See discussion question below from Professor Guinevere Liberty Nell.


Contributed Content (0)

Ask a Question

Show 2 Answers (Taregh Abedzadeh's answer approved by Guinevere Liberty Nell)
user's picture

Further market liberalization was another option they had available that I don't recall as discussed in the lectures, but the big problem is that ideological inconsistency could have cost any leader advocating it their political control(and possibly their life). I am not sure if they had access to any other models at this point, as it is doubtful that without going back to a more mainline economic modeler, they could have even fully grasped the issue of how capitalism was working while their system wasn't.

If I was in charge, and put in place with the dual function of making the system work, and make it consistent, and if I had access to resources without much limit, I would have sought to push for a market liberalization, set up a economic research board in charge of that system, and given it the task of understanding that market for the purposes of understanding how it worked while the desired system did not, and figuring out gradualist ways of removal while keeping the parts of the logic that were not incompatible with my own goals.

The NEP was not a system, and it was not successful. It was a set of stop-gap policies without firm theoretic basis. The failures support mainline economics(Austrian and neoclassical). Economists can learn more about the problems of replacing market systems with non-market institutions. The experience can argue that equilibrium is hard to understand and perhaps a fluctuating phenomenon. I'm unsure how much social/institutional evolution we'd wish to cite as involved, from what is seen, we might argue that political actors are somewhat rational, but the institutions were designed as clumsy. The circumstances might inform neoclassical economics on the difficulties of planning(and that's what it did during the end of the 80s), but modern neoclassicals have some degree of background knowledge of this.

user's picture

Very interesting. Further market liberalization was discussed, but often from the perspective - which was the party line always of all but the "right" and generally even of the "right" - that any market liberalization is a step back and only to be used when absolutely "necessary" in order to improve economic conditions - which they knew it could do - when their ongoing path of transition faltered too badly, i.e. when a policy was disastrous. But in the debate over industrialization and NEP the right in say '25-26 - Bukharin and Rykov at the time - argued that some amount of liberalization (mainly what was already in place, preventing further centralization and planning rather than liberalizing much more) should be used in the short term combined with an evolutionary road to ultimately bring about the new society (something Lenin had also discussed before his death), which may still use planning in the transition but the plan would be more fully accepted by the people if brought about in a slower way that allowed the peasants, for one, to keep some wealth ("enrich yourselves!" -- a way to end the grain shortage) and then to choose to join cooperatives or state firms later when they saw them working--of course others, like Stalin and Preobrazhensky, argued that this was just a road back to capitalism - if allowed to become wealthy the people would not give it up voluntarily.

I think equilibrium and institutional evolution - or the possibility of it - both can be informed by a thoughtful analysis of the Soviet experience, as we are doing here. I hope that more papers will still be written on the subject, and I have seen a few recently - as mainstream economics has been catching back up with the mainline (as Boettke calls it), which line has always had a more realistic view of both the individual actors and the system, through behaviorial economics, institutions, complex systems and evolutionary economics, etc.

Guinevere Liberty Nell approved 1 year 9 months ago.
user's picture

I think one of the main models being involved here is the application of large scale monopoly especially in the industrialization parts of Russia and the low cost of transportation and space (due to application of efficiency in the Urbanization model). From studies in Keynesian theory, the equilibrium rate doesn't stabilize immediately or quickly, especially if there is a price control applied into the model due to fluctuations of citizens economic choices in terms demand and the fluctuations of the farmers economic choices in terms of supply as well as demand (for their current goods as they are anticipating a shortage and will like save and increase in demand for their own supply).

user's picture

Interesting perspective. It sounds like (1) you are describing a Keynesian explanation for hoarding during the scissors crisis - and of course its role in making the crisis worse. Can you explain the model and causes more completely?
(2) You argue that "the equilibrium rate doesn't stabilize immediately or quickly" - sticky prices? - giving us a certain time period, which plans also tend to give and which price controls of course give us - you give a cause for the price controls: "especially if there is a price control applied into the model due to fluctuations of citizens [and farmers, who may hoard] economic choices" -- of course, there were price or supply controls (or ownership) before any hoarding or other behaviors that might lead the state to controls occurred, otherwise it would simply have been a market economy. What does your Keynesian view on equilibrium rate stabilization add here, if anything? What do sticky prices and demand fluctuations say about the progression of crises? It's cause (or perhaps that is political and no economic theory can touch it) and it's solution?

Guinevere Liberty Nell approved 1 year 9 months ago.
Please register or login to answer a question
user's picture
Please register or login to ask a question