(В) Comecon countries and China
State-owned enterprises,
| Socialist sector, percent of net material product (1980) (col. 1) | percent of net material product (various years) (col. 2) | Year (col. 3) | |
| Cuba | 96.9 | ||
| Romania | 95.5 | ||
| Mongolia | 100 | ||
| Vietnam | 52.7 | ||
| Unweighted | |||
| average | 92.2 | 88.5 | |
| China | 78.7 | (1980) |
Notes. The countries shown in both parts of the table are ranked in declining order of their real GDP per head in 1980, as explained under Table 2A.1, except that Cuba and Mongolia, not given in the TED dataset, are inserted on the basis of comparable estimates in the Maddison historical dataset (2009 edition), http://www.ggdc.net/ maddison/oriindex.htm.
Sources: (A) OECD countries, from Milanovic, Liberalization and Entrepreneurship, 24. Figures cover “state-owned enterprises in commercial activities,” excluding “government services proper.” Where Milanovic gives country figures for more than one year, I take the nearest to 1980. (B) Comecon countries and China, socialist sector in 1980 (col. 1), from SEV, Statisticheskii ezhegodnik, 37. Figures are for the shares of “state enterprises and institutions, social organizations, cooperatives of all kinds and types, personal sideline farms of members of cooperatives and personal sideline farms of manual and white-collar employees of state, social, and cooperative enterprises and institutions” (SEV, Statisticheskii ezhegodnik, 417-18) in the net material product in 1980, except Bulgaria where the figure for 1980 is missing, and the share of the socialist sector in productive fixed capital is used in its place. For Poland the source gives two figures. The lower figure, shown here, is at current prices, with a slightly higher figure at “comparable” prices. Shares of state-owned enterprises in the net material product in various years (cols 2 and 3) are those reported by Milanovic, Liberalization and Entrepreneurship, 21.
is subtly different from the OECD data: the “socialist sector” comprised “state enterprises and institutions, social organizations, cooperatives of all kinds and types, personal sideline farms of members of cooperatives and personal sideline farms of manual and white-collar employees of state, social, and cooperative enterprises and institutions.”
The inclusion of cooperatives and of households’ sideline farming (on state-owned land but not themselves state owned) within the “socialist sector” of Comecon countries is the major difference from the concept of the OECD figures. This is not so troubling for agricultural cooperatives (“collective farms”) which, although not legally owned by the state, were heavily regulated and monitored. The inclusion of nonagricultural cooperatives and of sideline farming is potentially misleading, however, because these were more often forms of private enterprise, either taxed and regulated or operating below the state’s radar. Still, the overstatement of state ownership in Comecon countries is far smaller than the Comecon/OECD gap.
Another source of discrepancy might be the treatment of “government services proper.” These are excluded from the OECD data, whereas the Comecon concept includes the output of “state . .. institutions.” The important thing is that whatever output is included in the Comecon data cannot refer to “government services proper” because the material product system counted these as final services, which were excluded from the value of output.
In short, the OECD data refer to the “commercial activity” of public corporations whereas the Comecon data refer to the “productive” activity of state-owned and cooperative enterprises, and this is the nearest we can get to comparable numerators.
Third, we turn to the denominator, the national income measure. Do the ownership shares of Comecon countries in national income need the same correction as the tax shares? It is a matter of judgement, but my judgement is no. For both groups of countries, we have an internally consistent measure. For OECD countries, final services are included in both numerator and denominator. For Comecon countries they are excluded. If they are to be added back to the bottom of the fraction, they must also be added back to the top. It is hard to imagine that substantial change would be the result.
3. THE SECRECY TAX
All states keep accounts. These accounts are of various kinds. Of necessity, they include records of the state’s money and the state’s employees. From more modern times they have also accounted for the nation’s money and the nation’s people. It goes without saying that the Soviet state accounted for money and for people.[131]
The Soviet state also kept accounts of secret paperwork. As part of their normal duties, Soviet officials regularly counted and listed all classified documents that passed through their hands, and all that were held in their files. Each classified document had its own life course, every moment of which was recorded from its creation through distribution and storage to destruction or assignment to the archive. The purpose of the accounting system was to provide assurance of the integrity of the regime of secrecy. As I will show, the accounting system was surprisingly costly. It was costly because secrets were numerous and keeping track of them was a complex task that consumed the efforts of government officials.
The costs of accounting for secrets deserve investigation because a willingness to incur costs can be evidence of motivation. The costs of Soviet secrecy suggest a lower bound on the value of secrecy to the Soviet rulers. The rulers valued secrecy because it helped to prevent change in the political order and so preserved the flow of benefits to the regime.
The existence of the Soviet system of accounting for secrets can be documented directly. It is also evident from many small failures. From creation to destruction, a named person was responsible for every classified document at every moment. Being human, these people lost or mislaid secret paperwork in a variety of circumstances, or they failed to record their disposal as required. These failures were also documented. They too reveal the system. In addition, they provide evidence of misaligned incentives and of the many attempts to bring them back into alignment.
The first part of this chapter describes the life course of the secret document and the data that it generated at each stage. The costs of complying with secrecy procedures can be likened to a cascading secrecy tax, paid on every transaction of government business. Using a unique data source, I go on to measure the burden of the Soviet secrecy tax on the management of a small regional bureaucracy—a republican KGB. A comparative perspective suggests that the burden was heavy. Finally, I consider the scope for generalizing this finding.
The secrecy tax was a procedural cost of Soviet secrecy. If we wish to account for the overall costs of Soviet secrecy, the procedural cost was a first instalment. Secrecy also incurred further costs directly through the effects of fear on the productiveness of officials and managers (Chapter 4), and indirectly through the adverse selection of the officials and managers themselves (Chapter 5), the spread of mistrust through society (Chapter 6), and the misinformation of the leaders (Chapter 7). While it is only the start, however, the secrecy tax is of particular interest because the evidence will suggest that the secrecy tax alone was very large.
131
On Soviet statistics see Treml and Hardt (eds), Soviet Economic Statistics; Wheatcroft and Davies, “Crooked Mirror of Soviet Economic Statistics.”