/sci/ - Science & Math

>>3960371
>The USSR also had a very nice growth for a long time and the economy was growing, the military.


The Soviet economy was based around increasing the economic inputs until the proper industrial sector employment would be met. During this industrialization era, or from the Stalin-era to the early Brezhnev-era, the Soviet economy grew as fast as the Japanese economy and significantly faster than that of the United States.

However, when the industrialization was complete, the economic growth slowed down and finally stagnated due to the fact that investing in further economic inputs lead to diminishing returns, as the country was already largely industrialized.

Apparently, the Soviet planners didn't think about investing in increasing the efficiency of production which accounts for most of the economic growth in most of the developed countries.

The Soviet Union would probably exist to the present day and probably surpass the US economic size if the planners would think of basing the investment strategy on increasing the efficiency of production. But what they did instead when their economy stagnated was to invest even more into industrialization.

This is why conducting open and active economic debate is important.

There's an elaborate essay on this topic, which is backed up by empirical evidence and uses the neoclassical economic growth theory to base it's claims off:
http://faculty.nps.edu/relooney/IMF_100.pdf

Central planning is a very viable and efficient system, as long as it uses a decentralized price system as well as a decentralized industrial output system for an efficient allocation of resources.