Plan, Siphoning, and Corruption in the Soviet Command Economy

Mark Harrison () and Byung-Yeon Kim

No 269376, Economic Research Papers from University of Warwick - Department of Economics

Abstract: This paper reconsiders Andrei Shleifer and Robert Vishny’s suggestion that a socialist industry will always prefer to cut both price and output relative to a market– clearing equilibrium in order to maximise bribe income. The evidence from recent archival studies of the Soviet economy does not support this conjecture. To understand the evidence we present an analytical framework within which a plan– setter and an effort–setter interact, subject to a hard resource constraint, to determine real output and hidden inflation simultaneously. We find that managers who use resources gained corruptly were enabled to produce more real output with less hidden inflation and fulfil the plan more honestly as a result. We find clear rationales for plan–setters to have tolerated corruption and siphoning while maintaining plan tension, and we associate reduced plan tension in the 1970s with the spread of disloyal behaviours.

Keywords: Agricultural and Food Policy; International Development (search for similar items in EconPapers)
Pages: 22
Date: 2001-08-13
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Related works:
Working Paper: Plan, siphoning, and corruption in the soviet command economy (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269376

DOI: 10.22004/ag.econ.269376

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