The Quality of Competition
Dividing people into an in-group and a discriminated out-group impairs the competition that allows individual talents to find their best use. Negative selection results in the short run, because more talented out-group members are kept out of the promotion pool, and their place is taken by less talented in-group members. Discrimination in education will multiply those losses in the long run, because educational capital will be misallocated in favor of the less-talented in-group members.
While the discriminatory barriers facing women and ethnic minorities in Western market economies are lower than they used to be, the costs of the barriers that remain are thought to remain large. A complete elimination of racial barriers to labor market competition from the French economy could raise its GDP by 16 percent.[286] A study of the US economy finds that declining barriers to the employment of women and Black people explain two-fifths of real income growth over the half century from i960 to 2010; reduced educational disadvantages produced greater gains than reduced discrimination in labor hiring. Complete elimination of remaining barriers would raise US GDP by a further 10 percent.[287]
On the side of employees, KGB discrimination also created disincentives. It raised the personal risk associated with investment in skills and qualifications. A person could spend years studying and training, and then KGB kompromat could stop their career in its tracks. For some employees—in Lithuania, a significant number—the risk of exposure of a dubious record could become a reason to avoid gaining the competences that would put them in line for promotion. For them, KGB regulation may have made a quiet life in a low-skill, low-wage environment preferable to seeking distinction and risking the scrutiny that would follow. Their talents would remain unused or undeveloped.
It remains the case that every society places some barriers in the way of talented people from less-privileged backgrounds. Before communism, interwar Lithuania placed many restrictions on the opportunities available to women and to ethnic minorities—Jews, in particular.[288] Rather than focus on the negative (discrimination against those who became outcasts under communist rule), should we celebrate the positive (discrimination in favor of formerly marginalized groups)?[289] Or did communist rule just replace one caste by another?
There is no doubt that the coming of Soviet rule to Lithuania widened opportunities for many women and for many Jews.[290] What Soviet rule did not do is create a competitive labor market. Rather, it attached labels to the population, allowing authority and privilege to be redistributed in favor of those classed as loyal. This favored Jews who were willing to commit to the establishment of Soviet rule. Later, it worked against them when they were reclassified as potential agents of the new state of Israel. Rather than levelling the playing field, Soviet class labels replaced old forms of discrimination with new ones, fixing in place a new stratification of society.[291]
The Quality of Cooperation
Another channel for the effects of discrimination is the quality of cooperation. The idea is that a group of people with different but complementary capabilities, experiences, and insights will collaborate and innovate more productively than a group of people who are all the same.[292] By implication, excluding out-group members can only reduce the diversity of the talent pool, with groupthink and stagnation as outcomes.
Diversity might not be an unmixed blessing. It is thought that an increase in the genetic diversity or ethnolinguistic diversity of a population might also disrupt society by weakening solidarity and promoting conflicts, at least beyond a point.[293] The key here is that to realize the gains from diversity requires diversity to be expressed. There can be no gain from diversity if people cannot voice their differences of experience and insight, and if those differences are not allowed to bring change to established ways of thinking and doing. The challenge, therefore, is to manage change without slipping into violence—a continuous balancing act of moderated disruption.
Soviet institutions ruled out this balancing act. Suppressing disruption was literally the first priority of KGB counterintelligence.[294] The Soviet leaders feared that open disputes over Soviet goals and values could only weaken the authority of the ruling party and lead to civil conflict. In their eyes, the diversity arising from “alien” social origins and nonconformist outlooks was always a threat to be suppressed. An example is provided by the considerable ethnolinguistic variation across the length and breadth of the Soviet landmass. This diversity was an unavoidable fact, but Soviet leaders from Stalin onward were determined to minimize its political significance. In 1930 Stalin declared that, until they inevitably disappeared, ethnic cultural differences should be confined to matters of “form” (such as dress and language), while all Soviet cultures would share the same socialist “content.”[295]
This formula continued to rule Soviet “nationalities” policy long after its author was no longer mentioned. It was not contradicted, at least in the eyes of the authorities, by universal compulsory ethnic self-labelling, or by official support for non-Russian languages and non-Russian elites, because the distinctions of ethnicity and language were supposed to be merely formal, while meanings and practices were expected to conform precisely with the substance of official norms and central directives.[296]
The KGB system for protecting government secrecy and security was designed to keep people with discordant values and life experiences out of positions of responsibility. These people, the excluded minority, may not have been any smarter, or more knowledgeable, or more talented than others. What they had to offer was simply different. The risk that the ingredient of nonconformity might lead to change in the design or working arrangements of the state and planned economy was exactly the reason they had to be excluded.
