Talk:Shortage economy

Dispute of August 2005

Right, so let's see, what are the actual differences between my version and yours? I see the following:

you seem to be doing a good job of sorting this out between the two of you, but let me still give you a third opinion on the disputed points.

• In the first paragraph, your version unnecessarily mentions twice the fact that Eastern European economies were planned. I simply removed the second mention of it.
  • I don't mind that, but I don't understand why do you remove the phrase: which to Kornai were inevitable consequences of the 'classical' communism economic system
    • Well, because that's the meaning of "systemic flaws": flaws that are inherent in the system... -- Mihnea Tudoreanu 09:06, 6 August 2005 (UTC)
      • Right, but it would be good to clarify what the system in question is: that it is not the general economic system, or political one, or social one, or anything but the planned economic system in communist EE that Kornai examined. --Piotr Konieczny aka Prokonsul Piotrus ^Talk 10:30, 6 August 2005 (UTC)
        • Ok, let's see... how about inserting "... but rather systemic flaws of the economic planning system used in those countries"? -- Mihnea Tudoreanu 21:04, 9 August 2005 (UTC)
• In the second paragraph, you say that economic planning led to shortages, as if it's a statement of fact. This is POV.
  • Well, this is Konrai's POV, not mine. This article is about his theory. You may want to stress Kornai's views are not universally accepted, but nonetheless you should not NPOV his very idea.
    • I don't know - the sentence really does sound like a general factual statement. I prefer the current version or one that makes clear that this sentence states K's POV.
      • I agree with Bastel. -- Mihnea Tudoreanu 09:06, 6 August 2005 (UTC)
        • I would be happy if the sentence stated what is K's POV, because now it is a new fact unattributed to anyone but MT... --Piotr Konieczny aka Prokonsul Piotrus ^Talk 10:30, 6 August 2005 (UTC)
          • See above. If we mention his POV in the first paragraph, we won't have to mention it again in the second. -- Mihnea Tudoreanu 21:04, 9 August 2005 (UTC)

• My caption for the queue photo says the same thing as yours, but it's more detailed. Why do you want to change it?
  • Sorry about that, I am ok with the new caption.

• By definition, a shortage economy involves frequent shortages. That's why it's called a shortage economy. There's no need to insist on this issue, as you do in the paragraph dealing with event zero.
  • I am not sure if this is very clear. I see no problem with stressing that the 'normal situation' - event 0 - is in fact rare in this scenario. Otherwise somebody after a glance may think that shortages are actually rare in shortage economy, or at lest not that frequent.
    • Here I agree with Piotr. His added phrase does help to clarify.
      • Ok, how about adding the sentence "According to Kornai, a shortage economy is by definition an economy in which this event happens rarely"? -- Mihnea Tudoreanu 09:06, 6 August 2005 (UTC)
        • Sounds fine with me. --Piotr Konieczny aka Prokonsul Piotrus ^Talk 10:30, 6 August 2005 (UTC)
          • Ok. Added. -- Mihnea Tudoreanu 21:04, 9 August 2005 (UTC)

• Regarding "forced saving", my version already states that the consumer unwillingly saves his money.
  • Right, but I think it is not very clear. Again, what's the harm in explicitly stating that 'consumer saves the money since 'he is not able to spend it in a way he desire'?
    • The thing is - forced saving can also take a different form as with high required pension plans in Singapore. So I would prefer not to include the "not able to spend...". it also doesn't really make things clearer. hope this helps: bastel 18:34, 5 August 2005 (UTC)bastel
      • Hmmm, well, there are indeed many other situations in which a person is not able to spend his money in the way he desires... -- Mihnea Tudoreanu 09:06, 6 August 2005 (UTC)
        • Which mostly points out to the fact that we need an article on the forced saving... :) --Piotr Konieczny aka Prokonsul Piotrus ^Talk 10:30, 6 August 2005 (UTC)

--Piotr Konieczny aka Prokonsul Piotrus ^Talk 16:53, 5 August 2005 (UTC) -- Mihnea Tudoreanu 14:49, 5 August 2005 (UTC)

Structure of Article

A comment on structure: This is great as a beginning - for improvements, I'd suggest shortening the lead section (before the TOC) and putting some of that in the article. I, and several other Wikipedians, have somewhat of a distaste for bullet point lists as in the "definitions" part. I'd suggest putting this in prose, including a one or two sentence concise definition.

