-CONFIDENTIAL
PROVISIONAL INTELLIGENCE REPORT
INDEXES DF HOUSEHOLD CONSUMPTION SN" THE
CIA HISTORICAL REVIEW PROGRAM RELEASE IN FULL
juuicmHHi-
'^iwnriiiLiii
e Bsmm ess
PROVISIONAL INTELLIGENCE REPORT
INDEXES OP HOUSEHOLD CONSUMPTION IN THE
CIA/RR
(ORR Project)
NOTICE
The data and conclusions contained in this report do not necessarily represent the final position of ORR and should be regarded as provisional only and subject to revision. Ccennenls and data which may be available to the user are solicited.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
Tills report examines household consumption in the USSR, identifies tho contents and relative Importance of different components ofconsumption, and presents indexes of movements of householdand its components for the- Trends In each of the three principal components of consumption are given separateincluding an appraisal of the effect of the consumer goods programn each component. An attempt Is made to evaluate Soviet levels of consumption by comparing Soviet production per capita ofconsumer goods with that of the US and Western European countries. The probable extent of dissatisfaction among Soviet consumers with Soviet levels of consumption lo examined.
'BVF
CONTENTS
Page
I, Introduction
II. Indexes of Household Consumption in the
Comparisons
Consumer
III. Levels of
TV-
Appendix A- Selected State Decrees Affecting the
Production and Availability of Consumer
Goods in the USSR,
Appendix B- Statistical Tables
Appendix C-
Appendix D- Gaps in
Appendix E. Source References
- v
Importance of Pood, Nonfood Consumer Goods,
and Consumer Services in Household Consumption
of Aggregate Household Consumption in the USSR,
Sclectod
of Household Consumption Per Capita in tho
USSR, Selected
U. Indexes of Aggregate Household Consumption ofand Services in the USSR, Selected
5- Indexes of Household Consumption Per Capita ofand Services In the USSR, Selected
6. Indexes of Aggregate Household Consumption ofand Services In the USSR, Selected
7- Indexes of Household Consumption Per Capita ofand Services in the USSR, Selected
8. Relative Importance of Selected Items in Household
Consumption of Pood in the5
9* Comparison of Diets in the USSR as Indicated by
Consumption Per Capita of Major8 and
10. Relative Importance of Selected Items inof Nonfood Consumer Goods in the
Page
XI. Relative Importance of Consumer Services in the USSR,
17
Per Capita of Selected Food Products in the
USSR, the US, and the7 and
Per Capita of Selected Nonfood Consumer
Goods In the USSR, the US, and the UK,
1*. Population of the USSR, Selected
of Food in thend
of Nonfood Consumer Goods in the USSR,
of Aggregate Household Consumption in the USSR,
nd
l6. Indexes of Population and Household Consumption Per
Capita in the -
19> Aggregate Household Consumption of Food in the USSR,
nd
Household Consumption of Nonfood Consumer
Goods in the-
of Production Per Capita of Food Between
the USSR and Other Countries, Selected Years,
of Production Per Capita of Nonfood Consumer
Goods Between the USSR and Other Countries, Selected
Chart
Following Page
USSR: Indexes of Household Consumption
CIA/RR
(ORR
IKDKXK3OUSEHOLD CmiSvMPTIOH IK THE USSR*
The rapid growth of the Soviet economy during the Five Year Plans, which began, has been achieved at the expense of household consumption."* 8oviet grossproduct (GHP) more than tripled, whereas aggregate household consumption increased by aboutoercent, and householdper capita byo hO percent.
During the same period, consumption of nonfood consumer goods more than tripled and consumption of services more than doubled, whereas consumption of foodwhich representedercent of total household consumptionncreased by onlyercent ander capita basis actuallylight decline.
Much of the lag In the Increase in consumption behind that of GHP took place. 8onsumption increasedigh rate, matching the increase in GKP, and0 consumption had regained the previous peak achieved The continuation of high annual increases beyond the recovery of the previous peak indicates an increased postwar emphasis in the USSR on raising levels of consumption.
Despite the postwar improvementa, Soviet levels of consumption continue to be extremely low compared with those of Western countrie Ho firm evidence is available, however, which would indicate serious dissatisfaction among Soviet consumers.
* The estimates and conclusions contained in this report represent the best Judgment of ORR as
** Household consumption is defined as total receipts by families and individuals of goods and services for consumption.
'1-
I- Introduction.
A. Background.
Beginning with the First Five Year, the USSRrogram of forced industrialization which la still Inand which has achieved results remarkable by Western Throughout the, Soviet GNPannually comparedercent annually in the US. The output of basic heavy Industries increased by aboutercent an-
ar0 t0ercent acDuany Blnce
These high rates of growth have been achieved byuch higher share of GNP to capital formation than in the US or in any other country of Western Europe and by directing capital formation into industries which produce capital goods. $/ ith the exception of the years during and inmedlately after World War II, the USSR has reinvestedercent or more of GNP, and Industryheavy industry) has receivedercent of the total amount reinvested compared withercent in the US. kf
B. Definitions.
The term level of consumption as used in thia report refers to the actual consumption of goods and services as opposed to the terms standard of consumption, which generally refers to desired levels of consumption, and living level or living standard, whichuch broader concept including such things as workingfreedom of choice, and security.
Z ?or eerially numbered source references, see Appendix E, ** For tt discussion of the treatment of medical and educational services, which are also provided free or direct charge, seeAppendix C.
-
The term household consumption refers to receipts byand families (including military personnel) of goods and services. These receipts include actual goods obtained from state, cooperative, and collective farm market retail establishments; from self-owned garden plots on collective farms; and imputed services rendered by owner-occupied dwellings. This report takes into account neither changes In household inventories nor certain services supplied free of direct charge by the Soviet government such as military security and government administration.**
A more precise definition of household consumption can he given in terms of its measurement. There arc at least two distinct ways io which household consumption of consumer goods" can he measured. The first, or direct, method is to add (l) total retail sales**collective farm marketonsumption by producers (for example, consumption of food from private garden plotsilitary and forced labor subsistence. The second, or indirect, method is to subtract from total production of individual consumer goods and net imports (l) seed, feed, and waste in the case of agriculturalndustrial use;et additions to state Tn principle the two methods yield the same result. Both methods are utilized in this report, themethod in the construction of the Individual indexes and the direct method in the construction of the weights employed in combining the indexes for the principal components of total consumption.
