Economics of Planning Volume 1 Issue 1 1961 - Maurice Dobb - Operational Aspects of Soviet Economy

7/27/2019 Economics of Planning Volume 1 Issue 1 1961 - Maurice Dobb - Operational Aspects of Soviet Economy

http://slidepdf.com/reader/full/economics-of-planning-volume-1-issue-1-1961-maurice-dobb-operational-aspects 1/16

OPERATIONAL ASPECTS OF SOVIET ECONOMYBy Maurice Dobb .1)

In recent years economists have ceased to think in purely sta-

tic terms, and to imagine that the only kind of efficiency-problem

is that envisaged by the allocation of resources so as to equalise

their marginal yields in all uses. Yet because of past preoccupa-

tion of economists with the latter, it might be as well, perhaps,

to start by pointing out, rather obviously, that there are three

main types (at least) of efficiency-problems to be distinguished.

Firs t ly , there is the dynamic problem of raising the produc-

tiv ity of labour in the course of economic change and growth. The

main agencies of improvement in this context are accumulation

of capital, technical innovation and improvements in human orga-

nisation (in which I include rationalisation of managerical tech-

niques and methods, improved specialisation and standardisation

in production and division of labour).

Secondly, there is the problem of so co-ordinating different sta-

ges of production and different productive units as to ensure a

smooth and continous flow of production, thereby avoiding loss

of time and of output through interruptionsm, idle capacity at some

points and overloading of plant and of personnel at others. With-

in an individual plant or firm this is known as achieving a ~ba-

lanced process~>. But there is also the same problem for the eco-

nomy as a whole as regards the supply-demand interrelationships

between the network of productive units of which the economyis composed.

Third ly , there is the problem of so allocating productive re-

1) T r i n i t y C o l l eg e , C a m b r i d g e .



20

sources that in the aggregate they achieve the maximum result,measured in some way or other. This is the favourite economists'

problem, and consists in adjusting resouces at the margin of

various employments until no further net gain is possible from

further marginal shifts. The result may be measured in various

ways in terms of given end-products valued or weighted in some

particular way; but the maximisation of consumers' welfare or

want-satisfaction has usually been taken by economists who have

discussed this problem as the criterion of what the composition

of these end-products should be. May I be allowed to add in pa-

renthesis that the result of the discussion of welfare economics

over the two past decades seems to me to be that no precise defi-

nition of such a welfare-optimum is possible, and that as a goal

of policy it must necessarily be regarded as something rathervague and approximate?

Hitherto it has been the first two of these three types of effi-

ciency-problem tha t has engaged the attent ion of Soviet planners

and policy-makers. An abnormally high rate of growth has been

furthered by a high rate of investment; but probably more im-

portant in this connection has been the fact that an unusually

high proportion of investment has been devoted to the develop-

ment of the capital goods sector of industry. The system of supp-

ly-allocations based on the method of material balances, of which

we shall give a brief description in a moment, was designed to

secure an overall balance in the sense of our second type of effi-

ciency-problem; and when Soviet statements refer to "maintai-ning the requisite proportion in developement" as one of the prime

objectives of planning, it is to this that they evidently refer, and

no t to the allocation-problem as this'has been conceived by Wes-

tern ecconomists with their marginal preoccupation.

This must not be taken to mean tha t the thi rd type of problem

has been altogether ignored. But I think is it not untrue to say

that until comparatively recently and especially in the pre-war

decade it held a very secondary place. This was partly becauseduring a period when the emphasis was on rapid growth at all

costs other considerations were almost inevitably sacrificed to

this emphasis and to a system of priorities based on a series

of "main points of consentration" (or "key fronts") -- as



21

indeed happens in any war economy. Another way of saying thesame thing is tha t when the time factor in achieving certain aims

is given special weight, this may conflict with a principle of maxi-

mum economy of means, since one way of "gaining time" is to

spend more means and to sacrifice secondary objectives. To this

I belive we have to add the consideration that in times of scar-

city the priorities in the supply of consumer goods are fairly

simple rather than complex, and it may reasonably be held that

the results one can achieve by rule-of-thumb methods will not be

so much inferior to the best that in these circumstances one could

achieve by more studied artifice.

With the raising standard of life and increased emphasis on

meeting comsumers needs in recent years there seems no doubt

that in one form or another our third type of efficiency problem

is receiving a greater measure of attention, and that it is likely

(provided tha t there is no war) to take an increasinly impor-

tant place in the future.

Some have, indeed, suggested that this growing attention to

the problem of optimum allocation is still deficient in a crucial

respect: namely, tha t it only seeks to minimise the cost of pro-

ducing an arbitrarily-defined set of end-products -- defined, tha t

is, by the requirements of the Plan, and bearing no necessary rela-

tion to the order-of-importance of consumers' wants. However

in view of the insistence officially placed on satisfying in increa-

sing degree the wants of consumers (cf. Stalin's definition of "t he

basic economic law of socialism")1) this contrast seems to be anartificial one. While it is true that there is no automatic mecha-

nism whereby output in the consumers' goods sector is adapted

to the pattern of consumers' demand (as there is in theoretical

models of a competitive free market system), we shall see that

there are ways in which consumers' demand exerts an influence

on producers, and there is a growing insistence on measures to

enable this influence to be felt.

We are going to start with a description of the system of supp-ly allocations and the part that it plays in planning. Here I shall

1 ) T h i s w a s d e f i n e d i n h i s E c o n o m i c P r o b l e m s o f S o c i a l i s m i ~ t h e U . S , F I. R . ,p u b l i s h e d s h o r t l y b e f o r e h i s d e a t h , a s : ' m a x i m u m s a t i s f a c t i o n o f t h e m a t e r i a la n d c u l t u r a l r e q u i r e m e n t s o f s o c i e t y " , w h i c h a f f o r d s t h e " p u r p o s e " b y w h i c ht h e " b a l a n c e d d e v e l o p e m e n t " p r o v i d e d b y p l a n n i n g i s g u i d e d .



22

beg i n by desc r i b i ng i n ou t l i ne t he t r ad i t i ona l sy s t em as i t g rewup under cen t r a l i s ed Mi n i s t r i e s un t i l t h ree yea r s ago ; t hen i nd i -

c a t i n g a n y r e sp e c ts i n w h i c h t h i s h a s b e e n s i g n i f i c a n t ly a l t e r e d

by t he r eg i ona l decen t r a l i s a t i on o f t he l a s t f ew yea r s ( so f a r a t

l eas t , a s such a l t e ra t i ons have become known) .

