Russia 5 Years After Stalin·9

...The output increases achieved by the basic industries producing iron and steel, coal, metals and other raw materials had been much more modest, and the processing industries were able to meet their output plans only by running down stocks of materials and semi-manufactures, and by battling a fast-spreading rash of bottlenecks which threatened to slow production...

...Either because or in spite of the reform, Soviet industry did rather well under its admittedly "softened" 1957 plan, and could claim an overall output increase by 10 per cent last year...

...The series began in our issue of March 24 with a discussion of foreign policy by David J. Dallin...

...some are even lower...

...To make it worse, the spread of shortages also engulfed the vast program of industrial and mining construction—the essential underpinning of forced expansion of heavy industry...

...Two sets of data recently published in the Soviet Union suggest that Khrushchev has learned from this failure to substitute political fiat for economic policy...

...For Soviet industry, the last five years were a period of continuous readjustment to a succession of economic policy changes which reflected the contentions among the political leadership...

...Such cuts, apparently, will affect some of the hitherto privileged heavy industries (including, probably, machine-building) as well as the long-suffering consumer-goods branches...

...While Gosplan went to work, Soviet industry evidently attempted to move forward fast, in all directions, as the Party had ordered...

...However, even the more moderate long-term rate of industrial growth now envisaged by the Soviets would give the USSR, fifteen years hence, a volume of industrial production of about the same dimensions as that of the United States in 1957...

...There has been some talk in the West about "crisis" in connection with two recent developments: the tendency for the Soviet rate of industrial growth to decline from the outstandingly high rates of the early postwar years...

...some items have declined below the 1955 level...

...This was, in substance, an admission of defeat, and another bow to realities, although the Party resolution tried to give the impression that the old directives had become outdated by the discovery of hitherto undetected growth possibilities in the economy...

...The goals set for agriculture, residential construction, and transportation put these sectors into acute competition with heavy industry for investment resources, as well as for materials and labor...

...The December resolution demanded a strengthening of the authority of the industrial Ministries...

...These problems encountered by industry in 1956 were aggravated by competition for resources from Khrushchev's energetic remedial programs in agriculture and housing construction, and by the unpublicized demands of the Soviet race for strategic parity with the United States...

...The other is a set of hypothetical output figures for a dozen or so important commodities which Soviet industry, Khrushchev hopes, will achieve in fifteen years...

...On the surface their program for industry reaffirmed the triumph of Stalinist orthodoxy over Georgi Malenkov's heretical attempt to dislodge heavy industry from its traditional primacy over all other sectors of the economy...

...This has forced the industrial planners to make some hard choices in disposing of the investment resources allocated to industry...

...Despite the special attention given to the bottleneck industries, there are indications that 1958 will be another year of seriously strained supply of basic materials...

...Actually, the planners' desire to keep up the tradition of skimping on the light and food industries has been curbed to some extent by two of Khrushchev's successes outside industry: The flush in milk ar.d meat output compels them to give some attention to expanding processing and storage plants, while the provision of more new housing has greatly increased demand for furniture—a predictable phenomenon which the planners so far had preferred to ignore...

...Our appraisal will focus on these two developments...

...Among the basic industries, only oil and gas production have expanded fast enough to keep up with the Party's orders...

...output in important other branches— such as metallurgical, chemical and power-generating equipment—has shown very modest gains...

...All in all, it seems that industrial output gains since 1955 have been made selectively (and probably, in some cases, erratically), and have not at all added up to the rapid advance along the entire front of industry which the Party Congress had called for...

...Khrushchev's list of long-term production targets for 1972 also suggests that he has undergone some education in economic realism...

...This expectation of a further slowdown in industrial expansion reflects a continued effort to correct the imbalances that have developed in the structure of industry...

...For 1953-1957, the official Soviet index of industrial output shows an increase of 73 per cent, or an average of 11 per cent a year...

...Evidently, this ambitious list of the Party's desiderata for 1960 had been drawn up with scant attention to the resources available...

...The picture is equally spotty for the consumer-goods industries...

...U.S...

...The planners were instructed to cut down investment programs, concentrate resources on projects nearing completion and go easy on starting new ones, reduce output goals in industries harassed by supply bottlenecks, and give industry a chance to rebuild its depleted inventories...

...The directives had been solemnly proclaimed by the 20th Party Congress in February 1956...

...manufacturing and mining output in 1953-1957 increased at an annual rate of 2.6 per cent...

...On the other hand, there has been considerable expansion of food processing output (made possible by Khrushchev's successes in agriculture), and in production of domestic appliances, TV sets and other consumer durables...

...More importantly, the figures clearly show that Soviet planners are now concerned with maintaining the reduced rate of industrial growth of the last few years, and do not expect to recapture the more dramatic rates of earlier Soviet development history...

...At the same time, it shows realistic recognition that Soviet industry must learn to live within the constraints imposed on it by Khrushchev's resolve to attend seriously to agriculture and housing, and by other competing claims on Soviet resources...

...The Chairman of the RSFSR Gosplan has warned that the increases in iron and steel output scheduled this year are insufficient "fully to meet the growing needs of the economy...

...A shortage of sulphuric acid is blamed for the decision to keep output of fertilizers at last year's level...

