ABSTRACT
The actual functioning of Soviet-type economies never seems to conform fully to the fundamental principles of the centralised model, i.e. the concentration of all decision-making powers in the hands of the political authorities, the use of directives as the guiding principle for the activities of enterprises and the elimination of the active role of prices in the allocation of resources. The frequency of’deviations’ and the permanent and systematic nature of most of them mean that they cannot be interpreted as accidental or individual failures. It is clear that they originate in the contradictions of the centralised model, the logic of which demands, in effect, that the planner: (a) limits the number of directives and constraints (taking into account his true capacity for collecting and processing micro-economic information); (b) insists, however, on strict adherence to his directives and constraints (which is the only way of preventing the very notion of directive becoming meaningless in the long term); (c) and never allows the influence of the incentive system to be felt outside of the framework established in the plan. However, indi-cators of success that are too simple and one-sided inevitably create conflicts between the interests of the national economy – identified with the implementation of the plan – and the interests of the enterprises which receive the incentives and are thus ready to take risks. The only answer is then to develop more and more complex incentive systems, accompanied by a proliferation of directives and more and more exten-sive interference by the economic authorities in the activities of enterprises (contrary to the first of the three requirements outlined above). This is the crux of the problem.
