Issues in state and private sector relations in the Soviet economy

The introduction of private enterprise into a state controlled, planned, nonmarket economy presents us with a valuable new opportunity to investigate the development of entrepreneurism. The events in the USSR, China, and Eastern Europe are historically unprecedented, and it is too early to know if our ideas developed on the basis of the emergence of private enterprise in earlier, market oriented societies are applicable. The most obvious and intriguing issue, of course, is that of how the new entrepreneurs emerge and operate in a system which is not only in transition but is also still overwhelmingly dominated by the state sector. It may be expected that the relationship between the state economy and the private economy would have a strong influence on the way in which the private sector develops. The purpose of this chapter is to explore this issue in the case of the Soviet Union. Given the complexity of the factors involved, I shall be able only to deal with some of what I consider to be the most important dimensions and processes. While empirical materials will be used to illustrate certain points, the emphasis will be on setting out the central issues rather than on a detailed empirical analysis of the situation. The questions with which we shall deal include the following: What are the legal relations between the state and private sectors?