Communism and economic modernization

The paper examines the range of national experiences of communist rule in terms of the aspiration to ‘overtake and outstrip the advanced countries economically’. It reviews the causal beliefs of the rulers, the rise and fall of their economies (or, in the case of China, its continued rise), the core institutions of communist rule and their evolution, and other outcomes. The process of overcoming a development lag so as to approach the global technological frontier has required continual institutional change and policy reform in the face of resistance from established interests. So far, China is the only country where communist rule has been able to meet this requirement, enabled by a new deal with political and economic stakeholders. The paper places the “China Deal” on a spectrum previously limited to the Soviet Big and Little Deals

Accounting for secrets

The Soviet dictatorship used secrecy to shield its processes from external scrutiny. A system of accounting for classified documentation assured the protection of secrets. The associated procedures resemble a turnover tax applied to government transactions. There is evidence of both compliance and evasion. The burden of secrecy was multiplied because the system was also secret and so had to account for itself. Unique documentation of a small regional bureaucracy, the Lithuania KGB, is exploited to yield an estimate of the burden. Measured against available benchmarks, the burden looks surprisingly heavy

Post-war Russian economic growth : not a riddle

In a recent article Steven Rosefielde (2003) has advanced three propositions. He suggests that according to the best available statistics the post-war growth of the Russian economy under the command system was surprisingly good; in fact, he argues that it was too good. The standard for this judgement is economic theory, which holds that non-market systems must fail by comparison with market economies; Rosefielde associates specifically this view with the 'Washington consensus'. He concludes that it is the statistics that are at fault: they 'lied and were misconstrued' by Western 'statistically oriented comparativists' in a way that was unduly favourable to the command system. In this comment I argue that Rosefielde has misread both the facts and the theory. There is no riddle in the statistics. His conclusion, therefore, must fall

Soviet industry and the Red Army under Stalin : a military-industrial complex?

The paper considers some of the views of the Stalin–era relationship between Soviet industry and the Red Army that are current in the literature, and disentangles some confusions of translation. The economic weight of the defence sector in the economic system is summarised in various aspects. The lessons of recent archival research are used as a basis for analysing the army–industry relationship under Stalin as a prisoners’ dilemma in which, despite the potential gains from mutual cooperation, each party faced a strong incentive to cheat on the other. It is concluded that the idea of a Soviet military–industrial complex is not strictly applicable to the Stalin period, but there may be greater justification for the Soviet Union after Stalin

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

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

Coercion, compliance and the collapse of the soviet command economy

Are command systems that rest on coercion inherently unstable, and did the Soviet economy collapse for this reason? Postwar evidence is inconsistent with the hypothesis that the Soviet economy was unstable. If it was not unstable, why did it collapse? A repeated game of coordination between a dictator and producers shows that a high level of coercion may yield a stable high–output equilibrium, that the command economy contains a time–consistency problem for central planners, and that a transition to a low state of coercion and performance in which everyone’s income falls may be brought about by rising monitoring costs and the dictator’s loss of reputation. The facts of the Soviet case are consistent with a collapse triggered when the dictator threw in the towel.COMMAND ; ECONOMY ; DICTATORSHIP ; INCENTIVES ; MONITORING ; SOVIET UNION ; TIME–CONSISTENCY