Chapter 34 Socialist Economies in Transition

1. Chapter 34 Socialist Economies in Transition

2. 1. THE THEORY AND PRACTICE OF SOCIALISM Learning Objectives • Discuss and assess Karl Marx’s theory of capitalism, including mention of the labor theory of value, the concept of surplus value, periodic capitalist crises, and worker solidarity.

3. 1.1 The Economics of Karl Marx • The labor theory of value and surplus value • The Labor theory of value is a theory that states that the relative values of different goods are ultimately determined by the relative amounts of labor used in their production. • Surplus value is the difference between the price of a good or service and the labor cost of producing it. • Capital accumulation and capitalist crises • Marx’s theory: an assessment

4. 2. SOCIALIST SYSTEMS IN ACTION Learning Objectives • Describe the operation of the command socialist system in the Soviet Union, including its major problems. • Explain how Yugoslavian-style socialism differed from that of the Soviet Union. • Discuss the factors that brought an end to command socialist systems in much of the world.

5. 2. SOCIALIST SYSTEMS IN ACTION • Command socialism in the Soviet Union • Yugoslavia: another socialist experiment • Evaluating economic performance under socialism

6. Per Capita Output in Former Soviet Bloc States and in the United States, 1995

7. 3. ECONOMIES IN TRANSITION: CHINA AND RUSSIA Learning Objectives • Discuss the major problems in transitioning from a command socialist economy to a market capitalist one. • Compare the approaches to economic transition taken in China and Russia.

8. 3.1 Problems in Transition • Property rights • Banking • Inflation • Ideology

9. 3.2 China: A Gradual Transition • Recent History • China’s Reforms

10. 3.3 Russia: An Uncertain Path to Reform • Recent History • Official versus black market prices in the soviet union, 1991