CIA HISTORICAL REVIEW PROGRAM RELEASE IN FULL
I-
H- 7rtTi.ii tn
kw Tool* and
B-
C, Soft
D* Conou&er
n the Coneunpticn Sector and laadorahlp
I. Tbe Uooetiefiedfor
8. Th* SlcMlovn in the fcU of Orovth ofSoft Good*
3* the ftntup Deoand for Oocunmr
f>i Inadequate Expaaolon or the Gen-ice
IB, Trcoda in Dlopooablo Honey
A. honey 2amInge of Ve.cc and Salary
9. Honeyof Collective Pamere and Secondary
Incoow of Rural
Ct sente and State
IV. Implication* of Diverging Tread* in Inccae and
of
V -
lev leaderaalponeuoer Oriented orCeneuaer Policy Before5 Berveetthe fceglae'i feopoeeen)35 nerveet
Appendix A: Oerlvatioa of the index of
appendix B: Derivation of the Index of DIapoeanle XncoM
TABUS
Average Annual Rate* or Growth ln Per Capita
Consuaption, of Food,
Cc*parative Indicators of ncalto and Education
elected Teara,
3- USSR and US: Estlaated Stock* of Selected Conauoer
Delected Yoars,
u- USSB: Retail Soles and Inventoriest Oooda,
Belocted Years,
Indexoo of Disposable ttoney Income, Solocted Years,
Xndexea of Bales and Price* lo too Collective Fara
7,
30
Retail Sale* and Personal Savings Accounts, Selected
AvertroMtier
9. Comparison ofConfuted Indexes of Consuaption.
10- CoEparison of Ratesof Official and Ccssputed Indexes
1
of
USSR: Rational Mspoaable toaay
USSR: Average Annual Msrey Earningo of Wage and Salary
Workers by
CHAS73
Figure 1. USSR; Average Annual Rata* of Orovta la Per Capita
Figure 2. USSH: Index of Growth in Per Capita Ccoeunptlon
byComponent
Figure 3- USSR: Avorage Annual Ifaney Earning* of Wage and
Salary Worker* in Seloctod Beetore,
x. iiiuroauction
One of tho basic measures of the performance of an economic system ic Its success In providing fcr the material vol faro of its members. With Buch ringing phrases as "Everything for mac, for hisl/ Soviet ideologiBtQ constantly proclaim Cctaminlsa's superiority in this respect. Certainly one of the principal alas of Soviet policy is to raise the level of living of its citizenry. However, this goal must compete for the allocation of resources, with the demands for military and space programs aad for modernization of plant and equipment throughout the economy. Because of its control over economic resources, thean manipulate the annual shore of groce national product (GCtP) allocated to consumption. In addition, through its investment policios tha regime can determine the level of inputB for those sectors of the economy that directly supply the consumerhe light and food industries, agriculture, end services.
The formulationolicy for allocation of resources among the major claimantsconsumption, defense, and inveetojento intertwined with the whole fabric of Soviet domestic and foreign policy. In the absence of Stalinist repression, the leadership must bead to some extent the popular expectationsetter life. Moreover, the prosperity of the industrial West continues to whet the appetites of Soviet consuaera for more rapid progress. Growing contact with the West presumably accelerates this process.
Tne Soviet population lives carkedly better ln the6 than it did at the end of the postwar reconstruction. 03 per capita consumption grew at an average rate ofercent per year, but8 thB rate has fallen by one-half (See. Nevertheleso
Sovietconsumption per capitaj 5 to.ercent in lofli. ""
(Figure 1)
a/ Itorivod from the index of cone umptIon, Appendix A.
* Soao part of this decline may have boon offset by better quality of goods and services, respite tbe myriad complaints concerning the quality of goods,
observers agree that both variety and workmanship of consumer products have improved noticeably in recent years.
Hit* respect toVxr NUffffUc of conjuaetios, toe annual rata of lncreaae Id tbe consuapUoa of food has been low ana declining over tiaoj that orhas beoo oloedy aad aonevhat hlghor than that for food) that of softhas bum greetar still but haa alowsd devn appreciably, and that of durable goods ass grown aost rapidly (Caa
2)
USSR: Index of Growth in Per Capita Consumption by Major Component
1BSO -IOO
a/ iscussion of the aaturo of the data used to derive the lndnxea and the sslhod of conotructioc.
A. Ficd and Bcvcriu;git
Soviet citiiana eoosuoa on0 calorics per aay, oraao as la tb* United Vhlt level, rasched3
aalotained since. Is adequate for tic energy rcqmreoects of tta* Soviet populace. Rut aloof with the expansion la real incoaas of taa populationoo tonend for batter quality food such as neat and eggs, aore variety, and aore conveniences has grown, la these respects, changes la tne dally diet nave not Batched concvaar expectations, hows tbe trends0 ln per capita coosuBptlon of the major categories of food.
Table 1
Average Annual Bates of Qrowtn lo Per Capita/
All food
of
Anlnal
Processed
3asle
a/ Separate foods vera aggrecated by ua* cf price weights. Anine! procuot* Include oeet, riah, nllk and allx products, sal or-ia include oasned goods, oacaronl, nargarln* and vogetable oU, sugar and confectionery, bear, wine, chanpagne, and vol**. Eagle staples Include vegetables, potatoes, nod braad and flour.
Per capita eonsunptloa of basic food* such as bread aod potatoes foil absolutelyJ aa the supply of enlaei prodUrta and praeeesad foolsas sugar, ennnsd goods, snd beverages ir.weeocd rapidly. owever, the demand for noro neat ond dairy froduct* was thvsxtad by tha failure of donsstla supply toprevious rates of expansion and the unwillingness of th* reglat to asthertse Inporte. ceult tha rate of Increase In per oaplte availability of anlaal product* declined by nora Uuui one-holf- HaglnnlrgU, however, the decline lu thi* growth rate apparently vas halted.
As Ineonsrise, ooBeoasra Lend to substitute anaaal produete, vegetable
olio,sugar, and other "quality" foods for the starchy staples such as
potatoes and grains. hange In the share of calories derived free, starchy
foods, the so-celled starchy-staple ratio, therefore,ood Indicator of
tha changes ln the quality of diet that havo occurred ln Lbs USSR, la IO53,
TO percent of tha caloric content of the average Soviet diet originated In
starchy food,ercent ln animal products. 0 the percentage of
calories froa starchy foods had dropped to aboutercent (coopered to 2V
percent In Uie UnitedhUe anlaal products supplied alaost SO
ecided laprovenent In diet. 0V hovover, the
starcoy-staplo ratio held nearly constant. Butarge boost lo
ttHawM
production of aeat and aliancreased eva^abUltles^roduoed toe ctarchystaple ratio toercent. B. Ocrvlmn
ikmslngarticular vexing probiea for the Soviet consuner. Rapid urbanisation and low rate* of leveataect In nev housing coabined to hold per capita living space" for the entire country static during the'a at slightly moreq. a. The new Khrushchev govornnent pledged ti to "overcone the housingndncreased state Investnent plus eneouregaaeat of private boasitable soon. But these
topartnent of Agriculture, US Food Consiegtlon. Statlstloalp. 6J.
Living space is defined inB to Include living rocos, dining roons, and bsdreamsj it does not lnoludo hathrocoe, kitchens, hallways, and corrldors.
policies vere botb short*lived, aadU tbe level of lrwectn^at it housing construction vua Ll percent belcv tbe peek achieved -taifltng cpacc constructed during the Seven Yearell y> percent abort of the target ofillico square uctere* Per capita living ep&ce5 vae aboutax chort of tbe officially designate ^Initial norac^ a. and leee then half tba available apace per copltn in Austria or Vast Cernaay,lthough there bao been no striking iarprcveoent in the per capita supply of
living epace. there hoa teen an appreciable tuprovcittEt In personal privacy.
