SEMAINE D'ÉTUDE SUR LE ROLE DE L’ANALYSE ECONOMETRIQUE ETC.

120.

individual enterprises is not released through a system of quantity
 targets (gross output measured in volume indices) established
 from above. Nor, is it nossible to achieve the desired
results by such a simple system of incentives as that of paying
a premium to an enterprise according to its overfulfillment of
‘he centrally established quantity targets or according to its
ability to increase its volume index of actual gross output over
that of the preceding year.
There are several reasons for the failure of such incentive
systems. One is that quantity targets, established from above,
may induce the enterprise directors to conceal their true production
 potential. Another is that they do not encourage directors
 to use imagination and effort in economizing of input
elements. A third reason is that these systems do not induce
these directors to help rationalize production and realize desirable
 investment within their specific fields. And fourth, they
lo not offer the inducement to improve the quality of the products,
 because the establishing of quantitative targets of goods
and services can only, to a small degree, cover the infinite
variety of improvements in quality that constitutes a basic element
 of economic progress.
A few examples will suffice to indicate the nature of the
experiences one has had. In the Soviet Union, in the period
before 1957, one worked according to what may be called the
ministerial system. There was one all-Union central ministry
for each group of goods. Because of frequent uncertainties of
supply from other ministries, each minister was tempted to set
ap his own ministerial factory for the component parts he
needed. This led, of course, to inefficiencies of various sorts.
There were also bureaucratic delays in settling questions due
to the scattered locations of enterprises over the whole country.
This motivated the abolition in 1957 of the central ministerial
system and the introduction of a territorial system. However,
his reform only replaced one type of difficulty by another. The
wishes and plans of the different regions were difficult to recon

“171 Frisch - pag.

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