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Does anything corroborate the claim, made by Ray Evans in the March 2002 proceedings of the H.R. Nicholls Society (dedicated to deregulating the Australian labour market), that when the American economist Gordon Tullock visited the offices of Gosplan in Moscow in the late 1970s or later, Gosplan officials admitted to using Sears Roebuck catalogues to help "fix prices"?

I referred earlier to the price setting arrangements which were established in the Soviet Union. There, economists located in the Gosplan offices were responsible for this function, and as an understanding of the implications of von Mises' arguments concerning the inherent incapacity of a socialist economy to generate prices for all the goods and services which are characteristic of a modern economy permeated through the West---it took forty years or more for that to happen---the question arose: Where did prices in the Soviet Union come from?

In the late seventies and early eighties, American economists began to travel to the Soviet Union and Gordon Tullock, an American economist who should have received the Nobel Prize for his work in public choice theory, took the opportunity, on a visit to Gosplan in Moscow, to ask that very question. Rather sheepishly his respondent took out a rather ancient Sears Roebuck catalogue from his desk and handed it over. Tullock didn't know what to make of this until it was explained that the Gosplan officials used the prices quoted for goods in the catalogue to obtain relativities between this and that item. They would then try to match the goods of the catalogue to what was available in the Soviet Union and then fix prices according to the relativities prescribed by Sears Roebuck. Where there was no match of product they just had to guess. So prices in the USSR were determined by Sears Roebuck.

"The New Paradigm" via archive.org

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  • 4
    Are we even sure that Gosplan was responsible for setting consumer prices? In East Germany, the offices for determining prices and for central planning were separate.
    – Jan
    Commented Apr 7 at 8:55
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    I'm not sure the term "fix prices" is appropriate for a managed economy.
    – MCW
    Commented Apr 7 at 13:36
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    I could see this happening in the 20s, not the 70s.
    – SPavel
    Commented Apr 7 at 14:14
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    Some of the comments seem to be missing the part to obtain relativities between this and that item. To me this indicates they are looking at the relative difference in values of items in the Sears catalog, not the actual price. If Sears pants are 1$ and a suit is 10$ then the same ratio should be true for similar items in the USSR. We've tried to do the same on this site at times trying to estimate ancient economies or values bases on something like the recorded price of a loaf of bread or a days labor compared to todays values.
    – justCal
    Commented Apr 7 at 15:13
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    @MCW It is a perfectly appropriate term to use. From mirriam-webster.com: Fix - 1a. to make firm, stable, or stationary; 3a.to set or place definitely. Commented Apr 7 at 18:08

1 Answer 1

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Wikipedia suggests that in East Germany (where the Office for prices was separate from the central Planning Committee), prices for some goods were indeed set by looking at prices in other countries. Though the goods named there are not those one would find in a catalogue. But prices were also set by looking at production costs.

Die Preisfestsetzung erfolgte unter staatlicher Aufsicht durch das Amt für Preise beim Ministerrat, im Wesentlichen unter Berücksichtigung der Herstellungskosten.

Prices were determined under government control by the Office for Prices which reported to the Council of Ministers, mainly by considering production costs.

(source)

Das Amt verglich die Verbraucherpreise beispielsweise von Grundnahrungsmitteln oder Energie in der DDR mit denen in anderen Ländern.

The office compared consumer prices e.g. for basic food items and energy in East Germany with those in other countries.

(source)

That said, for East German prices the US would probably be less relevant than West Germany as a reference. And it would have been quite unproblematic to obtain the latest catalogues at the time they were published.

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  • The last paragraph assumes East and West Germany economies being more or less comparable, but this was pretty much not the case. A decades-old snapshot of an arbitrary Western economy could be as much reasonable, given the technology lag.
    – fraxinus
    Commented Apr 8 at 7:36
  • @fraxinus We are entering the realm of pure specilation here, but a decades-old snapshot would be harder to obtain, maintain, and justify (both towards the citizens as towards other government offices). E.g. "Why do we take 15 years ago as a reference and not 10 years?"
    – Jan
    Commented Apr 8 at 8:16
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    Note that this is mostly saying that when setting prices they made use of all the sources they had available, which sounds like a very reasonable thing to do. The original quote on the other hand tries to imply that they just copied prices from a free market economy because they had no way to figure out prices themselves without a free market.
    – quarague
    Commented Apr 16 at 8:55

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