Total household consumption thus defined amounted to nearly two-thirds of Soviet GNPalued at market prices whichthe turnover tax. 5/ Total household consumption has been grouped into three components for presentation and analysis: food, nonfood consumer goods, and consumer services. The relativeof the three components, both in household cash expenditures and in aggregate household consumption (includings shown in*
The treatment accorded to consumer services is similar. See methodology. Appendix C.
** After deducting sales to Other deductions, such as net increases in producer or retail inventories, also could have been made. For the commodities under consideration in this report, however. It is believed that forpurposes such deductions can be* ollows on p. k. The effect of the substitution of flour for bread on the index of total consumption is to give thelight upward bias bythe weight for consumption of food.
A sample of items to be included in tho index for each of these three components was drawn. Insofar as possible the specific items were selected on tho basis of their representativeness and importance in the total, but the overriding consideration was the availability of satisfactory data. For example, flour wasfor bread in the index of food because of the complete lack of . reliable data on bread for the years since World* On
II s t
T
the other hand, although satisfactory data on production ofwere available, automobiles were excluded from the index because few are attainable for private ownership.
It was not possible to construct separate indexes of subgroups of the food or the nonfood components of the index of totalbecause of Inadequacies in the data. Although theseare of relatively minor importance to the indexes of food and nonfood consumer goods, such inadequacies could seriously impair the reliability of Indexes of subgroups of food or nonfood components. For example, the substitution of flour for bread would gravely weaken an indexubgroup of the index of food, such as processed food, but probably would haveinor effect on an entire index of food.
II. Indexes of Household Consumption in the USSR.11
A. Long-Range Comparisons.**
A comparison of levels of consumption in Soviet households8 with thoBe5 emphasizes graphically the cost of the Soviet program of forced industrialization to the average citizen. Whereas CUP more than tripled8* shows that during theggregate household consumption increased by onlyercent if medical and educational services are excluded and byercent if these services are included. he previous peak year,5 the increase in aggregate householdamounted to no more thanoercent. All indexes presented in this reportargin of error of plus orercent except the indexes of consumer services, whichargin of error of plus or minusercent.
* Political boundaries used throughout this report are those of the year in question unless otherwise indicated.
or the basic data on population, production, and consumption for the summary tables shown in the text, see Tablesppendix B.
ollows on p.* ollows on p. 6.
hows that during theousehold consumption per capita Increased by onlyercent if medical and educational services are excluded and byercent if these services are included. During thehe increase in householdper capita amounted to onlyoercent.
Indexes of Aggregate Household Consumption ia the USSR a/ Selected
6 7 0 5
Aggregate household consumption b/
Excluding medical 6*
a"! Political boundaries are those of the year in question, b. For an explanation of the use of alternative indexes, see methodology. Appendix C.
Table 3
Indexes of Household Consumption Per Capita in the USSR a/ Selected
1 5
Household consumption per capita b/
Excluding medical 76 76
Including medical 76 7*
Political boundaries are those of the year In question, b. For on explanation of the use of alternative indexes, see methodology. Appendix C.
t
Including medical 72
The greatest increase registered during theos in consumption of nonfood consumer goods, with, consumerlose second. hows indexes of aggregate householdof consumer goods and services for selected. The smallest increase was shown in the consumption of food. Because of the importance of food in the average household budget, the slowin total consumption was primarily the result of the slowIn consumption of food.
Table k
Indexes of Aggregate Household Consumption of Consumer Goods and Services in the USSR a/ Selected
Item
index b/
index by
mean
consumer goods
index b/
index b/
mean
services oj
medical and
services
medical and
services
boundaries are those of the year
an explanation of the Lospeyres andsee methodology, Appendix C.
of the lack of data, the Laspeyresindexes were not computed for consumer For an explanation of the alternativeand excluding medical andsee methodology. Appendix C.
hows indexes of household consumption per capita of consumer goods and services for selected' er capita basis, consumption of food actually declined by about kduring the- If the qualitative downward shift in the protein-to-starch ratio is taken into account, the decline was even greater."
Table 5
Indexes of Household Consumption Per Capita of Consumer Goods and Services in the USSR a/ Selected
Item
Index b/
index b/
mean
consumer goods
index b/
index bf
mean
services c/
medical and
services
medical and
services
Political boundaries
thos
of the
in
an explanation of the Laspeyres andsec methodology. Appendix C.
* The protein-to-starch ratio is discussednd in III, below.
of the lack of data, the Laspeyresindexes were not computed for consumer For an explanation of the alternativeand excluding medical and educationalsec methodology. Appendix C.
B. Postwar Cccaparisona.
Household consumption in the USSR hastriking recovery from wartime and early postwar lows, registering increases equal to or in excess of the growth of QHP. hows that during theggregate household consumption increased byercent, regaining0 the previous peak reached*
Table 6
Indexes of Aggregate Household Consumption of Consumer Goods and Services in the USSR Selected
100
consumer goods
services a/
household consumption a/
Medical and educational services
included.
is little difference between the alternative service indexe
* The index of total consumptionresented in thisdiffers from that presented in The index presented in that source is the arithmetic mean of two indexes, one constructedo weights and the other5 weights, whereas the present index is weighted by prices
** For example, Soviet agriculturehole emerged from World War II with greatly depleted mechanized equipment, and much of that was badly worn. The textile industry lost aboutercent of its cotton spindles andercent of its
Increases in the early part of this period may be accounted for by the initial low levels of output resulting from thedepletion of capital resources In agriculture and light , Industry during World War II.** Continuation of the high annual
fine
Increases well beyond the previous peak, however, indicates anpostwar emphasis on raising levels of consumption in the USSR.
hows indexes of household consumption per capita for selected-
Table 7
Indexes of Household Consumption Per Capita of Consumer Goods and Services in the USSR Selected
200
8l
82
Nonfood consumer goods Consumer services a/
t
e
o
69
8
household consumption a/
and educational services are included. For these years there is little difference between the alternative indexes.
* P.bove. ** P. Following
The indexes presented inndhen compared with those presented in Tables U** show that, despite the highincreases in consumption of foodhe peak consumption of food per capita reached8 has never been regained. of nonfood consumer goods, however, more than doubled during the period, regaining the previous peak0 The accompanyingompares prewar with postwar rates of growth In householdper capita In the USSR. Indexes are included for totalconsumption and for consumption of food, nonfood consumer goods, and consumer services for the.
