Keynesian Comparative Economics:

A BSTRACT . The authors of this article review the late E. Lynn Turgeon's contributions to economics, including his studies of the Soviet economy, use of qualitative and demographic analyses, his Keynesian critique of U.S. economic performance, and his critique of international financial markets. Turgeon's comparative approach led to unique insights about the challenges that confronted planned economies, including the differential impact of military spending on the demand-constrained economy of the United States and the supply-constrained economy of the Soviet Union. His study of the Soviet and planned economies also informed his analysis of the U.S. economy and international adjustment mechanisms. Turgeon argued for expansionary fiscal and neutral monetary policies, prudential restrictions on portfolio capital flows, and increased foreign direct investment and foreign assistance to shift the burdens of adjustment from deficit to surplus countries. Throughout his career, Turgeon measured economic policies by their effects on real people, including impacts on employment, the environment, living standards, and distributions of income and wealth.     

Financial Recovery and Structural Changes in the Economy

How significant is the Soviet Union's financial crisis? Sergei Vasil'ev, of the Institute of Finance and Economics in Leningrad, argues that the financial crisis is the key to future developments in the Soviet economy and that heavy industry can be expected to suffer as the budget deficit is brought into balance.     

Problems of Privatisation in the USSR

How easy will it be to reform the Soviet economy? A. Zabelin, of the USSR Trade Mission in Hungary, reviews the difficulties that will have to be surmounted on the way to privatisation and the market economy.     

The size of the firm in a transitional economy: Downsizing and economies of scale: The case of Russian footwear

Did Russian reforms alter the privileged position enjoyed in Soviet times by large firms? This paper considers the size of firms in one industry (footwear) during the years 1992–2000 and its relation to productivity. Soviet footwear firms were much larger than their foreign counterparts. With the transition to a market-based economy these large firms might lose their advantage relative to smaller firms. This study finds that while firms in each size category in this industry did substantially downsize, this process did not significantly affect relative productivities. It does not appear that larger firms created in Soviet times were relatively disadvantaged.     

USSR in Crisis

Dr Plaut assesses the weaknesses in the Soviet economy as revealed by economist, Marshall Goldman, recent lecturer in China on the USSR.     

Explaining economic growth in the Soviet Union, 1950–86

Production function estimates are provided for Soviet industrial production and gross national product for the period 1950–86. A variety of alternative specifications is tested, including Cobb-Douglas, constant elasticity of substitution and variable elasticity of substitution production functions, and an error correction mechanism is used to investigate the long-run properties of the estimated equation. The structural stability of the estimates is also examined. Constant-returns-to-scale Cobb-Douglas production functions suggest that the rate of total factor productivity growth in the Soviet economy has declined steadily over time, becoming negative sometime in the period between 1970 and 1980. However the extensive statistical tests can doubt on the validity of any production function estimated on Soviet data.     

Regional Production and Cost Minimization in the Republics of the Former Soviet Union

After the disintegration of the Soviet Union, the problems encountered early in the reforms made it obvious that understanding the system and structure of the economy during the Soviet period was crucial for predictions and recommendations. The present study analyzes the production of the republics of the former Soviet Union, by grouping them into the regions defined by common geographical and historical conditions, and by estimation of cost functions that represent the two major theories of international trade: the Heckscher-Ohlin and Ricardo-Viner models. The estimated parameters of the cost functions allow us to draw conclusions about the achievement of cost minimization and to calculate the elasticities that represent the comparative statics of both models. As a result of the analysis, it is demonstrated that the achievement of the cost-minimization goal depends on local conditions.     

ECONOMIC SYSTEM CONVERSION AND MIGRATION TRANSITION IN RUSSIA

This paper examines migration changes in Russia due to the transition of the economic system. As expected, great changes in migration patterns occurred in Russia. The correlation coefficients between federal investment and interregional migration are positive and large during the Soviet period, indicating that political incentives played a major role in migration patterns in the USSR. However, the regional development policy implemented in the Soviet era may not have been socially efficient in causing migration inflows and excess labor supply in the Far North regions. In addition, it can be said that the government could not control population flows perfectly even in the planned economy.     

