CRISIS AND PROGRESS IN THE SOVIET ECONOMY,

Transcription

1 CRISIS AND PROGRESS IN THE SOVIET ECONOMY,

2 By the same author THE INDUSTRIALISATION OF SOVIET RUSSIA 1: THE SOCIALIST OFFENSIVE: THE COLLECTIVISATION OF SOVIET AGRICULTURE, THE INDUSTRIALISATION OF SOVIET RUSSIA 2: THE SOVIET COLLECTIVE FARM, THE INDUSTRIALISATION OF SOVIET RUSSIA 3: THE SOVIET ECONOMY IN TURMOIL, THE DEVELOPMENT OF THE SOVIET BUDGETARY SYSTEM FOUNDATIONS OF A PLANNED ECONOMY, , Volume 1 (with E. H. Carr) SCIENCE POLICY IN THE USSR (with E. Zaleski and others) THE SOVIET UNION (editor) THE TECHNOLOGICAL LEVEL OF SOVIET INDUSTRY (editor with R. Amann and]. M. Cooper) FROM TSARISM TO THE NEW ECONOMIC POLICY: CONTINUITY AND CHANGE IN THE ECONOMY OF THE USSR (editor) SOVIET HISTORY IN THE GORBACHEV REVOLUTION THE ECONOMIC TRANSFORMATION OF THE SOVIET UNION, (editor with M. Harrison and S. G. Wheatcroft)

3 THE INDUSTRIALISATION OF SOVIET RUSSIA 4 CRISIS AND PROGRESS IN THE SOVIET ECONOMY, R.W. DAVIES Emeritus Prifessor if Soviet Economic Studies University if Birmingham

4 R W. Davies 1996 Softcover reprint ofthe hardcover 1st edition AII rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1996 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world ISBN ISBN (ebook) DOI / A catalogue record for this book is available from the British Library Copy-edited and typeset by Povey-Edmondson Okehampton and Rochdale, England

5 In memory of my Aunt Ciss WINIFRED DEAN

6

7 CONTENTS List of Tables Preface XI XIV THE 1931 PLAN 2 THE INDUSTRIAL CoNFERENCE, january 30-FEBRUARY 4, 1931 II 3 THE STRUGGLE FOR THE PLAN: january-jui'\e (A) Economic Development 18 (i) Crisis, January-February 18 (ii) Partial recovery, March-June 21 (B) (iii) Costs and finance, January-June 22 The Drive for Discipline 24 (i) Mobilisation 24 (ii) Control of labour 26 (iii) Forced labour 31 (iv) Against sabotage 37 (c) Revision of the Plans 40 (D) Signs of Reform 44 (i) The nepreryvka reconsidered 44 ( ii) The specialists 46 (iii) Khozraschet 49 (iv) Wage policy 53 (v) Retail trade 58 4 STALIN'S CONDITIONS FOR INDUSTRIAL DEVELOPMENT 65 Vll

8 Vlll Contents 5 REFORMS AND PLANS, july-december 1931 (A) The Political Context 77 (B) Attempts at Economic Reform 77 (i) The specialists (ii) Wage differentiation (iii) Personal responsibility (iv) Khozraschet (v) 'Soviet trade' 94 (c) The Struggle for the Plan IN RETROSPECT 104 (A) Capital Investment 104 (B) Industrial Production 105 (c) Labour and Labour Productivity 108 (D) Costs and Finance 110 (E) The Defence Sector 112 (F) Foreign Trade in Crisis THE 1932 PLAN THE XVII party CONFERENCE, january 30-FEBRUARY 4, REFORMS AMID DIFFICULTIES, january-june (A) The Economy under Strain 147 (B) Import Cuts 155 (c) Defence Imperatives 164 (D) Food Shortages 176 (E) Economic and Financial Policy 192 (F) Radical Economic Reform CRISIS AND REPRESSION, july-december (A) Crisis, July-August (B) The Harsh Solution and its Opponents, August-December (c) The Economic Debate, Autumn (D) Economic Developments, September-December (i) The failure of 'neo-nep' 270 (ii) Industrial production 279 (iii) Finance 283

