Planned investment also prevents the
flow of capital into the production of things for which
there might be some demand, but which would be clearly
harmful to the well-being of the people.
flow of capital into the production of things for which
there might be some demand, but which would be clearly
harmful to the well-being of the people.
Soviet Union - 1952 - Soviet Civilization
is determined and directed
* See p. 56.
165
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
by the state national economic plan with the aim of
increasing the public wealth, of steadily improving the
material conditions of the working people and raising
their cultural level, of consolidating the independence of
the U. S. S. R. and strengthening its defensive capacity. "
In my opinion social-economic planning is, together with
the public ownership and operation of the main means
of production and distribution, the most basic factor in
the economic life of the country.
The great Five-Year Plans have aroused interest,
skepticism, hope and fury throughout the world. The
First Five-Year Plan (or Piatiletka in the Russian) went
into effect in the fall of 1928 and made such rapid head-
way that it was completed in four and a quarter years, at
the end of 1932. The Second Five-Year Plan lasted from
1933 through 1937. The Third Five-Year Plan was
scheduled from 1938 through 1942. It was proceeding
most successfully when unexpectedly interrupted by the
Nazi onslaught in the middle of 1941. Shortly after the
conclusion of the Second World War, the Soviet Union
launched its Fourth Five-Year Plan, for the period from
January 1, 1946, through December 31, 1950.
The fundamental principle of planning is fairly
simple. Whether operative on a small or large scale it
consists of trying to coordinate future activities in the
light of the external environment, especially its economic
aspects, and of capacities, desires and potentialities. The
individual himself, if he is to lead an integrated and satis-
factory life, must continually plan from year to year and
even from day to day. Planning is in fact an indispens-
able factor in the functioning of human reason for the
solution of individual and social problems. Whenever
any person or organization or government draws up an
166
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
annual budget, that is financial planning of the most
essential sort for twelve months in advance.
The intelligent family adopts some measure of plan-
ning. It looks into the future so far as is possible and
plans, according to its resources, for the needs of its
various members. If it is wise, it makes a yearly budget,
allocating definite sums from its income to food, housing,
clothing, recreation, baby carriages and the like. The
next level of planning occurs in relation to individual
business enterprises. Every business has to plan carefully
if it is to be successful and make a profit. The larger and
more complex it is, the more carefully it must plan. A
huge corporation like the American Telephone and Tele-
graph Company, U. S. Steel or R. H. Macy & Co. must
have central planning in order to coordinate its many
different departments and its far-flung business opera-
tions. In the capitalist world today we occasionally find
government economic planning in effect for large-scale
enterprises such as the Tennessee Valley Authority and
sometimes for a whole industry, as when the state owns
and operates the railroads. However, the greatest degree
of government planning under capitalism takes place dur-
ing the crisis of international conflict, as it did during the
First and Second World Wars.
Now the planning that has been going on in Soviet
Russia since 1928 is the most extensive in history. The
Soviets believe that the limited, piecemeal, crisis plan-
ning under capitalism cannot solve permanently the eco-
nomic problems that face mankind. They are convinced
that just as the different departments in a big business
must be consciously correlated, so must the different
departments of a nation's economy as a whole. Coal must
be integrated with steel, steel with transportation, trans-
167
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATIOH
portation with agriculture, agriculture with wholesale
and retail distribution, distribution with finance, finance
with production in general, and so on down the line.
Such a concept demands that for the complex economic
activity of the entire country there be one great all-inclu-
sive Plan, covering all divisions and subdivisions of the
economy and under one vast unitary budget. This is
precisely what a Five-Year Plan entails.
The socialist planning of the U. S. S. R. differs from
any planning that takes place in capitalist lands in that
it is continuous and nation-wide and not confined to
special localities, industries or critical situations; in that
it is based on the public ownership and operation of all
the main means of production and distribution; and in
that its guiding aim is use, not profit. The welfare of the
whole community is the direct end and not secondary or
incidental to the making of profits.
Soviet and Marxist economists claim that only social-
ist planning can overcome the contradictions inherent in
the capitalist order and eliminate recurring depression,
financial crisis and mass unemployment. In general
terms it achieves economic stability by maintaining a
proper balance between production and consumption,
between supply and demand. Of primary importance
here is the central control over wages, prices, hours of
work and currency. As more and more goods are pro-
duced in field and factory, wages go up throughout the
entire nation; or prices decrease. (From 1946 through
the middle of 1952 there occurred five general reductions
in prices. ) To take care of an increasing turnover in
goods, currency may be expanded, depending on its rate
of circulation.
The fundamental point is that the Soviet people al-
168
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AMD CULTURAL PROGRESS
ways have sufficient wealth to buy back the goods which
they produce. This means that there can be no such
thing as overproduction, which is simply under-consump-
tion under a different name; and that unemployment,
except while workers are shifting from one job to another,
and depressions become extremely unlikely. If on some
distant day absolute overproduction, in some foodstuff,
for instance, does threaten the U. S. S. R. , it will be simple
to solve the problem by reducing hours of work and giv-
ing people more time for leisure and recreation.
The harmony between production and purchasing
power in Soviet Russia means in actuality that the coun-
try is always as rich as its productive capacity during any
given period. The United States and other capitalist
nations, however, are only as rich as the amount of goods
that can be sold for a profit during any given period. In
times of depression anywhere from one-third to one-half
of their productive capacity is idle; and even during pros-
perity a considerable proportion of their plant capacity
may be unutilized. The national wealth and standard
of living in the Soviet Union are of course not nearly
as high as those of America, but they would have re-
mained far lower had it not been for the Five-Year Plans.
How, exactly, does socialist planning operate in the
U. S. S. R. ? This is a large question indeed and I can do
no more than sketch in the main outlines of an answer.
The key organizations in this field are the State Planning
Committee* or Gosplan and the State Committee for
Material and Technical Supplies to the National Econ-
omy t or Gosnab. Gosplan works out the programs for
over-all production, new capital investment and financial
? Until 1948 this was called the State Planning Commission.
? )? This Committee was created in 1948.
169
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
arrangements between the different sectors of industry
and agriculture. Gosnab plans for the distribution of ma-
terials and capital equipment, determining the exact
quantity of raw materials and machinery that are to go
to each branch of the economy for the carrying out of
Gosplan's blueprints.
The Soviet Government approves the eleven-member
Presidium or Governing Board of Gosplan as well as its
Advisory Council of ninety. The Chairman of this Plan-
ning Committee is automatically a member of the Soviet
Cabinet and a Vice-Premier of the U. S. S. R. It is this
Planning Committee, employing over a thousand experts,
which welds together into one vast, integrated, long-
range Plan all the minor plans and reports of all the
various republics, districts, industries, factories, farms,
distribution units and cultural organizations throughout
the Soviet Union. It is this Committee that from week to
week, from month to month, from year to year, casts its
all-seeing eye over the economic activities of the nation
and shifts the schedules within the Plan to keep pace
with new and unforeseen developments.
