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Prices, planners, and producers : an agency problem in\ud Soviet industry, 1928-1950

By Mark Harrison


Soviet planners developed the “unchanged prices of 1926/27” to facilitate the solution of an\ud agency problem -- the regulation of self-interested producers as they worked to fulfil plans for\ud heterogeneous products denominated in rubles. The system limited but did not eliminate\ud producers’ opportunistic behavior, which took the form of inflating the plan prices of new\ud products. Through the 1930s and 1940s the “unchanged” prices proved resistant to reform,\ud and following their abolition in 1950 the system was soon afterwards reinstated with a new\ud base year. The history of the “unchanged” prices illustrates the limits of command

Topics: HC
Publisher: Cambridge University Press
OAI identifier: oai:wrap.warwick.ac.uk:212

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  1. [S]upposed to be”, because even for products actually produced in 1926/27, it was said that the “unchanged” price was often based on some other year (I. Turetskii, “K probleme”,
  2. (1934). 1562/1/809, folios 17-5 and 184-175 (Mezhlauk to Sovnarkom “Ob uporiadochenii i oformlenii tsennikov neizmennykh tsen 1926/27
  3. 4372/23/76, folios 44-45 (draft decree on 1926/27 prices,
  4. 51: “in order to economize costs, models once established in production are often manufactured without significant change over long periods”.
  5. As was recognized by Seton, “Pre-war Soviet Prices”, doi
  6. Dlia chego planiruetsia produktsiia”,
  7. Dlia chego planiruetsia produktsiia”, p. 63; Rotshtein, Problemy,
  8. (1935). folio 113 (Gosplan “Instructions”,
  9. (1935). folio 43 (Narkompishcheprom (People’s Commissariat of the Food Industry) to Gosplan,
  10. (1934). folios 1-2 (Mezhlauk to Sovnarkom,
  11. (1934). folios 14-27 (Mezhlauk to Sovnarkom,
  12. (1933). folios 146-145 (memo to Rozovskii (chief of sector for machinebuilding) and Turetskii “On methods of computation of 1926/27 prices for new products”,
  13. folios 155-154 (draft “Methodological instructions”,
  14. folios 22-23; see also ibid., folio 5.
  15. (1934). folios 48-50, “List of 1926/27 price schedules registered by Gosplan and TsUNKhU” (appendix to draft Sovnarkom decree of
  16. folios 9-5 (“Spravochnik neizmennykh tsen 26-27 goda i popravochnykh koefitsientov dlia tsentralizovannogo planirovaniia”, no date) lists ratios of commodity prices for artisan industry in 1932 relative to “unchanged prices of 1926/27” for state industry.
  17. For a broad-focus discussion of agency problems in the Soviet administrative setting, see Gregory,
  18. (1934). For official recognition of this problem see Rossiiskii Gosudarstvennyi Arkhiv Ekonomiki, fond 4372, opis’ 23, delo 76, list’ia 3-4 [hereafter RGAE, 4372/23/76, folios 3-4] (Mezhlauk to Sovnarkom,
  19. For the published story, see Rotshtein, Problemy,
  20. For the soft budget constraint see Kornai, Socialist System, doi
  21. individual commodities listed the unweighted mean ratio was 198 percent ( a standard deviation of 107 percent); only eight commodities showed a 1932 price below the “1926/27” level.
  22. (1947). Industry.” In The Economic Transformation of the USSR, 1913-1945, edited by
  23. Istoriia tsenoobrazovaniia,
  24. (1968). K probleme tsenovykh pokazatelei v plane [On the problem of price indicators in the plan].” Plan,
  25. K probleme”; Sh. Turetskii, “Dlia chego planiruetsia produktsiia”;
  26. (1965). Le Débat sur la Loi de la Valeur en URSS. Étude Rétrospective 1941-1953”. Annuaire de l’URSS,
  27. (1987). Lukavaya tsifra [A Deceptive Figure].” Novyi mir,
  28. On “hidden action” and “hidden information” see doi
  29. On inter-enterprise contests see Pannell,
  30. (1983). Planning and Management”. In The Soviet Economy: Toward the Year 2000, edited by
  31. s, unique products accounted for half the output of the machine-building and metalworking (MBMW) sector; in addition, between 10 and 17 percent of the MBMW product profile was renewed annually according to CIA, Comparing,
  32. see also Nutter, Growth, p. 154; CIA, Analysis, p. 2; CIA, Comparing,
  33. The Economics of Agency.” In Principals and Agents: the Structure of Business,
  34. The GNP deflators are calculated from Bergson, Real National Income,
  35. The Innovation Decision in Soviet Industry. doi
  36. (1961). The Real National Income of Soviet Russia since 1928. doi
  37. (1992). The Socialist System: the Political Economy of Communism. doi
  38. The subtitle of Ross, “Economic Theory”.
  39. This description draws on many sources, in particular Granick, Management; Berliner, Factory; Nove, Soviet economy; Gregory, Restructuring; Kornai, Socialist System.
  40. This was pointed out by Gerschenkron, “Soviet Indices”,

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