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Copy No.

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APPROVED FOR RELEASE DATE: J U N 2007

SOVIET STAFF STUDY

SOVIET ECONOMIC POLICY:

(Referencetitle:

December 1956 May 1957 C g E S a B l u-#b57) ,

HR70-14 (U)

Office of Current I n t e l l i g e n c e

CENTRAL INTELLIGENCE AGENCY

SOVIET ECONOMIC POLICY

December 1956

- May 1957
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Foreword

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Summary,

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Problems a t t h e end of 1956.

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Economic P o l i c y : Heavy I n d u s t r y , The Consumer a n d "Catching Up"Wth t h e West..

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Reorganization: Management and P l a n n i n g .

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Developments B e f o r e December Plenum. The December Plenum. 10 From Soviet Plenum F e b r u a r y Supreme The F e b r u a r y Supreme S o v i e t Plan. t h e 1957 From Supreme S o v i e t Khrushchev's Theses 21 The May Supreme S o v i e t
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Improve

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Background:

B e f o r e t h e December Plenum.

The December Plenum.

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The F e b r u a r y Supreme S o v i e t . The F e b r u a r y Plenum. Khrushchev's Theses.

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The May Supreme S o v i e t

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P o l i t i c a l Implications

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SOVIET ECONOMIC POLICY

December 1956

- May 1957

FOREWORD
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This s t u d y is a n attempt to provide a somewhat detailed a n a l y s i s of i n t e l l i g e n c e on S o v i e t economic p o l i c y from December 1956 t o May 1957. I t w a s w r i t t e n b e f o r e , and does n o t c o n s i d e r , t h e convulsions of 3 J u l y , b u t w i l l be u s e f u l as background t o a n a n a l y s i s of them.
Because i t is r e l a t i v e l y c u r r e n t , t h i s a n a l y s i s is n o t t o be regarded as d e f i n i t i v e . I t is rather an attempt t o p u l l t o g e t h e r a v a i l a b l e f a c t u a l information and t o d r a w speculat i v e c o n c l u s i o n s on t h e meaning of t h e s h i f t s i n S o v i e t eco= nomic p o l i c y and on t h e i n s i g h t s these s h i f t s provide i n t o t h e problems of t h e S o v i e t leaders d u r i n g t h i s period. T h i s s t u d y f a l l s somewhere between t h e r e p o r t o r i a l a n a l y s e s of S o v i e t affairs in t h e r e g u l a r p u b l i c a t i o n s of t h e O f f i c e of Current I n t e l l i g e n c e , and t h e more d e t a i l e d , less s p e c u l a t i v e CAESAR series of s t u d i e s on t h e S o v i e t leadership, which are produced o n l y after s u f f i c i e n t t i m e has elapsed t o allow a more complete accumulation of f a c t u a l information. A t a l a t e r date, i f new evidence w a r r a n t s , a CAESAR s t u d y on Sov i e t economic p o l i c y w i l l be prepared to cover t h e year and a h a l f f o l l o w i n g t h e 20th p a r t y c o n g r e s s ,
T h i s a n a l y s i s is a working paper and r e p r e s e n t s t h e views of t h e O f f i c e of Current I n t e l l i g e n c e , C I A .

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SOVIET ECONOMIC POLICY

December 1956
I.
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- May

1957

Summary

Although continuing t o grow a t a r a p i d pace, t h e S o v i e t economy faced 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 because t h e S i x t h Five-Year Plan w a s overambitious and t h e o u t put of key raw materials, t h e c o n s t r u c t i o n program, and progress i n improving labor p r o d u c 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 o t 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 e USSR's announced r e d u c t i o n of m i l i t a r y manpower. I n c r e a s e d p r e s s u r e s for improved l i v i n g s t a n d a r d s g e n e r a t e d by t h e d e - S t a l i n i z a t i o n campaign and u n r e s t i n E a s t e r n Europe, had also a r i s e n i n s i d e t h e S o v i e t Union.
F r o m December 1956 through May 1957 t w o meetings of t h e S o v i e t Communist P a r t y ' s c e n t r a l committee were convened t o c o n s i d e r s o l u t i o n s t o these problems, t w o new t o p c u r r e n t p l a n n e r s were appointed, and a reduced 1957 economic p l a n w a s approved. In February, p a r t y f i r s t s e c r e t a r y Khrushchev began t o act as t h e regime's p u b l i c spokesman on economic management-a r o l e Premier Bulganin had played earlier-and by May h e had pushed through a new p l a n for d r a s t i c a l l y r e o r g a n i z i n g i n d u s t r i a l administration.
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During t h i s period t h e regime d e a l t w i t h t w o major economic i s s u e s . F i r s t , it re-examined t h e q u e s t i o n of how much emphasis heavy i n d u s t r y s h o u l d r e c e i v e a t t h e expense of t h e S o v i e t consumer i n order t o m a x i m i z e t h e USSR's economic-military p o t e n t i a l . I n S o v i e t terms, t h e regime reexamined t h e d o c t r i n e s on t h e "primacy of heavy i n d u s t r y , " and o v e r t a k i n g t h e West in p e r capita o u t p u t "in a s h o r t historical t i m e . " Second, t h e regime i n i t i a t e d during t h i s period drastic measures t o r e o r g a n i z e economic management and planning, hoping t o i n c r e a s e e f f i c i e n c y and thereby t o a t t a i n ambitious economic goals i n a l l f i e l d s simultaneously.
On t h e first of these i s s u e s , t h e re-examination of economic p o l i c y , 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's 20-24 December plenum admitted t h a t t h e economy w a s overextended, 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 there could be no fundamental r e v i sion of planned o u t p u t g o a l s , although some m o d i f i c a t i o n s could be permitted. The major measure called f o r by t h e December plenum t o r e l i e v e s t r a i n s i n t h e economy w a s a red u c t i o n in c a p i t a l investment and an e f f o r t t o c o n c e n t r a t e investments on c o n s t r u c t i o n projects nearing completion

r a t h e r t h a n s t a r t i n g new long-range p r o j e c t s . The committee may a l s o have rejected p l a n s made e a r l i e r i n December f o r t h e consumer, which called f o r an immediate expansion of t h e housing program. The 1957 economic p l a n , p r e s e n t e d t o t h e Supreme S o v i e t on 6 February by presidium member and newly a p p o i n t e d c h i e f c u r r e n t p l a n n e r M , G. Pervukhin, scheduled s h a r p drops i n t h e growth r a t e s of heavy and 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 of key b a s i c raw materials, and i n t h e improvement of l a b o r p r o d u c t i v i t y . The rate of growth planned for c a p i t a l i n v e s t m e n t also dropped, b u t t h e a b s o l u t e volume of investment w a s s c h e d u l e d t o be about 9 p e r c e n t g r e a t e r t h a n i n 1956. The 1957 p l a n a l s o allocated a s l i g h t l y h i g h e r p r o p o r t i o n of t o t a l r e s o u r c e s t o t h e consumer t h a n i n t h e two p r e v i o u s y 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 t h e S i x t h Five-Year P l a n and developments i n 1956, when " f r i n g e b e n e f i t s " g r a n t e d t h e consumer 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, t h e need f o r t h e continued primacy of heavy i n d u s t r y w a s h e a v i l y emphasized by both Pervukhin and t h e S o v i e t p r e s s . The d i s c u s s i o n of heavy i n d u s t r y i n Khrushchev's "theses," p u b l i s h e d on 30 March, s u g g e s t e d t h a t t h e degree of emphasis t o be g i v e n heavy i n d u s t r y had been a s u b j e c t of r e c e n t debate w i t h i n t h e regime.
There are grounds f o r s p e c u l a t i o n t h a t t h e 1957 p l a n c o n t a i n 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 , and p o s s i b l y smaller r e d u c t i o n s i n c a p i t a l e x p e n d i t u r e s , t h a n envisaged by t h e regime a t t h e December c e n t r a l committee meeting. Economic a d m i n i s t r a t o r s had t r i e d u n s u c c e s s f u l l y a y e a r e a r l i e r t o b r i n g about similar changes i n t h e 1956 p l a n .

Although t h e low 1957 p l a n w a s a c c e p t e d , i t is p r o b a b l e t h a t t h e l e a d e r s h i p d i d n o t c o n s i d e r t h i s cutback i n p l a n n i n g p a r t i c u l a r l y p a l a t a b l e . Another meeting of t h e c e n t r a l committee w a s convened i m m e d i a t e l y a f t e r t h e Supreme S o v i e t meeting i n February, and Khrushchev took t h e lead i n propounding radical changes i n i n d u s t r i a l a d m i n i s t r a t i o n i n order t o r e v e r s e t h e slowdown i n S o v i e t economic growth. I n a d d i t i o n , a t t h e February plenum of t h e c e n t r a l committee and l a t e r , t h e theme of c a t c h i n g up w i t h t h e West w a s r e a f f i r m e d ; t h e S o v i e t p r e s s placed i n c r e a s i n g l y s t r o n g emphasis on " s o c i a l i s t competition" t o o v e r f u l f i l l t h e p l a n ; and t h e c u r r e n t p l a n n i n g group under Pervukhin f i r s t w a s c r i t i c i z e d and t h e n was f a c e d w i t h Khrushchev's recommendation t h a t i t be a b o l i s h e d under t h e new i n d u s t r i a l r e o r g a n i z a t i o n . E a r l y i n May,Pervukhin w a s a p p o i n t e d head of t h e S o v i e t atomic energy program--an important p o s t b u t one removed

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from o v e r - a l l economic planning. Khrushchev, i n h i s speech on t h e r e o r g a n i z a t i o n t o t h e May meeting of t h e Supreme Sov i e t , e x p l i c i t l y c r i t i c i z e d p a r t o f t h e 1957 p l a n . These events suggested t h a t t h e p a r t y l e a d e r s regarded t h e l o w outp u t g o a l s of t h e 1957 p l a n w i t h d i s f a v o r , and were u n w i l l i n g t o allow t h e low one-year g o a l s t o force a downward r e v i s i o n of t h e h i g h e r goals of t h e f i v e - y e a r p l a n . The second complex of economic i s s u e s w i t h which t h e S o v i e t regime concerned i t s e l f from December 1956 through May 1957 w a s r e o r g a n i z a t i o n and d e c e n t r a l i z a t i o n . In its e f f o r t s t o m a i n t a i n r a p i d i n d u s t r i a l growth and t o a c h i e v e a l l its o t h e r ambitious goals s i m u l t a n e o u s l y , t h e regime had undertaken numerous " e f f i c i e n c y measures" i n t h e management and p l a n n i n 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 e of s u c h measures u n v e i l e d from December through May w a s f a r m o r e d r a s t i c t h a n those undertaken p r e v i o u s l y , i n d i c a t i n g t h e s e r i o u s n e s s w i t h which t h e regime r e g a r d e d its problems. The new measures, which were c l e a r l y i d e n t i f i e d w i t h Khrushchev, called for a r e o r g a n i z a t i o n of t h e economy a l o n g r e g i o n a l l i n e s , The i n i t i a l p r o p o s a l w a s based on a r e p o r t by Khrushchev a t a Feburary 1957 meeting of t h e p a r t y c e n t r a l committee. I n March, Khrushchev's l e n g t h y lltheses'' on t h e r e o r g a n i z a t i o n were i s s u e d f o r p u b l i c d i s c u s s i o n , and i n May Khrushchev p r e s e n t e d t h e p l a n t o a meeting of t h e Supreme S o v i e t for a p p r o v a l . Khrushchev's l e a d e r s h i p i n t h i s f i e l d throughout t h e s p r i n g w a s p a r t of h i s i n c r e a s i n g pre-eminence i n a l l areas of S o v i e t f o r e i g n and domestic p o l i c y . On t h e other hand, in 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 as on s e v e r a l other s u b j e c t s , Khrushchev d u r i n g t h e s p r i n g modified h i s own p r e v i o u s p o s i t i o n 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 p l a n was worked o u t and a l s o perhaps t o o b t a i n g e n e r a l agreement among t h e c o l l e c t i v e l e a d e r s h i p . The i n d u s t r i a l r e o r g a n i z a t i o n as approved i n May w a s apprec i a b l y l e s s d r a s t i c t h a n t h a t proposed i n Khrushchev's t h e s e s i n March. Under t h e r e o r g a n i z a t i o n , t o have been completed by 1 J u l y , o v e r 20 c e n t r a l i n d u s t r i a l m i n i s t r i e s were a b o l i s h e d , b u t key m i n i s t r i e s running t h e atomic energy program, arms and related i n d u s t r i e s were r e t a i n e d . Over 100 r e g i o n a l economic c o u n c i l s are t o be formed throughout t h e c o u n t r y t o manage 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 . These r e g i o n a l c o u n c i l s are t o have f a i r l y wide a d m i n i s t r a t i v e powers b u t no policyLmaking f u n c t i o n s , and t h e c e n t r a l a u t h o r i t i e s have e x p l i c i t l y been g i v e n t h e power t o "suspend" d e c i s i o n s of t h e r e g i o n a l bodies. After t h e i n i t i a l c o n f u s i o n , t h i s r e o r g a n i z a 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 i c i e n c y .

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In the long run, however, regional bureaucracies and "special in erests" will tend to replace present ministerial barriers and bureaucracies, minimizing the benefits of the reorganization.
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Problems a t end of 1956

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A t t h e end of 1956 and i n e a r l y 1957, S o v i e t economic p o l i c y was i n a p e r i o d of f l u x , and despite e f f o r t s of t h e Moscow press t o prove t h e c o n t r a r y , S o v i e t l e a d e r s apparentl y encountered d i f f i c u l t i e s i n f i n d i n g a c c e p t a b l e s o l u t i o h s f o r t h e i r economic problems. Two s e p a r a t e meetings of t h e Communist P a r t y s c e n t r a l committee were convened i n t h i s s h o r t period t o d i s c u s s economic 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 planner, M, Z. Saburov, was removed from h i s p o s t i n December; and a reduced 1957 economic p l a n w a s p r e s e n t e d t o t h e Supreme S o v i e t by h i s replacement, M. G. Pervukhin, in early February. Pervukhin, i n t u r n , a f t e r r e c e i v i n g broad powers t o s u p e r v i s e implementation of t h e plan, in e a r l y May had h i s c u r r e n t planning o r g a n i z a t i o n c u t o u t from 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 o Gosplan, t h e newly reorganized body f o r both s h o r t - and longr a n g e planning,

In a d d i t i o n , first p a r t y s e c r e t a r y Khrushchev began t o act as t h e regimes p u b l i c spokesman i n t h e f i e l d of economic management a t t h e February c e n t r a l committee meeti n g , and i t w a s h e who p r e s e n t e d t h e p l a n f o r d r a s t i c a l l y r e o r g a n i z i n g t h e economy a l o n g r e g i o n a l l i n e s a t t h e Supreme S o v i e t meeting on 7 May. I n 1955 and 1956, Premier Bulganin had acted as spokesman on economic p o l i c y and management a t c e n t r a l committee meetings and a t t h e 2 0 t h p a r t y congress.
These s i g n s of change came o n l y one year a f t e r t h e amb i t i o u s S i x t h Five-Year Plan had been p r e s e n t e d t o t h e 20th p a r t y c o n g r e s s in February 1956, and were in c o n t r a s t w i t h t h e confidence expressed by S o v i e t leaders a t t h a t t i m e conc e r n i n g t h e USSRs f u t u r e economic growth. The r e a s o n s f o r t h i s change 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 e end of 1956 t h e o u t p u t of key raw materials such a s coal, i r o n , s t e e l , cement and lumber was behind plan. I n c r e a s e s in p r o d u c t i v i t y , or o u t p u t per worker, were a l s o below schedule. P l a n s f o r t h e completion of new i n d u s t r i a l cons t r u c t i o n projects and housing were l a g g i n g p a r t i c u l a r l y badly. S e r i o u s lags in t h e c o n s t r u c t i o n of r a w production f a c i l i t i e s had e x i s t e d s i n c e 1951, but u n t i l 1956 o u t p u t g o a l s c o u l d be and were m e t by drawing i n t e n s i v e l y on e x i s t i n g c a p a c i t y , By 1956, however, o p p o r t u n i t i e s t o expand o u t p u t from e x i s t i n g c a p a c i t y had been reduced t o a minimum, and t h e cumulative effect of t h e l a g s in c o n s t r u c t i o n was a basic r e a s o n behind 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 materials.