The work of the Planning Committee is divided into
over fifty different specialized departments, correspond-
ing to the different Ministries of the Soviet Govern-
ment. * Prominent among the Committee Departments
are those concerned with Agriculture, Automobile and
Tractor Industry, Building Materials Industry, Coal,
Electrical Industry, Foreign Trade, Machine-Tool Build-
ing Industry, Public Health, Railroads, Ship-Building
Industry, River Fleet and the Synthetic Plan. This last
section has the crucial task of constructing the final Plan
from the projects submitted by the various departments.
? See pp. 60-63.
170
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AND CULTURAL PROGRESS
There are also the Organization Section, which runs an
Academy to train experts for the Committee and handles
the selecting and managing of the personnel; and the
Central Administration for National Economic Account-
ing, which is in charge of the census and the highly rami-
fied accounting system that socialist business activities
require.
Until 1949 the Central Statistical Administration was
a subsidiary of the State Planning Committee. In that
year, however, its work had assumed such importance
that it was made a separate agency under the Federal
Government, continuing to function, of course, closely
with the Planning Committee. The activities of the
Statistical Administration are indispensable to planning.
This bureau has the duty of obtaining the basic statistical
information concerning the complex Soviet economy.
It is not possible even to start planning on a broad scale
without a considerable amount of such data; yet it is not
possible to get complete and reliable data until planning
has made considerable progress. Since in the old Russia
accurate statistical procedures were honored more in the
breach than in the observance, Soviet statisticians had
a hard row to hoe. As social-economic planning has made
more and more headway, the reliability of statistics has
steadily improved and has brought about what has been
aptly called adequate economic visibility.
Planning Committees similar to the federal Commit-
tee function in each of the sixteen federated Republics
and in the numerous Autonomous Republics, Autono-
mous Region and National Districts. In fact, there is
some planning agency in every community having a
population of 20,000 or more. Likewise, planning organs
operate in all the Ministries of the constituent Republics.
171
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
These various planning bodies all work under the general
direction of the State Planning Committee; and they
present frequent reports to the planning organization
to which they are immediately subordinate. There are
also planning divisions in each federal Ministry and in
the different subdivisions of each Ministry. For instance,
the Automobile and Tractor Industry as a whole has its
planning division; the various regional trusts in this in-
dustry also have theirs; and finally there are planning
committees in each factory of each trust and in each shop
of each factory.
Thus all the workers in an automobile or tractor
factory combine to carry out a plan for that unit; all the
factories in a certain district combine to carry out a
central plan for the trust of which they are part; all the
trusts combine to carry out a plan for the entire Auto-
mobile and Tractor Industry; and then this industry
combines with every other branch of the economy to
carry out a balanced plan for the country as a whole.
The geographical planning units operate on the same
principle as the functional: The cities' plans fit into that
of the regions, the regions' into that of the Republics and
the Republics' into that of the U. S. S. R. in toto. And
these two planning procedures, the functional and the
geographic, serve to stimulate and check on each other
in their mutual cooperation on behalf of the over-all
Plan.
The geographic and planning agencies operate both
from the smaller up through the larger and from the
larger down through the smaller, providing a constant
two-way flow of ideas, initiative, plans and counter-plans.
The higher bodies of course have more authority, but
they encourage local responsibility and are on guard
172
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECONOMIC AHD CULTURAL PROGRESS
against the red tape and hardening of the ideational
arteries which have handicapped many a centralized
bureaucracy.
Another cross-check occurs in the all-embracing Fi-
nancial Plan or State budget, which includes all the sub-
budgets of governmental and economic units throughout
the U. S. S. R. This Financial Plan, which is the counter-
part of the Material Plan (drawn up in terms of concrete
goods), translates all production and distribution sched-
ules into ruble figures. The ruble, worth twenty-five
cents at the official Soviet exchange rate, is the common
denominator in which the thousand and one different
aspects of the National Plan can be accurately expressed
and clearly related to one another. The Financial Plan
and the Material Plan are simply two different versions
of the same thing.
The State Bank and its more than 3,000 branches act
as a great central pool for the national income. They
achieve this role through the direct taxation of individ-
uals, which provides about 6 percent of the national
income, and especially through the turnover tax on each
economic enterprise throughout the land and an addi-
tional tax on its profits. The Government also raises a
certain amount of capital through savings banks and the
flotation of public loans. A significant feature of financial
planning is that it makes possible the distribution and re-
distribution of the total capital resources according to
the needs of the national economy as a whole. Some busi-
nesses, such as the railroads or the oil industry, will run
up handsome surpluses, part of which can be invested
in other less developed fields of industrial activity or in
the sphere of culture and education. A considerable
portion of such surpluses, however, are retained locally
173
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
by the unit earning them and used collectively for ex-
pansion, improvements or social benefits connected with
the same enterprise.
Planned investment, then, is a fundamental aspect
of Soviet socialist planning. Instead of over-investment
in some directions and under-investment in others, cen-
tral economic planning ensures an even flow of capital
into the channels most useful and important. It would
be inconceivable for manufacturing plants to be con-
tinually duplicating one another, ruining one another
through cut-throat competition, spending huge fortunes
in misleading advertising and glutting a locality or even
the entire country with an over-supply of practically
identical goods.
Planned investment also prevents the
flow of capital into the production of things for which
there might be some demand, but which would be clearly
harmful to the well-being of the people.
This strict supervision of investment, however, by no
means implies that so-called luxuries are taboo or that
a flat conformity of standardized goods must prevail.
One of the chief aims of Soviet planning is that everyone
should have an abundance of all sorts of personal posses-
sions, including luxuries. These consumption goods,
moreover, are to be as different in quality and design as
can reasonably be expected. With its informational ap-
paratus carefully attuned to the needs and desires of con-
sumers, the National Planning Committee presents the
citizens with a wide range of choices in commodities.
It is true that up till now Soviet clothes, shoes, hats and
so on have frequently been of an inferior grade; this is
not due, however, to socialist planning, but to the fact
that the handicaps of the past have not yet been over-
come.
174
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
It is essential to note that the surpluses or "profits"
built up by economic enterprises play a very different
role from what we have been accustomed to expect under
capitalism. They are, in effect, mainly a bookkeeping
device. Socialist business is run, as I have said, not for
profits, but in order to provide goods and services to the
community at large. The most convenient process of
accounting and distribution, however, demands the mech-
anism of buying and selling, of money and prices. Fur-
thermore, identifiable "profits" are necessary so that a
certain proportion of the nation's income can be set aside
to take care of depreciation and obsolescence and, above
all, to expand the means of production, particularly
heavy industry. Soviet Russia, for instance, put into
social savings for such purposes an annual average of one-
third its total income during the first two Five-Year
Plans.
