The Disjunction Between Decision-Making and the Information Flows: The Case of the Former Planned Economies

Abstract

This paper starts from the proposition that the performance of an economy is directly and indirectly the result of the quality of its information and the decision-making systems. The paper first analyses the nature of the decision-making system and information flows in the former planned economies of the Soviet Union and Eastern Europe. It then goes on to show that much of the economic decline and stagnation of the Soviet system in the late 1970s and in the 1980s can be explained by the failure to generate and diffuse a high rate of innovation, that this failure can then be traced to the disjunction between information and decision-making.