The Economics of Planning by R. Kerry Turner, Clive Collis (auth.)

By R. Kerry Turner, Clive Collis (auth.)

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J Branch 2 Branch 1 Branch 1 Branch 2 X,a " X , a 2, Final demand Total + X , a ,2 + Y, X, + X 2 a 22 + Y2 X2 In practice there are two ways of calculating the total requirement of intermediate goods from different branches in the production of a given branch: the 'step by step', iterative, method which uses the input-output coefficients of direct rqquirements to establish coefficients of indirect requirements; and second the method which enables the coefficients of total requirements, direct and indirect, to be calculated by matrix inversion [69,70].

Due to inconsistent plans, frequent plan modifications and an unreliable central supply system [73], the Soviet enterprise worked in conditions of uncertainty. ) This situation was aggravated by the practice of 'taut' planning, the centre pressurising the economy by deliberately setting and striving for very ambitious yearly plan targets. In order to ensure that the goods produced conformed to their specific preferences, the centre imposed numerous performance criteria or 'success indicators' on the enterprises.

The economic reforms instituted in East Germany are typical of the 'plan-reforming' philosophy. The country has retained the basic Soviet system of universal planning as well as assimilating some of the post-1965 Soviet reforms, and at the same time evolved some new organisational features such as the 'industrial association'. The creation of associations was an attempt to change the intermediate levels of the planning hierarchy from the bureaucratically based ministries to the business-based associations.

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