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Poor performance in t h e s e f i e l d s undoubtedly raised serious q u e s t i o n s w i t h i n t h e regime a s t o whether t h e S i x t h Five-Year Plan as a whole w a s overambitious. A t least some of t h e S o v i e t l e a d e r s probably realized t h a t t h e y were f a c i n g t h e dilemma of maintaining S t a l i n i s t f o r c e d - d r a f t rates of growth in a s y s t e m l a c k i n g many of S t a l i n ' s c o e r c i v e c o n t r o l s . Furthermore, many of t h e most r e a d i l y e x p l o 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 d and i n c r e a s e s in t h e rate of o u t p u t would be v e r y d i f f i c u l t . Expansion of raw material output in t h e e a s t e r n regions-t h e only long-range answer t o t h i s problem--would be a c o s t l y and slow process a t best. Also h i n d e r i n g i n d u s t r i a l growth was t h e i n c r e a s i n g l y s e v e r e impact of low war and postwar b i r t h rates. The low b i r t h rate of t h e 1940's w a s l i m i t i n g growth of t h e i n d u s t r i a l l a b o r f o r c e , and t h e postS t a l i n a g r i c u l t u r a l program precluded f u r t h e r l a r g e t r a n s f e r s of p e a s a n t s t o i n d u s t r y . P o l i t i c a l problems unforeseen e a r l y in 1956 i n c r e a s e d t h e burdens on an economy a l r e a d y s t r a i n e d by t h e five-year plan. I n o r d e r t o maintain its p o s i t i o n in E a s t e r n Europe f o l l o w i n g t h e outbreak of S a t e l l i t e u n r e s t during t h e autumn of 1956, t h e USSR w a s f o r c e d to expand its economic a i d t o these areas, provide f o r e i g n c u r r e n c y and gold f o r needed purchases in t h e West, cancel p r i o r debts of v a r i o u s S a t e l l i t e s , and reduce i t s own imports from E a s t e r n Europe of c e r t a i n important products, such as P o l i s h c o a l . While t h e magnitude 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 l S o v i e t o u t p u t , t h e S o v i e t leaders probably recognized i t a t least a s an aggravation of e x i s t i n g s t r a i n s . From November 1956 through May 1957, t h e USSR g r a n t e d l o a n s of over a b i l l i o n d o l l a r s t o Eastern Europe, and canceled p r i o r debts of 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 maintain high m i l i t a r y e x p e n d i t u r e s because of t h e i n c r e a s i n g c o s t and complexity of modern weapons and i n c r e a s e d East-West t e n s i o n a f t e r Hungary and Suez a l s o proba b l y aggravated S o v i e t economic s t r a i n s , The a c t u a l c o s t s of the m i l i t a r y i n t e r v e n t i o n i n Hungary and t h e more general Sov 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 h o s t i l 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 o n have halted t h e implementation of p r e v i o u s l y announced demobilization plans. To t h e e x t e n t t h a t t h e announced 1,840,000-man f o r c e r e d u c t i o n h a s n o t been carried o u t , t h e growth 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 n d in t u r n i n d u s t r i a l o u t p u t , w i l l be hampered accordingly.

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Another hindrance t o r a p i d economic growth which could not have been c l e a r l y f o r e s e e n by t h e regime in early 1956 w a s t h e boost which 'the d e - S t a l i n i z a t i o n campaign gave t o pressures from t h e population in g e n e r a l , and t h e managerial t 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 more p e r s o n a l freedom, a n e a s i n g of t h e c o n s t a n t p r e s s u r e s f o r high rates of i n d u s t r i a l growth, and higher l i v i n g s t a n d a r d s , These p r e s s u r e s had been r i s i n g e v e r s i n c e S t a l i n ' s d e a t h , w i t h t h e g r a d u a l moderation of p o l i c e and c o e r c i v e c o n t r o l s , The impact of d e - S t a l i n i z a t i o n and t h e doubts i t raised about i n h e r e n t defects in t h e S o v i e t s y s t e m , however, accelerated these f o r c e s . Of more immediate importance, and a l s o connected w i t h d e - S t a l i n i z a t i o n , t h e u n r e s t i n Poland and Hungary probably made t h e S o v i e t regime more s e n s i t i v e t o d i s c o n t e n t w i t h i n t h e USSR, and more a c u t e l y aware of t h e need f o r economic concessions t o a l l e v i a t e t h e d i s c o n t e n t and improve worker p r o d u c t i v i t y . An i n c r e a s e of such conc e s s i o n s , however, would a l s o reduce heavy i n d u s t r i a l growth.
.

. ...

The following a n a l y s i s attempts t o show t h e Soviet rea c t i o n s t o these economic problems from December 1956 through May 1957, and p o i 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 rea c t i o n s which s u g g e s t confusion or disagreement w i t h i n t h e leadership over economic p o l i c y . There are two major i s s u e s w i t h which most economic developments during t h i s p e r i o d can be l i n k e d , and which w i l l be d i s c u s s e d separately in t h i s a n a l y s i s . The first concerns economic p o l i c y ; a muted r e v i v a l of t h e heavy-versus-light i n d u s t r y d m and a reexamination of t h e r e l a t i v e emphasis which should be given t o t h e expansion of i n d u s t r i a l and m i l i t a r y p o t e n t i a l . To u s e t h e S o v i e t slogan, t h i s w a s a re-examination of how r a p i d l y t h e recime should attempt t o "catch up" w i t h t h e West i n per capita o u t p u t , and t o what e x t e n t improvements in l i v i n g standards should be s u b o r d i n a t e d t o t h i s end, The second major i s s u e concerns economic r e o r g a n i z a t i o n ; efforts t o improve management and planning in o r d e r t o r e v e r s e t h e downward t r e n d of economic growth. Throughout t h e p e r i o d under review, there was a p p a r e n t l y some c o n t r o v e r s y over h o w much a u t h o r i t y could be decentralized i n t h e Soviet economy in o r d e r t o increase e f f i c i e n c y , without l o s i n g t h e s t a t e c o n t r o l necessary 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.

111. Economic Policy: Heavy I n d u s t r y , The Consumer, and " C a t z h g Up" With t h e West

Developments Before December Plenum . .. . Although s e v e r a l of t h e new S o v i e t - S a t e l l i t e economic a i d agreements were concluded b e f o r e December 1956, t h e first s i g n t h a t S o v i e t i n t e r n a l economic p l a n s were being reexamined is l i g h t of t h e above problems appeared i n t h e f i e l d of housing construction--long t h e saddest aspect of t h e Sov i e t consumer's drab l o t .
A.

...

.I.

. ..... .*

The f i r s t p u b l i c s i g n that such a program was i n t h e m i l l appeared i n a n I z v e s t i a a r t i c l e of 1 2 December 1956 which stated t h a t measures w e r e "now being taken t o i n c r e a s e s 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 s q u a r e meters of housing f l o o r space o r i g i n a l l y scheduled f o r c o n s t r u c t i o n by t h e s t a t e d u r i n g t h e S i x t h Five-Year Plan.3 About t h i s t i m e , Western news correspondents i n Moscow s e n t o u t s e v e r a l stories r e p o r t i n g rumors t h a t a p a r t y c e n t r a l committee meeting was t o begin on 17 December and that a major i n c r e a s e i n housing and consumer goods o u t p u t was planned. On 16 D e c e m b e r , however, a Pravda e d i t o r i a l quoted t h e o r i g i n a l 205,000,000-squarem e m o u s i n g f i g u r e as s t i l l v a l i d , t h u s i m p l i c i t l y cont r a d i c t i n g I z v e s t i a ' s statement f o u r days e a r l i e r . 4

Some evidence a l s o appeared i n mid-December t h a t a broader q u e s t i o n w a s a t i s s u e , a t least among S o v i e t economists., whether or not t h e USSR could c o n t i n u e i n d e f i n i t e l y its v e r y h i g h r a t e of economic growth. The continuance of t h i s rapid growth, in o r d e r t o o v e r t a k e and s u r p a s s t h e l e a d i n g Western n a t i o n s in a s h o r t t i m e i n p e r capita o u t p u t , w a s b u i l t i n t o t h e o r i g i n a l s c h e d u l e s of t h e S i x t h Five-Year Plan. The d r i v e t o o v e r t a k e t h e West had a l w a y s been a basic c o r n e r s t o n e of S o v i e t economic p o l i c y , 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 n S o v i e t propaganda s i n c e t h e 20th p a r t y congress. I n a n i s s u e of t h e S o v i e t j o u r n a l Planned Economy (Planovoye Khozyaistvo)

which was published in midoDecember, t h e economist Ya. J o f f e s t a t e d t h a t i t was necessary t o reject t h e p r o p o s i t i o n s of some a u t h o r s t h a t as t h e size of t h e economy i n c r e a s e d , t h e "tempo of growth" must be reduced. 5

The p r a c t i c a l s i g n i f i c a n c e of t h e d o c t r i n e t h a t q u i c k l y c a t c h i n g up w i t h t h e West in p e r capita o u t p u t was t h e "main ,economic t a s k " of t h e USSR w a s probably t h a t i t provided t h e r a t i o n a l e f o r t h e continued p r e f e r e n t i a l development of .heavy i n d u s t r y , Equaling t h e West i n per c a p i t a 0utpu.t would be, even in terms of t h e most o p t i m i s t i c S o v i e t i n t e r p r e t a t i o n s , s e v e r a l five-year p l a n s o f f . Continued primacy f o r heavy i n d u s t r y , however, was a p p a r e n t l y regarded as a b s o l u t e l y necessary f o r maintaining rates of growth f a r enough above t h o s e of t h e West t o keep t h e g o a l of c a t c h i n g up w i t h i n decades rather t h a n w i t h i n h a l f - c e n t u r i e s . The narrower q u e s t i o n of housing was a l s o related t o t h e broader q 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 growth, s i n c e d i v e r s i o n of r e s o u r c e s to housing, a t least in t h e already s t r a i n e d Sov i e t economy, would a d v e r s e l y affect heavy i n d u s t r i a l growth.
A t t h e same t i m e , e v e n t s elsewhere in t h e Sino-Soviet bloc were probably e x e r t i n g some i n f l u e n c e on t h e t h i n k i n g of S o v i e t leaders on these problems. I t w a s probably app a r e n t t o them as e a r l y as October t h a t j u s t about a l l of t 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 1957 economic p l a n s in f a v o r of consumer i n t e r e s t s , and reduce heavy i n d u s t r i a l investment, in o r d e r t o a l l e v i a t e some of t h e basic c a u s e s of u n r e s t in t h o s e areas. I n China d u r i n g t h e same p e r i o d , s e v e r a l a r t i c l e s appeared in t h e press and economic j o u r n a l s suggesting t h a t t h e r a t i o of investment in heavy i n d u s t r y t o investment in l i g h t i n d u s t r y be reduced from t h e e i g h t - or seven-to-one which a p p l i e d in China's F i r s t Five-Year Plan t o six-to-one f o r t h e Second Five-Year Plan (1958-1962). Although S o v i e t s t a t i s t i c s may n o t be s t r i c t l y comparable, t h e corresponding r a t i o in t h e USSR had been about ten-to-one throughout t h e postwar p e r i o d , except f o r t h e "new course" year of 1954, when t h e S o v i e t r a t i o dropped t o around seven-and-one-half-to-one.

The reasoning in one Chinese a r t i c l e w a s t h a t an i n c r e a s e in consumer goods production would promote higher a g r i c u l t u r a l o u t p u t by providing better i n c e n t i v e s t o t h e peasants. I n t u r n , t h e p e o p l e ' s l i v e l i h o o d would be enhanced, "the a l l i a n c e of workers and peasants" would be c o n s o l i d a t e d , t h e s t a t e ' s accumulation of c a p i t a l i n c r e a s e d , and t h e r a t e of development of heavy i n d u s t r y f u r t h e r .!accelerated. T h i s tendency t o regard heavy i n d u s t r i a l growth a s a t least p a r t i a l l y dependent on a g r i c u l t u r a l and consumer goods o u t p u t d i f f e r e d from both
9

.,. .

. . . .
. . I . I

...... .. . ......
$ . L

t h e S o v i e t and o f f i c i a l Chinese dogma on primacy of heavy i n d u s t r y , under which t h e growth of a g r i c u l t u r e , consumer goods, and t h e c o u n t r y ' s m i l i t a r y power depended wholly on heavy I n d u s t r y . Another Chinese a r t i c l e stated that "some comrades, '* a f t e r s e e i n g t h e "mistakes" of c e r t a i n East European c o u n t r i e s , had raised q u e s t i o n s r e g a r d i n g t h e conf l i c t between t h e p r e f e r e n t i a l development of heavy i n d u s t r y and t h e care f o r t h e p e o p l e ' s l i v e l i h o o d . The a r t i c l e , howe v e r , rejected these q u e s t i o n s as n o t a p p l i c a b l e t o China.6

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

i n g concerning i t s own economic p o l i c y . Any e x p l i c i t inf l u e n c e China had would l i k e l y have gone in f a v o r of heavy i n d u s t r y , s i n c e i t w a s in t h i s f i e l d t h a t China needed sov i e t a s s i s t a n c e . Some i n f l u e n t i a l people i n t h e USSR, h o p e v e r , were perhaps swayed by $he same t y p e of t h i n k i n g . Furthermore, in t h e case of t h e East European Satellites, S o v i e t approval of t h e i r p l a n changes was prqbably.required.

no more t h a n a n i n d i r e c t impact on t h e S o v i e t regime's think-

These developments elsewhere in t h e bloc probably had

..

, '

. .

. .

.
.....

I
.

The c e n t r a l committee meeting c a l l e d t o d i s c u s s economic problems began on 20 D e c e m b e r , n o t 17 D e c e m b e r , as r e p o r t e d l y scheduled. The reason f o r t h e postponement i s n o t d e f i n i t e l y known, b u t a Western correspondent described by t h e American embassy in Moscow as having e x c e p t i o n a l l y good S o v i e t s o u r c e s r e p o r t e d a t t h e t i m e t h a t there w e r e "problems" connected w i t h t h e new economic program, and i t might n o t 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 called f o r a s h i f t of r e s o u r c e s t o i n c r e a s e housing c o n s t r u c t i o n and consumer goods o u t p u t , some r e d u c t i o n in o u t p u t of conventional m i l i t a r y weapons, a cutback i n c o n s t r u c t i o n of c u l t u r a l and communal f a c i l i t i e s , and i n c r e a s e d production of consumer goods a t heavy i n d u s t r i a l p l a n t s . 7 J
3.

The December Plenum

The c e n t r a l committee plenum, which m e t from 20 t o 24 December i n Moscow, d i d n o t make any s i g n i f i c a n t changes i n p l a n s f o r t h e S o v i e t consumer. The Moscow press published two "decisions" of t h i s meeting. One, on t h e need t o improve t h e guidance of t h e economy, w i l l be d i s c u s s e d below in t h e s e c t i o n on r e o r g a n i z a t i o n of t h e S o v i e t economy. The other, on "drawing up more s p e c i f i c c o n t r o l f i g u r e s " f o r t h e n a t i o n ' s economic p l a n s , e s s e n t i a l l y postponed a d e c i s i o n on how much of a n i n c r e a s e in r e s o u r c e s could be devoted t o housing and consumer needs, and a t t h e same admitted t h a t heavy i n d u s t r y w a s s u f f e r i n g s e v e r e s t r a i n s from overambitious planning.

10

. ., ... . . ..

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 of t h e f i v e - y e a r p l a n and t h e 1957 p l a n be made "more s p e c i f i , I 1 and t h a t t h e f i v e - y e a r p l a n be p r e s e n t e d i n f i n a l form t o t h e Supreme S o v i e t by mid-1957. The orders on how t h e i n d i v i d u a l g o a l s were t o be r e v i s e d were broken down i n t o t w o p a r t s , one on i n d u s t r y in g e n e r a l , and one on housing: "(a)...reduce t h e volume of c a p i t a l investments and...make t h e l i s t of c o n s t r u c t i o n projects more s p e c i f i c , w i t h a view toward reducing t h e number of them, p r i m a r i l y a t t h e expense of new c o n s t r u c t i o n proJects..,. Revise t h e p l a n goals for i n d i v i d u a l indust r i e s which have n o t been s u p p l i e d w i t h s u f f i c i e n t materials....
ll(b)...seek 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....
It

.
. .. . .

..

