media, goods and services"), although "regional instabilit
forces the USA to install permanent armies (known as peacekeeper) in
both Africa and Russia" (Zachry, 2000). While USA politicians (such
as the Bush family) often propagandize USA control of foreign coun
tries as being required because of "a world that 'depends on Americ
to reconcile old rivals and balance ancient ambitions"' (Calmes, 1 999),
they fail to mention the fact that the foreign rivalries used to "justif"
USA interventions are ofen deliberately promoted by the CIA and gen
eral USA policies themselves (Blum, 1 995). As New York Tmes writer
Thomas Friedman ( 1 999) stated in the middle of the USA bombing of
Yugoslavia, "The hidden hand of the market wil l never work without
the hidden fst."
This USA "strategy" of world domination has had a murderous efect
on the people of the world, as the Soviet Union is now no longer around
to inhibit the USA's subversion and attacks on other countries. For
instance, the number of wars and armed conflicts in the 1 990s bas 1oa-
bled from the level of the 1 980s (Associated Press, 1 999h), with thes
violent conficts having caused the deaths of 60 million chi ldren in the
1 990s (Deutschland 2000). Some, especially those who do not have n
adequate knowledge of USA history and gullibly believed USA Pnsi-
dent George Bush's propaganda about a "kinder" America (Greene,
2000), predicted that the USA's Cold War victor would result in the
USA becoming more benevolent once its primary enemy of the pst
World-War-II perio had been defeated. However, it is actually only
necessary to see that the USA was founded (and stolen) via genoide
to be able to realize that the foundations of the countr are criminal and
to be able to forecast a continuation of that core evit,l especially afer
examining all the millions of people killed in the hundreds of countries
attacked by the USA in the past.4
In fact, the USA in the 1 990s b continued its murderous, imperi

l
ist policies that it has practiced almost continuously throughout its hts-
CHAPTER 7 253
tor. Te costly maintenance of the "kind" embargo against Iraq, which
still kills thousands of innocent civilians each month fom preventable
disees, rpresents just one obvious example (Flounders, 1 998b ). `
Te various wars and embargoes launched against Yugoslavia by the
USA (and its NATO tool) in the 1 990s represent furher evidence of
USA "kindness" in action afer the ending of the Cold War. The lAC
(1998a) has documented the background and context of the war in
Yugoslavia, demonstrating that it merely represents a continuation of
imprialism by the USA and other NATO powers. For instance, West
Geny gave the local ruler of the Yugoslav province of Croatia $2
billion in 1 988 in order to assist in recreating "a new independent State
of Cratia with interational borders in the form originally set up by
e:Geran chancellor, Adolf Hitler, in 1 941 ." In addition, despite the
fact that "during World War II, Croatia was a Nazi puppet state in which
e:Croatian fascist Ustashe murdered as many as one million Serbs,
Jews, and Romani (Gypsies), [the resulting newly ' independent'] Croa
tia adopted a new currncy in 1 994, the kuna, the same name as that
Wb
the Ustasha state, and the new Croatian flag is a near-duplicate
of the Ustasha flag."
Neve
reless, most of the world has come to believe that the Serbs
Nthe "bad guys" in Yugoslavia (Independent Commission of Inquir,
1
99
), even though Serbia itself (with its demoratically elected coali
tion
goverment) had exhibited only very limited signs of repression
until afer the USA's overt attempts to overthrow the goverment (Blok,
1
99 b)
. One cause of this general misperception was a USA public
rlations fr which "was paid to @D Serbs into monsters, fascists,
ts" in the public eye, and jouralists seeking out the "bad guys"
-.

;
coperated to invent evidence of Serb atrocities even though
such evidence has been disproved (lAC, 1 998a). While Serbia was

;dem
onized by the Wester media in the 1 990s, Wester pwers
'
b
usy ar
m
ing anti-Serb terrorists in Bosnia and Kosovo as well
oCratia (Oberg, 2000), Croatia was renaming the "Square of Vic
lofFacism" the "Square of Croatian Heroes" (Levene and Robers,

and "8
00,000 to 900,000 Serbs" were being "ethnically cleansed
"Cratia, Bosnia, and Kosovo" (Ober, 20
0
0).
.
outright war launched by the USA and NATO against Yugosla
Vm 1999 is especially i l lustrtive. Despite all the absurd propaganda
254
THE TRIUMPHOF L|l
about the "kind" intent of the USA (and NATO) to stop the allege
atrocities of the Serb "bad guys" in the Kosovo province of Yugosla
via, there had actually been very little evidence of Serb atrocities or
human rights violations committed against the Albanian ethnic ppu
lation there (Johnstone, 2000). In addition, although a terorist civil
war was launched in Kosovo by the USA-backed Kosovo Liberation
Army (KLA), which was fnanced by the Albanian mafa, the CIA, ad
German "intelligence" (Independent Commission of Inquir, 1 999),
al legations of mass murders i n Kosovo by the Serbs have been dis
proved (Dunkel, 1 999). In fact, only 2 1 08 bodies have been found in
"mass graves," which contain people of all nationalities who appar to
have died fom many pssible causes, including from the acts of ter
rorism committed by the KLA (Catalinotto, 2000a). The KLA, may
of whose leaders "trace their roots to a fascist unit set up" by Axis
occupiers during World War II (Feinberg, 2000), had long engaged in
a strategy of threatening and assassinating Albanians participating in
Yugoslav elections and other democratic proesses in order to create the
appearance of repression (Johnstone, 2000).
Regardless, any Serb atrocities in Kosovo that did exist should M
seen in the light of Hitler's forcing Serbs out of Kosovo in the 1 940s in
order to create a Greater Albanian puppet state (at the time when the
Serbs were a majority there) and in light of the KLA's 1 998 terrorist
attacks on Serbs, gypsies, and non-Albanian Muslims (Wilson, l 999c).
It was within this context that NATO conducted its 1 999 terrori st bomb
ings, which deliberately attacked civilian targets but almost ignored
the Serb military (Wilson, l 999d), and which directly killed thousands
of civilians but only 57 1 Serb soldiers and police (Indepndent Com
mission of Inquiry, 1 999). Wester investigators indicated that the
NATO bombers hit just 1 4 tanks and 1 8 artiller/morar pieces, and that
"Bombing civilian targets worked best" (Catalinotto, 200b ). Newsweek
(2000) reported that although "air power was efective in the Kosvo
war not against militar tarets but against civilian ones, military pla
ners do not like to talk frankly about terror-bombing civilians (' str
tegic targeting' is the preferred euphemism)." Given NATO's deliber
ate targeting of facilities vital to civilian life (Becker, 1 999b ), includ
ing attempts to eliminate healthy food and water supplies in Kosovo
via NATO bombing of the power and transportation networks, the mas
CHAPTER 7 255
sive exous of civilians out ofKosovo during NATO's terror bombings
(including 70,00 Serb civili ans going to Serbia and hundreds of thou
snds of Albanians going to Albania) may have sved many lives,
e
vdeced by the frightfl living conditions created there by the bomb
ig (Independent Commission of Inquiry, 1 999). Even "the Wester
mia now admit that the vast majority of refugees who lef Kosovo last
sring were feeing the U. S. bombing" ( Workrs World 2000a).
On the other hand, the forcing of 250,00 Sers and other peple
(including many gypsies and non-Albanian Muslims as well as some
Albaians who don't suppor the KLA) out of Kosovo later in 1 999
under NATO occupation (via continued terrorist KLA attacks which
have killed over 500 people in the ethnic cleansing process that NATO
ocupation forces have made no meaningfl attempt to stop) can in
no way b seen as defensive (Chin, 1 999) or justified (Pearl, 1 999a).
Morever, Kosovo Albanian terrorists have already begun making f
quent terorist attacks on targets in Serbia itself with the apparent tacit
apval of the NATO ocupation force in Kosovo (Blok, 1 999a).
In addition, the KLA, which represents "a Balkan criminal networ
rpnsible for over 20 percent of Europe's heroin imports" (Gof,
w ),is no doubt benefting fom the opening of the sex-slave trade
i Kosovo under NATO ocupation (Feinberg, 200). However, the
mainstream Wester press continues to largely igore these facts

d
een mthe audaci ty (without fear of losing credibility with a beam
wahed audience) to blame the destrction of the civilian infstc
Min Kosovo and Yugoslavia on "lack of maintenance" by the
.
Serbs
(
Asiated Press, 1 999e ). In reality, despite NATO's "destctton of
Sia's electrical network," it was NATO-ocupied Kosovo, and not
Sia, that had to endure electrical outages and water shortages nearly
t}Nafer the NATO bmbings (Citakovic, 200 ).
Although the mainstream media virually ignored the existence of
s

btatial
mineral wealth i n Kosovo (including the largest lead

nd
W
mines in
Europe as well as sizable coal depsits, not to mentton
ciu
m, gold, and s.lver), access to that wealth cerainly represented
^
motivation for the USA/NATO seizure of the territory (Fiound

I Sa). Te USA/NATO's unstated purpse in the 1 999 war R

tb

OCupy
and seize that wealthy area of Yugoslavia is espect

lly
PI0ml fm the fact that al l ofers by Yugoslavia before and dunng
256 THE TRIUMPHOF L
the bombing to have the civil war mediated by neutral Lpeacekeep
ers were refused by the USA/NATO aggressors (Independent Commis
sion of Inquiry, 1 999). Besides the attraction of the mi neral wealth of
Kosovo for their own exploitation, it is quite likely that the capitalist
powers also saw an opportunity in Kosovo to divert the attention of
neighboring Albanians, who had earlier engaged in ared rebellion Ma
result of a nation-wide capitalist pyramid scheme that essentially stole
the life savings of many several years afer communism was overhrown
in that country (Griswold, 1 997). The purpose here was obviously to
have the Albanians hate Serbs instead of capitalism by giving them the
potential chance to recreate a Greater Albania just as Hi tler did in the
early 1 940s (albeit as a USA/NATO capitalist protectorate in the late
1 990s, as opposed to a German/ Axis capitalist protectorate in the
1 940s). As noted by Wilson ( 1 999b), the USA/NATO strategy is not
much diferent fom that employed by Hitler (who also "justifed" some
of his invasions of other countries as "liberations" of some ethnic group
that he had incited to riot to draw repression), by Mussolini (who
invaded Ethiopia in 1 935 in order to "fee" Ethiopians from their mon
archy government), and by the fascist Japanese (who sought to "pro
tect" the Chinese in the 1 930s).
The totally unjustified bombing of a badly needed pharmaceutical fac
tor in Sudan in 1 998 represents another clear-cut case of USA "kind
ness" afer its Cold War victory, albeit on much a smaller scale. The
plant had been important for producing medicines (especially against
malaria) that could have saved many lives in that impoverished countr,
and numerous investigations of the destroyed Sudanese factory indi
cated absolutely no evidence of the biological or chemical weapons
claimed to be there by the USA, but, in spite ofthese facts, the USA has
refsed to allow a UN investigation (Parker, 1 999). Consistent with this
"kind" action committed by the USA against Sudan, the USA bas also
tried to disrupt serious propsals to end a Sudanese civil war because
the proposed peaceful solution of allowing the Sudanese people to vote
on the issues might not result in the side the USA has been backing
to gain power, although the propaganda explanation for this attempt to
disrupt peace is that the USA "is stepping up efors to hold Sudan's
opposition together amid an increasingly successfl push by the Sudan
regime to make peace with its exiled opponents" (Pearl, 1 999b).
CHAPTER 7 257
Other examples of USA "kindness" in the 1 990s include the USA's
cntinued embargo and terrorist attacks on Cuba (Gutierrez, 1 999), and
te embargoes against North Korea (Griswold, l 999b) and numerous
other countries that refuse to open up their economies to the USA's
citalist exploitation (Marshall, 1 999). Toay, about 2/3 of the world's
pulation faces a USA embargo of some for or degree (Smith, 2000).
Wile the USA's capitalist propaganda machine may b sufcient to
cnvince many foreign country leaders to embrace the USA's new world
orer (with many foreign leaders i n counties such as in Latin America
atlly having been educated i n the USA), the USA threat of fnanc
ing "interal" terrorist attacks on disobedient foreign countries (using
"cover" operations), impsing or intensifing embargoes, conducting
bmbings of civilian targets, and mi litarily invading foreig countries
is also usefl for ensuring a high level of compliance with the USA's
"kind" wishes.
RICH CRIMINALS' PARADISE:
CAPITALI SM WITHOUT GOVERNMENT
It should b noted that the role of the USA goverment itself is not
estial for the enforcement of the new capitalist world order. In par
tcla, many of the CIA's covert actions themselves have long been
fce by private money and carried out by the private maa, espe
cially the attempts to overthrow the Castro goverment in Cuba (Furi
ai, 194). In addition, ever more "defense" services are starting to b
put into the hands of corporate owners, some of which directly hire
|.

aies to defend their interests (Chatteree, 1 997) instead of

umg the more indirect traditional procedure of having the USA gove
mnt (under the pressure of corporate lobbies and political donations
bb/other pressure) make the world safe for USA commerce and
u
isitions (Copeland, 2000). In addition, there is a growing private
|:+::service industry (Wolf, 1 999), which is currently separate
the
aaments production that is already largely corprate-owned,
which gos far beyond the private secret plice and terrorists owne
qucorrations before the creation of the CIA (Schulz, 1 982). The
ll et for such private "defense" services is forecast to grow so rapidly
Mme blieve they may even one day replace goverment armies,

whch pint "military and economic functions will b reunited" as

258 THE TRIUMH OF EVIL
they were before the creation of the modem capitalist state (Chatter
jee, 1 997). Given that there are numerous billionaires, each of whom is
richer than many countries (Foerstel, 2000), such a prediction is not all
that far-fetched.
There are also serious movements to privatize the police/judiciaU
prison system (Reynolds, 1 994). Prisons in the USA are already in the
process of being privatized in order to create a virtual slave market
of nearly two mil lion prisoners that corporations can exploit (Phill ips,
2000). The privatization of the police system is also proceeding quickly,
with private police or security guards outnumbering public police by 3
to 1 in the USA (Reynolds, 1 994). In addition, the private law enforce
ment system is bolstered by incredible Orwellian technology, which per
mits the private employment of a massive number of"security" camer
that not only spy on people in private buildings, but also increasingly in
public areas (Ramirez, 1 998). At work alone, 20 mil lion employees ar
watched with cameras by the corporate "Big Brother," 5 bi llion phone
calls are recorded annual ly, and employee email is read by 36% of all
employers (Dowd, 1 997). Moreover, while technology has also long
provided the capacity to photograph people almost anywhere with sat
ellite cameras (Zi mmerman, 1 988), technology now exists for camer
to see through buildings and clothing (Hansen, 1 997). Even if controls
are placed on government misuse of this technology, the potential for
unregulated private abuse is enormous.
Similarly, although goverment spokespeople are very efective in
spreading the message of global capitalism (Smith, 2000), and although
the CIA itself was one of the biggest publishers and disseminators of
pro-capitalist "information" (more appropriately labeled misinfora
tion or disinformation) in the world during the Cold War (Schulz, | 982),
the USA's capitalist propaganda machine is not at all dependent on
the USA goverment. For instance, instead of quoting capitalist gov
erment leaders for opinions and descriptions of events, the capitalist
media can provide more analysis and reporing direct from corporte
executives and other capitalist leaders (Smith, 2000), whose opinions on
events the media already accepts and reports as fact (Phillips, 200). In
addition, many of the CIA's prior publishing activities can now be spon
sored by think-tank institutions that are well financed by rich conserva
tives to spread the capitalist gospel (Strobel and Peterson, 1 999). Cor-
CHAPTR 7
259
prtions already use public relations (PR) firs extensively to ensure
that public opinion is manipulated to their liking (Phillips, 200).
Morover, much of the USA's propaganda continues to be perpetu
ated by the same mainstream press whose ownership is even more heav
ily concentrated in the hands of anticommunist rich owners than it was
in te Cold War times (Foerstel , 200). In particular, Jess than 20 medial
enteinment conglomertes currently control the bulk of the world
W|dc"inforation, entertainment, and mass culture" (Flounders, 200),
Wit Time Warer, Disney, Ruper Murdoch's News Corp., Viacom,
Sny, Seagram At&T/Libery Media, Berelsmann, and GE being the
dinant players i n the USA (McChesney, 200). In the USA, the
mt rcent increase in media concentration was made possible by the
degulation of the Telecommunications Act of 1 996, which the media
elite rquested to b passed by USA politicians who themselves are
dndent on the media for their popularity and reelection (Phillips,
20 ). Such deregulation of the media has also ocurred elsewhere
under te pressure of capitalist globalization. For instance, the lAC
(1 98a) RR, "In Easter Eurpean countries, the first instittions
to undero the transition to privatization seem to be the media, bth
ownerhip and content. Wester capital helps to subsidize the media
OPoland, Hungary, Romania, the Czech Republic, and Slovakia. The
plitical views which are reported are virtually indistinguishable frm
of the U.S. media. Bltz, a newspaper fnded by Geran capital,
a d in Serbia on September 1 6, 1 996. The paper, which at nine
#cents is the cheapest in the countr, sells rafe tickets and gives
tW1}Q. Within a month afer its frst printing Bltz had a circulation
. This process of moving toward a pro-capitalist, pro-imperi
alist tdological monopoly is describe straight-faced by U.S. leaders
Wmedia commentators as the 'democratization of Easter Europe. "'
other hand, when confronted with an anti-USA media, NATO
atually come in with occupation troops (as in Yugoslavia) and
'"
such undesirable media as a cynical means of "silencing broad
to encourage freedom of speech" (Parenti, 200). As one joul

Sari
z
ed when referring to censorship in the USA itself, "In the
e
o
r u s tn"
h
. . .
d" 1
.

" ump , ts even one alterative, somettmes ra tea , votce

ll y?" (Berstein, 2000)

Pr
-
USA/pro
-capitalism bias in this concentrated media is ofen
260 THE TRIUMH OF EVIL
attained by very subtle tactics (Herman and Chomsky, 1988). For
instance, the media widely accepts and spreads the lies of corprt
and capitalist government leaders a facts without permitting many (if
any) contrary opinions (Parenti, 2000). In addition, simple and repti
tive slogans, such as "The rich will save and invest and create jobs
for Americans," are very efective in making people believe in trickle
down economics, even when the trickle is really in the upward dire
tion and actually increases the poverty of the poor (Strobel and Peter
son, 1 999). Labels are also employed to subtly take sides, such dby
referring to union leaders as "bosses" but to corporate executives M
"leaders" (Parenti, 2000). Such tactics are especially useful for pur
poses of distracting people's attention from the dire need for infa
structure investments (like transportation) and productive investment
(like equipment) that corporate leaders and the rich are not making in
sufcient quantities because of their own excessive consumption ad
unproductive real estate investment (Strobel and Peterson, 1 999). More
over, anti-USA/anti-capitalist stories or facts are fequently omitted or
scarcely reported (Parenti, 2000). As the owner of the Washington Fo1/
owner once told the CIA, "There are some things the generl public
does not need to know and shouldn't" (Jackson, 2000). Possibly a
result of the latter opinion of the media elite, there has been a large dete
rioration in the quantity and substance of reporing of foreign events,
about which Americans have a great deal of interest, and of which they
should be aware in the era of globalization, but about which corrte
media elites believe they are better of not knowing (Phillips, 2000).
The result is a worldwide propaganda machine that "has developd
an ideology of individualism based on destroying the resistance ofth

individual [insofar as] it glorifes the individual hero, the star," ad It
thereby "destroys" the idea of resistance to this ideal, especially
"col
lective resistance" (Foerstel, 2000). It foments "a self-centered careerist
outlook oflife, an apathy to social problems, a fascination with sex,

io
lence, and commodities that sell well, but rob people of morality, ethiCS,
- . H
zeal and the determination to fght against injustice and explottatio

,
and generates "a culture that dehumanizes mankind into ' robots' with
no morality, ethics, or any vision for humanity" (Mukherjee, 20
).
Consistent with this efective brainwashing system, the mainstream
media limits political reporting to "mindless speculation about cam
CHAPTER 7
261
pg tactics and the regurgitation of mainstream pliticians' sound
bites" (McChesney, 2000).
As Smith (2000) summarizes, "With goverent inforation ser
vices, intelligence serices, and think tank press releases; with foun
a...corporate, and intell igence service fnding of the prpaganda
press; and with negligible resources among the impverished and
pliticaUy weak, the belief systems of the world stay to the right of the
plitical spectrm. There is no lef and no functioning middle. There is
only a right and an extreme right, which, because there is no tre lef or
te middle, are viewed by the people as a political right ad a plitical
ltk"
CONCLUDING PERSPECTIVES ON THE CAPITALIST WORLD
ORDER
It should also be mentioned that, even without considering the efect
of te most deadly embargoes and violence of the USA and its puppet
goverments, the new capitalist world order is very dealy. In paricu
la,while the capitalist system ensures that there is sufcient money
t buy the gain needed to fatten cattle so the mor afuent C eat
hexpensive meat in relative luxury, the system provides insufcient
jobs ad money to the poorest of the world to enable them to buy
eough food just to avoid starvation (Smith, 2000). As a result, 35 mil
lion pople sufer starvation-related deaths annually in the "prspr
ous" l990s under the USA's capitalist world order (Flounders, 1998b),
icluding 1 9,000 children under the age of 5 daily (Detschland, 200 ).
Tis anual catastrophe occurs despite the fact that the U has esti
mte it would only cost $1 3 billion annually (abut 0. l% of the USA's
aual income) to have a minimum level of both nutition and health
extended to al l people worldwide (Catalinotto, 1 999).6 Te i
thst mrket is similarly responsible for the fact that phannaceutJcal
cpies concentrate so much of their research on cures for ailments
not threatening to human life (such 8 baldness and pet al
i|
w), while very little research is conducted into curs for l

fe
ttening diseases (like malaria) that are concentrated in poor topic
.
al
ties which can't aford to pay for any drugs that Mcreated (Phil
"P.,
As
Chossudovsky ( 1 997) has documented, this human tgedy of
262 THE TRUMPH OF EVIL
unnecessary mass deaths can be blamed on the interational capitalist
system, which not only causes periodic economic catastrophes naturlly
(as explained in Chapter 6) but also more generally i ntensifes pover
(and related deaths). For instance, as previously mentioned, pressur is
ofen put on less developed countries (LDCs) to open up their markets
to imports. These imports (mostly from the rich developed countries
whose higher level of mechanization and technology, as well as greater
marketing resources, makes them more competitive despite higher labr
costs) tend to result in widespread bankruptcy of the LDCs' loal indus
try and agriculture that used to produce for the domestic market. As a
result, incomes in the LDCs, especially those of the poor, fall dramati
cally.
Meanwhile, to enable the LDCs to pay for the imports, the LDCs are
typically given loans from the richer countries (or fom their representa
tives at the IMF or World Bank), and those loans are usually made sub
ject to stringent conditions on further capitalist reforms, which requir
reducing or eliminating subsidization of essentials like food and health
care, thus intensifying the impoverishment process. In order to be able
to pay back the loans, the LDCs are forced to focus on the production
of goods such as i l legal drugs, tobacco, cheap commodities, and labor
intensive manufactured products, which can be exported to those with
the most money (i.e., the richer countries). This process frther lower
the amount of domestic output available for domestic consumption in
the LDC, fher impoverishing the poor, and results in a concentration
of the LDC's remaining wealth in the hands of a small elite including
narcotics dealers, swindlers who take advantage of the economic chaos,
and corrupt politicians and "business people" who profit from the "free
trade" with the rich capitalist countries via bribes or special deals. With
reduced production for the domestic LDC market and with export er
ings going largely to make debt service payments to rich foreign lend
ers and to pay for luxury imports for the LDC's rich elite (who increas
ingly become the only ones in the LDC able to aford imports), there ar
increasingly less resources available to keep the poor alive. As Chossu
dovsky ( 1 997) also shows, the economic chaos, poverty, and increasi

g
competition for decreasing resources ofen leads to regional or ethmc
violence and civil wars that cause further sufering and poverty.7
This process of the rich getting richer, and the poor poorer, is magnt -
CHAPR 7
263
|Nby
other characteristics of global capitalism. For instance, free mar
Kmad fully convertible currencies tend to result in richer developd
cunties having high re

