Soviet economy had advanced at a rate of 5 percent during 1974, with industrial production increasing 8 percent. These figures, which during the years of the long postwar capitalist boom would have provoked yawns of boredom and indifference, once again took on a rather provocative and in any event displeasing taste for the bourgeoisie, afflicted as it is with its own crisis. For their part, the pro-Soviet Communist parties also preferred not to go into a deep analysis of the Soviet economy, which, beneath the superficial veneer of apparent prosperity, conceals purulent sores that are particularly difficult to cure. Results in 1974 An analysis of the economic results of 1974 can reveal many things about the functioning of the Soviet economy, provided, of course, that such an analysis is conducted on the basis of methodologically correct criteria. An initial criterion, we believe, consists in comparing what data we presently have with the goals set by the economic plan four years ago (with the approval of the present leading group when the current five-year plan was drafted. For the first the soviet time since the 1920s, this plan set not only final overall objectives, but also year-by-year quantitative fargets. If in the Soviet Union the economic plan is the law, and also the basis of the economic order, it seems clear that the problems and controdictions of the Soviet economy can be illuminated through such a comparison. Obviously, it would also be necessary to examine how and in whose interests the plan was worked out. But this is not the place to do that. But the comparison between the plan and its realization is nevertheless significant and can provide a sufficiently effective litmus test. We shall make this comparison on the basis of the data of the five-year plan and not on the basis of the data of the annual plan, because the annual plans are not sufficiently broken down to allow meaningful conclusions to be drawn and, more generally, because the socioeconomic processes that we are interested in can be revealed only if the span of time being examined is sufficiently long. For the sake of precision, let us point out that, according to the official Soviet data available (For ministries, and therefore, more or less, for industrial sectors), the 1974 annual plan was fulfilled or overfulfilled everywhere; but this is a relatively insignificant point, as can be deduced from the fact that this is regularly the case anyway, even in the worst years. The following conclusions can be drawn from the tables we have worked out (see tables 1 and 2): 1. There was a general and widespread lag -greater or lesser according to sector - with respect to the goals of the five-year plan. Of forty-five outstanding commercial rubrics, the plan was ful-
21
USSR filled only in nine. None of the overall objectives of the plan was achieved. (See table 2.) Of the objectives that were attained, two were in agriculture (chemical fertilizer and agricultural machinery), thus confirming Brezhnev's line, especially since the 1972 harvest disaster, which leans toward developing investment in this traditionally weak sector. Activity in the coal industry, which has again become important because of the energy crisis, had previously been reduced much less and much slower in the USSR than in the capitalist countries. It was therefore easier to increase production. Now and then bureaucratic conservatism has some advantages in a world that changes very rapidly! The successes achieved in the computer industry have to be taken with a grain of salt, considering the very low starting point and the poor quality of Soviet production. 2. The objectives of the plan were not attained for a series of products that are decisive for economic development: first of all in the energy sector (apart from coal) - oil, gas, electrical energy. The lag in these areas is not as serious for internal consumption as it is for the opportunities that will consequently be missed on the world market. A more rapid development in this sector would have the countries of the East and on those of West Europe. Second, there were notable lags in the construction of facilities in all sectors: from chemicals to the petroleum industry to light industry and the food industry. The lag in the turbine industry was also considerable. Less important but nonetheless significant, there were discrepancies between the results achieved and the objectives set by the plan in construction of presses and forges and in the machine-tool industry -All this indicates that, once again, the investment projects now under way will suffer from serious lags - and not only because of the usual lack of coordination among the various sectors or because of the inefficiency of the construction companies. Obviously, this threatens the more long-term fundamental objectives (the slight lag in steel and cast iron has already had this effect). 