Thus t h e regime a p p a r e n t l y c o u l d n o t a g r e e on t h e immediate implementation of p l a n s , which earlier evidence s u g g e s t s had a l ready been formulated, f o r a new d i v i s i o n of r e s o u r c e s between t h e consumer and a n already o v e r s t r a i n e d i n d u s t r y , but called f o r a re-examination of how r e s o u r c e s were t o be divided.8 The c e n 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 s r e i t e r a t e d t h a t t h e basic p o l i c y pronouncements of t h e 2 0 t h p a r t y c o n g r e s s 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 c o n t i n u i n g t h e primacy of heavy i n d u s t r y w a s reaffirmed, as w a s t h e l i n e on c a t c h i n g up w i t h t h e West in a h i s t o r i c a l l y s h o r t t i m e , As on p r e v i o u s o c c a s i o n s , a c a l l was i s s u e d "to develop c o n s t a n t l y s o c i a l i s t c o m p e t i t i o n as a powerful means of s t r u g g l i n g f o r f u l f i l l m e n t and o v e r f u l f i l l m e n t of economic plans." While a d m i t t i n g t h a t i n d u s t r i a l and c o n s t r u c t i o n p l a n s might r e q u i r e a s l i g h t downward rev i s i o n , and t h a t O p p o r t u n i t i e s should be sought for i n c r e a s e d housing 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 such changes were t o have no impact on t h e basic d o c t r i n e s underl y i n g t h e o r i g i n a l f i v e - y e a r plan. i n d i c a t e d t ha t c a p i t a l investment e mainly r'esponsible f o r t h e plenum.9 During 1956 many m i n i s t r i e s 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 investment funds, a r g u i n g t h a t t h e i r g o a l s c o u l d n o t be a c h i e v e d w i t h o u t h i g h e r investments. T h e d i f f i c u l t i e s of i n c r e a s i n g investment, compounded by p r e s s u r e f o r more housing, r e s u l t e d in "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 o r t e d l y a g r e e k r n a r mere c0mru-m :'modifications" but no fundamental r e v i s i o n of 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 , and that capacity for accomplishing them must be found w i t h i n e x i s t i n g f a c t o r i e s .
1 1

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

1 .

.... ::..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 n s t a t e d t h a t Khrushchev in c a p i t a l investment. pea ers and Molotov were l e a d i nI C a t h e plenum, a l t h o u g h 3 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 reports Is0 sugof Saburov, Baibakov, and Bulganin. industry" gested t h a t a r e v i v a l of t h e "heavyc o n t r o v e r s y occurred a t t h e plenum, remarking t h a t t h e p a r t y has 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 production in f a v o r of t h e consumer.

CZGJ

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

The s e r i o u s n e s s w i t h which t h e S o v i e t leaders regarded t h e i r economic problems became clearer two days a f t e r t h e plenum-ended. The S o v i e t p r e s s on 26 December carried a decree a p p o i n t i n g M. G Pervukhin, member of t h e p a r t y pre. sidium and first deputy premier, head of t h e S t a t e Commission f o r . C u r r e n t Planning, and removing M. Z . Saburov from t h i s p o s t . The r e o r g a n i z a t i o n of t h e Current Planning Commission w i l l be d i s c u s s e d in more d e t a i l below a s i t rel a t e s t o o t h e r measures f o r economic r e o r g a n i z a t i o n . In terms 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 s o u r c e s among v a r i o u s branches of t h e economy, however, i t is important t o n o t e t h a t t h e s i x top a d m i n i s t r a t o r s who were named as Pervukhin's d e p u t i e s r e p r e s e n t e d almost a l l major economic sectors. A s first d e p u t i e s t o Pervukhin w e r e appointed--

--A. N e Kosygin, whose background is p r i marily i n l i g h t industry,

.....

--V. A. Malyshev, w i t h a background in heavy i n d u s t r i a l technology, atomic energy and s h i p b u i l d i n g .

As d e p u t i e s t o Pervukhin

.....

were appointed--

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

,

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

- . Khrunichev, w i t h a n armaments 4 V. i n d u s t r y background ,

--V. A. Kucherenko, i d e n t i f i e d w i t h t h e construction industry,

--V. V. Matskevich, m i n i s t e r of a g r i c u l t u r e and long connected w i t h t h i s f i e l d ,

--I. A. Benediktov, m i n i s t e r of s t a t e 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 tural official.

12

A l l s i x of these men were given the rank of m i n i s t e r ( t h e f i r s t f o u r headed no s p e c i f i c m i n i s t r i e s , while Matskevich and Benediktov r e t a i n e d t h e i r p o r t f o l i o s ) . The first f i v e

had p r e v i o u s l y been deputy premiers of t h e government, and were 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 removal from t h e top c u r r e n t planning post. The admission by t h e plenum of e x c e s s i v e s t r a i n s in economic p l a n s w a s v e r y s i m i l a r t o criticisms of t h e Gixth Five-Year Plan made a t the 20th p a r t y congress by M i n i s t e r of Ferrous Metallurgy A. G. Sheremetev and Minister of the Coal I n d u s t r y 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 i n g t h e y had proposed "reduced plans,** and had r e q u e s t e d more i n v e s t ment funds t h a n they needed. Saburov s a i d "the p a r t y and the goverament had t o i n t e r v e n e in t h i s matter," raise t h e p l a n s , and c u t down on t h e investment r e q u e s t s . The performance of t h e ferrous metals, c o a l and s e v e r a l other i n d u s t r i e s in 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 o v e r l y o p t i m i s t i c view of the r 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.
A t t h e same t i m e , however, t h e December plenum ordered investment reduced and repeated in m i l d e r f o r m Saburov's earlier condemnation of e f f o r t s "by some executives" t o have t h e i r economic p l a n s reduced and thereby "to conceal t h e i r u n s a t i s f a c t o r y work." According t o t h e r e s o l u t i o n , p l a n s should be "realistic, b u t n o t t o o low.9q The s u r p r i s i n g l y l o w g o a l s announced i n t h e 1957 p l a n a l i t t l e o v e r a month later suggested t h a t Pervukhin's committee went f u r t h e r than Overambitious planning t h e c e n t r a l committee had intended. perhaps was a f a c t o r i n Saburov's o u s t e r , but t h e wording of t h e December plenum suggested t h a t less of a r e d u c t i o n in g o a l s w a s f o r e s e e n than a c t u a l l y occurred,
... . .....
I . .

13

....,

as deputy premier and appointed ambassador t- Japan on 30 o December. N evidence provided a reason for t h i s apparent demotion, b u t Tevosyan, a p p a r e n t l y t h e deputy premier w i t h o 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 , might have 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. H e c o u l d also have opposed some of t h e proposals a t the December plenum on economic r e o r g a n i z a t i o n . (See S e c t i o n IV, following.)
C.

'I'

.From December Plenum t o February Supreme S o v i e t

While t h e r e o r g a n i z e d Current Planning Commission w a s ' r e v i s i n g t h e 1957 p l a n i n t h e s i x weeks f o l l o w i n g the December plenum, t h e S o v i e t Union continued t h e process of n e g o t i a t i n g new a i d and trade agreements w i t h t h e S a t e l l i t e s , which i n creased a t least marginally t h e s t r a i n s on home r e s o u r c e s , E a s t Germany's Premier Grotewohl, r e t u r n i n g from Moscow a t the end of January w i t h a new a i d agreement, e x p l i c i t l y commented on the USSR's added burdens. He s a i d it was "not easy" for t h e USSR t o g i v e t h e a i d agreed upon, s i n c e t h e S o v i e t Union had to "shoulder t h e great economic tasks which have a r i s e n f r o m the convulsions in some socialist c o u n t r i e s . I t l o Probably because of S a t e l l i t e needs for h a r d c u r r e n c y , and also because t h e USSR had a sizable adverse balance i n its 1956 f o r e i g n trade, S o v i e t gold e x p o r t s i n c r e a s e d t o a l e v e l which, i f continued through 1957, would be c o n s i d e r a b l y i n excess of g o l d sales i n the previous peak y e a r , 1953, when t 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 during t h i s p e r i o d continued a t roughly the l e v e l of t h e l a s t half 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 of economic a i d for t h e Near E a s t i n r e a c t i o n t o t h e new American program. Arms shipments continued t o S y r i a , and negotiat i o n s for re-equipping Egypt's armed forces were under way. The S o v i e t Union i n t h e last h a l f of January d i d t e l l Yugos l a v i a t h a t implementation of its aid agreement w i t h t h a t c o u n t r y c o u l d n o t be carried o u t immediately, and i n February the USSR postponed r l n t i l 1961 t h e E a s t German-Soviet p r o j e c t t o h e l p Yugoslavia b u i l d a n aluminum combine.ll These moves were almost c e r t a i n l y p o l i t i c a l l y motivated, and intended t o exert p r e s s u r e on Yugoslavia i n its d i s p u t e w i t h the S o v i e t Union, b u t t h e y also allowed a s l i g h t r e d u c t i o n i n S o v i e t and E a s t German economic commitments. Within t h i s framework t h e Current Planning Committee under Pervukhin worked during January t o r e v i s e t h e 1957 p l a n . The Communist P a r t y newspaper Pravda i n mid-January reacted t o Western press reports which-haldeized on t h e i m p l i c a t i o n

14

. .

....... ..

in t h e December plenum r e s o l u t i o n t h a t S o v i e t i n d u s t r i a l growth would slow down. The S o v i e t p r e s s d u r i n g t h i s p e r i o d also sh0.t off the first s a l v o s c a l l i n g f o r a massive campaign of " s o c i a l i s t competition" t o o v e r f u l f i l l t h e 1957 plan and later t h e S i x t h Five-Year P l a n , in honor of the 40th anniversary of the 1917 r e v o l u t i o n . Pravda's e d i t o r i a l on 12 January accused * * h o s t i l ebourgeois pro-avl of " t r y i n g t o p o r t r a y t h e d e c i s i o n s of t h e (December) plenum as a r e f l e c t i o n of some s p e c i a l d i f f i c u l t i e s f a c i n g o u r c o u n t r y , as a r e j e c t i o n of earlier planned higher rates of i n d u s t r i a l construction.11 A f t e r l a b e l i n g t h e s e views "slanderous," Pravda said t h a t the q u e s t i o n w a s n o t Ita r e d e c t i o n of higher t e m p o s of i n d u s t r i a l c o n s t r u c t i o n , b u t a t r a n s i t i o n t o a new stage of economic development i n which high tempos are guaranteed n o t o n l y , and n o t so much, by large c a p i t a l investments as by more c o r r e c t u t i l i z a t i o n of a v a i l a b l e resources." The e d i t o r i a l f u r t h e r argued t h a t i t w a s possible t o lower capital investment in i n d u s t r y , t h u s providing more r e s o u r c e s f o r housing, and a t the same t i m e i n c r e a s e "tempos of new i n d u s t r i a l construction.1i
The fact t h a t t h e 1957 p l a n announced t h e f o l l o w i n g month d i d show a s u b s t a n t i a l l y reduced growth rate f o r indust r i a l o u t p u t s u g g e s t s first t h a t P r a v d a ' s blast w a s aimed a 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 rate as w e l l as a t " h o s t i l e bourgeois propaganda," and second, t h a t the regime acquiesced t o these p r e s s u r e s , a t least temporarily. The corresponding 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 d t h e December plenum's criticism of economic a d m i n i s t r a t o r s who attempted t o get p l a n s approved which were loHer than necessary,

The speeches made by t h e S o v i e t leaders on t h e i r t o u r s through t h e provinces during t h e l a s t h a l f of January d i f f e r e d in t h e i r emphasis on v a r i o u s p o i n t s . Only the speeches of L, 116. Kaganovich and N. I. Belayev e x p l i c i t l y repeated t h e g o a l of c a t c h i n g up w i t h t h e West in t h e s h o r t e s t t i m e , b u t a l l t h e o t h e r s d i s c u s s e d 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 y of "socialism" over capitalism and t h e i n e v i t a b l e v i c t o r y of t h e former. The leaders a l l restated t h e primacy of heavy i n d u s t r y , b u t t h e i r speeches c o n t a i n e d some i n t e r e s t i n g v a r i a t i o n s concerning b e n e f i t s f o r t h e consumer, Bulganin, speaking in t h e Tadzhik'SSR, admitted shortcomings in housing and s u p p l i e s of consumer goods and said t h a t e f f o r t s were being made t o end these shortcomings, H e emphasized, however, t h a t "everything cannot be .done a t once." Kaganovich, speaking in Krasnoyarsk, s a i d t h a t under t h e d i r e c t i v e s of t h e December c e n t r a l committee meeting, t h e f i v e - y e a r p l a n w a s being "worked out" t o ensure t h e preponderant development of heavy i n d u s t r y , b u t a t t h e same t i m e " t o e f f e c t a s h a r p r i s e in the material

15

well-being...of t h e S o v i e t people." A. B. A r l s t o v , in Chelyabinsk, s t a t e d t h a t measures implemented during 1956 t o raise living s t a n d a r d s were one of t h e r e a s o n s why **some amendments" in the S i x t h Five-Year Plan were r e q u i r e d .
.. ..

Also b e a r i n g on f u t u r e economic p o l i c y w a s t h e way in which t h e leaders regarded the USSR's m i l i t a r y s t r e n g t h in these speeches. The t h e s i s c a l l i n g for continued primacy of heavy i n d u s t r y h a s always been based in part on the c o u n t r y ' s need f o r m i l i t a r y s t r e n g t h , and Bulganin, speaking in t h e Tadzhik SSR, reiterated t h i s p o i n t s t r o n g l y . Khrushchev, in Tashkent, s a i d t h a t t h e "mad arms race" being carried on by t h e United States demanded *'increased v i g i l a n c e and s t r e n g t h e n i n g of o u r armed forces.'* However, Malenkov, speaking in Chkalov, took a more moderate view: "Our p a r t y teaches, and t h e whole experience of 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 r n a l and ext e r n a l enemies of Communism shows, t h a t one must n o t underestimate the enemy. But a t t h e same t i m e one should n o t o v e r r a t e h i s s t r e n g t h o 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 of t h e c a p i t a l i s t wor Id. I*

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D.

The February Supreme S o v i e t and t h e 1957 P l a n

The 1957 p l a n presented by Pervukhin t o t h e Supreme S o v i e t on 5 February scheduled s h a r p r e d u c t i o n s in rates of growth f o r m o s t branches of t h e economy. Heavy i n d u s t r y w a s planned t o grow 7.8 percent in 1957, compared w i t h t h e 11.4p e r c e n t growth announced as achieved in 1956, and l i g h t lnd u s t r y w a s t o grow 5.9 p e r c e n t , against last y e a r ' s 9.4 perc e n t . G r o w t h of i n d u s t r i a l labor p r o d u c t i v i t y , scheduled a t 5.4 p e r c e n t f o r 1957, compared w i t h a 7-percent growth achieved i n 1956. In t h e f i e l d of c a p i t a l investment, the f 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 plan called f o r almost a 9-percent i n c r e a s e , compared w i t h a 17p e r c e n t i n c r e a s e i n 1956.

In i n d u s t r y , Pervukhin emphasized p a r t i c u l a r l y 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 a n d b u i l d i n g materials i n d u s t r i e s , and scheduled much larger i n c r e a s e s of capacity 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 e budget 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 as a 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 t i n d u s t r y w a s planned t o be below t h a t of heavy i n d u s t r y , 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 i n c r e a s e d f a r more i n percentage terms (and s l i g h t l y more i n a b s o l u t e terms) 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 called f o r c o n s t r u c t i o n of . s q u a r e meters of dwelling space from b o t h s t a t e and p r i v a t e f u n d s , compared w i t h t h e 36,000,000 s q u a r e meters a c t u a l l y b u i l t last y e a r . T h i s w a s a very 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 h e schedule of t h e o r i g i n a l ot five-year p l a n , w h i l e 1957 g o a l s i n m s other c a t e g o r i e s were below l e v e l s necessary t o a c h i e v e t h e five-year plan. On t h e o t h e r hand, t h e housing i n c r e a s e d i d n o t r e p r e s e n t an upward r e v i s i o n of t h e o r i g i n a l f i v e - y e a r plan g o a l , as some earlier evidence had suggested would be the case.
46,000,000

In f o r e i g n trade, Pervukhin crease i n t o t a l trade w i t h other s a i d t h a t the doubling of S o v i e t E a s t and Asia "should be noted," f u t u r e trade w i t h t h i s area.*

scheduled a 13-percent i n c o u n t r i e s of t h e bloc. He trade i n 1956 w i t h t h e Near b u t omitted any r e f e r e n c e t o

* T h i s r e p o r t i s n o t intended t o g i v e a d e t a i l e d a n a l y s i s of t h e 1957 S o v i e t economic p l a n , except as i t a f f e c t s t h e main l i n e s of S o v i e t p o l i c y .

