Vladimir G. Treml
Professor of Economics,
Duke University  
November 1996

WHY DID THE SOVIET ECONOMIC SYSTEM COLLAPSE? TWO SCHOOLS OF THOUGHT

Originally published in RFE-RL Research Report, Vol. 2, # 43, June
4, 1993, pp. 53-58; reprinted as "Dve pozitsii," VOPROSY EKONOMIKI,
# 11, 1993, pp. 90-95.  Revised and expanded.

     What are the reasons for the lackluster performance of the
Soviet economy between 1985 and 1988, its rapid deterioration after
1988, and collapse, along with the USSR itself, in 1991? As well as
being important in a historical context and for prognosis of
economic developments, the answer to this question is of immediate
political relevance as it directly affects analyses of the alarming
economic conditions in the newly independent states and
recommendations for remedying it. 
     Simplifying the issues somewhat, one can identify two schools
of thought concerning the causes of economic collapse.  
     According to the first school, on the eve of Mikhail
Gorbachev's ascendance to power in 1985 the Soviet economy was
experiencing some difficulties, but, generally speaking, the system
of central planning and administration, managed by the communist
party and the government in accordance with basic socialist
principles, was functioning fairly effectively.  The extant
problems - low labor productivity, poor returns on investment,
technological backwardness, environmental degradation, poor quality
of manufactured goods, suppressed inflation, and some structural
imbalances - could have been corrected by tightening labor
discipline, modernizing capital stock, and marginally improving the
planning and administrative mechanisms, but without truly radical
systemic reforms.      
     Proponents of this view argue that, unlike Western market
economies, the Soviet system was economically, socially and
politically stable and the people had confidence in the future of
the socialist system.  The fact that the Soviet system of central
planning which was created in the early 1930s and existed with
minor modifications for more than fifty-five years testifies to its
viability and effectiveness.  The ill-advised perestroika, with its
conflicting objectives and policies, they say, entailed poorly
designed, contradictory, and often unnecessary half-measures.  Many
of these policies, in fact, amounted to a dismantlement of
socialism.  The ultimate goals of perestroika were constantly
redefined, disorienting enterprises, ministries, and economic
regions and destroying work discipline and the efficacy of
administrative controls.  As a result, the time-tested Soviet
socialist institutions (such as central planning and supply
systems, state-set wages and prices, state monopoly on foreign
trade, state control over foreign exchange rates, and uniform tax,
credit, and budget policies) were partially destroyed or rendered
ineffective, but no coherent system was put in their place.  The
communist party, the argument goes, had always played an extremely
important role in the hierarchy of political power in the country
and in ensuring that all economic agents in the complex matrix of
interrepublican and interbranch relationships complied with orders
issued by the center; these relationships were upset by the
constraints imposed by Gorbachev in 1989 and 1990 on he
administrative functions of the party, while the disparagement of
Marxist-Leninist ideology weakened the moral fiber of society. The
deterioration in the economy, and the paralysis of central power
that occurred in the late 1980s and ultimately the collapse of the
Soviet Union is thus seen as the direct outcome of Gorbachev's
perestroika.
     The second school of thought maintains that the Soviet-type
"command economy" has never been a viable system.  Adherents of
this point of view (1) argue that the Soviet system endured for as
long as it did because of sustained growth of national income
generated by increases in the use of factors of production (labor,
capital, natural resources, and land), achieved under a brutal,
repressive regime at the expense of living standards.  But the
Soviet economy could not have relied on extensive growth model
forever.  The growth of the labor force was slowing down because of
demographic factors.(2) Relentless pressure to boost output in the
short run regardless of long-term consequences, affected the
quality of production, particularly the quality of mineral
resources and of soil fertility.  For example, the long term
decline in the gluten and protein content of wheat, of starch in
potatoes, and sugar in grapes and in beets in 1970s and 1980s was
the result of short-sighted agricultural policies.  Extraction of
fossil fuels and of other raw materials was becoming increasingly
expensive after easily accessible deposits had been exhausted. 
Technological progress was retarded by institutional factors such
as faulty managerial incentives and isolation from the
international scientific and commercial community.  The Soviet
ruble remained inconvertible which isolated domestic from world
market prices and made foreign trade planning ineffective;
bilateral trade arrangements limited the overall volume of foreign
trade.  Except for selected high priority military and space
projects the Soviet industry was lagging technologically behind the
world.  The quality of manufactured goods continued to be inferior
by world standards because of the absence of demand pressures on
producers isolated from buyers by the centralized supply system. 
