Homeworks

Rise and Fall of the Soviet Union – Homework Assignments

In each homework, answer fully any 6 discussion questions.  Your answers should demonstrate knowledge and understanding of historical events, policies and ideas from the readings/videos.  An excellent answer should be as detailed as possible. For best results use QUOTEs from readings, NUMBERs and EXAMPLEs to support your point of view.

Homework 1                          Marxism

1.  According to Marx’s labor theory of value, the value of a commodity can be objectively measured by the amount of labor hours that are required to produce that commodity. In fact, labor is the only factor of production capable of creating wealth (adding “value” to raw materials). Capital, land and entrepreneurial abilities create no value.  Capitalists extract “surplus value” (profit) from the workers by exploiting workers. Capitalists do not participate in production and do not create value. If labor is the source of all value created in the productive process, then workers have a valid moral claim to all wealth created through production.  Explain why you agree or disagree with this idea.

2.  According to Marx, capitalism is destined for a collapse. Competition in the long run creates monopoly. Unable to withstand tough competition, many capitalists go bankrupt, lose their factories, and fall into the ranks of the proletariat. This creates higher supply of labor, a fall in wages, unemployment and poverty. Explain why you agree or disagree with this idea.

3.  According to Marx, anarchic, unplanned nature of a complex market economy is prone to economic crises as supplies and demands become mismatched, causing huge swings in business activity and, ultimately, severe economic depressions. The entire capitalist system—with its private property, money, market exchange, profit-and-loss accounting, labor markets, and so on—must be abolished, and replaced with a fully planned, self-managed economic system. Explain why you agree or disagree with this idea.

4. K. Marx and F. Engels wrote their Manifesto in December 1847, as a guide to the fundamental principles and practices of Communists. What stages of history do Marx and Engels describe? What forces drive history forward?  What kinds of changes does Marx say have been characteristic of the bourgeois era?

5.  According to the Manifesto (parts 1 and 2), what demonstrates that the capitalist system has become a fetter on productive forces? Why are proletarians doomed to misery under capitalism? What features of capitalism transform the proletariat into a powerful political actor?

6. What features of the capitalist system are Communists ready to abolish?  What are the characteristics of an ideal communist society?

7. What are the steps towards creating an ideal society? By what means can a classless society be established?  Would it be a peaceful transition?

8. The long-run outlook for the 19th century capitalist society was bleak. Not only would profits tend to fall, but accumulation would tend to stagnate. Where did Marx find hope for transcendence within the dynamics of accumulation and crisis? Who would be the “gravediggers” of capitalism and why would they bother?

9. Why is Marx’s vision of communism called utopian?

10.  Based on your readings in this module, make up your own question and answer it  (For example: Describe major principles of dialectical materialism, etc).

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Homework 2                          First Policies
  1. Karl Marx predicted the emergence of communism in countries where capitalism is at its most advanced stage. Instead, communism won in a backwards agrarian country, Russia.  What political events or trends can explain why communists were not successful in Western Europe but instead were successful in Russia?
  2. Describe the general state of the Russian economy before the 1917 revolution.  Was Russia a developed country with modern industry, progressive agriculture and educated workforce? or not?  Explain.
  3.  Sometimes historians argue about whether the October revolution was made “from above” or “from below.” In other words, they argue whether the Bolsheviks rode to power on a wave of popular support or simply organized a conspiracy to take power.  What is your position on this?
  4. Who was Lenin? What was his contribution to Soviet history?
  5. Who was Trotsky? What was his contribution to Soviet history?
  6. What is War Communism? Why was this policy abandoned?
  7. What lessons can be learned from War Communism?
  8. What is NEP? Why was NEP abandoned?
  9. What lessons can be learned from NEP?
  10. Describe essential freedoms and rights granted to citizens by the Soviet constitution.
  11. Based on this module’s resources, make up your own question and answer it.

