THE SOVIET SIXTH FIVE YEAR PLAN (1956-60) (RR IM-426)

Created: 3/16/1956

OCR scan of the original document, errors are possible

INTELLIGENCE MEMORANDUM

THE SOVIET SDCTH FIVE YEAR

' CIA/RR66

INTELLIGENCE AGENCY Office of Research and Repc:ts

FOREWORD

This memorandum on the Sixth Five Yearaan analysis of the draft of the Plan which was6 and the Baterlals ofh Party The primary emphasis of this memorandum isexamination of the policies and programs contained withinItself. ore detailed estimate of the01 Is madeis

the ORR contribution to, Soviet uopanni^es and ProbableB or (to be published J. Based uponji=Ination of additional data, some of the preliminary estimates in this memorandum nay be changed,but the primary evaluation of the Plan is believed valid.

BLANK PAGE

Summary and

I. Guiding Principles of the

II-

TU.

and Industrial Materials

and Equipment

IV. Transport and

V.

VI. Population and Standard of

VTI. Capital

VIII. Eastward Extension of

Tables

of Energy and Fuels in the

0 -

of Metallurgical and Industrial Materials

in the0

3- Ooalfl for Production of nonferrous Metals in the USSR.

nd

h. Goals for Production of Machinery and Equipment

in the50 .

5- Production of Selected Consumer Goods in the USSR,

0

6. Planned Increases in the Transport program of the USSR,

0

7- Increases In Agricultural Production in the USSR,

0

The new Plan callsajor effort to increase the power resource fl of the country. Production of electric power is to be increased 80

Steel production is to increaseercent. The increase inof machinery and metalworking products is to beercent comparedercent5

The railroad system Is to be substantially modernizedew dleselization and electrification program.and its capacity Increased, by more widespread introduction of automatic block signaling equipment and centralized traffic control.

Increased production of consumer goods will cause some moderatein living standards. Inll-hour workweek is to bs introducednd the housing construction program is to be

An ambitious agricultural program is planned, based largely ongrain production from the "newncreased harvests of com, and increased production of meat and dairy products.

Capital investment is to increaseigh rate. ear total is toillion rubles,ercent more than the total. An important change in the pattern of investment will be the increased replacement of inefficient equipment. Expanded introduction ofand improved technical processes also are important characteristics of the new Plan.

In general, the Fifth Five Year Plan was successfully fulfilled in industry, but there were some shortfalls in the agricultural sector and in the production of consumer goods. elatively low increase In investment in the machine-construction industry, goals werein this vital sector. The expansion of power output did not keep pace with the general increases in industrial production, however, and the Sixth Five Year Plan stresses special effort to remedy this situation.

eriod of policy reexamination after Stalin's death, the Fifth Five Year Plan may be characterized as one continuing primary emphasis upon expansion of heavy industry.

Policy debate being resolved once more, the USSR considers the co tinued expansion of heavy industry as the most important guarantee of economic strength0 and as the basis for continuationate of growth There is little reason to believe that these plans will not be met unless the world situation deteriorates, requiring an extensive Soviet mobilization in the early part or the period, or an internal economic or political crisis develops. If neither of these situations occurs,ignificant failure to achieve industrial productivity goals could be counteracted by above-Plan additions to the industrial labor force from an unallocatedin the labor force or from other sectors of the economy. .The Planery low rate of increase in the industrial labor force; the addition of somewhat lessillion workers above and beyond the plan .would counteract the loss of production if theproductivity increase were no more than in the Fifth Five Year Plan (kh percent) compared with the planned increase ofercent. As the Plan appears toabor reserve, an addition of this size to the labor force .would, not endanger its fulfillment in other sectors.

The Plan for agriculture appears overly ambitious and probably will he underfulfilled, leading,in addition, to underfulfillment of those plans for the light and food industry, which depend upon Soviet agriculture for raw materials. Unless material shortages develop or manpower must be shifted to heavy industry, the plans for consumer durables appear feasible.

I- Guiding Principles of the Plan.

