The Market and the State under Perestroika

This article argues that efficiency gains sought by perestroika reform of the Soviet economy can only be realized in a full-fledged market economy. A system of indirect planning is seen as a transitory stage on the way to the optimal regime. In order to realize X-efficiency, indirect planning has to institutionalize all market elements except the market price mechanism. Four elements are analyzed more closely: enterprise, legality, competition, and money and capital. Perestroika has not yet accomplished its task, its constraint being the power claim of the monopoly party. Copyright 1990 by WWZ and Helbing & Lichtenhahn Verlag AG