The Economics of Illusion in the Soviet Administrative-Command System: Gosplan and Industrial Ministries Clashed Regularly over Information

One constant of the Soviet administrative-command system is that information was almost exclusively generated by the producers themselves. Peter Boettke wrote of the "economics of illusion" that apply in this situation; namely, the proclivity of producers to conceal or to distort information to pull the wool over the eyes of superiors. The ministries were required to submit a voluminous amount of reporting (otchetnosti): all reporting forms were confirmed by Gosplan's statistics office with agreement by the affected ministries, the Ministry of Finance, and Gosbank. These formal reports were also supplemented by numerous ad hoc requests for information and for special reports. "They" (the industrial ministries) controlled the flow of information. "We" (the Politburo/SNK/Gosplan) did not gather its own independent information, although it did receive ad hoc information from its control commissions, the interior ministry, and military inspectors. The ministries had a strong information advantage relative to their superiors. Clearly, the administrative-command system could not be effectively administered with incorrect information. Thus, Gosplan and industrial ministries clashed regularly over information.

--Paul R. Gregory, The Political Economy of Stalinism: Evidence from the Soviet Secret Archives (New York: Cambridge University Press, 2004), 140.