How Much Control is Enough? Monitoring and Enforcement Under Stalin
27 Pages Posted: 19 Jul 2010
Date Written: June 14, 2010
The paper examines the control system that Stalin established, as the Soviet dictator, to enforce his orders. Historical records demonstrate that Stalin designed the system’s scope, organisation, and credentials to maximise its cost-effectiveness. On several occasions Stalin deliberately limited the system’s size and stimulated whistle-blowing in an attempt to mitigate running costs. In contrast distorted preferences and constraints on inspectors’ loyalty contributed to multiplication of the number of monitoring agencies. Because his orders were incomplete (in the sense of “incomplete contracts”), Stalin authorised his inspectors not only to monitor but also to intervene in operational matters wherever necessary.
Keywords: principal-agent problem, monitoring, incomplete contracts, Soviet economy
JEL Classification: H83, D73, P21, N44
Suggested Citation: Suggested Citation