the soviet economy

[lenin]

between 1930-1950 the soviet economy's growth was possibly the fastest economic growth of all time. from backward feudal country to industrial super power ranked second only to the US economy. why? simple, it was actually for capitalist style reasons! stalins economy was incredibly un-complicated. it consisted of basically one thing, heavy industry! the party built thousands of factories across new urban soviet cities. and the gdp benefited massivly from it.
so why did the soviet economy eventually fail? one word, bureacracy! by the time of stalins death, there was lots of new products people wanted like tv's and other consumer products. so what did krushchev do? he ordered the factories that once created steel and iron, to create refrigerators and televisions. this meant the soviet economy got over-bureacrasised. if krushchev would of left the soviet economy the way it was (geared towards heavy industry) and let the private sector take care of the consumer industry, the USSR would still be a dominant economic power. but brezhnev wanted the profits from these consumer products to go to his massive bureacracy! rather than think of the people, he just wanted to please the bureacrats that put him there!
by the time brezhnev died, the economy was in free-fall. gorbachev tried to rescue it but it was too late. in 1986, the chinese (communist) government marketed only 200 consumer products. the soviet government, with its bloated buraecraxcy, marketed over 25,000!
so its simple, heavy industry doesn't need innovative ideas to grow. oil, coal, steel, iron were massive profit makers for the soviet government because there is not trick to selling them! just make a lot, and sell a lot! consumer products and light industry are different though, they need fresh ideas, the sought of fresh ideas you only get when the company is owned by a private individual (because of the incentive of profits).
as much as i hate to admit it, the soviet government needed capitalism in several sectors in 1953. we should of kept out state-owned haevy industry and left the consumer and possibly food insustry to private investors (but still not sold state land). this would of securd the soviet unions prosperity and we could of then gone on to achieve true socialism.

[RedSovietCCCP]

Good point lenin. I'm just sick and tired of the so called communist saying the ussr failed because it wasn't true communist. I know how they fail, you do to lenin. I just can't wait to see what bullshit remark comes first from these so called communist so I can pick away with there answer and disprove them once again.

[Hayduke]

I dont deny that the USSR wasnt a succes.
City's rose up from nowere and productions doubled.

I think it also went wrong cause of the expensive weapons
in the cold war.

[lenin]

interesting that de panama and his cronies have chosen to by-pass this one. pehaps they know they would have to admit stalin was an economic genius.
also, i'd be interested to see a capitalist reaction to this.

[RedSovietCCCP]

d day is a educated person and knows his stuff unlike a lot of people on this site.

[Capitalist Imperial]

Basically, the USSR was outspent/outproduced by the US. Over time, a closed-end economy like the one in the USSR could not compete with an open end economy with the velocity and grownth rate of the capitalistic USA. Capitalistic economies take advantage of both supply and demand side economics, and communist planners can only try to distribute from the supply side. The markets don't self adjust and maximize their efficiency, like in the USA. Also, the US capitalist system's inherent competitiveness encourages more free thinking and fresh thinking, which generated much more innovative products and inventions that it could export and sell to the world. The soviet system did not create many new inventions that the world could buy and use/consume on a grand scale. It cheifly was driven by industrial/raw material production and refinement, but the US also was a heavily industrialized country, and competed in that arena also. Economically speaking,communist economies can't compete with capitalism over time.

[RedSovietCCCP]

Capitalist Imerial one reason soviet union failed, To much military spending!!!! Bankrupt the country. I have no Idea where you got your other shit from. but i do like your qoute "...to secure peice is to perpared for war"

[lenin]

CI, but do you think if USSR kept the stalinist economy for heavy industry and liberalised the consumer and food industries to allow for free thinking, the USSR would still be number 2 economy today? i personally think so. USSR was never going to catch up USA immidiatly because of the fact that USA was industrialsed when russia was under serfdom.
the communist economy can work. look t china now, look at stalins russia. look at DDR, they had good industrial output. i know the standard of living was poor compared to the west, but i think that was mainly from isolation. hungary was also a very succeful socialst country with a high standard of living. in fact there economy hasn't changed much and the communist party have just been re-elected. the planned economy can work, but it needs a few capitalistic elements to get it going.

[Capitalist Imperial]

Lenin, I think you are on to something, I think if the USSR privatized consumer products, leisure services, and even food, they probably would have given their economy a great boost. As for china, their overall GDP is impressive, I think it is #2, but their population is 1 billion +, so China's gdp spread over the population actually results in per-capital gdp that is not that imppressive. I think china's population problem dilutes its economic power as a nation.

Red CCCP, maybe I wasn't clear, but I agree, trying to compete with the USA in military power (which of course comes down to spending) was definately a huge factor. It was actually my main idea (US out-spent USSR), but I did forget to mention the military aspect in my last post. I agree that military spending was probalbly the single biggest factor, though industry was important too.

[Capitalist Imperial]

Oh, and yes, if the USSR had not fallen and remained solvent, and added some free enterprise in some sectors, they would probably be #2 and still competing with the US (i would hope cold war tensions would have lessened, though).

