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Agree with an earlier post in that Marxism was never truly practiced in the Soviet Union except in the very beginning, and with a select few in the leadership. So Marxism wasn't necessarily a failure (although I believe Marxism in its truest form would have eventually failed there too), rather the Soviet Union itself was.
The industrial and agricultural progress made in the USSR over those 74 years came at horrific human cost in both lives and suffering. It was an experiment conducted at the end of a gun, that completely neglected key elements of human nature and motivation.
What economic system provides the highest quality goods and services to the most people for the lowest price?
What Marx and Engels had envisioned back in the 1850's was what a post-industrial Britain would look like. For most countries who embraced Communism as a means to transform themselves from an agrarian economy to a post industrial one was to skip their own industrial revolution with disastrous results; Communism became yet another philosophy a long list of failed governmental implementations perverted by demagogues for their own benefit. A true communistic culture as described by Marx, has yet to be realized anywhere on Earth, but any system that requires coercion in any form, Communistic, Socialistic, or the "mixed" economy of the US is antithetical to human progress. If we claim to value an individual's right to act as he or she sees fit, without violating the rights of other individuals, there's only one economic system and one political system that'll allow that, and it implies a very limited government. Anything else is treading down the long road to modern serfdom. For those who bemoan the current economics and blame the economic system, consider that government failed to uphold its own Rule of Law to check unsound business practices. Had they done so, we may have had only a downturn and not a disaster. Ever expanding meddling government is the curse of modern culture.
You can really go both ways on this and have good arguments either way.
The traditional western view of the collapse of the Soviet Union was that the experiment failed. It failed because societies can prosper only when the individual has proper incentives for his labor. Because the entire economy was centrally planned, and all industry was owned by the state, there were no incentives for managers and workers to innovate or improve their performance. They would receive no material reward for their work, since competition was eliminated. As John Stuart Mill once said, critiquing the system of socialism practiced in the former Soviet Union:
Competition may not be the best conceivable stimulus, but it is at present a necessary one, and no one can foresee the time when it will not be indispensable to progress.
On the other hand, you can also argue that socialism as Marx envisioned was never really practiced in the Soviet Union. Because of corruption in the leadership, there was never true public ownership of the means of production. Socialism is intended to distribute wealth more equally in society, and give everyone equal access to opportunity and well-being. But the Soviet Union had extremely authoritarian and corrupt governments that ended up concentrating wealth and power in the leadership, and using repressive measures to stifle dissent. This was not what Marx envisioned when he wrote about socialism: he believed in a system where people would find the inherent joy of their labor sufficient reward On this view, you can argue that the experiment didn't fail because it was never properly conducted.
The topic is interesting because today Marx is generally considered to be irrelevant -- that the collapse of the Soviet Union made him irrelevant because it "proved" the experiment failed. But today, as the economy continues its relentless slide, there are rumblings that perhaps capitalism is not ultimately the best economic system for human beings.
The Soviet Union was an experiment that crashed very soon after its initiation. One of the leaders, Stalin, was a mad man. After his first wife died in (about) 1920, he became truly demonic. Lenin was willing to kill large numbers of people, but Stalin seemed to delight in it. The Soviet Union was not communism, it was Stalin's regime of terror.
This is the main problem of the communist model... because there is only one power structure (The Communist Party) it is easy to grab full control. To get an idea of how it all went wrong, Orwell's brilliant Animal Farm, shows how vulnerable communism is to dictators.
Santari's answer is sadly true, we are not yet ready to truly work together as a group, we still need the incentive of immediate, personal gain (ie greed).
When discussing the pros and cons of capitalism and communism, do NOT forget that your comfy Californian lifestyle, (with it's nice houses, cars, comfort, peace, health-care and wealth) is supported by 3rd world workers on rubbish wages in rubbish conditions. The reason you have nice clothes, nice products, etc, is because a girl just like you in China or India or Bangladesh wasn't paid properly. She hasn't got any nice clothes. She lives in poverty working for you. The working class's poverty is still supporting rich people, it's just they are in a different country now. But they are real people who want a better life. Capitalism is not guaranteed to be 'good' or 'right'.
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