Socialist country with good economy?

Question

I want to have a socialist^* country where economy is good enough to have at least one big city of more then million people, that has well maintained buildings. The people don't have to be rich but there shouldn't be any queues for basic food & clothing. Upper middle class should be able to own a private car, whether it's Lada, Volga or whatever brand is popular there.

Beside the mom-pop stores, street vendors, artisans and small family farms all the other businesses must be state owned. No other private property nor special economic zones. All the banks, factories, utilities, department stores, large hotels and so on. Every business that can't be operated by the nuclear family with maybe few other workers at most must be either owned by the state or by cooperatives. The management could be either government appointed like in USSR or decided by the workers like in Yugoslavia, it doesn't make any difference to me as long as its not privately held.

The time period is the 70s of the XX century Earth.

Is the existence of such country realistic? Are there examples of real-world nations that could be used as a model?

^{* Please note that the term socialism has different meanings in different parts of the world. What is described here is called socialism in the USA, but in Europe this would be recognized as communism. These terms are, in Europe, not interchangeable at all. (What about other parts of the world?)}

Answer 1

Whenever there's a question about socialism or capitalism on here I always get fed up with the trite and blinkered answers which obsess only on the most painfully obvious facts of the matter - namely the USA and USSR.

But the fact is capitalism and socialism are broad philosophies with many different implementations. Socialist economies can be mixed, and many were. Often the question hinges on how you define the "means of production". Consider the rise of democratic socialism in Britain. When the socialist Labour party won the 1945 general election many industries were nationalised: coal, steel, railways, healthcare, defence, etc. This didn't mean private enterprise was forbidden. Banks were regulated but private, along with many other large and small companies.

The Rise and Fall of British Socialism

While full employment was achieved after the war, attempting to maintain it became crippling. Job-for-life-socialism was assumed best for the individual and economy, but it eventually led to the Winter of Discontent in 1978. Stagflation affected many economies in the 70s and was not specific to Britain or socialism; but low growth, high inflation, and union demands created a perfect storm. British socialism was especially vulnerable to stagflation, given that the Labour party was unable to mediate between the national interest, corporate management, and the workers (as the party had always been the party of the unions).

Far-left union agitation destroyed the system. Strikes were so frequent and disruptive that electricity was rationed in many places to a three day week. Productivity collapsed as there were no regulations on when a union could call a strike, or how many union members needed to agree for one to begin. Many amongst the far left hoped this chaos would lead to an even more socialist government... but all it did was give Margret Thatcher a mallet with which to smash the socialist system. She won the 1979 general election, promising to bring the unions to heel and to end British socialism (spoiler alert: she did).

Regardless of how it ended, Britain saw solid economic growth and increasing living standards with a socialist economy from 1945 to 70. The national debt was an eye-watering 240% of GDP after the war, and rationing was enforced until 1954... but by the 70s the national debt had been brought back to manageable levels. The postwar consensus was that whoever got elected; Conservative or Labour, they'd not rock the boat. Indeed, Conservative prime minister Harold MacMillan said in 1957: "You've never had it so good". And he was correct.

A Question of Political and Economic Balance

The main issue is how the state handles technological progress. If government never commits to full employment, and instead seeks technological innovation and promotes jobs when they are necessary, you'd likely see a more stable system over the longer term. A mixed economy is essential too. Let the private sector do its thing, while the public controls the "means of production" and seeks to improve its efficiency.

A large part of Germany and Scandinavia's success is owing to their willingness to mediate between national, corporate, and workers' interests. They engage in a collaborative and strategic consensus quite unlike the adversarial and tactical politics found in the UK or USA.

Perhaps the biggest problem is the conflict between socialism's raison d'etre of protecting worker's rights, and the cycles of redundancy brought about by rapid technological change. And perhaps the obvious solution is to make a clear distinction between workers and jobs. Government needs to empower workers, and yet not be precious about obsolete jobs.