Under the financial system 1 have been outlining,
every producing and distributing unit in the country has
an account in the central State Bank or one of its
branches. And it is the duty of each bank to check fre-
quently on the use of the credits, long-term, short-term
or emergency, issued from time to time. It must make
certain, for example, that the automobile factory to which
it has advanced credit actually turns out the cars called for
by the Plan and supposedly made possible by the credit.
The factory has the obligation of giving the bank reports
on definite dates showing how it is fulfilling its program.
If the bank discovers that the credit is being used ineffi-
ciently, it will at once stop further credits until the mat-
ter is cleared up, even instituting a special investigation
if necessary. As a brilliant student of Soviet economics,
Vladimir D. Kazakevich, writes: "The mechanism of
175
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
banking is used as a rudder to direct, through extension
and withholding of credit allocations, the fulfilment of
the Plan in production and distribution. "4
Thus, socialist planning makes the banks even more
important than they are in a capitalist country. For the
banks become the watchdogs of the whole economy by
carrying on what amounts to a constant audit of business
enterprise. They act as the vital link between the various
sets of plans drawn up on paper and the fulfilment of
those plans in terms of concrete goods and services. Their
vigilance means that there can be no let-down on the part
of management or workers in a concern without those
responsible being called to task. In this function the
banks are aided by a system of detailed accounting that
penetrates into every nook and cranny of economic activ-
ity. Soviet accounting, organized on the strictest basis,
aims to cut production costs and to attain the greatest
possible results for the least possible expenditures. Here
again book profits enter into the picture as a partial test
of whether or not a plant is being operated efficiently.
Let us consider some of the established procedures
in drawing up and putting into effect a Soviet Five-Year
Plan. After consultation with key Soviet and Communist
Party bodies, the State Planning Committee works out
general goals for the economic, social and cultural devel-
opment of the country during the next five-year period.
They are realistically based on the experience of the past
and the requirements and possibilities of the future.
With these goals as the objective, the State Planning
Committee, several months before the Plan is to go into
effect, sends out preliminary and tentative figures to all
the subordinate planning committees.
These planning agencies, and the various factories
176
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
and collective farms throughout the land, carefully con-
sider the proposed estimates with special attention to
those figures that concern them. Then, in the light of
their own experience, they make fresh suggestions and
counter-plans, returning the revised drafts to the central
Planning Committee. After receiving all available in-
formation and criticism regarding the preliminary sched-
ules, including the reactions of the various government
Ministries, the Planning Committee proceeds to draw up
the final Plan for presentation to the Council of Minis-
ters (or Cabinet), to the Communist Party and to the
Supreme Soviet. These three bodies must all pass on the
Five-Year Plan. It is to be remembered that the State
Planning Committee, in spite of its enormous importance
and influence, remains in the last analysis an expert ad-
visory board whose recommendations must be ratified by
the higher political authorities.
Along with the Five-Year Plan as a whole the Plan-
ning Committee also submits for ratification the control
figures for the first year of the Plan. In fact, every Jan-
uary the Committee submits a one-year plan to cover
the current year. This must of course fit into the general
outlines of the Five-Year Plan, but need not agree exactly
with the original figures of the Plan. The Committee's
obligation annually to decide upon a one-year schedule
gives it the invaluable opportunity of revising the Five-
Year Plan itself in the face of changing circumstances.
Furthermore, the Committee divides the yearly plan into
quarters and at the beginning of each quarter re-exam-
ines the estimates for the next three months. In short,
social-economic planning is carried out on the principle
of intelligent flexibility and not on that of unbending,
unalterable dogma.
177
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATIOH
It is perfectly obvious that a Planning Committee
composed of the wisest men in the world would be bound
to make some mistakes, particularly when country-wide,
long-range planning is being tried for the first time in
human history. Moreover, there exist certain factors
which the most flawless technique of planning cannot
precisely anticipate: weather conditions, for example,
affecting the fortunes of crops throughout the country;
new inventions and new discoveries of mineral wealth,
affecting the progress of industry and agriculture; the
movement of world prices, affecting payments for needed
imports; and the external threat of military aggression,
affecting both the productive needs and the psychology
of the people.
Such unpredictable developments in foreign and
domestic affairs mean that the State Planning Committee
must keep constantly on the alert, ready to alter the
direction and the tempo of the Plan as the total situa-
tion may require. Premier Stalin has ably summed up
the matter: "The Five-Year Plan, like every plan . . .
must be changed and perfected on the basis of experience
in carrying through the Plan. No Five-Year Plan can
calculate all the potentialities which are present in our
system and which become revealed only in the process of
work and in the application of the Plan in factory, mill,
collective and State farms, in the districts, etc. Only
bureaucrats can imagine that planning is concluded
with the drafting of a plan. "5
In the actual carrying out of a Soviet Five-Year Plan
much the same machinery is used as in drawing it up.
All the planning organs, in the Ministries of the Federal
and Republican Governments, in the individual indus-
tries and trusts, in the regions and cities, down to the
178
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECONOMIC AHD CULTURAL PROGRESS
factories and farms, actively function in putting the Plan
across. They stimulate the fulfilment of the Plan in
whatever sector of the economic front they are primarily
concerned with, keep abreast from day to day with what
is actually being accomplished, and forward periodic
reports to the Planning Committee to which they are
directly responsible. The trade unions play a particularly
important part in the administration of the Plan.
In other words, the transformation of a Five-Year
Plan from a beautiful, inspiring set of blueprints into
concrete material and cultural achievement is dependent
on the rank and file of workers and farmers. And their
participation in the execution of the Plan is a matter of
conscious volition. As one of the Soviet planning experts
puts it: "It was necessary not only that the working class
as a whole should direct industry but that every individ-
ual worker should understand his part in the total scheme
of production and the connection between his own work
and that of other workers in the same or allied branches
of industry. " This points to one of the outstanding ad-
vantages of social-economic planning: that it enables
every individual in the community to see how and why
his work fits into the larger scheme of things and to feel
a significance and dignity in his job that was seldom
present before.
Socialist planning definitely implies the full use of
productive capacity and its continual development. In
putting this policy into effect it has created among the
workers a new psychology. Under capitalism the worker,
thinking over the experience of the past, is quite prone
to say to himself: "Why should I try to work harder and
produce more when I know that may bring on overpro-
duction and the loss of my job? " Or he may object strong-
179
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
ly to the installation of new labor-saving machinery, fear-
ing that it also will cause unemployment. In the U. S. S. R. ,
however, the workers know that increased production,
far from leading to unemployment and economic misery,
will raise the standard of living for both themselves and
everyone else -- a major reason for their entering with
enthusiasm into schemes for heightening productivity.
I have already mentioned the counter-plans, usually
proposing higher schedules, that factories and other units
may suggest to the State Planning Committee. In the
fulfilment of such counter-plans Stakhanovites, workers
who make the most effective use of tools, time and group
effort, lead the way in increasing the quantity and im-
proving the quality of production. Individual factories,
coal mines, electric power stations and trade unions
enter into "socialist competition" to do the same. "Social-
ism," writes Lenin, "does not do away with competition;
on the contrary it for the first time creates the possibility
of applying it widely, on a really mass scale; of drawing
the majority of toilers into the field of this work, where
they can really show themselves, develop their abilities
and disclose their talents, which have been an untapped
source -- trampled upon, crushed and strangled by capi-
talism. "6
And Stalin adds: "Socialist competition and capitalist
competition represent two entirely different principles.
The principle of capitalist competition is: defeat and
death for some and victory for others. The principle of
socialist competition is: comradely assistance to those
lagging behind the more advanced, with the purpose of
reaching general advancement. "7 There is plenty of com-
petition within the general framework of a cooperative
economic order: competition in doing a first-rate job for
180
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
the community and in climbing the ladder of achieve-
ment in socially useful ways; competition in the contri-
butions one makes to the progress of a whole people all
working together on the basis of conscious teamwork.
In the U. S. S. R. the new motivation of striving for the
social good, including one's own, has been steadily taking
the place of the old motivation of seeking to pile up
personal monetary profits. Not only education and
propaganda has been directed to bring about this change
in fundamental incentives; planning itself, through es-
tablishing general economic security and the promise of -
ultimate abundance, has been an even more effective
factor. This sort of economy makes it unnecessary for
a man to carry on a bitter struggle with others in order
to maintain himself and his family. The basic economic
functionings and relationships harmonize with and sup-
port the higher social and ethical ideals instead of brut-
ally contradicting and counteracting them. And the Five-
Year Plans give Soviet citizens something definite and
compelling to which they can devote their energies and
loyalties. In this way central planning for the nation in
general brings central planning into the activity of each
individual, pulling together the various strands of his
nature and putting a great purpose into his life.
In the United States it is a commonplace to say that
the social sciences like economics and sociology have
lagged far behind the natural sciences. Scientific plan-
ning in Soviet Russia, as represented particularly by the
State Planning Committee, means that economics and
sociology, with a huge country of continental proportions
as the arena for experimentation, are enshrined at the
very center of things; and have become, in scope, prestige
and effectiveness, the equal of the physical sciences. This
181
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
socialist planning, directed by experts in all the relevant
fields, does not permit the reckless squandering of natural
resources for profit or for any other purpose. It not only
conserves the priceless bequests of Nature, but expands
and increases them, as in the great river, hydroelectric
and irrigation projects now under way. *
Over the ages intelligent men have ever sought to
deepen and broaden the reach of reason in human affairs.
The Russians have gone far in advancing this goal by
instituting, in the form of central planning, integrated
social-economic thinking on a vast nation-wide scale.
Soviet socialist planning, through its coordination and
controls, attains what might be called a great Community
Mind operating on behalf of the common welfare.
3. Achievements of the Five-Year Plans
Let us now review briefly what the Five-Year Plans
have accomplished. The major goals of the First Five-
Year Plan, 1928-1932, were to establish heavy industry
and machine-building on a permanent basis, to mechanize
and socialize agriculture, and to bring about the rapid
technical training of the population. The fulfilment
of these aims was designed both to provide a solid founda-
tion for the building of socialism and to make the Soviet
Union, in case of need, independent of the capitalist
world. The Plan admittedly cost a great deal in terms of
human strain and stress, especially since the emphasis on
heavy industry entailed unprecedented savings being put
into capital investment and therefore the temporary fore-
going of consumers' goods. Accordingly, the Soviet peo-
ple tightened their belts in order that the manufacture
* See pp. 203-208.
182
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECONOMIC AND CULTURAL PROGRESS
of producers' goods such as blast furnaces and steel found-
ries, tractors and agricultural combines, hydroelectric
plants and all kinds of machinery should go forward at
top speed. Huge quantities of foodstuffs and raw mater-
ials, badly needed at home, were exported to pay for the
import of machines and the hiring of foreign technicians.
What the socialization of agriculture meant in Soviet
Russia was the merging of separate farms into large-scale
collectives (kolkhozes), each managed as a single coopera-
tive unit by the individual members and owners, who
distribute the total income on the basis of the work per-
formed by each peasant. (The average Soviet collective
farm was, as of 1939, about 1200 acres in size and con-
tained about seventy-eight households. ) Each peasant fam-
ily retains, as guaranteed by the Constitution,* the own-
ership of its own dwelling, small kitchen garden, cows,
pigs, poultry or perhaps beehives. The communal side
of the collectives chiefly involves the major aspects of
agricultural production in sowing, reaping, storing,
caring for the herds and in applying scientific methods
and machine techniques so far as possible in all such
activities. Undeniably crucial in the collectivization
program was the establishment throughout the country-
side of the Government-run Machine-and-Tractor Sta-
tions, which rent to the collective farms tractors, thresh-
ing machines and reapers; and provide technical assist-
ance or instruction for the operation of this mechanized
equipment.
Besides the collectives, the First Five-Year Plan saw
instituted thousands of huge State farms (sovkhozes),
owned outright by the Government and managed by a
special Ministry. One of their main functions has been
? See p. 55.
183
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
to carry on big-scale agricultural experiments. All hands
on these State farms work for regular wages and are
organized into labor unions.
There can be no shadow of doubt that collectivization
was a necessity for the advance of socialism in the Soviet
Union. The continued existence of some 25,000,000
scattered strips and peasant holdings, with primitive
implements like the wooden plough still widely in use,
meant production that was terribly inefficient, with an
extremely low yield per acre, and therefore insufficient
for the needs of a growing population and an expanding
socialist economy. The obvious solution was to combine
these innumerable small farms into two or three hundred
thousand large-scale enterprises in which the advantages
of modern machinery and planned cooperative endeavor
could be utilized. Moreover, the retention of the old
individualistic agricultural system meant the persistence
of the old individualistic psychology that went with it.
And since the peasants constituted an overwhelming pro-
portion of the population, it would very likely have
proved fatal for the new society had they gone on main-
taining an attitude antagonistic to socialism.
The campaign for collectivization during the First
Five-Year Plan met the stubborn resistance of the kulaks,
the comparatively rich peasants to whom the whole idea
of collectives was anathema. They fought the new pro-
gram in agriculture with all possible weapons, includ-
ing those of murder and arson. The Communist Govern-
ment, on its part, retaliated with severity and harshness,
deporting hundreds of thousands of the kulaks to work-
camps in the Urals and Siberia. Other groups among
the peasants, especially in the Ukraine where a separatist
movement was stirring, became disgruntled over the
184
?
