Andrew rothstein

This being so, the reader is in a better position to judge now whether it is helpful, as a guide to the probable development of international relations, to interpret even large capital investments under the fourth Five Year Plan as proof of a policy of “guns instead of butter”, The fact is that the German devastations have hung like a heavy millstone about the neck of Soviet economy, making the most peaceable foreign policy a vital necessity for the U.S.S.R., even if constructive work in every direction, planned for the undevastated areas of the country, did not itself require it.

To judge of the long-term effects of wartime destruction, it will be sufficient to compare the targets originally put forward in a number of fields for 1942, under the third Five Year Plan, with the target now advanced for 1950, under the fourth. For purposes of comparison, the aims of the “plans for a longer period”, given by Stalin, are also included, where possible—with the levels reached in 1940, after three successful years of economic expansion.

Branch of production.	Planned output 1942 (third Five Year Plan).	Actual output 1940	Output 1950 (fourth Five Year Plan).	Long term plan.^3
Iron (million tons)	22	15	19.5	50
Steel ” ”	28	18.3	25.4	60
Coal	243	166	250	500
Oil	54	31	35.4	60
Grain	131	119	1277	180-190
Cotton	3.2	2.7	3.1	—
Electric power (milliard kw.h.)	75	48.2	82	—
All industries (milliard roubles in 1926-7 prices)	184	138.5	205	Over 400

All Soviet experience since 1917 has shown that it would be foolish and short-sighted for anyone to interpret these figures as an indication that the U.S.S.R. for years to come will be helpless or unable to protect its interests, impotent in face of any attempt to dictate to it or exclude it from collective leadership in world affairs. Such interpretations have reacted badly for their authors in bygone years, when the U.S.S.R. was far weaker in economic strength or political influence than it is today. But the figures do illustrate what a profound interest the U.S.S.R. continues to have in preserving world peace, and in consolidating for peace purposes its war-time friendship with the other Great Powers.

Molotov made directs allusion to this interest when addressing his electors on 6th February, 1946. After mentioning the need once again to take up the purpose which had to be dropped when Germany attacked in June, 1941, he said:¹

“Certainly in order finally to accomplish this major task we need a lengthy period of peace and of assured security for our country. The peace-loving policy of the Soviet Union is not some transient phenomenon: it follows from the fundamental interests and essential needs of our people—their desire as quickly as possible to raise their material standards, their tremendous urge to create their own new, cultured Socialist life, and their deep confidence that the Soviet Union will successfully accomplish all these tasks, provided the gang of aggressors is chained up. This is why the Soviet people display such vigilance when possible sources of violation of peace and international security, or intrigues towards that end, are in question.”

In this respect, as in many others, it would be most beneficial to Europe if Molotov were understood as meaning precisely what he said, and no more.

CHAPTER II

RESOURCES FOR SOVIET PLANNING AND MANAGERIAL INITIATIVE

1. The Basis of Soviet Planning

In the first chapter it was shown that the aims of Socialist planning in the U.S.S.R. have from the very beginning created a lively and very material interest in tranquil relations with other countries. We must now consider whether the methods by which Soviet plans are carried out—and particularly the methods by which the necessary resources are accumulated—leave any opportunity among those who are in charge of the various branches of economy to develop an interest in foreign adventures.

“Under the new Five Year Plan, centralised capital investment in the national economy will alone exceed 250 milliard roubles. To make such an expenditure possible, we should strengthen and develop Socialist methods of economic management, the regime of economy and thorough cost-accounting, resolutely do away with inefficiency in economic management, over-inflated personnel and high costs of production, and mobilise our internal resources and all sources of accumulation for the needs of the restoration and development of the national economy.”

Zhdanov, a secretary of the Communist Party, made this statement in the course of his speech at the anniversary meeting to celebrate the 1917 Revolution, held in Moscow on 6th November, 1946. It was not a demand for that mechanical, regimented, inelastic obedience to bureaucratic orders, which many still believe to be the method by which fulfilment of the Five Year Plans is secured.

To understand how Soviet plans are really carried out, it is important to bear in mind certain essential elements of the Soviet economic background.

First, there is public ownership of all land, mineral resources and mines, rail, air and practically all road transport, all harbours and most shipping (save for fishermen’s private boats), foreign trade and all industries (except for small individual handicraft workers, united for the most part in producers’ co-operative societies). Most home trade is also either publicly or co-operatively owned.

Secondly, all State-owned industrial and commercial establishments and organisations are managed on the basis of what may be called “business autonomy” or “cost accounting”—a method of securing the maximum effectiveness of expenditure, in which the basic and working capital are furnished by the State, and the director has freedom of initiative left to him, within the framework of the planned output for the industry, its cost limits and quality standards, and existing labour legislation.

