What Was Joseph Stalin’S Goal In Creating A Command Economy?

Answer: Explanation: Joseph’s Stalin goal in creating a command economy was to outproduce capitalist nations. A command economy is an economy in which the government decides what goods are produced, how much of these goods are produced and the price of the goods.

What was Joseph Stalin’s role in creating a command economy?

Command Economy: Collectivization Stalin’s government also controlled the agricultural economy. The Five Year Plans used a policy called forced collectivization which was intended to increase agricultural output from large government-owned farms created through the integration of smaller private farms.

What was Joseph Stalin’s goal in?

Collectivization and Industrialization – In November 1927, Joseph Stalin launched his “revolution from above” by setting two extraordinary goals for Soviet domestic policy: rapid industrialization and collectivization of agriculture. His aims were to erase all traces of the capitalism that had entered under the New Economic Policy and to transform the Soviet Union as quickly as possible, without regard to cost, into an industrialized and completely socialist state.

• Stalin’s First Five-Year Plan, adopted by the party in 1928, called for rapid industrialization of the economy, with an emphasis on heavy industry.
• It set goals that were unrealistic—a 250 percent increase in overall industrial development and a 330 percent expansion in heavy industry alone.
• All industry and services were nationalized, managers were given predetermined output quotas by central planners, and trade unions were converted into mechanisms for increasing worker productivity.

Many new industrial centers were developed, particularly in the Ural Mountains, and thousands of new plants were built throughout the country. But because Stalin insisted on unrealistic production targets, serious problems soon arose. With the greatest share of investment put into heavy industry, widespread shortages of consumer goods occurred.

1. The First Five-Year Plan also called for transforming Soviet agriculture from predominantly individual farms into a system of large state collective farms.
2. The Communist regime believed that collectivization would improve agricultural productivity and would produce grain reserves sufficiently large to feed the growing urban labor force.

The anticipated surplus was to pay for industrialization. Collectivization was further expected to free many peasants for industrial work in the cities and to enable the party to extend its political dominance over the remaining peasantry. Stalin focused particular hostility on the wealthier peasants, or kulaks.

• About one million kulak households (some five million people) were deported and never heard from again.
• Forced collectivization of the remaining peasants, which was often fiercely resisted, resulted in a disastrous disruption of agricultural productivity and a catastrophic famine in 1932–33.
• Although the First Five-Year Plan called for the collectivization of only twenty percent of peasant households, by 1940 approximately ninety-seven percent of all peasant households had been collectivized and private ownership of property almost entirely eliminated.

Forced collectivization helped achieve Stalin’s goal of rapid industrialization, but the human costs were incalculable.

Why did Stalin transform the Soviet economy?

Stalin wished to make Russia and economic and industrial superpower. HE laid down high targets for production for agriculture and industry. Failure to achieve such standards was met with stiff penalties. THE first plan was aimed at Heavy industry iron, coal, steel, transport and machinery.

What was the command economy of the Soviet Union?

Beginnings of the Soviet Command Economy – The year 1917 saw the Russian czar overthrown by groups of revolutionaries including the Bolsheviks, who fought and won a subsequent civil war to create a socialist state within the borders of the former Russian empire.

Five years later, the Union of Soviet Socialist Republics (USSR) was established, bringing together a confederation of states under the rule of the Communist Party, Starting in 1924, with Joseph Stalin’s rise to power, a command economy characterized by totalitarian control over political, social, and economic life would define the Soviet Union for most of the remaining 20 th Century.

The Soviet command economy coordinated economic activity through the issuance of directives, by setting social and economic targets, and by instituting regulations. Soviet leaders decided on the state’s overarching social and economic goals. In order to achieve these goals, Communist Party officials assumed control over all of the country’s social and economic activities.

What is the goal of a command economic system?

Key Takeaways –

In a command economy, the central government dictates the level of production of goods and controls their distribution and prices.Proponents of command economies argue government control rather than private enterprise can ensure the fair distribution of goods and services.In a free market system, private enterprises set production and price levels based on demand.

What motivates the command economy?

Ownership –

People and firms can own enterprises and invest in a free market economy. Because the government owns practically everything in a command economy, you can’t invest in anything. Profit is the main motivator in a free market economy, but society’s welfare is the key motive in a command economy. Watch this video on: What is Command Economy?

Did Stalin improve the economy?

They argue that although excessively brutal, Stalin’s policies allowed Russia to develop a strong modern economy that sustained a successful war effort in 1941-1945 and propelled the Soviet Union into a dominant power after WWII.

What were the main goals of Joseph Stalin’s Five Year Plan?

The primary goal of the plan was to turn the Soviet Union from a mostly agricultural into an industrialized country. The secondary goal was collectivization of agriculture which was supposed to aid in industrialization. One of the reasons for the plan’s launch in 1928 was the grain shortage of 1927-1928.

Why did Stalin want to build socialism in one country?

Background – The defeat of several proletarian revolutions in countries like Germany and Hungary ended Bolsheviks ‘ hopes for an imminent world revolution and began promotion of socialism in one country by Joseph Stalin, In the first edition of The Foundations of Leninism (1924), Stalin was still a follower of the orthodox Marxist idea that revolution in one country is insufficient.

Vladimir Lenin died in January 1924 and by the end of that year in the second edition of the book Stalin’s position started to turn around as he claimed that “the proletariat can and must build the socialist society in one country”. In April 1925, Nikolai Bukharin elaborated the issue in his brochure Can We Build Socialism in One Country in the Absence of the Victory of the West-European Proletariat? and the Soviet Union adopted socialism in one country as state policy after Stalin’s January 1926 article On the Issues of Leninism,1925–1926 signaled a shift in the immediate activity of the Communist International from world revolution towards a defense of the Soviet state.

