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access to The American Economic Review
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ECONOMIC TRENDS AND PROSPECTS IN THE
U.S.S.R. AND EASTERN EUROPE
By A. NOVE
London School of Economics
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542 AMERICAN ECONOMIC ASSOCIATION
given in the table below. These are deliberately confined to the present
decade. Figures for so remote a year as 1980 seem to me hardly worth
detailed discussion.
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TRENDS AND PROSPECTS IN EASTERN EUROPE 543
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544 AMERICAN ECONOMIC ASSOCIATION
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TRENDS AND PROSPECTS IN EASTERN EUROPE 545
'Ekonomicheskaya gazeta, Nov. 17, 1962, p. 5 (the figures relate to the first ten months
of 1962).
' Ibid., p. 6.
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546 AMERICAN ECONOMIC ASSOCIATION
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TRENDS AND PROSPECTS IN EASTERN EUROPE 547
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548 AMERICAN ECONOMIC ASSOCIATION
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TRENDS AND PROSPECTS IN EASTERN EUROPE 549
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550 AMERICAN ECONOMIC ASSOCIATION
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TRENDS AND PROSPECTS IN EASTERN EUROPE 551
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552 AMERICAN ECONOMIC ASSOCIATION
Let us now draw a few conclusions from the arguments set out
above. Soviet industrial planning has run into heavy weather, and
everyone knows it and is busily engaged in seeking remedies, suggest-
ing new courses and reforms. It is by no means clear whether they
will be able to find the desired balance between central planning of
essentials and the local operational initiative which they are seeking.
These are matters in the highest degree relevant to the assessment of
Soviet performance in the next decade. We may see a period of experi-
ment which could lead to increased confusion. In the short run, we
may be seeing a victory of the "conservatives"-an attempt to main-
tain tight centralization, with the computor used to facilitate more
speedy working out of consistent material balances and production
plans. This may no more than enable the planners to keep pace with
the constant increase in the volume of work which they have to per-
form as the economy grows. It is hard indeed to inmagine how any
form of centralization can eliminate the major inefficiencies of the
present system, but we would still see impressive increases in indus-
trial output in terms of percentages or tons or meters which can be
used to substantiate the claim that America is being overtaken and
the long-term plans fulfilled. In particular, the seven-year plan, due to
end in 1965, may even be declared fulfilled in 1964. Yet these figures
may be misleading, for reasons already discussed. Some of the output
will be a consequence of inefficient resource utilization. In any case,
the volume of production of basic commodities or aggregate indices
expressing quantities are becoming increasingly irrelevant as a guide
as to whether or when America is being overtaken. Soviet planners
know this, too. Thus V. Dymshits, the rising star among industrial
planners, expressed this thought when he said to the November, 1962,
plenum: "It is time to take seriously the economy and rational utili-
zation of timber. Of course the question is not one of overtaking
America in the volume of timber-cutting, but of using the timber bet-
ter than in America." These considerations apply, in even greater
measure, to consumers' goods and services.
However, it seems hardly likely that major decentralizing changes
in the planning system will be avoided for long. Let us suppose that
the Liberman proposals or some variant of these are adopted, and that
much greater flexibility is introduced into the economy through the
use of incentives based on prices and profits. The net effect should be
to make production much more responsive to demand and eliminate
inefficiencies of many kind's. However, this could have two adverse
effects on growth-one apparent and one real. In the first place, inso-
far as production geared to growth statistics is replaced by production
for need, the statistics of growth may show a slowdown contrasting
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TRENDS AND PROSPECTS IN EASTERN EUROPE 553
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554 AMERICAN ECONOMIC ASSOCIATION
Anyone who can read Russian is urged to read the debates in Ekonomicheskaya gazeta,
Nov. 3 and 10, 1962.
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