The intention behind all this is to concentrate economic decision-making in the hands of the top party leadership acting through Gosplan, the State planning agency. The Soviet factory manager must execute a blizzard of orders and directives, while his individual role is restricted to maximising output. He is told what to produce, from whom to obtain materials, how many people to employ and what to pay them.
Factory directors have no authority to deal with unexpected contingencies. At a big construction site near Ryazan, for example, a gear broke on some Polish-manufactured excavators. The replacement cost was no more than 250 roubles (about £180), but the new parts could not be ordered direct from Poland.
Instead the project’s chief engineer had to travel to Moscow, wait two weeks for an appointment with the Vice-Minister of Foreign Trade and then see an official in the Ministry of Finance because the purchase of the replacement parts required hard currency. Only with the approval of these officials could an order for the new parts be issued. They took another two months to arrive. In the meantime, the entire project was at a standstill.
Mr. Brezhnev expressed surprise that although the Soviet Union is the world’s larger producer of steel, iron, mineral fertiliser and cement, these basic goods are often in short supply. But this stems from the fact that the country’s highly centralised economic system must measure results on the basis of gross aggregates, which can supposedly be expressed in figures.
The planners set high production targets to force factory managers to make maximum use of men, materials and equipment. But managers protect themselves by overstating their resource requirements, and the system breeds a passion for fictitious results.
An engine factory in Kharkov, for example, satisfied its plan requirements by using 200 KG ingots to produce 30 KG units. The waste of steel was enormous but the factory met its targets because output was calculated on the basic of the value which was presumed to have been added to the material inputs. Reducing the steel order would have saved steel, but reduced the factory’s ostensible output too.
Transport workers who send cargoes back and forth between distant Soviet cities in order to accumulate mileage, or construction engineers who start projects but don’t finish them (unfinished projects have come to 80 per cent of capital investment in recent years) also reflect the logic of a system which rewards plan fulfilment rather than the filling of specific needs.
The relation between waste and the excessive concentration on gross output as an economic indicator was outlined persuasively in November 1977 in the party newspaper Pravda in a series of articles by Mr. Dimitri Valovoi, the paper’s deputy editor. There was no sign in Mr. Brezhnev’s speech, however, of any intention to move to qualitative indicators of economic performance which would require human judgments and vitiate central control.
The rigidity of the Soviet economic structure restricts not just factory managers but apparently ordinary workers as well. Under Stalin the economic system was backed up by political terror. With the passing of that era, increases in labour productivity have steadily declined and labour delinquency has increased. Labour productivity increased only 2.4 per cent during the first nine months of this year against a target of 4.7 per cent. In 1951, it increased more than 10 per cent.
Acute alcoholism is a growing and dangerous problem. Alone among modern countries, the Soviet Union shows declining life expectancy, which fell from 66 in 1966 to 64 in 1972 and has now dropped to the point where a figure for males is no longer published. This is attributed to the effects of alcoholism, and Soviet researchers have estimated that with complete sobriety at the work place, Soviet productivity would increase.
Efficiency is also hampered because the burden of adapting to the needs of the bureaucracy which directs the world’s largest planned economy is placed entirely on the average citizen.
In the early years of Soviet power, centralisation had unquestionable advantages. The Russians were proceeding from an undeveloped industrial base; quantity production and the ability to concentrate on specific objectives were beneficial. Agriculture was depressed and living standards were held down to produce capital for investment. Raw materials were plentiful.
Now, however, with the heavy industry base created, the need for efficiency is paramount because the economy faces an exhaustion of inputs. Oil production will increase only 2 per cent this year and may soon begin to fall. Population growth has levelled off, particularly in the European areas where industrial labour is most badly needed and the area of arable land is expected to decline.
Achieving efficiency would appear to require some measure of liberalisation and decentralisation, with the introduction of qualitative measures of economic performance and greater autonomy for factory managers. This was tried at the time of the Kosygin reform in 1965, but had little practical effect. There is now little likelihood that the Soviet economy will be decentralised, and it is no accident that Mr. Brezhnev failed to mention this as a possibility.
Allowing individual factory managers greater freedom to make economic decisions on economic grounds would not have direct political consequences. But the element of economic democracy represented by local decision-making would indirectly create greater possibilities for political democracy because economic discussion inevitably touches on questions of policy.
Under the Soviet system the State, which is ruled by the Party, must have full authority in all areas including the economy. Even the seemingly innocuous decentralisation of economic decision-making would weaken the authority of the Central Government.
This is why, despite Mr. Brezhnev’s threat to replace officials who fail to meet their targets, the decline of the Soviet economy is likely to continue throughout the next decade, leading to ideological vulnerability and public discontent, and giving the authorities an object lesson in the limits of centralised power.
ERZEUGT DURCH JUTOH - BITTE REGISTRIEREN SIE SICH, UM DIESE ZEILE ZU ENTFERNEN
Financial Times, Friday, December 21, 1979
Josef Stalin’s Legacy Leaves
Soviet Leaders in Dilemma
Each member of the older generation will be left with his own memories, but no official celebration is planned today for the 100th anniversary of the birth of Josef Stalin and few people are expected at the Kremlin Wall to lay flowers at the former dictator’s grave.
Josef Vissarionovich Djugashvili, the man known as Stalin, literally “man of steel” created the modern Soviet state. But the Soviet authorities show little inclination either to glorify or condemn him. Sometimes it seems that they would prefer most of all to forget him.
The dilemma posed by Stalin springs from the fact that he turned the Soviet Union into a totalitarian state. Though the present leaders may want to disassociate themselves from his crimes, they continue to exercise absolute power through the structure he created.
Kommunist, the Communist Party’s theoretical journal, tried to draw a distinction this week between Stalin and the Soviet system. The journal said Stalin’s career had both positive and negative sides but that the “negative phenomena,” namely “Stalin’s crude abuses of power,” did not reflect the nature of the Soviet system, only the distortions of the “personality cult.”
The only serious Soviet attempt to come to terms with the consequences of Stalin’s rule was made by Nikita Khrushchev, the former Soviet premier who authorised publication of Alexander Solzhenitsyn’s “One Day in the Life of Ivan Denisovich.”
Between 1962 and