Rccoa are ttraller. thus fever people per rcca, aod uoet nev ntate-built
aportccntfi nov Include private baths and kitchens. Ic addition to nev
building, nuch of tbe reconstruct!ca of old buildings eaphaslzes creation of
twUler, ttore rationally planned opoxtscnts.* Bavever. In towcevUo
percent of the hewingV vaa obsolete by Soviet st&na&rdft. vith teneatc
4
forced to use ccrantnol kitchens and
'Ae other services have advanced steadily, Household expenditures for utilities continue te grov,erga backlog of deaand for provision f gas end electricity Tbe population haa also used an Increasing
UX Eeoncovic Corniasictt for Europe Annual friUatln for Housing and Building Statistics forp.
Stroitel'payn Wta,-
* Eiftcussing tbe reconstruction or oae old building lnecent article noted thataailleo fomerly lived in one epartwat and chared the kitchen, after rccanitructloii each faolly haa an individual eporarant vith private kitchen* $J
echern&ya Wkva..
p*
share of ita graving Income for transportation, personal care, and repair services. During the past rev years the planners have placed great enphenls on Increasing the nunber Of Clotblng and appliance repair shops, laundries, drycleaners, and other service outlets. art, this policy eteas fron tbe increasing stocks of coasuner durables and the desire of the region to
rely or. caemerciel channels for the perfornance of chores formerly done la the home.
Cceaunal serviceshealth, education, end other 'free* servicesand the like)mount* percent of total COOS imp tlin health and education have been inpreselve, ae^tbeln Tablequality of nany cansuoal services, however,
la. ctnndnrda, the degree varying from field to field.
Table 2
USSa and US: Cemperntivo Indicators of Health and Education Services Selected
Doetora0 persons)
beds0 persons)
b/
enrollnents (thousands)
c/
of teachers (thouenndfi)
c/
of students per teacher
ft for
or health, a- Hospital's Guide. Augustart II,. c. . Statistical.
C Soft gaoU
Per capita couomptioa of soft goMoalnly fabrics, ClOtMng nnd shoeslnsrtssed at aarata ofercent0owever, tbe rate of growth hat sieved to an evorftgoercent par year. Ibis decline appears to bo due in large part to laeroeslng consumer reaistaace to pour quality eni Inappropriate sssortnsat of clothing and aheea.
Although the over-ell rata of laereeae ln coBsusptlon of soft good* hen fallen, cor.auaptloa of ease kinds or soft gooda Imu been nalotelnadigh rate. Par Instance,* sales of rsady-aada clothing were aore tbe* four tinea the level On tna other hand, aalaa of fabrics Increased by oaly one and one-half tinea,eak0 and declining absolutely in voluos ln the early lo&O'a. Thla differenceignificant aal ft from cone produetioa to the purchase ofclothing.
D. Consunsr durables
rodsctloa of cons-nor durable* laoraased at aa average rate of lty percent per year, decliningaroant per year. Proa slightly more than one-fourth or total sales of nonfood goodsC, durables coved upeataroant/ Stocks of cons-oner durableser capita basis reoaln rcry low because of the negligible level of stocks In the base period and, possibly, because of the relatively short service life of Sonet-cade durables. Coacerisoos of
6/ Scvfttskara
the stocksdurables in taa UUJt mci ihc united Statu ara shown la table 3. Brea these comparisons result la substantial oversiateoeat, considering Lhe louer quality of Soviet durables and the absence of ac estimate for retirements for tbe IBSR.
Cable 3
USSR aod IB: Batlnatsd Stocks of Selected Cenaarjsr Parables, Selected '
Lhlts persrsona.
rachlaee
m
"
sets"
-
sib
aad scooters
machines
trie vacuus cleaners
Electric only.
Basea on offlolal figure s. .
B. Problcna In tha Ctorjuaptlon Bsctor and leadarshis Redraw
ie laprcssojeal nade to date latloo is far free sufficient.
nor are the proelena In aedctelnlng and expanding iupaliee of coos-awr ti
easy to solve. The leadership has been particularly concerned about the
failure of agriculture to provide the ainlmua output require! for self-
sufficiency in food, necessitating the 1apart of large quantities of grain."
Clearly, aore resources had to bo oonnllted to the output of foodstuffs. In
Following the disastrous harvestha Soviet union iaported about ll million aetrlc tona of wheat and flour. The good harvest did not permit en adequate aargln for rebuilding depleted stocks, and tho poor ciinatlc conditions5 which resulted ia another harvest shortfall again forced
substantial.
- 'sceitreet to the situationhowever, the quality of breedy epserentlr Cia not fall {sen.i ).
addition, thcra hasersistent piling up of Inventories of various kinds of coostsaer foods, ibe Soviot coasu&er, havingtandard of living above tho ninlnua substance level, has shown groat reluctance to purchase the available supply of clothing, shoee, and other soft goods despite the ever-Increasing ioval of his ooney iceoaa end savings. At the sans tin* thereargo pent-up deoand forlSae^cor.flunor durables, as shown by the long waiting lists at retail outlets. Finally, the transition to an urban society haa aet been supporteddec.ost* provision of bousing, utilities, repsir sorvlces, and other aamiltles taken for granted in Western Huropo.
:. Ihe Ur.aatlsflcd teaand for rood
Progress in iaproring oooeusptloa of food has beccne stuck oo that part of the leadership's program callingatter and aore varied diet. Although real lncoaee of the Soviet populationIncreased approclsbls/ over the postears, tas diet has not laproved eceracneurataly, nor has the chare of incone spent co food declined. Households ir. tho USSR spend about one-half of their total Ibcobc fornercent of tase.fcoae pay spent by tha average US btliea. y Bo unsatisfied demand for high-quality foodstuffs, oapecially aninnl products and frulte, finds expressione continued high prices for those ltesa ir. tho collective fara asurketV,rt prices reflect changes la daeatnd and supply. Although tha proportion of foodstuffs purchaead ln state stores has boon lucres6Ing since
V f Agriculture, aatloanl reed Situation,
ho OoHo'etivn* famontinue to ploy on Inportant role ln supplying the population with items in chart supply In state outletsusually perishable foods such as vegetables, fruits, and onioal products.
We new lcadershlpy has recognized the leportance of tbe CSK, bothource of supply for tbe consuoer andource of Inome for
peasants and collective ferns. Iniberalisation of the rulce of
in tbe
trade Ares announced, jk/ All price ceiling;vere lifted, funds were ondo
available to modernize and expand existing narheto and to construct new
addltion^oeasuree were toien.to inprove the transportation of
Surplus agricultural products to the nsrket. esult,5 quantities
cold in the CFM increased end prices vere dovnercent.
2. The Slovaovn in the Hate of Grovth of Oar.sunptlon of Soft Goods
Ibe decline ln tho grovth of ccmsuxption of soft (goods as a
whole can be traced in large port to the stagnation in physical volune Of
soles ln spiteoderate growth in overall production. Bepeated price
cute for various cormcdltlcs, particularly cloth, have failed to Increase tie
volume of sales significantly. evere problem of inventory
eccixiulation hoo arisen. Inventories core than doubled9hereas
retail sales Increased by lose thanercent (see At the and
of lyti, rotnil Inventories of soft goodsillion rubles, acre
than half as large os total retail sdos of eoft goods In that year.1'
" ww^js'.JsP- X./ . 2.
ttrSoviet Inventory erotica, sfie'-Marshall Beidaaa. Wne Ifcluctanr ConhOwr end Economic Fluctuate* tn'thehef Poliei-I Econcqy.
SS
table *
USSS": iU Soles and Inventoried of Soft Goods Salooted
0
Bubles
mj
tlvSO-lOOl
.
..
2.
