The answer to this question kept getting longer and longer, so I’ve decided to break it into three parts so as not to frighten away my loyal readership, at least not any more than usual. This post constitutes part 1.
The reasons for the Cold War’s end are larely economic. Since the Cold War was a, eh, cold war, meaning there was no direct military conflict between the main beligerents, it would not, or could not, be won by force of arms. As I’ve mentioned in earlier answers, both sides were well aware that such a conflict could very well have ended in total anilhilation for everyone. And really, where’s the fun in that? So, the Cold War would be won not so much on the direct strength of one’s military, but on the sustainability on one’s economic system. Hence, the short answer to this question is that a capitalist, market economy was, and is, more sustainable than a communist, planned economy.
Ok, swell. But why is this so, and how did this play itself out? First we’ll take an over-simplified look at why a market-capitalist economy is more sustainable than a planned-communist economy. (I am by no means an economist, so this is indeed a very over-simplified analysis. If you are an economist and somehow ended up here I would like to say first, I’m sorry, second, please feel free to critique my critique, and third, please stop wasting your time on this ridiculous blog and fix the burst in the housing bubble before property values plummet even further and my house is valued at what it’s actually worth and I am forced to commit insurance fraud to feed my family.)
At the surface, it would appear that a planned economy is clearly the better option as it would seem to be less vulnerable to the boom-and-bust cycles of a market economy and the wealth generated would be distributed fairly amongst the populace. Capitalism, essentially, is predicated upon greed. An individual is free to do whatever is legally allowed, if not at least ambiguously unethical, to create greater profits for himself. There is a problem, however. In order to plan an economy, a government must control the means of production, distribution, and the flow of capital. This leads to a bloated government beaurocracy and the lack of competition quashes growth and improvement. A greed-fueled capitalist must always stay one step ahead of the other guy in order to be on top. This leads to a constant improvement of the product and relative stability in prices as rival business compete for customers. Some rules are neceasary to keep things in line, which is why there are anti-trust laws in place to prevent monopolies. In a planned-communist economy, pretty much everything is a government run monopoly. In summary, planned economy stagnates growth, capitalist economy encourages growth.