Category Archives: economics

by | 30 December 2016 · 10:30 am

Wordcatcher Tales: getihu, baochan daohu

I learned a few new Chinese terms from reading Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014).

个体户 (traditional 個體戶) getihu (‘individual-body-enterprise’) – Even during the heyday of collectivization, Communist China allowed very limited small-scale entrepreneurship. The term for such businesses translates literally as ‘individual’ (个 ge, used as a counter for individual items) + ‘body’ (体 ti, also ‘form, style; system’) + ‘door’ (户 hu, also ‘household, family; [bank] account; type of professional’).

包产到户 (traditional 包産到戸) baochan daohu (‘assure-production reach-household’) – The method used to abolish China’s disastrously underperforming collective farms was to reassign production quotas down to the level of individual households. The term for production quota is baochan, composed of 包 ‘wrap; envelope; include; take full responsibility for; assure, guarantee’ + 产 ‘give birth to; produce’ (or ‘product[ion]’). The reassignment of responsibility to households was conveyed by adding the modifier 到户 daohu, from 到 dao ‘arrive, reach’ + 户 hu ‘door; household, family’.

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by | 26 December 2016 · 2:13 pm

Thatcher’s Unorthodox Campaign, 1979

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 3391-3428:

The election of 1979 marked a watershed moment in British politics. This is not to say that everything about the vote was black-and-white. It is, for example, indeed true—as many contemporary historians are wont to point out—that Thatcher was careful to avoid making her proposals sound too radical and that the Conservative manifesto (the party program) included little in the way of detailed policies for change. It is true that she might have faced a much different political landscape if Callaghan had called for a general election back in the early fall of 1978 (as some of his advisers had counseled), before the Winter of Discontent had left British voters conclusively disgusted with the direction of the country. And it is even true that her personal popularity rating remained well below Callaghan’s right up to the end. Yet despite these qualifiers, there can be no mistaking the fact that Thatcher used the election of 1979 to offer a fundamental break with the way the country had been governed. Voters saw that she was offering a dramatically new approach to dealing with the unions, and it was also clear to them that she was proposing a new set of policies on management of the economy. She pledged change to an electorate that was deeply disillusioned with the status quo—and she did this less through election documents than through her own speeches and campaign appearances. Along the way she also departed decisively from the received wisdom on British electioneering. The message here was, at least in part, the medium—Margaret Thatcher herself.

Conservative leaders before her had focused their campaigns on the classic Tory electorate—those members of the middle and upper classes living in the more affluent parts of the country. Thatcher and her advisers, however, set out to target voter categories long neglected by Conservative campaigners. She made a point, for example, of specifically wooing skilled laborers of the type that Tebbit was courting in his home district. Known in the mysterious argot of British pollsters as “C2s,” these workers had long been considered automatic Labour voters. Thatcher disagreed. She believed that many union members resented the undemocratic ways and the cynical tactics of their leaders, and she surmised that many working-class voters would be correspondingly receptive to her calls for greater constraints on union power. She also felt that upwardly mobile workers would welcome her proposals to allow the tenants of public housing to buy their homes. She reasoned that many C2s were also tired of inflation and runaway spending. This was why she staged her first big election rally in the traditional Labour stronghold of Cardiff in Wales. “Labour, the self proclaimed party of compassion, has betrayed those for whom it promised to care,” she told her audience. “So in this campaign we’ll not only extend and consolidate Conservative support, we’ll carry the fight right into what were once the castles and strongholds of Labour, and in many places we’ll win.”

Her campaign tactics were equally novel. She shunned the traditional Conservative support network in the broadsheet newspapers and favored instead the tabloids and daytime TV—an approach that allowed her to tap into a new electorate in the embattled middle classes who felt threatened by the growing power of the state and the unions and also allowed her to avoid probing questions about policy specifics. She made aggressive use of television, whereupon she was accused (comical as it might seem to a modern audience) of the egregious sin of importing “American-style campaigning” to Britain. She proved very effective at exploiting the medium—especially once her adviser Gordon Reece prevailed upon her to lower her voice, an adjustment that lent her gravitas and authority.

