WHAT WAS SOCIALISM AND WHY DID IT
FALL (Alfred Chan)

Production - consumption – markets


Centralized planning
Goals (quotas) - targets that had to reached
Production

To reach quota
 Gov’t supplied all businesses with raw materials
 Delivery system inefficient
 Arrival not right on time
 Result: Hoarding of materials
o To keep production
o For bartering of goods with other producers
 ECONOMIES OF SHORTAGES

Results of inefficiencies
 Hoarding of labour
 Workers doing as little as possible just to get their pay checks

The creation of split between “us” (workers) and “them” (party leaders)
 “ They are exploiting us”
Redistribution


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Socialist key is redistribution vs. Capitalist view of accumulation of profits ($)
Increase dependency of those within
Profit was totally irrelevant
Being able to control the redistribution of goods and products; it gives center
fortified power


But total power is best
The control of everything, the resources and the areas/ land that the resource
comes from.

I.e.) Lemonade stand – control of lemons, water, sugar. (Products)
 The control of the land that the land the raw
materials come from, land that grows
lemons, own source of water.
Consumption


Center has to maintain power
Consumer consumes product – less power by center
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
Result: the distribution of goods to people by center would
maintain power by center
The Fall of Socialism

Accounted to the acts of Hungary
 Hungary’s long-term goal of opening to the west
 Western ideals

Socialist ideas surrounded by Capitalist world
o Socialists weren’t willing to change it’s structure to be competitive
 Result: world markets weren’t able to absorb the sufficient amount
of the products produced to be able to repay debt
o Debt by eastern counties by West
 Gave way to the emergence of the reform factions within
the soviet Gov’t
o 1987 privatization started to take place in selective
state properties
o Flexibility of the perestroika (rebuilding) gave way
to more reforms
At the End

Socialism was contaminated by capitalist ideas
o Capitalist ideas
o Capital import
o Debt services
o Privatization of certain state operations
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