Abstract
After almost fifty years of existence (or in the case of the Soviet Union seventy years, a period long enough for a new economic system to demonstrate its advantages), socialist economies have run into serious trouble. While both the high foreign debt and galloping inflation experienced by Yugoslavia are shared by a number of capitalist economies, low efficiency and the resulting comparatively low standards of living appear to be specific features of socialist economies. As shown by Bergson (1987), net labour productivity in the main East European socialist countries is about 30 per cent lower after adjusting for the variation in capital intensiveness compared with capitalist economies. My own estimates of the efficiency of investment for Yugoslavia in Bajt (1987) roughly agree with this. A gap of 30 per cent does not appear excessive. Yet, if it persists long enough, it causes the actual gross domestic product (GDP) to lag far behind the potential. In the case of Yugoslavia in the period after 1950, my estimates show that by 1980 the former fell more than 50 per cent behind the latter. This identifies socialist economies as poverty economies, as opposed to Kornai’s (1979) shortage economies.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Alchian, A. and Demsetz, H. (1972) ‘Production, Information Costs and Economic Organization’, American Economic Review, vol. 62, pp. 777–95.
Bajt, A. (1987) ‘Stvarni i potencijalni proizvod u 1980’ (The Actual and Potential Product in 1980), Privredna kretanja Jugoslavije, no. 171, pp. 42–52; published also in Bajt (1988) pp. 13–21.
Bajt, A. (1988) Samoupravni oblik društvene svojine (The Self-management Form of Social Property) (Zagreb: Globus).
Bajt, A. (1989) ‘The Scope of Economic Reforms in Socialist Countries’, Reform Economics (Vienna).
Bársony, J. (1982) ‘Tibor Liska’s Concept of Socialist Entrepreneurship’, Acta Oeconomica, vol. 28, pp. 422–55.
Bental, B., Ben Zion, U. and Spiegel, M. (1982) ‘Management Contribution and the Allocation of Time in a Labour-managed Firm’, Journal of Comparative Economics, vol. 6, pp. 353–62.
Bergson, H. (1978) ‘Managerial Risks and Rewards in Public Enterprises’, Journal of Comparative Economics, vol. 2, pp. 211–25.
Bergson, H. (1987) ‘Comparative Productivity: The USSR, Eastern Europe, and the West’, American Economic Review, vol. 77, pp. 342–57.
Berle, A. A. and Means, G. C. (1932) The Modern Corporation and Private Property (New York: Harcourt, Brace & World).
Desai, P. (1986) ‘Soviet Growth Retardation’, American Economic Review, vol. 76 (Papers and Proceedings) pp. 175–80.
Fama, E. F. (1980) ‘Agency Problems and the Theory of the Firm’, Journal of Political Economy, vol. 88, pp. 288–307.
Furubotn, E. and Pejovich, S. (1972) ‘Property Rights and Economic Theory: A Survey of Recent Literature’, Journal of Economic Literature, vol. 10, pp. 1137–62.
Horvat, B. (1971) ‘Yugoslav Economic Policy in the Post-War Period: Problems, Ideas, Institutional Development’, American Economic Review, vol. 61 (Supplement) pp. 69–169.
Korač, M. (1961) ‘Teze za teoriju socijalističke robne proizvodnje’ (Theses for the Theory of Socialist Commodity Froduction), Socijalizam, vol. 4/1, pp. 31–53.
Kornai, J. (1979) ‘Resource-Constrained Versus Demand-Constrained Systems’, Econometrica, vol. 47, pp. 801–19.
Laffont, J. J. and Maskin, E. (1982) ‘The Theory of Incentives: An Overview’, in W. Hildebrand (ed.), Advances in Economic Theory (Cambridge: Cambridge University Press) pp. 31–94.
Lange, O. (1936) ‘On the Economic Theory of Socialism’, Review of Economic Studies, vol. 4/1, pp. 53–71 and vol. 4/2, pp. 123–42.
Liebenstein, H. (1966) ‘Allocative Efficiency versus X-efficiency’, American Economic Review, vol. 56, pp. 392–415.
Liska, T. (1963) ‘Kritika ẻs koncepció. Tẻzisek a gazdasảgi mechanizmus reformjảhoz’ (Critique and Concept. Theses for the Reform of the Economic Mechanism), Közgazdasảgi Szemle, vol. 9, pp. 1058–1176.
Marris, R. (1963) ‘A Model of the “Managerial” Enterprise’, Quarterly Journal of Economics, vol. 77, pp. 185–209.
Nutter, W. (1983) ‘Markets Without Property: A Grand Illusion’, in Political Economy and Freedom (Indianapolis: Liberty Press) pp. 94–102.
Stigler, G. J. (1976) ‘The Xistence of X-efficiency’, American Economic Review, vol. 66, pp. 213–16.
Tardos, M. (1982) ‘Development Program for Economic Control and Organization in Hungary’, Acta Oeconomica, vol. 28, pp. 295–315.
Tardos, M. (1989) ‘Property Rights in Hungary’, Reform Economics (Vienna).
Vanek, J. (1970) The General Theory of Labour-Managed Market Economies (Ithaca, NY: Cornell University Press).
Winiecki, J. (1987) ‘Soviet-type Economies’ Strategy for Catching-up Through Technology Imports — An Anatomy of Failure’, Technovation, vol. 6, pp. 115–45.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 1991 Palgrave Macmillan, a division of Macmillan Publishers Limited
About this chapter
Cite this chapter
Bajt, A. (1991). Economic Reforms Versus Central Planning and Monoparty Control. In: Dasgupta, P. (eds) Issues in Contemporary Economics. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-11579-2_16
Download citation
DOI: https://doi.org/10.1007/978-1-349-11579-2_16
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-11581-5
Online ISBN: 978-1-349-11579-2
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)