USSR
indexes of household consumption per capita
Selected
C. Food.
onsumption of food, the moat important of the three components of household consumption defined in this report, amounted to aboutercent of household cash expenditures and to aboutercent of total household consumption in the USSR.
8ousehold consumption of food, as shown in Tables k** increased only betweenndercent on an aggregate basis and declined byercenter capita basis. During this period, despite substantial increases in the consumption of minor food products, consumption of the three most important items in the index of food as shown inlour, meat, and fluid milkincreased less than did theor actually declined.
Table 8
Relative Importance of Selected Items in Household Consumption of Food in the USSR5
Meat
Fluid milk
15
Canned
Other
estimates are based oacontained in the index inhas been substituted for bread.
* P.bove. ** P.bove.
-
-
figure includes suchpotatoes, fish, andindividually amount to5 percent of consumption ofterms of prices
A further impoverishment of the diet of the Soviethift in the ratio of the consumption of some major components of the diet. ompares the Soviet diets8 and Consumption of the high-quality, high-cost protein foods, meat and milt, shows declines ofand Consumption of flour, the major food Btaple in the USSR, declinedercent. Losses of starch from the diet becausehortage of flour were offset by the increasing availability Of potatoes. The protein components, whichreater loss, were replaced largely by concentrated, inexpensive, and nonnutritive sugar. Increases in fish and vegetables In the diet, however, have served to some extent to lessen the severity of these nutritively inferior substitutes.
Table 9
Comparison of Diets in the USSR As Indicated by Consumption Per Capita of Major Components
5
Consumption Per Capita
Dietary Component
Change
In the latter half3 the Soviet government wasnot so much by the slow rate of increase of consumption of food during the postwar period but apparently by the failure ofof food per capita to increase above thatf food per capita2 was betweenndercent below that The Soviet Council of Ministerseries
of decrees* calling for or designed to effect increases, vhlch in some cases were drastic, in the production and availability of food products* and The decrees, which vere widely regarded asnew course" in Soviet economic policy, called for agricultural measures to increase production andby farmers andeneral upward revision of the goals for production set2 by the Fifth Five Year.
The goals for production5ide range of processed and semiprocessed food products, including some of the mostitems in household consumption, were Increased. At the same time, imports of food were increased and substantial quantities of storable foodstuffs vere released from state reserves so thatcould be immediately increased. The measures directly affecting agriculture were designed to increase production of food crops and livestock, including those utilized primarily as rawin food processing plants and in the production of most nonfood consumer goods. Implementation of the program brought about an increase in the rate of growth of consumption of food* compared3 (see, attributable in part to increased imports and to reductions in state reserves.
Ink andowever, the revised goals for production of most foods were abandoned, and in most cases even the original goalshich had been setere The increase in consumption of food5 above thatk dropped below the rate that prevailed in the12 before the "new course."
The Inability to meet planned goals probably is attributable primarily to failures in the supply of agricultural rav materials tofood processing industry. Apparently recognizing this weakness in supply, the Soviet government has attempted to increaseproduction. Decrees have been issued which call for measures to be taken, ranging from initiation of the "new lands" program first announced in* to the milk decree of
* isting of the more important of these decrees, see Appendix A.
** P. bove.
On balance, it seems probable that the net effect of the "new course" on consumption of food5 has been small.
Consumption of nonfood consumer goods In the USSR has shown the greatest increase of the principal components of household The increase in consumption Of nonfood consumer goods85 rangedoimes, depending on the index number formula used.
Consumption of the three most important itemsotton fabrics, leather footwear, and sewn garmentsshowed relatively moderate increases8 Because of its low initial base, consumption of consumer durable goods, including radio and television receivers, registered much greater increases. The high rates of growth of consumption of durable goods have not affected the nonfood index significantly, however, because of the minor importance of durable goods.
Tablehows the relative importance of selected items in household consumption of nonfood consumer goods in the USSR
Table 10
Relative Importance of Selected Items in Household Consumption of Nonfood Consumer Goods in the USSR5
Item
Cotton fabrics Leather footwear Sewn garments
Silk and artificial silk fabrics b/ Cigarettes Other c/
estimates are based on the data contained in
item consists primarily of rayon fabrics.
figure includes such items as woolen and linenhosiery, and consumer durable goods, whichto lessercent of household consumption ofconsumer goods.
Total
Despite the substantial increases In the consumption of nonfood consuocr goods vblch were attained82 and plannedn3 the Soviet Council of Ministersecree calling for en upward revision of goals5 under the Fifth Five Year Plan. The decree appears to have had little Influence, however, on total consumption ofconsumer goods. The goal for production was increased forfost important items In the nonfood consumer goods index, sewn garments. With few exceptions the greatest increases inwere planned for conoumer durable goods, which are relatively unimportant in total consumption of nonfood consumer goods in the USSR. 6 the USSR announced that almost none of the revised goals had been reached and that oven the original goals5 were not reached for two of the most important Items in the index of nonfood consumer goods, cotton fabrics and leather footwear.
Part of the reason for the failure of the decree ongoods to influence the Index of the consumption of nonfood consumer goods may be that the program of consumer goods is notadequately in the index of nonfood consumer goods. of the data used in construction of thee It insensitive to short-term movements in consumption. Theseare as follows:
Much of the emphasis of the program was placed upon improving the quality and assortment (product mix) of nonfoodgoods. The index of nonfood consumer goods ia insensitive to changes in quality, and it utilizes, where pertinent, anproduct mix derived from1 Plan.
Implementation of the decree on consumer goods was achieved in part by reducing state reoerveo and by increasingof nonfood consumer goods. Because of the lack ofdata, no adjustment of the Index of nonfood consumer goods for changes in state reserves has been made. Because of the minor importance of foreign trade in the principal items in the indexlessercent of Soviet production In moat casesnohas been made to reflect changes in foreign trade.
On balance, however, the net effect of the consumer goods programn the consumption of nonfood consumer goods5 probably was small.
F,. Consumer Services.
