-
Communist Albania is often used an example of the hazards of autarky. Yet imports plus exports constituted over a quarter of their GDP in 1986.
Maybe they had huge tarrifs or strict quotas on consumer goods. Their major partners were all Soviet bloc countries, except Greece, FWIW. -
Division of labor notwithstanding, I understand that most economists would say that the key per-capita growth inducing factor is technological change.
I wasn’t aware of the import/export percentage of Albania’s GDP as you state, flowbark. I’ll have to go dig through some of the economic texts I have to bone up on the autarky thing.
Step 1 - Unit A incurs a rapidly escalating cost in the usage of product A. Starts casting about for a substitute or a solution.
Stage 2 - Formerly backward Unit B comes up with said solution, product B. Sells it to Unit A. Unit A deploys this successfully, and happily buys said solution from Unit B, while decreasing its purchases of product A from (let’s say) Unit C. Unit A, net, makes a “profit” by having money left over to spend on other things or to save.
Stage 3 - Unit C, finding itself with declining sales of product A, starts casting about for something else to sell to everyone else. It either finds something or doesn’t. If it doesn’t, it gets poorer. If it finds something, it can now sell this new thing - call it product C - to Units A and B. It makes money again.
Stage 4 - Units A and B buy product C from Unit C. In our changed economy, Unit C is now selling both products A and C to Units A and B, having successfully diversified its product mix and its economy. Unit A has progressed, with its economy able to use both products A and C from Unit C, while using product B from Unit B to save itself some money and do something more efficiently than it could have before. Unit B has progressed, because it now produces some “high-tech” item, product B, that Unit A, and very likely, Unit C both need.
Now, the units above can be families, companies, cities or countries. The products can be goods or services. But the point is that price drives change. Price forces Unit A to cast about for a solution, and gives Unit B a reason to produce that solution. Declining sales and, presumably, prices, force Unit C to diversify or become impoverished. And change, net net, is good.
Economic growth comes from many things - an increase in natural resources, improvement in processes, better education leading to a more efficient workforce, reduction in carrying costs through new technologies or applications of old technologies, increases in trade…
The key to the value of trade is the Law of Comparative Advantage, as formulated by David Ricardo. Here’s an example:
Let’s say I have the skills to make 10 chairs an hour, or 30 lightbulbs. A neighbor wants to set up a trade agreement with me. Being poorer than I am, and without the same tools, he can make 2 chairs an hour, and 26 lightbulbs.
Notice that I’m better at making chairs AND lightbulbs. So can we benefit from trade? Well, let’s look what happens.
First, let’s assume that we each spend half our time making chairs, and half our time making lightbulbs. After one hour, I’ll have 5 chairs, and 15 lightbulbs. My neighbor will have 1 chair, and 13 lightbulbs.
Between us, we have 6 chairs, and 28 lightbulbs.
But if I concentrate on building chairs, which I do best, and he concentrates on lightbuilbs, then after an hour I’ll have 10 chairs, he’ll have 26 lightbulbs. Notice we only have two lighbulbs less, but four more chairs.
So, If I trade 4 chairs for 15 lightbulbs, I wind up with the same number of lighbulbs than if I didn’t trade at all, but one extra chair. My neighbor winds up with 2 fewer lighbulbs, but 3 extra chairs.
Assuming that chairs and lighbulbs are worth the same amount, it’s easy to see that both of us are richer than if we didn’t trade, even though I’m better than he is at making both.
That’s the nature of trade between rich and poor countries. Even though we could do pretty much everything better than they can, it’s still to our advantage to buy some things from them so that we can divert those resources to things that we do even better.
Having had extensive contact with former residents of the East Block, my conclusion is much simpler than yours: Communism failed because it never gave people any personal reason to work hard, or work well.
It’s how most people are, anywhere in the world - unless they have something to gain by doing the maximum, they’ll always do the minimum.
Allesan, I completely agree, I was just curious if the lack of external trade (when compared to other nations, of course it wasn’t an absolutely closed economy) was seriously damaging, and if so, why doesn’t this damage us as a world economy.
I think it’s been answered, so let me see if I can say it correctly:
No, there is nothing wrong with a closed economy. 
Alessan: IIRC, the phrase in the old Soviet Union was “we pretend to work, and they pretend to pay us.”
Not much of a recipe for economic success.
Careful. While closed economies are not inherantly unstable, autarky does tend to be associated with slower growth, relative to open economies. So if earth could open up trade relations with the Venusians, it would be a good thing. 
just to nitpick, i feel i must point out that neither the USSR, nor any other country in the world has ever actually been truly communist.
they’ve started down the route to communism, but have in all cases faltered before reaching it. the USSR, for instance, stopped at the “dictatorship of the proletariat” stage (marxist theory says societies must progress in definite stages to reach communism; from slave-owning despotism to feudal monarchies to democracy, then to a period of the aforementioned dictatorship of the proletariat, where the infrastructure of an equal, classless society is laid down by a small ruling elite, and then to communism, where all citizens are equal; non is regarded above another, and all people work towards the good of the whole society.
in practice, of the other hand, all that’s happened so far is the ruling elites have not worked for the good of the whole at all, but have deflected the progression towards a totalitarian regime. the USSR was communist only in name. in practice, it was about as far right as you can get. likewise all other “communist” states. (at this time anyway. hopefully, the situation will be righted in the near future. i can’t see it happening [unfortunately], but i live in hope.)
sorry for not really staying on subject, i just hate it when communism is blamed for the collapse of the USSR.
