My time with Soviet economics.

AuthorRoberts, Paul Craig
PositionMemoir & Critique

The academic study of the Soviet economy was unsuccessful. Several widely held misconceptions contributed to the lack of success. Western economists assumed that economic growth was assured because the central planning authority controlled the rate of investment. They assumed that the Soviet economy was planned centrally because it had a central planning agency. They assumed, as Alexander Gerschenkron put it in his December 1968 Ely Lecture at the eighty-first annual meeting of the American Economic Association, "that hardly anything in the momentous story of Soviet economic policies needs, or suffers, explanations in terms of its derivation from Karl Marx's economic theories" (1969, 16). All of these assumptions were false. Western scholars (and intelligence agencies) consequently were unprepared for the sudden collapse of the Soviet Union. Their subject simply disappeared before they ever understood it. In this article, I discuss each of the erroneous assumptions in turn.

In April 1988, the Central Intelligence Agency and the Defense Intelligence Agency told the Joint Economic Committee of Congress that the Soviet economy had grown by approximately 2 percent yearly from 1981 to 1985, by 2.2 percent yearly from 1976 to 1980, by 3.1 percent yearly from 1971 to 1975, and by 5 percent yearly from 1966 to 1970 (U.S. Central Intelligence Agency 1988, 61). These estimates were given to Congress even though two months earlier Mikhail Gorbachev had told the Central Committee of the Communist Party that, except for vodka sales and the higher prices paid for Soviet oil, the Soviet economy had not grown for twenty years ("Communique" 1988, 1; see also Bergson 1988 and Franklin 1988).

In 1962, G. Warren Nutter tried to bring some reality into the estimation of Soviet economic performance with his book The Growth of Industrial Production in the Soviet Union, published by Princeton University Press for the National Bureau of Economic Research. Nutter had little success in curbing exaggerated estimates of Soviet economic growth. In the end, even his own estimates proved to be on the high side.

As late as 1979, economists still ascribed a remarkable growth potency to central planning. In that year a World Bank report, Romania: The Industrialization of an Agrarian Economy under Socialist Planning, credited central planning with achieving a 9.8 annual rate of economic growth over the quarter century from 1950 to 1975. Remarkably, the World Bank economists did not realize that using these lofty growth rates to project backward the World Bank's estimate of Romanian income per capita produced a figure too low to sustain life. This mistake provoked the Wall Street Journal observation: "We have heard exaggerated claims made for central economic planning, but never that it resurrected a whole nation from the dead" ("Resurrection of the Dead" 1979).

Economists could make such errors with impunity without any adverse effect on their careers because a positive attitude toward central planning was considered a sign of sophistication. It was more important not to...

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