Last week, economist, professor, and adventurer Yuri Maltsev passed away. Yuri’s passing is a gigantic loss for the economics profession, for the conservative and libertarian movements, and for me personally. He was a courageous advocate for truth, justice, and liberty — a champion for the rights of every member of the human race.
Someone ought to make a movie about Yuri’s life. Indeed, his life story is illuminating, informative, and inspiring. Born in Tatarstan, the Soviet Union, in 1950, Yuri’s life was impacted by Soviet cruelty from the start. When Yuri’s father was a boy, his own father (Yuri’s grandfather), a renowned architect, was summoned by none other than Joseph Stalin himself to work on a building project.
The senior Maltsev was highly regarded in his field, and there was a lengthy waiting list for his services. Understanding Stalin’s great power, Yuri’s grandfather told Stalin that he would put his project at the top of his list and would commence work on it immediately upon completing his current project. Most people would respect the integrity shown by a builder unwilling to abandon a partially completed project, but not Stalin. The terrible dictator had Yuri’s grandfather summarily shot as a saboteur.
The trauma of experiencing his father executed as an enemy of the state had a devastating psychological impact on Yuri’s father. Yuri told me that his father never recovered and that he died at a young age, leaving behind Yuri’s mother, sister, and Yuri.
From his youth, Yuri began to think about how to escape the world’s largest prison camp, the Soviet Union. One of the realities of life in the Soviet Union was that many privileges — including foreign travel — were generally reserved for members of the Communist Party. As a matter of expediency, not conviction, Yuri joined the party. This enabled him to earn three degrees in economics and opened the door to (relatively) good jobs and foreign travel on government business.
During his studies, Yuri encountered ideas that would change his life. One of his assignments was to become somewhat familiar with the writings of free-market economists — writings that were off-limits even to most members of the Communist Party — so that he could lie about and propagandize against Western ideas more effectively. This plan backfired spectacularly on the Communists. As Yuri read the forbidden texts of the Austrian economists, the proverbial scales fell from his eyes. He knew he had found the truth about economics. So captivating was that truth that Yuri and a colleague, risking multiple years in prison, would smuggle forbidden manuscripts out of their depository, stay up all night reading them, and then smuggle them back the next morning before anyone could detect that they had been removed. That is how Yuri became an Austrian economist.
Yuri rose through the ranks of Soviet bureaucracy, patiently biding his time. At one point, he was one of 328 bureaucrats in charge of setting 23 million prices for every imaginable economic good in all regions of the USSR — a land mass that spanned 11 time zones. In a market economy, prices are free to adjust as needed to changing conditions of supply, demand, technological improvements, newly discovered efficiencies, and so on. By contrast, Yuri and his colleagues set prices that often remained unchanged for years, based on woefully incomplete information about the myriad factors impacting supply and demand. Even if they had had comprehensive knowledge about any single market, how could they possibly have obtained such information for 23 million prices? Even if each bureaucrat could somehow have determined the “right” price for one good in one market in one hour’s time, the 328-person bureaucracy would only be able to set 2,624 prices per day. If they worked steadily at that pace, it would take them over 8,700 workdays (about 29 years, if working 300 days per year) before they could revisit and reset any given price. No wonder the Soviet economy was stagnant!
The Soviet economy was also wasteful. Econ 101 teaches that a price set too high above the market-clearing free-market price results in scarce resources being wasted in the production of things that people aren’t willing or able to pay for. Contrariwise, if prices are set too low (and this was more common in the USSR because the Communists figured that, in a workers’ paradise, prices would be low) there are pronounced shortages. Shortages, of course, have been a glaring standard characteristic of socialized economies. Indeed, so severe were shortages of consumer goods in the USSR that, as Yuri told me, at the time the Soviet Union collapsed and dissolved in 1991, approximately 70 percent of consumer goods were produced in black markets. That was technically illegal, but tolerated, because it was the only way to keep the economy afloat, even at such an anemic, impoverished level.
A bright, individual, and industrious worker, Yuri rose through the bureaucratic ranks, becoming a member of Mikhail Gorbachev’s economic advisory panel on perestroika (“restructuring”) in the mid-1980s. In 1989, while on a trip to Finland (a government-authorized trip, of course), Yuri made the boldest move of his life: He defected to the United States. He was 39 years old. Yuri had deliberately avoided marriage and children up to that point so that, when an opportunity to defect finally presented itself to him, the Soviet authorities wouldn’t be able to use his wife and children as leverage over him. Yuri loved his adopted country wholeheartedly. One of his proudest moments was becoming a U.S. citizen in 1995.
