4 ms·
It's not as astonishing as you describe it. It's basic intuition that the relative growth of something will be greater in real terms the lower your starting poi
by vezzy-fnord 11y ago
It's not as astonishing as you describe it. It's basic intuition that the relative growth of something will be greater in real terms the lower your starting point is. Robinson Crusoe finding a second stick to pluck berries with has doubled his capital structure and his output, but that's not particularly impressive. Starting from nothing, you can afford to just pump resources and treat the economy like it's a hydraulic system. It's what you do once you're up to parity that matters.
By all means, planning was inefficient. You had chronic surpluses and shortages. The attempt to replace profits and losses with "socialist competition" resulted in a disincentive to create surpluses, because it would quickly be integrated as a benchmark in the next Five Year Plan. This then resulted in the phenomenon of shturmovshchina where laborers would mostly idle and then expend massive crunches of labor during the final quarters.
The first seven years of Soviet rule were marked by massive hyperinflation. Wages were determined on a purely piece-rate basis, leading to workers toiling and factory managers manipulating quotas for greater wage returns. Attempted reforms under Khrushchev based on bonuses then only encouraged more homogeneity of production and made wage rates more volatile.
The reason Soviet planners could even calculate in a system of purely vertical transfers of resources was because of the establishment of the Comecon in 1949, piggybacking on Western price indexes. Kosygin introduced a reform in 1965 allowing some measure of profitability and sales, resulting in some growth but no movement in aggregate productivity because of the underlying Five Year Plan incentives. More radical reforms involving decentralization and minimization of bureaucracy in 1973 and 1979 were both rejected.
The Brezhnev era was marked by a large stagnation. Couple that with oil shocks affecting the key USSR exports, perestroika opening up the flood gates and the failed coup in 1991, the USSR was doomed to its failure.
It had nothing to do with Ronald Reagan or anyone "ending communism". It ended itself.
The Soviet system was a disaster and I can't imagine how anyone could say otherwise.
- jernfrost 11y agoIt is astonishing because if you look around the world at other countries you will find many many countries in the developing world which were not fully socialist like the USSR, which yet failed to ever develop even remotely at the level Soviet did. You could pick India as an example. While they did have a lot of state intervention they non the less had a market with market prices. People could start their own private companies and they did. Yet India did not see the kind of development that the USSR experienced. And if you look beyond mere economic factors and look at health care, education, literacy etc, they were completely outperformed by the USSR which had a very highly regarded educational system and health care. You have to add to this story as well that the USSR was devastated from WWII and received no marshal help, and yet managed to recover surprisingly quickly.