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Socialism is defined as a system of centrally planned economy in which the government controls all means of production. It was meant to be a remedy for economic and moral defects of capitalism, but it seems to have surpassed capitalism in economic malfunction and moral cruelty.

Karl Marx is thought to be the architect of socialism, but in reality he wrote only a few pages about this system of economic life. It was Lenin, who was the first to put it in practice by trying to substitute the profit drive and the market mechanism with a pyramid of command as a cornerstone of the economy.

After Soviet production had fallen to 14 percent of its prerevolutionary level, Lenin in 1921 was forced to institute the New Economic Policy (NEP), a partial return to the market incentives of capitalism, which was eventually aborted by Stalin who started the process of forced collectivization that was to mobilize Russian industrial resources.

At the apex of the socialist pyramid of command was Gosplan, which defined the target rate of growth of the economy, the ratio between military and civilian outputs, between heavy and light industry, or among various regions. Gosplan's directives were transmitted to ministries of industrial and regional planning, and then to particular factories, power centres, and collective farms. A completed plan was negotiated, and passed into law.

The plan defined all units of national output, as well as the order and technologies by which those were to be produced. In theory such a plan could provide a good basis for a working economy. But in reality there was a vast and widening gap between theory and practice.

The number one problem was that the plan specified outputs in physical terms, and managers maximized tonnages of output, not its quality. So, low-quality Soviet products lost competition to better products from abroad which the «black market» offered, while the home warehouses and stores were stuffed with homemade goods. Secondly, the economic flow became increasingly clogged and clotted due to the fact that planners in Moscow could not efficiently for see all the situations of the on-site production in the provinces or elsewhere. But the real danger of socialism was that of a bureaucratization of economic life. A capitalist firm responds to challenges offered by the economy by changing prices and innovating because failure to do so will cause it to lose money.

A socialist ministry ignores these challenges because bureaucrats learn that doing something is more likely to get them in trouble than doing nothing, unless doing nothing results in absolute disaster.

Absolute economic disaster was reached in the Soviet Union and its Eastern former satellites, which made President Mikhail Gorbachev announce his intention to reconstruct the economy from top to bottom by introducing the market, reestablishing private ownership, and opening the system to free economic interchange with the West. Seventy years of socialism had come to an end.

Слова и выражения:

abort – прерывать (обыч. беременность)

apex – вершина, макушка

architect – архитектор

bureaucrat – бюрократ

bureaucratization – бюро – кратизация

centrally – централизованно

challenge – «вызов», опасность

clog – засорять, забивать

clot – сгущаться, тромбировать(ся), забивать

cornerstone – краеугольный камень

cruelty – жестокость

directive – директива

disaster – катастрофа, беда

failure – неудача, провал

force – сила; вынуждать силой

forsee – предвидеть

gap – провал, разрыв, пробел

ignore – игнорировать

institute – устанавливать, вводить

interchange – взаимообмен

malfunction – неправильное функционирование

maximize – максимизировать

ministry – министерство

mobilize – мобилизовать

partial – частичный

prerevolutionary – дореволюционный

ratio – коэффициент, соотношение

reestablish – восстанавливать

remedy – лекарство, лекарственное средство

stuff – вещество, вещи, мусор; набивать

surpass – превосходить, оставлять позади

target – цель

warehouse – склад (оптовый)

put in practice– ввести в практику

profit drive – стремление к прибыли

pyramid of command – командная пирамида

target rate of growth – целевые темпы роста

due to the fact – благодаря тому факту

on-site – «на месте»

is more likely – в большей степени вероятно

from top to bottom – сверху донизу

Exercise 4

Answer the questions:

1. What is the definition of socialism?

2. Who is usually thought to be the architect of socialism?

3. What was Lenin trying to substitute the profit drive and the market mechanism with?

4. What made Lenin introduce NEP?

5. What was the role of Gosplan?

6. What was the number one problem for the socialist planning?

7. What products were the Soviet goods to compete with?

8. Why was the economic flow increasingly clogged and clotted in the Soviet economic system?

9. What was the real danger of socialism for the national economic system?

10. What intention did Mikhail Gorbachev announce?