Excess demand in many markets produced by low state-fixed prices,
inefficient state retail trade network, restrictions on
consumption, and other factors led to the emergence of flourishing
underground or "second economy" corrupting the system and
disrupting the planning process and state controls over the
economy.(3)  The traditional stress on short-term growth of
industrial output "at all cost" resulted in ever-widening
ecological disturbances; the defense sector protected by a veil of
secrecy and virtually unaccountable carried a particularly heavy
responsibility for contamination of soil, air, and water with
radioactive waste, heavy metals, and other toxins.  Owing to the
growth in the number and complexity of economic tasks and their
interrelated nature, the overcentralized and inflexible planning
apparatus was becoming increasingly ineffective and wasteful. 
      Many of the defects of the system, such as soft budgetary
constraints and the resulting self-perpetuating shortages of
intermediate and consumer goods, inefficient patterns of capital
investment and state-fixed prices which disregarded the demand were
systemic and could not be corrected.  The historical movement
toward the inevitable collapse of the system driven by built-in
inefficiencies had been occasionally slowed down by such favorable
exogenous developments as the bonanza of growing hard currency
earnings resulting from high world oil prices in the 1970s and
early 1980s, but it could not have been reversed.  The cumulative
weight of continuous waste, inefficiencies in the allocation of
resources and resulting sectoral deformities and structural
imbalances, adverse effects of growing environmental degradation,
and policy errors finally started the process of systemic
disintegration.      
     Adherents of the second school argue that the events of 1989
in Eastern Europe support their thesis.  Soviet-type countries of
the socialist bloc collapsed as soon as it became clear that the
USSR would not interfere militarily to defend the ruling communist
parties and the existing political order.  Economically and
politically these "command-administrative" systems simply could not
survive independently of the USSR.     
     Brezhnev, Kosygin, Andropov, Chernenko, Gorbachev and others
in central authority, it is argued, did not detect the accelerating
decay of the Soviet system, because bureaucrats presented them with
false pictures of "business as usual," purposely or inadvertently
concealing or ignoring the evidence of economic deterioration and
the decline of the quality of life in the country.  Faulty data
assembled by the state statistical organization not only presented
a slanted picture of a robust economy and profoundly satisfied
society to the outside world and Soviet people but deceived the
leadership as well. 
     Thus, in the eyes of the second school, the accelerated
economic deterioration of the last few years was the inevitable
product of the past and would have ultimately ensued with or
without Gorbachev and perestroika.  Had Andropov not died when he
did or were a different secretary general elected instead of
Gorbachev in the spring of 1985 the Soviet system may have lasted
a couple of years longer or the collapse could have come a year or
two earlier but the end was inescapable. 
     Were there any other non-systemic factors that caused the
economic collapse of the Soviet Union?  Three factors should be
considered -- the defense burden, independence movements in Soviet
republics, and President Reagan policies towards the USSR.      
     It could be argued that the continuing growth of defense
expenditures contributed to the country's economic difficulties in
the 1970s and 1980s.  Arguably, high defense expenditures should
not be considered an inherent feature of the Soviet or any other
socialist or communist system; yet, even in the area of defense,
such systemic features as overcentralization, the primitive nature
of budgetary and cost accounting, incorrectly set prices for inputs
and outputs, the hidden subsidies to the military-industrial
complex, and the absence of technological spin-offs of military
production made the high defense costs excessively burdensome for
the Soviet economy.  And, as in many other areas of state policies,
the true nature of the burden was hidden from the leadership by
fragmented and distorted statistical system.
      The poor economic performance of the late 1980s and the
dissolution of the Soviet Union in 1991 could also be partially
traced to inter-ethnic friction and the quest for independence in
Soviet republics.  These could conceivably be seen as political and
social factors that have nothing to do with Marxist economic ideas
or socialism.  But Marx and Lenin (and even Stalin in his earlier
days) repeatedly argued that forces of nationalism were
anachronistic and that loyalty and commitment to one's class,
ideology, or a political party superseded national identification.
Accordingly, the federal Soviet Union led by the "super-national"
communist party, it was believed, did not have "nationality
problems."  The dismissal of nationalism as an important political
force became an integral part of the Soviet state doctrine.  These
beliefs explain Gorbachev's foolhardy disregard of the evidence of
the gathering in strength of centrifugal forces in the country and
his early refusal to grant more autonomy to republics.   
