1. Ohio Wesleyan University Goran Skosples
16. Performance of Planned Socialist Economies

2. 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 ________________

3. Economic Growth

4. 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

5. Efficiency (1975)
data from 1975

6. 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

7. 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

8. Income Inequality

9. 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, ...

10. Economic Stability

11. 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