Ironically (or not) of history, some of the best effects of communism in the 20th century came from countries far from the USSR, East Germany, the Romanian Socialist Republic, or any other country in the Soviet orbit. At least that’s how some historians see it, who have long held the theory that communism derived one of its most important legacies from countries far from Moscow, in countries outside the influence of the Soviet Politburo. Such as? Reducing inequality levels in countries with market economies.

So if there was a spectre haunting Europe, as Karl Marx claimed, its effects seemed to be felt especially on the western side of the Iron Curtain.

“Disciplinary” inequality. Throughout the 20th century, communism left behind brutal displays of repression and raised serious doubts about the benefits of a planned economy or its ability to compete with capitalist countries, but there are researchers who believe that communism was felt outside the borders of the Soviet Union and its satellite republics, with a positive impact.

So how is this? Acting as a “discipline” of inequality. This idea has been put forward in recent years, with more or less emphasis, by researchers such as Andre Albuquerque Sant’Ann, Leonardo Weller, Vladimir Popov or Kwame Sundaram, who have investigated how the “spectre” of communism acts as a corrective to inequalities on the other side of the Iron Curtain.

The proposition is simple, as the Serbian-American economist Branko Milanović put it a few years ago: the shadow of communism in the USSR and other communist states led capitalist countries to act “cautiously.” “They knew that if they tried to put too much pressure on workers, they would retaliate and eventually lose everything,” he explains.

“He saved her from herself”Another writer who explores this idea is popular columnist Aditya Chakraborty. Guard In 2019, he published an article in which he argued the same hypothesis: that the sole threat posed by the Soviet bloc for most of the 20th century led Western states with market economies to be lenient towards workers.

In Chakraborty’s words, socialism turned out to be “a miserable failure, brutally oppressive of its people and incapable of competing with capitalist economies”, but there is no denying that it represented a value that was ironically not pursued by the Politburo and was “part of society”, one of the greatest paradoxes of our age: “Communism did not overthrow capitalism but kept it honest.”

But… How did he do it? With a simple counterweight system. And fears. Chakraborty argues that the existence of the USSR, with its rival and powerful ideology, forced capitalist economies into a struggle for survival. This largely involved being flexible and smoothing out potential inequalities. Or, what is the same, higher wages and more investment in social welfare.

Various data are cited to illustrate the impact of the socialist “ghost” Chakraborty. First, the eight-hour day, which workers had been demanding for more than a century and was one of the major demands of the May Day marches of the late 19th century. “But it took a few months for the Bolshevik revolution of 1917 and the unrest of workers across Europe to become law in France, Germany and Portugal,” he recalls.

The International Labour Organisation itself has published a report explaining how rising inequality throughout the 19th century had receded in the face of “the threat of the spread of communism” in the West, “giving capitalism a more human face and inspiring redistributive welfare reforms.”

Can it go further? This is also the attempt of André Albuquerque Sant’Anna and Leonardo Weller, who tried to explain in the most objective way possible whether the “threat” of communism during the Cold War affected the distribution of income in advanced capitalist economies and the role that the world wars of the 20th century might have played.

The starting point of both authors is clear and unambiguous: “We argue that the threat of the spread of communism serves as an incentive for elites and governments to keep inequality at low levels.”

According to Sant’Anna and Weller, the Cold War offered a “positive context” for the emergence of “common interest states” with a general consensus that “allowed the state to increase its fiscal capacity to protect the public.” status quo” and achieve more egalitarian societies in terms of power and wealth.

“Reduce the possibility of revolution”Their work concludes that as countries moved closer to the spread of communism, unions strengthened their power and employers agreed to reduce profits in favor of wages.

“The economic and political elites formed this Cold War coalition to redistribute income and reduce the likelihood of communist revolution,” they say. “By redistributing income, it made society more equal.”

Analysing the period 1960-2010In another article published in 2015, Sant’Anna goes one step further and tries to explain how socialism has managed to “discipline” income inequality. For this purpose, the situation of 18 OECD countries for half a century between 1960 and 2010 is analyzed.

His analysis focuses on the income share of the richest 1 percent and analyzes factors such as financial openness, union weight, tax rate and, above all, a special variable introduced by the Brazilian researcher that takes into account the country’s military expenditures, the relationship of the country in question to the military investments of the USSR and the distance separating this country from Moscow. The aim: to determine the degree of threat that the Soviet bloc, and therefore communism, could represent in each case. After examining the data, his conclusion is clear.

“An important factor”“The constant threat of military competition with the communist bloc has been a major factor in pushing Western states to build a social consensus around greater participation of the highest income earners in reducing inequality and building fiscal capacity.” : “War is not needed to build state capacity; the presence of a lurking specter is enough.”

From “following” to reality. This “tracking” alone does not explain the influence that the communist bloc was able to exert in limiting levels of inequality in capitalist economies. Sant’Anna points to other factors, in addition to the impact of the world wars of the 20th century, which destroyed capital and forced governments to seek tax formulas that would allow them to finance their troops.

In particular, as Milanović outlines, a number of channels would be available that allowed socialism to influence levels of income inequality under capitalism: the influence of communist and socialist parties in countries such as Italy or France, the “surveillance” of Soviet military power, and trade unions.

“The more threatened the national elites were by communist revolution, the more the state implemented policies that reduced the participation of the wealthiest in society, whether by imposing higher taxes and spending or by allowing uncomfortably powerful unions,” he adds. The USSR may have lost momentum over the years, but even in its final stretch in the ’80s, its existence continued to act as a counterweight to capitalism.

What about after the Cold War? Milanović reminds us that rich capitalist countries experienced a period of declining inequality throughout most of the 20th century, between the 1920s and 1980s. After that decade, inequality rose again.

He marks the turning point in the 1980s, which coincided with the decline of the communist bloc, although other factors also came into play, such as globalization, the expansion of Chinese workers into the global labor market, the decline of unions and political changes, with tax cuts. He is not the only one to make a similar diagnosis. The World Bank has warned of the effects of inequality, a scenario that Spain is no stranger to.

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