3 ms·
Soviet Union resource allocation was performed by central planning committee instead of markets. The result of that is known. With good financial system the re
by skolos 11y ago
Soviet Union resource allocation was performed by central planning committee instead of markets. The result of that is known.
With good financial system the resource allocation is same as capital allocation. Good capital allocation is not possible without transparent and liquid markets. Transparent and liquid market depends on its biggest players - institutional investors, banks and their regulators. Hence the banking system is huge wealth provider. Otherwise we would be living under communism now.
- marcosdumay 11y ago> Soviet Union resource allocation was performed by central planning committee instead of markets. So is big any bank investment portfolio... Anyway, the point is that if the bank does not invest the capital into something that ultimately produces wealth, you have just a big dysfunctional chairs game, where a few people get out with a lot of money, taken from the others that get out poorer, while the entire economy goes into the drain. But yeah, the above can not last unless there is some central planning committee overruling the market allocations. What I don't get is why you think that is an exclusivity of the old Soviet Union.