What is Communism? Communism Explained | Property Vs Personal Property

Marxism, What True Communism Looks Like

Transcript:

 Now I’m sure most of you have probably learned about communism before and associate it with  countries like the Soviet Union, China, and North Korea.  But what if I told you all of these countries practice a form of communism that departs  drastically from its core values put forth hundreds of years ago?  Now before we get into it, I want to thank you for watching Ben Explains, and if you  like this video and want to see more content like it, hit the subscribe button down below.

 Okay, now let’s get to it. The fundamental ideas of communism have been around since  the Greek philosopher Plato, who argued that private ownership of goods would corrupt the  individual and encourage selfishness. Plato also argued that possessions should be communally  owned, but it wasn’t until the 19th century that the idea of public ownership truly got popular when a German philosopher and writer named Karl Marx co-wrote Manifesto of the Communist Party with Friedrich Engels in 1848.

 Karl Marx was born in 1818 and lived during the Industrial Revolution, where Marx witnessed first-hand how  terribly treated the working class was. He began to write radically anti-capitalist works in Germany  and was eventually forced to leave the country and move to London where he lived the rest of his life.

 Marxism is an umbrella term based on Karl Marx’s political, economic, and social ideas.  based on Karl Marx’s political, economic, and social ideas.  While the name Marxism isn’t all that revolutionary,  some of his ideas were, so let’s talk about them.  Marx’s view of capitalism was that of two classes, a rich upper class that controlled almost everything,  including the means of production,  and the lower working class he referred to as the proletariat,  who worked for the upper class and eventually

 lost their sense of independence and became just another means of production. Marx wrote in his  work Capital, they mutilate the labored into a fragment of a man, deprive him to the level of an  appendage of a machine. Marx thought the solution to this was a society that replaced private  property and profit-based  economics with public ownership, allocating resources based on a person’s abilities  and a person’s needs, thus eliminating social and economic classes.

 The leaders of this society would be democratically elected and wouldn’t make more than the  workers they would lead.  For the most part, Marx left out much of the details on how to accomplish this, but he  did speculate that if it were to happen, it would happen in three stages.  The first stage would be a revolution.

 Marx observed that history is marked by the working class overthrowing the ruling classes.  He thought this would happen again, where the proletariat would overthrow the upper  class. Following the revolution,ariat would overthrow the upper class.  Following the revolution, there would be the second stage.

 And this stage would be a transitional stage, where there would still be some social class and people would be paid for work individually, but would have things like public education  and gradual income tax.  The final stage would be a state of true communism, where everyone is equal and taken care of. After Karl Marx died in 1883 several countries adopted communism.

 During the  20th century as much as one-third of the world was under a communist regime.  During this time Leninism came out of Russia, Stalinism followed it in the new  Soviet Union, and Maoism came out of China, all claiming to be based on the ideas  presented by Marx.  But all of these regimes mixed in qualities of fascism, dictatorship, bureaucracies, and  personal wealth to keep their leaders in power, turning into the type of societies that Marx  spent his entire life opposing.

 Thanks again for watching Ben Explains, and if you liked this video remember to click life opposing.

What Is Communism? & Why It’s Doomed To Fail

Transcript:

 Hello R-Tube. Today we’re going to be learning about one of the most controversial political  philosophies, communism. What it is, and how we can make it work if we try it properly  for once. What is communism? Communism is a political ideology that in a nutshell looks  to remove money and private ownership and distribute everything among the people.

 This  is not to be confused with socialism that gives everyone equal share in profit and prosperity.  Socialism is what’s been attempted before.  Communism has not.  Socialism is sort of the bridge between capitalism and full-blown communism.  In a communist society, everyone works, and everyone is provided for equally.

 If you’re struggling, your fellow man is there to help you out.  If you’re able to work more, you do.  The goal is to take the power away from those who own the means of productions and don’t do any work, the bourgeoisie, and place it in the hands of the workers, the proletariat.  The thought is that those who own the means of production are the oppressors who get most of the profit from that production.

 But they don’t have to work, and they only profit because they own the facilities or machines.  Whereas the people who are actually working on the production are paid as little as possible to sustain them.  In communism, this is flipped upside down and the workers are provided the means of production,  with the rewards being provided to everyone much more evenly.