     We must also consider the impact of American foreign policies
on the dramatic weakening of the Soviet system in the 1980s.  In
the early days of his presidency Ronald Reagan changed the official
US policy of "containment of world communism" in effect since the
late 1940s to a policy aimed at changing the Soviet system and
"rolling back" the Soviet influence in the world.  Reagan's active
intervention encompassed the following:
þ Secret financial, material, and logistical help to the Polish
Solidarity movement (supported by Vatican) combined with strong
international financial pressures on the Polish government to
restrain it from dealing too harshly with Solidarity. 
þ Secret financial, material, and intelligence help to Afghan
resistance movement in their fight with Soviet occupational forces.
þ A covert program pursued in cooperation with Saudi Arabia aimed
at reducing world price of crude oil for the purpose of cutting
hard currency earnings generated by Soviet energy exports.  This
program was combined with attempts to slow down construction of gas
pipelines from the USSR to Western Europe.
þ A policy aimed at reducing Soviet access to Western advanced
technology, particularly military and dual purpose technology by
strengthening CoCom operations.
þ Rapid buildup of US defense expenditures and launching of
multi-billion dollar "Strategic Defence Initiative" ("Star Wars"). 
The massive application of sophisticated American technology to
defense (regardless of prospects of technical success of proposed
SDI) threatened to disturb the military parity achieved by the
Soviet Union in the late 1970s.     
     All of these programs had been successful to a greater or
lesser degree.  The Solidarity movement survived against all odds
and must be given a major share of credit for toppling the
Communist regime in Poland and for starting the "domino" process of
disintegration of the East European Soviet Bloc.  The civil war in
Afghanistan expanded and became increasingly costly to the Soviet
Union both in terms of casualties and in rubles until Gorbachev was
forced to withdraw  Soviet troops.  In the 1970s and 1980s the
Soviet Union was becoming increasingly dependent on imports of
grain and machinery from the West paying for them by growing hard
currency earnings from oil and gas exports.  American and Saudi
Arabia intervention and other factors forced the world market price
of crude oil to be halved from the high $34 per bbl. in 1982 to
about $17 at the end of the 1980s.  As the result the USSR lost
tens of billions of dollars of export earnings and was forced to
borrow from the West to finance the imports on which it was
becoming dependent.  As the technological challenge of "Star Wars"
program could not be matched by Soviet defense sciences and
industries, Gorbachev was compelled to move towards disarmament and
to a less aggressive international posture which created
controversies and unrest among high party echelons and the
military.    
     It must be stressed that President Reagan's policies alone, no
matter how successful, would not have resulted in the collapse of
the Soviet system.  It would be reasonable to conclude, however,
that they did exacerbate the already deepening economic crisis.  
     The two alternative explanations of the economic decline and
collapse of the USSR have been widely used by opposing political
forces in the former Soviet Union.  Conservative elements in
society and large numbers of former communist party functionaries
and members of the ministerial apparatus subscribe to the first
explanation.  They viewed Gorbachev's perestroika as a futile as
well as a badly thought-out endeavor.  They were always opposed to
free markets, to private ownership of land, and to private
enterprise, which, they believed, created socially disruptive
income inequalities and fostered criminal economic activities. They
advocated the immediate restoration of the power of the central
government, the strengthening of administrative controls over the
economy, the suppression of separatist movements in the republics,
and the reestablishment of law and order.  In a general sense,
these attitudes fueled the aborted anti-reform coup d'etat of
August 1991.
     Radical reformers, on the other hand, derive their policy
recommendations from the basic premise that the
"command-administrative" system was not workable.  The only real
issue for them was how to go about dismantling the old system and
transforming the Soviet Union into a modern pluralistic and
economically viable market economy in the shortest time possible
and at the lowest cost to the long-term prospects of the economy
and the people.
      The two views affect in many ways the attitudes toward the
economic crises in postcommunist societies.  Those who subscribe to
the first interpretation of the Soviet collapse tend to blame all
adverse developments of the past few years on reforms and demand
the restoration of central controls.  The reform economists,
meanwhile, view current crises (budgetary deficits, open high
inflation, declining production, unemployment, and environmental
problems) as an inevitable part of the heritage of the moribund
socialist system.  For example, the chronic undercollection of
federal taxes in contemporary Russia can be viewed, at least in
part, as the legacy of seventy five years of primitive fiscal and
central banking mechanisms.
