Indonesia in Focus: Unfinished journey (45)

With Teenagers in Budapest

Unfinished journey (45)

(Part forty-five, Depok, West Java, Indonesia, 6 September 2014, 14:46 pm).

After the meeting session covering 13 countries members of the Petroleum Exporting Countries OPEC, in Vienna Austria in 1998 and we want to feel the atmosphere of Hungarian communist country.

We stopped first to the Office of the Embassy of Indonesia in Budapest before a look of tourism atmosphere in Hungary. We were greeted immediately Indonesian Ambassador in Hungary RM Pringgodigdo.

After looking around the city of Budapest we do not see a communist country like atmosphere that heralded this time, everywhere in fact many tourists visit this country. In fact, the tourism industry has been as busy as the city of Vienna, Austria, even as busy as the city of Amsterdam, in the Netherlands and Berlin in Germany.

Only forces (Army) Hungary who seems like using the uniform as used communist troops in East Germany and the Soviet Union.

I returned to this country in the 1990s has turned into a democratic country and has joined NATO and the European Economy. Now Hungary is one of the countries in Central Europe (Former Eastern Europe) most developed tourism industry exemplary Indonesia.

Traditional Customs in Budapest

Hungary

From Wikipedia, the free encyclopedia

Hungary

Magyarország

Flag Coat of arms

Anthem:

Himnusz

Hymn

MENU0:00

Location of Hungary (dark green)– in Europe (green & dark grey)– in the European Union (green) – [Legend]

Location of Hungary (dark green)

– in Europe (green & dark grey)

– in the European Union (green) – [Legend]

Capital

and largest city Coa Hungary Town Budapest.svg Budapest

47°26′N 19°15′E

Official languages Hungarian

Ethnic groups (2011[1])

83.7% Hungarians

3.1% Roma

1.3% Germans

14.7% undeclared

Demonym Hungarian

Government Parliamentary republic

- President János Áder

- Prime Minister Viktor Orbán

- Speaker of the National Assembly László Kövér

Legislature National Assembly

Foundation

- Foundation 895

- Christian kingdom 1000

- Secession from Austria-Hungary 1918

- Joined the European Union 1 May 2004

Area

- Total 93,030 km2 (109th)

35,919 sq mi

- Water (%) 0.74%

Population

- January 2014 estimate 9,879,000[2] (84th)

- October 2011 census 9,937,628[3]

- Density 107.2/km2 (94th)

279.0/sq mi

GDP (PPP) 2014 estimate

- Total $202.356 billion[4]

- Per capita $20,455 [4]

GDP (nominal) 2014 estimate

- Total $137.228 billion[4]

- Per capita $13,872[4]

Gini (2008) 26.9[5]

low

HDI (2013) Increase 0.831[6]

very high · 37th

Currency Forint (HUF)

Time zone CET (UTC+1)

- Summer (DST) CEST (UTC+2)

Date format

yyyy.mm.dd

yyyy.mm.dd (CE)

Drives on the right

Calling code +36

Patron saint Saint Stephen

ISO 3166 code HU

Internet TLD .hua

a. Also .eu as part of the European Union.

Hungary Listeni/ˈhʌŋɡəri/ (Hungarian: Magyarország [ˈmɒɟɒrorsaːɡ] ( listen)) is a landlocked country in Central Europe.[7] It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The country's capital and largest city is Budapest. Hungary is a member of the European Union, NATO, the OECD, the Visegrád Group, and the Schengen Area. The official language is Hungarian, which is the most widely spoken non-Indo-European language in Europe.[8]

Following centuries of successive habitation by Celts, Romans, Huns, Slavs, Gepids, and Avars, the foundation of Hungary was laid in the late 9th century by the Hungarian grand prince Árpád in the Honfoglalás ("homeland-conquest"). His great-grandson Stephen I ascended to the throne in 1000 AD, converting the country to a Christian kingdom. By the 12th century, Hungary became a middle power within the Western world.[9] Following the Battle of Mohács in 1526, Medieval Hungary collapsed and succumbed to 150 years of partial Ottoman occupation (1541–1699). Hungary eventually came under Habsburg rule, and later formed a significant part of the Austro–Hungarian Empire (1867–1918).

Hungary's current borders were first established by the Treaty of Trianon (1920) after World War I, when the country lost 71% of its territory, 58% of its population, and 32% of ethnic Hungarians. Following the interwar period, Hungary joined the Axis Powers in World War II, suffering significant damage and casualties. Hungary came under the influence of the Soviet Union, which contributed to the establishment of a four-decade long communist dictatorship (1947–1989). The country gained widespread international attention regarding the Revolution of 1956 and the seminal opening of its previously-restricted border with Austria in 1989, which accelerated the collapse of the Eastern Bloc.

On 23 October 1989, Hungary again became a democratic parliamentary republic, and is generally considered to be a developing country.[10][11] Hungary is a popular tourist destination attracting 10.675 million tourists a year (2013).[12] It is home to the largest thermal water cave system[13] and the second largest thermal lake in the world (Lake Hévíz), the largest lake in Central Europe (Lake Balaton), and the largest natural grasslands in Europe (the Hortobágy National Park).

Main article: History of Hungary

Before 895[edit]

Main articles: Hungarian prehistory and Hungarian mythology

Italian fresco depicting a Hungarian warrior shooting backwards

The Roman Empire conquered the territory west of the Danube between 35 and 9 BC. From 9 BC to the end of the 4th century Pannonia was part of the Roman Empire, located within part of later Hungary's territory. A Roman legion of about 600 men in a.d. 41–54, settled down in the Pannonian region, this settlement was named Aquincum. In the neighborhood of the military settlement a civil city raised gradually and in a.d 106 Aquincum became the focal point of the commercial life of this area and the Capital city of the Pannonian Inferior region. This area nowadays corresponds to the Óbuda district of Budapest with the Roman ruins now forming part of the modern Aquincum museum.[14] Later came the Huns, who built a powerful empire. After Hunnish rule, the Germanic Ostrogoths, Lombards, and Gepids, and the polyethnic Avars, had a presence in the Carpathian Basin.[15]

In the late 9th century the land was inhabited mainly by Slavic peoples and Avars.[16] On the eve of the arrival of the Hungarians, East Francia, the First Bulgarian Empire and Great Moravia ruled the territory of the Carpathian Basin. Additionally, the Avars formed a significant part of the population of the Carpathian Basin at the end of the 9th century; both contemporary sources[17][18] and a growing number of archaeological evidence suggest that groups of the Avars survived the disintegration of their empire.

The freshly unified Hungarians[19] led by Árpád settled in the Carpathian Basin starting in 895.[18][20] According to linguists, they originated from an ancient Uralic-speaking population that formerly inhabited the forested area between the Volga River and the Ural Mountains.[21]

Medieval Hungary 895–1526[edit]

Main articles: Principality of Hungary and Kingdom of Hungary in the Middle Ages

Hungarian raids in the 10th century

As a federation of united tribes, Hungary was established in 895, some 50 years after the division of the Carolingian Empire at the Treaty of Verdun in 843, before the unification of the Anglo-Saxon kingdoms. Initially, the rising Principality of Hungary ("Western Tourkia" in medieval Greek sources)[22] was a state consisting of a semi-nomadic people. It accomplished an enormous transformation into a Christian realm during the 10th century.[23]

This state was well-functioning and the nation's military power allowed the Hungarians to conduct successful fierce campaigns and raids from Constantinople to as far as today's Spain.[23] The Hungarians defeated no fewer than three major East Frankish Imperial Armies between 907 and 910.[24] A later defeat at the Battle of Lechfeld in 955 signaled a provisory end to most campaigns on foreign territories, at least towards the West.

Age of Árpádian kings[edit]

Main article: Árpád dynasty

King Saint Stephen, the first King of Hungary, converted the nation to Christianity

The Holy Crown (Szentkorona), one of the key symbols of Hungary

The year 972 marked the date when the ruling prince (Hungarian: fejedelem) Géza of the Árpád dynasty officially started to integrate Hungary into the Christian Western Europe.[25] His first-born son, Saint Stephen I became the first King of Hungary after defeating his pagan uncle Koppány, who also claimed the throne. Under Stephen, Hungary was recognized as a Catholic Apostolic Kingdom.[26] Applying to Pope Sylvester II, Stephen received the insignia of royalty (including probably a part of the Holy Crown of Hungary, currently kept in the Hungarian Parliament) from the papacy.

By 1006, Stephen had consolidated his power, and started sweeping reforms to convert Hungary into a Western feudal state. The country switched to using the Latin language, and until as late as 1844, Latin remained the official language of Hungary. Hungary became a powerful kingdom.[27] Ladislaus I extended Hungary's frontier in Transylvania and invaded Croatia in 1091.[28][29][30][31] The Croatian campaign culminated in the Battle of Gvozd Mountain in 1097 and a personal union of Croatia and Hungary in 1102, ruled by Coloman i.e. Könyves Kálmán.[32]

King Saint Ladislaus I

The most powerful and wealthiest king of the Árpád dynasty was Béla III, who disposed of the equivalent of 23 tonnes of pure silver a year. This exceeded the income of the French king (estimated at 17 tonnes) and was double the receipts of the English Crown.[33]

Andrew II issued the Diploma Andreanum which secured the special privileges of the Transylvanian Saxons and is considered the first Autonomy law in the world.[34] He led the Fifth Crusade to the Holy Land in 1217, setting up the largest royal army in the history of Crusades. His Golden Bull of 1222 was the first constitution in Continental Europe. The lesser nobles also began to present Andrew with grievances, a practice that evolved into the institution of the parliament (parlamentum publicum).

In 1241–1242, the kingdom received a major blow with the Mongol (Tatar) Invasion. Up to half of Hungary's then population of 2,000,000 were victims of the invasion.[35] King Béla IV let Cumans and Jassic people into the country, who were fleeing the Mongols.[36] Over the centuries they were fully assimilated into the Hungarian population.,[37] majority of them were exterminated during the Great Turkish War,[38] but they have strong dual identity.[39]

As a consequence, after the Mongols retreated, King Béla ordered the construction of hundreds of stone castles and fortifications, to defend against a possible second Mongol invasion. The Mongols returned to Hungary in 1285, but the newly built stone-castle systems and new tactics (using a higher proportion of heavily armed knights) stopped them. The invading Mongol force was defeated[40] near Pest by the royal army of Ladislaus IV of Hungary. As with later invasions, it was repelled handily, the Mongols losing much of their invading force.

Age of elected kings[edit]

Main article: Ottoman–Hungarian Wars

Territories ruled by Louis the Great

Western conquests of Matthias Corvinus

The Gothic-Renaissance Hunyad Castle in Transylvania (now Romania), built by king Charles I of Hungary

The Kingdom of Hungary reached one of its greatest extent during the Árpádian kings, yet royal power was weakened at the end of their rule in 1301. After a destructive period of interregnum (1301–1308), the first Angevin king, Charles I of Hungary – a bilineal descendant of the Árpád dynasty – successfully restored royal power, and defeated oligarch rivals, the so-called "little kings". The second Angevin Hungarian king, Louis the Great (1342–1382), led many successful military campaigns from Lithuania to Southern Italy (Kingdom of Naples), and was also King of Poland from 1370. After King Louis died without a male heir, the country was stabilized only when Sigismund of Luxembourg (1387–1437) succeeded to the throne, who in 1433 also became Holy Roman Emperor. Sigismund was also (in several ways) a bilineal descendant of the Árpád dynasty.

