Chapter 23 –
Comparative Economic
Systems
Section 3 –
Communism
Karl Marx’s Theory
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3.
4.
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Marx’s view of history – all of history is a story of classes competing
for the control of labor and productive property. One class is always
the oppressor and the other the oppressed. (i.e. Middle Ages: nobility
vs. the serf; current times: bourgeoisie vs. proletariat). Eventually,
masses will revolt and bring down oppressors. Communists’ political
role is to hasten the revolution, by violence if needed.
The Labor Theory of Value – Marx rejected the ideas of profit and
competition. The value of anything is the amount of labor put into it
and therefore the worker should get the whole value of it.
The Nature of the State – the state and government are tools by
which capitalists maintain their power and privileges. Other social
institutions also helped. (i.e. he called religion an “opiate of the
masses”, sort of a drug that lets workers tolerate the conditions they
are living in now in the hope they would get what Marx called “a
fictional afterlife.”)
The Dictatorship of the Proletariat – this is a transitional phase that
would happen between capitalism and the ultimate goal – a classless
society. This is an authoritarian state that would enforce the interests
of the workers/masses. Once classlessness was achieved, the state
would “wither away.”
Ultimate goal – a free, classless society in which workers
throughout the world would share a bond, doing away with
nationalism, a major cause of wars.
Characteristics of Communist
Economies
1.
2.
3.
4.
Role of the Communist Party – Communist Party holds the
decision-making power in both the government and the
economy. The government and the party are basically one and
the same.
Central Planning – typically, Communist economies use fiveyear plans that sets goals and states where growth should be
emphasized and what each individual factory and farm must
produce. It also sets prices and decides on distribution of
goods and services.
Collectivization – state ownership of the factors of production.
Merging of small private farms into large government-owned
agricultural enterprises is part of this. Many died resisting
collectivization in the Soviet Union.
State Ownership – Other parts of the economy are also
government owned. This varies from country to country. For
instance, in China many municipal governments, not the
central government, own things like housing, banks, hospitals
and stores.
The Soviet Union
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V. I. Lenin was the head of the Bolsheviks and took power in 1917 in
Russia through revolution. Lenin was a follower of Marx and wanted to
build the world’s first communist state. By the time Lenin died in 1924, the
Soviet Union was a one-party communist state. The person who followed
Lenin was Joseph Stalin, who turned the control into an authoritarian
dictatorship.
The Five-Year Plans – Stalin created an agency, Gosplan, which was in
charge of making the 5 year plans. The first called for collectivization of
agriculture and a higher production of chemicals, petroleum and steel. It
was completed 9 months ahead of schedule. Through later plans, Soviet
Union achieved industrialization, but left consumer goods, housing and
urban services scarce. Housing, food and other goods had to be rationed.
Social Policies – Free education, medical care, free summer camps. Not
classless – as economic incentives for production, cars and vacation homes
went to party officials and others who succeeded or were loyal to the
Communist Party. Not exactly the Marxian ideal of economic and social
equality (in fact – more like what?)
Gorbachev’s Reforms – Gorbachev became Premier (Soviet leader) in
1985 and instituted reforms called perestroika. Leaders gave more
authority to local farm and factory managers, loosened price controls, linked
salaries to performance and allowed profit incentives (sound like ?).
Bureaucrats resisted change, poor harvests, strikes and shortages of food
and goods continued and output did not increase. Gorbachev and the
Communist Party gave up their control of the economy in 1991 when the
Soviet Union collapsed.
Future is uncertain. Privatization (moving from government to private
ownership) began but not sure where Putin will move Russia.
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China
Mao Zedong was the founder of the People’s Republic of China.
Although a Marxist, he believed that instead of the workers, the
peasants would be the key to a communist revolution in China. He took
control of China in 1949 and, because China lacked skilled workers, he
improved technical and scientific education and then assigned workers
to jobs for the state (workers had little choice).
The Great Leap Forward – this was the name of the five-year plan for
1958. It was an attempt to modernize China quickly. All parts of free
enterprise were eliminated. Collective farms were brought together into
larger units called communes. Each commune was to be self-sufficient
run by party officials. The officials oversaw the industry and
government in a region and managed social policy. Workers received
the same compensation no matter how much they produced, so they
had little incentive to work hard. The Great Leap Forward was a failure
and was followed by a famine.
Deng Xiaoping’s Reforms – Deng Xiaoping came to power in 1977
and made changes called the Four Modernizations aimed at 1)
agriculture, 2) industry, 3) science and technology, and 4) defense. He
was more practical and less ideological. Started moving China from
central planning to a market economy and invited foreign investors into
China. Now China is a combination of small shops and businesses
privately owned, and larger businesses managed by the workers in the
workplace, with the state-owned businesses shrinking.
Other Communist Nations
• Fidel Castro – successfully led a revolution in Cuba in
1959. Castro nationalized American owned businesses
so the US broke with him. Soviet Union supported
Castro so in 1961 he announced he was a Marxist.
Cuba depended on the Soviet Union’s economic
support, so they started having problems when the
Soviet Union collapsed in 1991. Government relaxed
economic controls, began encouraging tourism, and
allowed some small businesses.
• Southeast Asia – At the end of World War II, a
communist named Ho Chi Minh fought for Vietnam’s
independence, first against the French and then against
the US. The communists are in control, but like others, it
has moved more to the free market.
• North Korea – Communist since the end of World War
II. Not made much economic growth. Severe food
shortages, even today.