Paul R. Gregory

Allocation under dictatorship : research in Stalin’s archives

We survey recent research on the Soviet economy in the state, party, and military archives of the Stalin era. The archives have provided rich new evidence on the economic arrangements of a command system under a powerful dictator including Stalin’s role in the making of the economic system and economic policy, Stalin’s accumulation objectives and the constraints that limited his power to achieve them, the limits to administrative allocation, the information flows and incentives that governed the behavior of economic managers, the scope and significance of corruption and market-oriented behavior, and the prospects for economic reform.

The Soviet enterprise director: an important resource before and after the coup

Executive Overview Privatization, eliminating monopolies and the vestiges of central planning, deregulating prices, introducing currency convertibility, establishing a modern financial infrastructure, and recovering from a failed three-day coup attempt are all intimidating tasks for policy-makers in the Soviet Union. However, in the long-run perhaps the most troubling circumstance facing the Soviet Union is preparing managers for a Soviet-style market-driven economy that can eventually compete in word markets. This article discusses some facts about Soviet managers, the historical fabric of Soviet and Russian cultures in which they must operate, as well as some of the attitudes and concerns of Soviet enterprise directors. Overthrowing Marxist-Leninist doctrine and overcoming a bungled attempt to take over the government may be the easiest parts of the new social experiment originally called perestroika. After seven decades of indoctrination to a centrally controlled system, its not hard to understand shy...

The Earnings of Soviet Workers: Evidence from the Soviet Interview Project

Micro data gathered by the Soviet Interview Project provide one of the first opp ortunities for Western researchers to investigate the determinants of Soviet earnings. The data show that Soviet labor markets operate in many respects like U.S. labor markets, yet institutional differences remain. The most striking institutional impact is that Soviet workers are rewarded and penalized for political behavior external to the firm. As in the U.S., education and experience are rewarded; men earn more than women. However the Soviet pattern of returns to education is different, returns to experience are lower and occupational segregation of women is less important. Copyright 1988 by MIT Press.

Dictator, Loyal, and Opportunistic Agents: The Soviet Archives on Creating the Soviet Economic System

Studies of the mature Soviet economy focus on the structuralweaknesses of rent seeking and corruption. Such an economy ispresumed to perform better in its adolescent phase under astrong stationary-bandit dictator, dedicated to growth andable to control rent-seekers. We use the recently openedSoviet state and party archives to show the process that beganin the 1930s of transforming the inner circle of the Sovietstationary bandit into a rent-seeking bureaucracy lackinglong-term goals.

The Russian Balance of Payments, the Gold Standard, and Monetary Policy: A Historical Example of Foreign Capital Movements

This paper reports new calculations of foreign investment in Russia between 1881 and 1913. As the major recipient of foreign capital under the gold standard, Russia provides an ideal case study of capital flows among countries. The conclusions are that the influx of foreign investment into Russia following convertibility was much more substantial than the early estimates suggested and that the Russian growth rate was raised by about 0.5 percent annually as a consequence of the gold standard. The major cost of achieving convertibility was that two-thirds of official borrowing abroad between 1885 and 1897 was used to acquire gold reserves, but the ensuing growth benefits which are estimated far outweigh these costs. The Russian case confirms the standard portfolio theory of capital movements, and the relationship between the demand and supply of fiat money explains observed variations in the exchange rate.

The role of the state in promoting economic development: the Russian case and its general implications

This chapter studies the role of the state in dealing with Russian relative backwardness. Russia is used as a case study because of Alexander Gerschenkron’s view that the Russian state substituted for missing preconditions. The chapter considers three forms of state involvement: constitutional change in agriculture, monetary and fiscal policy, and direct entrepreneurial activities. The chapter concludes that Gerschenkron’s assessment of constitutional change in agriculture has proven to be seriously flawed and that the Russian state’s entrepreneurial activities were minimal. The major success of Russian industrialization was the attraction of sufficient foreign investment to achieve high investment rates for a low-income country. While the state provided a stable monetary and fiscal framework, foreign capital was attracted principally by the private profit opportunities in Russia. In assessing the role of the Russian state, Gerschenkron assumed that the provisions of the 1861 peasant emancipation would be adhered to even though they violated private profit incentives. He also assumed that the ‘enlightened industrial policy’ strategy outlined by Witte was actually implemented by the Russian state.

