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Kosygin andh Five-Year Plan (U)
The Chairman of the USSR Council of Ministers, Aleksey Kosygin, has recentlyide-ranging, future-oriented article on economic plans and priorities in the July issue of Planned Economy, the journal of the State Planning Committee (Gosplan).* The article's appearance coincides with what appears toigh point in the campaign, prodded along by Presidentto institute changes in economic planning and 8 Politburo decision allocating greater
*A. N. Kosygin, "Course TowardMost Important Link in the Party's Economiclanovoye Khozyaistvo, No.igned toune.
Brezhnev has criticized the* planning mechanism for years. At the8 plenum of the Central Committee, he reveaLed that the Politburo hadecision "recently" that extended the powers of Gosplan, increased its coordinating role, and enjoined it to focus its attention more on long-term planning. He also revealed that the Council of Ministers had been charged with preparing recommendations for "perfecting the entire economic mechanism." On9 it was revealed that the Politburo hadesolution "on further perfection of the economicand tasks of party and state organs" (Hoskoyskaya Pravda,. The next day Izvestiyaengthy summaryeparate Central Committee and Council of Ministers' resolution "On Improving Planning and Strengthening the Impact of the Economic Mechanism on Raising the Effectiveness of Production and the Quality of Work." This document apparently represents the fruit of the Council of Hinisters' effort, aided by Gosplan, to reform itself. Still further changes were promised by theuly announcement, which stated: "It is planned to work out proposals for the further improvement of the organizational structure of administration, having foreseen in them measures for overcoming departmentalperfecting branch and territorial administration and organizational forms for implementing target programs and also proposals for raising the role of Soviets of People's Deputies."
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power to Gosplan {which has not beenhe9 resolution on planning, andrticle together suggest that the basic course for any change in economic management""has been established for theof the Brezhnev era, although someto be still under debate. The thrust of these measures is clearly toward greater centralization, an enhancement of directive elements in economic administration (particularly with respect to the binding character of five-year plannd cautious experimentationange of mutually"success indicators."
Premierrticle isersonal statement, as it defends certain positions long advocated by himn energygnores other positions that are developed in theuly joint Centralof Ministers resolution "On Improving. . he need for program-centerednd pays only minimum obeisance to the Brezhnev cult. But, it is also an authoritative expression of the point of view of the Soviet Union's top economic policymaker; and it has been publishedime when key decisions must be made in draftingh five-yearnd what is inyear"Basic Direcr tions of Economic and Social Development of the Country It projects courses of action that are likely to be pursued between nowt least if Kosygin remains in office.
Politically, the articleefense of the existing system of plan elaboration by Gosplan,through the Presidium of the Council ofand Central Committee apparatus, andtion of plan targets by vertically structured branch ministries. Economically, the article emphasizesinnovation as the strategic key to economic growth; the labor problem as the central constraint on economic performance; and the need to keep the rate of
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April to the Council
of Ministers, or in Mayathering convened to celebrateh anniversary of the first five-year plan. It is clearlyin any event, to lay down the line for planners.
qrowth in investment lower than the rate of growth in nationalguaranteeing low growth in.
Centralized Administration of the Economy
Kosygin strongly implies that there is no need for fundamental change in the existing system of centralized state planning and ministerial implementation of Plan directives. In his view, this system, operating on the basis of "democraticrovides the linchpin for translating party policy into economic reality, ana it has served the Soviet Union well forears. It follows that what is required is simply adaptation ot the system to the contemporary situation.
In contrast to the position he took duringof5 economic reform, Kosygin does nottrategic role to improvement in theof "economi? levers." His main concern.in this field is that plan indicators provide more incentive to save labor and raw materials; but, he has nothing to say about pricecrucial precondition fortharnessingto the regime's declared economic objectives. The thrust of his argument, on the contrary, is directed toward "effectiveness"-enhancing innovations in thethat will be imposed from above regardless ofresponsiveness to microindicators.
This posture is reflected most clearly in hison the preeminent role of Gosplan and on the drafting of long-term plansh five-year plan and the9"Basic) Tto "jtjrtiOD behind this planning effort is to develop far morelong-range targets than have previously beencompel their incorporation from year to year in annual plans, and then tie incentives.to fulfillment or overfulfilment of the plans derived in this manner.