This period was known up to 1928 as the Second Period, mirroring the shift in the Soviet Union from war communism to the New Economic Policy, In his 1915 article On the Slogan for a United States of Europe, Lenin had written: Uneven economic and political development is an absolute law of capitalism.

Hence, the victory of socialism is possible first in several or even in one capitalist country alone. After expropriating the capitalists and organising their own socialist production, the victorious proletariat of that country will arise against the rest of the world. In January 1918, Lenin wrote: I know that there are, of course, sages who think they are very clever and even call themselves Socialists, who assert that power should not have been seized until the revolution had broken out in all countries.

They do not suspect that by speaking in this way they are deserting the revolution and going over to the side of the bourgeoisie. To wait until the toiling classes bring about a revolution on an international scale means that everybody should stand stock-still in expectation.

1. That is nonsense.
2. After Lenin’s death, Stalin used this quote, and others, to argue that Lenin shared his view of socialism in one country.
3. Grigory Zinoviev and Leon Trotsky vigorously criticized the theory of socialism in one country.
4. In particular, Trotskyists often claimed and still claim that socialism in one country opposes both the basic tenets of Marxism and Lenin’s particular beliefs that the final success of socialism in one country depends upon the revolution’s degree of success in proletarian revolutions in the more advanced countries of Western Europe,

At the Seventh Congress in March 1918, Lenin explained: Regarded from the world-historical point of view, there would doubtlessly be no hope of the ultimate victory of our revolution if it were to remain alone, if there were no revolutionary movements in other countries.

• I repeat, our salvation from all these difficulties is an all Europe revolution.
• At all events, under all conceivable circumstances, if the German revolution does not come, we are doomed.
• The exponents of socialism in one country contend that Stalin’s theory was firmly in line with the basic tenets of Leninism in that the victory of socialism is possible in one or separate countries while other countries may continue to remain bourgeois for some time.

To support this assertion, they quote Lenin, who said: ocialism cannot achieve victory simultaneously in all countries. It will achieve victory first in one or several countries, while the others will for some time remain bourgeois or pre-bourgeois. The defeat of all the 1917–1923 revolutions in Europe, except Russia, ended the Bolsheviks and especially Lenin’s hopes for an imminent world revolution.

• In his 1918 Letter to American Workers, Lenin wrote: We are banking on the inevitability of the world revolution, but this does not mean that we are such fools as to bank on the revolution inevitably coming on a definite and early date.
• In his report to the Extraordinary Seventh Congress of the R.C.P.(B.) which met on 6 March 1918, Lenin said: Yes, we shall see the world revolution, but for the time being it is a very good fairy-tale, a very beautiful fairy-tale—I quite understand children liking beautiful fairy-tales.

But I ask, is it proper for a serious revolutionary to believe in fairy-tales? There is an element of reality in every fairy-tale. If you told children fairy-tales in which the cock and the cat did not converse in human language they would not be interested.

• In the same way, if you tell the people that civil war will break out in Germany and also guarantee that instead of a clash with imperialism we shall have a field revolution on a world-wide scale, the people will say you are deceiving them.
• In doing this you will be overcoming the difficulties with which history has confronted us only in your own minds, by your own wishes.

It will be a good thing if the German proletariat is able to take action. But have you measured it, have you discovered an instrument that will show that the German revolution will break out on such-and-such a day? If the revolution breaks out, everything is saved.

Of course! But if it does not turn out as we desire, if it does not achieve victory tomorrow—what then? Then the masses will say to you, you acted like gamblers—you staked everything on a fortunate turn of events that did not take place, you proved to be unequal to the situation that actually arose instead of the world revolution, which will inevitably come, but which has not yet reached maturity.

With the proletarian revolutions in other countries having been either crushed or altogether failed to materialize, the nascent Soviet Union found itself encircled by capitalist or pre-capitalist states. According to the interpretation of Lenin’s writings by the exponents of socialism in one country, Lenin laid down a long-term future course of action for the nascent Soviet state and its vanguard the R.C.P.(B.), prioritizing strengthening the nascent Soviet state internally so as to ensure its survival.

The plan was based on, firstly, building a close class alliance between the proletariat and the vast masses of the small peasantry (with assured proletarian leadership of the peasantry), and secondly, constructing a complete socialist society in Russia whilst patiently awaiting and aiding the worldwide class struggle to mature into a world revolution in order to hasten the final victory of socialism.

In his pamphlet, The Impending Catastrophe and How to Combat It, Lenin wrote: The revolution has resulted in Russia catching up with the advanced countries in a few months, as far as her political system is concerned. But that is not enough. The war is inexorable; it puts the alternative with ruthless severity: either perish or overtake and outstrip the advanced countries economically as well,

Perish or forge full steam ahead. That is the alternative put by history. In his speech delivered at the Plenum of the C.P.S.U.(B.), Stalin observed that the aforementioned was written by Lenin as early as in September 1917, on the eve of October Revolution, during the imperialist war, Earlier in the same work, Lenin wrote: It is impossible to stand still in history in general, and in war-time in particular.

We must either advance or retreat. It is impossible in twentieth-century Russia, which has won a republic and democracy in a revolutionary way, to go forward without advancing towards socialism, without taking steps towards it (steps conditioned and determined by the level of technology and culture: large-scale machine production cannot be “introduced” in peasant agriculture nor abolished in the sugar industry).

