In turn, this process continually disrupts established interests, throwingup the risk that at some point they may succeed in halting the process ofreform, causing economic growth to falter.30The core issue of socialist economic reform was the possibility ofnesting the advantages of decentralized markets within the structures ofsocialist state regulation.31It was sometimes thought that centralizedplanning had worked well in the early years of so-called extensive growth,and needed reform only after industrial modernization. Public discussionof the need for reform waited for the death of Stalin and a new generationof more freethinking economists. The Russian archives have shown,however, that the need for reform became obvious to insiders when thefirst Soviet five-year plan was still under way. As early as 1931 Stalin’sindustry chief Sergo Ordzhonikidze had become a keen advocate ofdecentralizing intra-industry transactions to plant managers and lettingthem keep profits and bear losses.32He was opposed from above andbelow. In the economy, industrial officials hoarded supplies andexaggerated demands; in other words, they continued to play thebureaucratic game, not the market game. In the Kremlin, Stalin andMolotov did not wish to give up detailed oversight of the allocation ofresources. At this time there was no reform.Because this did not solve any problems, the issue of reform remainedon the table in the postwar period. There were many variants but ashared theme was the need to replace physical controls on producers byfinancial controls, making producers responsible for profits and losses,29Philippe Aghion and Peter Howitt, ‘Appropriate growth theory: aunifying framework’,Journal of the European Economic Association4, nos2-3 (2006), 269-314.30Nicholas Crafts and Marco Magnani, ‘The golden age and the secondglobalization in Italy’, in Gianni Toniolo, ed.,The Oxford Handbook of theItalian Economy, 1861-2011(Oxford: Oxford University Press,forthcoming).31Paul G. Hare, ‘Economic reform in eastern Europe’,Journal ofEconomic Surveys1, no. 1 (1987), 25-59.32R. W. Davies, The Industrialisation of Soviet Russia, vol. 4, Crisis andProgress in the Soviet Economy, 1931-1933 (Basingstoke: Macmillan,1996), 11-18, 201-28, 265-70, 345-6.
17increasing the influence of consumers, and so motivating the main actorsin the economy towards greater efficiency.Underlying reformist proposals was the idea of replacing the Stalinistmodel of the socialist economy, directed from the centre by a totalitariandictator, with a reform model that shared power more widely amongst alimited number of stakeholders, still within the overall framework of aone-party state. In the reform model the government would control theallocation of resources in very broad terms such as the overalldistribution of public spending and rate of growth of output, leaving roomfor other stakeholders, such as experts, managers, work teams andcollectives, and regional and municipal authorities, to negotiate the detailin alignment with their own aspirations and information. At the same