The difficulty of bringing produclion end eonsuoptlon of sinto equilibrium in tne (JSS3 arises prinarily becausenor price reacts adequately co chances in leased- Omcontrol over tie total vol une of ecasuner supplies. Moreover,linitfi of resources devoted to ecasuaptlon, planners and antsrprlseaadjust to changes la cocsuuer doused, nhtorprlse annagcrsatewhen changes nay increase the risk of under fulfilling tasthan do so, they will resort to production of goods that thayunwanted. In recent years the region tins adopted Increasinglyln aa attempt better to Batch supply and daaand. Although acuts on herd-to-sail oonsuser goods, such aa certain clothing,household appliances, were announced at the sadh, thoexcess Inventories did not appear to be dlnlnishing after tbe Further retail price reductions, ranging
-
6 percent Tor certain types Of clothing toercent for aooc fnbrlca La excess supply, vara announced In the latter part of April. Staulteneously,
the na-al-urbon price dlffareatlal oa sane aoodaj-
abolished.[arthait" weald'
rural coaeuaers to purchaso aore of tho goods in excess supply.
Another approach to the probleo af lUhlisj supply and dttsand, watched with Interest by both Soviet and uestarn observerB, Is the experimental establishment of direct contraetual ralatlons between factories and retail outlets." These ware first tried In the Dol'ehevik and Hayek clothing flrna and were then extended to sons *O0 olothing, shoe, tortile end leather plants,' *lnto tha food iadustry. In ordsr to be successful tbe experineats oust assuae that asnagers of retail outlets are fasillsr with costcaer desires and have the necessary laceatives to balance sales with purchnEos. Finally, there Bust be an arrengeaent whereby tha rnotory aowgors ere penalised for not producing tho essortaent roflootod ln the retail -orders.
lhe rural-urban price differential was conpletely abolished la
Begun under khr^shchev, these oxparlaests not only navs been pornlttadnew regixc to continue but hove teea
JeMeeVc, &rr* /i Ml. m*.
*Se results of ihcten sro, as yet, Inconclusive, novover,
teafact that .aaa been extended suggest* that the
A
sallavea tbe eonauner Bust be allowed toreater Influence on tbe
aeoortacnt of
Theg Danand for CCoeiger ajrablca
Oneatisflal denaad for ccesuaer durables confronts the plannersifferent probloa fron lhat in the soft foods sectoreonpetltion with producer and defense durables for machina-bulldin* capacity. Although current product loo of coniumt durables la onlyercent af total production of ell nnchlnery sad oquipsjent, iho potential taped en the Soviet eecsvatyhift towsrd their .nrodueticnJisenormc'JS. So far the leadership's solution to the surplus danand has teen to use artificial restraints (for exosplc, to freere waiting lists for autonobUas) or to arbitrarily restrict the extent of the "Bsuajln the past ihera ha* been no intention toar for each foullyj a stock of carsotio of one cor foreoplo ln the USSR (coopered with one oar for fewer than three people tn the United States). IQJ Bather than supply each household with donestle appliances, the reglxe in the past has talked of and has supplied ease rental centers and lauodroaats. Is addition, crowded housing conditionsestricted supply of electricity help to hold back dscauul for large household durables. Finally, discontent with the quality of various rswamrrrr durables and tha difficulty ln getting repairs dona proxptly and correctly, crona at all, undoubtedly has curtailed donnnd.
70/ Survey,j,
Because enterprise* lack incentive to respond to coaster demand ond because of the relatively lev priority given producers for allocation ofinle, aachinery,cver to the practice, of eoasuaer An-ablea, poor quality and lack of aeaortnent haw been especially pronounced.
trong eeaaivd for selected durableaexist, Jfcv valttng lists for care opened inists had closed, andary abort tinehad oJgned up ln spite ef relatively high prices.* Just hovprices are vaa aad* dear vtea It vma revealedolga coatal^O) rubles to produce. JjJ Itoviet cltltan
to purchase that Volgov)
other durable*.
v Waiting lists also, for
tore clerks van ectiaetlagvaltlog portedears for tho uore des Ire Wo rerriReraters. tov of the rapid Increase in production, lt is quite likely that queuesait is still accessory for Om larger, sure desirable models. Ifeanlsgev are readily available ln larger cities but rural areas are not so veil supplied.
3fce supply Situation for voeuun cleaners, popular brands of television seta (including ti* low pricednd transistor radios la relatively better vith regard to both quality and quantity, Itespite the Increasing availability of various durables, however, sales of certain iteews**cnIoes, vatches, bicycles, and centreshave aetuaUy declined 1ft
* Ibe current ruble-dollar price ratio for cars averagesenparedor foodor oiloods and servicesnole (the geometric average of ratios using Soviet and US veighte),
jjj
recentMoreover, tbe planners nave bad only limited success Id correcting the imbalance of supply end denand for the sever el typee of
durables in surplus inventory. Price reductions and the offering of
Instalment credit hove failed to raise soles significantly.
3foe ncv five-year plan haaev goala for oonsunertelevision output le to double, refrigerator output lsand tho grout? value of furniture oatput.lo to lncreaae by sore thanercent. Even if these goals areper capita of these goods vlll ren&ln considerably belov stocksU3. triking, hovevcr, ls tho plan to increase productioncare ot anofercentercent
per year Ifavertheiess this noons producingOD tocarsO (lose thon one tenthSuantity that vlll not satisfy ell of tho vould-bo customers. IaafeejiftW_l^
Urbanization ond the Increase In disposable naney lncono have
train on retail facilities ond on the provision of peracaal
services, medical and educational cervices, transportation, sad ccaiiunlcotlons> la addition, plans for Increasing the nunber of laundries, public bo tho, aad talr-drocslng and barber cstabllshnents are continually under fulfil led.he grovlng stock of ccasuaer durables, coupled vith their lov quality,ajor expansion in xho repair nctvort- asual survey
e daily praselov of articles and letters detailing tho
and
Inadequate nuneer- /'variety of repair facilities and the poor quality of the services render*4- WAch of the inadequacy steo* frca tho lov priority given
to construction Ia tbe services sector. Tae ecu leadership hasgrovth of expenditures in this area, calling the fellthe services sector that occurred
expansion of facilities resnlns grossly Insufficient and the endemic problems of poor-quality repair vorX vlll not be solved easily. Public services In
districts lag far bohind^tho cltp*.^
In addition, urbanization hasrowing strain on the the eupply ofovever^auch of the exeese denand for housing as expressed in long waiting lists would disappear if the state charged full-coot rentals. State-built housing (currently about to percent of tbee heavily subsidised;esult of the nonlnal charges, the average family unit spends onlyercent of ite lnccoe for housing. Paying full costs would increase rente byercent. M/ Intensifying the pressure on the supply of nev state housing has boon the decline in private honehe yivc-yoarndicates that no nojor shift in investment toward state housing le planned, nor is the leadership apparently going to take tho obvious solution of encouraging private hone building*
* airing the Seven Sear Han, however, sn overage Ofercent of tho bousing constructed vas In the public sector, thus tbe share of state-built housing is increasing.
** Throughouta private home construction by individuals accounted for mere than one-third of the value of investnent in housing^gJUiU be Slightly under one-quarter for the decode of tbe ly&O's.
t^jSJ Irvestlyn,oprosy eXcacaikl.U, p. 7.
Disposable income in the Soriet union hss Increasedercent In contrast to increases In consumption, however, the nojor increases cenehen disposable income increased at sn average annual rateercent. Oilo rapid grovth cans about because; ngo ro foresndharply raised wage levels for workers enployed in et&teocial insurance reform6 liberalised paynent and broadened coverage for state workers, and beginningollective farmers and their families were includedtate social insurancebolition of compulsory bond purchases8artial abolition of income taxesncreased teta-nome pay; and (n) the share of money income in the Income of kolkhoz peasants rose rapidly.
Disposable income would have grown even faster had not seme of Khrushchev'< more flamboyant promises been delayed or shelved. For axenple, the vage reform for service workersise ln the-.oinimun wage scheduled2 vere notntil 1 - - urther increase in the sdnisnai vage promised5 was not node.