• Furthermore, in his 1923 article titled Our Revolution, Lenin wrote: You say that civilization is necessary for the building of socialism.
• Very good.
• But why could we not first create such prerequisites of civilization in our country by the expulsion of the landowners and the Russian capitalists, and then start moving toward socialism? Where, in what books, have you read that such sequence of events are impermissible or impossible? Another quote by Lenin further expounded on his ideas in his article titled On Cooperation, where he wrote: Indeed, the power of the state over all large-scale means of production, political power in the hands of the proletariat, the alliance of this proletariat with the many millions of small and very small peasants, the assured proletarian leadership of the peasantry, etc.

— is this not all that is necessary to build a complete socialist society out of cooperatives, out of cooperatives alone, which we formerly ridiculed as huckstering and which from a certain aspect we have the right to treat as such now, under NEP? Is this not all that is necessary to build a complete socialist society? It is still not the building of socialist society, but it is all that is necessary and sufficient for it.

• Opponents of this interpretation, notably Leon Trotsky, have contended that the Lenin quotes adduced in support of socialism on one country are taken out of context.
• They argue that in the 1915 article On the Slogan for a United States of Europe the expression “triumph of socialism possible in a single capitalist country” in context refers only to the initial establishment of a proletarian political and economic regime and not to the eventual construction of a complete socialist society which would take generations.

As for the quote from the 1923 article On Cooperation, Trotsky maintains that the passage speaking of “necessary and sufficient” prerequisites for the transition to socialism is concerned only with the “socio-organisational” and political prerequisites, but not with the “material-productive” and cultural ones which Russia still lacked.

What did Stalin do to try to improve the economy in the USSR?

From Wikipedia, the free encyclopedia The first five-year plan ( Russian : I, ) of the Union of Soviet Socialist Republics (USSR) was a list of economic goals, created by Communist Party General Secretary Joseph Stalin, based on his policy of socialism in one country, The plan was implemented in 1928 and took effect until 1932.

• The Soviet Union entered a series of five-year plans which began in 1928 under the rule of Joseph Stalin,
• Stalin launched what would later be referred to as a “revolution from above” to improve the Soviet Union’s domestic policy.
• The policies were centered around rapid industrialization and the collectivization of agriculture,

Stalin desired to remove and replace any policies created under the New Economic Policy, The plan, overall, was to transition the Soviet Union from a weak, poorly controlled, agriculture state, into an industrial powerhouse. While the vision was grand, its planning was ineffective and unrealistic given the short amount of time given to meet the desired goals.

What kind of economy did Stalin adopt?

Cross-posted from Broadstreet, a blog devoted to historical political economy. The spring quarter at Chicago starts in a week. I will be teaching a course on the political economy of communism and the postcommunist transition. I love this class, which I taught at Wisconsin for many years, and not just because it is an opportunity to subject a captive audience to my repertoire of Soviet-era jokes.

1. State socialism was the great social experiment of the twentieth century.
2. Understanding why it failed, and understanding why the transition from state socialism was not always successful, teaches us much about politics and economics.
3. We begin the quarter with what János Kornai calls the “classical socialist system”: the central features of political and economic governance in the Soviet Union under both Stalin and Brezhnev, and also in many East European countries between 1945 and 1989.

We read Francis Spufford’s superlative novel Red Plenty, which presents in the most readable fashion the underlying reasons why repeated attempts to reform the Soviet economy failed. We dig into those incentive problems, many of which have resonance in other forms of governance.

And we learn of the famine and terror that accompanied a utopian vision that would not be achieved. You see, the Soviet experiment was one of the world’s first attempts at structural transformation—at moving from an inefficient agrarian economy to an urbanized, industrialized economy. In a few short years the Soviet cityscape was populated with factories and smokestacks; Soviet industrial power helped to win the war.

To make an omelette, you have to break a few eggs—or so the many copycats of the Soviet experiment undoubtedly told themselves as they launched their own tragic transformations. This view receded into memory as evidence of Stalin’s horrors became impossible to ignore and as Soviet economic growth slowed in the 1970s and 1980s.

• Recently, however, there has been renewed debate about what Stalin accomplished.
• Two works stand out.
• Robert Allen’s Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution recasts the Soviet Union as one of the world’s most successful developing countries.
• Anton Cheremukhin, Mikhail Golosov, Sergei Guriev, and Aleh Tsyvinski present a far less positive view in “The Industrialization and Economic Development of Russia through the Lens of a Neoclassical Growth Model,” published in the Review of Economic Studies,

The stakes of this debate—for how we understand history, and for what sort of policies developing countries might still be willing to adopt—are important. To help Broadstreet readers understand what is at issue, I spoke with Sergei Guriev. (Sergei, for those who don’t know, is a prominent Russian economist, currently at Sciences Po, who previously was rector of the New Economic School in Moscow and for several years chief economist at the EBRD.) Scott: Sergei, welcome to Broadstreet! I have a number of questions about your paper, but first, why don’t you tell us a bit about what you and your coauthors do.

Sergei: Thanks! In this paper, we build and calibrate a two-sector (agriculture vs. non-agriculture) macroeconomic model of a market economy with distortions. The Tsarist economy was a market economy, but it was not a frictionless market economy. Explicitly modeling and estimating the various market frictions and barriers to reallocation from farm to factory is therefore crucial for understanding the performance—and underperformance—of the Tsarist economy.

We calibrate this model on data from 1885 to 1913 and then extrapolate Tsarist economic performance for decades to come. Our analysis helps us understand the main reasons for Russia’s pre-1913 inefficiencies. We show that these were driven by the lack of competition in the industrial sector; we refer to extensive historical evidence consistent with this analysis.

