ABSTRACT
The Soviet system of prices and wages contrasts sharply with a capitalist system in which almost everything is determined by market conditions of supply and demand, notwithstanding governmental regulations and taxation policies. In the Soviet Union the price of an item is set in Moscow, taking into account the cost of production, social need, and political advantage, with the last two considerations often prevailing over the first. The mechanism used for manipulating prices is a combination of subsidies and taxes, especially the turnover tax. An extreme example is the price of meat, which is sold in state stores at about one-third of production cost, whereas cars are priced way above their actual cost. Black market transactions can take place anywhere, from the back doors of state stores to kolkhoz markets, from second-hand car markets to private apartments.