The article would certainly benefit from some mention of voices critical of Kornai, which I'm sure do exist. bastel 18:34, 5 August 2005 (UTC)

Query

An interesting article - but surely the point is that products' prices could not rise (/fall) to match supply with demand? That is how the conventional economic process of price discovery occurs. Maybe I am missing something obvious; I'd be grateful for any explanation. Sliggy 17:44, August 9, 2005 (UTC)

Shortage economy is not market economy, it was a byproduct of the centrally planned socialist/communist economies, in which there was no place for market price adjustment. Prices were set by the government. For much of that period, there state run industries were even not concerned about such 'capitalistic concepts' as profit or loss. Thus the supply/demand system could hardly work - since the central planners didn't care what people wanted (or couldn't - since Soviets prioritiesed military goods and sacrificed consumer ones). People might have wanted milk or meat, might have been prepared to pay for it, but nobody produced it (remeber you could not start your own company). So what you got was completly arbitrary prices, invented by some bureaucrat in the government, and empty shelves (with name/price tags...) since the given good was either not produced by the state enterprises in sufficient quantities to meet the demand and there was no currency to import it to meet the demand. This resulted in the discussed forced savings - you had the 'money', but you could hardly get anything for it. Then there was the 'money substitute' of 'ration cards', which you needed to by much stuff (which meant you got, in addition to money, government gave you cards for such luxury products as milk, depending on various factor (worker, intelligentsia, mother with child, etc.). Of course, if there was a shortage the ration cards were as usless as money. In case you wonder, it was difficult to exchange money for foreign currency (for example, for some time in Poland even owning dollars was a crime!), so ordering stuff from abroad individualy was also extremly difficult. Of coure, market economy worked well in the black market, but it is another story... PS. And to think some people in the West thought this system worked better then their Western capitalism... reminds me what Einstein said about human foolishness :> PS2. This explains also why price raises were the cause of fall of two governments in Poland (see my recent FA on History of Poland (1945-1989) if you want some historical background for shortage economy). --Piotr Konieczny aka Prokonsul Piotrus ^Talk 19:46, 9 August 2005 (UTC)

Don't portray your views as those of all Eastern Europeans, Piotr. I, for one, strongly disagree. You say Eastern European planned economies didn't work as well as Western European market economies, and you're perfectly right. But that's comparing apples and oranges. By the same logic, I could point out that African market economies didn't work as well as Eastern European planned economies. You have to compare the relative performance of planned and market economies in the same country (or at least the same region) to get an accurate result.

Now, being an Eastern European myself, I can tell you, Sliggy, that in many parts of Eastern Europe - most parts, I would say - capitalism has been a dismal failure. Piotr would probably be loathe to admit it, but the majority of people in Russia, Ukraine, Romania, Bulgaria, etc. are worse off today than before 1990. He lives in Poland, of course, and Poland is overall better off, which explains why his experience is different from mine (I'm Romanian). He also misrepresents the way our economies worked. Prices weren't drawn up arbitrarely by clueless bureaucrats - if that had been the case, our economies would have crashed straight away in the late 1940's, rather than lasting for 45 years. Profit and loss are indeed capitalistic concepts, in the sense that they are not essential to running a factory. What is essential to running a factory is the input/output ratio (how much you get for what you put in), and opportunity cost (the question of whether there could be a better way to spend the resources you are currently using on that factory). Profit is not a measure of productivity. Profit = production - (worker wages + material costs). You can reduce your profit by increasing wages, without losing productivity. Now, the problem with the planned economies of Eastern Europe is not that they couldn't produce what the people needed, it's that the planners didn't want to. Why should they? There was no democracy, so there was no reason to care what the people thought. So the planners concentrated on military spending and heavy industry, ignoring consumer goods. If an actual socialist democracy had been in place, the planners would have been forced to deliver what the people wanted -- Mihnea Tudoreanu 21:43, 9 August 2005 (UTC)