* See p. 56.
165
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
by the state national economic plan with the aim of
increasing the public wealth, of steadily improving the
material conditions of the working people and raising
their cultural level, of consolidating the independence of
the U. S. S. R. and strengthening its defensive capacity. "
In my opinion social-economic planning is, together with
the public ownership and operation of the main means
of production and distribution, the most basic factor in
the economic life of the country.
The great Five-Year Plans have aroused interest,
skepticism, hope and fury throughout the world. The
First Five-Year Plan (or Piatiletka in the Russian) went
into effect in the fall of 1928 and made such rapid head-
way that it was completed in four and a quarter years, at
the end of 1932. The Second Five-Year Plan lasted from
1933 through 1937. The Third Five-Year Plan was
scheduled from 1938 through 1942. It was proceeding
most successfully when unexpectedly interrupted by the
Nazi onslaught in the middle of 1941. Shortly after the
conclusion of the Second World War, the Soviet Union
launched its Fourth Five-Year Plan, for the period from
January 1, 1946, through December 31, 1950.
The fundamental principle of planning is fairly
simple. Whether operative on a small or large scale it
consists of trying to coordinate future activities in the
light of the external environment, especially its economic
aspects, and of capacities, desires and potentialities. The
individual himself, if he is to lead an integrated and satis-
factory life, must continually plan from year to year and
even from day to day. Planning is in fact an indispens-
able factor in the functioning of human reason for the
solution of individual and social problems. Whenever
any person or organization or government draws up an
166
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
annual budget, that is financial planning of the most
essential sort for twelve months in advance.
The intelligent family adopts some measure of plan-
ning. It looks into the future so far as is possible and
plans, according to its resources, for the needs of its
various members. If it is wise, it makes a yearly budget,
allocating definite sums from its income to food, housing,
clothing, recreation, baby carriages and the like. The
next level of planning occurs in relation to individual
business enterprises. Every business has to plan carefully
if it is to be successful and make a profit. The larger and
more complex it is, the more carefully it must plan. A
huge corporation like the American Telephone and Tele-
graph Company, U. S. Steel or R. H. Macy & Co. must
have central planning in order to coordinate its many
different departments and its far-flung business opera-
tions. In the capitalist world today we occasionally find
government economic planning in effect for large-scale
enterprises such as the Tennessee Valley Authority and
sometimes for a whole industry, as when the state owns
and operates the railroads. However, the greatest degree
of government planning under capitalism takes place dur-
ing the crisis of international conflict, as it did during the
First and Second World Wars.
Now the planning that has been going on in Soviet
Russia since 1928 is the most extensive in history. The
Soviets believe that the limited, piecemeal, crisis plan-
ning under capitalism cannot solve permanently the eco-
nomic problems that face mankind. They are convinced
that just as the different departments in a big business
must be consciously correlated, so must the different
departments of a nation's economy as a whole. Coal must
be integrated with steel, steel with transportation, trans-
167
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATIOH
portation with agriculture, agriculture with wholesale
and retail distribution, distribution with finance, finance
with production in general, and so on down the line.
Such a concept demands that for the complex economic
activity of the entire country there be one great all-inclu-
sive Plan, covering all divisions and subdivisions of the
economy and under one vast unitary budget. This is
precisely what a Five-Year Plan entails.
The socialist planning of the U. S. S. R. differs from
any planning that takes place in capitalist lands in that
it is continuous and nation-wide and not confined to
special localities, industries or critical situations; in that
it is based on the public ownership and operation of all
the main means of production and distribution; and in
that its guiding aim is use, not profit. The welfare of the
whole community is the direct end and not secondary or
incidental to the making of profits.
Soviet and Marxist economists claim that only social-
ist planning can overcome the contradictions inherent in
the capitalist order and eliminate recurring depression,
financial crisis and mass unemployment. In general
terms it achieves economic stability by maintaining a
proper balance between production and consumption,
between supply and demand. Of primary importance
here is the central control over wages, prices, hours of
work and currency. As more and more goods are pro-
duced in field and factory, wages go up throughout the
entire nation; or prices decrease. (From 1946 through
the middle of 1952 there occurred five general reductions
in prices. ) To take care of an increasing turnover in
goods, currency may be expanded, depending on its rate
of circulation.
The fundamental point is that the Soviet people al-
168
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AMD CULTURAL PROGRESS
ways have sufficient wealth to buy back the goods which
they produce. This means that there can be no such
thing as overproduction, which is simply under-consump-
tion under a different name; and that unemployment,
except while workers are shifting from one job to another,
and depressions become extremely unlikely. If on some
distant day absolute overproduction, in some foodstuff,
for instance, does threaten the U. S. S. R. , it will be simple
to solve the problem by reducing hours of work and giv-
ing people more time for leisure and recreation.
The harmony between production and purchasing
power in Soviet Russia means in actuality that the coun-
try is always as rich as its productive capacity during any
given period. The United States and other capitalist
nations, however, are only as rich as the amount of goods
that can be sold for a profit during any given period. In
times of depression anywhere from one-third to one-half
of their productive capacity is idle; and even during pros-
perity a considerable proportion of their plant capacity
may be unutilized. The national wealth and standard
of living in the Soviet Union are of course not nearly
as high as those of America, but they would have re-
mained far lower had it not been for the Five-Year Plans.
How, exactly, does socialist planning operate in the
U. S. S. R. ? This is a large question indeed and I can do
no more than sketch in the main outlines of an answer.
The key organizations in this field are the State Planning
Committee* or Gosplan and the State Committee for
Material and Technical Supplies to the National Econ-
omy t or Gosnab. Gosplan works out the programs for
over-all production, new capital investment and financial
? Until 1948 this was called the State Planning Commission.
? )? This Committee was created in 1948.
169
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
arrangements between the different sectors of industry
and agriculture. Gosnab plans for the distribution of ma-
terials and capital equipment, determining the exact
quantity of raw materials and machinery that are to go
to each branch of the economy for the carrying out of
Gosplan's blueprints.
The Soviet Government approves the eleven-member
Presidium or Governing Board of Gosplan as well as its
Advisory Council of ninety. The Chairman of this Plan-
ning Committee is automatically a member of the Soviet
Cabinet and a Vice-Premier of the U. S. S. R. It is this
Planning Committee, employing over a thousand experts,
which welds together into one vast, integrated, long-
range Plan all the minor plans and reports of all the
various republics, districts, industries, factories, farms,
distribution units and cultural organizations throughout
the Soviet Union. It is this Committee that from week to
week, from month to month, from year to year, casts its
all-seeing eye over the economic activities of the nation
and shifts the schedules within the Plan to keep pace
with new and unforeseen developments.
