Economic Systems: Communism

Communism, in principle, pursues the laudable goal of creating an ideal human society. However, the practice of communism has demonstrated that centralized control and ownership of resources directed by authoritarian rule delivers a situation at odds with the goal of communism. This article reviews the basic ideas of communist theory, as originally articulated by Karl Marx as well as subsequent variations. It covers the impact of the communist economics and ideologies on society and the challenges faced by nations once controlled by communism.

Keywords Authoritarian; Bourgeoisie; Communism; Market Economy; Planned Economy; Proletariat; Socialism

Economic Systems: Communism

Overview

Communism has had a profound effect on society in the countries that adopted it as well as beyond those borders. Many millions of dissenters were executed in communist countries for any number of activities, most of which would have been protected by a document like the United States’ Bill of Rights. During the twentieth century, the United States and other capitalist countries took extraordinary measures to counter the spread of communism. United States citizens suffered under the frenzy, fear, and paranoia that Senator Joseph McCarthy caused in the United States during the 1950's with his rabid anticommunism. The country waited gripped with fear and anxiety of nuclear war in 1962 as the United States faced off with Cuba and the Soviet Union to prevent a Soviet nuclear deployment in Cuba. The many billions and trillions of dollars the United States spent during the Cold War arms race with the Soviet Union may have been diverted to other uses. Citizens of the People's Republic of China labored under oppression and drew international attention with the Tiananmen Square protests in 1989. A famous photo from those protests captured the image of one man standing in the path of four Chinese tanks and powerfully conveyed the idea of the individual standing against authoritarian rule. The Tiananmen Square Protests are also known as the Tiananmen Square Massacre, and estimates place the number of injured or killed between many hundreds and many thousands. Since Fidel Castro took power with his communist regime, thousands of Cubans continue to risk their lives on makeshift boats to sail the 90 miles to Florida in search of freedom. The willingness of so many people to risk their lives to escape or defeat communism speaks volumes about its effects on society and the world at large.

The focus of this article is to explore the social effects of the economic system that is created in communist societies. Of course, there are several systems that combine to form the complete communist system. A full throttle pursuit of communism involves an intermediate stage of authoritarian rule as a mechanism to enforce the required redistribution of wealth via police and military institutions. The maintenance of a communist state requires a political organization to plan and distribute collectivized resources. The political organization must also include certain economic planners that determine production and prices. Communist rule also demands party allegiance with all manner of propaganda, coercion, and the prohibition of religion. Of course, there are many other effects of communism, both direct and indirect, that deserve further study.

However, the issue under direct examination here is the effects of the basic communist method of distributing wealth by a method reflected in the statement "from each according to his ability; to each according to his needs." In discussing the distribution of wealth in a communist system, this essay will first define an economic system generally and then communism generally and finally will deal with issue at hand.

Economic Systems

An economic system is the collection of mechanisms that deal with the production, distribution, and consumption of goods and services in a particular society. Because people require material items to survive, the choice of an economic system is extremely important. All the things that we own, our ability to own things at all, the manner in which they are produced, who produces them, and how producers are compensated for their production are all details of the economic system. Likewise, all services we use every day, from golf lessons to medical services, are a product of our economic system. And it is the economic system that determines whether a college graduate will work, in which field, and how much he or she is paid.

Throughout history, societies have used different economic systems to create, distribute, and reward the productive efforts of its citizens. A useful general economic distinction is whether an economy is planned or market. A market economy is free from government control and sets prices and production according to market forces, such as supply and demand, through the voluntary interaction between buyers and sellers. A planned economy is when a government decides which items to produce and in what quantity. Capitalism is a market economy, and communism is a planned economy. Consequently, the availability and quality of goods and services in a planned economy is a result of the planning authority. Quality planning may lead to adequate goods for the people and vice versa. However, the challenges of planning an entire economy are many; shortages of goods and related limitations of the purchasing power of currency are a couple and have dramatic impacts on society.

Communist Theory

Communism, in broad theoretical strokes, is a governmental system in which the state controls ultimate power, specifically over the production and proliferation of goods, in order to create a classless society in which all goods are shared. In this classless society system, property is communally owned and equally distributed to the people in hopes of providing justice, equality, and freedom for all.

Karl Marx

The ideas of communism are largely based on the thinking of the German philosopher and economist Karl Marx. In 1848, Marx and his collaborator, Friedrich Engels, published the Communist Manifesto, which described their radical left-wing system of social organization. His philosophy, known as Marxism, became hotly debated in the 1870's and 1880's in Europe and czarist Russia while the industrial revolution produced a working class that appeared subservient to the industrial class. In an effort to resolve this class conflict, Marx began to attract followers and gave rise to the socialist and communist parties that largely adopted the Marxist philosophy.

