ABSTRACT
The role of planning and of the market under Socialism has been the most fundamental and controversial issue ever since the first Socialist state was established in 1917 and, no doubt, it will continue to be so in the future. The system presupposes the existence of a central planning authority, usually known as the State Planning Commission, whose chairman is a member of the cabinet. The problem of optimal planning had not attracted much attention until the late 1950s. The square matrix of inter-branch balances enables the calculation of technical coefficients of production which play a very important part in Socialist economic planning. Under capitalism, the functioning of the market provides the fundamental mechanism for guiding economic processes. The Socialist economic system which is almost completely governed by the market mechanism is known as market socialism. Market socialism may assume diverse forms, but in essence it represents peaceful co-existence, and indeed the complementary and harmonious co-operation of these mechanisms.