The first Hungarian Bible translation was completed in 1439. For half a year in 1437, there was an antifeudal and anticlerical peasant revolt in Transylvania, the Budai Nagy Antal Revolt, which was strongly influenced by Hussite ideas.

From a small noble family in Transylvania, John Hunyadi grew to become one of the country's most powerful lords, thanks to his outstanding capabilities as a mercenary commander. He was elected governor then regent. He was a successful crusader against the Ottoman Turks, one of his greatest victories being the Siege of Belgrade in 1456.

The last strong king of medieval Hungary was the Renaissance king Matthias Corvinus (1458–1490), son of John Hunyadi. His election was the first time that a member of the nobility mounted to the Hungarian royal throne without dynastic background. He was a successful military leader and an enlightened patron of the arts and learning.[41] His library, the Bibliotheca Corviniana, was Europe's greatest collection of historical chronicles, philosophic and scientific works in the 15th century, and second only in size to the Vatican Library. The library is a UNESCO World Heritage Site.[42]

The serfs and common people considered him a just ruler because he protected them from excessive demands from and other abuses by the magnates.[43] Under his rule, in 1479, the Hungarian army destroyed the Ottoman and Wallachian troops at the Battle of Breadfield. Abroad he defeated the Polish and German imperial armies of Frederick at Breslau (Wrocław). Matthias' mercenary standing army, the Black Army of Hungary, was an unusually large army for its time, and it conquered parts of Austria, Vienna (1485) and parts of Bohemia.

Decline of Hungary (1490–1526)[edit]

King Matthias died without lawful sons, and the Hungarian magnates procured the accession of the Pole Vladislaus II (1490–1516), supposedly because of his weak influence on Hungarian aristocracy.[41] Hungary's international role declined, its political stability shaken, and social progress was deadlocked.[44] In 1514, the weakened old King Vladislaus II faced a major peasant rebellion led by György Dózsa, which was ruthlessly crushed by the nobles, led by John Zápolya.

The resulting degradation of order paved the way for Ottoman pre-eminence. In 1521, the strongest Hungarian fortress in the South, Nándorfehérvár (the Hungarian name of Belgrade, Serbia), fell to the Turks. The early appearance of Protestantism further worsened internal relations in the country.

Ottoman wars 1526–1699[edit]

Main articles: Kingdom of Hungary (1538–1867), Ottoman Hungary, Principality of Transylvania (1570–1711) and Ottoman–Habsburg wars

Ottoman ravage in Hungary, 16th century

Painting commemorating the Siege of Eger, a major victory against the Ottomans

After some 150 years of wars with the Hungarians and other states, the Ottomans gained a decisive victory over the Hungarian army at the Battle of Mohács in 1526, where King Louis II died while fleeing. Amid political chaos, the divided Hungarian nobility elected two kings simultaneously, John Zápolya and Ferdinand I of the Habsburg dynasty.

With the conquest of Buda by the Turks in 1541, Hungary was divided into three parts and remained so until the end of the 17th century. The north-western part, termed as Royal Hungary, was annexed by the Habsburgs who ruled as Kings of Hungary. The eastern part of the kingdom became independent as the Principality of Transylvania, under Ottoman (and later Habsburg) suzerainty. The remaining central area, including the capital Buda, was known as the Pashalik of Buda.

The vast majority of the seventeen and nineteen thousands Ottoman soldiers in service in the Ottoman fortresses in the territory of Hungary were Orthodox and Muslim Balkan Slavs instead of ethnic Turkish people.[45] Orthodox Southern Slavs were also acting as akinjis and other light troops intended for pillaging in the territory of present-day Hungary.[46]

In 1686, the Holy League's army, containing over 74,000 men from various nations, reconquered Buda from the Turks. After some more crushing defeats of the Ottomans in the next few years, the entire Kingdom of Hungary was removed from Ottoman rule by 1718. The last raid into Hungary by the Ottoman vassals Tatars from Crimea took place in 1717.[47] The constrained Habsburg Counter-Reformation efforts in the 17th century reconverted the majority of the kingdom to Catholicism.

The ethnic composition of Hungary was fundamentally changed as a consequence of the prolonged warfare with the Turks. A large part of the country became devastated, population growth was stunted, and many smaller settlements perished.[48] The Austrian-Habsburg government settled large groups of Serbs and other Slavs in the depopulated south and settled Germans (called Danube Swabians) in various areas, but Hungarians were not allowed to settle or re-settle in the south of the Great Plain.[49]

From the 18th century to World War I[edit]

Main articles: Austria-Hungary, Lands of the Crown of Saint Stephen and Hungary in World War I

Francis II Rákóczi, leader of the uprising against Habsburg rule in 1703–11

Between 1703 and 1711, there was a large-scale uprising led by Francis II Rákóczi, who after the dethronement of the Habsburgs in 1707 at the Diet of Ónod, took power provisionally as the Ruling Prince of Hungary for the wartime period, but refused the Hungarian Crown and the title "King". The uprisings lasted for years. After 8 years of war with the Habsburg Empire, the Hungarian Kuruc army lost the last main battle at Trencsén (1708).[50]

The Period of Reforms[edit]

Count István Széchenyi offered one year's income to establish the Hungarian Academy of Sciences

During the Napoleonic Wars and afterwards, the Hungarian Diet had not convened for decades.[51] In the 1820s, the Emperor was forced to convene the Diet, which marked the beginning of a Reform Period (1825–1848, Hungarian: reformkor).

Count István Széchenyi, one of the most prominent statesmen of the country, recognized the urgent need of modernization and his message got through. The Hungarian Parliament was reconvened in 1825 to handle financial needs. A liberal party emerged and focused on providing for the peasantry. Lajos Kossuth – a famous journalist at that time – emerged as leader of the lower gentry in the Parliament. A remarkable upswing started as the nation concentrated its forces on modernization even though the Habsburg monarchs obstructed all important liberal laws relating to civil and political rights and economic reforms. Many reformers (Lajos Kossuth, Mihály Táncsics) were imprisoned by the authorities.

Revolution and War of Independence[edit]

Main article: Hungarian Revolution of 1848

On 15 March 1848, mass demonstrations in Pest and Buda enabled Hungarian reformists to push through a list of 12 demands. Under governor and president Lajos Kossuth and the first Prime Minister, Lajos Batthyány, the House of Habsburg was dethroned.

The Habsburg Ruler and his advisors skillfully manipulated the Croatian, Serbian and Romanian peasantry, led by priests and officers firmly loyal to the Habsburgs, and induced them to rebel against the Hungarian government, though the Hungarians were supported by the vast majority of the Slovak, German and Rusyn nationalities and by all the Jews of the kingdom, as well as by a large number of Polish, Austrian and Italian volunteers.[52] In July 1849 the Hungarian Parliament proclaimed and enacted the first laws of ethnic and minority rights in the world.[citation needed] Many members of the nationalities gained the coveted highest positions within the Hungarian Army, like General János Damjanich, an ethnic Serb who became a Hungarian national hero through his command of the 3rd Hungarian Army Corps or Józef Bem, who was Polish and also became a national hero in Hungary.

Lajos Kossuth, Regent-President during the Hungarian Revolution of 1848

Initially, the Hungarian forces (Honvédség) defeated Austrian armies. To counter the successes of the Hungarian revolutionary army, Habsburg Emperor Franz Joseph I asked for help from the "Gendarme of Europe", Czar Nicholas I, whose Russian armies invaded Hungary. This made Artúr Görgey surrender in August 1849. The leader of the Austrian army, Julius Jacob von Haynau, became governor of Hungary for a few months, and ordered the execution of the 13 Martyrs of Arad, leaders of the Hungarian army, and Prime Minister Batthyány in October 1849. Lajos Kossuth escaped into exile.

Following the war of 1848 – 1849, the whole country was in "passive resistance".

Austria–Hungary 1867–1918[edit]

Main articles: Austria-Hungary and Lands of the Crown of Saint Stephen

Territories of the Kingdom of Hungary and the Kingdom of Croatia (green parts) within the Austro-Hungarian Empire

Because of external and internal problems, reforms seemed inevitable and major military defeats of Austria forced the Habsburgs to negotiate the Austro-Hungarian Compromise of 1867, by which the dual Monarchy of Austria–Hungary was formed. This Empire had the second largest area in Europe (after the Russian Empire), and it was the third most populous (after Russia and the German Empire). The two realms were governed separately by two parliaments from two capital cities, with a common monarch and common external and military policies. Economically, the empire was a customs union. The old Hungarian Constitution was restored, and Franz Joseph I was crowned as King of Hungary.

The era witnessed impressive economic development. The formerly backward Hungarian economy became relatively modern and industrialized by the turn of the 20th century, although agriculture remained dominant until 1890. In 1873, the old capital Buda and Óbuda were officially united with Pest,[53] thus creating the new metropolis of Budapest.

Many of the state institutions and the modern administrative system of Hungary were established during this period.

World War I 1914–1918[edit]

Main article: Hungary in World War I

Hungarian built dreadnought battleship SMS Szent István in World War I

After the Assassination in Sarajevo, the Hungarian prime minister István Tisza and his cabinet tried to avoid the outbreak and escalating of a war in Europe, but their diplomatic efforts were unsuccessful.

Austria–Hungary drafted 9 million (fighting forces: 7.8 million) soldiers in World War I (over 4 million from the Kingdom of Hungary) on the side of Germany, Bulgaria and Turkey. The troops raised in the Kingdom of Hungary spent little time defending the actual territory of Hungary, with the exceptions of the Brusilov Offensive in June 1916, and a few months later, when the Romanian army made an attack into Transylvania,[citation needed] both of which were repelled. In comparison of the total army, Hungary's loss ratio was more than any other nations of Austria-Hungary.

The Central Powers conquered Serbia. Romania declared war. The Central Powers conquered Southern Romania and the Romanian capital Bucharest. In 1916 Emperor Franz Joseph died, and the new monarch Charles IV sympathized with the pacifists. With great difficulty, the Central powers stopped and repelled the attacks of the Russian Empire.

The Eastern front of the Allied (Entente) Powers completely collapsed. The Austro-Hungarian Empire then withdrew from all defeated countries. On the Italian front, the Austro-Hungarian army made no progress against Italy after January 1918. Despite great Eastern successes, Germany suffered complete defeat on the more important Western front.

By 1918, the economic situation had deteriorated (strikes in factories were organized by leftist and pacifist movements) and uprisings in the army had become commonplace. In the capital cities, the Austrian and Hungarian leftist liberal movements (the maverick parties) and their leaders supported the separatism of ethnic minorities. Austria-Hungary signed a general armistice in Padua on 3 November 1918.[54] In October 1918, Hungary's union with Austria was dissolved.

Between the World Wars 1918–1941[edit]

Main articles: Hungary between the World Wars and Hungarian interwar economy

With the Treaty of Trianon, Hungary lost 72% of its territory, its sea ports and 3,425,000 ethnic Hungarians[55][56]

Majority Hungarian areas (according to the 1910 census) detached from Hungary

Miklós Horthy, Regent of the Kingdom of Hungary (1920–1944)

The success of the 1918 Aster Revolution in Budapest brought Mihály Károlyi to power as prime minister and later as president of the first republic of Hungary. Károlyi ordered the full disarmament of the Hungarian Army, leaving Hungary without any national defence.

Romania took control of Transylvania and other parts of eastern Hungary, Czechoslovakia took control of the northern parts (also known as Upper Hungary), and a joint Serbian and French Army took control of the southern parts. These territories had majority populations of the respective occupying nations, but territories were occupied further than the ethnic boundaries, and so each had a significant Hungarian population as well. The post-War Entente backed the subsequent annexations of these territories.

