s "Theses" on the Reorganization of the Soviet Economy
I. Introduction
On tho Soviet press carriedord statement of Khrushchev's "thosos" on the reorganization of the administration of Soviet Industry and construction activities. By simplifying the management and planning for moreenterprisesonstruction sites, Khrushchev hopes to improve efficiency which will thereby assist in pushing the rate of Industrial growth back up to therercentby the present Five-Year Plan.
The theses, which were ordered to be developed by the February meeting of the Central Committee of the Communist Party of the Soviet Union, will be presented by Khrushchev to the-next, still unscheduled, session of the Supreme Soviet of tbe USSR. An unusual introduction to the text states that the Party Central Committee and Council of Ministers decided to publish the theses in order to encourage wide popular discussion and broad exchange of opinion ln the working out of details and that the theses only outline broad programs and problems but do not constitute final decisions.
The theses expand and elaborate the preliminary information on the February decisions previously published by the Soviet press and that given by Khrushchev and chief long range planner Baybakov to US newsman Joseph Alsop. They deal almost exclusively with the administration of industry and construction and have little or nothing to say about agriculture, national transportation-ivil government, military organization, or the party.
While great detail Is presented on some facets of thereorganization, the omissions of many Important problems--partlcularly the place of ortrnnizatlons such as armaments,and shipbuilding industries in the newthat much planning remains to be done, or, more likely, that the theses have been heavily censored prior to public dissemination.
C GGNFIDEXTDtf.
There is reaffirmation of the primacy of heavy industry,that the main economic task of the USSR is the overtaking of the leading capitalistic states in per capita production, and confidence ln the ability of the Soviet Union to fulfill goals of the Sixth Five-Tear Plan. There is no reference to the6 Central Committee decisions callingeduction inincreased housing,eview of the Sixth Five-Year Plan goals. The7 plan as well as all personalities, with the exception of Lenin, are also ignored.
The theses would abolish Pervukhin's three month old State Economic Commission for Short-range Planning. Whether Porvukhln is to be assigned another Important task in the new system is not yet known.
II. The New Organization
The theses state that the proposed sweeping decentralization will resulttructure similar to the former economic councils established by Lenin Immediately after the revolution, but that the new structure will still hold the gains of central planning while maintaining the rights of the union republics. Regional economic councils are suggested as the basic units for administeringand construction activity. An economic council would be responsibleeographic area and responsible to the existing government of that area. Examples described In the theses as idealouncil for the Bashkir ASSR, one for tbe Sverdlovsk Oblast and one for Chelyabinsk Oblast. Other examples cited are Yakutsk and Magadan. Individual shops, mines, plants, construction Jobs and technical supply organizations will be controlled by..the local city government, the regional economic council, or the Council of Ministers of the particularupon theof the specific enterprise.
The economic councils and the republics will be givencontrol over the enterprises in their area and will even gain some planning authority. They will be able to allocatefinances, material supply, and within the framework of the national plan, allocate products and locate new construction. The precise composition of the economic councils is not described, though some indication is provided. The Union Republics, however, will lose their specialized ministries, and will establish State Planning Commissions similar to Gosplan in Moscow.
The regional economic councils are to remain small, and are to use oxperts from local production, educational, and scientific organizations as "consultants" to augment their strength forproblems. This system is already in use by the municipal and rural governments.
The central government of the USSR will differ radically from It* present form. There will remainew specialized Those abolished, according to the theses, will not beby any similar unit withew name and form. The Chairmen of the republican Councils of Ministers will take the places of tho specialized ministers in the USSR Council of Ministers. The USSR Council will also include some subordinate Gosplanamong Its new members.
The State Planning Commission (Gosplan) will be greatly strengthened and expanded. It will take over some currentresponsibilities (others are to be given to tbe republics and the economic councils) as well as responsibility for the yearly plan and its implementation, now held by Pervukhln's State Committee for Current Planning, scheduled to be abolished. Gosplan willsections, as at present, for the important branches ofand the section headn may be of ministerial level.
Gosplan will establish national economic goals, allocateamong regions, determine rates of growth, handle plans for strategic stockpiles, review the work of regional planning bodies and control in detail the distribution of certain Items in short supply.
Apparently, the existing committee on new technology, headed by Malyshev until his recent death, will be replacedew organization. The Committee on Wages and Norms once headed by Kaganovich Is not mentioned, but the Committee on Construction is specifically retainedart of the Central government.
The Ministry of State Control, under Molotov, is to bereorganized" with the aim of increasing ite effectiveness. However, specific proposals foreorganization are notin the theses.
Accounting and statistical matters are to be centralizedreatly strengthened Central Statistical Board whose chief will have membership on the Council of Ministers. The Board will also provide for machine data processing centers to be established regionally under its control.
Finally, many of the scientific, research designing, and similar institutions now subordinate to the specialized ministries and located in Moscow will be physically relocated ln the areas of their chief interests and will be placed undor the control of the regional administration.
b* noJedollateral result of the reorganization
proposed in the theses will be the physical transfer of tens of thousands of intermediate level bureaucrats and technicians, mostly
GQrWfWENTML (
from Moscow and Leningrad to the provinces. arge part of the urban society of the USSR will unquestionably be affected.
III. Problems and Objectives
The Soviet leadership necessarily has had to devote increasing attention to problems of economic organization and institutional practices. Stalinist controls which repressed managerialto the pace of planned economic activity no longer exist. The nation has entered an era of tight labor supply. ising trend of capital costs as the more lucrative natural resources areisactor in economic planning. Agriculture and housing have emerged as increasingly critical major problems.
