Abstract

Conditions for efficacious reform in the socialist countries There are five main conditions which are essential for a country to achieve optimal growth in the context of the world economy : 1) Its enterprises must have reliable information available about the world market for products and factors which they are likely to produce or to use. This information includes, inter alia, a system of prices of products and factors fairly accurately reflecting their relative scarcity in terms of world demand. 2) Its enterprises must be independent of the public authorities, and free to adjust their production, their work force and their productive capacity in accordance with home and world demand. 3) Its enterprises must be stimulated to maximise physical yield of the factors employed, which assumes a conventional free market of the factors of production (labour, capital, natural resources), and which requires legal, temporary protection of the ownership of innovations. 4) Setting aside a minimum of resources required for the financing of production of indivisible goods and services which is incumbent upon the Stade, and which must be raised essentially by an income tax (moderately progressive) and value added tax, distribution of the profits of the productive system must be freely effected by market forces, so as to give maximum stimulus to the most productive branches and factors. 5) Hierarchical responsibility to the Party and the Stade must be replaced, at all decision-making points in the area of divisible goods and services, by the direct material responsibility of the decision-makers, which assumes the re-establishment of private ownership of the means of production. It is clear that none of the reforms at present taking place in the socialist countries, including perestroïka, meets even one of these conditions. It is for this reason that these reforms can only contribute very partial improvements, which are quite inadequate to affect the present system. On the other hand, immediate and wholesale application of the five conditions described above would bring about massive closures of useless offices and unprofitable enterprises. The resulting inevitable unemployment would gradually be reabsorbed by the creation of new enterprises, with massive participation of Western technology and capital, attracted by the low level of wages and the immensity of unsatisfied demand in the socialist countries.

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