     Thus transition policies, such as those advocated by Shatalin,
Yavlinsky, Gaidar and other reformers no matter how well designed
or effectively implemented, could not have produced immediate
positive economic results and the recovery process would be a long
and painful one.       
     Both schools of thought represented complex blends of economic
analyses, ideologies, and doctrines, vested interests and, in many
instances, somewhat slanted interpretations of the Soviet Union's
economic performance.  The lack of historical data and documents
and the often biased nature of available economic statistics
compound the difficulty of evaluating the two alternative theses. 
Moreover, the dividing line between the two schools of thought is
not well drawn, and some advocates of one or the other exegesis
have switched sides.  It could be argued that Gorbachev, for
example, started his career in the Politburo essentially
subscribing to the first thesis, believing in the feasibility of a
quick "fix" for all the country's economic ills.  In the late
1980s, however, as the depth of the economic crisis became clear to
him, he changed his position, recognizing the need for a thorough
revamping of the system. (4)     
       The debates can be expected to continue and to expand to
cover more issues.  Many socialists in the West (Marxist and
non-Marxist alike) argue that the Soviet system was not a truly
socialist one and thus its disintegration is irrelevant in the
assessment of the viability of the socialist model.  The
dictatorial nature of the command system and the use of brutally
oppressive police controls are, according to these arguments,
incompatible with true socialism, Marxian or not.  Others argue
that the system created by Stalin in the early 1930s was the only
feasible (and hence inevitable) polity based on the ideas of Marx
and Lenin.




     ENDNOTES
(1)  The author is supportive of this argument but is aware of the
need for much additional research and deliberation before final
conclusions can be drawn. 
(2)  A number of scholars in the former Soviet Union have advanced
a "genetic deterioration" or "degradation of the genetic pool"
thesis.  According to them, civil strife, wars, emigration, purges,
and the Gulag regime inflicted disproportionally high losses on the
better educated, more skilled, and more dynamic segments of the
population, primarily men of working age.  This "negative
selection," which has been taking place over several generations,
has, it is argued, unfavorably affected the "genetic pool" of the
nation both physiologically and mentally, resulting in the
long-term degradation of education, labor skills and productivity
of people.  The thesis is an interesting one but is difficult to
quantify or test.  But it seems likely that the turbulent years of
Soviet history must have had some long-lasting, cumulative adverse
demographic effects.
(3)  The net impact of the "second economy" on the effectiveness of
official centrally-planned economy is difficult to evaluate fully. 
The "second economy" corrected inadvertent error made by central
planners and managers.  Wrong consumer goods delivered at wrong
times to wrong localities by the state would be reshipped and
resold for profit by underground entrepreneurs to markets where
these goods were in high demand, thus increasing the welfare of the
people. On the other hand, the "second economy" disrupted the
planning process, diverted productive resources from the state to
the illegal private sector, and rendered ineffective the existing
state system of incentives.  Graft and corruption affected all
areas of Soviet life and so did tax evasion.  Most specialists
believe that on balance the impact of the growing "second economy"
was adversely affecting the official economy.    
(4)  It must be noted that until the end of his presidency,
Gorbachev continued to occupy a middle-of-the-road position with
respect to truly systemic reforms.  As late as the fall of 1991 he
was still professing to believe in the communist party and
socialist ideas and objecting to such proposed reforms as the
introduction of private ownership of land.                   


"THE MANY CAUSES OF THE COLLAPSE" COMMENTS ON TREML'S ANALYSIS" by
Professor Michael Ellman, University of Amsterdam  (Endnotes
omitted)

     The issues raised by Vladmir G. Treml are of fundamental
importance.  The two key questions are the causes Of the Soviet
economic collapse and the appropriate economic policy Lo be
followed in the successor states.  The position of the second of
Treml's two schools on the first of these issues is erroneous and
on the second harmful.
      As far as the collapse is concerned, Treml's neat division of
opinion into two schools of thought does, as he himself notes,
simplify the issues somewhat.  The collapse of the Soviet economic
system should be seen as a contingent event; that is, as the result
of the interaction of various external, policy, and systemic
factors. I agree with Treml's second school that the Soviet economy
was less efficient than market systems and that this played a role
in its collapse, but this was not the only factor.      