l exchange rates for their currencies, implying

Brlatively low purchasmg power for the curencies of the LDCs on
te interational markets compared to what they can buy fom domes
htpouction (Froot and Rogof, 1 995). As a result, expanding trade
rults in the LDCs efectively paying more for the same products (and
terby getting porer i n real terms) while the richer developed coun
tes pay less (and thereby get richer).
Tis situation of unfair ters of trade is a natural outgwth of the
citlist system, with or without diferent curencies and currency
cses, Smith (20) has shown. For instance, assume a worker in
M es $ 1 per hour to prouce a T-shir that takes one hour to
puce, but a worker in a rich country ears $8 per hour and can pro
..the same T-shirt but with a diferent brand name or label for $8.
If meting and name-brand fetishism (created via expensive adver
tising, psychological manipulation, and control of market distribution
chn els) can create demand for the $8 T-shir, it takes the poor workers
8 hours of work to buy the brand-name T-shirt, while the rich worker
Mpruce enough to 0able to buy 8x$8=$6 of the generic T-shirs
(i.e., $6/$1 % of them) in the same 8 hours. Thus, the rich workers
aulate the square of the wage diferential in products (or capital,
%they probably don't need T-shirs) and enrich themselves expo
nentially the greater is the level of trade. "
Not that this phenomenon of capitalism magnifing exponentially
Mefect of wage diferentials does not requir the rich worker to buy
oly generic products. In paricular, name-brand prducts can b built
LD for a trivial amount of money (like $1 ) and then sold for
may times that amount (like $8) in a rich county, with most of the
Wrtai l price being paid to distributors (like wholesalers, retailers,
Wsles people), landlords (i. e., renters of retail and wholesale real
e), ad investors (i. e., creditors and the rich owners of the capital
Msyst), a Chossudovsky ( 1 997) il lustates. In addition, a long a
D income in LDCs is concentated in the hands of a rich few, most of
=+countries' demand will be from the wealthy who can aford to
for name-brand fetishes (like exotically labelepackaged T-shirs },
Ktere will be limited monetary demand for inexpensive prducts
264 THE TRUMH OF L
(resulting in production being so focused on the name-brand goos with
marked-up prices and far superior proft opportunities that it might b
difcult to obtain economies of scale for production and distribution of
inexpensive goods).
Already by 1 992 the quintile of people living in the world's richest
countries had 82. 7% of the world's income and were 60 times better of
than the people in the poorest quintile of countries (Economist, 1 992).
Within many of the poor capitalist countries themselves, this enorous
diference is magnifed even frther. For instance, the quintile of the
richest people i n Latin America have 1 50 times the income of the po r
est 20% of the Latin Americans (Smith and Ratner, 1 997). Any attempt
by workers (or the poor) to obtain a larger share of the economic pie is
openly attacked worldwide by central bankers, who meet such attempts
to redistribute wealth with threats of higher interest rates (Aalund,
2000), which cause unemployment, a reversal in any trend toward rising
wages, and eventually more poverty (Chossudovsky, 1 997).
While the USA's brand of violent domination (and exploitation) of
other peoples is more atrocious than any other in history (as dou
mented in the Introduction), it should be reemphasized that the crelt
of capitalism itself is nothing new. For instance, it was capitalism that
transformed all people into objects to be exploited, so that the rich
could accumulate ever more wealth at the expense of others (Marx and
Engels, 1 988b ), especially in colonies like India (Gopal, 1 963). The
capitalist economic system also caused the Europeans together with the
USA to initiate an enormous and proftable slave trade (DuBois, 1 965)
that killed tens of millions of Africans, who not only died in massive
numbers on land and sea in transit to their new jobs but also during
their initial "seasoning" at those jobs (Stannard, 1 992). 9 The extent of
the overall exploitation here can be seen from the fact that today's third
world nations had average per capita incomes i n 1 750 that exceeded
the average of today's developed countries at the time, but the imposi
tion of several centuries of colonialism (or the forced removal of pro
tectionist bariers against imports from today's developed countries)
has resulted in their average per capita incomes being less than 1/8 that
of the developed nations (which maintained protectionism until they
had gained sufcient income/technological superiority) in 1990 (Bai
roch, 1 993). Although the enormous current income diferential maes
CHAPTER 7 265
exploitative trade with the third world relatively insignifcant to the
developed countries today, that contrasts greatly with the situation in
1750 when incomes in the two areas were more equal, and trade with
te developed countries remains a very important component of the low
icomes of the poor third world (putting them in a very weak and even
desprate bargaining position relative to the richer developed nations,
even without considering the daunting military situation).
It is interesting to observe that the Europeans used an economic strat
@to colonize Africa several hundred years ago that was ver similar
to tat employed worldwide by the USA today. In paricular, European
cpitlists exported a fo of cheap manufactured goods (like textiles)
t Afica, thereby reduced the demand for gods produced locally, and
tus destroyed the African economy (DuBois, 1 965). Nevertheless, even
afer their economies were destroyed, Africans were able to continue
to mae payments for the goods i mpored from Europe by ofering raw
materials and slaves i n ret. Today, the USA no longer engages in
ought exploitation of slaves and no longer transports labor units k
a BtW work place in the Americas, but it dos continue to accept raw
materals and the production of cheap labor as payment. This exploita
tion of the cheap labor in less developed countries toay is not much
diferet from the exploitation of slaves earlier, except that the cheap
worer can now stay in their own country and receive wages that are
just enough to buy what slaves in the past were provided with by their
mter (i.e., the people of many less developed countries are trans
faned into wage slaves who must work for the equivalent compensa
tion of slaves just to stay alive, and that is for the lucky ones who can
Ma company that will ofer them the "right" to be a slave so they
won't have to starve to death or die of related disease
__
.
In direct contrast to the holoausts caused by capitalism, communism
(m countries where it was instituted) saved many millions of lives
an ully not only by having a more even distribution of foo, shelter,
helth car, and work (Davies, 1 997), but also by generating faster
9Mrtes than under capitalism, as previously explained in Chapter
lof this bok and a admitted by the IMF ( 1 993) itself. It should also
b emphasized that the faster growth rates in communist countries were
&lly achieved with 7 -hour work days and reasonable living con
dlttos (Davies, 1 997) that were in stark contrast to the terrible work
266
THE TRUMH OF L
and living conditions endured by most during the capitalist industrial
revolution where many males and females (many starting as young M
years old) were forced to work 1 0+ hours per week just to surive jmt
for instance (Marx and Engels, 1 988b ).
As an especially clear contrast of the deadly efect of the imposition
of the USA's capitalist new world order, it is possible to exaine
post-communist Russia of the 1 990s. GNP per capita there 0 fallen
by about half since communism was overthrown there in 1 991 (IMF,
1 997a), and death rates have signifcantly risen, mostly due to incr
stress, il legal drugs, and less access to sanitation and medical care for
many (Cox News, 1 995). Also contributing to the incrased death rte
has been an enormous increase in the number of murders and mafa
executions, which exceeded 350,000 in the frst four years of the nN
to capitalism (Roth, 1 996) and continues to be far above the level of
even that in the violent USA (Wiedemann, 1 997). The USA think-tank
Brookings Institution, heavily sponsored by USA corporations (Str
bel and Peterson, 2000), has estimated three million more deaths t|a
normal in Russia in the 1 990s (Wilson, 1 998b ).
However, given that Russian death rtes have risen from 1 . 1 % in 1 -
to 1 . 6% in the mid-1 990s (Becker, 1 997a), the reimportation ofcapttal
ism in Russia in the 1 990s has actually caused about I ,000,000 ext
deaths there annual ly. So many extraordinary deaths in Russia repr
sents a worse catastrophe than i f a large number of nuclear bombs had
been dropped on the country, but they actually represent a mere nonnal
symptom of the very deadly disease called capitalism. In fact, the cata
trophe in Russia should not be surprisi ng, given its capitalist syte
which has been labeled "democratic" and "civil" by Wester capttalist
leaders who praise its founder Yeltsin (Wayland, 2000a).
Wester capitalist leaders' idea of a civil democracy can b clel
seen fom just a few ofYeltsin's more notable "civil" and "democrattc
acts. For instance, Yeltsin declared peacefl strikes by unpaid worker
in 1 998 to be unconstitutional ( Ostseezeitung, 1 998) according to a
constitution that he himself had created (Ignatius, 1 993). He bad been
able to design this constitution afer he had efectively made himself
Russian dictator in 1 993 by orderi ng military tanks to fre on an elected
parliament (which opposed his new capitalist order), killing hundreds
of members of the opposition in the proess (Wayland, 2000a). Shortly
CHAPTER 7
267
d r this "civil" and "democratic" action, he suspended the country's
e
reme cour that had opposed his decision to c lose down the elected
s
,uaent (Wall Stret Joural, 1 993), banned oppsition political par
.ad media (Ignatius and Rosett, 1 993), and
.
refsed to even creae
a Jaw allowing for a possible transfer of power tf the controlled medta
wer not successfl in obtaining a subsequent confrmation ''vote" for
himself (Rosett, 1 996).
1 1
HoPE FOR THE FuTURE
Dspite the horrible worldwide situation created by the USA's Cold
Wa victor, the fture does not necessari ly have to be as bleak as the
pt. There is always the chance that the American people themselves
will b able to see the evil of their capitalist system, see that most of
the lot fom the USA's crimes continues to be owned by a very small
rt|elite (Strobel and Peterson, 1 999),
1
2 and see ft to vote to end the
sstem. 1 3
Cur ntly, no major political party in the USA advocates an end k
the countr's atroities. Liberal Ne York Tmes writer Thomas Fried
m(l 999) has adequately summarized the only signifcant diferences
bween the various capitalist political paries today to be their opinions
on bow much (and whether) the poor should be bribed with a larger
Wof the income pie (to keep them from revolting) and how fast (and
whether) capitalism should be spread throughout the world system. For
instce, USA Democrats tend to favor giving the poor a larger share of
tlot USA Republicans, while there is some mixture of opinions
aong individual Democrats and Republicans on how much, how fast,
WNwhat manner the USA should force interational capitalism on
tworld. However, even the small diferences between the Demorats
WRepublicans in terms of sharing the loot have been almost elimi
W in the 1 990s (coinciding with the ending of the Cold War), so
||ttthe Democrats are now so similar to the Republicans that some call
"Republicrats" (Strobel and Peterson, 1 999).
Historically, as documented by Copeland (200), the Republicans
hve generlly represented the pary of big business and the rich (and
P trickle-up economics), while Democrats have represented the
Wof small family businesses (including family fars that employed
slves)
the "average" citizen (who was ofered small bribes for
268 THE TRIUMPH OF EVIL
not revolting). Although the policies of individual candidates of the
two main USA parties have varied somewhat both geographically and
temporari ly depending on the interests of their main supporters (Zinn,
1 995), it is no coincidence that the Democratic Party is not only the
pary that tends to "bribe" the average American with a larger share of
the pie but is also the party that has engaged the USA in more exten
sive wars, as the "bribes" are very useful to maintain the support of the
masses needed to successfully fght those wars (Copeland, 2000).
Note that while the Republicans and Democrats have been the two
parties in power that have engaged the USA in its horrible inhuman
acts over the last 1 50 years, alterative parties such as the Refor Part
and the Libertarian Party in no way advoate an end to USA atroitie
.
The Reform Pary is merely more nationalistic (and therefore pten
tially more militaristic) in maintaining USA world domination at the
same time that i t is less wedded to the ideology of global capitalism
(somewhat simi lar to the ideas advocated in Adolf Hitler's Mein Kamp]
which also promoted nationalism, strong encouragement of domestic
business, and protectionism, as well as restrictions on interational
stock exchange speculation). On the other hand, the Libertarian Par
is less nationalistic but more extremely oriented toward global capital
ism (which can theoretically be enforced in the "ideal" world of Liber
tarianism via private armies of the rich instead of goverment militar
forces that serve the same end).
Despite the political monopoly of a few capitalist parties in the USA,
the possibility exists that some anti-capitalist political party will some
day attract sufcient support so that a majority of Americans can vote
to terminate the crimes and create a true democracy. The likelihoo of
such an event is greater the sooner Americans actually become aware
of the extent of their countr's atrocities. Awareness may help them
realize that they are tacitly approving a continuation of USA atroitie
unless they vote for political candidates who explicitly state their inten
tion to end all USA exploitation, aggression, and mass murder of inno
cent civilians. Although candidates from anti-capitalist parties (like the
Workers World Pary, which does advocate terminating USA atroities)
are not on the ballot in all states, people can always cast a write-in
vote as a protest and as a way of developing needed momentum for the
anti -atrocity movement (one write-in possi bility is the long deceased,
CHAPR 7 269
Amcan soialist Eugene Debs, who might be delighted to O under
te slogan "Better a dead red than another mass murderer'').
Hop for such a drastic change in national attitude does exist. For
itace, one survey indicates that American paricipation in demon
sttions is about as high as it was in the Vietnam War, "although
t's 8kof media coverage renders Gen Yers' social consciousness
invisible," i.e., people are less aware of the protests of the American
pple because they are covered less in the mainstream media (Buss,
20 ). Based on past histor, it seems quite likely that, once Americans
bome aware of the crimes committed by their country, a natural out
re may spark Americans' i nnate and ingenious culture of rebellious
ttssat bing so badly manipulated for so long, and the desire for change
may spread very rapidly. The interet provides a wonderfl opporunity
he, as it can be used to spread news that is otherise efectively cen
Kmby the mainstream media (Foerstel, 2000). For instance, although
ad cable continue to be controlled by a concentrated few who
at mpt to distract Americans from imporant political issues with a bar
rge of sexual and personal subjects (Strobel and Peterson, 1 999), the
inuence of the interet on that mainstream media is alrady apparent.
|tpicular, the interet provides enough alterative outlets for "inter
oI|8gand sophisticated" enterainment and knowledge that the main
s media's lock on American minds is being reduced, as evidenced
by the growing demand in the USA for information beyond the "for
mula comedy, feel-god tales and big budget be-man adventures" with
which Hollywood has saturated people's minds in recent decades (New
1mTimes News, 2000).
Nonetheless, there even exist risks of big business obtaining central
=cotrol of the interet (ust as it controls the rest of the media),
sh 4through adverising and payment for top placement in interet
shes through browsers (e.g., see footnote 3 of Chapter 2). Possibly
slution to the general problem of centralize control of the
miaentertainment business would be to create a number of diferent
goeent media companies (perhaps I 0 ) whose administrators
wold be elected by the people i n a single periodic vote. Candidates for
mpsitions would be allowed to have their resumes, opinions, pro
Jls, m
promises available for reading at polling places (and permit
Weual fe access for engaging in media debates), but there would
270 THE TRIUMH LL
optimally be a prohibition on spending money on political adverising
or campaigns. The top 1 000 or so candidates in the election would
be entitled to an admi nistrative post, so that there would be rom for
many media firms in which only a small minority of people are inter
ested. Although the government could still sell commercial adverising
time on these media (perhaps, however, subsidizing the advertising of
smaller frms with new products to level the playing feld and to encour
age innovation), the advertising revenue would optimally go to the over
all federal goverment (which would centralize such sales sepately
from the independent programming of the media companies) in or1tt
to eliminate any fnancial pressure the advertisers might be able to put
on the media companies. In addition, in order to further democratize ||t
media, it would also be necessary to outlaw the information-repressive
efect of allowing big businesses to pay for top placement on an interet
search engine (that should be done more randomly or independently of
money considerations).
Once Americans recognize that the USA's wealth was stolen via hor
rible crimes against humanity, they might also see the justice in ending
any frther domestic or foreign exploitation. While reparations to the
USA's victims might also seem appropriate, it might be sufcient (and
more practical) to merely give the poor the freedom to grow out of their
poverty using some economic plan such as proposed in Chapter 5. Such
growth might ver well beneft all, including the USA itself.
In addition to sparking faster worldwide economic growth, an enlight
ened American people might also decide to have a system that shars
the existing loot more evenly. In particular, it would seem only fair that
the surviving Indian victims of possibly the worst holocaust in histor
(i.e., the virtual genocide of the native Americans) should be provided
with jobs that give them close to an equal share of the income fro
the land that was stolen fom them by force. While the native Amen
cans have clearly been the people most abused by the USA's capitalist
system, other victims of USA capitalist crimes like the Afro-Americas
(i.e., the former slaves) should also be entitled to a fair share of the
income from the wealth that they helped create while being exploited.
In addition, since a very large percentage of white Americans initially
came over to the USA as i ndentured serants and were forced to efec
tively work as slaves for a limited number of years (Zion, 1 995), the
(r+r 7 271
ators of the majority in the USA have been exploited and should
rlly be entitled to an equitable portion of the loot/income of the
USA.14
Morover, it must be remembered that American workers in general
(urly or salaried) have always received compensation that was less
wte value created by their work (and that ofen represented a for
ofwage slavery) in order to ensure a god proft margin to rich inves
tr (Ma and Engels, 1 988b ). One result of this exploitation is a sig
nifcat amount of povery among many Americans (Strobel and Peter
199) that is so severe that the rich USA ranks 24'h in the average
hlthy life-span of its residents even though it spnds more than any
oher countr in the world on health (Associated Press, 2000i). lt would
tus seem just and humane to have all Americans be provided with jobs
m|pay approximately an equal share of the USA's national income
o00P), which would come to about $70,0 per worker in 20.
Note that incomes in such a socialist system could still be al lowed to
\q smewhat for diferences in skill and perforance (e.g., ranging
bween $50,000 and $ 1 50,000 in the USA). Thus, although the USA
cpitlists have shared some of their loot with the average American
,u1for of brib or diversion to keep them fom investigating or com
pling about USA crimes and exploitation), and although most Amer
ic toy (at least the middle class) therefore have a higher standard
of living than people in most of the rest of the world (and thus proft
fm the USA's past atrocities), over 95% of the American pople 0
M the value of their work created and would therefore beneft
fm 1more equitable soialist system (the only exceptions bing those
cr tly with an abnormally large share of the USA capitaVloot). That
t6|could come fom higher wages and salaries or a shorer work
wek, or both.
No that incomes would also grow faster under a socialist system
under capitalism, as doumented in Chapters 1 and 4. Note also
tt
tes for social security and goverment services in a soialist
V would be less than under capitalism because unemployment
CId b eliminated, wasteful and destrctive defense spending could
"
to an extemely low level, and a more efcient goverment
Cld b Created, as explained in Chapter I . As documented in Chapter
tSCialist system would also be advantageous for many non-eco-
272 THE TRUMHOF EVIL
nomic reasons, permitting greater personal individuality (as soialism
prevents rich individual owners of capital from rpressing the individu
ality of others) and greater personal freedom (as socialism prevent
"free" markets from economically repressing personal freedoms).
Regardless, since the analysis in Chapter 3 of this bok shows that
the fall of socialism in Easter Europe was not inevitable, and since
Chapters 4 and 5 demonstrate that a socialist system can fnction ad
even integrate in a capitalist-dominated world, there is also hop for
other countries even if the USA's new world order is not overhrown
by USA voters. In particular, other countries can vote in political par
ties promising to attempt to create more just socialist systems that ae
immune from the USA's capitalist exploitation and atroities. While
socialism may not be perfect (and while an even better system could
perhaps be developed, maybe by developing frther some of the idea
presented in Chapter 5), it has clearly been shown to be superior to
capitalism in practice.
In the meantime, while waiting for the majority of voters to wake up
to the reality of the USA's Cold War victory, this book prvides per
spective on the hypocrisy of individuals, organizations, and nations that
refain fom doing business with countries for "ethical" reasons. Such a
refsal to engage in peaceful interational cooperation is ofen based on
citations of terrorist acts or other atrocities committed by those coun
tries. It is tre that some of the peoples and countries against whom the
USA has committed its own extermination tactics have also engaged
in morally criminal acts. For instance, Nazi Germany and fascist Japa
both made the top ten in civil ian killings (as documented in the intr
duction), Cambdia executed as many as 1 50,00 people afer the USA
slaughtered about a half million innocent Cambodians (as already men
tioned previously), Vietnam assassinated about 40,000 civilians during
the USA occupation and extermination proess there (Lewy, 1 978), the
American Indians killed thousands of civilians in retaliation for the
USA mass murders (Utley and Washbur, 1 985), and Iraq killed thou
sands of its own civil ians (Andreopoulos, 1 994).
1
5 Nevertheless, even
though other countries have also engaged in terrible acts, none compar
to the USA (and some of those terrible acts by others actually repre
sen ted a form of revenge for much more horrible USA atrocities com
mitted against them). A consistent policy of refsing to interact with
(r+nl 7
273
coutes that commit terrible atrocities would therefore also mandate a
rfl to do business with the USA itself.
.summar, this book irrefutably documents the fact that capitalism
|t much less efcient and much creler system than communism.
Wle furher worldwide sufering can be expected as long as the USA
|tale to enfore its power and capitalist rligion on the rest of the
worl
1
6 the situation today in the year 200 is probably not more hope
less ta it was in 1 941 at the height of the triumphs of Nazi German
citlism (which then also seemed invincible). Just as some have spec
k that Hitler's rule of Germany could have been "abored" with
"mas protests" (Associated Press, 2000h), so too could widespread
destrtions and other political actions terminate the rule of the
cl USA leaders. In particular, the USA's own demoratic fade
(which it currently uses so successflly for propaganda purposes, much
0R M than Hitler did for his own elections) creates an opportunity to
vVmmwthe USA tyrants peaceflly via the ballot box.17
274
THE TRIUMPH OF L|l
DL1b
INTRODUCiON
|. Bsides bing incompletely doumented, there are a numbr of prral prob
Mwith Money's ( 1 928) estimates. For instance, many of Money's own base fg
we drive from other sources that had alrady subjetively disounte actual
tigtiagof Indians for no apparent reason, and Mooney aritrarily reuce thee fg
CCfher (Jennings, 1 975). In addition, many of Money's estimates ar based
jut multiplying four by the number of warior claimed to have ben w afer
etive contact had been made with the white invader (Dnevan, 1 976), whereas
warrior numbr should have bmultiplie by a more noral 1 2: I milit
miliztion ratio for Indians (Dobyns, 1 983). Mover, Money even igored many
dk encountered (Denevan, 1 976), pssibly mpar bcause his work was not
cple at his death (Jennings, 1 975). Finally, Money faile K make any allow
for Indian warriors who were never diretly counted (bcaus they fed frothe
dly whites) or who were met (and kille) only bfor extensive militar contact
Ww(Torton, 1 987). The uncounted numb might b espcially large given
m||zt there was a widespread fontier practice of giving Indians gifs infete
Wsallpx (Jennings, 1 988), and given that the Indians quickly le to avoid
Wso frewer of USA by engaging in guerrilla warfare that avoide masing
Wonfor obseration (and counting) by the dedly whites (Jennings, 1 975). Despite
M's methoological flaws, bias, and obvious untimation of Indian ppula
wW USA, the USA goverment publication of Money's numbr gives them
Mof authenticity. Possibly as a rsult, many twentieth centur rer tend to
Wsimilar low numbrs (Wax, 1 971 ).
.While Indians did have more vacant land to allow for more hunting, it is nt clear
*sch practices resulted in more underutilization of land than the Europan
kof concentrating land holdings in the hands of the rich (Thomas, 1976).
3. Mexicans also stole a grat deal ofland fom Inians via frud, but, unlike the USA,
gerally allowe the Indians to continue to live on the land as srfs (Atkin,
|). Ia adition, unlike the USA which did not provide Indians with citizenship
WWtwcat|cthcentur afer they had bvirtually exterinate (Churchill, 1 994),
atomatically grnted citizenship to all Indians immiately upn achieving
Spain in the 1 820 (Jennings, 1 93). Perhap for thes
known to migrate fm the USA to Mexico (Maller, 1 877), as well as to
+-eap the USA's attacks (Jennings, 1 993).
4 Tis etimate of the USA's shor-ter kill rate may actually b far to low, a Wax
276 THE TRIUMH OF LL
( 1 97 1 ) indicates that the Califoria gold miners ki l led nine-tenths of the Indian ppula
tion in the space of a fewyears afer it was annexe by the USA.
5. The by count for these countries may actually b seriously underestimate. Fo
instance, some estimate the number killed in El Salvador to b in the hundres of thou
sands (Catalinotto, 1 998b). A group of Catholic religious orders (the Inter-Congrga
tional Commission of Peace and Justice) provide evidence that over 50,00 people zy
have ben assassinated by USA-backed Colombian goverment forces or their deth
squads over the 1 988-95 period alone (Javier, 1 996), and Colombian rebels claim the
anticommunist goverment in Colombia has ben killing 30,0 pople annually for
some time (FARC-EP, 1 998). In addition, although the USA puppt Pinohet was
only able to slaughter abut half the 20,0 civilians he planned to execute outside o
f
battle in the initial weeks of his terroristic rle of Chile in 1 973 (Sandford, 1976), and
although only 270 plitical executions have ben verifed since then (Javier, 1 99),
there are estimates that tens of thousnds of unared Chileans were kille over the
coure of his long and brtal dictatorship ( Workers World, 1 998).
6. The numbr of civilians killed by the USA in these other countries may b enor
mous. For instance, the Shah of Iran, who was put into pwer by the CIA in 1953, kille
nearly 50,00 pople just in the fnal year of his reign of terror that had lasted until he
was overthrown in 1 979 (Clark, 1 998). In addition, the CIA-spnsored mercenar war
launched against Nicaragua kil led an estimated 75,0 (Flounder, 1 998b). Moreover,
the CIA-financed terorist war launched against Angola has ki lled an estimated 30,00
pple (Blum, 1 995). Although many of the latter die in battles btween goverment
trops and the CIA-backe terrorists, the CIA-fnanced terorist were respnsible for
a large numbr of deliberate civilian murder (Minter, 1 994 ), and the WalclJ0ur
nal has actually estimated over 60 ,00 killings i n Angola (mostly of civilians) since
1 975 (Blok, 1 998). I n addition, the USA-spnsored atroities listed in the text is far
fom all-inclusive, as it dos not fonnally mention many other countries with murdr
ous USA-backed (or USA-installed) goverments like Bolivia, Brzil, Haiti, Per, Ur
guay, and so many other (Blum, 1 995), which have all killed a signifcant numbr
of pople for plitical reasons although the estimates of the number of victims var.
For instance, in Argentina, executions and arranged "disappearances" caused by LbA
trained terrorists and USA-installed goverment thugs range from 90 (Javier, 199)
to 30,00(Mathiowetz, 1 999).
7. Although the USA (as well as other countries) has ben using embaros to impv
erish peple of countries that do not submit to the capitalist world order at least si

c
1 80 (when Haiti was punishe with a 60-year embargo for its slaves revolting and seiZ
ing pwer), the embargos were not as efective when the Soviet Union was still around
to supprt opprspoples (Flounders, 1 98b ).
8. Some additional infonnation on some of these mass murders is merite. For
instance, while the British directly exterminated tens of thousands of unared civil
ians in Gerany with its teror bmbings in World War II (Markusen and Kopf, 1 995),
and while it directly slaughtered thousands of natives in its colonies (Kieran, 1 98),
including in Ireland (Levene and Roberts, 1 999), in the Caribbean (Daunton and H8!
em, 1 999), in India (Gopal, 1 963), and in Kenya (Maloba, 1 993), most of those kille
by Britain in Ireland and Australia died of hunger and disease as the British delibr
NoT 277
ael dte or stole the
.
fo of the 1

