How Do We Test Capitalism vs Communism?

Unfortunately for theoretical economists, we are not allowed to run economics experiments on the whole of society to see definitively whether or not certain economic policies or systems work in practice. Millions of lives hang in the balance, so this is an ethical non-starter. But we can study countries that have experimented with socialism, communism, and laissez faire capitalism to see what the outcomes are. And the experiments have been done.

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[haldir]

I think it's important to mention that the norwegian govt put production caps on oil to prevent it from swallowing up the rest of the economy, and to also ensure that our oil reserves would produce comfort for the norwegian people for a long time. The sovereign wealth fund was only started in 1990, decades after oil production started.

[gabrielfraser]

Last time I was this early, Argentine Treasury Bonds were a solid investment.

[andrewsang]

"nobody's going to let economists run experiments on their entire country"

Looks at Chile

[Nagria]

small error correction(Lesson) in chemistry:
when you showed dynamite (TNT) and Fertilizer (ammonium nitrate)
1) a better comparison would be "lab made" old school black powder. because it literally uses ammonium nitrate (and other ingredience)
2) left side @02:22 is NH4+ (ammonium) wich we actually do NOT care about. we care about the Nitrate part. you can also you potassiumntriate or other similar salts.

side note: thats why nh4 and TNT dont look very similar (you didnt recognice that i guess?)
BUT if you compare nitrate (NO3-) to TNT you will see that TNT is literally 3 NO3 stuck together (by toluol, that why the name is 3Nitrotoluol; if it was ammonia stuck to the sides it would be called triaminotoluene)
nitrate are already very reactive (bccause of the energetic Nitrogen and alot of reactive Oxigen) but if you arrange them it this star formation it can easily be broken and release even more energy.

sidenote 2 for nerds: it carrys its "own" oxygen. so it can actually explode underwater or in a vacuum.

[mindfulpessimist]

Another interesting comparison -- one we looked at in university -- is Canada vs. Argentina. In 1900 their economies were similar, but they went in two very different directions after that.

[Celis.C]

Here's an idea for a video:
How would the economies of 'imperial core' countries perform if they didn't have access to 'imperial periphery' resources, or would have to acquire them through fair market means?

[samklibaner]

One thing I think is worth talking about in comparing these countries is that a lot of them were democracies verses dictatorship. Now to some degree I know that seems natural because dictatorships tend more easily tip towards central planned economics. But it is worth noting how that itself might have affected economic development. Especially, when comparing Korea's. From that graph you showed the South started pulling ahead of the North in the Eighties, and then it really hit off in Nineties onward. This largely lines up with its transition from dictatorship to democracy. I think this is worth mentioning because I'd argue that being a democracy can itself have a strong effect on economic wellbeing outside of a just its economic policy. That's because leaders in a democracy not only have more reason focus more on promoting general wellbeing (verse say military buildup) but also to adjust policies when the fail. Their power comes from making people's lives better so if a policy starts failing that's incentive to stop, or at least modify them, where a dictatorship only needs to keep a specific clique of people happy (mainly the military and elites) so they don't have reason to stop, and the mindset of a dictatorship tends to encourage seeing all criticism as a threat verse constructive discussion, so that's even more reason to ignore failings, and create echoes chambers where you might not even hear about them. I think what would be more interesting is examining countries that kept the same political system but changed their economic policy. Like how thatcherism in both the short and long term effected the UK, or the effects of China moving away from Moa's original policies to a more Free Market system, might have led its increased levels of prosperity. Because in those cases you really do control for a lot of other factors, and an maybe get a better view of the impact of the economic policies themselves.

[tacitus]

A detail you've missed regarding the marshal plan in Europe: Germany received very little of that $13.3 billion. Only something like 10%.
Edit: Germany had the "German Miracle", or Wirtschaftswunder, overseen by Ludwig Erhard, which was accomplished by currency reformation, liberalizing the economy and removing price controls and rationing.
Compare this with the UK that remained on rationing and price controls and was lagging far behind Germany for the next decade or so despite having more of its infrastructure intact and less of its young men being killed in the war.

[alanchacindreissig]

Great video. Being from Venezuela, it's very interesting to me seeing how other economists view my country. I suggest you looking more into it and into our politic problems so you have a clearer view on how corruption has almost destroyed any hopes for our economy. That being said, I truly believe this is one of your best videos: objective and well explained, also not too long. Great job

[nickflottorp]

The Soviet Union dismantled all of East Germany's heavy industry and a significant part of its rail infrastructure. As much as 60% of total industrial production was taken by the USSR before reparations were ended in 1953. To say the USSR gave any support to East Germany is ridiculous.

[robertmiller]

A big problem with the supposed distinction between micro and macro is that it doesn't work like that. Macro is the AGGREGATION of all of the micro. It's like saying a forest is somehow distinct from the trees of which it is comprised. No, a forest is an emergent property of the trees of which it is comprised as does not exist apart from those trees.