You're basically having to sell to someone that being made redundant is a good thing. It can be, if the opportunities are better on the other side. Socialist economies typically offer free higher education, so it's entirely possible. You need to encourage some sort of idea of cycles of technological rebirth. If you go too soft (letting unions run amok) the system will fail. If you go too hard (nationalising everything and always spending the profit) the system will fail.

What Can Public Ownership Look Like?

Sometimes it isn't necessary to nationalise all industries, simply the largest ones. Ghana is an interesting example which certainly started as a democratic system, but unfortunately ended rather bleakly. Nonetheless their leader, Kwame Nkrumah, was a socialist who embarked upon many grand industrial projects to benefit his people, quite reminiscent of the infrastructure projects of the New Deal. The Volta river project was to create a hydroelectric dam which would produce the electricity to allow them to smelt and thus export aluminium rather than just the ore. This would also provide the electricity to drive industrialisation and economic growth, leading Ghana to economic independence, which would be the catalyst for a united Africa.

Unfortunately they lacked financing, and American backers suggested they would bridge the gap if restrictions were placed on what could be made from the dam's electricity. They were also interested in importing ore to use in the Ghanaian smelt; on face value because Ghanaian ore was not usable, in reality because they feared an integrated project would be nationalised.

That was against Nkrumah's plan to seek economic independence through national development. As the project dragged on Nkrumah became increasingly unpopular, and reacted with increasingly paranoid and authoritarian decisions. Just a month after the dam was completed Nkrumah was overthrown by a CIA-led military coup. The Americans got their terms, and Nkrumah's dream of creating an industrial example for a united post-colonial Africa died.

There are other examples where public ownership of the means of production (or simply the largest company) has had an overwhelmingly positive influence on society, namely Norway. In 1972 Norway's government created Statoil, which was and still is a publicly owned energy company. The Norwegians however had a very shrewd vision, and dumped profits from Statoil into a public fund. Importantly only the interest from this would be used to bolster public spending.

This was owing to their concern that spending all of the proceeds would imbalance the Norwegian economy to the point it was dependent and uncompetitive. This was a concern not shared by Venezuela's Hugo Chavez, who spent oil money subsidising the cost of food and fuel.

Long term this ended in the economic and political implosion of a country with great potential. Comparatively, Norway is now proportionally one of the richest nations on earth, with one of the most educated populations who enjoy a very high standard of living. Consider examples like this to be how the means of production could be administered sensibly, and the relevance of the old question: which is more important, controlling inflation or unemployment?

Answer 2

Cuba is about the closest you'll get.

Cuba's economy was artificially depressed for the last 50 years due to trade embargos. For much of that time though it still had a market in the USSR, its major export (sugar) was relatively valuable, and imported fuel (again from the USSR) was relatively inexpensive. It wasn't until the simultaneous impacts of the demise of the USSR, the bottom dropping out of the sugar market and the price of oil rising hugely that more flexibility was needed. In particular, with the dropping of the embargo, the Cuban government discovered that tourism was once again their major asset, and this could not reasonably be centrally controlled.

This flexibility has serious limits though, and prices of many commodities are centrally controlled. Much of Cuba's population still work in public sector jobs too. So whilst it's not centrally-controlled to the extent you ask for (>10 employees), it's still recognisably a centrally-controlled communist country, just with a small amount of wiggle room where previously there was none.

The Cuban economy isn't the best in the world, but it isn't in too bad shape compared to a lot of countries with similar size and natural resources. On the plus side, by many measures it has the best healthcare in the world, its school education system is famously good, and homelessness virtually doesn't exist. So whether it "sucks" would very much depend on your viewpoint. If you're Donald Trump, it looks awful because there's nowhere to strip-mine or strip-mall. If you're some homeless guy on the streets of New York, it looks like the next best thing to Paradise. If you're a regular working-class person, it's a mixed bag of no shopping malls and much more limited types of work, but a guarantee that you're always going to have food on the table, you're never going to lose your home, you're never going to have to pay for medical care, and you're never going to have to pay for your kids' education.

