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A new institutional approach to the study of the Soviet-type economy

Author

Listed:
  • Tamara TODOROVA

    (American University in Bulgaria)

  • Aleksandar VASILEV

    (University of Lincoln, Lincoln, UK)

Abstract

The paper analyses the transaction cost of economizing and efficiency-enhancing effects of the Soviet-type economy. The last 30 years of transition have seen the failure of market reforms in many industries in what are traditionally non-market economies. We argue that centralized, command-and-control systems are wealth maximizing in the conditions of persistent transactional and behavioural failures. With its centralism, strict hierarchy, and monopoly over information, the Soviet-type economy was able to produce significant output. We emphasize the role of centralism in coordinating economic activities, curbing opportunism, and facilitating information flow. In highly opportunistic societies where the transaction costs of market operation are significant, centralized systems are more efficient than decentralized, democratic systems based on free-market rules.

Suggested Citation

  • Tamara TODOROVA & Aleksandar VASILEV, 2022. "A new institutional approach to the study of the Soviet-type economy," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 13, pages 290-308, June.
    • Handle: RePEc:jes:journl:y:2022:v:13:p:290-308
    DOI: https://doi.org/10.47743/ejes-2022-0114
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    References listed on IDEAS

    as
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