9 Contents ix (E) The Control of Labour, November-December (F) Towards Realistic Planning 292 II 1932 IN RETROSPECT 302 (A) Capital Investment 302 (B) Industrial Production 303 (c) Labour and Labour Productivity 305 (o) Costs and Finance 308 (E) The Defence Sector 310 (F) Foreign Trade THEjANUARY PLENUM AND THE 1933 PLAN FROM DISASTER TO STABILITY: THE POLITICAL CONTEXT OF THE DEPTHS OF CRISIS, JANUARY-MARCH THE EVE OF THE UPSURGE, APRIL-DECEMBER (A) Economic Policy 381 (B) The Outcome 390 (i) Investment in crisis 391 (ii) Consumer industries in depression 394 (iii) The railways in trouble 396 (iv) The advance of heavy industry IN RETROSPECT 407 (A) Capital Investment 407 (B) Industrial Production 411 (c) Labour and Labour Productivity 419 (o) Stabilisation of Costs 420 (E) Finance 423 (i) The budget and public finance 423 ( ii) Enforcement of financial discipline 426 (iii) Prices 428 (F) The Defence Sector 432 (G) Foreign Trade under Control 434

10 X Contents 17 URBAN SOCIETY IN TRANSITION (A) Non-agricultural Employment (B) Industrial Workers (c) The Specialists and the Ruling Elite CoNCLUSIONS 457 (A) Economic Policy 457 (B) The Political and Economic System 459 (c) Results of the First Five-Year Plan 466 (D) The Transformation oflndustry 472 (i) Capital goods and armaments 472 (ii) Consumer goods 480 (iii) The problem of balance 481 (E) Location of Industry 485 (F) The Role of Western Technology 490 Tables 501 Glossary of Russian Terms and Abbreviations used in Text 55 7 Abbreviations qf Titles qf Books and Periodical Publications, etc., used in Footnotes 568 Bibliography 5 70 Name Index 588 Subject Index 596

11 LIST OF TABLES I. National income, (a) By sector of origin 503 (b) By end-use Gross capital investment by branch of the economy, Gross capital investment in state and cooperative industry, by type of industry, Stock of machine tools in metalworking and machine-building industries by age of machine tool, January 1, Industrial production in value terms 512 (a) Gross production of industry, by industry, (b) Gross production of armaments, (c) Gross production of heavy industry by months and quarters, (d) Gross production of large-scale industry by regions, 1928 and (e) Indexes of industrial production, 1913, 1927/ Industrial production in physical terms, (a) Intermediate products 518 (b) Engineering industries 519 (c) Armaments 520 (d) Consumer goods Monthly industrial production in physical terms, (a) Coal 522 (b) Crude oil 522 (c) Pig-iron 523 (d) Crude steel 523 (e) Rolled steel 524 (f) Tractors 524 XI

12 xu List of Tables 8. Production and import of non-ferrous metals, Allocation of rolled steel, (a) By end-user 526 (b) By origin and type of use Average daily number of railway goods wagons loaded, by months and quarters, ll. Retail trade turnover by social sector, Food rations 530 (a) Number of persons receiving individudal food rations, (b) Amount of food ration, by List and category, Foreign trade, (a) Exports in value terms 534 (b) Exports in physical terms 534 (c) Imports in value terms 535 (d) Quarterly imports and exports 536 (e) Exports by receiving country 537 (f) Imports by country of origin Urban population 538 (a) Total urban population, and population of large towns, 1926, 1931, (b) Number of persons entering and leaving towns, Number of persons active in the non-agricultural sector 539 (a) Number of employed persons by branch of the economy, 1927/28 and (b) Approximate number of gainfully-occupied persons, 1927/28 and Number of employed persons in large-scale industry 540 (a) By type of employment, 1929 and (b) By region, 1929 and (c) Manual workers, Monthly number of persons employed in building, January 1, 1930 to January 1, Number of persons confined in GULAG camps, and number of 'special settlers', January 1, 1930-January 1,

