I am indebted to Professors Gregory Grossman and Benjamin Ward, and to Mr. Thomas Gartland and Mrs. Ruth Polak for their help and valuable comments.
'The IV Congress of the Union of Czechoslovak Writers', Ceskoslovensky spisovatel, Prague, 1968, P. 27.
The analysis of views of different political parties based both on published materials and archive documents is contained in Karel Kaplan Znarodneni a socialismus (Nationalization and Socialism), Prace, Prague, 1968.
Miloslav Bernasek, 'Czechoslovak Planning 1945-8' in Sov Studies, Vol. XXII, No. 1, July 1970, p. 109. See also Drago Fiser,' Theoretical Problems of the Central Planning Organs', Nakladatelstvi CSAV, Prague, 1965.
According to the Czechoslovak Statistical Yearbooks the rates of growth of national income fell from the level of about 10 per cent in the period 1948-52, to 6.4 per cent in 1953, and 3.5 per cent in 1954.
.For principles of this reform see 'The Problems of the New System of Planning and Financing of the Czechoslovak Industry,' Prague, 1957.
B. Komenda and C. Kozusnik, 'Some Basic Problems of Improvement of the System of Management of the Socialist National Economy', Politickd ekonomie, No. 3, March 1964, pp. 219-35.
'Hlavni Smery zdokonalovani planoviteho rizeni narodniho hospodarstvi', Statni komise pro rizeni a organizaci, Prague, 1965.
There were some so-called 'experiments' made in the second half of 1965, but they were unrepresentative and may be safely disregarded.
'Zasady urychleni realizace nove soustavy rixeni" (Principles of Accelerated Implementation of the New System of Management), Statni komise pro rizeni a organizaci, Praha, May 1966. The new principles were approved by the Central Committee of the Communist Party in April 1966.
Jaroslav Jirasek, 'An Outline of the Ideology of the Economic Reform in CSSR', Hospodarske noviny, May 23, 1969.
V. Hula, '25th Anniversary of the Liberation of Czechoslovakia by the Soviet Army', Planovane hospodarstvi No. 5, 1970, p. 5.
V. Hula, op. cit., p. 7.
'Principles of the Planned Management of the National Economy valid from 1972', Usnesem vlady CSSR, No. 204/1971. This document together with an extensive commentary was published in Hospodarske noviny, Nos. 34 and 35, 1971.
V. Hula, 'Before the Fourteenth Congress of CPC', Planovane hospodarstvi, No. 5, 197 1.
R. A, Remington, Winter in Prague, M.I.T. Press, 1969, p. 1
Remington, op. cit., pp. 1 14-18.
Some arguments in favor of workers' councils were not purely economic: for example, the idea that self-government would create direct democracy in enterprises and eventually lead to the abolition of alienation. On the other hand, some economists expressed the view that scientific management is much more important than self-government: 'I do not think that the worker would feel more involved with the enterprise if he had a right to decide on problems he is ignorant of, or if he had a share in the profit or loss which he did not cause.... In this respect we should be very careful not to turn to pseudodemocracy.... When we allow 'democratic' or majority decisions on management matters, managers and rewards, we are abandoning the scientific aspect of enterprises and undermining their efficiency.... A truly modern management based on social psychology, human relations, etc. is able to create very intensive relations between workers and their enterprise.' Eugen Loebl, 'Economic Democracy but What Kind?', Planovane hospodarstvi, No. 6, 1968, p. 67.
Benjamin Ward, 'The Firm in Illyria: Market Syndicalism', The American Economic Review, No. 4, 1958. Evsey D. Domar,'The Soviet Collective Farm as a Producer Cooperative,' The American Economic Review, No. 4, 1966. R. Kocanda, P. Pelikan, 'A Socialist Enterprise as a Participant on a Market', Politicka ekonomie, No. 2, 1967. B. Komenda, 'Price System and Price Mechanism', in K. Kouba (ed.), uvahy o socialisticke ekonomice, Svoboda, Prague, 1968. L. Mlcoch, 'An Alternative Behavior of Firms in Decentralized Socialism', Politicka ekonomie, No. 11, 1967. A. Rusek, 'Material Incentives and Behaviour of a Socialist Firm', Politickd ekonomie, No. 4, 1968. J. Vostatek, 'Four Types of Enterprises and Socialist Distribution', Politicka ekonomie, No. 4, 1969.
'Provisional General Principles to Guide the Setting Up of Councils of Working People' approved by government on June 6, 1968, quoted from New Trends in Czechoslovak economics, September, 1968.
'The Main Issues in the Party Policy', Hospodarske noviny, No. 5, February 6, 1970.
This term was coined by Hungarian reformers and has not been used in Czechoslovakia.
