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This article presents the author's response to comments about his paper on the application of the Barro-Grossman disequilibrium model to the Soviet Union. In the empirical work reported in my 1976 article, I found that the disequilibrium model performed well in that the Soviet data were consistent with the model's predictions. Comparison of the growth in the stock of savings with the growth in the flow of income or consumption is misleading and uninteresting. For example, a constant marginal propensity to save and a constant income imply an increase in the stock of savings and, of course, no change in income or consumption. Joyce Pickersgill has examined data on average and marginal propensities to save in the Soviet Union during 1955 to 1971. She concludes that her results do not support the view that Soviet households are saving larger and larger proportions of their increased incomes. However, the course of variables such as the average propensity to save is irrelevant to the question at hand since examination of such variables omits the influence of other factors. The disequilibrium model involves several factors and options operating on and open to the household when faced with a quantity constraint and proper evaluation of the model involves examination of all of them. At the outset I should state that my paper assumes the existence of repressed inflation in the sense that the controlled prices of at least some consumer goods are below market-clearing levels. Therefore my tests are of a joint hypothesis of the presence of this particular kind of repressed inflation and the disequilibrium model. My results do not contradict this joint hypothesis, but they do not constitute a direct test of the existence of repressed inflation in the Soviet Union.

This article presents a discussion on the research paper "Soviet Economic Planning," by Gregory Grossman, a professor at the University of California in Berkeley, California, published in the May 1959 issue of the journal "American Economic Review." Grossman's paper establishes a very stimulating framework for the consideration of Soviet industrial prices. However, the class of quasi-prices is an extremely large one and one should be aware that in stretching the price system to include it, "price system" has been subtly redefined to cover nearly the whole mechanism of guidance and discipline in the Soviet system and it is a mechanism that has little in common with what, price system usually means. Not that there is any objection to this, Grossman has shown well enough that there is little point in studying in the Soviet economy what is usually meant by price system. Moreover, it is important to emphasize that while price systems are consciously employed by Soviet planners as an important determinant of enterprise behavior, they constitute a clumsy class of prices in practice. The reader of Soviet planning literature finds frequent instances of quasi-prices that prompt gross irrationalities and instances where the introduction of new quasi-prices to eliminate old irrationalities simply breeds new ones.

This article re-examines the growth of Soviet industry in terms of the production function and rate of technical change. In a pioneering article, Martin Weitzman rigorously analyzed the phenomenon of post-war economic growth in Soviet industry. His paper represents the first systematic attempt at identifying the production function for Soviet industry without making the competitive relations assumption. Weitzman's main conclusions are the following: (1) the constant elasticity of substitution (CES) production function with constant returns to scale adequately represents postwar growth in Soviet industry; (2) the estimated elasticity of substitution of .403 is significantly less than 1; and (3) the estimated technical change parameter of .0205 is not different from the parameter value of .023 for U.S. manufacturing in the recent period. The specification of the production function and the underlying assumptions in the following analysis are essentially similar to those of Weitzman. The difference is that the dependent variable is defined alternately in terms of gross output and gross value-added, and raw materials are explicitly considered. The CES and Cobb-Douglas forms with variable and constant returns to scale were fitted to the time-series data. Two gross output series, Soviet and Desai, and Weitzman's hybrid series, were used for esti-mating production functions defined on capital, labor, and raw materials.

This article focuses on a paper by economist Joseph S. Berliner. Berliner has constructed several indices which he uses to compare the efficiency of the Soviet Union relative to the U.S. However, it may be misleading to refer to these measures as indices of relative efficiency, since what they measure is already well known in the context of time series analysis as the difference in total productivity. This measure of relative efficiency throws little light on the question of traditional allocative efficiency. Improved resource allocation may have the same effect as improved technology on the productivity of inputs, but the measure does not allow to separate the effects of resource allocation from other influences on the quality of inputs, including the embodiment of technology. Finally, turning to the topic of static efficiency, it is worth while considering how one might measure the extent of resource misallocation in the Soviet Union. Efficient allocation implies the adjustment of all factors to underlying rates of return, net of differences in risk, so the measurement of resource misallocation involves measuring the extent to which observed factor returns exhibit persistent differences from average returns as well as estimating the amount of reallocation which would be required to bring these returns to equality.

In discussions of the Soviet Union, concept it has become customary to refer to it as Marxist. Under prevailing circumstances, this is more than just a convenient label, it expresses a tacit acceptance of Soviet claims concerning the origin of the concept. On occasion, this acceptance becomes explicit. It is the purpose of the paper to show that this presumed doctrinal lineage is not clear and that, on the contrary, those Soviet economists who in the past advocated broader national income concepts could with some justification point to antecedents in economic and political philosopher, Karl Marx. There is a good deal less conflict between Marx's writings and the Western concept of national income than there is between Marx and the Soviet theories on the subject. Of all the controversial aspects of Soviet national income accounting, the paper concerns with only the extent of the area of economic activity to be covered by the national income and product aggregates. The paper discusses the doctrinal consistency between Marx's writings and a set of propositions, rather than with the substance of the arguments themselves.