We then use the same approach to understand Stalin’s industrialization from 1928 to 1940. Stalin’s economy was not a market economy, but our model helps to estimate the kind of distortions a market economy would have had to have in order to replicate Soviet economic performance. We can therefore directly compare not only the aggregate performance of the Tsarist and Stalinist economies, but also unpack the specific reasons why these differed.

We show that while Stalin’s industrialization was brutally effective in moving labor from farm to factory, it greatly undermined productivity growth in both agriculture and industry, so on balance it only slightly outperformed the Tsarist trend. Scott: You are not the first to investigate Soviet industrialization.

Robert Allen, for example, notably argued that investment in heavy industry under Stalin increased growth and living standards. How is what you do different? Sergei: Our analysis is based on the state-of-the-art methodology used in modern analyses of the macroeconomic impact of policies and market distortions.

This approach was pioneered by Cole and Ohanian ( 2002, 2004 ), Chari, Kehoe and McGrattan (2007), and Hayashi and Prescott (2008) for analyses of the U.S., UK and Japanese economies. Our paper is the first to use this approach for a non-market economy.

1. The advantage of this approach is that distortions (both in Soviet and Tsarist times) reflect policies; thus, given the policies we can project the performance of the economy.
2. Furthermore, the methodology allows us to carry out counterfactual analyses—for example, what would have happened to the Tsarist economy if it had different frictions.

In his 2003 book Farm to Factory, Robert Allen used a more traditional simulation model. In many ways, his model is more detailed. For example, he has three sectors: agriculture, production of producer goods, and production of consumer goods; he also allows for centralized vs.

• Decentralized procurement of agricultural production and so forth.
• However, as is usually done in such traditional models, certain key economic variables (for example, the allocation of capital between sectors or rural-urban mobility) are fixed by the modeler rather than determined endogenously (as in our model).

Like Allen, we find that the Tsarist economy was inefficient. Our analysis helps identify the main source of the inefficiency, which is entry barriers and monopoly power in the nonagricultural sector. Furthermore, similarly to Allen’s work, we find that the main contribution of Soviet policies to industrialization and growth was the massive movement of both capital and labour from farm to factory.

1. Unlike Allen, however, we show that Soviet industrialization resulted in significant underperformance of both agricultural and industrial productivities relative to the Tsarist trend; this explains why our analysis finds that the Soviet economy outperformed the Tsarist counterfactual only slightly.
2. We agree with Allen’s argument that collectivization was very costly and that the continuation of NEP without collectivization would have substantially outperformed the actual scenario.

(We do not report our analysis of NEP in the published paper, but it is presented in the working paper that preceded it.) Scott: The economy the Bolsheviks inherited was overwhelmingly agrarian. At least since Gerschenkron, scholars have argued that the peasant commune, with the limited labor mobility it implied, was to blame.

1. Is that what you find? Sergei: We discuss this issue and find evidence that the wage differential between farm and factory was substantial: urban wages were twice as high as rural ones from 1885 to 1913.
2. This may indeed be explained by huge barriers to labor mobility from farm to factory, which can be traced back to the role of the commune.

However, it may also be explained by the costs of obtaining the skills necessary for working in factories—or by other barriers to mobility. One of the disadvantages of our study is that we do not model the role of skills in pre-1917 industrialization.

We have not been able to find reliable data on human capital for that period; I believe this is an important question for future research. Anyway, even if we attribute the full magnitude of mobility barriers to the commune, it is still less important quantitatively than “monopoly capitalism”: the entry barriers and market power in the industrial sector.

Scott: Stalin forced industrialization by coercively redirecting resources from the rural, agrarian economy to the urban, manufacturing economy. The human toll of these policies—mostly centrally, collectivization—was enormous, with millions killed during the Great Famine of 1932–33.

• But it was arguably a sort of Big Push, a top-down reallocation of resources that could not have been accomplished otherwise.
• Did Soviet productivity increase as a result? Sergei: If industry is substantially more productive than agriculture then, indeed, a reallocation of labor from farm to factory would per se greatly increase the economy’s aggregate productivity.

At the beginning of Soviet industrialization, 87 percent of Soviet employment was in agriculture, but agriculture accounted only for 48 percent of GDP. A simple calculation suggests that moving 20 percent of labor from farm to factory would have increased GDP by 69 percent.1 One therefore can agree with Acemoglu and Robinson’s statement in Why Nations Fail that there was “hugeeconomic potential from reallocatinglabor from agriculture to industry.” However, these calculations presume that productivities in both agriculture and industry would remain unchanged.

Our analysis shows that this assumption is wrong: Stalin’s collectivization and industrialization greatly undermined both agricultural and industrial productivity. Scott: One of the interesting ideas of this project (and also Allen’s work) is to explore different counterfactuals. What if, for example, the Bolsheviks had not seized power and the Tsarist regime had somehow managed to reform? What would have happened to the Russian economy? Sergei: This is indeed a major advantage of our approach: our methodology allows us to carry out counterfactual analysis in a credible way.

What would have happened to the Russian economy if it had Japanese policies and market frictions? How would Mao’s industrialization have proceeded if he had followed Stalin’s policies? We have answered these and some other questions in our papers on Soviet and Chinese industrialization,

As to your particular question, in the first of these papers we find that if there had been no entry barriers or monopoly power in the non-agricultural sector, then, by 1940, GDP per capita in the Tsarist economy would have been about 50 percent higher than in the actual Soviet data. Scott: Circling around some of the same issues, the working-paper version of this article asked (echoing Alec Nové ), ” Was Stalin Necessary for Russia’s Economic Development? ” Was he? Sergei: The answer is certainly “no.” Even without accounting for the huge human and social costs of Stalin’s policies, we find that Stalin’s economic performance only slightly outperformed the inefficient Tsarist trend.

