ABSTRACT
In both socialist and capitalist economies one observes the exchange of money for goods and services. However, the role played by money fundamentally differs in these economic systems. Money is virtually synonymous with the power to acquire goods and services or other assets in a capitalist economy. For private households, money matters less in a socialist economy where consumption choices are influenced by pervasive shortage and where non-market processes of distribution play a much larger role. Household choice in socialist economies is typically limited, both by a household’s monetary income and a host of other constraints on the quantities of particular goods and services (e.g. formal rationing or empty shelves). Furthermore, non-monetary benefits associated with a job or political position (e.g. connections or privilege) can constitute a very significant addition to a household’s real income.1