Consumer services, including medical and educational services, have shown the second greatest increase85 of the three components of Soviet household consumption. This increaseboth the low levels of consumption of consumer services8 and the heavy emphasis placed upon expanding these services during the Five Year Plans. ggregate consumption ofservices, including medical and educational services, had more than doubled, and consumption per capita of consumer services hod increasedercent compared
Consumption of housing and utilities, the most important single component of consumer services, showed the smallest increase8ffsetting much greater increases of other consumer services which received greater priority from the Soviet government. 8ousing and utilities, including imputed rent on owner-occupied dwellings, increased byercent. Consumption of educational and medical services, which startedower base and whichuch higher priority,imesimes, respectively, during the same period.
hows the relative importance of consumer services
Ill. Levels of Consumption.
* Tableollows on* If adjustments for foreign trade had been made, they would have shown the USSR in an even less favorable light compared with the UK; whereas Soviet imports of consumer goods are negligible, those of the UK are substantial.
The extent to which the consumer in the USSRow lovel of consumption is suggested by comparisons of Soviet production per capita of consumer goods with that of Western countries. Although the comparisons which follow do not take into account differences in quality and in the extent of foreign trade or industrial use, the comparisons do indicate that, despite impressive improvementhe level of consumption in the USSR5 was exceedingly low by Western standards.** These comparisons serve to deflate the official claims which make use of impressive percentage increases in production08 to measure progress in the light and the food industries.
Table 11
Relative Importance of Consumer Services in the USSR
Percent
Excluding Medical and Including MedicalServices Educational Services
and utilities a/ Transportation Personal oervicea and entertainment Ccemnunicat iono Medical services Educational services
Total
yigureii lnrl-Jde" tnputed rent on owner-occupied dwellings.
omperes annual production per capita of selected food products in the USSR with that In the US and the7 theweekly supply of foodoviet citizenounds of flour and leasound of meat comparedounds of flourounds of meatS citizen. Moreover, the flourto tho Soviet consumer would have been madereat extent from rye or other less preferred grain, whereas con wheat flours In themall part of total consumption of flour.
oviet production had increased sufficiently to provideounds of flour and four-fifths pound of meat per capita per week. At the same time, US production was sufficient toounds of meatounds of flour per capita per week. Meanwhile, Soviet production per capita of augar, which had been produced at approximately the same rute In both the US and the USSRad declinedercent-
- Tableollows on
Table 12
Production Par Capita of Selected Pood Productn in the USSR, the US, and the UK7*
Pc la
Item
y
y
cj
boundaries are those of the year In question.
and UK flour Includes wheat flour only, hecauaeall flour consumed In these countries Is made from wheat.
Because the US enjoys one of the highest levels of consumption in thoomparison of the USSR with the US may tend to exaggerate the Inferiority of the Soviet level of consumption. omparison of the Soviet weekly supply of food with that of the UKhen some British wartime rationing remained in effect, may be more meaningful. In that year, British production per capita providedercent more meat and aboutercent less flour than that of the USSR. roduction per capita of meat in West Germany was twice that of the USSR, and in France such production was three times that of the USSR. In butter, cheese, vine, and beer, all Western countries considerably exceed the production per capita in the USSR."
* Seeppendix B.
Deficiencies in the food supply of Soviet consumers arofirst of all, to the lag in agricultural production. Thedoes not lie with agriculture alone, however, but in considerable measure with the light and the food industries for
shortcomings in manufacturing and processing and with theand retailing network for faulty distribution and marketing. The limited processing facilities and inadequate storage andfacilities, together with lack of progress in agriculture, account for the limited availability and inferior quality of Soviet food products.
Although production of clothing and footwear In the USSRby aboutercent per capita7he USSR producedairs of leather footwear per capita* comparedairs in the USairs in the UK. Production per capita of cotton fabrics, the most important of Soviet textile and garment fabrics, was less than half that of the US and considerably less than that of the UK. Tablehows the production per capita of selected nonfood consumer goods lo the USSR, the US, and the UKft.
Table 13
Production Per Capita of Selected Nonfood Consumer Goods In the USSR, the US, and the UK*
Item
fabrics
footwear
of persons
radio
machines
of persons
machine
of persons
refrigerator
cars
of persons
car
Production of durable consumer goods, aucb aa householdincreased rapidly during the postwar era; however, littlebeen Bade before that time. For example.* the USSRft the rateorersonsfor CYPrversons in the US; refrigerators, at the
rateorersons; end passenger cars, at the rateforersons. Radios were more numerous, but theof production amounted onlyor everyersons1 ror everycrsonTin
Despite the low levels of consumption per capita indicated by these data, there is no firm evidence of serious, widespreadamong consumers in the USSR. The average consumer,influenced by the substantial postwar improvements, apparently gives little thought to the contrast between present levelfofQJ*tiCUlarly of thoSc Prevailing8 and
There Is recent evidence, however, of considerable interest in the levels of consumption in the US and other Western countries on
orn Western visitors come in contact. Thla evidence suggests that the average Soviet citizen, awakened by contacts with Germans and other Eastern Europeans during and after World War II, is aware that higher levels of consumption^ exist outoide the USSR and that he may eventually insist upon higher levels of consumption for himself, even at the expense of economic growth.
IV. Conclusions.
Two points of primary Importance have been derived from thisthe average citizen of the Soviet progrun
of industrialization pursued during the period of the Five Year Plans have been great. 85 the increase in the levels of household consumption has fallen far short of the increase in GRP. Second the impact of Soviet emphasis on the program for expansion of heavy industry has been fell most heavily in the area of food" of food showed the smallest gain of the three principal components of consumption and increasedlower rate than did the population8
Although attributable in part to the program of agriculturalthe failure of consumption of food to keep pace vlth the expansion of CK? and of the other components of householdreflects primarily the low priority assigned to agriculture by the Soviet government
Because of the importance of food in household consumption, any successful program to raise the levels of consumption significantly in the USSR mustajor effort to increase the availability of foodajor expansion of agricultural production.
