James R. Millar

Financial Innovation in Contemporary Soviet Agricultural Policy

At a very early stage of tlhe Bolshevik experiment with economic planning it became obvious that the economy could not be made to function without the use of money and other financial instruments. In fact, a financial history of the Soviet economy would slhow a gradual but relentless expansion in the number and functions of financial instrumients. This expansion has been gradual largely because Soviet economists, planners, and administrators have had both ideological (theoretical) and practical reservations about the appropriate uses as well as the potential abuses to which financial instruments can be put. The process has been relenitless nonetheless, because for a number of essential economic functions the possible substitutes or alternatives to financial instrumlents are either impractical or nonexistent. Let me attempt to explain briefly the fundamental reasons for the ambivalence in Soviet financial policy. As ordinarily described, the essential functions of money in an economy are (1) as a unit of account, (2) as a medium of exchange, and (3) as a store of value. As a unit of account, money permits the aggregation and comparison of what would otherwise be incommensurable magnitudes, such as units of labor time, material inputs, final goods, and services. The need to keep track of enterprise receipts and disbursenments was recognized quite early in Soviet history. The mandatory introduction of khozraschet (economic budgeting and accounting) for all state enterprises in 1921 ensured the accountability of enterprise managers for the uses to which enterprise funds are applied.1 Both the miedium-of-exchange and the store-of-value functions, as opposed to the unit-of-account function, are quantitative functions of mnoney in the sense that each requires the existence of a stock of money (currency plus de-