Current Support Brief
SOVIET CONSUMERS FACE CONTINUING RESTRICTIONS
CIA/RR63
CENTRAL INTELLIGENCE AGENCY Office of Research and Reports
SOVIET CONSUMERS FACE CONTINUING RESTRICTIONS
The Soviet people nave been lold bluntly that the often-promisedin the standard of living must once again be postponed because of increasing strains on the nation's resources. Onebruary, Khrushchevispirited olection speech in his borne constituency of Kalinin in which he made an emotional appeal for popularabout the failures in consumer production, linking them directly with the demands of the defense industry.jy Had the international situation been different. Khrushchev implied, he could have made good his earlier promises to consumers. Official data for Soviet light industry indicate, however, that, despite the change in official tone this industry'shave been accumulating for some time, particularly since the end The rates of growth for almost all major commodities of light industry have declined each yearcarcities of raw male -rials have resulted from the failure of agriculture to keep pace withof the industry, and restraints on capital investments in thehave slowed the construction of new facilities. In view of thosestrains on the industry, Khrushchev seemed also to be giving notice that future plans for increases In the quantity of consumer goods maye fulfilled.
I. Declining Rates of Growth
hronological buildup and deflation of consumer objectives in Khrushchev's own words, sec the Appendix.
Fulfillment of5 goals (or major consumer commodities is, indeed, virtually impossibleajor push, in view of lightperformance (and lhat of the related industries) thus far in the plan period. ears of work toward the achievement of these goals, total production of textiles in physical quantity had increased by onlyercent, whereas an increase ofercent during theill be required to meet the goals. Furthermore, thesmall increases above production levels2 evident in the
lans for key commodities in light industry, hold little promise for Soviet consumers. zj Indexes of physical production for the major commodity groups of light industry are as follows
Footwear find Clothing
Leather
Footwear Outerwear Underwear Hosiery Careen', s
(Plan)
(Plan)
2. Insufficient Capital Investment
* Including fabrics of rayon, synthetic fiber, and natural silk.
Paralleling the decline ln the rates of growth of production, light industry hasoor performance in its capital investmentAchievements in investment for theears of tho Seven Year Plan were notably unimpressive. ctual investment in
light industry increased byercent. The following year the reported increaseercenthort-lived attempt by Khrushchev to boost allocations to "speed the development'of lightn effort that was not sustained. 3/ Because of'mounting difficulties, particularly in procuring machinery and setting it inthere followed1 an absolute decline in the amount of funds invested, as shown in the following
Reported Annual
(Ml)
A further indication of the failures in the industry is the rise in investment in construction projects that have been begun but have not boon completed. According to official data, investment tied up inprojects in light industry roseillion rubles at the beginning of the plan periodillion/ To cope with this problem of increasing investment without payoff in terms ofthe number of plants scheduled for construction was reduced, and emphasis was shifted to the expansion of existing plants and to the modernization of machinery and production processes.
3. Shortages of Raw Mate rials
* Ruble values in this publication arc given in new rubles as established by the Soviet currency reformominal rate ofbased on the gold content of the respective currencies is0 ruble to This rate should not be interpreted as an estimate of the equivalent dollar value of similar US goods or services.
Expansion of production of textiles has been limited by shortages of raw materialsot only agricultural but also,esser degree,
Chemical. The severity of the problem in the supply of raw materials is shown by the fact that, although the output of all types of textile fiber in the USSR1ercent above the level of that2 droppedevelercent greater thans shown below:
Production of Textile
(Thousand)
* Primarily because the base) was an unusually good crop year, the index for production of textile fibersmallerthan does the index for production of fabrics shown above.
The principal problem in light industry is the shortfall in production of cotton, which makes up almostercent of the total output of fibers. Shortfalls in production of rayon and synthetic fiber compound the The use of these chemical fibers as substitutes for natural fibers has fallen far short of planned achievement, and at present they account for only aboutercent of the total production of fibers. In recent weeks, Soviet officials have made efforts to stimulate both of these lagging programs, although measures appear to be loo little and too late to affect the goals for light industry. Production of cotton received special attention in the recent decision to increase the delivery price to cotton-growing collective farms by an average ofercent and to state farms by aboutercent. 6/ Whether this increase in cost will be passed to consumers in the form of higher prices for cotton textiles or be absorbed within the industry or within the turnover tax is notetail price increase to cover this cost, if levied equally on aU cotton textiles, would be comparatively small, however, probably lessercent.
