Chapter 2: Economic Systems and the American Economy
"Back in the USSR"
In Chapter 2, students were introduced to the different types
of economic systems nations use. They also know that the way
societies answer the three basic economic questions determines
their economic system. In this lesson, students will learn
more about the command economy of the former Soviet Union
and its transition to a market economy.
Students will use information from The Causes and Consequences
of the Collapse of the Soviet Union Web site to learn about
the economic conditions of the former Soviet Union during
the economic crisis of the 1990s. They can browse the site
to collect information on the status of the economy during
the early 1990s, on the rebuilding of the economy, and on
the effect of social changes in the economy. Students will
answer four questions and then use what they have learned
to imagine they are economists in the early days of the economic
collapse. As Russian economists, students will write a page
in their diaries, describing their hopes and fears for the
future of Russia.
Previous Knowledge Expected
economic system: way in which a nation uses its resources
to satisfy its people's needs and wants
command economy: system in which the government controls
the factors of production and makes all decisions about their
Content Standards (from the National Council on Economic Education)
Standard 3: Different methods can be used to allocate
goods and services. People, acting individually or collectively
through government, must choose which methods to use to allocate
different kinds of goods and services.
1. Students will be able to identify the characteristics of
a command economy.
2. Students will understand the chaos that results when a
country's economic system collapses and the people are forced
to meet the challenges of creating a new system.
3. Students will use this information to imagine they are
economists describing conditions during the economic collapse
of the Soviet Union.
Web Activity Answers
1. Economic education was limited to the study of orthodox
Marxism. What little was taught on other economic systems
was simply a narrow survey. Students had to be motivated to
search for books on other economic systems, and then explain
why they wanted to read them if any were found. Additionally,
most of the information on alternate economic systems was
written in English.
2. Economists feared for their lives. It was a time of chaos
and unknown factors. They felt if they failed, they might
lose their lives. They also were limited in their education
of economic systems, and so they didn't really know what to
do. Finally, economic reform was an enormous task that many
economists were not willing to take on.
3. "When communism collapsed, it was the start of the collapse
of all the mechanisms of microeconomic regulation," states
Gaidar. Complete economic collapse occurred because the comprehensive
system, which was based on governmental power and not vested
interest, did not work. Without the command system in place,
there was no one to tell the producers what to do, how to
produce, or where to distribute. The economy shut down. The
people of the former Soviet Union had no access to basic necessities,
and no time to convert to a market system. They also had to
learn about the concept of vested interestentrepreneurship.
For a market system to succeed, the Soviets had to create
a social basis for the economic reforms.
4. Gaidar states that the immediacy of the problem led them
to make trade-offs, but they tried to open the economy to
trade the best they could. They introduced a zero import tax;
issued a decree that allowed trade to everybody, anyplace,
without restrictions; and created an independent Russian central
5. Students' diary pages will vary.
Go To Student Web Activity