Comparisons between countries and regions before and after the advent of capitalism in Eastern Europe, Russia and Central Europe as well as a comparison of Cuba and the ex-communist countries provide us with an adequate basis to draw some definitive conclusions. Fifteen years of "transition to capitalism" is more than adequate time to judge the performance and impact of capitalist politicians, privatizations, free market policies and other restoration measures on the economy, society and general welfare of the population.
Economic Performance: Growth, Employment and Poverty
Under communism the economic decisions and property were national and publicly owned. Over the past 15 years of the transition to capitalism almost all basic
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Moreover economic inequalities have grown geometrically with 1% of the top income bracket controlling 80% of private assets and more than 50% of income while poverty levels exceed 50% or even higher. In the former USSR, especially south-central Asian republics like Armenia, Georgia, and Uzbekistan, living standards have fallen by 80%, almost one fourth of the population has out-migrated or become destitute and industries, public treasuries and energy sources have been pillaged. The scientific, health and educational systems have been all but destroyed. In Armenia, the number of scientific researchers declined from 20,000 in 1990 to 5,000 in 1995, and continues on a downward slide (National Geographic, March 2004). From being a center of Soviet high technology, Armenia today is a country run by criminal gangs in which most people live without central heat and electricity.
In Russia the pillage was even worse and the economic decline was if anything more severe. By the mid 1990's, over 50% of the population (and even more outside of Moscow and St. Peterburg - formerly Leningrad) lived in poverty, homelessness increased and universal comprehensive health and education services collapsed. Never in peace-time modern history has a country fallen so quickly and profoundly as is the case of capitalist Russia. The economy was "privatized" - that is, it was taken over by Russian gangsters led by the eight billionaire oligarchs who shipped over $200 billion dollars out of
One can easily admit that the Party had failed to properly economically plan the needs of each state. The Soviet Union economy was complex and massive, it became an impossible task for the state planners to manage, as they did not want to grant and create more managerial levels that would proceed to the local level resulting in failed timely attempts to the constant changes the economy was going through. Since the Soviet economy was based on state planning, it failed in encouraging innovation and motivating productivity. Managers would also alter numbers in order to produce the quotas that they were required to meet. The growth of the Soviet economy had been in a constant decline since the 1950’s and this progressed to the 1980’s. This was a clear sign that the Soviet economy was in need of a complete economic overhaul. Gorbachev succeeded power in March, 1985 and became General Secretary of the Central Committee of the Communist party of the Soviet Union. His main goal was to revive the Soviet economy, and he strongly believed that success was tied to loosening the governments control and creating a system that included less government intervention and more freedom to allow private initiatives. This new market economy would allow for private enterprise, which what Gorbachev believed would create more innovation. For the first time since 1920’s, individuals were able to own and create businesses.
In a communist economic system, decisions are made by the overall community. In practice, attempts to implement a communist system have developed state-driven economies benefiting only single-party political elitists not accountable to their citizens. Capital assets are owned collectively by the state rather than private parties. Labor rates and the prices of goods are established by the government rather than supply and
The democratization, economic liberalization, and eventual collapse of the Soviet Union is commonly attributed to Mikhail Gorbachev's Perestroika and Glasnost reforms during the period of 1985-1991. This purpose of these reforms is still a trenchant question as the countries of the old Soviet Union, particular Russia, are being pressured to further liberalize their economies.
In comparison, capitalism and communism are like night and day--opposite of each other in every way, but the main differences in the two can be seen in the distribution of wealth among a society’s peoples and the appearance
In a capitalist economy, properties, land, capital, and businesses are owned and controlled by individuals (Pigou, 2002).
A Capitalist Economy vs Socialist Economy There are a variety of economic systems today, which can influence how prosperous we will be as individuals or as a group. Socialism is an economic system where the government will be greatly involved in the economy. In a socialist economy the government can control many industries, provide public institutions such as health care and education, and equalize incomes of the population. A socialist economy is one of low unemployment and stability, where the government sets production quotas and price regulation upon their perception of the needs of the economy.
nation's great cities and as oil refining rose so did the popularity of the automobile. With these
Socialism and capitalism are two very different economic/industrious systems but, in some ways, they share a few similarities and that is what this essay will be discussing. The comparison between the two systems and their advantages and disadvantages for those who live in such societies. Socialism and capitalism are marginally contradicting scenarios offering advantages and disadvantages in the world of production and financial assistance.
