Consistency and Viability of the Liberman-Kosygin Reforms: The Limited Market Relations Socialist Model

Abstract

Acceptance of much of the criticism of the centrally administered socialist model, particularly relating to the economic structure, resulted in the Liberman-Kosygin reforms. The immediate reason for the reform was a substantial slowdown in growth rates, declining capital and labor productivity, increasing labor shortage, growing consumer expectations, and the feeling that the current system failed to utilize optimally available resources as well as a sudden and dramatic build-up of unsold goods. Under the centrally administered socialist system, little or no consideration was given to such questions as whether production targets were being met at a minimum cost and whether the mix of consumer goods was what consumers really wanted.