Price hike in oil prices: why and how

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The fuel Price in India hit the record high three figures for the first time in the history of India. On Wednesday the retail price of regular petrol hiked by 26 paise in Rajasthan’s Sri Ganganagar and reached Rs. 100.13. While the Diesel rested at Rs. 92.13 after a hike of 27 paise. The fuel prices in India vary from state to state, City to City. It is determined after implementing state and central government taxes. So why are the prices rising like never before?  After effects of the infamous Pandemic:  Due to the then on-going Pandemic, the demand of Crude Oil (pre refined petroleum) showed a significant drop in April 2020. Which then turned to a collapse in prices of crude oil.           After Pandemic, Saudi Arabia a key oil producing country voluntarily cut its supply by about one million barrels to 8.125 million barrels of crude oil to boost the prices hence to cover the loss due to Pandemic. Resulting in Price of Crude Oil hiked by about 50%. Compared to $40/Barrel

What exactly is Communism

 Now Communism if simply put, is social, political and economic ideology leading to a movement whose main aim is to establish a communist society where the means of production are owned communally and there is no place for private ownership.

According to communists, there exists two classes in society and this is the sole reason for all conflict. These two classes are proletariat, the working class which forms the majority of the population and the bourgeoise which forms very little of the population but enjoys a lavish life earning from the work of the proletariat. The communists hence put in place a social revolution where the private ownership of properties is replaced with social ownership, this forms the basis for communism.


Communism as a term originated from Victor d’Hupay’s idea of living in communes where all property will be shared and all may benefit from everybody’s work. Modern Communist ideology began to develop during the French Revolution with the “Communist Manifesto” written by Karl Marx and Friedrich Engels which presented the French Revolution as an important turning point in history in which overturned the older feudal structure and replaced the earlier struggle of nobility with serfs to pitting the Bourgeoise with the Proletariat. Communism aims to make a classless society. Marx and Engels and many of their followers rooted for a proletarian revolution which would start a much greater social revolution which would eventually lead to the last stage of human development which would mark an end to this division based on classes and usher an era with no social classes, religion or property. A popular Marxist slogan at the time was that the state would function "from each according to his ability, to each according to his needs."

                                             

The Soviet Union 

The actual use of the theories of Marx and Engels would not be put to use until after their deaths. In the October Revolution of 1917, with the ousting of the Tsar, a new group known as the Bolsheviks came to rise with Lenin at the head of it. Prior to this revolution, Lenin had come up with the idea of Marxist theory of Vanguardism where a group of politically enlightened group of elites was necessary for such an arrangement as communism to usher. He died soon after the civil war and then his successor Stalin took over in 1927. He followed many tyrannical methods to pursue brutal ethnic and ideological purges. Tens of millions of people died between 1922 and 1950 in which there were also casualties caused due to the fight with Nazi Germany.

However, with the use of five-year plans, the Soviet Union saw rapid industrialization and reached new economic heights. Its GDP growth rate outpaced that of the USA between 1950 and 1965 but it was still slower than that of its capitalist counterparts.

The Soviet Union was dismantled in 1991 and the new system was a bit lenient on private enterprises and free speech. This did not affect the economic growth as seen in Soviet Union but allowed to lessen the points of dissent against it. 

Why Did Communism Fail?

There are a multitude of factors responsible for the failure of this system but there are a few which have been pinpointed by the researchers over the years.

1. Absence of Incentives: One of the basic principles of Communism is that there is no presence of sole motives and sole profits. Communism thrives on everyone working for each other’s benefits rather than their own. This eliminates the presence of competition in society. Competition in society leads to greater pace in development and innovation. In a communist society this was not present.

2. Central Planning: One of the Inherent problems with the system of communism was the presence of centralized planning. Centralized Planning led to aggregating the data for every project that had to be put in place. This humongous amount of data led to making the whole process a lot more complex than would have happened if there was federal structure or even if there was some sort of planning at regional level.

There was also concentration of power in a few hands which indirectly gave them an incentive to reap benefits and retain their position which led to inefficiency and corruption became common practice in East Germany and Soviet countries which in the end led to the collapse of economy.

      Author - Mayank Mishra



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