CU fitSrORiCAL REV'IEW PSOGitMl
TITLE: ew Source For Figures On Soviet Military Output
AUTHOR: J. P. Freeman
VOLUME:
STUDIES IN
INTELLIGENCE
A eolieciton ol articles on Die hrstorical, operational, rJoclrlnat, and theoretical aspects ol intelligence.
Ail statements of fact, opinion or analysis expressed in Studies in Intelligence are those of
the authors They do not necessarily reflect official positions or views of the Central Intelligence Agency or any other US Government entity, past or present. Nothing in the contents should be construed as asserting or implying US Government endorsement of anactual statements and interpretations.
The defense hardware portion of statistics on industrialnational income, andexpenditures.
A NEW SOURCE FOR FIGURES ON SOVIET MILITARY OUTPUT
One of the characteristics of the Soviet system of economic statistics Is that it is designed to embrace, and In practice must embrace, all Industrial activity that takes place In the USSR. This being the case, It has long been considered that the Soviet statistical aggregates "national Income" and "gross output of industry" must Include somewhere In their totals the amounts for such concealed activities as the production of military and space equipment. On this premise efforts have been directed for some years toward getting the best possible understanding of the two aggregates and their statistical subconcepts and trying to identify where within both sets of them the production of military and space equipment might be included. Although the detailed findings of this work are not yet firm enough to be used In official estimates, thehas proved exceedingly Interesting and now appears sufficiently definitive to warrant an Interim methodological report.
Study of Output and Income9
A supposition that the production of hardware for defense and other secret programs was being handled in outputas "rnaehlne buuding" was suggested early by the fact that3 the atomic energy program was put under the Ministry of Medium Machinehis supposition was confirmed inhen it became possible tothat the Soviet statistic for the "gross output ofbuilding" was large enough that the total production of civilian machinery might well account for only about half
' Kranush, Arnold. Atomic Energy In the Soviet Union,. Un<ua*slned.
ol lt> Since this machine output is one component ofoutput of industry" aggregate, the first step was toget the best possible figures for the Utter, year byabsolute ruble' '
The difficulty in establishingeries lay in the fact that the Soviets had always carefully avoided giving anyruble values for their major statistical categ< annual values of the^gross lndustrutftutput had'the. be built up step by step from casual references to the ruble values of various subordinate elements of the system.alue for any single year had been establishedLin.absolute terms, however, it would be possible, using thesta list leal data published by the Soviets In terms of percentageto expand thisair degree of assurance for the years0ull annual series. By the end9eries was In fact achieved, probably accurate within two percent. In both constant and current ruble prices.*
The end of the9 marked also the first findings In the other approach to the problem, that through nationalfigures. In an article in the9 issue of Soviet Studies. A. Nove and A. Zauberman called attention to the fact that one of the subconcepis of national Income, theto stateasigure of an orderercent of the total national income and henceoillion old rubles for the5 andoillion old rublesfor which there could be "only one possible explanation: this figure mustigure representinghat these state reserves Include "reserves of means of de-fense" was already known from the Soviet literature. For ex-
workingolts ol Soviet afocAmery and MOUaniproieetione to IMS, b, W. T. Le7 Jul,
and Crest Pnduetum of the Branches of Soulet Induitrv bi Clopper Aim on.S. Secret
,l a, Abiolute /table Value lor the Soviet Coruxpt. -Cms. Imdmstrtwl Oafpsr.- Confidential
A. and Zaubenaan. A.oviet Disclosure of Ruble National Income" Soviet Studies, October. lit UndessUSed.
oviet text on the national accounts defines them as
follows:
The fund of [state} reserves combines, first, statereservesong-term character; secondly, reserves of means of defensepecialnd thirdly, operational reserves of the Council ofto be made use of, in the course of carryingnnual plan, for satisfying newly arising current
Since the first and third constituents of the reserves here named would not in these years haveoillion old rubles, the figures of Kove and Zauberman would mean, averaging the highs and lows, that increments to "reserves of means ofepresenting new militaryand equipment, were of the order ofillion old rubles4 billion old rublesnd sayillion old rubles
From All Industrial Output to Machine Budding Only
A variety of data that became available at the end0 and In1 made it possible to strengthen the basis of the series for the value of the gross output of Industry. For example, detailed figures- for profits earned In state Industry published for the first time In9 statisticalhen combined with published statements of rates ot profit In state Industry, gaveet of absolute ruble values for stale Industryajor constituent element of the gross output of all Industry. Remarkably preciseof these figures was offeredtatement in the budget speech1 to the effecteduction1 indus-
' Although the phrasepecial character" might be read as restricting this category to certain special means of defense, tbeof the soma tt covers makes it more probably modifyarallel with the "long-term" and "current operational" of tbe other two categories. The second category should then cover the enure stock of defense hardware.
