Sunday, October 7, 2018

Week 7.2 - Ghodsee, Shopaholic in Eastern Europe (Due 10/11)

How were consumption patterns different under the communist regime than the free-market one? How did the command economy and the rationing system work? How do these economic systems shape people's behaviors and expectations?


  1. Command economy starts and ends with a central planning system (and planning committees within). This is where the state controls the “production and distribution of all goods and services in the economy” (more specifically, the prices/quantities of those goods and services), the allocation of scarce resources with high opportunity costs in public goods, and even other non-economic institutions such as media (eg. Zhenata Dnes and perfume). Rationing would occur as a result of the failure of the state to correctly determine demand/supply or misallocation of resources like finished goods and currency to the appropriate audiences. Consumption patterns reflected growing social inequalities, wealth gaps, urban/rural divides in the free-market society. Because the communist regime did not offer many choices or luxuries, there were hardly material ways for people to materially gain more resources or signal to others about wealth or status (and thus social groups). But with the injection of luxury goods, it allowed those able to save/pay off debt to consume more of those expensive imported goods and become separate from those who could not. Consumption patterns went to the extremes on both ends with the free-market. And were decided by the government in the command. Those who have lived through both systems tend to lean towards command economy behaviors. For example, the “red grandmother” whose instinct it is to ration tea so that others may also be able to buy (also a more social/greater-good focused view). Those who are younger, like the two Bulgarian girls who have never lived through a command system, spend without much regard to the context for their money’s value, and probably expect nothing else than being able to buy those goods (less saving/rationing/sharing).

  2. In the command economy, the government would assume its role as the sole producer of its goods, and have plans of what gets produced, how, and when their goods will be distributed, and in a way, would also determine who would be able to get their goods. This is explained by Ghodsee in her example of the Bulgarian perfume makers. The government in this example would say that they need a number of perfume to be made for their citizens. However, this number keeps getting lowered and lowered from its original value, as the various bottlenecks wrap around the number so tight that only a few Bulgarians can actually get any of the government produced perfume. The perfume example by Ghodsee also shows what the government and culture of Communists Bulgaria prized. The government seemed to place most of its resources in things like housing and healthcare than what it saw as luxuries. As the government failed to produce or even import many luxuries, that meant that outside of a few government insiders who might try to take what few luxuries there are for themselves, there would be even less civilians who would be able to even see these luxuries. This then goes back to earlier in the chapter when Ghodsee mentions the 'Red Grandmother' who would only sell her three of her eight teas. While the 'Red Grandmother' would indeed want to profit by selling all of her goods, she also would of remembered how hard the luxuries like tea might of been were to come by, and would then save as much as she can so she can sell to as many people as possible. The "Red Grandmother" I imagine then might of preferred to sell her eight teas to eight different people. On the flip-side, with the introduction of capitalism, a person might be more than happy to sell all eight of their teas to someone, as it means that they get a profit from their goods sold.

  3. Under the communist regime, Bulgaria had a command economy where production was planned by committees in the government. These central planning committees would try to project consumption rates prior to production in order to waste as little as possible, taking other competing items into account. Essentials like electricity, health care, industrial plants and so on were given priority over luxury items like perfume and trendy clothes. There was also little variety in and heavy rationing of goods, which led many people to rely on smuggling to acquire Western goods. So, everyone had their basic needs attended to, but rarely had the means to invest in high-quality or superfluous products.
    In the free-market economy, however, economic disparity became more apparent. Following a bout of hyperinflation, the Bulgarian economy settled and began to change. New stores popped up in cities, offering imported luxury goods to the wealthy, while in rural regions people returned to subsistence farming. The variety and quality of products had increased, but so had prices, and without a communist government to provide basic needs and guarantee employment, rural families simply didn’t have enough money to spend on unnecessary goods.
    Under the free-market economy, consumerism has become gendered, where one’s possessions are an indication of how successful a man or woman one is. Or at least it has in urban areas and among the upper/upper-middle classes. There are still remnants of communist sensibilities. Take for example the tea-seller encountered by Ghodsee. She is concerned with having enough tea for everyone else and refuses to sell any more than what is needed by an individual, because to sell any more would be wasteful and monopolizing.

  4. Command looks very different when looking at it within a command system economy versus a free-market economy. Within the command system economy, a stable economic system of communist regimes, the state controls how much of each good get produced, and if a good get produced at all, and they also control the prices of different services that can be offered within the nation. The power lies within planning committees which make up the central planning system. This is what shapes the consumption patterns within a communist regime; in a command system economy, there is always a risk that the government will underestimate the amount of goods that the population wants at a certain time – creating rationing. Rationing happens when the government fails to recognize the amount of the population who will consume a good and therefore under produce it, leaving many citizens without. When this occurs and there is no way for citizens to know when they will have a chance to get their hands on the good again.

    This rationing directly influences the consumption patterns under a communist regime, as Ghodsee exhibits with the “red-grandmother” as her husband termed the tea seller. The tea seller, used to the former economic system in Bulgaria, refused to sell more than three boxes of tea to Ghodsee because Ghodsee buying more than three seemed wasteful, and the tea seller could not risk having an empty shelf. This directly contrasts to a free-market system, like the United States, where the storekeeper likely would have sold Ghodsee as many boxes of tea as she wished. These economic systems shape people’s behaviors and expectations as well, as Ghodsee uses herself as the prime example. Coming from the United States, Ghodsee used shopping as an outlet as many American men and women do, knowing that she would always be able to get her hands on specific luxury items when in a mall. When Ghodsee moves to Bulgaria, she explains the shock that comes with being unable to get these goods and learned that she couldn’t be picky about the goods that she actually was able to get. This perhaps is the most drastic difference – in a free market system, it seems unthinkable that you won’t be able to get the specific pair of Adidas shoes you’ve been eyeing, but in a command system, the citizens have no reason to even be thinking about brand names or a specific style, they likely are just glad there’s even a few options of sneakers to choose from.


Note: Only a member of this blog may post a comment.