caesar 16 - soviet economic policy

8/4/2019 Caesar 16 - Soviet Economic Policy

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Copy No. 126APPROVED FOR RELEASEDATE: J U N 2007

SOVIET STAFF STUDY

SOVIET ECONOMIC POLICY: December 1956 - May 1957(Referencetitle: C g E S a B l u ,#b57)

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HR70-14(U)Office of Current I n t e l l i g e n c e

CENTRAL INTELLIGENCE AGENCY


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SOVIET ECONOMIC POLICYDecember 1956 - May 1957

Foreword . . . . . . . . . . . . . . . . . . . .I . Summary, . . . . . . . . . . . . . . . . . . . .

11. Problems a t t h e e n d of 1956. . . . . . . . . . .and "Catching Up"Wth t h e West.. .............11. Economic Po lic y: Heavy In d u s tr y , The ConsumerA. Developments Before December Plenum. . . . .B.' The December Plenum. . . . . . . . . . . . .C. From December Plenum to February SupremeS o v i e t . . . . . . . . . . . . . . . . . . .

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D. The February Supreme So v ie t and t h e 1957P l a n . . . . . . . . . . . . . . . . . . . . . E. From Supreme Soviet t o Khrushchev 's Theses .F. The May Supreme S o v i e t . . . . . . . . . . .Management and Planning. . . . . . . . . . . . .IV. Economic R e o r g a n i z a t i o n : E f f o r t s t o ImproveA. Background: Be fore t h e December Plenum. . .B. The December Plenum. . . . . . . . . . . . .C. The February Supreme Soviet . . . . . . . . .D, The February Plenum. . . . . . . . . . . . .E. Khrushchev 's Theses . . . . . . . . . . . . .F. The May Supreme Soviet . . . . . . . . . . .

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FOREWORD

This s t u d y is an a t tempt to provide a somewhat deta i leda n a l y s i s of i n t e l l i g e n c e on Soviet economic p o l i c y from De-cember 1956 t o May 1957.cons ide r , t he convu l s ions o f 3 J u l y , b u t w i l l be u s e f u l asbackground t o an ana ly s i s of them.I t w a s wr i t t e n be fo re , and does no t

Because i t is r e l a t i v e l y c u r r en t , t h i s a n a l y s i s is n o tt o be regarded as d e f i n i t i v e .t o g e t h e r a v a i l a b l e f a c t u a l in f or m at io n a nd t o d r a w specula-t i v e c o nc l us i on s on the meaning of t h e s h i f t s i n S ov ie t eco=nomic policy and on t h e i n s i g h t s these s h i f t s p rovide i n t othe problems of t h e Sovie t leaders dur ing t h i s per iod . T h i ss t u d y f a l l s somewhere be tween the r e po r t o r i a l ana lyses ofSovie t a f f a i r s in t h e r e g u l a r p u b l i c a t i o n s o f t h e O f f i c e ofC u r r e n t I n t e l l i g e n c e , a n d t h e more d e t a i l e d , l es s s p e c u l a t i v eCAESAR s e r i e s of s t u d i e s on t h e S o v i e t l e ade r sh i p , which areproduced only a f t e r s u f f i c i e n t t i m e has elapsed t o a ll ow amore comple te accumula t ion of f a c t u a l informat ion . A t al a t e r da te , i f new evidenc e wa rr an ts , a CAESAR s t u d y on So-viet economic policy w i l l be prepared to cover t h e year anda h a l f fo l lowing the 20 th pa r ty congress ,views of t h e O f f i c e of C u r r e n t I n t e l l i g e n c e , C IA .

I t is ra ther an attempt to p u l l

T h i s a n a l y s i s is a working paper a n d r e p r e s e n t s t h e

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I . Summary. . Although c ont inu ing t o grow a t a r a p i d pace, t h e Sovie teconomy f a c e d s e v e r e s t r a i n s a t t h e end of 1956, p a r t l y be-cause t h e Si x th Five-Year Plan w a s overambitious and t h e out -put of key raw mater ia ls , t h e cons t ruc t i on program, and prog-ress i n improving labor produc t i v i t y were behind schedule.Added burdens had r e s u l t e d from new economic commitments t ot h e S a t e l l i t e s and a p o s s i b l e h a l t i n g o r slowdown of t h eUSSR's announced reduction of m il it ar y manpower. Inc reas edpres su re s for improved l i vi ng s t and ard s generate d by t h ede- Sta l ini zat i on campaign and unre st i n Eastern Europe, had

a l so a r i s e n i n s i d e t h e Soviet Union.

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F r o m December 1956 through May 1957 t w o meetings of t h eSo vi et Communist Par ty 's c e n t r a l committee were convened t ocons i de r so l u t i ons t o these problems, t w o new t o p c u r r e n tp lanners were appointed, and a reduced 1957 economic plan w a sapproved. In February, par ty f i r s t secretary Khrushchev be-gan to ac t as t h e regime's pu bl ic spokesman on economic manage-ment-a r o l e Premier Bulganin had played ea rl ie r- an d by Mayh e had pushed through a new p l a n for d r a s t i c a l l y reorganiz ingi n d u s t r i a l a d m i n i s t r a t i o n .During t h i s per iod t h e regime d e a l t w i t h t w o majoreconomic issues. F i r s t , it re-examined t h e ques t ion of how

much emphasis heavy indus t r y should rec e ive a t t h e expenseof t h e So vi et consumer i n order t o m a x i m i z e t h e USSR's eco-nomic-mil i ta ry po ten t ia l . In Sovie t terms, t h e regime re -examined t h e d o c t r i n e s on t h e "primacy of heavy industry,"and over taking t h e West in pe r cap i t a ou t pu t "in a s hor th i s t o r i c a l t i m e . " Second, t h e re gim e i n i t i a t e d d ur in g t h i sper iod d ras t i c measures t o r eo rg an iz e economic managementand plann ing, hoping t o i nc r ease e f f i c i en cy and t he r eby t oat ta in ambit ious economic goals i n a l l f i e l d s s imul taneously.On t h e f i r s t of these i s s u e s , t h e re-examination ofeconomic policy, t h e r e s o l u t i o n of t h e c e n t r a l committee's20-24 December plenum admitted t h a t t h e economy w a s over-extended, Most of t h e speakers a t t h e meeting, however,

r e p o r t e d l y agreed t h a t t here could be no fundamental revi-sion of planned output goals , a l though some modi f ica t ionscould be permitted. The major measure ca l l ed f o r by t h eDecember plenum t o r e l ie v e s t r a i n s i n t h e economy w a s a re-duct ion in c a p i t a l investment and an effor t t o concen t r a t einvestments on cons t ruc t i on p ro j e c t s nearing completion


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r a t h e r t han s t a r t i n g new l ong- range p ro j ec t s . The committeemay a l s o have re jec ted plans made e a r l i e r i n December f o r t h econsumer, which ca l l ed f o r an immediate expansion of th ehousing program.

The 1957 economic plan, presented t o the Supreme Sovieton 6 Febr uary by p residi um member and newly ap po in te d ch ie fc u r r e n t p l a n n er M , G. Pervukhin , scheduled sh arp drops i n t heg row th r a t e s o f heavy an d l i g h t i n d u s t r i a l o u t p u t , o u t p u t ofkey bas ic raw mater ia ls , and i n the improvement of laborp roduc t i v i t y . The ra te of growth planned for c a p i t a l i n v e s t-me n t a l so dropped, but t h e ab so lu te volume of invest ment w a sscheduled t o be about 9 percent gr ea te r than i n 1956. The1957 p l an a l s o a l loca ted a s l i g h t l y h i g he r p r o p o rt i on oft o t a l r e sources t o t h e consumer tha n i n t he two previ ousy e a r s , b u t t h i s was c o n s i s t e n t w i t h th e Six th Five-Year Pla nand developments i n 1956, when "f r in ge be ne f i t s" gra nt ed th econsumer were q u i t e s u b s t a n t i a l . A t t h e same t i m e , however,the need for the cont inued pr imacy of heavy indus t ry w a sh ea vi ly emphasized by both Pe rvukhin and t h e Sov i e t p r e s s .The d i scuss ion of heavy i nd us try i n Khrushchev's "theses ,"publ i shed on 30 March, s u g ge s te d t h a t t h e degree of emphasist o be giv en heavy ind ustr y had been a s u b j e c t of r e c e n tdebate with in the reg ime.

There a re grounds f o r spec u l a t i on t h a t t h e 1957 planc o n t a in e d l a r g e r r e d u c t i o n s i n c u r r e n t o u t p u t g o a l s , a ndp o s s i b l y smaller r e d u c ti o n s i n c a p i t a l e x p en d it u re s , t h a nenvisaged by the regime a t t h e December cent ra l commit teemeeting. Economic ad mi ni st ra to rs had t r i e d unsucces s fu l l ya year e a r l i e r t o b r i n g a bo u t s imi la r changes i n t h e 1956 pla n.

Although the low 1957 plan w a s a c c e p t e d , i t is probablet h a t t h e l e a d e r s h i p d i d no t cons i de r t h i s cu tback i n p l ann i ngpa r t i c u l a r l y pa l a t ab l e . Ano ther meet ing of t h e central com-mittee w a s convened immedia te ly af te r the Supreme Sovie tmeeting i n Februar y, and Khrushchev took t he lead i n p ro-pounding r ad i ca l cha ng es i n i n d u s t r i a l a d m i n i s t ra t i o n i norder to re v er se th e slowdown i n So vi et economic growth. Ina d d i t i o n , a t th e February plenum of t h e c e n t r a l committeeand l a t e r , th e theme of catc hin g up wi t h t he West w a s r e a f -f i rmed ; t he Sov i e t p r e s s p l aced i nc r eas i ng l y s t r on g emphasi so n " s o c i a l i s t c o mp eti tio n" t o o v e r f u l f i l l t h e p l an ; and t hecu r r en t p l ann i ng group under Pe rvukh in f i r s t w a s c r i t i c i z e dand then was fa ce d wit h Khrushchev's recommendation t h a t i tbe abo l i sh ed under t h e new i n du s t r i a l r eo rga n i za t i o n .

Ea rl y i n May,Pervukhin w a s appoin ted head of t h e S o v i e tatomic ene rgy program--an imp orta nt po st b ut one removed

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f rom ov er -a l l economic planning. Khrushchev, i n h i s speecho n t h e r e o r g a n i z a t i o n t o t h e May meet ing of the Supreme So-v i e t , e x p l i c i t l y c r i t i c i z e d pa r t of t he 1957 p lan . Thesee v e n t s s u g ge s te d t h a t t h e p a r t y l e a d e r s r e g a rd e d t h e l o w ou t -p u t g o a l s of t h e 1957 p l an wi t h d i s f a vor , and were unwi l l i ngt o allow t h e low one-year g oa ls t o force a downward revisionof t h e h i gh e r goals of t he f i ve -yea r p l an .

The secon d complex of economic is s u e s wi th which th eS o v i e t regime concerned i t s e l f from December 1956 throughMay 1957 w a s r e o r g an i z a ti o n a n d d e c e n t r a l i z a t i o n . In i t se f f o r t s t o m a i nt a in r a p i d i n d u s t r i a l g ro wth and t o ach i evea l l i t s o t h e r ambit i ous goals s i mul t aneous l y , t h e r eg imehad undertaken numerous " ef fi ci en cy measures" i n t he manage-ment a n d p l an n in g f i e l d s i n c e S t a l i n ' s d e a t h , b u t t h e s p a t eof su ch me asure s un ve il ed from December thr oug h May w a s f a rm o r e d r a s t i c t han t hose unde r taken p r ev i ous l y , i nd i ca t i ngt h e s e r i ous nes s wi t h which t h e regime regarded i t s problems.

