Sample Essay on Commanding Heights Episode 2-The Agony of Reform Answers

Kremlin-controlled every feature of the economy through communism. The Soviet Union was a military super power, an industrial giant, and a threat to the world powers. People were forced to follow government rules and many ended up in jails. The entire state became a big prison, as the citizens lost their freedom. Prisoners were forced into hard labor of working in the mines. The poor became poorer. The government managed to hide this by maintaining a strong military base. The economy was maintained by the prisoners’ slave labour. The oil prices also helped them to maintain their economy and military power.

Dependency theory refers to movement of resources from poor citizens to rich citizens. The rich become richer at the expense of the poor. This theory emphasizes on barriers and tariffs for economic growth. It is a reminder of the Soviet Communism. It largely affects the growth of the country’s economy as the gap between the rich and the poor keeps on increasing. The domestic economy ends up reducing, as the poor become the majority while the rich become the powerful minority. This theory cuts the nation off from the flow of technology, information, and investment.

The ‘Chicago Boys’ comprised exchange economists students from Chile. They were from the Catholic University in Chile and were in the University of Chicago. They adopted the fee market economic philosophy. This was defined by the strong stand in minimal government while emphasizing on free market. They were taught to have doubts about planning and government control. This was against the dependency theory in Chile.

“Uncle Milt” was regarded as a traitor. This is because of his emphasis on the free market and freedom, and his talks to improve the economy of Chile. Free markets undermined political centralization and control. In Chile, this helped to improve the economy and initiate main reforms. It was a big breakthrough against inflation. The reaction resulted in resistance by other countries towards the proposal of market reforms.

“Permit raj” refers to the permit the business people required from the government to transact business deals. This permit made it difficult for businesses to progress. The price to get the permission was too expensive for most businesses. This led to the bureaucracy and corruption. The permission is similar to government policies, which are expensive and taxing to the executives.

He was referring to the increased hyperinflation rate that made people to look for other ways of surviving. This incorporated bribing and instability in government.

In every strategy, there was a risk, which was hard for the people. The economy was undergoing hyperinflation and the government was unstable in all aspects. There was a need for a quick and lasting solution. This came in form of the “shock therapy.”

The “Oligarchs” were the richest new entrepreneurs. They were qualified and efficient managers who prevented communism from coming back into power by coming up with a plan- the privatization program. This allowed the governments to take a loan while giving the “oligarchs” the commanding heights.

Capitalism with Chinese characteristics refers to the adoption of free markets while still embracing Marxism.

China appears to have an easier time to free markets than post-Soviet Russia. This is because of the totalitarian control of the government before the introduction of free markets. All the resources were therefore in the control of the central government. The inflation rate was not as high in China as the hyperinflation rate in Soviet. Moreover, Soviet experienced huge challenges because of the new government that was taking over.