Answer 3

Not in a long run. Sooner or later you will run out of other people's money.

If you really need it, and you want real socialism, not a mixed system like China, here are a few things that could help you make it more realistic:

• Use small country. If they got lucky of having an enlightened government it's easier to run small country then a large one.
• Use homogeneous country (race, religion, nationality). Homogeneous population could much easily reach consensus.
• Recent switch to socialism, if they accumulated quite a lot of capital stock they could run on it for a while.
• Populist elections vs revolutionary war. If the switch to socialism happened in populist elections the capital stock stayed intact compared to revolutionary war.
• Tourism income. If the country earns sizable amount of its foreign currency from tourism, they will be interested to keep their cities in good order. At least the ones regularly visited by tourists.
• Peaceful & neutral. Stay out of conflicts. Socialist countries have a tendency to under invest in capital stock.

Use small businesses to improve productivity.

Companies with less than 10 employees could be private

You could run a lot of things with below 10 employees: motels, small hotels, restaurants, bakeries, gas stations, workshops. Heck you could run a hydro power plant with 10 people beside a yearly refurbishment, which could be done by other company. Even investment bank could be run with less then 10 people, just outsource everything (secretaries, cleaning, accounting..) beside your core staff.

So if the law doesn't specify revenue or capital beside number of employees you can bend the law very far. Use whatever works for you best.

Answer 4

The evidence from our own history suggests that countries with strictly state owned businesses are an economic disaster. However, state owned businesses were all the rage for pretty much all of history until 1500.

Ancient Egypt concentrated its linen and cloth industries in Pharoah's palace workshops in Memphis. The Roman Emperors owned huge swathes of the state, both farmland and industrial mining, marble-quarrying, and amphorae-making concerns. During the Golden Age of Islam under Caliph Harun al-Rishd, the entirety of Mesopotamia was essentially one big plantation, worked by native serfs and imported slaves. Massive workshops in Basra and Baghdad produced sugar, paper, and other luxury goods. The same could be said with the Gangetic plain during the 17th century under the Moghuls.

So the easy solution is to set your story in pre-modern times. Then no one will notice the squalor of your society, since the whole world is poor.

Answer 5

Yes, you can, but you can't get the answer from us.

Generally speaking economists and philosophers have found that socialism is an unstable equilibrium. It is constantly being disrupted by the nature of humans, and energy must be continuously spent maintaining it, or it falls apart. The larger the group, the more rapidly it falls off of this ideal.

Accordingly, there is no way we can give you a path for your state. There is no path that can be written down on paper, and handed to you with a note saying "here's how to make socialism work." Your state is going to have to constantly observe the disruptions and find the most efficient way to deal with each of them as they come.

What we can do, and many of the answers have done, is show you a laundry list of ways that we have observed socialist (and communist) countries falter. You can draw from these as examples of what your society is going to have to to combat. But the actual solutions must be carefully measured against the exact specifics of each occurrence. Underact, and your society falls apart. Overact, and you turn into a totalitarian regime that destroys itself or its economy. Balance is the key, and if there was a way to write down the right way to balance a government, we'd have a lot fewer problems in our world today (I like to think the Founding Fathers of the United States at least got close).

Answer 6

The basic unit of economic organization is the Corporation. This is a non-person eintity that can own goods, make agreements, and the like.

Historically, creating such a corporation required government assent.

Smaller organizations, like partnerships, are sort of like them as well.

Modern "Western" economies have a mixture of privately owned corporations, publicly owned corporations, state corporations, nations, non-profit corportations (which are not owned) of various kinds, etc.

I could interpret your meaning as stating the privately owned and publicly owned corporations don't exist.

Examples of such an organizations engaging in commercial purposes is Ikea, most national postal services, central and regional banks.

Now, in the past half-century, there was a massive economic war between "Capitalist" and "Communist" states, and the "Capitalist" states won. Nations that did not ally with the "Capitalist" states where economically isolated, invaded, attacked, overthrown and destroyed by the winners of this war.

