The just-announced Tenth FYP (1976-80) provides for further retardation in growth throughout the economy. The advance in consumption levels is expected to slow down even further, as are fixed investment and capital formation. Labor productivity will also rise more slowly. Despite the relative moderation of the Plan's goals, they may still turn out to be rather ambitious in relation to resources. No liberalizing reforms seem to be in the wings; rather, there is strong emphasis on centralism in planning and management, with considerable hope placed on mergers of enterprises into rather large units and on computerization. Yet withal the industrial basis of Soviet power - including military might - will certainly continue to grow at a pace that would be creditable for any advanced industrial power.
Since the fall of Khrushchev and in general since the death of Stalin, the standard of living of the urban, and especially of the poverty-stricken rural, population apparently continued to improve, at least until rather recently. At the same time, the Soviet Union was bearing very heavy military expenditures, exemplified by the deployment of anti-missile ballistic systems and by the tremendous growth of the Soviet navy. Economic activities in the U.S.S.R. spread out, and the economic map of the country is undergoing constant change. Illustrations of this change include the rise of Novosibirsk as a great scientific and technological center in Siberia, the Bratsk Dam, the Baikal-Amur mainline railway, the new problem of the industrial pollution of Lake Baikal, and the shift in the center of oil production since the Second World War from its long-time location in the Caucasus to new fields between the Volga and the Urals, and, recently, also to oil and natural gas fields beyond the Urals.
The new leadership also resorted to economic reform, described generally as an economic 'liberalization' and associated with the name of a Kharkov economist, Evsei Liberman. Faced with an economic slow-down, characterized by a drop in the growth rate of the gross national product and by a marked decline in the return from investment and in the growth of productivity of labor as well as by a great loss accruing from an under-utilization of capital and labor resources, the government decided to shift the emphasis and the incentives from the sheer volume of production, where they had been from the inauguration of the First Five-Year Plan, to sales and profits. Under the new system managerial bonuses were to depend not on the output as such, but on sales and profits, the latter factor finally giving serious recognition to the element of cost in Soviet production. In January 1966 forty-three enterprises from seventeen industries, with a total of 300,000 workers, were switched to the new system. Others followed in
subsequent months and years. Some economic reform was realized in industry, transportation, and retail trade, and it spread to the sovkhozes and to the construction sector. Yet, ambivalent and probably insufficient to begin with, it was emasculated in the process of implementation, with the result that there proved to be very little difference between the new system and the old system before 1965. More prominent was the new emphasis on material incentives, provisions of more and more differentiated rewards. However, although widely applied, these incentives did not lead to an important improvement in performance.
Indeed, the Tenth Five-Year Plan, 1976-80, and the Eleventh which succeeded it, although on the whole less ambitious than their predecessors, witnessed repeated inability of the Soviet economy to meet set goals, a decline in the increase of labor productivity, and other signs of stagnation. Some specialists considered 1979, the first of the unprecedented four successive years of bad grain harvests, a disastrous turning point. Then and in the years immediately following, seemingly everything, from transportation bottlenecks and difficulty in maintaining the supply of energy to ever-increasing alcoholism and inflation, combined to retard Soviet economic development and to emphasize the seriousness of Soviet economic problems. Other observers wrote more generally of the first successful period of the Brezhnev regime, when the growth of Soviet military and industrial might went hand in hand with a sharp rise in living standards, and of the last stagnant and disappointing years with their ubiquitous shortages of food and consumer goods. At the time of Brezhnev's death perhaps the best evaluation of his eighteen-year stewardship of the Soviet economy, from 1964 to 1982, went as follows (accompanied by a telling comparison with the United States). On the one hand, there was
Steady growth of aggregate output over the eighteen-year period, averaging 3.8 per cent per year, with industrial output growing at an average annual rate of 4.9 per cent.
Steady increase in living standards of the Soviet population, with per capita consumption rising at an average annual rate of 2.7 per cent.
Significant growth in Soviet military power in absolute terms - achieved through a steady increase in real Soviet defense expenditures averaging 4 to 5 per cent per year - as well as in relative terms vis-a-vis the United States.
Reduction of the gap in aggregate and per capita output (GNP) between the Soviet Union and the United States. Whereas in 1965 Soviet GNP was only about 46 per cent that of the United States (38 per cent on a per capita basis), by 1982 it was 55 per cent (47 per cent on a per capita basis).
Reduction of the gap in productivity between the Soviet Union and the United States. While in 1965 the productivity of an average Soviet worker was only 30 per cent that in the United States, by 1982 it was 41 per cent.
Increase in the output of major industrial commodities to the point where, at the beginning of the 1980's, the physical output of many key commodities in the Soviet Union equaled or exceeded that of the United States.
On the other hand, there also was
Steady deceleration in the growth of the Soviet economy. The average annual growth of GNP declined from the peak of 5.2 per cent during 1966-70 to 3.7 per cent during 1971-75, to 2.7 per cent during 1976-80, and to an estimated 2.0 per cent during 1981-82.
Steady deceleration in the growth of living standards, with the average annual growth of per capita consumption declining from a peak of 4.3 per cent during 1966-70 to 2.6 per cent during 1971-75, to 1.7 per cent during 1976-80, and to an estimated 1.2 per cent during 1981-82.
Failure to achieve satisfactory growth in Soviet agriculture. Over the eighteen-year period the average growth rate of GNP originating in agriculture amounted to only 1.7 per cent.
Lack of growth of agricultural productivity both in absolute terms and in relative terms vis-a-vis the United States. While in 1965 the productivity of an average Soviet farm worker was only 14 per cent that in the United States (in the Soviet Union one worker supplied six persons; in the United States one worker supplied forty-three persons), by 1981 it actually declined to a mere 12 per cent (in the Soviet Union one worker supplied eight people; in the United States the corresponding figure was sixty-five).
Although a significant effect of
But while the facts and the statistics seemed reasonably reliable, explanations of them differed. Possibly the most important issue was to what extent Soviet economic difficulties were of a temporary and relatively remediable character and to what extent they were intrinsic to the system.
Soviet economic policies from the death of Stalin to the advent of Gorbachev thus demonstrated both the continuation of the main course of development pursued by the deceased dictator, and certain hesitations, reversals, and changes. Also, they indicated somewhat more attention to the immediate needs and wishes of the population than had hitherto been the case.