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Homework 3              1930s-1950s: Stalin, WW2

  1. What were the goals behind collectivization of agriculture? Were the first results of this policy successful?
  2. What were the goals of the industrialization policy? Were collectivization and industrialization separate policies? If they were connected, how so?
  3. What accounts for the tremendous sense of haste characteristic of the First Five-Year Plan period? What is the major goals Lenin and Stalin were trying to achieve with the 5-year plans?
  4. Who was Stalin? What was his contribution to Soviet history?
  5. How do you explain all the repressive measures undertaken by the regime – the secret police, the GULAG system, and attacks against its own citizens?  was all this necessary for the survival of the regime?
  6. How would you explain the great purges? Were they products of Stalin’s paranoia, a new flare-up of “revolutionary virus,” the culmination of the violence of the preceding two decades, or something else? The “show trials” asked people to believe many manifestly implausible things—including that people who had been among the most powerful leaders of the country had for many years been working against it. Why do you think the claims put forward in these trials were so extreme?
  7. What mass support was required for the purges to take place on the scale they did? Why do you think it was forthcoming? Why was opposition not successful?  Why did not Soviet people revolt against the murderous dictator?
  8. Was Stalin’s regime a natural successor to the Bolshevik-dominated state Lenin created? Set out your own position, identify several specific elements of Stalin’s rule and explain whether you see them as continuing or breaking with earlier Bolshevik practice.
  9. What were some of the repressive measures used to ensure discipline and effort in the war? What about measures intended to generate enthusiasm?
  10. Describe the role of the Soviet Union in WWII.
  11. Which countries became Eastern European allies of the Soviet Union?  How did they end up on the east side of the “iron curtain”? Why were they important for the Soviet Union?
  12. Why do you think the USSR-UK-USA alliance did not hold up in the post-WW2 world?
  13. Based on your readings about Stalin era, make up your own question and answer it.

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Homework 4              Centrally Planned Economy
  1. Describe major formal institutions of the Soviet economy.   Did the society also have informal institutions?
  2. What are the main features of a command economy?
  3. Describe the principal-agent problem between the state represented by ministries and local plant managers under central planning. Were socialist managers interested in innovation
  4. Sketch the way in which plans were constructed in the USSR. What ‘ratchet effect’ did this system produce?  Mention main strengths and weaknesses of the actual planning process.
  5.  Describe some of the features of the military industrial complex in USSR.
  6. How were wages set in a centrally planned economy?  How were managerial rewards structured?  How could plan bonus incentives lead to bad quality of products? Comment on what you consider the main strengths and weaknesses of this wage and reward system.
  7. How did the financial system – money, credit and banks- work in a centrally planned economy?
  8. How were prices determined?  Were prices important for material balance planning? Why did prices stay the same for decades in the USSR? What problems can result from the socialist system of prices?
  9. What is the soft budget constraint? What important implications about the socialist economy stem from the persistence of soft-budget constraints?
  10. What lessons can we learn form mistakes in central planning, including those about the allocation of labor and the role of money, capital and interests?
  11. Based on “Exchange Rates, 1953” article, how was foreign trade organized under the Soviet-type system?
  12. Suppose that the Board of Trustees of the Giant University decided that graduation rates are too low. To remedy this they impose targets on the administration for graduation rates, and furthermore, they make compensation depend on achieving these targets. The compensation for the President now equals zero if graduation rate is below target and rises with the number of graduates above target rate.  How will implementation of this plan affect the quality of teaching at the University?  How will implementation of this plan affect the admissions process at the University?  Suppose that some faculty develop a new teaching technology that may improve learning. Would the university be more likely or less likely to adopt this technology given the graduation rate policy?

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Homework 5          Reforms of 1960-70s, cold war, economic decline
  1. List major events of the cold war.
  2. Describe in more detail one of the events of the Cold War before 1980s.
  3. Give specific examples of Cold War governments making decisions based on fear and false assumptions of the opposing side.
  4. What was President Reagan’s role in managing and eventually ending the Cold War?
  5. Why did the Soviet leaders decide to invest in space technology instead of investing in housing and consumer goods?
  6. Based on the online book by Sutton “The Best Enemy Money Can Buy” or the interview with the author:  How did the US assist USSR during the cold war? what are your thoughts about it?
  7. Based on “The Costs of the Soviet Empire” article: what kind of costs did the USSR have to bear and why?
  8. Describe methods and scope of the Soviet propaganda. What type of messages did it try to instill in the minds of the citizens?
  9. What was the dissident movement and why did it emerge?
  10. Describe economic reforms undertaken by Kruschev’s administration.
  11. In what ways did centrally planned economies of other countries differ from the command economy of the Soviet Union?  Use one country as an example and compare it to the USSR.
  12. What were the major imports and exports of USSR in the 1980s?
  13. In the 1970-80s, the price of oil in the Soviet Union was artificially set much lower than the world price, and much lower than its scarcity value within the communist system.   Explain with examples how “wrong” prices can encourage waste of resources.
  14. Did the Soviet economy eliminate inequality in earning and opportunities? Explain.
  15. Persistent shortages of basic consumer goods were unintended consequences of the complexity of central planning. Do you agree or disagree and why?
  16. Make up your own question for this  module, and answer it.

