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

Author

Listed:
  • Alireza Naghavi

    (University of Bologna)

  • Alexander Mihailov

    (University of Reading)

  • Etienne Farvaque

    (Universite du Havre)

Abstract

This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences transmitted by ideology. We introduce inequality-averse and inefficiency-averse agents and 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.

Suggested Citation

  • Alireza Naghavi & Alexander Mihailov & Etienne Farvaque, 2012. "The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency," 2012 Meeting Papers 410, Society for Economic Dynamics.
    • Handle: RePEc:red:sed012:410
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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