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Some Ironies of Maoist Legacy in Industry

Beginning in the mid-1950s, administrative reform was on the agenda for the industrial systems throughout the communist bloc. Khrushchev's denunciation of Stalinist rule at the 20th Party Congress in 1956 not only legitimised the critique of existing communist institutions, but jolted all of those faithfully following the Soviet path into a provoking re-examination of their form of political and economic administration. In industry, the universal diagnosis was that the administration of Soviet industry under Stalin suffered from overcentralisation. The issue throughout he communist bloc was not whether or not to decentralise, but how. The phenomenon of overcentralisation in enterprise management was subtle and complex, but had two distinct aspects. The first was that it led to widespread economic irrationality-what should have been purely economic decisions were bureaucratic ones. The Soviet industrial manager was not an entrepreneur of an economic enterprise, but an administrator of a social institution, who oversaw the employment of capital 'in trust' for the Party and State. Virtually all major economic decisions-investment, expansion, renovation, product lines-were set by bureaux above the enterprise level. The efforts of the industrial administrator were focussed on meeting planned output indicators, since administrative performance was evaluated, and substantial bonus income derived, according to success in meeting targets. This tended to deform the process of managerial decision-making in the enterprise. The resulting organisational syndrome has been well documented by such writers as Joseph Berliner and J.nos Kornai.' The setting of targets for the factory becomes the object of a subtle form of political bargaining. Managers are sure to overfulfill targets just enough to achieve maximum bonuses, but not so much as to provoke a substantial upward readjustment of