In March 1919, the Communists took power in Hungary. In April, Béla Kun proclaimed the Hungarian Soviet Republic. Kun's government, like its immediate predecessor, proved to be short-lived. Despite some initial military successes against the Czechoslovakian Army, the Romanian Army defeated Kun's troops and took Budapest, ousting his regime.

On 4 June 1920, the Treaty of Trianon was signed, which established new borders for Hungary. Hungary lost 71% of its territory and 66% of its population. About one-third of the ethnic Hungarian population (3.4 of 10 million Hungarians) became minorities in neighboring countries. The new borders separated Hungary's industrial base from its sources of raw materials, and Hungary also lost its only sea port at Fiume (today Rijeka). The revision of the Treaty of Trianon rose to the top of Hungary's political agenda. Some wanted to restore the full pre-Trianon area, others only the ethnic Hungarian majority territories.

Rightist Hungarian military forces, led by the former Austro-Hungarian Admiral Miklós Horthy, entered Budapest in the wake of the Romanian Army's departure and filled the vacuum of state power. In January 1920, elections were held for a unicameral assembly. Admiral Horthy was elected Regent, thereby formally restoring the monarchy to Hungary. However, there would be no more kings of Hungary despite attempts by the former Habsburg ruler Charles IV to return to his former seat of power. Horthy ruled as Regent until 16 October 1944. Hungary remained a parliamentary democracy, but after 1932, autocratic tendencies gradually returned as a result of Nazi influence and the Great Depression.

World War II 1941–1945[edit]

Main articles: Hungary during World War II, Holocaust in Hungary and Soviet occupation of Hungary

Kingdom of Hungary, 1941–44

The Germans and Italians granted Hungary a part of southern Czechoslovakia and Subcarpathia in the First Vienna Award of 1938. In early 1939 Hungary occupied the rest of Subcarpathia and, following the Slovak–Hungarian War, part of eastern Slovakia. Northern Transylvania was occupied following the Second Vienna Award of 1940. In 1941, the Hungarian army took part in the invasion of Yugoslavia, regaining some more territories. On 22 June 1941, Germany invaded the Soviet Union under Operation Barbarossa. On 26 June, unidentified planes bombed the regained cities of Kassa, Munkács, and Rahó; as a response the next day Prime Minister László Bárdossy declared war on the Soviet Union, and formally entered World War II on the side of the Axis Powers. In late 1941, the Hungarian troops on the Eastern Front experienced success at the Battle of Uman.[57]

In 1943, after the Hungarian Second Army suffered extremely heavy losses at the River Don, the Hungarian government sought to negotiate a surrender with the Allies. On 19 March 1944, as a result of this duplicity, German troops occupied Hungary in what was known as Operation Margarethe. As the front reached Hungary, Miklós Horthy made a token effort to disengage Hungary from the war on 15 October 1944, but he was replaced by a puppet government under the pro-German Prime Minister Ferenc Szálasi of the Arrow Cross Party.[57]

Jewish women being arrested on Wesselényi Street in Budapest during The Holocaust, ca. 20–22 October 1944

The newly established fascist regime pledged all the country's capabilities in service of the German war machine. By October 1944, the Eastern Front was moving towards the river Tisza. Although the German and Hungarian troops experienced success at the Battle of Debrecen, it only delayed the advancing Soviet armies. By the end of December the soviets encircled the capital city - beginning the two months long Battle of Budapest.

During the Holocaust in Hungary and especially during the period of German occupation in May–June 1944, the fascist Arrow Cross Party and Hungarian police deported nearly 440,000 Jews, most to Auschwitz extermination camp, and nearly all were murdered.[58] The Swedish Diplomat Raoul Wallenberg managed to save a considerable number of Hungarian Jews by giving them Swedish passports.[59] Rudolf Kastner (original spelling Kasztner), one of the leaders of the Hungarian Aid and Rescue Committee, negotiated with senior SS officers such as Adolf Eichmann to allow a number of Jews to escape in exchange for money, gold, and diamonds.[60][61][62] Other diplomats also organized false papers and safe houses for Jews in Budapest and hundreds of Hungarian people were executed by the Arrow Cross Party for sheltering Jews.[citation needed]

The Széchenyi Chain Bridge and the Buda Castle in ruins after World War II (1946)

The war left Hungary devastated, destroying over 60% of the economy and causing significant loss of life. As many as 280,000[63][64] Hungarians were raped, murdered and executed or deported for slave labor by Czechoslovaks,[65][66][67][68][69][70] Soviet Red Army troops,[71][72][73] and Yugoslavs.[74]

On 13 February 1945, the Hungarian capital city surrendered unconditionally, two months later the last German troops were pushed out of Hungary, and the Soviet occupation was complete. After the war and by the agreement between the Czechoslovakian president Edvard Beneš and Joseph Stalin, expulsions of 200,000 Hungarians from Czechoslovakia and 70,000 Slovaks from Hungary started. 202,000 (two thirds) of the ethnic Germans were also expelled to Germany pursuant to article XIII of the Potsdam Protocol of 2 August 1945.[75]

All the territories regained with the Vienna Awards and during World War II were again lost by Hungary with the Paris Peace Treaty in 1947.

Communist era 1947–1989[edit]

Main articles: Hungarian Republic (1946–49), Hungarian People's Republic and Hungarian Revolution of 1956

A destroyed Soviet tank in Budapest during the 1956 Revolution; Time's Man of the Year for 1956 was the Hungarian Freedom Fighter[76]

Following the fall of Nazi Germany, Soviet troops occupied the entire country with the goal of forming Hungary into a communist satellite state of the Soviet Union. The Soviet leadership selected Mátyás Rákosi to helm the Stalinization of the country; his government's policies of militarization, industrialization, collectivization, and war compensation led to a severe decline in living standards. In imitation of Stalin's KGB, the Rákosi government established a secret political police, the ÁVH, to enforce the new regime. The purges that followed saw approximately 350,000 officials and intellectuals were imprisoned or executed from 1948 to 1956.[77] Many freethinkers and democrats were secretly arrested and taken to inland or foreign concentration camps without any judicial sentence. According to some estimates some 600,000 Hungarians were deported to Soviet labor camps, and at least 200,000 died in captivity.[78]

After Stalin's death in 1953, the Soviet Union pursued a program of destalinization that was inimical to Rákosi, leading to the latter's deposition from the premiership. The following political cooling saw the ascent of Imre Nagy to the premiership and the growing interest of students and intellectuals in political life. Nagy promised market liberalization and political openness, while Rákosi opposed both vigorously. Rákosi eventually managed to discredit Nagy and replace him with the more hard-line Ernő Gerő. Hungary joined the Warsaw Pact in May 1955 as societal dissatisfaction with the regime swelled. Following Soviet soldiers and secret police firing on peaceful demonstrations and rallies throughout the country on 23 October 1956, protesters took the streets in Budapest, inciting the 1956 Revolution. In an effort to quell the chaos, Nagy resumed the premiership, promised free elections, and pulled Hungary from the Warsaw Pact.

Nonetheless the violence continued as revolutionary militias sprung up against the Soviet Army and the ÁVH; the roughly 3,000-strong resistance fought Soviet tanks using Molotov cocktails and machine pistols. Though the preponderance of the Soviets was immense, they suffered heavy losses, and by 30 October, most Soviet troops had withdrawn from Budapest to garrison the Hungarian countryside. For a time, the Soviet leadership was unsure how to respond to developments in Hungary, but soon decided to intervene to prevent Hungary from breaking away from the Soviet bloc. On November 4 reinforcements of more than 150,000 troops and 2,500 tanks entered the country from Soviet Union.[79] Nearly 20,000 Hungarians were killed resisting the intervention while an additional 21,600 were imprisoned afterwards for political reasons with 13,000 interned and 230 brought to trial and executed. Nagy was captured, only to be executed later in 1958. Because borders had been briefly open, nearly a quarter of a million people fled the country by the time the revolution was suppressed.[80]

Kádár era 1956–1988[edit]

See also: Economic interventionism

A mixed economy is a largely market-based economy consisting of both private and public ownership of the means of production and economic interventionism through macroeconomic policies intended to correct market failures, reduce unemployment and keep inflation low. The degree of intervention in markets varies among different countries. Some mixed economies, such as France under dirigisme, also featured a degree of indirect economic planning over a largely capitalist-based economy.

Most capitalist economies are defined as "mixed economies" to some degree.[citation needed]

Other[edit]

Other variants of capitalism include:

Anarcho-capitalism

Community capitalism

Crony capitalism

Finance capitalism

Financial capitalism

Late capitalism

Neo-capitalism

Post-capitalism

Technocapitalism

Welfare capitalism

Etymology and early usage[edit]

Other terms sometimes used for capitalism:

Capitalist mode of production

Economic liberalism [48]

Free-enterprise economy [9][49]

Free market[49][50]

Laissez-faire economy [51]

Market economy [52]

Market liberalism [53][54]

Self-regulating market [49]

Profits system[55]

The term capitalist as referring to an owner of capital (rather than its meaning of someone adherent to the economic system) shows earlier recorded use than the term capitalism, dating back to the mid-17th century. Capitalist is derived from capital, which evolved from capitale, a late Latin word based on caput, meaning "head" — also the origin of chattel and cattle in the sense of movable property (only much later to refer only to livestock). Capitale emerged in the 12th to 13th centuries in the sense of referring to funds, stock of merchandise, sum of money, or money carrying interest.[56][57][58] By 1283 it was used in the sense of the capital assets of a trading firm. It was frequently interchanged with a number of other words — wealth, money, funds, goods, assets, property, and so on.[56]

The Hollandische Mercurius uses capitalists in 1633 and 1654 to refer to owners of capital.[56] In French, Étienne Clavier referred to capitalistes in 1788,[59] six years before its first recorded English usage by Arthur Young in his work Travels in France (1792).[58][60] David Ricardo, in his Principles of Political Economy and Taxation (1817), referred to "the capitalist" many times.[61] Samuel Taylor Coleridge, an English poet, used capitalist in his work Table Talk (1823).[62] Pierre-Joseph Proudhon used the term capitalist in his first work, What is Property? (1840) to refer to the owners of capital. Benjamin Disraeli used the term capitalist in his 1845 work Sybil.[58] Karl Marx and Friedrich Engels used the term capitalist (Kapitalist) in The Communist Manifesto (1848) to refer to a private owner of capital.

According to the Oxford English Dictionary (OED), the term capitalism was first used by novelist William Makepeace Thackeray in 1854 in The Newcomes, where he meant "having ownership of capital".[58] Also according to the OED, Carl Adolph Douai, a German-American socialist and abolitionist, used the term private capitalism in 1863.

The initial usage of the term capitalism in its modern sense has been attributed to Louis Blanc in 1850 and Pierre-Joseph Proudhon in 1861.[63] Karl Marx and Friedrich Engels referred to the capitalistic system (kapitalistisches System)[64][65] and to the capitalist mode of production (kapitalistische Produktionsform) in Das Kapital (1867).[66] The use of the word "capitalism" in reference to an economic system appears twice in Volume I of Das Kapital, p. 124 (German edition), and in Theories of Surplus Value, tome II, p. 493 (German edition). Marx did not extensively use the form capitalism, but instead those of capitalist and capitalist mode of production, which appear more than 2600 times in the trilogy Das Kapital.