The new measures, which were c l e a r l y i d e n t i f i e d w it hKhrushchev, ca l l ed for a re or ga ni zat io n of th e economy alongr e g i on a l l i n e s , The i n i t i a l p ro po sa l w a s based on a r e p o r tby Khrushchev a t a Feburary 1957 meeting of t h e p a r t y c e n t r a lcommittee. I n March, Khrushchev's len gth y l l theses ' ' on t h er e o r g a n i z a t i o n were i s sued f o r pub l ic d i sc uss ion , and i n MayKhrushchev presented t h e p l a n t o a meeting of t h e SupremeS o v i e t for approval . Khrushchev's l ea de rsh ip i n t h i s f i e l dthroughout t h e s p r i n g w a s p a r t of h i s inc re as ing pre-eminencei n a l l are as of Sov i e t f o r e i gn and domes t ic po l i cy . On t h eo t h e r hand, in t h e i n d u s t r i a l r e o r g a ni z a t io n as on s e v e r a lother subjec t s , Khrushchev dur ing the spr ing modif ied h i sown previo us po si t i on s , to take account of p r a c t i c a l d i f -f i c u l t i e s as t h e plan was worked out and a l so perhaps t oobta in genera l agreement among the co l lec t ive l eadersh ip .The i n d u s t r i a l r eo r g a n iz a t i on as approved i n May w a s appre-c i a b l y l e s s d r a s t i c than t h a t proposed i n Khrushchev 's the sesi n March.

Under th e reo rga niz at io n, t o have been completed by 1J u l y , o v e r 20 cen t r a l i n d u s t r i a l m i n i s t r ie s were abo l i shed ,bu t key mi n i s t r i e s runni ng t h e atomic energy program, armsand r e l a t ed i n d u s t r i e s were re ta i ne d . Over 100 re g io na leconomic cou nc i ls are t o be formed th roughout the count ry tomanage almost a l l i n d u s t r i a l e n t e r p r i s e s . T hes e r e g i o n a lc o u n c i l s are t o h a v e f a i r l y wide adminis t ra t ive powers but nopol icyLmaking funct ions , and t h e c e n t r a l a u t h o r i t i e s havee x p l i c i t l y been g i ven t he power t o "suspend" de cis io ns of t h er e g i o n a l bod i es . After t h e i n i t i a l c on fu si on , t h i s r eo rgan i za -t i o n may r e s u l t i n some improvement of i n d u s t r i a l e f f ic i e n cy .

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In the long run, however, regional bureaucracies and "specialin erests" will tend to replace present ministerial barriersand bureaucracies, minimizing the benefits of the reorganiza-tion.

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IS, Problems a t end of 1956A t t h e e nd of 1956 and i n e a r l y 1957, Soviet economic

p o l i c y was i n a per iod of f lux , and d e s p i t e e f f o r t s of t h eMoscow press to prove t h e con t ra ry , Sov ie t l eade r s apparen t -l y e nc ou nte re d d i f f i c u l t i e s i n f i n d i n g a cc e pt ab l e s o l u t i o h sf o r t h e i r economic problems. Two sep a ra t e meet ings of t h eCommunist P ar ty s c e n tr a l committee were conv ened i n t h i ss h o r t p e r io d t o d i s c u s s e conomic d i f f i c u l t i e s ; t h e t o p c u r -r e n t p l a n n e r , M, Z . Saburov, was removed from h i s p o st i nDecember; and a reduced 1957 economic plan w a s presen tedt o t h e Supreme Sovi et by h i s replacement , M. G. Pervukhin,in ea r ly February . Pervukhin , i n tu rn , a f t e r r e c e i v i n gbroad powers t o supe rvise implementat ion of t h e plan , inea r l y May had h i s cu r re n t p l ann ing o rgan iza t ion c u t ou tfrom under him and most of i t s c f u n c t i o n s t r a n s f e r r e d t oGosplan, t h e newly reorgan ized body f o r bo th shor t - and long-range p lanning,

In a d d i t i o n , f i r s t party secretary Khrushchev begant o ac t a s t h e regimes publ ic spokesman i n th e f i e l d ofeconomic management a t t h e F e br ua ry c e n t r a l committee meet-i ng , and i t w a s h e who presen ted t h e p l an f o r d r a s t i c a l l yreorganiz in g t h e economy a long regi ona l l i n e s a t t h e SupremeSoviet meeting on 7 May. I n 1955 and 1956, Premier Bulganinhad acted a s spokesman on economic policy and managementa t c e n t r a l committee meetings and a t t h e 20 th pa r ty congress .These s ig ns of change came only one year a f t e r t h e a m -bi t i o us Si x t h Five-Year Plan had been presented t o t h e 20thp a r t y c o n g re s s in February 1956, and were in c o n t r a s t w i t h

t h e conf idence expressed by Sovie t l eaders a t t h a t t i m e con-c e r n i n g t h e USSRs future economic growth. The reasons fort h i s c han ge were p a r t l y economic, p a r t l y p o l i t i c a l . By t h eend of 1956 t h e out pu t of key raw materials such as coa l ,i r o n , s t e e l , cement and lumber was behind p lan . Incr ease sin p r o d u c t i v i t y , or output per worker , were also belowschedule . P lans f o r the comple t ion of new in du s t r i a l con-s t r u c t i o n p ro j e c t s and housing were l ag g in g p a r t i c u l a r l ybadly. Serious l ag s in t h e c o n s t r u c t io n of r a w product ionf a c i l i t i e s had ex i s t ed s ince 1951, b u t u n t i l 1956 ou tpu tg o a l s c o u l d be and were m e t by drawing in tens ive ly on e x i s t -in g ca pa ci ty , By 1956, however, op po rt un i t ie s t o expandoutp ut f rom exi s t in g cap aci ty had been reduced t o a minimum,and th e cum ula tive e f f ec t of t h e l a g s in c o n s t r u c t i o n was abasic r e a so n b eh in d t h e u n s a t i s f a c t o r y o u t p u t of r a w mater i a l s .

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Poor performance in t h e s e f i e l d s u n do ub te dl y ra isedser ious ques t ions wi th in t h e regime a s t o w het he r t h e S i x t hFive-Year Plan a s a whole w a s overambit ious. A t l ea s t someof t h e Sov ie t l eade r s p robab ly rea l ized t h a t t h ey were f ac -i n g t h e dilemma of m a in tain ing S ta l i n i s t fo rced-d raf t ra t e sof growth in a sy s t e m l ack ing many of S t a l in ' s c oe rc i vecont ro ls . Fur thermore , many of th e most r e ad i ly exp lo i t -a b l e n a t u r a l r e s o u r c e s of t h e USSR w e r e being f u l l y u t i l i z e dand inc reases in t h e ra t e of o ut pu t would be v e r y d i f f i c u l t .Expansion of raw material output in t he eas t e rn r eg ions - -t h e only long-range answer t o t h i s problem--would be a c o s t -l y and s low process a t best . A l s o h i n d e r i n g i n d u s t r i a lgrowth was t he inc reas ing ly seve re im pac t of low war andpostwar b i r th ra tes . The low birth ra te of t h e 1940 's w a sl i m i t i ng g rowth of t h e i n d u s t r i a l l a b o r f o r c e , an d t h e po st -S t a l i n a g r i c u l t u r a l program p re cl ud ed f u r t h e r l a r g e t r a n s f e r sof peasants t o i ndus t ry .Po l i t i ca l problems unfo reseen ea r ly in 1956 increasedthe burdens on an economy already strained by t h e f ive-yearp l an . I n o r d e r t o m ai nt ai n i t s p o s i t i o n in Eastern Europefo l lowing t h e outbreak of S a t e l l i t e u n r e s t during t h e autumnof 1956, t h e USSR w a s forced to expand i t s economic a i d t ot hese areas , provide fore ign currency and gold for neededpurchases in t h e West, cancel p r i o r deb t s of var i ous Sate l -l i t e s , and reduce i t s own imports from Eastern Europe ofce r t a i n import ant p roduc ts , such as P o l i s h c o a l . While t h emagnitude of t h i s added burden w a s s m a l l i n t e r m s of t o t a lSov ie t ou tpu t , t h e Sovie t l eaders probably recognized i t a tl e a s t a s an aggravat io n of e x is t i n g s tr a in s . From November1956 th ro ug h May 1957, t h e USSR gran ted loans of over ab i l l i o n d o l l a r s t o E as te r n Europe, a nd c an c el ed p r i o r d e b t sof Rumania, Poland and Hungary t o a t o t a l of $1.4 b i l l i o n .

The need t o mainta in h igh mi l i ta ry expe ndi tures becauseof t h e in cr ea si ng co s t and complexity of modern weapons andincreased East-West tens ion a f t e r Hungary and Suez a l s o prob-a b l y aggravated Sovie t economic s t r a i n s , The ac tu a l co s t s ofthe m i l i t a r y in te rv en ti on i n Hungary and t he more general So-v i e t m i l i t a r y a l e r t s connected both w i t h Hungary and hostil-i t i e s in t h e N e a r E a s t were small , b u t t h e USSR may i n a d d i -t i on have ha l t ed t h e implementation of previously announceddemobil izat i on plans. To t h e e x t e n t t h a t t h e announced1,840,000-man f o r c e red uct ion h a s not been c a r r i e d o u t , t h eg ro wth of t h e i n d u s t r i a l l a b o r f o r c e , a nd in t u r n i n d u s t r i a lou tpu t , w i l l be hampered accordingly.

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Another hindrance t o r a p i d economic growth which couldnot have been c l e a r l y f o r es e en by t h e regime in ea r l y 1956w a s t h e boost which ' the de- Sta l in iza t io n campaign gave t opressures from t h e populat ion in genera l , and t h e managerialt e c h n i c a l and i n t e l l e c t u a l e l i t e in p a r t i c u l a r , f o r morepersonal freedom, an eas ing of t h e c o n s t a n t p r e s s u r e s f o rhigh r a t e s of in du s t r i a l g rowth , and h ighe r l i v in g s t andards ,These pressures had been r i s i n g e v er s i n c e S t a l i n ' s dea t h ,w i t h t h e gradual moderat ion of p o l i c e a nd c o e r c i v e c o n t r o l s ,The impact of de-Sta l in iza t ion and t h e doubts i t ra i sedabou t inhe ren t defects in t h e Sovie t sys tem, however, ac-celerated these f o r c e s . Of more immediate importance, anda l s o connec ted w i t h de-S ta l in i za t ion , t h e u n r e s t i n P o la ndand Hungary probably made t h e Sovie t regime more sens i t ivet o d i s c o n te n t w i t hi n t h e USSR, and more acutely aware of t h eneed for economic concessions t o a l l e v i a t e t h e d i scon ten tand improve worker productivity. An in cr ea se of such con-ce ss io ns , however, would al s o reduce heavy in d u s tr i a l growth.