T h e t r a d i t i o n a l m e t h o d h a s b e e n t h a t a s s o o n a n i n d u s t r i a l

e n t e r p r i s e k n o w s w h a t i t s p r o d u c t i o n p l a n f o r t h e c o m i n g y e a r

wi l l be ( somet i mes even be fo re ) , i t s ubmi t s a s t a t emen t o f i t s

s u p p l y - r e q u i r e m e n t s t o i t s a p p r o p r i a t e i n d u s t r i a l s u p p l y d e p a r t -m e n t (gIavsnab); s u p p o r t i n g t h i s s t a t e m e n t w i t h c o e f f i c i e n t s

( ' no rms ' ) r e l a t i ng i npu t s t o ou t pu t s , an d i nd i ca t i ng a l so se -

cond -bes t cho i ces fo r subs t i t u t e -ma t e r i a l s i f t he p re fe r r ed supp -

l ie s a re no t ava i l ab l e . Thu s t he h i ghe r bod ies , in d raw i ng up t he i r

a l lo c a t io n s h a v e b e f or e th e m t h e s t a t e d r e q u i r e m e n t s o f t h e i n d u -

s t r i e s and o f t he va r i ous en t e rp r i s e s w i t h i n each b ranch o f i ndu -

s t ry . In p repa r i ng t he a l l oca t i ons a t t op l eve l s u se i s made o f t he

p r e l i m i n a r y m a t e r i a l b a l a n c e s p r e p a r e d b y G o s p l a n f o r t h e p a s t

pe r i od and t he comi ng pe r i od (p re -war t hese ba l ance were con -

s t ruc t ed fo r be t ween 400 and 500 d i f f e ren t p roduc t s ; now appa-

ren t l y fo r abou t 1000). E ach ba l ance cons is ts , on t he one s ide ,

o f t h e o u t p u t o r a n t i c i p a t e d o u t p u t o f t h e p r o d u c t i n q u e s t i o n ;

on t he o t he r s ide o f t he m a i n s t ruc t u re o f i t s consum pt i on , toge t -

he r w i t h t he ave rage t echn i ca l coe f f i c i en t s (no rms ) govern i ng i t s

use in var iou s l ines o f p rod uct ion . Th i s i s , o f course, the sam e

t h i n g e s s e n t ia l ly a s c o n s t r u c t in g a n i n p u t - o u t p u t m a t r ix .

F r o m w h i c h e v e r l e v e l t h e y s t a r t , a l l o c a t i o n s a r e m a d e o n t h e

g e n e r a l p r i n c i p l e t h a t a t e a c h s t a g e t h e y a r e b r o k e n d o w n t o t h e

o r g a n is a ti o n s a t t h e n e x t l e v el b e lo w , a n d t h e n a t t h i s le v e l s u b -

d i v i d e d a m o n g t h e u n i t s w i t h i n t h e s p h e r e o f t h e s e o r g a n i s a t i o n s

( fo rmer l y t h i s was i n t he f i r s t i n s t ance t o t he l eve l o f a b ranch

o f i n d u s t ry , a n d t h e n f r o m t h e i n d u s t r y a m o n g i ts c o n s t i t u e n t

en t e rp r i s e s . ) The compl e t e b reak -down i s acco rd i ng l y no t worked -

ou t a t t he t opm os t l eve l. Once , however , t he a l l oca t i on ha s been

f i na l l y b roken -dow n t o t he en t e rp r i s e l eve l, t he en t e rp r i s e p ro -c ee d t o e n t e r i n t o c o n t r a c t s w i t h s u p p l y i n g f ir m s o r w i t h t h e s a le s -

d e p a r t m e n t s (glavsbyty) o g t h e p r o d u c i n g i n d u s t r i e s , i n o r d e r t o

a r r a n g e d e t a il e d s p e c i f i c a t i o n s r e g a r d i n g d e h v e r y - r e q u i r e m e n t s ,

deh ver y-d a tes e tc . O ne could , therefore , :descr ibe these a l loca t ions



23

as cons t i t u t i ng a l icense t o pu rchase , b u t no more t ha n t h i s ;a c t u a l d e l i v e r y - a r r a n g e m e n t s w i t h i n t h e l i m i t s o f t h i s l i c e n s e o r

pe rmi t be i ng t he r e spons i b i l i t y o f t he en t e rp r i s e s t hemse l ves .

A l l p r o d u c t s d e s t i n e d f o r " p r o d u c t i v e c o n s u m p t i o n " b y a n o t -

he r en t e rp r i s e ( i . e . eve ry t h i ng excep t f i na l consumer goods des -

t i ned fo r t he r e t a i l marke t ) have been t r ad i t i ona l l y c l a s s i f i ed

a c c o r d i n g a s t h e y w e r e s u b je c t t o c e n t ra l is e d o r d e c e n t ra l is e d

d i s t r i b u t i o n . I t w a s t h e f o r m e r t h a t c a m e u n d e r t h e a l l o c a t i o n -

s y s t e m w h i c h w e h a v e b r i e fl y d e s cr ib e d : a c a t e g o r y t h a t i n c lu d e d

m o s t h e a v y i n d u s t r y p r o d u c t s , r a w m a t e r i a l s a n d f u e l s a n d b u i l -

d i ng m a t e r i a ls . C onsumer goods, s ave fo r som e sp ec i a l l y s ca rce

i t ems , t o -day be l ong appa ren t l y t o t he decen t r a l i s ed ca t ego ry : i . d .

r e t a i l o r who l esa l e o rgans p l ace t he i r o rde rs d i r ec t l y w i t h t h e s a le s

d e p a r t m e n t s (glavsbyty) of t he consumer goods i ndus t r i e s (de-

p a r t m e n t s w h i c h a r e n o w , h o w e v e r , s u b o r d i n a t e d t o t h e M i n i s t r y

o f T rade o f t he U n i on o r t he R epub l i c , t o rende r t hem , i n nego -

t i a t i ons be t ween r e t a i l e r s and p roduce r s , l e s s a spokesman o f t he

l a t t e r a n d m o r e r e s p o n s i v e t o t h e d e m a n d s o f t h e f o r m e r t h a n

t hey u sed t o be ) . The o l d d i s t i nc t i on w i t h i n t he " cen t r a l i s ed"

c a t eg o r y b e tw e e n " f u n d e d " a n d " q u o t a " g oo ds (a c co rd in g t o

whe t he r t he i r a l l oca t i ons was con t ro l l ed f rom t he h i ghes t l eve l o f

t h e A l l -U n i o n E c o n o m i c C o u n ci l o r b y t h e M i n i s tr y of t h e p r o d u -