Marx's notion of the capitalist mode of production is characterised as a system of primarily private ownership of the means of production in a mainly market economy, with a legal framework on commerce and a physical infrastructure provided by the state. He believed that no legal framework was available to protect the laborers, and so exploitation by the companies was rife.[67][page needed] Engels made more frequent use of the term capitalism; volumes II and III of Das Kapital, both edited by Engels after Marx's death, contain the word "capitalism" four and three times, respectively. The three combined volumes of Das Kapital (1867, 1885, 1894) contain the word capitalist more than 2,600 times.

An 1877 work entitled Better Times by Hugh Gabutt and an 1884 article in the Pall Mall Gazette also used the term capitalism.[58] A later use of the term capitalism to describe the production system was by the German economist Werner Sombart, in his 1902 book The Jews and Modern Capitalism (Die Juden und das Wirtschaftsleben). Sombart's close friend and colleague, Max Weber, also used capitalism in his 1904 book The Protestant Ethic and the Spirit of Capitalism (Die protestantische Ethik und der Geist des Kapitalismus).

Perspectives[edit]

Classical political economy[edit]

Main articles: Classical economics and Classical liberalism

Adam Smith

The classical school of economic thought emerged in Britain in the late 18th century. The classical political economists Adam Smith, David Ricardo, Jean-Baptiste Say, and John Stuart Mill published analyses of the production, distribution and exchange of goods in a market that have since formed the basis of study for most contemporary economists.

In France, 'Physiocrats' like François Quesnay promoted free trade based on a conception that wealth originated from land. Quesnay's Tableau Économique (1759), described the economy analytically and laid the foundation of the Physiocrats' economic theory, followed by Anne Robert Jacques Turgot who opposed tariffs and customs duties and advocated free trade. Richard Cantillon defined long-run equilibrium as the balance of flows of income, and argued that the supply and demand mechanism around land influenced short-term prices.

Smith's attack on mercantilism and his reasoning for "the system of natural liberty" in The Wealth of Nations (1776) are usually taken as the beginning of classical political economy. Smith devised a set of concepts that remain strongly associated with capitalism today. His theories regarding the "invisible hand" are commonly interpreted to mean individual pursuit of self-interest unintentionally producing collective good for society. It was necessary for Smith to be so forceful in his argument in favor of free markets because he had to overcome the popular mercantilist sentiment of the time period.[68]

He criticized monopolies, tariffs, duties, and other state enforced restrictions of his time and believed that the market is the most fair and efficient arbitrator of resources. This view was shared by David Ricardo, second most important of the classical political economists and one of the most influential economists of modern times.[69]

In On the Principles of Political Economy and Taxation (1817), he developed the law of comparative advantage, which explains why it is profitable for two parties to trade, even if one of the trading partners is more efficient in every type of economic production. This principle supports the economic case for free trade. Ricardo was a supporter of Say's Law and held the view that full employment is the normal equilibrium for a competitive economy.[70] He also argued that inflation is closely related to changes in quantity of money and credit and was a proponent of the law of diminishing returns, which states that each additional unit of input yields less and less additional output.[71]

The values of classical political economy are strongly associated with the classical liberal doctrine of minimal government intervention in the economy, though it does not necessarily oppose the state's provision of a few basic public goods.[72] Classical liberal thought has generally assumed a clear division between the economy and other realms of social activity, such as the state.[73]

While economic liberalism favors markets unfettered by the government, it maintains that the state has a legitimate role in providing public goods.[74] For instance, Adam Smith argued that the state has a role in providing roads, canals, schools and bridges that cannot be efficiently implemented by private entities. However, he preferred that these goods should be paid proportionally to their consumption (e.g. putting a toll). In addition, he advocated retaliatory tariffs to bring about free trade, and copyrights and patents to encourage innovation.[74]

Marxist political economy[edit]

Main article: Marxian economics

Karl Marx considered capitalism to be a historically specific mode of production (the way in which the productive property is owned and controlled, combined with the corresponding social relations between individuals based on their connection with the process of production) in which capitalism has become the dominant mode of production.[24]

The capitalist stage of development or "bourgeois society," for Marx, represented the most advanced form of social organization to date, but he also thought that the working classes would come to power in a worldwide socialist or communist transformation of human society as the end of the series of first aristocratic, then capitalist, and finally working class rule was reached.[75][76]

Karl Marx

Following Adam Smith, Marx distinguished the use value of commodities from their exchange value in the market. Capital, according to Marx, is created with the purchase of commodities for the purpose of creating new commodities with an exchange value higher than the sum of the original purchases. For Marx, the use of labor power had itself become a commodity under capitalism; the exchange value of labor power, as reflected in the wage, is less than the value it produces for the capitalist.

This difference in values, he argues, constitutes surplus value, which the capitalists extract and accumulate. In his book Capital, Marx argues that the capitalist mode of production is distinguished by how the owners of capital extract this surplus from workers—all prior class societies had extracted surplus labor, but capitalism was new in doing so via the sale-value of produced commodities.[77] He argues that a core requirement of a capitalist society is that a large portion of the population must not possess sources of self-sustenance that would allow them to be independent, and must instead be compelled, to survive, to sell their labor for a living wage.[78][79][80]

In conjunction with his criticism of capitalism was Marx's belief that the working class, due to its relationship to the means of production and numerical superiority under capitalism, would be the driving force behind the socialist revolution.[81] This argument is intertwined with Marx's version of the labor theory of value arguing that labor is the source of all value, and thus of profit.

Vladimir Lenin, in Imperialism, the Highest Stage of Capitalism (1916), further developed Marxist theory and argued that capitalism necessarily led to monopoly capitalism and the export of capital—which he also called "imperialism"—to find new markets and resources, representing the last and highest stage of capitalism.[82] Some 20th-century Marxian economists consider capitalism to be a social formation where capitalist class processes dominate, but are not exclusive.[83]

Capitalist class processes, to these thinkers, are simply those in which surplus labor takes the form of surplus value, usable as capital; other tendencies for utilization of labor nonetheless exist simultaneously in existing societies where capitalist processes are predominant. However, other late Marxian thinkers argue that a social formation as a whole may be classed as capitalist if capitalism is the mode by which a surplus is extracted, even if this surplus is not produced by capitalist activity, as when an absolute majority of the population is engaged in non-capitalist economic activity.[84]

In Limits to Capital (1982), David Harvey outlines an overdetermined, "spatially restless" capitalism coupled with the spatiality of crisis formation and resolution.[85] Harvey used Marx's theory of crisis to aid his argument that capitalism must have its "fixes" but that we cannot predetermine what fixes will be implemented, nor in what form they will be. His work on contractions of capital accumulation and international movements of capitalist modes of production and money flows has been influential.[86] According to Harvey, capitalism creates the conditions for volatile and geographically uneven development [87]

Weberian political sociology[edit]

Max Weber

In social science, the understanding of the defining characteristics of capitalism has been strongly influenced by the German sociologist, Max Weber. Weber considered market exchange, a voluntary supply of labor and a planned division of labor within the enterprises as defining features of capitalism. Capitalist enterprises, in contrast to their counterparts in prior modes of economic activity, were directed toward the rationalization of production, maximizing efficiency and productivity – a tendency embedded in a sociological process of enveloping rationalization that formed modern legal bureaucracies in both public and private spheres.[88] According to Weber, workers in pre-capitalist economies understood work in terms of a personal relationship between master and journeyman in a guild, or between lord and peasant in a manor.[89]

For these developments of capitalism to emerge, Weber argued, it was necessary the development of a "capitalist spirit"; that is, ideas and habits that favor a rational pursuit of economic gain. These ideas, in order to propagate a certain manner of life and come to dominate others, "had to originate somewhere ... as a way of life common to whole groups of men".[88] In his book The Protestant Ethic and the Spirit of Capitalism (1904–1905), Weber sought to trace how a particular form of religious spirit, infused into traditional modes of economic activity, was a condition of possibility of modern western capitalism. For Weber, the 'spirit of capitalism' was, in general, that of ascetic Protestantism; this ideology was able to motivate extreme rationalization of daily life, a propensity to accumulate capital by a religious ethic to advance economically through hard and diligent work, and thus also the propensity to reinvest capital. This was sufficient, then, to create "self-mediating capital" as conceived by Marx.

This is pictured in the Protestant understanding of beruf [90] – whose meaning encompass at the same time profession, vocation, and calling – as exemplified in Proverbs 22:29, "Seest thou a man diligent in his calling? He shall stand before kings". In the Protestant Ethic, Weber describes the developments of this idea of calling from its religious roots, through the understanding of someone's economic success as a sign of his salvation, until the conception that moneymaking is, within the modern economic order, the result and the expression of diligence in one's calling.

Finally, as the social mores critical for its development became no longer necessary for its maintenance, modern western capitalism came to represent the order "now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt" (p. 123).[91] This is further seen in his criticism of "specialists without spirit, hedonists without a heart" that were developing, in his opinion, with the fading of the original Puritan "spirit" associated with capitalism.

Institutional economics[edit]

Main article: Institutional economics

Thorstein Veblen

Institutional economics, once the main school of economic thought in the United States, holds that capitalism cannot be separated from the political and social system within which it is embedded. It emphasizes the legal foundations of capitalism (see John R. Commons) and the evolutionary, habituated, and volitional processes by which institutions are erected and then changed.

One key figure in institutional economics was Thorstein Veblen who in his book, The Theory of the Leisure Class (1899), analyzed the motivations of wealthy people in capitalism who conspicuously consumed their riches as a way of demonstrating success. The concept of conspicuous consumption was in direct contradiction to the neoclassical view that capitalism was efficient.

In The Theory of Business Enterprise (1904) Veblen distinguished the motivations of industrial production for people to use things from business motivations that used, or misused, industrial infrastructure for profit, arguing that the former often is hindered because businesses pursue the latter. Output and technological advance are restricted by business practices and the creation of monopolies. Businesses protect their existing capital investments and employ excessive credit, leading to depressions and increasing military expenditure and war through business control of political power.

German Historical School and Austrian School[edit]

Main articles: Historical school of economics and Austrian School

From the perspective of the German Historical School, capitalism is primarily identified in terms of the organization of production for markets. Although this perspective shares similar theoretical roots with that of Weber, its emphasis on markets and money lends it different focus.[24] For followers of the German Historical School, the key shift from traditional modes of economic activity to capitalism involved the shift from medieval restrictions on credit and money to the modern monetary economy combined with an emphasis on the profit motive.

Ludwig von Mises

In the late 19th century, the German Historical School of economics diverged, with the emerging Austrian School of economics, led at the time by Carl Menger. Later generations of followers of the Austrian School continued to be influential in Western economic thought in the early part of the 20th century.

Austrian-born economist Joseph Schumpeter, sometimes associated with the School,[92] emphasized the "creative destruction" of capitalism—the fact that market economies undergo constant change. Schumpeter argued that at any moment in time there are rising industries and declining industries. Schumpeter, and many contemporary economists influenced by his work, argue that resources should flow from the declining to the expanding industries for an economy to grow, but they recognized that sometimes resources are slow to withdraw from the declining industries because of various forms of institutional resistance to change.

The Austrian economists Ludwig von Mises and Friedrich Hayek were among the leading defenders of market economy against 20th century proponents of socialist planned economies. Mises and Hayek argued that only market capitalism could manage a complex, modern economy.

Since a modern economy produces such a large array of distinct goods and services, and consists of such a large array of consumers and enterprises, argued Mises and Hayek, the information problems facing any other form of economic organization other than market capitalism would exceed its capacity to handle information. Thinkers within Supply-side economics built on the work of the Austrian School, and particularly emphasize Say's Law: "supply creates its own demand." Capitalism, to this school, is defined by lack of state restraint on the decisions of producers.

