Planned economy in the context of "Decentralization"

Joseph Vissarionovich Stalin (né Dzhugashvili; 18 December [O.S. 6 December] 1878 – 5 March 1953) was a Soviet politician, dictator and revolutionary who led the Soviet Union from 1924 until his death in 1953. His rule oversaw mass atrocities that caused an estimated 20 million deaths, and he is widely considered one of the most brutal despots of the modern era. He held office as General Secretary of the Communist Party from 1922 to 1952 and as premier from 1941 until his death. Despite initially governing the country as part of a collective leadership, he eventually consolidated power to become a dictator by the 1930s. Stalin codified the party's official interpretation of Marxism as Marxism–Leninism, and his version of it is referred to as Stalinism.

Born into a poor Georgian family in Gori, Russian Empire, Stalin attended the Tiflis Theological Seminary before joining the Marxist Russian Social Democratic Labour Party. He raised funds for Vladimir Lenin's Bolshevik faction through bank robberies and other crimes, and edited the party's newspaper, Pravda. He was repeatedly arrested and underwent several exiles to Siberia. After the Bolsheviks seized power in the October Revolution of 1917, Stalin served as a member of the Politburo, and from 1922 used his position as General Secretary to gain control over the party bureaucracy. After Lenin's death in 1924, Stalin won the leadership struggle over rivals including Leon Trotsky. Stalin's doctrine of socialism in one country became central to the party's ideology, and his five-year plans starting in 1928 led to forced agricultural collectivisation, rapid industrialisation, and a centralised command economy. His policies contributed to a famine in 1932–1933 which killed millions, including in the Holodomor in Ukraine. Between 1936 and 1938, Stalin executed hundreds of thousands of his real and perceived political opponents in the Great Purge. Under his regime, an estimated 18 million people passed through the Gulag system of forced labour camps, and more than six million people, including kulaks and entire ethnic groups, were deported to remote areas of the country.

After a period of political and economic crisis in the 1980s, the constituent republics of the Socialist Federal Republic of Yugoslavia split apart in the early 1990s. Unresolved issues from the breakup caused a series of inter-ethnic Yugoslav Wars from 1991 to 2001 which primarily affected Bosnia and Herzegovina, neighbouring parts of Croatia and, some years later, Kosovo.

Following the Allied victory in World War II, Yugoslavia was set up as a federation of six republics, with borders drawn along ethnic and historical lines: Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, and Slovenia. In addition, two autonomous provinces were established within Serbia: Vojvodina and Kosovo. Each of the republics had its own branch of the League of Communists of Yugoslavia party and a ruling elite, and any tensions were solved on the federal level. The Yugoslav model of state organisation, as well as a "middle way" between planned and liberal economy, had been a relative success, and the country experienced a period of strong economic growth and relative political stability up to the 1980s, under Josip Broz Tito. After his death in 1980, the weakened system of federal government was left unable to cope with rising economic and political challenges.

A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a market economy. Transition economies undergo a set of structural transformations intended to develop market-based institutions. These include economic liberalization, where prices are set by market forces rather than by a central planning organization. In addition to this, trade barriers are removed, there is a push to privatize state-owned enterprises and resources, state and collectively run enterprises are restructured as businesses, and a financial sector is created to facilitate macroeconomic stabilization and the movement of private capital. The process has been applied in China, the former Soviet Union and Eastern bloc countries of Europe and some Third world countries, and detailed work has been undertaken on its economic and social effects.

The transition process is usually characterized by the changing and creating of institutions, particularly private enterprises; changes in the role of the state, thereby, the creation of fundamentally different governmental institutions and the promotion of private-owned enterprises, markets and independent financial institutions. In essence, one transition mode is the functional restructuring of state institutions from being a provider of growth to an enabler, with the private sector its engine. Another transition mode is change the way that economy grows and practice mode. The relationships between these two transition modes are micro and macro, partial and whole. The truly transition economics should include both the micro transition and macro transition. Due to the different initial conditions during the emerging process of the transition from planned economics to market economics, countries uses different transition model. Countries like the People's Republic of China and Vietnam adopted a gradual transition mode, however Russia and some other East-European countries, such as the former Socialist Republic of Yugoslavia, used a more aggressive and quicker paced model of transition.

Socialist economics comprises the economic theories, practices and norms of hypothetical and existing socialist economic systems. A socialist economic system is characterized by social ownership and operation of the means of production that may take the form of autonomous cooperatives or direct public ownership wherein production is carried out directly for use rather than for profit. Socialist systems that utilize markets for allocating capital goods and factors of production among economic units are designated market socialism. When planning is utilized, the economic system is designated as a socialist planned economy. Non-market forms of socialism usually include a system of accounting based on calculation-in-kind to value resources and goods.

