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Socialist Systems in Action

24 April, 2015 - 11:52

Learning Objectives

  • Describe the operation of the command socialist system in the Soviet Union, including its major problems.
  • Explain how Yugoslavian-style socialism differed from that of the Soviet Union.
  • Discuss the factors that brought an end to command socialist systems in much of the world.

The most important example of socialism was the economy of the Union of Soviet Socialist Republics, the Soviet Union. The Russian Revolution succeeded in 1917 in overthrowing the czarist regime that had ruled the Russian Empire for centuries. Leaders of the revolution created the Soviet Union in its place and sought to establish a socialist state based on the ideas of Karl Marx.

The leaders of the Soviet Union faced a difficulty in using Marx’s writings as a foundation for a socialist system. He had sought to explain why capitalism would collapse; he had little to say about how the socialist system that would replace it would function. He did suggest the utopian notion that, over time, there would be less and less need for a government and the state would wither away. But his writings did not provide much of a blueprint for running a socialist economic system.

Lacking a guide for establishing a socialist economy, the leaders of the new regime in Russia struggled to invent one. In 1917, Lenin attempted to establish what he called “war communism.” The national government declared its ownership of most firms and forced peasants to turn over a share of their output to the government. The program sought to eliminate the market as an allocative mechanism; government would control production and distribution. The program of war communism devastated the economy. In 1921, Lenin declared a New Economic Policy. It returned private ownership to some sectors of the economy and reinstituted the market as an allocative mechanism.

Lenin’s death in 1924 precipitated a power struggle from which Joseph Stalin emerged victorious. It was under Stalin that the Soviet economic system was created. Because that system served as a model for most of the other command socialist systems that emerged, we shall examine it in some detail. We shall also examine an intriguing alternative version of socialism that was created in Yugoslavia after World War II.