Finance and capital accumulation in a planned economy: The agricultural surplus hypothesis and Soviet economic development, 1928–1939

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Finance and capital accumulation are closely related, although fundamentally different. “Capital accumulation” refers to increases in productive structures and equipment, while “finance” refers to the borrowing and lending undertaken by and through banks, securities markets, and among private individuals. In market economies, many real investment projects require a corresponding financing plan, so finance is often the complement to capital accumulation. In such cases, a more efficient financial system may increase the pace of capital accumulation or better direct it. Financial transactions, however, need not necessarily lead to capital accumulation, and projects financed out of retained earnings need not involve any new financial dealings. What about nonmarket economies? Is there a relationship between finance and capital accumulation? In a case like the Soviet Union in the 1930s, there is the possibility of no link. After all, in a market economy where capital formation requires monetary outlay, a lack of money can stop investment, but in a planned economy where investment goods are allocated by fiat, why should money matter? However, even Stalin balanced his budget, so finance was an issue in Moscow as well as New York. The agricultural surplus hypothesis is the link usually suggested between finance and capital formation in the U.S.S.R. The hypthesis deals with two issues – state finance and farm marketing. So far as finance is concerned, the agricultural surplus hypothesis contends that the investment drive of the 1930s was financed by mobilizing the agricultural surplus.

Original languageEnglish (US)
Title of host publicationFinance, Intermediaries, and Economic Development
PublisherCambridge University Press
Pages272-287
Number of pages16
ISBN (Electronic)9780511510892
ISBN (Print)0521820545, 9780521820547
DOIs
StatePublished - Jan 1 2003

Fingerprint

Finance
Planned economy
Economic development
Surplus
Capital accumulation
Capital formation
Market economy
Farm
Moscow
Marketing
Lending
Borrowing
Financial system
Capital projects
Financing
Soviet Union
Retained earnings
Securities market
Investment project

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Finance and capital accumulation in a planned economy : The agricultural surplus hypothesis and Soviet economic development, 1928–1939. / Allen, Robert (Bob).

Finance, Intermediaries, and Economic Development. Cambridge University Press, 2003. p. 272-287.

Research output: Chapter in Book/Report/Conference proceedingChapter

@inbook{b211b5b5b12b4cac873732aff71bc737,
title = "Finance and capital accumulation in a planned economy: The agricultural surplus hypothesis and Soviet economic development, 1928–1939",
abstract = "Finance and capital accumulation are closely related, although fundamentally different. “Capital accumulation” refers to increases in productive structures and equipment, while “finance” refers to the borrowing and lending undertaken by and through banks, securities markets, and among private individuals. In market economies, many real investment projects require a corresponding financing plan, so finance is often the complement to capital accumulation. In such cases, a more efficient financial system may increase the pace of capital accumulation or better direct it. Financial transactions, however, need not necessarily lead to capital accumulation, and projects financed out of retained earnings need not involve any new financial dealings. What about nonmarket economies? Is there a relationship between finance and capital accumulation? In a case like the Soviet Union in the 1930s, there is the possibility of no link. After all, in a market economy where capital formation requires monetary outlay, a lack of money can stop investment, but in a planned economy where investment goods are allocated by fiat, why should money matter? However, even Stalin balanced his budget, so finance was an issue in Moscow as well as New York. The agricultural surplus hypothesis is the link usually suggested between finance and capital formation in the U.S.S.R. The hypthesis deals with two issues – state finance and farm marketing. So far as finance is concerned, the agricultural surplus hypothesis contends that the investment drive of the 1930s was financed by mobilizing the agricultural surplus.",
author = "Allen, {Robert (Bob)}",
year = "2003",
month = "1",
day = "1",
doi = "10.1017/CBO9780511510892.011",
language = "English (US)",
isbn = "0521820545",
pages = "272--287",
booktitle = "Finance, Intermediaries, and Economic Development",
publisher = "Cambridge University Press",

}

TY - CHAP

T1 - Finance and capital accumulation in a planned economy

T2 - The agricultural surplus hypothesis and Soviet economic development, 1928–1939

AU - Allen, Robert (Bob)

PY - 2003/1/1

Y1 - 2003/1/1

N2 - Finance and capital accumulation are closely related, although fundamentally different. “Capital accumulation” refers to increases in productive structures and equipment, while “finance” refers to the borrowing and lending undertaken by and through banks, securities markets, and among private individuals. In market economies, many real investment projects require a corresponding financing plan, so finance is often the complement to capital accumulation. In such cases, a more efficient financial system may increase the pace of capital accumulation or better direct it. Financial transactions, however, need not necessarily lead to capital accumulation, and projects financed out of retained earnings need not involve any new financial dealings. What about nonmarket economies? Is there a relationship between finance and capital accumulation? In a case like the Soviet Union in the 1930s, there is the possibility of no link. After all, in a market economy where capital formation requires monetary outlay, a lack of money can stop investment, but in a planned economy where investment goods are allocated by fiat, why should money matter? However, even Stalin balanced his budget, so finance was an issue in Moscow as well as New York. The agricultural surplus hypothesis is the link usually suggested between finance and capital formation in the U.S.S.R. The hypthesis deals with two issues – state finance and farm marketing. So far as finance is concerned, the agricultural surplus hypothesis contends that the investment drive of the 1930s was financed by mobilizing the agricultural surplus.

AB - Finance and capital accumulation are closely related, although fundamentally different. “Capital accumulation” refers to increases in productive structures and equipment, while “finance” refers to the borrowing and lending undertaken by and through banks, securities markets, and among private individuals. In market economies, many real investment projects require a corresponding financing plan, so finance is often the complement to capital accumulation. In such cases, a more efficient financial system may increase the pace of capital accumulation or better direct it. Financial transactions, however, need not necessarily lead to capital accumulation, and projects financed out of retained earnings need not involve any new financial dealings. What about nonmarket economies? Is there a relationship between finance and capital accumulation? In a case like the Soviet Union in the 1930s, there is the possibility of no link. After all, in a market economy where capital formation requires monetary outlay, a lack of money can stop investment, but in a planned economy where investment goods are allocated by fiat, why should money matter? However, even Stalin balanced his budget, so finance was an issue in Moscow as well as New York. The agricultural surplus hypothesis is the link usually suggested between finance and capital formation in the U.S.S.R. The hypthesis deals with two issues – state finance and farm marketing. So far as finance is concerned, the agricultural surplus hypothesis contends that the investment drive of the 1930s was financed by mobilizing the agricultural surplus.

UR - http://www.scopus.com/inward/record.url?scp=84926982197&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84926982197&partnerID=8YFLogxK

U2 - 10.1017/CBO9780511510892.011

DO - 10.1017/CBO9780511510892.011

M3 - Chapter

AN - SCOPUS:84926982197

SN - 0521820545

SN - 9780521820547

SP - 272

EP - 287

BT - Finance, Intermediaries, and Economic Development

PB - Cambridge University Press

ER -