The Grand Experiment of Communism: Discovering the Trade-Off between Equality and Efficiency

Etienne Farvaque, Alexander Mihailov () and Alireza Naghavi

Journal of Institutional and Theoretical Economics (JITE), 2018, vol. 174, issue 4, 707-742

Abstract: This paper examines how the interplay between economic incentives and social preferences transmitted by ideology plays a role in the rise and fall of communism. We introduce inequality-averse and inefficiency-averse agents and model their conflict in ideology, triggered by envy. The socioeconomic dynamics generate a pendulum-like switch from markets to a centrally planned economy abolishing private ownership, and back to restoring market incentives. The grand experiment of communism is thus characterized as leading to the discovery of a trade-off between equality and efficiency. The model also derives conditions under which the two systems converge and become stable.

Keywords: communism; inequality; inefficiency; ideology transmission; economic system transitions (search for similar items in EconPapers)
JEL-codes: C72 D31 D63 D74 D83 P51 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2018)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2012)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
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DOI: 10.1628/jite-2018-0003

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