Someone whack me with a stick if I’m being obtuse, here, but: of course there’s nothing inherently wrong with a closed economy! After all, if you open up all the economies in the world, all we have is a bigger closed economy. Right? Am I missing something?
I believe that trade with many different parties is a good idea, and facilitates growth, but a closed economy which is self-sufficient doesn’t seem like an inherently doomed proposition to me.
I concur with Galt; the idea of a closed economy is relative. As for its rightness or wrongness, again it depends on the yardstick you measure it by.
For example, the Europeans had no idea how bland their food was until they went off to fight the Crusades. Eating Eastern spices created the desire to open their economy to Eastern trade. But had they never left Europe, they may have blissfully kept on eating bland food for another century or two (or into the present in England) and remained a (relatively) closed economy. We have no idea what our standard of living COULD be were we to establish trade with Martians, so our ignorance keeps us from judging the closed economy of Earth as a bad thing.
I think ultimately the USSR collapsed because it couldn’t stand to be on the same planet with other economies that spectacularly outperformed it, particularly in the Age of Information.
As for Communism not being a cause of the collapse because the USSR was not a true Communist State, that is like saying driving off a cliff didn’t cause your car to crash, it was the lack of a bridge.
One of the reasons that a “true” communist society has never evolved is because a key component to Marx’s thinking was holding to the primacy of political society over civil society. There is more to people’s lives than going to the factory to make shirts, chairs, or barbed wire for gulags. Economists tend to forget that innovation needn’t be confined to the realm of technology. We constantly form innovative relations among ourselves for the purpose of enriching our lives, but those relations are based very much in our civil identities. (i.e., Catholic, Protestant, Jew, gardening enthusiast, Cubs fan, Mom, etc.). And often, civil society interweaves with and influences political society, which is why Marx hated civil society, because it adds wrinkles in the starched shirt of central planning.
Even if you can persuade a man to make shirts all day with the unwavering dedication of a worker bee, he is going to want to be an identity apart from the hive at the end of the day.
A poor metaphor. Does this mean every time you get into a car, you’re going to end up driving off a cliff? Hardly. You have to look at how the car ended up heading towards the cliff in the first place. Was the driver drunk? Asleep at the wheel? Did the driver have a license? Was there even a driver in it? Or was there some flaw in the construction, or even the design?
Same thing with examining the collapse of Stalinist Russia and Eastern Europe. It’s not sufficient to say simply “because of Communism”. You have to look at a whole lot of factors, up to and including how the way the society was run compares to the theories and tenets of the philosophy purportedly behind it.
A quote from Marx’ Economic and Philosophical Manuscripts:
This is a description of labor under the free market - you have to get a job in order to satisfy your needs outside of work, rather than work to satisfy your needs directly. This is one of the main points of Marxism - to transform labor from a means of satisfying other needs into a need itself to be satisfied. And if it involves Gulags and extensive bureaucratic legal codes, that means it’s being done in the name of the working class rather than by the working class itself - and is not socialism or communism.
Back to the OP: What exactly is there to close the Earth in its entirety from? To state that the Earth, if made into one whole market (either through communism or some sort of single, unifying trade agreement) is a closed system means that there is something or some place outside of it to be closed off from, and therefore has the potential not to be self-sufficient. Which is patently not true - if the Earth itself weren’t self-sufficient we wouldn’t be here in the large numbers that we are. There is something wrong with closed systems because of the preclusion of self-sufficiency. The Earth, being self-sufficient, therefore cannot be a closed system.
So, if I understand you correctly, in order for the communist ideal to be achieved, the people must give all their rights away to a smaller group of people and hope that that group of people doesn’t take advantage of them. Do the people have any recourse if the ruling elite does what every ruling elite in the history of mankind has done and abuses their power? Could you perhaps cite something by Marx to back up the idea of a ruling elite being part of the plan?
Absolutely not. It’s right in the Manifesto: “The emancipation of the working class must be the act of the working class itself.” If anything, it’s people taking more rights for themselves, especially in the sphere of economic and political administration.
If anyone produces such a quote, it’s a misinterpretation or taken out of context. I can find plenty of quotes supporting the opposite but it’ll have to wait until tonight (the federal government takes a dim view of keeping the works of Marx on your desk at work).
Olentzero is right, the idea of a vanguard party is due to Lenin. Marx viewed progress from capitalism through socialism to communism (via revolution and the withering of the state respectively) as acts of the proletariat made inevitable by the workings of historical materialism. IIRC Lenin’s justification for this radical departure from Marx was that the crises in capitalism had been forestalled due to imperialism, and that the revolution needed a nudge.
Gonna have to differ with you here, picmr. The only thing Marx saw as inevitable was the crises of capitalism. Even he recognized the need for a political party that was fighting for workers’ interests; he recognized that a revolutionary situation would result “either in the revolutionary reconstitution of society or the common ruin of the contending classes”. (Manifesto, I think.)
The “forestalled crisis” theory was actually more the thought of the German Social-Democrats Bernstein and Kautsky, who believed that socialism was indeed inevitable and either that it would happen peacefully and quietly by voting Socialists into office or that the progress of capitalism across the globe would prevent further crises and wars. If Lenin had believed the same thing, he would have been just as confused by World War I as the Western Social-Democrats were.
In any case, I’d argue that Lenin’s thought was less a radical departure from Marx (if a departure at all) than the thinking of his contemporaries, the reformist Social-Democrats.