int 200: global capitalism and its discontents central planning

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INT 200: Global Capitalism and its Discontents Central Planning

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Page 1: INT 200: Global Capitalism and its Discontents Central Planning

INT 200: Global Capitalism and its Discontents

Central Planning

Page 2: INT 200: Global Capitalism and its Discontents Central Planning

Central Planning

• Socialism– social and economic doctrine that calls for public rather than private

ownership or control of property and natural resources

• Communism– the political and economic doctrine that aims to replace private

property and a profit-based economy with public ownership and communal control of at least the major means of production and the natural resources of a society

Page 3: INT 200: Global Capitalism and its Discontents Central Planning
Page 4: INT 200: Global Capitalism and its Discontents Central Planning

Central Planning

• The Realities of Soviet Communism– the Bolshevik leaders viewed themselves as the executors of the

Marxist program– “all products were to be delivered to communal warehouses, and the

members of society would draw them out in accordance with their self-defined needs”

– Bukharin: “Proletarian coercion, in all its forms, from executions to forced labor, is, paradoxical as it may sound, the method of molding communist humanity out of the human material of the capitalist period.”

– Lenin: the "dictatorship of the proletariat" • the vanguard party could initiate policies in the name of the working class even if

the working class did not support them, since the vanguard party would know what was best for the workers

• nationalized industry and established a foreign-trade monopoly to allow the productive co-ordination of the national economy; no competition

Page 5: INT 200: Global Capitalism and its Discontents Central Planning

Central Planning

• The Realities of Soviet Communism– before he died, Lenin warned that Stalin has “unlimited authority

concentrated in his hands, and I am not sure whether he will always be capable of using that authority with sufficient caution”

– Stalin: a “second revolution” with the introduction of state socialism and central planning• state ownership of the means of production and centralized planning, along with

bureaucratic management of the workplace by state officials that were ultimately subordinate to the all-encompassing communist party

• The increasing bureaucracy was at complete odds with the Marxist notion of "the withering away of the state”

Page 6: INT 200: Global Capitalism and its Discontents Central Planning

Central Planning

• Command Economy or Centrally Planned Economy– Economic system in which the means of production are publicly owned

and economic activity is controlled by a central authority – the total direction and development of a nation's economy is planned

and administered by its government: government control of production, distribution, and consumption

– Prices are also set by the central planners• But used mainly as instruments of the central planners in their efforts to reconcile

the total demand for consumer goods with the supply available, allowing also for revenues to the state

Page 7: INT 200: Global Capitalism and its Discontents Central Planning

Central Planning

• Command Economy or Centrally Planned Economy– Advantages

• harness land, labor, and capital to serve the economic objectives of the state• consumer demand can be restrained in favor of greater capital investment for

economic development

– Disadvantages• Inefficient resource distribution• Suppression of economic democracy and self-management• Economic Instability• Authoritarian• Shadow economy

• The End of the Soviet Union– The Era of Stagnation– Turn to capitalism and democracy