For citation:
Zolotukhin, A. A. (2024). Application of Labour Growth Theory to the Analysis of Soviet Stagnation. AlterEconomics, 21(2), 302–319. https://doi.org/10.31063/AlterEconomics/2024.21-2.8
Abstract:
The causes of stagnation and crisis in the Soviet economic system remain a topic of ongoing debate. Mainstream economists often attribute its downfall to fundamental flaws in its economic model. Conversely, heterodox economists argue that management errors, rather than planning itself, led to the crisis. Between these extremes lie numerous intermediate perspectives, underscoring the urgency of further study on this issue. This paper examines the dynamics of the Soviet economy through the lens of Labor Growth Theory (LGT), which offers a stochastic interpretation of the Labor Theory of Value (LTV). It explores several models of economic growth derived from endogenous LGT, applied to analyze the post-war Soviet GDP dynamics. The study aims to uncover the causes of Soviet stagnation through the lens of Labor Growth Theory (LGT). It includes a review of relevant literature on Soviet economic stagnation. The models developed within LGT accurately predicted the stagnation of the Soviet GDP in the 1970s and 1980s, based on trends observed in the 1950s and 1960s. Demographic factors and the monopoly of foreign trade are considered as primary causes of the stagnation. The paper also discusses potential alternative reforms that could have been pursued and evaluates the applicability of LGT for macroeconomic forecasting and its compatibility with LTV.
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