personalivahendi

Personalivahendi is a term coined to describe the Soviet concept of statist optimization. Developed in the 1930s, it refers to the practice of central planning where the state decides on the allocation of resources, division of labor, and production levels within a planned economy. This approach aimed to optimize the use of resources, ensure efficiency, and meet production targets.

Under personalivahendi, the state replaced the market mechanism of supply and demand. The Soviet government set quotas for industries, dictated production rates, and appointed managers to oversee the production process. Statistical analysis and planning were utilized to determine the most efficient use of resources. This approach aimed to kill the "wastefulness and disorder" associated with the unregulated market.

However, the personalivahendi approach has been criticized for its limitations. It often led to inefficiencies in production, misallocation of resources, and widespread welfare dependence. Some argue that personalivahendi hampered innovation and entrepreneurship, as the state's control of resources stifled initiative and creativity. Additionally, the concept relied heavily on the theoretical accuracy of centralized planning, which has been repeatedly shown to be unrealistic.

The concept of personalivahendi served as a failed experiment in Soviet economic development. The central planning model proved ineffective and eventually led to the catastrophic results seen in the Soviet economy during the late 20th century.