The Sixth Five Year Plan is predicated on the main economic task of tho USSR, which is defined as being "to overtake and surpass the most developed capitalist countries as regards per capita production.he goal is not only economic competition with the US .but also "the furtherf tho unbreakable defensive capacity /for theelative to US industrial production, achievement of the goals will increase the industrial production of the USSR5 toercent In the aggregate the old "Stalin goals, establishedre to be increased as follows:

* The Plan does not anticipate that this will occurowever.

esse

Million Metric Tons1*

Five Year Plan Goal

Pig 53

More than in any preceding plan, the keyword of the new Plan is efficiencyefficient use of the mineral and agricultural resources of the USSR, efficient use of the labor force, and efficient use of "Socialisthat share of the gross national product which cannot be consumed but must be kept available for defense and for investment. The USSRigh degree of simultaneous pressure upon its resources. It is strengthening its military capabilities, attempting to maximize its rate of economic growth, and endeavoring to keep Soviet consumers moderately appeased. Under suchthe economic program for theears Is taut, with little slack to absorb planning mistakes, plan underfulfiUment, or natural catastrophes. Itrogram which recognizee the possibility of peaceful "coexistence" and strong economic competition with the West but does not reject the possibility of war.

The economic policy of the Plan reflects six basic principles, which, when applied to specific problem areas, determine its basic characteristics. These six principles are as follows:

1- To Give Priority to the Expansion of Heavy Industry.

The extensionriority to the expansion of heavy industry isew concept and has characterized the preceding plans. It is,eversal of the emphasis during the "newt which time it was suggested by many Soviet economists that from time to time light industry could be given equal or higher expansion rates than heavy industry. The concept has now been explicitly rejected by the Central Committee.

Tonnages throughout this memorandum arc given in metric tons.

To Expand the Agricultural Base.

The recent agricultural policy of the USSR and the new Plan both reflect recognition that the increase in population has beengreat pressure on the food supply and on the supply of those products of light industry which are based upon agriculture.

3- To Strengthen Military Capability.

The Plan is explicit in requiring that the militaryof the USSR be strengthened. In addition to the implication that the production of increasingly complex military end items will continueigh level, several programs of the new Plan have great implications for Soviet military strength. Greatly increasedofs planned, is essential both to the military program and to improved technology in industry. ixfold expansion of productive capacity for heat-resistant alloys increases strategic, economic, and military production capabilities, as do the oxygen and ammonia production programs. The eastward expansion of industry into the more interior areas of the USSR, Kazakhstan, western Siberia, and Central Asia will place an increasing share of the war-supporting industry in the geographic area farthest from the Arctic, Pacific, and European bases of the Western nations. Much of the new railroadprogram will have the effect of creating additional lines parallel to the Trans-Siberian Railroad from Moscow all the way to Abakan,iles west of Lake Baikal.

Despite the long-range hydroelectric program which involves some long-term capital commitments, capital investment in general will not be so involved in long-term commitments as, because there is much less emphasis upon the building of entire new plants which would be several years under construction.

To Satisfy the Consumer While Increasing the Rate of Accumulation.

This principle embraces the competition betweenand investment. In the new Elan, as in previous plans, investment wins out. Accumulation for investment (and defense) still will beby setting the increases in per capita real wages substantially

The terra instruments includesnd mechanical control systems.

lower than the increases in per capita production. Althoughsuch consumer durables as washing machines and television setsrapidly expanded from the present small base, their importanceconsumption will remain small d, clothing,will continue to be the predominating factors in theof the living standard, and these factors depend upon the"of the economy, agriculture and construction. The Plansmaller gains In real wages than those reportedoubtful prospects for the ambitious agricultural goalsthese

Support Intra-Bloc Division of Labor.

The Sixth. Five year Plan specifically refers toational utilization of the economic resources andcapacities of the countries of the Sino-Soviet Bloc by means of coordinated development, specialization and cooperation in production, and the exchange of information and experience.

Penetrate Markets in Underdeveloped Countries.

The penetration of markets in underdeveloped countries is not explicitly stated in the Plan but rather is implied in the Plan's goal of economic competition with the West ,and made explicit by the offers of Soviet leaders to assist in the industrialization ofcountries. It is made meaningful by present efforts to penetrate the economies of the underdeveloped countries. It has been estimated that the USSR can increase greatly its effort in thiswithout creating undue dependence on Imported supplies, without undue diversion of resources necessary to its own development program, and with net gains, both economic and political.