c i ng i n d u s t r y ) - - h a s b e e n a p p a r e n t l y r e p l ac e d b y a d is t in c t i o n

be t wee n p roduc t s (or quo t a s o f a p roduc t ) d i s t r i bu t ed on an

a l l -Un i on s ca le , t hose d i s t r i bu t ed i n s ide a p a r t i cu l a r Re pub l i c

b u t b e y o n d t h e b o u n d a r i e s o f a n i n d i v i d u a l e c o n o m i c r e g i o n , a n dt hose d i s t r i bu t ed i n s i de t he economi c r eg i on where t hey a re p ro -

duced ( t he f i r s t t wo ca t ego r i e s be i ng a l l oca t ed by t he app rop r i a t e

glavsbyt a t t a c h e d t o G o s p la n a t t h e A l l -U n i o n l ev e l; t h e t h i r d

b y t h e a p p r o p r i a t e glavsbyt a t t he Repub l i c - l eve l ) ,

As r ega rds t he p rocedu re fo r cons t ruc t i ng t he annua l (ope ra -

t i o n a l ) p l a n s ( a n d t h e q u a r t e r l y p l a n s w i t h i n i t ) , i t h a s b e e n t h e

p r a c ti c e a b o u t h a l f - w a y t h r o u g h t h e y e a r f o r G o s p l a n t o d r a w u p

p r o v i si o n a l t a r g e t s ( " c o n t r o l f i g u re s " ) o n t h e b a s is o f t h e p r el i,m i n a r y m a t e r ia l b a la n ce s t h a t w e h a v e m e n tio n ed , a n d t o p a ss

t h e s e :to th e v a r i o u s i n d u s t r i e s (n o w p r e s u m a b l y t o t h e 1 2 0- od d

r e g io n a l e c o n om i c c o u n c i l s ) . A f t e r f u r t h e r b r e a k - d o w n t h e s e

w o u l d t h e n b e p a s se d d o w n t o t h e i n d i v i d u a l e n t e r p r i s e s . A n in n o -



24

v a t i o n i n t r o d u c e d , a p p a r e n t l y , b y t h e l a t e s t S e v e n - Y e a r P l a n i st ha t p rov i s i ona l t a rge t s fo r each o f i t s cons t i t uen t yea r s a re s t i pu -

l a t e d f or t h e m a i n p ro d u c ts , a n d n o t m e r e l y t h e q u i n q u e n n i a l

p e r s p ec t iv e a s f o rm e r l y . A n a p p r o x i m a t e i d e a o f t h e a n n u a l ta r -

ge t s i s acco rd i ng l y now ava i l ab l e t o t he i ndus t r i e s much ea r l i e r .

The en t e rp r i s e s t hen p roceed t o pas s t he i r own op i n i on on t hese

p rov i s i ona l t age t s . As we have s een , t hey a l so base upon t hem

t h e i r o w n e s t i m a t e s o f s u p p l y - r e q u i r e m e n t s , i n c l u d i n g d e m a n d s

f o r n e w e q u i p m e n t a n d f o r l a b o u r . A t e a c h s t a g e i n t h e r e t u r n

j ou rney back f rom t he en t e rp r i s e s t o Gosp l an , t he o r i g i na l d ra f t

t a rge t s w i l l be r econs i de red , amp l i f i ed and pos s i b l y r ev i s ed , un t i l

G o s p la n f i n a ll y s u b m i ts t h e r e s u lt s a g a i n t o t h e t e s t o f t h e b a l a n -

ce -me t hod t o s ecure a f i na l ad j u s t e m en t an d f it . Som et i mes t he re

m a y b e m o r e t h a n o n e p a s s a g e t o - a n d - f r o b e t w e e n G o s p l a n a n d

t h e i n d u s t r i e s i n t h e c o u r s e o f m u t u a l l y a d j u s t i n g r e v i s e d t a r g e t s

wi t h r ev i s ed supp l y - requ i remen t s . These l a t e r s t ages , however ,

a re ap t t o be sub j ec t t o a r a t he r s t r i c t t i me- l i mi t , wh i ch s eve r l y

c u r t a i l s t h e e x t e n t o f m u t u a l c o n s u l a t i o n , a n d i m p o s e s t h e n e e d

f o r a d j u s t m e n t s i n t h e s e f i n a l s t a g e s t o b e m a d e w i t h i n t h e p l a n -

n i ng mechan i sm i t s e l f . (Even so , appa ren t l y , t he re i s o f t en t i me

on l y t o r eca l cu t e t hose ba l ances wh i ch i nvo l ve so -ca l l ed " f i r s t -

o rde r l i nkages" ; t hose o f s econd o r t h i rd o rde r be i ng ad j u s t ed

on l y " w here t he changes a re s i gn i f i can t ones " ) . 1) I f consu l -

t a t i on w i t h l ower l eve l s i s t oo ru t h l e s s l y s ac r i f i ced t o speed , t he

f i na l r e su l t m ay su f fe r f rom be i ng un rea l i st i c . On t he o t h e r han d ,

t o o m u c h c o n s u l a t i o n a n d p a r l e y i n g m a y h a v e t h e n o - l e s s - s e r i o u sd i s an dva n t ag e o f leav i ng t hose a t t he p roduc t i on - l eve l t oo l ong i n

d o u b t a b o u t t h e i r p r e c i s e c o m m i t m e n t s a n d a b o u t s u p p l y - a v a i l -

ab i l i t i e s ( and t he re have been occas i ons when t he p l ans have no t

t a k e n f i n a l s h a p e u n t i l a f t e r t h e s t a r t o f t h e p e r i o d t o w h i c h t h e y

app l i ed m even a s l a t e a s March o r Ap r i l o f t he y ea r i n ques ti on ) .

I f one may haza rd a gene ra l i s a t i on , one cou l d pe rhaps s ay t h i s .

P l a nn i ng m us t a l w ays cons i s t o f a t w o-w ay p rocess , o f da t a , r equ i -

r e m e n t s , c r i t ic i s m f r o m b e lo w u p w a r d s , a n d o f t a r g e t s a n d d ir ec -t i v e s f r o m t h e t o p d o w n w a r d s ; m a n a g e m e n t s a t t h e l o w e r l e v e l s

knowi ng i n t i ma t e l y t he mi c roscop i c s i t ua t i on , i t s pos s i b i l i t i e s and

1) A . N . E f i m o v q u o t e d b y J . M . M o n t i a s i n A m e r i c a n E c o n o m i c R ~ v i e w

D e c . 1 9 5 9 , p . 9 76 .



