Does socialism result in a faster economic growth?

[UnknownPerson]

Wouldn't socialism result in a faster economic growth in a well-planned economy? The reason why I think it would is the fact that the non-working people would be put to work, and therefore the amount of value created would be higher than in a capitalist economy if all the production is coordinated properly.

[Tommy4ever]

Yes and know. In underdeveloped countries (the USSR being the prime example) the planned economy allowed the country to industrialise at a mind boggling rate. The Soviets really did squeeze several decades worth of industrial expansion into a single decade in the 30s.

However, the planned economy started to look incapable and ineffectual from around the 50s or 60s in the Soviet Union and elsewhere. Around this time the post-war boom in the West meant that the planned economies were simply unable to match the West for economic growth and development. Then in the 70s and 80s, across the world, planned economies seemed to go into utter collapse. By the late 80s the economies of the Soviet Union and Eastern Bloc had essentially collapsed and this led to the fall of the Eastern Bloc.

Especially later on, there were major problems with corruption, inefficiency and the mis allocation of resources (in some Eastern European countries the government was still trying to invest heavily in old heavy industries like steel as late as the 70s and 80s in an effort to stimulate growth - these industries were in terminal decline and those funds would have been better used to invest in more high tech and prosperous industries etc etc).

[RebelDog]

Yes and know. In underdeveloped countries (the USSR being the prime example) the planned economy allowed the country to industrialise at a mind boggling rate. The Soviets really did squeeze several decades worth of industrial expansion into a single decade in the 30s.

However, the planned economy started to look incapable and ineffectual from around the 50s or 60s in the Soviet Union and elsewhere. Around this time the post-war boom in the West meant that the planned economies were simply unable to match the West for economic growth and development. Then in the 70s and 80s, across the world, planned economies seemed to go into utter collapse. By the late 80s the economies of the Soviet Union and Eastern Bloc had essentially collapsed and this led to the fall of the Eastern Bloc.

Especially later on, there were major problems with corruption, inefficiency and the mis allocation of resources (in some Eastern European countries the government was still trying to invest heavily in old heavy industries like steel as late as the 70s and 80s in an effort to stimulate growth - these industries were in terminal decline and those funds would have been better used to invest in more high tech and prosperous industries etc etc).

The USSR was a socialist economy?

[Apoi_Viitor]

Wouldn't socialism result in a faster economic growth in a well-planned economy?

Yes.

http://charleskenny.blogs.com/weblog/files/russ6.pdf

[Tommy4ever]

The USSR was a socialist economy?

We both know what the OP meant. Stop trying to be a smart arse.

[Rusty Shackleford]

In underdeveloped countries, yes. It basically forces the whole of society forward instead of waiting around for capitalists to do it or even worse, pinning hopes on colonial occupiers.

But, that is it, really.

the goal isnt infinite and rapid growth. it is about sustainability and setting the basis for communism.

[UnknownPerson]

In underdeveloped countries, yes. It basically forces the whole of society forward instead of waiting around for capitalists to do it or even worse, pinning hopes on colonial occupiers.

But, that is it, really.

the goal isnt infinite and rapid growth. it is about sustainability and setting the basis for communism.

If the planning would be good, I don't see why it wouldn't result in a fast economic growth in developed countries as well.

[SacRedMan]

Look at Venezuela under Chavez :thumbup1:

[UnknownPerson]

Yes and know. In underdeveloped countries (the USSR being the prime example) the planned economy allowed the country to industrialise at a mind boggling rate. The Soviets really did squeeze several decades worth of industrial expansion into a single decade in the 30s.

However, the planned economy started to look incapable and ineffectual from around the 50s or 60s in the Soviet Union and elsewhere. Around this time the post-war boom in the West meant that the planned economies were simply unable to match the West for economic growth and development. Then in the 70s and 80s, across the world, planned economies seemed to go into utter collapse. By the late 80s the economies of the Soviet Union and Eastern Bloc had essentially collapsed and this led to the fall of the Eastern Bloc.

Especially later on, there were major problems with corruption, inefficiency and the mis allocation of resources (in some Eastern European countries the government was still trying to invest heavily in old heavy industries like steel as late as the 70s and 80s in an effort to stimulate growth - these industries were in terminal decline and those funds would have been better used to invest in more high tech and prosperous industries etc etc).

What made the Soviet economy decline in the future? I don't see any reason except for bad and inefficient planning and/or not enough planners for such a big economy.

[Tommy4ever]

What made the Soviet economy decline in the future? I don't see any reason except for bad and inefficient planning and/or not enough planners for such a big economy.

The bureacracy was extremely bloated and corrupt as well as very inefficient. The planners tried to expand the wrong areas of industry (as I mentioned they still plugged away at heavy industry at times when it was clearly no longer efficient). Industry as a whole became very inefficient and was corrupt to the core.

I know this might sound a bit airy fairy, but there also seemed to be a lack of direction. In the 30s the the planned economy was pushing to modernise the country and ready it for war, for all the chaos and problems then the economy actually grew at a tremendous rate whilst there was public enthusiasm and direction. Likewise, after the war there was enthusiasm to rebuild the country - problems and shortages seemed to be just temporary things as the country was rebuilt and things improved. But by the Brezhnev era, things weren't getting better anymore, there was no clear direction and the government seemed increasingly corrupt and incompitent.

The weight of titanic military spending cannot be underestimated either - especially in the 80s (with the Afghan War and Reagan's militarism pushing the Soviets to spend on the military) this became a huge problem.

Perhaps this was a major flaw in the whole Soviet Sytem. It was an economic system created for rapid industrial development - in that it was successful. But it struggled to deal with a situation without that explosive growth.

