Paul Gregory's very fine study of the Stalinist political economy represents something of an autopsy report of the Soviet Union as an experiment in socialist economy. Gregory has worked primarily with archive materials, located both in Moscow and in microfilm form at the Hoover Institution at Stanford University. The archival collections include those of the Council of People's Commissars (Sovnarkom), the industrial ministries, the Central Control Commission of the Central Committee, and the Gulag. One of the many strengths of this book is that Gregory, the leading active American economic historian of the Soviet Union, grappled with the problem of the Soviet command economy for the better part of 25 years before the opening of the archives. He is therefore in an excellent position to know precisely what the archival documents can tell us that we did not know before.

In the preface, Gregory states that “I regard the Soviet Union's experience with the planned socialist system as the most important social, political, and economic experiment of the twentieth century” (pp. ix–x). Clearly believing that a successful socialist economy was impossible to achieve, he views the Soviet economic project as a colossal failure, with serious consequences that reverberate to the present day for many of the world's planned systems.

Gregory frames his study by revisiting a question posed by Joseph Berliner: Did the system fail because of a bad jockey (incompetent leaders and irrational policies, with Stalin as “the principal architect”) or an inferior horse (the socialist economic arrangements themselves)? The book addresses this question by reconstructing “how the system really worked, both formally and informally” (p. 5), which is by itself a very impressive accomplishment. Gregory, agreeing with F. A. Hayek, rejects the jockey explanation, arguing that the command economy could only be managed in the framework of a “totalitarian” dictatorship. Another leader might not have shed as much blood as Stalin, but the system nevertheless required an authoritarian leader and the bludgeoning of any semblance of party democracy. Moving away from a Stalin centric approach, Gregory highlights the multiple layers of “little Stalins” at work throughout the planning and economic bureaucracies. He calls this a system of nested dictatorship: petty local autocrats with unlimited coercive authority but with loyalties to their shifting offices that enabled the system to function. The individuals who actually led economic institutions had little importance in this system; bureaucrats' agendas changed to fit the agency's interests, but they themselves were largely interchangeable.

One of the book's major contributions is to illustrate how constrained Stalin and the Politburo actually were when it came to decisions about the economy. Apart from grain collections, foreign exchange, and the investment budget, nearly all decisions about resource allocation were made by subordinates at lower levels. The Politburo chafed about the extent to which decision making was decentralized; it attempted to reserve more decisions for itself, often through force. This state of affairs contributed to the highly inefficient state of the economy, as Moscow forced local managers to do things they knew were ill planned, irrational, and counter to the information they had at their disposal. Failure to fulfill central orders could mean the loss of one's job and arrest, placing local officials in an utterly impossible situation. In fact, even as the regime established the general economic goals it also tolerated informal forms of exchange and shadow market activity among managers.

Gregory also seeks to highlight the surprising persistence of the administrative-command system after Stalin's death. (Gregory chooses to employ the phrase “administrative-command” rather than the more commonly used “command-administrative” system). The mistrust between Moscow leaders and local managers remained after 1953, even growing more heated. Demands for more leeway in using knowledge of local conditions were countered by Moscow's accusations of local corruption, greed, and disinformation. Gregory concludes that stasis in this system was inevitable and served to perpetuate the system until its collapse. Without real markets or the power to make decisions, managers could not act on their access to superior knowledge. Moreover, very few rules actually governed the system, apart from the general notion that one year's priorities, never explicitly stated in any case, would remain priorities the following year. The initial enthusiasm of the first five-year plans dissipated quickly as the plans in action began to seem irrational, confusing, and contradictory.

Read in conjunction with the work of social and political historians of the Stalinist police-state and industrial economy, such as David Shearer, Oleg Khlevniuk, and Mark Harrison, this excellent history of the Stalinist economy greatly expands our knowledge while opening doors to future research.