3. But the most striking feature is the overall lag in Department Il of the economy, production of consumer goods. This lag can be seen clearly in table 1: Televisions were the only commodity for 22 which production exceeded the planned objective. Even housing construction lagged behind the target set in the five-yeor plan. Although total industrial production exceeded the objectives of the annual plan (increasing by 8%. as compared with the 6.8% increase called for in the plan), the increase in production of means of production (8.3%) was higher than the increase in production of consumer goods (7.2%), despite the fact that the annual plan called for exactly the opposite (increases of 6.6% for means of production and 7.5% for consumer goods). Thus, for the third consecutive year (and completely independently of the provisions of the annual plan), the industries producing means of production developed more rapidly than those producing consumer goods. The plan for 1975 merely takes note of what may now be considered a clear tendency: Department I is supposed to increase 7%, Department ll 6%, for an overall increase of 6.7%. The extremely strong lags in the production of machinery for light industry and the food industry (25% and 40% respectively) predetermines that this tendency will continue in the future. Clearly, the log is not merely in production, but also in investment. This five-year plan was supposed to have been the first in the history of Soviet planning under which the rate of production of consumer goods would exceed the rate of production of means of production. This historic turn was presented with much pomposity by Kosygin in his report on the five-year plan. There is no lack of reasons for the solemnity of the announcement. During the Stalin period, "lending priority to heavy industry" was not only a solidly established practice, but also a nondebatable ideological dogma. (In any case, Stalin was not especially fond of discussion, as is known.) The year of Stalin's death was the first in which the rate of increase in production of consumer goods was more than 50% that of the increase in the production of means of production. But the "economic spring" promised by Malenkov proved to be of short duration. The "goulash" in Khrushchev's "goulash communism" was more ideological than real. The concessions to the peasants (partially withdrawn during the crisis of the beginning of the 1960% did not entail a substantial redistribution of investments. It was only with the initiation of the economic reforms that things began to change: For three successive years (1968, 1969, and 1970) the increase in Department Il was greater than the increase in Department 1. This inversion of the tendency was then consecrated in the projected figures for the five-year plan. But unfortunately, only on paper.
The agricultural crisis of 1972 marked the turning point. But what appeared at the time to be a conjunctural feature linked to the agricultural situation of the period turned out to be a much more significant phenomenon. Since then, the Soviet economy has returned to the "classical" proportions, which call for "priority development of the means of production." This, it may be said in possing, confirms our thesis that the 1972 crisis was not simply an agricultural crisis, but also an industrial one and that it was the result of the failure and the blocking of the economic reforms. The return to priority for means of production seems to have been imposed by the press of events (and probably by the pressure of certain groups); it was not so much a conscious turn by the leading group. It is probably not accidental that the plan for 1974 called for a greater increase in consumer goods. But neither is it an accident that this objective was not attained. The consumption dilemma The Soviet review Planovoe Khozyaistvo (Number 3 in 1975) listed failure to attain the plan's objectives in the area of consumer goods as one of the reasons for the insufficient increase in the productivity of labor, which also lagged behind the objecfives of the plan. The lag in consumer goods and the fundamental disequilibrium that afflicts the Soviet economy flow in turn from many other disequilibriums and disproportions. The social consequences are both the most important and the most obvious ones. And it is not only a matter of the absolute level of consumption of the Soviet masses, which continues to remain especially low. It is a question above all of the contradiction between this level of consumption and the overall industrial (and military) power of the country, on imbalance that inevitably provokes tension. It is a question of the contradiction between the effective level of consumption attained by the masses and the expectations of the masses, which are raised by the promises made by the leaders and by the propaganda that goes along with these promises. But if the increase in the production of consumer goods is so crucially important, why has the leading Soviet group, which completely controls