II. Energy.

Despite the large existing energy base of theontinuing emphasis upon the expansion of heavy industry necessitates theof goals for the production of fuels and energy which surpass the expansion of theears not only in absolute amount but in rate of expansion. Production of energy and fuels in the USSRnd0 Flan is shown in Table

ollows on p. 7.

Production of Energy and Fuels in the0 Plan

lan

(million metric

Oil (million metric

Electricity

593

Hydropower Nuclear power

23

Negligible

10

The Sixth Five Year Plan specifies that the coal industry is to overcome the lagging of coal extraction behind the growing needs of the economy. To this end, coal extraction0 is totons more thanillion achieved In view of the tightening labor supply, the emphasis Is upon minimizingto the-labor force in the coal industry. Improvedand the Increased use of strip mining arc emphasized accordingly. An effect of this cntphasls will be to Increase capital Investment in an effort to hold the present level of the labor force. Much of the additional output will be at higher cost than existing output, as more difficult extraction is encountered, such as the mining of narrow or steeply pitching coal seams.

Despite the great emphasis of the Plan on the generation ofpower, onlyercent of the total electric power generated0 will be hydroelectric power, with most of the remainder being thermoelectric power produced largely from coal sources. illion kilowatt-hours (kwh) are to be generated, ofwh arc to be from hydroelectric stations, as against 1'fO billion kwhithillion kwh from hydroelectric stations. It is estimated thatillion kwh of the total will be generated by the atomic power stations specified in the Plan.

A striking feature of the power plans is the hydroelectric power program, which is to increase the share of power now produced from water energy. Extensive construction is to continue in European Russia on the Volga, Kama, and Dnepr Rivers. ubstantial long-range buildup, however, is to be concentrated in the area east of the Urals. Although the highlands south of the Siberian plain have long been known as the greatest potential source of hydroelectric power in the USSR, problems of efficient transmission caused development to await the creation of industrial centers in the nearby areas of Middle Asia. The extensive industrialization now planned for the area stretching froa the Urals to lake Baikal makes development of this power potential practical and essential. esult, the two largest hydroelectric stations in the USSR, eachapacityillion kilowattsre to be built at Bratsk, where the Angara River joins the Oka River, and at Krasnoyarsk on the Yenisey River. Neither of these projects will be completedlthough the first section of the Bratsk station is to bo operative then. Nevertheless, adequate power will beIn the arean.the basis of other smaller stations to be completed.

power program, demanding extensive investment in dams,and transmission equipment,ong-term commitment of investment capital.

The USSR is to move further toward its dreamnified power grid byingle European powernified Trans-Caucasus grid,nified Novosibirsk-Irkutsk grid. Establishment of such unified grids will permit more efficient power distribution and greater ability to meet peak-load requirements.

The USSR has Insufficient rainfall, and problems of seasonal water flow limit the operating capacity of the hydrostations. Hydroelectric power is not the panacea to the problemsountry industrializing rapidly and pressing ever harder upon its power resources. Coal-generated power becomes costly at any distance from the coalfields.esult, nuclear power stations will receive great emphasis as possible answers to power problems in areas remote from coal and water sources and to the need for base lead stations capable of operating at relatively steady year-round rates.

B>

Petroleum requirements in the USSR have been expanding rapidly and will continue to expand as mechanized agriculture and aviation continue their great growth, as the country embarks od its dlcseliza-tion program for the railroads, and as the use of petroleum productshemical raw material increases. utput of petroleum products is to increaseercent above5 total, orillion tons. Such rapid growthransport problem which Is to be resolvedixfold growth in the pipeline transport of petroleum products. The need of the USSR for inexpensive fuel is to be met partially by an increase in the output of natural gasercent of5 level. Eventually, natural gas will be used much more extensivelyeed material to the chemical industry.

III. Industry.

A. Metallurgy and Industrial Materials.

0 goals of the metallurgy and Industrial materials industries callower rate of growth than that achieved, except for the chemical industry and the building materials industry. hows the trend in the production of metailorRical and industrial materials In the USSR.

Table 2

Production of Metallurgical and Industrial Materials in the0 Plan

Material

Pig iron Steel

Rolled metal Cement

Mineral fertilizers

The Sixth Five Year Planower rate of increase for the production of crude steel than that achieved,ercentn compared withpercent increase achieved

5 nevertheless, 0 goal3 million tons of steel considerably exceeds the old Stalin goal ofillion tons,

and the planned increase in annual production ofillion tons exceedsmiUion-ton increase achieved5 In the steel Industry of the US, production is to increaseillion

net tons per year This expansion is roughly equal to the

Soviet planned expansion.