If we are declaring our nationality then I am British (if this is important). I hope neither of you mind but I have just finished a short edit where I tried to clarify the English without changing the ideas. If I have accidentally changed an idea so that it is no longer true please let me know! Sliggy 22:22, August 9, 2005 (UTC)

I wouldn't call capitalism a dismal failure in EE. Or more to the point, I'd just like to point out that capitalism in Poland is quite different from capitalism in Romania, for example. Long story short, Poland was lucky to have Leszek Balcerowicz and his bold reforms, which did create much public anger (he is still quite unliked in Poland) but in the long term gave the economy the boost results of which can be seen now. Romania and other countries you mention had no Balcerowicz, they chose a slower transofrmation, without deep reforms which would threaten the government stability in the short term, retaining much socialist-era artifacts, but in the end this proved a wrong strategy in long term - 'the worst of bost worlds'. Same could be said about Africa. It may support market economy nominaly, but most of African countries are crippled by bad governance and corruption (problems which appear in EE, including Poland, as well to a much larger extent then in WE). And Mihnea is right to stress that much fault with shortage economy lies with the top planners - they didn't care about the common folk, pursuing great long-term grandiose industrialisation and militarisation plants. Defunct, commie-era heavy industry dotting Poland's and other EE countries landscape are a sad testament to the foolishness of commie-type central planning. --Piotr Konieczny aka Prokonsul Piotrus ^Talk 09:25, 10 August 2005 (UTC)

You are correct that we (Romania) had no Balcerowicz (in other words, no "shock therapy"). But Russia did. And, as we all know, it was a disaster - leading to the rise of the oligarchs in the 1990s and the economic crash of 1997. I suppose every country had a different experience, and it's often wrong to say that "if only we did what country X did, we would be in the same position that country X is in now". What works in one country may not work in another (or, conversely, what doesn't work in one country may work in another), due to many different factors. -- Mihnea Tudoreanu 17:24, 10 August 2005 (UTC)

• Separately, thank you both for your responses. They are interesting, but it is late (about 23:20), and I must go to work tomorrow morning, so I will think before responding. One question that did come to mind was whether any non-eastern European economies are (or have been) run as shortage economies? For example, was the People's Republic of China in the 1960s a shortage economy? Or is present day North Korea a shortage economy? Sliggy 22:22, August 9, 2005 (UTC)

Why googling for some info I did find some articles debating whether China was had a shortage economy (remember it is always unintentional), but I didn't have time to read them yet. I am pretty certain NK is a shortage economy. --Piotr Konieczny aka Prokonsul Piotrus ^Talk 09:25, 10 August 2005 (UTC)

I'd say North Korea is almost certainly a shortage economy. It devotes an immense fraction of its GDP - close to 30% - to military spending. That means 1 in 3 of all things made in North Korea is made for the army. No other country on Earth comes anywhere near that. -- Mihnea Tudoreanu 17:24, 10 August 2005 (UTC)

Question

I'm left with a question the article didn't seem to address; I hope someone here can answer it for me. The article says that people would usually que for hours a day to get their goods. What is the distribution like? I'm having a hard time imagining what it would of been like for those people. Did they have to wait in line for hours a day, over multiple days, at the same store, for a period of a week, to finally get a pair of shoes? Did they wait in line for a couple hours at one store, get their goods, then head to another store just to wait again? Thanks for any info you can give me; I'll try my best to integrate it into the article if you would like. Triddle 16:43, 10 October 2005 (UTC)

I am too young to remember the details, (un)fortunately. I think that multi-days queues were rare. What happeded is (IIRC) that the word of mouth spread that the given shop (which usually was empty) would receive a shippment of meat/shoes/toilet paper/milk/etc., and then people from the neighbourhood would go queue there as soon as they god the word. I don't think people would wait for days, but it was not uncommon to get up few hours before the opening, before the dawn, and go there (the best pararell you may be familiar in Western culture is die-hard fans waiting for movie tickets, like Star Wars). The key point is that queues were not common, since most of the time there was no reason to queue for empty shelves, so they happend only when there was (a possibility of) a new shippment. You'd better interview some older people for the more 'hands on' answer though. --Piotr Konieczny aka Prokonsul Piotrus ^Talk 18:23, 10 October 2005 (UTC)

