Game Theory #8: Communist Specter

The 20th century was defined by the Cold War, an ideological struggle between capitalism and communism. For the longest time, we believed that capitalism and communism were polar opposites—a dialectic, a black and white. But if that is the case, then how do we explain China?

For the longest time, China was a communist country. Then, in the 1980s, it started to reform, and now China is very much a capitalist country. This transition has been seamless; there hasn't been much conflict. This is not true historically, where transitions have been very violent. Think of the transition from feudalism to capitalism; that was a very violent process. Think of the process from Catholic Europe into Protestant Europe; that was also a very violent process. But in China, communism transitioned into capitalism pretty easily, pretty quickly, and extremely successfully.

Today, you could say that China is a capitalist country with some communist elements, but it's very much capitalistic. The question then is, if these two ideologies are such polar opposites, how did this happen in China? What I want to show you is that this is actually a false dialectic. Communism and capitalism are actually more similar than they are different. In fact, in many ways, communism is a creation of capitalism—a weapon to destroy capitalism's major enemies.

Communism is not really the enemy of capitalism. The real enemies of capitalism are different ideologies.

Capitalism's True Enemies

If you think about it, the enemy of capitalism is not communism. It's these four other things.

• Monarchy: The idea of monarchy is that rather than power being in the hands of a capitalist, power is in the hand of the king. A king often redistributes capital in a way that is more fair. For example, when a king first comes into power, he often cancels all debts and redistributes the land, which is why he's so popular. Capitalists are afraid of kings because a king will often redistribute property.
• Religion (or Theocracy): All religions teach you that money is evil. God doesn't want you to make money; God wants you to be kind to others, to love your children, to be a nice person. That's why in Catholic Europe, they were so poor—because people were more focused on redemption and salvation than they were on making money. Theocracy is a major enemy of capitalism.
• Nationalism: Nationalism is the idea of loyalty to your people, loyalty to your nation. For capitalism, that's a problem because capitalism wants to be loyal to capital, and it wants capital to flow across borders. If I see an investment opportunity in China, I want to take my money from America and put it into China. I don't want to worry about, "Oh, China's my enemy. China is not my people." Nationalism is a major problem.
• Democracy: Believe it or not, capitalists hate democracy. Why? Because if people had power—if the workers had power—they would all get together and vote to redistribute wealth and make the rich pay more taxes. We call this socialism.

How Communism Serves Capitalism

Communism is working with capitalism to destroy all four of these things.

Let's look at monarchy. Communism does not allow for monarchs to arise; it allows for a party to arise. What is a party? A party is an oligarchy, which is a capitalist system.

Now, theocracy. What does Marx say? Marx says that religion is the opium of the people. Religion is the great evil of the world; it creates false consciousness. Therefore, we must destroy all religion. If religion is destroyed, what is left? The only thing that is left is money.

Next, nationalism. Communism is international. "Workers of the world, unite!" So, nationalism is also bad. We want to unite as a world. All workers unite; class consciousness is more important than national identity.

Finally, democracy. No, this is bad too. Workers cannot defend their rights because they have false consciousness. Workers have been brainwashed by the capitalists in school, in the media, by the internet, by Hollywood. Therefore, a vanguard—the party—must lead the people into socialism.

It's really convenient how capitalism and communism have similar enemies, and communism helps destroy all four enemies in a way that capitalism cannot. You could make the argument that maybe communism was a weapon, or a virus, created by capitalism to conquer the world—to destroy the world so that capitalism can spread.

China is an example of this. Think about the Cultural Revolution that destroyed religion, tradition, and cultural identity. What happened after the Cultural Revolution? China became capitalist, and it became hyper-capitalistic. China had the fastest economic growth rate in the world. How did that happen?

The Strange Case of Karl Marx

Let us now think about Karl Marx, the founder of communism. The history of Karl Marx is really, really strange.

For example, he was a German citizen, but he spent all his time in Britain. He was exiled from Germany because he advocated for world revolution, so he went to Britain. But Britain is also a capitalistic country. Why was he allowed to do whatever he wanted in Britain? He wrote most of his works in a British library in the British Museum. Why did the British authorities allow him to do that? Britain was the most capitalist country in the world in the 19th century, and it basically allowed Marx to live there and do whatever he wanted. That's strange.

Number two: Where did Karl Marx get his money from? His wife was a German aristocrat, so she was used to luxury. But Karl Marx never made any money in his life. If he writes these works, the Communist Manifesto or Das Kapital, no one's going to read them. They don't sell. He was not a wealthy person, but we know for a fact that he lived a very good life. He wasn't an aristocrat, but he was middle class. His kids went to private school, and they had a nice house in Britain.

