Economics is still not a science, but we are trying (professionals and interested ones) to understand what is happening (happened) in our life times. So, very good and truthful approaches above, with profound intentions of responding honestly. I do think, concerning Russia, MI. Tugan-Baranovsky has to be re-read, i.e. capitalism is a human made system. However, it can not be leap-frogged; in this point, we will not be able to beat the prophet from Trier ( do remember, the surname ends with x). China has definitely learned the lessons; economic perestroika comes first, public glasnost will happen, anyway. Being myself from a working-class background, I had always difficulties in understanding the Marxian understanding of 'workers', applied in the 'Socialist commonwealth'. To sum it up: economics should move closer to science and try keeping a distance to religious interpretations of history.

Recently I have opened a book by one soviet traveller and economic geographer Mihajlov (see https://www.ozon.ru/context/detail/id/21509404/ ), that was published in the USSR in 1967 in Russian (50 years ago and 50 years after soviet revolution). Reading interesting stories about what one could see (places on touristic interests) in the regions of the former USSR (now it includes 15 countries) and some comments about local natural resources, development of industry and agriculture and changes over 50 years, I came to the conclusion about extreme importance of the ideas of classical economic geography and regional science that has been developed in the west in the beginning of the 20th century.

Let us start from the location theory of Weber (1909); the text is here: https://archive.org/stream/alfredweberstheo00webe/alfredweberstheo00webe_djvu.txt . Briefly speaking, it is about optimization of production location (minimal sum of transport costs), when we have 3 different inputs in other locations. Practically every region had some mineral resources (input 1). It was necessary to add input 2 (energy; plenty of hydro (and other) power stations have been constructed in many locations). Then we need labor (in close location). Labor was quite mobile in the former USSR, and not only in the time of GULAG camps. Transport was very cheap and economic incentives have been created for labor to move to new locations - industrial cities. Not only plants but also housing have been constructed by state. I have not seen anything similar in other huge countries with low population density (it means that transport cost matters a lot) and plenty of unused resources, like Canada or Australia. However, China employs such policy, by construction of (initially) empty cities, for example. (I will continue with other examples, but also expect yours).

The main economic problem is the feedback from the market information system. I would simply put it with Hayek and Mises: economic systems evolution is naturally bound to calculative feedback signals from (decentral) market transactions. Any socialist system must become a market system, with monetary seignorage and surplus as public revenue, to keep monopolies out .AI is now perfectly endangering this financial price mechanism in the capitalist planned economies, i.e. the danger of a central command economy is now real, because the cybernetic circuit is essential.

Thanks, Stephen, for your ideas in complementary direction.

While the financial system of the USSR may look strange, I see some analogy with the present global monetary system.

Let me explain some basics of financial system in the USSR. There were different types of money, non convertible into each other: a) usual money used by labor (both as paper money and private accounts in bank, called "nalichnye") and b) "beznalichnye" - money in the accounts of state firms. Money (a) were used for purchase of consumption goods, while money (b) were used for investment. So if we divide economics on the share of labor, L, and capital, K, then we can have economic growth on the basis of investment by capital owners (state firms), and consumption based on the share of labor, C=wL (w- formal wage).

If we look at the modern world, we also have money used for consumption and money used for investment. Due to growing income polarization, owners of these money are different (in some approximation), although they are formally convertible. But no billionaire will use his money to eat, let say, 1000 kg of meat and to drink 1000 liters of beer every day. His money are mostly on stock exchange. Interestingly, investment creates bubbles from time to time. So this inefficiency reminds me some inefficiencies of investment done by soviet firms. They expanded production for production, also military, but did not see the scarcity of some goods in consumption sector for labor.

Exponential knowledge automation will change the fundamentals of economic science and the market system; it is important to keep an eye on this cybernetic paradigm shift to better understand and respond to this seismographic or tectonic event. Katastroika is always a cognitive result of ignoring the facts of eco-dynamics, in logical and ethical terms. Most of economic theories will become obsolete and 'history', in the technical process of this quantum leap. However, money will remain essential, because the whole economic system is based on liquidity.

Interesting question. I follow up.

Regards!

Adel

Found this contribution (PDF) from Y.Kuznetzov on Gaidar's introduction of fiat money. This relates closely to the shocktherapy proposals from J.Sachs. Such thinking was strongly opposed by a list of famous 'Western' economists (1990/letter.pdf).

I would like to express my dilettante opinion, based on the video of some famous people in Russia such as Valentin Katasonov and Andrei Fursov.

In my opinion, there are two types of economy in the Soviet Union: it is the Stalin economy and Post-Stalin imitation of the economy. During the period of the Stalin economy, the USSR achieved enormous power and made a giant leap from a plow to an atomic bomb. After the end of World War II, the economy was almost completely restored in just a few years after the war. In the country there was a huge enthusiasm in all spheres of life, the USSR was rightfully considered the most reading country in the world, etc. etc. After the death of Stalin (more precisely, after the assassination of Stalin) the trotskyite traitor Khrushchev came to power, who, out of fear for his life, killed the ingenious manager, Lavrenty Beria who would can continue Stalin's course on the country's economic development with a tremendous pace. However, Beria was killed by the enemies of the people of the USSR, headed by Khrushchev. Since that moment, the period of post-Stalin pseudo-economy, the period of economic stagnation, has begun. Why? Stalin during his lifetime wanted to take power from the partocracy and hand over power to business executives. However, he did not have time to do it, he was killed. The party bosses stood in power, who did not answer for anything, but only gave stupid orders that should to be implemented. During this period, the economy of the USSR began to slowly stagnate. Stalin during his lifetime, fought against the dictates of the dollar and did not allow the dollar to be used into the economy of the USSR. However, Khrushchev agreed with the dictates of the dollar, which soon came to the USSR.  Thus, there was in the USSR a real economy in the period 1929-1953 and it worked for the good and prosperity of the country. I want to ask: why should we copy the Western economy when there was already a heroic example in the country. Maybe we should just to take from this example all the best as well as the education system, which was considered the best in the world. I want to summarize: Today Russia should have its own sovereign Russian economy without any imitations from the West. As an example, we can point to the prosperous economy of China, which were took into account all the lessons of the Soviet economy.

I want to thank everybody for the interest in this topic. Perhaps some of you view it as an attempt to say that USSR was good and modern Western world is bad. I do not have this intention. Indeed, we can criticize the modern western economy, and I I agree with the criticism of $ by @Alexander and some information about Stalin's period (little known in the west) provided by @Gennady. I also use brave statements in my answers to my other question: https://www.researchgate.net/post/What_do_you_know_or_think_about_economics_of_social_networks

But here I want to show some positive lessons of soviet economy. Many may still wrongly think (following big propaganda in the moment of introduction of Big Bang shock therapy by E.Gaidar in 1992) that all what has been done in the USSR was wrong. I know that even famous Joseph Stiglitz had a working paper that China is doing transition correctly and Russia - in a wrong way; see https://www8.gsb.columbia.edu/faculty/jstiglitz/sites/jstiglitz/files/1999_4_Wither_Reform.pdf . I heard that this truth has costed him his job; it was before he got Nobel prize. @Stephen provides a letter showing that even in 1990 not all Western economists have been supporting those reforms in a way done later by Gaidar.

As for the history of the USSR, it was very heterogeneous. There was too much stress on perhaps wrong statement of one of classics of Marxism that class struggle is growing over time. It was the basis for repression of moderately rich peasants in 1930-33 and the great Hunger of 1932/33.

There were perhaps too many people in GULAG in 1930s.

If we look at the economy after the 2nd world war, it was also changing. Stalin could repress (put to prison or even assassinate) any "partocrat" who was not following public interest on his job. In 1960s and 1970s this threat no longer existed, and it was perhaps private interest of people with power who have allowed for dishonest methods of wealth accumulation that had finally led to destruction of the USSR and abolishing of Marxist ideology. And since the global propaganda has put much more accent on what was bad in the last period, we have to reveal what was good in other periods (also from the perspective of western economic science).

Let us focus a bit on Economics of Public Sector. It is a standard course in western economics; Stiglitz has a book for students on that. The basics in that there are public goods (see https://en.wikipedia.org/wiki/Public_good ), and that public sector is more efficient in their provision. Here the experience of the USSR is very important. As I mentioned above, soviet firms had money for investment. When a new region has been developed, they built not only plants, but also housing and infrastructure (public good). In many cases it was cheaper and more efficient than under capitalist system.

Public sector can also provide some private goods. For example, public transportation or housing, both constructed for households (you see, I use western language, where I can) by state firms. As @ Stephen mentioned above, the problem here was in lack of feedback. Without market, state firm did not know what HH are expecting. Usually the quality was lower comparing to western standard. Of course, it was also cheaper. But consumers have some trade off between price and quality, and were willing to pay a bit more for better quality.

