Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 16

In a command economy, such as the former Soviet Union, all production and allocation decisions are taken by a central planning authority. The planning authority is expected to estimate the resource requirements of various economic agents, and then rank them in order of priority based on their relevance to social needs. Production plans and resource allocation decisions are then made so as to ensure that resources are directed to users in descending order of need. In practice, communist and socialist systems, which were based on this economic model, ensured that citizens complied with the directives of the state by imposing stifling legal, and occasionally, coercive measures.

The failure of the command economies was inherent in their structure. As we have discussed, efficient economic systems needed to aggregate and process an enormous amount of information. When this task was entrusted to a central planning authority, this not only proved to be infeasible in practice, but the quality of information was also substandard. The central planning authority was supposed to be omniscient and was expected to have perfect information as to what resources were available and what the relative requirements of the socioeconomic system were. This was necessary for them to ensure that optimal decisions were made about production as well as distribution.

Command economies were in practice plagued by blatant political interference. The planning authority was often prevented from making optimal decisions due to political pressures. The system gave the planners enormous powers that permeated all facets of the social system and not just the economy. One of the hallmarks of such systems was the absence of pragmatism, and a naïve idealism that was out of touch with realities. Planners used their authority to devise and impose stifling rules and regulations. These regulations, which were in principle intended to ensure optimal decision making, sometimes went to the ridiculous extent of imposing penalties on producers whose output exceeded what was allowed by the permit or license given to them.

Such economies were a colossal failure in practice and were characterized by an output that was invariably far less than the ambitious targets that were set at the outset of each financial year. When confronted with the specter of failure the planners tended to place the blame on those who were responsible for implementing the plans. The bureaucrats in charge of implementation passed the buck back by making allegations of improper decision making on the part of the planners. Eventually the contradictions in the system lead either to the total repeal of such systems or else to substantial structural changes that brought in key features of a market economy.