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Homework 6              Perestroika and Collapse of the USSR

  1. Gorbachev intended perestroika as a set of policies to remedy serious deficiencies in the Soviet system. In one of history’s greatest paradoxes, however, it was the remedies themselves which proved fatal, resulting in the system’s collapse. Discuss what is meant by this statement. What kind of problems in the Soviet system did Gorbachev’s perestroika reform intend to correct?  Did it achieve the desired goal?
  2. What other reform policies did the USSR leaders attempt in the 1980s?
  3. The Soviet economic model was successful at producing rapid growth when introduced in various economies. Over time growth performance slowed. What features of the model explain why it was relatively successful in the early years? Explain.
  4. To some extent the early success of the Soviet growth model represented borrowing from the future. Why and what does it mean?
  5. How did economic growth evolve in the USSR in comparison to the USA in 1930-80s? Give the general picture without necessarily citing exact numbers.
  6. Soviet economic performance was truly impressive in a world historical context. Discuss.
  7. Give several major reasons why economic growth in the USSR slowed down in the 1970-80s.
  8. What role did oil prices play in bringing down the Soviet economy?
  9. What events of the 1980s contributed to the collapse of the Communist economies of the Soviet Union and Eastern Europe?
  10. What explained ordinary Soviets’ growing hordes of cash, and what were some of the economic consequences?
  11. The collapse of Soviet-type economies was associated with a loss of central control. Yet most of the reforms that were implemented to improve performance in Soviet- type economies involved decentralizing economic decision-making. What explains this seeming paradox?  Why did central control weaken over time? How did weakening of central control destabilize the system?
  12. Economists often speak of an “extensive growth trap”. What is the difference between intensive and extensive growth? What type of growth that characterized the Soviet planned period? What would you expect to find in an economy that is stuck in such a trap?

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Homework 7              Transition to market
  1. What are the most important elements of transition from plan to market?
  2. What are the relative advantages of gradual reform and the relative advantages of shock therapy? Name a country that represents this strategy.
  3. A country wishing to make the transformation from a centrally planned economy to a market economy does not know how to proceed (North Korea or Cuba).  Do you suggest big bang or gradual reforms? How would you start transition to the market?
  4. After the collapse of the Soviet Union in 1991, what general approach and specific policies did the Yeltsin government take to Russia’s economic transition?
  5. When researchers of the transition process mention “legacies of the Soviet economic model” in Eastern Europe and the former Soviet Union, what do they most likely mean?
  6. Describe privatization process in Russia. Did it achieve its main objective of transferring asset ownership to workers?
  7. How did Russian oligarchs rise to power?
  8. The market value of shares in Russian enterprises during the early period of privatization suggested that many enterprises were highly under-valued when compared with similar enterprises in western economies. What are the most important factors responsible for this under-valuation?
  9. If transition involves an adjustment from an inefficient state sector to a more efficient private sector how can output fall? What are the explanations for the sudden collapse of output during transition?
  10. Why is it so difficult to estimate the true fall in output that occurs in transition? Why might the collapse in measured output overstate the true effect?
  11. What is price liberalization? Who are the major winners from price liberalization? Who are the losers?
  12. Why did income inequality increase sharply in most transition economies?
  13. Price liberalization should have led to changes in relative prices, not inflation. Instead, it led to a sharp increase in inflation in transition economies. Why?
  14. What is demonetization? Where and when was this phenomenon observed?
  15. External liberalization in transition economies is complicated by the problem of industries that actually destroy value at world prices. How can the same industry produce value added at domestic prices but destroy value at world prices?  Why are transition economies plagued with problems of negative value added producers?
  16. Outline briefly the main features of the Russian “virtual economy” according to Gaddy and Ickes.
  17. What effects did weak law enforcement have on economic activity and the development of markets in Russia?
  18. Evasion of the economic restrictions of the planned economy often was socially beneficial, and in many instances even promoted plan fulfillment.  In a liberal market economy, widespread evasion can be detrimental.  What kind of rule evasion existed in Russia during transition? How do you explain this behavior?