Both significantly lagged behind Japan’s performance. Japan is the most natural contemporaneous comparator for Russia and the Soviet Union—as mentioned by Millar (1970), who discussed Alec Nové’s thesis. Indeed, over the period from 1885 to 1913, the Russian Empire and Japan had similar levels and dynamics of GDP per capita.

• Before World War I, Japan also had substantial distortions and barriers to allocation ; we show that these distortions were similar to those of Tsarist Russia.
• However, in the interwar period, Japan managed to reduce those distortions and to accelerate industrial productivity growth.
• Our quantitative analysis suggests that a Russia with Japan’s policies would have substantially outperformed the actual dynamics of Soviet GDP.

Scott: Stepping back a bit, there is a lot of interest among young scholars in Imperial and Soviet economic history and historical political economy. Did writing this paper highlight for you any questions about the Russian and Soviet economy that have yet to be answered? Sergei: Andrei Markevich, Ekaterina Zhuravskaya, and I are now working on a survey of recent research on Russian and Soviet economic history that has been commissioned by the Journal of Economic Literature,

In the last 15–20 years, this field has grown substantially in both quantity and quality, resulting in many publications not only in economic-history but also in general economics journals. Yet, even with this exciting growth, we see many unanswered questions. As we are not finished with our review, let me refrain for the moment from offering a list of those questions.

The complete draft—hopefully available in a few months—will certainly outline an agenda for future research. ———

–,

Was the goal of the Soviet planned economy?

Features – “Catch up and overtake” (Russian: ? ). A 1929 Soviet propaganda poster based on 1917 paraphrase from Lenin, praising the economic superiority of state socialism. The unique features of Soviet-style economy were an ideologically driven attempt to build a total economic plan for the whole society, as well as unquestioned paradigm of superiority of the state socialist system.

Attempts to modify or optimize the former based on pragmatic analysis of economic outcomes were hindered by the latter. Dembinski describes the Soviet approach to Marxist economy as “quasi-religious” with economic publications by Marx and Lenin being treated as a “Scripture”. Michael Ellman describes specific features of the Soviet economic planning in economic and mathematical terms, highlighting its primarily computational challenges.

The theoretical objective of the Soviet economic planning, as executed by Gosplan, was rational allocation of resources in a way that resulted in output of desired assortment of goods and services. The plan was built and executed in annual cycles: each year, a target output of specific goods were determined and using estimates of available input resources Gosplan would calculate balance sheets planning output for all factories.

Who started the command economy?

Examples of Command Economies – Consider these examples of command economies:

Belarus: This former Soviet satellite is still a command economy. The government owns 80% of the country’s businesses and 75% of its banks as of 2022. China: After World War II, Mao Tse Tung created a society ruled by Communism. He enforced a strictly planned economy. The current leaders are moving toward a market-based system. They continue to create five-year plans to outline economic goals and objectives, Cuba: Fidel Castro’s 1959 revolution installed Communism and a planned economy. The Soviet Union subsidized Cuba’s economy until 1990. The government is slowly incorporating market reforms to spur growth. Iran: The government controls wide swathes of the economy through a mix of direct and indirect state control. This control has created inefficiencies and recessions, and sanctions from the international community worsened these hardships. These sanctions ended in 2015 under a nuclear trade deal, before being reimposed by the U.S. in 2018 after President Trump pulled out of the deal. Libya: The Libyan economy is almost entirely dependent upon the oil and gas sector, and most Libyans work for the government. North Korea: For decades, North Korea has had one of the world’s most centrally planned economies. The U.S. government considers North Korea’s industrial capital stock to be nearly beyond repair due to mismanagement, underinvestment, and material shortages. Citizens of North Korea face ongoing famine and starvation issues. Russia: In 1917, Vladimir Lenin and the Russian Revolution created the first Communist command economy. The Union of Soviet Socialist Republics (USSR) was also the longest-running command economy, lasting from the 1930s until the late 1980s. Since the fall of the USSR, the Russian state has transferred ownership of the largest companies to oligarchs,

Was the Soviet Union’s command economy successful?

The economy collapsed when the stability conditions required for a successful command system, that had been present in the Soviet Union for seventy years, ceased to hold. These conditions can be defined by the equilibrium of a game of strategy played by a dictator and a producer.

What is an example of a command economy?

Market Economy vs. Command Economy: An Overview – Market economies and command economies are the two polar extremes in the organization of economic activity. The primary differences surround who controls the factors of production and the mechanisms that determine prices.

The activity in a market economy is unplanned. It is not organized by any central authority but is instead determined by the supply and demand of goods and services. The United States, England, and Japan are all examples of market economies. Alternatively, a command economy is organized by a centralized government that owns most, if not all, businesses and where government officials direct all the factors of production.

East Germany, North Korea, and the former Soviet Union are all examples of command economies. In reality, all economies blend some combination of market and command economic principles.

Which of the goals is most important in a command economy?

The primary goal of these ancient command economies was to accumulate wealth and goods for the ruling class while preserving economic stability.

What does command economy mean in communism?

Conclusion –

• A command economy works with centralized control, which does not allow important factors like demand and supply to decide on production, process, quantity, and price of goods and services produced in a country. It also discourages competition and innovation, which are important aspects of today’s world economy.
• Although the government focuses on allocating resources to achieve economic and social welfare over time, many countries under command economies have failed to match that objective. However, there are certain advantages of the command economy where the government can take rapid decisions as per the requirement of the market to achieve its economic goals.
• As time passes in a new age, especially after the collapse of the Soviet Union in 1991, many economies in the world include capitalism aspects which have created a concept of mixed economies where competition and innovation are promoted. However, certain goods and services remain under government control while most sectors are now controlled by demand and supply.