The fo l lowing a n a l y s i s at tempts t o show t h e Soviet re-. a c t i o n s t o these economic problems from December 1956 throughMay 1957, a nd p oi n t o u t c e r t a i n i n c o n s i s t e n c i e s in these re-a c t i o n s which sugges t confus ion or disagreement within t h el e a d e r s h i p over economic policy. There a re two major issuesw i th which most economic developments during t h i s per iodcan be l inked, and which w i l l be discussed separate ly int h i s a n a l y s i s . The f i r s t concerns economic policy; a mutedr e v i v a l o f t h e heavy-versus- l ight indus t ry d m nd a re-examination of t h e r e l a t ive em phas i s which should be givent o t h e e xp an si on of i n d u s t r i a l a nd m i l i t a r y p o t e n t i a l . Tou se t h e Sovie t s logan, t h i s w a s a re-examination of howr a p i d l y t h e recime should at tempt t o "catch up" w i t h t h e Westi n per capi ta output , and t o what extent improvements inl i v i n g s t a n d a r d s should be subordinated t o t h i s end, Thesecond major is s u e concerns economic re org ani zat ion ; e f f o r t st o improve management and p lan nin g in o r d er t o r e v e r se t h edownward t r end of economic growth. Throughout t h e per iodunder review, there was apparent ly some controversy overh ow much au th or i t y could be decent ra l ized i n t h e Sovieteconomy in o r d e r t o increase e f f i c i enc y , wi thout los ingt h e s t a t e c o n t r o l n e ce s sa r y t o a s s u r e f u l f i l l m e n t of e e n t r a l -l y made plans.

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111. Economic Po li cy : Heavy In du st ry , The Consumer, and" C a t z h g Up" With t he West

A . Developments Before December PlenumAlthough several of t h e new Soviet-Satel l i te economic

.-.. .a i d agreements were concluded before December 1956, t h e f i r s ts i g n t h a t Sovi e t in te rn al economic p lans were being re-examined is l i g h t of t h e above problems appeare d i n t h e f i e l dof housing construct ion-- lo ng t h e saddest aspect of t h e So-vie t consumer ' s drab l o t .

... .I .

I IThe f i r s t p u b l i c s i g n that such a program was i n t h em i l l appeared i n a n I z ve s t i a a r t i c l e of 1 2 December 1956which s t a t ed t h a t measures w e r e "now being taken t o i n c r e a s es i g n i f i c a n t l y " t h e f i g u r e of 205,000,000 square meters ofhous ing f loor space o r i g i n a l l y s ch ed ul ed f o r c o n s t r u c t i o n byt h e s t a t e dur ing t h e Si xt h Five-Year Plan .3 About t h i s t i m e ,Western news corre spon dent s i n Moscow s e n t ou t s e ve ra l s t o r i e sr ep or t ing rumors t h a t a par ty cent ra l commit tee meet ing was t obegin on 17 December and that a major inc rea se i n hous ing andconsumer goods output was planned. On 16 D e c em b e r , however,a Pravda e d i t o r i a l quoted t h e o ri g i n a l 205,000,000-square-m e m o u s i n g f i g u r e a s s t i l l v a l i d , t h u s i m p l i c i t l y con-t r a d i c t i n g I z v e s t i a ' s s ta te me nt f o u r da ys e a r l i e r . 4ques t ion w a s a t i s s u e , a t l e a s t among Soviet economists., whetheror not t h e USSR c o u l d c o n t i n u e i n d e f i n i t e l y i t s very h igh r a t eof economic growth. The continuance of t h i s r ap i d growth, inorde r t o ove r t ake and su rpass t h e leading Western nat ions ina s h o r t t i m e i n pe r cap i ta ou tpu t , w a s b u i l t i n t o t h e o r i g i n a lschedu l e s of t h e Si xt h Five-Year Plan. The d r i v e t o over t aket h e West had a lways been a basic co rn er st on e of Sov iet economicpol icy , and had r e c e i v e d p a r t i c u l a r l y f r e q u e n t a t t e n t i o n i nSoviet propaganda since t h e 2 0 t h par ty congress . In a n i s s u eof t h e Soviet journal Planned Economy (Planovoye Khozyaistvo)

. .....*Some eviden ce al s o appeared i n mid-December t h a t a broader

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which was publ ished in midoDecember, t h e economist Ya. J o f f es t a t e d t h a t i t was necessa ry t o re ject t h e p r o p o s it i o n s ofsome au thors tha t as t h e size of t h e economy increased, t h e"tempo of growth" mus t be reduced. 5

The p r a c t i c a l s i g n i f ic a n c e of t h e d o c t r i n e t h a t quick lyc a t c h in g u p w i t h t h e West in per capi ta outpu t was t h e "main,economic t a sk" of t h e USSR w a s probab ly tha t i t providedt h e r a t i o n a l e f o r t h e c o n ti n ue d p r e f e r e n t i a l development of.heavy indu s t ry , Equa ling t h e West i n per capi ta 0utpu. twould be, even in terms of t h e most op t im is t i c Sov ie t in te r -p re ta t ion s , sev era l f ive -year p lans o f f . Continued p rimacyf o r heavy indu str y, however, was a p p a r e n t l y regarded asa b s o lu t e ly n e c e ss a ry fo r mainta ining rates of growth f a renough above tho se of t h e West t o keep t h e goa l of c a t c h in gup wi th in decades r a ther t h an w i t h in h a l f - c e n t u r i e s . Thenarrower qu est ion of housing was a l s o related t o t h e broaderq u e s t i o n of o v e r -a l l i n d u s t r i a l g row th , s i n c e d iv e r s io n ofr e s o u r c e s to housing, a t l e a s t in t h e a l r e a d y s t r a i n e d So-v i e t economy, would adversely a f fec t heavy in du st r ia l growth.

A t t h e same t i m e , e v e n t s elsewhere in t h e Sino-Sovietbloc were probably exer t ing some inf luence on t h e t h i n ki n gof Soviet leaders on these problems. I t w a s probably ap-p a r e nt t o them as e a r l y as October t h a t j u s t a bo ut a l l oft h e East European S a t e l l i t e s would have t o r e v i s e t h e i r 1957economic plans in favor of consumer in teres ts , and reduceheavy in du s t r i a l inves tment, in o r d e r t o a l l e v i a t e some oft h e basic c a u s e s of u n r e s t in t h o s e areas. In China du r ingt h e same p e r io d , s e v e r a l a r t i c l e s appeared in t h e press andeconomic journals suggesting t h a t t h e r a t i o of investmentin heavy indu s t ry t o inves tment in l i g h t i n d u s t r y be reducedfrom t h e e ig h t - or seven-to-one which a p p l i e d in China 's F i r s tFive-Year Plan t o s ix-to-one f o r t h e Second Five-Year Pl an(1958-1962). Although So vi et s t a t i s t i c s may no t be s t r i c t l ycomparable, t h e cor responding ra t io in t h e USSR had been aboutten-to-one throughout t h e postwar per iod, except f o r t h e "newcourse" year of 1954, when t h e S o v iet r a t i o d ropp ed t o a ro un dseven-and-one-half-to-one.The reasoning in one Chinese a r t i c l e w a s t h a t a n i n c r e a s ein consumer goods production would promote higher a g r i c u l t u r a lou tpu t by providing bet ter i n c e n t i v e s t o t h e peasants .t h e p e o p l e ' s l i v e l i h o o d wou l d be enhanced, " th e a l l i a n c e of

workers and peasants" would be conso l ida ted , t h e s t a t e ' s ac-cumulation of c a p i t a l i n c r ea s e d , a nd t h e r a t e of developmentof heavy industry f u r t h e r .!accelerated.gard heavy i nd us t r i a l growth a s a t l e a s t p a r t i a l l y d e p e n d e n ton ag r i cu l t u ra l and consumer goods output d i f f e r e d from both

I n t u r n ,

T h i s tendency t o re-

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.,.

. ... ..... . .. . . . . .

$L

. . . . ... ..\. :... .. . . . . ,. .. . .. . . . ._... .. . ..

. .

.. , '

. .. .

. .

. . . . . .

t h e Sovie t and o f f i c i a l Chinese dogma on primacy of heavyindus t ry , under which t h e growth of agr icul ture , consumergoods, and t h e cou ntr y 's mi l i ta ry power depended wholly onheavy Ind ust ry. Another Chinese a r t i c l e s ta ted that "somecomrades, '* a f t e r s e e i n g t h e "mistakes" o f c e r t a i n EastEuropean countr ies , had raised ques t ions r ega rd ing t h e con-f l i c t between t h e preferent ia l development of heavy industryand t h e care f o r t h e peop le ' s l i ve l ihood . The a r t i c l e , how-ever , rejected these ques t ions a s n o t a p p l i c a b l e t o China.6

These developments elsewhere in t h e bloc probably hadno m ore than an ind i r ec t impact on t h e Sovie t regime's think-ing concerning i t s own economic policy. Any e x p l i c i t in-f lu enc e China had would l i k e l y have gone in f a v o r of heavyi n d u s t r y , s i n c e it w a s in t h i s f i e l d t h a t China needed so-v i e t a s si s ta n c e. Some i n f l u e n t i a l p e o p l e i n t h e USSR, h o pever , were perhaps swayed by $he same t y p e of thinking.Furthermore, in t h e case of the East European S a t e l l i t e s ,Sovie t approval of t h e i r p l a n changes was prqbably. required.

The c e n tr a l committee meeting ca l le d t o discuss economicproblems began on 20 D e c e m b e r , n o t 17 D e c em b e r , a s r epor t ed lyscheduled. The reason f o r t h e postponement i s n o t d e f i n i t e l yknown, but a Western correspondent descr ibed by t h e Americanembassy in Moscow as having exceptional ly good Soviet sourcesrepor t ed a t t h e t i m e t h a t there w e r e "problems" connectedwi th t h e new economic program, and i t might not come as planned.T h i s j o u r n a l i s t ' s s o u r c e s s a i d t h e p l a n s had ca l l ed f o r a s h i f tof resources t o in cre ase housing cons t ruc t io n and consumergoods out put , some re du ct io n in output of convent ional m i l i -t a r y weapons, a c ut ba ck i n c o n s t r u c t i o n of c u l t u r a l a nd com-munal f a c i l i t i e s , and increased product ion of consumer goodsa t heavy in du s t r i a l p l an t s .7 JI 3. The December PlenumThe central committee plenum, which m e t from 20 t o 24

The Moscow press publ ishedDecember i n Moscow, d i d no t make a ny s i g n i f i c a n t changes i np l a ns f o r t h e Soviet consumer.two "decisions" of t h i s meeting. One, on t h e need t o improvet h e guidance of t h e economy, w i l l be discussed below in t h es e c t i o n on r eo rgan iza t ion of t h e Soviet economy. The other ,on "drawing up more s p e c i f i c c o n t r o l f igures" f o r t h e n a t i o n ' seconomic plan s, es se nt ia l l y postponed a dec i s ion on how muchof a n i n c r e a s e in r e sources cou ld be devoted t o housing andconsumer needs, and a t t h e same admitted t h a t heavy industryw a s su f fe r ing seve re s t r a i n s from overam bi tious p l ann ing .

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. .,. .

The order was i s s u e d t h a t t h e i n d i v i d u a l g o a l s o f t h ef ive-year p lan and t h e 1957 plan be made "more s p e c i f i , I 1 andt h a t t h e f ive-year p lan be p re s en t ed i n f i n a l f orm t o t h eSupreme So v ie t by mid-1957. The orders on how t h e i n d i v i d u a lg o a l s were t o be r ev i sed were broken down i n t o t w o p a r t s , o n e. on i n d u s t r y in genera l , and one on housing:

. . .. . . ., . .

. ... . ..

