Social Scientist. v 15, no. 174-75 (Nov-Dec 1987) p. 35.

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The Contract Responsibility System 35

ficult and contentious issue in socialist planning, from the early days when the Soviet Union was the only socialist country in the world, and economists such as Frederick von Hayek and Ludwigvon Mises predicted that because of its inability to find a substitute for the profit-motive and for markets as an allocative mechanism, socialist planning was bound to fail. While the experience of planning using prices of account, referred to in Oskar Lange's reply1 effectively disposed of the argument regarding resource allocation, the question of work motivation for the individual has continued to prove a vexing one (except in periods of mobilisation against a national enemy, as during the anti-fascist wars).

It has become clear from the practical experience of planning in the Soviet Union and later other socialist countries, that the more rational and socially equitable system that socialism represents releases productive forces undreamt of by even its most ardent advocates. Societies have leapt in the span of decades, starting with very adverse circumstances, over an economic growth trajectory which took today's advanced capitalist countries some centuries to cover, at the cost of a great deal of human misery. At the same time, however, the socialist growth path generates its own contradictory features and its own fetters on continued growth in productivity, once the initial leap has been accomplished.

Unsatisfactory agricultural growth in the Soviet Union has prompted the formulation of a policy, initiated by present President and former Agricultural Minister Gorbachev, of introducing a system of contracts between the production team and the collective within which it is located. The contracts specify the amount of product to be supplied by the team at a given price with bonus payments for overfulfilment. This is expected to provide a strong material incentive for rise in team productivity but it is as yet not clear how widespread the adoption of the system has been.

It is perhaps not generally known that in Vietnam, a system of contracts between peasant households and cooperatives was started some years ago, when the government faced a difficult situation with respect to the supply offoodgrains to the cities. Under the 'Khoan system introduced in 1977 in the northern part of Vietnam around Haiphong and extended subsequently, the peasant household signs a contract with the cooperative within which it is located to supply a specified amount of product at a given price. The surplus production over and above this belongs to it and it can dispose of it as it wishes. The Vietnamese government simultaneously raised the purchase price of grain and made available fertilisers and hybrid seed. The households were permitted to purchase implements and equipment. Under the new system agricultural growth has been quite spectacular : rice production grew at 10 per cent per annum and permitted an 80 per cent rise in procurement (from 2 m. tons to 3.6 m. tons) over only three years, 1980 to 1983. Peasant economic differentiation is reported to have increased.2

The main difference between the contract system in the Soviet Union on the one hand, and in Vietnam and China on the other, is that the former

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