SOVIET'S SECOND PLAN

Press, Volume LXX, Issue 21354, 22 December 1934, Page 15

SOVIET'S SECOND PLAN

BRITISH CRITICISM LESSONS OF EXPERIENCE SAID TO BE OVERLOOKED LONDON, November 9, The Birmingham Bureau of Research on Russian Economic Conditions has published a memorandum examining the Second Five-Year Plan and the prospects of its being realised. The bureau comments that the new plan, although drawn on an enlarged scale and with certain modifications, bears a great resemblance to its predecessor. When put into operation the first plan revealed such defects as excessive rates of annual increase, a disproportion in the development of the separate branches of national economy, a lack of unity in the proposed measures, and in some instances a planning of secondary and derivative rather than basic factors. These weaknesses of the First Five-Year Plan are repeated in the Second Plan. It would appear that the experience gained from the operation of the First Five-Year Plan had been inadequately utilised by the State Planning Commission and has had, in fact, little weight in the compilation of the Second Five-Year Plan. Although the proposed increase in national income was not achieved during the First Five-Year Plan, the Second Plan aims at a still higher figure of increase—l2o per cent, against 103 per cent. No information is available on which this optimistic estimate has been based, the Bureau comments. Judging from the last few years, when a consistent fall in the anual rate of increase of national income has been observed (.1930, 17.5 per cent.; 1931, 12.7 per cent,; 1932, 11.2 per cent.; 1933, 9.9 per cent.—in spite of a good harvest in 1933 which should have been reflected in the rate of growth of the national income) it is hardly to be expected that development will proceed at such a tempo. Railway Transport The estimates for railway transport are of special interest. If gross production of industry has to be increased by 114 per cent, and that of agriculture by 100 per cent., it is not clear how the railways would be able to cope with the transport of all the goods involved if their transport capacity is planned to increase by only 78 per cent. Furthermore, if the national income is to increase by 120 per cent, this relatively small increase in the transport capacity seems inadequate. The development of transport and national production on the lines laid down in the Plan could only be expected to take place if natural economy in Soviet Russia were to develop at the expense of monetary economy, i.e., if a regression in economic development were allowed to happen. This discrepancy in the Plan is of great importance and is reflected in the inability of the railways to cope with their allotted tasks. One of the principal reasons for the present critical position of the railways is the insufficient development of transport capacity during the First Five-Year Plan, when it was decided to increase the freight turnover by only 86 per cent, the increase of industrial production being simultaneously fixed at 136 per cent, and that of national income at 103 per cent. The Bureau works out with the help of the, Spearman method coefficients of correlation between Soviet plans and their fulfilment in large-scale industry, gross agricultural output and transport. Four out of six co-efficients bear a minus sign, which points to the fact that in the majority of cases the annual rates of development were falling when the organisations responsible for the plans were actually anticipating an increase.

Although tlie estimates for largescale industry are lower than those for the First Five-Year Plan, they are, in the opinion of the Bureau, also beyond the possibility of realisation. It is noted that the increase recorded in the first Five-Year Plan was in a certain measure achieved through the lowering of the quality of the goods manufactured, and it should also be borne in mind that the actual figures cf fulfilment for 1932 are exaggerated since they refer to a larger number of commodities—meat, fish, vegetable oils, and unworked timber have been included in the list of industrial products—than for the basic year 1927-28.

The plan for the development of agriculture. it is stated, shows some surprising features. The creation of colossal State farms and the collectivisation of 61.5 per cent, of the peasant holdings resulted in a fall of 9.8 per rent, in the gross production of agriculture as compared with 192728 and in a decrease in cattle of 38.7 per cent. Yet the Second Plan coniemplates an increase of 100 per cent, in the gross output and of 61 per cent, in the number of cattle.

Food Supplies One of the important features of the Second Five-Year Plan as compared with the First is the emphasis laid on the supply of food and the production of goods for personal consumption. The extent of the concessions needed can be gathered from M. Molotov's promise to increase by two and three times the supplies of such essentials as bread, potatoes, vegetables, milk, meat, and textiles. Discussing Soviet law and the Plan, the Bureau states that the legal and administrative compulsion to economic activity under penalty of capital and other punishment is so closgly associated with the Soviet system 'of planning that it may even be said that a study of Soviet economy at the present time should begin with an examination of its criminal code. The experience of recent years, when the fear of capital punishment has often paralysed economic activity and initiative, has not convinced Soviet economists of the harmful effects of legal compulsion backed by capital sanctions.

In a comment on the exploitation of natural resources and other developments, the Bureau states that the lack of minerals in the big Eastern European plain has up to the present greatly hindered the economic development of Russia. Apparently the exploitation of the mineral wealth of the Urals, of Western Siberia, and of Kazakstan will finally remove this obstacle from the historic path of the Russian people. The proposal to cut the Volga-Don canal and the damming of the Volga is also of great econom'c importance for Russia. The VolgaDon canal will connect the whole of the enormous basin of the Volga and its tributaries with the Black Sea. Construction began this year and is to be completed in 1936. The length of the canal will be 50 kilometres and the cost about 80,000.000 roubles. The Kamyshin dam and hydro-electrical station planned on the Volga will not only provide a large amount of electrical energy, but will also help to irrigate more than 4,000,000 hectares of the Trans-Volga steppes. Judging from the constructive work in the development of natural resources carried out during the course of the First Five-Year Plan, it is considered thflt these plans are by no means fantastic, but are quite capable of being carried out. The greatest difficulties lie in the irrigation of the saline steppes