Economic Demise of the Soviet Union

What happened is surely one of the great events of modern history, an upheaval that will continue to have monumental impact on global politics and trade.

Soviet history is the vehicle for teaching fundamental skills and principles of economic reasoning, which are then used to analyze the complexities of the intertwined economic, political-legal and moral-cultural components of Soviet society.

The lessons not only explain why the Soviet economy collapsed, but also provide insights into our own economy.

Lesson Outline

Lesson 1: Opportunity Cost

• Key Terms and Concepts: Opportunity Cost; Scarcity; Capital Goods; Choice; Consumer Goods; Communism
• Activity:  A Journey of Choices

Lesson 2: Missing Markets and Missing Prices

• Key Terms and Concepts: Markets provide information in the form of prices; Opportunity Cost; Prices; Information Costs; Investment; Demand and Supply; Markets; Competition
• Activity: Missing Markets – The Task of the Planning Ministry
• Activity Video: Missing Markets and Missing Prices

Lesson 3: Incentives Matter

• Key Terms and Concepts: People respond to incentives; Entrepreneur; Innovation; Profit; Productivity; Competition
• Activity: Why Would Anyone DO That? — Incentives Matter

Lesson 4: Property Rights

• Key Terms and Concepts: Property Rights; Private Property; Incentives; Collectivization; Profits; Tragedy of the Commons
• Activity: What Do I Care Who Owns It?

Lesson 5: Transaction Costs – Life in a Soviet Household

• Key Terms and Concepts: Transaction Costs; Incentives; Markets; Opportunity Cost; Prices; Secondary Markets; Creation of Wealth
• Activity: ‘Na Levo” – When Acting Within the Law Is Inconvenient

Lesson 6: Applying the Lessons of the Soviet Union

Unit Conclusion