Monday, October 31, 2005


"Allocation and Dictatorship: Research in Stalin's Archives" by Paul Gregory and Mark Harrison (in the Sep, 2005 Journal of Economic Literature) is fascinating. Many conjectures put forth over the years by Mises, Hayek, Schelling, and many others, are corroborated.

Yes, planned economies perform so badly that tyranny and terror are required. Yes, tyrants are not only ruthless but also fearful -- and the impulses feed each other. Yes, the whole mess is brought on from attempts do the impossible, plan an economy (and its growth) top-down. Yes, massive corruption is a side-product of this enterprise. Yes, an underground ecomomy is inevitable in these circumstances. Yes, steady infighting and scapegoating and worse occur regularly among the insiders. Yes, there were not (could not have been?) even serious economic plans (lament the authors). And much more.

We are left once again to wonder how in the world so many Western intellecuals took the Soviet model seriously -- many even becoming its apologists.

And prominent Western economists are still investigating "market failure" -- to be corrected by whom?