A notable feature of the new Plan is its stress upon increasing capacity for the annual output of stainless steel and heat-resistant alloys by anercent, of which the output of heat-resistant alloys would increaseercent. Thisignificant expansion in the type of material essential both to the military program and to the production of equipment with high-temperature and corrosion-resistant applications.

In the aggregate, projected increases in the annual production of nonferrous metals are to keep pace with the projected increases In industrial production. The planned increases, however, are less than those planned in the Fifth Five Year Plan. Especially striking are the reductions in the planned Increase for production of lead and zinc. The greatest increase planned among the major nonf errous metalsercent for aluminum. Production of refined copper is to increaseercent, as compared withercent in the Fifth Five Year Flan. Growth in aluminum production is closely associated with -growth in power supply, as the aluminum industry has extensive power requirements and reflects the relatively higher production cost of partiallycopper. .Indigenous supplies of refined copper in the USSR are insufficient; imports play an important role, and the relatively slow expansion in production which is planned is not likely to lead to self-sufficiency. Achievement of the copper production plans will be difficult, involving development of lower grade ore bodies in Kazakhstan. Substitution of other products, such as aluminum, for copper willwherever feasible. Goals for the production of nonferrous metals in the USSR50 are shown in

The chemicals Industryide range of products. One group of products, plastics, has assumed increasing importance in the worldwide search for metals or metal substitutes capable ofspecial tasks. Plastics have increasingly replaced metals in the struggle for cheaper materials, more convenient materials, or corrosion-resistant materials. Output of plastics in the USSR will increase greatly.

ollows on p. LI.

Goals for Production of Nonferrous Metals in the50

Percent

lan as Increase 0 Plan asI955

Copper,

Expansion of the chemicals industry will continueast rate, especially in the field of synthetics. Output of synthetic rubber is toercent higherOj synthetic alcohol,ercent; and syntheticercent.

The agricultural program requires that the production of mineral fertilizers be accelerated,0 production toercent Production of the basic Industrial chemicale, such as ammonia, sulfuric acid, caustic soda, and calcined soda, is to increaseate slightly higher than the increase in industrial production.

The new Plan establishes an extensive building program for hydroelectric projects and for housing. esult, although the Plan deemphasizes the construction of new structures in industry, the construction materials industry must continue to growapid rate. Production of cement Is to increase toillion tons5 production. Special emphasis is given toof prefabricated building materials and to prestressed concrete forms.

In general, an increased output of metals and industrialmust be obtained primarily from construction of now producing units and accompanying increases of the labor force. Increasedwill be gained largely by reducing the proportion of workers doing manual labor, which is, for example, kh percent in the coal

V5 PCrCeHt in"etaHurgy. Expansion Of the fer prises and major additions to the labor force-

S^f. 1 of tta nickel,ercent of the

f the most significant new thfSiSi STjSSiJaction efficiency have beenProducts in the synthetic organlcs Tield.

InLrS!neD ms fieU' becauSfcrodUCtlon ofhemicals essentialuturG' this emphasis may

avor of synthewc 0rganlCB

B. Machinery and Equipment.

yearB, of emphasis on the production of machinery and

rluTrhat Sexual

d^hL ls true generally of the

It bl^LZTy,thT&nnual production

luteperlcS, in abso-

roduction

1 of metal-forming machines, on the other

beSf ^nt^,belfWf such machines in the US being the production of consumer durables.

Three major programs of the Sixth Five Year Plan are responsible for significant Increases in the planned rate of growth forractors, and dlesel and electric locomotives. The programs areintensified mechanization of agriculture, and the dieselization and electrification program for the railroad system.

Significant improvements in technology are scheduled to have great impact upon the machinery and equipment sector. Renovation of old plants and equipment, automatization of processes, and reductions in the weight of end items are urged in an attempt to reduce production costs, increase labor productivity, and stretch the supply of metal. New producing units are required to fulfill the following planned hydraulic turbines,ercent; transformers,ercent; metal-cutting machine tools,ercent; tractors,ercent; passenger railroadercent; and chemical equipment,ercent. In general, the major emphasis within this category of Industry is upon increasing production from existing production units.