Differences in fertility determinants: Developed and developing countries

This study estimates two separate fertility models for developed and underdeveloped countries to determine if they are the same. The model differs from past studies in two respects: (1) a simultaneous equation model is used, and (2) an opportunity cost of fertility is included in the fertility equation. When this more complete model of fertility is used, the sets of regression coefficients of the fertility equations of developed and developing countries prove hereroge‐neous, contrary to the conclusions of past studies. Thus, it is suggested that development planning’ in underdeveloped and developed countries might proceed differently as far as the population variable is concerned. Underdeveloped countries may find it necessary to allocate scarce capital to investment in human beings, for this seems to be a powerful tool whereby population growth can be limited. On the other hand, developed countries might find it advantageous to invest in human capital and also to encourage greater female participation in...

Soviet Defence Puzzles: Archives, Strategy and Underfulfilment

PLANNING WAS SUPPOSEDLY one of the three core features of the administrative-command economy created by Stalin and his allies in the 1930s. The stereotype of Stalinist planning, promoted by Soviet textbooks, was that resources were allocated by a ‘scientific’ plan that efficiently balanced supplies and demands by administrative means and avoided the ‘anarchy of the market’. The notion of ‘pure’ scientific planning has long been discredited both in theory and practice. The classic theoretical critiques of Mises and Hayek showed that administrative planning would suffer from computational, informational and incentive problems that would render it, at best, economically inefficient and, at worst, unworkable. A long line of empirical research established its inability to produce ‘efficient’ outcomes. This article poses a narrower question: the relative efficiency of defence versus civilian planning as measured by fulfilment rates. Virtually all economies use some sort of administrative planning to manage their national defence and have turned to administrative measures during wartime. The ability of an administrative command economy to produce a ‘better’ national defence result than a market economy may be one of the last arguments for its superiority. Harrison, in his authoritative study of the Soviet economy during World War II, writes: ‘In World War II, regardless of the military performance of the Red Army, the Soviet economy should have collapsed. This is what poor agrarian economies, even large, relatively self-sufficient ones, normally do under the impact of a massive attack’. The failure of the Soviet economy to disintegrate under extreme conditions provides the research agenda for Harrison’s book and, to some extent, for this article, which explores whether the ability of the administrative command system to administer national defence constitutes one of its last-standing strengths. We cannot provide a direct answer; rather we approach it indirectly through the quality of its defence planning. Planning ‘quality’ is also measured indirectly as the system’s ability to meet its ex ante targets set in an earlier period. Although some have argued that unrealistic ‘optimally taut’ plans can achieve

Backward Bends, Quantity Constraints, and Soviet Labor Supply: Evidence from the Soviet Interview Project

This study makes two contributions to the quantity-constraint literature. First, it investigates the effects of consumer-market shortage on labor supply. Second, it considers the effects on hours of work of eliminating quantity constraints in a planned socialist economy. The estimated model of Soviet labor suppl y shows that the uncompensated wage elasticities of Soviet workers are negative and that workers facing quantity constraints react more strongly to wage increases than workers who do not face quantity constraints. The elimination of quantity constraints would, therefore, be expected to raise aggregate hours worked in the Soviet economy. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Russian Monetary Policy and Industrialization, 1861-1913

Some recent critics of Russian industrial policy argue that the costs of the Witte System may have been excessive relative to its benefits and that similar rates (or perhaps higher rates) of industrial growth could have been attained if alternate fiscal and monetary policies had been adopted. Once differential rates of growth of prices and real national income are considered, it appears that the Russian money supply was not unduly constrained. The authors also demonstrate that foreign capital inflows made a substantial contribution to Russian economic development, as did the decision to adhere to the international gold standard.