ABSTRACT
A combination of tight monetary policy with the rigidities of such administrative controls would lead to disturbances and significant falls in production, according to both historical experience and theoretical analysis. This combination—applied not only to the state-owned sector but to the entire economy—might be a temporary solution, as part of a general, well-elaborated stabilization package, but it could not be a durable systemic option. The incongruency of the economic system and liberalization may be overcome by a rapid, decisive implementation of the systemic transformation toward a market economy. In an economy with perfect central planning, just about any amount of foreign trade surplus can be extracted without inflation, because in such a system money is totally passive, its functioning subordinated to perfect in natura planning via direct controls. A market economy will always react with greater or lesser inflation to an attempt by the government to extract from it a significant surplus.