Drago Fiser, 'Planning in the Industrially Developed Capitalist Countries', Svoboda, Prague, 1968. K. Kouba (ed.), Uvahy o socialisticke ekonomice (Essays on the Socialist Economy), Svoboda, Prague, 1968.
'Zasady urychlene realizace nove soustavy frzeni', Statni komise pro rizeni a organizaci, Prague, 1966, p. 5.
o p. cit., pp. 5 - 6.
Karel Kouba, 'The Plan and Market in a Socialist Economy,' Czechoslovak Economic Papers, No. 11, Prague, 1969, p. 37. On the Plan as a sequence of Pareto optima see for example L. Rychetnik and O. Kyn, 'Optimal Central Planning in Competitive Solution' in Czechoslovak Economic Papers, No. 10, Prague, 1968.
Drago Fiser, 'Planning as a Decision Process', Politicka ekonomie No. 4 1969, pp. 295 and 298.
Ignic Rendek, 'Optimalny plan' (An Optimal Plan), Slovenske vydavatelstvo technicke literatury, Bratislava, 1967, pp. 7-8.
Jri Tuvora and Kvetoslav Gottwald, 'The Economic Guidelines and Plans of Enterprises', Hospodarske noviny, No. 29, July 1969.
See for example an interview with the Federal Minister of Planning D. Dvorak, Hospodarske noviny, No. 29, 1969, p. 5. 'The results of agreements are much better than those of the plans of enterprises.... the fulfillment of economic guidelines was however not guaranteed.' Vlastislav Hamouz, 'Problems with Agreements', Hospodarske noviny, No. 34, 1969, p. 1.
Karol Martinka, 'The National Economic Plan - the Basic Instrument in the Management of the Economy', Planovane hospodarstvi, No. 4, 1970, p. 4.
'The Resolution of the CC CPC on the Main Problems of Economic Policy of the Party', Hospodarske noviny, No. 5, February 1970, p. 5.
'Agreements' or rather 'protocols' were signed in March to enforce the plan for 1970. The results were as follows:
Source: Jaroslav Grof, 'From Signature to the Realization of Plan', Hospodarske noviny, No. 11, March 20, 1970. p. 1.
'The aforementioned 450 balance sheets, for example, represented 50-60 per cent of industrial output, 40-50 per cent deliveries for export, 55 per cent deliveries for internal trade and 70 per cent for productive consumption'. Ladislav Smid, 'Material and Technical Supplies in the Fifth Five Year Plan', Planovane hospodarstvi, 6/1972, p. 67.
For the description of the mathematical model and algorithm see L. Heil, 0. Kyn, B. Sekerka, 'Model cenovych typu' (A Model of Types of Prices), Academia, Prague, 1969.
The reform of wholesale prices was occasionally regarded as a total failure, an evaluation which is highly exaggerated. Some positive aspects of the reform are indisputable. 'Approximately until 1965, or even 1966, a method of price fixing was applied, under which prices covered only costs and a very small profit margin.... In this period one of the deficiencies of the price system was that wholesale prices had only an accounting character and were ineffective from the economic point of view. The situation has completely changed since the price reform. The new level of prices basically covers requirements of productive accumulation.... The connection between wholesale and retail price is better.... The economic role of wholesale prices has been revived and they have become much more sensitive instruments than they were before 1967.' Frantisek Nevaril, 'Must They Only Grow? ',Hospodarske noviny, No. 12, March 27, 1970, p. 4.
J. Polak, 'The Stabilization of the Economy and Prices', Hospodarske noviny, No. 35, August 29, 1969.
V. Knobloch, H. Kysilka, 'Direction for the planned development of prices in 197 1', Planovane hospodarstvi, No. 2, 197 1, p. 65.
M. Jirava, R. Krutsky, 'Plan for the development of wholesale prices', Pannovane hospodarstvi, No. 4, 1972, pp. 73. 75.
From the ranks of the Western New Left a criticism was frequently heard that the Czechoslovak economic reform was aiming to restore the class structure by increasing the incomes of managers and intellectuals above those of blue collar workers. This argument was wrong because it did not take in account differences between the lifetime profiles of the income flows. While the typical blue-collar worker begins to earn regular monthly wage at the age of 15 or 16, his counterpart with a college education earns his first and usually very low salary when he is 24 or 25. It is obvious that the progression of salary rates for white collar workers must be steeper as they grow older if they are to catch up to the cumulative income of blue collar workers before retirement. The following table shows the progression of cumulative incomes for several selected professions in the Czechoslovak engineering industry in 1965.
CUMULATIVE INCOMES OF SELECTED PROFESSIONS IN
*with college education
**with secondary education
Source: Premysl Tomasek, Odmenovani v novych podminkach rizeni (Remuneration under the New Conditions of Management), Svoboda, Prague, 1967, p. 24.
