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Ivan Boldyrev and Till Düppe (eds), Economic Knowledge in Socialism, 1945-89

Phillip J. Bryson
p. 827-831
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Ivan Boldyrev and Till Düppe (eds), Economic Knowledge in Socialism, 1945-89, History of Political Economy (Annual Supplement to Volume 51), Durham: Duke University Press, 2019, 321 pages, 978-147800937-5

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1The book Economic Knowledge in Socialism, 1945-89 is a collection of papers by the following European and American scholars: Martha Lampland, György Péteri, Vítězslav Sommer, Oleg Ananyin and Denis Melnik, Yakov Feygin, Adam E. Leeds, Richard E. Ericson, Olessia Kirtchik, Eglé Rindzevičiūtė, Chris Miller, Johanna Bockman, and Joachim Zweynert. The papers focus on the period suggested in the title, although some provide background from years prior to 1945. The Soviet planning system is the object of attention for most of these articles, although a few address related planning and economic experience from Hungary, Czechoslovakia, and Yugoslavia. The central theme of the book is planning theories and issues, and reform ideas, mostly from Soviet experience. The authors insightfully discuss the planning issues as well as the distinguished economists who introduced and championed reform ideas in these countries.

2The papers are well written or translated. Individuals who have researched the Marxist-Leninist central planning of the Soviet Union and the bloc countries will find the contributions interesting and informative. The elaboration of the planning era’s historical developments and the ideas motivating them provides an interesting review and offers a comprehensive set of impressions.

3I have long been convinced that the high-profile economists, scholars and reformers from this period and from the countries involved were, of course, always competent, often brilliant. Unfortunately, their mastery of economic theories and technologies could only carry reform so far under the difficult constraints imposed by the planning system. Clever theories and promising policies generally had no chance against the unsurmountable issues stemming from Marxian biases against free market and private property institutions. Stalinist orthodoxy generated devastating disadvantages for economic performance. Government bureaucracies, as Lenin discovered and as became more and more obvious with the passage of time, were destined to distort performance, guide efforts into the wrong channels, and clog all flows that might lead to progress. In the Soviet case, the bureaucracy not only produced hurried, slipshod work; it was also a strong lobbying force blocking any possible reform. These are the conclusions one draws from the papers and they are in agreement with my own findings (see Bryson, 2015, especially the extensive chapters on 1) Bureaucracy and 2) Soviet Planning).

4Finally, one cannot but wonder how the whole effort did not simply grind to a halt even sooner than it did. How can a national bureaucracy manage both the affairs of governance efficiently and every (legal) business in the entire country? Considering the millions of small businesses and corporations that populate a modern economy and the number of transactions among them geographically across towns, cities and states is dizzying. One can see why the planning system joined state-owned firms into associations and tried to reduce the myriad of communications and information flows the planning exercise required. No wonder some planners liked to picture the socialist economy as a single gargantuan production unit (Bryson and Melzer, 1987). The attempt to plan the entire economy was a huge overreach for the bureaucracy, which explains why the second economy, an omnipresent black market, expanded inordinately to bask in the demands of the hungry and shortage-burdened consumer sector. I had to wonder why the second economy was not discussed in these papers. Black markets were not explicitly a problem Gosplan could work with or solve, but such markets certainly had a major impact on economic reality. Black markets are common in many countries, but the Soviet second economy was especially large and complex, filling in many gaps in the planned economy and producing a plethora of items consumers demanded right up until Perestroika failed.

5Stalinist Anti-Revisionist agents were omnipresent in Soviet planning, constraining the aspirations of the exceptionally talented and mathematically-minded would-be economic reformers. In Hungary, Péteri reminds us, István Friss, head of a new Institute of Economics within the Academy of Sciences, was for a time able to maintain some limited independence from the “intellectual confinement” of Marxist-Leninist political economy (32). But Friss struggled to protect his institute’s most talented and exposed scholars and their research programs. At one point, he could not avoid sacking his dear friend, the distinguished Kornai, to appease the Stalinists. Hungary was able to experiment somewhat with its version of market socialism, but as appears to have been the case in all bloc countries, what Péteri called the “force of thought” was less significant than the “force of power.”

6In Czechoslovakia a wave of de-Stalinization, promoted even in the public sphere by some well-known economists, began to use Marxist theory creatively and to consider less orthodox Marxist traditions. Moreover, Brus, Lange and Kalecki, famous Marxist economists from other countries, not to mention some non-Marxist economists, were of great interest to the Czech reformers. Ota Šik broke down the boundaries between economic writings and expertise, on the one hand, and public discussion about economic reform, on the other. The journal Ekonomická revue became a platform for politically critical journalism (61). As the Prague Spring went on, the very nature of a socialist economy was opened up to discussion and some literature on life under capitalism in the United States was produced. Ultimately, this became too much for the Stalinists and in August, 1968, the Warsaw Pact invasion peremptorily shut down the Prague Spring. There was a massive cleansing of “rightist revisionism” in all spheres of Czechoslovak society until the advent of perestroika (68-69).

7The authors of this collection focus mostly on schools of thought and indirectly on reform initiatives, all illuminating the directions of attempted economic change in the Soviet Union. The collection also features several studies on individual economists and their contributions to the advancement of planning issues. Yakov Feygin focuses more on a single economist, Yakov Kronrod, an “honest Marxist,” and his reform conceptions. Kronrod asserted that Fedorenko, the leader of the “new school” of mathematical economics, was attempting to replace a Marxist theory of value with “scarcity prices” (100). Kronrod insisted that economics should study social relations—how they divide the economic surplus and produce scarcity conditions—for these, and not “prices”, are the central questions of economics. Kronrod attempted to unravel in both macro and micro terms how to rationalize the process of economic reform. He attempted to do so in terms of Marxian reproduction schemes rather than in terms of pricing efficiency (111).