What is the difference between communism and a command economy?

Is a command economy socialism or communism? – A command economy is like a tree trunk, while socialism and communism are its different branches. Both socialism and communism are types of a command economy. In all three, the government controls businesses, resources, and economic activity in the country.

All have central planning, too. However, there are subtle differences between them. In socialism, everything is controlled by the government. The people and government have a common objective, which is usually social welfare. Profits in socialism are distributed according to people’s contributions. In communism, everyone collectively owns the land and money, and the output is distributed equally.

In reality, pure communism has never been achieved. Instead, we have seen aspirational versions of it in the Soviet Union, China, and Cuba. In communism, private ownership is not allowed. People’s pay is based on only need and not their contribution. Command economy is an umbrella term for any controlled economic system — it encompasses both socialism and communism.

Who benefits the most in a command economy?

What are some of the ways a command economy benefits and harms people? – A command economy benefits its citizens because the government ensures that all individuals are employed. Furthermore, profit isn’t prioritized but rather the worker. It leads to more equality, theoretically.

What are 3 characteristics of a command economy *?

A command economy is a system where the government has total control over the economy it reigns over. Characteristics of this economy include governmental control of wages and pricing, limited property rights, government ownership of key businesses and industries, and robust black markets.

Who created the command economy?

Examples of Command Economies – Consider these examples of command economies:

Belarus: This former Soviet satellite is still a command economy. The government owns 80% of the country’s businesses and 75% of its banks as of 2022. China: After World War II, Mao Tse Tung created a society ruled by Communism. He enforced a strictly planned economy. The current leaders are moving toward a market-based system. They continue to create five-year plans to outline economic goals and objectives, Cuba: Fidel Castro’s 1959 revolution installed Communism and a planned economy. The Soviet Union subsidized Cuba’s economy until 1990. The government is slowly incorporating market reforms to spur growth. Iran: The government controls wide swathes of the economy through a mix of direct and indirect state control. This control has created inefficiencies and recessions, and sanctions from the international community worsened these hardships. These sanctions ended in 2015 under a nuclear trade deal, before being reimposed by the U.S. in 2018 after President Trump pulled out of the deal. Libya: The Libyan economy is almost entirely dependent upon the oil and gas sector, and most Libyans work for the government. North Korea: For decades, North Korea has had one of the world’s most centrally planned economies. The U.S. government considers North Korea’s industrial capital stock to be nearly beyond repair due to mismanagement, underinvestment, and material shortages. Citizens of North Korea face ongoing famine and starvation issues. Russia: In 1917, Vladimir Lenin and the Russian Revolution created the first Communist command economy. The Union of Soviet Socialist Republics (USSR) was also the longest-running command economy, lasting from the 1930s until the late 1980s. Since the fall of the USSR, the Russian state has transferred ownership of the largest companies to oligarchs,

Who started the command economy in Russia?

Historical background – For about 69 years, the Russian economy and that of the rest of the Soviet Union operated on the basis of a centrally planned economy, with a state control over virtually all means of production and over investment, production, and consumption decisions throughout the economy.

• Economic policy was made according to directives from the Communist Party, which controlled all aspects of economic activity.
• Since the collapse of Communism in the early 1990s, Russia has experienced difficulties in making the transition from a centrally planned economy to a market based economy,
• Much of the structure of the Soviet economy that operated until 1987 originated under the leadership of Joseph Stalin, with only incidental modifications made between 1953 and 1987.

Five-year plan and annual plans were the chief mechanisms the Soviet government used to translate economic policies into programs. According to those policies, the State Planning Committee ( Gosudarstvennyy planovyy komitet — Gosplan ) formulated countrywide output targets for stipulated planning periods.

Regional planning bodies then refined these targets for economic units such as state industrial enterprises and state farms ( sovkhozy ; sing., sovkhoz ) and collective farms ( kolkhozy ; sing., kolkhoz ), each of which had its own specific output plan. Central planning operated on the assumption that if each unit met or exceeded its plan, then demand and supply would balance.

Before Command: The Russian Economy from Emancipation to Stalin – Paul R. Gregory

The government’s role was to ensure that the plans were fulfilled. Responsibility for production flowed from the top down. At the national level, some seventy government ministries and state committees, each responsible for a production sector or subsector, supervised the economic production activities of units within their areas of responsibility.

1. Regional ministerial bodies reported to the national-level ministries and controlled economic units in their respective geographical areas.
2. The plans incorporated output targets for raw materials and intermediate goods as well as final goods and services.
3. In theory, but not in practice, the central planning system ensured a balance among the sectors throughout the economy.

Under central planning, the state performed the allocation functions that prices perform in a market system. In the Soviet economy, prices were an accounting mechanism only. The government established prices for all goods and services based on the role of the product in the plan and on other noneconomic criteria.

This pricing system produced anomalies. For example, the price of bread, a traditional staple of the Russian diet, was below the cost of the wheat used to produce it. In some cases, farmers fed their livestock bread rather than grain because bread cost less. In another example, rental fees for apartments were set very low to achieve social equity, yet housing was in extremely short supply.

Soviet industries obtained raw materials such as oil, natural gas, and coal at prices below world market levels, encouraging waste. The central planning system allowed Soviet leaders to marshal resources quickly in times of crisis, such as the Nazi invasion, and to reindustrialize the country during the postwar period.

What kind of economy did Stalin adopt?