TE DECREED AFFEOTIKG THE VECmCTIOK AND AVATLASTLPTYO?lPUt^ GOODS IK THE USSR
THE!
ugust
Hew Agricultural Tax Law Reducing Delivery Quotas and Excessive Taxes
September Measures for the Further Development of Agriculture in the USSR
eptember Measures for the Further Development of Livestock
Production and the Lowering of Quotas for Obligatory Deliveries of Livestock Products from the Plots of Individual Kolkhoz Farmers, Workers, aad Employeco
eptember Measures for Increasing Production and Procurement of Potatoes and Vegetables In Collective and State35
1 October Measures for the Further Improvement of Machine Tractor Station Operations
17for the Further Expansion of Goods Turnover
and Improvement of the Organization of the State, Cooperative, and Collective Farm Trade
2dfor Expanding Production of Industrial
Consumer Goods and Improving Their Quality
ctober Measures for Increasing the Production of Foods and Improving Their Quality
5 March
arch
une
August
ugust
2 February
Measures for Further Increasing the Production of Grain and for Reclamation of Virgin Soil and Waste Land
Measures for Increasing the Production of*5
Measures to Increase Flax Growing
Measures to Increase Animal Husbandry
Introduction of Seasonal Retail Prices for Potatoes, Vegetables, and Fruit and Reduction of State Retail Prices of Vegetable Oil and Canned Vegetables
Measures for Further Development of Virgin and Fallow Land to Increase Grain Production
Measures to Increase Production of Livestock Products
February Measures toew Farm Pay System to Increase the Amount of Goods Delivered
Marchay
8 July
to Reduce Centralized Farm Planning
Measures to Raise the Interest of Collective Farmers and Workers of MTS Brigades to increase Corn Output5
Measures to Insure Work Already Set Up and Done to Increase Agricultural Ouput
-S g
anuary
9arch
Measures to Increase the Production and Procurement Deliveries of Potatoes and Vegetables
Measures to Increase Output of Pull Cream Milk and to Improve Delivery of Milk to the Populations of Towns and Industrial Centers
Measures for the Further Development of the Initiative of Collective Farmers in Organizing Collective Farm Production and Managing the Affairs of Artels and to Increase Monthly Advance and Supplementary Payments for Collective Form Work
-
STATISTICAL TABLES
Table 1*
Population of the USSR a/ Selected
Millions
5
/
1?U. *
are asuly. and interpolationson.
was adjusted toincreases
-W
sis
* r 3& i a
Jv. 3* IS
$ a* * mi
.
Table 17
Indexes of Aggregate Household Consumption in the USSR
OC"
870 89 0 1 g 3 ft
Aggregate household consumption
Excluding medical and educational services
medical and educational services
goods
index
cc
index
GO
mean
consumer goods
index
index
mean
services
medical and educational services
medical and educational services
The Indexes of consumer services presented in this tableargin of error of plusnusercent; the otherargin of error of plus orercent.
-j
Table 18
iDdexeB of Population and Household Consumption Per Capita in the USSR5
m "i
gills! I
Table 21
Comparison of Production Per Capita of Food Between the USSR and Other Countries a/ Selected
Table 21
Comparison of Production Per Capita of Food Between the USSR and Other Countries SelectedContinued)
cm
US
u:<
France West Germany
5-2
ipwi|l
ssssf sskes ISSESS k
METOCDOLOG Y
T. Basic Data.
A. Production.
1. Consumer Goods.
Estimates of production of the individual ccmaodltlesIn the construction of the Indexes vere obtained or derived from official statements contained In the Soviet press and in periodical literature except where minor revision was required by nev datain. Complete methodology and documentation of the estimates of production of food are contained innd ore not repeated here.
In general, production of nonfood consumer goods vashy starting from the goals of the Sixth Five Year, which vere anoounced by the Soviet government ae absolute figures, ard vorklng backward by means of orTiclu! announcements of annual percentage changes. Gaps of no moreingle year vere filled either by annumlog no change from the preceding year or by semilogarithmicdepending upon the individual circumstance. Estimates of production of most items0 vere derived from3 decree on consumer goods. In which goals5 were given as absolute figures and were related to actual production0 Data78 were obtained frost official statistical abstracts, tradeor from arjrjouncements of the Third Five Year.
S. Consumer Services.
a. Medical Services.
The total value of medical services was estimated from state budget appropriations, which Include contributions from theUnion of Trade Unions, the Red Cross, industrial cooperatives, andorth. Military, industrial, and collective farm expenditures have not been included, because of lock of data. Indications are, however, that these expenditures ore insignificant In the total.
Total laedlcol expendltureo thus estimated were then broken dovn by type of expenditure on the basis of relationshipsbefore World War II, as follows (In:
Hospital
Capitaland other
Capital Investment and expenditures for food were moved by an index of hospital beds. The expenditures were then converted to current prices by means of appropriate lndexea of investment and state food prices. The wage bill for the year In question was obtained The residual remaining after the three components mentioned above hod beeo deducted was assumed to represent expenditures onand nonfood supplies. Capital Investment was then deducted from the total, and the remaining Items were converted to constant prices in the following manner. The ruble value of the wage was deflated by an Index of medical wage rates; that of hospital feeding, by an index of state retail food prices; and that of expenditures for equipment and supply, by an index of state nonfood prices.
b. Education.
State budget lata on educational allocations include, in addition to current expenditures on education ao strictly defined, allocations for some printing and publishing, for propaganda work, for the theater, for other social organizations, and for capital investment. To obtain current expenditures for education, the wage and purchased goods components of total educational expenditures were estimated oo the basis of relationships exloting before World War EE. Thesewere moved5 by an Index of the number of teachers In each wage category, weighted by wages paid. The residual remaining In the budget after deducting the wage and purchased goods components was assumed to consist of capital investment in education and of noneduca-tlonal Items. The wage and purchased goods components were5 prices by an Index of educational wage rates and by an index of state nonfood retail prices, respectively.
Toe Index of housing and publicime series of the total availability of housing In terms of square meters of floor space. Public and private housing vere priced at prices paid by households for public housing, including the cost of heat and public utilities. Data on private housing are available from official Soviet sources In total number of units. These data vereto square meters of living space at the rate ofquare meters por
The index of transportation was constructed by pricing at the fares paid by householdsime series of passengeron rail, streetcar, bus, inland vatervay, and ocean passenger traffic. Highway transport and taxi service were excluded because of the lack of adequate data.
The index of communications was constructed by pricing at the rotes paid by householdsime series In physical units of telegrams and telephone calls sent.
Personal services and entertainment were assumed toixed relation to income and hence were moved by the total of social insurance payments to the state budget.
Consumption.
