Bryan Caplan  

Keep on Truckin', Stalin-Style

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Did central planners under socialism focus on economics or politics? Lazarev and Gregory present an interesting test in their article "The Wheels of a Command Economy." (Published in the 2002 Economic History Review, and popularized in Gregory and Harrison's piece in the latest Journal of Economic Literature). It seems that Stalin had personal reserves of resources that he could allocate on a case-by-case basis, and motor vehicles were the most valued.

So how did Stalin hand out the car keys? Lazarev and Gregory use neat evidence from the Soviet archives to test for the relative importance of economics and politics.

This study is based on full data on requests for motor vehicles from the dictator’s reserve fund in 1932 and 1933... The researchers had each request, the cases made for the allocation, letters of support, and the eventual outcome. The final decisions were made by a high-level Politburo commission headed by Molotov. The researchers coded the cases made for the vehicle allocation as “economic,” for example a note from Gosplan explaining why this allocation was vital to fulfill the plan, or “political,” for example support from a political patron.

The conclusion doesn't surprise me:

In the regressions, only the political variables were significant in explaining approvals. Economic variables were insignificant and also had the wrong signs.

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COMMENTS (2 to date)
Rick Gaber writes:

"When politics are used to allocate resources, the resources all end up being allocated to politics." -- P.J. O'Rourke, here.

spencer writes:

I wonder what you would find if you did a similar study of compensation within the upper reaches of major corporations.

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