ABSTRACT
This chapter demonstrates how ideology interacted with economic and geopolitical conditions in shaping the economic institutions and economic policy between the end of the war and the fall of communism. It describes the classical model of the command economy, which was implemented first in the Soviet Union by Joseph Stalin during the 1930s and remained in place until the death of the dictator. The chapter explores the contribution of economic policy to the collapse of state socialism in the late 1980s, and asks to what extent political factors rather than the intrinsic inefficiency of the socialist system determined its fate. From the early 1950s, Yugoslavia began to embark on building a unique version of socialism that for many developing countries represented a ‘third-way’ alternative to the Western capitalist and the Soviet communist models. Economic development in socialist countries was slowing down for at least a decade before the demise of communism in the late 1980s.
