The Centrally Planned Economy and Global Business Cycles
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Publication date: 2009-10-31
GNPJE 2009;235(10):71-81
The demise of central planning in the former East bloc is a frequent topic of economic and political analyses. Kaliński’s article describes changes in the centrally planned economies of former Soviet satellite states in the context of market trends in capitalist economies. The analysis covers a period from the emergence of the Soviet Union until its breakup. The statistical analysis is accompanied by a discussion of the political and social environment of the time. The author notes that, in the initial period, there was no link between global business cycles and economic growth in the Soviet Union and other Soviet bloc countries. This was due to major political and economic differences and the far-reaching isolation of the region’s centrally planned economies, especially during the Cold War period. The partial opening of Central and Eastern Europe to commercial and financial cooperation with the West in the 1970s led a convergence between the capitalist and centrally planned systems. Negative trends in the global economy, including energy crises and growing indebtedness, had a strong impact on what happened in the Soviet bloc. This situation, coupled with the inefficiency and poor competitiveness of the centrally planned economy and its inability to meet consumer demand, became a significant factor behind the collapse of the system across Central and Eastern Europe, the author concludes.
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