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- 3 E

... . .. ..

In Pervukhin's speech, and throughout t h e published disc u s s i o n s on t h e p l a n a t t h e Supreme S o v i e t , there w a s no reference t o t h e d o c t r i n e of c a t c h i n g up w i t h the West i n per capita o u t p u t i n a . h i s t o r i c a l l y short time. The complete s i l e n c e on t h i s p o i n t p o s s i b l y reflected unhappiness w i t h i n the leadership over the s h a r p l y c u t rates of growth i n t h e p l a n . Less than a month earlier the Pravda e d i t o r i a l of 12 January had attacked as " h o s t i l e b o u r g e o i s a n d e r " any s p e c u l a t i o n t h a t t h e rate of growth would i n fact drop, and y e t p r e c i s e l y t h i s happened.
The leadership may n o t have envisaged a t t h e December plenum t h e drastic r e v i s i o n of c u r r e n t o u t p u t g o a l s i n the 1957 p l a n , The wording of t h e December plenum's r e s o l u t i o n had i n d i c a t e d some downward r e v i s i o n , b u t n o t so large a one as appeared in t h e plan. Furthermore, t h e December plenum had e x p l i c i t l y o r d e r e d *'the volume of c a p i t a l investmentt1 t o be reduced, and in f a c t t h e a b s o l u t e volume i n c r e a s e d , a l though a t a slower rate than in t h e preceding year, The plenum's i n s t r u c t i o n may have meant a r e d u c t i o n below t h e o r i g i n a l 1957 p l a n , or a r e d u c t i o n below t h e a b s o l u t e volume of 1956. In any e v e n t , it seems l i k e l y t h a t in working o u t t h e 1957 p l a n , Pervukhin allowed larger r e d u c t i o n s in c u r r e n t o u t p u t g o a l s , and perhaps smaller r e d u c t i o n s i n c a p i t a l exp e n d i t u r e s , than were envisaged by t h e December plenum.

P l a n changes of p r e c i s e l y t h i s t y p e would be f a v o r e d P r i m a r i l y by economic a d m i n i s t r a t o r s , from m i n i s t e r s and their d e p u t i e s down t o i n d i v i d u a l p l a n t managers. A t the 20th p a r t y congress a year e a r l i e r i t w a s such i n d i v i d u a l s who had been squelched by Saburov in h i s s u c c e s s f u l e f f o r t s t o r e v i s e t h e 1956 o u t p u t g o a l s upward, w h i l e c u t t i n g back t h e investment f u n d s . r e q u e s t e d by m i n i s t r i e s . Since Pervukhin and%-is d e p u t i e s were p r i m a r i l y experienced in i n d u s t r i a l a d m i n i s t r a t i o n , rather than in planning or i n t h e p a r t y a p p a r a t u s , t h e y might have had more sympathy than t h e i r p r e d e c e s s o r s for arguments i n f a v o r of reduced o u t p u t g o a l s ,
, . .............. ....

The l i k e l i h o o d t h a t the 1957 p l a n w a s n o t e x a c t l y t h e one ordered by t h e December plenum w a s s t r e n g t h e n e d by t h e fact t h a t Pervukhin emphasized throughout h i s speech on t h e plan t h a t t h e g o a l s should be o v e r f u l f i l l e d . A i s f r e q u e n t r e f e r e n c e s t o t h e ease w i t h which t h e p l a n could be overf u l f i l l e d f a r outweigh h i s one r e f e r e n c e t o t h e p l a n being r e a l i s t i c , b u t n o t t o o e a s y . Pervukhin probably found h i m s e l f i n an unenviable p o s i t i o n , p r e s s u r e d by i n d u s t r i a l administrators t o lower p l a n s , and faced by d i s p l e a s u r e from o t h e r m e m b e r s of t h e p a r t y leadership when he d i d .

19

... . . .

...

. ..

On the s u b j e c t of heavy i n d u s t r y , t h e 1957 p l a n also r e p r e s e n t s a p o s s i b l e d e p a r t u r e f r o m t h e propaganda l i n e and t h e p o l i c y of 1955 and 1956. As noted p r e v i o u s l y , t o t a l all 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 d more t h a n 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 (these budgetary a l l o c a t i o n s cover c e r t a i n o p e r a t i n g expenses as w e l l as lnvestment, and figures f o r investment a l o n e 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 l i n an i s s u e of t h e p a r t y j o u r n a l Kommunist which w a s published l a t e r i n February stated t h a t i n t h e 1957 p l a n t h e p r o p o r t i o n of t o t a l a l l o c a t i o n s devoted t o production of consumer foods, housing, schools and h o s p i t a l s w a s higher t h a n i n 1956. 6 The Pravda e d i t o r i a l of 9 February, after r e a f f i r m i n g a t g r e a w t h t h e p r e f e r e n t i a l development of heavy i n d u s t r y , and emphasizing t h a t heavy i n d u s t r y w a s " t h e s o l i d f o u n d a t i o n of t h e n a t i o n a l economy...and i t s defense c a p a c i t y Y t fs t a t e d t h a t "the d i s t i n g u i s h i n g feature'' of t h e 1957 p l a n was t h a t it envisaged "higher t e m p o s than h i t h e r t o for t h e production o f . consumer goods.
I'

Thus, i n p r a c t i c e , t h e p l a n s f o r 1957 a p p a r e n t l y called f o r g i v i n g t h e consumer a l i t t l e larger piece of t h e t o t a l p i e t h i s year. T h i s probably r e s u l t e d i n p a r t from t h e fact t h a t housing p l a n s , although n o t i n c r e a s e d above t h e o r i g i n a l s c h e d u l e , were a t least n o t c u t back t h i s y e a r ; i n p a r t from l a s t year's good h a r v e s t , which s h o u l d i n c r e a s e food s u p p l i e s in 1957; and i n p a r t from t h e i n c r e a s e d budgetary 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 . Increased emphasis on improving l i v i n g s t a n d a r d s had a c t u a l l y begun t o develop earlier. The S i x t h Five-Year P l a n approved by t h e 20th p a r t y congress had i n dicated t h a t t h e consumer would r e c e i v e a g r a d u a l l y i n c r e a s i n g share of t o t a l r e s o u r c e s in t h e later y e a r s of t h e plan. I n 1956, 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 , " such a s h i g h e r pensions and i n c r e a s e d minimum wages, were g r a n t e d t h e consumer. Although an i n c r e a s e d p r o p o r t i o n of t o t a l r e s o u r c e s c o u l d be devoted to the consumer i n any one year w i t h o u t r a i s i n g t h e growth rate of o u t p u t f o r t h e consumer above t h e heavy i n d u s t r i a l o u t p u t , i t may a c t u a l l y be somewhat d 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 of growth below t h a t of heavy i n 1957. A g r i c u l t u r e provides more than half of t h e r a w materials for l i g h t i n d u s t r y i n t h e S o v i e t Union, and last y e a r ' s large h a r v e s t w i l l t e n d t o i 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 p r e s e n t problems i n t h e f u e l , metals and b u i l d i n g materials ind u s t r i e s are s o l v e d , on t h e other hand, heavy i n d u s t r y may face continued r a w materials s h o r t a g e s . (Housing, of c o u r s e , is not included i n t h e S o v i e t accounting categories f o r e i t h e r heavy or l i g h t i n d u s t r i a l o u t p u t . )
20

The p r e s s u r e s f a c e d by the p l a n n e r s both t o g i v e more t o t h e consumer and t o allow i n d u s t r y more investment funds appeared v e r y c l e a r l y in t h e speeches of l o c a l d e p u t i e s a t t h e Supreme S o v i e t meeting. A r e p r e s e n t a t i v e f r o m the Estonian SSR 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 e g i o n w a s t o have been modernized under the d i r e c t i v e s of t h e 20th p a r t y congress on t h e S i x t h Five-Year P l a n , and said t h i s moderniaat i o n , which w a s t o have begun in 1957, was being postponed and now " w a s n o t even included in t h e S i x t h Five-Year Plan." A deputy from Leningrad complained t h a t under t h e five-year plan d i r e c t i v e s two long-distance gas p i p e l i n e s were scheduled for c o n s t r u c t i o n to Leningrad by 1959, b u t t h a t now o n l y one w a s envisioned. A female deputy f r o m t h e Latvian SSR quoted a decree of t h e Council of M i n i s t e r s which o r d e r e d a l l e n t e 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 criticized v a r i o u s m i n i s t r i e s f o r n o t obeying t h i s decree. She p o i n t e d o u t t h a t the M i n i s t r y of Light I n d u s t r y employed 33,000 women i n L a t v i a , b u t had k i n d e r g a r t e n s and n u r s e r i e s f o r less t h a n 900 c h i l d r e n .

... .

The speeches a t t h e Supreme S o v i e t also provided f u r t h e r evidence t h a t housing plans, except in a f e w large c i t i e s l i k e Moscow o r v i t a l i n d u s t r i a l areas l i k e t h e Donbas, were n o t being r e v i s e d upward. A Moscow delegate d i d announce t h a t t h e f i v e - y e a r housing p l a n for t h e capital w a s being i n c r e a s e d f r o m 9,000,000 t o 11,000,000 s q u a r e meters. A deputy 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 s u b o r d i n a t e t o t h e Ministry of t h e Timber I n d u s t r y had produced 159,000 s q u a r e meters of prefabricated housing in 1956, but were o r d e r e d t o reduce o u t p u t s h a r p l y in 1957, t o 60,000 s q u a r e meters. R e p r e s e n t a t i v e s of t h e Azerbaidzhan SSR, Chuvash Autonomous Republic, and Kemerovo O b l a s t a l s o complained t h a t housing p l a n s f o r t h e i r areas were e i t h e r t h e same as l a s t year or lower.

E.

From t h e SuDreme S o v i e t t o Khrushchev's Theses

A f t e r t h e Supreme S o v i e t , t h e s p o t l i g h t s h i f t e d f r o m economic p o l i c y t o economic r e o r g a n i z a t i o n in t h e USSR ( t h e l a t t e r problem w i l l be d i s c u s s e d in t h e n e x t s e c t i o n ) . Immediately f o l l o w i n g t h e Supreme S o v i e t , a new c e n t r a l committee plenum m e t on 13 and 14 February, and i s s u e d a resolut i o n based on proposals of Khrushchev f o r a d r a s t i c r e o r g a n i z a t i o n of economic a d m i n i s t r a t i o n a l o n g r e g i o n a l l i n e s . T h i s p r o p o s a l , t o be worked o u t in d e t a i l and p r e s e n t e d t o t h e n e x t meeting of t h e Supreme S o v i e t by t h e p a r t y presidium and Council of M i n i s t e r s , w a s described i n 'a later speech by Khrushchev as a n e f f o r t t o evoke a great new upsurge of ind u s t r i a l o u t p u t , comparable t o t h a t achieved in a g r i c u l t u r e by t h e s i m i l a r l y grandiose "new lands" program.

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Some p a r t s of t h e February plenum's r e s o l u t i o n , however, do concern economic p o l i c y , and may r e p r e s e n t t h e r e a c t i o n of t h e p a r t y leadership--or dominant elements of it--to t h e low 1957 p l a n , which w a s perhaps n o t p r e c i s e l y what t h e y had o r d e r e d t w o months earlier a t the December plenum. While a 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 through t h e i r own forum, t h e r e s o l u t i o n of t h e plenum, i s s u e d s e v e r a l statements i n c o n s i s t e n t w i t h those made a t t h e Supreme S o v i e t . The o p t i m i s t i c tone of t h e plenum's r e s o l u t i o n w a s similar t o t h a t of t h e 20th p a r t y congress a year earlier, and t h e pledge to "overtake and o u t s t r i p the most developed c a p i t a l i s t c o u n t r i e s i n p e r c a p i t a production" w a s restated. The r e s o l u t i o n emphasized that t h e m s important c o n d i t i o n f o r achievot i n g t h i s ai$ w a s rapid growth of labor p r o d u c t i v i t y , and stated, " e have every p o s s i b i l i t y t o a c h i e v e t h i s t a s k W s u c c e s s f u l l y . " As mentioned e a r l i e r , Pervukhin i g n o r e d t h e theme of c a t c h i n g t h e West i n h i s p r e s e n t a t i o n of t h e p l a n t o t h e Supreme S o v i e t , and the p l a n scheduled o n l y a 5.4p e r c e n t i n c r e 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 .

In a d d i t i o n , the plenum l e v e l e d a criticism a t t h e Current Planning Commission, which w a s n o t mentioned i n December; it w a s probably aimed a t Pervukhin's commission, r a t h e r t h a n a t Saburov's. The commission w a s ordered n o t t o " d u p l i c a t e t h e worktt of Gosplan (long-range p l a n n i n g ) , and n o t t o i n t e r f e r e w i t h " f u n c t i o n s of management." F i n a l l y , t h e February plenum's r e s o l u t i o n c o n t a i n e d no r e f e r e n c e t o the 1957 plan which had j u s t been approved, although i t d i d have p r a i s e f o r the r a p i d economic growth of 1956.
The a c c u s a t i o n t h a t the commission w a s d u p l i c a t i n g t h e work of Gosplan might i n d i c a t e t h a t t h e p a r t y leaders regarded t h e l o w 1957 p l a n goals as incompatible w i t h higher goals, which,they perhaps i n s i s t e d , had t o be i n c o r p o r a t e d in t h e r e v i s e d five-year plan. A t any rate, t h e campaign t o develop "socialist competitiont1 for o v e r f u l f i l l i n g the 1957 p l a n in honor of t h e 40th a n n i v e r s a r y of t h e 1917 r e v o l u t i o n picked up steam after mid-February. Pravda e d i t o r i a l s between 18 February and t h e end of March EGEEned t h i s s u b j e c t on 10 days, and I z v e s t i a followed s u i t , a l t h o u g h less f r e q u e n t l y . Pravda on 3 Ma rch called f o r f u l f i l l m e n t ahead of t i m e of t h e x t h Five-Year Plan g o a l s , as w e l l as t h e 1957 p l a n , and a n e d i t o r i a l of t h e trade-union paper Trud r e p e a t e d t h i s l 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 e s o l u t i o n was i s s u e d concerning p r e p a r a t i o n s f o r t h e 40th annivers 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 called f o r o v e r f u l f i l l m e n t o n l y of t h e 1957 p l a n , and a l s o repeated t h e goal of o v e r t a k i n g 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 v v t h e s e s v v t h e proposed ecoon nomic r e o r g a n i z a t i o n were i s s u e d , and a g a i n t h e goal of c a t c h i n z t h e West was s t r o n g l y r e a f f i r m e d . The t h e s e s also ot c a l l e d f o r t h e t r a n s f e r of m s of Current Planning Commission f u n c t i o n s t o Gosplan, and t h e a b o l i t i o n of t h e former. The f a i l u r e of Pervukhin to be a p p o i n t e d as head of t h i s combined c u r r e n t and long=range planning group t e n d s t o confirm s p e c u l a t i o n t h a t h i s c o n s e r v a t i v e approach t o t h e 1957 plan w a s n o t s a t i s f a c t o r y . Subsequent reports t h a t both Malenkov and Khrushchev t o l d Westerners t h a t Saburov had , d r a f t e d Khrushchev's theses on t h e r e o r g a n i z a t i o n s u g g e s t a r e t u r n t o more ambitious planning a f t e r t h e 1957 p l a n w a s formulated.
Khrushchev's t h e s e s also c o n t a i n e d a lengthy a n a l y s i s of why continued primacy f o r heavy i n d u s t r y w a s necessary, and t h e wording s u g g e s t s (1) t h a t t h e degree of emphasis t o
be g i v e n heavy i n d u s t r y had r e c e n t l y been under d e b a t e w i t h i n t h e regime and (2) t h a t Khrushchev may have compromised s l i g h t l y h i s earlier hard p o s i t i o n . On one hand, he empha-

sized-1

"If w e accept a n i n c o r r e c t and f a l s e i n t e r p r e t a t i o n and direct t h e basic means toward t h e development of l i g h t i n d u s t r y , w e can b u t achieve a semblance of s u c c e s s and e n s u r e t h e s a t i s f a c t i o n of c e r t a i n demands for a s h o r t t i m e o n l y . And t h i s w i l l be a t t h e expense of undermining t h e dpelopment of o u r economy in the f u t u r e . . . . I n o r d e r to o u t s t r i p t h e m s developed c a p i t a l i s t ot c 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 is necessary...to e n s u r e t h e p r i o r i t y development of heavy i n d u s t r y . "

...

