Get Alternative Approaches to Economic Planning PDF

By Martin Cave

ISBN-10: 0333266900

ISBN-13: 9780333266908

ISBN-10: 1349165239

ISBN-13: 9781349165230

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Sample text

The supply of consumer goods is determined by the central planners, and consumer-goods factories receive output targets in the same way as other enterprises. The central authorities use market research and various other forecasting methods to try to meet the consumers' needs at a disaggregated level, but this is a recent development and, historically, centrally planned economies have not been entirely successful in this respect, as accumulations of unwanted consumer goods testify. We noted above a widely held view that output of consumer goods is a residual category which could be raided to meet shortages in other sectors of the economy receiving a higher priority.

Such late arrival of supplies is one of the factors responsible for the practice of 'storming', the concentration of production in the last part of any period (month, quarter). This practice has a harmful effect on quality, and to the extent that it is caused by supply delays it can become cumulative. These factors may seem to put in question the very workability of centrally planned economies. However, the problem is mitigated by several factors, some of which have a beneficial and some a harmful effect on the efficiency of resource allocation.

This leaves technical progress as the chief source of productivity increases and hence magnifies its importance. The microeconomic disincentives to innovation in centrally planned economies are well known (Berliner, 1976; and Hanson, 1980). The lack of authority in the lower levels of the management system tends to rule out spontaneous innovation. Rather, enterprise directors regard new products or new processes as a threat to the orderly fulfilment of the output plan. , 1977). Numerous attempts have been made in centrally planned economies to stimulate technological advance.

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Alternative Approaches to Economic Planning by Martin Cave


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