wartime as well as peacetime needs. The necessity for an industrial defense base, as well as machinery for rapid mobilization, was also emphasized. These views were opposed by those who favored a militia-type Red Army.
On March 11, 1924, Frunze was appointed as Trotsky’s deputy, and on January 1, 1925, Joseph Stalin named him Commissar of Military and Naval Affairs, replacing Trotsky. Frunze’s death, as a result of an operation recommended by Stalin, has given rise to a number of claims that his demise was no accident and that it gave Stalin the opportunity to replace him with Kliment Voroshilov, about whose loyalty there was little doubt. Frunze is buried on Red Square. His son, fighter pilot Timur Frunze, was killed during the Battle of Stalingrad. See also: MILITARY, SOVIET AND POST-SOVIET
BIBLIOGRAPHY
Gareev, M.A. (1987). M.V. Frunze, Military Theorist. Washington, DC: Pergamon-Brassey’s. Von Hagen, Mark (1990). Soldiers in a Proletarian Leadership: The Red Army and the Soviet Socialist State. Ithaca, NY: Cornell University Press.
In the Soviet economy, industrial enterprises were treated as independent units from a financial management and economic accountability perspective. Under the system of full economic accounting (polny khozrachet) introduced by Mikhail Gorbachev, each enterprise was to be self-financing in the long run, meeting wage payments and other production costs from sales revenues. Investment requirements identified in the techpromfinplan were to be met from enterprise profits. Full economic accounting was a cornerstone of perestroika, regarded as an important measure to improve enterprise operations.
The khozrachet system used by Soviet enterprises during the 1980s was not new, but the attention paid to enterprise autonomy and accountability during the period of perestroika appeared more serious. Under the system of full economic accounting, unprofitable or “negative-value-added” firms were to go out of business either through a bankruptcy proceeding or by another enterprise taking over the loss-making firm’s assets. Prior to perestroika, the khozrachet system gave lip service to self-financing and economic accountability, but in practice, loss-making firms routinely received subsidies from central authorities or industrial ministries redistributing profits from “winners” to “losers.”
Gorbachev’s full economic accounting system was supposed to end the automatic subsidies provided to loss-makers. It appeared to be the Soviet answer to the question of how to eliminate the “soft budget constraint” described by Janos Kornai as the primary contributing source of scarcity in a planned economy. However, centrally determined prices for inputs received by the firm and output sold by the firm made calculations of cost, revenue, and profit somewhat meaningless from an efficiency or economic accountability perspective. Centrally determined prices did not reflect scarcity, nor did they signal accurate information about the operation or performance of the Soviet industrial enterprise. Consequently, basing the full economic accounting system on these prices, in an environFUNDAMENTAL LAWS OF 1906 ment of persistent and pervasive shortages, provided little opportunity to maneuver Soviet enterprises away from the production of shoddy goods and toward the production of goods that adequately captured the specifications or preferences of customers. Moreover, as planners maintained the bonus system that linked substantial monetary payments to the fulfillment of output targets rather than cost reductions, enterprise managers continued to over-order inputs and hoard labor in order to achieve the planned output targets. As planners continued to set output plan targets high relative to the firm’s productive capacity, enterprise managers continued to disregard cost in efforts to fulfill planned output targets. In short, policies pursued by planners sustained the outcome that the extension to full economic accounting was to replace. The absence of bankruptcy law and established bankruptcy proceedings, plus the lack of a mechanism for one firm to acquire the assets of a second firm, also undermined the effectiveness of full economic accounting in improving enterprise operations. See also: KORNAI, JANOS; PERESTROIKA; TECHPROMFIN-PLAN
BIBLIOGRAPHY
Gorbachev, Mikhail. (1987). Perestroika: New Thinking for Our Country and the World. New York: Harper amp; Row. Gregory, Paul R. (1990). Restructuring the Soviet Economic Bureaucracy. New York: Cambridge University Press.
The Fundamental Laws, a 203-article compilation of existing laws on supreme rule, were first published in the Set of Laws of the Russian Empire (Svod zakonov Rossyskoi impery) in 1832. Unchanged since the edition published in 1892, they had to be revised in order to carry out the principles set forth in the October Manifesto of 1905. The revision was based on the principles established by the Manifesto of 1906, which made the State Council a second legislative chamber with the right to veto acts by the State Duma, thereby establishing that the Duma did not have the right to change the Fundamental Laws. The new revision of the Fundamental Laws was hurriedly accepted before the upcoming election of the Duma. Count Sergei Witte, one of the initiators of the October Manifesto and of the introduction of national representatives into Russian politics, warned that if the revision was issued before the election, the Duma would become the Constitutional Assembly, and this would lead to violence and the end of the new order.
There were three drafts of the Fundamental Laws: one liberal, one conservative, and one “moderate” (in fact closer to liberal). The latter, created at the State Chancellery by the deputy state secretary, Peter Kharitonov, was adopted as basis for the future document. The Japanese, Prussian, and Aus-tro-Hungarian constitutions were studied in the process of creating and compiling the laws, as was a draft prepared by the Union of Liberation and published abroad. The draft prepared by the State Chancellery was discussed at five meetings of the Council of Ministers in March of 1906 under the chairmanship of Witte and was completed in a spirit of fortifying conservative principles. Such articles as “the restriction to punish in ways other than the court’s ruling” and “the respected secrecy of private correspondence” were removed, and the tsar’s prerogatives were strengthened. The project and its revisions were discussed at meetings on April 1906 in Tsarskoye Selo under the chairmanship of Tsar Nicholas II. After he approved the new edition of the Fundamental Laws, it was published on May 10 (April 27 O.S.), 1906, the day the State Duma opened. The new edition, containing 223 articles, transformed Russia into a constitutional monarchy.
Whereas the first article of the earlier version of the Fundamental Laws stated that “The Russian emperor is an autocratic monarch with unlimited power,” article 4 now gave the tsar supreme autocratic power. The term “unlimited” was removed, and “autocratic” (samoderzhavnyi) was defined as declaring the independence of the country and the monarch. A special note by the historian Sergei Knazkov proved that the word “autocracy” had been used in this sense during the seventeenth century and had only assumed the meaning of unlimited power during the eighteenth. The new article proclaimed the unity and indivisibility of the Russian Empire. It noted that Finland was an “inseparable part” of Russia, but “was governed by special institutions on the basis of being a special legislative authority.” Russian was declared the official language of the empire, and its use was required in the army, navy, and all state and civil institutions.
FUNDED COMMODITIES
From then on, no law could be passed without the approval of the State Council and the State Duma. Members of the Duma were elected for five years. The State Council and the Duma could legislate on matters not covered by the Fundamental Laws. The chief innovation was the inclusion into the Fundamental Laws of articles that guaranteed identity rights and civil freedoms, specifically the protection of identity and residence, freedom of residence, activity, movement, protection of possessions, freedom of speech, press, unions, assembly, and religion. The declared rights and freedoms did not include Jews, for whom residential restrictions (the Jewish Pale of Settlement) and restrictions on civil service positions still existed.
These concessions notwithstanding, the tsar retained an enormous amount of power. He had the right of the legislative initiative, including the exclusive right to initiate revisions of the Fundamental Laws. Without his approval, laws approved by the legislative chambers could not be passed. Moreover, in emergency situations the tsar could promulgate laws when the Duma was not in session (article 87). These would be nullified, however, unless ratified by the Duma within two months. The tsar had supreme control of the country, including control over foreign policy, the power to declare war and peace, supreme command of the armed forces, the right to mint coins, the