So the question is, where did he get his money from? They say he got his money from his partner, Friedrich Engels. And where did Friedrich Engels get his money from? His father was a capitalist, an industrialist. So here's a question for you: Why would his father, who was a very wealthy person, give Engels a lot of money to give to Marx, when Marx was calling for a world revolution to destroy the capitalists? Why would they do that?

The third thing is that at this time, socialism was the most dominant ideology. The idea of socialism is that it will evolve naturally. But Marx said, "No, no, no. We cannot allow it to evolve naturally. It will not evolve naturally. We need a revolution. We need a world revolution." Why would he say this?

Socialism vs. Communism: A Deliberate Confusion

Let's look at what socialism is, and then let's look at what communism is.

The idea of socialism is pretty simple. Before, you had a feudal society, and then it became industrial. Because it becomes industrial, you have lots and lots of workers, and you have capitalists. The problem is that capitalism exploits labor and makes people very unhappy, so the workers want change. For the industrialists, the problem is that capital consolidates. Maybe you have a thousand capitalists to start, but then maybe ten will take over all the money and all the means of production. Then maybe one. Because that's how capitalism works, it consolidates, which means that eventually, the capitalists will turn against capitalism as well.

Because of democracy, people can vote. They can then together affect political change, and this will lead to socialism. What is socialism? Socialism is just a redistribution of wealth.

For the sake of simplicity, let's say there are three classes: the rich, the middle class, and the poor. All redistribution is doing is taking money from the rich and giving it to the poor. Because of this, the middle class improves in status and power. The poor want this system because they have more money and equality, but the people who really want this system are the middle class because it means that over time, they have more power and status than the rich. This is a pretty powerful coalition. That's why socialists believe that over time, this is just a natural evolution. This is true for most of human history. After World War II, Europe didn't become communist or capitalist; it became socialist. It had a very strong welfare system. In the natural course of human history, socialism will become inevitable because it represents a majority of people.

But Marx had problems with this. He said the major problem is false consciousness. You think that this is a natural process, but capitalists, the ruling elite, have a lot of tricks up their sleeves. They can brainwash the workers. For socialism to work out, you need to create true consciousness. You need to destroy religion, revamp the education system, and control the media. Otherwise, the capitalists will use schools, media, and religion to brainwash the workers. Also, these workers need to unite across the world to have true power because the real struggle is one of class consciousness.

For socialism to arise, we need to destroy class. The idea of the middle class obtaining power is bad. What we should have is just everyone the same: equality. And that's the idea of Marxism: to destroy all property. That's the main difference between socialism and communism. Socialism is the redistribution of property; communism is the destruction of property. But if you do it this way, the middle class now loses status. It's both the rich and the middle class that suffer under communism, and therefore they will probably unite against the poor.

It sounds similar, socialism and communism, but it's night and day. Socialism seems like the natural evolution of things. So why is Marx screwing around with this? He also says you need a party, a vanguard, an elite to destroy the false consciousness, unite the workers, and create a communist society. And when they do that, when the system is completely communist, then the party will give up power, and you will have a socialist paradise.

But then the question is, why would the party give up power? If the party is capable of creating consciousness, why don't they just switch to a different false consciousness? The problem with Marx is that he's working on socialism and making it more extreme and more confusing. Why would he do that?

My argument to you is that when an idea becomes more extreme, the intention is to discredit it, to make it illegitimate, to destroy the idea. According to game theory, the people responsible for communism are not Marx. The people responsible for communism are the capitalists, the ruling elite, because they want to destroy the idea of socialism. They don't want this unity between the middle class and the workers. They want the middle class to remain with the nobility and the oligarchy.

The Historical Context: The 1848 Revolutions

In the feudal economy, you have the monarch and the nobility. They have power through three mechanisms: they control the land, the military, and religion. This is the status quo. The peasants are the people who work the land. This was true for most of Catholic Europe.

But then, with the rise of industrialism, new people come into power. You have the bourgeoisie, who are just the capitalists, the factory owners. Because of the bourgeoisie, you now have the workers. And because of this industrial economy, you have the middle class—lawyers, teachers, accountants, journalists, people who support the industrial economy.

When new groups of people emerge, you have tension and violence. This is ultimately what led to the French Revolution, where the new order—these people—worked together to try to overthrow the old order. This led to the Napoleonic Wars, seven wars fought between France and everyone else, leading to the deaths of tens of millions of people in Europe.

