Why did communism collapse?

Why did communism collapse? Communism collapsed because everybody began to realize that free-market democracies were richer. This realization grew after World War II. It became evident that the people who lived in communist regimes were unhappier than their counterparts in free-market democracies. They were also poorer.

Communism refers to a system in which the state owns and controls everything. All a country’s wealth belongs to its citizens. There is no private ownership. Everything belongs to the collective.

The United States, Canada, the United Kingdom, and Western Europe are examples of free-market democracies. In other words, capitalist countries where citizens have the vote.

After World War II, Winston Churchill warned of an ‘Iron Curtain.’ In other words, a division emerging between the free-market democracies and the communist world.

Communism collapse – Berlin Wall

In fact, in Berlin, they had to build a large wall to stop people escaping from the communist system. Hardly anybody wanted to escape in the other direction. In other words, nobody left the free-market democracies to live in the communist states.

However, hundreds of thousands of people in communist Eastern Europe tried to get out.

Apart from the Berlin Wall, the communist regimes placed border guards to prevent their people from emigrating.

North Korea, for example, placed thousands of land mines on its border to deter its citizens from leaving.

Communism collapse - Winston Churchill Iron Curtain speechIn 1946, former British Prime Minister Winston Churchill condemned the Soviet Union’s policies in Europe. Churchill declared: “From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the continent.” His speech was one of the opening volleys announcing the beginning of the Cold War. (Image: winstonchurchill.org)

Communism collapse – people didn’t like it

Historians say that communism did not work because people did not like it. They did not like it because:

It was a dictatorship

There was no way to judge the government’s performance. There were no free democratic elections. Just one party existed. Other parties with different systems that could argue their case did not officially exist.

It killed initiative and creativity

Initiative and creativity are two basic and important human instincts. Communism did not encourage those instincts.

The state told you what to do, what to think, how to behave, and what to buy. It also told you where to live, where to go on vacation, etc.

In the Soviet Union, for example, people could not travel to different regions within the country without a special permit.


Artists, poets, actors, and writers could not express themselves freely. If your works and ideas were not compatible with communist ideology, the state would tell you to stop. If you didn’t, you risked going to prison.

No competition

In an economy where the state owns and controls everything, there is no competition. The state runs all production and distribution. In fact, monopolies supply all goods and services.

The quality of products was very low. The state subsidized companies that did not make a profit.

Apart from producing sub-standard products, many state enterprises consumed enormous amounts of money.

Military Spending

Military spending in all the communist regimes is always very high. In fact, from an economist’s viewpoint, far too high.

The Soviet-US arms race during the Cold War drove the Soviet Union to bankruptcy. The Soviet Union was much poorer than the United States. Consequently, trying to keep up militarily drove it to bankruptcy.

Communism collapse - corruptionIn every communist system, corruption thrives. ‘Equality’ is a popular word in the propaganda machine. In reality, Communist Party members have all the luxuries, privileges, and money. (Image: twitter.com/DollarVigilante)

Communism collapse – independence

Humans need to express themselves. We also like to own things and make decisions ourselves regarding our lives. Most of us want to choose our children’s schools.

People like to be in charge of their own businesses. Communism does not let them do this. It stifles initiative and creativity. However, it is an environment where corruption thrives.

Let’s compare two countries that were split down the middle – Germany and Korea. One half of Korea is communist while the other half is a free-market democracy.

During the second half of the 20th century, Germany had a similar split. Look at the people’s standard of living – the difference is stark.

West Germany was considerably richer than East Germany. The average citizen in South Korea has a standard of living that the North Korean can only dream of.

In North Korea, citizens have very little choice when they want to buy things. Shortages are very common. Nobody can criticize their government.

In South Korea, shops are always full of products; there are never any shortages. Additionally, South Koreans can demonstrate in the streets against their government. West and East Germany had similar differences.

The movement of people in the two halves of Germany and Korea have always been the same. From east-to-west in Germany and north-to-south in Korea.

In other words, people in communist regimes want to emigrate to the other side. However, hardly anybody wants to move in the opposite direction.