INFORMATION AND MOTIVATION - REFLECTIONS ON THE FAILURE OF THE SOCIALIST ECONOMIC-SYSTEM

The Literature on the failure of the socialist economic system is enor mous and growing. This paper focuses on the lack of adequate informati on and motivation as the root cause of that failure. Basic information problems are traced to their origin in the light of long lasting theo retical debates between proponents and opponents of socialism, The cri tics have been proven essentially right in their arguments regarding t he impossibility of rational economic calculation under socialism, As for motivation, the paper adopts the premise prevailing in economies o n the dominant role and function of self-interest in a modern economy. Under socialism, as wed as under capitalism, self-interest-notwithsta nding all attempts to suppress it and to bring out or impose more ''no ble'' behavior-never ceased to motivate, and remained a powerful movin g force, revealing itself, both positively and negatively, in every sp here of economic Life, Over-all, however, the socialist system could n ot provide the necessary incentives for the pursuit of self-interest t o lead to outcomes socially desirable from the standpoint of central p lanners, Observations are made on self-interest in the behavior of pol iticians as expressed in a narrow materialistic sense. It is argued th at politicians, Like most of their fellow men, were longing for privat e property rights, This reinforced the self-destructive tendencies wit hin the system and should be recognized as a significant factor contri buting to the collapse of the communist state. Elsevier Science Ltd. ( C) 1996 The Regents of the University of California.