Fraser Institute
‘New Socialist Man’ was a selfish corrupt cheat
From the Fraser Institute
It’s a common trope that capitalism corrupts. Anyone who has spent time with our species knows that we can be avaricious, materialist and selfish. Tempting as it may be to think that socialism would make us better, it seemed to make us worse.
The communist revolution sought to reshape the economy by giving government control over the means of production. But socialist revolutionaries had more than the economy in their sights. They aimed for nothing less than an extreme makeover of human nature. Unfortunately, actual socialism seemed to make people worse, not better.
Why did socialists seek to change man?
Marx believed that “the essence of man” was “no abstraction inherent in each single individual.” Instead, this essence was “the ensemble of the social relations.” And by changing social relations, he believed man could be changed for the better.
For his part, Stalin saw that certain aspects of human nature were stumbling blocks to the socialist dream. In 1935 he told a conference of collective farm labourers that “a person is a person. He wants to own something for himself.” It will “take a long time yet to rework the psychology of the human being, to reeducate people to live collectively.”
But Stalin and others believed that, given enough time, socialism would create what they called the “New Socialist Man.” He would be intelligent, healthy, muscular, selfless and supremely dedicated to the cause. Basically, he’d look like everyone in the socialist “realist” paintings that the government compelled artists to paint.
He would care less about his private life and his family and more about society-at-large. It was in this vein that Soviet education theorists taught that “By loving a child, the family turns him into an egotistical being, encouraging him to see himself as the centre of the universe.” In the place of such “egoistic love” the state encouraged “rational love” of the broader “social family.”
Socialists had a practical reason for remaking man. Without economic freedom, citizens had little incentive to produce. In a capitalist society, Adam Smith’s butcher, brewer and baker serve us dinner because they are incentivized to do so; it puts money in their pockets and food in the bellies of their children. But in a state-run canteen the workers were paid whether they served decent food or not. The socialists hoped that by remaking human nature—by creating a New Socialist Man motivated to serve others and not just himself and his family—they could solve this incentive problem.
How did people change?
As I’ve explained in an earlier post, the incentive problem was never solved. The New Socialist Man never got very good at serving others, so socialist societies were systematically poor.
But what happened to human nature? Did they succeed in changing it? The species evolves over generations so, of course, the seven-decade socialist experiment didn’t alter human genes (when Marx sent a copy of Das Kapital to Charles Darwin, it apparently sat unread on Darwin’s shelf). But socialism did have a profound effect on cultural norms and attitudes. And these changes were almost entirely for the worse.
In my book on Poland with Pete Boettke and Konstantin Zhukov, we quote one Pole from the late-1980s who observed: “one can make a generalization that everybody in Poland who has the chance engages in a good deal of stealing, cheating, and supplementing his or her income by illegal means.”
Another complained: “Why must I so often do things to get a promotion or improve my family’s living standard that run against my conscience? Why and how has it become true that I am a swine? When did I realize it, and when did I stop caring?”
Socialist planners also worried about cultural decline: “What is going to happen to the character of the young generation,” a state planner asked, “if from the very beginning of their working career in the enterprise, they are being taught and morally forced to cheat at the expense of the whole society?”
In our Estonia book, we quote Václav Havel, the poet-playwright-dissident who became Czechoslovakia’s last president. He identified the problem in his New Year’s address of 1990:
We fell morally ill because we became used to saying something different from what we thought. We learned not to believe in anything, to ignore each other, to care only about ourselves. Concepts such as love, friendship, compassion, humility or forgiveness lost their depth and dimensions and for many of us they represented only psychological peculiarities… I am talking about all of us. We had all become used to the totalitarian system and accepted it as an unchangeable fact, and thus helped to perpetuate it. In other words, we are all—though naturally to differing extents— responsible for the operation of totalitarian machinery, none of us is just its victims; we are all also its cocreators.
Even Soviet leader Mikhail Gorbachev complained in his autobiography of “a gradual erosion of the ideological and moral values of our people.”
Why was the New Socialist Man a worse man?