1 inhabitants (Levene and Robrs, 1 99)

foibly rmove the natives fm the1r fo surce (Reynlds, 1 995). Similarly,
altgh czarist Russian sldier directly masscred thousands of Circassian civilians,
ym died of hunger and diseas while feeing frm this onslaught to refgee
gin Turkey (Levene and Roberts, 1 99). For France, Smith (200) reprs abut
millio ple killed by the French in its war to kep Indohina colonized over the
g1954, and ( 1 967) provides evidence that W to of those kille by
|m|gund foces were civilians and that pssibly even a larger prcentage of civil
WW kille by Frnch aerial attacks that foused on pasnt living quarter and
tly ig the rice pattie and jungles in which the are guerilla tended to hide.
massive slaughter is alone sufcient to pt Frnce in the numbr 9 slot, but Frnce
@in oter atroitie in its other colonies as well, such as in Algeria where it
gtens of thousnds of exeutions (Home, 1 977) and employed widespread
W(Mann, 1 97). Although the numbr of dad rsulting fom Frnc
'
s 1 954-62
waainstAigerian indepndence fghter is estimate as high as one million if loss
dlife cause by hunger and disease (largely stemming fom France's fore
rl ement of Algerians) are included (Home, 1 977), only abut 30,00 pople wer
:wdelibrtely killed, with many bing murdere by armed Algerian nationalists
Wwith many more of th dead bing arme Algerian nationalists themselves (Ruedy,
|).fm als committed major atrocities in its Madagasar colony, where it is
MWthat it killed as many as I 0,0 pople in conquering the countr during the
|M|K97p(Ellis, 1 985), and where it may have m cre an additional 50 00
XWin a 1 947 revolt ther (Hesltine, 1 97 1 ).
'
9. B not counting cpitalism-induce deths unles obviously delibrte, othr
M,suh a the staration deaths of three million reidents oflndia that resulte
8r|u|o destryed Bengali agriculture upn the approch of the Japanes ary
Wo War II (Markusen and Kopf, 1 95), are not incorprte into the analysis
was no explicit intent to kill them.
10. eaggerated number repred by the capitalist press to have ben killed by
1st goverments ar fequently base on outright CIA fabrications o absur
w|8lcm, 1 995). For instance, the number might b based on an allegation from
=even a CIA agent) that, say, I 0/ of the pople in his village disap
It assume that al l were executed, and then this prcentage is extraplate to
MWNcntr (Rummel, 1 91 ).
l

|
Cuia woud not

ven come clos to bing in the top ten in mass murder.

It defmely 1lle les than Uganda, which slaughter 250,00 of its
_.uner ld1 Amm at abut the sme time (Dato, 1 989), although Idi Amin
n
ly as much

ublicity as Pol Pot toay (pssibly 0m he was a capi

CJ
a als ceramly murdered less than Burndi, which (under dictatorial

f
ao
em
rt army dominate by minority Tutsis) slaughtere ptentially in
o IOOOH tu
. .
,

W
u N 1ans m a 1 993-98 civil war (Uvin, 1 99), as well as another

man earher 1 972 extermination campaign (Chalk and Jonassohn, 1 99).

K
' " murder of Hutus no doubt helpe motivate the confl ict in neighbr
_
wh
JC
h (under Hutu rle) exterinated abut 50,00 of its ethnic Tutsi

o1 9 (K
ingerhofer, 1 998), and which theref< would also rnk far abve
Camb1a als killed less than communist China, which is discusse later
278 THE TRIUMPH OF L
in the Introuction, and less than the Soviet Union, which is evaluate in Cp|o1.
Note als that if the rnkings were based on the existence of an actual state, there migt
be others ahead of Cambia (and pssibly in the top ten), such as Mongolia du
Ghengis Khan's medieval practice of killing unarmed civilians (Chalk and Jonasshn,
1 90). In addition, i f Nationalist China (now only existing on the island of Taiwan)
were held responsible for all the people killed (including many communists) udoa
combination of warlord and foreign domination bfore the communist takever in 199
(Ho, 1 959), it would undoubtedly also easily bat out Camboia, although many of
Nationalist China's atroities might actually be more appropriately attributable |o W
Wester colonial power that to sme extent controlled the countr into the frt half of
the twentieth century. Besides the major colonial pwer already mentione, Porgl
also had a stake in Nationalist China, engaged in the killing of tens of thosnd of
peple in its own colonies that continued into the 1 970 (Kieran, 1 998), and mg||
therefore als merit investigation for a high ranking. Similarly, Belgium migt N
desrving of consideration here for its atrities in its Congo colony (Galvez, 199).
1 2. For instance, while there were no doubt hundreds of innoent civilians killed in
the gueri lla war launched against communist China by Tibtan feudal warlors and
slaveowners fnanced by the CIA, the USA State Department itself has privately clle
claims that China killed 65,00 Tibetans in a civil war in the 1 950s "wild exager
tions" (Grnfeld, 1 996).
1 3. In addition to the 1 950-52 executions and the 1 960s killings, there wer undoub
edly hundreds of demonstrators killed at Tiananmen Square in 1 989 and at v

riu
other times (MacFarquhar, 1 993), but these number are not signifcant in the lusto
of mass murder. The 1 950-52 mass exeutions and the 1 960s killings, however, wold
certainly put communist China in the top 20 (see fotnote I I of this Incti

o
the country's other comptition, which would als include Nationalist China ttlff|0
mix of deadly warlord and foreign rle of mainland China befor 1 949 was constde
a tre indepndent state).
.
1 4. The death rate in pre-communist China reported by Deleyne ( 1 974) is consistent
with other estimates for pacefl years with noral harests in the 1 930s (Eastman,
1 974). The estimated death rate in pre-communist China is also consistent with the (act
that the Chinese ppulation growth rate was abut 0.5% in the frst half ofthe m0hhtD
centur, as that growth rate implies a death rate of over 3.2% given that the annul btrh
rate (which has ben trending down) must surely have exceeded the 3.7% rate of Dt
early 1 950s (Deleyne, 1 974).
.
1 5. While Chapter provides sufcient inforation Rrefte the overall allegatios
against the Soviet Union, that analysis of Soviet killings concentrates Stalins M
notorious 0, the 1 930. In fact, demographic data alone are sufcient to d1sc
the conjecture of Rumml (190) and other that Stalin and his successor murer ini
lions of pople in the 1 940s m1 950s. In particular, Chalk and Jonassohn ( 1 90)
census data indicating that the ppulation of the Soviet Union had risen to 209 mllon
by 1 959, f
.
whi

h 1J milli

had
br since 1 940, implying 209-:5

1 34 mtlhn
of these llvmg m 1 959 haVIng m existence bfore 1 940. Combmmg the MJ
1 939 Soviet population of 1 68 million with 24 million new Soviet citizens (-we
added as a result of Soviet r-annexations of forerly Russian teritor later m I9J
NorE 279
imlie a ppulation of 1 92 mi l l ion at the end of 1 939. Given Rummel's ( 1 9) own
eimates of 20 million Soviet killed by the Nazis in World War II, there are a total
of 192-2(1 3438 million pople lef who could have died fm deaths not related to
WNais. Tat numbr of deaths represents only 38/20 1 .9 million pr year over the
19-1959 interal, or under 1 .0/ of the population annually. Such an annual death rate
is fa les than the over 3% Russian death rate under the czar even in pacetime in 1 91 3
(Wtrf, 1 99}, is les than the 1 .9 Soviet death rate in 1 928 bfore Stalin tok
Ncotrl (Buck, 1 93 7}, is even blow the 1 . 1 % death rate in the fnal yer of com
munis in 1 99, and is signifcantly less than the 1 .6% dath rte under Yeltsin 's capi
Russia (Becker, 1 97a). Thus, although ther Wsme guerrlla warfare btween
Sv to and Nazi collabrator (i.e., "fredom fghter" in CIA terinolog) afe
mofthe Soviet Union sized by Hitler were librated in World War n, and although
WSiet Union had hundreds of the Nazi collabrator execute N many other
g(Assiated Press, 20 e), there is no evidence of Stalin having kille a sig
nifcnt numbr of pople in the 1 940s and 1 950s. Similarly, while ther were numer
weeutions in other Easter Europ countries under Soviet militar ocupation afer
Wold War II, they numbered only i n the hundreds (Parrish, 1 96).
CHAPTER 1
.Given that the pre-communist relative GNP estimates quoted her are higher than
oher resarch estimates (Gregor, 1 982) and given that other estimates of Q
cit Soviet GNP in the fnal yers of cmmunism are closer to 50 of the USA
|U@qand Stuart, 1 95), it is pssible that the number listed in the text undertate
Nmitude by which the Soviet Union caught up. Stalin himslf stated in 1 931 that
W USSR wa "fify or a hundred years bhind the advance countries" (Harrison,
19), mcing what was accomplished economically by the USSR trly amazing.
. admitted by the forer National Security Council membr Richard Pips
(193), the Foreign Interentionist Civil War would not have ben pssible if it had
wfo the extensive militar and other suppr given to anticommunist mercenar
|Nby Grat Britain and over a dozen other capitalist power that invade the USSR
=m 1918 and 1 921 . The destrction of this war, as well a tat of the Nazi inva
tmW threfore not inherent to communism but inficte upn the Soviet Union by
dcapitalist pwers.
3. T includes its fnal decade (lMF, 1 993}, during which the Soviet Union expri
its slowest pacetime growth (Gregor and Stuart, 1 995). With rept to other
r|mz|s,Maddison ( 1 969) estimated that real GNP growth pr capita in the Soviet
vk
cumulate to 25.8% more than in the USA btween 1 91 3 and 1 953 (or 0.6%
|annully), despite the Forign Interentionist Civil War and the Nazi invasion
|of which st back Soviet output levels by abut a decade) and despite including 4
Fof ngative Russian growth under the czar during the Geran invasion in W

ld
Ww I. Tis estimate combined with the fgures stated in the text implies that real Sovtet
been 1 953 and 1 91 must have cumulated to b 1 24% greater than in the
(implying 2. 1 % faster annual growth over that time interal). Such a fndi

g is
st with the growth fgures reprted by the IMF ( 1 993) and is substantially

"
various estimates based on pre- 1 90 studies cited by Grego and Stuar
(I9S) that indicate only 0.8% higher annual Soviet growth btwen 1 950 and 1 99.
280 THE TRIUMH OF EVIL
Jn addition, Maddison's ( 1 969) estimate that Soviet growth pr capita was 2.4% hige
between 1 953 and 1 965 implies from the foregoing information that Soviet grwth
must have ben 1 .9 higher annually btween 1 965 and 1 991 . The latter infonnation,
along with JMF ( 1 993) data, reftes the hypthesis cited by Gregory and Stuar ( 1 95)
that the rate at which Soviet output had been catching up had not only slowed signif
cantly but had actually reversed itself in recent decades.
4. Anticommunist propaganda cerainly played its par in the overhrow of commu
nism. Herman and Chomsky ( 1 988), Blum ( 1 995), and Forstel (20 ) provide se
details on how the capitalist propaganda machine fnctions without many people CC
being aware that it is biased propaganda. For instance, attempts to portray pre-commu
nist Russia as relatively efcient and afuent by drawing attention to the fact that Russia
was a major grain exprter in 1 91 3 but had tured into a major grain importer une
communism (Pips, 1 993) convinced many Soviets, including Gorbachev himlf, tat
communism was inefcient, and Gorbachev even purged pople who expressd V
trar, pro-communist opinions (Marcy, 1 990). However, data provided by Grego
( 1 982) and Goldman ( 1 991 ) indicate that, despite almost a 2/3 reduction in the numbr
of worker employed in Soviet agriculture compared to 1 91 3, Soviet grain prouctio
nearly doubled by 1 990 compared to the 1 91 3 level. While the transfer of labr from
agriculture to industry helpd enable the Soviet Union to greatly increase industrial
prouction and consumption, consumption of grain also rose signifcantly under com
munist rle, both indirectly (through greater meat consumption, which requires lare
amounts of livestok foder) and directly (Marcy, 1 990). Moreover, it should Demph
sized that aggregate Russian agricultural production was lower than that of the USA 0
1 91 3 despite employing over six times as many people and despite 1 91 3 bing a bump
year for Russian farer with abnormally high agricultural prouction (Gregor, 1982).
Although some estimate Russian pr capita income to be as high as Wthat of the USA
in 1 91 3 based on a backcasting of very subjective growth estimates (Maddison, 195),
backcasting leads to a compunding of error and biases over time that can cause hu

e
distortions in past output estimates. For example, it is impossible for output Qrcap

ta
in Russia to have been Zthat of the USA in 1 91 3, given that Russia produced less With
6 times as many pople in agriculture even in a goo year, and given that Russian indus
tr was even less competitive relative to the USA than Russian agriculture (Grgor,
1 982).
5. In a 1 988 surey of East Gennans who sought to emigrate to West Genn

y,
690/ listed limited consumption and travel opportunities in East Gerany as the maJo
reason for wanting to leave (Falck, 1 998).
6. The anticommunist propagandist Rummel ( 1 990) al leges 250,00 outright

=
munist kill ings of civil ians in Afghanistan, based on his typical metho of efecuvely
multiplying by the highest pssible numbr reprted from any source, in this an
unsubstantiated 50,0killings cited by Klass ( 1 987). Given that Rummel's

methodology typically results in an estimate that is to high by a factor of 1 0- 1 0 ume

(as demonstrated previously and subsequently in the text for diferent alleged =a
nist atroities), the tre numbr of delibrate communist killings of civilians IS =
likely to lie btween 250 and 25,00. For instance, of the largest communist atrolt
.
IC
mentioned by Khan ( 1 991 ), which included the killing of over 1 0
civilians dunn

the Soviet Union's 1 984 combined air/artiller/ground assault on rebel-controlled
NarE 281
in the Afghan city of Herat, the killing of almost 30 civilians in an air/grund
at k on thre Afghan villages in the Shomali region, and the killing of two hunre
civilians in a pure aerial bombing on the outskir of Qandahar, only one action (the
t00m)resemble USA terorist tactics in Vietnam (and as mentioned in the text, the
Sviet, unlike the USA, had an ofcial plicy of providing adequate waring to civil
miobbefore an aerial bmbing). Other alleged communist atroities have ben
Mby Urban ( 1 990), who cites a 1 989 communist air/ariller shelling of rbl
XNvilla,that the USA claimed killed 0civilians, and who also spifcally men
Mto sparate air/ground campaigns in which communist bmbings kille a totl
0serl hundred civilians accoring to rebl surces in 1 987. Given m proximity
gnariller force in thes latter attacks, the civilian deths appar to b more
g@to actul militar battles with ared rebls (as oppd Kaerial trsm), and,
jgWU|the numbr of deaths may have ben exaggerate (as most other). To
pisme prspctive on the relative numbr of civilian casualtie involve in mili
pbles, Girardet ( I 985) cites rebl claims that more than 6 time as many civilians
[eimted 20) were killed as ared rebls i n one big Soviet ground ofensive (that
inlu ttical aerial bmbings and strfing, as well as heavy ariller fire, to dirtly
Soviet ground trops) into a key rebel-ontrolled area in 1 982 (that redly
rlt in thousands of communist casualties). However, it should b mentioned that,
Mmny of the rebels were par-time civilians, it is not clear if the estimate of I 20
cilian deaths is supose to represent only innoent civilians or not. Morever, it
sld Mmentione that "resistance groups rrely acknowledged signifcant casualtie
MN0le (Corovez and Harisn, I 95). Jn another air/grund battle (in 984), Uran
|%)cite a rebl estimate of twice as many civilian as rbl deths. Another prsp
te is pvided by Amstutz ( 1 986), who cites the estimates of one Frenh joralist
initing that there wer abut half as many civilians killed (sverl hundre) as dea
ths
:m (on both sides) for one province of Afghanistan during one month of
ur/grud battles in 1 982.
7. As noted in the Intruction, even Vietnam's invasion of Cambia could have
=N|parially and indiretly caused by USA plicies. Jn paricular, communist
"Winvadeand ocupied communist Cambia in I 979 af a signifcnt amount
|
wmmthat had ben initiate by Cambia with the supprt ofChina N
Sbly

als the USA (Kiinghofer, 1 998). Cambia's provoative brder incursions
leKan attempted coup against Cambia's leade Pol Pot, who realiate
mssive killings of ethnic Vietnames and Vietnam sympatizer (Kier, 1 96).
_.USA's histor of using diplomacy, extorion, and M0 K crete conficts
cmunist China and the Sviet Union (Griswold, 972), it would n b

,if the USA had als played a signifcant role in stiring up the btwen
11 "etnam, which were allied with China and the Soviet Union, P
7>ev
1dence of such a sheme is provide by the fact that m USA did inde
ly rize the Pol Pot goverment and dirctly suppred his guerilla activi

llt
Vietnam afer his fal l fom pwer (Blum, 95). Communist China itslf

l
y
a
t
cked Vietnam mi litarily afer the Vietnamese ocupation of Cambia, but

sle

lthe attack was ver l i mited (Kiinghoter, 1 98), so it is not counte as

In
Vasion, just as the minor brder skirishes btween the Sviet Union ad
Mserl decades ago (Bradsher, 1 983) are not counted as invasions.
282 THE TRUMH OF L|L
8. When Nazi Germany did invade the Soviet Union in the early 1 940s, it did inde
put many czarists into power in its ocupie territories, and although the greater ef
ciency of collectivization and communism inhibited them fom immeiately transfonn
ing the ocupied ares into a capitalist system while the war was continuing, there were
some expriments along those l ines, and there was a long-tenn plan to do so for pliticl
reasons that were consistent with the Nazi capitalist ideology (Schulte, 1 989). Hit ler's
long-term plans were to colonize Russia with Germans while killing of the native Rus
sians in a manner very similar to (and based on) the genoidal methos employe by
the USA to take land from the Indians, and, in the meantime, he hoped to enslave an
fragment the Russians as much as pssible although he planned to allow them kke
their loal communes if absolutely neessr (Cok, 1 973).
9. Although there have ben some capitalist countries (such as in sutheast Asia) tat
grew faster than Easter Eurp (IMF, 1 998: 1 71 ), communist Easter Eurp did
faster than the average capitalist developing country even in its fnal years, as well
faster than the average capitalist developed countr (IMF, 1 993). Tn addition, it should
also b mentioned that many of the developing capitalist countries (such as in southest
Asia) had spcial advantages that Easter Eurp di d not, as the USA encouraged their
economic development as a defense against the frther spread of communism (Smith,
200). The advantages ofered by the USA to its strategic capitalist allies include
facil itated exprts to the USA market at the same time these allied countries were pr
mined to use a substantial amount of protectionism against imports, were given easy
access to Western capital and technology, and were not reuired to spnd muh
on defens. Despite these advantage, many of the sutheast Asian countries ar nw
facing a very severe eonomic crisis that has reversed some of the previous income
gains, as is discussed later in Chapter 6.
I 0. While China has conducted numerous capitalist reforms of its eonomy in spial
coastal zones to attract foreign investment, encourage exprts, and ease the transitio
to unifcation with Hong Kong (Adams, 1 997), most of industr remains state-own
and controlled (Mok and Hui, 1 998), and "no large enterprise has becomplete!
privatized, with most prmitted to sell only a small stake on overeas capttal markets
(Chang, 20). In addition, it should be mentioned that real economic growth in com
munist China was relatively high even in earlier prios, as admitted by GregoN0
Stuar ( 1 95), who cited sources indicating real average annual grwth to b 7.9% f the
1 950s, 5.6oo in the 1 960s, and 7.00/ in the early 1 970s. Although some have dM
that the real growth rates in the aggregate eonomy reprted by China of7.8% in 1998
and 7. 1 in 1 999 were overestimate and were closer to the nominal 5% wage and W
growth reped in thos yers (Johnson, 20), such lower estimates ignore other fac
tor such as profts and net exp income, and bcaus they apparently ignore the efet
on real income inc of the commodity price defation incurred during those yer
(Leggett, 200). I n addition, as explaine by Roach ( 1 999), i f growth were in fact lo

er
than China reprs, there would likely b a signifcant increase in unemployment whtch
dosn't appar to have happened.
I I . Stalin originally did not plan to implement forced collectivization (Cam1
1 974), but he changed his mind afer ther was a threat of another British invaston
'

1 927 (Meur, 1 99) and afer farmers refsed to make mandator sales of fo to the
state at low prices in the late 1 920s (Conquest, 1 986). This senario had its n Nin th
NarE 283
bltl war that was launche against the Soviet Union practically frm the moment of
ction in Otobr 1 91 7. war was made pssible only through the extensive
IIItS suppr, embargo, and militar invasion by Britain, and the contrl and
withholding of fo supplies were strategic weapns use in this war that kille mil
li qstaation over the prio 1 91 8-22, as the rich farer simply murdered the
of Soviet tax col letor sent out to the m to obtain fo for te citie
g,193). Afer an efetive multi-year cease fre in mot of the Soviet Union except
Tetan (Krivosheev, 1 997), much of the civil strife i n the 1 930s was, Ksom extent,
mly a cntinuation of that confict (Viola, 1 993). Te are gurillas ofen use the
s wepns in the 1 930 to fght the Soviet goverment as they W, and obtaine
WBritain, in the earlier civil war (Conquet, 1986). While capitalist countrie now
Ngloif pole as "clever" for corering a market in essntials like fo (or fo
avoiing Nm and goverment regulations in order to b able to maximize their own
ptincome at mcost of others like the por), only a few hundre ye ago pople
M@
in such acts even in capitalist counties like Britain were considere molly
Wlelly criminal (Furlough an Strikwerda, 1 99).
12. growth rate in the ppulation was actually abnorally high in the late 1 920s
cre to prior and later times (Wheatcrof, 1 93).
13. Data supprting these facts on lower birth rate are prvide by Davies ( 1 97)
WCot (1 9) himself. Te 1 .5% lower annual birth rate in the 5-year interal
of 1932-36 imply 5x.O I 5x 1 69= 1 2 mi l l ion less babies, while the 0.5% lower birth rate
irother four year imply a frther 4x.05xl 69=3.2 mil lion reuction in babie.
Wali i Jmill ion "missing" pple were causd by a lower numbr of birhs.
|!.Inluding 1 933, the average death rte in th 1 930s was 2. 1 Qyear, which
rin far blow the annual death rate in noral pacetime in Russia bfore com
=m(Wheatcrf, 1 993). The 1 930 average includes a horible 6% death rte
m wleing agricultural region of the Soviet Union (th Ukraine) in 1 933 (Wheat
1 19), implying one million deaths abve the noral 2% death rate there that
). While tis fgure itself is tragic, it refte the allegations of Conquest ( 1 9)
WAntonov-Ovseyenko ( 1 98 1 ) that Stalin murdered millions ther. In addition, while
W
.
Sviet archives do indicate widespread fo shortages and disease in the Ukraine
QW 1932-33 interal, as well as serious conficts and eonomic warfare btween
lking farer and the goverment, there is little evidence of a deliberate attempt
pple to death, and the Sviet goverment underok strong measure K
KW fo shorages when and wher they were disovered (Konker an Bach
1 7) .
.
Conquest's ( 1 986) allegation that ral wages fel l by over Mduring this
Wluicrous, since the estimate is probably base o W i llegal black market
rte, which was rarely use (except for luxur gos), and which was fairly
_nngles (espially given m subsidized price of essntials in the Soviet Union),
_-ludicrous studies indicate real consumption fel l only a few prent in

