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Soviet economic reforms : 1950-1970 ; an examination and assessment of the economic reforms undertaken in the Soviet Union in industry, agriculture and trade : 1950-1970 Tha, David Lawrence

Abstract

The purpose of this study is to examine the modifications made in the mechanics of allocation utilized in the Soviet Union, since the death of Stalin, in industry, agriculture, and trade. These sectors of the economy have been chosen because they comprise the predominant portion of productive activity in the Soviet Union, and because these sectors have undergone the most significant changes of their forms of allocation. The crux of the original Stalinist allocation mechanics was quantitative planning: an imperative economic plan formulated by the central planning apparatus to direct the economic processes of the nation. The implementation of the macro-economic plan at the micro level was carried out through a complex system of centralized physical directives and financial controls, and by a system of material incentives to encourage the fulfillment of the centrally defined targets or goals. Within industry, agriculture, and trade, the mechanics of the allocation system were somewhat differentiated in that the combination of centralized directives, physical and financial controls, and the directive effects of prices and material incentives were integrated in varied ways to bring about the desired end results. I will first examine the integration of these variables in forming a 'coherent' guidance system, and their relative dominance in determining the allocation of the nation's resources, during the Stalinist period, and will then consider the modifications made in their relative importance up to the present time. The first chapter of this study deals with industry. It concentrates on the three component parts of the Soviet industrial allocation system: the formulation of production-supply plans; financial planning and the role of prices; and micro-economic targets, controls and incentives. The annual planning procedure described refers specifically to heavy industry. However, this procedure is generally applicable to the macro planning in both agriculture and the consumer goods industry as well, and thus provides background information to the more abbreviated discussions of the planning procedures used in these latter two sectors of economic activity. Similarly, in the discussions of financial planning and prices, the relationship of these variables to heavy industry is intensively investigated but the discussion is expanded to a more encompassing level in order to give a general comprehension of the role of currency and prices in the Soviet economy as a whole. The chapter concludes with an investigation of the relative dominance of physical and financial directives and controls at the micro level, and the integration of the material incentive scheme in the allocative system to encourage behavioural adherence to the centralized directives and controls. The second chapter deals with agriculture. It follows a similar investigative format for both collective and state farms, but places emphasis on collective farm production, and distribution of outputs, for two reasons: collective farm and 'private' plot agricultural activities provide the bulk of the nutritional requirements of both the rural and urban populace; and the guidance system used for state farming is very similar to that used in the industrial sector already discussed. The third chapter deals with trade. It discusses both domestic and foreign trade. With regard to domestic trade, the macro planning procedure is described, the distribution network for consumer goods is detailed, and the microeconomic targets and controls formulated for light industry are distinguished from those used in the allocation of producer goods. The discussion on foreign trade details the roles of foreign trade in the Soviet economy, its integration into the national economic plan, and the reforms in the methods and means utilized to finance the flows of traded commodities. The final chapter of the paper assesses the original Stalinist allocation mechanics in the economic sectors analyzed, and the successes and shortcomings of the modifications made in their respective guidance systems to the present time. Many of the modifications made prior to the general reforms undertaken in 1965 pertained to the administrative-economic bureaucracy and thus did not alter any fundamental characteristics of the Soviet allocation systems. The 1965 reforms increased the role of selected financial and price variables, and material incentives, in an attempt to increase efficiency at the microeconomic level. However, the long-run benefits of the post-Stalin reforms are smaller than originally anticipated. Efficient decision making that would optimize the execution of economic processes in such a way as to maximize the utilization of resources necessitates a rational price system. However, the essence of the Soviet allocation mechanics is still quantitative planning, implemented through centralized administrative controls.

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