The control problem is one explanation for this gradual erosion of moral values. With no carrots in the form of market incentives, socialist leaders deployed a terrifying array of sticks—mass deportation, widespread surveillance, arrests and slave labour. They even weaponized children against their parents (a topic I plan to cover in a future post). And since the socialist revolution was built around the notion of class warfare, the socialists felt justified in using these sticks against any class that stood in their way: kulaks, capitalists, ethnic minorities, nationalists, internationalists, left deviationists, right deviationists, religious leaders, cultural icons and intellectuals.
In the face of such widespread terror, it’s no wonder that the socialist state bread cultural habits of anger and distrust. But terror was not the only source of cultural rot. The dysfunctional economy, with its everyday contradictions and absurdities, was another source.
Despite the promise of material abundance, shortages were endemic to the socialist economy. Consumers routinely faced shortages of soap, coffee, sugar, laundry detergent, cigarettes, rubber, transportation, household appliances, cars, housing, clothing and—above all—meat. The shortages arose in part by accident. Without market-determined prices, planners were often flying blind. But shortages were also purposefully engineered by bureaucrats to solicit bribes from rationed consumers.
The only legal way that people could get what they wanted was to wait in line—sometimes for weeks on end. And even then, thugs could jump the queue. Those who didn’t want to wait would resort to bribery and the black market. Even socialist planners and factory leaders had to use the black market to meet their targets in the Five-Year plans. People commodified their relationships, using friends and family to supply them with what the socialist economy would not. This gave rise to what was called “an economy of favours” and the saying that “One must have, not a hundred rubles, but a hundred friends.”
The political scientists John Clark and Aaron Wildavsky describe the dynamic:
When the need for social or political contacts to accomplish anything—from getting enough steel in order to meet one’s factory’s plan quota to finding chocolate for a child’s birthday party—become indispensable… human relations suffer. People expect both too much and too little from friends, family, and acquaintances: too much, since almost every aspect of your life depends on what others can do for you; too little, since the instrumentalization of these relations means that they are sucked dry of any inherent pleasure.
The anthropologist Janine Wedel describes the effect on a Polish woman who manipulated her connections to obtain curtains: “[She] feels a kind of revengeful pride—she is happy to manipulate a system that has humiliated her all her life.”
As we put it in our Poland book: “The new socialist man was not the selfless creature of Marxist writing. He was a grifter who had no choice but to make his way by cheating the rest of society, just as the rest of society cheated him.”
It’s a common trope that capitalism corrupts. Anyone who has spent time with our species knows that we can be avaricious, materialist and selfish. Tempting as it may be to think that socialism would make us better, it seemed to make us worse.
The communist revolution sought to reshape the economy by giving government control over the means of production. But socialist revolutionaries had more than the economy in their sights. They aimed for nothing less than an extreme makeover of human nature. Unfortunately, actual socialism seemed to make people worse, not better.
Why did socialists seek to change man?
Marx believed that “the essence of man” was “no abstraction inherent in each single individual.” Instead, this essence was “the ensemble of the social relations.” And by changing social relations, he believed man could be changed for the better.
For his part, Stalin saw that certain aspects of human nature were stumbling blocks to the socialist dream. In 1935 he told a conference of collective farm labourers that “a person is a person. He wants to own something for himself.” It will “take a long time yet to rework the psychology of the human being, to reeducate people to live collectively.”
But Stalin and others believed that, given enough time, socialism would create what they called the “New Socialist Man.” He would be intelligent, healthy, muscular, selfless and supremely dedicated to the cause. Basically, he’d look like everyone in the socialist “realist” paintings that the government compelled artists to paint.
He would care less about his private life and his family and more about society-at-large. It was in this vein that Soviet education theorists taught that “By loving a child, the family turns him into an egotistical being, encouraging him to see himself as the centre of the universe.” In the place of such “egoistic love” the state encouraged “rational love” of the broader “social family.”
Socialists had a practical reason for remaking man. Without economic freedom, citizens had little incentive to produce. In a capitalist society, Adam Smith’s butcher, brewer and baker serve us dinner because they are incentivized to do so; it puts money in their pockets and food in the bellies of their children. But in a state-run canteen the workers were paid whether they served decent food or not. The socialists hoped that by remaking human nature—by creating a New Socialist Man motivated to serve others and not just himself and his family—they could solve this incentive problem.
How did people change?
As I’ve explained in an earlier post, the incentive problem was never solved. The New Socialist Man never got very good at serving others, so socialist societies were systematically poor.
