Empirical Studies








   It is obvious that in the present discussions, we are not concerned so much about general tendencies but by the question of how to solve present problems of the Czechoslovak economy. I think that it cannot be proved that the only possible way of overcoming stagnation in Czechoslovakia is a substantial increase in the rate of accumulation with the subsequent reduction of already low growth rate of personal consumption. At least equally possible is a strategy which leads not to a further "creation of resources”  but to a more efficient utilization of the immense stock of accumulated capital.

Today of course we cannot claim that development will follow one way or the other. Not because  it will be determined somehow by objective forces, but on the contrary because it depends on numerous economic decisions that will be made in future. The efficiency of the economy as a whole depends on decisions about choice of technology of production, about utilization of scarce resources and also on how well are economic decisions coordinated. If we do not succeed in actually constructing a better mechanism of functioning of a socialist economy, we shall probably be forced back to the logic of the old system. Loses arising from non-rational decisions, from waste of limited resources and imperfect economic coordination, will have to be offset by a further accelerated "creation of resources" and by further "belt tightening. " We can imagine this kind of development but it is difficult to imagine that during such a development socialism could prove its superiority over capitalism.

The hopes of the new management system are founded on the belief that economic development, based on the quantitative piling of the means of production, but accompanied by the low utilization of a potential stock of human intelligence, by a general decay of initiative, and insufficient flow of innovations, can be changed into a development where the human factor will enhance the productive force of material factors of  production. Hence the central problem facing our economy now  is how to create a system where decision-makers would receive sufficient amount of relevant information,  where the criteria of economic decision-making would be undistorted and where --and, this is most important--  there would be sufficient incentives in all parts of the economy.

That our economy suffers from insufficient resources is only an optical illusion.  The lack of resources is a consequence of inefficient utilization of existing resources. What the economy really  needs  are incentives that would make people interested in getting maximal social effect out of existing resources. If we embark in the new system with a further slow­-down of consumption (or even lowering of real wages), we shall not generate such interest but rather strengthen the already widespread distrust in economic changes in our country. Present-day economic theory has already established a close correlation between growth in living standards and growth of social labor productivity. 24  Reducing consumption would weaken incentives for work and thus would diminish one of the most important factors of economic growth - the labor productivity. Fast growth of consumption on the other hand can help to sweep away skepticism, stimulate initiative and thus overcome stagnation.












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