probably by 1997. In the 1980 edition there was little
change in the analysis, though the two dates were delayed
to 2002 and 2012.
Though the policies of Stalin and subsequent Soviet
leaders could produce rapid economic growth, they could
not do so in a sustained way. By the 1970s, economic
growth had all but stopped. The most important lesson is
that extractive institutions cannot generate sustained
technological change for two reasons: the lack of economic
incentives and resistance by the elites. In addition, once all
the very inefficiently used resources had been reallocated
to industry, there were few economic gains to be had by
fiat. Then the Soviet system hit a roadblock, with lack of
innovation and poor economic incentives preventing any
further progress. The only area in which the Soviets did
manage to sustain some innovation was through enormous
efforts in military and aerospace technology. As a result
they managed to put the first dog, Leika, and the first man,
Yuri Gagarin, in space. They also left the world the AK-47
as one of their legacies.
Gosplan was the supposedly all-powerful planning
agency in charge of the central planning of the Soviet
economy. One of the benefits of the sequence of five-year
plans written and administered by Gosplan was supposed
to have been the long time horizon necessary for rational
investment and innovation. In reality, what got implemented
in Soviet industry had little to do with the five-year plans,
which were frequently revised and rewritten or simply
ignored. The development of industry took place on the
basis of commands by Stalin and the Politburo, who
changed their minds frequently and often completely
revised their previous decisions. All plans were labeled
“draft” or “preliminary.” Only one copy of a plan labeled
“final”—that for light industry in 1939—has ever come to
light. Stalin himself said in 1937 that “only bureaucrats can
think that planning work ends with the creation of the plan.
The creation of the plan is just the beginning. The real
direction of the plan develops only after the putting together
of the plan.” Stalin wanted to maximize his discretion to
reward people or groups who were politically loyal, and
punish those who were not. As for Gosplan, its main role
was to provide Stalin with information so he could better