Soviet Wages and Salaries

Abstract

The institutional context of Soviet wage formation is obviously very different from that which is envisaged by neoclassical economic theory, as well as from the capitalist mode of production that Marx analysed. The assumption, discussed in the preceding chapter - that at the margin, wages should equal productivity - is deduced from an assumption that firms maximise profits. Irrespective of whether one accepts this theory, as applied to capitalist firms, or not, profit-maximisation was clearly not a good approximation of the behaviour of Soviet enterprises. In the USSR, there were centrally determined wage rates. Implicit ‘wage-bargaining’ took place when these were applied locally. Bonuses, which were a substantial part of earnings, were determined at enterprise level, albeit subject to official regulations. Hence, as will be discussed here and in chapter 6, wage formation was the outcome of a complex interplay of local and central forces, regulations and demand and supply pressures.