Bor. U. Z. Batons Narodnogo Khoryaiistva, SSSR (The balance of the national economy ot theoscow,ncuuudfled.
' USSR, Tsentralmoye statlstlcheskoye upravlenlye. Sarodnoyt kho-zvayitvoHf godu (The National Bconomy of the USSR.. TJAclaanfled.
trial costs by one percent0 would provide savingsillions of0 billion old)he fourdigits of this figure enabled us to establish that our calculations for the output of state industry were correctaction of one percent.
In attempting to derive from the gross industrial outputalue for the gross output of machine building alone
relationship of that concept to the gross output of Industry was given in the handbooks. Inowever, this effort was short-circuitedoviet textbook on theof machine bunding presented usigureillion rubles explicitly stated to be the value5 rubles of "machine building and metal working"' "Machine building and metal working" differs from "machine building-only by the addition of two minor elements, "metal working" andurthermore, to help break any figure for the aggregate into its three constituent elements, we already had from an earlier handbook the rates of growth05 for Ute three elements and for thehe Repair Problem
The only trouble with this windfall was thatfigure did not fit. It could not be reconciled with the data we already had on the value of repair and of machine building. This impasse was resolved, however, by Sovietin the spring1ook on the efficiency of labor" which gave detailed tables showing the distribution of repair labor ln Industrytudy of these tables came the hypothesis that5 the repair category in
Pravda.ec.. 4. Unclassified.
A. H. Sovremennoyeapraolenlya ratvitfya tekhnologtlrtboroitroenlya (fresenf it ate andof developmenthe technology of machine and Instrument - . Unclassified.
" USSR. Ttentralnoye aUUstlcheskoye npravlenlye. Promyihlenioit' SSSR (Industry. tJoclasslAed.
"Kheynman,. OrganUatttyarolivodltetnoit'romyshlennostt SSSR {Organisation of production and the productivity of labor in USSRoscow. IMl, p. ai. Unclassified.
"machine building; and metal working" ceased to cover repair work in general and reported only that done In special "repairhere is no direct evidence that this Is what happened, buthange would be consistent with the new general rule In effect7 that all statistics should henceforth be furnished on an enterprise basis. Beforehe "repair enterprises" comprised only those doing work for Indus trrand construction,s revealed for. the first timewootextboolthey came then or sometime thereafter to include those doing the1 repair of railway rolling stock and of communications equipment In all this context, the concept of repair includes the manufacture ofspare parts.
". Kurt promyihtennoy iroiufUf (Count Unclassified.
Baalch. P. "Problemj Xapllal*noeo remonta cenornykh fondoe(To* problem of the capital repair ofinanrtrovantye kepitoTnooofondov (Th* planning and financing of th* copttalfixedoacow, Ooefnusdat. is is. pp. s. jiI voproey finarudroeanlyaode ml-
salsiln dor" (Amortisation and tbe question of thef tbe repair and mcderrUsaUon of fixedoproty rfcono-mlfti (Ovcsftoru ofo.n Unclassified. Oudek, x3 January law, p.nclassified.
"nd Tesnovstly, K. aoreTOOTanlrafclaiU maablnostroenlya" irrospecta for the rivalry of th* USSR and the USA In the field of macblns buUdlnal, rlanovoyetyayttvo (Plannedo.,nclassified.
Using the new tables showing the distribution of repairtogether with such other data as we have on the amount oft has been possible to calculateigure ofillion rubles as the value of work done In the repairand hence as the amount of repair contained Inillion aggregate for "machine building and metalAs the amount of the other extraneous element In this statistic, "metalan be estimatedtatement of its weight In the whole" lo be approximatelyillion rubles, there Isillion rubles as the value ot "machine building'* alone. These figures for the three elements, soat, are consistent with the available data on growth rates, which at the8 we have for the "machine
lng" element and for the total "machine building and metal working."'