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Homework 8                    Economics Systems
  1. What elements of planning exist under market economy?  What elements of market existed under central planning?
  2. How would you explain the rise of the communist movement over the world in the 1950-80s? Do you think communism may regain its popularity any time soon? If yes, why and where?
  3. Was the socialist economic system ever perceived as a threat to capitalism? If yes, what circumstances led to this perception?
  4. Russia would have been better off without the socialist revolution. Discuss.
  5. Even though the USSR was characterized by 1) state ownership of property, and 2) a political system controlled by the revolutionary workers’ party, the USSR cannot be broadly considered a social experiment in communism. Do you agree with this statement or disagree?  In what ways was the Soviet society differed from the higher order communist society envisioned by Marx?
  6. Why has the view of government as a “benign and costless social guardian” fallen into dispute in the modern world?  Discuss, with examples, the tradeoff between government and market failure.
  7. The centralized state requires enormous amounts of information for material balance planning. In addition, it has to maintain records on its citizens with the help of secret police and its giant state bureaucratic apparatus that enforces compulsory housing registrations, labor books, moving restrictions, etc.  Such system becomes increasingly complex, inefficient and expensive as the economy grows.  Computers could reduce the costs of the regime by solving systems of equations for material balance planning and by offering cheap ways to maintain data on citizens. Therefore information technology could make central planning workable. Respond.
  8. Soviet Union fell apart in 1991, the official birth year of the internet. Coincidence or not? Comment on the possible link between the advent of the new information technologies and the demise of communism.
  9. “In the beginning of the 20th century the majority of the Russian population supported the communist regime because the regime promised them so much needed income security.  By the 1980s, the cost of income security started to outweigh its benefits. As a result communism was no longer necessary.”  Respond. Clarify the “costs and benefits” of the regime.
  10. The Soviet experience teaches us to accept the principle that private firms operating in free markets are the most effective and efficient way of organizing production, and that state intervention in markets are not only undesirable but most of the time harmful. Argue.
  11. What advantages does the system of central planning have over a free market economy?
  12. Many of the advantages of central planning can be matched within a market system by the “right” government intervention into the free market activity.  Give an example how this is possible.
  13. In market economies there is no central regulator of quality or quantity of output while in Soviet-type economies there was. Yet the planned economies suffered much more from shortages and the poor quality of goods and services. What is the source of the bad quality problem in planned economies? Why is quality less of a problem in market economies?
  1. The collapse of the Soviet Union in the late 1980s has settled once and for all the question of whether a socialist economy is possible by proving socialist economic theory to be wrong.  Argue.
  2. Respond to the statement “Europe has both private property, and social equality. Therefore, capitalism can be reformed and it is not necessary to adopt a socialist state to achieve a better society.”
  3. Mises and Hayek concluded that the economic growth in the administratively planned economy would be insufficient to improve well-being and sustain the system over time. What are the inherent weaknesses of the administrative command economy according to Mises and Hayek?
  4. Several modern economists have pointed out that the danger of command regimes is outside economic theory. What types of undesirable non-economic consequences are associated with command economies?
  5. From its inception, the Soviet Union had claimed to be an experiment in socialism, a superior alternative to capitalism, for the entire world.  If socialism was not superior to capitalism, its existence could not be justified. Before WW2, what events in the capitalist world could be interpreted as signs of collapse of capitalism and triumph of socialism?
  6. Lenin and his successors in the Soviet Union had to develop a practical implementation of Marxist principles without having a detailed plan of a communist society to work from. If you were the leader, what would be your first steps in establishing a higher order communist society?

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