[WS:] It depends how you look at this. They were clearly aware of the potential malfeasance of managers, and instituted measures to control it.
One of them was the institutional structures of the party. Each major production unit had a party cell that answered to the party structures rather than to the firm's management. The idea here was to have an independent "watch dog," somewhat similar to to the role of the board of directors in the US. As far as i know, it seldom worked as intended because party secretaries often covered up questionable practices of firms management instead of reporting them. The often quoted reason for that was that while party secretary was nominally independent of the management, his party career would suffer if the firm flopped, so they looked the other way hoping that the management will keep the firm afloat by. meeting its production quota.
Another mechanism they employed was the so-called "taut planning" that is , the practice of imposing higher production targets than those apparently warranted by productive capacity reported by the firm management. The underlying assumption was that management tended to under-report its capacity, so this was a measure to improve efficiency. I would compare it to the No Child Left Behind or Race to the Top - increasing artificial pressure on service providers to improve performance in areas over which they had onl;y partial control, without giving them necessary tools to achieve those higher standards. In both cases, the strategy flopped because it penalized those who were honest (i.e. honestly reported their true capacity and progress) and encouraged all kinds of cheating and under the table deals.
There were also some restriction on labor input, to increase labor productivity (which systematically declining) but that was not very effective either for the same reasons as above.
However, I think that the reason for their substandard performance were more macro- than micro- that is, resulting from systemic features than the lack of efficiency controls at the firm level. In short, the absence of effective price mechanisms led to substantial misallocation of resources and the emergence of a "grey" economy (informal redistribution system among firms - not to be confused with the black market that dealt primarily in consumer goods) that virtually doubled the formal economy and effectively circumvented the planning process. Of course the absence of price mechanisms i.e. the market is not the same as the absence of private ownership - the neo-liberal propaganda notwithstanding. I think that reintroduction of market pricing was quite compatible with central planning (cf. Taiwan which gradually went from strict planning and import substitution to more market oriented pricing) - but that is the subject of another discussion.
To answer the second part of your question pertaining to "efficiency" of the public sector - keep in mind that the public sector is charged in the production of public goods, which in a capitalist system often means absorbing costs externalized by private businesses or simply bailing out failed businesses. Hence the perception of "inefficiency" of the public sector. By the same logic, hospitals are "illness and death factories" because many sick and dying people people are directed there. But outside the bailout aspect, th epublic sector can be more efficient than the private sector - as the comparison of health service in the US and other developed countries demonstrates.
Wojtek
On Thu, Feb 24, 2011 at 12:32 PM, Fernando Cassia <fcassia at gmail.com> wrote:
> Thanks Wojtek, this is the kind of analysis that I was after. :)
>
> What you say makes sense. :)
>
> Specially this "In other words, the motivation of managers and
> functionaries
> that run the
> former USSR and the US are pretty much the same - to suck up as much of OPM
> they manage as possible and get away with it."
>
> So, moving on, is there any evidence of public sector efficiency
> measurements in former soviet bloc countries?. Public sector "reform" (for
> enfficiency, not shutdown/privatization).
>
> FC
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