In turn this process continually disrupts established interests throwing up the

In turn this process continually disrupts established

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In turn, this process continually disrupts established interests, throwing up the risk that at some point they may succeed in halting the process of reform, causing economic growth to falter. 30 The core issue of socialist economic reform was the possibility of nesting the advantages of decentralized markets within the structures of socialist state regulation. 31 It was sometimes thought that centralized planning had worked well in the early years of so-called extensive growth, and needed reform only after industrial modernization. Public discussion of the need for reform waited for the death of Stalin and a new generation of more freethinking economists. The Russian archives have shown, however, that the need for reform became obvious to insiders when the first Soviet five-year plan was still under way. As early as 1931 Stalin’s industry chief Sergo Ordzhonikidze had become a keen advocate of decentralizing intra-industry transactions to plant managers and letting them keep profits and bear losses. 32 He was opposed from above and below. In the economy, industrial officials hoarded supplies and exaggerated demands; in other words, they continued to play the bureaucratic game, not the market game. In the Kremlin, Stalin and Molotov did not wish to give up detailed oversight of the allocation of resources. At this time there was no reform. Because this did not solve any problems, the issue of reform remained on the table in the postwar period. There were many variants but a shared theme was the need to replace physical controls on producers by financial controls, making producers responsible for profits and losses, 29 Philippe Aghion and Peter Howitt, ‘Appropriate growth theory: a unifying framework’, Journal of the European Economic Association 4, nos 2-3 (2006), 269-314. 30 Nicholas Crafts and Marco Magnani, ‘The golden age and the second globalization in Italy’, in Gianni Toniolo, ed., The Oxford Handbook of the Italian Economy, 1861-2011 (Oxford: Oxford University Press, forthcoming). 31 Paul G. Hare, ‘Economic reform in eastern Europe’, Journal of Economic Surveys 1, no. 1 (1987), 25-59. 32 R. W. Davies, The Industrialisation of Soviet Russia, vol. 4, Crisis and Progress in the Soviet Economy, 1931-1933 (Basingstoke: Macmillan, 1996), 11-18, 201-28, 265-70, 345-6.
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17 increasing the influence of consumers, and so motivating the main actors in the economy towards greater efficiency. Underlying reformist proposals was the idea of replacing the Stalinist model of the socialist economy, directed from the centre by a totalitarian dictator, with a reform model that shared power more widely amongst a limited number of stakeholders, still within the overall framework of a one-party state. In the reform model the government would control the allocation of resources in very broad terms such as the overall distribution of public spending and rate of growth of output, leaving room for other stakeholders, such as experts, managers, work teams and collectives, and regional and municipal authorities, to negotiate the detail in alignment with their own aspirations and information. At the same
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