Differences of East and West European Economies
Before and After Communism
After World War II, Europe was divided along the Iron Curtain, a political, military, and ideological barrier constructed by the Soviet Union to separate itself and its allies from noncommunist areas. The West, defined by the North Atlantic Treaty Organization (NATO), members were Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom, and the United States, with Greece, Turkey, West Germany, and Spain joining later. The East was defined by the Warsaw Pact, a treaty establishing a mutual-defense organization composed of the Soviet Union, Albania, Bulgaria, Czechoslovakia, East Germany, Hungary, Poland, and Romania. This remained in place until the fall of the Soviet Union in 1991. Communism - the social, political and economic ideology that defined the East, aimed at establishing a classless, moneyless, and stateless socialist society. This movement saw intense rivalry between their world and countries with market economies and Liberal democratic governments like the West. There are many reasons why communism doesn’t work. The three main reasons for the collapse of the Soviet Union are centrally planned economy, industry at the expense of consumers, and shortage of workers by immigration.
In Eastern Europe the government of the Soviet Union made all basic economic decisions rather than private persons as would happen in a free market. In theory, it seems more rational and fair than the marketplace, but in practice it yields inefficiency, lazy bureaucracy, and little incentive to work hard or be innovative. Free market encourages people to develop businesses, work hard to reap rewards, and develop new ideas. The Soviet Union kept their satellites in a state of economic isolation and backwardness by not encouraging them to think for themselves.
During the Cold War the Soviet Union felt challenged by the United...
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