Despite this, some "Socialist" economies have persisted and flourished better than similar nearby "Capitalist" economies. An example is Cuba, which is richer than the nearby island of Haiti and Dominican Republic (both halves!) despite being both invaded and under economic sanctions from the nearby super power economy (USA).

Corporations themselves almost universally operate as "Socialist" organizations within themselves -- Command Economies. And there are Corporations whose size exceeds that of many nations.

That isn't to say there aren't horrible traps that Socialist centrally planned economies fall into.

Corporations avoid them through a number of ways. They aren't the primary power, so their rulers must obey the rules of the state in which they are embedded. This prevents them from going off-the-rails in power-centralization and protection (the dictator trap, where you turn state power into an engine of protecting the current set of rulers).

As they are relatively small, they often have competition. Their ability to use their power to crush their competition is limited by the state they are embedded in; which means even strong corporations can eventually be outmaneuvered and fail if they stop generating excess value efficiently.

Newly large capitalist corporations almost always have recently successfully generated a whole pile of surplus value in order to grow. Inertia keeps them doing what they have been doing, with minor corrections (their correction process was also possibly successful at smaller scales).

Over time they'll drift. If they remain long, they almost always have a natural monopoly they have managed to corner. They now drift, protected against competition to some extent by their monopoly power. Sometimes they drift into being really inefficient; that is when competition can grow and threaten them. Sometimes they drift into being more efficient.

Cross-transfer of corporate culture occurs, where what other successful corporations are doing is imported via business school graduates, hiring workers from their businesses, etc. This is another source of culture drift, almost unavoidable if a business wants to grow at a fast pace.

And then they die. They are torn apart into their assets, and new Corporations claim their "territory".

States could do much the same thing, but traditionaly States "death" involves violent war, revolution, and a lot more destruction than Corporate "death".

So one approach would be to invent an authority that prevents overly violent "death" of States, and prevents them from going into the trap of protecting the ruler's interests against the interest of the State or the (entire) People.

Another would be to point out that the advantages Corporations have over States is mostly long term. In the short term, it is perfectly plausible for a medium-large "Socialist" state to function. The Soviet Union went from an agricultural economy to one capable of defeating the German Empire and then holding off the most powerful industrialized nation for a half-century in a few decades under a centrally planned economy.

Another approach is to solve the problem with information. The theoretical advantage markets have over planning is that markets solve pricing problems better. A genius economist with modern computers might be plausibly able to solve the pricing problem without markets.

Doing so accidentally would easily be reasonable, and sustaining it for a while as well.

The biggest problems against such an experiment in our world is both the extreme risk that it would fail (and cause untold suffering), the violent reaction of the capitalist western economies to such an experiemnt, and the fact that this doesn't prevent the "protect the king" dictatorship trap.

Answer 7

A completely socialist country is possible as long as your neighbors aren't capitalists

As kingledion mentioned in his answer, before 1500, it was possible to have a completely socialized/nationalized system. Prior to 1500, the marriage of religion, economic power and monopoly on violence hadn't yet broken down. When all countries operate with nationalized industries, they are on equal footing. However, as soon as someone comes up with capitalism, all those nationalized industries and the countries that depend on them will start to lose.

Most of what keeps capitalistic systems so functional is the inherent competition in free-markets. Anyone with the capital can start a competitor to a incumbent company and eat their lunch. Clayton Christensen's Innovators Dilemma talks about this kind of situation extensively. Any company in a free-market that fails to eliminate waste, cut expenses and increase profits will eventually go out of business. In a socialist country, this kind of competition is either impossed by legislation (which can be cheated by legal manuvering or backroom deals) or not at all. In general, competition in socialized systems is social competition ("who do I know that can get me a sweet deal...") vs free-markets systems ("can I make a product/service that will sell better than the other guy's")

Because of the lack of pressure to be efficient, the nationalized industries will tend to become more inefficient over time. Capitalist industries tend to get more efficient over time because of competition. As long as the socialized country doesn't have to compete with anyone else, it should be okay.

