The situation in commerce was repeated in the fields of research and culture, where facilities were underused and heavily overstaffed. Moreover, enterprises took a considerable time to apply technological inventions to production. The report provided a list of products and equipment that had been developed years ago, but which were still not in use. Once again, the losses were staggering.
For its part, the Popular Control Committee had investigated a large number of industrial enterprises and added its contribution to the litany of complaints. In particular, it had discovered that the production costs fixed by the plan were invariably exaggerated. The determination of these costs did not take account of the fact that the costs in previous years, which served as a base-line, had already been overstated on account of waste, mismanagement, overproduction, and poor use of productive capacity. The Committee did not skimp when it came to listing inefficiencies and waste, but we should note the ‘gentility’ of its recommendations to the ministries that swallowed up resources. It merely drew ‘the ministries’ attention to the need to plan a reduction in production costs more carefully’. But what incentive did they have to do that?
As ever when a control commission or task force was appointed to look into a problem, it presented a picture of utter chaos where nothing worked. It must therefore be made clear that many enterprises functioned reasonably welclass="underline" otherwise, the whole economy would have collapsed long ago. But the system was approaching the critical point where ‘waste’ was going to render it a historical aberration: a system that produced more costs than goods.
If it continued to limp along, it was because the country possessed immense resources. Hence another paradox: a very wealthy country with very low consumption. In sum, the commission suggested that everyone had to learn to be more thrifty. In fact, the problem did not stem exclusively from wastage. No less amazing was the fact that the planning system perpetuated, even exacerbated, inefficiency and waste in the production process, when by definition it should have prevented them.
By now, purely economic and technological measures would not do the trick. Some experts thought that reserves for economic development were to be found in the costly arms sector, since, according to Gosplan’s calculations, 40 per cent of all new machines manufactured in the USSR were intended for ‘special projects’. Was it not time for them to help revive the civilian sector? But this was another pipe dream. In the military-industrial complex itself, technological progress was rooted in waste and utter disregard for costs. Excessive secrecy (and the excessive power of this complex) aggravated the situation. Whatever the achievements (and they were numerous, but remained in the notorious ‘closed cities’ that took a lot without giving anything in return), the economic spin-off for civilian industry was non-existent.
On the other hand, the Soviet ‘planning’ system, whose targets were almost exclusively quantitative, failed to establish sufficiently well-thought-out correlations between these targets and the incentive system; or to ensure an overall balance between the main socio-economic factors conducive to scientific and technical progress and to the satisfaction of social needs that were changing and growing. Soviet planners knew full well that the most advanced Western economies established these correlations successfully – most of the time, at least. A formula for outperforming the West existed on paper in Gosplan’s offices; and things seemed to have worked out in the regime’s early years and during the war. But that simply meant that pathologies could be tolerated for a time. With the economy growing and changing, unaltered planning methods were becoming a fetter: they only perpetuated – even exacerbated – the pathologies. The planning system was in disarray and decaying together with the whole politico-economic statist model.
That is why, as far as Kosygin was concerned, the task was much more complicated than squeezing savings out of each agency (industrial, commercial, etc.). The real task was nothing less than Herculean.
24
LABOUR FORCE AND DEMOGRAPHY: A CONUNDRUM
A good indicator for assessing and understanding both the growth of the 1960s and the decline of the 1970s is to be found in the complex of factors which, astonishingly enough, created a growing labour shortage.
As we saw in Part Two from Gosplan’s own research, in 1965 the main problem stemmed from a distorted geographical distribution of labour: some areas had a surplus, and yet it was difficult to persuade workers to move; others experienced shortages that were difficult to make good.
As the years passed, it became ever more clear that planning methods had not progressed sufficiently beyond the original 1930s model. This consisted in allocating investments in abundance, while relying on the system’s ability to mobilize massive labour reserves when and where required. Everything was different now. In the first place, the planning and education systems had to train large numbers of qualified personnel – technicians and high-level specialists, as well as scientific researchers – and this was a task they acquitted rather successfully. But from 1968 onwards, an entirely new problem arose: the spectre of an outright labour shortage (not just of certain categories) – and without any real prospect of remedying it.
How are we to explain such a situation in a country of 270 million inhabitants, a higher population than the USA’s, but with an economy and national income that were much smaller? In the previous chapter, the report we summarized at some length revealed that ‘waste’ was absolutely central. The factors underlying it also hampered productivity and allowed for growth exclusively through an injection of huge sums of investment, which issued in quantitative expansion – a formula that could only lead, in the more or less short term, into a dead end if nothing was done. Some had grasped this logic at a time when the Soviet economy still seemed to be in reasonably good shape. The plan was unable to ensure a fit between investment targets, output, and an adequate supply of labour. Numbers for the quantity of labour required did exist, but there were no coherent policies and measures for guaranteeing its supply. That in turn would have required appropriate social policies. In the past, labour requirements had been met by the spontaneous gravitation of labour or its mobilization. These mechanisms were no longer operative, and everything was complicated still further by demographic factors.
The articulation of the relevant factors in a situation where labour could no longer be ‘mobilized’ was analysed by an expert in 1968 before a selected audience of top officials. The lecturer – E. V. Kasimovsky – was head of the Research Institute of the Russian Federation’s Gosplan, and his lecture was entitled ‘Problems of Labour and the Standard of Living’.[1] His richly documented presentation surveyed the problems of labour, labour productivity, and the geographical distribution of labour resources. Here we shall cite some key points.
In recent years, large urban centres had experienced labour shortages, to the tune of tens of thousands not only in Leningrad but also in Moscow, Kuibyshev, Cheliabinsk and Sverdlovsk. The situation was even worse in Siberia. ‘This is a new period’, said Kasimovsky, ‘and we have never seen anything like it before.’ No doubt demographic projections held out the hope that the next five-year plan would see a strong influx of young people into the labour market. But they also anticipated that this increase would drop off thereafter. In 1961–5, 2.6 million young people had arrived on the labour market; an additional 4.6 million were expected for the 1966–70 plan and 6.3 million for 1971–5. But the figure subsided to 4.6 million for 1976–80.