This article briefly analyzes a research paper titled "Teaching of Economics in the Soviet Union," published in a previous issue of the journal "American Economic Review." It characterizes the main contents of the article and attempts to find out that to what extent do these contents represent a departure from orthodox Marxian economics as accepted in the Soviet Union, and what contribution does the article make to economic theory of Marxism or to a better understanding of the Soviet economy. The author states that the trouble with the teaching of political economy in the Soviet Union is not only confined to the formal arrangement of the instruction but grave mistakes are committed by the authors of the paper itself also in interpretation and evaluation of the subject matter itself. These mistakes, although listed in an almost random fashion, seem to have something in common. They all represent "ultra-left" aberrations and all tend to promote an attitude which does not conform to the present tenets of Soviet policies and thinking. The author concludes that the research is not a departure from Marxian orthodoxy but it is rather its renewed and vigorous affirmation.

The article characterizes the economic nature of several countries. The belief held by a sizable segment of the U.S. business community that the U.S. economy is unplanned largely is a myth. Government intervention and regulation is pervasive and has significant effects on the allocation of resources, the prices of outputs, and the costs of factors of production. Minimum wage laws, occupational safety and health standards, unemployment insurance contributions and payments, equal employment opportunity regulations, and pollution standards, impinge widely on all industries. Toward the other end of the spectrum, Soviet economic analysis capabilities, too, seem deficient and inadequate to the monumental tasks of operating well a planned economy. The paper by Aron Katsenelinboigen and Herbert Levine unfortunately does not address that subject but is confined to categorizing transactions among state enterprises, collectives, and households by their degree of legality in a matrix format. In the case of Yugoslavia, there has been greater emphasis on efficiency than in other socialist countries and willingness to experiment with greater and lesser degrees of centralized control of the economy. The most recent swing has been toward greater coordination and direction and emphasis on planning. This apparently was done because of dissatisfaction with the income distribution arising from a freer system and to avoid certain gross duplications and inefficiencies associated with lack of ex ante coordination.

This article presents the author's comments on a paper by David Howard about the application of the Barro-Grossman disequilibrium model to centrally planned economies (CPE). Howard presents a relatively simple model of disequilibrium in a controlled economy together with some empirical results, which, he claims, strongly support the presence of repressed inflation in the Soviet Union. On the basis of his results, he confirms the predictive ability of the Barro-Grossman model, and he claims to have improved our knowledge of Soviet repressed inflation. Similar empirical investigations of other CPE countries, Howard also suggests, are of great importance in testing the general applicability of his model and his estimation technique. It is with this aim that a test of the Polish economy was undertaken, but certain difficulties encountered in the process of estimation revealed several fundamental drawbacks in his methodology and estimation technique. The main technical problems are the identification of the model, and the specification of the labor demand function and hence the endogeneity of prices and wages. These will be dealt with first. I shall then go on to discuss more basic problems. These are concerned with Howard's lack of any model of planners' behavior, the assumptions of his maintained hypothesis and the unjustifiable claims he makes for his results.

This article presents the author's comments on a paper by David Howard about the predictive ability of the Barro-Grossman (B-G) disequilibrium model applied to the Soviet Union economy. The B-G model focuses on the responses of saving and labor supply to conditions of excess demand, defined as the case where at the prevailing price, the demand for consumer goods exceeds their supply. The B-G model predicts that under conditions of excess demand, referred to also as repressed inflation, an increase in the quantity of goods available leads to a decrease in saving and an increase in labor supply, with its consequent multiplier effect on output. Howard tailors the B-G model to the Soviet economy by including an uncontrolled market, specifically the collective farm market, and by eliminating the role of profits as an argument in the effective saving and labor supply functions. While the B-G model supplies an important theoretical framework for predicting responses to changes in the constrained availability of goods, the model is difficult to test empirically. Moreover the methodology used by Howard is flawed in several ways. An adequate measure of the supply of goods available on the constrained market is needed to test the B-G model.

The separate performance of major sectors of the economy has engaged the attention of many students of Soviet economic growth. In the case of transport, the aggregative aspects of performance have been neglected because neither the official measures nor the various non-Soviet estimates of output growth have contributed an index. The purpose of this paper is to summarize results of an attempt to construct and use output indexes for transport and communications. This paper presents indexes and their growth rate implications and compares the output increases with increases in the capital and employment. Over the 1928-63 period as a whole, output has increased by much more than the increase in either employment or capital and therefore, by much more than the increase in combined factor inputs regardless of the input weights. For Soviet transport and communications and its indicated components, rates of output increase in 1958-63 are substantially below than those of in 1951-58 or 1953-58.

The article presents a discussion on the paper titled On Patterns of Technological choice in Soviet Industry written by David Granick. First, the question of single-shift operation. Looking back it seems odd that, at a time when capital was extremely scarce, Soviet planners, did not make a greater effort to economize capital by working plants around the dock. It is a matter of wonder as to how far Soviet methods, of cost calculation may have contributed to this result. Second shifts are notoriously less productive than first shifts, and third shifts are even less productive. Average variable costs are correspondingly higher. Under the existing methods of calculation, this can be more than offset, at least in capital-intensive industries, by a decline in unit overhead costs. But the understatement of capital costs in Soviet accounting, leading to heavy emphasis on direct costs, may well have led them to conclude that multiple-shift operation was prohibitively expensive. The author also suspects that political and bureaucratic considerations were important.

Early industrial development in Soviet Union means its development during the period of the first two Five Year Plans-is commonly acknowledged to have been extremely rapid by international standards. As such, it inevitably exerts a strong attraction on the governments of underdeveloped nations. There is a natural interest in seeing what lessons can be learned from it. This paper concentrates on one such lesson. In trying to explain this rapid rate of development, three different lines of explanation have been pushed by various Western scholars. The main explanation given is the high proportion of national income set aside for investment, and the fact that such investment was directed primarily into the expansion of directly-productive rather than social capital. This investment was accompanied by a large influx of labor into industry and construction, since this labor force was more pushed out of agriculture than pulled into industry, such relocation of human resources did not interfere with a program of restricting consumption to the advantage of investment.

