Figure 1.--.

The economic impact of socialism in terms of creating wealth is much more mixed. Many countries which attempted state ownership and central planning have in recent years generally instituted policies to reintroduce private enterprise. The Soviet Union, the Eastern European countries after the imposition of Communism following World War II, China, and several other countries (Cuba, Vietnam, and North Korea) adopted command economies and virtually did away with individual economic activity. Many other countries adopted a range of state involvement resulting in mixed economies. This occurred in much of Western Europe as well as many developing countries. Socialism as conceived by Marx was a stage of ineconomic development that followed industrialization. The Revolution occurred, however, in Russia a largely agrarian society. The apprent success of the Soviets in modernizing the Soviet Union caused many Third World countries after World War II when they became independent to turn to state controlled central planning. The experiment with socialism was so widespread around the world that it permits an assessment of how effective socialist economics were in creating wealth, both in developed industrial economies and in developing countries. One interesting result of the Cold War is that three countries were divided (Germany, Korea, and China), allowing the comparison of how socialist and capitalist economies worked in the same countries.

Socialist Command Economics

Many countries which attempted state ownership and central planning have in recent years generally instituted policies to reintroduce private enterprise. The Soviet Union, the Eastern European countries after the imposition of Communism following World War II, China, and several other countries (Cuba, Vietnam, and North Korea) adopted command economies and virtually did away with individual economic activity. The Bolshevicks who seized control of Russia had a problem. Marxist theory was based on the Revolution occiring in indistrialized country. Thus Communist dealt more with an equitable distribution of wealth. Russia was, however, a largely pre-industrial agearian society. Lennin and his colleagues had to retool Markist doctrune to address the problem of economic development. Soviet propasganda and the Soviet victory in World War II convinced many Third World leaders that Communism was the superior economic system. Communism succeeded , however, in only a fe countries other than those occupied by the Soviet Union. In these countries (China, Vietnam, and Cuba), Communism proved to be an economic disaster. China and Vietnam have since move to introduce free enterprise. North Korea and Cuba have not and are among the poorest countries in the world. The appeal oif socialism in Latin America, however, is such that Cuban leader Fidel Castro continues to be a cult hero. Socialist central planning also proved tgo be a disaster in Russia. Communism was repudiated by the Russians, but it is unclear at this time just what kind of economic system will emerge in Russia and the other countries that emerged from the Soviet Union. Socialist economics also failed in the Soviet Eastern Europe satellites. These countries have all introduced free enterprise, some with considerable success.

Mixed Industrial Economies

Many other countries adopted a range of state involvement resulting in mixed economies. This occurred in much of Western Europe as well as many developing countries. Western Europe along with North America, the Soviet Union, and Japan were the major industrialized countries. Even before World war II, Socialist political powers had begun gaining influence and affecing public policies. This was even more rue after World War II. As a result, the Government in many of these countries began nationalizing industries, especially untilities and transportation. British Labour governments also nationalized the coal industry. Along with state ownership came a range of policies such as extemely high taxes on the wealthy designed to better distribute wealth. The result of these policies were mixed economies. The actual policies varied from country to country as did the impact on the economies.

Developing Countries

Mixed economies also energed in the Third World countries of Africa, Asia, Latin America, and Middle East. One common thread in many of these countries were devlopment strategies involving a major role for state institutions. Socialism as conceived by Marx was a stage of ineconomic development that followed industrialization. The Revolution occurred, however, in Russia a largely agrarian society. The apprent success of the Soviets in modernizing the Soviet Union caused many Third World countries after World War II when they became independent to turn to state controlled central planning. Also the colonial experience was such that many leaders in the developing countries rejected the preceived policies of the colonial powers. The results in many countries was discouraaging. Many countries achieved only minimal growth rates and quite a number experienced negative growth rates. The actual experiences varied greatly from county to country. Here the national experience with ecinomic development involkved more than economics, but a wide range of historical, political, and cultural factors.

Divided Countries

One interesting result of the Cold War is that three countries were divided (Germany, Korea, and China), allowing the comparison of how socialist and capitalist economies worked in the same countries. Here we have examples of both a highly industrial and two largely agrarian societirs.

Created: 12:42 AM 1/10/2007
Last updated: 12:42 AM 1/10/2007