In general, estimates of household consumption of consumer goods were derived from the estimates of production by adding net lmporte (where significant) and subtracting seed, feed, waste, industrial use, and net increases in state reserveDouble counting of Items atstages of processing was eliminated. For example, the milk required to produce canned milk, butter, and cheese was subtracted from the fluid milk series. Because of lack of data, however, it was not possible, to make this adjustment for confections, vhlch coke substantial use of sugar, milk, and flour for pastries. Adjustments to services were made at the weighting stage and are discussed under the section on weighting, below.
The commodity prlceB which are employed as weights In the index are official prices prevailing at otute and cooperative stores in Moscow. Prices at collective form market were not taken into account.
PrlceB at collective farm markets rangeoercent, higher than prices at state and cooperative stores. Distortion of the index occasioned by the neglect of prices at collective formwould arise from undorwcighting (by using prices lower than those actually paid) In the index those commodities obtained by households from collective farm markets, principally meat, vegetables, and dairy products. The effect of the neglect of these prices on the index, however, is likely to be minimal.
because the collective farm markets trade in almost all food products, the principal distortion would not arise In comparisons of individual food products but in comparisons of food products, takenhole, with other consumer goods and services. This potential distortion has been corrected, however, in the weighting of the three principal components of the index discussed in the following section.
The distortion resulting frcen the use of prices prevailing in Moscow is more serious. Although it has been demonstrated that price movements in Moscow were generally indicative of national pricefor atart of theelative prices In Moscow are not accurately representative of national relative prices. During the early part of tho period the Soviet policy of zonal pricingto this distortion, huthen zonal pricing of many of the products included In the index was discontinued, urban-rural price differentials were the principal causes of distortion. Thus, because of the use of prices In Moscow as weights, particularly during the periodhe index of household consumption applies more accurately to urban than to rural households. Again, however, the importance of this distortion is tempered. Because of the closeong movements of the quantity relatives for the individual commodities within each of the principal canpooents of the indexven large differences in the weights usedthat is, in relative priceswould have comparatively small effects on the resultant indexes.
In general, the official prices at state and cooperative stores in Moscow were obtained in absolute terms for the2 from official prices published occasionally in the Soviet press and from official reports. Most of the prices received apply to items more narrowly defined than are the individual items for whichof consumption ore given in this report. To obtain prices to match the data on consumption, average prices for entire categories
- hh -
si-eon
for example, all types of leather footwearndividual items were averaged by using the Soviet product mix as weights. The prices thus averaged were applied to the entire Because the product mix was available in the greatest detail for that year, the planned product mixhichoint midway in the period covered, was used.
To obtain priceshe prices2 previouslywere adjusted in accordance with information contained in the annual Soviet official price decrees for the8p5 these decrees are believed to reflect changes in prices of consumer goods. Except where specific information to the contrary was available, prices* were assumed to be identical with prices* The index0 was weighted by prices To obtain pricesrices2 were adjusted8 by means of the official decrees on prices and then moved back7 by means of an Index of consumer
Because of the extensive coverage of the prices of suchitems as footwear and soap, which were available from official sourcesverage prices were computed6 (weighted by the product mixes contained in1 Plan) and then were moved backward8 and forward
II. Weighting.
A. Treatment of Medical and Educational Services.
* This assumption agrees with the official Soviet price index, which shows no changes In prices*
In constructing an indexwhich in tho case of the indexin this report is essentially an averaget is necessary to impute weights to the various components in accordance with scene When constructing indexes of consumption or production for the purpose of drawing conclusions as to standards of living, the appropriate criterion is that the individual item be weighted in proportion to the marginal amounts of satisfaction enjoyed by consumers from obtaining
these Items.* It can be shewn that in general this criterion can bey using as weights market pricesthat is, prices which include indirect taxes and exclude
One of the principal problems connected with employment of this criterion lies in the treatment accorded to wholly subsidized state Unquestionably the individual pays for these services through taxation, direct or Indirect. Because the amount of payment is not directly related to the amount of the service consumed, however, the market price for these services is equal to zero, and the service is omitted from the index. This treatmenttandard for governmental services such as general administration and for police and military
Medical and educational services also are almost entirelyIn the USSR- To include these services in the Index ofconsumption at cost probably would be to overstate their importance in theo omit them would be to omit from thelass of consumer services of great importance to Soviet economic welfare.
* When constructing these indexes for the purpose of drawingconcerning the allocation of resources, the appropriate criterion is that the individual items be weighted in proportion to their marginal cost of production, thus resultingifferent index.
** Because of the substantial amount of nonprlce rationing that(for example,his criterion is satisfied onlyin the USSR. If nonprlce rationing tends to apply to allgoods and services within each of the component indexes more or less equally, however, its total effect on overweighting or underweight-lng the prices of some consumer goods and services may be of minimum Importance.
*** This argument is based on the belief that, despite the existence of some rationing, Soviet households are still consuming more medical and educational services than they would if they were charged the full cost of providing those servicesthat is, the increment inper unit expenditure on these services is less than thein satisfaction per unit expenditure on other goods and services.
ractical matter, the problem of the treatment of medical and educational services has considerable importance in theof the index presented in this report for the80
because the growth, of medical and educatloual services differedfrom that of the other services. Consequently, alternative Indexes have been computed, one including und one excluding medical and educational services, which are to be considered as upper and lower limits, respectively, in the growth or household consumption of consumer services and hence of total household consumption6
3. Imputations.
Inclusion of consumption of food products by producers andof services rendered by owner-occupied dwellings in the index, weighted in accordance with the criterion discussed in the preceding section,roblem different from that raised by medical'and educational services.
Because the goods consumed by the producers of these goods and the services rendered by owner-occupied dwollinga are not exchanged, they have no market price. Unlike medical and educational services, however, market prices can be imputed to them by viewing theiras the remilthoice by farmers and house owners between consuming their own production or living in their own bouses and the alternative of selling the goods or renting the houses. In effect, then, the cost of consuming these goods or using these bouses is the cost of selling or renting them.
Accordingly, the services rendered by owner-occupied dwellings are valued at rents charged for public housing.
Because of Inadequate data, however, It was not possible to separate consumption of individual food products by the producer from total consumption for all the years covered by the index. It was therefore necessary to weight total consumption of food by state store prices. This weightingmall bias into the index of food and into the index of total household consumption.
