Command Soviet Economy: Stalinist FiveYear Plans & Rapid Industrialization and Collectivization
Zaruhi Sahakyan Doctoral Student in Economics Department of Economics, UIUC
September 22, 2006
Economic Policy of USSR
"War Communism" (19181921) New Economic Policy (NEP) (1921 1928) Fiveyear plans (Piatiletki) (19291995) Perestroyka (19871991)
"War Communism" (19181921)
Emergency program during the civil war. Forced requisition of grain. Nationalization of all trade and industry. Strict control of labor. Confiscation of financial capital. In 1920, industrial production was 13% and agricultural production 20% of the 1913 figures.
NEP (19211928)
"We are not civilized enough for socialism". Return to a limited capitalist system. Forced requisition of grain was replaced by a specific tax in kind (a fixed proportion of the crop). Peasants retained excess produce, sold for a profit at a stateregulated price. Small businesses were permitted to operate as private enterprises (< 20 workers). Large industries remained under state control. Private trade and wages were restored.
Scissors Crisis During NEP
Reasons: Agricultural production had rebounded quickly from the devastating famine of 192122. Industrial infrastructure was relatively slow to recover from civil warera neglect and destruction. State demanded high prices for the manufactured goods and low for agricultural Result: Industrial prices were three times higher, relative to agricultural prices, than they had been before the war.
NEP
By 1928, the NEP had raised the soviet national income above its prewar level. However, the NEP policies were inadequate for the expansionist aims of Stalin. Why? NEP was too capitalistic and went further away from socialism. Weak heavy industry
Soviet Command Economy
What should be produced and in what quantities is "commanded" by the state, Centrallyplanned economy (central planner) The state controlled the factors (means) of production and made all decisions about their use and about the distribution of income State decided what should be produced and directed enterprises to produce those goods Prices and wages determined by the state
Stalin
"Fifty to a hundred years behind the advanced countries (the U.S., France, Germany, the UK), Must narrow "this distance in ten years" Declared "Either we do it or we shall be crushed." "Socialism in one country" Russia had to be able to feed itself hence collectivization
Time Magazines Man Of The Year
Iosif Stalin (1879 1953) 1939 he switched the
balance of power in Europe by signing a "non aggression pact" with Hitler. 1942 he helped to stop Hitler and opened the door of opportunity for allied troops.
Stalin's "Revolution From Above"
Fiveyear plans (Piatiletka) Nationwide centralized exercises in rapid economic development. The plan called for the state taking control of the economy Two goals: extraordinary Rapid industrialization (heavy industry), Collectivization of agriculture.
Aims
To erase all traces of the capitalism To transform the Soviet Union as quickly as possible into
Industrialized, Completely socialist state,
... without regard to cost.
Five Year Plans
There were 13 fiveyear plans. The first five year plan was from 1928 to 1932 (one year early). The second five year plan was from 1933 to 1937. The third five year plan was from 1938 to 1941 (interrupted by war) The last, thirteenth FiveYear Plan was for the period from 1991 to 1995 and was not completed, as the Soviet Union was dissolved in 1991.
Problems With 5year Plan
Widespread shortages of consumer goods (due to
unrealistic production targets). Deportation of kulak households (5 mil people). Disastrous disruption of agricultural productivity. Catastrophic famine in 193233 (Ukraine) Prices system did not function to signal the shortage. ...Human costs were incalculable
Serious Flaws
Parts for industrial machinery were hard to get
Expeasants were used as skilled workers, while they had no idea how to operate the machines
No parts to repair worn out machines Factories were kept idle for weeks
Products produced were frequently so poor that they could not be used
Damaged the machines
Collectivization
Consolidation of individual land and labor into cooperatives collective farms (kolkhoz) and state farms (sovkhoz). Stalin thought the peasant farmers should provide food for the urban workers in the factories
Goals
Modernize soviet agriculture by modern equipment using the latest scientific methods. Increase agricultural production. Put agriculture under the control of the state. Transfer the land and agricultural property from kula...