Are command economies unstable? why did the soviet economy collapse?

Mark Harrison ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: A transformational recession? Between 1989 and 1992 Soviet GDP per head fell by approximately 40 per cent. In asking why this happened we may hope to learn about the nature of both the old Soviet economy and its transition to the new Russia. But to do so we must first dispense with a series of illusions. Think of a command economy with an initial endowment of physical and human capital. These assets are capable of producing either capitalist or socialist goods, measured along the vertical and horizontal axes respectively in figure 1. The difference between them is that capitalist goods add value at market prices; socialist goods do not add value but create employment, which is why a dictator may command them to be produced, so initially the economy’s assets are specialised in the production of socialist goods at point A.

Pages: 24 pages
Date: 2001
References: Add references at CitEc
Citations:

Downloads: (external link)
https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp604.pdf

Related works:
Working Paper: Are command economies unstable? Why did the Soviet economy collapse? (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:604

Access Statistics for this paper

More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Margaret Nash ().