13 List of Tables X Ill 19. Quarterly labour turnover in large-scale industry, Average monthly earnings in non-agricultural employment, 1928, Distribution of managers and workers by size of monthly earnings and by industry, September-October State budget in comparable classification, (a) Net revenue 546 (b) Net expenditure Union budget allocations to principal branches of the economy, by quarters, Currency in circulation, January l, 1930 to January l, Price indexes 553 (a) Average annual retail prices, 1928 and ( 1928 = 100) 553 (b) Monthly urban bazaar prices for agricultural goods (peasant supplies) (1928= 100) 556

14 PREFACE This book deals with economic developments in , a period of devastating crisis. The Soviet authorities desperately sought to achieve the over-ambitious industrial plans adopted in the course of In 1931 alone capital investment increased by 20 per cent or more, and reached more than double the 1928 level. Non-agricultural employment increased by as much as 30 per cent in the most rapid expansion in any single year. The expansion of the industrial sector placed an immense strain on resources. Many more mouths were clamouring for food, which the state sought to squeeze from a reluctant peasantry and an agriculture in decline. In spite of the hypertrophy of the industrial sector, the great projects of the first five-year plan were not completed on schedule, and the production plans were not achieved. And in the agricultural year 1931/32 the state failed to obtain from agriculture the increase in supplies which was required for food, fodder, industrial raw materials and export. These failures led to major shifts in policy. In the summer of 1932, investment and production plans were drastically cut, and the year 1933 saw a return to more realistic planning. On September 12, 1933, Stalin wrote to Molotov accepting the Gosplan proposals for the 1934 plan: I agree that capit[al] investment should not be fixed at more than 21 milliard rubles for 34, and that the growth of industr. output should not be more than 15 per cent. That will be better. 1 This marked the end of the era of Utopian planning- at least for the time being. Even before this revolution in policy, major modifications were made, in both concept and practice, to the model of the socialist economic system which had prevailed in 1930 (on which see 1 Cited in Kommunist, II, 1990, XIV

15 Preface XV vol. 3, pp ). Mini-reforms in 1931 were succeeded by major reforms in In the post-soviet writings of Russian economists and historians, the Stalinist economic system is usually characterised as a 'command-administrative economy' (a term first popularised by Gorbachev) or a 'commandrepressive economy'. It is certainly the case that the 1930s saw a general movement, albeit by fits and starts, to a more centralised and more repressive system. In the course of the labour camps were greatly expanded, and acquired a definite economic role. But - in spite of purges and terror- the political system was more complicated and more flexible than its image in the traditional 'totalitarian hypothesis'. And as a result of the reforms of the Soviet economic system - under Stalin and after- permanently embodied several important features which are absent from the 'command-administrative ' model. Thus money played a significant if subordinate role in Soviet state socialism; and 'economic accounting' was posed as a subsidiary goal to every economic unit. Labour was controlled not only by administrative orders but also through wage incentives; there was a 'quasi-market' for labour. The authorities decided that most food and consumer goods would be made available to wageearners on a retail market, albeit at fixed prices, rather than through administrative rationing. And peasants and collective farms acquired limited legal rights to sell food on the 'kolkhoz market' at prices formed by supply and demand. This was a command system, but one with certain indispensable market and quasi-market features. These changes in policy and system were insufficient, and came too late, to prevent the devastating famine of , in which millions of peasants died. All mention of the famine was banned from the Soviet press, but its grim consequences silently loomed over every aspect of life. Agriculture and the famine will be the subject of the next volume in this series, The Years of Hunger: Soviet Agriculture and the Famine, Dr Stephen Wheatcroft, Director of the Centre for Russian and Euro-Asian Studies, University of Melbourne, will be joint author of this volume; his expertise will be invaluable. While I was engaged in research on the present volume, the Soviet Union collapsed, an event which is certainly as significant