The article discusses the mathematical methods of input-output, and its possible application in one particular aspect of planning in the Soviet Union, the construction of the short-term, annual economic plan. Furthermore, this paper is restricted to the discussion of one particular aspect of the process of plan construction. That part concerned with the attaining of internal consistency in the annual plan. One enters the planning process after a set of preliminary production targets has already been established by the political leaders of the Soviet Union. One do not inquire into the rationality of these targets, but just into their internal balance, which is the assurance, for example, that if the output of a certain number of tons of steel is planned, then the necessary outputs of coal, pig iron, and of all the other input materials into steel are also planned. Of course, as the internal balance of the plan is worked out, the set of initial production targets is altered. But the general configuration of these targets is not significantly changed, and thus a basic part of the question of resource allocation remains out of the scope of discussion.

This article presents a discussion on the research paper "Soviet Economic Trends and Prospects," by Francis Seton, a professor at Oxford University, England, published in the May 1959 issue of the journal "American Economic Review." The article is a remarkably imaginative effort to extract usable inferences from sparse and faulty data. Seton has measured the differences in output which are associated with differences in capital and labor inputs as among industries or areas. Interfirm production functions could be called interindustry or interregional functions as they tell things like how output per unit of input varies moving from industries of low capital/labor ratios to industries of high capital/labor ratios, or from industries of small to large scale. They represent a scatter of realized points on a number of different production functions, not of alternative potential points on a single production function. The second objection is alternative to the first, or, perhaps, bears on the reliability of Seton's computed functions regarded simply as interindustry functions. The observations available for Seton's prewar computations are very oddly distributed, especially in view of the purposes for which the results are intended. In the period from 1928 to 1934, according to the official data, the so-called "metal-working industries," principally machine building, accounted for 26 percent of the increase of capital and 35 percent of the increase of labor in large-scale industry as a whole in the Soviet Union.

The paper analyzes the foreign trading system of the Soviet bloc countries, which have the most extreme form of direct controls known in history over both their internal and international transactions. Two general questions will be considered in this article: can a country using only direct controls decide what its imports and exports will be; and whether direct controls over international transactions a sufficient condition for external equilibrium. The purpose of this analysis is to illuminate, by means of an admittedly atypical case study, some issues involved in the perennial discussion of the relative effectiveness and desirability of direct controls, in contrast to monetary and fiscal controls, as a means of establishing or maintaining external balance. Trade within the Soviet bloc is typically carried out on the basis of bilateral agreements between Ministries of Foreign Trade. These annual agreements list amounts of each commodity to be exported by each trading partner. They provide that shipments in each direction should be equal over each six-month period; within each such period, however, a country may have an import or export surplus, which will be financed by an automatic credit not to exceed specified limits. The same terms seem to prevail in intersatellite trade agreements.

The article focuses on the decision by the Council of Soviet Ministers to put the ruble on a gold basis corresponding to its gold content. There has been and still is little quarrel among Soviet economists on gold in the context of the capitalist society. The point of controversy is the well known Marxist proposition that gold being a product of labour is equivalent to any of equal labour content, while paper money is equivalent to the quantity of gold which it represents symbolically. The author remarks that most recent developments seem to confirm the contention of the growing emphasis on the reality of money in internal economic calculus. The trial-and-error readjustment process has been used to impress on industrial management the importance of a strict money economy regime, though it has been frankly admitted in literature that the problem has not yet been satisfactorily solved, one is allowed only to guess how far this is the to the intrinsic difficulty of making real money make-believe profits a stimulus, especially in conditions of conventional rigid supply and release prices for plants on different levels of technico-economic efficiency.

The main purpose of this paper is to discuss those provisions of the international trade organization charter which have relevance to Russia. In addition something will be said about certain broad problems of Russia's foreign economic development in their relation to the organization. It cannot be gainsaid that, at this writing, the probability of Russia's early adherence to the organization does not appear too great. Russia has failed so far to join the International Monetary Fund and the International Bank for Reconstruction and Development. Even more significantly, it has refused to take part in the preliminary work for the organization. The Preparatory Committee of the International Conference on Trade and Employment met in London, England, in October-November 1946, with Russia invited but absent. This is hardly encouraging. Nevertheless, the problem of Russia's reintegration into the world economy is of such a stupendous moment that a discussion of the charter on the assumption of Russian membership seems justified even in default of current urgency.

The nature and scope of national income estimates in the Soviet Union and the problems involved in their preparation are determined by the peculiar structure of the Soviet economy. To understand these estimates and their problems it is necessary at all times to keep in mind their peculiar backgrounds. An American student of the Soviet national income estimates, even if he knows the Russian language, as is the case with at least one of the two authors of this paper, is greatly handicapped. In his studies by the meagerness of the Russian published materials on the subject as well as by the unavailability of some of these materials in the American libraries. Barring the publications issued prior to the collectivization of agriculture in the early 1930s, which are now out of date, the Soviet literature on national income is comprised today of only three or four books or monographs' and of half a dozen major articles published in the economic journals of the country. The systematic preparation of national income estimates in Soviet Russia began in the middle of the 1920s.