25

limitations, and the higher bodies knowing the general shape ofthe macro-economic situation, its needs and its constraints. Suc-

cessful planning has to be a blend of the two; but in practice

the blend may vary, and what places the strictest hmit on the

blend is probably the time-factor. There may also be a certain

pohtical conflict in the two-way process, since the industries and

the enterprises will tend to have a not unnatural bias in favour

of "loose" planning and lenient targets, not only in the selfish

pursuit of an easier life for themselves, but, more justifiably, to

provide a "safety margin" against unforeseen contingencies,

interruption or failure of supplies etc. Reacting against this bias

planners and pohcy-makers are hkely to lean towards "tight"

planning and the setting of targets and coefficients which keep

the managers of enterprises in theirshirts leeves and on their toes.

It would seem that in the past, and especially in the pre-war

years when construction was "against the clock" and across the

lengthening shadows of war, many of the economic difficulties of

the time, (the interruptions in the "balanced flow" of output

owing to scarcities, non-arrival of supplies, overworking of equip-

ment, tendency to sacrifice quality and 'assortment' to quan-

titative fulfilment of an output target etc.) were due to a con-

tinual forcing of the pace b y over-tight planning; and this at a

time when there were insufficient reserves to provide sufficient

flexibility and "roo m for manoeuvre". As we have suggested,

this is not necessarily a sign of irrationahty, since when results

are measured within a fairly narrow time-horizon, one way of"buying time" is to use resources more lavishly than one other-

wise would on objects of high priority at the expense of ends

which (judged within this time-horizon) are of low priority. (One

of the things sacrificed at this period, of course, was the increase

of consumer goods production.) But viewed as a long-term pohcy

this will be uneconomic,1) by the criterion of our second type of

efficiency-problem alone; and one form that increasing attention

in recent years to questions of efficiency has taken seems to havebeen a greater attention to the "realism" of planning targets and

1) Exc ep t in so far as , in achieving cer ta in gro wth wi th in ten years i n s t e a d

of (say) twen ty , one i s then cef orth able af ter the t en th year to use t h e r e s u l t s

of th i s g rowth to p romot e fu r t~r g rowth , and so on cumula t ive ly .



26

the introduction of greater flexibility by the accumulation of re-serves and a greater desentralisation of supply-arrangements.

I need hardly add, perhaps, that the task of planning is not

finished (at least in a system of the Soviet type) with the con-

struction of a set of plan-targets; possibly it is not even half-finis'

hed. Nothing can go exactly according to programme, even in the

most well-ordered world. Some flexibili ty has to be allowed for

to meet unforeseen contingencies or imperfect reasilm in the plan.

Economically speaking, this can only be provided for by the hol-ding of reserve stock at key points -- which as we have seen

were notably deficient in the pre-war period and the immediate

post-war years; also perhaps by holding a certain amount of re-

serve capacity of equipment and manpower (although this is, of

course, as much an offence against our second type of efficiency

as interruptions in the production flow would be in consequence

of shortages or diversions of supplies). Administratively, flexibi-

lity is afforded by provision for an enterprise's plan to be altered

with the sanction of higher author ity (effectively this seems to

mean the administrative department for the industrial branch,

now under the regional Sovnarkhoz), which issues what is termed

"operational corrections". Sometimes th is is done on the initia-

tive of the enterprise, sometimes of higher authority (e. g. owing

to the discovery of a bottleneck in some product and the need

to cut its consumption by users and step-up its output by produ-

cers of it; plan-revision here playing the role, more directly, of

short-period price fluctuations in a free market system). Finan-

cially flexibility is afforded by the existence of so-called "un-

planned credits" (nominally subject to a maximum period of one

month) to meet "above-plan" needs for inputs or unforeseen

production delays (e. g. due t(~ late-delivery of supplies); also

"supplementary credits" to cover needs arising from "opera-

tional corrections". It will not of course, necessarily follow that

when revisions have been sanctioned by higher authori ty that the

supplies will be available to make them possible; and the "opera-tional correction" apparent ly carries no gurantee to this effect.

This may be said to be the crucial difficulty in making revision

to the plan-in-process smoothly: that of enabling changes in supp-

ly arrangements to match changes in output-targets. But provided



27

that the supphes are available, greater decentralisation of theactual supply-arrangements is likely to make for quicker adjust-

ments.

Before we come to the question of consumer goods, and our

third type of efficiency problem, there is something more to say

about planning of producer goods (Group A industries according

to Soviet classification), especially of the planning of investment.

It will be clear tha t in any growth-process an important r61e will

be played by what may be called a circular production-process

within this sector (to distinguish it from the straight-line produc-

tion flow from primary stages to consumer in terms of which eco-

nomists are, perhaps, too apt to think). This will not directly and

immediately have reference to any want satisfications of individual

consumers, since for the time being none of the constituent pro-

ducts will have a destination outside the producer-goods sector.

The output-pattern of this circular flow will be dictated by the

internal requirements of the growth-process. Belonging to it,

however, there will be a problem of allocation of resources (other

than tha t dictated by the output-pattern of the production plan):

this appears essentially as a choice of methods of production or a

choice of technique, which could be called a choice between using

labour to work machines or to make them (since more labour-

saving machines are apt to cost more to make -- at any rate as

between any pair of alternatives where an economic choice is in-

volved).It is to deal with this type of problem that Soviet planners and

"project-makers" have utilised the so-called "coefficient of

effectiveness" of an investmen t project (or its inverse the "pe-

riod of recoupment"). On this question there has been consider-

able discussion in the course of the last ten years or rather

more. At first the notion met with considerable doubt and criti-

cism; partly on doctrinal grounds because it smacked of a bour-

geois rate of interst and uniform profit-rate; others (includingStrumilin) thought that it would exert a bias against techical

progress. Four years ago, however, there was issued, following

an All-Union conference on the subject, an interim set of recom-

mendations on the use of such coefficients; and this year a joint



28

recommendation of the Research Insti tute of Gosplan and theEconomics Institute of the Academy has been published, embo-

dying a set of 'standard methods' (tipovaia metodika) for use

in making such decisions at all levels down to the industrial enter-

prise.

