ISTORICAL RSfiB*
RELEASE AS
Febrvary loTtf
w
SOVZLY IffilJiTRIALD ITS fu^IATIOfSEXI*
Gentlemen, tbe purpose of cy ted* ia to give you an idea of the general industrial strength of the Soviet Union and its relations hip to Soviet research and development. ope my rejaarks vill give you some perspective on the detailed descriptions by later speakers of the Soviet atomic energy program.
The Soviet economy Is aomevhat lass than half the aire of. oconcejy. The groos national product of the USSR5 is estimated atf US GRP. Aggregate industrial production Ilea about the same proportionoDeubat lass than half. Industrial production. Tha Sovietsorela Industry than we do, ao tbe output per Soviet worker ishat of. sil industrial worker07 net agricultural production Is6. agricultural production; since the .Sovietsill Ion workers in agriculture t, ccapered toillion, the ratio of output per worker le about 10
n our favor.
3* The relative rates of growth of tbe two economies baa changed markedlylost decade. Ina the groos national product of tbewaa growing at an average rate of Of per annum,rowingate of Ins, however, therate has slipped to and ours has risen to kfo, growthhave consistently said that their number one
o LCI'a Ifualoor Intelligence Panel
economic goal is to overtake ond surpass. ln first Industrial production, and than total production. They aro extremely sensitive. government releases shoving that they are now making no progress at all toward that goal.
But even If tbs Soviets have no present prospects of overhauling. In GWP, they are allocating thoir resources in directions that are of vital consequence to our national security, a. They continue to emphasize tho development of* heavy industry,
including; .BuUitary.industry, at tbo expense of agriculture,
housing, consumer industry, and consumer services, b- Theyilitary-and-space establishment vhlch, if valued
in dollaro,,vould cost about QOf> of our own.
the other hand,.par capita consumption isven -this figure does.not take into
of
and development is one or those areas to vhlch theproportionately more of their resources than does theare difficult due to lack of data, the dissimilarityinstitutions, and the always knotty problem ofcut-off pointhangei; to production activity. Myfeeling is that the Soviets putf theequipnsnt resourceo. than we da. Their effortsresults instead of by tnput6 would be less.
- e
3
5- In orJer to giveore concrete feeling for tbe atze of the
Soviet economy, let ma give you the comparative outputajor
productsk;
oil Mtor.
Coal (bit &all MT0
oil kwh
Crudemil MT
thou Mr
mil MT vaall MT va 15
Rayonyn.mil MT
Passengerthou,il.
6. On the average, tbe quality of .output and the level of technology of
Soviet industry ls behind that of. The range of variation in
quality and technology le much more striking in tho Soviet Union. The
Soviets concentrate their energies end their resources on production
that Is associated with national prestige and national power; thie
concentration Includes the assignment of the best managers, tbe most
skilled scientists end engineers/^aiid.-the ablest yworkcrs tc these fields.
the provision of the best raw materials, tbe best machinery, the best
support by the construction industry, and theupport. For
. construction engineer vho rucently visited the USSR
observedarge electric power plant under construction waa
being well built under the supervisionery competent manager
but that work at other, lass Important construction sites fell woefully
short. atandords.
* 7- We should be careful, however, not to think of theRoonoayonolithic ays Urningle purposeingle well-defined priority. Priorities are not absolute and Interest groups have to be placated. After the poor harvoator example,illion tons of groin vara Imported end the quality of broad vas The populace grumbled but It vaa fed. After tho mediocre harvestmportsillion tons of grain jcvc arranged, but the quality of bread vas not adulterated. Tbe give-and-take argument between Khrushchev and tha military chiefs about how far the ground forces vere to he cut is another example of the absence of fixed absolute priorities. 8. Kcv on the organisation of Soviet industry
the industrialization of thc USSR undereries of powerful verticallyone forteel, one for electric pover,n. 'Each ofutrio.svhich to the greatest extent feasible provided ita ownIts own equipment, tools, and supplies. Its owndevelopment facilities, even housing for ita own workers. tr lee vere tied together only at the top in Moscow, endbetween them at lover levels vas practically nil.
development of nev technologicn and nev fields ofmeant the addition of new ministries, for Instance, aaircraft production.
f emitted In actual briefing.
This ministerial system vorked well In its tlou,thend mill lory purposes of the Soviet state. Production of basic cocsBOdltlea grew rapidly, and direct control out of Moscow uau crudely effective.
Gradually, however, tbe addition of core ministerial pyramids In the system ledonsiderable overlapping and lnterpenetratlon of the pyraaidc at lover levels. The examples multiplied of duplicative support facilities, cross-hauling, end failure to take advantage of apeel&lization. Purthermore tha central planning and guidance system In Moscow became overloaded.