"An economy that doesn't suck" is inherently comparitive. A nationalized economy that benefits everyone is better than no industry.

Answer 8

It is worth looking at some examples of countries that attempted at one point or another to introduce some form of market socialism. For instance, in China 50% of GDP is still generated by SOEs, and it is mostly the large companies that are state-owned.

You may also want to look at other countries with a large SOE sector, such as Russia, Malaysia, UAE, Saudi Arabia, Indonesia, India or Brazil. Some are relatively successful, many are not and struggle with ineffective management and corruption.The biggest issue is the introduction of effective governance and the creation of incentives that are similar to those faced by privately-owned companies.

The most interesting example is Singapore, where, although the economy is mostly composed of small and medium enterprises, pretty much all the large ones are SOEs. Singapore is considered to be a very successful case of how the state can manage SOEs well. Corporations linked to the government account for around 50% of the stock market valuation in Singapore.

Answer 9

Yes, A Post-Scarcity society can be purely socialist because it no longer needs motivated humans to fill all of the roles in the economy. With AI driven robots handling all of the mining, farming, manufacturing, distribution, and everything else, each human citizen can have a life of leisure with all of the material wealth that they can ever dream of.
See Cory Doctorow's Down and Out in the Magic Kingdom for a good example of what such a society would look like.

Answer 10

From personal memories, Hungary in the seventies seems to be a good match. The question specifies a particular decade, so the long term sustainability and unchanging political system may not be relevant.

Big city: Budapest with two million people, check.

Well maintained buildings, er, needs a local party secretary with good taste and then no problem. Certain parts were nice, others not so much. A lot of old residential buildings had WW2 scars even later, but many new (70's era) buildings were erected.

No queues for basic food & clothing, in national store chains.

Cars were those normal in the Eastern block, but they were all imports so long queues existed. People waited sometimes ten years after submitting the request before they could receive the car, then request the next to have it in another ten years.

Small non-family ventures (GMK) appeared in the 80-ies and then the private sector gradually increased as the Soviets looked elsewhere. In the 70-ies this may not be in the picture.

Corporation management included a representative of the Party who was influential. The workers not so much.

Answer 11

Just look at the list of countries with large ratios of tax revenue to GDP and you find at the top of the list: Denmark, Belgium, France, Sweden, Cuba, Finnland, Norway with about 45-50% percent government income (or spending) of total GDP. Depending on your definition of socialism this might not yet fit, but indeed these countries are probably amonst the most social in the world and quite successful economically they are too.

Depending on how socialistic you want your country to be, take some traits of these and then mix them together.

For example give them:

• a strong political, philosophical tradition of egalite (the notion that all men (and women) are equal) like in France
• strong unions demanding a share of the profit like in France
• a good educational system like in Denmark, Sweden, Cuba, Finnland
• lots of natural resources like in Norway
• money from supranational organizations to build their headquarters there like in Belgium
• a superb and free healthcare system like in Cuba (and Denmark and ...)
• peaceful neighbours like in Denmark, Sweden, Norway,...
• incredible transparency like the public tax declarations in Sweden
• a very rich society where everyone has plenty of everything like in Norway (so nobody is really unsatisfied)

So much for real world examples, now for some fictious properties:

• draconic laws and efficient persecution could eliminate corruption
• effective taxation could eliminate waste (like taxing luxuries very high and useful stuff very low)
• just incredible luck with choosing superb (incorruptible) leaders (outstanding personality, clever, charismatic, beloved) - sometimes you are just lucky
• some kind of philosophy/religion that gives everyone the idea that the community must work together and everybody has the duty to give
• a strong principle of subsidiarity, so people vote regularly on everything they are responsible for (what should be researched next, which motorways should be built, what kind of cars should be produced,...), make the unions and party actually desirable organizations, a place where people find together

This all might result in a socialistic country like none we know and it might work or might not work, but given a bit of luck, at least modest economic success should be guaranteeable, you just need the right people for it.

