This dissertation analyzes the significance of the formation of the Soviet mathematical economic school and its particular influence on the transformation process of Soviet economics, and describes how this transformation affected the economic debates between 1957 and 1965 in the Soviet Union.
The pioneers of the Soviet mathematical economic school, namely V. S. Nemchinov, V. V. Novozhilov and L. V. Kantorovich, began their own academic career from the 1920s. Despite their different academic backgrounds, they had common interest in using the mathematical methods for the balance and equilibrium of the practical economy. They were indirectly influenced by the 1920s Soviet economics(Bogdanov-Bukharin type) or neoclassical economics after the late 19th century. But it is more important that they formed their own viewpoints in terms of solving the problems with which the Soviet Union had faced in the1930-1940s. The Soviet economic themes in 1930-1940s were not so extraneous to mathematical economics, let alone how limited. Most economic problems set up by the soviet mathematical economists in the 1950s were already questioned in the 1930-1940s. But the themes were not easily accepted by the soviet mainstream economists, the so-called “orthodox Marx-Leninists”, for they were hostile to any idea related to the neoclassical economics. Unfortunately, the Soviet mathematical economists did not have any academic organization to support them in spreading their own ideas and fight against the Soviet mainstream economists.
The Soviet economic society was undergoing a transformation since the mid-1950s. Firstly, the ‘Thaw’ after Stalin’s death had an influence; however, it was not the death of one special person, but the restoration and economic growth which followed after the World War II that was actually meaningful. Secondly, and more importantly, the Soviet mathematical economists who rightly recognized the structural change at that time dealt with it quickly and systematically. Above all, they demonstrated themselves to be capable in solving the problem of disjunction between economic theory and actual economic management in the Soviet Union with their own mathematical economic theory. They have laid the foundations for spreading their economic thoughts and ideas. They gave advice to the Party(Parties?) and the Government to organize new types of economic laboratories, such as the Central Economic Mathematical Institute. They also published numerous articles in the well-established journals in the USSR, and began to publish new mathematical economic journals. Moreover, to adopt new mathematical economic curriculum in the department of economics in the colleges was proposed to extend their academic influence to college students and planners.
These changes affected the debates in which different Soviet economists including the Soviet mathematical economists have taken part since the late 1950s. Their major issues were the wholesale pricing, the economic efficiency of capital investment and new technology, and material incentive and profitability. Attacking such issues could be considered similar to attacking the soviet economics and economic management system in many ways: First of all, the assertion of the mathematical economists was a challenge to the pricing theory of the Soviet orthodox Marx-Leninist political economics, questioning the actual Soviet price-planning system. They suggested a microscopic price-making principle based on the neoclassical concepts, e.g. ‘marginality,’ ‘scarcity,’ and ‘opportunity cost,’ and of course the economic efficiency of capital investment and new technology was in line with it . In this theory, the standard criterion that enables comparing expenses with the effects to seek the most efficient investment program and technology became most important. What the Soviet mathematical economists tried to do was to apply the theory of opportunity cost at comparing expenses with the effects as they did for the price-making theory. The theme of material incentive and profitability was also important. The soviet mathematical economists and E. Liberman proposed the realized profit of the final product to be the only evaluation criterion for the economic performances by both entrepreneurs and workers in order to successfully carry out the duty plans and achieve higher targets spontaneously.
These theoretical changes influenced the Soviet economic policies from 1957 to 1965. The Sovnarkhoz(the Council of National Economy) reform already began in the 1957. But this was not based on new economic thoughts. The 1965 economic reform was launched after the long debates and was based on these theoretical transformations. The economic debates regarding the 1965 reform were performed by the major economic laboratories including newly organized mathematical economic labs. After the publication of Liberman’s article, ‘Plan, Profit, Bonus’ in Pravda, these debates were intensified. In the course of the debates, many economists and economic institutions affected the upper cadres of the soviet economic management system. Especially, the economists influenced by the new mathematical economics directly affected the soviet planners and cadres. As a result, many influential economists and upper cadres recognized the necessity of the overall economic reform in the Soviet Union. The economic experiments were begun from the 1964 following the newly proposed economic management, such as the improvement of profitability by means of the adoption of new incentive system. One year later, A. Kosygin, the prime minister of the Council of Ministers declared the 1965 economic reform. And the new wholesale prices were applied in 1966.