A lengthy page would be required just to list the departments and sections of this imposing body. It employed some 130,000 people, which was not excessive given its task – namely, to organize a smooth flow to the country’s productive apparatus of all the supplies required for it to function: machinery and equipment, raw materials, fuel, construction materials and tools, and so on. Everything sounds perfectly reasonable – until we realize that in the USSR a single bureaucratic agency was responsible for doing what market mechanisms did elsewhere. If Gossnab had performed satisfactorily, the USSR would indeed have represented the alternative to capitalism it sometimes claimed to be. Gossnab and Gosplan would have been the two cathedrals of a new world. Here we might remind the reader that a good socialist like Trotsky had explained to the Comintern executive committee in 1921 that socialism was a long-term project and that those who wished to realize it one day had to start off by following in the footsteps of the market economy.
The reality is that in the Soviet world no other centralized agency produced such a host of ‘decentralized’ side-effects. Gossnab, super-supplier, was in fact one of the system’s bottlenecks, for it was the cause and manager of constant shortages. Consequently, it is scarcely surprising that the whole economic apparatus responded to these shortages, and to Gosplan’s patent inability to furnish vital supplies consistently, with all sorts of devices and practices and an independent supply-cum-marketing system, emulating the ministries and important enterprises. This murky world of snaby and sbyty acquired a life of its own, becoming a key fixture of economic and social life. No study of Soviet reality can ignore it, and it is important not to confuse it with Gossnab.
‘Murky’ is the appropriate adjective to describe this plethora of operators on the margins of the official system. Even so, had the regime really wanted to know how things stood (and even if it did not really wish to know), it could have referred to the inspection agencies, which regularly conducted inquiries into the sector, or (even better) to the Central Statistical Office, which on 1 October 1970 carried out a census of these ‘commercial’ organizations. Although it could not claim to be exhaustive – naturally, it did not encompass military procurement agencies – the figures are impressive. The 11,184 organizations recorded in the third quarter of 1970 employed 722,289 people, with a total payroll of 259,503,700 roubles. The Central Statistical Office also provided information on warehouses, inventories and transportation costs.[8]
The census was incomplete because it did not include the unofficial personnel of these snaby-sbyty bodies. The notorious tolkachi featured on the payrolls as employees of other administrative agencies or in more or less fictitious jobs in enterprises. They actually spent most of their time dealing with all manner of suppliers and disposed of the requisite resources to ‘speed things up’, or simply to secure indispensable supplies in means of production and consumer goods. For crucial supplies were rarely obtained without a nudge in the right direction; and that was precisely the task of the tolkachi. Their activities were severely condemned by the party, but flourished nevertheless, for without them the economy would have stalled completely.
There was a further dimension that the census could not take account of Possessing plentiful resources, these operators frequently meshed with dealers on the black market, who hovered around factory warehouses whose stocks were not strictly inventoried. The huge army of people engaged in snaby-sbyty activities formed a natural environment for all sorts of deals, and thus for the development of a shadowy proto-market economy, which was often vital and useful. At all events, it constituted a surreal aspect of Soviet reality.
26
‘TELLING THE LIGHT FROM THE SHADE’?
Gregory Grossman has pioneered the study of the phenomenon known as the ‘second economy’, while others – and the Russians themselves – prefer the more mysterious-sounding ‘shadow economy’ (the literal translation of the Russian term tenevaia ekonomika), which refers to a much broader, more complex reality than the readily definable ‘black economy’. This is unquestionably a thorny issue, with economic, social, legal, criminal, and even profoundly political dimensions. The authors of a serious Russian work, who are well acquainted with Western publications on the subject and refer to them, have enriched the debate by bringing previously inaccessible Russian sources and studies to our attention.[1]
The shadow economy is not easy to define, but efforts to circumscribe it lead us into some of the less well-known complexities of the Soviet economy. For some scholars, its causes are to be sought in the almost permanent imbalance between supply and demand, with the deficit in consumer goods and services leading to inflationary pressures. According to the Hungarian economist Janos Kornai, bureaucratic planning creates shortages of capital and goods and the shadow economy emerges as a partial correction of the straitjacket imposed by an economy of shortages. As wages lose their purchasing power, the population is forced to find other sources of income, prompting many to engage in some additional activity on top of their regular state jobs. Experts who have tried to assess the extent of the shadow economy for the years 1960–90 estimate that it multiplied eighteen-fold in this period: one-third of it in agriculture, a further third in commerce and catering, and the remaining third in industry and construction. In the case of services, the main activities in the shadow economy were home and car repairs, and private medical services and education at home.
I. G. Minervin, who contributed the chapter dealing directly with the Soviet period, made ample use of Western works and recent Russian contributions. The majority of Western authors (Grossman, Wiles, Shelley) concur that the emergence of a shadow economy is inevitable in the so-called socialist economies, and this is mostly confirmed by later Russian studies. But how exactly is it to be defined? For some, it comprises all economic activities not included in the official statistics or all forms of economic activity conducted for personal profit that flout existing laws. Others (Western scholars) regard it as a ‘second economy’ or a ‘parallel market’. However, because the dividing-line between legal and illegal activities is often difficult to draw, some of them include all activities that were acceptable in practice, but which did not pertain to the official economy. Thus, Grossman’s ‘second economy’ encompasses activities that were common to the Eastern bloc and Western Europe, such as the cultivation of a private plot or the sale of its produce in kolkhoz markets – activities that were legal in the USSR, but which might sometimes be connected with illegal practices. The situation was similarly ambiguous in construction: building materials from dubious sources, bribes, illicit use of state transport, helping private citizens or influential bosses to build a house or dacha. The same applies to repair work of all kinds carried out by private individuals or teams: this could be legal, semi-legal or illegal (the latter two categories belonging to the ‘shadow economy’).
8
RGAE, f. 1562, op. 47, d. 1183, LL. 4–8: data of the census conducted on 1 October 1970 by the Central Statistical Office on ‘indicators of the activities of supply-and-marketmg organizations’.
1
I. G. Minervin, ‘Tenevaia ekonomika v SSSR – prichiny i sledstviia’, pp. 103–27, in I. Iu. Zhilina and L. M. Timofeev, otvet. red., ‘Tenevaia ekonomika: ekonomicheskie i sotsial’nye aspekty’. This set of essays is to be found in a periodical published under the auspices of the Russian Academy of Sciences,