The work of the Planning Committee is divided into
over fifty different specialized departments, correspond-
ing to the different Ministries of the Soviet Govern-
ment. * Prominent among the Committee Departments
are those concerned with Agriculture, Automobile and
Tractor Industry, Building Materials Industry, Coal,
Electrical Industry, Foreign Trade, Machine-Tool Build-
ing Industry, Public Health, Railroads, Ship-Building
Industry, River Fleet and the Synthetic Plan. This last
section has the crucial task of constructing the final Plan
from the projects submitted by the various departments.
? See pp. 60-63.
170
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AND CULTURAL PROGRESS
There are also the Organization Section, which runs an
Academy to train experts for the Committee and handles
the selecting and managing of the personnel; and the
Central Administration for National Economic Account-
ing, which is in charge of the census and the highly rami-
fied accounting system that socialist business activities
require.
Until 1949 the Central Statistical Administration was
a subsidiary of the State Planning Committee. In that
year, however, its work had assumed such importance
that it was made a separate agency under the Federal
Government, continuing to function, of course, closely
with the Planning Committee. The activities of the
Statistical Administration are indispensable to planning.
This bureau has the duty of obtaining the basic statistical
information concerning the complex Soviet economy.
It is not possible even to start planning on a broad scale
without a considerable amount of such data; yet it is not
possible to get complete and reliable data until planning
has made considerable progress. Since in the old Russia
accurate statistical procedures were honored more in the
breach than in the observance, Soviet statisticians had
a hard row to hoe. As social-economic planning has made
more and more headway, the reliability of statistics has
steadily improved and has brought about what has been
aptly called adequate economic visibility.
Planning Committees similar to the federal Commit-
tee function in each of the sixteen federated Republics
and in the numerous Autonomous Republics, Autono-
mous Region and National Districts. In fact, there is
some planning agency in every community having a
population of 20,000 or more. Likewise, planning organs
operate in all the Ministries of the constituent Republics.
171
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
These various planning bodies all work under the general
direction of the State Planning Committee; and they
present frequent reports to the planning organization
to which they are immediately subordinate. There are
also planning divisions in each federal Ministry and in
the different subdivisions of each Ministry. For instance,
the Automobile and Tractor Industry as a whole has its
planning division; the various regional trusts in this in-
dustry also have theirs; and finally there are planning
committees in each factory of each trust and in each shop
of each factory.
Thus all the workers in an automobile or tractor
factory combine to carry out a plan for that unit; all the
factories in a certain district combine to carry out a
central plan for the trust of which they are part; all the
trusts combine to carry out a plan for the entire Auto-
mobile and Tractor Industry; and then this industry
combines with every other branch of the economy to
carry out a balanced plan for the country as a whole.
The geographical planning units operate on the same
principle as the functional: The cities' plans fit into that
of the regions, the regions' into that of the Republics and
the Republics' into that of the U. S. S. R. in toto. And
these two planning procedures, the functional and the
geographic, serve to stimulate and check on each other
in their mutual cooperation on behalf of the over-all
Plan.
The geographic and planning agencies operate both
from the smaller up through the larger and from the
larger down through the smaller, providing a constant
two-way flow of ideas, initiative, plans and counter-plans.
The higher bodies of course have more authority, but
they encourage local responsibility and are on guard
172
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECONOMIC AHD CULTURAL PROGRESS
against the red tape and hardening of the ideational
arteries which have handicapped many a centralized
bureaucracy.
Another cross-check occurs in the all-embracing Fi-
nancial Plan or State budget, which includes all the sub-
budgets of governmental and economic units throughout
the U. S. S. R. This Financial Plan, which is the counter-
part of the Material Plan (drawn up in terms of concrete
goods), translates all production and distribution sched-
ules into ruble figures. The ruble, worth twenty-five
cents at the official Soviet exchange rate, is the common
denominator in which the thousand and one different
aspects of the National Plan can be accurately expressed
and clearly related to one another. The Financial Plan
and the Material Plan are simply two different versions
of the same thing.
The State Bank and its more than 3,000 branches act
as a great central pool for the national income. They
achieve this role through the direct taxation of individ-
uals, which provides about 6 percent of the national
income, and especially through the turnover tax on each
economic enterprise throughout the land and an addi-
tional tax on its profits. The Government also raises a
certain amount of capital through savings banks and the
flotation of public loans. A significant feature of financial
planning is that it makes possible the distribution and re-
distribution of the total capital resources according to
the needs of the national economy as a whole. Some busi-
nesses, such as the railroads or the oil industry, will run
up handsome surpluses, part of which can be invested
in other less developed fields of industrial activity or in
the sphere of culture and education. A considerable
portion of such surpluses, however, are retained locally
173
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
by the unit earning them and used collectively for ex-
pansion, improvements or social benefits connected with
the same enterprise.
Planned investment, then, is a fundamental aspect
of Soviet socialist planning. Instead of over-investment
in some directions and under-investment in others, cen-
tral economic planning ensures an even flow of capital
into the channels most useful and important. It would
be inconceivable for manufacturing plants to be con-
tinually duplicating one another, ruining one another
through cut-throat competition, spending huge fortunes
in misleading advertising and glutting a locality or even
the entire country with an over-supply of practically
identical goods.
Planned investment also prevents the
flow of capital into the production of things for which
there might be some demand, but which would be clearly
harmful to the well-being of the people.
This strict supervision of investment, however, by no
means implies that so-called luxuries are taboo or that
a flat conformity of standardized goods must prevail.
One of the chief aims of Soviet planning is that everyone
should have an abundance of all sorts of personal posses-
sions, including luxuries. These consumption goods,
moreover, are to be as different in quality and design as
can reasonably be expected. With its informational ap-
paratus carefully attuned to the needs and desires of con-
sumers, the National Planning Committee presents the
citizens with a wide range of choices in commodities.
It is true that up till now Soviet clothes, shoes, hats and
so on have frequently been of an inferior grade; this is
not due, however, to socialist planning, but to the fact
that the handicaps of the past have not yet been over-
come.
174
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
It is essential to note that the surpluses or "profits"
built up by economic enterprises play a very different
role from what we have been accustomed to expect under
capitalism. They are, in effect, mainly a bookkeeping
device. Socialist business is run, as I have said, not for
profits, but in order to provide goods and services to the
community at large. The most convenient process of
accounting and distribution, however, demands the mech-
anism of buying and selling, of money and prices. Fur-
thermore, identifiable "profits" are necessary so that a
certain proportion of the nation's income can be set aside
to take care of depreciation and obsolescence and, above
all, to expand the means of production, particularly
heavy industry. Soviet Russia, for instance, put into
social savings for such purposes an annual average of one-
third its total income during the first two Five-Year
Plans.