The article presents the report of the American Economic Association's Committee on U.S.-Soviet Exchanges for 1976. The committee consists of Abram Bergson, John Meyer, and Fritz Machlup. The sponsoring body in the Soviet Union is the Association of Soviet Scientific Economic Institutions, under the chairmanship of Academician Tigran Khachaturov. Pursuant to this invitation, ten Soviet economists came to the U.S. for two weeks in April 1975. In the fall of 1975 the Soviet Association issued a return invitation for ten American economists to visit the USSR in June 1976, for a conference in Moscow on The Economics of Technological Progress and for visits to economic institutes in other parts of the country. The two members of the committee who were in Moscow took the opportunity for tentative discussion of future plans with Khachaturov. Khachaturov expressed some preference for an area comprising worker training, deployment, compensation, and productivity.

The retardation in Soviet Union economic growth since 1950 requires explanation. It has also important policy consequences for the Soviet Union, posing choices and raising dilemmas. The author in this article addresses the former question in depth in the present paper, drawing on the considerable econometric, theoretical and institutional literature that has now emerged on the Soviet economy, touching only briefly on the latter issue for lack of space. These causes of retardation in Soviet economic growth suggest their own remedies. Evidently, more capital accumulation, through further increase in the already impressive Soviet savings rate, is not the answer. There are only three possible options open to the Soviet planners, reduce the demands on the pie that is growing ever more slowly, that is, learn to lower expectations and cut the icing from the cake, undertake substantive, extensive and intensive economic reforms that would increase efficiency and continually improve the productivity of resources, thereby raising economic growth, and seek external resources, especially in the form of superior know-how, that would provide the stream of technical change thereby raising the diminishing growth rate. The first two options offer little promise, making the third critical in Soviet decision making.

The purpose of this paper is to offer a consistent interpretation of two apparently contradictory phenomena of Soviet Union industrial innovation and growth. One is that the average labor productivity growth rate in the period 1928-75 was high, resulting in a significant reduction of the relative labor productivity gap between the U.S. and the Soviet Union. The other phenomenon is !that since 1975 this reduction, or the so-called catching-up process, has nearly stopped. The timing of the post-1975 slowdown is not self-evident either, since the productivity gap that remains is still large. The topic which received much attention in Western literature has been the Soviet Union growth slowdown in the years 1947-75. However, if one begins analysis in 1928 or 1940, the extraordinary high productivity gains in the years 1947-61 can be interpreted as linked with the significant productivity losses in the years 1941-46. This interpretation rests on the notion that, until 1975, there was in Soviet Union industry a fairly constant trend rate of innovation and of labor productivity growth but on this trend there was superimposed a transitory component of technological and productivity change, negative in the years 1941-46 and positive during the post-1946 reconstruction.

This article focuses on the author's estimate on the productivity of foreign resource inflow in the economy of the Soviet Union. My estimates of the productivity of foreign resource inflows in the Soviet economy are remarkably low compared to the market terms for credits that typically obtain in the private capital markets of the West. They suggest the following thoughts. First, they may explain why the Soviet Union is keen to get softer terms and conditions. While soft terms are better than hard terms, by definition, the Soviet keenness to get them may follow from the fact that hard, commercial terms may tend to result in counterproductive borrowing, given the low returns domestically. Second, the estimates may also explain the Soviet emphasis on getting associated technology rather than pure capital inflows. Unless the importation of technology is at terms that capture for the sellers of technology the full returns to the Soviet Union from its utilization, the incremental benefits to Soviet income from such technological imports, financed with the capital inflows, would raise the net return from such joint capital cum technology inflows above the rates of return that has been calculated. Third, and related to the preceding remark, the results may also suggest that the Soviet Union is likely to be very particular about the areas in which foreign capital cum technology is available and accepted. If the returns in terms of the growth of income from foreign resource inflow in general are not substantial, the net benefit would have to be substantial in terms of other objectives such as diversification of the economy towards consumer goods in toto, or some particular types of consumer goods for the commercial terms of such capital cum technology imports to be acceptable to the Soviet Union.

The article discusses the problem of unemployment in two major types of economic systems-capitalist regulated market economies (CRME) and socialist centrally planned economies (SCPE). This paper compares the two systems in regard to types of unemployment and antiunemployment measures. The CRME have several key characteristics like that most of the means of production are privately owned, market forces chiefly determine the level of economic activity, the rate of growth, the composition of output, and the distribution of income. In the SPCE, on the other hand, the most means of production are collectively owned and a large administrative bureaucracy attempts to direct resource allocation and income distribution through comprehensive and detailed planning. The experience of particular countries such as the United States or the USSR is mentioned by way of illustration, but it is not suggested that they are protypical or ideal examples of their respective economic systems. The author says that there is an interesting difference in regard to unemployment among the CRME and among the SCPE, arising from differences in the level of economic development, the structure of the economy, the demographic composition of the labor force, and social and institutional arrangements.

The article examines the issues involved in the plan-market economic relationship in the Soviet Union. The three major groups of economic units are: state enterprises, collectives, households. Interactions among units in an economic system fall into two main categories: vertical and horizontal. Vertical interactions are those between units in a hierarchy wherein each unit possesses administrative authority over the units below it. Horizontal interactions are characterized by direct interrelations between units, in which neither unit has administrative authority over the other. In the literature on Soviet economic planning and centralized economic planning in general, it would appear that many hold the view that only vertical mechanisms and interactions matter. The horizontal relations that we will discuss take three forms: 1) rationing, 2) monetary payment, 3) free acquisition (besplatnyi). There is, again, a tendency in analysis of the Soviet economic system to associate rationing with central planning, monetary transactions with the market, and free goods with full communism.