Another repercussion of the Soviet Union’s collapse was the failure of the economies of almost every new post-Soviet country. Most of the economies of the new Republics were left in shambles after the collapse. In Russia, people were not ready for the new economic freedom that resulted from the fall of Communism. Their unpreparedness led to inflation. “Inflation caused prices to go up three hundred percent in the first month, and 2,591 percent by the end of 1992.”( Russian Economy in the Aftermath of the Collapse of the Soviet Union) Just three years after the Soviet Union’s fall, Russia’s inflation rate had skyrocketed to 2591 percent, evidencing that Russians were not prepared for such a rapid evolution, going from a communist economy into a capitalist economy. All post-Soviet countries had the same economic fate as Russia, plunging into worse economic conditions than the United States suffered during its Great Depression. For example, in 1992, the Ukraine had almost a fifteen percent drop in its gross domestic production and Latvia suffered a 33 percent drop. (GDP growth) Many of these countries’ economies are still suffering as a result of the rapid evolution
Throughout history, there have been many systems developed in order to have a better society. Two of the most analyzed, and debated systems that have tired to change an economy for the best are communism, and capitalism. Communism, and capitalism have been compared on many levels, such as why they will or will not work, and which one works better. Throughout this essay I will concentrate on the differences, and similarities of how each operates, along with the benefits, and problems that each of them produces.
What is communism? Communism is a term used broadly to designate a ‘theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state.’ It refers to the doctrine which underlines the revolutionary movement which aims to abolish capitalism and ultimately to establish a society in which all goods will be socially owned, all economic activates socially planned and controlled, and in which all distributions will be in accordance with the maxim. German author Emil Ludwig described the maxim as “for each according to his capacity, to each according to his need.”(1) It is to be distinguished from socialism which aims by constitutional and democratic
Today, more than ever, there is great debate over politics and which economic system works the best. How needs and wants should be allocated, and who should do the allocating, is one of the most highly debated topics in our current society. Be it communist dictators defending a command economy, free market conservatives defending a market economy, or European liberals defending socialism, everyone has an opinion. While all systems have flaws and merits, it must be decided which system is the best for all citizens. When looking at both the financial well being of all citizens, it is clear that market economies fall short on ensuring that the basic needs of all citizens are met. If one looks at liberty and individual freedom, it is evident
The many long-term internal causes of the collapse of the Soviet Union centralized around weaknesses in their economy. They had an inflexible central planning system, the inability to modernize, and the inefficiency in their agriculture production. Sometime around the 1970's the computer and automation revolution had emerged. This revolution took over the West, but practically missed the Soviet Union, except in the military sector (Baylis & Smith, 2001.) Gorbachev's goal in economic restructuring was to create a separation between the economic and the political. The major changes began with the legalization of private farming and business co-operatives, and the allowing of foreign company ownership over Soviet enterprises (Baylis &Smith, 2001) All of Gorbachev's ideas on economic restructuring backfired on him since the price levels were inconsistent, and a sense of social confusion about the future of their state was created.
Economies throughout the world differ along varying lines, with some taking worker oriented approaches, and others pushing profit and risk into priority. The dichotomy between Capitalism and Communism throughout the 20th century can lead one to feel that capitalist nations are a unified front in how they approach economics. This is untrue, as even capitalist nations view the free market in different forms. Some may view government involvement as a necessity, others as a plague. American economics have long been dominated by this latter approach, a liberal market approach. While coordinated economies have gained strides in approval and productivity in recent years, individuals have claimed the US needs to follow the example. However, as the US most likely will retain its liberal approach for the time being, one must look at specifics to begin working on to better both the economy and its people. Therefore, industrial relations, that is, the relation between workers and their respective companies, comes as the issue that can best be developed to assist the United States economic status and conditions of its workers.
In this chapter I will focus on four countries: Hungary, Czechoslovakia, Russia, and China. By the late 1980s the public in these countries believed that communist economic arrangements had failed and needed to be replaced rather than repaired. In response, these economies have rejected all or, in the case of China, some of central planning. In centrally planned economies (CPEs) prices do not represent actual costs, incentive systems are absent, losses of unprofitable state-owned enterprises are automatically