[LevDavidovichBronstein]

Yes, yes and yes.

[RichardAWilson]

To answer your question: The Soviet-Union was practicing deformed State Capitalism. Central planning can often be inefficient when it's overrun with waste, corruption and fraud.

Central planning is also inefficient when it's made to conform to unreasonable quotas.

Soviet economic growth during Stalin was, to a large degree, overstated. The quota based approach led to waste, lies and misallocations. Workers were forced to adhere to the quotas, otherwise they'd be punished and their supervisors imprisoned. Compulsion isn't as effective as sugar (I.e. Financial Incentives). Soviet-industries did often fulfill the production quotas by producing products that were overweight trash.

This isn't to say that Central Planning can't work when it's managed in the interests of the working classes and those working classes are provided with a voice in the matter. For the United States, Einstein believed that a democratic planning model would lead to tremendous economic growth by putting unused labor to work.

Einstein's "Why Socialism" - It's available online.

In America, democratic socialism would lead to a tremendous increase in wealth and income. Around one in five Americans would like to work and aren't working. Millions have stopped looking because they haven't been able to find a job (The U.S. Rate of Workforce Participation has crashed since 2000). Furthermore, millions of Americans are being imprisoned on worthless charges for marijuana, prostitution and infamous three strike sentencing. We now incarcerate more men and women than the U.S.S.R and so-called Communist China. Imagine the social and economic benefits of putting one in five Americans to work.

Nonetheless, there are even more benefits to a democratic planned economy. Waste, such as on keeping military bases in Germany and South Korea, could be used for providing meaningful economic values (national high-speed rail system for transporting manufactured goods). The eradication of joblessness and poverty would lead to a fall in crime rates. The cash saved on welfare benefits and crime could be used to abolish college tuitions. An educated workforce is, after all, a more productive workforce that would yield more technological innovations.

[Weezer]

To answer your question: The Soviet-Union was practicing deformed State Capitalism. Central planning can often be inefficient when it's overrun with waste, corruption and fraud.

From Leon Trotsky's The Revolution Betrayed

The vast scope of industrialization in the Soviet Union, as against a background of stagnation and decline in almost the whole capitalist world, appears unanswerably in the following gross indices. Industrial production in Germany, thanks solely to feverish war preparations, is now returning to the level of 1929. Production in Great Britain, holding to the apron strings of protectionism, has raised itself 3 or 4 per cent during these six years. Industrial production in the United States has declined approximately 25 per cent; in France, more than 30 per cent. First place among capitalist countries is occupied by Japan, who is furiously arming herself and robbing her neighbors. Her production has risen almost 40 per cent! But even this exceptional index fades before the dynamic of development in the Soviet Union. Her industrial production has increased during this same period approximately 3½ times, or 250 per cent. The heavy industries have increased their production during the last decade (1925 to 1935) more than 10 times. In the first year of the five-year plan (1928 to 1929), capital investments amounted to 5.4 billion rubles; for 1936, 32 billion are indicated.

Inefficient? Maybe on some levels.

[bailey_187]

please can we not debate what the USSR was, we all know there are many views on this siteabout it, its boring to repeat

anyway, the countries that labelled themselves socialist were able to acheive high rates of extensive growth (e.g. building more machinary, factories etc) but were not so great when it came to acheiving intensive growth (growth of production within existing factories/industries etc). So most of the self-proclaimed socialist states saw great rates of economic growth when it came to the early years of rebuilding after the war or overcoming the legacy of underdevelopment, but then began to see a decline in growth rates after this.

[Tommy4ever]

I have something else to say on this matter.

In the early days planning seemed to be rather simple:

If you wanted to industrialise it was easy to plan which heavy industries to invest in and expand. When people were poor it was easy to predict what their demands would be - as they would have little surplus income to spend on luxuries, and when they did buy luxuries they would perhaps be more predictable. But by the mid-60s the Soviet economy had become so advanced that people were able to become more active consumers (as in the West) and now had a much wider variety of demands and the plans struggled to effectively meet exactly what the Soviet consumers wanted. Inspite an ever expanding bureacratic structure to tyr to adress this problem the system proved too clunky and by the Brezhnev era the government seemed to sort of give up on trying to reform the system - just leaving the bureacracy to spiral into the absurdities of the 70s and 80s.

[Rooster]

From Leon Trotsky's The Revolution Betrayed

The vast scope of industrialization in the Soviet Union, as against a background of stagnation and decline in almost the whole capitalist world, appears unanswerably in the following gross indices. Industrial production in Germany, thanks solely to feverish war preparations, is now returning to the level of 1929. Production in Great Britain, holding to the apron strings of protectionism, has raised itself 3 or 4 per cent during these six years. Industrial production in the United States has declined approximately 25 per cent; in France, more than 30 per cent. First place among capitalist countries is occupied by Japan, who is furiously arming herself and robbing her neighbors. Her production has risen almost 40 per cent! But even this exceptional index fades before the dynamic of development in the Soviet Union. Her industrial production has increased during this same period approximately 3½ times, or 250 per cent. The heavy industries have increased their production during the last decade (1925 to 1935) more than 10 times. In the first year of the five-year plan (1928 to 1929), capital investments amounted to 5.4 billion rubles; for 1936, 32 billion are indicated.

Inefficient? Maybe on some levels.

Trotksy also mentions the low quality of commodities and the low productive levels in soviet production. Well, I think he mentions the second part. I haven't read that book for a long time. And it's kind of obvious that a planned economy has the potential to grow at a high rate, especially in a less developed (or a war torn) country where you're basically starting from scratch.