A. Maney Barclnge of Wage end Salsre Workers
Wages and salaries of workers in State owned enterprises constitute the largest segment of money income, risingercent of the totalO toercent Pur lag this period the average wage of state vorkors grew
Dlapoocblo incase is defined as the total aooey receipts of the populationiven year ninus direct taxes on tho population. Money recoipta include: ancy wages andet income from privateividends paid members of cooperative organizations; (t) pensions, grants, stipends and other transfernterest on bonds and covings;et borrovlng. die conoept of incone excludes all imputed payments 6uch as lC-kind paynents. Direct taxesncome tax on the earnings of tho populationocal taxes, fees, fines, etc
-
- i;
t
I
illllh
Mrssult or aojcr wag- refarasad
. Tbt earlier refers, affectedillion workers,illion
rubles annually to tbe wage bill, aad raised tbe average wager ken in
/V*
industry, construction, ond state agricultureo fij porcent. jj/ resigned to restructure the chaotic wagein the "productive" sectors of the ecoooay, the refersat of coordinated Job classiflcatlou andwagereestnbllrhcd base pay as the prsdoalaant snare of vorkcrsi incase, and _ fixed ' lalnja wage ofonta.
To complete tbo rastruoturlng of wages, sorvlcs workors were scheduled to
receive wage increasonnd tbe Ddnla.ua wage was to be raised,to U0
4
onth for aU workers and ecploysea. However, tbelii Ion service workers wore granted
wage Increases averagingorcent; these increasesillion rubles annually to the wage As can be seen injds changerrowed the dlfferantlsl ln wages between the "productive" and service eeetcro. Also laplcnontrd at thie tine was tho postponed hike ln Lhe ninlauat wage.'
FIB- 3
B. Mooey Incoxee of Collective Parser) and Secondary Ir.'cae of Jural Basldaata
lhe peasant population ln households attached lo collective ferns has two prlnary soureea of seney Incone: (l) the remuneration for laborxpended on tho oollectlva fern,onsy lncOBS fron the sale of fan products produced on private plots- Other rural roM dents, including state
J.V. Popov-Cberkasov, Oraanltetslyn narabotnoy piety paloohlkh star.
foggy raid.
workers, ouppleacnt their vbrcc with lncore from the sole of fernthe poet decade the everogc money earnings of collectivefron work on thelmost tripled end cosh peysonts nowAbout three-fourths of the forcers' total income, ccapared yet collective farmers remain at the bottom of the economiccash lncomcc averaging lessearrthe level of earnings of state workers. In pert, the rapidmoney payments merely represents the ioplenentatioatate policymoney wages rather than to make payments in-kind. In-Wni paymentsshore of total lnconc paid out By the collective farm'to Itsfromercent5 toercent inthe
tripling of noncy wages paid to collective farmers by no meanshree-fold increase ln total liwoiw.
About cne-half of the total money income of collective farm families Is derived frcn the sale of farm prod .etc either obtained froa their "own enterprise"and allotment and livestock held by the householdr fron
fS
the sale of products received frcn the collective farmnd payments, fej/ Tc.ctv sales ere made In collective faro marketshere prices fluctuate with changes in supply and demand (See Table 6J. in general, prices la the CPH declined gradually duringa and increased noderately durings
Kh, E., Ponlnondyaooredeleniye kolkhpinykh doitkhodov.
X. Polyokovo, Bwncailka scl'stoctyavstyeitfiyhh predprlyattli,.
f2& Xe. V. ICasiowvokly, Probloay ekonomiki truss,.
-
However, incomes froa CFM sales depend aot only oa prices but also oa the supply of goods both in the CFM and in statenus,59 the increase in volume of sales more than offset tho decrease in prices, end incomes from CrW sales increased by approximately <t0 percent. Incomes stagnatedespite higher prices. Khrushchev's restrictions on private agriculture during thos succeeded in reducing CFM volume sharply. Increased prices did, however, resultoderate improvement in incomes Eve removal of Khrushchev's restrictionsby the present
insurance prcgraa, vorkerc are entitled tc benefits for clcleioss* mternity. aad largcfaalllcal and pensions for old ogc aad disability- IVo najor social Insurance reforms have increased tba cost of social Insuranceercent of the total state budget5 toercent- evision ln
the pension lav& sharply raised the sire of paykents and considerably
4
increased the Buster of pensioners by (l) granting partial pensionsr Iters vho have not vorXsd the required number of years necessaryull pension,
bolishing tte tine limitation follovlag retlrcncnt ln^ich one could apply
ension,dding nev categories of persons entitled to pensions.
esult, the nunber of state pensioners increasedetveen
^ and by an averageCO annually betveen,
ft dayllllon persona drav state pensions*
Ihe eecond najor refcra, approved by the Supreme Soviet on}
broughtllllon collective fare householdsmore thanmillion persons
tote social insurance syatem beginning* Until^thia program.
the establlshcent of pension* programs at collective fame hod been optional
and entirely at the exponce of ths individual fern. esult, aany faraa
ee
hod no progran at oil, andprcgraa^ usually failed to natch the
benefits iters ot stote enterprises.
Under the nev program for collective fsrners, tenants are smaller and
eligibility requlrenents aoro stringent than thosestate
*> *
vcrkcrs. -ne minlnun old ago pension forlJM**leonth
A
for state vor.core, y>onth. Both the collective forasr and the state
* Secluded free, coverage under this prcgraa ore collective farm BWnbero vho vork only on private plots as wall as chairmen and certain technical vcrkeri vho qualify far benefits under tbo prcgraa for ototo workers.
eaployee oust workears to sa eligible forfull pension, but the state
employee of retirement age can qualifyartial pension afterears, whereas there la no provision for partial pensions, for collective ferners. The
retirement age for Bale collectiveaut for state oaployees only
ears. Nevertheless, collective farmers are benefiting significantly fron
the aevthe cumber of collective fnra
pensionersllllooillion, and the average pension taeSMaaag frcm
onth to aboutubles aAloro than 1
biUion rubles vua^slded to the money incomes of collective farmers,
Funding provlaloas fcr the prosrsa, welch is officially astlaated
to naveillionillion rublesalted tba cost to
the stele by requiring mandatory deductions free; the gross revenues of the farms.'
BoUectlve fams vere required toercent of iheir gross
revenuesentralised social Insurance fund, and" .
Tif
... intate
subsidy, averaging tOO millionear, la to be granted
to nset tho estimated cost of the progrea.
State daducUoas from workers' lnccaai declinedercent of
total money Income5ercent schstanuali, ltereaslog
disposable income during this period. The reduction was caused pr tartly by the
suspension of compulsory bond purbhases purther, Khrushohov annojoced
rogram for abolishing personal lncone taxes, whichercent
of total money income in that year. 3ie program began ln0 with the
lowest income groups and vas to be appliedrogressWl, niafcer income
group each October tbereofter until ell income tax payments vere After completing about one-tentb of the program, however, the regine announced ln2 that additional military spending brought about by the "Increasingly aggressive actions of lmperialiem"uepension of the program, gT7 peech tod Party Congress Brerhnev^ague premise to reduce the Income tax "ln the future!!. 5 state deductions still amountedercent of total money Income. IT. lap!lentions of the Diverging Trends In Incooeeitapticn
In recent years increasing money incomes conblaedlowing grovth rate lned to an imbalance between total money supplies snd the onountc needed for. purchases of coneuoer goods andauo generated Inflationary pressures of varying intensity.
excess
?or the purpose of this paper inflationarye defined asdemand for censuser goods causedap between thesupplied to the economy nnd the onount actually needed tolevels of output at planned prices. Given the presence offor goods, "open" inflation results if prices
jS/ IivestTyn.2
la response. If, instead, prices are fixed By decree, tn Mill! "repressed"
inflation ixiits in that eeneunera are forced to hold cash or savings deposits
of tha amount desired, that ls, they vould spend tbe money If only
the proper foods ead services vcro evxUehle. It Is important to note that under "open" Inflation tbe higher pricesncone,
whereas under so-cello4 "repressed" Inflation, this clamant of the Inflation
I
process Is largely absent.
