The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Economic Calculation in Socialist Countries

  • Michael Ellman
Living reference work entry

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In the 1930s, when the classical socialist system emerged, economic decisions were based not on detailed and precise economic methods of calculation but on rough and ready political methods. An important method of economic calculation – particularly in the post-Stalin period – was that of incrementalism. Input norms were a very important method of both inter-industry and consumption planning. Material balances, and later input–output, were also widely used. Project evaluation, linear programming, comparisons with the West, and economic intuition were other methods used. The influence of methods of economic calculation on economic outcomes should not be exaggerated.


Coefficient of absolute economic effectiveness Coefficient of relative economic effectiveness Consumption norms method Council for mutual economic assistance (Comecon) Economic calculation in social economies Five year plans (USSR) Gosplan Gossnab Incrementalist method of economic calculation Input norms method of economic calculation Input–Output method of economic calculation Kantorovich, L. Lemeshev, M. Linear programming Material balances method Planned economy Planning and counter-planning Stalinism, political economy of Standard Methodology of economic calculation 
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  • Michael Ellman
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