Under the financial system 1 have been outlining,
every producing and distributing unit in the country has
an account in the central State Bank or one of its
branches. And it is the duty of each bank to check fre-
quently on the use of the credits, long-term, short-term
or emergency, issued from time to time. It must make
certain, for example, that the automobile factory to which
it has advanced credit actually turns out the cars called for
by the Plan and supposedly made possible by the credit.
The factory has the obligation of giving the bank reports
on definite dates showing how it is fulfilling its program.
If the bank discovers that the credit is being used ineffi-
ciently, it will at once stop further credits until the mat-
ter is cleared up, even instituting a special investigation
if necessary. As a brilliant student of Soviet economics,
Vladimir D. Kazakevich, writes: "The mechanism of
175
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
banking is used as a rudder to direct, through extension
and withholding of credit allocations, the fulfilment of
the Plan in production and distribution. "4
Thus, socialist planning makes the banks even more
important than they are in a capitalist country. For the
banks become the watchdogs of the whole economy by
carrying on what amounts to a constant audit of business
enterprise. They act as the vital link between the various
sets of plans drawn up on paper and the fulfilment of
those plans in terms of concrete goods and services. Their
vigilance means that there can be no let-down on the part
of management or workers in a concern without those
responsible being called to task. In this function the
banks are aided by a system of detailed accounting that
penetrates into every nook and cranny of economic activ-
ity. Soviet accounting, organized on the strictest basis,
aims to cut production costs and to attain the greatest
possible results for the least possible expenditures. Here
again book profits enter into the picture as a partial test
of whether or not a plant is being operated efficiently.
Let us consider some of the established procedures
in drawing up and putting into effect a Soviet Five-Year
Plan. After consultation with key Soviet and Communist
Party bodies, the State Planning Committee works out
general goals for the economic, social and cultural devel-
opment of the country during the next five-year period.
They are realistically based on the experience of the past
and the requirements and possibilities of the future.
With these goals as the objective, the State Planning
Committee, several months before the Plan is to go into
effect, sends out preliminary and tentative figures to all
the subordinate planning committees.
These planning agencies, and the various factories
176
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
and collective farms throughout the land, carefully con-
sider the proposed estimates with special attention to
those figures that concern them. Then, in the light of
their own experience, they make fresh suggestions and
counter-plans, returning the revised drafts to the central
Planning Committee. After receiving all available in-
formation and criticism regarding the preliminary sched-
ules, including the reactions of the various government
Ministries, the Planning Committee proceeds to draw up
the final Plan for presentation to the Council of Minis-
ters (or Cabinet), to the Communist Party and to the
Supreme Soviet. These three bodies must all pass on the
Five-Year Plan. It is to be remembered that the State
Planning Committee, in spite of its enormous importance
and influence, remains in the last analysis an expert ad-
visory board whose recommendations must be ratified by
the higher political authorities.
Along with the Five-Year Plan as a whole the Plan-
ning Committee also submits for ratification the control
figures for the first year of the Plan. In fact, every Jan-
uary the Committee submits a one-year plan to cover
the current year. This must of course fit into the general
outlines of the Five-Year Plan, but need not agree exactly
with the original figures of the Plan. The Committee's
obligation annually to decide upon a one-year schedule
gives it the invaluable opportunity of revising the Five-
Year Plan itself in the face of changing circumstances.
Furthermore, the Committee divides the yearly plan into
quarters and at the beginning of each quarter re-exam-
ines the estimates for the next three months. In short,
social-economic planning is carried out on the principle
of intelligent flexibility and not on that of unbending,
unalterable dogma.
177
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATIOH
It is perfectly obvious that a Planning Committee
composed of the wisest men in the world would be bound
to make some mistakes, particularly when country-wide,
long-range planning is being tried for the first time in
human history. Moreover, there exist certain factors
which the most flawless technique of planning cannot
precisely anticipate: weather conditions, for example,
affecting the fortunes of crops throughout the country;
new inventions and new discoveries of mineral wealth,
affecting the progress of industry and agriculture; the
movement of world prices, affecting payments for needed
imports; and the external threat of military aggression,
affecting both the productive needs and the psychology
of the people.
Such unpredictable developments in foreign and
domestic affairs mean that the State Planning Committee
must keep constantly on the alert, ready to alter the
direction and the tempo of the Plan as the total situa-
tion may require. Premier Stalin has ably summed up
the matter: "The Five-Year Plan, like every plan . . .
must be changed and perfected on the basis of experience
in carrying through the Plan. No Five-Year Plan can
calculate all the potentialities which are present in our
system and which become revealed only in the process of
work and in the application of the Plan in factory, mill,
collective and State farms, in the districts, etc. Only
bureaucrats can imagine that planning is concluded
with the drafting of a plan. "5
In the actual carrying out of a Soviet Five-Year Plan
much the same machinery is used as in drawing it up.
All the planning organs, in the Ministries of the Federal
and Republican Governments, in the individual indus-
tries and trusts, in the regions and cities, down to the
178
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECONOMIC AHD CULTURAL PROGRESS
factories and farms, actively function in putting the Plan
across. They stimulate the fulfilment of the Plan in
whatever sector of the economic front they are primarily
concerned with, keep abreast from day to day with what
is actually being accomplished, and forward periodic
reports to the Planning Committee to which they are
directly responsible. The trade unions play a particularly
important part in the administration of the Plan.
In other words, the transformation of a Five-Year
Plan from a beautiful, inspiring set of blueprints into
concrete material and cultural achievement is dependent
on the rank and file of workers and farmers. And their
participation in the execution of the Plan is a matter of
conscious volition. As one of the Soviet planning experts
puts it: "It was necessary not only that the working class
as a whole should direct industry but that every individ-
ual worker should understand his part in the total scheme
of production and the connection between his own work
and that of other workers in the same or allied branches
of industry. " This points to one of the outstanding ad-
vantages of social-economic planning: that it enables
every individual in the community to see how and why
his work fits into the larger scheme of things and to feel
a significance and dignity in his job that was seldom
present before.
Socialist planning definitely implies the full use of
productive capacity and its continual development. In
putting this policy into effect it has created among the
workers a new psychology. Under capitalism the worker,
thinking over the experience of the past, is quite prone
to say to himself: "Why should I try to work harder and
produce more when I know that may bring on overpro-
duction and the loss of my job? " Or he may object strong-
179
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
ly to the installation of new labor-saving machinery, fear-
ing that it also will cause unemployment. In the U. S. S. R. ,
however, the workers know that increased production,
far from leading to unemployment and economic misery,
will raise the standard of living for both themselves and
everyone else -- a major reason for their entering with
enthusiasm into schemes for heightening productivity.