This article discusses the disequilibrium model in a controlled economy in the Soviet Union. Robert Clower has presented a hypothesis of household behavior under conditions of involuntary unemployment; in his analysis, Clower contends that a constraint in labor supply implies a decrease in demand for consumer goods. Robert Barro and Herschel Grossman generalized Clower's analysis to include the case where the quantity of consumer goods available is less than the demand at the going price. The Barro-Grossman disequilibrium model provides a framework for analyzing the effects of repressing inflation by means of price controls. The model predicts that such a policy will lead to increased saving and, more importantly, a reduction in labor supply. The latter response will have a multiplier effect on output. Given the potential importance of the implications of these effects, particularly the labor supply response, it would seem of utmost importance to test this model empirically. The disequilibrium model predicts that if the amount of goods available on the state and cooperative retail market decreases then labor supply decreases, demand on the collective farm market and other free markets increases and saving increases. These predictions are tested here using time-series data for the years 1955 to 1967.

This article investigates technological changes in collective farms in the Soviet Union. The basic structure of Soviet agriculture is based on two types of collective enterprises, namely, the state farm, which is owned by the state and operated as any rural factory with hired managers and workers, and the collective farm, which is similar to a producers' cooperative and where peasants share in the net income of the farm. The main purpose of the study is to prove that despite the country's failures and relative inefficiency in comparison with U.S. agriculture, the Soviet agriculture still has experienced a good deal of technological change.

This article focuses on the economic growth and capital-labor substitution in the Soviet Union. High growth rates of capital and the absence of business cycles combine to create a relatively rich sample of full employment capital-labor and capital output ratios. This results in greater statistical power than is typically available in the records of most Western economies for testing the appropriate form of an aggregate production function. The author argues that the postwar Soviet growth record can be accounted for by a constant elasticity of substitution production function with elasticity of substitution significantly less than one. Implications for past and future Soviet growth are discussed. Soviet growth is also compared with U.S. postwar economic growth.

The purpose of this paper is to investigate some aspects of Soviet practices and policies with regard to export and import pricing and the ruble exchange rate. The need for special investigation arises out of a number of peculiar institutional circumstances under which Soviet foreign trade is conducted, the existence of a foreign trade monopoly which transacts all imports and exports, the inconvertibility of the ruble, the inconvertibility of the currencies of other Bloc nations with which the Soviet Union now transacts the bulk of its trade on a strictly bilateral-balance basis and a highly manipulated internal price structure which differs markedly from that of any Western nation. Soviet foreign trade pricing is by no means a complete mystery. On the basis of elementary trade theory, it is obvious that, in Soviet trade with Western nations, prices must be somewhere in the neighborhood of world prices since the Soviet Union is a small competitor on a large market and must generally play the role of price-taker.

The experience of 1930s demonstrated how instabilities within countries can be transmitted to others through trade and thus serious concern with the problem of international economic instability continues to the present. This paper reports the results of statistical investigations of imports and exports stabilities for the Organization for Economic Cooperation and Development (OECD) and the Council for Mutual Economic Assistance (COMECON) blocs. The study of trade stability can be based either on the country's aggregate trade along with the rest of the world or on binary, country-pair comparisons involving a large number of trading partners for each country. This study is based on country-pair comparisons. Total trade flows are much too aggregative and can conceal important differences in stability. Empirical results of this study shed new light on the trade stability patterns of the two blocs. The economic performance with respect to the trade stability of the OECD in general and the U.S. in particular was surprisingly good when compared to the Soviet Union and the COMECON countries.

The article presents a comment on the article "Industrial growth in the Soviet Union " by G. Warren Nutter, published in the May 1958 issue of the journal "American Economic Review." According to the author, Nutter in his article presented number of different indexes of Industrial production for the Soviet union, namely, industrial materials indexes, finished goods indexes, and indexes of "All Industrial Products." Out of these he selected the industrial materials indexes as the most reliable and compared them graphically with a single comprehensive industrial production index for the U.S., consisting essentially of the Federal Reserve Board index for 1929 to 1955, the Fabricant-Barger index for 1899 to 1929. The conclusion is surprising since most students of the Soviet economy have thought that Soviet industry has been growing considerably faster than the U.S. industry. Therefore the author argues that Nutter's comparison of materials indexes for the Soviet Union with a comprehensive index for the U.S. is improper, and that a comparison of a U.S. materials index with Mutter's Soviet materials indexes does not support the conclusion that U. S. industry has kept pace with Soviet industry.

The article presents a reply in response to an article written by R.V. Greenslide and Phyllis A. Wallace, criticizing an article written by the author on industrial growth in the Soviet Union, published in the May 1958 issue of the journal "American Economic Review." The author clarifies that his comparisons of the Soviet Union and the U.S. industrial growth were based on three different indexes of Soviet industrial growth, each with two weight base. The indexes of industrial materials, which show a growth more or less midway between extremes, were chosen to represent the Soviet Union on a graph comparing Soviet and the U.S. industrial growth. But they were used only for a broad look into the research, immediately supplemented by a table that presented the ranges of Soviet growth rates derived from all the indexes presented in the article, and compared those ranges with growth rates derived from the author's index of industrial production in the U.S. The author argues that an index of industrial materials does not reflects adequately the total industrial growth. The author also clarifies the argument that a comprehensive index of industrial production for the Soviet Union must have a downward bias relative to a similar index for the U.S.

