OVER the course of many years, and particularly owing to the early work of Joseph Berliner, a widely-accepted model has been developed to explain micro-economic behaviour in Soviet-type economies. This model views enterprise managers as maximizing subject to constraints, with their own bonuses constituting their objective function. It posits a system in which enterprise managers orient their behaviour to achieving the 'success indicators' to which bonuses are attached, and suboptimize with regard to society's goals as these are perceived by central authorities. This theory of the firm has been used as a principal intermediate analytic instrument to connect planners' decisions and the macro-economic behaviour of the economy. Specifically, it is critical (even if usually only by implication) in the explanation of suboptimizing behaviour by individual enterprises which leads to macro-economic malfunctioning.1 The model has been developed particularly with regard to the Soviet economy, but has also been applied to Hungary of the 1950S and to Poland of the I960s. This orthodox model constitutes a subset of the model of the firm which has long been dominant in the micro-economics of capitalist economies; in lieu of capitalist enterprises acting so as to maximize the * Interviews in Romania were conducted under an exchange programme between the International Research and Exchanges Board and the Romanian National Council for Scientific Research. This work was part of a project sponsored by the International Development Research Center of Indiana University on comparisons of industrial management among East European socialist countries. Additional financial support was provided by the American Philosophical Society, the International Business Research Institute of the Indiana School of Business, and the International Studies and Programs Office, University of Wisconsin. Helpful comments by Earl Brubaker, Paul Marer and George J. Stolnitz are gratefully acknowledged. 1 Not only does such an orthodox treatment as that of Nove (A. Nove, 'The Problem of Success Indicators in Soviet Industry', Economica, February 1958, pp. I-13) rest upon this micro-economic model, but so too does the quite unorthodox treatment of Ames (E. Ames, Soviet Economic Processes, Homewood, Ill., I965-see chs. 4 and 7). It is true that the same results may be derived from a micro-economic model which rests upon rapid job mobility of enterprise managers, with such mobility being strongly linked to the performance of the enterprise as judged by success indicators (see D. Granick, 'An Organizational Model of Soviet Industrial Planning', The Yournal of Political Economy, April I 959). But such high mobility has not in fact characterized the Soviet economy since World War II (id., Managerial Comparisons of Four Developed Countries (Cambridge, Mass., 1972), ch. 8).