In keeping with his defense of existing planning and managerial arrangements, Kosygin aPPr0?che* ^mpnt gingerly the politically sensitive issueement in regional-territorial planning and coordination. While paying lipservice to the need to improve territorial planning, and acknowledging the importance of integral
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development" (kompleksnost') in republic and regional economic management, ne implies that the problemhas been solved,umber of existing reqional programs as positive examples of the "complex systems approach to the solution of regional problems." Hea need to do better in the coordination ofactivities and synchronization of completion of production and infrastructure facilities in newcomplexes (TPKs). But in contrast to the position recently taken by First Deputy Chairman of the Council of Ministers Nikolay Tikhonov, he saysabout organizational changes (long urged by local party and economic officials) to cope with the problem of horizontal integration of the
Technological Innovation
Kosygin clearly states that the solution to Soviet economic problems lies in forcing the pace ofinnovation. Realization of the Soviet Union's scientific-technical potential will not occurit must be planned and administered from above:
The most important task of all participants inout the new five-year plan is to make sure that the plan and all its targets are based on theof science, that they open the way for the
states: "An intensive search is now under way for the most effective organizational forms of administeringand territorial-production complexes. This task,has still not been solved. It is necessary, as was pointed out ath congress of the Communist Party of the Soviet Uniono approach more boldly the creation of authoritative organs of administration of the complexes that dispose of the necessary resources, which is especially important for overcoming diffusion, lack of coordination, and the large losses connected with this. As regardshowever, some complex territorial plans and programs at times amount simply to an assembly of the territorialof branch plans. At times Lhere are no organizational bases for planning and administration for large economic The solution of this problem is especially topical for theommunist, No.
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introduction of technical innovations, that the plan represent an elaborated program of actions for accelerating scientific-technical progress.
The main lines of technology strategy upon whichshould be based, Kosygin implies, have been set out in the "Complex Program of Scientific-Technical Progress and Its Social-Economic Consequences to theocument prepared under the guidance of the Presidium of the Academy of Sciences and the State Committee for Science and Technology.
Investment
The rate of investment. Kosygin approaches the invest-ment question by observing that the Soviet Union has proved itself by already having outdistanced the United States in the production of such important commodities as oil, steel, cement, and mineral fertilizers, and that every year it implements "one of the largest programs of capital construction in the world." The stress now must be placed on effective utilization of existingstock:
A characteristic feature of the party's contemporary economic policy lies in the orientation toward fuller utilization of the mighty economic andpotential that has been created in the country, toward all-round raising of the effectiveness of social production, the quality of all work. It is namely in this that the party sees the main path for furtherand cultural construction, the growth of public well-being.
In perhaps the single most important policyin the article, Kosygin unequivocally commitsto the proposition that the rate of growth inin thend beyond should be les than the rate of growth in nationalthesis underpinningh five-year plan. He comments:
For many years we have rapidly stepped up the volume of capital investments, the temp* of growth of which has noticeably exceeded the growth of national income. to the results of the first three years of the
income .was higher than the growth of capitalhisositive tendency that testifiesaising Of effectiveness of sos-ial production. It must bein plans for the future.
Given the declining rate of growth of national income in recent years (growth in GNP has fallenearly averageercentercentncreases in capital investments duringaccording to this formula will remain modest. If the strategy is carried out, it will tend over time to depress growth of national income even further, unless productivity gains far exceed anything the Soviets have been able to achieve so far. Slower economic growth will somewhat alleviate pressure on energy and raw(which mayentralut it may also force Soviet policymakers to examine more closely the opportunity costs of maintaining theercent annual growth in military spending.
Sectoral allocation of investment. In the article Kosygin provides only fragmentary hints about the desiredof investment among branches of the economy. He is clearest with respecthronic source of contention, investment in agriculture. Agriculture, he notes, has been getting vast investments; but increases now, he implies, will have to be scaled down:
As is well known, the party has providedharp increase in capital investments in agriculture. They will continue to grow in the future as well. as was indicated at the July plenum of the Central Committee of the CPSU, under contemporary conditions the task must be moved to the foreground of improving the utilization of material and financial resources in sovkhozes and kolkhozes, of raising the effectiveness of agricultural production.
in the article Kosygin mentions defense only once, at the endist of sectors of the economy in which the solution of problems is viewed as being dependent upon the development of science and technology.
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sector most favored by Kosygin would appear to be machinebuilding, quite in accordance with his stress on technological innovation as the key to economic growth-He sets the machine-building ministries the ambitious task of "providing for the technical reequipping of all branches of the economy on the basis of new machinery that meets contemporary world standards." This task, reflected in both the 9thh five-year plans, will be continued in the five- and ten-year plans now being drafted.
Territorial allocation of investment. Important issues in territorial allocation of investment include theand scope of Siberian and northern development; the division of investment resources between major urban-industrial centers, on the one hand, and smaller cities and towns, on the other; and satisfaction of the claims of non-Russian national republics to equalization of economic growth. Kosygin appears cautious with respect to Siberian investment. He stresses how much has already been-accomplished there (especially in the oil and gas region of Westnd while noting President"directions" on Siberian development, calls simply for the "phased expansion of the potential of the eastern regions." On the contentious point of whether or not development in northern territories should proceedroad or narrow economic front, Kosygin explicitly aligns himself with the historically dominant strategy of narrowly based resource exploitation. On the urban issue, he stresses the need to avoid investment in new fixed capital in the heavily industrialized regions of the USSR where there is an increasing labor shortage and repeats the familiar call for renewal of equipment and reconstruction of enterprises in these areas, with higher rates of investment in smaller cities and towns where thereool of underutilized labor.
