ongoing loss-making activities. Without the constraint to minimize or reduce costs, and given the emphasis on fulfilling or expanding output targets, Soviet firms were encouraged to continually demand additional resources in order to increase their production. In contrast to hard budget constraints faced by profit-maximizing firms in market economies, Soviet industrial enterprises faced soft budget constraints. See also: NEW ECONOMIC POLICY; VALUE SUBTRACTION; VIRTUAL ECONOMY
LAWRENCE N. LANGER
In market economies, firms face hard budget constraints. This means that they must cover their costs of production using revenues generated either from
Kornai, Janos. (1986). Contradictions and Dilemmas: Studies on the Socialist Economy and Society, tr. Ilona Lukacs, et al. Cambridge, MA: MIT Press. Kornai, Janos. (1992). The Socialist System: The Political Economy of Communism. Princeton, NJ: Princeton University Press.
(1899-1992), leading proponent of markets as an evolutionary solution to complex social coordination problems.
One of the leaders of the Austrian school of economics in the twentieth century, Friedrich Hayek received the Nobel Memorial Prize in Economic Science in 1974. Born to a distinguished family of Viennese intellectuals, he attended the University of Vienna, earning doctorates in law and economics in 1921 and 1923. He became a participant in Ludwig von Mises’s private economics seminar and was greatly influenced by von Mises’s treatise on socialism and his argument about the impossibility of economic rationality under socialism due to the absence of private property and markets in the means of production. Hayek developed a theory of credit-driven business cycles, discussed in his books Prices and Production (1931) and Monetary Theory and the Trade Cycle (1933). As a result he was offered a lectureship, and then the Tooke Chair in Economics and Statistics at the London School of Economics and Politics (LSE) in 1931. There he worked on developing an alternative analysis to the nascent Keynesian economic system, which he published in The Pure Theory of Capital in 1941, by which point the Keynesian macro model had already become the accepted and dominant paradigm of economic analysis.
In the 1930s and 1940s, Hayek made his major contribution to the analysis of economic systems, pointing out the role of markets and the price system in distilling, aggregating, and disseminating usable specific knowledge among participants in the economy. The role of markets as an efficient discovery procedure, generating a spontaneous order in the flux of changing and unknowable specific circumstances and preferences, was emphasized in his “Economics and Knowledge” (1937), “The Use of Knowledge in Society” (1945), and Individualism and Economic Order (1948). These arguments provided a fundamental critique of the possibility of efficient economic planning and an efficient socialist system, refining and redirecting the earlier Austrian critique of von Mises. They have also provided the basis for a substantial theoretical literature on the role of prices as a conveyor of information, and for the revival of non-socialist economic thought in the final days of the Soviet Union.
Hayek worked at LSE until 1950 when he moved to Chicago, joining the Committee of Social Thought at the University of Chicago. There Hayek moved beyond economic to largely social and philosophic-historical analysis. His major works in these areas include his most famous defense of private property and decentralized markets, The Road to Serfdom (1944), New Studies in Philosophy, Politics and Economics (1978), and the compilation The Fatal Conceit: The Errors of Socialism (1988). These works, more than his economic studies, provided much of the intellectual inspiration and substance behind the anti-Communist and economic liberal movements in eastern Europe and the Soviet Union in the 1980s and 1990s. In 1962 Hayek left Chicago for the University of Freiburg in Germany, and subsequently for Salzburg, where he spent the rest of his life. The Nobel Prize in 1974 significantly raised interest in his work and in Austrian economics. See also: LIBERALISM; SOCIALISM
BIBLIOGRAPHY
Bergson, Abram. (1948). “Socialist Economics.” In A Survey of Contemporary Economics, ed. H. S. Ellis. Home-wood, IL: Irwin. Blaug, Mark. (1993). “Hayek Revisited.” Critical Review 7(1):51-60. Caldwell, Bruce. (1997). “Hayek and Socialism.” Journal of Economic Literature, 35(4):1856-1890. Foss, Nicolai J. (1994). The Austrian School and Modern Economics: A Reassessment. Copenhagen, Denmark: Handelshojskolens Forlag. Lavoie, Don. (1985). Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered. Cambridge, UK: Cambridge University Press. Machlup, Fritz. (1976). “Hayek’s Contributions to Economics.” In Buckley, William F., et al., Essays on Hayek, ed. Fritz Machlup. Hillsdale, MI: Hillsdale College Press. O’Driscoll, Gerald P. (1977). Economics as a Coordination Problem: The Contribution of Friedrich A. Hayek. Kansas City: Sheed, Andrews and McMeel.
