Friday, April 20, 2012

back in the cccp

You don't know how lucky you be, boy.

Today, as promised, I want to take up the subject of how the Soviet Union went out of business and became Russia again, with a few geographical revisions. You'll be glad to know it's not a long or complicated tale.

First of all, if you're American you probably know that St. Ronald, by spending unprecedented amounts of cash on the preparations for war he called "defense," including billions for a missile shield he called "Star Wars" (later renamed "Strategic Defense Initiative or SDI), economically overpowered the poor old CCCP to where they were unable to maintain the weaponry of a superpower. Reagan forced them to relinquish their superpower status and, eventually, their government. Problem is, if that's is as much as you know about this chapter of history, then everything you know is wrong.

The real story of the Soviet Union's collapse has been told in the US, but gets little attention, since it doesn't support Americans' desire to feel exceptionally strong and to canonize Reagan at the same time. It's told by one of the world's premiere energy experts, professor emeritus of geology Kenneth Deffyes of Princeton in his 2005 book "Beyond Oil: The View from Hubbert's Peak."

Deffyes writes, "At that time, Soviet oil production was larger than Saudi production by a factor of three, but Saudi Aramco (the state-owned oil company) had much lower production costs. Saudi Aramco resorted to a familiar tactic: a price war. They flooded the world with oil and drove the world price of crude oil below the Soviet cost of production and transportation."

It was the hard currency from oil profits that enabled the Soviet Union to produce the consumer goods necessary for a functioning modern-day society. Six years into the price war, the country collapsed from lack of money. Essentially, the Soviet Union defaulted on its social contract to provide citizens with everything from shoes to shoelaces.

It wasn't Saint Ronald Reagan who demolished the Soviet Union, but the ghost of old John D. Rockefeller, channeled through the Saudi royals and obsessed as always with destroying the competition.


WhitneyT said...

I have read that it was their ongoing war in Afghanistan that finished off the USSR.
After reading your notes, I wonder if Saudi Arabia undercut them to get them out of the Middle East.

Dave B, a.k.a. catboxer said...

LP, that might have been a factor, and the Sauidis already hated the Russians.

Russia was the biggest producer at the time, so I think the Saudis were mostly acting out that old capitalist killer instinct.

The competition is the enemy.