The role of the Plan

The economic reform of 1960's in Czechoslovakia attempted change to the Socialist Market Economy. That raised the question of compatibility of central planning with the market mechanism. This paper tries to show, that the Soviet-type Command planning is truly incompatible with market. The plans that would be compatible must be flexible, nonobligatory and probabilistic. They must not prescribe specific compulsory targets, but rather recommend ranges of desirable output and other indicators, and they should be frequently adjusted to changing conditions.Planning; Czechoslovakia

Cybernetics in Economics

In 1965 Kyn and Pelikan published in Czechoslovakia the book “Kybernetika v Ekonomii” (Cybernetics in Economics). This article, which was published in Prague in English gives the summary and discusses some more important ideas of that book. The book was quite successful and influenced significantly the way economists were at that time looking at the centrally planned economic system imported from the Soviet Union. The main ideas were: a) the crucial role of information in coordination of economic activities; b) the requirements of the appropriate decision making rules; c) the refutation of the prevailing negative views of randomness and spontaneity; d) the role of “natural selection” for processes of self-organization in economic systems. This provided an implicit critique of the over-centralized command economy and indicated the necessity to revive the market economy.Economic Cybernetics; Information; Decission-making; Planning; Selforganization;

ZDROJE NEBO PODNĚTY RŮSTU?

This article was published in the Czech Journal “Plánované hospodářství” in 1967. This was the time of rapid changes both in the Czechoslovak economic and political theory as well as in actual economic and political systems that culminated in the “Prague Spring” of 1968. These changes were preceded and in the considerable degree also stimulated by the completely unexpected economic recession of the first half of 1960’s. The economy that was by Marxist theory and Communist propaganda supposed to grow in the fast, uninterrupted and well balanced way suddenly stopped growing and in one year even slightly declined. There appeared two conflicting views about the way out from the recession. The orthodox Marxists and especially the planners from the Central Planning Office argued that the only way out is by significant increase of investment that would generate additional productive capacity. Some even argued that because the technical progress is capital intensive, the uninterrupted growth requires permanently increasing share of investment in the National Income. The opposite view saw the solution in the abolition of the Soviet-type command planning and return to the market economic system. This paper uses theories of economic growth and references to the empirical studies that unquestionably demonstrated the mostly capital-saving nature of technological progress in the 20th century, to show, that the further increases of already very high share of investment in National income is not necessary and would be in fact harmful. The further slowing down of the growth of per capita consumption that would be necessary if the first strategy was adopted would undermine the incentives for increasing the labor productivity and for choice of capital-saving technologies.Socialism; Central Planning; Czechoslovak Economic Reform; Prague Spring; Recession; Rate of Growth; Share of Investment; Capital-Output Coefficient; Technical Progress; Capital-Saving Technology; Incentives; National Income; Consumption; Investment;

The role of the Plan

The economic reform of 1960's in Czechoslovakia attempted change to the Socialist Market Economy. That raised the question of compatibility of central planning with the market mechanism. This paper tries to show, that the Soviet-type Command planning is truly incompatible with market. The plans that would be compatible must be flexible, nonobligatory and probabilistic. They must not prescribe specific compulsory targets, but rather recommend ranges of desirable output and other indicators, and they should be frequently adjusted to changing conditions

Macroeconomic Production Functions for Eastern Europe

This paper was presented in June 1974 at the Symposium ―On the Measurement of Factor Productivities‖ at the castle Reisensburg in Bavaria, and was published in the book of proceedings from this Symposium. It contains results of several years of research about the economies of six East European countries, namely Czechoslovakia, Poland, Hungary, East Germany, Bulgaria and Rumania. Data on output, capital and labor for 15 – 20 branches of industry and 17 – 20 years were collected for each of the mentioned countries. About 40 different models of production function were estimated using time series, cross-section, and combined time series and cross-section regression analysis. Because the time series regressions were run for each industrial branch in every country and cross-section regressions were run for each year across all branches in every country and almost always 40 different versions of production function were estimated, several thousand regressions were run all together. The results showed that in most cases the production functions had usual form with constant returns to scale and close to unit elasticity of substitution between capital and labor. However the most interesting result was relatively high original but steadily declining growth rate of total factor productivity (technical progress). This indicated that within 10 to 20 future years Eastern Europe would be tremendously lagging behind the West