Goals for the production of machinery and equipment in" the50 are shown in*

C. Consumer Goods.

* Increased production of instruments is required not only for the automation program but also for complex military end items andresearch and development. ** ollows on p. Ik.

ategory of industry in the USSR, consumer goods includes the light and food industries. It Is also meaningful to split theinto consumer durables and consumer nondurables, as these twoexhibit quite different growth characteristics. Con-sumer durables haveery small component of the Sovietindustry and are capable of great increases in growth rate because of the small current scale of production. This is true of television sets, refrigerators, sewing machines, and washing machines. Consumer nondurables, consisting largely of clothing and food products, have been much more essential to the Soviet consumer. Essentially the production of consumer nondurables has been closely related to Soviet agriculture, on which depends not only the supply of vital foodstuffs but also the wool and cotton for clothing. Growth rates for nondurables .

consumer durables has suffered whenever industry has run short ofevery other branch of industry having prior claim in allocation.

Table 5

Production of Selected Consumer Goods in the0 Plan

Commodity and Unit

Radio and television sets

(million units) Watches and clocks

(million units) Cotton fabrics (million meters) Woolen fabrics (million meters) Footwear (million pairs) Industrial meat processing

(million tons) a/ Butter and dairy products

(million tons,.milk basis) b/ Vegetable oil (million tons) Fish haul (million tons)

In general, the transport program of the Soviet Sixth Five Year Plan calls for growth in carrying capacity commensurate with the growth of industrial production;esser share of the total product to be carried by railor improved transport between European USSR and the Far East; andubstantial improvement of transport facilities In western Siberia and Kazakhstan, in support of the industrial and agricultural programs in that area.

In communications, the Plan calls for an accelerated programcable lines and increasing the capacity of automaticexchanges. kilometer network of radio relay lines Is to be put into operation.

Plan establishes goals in the field of transport which continue the rate of increase displayed in the Fifth Five Year Plan. Railroad freight turnover, river cargo turnover, air cargo turnover, aid pipeline transport are all to expand at approximately the same rate as that planned. 0 goal for sea cargo tonnageimes the tonnage carriedhe Fifth Five Year Plan called5 toercent increase. Motor freight turnover is to double in the new Plan, as comparedlannedoercent increase in Planned increases In the transport program of the USSR50 are shown in Table 6.

Table 6

Planned Increases in the Transport Program of the50

0 05

RaiOroad freightto

River freightto

Sea cargoto

Motor freightto

Air freight turnover

Pipeline transport

In the USSR the railroads carry approximatelyercent of all freight turnover. Expansion of other types of transport at rates faster than expansion of rail freight turnover will reduce thissomewhat

The Sixth Five Year Plan call* for the constructionm) of new lines, twice as much as constructed. Much of this increase is directed to the improvement of rail service in the "new lands" area, to improvement of rail transport between the Kuznets flasin and the Urals, and to the eventual establishmentew rail link to Communist China byine eastward from Alma-Ata feeding toward the Chinese Sinklang railroad project.

In addition, the Plan directs extensive replacement of rails, ox-tension of the automatic block system and other safety devices,conversion to automatic coupling, and widely increased usexle freight cars. An extensive program is to be established for beginning conversion to diesel and electric locomotion, with diesels to be hauling from UOercent of total rail freighturing the Plan period, production of steam locomotives will be

In river transport the prime emphasis is upon greater efficiency of operation, to be obtained largely by measures designed to expedite two-way traffic on rivers and canals and by improvement of port.

The aims of the program for sea transport are to develop seaports, to improve handling facilities at the ports, and to expand the sea fleet. Sea cargo turnover0 is planned to double5 turnover. This will give the Soviet merchant marine greatly increased potential for carrying East-West trade, for carrying intra-Bloc trade, and for commerce with the Far East.

The pipeline expansion program assumes great importance forof petroleum products to refining and consuming centers. The Plan establishes no unusual emphasis on expanded air freight It does state, however, that new models of passenger planes will be introduced into service which will be faster and will have larger seating capacity. It is possiblewin-Jet model will be used on some flights.

