78 Chapter 2
Conclusion
As Soviet economic cyberneticists emerged as a viable option in the early
1960s and again early 1970s, they confronted a monumental problem in
managing and reforming the command economy. The question was identi-
fied by the Austrian school of economics decades earlier: which techniques
and approaches would help resolve the mounting tensions among the for-
mal command economy, the gray economy, and the infusion of informal
practices in the administration of Soviet socioeconomic life? For the most
part, the leading Soviet economic cyberneticists sought to fix the formal
command economy by introducing ambitious, even grandiose, plans for
automating and modeling the administrative planning decision process
itself. And yet, as is shown, those formal plans—a networked plan to fix the
planning process itself—did not work because even cybernetic plans could
not account for nonlinear operations in the Soviet economy. Their formal
plans to rebuild the command economy as a hierarchy had to overlook
the complex crisscrossing networks of relations that made it function in
practice—the gray economy and its entrenched currency of blat or informal
favors that were entrenched in the governance structures. By reimagining
the command economy as a heterarchical crisscross of hierarchical orders
from above and a resulting swirl of unregulated practices in every other
direction, the failure of these Soviet economic cyberneticists to reform,
automate, and manage the command economy begins to make more sense.
There is one goliath exception to this critical description of the infor-
mal administration of the state and economic bureaucracy. The command
economy, which staggered along a winding path toward the creation of a
normal industrial civilian economy, was relatively functional at powering
and sustaining superpower military technological initiatives. Formulated
first as a wartime economic model by the Germans, the insatiable sink of
the Soviet defense apparatus into which economic resources were continu-
ously poured cannot be overestimated. Both official state and CIA statistics
on Soviet military spending are controversial, although if a critic of both
can believed, the Russian American economist Igor Birman estimated that
by 1975 the CIA estimates of the size of the Soviet economy were two or
three times larger than reality and that instead of spending roughly 6 per-
cent of its GDP on military expenditures, the Soviet state devoted closer
to 30 percent of its GDP on the military. The military-industrial complex
enjoyed massive funding streams and the brightest and best intellectual
and technological resources, and although the jury is still out on the exact
nature of the Soviet military (most of its details remain closed to this day),