"(a). . . reduce th e volume of c a p i t a linv est men ts and...make th e l i s t of cons t ruc-t i o n projec ts more sp ec i f i c , w i t h a view to-ward reducing t h e number of them, p r i m a r i l ya t t h e expense of new co ns tr uc ti on proJects. . , .Revise t h e p lan goa l s for i nd iv idua l i ndus -t r i e s which have not been supplied w i t h s u f -f i c i e n t materials....l l (b ) . . . s eek o u t o p p o r t u n i t i e s f o r a l l o -

c a t i n g a d d i t i o n a l f u n d s for housing.... I tThus t h e regime a p p a r e n t ly c o ul d n o t a g r e e on t h e immediateimplementation of pla ns, which ear l i e r evidence sugges ts had a l -ready been formulated, f o r a new division of res our ces betweent h e consumer and an a l ready o v e r s t r a i n e d in d u s t r y , b u t ca l l edf o r a re-examination of how r e sources were t o be divided.8

The cen t r a l committee r e s o l u t i o n on r e v i s i n g t h e p l a n sr e i t e r a t e d t h a t t h e basic po li cy pronouncements of t h e 20thpa r t y congress should remain as t h e g u i d e l i n e s f o r t h e plan .The need f o r con t inu ing t h e primacy of heavy indus t ry w a s r eaf -f i rmed , as w a s t h e l i n e on ca tch ing up w i t h t h e West in ah i s t o r i c a l l y s h o rt t i m e , As on previous occas ions , a c a l lwas i s s u e d " to d e ve l op c o n s t a n t l y s o c i a l i s t compet i t ion asa powerful means o f s t r u g g l i n g f o r f u l f i l l m e n t an d o v e r f u l-f i l l m e n t of economic plans." While adm i t t ing t h a t i n d u s t r i a land cons t ruc t ion p lans m igh t r equ i re a s l i g h t downward re-v i s ion , and t h a t Oppor tuni t ies should be sought for i nc reasedh ou si ng c o n s t r u c t i o n , t h e r e s o l u t i o n asserted t h a t suchchanges were t o have no impact on t h e basic doc t r in es under-l y i n g t h e o r i g i n a l f i v e- y e ar p l an .

i n d i c a t e d t h t c a p i t a l i n ve s tm e nt 1 .e mainly r 'esponsible f o r t h e plenum.9 During 1956many minis t r ies had r e p o r t e d l y p u t in s t r o n g b i d s for more in-vestment funds, arguing t h a t t h e i r g o a l s c o u l d n o t be achievedwi thou t h i g h e r investments.investment, compounded by p r e s s u r e f o r more housing, resul tedin "sharp" d i s c u s s i o n s a t t h e plenum,Most of t h e speakers r e p or t ed l y a g r e e k r n a r mere c0mru-m: 'modifications" but no fundamenta l revis ion of t h e f ive -yea rp lan ou tpu t goa l s , and t ha t capac i ty for accomplishing themmust be found wi th in ex i s t ing f a c t o r i e s .

The d i f f i c u l t i e s of i n c r e a s i n g\

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.... ::..e. .

................................, :. ..........

. . . . .

. . . . ...>.:.. ,.; .. . . . . ................, .. . . . .. . . . . . .

A t t h e same t i m e , t h e lenum a r l y ordered a r e d u c t i o ns t a t e d t h a t Khrushchevand Molotov were l ead in pea ers a t h e plenum, althoughin c a p i t a l investment.t h e p u b l i s h e d d e c i s i o n s of t h e meetin were based on reportsCZG J n d u s t r y "of Saburov, Baibakov, and Bulganin.gested t h a t a r e v i v a l of t h e "heavy-con t roversy occur red a t t h e plenum, rem arking t h a t t h e p a r t yhas always had t o f i g h t a g a i n s t a "right-wing tendency"t o lower t h e tempo of heavy i n d u s t r i a l p r o d u c ti o n in f a v o rof t h e consumer.

The s e r i o u s n e s s w i t h which t h e Sovie t l eader s regardedtheir economic problems became c lea re r two days a f t e r t h eplenum-ended. The Sov iet pr es s on 26 December carr ied adecree a p p o in t i n g M. G. Pervukhin, member of t h e p a r t y p r e-s idium and f i r s t deputy premier, head of t h e St a t e Commis-sion fo r . Cu rr en t Planning, and removing M. Z . Saburov fromt h i s pos t . The reorg an iza t ion of t h e Cu rr en t Pla nni ng Com-mission w i l l be discussed in more d e t a i l below a s i t re-l a t e s t o ot he r measures fo r economic reo rga niz at i on. Interms of p r e s s u r e s t o change t h e d i v i s i o n of a v a i l a b l e , r e -sources among var ious b ranches of t h e economy, however, i tis important t o n o t e t h a t t h e s i x to p a d m i n i s t r a t o r s whowere named as Pervukhin ' s dep u t i es represen te d a lmos t a l lmajor economic sec to r s . As f i r s t d e p u t i e s t o P er vu kh inw e r e appointed--

Is0 sug-IC3

--A. Ne Kosygin, whose background is p r i -m a ri ly i n l i g h t i n d u st r y,--V. A. Malyshev, w i t h a background inheavy in du s t r i a l t echnology , a tomicenergy and shipbui lding.

As deput ies t o Pervukhin were appointed---4.. Khrunichev, w i t h an armaments--V. A. Kucherenko, ident i f ied w i t h t h e--V. V. Matskevich, minister of a g r i c u l ---I. A. Benediktov, minis ter of s t a t e

in du st ry background ,c o n s t r u c t i o n i n d u s t r y ,tu r e and long connected w i t h t h i s f i e l d ,farms and f o r y e a r s a l e a d i n g a g r i c u l -t u r a l o f f i c i a l .

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A l l s i x of these men were given th e rank of m i n i s t e r ( t h ef i r s t f o u r headed no sp ec i f i c m in i s t r i e s , wh i l e M atskevichand Benediktov re ta ined t h e i r p o r t f o l i o s ) . T h e f i r s t f i v ehad previously been deputy premiers of th e government, andwere r e l i e v e d of t h e s e p o s t s .

There are s e v e r a l p o s s i b l e r e a s o n s f o r Saburov's removalfrom the top cur ren t p l ann ing post.plenum of e x c e s s i v e s t r a i n s in economic plans w a s very s i m i l a rt o criticisms of th e Gixth Five-Year Plan made a t the 20thpar ty congress by M inis t e r of Ferrous Meta l lurgy A. G .Sheremetev and Minis ter of the Coal Indus t ry A. N. Zademidko.A t t h a t time Saburov censured these m i n i s t r i e s , s a y in g th e yhad proposed "reduced pla ns,* * and had r eques ted more i n v e s t -ment funds than they needed.the goverament had t o i n t e r v e n e in t h i s matter," ra i s e t h eplans, and cut down on the inves tment reques ts . The perform-ance of t h e ferrous metals, c o a l a n d s e v e r a l o ther i n d u s t r i e sin 1956 showed t h a t Saburov had erred in r a i s i n g t h e goals,and perhaps in encouraging an over ly opt imis t ic v iew of th er a p i d i t y w i t h which t h e USSR could catch up w i t h t h e West.

The admission by t h e

Saburov s a i d "the p a r t y a nd

...I.. ...

A t t h e same t i m e , however, t h e December plenum orderedinvestment reduced and repeated in m i ld e r f o r m Saburov'sea r l i e r condemnation of e f f o r t s "by some execut ives" t o havet h e i r economic plans reduced and thereby "to conceal t h e i run sa t i sf ac to ry work." According t o th e r e s o l u t i o n , p l a n sshould be " rea l i s t i c , but not too low.9q The surpr is inglyl o w go al s announced i n t h e 1957 p lan a l i t t l e over a monthl a t e r sugges ted t h a t Pervukhin 's committee went fu r t he r thant h e cent ra l commit tee had intended.perhaps was a f a c t o r i n Sa bu ro v' s o u s t e r , but t h e wordingof t h e December plenum suggested t h a t l ess of a r e d u c t i o n ing o a l s w a s f o r e s e e n t h a n a c t u a l l y o c c u rr e d,

Overambit ious planni ng

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. . . . ,

as deputy premier and appointed ambassador t - Japan on 30December. No ev ide nc e pr ov ide d a reason for t h i s apparentdemotion, b ut Tevosyan, ap pa re nt ly t h e deputy premier w i t ho v e r- a l l r e s p o n s i b i l i t y f o r t h e m e t a l l u r g i c a l i n d u s t r y , mighthave been blamed f o r t h e poor showing of t h a t i n d u s t r y in )1956. He cou ld also have opposed some of t h e proposals a tthe December plenum on economic reorganizat ion.IV, fo l lowing. ) (See Sect ion ' I '

C. .From December Plenum t o February Supreme SovietWhile t h e reorganized Current Planning Commission w a sr ev i s i ng th e 1957 p lan i n t h e s i x weeks fo l lowing the Decemberplenum, the Soviet Union continued t h e process of n e g o t i a t i n gnew a i d and trade agreem ent s wi th the Sa te l l i t e s , which i n -creased a t l e a s t marginal ly t h e s t r a i n s on home resources,

E a s t Germany's Premier Grotewohl, re tu rn in g from Moscow a tthe end of January w i t h a new a i d agreem ent , exp l i c i t l ycommented on the USSR's added burdens. He s a i d it was "noteasy" for t h e USSR t o g i v e t h e a i d agreed upon, since t h eSoviet Union had to "shoulder the great economic tasks whichhave a r i sen f r o m the convuls ions in some soc ia l i s t c o u n t r i e s I t loProbably because of S a t e l l i t e needs for h a r d currency, andalso because t h e USSR had a s i zab l e adverse ba lance i n i t s1956 f o r e i g n trade, Sovie t go ld expor t s i nc reased t o a l e v e lwhich, i f continued through 1957, would be cons ide rab ly inexcess of go ld sa les i n the previous peak y e a r , 1953, whent h e USSR had exported about $150,000,000 i n gold.

'

.

S o v i e t a i d programs t o t h e f r e e world dur ing t h i s per iodcont inued a t roughly the l e v e l of t h e l a s t h a l f of 1956, a l -though t h e USSR d i d n o t come up w i t h a large c o u n t e r o f f e r ofeconomic a i d for t h e Near E a s t i n r e ac t i o n t o t h e new Ameri-can program. Arms shipments cont inued to S y r i a , and negotia-t i o n s fo r re-equipping Egypt 's armed forces were under way.The Soviet Union i n th e last h a l f of January d i d t e l l Yugo-s l a v i a t h a t i mp le me nt at io n of i t s a id agreement w i t h t h a tcoun t ry cou ld no t be carr ied ou t immediately, and i n Februarythe USSR postpo ned r ln t i l 1961 t h e E a s t German-Soviet projectt o h e l p Yugos lavia b ui ld an aluminum com bine .ll These moveswere a l m o s t c e r t a i n l y p o l i t i c a l l y motivated, and intended t oexert p r e s s u r e on Yugoslavia i n i t s d i s p u t e w i t h the S o v i e tUnion, but t h e y also allowed a s l i g h t r e d uc t i on i n S o vi e tand E a s t German economic commitments.