I have already mentioned the counter-plans, usually
proposing higher schedules, that factories and other units
may suggest to the State Planning Committee. In the
fulfilment of such counter-plans Stakhanovites, workers
who make the most effective use of tools, time and group
effort, lead the way in increasing the quantity and im-
proving the quality of production. Individual factories,
coal mines, electric power stations and trade unions
enter into "socialist competition" to do the same. "Social-
ism," writes Lenin, "does not do away with competition;
on the contrary it for the first time creates the possibility
of applying it widely, on a really mass scale; of drawing
the majority of toilers into the field of this work, where
they can really show themselves, develop their abilities
and disclose their talents, which have been an untapped
source -- trampled upon, crushed and strangled by capi-
talism. "6
And Stalin adds: "Socialist competition and capitalist
competition represent two entirely different principles.
The principle of capitalist competition is: defeat and
death for some and victory for others. The principle of
socialist competition is: comradely assistance to those
lagging behind the more advanced, with the purpose of
reaching general advancement. "7 There is plenty of com-
petition within the general framework of a cooperative
economic order: competition in doing a first-rate job for
180
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECOHOMIC AHD CULTURAL PROGRESS
the community and in climbing the ladder of achieve-
ment in socially useful ways; competition in the contri-
butions one makes to the progress of a whole people all
working together on the basis of conscious teamwork.
In the U. S. S. R. the new motivation of striving for the
social good, including one's own, has been steadily taking
the place of the old motivation of seeking to pile up
personal monetary profits. Not only education and
propaganda has been directed to bring about this change
in fundamental incentives; planning itself, through es-
tablishing general economic security and the promise of -
ultimate abundance, has been an even more effective
factor. This sort of economy makes it unnecessary for
a man to carry on a bitter struggle with others in order
to maintain himself and his family. The basic economic
functionings and relationships harmonize with and sup-
port the higher social and ethical ideals instead of brut-
ally contradicting and counteracting them. And the Five-
Year Plans give Soviet citizens something definite and
compelling to which they can devote their energies and
loyalties. In this way central planning for the nation in
general brings central planning into the activity of each
individual, pulling together the various strands of his
nature and putting a great purpose into his life.
In the United States it is a commonplace to say that
the social sciences like economics and sociology have
lagged far behind the natural sciences. Scientific plan-
ning in Soviet Russia, as represented particularly by the
State Planning Committee, means that economics and
sociology, with a huge country of continental proportions
as the arena for experimentation, are enshrined at the
very center of things; and have become, in scope, prestige
and effectiveness, the equal of the physical sciences. This
181
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
socialist planning, directed by experts in all the relevant
fields, does not permit the reckless squandering of natural
resources for profit or for any other purpose. It not only
conserves the priceless bequests of Nature, but expands
and increases them, as in the great river, hydroelectric
and irrigation projects now under way. *
Over the ages intelligent men have ever sought to
deepen and broaden the reach of reason in human affairs.
The Russians have gone far in advancing this goal by
instituting, in the form of central planning, integrated
social-economic thinking on a vast nation-wide scale.
Soviet socialist planning, through its coordination and
controls, attains what might be called a great Community
Mind operating on behalf of the common welfare.
3. Achievements of the Five-Year Plans
Let us now review briefly what the Five-Year Plans
have accomplished. The major goals of the First Five-
Year Plan, 1928-1932, were to establish heavy industry
and machine-building on a permanent basis, to mechanize
and socialize agriculture, and to bring about the rapid
technical training of the population. The fulfilment
of these aims was designed both to provide a solid founda-
tion for the building of socialism and to make the Soviet
Union, in case of need, independent of the capitalist
world. The Plan admittedly cost a great deal in terms of
human strain and stress, especially since the emphasis on
heavy industry entailed unprecedented savings being put
into capital investment and therefore the temporary fore-
going of consumers' goods. Accordingly, the Soviet peo-
ple tightened their belts in order that the manufacture
* See pp. 203-208.
182
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ECONOMIC AND CULTURAL PROGRESS
of producers' goods such as blast furnaces and steel found-
ries, tractors and agricultural combines, hydroelectric
plants and all kinds of machinery should go forward at
top speed. Huge quantities of foodstuffs and raw mater-
ials, badly needed at home, were exported to pay for the
import of machines and the hiring of foreign technicians.
What the socialization of agriculture meant in Soviet
Russia was the merging of separate farms into large-scale
collectives (kolkhozes), each managed as a single coopera-
tive unit by the individual members and owners, who
distribute the total income on the basis of the work per-
formed by each peasant. (The average Soviet collective
farm was, as of 1939, about 1200 acres in size and con-
tained about seventy-eight households. ) Each peasant fam-
ily retains, as guaranteed by the Constitution,* the own-
ership of its own dwelling, small kitchen garden, cows,
pigs, poultry or perhaps beehives. The communal side
of the collectives chiefly involves the major aspects of
agricultural production in sowing, reaping, storing,
caring for the herds and in applying scientific methods
and machine techniques so far as possible in all such
activities. Undeniably crucial in the collectivization
program was the establishment throughout the country-
side of the Government-run Machine-and-Tractor Sta-
tions, which rent to the collective farms tractors, thresh-
ing machines and reapers; and provide technical assist-
ance or instruction for the operation of this mechanized
equipment.
Besides the collectives, the First Five-Year Plan saw
instituted thousands of huge State farms (sovkhozes),
owned outright by the Government and managed by a
special Ministry. One of their main functions has been
? See p. 55.
183
? ? Generated for (University of Chicago) on 2014-06-10 17:30 GMT / http://hdl. handle. net/2027/mdp. 39015020686591 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? SOVIET CIVILIZATION
to carry on big-scale agricultural experiments. All hands
on these State farms work for regular wages and are
organized into labor unions.
There can be no shadow of doubt that collectivization
was a necessity for the advance of socialism in the Soviet
Union. The continued existence of some 25,000,000
scattered strips and peasant holdings, with primitive
implements like the wooden plough still widely in use,
meant production that was terribly inefficient, with an
extremely low yield per acre, and therefore insufficient
for the needs of a growing population and an expanding
socialist economy. The obvious solution was to combine
these innumerable small farms into two or three hundred
thousand large-scale enterprises in which the advantages
of modern machinery and planned cooperative endeavor
could be utilized. Moreover, the retention of the old
individualistic agricultural system meant the persistence
of the old individualistic psychology that went with it.
And since the peasants constituted an overwhelming pro-
portion of the population, it would very likely have
proved fatal for the new society had they gone on main-
taining an attitude antagonistic to socialism.
The campaign for collectivization during the First
Five-Year Plan met the stubborn resistance of the kulaks,
the comparatively rich peasants to whom the whole idea
of collectives was anathema. They fought the new pro-
gram in agriculture with all possible weapons, includ-
ing those of murder and arson. The Communist Govern-
ment, on its part, retaliated with severity and harshness,
deporting hundreds of thousands of the kulaks to work-
camps in the Urals and Siberia. Other groups among
the peasants, especially in the Ukraine where a separatist
movement was stirring, became disgruntled over the
184
?