So7 Khrushchev moved to end the branch-of-Industry principle
of economic organization, replacing it by the territorial principle.
(sovnarkhosy)
He set up one hundred Councils of national Economy/ each to manage
tbe economic affairs in its own geographical area,guidance
from :theourse. ver
producing- military goodseaMon of critical materialsmportanv'ivW).-
The new Aovnarhozy gave rise to their own set of problems, one being
a natural dlsposltloa to place local economic interests above national
Interests. The new Brezhnev-Kooygln administration has dissolved
the local Councils of National Economy and has gone bock to the
ministerial branch-of-industry organization. There'a no indication
that the ministerial syatea will work any better than it did the
last time.
h-ton
in thv sV/iet hcopuinndline* ofonverge at the top ir. the handsozen top leaders, tvo of vhomresbnev and Kosygiiire mora equal than the ethers. These ace sit, as it vere,oard of directorsiant nationwide corporation whose subsidiaries are vast industrial enterprises. Tbe locus of power organizationally is the presidium, that is, the executive ccnnnittse, of the Central Ccmiittee of thc Cooounlat Party of tbe Soviet Union, beaded by Brezhnev. The government organ that translates basic economic decisions into action is tha Council of Ministers, which Kosygln beads.
and development la no exception to the rule that allare made at the top. The size offfort,its organization, its fundingare all decided at
of the government bodies reporting to the Council ofthe State Connlttee on Science ond Technologyovernment organization plans thebjectives ofarranges for tha import of foreign technology, and Iscoordinator and expediter of scieaee and technologyeconomy.
o. Another Important governoent body reporting to the Council of Ministers Is tbe USSR Acadewy of Sclsncaa. KeMyeb). The divisions on! affiliates ot the Academy ofunesearch lnrt'tubes perform:ac.esearch Ir. physics,ry, matheaat'es, economics, and 'h* like-
e- hird government body to be mentioned here, which also reports to tbe Council ofiStry or Higher Education. yelyutin). Higher education in the Sov'.et Union ie mace up of JiO univerGltiespecialized higher educational ine titutions, which ore roughly equivalent to our engineering colleges, business schools, teachers colleges, ASM colleges, and medical schools. The faculties of these higher educational institutes perform some research in their own laboratories, in the research institutes of the Academy of Science, and in Industrial research facilities, f. ave mentioned tha research carried on by tbe basic research
institutes of tbe Academy of Sciences and by the higher educational institutions. urn to the industrial and other economic ministries such as ag and health construction. These ministriesO research institutes for applied research in their product field. Product development is the task of several thousand design bureaus and laboratories which ore attached to"IMustrialministries, to groups of plants, or to large industrial plants. However, basic research, applied research, and development ore not neatly divided up among BSD organizations-g0 lhe Ministry of Machine Tools, as an lllustation,arge research institute in Moscow,cientists and engineers. ^ExperimEntal Scientific Research Institute ofutting and Machine Tools (BNlKSj/ Tbio institute cay work on fairly esoterl:
problems auohheoretical atudy of vibrations aa they affect machine operations or it may workodel machine or it my do trouble-shooting reacorchroduction plant in the ministry. In its annual plan, this Heebine-Building Research Institute may on Itn own initiative or on initiative froa above Include thoof an improved gear-cutting machine. The project, once the general mode of attack ls decided, is assignedroject manageruitable group of engineers. The design for tbe now machine la roughed out, then detailed,rototype Is built in tbe produetion shop attached to tho research institute. The prototype le teated, aultably modified, and shipped outser plant for trial use.
h. If all goes well, the Machine-Building Research Institute suggests to the front office of the Ministry of Michlne-Building that the new near-cutting machine be put into production, say at the Gorky plant of the Ministry. The manager of tbe Gorky plant probably dons not want to disturb bis production flow because it will affect bonusce, wage incentives, productivity standards, etc. He la paid to prod ice gear-cutting machine a, hot to produce Improved gear-cutting machinea. After his arm is twiatad, h- agrees to changeover and hla production engineers go over the blueprints ln conaultation with the rceeorch people. Ultimately, the new machinego Into production.
i. tut Corky plane's -suxarrs didirjange.
Ratahat even if the Goeky plant vas .vcau^lng lor iiigh-priority eonsuuera such us plants buildingthe cuetoners' priority vould have to penetrate bureaucratic barriers before Corky would move.
