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Soviet Economics

In response to:

Rationalizing the Russians from the October 28, 1965 issue

To the Editors:

I hate to spoil a good story, but must observe that the frightening inconsistency which Peter Wiles attributes to me and criticizes so skillfully in his review of my Economics of Soviet Planning (NYR, October 28, 1965) is not really of my authorship. Rather it is pure vintage Wiles, a droll concoction familiar to connoisseurs but probably not to many of your readers.

According to Wiles, I “astoundingly used to maintain that…the Soviet economy observed…the rules of rational resource allocation.” Indeed, this is said to be a fundamental presupposition of a previous study of mine on Soviet national income. Wiles argues, however, that the study he now reviews “tacitly abandons” this position which previously I “notoriously took.” “Seldom,” he concludes, “was there a more imposing or intrinsically valuable self-criticism.”

From this dramatic tale of alleged self-destruction, the uninitiated reader will be quite unable to grasp that in my study of Soviet national income I in fact made it a major concern to explore the problem posed by the divergencies of Soviet ruble prices from “scarcity values” and that because of such divergencies I was led to reject the usual expedient in national income measurement, which is simply to value goods and services produced in terms of prices actually prevailing in the country in question. Instead I applied an “adjusted ruble” standard of valuation, attempting to correct ruble prices for major distortions. In the calculation of a complex aggregate, such as national income, valuation in terms of some standard is, of course, unavoidable.

I was also careful to explain that, even after making any and all corrections for ruble price distortions, one cannot hope to obtain for the USSR fully satisfactory measurements of national income. Because of the prevailing inefficiency in the USSR, I pointed out, such measurements at best must have a rather different analytic meaning from the one economists usually ascribe to them.

In the midst of his playful strictures, Wiles is kind enough to acknowledge that my study of Soviet national income “was the most important work being done anywhere in the West on the Soviet economy.” I am not sure how pleased I should be with this incongruous praise, especially since he nowhere pauses to explain how such an important work could be founded on an allegedly untenable premise. Still, the alert reader of Wiles’ review might have been led to wonder to what extent his critique could possibly rest on anything but sheer fancy.

As for my Economics of Soviet Planning, Wiles seems to consider that this has the virtue of refuting the assertedly erroneous premise of my earlier work, but he apparently feels that the more recent study is otherwise rather pointless so far as it seeks to demonstrate what, according to Wiles, is “after all exceedingly obvious,” to wit, “that Soviet resource allocation is irrational.” I don’t think I am alone among economists in feeling that the subject of economic efficiency is extremely complex. What is really in question here is not simply whether the Soviet economic system is inefficient. Manifestly it is, but so also is every other economic system in the real world. Rather the question is how inefficient the Soviet system is, and unhappily this is by no means obvious. Tedious as it may be to Wiles, careful and systematic analysis cannot be avoided if we are to gain but a limited insight into this intricate matter.

And even an author who has the delightful virtues that Wiles demands of a writer on Soviet economics—“a profound understanding of Marxist ideology, an empathy with Kremlin politics, and a general feeling for people and institutions”—even such a wonderfully gifted writer I fear could not be especially successful in illuminating Soviet economic inefficiency if he disdained to engage in serious economic analysis….

Abram Bergson

Russian Research Center

Harvard University

Peter Wiles replies:

It is impossible to reply to this protest without deep and conflicting emotions. Subject-matter apart, there are large public issues involved.

First, I must point to the very purpose of the NYR: to get away from “appreciations” and back to sincerity in reviewing. It has always seemed to me, as an outsider, that literary circles had small need of this. There is nothing cosy about the reviews in the small magazines, which on the contrary manifest a strong taste for gratuitous blood. Indeed the NYR itself is not innocent in this respect. But what only applies—or applied—to a few literary reviews of large circulation is distressingly true of academic reviewing. To speak one’s mind, and to be subject to candid rejoinder, as I have been, is wholly good.

Secondly, university scholarship however technical is not a private practice between consenting adults. It is affected with a public interest. Someone has to popularize it. He must be fair, he must be subject to rejoinder; but he cannot help simplifying. This is, on the contrary, his duty. Some things of course cannot be simplified: they cannot then be popularized at all. I do not think there was anything like this in my review.

Thirdly and most delicately, how do we review in narrow fields where we all know each other? Here of course is the strongest temptation to be merely cosy. I can see no solution here but simply to proceed as if the circle were a larger one, and write with the same candor, ruat caelum.

All this Abram Bergson undoubtedly understands, and in part himself declares. But there is that in his tone which might unintentionally discourage another from doing what I have done. This would surely not be what he wishes.

On the substance of the review I stand my ground. The best authors must be judged by the highest standards. It is valuable to have a summary of the various “irrationalities” of the Soviet economy, but the subject is certainly not a new one, and Soviet economics itself is very outspoken today on this very point. Had Bergson in fact given correct quantitative estimates of these distortions (“how inefficient”) he would have broken very new ground indeed. But the last chapter cannot be regarded as successful in this endeavor, nor as organically connected to the previous chapters, which are as non-quantitative as any previous work. Objectively it may be that I am satisfied with the cheap and easy, but my subjective feeling is simply one of professional dissatisfaction with the estimate offered. My reasons are on their way to the author, and they are indeed rather too technical and tentative for your columns.

It further seems to me, re-surveying Bergson’s work from 1944 to 1964, that he has indeed shifted his position on the rationality of the Soviet economy very far. Why not? To say so is praise, not blame; consistency is the fault of little minds. Moreover I have often and most explicity upheld the value of this work as independent of the premises in welfare economics on which it is based. Nor would I claim infallibility for the criticisms I made in past years—far from it. Bergson has built more securely than he thinks, and neither he nor I can destroy his achievement.

But when epic Homer nods, the peasant Hesiod’s duty is to grumble.

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