There have been referunces from time to time in the Yestern press about the discussion which has been going on in the Soviet Union about the role of profit in central planning. The main protagonist of the idea of giving individual factories a 'profit motive' is one Professor Liberman of Kharkov State University. After the Economist had referred to an article by him in Pradva he wrote to explain his ideas to the readers of the Economist. We think the points he touches upon are of great interest. His letter wents att
"eeeCentral planning under socialism does not nean that every detail of production has to be dictated from above. Of late, heads of a number of enterprises have been given broad powers ani opportunities to display initiative. Let me offer clothing factories in Moscow and Gorky as an illustration, Total volume of output in these economic areas is fixed in money terms by the central plan on the basis of an analysis of such factors as increase of population, purchasing power and the share of income that goes to buy clothes, and raw material resourcese The plan does not fix exactly what styles or sizes of clothes the factories are to put out. These are stipulated in contracts between shops and factories. Prices are specified in the contracts on the basis of the average prices fixed in government price lists, but taking into consideration the nemess of the item, its attractiveness, conve= nience, packing and so one
"The success of a factory's work is judged, first how well its wares sell, and, second, by the profit level...It is quite compatible with the principle of central planning of the basic proportions and rates of development of the economy as a whole, and of individual branches and of geographical areas, It does not weaken central plannine, but rather strengthens it, as it frees the planning bodies of detailed control, permitting them to concentrate on planning technolo= gical progress and scirntific research. <A factory's profit cannot be appropria= ted by its heads or by’ the collective as a whole. Large investments out of profits are made only under the central plans, but with consideration given to the factory's proposals, A certain share of the profits goes to’ incentive premiums...«But these premiums are a form of socialist remuneration according to labour performed; they do not create owners of private capital.
"The 'resistance'" (to) "..my recommendations..edid not spring from the conservatism of particular individuals but from the fact that the whole of this complicated problem had not been worked out...practically...I was afforded the opportunity of testing my proposals in practice. Today such opportunities are being extended despite the contrary viewpoints of individual economists, however high a post they occupy. These conditions have been created..esince the 20th Congress of the Communist Party of the Soviet Union."
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