It is apparent that up to the age of 40 the cumulative income of such white collar professions as lawyers, economists and even engineers remained far behind the cumulative income of skilled blue-collar workers and was only slightly above the lowest category of unskilled workers.
'Zasady urychleneho zavadeni nove soustavy rizeni.' Statni komise pro rizeni a organizaci, Prague, 1966, p. 28.
Hana Brydlova, 'Growth and Level of Real Wages and Salaries in CSSR and Some Capitalist Countries', EU CSAV, Prague, 1968, p 22
Premysl Tomasek, op. cit., p. 16.
Rudolf Bakic, 'Wage Development in the Fifth Five-Year Plan', Planovane hospodarstvi, No.8, 1972.
See for example B. Komenda and C. Kozusnik, 'Some basic problems of the improvement of the system of management of socialist conomy', Politicka ekonomie, No.3,1964
The term 'gross income' was used in Czechoslovakia for the sum of wages and profits.
'Zasady urychleneho zavadeni nove soustavy rizeni.' (Principles f Accelerated Implementation of the New System of Management), Statni komise pro rizeni a organizaci, Prague, 1966, p.23
Capital charge and payroll tax
Jan Cima, 'Principles for Use of Financial Economic Instruments for 1972 and Following Years', Planovane hospodarstvi, No.19, 1972.
Jan Cima, op. cit., p.50.
Jan Cima, op. cit., p.49
J. G. Zielinski, 'On the Theory of Economic Reforms and Their Optimal Sequence in economics of Planning, Vol.8, No.3, 1968, p.195.
R. D. Portes, 'Economic Reforms in Hungary' in The American Economic Review, Vol. LX, No.2, May 1970, p.307.
'Experience from the failure of the Czechoslovak economic reform at the end of the 1950s shows that attempts to increase the active role of prices and of economic tools were to a great extent frustrated by an orientation towards an extensive rate of capital investment in connection with the medium term plan for 1961-65.' Karel Kouba, Present Economic Trends in Czechoslovakia, EU' CSAV, Prague, 1970, p. 11.
Otakar Turek; 'Zavislost duchodu na efektivnosti, parametrickem prostredi a ekonomicka reforma (The Dependence of Income on Efficiency, Parametric Environment and the Economic Reform), Politicka ekonomie, No.7, 1970, p.619.
'Zasady urychleneho zavadeni nove soustavy rizeni.' Statni komise pro fizeni a organizaci, Prague, 1966, p.7.
O. Turek, O Planu, trhu a hospodarske politice (On Plan, Market and Economic Policy), Svoboda, Prague, 1967, p.227.
This, of course, does not imply incompatibility of a market mechanism and central long term planning.
Wlodzimierz Brus, Ogolne principy funkcirjovania gospodarky socialisticznej, Warsaw, 1959. English translation published under the title 'Market in a Socialist Economy'.
Turek, op. cit., pp.22 and 179
The stability of a command economy is not absolute. 'The Soviet system is relatively stable with respect to organizational change except for a tendency toward a cyclical organizational response to information flows about performance.' Benjamin Ward, The Socialist Economy, Random House, New York, 1967, p.261.
H. Ripka, Demokraticka forma socialismu (A Democratic Form of Socialism). From the Archives of Czechoslovak Socialist Party quoted by Karel Kaplan in 'Znarodneni a socialismus', Prace, Prague, 1968.
From the Draft of the Program of Czechoslovak National Socialist Party. Same source as fn. 62.
'The prevalent bureaucratic modus operandi of socialism makes formal reorganization the main vehicle of change. Still, informal rearrangements (for example, the rerouting of communications outside official channels or unauthorized extension of command) are not uncommon. Naturally, such processes - in contrast to reorganization by decree, whether piecemeal or wholesale - are gradual.' Adrzej Brzeski, 'Social Engineering and Realpolitik in Communist Economic Reorganization', in Gregory Grossman (ed.), Essays in Socialism and Planning in Honor of Cart Landauer, Prentice-Hall, 1970, p.154.
Participants of both of these teams prepared a great number of interesting working papers for internal circulation. The discussions in these teams were free and uninhibited. The matters discussed were, however, regarded to be of a 'delicate' nature and therefore no attempts were made to formally publish papers. The work of both of these teams influenced the formulation of 'The Action Program'.
Turek draws attention to this fact when he says that critique of the economic system had never been as radical as in the early sixties and he explains: ... . This fact should be attributed to the unprecendent sharpenning of difficulties in our economy. These difficulties themselves a much more convincing critique of the dogmas connected with the directiv system of management than any of the ablest economists were able to do in the fifties…The economic situation itself…accelerated the process of transformation in the way of thinking…." (op.cit. p.12)