Prior to the reign of Peter the Great there were virtually no modern physicians or medical programs in Russia. The handful of foreign physicians employed by the Aptekarskyi prikaz (Apothecary buHEALTH CARE SERVICES, IMPERIAL reau) cared almost exclusively for the ruling family and the court. Peter himself took a serious interest in medicine, including techniques of surgery and dentistry. His expansion of medical services and medical practitioners focused on the armed forces, but his reformist vision embodied an explicit concern for the broader public health.
As of 1800 there were still only about five hundred physicians in the empire, almost all of them foreigners who had trained abroad. During the eighteenth century schools in Russian hospitals provided a growing number of Russians with limited training as surgeons or surgeons’ assistants. The serious training of physicians in Russia itself began in the 1790s at the medical faculty of Moscow University and in medical-surgical academies in Moscow and St. Petersburg. Later these were joined by medical faculties at universities in St. Petersburg, Dorpat, Kazan, and elsewhere. The early medical corps in Russia also included auxiliary medical personnel such as feldshers (physicians’ assistants), midwives, barbers, bonesetters, and vaccinators. Much of the population relied upon traditional healers and midwives well into the twentieth century.
Catherine the Great made highly visible efforts to improve public health. In 1763 she created a medical college to oversee medical affairs. She had herself and her children inoculated against smallpox in 1768 and sponsored broader vaccination programs. She established foundling homes, an obstetric institute in St. Petersburg, and several large hospitals in the capitals. Her provincial reform of 1775 created Boards of Public Welfare, which built provincial hospitals, insane asylums, and almshouses. In 1797, under Paul I, provincial medical boards assumed control of medicine at the provincial level, and municipal authorities took over Catherine’s Boards of Public Welfare. With the establishment of ministries in 1803, the Medical College was folded into the Ministry of Internal Affairs and its Medical Department.
The paucity of medical personnel made it difficult to provide modern medical care for a widely dispersed peasantry that constituted over eighty percent of the population. During the 1840s the Ministry of State Domains and the Office of Crown Properties initiated rural medical programs for the state and crown peasants. The most impressive advances in rural medicine were accomplished by zemstvos, or self-government institutions, during the fifty years following their creation in 1864. District and provincial zemstvos, working with the physicians they employed, developed a model of rural health-care delivery that was financed through the zemstvo budget rather than through payments for service. By 1914 zemstvos had crafted an impressive network of rural clinics, hospitals, sanitary initiatives, and schools for training auxiliary medical personnel. The scope and quality of zemstvo medicine varied widely, however, depending upon the wealth and political will of individual districts. The conferences that physicians and zemstvo officials held at the district and provincial level were a vital dimension of Russia’s emerging public sphere, as was a lively medical press and the activities of professional associations such as the Pirogov Society of Russian Physicians.
By 1912 there were 22,772 physicians in the empire, of whom 2,088 were women. They were joined by 28,500 feldshers, 14,000 midwives, 4,113 dentists, and 13,357 pharmacists. The fragmentation of medical administration among a host of institutions made it difficult to coordinate efforts to combat cholera and other epidemic diseases. Many tsarist officials and physicians saw the need to create a national ministry of public health, and a medical commission headed by Dr. Georgy Er-molayevich Rein drafted plans for such a ministry. Leading
