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Money and Plan concerns the changing role of money and finance in the East European countries as they enact economic reforms designed to decentralize economic decisions, extend enterprise autonomy, and rationalize the management of their economies. The book is the first in the Western world to address itself directly to this theme. In the Stalinist economic system, which all European communist countries shared until the mid-sixties and which most still do, mon

In the USSR, conditions for private underground activity have been highly propitious, given the barring, until recently, of nearly all lawful private business, chronic excess demand with fixed prices, high excise taxes, and both pervasive bureaucratic regulation and widespread corruption. State property is vastly misappropriated and exploited, particularly by camouflaged cryptoprivate firms. The underground, generally employing money as the main medium of exchange and functioning through markets, touches very many and on average provides large supplements of goods and - together with bribes, theft, and fraud - income to the public. In the larger operations, illicit money flows up informal structures, often to very high officials. Underground money and aboveground political and administrative power tend to fuse and to spawn, or exploit, organized crime. Vested interests so created are a significant aspect of conservative opposition to perestroika. Under Gorbachev, the underground economy has increased markedly, despite measures both to suppress and to legalize it.

IN THE USSR, CONDITIONS FOR PRIVATE UNDERGROUND ACTIVITY HAVE BEEN HIGHLY PROPITIOUS, DUE TO THE PROHIBITIONS ON LEGITIMATE PRIVATE BUSINESS, THE CHRONIC EXCESS DEMAND, FIXED PRICES, HIGH EXCISE TAXES, OPPRESSIVE BUREAUCRATIC REGULATION, AND WIDESPREAD CORRUPTION. STATE PROPERTY IS VASTLY MISAPPROPRIATED AND EXPLOITED, PARTICULARLY BY CAMOUFLAGED CRYPTO-PRIVATE FIRMS. THE UNDERGROUND, GENERALLY EMPLOYING CURRENCY AS THE MAIN MEDIUM OF EXCHANGE AND FUNCTIONING THROUGH MARKETS, TOUCHES MANY AND PROVIDES LARGE SUPPLEMENTS OF GOODS AND INCOME TO THE PUBLIC, ALONG WITH BRIBES, THEFT, AND FRAUD. IN THE LARGER UNDERGROUND OPERATIONS, ILLICIT MONEY FLOWS UPWARDS, OFTEN TO VERY HIGH GOVERNMENT OFFICIALS. THIS UNDERGROUND MONEY AND ABOVEGROUND POLITICAL AND ADMINISTRATIVE POWER TEND TO FUSE AND TO SPAWN, OR EXPLOIT, ORGANIZED CRIME. THESE VESTED INTERESTS ARE A SIGNIFICANT ASPECT OF THE CONSERVATIVE OPPOSITION TO PERESTROIKA. UNDER GORBACHEV, THE UNDERGROUND ECONOMY HAS GROWN MARKEDLY, DESPITE EFFORTS BOTH TO SUPPRESS AND TO LEGALIZE IT.

The Second Economy and Soviet Economic Planning.
As here defined, the Second Economy (SE) comprises both the small legal private sector and the ubiquitous and protean realm of illegal activities. Closely connected with the SE are (a) theft of socialist property, (b) cheating of customers, and (c) corruption of officials and other employees. Some important examples of SE activity are described. The authorities, national or local, seem to take a tolerant view of some illegal SE activities, and in certain cases may even encourage them for both official and self-seeking ends. The SE and the First Economy (FE) co-exist in a symbiotic relationship. Economic policy and planning can only indirectly regulate the behavior of the SE; moreover, owing in part to the SE, its control of the FE is also quite incomplete. At the same time, planners often must — and in some ways doubtless do, if only indirectly — take cognizance of the effects of the SE on the FE, though there is little knowledge of just how they do. Moreover, corruption in the performance of "planning acts" — e.g., allocating supplies and equipment, distributing budgetary funds, setting norms and targets, etc. — is known to exist. The paper raises a series of questions in these regards. The research rests on Soviet sources and on interviews with knowledgeable former participants in the Soviet economy.