Economics Dictionary of Arguments

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Soviet Union: The Soviet Union, officially the Union of Soviet Socialist Republics (USSR), was a single-party, communist state that spanned much of Eurasia from 1922 to 1991. It covered an area of 22.4 million square kilometers (8.7 million square miles), making it the largest country in the world by land area by a considerable margin. The USSR consisted of 15 constituent republics, which possessed substantial autonomy in all but foreign affairs, defense, and heavy industry. See also Communism, Socialism.
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Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

 
Author Concept Summary/Quotes Sources

Daron Acemoglu on Soviet Union - Dictionary of Arguments

Acemoglu I 126
Soviet Union/Acemoglu/Robinson: Neither the newly created industry nor the collectivized farms were economically efficient in the sense that they made the best use of what resources the Soviet Union possessed. But the Soviet Union grew rapidly.asf
Allowing people to make their own decisions via markets is the best way for a society to efficiently use its resources. When the state or a narrow elite controls all these resources instead, neither the right incentives will be created nor will there be an efficient allocation of the skills and talents of people.
But in some instances the productivity of labor and capital may be so much higher in one sector or activity, such as heavy industry in the Soviet Union, that even a top-down process under extractive institutions (>Terminology/Acemoglu
) that allocates resources toward that sector can generate growth.
Acemoglu I 127
There was (...) huge unrealized economic potential from reallocating (...) labor from agriculture to industry. Stalinist industrialization was one brutal way of unlocking this potential. By fiat, Stalin moved these very poorly used resources into industry, where they could be employed more productively, even if industry itself was very inefficiently organized relative to what could have been achieved. >Soviet Union/Samuelson.
Problems: Though the policies of Stalin and subsequent Soviet leaders could produce rapid economic growth, they could not do so in a sustained way. By the 1970s, economic growth had all but stopped. The most important lesson is that extractive institutions cannot generate sustained technological change for two reasons: the lack of economic incentives and resistance by the elites. In addition, once all the very inefficiently used resources had been reallocated to industry, there were
Acemoglu I 128
few economic gains to be had by fiat. >">Institutions/Acemoglu, >Terminology/Acemoglu, >Economic growth/Acemoglu.
Acemoglu I 129
Innovations/motivation/incentives/production targets: (...) paying (...) bonuses created all sorts of disincentives to technological change. For one thing, innovation, which took resources away from current production, risked the output targets not being met and the bonuses not being paid. For another, output targets were usually based on previous production
Acemoglu I 130
production levels. This created a huge incentive never to expand output, since this only meant having to produce more in the future, since future targets would be “ratcheted up.” Underachievement was always the best way to meet targets and get the bonus.

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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.

Acemoglu II
James A. Acemoglu
James A. Robinson
Economic origins of dictatorship and democracy Cambridge 2006

Acemoglu I
James A. Acemoglu
James A. Robinson
Why nations fail. The origins of power, prosperity, and poverty New York 2012


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