Hello and welcome.
In the customary division of the world into 3 parts –
1 : The western countries
2 : The East Block
3 : The Third world
The Socialist countries represent nearly one third of the
world’s population and industrial output.
Despite wide differences in the economic instutions of these
countries and their respective stage of development , fairly
similary patterns of economic organisations have emerged.
Here are the main common features.
1 : Public ownership of the means of production :
This takes the form of state , cooperative or collective
ownership and , by no means implies social ( as opposed as elitist )
It need not to be total ownership and small private sectors can exist
in minor sectors of the economy , but there are strict limits on
the abillity to command labour other than one’s own .
The banking system and foreing trade are also nationalized.
2 : Centralized control of the rate of accumulation and the principles
guarding the directions of economic growth.
3 : The existence of a market for consumption goods and for labour.
Collective consumption is in the range of 10 to 15 percent of
national income and the rest of the consumption goods are
exchanged in the market , wages are paid and transactions take
place in cash.
The market for production goods if exists are seperated to greater
or lesser extent from the market for consumption goods.
4 : Prices , price limits or price fixing criteria for all goods sold by the
state are decided by the planning authorities .
The prices are locked and not subject to change spontaneously.
The main economic differences between these countries and the stage
of development they represent depend of the degree of central control
over the functioning of the economy and are concerned with the
desision making agencies and their relations.
The use of money and value indicators the relative scope of plan and
markets and the nature of incentives and of plan implementation.
Ref : Alec Nove 1972