A. Indications of Inflation
At beat, theof inflationary pressuras ln tbe 'J3SK Is difficult because of the lank of oonprehensive official data on laocoe, price levels, real output, and the acoey supply. Xo atfapt is mods in this paper to measure on "inflationary gap." Instead, tho trends in prices ore presented, using the differential between state retail prices and collective fom nsrket prices as tha best indicator of Inflationary trends over tlse. rurtaer evidence is provided by examining trends In savings.
1. In the IBSR, almost all nonfood goods and most food goods are sold ln State stores at fixed prices. Inssauct as tftese prices ere changed Infrequently, excess monetary demand hu resulted typically la "repressed" inflation, flame of this excess purchasing power flova into the CSX, the only organised free carkots in the USSB, and, therefore, prices ia thearometer of tie extent cf "repressed" inflation. Tec ratio between prieee in tbe CPU and state retailor food le probably the best single measure of tha failure of the stats to drain off excess purchasing
It*
power. Althoughhe ratio Of th*lo the tvo markets rose1he ratio still la veil below the ratio
USSR: Ratio of GTM Prices to State Retail Prices for
Ji?5 9 1 5 0 *
Furthermore, toe ratio* prevail/lag la roceat years are still far belov the
ratio of Bven these ratios overatato the case for the
Importance of "repressed" inflation because they do not take account of the
diminishing Importance of the collective farm markets la total retail trade.
Pranklyn Bolaaan has suggested the useeasure cf rcproeaed inflation
that espressos the ratio of the difference between actual expenditures in
collective farm aarkets and these sans cxpsnditures valued at official state retail prices te the sua of total abate retail salas plus collective farm
market asflaa valued at state prices. Sg/ Ac Index ef these adjusted ratios
ro tented la the tabulation belowercent Increase la the Index0ndicating Increasing Inflationary pressure. This sharp Increase vas duo primarily to large reductions In state retail Prices, which resulted la shortages and queues.hedeclined to below0 level, not because of changing prices, but becauseecline la the higher priced CPM soleshare of total sales.I the ratio has again increased, reflecting rising CPU prices.
6 1 ! 2 c 1 2 3 icm 33 31 36 37 l
XI nnationary: Causes and Cures,"of Economics,C,.
-
2. Savings deposits* mors tha,doubled? coup, rod with
of
an Increase in retail sales (for all goods)/aboul JO percent. Trends in retail sales end personal savings accountsre Indicated ia tbe following table.
Table 7
USSR: Retail Solos and Personal Savings Accounts, Selected
1 2 lg6j , >
lco fables *
soles o/
0 2 5 lOOA lOa.3
savings aceovnte b/
7 7 l't-0 7 7
Increaserevious Yenr
sales
M
savings accounts
2 1 1
p.
y U,..
Tne rapid increase lnlngs held in bonks suggests that it ls not a
i
lack of aggregate consumer purchasing power that is causing fcr owing inventories of selected goods. Satber, the inproved income and living Standards of the Soviet ccneuner now pcmlt him to be aore selective in his purchases. In other words, thearket characteristic of the Stalin era, when extrene conditions of scarcityeady naxket for whatever goods were available, has given wayuyers' narket for nony products.
* Jttto on total savings held by Soviet households (personal savings accounts deposited in state banks plus personal holdings) ore not published. Hovever, there ic no evidence that deposits are increasinghore of total savings.
-
A second considerationhc widest confidence the average citizen nee placeshe value Of the ruble.* Almost every Ccasiualst Stateistory of ruthless devaluation of money holdings, and the current confidence of the Soviet population. If well fomeed, represents an loportant economic davaleassnt.
S> Leadership ficspr.ru..
Although the Indicators described above do not provide precise Matures of the degree of repressed inflation both suggest tbat such pressures have grown la the past several years. These Indicators, coupled with the growing divergence between incomes aod outlays on goods and services haveotentially eorlous problem for the Soviet leadership. In contemplating an antl-lnflaticnary programhe regime was able toange of actions: (i) raise retailreete vage aad salary levels; (J) reduce tho rate of increase ln transfer payments; (It) increase Income toxnnjelnatitute .. ond purchases. As noted above, Eiruahchev
chose to postpone the premised Increasesm tha vagee of service where, the Blnlaw wage -iworkers, and the nialaum pension level. Also, shelved2 was tbe program to abolish the income tax. Finally prices vere raised. Up toercent, for selected consumer itemshich lad to civil unrest. Vj
re in the eabryoalc stage of studying consumer demand snd apparently have not developed sample aurreys to determine, for example.the .otivatlons for savings (in snd out cf bonks). ecent iaaWof the orficlol journal of Gosbank did provide tbe following;
"Sevlngo (in bonks) by the population in tho USSRroper and planned budget for the worker, In some cases, there depositedetermined purpose; for exanple, for the purchoLelevision set, refrigerator, motor scooter, furniture, or* oooper.Uve, or for trip.
redit. Be.. fry fork Tines, fl. 1.
T. Toe Hew Leadershipons jpctOriented or Kot
Ibe nevteg cot cose out wltteieer-cul ladloetloB of lie overall
polloy toward the Soviot consumer. Hsvortheiess, during tha yeei'and aremoval there have boon nev initiative* ca the pert ofacne la response to ianediate problana ln the coniuar'-lon areaundertakencog-rango viev. rief description of none ofadopted to lncreaae tne level of living .presented belov. an aoalyele la undertaken Of the current Leadership's responseharvest failure5 compared vith Khrushchsv'e handling ofoaparlcon ef the eeergency measures enacted ia the twoinsight into the 'of tho tvo regies* and la perhapa
sjggestlveore positive approach on the pert of the nev government la at least RSlatalalng levels of living aider abaoroal conditions. A. Coaaunar Policy Beforearvest Failure
Op to the tine of thearveit, thereuaber of indications that the nev regime had adopted measurea teat vould raise tho proportion of notional income allocated directly to consumption, la addition, thr re vas evidencearger share of lnvtstneat resources vss planned for oonsuoer-oriented progrens. The leadership la outlining Ita
I9S5 plan ard-rH^auhsequsat atatemeats promleed the following:
(l) remised increase of storeercent in real lacooa .* '
n
twice tho officially elalaad average rate of growth for the. Crest etress, moreover, vaa laid on an expected sharp rise in tbe quality of
s>r.
and service*. Although$id not ehov how tba overall rlee in real lnc^iti van to be obtained, lt appeared to b= baaed on the presuppositionsuch iaproved eupply of processed foodsperoent Juapanarked Inprorraat In the qtality or goods add servient, an increase ofercent in urban-typo housing cooatncrlon. aa acceleration in the output of selected ccnauner durables,aj or expansion in personal services.
A nev fansnicn called for large Incroaaoa in tha allocation of resources to socialiaed agriculture over theeare* thus apparently cemitting xh* atate not only to achieve self-sufficiency in baoic fooda. but alao toajor Inpwanonn in tbe quality of the diet.
ewratith the Italian industrial fin, fiat, to cooperate vith tha LBSft In tto field of automobile production.** Zf thia accord ia carried out, it will bringsignificantIn the aa&lity of Soviet cara aa veil ae expand the nui^er produced. Hareover, Fiat aay be aakedssist ina netvork of service and pnrx* centers- The ancillary faellitiea to aupport tte operation of peraooally ovned notor vohlaleaga&olioe stations, repair chopa, and the Ilkaare precxtcevLly none*!stent at present.
Selective redartlona on retail prieea of soft gooda in surplus
supply.
(5) The relaxation of eone roatrlctiotts on private activity In tvo lecertent areas of conaxsptionhose construction and the cultivation of rerdM* and astlntenance of livestock.
/ar
(6) An increase In tbo snare of nev order* for chemical equip&ent used ln tbe production nf coto&uaor-oriented products-
Soxe of the above neasurce vere short run, reminiscent of tlioce taken after Stadin'a death and agsvin shortly after Khxuahchev's ascendancy to peverod nay have been designed to win popular aupport. But tone, such aaear progres for agriculture, euggeat that the reglne fait Impelled tovard notarial iayrovcEcnt of certain axeaa of consumption.
