Murray N. Rothbard, “Should We Bail Out Gorby?” — Summary

This short political-economic essay, appearing as chapter 97 of Making Economic Sense, is Rothbard’s polemical intervention in the 1991 debate over American aid to Mikhail Gorbachev’s Soviet Union. Its central thesis is that any U.S. bailout would misconceive both America’s role and the nature of the Soviet crisis: foreign aid to the Soviet state would not help Soviet people, but reinforce the very state apparatus that had impoverished them.

The debate over whether or to what extent we should bail out Gorby ($10 billion? $50 billion? $100 billion? Over how many years?) has almost universally been couched in false and misleading terms.

Rothbard first reframes the public discussion as a false parental metaphor. The United States, he argues, had begun to imagine itself as the guardian of the Soviet Union, dispensing monetary rewards or punishments according to whether Gorbachev behaved as reformer, backslider, or stabilizing force. The debate’s apparent range—how much money, over what period, and with what political effect—conceals a shared assumption: that Washington should manage Soviet political evolution.

The result of all these complexities is that, as in most other areas of American life, our seemingly vibrant democracy appears to be engaged in free and vigorous debate, but is really only parsing relatively trivial nuances within a basic, unargued, and implicitly assumed, paradigm: the U.S. as parent trying to find the precise formula for correcting previously unruly offspring.

The essay’s structure moves from exposing this paradigm, to rejecting its moral and practical premises, to substituting Rothbard’s libertarian account of prosperity and political order. His first conceptual move is anti-providential: the United States is neither divinely appointed nor materially capable of repairing the world’s political and economic failures.

Even if we wanted to and set out to do so, it is not in our power to cure all the ills of the world.

Against bailout politics, Rothbard proposes example rather than subsidy. The West’s relevance to Russia is not as financier but as evidence that prosperity comes from property, contract, savings, investment, and limited government. His advice is deliberately stark:

If you want to prosper, follow our forefathers: privatize and deregulate.

The essay’s second major move is to distinguish “the Soviet Union” from the Soviet state. Aid to Gorbachev cannot be neutral humanitarian support; routed through government, it strengthens the ruling apparatus and weakens the emerging private economy. Thus what appears as rescue is, for Rothbard, a subsidy to the remnants of Communist power.

U.S. government aid can only be a reward for Gorby and the rest of the neo-Communist nomenklatura.

This leads to the essay’s sharpest inversion: a bailout may reward rulers, but it punishes the ruled. Rothbard’s anti-statist theory of political economy underwrites the claim that government aid consolidates coercive institutions rather than civil society.

Aid to Gorby, therefore, may be a reward for Gorby and his friends; but it is necessarily and ineluctably a harsh punishment for the peoples of the Soviet Union, because it can only delay and cripple their return, or advance, to a free economy.

The conceptual core of the essay is Rothbard’s “two nations” model. Every country contains a productive social order and a parasitic state order. The Soviet tragedy, in his account, is that the second nearly devoured the first.

The "second nation"—the State—produces nothing; it acts as a parasitic blight upon the first, productive nation: taxing, looting, inflating, controlling, propagandizing, murdering.

Rothbard closes by rejecting consequentialist fear: the argument that without Gorbachev, worse rulers might take power. Since Americans cannot know or control Soviet outcomes, he insists that policy should rest on justice, restraint, and nonintervention rather than speculative management of foreign succession.

In the first place, it is not given to us to decide the fate of the Soviet Union; that, after all, is up to the Soviets themselves.

The essay’s relevance lies in its compressed critique of foreign aid, regime management, and technocratic “stability” politics at the Cold War’s end. Rothbard treats the Soviet collapse not as an occasion for American guardianship, but as a test of whether the United States can resist exporting state power under humanitarian or strategic pretexts.