Why did socialism fail as an economic system in the Soviet Union?

Posted on April 10, 2022 by Cheapest Assignment

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After almost two years right after the dissolution, integration of communist system in the Soviet Union in the year 1991 took place. However, there has not been any consensus over the consequences and causes of these distinct and epochal events. Considering the cause, it is very convenient to assume that Soviet’s fall was exaggerated with a wide array of factors. It pertains to the scholar for making trials of establishing a hierarchy of obtaining casualty which is a methodological exercise (Adam, 2016). The arbitrary prioritization of a signal factor over the others is equally creating a trap which needs to be prevented. Going through the evaluation of different factors and reasons would encompass then what happened at the end of the entire period. 

The soviet system can be regarded as to have a sui generis approach towards the aspect of modernization. However, Clover said that the great paradox could be regarded to the system not applying the principle to it. By making attempting to project outside the processes that it presented both the system and society entered into a stagnation cycle (Clover, 2016). The concept of neo-modernization, regardless of all other ideas which societies are counteracted in order arrive at terms with the “Civilization of Modernity”, every of the cause in their own ways, facilitates a key to the improvements. At the end, the approach of Soviet to counteract failed and the factors that pertained. The report is categorized into different sections which also are regarded as a variable within a wider equation. There is description of factors that led to the collapse of the Soviet Union. 

Soviet Union

Right from the beginning, Soviet Union faced failure at facilitating simple commodities to the consumer. The party of Bolshevik counteracted many challenges post the success of October resolution in the year 1917. Lenin could find a window of chance for implementing his principle movement completely regarding bringing transformation of Russia right from capitalism to socialism. This propaganda arose right from the political aspects to the social and economic stages. As it generally is known as, “Leninism”, we was regarded as the “Marxism in the imperialism epoch and of the regarding the proletarian revolution. As per Ellman & Kontorovich (2015), during the times of Russian Civil War from the year 1918 to the year 1921, War Communism regarding the economic policy was not in a good from. It made attempts for eliminating the private trade and production completely (Ellman & Kontorovich, 2015). 

This resulted in high degree of hatred and bitterness towards the new plan. The extreme Communists were found to be highly determined regarding elimination of any kind of Capitalists sector. This was because as long as stay of the capitalists existed in, profits in the region were occurring which gave the capitalists a share of the existing power which could have strong impact on the influence to counteract the young regime. However, civil war resulted in worsening the country in economic aspects and pose great threat to the country as compared to the World War I (Hanson, 2014). This was feasible due to the imposition of dictatorship by the Communists. 

According to the belief of Lenin, the coercion was only important during the transitional stage of the country from the capitalism to socialism resulting to Communism as the final outcome. Further, developing coercion was needed as the political, social and economic clashed with the concept of citizenry, wherein it was very important regarding protecting social gains till the concept of communism was accepted and realized. This was basically due to the ideology of Bolshevik as all the authentic truth are associated, throughout all the physical and scientific coercion is provided with justice. This is because of it brings any kind of social change (Kasamara & Sorokina, 2012). 

The communist regime also happened to know about the things that were good for the entire society and what were to be done for accomplishing the most effective outcomes after the power was made to be unchallengeable and secured. They would not happen to tolerate any kind of activity that had any scope of gaining momentum for rivalry against Communist Party. Hence, coercion basically obtained its goals, however, it came at a very high cost to the entire society. 

The extensive growth in the economy in the eras of 1930 represented Stalinism to the best possible extent. Part of it was due to the extraction of force beyond the extent what is necessary. It was observed that Stalin desired to alleviate Russia from the economic stagnation that it existed in earlier and transform it into a highly developed industrial society within a very short duration of time. This resulted in queries regarding the fact that what has to be the suitable rate of growth for any economy (Kupatadze, 2015). 

Different Aspects

Lenin persuaded different aspects throughout the entire world that capitalism was bad inheritably. The aspects that he called as super profits in the developed economies were economies were accountable for the extensively exploitative activities that occur in the countries that are less developed (Laruelle, 2012). This happened to be political argument of Lenin for differences in the income which in accordance to Sowell was not determined on the basis of an empirical logic and evidence. He was similar to the other leaders in regards to the adamancy in power hankering and retaining that authority that they used spent very little time in calculating the long term plans for the economy. 

