How to make socialist economies grow faster?

[UnknownPerson]

How to make socialist economies grow faster than the former socialist economies of the Warsaw Pact countries?

[MaciejRozga]

Former socialist economies of the Warsaw Pact countries grew very fast. For example Soviet Union has the biggest production of carbon, steel etc. But’ as you probably know, it was centrally planned economy and it had a few problems. They have produced too much ofmeans of production and too little consumer goods.

I think that was bigger problem that too slow growing of economies. It was growing faster that capitalist countries economies.

[UnknownPerson]

Former socialist economies of the Warsaw Pact countries grew very fast. For example Soviet Union has the biggest production of carbon, steel etc. But’ as you probably know, it was centrally planned economy and it had a few problems. They have produced too much ofmeans of production and too little consumer goods.

I think that was bigger problem that too slow growing of economies. It was growing faster that capitalist countries economies.

Although the USSR economy grew very fast from 1930s to 1950s, this is still quite relevant:

http://upload.wikimedia.org/wikipedia/commons/1/11/Soviet_Union_GDP.gifhttp://upload.wikimedia.org/wikipedia/commons/1/11/Eastern_bloc_economies_GDP_1990.jpg

[MaciejRozga]

Although the USSR economy grew very fast from 1930s to 1950s, this is still quite relevant: (...)

After 20 Congress of CPSU soviet planer made some mistakes (for example in agriculture). You noticed that problems emerged in 60s.


But the main problem, in my opinion, was produced too much means of production and too little consumer goods. Why? State Planning Committee in USSR assumed in 50s that after 1960 they’ll produce more consumer goods. It would be good for soviet economy because if citizens would buy more, production should grow. It can’t grow as fast as in 90s because people had money but they can’t bought anything for it. In 90s people can buy anything they want, but much people don’t have enough money.

What to do to socialist economies grow faster? After it has as much means of production as it need start to produce more consumer good than means of production.

It’s my opinion the main problems of socialists economies: Production has ceased to satisfy the needs of society it was set to compete with capitalist countries.

[Tommy4ever]

Is that big spike at the end of the 80s due to inflation or something?

I was under the impression that the Soviet economy was in the midst of collapse at this stage.

[Nox]

Is that big spike at the end of the 80s due to inflation or something?

I was under the impression that the Soviet economy was in the midst of collapse at this stage.

Yeah, I was going to say something looks a little unusual with this graph...

From what I can see, it shows that the GDP almost doubled under Brezhnev :laugh:

[Apoi_Viitor]

As you can see, post collapse growth is pretty high (though it doesn't eclipse the growth of the USSR during its prime), but when you take into account the massive economic growth of the 90's in general (which I pointed out in your other thread), the growth seems to be less impressive.

http://eng.globalaffairs.ru/photo/active/72.jpg

Also, here's a comparison which shows just how well the USSR performed before its stagnation.

http://www.ljplus.ru/img4/h/i/himmelwerft/allen-b3.gif

[mykittyhasaboner]

As if GDP is an accurate way of measuring economic growth......

Can someone point to a comparison of Soviet NMP to post-Soviet GDP (which excludes service, insurance, etc)?

i have yet to find something of the sort.

[UnknownPerson]

As you can see, post collapse growth is pretty high (though it doesn't eclipse the growth of the USSR during its prime), but when you take into account the massive economic growth of the 90's in general (which I pointed out in your other thread), the growth seems to be less impressive.

http://eng.globalaffairs.ru/photo/active/72.jpg

Also, here's a comparison which shows just how well the USSR performed before its stagnation.

http://www.ljplus.ru/img4/h/i/himmelwerft/allen-b3.gif

But why did the USSR stagnate?

[Apoi_Viitor]

But why did the USSR stagnate?

Because


I'm saying Soviet growth throughout its existence was composed of increasing the supply of labor without significant technological advancement (capital intensivity) or labor productivity. The Western capitalist states had long entered modes of intensive growth. The USSR could not maintain growth once all remaining labor reserves (like women outside the workforce previously reserved to the domestic sector, and farm labor) had been consumed.

[UnknownPerson]

Because

Why didn't they start investing in their means of production more extensively even though they apparently saw their economy stagnating?

[Conscript]

The economies of the warsaw pact heavily funded large armies, focused heavily on expanding heavy industry at the cost of others and used its produce to trade for the goods it wouldn't invest in producing in, and the economic plan was largely designed by a privileged elite within the government.

Proper priorities, which will arise from an inclusive plan devised by workers, will ensure proper growth. That way, what's produced/funded is only what the workers feel is necessary, and there will be less waste. The allocation of resources will be much more rational.

[Apoi_Viitor]

Why didn't they start investing in their means of production more extensively even though they apparently saw their economy stagnating?

I don't know... sheer ignorance - of which we can probably ascribe to the lack of democracy in those countries.

Anyways, this pattern of development is more clearly seen in North Korea, which had substantial economic growth in its early years, but which also came to a halt. This is because its leaders were reluctant to engage in measures that would increase its technological efficiency, and instead initiated plans such as the "Taean Work System", etc. which were simply focused on other labor intensive measures.

[UnknownPerson]

I don't know... sheer ignorance - of which we can probably ascribe to the lack of democracy in those countries.

Anyways, this pattern of development is more clearly seen in North Korea, which had substantial economic growth in its early years, but which also came to a halt. This is because its leaders were reluctant to engage in measures that would increase its technological efficiency, and instead initiated plans such as the "Taean Work System", etc. which were simply focused on other labor intensive measures.

Can objectives which are set by the plan modified during the plan so that new investments in the means of productions would be made and consumer preferences would be adjusted to if necessarily? Or do plans have to be static and unchanging? Why not to make them change all the time to adapt to the changes of the real world?

[Apoi_Viitor]

Can objectives which are set by the plan modified during the plan so that new investments in the means of productions would be made and consumer preferences would be adjusted to if necessarily? Or do plans have to be static and unchanging? Why not to make them change all the time to adapt to the changes of the real world?

Of course. Here's an example of just that.

http://en.wikipedia.org/wiki/Cybersyn

[UnknownPerson]

Of course. Here's an example of just that.

http://en.wikipedia.org/wiki/Cybersyn

Does it have to be done with computers?

[Sperm-Doll Setsuna]

Does it have to be done with computers?

Without computer the manpower required would be incredible and quickly turn into a confused mess; for example it was because prices were set manually that Gosplan did not really have price control over more than 200.000 out of 24 million goods, because it was simply not possible to manually manage that many prices.

[UnknownPerson]

Without computer the manpower required would be incredible and quickly turn into a confused mess; for example it was because prices were set manually that Gosplan did not really have price control over more than 200.000 out of 24 million goods, because it was simply not possible to manually manage that many prices.

I realize this, I'm asking because I'm not sure if we currently have the technology to plan an economy of an entire country, let alone the entire world.

That is, to not only set the prices, but also allocate all the inputs to outputs, and doing so starting with the outputs and asking what inputs are needed, and not the other way around (because this way enormous amounts of resources are wasted).

I'm also wondering how exactly do 5-year plans work - are they a set of objectives, prices, etc which can't be changed during the plan?