 What does the ideal communist world look like? So in an ideal communist world,  the worker or the proletariat will take the means of production from those who have the means,  the bourgeoisie.  And we will have a society where people do what they can and take what they need.  In an ideal communist world, we are all one big tribe looking out for one another.

 No one is greedy and no one takes everything for themselves.  The good thing is though, with the current abilities of production, we would be able to create a world where people don’t actually have to work that much.  And instead of shunning this, we should call it freedom, and give people the freedom to pursue whatever they find fulfilling.

 This is the communist vision.  Karl Marx lays out that when capitalism is overthrown, there’s a transitional period  where most lands are transferred to the state.  There’s still an income disparity, but that disparity goes to the government in the form  of massive taxes where it will then be doled out to help reduce income inequality.

 Credit, communication, and transport will be centralized by the state,  which is designed to mean individual enterprises won’t have a chance to steer the economy  as big banks and big cell phone monopolies do today. Abolition of the right of inheritance  means that when you die, you can’t pass along everything you own to your kin. This  helps to make it so everyone is boned with equal chance of opportunity, and it’s also healthier to have the wealth  be redistributed after someone’s death than during their life.

 There are many forms of communism, Leninism, Maoism, Stalinism, Trotskyism, but they are  all variations of Marxism as explained in the Communist Manifesto. In the manifesto, authors Karl Marx and Friedrich Engels  try to highlight that in order for communism to be successful,  capitalism has to reach its peak.

 In providing the proletariat the means to centralize, communicate,  and traverse fast and effective enough to overthrow the bourgeoisie.  Why hasn’t this worked?  Communism hasn’t been attempted in its pure form. Instead,  we’ve only seen attempts at socialism.

 One of the main reasons communism has failed is because  every time it’s been attempted, it hasn’t been at the peak of capitalism, which is what’s required  according to Marx. Another reason it’s failed in the past is simply corruption. In theory,  you take what you need and you do what you can. That’s great. But the people who are in charge  of distributing what you need are people too. And given power, people are corrupt.

 In communist societies, the one place of centralization is the government. Leaving the government  in charge of controlling everything is always a bad call. There are certain things like  fire departments and police forces that shouldn’t be for profit where a fire won’t be put  out unless it’s profitable to the fire departments.

 But if you’re putting your bread production in the hands of the government,  what you get is a really inefficient process.  This is because most things in government are run on bureaucracy,  which doesn’t remind anyone of efficiency or effectiveness.  So the better game plan is to just leave bread making to the baker  who has an incentive to make it efficient and easy for you,  because if he buys bread, he can feed his family.

 But can communism work if it’s done properly?  What if we have a society that properly overthrows the bourgeoisie  and redistributes the wealth properly,  takes away land and titles and money,  and we have a world that finally looks like the communist utopia we were promised?  Where everyone has what they need, and they do what work they can.

 Can this work?  It all comes down to human nature.  In marketing, there are  certain few biological drives that are used to get people to pay attention and  need to buy your product. One of those biological drives are to be superior,  winning, keeping up with the Joneses.

 We have a biological urge to be better than  our neighbors. In communism, the goal is to care about your fellow man, but your  biology is built to recognize hierarchies. Your genetics say you need to climb to the top.  You need to gather resources so you can take care of your family or have more opportunities to find a mate.  Although we like to think of ourselves as advanced creatures, research has shown we’re only able to support about 150 relationships.

 We don’t care about the millions of people in our country who we’ll never speak to or see.  Why should you work hard to support someone else?  It doesn’t sound fair and it doesn’t make sense. Likewise in the government, you have access to  all this money and you’re supposed to dole it out evenly.

 But most of the people you aren’t ever  going to meet or see, but your family, your friends, they could benefit if they get just  a little bit more. We won’t ever see communism succeed because in my opinion you can’t have a  political ideology that goes against human nature.  If humans are inherently greedy, how can we build a world where greed is harnessed to benefit others?  This is just one person’s opinion, and it’s not an open and shut case.

