The Economic Failure of Socialism

The poster child of economic failure for socialism and communism (state mandated socialism) was the Soviet Union. With its highly centralized government and economy, the USSR survived for 69 years until its collapse in 1991. Free markets were abolished; the state owned the businesses and a central planning committee planned the economy. Consider this, bakers were arrested for making brownies, because their job was designated as only baking bread. I kid you not. If you had an apple tree in your front yard, it was illegal to pick those apples because they belonged to the state. I think you get the picture.

While oil prices were high and oil could be sold, the Soviet Union appeared to have a strong economy and could maintain its focus on increasing its military power. But when oil prices fell towards the end of the 1980s, the USSR found itself forced to borrow from Western banks. Its sluggish economic system and dependency on the West also weakened the control that it had over countries under the USSR’s control and eventually led to its demise. A situation similar to what Venezuela is experiencing today.

A brief comparison between the Soviet Union at its collapse and the US at that time reflects the weakness of socialism as compared with free market capitalism; which we believe to be a more Biblical economic system:

  • At the point of its collapse the Soviet Union found itself with a standard of living that was 1/3 of that in the United States.
  • Because consumers were not served, the soviet diet was not good; resulting in a male life expectancy seven years less than the United States.
  • The infant mortality rate was twice of that in the US.
  • One in 20 people in the Soviet Union had a car in 1970 vs. more than one out of two in the United States.

The environment was sacrificed on the alter of state control as well. The Aral Sea used to be the fourth largest lake in the world. The whole lake, over 23,000 square miles of water, in some places 100 feet deep, evaporated into thin air. Why? Soviet planners wanted to turn Central Asia into the world’s largest producer of cotton so they diverted the two rivers that fed the Aral Sea for irrigation for the Soviet cotton industry. The scale of the Aral Sea disaster only became apparent in the 1980’s. It is one of the world’s most startling ecological calamities – the story of how Soviet planners soaked up an entire sea to build a cotton industry. Everything served the state.

Of course this is only an economic comparison that does not reference the millions who were brutally killed by Lenin, Stalin and his followers.


How Socialism Destroyed VenezuelaJuan Carlos Hidalgo, Cato Institute, Feb. 25, 2014

Waiting for the Sea; Rustam Qobil, BBC News, 25 February 2015

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2 Responses to The Economic Failure of Socialism

  1. Andrew Simpson says:

    How best can we protect the well-being of the dis-advantaged under free market capitalism, without supporting some social policies.
    Harmony and prosperity sounds lovely but it’s not easy to adequately opportune all participants.

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