CRISIS IN POLAND 23 and net profit. Along with it a novelty was introduced. Instead of setting a planned target it was decided that performance would be judged by the growth of the indicators over time. In simple terms, the two indicators used in Poland could be expressed as follows: Value added === (Sales less turnover tax puls price subsidies less material cost) and Net profit === (Sales less turnover tax plus price subsidies) less (total cost plus repayment of investment costs). According to one author these indicators encouraged a "maximising" approach rather than a "satisfying" approach, meaning thereby that fulfilment of planned targets was not the only criterion of satisfactory progress.2 It has to be mentioned that in this scheme the performance in the foreign market was given sufficient importance. Another interesting innovation was that in the new situation a large part of the investment fund of the entities was to be in the form of repayable bank credits with interest instead of coming from budgetary transfers as earlier. The formula for the profit fund of the entities was as follows: G---PQ—(C+V+T+aK+bW) where G-gross profit: PQ—value of the product sold; C+V-=cost of production; T==turnover tax, aK-= charge on capital at 5 per cent and bW==tax on the wage fund. The practice of transferring a part of the profit to a production development fund which constituted the entity's own investible fund and a material incentive fund remained as before, but there was no specific requirement as existed earlier for apportioning a part for a socio-cultural fund. On the other hand the formation of a research fund became compulsory for all entities. The price model of the new system was not significantly different from that in the past although it was claimed to be so. In theory and practice it was nothing but a variant of the socialist production price model very much in use. The formula was: p-.C+riK-i-r^W, where P==price of production, C-=-cost of production, r^K===the net income rate proportional to the value of productive fixed and material working assets (8°o), r^W -=net income rate proportional to the value of wage fund. The practice of price formation was based on the obligatory principle under central control but price was not an indicator in the strict sense of the term. The entities themselves had the freedom to fix the price but once it was mutually approved and fixed it acquired the characteristics of an obligatory indicator. The main motivational initiative of both managerial and other working people depended on financial results, mainly in terms of net profit. This is not at all a change from the days prior to the BEO plan. But the larger size of the entity on the one hand and the greater degree of decentralisation on the other were advantageous for obtaining definite economic gains. Economies of scale also provided the necessary condition for the entities to be active