This might seem trivial, but it was especially important in light of Callaghan’s magisterial efforts to use her gender against her. It was not so much what he said as how he said it; he was a master at sardonically implying that whatever the leader of the opposition said was made even sillier by the fact that it was being said by a woman. She countered this by doing what she had always done to beat so many male competitors before: she worked harder, sleeping just a few hours a night as she relentlessly studied her briefing papers and learned her lines. At the same time, she turned her gender to her own advantage by slipping, when she chose to, into the role of a commonsensical housewife, hoisting sample grocery bags to drive home the corrosive effects of runaway prices on the ordinary household budget. Nor was she afraid to give interviews to women’s magazines in which she shared recipes and stressed her fussy mastery of good housekeeping. Not only did this help to draw in female voters, but it also underlined her point that the economic remedies she was proposing were less a matter of abstract theories than of the everyday ethos of thrift and moderation on which many British households prided themselves.

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by | 26 December 2016 · 10:06 am

Afghanistan’s Communist Revolutionaries, 1978

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 2221-2259:

Taraki and Amin both belonged to the PDPA’s other faction, known as Khalq (“the People” or “the Masses”). Khalq’s ethnic basis was narrower than Parcham’s: Khalqis were overwhelmingly Pashtuns, and more often than not they hailed from a particular subset of the Pashtuns. Taraki and Amin were both members of a particular Pashtun tribal confederation, the Ghilzais, that had long chafed under the domination of more powerful Pashtun groups—and especially the Durranis, the dynasty that had dominated Afghanistan for centuries, right up until the Communist coup. (Both Daoud and Zahir Shah were Durranis.) The Khalqis tended to be far less vested in the existing system of ruling elites, and this helps to explain the radicalism that dominated their thinking.

Khalqis were, above all, dutiful Leninists. Like so many other would-be Third World modernizers, they detested their country’s backwardness, and they believed that the only reasonable cure was to frog-march it into the twentieth century by brute force, if need be. To be sure, Afghanistan didn’t really have a proletariat, and though many aspects of its agricultural system appeared backward and traditional, most peasants actually owned their own land. But no matter. There was one institution that could still serve as a revolutionary vanguard, and that was the army. For years the military had been one of the few structures in the country—along with the monarchy and a steadily expanding state educational system—that managed to coalesce the notoriously unruly Afghans around a sense of shared national destiny. The military was one Afghan institution that offered opportunities for advancement even to those who weren’t part of the traditional elites. And the upper ranks were filled with officers who had studied in the Soviet Union, which offered them a clear example of a primitive rural society that the Communists had mobilized into a modern industrial power.

The ideological differences between Parcham and Khalq were just part of the problem. There were also intense personal feuds at work. Karmal, the Persian-speaking patrician, despised Taraki and Amin as upstarts, and they were happy to return the favor. In the old, prerevolutionary parliament, Amin had been famous for his easy joshing with his opponents among the religious conservatives, who gave their atheist colleague the joking nickname of “Satan.” Karmal, a formidable orator once imprisoned for five years by the king, had emerged to become a political heavyweight courted even by Daoud himself, and he cultivated a self-regard that alienated just about everyone. As the new Communist regime got under way, Amin couldn’t help reminding the Parchamis that they had spent the “revolution” cringing in prison while the Khalqis got on with the job. The Parchamis, in turn, regarded the Khalqis as bumbling zealots who needed a bit of adult supervision.

The Afghan public at large knew little of this, of course. What they saw instead were slogans, revolutionary parades, and a burgeoning personality cult centered on Taraki. There is little doubt that the vast majority of Afghans—most of whom had no access to television or newspapers—regarded all this with bemusement, apprehension, or apathy. But the state almost immediately denied them the luxury of disengagement. Within weeks of seizing power, the new revolutionary government announced a series of far-reaching edicts that would tip Afghan society into a maelstrom from which it is still struggling to recover.

