The Soviets Tried to Run an Economy without Market Prices

The Soviet government, in accordance with the principles of state socialism, owned and controlled all industry in the country. The economy was managed by Gosplan, a central planning agency that set levels of production, wages, and prices. For Soviet ideologues, Gosplan would replace the free market, maximizing efficiency in production and allowing for the more equitable distribution of goods and services. To accomplish this task, Gosplan utilized a system of material balances.