In motor transport, there is no evidence of intent toajor roadbuilding program. Apparently, motor transport is still tohort-haul naturelanned doubling of freight turnover. The Plan lays great stress upon more efficient utilization of vehicles and increased centralization of the vehicle park.

V. Agriculture.

The Sixth Five Year Plan continues the broad attack on three closely related factors which have historically held back Soviet agricultural growthlimited natural resources, pastand organizational difficulties. .In general, the directives callontinuation .of the policies adopted These Include the development and completion of the "new lands'1 and cornise in capital investmenthange in itsand the simultaneous extension of incentives to and controls over collective farmers. On the basi6 of these programs, output is to increase sharply, and Khrushchev has even declared that some of the targets can be met by the midpoint of the planning period. Despite Khrushchev's optimism, the goals of the program appear overoptlmistic. The planned increases in agricultural production in the USSR50 are shown In Table 7.

Table 7

Increases in Agricultural Production in the50 Plan

Percent

Product 50 05

Flax

Raw

Sugar beets

Meat (slaughter weight)

Eggs

to unknown extent by inclusion of

production. Past and future gains may bethe expense of private production.

The attack on resource limitations is embodied both in the "new lands" program, now nearly completed, which extends grain cultivation into an area of high drought risk, and the corn scheme, which also encounters serious climatic difficulties. The Plan reuffirms both programs, envisioning neither an expansionontraction of their previous scope. In combination, they seek to achieve adequate supplies of bread grainsharp Improvement in fodder supplies, which in turn will support higher levels of livestock and Improve the quality of the Soviet diet.

Investment has been raised and redirected in support of these programs and of traditional types of cultivation. Expenditures on mineral fertilizers are to rise, and large investments will be made in increasing livestock numbers, providing them with shelter, and mechanizing livestock operations, which presently are performed largely by hand. Except for expenditures for equipment the capital" expenditures for resettlement In the "new lands may be expected to decline Investment in production of tractors andwin continue to rise, with average annual deliveries during the Plan atimes3 rate. An important change is planned in the composition of the tractor parkproduction of smaller, wheeled tractors for use in cultivating will increase much faster than the large, general-purpose tractors employed in grain production. The stress on corn, technical crops, vegetables, nod potatoes is responsible for plans to Increase the share of cultivator tractors toercent of0 tractor park in physical termsercent in horsepower terms as opposed toercentrespectively,

Plan relies on increased labor productivity to achieve its ambitious agricultural goals. Labor quality will be improved bytraining programs and the assignment of more graduate specialists to agriculture, twice as many as planned for theears. The total number of workers, however, is to remain relatively steady, although hopes have been voiced that eventually the traditionalof labor from agriculture to industry can be resumed. In the meantime, the productivity of state farm workers is to increase byercent and of collective farmersercent during the Sixth Five Year Plan, although the Fifth Five Year Plan goal ofercent for all agriculture was not met. Failures corresponding to output underfulfillments are expected.

Mechanizing livestock operations and the farming of corn and non-grain crops is one aspect of these productivity plans. Another aspect is the Income incentives offered to collective farmers for greater efforts on communal tasks. hird is the more effective political controls exerted fay the greatly strengthened Party apparatus in the countryside. Certain elements of the Plan and of contemporary Soviet pronouncements hint that in the future this third aspect may become increasingly important and that the perennial campaign to reduce or eliminate the private plot and the free market, which compete with collective employment as alternative means of livelihood, may be Such developments will, occording to Party dogma, produce on Increase in agricultural labor productivity, although in the past these efforts have frequently had on opposite result in the short run.

Population and Standard of Living,.

he population of the USSR grew3 millionotal ofllliop,ala ofercent. The population of the US5 wasillion. By the end0 the population of the USSR will beainercent.

According to the Sixth Five Xear Plan, there will beillion "workers and employees"n increase of nearlyercent above the total The category "Vorkers and employees"both the nonagricultural labor force and the labor forcein state agriculture. State agriculture employed anillion at the end

During thehe nonagricultural labor force grew by on estimatedercent. he planned increase appears to be about lU percent; however, the Plan callsrowth in the industrial labor force of onlyercent. Comparison of these dataigh rate of growth planned for aggregate nonagricultural employment other than industrial employment. Nevertheless, the Plan does not specifically indicate substantial increases in labor force planned for construction, transport, or other nonagricultural sectors; hence it is likely that an unallocated labor reserve Is included In the aggregate figure for this category. Employment of this labor In Industry would enable fulfillment of the productiondespite significant nonfulfillment of labor productivity plans.