Socialist economics has been associated with different schools of economic thought. Marxian economics provided a foundation for socialism based on analysis of capitalism while neoclassical economics and evolutionary economics provided comprehensive models of socialism. During the 20th century, proposals and models for both socialist planned and market economies were based heavily on neoclassical economics or a synthesis of neoclassical economics with Marxian or institutional economics.

The Road to Serfdom is a book by the Austrian-British economist and philosopher Friedrich Hayek. In the book, Hayek "[warns] of the danger of tyranny that inevitably results from government control of economic decision-making through central planning." He further argues that the abandonment of individualism and classical liberalism inevitably leads to a loss of freedom, the creation of an oppressive society, the tyranny of a dictator, and the serfdom of the individual. Hayek challenged the view, popular among British Marxists, that fascism (including Nazism) was a capitalist reaction against socialism. He argued that fascism, Nazism, and state-socialism had common roots in central economic planning and empowering the state over the individual.

Since its publication in 1944, The Road to Serfdom has been popular among liberal (especially classical liberal) and conservative thinkers. It has been translated into more than 20 languages and sold over two million copies (as of 2010). The book was first published in Britain by Routledge in March 1944, during World War II, and was quite popular, leading Hayek to call it "that unobtainable book", also due in part to wartime paper rationing. It was published in the United States by the University of Chicago Press in September 1944 and achieved great popularity. At the arrangement of editor Max Eastman, the American magazine Reader's Digest published an abridged version in April 1945, enabling The Road to Serfdom to reach a wider non-academic audience.

Czechoslovakia (/ˌtʃɛkoʊsloʊˈvæki.ə, ˈtʃɛkə-, -slə-, -ˈvɑː-/ CHEK-oh-sloh-VAK-ee-ə, CHEK-ə-, -⁠slə-, -⁠VAH-; Czech and Slovak: Československo, Česko-Slovensko) was a landlocked country in Central Europe created in 1918 when it declared its independence from Austria-Hungary. In 1938, after the Munich Agreement, the Sudetenland became part of Nazi Germany. Between 1939 and 1945, the state ceased to exist, as Slovakia proclaimed its independence and Carpathian Ruthenia became part of Hungary, while the German Protectorate of Bohemia and Moravia was proclaimed in the remainder of the Czech Lands. In 1939, after the outbreak of World War II, former Czechoslovak president Edvard Beneš formed a government-in-exile and sought recognition from the Allies.

After World War II, Czechoslovakia was re-established under its pre-1938 borders, with the exception of Carpathian Ruthenia, which became part of the Ukrainian SSR (a republic of the Soviet Union). The Communist Party seized power in a coup in 1948. From 1948 to 1989, Czechoslovakia was part of the Eastern Bloc with a planned economy. Its economic status was formalized in membership of Comecon from 1949 and its defense status in the Warsaw Pact of 1955. A period of political liberalization in 1968, the Prague Spring, ended when the Soviet Union, assisted by other Warsaw Pact countries, invaded Czechoslovakia. In 1989, as Marxist–Leninist governments and communism were ending all over Central and Eastern Europe, Czechoslovaks peacefully deposed their communist government during the Velvet Revolution, which began on 17 November 1989 and ended 11 days later on 28 November when all of the top Communist leaders and Communist party itself resigned. On 31 December 1992, Czechoslovakia split peacefully into the two sovereign states of the Czech Republic and Slovakia.

The history of socialism has its origins in the Age of Enlightenment and the 1789 French Revolution, along with the changes that brought, although it has precedents in earlier movements and ideas. The Communist Manifesto was written by Karl Marx and Friedrich Engels in 1847-1848 just before the Revolutions of 1848 swept Europe, expressing what they termed scientific socialism. In the last third of the 19th century parties dedicated to democratic socialism arose in Europe, drawing mainly from Marxism. The Australian Labor Party was the first elected socialist party when it formed government in the Colony of Queensland for a week in 1899.

In the first half of the 20th century, the Soviet Union and the communist parties of the Third International around the world, came to represent socialism in terms of the Soviet model of economic development and the creation of centrally planned economies directed by a state that owns all the means of production, although other trends condemned what they saw as the lack of democracy. The establishment of the People's Republic of China in 1949, saw socialism introduced. China experienced land redistribution and the Anti-Rightist Movement, followed by the disastrous Great Leap Forward. In the UK, Herbert Morrison said that "socialism is what the Labour government does" whereas Aneurin Bevan argued socialism requires that the "main streams of economic activity are brought under public direction", with an economic plan and workers' democracy. Some argued that capitalism had been abolished. Socialist governments established the mixed economy with partial nationalisations and social welfare.

Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources between and within organizations contrasted with the market mechanism. As an allocation mechanism for socialism, economic planning replaces factor markets with a procedure for direct allocations of resources within an interconnected group of socially owned organizations which together comprise the productive apparatus of the economy.

There are various forms of economic planning that vary based on their specific procedures and approach. The level of centralization or decentralization in decision-making depends on the specific type of planning mechanism employed. In addition, one can distinguish between centralized planning and decentralized planning. An economy primarily based on planning is referred to as a planned economy. In a centrally planned economy, the allocation of resources is determined by a comprehensive plan of production which specifies output requirements. Planning can also take the form of indicative planning within a market-based economy, where the state employs market instruments to induce independent firms to achieve development goals.

Market socialism is a type of economic system involving social ownership of the means of production within the framework of a market economy. Various models for such a system exist, usually involving cooperative enterprises and sometimes a mix that includes public or private enterprises. In contrast to the majority of historic self-described socialist economies, which have substituted some form of economic planning for the market mechanism, market socialists wish to retain the use of supply and demand signals to guide the allocation of capital goods and the means of production. Under such a system, depending on whether socially owned firms are state-owned or operated as worker cooperatives, profits may variously be used to directly remunerate employees, accrue to society at large as the source of public finance, or be distributed amongst the population in a social dividend.

Market socialism can be distinguished from the concept of the mixed economy because most models of market socialism propose complete and self-regulating systems, unlike the mixed economy. While social democracy aims to achieve greater economic stability and equality through policy measures such as taxes, subsidies, and social welfare programs, market socialism aims to achieve similar goals through changing patterns of enterprise ownership and management.

A mixed economy is an economic system that includes both elements associated with capitalism, such as private businesses, and with socialism, such as nationalized government services.

More specifically, a mixed economy may be variously defined as an economic system blending elements of a market economy with elements of a planned economy, markets with state interventionism, or private enterprise with public enterprise. Common to all mixed economies is a combination of free-market principles and principles of socialism. Alternatively, a mixed economy can refer to a reformist transitionary phase to a socialist economy that allows a substantial role for private enterprise and contracting within a dominant economic framework of public ownership. This can extend to a Soviet-type planned economy that has been reformed to incorporate a greater role for markets in the allocation of factors of production.

Economic systems as a type of social system must confront and solve the three fundamental economic problems:

• What kinds and quantities of goods shall be produced, "how much and which of alternative goods and services shall be produced?"
• How shall goods be produced? ..by whom and with what resources (using what technology)...?"
• For whom are the goods or services produced? Who benefits? Samuelson rephrased this question as "how is the total of the national product to be distributed among different individuals and families?"

Economic systems solve these problems in several ways:"... by custom and instinct; by command and centralized control (in planned economies) and in mixed economies that "...uses both market signals and government directives to allocate goods and resources." The latter is variously defined as an economic system blending elements of a market economy with elements of a planned economy, free markets with state interventionism, or private enterprise with public enterprise..."

Soviet-type economic planning (STP) is the specific model of centralized planning employed by Marxist–Leninist socialist states modeled on the economy of the Soviet Union.

The post-perestroika analysis of the system of the Soviet economic planning describes it as the administrative-command system due to the de facto priority of highly centralized management over planning. An example of analytical approach to several stages of the Soviet political-economic model can be found in the works of Soviet economist Lev Gatovsky.

Cuba has a developing planned economy dominated by state-run enterprises. The Communist Party of Cuba maintains high levels of public sector control and exerts significant influence over the Cuban economy. The island has a low cost of living, inexpensive public transport, as well as subsidized education, healthcare, and food. Cuba's economic growth has historically been weak due to high labour emigration, import dependency, an ongoing energy crisis, foreign trade sanctions, and limited tourism in Cuba. The dual economy of Cuba has led to a series of financial crises. Cuba is one of the poorest countries in Latin America and the Caribbean with high inflation, collective poverty, and food shortages. It is heavily indebted due to its large public sector and high deficit spending, with a global sovereign debt burden.

