Abstract
In this chapter we will briefly survey the development of consumer prices in the countries under review and, above all, the policy followed towards price stability there since the start of economic planning. The period involved is marked by three phases which could not occur simultaneously in all the countries due to the earlier beginning of planning in the USSR. The first phase covers the initial phase of ‘socialist’ industrialisation; the second phase starts with the stabilisation of prices and ends with the abandonment of the price-cutting policy; the third phase lasts up to the present. In the initial phase of ‘socialist’ industrialisation all the countries (except East Germany) suffered from severe inflation. In the Soviet Union this occurred in the 1930s, during the three five-year plans, and continued during and after the Second World War up to 1947, while in the other countries it took place in the period 1949–50 to 1953.
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Notes
J. Adamíček, Politická ekonomie, no. 8, 1968.
E.g., East Germany increased wholesale prices by 12% in the period 1964–6, Czechoslovakia by 29% in 1967 and the USSR also had some increases in 1966–7, but none of them increased retail prices at the same time. See Sztyber, Ekonomista, no. 6, 1969.
‘Although each Five-Year Plan scheduled a more or less substantial deflation,’ writes N. Jasny (1951, p. 13), ‘no real effort was made to accomplish this. Indeed, only during the 1st Plan period was a serious attempt made even to hold to the existing price levels.’
For more, see Tägliche Rundschau (containing the official decree), 16 December 1947; E. Pithe, Finanzarchiv, no. 3, 1949 and Ia. Kronrod, ch. 3, 1950.
Among ideological considerations, mention should be made of the prevailing notion, allegedly Marxist, that with growing productivity the drop in the value of goods should be reflected in price decreases. (See B. Csikós-Nagy, Valóság, VI, 1974.) The relatively widespread idea that the sources of the growth of productivity must determine the means of distributing its results, may have also contributed to the reliance on price cuts. It was believed that the gains in productivity which are a result of objective factors (such as investment and technological progress) should accrue to the whole society (and not just to employees in the factories where the gains were achieved) in the form of price reductions and tax revenues. It was so argued in the name of the principle of distribution according to labour.
B. Csikós-Nagy, Valóság, no. VI, 1974, and
P. Vlach, Hospodářské noviny, no. 36, 1968.
For more, see G. Garvy, 1974, p. 88; A. Marton vol. 14(4), 1975, and J. Mujźel, Ekonomista, no. 4, 1974.
For the way in which enterprises take advantage of the introduction of new products for price increases, see G. Grossman, 1977, pp. 139–42 and F. Haffner, Zeitschrift für Wirtschafts und Sozialwissenschaften, no. 2, 1977.
M. Melzer, Deutsches Institut für Wirtschaftsforschung, 1969, and
W. Sztyber, Ekonomista, no. 6, 1969.
Readers who are eager to know more about this subject are advised to read L. Beskid, Gospodarka planowa, no. 11, 1957, and
R. Glowacki and Cz. Kos, Zycie gospodarcze, 3 April 1960. The former gives a comparison between Polish relative prices and foreign ones, whereas the latter makes a comparison of postwar prices with the prewar ones.
Some Hungarian computations show that the Hungarian price system acts only moderately in the way mentioned. See J. Ladányi, Valóság, no. 12, 1975;
T. Érsek, Pénzügyi Szemle, no. 10, 1972.
See B. Csikós-Nagy, Finance a úvěr, no. 3, 1968.
B. Csikós-Nagy, in Reform of the Economic Mechanism in Hungary, 1969, p. 140.
The first price increase action designed in such a way was in 1963 (see Trybuna Ludu, 15 September 1963). See also J. Struminski, Gospodarska planowa, no. 1, 1966. This policy only lasted a short time, however.
See A. J. Smith, in East European Economies Post-Helsinki, 1977, pp. 162–3.
B. Csikós-Nagy, Finance a úvěr, no. 3, 1968, and also from the same author, in Reform of the Economic Mechanism in Hungary, 1969.
See A. Marton, Kereskedelmi Szemle, no. 12, 1975.
B. Csikós-Nagy, Marketing in Ungarn, no. 3, 1976. The resolution of the Central Committee of the Hungarian Communist Party of April 1968 (Társadalmi Szemle, no. 5, 1978) mentions that, due to subsidies, the level of wholesale prices is at present higher than the level of retail prices.
It would be interesting to analyse the reasons for the different reactions to price adjustments in Poland and in Hungary. As already mentioned, the Hungarians carried out a huge price adjustment in 1966 which was generally accepted with concern, in some circles even with resentment. These feelings were not reflected in outward manifestations as they were in Poland. One of the reasons for the different reaction was the fact that the Hungarians took time to prepare the population for the need of price adjustments and also gave more adequate compensation. What is perhaps no less important is that the Hungarian people have more confidence in their government than the Poles in theirs. (See also V. Zorza, The Guardian, 17 December 1970.)
The scheduled price increases for food, including a 40% increase in meat prices, would have meant a 16% increase in the cost of living. See R. N. Gorski, Berichte des Bundesinstituts für ostwissenschaftliche und internationale Studien, no. 36, 1976.
P. Vlach, Hospodářské noviny, no. 36, 1968.
Even if average price increases (ratio of receipts from sale of goods and their physical volume) which reflect changes in assortment are considered, the results are not so dramatic as the anti-reformers try to make out. In 1968 average price increases amounted to 3% and in 1969 to 4.7%. (See S. Hejduk, Finance a úvěr, no. 5, 1975.)
As is known, Poland has had a much higher increment in the population of working age than Hungary and Czechoslovakia. See G. Baldwin, in East European Economies Post-Helsinki, 1977, p. 421.
See also B. Schwarz, in Struktur- und Stabilitätspolitische Probleme alternativen Wirtschaftssystemen, 1974, p. 157.
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© 1979 Jan Adam
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Adam, J. (1979). Price Stability Policies in the Soviet Bloc Countries. In: Wage Control and Inflation in the Soviet Bloc Countries. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-04892-2_1
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