cb208340   
   XPost: soc.culture.baltics, soc.culture.czecho-slovak, soc.culture.russian   
   XPost: soc.culture.nordic, soc.culture.baltics   
   From: holman@mappi.helsinki.fi   
      
   In article   
   , David   
   Friedman  wrote:   
      
      
      
   > Further, your point about the difference between the official exchange   
   > rate and the market exchange rate--four to one is a higher ratio that I   
   > would have guessed--supports the idea that payment in rubles at somewhat   
   > more than world prices--using the official rate to convert--would in   
   > fact be payment at far below world prices.   
      
   It is more complex than that. There were several official exchange rates   
   for the ruble, some of them state secrets, in international trade within   
   the socialist block, depending on what was being traded and with whom. The   
   black-market rate was not the same as a market exchange rate, since it   
   included a risk factor and other variables. The work that a person did to   
   earn 120 rubles a month - $192.00 at the official rate ­ was certainly   
   worth far more than $48, but some people were willing to exchange a lot of   
   money with constrained buying power for far less money with unlimited   
   buying power. Soviet communism was lots of money chasing few goods and   
   services, capitalism being the reverse.   
      
   > By your account that isn't   
   > relevant to the case of Russo-Finnish trade, since the barter was using   
   > dollar prices both ways,   
      
   They were not real dollar prices. They were "clearing" dollar prices.   
   Clearing dollars are fictitious units of currency used for book keeping   
   purposes.   
      
   > but it does explain why James regards Soviet   
   > foreign trade with payment in rubles as bogus.   
      
   There was no foreign trade between the Soviet Union and the capitalist   
   world with payment in rubles. The Soviets said, basically, we'll pay you   
   in oil at ten percent below the world market price per barrel. The Finns   
   said, we want this price, set in clearing dollars but actually as a   
   specific quantity of oil at the subsidized price, per unit for our baggy   
   men's suits. Both sides agreed, shook hands, and went off to celebrate by   
   drinking a bottle of vodka. The Finns got their oil, the Soviets got their   
   suits. Neither side considered who was getting the better deal (well, the   
   Finns did, but they didn't tell anyone as they laughed their way to the   
   bank to deposit the money they earned selling the oil and the products   
   made from it), because trading in a socialist economy is not concerned   
   with such bourgeois matters. For the Soviets, getting the umpteen   
   kazillion baggy men's suits relieved their industrial infrastructure of   
   having to produce them. This type of outsourcing in order to focus   
   industry on what it does best was the economic advantage that the Soviet   
   side got.   
      
   Regards,   
   Eugene Holman   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)