_'
the 1 930s as prouction was shife more toward investment (Maddison,
.example, Bergsn ( 1 987) conducte a study that indicated output in cerain
' untries in one particular year ( 1 975) W inefcient in relation to
lt of capttal employed (implying that Easte Europan growth wa largely
284 THE TRIUMH OF EVIL
achieve through heavy invetment as opp to the efciency of central planning).
However, Berson ( 1 992) later admitted that his results may have ben biaseby his
overestimate (and prhaps ver large overestimate) of the value of the Easter Europan
capital stok (among other things). rn particular, he made no adjustent for the muh
higher cost oftechnology and high-tech capital goos in Easter Europ resulting frm
the technological embaro (Parott, 1 985), and he used gross capital stoks that not
take into consideration the higher level of depriation that exists on Easter Eurpan
capital due to their tendency to keep it in serice longer (i nstead of deprciating th
capital over time, he increase its value with price indexe). He also faile to adjut for
diferences in the quality of agricultural land and weather factor in all countrie except
the Soviet Union, he exclude srvices such as education and health from the analysis
although soialist countries may be more efcient in these areas (which prioritie
in many sialist countries), and he attempted to aritrarily factor a prion ofgove
ment administration and capital out of the moel although he admits the imprtance of
goverment infrastrcture that communist systems are more efcient in administering
(Campbll, 1 974). rn addition, by efectively measuring output pr employed worker,
he faile to adjust for overall system efciencies in communist countries related to a
higher level of employment that is made pssible by the existence of guaranteed job
(which greatly reduce or eliminate unemployment) and extensive childcare netWors
(whose economie of sale may prit more women to be more prouctively employe
as oppse to individually having to take care of children). Morever, Berson ( 1 987)
made no adjustment for the efect on labr efort of diferences in worker proetion,
envirnment, and satisfaction, which may b higher in communist countries cmpr
to other nations at similar levels of development due to the communists' proworke
philosphy (Adler, 1 980). For instance, Bergsn ( 1 987) did fnd that an adjustment for
the quality of labr related to the numbr of hour worked pr worker incr the
estimate of the prouct ivity of communist labr.
1 6. Although corrption (including tax evasion and bribry) dos exist in cmmu
nist systems, communist goverments frequently engage in widespread efors to
it out (through imprisonment and explling corrpt bureaucrats out of the cmmumst
party), as in the Soviet Union under Stalin (Getty, 1 985) and in China under
.
Mo
(Gong, 1 994). Corrption dos tend to rise when communist countries initiate capitalis
tic market refors, as in China in the late 1 970s (Kwong, 1 997) and in the Soviet u
.
nion
in the late 1 980s (Marcy, 1 90). lt should also b mentione that corrption als ex
1
s

e
bfore communism, especially in China. which had a substantial amount of corption
prior to the communist sizure of pwer in 1949 (Gong, 1 94).
1 7. Although the Soviet Union spnt a higher prcent of GNP on defens than the
USA, the abslute dollar amount was substantially less. It is therefore likely that the
USA could also exist on far lower defense expnditures if it maintaine a mor defen
sive foreign plicy like the Soviet Union did (espcially since there would 0no other
world pwer to threaten it), thereby frther lowering the tax bite. Morever, given the
USA's enormous nuclear arenal and overwhelming militar power, it is very unlikely
that there would b any foreign invasions to prompt the Qof destrctive civil w
which P w afer the communist revolution in Russia in 1 91 7 and which m
national income there by abut half. Instead, if the USA were to chos a cmmunist
path, there would b no more USA economic, militar, political, and subversive (i.e
.,
NO 285
Q)p n for te rest of the world to rmain cpitalist (Blum, 1 95), N R is
gMpsible that a large numbr of other countrie would tum toward a cmmunist
V

tFor example, th Sviet Union typically spt only I% of GNP on govemt

linistion Y- 3% for the USA (Campbll, 1 974). rt should als b notetat the
Mof uployent in communist countrie wold eliminate the taxe that have to
XwoUSA capitalism for m unemployed. Furher evidenc on the issue
pwby cmmunist China. whoe goverment spning (including nt only fo
linion but als defens and various govermet srics) rret only
|Xof mic output. and moverall M burden th is on of the lowet in th
WQm,200 ).
19. nntrivial risk of falling into pvery b illustrate by th fact tht m
WMM wh go quickly fom ver go-payingjob (suh as S 1 25,00 annually)
uneploye and hmless, and by the fct that eve woring pple eing
m$30,0 gyer ofen live in pvery msoetime go hmeles bmland
@a go creit histor as well a high t income to eur pymnt of
mt(ingto Post. 20 ). It should b note that the latter fgure is the approximate
Wwino for USA familie (Phillips, 20 ).
CHAPTER 2
Wile WGerany did eventually py out DM72 billio fo war-relate crm
=including mmpre-war deb of Nazi Gerany that we largely foive
wmWm,1 9), and while the unite Gerany cntinue to make
^p
y
mnts (Wink, 20 ), the amunt we s ove ver mny
M(eel NWahl, 1 91 ) and therefore amounte to oly a smll pio of Wet
ctyear. Assuming an average paymt of DM2 billion yer n
m1953 wer invete at 1 8% insted of pid out for war-rlate crim N0N,
11-ing theing (bad on the sm | Minteret rate) mth capital
afe36 yer were pid out in 1 989 (and ech year terefer), WGern
II
.
pr capita would have bonly abut 1 /3 higher. Compring this fgure to the
_=mG=fgures estimate to have existe withut reprations indicte
capita incom in 1 989 to still have far higher at 5- 1 0 time th
NWe Ge pr capita incme. In order to provide ju compnstio m, it
-P for the Wet Gerans to py the East Geas a @amont
teir own curent GNP. Fo te ver reasn that an annual pymt in
_-would p b psible, it would 0 ncs fo t Wet Gens
_ Ww 0 efcient eonmic system (like unism) W mcold
_tr GN sufciently to b able to aford fair coption to the EGer-

lnl
"re in East Gerany afer te cr cy uni

that relacethe

" With te West Geran Mark in 1 9. Acrdtng to te Geran

g
"'
wer 1 4% highr in ester Gerny with the West Ge

n Mark
^
were under m old system with mold EGeran Mar m 19
1 991 ), and the figur do not even includ thefet ofthe mul
10 P that ocurd subseuently (and othr factor that anlyze

detil).
286 THE TRUMPH L|l
3. Theoretically, one way a tre unreprte infation could b hidden from the ofcial
figures would have ben via a proess of East Germany massively increasing its forig
debt to enable it to imprt more than it exported and then to arifcially value m0
imprts. However, East Gennan foreign debt actually changed little btween | 9K0and
1 989 (Haendcke-Hopp-Ardt, 1 996), and East Germany had to exprt mor thn it
impored in the 1 980s to enable it to make payments on its existing foreign debt (which
itself was actually a fairly low percentage of the country's National Income). a
somewhat more srious note, Schwarer ( 1 999) has hypthesized that East Gen
ofcial infation fgures were understated bcause East Germany introuce new pr
ucts at premium prices in order to b able to fnance subsidies on essentials. However,
this practice is not much diferent from that ocurring in capitalist countries whr
profit margins on newer proucts are higher, and where greater marketing expn
(which frher increas their prices) are incurred to manipulate pople to buy such K
ucts (regardless of any tre advantages of the "new" proucts). In any case, the mcl|of
the East German practice was merely an increasing level of subsidization of consumr
essentials over time (Schwarzer, 1 999) so that East German consumer price infatio
could be kept at 0% while aggregate East German economic infation was 0.5% annu
ally.
4. Some might also assert that the West German system of unlimited private wealth
might encourage innovation, but the evidence indicates that capitalism is actually inn
vation-unfriendly (for the same level of economic development) because it is ofen
easier to persuade goverments to take long-tenn chances than rich capitalists or cor
rate buraucrts, as previously explained in Chapter I . Adler ( 1 980) has shown how
why East German communism is actually more compatible with decentralized deision
making and with the tehnological and scientifc revolution in general than capitalism.
It is tre that goverment development of the interet has increased the potentia
.
( f

r
greater innovation in capitalism through more decentralization of marketing and d1stn
bution of innovative gods, thereby transferring some of the pwer to exploit inn
.
ova
tions away fom static corprate bureaucrats to individual small innovators (Assoiated
Press, 1 999f. However, the capitalist system itself may succeed in crippling the pten
tial of this demoratic, decentralized, and innovation-friendly medium (Phillips
,

^'
which was originally developd by the goverment but later assigned to the pnvate
sector. For instance, some (including apparently the average investor from stok

aret
valuations of the largest interet frms) forecast a trend toward greater concentrtion of
market control of the interet into the hands of a few large businesss, where consume
habit of using the biggest (and richest) sites can result in less established sites, comp
nies, and products remaining undisovered and unused ( lp, 1 999). I n addition, the les
established interet sites can't aford the necessary expnsive advertising and
pym
ent
for top placement on interet search engines that allow pople to fnd sites (fo
r

el,
200). Moreover, less known sites may not b trsted (because insufcient mkuaj
resources make them unfamiliar, unknown, and riskier due to the lack of an establishe
reputation and due to insufcient assets that could be seized by lawsuits in the OP
of fraud) and don't have sufcient economies of scale (because of inadequate volu

e
caused by not bing able to aford sufcient marketing expnditures), just as it is with
traditional retailing and wholesling activities (Assoiated Press, 1 99f. The interet
in that sense is not dissimilar frm radio, TV, and cable, which also created the oppr

NoTE 287
nit of raching a mass audience, but the adverising cost (for a sustained and efective
maeting campaign) generally only b bre by th rich and pwerfl (Forstel,
20 ). Te interet is also not substantially diferent mthe telephone, which als
pn its interactive communication and marketing (such as telephone sles pitches).
Altgh interet chat groups do have some ptential for increasing the sale of inter
ativity, epcially with increased availability via libraries and other free srice, as
well via cheap interet terinals (Wingfeld, 20), accs to the interet curntly
still a luxur mostly resered for the world's more afuenteucated.
!.Us of black market exchange rtes would imply even far les mGenan spnd
mg surity at abut $30 pr citizen, or one ninth that of Wet Gennany, although
Wwould b little theoretical justification for using such an exchange rte for the
m (just as it would b meaningles to us sme trade-weighte exchange
rte tht would indicate East Geran spnding on surity to have babut $50 pr
cita).
6. Although the East Gennan seret plice did use a large numbr of unpaid infor
mats and witnesses (as do al l plice forces worldwide) to assist in its information
gtng tasks (which included obtaining ver generl information on the eonmy
Wpblic sentiment that is gathered by jouralists in Wester countries), there were
lM!0undercover East German agents in 1 989 (abut 0.03% of the ppulation),
Wa lare numbr of these were spies in foreign countrie (Diedrich, Ehler. and
Wee, 198). In addition, given that there were annually over hundres of millios of
mand tens of millions of phone calls fom West Gerany (Ea, 1 985), which
ma cnstitutional goal of annexing East Gerany by unspcife means, m sverl
=Stasi membr involved in opning mail or listening in on phone calls (Wie-
11n 19) had time to monitor only a small faction of the unication with the
'videological enemy (Dierich, Ehlert, and Wenzke, 1 998), much less inte
si
gifcant amount of communication btween East Gerans.
Thythesis that the lack of a market economy in communist countries resulte
bcoming less and less efcient over time, with continued gowth only ocur
to excessive investment (Gregor and Stuar, 1 995), is not M out the
Finstance, the real growth rates in pr capita incom in East Gennany repe
bnStatistishe Amt ( 1 990) were higher in ever decade fom 1 950 to 1 989 than
red for West Germany by the Statistisches Bunt ( 193). In the m
=uGenany's ratio of national income to capital stak mfom 7.2% in 1 950
.TAlD 1989 despite over a I 0/ drop in its ppulation over that time prio (Statis
lAmt, 19) and despite the fact that the East Geran cpital stok stare out at
low level bcaus of capital seizures by the Soviet Union afer World Wa
' 1 951 ).
tWile the united capitalist Gerany did not place much value on clening up the
t in East cerany, it did find it imprtant to "clean"

ut com
u
_ist
.
pliti
1i
~ --For mstance, an expnsive (and ppular) rcretional bUJidmg m East
alast der Republik) was close down ostensibly bcause of abstos i

the
.
even though the chance of a person being hit by lightening was
.
th

t

m
"
the chance of smene living in the building for 20 year bmg mh
cted
a
stos
-related disase (von Schnitler, 1 92).
288 THE TRIUMH EVIL
9. While pllution per capita was substantially higher in East Gerany than in West
Germany with respect to sulfr oxide (largely due to East Germany's heavy use of its
domestic coal resources to meet much of its energy needs), pollution pr capita with
respct to nitrogen oxide and hydr0ns was on abut the same level, and extrmely
high smokestacks in East Germany dissipated some of the concentrated efets of
East Gennany's pllutants (Buck, 1 996). While East Germany spnt abut I% less of
National Income on pollution control and environmental protection than West Gerany
(Welfens, 1 992), it also had developd a system that in some respcts caused les pl
lution. For instance, bause of East Gennany's emphasis on rail and mass transpr
tion, there were fewer automobiles pr capita to cause pllution than in West Gerny
(Wei fens, 1 992). Moreover, the typical East Geran car (the Trabant of older desig
vintage) emitted only 1 / 1 0 as much nitrogen oxide as the average West German car, an
although the Trabant did prouce far more hydroarbns (Kusch et al., 1991 ), which
contribute to dangerous global warming, hydrocarons have been shown to actually
have a bnefcial efect on the all-imprtant earth ozone layer that blocks out the sun's
ultraviolet rays, and it is nitrgen oxide which has the more long-ter damaging efets
(U. S. Congress, 1 987). Although the anticommunist Buck ( 1 996) was able to fnd evi
dence offuoroarbon (FC) pllutants emanating from East Germany (proably caus
by its heavy chemical industry), it is chlorofuorocarbns (CFCs), emanating espially
from air conditioner as well as Wester chemical and electronics industries, that cu
espcially heavy and long-term damage on the ozone layer (U.S. Congress, 1987), an
East Germany's lack of air conditioner certainly limited its CFC pllution. While wtie
pllution in East Gerany probably did exceed that of West Gerany (Buck, 1 96),
it should b mentioned that many pollution problems exist in West Germany (es
p

cially with respct to chemical pllution) that have not ben widely investigate (Welf
ens, 1 992). In addition, it should also be noted that East Gennany was probably W
most pllute of the Easter European communist states, as the rest of Easter Eur
(espcially the USSR) had placed a relatively greater emphasis on the environment an
nuclear pwer than East Germany which had emphasized economic growth (Medvev,
1 991 ), at least partially in an apparently ftile attempt to reduce the ability of West
Germany to buy its workers with the allure of greater wealth.
1 0. The rights of ci tizens to protest against goverment plicies and against gover
ment bureaucrats or politicians were fairly widespread in communist Easter
Eu
rp
d
and the communist systems not only allowed such protests but actually encourge
them to reduce the ocurrence of"des fom legality," "arbitrar acts," and "abu
of pwer by agencies of public administration" (Bader and Brompton, 1 968).
I I . Hitler employe a similar proceure to essentially outlaw German Jews i
_
n t
1 930 (and thereby caused sveral hundred thousand of them, or abut half, to emlg
from Germany) by forbidding Jews to work for anyone but Jews and by destroying m
o
t
Jewish businesses (Chalk and Jonassohn, 1 990). Hitler's system was similar to the West
German one in other respcts as well, insofar as "ordinar Germans" (who wer no
Jewish, communists, or otherise hated by the Nazi leaders) "had little to fear fm

he
Nazis" (Assoiated Press, 200h), just as "ordinary Germans" (who are not comums
or otherise hated by the West German capitalist leaders for some reason) have ii|eto
fear from direct prsecution by West German leader.
.
1 2. The diference in the views of the various East German political parties in pha
NarEs
289
mt was abut as small as that betwen the main plitical paries of West Gennany, the
CU and the SPD. The situation in the USA is not much diferent, with the Dmorts
Ning s similar to the Republicans that they are ofen calle "Republicrats" (Strobl
WPetern, 1 999).
1 3. Tis fnding is consistent with a statement made by a fonner centrist prime min
iS (of Italy) in reference to a scandal abut secret i llegal fnancing of conserative
pliticl parties in Gerany, "Demoracy is the system that is most expse to co
rtion, simply bcause it's the one that is mot expnsive" (Kamm, Rohwedder, and
Trmov, 20 ). The worst excesses of the East Genan leadr have b state to
NWir us of East German state land for hunting puQduring vacations (,
19), as well as their consumption of sme West Genan gos, sme of which may
MW ben given to them as presnts. For i nstance, the leader of East Gerany from
1971 -89 was given gifs of 1 4 Weter fm Wester Europan goverments and
Mbut h handed them all over to the East Genan goverment (Honker, 19).
Wwas one East Geran who was rmore to have lote billions of Marks of
wlth fm East Geran investments in Weter countries, but Wet Genany pro
te him fromprosution, pssibly bause he had ben engaging in any such illegal
aivitie with the coperation, encourgement, and active paricipation ofWest Ger-
J|vpr 1991 ).
14. Even many East German communist leader ignored, and continue to ignore, the
all-imt rpartions issue (Krenz, 1 99), pssibly earlier out of fear of causing
dtent with their forer Soviet ally and protetor, and pssibly nwout ofblief in
|w fer of represion if they espuse opinions contrar to) the rling Wester pro
through which the anticommunist rich attempt to control the overall opinions
~Gcnnan pople just as in the rest of the world (Fortel, 20 ). As mentione
Pwtext, the West German press (bth right-wing and moerate lef-wing) has long
=manipulated by the CIA (Age and Wolf, 1 975). In addition, although capitalist
G has many "independent" newspaprs (Hintereer and Zips, 20 ), they tend
NN0 rich capitalists, and even the capitalist pres itslf has pinted out the
control exerted over the meia by rich conseratives (Dr Spiegel, 1 94).
Gennan television and cable themselves are in the hands of the capitalist
SOment and two large cororate meia conglomerates, and all ofthe major meia
Rfor East Gerany m naturally (and strategically) ben taken over by large West
Wcompanies (Hintereder and Zipf, 200).
CHAPTER J
|
_
|
`''(1 92) cites Soviet World War II deaths of7 million civilians an I I mil
sldier. As explaine in the Introuction, the foner numbr may greatly uner
the total civilian deaths from all causes. Of the latter, over 6 million Soviet
were killed in action, a further half million Soviet sldier d of disas
.
and

and over 4 million Soviet soldier died in Nazi capttvtty o remame

_ .afer the war (Krivosheev, 1 97). In spite of these losses, the
.

iet Union
cted teror bombings or mass murder of unarmed Gennan ctv1hans (Urla-
1971 ) h m
. .
1
.
a
w ereas the USA (itself untouched by war) svagely bmbd ctvt tan
_ls of both Gerany and Japan in terrorist aerial attacks that includ

bth fre
atomic bmbs designed to infict maximum civilian casualttes (Marku-
290
THE TRUMH EV
n.

nd Kopf, 1 995)
:
It should also be mentioned that the USA's terr bmbing of
C1v1t

an targets only mcreased the fasists' will to rsist (Shulz, 1 982). Fo rxrmplt,
desp1te several yer of intensive aerial attacks, German araments prouctio W
at its highest level ever in July 1 944, and it declined therafer only bause of lo
prouction and rw materials from territories seized by ground forces (Spe r, 1 970). ln
addition, it must b remembered that the USA essentially only entered into World Wa
II to protect its Pacifc colonies and not for any humanitarian reasns (Copland,

i
Even Hawaii at the time of the Japanese attack on Pearl Harr in 1 941 wa no ye
state, and the sizure of that territor in the late 1 80 by USA businessmen bcke
by Marine was so blatantly imprialistic (even by USA standards) that it continu
b challenged legally (Asiated Press, 1 996c). Similar to the USA's terrost wa
the Geran civilian ppulation, the USA's terror bombings of Japanese cities W
USA's widespread killing of Japanese prisoner of war merly increse the will of W
Japanese to fight to the end (Dower, 1 986). Japan finally surender abut a wek afe
bing attacked militarily by the Soviet Union (Werth, 1 964), which confrnte the m0
boy of the Japanese army in Asia and thereby sufered in a brief time abut I 0,0
battle deaths (Krivosheev, 1 997), which represented over 1/30 of the loses of the USA
for the entire war on all fonts from all causes.
2. One of the most important weapns was the media, which was probably W sue
cessflly, and defnitely more subtly, employed by the Wet. For instance, the disto,
one-sided repring by the most infuential Wester press is espcially efetive MM
mot aren't even aware of how they are manipulated by the Wester mainstrem mia
which is owned by a rich concentrated few, which relies heavily on the gofgov
emment agencies like the CIA, which can b pressured by rich corrate adveri to
disseminate only anticommunist views, and which refects the natural slf-intert of
the m valuable rich adverisers and "customer" who have be n indotrinate sinc
birth with anti-communism, but which allows for some "dissnt" in the for of ngtive
reprting on sme controlled and relatively unimportant issues (Heran and C
1 988). In addition, the USA dominates the media i n most countries of the world no
only through Hollywoo's market share of movies (Economist, t 9a) but also via th
extensive us of USA TV pms in countries outside the USA, trnslate or subtitle
in countries that don't use English, and the "indepndent" meia of other counte
(wher private or goverment controlled) is bcoming more mmore like the USA
medta (Foemel, 20). Exploiting this control, television and Hollywo flms [well
as even cartons) tend to always show the capitalist USA to b the "g
o g
y"
that
always wins in the end, even i f the "gguys" have sme minor correctable ple
or

ufe

temp sks. Possibly as a result of this brainwashing system, Ha
Umvers1ty professor Col West has concluded, "the mainstream ppulation is lokmg
for happy endings, like in Disneyland. America is growing old and big without gwing
up" (M

rray, 20). Moreover, the violence of Hollywoo films and (promote W

peetl that
.
the USA's long histor of continuing violence is justifed to overc
evil Vllla

ns (with the 0comprehensive evil of the USA itself explained in this b

k
n

ver bmg poryed). use of the hypnotic pwer of such media and the e

en
s
1
ve amount of hm Arns and others spnd watching television, the
gtavt
ness of the
_
th

e causes many pople to believe in such even when they might

aware that tnd1v1dual shows or films are fiction. The media thereby create what
Hast
NarE 291
|g(199) calls a "gullible eletorate" that can b easily manipulate Ksupr USA
tst attacks on countries like Yugoslavia in 1 9. Meia pryal of violenc also
Wsubtly sere the pur of encouraging violence in defens of USA capitalist
"rls
"
and helps to develop the sldier, plice, and right-wing terorsts that are
to kep repressed those who disagree with USA capitalist world domination,
while violence programming (along with sex and sprts shows) also achieves the goal
0chnneling youth protest away fom anti-capitalist activitie ( w, 20 ). Te
mia als mre generally provide a distraction fom issues that might lead to anti
citlist plitical discussions (Forstel, 20).
3. Oe of the primar battlefonts was the propaganda war, which was probably
we more deeitflly and successfully by the West For instance, whe the Easter
M of countries stare to win an extraordinar numbr of medals at the Olympic
Qin the 1 970s due to suprior mtivation (as the comunist athlete enjoye the
rd challenge of the spr, which has ben found msur 6 time more efe
tive porane than the incentives ofere Weste athletes in the for of Mand
), the Weter blo of nations blamed the communist succss on doping m
alets with drgs, even though drg tests revealed less than 0.0 Y of the athlete had
Wdg of any srt, and even though the test fnding of two athlete having d@ in
tr by was consistent with them having taken only harmless antihistamine tablets
(Wllias, 1 95). In comparison, steroid and other illegal drg W athletes in the
Wee countries appars to b much more prvalent (Rozin, Flynn, and Durcnin,
|R!). Neverheles, Weter countries ar generally still cosidere to b the "go
o this issue, in spite of other negative facts like mexistence of a huge wold
notics tade spnsod by USA intelligence srice (Stich, 1 94), Nlike th
rCMetion btwen British cpitalists and the drg tde in their colonies peK
vworld domination (Gopal, 1 963). One reson fo the continue blief in the USA
P"go guy" is the fact that those Americans who have clle the ofcial ant
cm unist religion into question (including professor) have ofen ben fred (Smith,
),
!Bides outright mass murder and other blatant atroities (as previously dou
mte in the Introduction), the USA also victimized many pople using mor discrete
such as clandestine assassinations, drggings, mhynois, which ar ofen
=wthrough religious cults that they use as fonts, m that they typiclly
Wwith pfts made fom distibuting illegal narotics in the USA and elswhr
tine, 1 995). Bowar ( 1 978), Schulz ( 1 982), and Stich ( 1 94) prvide substan-
de
ted evidence of these facts. Boks by Age and Wolf ( 1975), Stokwell
0978), Pru ( 1 92), and Re and Cummings ( 1 94) prvide inside inforation
"
issues prsnted by forer CIA agents, while Milan (1 989) and Gian
c
a
VWM( 1 92) provide som pronal acount of imprant mafa connetions
^USA scret plice. Furiati ( 1 994) has provided ver interesting doumetation
Jtive on how the Mafia/CIA alliance assssinate an electe U