Keynesian economics[edit]

Main article: Keynesian economics

John Maynard Keynes

In his 1937 The General Theory of Employment, Interest and Money, the British economist John Maynard Keynes argued that capitalism suffered a basic problem in its ability to recover from periods of slowdowns in investment. Keynes argued that a capitalist economy could remain in an indefinite equilibrium despite high unemployment.

Essentially rejecting Say's law, he argued that some people may have a liquidity preference that would see them rather hold money than buy new goods or services, which therefore raised the prospect that the Great Depression would not end without what he termed in the General Theory "a somewhat comprehensive socialization of investment."

Keynesian economics challenged the notion that laissez-faire capitalist economics could operate well on their own, without state intervention used to promote aggregate demand, fighting high unemployment and deflation of the sort seen during the 1930s. He and his followers recommended "pump-priming" the economy to avoid recession: cutting taxes, increasing government borrowing, and spending during an economic down-turn. This was to be accompanied by trying to control wages nationally partly through the use of inflation to cut real wages and to deter people from holding money.[93]

John Maynard Keynes tried to provide solutions to many of Marx's problems without completely abandoning the classical understanding of capitalism. His work attempted to show that regulation can be effective, and that economic stabilizers can rein in the aggressive expansions and recessions that Marx disliked. These changes sought to create more stability in the business cycle, and reduce the abuses of laborers. Keynesian economists argue that Keynesian policies were one of the primary reasons capitalism was able to recover following the Great Depression.[94] The premises of Keynes's work have, however, since been challenged by neoclassical and supply-side economics and the Austrian School.

Another challenge to Keynesian thinking came from his colleague Piero Sraffa, and subsequently from the Neo-Ricardian school that followed Sraffa. In Sraffa's highly technical analysis, capitalism is defined by an entire system of social relations among both producers and consumers, but with a primary emphasis on the demands of production. According to Sraffa, the tendency of capital to seek its highest rate of profit causes a dynamic instability in social and economic relations.

Neoclassical economics and the Chicago School[edit]

Main article: Neoclassical economics

Today, the majority of academic research on capitalism in the English-speaking world draws on neoclassical economic thought. It favors extensive market coordination and relatively neutral patterns of governmental market regulation aimed at maintaining property rights; deregulated labor markets; corporate governance dominated by financial owners of firms; and financial systems depending chiefly on capital market-based financing rather than state financing.

Milton Friedman

Milton Friedman took many of the basic principles set forth by Adam Smith and the classical economists and gave them a new twist. One example of this is his article in the September 1970 issue of The New York Times Magazine, where he argues that the social responsibility of business is "to use its resources and engage in activities designed to increase its profits ... (through) open and free competition without deception or fraud." This is similar to Smith's argument that self-interest in turn benefits the whole of society.[95] Work like this helped lay the foundations for the coming marketization (or privatization) of state enterprises and the supply-side economics of Ronald Reagan and Margaret Thatcher.

The Chicago School of economics is best known for its free market advocacy and monetarist ideas. According to Friedman and other monetarists, market economies are inherently stable if left to themselves and depressions result only from government intervention.[96]

Friedman, for example, argued that the Great Depression was result of a contraction of the money supply, controlled by the Federal Reserve, and not by the lack of investment as John Maynard Keynes had argued. Ben Bernanke, former Chairman of the Federal Reserve, is among the economists today generally accepting Friedman's analysis of the causes of the Great Depression.[97]

Neoclassical economists, who by 1998 constituted a majority of academic economists,[98] subscribe to a subjective theory of value, according to which the value derived from consumption of a good, rather than being objective and static, varies widely from person to person and for the same person at different times. Adherence to a subjective theory of value compels Neoclassical thinkers to reject the labor theory of value upheld by Adam Smith and other classical liberal thinkers, which was grounded upon a conception of objective value.

Neoclassical models typically adopt the assumptions of Marginalism, according to which economic value results from marginal utility and marginal cost (the marginal concepts). Marginalist theory implies that capitalists earn profits not by exploiting workers, but by forgoing current consumption, taking risks, and organizing production.

Neoclassical economic theory[edit]

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Neoclassical economics explain capitalism as made up of individuals, enterprises, markets and government. According to their theories, individuals engage in a capitalist economy as consumers, laborers, and investors. As laborers, individuals may decide which jobs to prepare for, and in which markets to look for work. As investors they decide how much of their income to save and how to invest their savings. These savings, which become investments, provide much of the money that businesses need to grow.

Business firms decide what to produce and where this production should occur. They also purchase inputs (materials, labor, and capital). Businesses try to influence consumer purchase decisions through marketing and advertisement, as well as the creation of new and improved products. Driving the capitalist economy is the search for profits (revenues minus expenses). This is known as the profit motive, and it helps ensure that companies produce the goods and services that consumers desire and are able to buy. To be profitable, firms must sell a quantity of their product at a certain price to yield a profit. A business may lose money if sales fall too low or if its costs become too high. The profit motive encourages firms to operate more efficiently. By using less materials, labor or capital, a firm can cut its production costs, which can lead to increased profits.

An economy grows when the total value of goods and services produced rises. This growth requires investment in infrastructure, capital and other resources necessary in production. In a capitalist system, businesses decide when and how much they want to invest.

Income in a capitalist economy depends primarily on what skills are in demand and what skills are being supplied. Skills that are in scarce supply are worth more in the market and can attract higher incomes. Competition among workers for jobs — and among employers for skilled workers — help determine wage rates. Firms need to pay high enough wages to attract the appropriate workers; when jobs are scarce, workers may accept lower wages than they would when jobs are plentiful. Trade union and governments influence wages in capitalist systems. Unions act to represent their members in negotiations with employers over such things as wage rates and acceptable working conditions.

The market[edit]

The price (P) of a product is determined by a balance between production at each price (supply, S) and the desires of those with purchasing power at each price (demand, D). This results in a market equilibrium, with a given quantity (Q) sold of the product. A rise in demand would result in an increase in price and an increase in output.

Supply is the amount of a good or service produced by a firm and which is available for sale. Demand is the amount that people are willing to buy at a specific price. Prices tend to rise when demand exceeds supply, and fall when supply exceeds demand. In theory, the market is able to coordinate itself when a new equilibrium price and quantity is reached.

Competition arises when more than one producer is trying to sell the same or similar products to the same buyers. In capitalist theory, competition leads to innovation and more affordable prices. Without competition, a monopoly or cartel may develop. A monopoly occurs when a firm supplies the total output in the market; the firm can therefore limit output and raise prices because it has no fear of competition. A cartel is a group of firms that act together in a monopolistic manner to control output and raise prices.

Role of government[edit]

Further information: Competition regulator, Consumer protection and Competition law

In a capitalist system, the government does not prohibit private property or prevent individuals from working where they please. The government does not prevent firms from determining what wages they will pay and what prices they will charge for their products. Many countries, however, have minimum wage laws and minimum safety standards.

Under some versions of capitalism, the government carries out a number of economic functions, such as issuing money, supervising public utilities and enforcing private contracts. Many countries have competition laws that prohibit monopolies and cartels from forming. Despite anti-monopoly laws, large corporations can form near-monopolies in some industries. Such firms can temporarily drop prices and accept losses to prevent competition from entering the market, and then raise them again once the threat of entry is reduced. In many countries, public utilities (e.g. electricity, heating fuel, communications) are able to operate as a monopoly under government regulation, due to high economies of scale.

Government agencies regulate the standards of service in many industries, such as airlines and broadcasting, as well as financing a wide range of programs. In addition, the government regulates the flow of capital and uses financial tools such as the interest rate to control factors such as inflation and unemployment.[99]

Democracy, the state, and legal frameworks[edit]

Main article: History of capitalist theory

Private property[edit]

The relationship between the state, its formal mechanisms, and capitalist societies has been debated in many fields of social and political theory, with active discussion since the 19th century. Hernando de Soto is a contemporary economist who has argued that an important characteristic of capitalism is the functioning state protection of property rights in a formal property system where ownership and transactions are clearly recorded.[100]

According to de Soto, this is the process by which physical assets are transformed into capital, which in turn may be used in many more ways and much more efficiently in the market economy. A number of Marxian economists have argued that the Enclosure Acts in England, and similar legislation elsewhere, were an integral part of capitalist primitive accumulation and that specific legal frameworks of private land ownership have been integral to the development of capitalism.[101][102]

Institutions[edit]

New institutional economics, a field pioneered by Douglass North, stresses the need of a legal framework in order for capitalism to function optimally, and focuses on the relationship between the historical development of capitalism and the creation and maintenance of political and economic institutions.[103] In new institutional economics and other fields focusing on public policy, economists seek to judge when and whether governmental intervention (such as taxes, welfare, and government regulation) can result in potential gains in efficiency. According to Gregory Mankiw, a New Keynesian economist, governmental intervention can improve on market outcomes under conditions of "market failure", or situations in which the market on its own does not allocate resources efficiently.[104]

Adam Smith

Market failure occurs when an externality is present and a market will either under-produce a product with a positive externalization or overproduce a product that generates a negative externalization. Air pollution, for instance, is a negative externalization that cannot be incorporated into markets as the world's air is not owned and then sold for use to polluters. So, too much pollution could be emitted and people not involved in the production pay the cost of the pollution instead of the firm that initially emitted the air pollution. Critics of market failure theory, like Ronald Coase, Harold Demsetz, and James M. Buchanan argue that government programs and policies also fall short of absolute perfection. Market failures are often small, and government failures are sometimes large. It is therefore the case that imperfect markets are often better than imperfect governmental alternatives. While all nations currently have some kind of market regulations, the desirable degree of regulation is disputed.

Democracy[edit]

The relationship between democracy and capitalism is a contentious area in theory and popular political movements. The extension of universal adult male suffrage in 19th century Britain occurred along with the development of industrial capitalism, and democracy became widespread at the same time as capitalism, leading many theorists to posit a causal relationship between them, or that each affects the other. However, in the 20th century, according to some authors, capitalism also accompanied a variety of political formations quite distinct from liberal democracies, including fascist regimes, absolute monarchies, and single-party states.[24]

While some thinkers argue that capitalist development more-or-less inevitably eventually leads to the emergence of democracy, others dispute this claim. Research on the democratic peace theory indicates that capitalist democracies rarely make war with one another[105] and have little internal violence. However, critics of the democratic peace theory note that democratic capitalist states may fight infrequently and or never with other democratic capitalist states because of political similarity or stability rather than because they are democratic or capitalist.

Some commentators argue that though economic growth under capitalism has led to democratization in the past, it may not do so in the future, as authoritarian regimes have been able to manage economic growth without making concessions to greater political freedom.[106][107] States that have highly capitalistic economic systems have thrived under authoritarian or oppressive political systems. Singapore, which maintains a highly open market economy and attracts lots of foreign investment, does not protect civil liberties such as freedom of speech and expression. The private (capitalist) sector in the People's Republic of China has grown exponentially and thrived since its inception, despite having an authoritarian government. Augusto Pinochet's rule in Chile led to economic growth and high levels of inequality[108] by using authoritarian means to create a safe environment for investment and capitalism. Thomas Piketty of the Paris School of Economics asserts that rising economic inequality is a natural consequence of capitalist activity, and is destabilizing to democratic societies and undermines the ideals of social justice upon which they are built.[109]

In response to criticism of the system, some proponents of capitalism have argued that its advantages are supported by empirical research. Indices of Economic Freedom show a correlation between nations with more economic freedom (as defined by the indices) and higher scores on variables such as income and life expectancy, including the poor, in these nations.