During the Utter part, hevevsr, after the regime vaa aade painfully avare or the5 vhcot harvest, there vas e> noratorlvn on statcttcnts or actions either ln affirming previously taken action* or in taking nev steps deelgned to raise consuaption levels. Efais situation is in keeping vith the lack of evidence of clear-cut decisions on relative priorities' for tha several najor resource clalnants in the nev ^ive-yeor- Undoubtedly, the recurrencearvest failure (the secondequiring outlays of another million for vheat purchases, reopened the question of over-All resource allocations* In addition to possible conflict vithin the leadership over the relative priorities of, for cxasplc, consumption versus defense, there say be serious
L
dieagreenent aa to eapbaals on alternative aeasuree to further consuner velfare. Tor example, the vicvo of those political leaders in favor of allocating aore reaourcea to agriculture than outlined In tbe HarchPlenum and at the expense of, for cxsaplc, expanded program for consumer
1- The5 Harvest raUuraa
Therearked contrast in the regliwf) response to tha aarlous shortfalls ia production or wheat3 After the earlier crisis tho Soviel leaders attempted toumber of conservation neesurca to reduce the overall use of grain. Among te steps were (l) an Increase ln the yield of every ton of grain by raising the extraction rate In milling realn Into flour, thus degrading the quality ofestrictions on the sale of bread aad fleer ln retailtep-up la the drive against feeding bread toevival of canpalgna against vasts and theft of bread and grain products;nductlon in the need for feed grains bxjiiaugbterlag 7, an livestock than usual. These aad ether measure* were n) very soon after the Kremlinware of the harvest failure.
5 crisis, on the other hand, appears te hove been deliberately underplayed by tbe new leadership, which referred only obliquely to tba need for large imports of wheat, eeassurtng the population that tbe gov ansae a) had taken measures to provide for "normal supplies Of breed snd breadpparently no restrictive measures comparable to those employed by Khrushchev
vers adopted. .. _ . reluetanee of the new
regime to take such steps may be due ln large part to the experience galrjed under comparable conditions during. consumption year. Certain measures, ouch as the campaigns against reading of bread to livestock, were laerrectlve; others, sue* as degrading the quality of bread, caused severe
The extraction rate ln milling grain into flour Is expressedroportion or percent end dctrmines the volume of flour that can be obtainediven volume of grain. For example. Ifilogramn of flour are Obtainedilograms of grain, the extraction rate Is said to beercent. Tbo quality or desirability of tne bread baked froa riour is Inversely related to the extraction ratothe higher tbe extraction rate la ellilng the grain, tbe lover tbe "quality? oratisfaction.
widespread ccn*mer dleastl* faction,ee led in reduced labor productivity and dvU disturbances.
^"oansidsaaee; way* to bnld down grain Importa and thu* conserve foreign exchange, tha raining of the extraction rale when converting grain into flour le probably tha oost tempting alternative open to the regime. Tor every percentage point rise La tbe overoge extraction rat* In state jelling enterprises,ons* of grain, or roughlyll ion in hard currency, ore saved In terms of wheat mparts roregooe. This saving assumesntenance ef total flour production ln the present ooasuenitloa year at apprcxlnately ths aaau level as in previous years. Kurtheraore, It does not allow for the loss of ths residual la milling groin Into flour, part of which con be processed Into Livestock feed.
The average extraction rote for floor (at state mills) dropped froaercent0 toercent0 and to cl percenthere it remained fairly constant Based on incomplete date, the extraction rate during1 consumption year appear* to have rises to aboutercent. If the rata did rise byercentage point* (free, fll toercent) ^tC. the eavinge ia foreign currency con be sat looted at about Billion. In other words, if extraction rate* had been nalntolnel at the relatively low level of Ol percent,il tion too* of additional grain ircports would have teen roq.uired to provide the ease absolute number of calorie* as that obtained withporcent rate.
* Tcenagee are given la
^ffit la doubtful if tae average extraction ratagV-65
conauooiLlon year was actually reduced to thoevel, thereecided improvoeeet in tho quality or bread and toe evoilobUity of other producte requiringuallty flour." Bie extraction rate aay have fellea to, aay, aa average betweenndercont.
Since5 tho ISSR haa contracted for the purchase of abouttoneof wheat end flour froa free World suppliersostallllon.** If the average extraction rat* ofercentporcent level, import requlrenents vould hove been reduced bya saving ofC allllon. Bjvavor, the quality of bread has aotdovagreded and, aa far aa is xnowa, the oilllng rate haa not been^2/ In fact,assber nrethnev anno jo cod that- the "CPBUand tho Oouncil of Ministers envisage- further inprovsoectthe population with bread both qualitatively and qixuttltatlvoly."th* supply of flour has ixxwoved is attested by IB tourists whonoticed lt for sale lo state stores in several scaliernot'In' either Moscow or Leningrad.
* he sussssrop-quality white broad had beoaoe sporadicaland by autumn most areas had wait* breed soma of tbe tlse. nocoronl, noodles, and other grain products requiring aflour lo their manufacture have been continually available sincethe best-quality bread has remained unavailable onven in wjor cities, ond, with tho exception of snailholidays, state flour soles to tbe puNlajhavo not yet beonnejor cities.
deliveries10 Juna'} or* estimated at aboutilllco tons of grainost of0 mill lea. All of these deliveries were contracted for by Umnt regime, 'St/ %y
partment ofoviet Sralr. laports. ,-
B Letter to the author fron Or. B.rleulturel Attache, Moscow.
l Itvestlya,. .Wjy-w- Deportment orcumol of Casswree. JO
C. rrcapcctg
B tho plsmaoa goals forby Xooygin atd Party Coogreca,ucceseori nave pledgee themselves toapidly improving level or living for tba Soviet populace. -Tbe premises are wide-ranging: higher wages, Utter quality goods. Increased pensions, lesucaoe Uwr taxes, and acre housing. Also, the gap between urban and rural levels of living is to be nerTCveaV
Per capita cono-mptioo is to increase slightly aore than #ewr percent annuallya contrast* percent. Continual references to quality improvement tn the plan Indicate the regime recognise thet low quality of consnisr goodsore point with the populace. So major reallocation of resources is planned, rather, planners are counting on providing tba additional goods aad servicefor eoueuoDtton* starn of previous rates of growth in productivity and national Income. Tbo confidence ef the leadership Is Indicated by new programs to boost money laooaes substantially
V According to Srothnev,he minimum wage will be lncreeccdoonth, collective farmers willuaranteed vage. nlnimua pension levels vlll be raised and tbe collective farm pension program will be liberalised* Breihnev also renewed the old promise to abolish the income tax.