A Preside!
. ), who wasn't right-wing enough for that criminal consorium, espcially on ph
Crlate to the criminals' desire to overthrw the Castro gvernt in Cuba. In
'
to di
sredit such facts that are in confict with the mainstrea lies mp
r
"Spd by the capitalist pres and USA goverment ofcials, the CIA it
Cly
!motes the spreading of some ver absurd conspircy theries (Constantine,
292 THE TRIUMPH OF L|L
1 95), such as invasions by al iens and other nonsense reprted in publications like the
National Enquirer (Assiated Press, 1 999b). However, despite the CIA's disinfonna
tion campaign, it has not been possible to totall y dupe Americans. For instance, surveys
indicate that the majority of Americans believe that the CIA has engaged in variou
actions against its own people, such as murdering President Kennedy and impring
narcotics (Scri pps Howard News Service, 1 997). In addition, even though the CIA is
able to use bribs, extortion, and arbitrary mention of "national security" reasns to
purge any damaging evidence from being admissible in court (Stich, 1 994 ), some con
spiracies btween the CIA and organized crime (such as the assassination of Manin
Luther King Jr. in order to stop his anti-war activities during the Vietnam War) have
been proven beyond a reasonable doubt in court (Assoiated Press, 1 999g).
5. Even the ver limited choice provided by West Gennan elections tends to b con
trolled by money, marketing, and personalities (Schumacher, 1 998). Some of the mone
used to fnance the "election" of conservative political leaders like Helmut Kohl (th
"unifcation" chancellor) has ben contributed illegally and secretly, and Kohl himslf
would rather pay a multimillion dollar fne than reveal the actual source of the mone
( Wall Street Journal, 200 ). Although I have not ben able to provide any doumenta
tion to support the claim (and so it may not b true), I heard from one Neonazi sverl
decades ago that Kohl (who was not yet chancellor at the time) was bing fnanced (an
controlled) with Nazi money in the 1 970s. This hypothesis is consistent with sme of
the rmor that have ben publicized indicating the West German secret plice as th
source of some of the money, epecially since some contributions to Kohl's pry have
been documented to have ben bribs to facil itate German weapns exports (Schulte,
20 ), and since the West Gennan secret police has long used bth weapns smugling
and Nazi money to fnd its oprations (Schmidt-Eenbom, 1 95). Also magnifing the
shadi ness of the afair has ben an ofcial accusation that a goo attorey friend

f
Kohl's has been helping drg traders, dictator, and the Russian mafa launder their
illegal money through Liechtenstein (AFP, 200).
6. The USA has continued to influence West Gennan politics via CIA propagnd
and manipulation (Agee and Wolf, 1 975). Political machinations (whether contro|lc by
outside pwers or domestic capitalists) have long characterized capitalist countnes and
ensured their continued rle, as documented by Zinn ( 1 995). For instance, in order to
defet anention away from any propsals for a more complete redistribution of wealth
and pwer away from the rich, capital ists are motivated to channel disagreement m
conflicts into issues relating to how to divide up the tiny amount of wealth not own
by the rich few, and racism ofen results, as por and middle class whites strggle Wit
other for a larger share of the tiny prtion of the pie allotted to them (Strobl an
Peteron, 1 999). Besides detracting disussion away from more imprtant issues to |
imprtant ones, many capitalist "democracies" ar also ver efective in concentrting
public attention on candidate personalities as opposed to real issues (Forstel, 20 ).
By doing s, pliticians who promise to undertake plicies less attractive to voter ofen
win elections bcause of their charisma or prsonality, or bcause enough dirt on opps

ing candidates is either dug up or fabricated to make them undesirable for many voters.
In addition, representative "demoracy" (as opposed to direct demoracy whe
"
th
people directly vote on important issues) creates the ptential for candidates to e

th

r
camoufage or lie abut the tre plicies they intend to carry out, with one survey mdl-
NorE 293
eting that over 80/ of the American pple blieve that thir leader don't tell the
m(Zinn, 195). Tis fact create a frr distractio fom th issue, a many vote
fo W who are thought to b mst honet in keping their promise, regardless of
Watual content of their plicie. This "demoratic" system ofen results in eletios
rting nothing mo than a choice btween rival rich factions, which use their
wlth k manipulate voter to give them cotrl of the goverment s that they can
on CC bigger relative shars of the aggegate pie (Coplan, 20 ). As a rsult of
this maipulated plitical system, the winner of the 1 98 Fulbright prize for "Intera
wUnding" mstate that many pple in capitalist "dmorcie" have lost
fait in the plitical proess (and no longer vote) bcaus they prceive little diference
NNWplicie of diferent cndidate (o plitical paries) and "feel that the really
ila t isues nt in their pwer to deide" (Azour, 1 998).
.previously mentione in Chapter I , oe rasn why the USA and other indus
tlize capitalist cuntries were welthier in 1 91 7 is the long histo of imprialism,
clialism, slaver, and other fonns of exploitation (enforced by technologically
4militar fores). One of the m impt fos of exploitation (imprial,
clial, or otheris) was carie out using unfair trade prctice that were militrily
Mto extract rurce fom countrie for low compnstion and that even reuced
Wlike India and China which were previously relatively rich (with China actually
hvg a higher standard of living pr cpita than that of Europ in 1 80) into
pvm(Smith, 200 ). Als cntributing to income dispartie bte cuntie
Wfailure of my nations (such M Russia} to replace their inefcient feudal Q-
IMfast egh (Meurs, 199 }. Te relative wealth of the Wetcountrie cntinue
by frher exploitation in the fonn of destrctive unfair trade plicies that
iibit t ability of les dvelopd countries to compte in industies where they have
cpve advantage (Wohenpt, 1 92a). A generl disussion of neolonialist
etation can b found in Morgan ( 1 92}, while Smith (20} provides a much more
Ceive analysis of th issue. Ways to overome 0lonialism can b found in
Mwy (192a) an furher analyze in Chapter 5.
t
Dpite the very negative efect that tis tratment had o the East German econ
asiation of West Genan banker estimate East Geran GNP pr capita
to the eighth highest in Europ by 1 989 (Berliner Morgenpt, 19),
tt remamed signifcantly Jes than that in West Gerany.
:.-fairly ch capitalist countrie, which have inC ver clos to that of
"countnes (and who citizens, instead of bing ofere sizable goverment
rl

ving, are faced with sver legal retrictions against obtaining a jo in t

countnes bcaus of vis and citizenship reuirements},

sufer s

bsnt1

l
I0we|l

uted. costly "humn capital" a a reult of the nchet countne st-

_
Pvtdmg enonnous fnancial incentives for the b talents H the les nch

-leave. A go example is provided by the lare numbr of egine from

l
o
rlatrvely rich Canada who take jos i n the richer USA (Brenner, 1 99).
thou
h

.
It was
_
smewhat cumbrsme to cast a vote against

ter tn ast

(
w
htch reutred having to drw a line thrugh each cantdate s name), the

lat

oting against the system m also ben smewhat difcult in the past in
|a:tnstance, I pernally have made three efors to register a write-in vote
294 THE TRIUMH OF EVL
against the presidential "party slates" in the USA. In two of the three attempts I reuir
the assistance of the voter registration ofcials, who largely ridiculed my vote publicly,
and in the third attempt, I doubt my vote was proprly counted. My converstions with
East German dissidents who attempted to vote against the pary slate bfore the revolu
tion indicate a similar system in East Gerany, where simply marking a ballot with N
7 represented a vote for the candidate l ist, and where use of a closed voting both to
register a secret ballot was ridiculed by those in the queue who were anxious to mhm
to their own business. In addition, it should also b mentione that claims of outright
fraudulent voter counts have also been alleged in the USA in recent times (Collier N0
Collier, 1 992).
I I . Opp and Gem ( 1 93) have estimated 1 24,500 to 1 66,0participants in the Oto
ber 9, 1 989 demonstration in Leipzig. In surey interviews conducted afer unifca
tion, these investigator stated that the demonstration seme to b fairly spntaneus
without any apparent leder, although it is interesting to note that their resh 00
not allude at all to the public announcements played on the radio and on loudspke
essntially condoning the demonstration (i mplying that either the two Wester rerh
er conducted very supercial interiews, or they have a plitical agenda that motivate
them not to reprt such semingly i mprtant facts).
1 2. It is also instrctive to see that Wester-oriented "free" market advoates, who
applauded the Soviet Union's movement to "demoracy" under Yeltsin in 1991 , pr
vided no oppsition to Yeltsin's appintment of his forer had of the scret plice,
Vladimir Putin (who had ben a KGB ofcer in the 1 980), as his successor in 1 99
(Cullison, 20 a), although they did formally protest Putin's bringing pople with lf
wing opinions into the goverment (Chazan, 20 a). Thee "fem" advoate (t:
the Ukrainians who collabrate with Hitler and who worked with the CIA to enact a
violent retur of the Nazi "freedom" to exploit and kill) thereby confred that heir
only real concer was abut the "freeom" of the maretplace (which, as explame
throughout this b, restricts pople's freedom and creates an enormous amount of
repression and sufering in pople's lives).
CHAPTER +
1 . Many of these problems are magnife in West Germany bcaus the fnancial
markets are less liquid than more developd capitalist markets such as in the Uk
However, for private frms in East Gerany that oprated outside of state control, W
cost of capital was even higher than in West Germany bcause of heavy income taxa
tion (9for frs that do not supply srices or essentials) and legal restrictions
the maximum number of employes ( 1 0), as explained in Der Tagesspiegel (1 989a,
1 989d).
2. This estimated purchasing pwer value of the East German Mark is als consistent
with the consumer price infation fgures reprted by the Wet German govemmet,
which showed eater German inftation to b 2% lower than in wester GermanY Jn
19 but 1 2% higher in 1 91 (Statistishes Bundesamt, 1 992). Thee numbr, wh
combined with the 1 6% higher infation in easter Germany afer 1 991 , imply that th
consumer purchasing pwer of the East German Mark wa equal to abut 1 .28
Wet
Geran Marks. However, given that such purchasing pwer might apply to no P
than 80% of East German National Income, and given the fact that East German
NarE 295
$prices fell by 50/ in 1 9 to a distresse level well blow their te value (van
195), the weighted-average aggregate infation in eater Gerany was likely
fto 15% higher than in wester Gerany afer 1 989, implying the 1 989 exchange
me of 1 . 1 5 West Gerany Marks per East German Mark. This estimate may actually
Nlow, Mon West Geran study indicated that, instead of insigifcantly chang
in during the time around the transformation of the East German Mark into the Wet
Mark, consumer price in East Gerany actully ros by over 25% bM
!and July 19 (Wei fens, 1 92). Such a fgure (combine with the subsuently
mginfation in ester Gerany as its prices continued to H to wester Geran
lls oer time), might imply the consumer purchasing pwer of the East Geran
NWeual K that of 1 .6 West Geran Marks (although the latter estimate may
MNlly ajust foquality diferentials).
3. Dt inconsistenies on relative living standards (Shrlev m Popv, 1 989)
W q0 W of ofcial or black market exchange rate can getly distor rel
mcparisns bcause they are extremely por indicator of 0 purhsing
,as shwn by Sheikh ( 1 976), Schmitt ( 1 980) and Daniel ( 1 986). Such distor
war avoided her bcause it is psible to us estimate purchasing pwer pq
echge MR that are verife by the much higher prices that appare in East Ger
NM0q wer denminated in Wet Geran Marks copared to m GO
Mas erlier (Neue Deutschland, 1 991 ). While Shmelev and Popv ( 1 989) hve
hize that the existence of shorage and other prolems may make fgures from
Mm Europan countries suspt, Collier ( 1 985) has fon the ml Geran
to b fairly reliable, even afer adjusting mshorage. In addition, althugh
k+(1 95) etimated East Geran industrial prouctivity to b only 30/ of that
Wet Gany, his rults are sverely bias by an industrial purchasing pwe
^that faile to ajust for East Gerany's heav levie o industr to fnance
CI ion go subsidies.
4. Noe that the 27% ratio of invetment to National Inom is mesur gof
iation, i.e., it includes capital investment underaken to replace depreiated M .
Inet net of deprciation averaged only slightly over 20 of National Inome in
Gany.
.While individual national account figures in all countrie are subjet to lare O
It em,
1 93), no signifcant overtatement of output has ever ben found fo
PGean accounts, which Schwarer ( 1 99) has cite as bing as acurte a
ll
ac nts for Wester contrie. Unbias er in national income should
%cel ot over m long tim interal examin. Althugh Ritshl ( 19) hs
inicating that East Geran otput fgures may hve undereighte sme
_Jio (compared to Wet Geran weighting) and tht O

&th may have therefore ben overtate by I% annually, such a mct|m
p would still inicate it to 0 significantly higher 0 in Wet
It shuld als b nte that virally all of this allege neglete "otpt"
O is in the M of fnanial srice, which th East Geran govement
}pvided via a ver simple cheap and efcient system of sving, pn
Minsu
(Merkel an Wahl t w1 ) awhich can corectly 0cnsider K
C f
S
mm )

-rl otput (i.e., a cst of alloating fns to fture Omption

.
%
to bing an otput itslf (an theoetically shold therefo no b mclud
296
THE TRIUMH OF EVIL
in the real output computations, since doing so results in an overstating of economi c
growth for capitalist countries that increase their spnding on selling, repackaging, ad
unneessrily complicating a basic serice that communist systems provide so much
more efetively and less confsingly, i.e., with less risk and analysis time lost to the
individual). rt should also b mentioned that ofcial output accounts in all countries
systematically leave out some eonomic activity, such as unrepred output by ta dg
ers and other law evaders (some of whom provide usefl proucts or serices). Also,
ofcial accounts don't take into consideration most of the output produce by individu
als and families for themselves (this latter unreported output was probably much highe
for East Germany, since shortages there motivated individuals to do many thing .
their own instead of purchasing them, as commercially sold consumer serices mad up
a relatively small prtion of National Income beaus the dominating state business
put far more resources into prouction).
6. Some, such as Merkel and Wahl ( 1 991 ) and Schwarzer ( 1 999), have suggeste that
the actual prices paid for all gos should b adjusted for a price ratio deterine by
some ver narrowly-traded products when estimating the actual infation rate nee
to defate nominal output to compute real output growth. However, even an anticom
munist propagandist like Ritschl ( 1 996) has called such an arbitrar, biase, umi

curate practice "obviously questionable," especially since the chosen traded gos dtd
not include big essentials like housing, which East Gennany heavily subsidized. T
.
e
use of such exchange rates to evaluate relative income, living standards, and outpultv
abut as ridiculous as using the black market exchange rate, which had only a ver
narow use and varie widely, bing as high as 20 East German Marks pr West G
.
er
Mark on the day afer the Wall opned up in November 1 989 (Nawroki, 1 987), tmply
ing an absurd ratio of per capita income in the two countries of abut 40 to I on tht
day.
7. This exchange rate is consistent with the cross-rate btween East German Mmv
and West German Marks implied by Stolper's ( 1 96) estimated valuation ratio of 1
:
748
West German Marks in 1 950 per 1 936 Reichsmark and his citation of a 1 936 Retchs
mark having the same purchasing power as 4. 1 86 East German Marks in 1 950. The
data imply that the East Gennan Mark was worth 1 .748/4. 1 86
=.42 West Ge
Marks at that time. Although a drastic reduction in repartions payments prtlt
East German consumer prices to b lowered signifcantly afer 1 953 (Weber, 1 988),
the ofcial economic statistics (repre by each country) indicate negligible agpe
infation (on all output) in both East and West Gerany in the 1 950s, thus implytng
approximately the same relative purhasing pwer (0.42 West Geran Marks pr E
st
German Mark) in 1 961 as in 1 950. Despite the fact that bth East and West Gerany
initially had the sme Mark currency between 1 945 and 1 947, the USSR (in an attemp
to circumvent the USA's refsal to allow West Gerany to pay its shar of

tions) had caused East Gerany to print excessive amounts of money to pay reparattons
(Schwarzer, 1 99
)
, and th
e USA reacted by causing West Gerany to for a
sparte
currency that was not subject to the reparations-induced infation of East Germany. ^
a result, in 1 948, afer the establishment of separate currencies for East and West Ger
many, there were over twice as many East German Marks pr East Geran reident
.

West German Marks pr West Geran resident, and, despite a continue I : I o

fcta
k
exchange rate (which was only honored for some spcifed currncy trdes), the blac
NoT 297
exchange rte was 0.27 Geran Marks pr East Geran Mark late in 1 948
mfell blow 0.2 West Geran Marks in the early 1 950s (Shwarer, 1 99).
tMay prior studies of relative income may have overestimate relative East German
mat various pints i n the past, at least partially bause of an overestimate of
Wvlue of the East German Mark in the aggregate (Grgor and Leptin, 1 977). Previ
Wrrch has shown the relative consumption purchasing pwer of the East Geran
Wto have generally exhibited a rising trend over time that is consistent with the
hig infation in West Gerany, with the curency having ben estimate to b worth
0.88 Wet Geran Marks in 1 973 (Gregor and Leptin, 1 977), 1 .0 West Geran
%in 1980 (Collier, 1 985), and values averaging abut 1 . 1 3 West Geran Marts
Werly 1 980 (DIW, 1 984). However, these values may not flly incorrate qual
i difec, and they defnitely do not include proucer p,which were much
hg mEast Gerany bcaus of the East Geran goverment's taxes indust to
wsubsidization of consumer prices (Schwarer, 1 99). a reult, such past fg
eovtt the tre aggrgate eonomic purhasing pwer of the East Geran Mark
WWdate and therefore als result in overestimates of the compartive income of
mGany at those time. Est Gerany itself overestimated its relative pr cpita
win 1 9 to be only 30% blow that of West Germany, but this estimate wa
likely on its clearly overalue ofcial I : I exchange rate (that it felt neessar to
ofcially pQrt and that at M enable it mmake an apparently ftile attempt to keep
4Mfoin the countr with optimistic statements abut relative living standars),
w atl Est Geran income pr capita was probably abut 40% of the West
level at that time (Merkel and Wahl, 1 91 ).
Trlative pricing of gos and serices in interational trade may also have le
eic advantages for West Gerany. For instance, bcaus of suprior maret
Nptectionist trade policies i n West Gerany, the Wet Geran Mark was ofen
Win the curncy markets rlative to its purhasing pwer, mthis overalu-
pid West Gerany with terms of trade advantages with the rest of the world
, t 992a). Lthe other hand. East Geran ters of trade sufered not only frm
N mete by capitalist countries against communist countries (Melzer and
=1 986) but also from the negative worldwide propaganda leveled against p
communist countrie (Szczesny, 200 a) that was bth plitical anecono

1c

ct
" Eat Geran ters of tade with their larger Russtan tradmg
M,which were determine by negotiation, did not prouce any ofstting advan
|East Germany, a slow adjustments mworld market price for many commo
Ppvided East Europan countries with temprar advantages and disdvan
Mmto cancel out (Menderhausn, 1 960), until the late 1 980s when the
ban to chare prices for oil that more refected world market prices (Ritschl,
*
_
'
other studies have als shown economic gowth in les develop coun
-hi
.
ger under cmmunism than under capitalism (Di1 976), the fnd
.
ing of
_ Peially imprant bause it compares two relatiVely advan, mdus
eonomies. This comparisn of real economic growth mesurs rel

ttve ef

&gate terms of mobilizing and managing resorces. Comprative retur

N are not sparately analyzed in this pr us marinal res
Nofn more a fnction of the prcent of nattonal mcome alloated to mvest
298 THE TRIUMPH OF EVIL

ent, the amount of labor per unit of capital employe, and the quality of the capital
(t.e., the technology level) than of fnancial efciency.
I I . This ofcial economic blackmail was suppred by a massive numbr of indi
vidual militant threats of physical violence made unofcially and il legally against rep
resentatives of other political parties, especially against the communists (Der Iagcss-
pieel, 1 990n), who nevertheless mustered almost 20% of the vote, and who have con
tinued to receive about 1 15 of the vote in easter Gerany throughout the subsequent
elections of the 1 990s (Autorenkollektiv, 1 995).
1 2. An indication of the effectiveness of the West German election strategy is pr
vided in surveys. In mid-December | 989, 71 % of all East Germans were in favor of
Soialism, and 73% were for preserving the East German state independent of Wet
Gennany (Bahrmann and Links, 1 994). By Febrary 1 990, the numbr of East Gennans
in favor of unifcation had risen dramatically to 76%, although only I I % would have
voted for the West German conserative parties at that time (Der Tagesspiegel, 199g).
1 3. Surveys of other Easter Europan countries reveal similar levels of dissatisfac
tion with capitalism, with at least half of all Easter Europeans bl ieving that they were
better of under communism (Investors Business Daiy, 1993). Capitalist media pro
ganda, the costs and risks assoiated with turing back, threats of Wester boycotts, and
political repression have so far kept Easter European countries from returing to their
prior system, as explained throughout this bok.
1 4. The destruction of the economy in the easter prvinces is also used to make
the residents there feel inferior, subserient, and pwerless. A typical example of the
misleading nature of this psychological warfare can b found in the agricultural stor,
where heavy West German goverment subsidization of family farms (Economist, | W| )
made i t ver difcult for the East German collective farms to compete i n the New Order
of "free trade." As a result, agricultural prouction fell by 1 /3 in the easter provinces
in the year after unifcation (Frankfurter Allgemeine, 1 991 ). According to conservative
West German propagandists, this collapse of East German agriculture stemmed frm
the "inefciency" of collective farms! While East German agricultural output pr hect
are of land and per fann worker was signifcantly less than in West Germany, even West
Gennan anticommunists admit that one contributing cause was the far lower level of
mechanization of East German farms (Thiele, l 998).This situation in tur refected the
lower level of capital and wealth in East Germany in general (stemming, once again,
from its reparations payments), so that East German agricultur and collectivization
may very well have been ver efcient for its level of resources. For instance, East Ger
many had only 1 /6 as many harvest combines per acre as West Gerany in the 1 980s
(Kusch et at., 1 991 ) but harvested abut Zas much agricultural output per fann worker
(Thiele, | 998),Some studies have indeed discovered Easter European agricultural col
lectives to be relatively efcient (Meurs, 1 999), including in East Germany (Grego
and Leptin, 1 977), and even in cases where private farming has appared to b more
prouctive, the cause may well b better land and weather, more mechanization, and
other input advantages, as Thiele and Broersen ( | 999)found when comparing agricul
tural prouctivity in eastern and wester Germany.
1 5. These fgures represent additional amounts that would have to be spent over and
above the costs that are currently being incurred for these undesirable characteristics
NOT 299
of cpitalism For instance, in the capitalist USA, over 1 0 ofGDP is curently spnt
W due to crime. In paricular, approximately 2% of GDP is spnt on public Jaw
efoment (including for over hal f a mi llion public plice, as well a mcriminal
wprison costs), approximately 3% ofGDP is lost in the for of stolen propy
(lqely paid for by higher insurance premiums), and abut 5% ofGDP is lost due to the
q,o|costs, sufering, and lost wages of victims of violent crime (US Nd World
Rtr, 19). Another 1 % ofGDP is spnt on private surity, including for well 0
tmillio surity guards (Reynolds, 1 94). Evidence of the fact tat capitalism causs
mWis pvided by Japan, which has move toward a mor market-oriented siety
lW 19 with all its side-fets of unemployment and hoelessnes, and the result
Nan enonnous increas in crime (Tyson, I 998).
|.Lal peing have actually found corptio among the East Geran lead
fair tivial (in comparisn to the corption in West Gerany or Amrica),
lly tnvolvmg oly privileged use of vacation spts i n East Gerany, or acceptance
RjNmthe Wst, whose value could be measure in thousnds of Mars m
|).
CHAPTER J
,Having frst fallen by over 40% to under Z that of wester Geran output
@IIt NM 1 989 and I 91 (back to th 1 960 ratio), output pr capita in easter
y expenced a brief rapid spur of growth in the mid- 1 9 (driven by tax
lltves

vtded by the unite Geran goverment minvet into easter Gennany).