 As far as the world is seen, communism and socialism haven’t been successful.  Although there are many aspects of socialism that help keep capitalism balanced, it’s not all just black and white.  Now I’d like to hear your opinion in the comments.  Do you think that communism can ever work?  Let me know.

 And also make sure to check out some of our other videos for more philosophical or political  ideas.

Communism vs. Socialism: What’s The Difference?

Transcript:

 This might come as a surprise, but in the history of the modern world, there has never  been a communist country.  While a number of countries have described themselves as communist, for example China  and North Korea, by definition there has never been a true communist country.  So what exactly is communism, and how does it relate to socialism?  Well, it may be easier to explain what the two have in common.

 Both ideologies originate from a desire to limit worker exploitation and lower or eliminate  the influence of economic classes in society.  There are dozens of variations on both communism and socialism based on the different ways  these ideologies are implemented in different countries.  There’s Stalinism, Leninism, Trotskyism, Maoism, and others which are essentially all  versions of Marxism, coupledotskyism, Maoism, and others which are essentially all versions  of Marxism, coupled with various styles of revolution.

 Karl Marx was an economist and philosopher who co-wrote the Communist Manifesto, among  other foundational books on communism.  In short, his theory centered around the idea that as Europe transitioned from centralized  monarchies to quasi-democratic capitalist economies, workers were being exploited  by those who owned the means of production.

 So if you work in a factory or on a farm, as many at the time did, whoever owns the  factory or farm is getting more out of the worker than they’re putting in.  This creates an inherent inequality, giving the owners, whom Marx called the bourgeoisie,  power over the workers, called the proletariat.  In Marxism, to fix this inequality, society must shift towards a model where the proletariat  hold this power instead, by collectively controlling the means of production.

 That’s where socialism and communism come into play.  According to Marx, socialism is a precursor to communism and the next logical step after  capitalism.  In socialism, a democratic state controls the means of production, rather than having  private companies hold ownership.  Instead of competing with each other as in a capitalist society, socialism has workers  contribute as much as they can to the greater good, and then they all share equally in that  good.

 Variations of this idea are already popular within capitalist societies in the form of  universal healthcare, or social services like fire departments and schools funded by taxes.  While the use of these services is unequal, everyone is equally responsible for contributing  to them based on their ability or level of income.

 So that’s socialism.  But once the state controls all the means of production, the next step is total collective  ownership, not just of production, the next step is total collective ownership,  not just of production, but all aspects of society and economy, including private property.  The intention of abolishing private property is a classless, moneyless, and stateless society,  where everyone works towards the same collective goal of being healthy, happy, and free.

 Everybody does what they can to contribute, and takes only what they need in return.  As I said before, there are no true communist countries, and there never have been.  Every so-called communist country is actually a socialist country, with the state controlling  employment and economy to some degree.

 Even the widely referred to Communist Russia was actually called the Union of Soviet Socialist  Republics.  In short, socialism and communism are not altogether different.  Rather, most schools of economics consider socialism to be a precursor to communism once  the state has enough control over society and economy.

 But this total control is a major reason that socialist countries struggle to reach this  ideal.  Corruption is rampant in countries like the former USSR, Venezuela, Vietnam, and North  Korea, largely due to people in power abusing that power instead of using it to help the  society they control, and refusing to give up that power to the people.

 Nonetheless, socialist ideals have seen incredible success when paired with capitalism, in countries  like Sweden and Canada.  The human hurdle of overcoming power and greed in government is the biggest reason we’ve  never seen a true communist country.  So which countries have been labeled communist, and how do they actually live up to their  reputations?  Find out in this video to the right.

 Thanks for watching NowThis World, don’t forget to like and subscribe for more videos  like this every week.

Soviet Style Economics Was Insane and Here’s Why

Transcript:

 It’s the 1920s and almost every major economy is booming.  The Roaring Twenties was a decade defined by its opulence, opportunity, and hope for the future.  With the end of the First World War in 1917, the global economy was supercharged and led  by American industrial growth, which then boasted almost half of the world’s total output.

 From 1920 to 1929, the US economy grew by a massive 42%,  spurred on by the widespread adoption of mass production and the introduction of electricity.  The UK and France rebuilt and maintained their powerful colonial empires and even Germany was  starting to see a major economic rebound by 1923.  However, the economic euphoria came to a screeching halt.  It was panic. Sixteen and a half billion shares of stock sold in a single day.