After Napoleon was defeated, the leaders and nobility of Europe got together and decided that from now on, they would no longer fight wars. They created something called the Concert of Europe, where different monarchies agreed to resolve their differences through negotiations rather than on the battlefield. Think of it as a United Nations. It worked really well—too well, because you're not resolving the conflict between the new order and the old order. The old order wants to maintain the status quo, but the industrial economy wants a new order that allows for democracy, liberalism, and socialism—a greater redistribution of wealth, greater participation in the political system, and limitations on religion. Basically, the French Revolution.

This system was created to avoid the French Revolution, but because of peace, the ingredients for another one were increasing. This led to the 1848 Revolutions.

This happened throughout the entirety of Europe. In each place, there was an uprising—a combination of the bourgeoisie, middle class, and workers who called for changes in government. Some places were violent, some peaceful. Some focused more on democracy, some on liberalism, some on socialism. The only place in Europe that was basically spared these revolutions was England, because England has colonies. If you're not happy, you can go somewhere else, like Canada, the United States, Australia, or New Zealand. But everyone else was stuck where they were, fighting for more rights.

This put the fear of God into the European nobility. For the longest time, they had maintained peace, but now the bourgeoisie, the industrialists, the capitalists, wanted to overthrow the regime. After 1848, the leaders of Europe recognized that if they didn't do anything, the new order of the bourgeoisie, middle class, and workers would consume them.

Their solution was to divide them. Before, the conflicts were about power, status, and religion. The first idea was to create the idea that the real conflict is class. The real enemy is not between the nobility and the bourgeoisie; the real enemy is between the bourgeoisie and the workers. This is the real conflict.

Second, they had to discredit these people and make this movement seem extreme, fanatical, and zealous. You do that by saying, "No property." What we want is not a welfare society; what we want is a completely equal society where no one has any money, rights, or freedom. Communism.

The third way you delegitimize it is to say that this is an international conspiracy of Jews. These communists are in a secret society that wants to take over the entire world. It's not that these workers just want more rights. No, these workers are tools in an actual conspiracy to conquer the entire world. They are funded by Jews, by capitalists, by the British. Who cares? But they're not Germans. They're not French. They're not us.

Communism was a psyop, a tool used by the elite and the nobility to make the movement of democracy, socialism, and liberalism illegitimate. This is propaganda.

The Communist Manifesto: An Agenda for Whom?

Karl Marx and Friedrich Engels wrote the Communist Manifesto after the 1848 revolutions because they were absolutely convinced that Europe was ready for a global revolution. This was their agenda, and it was also a secret document because at this time, the communists were a secret society all around Europe. I would argue that this was probably being funded by the nobility.

It calls for the abolition of all property. That's pretty extreme. Remember, the middle class wants to support socialism, but it cannot support communism. Socialism is just a redistribution of wealth; communism is the abolition of wealth. Two different things.

Here are some of its points:

• Abolition of all property.
• Abolition of all inheritance. (If you're middle class, you've worked hard to make money and want to give it to your children. Now you can't.)
• Centralization of credit in the hands of the state by means of a national bank. (This sounds extreme, but they already do this in capitalism. It's called the Bank of England, where all wealth from around the world is stored. A centralized bank in a communist system is the same thing.)
• Centralization of the means of communication. (A party. This is just the capitalist class, an oligarchy. Does it really matter if it's an oligarchy or a party? It's the same thing.)
• Extension of factories and instruments of production owned by the state.
• Combination of agriculture with manufacturing industries. (This is the idea of creating a proletariat. This is what capitalists want. At this time, most of the world is agricultural and feudal, and this calls for the creation of a manufacturing, industrial economy. That's what capitalists want because that way they can better exploit people.)
• Free education for all children. (You might think, "Oh, that's great, free schooling." No, it's not, because now you can brainwash them. This is brainwashing.)

If I'm a capitalist, I'm okay with this agenda. I'm happy with this agenda. What's wrong with it?

The Manifesto says:

When, in the course of development, class distinctions have disappeared, and all production has been concentrated in the hands of a vast association of the whole nation, the public power will lose its political character... If the proletariat during its contest with the bourgeoisie is compelled, by the force of circumstances, to organize itself as a class, if, by means of a revolution, it makes itself the ruling class, and, as such, sweeps away by force the old conditions of production, then it will, along with these conditions, have swept away the conditions for the existence of class antagonisms and of classes generally, and will thereby have abolished its own supremacy as a class.