Cross-posted from Broadstreet, a blog devoted to historical political economy. The spring quarter at Chicago starts in a week. I will be teaching a course on the political economy of communism and the postcommunist transition. I love this class, which I taught at Wisconsin for many years, and not just because it is an opportunity to subject a captive audience to my repertoire of Soviet-era jokes.

State socialism was the great social experiment of the twentieth century. Understanding why it failed, and understanding why the transition from state socialism was not always successful, teaches us much about politics and economics. We begin the quarter with what János Kornai calls the “classical socialist system”: the central features of political and economic governance in the Soviet Union under both Stalin and Brezhnev, and also in many East European countries between 1945 and 1989.

We read Francis Spufford’s superlative novel Red Plenty, which presents in the most readable fashion the underlying reasons why repeated attempts to reform the Soviet economy failed. We dig into those incentive problems, many of which have resonance in other forms of governance.

And we learn of the famine and terror that accompanied a utopian vision that would not be achieved. You see, the Soviet experiment was one of the world’s first attempts at structural transformation—at moving from an inefficient agrarian economy to an urbanized, industrialized economy. In a few short years the Soviet cityscape was populated with factories and smokestacks; Soviet industrial power helped to win the war.

To make an omelette, you have to break a few eggs—or so the many copycats of the Soviet experiment undoubtedly told themselves as they launched their own tragic transformations. This view receded into memory as evidence of Stalin’s horrors became impossible to ignore and as Soviet economic growth slowed in the 1970s and 1980s.

• Recently, however, there has been renewed debate about what Stalin accomplished.
• Two works stand out.
• Robert Allen’s Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution recasts the Soviet Union as one of the world’s most successful developing countries.
• Anton Cheremukhin, Mikhail Golosov, Sergei Guriev, and Aleh Tsyvinski present a far less positive view in “The Industrialization and Economic Development of Russia through the Lens of a Neoclassical Growth Model,” published in the Review of Economic Studies,

The stakes of this debate—for how we understand history, and for what sort of policies developing countries might still be willing to adopt—are important. To help Broadstreet readers understand what is at issue, I spoke with Sergei Guriev. (Sergei, for those who don’t know, is a prominent Russian economist, currently at Sciences Po, who previously was rector of the New Economic School in Moscow and for several years chief economist at the EBRD.) Scott: Sergei, welcome to Broadstreet! I have a number of questions about your paper, but first, why don’t you tell us a bit about what you and your coauthors do.

Sergei: Thanks! In this paper, we build and calibrate a two-sector (agriculture vs. non-agriculture) macroeconomic model of a market economy with distortions. The Tsarist economy was a market economy, but it was not a frictionless market economy. Explicitly modeling and estimating the various market frictions and barriers to reallocation from farm to factory is therefore crucial for understanding the performance—and underperformance—of the Tsarist economy.

We calibrate this model on data from 1885 to 1913 and then extrapolate Tsarist economic performance for decades to come. Our analysis helps us understand the main reasons for Russia’s pre-1913 inefficiencies. We show that these were driven by the lack of competition in the industrial sector; we refer to extensive historical evidence consistent with this analysis.

1. We then use the same approach to understand Stalin’s industrialization from 1928 to 1940.
2. Stalin’s economy was not a market economy, but our model helps to estimate the kind of distortions a market economy would have had to have in order to replicate Soviet economic performance.
3. We can therefore directly compare not only the aggregate performance of the Tsarist and Stalinist economies, but also unpack the specific reasons why these differed.

We show that while Stalin’s industrialization was brutally effective in moving labor from farm to factory, it greatly undermined productivity growth in both agriculture and industry, so on balance it only slightly outperformed the Tsarist trend. Scott: You are not the first to investigate Soviet industrialization.

Robert Allen, for example, notably argued that investment in heavy industry under Stalin increased growth and living standards. How is what you do different? Sergei: Our analysis is based on the state-of-the-art methodology used in modern analyses of the macroeconomic impact of policies and market distortions.

This approach was pioneered by Cole and Ohanian ( 2002, 2004 ), Chari, Kehoe and McGrattan (2007), and Hayashi and Prescott (2008) for analyses of the U.S., UK and Japanese economies. Our paper is the first to use this approach for a non-market economy.

The advantage of this approach is that distortions (both in Soviet and Tsarist times) reflect policies; thus, given the policies we can project the performance of the economy. Furthermore, the methodology allows us to carry out counterfactual analyses—for example, what would have happened to the Tsarist economy if it had different frictions.

In his 2003 book Farm to Factory, Robert Allen used a more traditional simulation model. In many ways, his model is more detailed. For example, he has three sectors: agriculture, production of producer goods, and production of consumer goods; he also allows for centralized vs.

decentralized procurement of agricultural production and so forth. However, as is usually done in such traditional models, certain key economic variables (for example, the allocation of capital between sectors or rural-urban mobility) are fixed by the modeler rather than determined endogenously (as in our model).

Like Allen, we find that the Tsarist economy was inefficient. Our analysis helps identify the main source of the inefficiency, which is entry barriers and monopoly power in the nonagricultural sector. Furthermore, similarly to Allen’s work, we find that the main contribution of Soviet policies to industrialization and growth was the massive movement of both capital and labour from farm to factory.

Unlike Allen, however, we show that Soviet industrialization resulted in significant underperformance of both agricultural and industrial productivities relative to the Tsarist trend; this explains why our analysis finds that the Soviet economy outperformed the Tsarist counterfactual only slightly. We agree with Allen’s argument that collectivization was very costly and that the continuation of NEP without collectivization would have substantially outperformed the actual scenario.

