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Plan, siphoning and corruption in the Soviet command economy
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Harrison, Mark, 1949- and Kim, Byung-Yeon (2001) Plan, siphoning and corruption in the Soviet command economy. Working Paper. University of Warwick, Department of Economics, Coventry.
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Abstract
This paper reconsiders Andrei Shleifer and Robert Vishny’s suggestion that a socialist industry will always prefer to cut both price and output relative to a market–clearing equilibrium in order to maximise bribe income. The evidence from recent archival studies of the Soviet economy does not support this conjecture. To understand the evidence we present an analytical framework within which a plan–setter and an effort–setter interact, subject to a hard resource constraint, to determine real output and hidden inflation simultaneously. We find that managers who use resources gained corruptly were enabled to produce more real output with less hidden inflation and fulfil the plan more honestly as a result. We find clear rationales for plan–setters to have tolerated corruption and siphoning while maintaining plan tension, and we associate reduced plan tension in the 1970s with the spread of disloyal behaviours.
| Item Type: | Working or Discussion Paper (Working Paper) |
|---|---|
| Subjects: | H Social Sciences > HC Economic History and Conditions D History General and Old World > DK Russia. Soviet Union. Former Soviet Republics |
| Divisions: | Faculty of Social Sciences > Economics |
| Library of Congress Subject Headings (LCSH): | Business and politics -- Soviet Union, Bribery -- Soviet Union, Corruption -- Soviet Union, Central planning -- Soviet Union, Soviet Union -- Economic conditions, Soviet Union -- Economic policy |
| Series Name: | Warwick economic research papers |
| Publisher: | University of Warwick, Department of Economics |
| Place of Publication: | Coventry |
| Date: | 13 August 2001 |
| Number: | No.606 |
| Number of Pages: | 22 |
| Status: | Not Peer Reviewed |
| Access rights to Published version: | Open Access |
| Description: | Revised 13 August, 2001 |
| References: | Ames, Edward (1965), Soviet Economic Processes, Homewood, IL: Irwin Belova, Eugenia (2001), “Economic Crime and Punishment”, in Paul R. Gregory, ed, Behind the Façade of Stalin’s Command Economy, Stanford, CA: Hoover Institution Press, 131–58 Belova, Eugenia, and Gregory, Paul R. (2001), “Dictators, Loyal, and Opportunistic Agents: the Soviet Archives on Creating the Soviet Economic System”, University of Houston, Department of Economics (submitted to Public Choice) Berliner, Joseph S. (1952), “The Informal Organization of the Soviet Firm”, Quarterly Journal of Economics, 66, 342–65 Berliner, Joseph S. (1976), The Innovation Decision in Soviet Industry, Cambridge, MA: MIT Press Birman, Igor (1980), “The Financial Crisis in the USSR”, Soviet Studies, 32, 84–105 Davies, R.W. (1958), The Development of the Soviet Budgetary System, Cambridge: Cambridge University Press Davies, R.W. (2001), “The Making of Economic Policy”, in Paul R. Gregory, ed., Behind the Façade of Stalin’s Command Economy, Stanford, CA: Hoover Institution Press, 61–80 Dewatripont, Mathias, and Maskin, Eric (1995), “Credit and Efficiency in Centralized and Decentralized Economies”, Review of Economic Studies, 62(4), 541–55 Gregory, Paul R., and Tikhonov, Aleksei, (2000), “Central Planning and Unintended Consequences: Creating the Soviet Financial System, 1930–1939”, Journal of Economic History, 60(4), 1017–40 Grossman, Gregory (1977), “The ‘Second Economy’ of the USSR”, Problems of Communism, 26, 25–40 Grossman, Gregory (1998), “Subverted Sovereignty: Historic Role of the Soviet Underground”, in Cohen, Stephen S., Schwartz, Andrew, and Zysman, John, eds, The Tunnel at the End of the Light: Privatization, Business Networks, and Economic Transformation in Russia , Berkeley, CA: University of California, International and Area Studies Research Series no. 100, 24–50 Harrison, Mark (1996), Accounting for War: Soviet Production, Employment, and the Defence Burden, 1940–1945, Cambridge: Cambridge University Press Harrison, Mark (1998), “Prices, Planners, and Producers: an Agency Problem in Soviet Industry, 1928–1950”, Journal of Economic History, 58(4), 1032–62 Harrison, Mark (2000), “Soviet Industrial Production, 1928 to 1955: Real Growth and Hidden Inflation”, Journal of Comparative Economics, 28(1), 135–55 Harrison, Mark (2001), “Coercion, Compliance, and the Collapse of the Soviet Command Economy”, University of Warwick, Department of Economics Kaser, Michael (1975), "The Economy: A General Assessment", in Brown, Archie, and Kaser, Michael, eds, The Soviet Union since the Fall of Khrushchev, London: Macmillan, 000–000 Kim, Byung-Yeon (2000), “Causes of Repressed Inflation in the Soviet Consumer Market: Retail Price Subsidies, the Siphoning Effect, and the Budget Deficit”, Bank of Finland Institute for Economies in Transition, Discussion Paper no. 9 (forthcoming in the Economic History Review) Kornai, János (1980), The Economics of Shortage, 2 vols, Amsterdam: North–Holland Nove, Alec (1958), “The Problem of ‘Success Indicators’ in Soviet Industry”, Economica, 25(97), 1–13 Nove, Alec (1977), The Soviet Economic System, London: Allen & Unwin Qian, Yingyi (1994), “A Theory of Shortage in Socialist Economies Based on the ‘Soft Budget Constraint’”, American Economic Review, 84(1), 145–56 Schroeder, Gertrude E. (1985), “The Slowdown in Soviet Industry, 1976–1982”, Soviet Economy, 1(1), 42–74 Shleifer, Andrei, and Vishny, Robert W. (1992), “Pervasive Shortages Under Socialism”, RAND Journal of Economics, 23(2), 237–46 Wintrobe, Ronald (1998), The Political Economy of Dictatorship, Cambridge: Cambridge University Press |
| URI: | http://wrap.warwick.ac.uk/id/eprint/1577 |
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