This sounds very noble, but it's not. First, it establishes the proletariat and the bourgeoisie as the real enemies, not the conflict between capitalists and the monarchy or between capitalism and religion. The real conflict is class. For the proletariat to win, they need a party, a vanguard party. But hey, once this vanguard party establishes itself and destroys class, it will go away. It will give up power voluntarily. It will choose to not exist anymore. This has never happened in history before, but trust us on this one. This time it will be different.

In the Communist Manifesto, it says in Switzerland we support the radicals, in Poland we support the agrarian revolution, in Germany we support the bourgeoisie. In different places, they have different concerns and needs. What these people are saying is, "We're not part of an international conspiracy. All we want is a more fair, just society. We're not part of a secret society bent on world domination." What the Communist Manifesto says is, "Yes, you are. We're all part of this great conspiracy to conquer the world and establish communism."

Why would they do that? Why would they admit, "We are an international conspiracy"? This is a secret document that we read amongst ourselves, but it's also possible for you to steal it and show that yes, there is this secret society and a conspiracy of Jews trying to destroy the world. Really interesting.

The Russian Revolution: A Capitalist-Funded Coup?

In 1917, World War I was breaking out, and the Russians were losing the war. Tsar Nicholas II abdicated, and a democratic government was formed in Russia. But then the Bolsheviks, an extreme communist faction, launched the October Revolution. They seized power for themselves and then held an election.

As you can see from the election results, the Bolsheviks, even though they had seized power, were not as popular as the socialists, who argued for more gradual change.

• Socialists: 17 million votes
• Bolsheviks: 10 million votes

The Bolsheviks only got 23% of the popular vote. They were not a popular faction; they were a minority. This launched the Russian Civil War. At this time in history, the communists had control over the major cities of Russia, but they didn't really control most of the country. They had lots of enemies: the Whites (the nobility), allied armies who came in, and the Greens (the peasants). You could not possibly expect that the Bolsheviks would win this battle. But they did.

The Fate of the Romanovs

The Romanovs had been in power in Russia for hundreds of years. They were beloved by the peasants and were part of the Orthodox tradition. They were also relatives of the nobility of Europe, including in England and Germany. When the revolution broke out, you would think they would just run away to Europe where their relatives were. They didn't do that; they just stuck around.

Why would they stick around? The answer is they never believed they were in danger. First, they could not expect the Bolsheviks to win. Also, they were beloved by the peasants, part of the Orthodox Church tradition, and had relatives who were the most powerful people in Europe, including the Kaiser. They thought they were fine.

But then something strange happened. The Bolsheviks decided to kill every one of them. They wiped out the Romanov family. Between 17-18  members of the Romanov family were assassinated. This makes no sense. By doing that, you piss off the peasants, who love the royal family. You get the families of Europe pissed off at you because you killed their relatives. You also come across as fanatical, and you piss off the Orthodox as well. These communists are fanatics.

But let's assume they're not fanatics and that they had a good reason to do this. Why would they do that? The answer is this: the Romanovs had billions and billions of dollars in foreign banks in the City of London and on Wall Street. A lot of their wealth was stored overseas. What happens if they all die? These billions now belong to the foreign banks. That's a lot of money. This is exactly what happened. They all died, and the foreign banks just took control of this money. This is one of the great controversies of the 20th century. The government of Russia has been trying for a long time to get this money back, and the foreign banks say, "Well, you don't own this money. It's the Romanovs who own this money."

This is evidence that the communists and the capitalists were actually friends, working together.

Wall Street's Role in the Red Terror

The Bolsheviks were not that popular. The peasants were pissed off at them because they just killed the noble family. There weren't that many workers. So how could they fight this war? They fought this war using mercenaries from Latvia, China, and Hungary. There were over 200,000 of these mercenaries.

How did these guys get paid? The Bolsheviks didn't have any money. How were they getting paid? The answer is Wall Street. Wall Street and the City of London gave the Bolsheviks money to pay these mercenaries. Why would they do that? The answer is because the Bolsheviks, to pay Wall Street back, created the Red Terror. The Red Terror is when the Bolsheviks basically went to all the rich people in Russia, the nobility, and said, "You either give me all your money, or I will rape your daughter, I will kill your wife, I will kill you." By doing that, they made a lot of money, and that money went to pay Wall Street for the foreign mercenaries. Again, capitalists and communists work well together.

Then you have the Allies: Britain, America, France, and Japan sent huge armies to Russia. Everyone thought they would destroy communism because they were capitalists afraid of the communists. But that's not what happened. They went to collect debt. Russia owed these countries money. The Bolsheviks paid off the debt, so then the Allies left and attacked the Whites. The Allies helped the Bolsheviks, and Wall Street gave money to the Bolsheviks for mercenaries. That's how the Bolsheviks won the war.