Soviet discussion on enterprise incentives and methods of planning

For some years a discussion has been in progress among economists in the Soviet Union on methods of securing the active and positive participation of individual enterprises in a centrally planned economy. The main theme of discussion has been the problem: how to arrange the system of plan indices, prices, enterprise bonuses, etc. to encourage enterprise interest in higher plan assignments, introduction of new technology, and improvement of quality of output. On the following pages some excerpts from this debate are reproduced. However, since the problems discussed are now engaging also the Soviet political authorities, let us first quote a few sections from one of the many official statements made in this connection. The one we have chosen is from the report given by the Soviet Prime Minister N. S. Khrushchev at the CPSU Central Committee Plenary Meeting of November 19, 1962 (Pravda, November 20).     

Currency under War Communism: An example of Gresham's Law?

This article covers the consequences of the Bolsheviks' coup d'état in 1917 for the Soviet monetary system. I argue that the episode illustrates Gresham's Law, as three different currencies made an appearance in the Russian economy. This monetary disorder is scarcely mentioned by Marxist authors. It was a failure that would be mitigated by the subsequent New Economic Policy, an amendment to the Bolshevist War Communism programme of nationalisation and intervention in the economy.     

‘Znakomstva I Svyazi’ (Acquaintances and connections) – Blat,the Soviet Union,and mundane entrepreneurship

The discussion regarding entrepreneurship and society has often presupposed that this society by necessity will be one that embraces the market economy as a guiding principle. This paper questions this assumption by discussing a command economy, namely the Soviet Union, as a fundamentally entrepreneurial society. By introducing the case of the blat, ‘Russia’s economy of favours’, the paper illustrates how mundane individual economies can be a part of entrepreneurship, and how flexible opportunity networks can support the rigidity of a command economy. Continuing from this, the exclusion of such irregular economies is discussed from an ideological rather than an analytic standpoint. The paper further presents some inferences that can be drawn from the case of the blat and which problematizes common assumptions in entrepreneurship studies.     

Company performance in Ukraine: is this a market economy?

This paper examines empirically the responsiveness of firm performance to ownership and market structures, sector and regional specificity, and varying degrees of soft budget constraints. It does so by providing a “snapshot” of the economy. For cross-sectional data on Ukrainian firms in 1998, the paper presents evidence that the firms in the snapshot behaved more as if they were still in a loosely reformed Soviet environment where exchange via interpersonal connections, rather than the price mechanism, determined the allocation of resources.     

Evolution of the Government–Business Relationship and Economic Performance in the Former Soviet States – Order State, Rescue State, Punish State

The objective of this paper is to elucidate the relationship between the reform process and economic performance in the states of the former Soviet Union (FSU). There were two strategies used by the former Soviet states to cope with the collapse of the USSR. Some of the FSU countries, in an effort to overcome the institutional vacuum caused by the disintegration of the federal economy, centralized their government authority to manage industry. Others decentralized power in an attempt to regain economic independence for domestic enterprises. To evaluate the essential differences and progress gaps among transition strategies, FSU countries can be divided into three groups, which reflect variations in institutional control of the government-business relationships. The differences in economic performance in FSU countries can be explained to some extent by examining the diversity of institutional patterns that characterize each category. The results of various empirical analyses positively support the validity of such an analytical framework. In this sense, this paper presents a new viewpoint on the transition process in FSU countries that may complement that shown in existing literature.     

Accounting education in Russia today

The West has not perhaps appreciated the role of the command or planned economy on the provision of education. The extent and detail of that involvement is first reviewed in respect to accounting education. The changes which are already under way are described and future trends in which Western academics may participate are outlined. Russia and the rest of the former Soviet Union (FSU) is in the process of changing a well-established, clear structure of education for a less rigid but more idiosyncratic approach. Accountants and accounting educators in other countries should be aware of the history and emerging structures in Russia and the FSU if their involvement is to be worthwhile.     