Decree Number One proclaimed land reform. The proclaimed intent was to uproot the supposedly feudal underpinnings of Afghan society, stripping power from traditional landlords and canceling unfair lending arrangements that had kept millions of people indentured to local power brokers. The political aim was to give the majority of Afghans—who overwhelmingly lived in the countryside—a reason to love the new government. A flurry of other new reform measures followed. A literacy campaign taught the benighted how to read and write. Women received full civic rights. It was a program that bore a striking resemblance to the shah’s White Revolution [in Iran].

It all sounded wonderful, on paper. The problem was that this blizzard of reforms, and especially the realities of their implementation, bore little or no relation to the society they were intended to change. Of course, everyone believed in the goal of literacy, but the catch was that the government had little in the way of resources to accomplish the task of educating the rural poor. So it relied, as Communist regimes so often had in the past, on a mixture of mobilization and brute force to fill the gap. Zealous young schoolteachers dispatched to the villages, invariably without proper textbooks or teaching materials, often ended up haranguing the locals on their backwardness. What particularly inflamed the locals was the newcomers’ insistence that women should take part in the courses, in classrooms that mingled both sexes. Mobs drove the arrogant outsiders away. In some cases the do-gooders then returned with escorts of government troops, and literacy classes then proceeded at bayonet point.

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by | 25 December 2016 · 10:43 am

Afghanistan in the 1970s

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 997-1035:

Afghanistan in the 1970s thus offered a textbook example of what the economists like to call a “rentier state”—one that lives by exploiting the advantages of good fortune (natural resources or favorable strategic position) rather than capitalizing on the talents and skills of its people. There were deep-seated historical reasons for this. Afghan rulers had long governed according to a somewhat minimalist philosophy, dictated, to some extent, by the country’s bewildering ethnic diversity and its fantastically rugged terrain. Roads were few and far between. The high mountains and deep valleys fragmented the population, exacerbating differences of language and custom. When the Soviets finally completed the Salang Tunnel in 1964, the world’s highest traffic tunnel at the time, they supplied the missing link to a road that connected the northern and southern halves of the country for the first time in its history. The Americans, meanwhile, had already built the first east-west highway, from Kabul to Kandahar. This new infrastructure transformed Afghanistan’s economy and dramatically simplified the government’s ability to communicate with the interior.

Even so, the average Afghan’s dealings with Kabul remained shallow and infrequent. The primary function of the local administration was less to provide people with public services, few of which were available in the countryside to begin with, than to prevent them from organizing opposition. Most people correspondingly regarded officials as a remote and somewhat unnecessary presence, better avoided than engaged. American anthropologist Thomas Barfield, who conducted field research in Afghanistan in the mid-1970s, noted that, for most Afghans in the countryside, “government” meant not a concept but a place, namely, the local government compound. “On passing out its front gate, and particularly after leaving the road that led to it, ‘government’ ended,” he wrote. (And this, in turn, helps to explain why literacy rates in the country were so shockingly low. In the 1970s, only 10 percent of the population could read or write—and only 2 percent of women.)

The real power in most communities came from traditional leaders, usually tribal notables or landowners. The local khan might provide jobs, adjudicate disputes, or allocate resources (especially water, that scarce but vital commodity for this overwhelmingly rural population), and his authority rippled through the intricate networks of kinship that structured most of society. The leader’s followers judged his legitimacy in part according to his success at distributing wealth. In the old days, that might have meant the booty from battle, but in the 1960s and 1970s, this often translated into access to a cushy government job or a place in the university in Kabul. Afghanistan is often described rather loosely as a “tribal society,” but the reality is more complex, given the fantastic ethnic and social diversity of the place. The word Afghans use for the defining characteristic of their society is qawm, which can refer not only to networks of blood relationships but also to linguistic, religious, and geographical traits that shape the group to which an individual belongs. A Turkic-speaking Uzbek might define himself above all by the dialect that he speaks, a Persian-speaking Tajik by the district that he hails from, a Pashtun by his tribal affiliation.

