Resource Misallocation and Strain - explaining shocks in post-command economies

A fundamental tenet in economic theory - which was confinned by reality - is that a command system allocates resources poorly because of the impossibility of economic calculation. l Therefore, once prices are freed and start to operate at quasi-equilibrium (market-clearing) levels, the hidden inefficiencies come into the open and a massive resource reallocation would have to take place - from low to high productivity areas.