Basic Institutions of the Soviet-type Economy: (II) Relations with Households and Agriculture, Money, and Prices

The relationship of the SPE to the population, we have suggested, is similar to that of the single employer in a company town. In this relationship there is an illuminating contrast with the methods used for allocating resources and making decisions within the production establishment discussed in Chapter 2. The difficulty of trying to apply the command principle used within the SPE to the approximately 100 million persons in the Soviet labor force is obvious. It is as if each person in a company town were told what occupation to enter, what skills to acquire, and where to work, and allocated a set of supporting inputs — a specified ration of consumption items. Any attempt to do this would be impossibly cumbersome and inefficient. There are simply too many people involved, and they are too differentiated from each other in the relevant respects, i.e., their tastes and talents. . Given the tremendous variations in human personality and the requirements of different jobs, one important element in getting the most out of the labor force is to match the right person with the right job. Another is to suit the reward (primarily material) that he earns to his special tastes and circumstances.