     Key external factors in the 1980S were the rearmament program
of Ronald Reagan's administration, the Strategic Defense Initiative
(SDI), and US support for anticommunist guerrillas throughout the
world-for example, the "mujahidin" in Afghanistan.  The delivery of
the Stinger missile to the "mujahidin"  played a major role in the
Soviet defeat in Afghanistan.  The costs of the Afghan war and the
defeat were important factors in the destabilization of Soviet
society.  SDI caused great alarm in Moscow.  The rapid expansion of
the engineering sector in the 1986-1990 five-year plan and Mikhail
Gorbachev's initial "uskorenie" (acceleration) drive, both of which
disrupted the Soviet economy and increased the tension within it,
owed much to the perceived need to respond to the buildup of US
military might.  Other external factors that destabilized the USSR
were the sharp decline in world oil prices, the inclusion of Basket
3 (on human rights) in the 1975 Helsinki accords and the human
rights campaigns of successive US administrations, and the progress
made by the Organization for Economic Cooperation and Development
countries and the Newly Industrialized Countries.  If there had
been another Great Depression in the 1980s, it is likely that the
USSR would have been much more stable, despite the inefficiency of
its domestic economic system.    
     As far as policy is concerned, I share much of the evaluation
of perestroika by Treml's first school.  The withdrawal of the
communist party from the economy did remove an essential element of
the traditional model.  The abandonment of Marxism-Leninism did
contribute to rapid economic and political collapse.  As Vladimir
Kontorovich has argued: "The regime's delegitimation was, in the
final account, the main reason for the collapse of the whole
system.  The years 1989-91 were an experiment in dispensing with
the role of ideology in the Soviet system.  All the coercive
institutions were still in place, but with ideology destroyed they
were unsure what to do, and the people saw no reason to obey them."
Similarly, the attacks on the central economic institutions did
weaken a valuable coordinating mechanism.  All in all, the policies
adopted by Gorbachev played a key role in the collapse, a point
stressed by Kontorovich: "Gorbachev's response to Reagan's
challenge ultimately destroyed communism.  That response was just
one of several viable alternatives, one that bore the unmistakable
imprint of the general secretary's personality ... the collapse of
the Soviet system was the unintended result of a small number of
disastrous decisions by a few individuals.  "'Similarly, Alexander
Dallin, who stresses the multiple causes of the collapse, both
structural and nonstructural, draws attention to the crucial
importance of the policy choices made by Gorbachev: Do we mean to
say that, had Gorbachev and his associates not come to power, the
Soviet Union would have hobbled along, and might have continued to
muddle through without overt instability? That is the only possible
conclusion.  If we reach that conclusion, based on those premises,
then we must give serious weight to the proposition that the much
touted 'collapse of communism' was perhaps not nearly so inevitable
and surely not necessarily so imminent as it has been made out to
be."
      On the other hand, I do not share the apparent view of
Treml's first school that the traditional model could have survived
indefinitely.  In "The Disintegration of the Soviet Economic
System" Kontorovich and I drew attention to the long-run decline in
growth and suggested that "the ultimate causes of the slow-down are
all rooted in the fundamental characteristics of the Soviet system.
This means that the system was probably not viable over the long
run."'
      The argument of Treml's second school that "the Soviet-type
'command economy' has never been a viable system" and that "the
system endured for as long as it did because of sustained growth
... achieved under a brutal, repressive regime at the expense of
the living standards of the population" is not borne out by the
facts.  In the 1950s, for example, the Soviet economy grew rapidly
and this growth benefited the Soviet people as consumers.  Nor was
this due to brutal police oppression, since this was a period of
political relaxation, of the Thaw and de-Stalinization.
      As far as Eastern Europe is concerned, I agree with Treml's
second school.  As I have pointed out elsewhere: The 1989 collapse
of state socialism in former Eastern (now Central) Europe resulted
from a combination of changes in the USSR and domestic failure. 
Once the use of Soviet force to maintain the status quo was
abandoned, these regimes were bound to collapse, since they were
simply a projection of Soviet might on unwelcoming countries where,
after four decades in power, state socialism was a complete
failure, both economically and politically.  It was the "new
thinking" in Moscow, together with the domestic failures, that led
to the end of state socialism in Eastern Europe.  The domestic    
failure was long-standing and on its own might not have caused    
the 1989 collapse." Treml's second school's one-sided evaluation of
the Soviet economic system prompts it to pose some inappropriate
questions.  If the Soviet "command-administrative" economic system
is viewed as carrying "the seeds of its own destruction within it,"
it is natural to ask "why was this phenomenon not detected by those
who specialized in measuring the Soviet gross national product ...
and rates of economic growth?" But this question simply projects
back into the past a misunderstanding of the collapse of the Soviet
economy from the second half of 1988 onward.  Because the Soviet
economy eventually collapsed, it is assumed that it was always on
the point of collapse and that analysts should have seen this. 