=m,th1s short-term rpid growth raised output pr capita to only abut half that
Rwe Genany where it has since stabilize at a level well below the 2/3 rtio of
|.
:

Dviations bW market exchange rates and purchasing pwer parity exchange

ocur not only due to barrier to trade (including tnspration cots and
etndistribution expnses, as well as arifcial barier such a tarfs and quotas)

due to the existence of nontradable gos and serices like housing (Kravis and
1988).
_
Si
m
ply
giving citizens shares in state-owned companie that they can immediately
N

t only lead to mass sles at dists price but might als cause excesive
on and infation (Ciampi, 1 98). Te plan actually use in ester Gennany
_the German goverment sll of all stte-wned asst as so n a psible to
P 1e
and utilized the ver l i mite p s from this distse sle of capi

r
e
uce the enorous costs of unifcatio incur Although the ovell
it {
led to a depession which resulte in Jes outside cpital invetent thn
_
almost all of the existing capital stok in the ester par of Gerany
_ Oed by entitie outside easter Gerany (DSpiegel, 1 997b).
'
'
I
r
rs that the Deutshe Bank and fve other Gennan institute
the
dechne m real GNP to b over 40/ in easter Gerany in 1 9-91 .
E.
cial erman goverment surces indicate National Income in the forer
@
198
"=to have fallen from only 275 billion Mars to 1 81 billion Marks
9
.
and I 99 I (Statistisches Bundesamt, 1 92), prices in easter Genany
@'':"
ted 1 3
.8% over that sme 2-yer interal, as etimate by fve Wet
ctal and
eonomic rsearh institutions (Omond, 1 92). In ral ters
300
THE TRIUMPH OF EVI
then, national income fel l by 1 -[ { 1 8 1 /1 . 1 38}/275]=42.2%. This measure of the deline
dos not even take into considertion the fact that, afer unifcation, the Gennan gove
ment expropriated East Germany's Ml .7 trillion in goverment-owned capital stok,
which theoretically blonged to the East Gennan pople (as did all the land of East
Gerany), and gave most of it (and much of the land) to investors outside easter Ger
many, who made non-binding pledges (many of which were not flflle) of investing
additional capital, and who tok most of the existing East German capital out of opr
tion due to their own excess capacity (Der Spieel, 1 990b). As a result, most of the
proft prtion of the remaining output no longer belonged to the easter Genans.
5. Afer unifcation, the united Gennan goverment also ofered signifcant tax incen
tives to invest into easter Germany, such as heavy depreiation tax shields, which pr
mitted tax savings to the equity investor that exceeded the amount put up by them in
cash in the frst year. However, these incentives ofen le to uneconomic investments
that rewarded investor with the greatest ptential M svings for expnsive and unpr
ductive but depreciable buildings (such as superfuous and expensive retail outlets) that
were constrcted on the cheapst land (Der Spiegel, 1 997a).
6. The German government has estimated that each unemployed persn costs th
goverment OM38,0 annually in transfer payments and lost tax revenue (Schlitz,
1 998). With over 5 million less people working in easter Germany afer unifcation
than before, that alone costs Germany around OM20 billion per year.
7. Actual foreign investment rules in East Gerany imposed a 25% tax rate on prf
its for joint ventures with foreign participation not exceeding 49, while tenns we
negotiable for foreign ownership levels above 49% (Buero des Ministerrates, 1 985). ln
either case, East Germany could take at least a 50/ share of the profts via either taa
tion or proft sharing (in the joint venture form, Eat Germany would normal ly prvide
its share of capital in the form of fe lease of land and permits to do business. as well
as guaranteed trained labor at set prices).
8. Another possible way to reduce any extraordinar withdrawals from svings ini
tially would be to treat al l monies in existing savings accounts as a separate in
c
on
verible M currency that could neither b used to convert into DM nor to invest mto
the mandated savings accounts reuired to exchange into DM (thus reuiring all M
exchanges to be made only with fture i ncome until it was economically feasible to
make the M flly converible). Alteratively, the goverment could rle that anyon
using their existing savings balance to purchase OM would have a proprtionate =aat
tion in their share of the East German goverment mutual fnd. However, such proe
dures would add a potentially unnecessary layer of confsion and might reduce conf
dence in the system.
9. The tax rate on profts actually 5% higher (at 95% on profts above M250,00 )
if the private business was involve in manufacturing (Buero des Ministerrates, 1 970).
Although the maximum tax rate on wages was only 25% (Buero des Ministerr

es,
1 96), controls placed by the state on wages limited the opprtunities to avoid the high
proft tax by paying out high salaries to relatives and friends. It is quite pssible
_
s

cially within this environment, that, instead of investing the cash svings fm uuhztng
the black markets, East Germans could use the money to purchase even more DM
the black markets in order to buy more Wester goos and services. For reasons me
NorE
301
09 erlier in this subsction, moverall results of the plan would still not b afeted
mm such imprs would only replace sme of the expr subsidie that otheris
wold have to ocur (and at a cheapr cot to the economy).
10. It might als b pssible to pay West Geran banks a fe in order to entice
Wto conduct I : I exchange and 0H over the OM s obtaine (less the fe) to m
QQm goverment. Black market exchanges could b disourged by threaten
ing lawsuits and banning black market dealer and curncy smuggler fom enterng or
ding bsiness with East Germany. Increasing the pnalties fo black market exchange
(eially imprisnment) would als inhibit such activities, as might some public rela
wefo by the goverment that spread the message of hw damaging and criminal
sh tf activities are. In addition, the plicy could b continue of reuiring foreig
to me minimum I : I ofcial exchanges with the East Geran goverment (OM25
In late 1 980) m each day a foreigner was in that count, although that plicy
mben shown to dereas West German visitor by abut % (Melzer and Stahnke,
|7k).Alttively, foreigner (including West Gerans) could b require Kpy for
all gos and sices in East Gennany with OM (at a I : I exchange rte) N denote
t

h phases with a OM sign on rceipts (thereby ensuring that the cahier and
midid indeed mHover the OM to the goverment). To enforce the latter system
effen
'
gmpying oly with OM, East German businesss (and brder guards) could
ruird K prioically request customers to show identity douments in order to

the risk to the foreigner of getting caught tring to pay (or having paid) with
Nw1ch they culd only obtain on the black markets (increased acceptance of credit
Wat Et Gennan shops would als help here). A smwhat similar identity cntrol
was use bfoe 1 91 that prohibited Wet Gerans from using East German
although msystem at that time was designed to prohibit all Wet Gennan
ofsuidize gos, even with DM, and although the system was not totally
ctlve due to tnaduate controls of cahiers and busineses (Falck, 1 998). East Ger
_als engage in sme spt identity checks at shops for a few weeks in 1 99, but
Pwas made inefective 00 the reuests for identifction were ver
_se the system allowe foreigners to pay in M as long they showe

_
lp lnJC
at
tng that they had exchange mone with an East Gennan bank at the
c
l
3: '
rate at any time in 1 90 so that foreigner were able to avoid mor than one
Cl
al e
x
change by using the sme reeipt whenever ake (Der Tae piegel, 1 9i),
|
even the 1 90 ofcial exchange rate itself(3: I ) tripled East Gerany's cost
a DM (which was already high due mthe fact that the foreigner typically
sll
gos and serice that were subsidized by the East German govement to

v
e low prices).

is als a risk that dennd for East German exprts might b inelastic
.West German infation and thereby require East Gerany to expnd more

w
to generate expors sufcient to py for the sme leveof real West Ge
ctba
henever West Geran prices ros. However, Murhy s ( 1 992b) sy mdi

.
t the M
cost of generting a OM 1 .0 of exprs did fall signifcantly w1th West

mfatton, even though it was not a fl l one-toone drop. Given that East Genan
a
e
Wet Geran gos were generally concentrated in high-teh areas such
fll
=whos prices tend to ris less than with the overl l economy (and ofen
), 11 18 actually mor likely that mcost of paying for the sme amount of ral
302 THE TRUMH OF EVIL
imprs would actually go down instead of up with changes in relative prices.
12. Many of the West Geran quotas were infonnally agreed to by East Geray
whenever it attained a signifcant market share of over 5%, as West Gerany threatene
to impose formal binding quotas otherise (Melzer and Stahnke, 1 986). This impse
practice certainly inhibited East Germany from obtaining adequate economies of sle
in exporting. In addition, the political and consumer biases against East Gennan go
(and the restrictions on developing their own distribution channels) gave Weter frs
greater bargaining pwer when deterining the prices paid to East German supplier,
whereas a shortage of (m nee for) hard currency put the East Germans in a ver po r
bargaining psition (Heimann, 1997). For instance, Wester companies could extrct a
much higher prtion of the fnal price of proucts for their Wester distribution systems
bcause consumers and retai ler would norally prefer not to buy proucts "made in
East Germany" (the idelogical enemy) when they could obtain similar proucts Ra
similar price elswhere (such as fom Asia). An elimination of such biase and unfair
treatment, along with the increased economies of sale that ofen are neesr to even
get unprejudiced products in capitalist retail stores (Assoiated Press, 1 999f, would
further increase East Germany's net hard currency revenues.
1 3. Although the ability of East Geran fnns to ear DM revenues was dramatically
impaird by the rise in the DM afer 1 984 (Muel ler, 1989), this negative trend could not
be expected to continue and could easily have reversed itself (and did eventually). In
addition, East Germany's M cost of earing US dollars actually was fairly stable ove
the 1 984- 1 989 interval. As a result, despite a lare amount of trade with West Gerany,
East Germany's overall terms of trade (exprt prices divided by impor price) o

ly
deteriorated by 2% over the 1 985-89 interval (Statistisches Amt, 1990) bcause the hM
in the DM also reduced the DM cost of gos imported into East Germany.
1 4. In East Germany, in early 1 990, one retail business did successflly develop an
ofcial plicy of requiring foreigners to pay higher prices (three times higher) than East
Germans (Der Tagesspiegel, 199d), but this policy was not widespread enough (nor
lasted long enough) to have much efect. Historically, the Soviet Union had also
.
h

d
ver ppular rationing policy in the 1 920s and early 1 930s that was somewat sn

utar,
insofar as it allowed Soviet citizens to purhase a limited amount of spc1fed lte

s
(such as bread) at below-market prices (Davies, 1 997). Communist China's econom
_
y s
also characterized by a system that allows for limited purchases of gods at low pnce
while prmitting market prices for excess prouction (Lau, Qian, and Roland, 200 ).
1 5. Some evidence of how much net emigrations would change once prsonal wage
diferentials were no longer motivating factor is provided by the fact that there were
only 25,0 more East German retirees who had deided to move to Wst Germ
an
Y
than West Genan retirees who had decided to emigrate to East Gerany in the 1980
when there were no rstrictions on retiree emigrations and when pnsion income was
fxed to b the same for retiree emigrants in bth countries (Melzer and Stahnke, 1986).
Even here, however, it must b taken into account that a West German retiree would
normally have much higher pension income (based on hisher prior wages) than an
German, and so emigration to East Germany resulted in a decline in West Ger
m
an reur
:
ees' income that cerainly discouraged such emigrations. Also afcting pnsionees
choice of residence was the existence of additional sources of retiree income, such M
00 303
pB fm rich West Geran relatives (or other) for emigrating fm East Ger
.
16. A st radical group of environmentalists was actually demanding that 20
bllio Marb b invested into the East Geran environment over a pro of 5 yers,
gtr ruets included many unralistic (and counterrouctive) demands such as
Mrlaent of all nuclear pwer plants (Der Tagespiege/, 1 9 ). Many countries
Wrlatively low income pr capita tend to spnd less on the envirnment, and there
hve les clean air, water, and landsaping, bause most pople at low income
lls grte more utility mhigher inome than fom a cleaner environment.
1
7. (1 92) has estimate the amount of East Geran hard curency foreign
dat $1 8.5 billion in 1 989, which represnts abut DM30 billion, although his fg
=vmnot netted out with East Geran hard curency foreign asets (these asset
mEast Gennan foreign businesses, exprt reeivables, and assets obtained but
csmed by drw-downs of spcial credits ofere by West Gerany shorly
W oning of the Wall late in the year, as well as noral foreign exchange
~).|winstance, East Geran businesses in West Gerany alone had annual
w.oer DM3 billion at the end of the 1 980 (Der Spiegel, 1 991 ), and the value of
Mbsiness along with the foreig currency assets of te East Geran expr bnk
..- :billion in Novembr 1 989 (Haendcke-Hopp-Ardt, 196). White
lc (l 96) repred total foreign debt of 49 billion Mars in 1 989 for East Gerany,
MII nt incl

des various amounts of sof currency debts owe

J
. o other Easter
=and th1rd world countrie {which were much easier to rey at a lower M
Mm),and it is als not ntted out with foreign assets. For instance, Mittag ( 1 91 )
WMwMof the over 6 billion transferble rbles in Soviet debt to other Easter
=cntries in 1 99 was owe to East Germany, and this amont represnted
_30 billion Marks at ofcial commerial exchange rts. Given that the substan
. ll t of m% lent to East Germany afer th opning of the Wal l was spnt
w0m 5 months of 1 99 (m cover the lare trde defcit that had arisen bcuse
cntr's failure to 0 the plicy recommended in this chapter), the cited text
_.-:.billion i n net East German debt at the end of 1 989 is consistent with
'bil
lion in East German debt reprted by the West Geran central bank for
.a
r19 (Haendcke-Hopp-Ardt, 1 9). Thee fgure are als consistent
_ w-:billion in debt re by the East Geran goverment in mid- 1 9
199), which reprented a time afer unifcation negotiations had ben
_ _"ith the

ewly elete East Geran goverment that was plitically allied

t
etlve
umfed) with the Wet German goverment.

at problem not considere in the analysis was the Wet Geran gov

m
.n afer unifcation to reimburse thO whose proprie had ben n

t
_
on
gthe
m
Geran goverment at various times. In this ps, tong

al
@_'
rof
w
h
m were West Germans) were treate like anyone els

n the b1
-_:
h
Pbut they reeive fnancial compnsation if they d1d not w
_
n
t tok Into consideration the bidder' pledges of employment and add
gI
n
V
estment (Osmond, 1 992). This transfer of wealth dos not seem neces-
__
'
"
alth
ogh it alone probably did not materially afet output.
rthat Czechoslovakia (and later the Czeh Republic) did indeed adopt some
306 THE TRIUMH LL
ward defense of U.S. interests" (Phill ips, 200b). The head of the IMF is generlly a
European, but the USA has sufcient voting pwer and infuence over other countries
to exercise veto rights over the actual choice ( Wall Street Joural, 200). A Europn
leader of the IMF helps ensure continuity in capitalist exploitation plicies, insofar q
the IMF efectively assists Europ in maintaining neoolonial control over the former
European colonies (i.e., over the less developd countries that need IMF fnancing
bcause Europan nations impoverished them during their colonial rle). However, the
USA right to make the fnal decision is consistent with toay's reality of overall USA
world domination (and also represnts a form of continuity given the USA's past ad
current exploitation of less developed countries, especially in Latin America).
9. One example of such a continuing phenomena in the USA is the Midwester pay
ment of salaries as much as $ 1 0,0abve those in the South for computer spcialists,
which results in one third of all new jobs in that area going to the Midwest (Stopa,
20 ).
I 0. Capital controls are normally used to reduce capital fight, but they have some
times been used (in countries like Germany) to maintain more autonomy over their
economy and businesses and reduce unwanted curncy appreciation (Caves, Frnkel,
and Jones, 1 996).
I I . In fact, capital controls can actually result in greatly increased foreign

.
investment if the goverment restrictions lead to healthy economic growth (whtch
attracts foreign capital) and prevent economic catastrophes (which scare of foreign
investment). For instance, while Easter Europe was rpidly reducing curency con
trols in the early 1 990s (Williamson, 1 91 ) and China was doing s only very slowly,
the rate of direct foreign capital investment into Easter Europ was less than 1110 of
the amount going into China (Ewvpaische Wirtschaf, 1 991 ). This situation had
?
ot
changed much by the late 1 990s (Liu et al., 1 997), even though China still has capttal
controls (Roach, 1 999), and even though over half of al l foreign investors in China w

r
not able to ear a proft in that ver comptitive but rapidly growing market (Smtih,
1 999). Direct investment into Russia did fnally rise modestly by 1 999 (Chazan, :-r
afer Russia had rinstituted capital controls and other goverment interference Wtth
fee markets (Economist, 1 99b).
1 2. Although tax dodges also sometimes create the potential for unproductive lop
hole schemes, such scams exist even with lower tax rates and simpler tax systems
(Smellie, 1 999). Regardless, any tax system should b evaluated not only for the n

a
tive efects of any incremental unprouctive actions for which it creates oppruntttes
but also for the economically prouctive bhavior that it motivates.
.
1 3. For instance, one subtle metho of protectionism that was al lowed (with

ut

talt
ation) by the forernner of the WID (i.e., GAT) is the use of sales taxes (prunartly or
completely) to fnance goverment expndi tures, as opposed to income taxes (Hutbauer
and Erb, 1 984). Sales taxes, or similar Value Added Taxes (VAT), act as a form of
subtle tarif, insofar as such taxes ar levied on i mprts into the country ut exports
out of the countr are not so taxed (whereas income taxes are efectively levted equally
on domestic entities proucing for the domestic market or for expr but are not at
all levied on imports into the country). As a result, replacing sales taxes with income
taxes makes domestic entities more competitive interationally. For example, assume a
NarE 307
cmpany a USA comptito, ech with the sm costs of prouction of $7
gani.Ncurnt exchge
.
rte, each with a_JJ%icome tx
.
rte, each

ith a
.
$2
Mpft unit reutre order to cover 1t cap1tal cot, 1mplymg a sllmg pnce
of$2+$1+$7=$ 1 0 for thir proucts. If Gerany were to rplace its income tax with a
mWof I A,the Gecompany would suddenly b able to exprt it gos for
$+$7=9, threby underutting the USA comptito (which would still have to charge
..iacover all it costs). In aditio. the USA company cold not comptitively expr
Gny bcaus the price it wold ne to charge would bS I Ox i . I 0$ 1 1 , whereas
W company could charge a price of $9x 1 . 1 0$9.90. In this situation, either
WGan curency would ris in valu, or the Geran balance of payments situa
wold imprve (o psibly M combinatio of bth). Not oly dos a sles tax
sidiz exps (by Nving th tax burdn o exping busi ness, as the sles tax
i Mowe on sle outsid th count), it als diMge dometic Omption (by
ting it) and encurge domestic sving (by nt taxing the erings fom sving).
Wile sh cnsumption taxe tend to negatively afet the consumpion of the por the
Win rlative i tens (i f aplied equal l y to al l pucts), this regrssiveness
WMofst with transfr pymnts, or with the typ of coupns propsed in Chapter
l.
CHAPTER 7
I. As explaind erlie, the mehanics of th USA prpganda machine is fairly
alc (which is N why it is s efetive). For instance, the CIA often diretly
(ainirtly throgh a font oanization that it sretly fnds) pays for the publication
da b a note pr (psibly eve with a Ph.D.) that cites matroitie com
mit e -,communists (or by othe USA eemie) bas o ridiculous evidence, and
Nmainst prs then accepts the fabricated events a fact N continully repr
m(Hcn n and Chomsky, 1 988). Although there is generally no pnalty for printing
lmunist or po-USA aricles even when later proven to b fals, and although
msno even areuiremnt to cort or retract such material once prven untue, a
*Wsvere system exists for 0 who print anti-USA or prommunist aricles.
|eintane, two Ljouralists wer recently fre for writing a stor abut the USA
ki lling drer with nere gas in the Vietnam War even thugh the chief critic of the
~aitted that t reprt wa pssibly tr but lacked the MQ evidence that
w@ruired for printing such stoie which put the USA in an unfavorable light
.1 98). It shold als 0 mntione that the cotete issue never was whther
"P
wer slaughtere via aerial at but whether they were killed with
g o n and the claim of nere usge was rtracte only afer wa
^%hvy
psure by the CIA to accet its "invetigative" interttion of the
(Ayling, 198). Oher rer printing negative Dabut th USA ve en
Wthir jos even thogh subseuent investigations have conf

e the1r ston

^195), and it only take a few suh example (as well a pthve press

re m
|

arPlitzer Prize for spreading l i e that unjustly vilif the USA's enemtes) to
Jlistic conformity to th system (Fortel, 200 ).