Advocacy for capitalism[edit]

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Economic growth[edit]

World's GDP per capita shows exponential growth since the beginning of the Industrial Revolution.[110]

Capitalism and the economy of the People's Republic of China

Many theorists and policymakers in predominantly capitalist nations have emphasized capitalism's ability to promote economic growth, as measured by Gross Domestic Product (GDP), capacity utilization or standard of living. This argument was central, for example, to Adam Smith's advocacy of letting a free market control production and price, and allocate resources. Many theorists have noted that this increase in global GDP over time coincides with the emergence of the modern world capitalist system.[111][112]

Between 1000 and 1820, the world economy grew sixfold, a faster rate than the population growth, so each individual enjoyed, on the average, a 50% increase in wealth. Between 1820 and 1998, world economy grew 50-fold, a much faster rate than the population growth, so each individual enjoyed, on the average, a 9-fold increase in wealth.[113] In most capitalist economic regions such as Europe, the United States, Canada, Australia and New Zealand, the economy grew 19-fold per person, even though these countries already had a higher starting level, and in Japan, which was poor in 1820, the increase per person was 31-fold. In the third world there was an increase, but only 5-fold per person.[113]

Proponents argue that increasing GDP (per capita) is empirically shown to bring about improved standards of living, such as better availability of food, housing, clothing, and health care.[114] The decrease in the number of hours worked per week and the decreased participation of children and the elderly in the workforce have been attributed to capitalism.[115][116]

Proponents also believe that a capitalist economy offers far more opportunities for individuals to raise their income through new professions or business ventures than do other economic forms. To their thinking, this potential is much greater than in either traditional feudal or tribal societies or in socialist societies.

Political freedom[edit]

In his book The Road to Serfdom, Freidrich Hayek asserts that the economic freedom of capitalism is a requisite of political freedom. He argues that the market mechanism is the only way of deciding what to produce and how to distribute the items without using coercion. Milton Friedman, Andrew Brennan and Ronald Reagan also promoted this view. Friedman claimed that centralized economic operations are always accompanied by political repression. In his view, transactions in a market economy are voluntary, and that the wide diversity that voluntary activity permits is a fundamental threat to repressive political leaders and greatly diminish their power to coerce. Some of Friedman's views were shared by John Maynard Keynes, who believed that capitalism is vital for freedom to survive and thrive.[117][118]

The novelist and philosopher Ayn Rand made positive moral defences of laissez-faire capitalism, most notably in her 1957 novel Atlas Shrugged, and in her 1966 collection of essays Capitalism: The Unknown Ideal. She argued that capitalism should be supported on moral grounds, not just on the basis of practical benefits.[119][120] She has significantly influenced conservative and libertarian supporters of capitalism, especially in the American Tea Party movement.[121]

Self-organization[edit]

Austrian School economists have argued that capitalism can organize itself into a complex system without an external guidance or central planning mechanism. Friedrich Hayek considered the phenomenon of self-organization as underpinning capitalism. Prices serve as a signal as to the urgent and unfilled wants of people, and the opportunity to earn profits if successful, or absorb losses if resources are used poorly or left idle, gives entrepreneurs incentive to use their knowledge and resources to satisfy those wants. Thus the activities of millions of people, each seeking his own interest, are coordinated.[122]

Criticism[edit]

Main article: Criticism of capitalism

An Industrial Workers of the World poster (1911)

Critics of capitalism associate the economic system with social inequality; unfair distribution of wealth and power; a tendency toward market monopoly or oligopoly (and government by oligarchy); imperialism; counter-revolutionary wars; various forms of economic and cultural exploitation; materialism; repression of workers and trade unionists; social alienation; economic inequality; unemployment; and economic instability. Notable critics of capitalism have included: socialists, anarchists, communists, national socialists, social democrats, environmentalists, technocrats, some types of conservatives, Luddites, Narodniks, Shakers, and some types of nationalists.

Many socialists consider capitalism to be irrational, in that production and the direction of the economy are unplanned, creating many inconsistencies and internal contradictions.[123] Capitalism and individual property rights have been associated with the tragedy of the anticommons. Marxian economist Richard D. Wolff postulates that capitalist economies prioritize profits and capital accumulation over the social needs of communities, and capitalist enterprises rarely include the workers in the basic decisions of the enterprise.[124] Following the banking crisis of 2007, Alan Greenspan told the United States Congress on October 23, 2008, "The whole intellectual edifice collapsed. I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders. ... I was shocked."[125]

Some labor historians and scholars have argued that unfree labor — by slaves, indentured servants, prisoners or other coerced persons — is compatible with capitalist relations. Tom Brass argued that unfree labor is acceptable to capital.[126][127] Historian Greg Grandin argues that capitalism has its origins in slavery: "when historians talk about the Atlantic market revolution, they are talking about capitalism. And when they are talking about capitalism, they are talking about slavery."[128]

According to Immanuel Wallerstein, institutional racism has been "one of the most significant pillars" of the capitalist system and serves as "the ideological justification for the hierarchization of the work-force and its highly unequal distributions of reward."[129]

Many aspects of capitalism have come under attack from the anti-globalization movement, which is primarily opposed to corporate capitalism. Environmentalists have argued that capitalism requires continual economic growth, and that it will inevitably deplete the finite natural resources of the Earth.[18] Such critics argue that while this neoliberalism or contemporary capitalism has indeed increased global trade, it has also destroyed traditional ways of life, exacerbated inequality and increased global poverty - with more living today in abject poverty than before neoliberalism, and that environmental indicators indicate massive environmental degradation since the late 1970s.[130][131]

Many religions have criticized or opposed specific elements of capitalism. Traditional Judaism, Christianity, and Islam forbid lending money at interest,[132][133] although alternative methods of banking have been developed. Some Christians have criticized capitalism for its materialist aspects and its inability to account for the wellbeing of all people.[134] Many of Jesus' parables deal with economic concerns: farming, shepherding, being in debt, doing hard labor, being excluded from banquets and the houses of the rich, and have implications for wealth and power distribution.[135][136] In his 84-page apostolic exhortation Evangelii Gaudium, Pope Francis described unfettered capitalism as "a new tyranny" and called upon world leaders to fight rising poverty and inequality:[137]

“ Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.[138] ”

Communism

From Wikipedia, the free encyclopedia

For the Western term for a state that is governed by a self-professed Communist party, see Communist state. For the ideology upheld in multiple Communist states, see Marxism–Leninism.

Communism (from Latin communis – common, universal)[1][2] is a socioeconomic system structured upon common ownership of the means of production and characterized by the absence of social classes, money,[3][4] and the state; as well as a social, political and economic ideology and movement that aims to establish this social order. The movement to develop communism, in its Marxist–Leninist interpretations, significantly influenced the history of the 20th century, which saw intense rivalry between the states which claimed to follow this ideology and their enemies.

Communism was first developed into a scientific theory by German philosopher and social scientist Karl Marx, and the collective understanding of this scientific approach is today commonly referred to as Marxism (even though there are communist tendencies which are not Marxist). According to Marxism, capitalism is a historically necessary stage of society, which has led to the concentration of social classes into two major groups: proletariat - who must work to survive, and who make up a majority of society - and bourgeoisie - a minority who derive profit from private ownership of the means of production. The political, social, and economical conflict between both groups (class struggle), each attempting to push their interests to their logical extreme, will lead into the capture of political power by the proletariat. Public ownership and management of the means of production by society will be established - this is known as socialism. As the development of the productive forces end scarcity, goods and services are made available on the basis of free access. This results in the disappearance of social classes and money.[5] Eventually, as the class struggle ends, the state ceases to be relevant and fades from recognition, as the social institutions for the collective self-management of the human community continue without it.[6] The result is communism: a stateless, classless and moneyless society, structured upon common ownership of the means of production.

The October Revolution, led by Lenin and Trotsky, set the conditions for the rise to power of a Marxist party in Russia, eventually resulting in the creation of the Soviet Union, with the aim of developing socialism and eventually communism. Lenin never claimed that the Soviet Union had achieved socialism; in fact, Lenin openly admitted that state capitalism was in place, but also stated that socialism was eventually going to be developed.[7][8] Lenin, in his last days, asked for Stalin to be removed from his position.[9]

Lenin's death led to a struggle for power between opposed factions, eventually resulting in the victory of Stalin, whose rule saw the elimination of any opposition. Stalin created Marxism-Leninism,[10] an ideology which is not the mere union of both, but rather is a term created to describe the political ideology Stalin implemented in the CPSU and Comintern, which also sets deviations from both Marxism and Leninism (such as the acceptance of "socialism in one country"[11][12][13]). There is no definite agreement between historians of about whether Stalin actually followed the principles of Marx and Lenin.[14] Marxism-Leninism is based on the creation of a single-party state[15] which has full control of the economy. According to Marxism-Leninism, the Soviet Union had achieved socialism and was on the way to communism; other communist tendencies disagree, some (of which some are Marxist, some others not) claiming that it had in fact established state capitalism,[16] and that socialism was not being developed but rather that its development was halted since the come to power of Stalin. To these tendencies, Marxism-Leninism is neither Marxism, Leninism, nor the union of both; but rather an artificial term created to justify Stalin's ideological distortion,[13] forced upon the CPSU and Comintern. In the Soviet Union, the struggle against Marxism-Leninism was led by the Left Opposition (with Trotsky as de facto leader). Trotskyism describes itself as a Marxist and Leninist tendency.

Marxism-Leninism was made into the official ideology of the Comintern, and exported to other countries. This body of thought formed the basis for the most clearly visible communist movement in the 20th century and, as such, in the Western world, the term "communism" came to refer to social movements and states associated with the Comintern. However, these states did not develop communism, and the degree to which they had achieved socialism is debated.[17]

Etymology and terminology

In the schema of historical materialism and dialectical materialism (the application of Hegelian dialectic to historical materialism), communism is the idea of a free society with no division or alienation, where the people are free from oppression and scarcity. A communist society would have no governments or class divisions. In Marxist theory, the dictatorship of the proletariat is the intermediate system between capitalism and communism, when the government is in the process of changing the means of ownership from privatism to collective ownership.[18]

The hammer and sickle has its origin in the Russian Revolution, symbolizing the union of industrial workers with peasants. The red star is a symbol often used by the political left as well as communism.

In modern usage, the word "communism" is still often used to refer to the policies of past and present self-declared socialist governments typically comprising single-party states wherein the country's vanguard party is governing the state exclusively, operating centrally planned economies and a state ownership of the means of production. A significant sector of the modern communist movement alleges that these states never made an attempt to transition to a communist society, while others even argue that they never achieved a legitimate socialism, often arguing that they established instead state capitalism. Most of these governments claimed to base their ideology on Marxism-Leninism (though some of these states have been accused of revisionism), but they did not call the system they had set up "communism", nor did they even necessarily claim at all times that the ideology was the sole driving force behind their policies: Mao Zedong, for example, pursued New Democracy, and Vladimir Lenin in the Russian Civil War enacted war communism; later, the Vietnamese enacted doi moi, and the Chinese switched to socialism with Chinese characteristics. The governments labeled by other governments as "communist" generally claimed that they had set up a transitional socialist system. This system is sometimes referred to as state socialism or by other similar names.

"Higher-phase communism" is a term sometimes used to refer to the stage in history after socialism (or lower-phase communism), although just as many communists use simply the term "communism" to refer to that stage. The classless, stateless society that characterizes this communism is one in which decisions on what to produce and what policies to pursue are made by a free association of equal individuals. In such a higher-phase communism the interests of every member of society is given equal weight in the practical decision-making process in both the political and economic spheres of life.