This coefficient expresses the saving in prime cost (of produ-

cing a given output) which results from a given increase of in-

vestment (e. g. in more expensive and capital intensive eqiup-

ment) as a ratio to this increased investment. A standard minimum

coefficient is set, and any investment project that does not reachit will be rejected from the planning agenda. Actually no uniform

value for the coefficient is lais down in the recently published

"standard methods": merely limits within which it is suggested

that branches of industry should fix a standard coefficient (these

are between .15 and .3 for industry, with a lower figure of .1,

or a recoupment period of ten years, for transport and power-

production). The coefficient is also usable as a discount-factor to

relate expenditure at different dates; and its use, alternatively,

to construct an accounting cost-price is also suggested (a sugges-

tion which I believe originated with Professor V. V. Novozhilov,1)

one of the Leningrad pioneers of the linear-programming approach

according to the Kantorovitch-method). Thus, if we write C for

the prime cost of output under a given method of production, K

for the value of the invested capital and r for the standard coeffi-

cient of effectiveness, then this cost price can be written as

r K § C , and the method of production be chosen for which thiscost-price is a minimum.

The retail market for consumer goods, is of course, a real mar-

ket, and the prices on it have to be equilibrium prices (i. e. achie-

ving an equilibrium or balance between current demand and avail-

able supply) if there are not to be queues and abnormal depletion

(or alternatively accumulation) of stocks. This does not mean

that these prices are changes at frequent intervals. They are nowmostly controlled2) according to price-lists or price-limits drawn

1) See his con tri but ion to P r O n e n e n i e M a t e m a t ~ k i v E k o n o m i c h e s k i k h

I s s : e d o v a n ~ a k h , ed. V. S. Nem ch in ov , :Moscow 1959, pp. 42- -21 3.~) Some th ings of wide con sum pt io n including basic foodstuffs are s t i ll

covered by cent ra l pr ice- l i st s a t an A l l -Union level.



29

up by special price-fixing commisions at the level of the RepublicGovernments or else locally in the various regions; and these lists

are apt to be altered only at intervals unless very marked discre-

pancy or anomaly becomes apparent. Thus quite short-period

variations in demand have an effect usually on stocks rather than

on prices. During the successive price-reductions of the 50's, how-

ever (which in the earlier half of the decade were apt to occur at

regular annual intervals), there came to be a rough adjustment

of the levels of individual prices to the prevailing demand situ-

ation for individual commodities. To begin with, there was what

is now admitted to have been a too-rigid tendency to apply per-

centage reductions uniformly over a broad commodity-group.

Resulting disequilibria in the market for certain goods (runs on

some lines and resulting stock depletion and non-availability) for-

ced an abandonment of this bureaucratic attitude in later price-

reductions and a more careful adjustment of particular prices to

the particular situation, with emphasis on the need for detailed

market reasearch.What is known as the "wholesale price" (optova ia tsena) at

the industrial level is, however, unrelated to the retail price,

and is, in fact, a cost-price, based in familiar fashion upon "plan-

ned cost" with the addition of a small profit margin ("planned

profit"). This planned "cost" consists essentially of prime costs,

although it includes an amortisation charge to cover depreci-

ation of equipment. The same applies to products of both sec-

tors of industry, and in the case of Group A (producers' goods)this constitute the actual transfer price at which goods change

hands between enterprises and at which they enter into the cost

of the using enterprise. This is the "dual price-system" as it

has grown up/during and since the 1930's, which is defended

mainly on the grounds of khozraschot: that the pre-fixing of sel-

ling-prices on the basis of the estimated cost of producing the

planned output gives a maximum incentive to efficiency by the

producing industry, since the industry (or individual enterpriseswithin it) can only realise a profit above the planned profit by

reducing actual cost below planned cost (and enterprises are allo-

wed to retain a substantial proportion of any "above-plan pro-

fit"). The prices paid to individual enterprises within an indu-



3 0

s t r ia l b r a n c h a r e u s u a l l y v a r i e d w h e r e t h e r e e x i s t a p p r e c i a b l e d i f-f e re n c es i n t h e " p l a n n e d c o s ts " o f o u t p u t f o r d i f f e r e n t e n t e r -

p r is e s (e . g . o w i n g t o d i f fe r e n c e s i n t e c h n i c a l e q u i p m e n t , i n t y p e

o f p r o d u c t , o r i n n a t u r a l s i t u a t i o n i n t h e c a s e o f a n e x t r a c t i v e

i n d u s t r y ) ; t h e s e l li n g -p r ic e a t t h e l e v e l o f t h e s a l e s - d e p a r t m e n t

(sbyt) o f t h e b r a n c h o f i n d u s t r y a s a w h o l e b e in g a r r i v e d a t a s

a n a v e r a g e o f t h e p r i c e s s e t f o r t h e c o n s t i t u e n t e n t e r p r i s e s . I n t h e

c a se o f c o n s u m e r g o o d s t h e d i f fe r e n c e b e t w e e n t h e t w o p r i c e le -

v e l s - - b e t w e e n t h e r e t a i l p r i c e ( l e s s d i s t r i b u t i v e c o s t plus p l a n -

n e d p r o f i t - m a r g i n t o d i s t r i b u t i v e o r g a ns ) a n d t h e i n d u s t r i a l w h o l e -

s al e p r ic e - - is b r i d g e d b y t h e t u r n o v e r t a x , w h i c h d i v e r t s th i s

d i f fe r e n c e d i r e c t l y i n t o t h e B u d g e t i n s t e a d o f a l l o w i n g i t to a c c r u e

a s p r o f it t o i n d u s t r y . I n t h e c a s e of p r o d u c e r g o o d s i t is o n l y

e x c e p t i o n a l l y t h a t t h e t r a n s f e r p r i c e c h a r g e d t o u s e r s i s b u i l t o p

b y t h e a d d i t i o n o f a t u r n o v e r t a x t o t h e s a l e- p ri ce a t t h e i n d u -

s t r y l e v e l ( e x a m p l e s a r e o il a n d e l e c t r i c i ty w h i c h a s l o w - c o s t s o u r-

c e s o f f u e l a n d p o w e r a r e b u i l t u p t o t h e l e v e l o f c o a l a s t h e

h i g h - c o s t s o u r c e i n th i s g r o u p o f s u b s t i t u t e s ). T h e r e is a t e n d e n c y

e l s e w h e r e f o r s e l li n g p r i c e s o f f a i r l y c l o s e s u b s t i t u t e s t o b e c l o s e l y

r e l a t e d i n t h i s w a y ; a n d i n t h e c a s e o f d i f f e r e n t g r a d e s o f a c o m -

m o d i t y f or t h e p r i ce s o f t h e m o r e f a v o u r e d g r a d e s t o b e r ai s ed

b y m o r e t h a n t h e i r c o s t w a r r a n t s , u s u a l l y o n t h e g r o u n d t h a t

t h e s e t e n d t o b e i n " d e f i c i t s u p p l y " ( th i s a p p li es , f o r e x a m p l e , t o

" d e f i c i t s t e e l s " ) .