...The result was a mounting backlog of unfinished construction and unused equipment, and of failures to complete on schedule those very plants and mines whose output would have widened the bottlenecks...

...This continued high rate of overall industrial growth must be borne in mind in any survey of the present condition and prospects of Soviet industry...

...But the Party had spoken, and the unenviable task of matching its goals with resources was left to the experts of the State Planning Commission, who were expected to draw up an operational Five-Year program for the economy...

...In the machine-building sector, selected branches—like farm equipment and tractor manufacture—have made good progress...

...This, presumably, was the main reason for quietly backing out of the 1960 commitments entered into by the directives...

...Severe critics of the Soviet index will probably concede that industrial production in the USSR has been growing by 7 or 8 per cent annually in the past five years...

...They were instructed to submit a draft of the overdue Sixth Plan by mid-1957...

...Oleg Hoeffding is an economic specialist attached to the Rand Corporation...

...In December 1956, the Party had ruled that industry's troubles were partly caused by shortcomings in planning and administration, and had indicated that changes were in the offing...

...To give industry a breathing spell, a relatively modest (by Soviet standards) 7.1-per-cent increase in total industrial output was prescribed for 1957...

...and the petroleum and natural gas industries...

...Considering the vacillations of policy and reshuffling of the machinery of administration and planning to which Soviet industry has been exposed, its overall performance has been remarkably impressive...

...However, the directives also ordered determined attacks on sectors of the Soviet economy which Stalin had neglected...

...There are also indications of faulty coordination between the new system of decentralized and regional industrial administration, and the planning system, which remains highly centralized and is organized along industry rather than regional lines...

...They made them by concentrating heavily on capacity expansion in four selected branches of industry...

...But this proved a Pyrrhic victory...

...These are iron and steel production and the chemical industry, both identified as laggards who are responsible for many of the recent bottlenecks...

...It is admitted that other industry branches stand badly in need of capacity expansion, but evidently they have to wait their turn, and to content themselves this year with modest increases in investment, or—as is also admitted—face investment cuts...

...Here, there was a conspicuous drop in cotton fabrics production, barely offset by increases in other textiles...

...In subsequent issues, Boris I. Nicolaevsky discussed the Communist party, Gleb Struve literature, Richard Pipes nationalities, Simon Wolin the secret police, Vladimir Gsovski law, Myron Rush the economic managers, and Lazar Volin agriculture...

...and the so-called "scrapping of the Sixth Five Year Plan...

...Moreover, the rate of growth envisaged for consumer-goods industries was also quite impressive...

...The latter two have been leaders rather than laggards, but the fact that the USSR has been enjoying an oil and gas bonanza means that large investment resources must be poured into refining and distribution facilities...

...By late December 1956, the Party's Central Committee bowed to realities and acknowledged that industry had been driven too fast...

...One is the Economic Plan for 1958...

...Once again, however, basic materials and fuel production did not do so well, and production gains elsewhere were quite uneven...

...The extent to which the housing program competes with industry for investment resources is indicated by the fact that public housing construction this year is due to absorb one-third of total planned construction volume—a strikingly high ratio by past Soviet standards, and one which, apparently, will confine nonresidential construction in 1958 to last year's volume...

...For one thing, he has been very careful to refer to them as "tentative benchmarks" rather than represent them as firm goals...

...The annual growth rates for 1958-1972 implied by the list, for most items, are about those of the recent years of decelerated expansion...

...This deadline lapsed, and by September the Central Committee issued a resolution which, in effect, told Gos-plan to forget about the 1956-1960 Plan and to start work instead on a new Seven Year Plan, to run from 1959 to 1965, and to be ready by mid-1958...

...Future articles in this series will deal with education, labor and the Army...

...But the abolition of most of them proved to be the central feature of the 1957 reform...

...The 1958 Plan, despite the over-fulfillment of the year's target for 1957, once again set a "soft" output goal for industry as a whole—an increase by 7.6 per cent...

...As 1956 drew to a close, it was able to claim an output expansion by 11 per cent, a rate consistent with the goal set for 1960...

...The fate of the Communist party's directives for the Sixth Five Year Plan for 1956-1960 (the Plan itself never materialized) provides an interesting illustration of the impact on industry of Nikita Khrushchev's spirit of restless impatience and adventurous innovation...

...Since the reform, there has been much criticism of tendencies on the part of the new regional Economic Councils to preoccupy themselve with parochial interests, to the neglect of responsibilities toward other regions...

...Published production figures for the last two years generally suggest that the pattern of actual industrial output changes since 1955 has borne little resemblance to what would have been required to meet the 1960 goals of the directives...

...One can only surmise that these inconsistencies—and the haste with which the reform was carried out—reflected the political contentions which led to Khrushchev's June purge of the Presidium...

...The rate of heavy-industry expansion demanded by the directives for 1956-1960 was only slightly below that maintained in the preceding five years, and consumer-goods production was relegated to second place...

...Yet, while easing the pace in industry, the Party evidently still hoped that the planners would succeed in producing a Five Year Plan roughly consistent with its directives...

...Such possibilities were claimed to be inherent, inter alia, in the sweeping administrative reorganization of industry carried out earlier in 1957...

...It has had, and is having its troubles and problems but only wishful thinking can read critical weaknesses into the recent Soviet industrial record...