C. Cceabinlng Pood, Nonfood Consumer Goods, and Consumer Services.
As was pointed out in I, B, above, the index of totalconsumption is to be viewed as consisting of three componentof consumption, each of which is representedample of Items. To avoid permitting the importance of each of these classes In theto be dependent solely upon the accident of sample size and also to adjust the weighting of food in the index to take account of the higher
prices of food prevailing in the collective farm market, weights Tor combining Indexes for each oflasseslngle Index were estimated*
1. Ratio of Food to Nonfood Consumer Goods.
Total cash expenditures by households on consumer goods3 are estimated5 pricesafter deducting sales tofrom total retail sales, including sales by collectivetbillion rubles, consistingillion rubles for sales by state and cooperative stores and U5 billion rubles far sales by collective farm markets. Aboutercent of the sales by state and cooperative stores consist of 6ales of food; all of the sales offarm markets are assumed to be sales of food. The estimate of total cash expenditures by households then ccmesillion rubles for food andillion rubles for nonfood consumer goods. Because this report Includes consumption by producers and military and forced labor subsistence In household consumption, these categories wero added to cash expenditures to obtain an estimate of total household Expenditures3 for military subsistence are estimatedillion rubles for foodillion rubles for nonfood consumer goods. Expenditures3 for subsistence of forced laborillion rubles for food. Consumption of farm products by producers le estimatedillionigure which was obtained by (a) applying the percentages of Individual farm cceaaodities consumed byo the estimates of productionnoi pricing the results at estimated prices charged by state and cooperative storesncluding the turnover tax, and (c) adding the results. The resulting totals for food and for nonfood consumer goods35 prices) were moved5 by theindexes of food and nonfood consumer goods- Thus the following weights for food and nonfood consumer goods5 were obtained:
206
Yl 29
Food
Nonfood consumer goods
The weights for combining the three principal classes are computed only Data for other years are unsatisfactory for making this computation. ** bove-
- h& -
2. Ratio of Consumer Goods to Consumer Services.
To adjust for possible errors in estimating tne magnitudes of individual services, valued at prices actually paid by households, as well as lo include serviceshole in the index In proportion to actual expenditures for these servicesercentageof household cash expenditures for all consumer services except medical and educational services.' ercentage distribution which is believed to be applicable5 was obtained from, Although these data are presented by the sourceextbook,they conform so closely at points of overlap with almost all other available data that they are believed to be based on actual sta-tlatlcal data available to the Soviet government. According to this source, cosh expenditures on consumer services amount tof total cash expenditures by households on consumer goods and services, broken down as follows:
PercentExpenditures
Houulng and
y1services and
* This distribution of cash expenditures on consumer services applies primarily to urban households, thus overstating the true importance of services In the Index when It Is applied to rural households. The true Index accurately representing rural as well aa urban consumers will lie within the limits bounded by the index of total consumption and by the index of consumption of consumer goods alone (aee Table la,bove) In the case8 relativehe true index would lie between the limits ofthe index of total consumption excluding medical and educational services) andthe index of consumption of consumer goods.)
- il9 -
For purposes of weighting. If cash expenditures byon consuaer goods alone5 amountedillionhe total value of retail sales to households5 total cash expenditures by households would have had toillion rubles and cash expenditures on consuaer services alone,illion rubles.
Imputed rent on owner-occupied dwellings5 isatillion rubles. The total costs of medical aid educational services, excluding investment, are estimated atillion rubles andillion rubles, respectively. These figures give the following weights for servicesakenhole and individually,imputations, with and without medical and educational services:
of Consumption
Hedlcal and Educational Services
Including Medical and Educational Services
Consumer goods Consumer services
Rubles
710
Percent 8k. k
Billion Rubles
710
9
and
^rCoBM*ml
' Personal services
and
Medical services Educational services
Total consumer services
2.2
c
7 19
8
226
2k. 1
consumer
D. The Laspeyres and the Paasche Indexes.
Relative prices tend to change through timefor example, the price of shoes relative to the price of meatin response to changes in economic policyfor example, changes in turnover tax ratesor to changes in relative costs of production, and so forth. Experience indicates that the longer the time elapsed, the greater the changes that
ME
take place. It Is therefore important in making long-range comparisons of economic magnitudes by means of index numbers weighted by prices that some account be taken of the possibility of changing prices through time.
One way to measure the importance of such changes is to compute one index based on the relative importance of the included items in the earlier yearinary comparison (the Laspeyres index)econd based on the relative importances of the included Items io the later year of the comparison (the Paasche index). The difference between the results of the two computationseasure of the effects of relative price changes between the two periods; the greater the difference the greater the change In relative prices, and so forth. Neither set of weights is to be preferred to the other, and hence there Is no criterion for choosing between the two Indexes; both are equally good estimates of the same thing, one index giving an upper boundary to the true index, theower boundary. Computationean, and eithereometric mean is equally good, is made for convenience and is meaningful only when the Laspeyres and the Paasche indexes do not differ widely.
On occasions when the Laspeyres and Paasche indexes differ widely, the usefulness of either,easure of the percentage change in quantity levels between two, usually distant, periods of time is open to question. In suchhain Index, forged from linkedbetween-adjacent periods of time, generally is constructed to bridge the gap.
In thie report the Laspeyres and Paasche Indexes were computed for comparisons5885 prices,577 and5 prices, and507 and5 prices. Because these Indexes do not differantly except for the comparison8here there is some difference, constructionhain index would add little toexcept for the8
Hod sufficient data been available, it would have been desirable to construct weights for combining the three principal classes ofus defined in this report8 ors was done Such weights would haveaspeyres-Paasche indexfor the index of consumptionhole similar to that made for the two indexes of consumption alone. The principal result ofaspeyres index in this case would have been to raise the increase in the index of consumption85 by decreasing substantially the weight of food products in the Index.
-
T:
Comparison of Results of This Report with Those of Other Studies.
A survey of literature on the subject Indicates two otherstudies In which an attempt has been made to measure changes In Soviet levels of consumption8ecent year, those by Jasny and In both or these studies, changes In levels of consumption were measured by deflating Soviet money incomes by an index of consumer prices. Because the Chapman study is the more comprehensive of the two, the indexes in this report will be compared only with those in that study.
In principle, both the method employed in this reporthat is, the construction of an index or consumption per capita basedime series for consumption of individual consumer gooda and services, weighted by market prices, including turnover'taxnd the method of deflating per capita income net of direct taxes and compulsory bond purchases by an index of consumer prices should lead to Identicalecause they are simply two methods for reaching the same goal.