Investment in labor surplus regions is, to adegree, investment in non-Russian republics. But Kosygin adamantly rejects the notion thatpersist among the republics,to theequalization has already been "achieved" and that consequently the interests ofrepublics can and must be subordinated to the achievement of "common goals."
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Sectoral Development Priorities
Energy. Kosygin emphasizes those elements in the energy picture with which helong identified himself: coal (based on development of the enormous Kansk-Achinsk brown coal deposits of centralnd nuclear power, especially breeder reactors. ew note that he strikes is the stress on coal liquefaction, evidently because of doubts about oil availability and intractable coal and electricity transportation problems. "Growth in oil extraction, andonsiderable degree gas ase notes, "must be directed toward technological needs for the production of chemical industry output."
Agriculture. Growth in agricultural output, Kosygin acknowledges,L. I. Brezhnev haskey indicator. "But it is no lessecontradicts Brezhnev, "that output be stored and brought to the consumer." Kosygin stresses the need to view agriculture as "an integral part of the agroin-dustrial complex." Operationally, what this means is that of the resources allocated to agriculture, relatively more should now be devoted to storage, transportation, and processing, as opposed simply to increasing output. In the production sphere allocations should be relatively greater for mechanization implements, fodder production-equipment, and agricultural chemicals than, for example, tractors. There should be less stress on expansion of irrigated land and more on its effective utilization. By blurring the difference between agriculture proper and the various industries that service agriculture, Kosygin is saying that agriculture's share ofshould be shared with otheris, in effect, reduced.
NachinebuiIding. Kosygin stresses the need to produce larger capacity, more efficient equipment: for example,egawatt nuclear power reactors. He also calls for greater concentration of production in the machine-building industry, and the establishment of subassembly and technologically specialized factories and assembly plants.
Transportation. The key problem Kosygin addresses is transportation of electricity and fuel over greatdilemma posed by the location of gas, coal,
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and hydroelectric reserves thousands of kilometers from domestic and foreign consumers. His preferred solutions include deployment of multiwalled gas pipe (creating greater throughput capacity, in combination with higher pressures and chilling of theocation of energy-intensive nonferrous metallurgical and chemicalnear the Kansk-Achinsk coal deposits; and--in the longerof ultra-high voltage electrical transmission lines.
water. "Evenosygin observes, "some regions in the European part of the country, including the Urals, and irrigated farmland in Central Asia, aredifficulties with water supply." The solution to this "water problem" is not rapid implementation of costly and ecologically problematic schemes to shift the flow of Siberian rivers, but elaboration of for the rational, thrifty use of water."
Kosygin views the emerging labor shortage as aconstraint on future Soviet economic development:
In che future the growth of labor resources will be sharply reduced. To provide the economyabor force under these conditions, to maintain high tempos of economic growth, it is necessary to work out and make provision in long-term plansystem ofmeasures aimed bothundamentalof labor expenditures and at drawing additional laborers into social production. Planning workers and leaders must lake this into account. Each of them must recognize that the opinion one still encounters, "just get the capital investments, and labor will take care ofs hopelessly outmoded.
The motivation problem. Kosygin does not suggest the slTghtest sympathy for moves in the direction of worker participation in management. He does argue, however, that labor productivity now depends directly upona more comfortable working environment. Likewise, he does not broach the sensitive issue of "group B and the relative priority of cojisumer goods production.
Yet he does call for "measures aimed at meeting the wage-based demand of the population." In this context he observes that "satisfaction of demand expressed by the population, the creatioif of normal conditions formonetary incomes by the population, is an important aspect of consistent realization of the principle of distribution according to quantity and quality of labor, of strengthening stimuli for raising laborn the controversy over the relative efficacy of material as opposed to "moral" incentives, Kosygin unquestionably sides with the proponents of the former. Moreover, he explicitly urges greater wage differentiation: "It is necessary to overcome still-existing elements ofin the payment of labor, to apply more broadlyforms of payment of labor that link theof earnings of each worker with the final results of his personal labor and of the activity of thosewhere he works."
At several pOiBtl
Kosygin calls attention in passing to the problem of labor redundancy in the economy and to the need forof labor resources. He speaks obliquely of "rational resettlement of thereduction of the number of people employed at existing enterprises, and "planned systematic relocation of workers." Heot prepared, however, to urge the politically risky courserontal attack on labor hoarding and feather-bedding, which would offer the quickest alleviation of the Soviet labor supply problem. Instead, he calls for improvement in training and retraining of the labor force to promote mobilityise in labor productivity. In this connection he endorses what appears to be ashift backombining of general and polytechnical secondary education, as well as tighter planning and control over the production of specialists with higher technical education.
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Original document.
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