[ommin]

Can you do a video about the "dutch disease" happening in Canada, especially Western Canada? Oil in Alberta, and Forestry/Fishing in BC. We're effectively a separate economy from Eastern Canada but the only thing we really do competitively is resource extraction.

[GnomaPhobic]

I think this is my favorite video that you've done so far. Rational, sober analysis. The use of sovereign wealth funds for long term investment and income vs the immediate spending on social uplifting programs reminds me of the difference between people with old money, and people who win the lottery. It's a lot harder to moderate your spending and exercise restraint around money when you've not 'grown up' so to speak with it.

[scott]

It is worth mentioning that it is difficult to get a true understanding of economic growth in a centrally planned economy…when the state sets prices, they can work the numbers to get whatever growth they like. Under such misconceptions as the labour theory of value they attribute value to products that may have no consumer demand.

[ocadioan]

2:21 Maybe stick to economics, because the two compounds shown are not at all similar to anyone with even a high school level of understanding chemical structural drawings. For starters, the one on the right isn't dynamite, but Nitroglycerin, which is only _one_ part of making dynamite.

[jimmacgregor]

I think this is your best effort. It's continuously important to hold up a mirror to disciplines, to be accountable, and to do so in a constructive way.

[Sunflowersarepretty]

I think its a good idea to often repeat what you've explained in previous videos. Call me dumb or whatever but I finally understood "dutch disease" here in this one and I had to watch that part 5 or 6 times.

[eisenstein]

I'm not very well versed in contemporary European history, but if I remembered correctly the USSR pretty much dismantled what East Germany had for industrial base and pack it back to Russia. I think it would already be very generous to say that the USSR was not actively tanking the economy of East Germany, let alone "help".

And it is interesting that you raised North/South Korea as an example for "free market" vs "planned economy". However, it would be more beneficial if you could examine the facts closer:
1. while it is true that NK had better heavy industrial base than the South, it had significantly less light industry, agriculture, and commerce
2. starting in 1950s, NK was sanctioned by the US, which, at the time, represents ~40% of world economic power. Meanwhile, US gave out huge funds to SK to develop. At the time, US was indeed the kingmaker of economic power
3. SK economy took off between 1960s and 1980s, under the rule of a military junta led by dictator Park Chung Hee. Park Chung Hee literally adopted "Five Year Plan" to boost SK's industrial prowess. State bank heavily subsidized the chaebols (this is where the famous LG, Samsung, and Hyundai come from). Park was very protectionist as well. He restricted most imports of foreign goods except for raw materials. After Park's assassination in 1979, another military dictator Chun Doo-hwan took over and carried out similar industrial policies till 1990s, at which time SK's industrial base had already been established.

So I would say it is very irresponsible to use North/South Korea as an example to analyze "free market" vs "planned economy"

[JMMRanMA]

This is a very well done video, but there are several things that need to be mentioned. I taught in S. Korea spread out over several decades. When I started, the government had become a military dictatorship. Pres. Park had two main objectives, 1. creating a modern industrialized economy, and 2. improving the living conditions of the people. 3. Improving education, though while education was a priority, democracy wasn't and this gave rise to student demonstrations and the eventual overthrow of the government and establishment of a truly democratic one [that had deposed and jailed dictators, while the US has yet to jail a former president🤞]. The educational drive led to sending large numbers of students to US universities, something that many other countries have done. They also improved and increased the number of universities in the country. They prioritized the learning of English because the medical and technology fields required English competency, even getting into a good Korean university, getting a good job at a big company or even getting a promotion in the Korean military requires getting a good score on an English exam.

The Park government did [through the Sae Maul Program] improve farming, education and modernization of industry, where it succeeded most was in aligning with the West, which made it temper, somewhat, the totalitarianism, and the increase in education and sending people to freer countries led to an educated opposition that eventually prevailed. Basically the drive to improve the individual's life, and that of the family and country, works better than propagandistic exhortations to improve the working class through one party politics!

[ambition]

0:24: 🌍 The study of economics is divided into microeconomics and macroeconomics, but studying macroeconomics is challenging due to the complexity of human behavior and the inability to conduct controlled experiments on a large scale.
6:00: 📈 Centrally planned communist economic policies in North Korea have squandered its advantages, while free market systems in South Korea have enabled it to flourish into one of the most powerful economies in the world.
7:05: 📊 The difference in economic performance between North Korea and East Germany can be attributed to factors beyond just the profit motive.
10:27: 📚 Centrally planned economies have the advantage of making big decisive investments, but they struggle with resource allocation and negative externalities, while market economies waste resources and struggle with externalities.
14:29: 📚 Norway and Venezuela both faced challenges in managing their natural resource wealth, but Norway focused on economic stability while Venezuela prioritized rapid growth at the expense of stability.
17:26: 📚 Norway's economic stability is attributed to their sovereign wealth fund which acts as an economic shock absorber.
Recap by Tammy AI