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Another advantage of economic planning from the neoclassical perspective is the ability to eliminate unemployment with the exception of frictional unemployment and business cycles.
Also, because the state makes labor compulsory and can run enterprises at a loss, full employment is a theoretical possibility even when capital stocks are too low to justify it in a market system.
This was an advantage that the USSR arguably realized by although critics argue that sometimes certain segments of Soviet labor exhibited zero productivity, meaning that though workers were on employment rolls, they essentially sat idle because of capital deficiencies; i.
One is the ability to control for externalities directly in the pricing mechanism.
But, because in STP prices are set by the state, STP avoids this pitfall by never pricing an item below its labor value.
While these do seem to be valid theoretical advantages to STP especially under a Marxist frameworkit has been argued by some that STP as implemented by the USSR failed to achieve these theoretical possibilities.
Relevant discussion may be found on the talk page. Please do not remove this message until conditions to do so are met. December Learn how and when to remove this template message From a neoclassical perspective, there were many disadvantages to STP.
They can be divided into two categories: Additionally, planners had to aggregate many types of goods and inputs into a single material balance because it was impossible to create an individual balance for each of the approximately 24 million items produced and consumed in the USSR. Another disadvantage is that while STP does allow for the theoretically possibility of full employment, the USSR often achieved full employment by operating enterprises at a loss or leaving workers idle.
Therefore, there was always a Pareto superior alternative available to the USSR rather than full employment, specifically, the option to close some enterprises and make transfer payments to the unemployed. This effect resulted from an enterprise overproducing in a given plan cycle.
An anti-innovation bias also from fear of the ratchet effect "Storming" shturmovshchina which was the hurry to complete the plan at the end of a planning cycle resulting in poor production quality "Scattering" of resources excessive spread, raspylenie sredstvwhere too many projects esp.
Other scholars have argued following the collapse of the USSR argued that a central deficiency of Soviet economic planning was that it was not premised on final consumer demand, and that such a system would be increasingly feasible with advances in information technology.The US did NOT cause the Fall of the Soviet Union – that is a False Belief on Both Sides.
Blog/Uncategorized Posted Mar 18, by Martin Armstrong without the Arms Race consuming resources within the Soviet economy preventing economic expansion and the lifting of living standards in Russia, Gorbachev understood he could now make his.
The Soviet Union lived in a command economy. In a command economy the government decides how many goods should be made. After the war ended, both the Soviet Union and the U.S.
wanted to influence Europe with their systems of government. The Soviet Union influenced Eastern Europe, while the U.S.
influenced Western Europe. She warns that the Chinese Communist party has long used the collapse of the Soviet Union and the economic and political upheaval Russia underwent in the s as a cautionary tale.
In the economic sphere, communism calls for the government to take control of all the capital and industry in the country in an effort to get rid of economic inequality.
On the other hand, a democracy respects individuals' right to own property and means of production. The apparent paradox of the observable low standard of living in the Soviet Union and the high claimed rates of Soviet economic growth has sometimes been explained by reference to high rates of saving and investment and the heavy emphasis on the production of producer goods.
De Jonge, unfortunately, has built his analysis of the Soviet bureaucracy on a dubious comparison of the Soviet system with a modern corporation.