 Sold hopelessly,  desperate, at any price.  The market crash of 1929 and subsequent Great Depression steamed the role of the global economy.  U.S. industrial production plummeted by 47% and unemployment soared to 20%,  decimating the growth of the prior decade. Every major economy experienced incredible  contractions to their outputs, incomes, and workforces. Well, except for one.

 Largely cut off from global economic banking and trade, as well as not being subject to demand shocks,  the Soviet Union was a single country that didn’t just get through the Great Depression, but thrived.  Rather than contracting, the Soviet economy continued its dramatic economic and industrial boom, increasing its total industrial output between  1929 and 1934 by a whopping 50%, all while maintaining effectively zero unemployment.

 In light of such a major economic downturn in contrast, some Western economists praised  the Soviet Communist system, with some going as far as to claim its superiority over Western  capitalism.  In just a span of 40 years, the Soviet Union went  from being a backwards, impoverished agricultural monarchy to being the defeater of fascism,  the first to launch a satellite and man into orbit, and the largest sole proprietor of weapons  of mass destruction ever. The Soviet Union catapulted itself onto the world stage as just

 one of the two remaining superpowers, yielding the largest military and second largest economy. However, as quickly as it arose, the Soviet Union collapsed  as a result of its crumbling economy. But why? How is the once envied Soviet economy now in ruins,  only to have left a bloodied print on human history? This is the story of the Soviet economy.

 human history. This is the story of the Soviet economy.  To truly understand the Soviet economy and the path it ultimately took, we need to first understand the fundamental forces and conditions that caused it to arise in Russia in the first  place. To do this, we have to travel all the way back to the 14th century.

 Following the fall of  the Roman Empire, the dominant form  of European governments was feudalism. Feudalism was a system in which a king would personally own  all the land in the country. To maintain control and security, the king would then divide up the  land and distribute it to a class of lords.

 In return for the land, the lords would then provide  military for the king when needed. The lords would then make use of their holdings by forcing the vast peasant population to pay for living and working on the land by paying  heavy taxes and performing extensive unpaid labor. This was called serfdom, and the peasants,  known as serfs, were tied to the land, meaning they were not allowed to move away without the  lord’s consent.

 This system was designed to exploit the vast lower class and have the small amounts  of wealth produced to trickle upwards to the elites.  A system that acts in this way is known as an extractive economic system, and it is held in place by an extractive political system.  The political system in this case was simple.  The only people with control to change things in the country were the small group of lords and kings,  therefore it was nearly impossible for the peasant situation to improve since the elites had a vested interest for things to stay the same, and for a long time they did. However,

 in the year 1346, in the port city of Tanna, where the Dod River meets the Black Sea in modern day  Russia, the first known European case of bubonic plague or Black Death appeared. Having been spread  from China via the Silk Road, the plague quickly swept across Europe killing nearly 50% of the population anywhere it went.

 The extreme loss of life  of the peasant population shook the foundations of the feudal system to its core. With a new  massive scarcity of labor, suddenly the value of peasant labor had skyrocketed and thus  the power to bargain. Faced with a shortage of workers, desperate lords across Europe started  to try and steal one another’s peasants by promising to require no extensive work and or  reduce taxes.

 This resulted eventually in a near or in some places total abolishment of unpaid labor,  significantly increasing peasants’ living conditions, wealth, and eventually power to  demand further changes. By 1351 the English government  in a attempt to maintain the power and wealth of the elites instituted a statue  that punished peasants with prison time if they moved from their current Lord’s  land.

 This would have the effect of fixing wages and unpaid labor  requirements to pre-plague levels. Not willing to see their newfound freedoms  go away, this culminated in the 1381 Peasant Rebellion in England, which saw the rebels taking London.  Eventually, the rebellion was put down by the king. However, there was never another attempt to enforce the statue.  This happened all over Western Europe, effectively creating a new, more inclusive labor market.

 Opposite to an extractive economic system, an inclusive one does not rely on the desires of the upper class, but on the equilibrium of markets. Therefore, wages cannot be artificially lowered, but rather  workers are paid based on their value to their employer. While in the case of Western European  peasants after the plague, the system was by no means inclusive.