If anything could be said to unite them all, it is religion. Virtually all Afghans are Muslims, most of them Sunnis. (The most prominent exception are the Hazaras, an ethnic group, descended from the Mongols, who happen to be Shiites.) Even in the 1960s and ’70s, observers often remarked upon the simple piety of the people in Afghanistan. All activity stopped whenever the call to prayer sounded from the local mosque. References to God and the Prophet punctuated everyday speech. Public figures were expected to invoke the supremacy of the Almighty at every turn.

Yet this did not mean that religion and politics seamlessly overlapped. Throughout their history, Afghans had known rule by kings, not religious leaders. Village mullahs, who performed a variety of religious services in exchange for fees, were often regarded as corrupt or buffoonish, the butt of jokes rather than figures of respect. There were, of course, some religious figures who enjoyed privileged status—Islamic scholars, perhaps, or pirs, Sufi spiritual leaders. But none of these individuals had any clearly defined institutional power over the others. The diffuse quality of Afghan Islam was also a product of practices that many other Sunni Muslims would have regarded as heterodox—such as the veneration of saints, whose graves, beflagged and decorated, were treated as holy places. In Iran, the Shiite religious elite presided over a clearly defined hierarchy, which greatly increased the power of the clerics. In Afghanistan, there were no central religious institutions to speak of. Islam was flat, localized, and fragmented.

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by | 24 December 2016 · 8:32 am

Britain on the Eve of Thatcher, 1970s

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 360-398:

The postwar consensus endured because it worked—at least for the first few decades. The British economy grew steadily through the 1950s and 1960s, widely spreading the benefits of expanding national wealth. But by the 1970s, the bloom was off. Rising global competition had revealed the structural rigidities of Britain’s social-democratic system. The oil shock hit at a moment when traditional British manufacturing industries were already affected by painful decline. Once-proud working-class cities had turned into landscapes of blight, factory ruins defaced with graffiti. In the 1970s, the British economy tottered from one crisis to another. In 1974, in the wake of the Arab oil embargo, Conservative prime minister Edward Heath was forced to introduce electricity rationing and a three-day workweek. Unemployment surged and productivity sagged. British business seemed to have lost its way. Entrepreneurs fled punishing tax rates for more hospitable climes. Strikes punctuated the national news with benumbing regularity; the trade unions repeatedly demonstrated their enormous political power, contributing mightily to the fall of Heath’s government in 1974.

These were the problems that confronted James Callaghan as he assumed the office of prime minister two years later. His Labour Party had won the 1974 election under the leadership of Harold Wilson, who returned to Number Ten Downing Street after an earlier stint as prime minister. But Labour’s margin of victory in the election was narrow, and the best that Wilson could do was to form a minority government with his party in the lead. His administration soon foundered as it struggled to deal with the aftereffects of the energy crisis and the intensifying demands from the unions, his party’s most powerful constituency. By the time Callaghan stepped in to take the beleaguered Wilson’s place, inflation had reached a staggering 25 percent. Outside investors lost confidence that the British government would ever regain control over its finances, and the pound became so anemic that London found itself facing a full-blown balance-of-payments crisis. Put simply, the British state had run out of the foreign exchange it needed to pay for imports. Bills were coming due that the United Kingdom was not in a position to pay.

To his credit, Callaghan did not soft-pedal the causes. He inherited stewardship of the economy at a moment when the old sureties were crumbling. His chancellor of the Exchequer, Denis Healey, declared that Britain couldn’t go on spending its way out of crises. Callaghan’s son-in-law, an influential journalist by the name of Peter Jay, had even become a convert to the economic school known as “monetarism,” which deemed strict control of the money supply to be the only remedy for inflation. This flew in the face of the Keynesian principles of Britain’s postwar consensus, which placed a premium on combating unemployment through government spending. The speech that Callaghan gave at the 1976 Labour Party conference, authored by Jay, turned into something of a elegy for Britain’s postwar economic system:

For too long this country—all of us, yes this conference too—has been ready to settle for borrowing money abroad to maintain our standards of life, instead of grappling with the fundamental problems of British industry. . . . [T]he cozy world we were told would go on forever, where full employment would be guaranteed . . . that cozy world is now gone. . . . We used to think we could spend our way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candor that that option no longer exists, and that insofar as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy followed by a higher level of unemployment as the next step.