A recent writer says on this subject:

“Cost accounting requires from the business organisations that they should struggle to preserve the resources assigned to them by the State, and to utilise them in the most effective manner. The business organisations bear material cash responsibility for losses which they permit, and receive a material, monetary advantage from their profitable working. This promotes the fulfilment of obligations to the State in respect of lowering costs of production and increasing accumulation.”²

Thirdly, the greater part of agriculture (nearly 90% of the cultivated area and nearly 85% of the output) is managed by co-operative producers’ societies of peasants, called collective farms. These are distinguished from the State farms, which are responsible for nearly all the remainder of agriculture, by being entirely self-owning, except for the land on which they work, and for which they pay no rent: while equipment, stock and produce of the State farms are all State-owned. The collective farms are controlled by management committees, elected by their members. State farms are comparable to factories, in having a manager appointed by the appropriate Government organisation and employing their labour on a wage basis. The collective farms, once they have delivered a part of their produce to the State at fixed prices, have paid their taxes and other dues, and have decided how much to keep in reserve and how much to distribute among the members, can sell the rest of their produce at uncontrolled prices. Their individual members, the collective farmers, once they have satisfied their own household needs out of their share of the produce, can also sell the balance, with the produce from their own household allotment, on the free market.

Fourthly, the efficient working of this system requires—contrary to what is still widely believed abroad—the use of money. The level of production, as we have seen, is not yet sufficient to assure distribution of products according to need. Work must still be the criterion, in order to ensure a constant development of productive forces. The measurement of quantity and quality of work, and of the amount of consumption by each individual, still requires money. So does measurement of the success or otherwise of the managers of industrial and commercial establishments in avoiding waste, reducing costs and so forth. So does the measurement of the comparative efficiency of industries or factories with different levels of technical equipment—i.e., with the production process mechanised to different extents, using different sources of mechanical energy, etc.

Again, the very fact that there are two forms of socially-owned property in the U.S.S.R.—one belonging to the State, the other to co-operative organisations (collective farms)—means that there is still considerable economic difference between the labour of industrial workers and that of collective farmers—the latter being less subject to State regulation—and likewise in the method of disposal of the produce of their labour—part of the collective farmers’ produce being disposed of at prices fixed by the law of supply and demand, whereas factory prices at all stages are regulated by the State. In these conditions the planned exchange of the output of State industry for collective farm output of foodstuffs and raw materials also can only be effected with the help of money.

Nevertheless, it must be remembered that money in the U.S.S.R. cannot become capital,¹ i.e., a means of commanding the labour-power of others through investment or holding of securities. There are no shares, stocks or securities in the U.S.S.R., except for the bonds of State loans, issued as an auxiliary means of hastening capital construction of publicly-owned enterprise, and subscribed out of the personal earnings of citizens.

Fifth, the essential purpose of Soviet planning itself is “to attain the most favourable combination of the following elements—expanded consumption by the masses of workers and peasants: expanded reproduction (accumulation) in State industry on the basis of expanded reproduction in national economy as a whole: a rate of development of the national economy more rapid than in the capitalist countries and, in any case, the systematic increasing of the relative importance of the Socialist sector of our economy, which is the decisive and principal element in the entire economic policy of the proletariat.”² This formula, laid down for the first time at the XV Congress of the C.P.S.U. in December, 1927, as the basis for drawing up the first Five Year Plan, may perhaps be considered outdated in its last section, since “the Socialist sector” is now equivalent to practically the whole of Soviet economy; but in all other respects it still holds good.

Lastly, the economic plans of the U.S.S.R. are the result of the joint effort of Government and the working people. A full and precise description in English has been given by Professor J. Joffe, a member of the Staff of the State Planning Commission. The following quotations sum up its essential points:³

(i) “Work on drawing up the annual plans usually begins six or seven months before the new year. On the basis of data submitted by the People’s Commissariats” (now Ministries: A.R.) “and the State Planning Commission, the Government sums up the results of plan fulfilment for the current year.”

(ii) “The Government also determines the chief tasks that must be carried out in the next few years. These tasks are formulated in the Instructions” (sometimes called “Directives”: A.R.) “for drawing up plans.... In the Instructions for drawing up plans the Government indicates the key problems for the period covered by the plan, specifies the industries that will play a decisive part in fulfilling the plan, and formulates their basic tasks.”

(iii) “The plan fulfilment of all other branches of industry is regarded from the standpoint of the extent to which they ensure the fulfilment of the plan for the key industry.... When the People’s Commissariats receive the government instructions for drawing up their plans, they proceed to determine the preliminary programmes of each of the industries under their jurisdiction. The chief administration of the given industry defines the plan for each establishment under its control.”