Behavioral Characteristics in Soviet-Type Economies

Abstract

This paper addresses behavioral characterstics of the representative agents in Soviet-type economies(hereafter, STEs)in an attempt to explain some causes of the collapse of STEs from the viewpoint of the theory of economic systems. We single out three representative agents in STEs, i.e., central planning bureau(hereafter, CPB), firms and households. It is shown that three agents have the following characteristics peculiar to STEs, respectively. First, CPB: (1)faulty and unsuccessful planning, (2)planning from the achieved level, (3)priority sectors and a narrow range of options, (4)emphasis on volume and fixed price, (5)strong preference for autarky. Second firms: (1)slack plan and hoarding of materials and labor, (2)self-supply bias, (3)"storming"(shturmovshchina), (4)change aversion, (5)unsatiable demand for new investment. Third, households: (1)consumers suffering most from the system, (2)workers taking advantage of the system in their favor. Finally, some implications for the transition to a market economy are derived.