 However, it was importantly  less extractive than before. This small gain in wealth caused a small gain in power to act and organize in the future. Over time this compounded until when the  time was right a broad coalition of workers, soldiers, businessmen, etc. could  then rise up to make demands or even remake the system to be more inclusive.

 When a coalition is sufficiently broad it makes it so no one single group is  able to make a power grab to cement themselves as the new elite,  becoming equally as tyrannical as the old ones. Eventually, this led to secure property rights,  a crucially important foundational element for the Industrial Revolution, which supercharged  national economies and living standards for all that lived in them.

 This was the story of economic  development in Western Europe., however it contrasted drastically  with Eastern Europe.  Unlike their Western counterparts, the peasants in the East were more spread out, lived in  smaller villages, and were less organized while their lords controlled larger and more  powerful swaths of land.  In response to the labor scarcity caused by the bubonic plague, the Eastern lords snapped  up more lands and added to their holdings while also clamping down on the peasant population  even more harshly. Since the Eastern peasants were less powerful, their

 rebellions either didn’t happen or failed miserably. They didn’t see any new  freedoms afforded to them but rather had even more taken from them. This was  further exacerbated by the 16th century when Western demand for agricultural  products like livestock and wheat produced in the East grew rapidly.

 With this increased demand, the lords sought in their  best interest to place even tighter controls on the peasants, demanding more unpaid labor and  levying even more taxes. The gap in wealth, power, and freedoms between the peasants in the West and  East grew large. This fundamental divide in Europe compounded over the centuries. While in the West,  the lower classes were eventually able to overthrow absolute monarchies  and replace them with much more inclusive constitutional ones, or even republics,  the Eastern Kingdom stayed almost exactly the same, or even became more extractive.

 First in the British Isles, then in the US, and later in Western continental Europe,  the Industrial Revolution began in the mid-18th century.  Spurred on by fair legal systems and property rights on intellectual property, people could now  profit off of discovering new inventions and processes without fear of someone robbing them  of their ideas.

 This caused an explosion of new patents, inventions, and systems, which  dramatically increased the productivities and efficiencies of industries and economies.  For the first time in history, sustained economic growth occurred and the living standards of  all increased exponentially.  By the turn of the 20th century, powerful industrial manufacturing bases were established  in Britain, France, Germany, and the United States.

 However, the Industrial Revolution was faced with staunch opposition in the eastern countries  that still maintained absolute monarchies and extractive systems like that of the Russian Empire.  In the year 1850, Russia comprised 1 7th of the entire Earth’s landmass  stretching from Germany all the way to Canada, yet its total economy was  relatively small and its citizens still poor.

 This was not for without good  reason. Russia was still based  on the feudal system of the 14th century, meaning the king, known as a czar, had near total control  over his population, and the small nobility class exploited the poor by being in charge of the old  traditional industries.

 The king and the elites feared the creative destruction that was brought  on by industrialization. Creative destruction refers to the process of new inventions or  systems that upend old industries and replace them with more efficient and productive ones,  thereby taking wealth and resources away from the established elite class while also building a more powerful middle class that would be able to challenge the current system.

 Therefore, to keep control, the Tsar actively stopped industrialization, effectively curtailing economic growth during the 18th, 19th, and early 20th  century. As a result, the Russian Empire was an extremely backwards, impoverished state which had  very little in the way of freedoms for the population.

 Serfdom was finally abolished in  the Russian Empire in 1861. However, it was replaced with a system that kept many of the  same oppressions with little increase in quality of life. By this point, Russia was woefully behind the others in terms of heavy industry and  military.  Before 1853, the entire Russian Empire had only a single railway.

 This only changed when the decisive defeat of the Crimean War showed that their lack  of rail was a major security threat against their much more industrialized neighbors.  By 1914, the Russian society, outraged from centuries of oppression under a tyrannical  monarchy, had been repeatedly revolting unsuccessfully in an attempt to gain the  freedoms those in the West had enjoyed.

