Inflation in Socialist Countries: Regularities and Peculiarities

Abstract

Inflation is now being talked about and written about everywhere. To all appearances, it has become every country's constant companion regardless of the system to which it belongs. But as we know, until very recently socialist countries proclaimed inflation to be an exclusively capitalist phenomenon. It was not considered at all in theories of a planned economy and was at best regarded as the result of incorrect policy, as an import of Western inflation, or as a combination of the two. Most socialist countries have now overcome this previously dominant understanding. The view that a chronic exceeding of solvent demand over the real supply of goods and services is an immanent feature of a mandatory-efficient system of management is becoming more and more firmly established. At the same time, under the pressure of reality the dogma that prices drop as labor productivity rises is being decisively rejected: the tendency of the overall price level to rise is beginning to be viewed as a natural process.