the levers of the planned economy, not succeeded in attaining the objectives it has set itself? On this point, it almost seems as though Kuron and Modzelewski were correct in attributing to the "central bureaucracy" an organic link with the increase in the means of production. In fact, however, we do not believe that there are structural reasons why the Soviet bureaucracy has not succeeded in developing the production of consumer goods. Neverthe less, we note the existence of a whole series of concrete historical factors that have up to now prevented the realization of the objectives. In the first place, the connection between light industry and the agricultural sector is obvious. But it is precisely the agricultural sector that remains the Achilles heel of the Soviet economy, in spite of the development of investment and the notable concessions that have been made to the peasants during the past decade. In reality, the technicaleconomic measures taken in favor of agriculture have not affected the social structures (nor could they do so without placing the bureaucracy's rule in danger), which remain schizophrenically divided between the bureaucratically managed enterprises (whether kholkhozi or sovkhozi, cooperative or state-owned) and the very small property, which is intensively cultivated on an individual basis, with corresponding productive results (32% of meat, 61% of potatoes, and 43% of eggs are produced on these privately worked plots). This structural weakness of agriculture creates a high degree of variation in productive results. AFter the disaster of 1972, there was the record harvest of 1973. But that was in turn followed by the mediocre harvest of 1974. Last year, with a planned overall increase of 7.5% in Department II, the food industry (strictly linked to agriculture) was supposed to increase 7.6%. This increase did not occur, because of the mediocre agricultural harvests, which did not provide adequate supplies to the processing companies. And the results of the food industry, which were inferior to the targets set, weighed negatively on all of Department Il. Second, an extreme sluggishness both in taking decisions and in carrying them out is characteristic of a bureaucratic system like the Soviet one. This overall viscosity of the system has in turn played a role in prolonging for years (from the death of Stalin to the end of the 1960s) the discussions about shifting priorities from heavy industry to light industry. It is thus not surprising that a tum taken with such difficulty should be carried ouf with such sluggishness. But viscosity means not only sluggishness but also + the encountering of (and clash with) vested interests that oppose any policy that would place acquired positions in danger by modifying the proportions between the fundamental sectors of the economy. It is clear that the predominance of heavy industry over a period of many decades has created an interlacing of interests that includes the top bureaucracy of the ministries that preside over the development of heavy industry, certain sectors of the Gosplan (the state planning commission), the directors of certain large enterprises, and the party bureaucracy
USSR that manages the corresponding interests ("sectors" of the central committee, leading groups of the regional and citizens' committees in key zones of heavy industry). For these groups, "priority development of heavy industry" has meant "priority development" of their respective bureaucratic privileges and of the positions of power that guarantee such privileges. It is not surprising that these "eaters of steel, " as Khrushchev once called them in his famous speech, are prepared to mount the most rabid resistance to any attempt to undermine the bases of their own Power.* Third, the strong centralization of Soviet industrial structure makes it much easier to administer the development of sectors with a high horizontal and vertical concentration like those of Department 1 than to administer the sectors producing consumer goods. The latter, because of their direct links with the individual choices of consumers, require more elasticity in management and a certain degree of decentralization. These conditions can be fulfilled either through democratic control of the management by the rank and file or through the utilization of market mechanisms. With the economic reforms, the Soviet leaders chose the latter path. And in fact, during the years in which the application of the reform was begun (1968-1971), the outlines of the inversion of the old tendency also emerged. The ditching of the reform at the end of the 1960s resulted almost immediately (beginning in 1972) in a return to the old proportions. Finally, it is probably that the weight of the military sector acted in favor of Department I, of which military production is a part. This is probable, but not certain, given the aura of secrecy with which everything in the USSR that is even tangentially connected with military problems is surrounded. But a series of indirect deductions leads to this conclusion. Among the power groups interested in maintaining the priority on heavy industry are certainly those circles linked to the military industries and also those of the armed forces. It is quite probable that these circles brought their pressure to bear along with the "eaters of steel." In addition, there are many signs that suggest that when the policy of détente with the United States was ini* It may be noted in passing (for this evaluation, we believe, is not sufficiently based on definite information) that Kirilenko, whose star has undoubtedly been rising during the past several years, is considered a representative of these groups. 