The Sixth Five Year Plan establishes output goals In Industry0 which in terms of percentage axe much higher than plannedto the labor force. They must be met by cither sharplythe productivity per worker orelective basis, by theof labor from less essential sectors to priority sectors. per worker in industry is to increaseercent, as compared with the planned increase ofercent for industrial production. Productivity is to Increaseercent in building,ercent in rail

'percontsea transport,ercent in state agriculture,ercent in the collective farms. According to Khrushchev in his6 speech, although Soviet agriculture probably will nerer reach the productivity of US agriculture, there is much need foromparison of the planned increases for agriculturaluctivity with scheduled increases in agricultural production indicates that there will be little increase In the agricultural labor force, the major resettlement effort being largely completed. -There may be, however, transfers of labor from the collective farms to state agriculture. The number and quality of supervisory andpersonnel may be expected to Increase.

On the whole, with the exception of agriculture, the goals forlabor productivity are similar to those of the Fifth Fivethe new Plan, however, there is increased emphasis uponoutput per producing machine, as the result ofhe USG of advanced technological improvements,

and the increased specialization of producing enterprises. Automation in the sense of mechanized production control systems isartthis whole effort. Recent Soviet speeches appear to use automationomewhat more ambiguous senseolorful word signifying this whole new effort.

The new drive for increased productivity has major implications for capital investmentarger share of future increases in the volume of production will result from the modernization or increased capacity of existing plants. arger share of capital Investment will go to equipment.

* The goals are similar only in terms of annual labor nroductivity. The planned reduction of the work week0 wouldncrease in industrial production per nan-hour

As usual, the increase in wages and in the income of collective farmers is to lag behind the increase in the value of output per worker or collective farmer. This withheld income goes to the state to finance investment and defense. Productivity is tond real wagesercent per worker in industry. In the Fifth Five Year plan, increases ofercent in productivity andercent

in real wages were planned.* In the newcollective farm

member is toercent more, butis to increase

k0 percent. Thisomewhat lessof thethan is allowed the wage earner.

Although the rise in living standards will be moderate ineriod, two new programs will be of great psychologicalto the average Russian. These are theour week and the new housing program.

hour week was launchedoal of the Sixth Five Year Plan in Khrushchev's speech before the Party Congress on lUt is to be introducedradual basis startingand the program is to be completed Assuming progressive introduction of the programteady rate, the net impact on the average hours per worker-year0 woulderccnt reduction. At the present time, it is difficult to see how this reduction can beand the plan for industrial production be met unless either the plan for increased labor productivity is overfulfilled,or, as would be more likely, additions to the industrial labor force are largerlanned.

Construction of state housings planned to almost double that- This program will improve urban housing conditionsimited extent. It is estimated that living space per urbanncreasequare meters5quare metersoth because of the increased space and also because of the slower urban population growth planned. Housing conditions on the collective farms are to be improved by an intensified program of privateperformed largely by special housing brigades on the collectives and financed ultimately by the collective farm member assisted by special banks or credit arrangements.

The Plan projects further expansion of the social security and medical programs. In education, two major goals are the extensionyear schools to the towns and rural areas, conversion fromyear schools having been accomplished already in city areas; and intensified specialized advanced training to increase the numbers of skilled workers, technicians, and scientists In support of theemphasis upon technology.

* An actual increase in real wages ofercent has been claimed; Industrial labor productivity increased hh percent.

VII. Cupllal Investment.

The Sixth Five Year Plan stipulates only that capital investment over the entire period will bebillion rubles,ercent more than Invested, in constant rubles. It seems probable that aboutercent of the total capital Investment,illion rubles, will be Invested in Industry. This is the share of capital investment which6 budget allocates toand is roughly the share which industry received., total Investment in machinery and equipmentercent above the total- As total capitalla to increaseercent, the higher rate of increase for machinery and equipment implies that investment in construction will increaseate less thanercent and that Investment inand equipment willarger shore of the total. Inof the new emphasis upon reduction of production costs andoutput from existing plants, the construction of new plants will be deempbasized, lnvestaent at existing enterprises emphasized, and the share of industrial Investment going to equipment willfrom aboutercento nearerercent.