In practice, however, the two indexes should not be expected to agree, because the Chapman index applies only to the roal wages of workers and employees" primarily urban, expressed per worker or employee. Thus the Chapman index does not take into account, as does the index in this report, changes In the consumption of servicesby owner-occupied dwellings, pertaining primarily to the rural population, consumption of farm products by producers, or rural cash incomes.
Without adjustment, the Chapman Index is not comparable to thepresented in this report as an index of urban household consumption per capita. Because the Chapman index reflects real wages relative to the labor force alone rather than to the labor force including itsthe Chapman index would differ from an index of consumption per capita for urban consumption to the extent of changes in the worker and employee dependency ratio.
Omitting suvings, which are small relative to total Income.
r--'
A comparison of the index presented in this report with Chapman's results, adjusted for changes in the dependency ratio, is presented
? 6 2
Chapmen
Present index (per
* Medical and educational services are excluded in both indexei ** This index7 weights.
A comparison of the two indexes indicates that82 the consumption per capita by workers and employees and their dependents Increased considerably core than did consumption by the populationhole, with increases ranging fromercent to lb percent, respectively This comparison suggests that during this period consumption per capita by the part of the population which is primarily urban Increased much more than did consumption per capita by the rural, primarily collective farm, population.
APPENDIX D
GAPS IN INTELLIGENCE
There are dcriclcnciee In the cellmates of production andof many of the individual consumer goods utilized in this report. For example, the series on fish includes state catch only and excludes collective farm catch, which may be on appreciable portion of the total. Many of the adjustments for double counting of items Included in the index were based on relationships observed forlngle year. It Is doubtful, however, that future improvements in these data will effect significant changes in the index.
More Important are the deficiency in the estimates for flour and the lack of estimates for breed. Becauao of the absence of postwar Soviet data on flour and bread, it was necessary to derive estimates ofof flour from estimates of prcduction of bread grain and to exclude bread from the index altogether. Improvement in theof these data could, because of their importance, result in an alteration of the food Index.
Much more work is required on consumer services. Whereas only minor revisions in trends are anticipatedeneral improvement in the estimates for consumer services, substantial changes in the present estimates of their absolute magnitudes, or total cost of production, could be expected. Such an Improvement may make possible an independent check of the weights for consumer services employed In tho construction of the index.
More work Is also required on consumption of food products byparticularly in determining year-to-year changes for individual products. This work is necessary Id order to weight the amountsby producers at prices paid to farmers rather than at state store prices, as wus necessary in this report.
It is believed, however, that possible changes in the index of total household consumption occasioned by the results of new research and by the release of official Soviet data not now available will beminor and that the general conclusions of the report pertaining to this index should remain relatively unaffected.
-
APPEKDIX E
SOURCE REFERENCES
The estimates of production and consumption of individual consumer goods and services in this report vere obtained almost entirely from overt source material, including Soviet newspapers, periodicals, trade Journals, and monographs. Although no attempt at deliberatehas been dlucovered, it was found that data from these sources must be interpreted with extreme caution because of what amounts to deliberate Soviet casuulncss with definitions. Much of the research effort in the preparation of these estimates was devoted not tothe figures but to arriving at their correct interpretations. Many of the deficiencies that remain in this report arc attributable to this source of error.
For information on Soviet consumer pricesfficial price data were utilised where available, but of necessity primarywas placed on the State Department reporting and on covert sources. Including defectors and returnees.
Tho report also has been heavily dependent for price information on the RAND studies of Janet Chapman. Almost all of the information on Soviet consumer prices8 was obtained from Mrs. Chapman's studies.
A series of reports on Soviet consumer goods industries8 published by the State Department, Office of Intelligence Research, hasaluable aid in the interpretation of prewar Sovieton consumer goods. The most important single source on production of consumer goods, however, has been the new statistical handbook, Narodnoye khozyaystvo SSSR (The National Economy of theNCLASSIFIED.
-
Evaluations, following the classification entry and designatedave the following significance:
Source of
Doc
- Documentary
Confirmed by other sources
-
reliable
Probably true
-
reliable
Possibly true
-
reliable
Doubtful
-
usually reliable
Probably false
-
reliable
Cannot be Judged
-
be judged
"Documentary" refers to original documents of foreign governments and organizations; copies or translations of such documentstaff officer; or information extracted from such documentstaff officer, all of which may carry the field evaluation "Documentary."
Evaluations not otherwise designated ore those appearing on the cited document; those designated "RR" are by the author of this report. Novaluation is given when the author agrees with the evaluation on the cited document.
1. US DOC,oviet Economic Development:
National Accounts Analysis." S. Eval. PR 1.
Ibid.
Tbid. h. Ibid. 5. Ibid.
6- CIA. CIA/RR, Soviet Capabilities and Probable Soviet Courses of Action W-
7. Tekstil'naya promyshlennost', vol,. U. Eval. RR ?.
-T
Schwartz, Harry. Russia's Soviet Economy,d. Hew York,
- U. Eval. RR. UH, Statistical Office. Statistical'*
volew Eval. RR
9- Ibid.
FDD Translation,he National Economy
of the USSR (Karodnoye khozyaystvo SSSR, Moscow,USE. Eval. RR 2.
Statistical Office. Statistical45
(8,
13- CIA. FDD Translation,k. CIA. CIA/RRtatistical Data on the Production of Foodstuffs in the USSR,
G.A. XXV let sovetskogo zdravookhraaenlya (Twenty
Years of Sovietoscow, lOfta,. U. Eval. RR 2.
Abram, and Heymann, Hans, Jr. Soviet Katlonal
Income andew. U. Eval. RR 3.
Corporation. he Regional Structure of Soviet
Retail Prices, Eval. RR 1.
CIA. FDD Translation, above).
RAND Corporation. , Real Wages in the Soviet Union,
7 U. Eval. RR 2.
J.R. "The Valuation of Socialconomica,
U. Eval. RR 1.
onstruction of Soviet Gross National
Product Accounts,- 8. S.
M.A. Raschety pokupatcl'nykh fondov naselehiya
(Expenditures by the. U. Eval. RR RAND Corporation. , above).
Jasny, Naum. The Soviet Economy During the Plan Era, Food Research Institute MiscellaneousA, Stanford, U. Eval. RR 2.
-
Original document.
Comment about this article, ask questions, or add new information about this topic: