I've heard this discussed a few different places. Stuart Klawans, the critic for The Nation has talked about it, and now Jon Jost mentions it in a column here on the Filmmaker magazine website, about this European thing. In Europe, governments use taxpayer dollars to bankroll movies in their effort to promote "culture". The movies cost millions, get shown in state TV but nobody wants to see them.
Private funding's not much better. Consider the work of Uwe Boll. The man has made a series of big budget bombs, most of them based on video games. The more money they lost, the more his German investors got to write off on their taxes. He made a twenty-five million dollar movie that grossed two million, a movie for $60 million that grossed $10 million, and rich Germans were clamoring to "invest" more.
They finally changed the tax laws in Germany in 2005 and put an end to it.
In capitalism, your ability to continue making movies depends on your ability to raise money. Some get it from the government, others from people who invest for whatever reason. But your ability to sell tickets is still secondary.
Contrast that with the Soviet movie industry. Soviet studios had no investors and the government wasn't interested in subsidizing them. They didn't even have merchandising. Ticket sales was all there was. They had the same problems American studios had. They had to compete with television, but, unlike Hollywood, they had to compete with foreign films, too. Soviet audiences loved American westerns and Indian musicals among other things.
But I'm not sure how much difference it made. I've seen Soviet movies and I liked most of them. They were very well made. A lot of them were vastly superior to similar movies made in Hollywood.
I've seen a few that had supposedly been suppressed for political reasons, but they just weren't very good. If they had been out of circulation it was more likely because they stunk.
The Grapes of Wrath
There's a story I've heard different places that the American movie, The Grapes of Wrath, was shown in the USSR, that they allowed it to be shown because it showed life as hard in the United States, but it was then banned because Soviet audiences were impressed that impoverished farmers owned a truck.
That's unlikely. If it was banned for that reason, how would anyone know? It's not something they would announce. And this myth has been circulating at least since the 1970s, so it wasn't some fact from the Soviet archives revealed after the collapse of the Soviet Union.
The Grapes if Wrath was made in 1940. If it was taken out of circulation in the Soviet Union it was probably because they were invaded by the Nazis, the U.S. became an ally and the movie didn't make the U.S. look terribly good.
Other American movies were widely seen in the Soviet Union anyway. If movies gave the Soviet people a distorted picture of life in the United States, it was distorted in the United States' favor.
A Soviet director
I remember back in the '70s or early '80s. There was a Soviet director making the rounds on American talk shows. I don't know who it was---I wouldn't have recognized his name at the time. I saw him interviewed at least twice, and both interviews went the same way.
The American interviewer said that it was unimaginable---having to work in a system where you had to go to the government when you wanted to make a movie!
The director said, no, you don't go to the government, you go to the movie studio.
Then there was the talk about propaganda. It's unlikely the reporters had ever seen a Soviet film. The director quoted Woody Guthrie. To a baby, a lullaby is propaganda. He said the only things banned from Soviet cinema was counter-revolutionism and actual pornography.