Two aspects of investment at existing enterprises are theof worn equipment with equipment of the same capacity, which will produce at lover costs, and the increasing of actual capacity through the installation of new, more productive processes or by extension of existing plants- The enlargement of the capacity of existing plants

. is much less expensive, unless expansion Is excessive, than the con-

Btructlon of whole new plants on new sites, and this appears toajor element of consideration, especially when Soviet construction costo are so high in relation to Soviet equipment costs.

On the whole, the new patterns of investment appear rational. Whether the industrial productivity goals will be achieved is yet problematical, because few things are more difficult to predict than the degree to which new technology can be introduced or the effect of such new technology. ubstantial degree the new program goesrogram for simple capital replacement, which could be scheduled and predetermined as to effect. Much of the program depends upon the introduction,arge scale, .of relatively advanceda very complex engineering problem. Nevertheless, the program must be followed if the productive resources of the USSR ore to be used to the fullest extent.

Aside from the problems Of technological, progress, tho building, equipping, and modernizing of plants, as planned in the investment program, are ul thin the present ability of the USSR, unless ancrisis results. The Plan correctlyeavier share of investment to equipment than in tie past, in support of theplans for technological Improvement and increased labor Two possible developments bear special attention, however, and may endanger achievement of the productivity goals for industry in general. The first development would be an undersupply of instruments to industry such as could result should military requirements be larger than planned. The second would be an underestimation of capitalin the machine construction industry Itself, as the targets of the new Plan rely predominantly upon increasing output from existing plants.

A substantial part of the new investment is directed towardIn energy and raw materials, and in the area east of the Urals. Investment in machine construction appears to be increasingow rate in relation to the production goals. The machine construction industry is relying in many cases upon substantial production increases from relatively small capital investment in support of the introduction of new technology and capital replacement in existing plants. Should this be too optimistic, heavy additional capital expenditure would be required for the construction of additional new plants. In general, however, the capital investment program should be fulfilled substantially.

VIII. Eastward Extension of Industry.

'in the Sixth Five Year Plan, which emphasizes the development of natural resources and energyubstantial effort is directed toward the development of natural resources cast of the Urals. the movement of industry eastward is not new, theillew intensification of this effort. The agricultural development of the "new lands"yproduct will help toood base for an enlarged urban population in years to come.

The new hydroelectric power development is concentrated in the area east of the Urals. Khrushchev stated in his address toh Congress of the Communist Party: "Within the nextears we must makeeading producer of coal and electricity in the Soviet Union and the principal center of industriesreat deal of fuel and powerespecially industries producing aluminum, magnesium, and titanium as well asentor7 of the eloctromctallurgical, cokeand electrochemicalhe Planong-term

one, foreseeing the creation in Siberia withinrears ofcenter producingillion toillion tons ofH

, half of the capital investment in the USSR Is to be Invested in areas east or and including the Urals. There is to be greatly increased construction activity in Kazakhstan. Inoundry, an ore-concentrating combine,olling equipment plant are to be constructed. An aluminumerrous metallurgical plant,lant for the construction or agricultural combines are to be built at Pavlodar. Two large blast furnacesontinuous sheet rolling mill are to be constructed at Karaganda- In addition, several chemicals plants and engineering plants will be constructed in Kazakhstan.

Inew aluminum plants will be constructed as well as oilew machine-tool constructionetal-formlng equipmentonstruction and transport equipmentlectric locomotive plant, and several chemicals plants.

A substantial nucleus of an aircraft industry in Siberia probably will be further enlarged if increased supplies of aluminum, fuels, titanium, magnesium, synthetic rubber, and other basic materials arefrom new plants going up in the area.

Major new railroads which are projected will improve transport facilities within the new industrial areas. The new line fromwestward to Abdulino will improve transport between both the Urals and Karaganda and the areas in the west. The new lines Krasnouftask-Kurgan, Omsk-Barnaul, and Stalinsk-Abakan will improve transportand eventually will help relieve pressure upon the Trans-Siberian Railroad, which they and other existing lines parallel.

Continuing, long-term development of the areas east of the Uralsa major assignment of the State Planning Commission and assumes great importance not only from econcalc considerations but also from the point of view of defense.

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