U of U ECON 7004 - Socialism and Capitalism

Unformatted text preview:

Socialism and Capitalism: Lessons from the Demise of State Socialism in the Soviet Union and China by David M. Kotz Economics Department Thompson Hall University of Massachusetts Amherst, MA 01003 Telephone 413-545-1248 Fax 413-545-2921 E-mail [email protected] November, 1999 This paper was pubished in Socialism and Radical Political Economy: Essays in Honor of Howard Sherman, edited by Robert Pollin, Cheltenham and Northampton: Edward Elgar, 2000, 300-317.Socialism and Capitalism, by David M. Kotz (November 1999 version) 1The Soviet model is the only version of socialism that gave birth to an alternative socioeconomic system to that of capitalism.1 After its development in the Soviet Union in the late 1920s and early 1930s, the Soviet model, also referred to here as state socialism, was later introduced, with variations, in Eastern Europe, China, and other countries on several continents. That model of socialism now has either been dismantled or is in rapid retreat everywhere it had taken hold. The attempt to renovate Soviet state socialism under Mikhail Gorbachev during 1985-91 led instead to the demise of that system and the disintegration of the Soviet state, with the leadership of the successor states to the former Soviet union seeking to build capitalist systems. Twenty years ago China=s Communist leadership under Deng Xiaoping began a marketization process which they said would build Asocialism with Chinese characteristics.@ The new Chinese model has produced rapid economic growth, but the new system has come to look more and more like Acapitalism with Chinese characteristics.@ This paper will examine the reasons why the Soviet Union and China, both the product of home-grown revolutions aimed at building a new socialist society, have embarked on transitions to capitalism. We will argue that, despite the obvious differences in the trajectories of the former Soviet Union and China along the path toward capitalism, there are similarities in the underlying factors that have been propelling them toward that end. This paper is organized as follows. First we will comment on aspects of Howard Sherman=s work that are related to the topic of this paper. Second, we will consider the controversial question of what relation, if any, the Soviet model bore to socialism. Third, we will analyze the factors that led to the current effort at capitalist transition in the Soviet Union and those that have been pushing China toward the same destination. Last, we will discuss the lessons of the demise of state socialism in the Soviet Union and China for building a viable socialism in the future.Socialism and Capitalism, by David M. Kotz (November 1999 version) 2 Howard Sherman on Socialism and the Soviet Model Among the many books Howard Sherman wrote, three deal extensively with socialism and economies of the Soviet type. These are The Soviet Economy (Sherman, 1969), Radical Political Economy (Sherman, 1972), and Foundations of Radical Political Economy (Sherman, 1987). He coauthored a fourth book on that topic. Comparing Economic Systems (Zimbalist and Sherman, 1984; Zimbalist, Sherman, and Brown, 2nd Edition, 1989). Two features of Sherman=s work on socialism and the Soviet model are relevant to the topic and argument of this paper: his interpretation of the Soviet system and his early recognition of key problems in that system. In his earlier books Sherman viewed the Soviet model as socialist, defining socialism as a system in which the means of production are predominantly publically owned (Sherman 1969 pp. 15-18, 1972 p. 240). In these works he emphasized, with characteristic realism and with attention to the inevitable gap between ideal types and real world systems, that we should not Atoss [countries] out of the socialist category@ simply because they have serious flaws, since that approach would mean Awe never do face up to the problems that may still occur under socialism@ (1972, p. 240). Later he decided that the lack of popular control over the economy in the Soviet model was more than just a flaw in socialism. While Sherman had always argued that a socialist system ought to be democratic, in his 1987 book he argued that economic democracy was not just a desirable feature of socialism but essential to it. On that basis, he concluded that the Soviet model was not socialist (1987, p. 260). However, Sherman resisted the temptation felt by many Western socialists to portray the Soviet model, with its many negative features, as a form of capitalism. Sherman notes that the Soviet system lacks key features of capitalism as we know it, such as private ownership of the means of production, property incomes, inheritance of social position by members of the dominant class of officials, unemployment, or market-based competition among enterprises (1987, pp. 257-260). HeSocialism and Capitalism, by David M. Kotz (November 1999 version) 3calls this system Astatism,@ to emphasize the appropriation of surplus through access to state power by a ruling class of party and state officials. The typical Western specialist in comparative economic systems viewed the Soviet model through the lens of neoclassical economics and, not surprisingly, found little of merit in the economic performance of that system. Sherman=s several books that deal with the Soviet system have given us a more meaningful and balanced evaluation. He has noted the rapid economic growth in the Soviet Union, pointing out that over time an economic growth advantage of a system is likely to outweigh any static efficiency disadvantage. He has pointed out that the claimed efficiency advantage of capitalist economies is not so obvious as is assumed by neoclassical economists, if one takes account of such capitalist wastes as unemployment, advertising, and monopoly power. He gives due weight to the Soviet achievement of continuous full employment and a stable price level. He notes that the absence in the Soviet system of the large individual property incomes which characterize capitalist systems has led to a far more equal income distribution under the Soviet model. Nevertheless, in his works Sherman has pointed out the many economic problems and failings of the Soviet system, including inefficiencies, inequalities, and obstacles to the rapid development of the forces of production, analyzing them based on the failure to meet socialist standards and expectations, as opposed to neoclassical prejudices. Most


View Full Document

U of U ECON 7004 - Socialism and Capitalism

Download Socialism and Capitalism
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Socialism and Capitalism and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Socialism and Capitalism 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?