To conclude, the secret uses of KGB kompromat capture another aspect of the Soviet secrecy/capacity tradeoff. The more the Soviet regime tried to improve its security by excluding suspicious people from secret work, the more it harmed the human capacities of the state. In the late 1930s, Stalin’s preference for loyalty over competence became so extreme that the millions of people being killed or imprisoned included even world-class scientists and engineers; at the same time, important branches of science and technology were handed over to out-and-out frauds such as Trofim Lysenko, whose mistaken pseudo-Marxist claims about plant selection and adaptation were forced on agricultural specialists and farmers.[297]
By the 1970s, Stalin’s successors had had time to revise his legacy. The Soviet state no longer tried to kill out-group members or physically exclude them by imprisonment or resettlement in the remote interior. For the most part, it tried to keep them within the community while discriminating against them in a calibrated way, aiming to exclude them from managerial responsibility and influence over others. They aimed to recover some state capacity while sufficiently protecting their secret channels of communication. At the point where we observe it in this chapter, the Soviet state was more open to competing and diverse talents than in Stalin’s day. Still, it remained highly secretive and suspicious of those who had the ambition to serve it, and there was still a price to be paid. Thus, the Soviet state remained on the downward slope of the secrecy/capacity frontier.
288
Jureniene, “Women’s Position in Lithuanian Labour Market”; Pinchuk, “Sovietization of the Jewish Community.”
289
The Affirmative Action Empire is the title of Terry Martin’s study of the evolution of Soviet nationalities policy in the 1920s and 1930s.
291
In a new study of communist and postcommunist Hungary, Bukowski et al., “Social Mobility and Political Regimes,” show that successive regime changes brought dramatic changes in the representation of historically low-status family names in Hungary’s political elite, but rates of social mobility into elite occupations and groups at least one remove from the central government remained low and unchanged throughout. The question of how to balance social levelling versus social stratification also arose among scholars studying communist China. See for example Whyte, “Inequality and Stratification in China” (published in 1975) and the same author’s thirty-year retrospective, “Rethinking Equality and Inequality in the PRC.”
292
Ottaviano and Peri, “Economic Value of Cultural Diversity.” To explain the benefits of diversity, the economist Ricardo Hausmann suggests the model of an alphabet. A complex idea requires many words using most letters of the alphabet. In a homogeneous society, where everyone lives in the same way and shares the same background, each person knows only the same few letters. No matter who collaborates, complex ideas can’t arise; conventional wisdom and groupthink predominate. What is needed is collaboration with people who can pool the knowledge that comes from different backgrounds and experiences. Together they can combine a wider range of letters to make more complex words, sentences, and conceptions. Thus, increased variety produces innovation. Hausmann et al., Atlas of Economic Complexity, 20.
293
Genetic diversity: Ashraf and Galor, “The 'Out of Africa’ Hypothesis,” find that the level of development around the world is “hump-shaped” in a predictor of genetic diversity: that is, genetic diversity promotes development up to a point, so you can have too little of it and also too much, but somewhere there is a right amount. Ethnolinguistic diversity: Alesina, Baqir, and Easterly, “Public Goods and Ethnic Divisions”; Alesina and La Ferrara, “Ethnic Diversity and Economic Performance.”
294
The sphere of counterintelligence was defined by Nikitchenko et al., Kon- trrazvedyvatel’nyi slovar’, 142, as “struggle with the intelligence agencies of other states and the disruptive activities of the organizations and persons that they exploit” (my emphasis). Scanning society for signs of disruption and checking for evidence of foreign agents at work were then the tasks of KGB surveillance and investigation.
295
Stalin, “Politicheskii otchet tsentral’nogo komiteta XVI s”ezdu VKP(b),” 368 (27 June 1930).
296
Why was Stalin’s expectation at fault? One possibility is a mistaken assumption—that, when crossing languages and cultures, it is possible to find exactly equivalent meanings, with nothing lost or added in translation. Another possibility is proposed by Martin, Affirmative Action Empire, 448-51: compulsory ethnic labelling and the promotion of non-Russian languages may have had the unintended consequence of reinforcing awareness of deep-rooted ethnic differences.