Macroeconomic Production Functions for Eastern Europe

This paper was presented in June 1974 at the Symposium ―On the Measurement of Factor Productivities‖ at the castle Reisensburg in Bavaria, and was published in the book of proceedings from this Symposium. It contains results of several years of research about the economies of six East European countries, namely Czechoslovakia, Poland, Hungary, East Germany, Bulgaria and Rumania. Data on output, capital and labor for 15 – 20 branches of industry and 17 – 20 years were collected for each of the mentioned countries. About 40 different models of production function were estimated using time series, cross-section, and combined time series and cross-section regression analysis. Because the time series regressions were run for each industrial branch in every country and cross-section regressions were run for each year across all branches in every country and almost always 40 different versions of production function were estimated, several thousand regressions were run all together. The results showed that in most cases the production functions had usual form with constant returns to scale and close to unit elasticity of substitution between capital and labor. However the most interesting result was relatively high original but steadily declining growth rate of total factor productivity (technical progress). This indicated that within 10 to 20 future years Eastern Europe would be tremendously lagging behind the West

The role of the Plan

The economic reform of 1960's in Czechoslovakia attempted change to the Socialist Market Economy. That raised the question of compatibility of central planning with the market mechanism. This paper tries to show, that the Soviet-type Command planning is truly incompatible with market. The plans that would be compatible must be flexible, nonobligatory and probabilistic. They must not prescribe specific compulsory targets, but rather recommend ranges of desirable output and other indicators, and they should be frequently adjusted to changing conditions

Strukturální modely růstu

This is one chapter from the book “Eseje o teoriich ekonomickeho rustu” (Essays in the Theory of the Economic Growth”, that was published in Czechoslovakia during 1967. The main purpose of the book was to fill one of the many gaps in the knowledge of the advanced contemporary economic theory. These gaps were created in the times of dogmatic Marxism. This particular chapter was about the multi-sector models of economic growth. It starts with Walras’s attempts to make a dynamic version of his model of general equilibrium. It continues with presentation and detail explanation of several versions of the Leontief’s Input-Output model. Then von Neumann’s model is discussed with its extensions by Morishima (Marx-von Neumann and Walras – von Neumann models) and with analysis of the “Turnpike Theorem” (Dorfman, Samuelson, Solow, Hicks, Mc Kenzie, Morishima, Nikaido and Radner). There is a brief information about Optimalization models at the end of the chapter

ZDROJE NEBO PODNĚTY RŮSTU?

This article was published in the Czech Journal “Plánované hospodářství” in 1967. This was the time of rapid changes both in the Czechoslovak economic and political theory as well as in actual economic and political systems that culminated in the “Prague Spring” of 1968. These changes were preceded and in the considerable degree also stimulated by the completely unexpected economic recession of the first half of 1960’s. The economy that was by Marxist theory and Communist propaganda supposed to grow in the fast, uninterrupted and well balanced way suddenly stopped growing and in one year even slightly declined. There appeared two conflicting views about the way out from the recession. The orthodox Marxists and especially the planners from the Central Planning Office argued that the only way out is by significant increase of investment that would generate additional productive capacity. Some even argued that because the technical progress is capital intensive, the uninterrupted growth requires permanently increasing share of investment in the National Income. The opposite view saw the solution in the abolition of the Soviet-type command planning and return to the market economic system. This paper uses theories of economic growth and references to the empirical studies that unquestionably demonstrated the mostly capital-saving nature of technological progress in the 20th century, to show, that the further increases of already very high share of investment in National income is not necessary and would be in fact harmful. The further slowing down of the growth of per capita consumption that would be necessary if the first strategy was adopted would undermine the incentives for increasing the labor productivity and for choice of capital-saving technologies

MNOHALETÁ MEZINÁRODNÍ DISKUSE O SOCIALISMU A TRHU

This article was published in the leading Czech journal of economics named “Politicka Ekonomie” in 1967 that is during the process of Economic Reform intended to change the Soviet-type Command Economy in a sort of Market Socialism. It was curious that while the need to revive the market mechanism was accepted by the majority of economists and politicians, the famous “Socialist Controversy” that was just about this crucial problem was still virtually unknown in Czechoslovakia at that time. Our purpose was not only to provide the basic information about that controversy, but also to put it in the broader context of the evolution of the economic theory in the 19 th and 20 th century. Because of the previous domination of the orthodox Marxist economics, any developments of the non-Marxist economics after the classical contributions of Smith and Ricardo were regarded as the attempts of the “bourgeoisie” to falsify the “true” economics for the purpose of preserving Capitalism. We found it therefore necessary to start with the explanation of neoclassical concepts of marginal utility, imputation of value from final products to intermediate products and primary resources, as well as concepts of general equilibrium. After explaining these “roots” of the controversy the critical points of von Mises and Hayek are presented and the socialist responses of Maurice Dobb, Oskar Lange, Abba Lerner and others are discussed with a clear aim to show that without the market the socialist economy cannot be efficient