Within t h i s framework t h e Current Planning Committeeunder Pervukhin worked durin g January t o re vi se t h e 1957 plan.Th e Communist P a r t y newspaper P ravda i n mid-January reactedt o Western press reports which-ha lde ized on t h e im pl i ca t ion

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in th e December p lenum resolu t ion tha t Sovie t indus t r ia lgrowth would slow down. The S o v i e t p r e s s d u r in g t h i s p e r i o dalso sh0.t off the f i r s t s a lv o s c a l l i n g f o r a massive campaignof "so ci a l i s t compet i t ion" t o o v e r f u l f i l l t h e 1957 plan andl a t e r th e Si x th Five-Year Pla n, in honor of th e 40th anniver-sary of the 1917 revo lut io n . Pravda ' s e d i t o r i a l on 1 2 Januaryaccused ** hos t i l ebourgeois pro-avl of " t ry ing t o p o r t r a yt h e d e c i s i o n s of th e (December) plenum as a r e f l e c t i o n ofsome s p e ci a l d i f f i c u l t i e s f ac i ng our coun t ry , as a r e j e c t i o nof ea r l i e r planned higher ra tes of i ndus t r i a l cons t ruc t ion . 11A f t e r lab el i ng the se views "slanderous ," Pravda s a i d t h a t th eques t ion w a s n o t Ita r edec t ion o f higher t e m p o s of i n d u s t r i a lcons t ruc t ion , bu t a t r a n s i t i o n to a new stage of economicdevelopment i n which hi gh tempos are guaranteed not only , andno t so much, by large c a p i t a l i n v e s t m e n t s as by more c o r r e c tu t i l i z a t i o n of av ai la bl e resources . " The e d i t o r i a l f u r t h e rargued t h a t i t w a s possible t o lower c a p i t a l investment inindu s t ry , thus providing more reso urce s fo r hous ing, and a t

4 the same t i m e increase "tempos of new in d us t r ia l cons t ruc t ion .1 iThe f ac t t h a t t h e 1957 plan announced t h e fo l lowingmonth d i d show a su bs ta n t i a l ly r educed g rowth ra te fo r indus -t r i a l ou tpu t sugges t s f i r s t t h a t Pravda ' s b l a s t w a s aimeda t i n t e r n a l p r e s s u r e s f a v o r i n g a reduced growth ra t e as w e l las a t "h os t i le bourgeois propaganda," and second, t h a t th eregime acquiesced to these pressu res , a t l eas t temporar i ly .The c or re sp on di ng I z v e s t i a e d i t o r i a l of 1 2 January r e i t e r a t e dt h e December plenum's cr i t i c i sm of economic administratorswho attempted t o ge t plans approved which were loHer thannecessa ry ,The speeches made by t h e S o v i e t leaders on t h e i r t o u r sthrough t h e provinces dur ing t h e l a s t h a l f of January d i f f e r e din t h e i r emphasis on var ious poin ts . Only th e speeches of L,

116. Kaganovich and N. I . B e l a y e v e x p l i c i t l y repeated t h e g o a lof ca tch ing up wi th th e West in t h e s h o r t e s t t i m e , b u t a l lt h e o t h e r s d i s c u s s ed in g e n e r a l terms t h e a l l e g e d s u p e r i o r i t yof "social ism" over capi ta l i sm and t h e i n e v i t a b l e v i c t o r y oft h e former. The l eader s a l l r e s t a t e d the primacy of heavyi n d u s t r y , b u t t h e i r speeches con ta ined some in t e re s t in gv a r i a t i o n s c on ce rn in g b e n e f i t s fo r t h e consumer,speaking in t h e Tadzhik'SSR, admit ted shortcomings in housingand supp l i e s of consumer goods and sa i d t h a t e f f o r t s werebeing made t o end these shortcomings, H e emphasized, however,t h a t "everything cannot be .done a t once." Kaganovich, spe ak ingin Krasnoyarsk, s a i d t h a t under t h e d i r e c t i v e s o f t h e Decembercentral committee meeting, t h e f ive -yea r p l an w a s being "workedout" t o e n su r e t h e prepond erant development of heavy indus t ry ,b u t a t t h e same t i m e " to e f f e c t a s h a r p r i s e in th e material

Bulganin,

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well-being. . .of th e So vi et people." A. B. Arls tov , inChelyabinsk, s t a t e d th a t measures implemented durin g 1956 t oraise living s t andards were one of t h e re aso ns why **someamendments" in the Si xt h Five-Year Plan were requi red .

Also bearing on future economic policy w a s t h e way inwhich t h e leaders regarded the USSR's m i l i t a r y s t r e n g t h inthese speeches.heavy indus t ry h a s always been based in par t on the count ry ' sneed fo r m i l i t a r y s t r e ng t h , and Bulgan in , speak ing in t h e TadzhikSSR, re i te ra ted t h i s po in t s t ro ng ly . Khrushchev, in Tashkent,s a i d t h a t t h e "mad arms race" being ca r r i ed on by t h e UnitedStates demanded * ' increased vi gi la nc e and stre ngt hen ing ofour armed forces.'* However, Malenkov, speaking in Chkalov,took a more moderate view:

The t h e s i s c a l l i n g for continued primacy of

"Our party teaches, and t h e whole experienceof t h e s t r u g g l e a g a i n s t t h e i n t e rna l and ex -ternal enemies of Communism shows, t h a t o n emust n ot un derest imate th e enemy. But a t t h esame t i m e one shou ld no t ove r ra t e h i s s t r e n g t ho r have a f a l s e p i c t u r e of t h e s t r e n g t h o f t h ec a p i t a l i s t wor Id . I*

.,...% ._...:....*..:,..: ; ..' , . ,.. .. ,.

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D. The February Supreme Soviet and the 1957 PlanThe 1957 plan presented by Pervukhin t o t h e SupremeS o v i e t on 5 February scheduled sha rp reduct ion s in ra tes ofgrowth for m o s t branches of t h e economy. Heavy i n d u s t r y w a splanned t o grow 7.8 percent in 1957, compared w i t h the 11.4-pe rcen t growth announced as achieved in 1956, and l ight ln-d u s t r y w a s t o grow 5.9 percent , against last year ' s 9 . 4 per-c e n t . G r o w t h o f i n d u s t r i a l labor produc t iv i ty , s chedu leda t 5.4 percen t fo r 1957, compared with a 7-percent growthachieved i n 1956. In t h e f i e l d of c a p i t a l i nv es tm en t, thef i g u r e s may n o t be s t r i c t l y comparable, b u t t h e 1957 planca l led f o r almost a 9-percent increase , compared w i t h a 17-p e r c en t i n c r e a s e i n 1956.In i n d u s t r y , Pervukhin emphasized part icular ly t h e need

t o i n c r e a s e t h e capacities of t h e f u e l , m e t a l s and b u i l d i n gmaterials i n d u s t r i e s , and scheduled much larger i n c r e a s e s ofcapaci ty than of production. M i l i t a r y a l l o c a t i o n s i n t h ebudget were scheduled a t p r a c t i c a l l y t h e same high l e v e l asa c t u a l e x p e n d i t u r e s in 1956. Although t h e growth of l i g h ti n d u s t r y w a s planned to be below that of heavy industry,a l l o c a t i o n s t o l i g h t i n d u s t r y from t h e budget increased f a rmore i n percen tage terms ( an d s l i g h t l y more i n a b s o l u t eterms) than d i d a l l o c a t i o n s t o heavy i n d u s t r y .The 1957 housing plan ca l l ed fo r c o n s t r u c t i o n of .46,000,000 square meters of dwel l ing space from b o t h s t a t eand private funds, compared w i t h t h e 36,000,000 square metersa c t u a l l y b u i l t l a s t yea r . T h i s w a s a v er y s u b s t a n t i a l i n -

crease, and w a s c o n s i s t e n t w i t h t he schedule o f t h e o r i g i n a lf ive-year p lan , w hi l e 1957 goa ls i n most othe r c a t e g o r i e swere below le ve ls necessary t o ach ieve t h e f ive-year plan.On t h e other hand, th e hous ing increase d i d n o t r e p r e s e n t a nupward r e v i s i o n o f t h e o r i g i n a l fi v e -y e a r p l an g o a l , as someea r l i e r evidence had suggested would be the case.In f o r e i g n t rade, Pervukhin scheduled a 13-percent in-crease i n t o t a l t r a de w i t h other c o u n t r i e s of t h e bloc. H es a i d t h a t the doubling of Sovie t t rade i n 1956 w i t h t h e NearEast and Asia "should be noted ," but omi t ted any refe renc e t of u t u r e t rade w i t h t h i s area.*

*This r e p o r t i s no t in t ended t o g ive a d e t a i l e d a n a l y s i s o ft h e 1957 Soviet economic plan, except as i t a f f e c t s the mainl i n e s of Sovie t p o l i c y .

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In Pervukhin 's speech, and throughout t h e publ ished d is -cuss ions on t h e p l a n a t t h e Supreme Soviet, the re w a s no refer-ence t o t h e doc t r ine of ca t ch ing up w i t h the West i n per capi tao u t p u t i n a . h i s t o r i c a l l y shor t time. The complete s i lence ont h i s p o i n t p o s s i b l y r e f l e c t e d unhappiness within th e leadershipover the s h a r p l y c u t ra tes of growth i n t h e p l an . Less than amonth ea r l i e r th e P r a v d a e d i t o r i a l of 12 January had attackedas " h o s t i le b o u r g e o i s a n d e r " any s p e cu l a ti o n t h a t t h e ra teof growth would i n f a c t drop, and y e t p r e c i s e l y t h i s happened.

The l e a d e r s h ip may not have envisaged a t t h e Decemberplenum t h e dras t ic r e v i s i o n of c u r r e n t o u tp u t g o a l s i n th e1957 plan, The wording of th e December plenum's resolu t ionhad in di ca te d some downward re vi si on , but n ot so large a oneas appeared in t h e plan. Furthermore, th e December plenumhad ex p l i c i t l y o rde red * 't he volume of ca p i t a l i nves tm en tt1 t obe reduced, and in f a c t th e ab so lu te volume in cre ase d, a l -though a t a s lower ra te than in t h e preceding year , Thep lenum 's ins t ruc t ion may have meant a r e d u c t i o n below t h eo r i g i n a l 1957 p l a n , or a red uct ion below th e a bs ol ut e volumeof 1956. In any event , it seems l i k e l y t h a t in working outt h e 1957 plan, Pervukhin allowed l arger r e d u c t i o n s in c u r r e n toutput goals , and perhaps smaller r e d u c t i o n s i n c a p i t a l ex-p e n d i t u r e s , than were envisaged by t h e December plenum.

, .......... ... ....

Plan changes of prec i s e l y t h i s t y p e would be f avoredPr im ar i ly by economic ad min is t ra t ors , f rom min is t ers andt h e i r deputies down t o indiv idual p lant managers . A t t h e20th p a r t y congress a year e a r l i e r i t w a s s u c h i n d i v i d u a l swho had been squelched by Saburov in h i s s u c ce s s fu l e f f o r t st o r e v i s e t h e 1956 output goals upward, w h i l e c u t t i n g b ackt h e inves tment funds . reques ted by mi ni s t r i es . S ince Pervukhinand%-is deputies were pr imar i ly exper ienced in i n d u s t r i a ladm in i s t r a t ion , ra ther than in planning or i n t h e p a r t yappara tus , t h e y might have had more sympathy than t h e i rpredecessor s for arguments i n fav or of reduced output goals ,

The l ike l ihood t h a t th e 1957 pla n w a s n o t e x a c t l y t h eone ordered by the December plenum w a s s t r eng thened by t h efac t t h a t Pervukhin emphasized throughout h i s speech on t h eplan t h a t t h e goa l s shou ld be o v e r f u l f i l l e d . A i s f r e q u e n tr e f e r e n c e s t o t h e ease w i t h which t h e plan could be over-f u l f i l l e d f a r outweigh h i s one r e fe renc e to t he p l an be ingr e a l i s t i c , bu t no t too easy . Pervukhin probably found h i m -s e l f i n an unenv iab le po s i t ion , p res su red by i ndus t r i a l adm in-i s t r a t o r s t o lower plans , and faced by d i s p l e a s u r e fromo t h e r m em b e r s of t h e par ty leadership when he d i d .

