Socialism : A Utopian Concept

Index• Introduction• Demerits Of Socialism• Nazism• Communism• Case study of The Soviet Union• China’s transition from socialism to capitalism• Comparison of socialism and capitalism• Conclusion• Bibliography/Webliography

Introduction

• Advocated by Marx ,Engels , de Saint-Simon• Govt. ownership of productive resources• Planning• Redistribution of income• Peaceful and democratic evolution• Fell out of favour

Demerits Of Socialism

• Lack of incentives and enterprise• Bureaucracy• Inefficient use of resources• Concentration of economic power• Red-tapism• Loss of consumers’ sovereignty• Inflexibility

Nazism

• Officially in German as National Socialism• Elements of Nazism• Economy• Purity of Aryan blood• Anti-Semitism• The Holocaust

Communism-I• Primitive communism : since The Stone Age• Social structure in which classes are abolished• Marxist-Leninism• Capitalism can be overthrown by revolution• The government controls the entire state• All problems are solved by central planning

Communism - II

• Lack of freedom• Stagnant technological advance• Reduced prosperity• Reduced incentives for workers• Poor economic performance• Political repression

Communism-IIICountry Years Growth of

laborGrowth of fixed capital

Capital productivity

Total productivity

Czechoslovakia 1950-60 0.7 3.5 1.3 3.4

1960-83 1.0 4.7 -2.1 0.5

East Germany 1950-60 0.0 2.0 4.1 5.6

1960-83 0.3 4.0 -1.2 1.4

Soviet Union 1950-60 1.2 9.4 -3.6 2.4

1960-83 1.3 7.3 -3.7 0.8

Poland 1950-60 1.0 2.6 2.0 3.2

1960-83 1.5 4.7 -1.4 0.8

Romania 1950-60 1.0 3.1 1.0 2.9

1960-83 0.3 5.0 -2.1 1.2

Hungary 1950-60 1.1 NA NA NA

1960-83 0.4 NA NA NA

Economic development – A regional, institutional, and historical approach

Case study of The Soviet Union-I

• In 1917 Russia was predominately agrarian• Communism was adopted after Russian

revolution• The soviet economy started to revive• But at a cost :Freedom was restrictedWidespread famines occurred

Case Study Of The Soviet Union-II

• The economy of soviet union was based on GOELRO plan.

• A system of collective farms was organized• The economy reached its zenith in mid 60s• Principal-Agent Problem • Then the economy stagnated

Case Study Of The Soviet Union-III

• The economy was resistant to change• Shortage and overproduction occurred• The quality declined• The economy had declined• Finally the Soviet Union was dismantled

Case Study Of The Soviet Union-IVPeriod/ Category

1928 - 1940

1940 - 1950

1950 - 1960

1960 - 1970

1970 - 1980

1980-1985

1986 - 1990

1928 – 1990

GNP 5.8 2.2 5.2 4.9 2.5 1.8 1.3 3.2

Population 2.1 -0.8 1.8 1.3 0.9 0.9 0.9 1.2

GNP per Capita 3.6 3.0 3.3 3.6 1.6 0.9 0.4 2.0

Employment 3.9 0.3 1.6 1.8 1.4 0.7 0.1 1.4

Capital 9.0 0.4 9.5 8.0 7.4 6.2 .. 5.7

Total Factor Productivity (TFP)

1.7 2 0.4 0.5 -1.2 -1.0 ..

0.5

Consumption 3.5 3.3 5.2 5.2 3.4 1.9 2.2 3.2

Consumption per Capita 1.4 2.5 3.3 3.9 2.5 1.0 1.3

2.1

http://www.answers.com/topic/soviet-economic-growth

China’s transition from socialism to capitalism - I

• The reform process began in 1970• The Chinese achieved spectacular results• The reform was achieved through 4 factorsHierarchy of governmentsAuthority within jurisdictionProtection of common marketsHard budget constraints

China’s transition from socialism to capitalism - II

• Competition between jurisdictions• Encourages economic experimentation• Reforms began in the Agricultural sector• Communal agriculture was dismantled• Household responsibility system was used• Township and Village enterprises expanded

production

China’s transition from socialism to capitalism - III

• Decentralization of authority• The proportion of state owned enterprises fell• Competitive pressure rose sharply• In 1995 privatization of state owned enterprises

took place• Largest owned state enterprises are controlled by

the government

China’s transition from socialism to capitalism - IV

Year Growth rate Year Growth rate

1980 7.8 1991 9.2

1981 5.2 1992 14.2

1982 9.1 1993 13.5

1983 10.9 1994 12.6

1984 15.2 1995 10.5

1985 13.5 1996 9.6

1986 8.8 1997 8.8

1987 11.6 1998 7.8

1988 11.3 1999 7.1

1989 4.1 2000 8.0

1990 3.8

Economic development – A regional, institutional, and historical approach

Capitalism vs. Socialism - ICapitalism Socialism

Incentive for greater work and skill. Kills encouragement.

Makes efficient utilization resources. Doesn’t ensure efficient utilization.

Automacy present. Automacy absent.

Flexible. Inflexible.

Freedom to choose profession. Every person is an employee of the govt.

Freedom of consumption. Everything is state produced.

Political freedom One party government

Improved standards of living ,per capita income

Social unrest often takes place

Capitalism vs. Socialism-IIUnited States Of America Soviet Union

The capitalist economy gained strength after strength post World War II

The communist economy faltered in the 1960s and crippled the Soviet Union

Per capita income rose to high levels Per capita income was less than 1/4th of the per capita income in the USA.

US controlled capitalist West Germany had a production level 4 times stronger than East Germany.

Soviet Union controlled communist East Germany production levels had fallen dramatically and goods were of scant quantity.

All citizens were given a chance to air their opinions. Human rights were provided to all.

Human rights were severely restricted. Dissidents imprisoned.

The press was provided complete freedom.

The press was owned by the government and heavily censored

Conclusion

• Socialism is impractical.• Capitalist and mixed economies have achieved

more successes.• Though well meant , it restricts freedom• Thus it remains a utopian concept

Bibliography• Samuelson Nordhaus-Economics 18th edition• Economic development – A regional, institutional, and historical approach• http://en.wikipedia.org/wiki/Soviet_Union• http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union• http://en.wikipedia.org/wiki/Nazism• http://en.wikipedia.org/wiki/Economy_of_Nazi_Germany• http://en.wikipedia.org/wiki/Communism• http://en.wikipedia.org/wiki/Marxism-Leninism• http://en.wikipedia.org/wiki/Socialism