In the initial stage of socialism, the political leaders of the region were found to lack the basic tasks in a structured and socialist economy. As per Owen & Bindman (2017), the conditions and rules that Marx had established had significant impact on the economy of the region. It was observed that Russia was in the way of obtaining the status of Modern economic growth in the beginning of 20th century (Owen & Bindman, 2017). The rate of growth of Gross Domestic product becomes highly considerable, though they existed in a very unstable. Secondly, the entire world was transforming and undergoing expansion in regards to the international competition which further compelled different states to improve the human capital and conventional formation and optimize growth in the productivity. Thirdly, so as not to degrade behind the West, the country had to make a lot in regards to conduct much comprehensive reforms that were oriented towards the market. This created vital, activation of the civil society along with sound institutions (Petrov, Lipman & Hale, 2014). However, till the First World War, the developmental model stayed very balanced. There was significant and rising categorization between traditional and modern westernization sectors along with substantial inequality of income. The entrepreneurial, general managerial and cultural levels of the entire population of Russia were very low. The war resulted in activating highly destructive forces in the society of Russia which was on unprepared for such transformation (Robinson & Milne, 2017). 

New Economic Policy

There was the formation of New Economic Policy wherein Lenin announced regarding the formation of capitalism state. As a despotic from of nation government, Soviet Union had adopted this new capitalism from which is also considered as a “U-TURN POCLIY”. This was so considered as it was another ways to socialism. It was not a return to the capitalism instead it was considered as revitalization through varying initiatives regarding entrepreneurships. As per Seliktar (2015), Lenin was aware of the fact that the only way of achieving the global revolution and to make the economy foster again included the linearization of politics and formation of an entrepreneurial atmosphere for a short duration of time (Seliktar, 2015). 

By executing the NEP, Lenin thought to be able to minimize the bourgeoisie inefficiencies which the transformation could have achieved. On the other hand, he replaced the insufficiency with the inefficiency of his own. Significance of the socialism facilitated the guidance of the experts of bourgeois in the experiences regarding management and technology. This lead to greater productivity in the labor, however, this was not included in the long term objective (Shenfield, 2016). A sophisticated system of social-democratic aspect which would later result in equalizing the distribution of revenue and profits through the ownership seizure in regards to the economic infrastructure. This also encompasses natural resources from the arena of bourgeoisies and reforming the prime industries and institutions to serve the requirements of the poor peasantry and proletariat. Lenin had the understanding that the only resolution to the abolishment of bourgeois oppression of labor class that would be to educate the labors, enhancing their skills that eventually facilitated for increased efficiency for transpiring in the process of manufacturing (Simonsen, 2001). Lenin was completely convinced regarding the fact that only a government of Soviet Union would move the negative perception of the people towards the government. Right from the government of Russia and bourgeoisie for many years had robbed and oppressed the people of Russia. Thus, the path to socialism was executed in such manner. 

Concrete Economic Backwardness

Another key serious issue that confronted the early revolutionist in the Soviet Union was devoted to the concrete economic backwardness. The power of the state is only imagined and apparent and it happened to have no basics in the economic life of the citizens. Further, it does not happen to embody the interests of any particular class. The basic reason for the entire transformation was to avoid the eradication of commune that represented most part of the population at those times. right after the establishment of communism, the revolutionist understood that in order to obtain a string growth in the economy, they would require to make investments regarding engagement of heavy industrialization; Soviet Union had been being short of the low levels of foodstuffs and machinery during the World War I and the following Civil war (Stephenson, 2017). Moreover, the cooperation with the peasantry in the country side of Russia was significant on cultural terms. If significant amount of uprisings would occur, there would be minimization of chaos, hence, threatening the immediate outcomes of the entire revolution. Moreover, the NEP facilitated free exchange of varying commodities from occurring, hence, increasing the varying number of peasants and creating a very strong group of people in the middle class (Taylor, 2014). While many economies that were advanced were undergoing sufferings through the renowned Great Depression of the eras 1930s, there was rapid development of Soviet Union into very powerful powerhouse of economy, facilitated by the defense spending and strong military. The implications of NEP are significant in the structuring of the entire equation: they were the basics of the beginnings of economic policy of Soviet Union (Turunen, 2007). On the other hand, it proved to be very good for the Soviet Union of getting back to it’s from, however, on the other hand, it proved bad for the extensive expansion of the Leninist-Marxist theory. The premature death of Lenin, unfortunately, along with the political defeats of the most significant heir, Stalin, resulted in the prevention of the New Economic Policy from projecting any kind of outcomes on a longer term (Van Herpen, 2013). 

