Why Did Communism Fail? #3 – Incentives

The most common and simple explanation for why communism failed is that people are greedy. This is a gross simplification but does contain some truth. Communism failed to provide incentives for workers and citizens to work hard and be productive. While there are many benefits from equality, if pushed to an extreme it robs people of an incentive to make an effort. There was little if any reward for hard work or innovation and a lack of punishment for poor or inefficient work. The lack of incentives was a major reason for the poor performance of Eastern Europe economies. Why bother working hard if the reward was the same as doing the bare minimal? Continue reading “Why Did Communism Fail? #3 – Incentives”

Why Did Communism Fail? #2 – Absence Of The Market

The main reasons why Communism failed was that it could not provide a decent standard of living for its people. This was because the absence of a market meant Communism was enormously wasteful with resources. The system was notable for its crippling inefficiencies and gross mismanagement. Despite having some of the highest levels of investment, they had some of the lowest returns. This was due to the absence of market forces and signals, the primacy of political influences and a lack of accountability. Continue reading “Why Did Communism Fail? #2 – Absence Of The Market”

Why Did Communism Fail? #1 – Dictatorship

Communism was one of the most influential ideologies of all time. Millions of people lived under Communist regimes and millions more debated whether or not it would be a superior system. However, as everyone knows, it failed. It hardly needs to be said that the Soviet Union failed to provide an adequate standard of living, and this was the major reason for its collapse. But why? Huge amounts of ink have been spilt over narrating its collapse, but little has been said about why this happened. What was it about Communism that made it fail?

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I will run a series of posts discussing several reasons why communism failed economically. It will soon become clear that there is a strong overlap among the reasons and there are all interlinked. Although I will not quote sources, the posts are based on a politics essay I wrote for university. The first and most obvious (though not always discussed) reason was that Communist regimes were dictatorships. This meant there was a repressive environment, large military expenditure, misallocation of resources, and the heavy burden of a totalitarian regime and the absence of procedures to remove incompetent decision makers. Continue reading “Why Did Communism Fail? #1 – Dictatorship”

The Yugoslav Model

On a scorching hot day last July, I wandered off the motorway into Belgrade and past crumbling tower blocks and up the steps to what was once an impressive villa. Now the steps were cracked and the fountain was dry and empty. I was entering the Mausoleum of Tito, the Communist ruler of Yugoslavia from 1945 to 1980. Beside his final resting place was an information centre, part of which was dedicated to Yugoslavia’s experiment in Worker Self-Management, as it was called. It was here that I was introduced to an idea I had never considered before, that of workers democratically running their workplace the same way democracy runs the government. Did this novel experiment work? Continue reading “The Yugoslav Model”

1919 Limerick Soviet

Ireland is probably the last place in the world that you expect workers to host a red flag and seize control of a business let alone an entire city. That sort of stuff is usually considered too continental for our liking. Yet this is exactly what happened in 1919. A soviet was declared and the workers seized control of essential supplies. They even printed their own money. Nor was this some irrelevant backwater but rather Ireland’s fourth largest city. Continue reading “1919 Limerick Soviet”

Misunderstanding Hayek And The Road To Serfdom

“The Road To Serfdom” by Fredrick Hayek is a disappointing book. Conservative bloggers often race about it claiming it has great insights into modern politics. While I disagree with the Austrian school of economics I read it to here the other point of view. I found it a boring, out dated book that didn’t have anything particularly original or insightful to say. It’s mainly concerned with saying a totalitarian state where the government controls everything doesn’t work (you don’t say). The book might have been relevant when it was published, but I am at a loss to see its use today.

I think to a large extent Hayek has been misunderstood. I have regularly heard people use Hayek to criticize the growth of the state or the Obama administration. Yet Continue reading “Misunderstanding Hayek And The Road To Serfdom”

What If The Workers Ran The Business?

Most people think there is only one way of running a business, that is, with a boss in charge telling everyone what to do. The boss makes all the decisions and keeps all the profit. This is the way it always has been and the way it always will be. But then again there was a time when people thought the unrestrained rule of Kings was the natural way of running a country. What if there was an alternative? What if the workers made the decisions themselves? What if they took ownership of their place of work rather than simply having it as a means to make a living? What if the makers of the money got to keep it? What if the divide between employer and employee was removed? What if the workers ran the business? Continue reading “What If The Workers Ran The Business?”