The article presents the author's views on indexes which are based on a compilation of many individual commodity series and their subsequent aggregation by means of certain chosen weights. The reliability of such indexes is critically dependent on the completeness of the product coverage achieved, the representativeness of this coverage relative to the total product mix, and the appropriateness of the weighting procedure followed. The author, however, reveals only a few tantalizing facts about the coverage of his indexes, and virtually told nothing about the representativeness of his chosen series. Author certainly demonstrates a healthy divergence of his own figures from the propagandistic official Soviet claims. The volume of freight traffic in a growing economy has interested economists studying the USSR partly because it appears to provide a physical indicator of the volume of industrial production. The article also presents a comparison between the USSR and the U.S. transportation. The author suggest that there would be mutual benefit in an exchange of information between American and Soviet railroadman on operating methods.

The article presents the author's views regarding the investment in the Soviet economy, which is undertaken to raise the economy's output and living standards. Something like a quarter of the national income is devoted to capital formation. It is allocated among sectors so as to maximize the rate of industrial growth. Industries are interdependent, and investment allocation decisions must therefore be internally consistent. Not only must connections among industries be recognized, but choices must be made among regions and alternative production processes as well. Moreover, the bill of goods initially specified in a plan will be influenced by the investment allocation decision made in the planning process, and adjustments will be required. Capital productivity through estimating the change in labor productivity that results from adding capital to the production process. This can be determined, ex post, through dividing a time series for output in roubles by a labor force time series. This shows that the growth in output can be thought of as a product of three factors: a larger labor force, improved skills in the labor force, and additions to capital plant and equipment. Finally the author suggests that imports of a planned socialist economy are highly stable and by directing trade to such markets, the crisis prone capitalist economies can avail themselves of a countercyclical trade balance.

One way to determine the answer to the question of Soviet Union's success in matching the industrial achievements of the U.S. is to make an industry-by-industry comparison of growth in physical output of both the countries, in each case confining the comparison to periods in which the U.S. and Soviet industries were of equivalent size. Soviet industry seems still to be roughly three and a half decades behind its counterpart in levels of output and about five and a half decades in levels of per capita output. This is a generalization about average performance rather crudely defined, in some areas the Soviet Union is much closer to The U.S. historically, in others much further behind. The development of Soviet industry is roughly equivalent to what took place in The U.S. in four decades bracketing the turn of this century, in per capita terms, in an even earlier period ending around the turn of the century. Third, over the Soviet era as a whole, Soviet industries have generally lost historical ground to their American counterparts, the lags have generally increased, in terms of both total and per capita output. That is, growth from the same level of output, total or per capita, has been slower in Soviet than in American industries.

This article focuses on tax structure of Soviet Union. In this paper an index is presented of changes in the magnitude of the "burden of tax" from 1925/26 until 1950, excluding the war years. Two time series are constructed: One, consumer money income and second, taxation, in money, of the consumer. The principal task faced by Soviet tax authorities is absorption of excess household consumer purchasing power generated by the very high rate of non consumption expenditures normally undertaken by the state. The position of the household is particularly central in the Soviet economy because it comprises, with minor exceptions, the entirety of the private sector; since private industry has been virtually nonexistent in Soviet Union for many years, the burden of the state's economic activities must be borne primarily by the household. Two independent methods of measuring consumer money income are available to the research worker. The first, and most direct approach, is to add up all sources of income paid out to households over the course of a year. The second approach is to total up household expenditures including changes in savings.

The article presents information on the criteria for capital investment decision in the USSR. According to the author the Soviet economics recession together with the informal contacts planned would represent a significant step forward in the international understanding between the East and the West. Moving forward on this front is vital at the present juncture in world affairs, and it involves among other things developing contacts between scholars of the East and scholars of the West, and in particular between economists. When intellectual inquiries on the same general subject are being pursued in different countries, cross-fertilization of ideas is commonly profitable. Surely this must be the case with inquiries in the field of economics. The present status of economics in the U.S., it is this: our economic theory insists on the meritorious features of our free enterprise system and rightly so, but that does not mean that we can wisely continue to be surrounded by an ideological curtain.

In this article, the author responds to the comments made by economist Earl Brubaker on his paper published in the journal "The American Economic Review" in which he argues that observable slowdown in the growth of output of the Soviet Union economy in the 1960's need not be associated with a fall in the growth of total factor productivity, as is usually suggested, but rather can be better shown to be a manifestation of diminishing returns to capital. Those parts of Brubaker's comments which touch upon difficulties of aggregation, inaccurate measurement of "true" inputs, etc., are really universal complaints about using aggregate data that have been heard many times before. Author agrees fully and unconditionally that they throw up serious obstacles to the measurement, interpretation and application of aggregate production functions. Then there is the old fear about "Soviet Statistics." According to Brubaker, "one can only ponder in awe how these difficulties of production function estimation may be compounded where the data have their underlying basis in the Soviet statistical and economic systems." This strikes the author as an unwanted exageration.