 Coupled with a Tsar that was  particularly incompetent, Nicholas II, in an embarrassing defeat against the  Japanese in 1905, the seeds of revolution had been sown and the entire system had grown unstable. Then on August the 1st 1914,  Germany, because of obligations to defend Austria-Hungary after its invasion of  Serbia, declared war on Russia.

 By 1917, Russia was losing badly to the Germans,  its people were starving, its economy had collapsed, and its ruler, Nicholas II, had made some pretty terrible political decisions, like placing himself  as the commander of the military while leaving his German wife in charge of the country.  Protests erupted in Petrograd, soldiers began a mutiny, and Vladimir Lenin, the exiled head  of the Communist Bolshevik Party, was smuggled into the country by the Germans, who had hoped  would cause further internal conflict, which it did. Under enormous pressure,

 Tsar Nicholas II abdicated the throne which had been held by his family for over 300 years.  The country quickly became divided between the provisional government held by the less radical  revolutionaries and the much more organized and radical communist Bolsheviks.  Eventually the country broke into a bloody and  grueling three-year-long civil war.

 By the end, Russia was in ruins and the communists,  under the command of Lenin, had taken and cemented control of the country,  formally creating the Soviet Union shortly after. The ideology of the communists were based on the  ideas of the German philosopher Karl Marx. He believed a constant battle between capitalism  and workers  would ultimately result in a revolution, for which the working class would seize the means of  production and build a classless society where private property would be abolished and everyone  would work for the common good. The Russian revolution, which was originally based on these

 ideas, was to replace the old extractive czarist government with a more equal socialist one.  However, the party that took control, the Bolsheviks, were not a broad coalition of the  working and lower class like the Western revolutions, but rather a small group of  highly radicalized and organized Marxists.

 Therefore, there was no built-in  mechanism to stop them from becoming tyrannical themselves like there had  been in the West. The first thing the Bolsheviks did was make themselves into  a new class of political elites much the same as the ones they had been in the West. The first thing the Bolsheviks did was make themselves into a new class of political elites much the same as the ones they had destroyed in the revolution.

 They disallowed anyone who disagreed with them from joining the party and sought to  institute their socialist utopia through force. In 1918, during the Civil War, the first real  display of the communist economy was put into place called War Communism. All industries were  nationalized and all economic processes were to be controlled by the state.

 Because of the desperate state of  the economy, the Bolshevik Red Army was unable to get the weapons and food needed to win the war.  Food and grain was seized from the rural peasants and all industry was allocated toward military  manufacturing. By 1921, the new economic policy was instituted because war communism had dramatically  reduced agricultural output and peasant public opinion.

 The NEP from 1921 to 1928 made agriculture  and small businesses private again to stabilize food supply. The economy began to recover,  but mostly as a result of rebuilding after complete collapse.  result of rebuilding after complete collapse. In 1924, Lenin died of a stroke and shortly after, Stalin took control as head of the  Communist Party.

 In 1928, the first of the five-year plans was set into motion which nationalized all  production once again.  By this point, the entire Soviet economy was entirely commanded from above, meaning that  every input and every output, from every factory, every input and every output from every factory,  every farm, every enterprise, every store, every price, all aspects of the Soviet economy was  dictated by the government.

 Stalin and the innermost party officials in the Politburo  would decide the general direction of the economy, then through a series of government agencies,  an extremely intricate and detailed plan would be laid out. After a series of minor  negotiations with managers of the individual farms and factories, the five-year plan was put into law.  The first major initiative of Stalin was to radically grow the heavy industry, which included  steel and military manufacturing, in a desperate attempt to catch up economically to the other  European powers. Stalin deeply feared that another war

 would come and that being so behind in industrial development, the Soviet Union wouldn’t be able to  stand a chance. In an amazingly accurate and chilling speech given by Stalin at the first  workers’ conference in 1931, he stated, we are 50 or 100 years behind the advanced countries.  We must make up this gap in 10 years.

 Either we do this,  or they will crush us. It would be exactly 10 years later when the Germans launched the largest  land invasion in history into the Soviet Union. The way in which this plan of rapid industrialization  was to be carried out was to dramatically tax agriculture and ship massive amounts of food,  labor, and supplies to the factories in the cities.

