Saturday, November 7, 2009
A Globe Redrawn
The following article talk about Russia after the Soviet collapse. The author points out to the huge inflation, the result of the repressed inflation of the central planning era. Additionally, he describes how wrong incentives aimed at continuous industrialization led producers to make tonnes of steel or cement, or tanks and rockets that no one wanted, "while shops were empty of the things they craved." The author states that "producing goods worth less in real terms than the materials used to make them could not go on for ever." "Meanwhile, shortages created a crime-ridden black economy that, by some estimates, was worth as much as 30% of the real one, perhaps more." Thus,when the Soviet Union collapsed, and the government chose to opt for the "shock therapy" in the transition to a free market economy, there was no mechanism in place to support it.
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3 comments:
This description of the rapid fall of communism in the Soviet Union shows an interesting contrast to China, and perhaps why China's transition was so much more successful. Although the fall of communism was unforeseen, the impact of the drastic change in economic and military power of the Soviet Union had a wide-reaching effect. This is a good example of the negative side effects of a rapid change in economic system, especially in a very influential country.
This article is very informative and interesting. One of the many ideas that stuck out at me was when the author said that "In many ways it was the Soviet Union that lost the cold war, rather than America that won it." I never really thought about it that way.
I also liked how the article talked about the Soviet Union and that even without the fall of the Berlin Wall similar outcomes would have happened. This is a great article that really details all the interconnections between the Soviet Union and many other countries.
Alexandra's comment about the Soviet Union losing the cold war is an interesting way to look at the outcome. This article also pointed out the interconnectedness of the global economies.
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