Finally, in November 1976, the United Kingdom was forced to ask the International Monetary Fund (IMF) for a $3.9 billion loan to tide it over through the crisis. The conditions included brutal spending cuts and across-the-board austerity measures. Back in 1945, the United Kingdom had been America’s partner in creating the international economic system that had brought the IMF to life. Now London was calling on the fund for help in an existential crisis. It was the first time that one of the world’s developed countries had ever asked for IMF support. (Nothing comparable would happen again until 2008, when Iceland was forced to follow suit during the global financial crisis.)

This was a humiliation of epochal proportions. A country that had been at the heart of the Western economic and political system found itself reduced to the status of a banana republic. Callaghan diagnosed the problems but was unable to come up with a remedy. Something always seemed to get in the way: the resistance of the unions, the global economic climate, the accustomed way of doing things. The old ideas no longer worked—that much was clear. But where were the new ones? Britain was waiting for something to give.

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by | 23 December 2016 · 3:53 pm

Hua Guofeng and the Two Whatevers, 1977

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 2594-2619:

In the wake of Mao’s death, the colorless Hua surprised everyone with a sudden show of initiative. Allying himself with two established party elders, Army Marshal Ye Jianying and veteran functionary Li Xiannian, Hua engineered the arrest of the Gang of Four. It was a startling gambit even by the Byzantine standards of twentieth-century Communist conspiracies. Hua had started by splitting off one of the Gang’s key allies, a man by the name of Wang Dongxing, who had risen with the Gang’s help to become the head of the party’s Praetorian Guard, the 8341 Special Regiment, which provided for the security of top officials. Hua and Wang arranged for two of the Gang’s leaders to be called to a special session of the Politburo. They were arrested at gunpoint as they stepped into the room. Jiang Qing, Mao’s widow and the Gang’s leader, was taken into custody in her bedroom; one of her personal servants is said to have spat on her as she was led away. Under orders from Hua, the People’s Liberation Army quickly moved to disarm the heavily armed militias and the powerful media machine that Jiang’s faction had built up over the years. The Cultural Revolution was finally coming to an end.

Yet what was Hua offering in its place? This was not immediately clear. Hua certainly understood that the country could no longer afford permanent revolution. Adopting a strategy originally envisioned by Zhou Enlai, he declared that China should push ahead with “the Four Modernizations” (science and technology, industry, national defense, and agriculture). He moved to restore the economy’s animal spirits by ordering a huge surge of investment in industry and agriculture. Like Gierek in Poland, Hua seemed to believe that part of the solution involved taking big foreign loans for flagship projects; also like Gierek, he seemed to have few concrete ideas about how these loans would be paid back.

Hua’s program did result in tangible growth. But it also led to big budget deficits and scandalous waste, since it failed to tackle many of the serious problems of management and organization bequeathed by Maoist excess. Hua had the right idea, but he was still, in essence, relying on mobilization and slogans rather than substantive economic policy. Some of his critics belittled the program as another Great Leap Forward, a utopian exercise with little practical foundation. Hua, for example, urged a rapid increase in the output of steel, which duly materialized. But to what end? What, precisely, was the underlying economic strategy?

Hua had eliminated the Gang of Four. He tried to revive the economy. But he seemed hesitant to put an end to the broader legacy of the Cultural Revolution. In February 1977, a few months after Mao’s death, Hua’s supporters published a statement containing a conspicuous quote: “We will resolutely uphold whatever policy and decisions Chairman Mao made, and unswervingly follow whatever instructions Chairman Mao gave.” This credo came to be known as the “the two whatevers,” and its adherents, “the Whateverists.” Like many factional nicknames, this one contained a large grain of truth. Hua’s legitimacy stemmed from the fact that he was Mao’s chosen successor. That counted for a lot. But it also limited his freedom of maneuver. He could not chip away at the memory of the Great Helmsman without undermining himself.