[Ernest Everhard]

short response:

soviet economic planners stressed capital accumulation. The benefits of capital accumulation is that it is the surest way to create predictable economic growth, the disadvantage is that it is ultimately asymptotic.
Capital accumulation comes from savings, the higher a nations cumulative Savings rate the higher its investment will be. The problem here is that you can't save more than 100 percent, its impossible to save more than you produce. Therfore if you save 5 percent in year 0 to create a growth rate of 4 percent, to create an equal economic growth rate for year 1 you must save more than 5 percent and so on. Each year you will have to save more to produce the same rate. Ultimately this is disastrous to your economy for a variety of reasons.
First high savings rates and capital accumulation, exemplified by soviet industrialization Stalin through Kruschev, detracts from consumer product creations. Hence the age old criticism of the the soviet system that could put a man in space but could not efficiently distribute household amenities.
Secondly it detracts from other aspects of economic growth. THe fudemental equation for economic growth is called the sallow-swan model. It states that growth is basically equal to 3 things:
1)change in capital
2)change in population
3)change in productivity (technology)

common sense dictates that it is undesirable to grow your economy with increases in population, so we will neglect that. Capital accumulation as i've shown above is also dangerous because it is asymptotic. Furthermore capital accumulation, in the case of the soviet union detracts from step 3, increase in productivity.
The soviet union was perhaps the greatest industrialized nation that ever existed on the face of the earth, the problem is that the reliance on heavy industry was downright foolish and from a marxist perspective fetishistic (those of you that really know your marx will know what i mean by fetishistic). As the soviet union's economic indexes in steel and coal surpassed those of the US the soviet economic planners decided to push their advantage in those fields and dump lots of their capital investment into the heavy industries. On the contrary private firms in the US and the west moved from heavy industry to high tech robotic manufacturing and information technologies.
That which people like redcccp and lenin here fail to realize is that what they perceive to be the very strenght of the soviet union was perhaps its greatest weakness. The soviets mastered heavy industry when the world moved out of the industrial age. Kinda like perfecting hunting after the advent of farming.

[Capitalist Imperial]

impressive analysis

[Needssomeconvincing]

CI coming up with something other than his/hers your stupid defence! Still takin crap however. Red Soviet got this one right on the head. The USSR were way too paranoid and spent too much on military. Today's russian military is falling apart trying to deal with the Soviet armies remains,troops are paid,they're starving and losing faith in goverment.Mutiny is on its way

[lenin]

i do agree with most of that responce ernest. but i still feel the USSR would be doing a lot better now if there was a liberalisation when consumerism hit the USSR in the early 60's. the USSR did put too much into heavuy industry at the expense of other things, but my point is, the soviet planners shouldn't have even contimplated putting anything into consumer products. they should of left that to foriegn investors. as capitalistic and anti-socialistic as it is, it had to be done for the sake of prosperity in the USSR.

[lenin]

needsomeconvincing, you are absolutyl right about the military. my dad used to be red army and when he speaks to his old comrades, he hears nothing but dispair. he even thinks a military coup could be an option to force the government out!

[Capitalist Imperial]

Quote: from Needssomeconvincing on 10:20 pm on May 31, 2002
CI coming up with something other than his/hers your stupid defence! Still takin crap however. Red Soviet got this one right on the head. The USSR were way too paranoid and spent too much on military. Today's russian military is falling apart trying to deal with the Soviet armies remains,troops are paid,they're starving and losing faith in goverment.Mutiny is on its way


I AGREED WITHH RED CCCP, NSC, YOU NEED BETTER READING COMPREHENSION SKILLS.

[Ernest Everhard]

Lenin I'd have to say that while your approach might have preserved the USSR it would not be desirable in the least. You are saying that the USSR should be a colony to foreing producers of consumer goods. The thing is that you have to ask yourself how they will pay for those foreign consumer goods, with their heavy industry? THe USSR allowed foreign consumer goods they were just too expensive because there was so little hard currency in the hands of ordinary soviets.
You have to realize that an economy is not about how much pig iron you produce as a nation, or how many bushels of wheat are made in your nations agriculture. An economy is about the efficient distribution of goods, its about consumer products its about maximizing the individuals utility. TO create prosperity in the USSR the soviet economic planners did not have to concentrate more on consumer products, nor let foreign companies sell consumer goods to the soviet public , the only plan the economic planners had to undertake was a concentrated effort to eliminate their beauracratic department, all they had to do was stop planning the economy, be capitalist.
Ofcourse they didn't, the USSR collapsed and became an oligarchic state with none of the social institutions that are pre-requisite for succesful capitalist nations. What happenedin the USSR was that when communism collapsed the economic planners bestowed the jewels of state industry to themselves and called it capitalism. Of course the educated mind nows that the USSR is only slightly closer to capitalism today than it was in 1991.

[lenin]

ernest, you seem to know about economic (not being sarcastic) so i'll ask you, what do you think is wrong with todays russian economy? i personally think once oil prices drop, the economy will crash again. even putin says the future is bleak!

(Edited by lenin at 5:51 pm on June 1, 2002)

[Capitalist Imperial]

In simple terms, going from communism to capitalism, especially with an economy like russia, is still generating growing pains.

[lenin]

'growing pains'? is that what you call them? russian economy is in tatters!!!! it isn't communist, it isn't capitalist. it needs sorting out badly!!!!

[Astrofro]

I agree with all of you except the idiots... I leave the decision to who the idiots are to you...

I know this is pointless, I just havnt posted in awhile...

[Capitalist Imperial]

Quote: from lenin on 11:18 pm on June 1, 2002
'growing pains'? is that what you call them? russian economy is in tatters!!!! it isn't communist, it isn't capitalist. it needs sorting out badly!!!!


I agree, i think your idea of maintaining most heavy industrial production and raw resource refinement as centrally planned to maintain some economic stability, but going capitalist with consumer products and services, leisure services, possibly medicine/engineering/technology (giving your very capable and excellent russian scientists more resources and options to realize their true potential) and even food would have been a good option for the soviets to try and maintain their solvency. It would also have forced your nation's minds to become more innovative and inventive, possibly yielding consumer products and ideas that would be desirable to the rest of the world, leading to more exports in that area, which would posititvely and significantly impact your gdp.

[lenin]

CI, couldn't have said it better myself.