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Econ Ch 6

SG

QuestionAnswer
How did Communism get established in Russia? Through nationalization and force
What is War Communism? The gov nationalized all businesses to direct the economy to the war effort
When did the gov nationalize the businesses for the war? 1918-1921
Who started war communism? Lenin
What were the goals of war communism? To have nationalization of industry, labor, and agriculture by the banning of private ownership. Main purpose was to support the Red Army
Were the goals of war communism accomplished? In a military victory yes, but the economy then failed
What is the New Economic Policy? Strict socialist principles with some parts of capitalism
When was the new economic policy? 1921-1928
Who started the new economic policy? Lenin
What was the purpose of the new economic policy? To allow people their private property again and to the ability to operate small businesses
Was the new economic policy a pro socialist program? No, it was more so mixed
Was the new economic policy successful? To the Bolsheviks, yes, but to the economy, mostly
Explain: Private ownership of farms, small businesses and light industry, but govt ownership of Commanding Heights Lenin decided that they changed too much at once, so he let farms have private ownership and control over what they grow and light industry. The gov still controlled larger businesses and foreign trade which created a mixed economy
What is Central Planning? Also known as Command Planning // The political figure at the center makes the higher level decisions regarding the factors of production. The soviet union calls their figure a politburo.
Why is central planning necessary in a socialist system? Socialism is a government run system, it makes sense that one would need to control all because that is what socialism is.
What is the difference between the Politburo, GOSPLAN, and the Ministries of Production? The politburo sends orders so ministries such as GOSPLAN who makes a plan to follow the orders. The ministry then executes those orders to follow the plan.
Between Politburo, GOSPLAN, and the Ministries of Production, who makes what kinds of decisions, and who carries them out? Politburo makes orders, GOSPLAN plans for orders, ministry carries plans
What is the difference between a Consistent Plan and an Optimal Plan? A consistent plan satisfies the lowest level of rationality and requires the total use of resources = total source of resources. Optimal Plans must satisfy a higher level of rationalism, and requires that plan is consistent and efficient
What is the Material Balance Method of planning? Consistent plan where total source of resources = total use of resources
How does Material Balance Method of planning work? GOSPLAN sends the wants of the Politburo to the ministries whom make a list of the resources they need in which GOSPLAN uses the list to construct a material balance.
What causes the central planning system to be inneficient? Discuss bureaucracy, Lack of profit (and loss) motive, no bankruptcy system, etc. The system is so vast and complex that central planning cannot handle it all. Bureaucracy causes lack of productivity, lack of profit takes away an incentive and want to put in effort, no bankruptcy system doesn’t allow for creative destruction
Explain Dramatic growth in the early years of command planning. What years? 7.2 percent from 1950 to 1960. Due to forced industrialization. Westers had more growth.
Explain Decreased growth over time. What years? 4.2 percent from 1960-1080 and 3.2 percent from 1970-1975. Due to inefficient system
Explain Stagnation in growth during the 70’s and 80’s. What did this lead to? 1 percent from 1975 to 1980 and 0.6 percent from 1980 to 1985 and up to 2 percent by 1987. Led to seven poor harvests and to imposition of food rationing.
Compare growth to Western European countries. Was Communism successful? Communism was not successful, the soviet union collapsed. West European countries were doing great. The difference in GDP per capita between the soviets and the west was greatest in the late 1980’s
Created by: MikalahQuillen
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