Well, it depends. Multi-day queues were common in Poland in the 1980s, but mostly in case of furniture and other harder-to-get items. With meat it was easier, sometimes you could even buy it in an hour or two. What Piotrus did not mention is that a completely new queue culture developed in Poland back then. There was a new occupation called stacz (literally stander). A stander was a person (usually a pensioner) who - in exchange for money or some goods - spent his or hers day in queues to buy items for other people. Another institution was a so-called queue committee. Usually when it was apparent that a queue would last for hours and days, people gathered up and formed such a committee and created a queue list. That way you did not have to stay there all day and night, but instead simply had to report once every two hours, for instance. This did not always work obviously and there were queue-jumpers as well. //Halibutt 22:15, 27 March 2007 (UTC)

Wii as an example?

Is the market for video game consoles as of November 2006 through January 2008 a shortage economy? --Damian Yerrick (talk | stalk) 17:55, 27 December 2007 (UTC)

Look for citations and research. I doubt it - it is a luxury good, and those are governed by different laws than normal ones. --_{Piotr Konieczny aka Prokonsul Piotrus| talk} 22:51, 27 December 2007 (UTC)

I know this query is really old, but the market for video game consoles is actually a textbook example in many Industrial Organization courses of a situation where private companies may create artificial shortages for strategic reasons (more or less to "generate buzz"). This is perhaps a topic which deserves its own article on Wikipedia but it is distinct from Kornai's ideas.radek (talk) 00:26, 20 August 2010 (UTC)

Undone merge to "Shortage"

The subject "shortage economy" is clearly a distinct concept, of different category: "shortage" is a fact of life, while "shortage economy" is an economic theory. It is a reasonably large article, and in wikipedia actually the opposite actions is preferred: to keep separate subjects in separate articles. - üser:Altenmann >t 21:18, 16 August 2015 (UTC)

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Quality Issues

This is quite a poorly written article and would benefit from being rewritten by somebody else. I will focus on the introductory statement which is confusing, slightly non sequitur and possibly illogical.

"In his article Economics of Shortage (1980), Kornai argued that the chronic shortages seen throughout Central and Eastern Europe in the late 1970s (and which continued during the 1980s) were not the consequences of planners' errors, but rather systemic flaws."

The next statement sounds a little like the author's opinion. The way it is phrased makes it unclear if this is part of Kornai's opinion or the author's. Clarification is needed.

"A shortage of a certain item does not necessarily mean that the item is not being produced;"

This statement is so obvious, that is either absurd or patronises the reader. At any rate it is ambiguous as it does not differentiate between the following three possibilites: Not produced at all. Produced, but at a level that falls short of demand. Produced at a level that exceeds demand but is being obstructed from reaching the point of demand by some factor. Perhaps you meant to say "produced in a quantity that would satisfy demand"?

"rather, it means that the amount of the good demanded exceeds the amount supplied at a given price (see supply and demand)."

This is self contradictory. In the first half of the sentence, you imply that supply may adequate for demand but is being prevented from reaching the point of demand under the law of supply and demand and in the second, you imply it is not. It is irrelevant for this purpose what the cause of the demand (ie price) is. Demand is demand. It is better to be explicit or to explicitly state uncertainty than to insinuate and imply.

This may be caused by a government-enforced low price which encourages consumers to demand a higher amount than is supplied.

"may be" is vague and implies that there are other possible causes, which are not discussed here. Again, the reader is left wondering what he or she is not being told.

"However, Kornai concentrated on the role of reduced supply and argued that this was the underlying cause of Eastern European shortages during the 1980s."

Implying that what was written before is nothing to do with Kornai and is the author's opinion instead. This corresponds to comments made by other Wikipedians on this article. — Preceding unsigned comment added by 209.93.146.80 (talk) 13:34, 30 January 2023 (UTC)