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by | 23 December 2016 · 3:51 pm

Quoting Mao Against Mao, 1978

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 2656-2682:

In May 1978, the prominent national newspaper Guangming Daily published an article with the innocuous title “Practice Is the Sole Criterion for Judging Truth.” The piece was quickly picked up by a series of other publications, including the leading army newspaper. The title sounds dull enough, but it went off like a bomb. The article, collectively authored by a team of academics working under the direction of rising party reformer Hu Yaobang, argued that Communist ideology was not the only yardstick for determining what was true. If Marxism was indeed a scientific theory, as it claimed to be, its findings ought to be tested through experiment: apply them to reality and see if they worked. Marx had said that the social and political prescriptions derived from his theory had to be subjected to constant empirical testing to make sure that they coincided with the dictates of historical materialism. And just to be sure that everyone got the point, the authors of the article undergirded their argument with a slogan from Mao himself—the one they used as the article’s title.

They were, in short, using Mao’s own words to undermine the central Maoist postulate of the Cultural Revolution, namely, the idea that the imperative of “revolution” overrode all else, including professional expertise, scientific knowledge, or economic efficiency. To many Chinese, the article’s paean to pragmatism sounded like a healthy dose of common sense after years of hysteria. Yet this was exactly what the Whateverists did not want to allow. After all, during the Cultural Revolution, Mao and his adepts had followed a rather different principle: for them it was revolutionary zeal, directed against the entrenched establishment, that had become the decisive litmus test for the correctness of policy. It was this same mind-set that had led to the persecution of countless engineers, managers, scholars, and scientists on the grounds of insufficient “class consciousness”—with devastating consequences for the Chinese economy.

Prioritizing “practice,” as the authors of the new article demanded, thus represented an implicit challenge to those who considered themselves to be the keepers of the chairman’s flame. If this new argument won the day, unwavering loyalty to Maoist slogans would no longer be the deciding factor in career advancement or political struggle. Professional skill, managerial competence, or scholarly acumen would come to the forefront. Deng, who does not appear to have been directly involved in the publication of that article, was quick to see its uses in his reckoning with Hua. Since his return to the center of party life, Deng had already been putting a different Mao quote at the center of his speeches: “Seek truth from facts.” This, of course, was a dig at Hua and his adherents, who continued to stress that truth was whatever Mao had said it was. Among the things that Deng had learned from his long years of involvement in party intrigues was the importance of defining the terms of debate. He now set out to deploy his “good,” pragmatic Mao against the “bad,” doctrinaire one of the Cultural Revolutionaries. Would the party cling to the Mao celebrated by the Gang of Four, inflexible, rigid, and dogmatic? Or would Chinese Communists reach back to the earlier version of Mao that was now held up high by Deng and his friends—a Mao who had (allegedly) celebrated the virtues of practicality and sober realism?

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by | 16 December 2016 · 10:22 am

1979, A Turning Point

From Strange Rebels: 1979 and the Birth of the 21st Century, by Christian Caryl (Basic Books, 2014), Kindle Loc. 236-279:

These five stories—rich in event and grand personalities—would be worth telling in themselves. But do they really have that much to do with each other? Surely, Britain’s first female prime minister has nothing in common with Iranian Shiism’s leading militant cleric. And what could possibly unite the bishop of Rome, the budding Islamists of Afghanistan, and the leader of the Chinese Communist Party? The fact that they lived through the same historical inflection point, one might argue, does not mean that their stories are linked. Coincidence is not correlation.

In fact, though, they have much more in common than at first meets the eye. The forces unleashed in 1979 marked the beginning of the end of the great socialist utopias that had dominated so much of the twentieth century. These five stories—the Iranian Revolution, the start of the Afghan jihad, Thatcher’s election victory, the pope’s first Polish pilgrimage, and the launch of China’s economic reforms—deflected the course of history in a radically new direction. It was in 1979 that the twin forces of markets and religion, discounted for so long, came back with a vengeance.

Not all of the historical figures whose fates converged that year necessarily thought of themselves as conservatives, and none of them tried to turn back the clock to some hallowed status quo ante. This is precisely because they were all reacting, in their own ways, to a long period of revolutionary fervor that expressed itself in movements ranging from social democracy to Maoism—and it is striking that they were all variously denounced by their enemies on the Left as “reactionaries,” “obscurantists,” “feudalists,” “counterrevolutionaries,” or “capitalist roaders” who aimed above all to defy the march of progress.

