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I wouldn't ignore them, but I'd suggest that there were other more potent mechanisms for information control which resulted in ineffective capital allocation.
by lumost 6y ago
I wouldn't ignore them, but I'd suggest that there were other more potent mechanisms for information control which resulted in ineffective capital allocation.
Consider that talking about a superior suspension system present in Western cars would have been problematic to the censors. Engineers who pushed such systems could find themselves in trouble, and ultimately cozy insiders could get competitors blackballed for pushing competing programs e.g. Censorship and Corruption did the most damage to the efficient allocation of capital.
- chordalkeyboard 6y agoCertainly the USSR made other mistakes besides price controls, the point is that without market-generated prices, they had no way of knowing which goods were in higher demand relative to their supply in order to invest capital resources in producing those. Many Soviet goods were of high quality but the planners still sought pricing information from their western rivals in order to allocate capital.
- barrkel 6y agoThe corruption of nominating a supplier or a design as the only approved design is equivalent to not using price as information - or rather, not being allowed to use price as information. For example, if a supplier is inefficient in a free market, then the prices they charge are significantly higher than the inputs - i.e. profit is high. High profits attract competition; competitors look at the price of the output and the prices of the input and see that they can do better by building something cheaper. This competition drives efficiency and reduces prices. Whether competition is banned, or improvements are banned, or prices are exogenously set, it's all approximately equivalent to mucking with price as information.