This, however, was not the case.  Today all specialists are
familiar with Gregory Khanin's estimates of Soviet economic growth,
which differ significant both from official Soviet figures and from
Western estimates." As Mark Harrison has pointed out: The
difference between the best Western estimates and Khanin for the
long run since 1928 arises almost entirely within the period
1928-40, and has nothing to do with the CIA; according to Moorsteen
& Powell, Soviet GNP doubled under the prewar five year plans,
where Khanin finds only a 1.5-fold expansion.  This may be regarded
as ironic in view of the widespread disparaging of the bureaucratic
labors of the despised Agency in contrast with the high reputation
of Moorsteen & Powell's  scholarly endeavors.
     Over the past year, a number of well-informed Russian writers
have contributed to the debate on the collapse of the Soviet
economy.  Sergei Dubovsky of the institute for Systems Studies, for
example, has argued that "despite the reduction in its vitality,
the system could have continued its inertial development with
positive rates of economic growth, at any rate up to the year
2000." Similarly, Feliks Klotsvog and his associates at the
Institute of Forecasting of the Russian Academy of Sciences have
compared their macroeconomic projections of what is now likely to
happen with what they regarded as an entirely realistic
"hypothetical extrapolated variant of development under the former
economic system (assuming an average growth rate of national income
of 2-2.5% p.a.)."' Yurii Olsevich of the Institute of Economics of
the Russian Academy of Sciences, meanwhile, has stressed the
crucial role of the misconceived policies of liberalization pursued
by the Gorbachev leadership in generating the crisis.  In his view,
the collapse was caused by the very harmful economic policy of the
Gorbachev leadership, which was in turn caused by a lack of
understanding of the workings of the Soviet economic system and too
much stress on both Soviet Marxist doctrines and inappropriate
Western advice."'The new economic thinking,'based on the dogmatic
scholasticism of Soviet textbooks and ideologized Western
freetradeism," he concludes, "led economic policy up a blind alley
and the country into crisis.  The view that the policy errors of
Gorbachev played a major role in the collapse of the Soviet economy
has also been supported by Western works.  Dallin, for example,
comes to the conclusion that "it is not the case that the Soviet
system could have collapsed at any given moment during its 74-year
history ... ; its end . . . required the particular ... blind spots
in the perceptions and policy choices of the Gorbachev leadership. 
     As far as the appropriate economic policy in the successor
states of the USSR is concerned, there is no question that the
newly independent states are beginning from a very difficult
position and that not to take account of the Soviet legacy would be
absurd.  Accordingly, I entirely agree that much of the criticism
leveled at Boris Yeltsin's economic policy by his political
opponents is greatly distorted.  On the other hand, policy must be
based on serious economic analysis and attention paid to the
lessons to be learned from the experiences of the more successful
economies in transition.  To attempt to jump into the market just
because of a mistaken interpretation of the causes of the collapse
of the Soviet economic system, or because of a failure to
understand the complex reality of a market economy, or because this
happens to be fashionable in International Monetary Fund circles is
simply to repeat the mistakes of the Bolsheviks in the civil war.20

    Those who believe that the traditional Soviet model "has never
been a viable economic system" naturally wish to dismantle the old
system and to transform the Soviet Union into "a modern pluralistic
and economically viable market economy, in the shortest time
possible." Those who consider that policy errors and the unintended
consequences of policy decisions played major roles in the collapse
of the Soviet economic system naturally favor close attention to
the details of post-Soviet economic policy (so as to avoid
analogous policy errors) and to analysis of its short term effects.

     The emphasis on the goal of a market economy at the expense of
a realistic analysis of the path purportedly leading to it is a
dangerous (liberal) ideologizalion of economic policy that brings
unnecessary hardship and substantial economic losses with it.     
The debate about the causes of the collapse of the Soviet economic
system has only just begun.  From a methodological point of view,
it is analogous to that about the causes of the English and
American civil wars, the French Revolution, and the October
Revolution.  Because it combines historical importance with contem-
porary relevance, it is likely to carry on for a long time and to
lack an unambiguous outcome.  As the debate proceeds, new
information and new interpretations will emerge.  The debate on
appropriate economic policy in the transition economies has already
generated extensive political polemics and a large academic
literature.  The latter is likely to grow as time passes, more data
accumulate, and new theoretical insights are developed.