F o r m e r l y t h e t u r n o v e r t a x o n c o n s u m e r g o od s w a s g e n e r a l l y

s e t a t f i x e d r a t e s f o r i n d i v i d u a l i t e m s , o r r a t h e r f o r groups o fi te m s a s it i n e v i t a b l y h a d t o b e . W i t h t h e m o r e c a r e fu l a t t e n t i o n

t o i n d i v i d u a l r e t a i l p r i c e d i f fe r e n c e s w h i c h I h a v e m e n t i o n e d ,

t h is h a d t h e d i s a d v a n t a g e e i t h e r o f i m p o s i n g u n d e s i r a b l e r ig i d i t y

o n p r ic e s o f i t e m s w i t h i n a p a r t i c u l a r t a x - g r o u p , o r e ls e ( if r e t a i l

p r i ce s o f i t e m s w e r e f l e x ib l y fi x e d ) o f i m p o s i n g o n t h e i n d u s t r y a

v a r i e t y o f p r o f i t - m a r g i n s f o r d i f f e r e n t i t e m s . O n e o f t h e p e r e n -

n i a l p l a n n i n g - d i ff i c u lt i es h a s b e e n w i t h t h e s o - c al le d " f u l f i l m e n t

o f t h e a s s o r t m e n t p l a n " - - o f t h e o u t p u t p l a n a s r e g a rd s q u a -l i t y a n d r a n g e o f v a r ie t ie s ; e n t e r p ri se s h a v i n g a t e n d e n c y t o c o n -

c e n t r a t e o n l in e s o r v a r i e ti e s y i e l d i n g t h e h i g h e r p r o f i t - m a r g i n s

o r e ls e o n t h o s e m o s t e a s y t o p r o d u c e a n d h e n c e m o s t a d v a n t a -

g e o u s f o r f u lf il li ng t h e o u t p u t - t a r g e t i n q u a n t i t a t i v e t e rm s . T o



31

r e m o v e o n e o f t h e b i a ss in g i n fl u en c e s , t h e r e h a s a c c o r d i n g l y b e e na m o v e t o w a r d s e q u a l i s in g t h e i n d u s t r i a l p r o f i t - m a r g i n o n i te m s

t h a t a r e n e a r - a l t e r n a t i v e s ; a n d t h i s h a s l e d t o a n i n t e r e s t i n g

c h a n g e o f t r e a t m e n t o f t u r n o v e r t a x . I n c o n s u m e r go o d s i n d u s tr i e s

t h i s n o w t e n d s t o b e t r e a t e d a s w h a t e v e r h a p p e n s t o b e t h e d if-

f e r e n c e i n a n y p a r t i c u l a r c a s e b e t w e e n t h e r e t a i l p r ic e ( le ss d is -

t r i b u t i v e - m a r g i n ) a n d t h e i n d u s t r i a l w h o l e s a le p r ic e , i n s t e a d o f

b e i n g l e v i e d a t f i x e d r a te s . S t a r t i n g o n t h e e v e o f t h e w a r i n t h e

t e x t i l e in d u s t ry , t h is w a s l a te r e x t e n d e d to m o s t o f t h e o u t p u t o f

t h e f o o d a n d l i g h t i n d u s t r i e s a n d s e e m s o n t h e w a y t o b e c o m i n g

a g e n e r a l p r a c ti c e ( t h o u g h a p p a r e n t l y t h e M i n is t r y o f F i n a n c e

d o n o t m u c h l i k e i t , f o r c o n t r o l a n d a d m i n i s t r a t i v e r e a s o n s . )

T h e r e a r e s o m e w h o f a v o u r r e l a t i n g i n d u s t r i a l w h o l e s a le p r ic e -

d i ff e re n c e s t o r e t a il p r i c e - d if f er e n c e s t o t h e e x t e n t o f w i d e n i n g

i n d u s t r i a l p r o f i t - m a r g i n s o n s p e c i a l l y s c a r c e g o o d s o r l i n e s o r

v a r i e t i e s . I r a t h e r s u s p e c t t h a t o n o c c a t i o n s t h e p r o f i t - m a r g i n

m a y b e w i d e n e d ( a t l e a s t t e m p o r a r i l y ) t o g i v e a n i n c e n t i v e t o

e n t e r p r i s e s t o p r o d u c e m o r e o f a s c a r c e l i n e ( e . g . i n t h e c a s e o f

n e w p r o d u c t s a n d d e s i g n s o r s p e c ia l q u a li ty ) . B u t if s o, t h is d e v i c e

i s a d o p t e d r a t h e r s p a r i n g l y ; p r e s u m a b l y b e c a u s e i t i s r e g a r d e d

a s c o n f l ic t in g w i t h t h e a i m s o f khozraschot.

R e g a r d i n g m o r e l o n g - t e r m c h a n g e s i n t h e r e l a t i v e o u t p u t s o f

d i f f e r e n t c o n s u m e r g o o d s , i n v o l v i n g c h a n g e s i n r e l a t i v e p r o d u c -

t i v e c a p a c i t i e s o f i n d u s t r i e s o r o f s p e c i a l i s e d e n t e r p r i s e s w i t h i n

t h e m , t h e r e is , o f c o u rs e , a n o b v i o u s i n d e x f o r g u i d i n g s u c h s h if t s

a v a i l a b l e i n t h e c o m p a r a t i v e r a t e s o f t u r n o v e r t a x o n d i f f e r e n tg o o d s e x p r e s s e d i n e a c h c a s e a s a r a t i o t o t h e i r p r o d u c t i o n c o s t

( b u t t h e l a t t e r w o u l d n e e d t o b e i n t e r p r e t e d a s N o v o z h i l o v 's t y p e

o f c o s t - p r i c e , n o t a s p r i m e c o s t o n l y ) . I n P o l a n d , a p p a r e n t l y , t h i s

k i n d o f i n d e x f or c h a n g i n g r e l a t i v e o u t p u t s h a s b e e n a d o p t e d ,

i n p r in c i p le a t l e as t . B u t a g a in , I k n o w o f n o e v i d e n c e t h a t i n

t h e S o v i e t U n i o n t h e p r o b l e m s i s c o n s c io u s l y r e g a r d e d i n t h is w a y .