 In 1928, roughly 85%  of the entire Soviet population was rural peasants whose backward, traditional way of doing things  caused farming output to be very unproductive. Taxation of these small, scattered village  communes was also notoriously inefficient. Stalin’s way to deal with these problems was to  force all the peasant farmers onto state-run or communal farms which lumped hundreds or thousands together to work for the state.

 This process was known as  collectivization and it would directly lead to the deaths of approximately 12 million people.  Almost all the food produced was shipped to the cities to aid in the main goal of  industrializing the heavy industries. Taxation and the redistribution of food became easier,  however the inefficiencies  were further exacerbated by the lack of incentives since farmers’ output had no bearing on how much  they were paid.

 The agricultural sector continued to be a serious thorn in the Soviet economy for  the rest of its history, and it highlights the first major problem with the Soviet economic system,  that of incentives. In a capitalist society, you have total freedom to change your job and work anywhere else  that will hire you.  If you work smarter, or harder, or longer, you provide extra benefits to your employer.

 Not wanting to risk losing you to another employer, they will reward you with increased  pay or benefits.  Thus, there is a built-in incentive toward doing more of your job or better.  In the communist Soviet Union, there was little if any incentive to do so,  since your wage was almost always locked to a specific rate.

 Even when later attempts to provide more incentives were rolled out by the government,  the extra money workers would receive would be of little use.  Since the Soviet economy was dictated from above, to keep the population content,  prices were fixed and kept low.  Output and prices were therefore not correlated with one another like they are in  capitalist societies.

 That meant that the need for goods at prices set was much  greater than the actual production of those items. This meant that items were  almost always out of stock and when they weren’t they would quickly sell out. This,  along with the fact that the heavy industry was persistently emphasized  more than the  consumer goods manufacturing, and what you’re left with is the inability to make use of any of the  extra money afforded to you for doing a better job.

 Thus, incentives in the Soviet Union did not  function well and per-person productivity suffered. Despite this, the economy kept on steaming ahead.  Between the time period of Stalin’s first five-year plan in 1928 and the start of World War II, the Soviet economy grew by 5.8% per year, almost doubling in size during a  time in which Western economies stagnated.

 This was done by forcing the allocation of people from  less productive industries toward more productive ones. By utilizing the massive peasant population  working in highly inefficient village farms and moving them to highly productive heavy industry and construction, massive gains in economic activity  were accomplished.  Even if workers themselves were not very productive, increased output could be accomplished simply  by dramatically increasing inputs.

 How do you make more steel?  You just make more steel factories and give each more iron and workers.  The Soviet economy grew rapidly, however the quality of that growth was very poor.  This is shown precisely by the actions of the enterprise managers who were the ones  that were actually managing the individual farms and factories.

 When a five year plan was being created, the last step included negotiations between heads  of industry and the enterprise managers about how much input was needed for the planned  output.  Since the enterprise managers only concern was to reach the planned output, they did not  care about being cost-effective and thus always asked for as many inputs as they  could get away with.

 One way the Soviet planners tried to increase productivity  was to demand more output this year than last year with the same amount of inputs.  The way they incentivized managers to do this was by making managers pay based on  meeting the target output and giving a bonus for going over.  However, managers were smart and almost always the actual outputs were either directly above the target or much below.

 This was for one major reason.  While the managers would receive a bonus for producing more, they were also concerned about next year’s pay.  By producing well over the target this year, the planners would just make that output the target for next year, making the ability to get next year’s pay that much harder.

 So if the target was achievable, the manager would stop producing when they reached it,  or if it was out of reach, there was no reason to work for nothing, so they produced as little  as they could get away with, hoping next year’s target would be lowered. Inputs for a factory  also included the total number of employees. Supply chains were also notoriously unreliable and sporadic.

 This meant that for much  of the time, there was way too many workers with little to no work to be done. However,  when supplies came, the excess labor was needed to pull through quotas. Therefore,  enterprise managers would ask for as many employees as possible, never wanting to fire  any workers, and even if they did, it was often difficult to do so since jobs were legally guaranteed in the  Soviet economy.