The Seventh U.S.-Soviet Economic Symposium was held at Yale University, June 4-6, 1983, on the subject "The Economics of Non-Renewable Resources." The atmosphere of the meeting was, as usual, informal and friendly. There was some improvement in the quality of the Soviet participation, compared with previous meetings held in the U.S. The Soviet delegation was younger than usual, perhaps due partly to urging from this side, and it also included for the first time two women economists. The Soviet papers were reasonably well prepared, though not up to the quality of the U.S. presentations. After the symposium, the Soviet delegation was scheduled to visit New York, Washington, and New Orleans. But, for reasons unknown, the Soviet authorities reduced the visit to one week from the usual two weeks. So New Orleans had to be cancelled, and time in New York and Washington was also curtailed. The eighth symposium is scheduled to be held in the Soviet Union in early June, 1984. The subject is "Structural Change in the U.S. and Soviet Economies," which is interpreted as involving a fifty to sixty year time span. The meeting will probably be held in Riga or Tallinin, followed by visits to Moscow and other cities. Organization of the U.S. delegation is well under way, and it appears that there will be no difficulty in fielding a strong team.

The article presents information on international technology transfer. The article also discusses the problems and costs involved in the transfer process and comments on some aspects of U.S.-Soviet Union technology transfer. First, it is important to distinguish between vertical technology transfer and horizontal technology transfer. Vertical technology transfer occurs when information is transmitted from basic research to applied research, from applied research to development, and from development to production. Horizontal technology transfer occurs when technology used in one place, organization, or context is transferred and used in another place, organization, or context. As emphasized in the first section, the transfer of technology is by no means costless. Like any economic activity, it uses up resources. The Soviet Union devotes very substantial amounts of money to research and development, and has achieved notable successes in many technological areas. In the past few years, there has been a marked increase in the amount of technology transfer between the U.S. and the Soviet Union.

This article examines the Soviet Union's international trade activity from 1955-1968. The Soviet international trade can be usefully disaggregated into three familiar ideo-geographical categories: developed capitalist, developed socialist and less developed countries. when the Soviets trade with relatively developed countries, they import capital intensive commodities and export labor intensive goods. When they trade with nations at a similar developmental level, imports and exports embody factors in approximately equal proportion, and when they trade with underdeveloped regions, they export capital intensive and import labor intensive products.

This article focuses on the dynamic efficiency of the Soviet Union. Dynamic efficiency has been defined in relative terms, with reference to a comparison of economic systems, assuming identical initial resources and identical saving ratios, a higher rate of economic growth would correspond to a higher degree of dynamic efficiency. Allowing for uncertainty and the possibility of technological change, the major influences determining dynamic efficiency includes innovating activity, the spreading of new technology among the units of production, and the choice of appropriate investments. The dynamic efficiency of a national economy could then be indicated by comparing its actual growth rate to its potential growth rate, defined as the maximum rate of northeast movement of the production-possibility frontier compatible with consumption profiles and initial conditions, including the rate of saving. In terms of dynamic efficiency, the performance of the Soviet economy does not appear to be superior to that of free enterprise economies at a similar level of economic development. Rather, the achievements of the Soviet economy should be explained by its success in attaining a high rate of capital formation and in reallocating labor from agriculture to industry.

The article focuses on prospects for economic growth in Soviet Union. There is a wide consensus in favor of the proposition that they are reliable guide to growth rates of industrial commodities in physical terms, but that agricultural statistics have been or may have been inflated on an increasing scale in the last few years. For familiar reasons, aggregate percentage indices of national income and industrial production should be regarded with varying degrees of suspicion, although it is accepted by most critics that the amount of exaggeration has somewhat declined compared with the period before 1950. The growth plan through 1970 for Soviet industry implies a slight decline in tempo compared with that achieved in the last five years. However, if, as is widely believed, output indices for past years are somewhat exaggerated and if indices reflecting output plans for the future do not suffer from this defect, what looks like a slowdown may in fact represent acceleration. To sustain an annual growth rate of 9.6 per cent to the end of the present decade, Soviet industry will require a vast increase in the flow of materials and fuels.

In any effort to gauge the relative economic strength of the U.S. and U.S.S.R. a comparison of industrial output is of central importance. Industry is the supplier of those outputs that are of greatest concern in the current international power struggle, it is the source of the most important inputs into the military program, investment and foreign economic assistance. The comparison involves a combination of two approaches. For branches of industry other than engineering relative output is estimated on the basis of physical production data. The first step is to determine as many physical output relatives as possible. These are then aggregated by means of U.S. value-added weights. Concretely, for each class of industries of the U.S. Census of Manufactures physical output relatives showing U.S.S.R. as per cent of U.S. are determined for the main commodity or commodities in that class. For each class, Soviet industry is then assigned a value-added figure in dollars equal to U.S. value added times the output relative. When these value-added figures in dollars are aggregated for each side and compared, the resulting ratios constitute averages of the physical output relatives, weighted by U.S. value added. As might be expected, this approach encounters difficulties in application.

This article analyzes the role of prices in the planned economy of the Soviet Union as of March 1962. In the Soviet Union, as in all modern, complex economies, prices play an important part in the guidance of economic activity. However, their role in the Soviet economy is different both from their role in a capitalist market economy. In the Soviet economy, prices are not an autonomous force determining production, resource allocation, and consumption. Instead, prices are manipulated by the central authorities as one of various instruments intended to accomplish their planned goals. Prices are used by the central planners to secure compliance by enterprise managers with the plans elaborated by the former and to evaluate the performance of the managers in the execution of their assigned tasks. Although resource allocation is determined by the planners largely in physical terms, it is necessary for them to express complex input and output targets for the enterprise in value terms in order to have a common denominator for physically dissimilar units of raw materials, labor, and capital goods. Thus the enterprise plan contains not only physical targets, but also value targets, such as those for value of output, cost, use of working capital, tax payments, and profits. To control and evaluate the use of inputs and the production of outputs by enterprises in physical terms alone would be extremely difficult, if not impossible.

