OTHER WOES OF THE ECONOMIC MODEL
After Stalin’s death, important changes were made in the economy, with positive results. A sharp increase in agricultural investment (mainly in the ‘virgin lands’ of Kazakhstan and elsewhere), and an increase in the prices paid to agricultural producers, led to a doubling in the monetary income of collective farms between 1953 and 1958. Agricultural output grew by 55 per cent between 1950 and 1960; grain output alone rose from 80 to 126 million tons, with three-quarters of the increase deriving from the virgin lands. But the latter were not a stable source of grain in the longer run.
To improve living standards, investment in housing and consumer goods was stepped up. Between 1950 and 1965, the urban housing stock doubled and the gulf between investment in capital goods – priority of the Stalinist period – and in consumer goods narrowed.
Great improvements were made in health care. The mortality rate declined from 18 per thousand in 1940 to 9.7 in 1950 and 7.3 in 1965. Infant mortality – the best indicator of public health standards – dropped from 182 per thousand live births in 1940 to 81 in 1958 and 27 in 1965.
Educational levels also rose: the number of pupils continuing their education beyond the four years of elementary schooling rose from 1.8 million in 1950 to 12.7 million in 1965–6. As for numbers in higher education, they trebled from 1.25 million students to 3.86 million in the same years.
Extremely low in 1953, peasant incomes grew more rapidly than those of town dwellers. Within the urban population, a certain levelling set in: minimum incomes rose, as did pensions, while wage differentials narrowed.
But the old preference for heavy industry and armaments persisted, and in so far as an effort was being made at the same time to raise living standards and stimulate technological progress, problems were mounting. In these years, Japan caught up with Soviet growth levels and succeeded in both improving its living standards and modernizing its economy. By contrast, Soviet economists and planners knew and said – in secret but also in published works – that the country’s economic model, which remained basically Stalinist, contained dangerous disequilibria. Nevertheless, the Soviet Union enjoyed some spectacular successes, especially in aerospace, so that (in R. W. Davies’s words) ‘by 1965 the Soviet Union faced the future with confidence, observed by the capitalist powers with considerable alarm’.[5] But as the archival material from Gosplan and other institutions indicates, the immediate future was much more complicated and worrying, and the planners began to grow seriously alarmed.
Regarding the targets of the eighth five-year plan (1966–70), certain failures were already evident. Gosplan’s collegium had warned the government that these shortcomings would impact on the subsequent plan.[6] Although investment from all sources had increased by 1.7 per cent (10 million roubles), the central investment plan from which the bulk of new productive capacity derived (especially in heavy industry) had fallen short by 27 billion roubles (10 per cent). On top of this, an extra 30 billion had to be spent to cover increased construction costs for productive units, whose productive capacity had not thereby been enhanced. Thus, the plan’s targets for the coming on stream of new units had been met only to the tune of 60 per cent for coal and steel, 35–45 per cent for the chemical industry, 42–49 per cent for tractors and lorries, 65 per cent for cement, and 40 per cent for cellulose. All this would impact on the construction of plant in the course of the subsequent plan.
Gosplan attributed the responsibility to government ministries, which had to find the reserves required to expand output. But most of them did not include proposals for improvements in their respective sectors in their plans for 1971–5 – and this despite numerous injunctions from government to do so and to find reserves.
CONTINUAL GROWTH IN EXTENSIVE FACTORS IN THE ECONOMY
A yet more revealing diagnosis was offered, again by Gosplan’s research institute. On 19 November 1970 its director, Kotov, wrote to Gosplan’s deputy head, Sokolov, and had this to say: in its directive for the ninth five-year plan (1971–5), the Twenty–fourth Party Congress had postulated that economic success was based on intensive growth and the introduction of new technology (this also applied to agriculture). But the relevant data indicated, in agriculture in the first instance, that the expenditure already committed in terms of labour, wages and social funds was growing faster than output. This trend contradicted the imperative of economic development – namely, achieving relative savings in social labour.[7]
The far from favourable prospects for the next five-year plan were primarily caused by the signal reduction in the productivity of capital assets. The existing indicator for measuring returns on investment was inadequate and economists in the agricultural department lacked a reliable instrument for assessing these assets and planning the requisite amounts of capital.
Kotov then produced a series of calculations that we shall not reproduce here, but which served as a basis for his warning to Gosplan and the government: ‘Extensive factors are becoming stronger in the development of the Soviet economy, primarily because growth in basic capital assets is outstripping growth in output. This trend is even more apparent in agriculture than other sectors.’
If the experts were alarmed, it was because such a trend ran counter to modern industrial and scientific development. There is no doubt that some of the leaders involved in the development and implementation of economic policy were also aware of these trends and what they portended.
17
THE ‘ADMINISTRATORS’: BRUISED BUT THRIVING
‘BARGAINING’
We can now return to the Soviet bureaucracy, whose fate we tracked under Stalin. After his death, what happened to it can best be described, without the slightest hyperbole, as the ‘emancipation of the bureaucracy’. Stalinism cost it dear, and even if administrators served as best they could, the system did not allow them to behave like the bosses they were supposed to be. Henceforth they did everything in their power to eliminate from the system all the elements of Stalinism that had spoilt things for them. To anticipate somewhat, we can say that the bureaucratic phenomenon was going to flourish as never before and that the Soviet system’s modus operandi was to be profoundly transformed by it. Henceforth the decision-making process was ‘bureaucratized’ – that is to say, it no longer took the form of categorical orders, but of a complex process of negotiation—coordination (soglasovyvanié) between top political leaders and administrative agencies. This new modus operandi had already existed in many respects, but was always vulnerable to abrupt termination by sometimes bloody purges. That was now out of the question, even if a peremptory reform by Khrushchev abolished a large number of government agencies and offices with a stroke of the pen. But this had nothing in common with the way Stalin had operated. Moreover, the reform in question actually ended up failing, as we shall see in more detail later.
5
With the exception of a few remarks of my own, this material is taken from R. W. Davies,