...

On t h e other hand, Khrushchev made s e v e r a l s t a t e m e n t s d i f f e r e n t from any he had made p r e v i o u s l y , a t least s i n c e e a r l y 1955 :
I 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 the role and i n t e r r e l a t i o n of heavy and l i g h t i n d u s t r y , t h e harmful c o n t r a s t i n g of these branches,...The matter s h o u l d n o t be pushed t o t h e verge of a b s u r d i t y --to one-sided development of heavy i n d u s t r y i g n o r i n g t h e development of l i g h t industry-which i n e v i t a b l y would cause d i f f i c u l t i e s i n t h e development of t h e n a t i o n a l economy and d e l a y t h e f u r t h e r improvement of t h e l i v i n g s t a n d a r d s of t h e people.
I1

....

23

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 h i s p o s i t i o n as follows:

".;..While f u r t h e r c o n s o l i d a t i n g heavy ind u s t r y , which is t h e basis of t h e n a t i o n a l

economy, w e must a t t h e same t i m e produce more c l o t h i n g , v a r i o u s foodstuffs--and n o t simply f o o d s t u f f s , b u t good ones-build more houses, and also s a t i s f y o t h e r needs of the people. Our S o v i e t people must have t h e h i g h e s t l i v i n g s t a n d a r d in the world, and w e s h a l l achieve t h i s g r e a t a i m . " T h i s is r e m i n i s c e n t o f t h e p o s i t i o n taken by Malenkov in August 1953, and probably reflects Khrushchev's desire to have h i s cake and eat i t too.
. .....

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

........ . "

Whether or n o t Khrushchev has modified h i s s t a n d , t w o a r t i c l e s published i n the p a r t y j o u r n a l Kommunist s h o r t l y a f t e r t h e February plenum i l l u s t r a t e d t h m thinking which c o u l d lead t o 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 s f o r a change. One of the articles, e n t i t l e d *lSurvivals of C a p i t a l i s m in Men's Mentality Under S o c i a l i s m and How t o Overcome Them,"17 implied q u i t e c l e a r l y t h a t t h e r e c e n t i n c r e a s e of i n t e l l e c t u a l nonconformity and of v o c a l o p p o s i t i o n t o defects in t h e Communist s y s t e m w a s caused in p a r t by l o w l i v i n g s t a n d a r d s . The a u t h o r noted t h a t o f t e n t h e o n l y means suggested t o combat t h e "relics of a l i e n ideology" were educat i o n measures, T h i s "one-sided approach,t1 w a s s e e n in too many a r t i c l e s and pamphlets, which "assert that backward views in a socialist s o c i e t y e x i s t o n l y because men's consciousness lags behind the new c o n d i t i o n s of l i f e . " According t o the a u t h o r , t h i s d i d n o t " f u l l y e x p l a i n t h e s u r v i v a l s of backward views, and especially t h e fact t h a t t h e y grow even s t r o n g e r at times." The a u t h o r emphasized t h a t improved l i v i n g s t a n d a r d as w e l l as e d u c a t i o n a l measures were necessary t o combat these t e n d e n c i e s , and concluded-

l ' I n s o f a r as socialism and t h e s o c i a l i s t p r i 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 s e c u r e t h e f u l l e l i m i n a t i o n of d i f f e r e n c e s (between classes) and t h e s a t i s f a c t i o n of material needs, or of other "birthmarks" of t h e o l d s o c i e t y , these "birthmarks" may under c e r t a i n c o n d i t i o n s nourish backward views t o one or a n o t h e r e x t e n t , and a c t u a l l y do so.** The lead a r t i c l e in the same i s s u e of Kommunist w a s devoted t o a d i s c u s s i o n on t h e Supreme S o v i e t meeting and t h e
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. .

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

1957 p l a n , w i t h s e v e r a 1 , p a r a g r a p h s a t t h e end on t h e February plenum.l6 T h i s 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 primacy of heavy i n d u s t r y or c a t c h i n g t h e West. I t devoted much of i t s a t t e n t i o n t o e x p l a i n i n g why t h e Supreme S o v i e t had approved l e g i s l a t i o n d e c e n t r a l i z i n g c e r t a i n powers f o r Moscow t o t h e union r e p u b l i c s ( t h i s w i l l be d i s c u s s e d i n t h e s e c t i o n on reo r g a n i z a t i o n , following). The r a t i o n a l e given f o r t h i s i n crease i n "democracy" could very e a s i l y a p p l y , a l t h o u g h t h e a 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 a p p l y , t o t h e slowing down of growth rates and s l i g h t l y i n c r e a s e d emphasis on consumption i 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 y i n c r e a s e s i n lldemocratization'l d u r i n g r e c e n t years w e r e sometimes connected wholly w i t h t h e need t o e l i m i n a t e effects of t h e p e r s o n a l i t y c u l t , b u t stated t h a t t h e basic r e a s o n f o r more democracy l a y ''in t h e o b j e c t i v e changes which have t r a n s p i r e d i n t h e economic, c u l t u r a l and p o l i t i c a l development of t 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 emphasized that a number of "socialist*' c o u n t r i e s had sprung up around t 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 s had s u b s t a 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 t encirclement." Therefore, "Communist c o n s t r u c t i o n i n t h e USSR d u r i n g t h e postwar p e r i o d has been developing...under more f a v o r a b l e e x t e r n a l conditions." Since there w a s " f i r m confidence" 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 countries, t h e e x i s t e n c e of t h e " s o c i a l i s t f 1 bloc raises i n a new l i g h t q u e s t i o n s of economic, s o c i a l and p o l i t i c a l development. "He who does n o t understand ( t h i s ) . . . d e m o n s t r a t e s h 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 any but a narrow n a t i o n a l framework." This seems t o be a t least a s u g g e s t i o n t h a t " c a p i t a l i s t encirclement" of t h e USSR h a s been weakened t o such a p o i n t as t o j u s t i f y a new look a t basic Soviet p o l i c i e s in a l l f i e l d s .

F.

The May Supreme S o v i e t

I n t h e month between t h e i s s u a n c e of Khrushchev's theses and 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 l propaganda c o n c e n t r a t e d on t h e nationwide and a l l e g e d l y "free" d i s c u s s i o n s of t h e proposed i n d u s t r i a l r e o r g a n i z a t i o n almost t o t h e e x c l u s i o n of other economic themes. The economic p l a n n e r s presumably continued t h e i r e f f o r t s d u r i n g t h i s per i o d t o make t h e 1960 i n d u s t r i a l o u t p u t goals of t h e f i v e year p l a n "more exact," t o " e l i m i n a t e e x c e s s i v e s t r a i n s " by s 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 planned c a p i t a l investments. There was no p u b l i c r e f e r e n c e i n A p r i l or May, however, t o t h e December plenum's i n s t r u c t i o n t h a t The t h e p l a n ' s f i n a l v e r s i o n be worked o u t by midyear.

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s h a r p r e d u c t i o n s i n t h e o u t p u t goals of t h e 1957 annual p l a n probably made d i f f i c u l t t h e a t t e m p t s of t h e long-range p l a n n e r s t o maintain b a s i c a l l y unchanged t h e o r i g i n a l g o a l s of t h e f i v e year p l a n .

I

An e v e n t o c c u r r e d j u s t before t h e Supreme S o v i e t convened which tended t o confirm t h a t the regime w a s d i s s a t i s f i e d w i t h t h e magnitude of r e d u c t i o n s i n t h e 1957 p l a n . Pervukhin, though t h e l o g i c a l c a n d i d a t e f o r the chairmanship of Gosplan, w a s appointed on 3 May m i n i s t e r of medium machine b u i l d i n g . T h i s appointment as chief of t h e S o v i e t atomic energy program gave Pervukhin a very important j o b , b u t one removed from o v e r - a l l economic planning. As head of Gosplan, which under t h e r e o r g a n i z a t i o n was made r e s p o n s i b l e for both long-range and c u r r e n t planning, t h e regime on 5 May appointed I. I, Kuzmin, a p r e v i o u s l y obscure p a r t y a p p a r a t u s man w i t h exp e r i e n c e in t h e i n d u s t r i a l f i e l d b u t w i t h l i t t l e p o l i t i c a l s t a n d i n g . Be was n o t a member of t h e p a r t y c e n t r a l committee, a l t h o u g h he w a s on its a u d i t i n g commission.
There is no evidence which e x p l a i n s Kuzmln's appointment. He could be a protege of Khrushchev from t h e p a r t y a p p a r a t u s . As an equal p o s s i b i l i t y , however, he could r e p r e s e n t a compromise c h o i c e by the p a r t y presidium of a lower-level i n d i v i d u a l who d i d not have a n independent power p o s i t i o n and who would t h e r e f o r e be responsive t o t h e c o l l e c t i v e l e a d e r s h i p i n f o r m u l a t i n g and implementing t h e f i v e - y e a r plan. In view of Khrushchev's i n c r e a s i n g l y e v i d e n t dominance over t h e S o v i e t l e a d e r s h i p during A p r i l and May 1957, t h e first of these a l t e r n a t i v e s seems more likely. Khrushchev's lengthy speech a t t h e Supreme S o v i e t meeti n g i n May w a s devoted p r i m a r i l y t o t h e i n d u s t r i a l reorganizat i o n b u t a l s o contained some c l u e s concerning economic p o l i c y . The propaganda l i n e s on primacy of heavy i n d u s t r y and catching up w i t h t h e West i n per capita o u t p u t were a g a i n emphas i z e d I n a d d i t i o n , Khrushchev e x p l i c i t l y criticized t h e Current Planning Commission under Pervukhin f o r t h e way i n which the 1957 p l a n for t h e coal i n d u s t r y w a s formulated. According t o Khrushchev, a p l a n had been worked o u t i n 1956 t o improve c o a l mining i n the Donbas, b u t Ira f e w months l a t e r i t w a s a r b i t r a r i l y v i o l a t e d d u r i n g t h e d r a f t i n g of a new p l a n for 1957." Khrushchev a l s o c r i t i c i z e d t h e planning organs, though n o t s p e c i f i c a l l y i n connection w i t h t h e 1957 p l a n , f o r "agreeing t o o e a s i l y . t o s u p e r f l u o u s cap1t a l investment It These criticisms are t h e b e s t evidence t o date t h a t t h e regime r e g a r d s a t l e a s t some elements of the 1957 p l a n w i t h disf a v o r

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I
The May Supreme S o v i e t meeting gave no c o n s i d e r a t i o n t o t h e f i v e - y e a r p l a n , aIthough last December t h e p a r t y c e n t r a l committee i n s t r u c t e d t h a t t h e f i n a l v e r s i o n of t h e p l a n be p r e s e n t e d t o t h e Supreme S o v i e t by mid-1957. The reduced 1957 p l a n makes t h e o r i g i n a l 1960 goal f o r i n d u s t r i a l o u t p u t almost impossible t o f u l f i l l , b u t evidence as of May 1957 p 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 n o t 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 reduced. O n . t h e one hand, i n a d d i t i o n to-showing s i g n s of 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 l a n , s e v e r a l S o v i e t l e a d e r s have r e c e n t l y made very o p t i m i s t i c s t a t e m e n t s on t h e USSR's p r o s p e c t s f o r o v e r t a k i n g t h e U n i t e d S t a t e s ' economy. Bulganin, speaking t o a group of v i s i t i n g American women on 5 May, made an off-the-cuff comment t h a t t h e S o v i e t Union could c a t c h up w i t h t h e United States in another 40 y e a r s . Khrushchev, speaking on 22 May t o a g r i c u l t u r a l workers in Leningrad, boasted t h e USSR could o v e r t a k e t h e United S t a t e s in t h e o u t p u t of meat and d a i r y products by 1 9 6 o ' o r 1961, despite p r e d i c t i o n s of "some economists" i n the USSR t h a t t h i s goal could o n l y be reached by 1975. T h i s w i l l i n g n e s s t o f l o u t t h e views of e x p e r t s i n one f i e l d s u g g e s t s t h a t Khrushchev would a l s o oppose e f f o r t s i n other f i e l d s t o reduce p l a n g o a l s . S o v i e t newspapers i n r e c e n t months have also restated 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 i n g t h o s e f o r c o a l , p i g iron, s t a t e housing, i n t e r n a l t r a d e , petroleum and l i g h t i n d u s t r y .
I

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

.I

On t h e o t h e r hand, according t o an e a r l y May report

I

I,
. ......;,> . .. .. ..."......

. .

the l-962~ n d u s t r i a l production t a r g e t ' h a d 1 een c u t from 16s d e r c e n t of 1955 t o a new t a r g e t of 158 perc e n t . I n a d d & t i o 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 of from 5 t o 10 p e r c e n t i n five-year p l a n i n d u s t r i a l goals of t w o i n d i v i d u a l republics-Latvia and Uzbekistan-in April and mid-May r e s p e c t i v e l y . In l a t e A p r i l , an a r t i c l e in the p a r t y j o u r n a l Kommunist, by a s e n i o r economist df t h e State Planning Commission, a l s o i m p l i e d t h a t t h e cadital investment target of t h e S i x t h Five-Year Plan had been c u t . C e n t r a l l y planned investment w a s o r i g i n a l l y scheduled t o be 990 b i l l i o n r u b l e s during t h e p l a n p e r i o d (1956-1960). C a l c u l a t i o n s based on data i n t h e Kommunist a r t i c l e i n d i c a t e t h a t such investment has been reduced 6 p e r c e n t t o 930 b i l l i o n r u b l e s . T h i s probably s i g n i f i e s a r e a l r e d u c t i o n i n planned investment, b u t n o t c o n c l u s i v e l y 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 ( t h o s e scheduled by t h e c e n t r a l planning bodies and carried as p a r t of t h e n a t i o n a l economic plan) may c o n s t i t u t e a smaller p r o p o r t i o n of t o t a l investment under t h e r e o r g a n i z e d a d m i n i s t r a t i v e s t r u c t u r e of i n d u s t r y . I
I

27
I
I
I
I

While the c o n f l i c t i n g evidence on t h e five-year plan a l l o w s no conclusion as t o t h e p l a n ' s f i n a l form, i t s u g g e s t s t h a t p r e s s u r e s i n f a v o r of a s u b s t a n t i a l l y reduced p l a n and p r e s s u r e s f o r o p t i m i s t i c , exceedingly a m b i t i o u s p l a n s cont i n u e to e x i s t s i d e by s i d e . Since Khrushchev, an apparent p r o t a g o n i s t of ambitious p l a n s , has modified h i s own previous p o s i t i o n s on 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 and on s e v e r a l o t h e r s u b j e c t s t h i s s p r i n g , he c o u l d do t h e same on t h e f i v e year p l a n , probably without loss of face or i n f l u e n c e , i f he f e l t such a move necessary i n o r d e r t o o b t a i n agreement among the c o l l e c t i v e leadership.

, -

28

'

IV.

Economic Reorganization: and m a n n i n g

E f f o r t s t o Improve Management

..,

The second complex of economic i s s u e s w i t h which t h e S o v i e t regime concerned i t s e l f from December 1956 through May 1957 was r e o r g a n i z a t i o n and d e c e n t r a l i z a t i o n . Unwilling t o face t h e prospect of slower heavy i n d u s t r i a l growth, o r perhaps unable t o reach a s t a b l e agreement t h a t t h i s w a s t h e only feasible way t o e l i m i n a t e s e r i o u s s t r a i n s in t h e economy, t h e leaders had been s t r i v i n g s i n c e S t a l i n ' s death t o i n c r e a s e economic e f f i c i e n c y and improve management so a s t o a c h i e v e a l l - t h e i r ambitious g o a l s simultaneously.

