Economic system - Corruption: With prices determined by the central government rather than the market, consumer demand for many products outstripped supply. This discrepancy created economic opportunities for factory, warehouse, and shop managers responsible for producing or distributing these products.
Referred to as “deficit” by the public, these goods could be either illegally sold for a higher price or quasi-legally bartered in exchange for other high-demand products and services with similarly well-positioned people. The system of personal and familial connections based on such barter exchanges could also be leveraged to secure various privileges, such as admission to a superior hospital or university, career advancement, or reduced production targets for an enterprise.
- Low quality of manufactured goods: In the absence of a free market where prices are dictated by consumer demand, government planners lacked a straightforward method to assess the quality of produced goods. Factory managers’ performance was primarily evaluated based on the quantity of output, incentivizing a sacrifice of quality for quantity.
- Egalitarian Pay System: A highly constrained salary range resulted in minimal difference in earnings between the least and most effective employees.
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