24 tiated that is, around 1970, at the same time as the current five-year plan was worked out), the Soviet leaders believed that such a policy would enable them to reduce military expenses rather rapidly. More generally, the détente policy holds a particular attraction for the Soviet leaders precisely because it could allow them to reduce the enormous weight of military production in the Soviet economy. But reality refuted this prediction. In spite of the collaboration with the United States that continues to develop in other areas, there has not been a reduction in internal or external military commitments and therefore in military expendifures.* Perspectives In 1974 the overall growth of Soviet industry was higher than the planners had predicted one year before (8% compared with 6.8%) but lower than had been called for in the original five-year plan. Nevertheless, even the targets of the 1974 annual plan were not fulfilled in a whole series of important areas — from sheet metal to caustic soda, from cellulose to refrigerators, from knitwear to cotton cloth and shoes. (See Planovoe Khozyaistvo, No. 3, 1975, p.29.) It is not simply a matter of lack of quantitative success; in some delicate investment sectors the endemic malady of the Soviet economy made itself felt once again: the "dispersion of industrial building projects. According to the statistics of Planovoe Khozyaistvo, the number of such projects rose by 10,000 during 1974, and the value of resources "frozen" in uncompleted industrial construction projects reached 70,000 million rubles. This means low efficiency of invested sums, which will require more time than originally Foreseen before yielding productive results, which will in turn mean that the establishments constructed will already be obsolete when they begin to function and who knows when that will be! Clearly, the attempt to concentrate investment, which was made in 1973 in order to eliminate the consequences of the crisis of 1972, has not yielded sufficient results in time. The only sector that is experiencing a strong expansion is foreign trade, although full and definitive data on this sector are not yet available. It is clear that the energy crisis has played an essential role in achieving this result. The boom in the prices of raw materials, and especially of oil, has acted in *See, for example, the recent conclusions of the negotiations on multiple-warhead missiles, which established a ceiling that seems clearly superior to the productive capacity of both the USSR and the United States.
* The "actual results" include condensed gasoline, although the statistics of the plan did not include this. The difference between what was planned and what was achieved is there-
TABLE I
Actual results
Planned for 1974 under the five-year plan
Electrical energy (in billions
975 of kilowatt hours
985
Petroleum (millions of tons)*
461
459
Natural gas (billions of cubic
261
280 meters)
670.2
684
Coal (millions of tons)
101.9
99.9
Cast iron
138.1
136
Steel
(
109.8
109
Sheet metal
15
16
Pipes
80.2
80.3
Chemical fertilizer
Calcinated soda (millions
4.5
4.5 of tons)
Caustic soda (millions of tons)
2.3
2.2
Tires (millions)
46.6
Turbines (millions of kilo-
22.3 walt hours)
Machine tools
233
Presses and forges
54.3
Calculating machines (billions
1.6
2.2 of rubles)
Oil refineries (thousands of tons)
228.5
Chemical plants (millions of
717.2 rubles)
Machinery for light industry
793.7
(millions of rubles)
Machinery for the food industry
(millions of rubles)
Trucks (thousands)
Possenger cars (thousands)
Tractors (thousands)
Agricultural machinery (millions of rubles)
Harvesters (thousands)
Excavating machines (thousands)
Bulldozers (units)
Timber (millions of cubic meters)
Cellulose (millions of tons)
7.4
6.3
)
5.1
5
Paper
3.2
Cardboard
4
Cement
Textiles, all varieties (millions
10,450 of square meters)
7,000
Cotton
853
Linen
Wool
825
1,461
Silk
Ready-to-wear clothes (billions of rubles)
19.8
Leather shoes (millions of pairs)
791
Watches (millions of units)
51.3
Radios and record players (mil-
10.3
8.8 lions of units)
6.3
Televisions-(millions of units)
6.6
("
6.2
5.4
Refrigerators
)
975
960
Motorcycles (thousands)
Furniture (billions of rubles)
4
4 fore in excess of 2 million tons.