Answer 12

Yes, but it needs almost perfect resource management or some quasi-free markets. It needs a system that is guarding the administration and itself, by for example having multiple divisions that enforce the policies on every governmental body, including each other.

It is hard, and no system has ever succeed. With technology a super intelligent AI that oversees could make it work.

Answer 13

No

Centrally planned economies have universally been a disaster. They're unable to respond to local requirements and market pressures fast enough to be useful.

Nationalising universal infrastructure like water and power and the rail companies, all perfectly reasonable. You could even consider nationalising the automotive industry if you want everyone to drive really boring cars. The worst you'll get out of this is epic inefficiency.

However there's really no point nationalising a tea shop or surf school, all of which will come under your current heading. Local business needs to remain locally owned and run, responding to local needs and environment. A government owned tea shop would look the same as every other tea shop in the country and end up with all the wrong stock for local tastes.

The state should only get involved a company which is a (near) national monopoly or nationally critical infrastructure.

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As a note relating to ownership and management. Since, as everyone knows, property is theft, "ownership" in a socialist world means "control".

Answer 14

I think your description leaves a loop hole that not only makes this possible but also transforms your world into a pseudo-capitalistic system.

Much like anything running a business is a skill some people are very good, others not so much.

In your proposed framework really good business people would build a business to the allowable limit and then stop. Sort of. While they might not own the business they might also run the business of their friend as well as their own. The friend and the good business owner would split profits. The friend would benefit by having money for nothing, and the business owner would be able to grow a second business and quite possibly the first as the two might compliment each other.

Then how many associates could the good business owner repeat this process? In effect he would form a conglomerate of small family businesses, and presumably have a large income.

Answer 15

Make it small, religious, and unappealing to foreign aggressors.

Let's work backwards from the problems of real attempts at socialism:

1. Lack of incentives discourages hard work: You mention "upper middle class" so it sounds like you're OK with some financial incentives, but social prestige is just as motivating. Give them a traditional religion (maybe even an interpretation of Christianity) where charity is the strongest ideal, so people aren't angry about others "leeching" of their work. Make the country small enough that people can earn a reputation for helping the country, and the critical inventors and managers can become celebrities.
2. Central planning is hard: Hayek was right, markets rock. But you don't need everything run by a single 5 year plan. Break the economy into manageable chunks (Amazon has 300k employees and is still dynamic), and make the country overall small enough that there are a manageable number of them. Give the people a few different options (like 4 independently managed but government owned fast food chains) and let them allocate resources.
3. Lack of investment in consumer products: Both the Soviet Union and current China are trying to build armies that directly compete with that of the largest economy on Earth. That takes an incredible amount of money and necessitates investment in heavy industry over keeping the people happy. Make them unappealing to foreign aggression by making the world safe (like modern day Europe), or making the country lack in strategic value or be naturally defensible (like Switzerland).
4. Corruption: This is hardly unique to socialism, but destroyed the Venezuelan experiment and is common in centralized economies. But it's mitigated with a religious/social more against opulence and a way to remove those in a position to profit from corruption. Let the monastic priests kick the crooks out.

Bonus: Give them a head start. The GDP per capita of the areas that would become the USSR was only 1488 on the eve of the revolution compared to 5301 in the US. Even if they had they'd matched US GDP growth until today, they'd still be 3.5x poorer. If the situation was reversed, the socialist country could grow slower and still be relatively more prosperous.

EDIT: Added 4.

Answer 16

It's not impossible

But it should be understood that Karl Marx's original vision was not that Communism would be efficient, but that it could be adopted in a post-scarcity economy and it wouldn't matter if it wasn't efficient.

The key to getting Communism right is to get the post scarcity economy first, then switch to Communism so everyone has a slice of the pie. Actual Communist countries have made the switch without the post scarcity economy and found that the existing scarcity got worse and there wasn't enough pie to go around.

Socialism in general is like this. Morally appealing, but expensive. You take what you can afford.