In the 19th century, Cuba was one of the most prosperous pre-industrial Latin American countries with the export of tobacco, sugar, and coffee. At the Cuban Revolution of 1953–1959, during the military dictatorship of Fulgencio Batista, Cuba was on a growth trajectory within Latin America. During the Cold War, the Cuban economy was heavily subsidized – 10% to 40% of Cuban GDP in various years – by the Eastern Bloc, due to their geopolitical alignment with the Soviet Union. Cuba endured severe economic downturn when the Soviet Union collapsed, with GDP declining 33% between 1990 and 1993. A protracted economic malaise known as the Special Period overcame Cuba from 1991 to 2001. The Cuban economy rebounded in 2003 with marginal liberalization and foreign support from Venezuela, China, and Russia. The United States has maintained an economic embargo against Cuba since 1960 due to geopolitical tensions. Cuba has free-trade agreements with many world nations.

Perestroika (/ˌpɛrəˈstrɔɪkə/ PERR-ə-STROY-kə; Russian: перестройка, romanized: perestroyka, IPA: [pʲɪrʲɪˈstrojkə] ) was a political reform movement within the Communist Party of the Soviet Union (CPSU) during the late 1980s, widely associated with CPSU general secretary Mikhail Gorbachev and his glasnost (meaning "transparency") policy reform. The literal meaning of perestroika is "restructuring", referring to the restructuring of the political economy of the Soviet Union in an attempt to end the Era of Stagnation.

Perestroika allowed more independent actions from various ministries and introduced many market-like reforms. The purported goal of perestroika was not to end the planned economy, but rather to make socialism work more efficiently to better meet the needs of Soviet citizens by adopting elements of liberal economics. The process of implementing perestroika added to existing shortage and created political, social, and economic tensions within the Soviet Union. Furthermore, it is often blamed for the political ascent of nationalism and nationalist political parties in the constituent republics.

In economics, the market mechanism is a mechanism by which the use of money exchanged by buyers and sellers with an open and understood system of value and time trade-offs in a market tends to optimize distribution of goods and services in at least some ways. The mechanism can exist in free markets or in captive or controlling markets seek to use supply and demand, or some other form of charging for scarcity, to choose among production possibilities. In a free market economy, all the resources are allocated by the private sector (individuals, households, and groups of individuals); in a planned economy, all the resources are owned by the public sector (local and central government); and, in a mixed economy, some resources are owned by both sectors, private and public. In reality the first two are mostly theoretical and the third is common. Resources are allocated according to the forces of supply and demand.

Government interference in the market mechanism can lead to economic inefficiency when it is applied to some private goods. Prices convey a lot of information. They not only tell producers what to produce but also inform the producers to produce what people want. The more inaccurate the information gets, the lesser will be the economic coordination which will in turn lower satisfaction of wants. Thus interference in the information conveyed by prices is destructive to economic development if misapplied or overused. However, the market mechanism often cannot optimize for public goods, owing to problems such as the tragedy of the commons. For example, modern highways have been good for economic development, but it has taken government planning and allocation to bring them into existence.

Until the early 19th century, Germany, a federation of numerous states of varying size and development, retained its pre-industrial character, where trade centered around a number of free cities. After the extensive development of the railway network during the 1840s, rapid economic growth and modernization sparked the process of industrialization. Under Prussian leadership Germany was united in 1871 and its economy grew rapidly. The largest economy in Europe by 1900, Germany had established a primary position in several key sectors, like the chemical industry and steel production. High production capacity, permanent competitiveness and subsequent protectionist policies fought out with the US and Britain were essential characteristics.

By the end of World War II, the country's economic infrastructure was completely destroyed. West Germany embarked in its program of reconstruction guided by the economic principles of the Minister of Economics Ludwig Erhard excelled in the economic miracle during the 1950s and 1960s. East Germany was embedded in the Eastern Bloc system of socialist planned economy. It fell far behind in terms of living standards.

Nineteen Eighty-Four (also published as 1984) is a dystopian novel by the English writer George Orwell. It was published on 8 June 1949 by Secker & Warburg as Orwell's ninth and final completed book. Thematically, it centres on totalitarianism, mass surveillance and repressive regimentation of people and behaviours.

The story takes place in a fictional future. The current year is uncertain, but believed to be 1984. Much of the world is in perpetual war. Great Britain, now known as Airstrip One, has become a province of the totalitarian superstate Oceania, which is led by Big Brother, a dictatorial leader supported by an intense cult of personality manufactured by the Party's Thought Police. The Party engages in omnipresent government surveillance and, through the Ministry of Truth, historical negationism and constant propaganda to persecute individuality and independent thinking. Orwell described his book as a "satire", and a display of the "perversions to which a centralised economy is liable", while also stating he believed "that something resembling it could arrive". The novel examines the role of truth and facts within societies and the ways in which they can be manipulated. Parallels have been drawn between the novel and real-world totalitarianism, mass surveillance and violations of freedom of expression, among other themes.