A t t h e s a m e t im e o n e c a n n o t h e l p t h i n k i n g th a t l o n g - t e rm a d -

j u s t m e n t s o f s u p p l y a r e i n f lu e n c e d b y s o m e s u c h c o n s i d e ra t io n s a st hi s, i f o n l y r o u g h l y a n d a p p r o x i m a t e l y . I t s e e m s o n l y c o m m o n -

s e n s e ( p a r t i c u l a r y d u r i n g a p e r i o d w h e n p r i c e - r e d u c t i o n s h a v e

b e e n f r e q u e n t ) t o r e g a r d t h e g a p b e t w e e n t h e r e t a i l p r i c e a n d t h e

c o s t o f a g o o d a s a m e a s u r e o f i ts s h o r t n e s s - o f - s u p p l y , a n d t o



32

g i ve i nves t men t -p r i o r i t y , o t he r t h i ngs be i ng equa l ( i nc l ud i ng t hecos tl ines s of ne w equ ipm en t ) , t o t he p rod uc t i on o f t hose t h i ng s

t ha t a r e mos t c l ea r l y i n sho r t =supp l y .

E v i d e n t l y , w h e n m o r e a t t e n t i o n b y p r o d u c e r s t o d e m a n d a n d

t he ad ap t i o n o f p rodu c t i on more c l o se ly t o consum ers ' wa n t s

a r e s p o k e n of, w h a t i s m a i n l y th o u g h t o f a s t h e i n d e x o f d e m a n d

i s t he pa t t e rn o f o rde r s comi ng f rom re t a i l e r s . (The re has been

c r i t i c i sm i n t he pas t o f i ndus t ry adop t i ng a t ake - i t -o r - l eave - i t

a t t i t u d e t o d i s tr i b u to r s a n d s u p p l y i n g w h a t i t c h o os es to t h e l a t -

t e r i n s t e a d o f su p p l y i n g w h a t t h e y a s k f or ). I n t u r n r e ta i le r s p re -s u m a b l y b a s e t h e i r o r d e r s o n c o m p a r a t i v e r a t e s o f s t o c k - t u r n -

over o f d i f fe ren t goods , o r in the case o f scarce l ines on what

consumers a sk fo r . Up t o a po i n t t h i s may be a good -enough

i n d e x . B u t t h e d a n g e r i s t h a t i t m a y m e r e l y r e g i s t e r t h e d e g r e e

t o w h i c h i n d i v i d u a l prices a re out of equilibrium ( i . e . wi th the

s u p p l y - d e m a n d s i t u a t io n o f i n d i v i d u a l g oo d s) , a n d n o t i n t h e r ele -

van t s ense t he " r ea l " s ca rc i t i e s o f t he goods i n ques t i on . ( I f

p r i ces were eve rywhere ' p e r f ec t l y " ad j u s t ed t o demand , i t cou l d

b e p r i c e s w h i c h a d j u s t e d d e m a n d e v e r y w h e r e t o t h e a v a i l a b l e

s u p p l i e s , w i t h o u t b r i n g i n g a b o u t a n y a d j u s t m e n t o f t h e l a t t e r t o

t he fo rmer ) .

I h a v e n o t l e f t m y s e l f t i m e t o s a y a n y t h i n g a b o u t t h e d is cu s -

s i ons on p r i ce -po l i cy o f t he pas t f ew yea r s among Sov i e t econo -

mis t s , and the i r poss ib le repercuss ions on the fu tu re . Al l I can

say b r i e f l y i s t h a t t h i s d i scus s ion ha t l a rge l y been conce rned w i t h

t w o m a i n t o p i c s : f ir s t ly t h e q u e s t io n o f t h e " d u a l p r ic e - le v e l "fo r t he t wo s ec t o r s , and whe t he r t he t r ans fe r -p r i ces o f p roduce r

g o o d s o u g h t n o t t o i n c l u d e , i n a d d i t i o n t o " p l a n n e d c o s t " a s a t

p re sen t a s s esed , a p ropo r t i ona l sha re o f t he " su rp l u s p roduc t

o f s o c i e t y " a s r e p r e s e n t e d a t p r e s e n t m a i n l y b y t h e t u r n o v e r

t ax ; s econd l y t he ques t i on o f wh e t he r , i f t he re i s t o be a gene ra l

p r i ce - r e fo rm, t he gu i d i ng p r i nc i p l e o f p r i ce f i xa t i on shou l d no t be

" p r i c e s o f p r o d u c t i o n " ( in t h e M a r x i a n se ns e) r a t h e r t h a t " v a l u e s " .

A d v o c a t e s o f t h e s e c o n d t y p e o f c h a n g e a r g u e t h a t t h i s i n t e r p r e -t a t i on i s cons i s t en t w i t h t he u se o f an e f f ec t i venes s -coe f f i c i en t a s

i n v e s tm e n t - cr i te r io n , a n d m o r e o v e r t h a t t o f i x p r ic e s in a n y o t h e r

way may i n t roduce a d i s t o r t i on i n t o such coe f f i c i en t s ( a f f ec t i ng ,

e . g . , t he r e l a t i ve i nves t men t -cos t o f p ro j ec t s u s i ng d i f f e ren t con -



3 3

s t r u c t i o n a l m a t e r i a ls ) . A d v o c a t e s o f a u n i f o r m p r i c e - le v e l fo r t h et w o s e c to r s a r g u e t h a t t h e l o w t r a n s f e r -p r i c e o f p r o d u c e r g o o d s

e n c o u r a g e s w a s t e f u l u s e o f e q u i p m e n t e t c . a n d i n a d e q u a t e a t t e n -

t i o n t o i t s r e p a i r a n d m a i n t e m a n c e .

A t p r e s e n t t h e s e a re s ti ll m a t t e r s o f k e e n c o n t r o v e r s y a n d n o

e a r l y a g r e e m e n t a b o u t t h e m s e e m s l i k e l y . I f o n e i s t o h a z a r d a

g u e s s , o n e m i g h t s a y , I t h i n k , t h a t t h e r e i s m o r e l i k e l i h o o d i n t h e

n e a r f u t u r e o f t h e u s e o f accoun t i ng p r i c e s ( e . g . f o r c a l c u l a t i n g

i n v e s t m e n t - d e c i s i o n s ) b a s e d o n n o v e l p r i n c i p l e s s u c h a s t h o s e

o f N o v o z h i l o v a n d K a n t o r o v i t c h ( a lr e a d y t h e r e i s t a l k o f u s i n g

" p r i c e c o r r e c ti v e s " i n p a r t i c u la r c a s e s fo r a c c o u n t i n g p u r p o s e )

t h a n o f a n y r a d ic a l c h a n g e i n t h e b a s i s o f ac tua l p r i c e s . W h e t h e r

i n t h e c o u r s e o f t i m e w i d e s p r e a d u s e o f a n d a c c l i m a t i s a t i o n t o

t h e f o r m e r w i l l b r i n g a b o u t c o r r e s p o n d i n g c h a n g e s i n t h e l a t t e r

c a n b e n o m o r e a t p r e s e n t t h a n a m a t t e r f o r s p e c u l a t i o n .