The hey to the assessment of prospects under the new five-year plan is the plan's dependence on restoration of foroer grovth rates In productivity and national ineono. The same forces that reduced these rates of grovth ic the
Appendixlterjyatlpn'of the"index.of^nauraptlon
L
The overall Index of coneumption comprises four atajorooda and beverages;oftonauner durablea;) service a. These components are combined5 expenditure veights, vhlch ara essentially estlnatea of bouse hold outlayo for goods and aervlcea5 for consumption purposes (including military and prisoner subsistence) plus conexm^ loo-in-kind of household-produced items (chiefly food products and housing) plus all health and education eervlcesj vbether purchased or provided by government* Tte uelgfrt assigned sou aervlcea ia baaed5 expenditures o$ "inputs-vegee paid persona employed in providing the service plus the value of materials used-Health and education aerviees aro the oost notable example of this procedure. Expenditures on tha purchaae of goods and services vera directly obtainable frco official data (retail sales and the lito) for one-half of tba total in tha base* official production data and prices providedercent store; and quantity estimates valued vith official prices vera required for tho remaining
Eacht of toe lnd*xback0 aal fowiri to by th*?ofndexes. However, th* voluae iodicater* probebly do actreflect tne iaprovwaeot la tne Quality of cocaa aad servlcea over tiae. nva resulting doroerdclaiircly unimportant for food, the najorof the aggregated index, butost laportaat la* of toftaad health aarvldaa. Because cf thsoo deficiencies in tbe ccaatruatloa of the latex* lt should not be* reliable Indicator of cheagc la aay tm coaeecutive ye are. 5wrthel**i,ata limitation* li^arcot la thell coxwuvptloa index and Itat ie believed that the stat lit leal manure0 over tiae arereliable. Dat* recently publlebed by tbeends tou&;rtlcci (taa Sertiaa resent* tne ladtm of ptr capita increases ia tbe availability af ccspaiiectt of cc^acptloa, 2- Specific Detail* vith aegpoct to the Derivation of tho Tour Separatetxet
e. o gocd* index
(1) Zatl-aatc* en Sade of Soviet output ofe^aeatative food
product* in three categories: -
Basic food*food gralne, potatoes, aad vegetables;
Aniael predict*fiah, Beat aad slaughteril*,
better, cheeae aad eggs;
egetable oil,llc*acry, beer grape viae, ehe^pogue, rodXa, cannedacaroni, and ttvargivrlae,
l
I
111
III
mynil
i
limit:
i Iii ii il
4
i
iMM
ifiiif
CO Too volume index la then oata Iced by weighting the Individualla tbe aggregate Index vith tne value of eoceuncr outlaya for each food
(5) Tbe product coverage In tne volune Indicator ls nearly tbe same
as ln tbe basejjpje_lt Js.repreeentative-of-tbe
b. Tne soft goods Index
tall sales5 are obtained for selectedilk.and rayon cloth and linen, seven producte, hosiery, leatherand txtkhordnov-grade ofnd knitted outerwear end under-
wear.
5 values ere moved over time by production indexes based on official data obtained fron Soviet handbooke. The production data have not been adjusted for net Imports, changes in composition, or inventory ehangeB and therefore, the value aerlee are not precise Indications of consumption. '
Summation of the individual value aeries provides the beats for the index.
(h) lbs sample accounts foreimcnt all.'t&V" (retail sales of eoft
goods,coverage is representative of the
universe.
Bats for bencamars: years pertaining to actual retail soles Indicate that the use of production series did aot lead to important error la the earlier
There undoubtedlyarge degree of downward Mae due to quality improvement ln the soft goods sector. Sea Appendix A,or its possible sngnltude.
iff-.
e. ThebIts IM'i
(l) 7xu.ll mIh5 or* obtained forlteaafurniture {including metalicycles end aotoreyeLes, radios end television isto, vetches end oloeke, electrical appliances, sowing nachinoo, eaaeraa, kerosene burners, and musical laatruasate.
(?) ; valnas are aced over tine by production indexes basedgTfctfal -aaaa oVsscenaa Bran SornEi Jaanhxata. Sa ona ton aK bKcior net laports, changes ln ccn-poeitlon, or Inventory changes, and therefore, aa In tbe base of soft goods, the value series are not precise Indications of consumption.
(3) DUaaatlon of the Individual value aerlee provides the basts for the lndai.
(a) Ibe sample accounts for about fcj parcemt of total retail sales ef "non-soft goods" but lt Includes all major durable gooda^fififft.
(5) Although thereegree or downward bias present because of qualitys believed small.
of the oerricee Index Include outlays oa household operation, ccaatunleatlcei, perooeal transportation, recreation aad sports, oipsadlturas oa religioo, personal cut aad ropolr services, bousing, health aad physical culture, and education.
Total, expondlturaa oo tha so ltaaa ara derived
Eecb ltea la noved ornx tla* or tho appropriol* volume indicator. 7or sample, expenditures oa health aad payeleal education arc noved by aa index, darlrad frcae budget expeadlturee oa boaltb and payolcol educotloeoablsatlaa of notarial cxpondlturee ondxpeadlturee oa education ara novod Ij on
index boaad on budgot arpoadlturoa oa education In tbo aaao
3. CoaparlBon of tbe official and Um eonjMlaa li.lotofl ' '
a. General
Ma
Tba ISSB racoatlj publlobod an index of eonsosptloe far tbaba ladox, hereafter referred te oa Um official index of eoosJnptloo la aaeixaod temlld aeasurab. Ofa actual coneusptice^ Varloua croas cbocks irdleate
data Is consistent vith other data Issued' In of f
Tbo official index of consumption differs froa Um independently constructed Index used in this paper ln theuajor dlffsrenee arises froa tba fact that the official Index la based on oolce {actual consuaptloo)
vy, pp.of food ond nonfood goods by Um popu
). Thentitled ?ooauxptioa of food ond sooxcod seeds by Um population and notarial expenditures or institutions serving Um population, of sclentlfle organisations and of goveraoeat it includes both axpeedlturee ln current rubles and ledaxao of rstat of growth oxpreoood in constant prices.
of tU goods, vltb Um addition ofvalue for tha ooneumptIon- ln-kind of food products, but tbe computed Index la baaed primarily on production data adjusted for various usee. Tbe computed Index Implicitly *saimes tbat production of any year la consumed lo tba given year of good* producediven yearfrequently occursln tba succeeding year. Thus theresfinite, lag effect ln tbe official index, or, axpresaed another vay, tbe eomputed Index measures, ln part, consumption before it occurs.
tba official Index lncome-ln-klcd is valuedombination ofmarket prices aad average procurementccmmuted Indexat retell prices.
Marxian concept of aosial product excludes all vork dona outside
tbe broaches or material production thereby excluding such benefitsambuecl
consumption, fcarly all aervlcea are excludedboee of teachers, doctors,
nurses,ad those providing passengerarge part Of alt-
coBBualeatlon servicas,,sanitary services, reeraatlon and eptartainBent and so on. Only Staterlal"axp*Mlturei bv tba Institutions providing tbase services are Included. Thus, tbe purchases of xadlclas* or food by tbe hospital, for lastanee, are included but tbe cleaning service for tbe same hospital Is
not. Tbe computed Index attempts to value all oxpoodlturea on services. Tbe
xoMnvniliov"
western concept considers all auch services touijsint
evel a* liVltut.
. Traml. TteaVm Intaraoctorel rlov Table. Vol.
cXViCCS ovioVei.ttrA*
O) torn official Index excluded tbe value of Iwsing. Ibe coaputed
Indexental value on tbe stock of bousing*
Tbe folloving tables contra tneeoaputod Index vith tba official index aad eeleetadente of csspsree tao actual indexes,osperee tbe rates of change. All esteeprlei of tbe coasted Index have been edjuatad to caeuTcw vita taa classification used ln Ua official index, auee Of tbe edjuetaonta tbe coay-ted ladaxee do not agree vita tbe indexes presented la1 Of Appendix A.
;onmerlson of Official nae^vW^Wc^indexes of
fatal coaa^saptloa
Official index (exeiuAliig
Ccajwtedr
Total food goods Official Index Coaputed index Processed food Official index Coaputed index
Total nonfood goods
Official index
Coaputed Index Soft goods
Official index**
Ccoputvd Index Radio ead television sete
Official Index***
ndex
1W
100
109
10?
115
117
10O
111
112
100
10>
113
UK
13C
100
108
100
107
11)
12|
100
120
130
139
Aljjeted to epev^xlMte tba covers* of the official index through toe sxcluelaa of rent, expeadlturee oa services sad on salaries ia tveelth end educetioa ** IrodiKte of light Producte of radio industry.
raw* 10
jjpapfi^iof^Jteitco of Change ofiDacjtca.of.
rage
0
cottsuaptloii
index
6
3
index
6
food goodo
iodex , ;
index
food
index
index
noafood goode
index i
index
fl
index
index
and tele vie ioa seta
index
Index
"
Derived from.
read of both
Indexee le upward vith similar accelerations and decelerations. Eovaver, there le, ln general, better agreement over time than betveen any tvo consecutive yeore Bat tvp oajor) the elover rate of grovtb la tbe ccajp-ated
Index of foodvhlch le reflected in taa lover rate of grovthccq^ounrptioa,hesoft goode
cKOMjnent.
ho Problem lo tho Food Sector
Further lovestigatIon of tho food sector ladlestea tbat the basis of the differential botvcoo the two Indexes is ln theproducts components (see the following tabulation). Where other components can bo matched, tbe movement ia siallar.