History

Main article: History of communism

Early communism

Further information: Primitive communism, Religious communism and Utopian socialism

The origins of communism are debatable, and there are various historical groups, as well as theorists, whose beliefs have been subsequently described as communist. German philosopher Karl Marx saw primitive communism as the original, hunter-gatherer state of humankind from which it arose. For Marx, only after humanity was capable of producing surplus, did private property develop. The idea of a classless society first emerged in Ancient Greece.[19] Plato in his The Republic described it as a state where people shared all their property, wives, and children: "The private and individual is altogether banished from life and things which are by nature private, such as eyes and ears and hands, have become common, and in some way see and hear and act in common, and all men express praise and feel joy and sorrow on the same occasions."[19]

In the history of Western thought, certain elements of the idea of a society based on common ownership of property can be traced back to ancient times. Examples include the Spartacus slave revolt in Rome.[20] The 5th-century Mazdak movement in Persia (Iran) has been described as "communistic" for challenging the enormous privileges of the noble classes and the clergy, criticizing the institution of private property and for striving for an egalitarian society.[21]

At one time or another, various small communist communities existed, generally under the inspiration of Scripture.[22] In the medieval Christian church, for example, some monastic communities and religious orders shared their land and other property (see Religious and Christian communism).

Lenin

Communist thought has also been traced back to the work of 16th-century English writer Thomas More. In his treatise Utopia (1516), More portrayed a society based on common ownership of property, whose rulers administered it through the application of reason. In the 17th century, communist thought surfaced again in England, where a Puritan religious group known as the "Diggers" advocated the abolition of private ownership of land.[23] Eduard Bernstein, in his 1895 Cromwell and Communism[24] argued that several groupings in the English Civil War, especially the Diggers espoused clear communistic, agrarian ideals, and that Oliver Cromwell's attitude to these groups was at best ambivalent and often hostile.[25] Criticism of the idea of private property continued into the Age of Enlightenment of the 18th century, through such thinkers as Jean Jacques Rousseau in France. Later, following the upheaval of the French Revolution, communism emerged as a political doctrine.[26]

Various social reformers in the early 19th century founded communities based on common ownership. But unlike many previous communist communities, they replaced the religious emphasis with a rational and philanthropic basis.[27] Notable among them were Robert Owen, who founded New Harmony in Indiana (1825), and Charles Fourier, whose followers organized other settlements in the United States such as Brook Farm (1841–47).[27] Later in the 19th century, Karl Marx described these social reformers as "utopian socialists" to contrast them with his program of "scientific socialism" (a term coined by Friedrich Engels). Other writers described by Marx as "utopian socialists" included Saint-Simon.

In its modern form, communism grew out of the socialist movement of 19th-century Europe. As the Industrial Revolution advanced, socialist critics blamed capitalism for the misery of the proletariat—a new class of urban factory workers who labored under often-hazardous conditions. Foremost among these critics were Marx and his associate Friedrich Engels. In 1848, Marx and Engels offered a new definition of communism and popularized the term in their famous pamphlet The Communist Manifesto.[27]

Modern communism

Countries of the world now (red) or previously (orange) having nominally Marxist-Leninist governments.

The 1917 October Revolution in Russia was the first time any avowedly Communist Party, in this case the Bolshevik Party, seized state power. The assumption of state power by the Bolsheviks generated a great deal of practical and theoretical debate within the Marxist movement. Marx predicted that socialism and communism would be built upon foundations laid by the most advanced capitalist development. Russia, however, was one of the poorest countries in Europe with an enormous, largely illiterate peasantry and a minority of industrial workers. Marx had explicitly stated that Russia might be able to skip the stage of bourgeois rule.[28] Other socialists also believed that a Russian revolution could be the precursor of workers' revolutions in the West.

The moderate Mensheviks opposed Lenin's Bolshevik plan for socialist revolution before capitalism was more fully developed. The Bolsheviks' successful rise to power was based upon the slogans such as "Peace, bread, and land" which tapped the massive public desire for an end to Russian involvement in the First World War, the peasants' demand for land reform, and popular support for the Soviets.[29]

Vladimir Lenin after his return to Petrograd.

The Second International had dissolved in 1916 over national divisions, as the separate national parties that composed it did not maintain a unified front against the war, instead generally supporting their respective nation's role. Lenin thus created the Third International (Comintern) in 1919 and sent the Twenty-one Conditions, which included democratic centralism, to all European socialist parties willing to adhere. In France, for example, the majority of the French Section of the Workers' International (SFIO) party split in 1921 to form the French Section of the Communist International (SFIC). Henceforth, the term "Communism" was applied to the objective of the parties founded under the umbrella of the Comintern. Their program called for the uniting of workers of the world for revolution, which would be followed by the establishment of a dictatorship of the proletariat as well as the development of a socialist economy.

During the Russian Civil War (1918–1922), the Bolsheviks nationalized all productive property and imposed a policy named war communism, which put factories and railroads under strict government control, collected and rationed food, and introduced some bourgeois management of industry. After three years of war and the 1921 Kronstadt rebellion, Lenin declared the New Economic Policy (NEP) in 1921, which was to give a "limited place for a limited time to capitalism." The NEP lasted until 1928, when Joseph Stalin achieved party leadership, and the introduction of the Five Year Plans spelled the end of it. Following the Russian Civil War, the Bolsheviks, in 1922, formed the Union of Soviet Socialist Republics (USSR), or Soviet Union, from the former Russian Empire.

Vladimir Lenin giving a speech.

Following Lenin's democratic centralism, the Leninist parties were organized on a hierarchical basis, with active cells of members as the broad base; they were made up only of elite cadres approved by higher members of the party as being reliable and completely subject to party discipline.[30] The Great Purge of 1937–1938 was Stalin's attempt to destroy any possible opposition within the Communist Party. In the Moscow Trials many old Bolsheviks who had played prominent roles during the Russian Revolution of 1917, or in Lenin's Soviet government afterwards, including Kamenev, Zinoviev, Rykov, and Bukharin, were accused, pleaded guilty, and executed.[31]

Following World War II, Marxist-Leninists consolidated power in Central and Eastern Europe, and in 1949, the Communist Party of China (CPC), led by Mao Zedong, established the People's Republic of China, which would follow its own ideological path of development following the Sino-Soviet split. Cuba, North Korea, Vietnam, Laos, Cambodia, Angola, and Mozambique were among the other countries in the Third World that adopted or imposed a government ran by a Marxist-Leninist party at some point. By the early 1980s almost one-third of the world's population lived in states ruled by a self-proclaimed Marxist-Leninist party, including the former Soviet Union and PRC.[citation needed]

States such as the Soviet Union and PRC succeeded in becoming industrial and technological powers, challenging the capitalists' powers in the arms race and space race.

Cold War

Main article: Cold War

USSR postage stamp depicting the states ruled by self-proclaimed communist parties, launching the first artificial satellite Sputnik 1.

Its leading role in the Second World War saw the emergence of the Soviet Union as a superpower, with strong influence over Eastern Europe and parts of Asia. At the same time the existing European empires were shattered and Communist parties played a leading role in many independence movements.

Marxist-Leninist governments modeled on the Soviet Union took power with Soviet assistance in Bulgaria, Czechoslovakia, East Germany, Poland, Hungary and Romania. A Marxist-Leninist government was also created under Marshal Tito in Yugoslavia, but Tito's independent policies led to the expulsion of Yugoslavia from the Cominform, which had replaced the Comintern. Titoism, a new branch in the Marxist-Leninist movement, was labelled "deviationist"[by whom?]. Albania also became an independent Marxist-Leninist state after World War II.[32]

By 1950, the Chinese Marxist-Leninists had taken over all of mainland China. In the Korean War and Vietnam War, Communists fought for power in their countries against the United States and its allies. With varying degrees of success, Communists attempted to unite with nationalist and socialist forces against perceived Western imperialism in these poor countries.

Communism was seen as a rival of and a threat to western capitalism for most of the 20th century.[33] This rivalry peaked during the Cold War, as the world's two remaining superpowers, the United States and the Soviet Union, polarized most of the world into two camps of nations. It supported the spread of their respective economic and political systems. As a result, the camps expanded their military capacity, stockpiled nuclear weapons, and competed in space exploration.

Dissolution of the Soviet Union

Further information: List of communist parties, List of communist and anti-capitalist parties with parliamentary representation and Dissolution of the Soviet Union

A demonstration of the Communist Party of the Russian Federation, Moscow, December 2011.

In 1985, Mikhail Gorbachev became leader of the Soviet Union and relaxed central control, in accordance with reform policies of glasnost (openness) and perestroika (restructuring). The Soviet Union did not intervene as Poland, East Germany, Czechoslovakia, Bulgaria, Romania, and Hungary all abandoned Marxist-Leninist rule by 1990. In 1991, the Soviet Union dissolved.

At present, states controlled by Marxist-Leninist parties under a single-party system include the People's Republic of China, Cuba, Laos, and Vietnam. North Korea currently refers to its leading ideology as Juche, which is portrayed as a development of Marxism-Leninism. Communist parties, or their descendant parties, remain politically important in a number of other countries. The South African Communist Party is a partner in the African National Congress-led government. In India, communists lead the governments of three states, with a combined population of more than 115 million. In Nepal, communists hold a majority in the parliament.[34] The Communist Party of Brazil is a part of the parliamentary coalition led by the ruling democratic socialist Workers' Party and is represented in the executive cabinet of Dilma Rousseff.

The People's Republic of China has reassessed many aspects of the Maoist legacy; it, along with Laos, Vietnam, and, to a lesser degree Cuba, has reduced state control of the economy in order to stimulate growth. Chinese economic reforms started in 1978 under the leadership of Deng Xiaoping; since then, China has managed to bring down the poverty rate from 53% in the Mao era to just 6% in 2001.[35] The People's Republic of China runs Special Economic Zones dedicated to market-oriented enterprise, free from central government control. Several other states ran by self-proclaimed Marxist-Leninist parties have also attempted to implement market-based reforms, including Vietnam.

Theories within Marxism as to why communism in Central and Eastern Europe was not achieved after revolutions pointed to such elements as the pressure of external capitalist states, the relative backwardness of the societies in which the revolutions occurred, and the emergence of a bureaucratic stratum or class that arrested or diverted the transition process in its own interests. Marxist critics of the Soviet Union, most notably Trotsky, referred to the Soviet system, along with other states ran by Marxist-Leninist parties, as "degenerated" or "deformed workers' states", arguing that the Soviet system fell far short of Marx's communist ideal and he claimed the working class was politically dispossessed. The ruling stratum of the Soviet Union was, by Trotskyism, held to be a bureaucratic caste, but not a new ruling class, despite their political control.

Marxist communism

Marxism

Main article: Marxism

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Like other socialists, Karl Marx and Friedrich Engels sought an end to capitalism and the systems which they perceived to be responsible for the exploitation of workers.

According to the Marxist argument for communism, the main characteristic of human life in class society is alienation; and communism is desirable because it entails the full realization of human freedom.[36] Marx here follows Georg Wilhelm Friedrich Hegel in conceiving freedom not merely as an absence of restraints but as action with content.[37] According to Marx, communism's outlook on freedom was based on an agent, obstacle, and goal. The agent is the common/working people; the obstacles are class divisions, economic inequalities, unequal life-chances, and false consciousness; and the goal is the fulfilment of human needs including satisfying work, and fair share of the product.[38][39]

They believed that communism allowed people to do what they want, but also put humans in such conditions and such relations with one another that they would not wish to exploit, or have any need to. Whereas for Hegel the unfolding of this ethical life in history is mainly driven by the realm of ideas, for Marx, communism emerged from material forces, particularly the development of the means of production.[37]

The Communist Manifesto.

