EVIDENT EVIDENCE: Keywords: Communism in America, Lenin, Stalin, October Revolution, Mao Zedong, ROC in Taiwan, The PRC Peoples Republic of China, Economic Freedom Index, Franklin D. Roosevelt, Winston Churchill, Yalta Conference, West Germany and East Germany, Ludwig Erhard, Price Controls, Keynes, Marcuse, Samuelson. TSMC and Morris Chang.

 

Modern Taipei, capital of the Republic of China in Taiwan

EVIDENT EVIDENCE

A Meditation about the New Rise of Communism in America

By Xuan Quen Santos

At the end of World War II (1945), millions of socialists around the world were confronted by events that became too numerous, too gross and too visible to hide, deny or spin. At the same time, two living laboratories became the most devastating proof that their political and economic system (Marxism-socialism-communism) would not work, even without revolution or violent opposition. One was in the center of Europe and the other in the Asian Pacific.

THE NAKED TRUTH CAME OUT

The truth about the October Revolution’s government of the former Russian Empire was exposed, even if decades late. Stalin’s Soviet Union, an ally in victory during WW II, was a worse totalitarian regime than Hitler’s. Every crime against humanity the German National Socialists had committed, the Soviets had tripled, only to be surpassed shortly after by communist China, their main ally in Asia. Germany surrendered in May, and Imperial Japan in September. Despite the victory of the Grand Alliance (made again possible with the mighty economic power and determination of the free people of the United States of America), the re-arranged map showed a lop-sided monumental victory for the Soviet Union and China, the new communist super-powers.

The Soviet state promoted itself as the leader of a future world order, and its international agenda for exporting terrorism was developed from the start. In 1916, Lenin wrote “the aim of socialism is not only to abolish the present division of mankind into small states and all-national isolation, not only to bring the nations closer to each other, but to merge them”. After all, Marx’s Communist Manifesto (1848) begins with the phrase “Workers of the World, Unite!”. In German Ideology (1845), Marx and Engels defined “the proletariat” as the “expression of the dissolution of all classes, nationalities, etc. within the present society”. In 1922, the USSR imposed a treaty on Ukraine, Belarus and Transcaucasia (Today’s Georgia, Armenia and Azerbaijan) that formed the Union of Soviet Socialist Republics (USSR). At the end of WW II, it had enlarged the dominion controlled by the Communist Party to the Baltic countries, Polland, the remnants of the Austro-Hungarian Empire and half of Germany with half of Berlin. This de-facto annexation became known as Eastern Europe. The COMINTERN, The Communist International, then based in Moscow, had a clear vision of the future it pretended to shape. When a feeble and dying FDR and the aging and alcoholic Churchill faced Stalin in full strength in Yalta, they were too anxious to conclude the peace and gave away the victory of the west.

The 1945 Yalta (USSR) Conference that divided Europe.
FDR died a few months after. Churchill was an aged 71.

Compare the maps. What about the “other allies”? They had already been defeated when the US entered the war. If anything, the US was able to stop the war before the Soviets went all the way to Spain. The European former powers were broke, and some of them had suffered extensive destruction. Their currencies were worthless and inflation was rampant. Almost immediately, they began to shed their remaining colonies. The COMINTERN had been ready. Almost every country in Africa and Asia that obtained its independence after the war was taken over by a Marxist inspired regime, not in a totally peaceful way. France shed Indochine (Vietnam, Cambodia, Laos), Algeria, Tunisia, and Morocco. Belgium shed Congo, Rwanda and Burundi. Holland lost Indonesia, Surinam and six Caribbean islands. Denmark lost Iceland. Italy could not hold on to Libya, Somalia, Eritrea and Ethiopia. The UK lost India (Pakistan and Bangladesh, Burma), Cyprus, Malta and Cameroon. Eventually lost Hong Kong. But through the Commonwealth, Canada, Australia and New Zealand remained close and are quasi-independent today. The list is longer, but the conclusion is easy to grasp. The global reach (power) of the “other allies” was greatly diminished.

THE NEW ORDER TAKES SHAPE

The United States understood this process and its risks. The Cold War was hot in a different way from the start. War would continue against the former ally, the enlarged Soviet Union. Europe was not ready besides being broke. The truth is that most countries had already embraced different versions of the “middle-way” socialism to hide the truth. They still are. Two American initiatives took form and had lasting results. The Marshall Plan financed the reconstruction of the European allies in proportion to the damage suffered, and it included the new country of West Germany that was occupied by the western allies, really by the United States. The other initiative was NATO; the North Atlantic Treaty Organization was designed specifically as protection from the Soviet Union. As NATO has been tested, it was evident they had ceased to be “equal partners”.