Average
0 1 2 3 Annual fate
.
Animal products
Official
Coaputed
* includeV'meat, Bilk, fish, and Estimates of the total production of the anon oatogorleafor
Tho conputed index for aDleal products0 while the official indox increased 5
Tho discrepancy appa^afl/ ajiaey"froabetweenof animal produota and thoir salesiven pear. an extraordinarily good year for agriculture. Above-normalof food and .feed grains permitted an expansion ofarge gain in the output of animal products. ThoIndex (based oa production of the cWent year) thus is atbase9 than is tho official index (based ooof the current yoar). Thus, tbe lag lo marketingart of the increased production (lAJp_
occurring Salon of moat0articularly great increase.ercent. At the Bene time tbe relatively poor harvest9 causod horde to decline slightly0 aadtho supply of animal products (again based oo produotioo of the current year) declined.
To Met tho validity of this explanation tbe base year for both Indexes vaa shifted8 (the official Index8oablnation of retail sales of animal products and estimated consumption of anlnal products as in-cooo-la-klnd valuedombination of procurement and retstl prices) In order to more both indexes forwarderiod when sales and production wore aore nearly balanced. Tha followingshows that as tbe result of the recalculation CZ3 tbo move-
seat of the two Indexes is similar.
Average
. 8 9 0 1 2 3 Annual&fe
HM-el
AVn lotal
Official X
Computed '.
t.Thetv of tho Soft Goods lodexea
A special problem ln soft goods also arises fron the use
of production data for the computed index aad aaloa data for tbe
official. As previously noted tbe soft goods conputed Index le bi-
asod downwarde because of tho impossibility of measuring quality
change. Nor bas tho computed Index been adjusted for Inventory
chnngos. Ae Indicated ln tbo text, growth la Inventories of soft
goods in rocont years ban accolorateduob foster pace than
actual sales (son Thus, Sx^tbe computed index
adequatelyimprovements over tine it
expected to increaseaster rate toss the official Index.
Tho follow log; tabulation is Indicative of tbe eiteat of
tbe downward bias of the conpulod Index.
19S9 0 1 2 3
100
goods
Official index Official index (adjusted t
Inolude Inventories) Computed index
The oxerclso of comparison was useful, pointing: up the areas of groatest problems but, at tbe same lime, demonstrating tbat the methodology used to derive tho computed indox of consumption Is adequate for neaaurlng changes in consumption over time. The agree sent between tbe two ladexos forear periods' adds validity to the coejputed index for tbe longer period of tine as used ln tbla paper.
Appendix B
BsrlvationOf Disposable
The USSH does not publish estimates of totnl disposable money incose, but estimates for components covering approximately BO por-oont of the total can be derived directly froa official Soviot statistics. In constructing estimates for tbo remaining components it ls necessary to uao Soviet data appearingumber ofsources and, ln Bone coses, independent ontiontoe.
. Table 1|
monoy incoci
ofhrough
ercent increase4 reported lnHov,
earnings of workers and employoos
- Average aonual number of workersHardonoyo Khozyaystvo (hereafter
. H., times tbe average^monoy^carnlngs of workers and employees adjusted to an annual.
oney earalng from S. P. Flgurnov, Real'nays
i
Zarbotnaynod'yea material'nogo blagOHOutoyjnlyoR,; employment from H.
ft RS
*1
Ul* . r. tr.
w_
Sj S ft 3: "
ed dmej^dd
ssays
o <0 t- ojj
i -i
ssists
Si j 1ft S3 SRS &
-d
d d
s! do [d:
a
d d m>
RS S
O ai
8 RS
ir>
^
O On 1
.J 6
dd
8 9 wi..C
ui ia to dd
*' -i dd
3 df* J
d
P
! 1
-H> his }i
fin
h mod dd
wi no d
8a
5
I I
Si
? Mi
ill |u
35
C. Qroee earnings of cooperative artisans
Ocopereitlve artisans reportedlyage
equal to tvo-thirds that of indue trial workers and employees.
/ . Bureau of the Census, Producers' Cooperatives in tbe Soviet Union, by Frederick A. Leedy, International Population Bo portao. pi,.
The average annuel ouster of artisans reported in' sT.t,
p. The average annual Industrial earnings are estlnated
as follows!
. Kerpukhln, Sootno&honiye rostactl
- Ibid,.
--VKTKaVl 1
nterpolated based reported earnings8
Producers cooperatives vere convertednd neuters wore classified fa workers and.
1 u
employees. Oollcctivo farm wane paynsirie
a.Estimates by Constance Xrueger (unpublished) and are derived for each yearesidual, the difference between total coney outlay and the bus ofor obligatory payments to the state, repayment of long-term loans, deductiono frca income, production expenses, and ednlolBtratlve-ecoccclc expenditures.
S%
b. . Venzhor, Ispolzvanlyo nukonolkhoznonu prolzvodstva, Moacow,..
o. stimated baaed on tho relationship of wage
pnymonte to total rovonuenreceding yeare.
d.
hounohold lncoso froa nale of farm products
a, Entiaatod by Conatneco Kruogerare basod on total private salee as; H.J W.( H. Kh. .
t '.r
distributed to coop members
Sun of profits distributed by consumer cooperatives and .cooperatives:
Estimated based on reported gfy'ss^ of consusior and producer cooperatives sinus reportod
income taxes and the reported ohare of not profits distributed to membere.
Projected at sans levelor abolition of producer cooperatives
ilitary pay and allowances
tbav.
'a. stimate ndjuntod for changes/size of tte
Abrahoa C.
b. Kational Income and Product,.
(horoaftor SHIP),Santa.
O. -, p. . Projootod at aaaa levelraaaior pnymunta
and grants
Ineludeo state social insurance payments, state social aesistaaco payments, benefits to mothers minus expenditures on education, hedlth, end physical culture.
..
. Kh. p.
(Hereafter, Bud;
GoaudnrBtvonnyy byudzhet
. Kh. .
. Kh.-
(8) rojected increaseillion rubles dletrlbuted to collective farm members.
4
c
- Raskhody na sotelal'nolcul'turnyye meroprlratlya po Koiiudarstvepuony byudzhety SSSR,
ase projected on the basis of tbo number ot full-time studonte in higher and secondary-epoolallzed educational Institutions; an reported la K./
o. Loan service
IoCludes intoroot from State loaon and navlogs dopoelts plus principal retirement of state . Kh..
udgot p. 9.
p. .
4 H. Kb.
- K..'
Projected4 Insurance payments less premiums
H, Laptevotslallstlcheskoyu
Btroltol'stvo,.
Projeeted at dido level aitor Hot borrowing
Long tern loans to tbe population. Difference botween loans outstanding at tbe ond of thfl^year. and loans out-atandlag at tho ond of the previous year.
ostnlk statlfltlKl, no. 2,p.
. Kh. ..
. Kb. p..
t, Direct taxes on the population
,.
Eatimatod,
K..
H.,
0. 5lnanay. No. 1, IOCS, p. 6.
Ww. fees, fines. pngBPorf f
Estimates uBing nothodology described la.. aad based oo data ia:
K..
. p..
0. M., H.. ! d. rojected4 level.
loapa
...
. Kh. p..
'*:
O. 8 K. Kb. p. BOO, d. . Kh. . Population
yid-year population oatlmates. Department of Commerce,f tho Population of tho USSR,nd Sox: Hntall price led ox
Derived by combining the reported atate retail price ladox with reported collootlve fara market price Index5 share weight*3 for state retail pricesor collective fara prices. SovetehaTa Torgovlra..
*
(To
H ggfSg-S
iimi
Si Sum J J4
Original document.
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