Another private service (provided in the USSR mostly by state firms) was public food ("stolovaja" in Russian), some analogy of western cafe and restaurants. They were cheap - but with too low quality of food and service. Those who worked in the kitchen also had an incentive to steal some food (and were not prosecuted, because "who would work honestly for their salaries?"), so the portions contained less important inputs (like meat) and more cheap vegetables or pasta. Interestingly, Baltic republics has good and cheap cafe, but somehow there was no learning in the rest of the country.

Perhaps, "nomeclature" (party bosses) had better quality of all private goods for themselves and did not know how normal people have felt about that. Here I would cite @Fedulov: "The party bosses stood in power, who did not answer for anything, but only gave stupid orders that should to be implemented". I would say, also in agriculture, when they were giving stupid micro orders what to do (like putting seeds in land), without understanding technology. Labor was also not respected. In some cases, substitution by machines was technically feasible and cost-efficient (in the west). But many students have been ordered to collect potatoes manually in the field in September (instead of studies), because for party bosses they were treated as cost-free labor. In the South cotton and tomatoes have been collected by students. Bosses did not account (or even had no knowledge) for the lost human capital.

Economics is still not a science, but we are trying (professionals and interested ones) to understand what is happening (happened) in our life times. So, very good and truthful approaches above, with profound intentions of responding honestly. I do think, concerning Russia, MI. Tugan-Baranovsky has to be re-read, i.e. capitalism is a human made system. However, it can not be leap-frogged; in this point, we will not be able to beat the prophet from Trier ( do remember, the surname ends with x). China has definitely learned the lessons; economic perestroika comes first, public glasnost will happen, anyway. Being myself from a working-class background, I had always difficulties in understanding the Marxian understanding of 'workers', applied in the 'Socialist commonwealth'. To sum it up: economics should move closer to science and try keeping a distance to religious interpretations of history.

Dear @Stephen, I would say that economics is still a science. Also because some people without ideological limits (mostly applied mathematicians) try to model socio-economic relations that have some explanatory and predictive power. In the USSR optimization theory was well developed. (However, they could not formulate final objective oriented on consumer. Perhaps, lack of microeconomic knowledge in the USSR was the reason.) Western scientist Harold Hotelling (not ideological mainstream in economics, but a good mathematician, see biography and works here: https://en.wikipedia.org/wiki/Harold_Hotelling ) suggested 2 models (1929, 1931) that are still fundamental in spatial competition and extraction of non-renewable resources. People who explained reality were often not mainstream, neither in the West nor in the USSR (because they often had to give up some ideological assumptions, that were not satisfied in reality). I am trying to make realistic assumptions in my models. I also want to attract your attention to one of my recent models about separation of land rent and construction costs in cities with raising a question "to whom this land rent should belong"; see Conference Paper Aggregate and Average Land Rent in Cities

After reading letter to Gorbachev (posted by @Stephen) signed by 30 western economists (I know one personally, Jacque Thisse) I understood some similarity between our ideas. Unfortunately, other ideas have been promoted, and Russia went wrong way in transition. They also told Gorbachev about danger of auctions for privatizing land and natural resources. There was one student in our department who wrote her MA thesis about auctions for selling Russian oil fields in 1996. She found that there were about 1-2 participants on each and the auction price was as low as 1% of the stock value in 1 year after. Something like buying a field with future value of $10 bln for only $100 mln.

We probably will never know whether Gorbachev: a) has read this letter, b) understood it (or at least asked academicians for explanation), c) agreed with it. But there were no public discussions in Supreme Soviet and the chosen way of fast transition was not people's choice. In 1 year Gorbachev lost his power, so formally he was not responsible for economic changes starting 1992.

I want to add some ideas about comparison of education in the USSR and in the West. Before all soviet education was public, and now we see that it was good. Soviet diplomas in math, natural sciences and some engineering are well accepted abroad. After reforms in education starting 1990s its level has dropped a lot. People from secondary school in the USSR were often holding 1st prizes in Olympics for math and physics, and now Chinese are often better. See https://www.imo-official.org/results.aspx . See USS for USSR (1st place every 2nd year) and CHN for China. I also can compare the knowledge in math by schoolchildren that time and now; now it is worse. To summarize, movement to market economy has resulted in decline of Russian education quality.

A lot of education in Russia is now private. It may be good for teachers and professors. But very often the quality of private education is lower. Simply because paying money by rich parents (for stupid or lazy children) does not guarantee their high level of education.

In the West public and private education systems are coexisting. In many cases public education is good. It is more accessible for poor but talented students.

Dear Yuri

I don't have idea about Economics. So, I can't make specific comment. I, however, follow this interesting discussion to augment my knowledge.