rise and fall of socialism

Question 1

what were marxs and engels view on the productive capacity of capatilism?

Answer 1

Marx and Engels admired the productive power unleashed by capitalism whilst condemning its ‘brutal exploitation’.

Question 2

what was the basic propositions of marx?

Answer 2

Social and political structure of society is driven by economic forces
Labour theory of value (Ricardo)—profits represent exploitation
History is a succession of class struggles
The working class will be “immiserized” by capitalism
Capitalism at its highest stage will collapse because of internal contradictions I.e. the collapse will be via endogenous forces

Question 3

what is the supposed to happen to a nations economic structure according to marx?

Answer 3

feudalism -> early stage capitalism -> mature capitalism -> socialism -> communism

Question 4

how did socialism occur in eastern europe post 1945?

Answer 4

Not an example of endogenous development towards socialism
“Socialism” was imposed from outside after WW2

Question 5

what were marx’s insights into economics?

Answer 5

Over expansion of credit leading to periodic crises in capitalist system– i.e. Capitalism vulnerable to financial crises
Anticipated Joseph Schumpeter’s insights on “creative destruction” character of technological change
Concerned with states of disequilibrium and instability (business cycles)
Concerned with persistence of unemployment
Concerned with inequality (Thomas Pikety Capital In The Twentieth Century)
Marx’s analysis was inter-disciplinary - combining economics, politics ,sociology & history—he was the first real “social scientist”

Question 6

what were the 3 main changes that marx prescribed?

Answer 6

1. Abolition of private property
2. Collective ownership of means of production
3. Replace anarchy of the market with centralised direction

Question 7

what percentage of the world population were socialist in 1987?

Answer 7

37% of the world population

Question 8

how did stalins great turn occur?

Answer 8

unbalanced growth via industrialisation and enforced collectivisation of agriculture

Question 9

how did they extract the agricultural surplus?

Answer 9

Confiscation of agricultural surplus via use of “price scissors”. Peasants forced to sell output at below market prices - goods then sold to industrial workers at higher prices or exported at world prices (to purchase industrial equipment)

Question 10

what was the effect of the extraction of the agricultural surplus policy?

Answer 10

in 1930 there were 6500 riots. it led to a decline in agricultural output and the great famine in 1931-33. it led to massive rural to urban migration

Question 11

what were the achievements of the USSR?

Answer 11

Rapid (if distorted and inefficient) growth and industrialisation
Victory in WW2 (the “Great Patriotic War”) Planning system and mass production work well (eg.T34 tank)
Technological achievements - Sputnik (1957) and first man in space, April 1961
Mass education Significant improvements in health indicators but life expectancy remains low relative to income

Question 12

what was the rapid growth between 1928-70 based upon and what was the issue?

Answer 12

Rapid economic growth based on:
Capital accumulation
Structural shifts of resources out of agriculture
This strategy unsustainable after 1970

Question 13

what are famous examples of capatlism vs socialism?

Answer 13

USA vs USSR 1917-91
Western europe vs eastern europe 1948-90
south korea vs north korea 1948-2020

Question 14

what were the 10 inherent problems with the socialist system?

Answer 14

1. Diminishing returns to capital accumulation (Solow model prediction)
2. End of surplus agricultural labour
3. Increasing problems with monitoring and incentives— e.g. Stockpiling inputs to meet output targets, problems with worker motivation
4. Static inefficiency - inefficient resource allocation— lack of price mechanism
5. Dynamic inefficiency - lack of innovation and productive entrepreneurship - lack of “creative destruction” – low growth of A
6. Soft budget constraint - moral hazard problem
7. X-inefficiency - lack of competition - firms off their isoquants
8. Suppressed inflation and hidden unemployment
9. Chronic & sustained shortages - queueing and black markets
10. Political repression - lack of rule of law and individual rights

Question 15

what was the effect on information and why in the socialist country?

Answer 15

Information Gets Distorted In Coercive “U-form” Hierarchy. Managers have incentive to hoard resources and falsify information

Question 16

what does long run sustainable growth depend on?

Answer 16

in the long run sustainable growth depends on improvements in the total factor productivity ie rising efficiency and technological change