16 xv1 Preface for world history at the end of the twentieth century as the Bolshevik revolution was at its beginning. The downfall of Soviet state socialism was not anticipated by specialists on Soviet affairs, and like other historians of the Soviet period I have naturally been impelled to reconsider my view of the Soviet past. The inherent defects of the Soviet economic system had already emerged in the early 1930s, and have long been a commonplace in Western histories of this period. In the previous volume I described the neglect of quality and of the needs of the customer, the fettering of initiative and the discouragement of risk, and above all the inhibitions on new production and new technology. These characteristic negative features of the Soviet system had already emerged in 1930 as consequences of the sellers' market and the strong central controls over industry (see vol.3, pp ). Perhaps even more significant was the profound agricultural crisis of the early 1930s, the consequences of which still haunted the Soviet countryside fifty years later. But I would hesitate to profit from the advantages of hindsight by jumping to the conclusions that these inherent defects of the system were insurmountable, and that the fate of the Soviet economic system was already settled by the Stalin revolution of the early 1930s. In spite of its weaknesses, the Soviet economy of the 1930s displayed an industrial dynamism which contrasted sharply with the Great Depression in the capitalist world. In the last months of 1933 the Soviet capital goods industries began their rapid expansion; in the course of the second five-year plan the Soviet Union became a great industrial power. Soviet industry produced modern armaments which played a major part in the defeat of Nazi Germany; and after the second world war Soviet industry and science enabled the USSR to become - for a time - one of the two world super-powers. The present and subsequent volumes seek to show how the economy acquired both its dynamism and its inherent defects. But a study of the economy of the 1930s cannot hope to disclose the reasons for the downfall of Soviet communism, for several reasons. First, that downfall was at least partly due to new factors which emerged after 1945: the ability of the capitalist world to initiate and launch new technological revolutions; the inability of the Soviet leadership - under both Brezhnev and Gorbachev - to reform the economic system; and fatal above all perhaps was the decision of the Soviet leaders -like Ivan Grozny, Peter the Great and Nicholas II- to

17 Preface xvii embark on military competition with powerful Western neighbours, placing an immense strain on the relatively backward Soviet economy. Moreover, political and social factors - including the role of the party, the nomenklatura, and the secret police - may have played an even more important role in the collapse of the system than its economic weaknesses; and these factors are dealt with in these volumes only as background to the economic factors. I hope none the less that these volumes may provide information and analysis which contribute to our understanding of the collapse of Soviet Communism. Since I completed the previous volume, many important Russian archives have become accessible to scholars. These include the protocols of the Politburo in the former party archives (RTsKhiDNI), the decrees and papers of Sovnarkom and its committees in GARF (formerly TsGAOR), and the materials of Gosplan and TsUNKhU in RGAE (formerly TsGANKh). For all these archives the opisi (finding aids) have also been available. I am most grateful to E. A. Tyurina, S. V. Somonova, D. Babichenko, G. V. Gorskaya, L. P. Kosheleva and L. Rogovaya for their friendly assistance. E. Danielson of the Hoover Institution provided valuable material from their Trotsky archive, and I again drew on their records of American Engineers in Russia. Many colleagues have provided advice and assistance. I am most grateful to Dr Oleg Khlevnyuk for his valuable help; Melanie Ilic prepared the Bibliography and Index and assisted in other ways. I should also particularly mention Pierre Broue, Julian Cooper, who provided material on capital investment, V. P. Danilov, the late Vladimir Drobizhev, Mark Harrison, Jonathan Haslam, Hiroaki Kuromiya, Arfon Rees, Nicholas Werth, Stephen Wheatcroft and Stephen White. Betty Bennett worked unsparingly on the preparation of numerous drafts of the manuscript; as soon as a typescript was complete, new Russian archive material became available. My wife Frances continued to provide great support and encouragement. The work was facilitated by the successive grants of the British Economic and Social Research Council for the Birmingham projects on Soviet economic and social history. These enabled the

18 XVlll Priface employment of Mrs Bennett as project secretary and ofms Ilic as part-time research associate; provided travel money; and supported the 'SIPS' seminars (Soviet Industrialisation Project Seminars) at which I presented preliminary findings on several occas10ns. February 1995 R. w. DAVIES