Abstract
The basic method of economic calculation used in the state socialist countries is that of incrementalism, or as it is known in the USSR, ‘planning from the achieved level’. The starting point of all economic plans is the actual or expected outcome of the previous period. The planners adjust this by reference to anticipated growth rates, current economic policy, shortages and technical progress. For nearly all products, the planned output for next year will be the anticipated output for this year plus a few per cent added on. The advantages of incrementalism as a method of economic calculation are its simplicity, realism and compatibility with the functioning of a hierarchical bureaucracy. Its disadvantages are that it provides no method for making technically efficient or consistent decisions, nor does it ensure that the population will derive maximum satisfaction from the resources available.
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© 1990 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Ellman, M. (1990). Economic Calculation in Socialist Economies. In: Eatwell, J., Milgate, M., Newman, P. (eds) Problems of the Planned Economy. The New Palgrave. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20863-0_14
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DOI: https://doi.org/10.1007/978-1-349-20863-0_14
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