But what happened to human nature? Did they succeed in changing it? The species evolves over generations so, of course, the seven-decade socialist experiment didn’t alter human genes (when Marx sent a copy of Das Kapital to Charles Darwin, it apparently sat unread on Darwin’s shelf). But socialism did have a profound effect on cultural norms and attitudes. And these changes were almost entirely for the worse.
In my book on Poland with Pete Boettke and Konstantin Zhukov, we quote one Pole from the late-1980s who observed: “one can make a generalization that everybody in Poland who has the chance engages in a good deal of stealing, cheating, and supplementing his or her income by illegal means.”
Another complained: “Why must I so often do things to get a promotion or improve my family’s living standard that run against my conscience? Why and how has it become true that I am a swine? When did I realize it, and when did I stop caring?”
Socialist planners also worried about cultural decline: “What is going to happen to the character of the young generation,” a state planner asked, “if from the very beginning of their working career in the enterprise, they are being taught and morally forced to cheat at the expense of the whole society?”
In our Estonia book, we quote Václav Havel, the poet-playwright-dissident who became Czechoslovakia’s last president. He identified the problem in his New Year’s address of 1990:
We fell morally ill because we became used to saying something different from what we thought. We learned not to believe in anything, to ignore each other, to care only about ourselves. Concepts such as love, friendship, compassion, humility or forgiveness lost their depth and dimensions and for many of us they represented only psychological peculiarities… I am talking about all of us. We had all become used to the totalitarian system and accepted it as an unchangeable fact, and thus helped to perpetuate it. In other words, we are all—though naturally to differing extents— responsible for the operation of totalitarian machinery, none of us is just its victims; we are all also its cocreators.
Even Soviet leader Mikhail Gorbachev complained in his autobiography of “a gradual erosion of the ideological and moral values of our people.”
Why was the New Socialist Man a worse man?
The control problem is one explanation for this gradual erosion of moral values. With no carrots in the form of market incentives, socialist leaders deployed a terrifying array of sticks—mass deportation, widespread surveillance, arrests and slave labour. They even weaponized children against their parents (a topic I plan to cover in a future post). And since the socialist revolution was built around the notion of class warfare, the socialists felt justified in using these sticks against any class that stood in their way: kulaks, capitalists, ethnic minorities, nationalists, internationalists, left deviationists, right deviationists, religious leaders, cultural icons and intellectuals.
In the face of such widespread terror, it’s no wonder that the socialist state bread cultural habits of anger and distrust. But terror was not the only source of cultural rot. The dysfunctional economy, with its everyday contradictions and absurdities, was another source.
Despite the promise of material abundance, shortages were endemic to the socialist economy. Consumers routinely faced shortages of soap, coffee, sugar, laundry detergent, cigarettes, rubber, transportation, household appliances, cars, housing, clothing and—above all—meat. The shortages arose in part by accident. Without market-determined prices, planners were often flying blind. But shortages were also purposefully engineered by bureaucrats to solicit bribes from rationed consumers.
The only legal way that people could get what they wanted was to wait in line—sometimes for weeks on end. And even then, thugs could jump the queue. Those who didn’t want to wait would resort to bribery and the black market. Even socialist planners and factory leaders had to use the black market to meet their targets in the Five-Year plans. People commodified their relationships, using friends and family to supply them with what the socialist economy would not. This gave rise to what was called “an economy of favours” and the saying that “One must have, not a hundred rubles, but a hundred friends.”
The political scientists John Clark and Aaron Wildavsky describe the dynamic:
When the need for social or political contacts to accomplish anything—from getting enough steel in order to meet one’s factory’s plan quota to finding chocolate for a child’s birthday party—become indispensable… human relations suffer. People expect both too much and too little from friends, family, and acquaintances: too much, since almost every aspect of your life depends on what others can do for you; too little, since the instrumentalization of these relations means that they are sucked dry of any inherent pleasure.
The anthropologist Janine Wedel describes the effect on a Polish woman who manipulated her connections to obtain curtains: “[She] feels a kind of revengeful pride—she is happy to manipulate a system that has humiliated her all her life.”
As we put it in our Poland book: “The new socialist man was not the selfless creature of Marxist writing. He was a grifter who had no choice but to make his way by cheating the rest of society, just as the rest of society cheated him.”
From the Fraser Institute
By Ben Eisen
In case you haven’t heard, Chrystia Freeland resigned from cabinet on Monday. Reportedly, the straw that broke the camel’s back was Prime Minister Trudeau’s plan to send all Canadians earning up to $150,000 a onetime $250 tax “rebate.” In her resignation letter, Freeland seemingly took aim at this ill-advised waste of money by noting “costly political gimmicks.” She could not have been more right, as my colleagues and I have written here, here and elsewhere.
Indeed, Freeland was right to excoriate the government for a onetime rebate cheque that would do nothing to help Canada’s long-term economic growth prospects, but her reasoning was curious given her record in office. She wrote that such gimmicks were unwise because Canada must keep its “fiscal powder dry” given the possibility of trade disputes with the United States.
Again, to a large extent Freeland’s logic is sound. Emergencies come up from time to time, and governments should be particularly frugal with public dollars during non-emergency periods so money is available when hard times come.
For example, the federal government’s generally restrained approach to spending during the 1990s and 2000s was an important reason Canada went into the pandemic with its books in better shape than most other countries. This is an example of how keeping “fiscal powder dry” can help a government be ready when emergencies strike.
However, much of the sentiment in Freeland’s resignation letter does not match her record as finance minister.
Of course, during the pandemic and its immediate aftermath, it’s understandable that the federal government ran large deficits. However, several years have now past and the Trudeau government has run large continuous deficits. This year, the government forecasts a $48.3 billion deficit, which is larger than the $40 billion target the government had previously set.
A finance minister committed to keeping Canada’s fiscal powder dry would have pushed for balanced budgets so Ottawa could start shrinking the massive debt burden accumulated during COVID. Instead, deficits persisted and debt has continued to climb. As a result, federal debt may spike beyond levels reached during the pandemic if another emergency strikes.
Minister Freeland’s reported decision to oppose the planned $250 onetime tax rebates is commendable. But we should be cautious not to rewrite history. Despite Freeland’s stated desire to keep Canada’s “fiscal powder dry,” this was not the story of her tenure as finance minister. Instead, the story is one of continuous deficits and growing debt, which have hurt Canada’s capacity to withstand the next fiscal emergency whenever it does arrive.
From the Fraser Institute
By Grady Munro, Milagros Palacios and Jason Clemens
The sudden resignation of federal finance minister (and deputy prime minister) Chrystia Freeland, hours before the government was scheduled to release its fall economic update has thrown an already badly underperforming government into crisis. In her letter of resignation, Freeland criticized the government, and indirectly the prime minister, for “costly political gimmicks” and irresponsible handling of the country’s finances and economy during a period of great uncertainty.
But while Freeland’s criticism of recent poorly-designed federal policies is valid, her resignation, in some ways, tries to reshape her history into that of a more responsible finance minister. That is, however, ultimately an empirical question. If we contrast the performance of the last four long-serving (more than three years) federal finance ministers—Paul Martin (Liberal), Jim Flaherty (Conservative), Bill Morneau (Liberal) and Freeland (Liberal)—it’s clear that neither Freeland nor her predecessor (Morneau) were successful finance ministers in terms of imposing fiscal discipline or overseeing a strong Canadian economy.
Let’s first consider the most basic measure of economic performance, growth in per-person gross domestic product (GDP), adjusted for inflation. This is a broad measure of living standards that gauges the value of all goods and services produced in the economy adjusted for the population and inflation. The chart below shows the average annual growth in inflation-adjusted per-person GDP over the course of each finance minister’s term. (Adjustments are made to reflect the effects of temporary recessions or unique aspects of each minister’s tenure to make it easier to compare the performances of each finance minister.)
Sources: Statistics Canada Table 17-10-0005-01, Table 36-10-0222-01; 2024 Fall Economic Statement
By far Paul Martin oversaw the strongest growth in per-person GDP, with an average annual increase of 2.4 per cent. Over his entire tenure spanning a decade, living standards rose more than 25 per cent.
The average annual increase in per-person GDP under Flaherty was 0.6 per cent, although that includes the financial recession of 2008-09. If we adjust the data for the recession, average annual growth in per-person GDP was 1.4 per cent, still below Martin but more than double the rate if the effects of the recession are included.
