Directive management of monetary relations

The organization of monetary relations and their management after 1948 (and especially after 1953) corresponded to a fundamental change in views on money and its functions in the socialist state. The money, capital and foreign exchange markets were excluded. They were replaced by the directive management of all monetary relations, which became only a reflection of the materially determined direct proportions in the creation and distribution of the social product. The material proportions of the state plan had priority. Although money took its usual forms (as cash in circulation, as funds in bank accounts and as foreign exchange), its functions were completely different. They were not a factor that influenced the formation of real proportions in the economy, their growth, structure and balance. Interest was not the price of the capital market and the exchange rate was not the result of the foreign exchange market. The functions of money were precisely defined in terms of the scope of their activities and in terms of the directions of their activities in the central economic plan.