Overview

Why did the Soviet Union squander the political leverage afforded by its trade subsidy to Eastern Europe? Why did Soviet officials fail to bargain with resolve, to link subsidies to salient political issues, to make credible commitments and to monitor the satellites' policies? Using formerly secret documents housed in archives in Moscow, Warsaw and Prague, as well as interviews with former Communist officials across Eastern Europe, this book attempts to answer these and other questions. The book argues that trade politics revolved around the incentives created by distorted prices on the Western market and those in the Soviet bloc. The Soviet Union made numerous attempts to reduce its implicit trade subsidy and increase the efficiency of the bloc, but the satellites managed consistently to outmanoeuvre Soviet negotiators. Drawing upon recent developments in bargaining and principal-agent theory, the book argues that the incentives created by domestic institutions weakened Soviet bargaining strategies. In effect, it suggests, perverse incentive structures in the Soviet economy were exported into Soviet foreign policy. Futhermore, the book argues, incentives to smother information were so deeply entrenched that they frustrated numerous attempts to reform Soviet institutions.

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9780691044149

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Reviews

A theoretically sophisticated and empirically rich study.... Stone provides a provocative analysis that challenges a number of prevailing views about Soviet-East European relations.... Indeed, his careful study has set the terms for debate and an agenda for further research. - Philip G. Roeder, American Political Science Review Stone's book is a major achievement in the field of Soviet studies. It is an original, carefully documented, and theoretically valuable contribution. - Alan Rousso, Political Science Quarterly

Author Information

Randall W. Stone is Associate Professor of Political Science at the University of Rochester. He is the author of Lending Credibility (see page 36).

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