Download Economic Systems - Ohio Wesleyan University

Economic Systems
Ohio Wesleyan University
Goran Skosples
16. Performance of Planned Socialist
Economies
Performance of Planned Socialism
Lecture 11 Hypotheses:
Economic growth
• state controls ___________ and ____________
• efficiency issues
Efficiency
• no ___________ valuation allocative efficiency?
• focus on consistency (feasibility)
Income distribution
• _______________ capital and land
• considerable attention to “fair” income by authorities
(macroeconomic) Stability
• investment spending controlled by the state
• control of supply and demand of consumer goods
• no job layoffs in ________________
1
Economic Growth
GDP per capita growth rates
Annual growth rate (%)
5
4
Planned socialist
countries
Capitalist Countries
3
2
1
0
1950-60 1960-65 1065-70 1070-75 1975-80 1980-85 1985-90
2
1
Economic Growth
_____________ in socialist economies although
the authorities placed emphasis on it
since mid-1970s, _________ in economic growth,
while capitalist economies ______ fear that the
system lost its ability to generate growth (______)
much more ________ than ___________ growth
• productivity growth __________ under socialism
• sacrifice now for the future gains, but those gains
never materialized
3
Efficiency (1975)
4
Efficiency
Do socialist countries systematically obtain less
output from their available inputs?
compare Italy and the Soviet Union
there was a systematic tendency for the output
per worker to _________ of output per worker in
capitalist countries when inputs are held constant
•
overall, efficiency in planned socialist countries
was _______ than in market capitalist countries
5
2
Income Distribution
What are the sources of income inequality in
market capitalist economies?
• unequal distribution of ___________________
• unequal distribution of __________________
Socialist countries had a more equal distribution
of ____________________
• provision of _____________________
The role/effect of the redistributive government in
capitalist economies?
Overall, ______ differences in income distribution
between capitalist and planned socialist countries
6
Income Inequality
7
Economic Stability
_____________ in fluctuations in GDP, industrial
output, and investment between two systems
unemployment smaller in planned socialism
•
•
official prices more stable in planned socialism
• new products
• prices in the ____________________
• cost of ________________ or paying ________
Qd > Qs rationing via long lines, coupons, ...
8
3
Economic Stability
9
Decline of Planned Socialism
What caused planned socialist systems to collapse?
• slowdown in productivity
- declining ________________________ diminishing
returns to capital (capital substituted for labor)
- labor less ________ – no improvement in the standard
of living, shortages of goods __________________
________
• inefficiencies
• inability of the center to control the periphery
• complexity of planning increases with growth and
new products (more variety)
• incentives – both for workers and managers
Inability to ___________ the system
10
4