Many of the significant implications for U.S. military objectives of specific military choices such as the introduction of a new weapons systems, a change in basing or deployment, new operational procedures or protective measures depend upon their impact on the limited set of U.S. and the Soviet Union decision elements. The article presents a schema corresponding to this decision-making. It depicts some major, interrelated elements in two concurrent U.S. and Soviet decision problems, whether or not to launch an all-out nuclear attack upon the opponent. "Strike" denotes such an attack. The "Wait" strategy may be interpreted either as a "representative" or as a "best" alternative to Strike. The inclusion of a U.S. Strike strategy does not imply active consideration of such an alternative at any given moment, as a possibility, it is relevant particularly to Soviet calculations, for various reasons. The u's and v's are, respectively, U.S. and Soviet scientific utilities for certain consequences of their actions and p and q are, respectively, the U.S. and Soviet subjective probabilities that a choice of Wait will encounter an opponent's choice of Strike during a certain time period. Though all of these are subjective variables, they clearly depend upon estimates of objective outcomes under specified circumstances, based upon some form of explicit or tacit systems analysis.

The currency reform was announced in a speech to the Supreme Soviet on May 5, 1960, and an official decree was published in the Soviet press the following day. Beginning January 1, 1961, a new ruble currency will be issued at the rate of 1 new ruble for 10 old rubles. Effective January 1, 1961, all prices, wages and other money incomes, taxes, savings deposits, government bonds, and assets and liabilities of Soviet enterprises are to be reduced to one-tenth of their former level. The currency reform will thus have no real impact on the average Soviet citizen, whose real income and real asset positions will be unaltered as a result of the change, in the same proportion, of wages, prices, assets, and claims. In this respect, the 1961 reform differs from the early post-war monetary reform of December 1947. Under the latter, new currency was exchanged for old at the rate of 1-to-10; savings deposits were exchanged at varying rates, ranging from 1-to-1 for small deposits to 1-to-2 for large deposits; and government bonds, with some exceptions, were exchanged at a rate of 1-to-3. On the other hand, wage rates were unchanged while prices were reduced, although not in proportion to the reduction in the population's holdings of currency and near-money.

The phrase incentives and economic growth evokes the image of a market economy with a multitude of autonomous decision-making units whose initiative and active participation in saving, investment, the acquisition of skills and innovation is to be elicited. True, the government of Soviet Union itself may be an investor and entrepreneur, in addition to setting the politico-economic climate for its citizens or even influencing them more directly. But even with this qualification, the image is not applicable to the country, where the market mechanism as well as any significant measure of autonomy of investment decision was deliberately abandoned at the dawn of the Plan Era. Many factors have contributed to the outstanding technological progress of Soviet Union, the thirst for education and knowledge among the country's youth, the small but able nucleus of scientists and engineers inherited from the Empire and standards of excellence bequeathed by them, substantial amount of direct foreign technical tutelage.

The material balance is at the core of Soviet planning; it is the most operational (or bureaucratic) of all balances in the sense that all its elements-output orders, import and export quotas, inventory changes and allotments of materials to various consuming groups-hang on administrative decisions. Until recently so little was known about the practice of central planning in the Soviet Union and in Eastern Europe that material balances and other "balanced estimates" meshing the supply and demand for commodities and for factors of production were rarely discussed in Western economic literature. But of late Soviet and Czech publications have become more candid about planning methods actually in use; while of course the Poles and the Hungarians, ever since 1955, have been less reticent than any other members of the Soviet bloc to expose their economic system to public scrutiny. The structure of planning and of administrative organs differs in these various countries and it has undergone a substantial reform since 1957 in the Soviet Union itself.

This article focuses on the economic integration in the communist countries of European Soviet bloc. The levels of prices in the individual countries have moved differently. In the Soviet Union, prices were doubled in 1949 and were gradually reduced until 1954, when they were stabilized. Satellite prices certainly rose from 1949 until about 1952 or 1953, at which time the currency systems of most of them had to be replaced. Through 1956, at least, wages tended to rise more rapidly than labor productivity, so that prices probably continued to rise there. However, there is no basis for saying that they have changed on the same rates or in the same proportions in the individual satellites. Moreover each country has a fixed exchange rate and indulges in fewer multiple rate practices than most free world countries. These exchange rates, however, seem to have little or nothing to do with "purchasing power parities." Most of the trade of each bloc country is with other bloc countries. Apart from unilateral payments, notably reparations to the Soviet Union by the former Axis allies.

This article focuses on the Soviet industrial reorganization of 1957. The radicalism of the 1957 reform derives mainly from the very substantial modifications which the changing of "principles" has wrought in the administrative environment of Soviet industrial and construction enterprises. This reform was a radical measure only in an administrative sense. It introduced a concept of direction of industry, an execution of industrial policy, practiced on a very limited scale only in recent Soviet history, a concept officially styled "administration according to the territorial principle." Under this concept, centrally determined plans and policies are implemented by regional executive agencies, placed in general charge of their region's industry, regardless of branch affiliation. Even though the new administrative regime stops far short of establishing the "territorial principle" fully and purely, it differs sharply from the old system. This was based on the "branch principle" of vertical control of industry, regardless of location, by central agencies which, in name at least, were differentiated by industry branch. The radicalism of the 1957 reform derives mainly from the very substantial modifications which this changing of "principles" has wrought in the administrative environment of Soviet industrial and construction enterprises.