S value of "machine building and metal working" was derived by carrying back8 figureillion Ln accordance with the published rate of growth for theThe resultantillion old rubles, was later quite closely cotifirmed by Khrushchev's statement1f machine buttling" 'working5 wasillion0 billion old) rubles'* When the "metal working" and "repair" elements arerespectivelyillion old rublesachine building for that year Is leftillion rubles. If the repair figure Is adjusted to the old practice by5 billion rubles for sundry repair outside of theillions for machine tractoror trucks and cars,orhe values of the three elements and their adjusted total are completely consistent with therowth rates published for them. Thus all of the data now seem to fit. and our hypothesis aboutappears vindicated.
From Machine Building to Defense Hardware
eries for the gross output of machine building so established, the rest of the way is reasonably straightforward "Oross output" reflects, not completed production, but costs put Into machine building. Including those put Into anyamounts ofill In process at the end of the year.egularly rising rate of production. Increases ln the amount of work ln process are to be expected, and these have to be estimated In order to convert gross output Into what is known as "commercial output."
Furthermore, gross output adds together the output of all machine building enterprises, despite the fact that products of some enterprises enter as Input Into the production of others and thus are counted twice. This fact, however, has also bothered the Russians, and they thereforepecial account for the value of such Items (pcJ'fabrikaty) figured Into the "gross output of machinewo chanceravda. II. ft. Unclassified. "Ooloshchapov, V. A. Spraoochntk po bakhoalttrikemu mchetu ertnee book /or Unclassified.
stem
erenres to this statistic, consistent with each other, inform us that5 It representedercent of materialwhich were themselves S9 percent ofhich5 percent ofnd that8 lt accounted forercent of the value of gross output.*
With these two adjustments one can derive from the gross output series one for the value of the -final output of machine building. Roughly,5 rubles, the figuresill Ion5illionhese include the output of consumer durables. They also Include each machine building plant's own repair work and any contract repair orof replacement parts It did for anyone outside the machine building industry. From the data on repair labor amaximum figure ofillion rubles can be calculated for this repair workorresponding figure5 wouldillion. The subtraction of these wouldillion rubles for new machines58 respectively.
" Zverev, A. tt ml.otetalUtichtikov* OroUtTitood Kxtalttt. rrnelsjatfied.
" USSR, TfentralTtoje ttalUtlcheskoye upraTlenlye. narodnoyeti!vQJS6 aodu The National tcoaevtp o; the USSR In. ISO Unclassified.
A. "Ooaudaritvennry bvudshet vtorofo goda iheiior(The state budget In Ute second year of theo.SSt, p. IS.
Un class! fled.
. andSlastenko, Ye.N. SpetitalUotrlvaroita proUvodstva (SpectatUatUm andreserve /or the tncriase olel. p. el. Uaclasslfled.
More work on this series, as well as on these adjustments, will have to be done. But when the value of consumerIs excluded from the figures so far reached and they are adjusted for exports and Imports, theyet output of "capital" equipmentillion rubles5illion rublesince we know how much of these amounts were put back Into the civilian economy asillion rubles5 andillion lnhave left to cover the value of military and other secret equipmentand above repair work, the manufacture of replacement parts, and probably the output of conventionallikeillion rubles5 andillion
Output-Income-Budget Correlation
The Nove-Zauberman calculations from national Income figures, which upon adjustment as outlined above gave values for military accumulation ofillion rubles5 andillionre closely comparable to these results ofndillion, respectively, arrived at from estimatedfigures. The correlation supports the view that military productioncapital" nature. Is accounted for as anent to* "reserves of means of defense"orollary thesis that such production Is charged to the budget not as aexpenditure but as an "accumulation."
There Is no problem In finding places In the Soviet budget outside the explicit defense allocation where sums of these magnitudes could be charged. The several unassigned residuals In the budget, taken together, are quite sufficient to cover them. For example, the residua) in the categorythe Nationaland Construction"8 was calculated atillion old rubles, and In the same year the planned residual for Financing the Nationaland for the budgethole totalled between them more thanillion.'1
clasSi7** ttto"
Original document.
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