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Alan Freeman followed Anwar Shaikh and Emet Tonak (Shaikh & Tonak 1996) in the use of the national accounts to measure the rate of profit for the productive sector only (Freeman 1991). This is at odds with Marx’s own method which recognises that as all value originates in the productive sector it is necessary to aggregate all exchanges inside the market boundary, to establish national income. Shaikh, Tonak and Freeman criticised Soviet economists for including only material output in their measures of material product, but they failed to point out, that the aggregates used in the material product system (MPS) were of concrete not abstract

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socially necessary labour, as the exchange of commodities, the pre-requisite for the existence of value did not exist in the centrally planned economies. Nonetheless, the attempt to derive value measures from the national accounts confirms that these accounts can be used to develop estimates of value production in a market economy, expressed in actual measurements of real national income.

Marx shows how the form of value under capitalism, exchange value, is synonymous with and limited to market production and exchange. Consequently, where the market does not exist, such as in the centrally planned economy of the USSR, neither does the pre-condition for the existence of value or national income. It is not necessary to accept Marx’s method to agree that if national income measures economic output within the market boundary, then it does not measure economic output outside the market boundary, such as the output of a centrally planned economy. This is a simple matter of logical consistency.

But Marx’s theory of value does provide an important point of reference for the subsequent analysis. It assists a critique of the application of national income to the centrally planned economies and of their transition to capitalism. It demonstrates how, in the centrally planned economy (CPE), which operated without commodity production or exchange, quite different economic laws from the capitalist law of value, determined what was produced and how and explained the eventual stagnation, decline and collapse of the CPE.

The objective of this study is to understand the growth of national income within the transition economies. This permits an assessment of the model of national income and the theory from which it was derived (Tuma 2004). It undertakes a systematic re-assessment of the original national income estimates produced at the time (Gardner 2006, p135). It uses two distinct sources of material. Primary sources include original manuscripts, contemporary records, or documents not derived from any other sources (Lombard 2010). In this study they are mainly the original studies of Western economists, to establish as directly as possible how various theoreticians understood national income as applied to a market economy and to a centrally

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planned one; to consider how they reconciled the differences between the two

economic systems, if at all; and how this affected their analysis and measurements. It follows the arguments from their inception and as they developed and were applied in different national contexts, for example in the Soviet Union and CEE and in China. It also uses secondary data analysis of longitudinal linear data (Prytherch, Harrod 1990, p494) to develop alternative estimates of the growth of distinctively capitalist production during the transition period from central planning to the market. Longitudinal linear data is a sample of units of analysis, in which at least some of the units are measured more than once, having been collected by international research organisations. Data is generated from panel studies or pooled time series and cross sectional data, in which each unit of analysis is followed up at either equal or unequal intervals. They may be viewed as a sample of short time series, with the number of units equal to the number of time series (Guo & Hipp 2004).

A key theme of this study considers how Western economists viewed the reliability of official data produced in the centrally planned economies, and it is essential that this data is considered in the context in which it was created, who created it and why, to inform the assessment of its historical importance and to enable its reapplication to the new research questions produced by this study (Anderson 2004).

Longitudinal studies suffer from problems of attrition and the reliability and validity of measurement. The data may be outdated or have historical bias or in this instance, particularly methodological bias, where value measurements are attributed to centrally planned economies without actual value. To use this data correctly, the operational definition needed to be similar and congruence needed to exist between the conceptual definitions and the quantitative databases noting their completeness, accuracy and how they dealt with missing data. Potential problems with this data arise precisely from its secondary nature - it is not collected for the definite study in which it is used. In this instance however, this is not only unavoidable, but absolutely necessary. The re-examination of the measurements of the transition period presented in this study precisely relies on the use of the same, or as similar as possible, data

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sets as those used by the original estimators. This thesis argues that it was the economic interpretation applied to the data which were at fault, not the data itself. The strength of this thesis rests on its ability to re-interpret the same datasets as were originally used in order to show how distinctive estimates of the decline of centrally planned production and growth of market production can be made. The review of the existing data enables an empirical test of the theoretical assumptions and provides elements of the answer to new research questions (Coyer & Gallo 2005).

After the fall of the USSR and the opening of the Goskmostat archives to Western economists, there were attempts to re-estimate Soviet output. Again official statistics were used and the re-estimates, while generally lower, closely followed the original estimates (Kuboniwa 1997). Different problems followed in the immediate transition period, under the central plan production units reported their output to the planning authorities, with the destruction of the plan there was no clear reporting path. The situation was complicated by the multiplication of small output units, particularly due to the de-collectivisation of agriculture in China and the self-interest of producers (Holz 2004). Changes in the tax structure meant that the producers had incentives not to report output, interest or profits to avoid taxes. The legal framework to impel them to do so was not yet established, while the switch from quantitative measures of physical output to value measures based on exchange, caused confusion. The transition to a survey system of data collection typical of the SNA took time to establish. Reporting authorities struggled to cope with the pace of transition and there were mistakes in the presentation and aggregation of data. In the CEE and CIS this was exacerbated as it took several years for market prices to act as real determinants of income and output (Bloem, Cotterell 1996).

This study does not seek to discover more or better statistics for the Soviet economy. Rather, through a reassessment of the very same empirical material it applies a new method of estimating the growth of national income during the transition period. It disaggregates the output of the central plan and capitalist modes of production. Paradoxically, it uses physical units to demonstrate this change, as these indicators stand independent of changes in exchange rates and prices. The

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estimates for aluminium are compiled from a variety of domestic and international public sources based on information available to the United States Geological Survey (USGS 2012). Hydraulic cement is similarly compiled from domestic and

international public sources available to the USGS. Electricity figures are drawn from the British Petroleum (BP) Statistical Review of World Energy collated from government sources and published data (BP 2012). Steel figures derive from the World Steel Association compilation of reports from national steel associations where possible (World Steel Association 2012). The source for automobile figures is the International Organization of Motor Vehicle Manufacturers (OICA 2012)

comprising 37 national trade associations, including all major automobile

manufacturing countries, making up most of the worldwide motor vehicle industry. The GDP PPP statistics originate from the Groningen Growth and Development Centre (GGDC 2012), based on national sources, that do not measure only capitalist output, but rather measure all output as if it were capitalist. The use of imputed value measures for non-capitalist production is particularly significant during the transition period. The key problem with the independent estimates of centrally planned output was not essentially the quality of data at the disposal of statistics agencies, but the failure of statistical authorities to measure actual output within the actual market boundary.

This study limits its measurement of national income to that of the

distinctively capitalist economy alone. Central planning was not a distorted or less developed form of capitalism. It was not capitalism. Comparative measures can be used to estimate the possible size of the centrally planned economy in comparison with the capitalist one, but as much to highlight the differences rather than the similarities between the different stages of economic development of society. Different economic systems require different systems of measurement.

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