D I S C U S S I O N

O b s e r v a t i o n s w e r e m a d e b y M r . K n u d E r i k S v e n d s e n , M r . L e f t J o h a n s e n ,

M r . M i c h a e l K a s e r , D r . l ~ o l f K r e n g e l , M r . T o r b e n G r a g e a n d t h e l e c t u r e r .

R e g a r d i n g l o n g t e r m p l a n n i n g o f t h e p r o d u c t i o n o f c o n s u m e r g o o d s s o m e

c o m m e n t s w e r e m a d e o n t h e l e c t u r e r ' s s u g g e s t i o n t h a t a n o b v i o u s i n d e x f o r

g u i d i n g c h a n g e s i n p r o d u c t i o n i s a v a i l a b l e i n t h e c o m p a r a t i v e r a t e s o f t u r n -

o v e r t a x o n d i f f e r e n t g o o d s e x p r e s s e d i n e a c h c a s e a s a r a t i o t o t h e i r p r o d u c -

t i o n c o s t s . O n e s p e a k e r r a i s e d t h e q u e s t i o n w h e t h e r t h e s i z e o f t h e r e l a t i v e

t u r n o v e r t a x m i g h t b e a n i n d i c a t o r , a n d e v e n t u a l l y a s o u n d i n d i c a t o r o f

i n v e s t m e n t p r i o r i t i e s . H e s a i d t h a t r e c e n t l y s o m e r e s e a r c h h a d b e e n d o n e i nt h e S o v i e t U n i o n t o f i n d o u t t h e f u t u r e c o n s u m p t i o n p a t t e r n , f o r i n s t a n c e

f o r t h e y e a r 1 9 7 5 . T h e m a t t e r h a d b e e n d i s c u s s e d w i t h o u t t a k i n g i n t o c o n s i -

d e r a t i o n t h e e x i s t i n g t u r n o v e r t a x o n t h e v a r i o u s g o o d s . D i f f e r e n t f i g u r e s

b a s e d o n m e d i c a l r e s e a r c h a n d o t h e r s t u d i e s , h a d b e e n f i x e d f o r w h a t w a s

c a l l e d a r a t i o n a l c o n s u m p t i o n p e r h e a d f o r s o m e i m p o r t a n t g o o d s . T h e s e

l e v e l s o f r a t i o n a l c o n s u m p t i o n w e r e d i f f e r e n t f o r d i f f e r e n t r e g i o n s o f t h e S o v i e t

U n i o n . T h e s p e a k e r s a i d t h a t i f t h i s w a s t o b e c o n s i d e r e d a r e a l r a t i o n a l c o n -

s u m p t i o n d i s t r i b u t i o n , t h e c o n c l u s i o n s h o u l d b e t h a t t h e f u n d s f o r r e s e a r c h ,

i n v e s t m e n t s e t c . h a d t o b e d i s t r i b u t e d i n a m a n n e r t h a t w o u l d p r o m o t e p r o -

d u c t i o ~ o f t h o s e g o o d s w h i c h a r e s c a r c e i n p r o p o r t i o n t o t h e f i x e d n o r m s .T h i s d i s t r i b u t i o n o f i n v e s t m e n t s m i g h t d i f f e r c o n s i d e r a b l y f r o m t h e d i s t r i b u t i o n

r e s u l t i n g f r o m t h e p r a c t i c e s u g g e s t e d b y t h e l e c t u r e r .

I n t h i s c o n n e c t i o n o b s e r v a t i o n s w e r e m a d e a s t o t h e p o s s i b i l i t y o f r e a c h i n g

a r a t i o n a l a n d s o u n d d i s t r i b u t i o n o f i n v e s t m e n t s b y u s e o f t h e t w o m e t h o d s .

I t w a s m e n t i o n e d t h a t a p p l i c a t i o n o f w h a t m a y b e c a l l e d " t h e r a t i o n a l c o r n -



34

sumpt ion me tho d" wou ld of cou rce r equ i r e hav in g a l a rge amoun t o f p ro -

duce r ' s o r p l ann e r s ' sove re ign ty, wh i l e ' ' t h e tu rnove r t ax me tho d" wou ld imp ly

tak i ng more d i r ec t ly in to accoun t cons umers ' p r e f e rences , wh ich in a way a r e

r e f l ected in the r a t e of tu rno ve r t ax . H oweve r bo th me thods migh t have

advan tages a s we l l a s d i sadvan tages .

A n o t h e r c o m m e n t c o n c e rn e d t h e r e v i s i on s o r a d j u s t m e n t s o f p l a n s d u r i n g

the i t e r a t i on p rocedu re, wh en p lans a r e pass in g f rom the Gosp lan l evel th rough

d i f f e r en t lower s t ages down to ind iv id ua l en te rp r i se s and ba ck ag a in a long the

same rou te . Th e ques t ion was r a i sed whe t he r the r ev i s ions on ly amoun t to

r ev i s ions o f quan t i t i e s o f p roduc t ion o r whe the r the re a l so t ake p lace ad ju s t -

men ts of the coef f ic ien ts appl ied a t d i f feren t s tages , fo r ins tan ce the coef f ic ien te x p r e s s i n g t h e r e q u i r e m e n t s f or r a w m a t e r i a l s a n d l a b ou r . I t w a s s u g g e s t e d

tha t i f t he coef f i ci en ts a r e un de r r ev i s ion a t d i f f e r en t s t ages , t h i s i t e r a t i on

proce dure may he a very usefu l one, bu t i f the coef f ic ien ts a re kep t f ixed al l

the t i me ( tha t i s , i f t he r ev i s ions t ake p lace unde r the cond i t io n o f f ixed coef f i-

c i en t s) then i t m igh t have been poss ib le to do much o f the ad ju s t men t work on

a h ighe r l eve l wi th ou t th i s pass in g f rom the top to the bo t t om and up aga in .

Some o f the speake r s touched the ques t ion whe the r economi c p lan n ing i s

more d i f fi cul t i n a h igh ly indus t r i a l i zed conu t r y than in an e conomica l ly

backw ard one . Op in ions di f fe r ed , and so they d id when d i scuss ion touc hed

t h e a p p l i c a b i l i t y o f m a t h e m a t i c a l m e t h o d s t o p l a n n i n g .

Economics of Planning Volume 1 Issue 1 1961 - Maurice Dobb - Operational Aspects of Soviet Economy

Documents