Another aourceould be the produetion plant itself. Continuing with the machine-tool exasiple: the Oorky plant might be dissatisfiedrinding machine used in its own operation. Its own design shop might draw up specificationsodlficatlon In the grinding machine and the proposal would then be checked out with tbe research institute ln Moscow.
As for> we have very little direct information. Ue conjecture that once top-level approval Is gottenew or Improved weapon: Specifications are worked out by the Ministry of Defense ln
consultation with the appropriate scientific and Industrial officials.
in the development ofeapon are parceled out toresearch institutes and design bureaus.
for the supply or supporting equipewnt and naastructlon
a
work arc drawn up, with appropriate priorities.
f
i. Prototypes are built and tented.
e. Finally, large-acalr production1 vary to tbe military presumably accomplished.
Cciltted.
Ths considerable success achieved by tbe Soviets In military production is, of course,aatter of high priorities. But another Important element is that this has been the only place in the Soviet economy where the customer can say no to equipment of low quality.
problems faced by tbe manager of an individual industrial plant, a- fie ia facedariety of sometimes mutually inconsiatent directives from above, covering all aepects of binmounts and mix and specifications cf output delivery schedules, wage rates and total vage bill, increase in labor productivity, amount of investment, and the like. *o. He must continually worry about tbe supply of raw materials, equipment and spare parts. Be must even construct bousing and provide other benefits in order to keep bis better. Above all, he must increase output. What Is bis reaction to all this
of qualitywhat will get by.
away of tools, supplies, raw materials, labor.
of fixers and expediters.
of workers, so they can be paid Juggling of accounts and reports.
f. Neglecting worker safely and worker amenities and scheduling
unreported overtime. * emitted.
-
Resisting the mod ornlring or replacing of equlpo^nt aad the
Introduction or nev products if they interrupt prees-nt prcduct_on.
e.. ave noted thatHcconaandhat orders cose froa tbe top down, and that the system worked in tbe early days when the products were few and simple and when there waa elbow room ln the economy- With the advance of technology and the greater demand for quality and variety ln the final product, tho system has become overloaded and inflexible.
the USSR baa relied on Western technologyong timeareas and at the same tins has rapidly improved itsbane. Tbe gains ore now harder to make, yetfrightening dynamism of modem military technology, toe gains
are even more vital if the Soviet pover position is to be maintained, let alone Improved.
USSR lacks the advantagesmarket economy" in thisinitiating and applying scientific advances.
(1) Note my mention or the difficulty of lateral cooaunlcation between industrial ministries; in. it is thc market that supplies excellent lateral communication, that supplies new machinery, new construction methods, new materials,ithout regard to industrial boundaries. The Soviets have
-
great trouble in transferring advicesne field Lo related field. Ini'iv. n in bftoailMvl; UW equivalent of tlie cwrket end tot; that in. the more aggressive and aorc efficient
Tints are allocated an increasing share of available rerources via the market nwchaalanu In the USSR there is no such^ making production or AID assignments. An unsuccessful manager can be fired, but the organization Note that in. the user can enforce quality standards because be has alternative suppliers. Ue can aakc sure his construction gate done on time or elseor else he hires anothe contractor.
Rext, the market automatically provides central pooling of
ruck rental servicelant protection service, vhen economies of scale dictate. But ln the USSRifferent design bureaus could and didifferentd in vulcanizing rubber tires.
(5) . system ofeesss to me to be costly only co rirst Inspection. m referring to. competitive presentation of proposals for new aircraft or other ueajions. Tbe Soviet eyatea of directedappears direct end efficient cflly vhen the long-tva elements eCnd "cross-fertilization" are ignored.
aportont of all, to judg- froa dlacuesiona In th*
Soviet press, laay in getting th* fruits of research anC development Into actual production. Khrushchevalways cosipialnlag that Soviet science bad developed plastic pipe that could replace steel pipeaving of moreut that planning and production officials had donned "steel blinkers" and kept on shouting for more steel. Vt mc summarize
ecoocaic and industrial capacity Is somewhat less thanof. and the Soviet economy Is growing at aboutrate. Nonetheless, we tthould be concerned that Sovietbeing allocatedanner that directly affect* ourinterests.
the peat fev yearn the gap. and Soviet scienceappreciably narrcved.
0. Compared tooviet economic and political Institutions
are much less suited for the successful incorporationesults Into industry.
* d. Tlie Soviets recognize these problems and are trying various Indus trial re organ!sations and reforms which do not seen promising since they leave the basic rules of the game unchanged. If. as ve think likely.
(laltted.
-
. ii rt *
Original document.
Comment about this article, ask questions, or add new information about this topic: