Thursday, December 16, 2010

Another Pointless War

Norman Stone covers the Eastern Front in WWI in a 1975 book, detailing the politics and logistics of the Russian front with the Germans.  The book is detail rich, and necessarily so, since it outlines how utterly clueless the general staff was about how to fight such a war.  Literally millions of men were sent off to suffer and die pointless and painful deaths.  Nothing was settled, and the war was refought 20 years later.

Stone could not have foreseen today when he wrote the book, but the details about the players is painfully familiar. War for profits sake, slaughter for honors sake, unwarranted fears, whipped up to manipulate the masses.

Financing war is a challenge, and Stone details the arrangements for war production and credit for the same.  Business and industry loved war, for it allows expansion and profits.  Stone shows that the idea that Tsarist Russia was economically backward is simply not borne out by the facts, Russian industry at the beginning of this optional, voluntary war compared favorable to German, French and British.  And a very important point:  "allies" very much had a view to a weakened Russia unable to sustain its sphere of influence, thus allowing Brit and French biz an opportunity to expand.  Clearly China today welcomes our self-destruction in the optional, voluntary middle eastern wars, but keep in mind it is likely the French, German and Brits do too.

Russia begins to unravel, when to expand for war production, Russia leaves the gold standard to create fiat money.  Read in 1975 Stone wrote about 1916, and you are reading what USA is doing today.  Follow the malinvestment, breakdown of distribution, where some people starve and not far away meat and grain rots.

Inept, politically operative generals are promoted, and are clueless on how to fight the war.  When someone of no count effectively manages a battle, it is ascribed to luck among the powers that be.  Those effective soldiers recognized one another, and became the kernel of what was eventually the Red Army, which in turn defeated fascism.  The funny money went bad, distribution broke down, virtually the entire country of Russia went on strike in the summer of 1917, and Stalin, Lenin and Trotsky overcame the liberals, and the Soviet Union emerged.

Surprised at the swiftness of their victory, and faced with widespread malinvestment, shortages and unemployment, Stalin first permitted, if not encouraged, the black market (aka free markets).  The economy improved immediately.  After sorting out other emergencies, the Soviets got to work getting Russia back on track economically.  Sadly they were communists, so it did not work out so well.  The first mistake was war, but that inevitably led to the 2nd mistake, going off the gold standard.


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