Lessons on Economics and Political Economy from the Soviet Tragedy

Peter J. Boettke, George Mason UniversityFollow
Rosolino A. CandelaFollow

Publication Date

January 2018

Abstract

This paper explores the economics and politics of the tragic Soviet experiment with socialism. Beginning with the period of “War Communism” between 1917 and 1921, the Soviet government’s attempt to implement socialism failed to achieve its stated objectives, namely to create social harmony, eliminate class struggle, and to unleash advanced material production. It attempted to achieve these ends by abolishing private property and market prices in the means of production, eliminating the incentives and information necessary to guide production in an efficient manner. The unintended political and economic results were disastrous, leading to tyranny, famine, and oppression. Failing to achieve its stated objectives, after 1921 the Soviet Communist regime continued to survive only by changing the meaning of socialism. De jure socialism in the Soviet Union continued to mean the abolition of private property and market competition of the means of production. However, de facto, this meant the monetization of political control over resources, via black market exchange, in a shortage economy, and competition for leadership in the Communist Party to control such resources. As a result, the Soviet political system failed to achieve the ideals of socialism on its own terms, not only because central planning eliminated the institutional conditions necessary to allocate resources productively, but also because central planning created the institutional conditions by which the worst men, those most able and willing to exercise force in a totalitarian environment, got to the top of the political hierarchy.

Author Bio(s)

Peter Boettke is the BB&T Professor for the Study of Capitalism, and the Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University. He is the author of Why Perestroika Failed: The Politics and Economics of Socialist Transformation, London: Routledge, 1993; and The Political Economy of Soviet Socialism: The Formative Years, 1918-1928, Boston: Kluwer Academic Publishers, 1990. In 2012, Boettke received a doctorate honoris causa in Social Sciences from Universidad Francisco Marroquin. In 2013, Dr. Boettke received his second honorary doctorate from Alexandru Ioan Cuza University in Romania.

Rosolino Candela is a Postdoctoral Research Associate in the Political Theory Project at Brown University. He holds a Ph.D. in Economics from George Mason University, where he was a Graduate Research Fellow in the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics. In 2015, he was a Visiting Ph.D. Student in the Department of Political and Social Sciences at the European University Institute in Florence, Italy. His research interests include Austrian economics, Public Choice, the history of economic thought, and political economy.