.7 interv-ational pr'?Jes, to allow, in some caszs, enterprises to have ditect accers to technology and other imports " and by greater tolerance for unofficial or parallel markets in both goods and currency. Such measures were very tentatively initiated (but then reversed) in Poland and Czerhoslovakia in the late 1950s and more systematically in Hungary after 1968 and Pcland after 1.973/75.

Decentralization involved the central authorities relinquishing the right to set physical output targets and centrally allocate inputs and materials. Given concentration and market power, supervisory agencies were generally retained with a view to containi.,g price expansion by monopolists. This also cohered with the discretionary realloc-ati **o** fn resources by means of the tax system, subsidies and refinancing credits issued through the Central Bank.

Despite specific country features, certain regularities can be isolated. In general, devolution of controls implied some measure of worker selfmanagement, normally through enterprise councils or partially accountable entitier. In Poland by the early 1980s workers' councils had been established in over 6000 enterprises while in Hungary later measures resulted in around 73% of state enterprises being transformed to management by councils 2. From the perspective of this paper, this transition implies, first, the possible creation of a new player in the game linking plant to planner. Under the partially reformed system a diluted managerial role emerged, given the weakening of planned outputs and allocations. This generated a more complex set of games between enterprise and planner covering subsidy, tax eligibility and other negotiable arrangements; it also generated the potential for firm-specific bargaining.

Decentralization also raised the issue of the manager's function and motivation. Clearly, in a market economy, with a division between owner and manager, motivation depends variously on labour market rewards, earnings based incentives, share or stock options and any discipline exerted by external valuation on the viability or independenc if the enterprise. rhese incentives are largely absent in the RlE. In fact, the only consistent motivational mechanism has been wage and performance-related bonus payments; themselves in part constrained by the political acceptability of wider income dispersion ". Further, precisely because of the horizons generatee by the system of social ownership, the need to regulate the size of the incentive payments was recognized. In general, the wage premia paid to enterprise managers was explicitl' associated with performance or synthetic indicators with penalties levied if wage expansion Was in excess of the growth in the performance " With commonly disastrous consequences involving later socialization of the debts incurred by unsatisfactorily regulated enterprise borrowing, particularly in Poland.

12 However, central and party interference in the composition of management committees remained widespread. For a summary of the inst :utioa%l changes, see IMF (1989a and 1989b).

13 Political opposition to wage differentiation was one main reason for the failure of the 1969 reforms in Hungary; see Soos (1987).