For Marx, social equality and justice would ultimately be realized after a societal progression through various stages from capitalism to socialism and then ultimately to communism. Capitalism, during the industrial revolution, created an exploited working class called the proletariat. The proletariat would revolt to overthrow the exploitive capitalist middle class, called the bourgeoisie. At that point, the proletariat would institute an authoritarian socialist government to nationalize resources and equalize the wealth of society. Marx theorized that after the intermediate period of socialism, marked by communal ownership of productive forces but differentiated wealth, communism would follow as the ideal egalitarian earthly paradise.

The Bolshevik Revolution

Marx's work was largely ignored during his life, and he died in 1883. However, Marxism gained in popularity and had its first major implementation in 1917 with the Bolshevik Revolution in Russia under the leadership of Vladimir Lenin. With Lenin and the Bolshevik Revolution, the ideas of Marx and the system of communism began its first major test as an economic system and a related structure for social organization. Lenin later renamed his Bolshevik party to the Russian Communist Party, which then became the Soviet Union or Union of Soviet Socialist Republics (USSR). Communism also spread to eastern European countries within the Soviet influence, including Albania, Poland, Czechoslovakia, Hungary, Bulgaria, Romania, and East Germany. Communism also established itself in Asia, most notably, in China by 1950 and in the People's Republic of Korea.

Flaws in the Communist Doctrine

Marx and others who adopted his ideas, either in whole or in part, may have envisioned communism as the path to the ideal human society. However, the spectacular collapse of the Soviet Union and the revelations of life under communism demonstrated fundamental flaws in communist doctrine. From an historical perspective, communism had a short life span, proved fatally flawed in practice, and lead to the precise opposite of the earthly paradise it promised. In 1991, the Soviet Union collapsed in economic ruin. China and other countries that adopted communism, e.g. Cuba, have significantly relaxed the central tenets of communist doctrine to allow for individual ownership of productive capital to encourage economic growth. China's staggering economic growth since selectively adopting capitalism has become a major story in world economics, and the country is poised to become, or perhaps already is, an economic superpower. China is a story of keen interest because the government retains authoritarian control but allows economic activity normally associated with freer nations.

Communist Economics

Communism is based on a specific economic system characterized by the collective ownership of property and organization of labor for the stated purpose of a common advantage for all members. At the heart of communist ideology is the concept of the collective. Collective ownership means ownership by the state and within that collective, a person does not own property and exists only as a part of the whole. Within the communist collective, goods and services are created and distributed according to the concept "From each according to his ability; to each according to his needs." Communist party leaders are concerned with the good of the party or the good of society and decide what should be done to further that good. Communist party members or citizens are expected to sacrifice individual desires or goals for the good of the collective or party. Therefore, it is virtuous to work and abstain from consumption for the sake of another. This approach to the distribution of economic resources, directed by an authoritarian central authority, was intended to remove inequality from society and deliver the just and perfect society imagined by communist doctrine. At first blush, the redistribution of wealth and the imagined equality among citizens may appear appealing and perhaps even proper.

The two basic abstractions in the communist economics related to production and need may, at some level, seem like a statement of charity and social responsibility. However, communism lacks the critical feature of choice; it is important to remember that economic redistribution commanded by communism occurred under the looming threat of death and torture. Communist redistribution of wealth was far different from the capitalist notion of a voluntary donation of money to the Red Cross at Christmas; it existed as a fixture of daily life and was enforced by brutal means. Choice was replaced with capricious decisions by people in power claiming knowledge or agency of the good of the collective. With that in mind, we will take a closer look at the central concept.

The Central Communist Tenant

"From each according to his ability" means that a person is expected to produce and contribute to the goods and services in a communist collective to the extent they are able. Those who are more skilled or able are expected to produce more. For example, if a scientist who through great personal effort invents a new alloy far superior to anything that had previously existed, his communist society, at the socialist phase of development, would own the invention. The idea once realized would become property of the state for the "good of the people." The collective, under authoritarian rule by a party of leaders, would then decide how to distribute the benefits of the invention and what to charge for it. The party also decides how to compensate the scientist for the invention. The individual is expected to always give and receive not according to what he or she has to give but according to what he or she needs.