(We do not report our analysis of NEP in the published paper, but it is presented in the working paper that preceded it.) Scott: The economy the Bolsheviks inherited was overwhelmingly agrarian. At least since Gerschenkron, scholars have argued that the peasant commune, with the limited labor mobility it implied, was to blame.

1. Is that what you find? Sergei: We discuss this issue and find evidence that the wage differential between farm and factory was substantial: urban wages were twice as high as rural ones from 1885 to 1913.
2. This may indeed be explained by huge barriers to labor mobility from farm to factory, which can be traced back to the role of the commune.

However, it may also be explained by the costs of obtaining the skills necessary for working in factories—or by other barriers to mobility. One of the disadvantages of our study is that we do not model the role of skills in pre-1917 industrialization.

We have not been able to find reliable data on human capital for that period; I believe this is an important question for future research. Anyway, even if we attribute the full magnitude of mobility barriers to the commune, it is still less important quantitatively than “monopoly capitalism”: the entry barriers and market power in the industrial sector.

Scott: Stalin forced industrialization by coercively redirecting resources from the rural, agrarian economy to the urban, manufacturing economy. The human toll of these policies—mostly centrally, collectivization—was enormous, with millions killed during the Great Famine of 1932–33.

• But it was arguably a sort of Big Push, a top-down reallocation of resources that could not have been accomplished otherwise.
• Did Soviet productivity increase as a result? Sergei: If industry is substantially more productive than agriculture then, indeed, a reallocation of labor from farm to factory would per se greatly increase the economy’s aggregate productivity.

At the beginning of Soviet industrialization, 87 percent of Soviet employment was in agriculture, but agriculture accounted only for 48 percent of GDP. A simple calculation suggests that moving 20 percent of labor from farm to factory would have increased GDP by 69 percent.1 One therefore can agree with Acemoglu and Robinson’s statement in Why Nations Fail that there was “hugeeconomic potential from reallocatinglabor from agriculture to industry.” However, these calculations presume that productivities in both agriculture and industry would remain unchanged.

1. Our analysis shows that this assumption is wrong: Stalin’s collectivization and industrialization greatly undermined both agricultural and industrial productivity.
2. Scott: One of the interesting ideas of this project (and also Allen’s work) is to explore different counterfactuals.
3. What if, for example, the Bolsheviks had not seized power and the Tsarist regime had somehow managed to reform? What would have happened to the Russian economy? Sergei: This is indeed a major advantage of our approach: our methodology allows us to carry out counterfactual analysis in a credible way.

What would have happened to the Russian economy if it had Japanese policies and market frictions? How would Mao’s industrialization have proceeded if he had followed Stalin’s policies? We have answered these and some other questions in our papers on Soviet and Chinese industrialization,

• As to your particular question, in the first of these papers we find that if there had been no entry barriers or monopoly power in the non-agricultural sector, then, by 1940, GDP per capita in the Tsarist economy would have been about 50 percent higher than in the actual Soviet data.
• Scott: Circling around some of the same issues, the working-paper version of this article asked (echoing Alec Nové ), ” Was Stalin Necessary for Russia’s Economic Development? ” Was he? Sergei: The answer is certainly “no.” Even without accounting for the huge human and social costs of Stalin’s policies, we find that Stalin’s economic performance only slightly outperformed the inefficient Tsarist trend.

Both significantly lagged behind Japan’s performance. Japan is the most natural contemporaneous comparator for Russia and the Soviet Union—as mentioned by Millar (1970), who discussed Alec Nové’s thesis. Indeed, over the period from 1885 to 1913, the Russian Empire and Japan had similar levels and dynamics of GDP per capita.

• Before World War I, Japan also had substantial distortions and barriers to allocation ; we show that these distortions were similar to those of Tsarist Russia.
• However, in the interwar period, Japan managed to reduce those distortions and to accelerate industrial productivity growth.
• Our quantitative analysis suggests that a Russia with Japan’s policies would have substantially outperformed the actual dynamics of Soviet GDP.

Scott: Stepping back a bit, there is a lot of interest among young scholars in Imperial and Soviet economic history and historical political economy. Did writing this paper highlight for you any questions about the Russian and Soviet economy that have yet to be answered? Sergei: Andrei Markevich, Ekaterina Zhuravskaya, and I are now working on a survey of recent research on Russian and Soviet economic history that has been commissioned by the Journal of Economic Literature,

• In the last 15–20 years, this field has grown substantially in both quantity and quality, resulting in many publications not only in economic-history but also in general economics journals.
• Yet, even with this exciting growth, we see many unanswered questions.
• As we are not finished with our review, let me refrain for the moment from offering a list of those questions.

The complete draft—hopefully available in a few months—will certainly outline an agenda for future research. ———

–,

Did Stalin implement the new economic policy?

Disagreements in leadership – Lenin considered the NEP as a strategic retreat from socialism. He believed it was capitalism, but justified it by insisting that it was a different type of capitalism, ” state capitalism “, the last stage of capitalism before socialism evolved.

• While Stalin seemed receptive towards Lenin’s shift in policy towards a state capitalist system, he stated in the Twelfth Party Congress in April 1923 that it allowed the “growth of nationalistic and reactionary thinking.”.
• He also states that in the recent Central Committee plenum there were speeches made which were incompatible with communism, all of which were ultimately caused by the NEP.

These statements were made just after Lenin was incapacitated by strokes. Leon Trotsky and Joseph Stalin disagreed over how to develop the Soviet economy. Trotsky, supported by radical members of the Communist Party, believed that socialism in Russia would only survive if the state controlled the allocation of all output.