The horrors committed by the Marxist-socialist-communist regime of the Soviet Union and Red China from 1920 to 1950 were buried by a misguided “respect, maybe even gratitude” by the western allies for their participation in the defeat of the German National Socialists. The socialist underground in the west felt vindicated, but many began to admit the truth. The public was occupied by the attention paid, rightly so, to the Holocaust and the post-WW II Nurenberg Trials, aided by the massive propaganda coverup the Soviets financed around the world, supported by the international networks of underground communist parties, local cells and the so called “liberal” media that masks their true color.

The reality of what communism inevitably becomes was evident. Socialist, communist, and labor movements around the world split into three branches. The honest intellectuals began to separate and eventually changed their convictions knowing they would be shunned and even persecuted. The faithful zealots dug in and continued to create the conditions for revolution around the world, following the directives of the COMINTERN. National Liberation Movements were a favorite name of the guerrilla movements that sprang all over the world. The third group, greatly led by tenured Marxist intellectuals, barricaded in the faculty clubs. In their minds, the professors made the distinction between what Lenin and Stalin had unleashed, and a still attainable workers’ paradise that needed different leaders and a revised theory.

The best examples of this last group were the Old England Fabians (Lords Keynes and Russell), the New England Ivy Leaguers (Schumpeter, Samuelson and Galbraith), and Herbert Marcuse’s Frankfurt School of Critical Theory that escaped Germany before the war broke. The German communists re-branded at Columbia University as the Institute for Social Research. Their first book aimed at the non-academic public was “Critical Theory”. A give away about their true color was their choice to re-establish their old institute after the war in East Germany, controlled by the Soviets, but only after having poisoned the minds of an entire generation that is now teaching. Many historians have pointed to Marcuse as the “father of the 60s socialism”.

The first group of former communists that saw the truth mostly disappeared in history, shunned and forgotten, trying to make a living. The second and third groups, the hardliners that believe in violence and the obstinate and conceited professors, have totally ignored what the two living labs exposed to the world.

WEST GERMANY VS EAST GERMANY

The European lab was the post-war divided Germany. As West Germany rebuilt and succeeded by liberating its people to create the “economic miracle”, Soviet controlled East Germany remained in ruins and depression for four more decades. Reconstruction only began after the collapse of the Soviet Union in 1992. Ludwig Erhard, former Chancellor and Minister of the Economy had been Director of Reconstruction during the ally occupation. He clearly points to his sound-money and free-market policies for his success. West Germany was the only recipient of Marshall Plan assistance that quickly came out of the post-war economic crisis. The others kept their war-management socialism that eventually became permanent. Success was not due to the Marshall Plan designed by the Harvard professors.

Vintage cartoon comparing West Germany with East Germany during the occupation

The National Archives describe the origin of the Marshall Plan: “On April 3, 1948, President Truman signed the Economic Recovery Act of 1948. It became known as the Marshall Plan, named for Secretary of State George Marshall, who in 1947 proposed that the United States provide economic assistance to restore the economic infrastructure of postwar Europe.”  The plan distributed assistance towards the reconstruction in the amount of $ 13.6 billion. The sixteen Marshall Plan beneficiary countries in order of the funds received were the United Kingdom (25%), France (21%), Italy (12%), Netherlands-Belgium-Luxemburg (12%), West Germany (11%), Austria (5%), and Greece (5%). The remaining 9% included Iceland, Ireland, Norway, Portugal, Sweden, Switzerland, Turkey, and Denmark. The central European and Balkan countries, as well as East Germany were excluded, except for Austria, as they became occupied by the Soviet Union. Switzerland and Portugal had remained neutral, and Spain, although assisted by Axis powers before the war, had undergone a civil war that reversed a communist takeover.

It should be obvious that in 1948, the country that had suffered the most destruction was Germany. Its territory and its capital, Berlin, were cut in half, making its reconstruction more challenging. At the end of WW II, West Germany was occupied by three different bureaucratic armies, and in the early years, it had to absorb a flood of 12 million refugees from East Germany that were escaping from the communism they knew would come. In 1948, the industrial production was only half of what had been in 1936 before the war. The inflation rate in the final months of the war had reduced the value of the NAZI Reichsmark from 2.50 ℛ︁ℳ︁ = $1US to 10 ℛ︁ℳ︁ = $1US. The National Socialist regime had imposed strict price controls and rationing. This had generated scarcity and an active black market that operated by barter. Unfortunately, after the defeat of the National Socialist government, the occupying Allied forces that had defeated Hitler imposed their own form of centrally directed economy by maintaining Hitler´s price and wage controls. Money was worthless, and Hershey chocolate bars and American packs of cigarettes operated as a more efficient form of money.