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On the s u b j e c t of heavy indus t ry , th e 1957 plan a lsor e p r e s e n t s a poss ib le depa r tu re f r o m t h e propaganda l i n e andt h e p o l i c y of 1955 and 1956. As noted previous ly , t o t a l a l -l o c a t i o n s from t h e s t a t e budget t o l i g h t i n d u s t r y i n c r e a s e dmore than d i d a l l o c a t i o n s t o heavy industry ( these budgetarya l l o c a t i o n s c o v e r c e r t a i n o p e r a t i n g ex pe ns es as w e l l as ln-vestment, and f i g u r e s fo r inves tment a lone are n o t a v a i l a b l e ) .T h i s happened last i n 1954. Furthermore, t h e lead e d i t o r i a li n a n i s s u e of the party journal Kommunist which w a s publ ishedl a t e r i n Februa ry s ta ted t h a t i n t h e 1957 p lan the p ropor t ionof t o t a l a l l o c a t i o n s d e vo te d t o product ion of consumer foods,housing, schools and h o s p i t a l s w a s h ig h e r than i n 1956. 6g r e a w t h the preferent ia l development of heavy indus t ry ,and emphasizing t h a t heavy industry w a s " th e s o l i d f o un d at i onof t h e national economy...and i t s defense capac i tyYt f t a t e dt h a t "the d i s t ingu i sh ing f ea tu re ' ' of t h e 1957 pla n was t h a tit envisaged "higher t e m p o s t ha n h i t h e r t o for t h e product iono f .consumer goods. I'

. .. The Pravda ed i to r i a l of 9 February, af ter r ea f f i rm ing a t

T hus, i n p r a c t i c e , t h e p l a n s f o r 1 957 a p p a r e n t l y ca l l edf o r g i v i n g t h e consumer a l i t t l e la rger piece of t h e t o t a lp i e t h i s year . T h i s probab ly r e su l t e d i n p a r t from t h e f a c tt h a t housing p la ns , a l though not incre ased above t h e o r i g i n a lschedu le , were a t l e a s t not cut back t h i s y ea r; i n p a r t froml a s t yea r ' s good h a r v e s t , which s h o u l d i nc rease food s u p p l i e sin 1957; and i n p a r t from t h e i nc reased budge ta ry a l loca t ionst o l i g h t i ndus t ry . Inc reased emphasis on improving l iv ings t a n d a r d s had actual ly begun to develop ear l i e r . The S i x t hFive-Year Pla n approved by the 2 0th par ty con gres s had i n -dica ted t h a t t h e consumer would receive a g r a d u a l l y i n c r e a s i n gshare of t o t a l r e sources in t h e l a t e r year s of t he p l an . I n1956, s u b s t a n t i a l " f r i n g e b e n e f i t s , " s u ch a s h i g h e r pensionsand increased minimum wages, were g r a n t e d t h e consumer.

Although an increased proport ion of t o t a l r e s o u r c e scou ld be devoted to the consumer i n any one year wi thoutr a i s i n g t h e growth rate of ou tpu t f o r t h e consumer abovet h e heav y i n d u s t r i a l o u t p u t , i t may ac t u a l l y be somewhatd i f f i c u l t f o r t h e USSR t o keep l i g h t i n d u s t r y ' s r a t e ofgrowth below t h a t of heavy i n 1957. Agricul ture providesmore than h a l f of t h e r a w materials for l i g h t i n d us t r y i nt h e So vi et Union, and l a s t y e a r ' s l arge h a r v e s t w i l l t end t oi n c r e a s e l i g h t i n d u s t r i a l o u t p u t t h i s year . Unless pres entproblems i n t h e f u e l , metals and bui ld ing materials in-d u s t r i e s a re so lved , on t h e o ther hand, heavy in du st ry mayface cont inued r a w materials shortages. (Housing, of course ,is no t inc luded i n t h e Sovie t account ing categories f o re i t h e r heavy or l i g h t i n d u s t r i a l o u tp u t. )

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Th e pressu res f aced by the p lanner s both t o g ive moret o t h e consumer and t o allow i n d u s t r y more investment fundsappea red ve ry c l ea r ly in t h e speeches of l o c a l d e p ut i e s a tt h e Supreme Soviet meeting. A r e p r e s e n t a t i v e f r o m th e EstonianSSR complained t h a t a n i n d u s t r i a l p l a n t in h i s r eg ion w a s t ohave been modernized under th e d i r e c t i v e s o f t h e 2 0t h p a r t ycongress on t h e Si xt h Five-Year Pla n, and sa id t h i s moderniaa-t i o n , which w a s t o have begun in 1957, was being postponed andnow "was not even inc luded in t h e Si x th Five-Year Plan." Adeputy from Leningrad complained t h a t under t h e f ive-year p land i r e c t i v e s two long-distance gas p i p e l i n e s were scheduled fo rc o n s t r u c t i o n to Leningrad by 1959, b ut t h a t now on ly one w a senvis ioned. A female deputy f r o m t h e Latvian SSR quoted adecree of t h e Council of M inis t e r s which orde red a l l en te r -prises employing more than 500 women to have t h e i r own c h i l -d r e n 's i n s t i t u t i o n s , and c r i t i c i zed v a r io u s m i n i s t r i e s f o rnot obeying t h i s decree. She pointed out t h a t th e M inis t ryof Ligh t In du st ry employed 33,000 women i n L a t v i a , b u t hadk inderga r t ens and nur s e r i e s f o r less t han 900 c h i l d r e n .evidence t h a t housing plans, except in a f e w large c i t i e sl i k e Moscow or v i t a l i n du s t r i a l areas l i k e the Donbas, wereno t be ing r ev i sed upward. A Moscow delegate d i d announcet h a t t h e f ive-year housing p lan for t h e c a p i t a l w a s beinginc reased f r o m 9,000,000 t o 11,000,000 square meters. Adeputy from t h e Karelian Autonomous Republic s a i d t h a t s a w =m i l l s of h i s area subord ina te to t h e Ministry of t h e TimberIndus t ry had produced 159,000 square meters of prefabricatedhousing in 1956, but were orde red to r educe ou tpu t sha rp lyin 1957, to 60,000 square meters. Represen ta t ives of t h eAzerbaidzhan SSR, Chuvash Autonomous Republic, and KemerovoO b l a s t a l s o compla ined th a t housing p lans f o r t h e i r areaswere either t h e same as l a s t year or lower.

The speeches a t t h e Supreme Soviet a l so prov ided fu r the r

E. From t h e SuDreme So vi et t o Khrushchev's ThesesA f t e r t h e Supreme Soviet, t h e s p o t l i g h t s h i f t e d f r o meconomic pol icy t o economic reo rga niz at i on in t h e USSR ( t h el a t t e r problem w i l l be d i scussed in th e n e x t s e c t i o n ) .Immediately following the Supreme Soviet, a new c e n t r a l com-mittee plenum m e t on 13 and 14 February, and i ssued a resolu-t i o n based on proposals of Khrushchev f o r a d r a s t i c r eo rgan iza -t i on o f economic adm in i s t r a t ion a long r eg iona l l i ne s .

p roposa l , t o be worked o u t in d e t a i l and p resen ted to t h enext meeting of th e Supreme Soviet by t h e par ty pres id iumand Council of M inis t e r s , w a s described i n 'a l a t e r speech byKhrushchev as a n e f f o r t to evoke a great new upsurge of in-d us t r i a l ou tp u t , com parable to t h a t achieved in a g r i c u l t u r eby t h e s i m i l a r l y gran dios e "new lands" program.

T h i s

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Some p a r t s of th e February plenum's r es ol ut io n, however,do concern economic policy, and may rep res en t t he re ac t i on ofth e pa rt y leadership--or dominant elements of i t-- to t h e low1957 plan, which w a s perhaps no t p re c i s e ly what they hadorde red t w o months ear l ie r a t th e December plenum. Whilea c c e p t i n g t h e p l a n , t h e p a r t y l e a d e r s t h ro ug h t h e i r ownforum, t h e r e s o l u t io n of t h e plenum, i s sue d se ve ra l state-ments inc on s is ten t wi th those made a t t h e Supreme Soviet.The op t im is t i c tone of t he plenum's r e s o l u t io n w a s s imi la rt o t h a t of t he 20 th pa r ty congress a year ear l ie r , and thepledge to "overtake and o u t s t r i p the most developed c a p i t a l i s tc o u n t r i e s i n p e r c a p i t a p ro du ct io n" was res tated. The r e s o l u -t i o n emphasized that t h e most im port an t cond i t io n f o r achiev-i n g t h i s ai$ w a s r ap i d growth of labor p r o d u c t i v i t y , a n ds ta ted , "We h av e e v er y p o s s i b i l i t y t o ach ieve t h i s t a s ksuccess fu l ly . " As mentioned e a r l i e r , Pervukhin ignored t h etheme of c a t c h i n g t h e West i n h i s p r es e nt at i on of t h e p l a nt o t h e Supreme Soviet, and the p lan scheduled on ly a 5.4-p er ce nt i n c re a s e i n i n d u s t r i a l labor p r o d u c t i v i t y .Current Planning Commission, which w a s no t mentioned i n De-cember; i t w a s probably aimed a t Pervukhin's commission,r a t h e r t h a n a t Saburo v's. The commission w a s ordered n o tt o "du plic ate th e worktt of Gosplan (long-range planning),and not t o i n t e r f e r e w i t h " func t ions of management."F i n a l l y , t h e February plenum's re so lu t i on conta ined nor e f e r e n c e t o the 1957 plan which had j u s t been approved, a l-though i t d i d have pra ise f o r th e r a p i d economic growth of1956.

In a d d i t i o n , the plenum leveled a cri t ic ism a t t h e

The accusat ion t h a t the commission w a s d u p l i c a t i n g t h ework of Gosplan might i n d i c a t e t h a t t h e p a r t y leaders regardedt h e l o w 1957 plan goals as incompat ib le w i t h higher goals,which , they pe rhaps ins i s t ed , had t o be i n c o r p o r a t e d in t h er ev i sed f ive-yea r p l an . A t any ra te , the campaign t o develop"socialist competi t iont1 fo r o v e r f u l f i l l i n g th e 1957 plan inhonor of t he 40 th ann ive r sa ry of t h e 1917 revolut ion p ickedup steam after mid-February. Pravda e d i t o r i a l s between 18February and t he end of March EGEEned t h i s s u b j e c t on 10days, a nd I z v e s t i a f ol lo we d s u i t , a l though l e ss f r e q u e n t l y .Pravda on 3 March cal led f o r f u l f i l l me n t ahead of t i m e oft h e x t h Five-Year Pla n go al s, as w e l l as t h e 1957 plan ,and an e d i t o r i a l of t h e t rade-union paper Trud rep ea ted t h i sl i n e e a r l y in March. On 17 March, a c e n t r f i o m m i t t e e r es ol u-t i o n was i s su ed conce rn ing p repa ra t ions f o r t h e 40th anniver -s a r y of t h e r e v o l u t i o n , which e x p l i c i t l y ca l l ed fo r o v e r f u l -f i l l m e n t o n ly of t h e 1957 plan , and a l s o repeated t h e goa lof over t ak ing the West in a h i s t o r i c a l l y s h o r t t i m e .

