|Russia's Conversion From Communism to Capitalism
Target Grade Levels:
Cold War, Communism, Capitalism, Command Economy, Market Economy, Economic Incentives
Relevant National Standards
Ties to Literature
Using Russia as a case study, help students examine the real-world struggles of converting from a command economy to a market economy. Begin by defining the terms "command economy" and "market economy." Invite students to name countries that have or have had each type of economy. Build on student responses to develop a list of characteristics that describe each economic system.
Next, show students where Russia is on a map and explain
(or review) that before 1991, Russia was a part of the Soviet
Union. The communist government owned the country's diverse
economic assets, controlled the labor force and allocated
all resources. It was a command economic system. After the
collapse of the Soviet Union, Russia experienced a wild
privatization period where a small number of men gained
control of Russia's greatest economic assets and made billions
in the new market economy. The newfound economic strength
of these billionaires, who are often called oligarchs, has
triggered a power struggle between them and government leaders.
Russia's new economy has also created a wide gap between
rich and poor.
To illustrate recent economic conditions in Russia, show students the FRONTLINE/World video "Rich in Russia" (about 18 minutes). (Note: This story can be viewed online in its entirety. A free transcript is also available to assist with planning. Please see the Related Story box at left for details.) Focus student viewing by asking them to take note of specific details on what life in Russia is like for the rich and for the poor.
After viewing, ask students to share their observations.
- What advantages and disadvantages did Russians experience with a command economy? With a market economy?
- What characteristics of a market economy have contributed to the divide between rich and poor?
- Will conditions for the poor likely improve or get worse as market economic factors become more firmly established in Russia? Why?
Next, extend this discussion to include the power of "incentives" on markets and behavior. Divide students into eight groups and have each group read about one of the Russian oligarchs profiled in the FRONTLINE/World feature "How to Make a Billion Dollars."
As students read, they should identify the oligarch's background, his estimated worth, the Russian economic resource(s) that made him rich, political connections and any business practices that have been criticized. Provide these categories as column headers across the top of a class matrix, with the names of the oligarchs listed down the side. Groups can then write details about their profiled oligarchs in this class matrix and take turns introducing the men to the class. Discuss the following questions:
- What similarities and differences do the students see among the oligarchs?
- What economic incentives influenced the behavior of these men after the fall of communism?
- How might corruption and questionable business practices affect Russia's transition to a modern market economy?
- What role does the government play in the new Russian economy?
Conclude the lesson by having students apply their knowledge of economic systems and incentives to the creation of a political cartoon that makes a statement about a Russian economic issue. Consider displaying the cartoons and having them evaluated by other students in the class.
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Relevant National Standards
These standards are drawn from "Content Knowledge," a compilation of content standards and benchmarks for K-12 curriculum by McRel (Mid-continent Research for Education and Learning) at http://www.mcrel.org/standards-benchmarks/.
Standard 2: Understands characteristics of different economic systems, economic institutions and economic incentives
Level III, Benchmark 2
Knows that in a command economic system a central authority, usually the government, makes the major decisions about production and distribution
Level III, Benchmark 3
Knows that in a market economic system individual households and business firms make the major decisions about production and distribution in a decentralized manner following their own self-interests
Level III, Benchmark 6
Understands that economic incentives such as wanting to acquire money or goods and services and wanting to avoid loss are powerful forces affecting the way people behave
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