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11 Cato J. 489 (1991-1992)
Institutional Development in the USSR

handle is hein.journals/catoj11 and id is 495 raw text is: INSTITUTIONAL DEVELOPMENT IN THE USSR Vitali Naishul Douglass North's paper deals with the frequently underrated impact of social institutions on the economic performance of market systems. It is difficult to disagree with his conclusions, which demonstrate, in particular, that the task of building a national market economy simply cannot be achieved by copying foreign models-no matter how bril- liant-and that underlying the surface of rational market behavior there is usually a deep layer of informal (often unconscious) habits, customs, and norms that, in fact, make the functioning of the market possible. In my commentary, I will not attempt to bolster North's arguments on the market impact of social institutions; instead, I will apply his analysis to the specific conditions of the modem Soviet economy and examine the emerging economic structure.' The Administrative Command Economy and the Administrative Market It is commonly held that prior to the Gorbachev reforms, the Soviet economy was run-and, to some extent, still is-by the administra- tive command system. Accordingly, it is believed that the task of progressive reformers is to transform the command economy into a market economy. People who are actually familiar with planning practices in the USSR realize that this widespread view is incorrect. From the 1960s onward, the Soviet Union was a country with a market economy. Cato journal, Vol. 11, No. 3 (Winter 1992). Copyright 0 Cato Institute. All rights reserved. The author is a Senior Researcher at the Institute of Economics and Forecasting. He previously conducted research at the Central Economic-Mathematical Institute of the Academy of Sciences of the USSR and the Institute of Economics of the State Planning Committee of the Council of Ministers of the USSR. 'For a detailed discussion of the emerging economic structure in the USSR, see Naishul (1991). 489

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