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,..._.._..On 30 March Khrushchev's vvthesesvvn the proposed eco-nomic reorganizat ion were i s sued , and aga in the goal of

c a t c h i n z t h e West was s t r on gly reaf f i rmed. The thes es a lsoc a l l e d fo r t h e t r a n s f e r of most of Current Planning Com-miss ion func t ions t o Gosplan, and t h e a b o l i t i o n of t h eformer.of t h i s combined current and long=range planning group tendst o conf i rm specula t ion t h a t h i s conser va t ive approach t o t h e1957 p lan w a s no t s a t i s f ac t o r y . Subsequen t reports t h a t bothMalenkov and Khrushchev t o l d Weste rne rs t h a t Saburov had,d ra f t ed Khrushchev's theses on t h e r eo rgan i za t i on sugges t ar e t u r n t o more ambitious planning a f t e r t h e 1957 p l an wasformulated.Khrushchev's theses a lso conta ined a l eng t hy ana l ys i sof why continued primacy f o r heavy in du st ry w a s necessary,

and t h e wording suggests (1) t h a t t h e degree of emphasis t obe given heavy in du str y had rec en t ly been under deba te wi t h int h e regime and (2) t h a t Khrushchev may have compromiseds l i g h t l y h i s e a r l i e r hard p o s i t i o n . On one hand, he empha-sized--

T h e f a i l u r e of Pervukhin to be appoin ted as head

1 "If we accept an i nco r r ec t and f a l s e i n t e r -p r e t a t i o n a nd d i rec t t h e bas ic means towardt h e development of ... i g h t i ndus t ry , we canbut achieve a semblance of success and ensuret h e s a t i s f a c t i o n of c e r t a i n demands for as h o r t t i m e only. And t h i s w i l l be a t t h eexpense of undermining ... h e dpelopmentof our economy in the f u t u r e . . . . I n o r d e rto o u t s t r i p t h e most d ev el op ed c a p i t a l i s tc o u n t r i e s in p e r c a p i t a o u t p u t , it isnecessary. . . to ensure t h e p r i o r i t y d ev el-opment of heavy industry."

On t h e o t h e r hand, Khrushchev made s e v e r a l s t a t e m e n ts d i f -fe ren t f rom any he had made previous ly , a t l e a s t s i n c e e a r l y1955:I 1 .... t is impermissible t o t o l e r a t e t h e p r i m i -t i v e i n t e r p r e t a t i o n of th e ro l e and i n t e r r e l a -t i o n of heavy and l i g h t indu s t ry , th e harmfulc o n t r a s t i n g of these branches,...The mattershould not be pushed t o t h e verge of a b s u r d i t y--to one-s ided development of heavy industryignor ing t h e development of l i g h t i nd us tr y- -which i n e v i t a b l y would c au se d i f f i c u l t i e s i nt h e development of t h e national economy anddelay the fur ther improvement of t h e l i v i n gs t anda rds of t h e people.

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.. .,... . ,.. ._... .... .

. "

In a speech t o a g r i c u l t u r a l workers on t h e same day, 30 March,Khrushchev formulated hi s p os i t io n as follows:".; . .While fu r t he r conso l i da t i ng heavy in-d u s t r y , which is t h e basis of t h e n a t i o n a leconomy, w e must a t t h e same t i m e producemore c lo th ing , var io us foods tuf fs - -and nots imply foodstuffs , but good ones-bui ldmore houses, and also s a t i s f y o t h e r n eeds ofthe people. Our So vie t people must have t h eh i g h e s t l i v i n g s t a n da r d in t he world, and w es h a l l achieve t h i s g r e a t a i m . "

This is reminiscentof the posi t ion taken by Malenkov in August1953, and probably ref lec ts Khrushchev's desi re to have h i scake and eat i t too.Whether or not Khrushchev has modi f ied h i s s t a n d , t w oa r t i c l e s publ ished i n the p a r t y journal Kommunist s h o r t l ya f t e r th e February plenum i l l us t r a t e d t h m h i nk i ngwhich could lead to a change, and t h e i n t e l l e c t u a l p r e s s u r e sf o r a change. One of the a r t i c l e s , e n t i t l e d * lS ur vi va ls ofCapi ta l i sm in Men's Men tali ty Under So cia lis m and How t o Over-come Them, "17 impl i ed q u i t e c l e a r l y t h a t t h e r ecen t i nc r easeof in te l l e c t u a l nonconformi ty and of voca l oppos i t ion t odefects in t h e Communist s y s t e m w a s caused in p a r t by l o wl i v i n g s t a n d a r d s.suggested t o combat t h e " re l i c s of a l i en i deol ogy" were educa-t i on measures , T h i s "one-sided approach,t1 w a s seen in toomany a r t i c l e s and pamphlets, which "asser t t ha t backward viewsin a soc ia l i s t s o c i e t y ex i s t on ly because men's consci ousnes slags behind the new conditions of l i f e . " According t o theau t ho r , t h i s d i d n ot " f u l l y e x p l ai n t h e s u r v i v a l s of backwardviews, and espec ia l ly t h e fac t t h a t they grow even s t rongera t t i m e s . " The author emphasized t h a t improved l iv in g s tandardas w e l l as educa t iona l measures were necessary t o combatthese tendencies, and concluded-

The a u th o r no te d t h a t o f t e n t h e only means

l ' Insofar as socialism and t h e s o c i a l i s t p ri n-c i p l e s of d i s t r i b u t i o n s t i l l cannot securet h e f u l l e li m in a ti o n of differences (betweenclasses) and th e s a t i s f a c t i o n of materialneeds, or of o ther "bir thmarks" of t h e o l ds o c i e t y , these "bir thmarks" may under certaincondit ions nourish backward views t o one orano t he r ex t en t , and ac t ua l l y do so.**voted t o a d i scus s i on on the Supreme Soviet meeting and t h eThe lead a r t i c l e in the same i s s u e of Kommunist w a s de-

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. .

, .

. . . .. .. . ... .... . . .

1957 plan, w i t h seve ra1 , pa ragraphs a t t h e end on t h e Februaryplenum.l6 This e d i t o r i a l d i d n o t repeat t h e l i n e s on primacyof heavy indus t ry or c a t c h i n g t h e West. I t devoted much ofi t s a t t e n t i o n t o exp lai nin g why t h e Supreme Soviet had approvedl e g i s l a t i o n d e c e n tr a l i z i n g c e r t a i n powers f o r Moscow t o t h eu n i o n r e p u b l i c s ( t h i s w i l l be d i sc u ss e d i n t h e s e c t i o n on re-organ iza t io n , fo llowing) . The r a t i on a l e g iven f o r t h i s i n -crease i n "democracy" could very ea s i ly apply , a l though t h ea u t h o r s d i d n o t e x p l i c i t l y make i t app ly , t o t h e slowing downof growth r a te s a nd s l i g h t l y i n c r e as e d emphasis on consumptioni n t h e 1957 plan . The a r t i c l e p o i n t e d o u t t h a t t h e s t e a d yi n c r e a s e s i n l ldemocrat izat ion ' l during recent years w e r e some-times connected wholly w i t h t h e need t o e l i m i n a t e e f f ec t s oft h e p e r s o n a l i ty c u l t , b ut s ta ted t h a t t h e basic r e as o n f o rmore democracy lay ''in t h e ob j ec t ive changes which have t r ans -p i r e d i n t h e economic, c u l t u r a l a nd p o l i t i c a l development oft h e S o v i e t peoples. '*Among these " o b j e c t i v e f a c t o r s , t h e a r t i c l e emphasizedthat a number of "social is t* 'c o u n t r i e s had sprung up aroundt h e USSR s i n c e t h e war, and t h e e x i s t e n c e of these c o u n t r i e shad su bs ta n t i a l l y weakened t h e bonds of " h o s t i l e c a p i t a l i s tencirclement ." Therefo re, "Communist co ns tr uc t i on i n th eUSSR d u r i n g t h e postwar period has been developing. . .undermore f avo rab l e ex te rna l cond it ions. " S ince there w a s " f i r mconfidence" in t h e i n v i n c i b l e might of t h e l ' s o c i a l i s t l l coun-t r i e s , t h e ex i s t ence o f t h e " s o c i a l i s t f 1 bloc ra ises i n a newl i g h t q u e s t i o n s of economic, s oc i a l a nd p o l i t i c a l d ev el op -ment. "He who does not unders tand ( th is ) . . . demonst ra tesh i s i n a b i l i t y t o conceive of s o c i a l i s t development in anybut a narrow nat ional framework." This seems t o be a tl eas t a sugges t ion t h a t " c a p i t a l i s t enci rc lement" of t h eUSSR h a s been weakened t o such a p o i n t a s t o j u s t i f y anew look a t basic S o v i e t p o l i c i e s in a l l f i e l d s .

F. The May Supreme SovietI n t h e month between t h e i s s u a n c e of Khrushchev's thesesand t h e Supreme Soviet meeting of 7 t o 10 May, S o v i e t i n t e r n a lpropaganda concentrated on t h e na t ionwide and a l l eg ed l y "free"d i s c u s s i o n s of t h e proposed in du s t r i a l r eo rgan iza t ion almostt o t h e e x c l u s i o n of other economic themes. The economicplanners presumably continued t h e i r e f f o r t s dur ing t h i s pe-r i o d t o make t h e 1960 i n d u s t r i a l o u t p ut goals of t h e f i v e -

yea r p l an "more exact , " t o " e l i m i n a t e e x c e s si v e s t r a i n s " bys l i g h t r e d u c t i o n s i n these goals , and t o c u t back plannedc a p i t a l investments . There was no p u b l ic r e f e r e n c e i n A p r i lor May, however, t o t h e December p lenum 's ins t ruc t ion t h a tt h e p l a n ' s f i n a l v er si on be worked ou t by midyear. The

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. . .. . .. .

