Some Observations on the Plan-Market Relationship in Centrally Planned Economies

Abstract

This paper is comprised of several sets of observations on the plan-market relationship in centrally planned economies, as reflected in the experience of the Soviet Union. The paper begins with a discussion of the division of economic relations into vertical and horizontal and a description of the extensive and varied role of horizontal relations in the Soviet economy. A second set of observations concerns the beginning of market type mechanisms in the centrally controlled horizontal relationships among enter prises. A third set relates to the differences between routine production processes and creative processes. A fourth and final set of observations concerns the centralization of appointment making power and other aspects of the role of the Party in the Soviet economy. The paper ends with two conclusions: one, plan and market are not substitutes, but are complements for each other; two, the key problem of balance between plan and market is related to the issue of power in the society.