Global Political Economy Outline & Presentation - Book Report/Review Example

Oral Presentation Outline Introduction Soviet’s traditional model of the command economy disastrously failed. The articlepresents information about the economic system of the Soviet Union. It discusses the logic applied in its institutions and various interactions while pointing out the natural economic consequences. The author identifies a number of mutually dependent characteristics that stakeholders should change to enable the initiation of reforms.The Traditional Soviet System The system is a centralized planning, implemented administratively through the issuing of detailed and extensive coordinating instructions and direct commands.

Subordinates offer information and viable suggestions that have greater inspiration on the commands. Nevertheless, subordinates normally possess little independence in determination of the directive of commands. Institutional Structure The characteristics of the Soviet economic, institutional structure are as follows:The state owns natural resources and capitalThe state conducts all production activitiesLegal private production is relatively smallComplex hierarchical administrative structures maintain the priorities of political leadershipParallel monitoring hierarchies exist outside the economic chain1.

Planning, Control and CoordinationPlanning entails iterative communication and negotiating amongst the existing fundamental agencies Communication and negotiation takes place in the form of sequence of commands from the managers to the subordinatesControl figures are explained in escalating detail down the managerial hierarchyCommands are based on the prevailing outdated informationPlanning and coordination involves approximately 10000 operational units and 10 million distribution processes with 24 million productsPlanning encompasses interactive communication among central agencies from senior officersThe administration sets prices, wages, and salariesOperational units rejoin to the duties by demanding capital and measurable resources 2.

Plan Implementation and Economic BehaviorExecution decisions are mainly compartmentalized by the underlying managerial hierarchySubordinate solely trail and care about dispersed plan objectivesThe complex structure poses planning problemsConsistency lacks in the issue of commandsThe implementation process is marked by ignorance of subordinatesThe subordinate conduct only the assigned ordersThe system causes interference in the production output3. Strengths and Weaknesses of the Traditional SystemStrengthsSuitable for mobilization of scarce resourcesSimplicity in planning, communication, verification and monitoring processEffective for central prioritiesWeaknessesDifficulty in the measurement of opportunity costsInhibition of fine-tuning and feedback due to inflexibility of planningDepartmentalism inhibits the centralization of goalsImplication for Reform A market-based system is significant for USSR.

The system will have the following characteristics:Free, market-determined pricesIndependence of firms motivated by economic factorsInitiation of industrial regulation to replace of industrial planningA modern financial system including financial intermediaries, commercial banking and exchangesConclusion The current state of the traditional system poses challenges to reformers in the quest to initiate relevant changes in the system. Thus, for the fruitful reform, systems should the Faustian compulsion to predict and control.

Thereby, the systems can permit the natural occurrence of economic outcomes based on market interactions.Work CitedEricson, Richard E. "The Classical Soviet-Type Economy: Nature of the System and Implications for Reform." Journal of Economic Perspectives 5.4 (1991): 11-27. Web. 13 Nov. 2014. https://www.aeaweb.org/articles.php?doi=10.1257/jep.5.4.11