"To each according to his need" means that products and services are given to those who claim to need them. The first challenge is determining the definition of need. What is need? What would adequately fill that need? Who decides? Food, shelter, and clothing are needs. But steak or hotdogs? Armani or Wal-Mart? Shack or mansion? These questions are answered by the people in power according to the declared standard of the good of the party—a standard that raises its own serious problems of definition. By virtue of need, a communist can live without creating value. The burden of production shifts to those more capable who must work to provide for the collective. Production is disconnected from reward and motivated by internalized or externally compelled social duty to the party. Rewards are determined by a third-party assessment based on a standard of collective good that defies concrete definition.

Applications

Various Forms

Communism as conceived by Marx and originally implemented by Lenin in Russia is perhaps its most identified form. However, the fundamental communist theory articulated by Marx has taken several forms, including Maoism, Trotskyism, and various religiously based communist orders, among others.

Maoism

Maoism is a variation on the Marxist-Leninist formulation developed by Mao Zedong Chins in the 1950's. The Marx-Lenin formulation focused on the uprising of the working class, or proletariat. As China largely lacked an industrial working class, Mao instead focused on the power uprising of the agrarian peasantry, a class discounted by Marxism. Maoism instigated the the Great Leap Forward in the 1950's and the Cultural Revolution in the 1960's and 1970's. After Mao's death in 1976, Deng Xiaoping began to introduce market-based reforms into the economy. These reforms have continued, and in many respects, several regions have a market economy although the government retains authoritarian communist control over other aspects of life.

Trotskyism

Leon Trotsky, a Russian political leader, born in 1879 and murdered in 1940, advocated a form of communism at odds with the Soviet brand of communism lead by Joseph Stalin, who exiled Trotsky in 1929. Trotsky advocated an international permanent revolution that involved the cooperation of the proletariat between nations. The political movement known as Trotskyism criticized Soviet communism because it transferred power from the proletariat to a bureaucracy and the transition from capitalism to socialism would only be accomplished with international cooperation.

Religious Communism

Religious communism is the implementation of communist egalitarian principles based on religious beliefs. The abdication of personal property in favor of the "receive according to needs" and "labor according to abilities" communist principle is often associated with monks and nuns of various faiths, including Christianity, Daoism, Hinduism, and Buddhism. Christian communism advocates that the teaching of Jesus Christ compels communism as the ideal social order.

Social Impact

Ayn Rand, a novelist and philosopher, born in Russia in 1905, witnessed the communist rise to power in Russia and subsequent nationalization of her father's business. Rand developed a complete philosophy, called objectivism, which is diametrically opposed to communism; objectivism is as individualistic as Marxism is collective. To explore the operation of communist economics, it may be helpful to use a fictional account as a case study. This account comes from Rand's novel Atlas Shrugged, published in 1957, and describes a motor manufacturing company, set in the United States, that adopted a policy of "from each according to his ability and to each according to his ability." The account, told by a former employee of the motor company described the employees' experience under their new company plan (Machan).

Progressive new owners of the motor company presented the employees with the plan for their vote and expounded its social virtue. Not completely understanding the plan or how it would benefit them they voted the plan into effect. The plan created the "Family" that would vote on all matters related to compensation and production. The first thing that became apparent to the employees under the plan was its consequences for the most productive employees of the company. For example, a bright young engineer introduced an important innovation that vastly improved sales. In the following year, when sales fell, the Family decided that someone was not producing to his or her capability. Because the engineer had demonstrated ability, the Family voted that the engineer should work overtime. After that, the engineer ceased introducing new ideas. Consequently, other employees, instead of striving for excellence, took to hiding whatever ability they had for fear of being sentenced to overtime; after all, their needs would be met regardless of what they produced.

The Family voted in periodic meetings to determine compensation according to need. Feigning incompetence and seeking not to excel was bad enough but establishing need was far worse, the employee lamented. Employees were forced to put their troubles on display to convince the Family that they needed some thing or the other. Once proud people were reduced to beggars in an effort to convince the Family that their need was greater than another’s. Some employees felt guilty accepting something for themselves knowing that others would have to do without. Proud employees simply went without because they refused to beg. Still others became experts at establishing need and began to spy and report on other employees who may be falsifying their needs. In the end, the company, once prosperous, collapsed in financial ruin under the plan (Rand, 1957).

The large-scale social implication of the communist economics implied by the story above is the loss personal freedom and the related diminution of the individual's ability to make decisions. Private ownership of the means of production decentralizes the control of economic life to parties acting individually, which prevents total control over individuals. Collective ownership, on the other hand, concentrates all control of property in a political body and therefore all economic decisions become politicized and enforced by the coercive power of the state. Therefore, those wielding political power determine social and economic power and make political power the only power worth having. This close relationship between politics and economics coupled with authoritarian control precludes social freedom in the absence of individual property (Dorn, 1991).

