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Liberman, Evsei Grigor’evich

(1897–1981), economist. Evsei Liberman was chair of the economics and engineering department at the Kharkov Institute of Economics and Engineering (1947–1963) and from 1963 headed the statistics department at Kharkov State University. He was a key figure in the debates over economic reform in the Soviet Union following Stalin’s death.

Liberman’s 1955 paper “Khoziaistvenny rashchot i materialnoe pooshrenie rabotnikov promishl’nnosti” (Cost Accounting and Material Encouragement of Industrial Personnel; published in Voprosy ekonomiki) was an early instance of open economic debate allowed under Khrushchev. Liberman continued publishing articles in leading economic journals, and in September 1962 Pravda praised his ideas and noted their appreciation by the country’s leadership. The economic debates of the period, despite important contributions by other economists such as Vasilii Nemchinov, were dubbed “the Liberman Discussions,” and the reforms discussed were referred to as Libermanism. While one of Khrushchev’s last acts was to stop the debates abruptly in September 1964, a number of Liberman’s ideas were partly incorporated into the so-called Kosygin reforms of 1965.

Liberman’s main proposal was to transfer decision-making power from the central government to the managers and staff of industrial enterprises, primarily by reducing the number of instructions imposed from above, and by substituting administrative fiats with incentives. His proposal consisted of four main components. The first was to reduce the number of specific annual quantitative targets that industrial enterprises had to meet and replace some of them with long-term profit norms that enterprises would have to reach or surpass. Liberman maintained that the introduction of a synthetic index incorporating sales and costs would stimulate efficiency and leave enterprises with more freedom to work to achieve their goals. In response to objections that his advocating the use of profits as an economic incentive put him on the side of capitalism, Liberman emphasized the difference between Communist and capitalist concepts of profit, pointing out that under communism profits were used to improve the life of the people, rather than to enrich the wealth of a few capitalists.

The second major element of his proposal was to determine the level and assortment of output through direct negotiations with potential buyers (stores), instead of through centrally dictated distribution orders. Third, enterprises would have to pay interest on funds made available to them for investment purposes. Indeed, the second and third ideas, important on their own, would also make profits a much more meaningful criterion.

Liberman’s final demand was to reform prices—including those determined by the central authorities—to more closely reflect products’ true value. Although the Kosygin reforms incorporated a number of watered-down versions of these ideas, they failed to halt the decline of economic growth and the general deterioration of the Soviet Communist system.

In the West, Liberman’s ideas were sometimes interpreted as advocating the adoption of capitalistic ideas. In his articles and books, including Economic Methods and the Effectiveness of Production (1971), published abroad in English, Liberman went a long way to deny all such allegations. He repeatedly emphasized his support of Communist ideology and central planning.

Suggested Reading

Michael Kaser, “Kosygin, Liberman and the Pace of Soviet Industrial Reform,” World Today (September 1965): pp. 375–388; Myron Sharpe, ed., Planning, Profit and Incentives in the USSR, vol. 1 (White Plains, N.Y., 1966); Robert Stuart, “Evsei Grigor’evich Liberman,” in Soviet Leaders, ed. George W. Simmonds, pp. 193–199 (New York, 1967); Vladimir G. Treml, “The Politics of Libermanism,” Soviet Studies 19.4 (1968): 567–572.