The Saturday Essay; The amazing legacy of the century's greatest non-event

Because the Cold War was not a war at all, it seems doomed to fade much more rapidly from our memories

Never mind Jeremy Isaacs' epic television history of the Cold War - for me it became History (with a capital H) about three years ago. It was then that, for the first time, I encountered students who had no memory of even the 1989 revolutions which marked its end.

They had been 11 then; and it is a truth universally acknowledged that 11-year-olds (even those who go on to Oxbridge) don't watch the news. To them the collapse of Communism was as much history as the collapse of the Third Reich. As for the Cold War, it was the Old War. The Gulf War they dimly recollected. The Bosnian War they glimpsed on television. But the Age of Missiles - when you had to know your Pershings from your Cruises and your Salts from your INFs - was as remote as the Age of Miracles.

I remember being completely thrown by this; it was the moment when I saw for the first time the generation gap between myself, a child of the Sixties, and my students, born in the late Seventies. For me, 1989 was the annus mirabilis, the climax of the era I grew up in.

To my students, however, watching the BBC2-CNN series, it all seems rather quaint, not to say irrelevant. It was always quite difficult to believe in the Iron Curtain unless you had actually been to Friedrichstrasse S- bahn station, passing through it in all its concrete and barbed wire hideousness. Now that the Iron Curtain has gone, it has joined the lost city of Atlantis and the Colossus of Rhodes as one of those past architectural wonders it is hard to imagine ever existed.

But even more bizarre to young viewers are the images of West European and American supporters of the Communist bloc - especially as so many of them were themselves students. Today's undergraduates are, on the whole, unpolitical, unprepossessing and fearful only of being unemployed after they graduate. The students of 1968, by contrast, look (on film at least) not only madly political but also determined to avoid employment at all costs.

How to explain the '68ers to the '98ers? What could be more baffling to the youth of the Blair era than the passionate commitment of their predecessors 30 years ago to the most extreme variants of Marxism? Why did anyone in their right mind ever want to wage a terrorist campaign (as the Baader-Meinhof gang did) against the businessmen - sorry, breadheads - of the military-industrial complex? Why did intelligent middle-class kids face tear gas and baton charges to register support for a Communist bloc that repressed demonstrators in its own cities far more harshly?

Even the last phase of the Cold War is hard to explain to those who were pre-pubescent at the time. In these days of Blairite trasformismo, the party of the left has become another party of the right (or rather a party of left, right and centre). How long ago seem those days of political polarisation, when a chasm appeared to separate the parties of Thatcher and Foot.

With hindsight, it is clear that the Cold War accounted for much of that polarisation. More than anything else - more even than the question of trade union power - it was Labour's commitment to unilateral nuclear disarmament that rendered it unelectable in the Eighties; for it was that which helped unite wets and dries in the Tory Party and which drove so much support to the opposition-splitting SDP. To be a Thatcherite student in the early Eighties - we were a small, obnoxious band - was to adore the Cold War. I still recall the drinks party a friend at Balliol threw to celebrate the deployment of Cruise missiles. The invitation featured a picture of a bottle of Bollinger with a mushroom cloud rising from the neck.

In the library suggestions book at Magdalen, every time the college's resident Maoist recommended a book on Class-conflict and Hegemony in the Prison Diaries of Gramsci, we would counter with the Collected Love Songs of Nicolae and Elena Ceausescu. The joy of this kind of thing was that the left always rose to the bait, no matter how puerile. At the same time, we knew we were right if only because grown-ups such as Roger Scruton, Norman Stone and Timothy Garton Ash assured us that the Communist system truly was irredeemably awful.

It was under their influence that I went to Germany as a graduate, notionally to write a doctorate, but primarily to dabble in journalism along the real front-line. Again, it is strange to realise that those pieces I bashed out about short-range nuclear forces, or life (the lack of it) in East Berlin are now as much period pieces as Le Carre novels - although a lot less readable. At the time, travelling to the Eastern bloc was a revelation: that first train journey from Hamburg to Berlin in the mid-Eighties still haunts me - especially the stops at dreary stations such as Magdeburg, at which you were forbidden to alight. How vividly I recall the smell of lignite, the all-but deserted roads, the nasty grey plastic shoes, the eerie lack of graffiti.

What made these trivial differences seem sinister were the real, substantive differences. The party-controlled newspapers, with their unreadably dull reports of Erich Honecker's latest visit to Karl-Marx-Stadt to present plastic decorations to Young Pioneers who had over-fulfilled their quotas. The lousy food. The crumbling housing once you had walked a couple of miles east of Alexanderplatz. And, perhaps worst of all, the awful reluctance of people to talk to you in public.

To know Eastern Europe was to loathe Communism and to cheer Ronald Reagan every time he denounced it. Yet how easily dupes in the Western "peace movement" were manipulated by the KGB. I once spent a very odd couple of days in Vienna reporting on a conference run by "Generals for Peace" (a fishy name in itself) which was so manifestly a Soviet set-up that I was the only Western journalist who bothered to turn up.

The end of the Soviet system was, I continue to believe, the best thing that has happened in my lifetime. The sole regrets I have are: (a) that without that system as a ghastly warning, we now take too much about our own system for granted; and (b) that too many people who were at best neutral in the Cold War - and there were plenty at last week's Blackpool Conference - have been able to get away with it. The CND members who would have let the Soviets deploy their SS-20s with impunity. The silly sods who went on Intourist holidays and returned singing the praises of Soviet health care.

Yet we ageing Cold Warriors need to offer more than nostalgia and recrimination if the young generation is to understand the war that we fought. And here I wish to depart from the propaganda script of the Eighties. At the time, many of us maintained that the Cold War was a two-cornered ideological fight between capitalism and Communism, between the free market and the planned economy. This was a half-truth.

The reality was, and remains, that after 1945 the Western system was never a purely capitalist system. As a percentage of gross national product, government spending in Britain rose from 38 per cent in 1950 to 51 per cent in 1985. In some western European states the percentage ended up even higher. An economy in which the state spends (or, to be more accurate, redistributes) more than half of GNP is a very different system from one in which the figure is less than 10 per cent, as it was before the First World War, or below 20 per cent, as it was before the Second.

The fact is that, despite the rhetoric of Thatcherism, her government achieved only a relatively small reduction in the size of the state; public spending as a percentage of GNP fell from 53.7 per cent in 1982 to 44.5 in 1990, still more than double the amount in 1938.

This gives us an important insight into the nature of the Cold War. Current talk of a "Third Way" between capitalism and socialism today is otiose for the simple reason that the West has been going down that road since 1945. (This is a point on which I think I can agree with a Marxist historian such as Eric Hobsbawm.)

Both the West and the East used rather similar methods after the Second World War to achieve social stability. There was none of the helter-skelter disarmament that had characterised the post-1918 period. Indeed, part of the point of the Cold War was precisely that large defence budgets could be justified, and large defence industries kept in business.

Secondly, both West and East used redistributive policies to make their societies more equal. And superficially, some of the institutions associated with Western economic "corporatism" also resembled their statist counterparts in the East. If nothing else, the bureaucracies which grew up, whether corporate or state, tended to look similar: unfit men sitting in box-like offices with filing cabinets, typewriters and wilting potted plants. In these respects, John Kenneth Galbraith was half right to talk about the "convergence" of the two systems.

Or maybe one-eighth right. The West had democracy. The East did not. The West had the rule of law. The East did not. The West had a real civil society, with the key freedoms of belief, speech, press and assembly. The East did not. That was what we Cold Warriors hated about it.

But - and this is the most interesting point about the Cold War - those deficiencies do not explain why the East lost the war. Indeed, in any explanation of the collapse of Communism, I believe the lack of liberty must play a very minor role.

The fundamental reason for the Soviet failure lies in the fact that the Cold War never became a real war; it was its very coldness that proved fatal. The fundamental economic difference between the two systems was that the Soviets had perfected, in the rigours of the Forties, a system for waging large-scale war. As we now know, Stalin was unimpressed by the possibility of American atomic attack on the USSR even in the period before the Soviets detonated their own first A-bomb in 1949. "Atomic bombs," he sneered in a newspaper interview, "are designed to terrify those with weak nerves." Later, he shrewdly remarked: "America has the technical but not the human potential for war; it has the air force, it has the atomic bomb, but where is it going to find the soldiers needed to launch a third war?"

This was spot on (hence Winston Churchill's recently revealed contingency plans for an attack on Russia in 1945 were sheer fantasy). In truth, the Americans could not have weathered a third world war, whereas the Russians, who had sustained losses in excess of 20 million in the Forties, almost certainly could have. A bomb on an American city would have caused pandemonium. A bomb on a Russian city - even Moscow - need not have been fatal to the Stalinist system, which from the outset had shown an unprecedented disregard for the lives of its people.

The problem for the Soviets was that, time and again, the Americans and (to a lesser extent) they themselves shrank back from the brink of all- out war: the prospect of mutually assured destruction deterred even hardened Communists. As a result, the hottest battles of the Cold War were fought through proxies on the periphery - Korea, Vietnam, Angola, Afghanistan. The big superpower showdown never came.

That absence of war allowed the West to do what it was bound to be better at: to develop the consumer industries that have been the key to its sustained post-war growth. This was something the planned economy could only try to mimic, because consumerism depended so hugely on the responsiveness of free markets to the price (and other) signals sent by individual consumers.

This is not to say that the Soviet Bloc collapsed simply because East Europeans wanted to exchange their nasty grey plastic shoes for Nike trainers; 1989 was a primarily political event caused by the madly unrealistic attempt of Mikhail Gorbachev to combine political and economic Westernisation. If Andropov had not dropped off, the old Soviet system could perfectly well have rumbled on for another decade; pace the neo-Marxists who see its fall as economically determined, it was perestroika that caused the economic crisis, not the other way round. And if Gorbachev had sent in the tanks in the winter of 1989, the West would have shed crocodile tears before surreptitiously reverting to detente.

But the Soviet system could never have won the Cold War. To do that, it would have needed at some point to have opted for Hot War. The likeliest moment, it is now clear, was October 22, 1962, when Khrushchev and Kennedy seriously contemplated using nuclear weapons over Cuba. If Kennedy had listened to the hawks in Congress and sent troops into Cuba, the third world war would almost certainly have begun.

If it had, I suppose today's students might find it more interesting - if anyone had survived to tell the tale, that is. Because the Cold War was not in the end a war at all, it seems doomed to fade much more rapidly from our collective memories than real wars. But just because the good guys won, does not stop it being the greatest non-event of the century.

Niall Ferguson's `The Pity of War' is published by Penguin on 5 November, pounds 16.99.