Principles of Economics -- ECON 201/202 

Paul Gregory and Robert Stuart, Comparative Economic Systems in the Twenty-First Century, 7th ed. Houghton-Mifflin (2004)

János Kornai, The Socialist System: The Political Economy of Communism, Princeton University Press (1992) 

Fourteen WebCT (online) quizzes, one midterm, the final exam, and short summaries of Kornai. 

The major objectives of the course are to:

• identify the characteristics of capitalism, planned socialism, and market socialism
• assess the performance of the economic systems
• study leading examples of each system (the United States, the Soviet Union, and Yugoslavia)
• learn the major tasks of transition from planned or market socialism to capitalism
• study the experience of transition in Russia, China, and central Europe
• gain a better understanding of capitalism, our own system

Comparative economic systems is the study of the effects of economic systems on observed outcomes, i.e., economic performance and welfare. Thus, our goal will be to attempt both theoretical and empirical (case study) investigations to determine the relative effects of the various systems. This will not be easy, for economic outcomes are determined by many other things (stage of economic development, income, politics, climate, geography, customs and traditions, etc.), as well. 

We will study three economic systems: capitalism, planned socialism, and market socialism. The countries most representative of these systems are the United States, the former Soviet Union, and the former Yugoslavia. We will also study some of the transitional countries, including Russia and China, as well as Cuba, a socialist country that remains committed to socialism.

Lectures and Examinations

Lectures and discussions will generally follow the format of the first text, Comparative Economic Systems. However, be warned that I will not lecture on all the material in this text, and the text will not cover all the material we will discuss in class. You will be responsible for all the readings I assign in the text and you will be responsible for the material I cover in my lectures. There will be fourteen short quizzes, a midterm exam, and a comprehensive final exam. These will test you on the material covered in the text and in class lectures. There will be no make-ups if you miss any of the fourteen short quizzes, but the two lowest grades will be dropped.  There will be no make-up for the midterm unless you are a member of a club or team that has a scheduled road trip at that time and you notify me of the conflict in advance. I will, however, drop the midterm grade if it improves your final grade. The weights toward your final grade (see table below) will depend on whether the midterm counts. You should take the midterm even if you feel unprepared; it will not hurt your grade, and it will give you some practice. 

Each quiz will be taken via eCampus (what used to be called WebCT), and so can be taken from any place that you have access to the internet. There will be a quiz each week except for the week of the midterm exam.  Each will have a one-day window of opportunity (5PM Thursday until midnight Friday). Once you begin a quiz, you will have ten minutes to answer five multiple-choice questions. They are open-book, but you won't have much time to look things up.

Summaries of Kornai

You are to read the first nineteen chapters of János Kornai's book, The Socialist System: The Political Economy of Communism. I have assigned chapters of the book to read each week.  Each week, you will write a short (one to two pages, double space, 12 pt. font) summary of the reading assignment. Expect about thirty pages of reading per week. The reading is not very technical and, if you are the least bit interested in planned socialism, it is fascinating reading. Kornai lived it and his insights are incredible. For a very interesting interview that reveals how Kornai developed in his thinking, starting in the early '50s in Hungary, and how much he has influenced our understanding of socialism, see Oliver Blanchard, "An Interview with János Kornai," Macroeconomic Dynamics, 3, 1999, 427-450.

Each of the sixteen summaries is worth ten points, for a total of 160 points. This is almost a third of the total points possible, so take this part of the course seriously. Also, I will have questions on the exams from this material so, if you have a good set of summaries, you should be in good shape.

You will submit your summaries as Word documents through the eCampus Assignments Tool. You can submit them at any time up to the due date. Therefore, if you want to read at twice the rate I have set out and complete the readings and summaries by mid-term, feel free to do so. In fact, I would encourage you to complete the assignments by Thanksgiving, or during the break, because that period between Thanksgiving and finals tends to be very hectic.

Kornai covers a lot of ground and many of the ideas will be new to you. If there is anything you do not understand or want to discuss, I would like you to post your questions or comments using the eCampus Discussion Tool. That way, everyone can see your question and my response. Everyone should feel free to weigh in on anyone else's posting. In fact, I would love to get some real online discussions going. Please check eCampus for new postings frequently.

Attendance

I do expect you to come to class. Please read the chapters before we cover them so that you can participate in discussions, answer the many questions I will ask in class, and do well on the exams. I reserve the right to make adjustments to the grades to reflect participation (including any online discussions), or the lack of participation.

Option 1:  Midterm counts
Option II: Midterm dropped

Quizzes: New quiz opens each Thursday at 5PM and

closes the following day at 5PM, starting August 23.

No quiz week of midterm exam.

1. Classification of Economic Systems (1 week)

          Read Chapters 1, 2 

2. Performance Criteria for Economic Systems (1 week) 

          Read Chapter 3 

3. Models of Economic Systems

     a. Capitalism (2 weeks) 

          Read Chapter 5 

     b. Planned Socialism (2 weeks) 

          Read Chapter 6 

     c. Resource Allocation in the old USSR (1 week) 

          Read Chapter 11

     d. Market Socialism and Yugoslavia (2 weeks) 

          Read Chapter 7 

4. Performance of Economic Systems (1 week) 

          Read Chapter 13

5. Transitions to Capitalism 

          Read Chapters 14 through 22

     a. Introduction (1 week) 
       
     b. The Russian Economy (1 week) 

     c. China (1 week) 

     d. Poland, Czech Republic, and Hungary (1 week)

6.  Cuba:  Committed to Socialism (1 week)