NEOCLASSICAL NORMS AND THE VALUATION OF NATIONAL PRODUCT IN THE SOVIET-UNION AND ITS POSTCOMMUNIST SUCCESSOR STATES

It is widely believed that national product statistics of controlled e conomies can be adjusted in accordance with neoclassical theory to pro vide reliable measures of production potential by subtracting turnover taxes, adding subsidies, replacing accounting profits with imputed un iform interest charges on capital, and imputing rents on land. This es say shows that the application of these procedures at the enterprise l evel cannot reliably generate prices that are approximately proportion al to marginal rates of transformation, and, hence, that adjusted fact or cost statistics as commonly computed cannot adequately measure prod uction potential and should not be treated as second-best indicators o f Soviet economic performance. (C) 1995 Academic Press, Inc.