Accounting Controls and the Soviet Economic Reforms

Knight Frank , The Economic Organization, University of Chicago, 1933.

Ijiri Y. Jaedicke R. K. Knight K. E. , “The Effects of Accounting Alternatives on Management Decisions,” in Jaedicke R. Ijiri Y. Nielsen O. , Research in Accounting Measurement, American Accounting Association, 1966, p. 188.

Solomons D. , Divisional Performance: Measurement and Control, Financial Executive Institute, 1966.

Zielinski J. , On the Theory of Socialist Planning, Oxford University Press, 1968, Appendix II.

For a detailed description of the components of the wage fund see Cerniglia S. J. , Wages in the U.S.S.R., 1950–1960: Construction, U.S. Department of Commerce, Bureau of the Census, Foreign Demographic Analysis Division, October 1967, Appendix B, pp. 27–31.

Nove A. , The Soviet Economy, Praeger, 1961, Chapter 6; and Felker J. , Soviet Economic Controversy, M.I.T., 1966, Chapter 3.

Kornai J. , Overcentralization in Hungarian Light Industry, Oxford, 1959, p. 38, as quoted by Nove A. , p. 164.

For a detailed description of the results of the experiments see Zaleski E. , Planning Reforms in the Soviet Union, 1962–1966, University of North Carolina, 1967, Chapter 6, “Experiments with Flexible Administrative Controls”; Felker J. , pp. 81–88. Zaleski describes the difficulties encountered, especially in the supply system.

Kosygin A. , “On Improving Industrial Management, Perfecting Planning, and Enhancing Economic Incentives in Industrial Production,” reprinted in Sharpe M. , ed., Planning, Profit and Incentives in the U.S.S.R., International Arts and Sciences Press, 1966, Vol. II, p. 29.

Ibid., p. 41.

Under the “old” system, where physical output was stressed, there was a strong incentive to submit low, easily achievable plans. “Under the existing system … the entire appraisal of the enterprise's work and the system of material incentives for the personnel are mainly based on reward for fulfillment of the plan.” Ibid., p. 26.

The definitions of these terms have been derived from Ukazaniia (Instructions) which appeared in Ekonomicheskaia Gazeta, Moscow, No. 50, December 1966.

The United Nations Economic Commission for Europe in Economic Survey of Europe in 1965, Part I, p. 57, lists gross income (net value added) as an indicator. Although the use of gross income (the balance of the realizatsiia account) was discussed, the methodological instructions for enterprises transferring to the new system require the use of profit or sales.

Molyakov D. C. , Pribyl' i Rentabel'nost' Promishlyennoyo Predpriiatiia (Profit and Profitability of the Industrial Enterprise), Moscow, 1967, p. 53.

Sitnin V. , “Plata za Fondi I Ekonomicheskiie Stimuly” (Payment for Funds and Economic Incentives), Planovoe Khoziastvo, 1966, No. 11, p. 35.

Ekonomicheskaia Gazeta, No. 39, 1966, p. 15. Other reasons cited are that depreciation does not necessarily reflect a decline in economic effectiveness, and since it is difficult to determine “actual” value, the use of gross more closely approximates economic value than the use of net.

It should be noted that a pervasive problem in the past was the retention of assets beyond the time when they were economically obsolete. See Campell R. , Accounting in Soviet Planning and Management, Harvard, 1963, pp. 152–160.

Mauriel J. Anthony R. , “Misevaluation of Investment Center Performance,” Harvard Business Review, March-April 1966, pp. 98–105.

Ukazaniia, paras. 43–54, pp. 5–6.

For an example of how the formula is applied see Krylov P. Rothstein L. Tsarev D. , “O Poryadkye i Usloviyakh Perekhoda K Novoi Sistema” (On the Procedures and Conditions of the Transfer to the New System), Planovoye Khoziastvo, No. 4, 1966, pp. 55–66. Also, reprinted in English in Sharpe, Vol. II, pp. 255–274.

“Strengthening Cost Accounting at the Industrial Enterprise” Voprosi Ekonomiki, No. 6, 1966, p. 56.