An earlier spate of l ' e f f i c i e n c y measurest1 appeared, f o r example, i n mid-1955. In May of t h a t year, t h e S t a t e Planning Commission (Gosplan) was s p l i t i n t o s e p a r a t e bodies f o r longrange and c u r r e n t planning, and new, high-level government committees f o r wages and l a b o r and f o r i n t r o d u c i n g new technology i n t o t h e ecsnomy were established. A t t h e J u l y 1955 meeting of t h e c e n t r a l committee, a major program was launched t o modernize S o v i e t i n d u s t r y and i n c r e a s e i t s e f f i c i e n c y . a major z a t i o n and r e a u c t i o n in r o r c e in tn t r y of S t a t e Control, and t h e c o n t i n u i n g d r i v e t o reduce bureaucracy throughout t h e economy was accelerated. I n a d d i t i o n , v a r i o u s i 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 specialized ones from 1954 through e a r l y 1956 t o improve management and i n c r e a s e e f f i c i e n c y . A s i m i l a r spate of more d r a s t i c measures, some even r e v e r s i n g s e v e r a l of t h o s e l i s t e d above, were adopted o r proposed from December 1956 through March 1957.
... .

T h e " e f f i c i e n c y measuresf1 of t h e r e c e n t p e r i o d were intended t o a c h i e v e a real degree of d e c e n t r a l i z a t i o n , a l o n g geographic l i n e s , of a u t h o r i t y and r e s p o n s i b i l i t y f o r implementing economic p l a n s , and a semblance of d e c e n t r a l i z a t i o n of t h e r e s p o n s i b i l i t y for f o r m u l a t i n g economic p l a n s . A t t h e same t i m e , a l l p u b l i c s t a t e m e n t s d u r i n g t h i s p e r i o d emphasized that c e n t r a l c o n t r o l was t o be r e t a i n e d over both t h e f o r m u l a t i o n and implementation of b a s i c economic p o l i c i e s . The mere statement of these aims shows t h e dilemma which faces t h e regime and which none of t h e measures adopted d u r i n g t h i s p e r i o d answered very p r e c i s e l y : how much real d e c e n t r a l i z a t i o n can be allowed without reducing t h e a b i l i t y of t h e cent r a l a u t h o r i t y t o implement n a t i o n a l p o l i c y ?

P r e s e n t information on S o v i e t e f f o r t s toward economic reo r g a n i z a t i o n from December through March i n d i c a t e s t h a t t h e regime faced two s p e c i f i c problems:

29

. . ... .. ,

(1) Should a r e o r g a n i z a t i o n of i n d u s t r i a l management be carried o u t wholly along geographic l i n e s , o r should t h e a u t h o r 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 d m i n i s t r i e s be strengthened? Once t h i s q u e s t i o n had been dec i d e d i n f a v o r of geographic d e c e n t r a l i z a t i o n , should economic r e g i o n s 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 i s i o n s should t h e r e g i o n s be set up r e p u b l i c s , krais and oblasts-or according t o economic l o g i c , i n c o r p o r a t i n g 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 and s e r v i c e s i n one region? (2) How should t h e planning bodies, s t a t e c o n t r o l app a r a t u s , trade unions and f i n a n c i a l organs be reorganized so as t o a s s u r e c e n t r a l c o n t r o l ? W h a t r o l e should t h e Communist P a r t y a p p a r a t u s play?

.. . .. .

.. . . . .. ..

A.

Background:

Before t h e December Plenum

One of t h e methods by which t h e regime attempted t o increase i n d u s t r i a l e f f i c i e n c y from 1954 through e a r l y 1956 was t o s p l i t up e x i s t i n g i n d u s t r i a l and c o n s t r u c t i o n m i n i s t r i e s , forming new and more specialized c e n t r a l m i n i s t r i e s . The most r e c e n t example of t h i s w a s t h e S o v i e t press announcement of 22 January 1956 that t h e M i n i s t r y of Machinery and I n s t r u ments was being divided i n t o 8 M i n i s t r y of I n s uments and Automation and a Ministry of Machine Building. 16 During t h e same p e r i o d , there w a s a c o u n t e r t r e n d of t r a n s f e r r i n g some d e t a i l s 00 planning and a d m i n i s t r a t i o n t o t h e union r e p u b l i c s and t h e i r m i n i s t e r i a l apparatus. A government decree of 4 May 1955, f o r example, t r a n s f e r r e d t o t h e r e p u b l i c s numerous detailed q u e s t i o n s of planning in t h e budgetary and i n v e s t ment f i e l d s . 1 9 I n a d d i t i o n , in 1954 and 1955 s e v e r a l a l l Union m i n i s t r i e s were changed t o Union-Republic ones, and c o u n t e r p a r t m i n i s t r i e s set u p i n c e r t a i n r e p u b l i c s . A f t e r e a r l y 1956 t h e second of t h e s e t r e n d s began t o win o u t over t h e first. A government decree of 30 May transf e r r e d from USSR m i n i s t r i e s t o t h e corresponding r e p u b l i c m i n i s t r i e s a large number of e n t e r p r i s e s in t h e food, l i g h t , t e x t i l e , b u i l d i n g materials, paper and o t h e r i n d u s t r i e s , and a l s o t h e r e t a i l trade network. A t t h e same t i m e t h e USSR Ministries of Highway Transport and I n l a n d Shipping were a b o l i s h e d , and t h e M i n i s t r i e s of L i g h t I n d u s t r y and T e x t i l e I n d u s t r y were merged.20 The l a t t e r two i n d u s t r i e s had been d i v i d e d i n t o two m i n i s t r i e s less than a year earlier. The head of t h e newly combined M i n i s t r y of L i g h t I n d u s t r y w a s N S. Ryzhov, . who w a s l a t e r , i n February 1957, s e n t o u t as ambassador t o Turkey 21

. ....

..

.... .

30

*_

As a r e s u l t of these and earlier measures s i n c e S t a l i n ' s death, t h e S o v i e t Union could claim a t t h e end of 1956 t h a t about 15,000 p l a n t s had been s h i f t e d from c e n t r a l government

t o r e p u b l i c j u r i s d i c t i o n and that t h e p r o p o r t i o n of i n d u s t r i a l o u t p u t produced by p l a n t s s u b o r d i n a t e t o t h e r e p u b l i c s rather than t h e USSR governme had i n c r e a s e d from 31 p e r c e n t i n 1953 t o 55 p e r c e n t i n 1956. Much of t h i s t r a n s f e r of power was o n l y nominal, however, and in many i n s t a n c e s meant merely t h e a d d i t i o n of r e p u b l i c m i n i s t r i e s as a n o t h e r l i n k i n t h e c h a i n of command between USSR m i n i s t r i e s i n Moscow and t h e individual enterprises.

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

.... . .

Some emphasis on t h e geographic or r e g i o n a l approach t o economic o r g a n i z a t i o n had been e v i d e n t in t h e o r i g i n a l d r a f t of t h e S i x t h Five-Year Plan. The d r a f t ordered that a longr a n g e p l a n be drawn up "for s p e c i a l i z a t i o n and co-operation in i n d u s t r y i n conformity w i t h t h e economic r e g i o n s of t h e . country." In t h e c o n s t r u c t i o n f i e l d , t h e d r a f t p l a n called f o r t h e merging of small b u i l d i n g o r g a n i z a t i o n s i n t o territ o r i a l b u i l d i n g a g e n c i e s , l i k e t h o s e established i n 1954-55 in Moscow, Leningrad and Kiev.

In 'late 1956 s e v e r a l e v e n t s occurred which i n d i c a t e d t h a t t h e regime w a s devoting i n c r e a s e d a t t e n t i o n t o t h e q u e s t i o n s of central c o n t r o l over t h e economy and economic r e g i o n s a s a basis f o r a d m i n i s t e r i n g i n d u s t r y . On 21 November, f i r s t deputy premier and former f o r e i g n m i n i s t e r V M. Molotov w a s . appointed m i n i s t e r of s t a t e c o n t r o l . In t h e preceding y e a r s t h i s m i n i s t r y had l o s t most of i t s earlier powers, except, t h a t
of a u d i t i n g t h e f i n a n c i a l r e c o r d s of enterprises. S h o r t l y a f t e r Molotov took over, however, 1S o v i e t press s t a t e m e n t s began u u wuw briar. sue mi61C9try re-emerging as a powerful i n s t r u m e n t of c e n t r a l i z e d a u t h o r i t y . The m i n i s t r y appeared t o be extending its powers from t h o s e of a f i n a n c a a l watchdog t o i n s p e c t i n g t h e implementation of government o r d e r s i n o t h e r f i e l d s . One p r e s s a r t i c l e s u g g e s t s that t h e m i n i s t r y a l s o began t o l e v y p e n a l t i e s on enterprises and o r d e r the dismissal of c e r t a i n of cialspowers which t h e m i n i s t r y had l o s t a s e a r l y as 1948.

'

,...

. ..._.... .. ......... .., ....I . .

84

In mid-December, j u s t b e f o r e t h e December plenum, a n a r t i c l e d i s c u s s i n g t h e problems of economic regi ns a eared Tg in t h e j o u r n a l of t h e S t a t e Planning C o m m i ~ s i o n . ~ ~ f s a r t i c l e , f o o t n o t e d as being " f o r d i s c u s s i o n , '* s t r o n g l y emphasized t h e need t o form economic r e g i o n s on a " s c i e n t i f i c " basis, and c o n t a i n e d only b r i e f r e f e r e n c e s t o t h e need f o r c o n s i d e r i n g "the L e n i n i s t n a t i o n a l i t y p o l i c y , '' i e . , , the e x i s t i n g p o l i t i c a l - a d m i n i s t r a t i v e d i v i s i o n s . The a u t h o r stated t h a t two basic c r i t e r i a f o r an economic r e g i o n should be

31

. ..

(1) l a r g e - s c a l e s p e c i a l i z a t i o n on a c e r t a i n t y p e o r t y p e s of production, and (2) "economic completeness," i.e., a n adequate base of f u e l s , machine b u i l d i n g , a g r i c u l t u r e , consumer goods and t r a n s p o r t t o support t h e l a r g e - s c a l e o u t p u t of t h o s e produ c t s i n which t h e r e g i o n s p e c i a l i z e d . The a r t i c l e noted that a t p r e s e n t t h e a d m i n i s t r a t i o n of t h e economy must be based on e x i s t i r i g p o l i t i c a l a d m i n i s t r a t i v e u n i t s , b u t expressed t h e hope t h a t in t h e f u t u r e , changes of a d m i n i s t r a t i v e - t e r r i t o r i a l d i v i s i o n s would be p o s s i b l e .
t h e S o v i e t Union i n t o economic r e g i o n s (there were 13 a t t h e

U p t o t h i s t i m e , although t h e planning bodies had s p l i t

end of 1956), these r e g i o n s w e r e used o n l y f o r planning purposes. T h i s a r t i c l e d i d n o t imply t h a t t h e p r e s e n t s y s t e m of economic a d m i n i s t r a t i o n through m i n i s t e r i a l or e x i s t i n g p o l i t i c a l - t e r r i t o r i a l d i v i s i o n s would be changed in t h e n e a r f u t u r e . Some pressures in t h i s d i r e c t i o n , however, were r e v e a l e d in t h e Soviet press d u r i n g t h e f a l l of 1956. The director of t h e U r a l Machine Building P l a n t in Sverdlovsk suggested In October t h a t "the t i m e had f i n a l l y come t o create i n economic r e g i o n s organs which would s t u d y production ties" of e n t e r p r i s e s w i t h i n t h e r e g i o n and attempt t o induce more s p e c i a l i z a t i o n and co-o e r a t i o n among e n t e r p r i s e s . 25 On 21 December, a s e c r e t a r y of t h e p a r t y committee i n a Leningrad i n d u s t r i a l p l a n t wrote: "Perbaps it would be expedient t o combine t h e v a r i o u s branches of industry i n t o a s i n g l e organ.... I t would a l s o be w e l l t o c o n s i d e r terr o r i a l combination of enterprises in a given economic region."

48

..:..;..:.:. .. . . . .

B.

The December Plenum

The d e c i s i o n of t h e December plenum on improving economic management admitted that " s u b s t a n t i a l shortcomings" e x i s t e d in S o v i e t economic planning, p a r t i c u l a r l y c u r r e n t planning. The planning bodies were accused of i n a d e q u a t e l y s t u d y i n g c o n d i t i o n s in i n d i v i d u a l i n d u s t r i e s and of "maintaining poor c o n t a c t " w i t h r e p u b l i c s , krais, o b l a s t s and economic e n t e r p r i s e s . T h e p l a n n e r s p e r m i t t e d " s e r i o u s omissions and e r r o r s " in d r a f t i n g

32

p l a n s , and d i d not "cope w i t h t h e i r d u t i e s i n checking on f u l f i l l m e n t . " As i t s formula f o r improving c e n t r a l c o n t r o l and a t t h e same t i m e d e c e n t r a l i z i n g a u t h o r i t y t o i n c r e a s e e f f i c i e n c y i n implementing p l a n s , t h e plenum i s s u e d t h e following orders:
. . . . ..

(1) The Current Planning Commission (which was reorganized under Pervukhin on t h e following day) w a s t o r e c e i v e more power and be given new "operative" func-

.., ...

t i o n s t o a s s u r e f u l f i l l m e n t of state p l a n s and t h e c o r r e c t d i s t r i b u t i o n of material s u p p l i e s . The p a r t y a p p a r a t u s and t h e trade unions were ordered t o p l a y a larger r o l e i n improving economic management, w i t h t h e p a r t y , as a l w a y s , t o be responsi b l e f o r t h e " s e l e c t i o n , promotion, and c o r r e c t placement of personnel.
(2) The economic powers of r e p u b l i c s were t o be extended to " e l i m i n a t e exc essi ve c e n t r a l i zat i on" and g i v e t h e r e p u b l i c s more c o n t r o l over f u l f i l l i n g s t a t e p l a n s . E f f o r t s were t o be made t o b r i n g a g e n c i e s of t h e c e n t r a l managerial a p p a r a t u s into t h e r e g i o n s where corresponding branches of t h e economy were l o c a t e d , and t h e co-ordination of a c t i v i t y w i t h i n economic r e g i o n s w a s t o be improved.

(3) A t t h e same t i m e , however, t h e plenum called f o r a " f u r t h 9 6 e x t e n s i o n of t h e powers of m i n i s t r i e s . lt

I t should be noted t h a t t h e i n s t r u c t i o n s of t h e c e n t r a l committee were wholly u n c l e a r i n t h e matter of drawing a l i n e between q e n t r a l a u t h o r i t y on oae hand. and t h e power of r e p u b l i c s and i n d i v i d u a l m i n i s t r i e s on t h e o t h e r . Both were t o be increased. Furthermore, these d i r e c t i v e s d i d n o t r e s o l v e t h e i n h e r e n t c o n f l i c t between f u r t h e r widening t h e power of r e p u b l i c s and i n c r e a s i n g t h e a u t h o r i t y of i n d i v i d u a l central ministries,

According t o a report on t h e December plenum from a S o v i e t s o u r c e b e l i e v e d r e l i a b l e , 9 t h e defects of S o v i e t planning i n 1956 w e r e a p p a r e n t l y under such c r i t i c i s m t h a t t h e p r i n c i p l e s of planning came under fire. According t o t h e secondary s o u r c e through whom t h i s r e p o r t came, Molotov "apparently made some apology" f o r t h e p r i n c i p l e s of planning a t t h e plenum, and

f o r p r a c t i c a l purposes equated planning w i t h t h e w i l l of t h e p a r t y . The a b i l i t y of t h e p a r t y , through planning, t o conc e n t r a t e r e s o u r c e s f o r t h e purpose of a t t a i n i n g any desired p o l i c y o b j e c t i v e w a s claimed t o be t h e maJor r e a s o n f o r t h e s u p e r i o r i t y of t h e s o c i a l i s t s y s t e m over t h e c a p i t a l i s t system, T h i s r e p o r t appears p l a u s i b l e , s i n c e t h e S o v i e t press, s e v e r a l t i m e e a r l y i n 1957 reiterated t h e s u p e r i o of s o c i a l i s t planning o v e r capitalism i n similar words. SAtY
The same s o u r c e r e p o r t e d t h a t a t t h e plenum h a r s h c r i t i cism a r o s e a g a i n s t "departmentalism," o r t h e b u r e a u c r a t i c barriers between m i n i s t r i e s which s e v e r e l y hindered specializat i o n and co-operation among i n d i v i d u a l p l a n t s . T h i s r e s u l t e d i n d u p l i c a t i o n of production, c r o s s - h a u l i n g of f r e i g h t between d i f f e r e n t r e g i o n s , and wastage of c a p i t a l investment funds. Khrushchev himself r e p o r t e d l y made a sharp attack on t h i s problem, and t h e c e n t r a l committee ordered a n i n v e s t i g a t$on of ways t o reduce t h e barriers. According t o t h e source, t h e merging of related m i n i s t r i e s w a s considered and rejected as a s o l u t i o n in t h e weeks f o l l o w i n g t h e plenum. The answer which w a s i n c r e a s i n g l y favored w a s r e p o r t e d l y a s e r i o u s reduct i o n i n t h e v e r t i c a l , i.e., m i n i s t e r i a l , c h a i n of command, and a g r e a t e r emphasis on r e g i o n a l co-operation and s p e c i a l i z a t i o n .

