What type of economy did 1984 have and how does this compare to our modern day economy?

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teachersage eNotes educator| Certified Educator

The economy of 1984 was controlled by a small group of government officials. As in the Soviet Union of the 1940s, all major economic activity was centrally planned. There was a free market for minor goods and services among the impoverished proles, but all the important industries and agricultural enterprises were owned and controlled by the state. In our modern economy, we have, in contrast, free enterprise, choosing to privatize many of our goods and services and to allow people to compete for market share. However, we also have a mixed economy, in which some sectors are run by the government, such as the armed services. 

A society in which the state owns the means of production is socialist. In theory, this means all the profits from an enterprise are distributed among the people, leading to greater general prosperity, but in the case of Oceania, the benefits flow only to a tiny group of Inner Party members. Most of the money that could make life better for people in Oceania is funneled into warfare, so even the average Outer Party member lives a physically miserable life with bad food, small living quarters, and few pleasures. 

In the U.S. too, a war economy runs almost constant low-level wars in other parts of the world that siphon off resources that could be used to fund health care, education, and other programs that would make life better for the average person. We feel we need to do this to protect our way of life.  

In Oceania, the point of the economy is to keep people miserable, because that helps keep them powerless. The system concentrates power in the hands of the few people who run the Party. Power is defined in a negative way: the ability to force people to do what they don't want to do. In our economy, as economist Thomas Piketty has established, the system is set up to keep interest payments on debt, rents, and profits flowing to a small number of wealthy individuals. Fortunately, however, some of that money does come back to the rest of us so that we can lead reasonably comfortable lives. 

clane eNotes educator| Certified Educator

The economy in the world of 1984 is constantly recessed and it is referred to as Ingsocwhich is newspeak for English Socialism. There are shortages of commonly used and needed items, buildings are run down with no hope of repair, and the city of Oceania (and probably much of the rest of the world) is dirty. The economy is socialistic. The distribution of wealth and property in the community are controlled by the government. The government controls the means of production of everything in the society, there are no private institutions. With a socialistic economic system there are usually three very distinct classes and rarely any gray areas. The rich, the middle class, and the poor (The Inner Party, the Outer Party, and the Proles).

The society in Oceania is in a constant state of war. Winston questions whether the war is even actually real or it is just present in the media to help keep the economy recessed and the people dependent upon the government. War is also used to explain shortages of everyday use items like razor blades and the reason there is a need for synthetic food.

In comparison the US capitalistic economy it is very different. We have competition which drives the market and not the government. The distribution of wealth is dependent upon individuals and the market. The classes range from the obscenely rich to the poorest of poor with many gray areas between.  

kmj23 eNotes educator| Certified Educator

In 1984, Oceania has a Socialist economy. This is made clear through the Newspeak word Ingsoc, which stands for English Socialism. In practice, this means that the economy is planned and controlled by the Party. Note, for example, how food and other goods, like razors, are rationed by the Ministry of Plenty and how statistics about economic production are published in the press.

Looking a little deeper, however, it becomes clear that the Party does not strictly adhere to Socialist principles. In Socialism, for instance, society's wealth is equally distributed among the people but, in Oceania, this does not happen. This is shown clearly in the contrast between the run-down Victory Mansions (where Winston lives) and the palatial and luxurious interior of O'Brien's apartment. In other words, the Party has created its own version of Socialism which keeps Party members in poverty and, therefore, easier to control.

By contrast, in a capitalist economy, industry and business are usually not controlled by the government but by private individuals for the purpose of making profit. In addition, it is supply and demand that determine the production of goods and services, meaning that rationing is rare in a capitalist society.