 This meant that the average factory in the Soviet Union would have as  many as twice the amount of workers as a comparatively similar one in the United States. So while  unemployment was effectively zero, which is better than any capitalist society then and  now, it was because of law and inefficiency rather than a byproduct of a more productive system.  To make matters worse for productivity, when given new equipment that would eventually  make the factory more productive, it would often end up going unused.

 This again was because of a lack of incentive by the enterprise managers to increase productivity.  The enterprise manager would not profit off of this increased productivity and he would personally risk not reaching  target outputs this year since time would be needed to retrain and integrate  the new equipment into the manufacturing line.

 Therefore, productivity gains were  slow and stunted. Most of these incentive issues stemmed  from another key issue, that of limited information. When planning out, in its entirety,  an economy of an industrialized nation, what is needed to run things as efficiently as a market  economy is complete and total information, for which the Soviet planners did not have.

 Unproductive and wasteful industries persisted as incentives were unable to be utilized by the  planners to increase efficiency. The last and arguably most important failure of  the Soviet economy was a lack of innovation. In the capitalist world, ever since property rights  were established and maintained, there was an immense incentive to create a new invention or  more productive manufacturing process because you could patent the idea and make a lot of money.

 Again, in the Soviet Union, with fixed wages, limited range of items to buy, and the fear of  this in some way or another coming back to harm you, there are like general incentives  for Soviets to innovate.  Innovation is what drives growth in developed economies, and so without organic innovation,  the Soviet Union attempted to import innovation by buying advanced machinery to be utilized  and to copy.

 This included the purchase of an entire factory when the Soviets contracted Fiat  to build a high-tech people’s car factory for them. However, this cost a lot and the Soviets  did not like relying on the West for anything, especially innovation. Coupled with an inefficient  farming sector which caused the need for mass food importation and the costs piled up quickly.

 Luckily, the Soviet Union was blessed with immense natural resources, specifically oil.  So when oil prices skyrocketed in the 1970s, they could offset a lot of this importation cost by  just exporting oil. However, as oil reserves in Western Russia started to dry up and oil prices  returned to normal, the importation costs again mounted and the economy stagnated.

 It was also  at this point when the Soviet Union could no longer keep dramatically increasing  inputs as most of the population had now been moved from low productive industries to high  productive industries, which ultimately was the main source of economic growth for the  Soviet Union.  Growth by the late 1970s slowed to just 2%, lower than that of the developed West.

 The only significant gains came from allocating  massive amounts of capital toward the military. However, this was not enough and the gap between  the Soviet economy and those of NATO started to grow once again. The growth that kept citizens  content about having little freedom started to wane and the massively overweight political system  of the Soviet Union put it on an irreversible track toward economic stagnation  and eventually collapse. However, the seeds of the Soviet economic collapse had been planted

 before the nation even existed. Unlike the revolutions in Western Europe and the United  States and their slow march toward greater rights and freedoms, the Bolsheviks that took control  were not a broad coalition and thus they became tyrannical. Left with unchecked power, they did  not form new inclusive systems, but rather made new extractive ones with themselves at the top.

 By the 1960s, when the ability to just dramatically increase inputs for growth had ceased,  and it was time for the government and economy to change so to allow for innovation and productivity  gains, the change never happened because those in charge never allowed it to happen.  Just like how the elites of the Russian Empire resisted the creative destruction of industrialization,  so too did the elites of the Communist Party, as they resisted giving up any political or  economic power that would have enabled these positive changes. This was because they knew

 doing so would reduce their personal power, wealth, and potentially even their lives.  By the time Mikhail Gorbachev  instituted real democratic reforms, it was already too late. The system was already cracking at the  seams because of economic instability, and by letting go of some political power, the system  collapsed in on itself and the Soviet Union ceased to exist.

 The story of the Soviet Union was  ultimately one about its economy. The unprecedented and rapid growth that stunned  the world was ultimately unsustainable and riddled with too many inefficiencies.  But ultimately, the story of the Soviet economic system was one that warns against the perils  of tyrannical governments that only care about self-preservation.

 The incredible growth of  the Soviet Union early on was not about increasing the living standards of its people, but rather  to protect those in power. Therefore, the Soviet Union’s collapse was not about increasing the living standards of its people, but rather to protect those in power.  Therefore, the Soviet Union’s collapse was determined before it even became an official  country.