Marxism holds that a process of class conflict and revolutionary struggle will result in victory for the proletariat and the establishment of a communist society in which private property and ownership is abolished over time and the means of production and subsistence belong to the community. (Private property and ownership, in this context, means ownerships of the means of production, not private possessions).[40] Marx himself wrote little about life under communism, giving only the most general indication as to what constituted a communist society. In the popular slogan that was adopted by the communist movement, communism was a world in which each gave according to their abilities, and received according to their needs. The German Ideology (1845) was one of Marx's few writings to elaborate on the communist future:

In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.[41]

Marx's lasting vision was to add this vision to a theory of how society was moving in a law-governed way towards communism, and, with some tension, a political theory that explained why revolutionary activity was required to bring it about.[37]

In the late 19th century, the terms "socialism" and "communism" were often used interchangeably. However, Marx and Engels argued that communism would not emerge from capitalism in a fully developed state, but would pass through a "first phase" in which most productive property was owned in common, but with some class differences remaining. The "first phase" would eventually evolve into a "higher phase" in which class differences were eliminated, and a state was no longer needed. Lenin frequently used the term "socialism" to refer to Marx and Engels' supposed "first phase" of communism and used the term "communism" interchangeably with Marx and Engels' "higher phase" of communism.[42]

These later aspects, particularly as developed by Vladimir Lenin, provided the underpinning for the mobilizing features of 20th century communist parties.

Stalin

Leninism

Main article: Leninism

Vladimir Lenin, 1920.

"We want to achieve a new and better order of society: in this new and better society there must be neither rich nor poor; all will have to work. Not a handful of rich people, but all the working people must enjoy the fruits of their common labour. Machines and other improvements must serve to ease the work of all and not to enable a few to grow rich at the expense of millions and tens of millions of people. This new and better society is called socialist society. The teachings about this society are called 'socialism'."

-Vladimir Lenin, "To the Rural Poor" (1903); Collected Works, Vol 6, p. 366

Leninism is the revolutionary theories developed by Vladimir Lenin, including the organizational principles of democratic centralism, Vanguardism and the political theory of imperialism. Leninist theory postulates that, with the strongly determined will of the Bourgeoisie to establish Imperialism, socialism will not arise spontaneously through the natural decay of capitalism, and that workers by themselves, who may be more or less sedated by reactionary propaganda, are unable to effectively organize and develop socialist consciousness, therefore requiring the leadership of a revolutionary vanguard organized on the basis of democratic centralism. As a result, Leninism promotes a Vanguard party in order to lead the working-class and peasants in a revolution. Because this revolution takes place in underdeveloped, largely pre-capitalist countries such as Russia, Leninism establishes a single-party, authoritarian state, justifying single-party control over the state and economy as a means to safeguard the revolution against counter-revolutionary insurrection and foreign invasion.[43]

Although the creation of a vanguard party was outlined by Marx and Engels in Chapter II: "Proletarians and Communists" of The Communist Manifesto, Lenin modified this position by changing the role of the vanguards to professional revolutionaries, who were to hold power post-revolution and direct the national economy and society in developing world socialism.

After disposing of the Bourgeois dictatorship through socialist revolution, Leninists seek to create a socialist state in which the working class would be in power, which they see as being essential for laying the foundations for a transitional withering of the state towards communism (Stateless society). In this state, the vanguard party would act as a central nucleus in the organization of socialist society, presiding over a single-party political system. Leninism rejects political pluralism, seeing it as divisive and destructive. Instead, Leninism advocates the concept of democratic centralism as a process to ensure the voicing of concern and disagreement and to refine policy. Generally, the purpose of democratic centralism is "diversity in ideas, unity in action."

After Lenin's death in 1924, Leninism branched into multiple (sometimes opposing) interpretations, including Trotskyism and Marxism-Leninism.

Marxism-Leninism, Stalinism and Trotskyism

Marxism-Leninism and Stalinism

Main articles: Marxism-Leninism and Stalinism

Joseph Stalin

Marxism–Leninism is a political ideology developed by Stalin,[10] officially based on Marxism (the scientific socialist concepts theorised by Karl Marx and Friedrich Engels) and Leninism (Vladimir Lenin's theoretical expansions of Marxism which include anti-imperialism, democratic centralism, and Vanguardist party-building principles).[44] However, it is not the mere union of both but rather is a term created to describe the specific ideology which Stalin implemented in the CPSU and Comintern. There is no definite agreement between historians of about whether Stalin actually followed the principles of Marx and Lenin.[14] It also contains deviations from both Marxism and Leninism, such as "socialism in one country".[11][12] Marxism-Leninism was the ideology of the most clearly visible communist movement. As such, it is the most prominent ideology associated with communism. Marxism-Leninism advocates the creation of a single-party state[15] with total control of the economy, which according to it forms the basis of a socialist state.

Marxism-Leninism refers to the socioeconomic system and political ideology implemented by Stalin in the Soviet Union and later copied by other states based on the Soviet model (central planning, single-party state, etc.), whereas Stalinism refers to Stalin's style of governance (political repression, cult of personality, etc.); Marxism-Leninism stayed after de-Stalinization, Stalinism did not. However, the term "Stalinism" is sometimes used to refer to Marxism-Leninism, sometimes to avoid implying Marxism-Leninism is related to Marxism and Leninism.

Maoism is a form of Marxism-Leninism associated with Chinese leader Mao Zedong. After de-Stalinization, Marxism-Leninism was kept in the Soviet Union but certain "anti-revisionist" tendencies, such as Hoxhaism and Maoism, argued that it was deviated from. Therefore, different policies were applied in Albania and China, which became more distanced from the Soviet Union.

Marxism-Leninism has been criticized by other communist and Marxist tendencies. They argue that Marxist-Leninist states did not establish socialism but rather state capitalism.[16] The dictatorship of the proletariat, according to Marxism, represents the rule of the majority (democracy) rather than of one party, to the extent that co-founder of Marxism Friedrich Engels described its "specific form" as the democratic republic.[45] Additionally, according to Engels, state property by itself is private property of capitalist nature[46] unless the proletariat has control of political power, in which case it forms public property.[47] Whether the proletariat was actually in control of the Marxist-Leninist states is a matter of debate between Marxism-Leninism and other communist tendencies. To these tendencies, Marxism–Leninism is neither Marxism nor Leninism nor the union of both, but rather an artificial term created to justify Stalin's ideological distortion,[13] forced into the CPSU and Comintern. In the Soviet Union, this struggle against Marxism–Leninism was represented by Trotskyism, which describes itself as a Marxist and Leninist tendency.

Trotskyism

Main article: Trotskyism

Leon Trotsky reading The Militant.

Trotskyism is a Marxist and Leninist tendency that was developed by Leon Trotsky, opposed to Marxism-Leninism and Stalinism. It supports the theory of permanent revolution and world revolution instead of the two stage theory and socialism in one country. It supported proletarian internationalism and another Communist revolution in the Soviet Union, which Trotsky claimed had become a degenerated worker's state under the leadership of Stalin, rather than the dictatorship of the proletariat, in which class relations had re-emerged in a new form.

Trotsky and his supporters, struggling against Stalin for power in the Soviet Union, organized into the Left Opposition and their platform became known as Trotskyism. Stalin eventually succeeded in gaining control of the Soviet regime and Trotskyist attempts to remove Stalin from power resulted in Trotsky's exile from the Soviet Union in 1929. Trotsky later founded the Fourth International, a Trotskyist rival to the Comintern, in 1938.

Trotsky's politics differed sharply from those of Stalin and Mao, most importantly in declaring the need for an international proletarian revolution (rather than socialism in one country) and unwavering support for a true dictatorship of the proletariat based on democratic principles.

Libertarian Marxism

Main article: Libertarian Marxism

Libertarian Marxism refers to a broad scope of economic and political philosophies that emphasize the anti-authoritarian aspects of Marxism. Early currents of libertarian Marxism, known as left communism,[48] emerged in opposition to Marxism–Leninism[49] and its derivatives, such as Stalinism, Maoism, and Trotskyism.[50] Libertarian Marxism is also critical of reformist positions, such as those held by social democrats.[51] Libertarian Marxist currents often draw from Marx and Engels' later works, specifically the Grundrisse and The Civil War in France;[52] emphasizing the Marxist belief in the ability of the working class to forge its own destiny without the need for a revolutionary party or state to mediate or aid its liberation.[53] Along with anarchism, Libertarian Marxism is one of the main currents of libertarian socialism.[54]

Libertarian Marxism includes such currents as Luxemburgism, council communism, left communism, Socialisme ou Barbarie, the Johnson-Forest tendency, world socialism, Lettrism/Situationism and operaismo/autonomism, and New Left.[55] Libertarian Marxism has often had a strong influence on both post-left and social anarchists. Notable theorists of libertarian Marxism have included Anton Pannekoek, Raya Dunayevskaya, CLR James, Antonio Negri, Cornelius Castoriadis, Maurice Brinton, Guy Debord, Daniel Guérin, Ernesto Screpanti and Raoul Vaneigem.

Council communism

Main article: Council communism

Council communism is a far-left movement originating in Germany and the Netherlands in the 1920s. Its primary organization was the Communist Workers Party of Germany (KAPD). Council communism continues today as a theoretical and activist position within both left-wing Marxism and libertarian socialism.

The central argument of council communism, in contrast to those of social democracy and Leninist communism, is that democratic workers' councils arising in the factories and municipalities are the natural form of working class organization and governmental power. This view is opposed to both the reformist and the Leninist ideologies, with their stress on, respectively, parliaments and institutional government (i.e., by applying social reforms, on the one hand, and vanguard parties and participative democratic centralism on the other).

The core principle of council communism is that the government and the economy should be managed by workers' councils composed of delegates elected at workplaces and recallable at any moment. As such, council communists oppose state-run authoritarian "State socialism"/"State capitalism". They also oppose the idea of a "revolutionary party", since council communists believe that a revolution led by a party will necessarily produce a party dictatorship. Council communists support a worker's democracy, which they want to produce through a federation of workers' councils.

Left communism

Main article: Left communism

Rosa Luxemburg, inspiration of left communism.

Left communism is the range of communist viewpoints held by the communist left, which criticizes the political ideas of the Bolsheviks at certain periods, from a position that is asserted to be more authentically Marxist and proletarian than the views of Leninism held by the Communist International after its first and during its second congress.

Left Communists see themselves to the left of Leninists (whom they tend to see as 'left of capital', not socialists), anarchist communists (some of whom they consider internationalist socialists) as well as some other revolutionary socialist tendencies (for example De Leonists, who they tend to see as being internationalist socialists only in limited instances).

Although she died before left communism became a distinct tendency, Rosa Luxemburg has heavily influenced most left communists, both politically and theoretically. Proponents of left communism have included Amadeo Bordiga, Herman Gorter, Anton Pannekoek, Otto Rühle, Karl Korsch, Sylvia Pankhurst and Paul Mattick.

Prominent left communist groups existing today include the International Communist Party, the International Communist Current and the Internationalist Communist Tendency.

Non-Marxist communism

The dominant forms of communism are based on Marxism, but non-Marxist versions of communism (such as Christian communism and anarchist communism) also exist.

Anarchist communism

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Anarcho-communism

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