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”

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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”