Survival Through Networks: The ‘grip’ of the administrative links in the Russian post-Soviet context

Abstract

Based on an analysis of the post-Soviet transformation experience of four defence sector organizations in a Russian region where the defence sector occupies a substantial part of the local economy, this article develops a typology of network relationships: Grooved Inter-relationship Patterns (Gr’ip) networks and Fluid Inter-relationship Patterns (Fl’ip) networks. This typology can be applied to a range of transition/emerging market and low system trust contexts. Gr’ip networks, in this case, represent the persisting legacy of the Soviet command-administrative system. Fl’ip networks are here an attempt by the defence companies to link into the civilian supply chains of a developing market economy. This article argues that Gr’ip networks had and still have a crucial role to play in Russian enterprises’ survival and development.     

Soviet Household Saving Function

In this paper, the Soviet household saving function is estimated using reconstructed data from the unpublished archival material: the Soviet family budget survey data. In addition, a shortage indicator is developed to capture both household purchasing power in comparison with the availability of consumer goods in the official market and the spillover of the household demand for consumer goods from the official retail market to the secondary one. A long-run solution of the Soviet household saving function, which includes a shortage indicator as one of the independent variables, is estimated using these data. The reliability of the long-run solution is confirmed by the short-run dynamics of the Soviet household saving function, which satisfy super-exogeneity, parameter constancy, and several diagnostic tests. The highly significant coefficient of the shortage indicator suggests that Soviet household saving behaviour was affected by shortages of consumer goods during 1965–1989. This revised version was published online in July 2006 with corrections to the Cover Date.     

Direct transfers between the former Soviet Union central budget and the republics: Past evidence and current implications

This paper examines the magnitude of direct transfers between the former Soviet Union central buget and individual republics. It shows that Kazakhstan and Central Asian republics were primary recipients of large net transfers of funds from the Soviet central budget amounting in some cases to about ten percent of their GNP. On the contrary, Russia was the single largest net donor of funds to the Soviet central budget through more transfers paid to the union budget than received from it, both in rouble terms and as a share of the GNP.With the dissolution of the central budget in November 1991, these transfers were discontinued. This has caused a dent in fiscal budgets and a large negative income shock in recipient republics. To some extent, external saving is suggested as the way to ease up the burden of the loss of income induced by the collapse of the fiscal system and the system of direct transfers within the former Soviet Union.     

Political exchange in mass party regimes and the transition from socialism

This paper contrasts the east European and the Chinese routes of exit from the Soviet-type economy and argues that a communist regime, if it is to remain in power, cannot renounce state ownership or control of large-scale industry and party control of managerial appointments, careers, and incomes: these two features make up an enforceable, efficient contract for political service in a monopolistic political market. These features were abandoned in the European route and preserved in the Chinese route because of the average versus modal character of party representation and membership in the two groups of countries, so that the modal nature of the Chinese party is the key to the regime’s survival and success under market reform. The approach also explains the failure of Gorbachev’s attempt to export the Chinese model to the Soviet Union in the form of perestroika.     

The transition from central planning to a market economy: A computable general equilibrium model

This paper develops a computable general equilibrium (CGE) model of the transition from a central planned economy to a market economy. The model is an extension of Wellisz and Findlay's (1986) model of the Soviet second economy. By distinguishing alternative assumptions about the disposition of the government budget, two model variants — the activist and non-activist — are analyzed. Equilibria of these model variants are computed for various parameter specifications of the Kantorovich ray, which represents the stringency of central planners' direction of the economy. The paper shows that increasing efficiency of the private sector, while it reduces the size of government subsidies to the state sector, does not necessarily increase the net government budget.