4. Prospects
If Khrushchev's statements of1 that urged the allocation to consumptionreater share of the nation's resources reflected an actual attempt to pusholicy, he was overoptimistic, and his efforts have fallen far short of the goal. Although achievements in light industry (see production indexes above) suggest that the0 saw the climax of Khrushchev's consumer program, the3 seems loontinuing decline in the priority given tho program, even though it may continue to achieve modest gains. Official discussion relating to consumers since the Khrushchev speech of Februaryeems to be shifting more toward subjects of welfare and consumer services, whereas references to production of consumer goods tend to show an element of restraint. May Day slogans this year have dropped the "Catching Up with the US" theme and, instead, promise continued welfare growth.eport by the Chairman of the RSFSR Council of Ministers to theSoviet of the RSFSR heavily emphasized the role of publicwhile discussion of consumer goods was confined largely loin quality and assortment. 8/ An immediate course of action is suggested by the resolution of this meeting in which officials of light industry are exhorted to seek out "hidden reserves" and to utilise more efficiently tbe existing machinery and equipment in light industry itself. The resolution also calls for greater effort by heavy industry to support the needs of consumer production. 9/
In brief, recent Soviet developments, viewed against achievements in light industry during theears, suggest that consumers canlittle in the way of substantial gains in the near future. Although there are indications that the regime is attempting to find ways ofthe consumer outlook without cutting into the defense program and/or heavy industry, most of these measures probably will be in the nature of bootstrap operations. These attempts are being and undoubtedly will be accompaniedarrage of official propaganda designed tothe consumer that all possible is being done in his behalf. It must be obvious to the Soviet citizen, however, that hopes born of officialof "the highest living standard" must once again be replaced by pro- onged waiting.
IA-tr
APPENDIX
Selected quotations from Khrushchev's speeches during thehat relate to production of consumer goods are listed betow in chronological order:
Khrushchev's speech bofore the Supreme Soviet: "We are sotting the following task: after implementation ofear. to catch upears, and then to outstrip, the United States in per capita consumption of consumer commodities including textiles and .we shall in the immediate future reach theand consumption level of the United States, the wealthiest country of the capitalistnd then we will enter the open sea in which no comparisons with capitalism will anchor us."
Khrushchev's speech to the Conference of Representatives and Workers Parties in "Neglect for the materialof the working people and concentration of emphasisocial and moral forms of incentive and reward has retarded development of production and the raising of the living standards of the workingKommunist, no.
Khrushchev's speech before the Academy of Social Sciences and the Party Central Committee's Institute of Marxism-Leninism: . We shall transfer part of the capital investment to agriculture and light Communism cannot be built only by offering machines andand nonferrous metals. It is necessary for people to be able lo eat well, dress well, and have housing and other material and cultural This isevision of our general line butensible use of our material potentialities. When we were in an encirclement ofe economized Now the situation is (Pravda,
Khrushchev's statement to correspondents at the British Trade Fair in Moscow on "Now we consider our heavy industry as built; so we are not going to give it priority. Light industry and heavy industry will develop al the same rate." (New York Times.
Khrushchev's speech to Cuban students "Our enemies (want us] to channel additional big allocations for theof animal husbandry at the expense ofnd defense We cannot do this. " (FBIS,
Khrushchev's speech at Grivita Rosie Plant in Rumania on "We must liveood housewife, who ably decides what to buy and. Naturally it is not pleasant for us to waste the labor of manyn the production of means of. (But if we reduce funds forill the people praise us forFBIS.
Khrushchev's election speech in Kalinin: "Of course, had thesituation been better, had it been possible to achieve agreement and to shake off the burden of armaments, that would have multiplied the possibilitiesurther improvement of the economy and for raising the welfare of the people
"On the one hand, one would like to build more enterprises producing consumer. On the other hand, life dictates the need to spend enormous sums on maintaining our military. The time will comee shall have clothes for every. but you must be patient;hile and you will have everything. We can't make everything at once. It is impossible. The wish alone is not enough. "
.
Coord:
Sources:
Pravda. U.
1 U.
FBIS. Daily Report {USSR and Eastupplement no 6,
6 OFF USE
Narodnoye hhotyaystvo1 godu (National Economy of
the USSR.. U. b. USSR. Central Statistical Administration. Kapitalnoye
SSR: statisttcheskiy sbornik (Capitalin the USSR; tatistical
Daily Report (USSR and East8
p. CC 8. OFF USE.
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Original document.
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