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Counter-Intelligence in a Command Economy

  • Harrison, Mark

    (Department of Economics and CAGE, University of Warwick Centre for Russian and East European Studies, University of Birmingham)

  • Zaksauskienė, Inga

    (Vilnius University)

We provide the first thick description of the KGB’s counter-intelligence function in the Soviet command economy. Based on documentation from Lithuania, the paper considers KGB goals and resources in relation to the supervision of science, industry, and transport; the screening of business personnel; the management of economic emergencies; and the design of economic reforms. In contrast to a western market regulator, the role of the KGB was to enforce secrecy, monopoly, and discrimination. As in the western market context, regulation could give rise to perverse incentives with unintended consequences. Most important of these may have been adverse selection in the market for talent. There is no evidence that the KGB was interested in the costs of its regulation or in mitigating the negative consequences.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/research/wpfeed/170-2013_harrison.pdf
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Paper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 170.

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Date of creation: 2013
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Handle: RePEc:cge:wacage:170
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Web page: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/

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  1. Harrison, Mark, 2012. "Communism and Economic Modernization," CAGE Online Working Paper Series 92, Competitive Advantage in the Global Economy (CAGE).
  2. repec:cup:cbooks:9780521358668 is not listed on IDEAS
  3. Belova, Eugienia & Gregory, Paul, 2002. " Dictator, Loyal, and Opportunistic Agents: The Soviet Archives on Creating the Soviet Economic System," Public Choice, Springer, vol. 113(3-4), pages 265-86, December.
  4. Harrison, Mark, 2013. "Accounting for Secrets," The Journal of Economic History, Cambridge University Press, vol. 73(04), pages 1017-1049, December.
  5. Georgy Egorov & Konstantin Sonin, 2005. "Dictators and Their Viziers: Agency Problems in Dictatorships," Economics Working Papers 0053, Institute for Advanced Study, School of Social Science.
  6. Harrison, Mark, 2011. "Secrecy, Fear and Transaction Costs: The Business of Soviet Forced Labour in the Early Cold War," CAGE Online Working Paper Series 47, Competitive Advantage in the Global Economy (CAGE).
  7. Dieter Helm, 2006. "Regulatory Reform, Capture, and the Regulatory Burden," Oxford Review of Economic Policy, Oxford University Press, vol. 22(2), pages 169-185, Summer.
  8. Mark Harrison, 2009. "Counter-Terrorism in a Police State: The KGB and Codename Blaster, 1977," Economics of Security Working Paper Series 20, DIW Berlin, German Institute for Economic Research.
  9. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766, March.
  10. Markevich, Andrei, 2007. "How Much Control is Enough? Monitoring and Enforcement under Stalin," The Warwick Economics Research Paper Series (TWERPS) 829, University of Warwick, Department of Economics.
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