Ludwig Erhard, champion of the free market

Ten years later, by 1958, an astonished Europe and a more astonished United States occupying administration, witnessed the headlines: An Economic Miracle in West Germany. Of course, the Harvard designers of the Keynesian Marshall Plan take the credit, and so does the official history of the U. S. Government. Common sense requires the answers to other questions. How come the other countries did not progress at the same pace? How come the most destroyed economy that received less money than others succeeded? Don’t ask them. That is why it has been called a miracle, so you don’t ask the questions. Enough time has passed so that the questions that were already answered can be made public. They are no secret. They are just discreetly archived.

A German resistance group that had not been eliminated by the National Socialists included Ludwig Erhard. He was part of the group of businessmen, intellectuals and other notable economists and legal scholars who shared a vision of a free market economy. He was educated at the University of Frankfurt and had been a disciple of the free market economist Wilhelm Roepke. Erhard wrote drafts of a plan that fell in the hands of the high allied command. The rest is history, but not well known. Erhard was called in to interview with General Lucius D. Clay, the Allied commander and Deputy Governor of Germany and ended up in charge as Director of Economics of the occupied zone. His first assignment was to oversee monetary reform and implement the Marshall Plan.

This is the short story as told by Erhard in private among friends in Guatemala and in London, and perhaps other places. Erhard was confronted with a dilemma. He could attempt to implement the Keynesian Marshall Plan devised in Harvard with the central controls already in place that existed from Hitler’s regime that the allies had tried to continue to drive, or to liberate the economy. He had proposed many changes to the Marshall Plan, but to no avail, until General Clay told him: “You are not authorized to make changes nor I to approve them. But you can trash it. You have the power to implement your plan.” Erhard went ahead and trashed the Marshall Plan, a decision that resulted in the German Economic Miracle. When General Clay informed Erhard that all the American and English economic experts were opposed and greatly concerned about the consequences of eliminating all wage and price controls, Erhard replied, “So are mine.” Americans today have forgotten that “the war effort” created domestically the same type of government controls over the economy that Hitler had imposed in Germany.

A complete description, of course more diplomatic and documented, can be found in his best seller “Prosperity Through Competition: The Economics of the German Miracle” (1958). Erhard went on to be appointed as Minister of the Economy during Konrad Adenauer’s government and was elected Chancellor in 1963.

The black market disappeared overnight. Free prices
and stable currency gave enough security for the economy to re-start

Erhard knew that two key free market policies needed to be implemented immediately: a new monetary system and the elimination of all wage and price controls. He did it overnight, on a Sunday in June, when the bureaucrats were not able to blink. “The black market suddenly disappeared. Shop windows were full of goods, factory chimneys were smoking, and the streets swarmed with trucks. Everywhere the noise of new buildings going up replaced the deadly silence of the ruins. If the state of recovery was a surprise, its swiftness was even more so.”

“In all sectors of economic life, it began as the clock struck on the day of the currency reform. Shops filled up with goods from one day to the next; the factories began to work. On the eve of currency reform, the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later, they thought of nothing but producing them. One day apathy was mirrored on their faces, while on the next the nation looked hopefully into the future.”

“This measure of the undisputed success of the policy demonstrates how much more sensible it is to concentrate all available energies on increasing the nation’s wealth rather that to squabble over the distribution of this wealth and thus be sidetracked from the fruitful path of increasing the national income. It is considerable easier to allow everyone a larger slice out of a bigger cake than to gain anything by discussing the division of a smaller cake.”

Erhard definitely was what, two decades later, was described as a “supply-side economist”, fully aware that the Say’s Law of The Market is a law of nature, a law that economic science recognizes as its fundamental principle. Under the guidance of free market policies and a new federal system, Germany led the growth of Europe for several decades, until the supra-national socialist policies of the newly expanded European Union began to “manage” the economy with “middle-way” socialist ideals. Germany is now trending backwards, losing population and de-industrializing. The Europeans did not see the success of their own experiment. By the end of the Soviet Union, most European countries had not dismantled the “war-effort” policies established in the 1930s. Prime Minister Margaret Thatcher was the leader in that effort in the 1980s but did not last long.

THE R.O.C. IN TAIWAN VS RED CHINA

In Asia, the living lab was The Republic of China in Taiwan by gradually abandoning the centralized economy brought from China by the National Socialist Kuomintang for an enterprising market economy geared to international trade while becoming a free-elections state. In three generations joined the first world by becoming an international economy on a small island that had been a colony of Portugal (Formosa), Spain, Holland, Imperial China and Japan. Today, Taiwan’s economic and technological development is at the forefront of the semi-conductor and hardware production and an integral part of the AI revolution.