Answer 17

What history has taught us is that a system with a wasteful controlling class, a communist party, a dictator, a royal family, will indeed leave the lower classes poor and wanting.

Most people forget how wasteful the current capitalist system is and how many people are left poor and wanting. How many homeless people are there in the US? How many people have lost everything when last bubble bursted?

A friend of mine told me in the late eighties that a plan economy could not work because the giant matrices you'll have to calculate to set prices and production so that you could reduce waste. It would take so long to calculate what next years production should be, that next year would have gone and many other next years with it before you got the result.

That was true then, today you could just fire up an array of a few thousands of high grade graphics cards and be done with it in a few weeks.

And to beat the current capitalist system it does not have to be optimal, it only has to be decent.

Answer 18

Another close-enough example can be Turkey 1923-1946.

State ownership of major industries was not as absolute as you require, but it was close. The country was founded on the ashes of the Ottoman empire, severely depleted of capital after 500 years of continuous warfare, often on the losing side.

The ethnic minorities that comprised the majority of the upper middle class were either living outside the newly drawn borders, immigrated, "exchanged", or purged. Therefore, the ruling founder of the country, Mustafa Kemal, adopted "statism" and started a 25 year period of the state building and running all kinds of industrial enterprises from sugar factories to foundries to textile mills.

Private enterprise was not illegal but very few private citizens had the necessary capital. Feudal "lords" in the countryside continued to own large swathes of land, though; agriculture was not cooperative-ized (These landowners eventually supported a more conservative, capitalist movement from 1946 onwards).

This country supported exactly 1 city of 1M+ (Istanbul) where quality of life was very reasonable for the middle class compared to the rest of Europe. Buildings were not only in good state of repair but were admired all over the continent fo their architecture.

However, this being 1930s, private automobile ownership would not be at the level you need.

Source: My ancestors lived there during the time period described.

Answer 19

Sure.

For completely mysterious reason, the other answers missed the most obvious example of a large socialist country with economy not just good but booming, about tripling in the 25 years between 1945 and 1970:

This disproves, on empirical grounds, any theoretical argument that "Socialism cannot work under any circumstances". A conventional wisdom in 50s and 60s was that USSR was soon to overtake the US (much like Japan a bit later and then China still later, which also never happened).

A common argument against socialism is that later USSR failed to transition to high income, collapsing instead. While the socialist economy inefficiencies surely might have contributed to that, it would be hard to prove that they played a non-negligible role, let alone decisive. First, the USSR military spending was about 15% of GDP, which is huge (as we know, the current NATO target is 2% and many members fail to meet even that); add to that the financing of the "sphere of influence". Second, it had a political system discouraging open discussion, and ruled by indoctrinated, incompetent, and, towards the end, very old apparatchiks. Third, the collapse happened partly for political reasons having little to do with socialism (e.g., national movements in republics). Fourth, it was poorly integrated into the world economy, again partly for political reasons. These and other factors seem more important than the selection in a local tee shop.

Then again, the actual question concerns 70's, when Soviet economy was still growing. Undeniably, the quality of life and consumerism was lagging far behind the developed capitalist nations. However, it's again hard to prove that it was because socialism could never deliver. Socialism delivered growth; it was a political decision to channel it into tanks and warplanes rather than cars. Since you mention cars, passenger car production was negligible until 1970, but then, once a decision was made, the production quadrupled in four years to more than 1 million cars a year. I see no a priori reasons why the decision could not have been made in 1960 instead, and why 1 M/y could not be 5 M/y, giving a car to most families by 1970.

In conclusion, yes, it's absolutely plausible, if your socialist country has no ambition to rule half of the world, does not (have to) spend 15% GDP on the military, and consequently makes earlier decision to emphasize consumer goods.

Answer 20

Yes. No. Maybe.

Redistribution requires centralization, centralization is faulty, thus redistribution always produces a faulty system. In addition redistribution often destroys complexity- and complexity is the most important production factor in a industrial economy (without we would all starve to death).

