Dealing with scarcity

Every society must deal with scarcity. The Soviet economy is no exception. Claims on society's resources exceed its ability to meet them. Capitalist societies use market allocation to determine who gets scarce resources and how they are used. This chapter examines how the Soviet economic bureaucracy administers the allocation of scarce resources among claimants. Four key groups of questions are raised concerning Soviet resource allocation. First, how are output targets and resource limits determined in the actual planning process. How is it that one ministry or enterprise has easier targets and more abundant resources than other ministries or enterprises? What systematic patterns underlie the bargaining process? Second, how are output targets and resource limits “corrected” during the process of plan fulfillment? How is it that one ministry or enterprise can convince its superiors to lower its output targets or increase its resource limits whereas another ministry or enterprise is stuck with its original targets? Third, what formal and informal techniques, levers, and procedures do ministries and enterprises use to ensure the successful fulfillment of their tasks once they have achieved their “best deal” from their superiors? Fourth, how are financial resources – particularly wage bills – allocated among claimants?

This chapter is not a comprehensive account of Soviet planning. It focuses on the bargaining and decision making that take place during and after planning.