27437ecd   
   XPost: soc.culture.baltics, soc-culture.czecho-slovak, soc.culture.russian   
   From: holman@mappi.helsinki.fi   
      
   In article   
   , David   
   Friedman  wrote:   
      
   > In article ,   
   >  holman@mappi.helsinki.fi (Eugene Holman) wrote:   
      
      
      
   > > Why do you keep repeating this nonsense, and why would the Finns have been   
   > > stupid enough to continue trading with the USSR if their hard work was   
   > > compoensated with worthless rubles?   
   >   
   > Presumably, in James' view, because the alternative was being invaded.   
      
   The USSR had no desire or motive to invade Finland after WW II. Such a   
   move would have made it a pariah state in addition to which it would have   
   destroyed the basic underpinning tenet of its post-WW II foreign policy: the   
   thesis that countries with different socio-economic systems could coexist   
   peacefully.   
      
   > > Finnish-Soviet trade was based on BARTER and clearing accounts. Barter   
   > > means that you give a product or service a stipulated monetary value that   
   > > is recorded in a clearing account. At that time a barrel of oil might have   
   > > cost $15 on the world market, and the USSR supplied to Finland at a   
   > > discount, say $13.50. The Finns used the barrale of oil to make plastic   
   > > bags, one barrel making 500 bags, the fair value of which would have been   
   > > say $0.10/bag.   
   >   
   > By "the fair value" do you mean the value the Finns could have sold   
   > those bags for on the world market?   
      
   Yes.   
      
   > > Thus the amount made from a barrel of oil was worth $50.   
   > > The Finns took an additional 50% profit, thus we get the clearing price   
   > > for the bags being $75.   
   >   
   > And why, in your view, were the Soviets willing to exchange a barrel of   
   > oil  for $13.50/$.15 = 90 bags, when they could have sold the oil on the   
   > world market for $15, bought the bags on the world market for $9, and   
   > had $6 left over to buy other things? On your account, the Soviets would   
   > have done far better for themselves trading on the world market.   
   >   
   > Is your argument that the Soviets were too stupid to realize that, or   
   > that the Soviets were not extorting the Finns but bribing them, or what?   
      
   Firt of all, ideology dominated everything that the USSR did. Thus, trade   
   was not simply trade, but rather another vehicle to further foreign   
   policy objectives. Selling raw materials to the Finns at a discount, and   
   buying them back at inflated prices set by the Finns, was a way of   
   "rewarding" Finland for being ­ or bribing them to be ­ a good neigbor as   
   defined by the Soviets.   
      
   Secondly, Soviet trade officials appreciated long-term stability over   
   short-term profitabiity. Setting prices for a period of one or five years   
   allowed for a kind of stability and long-term planning that would not have   
   been possible within a fraemwork where market prices fluctuated on a daily   
   or weekly basis. Both the Finns and the Soviets thought that the   
   predictability and ideological browny points that this system seemingly   
   ensured was worth the price of one side taking short-term economic advange   
   over the other.   
      
   Regards,   
   Eugene Holman   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)