chapter  9
16 Pages

The turning point

Two years into the Sovnarkhoz reform, the new institutional system still lacked transparency. The central apparat , the republican authorities and the sovnarkhozy remained driven by contradictory aims and incentives. Whilst the republic authorities sought to formalize the system of economic administration and maximize the devolution of economic decision making, the central apparat concentrated its efforts on keeping the republics and regions dependent on its own decision making. As a result, the implementation of the decentralization policy was full of inconsistencies. The institutional mechanisms, so necessary for the policy of decentralization to take full effect, were either not installed or were rendered ineffective. Formally centralized distribution of materials and equipment, and centralized management of inter-republican deliveries, proved insuffi cient for the central planners to retain control over resources and induced the central apparat to impose informal control over resources. The sovnarkhozy , particularly the highly industrialized ones, had more leverage over the planners than the planners had over the sovnarkhozy . In 1959, before it had had a chance to prove itself, the policy of decentralization of economic decision making entered a U-turn.