Summary
Few truly understand how the just deceased Russian President Boris Yeltsin made it almost impossible for President Vladimir Putin or any future successor to bring back communism to Russia. Many are concerned Mr. Putin is trying to re-establish communism, but he is not, because he cannot. Instead, he is trying to create a more traditional authoritarian state - more on this later.
It is almost forgotten that one of the cardinal tenets of communism is that the price system should not be used to determine the allocation of resources nor who gets to consume what. Thus, under the Soviets, what was produced and consumed was not determined by supply and demand, but by the state planning agency - Gosplan. This agency and its subagencies determined how many shoes, cars, stoves, paperclips and bottles of vodka were produced in the Soviet Union. Gosplan was more concerned with quantity than quality; hence, much of what was produced was junk and of little or no use. Since bureaucrats, rather than consumers, determined how much was produced, there was either too much or, in most cases, too little of what people actually wanted. Prices were set by the state, and most were artificially low to give the illusion of prosperity. For instance, the price of bread might be set at 10 cents (kopecks) per loaf, but the supply was sharply limited, so most people could not get bread except by waiting in long lines for many hours. For many nonfood quality items, people went to the black market.See the full content of this document
Extract
Yeltsin Vs. Putinism
Western economists, such as Ludwig von Mises, Friedrich Hayek and Milton Friedman, had long predicted that without market-determined prices the Soviet system would increase the misallocatio...
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