Then again, capitalism degrading to a oligarchy (centralization) becomes flawed and faulty too. So the optimal system, which is partially communist, would be a loop between the two extremes.

As in, a oligarchy gets auto-broken up by social turmoil, gets redistributed (without destroying the complexity) and then the whole thing returns to capitalism without ever going through the centralized state phase. Its basically a emulation of what civilwar/social unrest or external war/conquest do to a society without the unrest/conquest + complexity degradation.

Its basically a combustion engine, with a restructuring of oligarchs as soon as they attack the engine. Of course there you encounter the problematic part of that plan. The individual.

Individuals may invest into "tribes" more then into a functioning of the system splitting up tribes or limiting there ability to move. So the individual would need to be manipulated to partially act against its own instinctive interest. Be it rich or poor.

Answer 21

To make this stable in slightly longer term, instead of everyone starving themselves if they don't work, in the laziest way, everyone should have some inherent high income and expense, which cancels out so they have the net income similar to the rest of the world.

At first I thought of making a group of scientists to declare independence in Antarctica or even Mars. But that doesn't seem to satisfy your criteria.

But some much simpler models might work too, for example some oil field near some extreme environment. The expense could be explained by the extreme environment. But the problem is, if humans didn't have modern technologies when they first arrive there, so they still have chances to form a new country, how did they survive? The income could be from the oil field. But why isn't it owned by the leader of the first group of people discovering it? And many young people may not think an oil field could prove all their value. Why don't they want to leave there? The answers might not be straightforward, but I think they should be all possible.

The nearest thing in the modern world might be the space station. It's unlikely anyone will charge the astronauts for their expenses, even if the expenses are not for their main mission. And it is expensive to launch all the resources they require. The only difference beside not being an independent country is that they relies on the earth and cannot generate income themselves.

Many companies in capitalist countries could operate in similar ways. It's just a way to isolate them to a specific location and prevent them dealing with anyone else after their jobs.

Answer 22

The power isn't allowed to be to concentrated and retained indefinitly, otherwise you will end up with defacto oligarchies or dictatorship. Make it a multiparty system (maybe each party representing different interests, like internet interests, scientific interests, technical interests, nature preserving interests, production interests in general, policy interests, system failure-fix interests).

The country needs (not only theoretical, but practically) guranteed free speech and free journalism.

People need to really have influence and there need to be anti-corruption mechanisms that immediatly imprison/fire anyone not reporting a bribe attempt or taking a bribe. You can use randomly appointed citizens which serve as short term inspectors as control instance here, for the important tasks. The control should be without any holes, so that inbetween inspections no corruption can take place.

If you have a high focus on scientific method in the goverment and control mechanisms that prevent capitalistic failures and corruption, and potentially give some incentives for work, like a public reputation system or privilege system that gives you quicker access (other still get access but require longer time) to luxury goods, then I can easily see a non-corrupt goverment of any kind to be more efficent than any other system.

Because lets face it UDSSR, failed because of a static high power with non-shifting goverments, which were highly corrupt. This is also todays russian problem were police is still corrupt and power is still static.

Answer 23

What about Yugoslavia itself? Did you consider it as an example?

I think it can be definitely considered a socialist country. In Belgrade has over a million citizens. Novi Beograd, 1980. Isn't it a beautiful example of communist architecture?

They had these "famous" Yugo cars and I think buildings were pretty well maintained, at least according to the pictures of the 70s you can find. The overall standard of living surely wasn't as bad as in the USSR since it was an open country, people could easily leave it. In fact many did, there has always been a strong Yugoslavian immigration in Germany and Switzerland. But if things down there were as bad as in the USSR, almost everyone would have left the country (like many people wanted in the GDR, for example). It was also a quite popular holiday destination for western-Europeans. Here are some pictures of a resort close to Dubrovnik, in the 1980s and what's left of it today

Answer 24

I suggest to consider Poland. Similarly to Hungary, Poland had such kind of economy as you need. But you should remember, that Poland got big debts and credits at that time. As a consequence, your economy will collapse at the end of 70ths.