1. Chapter 23 – Comparative Economic Systems Section 3 – Communism

2. Karl Marx’s Theory 1.Marx’s view of history – all of history is a story of classes competing for the control of labor and productive property. One class is always the oppressor and the other the oppressed. (i.e. Middle Ages: nobility vs. the serf; current times: bourgeoisie vs. proletariat). Eventually, masses will revolt and bring down oppressors. Communists’ political role is to hasten the revolution, by violence if needed. 2.The Labor Theory of Value – Marx rejected the ideas of profit and competition. The value of anything is the amount of labor put into it and therefore the worker should get the whole value of it. 3.The Nature of the State – the state and government are tools by which capitalists maintain their power and privileges. Other social institutions also helped. (i.e. he called religion an “opiate of the masses”, sort of a drug that lets workers tolerate the conditions they are living in now in the hope they would get what Marx called “a fictional afterlife.”) 4.The Dictatorship of the Proletariat – this is a transitional phase that would happen between capitalism and the ultimate goal – a classless society. This is an authoritarian state that would enforce the interests of the workers/masses. Once classlessness was achieved, the state would “wither away.” Ultimate goal – a free, classless society in which workers throughout the world would share a bond, doing away with nationalism, a major cause of wars.

3. Characteristics of Communist Economies 1.Role of the Communist Party – Communist Party holds the decision-making power in both the government and the economy. The government and the party are basically one and the same. 2.Central Planning – typically, Communist economies use five- year plans that sets goals and states where growth should be emphasized and what each individual factory and farm must produce. It also sets prices and decides on distribution of goods and services. 3.Collectivization – state ownership of the factors of production. Merging of small private farms into large government-owned agricultural enterprises is part of this. Many died resisting collectivization in the Soviet Union. 4.State Ownership – Other parts of the economy are also government owned. This varies from country to country. For instance, in China many municipal governments, not the central government, own things like housing, banks, hospitals and stores.

4. The Soviet Union V. I. Lenin was the head of the Bolsheviks and took power in 1917 in Russia through revolution. Lenin was a follower of Marx and wanted to build the world’s first communist state. By the time Lenin died in 1924, the Soviet Union was a one-party communist state. The person who followed Lenin was Joseph Stalin, who turned the control into an authoritarian dictatorship. The Five-Year Plans – Stalin created an agency, Gosplan, which was in charge of making the 5 year plans. The first called for collectivization of agriculture and a higher production of chemicals, petroleum and steel. It was completed 9 months ahead of schedule. Through later plans, Soviet Union achieved industrialization, but left consumer goods, housing and urban services scarce. Housing, food and other goods had to be rationed. Social Policies – Free education, medical care, free summer camps. Not classless – as economic incentives for production, cars and vacation homes went to party officials and others who succeeded or were loyal to the Communist Party. Not exactly the Marxian ideal of economic and social equality (in fact – more like what?) Gorbachev’s Reforms – Gorbachev became Premier (Soviet leader) in 1985 and instituted reforms called perestroika. Leaders gave more authority to local farm and factory managers, loosened price controls, linked salaries to performance and allowed profit incentives (sound like ?). Bureaucrats resisted change, poor harvests, strikes and shortages of food and goods continued and output did not increase. Gorbachev and the Communist Party gave up their control of the economy in 1991 when the Soviet Union collapsed. Future is uncertain. Privatization (moving from government to private ownership) began but not sure where Putin will move Russia.

5. China Mao Zedong was the founder of the People’s Republic of China. Although a Marxist, he believed that instead of the workers, the peasants would be the key to a communist revolution in China. He took control of China in 1949 and, because China lacked skilled workers, he improved technical and scientific education and then assigned workers to jobs for the state (workers had little choice). The Great Leap Forward – this was the name of the five-year plan for 1958. It was an attempt to modernize China quickly. All parts of free enterprise were eliminated. Collective farms were brought together into larger units called communes. Each commune was to be self-sufficient run by party officials. The officials oversaw the industry and government in a region and managed social policy. Workers received the same compensation no matter how much they produced, so they had little incentive to work hard. The Great Leap Forward was a failure and was followed by a famine. Deng Xiaoping’s Reforms – Deng Xiaoping came to power in 1977 and made changes called the Four Modernizations aimed at 1) agriculture, 2) industry, 3) science and technology, and 4) defense. He was more practical and less ideological. Started moving China from central planning to a market economy and invited foreign investors into China. Now China is a combination of small shops and businesses privately owned, and larger businesses managed by the workers in the workplace, with the state-owned businesses shrinking.

6. Other Communist Nations Fidel Castro – successfully led a revolution in Cuba in 1959. Castro nationalized American owned businesses so the US broke with him. Soviet Union supported Castro so in 1961 he announced he was a Marxist. Cuba depended on the Soviet Union’s economic support, so they started having problems when the Soviet Union collapsed in 1991. Government relaxed economic controls, began encouraging tourism, and allowed some small businesses. Southeast Asia – At the end of World War II, a communist named Ho Chi Minh fought for Vietnam’s independence, first against the French and then against the US. The communists are in control, but like others, it has moved more to the free market. North Korea – Communist since the end of World War II. Not made much economic growth. Severe food shortages, even today.