#4 - JRL 7173
From: "Helen Boss Heslop" <helenbossheslop@ntlworld.com>
Subject: Re: comment on Andreyewsky/Wilhelm re Abram Bergson 7171
Date: Thu, 8 May 2003

Re A. Andreyewsky and J. Wilhelm on A. Bergson.

I would like to add a word in strong support of all the points made by A. Andreyewsky. Specifically on the GDP issue, Professor Bergson, in addition to his other brilliant qualities, understood perfectly (not just because he was a friend of Paul Samuelson's!) that, once the boundary of the economic domain, and what was intermediate and what was final was agreed by convention (his friend Kuznets's work), GDP (and its structure) were 'just' a function of price. As he put it, "prices are the weights" which allow economists to aggregate from the enterprise (or other micro) level, to some kind of national total. Faute de mieux, since the USSR was a non-market economy at the time, synthetic, third-country or otherwise imputed prices (Portuguese golf carts, imputed market value of nearly-free housing, PPP exchange rates) had to be used. Since 1992, competition at home and abroad, especially from imports, have revealed the 'true' prices achievable by Soviet-design clothing, footwear, military goods and consumer electronics. Professor Bergson was far too serious an economist to have neglected the implications of imperfections to as-if competition in measuring the GDP of a command-administrative economy. Anyone who knew that much about Stalin and his successors understood monopoly! At RRC seminars in the 1980s Abram Bergson took a keen interest in research into the incentive structure of the Soviet enterprise's relations with the planning authorities, a field pioneered by his friend J. Berliner, modelled by J. Kornai, and given anecdotal flesh by e.g. T. Zaslavskaya, a frequent visitor to the Center. Since enterprise reform in Russia still has ways to go, it is still a question of 'we pretend to work and they pretend to pay us', but at least now those incentive structures yield output priced at truer prices with which to aggregate to a national total.

Helen Boss Heslop
Principal Economist for Ukraine, Kazakhstan, the Vienna Institute of International Economic Studies (WIIW)