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The Second Economy of the Soviet Union and Eastern Europe

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  • STEVEN L. SAMPSON

Abstract

The second economies of the Soviet Union and other East European countries derive from structural inadequacies in the socialist planning system and from the cultural and historical evolution of each East European society. This article combines the structural and cultural approaches to the second economy and focuses on four of its most prevalent forms: peasant household production, the shadow economy within socialist enterprises, the underground factories of Soviet Georgia, and the hidden economy within the retail and service sectors. In all cases, social linkages and cultural values provide frameworks for economic activities. The second economy helps to alleviate consumer shortages and bureaucratic bottlenecks in all these societies. It also acts as a social mollifier, channeling dangerous political frustrations into consumerism, swindling, or petty corruption. Yet the overall effect of the second economy is a corrosive one: as a surrogate reform, a second economy tolerated by the authorities only reproduces the fundamental flaws of the formal economy. Moreover, it exacerbates the gap between society and the state, between “us†and “them.â€

Suggested Citation

  • Steven L. Sampson, 1987. "The Second Economy of the Soviet Union and Eastern Europe," The ANNALS of the American Academy of Political and Social Science, , vol. 493(1), pages 120-136, September.
    • Handle: RePEc:sae:anname:v:493:y:1987:i:1:p:120-136
    DOI: 10.1177/0002716287493001009
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    References listed on IDEAS

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    1. A. Katsenelinboigen, 1977. "Coloured markets in the Soviet Union," Europe-Asia Studies, Taylor & Francis Journals, vol. 29(1), pages 62-85.
    2. István Kemény, 1982. "The unregistered economy in Hungary," Europe-Asia Studies, Taylor & Francis Journals, vol. 34(3), pages 349-366.
    3. Joseph S. Berliner, 1952. "The Informal Organization of the Soviet Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(3), pages 342-365.
    4. Anonymous, 1957. "North Atlantic Treaty Organization," International Organization, Cambridge University Press, vol. 11(3), pages 558-563, July.
    5. Anonymous, 1957. "North Atlantic Treaty Organization," International Organization, Cambridge University Press, vol. 11(1), pages 195-199, January.
    6. Anonymous, 1957. "North Atlantic Treaty Organization," International Organization, Cambridge University Press, vol. 11(2), pages 394-395, April.
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    Cited by:

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    2. Boettke, Peter J. & Candela, Rosolino A. & Zhukov, Konstantin, 2023. "The morality of illicit markets: “Greasing the wheels” or “greasing the palm”?," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 411-422.

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