I have a pet theory that the state-planned economies failed not because they were inefficient (as neoclassical economics claims), but rather because they attempted to be too efficient. They tried to exactly calculate which producer needs what inputs, what they should produce and when, and a little deviation from the plan caused big cascading failures.
Free market is actually less efficient than direct control, but it is correspondingly more robust. This is evidenced in the big companies, which also sometimes try to control things in the name of "efficiency" and end up being quite inefficient. And also small companies, which are often competing and duplicating efforts.
The optimum (I hesitate it call that because it's not well-defined, it is in some sense a society's choice) seems to be somewhere in the middle - you need decent amount of central direction (almost all private companies have that) and redundancy (provided by investment funds on the free market).
(As aside, despite me being democratic socialist, I don't believe the democracy matters that much for economic development, but is desirable from a moral perspective. You can have a lot of economic development under authoritarian rule, there are examples on both sides, as most private companies are also actually small authoritarian fiefdoms.)
On this side track to the discussion, I think that a major factor there was the ___location of decision making vs. where the action took place. Too much control was taken away from the ___location where it was needed.
Centralization does that, in general, not just in those countries.
There is a reason octopuses have sub-brains in their arms, and that some of our reflexes are controlled from neurons in the spine and not from all the way up in the brain, and why small army units have some autonomy.
Isn't centralized vs decentralized just another case of efficient vs robust?
If you want to make an optimal decision, you need to make it in a centralized fashion, in some form. But that also gives you a single point of failure.
That suggests a plausible mechanism for why the dissolution of the Union was so peaceful: faced with a call for glasnost' from Moscow, local leaders preferred to quietly leave?
Do we have any reasonable datasets for before-and-after corruption levels in the FSU, or would that be a project which would* need another 3-5 decades to be viable?
* in the absence of sufficient well-placed cabbage?
Free market is actually less efficient than direct control, but it is correspondingly more robust. This is evidenced in the big companies, which also sometimes try to control things in the name of "efficiency" and end up being quite inefficient. And also small companies, which are often competing and duplicating efforts.
The optimum (I hesitate it call that because it's not well-defined, it is in some sense a society's choice) seems to be somewhere in the middle - you need decent amount of central direction (almost all private companies have that) and redundancy (provided by investment funds on the free market).
(As aside, despite me being democratic socialist, I don't believe the democracy matters that much for economic development, but is desirable from a moral perspective. You can have a lot of economic development under authoritarian rule, there are examples on both sides, as most private companies are also actually small authoritarian fiefdoms.)