The Japanese army parades in Taipei in 1895, after taking it over as a colony

Taiwan’s success put Mao Zedong’s People’s Republic of China to shame. Red China caused at the same time one of the most disguised human disasters resulting from the collectivization of farmland. Between 1959 and 1961, 30 million mainland Chinese people died of starvation. The communist regime called this period “The Three Years of Natural Disasters”. After Mao’s death, the new leadership seemed open to abandoning communism. Red China had a second thorn in what had been the colonial enclave of Hong Kong. To recover sovereignty over the territory from Grean Britain, Deng Xiaoping formulated in 1980 the policy of “One China, Two systems”. What made modern China since then has been the “other system” besides communism. By reneging of the Hong Kong accord to self-rule and the election of the current totalitarian dictator Xi Jinping, the Peoples’ Republic of China put the modernization button in “pause”. A successful “Fair free-trade” with the US could lead to a re-start, but it would not last until the present form of total control of the labor market is freed. In effect, Red China’s economy is a disguised form of slavery without chains, where most of the value produced by labor is confiscated by the communist party.

Modern Taipei, one of the most modern and beautiful cities in Asia

Once Taiwan abandoned the policies brought from China, during the period of export-oriented industrialization from the 1960s to the 1990s, it experienced rapid economic development. From a poor and backward agricultural society, it became a modern industrialized, high-income economy. It was so obvious that the phrase of success given to Erhard’s West Germany recovery soon was repeated as the Taiwan’s Economic Miracle. Taiwan has a highly developed free-market economy. Despite its small size, it is the 22nd-largest in the world by nominal GDP and 20th-largest by purchasing power parity. Its GDP per capita ranks highly at 8th in the world. Its Per Capita Income is above $ 85,000 per year. As a comparison, the PCI of the USA is just above $ 89,000.

The latest report of the Heritage Foundation’s 2026 Index of Economic Freedom ranks Taiwan as No. 5 in the world. As a reference, the USA has been dropping below 20 for three decades. Taiwan is ranked 3rd out of 39 countries in the Asia-Pacific region. The country’s economic freedom score is higher than the world and regional averages. Red China occupies the 150^th place out of 184 countries included in the Index.

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THE MIRACLE RECIPE EXPANDS ITS INFLUENCE

In Asia, other thorns began to prick China. Japan and South Korea contraposed to China’s surrogate North Korea. Not only did they rebuild, but became driven by international trade and began to move towards more open electoral political systems. Singapore followed and received all the talent and capital fleeing the takeover of Hong Kong. More recently, Malaysia, Indonesia, Thailand and even Viet-Nam are moving towards “the other system” with a careful management of their relationship with the neighboring giant Panda. Time will tell how far they can go if Red China stalls. The Asian Pacific countries seemed to have understood the MIRACLE LESSON better that Old Europe.

The Korean Peninsula. North Korea above. Satellite photographs.
North Korea at night has no electrical power. South Korea beams nightlife and productivity 24/7

FREEDOM WORKS

As a proposed theory, Marxism failed in its fundamental predictions. Predictability is a requisite of any explanation that claims to be a theory. The industrial age did not implode. The working classes did not get impoverished; an unpredicted “middle-class” appeared. Industrial innovation increased productivity and created new jobs and occupations as the old trades and guilds vanished. Consumer products at ever lower prices began to appear. It was because women obtained independence through new employment opportunities they earned their path to their enfranchising as voters.

Revolution never happened spontaneously. It never would. It never does. Freedom works. The living experiments of the two Germanies and the two Chinas should be highlighted as the most evident evidence of the failure of socialism regardless of the mask is hiding under.

BOOKS TO EXPAND ON THIS TOPIC:

Now available at AMAZON and other online bookstores, in paperback and Kindle

A treatise on communism, its roots and its current status around the world. Provides all the answers needed to answer the current questions about the new rise of communism in the United States. Chapters on the totalitarian roots of radical Islam and the current situation in China. Marxism is dead, but not buried yet. The last holdout of Marxist devotees are the formerly respectable American colleges. Guess where the daughter of Xi is going to school: Harvard. Guess where DEI spread from: Harvard.

A treatise on Inflation. What the Bible teaches about inflation. The errors in economic theory that have turned a destructive evil into "monetary policy". The errors of Keynes and the Federal Reserve. The original proposal of Lenin to destroy capitalism quickly was kept a secret until recently. Keynes knew about it. The new Secretary of the Treasury, and the recently appointed Chairman of the Federal Reserve know what needs to be done. Follow the Constitutional directive on monetary policy and abandon the absurd "dual mandate" that is a socialist fiction.