8Adam E. Leeds writes of another lesser-known Soviet economist, Yurii Yaremenko who wrote not for the public, but for the planners. Yaremenko presented a theory based not on a comparison with capitalist markets, but based on the planned economy per se. He held that the Soviet planning system was facing a dead end without the possibility of reform. Beginning in the 1960s, the economy’s sources for extensive growth were exhausted and the state plan had lost its coherence. The economy’s structure became distorted with the runaway growth of the military-industrial complex. Without central control, the adjustments required to sustain growth could not be made (128). Leeds confirms most of the same reasons for the failure of central planning I have found in my research. Olessia Kirtchik’s paper on Braverman represents another memorable contribution to the overall Soviet economic history. She, too, focuses on this single reformer.

9Richard E. Ericson’s review of the “System for Optimal Functioning of the Economy” (SOFE) tracks the development of a most important post-Stalinist reform endeavor which, at least for a time, was able to remain beyond the reach of anti-revisionist opposition. SOFE’s home was Nikolai Fedorenko’s Central Economic-Mathematics Institute of the USSR Academy of Sciences. It was hoped that mathematical methods, “economic cybernetics,” would modernize Soviet society’s development (155).

10After an enthusiastic beginning, the movement began to slow down as opposition from mainstream Marxist economists gradually increased. After the crushing of the Prague Spring in 1968, SOFE was limited to suggesting ways to make planning more efficient, rather than advocating market-oriented change. Ericson argues that the last act was in providing the economic-analytic foundation for perestroika (156). Along the way, brilliant minds accompanied Federenko in this analytical effort; Nemchinov, Liberman, Fel’dman, and Kantorovich were only some of the important ones, and they drew on works by Leontiev, von Neuman and others from the outside. But all the mathematical sophistication rather lingered in a state of abstraction that did not translate into the mundane language of the economic planner. Ericson reviews the problems of retaining control from the center over subordinate organizations, including state-owned firms in the real world of reform. Managing incentives, accounting for moral hazard and adverse selection among the plan’s agents, and other such problems made it impossible to achieve adequate reform outcomes. Mathematical theories could provide general guidelines and insights into planning processes, but were too abstract to provide specific instructions for a five-year plan. Still, in one sense Soviet-type mathematical reformers got it right: Market relationships and incentives, decentralization, and loosening the grip of the anti-revisionists on the economy would be necessary to solve the basic planning problems. But until the system collapsed, that grip was never effectually relaxed.

11Johanna Bockman’s paper follows up on some of her previous work, in which she uncovers an almost forgotten fact. Bockman asserts that in a bygone age when mathematician-economists like Paul Samuelson were developing the analytic conceptions of neoclassical economics, they thought they were doing so to provide a theoretical foundation for a socialist economy. True, before he began this mathematical work, Samuelson had expressed his youthful love for socialism. His assumption that a mathematical analysis of firms, markets and prices would lay the theoretical groundwork for a socialist system, was made before he and his contemporaries had any experience with Stalinist or other real-world planning environments. Models of markets certainly do fit markets, but to assume in retrospect that general equilibrium theories provide a natural application to socialist economic planning seems like a stretch.

12Planning problems that brought down the Stalinist system extend readily to other socialist planning experience. One broad class of such systems is addressed in Chris Miller’s article on the “Bureaucratic Bourgeoisies” of a number of developing countries. The Soviets had hoped to guide them to effective economic development. Markets are the enemies of socialist planners, who in the real world are bureaucrats with no particular interest in prices, real costs, or profit outcomes. These planner/bureaucrats are more interested in planning quantities than in planning prices and markets. The Soviet tendency to push for large quantities (forcing rapid economic growth rather than seeking to improve efficiency) argues against resolving incentive incompatibilities in the system. Since no one owns property, or the “means of production,” there is little sense of the importance of optimizing its use. Planning institutions and agents have characteristics and interactions that were unclear to Samuelson and his contemporaries in those early years. At that time, for example, economists did not talk about moral hazard and other issues that applied prominently to Soviet economic planning. Institutional inter-relationships caused planning agents and managers of state-owned firms to pursue particular interests that would make their lives easier, but which resulted in violating all the efficiency principles built into the theoretical structures of neo-classical economics. In any case, great mathematical economists across the bloc were unable to achieve what Samuelson thought could be taken for granted. This book, however, Economic Knowledge in Socialism, 1945-89, provides abundant if not overwhelming evidence of the tendency for the Marxist views of Lenin and Stalin to thwart economic efficiency and destroy all hope for economic success and prosperity.

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Bibliographie

Bryson, Phillip J. 2015. Socialism: Origins, Expansion, Decline and the Attempted Revival in the United States. Bloomington, IN: XLibris.

Bryson, Phillip J., and Manfred Melzer. 1987. Planning Refinements and Combine Formation in East German Economic ‘Intensification’. The Carl Beck Papers in Russian and East European Studies, 508.

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Phillip J. Bryson, « Ivan Boldyrev and Till Düppe (eds), Economic Knowledge in Socialism, 1945-89  »Œconomia, 10-4 | 2020, 827-831.

Référence électronique

Phillip J. Bryson, « Ivan Boldyrev and Till Düppe (eds), Economic Knowledge in Socialism, 1945-89  »Œconomia [En ligne], 10-4 | 2020, mis en ligne le 01 décembre 2020, consulté le 09 mars 2021. URL : http://journals.openedition.org/oeconomia/9527 ; DOI : https://doi.org/10.4000/oeconomia.9527

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Auteur

Phillip J. Bryson

Professor of Economics Emeritus, Brigham Young University.

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