-h a r p re d u c ti o n s i n t h e o u t p u t goals of t h e 1957 annual planprobably made d i f f i c u l t t he a t t em pts of t h e long-range planners

t o m a in ta in b as i ca l ly unchanged th e o r i g i na l goa l s of t h e f i v e -year p lan .An e v e n t oc c u r re d j u s t before the Supreme Soviet convenedwhich tended t o conf i rm tha t the regime w a s d i s s a t i s f i e d w i t ht h e magnitude of r educ t ions in t h e 1957 plan. Pervukhin,though t h e l o g i c a l c a n d id a te f o r th e chairman ship of Gosplan,w a s appointed on 3 May m i n i s t e r of medium machine building.This appointment as chief of t h e S o v i e t atomic energy programgave Pervukhin a very important job, but one removed fromov er -a l l economic planning. As head of Gosplan, which undert h e r e o r g a n i z a ti o n was made responsible for both long-rangeand cur ren t p l anning , t h e regime on 5 May ap poin te d I . I,Kuzmin, a prev ious ly obscure pa rt y appa ratu s man w i t h ex-

pe r i ence in t h e i n d u s t r i a l f i e l d b ut w i th l i t t l e p o l i t i c a ls t and ing .a l though he w a s on i ts auditing commission.Be was n o t a member of t h e par ty cen t r a l com m i t t ee ,There is no evid ence which ex pl ai ns Kuzmln's appo int-ment. He could be a protege of Khrushchev from t h e p a r t yappara tus . As an equa l pos s i b i l i t y , however, he couldr e p r e s e n t a compromise choice by the par ty p res idium of al ower - l eve l i nd iv idua l who d i d not have an independentpower pos i t ion and who would therefore be respons ive tot h e c o l l e c t i v e lead ersh ip i n formula t ing and implement ingt h e f ive-year p lan . In view of Khrushchev's in cr ea si ng lyevident dominance over t h e Sovie t l ea de r sh ip dur ing Apr i land May 1957, the f i r s t of these a l t e r n a t i v e s seems more

l i k e l y .Khrushchev's leng thy speech a t t h e Supreme Soviet meet-in g i n May w a s devoted pr imar i ly t o t h e i n d u s t r i a l r e o r g a n i z a -t i o n b u t a l s o c o n t a i n e d some cl ue s concerning economic polic y.The propaganda lines on primacy of heavy in du st ry and catch-ing up w i t h t h e West i n per capi ta o u t p u t were aga in empha-s i zed In add i t i on , Khrushchev e xp l i c i t l y c r i t i c i zed t h eCu rre nt Pla nn ing Commission under Per vukhin f o r t h e way i nwhich th e 1957 plan for t h e coal i n d u s t r y w a s formulated.According t o Khrushchev, a pla n had been worked o ut i n 1956t o improve co a l mining i n th e Donbas, but Ira f e w months l a t e rit w a s a r b i t r a r i l y v i o l at e d d ur in g t h e d r a f t i n g of a new p lanfor 1957." Khrushchev also c r i t i c i z e d t h e planning organs,

though not s p e c i f i c a l l y i n c o nn e ct io n w i t h t h e 1957 plan , f o r"agree ing too eas i ly . . o s u p e r f l u o u s cap1 a l investment . tThese crit icisms are t he bes t ev idence t o date t h a t t h e re-gime regards a t l e a s t some elements of the 1957 plan w i t hd i s f avor .


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.. . . ,. . . .. . ..I .

.- -Ihe May Supreme Soviet meeting gave no c o n s i d e r a t i o n t ot h e f ive -year p lan , aIthough l a s t December t h e p a r t y c e n t r a l

commit tee ins t ruc ted t h a t t h e f i n a l v e rs io n of t h e p l a n bepresen ted t o t h e Supreme S o v i e t by mid-1957. The re du ce d1957 plan makes t h e o r ig in a l 1 9 6 0 goal f o r i n d u s t r i a l o ut pu talmost impossible t o f u l f i l l , b ut e vide nc e as of May 1957p r e s e n t s a c o n f l i c t i n g p i c t u r e on whether or not t h e f i v e -y e a r , p l a n o u t p u t g o a l s w i l l be s u b s t a n t i a l l y r ed uc ed .On.the one hand, i n a d d i t i o n t o- sh o wi n g s i g n s o f d i s -s a t i s f a c t i o n w i t h t h e low 1957 annual p lan, s e v e r a l S o v ie tl e a d e r s h a v e r e c e n t l y made v er y o p t i m i s t i c s t a t e m en t s on t h eUSSR's p r o s p e c ts f o r o v er t a k in g t h e Uni ted States ' economy.Bulganin , speaking t o a group of v i s i t i n g American women on5 May, made an off-the-cuff comment th a t the Sov ie t Unioncould catch up with the Uni ted S t a t e s in another 40 years .

Khrushchev, speaking on 22 May t o a g r i c u l t u r a l w o rk er s inLeningrad, boasted t h e USSR c o u ld o v e r t a k e t h e U n i t e d S t a t e sin t h e outpu t o f meat and d a i r y products by 196o'or 1961,d e s p i t e p r e d i c t i o n s of "some economists" i n the USSR t h a tt h i s goal cou ld on ly be reached by 1975.t o f l o u t t h e views of e x p e r t s i n o ne f i e l d s u g g e s t s t h a tKhrushchev would a l s o oppose e f f o r t s i n other f i e l d s t oreduce plan goals . Sovie t newspapers i n rec en t months havealso resta ted many of t h e o r i g i n a l 1960 g o a l s , i n c l u d in gthose fo r c o a l , p i g iron, s t a t e h ou si ng , i n t e r n a l t r a d e ,pe t ro leum and l igh t indus t ry .On t h e ot he r hand, accord ing t o an e a r l y May reportI I

T h i s w i l l i n g n e s s

. ......>. . . ." .....

. .

I, th e l-962~ d u s t r i a l pr od u ct io n t a r g e t ' h a deen cut f rom 16s dercen t o f 1955 t o a new target of 158 per-c e n t . I n a d d & t io n , t h e S o v i e t p r e s s r e v e a l e d r e d u c t i o n s offrom 5 t o 10 p e r ce n t i n f iv e -y e ar p l a n i n d u s t r i a l goals oft w o in di vi du al republ ics-Latvia and Uzbekis tan-in A p r i land mid-May r e s p e c t i v e ly . In l a t e A p r i l , an a r t i c l e int h e party journal Kommunist , by a s e n i o r economist df t h eS t a t e Planning Commission, a l s o i m p l i e d t h a t t h e cad i ta linvestment t a rg e t of t h e Si xt h Five-Year Plan had been cu t .Centra l ly planned investment w a s o r i g i n a l l y s c h e d u l e d t o be990 b i l l i o n r u b l e s du ri ng t h e plan period (1956-1960).Ca lcu la t ions based on data i n t h e Kommunist a r t i c l e i n d i c a t et h a t such investment has been reduced 6 percen t to 930 b i l l i o nr u b l e s . T h i s probably s i g n i f i e s a r e a l reduc t ion i n p la nn edinves tment, bu t no t conc lus ive ly so, s i n c e c e n t r a l i z e d i n v e s t-m e n t s ( those scheduled by th e c e n t r a l p l a n n i n g bodies andca r r i ed as p a r t of t h e na t i on al economic plan) may c o n s t i t u tea smaller propor t ion of t o t a l investment under t h e reorgan izeda d m i n i st r a t iv e s t r u c t u r e of i n d u s t r y .

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While th e conf l i c t i ng ev i dence on the f ive-year plana l lows no conclusion as t o th e p la n' s f i n a l form, i t sugges t st h a t p r e s s u r e s i n f a v or of a su bs t a n t i a l l y r educed p l an andpres su re s f o r o p t i m i s t i c , exceedingly ambi t ious plans con-t i n u e to e x i s t s i d e by s i d e . Sin ce Khrushchev, an app are nt. I pro t agon i s t of ambit ious plans , has modified h i s own previouspos i t i ons on t h e i n d u s t r i a l r e o r g an i z a ti o n an d on s e v e r a lo t h e r s u b j e c t s t h i s spr ing , he could do t h e same on t h e f i v e -year p l an , probably without loss of face or i n f l u e n c e , i f hef e l t such a move neces sary i n ord er t o o bt ai n agreement amongt h e c o l l e c t i v e l e a d e r s h i p .

,-

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I ' I

I V . Economic Reorganiza tion: E f f o r t s t o Improve Managementand manningThe second complex of economic issues w i t h which t h eSoviet regime concerned i t s e l f from December 1956 throughMay 1957 was r eo rgan iza t ion and decen t ra l i za t ion .t o face t h e prospect of s lower heavy in d u s t r i a l growth, o r

t h e only f ea s i b l e way t o e l im i n at e s e r i o u s s t r a i n s in t h eeconomy, the leaders had been s t r i v i n g s i n c e S t a l i n ' s d ea tht o i nc re a se economic ef fi ci en cy and improve management soa s t o achieve a l l - t h e i r ambi t ious goals s imul taneous ly .example, i n mid-1955. In May of t h a t y e a r , t h e S t a t e P la nn in gCommission (Gosplan) was s p l i t i n t o s e p a r a t e b o di es f o r l on g-rang e and cu rr en t planning, and new, high -lev el governmentcommittees f o r wages and l ab or and f o r introducing new tech-nology in to t h e ecsnomy were es t ab l i shed . A t t h e July 1955meeting of t h e ce nt ra l committee , a major program was launchedt o modern ize Sov ie t i ndus t ry and inc rea se i t s e f f i c i ency .a majorza t ion and r eauc t ion in r o r c e in tn t r y ofS t a t e Control , and t h e con t inu ing d r iv e t o r educe bureaucracythroughout t h e economy was accelera ted. I n a d d i t i o n , v a r io u si n d u s t r i a l m i n i s t r i e s w e r e s p l i t into m o r e spec i a l i z ed onesfrom 1954 through early 1956 t o improve management and in cr e as ee f f i c i ency . A s i m i l a r s p a t e of more d r a s t i c measures, someeven r eve r s ing seve ra l of t hose l i s t e d above, were adopted orproposed from December 1956 through March 1957.

Unwilling. , perhaps unab le t o reach a s t a b l e agreement that t h i s w a s

An ear l ie r spate of l 'eff icien cy measurest1 appeared, f o r

. . . .The "eff iciency measuresf1of t h e r e c e n t p e r i o d were in-t ended t o ach ieve a rea l degree of d e c e n t r a l i z a t i o n , a l o n ggeographic l i ne s , of a u th or i ty and r e sp on s i b i l i t y f o r im ple -menting economic plans, and a semblance of d e c e n t r a l i z a t i o nof t h e r e s p o n s i b i l i t y for formulating economic plans. A tt h e same t i m e , a l l pub l i c s t a t em ent s dur ing t h i s per iodemphasized that c e n t r a l c o n t r o l was t o be r e t a ined ove r bo tht h e for mul ati on and implementation of ba si c economic po li ci es .The mere statement of these aims shows t h e dilemma which facest h e regime and which none of t h e measures adopted during t h i speriod answered very p r e c i s e l y : how much r ea l decen t ra l i za -t i o n c an be al lowed without reducing t h e a b i l i t y of t h e cen-t r a l au th or i t y t o implement na t io na l po l i cy?

organization from December through March i n d i c a t e s t h a t t h eregime faced two s p e c i f i c problems:Present informat ion on Soviet efforts toward economic re-

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(1) Should a r eo rgan iza t ion of in d u s t r ia l managementbe car r i ed out whol ly a long geographic l in es , or should t h eau th or i t y and independence of i n d i v i d u a l b u t c e n t r a l i z e dm i n i s t r i e s be s t rengthened?c i d e d i n f avor of geographic de ce nt ra l i za t i on , should economicregions be organized according t o e x i s t i n g p o l i t i c a l d i v is i on s -r e p u b l i c s , krais and oblas ts -or should th e regio ns be se t upaccording t o economic log i c , i ncorpora t ing f a i r l y w e l l i n t e -g r a t e d i n d u s t r i e s an d s e r v i c e s i n o n e r e gi o n?para tus , trade un ions and f inanc ia l o rgans be reorganized soas t o a s s u r e c e n t r a l c on tr ol ? W h a t r o l e s ho ul d t h e CommunistP a r t y appara tus p lay?

Once t h i s ques t ion had been de-

(2) How should t h e planning bodies, s t a t e c o n t r o l ap-

A. Background: Befo re t h e December PlenumOne of t h e methods by which t h e regime attempted t o in-crease i n du s t r i a l e f f i c i ency f rom 1954 th rough ea r ly 1956 wast o s p l i t u p e x i s t i n g i n d u s t r i a l a nd c o n s t r u c t i on m i n i s t r i e s ,forming new and more special ized c e n t r a l m i n i s t r i e s.most recent example of t h i s w a s t h e Sovie t press announcementof 22 January 1956 that t h e Min

caesar 16 - soviet economic policy

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