3 - The reform process

Summary

Introduction

The problems of the traditional model were well known for decades. In the USSR, reforms were advocated from the early 1930s (initially publicly, and later in confidential memos to the top leaders). However, the case for reform was rejected because in the opinion of the leadership the problems were outweighed by the big advantage of the traditional model. This was that it enabled resources to be concentrated on key investment projects. Actually implemented policies to overcome the problems began much later, and took on different forms in different countries. The Maoists argued that the way to do this was by internal political struggle, decentralisation to local political authorities and self-sufficiency. In the GDR, reliance was placed in the 1970s and 1980s on the reorganisation of industry into vertically integrated combines run by technocrats and with a considerable say in the plan compilation process. In the USSR under Brezhnev, stress was laid on the automation of planning and management, improved planning of technical progress, the reorganisation of industrial management, and, in the heyday of detente, import of technology, including turn-key factories. By the late 1980s, however, the predominant reaction to the problems of the traditional model was that of economic reform. By ‘economic reform’ was understood a major institutional change that replaced the traditional model of a socialist economy by an alternative model of a socialist economy that combined centralised state decision making with a market mechanism.