One of the ways that the loss of economic freedom required by central planning manifests itself is on the ability to make decisions on an individual level. This affect of communist economics is particularly relevant in the postcommunist transition to market economies. Market economies are founded in entrepreneurial endeavors that are calculated risks about how the market might react to new products or services in the future. As highlighted in Rand's story, anticipating risk has no upside in a communist system and can in fact be punished. In a planned economy, such decisions are left to the political establishment (Nordin, 1994).

Communist economics discourages decision making about the future in several ways that are relevant to the development of market-based economies. Formerly communist countries face challenges in transitioning to a market economy that is based on private property and the related social institutions. In a capitalist economy, people build wealth and plan for the future for a number of reasons including the purchase of real property, safeguard against unemployment, investment income, provision for heirs or for old age. Wealth and savings for these and other purposes are far different in communist economics. Some major forms of investment income in capitalist economies are real property, securities, bonds, and deposit accounts. These devices have little relevance under communism. All property and companies are collectively owned and unavailable for investment, and deposit accounts paid government-controlled interest rates were often very low. Moreover, depositors were subject to severe penalties if savings were deemed illicit by the government-controlled banks. Individual ownership of property was not permitted as it was all state owned or leased from the state (Nordin, 1994).

Conclusion

Communism, in principle, pursues the laudable goal of creating an ideal human society. However, the practice of communism has amply demonstrated that centralized control and ownership of resources directed by authoritarian rule delivers a situation at odds with the goal of communism. To implement communist society governments and truly collectivize an economy, individual freedom must be replaced with state-imposed coercion in the common good. Societies based on freedom succeed by virtue of the freedom their citizens enjoy—freedom to produce according to their desires and in response to their needs. As a general observation, communism failed in its task to produce a paradise on earth because it lacked this critical feature. As discussed above, the lack of personal freedom manifested in various ways and had a dire impact on society.

Terms & Concepts

Authoritarian: A style of government in which the rulers demand unquestioning obedience from the ruled. Traditionally, 'authoritarians' have argued for a high degree of determination by governments of belief and behavior and a correspondingly smaller significance for individual choice.

Bourgeoisie: The middle class. In Marxist theory, the social group opposed to the proletariat in the class struggle and described as the dominant class of capitalist society that exists by exploiting the wage labor of the proletariat and that is ultimately doomed to extinction.

Communism: A theoretical economic system characterized by the collective ownership of property and by the organization of labor for the common advantage of all members. 2.a. Communism, in broad theoretical strokes, is a governmental system in which the state controls ultimate power, specifically over the production and proliferation of goods, in order to create a classless society in which all goods are shared. b. The Marxist-Leninist version of Communist doctrine that advocates the overthrow of capitalism by the revolution of the proletariat.

Market Economy: An economy free from government control that sets prices and production according to market forces, such as supply and demand, through the voluntary interaction between buyers and sellers.

Planned Economy: An economy controlled by a central authority, usually a government, that determines production, quantity, and price.

Proletariat: The class of industrial wage earners who, possessing neither capital nor production means, must earn their living by selling their labor. The poorest class of working people.

Socialism: Any of the various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy. In Marxist-Leninist theory; intermediate between capitalism and communism, in which collective ownership of the economy under the dictatorship of the proletariat has not yet been successfully achieved.

Bibliography

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Suggested Reading

Dorn, J. (1991). From plan to market: The post-Soviet challenge. CATO Journal, 11, 175. Retrieved April 12, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9604112157&site=ehost-live Fleck, C., & Hess, A. (2011). Sociology and communism: Coming to terms with a discipline's past. Comparative Sociology, 10, 670–690. Retrieved October 22, 2013, from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=67348170

Machan, T. (1994). Ayn Rand versus Karl Marx. International Journal of Social Economics, 21(2–4), 54. Retrieved March 28, 2008, from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=9504071541&site=ehost-live

Nordin, H. (1994). The NOW Society: The psychological impact of the communist economic system. Mankind Quarterly, 35(1/2), 11. Retrieved April 8, 2008, from EBSCO Online Database Academic Search Premier. http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9505026689&site=ehost-live

Rand, A. (1957) Atlas shrugged. New York, NY: Signet Publishing.

Róna-Tas, Á. (1993). Autopsies of communism. Contemporary Sociology, 22, 35-37. Retrieved March 28, 2008, from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=9306165773&site=ehost-live Wydra, H. (2012). The power of symbols—Communism and beyond. International Journal of Politics, Culture & Society, 25(1–3), 49–69. Retrieved October 22, 2013, from EBSCO Online Database SocINDEX with Full Text. http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=79292977