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

Etienne Farvaque, Alexander Mihailov () and Alireza Naghavi

Center for Economic Research (RECent) from University of Modena and Reggio E., Dept. of Economics "Marco Biagi"

Abstract: This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences in different economic systems. We introduce inequality-averse and ine¢ ciency-averse agents responding to economic incentives and transmitting their ideology as they are a¤ected by evolving outcomes. We analyze their conflict through the interaction between leaders with economic power and followers with ideological determination. The socioeconomic dynamics of our model 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 to have led to the discovery of a trade-off between equality and efficiency at the scale of alternative economic systems.

Keywords: capitalism; communism; inequality; inefficiency; ideological transmission; economic transitions (search for similar items in EconPapers)
JEL-codes: C72 D31 D63 D74 D83 P51 (search for similar items in EconPapers)
Pages: pages 25
Date: 2011-06
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Related works:
Journal Article: 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 (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)
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