Capitalists and communists work well together because they have a similar worldview.

In his book Wall Street and the Bolshevik Revolution, historian Antony C. Sutton provides documentation showing Wall Street financing the Bolsheviks. He explains that Wall Street wanted to destroy the Russian economy because Russia was a threat, and then it wanted to steal the riches and resources from the Russians. That was the purpose of financing the Bolsheviks.

From 1918 until 1921, the Bolsheviks reduced Russia to an economy based on barter and robbery. Besides the suppression of private trade and the destruction of the monetary system, the Red regime embarked on a massive looting campaign, ransacking palaces, bank vaults, churches, and museums. They appropriated every valuable they could get their hands on and stashed it all in a new state treasury. By the close of 1921, an estimated $450 million in valuables had been sequestered there, with more to come. Much of it was going to be fenced abroad for a fraction of its value in capitalist hard currency.

The Bolsheviks destroyed their own society to get the money to finance this war and pay off Wall Street. In the process, by destroying their tradition, wealth, religion, and nobility, they made the Soviet Union much more amenable to capitalism. That's what happened when the Soviet Union fell: it became capitalist. This shows us that capitalism and communism are not enemies; they're partners in world conquest.

What is "Chinese Unique Socialism"?

China is an interesting example because when Marx was examining the world, the two places he didn't really consider were Russia and China. Why? Because both were agricultural, agrarian, or what he called feudal. From his perspective, Russia and China had not reached a state of development ripe for world revolution. For him, the focus was on Germany. This makes sense because Marx was being supported by Britain, and Britain was a great enemy of Germany. Britain would support Marx because he was trying to create a revolution in Germany. For Marx, China and Russia didn't really matter because they were backward.

But then Lenin came and said, "No, you can speed up the revolution. Even though you have peasants, they can become workers if you have a party to help the process." That was Lenin's contribution. Mao was like, "No, you don't even need workers. You can have a movement entirely of peasants." And then once you have won the revolution, you can create an industrial revolution.

If you think about it, Mao wasn't really leading a communist revolution. It had the facade of communism, but it was really a peasant uprising. Mao was not a great communist theoretician like Marx or Lenin; he was a military commander. He was no different from other peasant leaders in the past, like Zhu Yuanzhang of the Ming dynasty. But in order to create legitimacy and have support from the Soviet Union, they had the communist facade.

Communism also provided a framework to industrialize very quickly. At this time in history, Mao was trying to work with the United States as well. He was trying to work with both the Soviet Union and the United States. The United States wanted to support Chiang Kai-shek, so when Mao won, the United States shut off and embargoed China, which forced Mao to fully embrace communism.

But for Mao, communism was not that important. What was important was to industrialize very quickly. The other idea was national sovereignty. He didn't really want to be controlled by the Soviet Union. If China was fully communist, then the Soviet Union would say, "You're our little brother." But for Mao, what was important was national sovereignty, and that's what ultimately led to the Sino-Soviet split in 1957.

Does Capitalism Equal Communism?

Capitalism is the belief that you can structure society around capital. This is a direct threat to the old order, which focused on religion, the king, and the military. Capitalism says, "Let's get away with all this complexity. Let's just make capital the basis of society."

As these two systems came into conflict, the workers wanted social democracy. From capitalism, you had social democracy. It's simple: yes, we believe in capitalism, but we believe in restraints on capitalism and a fair distribution of capital. That makes sense because you can't just have a few people with all the money.

But social democracy was a threat to both the old order and to the capitalists. So, the old order and the capitalists mutated social democracy into communism in order to delegitimize it, to make it a threat against everyone.

To summarize, capitalism is a natural outgrowth of history, but this comes into conflict with the old order. Capitalism gives birth to social democracy, which is a natural response to it. Social democracy becomes a threat to both the old order and capitalism. So, they conspire to create communism. In the early days, communism was supported by both the nobility and the capitalists, but for different reasons.

Because of this support, communism became much more extreme, which led to Bolshevism, or revolution. We can't say they all had this planned out. It's actually much more organic and confusing than that. At first, they had communism just as a psyop. No one actually believed that from communism, you'll have Bolshevism, because Bolshevism is just crazy. But at first, they thought communism was crazy, and then it became much more mainstream. That led to the birth of Bolshevism, which was really crazy at that time, but over time it also became more mainstream, which led to the rise of communism everywhere, including in China.

The 1917 October Revolution was a wild gamble, and it worked because of the greed of capitalists. But once it worked, once communism was established in the Soviet Union, it changed the way people saw the world. They thought that now communism is possible anywhere, including in China.