Evaluation Of Soviet Economy
PART 1 QI: OVERALL EVALUATION OF THE SOVIET EXPERIENCE
The administrative command economy in the Soviet Union was a centralized organized hierarchy that was very complex and had several dimensions. One of the major criticisms by economists Hayek and Mises was that under the central planning there was no economic calculation or no way to make a rational decision about resources. According to the Hayek and Mises central planners could make technical decision but not economic ones.
Major criticisms with the administrative command economy involve several issues. The first, which we will address, is in regards to pricing and information. One of the first oberservations that one can make about the system of pricing concerns the existence of operating losses for many enterprises as a result of considerable deviation from the average branch cost. This is because some enterprises would have much higher cost that others, although for the ones in question these loses were not significant because state subsidies would be routinely given. The prices they used were fixed and based on accounting costs and from information that was often outdated.
Information gathering under the administrative command economy were overwhelming. Millions of goods were produced and for the central planning
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