There was a grain of truth to these accusations. The protagonists of 1979 were, in their own ways, participants in a great backlash against revolutionary overreach. Deng Xiaoping rejected the excesses of Mao’s Cultural Revolution in favor of pragmatic economic development—a move that, despite Deng’s disclaimers, entailed a gradual restoration of capitalist institutions. Khomeini’s vision of an Islamic state was fueled by his violent repudiation of the shah’s state-led modernization program (known as the “White Revolution”) as well as the Marxist ideas that dominated Iran’s powerful leftist opposition movements. (The shah, indeed, denounced the Shiite clerics as the “black reaction” in contrast to the “red reaction” of the Marxists.) Afghanistan’s Islamic insurgents took up arms against the Moscow-sponsored government in Kabul. John Paul II used Christian faith as the basis for a moral crusade against the godless materialism of the Soviet system. And Margaret Thatcher aimed to roll back the social democratic consensus that had taken hold in Great Britain after World War II.

At the same time, it was easy to underestimate just how much these leaders had actually absorbed from their opponents on the utopian Left. A conservative can be defined as someone who wants to defend or restore the old order; a counterrevolutionary, by contrast, is a conservative who has learned from the revolution. John Paul II, who had spent most of his adult life under the Communist system, knew the Marxist classics intimately and devoted considerable intellectual and pastoral effort to countering their arguments—knowledge that helped him to shape his program of moral and cultural resistance. (It also left him with an intense interest in the politics of the working class that informed his patronage of the Solidarity movement—as well as feeding a deep skepticism about Western-style capitalism.) Khomeini and his clerical allies appropriated Marxist rhetoric and ideas wherever they could, forging a new brand of religious militancy that railed against colonialism and inequality; socialist notions of nationalization and state management later played a large role in the Islamist government’s postrevolutionary economic policy. (One historian describes the resulting synthesis as “revolutionary traditionalism.”) Afghanistan’s jihadists borrowed from the Communist playbook by building revolutionary political parties and comprehensive ideological systems to go with them. Margaret Thatcher, who studied at Oxford when Marxism was the reigning political fashion, fused her conservative instincts with a most unconservative penchant for crusading rhetoric, ideological aggression, and programmatic litmus tests. It was precisely for this reason that many of the Conservative Party comrades-in-arms who accompanied her into government in 1979 questioned just how “conservative” she really was. As for Deng Xiaoping, he insisted on maintaining the institutional supremacy of the Communist Party even as he charted a course away from central planning and toward state capitalism. Cold War historian Odd Arne Westad describes Deng’s reform program as “a counterrevolution in economics and political orientation the likes of which the world had never seen.”

It was entirely in keeping with this spirit that Thatcher proudly reported to a Conservative Party rally in April 1979 that her political opponents had dubbed her a reactionary. “Well,” she declared, “there’s a lot to react against!” It was, indeed, precisely this peculiar spirit of defiance that gave the year its transformative power. The decisions of these leaders decisively defined the world in which we live—one in which communist and socialist thought has faded, markets dominate economic thinking, and politicized religion looms large. Like it or not, we of the twenty-first century still live in the shadow of 1979.

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by | 3 December 2016 · 8:23 am

British–German Army Rental Contracts, 1776

From Hessians: Mercenaries, Rebels, and the War for British North America, by Brady J. Crytzer (Westholme, 2015), Kindle Loc. 326-348:

By January 1776 the British Empire had drafted agreements with five separate German princes including the regional powerhouse of Hesse-Cassel and its sister state of Hesse-Hanau. Along with these treaties there were also signed agreements with Brunswick-Wolfenbüttel, Anspach-Beyreuth, and the Principality of Waldeck. Later in 1777 the empire would ultimately settle terms with the relatively minor state of Anhalt-Zerbst, bringing their final treaty count to six separate German entities. Although these states would all furnish armies to sail to America and fight George Washington’s Continental Army, like all things in the Holy Roman Empire not all were equal in their contribution. The Landgrave of Hesse-Cassel Frederick II supplied the single largest armed force, 16,992 men, for a total sum of £2,959,800. The Duke of Brunswick provided 5,723 souls for £750,000, and Hesse-Hanau lent 2,422 men for £343,000. Margrave Karl Alexander of Anspach-Bayreuth sent 2,353 men, and signing over the least amount of soldiers were Prince Frederick of Waldeck at 1,225 and Prince Frederick Augustus of Anhalt-Zerbst at 1,160 for £109,120.

