Financial innovation under market socialism

Abstract

Over the last thirty years centrally planned economies, also known as Soviet-type or socialist or as instances of realised socialism, have often undertaken and to some extent implemented reform projects for the progressive expansion of the scope of markets at the expense of direct central allocation. From Yugoslavia to China, from Hungary to Poland and the Soviet Union, none of these economies with the possible exception of Albania has escaped this process; the very frequency of reform attempts indicates both the necessity and difficulty of changing the principles of operation of socialist planning, rather than simply introducing marginal improvements. Reform projects have included varying degrees of enterprise decisional autonomy, contractual relations instead of central allocation of materials and foreign exchange, direct access to foreign trade, workers' self-management, reprivatisation.