Why did communism fail? – An economic perspective

Karl Marx had an ideology of human progression in society whereby over time, the structure of economy would change from an unfair to a model where there was overall equality. A model where the feudal system containing the cavity of wealth between the rich and the poor would be completely dissolved. In theory, this was a good concept on the economic side of society because it would mean that income would be distributed equally and factors such as poverty and malnutrition would never exist. However, as every society experiences economic growth in some fashion, the communist society, being a closed system of income would not provide that. Producer and consumer development would cease to exist.
There are numerous reasons to justify that communism in practice had major weaknesses as an economic system but the main concern would be the issue of human incentive. The theory of communism assumed that every human under its ruling would have a “good heart” with the incentive to work for the overall benefit of the country. In human nature, it is natural for humans to express self-centred feelings as a primary instinct but communism expected society to take a more humanitarian approach to the functioning of an economy. In other words, when everyone is working for the betterment of everyone else, people would lose the motivation to work to their maximum productivity because there wouldn’t be a difference in the end to their quality of life.  Lower productivity in the workforce would reduce output, which in turn would reduce the availability of resources as well as consumer choice, and actually result in a lower quality of life. This is a representation of economic decline, and this is a cycle that will keep repeating itself. Linked to this, communism would diminish the concept of self-improvement. A person would be born into the world without any hope of improving their own situation, so there would be no point in working hard to improve the overall economy. Another reason on the human incentive side is that even though there are variations in the difficulty or importance of an allocated job, you will still be in the same economic position at the end of the day regardless of whether you were a scientist or a builder. Communism collapsed because it didn’t take into account the capabilities and potential of individual people, and it measured potential as an entire contribution of society. Famous examples of when this didn’t work was the Russian revolution.
A reason for the failure of Communism as an economic system is because communism expected the country to be an autarky. This meant that there would be no international trading of any produce and resources, including labour. Consequently, this would hinder the global distribution of technology as well as a varied and skilled workforce. This would result in slower economic development, because making revenue from tourism and exports wouldn’t even exist, as well as causing the country to become increasingly disjointed from the world to an extent where society could become ignorant of modern practices and technological advancements. When all of this occurs, there would be a lack in modernity throughout a communist economy, and this would cause the country to become underdeveloped and backwards moving, rather than a fully functioning representation of a developed economy.
Another reason is that communism would treat everyone homogenously which means that everyone would follow one order of beliefs or culture regardless of their language, religious or cultural differences. A non-existent multicultural society, while supplemented by the lack of tourism would not be economically beneficial for the economy. A multicultural society would bring in cultural variations in clothing, cuisine and entertainment and there is usually a large market for this. Without any change, or a varied genre of leisure activities people wouldn’t want to invest their money into anything new and this could reduce the liquidity of money in an economy, which has severe implications such as a possible recession. Linked into this, in a communist economy there is no freedom of speech which means that people would not be able to discuss contrasting opinions and there would be no ideological development in society. The state wouldn’t know of people’s desires and again, there would be no investment in the economy meaning no circulation of income.
Overall, communism failed as an economic system because it did not adapt for ever changing requirements, and due to its economic restrictions it could not develop as quickly as capitalist countries. Looking at communism from a more diplomatic perspective, one could argue that Karl Marx’s theory of how capitalism was a flawed economic system whereby ultimately economy would collapse is also a true representation of what occurs in a communist state.

By Abbas Jodiyawalla