Fundamental Features of Socialist Societies

8/2/2019 Fundamental Features of Socialist Societies

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Fundamenta l

Fea tures ofSoc ia listSoc ietiesSO 246, Market Transitions

September 8-13, 2011


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Post-Communist Region


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Key Features of Socialism

Party state

Single-party regimes, where the Communist Party

has autocratic power State subordinate to the Party

Ideologically, socialist system was seen as a stagein the transition towards communism

The goal of the socialist stage was to catch up andsurpass capitalism by doing away with theinefficiencies and injustices of capitalism


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System-specific Attributes

of Socialist Economies

public (collective) property

central planning (bureaucratic coordination)

constitutionally guaranteed right to employment

heavy industrial development (at the expense of

light industry and service sector)

soft-budget constraints


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Realities

of Socialist Economies

Challenges of comprehensive planning on the

national scale

For ordinary folk this resulted in:

Sellers markets (shortages)

reduced role of money

privileges closed distribution channels

dependence on work unit and the party


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Empty shelves in a Polish state store during late

socialism


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Why d idn t soc ia lism work out in

the long run?

Weakened legitimacy of its core institutions

Economic inefficiency

no competition, plan is quantity-based


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WANTED (at the textile

factory): CONSUMERS


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Why didnt socialism work out in the

long run?




draw-backs of state planning

public property


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-- I work nearby, at a meat-processing plant


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Why d idn t soc ia lism work out in

the long run?




draw-backs of state planning

public property

low return on human capital, poor work ethic


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Relative Productive Inefficiency of the

Socialist System

Quoted in Kornai


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How to survive in a country where

goods are scarce and access isdetermined based on the position in

the formal hierarchy?

horizontal networks of cooperation, trust and reciprocity

that move goods, services and information: guanxiin

China, blatin Russia.


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Wide-spread favors and bribing

systemic qualities of socialism?

State and public ownership on most of the propertyrendered bribe-taking and theft the options available to alarge number of people

The ubiquitous role of the state as a producer, distributorand administrator resulted in an inflated bureaucracy,which coupled with rigid and often contradictory rulesmade citizens particularly dependent on the bureaucratsbenevolence

Constant shortages and a system of privileges turned goodsand services into a means of exchange in the hands of thesales staff


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Six paradoxes of socialism

There is no unemployment, but nobody works.


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Nobody works, but the plan is fulfilled.


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The plan is fulfilled, but the stores are empty.


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The stores are empty, but the fridges are full.


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The fridges are full, but nobody is content.


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The fridges are full, but nobody is content.

Nobody is content, but everyone votesunanimously.

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Fundamental Features of Socialist Societies