Command or Centrally Planned Economies

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Command or Centrally Planned Economies

• Historical Context
  
• -Industrial Revolution
• -Urbanization
• -Karl Marx/Friedrich Engles
• -Marxism
• -Have and Have Nots
• -Soviet Communism
• - Vladimir Lenin
• -Fall of USSR

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• Industrial Revolution
• Increased machine output that began in 18th
  century in England. Spread to Europe first then
  to US.
• The factory system led to more efficient
  production, cheaper things and urbanization.
• Urbanization move to the cities to work in mines
  and factories.
• New wealth, new middle class

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• Marxism
• Karl Marx Friedrich Engles
• Communist Manifesto/Das Kapital
• Dictatorship of Proletariat
• -rule by class not by
• the individual
• Bourgeoisie vs. Proletariat
• -they exploit the workers, lives are better while
  workers are suffering
• -workers should rise up, masses will win and
  collectively own in society

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• Marx saw a switch from capitalism, to socialism,
  to communism. Society would make these changes
  and government would melt away.
• No more Haves and Have Nots
• Lenin/ Soviet Union
• 1922, after civil war from 1917 -1922
• Lenin became the leader of the USSR
• -wrote the State Revolution, a pamphlet

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• World War I seen as an imperialist war
• Marxist in that he wanted a new
• form of government based on
• workers council Soviets
• -suppress the bourgeoisie in
• order to destroy capitalist society
• evolve in to a socialist society,
• eventually becoming communist.

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• Soviet Union
• Communism characterized by centrally
• planned economy with all economic and
• political power resting in the hands of the
• central government.
• The principle of soviet democracy was that the
  local workers' soviets would elect
  representatives that would go on to form regional
  soviets, which would in turn elect
  representatives that would form higher soviets,
  and so on up to a Supreme Soviet, the highest
  legislative body of the entire country.

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Soviet Union

• Soviet Agriculture
• In the Soviet Union, the government created large
  state-owned farms and collectives for most of the
  countrys agricultural production.
• Soviet Industry
• Soviet planners favored heavy-industry production
  (such as steel and machinery), over the
  production of consumer goods.
• Soviet Consumers
• Consumer goods in the Soviet Union were scarce
  and usually of poor quality.

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Command or Centrally Planned Economy

• Problems
• Poor quality
• Shortages
• Diminishing production
• Lack of incentives
• Discouraged any new change
• Sacrifice individual freedom for societal goals
• Due to Perverse Incentives

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Command or Centrally Planned Economy

• Fall of USSR
• On December 25, 1991, Gorbachev
• resigned as president of the USSR.
• By December 31, 1991 all official
• Soviet institutions had ceased operations
• as individual republics assumed the central
• government's role. The Soviet flag was lowered
  for
• the last time over the Kremlin.
• Perestroika - economic reform implemented by
• Gorbachev.
• The beginning of the end, due to reform of the
• command system.

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• Why did it collapse?
• The economic system could not handle
• economic reform to a more market based
• economy.
• The inefficient command system could not
• hold its own once opened for a market
• economy.
• Post Notes
• Many believed that the GDP would rise, but
• it fell sharply.
• Putin has brought stability, but they are still
  vulnerable to Intl markets due to oil and
  natural gas exports.