Difference
(in units)
10
-
2
19
+
14
2
1.1
0
0.8
0.1
+
0.1
0.5
+
5
5.3
0
.6
53.5
-
-
-
-
+
1.6
+
-
-
- 630
- 381
57
- 101
49
-
1.7
- 107
0.7
-
1.5
-
+
0.3
0.8
-
15
25
*Average monthly wages for 1975 are now planned to be 144 rubles, while the five-year
USSR
Planned for 1974 under five-year plan (1970 = 100) National Product Industrial production Salaries of workers and employees* Real income per capita Productivity plan had set a goal of 149.3 rubles. the USSR's favor (since it is a big exporter of raw materials) and seems to have enabled it to close out the year with a trade surplus of 2,000 million rubles, as compared with a 1,000 million ruble deficit the year before. Nevertheless, a further improvement in the Soviet balance of payments on the convertible currency market seems excluded, both because of a decline in the prices of a number of raw materials and because of the impossibility of transfering any great quantities of oil to the world market from the internal market and the market of the East European countries. But just at the moment when foreign trade is scoring brilliant successes, commercial relations with the United States, to which the prospect of fantastic medium- and long-term expansion of foreign trade was linked, are going through a period of intense difficulties. The block by the American Congress of Eximbank credits and the rejection of most-favored-nation status for the Soviet Union, not to mention the subsequent Soviet denunciation of the U.S. trade bill, jeopardizes not only the relatively limited trade that has been developing between the two countries, but also the vast collaboration projects for the exploitation of natural resources in Siberia. This is the result not only of the contradictions that presently exist on the international field, but also of the contradictions that have come to light within 26
TABLE II
Actual Result 129 123.6 135.1 133 117.5 115 123.8 119 129 126.4 the bureaucracy between the groups that are inclined to make concessions to the United States and the groups that are more or less conscious of the dangers such concessions could have not only for the system of planning but even for the very power of the bureaucracy. But the elimination, or at least the deferment, of the prospect of economic collaboration with the United States on a vast scale just at the moment when the Soviet economy is once again manifesting all its basic weaknesses leaves the leading Soviet group uncertain in face of the basic choices that are demanded by the imminent elaboration of the tenth five-year plan and by the discussions on a development program to run through 1990. Once again, the Soviet leaders are faced with all the wrenching alternatives that gave rise first to the elaboration of the economic reform and then to its abandonment. Up to now, Brezhnev has proven himself a master at postponing the most difficult choices. During this year, which precedes the twenty-fifth congress of the Communist party of the Soviet Union, we will see whether his mastery can succeed in managing a situation that has become even more difficult. Was this perhaps the deeper source of his recent illness? April 1, 1975
the hungarian communist
HUNGARY the congress of -by TIBOR SERETI The eleventh congress of the Hungarian Socialist Workers party), which was held in Budapest March 17-22, 1975, was no exception to the rule that makes such meetings nothing but ritual ceremonies that run along precise protocol guidelines instead of real working meetings. The few surprises did not come from the 800-odd delegates present (whose role remained strictly passive: applauding at the appropriate moments and delivering occasional 3to-5 minute speeches) nor from the several dozen foreign guests (among them Brezhnev, who was making his first public appearance in several months). On the other hand, there was much talk about the new seating arrangements around the podium, the sort of talk that would be useless were it not for the fact that the absence of information obliged observers to examine the distribution of chairs, just as the entrails of chickens were examined in ancient Rome. The ritual of such a ceremony, its virtually gratuitous character, is reflected most especially in the manner in which it was prepared. True, the future delegates learned in March 1974 that a congress would be held in March 1975 (although it was necessary to wait until February 1975 to find out the exact date); but they were not able to get hold of the draft resolutions (that is, the very material to be discussed at the congress) until December 1974. In scarcely three months they had to become acquainted with, understand, and supposedly discuss a document that claimed to set the line of the party and the evolution of the whole society during the next five years. Even apart from the usual absence of the minimal material conditions necessary for fostering a discussion (there is no internal bulletin and no public debate; still less do tendencies confront one another with alternative lines), the time set aside for discussion could not but render any discussion purely formal.
party