The treaties originally signed with the six individual German princes differed from each other in specifics, but all effectively offered the same general terms. The armies were “rented” for a term of six, seven, or eight years and the agreed-upon subsidy would go directly to the landgrave, duke, or margrave who ratified the treaty. The individual soldiers forced to serve in North America would receive none of those funds, but would be paid by the British Empire at roughly the same rate that they would pay their own regular soldiers. While the treaties were agreed upon in principle there were still small line items to be negotiated. One such point of contention was that some of the German princes demanded that London pay the soldiers’ salaries to the princes directly; British administrators balked at this assertion as they were almost certain that the dishonest German rulers would simply pocket the money for themselves. Another issue was the inevitable matter of wartime casualties, in which the British offered to reimburse the states for each man lost. Perhaps the most startling development, though, came from the inclusion of a contracted casualty reimbursement; for every man killed or wounded their prince would be additionally compensated in turn. The German soldier traveled to the New World knowing that he was, quite literally, worth more dead than alive.

By the winter of 1776 the British Empire had contracted nearly eighteen thousand German soldiers to travel to North America and suppress the growing revolt that was stirring in the Atlantic colonies. Of those men over half were provided by Hesse-Cassel, therefore the term “Hessian” would be generically applied to all German auxiliaries employed in the New World. For the unlucky soldier commanded by his feudal lord to travel across the sea and battle the American rebels there was little hope; they were doomed to fight a rebellion for which they stood to gain nothing.

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Filed under Britain, economics, Germany, labor, migration, military, nationalism, North America, war

by | 2 December 2016 · 3:52 pm

Europe’s Rent-an-Army Era after 1763

From Hessians: Mercenaries, Rebels, and the War for British North America, by Brady J. Crytzer (Westholme, 2015), Kindle Loc. 280-95:

The close of the Seven Years’ War saw a great reshuffling of Europe’s imperial hierarchy, and with each great power attempting to reestablish itself within the new geopolitical order. The 1763 Peace of Paris established the northern kingdom of Prussia as the supreme German state in the region and its ruler Frederick the Great proved to be a magnetic and respected enlightened politician. To the south Prussia was challenged for regional superiority only by the long-standing European power broker of Austria.

As Prussia and Austria gained prominence in central Europe in the wake of the postwar reorganization, the smaller polities began to do whatever was necessary to maintain relevance in an ever changing world. For those left out of the Austro-Prussian sphere of influence, there were few ways to remain competitive in the international arena. There were few natural resources to sell on the open market and because of their tiny territorial possessions, few found realistic opportunities to expand their wealth. While they lacked the commodities typically associated with increased revenue through wider economic pursuits, it seemed the only true domestic product that many of the smaller states of the Holy Roman Empire had to offer were the people themselves. With a large population held in subjugation due to an adherence to a dying feudal system, many regional German rulers began exploring new ways to turn their otherwise shrinking revenue streams into hefty channels of profit. Their means of doing so became known as Soldatenhandel, or the soldier trade. Typically speaking, the small states of the German empire, like Hesse-Cassel, bolstered their army’s numbers through either conscription or hiring mercenaries themselves, but few ever considered actually renting their armies to outside powers. When it was discovered that there was a market for such an unusual practice as Soldatenhandel, the kings and lords of the German countryside began to dramatically increase their draft totals. By 1776 in the simplest terms the otherwise insignificant German states made themselves relevant to the great powers of Europe by offering their own citizens to the highest bidder.

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Filed under Austria, Britain, economics, France, Germany, labor, military, war