Wile the genide of Indians is fairly well-rize, se have argu that

' of t Indians die of dise and their deaths should nt b labled dehbrate
^1
978). Tt argument is mparable to sying someoe who consiously
308
THE TRIUMPH OF EVIL
spreads Al

s is innoent since the original prsn with AIDs was largely just se king
p

nal enjoyment from the viral invasion Gust as the USA only wanted the prnal
enjoyment of the I ndians' land). More imprtantly, however, that argument ignor
all the evidence of deliberate murderous intent on the part of the USA (including pub
licly announcing a national campaign to exterminate the Indians, USA laws providing
rewards for the killing of any and all Indians, the gruesome cases of USA biologicl
warfare, the USA's deliberate destrction of Indian fo and water surces, and the
USA's us of force to keep Indians away from foo and water, as doumented in the
Introuction to this bok). Deaths by disase tend to b maximized under conditions
of extreme duress, force migrations and overcrowding (Levene and Robrs, 1 99 ),
and war ( Hobhouse, 1 989), espcially in a campaign of delibrate exterination (like
the USA followed), as doumented by Thorton ( 1 97). To illustrate the imprane
of intent her, it is pssible to examine the Polynesian pple in New Zealand calle
Maori, who were very similar to Indians in terms of bing very susceptible to deadly
Europan diseass (as well as in terms of having some demortic communist tenden
cies), and yet there is sme evidence that the Europan invasion of their count did
not even result in a population deline for the Maori bcause the native people of Ne
Zealand were recognized as humans whom (despite some land thef by the British and
some wars with the British invaders) the British never attempted to exterminate (King,
1 997). On the other hand, a malicious campaign that exhibited some intent (and efects)
similar to (although not nearly as atroious and deliberate as) that of the USA was
Great Britain's plicy in Australia, where about half the abriginal ppulation (or abut
20,0pople) was exterminated (Reynolds, 1 995). Although only about 10 of the
Australian abrigines were killed di rectly (with most dying instead of hunger and dis
ease as their livable land was stolen by brte force), and although ther were never any
laws in Australia providing rewards for the extermination of native as there were in
the USA, the deaths of the Australian aborigines can be considered delibrate bcaus
the British ofcially labeled Australia "uninhabited", efectively legalizing the exteri
nation of the aborigines to make way for the settling invader (Reynolds, 195), wh
were efetively only compnsated for such killings with free land (and not also with
additional monetar rewards as in the USA).
J. Mass murderer have historically ofen attempted to portray their victims as the
evil ones in order to try and justif their own atroities (Daunton and Halpr, 1 99).
For instance, Jenni ngs ( 1 975) has noted an old argument ofen made that the Indians in
what is now the USA desered to die bcause they were savages rled by dictator who
ofered human scrifices to pagan gods, and who even engaged in cannibalism. How
ever, such allegations are generally either totally untre (Sale, 1 99 1 ) or basd on sme
very spculative archaeological fndings from the ancient past (Der Spiegel, 1 998). Te
trth of the matter is that it was the Europans who engaged in massive numbr of
religious exeutions (Levene and Robrts, 1 999), which some estimated numbere hun
dreds of thousands during the medieval Inquisition (Smith, 200), and it was the earli
est invaders fom Europe who, despite gifs of foo fom Indians, engaged in cannibal
ism in order to surive the new environment in what is now the USA (Zinn, 1 995). In
addition, although there were Indians in Latin America who had a dictatorial plitical
system that did ofer human scrifces (Chalk and Jonassohn, 1 99), the Indians in what
is now the USA did not, and they actually "were much more demoratic and allowe
m fe om to the individual" (Driver, 1 91 ). Indian soieties of what is now
WUSA we als charcterized by mre equal rghts for women, bsids exhibiting
wid
signs of sial dMracy and communism (Zinn, 1 995). In w(
Novk ( 1972) arues that the existence of fre communist demorcie among the
Mwaa primar unerlying n why the USA committe genide, insfr a
! native Amcans were to diferent fm the USA's capitalist QR to bcompat
iblwith th invader. Regardless, the logic of exterinating an entir pple in ordr
W them (ostop a few human scrifces) is morally incomprehensible to anyone
@murderer.
4. Noe that the fi @ repre m m I ntrouction to this greatly unertate
! t numb of deths resulting fm USA imprialism. In picular, even withut
cidering te victims of pure capitalist exploitation, th numbr of innent pple
klle qUSAimprialism is much larger if one include deths fom dis and star
Wtat were not delibrately inficte but that stemme indirtly from war initi
WNpted by the USA. Fo instance, UNICEF etimates that over 30,0
cildn alone have died diretly or indirectly as a result of mwar in Angola tht W
g M ben ptuate by the USA (Minter, 1 94). Morever, many a
Wmillion pople may have ben kil led in the 1 979-89 war in Mghanistan that wa
W Nqksts who were financed with abut $6 billion worh of weps fm
WCIA and whos terrorist activities have now bcome threatening enough to pvoke
USA militar attacks (Catalinotto, 1 998c). Although the CIA-fnance terrists my
Whve mthe only ones committing atroitie in the latter cofict, the Soviet Union
Wlog ofeto allow Afghanistan to bcome a neutral and indepndent count and
witw its to p as long as the foreign-supplied rbls disontinue their terrist
%(Girrdet, 1 985).
S. Dite the M that even a USA congressional repreentative reently clle the
aginst Iraq "infanticide," USA state deparent spkesman Jams Rubin cn
|wwith the worldwide propaganda line of blaming the USA hlouts on other,
is again pushing m that sction&ther than m misrle ad m
cl manipulation of his own pple that Saddam Husein propagate- are Gn
wf
sufering of the Iraqi people" (C,200 ). While the absurd logic in the
t of USA propaganda (i.e., blaming the leder of the victims for the sufering
Pthm by the USA) would sem to b all to a@t to anyone thinking
"Pmst Americns already s convinced by the ppgand barrage tht

"
g
o" 8Y they don't even stop to think abut it (escially since to do
Nnugt Qm sme mental and sial disomfor and distract them fm their own
Plives). Te result is Americans' tacit consnt to a continuation of USA mas
% .
Ih

frher estimate the cost of providing clen water and

itation

o
pple ithe world who don't have such basic nesitie to bJUt $1 2 ba
_
l
ll
n
u
lly, whale the incremental annual cot of mking it psible for everone an

-ha

e a basic education was clculated to b only $6 billion (Catalinotto,

.
mntaone by Ashton et al. ( 1 984), the nee qm is nt alloate to such
tasks prtially bcause the rich capitalist countrie (which cold easily aford
aid that would amount to far less than 1 % of the GOP of the USA alone, and les
3 1 0 THE TRIUMPH OF EVIL
than 1 5% of the USA's annual military spending) have political inhibitions about giving
anything to pople in countries whose goverments are not agreeable to them (excpt
potentially for propaganda purposes). I n addition, the author even mention a capital
ist belief that providing basic necessities like fo interferes too much with capitalist
market prices and producer incomes (implying that fee markets and profts are m0N
precious than human lives).
7. It is not coincidental that one of the worst massacres in the 1 990s, Rwanda's kill
ing of a half million Tutsi civilians in 1 994, ocurred afer the standard IMF plicy of
using tight fiscal and monetary plicy to balance the current account had been imps
on Rwanda in 1 990 and had greatly impoverished the por there (Kiinghofer, 1 98).
The Hutu slaughter of Tutsi civilians had been precipitated by a fight against a band
of armed Ttsi rebels whose leaders had been trained i n the USA (Ray, 20), wh
had received widespread aid from the USA's puppet government in Uganda (Ntam
abyaliro, 1 999), and who assassinated Rwanda's Hutu leader just before the masscr
(Ray, 200). The Tutsis themselves represented a very small minority group in Rwanda
and had previously engaged in mass killings of Hutu civilians in Rwanda (Kiinhoter,
1 998), as well as in neighbring Burndi where they, as militar rlers, had earlier com
milled enough mass murders ofHutus in their own country to nearly make the top ten I
human exterminations (as doumented in fotnote . . of the Introduction). In addition,
since 1 93 when Tutsi soldiers assassinated Burndi's frst elected president (a Hutu),
the Tutsis have killed at least 20,00 people, mostly Hutu civilians (Assoiated Pres,
200 a), and they have also massacred many Hutu refgees in the neighboring Congo
(Ray, 200).
8. Note that the theory of comparative advantage as well as supply-and-demand
theor (Sodersten and Reed, 1 994) can be easily incorprated into this illustrtive
analysis without afecting the conclusion. For instance, if the rich country is assume to
be the English-speaking USA, and if only a small afuent section of the LDppula
tion is assumed to b educated in English, the Engl ish-speaking Americans will natu
rlly have a comparative advantage in producing exotic English labels that are generlly
in higher demand not only by the richer, English-spaking Americans but also by afu
ent LOC residents (who may prefer them for status reasons and, despite their hgh0I
prices, may be able to aford them because of their higher incomes). On the other hand,
the LO has a comparative advantage in producing generic clothing, which may M
preferred by more individuals worldwide, but for which there is very little monear
demand bcaus the pople prefering generics tend to b the por who have ver htte
money to pay for the proucts. As a result of the low monetar demand for the genenc
T-shirts, there will be no upward pressure on their prices to change the fact that an
American can produce 64 times as much "market value" as an average LD woer
can in the same time prio. However, it is important to point out that the illust

uve
example in the text dos m incorporate the higher level of mechanization a

allale
to the richer countries that frher magnifes real income and wealth accumulation dlf
ferentials. In particular, assume that more capital-intensive production allows the ..
to prouce two $8 T-shirs in an hour, with half the income accruing to the worker an
half to the investor provider of capital, so that the combined worker and investor can
buy 1 6 generic T-shirts in an hour. Since it would still take the LO worker ou
to create 8 generic 3.T-shirts to ear the money needed to buy one of the exotic
NarE 3 1 1
1!h|0and since the USA residents can create 1 6 exotic T-shir in m W8 hurs,
WUSA residents will b able to receive the equivalent of 1 6x8= 1 28 genric T-shirs in
WW8 hour that it take the LD worker to er I exotic T-shir, for a 128: I rel
IMdiferential (verus only 6: I bfore considering the efet of mechanization).
7.Despite the crelty of the Europeans, with repct no only to Afcans, but als
I0elier Roman times (Brownlow, 1 969}, as well as in the Middle Ages with p
to te enslavement of Slavs (Bairoh, 193}, it should b reemphasize that it was the
USA that impsed slaver i n it most despicable and proftable extreme in the mot
rnt erby making blacks and their ofspring slaves for life. 1crelty of USA slav
Qlaws is not surprising given that they are derive from capitlist commial laws
tt N everthing, including pople, into tradable commoitie (Nichols, 1 94).
It shold bnote, however, that the Arab slave trde (lasting fom m MO0 Km
ninetenth centur) may have ben larger (in ters of the total numb of Afrcans
eslaved), M well as creler i n the snse that Afcans taken by Arbs as slaves wer
glly castrated (Bairoh, 1 93).
10. Tis new for of colonialism and slaver also entails se of the mK
of majo war between major imprialist pwer that existe centure erlier, a rival
cpitalist countries ris up to compte with the dminating pwer for control of their
Wforign markets, resources, and slaves (Collon, 200 ). Toay, the prim cmpti
to fo the USA is the EU, led by Gerany, whos "natural" interest in coloni

in
wEur (a so clearly explained by Hitler in his bo k Mein Kampf ha umq
N a majo factor in motivating NATO to expand estward and attack Gerany's
log-time enemy Serbia (Forstel, 200 ). Note that it is not m or forign cpital
W investment that cuses the evil, sufering, and war. Insted, it is m pur uncon
tlle prft motive and the resulting exploitation and dehumanifcation of ple.
eplaine in Chapter 5 (and as communist China itself has shown), cotolle trde and
f<ign investment can lead to enorous bnefits for all, wheras uncntrolle trde
WNGmthe gowth of even the mightiest pwer, as Britain demstrate empirical
.
ly
tdit roved its protetionist barier in the nineteenth centur mgrdually .It
i
nwelth dominance to the protetionist USA and cotinental Europ (Batroh,
193).
. . Such dictatorial actions help explain why, depite eonomic and soial tgey,
Km nWthe ret of the newly capitalist Easter Europ have Nyet rte to m
efcient and soially just communist systems they had. Algh -th

Soviet
rpublics have crete and continue to maintain outnght capttahst dJCta
t
ohip (Whalen 200) Yeltsin (at least more recently) and 5othe mO
-
g the
Pcuntries have ben able to develop sme fade of demorcy, ply M
citalis sizure of control over the media there has create a ver efetive progn
lln that is "unabashedly" one-side in favor of anticommunist canidates m
ef eively QM negative inforation abut capitalist candidate we confnte
* co
munist electoral oppnent (Banerje and Rt 1 9) .
.
"

ns dis
*(blatantly) matter muh mo than ids an pr or

1ztton,

g
te that the votes will b conte fairly, or that the eJetum reult will N0
chlleg in a suitably pliable cour" (Economist, 1 99 ). Wheeve sch cotol
M
+
J'
sts always stze
^ an having the "t" candidate electe, the captta c
3 1 2 THE TRUMH OF EVIL
dictatorial conrol of a ount_ry

gain (such as via the unconstitutional shutting down of

n elected arhment), Just hke m 1 994 in Russia, which appear similar to the situation
m the Ukrme m early 200 (Wayland, 200b).
. For intance, since he USA's Cold War victory, workers have seen only a 1 .9
real tcome mcrese desptte a 1 2% increase in prouctivity, and the porest 10% of the
mencan ppulatton have seen their incomes drop by 1 5% in the last decade, while the
nchest 1 % of Americans have increased their incomes to 40 times that of the :.-.-
400/
_
of Areicans (Tepn, 1 999). Meanwhile, the average number of hours spnt
workmg on a JOb has nsen to a higher level in the USA than in any other industrialize
country (Assoiated Press, 1 999a).
I
_
3. <nee Americans are made aware of the facts and elect a government that refets
thtr ...to end the atroities, the guilty USA leader could be tried by an Interational
Cnmmal Court that those same leaders curently refuse to allow the L to establish
(Assoiated Press, 200c). The criminal USA leader currently pennit the Uto only
create spcial tribunals (such as in the case of the Bosnian civil war in Yugoslavia),
afer worldwide anger is aroused against USA enemies (such as Serbia in the case of
the Bosnian war) by the fabrication of evidence (such as the portryal of a Bosnia
rfgee amp as a fascist prison concentration camp by showing only picturs of the
tmy prtton of the camp fanked with barbed wire, when there was actually m ent
and exit to the camp) that is then widely and repeatedly publicized long afer it has be n
doumented to be fraudulent ( lAC, 1 998a). Such delibrate impsition of one-sided and
even fraudulent "justice" implies that the USA plitical leaders are aware of(and afrid
of prosecution for) their own crimes, and so USA politicians may not be able to Uthe
defens that they themselves have merely been brainwashed by the USA media kcan
out their crimes (unlike the American pople who can, until they are aware ofthis bok
or related doumentation, legitimately assert that they were manipulated into electing
the criminal USA government leaders). However, it might be appropriate at some pint
o offer amnesty to all those American terrorist leaders who surrender pwer willingly
m order to maximize the chance of a spedy and pacefl revolution (although some
fon of reparations would have to b required from the mainstream plitical paries, th
mamstream media, and the mainstream leaders who have inficted so much sufering on
te

orld- the aim of such reparations would b to not only partially compnsate their
Vtctlms but also to reduce the pwer of those criminals who benefted so much fom
perptuating the atroities).
. 1 4. It should also be mentioned that many Americans were not even allowed to vote
m the early decades of their country (Copeland, 200). Although al l American citizens
now al have the right to vote, the majority are not even aware of the crimes com
mitte
by thetr country (Foerstel, 200 ),just as the average American investor does not seem to
be aware of how their optimism about the fture is manipulated by politicians to cause
the stok ?arkt to ri sustantially on average (by about 1 0%) in the 6 months pr|orto
each prestdenttal election m the USA (Murphy, 200). As a result, the American people
as a whole sho
_
uld not b held responsible for the USA's past crimes against humanity
unless and unttl they are made aware of the atroities and of their moral obligation to
v

te out of pwer the criminal plitical parties and politicians who perpetuate tho
cnmes.
No rE 31 3
.
15. Of the countrie
_
s, the atroitie of only Gerany, Japan, and Iraq were nt
duetly motivated by pnor USA mass murder (although Nai Gennany had us USA
extermination of Indians as an example, as previously cite in the Introuction of this
m)

It should b mentione, however, that the USA had no qualms abut extensively
uing faist Japanes sldier and Nazis afer World War II to defend (or create) brtal
citalit dictaor
_
hips in various countries (Blum, 1995). Despite the rivalr bM
cptmg capttahst per that led to Wold War II, the previously waring capitalist
vm(the USA, fastst Japan, and Nazt Gerany) hd a common interst in 0
rsion of Marxists, unionis
_
ts, and other with lef-wing opinions (Feinbrg, 1 99 ).
als se m to have a untte blief that capitalists reprent an elite gup which
mbst what to do with the world's welth and is therefor entitle to it fact
tt W Geran stok market soared in valu in the 1 930 afer Hitler's seizre of
v

(Bilingmayer
:
1 98) represnts an i l lustration of the latter capitalist philo
py_ -actton. In particular, despite the Nazis' us of proworker slogans (suh as by
clhng themslves the "National Soialist Geran Worker Pary") as camoufaging
dgoguer to help dup the German public into supping thm (Feinbrg, 1 99),
Wdespite Hitler's propsals for world disrament, pace, and non-agsion tht
xformally ofered in the early 1 930s at the same time that he was making plans for
rmilitariztion and foreign subverion (Davidsn, 19), it Wrich German
Cpttalist imprialists (albeit non-Jewish ones) who fnaned Hitler's eletion to pwer
Wtrived under Nazi rle (Feinbrg, 1 99). It should als 0mentione that mNais
ls had substantial suppr fom small business owner and the lower midle clas
irGn y (Winkler, 1 972), and even many foreigner (such a te Frnch) joined
NNs in the oppression of Jews and the loting of Jewish bsins M wealth
(tated Prss, 200 f). As dumented by Copland (20 ), th rich have long N
ly us the tactic of fnancing diferent anticommunist plitical partie (even one
wth se lef-wing demagoguer like the Nazis in Gerany and th ts in
USA) in order to maintain thir pwer and wealth. Financial aid for the more lef
Wing anticommunist paries is espcially usefl for appasing the mass and taking
M daway from the communists, while at the sme time it als sres as a mens
|arich to hedge their bts, as plitical loyalty is thereby bught that ensures that
any le_f:wng reforms to the capitalist system which damage the psition of the welthy

mioitz
(Agee and Wolf, 1 975). Lef-wing anticommunist pries ar als ofen
Ulthz as a means of winning the suppr of the masse for imprialist war, which the
must fght, but fom which the rich proft so greatly (Copland, 20 ).
. 16. o
propaganda purpss, the USA ofen emphasize "human rights" a the reli
w|l ($protecting or spreading whenever it "wishes to rplace loal rler with mor
Chant defender of global fnancial interests" (Johnstone, 20 ). USA propz-
to asiate "mmarets" s ver closly with "M"mocy,"
. human nghts" that it is able to successflly ignore actual human nghts vtola-
^m
M 0

ha
'

un .:es that have free markets (like Kuwait) at the mt t tt t

vent
n nghts problems in countries that don't have hmarkets (hke Yugolavta). ln
_cnturie, hrisianity represented the tol usd by the S- (an Europ) to make
KI
bheve tts exterination campigns (and explottatton hke slaver) wr
-n
teous attempts to eliminate (o civilize) pgans, with churches ofen wormg
tn-hand with global capitalism to imps a Christian capitalism on the world
3 1 4 THE TRIUMH OF EVIL
(DuBois, 1 965). However, toay, Christian churches tend to distance themslve mm
such activities, and the Pop has even requested forgiveness for Christianity's pin
past violent oppression (Assoiated Press, 200).
1 7. As explained in this bok, and in other research such as by Copland (2w)
and Fortel (20), the USA's demoratic famework is larely a faade that it crte
bcause it contributes greatly to the efectiveness of its propaganda machiner. How
ever, as also doumented in this bok, as well as in other sources like Zion ( 1 95), the
capitalist USA has a histor of using extreme repression in cases where its prpagand
machine (and other manipulation and pressure) is not succesfl in winning its .=
style of"eletions." A statement by USA President Bill Clinton in 1 99 may billust
tive here. In particular, in respns to tens of thousnds of Greeks demonstrating aginst
hi s bmbing of civilian "targets in his unprovoked 1 999 militar attacks on Kosovo and
the rest of Yugoslavia, Clinton stated, "they have a right to their opinion and I have a
right to mine" (CNN, 1 99b). In light of the facts provided in this bok, this statement
can b interpreted to refet Clinton's blief that the masses around the world have th
right to their opinion, but they should respct his opinion that USA leader continue
to have the "freedom" to commit atroities whenever and however they chose (in th
best interest of global capitalism and USA world domination of course). Actually, given
that Clinton insisted Kosovo had to b ocupied by USA forces and its "allies" (m
refsed Yugoslavia's many ofers bfore and during the bmbing to allow the USA
instigated civil war in Kosovo to b mediate instead with a neutral L force}, and
given that Kosvo has an extraordinar amount of underground minerl wealth (Ine
pendent Commission of Inquiry, 1 99), Clinton's use of the word "mine" i n the forego
ing quotation might actually be corectly interpreted to have a more subtle mein
For instance, in the New World Order, it be implie that pple have a right to thetr
opinions as long as they do not disturb the USA leader' "right to mine" wealth -
the rest of the world.
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3 1 6 THE TRIUMPH OF EVIL
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358 THE TRIUMPH OF EVIL
1ndCX
P
Abrigines 27, 51 , 81 , 88, 308
Advertising 19, 1 01 -1 02, 1 74, 1 77,
263, 269-270, 286-287, 324
Afghanistan 61 , 65-70, 76, 82, 249,
280-281, 309, 31 5, 3 16, 320, 324, 329, 331 ,
337-338, 351 , 353
Africa 45, 51 , 21 2, 252, 265, 3 17,
322-323, 328, 331 , 333, 338, 342
Agricultural tpt 165, 298
Alaska 27-28
Albania 255-256, 332
Alexanderplatz 1 38
Algeria 277, 334, 348
Al legheny
32
Amrican Revolution 32
Amin 277
Amnesty International 42-43, 6
Angola 43, 276, 309, 31 9
Anticommunist propaganda 52, 78, 280
Argentina
276
Aristide 249, 328
Asia
71, 21 2, 21 6, 226, 228, 230,
2
82, 29, 302, 322, 332, 334, 336, 342,
36-347
Atroities
i i i, I I , 20-22, 38, 42,
4-46, 48, 50-52, 57, 65, 67, 69-70, 74,
80-81, 92, 253-254, 267-268, 271-273,
276, 277-278, 280-281 , 291 , 307-309,
312-314, 334
Australia 51, 81 , 276, 308, 339
Austria
42, 1 14, 1 33- 1 36
B
Baltic countries 82
Bengalis 51
Berlin Wall iv, 9-1 1 , 1 3, 71 , 92,
108, I l l , 1 25-126, 146-149, 172-173, 195,
201-202, 207, 210-21 1 , 317, 343
Biafra 51 , 330
Biological warfare 308
Birth rate31 , 43, 85, 186, 278, 348
Black market 92, 1 25, 149, 1 96-199,
201-202, 220, 283, 287, 295-296, 301,
349
Bolivia 276
Bombings 20-21 , 38-40, 43,
51 -53, 67-69, 82, 21 5, 254-255, 257, 276,
281, 289-290, 342, 352
BOP 217, 227-229, 231-233, 236,
238-239, 241 -247, 305
Bosnia 253
Brainwashing 122, 260, 290
Brazil 226-229, 232, 276, 319, 332,
336, 342, 354
Bribry 108, 165, 257, 284
Britain 31-32, 38, 40, 51 , 61, 1 54, 225,
276, 277, 279, 283, 308, 31 1
Buffalo 36
Bulgaria 72, 77, 1 32, 1 51 , 328, 342
Burundi 277, 31 0, 353
Bush 252, 321, 332
L
Cable 18, 269, 286, 289
California 26, 34, 37, 276, 323,
338, 340, 342
Camboia
277-278, 281, 321
Cameras 68, 258
21 , 53, 82, 272,
Canada 24, 29, 31 , 275, 293, 319, 339
Cannibalism 308
Capital controls v, 230-232, 236,
239-240, 246, 305-306, 325, 331 , 338,
346
Capitalism iv-vi, 7, 9, 1 1 , 13, 1 5,
17, 20, 45, 52-53, 56, 60-61, 80-83, 85,
87, 89. 93, 10-103, 1 1 1 -1 12, 123. 1 53,
164-165, 167, 173-175, 177. 179, 20, 213,
21 5-216, 21 8, 226, 232-233, 236, 249-250,
360
251 , 256-258, 263-268, 271 -273, 285-286,
297-299, 304, 31 3-314, 33 1 , 346, 354
Caribbean 23, 276
Central bank 1 82, 1 88, 220, 222,
224, 237, 247, 285, 303, 329-330
Cherokee 33, 332
Chile 21 , 80, 276, 356
China 1 7, 51 , 53-57, 63, 83, 86, 133,
143, 203, 230, 240, 244, 277-278, 281-282,
284-285, 293, 302, 305-306, 3 1 1 , 316,
320, 322, 327, 330, 332, 334-339, 341 -342,
347-350, 352, 354
Christianity 29, 50, 31 3-314
CIA 1 9, 21, 41, 43-44, 52, 66, 69,
72, 74, 78, 80-82, 92, 100, 21 5, 252, 254,
257-258, 260, 276, 277-279, 285, 289-292,
294, 305, 307, 309, 31 8, 320, 350
Civilian targets 20-21 , 38, 40-41, 44,
66, 68, 254, 257, 290, 314, 321
Clinton 31 4, 345
Cold War I , iv-v, 9, I I , 14- 1 5, 56, 59, 61 ,
87, 1 1 3, 1 1 5, 1 23, 1 33, 1 51 , 201 , 21 1 ,
21 5-216, 217-218, 224, 249, 251 -253, 256,
258-259, 267, 272, 305, 31 2, 31 348
Colombia276, 331 -332
Colonialism 51 , 63, 264, 293, 3 1 1 ,
335
Colorado 34
Communism i i i-iv, vi, 7, 9-1 1 , 1 5,
56-57, 59-61 , 63-64, 66, 71 -74, 83, 85-89,
93-94, 98, 1 10-1 1 1 , 1 1 3-1 14, 1 19, 142, 1 52,
1 74- 1 75, 1 77, 179-1 80, 207, 21 5, 21 8, 220,
223, 249-250, 251 , 256, 265-266, 273,
279-280, 282-286, 297-298, 309, 323, 337,
339, 353
Communist party 55-56, 68, 78, 106,
108, 1 1 7, 1 22, 1 26, 1 28, 1 32, 144, 149,
284
Concentration camp 31 2
Connecticut 34
Cooperative 350
Cost of capital 162, 294
Crime 7, 14, 44, 47, 53, 72-73, 78, 81 ,
86-87, 89, 93, 98, 1 1 8-1 19, 1 21 , 1 51 - 1 52,
161, 165, 177-178, 220-222, 224, 226-227,
233, 292, 299, 34 353
THE TRIUMH OF EVIL
Croatia 42, 253
Cuba 17, 44, 81 , 257, 291 , 333
Cultural revolution 54, 56
Currency controls 220, 230, 239, 241,
306
Currency crises v, I I , 21 3, 21 5-216,
21 7, 224, 226, 229, 231 -232, 236, 239-240,
263, 31 9
Current account vi, 217, 21 9, 225-241,
243-247, 305, 31 0, 327, 331 , 345, 347, 351
Czech Republic 223, 259, 303-304
Czechoslovakia 82, 132, 1 36, 146-147,
1 51 , 303-304
D
Death rate 30-31 , 43, 52, 55-57,
78-79, 83, 85, 1 86, 266, 278-279, 283
Demand elasticity 21 7
Democracy 1 7, 34, 62, 106, 108,
I l l , 1 23, 1 51 , 266, 268, 289, 292, 294,
309, 3 1 1 , 31 3, 324, 331 , 350
Demoratic Party 1 00, 106, 268
Demonstration 1 37-145, 294
Depreciation tax shields 300
Devaluation 219-220, 224-232,
236-240, 247, 333, 345
Disease 27, 30-31 , 35-36, 38, 40, 48-51,
53, 83-85, 265-266, 276, 277, 283, 287,
289, 307-309
OM v, 182, 183, 187-1 92, 194-204,
207, 209-21 2, 300-302, 325-326
Doping 291
Dresden iv, 1 33, 1 36-1 37, 143
L
East Berlin 1 3-1 4, 1 1 8, 1 25-126,
1 31 , 1 36-1 38, 143, 145, 287
East Germany iv-v, 10, 1 3-1 5, 48,
63-65, 71 , 73, 91 -1 00, 102-1 1 1 , 1 1 3-125.
1 27-1 39, 141-143, 145-1 54, 1 55-164, 166,
168-174, 176-182, 1 83-21 1 , 224, 280,
285-289, 293-303, 321 , 345, 352-353, 355
Eastern Europe iii, v, I I , 43, 48, 57,
59-65, 71 -72, 74, 77-80, 83, 87, 108,
1 32-1 33, 1 50- 1 51 , 1 53, 175, 1 80, 187,
k0D
203-20, 210, 223-224, 226-227, 233, 259,
272, 27, 282, 284, 288, 30, 30, 3 1 1 ,
318-319, 323, 329, 333, 33, 355
Ecomi groth vi, 9-1 0, 59-61 , 65,
87, 91, 93, 103, 1 58, 162, 168, 1 70-174,
, 184-185, 1 87, 192, 1 97, 207, 20-21
, 225-226, 228-229, 231 , 234, 236,
241, 247, 270, 282, 288, 295-27, 30,
3, 30, 343
Eatio 65, 73, 16, 21 6, 235,
245, . 30, 328
LlU!K839, 7, 10-107, 1 33, 148,
IS-lSI, 1 55, 178, 25, 273, 292-23, 298,
305, 314, 324, 334, 348
El Slvaor 21 , 276
LW@40-41, 53, 62, 1 28, 20, 253,
257, 276, 283-284, 30
LMW88 1 27, 1 31 , 1 3- 1 36, 146
LM@!m v, 9, I 1 5, 1 30-1 31 ,
13, 146, 1 71 , 205, 207, 233, M
LhUi (EU) 241
Llmpire 249
L80h@ rate , 1 49- 1 5, 1 74,
180, 183, 18-187, 1 8-1 91 , 1 97-19,
22-203, 207, 21 1 , 21 8-220, 225, 230, 232.
236-237, 240, 283, 287, 295-297, 301' ,
321, 323, 327, 334, 338-339, 347
Ecutios
%,42, 49, 52, 7M,
74-76, 78-7, 85, 26, 276, ~. 7
Explitatio 49, 5 1 -52, 0, 176,
2
0, 249, 251, 25257, 26, 26-265,
2
8, 2
7-272, 293, 3, 30, 31 , 31 3
L8l8l! [}
Exterminati 21 -22, 25, 3-31 ,
33-34, 3-39, 41-42, 47-51 , 62, 8 1 , 27,
--W.Jt3, 323
L8lM!KI I , 53, ]_ 1 07, 1 61 , 165,
221, 281 , 22
F
Famine 5657, 83, 85, 31 6, 352
' W,339, 352
feral Repbli of Germany (FRG)
1 14
fo Q
0
182, 1 83
Foreign debt 229, 286, 303
361
Foreign exchange resrves 228, 247,
303
Forwar exchange rate 338
France 51 , 1 54, 170, 277
Fraud 23, 31 , 86, 1 04, 1 33, 1 61 , 275,
286, 352
Free German Youth 14, W,1 23,
1 37, 143
Free time 103, 21 6
Freeom i i i , 17, 44, 46, 62-63, 72-73, 6,
93, 10, 108-1 10, 1 26-1 27, 1 30, 132-1 33,
1 39, 141, 146, 1 51 , 176-177, 179, 259, 270,
272, 279, 294, 30, 31 3-314, 337, 339
Freeom of spech 73, 1 10, 132, 259
Free market 62, 64, 20, 203, 216,
21 7, 233, 244-246, 250, 294, 355
Friedrich 143-144, 333
G
Genid21 -22, 34-35, 37, 47, 49-50, 70,
270, 307, 309, 316, 322-323, 328, 335, 337,
34-345
Geogia 33-34, 338
Geman Demorati Republic (GDR)
1 14
Germany iv-vi, 9-10, 1 3-1 5, 21 , 38, 42,
47-49, 61 , 63-65, 71 , 73, 75-77, 80, .
84, 87, 91-10, 102-1 1 1 , 1 1 3-1 39, 141-143,
145-1 54, 1 55-182, 183-213, 224-225, 238,
253, 272-273, 276, 280, 282, 285-289,
293-303, 30-307, 3 1 1 , 31 3, 321 , 328,
330-332, 345, 348, 352-355
GOP 86-88, 162, 175, 227, 229-230,
232-233, 244, 271 , 299, 30
Glasn 1 32
Gloaliztion 141, 216, 251 ,
259-26, 322
GNP 6, 62, 88, 1 10, 175, 203, 207,
26, 279, 284-285, 293, 29, 30
Gochev 64-65, 87, 1 32,
1 37-1 38, 142, 1 57, 165, 220, 280
Grant 47, 6, 147, 210
Great Leap Foard
83
Gree 80, 323
362
Guerrillas 39, 55, 76, 277, 283
Gypsies 253-255
H
Hackenberg 144-145
Haiti 1 7, 249, 276
Hard currency 201 -202, 210-21 1 ,
21 9, 223, 302-304
Hawaii 27-28, 290
__lth care 177, 21 6, 261 -262,
Herat 281
Hi gh technology goos 86, 1 28,
1 35, 1 51 , 200
Hispaniola 23
Hitler 21 , 39, 41 -42, 48, 80, 85, 100,
1 22, 178, 253-254, 256, 268, 273, 279,
282, 288, 294, 3 1 1 , 31 3, 321 , 323-324
Hollywood 1 7, 269, 290, 344
Holocaust 43, 49, 270, 340, 350
352, 356

