The Soviet economy failed for many reasons. One key reason is that centralized command and control economics suppresses adaptation. No one in the system can add new technology or adapt to environmental circumstances. One example of this is the Soviet refusal to create plastic bags for bread.

Moscow was a city of 9 million in the 1980s. It needed 2,500 tons of bread every day. Bakeries made the bread the night before or morning of and sent it to the shops. The loaves only stay fresh for one day, so any delays would result in stale bread. Since this was the Soviet Union, there were many, many disruptions and delays.

The bread was wrapped in paper, if at all. The Soviets almost never used packaging. In the US, plastic bags and packaging were in widespread use and this extended the freshness of bread and made transportation easier.

There was also no refrigeration and half the refrigerators they did have did not work. Nor did the Soviets did not have many refrigerated trucks to transport foodstuffs. There were a number of delays and problems with shipping the bread to the correct shops. Some shops did not get their daily quota of bread, others got too much.

There was a poor incentive system that withheld pricing signals from consumers. The Soviets believed everyone was entitled to cheap bread, regardless of the actual supply and demand. This resulted in the long lines. Consumers had to first check to see if the shop had any bread, then wait on a line to get a purchase slip, then wait on another line to take the bread. If bread ran out, they went to a different shop and started over. When a person did get ahold of bread, it would quickly go stale, if it wasn’t already.

In the United States, bread was packaged in plastic bags. This extends the shelf-life of breads to several days. With proper refrigeration, breads last a week. Plastic bags were introduced in the 1960s and by the 1980s, plastic bags were in widespread use.

Why didn’t the Soviets make plastic bags? Their command and control economy lacked the flexibility to adapt to new technology. There were many Soviet citizens who were aware of the usefulness of plastic bags. But, to make them, they had to get a bureaucratic permit to build a plastic bag factory. Then he needed permits to collect the raw materials for the plastic. Then he needed permits to transport these raw materials to his factory. Then thousands of bakeries and shopowners needed permits to use the plastic bags. But the bureaucrats were specialists in their own individual departments and were not receptive to new ideas. They ignored system-wide changes because any failures threatened their jobs. There were so many nodes in the system that no individual could hope to reform the economy even by adding simple new technologies.

The Soviet Economy was a complex series of nodes and connectors, just like the American economy. The key difference was that the Soviets suppressed decentralized adaption in the complex system. Without adaptation, everything turned stagnant. The economy stopped evolving.

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