The economic performance of socialism

ABSTRACT

Socialism is attracting renewed interest. But forced economic equality comes with significant economic costs. I conduct an empirical evaluation on the performance of major socialist economies in meeting living standards and show that socialism results in poverty.

KEYWORDS:

• Economic development
• socialism
• capitalism
• economic freedom

JEL CLASSIFICATION:

• O1
• P1
• P2

Disclosure statement

No potential conflict of interest was reported by the author.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

¹ The R² is 0.51. This result is based on a regression of the log of GDP per capita against country rankings for the 158 countries (jurisdictions) common to both indices.

² GDP per capita (PPP) is sourced from the World Bank as of October 2019. Venezuela’s 2018 GDP per capita (PPP) is sourced from the International Monetary Fund as of October 2019. US poverty and household income levels are sourced from the US Census Bureau as of August 2019.

³ The beta is 0.93 with a t-statistic of 72.

⁴ The beta is 1.04 with a t-statistic of 65.

⁵ Corporate tax rates are sourced from Deloitte.