From t h e December plenum t o t h e Supreme S o v i e t meeting i n e a r l y F e b r u a r y , discuesions i n t h e S o v i e t press on r e o r ganizing planning and economic a d m i n i s t r a t i o n were g e n e r a l l y c o n s i s t e n t w i t h t h e information p r e s e n t e d above on t h e December plenum. A t t h e beginning of January, a measure was i n t r o d u c e d i n c r e a s i n g t h e a u t h o r i t y of republics over t h e d i s t r i b u t i o n of meat and d a i r y products produced w i t h i n t h e i r territories, 3o and e d i t o r i a l s i n both Pravda and I z v e s t i a d u r i n g t h e month commented on t h e need t m e a s e t h e powers of r e p u b l i c s and local s o v i e t s . Khrushchev, perhaps a l l u d i n g 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 then being planned behind t h e scenes, stated i n a 13 January speech i n t h e Uzbek SSR that shortcomings i n economic management s h o u l d be exposed and removed f'more rapidH e emphasized t h e need t o "act l i k e a surgeon who takes ly." a s h a r p k n i f e and o p e r a t e s on a man's body t o c u t o u t malignant growths ''31

.. .

In mid-January, F R. Kozlov, first s e c r e t a r y of t h e . Leningrad Oblast p a r t y committee who w a s appointed a c a n d i d a t e m e m b e r of t h e p a r t y presidium in Moscow one month l a t e r , d i s cussed a t a p a r t y meeting t h e lack of co-operation between m i n i s t r i e s and t h e need f o r t h e planning bodies t o c o n s i d e r more f u l l y t h e p o t e n t i a l i t i e s of economic r e g i o n s i n formulating plans.32 A t t h e end of January, a n a r t i c l e appeared i n t h e State Planning Commission's monthly j o u r n a l c a l l i n g f o r

34

.............. . . ..
I .

The complaints of d e p u t i e s concerning e x i s t i n g defects i n i n d u s t r i a l a d m i n i s t r a t i o n and planning c o n s t i t u t e d a c a t a l o g u e of t h i n g s which have gone wrong in t h e S o v i e t bureaucracy.. According t o a speaker from t h e Ukrainian SSR, f o r ' . example, t h e S o v i e t government in 1951 and a g a i n in 1952 decreed t h e r e c o n s t r u c t i o n and enlargement of t'he Odessa water supply system, t h e c o s t t o .be shared by " i n t e r e s t e d m i n i s t r i e s . " This j o b w a s only half f i n i s h e d by e a r l y 1957 because many of t h e m i n i s t r i e s d i d not do t h e i r parts of t h e work. Again, a r e p r e s e n t a t i v e f r o m Moscow described t h e a c t i v i t i e s of t h e M i n i s t r y of Chemical I n d u s t r y , which had s p e n t seven y e a r s and over 100,000,000 r u b l e s b u i l d i n g a p l a s t i c s f a c t o r y . . T h i s p l a n t was not y e t f i n i s h e d , and i t now appeared there was no need f o r i t . Nearby was a similar, a l r e a d y f u n c t i o n i n g p l a n t , w i t h a " g r e a t r e s e r v e " of unused production c a p a c i t y . T h i s s i t u a t i o n had a r i s e n because t h e t w o p l a n t s belonged t o d i f f e r e n t m i n i s t r i e g , which obviously were n o t co-operating w i t h one a n o t h e r f u l l y . A s a f i n a l example,a deputy from t h e Georgian SSR r e v e a l e d t h a t t h e USSR M i n i s t r y of Building Materials had i s s u e d a cement production p l a n f o r t h e Rustavi cement p l a n t a year b e f o r e t h e e n t e r p r i s e w a s even completed and r e a d y t o s t a r t production.36

D.

The February Plenum

been used p r e v i o u s l y t o some e x t e n t f o r planning purposes, and in t h e weeks b e f o r e and f o l l o w i n g t h e December plenum a p p a r e n t l y r e c e i v e d i n c r e a s i n g s t u d y and support. The proposed o r g a n i z a t i o n of management r e p r e s e n t e d a v i c t o r y f o r t h e r e g i o n a l concept over t h e s p e c i a l i z e d m i n i s t e r i a l conc e p t and w a s b y far t h e most radical " e f f i c i e n c y measurevf f o r t h e S o v i e t economy s i n c e S t a l i n ' s death. The confusion and temporary r e d u c t i o n of output which could r e s u l t showed t h a t t h e regime f e l t d r a s t i c , and r i s k y , measures were needed in its e f f o r t t o a t t a i n t h e v e r y ambitious i n d u s t r i a l g o a l s on which p r o g r e s s w a s already lagging, and, a t t h e same t i m e , t o meet added burdens from abroad and, i n some degree, press u r e s from t h e consumer.
The r e s o l u t i o n contained t h e f o l l o w i n g main p r o v i s i o n s :
(1) I n d u s t r i a l management should be based on a combination of c e n t r a l i z e d government a d m i n i s t r a t i o n "and a greater r o l e

The d e c i s i o n of t h e February plenum w a s t h e first off i c i a l a t t e m p t t o o r g a n i z e economic management on a r e g i o n a l basis. A s noted above, however, t h e r e g i o n a l concept had

f o r l o c a l economic, p a r t y , and trade union bodies," The c e n t e r of a d m i n i s t r a t i o n

"must be s h i f t e d t o t h e local areas," and management should be organized "according t o t 4 e main economic areas.'' S i n c e t h e e x i s t i n g m i n i s t e r i a l s t r u c t u r e had l e d t o i n c r e a s i n g departmental barriers as t h e economy became more complex, "new forms must be elaborated...b@sed on t h e terr i t o r i a l principle. "
(2) In o r d e r t o s t r e n g t h e n c e n t r a l c o n t r o l , t h e r o l e of Gosplan (long-range planning) must be "enhanced, '' nnd Gosekonomkommissia'(current planning) should be reorganized so a s n o t t o "duplicate" Gosplan's work o r i n t e r f e r e i n "admini s t r a t i v e functions."

(3) A new organ of t h e S o v i e t government must be formed t o a s s u r e more eff e c t i v e i n t r o d u c t i o n of new technology i n t o t h e economy.
(4) The r e o r g a n i z a t i o n w i l l create "still greater p o s s i b i l i t i e s f o r t h e r e a l l y c r e a t i v e p a r t i c i p a t i o n " of " p a r t y , local government, trade union, and Komsomol org a n i z a t i o n s i n economic management. " Work of s t a t e c o n t r o l bodies should be improved, both " i n t h e c e n t e r and on t h e spot."

The p a r t y presidium and t h e gov(5) ernment's Council of M i n i s t e r s were i n s t r u c t e d t o p r e p a r e d e t a i l e d p r o p o s a l s on t h e r e o r g a n i z a t i o n and t o p r e s e n t them t o t h e ne-t meeting of t h e Supreme S o v i e t .
Although t h e kind of d e c e n t r a l i z a t i o n called f o r by t h i s r e s o l u t i o n w a s foreshadowed w i t h r e a s o n a b l e accuracy by S o v i e t p r e s s s t a t e m e n t s and o t h e r evidence accumulated s i n c e t h e December plenum, t h e changes made i n t h e c e n t r a l planning and control bodies were n o t . A s noted above, a l l evidence through January, and a t t h e Supreme Soviet meeting i n e a r l y February, i n d i c a t e d t h a t Gosekonomkommissia, t h e c u r r e n t planning body under Pervukhin, w a s t o be etrengthened and given o p e r a t i o n a l r e s p o n s i b i l i t i e s f o r t h e implementation of p l a n s . A t t h e February plenum, however, t h e c u r r e n t planning group was ordered not t o d u p l i c a t e t h e work of Gosplan and not t o i n t e r f e r e is t h e a c t u a l a d m i n i s t r a t i o n of t h e ecoqomy.

37

The i n s t r u c t i o n of t h e plenum t o s e t up a new government organ t o a s s u r e t h e i n t r o d u c t i o n of new technology i n t o t h e economy a l s o fits t h i s p a t t e r n of reducing t h e c u r r e n t planning body's r o l e . In May 1955, when t h e o r i g i n a l State Planning Commission w a s s p l i t i n t o long-range and c u r r e n t planning organs, a S t a t e Committee for New Technology w a s a l s o set up. By t h e end of 1956 i t was a p p a r e n t l y f e l t t h a t t h i s committee was n o t a d e q u a t e l y f u l f i l l i n g its f u n c t i o n s , s i n c e t h e December plenum s t a t e d t h a t "a major task" of t h e c u r r e n t planning group w a s t o a s s u r e t h e i n t r o d u c t i o n i n t o t h e economy of new technology. A t t h e February plenum, t h e formation of a new body w a s ordered i n s t e a d .

:I

Immediately f o l l o w i n g t h e February plenum, i t became i n c r e a s i n g l y c l e a r t h a t t h e proposed r e o r g a n i z a t i o n would basically f o l l o w t h e t e r r i t o r i a l boundaries of e x i s t i n g rep u b l i c s , k r a i s and o b l a s t s , w i t h perhaps a f e w mergers of o b l a s t s whose economies were poorly developed. Pravda and I z v e s t i a editorials both emphasized t h e need t o -then %he r i g h t s of r e p u b l i c s during t h i s p e r i o d , p r a i s i n g in t h i s connection t h e c o r r e c t n e s s of t h e " t e n i n i s t n a t i o n a l i t y policy.t' On 18 February, a n o t h e r a r t i c l e on economic r e g i o n s was published i n t h e j o u r n a l of t h e S t a t e Planning Commission,37 labeled " f o r d i s c u s s i o n , " as w a s t h e a r t i c l e i n December published by t h e same j o u r a a l . ( s e e above). The new a r t i c l e emphasized much more s t r o n g l y t h a n t h e D e c e m b e r one t h e need t o p r e s e r v e t h e p r e s e n t n a t i o n a l l i n e s i n t h e USSR, and s a i d , "It is impossible t o regard a s j u s t i f i e d . . . t h e e s t a b l i s h m e n t of economic r e g i o n s in t h e USSR in which s e v e r a l r e p u b l i c s a r e . i n c l u d e d . " The December a r t i c l e had recommended merging i n t o l a r g e r economic r e g i o n s some of t h e smaller r e p u b l i c s .

E .

Khrushcheb's 'Theses

On 27 FeQruary.1957, candidate m e m b e r of t h e presidium r e o r g a n i z a t i o n t h a t "before t h i s q u e s t i o n comes up b e f o r e t h e Supreme S o v i e t , t h e theses of t h r e p o r t w i l l be published and submitted f o r wide d i s c u s s i o n . 1 3 A month l a t e r , on 30 18 March, t h e S o v i e t p r e s s published f o r p u b l i c d i s c u s s i o n Khrushchev's "theses" on t h e r e o r g a n i z a t i o n , apd s e v e r a l days l a t e r announced t h a t a Supreme S o v i e t meeting would begin on P u b l i c a t i o n of such theses 7 May t o a c t on t h e proposals. on important s u b j e c t s is unusual b u t n o t unique in S o v i e t h i s t o r y , and is intended t o g i v e t h e appearance of democracy as w e l l as t o s o l i c i t s u g g e s t i o n s f o r c a r r y i n g o u t major changes of p o l i c y or methods of o r g a n i z a t i o n and a d m i n i s t r a t i o n . S i m i l a r "theses" preceded t t e adoption of r e v i s e d s t a t u t e s of t h e Communist P a r t y by t h e 1 9 t h p a r t y c o n g r e s s

Y A. F u r t s e v a stated in a speech in Moscow on t h e proposed .

38
I

....

i n 1952, and a similar "wide, public" d i s c u s s i o n was held bef o r e t h e USSR c o n s t i t u t i o n w a s approved i n 1936, The d r a f t s of f i v e - y e a r p l a n s a l s o have normally been published f o r d i s c u s s i o n a month o r so b e f o r e formal adoption by t h e p a r t y .

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

As mentioned above, there have been r e p o r t s that 'Saburov a c t u a l l y d r a f t e d Khrushchev's lltheses.ll If t h i s was t h e case, Saburov may have proposed t h e r e o r g t m i z a t i o n p l a n i n e a r l y , February as a f e a s i b l e way of e l i m i n a t i n g b u r e a u c r a t i c "adm i n i s t r a t i v e deficienc%es" which he may have contended in D e c e m b e r were t h e real r e a s o n s why r e a l $ a a t i o n of t h e S i x t h Five-Year Plan w a s i n jeopardy.
The t h e s e s called for t h e a b o l i t i o n of c e n t r a l i n d u s t r i a l and c o n s t r u c t i o n m i n i s t r i e s and t h e formation of new " n a t i o n a l economic c o u n c i l s " which would be r e s p o n s i b l e f o r a d m i n i s t e r i n g i n d u s t r y w i t h i n geographic areas. The areas would be b a s i c a l l y t h e same as e x i s t i n g p o l i t i c a l - t e r r i t o r i a l d i v i s i o n s , such a s t h e B a s h k i r autonomous r e p u b l i c , Sverdlovsk O b l a s t and Chelyabinsk Oblast. The powers of t h e v a r i o u s r e p u b l i c governments would be i n c r e a s e d markedly under t h e r e o r g a n i z a t i o n , and t h e r e p u b l i c s , t o g e t h e r w i t h t h e s u b o r d i n a t e " n a t i o n a l economic would have much g r e a t e r r e s p o n s i b i l i t y t h a n p r e v i o u s l y f o r t h e implementation of t h e n a t i o n a l economic p l a n which had been approved by Moscow. The n a t i o n a l economic c o u n c i l s (called Sovnarkhozes) would e x e r c i s e o p e r a t i o n a l cont r o l over i n d i v i d u a l e n t e r p r i s e s in t h e i r areas.
The p r o p o s a l s a l s o called f o r major changes in t h e cent r a l government and planning apparatus. Gosplan, s i n c e 1955 r e s p o n s i b l e o n l y f o r long-range planning, would be given most of t h e planning and o p e r a t i o n a l r e s p o n s i b i l i t i e s of t h e curr e n t planning body, and t h e l a t t e r would be a b o l i s h e d . T h i s proposal went beyond t h e i n s t r u c t i o n s of t h e February plenum t h a t t h e c u r r e n t planning group n o t d u p l i c a t e Gosplan's work, and was t h e f i n a l s t e p is c u t t i n g down Pervukhin's committee. I n i n t e g r a t i n g t h e economic p l a n s of t h e v a r i o u s r e p u b l i c s , Gosplan should "nip i n t h e bud" a l l attempts t o u s e r e s g u r c e s f o r l o c a l purposes " t o t h e detriment of t h e i n t e r e s t s of t h e s t a t e as a

.. . ..

., . . . . . ....

The theses a l s o recommended t h a t t h e USSR Council of Ministers be r e o r g a n i z e d t o i n c l u d e t h e chairman of each r e p u b l i c ' s Council of M i n i s t e r s . In a d d i t i o n , t h e r o l e s of t h e p a r t y apparatus and trade union organs i n a s s u r i n g t h e implementation of s t a t e p l a n s were t o be i n c r e a s e d under t h e r e o r g a n i z a t i o n . The l o c a l p a r t y organs would b e n e f i t p a r t i c u l a r l y from a r e g i o n a l f o r m of management, s i n c e t h e e x i s t i n g S t r u c t u r e , under which

... , ..