During Bill Morneau’s term, average annual growth in per-person GDP was -0.5 per cent, although this includes the effects of the COVID recession. If we adjust to exclude 2020, Morneau averaged a 0.7 per cent annual increase—half the adjusted average annual growth rate under Flaherty.
Finally, Chrystia Freeland averaged annual growth in per-person GDP of -0.3 per cent during her tenure. And while the first 18 or so months of her time as finance minister, from the summer of 2020 through 2021, were affected by the COVID recession and the subsequent rebound, the average annual rate of per-person GDP growth was -0.2 per cent during her final three years. Consequently, at the time of her resignation from cabinet in 2024, Canadian living standards are projected to be 1.8 per cent lower than they were in 2019.
Let’s now consider some basic fiscal measures.
Martin is by far the strongest performing finance minister across almost every metric. Faced with a looming fiscal crisis brought about by decades of deficits and debt accumulation, he reduced spending both in nominal terms and as a share of the economy. For example, after adjusting for inflation, per-person spending on federal programs dropped by 5.9 per cent during his tenure as finance minister (see chart below). As a result, the federal government balanced the budget and lowered the national debt, ultimately freeing up resources via lower interest costs for personal and business tax relief that made the country more competitive and improved incentives for entrepreneurs, businessowners, investors and workers.
*Note: Freeland’s term began in 2020, but given the influence of COVID, 2019 is utilized as the baseline for the overall change in spending. Sources: Statistics Canada Table 17-10-0005-01, Table 36-10-0130-01; Fiscal Reference Tables 2024; 2024 Fall Economic Statement
Flaherty’s record as finance minister is mixed, in part due to the recession of 2008-09. Per-person program spending (inflation adjusted) increased by 11.6 per cent, and there was a slight (0.6 percentage point) increase in spending as a share of the economy. Debt also increased as a share of the economy, although again, much of the borrowing during Flaherty’s tenure was linked with the 2008-09 recession. Flaherty did implement tax relief, including extending the business income tax cuts started under Martin, which made Canada more competitive in attracting investment and fostering entrepreneurship.
Both Morneau and Freeland recorded much worse financial performances than Flaherty and Martin. Morneau increased per-person spending on programs (inflation adjusted) by 37.1 per cent after removing 2020 COVID-related expenditures. Even if a more generous assessment is used, specifically comparing spending in 2019 (prior to the effects of the pandemic and recession) per-person spending still increased by 18.1 per cent compared to the beginning of his tenure.
In his five years, Morneau oversaw an increase in total federal debt of more than $575 billion, some of which was linked with COVID spending in 2020. However, as multiple analyses have concluded, the Trudeau government spent more and accumulated more debt during COVID than most comparable industrialized countries, with little or nothing to show for it in terms of economic growth or better health performance. Simply put, had Morneau exercised more restraint, Canada would have accumulated less debt and likely performed better economically.
Freeland’s tenure as finance minister is the shortest of the four ministers examined. It’s nonetheless equally as unimpressive as that of her Trudeau government predecessor (Morneau). If we use baseline spending from 2019 to adjust for the spike in spending in 2020 when she was appointed finance minister, per-person spending on programs by the federal government (inflation adjusted) during Freeland’s term increased by 4.1 per cent. Total federal debt is expected to increase from $1.68 trillion when Freeland took over to an estimated $2.2 trillion this year, despite the absence of a recession or any other event that would impair federal finances since the end of COVID in 2021. For some perspective, the $470.8 billion in debt accumulated under Freeland is more than double the $220.3 billion accumulated under Morneau prior to COVID. And there’s an immediate cost to that debt in the form of $53.7 billion in expected federal debt interest costs this year. These are taxpayer resources unavailable for actual services such as health care.
Freeland’s resignation from cabinet sent shock waves throughout the country, perhaps relieving her of responsibility for the Trudeau government’s latest poorly-designed fiscal policies. However, cabinet ministers bear responsibility for the performance of their ministries—meaning Freeland must be held accountable for her previous budgets and the fiscal and economic performance of the government during her tenure. Compared to previous long-serving finances ministers, it’s clear that Chrystia Freeland, and her Trudeau predecessor Bill Morneau, failed to shepherd a strong economy or maintain responsible and prudent finances.
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