Communist Economies

Report Outline
The System's Challenges
Marxist Applications
Changing Conditions
Special Focus

The System's Challenges

Interdependence of the World Economy

Interdependence is the catchword for today's global economy. Newly industrialized countries such as Taiwan and South Korea are nibbling away at the industrial prominence of the United States, Western Europe and Japan. These established industrialized giants are vulnerable to outside pressures, as they discovered in the 1970s when oil-rich nations, mostly in the Middle East, banded together to control the production and price of oil. Many of the less-developed nations of the Third World rely heavily on the industrialized world for investment and financial aid to fuel their own development.

Within the context of this increasingly interdependent global economy, the communist countries occupy a special place. The centrally planned economies of the Soviet Union and its allies in Eastern Europe as well as Soviet-supported Third World countries such as Cuba and Vietnam participate to a far lesser degree in the world economy. This is due in part to the Soviet abundance of oil and other natural resources, in part to the Soviet policy of trying to maintain economic self-sufficiency within its own borders and the continued dependence of its satellites. As a result these economies have suffered less directly from the recurrent recessions and oil shocks that have buffeted the capitalist, or market, economies in recent years. But the communist economies have also benefited less from the stimulus offered by expanding world trade.

Since the Soviet Union and its allies publish few reliable statistics, Western analysis of the communist economies is sketchy and often incomplete. It is clear, however, that the central planning on which they are based has fallen short of expectations. The Soviet Union, which has stood as the principal model of communist economic development for the past 67 years, today presents a lackluster alternative to the free enterprise system. Low industrial productivity, dependence on foreign sources of agricultural commodities and a dearth of consumer goods are chronic problems.