39

i n d i v i d u a l p l a n t s o f t e n had d i r e c t l i n e s of command t o ministries i n Moscow, had "deprived" l o c a l p a r t y organs "of e x e r c i s i n g more a c t i v e i n f l u e n c e upon t h e work of e n t e r p r i s e s . '* Some p a r t s of Khrushchev's theses i n d i c a t e d t h a t cont r o v e r s y had occurred i n t h e i r formulation. According t o t h e theses, "some comrades" were proposing t h e formation of special committees under t h e USSR Council of M i n i s t e r s t o have r e s p o n s i b i l i t y over key branches of heavy i n d u s t r y . Earlier i n March a n o f f i c e r / \ that a possible in zne r e o r g a n i z a t i o n rnlgat'be t h e formation of broader c e n t r a l m i n i s t r i e s , f o r example, one m i n i s t r y f o r t h e whole of heavy Andustry.39 Whether named committees or m i n i s t r i e s , such organs would, a c c o r d i n g t o Khrushchev, " i n e v i t a b l y set up apparatuses" s i m i l a r t o t h o s e of e x i s t i n g m i n i s t r i e s . The S t a t e Planning Commission, now t o be res p o n s i b l e f o r both c u r r e n t and long-range planning, should be given a n y f u n c t i o n s which such organs might perform.

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

....

opposition.

a rumor w a s

Another personnel reassignment which occurred a t t h e same t i m e , and, t h e r e f o r e may be connected w i t h t h e r e o r g a n i z a t i o n , is t h a t of h. S. Ryzhov, whose release as m i n i s t e r of l i g h t i n d u s t r y and appointment a s ambassador t o Turkey was announced on 24 February. 1 I I
I

40

Ryzhov's M i n i s t r y of Light I n d u s t r y 1955 as part of t h e t r e n d toward more specialized m i n i s t r i e s , and t h e two parts had been merged a g a i n a year later, when many consumer goods and t e x t i l e p l a n t s under t h e t w o m i n i s t r i e s were t r a n s f e r r e d t o republic jurisdiction. Another p o s s i b l e s o u r c e of o p p o s i t i o n t o t h e reorganizat i o n is suggested by t h e s h a r p c r i t i c i s m of Molotov's Mini s t r y of State Control i n Khrushchev's theses. The r e s o l u t i o n of t h e February plenum contained no such criticism, and earlier evidence had i n d i c a t e d a n i n c r e a s e i k t h e mini r y ' s ower s i n c e Molotov became i t s chief i n November 1956. The theses, however, attacked t h e m i n i s t r y f o r maintaining ''a cumbersome a p p a r a t u s , " "usurping t h e f u n c t i o n s of economic organs,11 and t r y i n g t o "embrace l i t e r a l l y a l l matters." The theses c a l l f o r a l l s t a t e c o n t r o l organs t o b r i n g t h e i r work i n t o l i n e w i t h "Leninist" d i r e c t i v e s on c o n t r o l work, which probably means making t h e i r ' w o r k more r e s p o n s i v e t o d i r e c t i o n by t h e c o l l e c t i v e leadership. T h i s criticism of Molotov may mean t h a t he had f a i l e d t o r u n t h e m i n i s t r y e f f i c i e n t l y , that h e w a s t r y i n g t o u s e t h e s t a t e c o n t r o l p o s t as a s p r i n g board t o recoup h i s f a i l i n g p o l i t i c a l i n f l u e n c e , o r t h a t be opposed t h e r e o r g a n i z a t i o n . S i n c e Molotov r e p o r t e d l y was one of t h o s e who c r i t i c i z e d S o v i e t economic defects most s t r o n g l y a t t h e December plenum,g he probably d i d n o t oppose A s a n "old Bolshevik," t h e need f o r some form of r e o r g a n i z a t i o n . however, he may have opposed t h e radical proposal of a b o l i s h i n g i n d u s t r i a l m i n i s t r i e s and going over t o a r e g i o n a l form of management.

ai

I n a d d i t i o n t o r e v e a l i n g some disagreement over t h e reo r g a n i z a t i o n , Khrushchev's theses showed t h a t t h e regime a n t i c i p a t e d confusion i n management and disgruntlement among displaced a d m i n i s t r a t o r s when t h e p r o p o s a l s were implemented. The theses emphasized t h a t due care should be taken to provide released employees w i t h s u i t a b l e j o b s and expressed confidence t h a t these employees would see t h e r e o r g a n i z a t i o n i n its " t r u e light." Madame Furtseva had t o l d a p a r t y g a t h e r i n g i n Moscow on 27 F e b r u a r y t h a t t h e p a r t y organs of m i n i s t r i e s "must e x p l a i n matters w e l l " t o employees released from m i n i s t r i e s , and h e l p them " c o r r e c t l y understand" t h e measures. 30
.,

Apparently these explanatory e f f o r t s were not t o o succ e s s f u l , a t least in t h e i r i n i t i a l phase, because a n a r t i c l e published on 15 March i n P a r t y L i f e , a j o u r n a l of t h e Commun i s t P a r t y , quoted s t a t e m x o f speakers a t v a r i o u s l o c a l p a r t y meetings t h a t t h e e f f i c i e n c y of m i n i s t r i e s and other c e n t r a l a u t h o r i t i e s had a l r e a d y d e c l i n e d because of t h e

41

envisaged a d m i n i s t r a t i v e changes. The a r t i c l e concluded by u r g i n g that t h e p r o j e c t e d economic changes n o t be used as excuses f o r poor work.40 I n a d d i t i o n , a slowdown i n planning work w a s suggested by t h e fact that, as of l a t e March, t h e s t a t e planning commission of t h e Kazakh SSR had n o t y e t been informed by Moscow of a l l data on t h e 1957 p l a n f o r t h o s e enterprises subordinate t o central/ministries.41

F.
. .

The May Supreme S o v i e t

.. .. _. . t ,. . . .
.. ,,.

. .

.. ,.

During A p r i l , a great show was made throughout t h e USSR of p u b l i c d i s c u s s i o n s concerning t h e proposed i n d u s t r i a l reo r g a n i z a t i o n . A t t h e Supreme S o v i e t meeting i n May, Khrushchev in a l e n g t h y speech d e t a i l e d a somewhat r e v i s e d version of t h e r e o r g a n i z a t i o n , and was a p p o i n t e d chairman of a subcommittee of t h e Supreme S o v i e t which w a s t o c o n s i d e r ltaddenda'l t o t h e o f f i c i a l l a w on t h e r e o r g a n i z a t i o n . A f t e r two days of d i s c u s s i o n , t h e Supreme S o v i e t approved t h e l a w , w i t h s e v e r a l minor amendments, and ordered t h a t t h e reorganiz a t i o n be implemented by 1 J u l y 1957.
The r e o r g a n i z a t i o n approved by t h e Supreme S o v i e t i n May was a p p r e c i a b l y less d r a s t i c t h a n t h a t envisaged in Khrus h c h e v ' s theses a t t h e end of March. The theses in March had c l e a r l y called f o r t h e a b o l i t i o n of a l l c e n t r a l i n d u s t r i a l m i n i s t r i e s , w h i l e i n May t h e m i n i s t r i e s r e s p o n s i b l e f o r atomic energy, arms and related i n d u s t r i e s were r e t a i n e d . (Khrushchev h i m s e l f s a i d a t t h e May Supreme S o v i e t meeting t h a t In March, t h e theses had t h i s r e p r e s e n t e d a change of view.) a l s o called f o r t h e a b o l i t i o n of i n d u s t r i a l and c o n s t r u c t i o n m i n i s t r i e s in i n d i v i d u a l r e p u b l i c s , w h i l e i n May Khrushchev said there were d i f f e r i n g views on t h i s q u e s t i o n , and admitted t h a t some m i n i s t r i e s should perhaps be r e t a i n e d i n t h e larger r e p u b l i c s . The Supreme S o v i e t postponed a d e c i s i o n on t h i s problem by t u r n i n g r e s p o n s i b i l i t y f o r i t over t o t h e i n d i v i d u a l r e p u b l i c s . In a d d i t i o n , i n March t h e theses had s h a r p l y c r i t i cized t h e M i n i s t r y of State C o n t r o l under Molotov and had c a l l e d for a "drastic r e o r g a n i z a t i o n " of t h i s m i n i s t r y . In May, howe v e r , a f t e r one of t h e d e p u t i e s a t t h e Supreme Soviet had proposed c o n c e n t r a t i n g a l l s t a t e c o n t r o l f u n c t i o n s i n Moscow, Khrushchev s a i d t h a t t h e s o l u t i o n of t h i s i s s u e would be postponed and t h e q u e s t i o n s t u d i e d "more profoundly."
The r e o r g a n i z a t i o n a s f i n a l l y approved by t h e Supreme Sov i e t , however, s t i l l c o n s t i t u t e s t h e m o s t drastic change i n t h e s t r u c t u r e of t h e government s i n c e World War 11. According t o p u b l i s h e d i n f o r m a t i o n concerning t h e USSR Supreme S o v i e t and t h e meetings of v a r i o u s r e p u b l i c Supreme S o v i e t s i n f o l lowing weeks, 105 r e g i o n a l economic c o u n c i l s ( 7 0 i n t h e RSFSR,

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1 in t h e Ukraine, n i n e in Kazakhstan, f o u r in Uzbekistan, 1 and one each in t h e remaining republics) are to be established t o manage most of t h e USSR's i n d u s t r i a l e n t e r p r i s e s . Although, as mentioned above, some m i n i s t r i e s are r e t a i n e d , over 20 c e n t r a l i n d u s t r i a l m i n i s t r i e s are t o be abolished. The . r e g i o n a l c o u n c i l s have been given f a i r l y wide a d m i n i s t r a t i v e powers, b u t do n o t have poltcy-making f u n c t i o n s . C e n t r a l a u t h o r i t i e s have e x p l i c i t l y been given power t o "suspend1* d e c i s i o n s of t h e r e g i o n a l bodies.
W h a t are t h e prospects f o r s u c c e s s of t h i s reorganizat i o n in i n c r e a s i n g S o v i e t i n d u s t r i a l e f f i c i e n c y ? After t h e i n i t i a l confugion, some improvement of i n d u s t r i a l e f f i c i e n c y w i l l probably r e s u l t . Co-operation between r e l a t e d i n d u s t r i e s in t h e same geographic area should be improved, and i r r a t i o n a l %ross-haulinglf of i n d u s t r i a l goods should be reduced. In t h e long run, however, r e g i o n a l b u r e a u c r a c i e s and s p e c i a l interests w i l l t e n d t o replace t h e p r e s e n t m i n i s t e r i a l barriers, minimizing t h e b e n e f i , t s of t h e r e o r g a n i z a t i o n .

. ....

.,

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

...%.(_

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V.

P o l i t i c a l Implications

The above a n a l y s i s of developments in t h e S o v i e t economy from l a t e 1956 through May 1957 h a s t w o important p o l i t i c a l implications

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

(1) S i n c e r e p l a c i n g Bulganin as t h e regime's p u b l i c spokesman in t h e f i e l d of i n d u s t r i a l a d m i n i s t r a t i o n l a s t February, Khrushchev has been t h e dominant S o v i e t leader i n t h e economic f i e l d . From start t o f i n i s h he has p u b l i c l y assumed leadership over 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 . I n many speeches t o a g r i c u l t u r a l workers throughout t h e s p r i n g , he h a s continued t o a c t as t h e p r i n c i p a l formulator of S o v i e t farm p o l i c y . (Actually, Khrushchev has become i n c r e a s i n g l y pre-eminent i n t h e Soviet leadership in a l l areas of fore i g n and domestic p o l i c y t h i s s p r i n g , and has r e c e i v e d more p u b l i c i t y than any l e a d e r s i n c e S t a l i n ' s death. A l l e v i dence shows q u i t e c o n c l u s i v e l y t h a t IUlrushchev h a s more t h a n r e g a i n e d whatever i n f l u e n c e and prestige he may have l o s t d u r i n g t h e S a t e l l i t e crises l a s t October and November.)

During t h i s same period, however, Khrushchev seems t o have modified or compromised h i s own previous p o s i t i o n on economic problems on s e v e r a l occasions. The i n d v s t r i a l reo r g a n i z a t i o n t u r n e d o u t t o be less drastic t h a n he had o r i g i n a l l y proposed. His s t a t e m e n t s on t h e primacy of heavy i n d u s t r y i n t h e 30 March theses of t h e r e o r g a n i z a t i o n a l s o suggested a less dogmatic view t h a n h e had formerly propounded on t h i s s u b j e c t . Though n o t d i s c u s s e d in t h i s a n a l y s i s , t h e retrenchment in t h e spring of 1957 of t h e g r a n d i o s e c o r n program advocated by Khrushchev s i n c e 1955 r e p r e s e n t s a n o t h e r change i n h i s previous views. On each of these occasions, Khrushchev himself announced t h e change in p l a n s o r p o l i c y , and there w a s a complete abs e n c e of p u b l i c criticism in t h e USSR over t h e changes. I t cannot be determined whether Khrushchev was forced by t h e c o l l e c t i v e leadership t o modify aspects of h i s programs which came t o be regarded as u n r e a l i s t i c or unacceptable, or whether h e p e r s o n a l l y became convinced t h a t such changes were necessary. In either case, Khrushchev p u b l i c l y s u f fered not a t a l l , and h i s personal announcement of changes has c o n t r i b u t e d t o h i s prestige.
(2) T h i s a n a l y s i s s u g g e s t s that t h e economic bureaucr a c y , o r so-called managerial class, is e x e r t i n g i n c r e a s i n g i n f l u e n c e over S o v i e t economic--and t h u s p o l i t i c a l - - p o l i c y . The low goals of t h e 1957 plan, which r e p r e s e n t t h e i n t e r e s t s of t h i s group, were approved a s t h e l a w of t h e land a t t h e

. . .. ...... .,....-... ... . .

... ...

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February meeting of t h e Supreme Soviet. D e s p i t e later e v i dence s u g g e s t i n g t h a t t h e regime hopes t o a v o i d r e d u c t i o n s of similar magnitude i n t h e g o a l s of t h e f i v e - y e a r plan, and d e s p i t e crit$cism by Khrushchev of a t least p a r t of t h e 1957 p l a n , t h e l o w g o a l s of t h e 1957 p l a n have n o t been repudiated

I t seems u n l i k e l y t h a t there is a c o h e s i v e group i n t h e USSR, o r one w i t h any form of u n i f i e d p o l i t i c a l a i m s , which c o u l d be l a b e l e d a s t h e economic bureaucracy o r t h e managerial class. The concept of a n economic bureaucr a c y o r managerial c l a s s is itself a n a b s t r a c t i o n . Although pattergs of thought from which v a l i d g e n e r a l i z a t i o n s can be i n f e r r e d e x i s t l n , s u c h a group, the views of s p e c i f i c i n d i v i d u a l s i n t h e group undoubtedly range t h e gamut between conservatism and optimism. There are i n a d d i t i o n subcate-

g o r i e s w i t h i n such a group, s u c h a s economic p l a n n e r s o r p r a c t i c a l b u s i n e s s a d m i n i s t r a t o r s . Those who have gained most of t h e i r experience i n t h e planning f i e l d , d e s p i t e i n d i v i d u a l d i f f e r e n c e s , probably t e n d toward t h e view t h a t ambitious p l a n s are necessary f o r maximum economic growth. Those in t h e f i e l d of p r a c t i c a l a d m i n i s t r a t i o n , on t h e o t h e r hand, may tend t o emphasize more s t r o n g l y t h e i m provement of economic e f f i c i e n c y as a desirable o b j e c t i v e , and feel that i n c r e a s e d e f f i c i e n c y can best be achieved w i t h r e a l i s t i c , rather than overambitious plans.
I t is t h e practical a d m i n i s t r a t o r s who seem t o have played a role of i n c r e a s e d importance i n e a r l y 1957. Press u r e s from t h i s group, however, are l a r g e l y unorganized, probably a t t h e p r e s e n t i n f l u e n c e s t a t e p o l i c y only through t h e economic f i e l d , and probably appear mainly i n t h e form of i n d i v i d u a l m i n i s t e r s and o f f i c i a l s p r e s s i n g f o r special r i g h t s and i n t e r e s t s . I t may be i n c o r r e c t t o regard any of t h e p r e s e n t p a r t y leaders as l v r e p r e s e n t a t i v e s v lof t h i s group b e f o r e t h e presidium, but a p a r t y l e a d e r , such as Pervukhin, who has himself r i s e n from t h i s group,may t e n d to espouse o r a t least sympathize w i t h t h e views of t h i s group. I n any event, s i n c e t h e r o a d t o p e r s o n a l g a i n and i n f l u e n c e i n t h e USSR is through t h e p a r t y , any f u r t h e r i n c r e a s e i n t h e power of t h i s group, and any e f f o r t s t o g i v e i t cohesiveness, w i l l occur w i t h i n p a r t y channels, and could r e s u l t in i n c r e a s e d f a c t i o n a l i s m w i t h i n t h e p a r t y .

SOURCES

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