The Soviet Union provides a wealth of information on the day-to-day functioning of a centralized, command economy. Recently released Soviet archives have prompted a flood of academic inquiries that compared the theoretical vision of socialism with the daily realities of the largest and oldest socialist economy. These internal memorandums and reports paint a picture of a socialist economy that was “planned” in name only. Despite the careful calculations and best intentions of Gosplan, the State Planning Committee in the Soviet Union, the outcomes of economic directives barely resembled the spirit of the planners’ wishes by the time a decision was made on a factory floor. The absence of a functioning price system created a breakdown of the incentives that normally guide economic production to place scarce resources in their highest-valued uses. Without a way of properly pricing risk and reward, Soviet managers resorted to alternative methods to game the system in order to procure the resources that they needed. Since certain members of Soviet society were more privy to the bureaucratic channels and centers of authority that signed off on these decisions, a new class of society emerged that was able to amass personal riches by leveraging these rules to their own advantage.
Where cronyism and communism collide. It’s been fun, so far, and humorous at times. All of the Soviet memos are like, “WE’VE RUN OUT OF MILK I DON’T KNOW WHAT TO DO.”