The Growth and Distribution of Profits

Abstract

There has been a remarkable growth of profits in all the eight Socialist countries, particularly since the economic reforms. This trend can be explained on the following six grounds. First, as material incentives to labour have been based on enterprise profit, both management and workers have been anxious to increase the level of profits or profitability to qualify for larger bonuses. In fact in some Socialist countries (the German DR, Poland, Romania and the USSR) incentive payments have been made dependent not so much on the level of enterprise profits or profitability but on their increases in comparison with the preceding or some other base year (see Ch. 2b, c, d). The greater independence of enterprises has naturally made it possible to conduct enterprise operations in such ways as are also most beneficial (however indirectly) to the enterprise personnel.