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ANALYSIS OF COMMUNIST ECONOMY SYSTEM FAILURES
Capitalism is an economic system in which capital goods are fully owned by the upper class
or businesses. The production of goods and services is based on supply and demand in the
general market (market economy), rather than through central planning (planned economy or
command economy). The bona fide of capitalism is free market or laissez-faire capitalism, in
which upper class are completely unimpeded in determining where to invest, what to produce
or sell, and at which prices to exchange goods and services, operating without checks or
controls. Most modern countries practice a mixed capitalist system of some sort that
includes government regulation of business and is an economic system in which capital
goods are owned by private individuals or businesses. The production of goods and services
is based on supply and demand in the general market (market economy), rather than through
central planning (planned economy or command economy).
The economic system of communism is an economic system which puts all planning of the
economy in the hands of the government. A communist society gives out ownership of
property equally among every member. Because of the gigantic power of the state, small
business is almost non-existent in a communist society. Although numerous efforts have been
made to create communist societies, true communism has essentially died.
Karl Marx inaugurated the ideas of communism during the 1840s in his ground-breaking work
"The Communist Manifesto." During his time, Marx believed that liberal society provide
workers only the illusion of the freedom of religion and property. Essentially, Marx believed
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that capitalism leads to the agenda where elites are controlling the lower classes, in certain area
by giving them token of freedom yet ended up serving the upper class and the "bourgeoisie."
A split between the ideas of communism and socialism, which were largely viewed as the same
thing, occurred during the early 1920s when Vladimir Lenin led the Russian revolution. Lenin
believed a communist society would need one-party rule to quell chaos in the country and
control the economy after a peasant revolution, according to the Library of Economics and
Liberty. Socialists who endorsed to Lenin's philosophy became known as "communists."
A command economy is a system where the government, rather than the free market, decides
the types of good that should be produced, number of products that should be produced and the
price setting at which the goods are offered for sale. It also determines investments and
incomes. The communist economic system is a key feature of any communist society. Cuba,
North Korea and the former Soviet Union are examples of countries that have communist
economic system, while China maintained a communism for decades before transforming to a
mixed economy that features both communistic and capitalistic elements.
Communist economic system is failed to allocate goods due to the lack of knowledge or the
central planner's inability to discern quantity of goods that should be produced. Deficiencies
and surpluses are common consequences of communist economic system. The government is
separated from the body of consumers, whose needs are fluid rather than static. As a result, the
entity that controls the means of production faces constant difficulty responding to everdemands varies across various sectors in a timely manner. In addition to that, the central
government in a communist economic system sets prices relentlessly based on revenue needs,
resulting in pricing that is almost always uneconomical regarding output and demand.
Apart from that, there will be no freedom of speech in communist economic system. This is
because, the private individuals or businesses make every decision. Large or geographically-
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broad populations tend to be heterogenous, making it unfavourable to fix a common goal or set
of rules for shared effort and resources. Furthermore, central planning is difficult to achieve in
communist system due to the disorganized leadership. Consumer’s needs are not taken into
consideration. Moreover, productivity and efficiency are impossible to achieve without
profitability for the labour which is one of the reason for the failure of communism. It is
difficult to achieve internal balances between supply and demand without a price mechanism.
In command economy, the leaders create a plan that outlines their decisions. It's implemented
with laws, regulations, and directives. The aim of the plan is to give to "each according to his
need." Communist countries have free healthcare, education, and other services. The plan also
seeks to increase the nation's economic growth. It secures national defence and maintains
infrastructure.
Many of the personal freedoms that capitalist societies take for granted are eliminated under a
communist regime. Not only is freedom of speech completely taken away, but those who
openly criticize the workings of the government are often subject to severe and overly harsh
punishments.
Even if a family is able to save money from their typically meager earnings, they are not
allowed to provide any sort of inheritance for their family members after they have deceased.
Equality is great, but when a person is not able to accumulate any sort of savings or personal
property, this leaves their close relatives with very little to remember them by once they are
gone.
Creative pursuits are no longer encouraged. Communism focuses on production and
agriculture, things that will support the long-term growth of the nation. When this happens,
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art and music tend to fall by the wayside. If you cannot own artwork or earn a pay check
creating music, there is very little motivation to partake in creative outlets.
The state owns businesses on behalf of the workers. In effect, the government owns a
monopoly. The government rewards company managers for meeting the targets detailed in the
plan.
In communism, central planners replace the forces of competition and the laws of supply and
demand that operate in a market economy. They also replace the customs that guide a
traditional economy.
Unfortunately, communism often leads to widespread corruption among elected officials and
typically encourages greed. The goal is to allow everyone to obtain an equal profit for the
work they’ve done, but it rarely works this way.
When the lower class is unable to question the actions of their superiors, this amount of
power tends to corrupt those who have it. The ruling class of communist nations tends to
become quite greedy, since there is no way for the classes beneath them to gain insight into
how their nation truly works.
Market competition is a primary force of improvement, but it is not found in a command
economy. After all, the government is the one owning all the industries. Plus, it does not
encourage competition, and, it even tries to eliminate it. You would not certainly see the
benefits of competition in countries implementing this economic system.
In a command economy, the needs of the society are often ignored for its betterment. For
workers, they will not be given a choice on where they can move or where they can work.
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Almost all countries in the region saw a return to growth in 2010 and early 2011, with the
rebounds tending to be strongest in the countries that had seen the largest output falls in
2009—notably the Baltic and CIS countries. But a range of factors increasingly took their
toll. The lingering effects of weak private and public balance sheets, along with the emerging
euro area crisis, damaged growth through financial sector retrenchment and withdrawal of
fiscal stimulus (as discussed in Chapters IX and XI) as well as effects on confidence,
investment and trading partner demand. The result was a marked slowdown in growth in
2012 affecting every country of the region, with nine slipping back into recession.
The easing of the euro zone crisis since mid-2012 has given some respite. But the shocks
have left lasting damage to regional growth prospects. While subject to a high degree of
uncertainty, IMF estimates suggest that potential output for the region has declined sharply
since 2008 and is likely to remain subdued going forward. This contrasts with relatively
unchanged estimates of potential output for many other emerging markets. The growth model
that yielded increased income levels and economic convergence prior to the crisis is unlikely
to be available going forward because the elements underpinning this model—strong trading
partner growth and ample foreign bank financing—will probably not return soon. Instead,
strengthening global competitiveness through renewed efforts to implement structural
reforms, and restoring the capacity of the banking system to supply credit to the economy, are
likely to be key prerequisites for raising potential growth in the future.
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