Although Khrushchev's theses explicitly deny that theseorganizational changes have anything to do with "some(which) have come to light in the fulfillment of theeconomic developmenthe general objective is to improve over-all efficiency-in order to push the falteringgrowth rate back up to theoercent annual average required by the policy of overtaking the industrial production of the West. The principal organizational and institutional problems facing the "collective leadership"ormidable list. Most important problems to be dealt with are: he detailin centrally planning and controlling an economy growing rapidly in size and complexity;xtreme vertical integration of industrial enterprises;rossragmentation of construction activities;ureaucratic obstructionism andin the centralized, functional economic ministries;ow level of utilization of local building>materlale not Included in the national economic plan. Khrushchev; is sure that .the neworm of. organization -will deal, eff actively'.with roblems; he; expects it tb- be -for. industry' whatSthe virgin-lands have been ttbus far).to*agriculture. Furthermore, he believes that tbe center can maintain sufficient control to insure that theto bo delegated to the regional level will be exercised for the ends specified by the leadership.
IV. Relevance of Proposed Changes
The new economic councils presumably would present the regional gosplans and, in turn, the hew consolidated Gosplanomewhat smaller quantity of dataore summary and integrated form than was obtainable from thadd functional ministries to be abolished The relationship of the economic councils to Gosplan would beanalagous to that of the previous relationship betwoen Gosplan and the functional ministries. Bringing economic direction closer to the enterprises may provide better direction with lessdelay.
GStmBEN-FML f
If the regional organizations can operate tho system of direct distribution of material resources more expeditiously, vertical integration. the tendency to concentrateingle plant the production of most component parts, from steel castings towipers,omplex Item suchruck) may decrease as plant managers become more willing to roly on sub-contracting to highly specialized plants. This Is the most Important problen which the new system is designed to alleviate slnco reduction in vertical Integration offers the greatest theoretical savings in labor and materials costs. However, the degree to whichof materials can be improved is doubtful, since chronic shortages have characterized the Soviet economy under the high growth rates Imposed.
Control of all economic activity at the regional level should reduce cross hauling. The managerlant now might be willing to contract for supplieslant located across the street; failure to deliver materials can be taken up promptlyearby common superior Instead of relying upon adjudication between rival bureaucratic empires in far off Moscow.
Consolidation of the bulk of construction in each regioningle organization should reduce the fragmentationesult* the trend of rising construction costs may be haltod, Khrushchev's theses, however, do not touch upon aof problems in the construction sector which have beenfor some time. For example, the traditional emphasis onof activity as distinct from completion of capacity, the need for new labor saving machinery, further wage reforms, andhousing, are not mentioned In the theses.
Khrushchev's belief that shaking up the apparat will cut -through the tangled skein of bureaucraticdesires to slow the tempo, resistance to technological innovation, protection of various vestedbe too optimistic. the initial confusion the decentralized system mayime, prove more responsive to tbe leadership's policies. But tbeof counter tendencies, in time, seems not unlikely. organizations may prove no more effective in controlling the activities of enterprise management than were the old central ministries. Regional organizations may be no less conservative in introducing new technology, and may have vested Interests Just as do the present centralized functional ministries. Similarly, since the new economic regions apparently will not cut across existing republic boundaries even when there are good economic reasons for doing so, the oconomlc nationalism which Stalin repressed ln the Nineteen Thirties could reappear in the economic councils of the Union Republics. This possibility, in fact, ls recognized by Khrushchev in the text of the theses.
Maintenance of Central Control
Many of tho obstacles to implementing the now system arerecognized by the theses. The "commanding holghts" of key economicgoals for production, investment, labor productivity, costthe prerogative of theleadership. At the same tlmo, Instruments of control over use of the newly delegated authority will be strengthened. Gosflnr .rill absorb much of the existing Short-range Planning Commission and its powers will be broadened. The new Council of Ministers will Include tho Chairmen of the Union Republican Councils ofex officio, possiblyounterbalance to nationalistic The role of the Party as an instrument of control is to be enhanced further, and it will bo supplementedeconstituted Ministry of State Control which apparently will become morein nature. The traditional financial and statistical controls will be tlghtenod and some effort will be mado to revitalize the trado union.
VI. Conelus ions
Since Khrushchev became "first amongoviet leadership has proceedod slowly and cautiously ln tbe field of organizational policy. As time has passed, however, the leadership has evidenced increasing awareness of tbe need for more drastic organizational changes. Crowing managerial resistance to "forced draft" economic growth, rising costs and increasingly critical problems in housing ond agriculture are areas demanding action. Drastic revision of thc7 economic goals highlighted thoso problems. Khrushchev's theses call for reorganization aimed at obtaining improved efficiency ln construction, reduction of cross hauling, reduced duplication and Increased sub-contracting. Suchmay well result, except significant reduction of verticalthrough encouragement of sub-contracting is oxpected to be nearly impossible of achievement as long as the present rapid economic growth is maintained. Vertical industrial integration is more unction ot tempo than of organization. Moreover, the developmentendency toward economic nationalism among regionsecognized danger. The problem confronting tho Sovietis bow to encourage initiative at the lower echelons ofwithout sacrificing ultimate control.
Assistant Director Research and Reports
GONPIDENTt7tT
Original document.
Comment about this article, ask questions, or add new information about this topic: