The Nature of Socialist Economics

The Nature of Socialist Economics: Lessons from Eastern European Foreign Trade

Copyright Date: 1990
Pages: 292
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  • Book Info
    The Nature of Socialist Economics
    Book Description:

    What are the sources of the well-known differences in the performance of capitalist and socialist economic systems? Peter Murrell argues that the Schumpeterian model has far more power to answer this question than does the neoclassical theory generally used for that purpose. The neoclassical theory focuses on the absence of a price system and the inability of a centralized system to allocate resources efficiently, while the Schumpeterian model emphasizes the rigidity of institutions and policies in socialist economies and their lack of mechanisms either to create new institutions or to identify and to foster the growth of the most efficient organizations (including multinational corporations). In a work that will have profound consequences for the analysis of economic reform in socialist economies, Murrell compares the predictions of these two models against data summarizing foreign trade performance and finds the Schumpeterian model clearly superior. Combining international trade theory and econometric techniques, the author develops new methods of comparative economic analysis. These methods provide new information on the values of eleven resource endowments implicit in trade, the degree to which the socialist countries fit standard models of trade, the effect of multinational corporations on trade, and myriad other features of economic performance.

    Originally published in 1990.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-6086-9
    Subjects: Political Science, Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-viii)
  3. List of Figures
    (pp. ix-x)
  4. List of Tables
    (pp. xi-xiv)
  5. Acknowledgments
    (pp. xv-2)
  6. CHAPTER 1 An Overview of the Research, the Theories Underlying the Interpretation of the Results, and the Conclusions
    (pp. 3-24)

    In the closing paragraphs ofThe General Theory,Keynes remarks on the powerful influence of the ideas of economists, both when they are right and when they are wrong. This remark comes easily to mind at present, on reading the extended analyses of the problems of the Eastern European economies and their possibilities for economic reform. Much of the discussion of the properties of the socialist economies, both academic and popular, is cast in terms that are directly derived from the standard paradigm of Western economics—the set of ideas that economists call neoclassical economics. The present book examines whether...

  7. CHAPTER 2 The Variables Used in the Analysis: Their Properties and Sources of Data
    (pp. 25-43)

    The methods of many empirical studies in economics are constrained by the absence of appropriate data. This is especially the case for cross-national studies, for which one must negotiate the Babel created by differing procedures of data collection across countries. To understand the techniques of analysis used in subsequent chapters, it is therefore necessary to have a basic overview of the types of data that were available for this study.

    The present chapter has a dual purpose. First, for those interested only in absorbing the basic results of this book, there is a brief description of all data used. The...

  8. CHAPTER 3 International Trade Theory and the Centrally Planned Economies
    (pp. 44-81)

    The ultimate goal of the present work is not primarily to analyze the international trade of socialism, but rather to use trade data to understand the effect of economic system on economic behavior. The central assumption underlying this methodology is that the world is a seamless web, with trade patterns inevitably reflecting the internal character of economies. Those who doubt the reasonableness of this assumption for Eastern Europe should consider whether they would predict that the Soviet Union exports as many videocassette recorders as barrels of oil. The question is notwhethertrade depends on the character of the domestic...

  9. CHAPTER 4 Qualitative Information on Nonstandard Trade Determinants: Summary Statistics from Trade Data
    (pp. 82-140)

    In empirical applications of the standard theory of international trade, economists have tended to emphasize a narrow range of trade determinants. The great triumvirate—land, labor, and capital—usually span the spectrum of factors analyzed.¹ However, differences in the economic performance of nations are plausibly the product of a much wider set of influences. For example, Gogol’s Yakovlevich reminds us that lack of sensitivity to quality of service might be a more enduring determinant of Russian economic performance than the more usual factor endowments.

    Nothing in the standard theory restricts its application to the usual narrow range of variables. One can...

  10. CHAPTER 5 The Econometrics of Estimating Endowments Implicit in Trade Decisions and Measuring Country Conformity to Trade Models
    (pp. 141-155)

    This chapter develops methods of discovering the patterns embedded in international trade data. The patterns are summarized in estimates of the factor endowments that are implicit in trade decisions. Because these patterns are deeply hidden within the data, it is necessary to combine a complex statistical procedure with international trade theory to extract them. Moreover, given the distance between the observed phenomenon and the object of interest, the form that the statistical procedure must take is not immediately obvious. One needs a methodology for deriving that procedure—hence the use of maximumlikelihood methods in this chapter.

    The primary reason for using...

  11. CHAPTER 6 The Levels of Resource Endowments Implicit in Eastern European Trade Patterns: Estimates for Eleven Endowments
    (pp. 156-193)

    There is a distinguished tradition to the notion that foreign-trade data can reveal information about the internal affairs of a country. Leontief 1953, 1956 apparently had no doubt about the meaning of his results, which others later interpreted as paradoxical. He viewed these results as demonstrating a feature of the economy that was not apparent from conventional statistics. The present chapter is written in the same spirit. I estimate the stocks of endowments implicit in the trade patterns of the CPEs and evaluate which hypotheses best explain these estimates.

    The sections containing the main empirical results of the present chapter...

  12. CHAPTER 7 Measuring How Closely the Trade Patterns of Socialist and Capitalist Economies Fit Standard Trade Models
    (pp. 194-221)

    This chapter presents estimates of the degree to which the trade patterns of capitalist and socialist countries fit standard models of trade. The econometric groundwork for the calculation of these estimates has already been presented in Section 5.5. Here the emphasis is on economic interpretation.

    If the statistical results from neoclassical models show that the trade patterns of MEs and CPEs are very similar, in that they both fit the same model, how might one construe the results? Two possibilities are outlined in Section 7.1 and given detailed elaboration in Sections 7.4 and 7.5. “Coherency” reflects the notion that the...

  13. EPILOGUE The Results and Some Questions They Raise
    (pp. 222-228)

    In this epilogue I summarize the principal features of the preceding pages—the nature of the differences between Schumpeterian and neoclassical paradigms, and the empirical results that most directly reflect on those differences. I then reflect briefly on an issue that has been ignored thus far—the significance of the results for the future of the socialist countries. I do this by posing a number of questions about the process of economic reform, questions that arise naturally only on acceptance of the Schumpeterian framework.

    The central message of this book has focused on the differences between two views of the...

  14. APPENDIX A Do RCAs Reveal Comparative Advantage?
    (pp. 229-236)
  15. APPENDIX B Derivation of Equations Representing Trade Models
    (pp. 237-242)
  16. APPENDIX C Interpreting the Values of RCAs in the Presence of Intraindustry Trade
    (pp. 243-248)
  17. APPENDIX D Interpreting the Estimates in the Presence of Missing Data
    (pp. 249-254)
  18. References
    (pp. 255-266)
  19. Index
    (pp. 267-275)