Sorry if this a little silly of a question I haven’t read much on the topic, but in a centrally planned economy, if everyone is a worker of a state owned business, how did the government have a budget surplus? Did they only rely on exports and tourism for state finances, because I can’t think of other ways to generate state revenue surplus. Thank you for your answers.
The Soviet Union typically maintained very minor (margin of error) surpluses and deficits of no more than about 0-3% of GNP up until the late 80s when the powerful Soviet economy could no longer entirely offset the global economic crisis that started with the 70s Oil Crisis and had already been plaguing the West for over a decade.
I asked my gf this. She said that the workers spend their money which recirculated the existing money back into the system, then the value of the goods they produce adds new value into the economy.
As I understand her response
Ooh did the businesses that received the money, for example the grocery store, the revenue from their sales went to the workers who work at the store directly?
I’m afraid I genuinely do not know. I think my gf was just answering the question on a more macro sense. Like, how do they have a budget surplus. I’m sure in many cases money does go directly from one person to another without state intervention.
I don’t think it’s silly at all. I also want to know. I have a notion that’s why Chinese and DPRK economies function as they do, and possibly Vietnam, but I really don’t know.
