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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._____________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. | |||
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Jack Hirshleifer on Soviet Union - Dictionary of Arguments
Henderson I 99 Soviet Union/Hirshleifer/Henderson/Globerman: Soon after the Bolsheviks managed to oust the relatively moderate provisional government run by Alexander Kerensky, the Soviet Communists began their policy of War Communism. War communism: Under War Communism, which lasted from 1917 to 1921, the Bolsheviks proceeded in two steps. They first took over the so-called "commanding heights" of the economy. The commanding heights, wrote Hirshleifer(1), were "a relatively small number of large factories located mainly in the major cities." Bolsheviks: The Bolsheviks then proceeded to take over almost the whole rest of the economy. The government requisitioned all agricultural output that it judged to be above the farmers' level of subsistence and rationed it to the urban population at below-market prices. Inflation: A policy of high inflation made these prices meaningless, and the Communists then shifted to simply giving away food. The government also conscripted labour. Hirshleifer pointed out that the entire economy was run as if it were an army and "the process of voluntary exchange was reiected and prohibited." Henderson I 100 Problem: As Hirshleifer documented, the result was economic disaster. By 1920, Russian industrial output was only 20.4 percent of its level in 1913. The gross yield of crops in 1920 was 54 percent of the average level between 1909 and 1913, and the numbers of horses, cattle, and sheep, and goats were all down by double-digit percentages. Incentive: Incentives matter: With little incentive to produce for others, given that they couldn't charge, farmers reduced production. Black markets: When governments give away food and don't allow free markets in food, there are always shortages, and the case of the Soviet Union was no exception. When that happens, black markets inevitably arise. Hirshleifer pointed out that town dwellers obtained well over half of the food they consumed through illegal channels. New Economic Policy: The Soviets, seeing the economy collapse and concerned about maintaining their political power, tried the New Economic Policy. The first big step was in agriculture, in which well over half of the labour force worked (Katkoff, 1957)(2). Taxation: In March 1921, the Soviets ended compulsory requisitions of food and replaced them with a proportional tax in kind on farm production. That was a major step. Compulsory requisition of food above a certain level, Hirshleifer notes, is the equivalent of a 100 percent tax above that level. A proportional tax, by contrast, is what we now call a flat tax rate. The Soviets also legalized private exchange of agricultural and industrial products, abandoned central planning of the economy, and ended conscription of labour. The result was an economic boom. By 1923, industrial output was 75 percent above its 1920 level and agricultural output was up by 17 percent. Later, of course, all of this was reversed when the Soviets went back to full-on Communism with all its problems.* * For a beautiful and moving treatment of the problems with communism, see Spufford (2010)(3). Spufford, though not an economist, shows a deep understanding of Communism as an economic system and as a wreaker of havoc with family life. The book is somewhere between novel and history, with real and made-up characters. 1. Jack Hirshleifer (1987), Economic Behaviour in Adversity. 2. Katkoff, V. (1957). Agricultural Labor Force in the USSR. Journal of Farm Economics 39, 1 (February): 138-139. 3. Spufford, Francis (2010). Red Plenty. Graywolf Press. _____________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. |
Hirshleifer I Jack Hirshleifer Economic Behaviour in Adversity Chicago: University of Chicago Press 1987 Henderson I David R. Henderson Steven Globerman The Essential UCLA School of Economics Vancouver: Fraser Institute. 2019 |
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