The Growth and Marcescence of the “System for Optimal Functioning of the Economy” (SOFE)

Abstract

This article discusses the perhaps most systematic attempt to develop mathematical methods for use in planning and management of the Soviet economy: the system for optimal functioning of the economy (SOFE). The intellectual ferment of the post-Stalin “thaw,” and increasing difficulties in managing the growing economy, opened the way to new approaches to Soviet economics. Scholars, primarily at a new Academy of Sciences institute for applying mathematics to economic problems—the Central Economic-Mathematical Institute—developed a series of models and policy recommendations in dozens of monographs, articles, and conference reports from 1963 to the mid-1980s. Despite evident support at two CPSU Party Congresses (1966, 1971), SOFE never got traction in the official planning or administrative organs, although some specific mathematical methods and recommendations derived from SOFE were used experimentally, and indeed partially applied in plan implementations. The last act of SOFE came with the incorporation of many of its ideas in the final Soviet reform—Mikhail Gorbachev’s perestroika. I survey the evolution of the SOFE research program and its policy recommendations, arguing that it was inherently incapable of providing viable reform recommendations due not only to the difficulty of that task but also the political opposition to the recommendations derived from that program.