Honecker 107-108, 143, 145, 1 52, ISS 289
334, 344

Hong Kong 54, 105, 282, 347,
352
Human capital 238, 293
Human rights 17, 73, 254, 31 3
Hungary iv, 72, 77, 82, 1 31 - 1 36, 1 5 1 223
9
.
Hutus 277, 31 0
Hypnosis 1 22, 291
Ib 51

IMF 60-61 , 83, 1 53, 168, 195, 203,

21 0, 220, 222-223, 228, 231 , 234-235, 237,
262, 265-266, 279-280, 282, 304-30,
31 0, 31 9, 322, 327, 332, 335, 339, 341, 343,
346, 349-351 , 354
Imperialism 21 , 63, 82, 253, 293,
309, 356
Incentives 88, 1 24, 157- 1 58,
163-165, 173, 1 89, 1 91 , 202-203, 239, 244,
291, 293, 300, 31 6
India 230, 264, 276, 277, 293, 332,
THE TRUMH OF EVIL
343
Indiana 34, 321 , 327, 340, 345, 348
Indochina 277
Indonesia21 , 41 , 80, 227, 229, 23 1 , 332
Infation v, 93-94, 1 33, 152, 1 54, 172,
175, 1 85-1 86, 205-206, 21 7-219, 222-223,
225, 227, 230-23 1 , 234, 239-240, 247,
285-286, 294-297, 299, 301, 305, 315,
354
Infrastructure v, 41 , 162, 188- 189,
208-209, 238, 244-245, 255, 260, 284
Innovation 62-63, 163, 168, 270,
286
Interest rates 84, 1 96, 222, 225,
227-232, 236-239, 247, 264, 328, 330
Internal Rate of Return (IRR)
1 56
Internet 63, 269-270, 286-287, 317, 323,
335, 345
Interventionist civil war
82, 279
60, 74, 77,
Investment v, 56, 62, 156-163,
1 66, 168, 1 70, 173, 1 77, 183-192, 19,
1 96-200, 202-205, 207-209, 21 1 , 21 5-216,
21 7, 222-223, 226, 232, 235, 238-240,
243-245, 250, 260, 282-284, 287, 295,
299-300, 303-304, 306, 3 1 1, 324, 327, 336,
338-339, 343-344, 346, 348, 354-355
Iran 43, 276
Iraq 21 , 40-41 , 253, 272, 309, 313,
323, 337, 344
I reland 276
J
Jackson 1 8-1 9, 47, 260, 335
Japan 38, 51 , 61 , 75-77, 85, 183,
225-226, 233, 241 -242, 250, 272, 289-29,
299, 31 3, 317, 320, 326, 340, 347, 353
Jefferson 34, 47
Jews 39, 41 -42, 47-49, 253, 288, 313,
31 7
Job security
Journalists
307
94, 98, 166
19, 68, 1 17, 253, 287,
k0f
Kenya 276, 340
Kentucky34
KGB 294, 316

Kohl 148 1 82, 292, 31 5, 354

Kombinate 1 55-1 56
Kosvo Liberation Army (KLA)
254
KM 182, 183-184, 190, 206, 21 2
Korea 21, 42-44, 54, 82, 227, 229, 257,
333, 341, 348, 350
Koovo 253-256, 314, 31 7, 320, 345,
355
Krenz 108, 1 31 , 1 33-1 34, 1 37, 143-147,
149, 151-152, 289, 299, 338
Kurds 51
Kuwait 40-41, 31 3

Los 21, 321

Latin America 175, 21 2, 257, 264,
3, 308
LD 262-263, 31 0-3 1 1
Librtarian Party 268
Life-sustaining anxieties 73, 93-94,
!
Lincoln 47
Liquidity premium 162
lithuania42, 72
L
obbying243, 316
M
Madagasar 277, 334
_fa
161, 220-223, 227, 254 257
M
:
291-292, 305, 31 5, 348
' '
;
_nstream press 9, 52, 72-74, 255, 259,
Malaysia 227, 229, 231 , 240, 346
Mao
55-57, 284, 341
Marketing
71 -72 86 93
10-102 1

2
04, 107, 1 64, 1 74, 177 21 8
: 63
286-287, 292, 297, 299. 341.
Marks
91-92, 102, 1 05, 1 16, 1 20, 1 24,
363
1 35, 149, 1 54, 1 56, 169-172, 174-175, 177,
1 81 , 194, 198, 209, 289, 294-297, 299,
303, 323
Marshall Plan 92, 1 70
Martin Luther King 292
Massachusetts 34
Media 9, 1 3, 17-20, 45, 52, 71-72, 1 00,
1 51 , 182, 252-253, 255, 258-260, 267,
269-270, 289-291 , 298, 305, 31 1-312, 320,
323-324, 330, 336-337, 341, 345-346, 348
Mexico 1 7, 21 , 24-25, 27, 29-31 , 33, 1 05,
226-229, 233, 275, 31 7, 31 9, 321, 323, 327,
342-343, 347
Midwest 36, 30
Mielke 1 38, 143-144
Modrow 149
Mongolian, 278
Moorehead 57, 342
Murder 21 -22, 39-44, 46, 48-53, 67, 80,
98, 220, 268, 27 289, 291 , 313, 348

NAFTA 227, 241-242

Narcotics44, 67, 98, 1 1 8, 1 22, 1 79, 262,
291 -292
National accounts 1 72, 187, 1 95, 295
National Income 64, 92, 99, 103, 1 16,
1 24, 1 54, 168-173, 1 76, 185, 188-192,
194-1 96, 203, 205, 207-208, 21 0, 271 , 284,
286-288, 294-297, 299-300, 332
Nationalist China 54, 278
Nationalization 1 55
Naturalness 96-97
Nazi 9-1 0, 21 , 38, 47-49, 60, 62,
75-78, 80, 84, 92, 1 10, 1 1 3, 1 54, 170, 253,
272-273, 279, 282, 285, 288-289, 292,
294, 31 3, 349
Neues Forum 1 39
New York 34, 251-252, 267, 269,
31 5, 31 6-325, 327-332, 334-351 , 353-355,
357
Nicaragua
Nigeria 51
North Dakota
North Korea
1 7, 43, 276
34
42-44, 82, 257, 333,
364
341 , 350
L
Obesity 102, 356
Oil 17, 40, 65, 297, 31 9, 337
Oregon 34
l
Pakistan 51 , 65, 68, 70
Palast der Republik287
Payback period 1 56-1 57
Peace prayer 1 41 , 144
Pearl Harbor 290
Pennsylvania 34, 316, 324
Perestroika 64-65, 87, 1 32, 165,
332, 340
Peru 276, 322
Perverts 179
Pet roks 1 01
Phil ippines 37-38, 229-230, 31 5,
348
Pinochet 276
Plymouth31 , 353
Pol Pot 53, 277, 281 , 337
Poland 42, 72, 1 32, 1 36, 1 51 , 223 235
259, 340

Police iv, 14- 1 5, 41 , 44, 48, 73-74, 79,
93, 98-100, 106, 109-1 10, 1 1 5, 1 19- 1 23,
1 25, 1 3 1 - 1 32, 1 37-145, 178- 179, 254,
257-258, 287, 291 -292, 294, 299, 305, 31 7,
352
Political freedom 93, 106, 1 33 1 51
176-177

Pol lution 93, 105, 176, 21 0-2 1 1 , 288, 347
Portugal 278
Potsdam 64, 1 39, 1 54
Poverty 10-1 1 , 47, 61 , 63, 72, 83, 87-89,
93, 96, 105, I l l , 1 41 , 1 52, 205, 224,
233-234, 260, 262, 264, 270-271 , 285,
293, 304, 31 6, 322, 338
POWs 44, 55, 67, 76
Prairie 28
Prices 48, 65, 73, 84, 86, 94, 100,
102-104, 149, 155, 1 57-162, 164-165, 167,
169, 172, 175, 177-178, 182, 184- 1 86, 1 90,
THE TRIUMPH OF EVI
194, 1 98, 202, 205-206, 208, 21 9-220
222, 245, 247, 264, 282, 285-286, 295-297
.
299-302, 310, 319, 326, 331 , 337-338 340
.
352
Y
Prisoners 36, 48, 74, 258, 290, 321
Private capital 1 55, 189, 191, 195,
21 3, 239
Private investment 1 88 1 91 , 21 1 , 239,
346

Private police 48, 257-258
Productivity v, 88, 160, 167,
1 83-1 85, 200, 205-208, 21 0-21 1 , 216,
221-222, 232-233, 236, 241 , 243-246, 250,
284, 295, 298, 31 2, 31 9, 331 , 353
Propaganda 9- 1 1 , 1 3-14, 19-22,
52, 54, 68-69, 73, 78, 84, 91 , 100, 108,
I l l , 1 1 5, 1 1 8, 1 24, 1 32- 1 33, 148, 153, 1 73,
178, 21 8, 224, 250, 252-253, 256-261, 273,
280, 289, 291 -292, 297-298, 307, 309-31 1 ,
31 3-31 4
Protect ionism v, 227, 236, 241 -244,
246-24 250, 264, 268, 282, 306
Purchasing power 94, 98, I l l , 149, 169,
172, 183, 21 8, 247, 263, 294-297, 299, 315,
323, 340
Purchasing power parity 295, 299,
31 5, 340
Putin 294, 322, 324, 354

Qandahar 281
Quotas 75, 201, 241 , 250, 299, 302,
356
R
Reagan 20, 249, 351
Real interest rate 1 71 , 186
Reform v, 71 , 1 39, 180, 1 87, 234, 268,
304, 31 5, 32 338, 341 , 349
Refugees 24, 42, 56, 66, 68, 7U 85, 1 26,
1 31 , 1 34-1 37, 255, 310
Reparations iv, 10, 64, 91-93,
1 1 0-1 1 1 , 1 24, 1 54, 1 70-172, 183, 270, 285,
289, 296, 298, 31 2
Revolution iv, 14, 32, 54, 56, 60,
k0D
, 65, 71, 76, 79-80, 83, 1 1 3, 1 23, 1 32,
150, 152, 163, 178,237,26, 284,286, 294,
312, 317, 328, 330, 334-336, 345-346
Rights for women and chi ldren
93,95
Roanoake 31
Romania 42, 74, 77, 80, 1 32, 1 51 , 259,
0
Ruble 20, 21 8-21 9, 231 , 240, 333
Russia vi, 51, 60, 64, 71 -72, 77, 79, 85,
124, 132, 151 , 21 2, 216, 21 8-223, 226-229,
231-232, 240, 252, 266, 279-280, 282-284,
23, 305-306, 31 1 -31 2, 31 8, 322, 324,
327-328, 330, 332, 334-335, 339, 346, 349,
352, 354-355
Rwanda 277, 310, 337, 344, 353
b
Mktax 307
Savings v, 183, 185- 1 86, 1 89-1 98, 200,
244, 246, 256, 295, 30, 304 307 31 9
W
. g ,
mpolice iv, 1 5, + 48, 73-74,
7 93, 98-10, 1 0-1 1 0, 1 1 5, 1 1 9-1 23
125 138-140, 142-143, 178-1 79, 257, 287,
21-292, 294, 305, 352
Srity analysts 161
Selling 46, 101, 162, 166 1 82 219 296
3
07, 332
3 Y Y 9
20, 253-256, 346
Sttlers 23, 27, 31 -37
S
h
m
Sx
20, 97-98, 1 79, 233, 260 291
al i 281
'
Shortages
81 , 86, 93, 103, 1 29,
-l77, 204, 255, 283, 295-296
3l

very
320
46-47, 50, 63, 271 , 293, 3 1 1 ,
, , 322, 349, 351
Smallpox 36-37, 275 350 352
Smu I'
Y 9
l
lg 78-79, 1 1 8, 1 22, 1 25,
27. 135 l49, 178, 220, 292, 349
St connections 168
S
1
al
scurit
8
S
l77, 1
9, 271,21
6, 88, 95-96, 1 21 ,
ia|sQ
272, 29
88, 106, 1 14, 1 16, 1 50,
South Dakota
South Korea
Southeast Asia
282, 322, 342
365
34
42-43, 82, 227, 229
21 2, 21 6, 226, 228,
Soviet Union 1 0- 1 1 , 44, 52, 57,
59-62, 64-67, 71 , 74-79, 82, 84-87, 91,
103-1 04, 1 10, 1 1 3- 1 1 5, 1 21 , 1 24, 1 32, 1 37,
1 51 , 1 54, 1 55, 1 57, 165, 1 70, 21 5, 220,
223, 237, 249, 251 252, 276, 278-285, 287,
289-290, 294, 302, 30, 3 1 8, 320, 355
Spain 1 9, 21 , 37, 49-50, 275, 336
Sputni k 1 32
Stalin 57, 74-79, 83-85, 1 32, 278-279,
282-284, 31 6, 31 8, 321, 324, 352
Starvation 35, 38, 40, 49-51 ,
53-54, 70, 83, 1 26, 261 , 27 283, 309
Stasi 99, 1 1 5-1 21 , 1 27-128, 1 30-1 31 ,
1 39, 178, 287, 325, 331 , 347
Status symbols iv, 1 27
Stock 48, 1 54, 1 55, 160, 1 64, 166-167,
216, 225, 268, 284, 286-287, 299-30,
31 2-31 3, 31 9-320, 325, 337-338, 343, 345,
35 1
Subsidization 186-187, 244, 262,
286, 297-298
Suharto 41
Systematic risk 162
J
Taxes 87-88, 102, 1 59, 1 70, 1 85, 188,
1 91 , 209, 21 5-216, 21 9, 221 , 234, 245, 251,
271, 283, 285, 297, 30-307
Taiwan 54, 278
Tarifs 201, 219-220, 241 , 250, 299,
356
Technological embargo 62, 284
Telephones 105, 1 29, 208-209
Terror 38, 43-44, 255, 276, 289-290,
31 6, 323, 333, 340, 344-345, 349,
352-353
Texas 34, 44, 321 , 347
Thailand 227, 229
Think-tank 258, 266
Tibet 333
Tight monetary policy 231 , 234
366
Torture 44-46, 80, 1 22, 277, 340
Trabant 1 28, 163, 288, 349
Trade 32-33, 41 , 45-47, 51 , 64,
173-174, 180, 1 89, 1 99, 201 , 203-205,
21 6, 21 7-219, 222-223, 226-227, 232-235,
239-244, 246-247, 250, 251 , 255, 262-265,
291 , 293, 297-299, 302-303, 3 1 1 , 31 6,
31 8-322, 324, 331 , 334-335, 340, 342-343,
345-348, 350, 352, 354, 356
Travel freedom 63, 108- 1 09, 1 26-1 27,
1 30, 146, 1 79
Trkey 51 , 277
TV 1 8, 134, 1 41 , 147, 269, 286, 290
L
Uganda 277, 31 0
Ukraine 42, 84, 283, 31 2, 354
UN 40-41, 48, 60, 83, 256, 261 , 304,
309, 31 2, 31 4, 321 , 323, 329, 353
Unemployment 47, 72-73, 89, 93-94,
103, 1 07, 1 28, 1 52, 164, 169, 175, 177- 1 78,
1 81 , 193, 204, 21 3, 221 -224, 233-234, 264,
271 , 282, 284-285, 299, 305
Unifcation v, I I , 73, 96, 1 05-1 06,
1 1 0- 1 1 2, 1 1 9, 1 50, 1 52-1 53, 156, 1 74, 1 81 ,
1 84, 1 87-189, 208, 21 2, 224, 238, 282,
292, 294, 298-300, 303, 355
University of Leipzig 143
Uruguay 276
Ustashe 253
USA I , i i i, vi, 7, 9-1 1 , 1 3-1 5, 18-50,
52-54, 56-57, 59-62, 64-65, 67, 69, 73-74,
76, 78-83, 86-88, 92, 1 01 , 103- 1 04,
1 1 3- 1 1 5, 1 1 9-1 20, 1 22- 1 24, 1 26, 1 31 ,
140-1 41 , 1 54, 163-165, 167-168, 1 70, 1 77,
1 79, 202-203, 208, 21 3, 21 5-21 6, 21 7-218,
224, 235-238, 242-243, 245, 247, 249-250,
251 -259, 261 , 264-273, 275-276, 278-282,
284-285, 289-294, 296, 299, 304-314, 323,
326, 347
USSR 52, 62, 65, 67, 80, 82, 1 54, 175,
279, 283, 288, 296-297, 31 9, 332-333,
340
THE TRIUMPH OF EVIL
N
Value 10, 52, 73, 1 01 - 102, 105, 1 1 9,
1 56-1 57, 1 59, 1 61 -162, 164, 166-168, 170,
172, 177, 184, 192- 1 93, 197-1 98, 21 2, 21 7,
21 9, 224, 226-229, 247, 271 ' 284, 286-287,
294-295, 297, 299, 303, 305-307, 310, 313,
35 1
Vietnam 21 , 39-40, 53, 69, 82, 235, 269,
272, 281 , 292, 307, 320-321 , 323, 332,
334, 339-340, 35 1
Violence 56, 6, 81 , 84, 98, 137-138,
142-145, 1 79, 226, 260-262, 290-291 , 298,
328
Virginia 27-28, 32, 34
W
Waiting lines 86, 103-1 04
Washi ngton 32, 34, 47, 251, 260,
285, 31 6, 321 , 326, 335-337, 342-344,
353-356
Welfare 108, 1 1 0- 1 1 1 , 167, 176, 21 2, 216,
224, 234-235, 304, 341
West Berlin 1 25- 1 26, 1 31 , 147-148,
1 54, 21 0
West Germany vi, 9-10, 6, 73, 91-93,
95, 98-1 00, 103- 1 1 1 , 1 14-1 20, 1 22-129,
1 31 - 1 32, 1 35- 1 37, 146-1 50, 1 52-153,
1 55-1 57, 1 59-162, 164-166, 168-174,
176- 1 81 , 183-184, 186-188, 191-192,
1 95- 1 96, 1 98-202, 206, 208, 21 0-21 1, 253,
280, 285, 287-289, 293-299, 302-303
Western Europe 60-61 , 63, 201, 203,
224-225, 241, 250, 251
Workers World Party 268
World Bank 21 0, 262, 322
World War I 40, 82, 279
World War II 10, 38, 42-43, 47, 62,
64, 78-80, 82, 91 -92, 103, 107, 1 1 3,
1 23- 1 24, 1 53-1 54, 239, 241 , 253-254, 276,
277, 279, 28 289-290, 31 3, 320, 354
WTO 241 -242, 247, 250, 251 , 306,
323, 354
IND
367
A
Yello jrnalism 1 9
Yqavia 20, 72, 77, 235,
2S22SS, 259, 291, 31 2-314, 322, 336
Yuki 35, 342

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