Imbalances in the Trade

It was also noted that imbalances in the trade resulted in failure of the Soviet Union. It is a fact that when any country makes trade with any other country, both the countries happen to gain the benefit. This is determined on the basis of comparative advantage law. This denotes that when any country has the reduced costs opportunity for the production of a community or a good, it should need to socialize in the manufacturing of the goods. When the country happens to continue trading to another country, manufacturing will improve and the overall consumption will result to increase as the trade terms raise income of the country. Trade during the era of Stalin has served two kind of purpose to alleviate Russia in a fast manner from its backwardness and to broaden the stock in the capital and result in increase in the production in specific branches of varying industry (Petrov, Lipman & Hale, 2014). Unfortunately, this reliability on the technological technology lead to inability of generating and diffusing technological progress in the domestic aspects. In different words, this dependence on varying imports happens to hurt the extensive economy in the longer term. After the death of Stalin, the Secretaries of the state introduced some effective reforms for the economic upliftment for alleviating the dependence on the foreign trade. This resulted in a negative outrun in which the imbalance in the trade got worse (Kasamara & Sorokina, 2012). 

Downward Falloff the Soviet Union

Among various facts or that resulted in the downward falloff the Soviet Union was Brezhnev who did not have any kind of personal vision of program related to political aspect of the country. He did not take many efforts in reaching and surpassing America or establishing communism. These expectations depend a lot heavily on the innovation at global scale that can explain the rise in the trade. The large rise in the capital against the output generated resulted in the inefficiency of the economy (Ellman & Kontorovich, 2015). It was observed that centralized planners were making investment in huge capital amounts in spite of the minimization of production. In spite of any kind of reasons, the economists on the Soviet Union were ignoring the golden rule stock which denotes to the level of capital which optimizes the consumption for every capita. The problems in the region was also accounting to the increased levels of capital which were exhaustive to the country’s economy (Petrov, Lipman & Hale, 2014). If the economic leaders focused on the equation of the economy in their respective models, the levels of the capital would have returned to balanced levels. The rates of depreciation were comparatively low which denoted that less amount of money had to be spent on the country’s capital and need to have allocated to the next major alternative (Robinson & Milne, 2017). Moreover, if the individual companies have been able to handle the financial repairs by themselves, an eradication of the control of the bank over the entire expenditure of various funds would have been feasible. This innocent transaction would have stripped all kinds of power from the centralized planners. This would be something that would not have been tolerated by the centralized planners. This is the scenario in which induction of bureaucration in excessive amount over the enterprises would result in preservance of overall output regarding planning and targeting from a level of achievement which results in restrained production and wastes. 


Staling relied more on the heavy industrialization, however, his expectation of revolutionalizing Russia had drawback to the extensive rates. This specially pertains to the allocation of funds. As an outcome from the Party Congress XVI in the year 1930, decision was made in regards to the creation of new centers of varying industry in the East, hence, removing the production of Soviet Union from the probable danger of extensive aggression directly from the West . This also encompassed the industrialization of the country to such an extent that it would happen to reach the highest level of industrialization in the West within a decade. It has also been observed that the struggle of Soviet Russia regarding the maintenance of political power that the xenophobia of Stalin and policies emphasize , which happened to realize in dampened innovation and scarcity in technology. The failure of the Soviet Union as an economy also pertains to the faulty priorities of Soviet Union that resulted inefficiencies and huge amounts of generation of waste. These factors basically provided to be an economic shock to Soviet Union. 


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