Russia Studies Profit Motive

Press, Volume CIII, Issue 30542, 10 September 1964, Page 9

Russia Studies Profit Motive

(N.Z.P .A.-Reuter—Copyright)

MOSCOW, September 8.

Soviet plans to give the profit motive a bigger role in the economy gained powerful support today from one of Russia’s most influential economists.

Mr Lev Leontiev, an associate member of the Academy of Sciences, was the second top economist to support the profit idea since “Pravda” threw the subject open for discussion a month ago. Moscow observers said the enthusiastic support given publicly to the profit principle suggested that major economic changes were under way aimed at giving Soviet factories more independence. They said the “Pravda” discussion could take place only if the idea already had official sanction. Adoption of the profit motive as a guiding principle in Soviet production would transform the entire basis of Communist-controlled industry in Russia. Mr Leontiev said today that industry’s “centre of gravity” should shift away from administrative controls to “economic methods of leadership.”

At present, Soviet factories work to fulfil production targets laid down by the State. Bigger Role The theory that profits should play a bigger role, as they do in the West, was first advanced by a Ukrainian economist, Professor Yevsei Libennann, two years ago, but failed to win official support. Last month, the idea was revived in a “Pravda” article by a top-ranking economist and academician, Vadim Trapeznikov. Mr Leontiev, an expert in capitalist economic methods, gave it full backing in a new “Pravda” article occupying almost half a page. He said Russia’s planned centralised economy should continue, but it was also important to give factories “the maximum opportunity for initiative.” He was sharply critical of what he called the present “cumbersome system of planning,” and the “endless stream of paper” which resulted from it. Mr Leontiev said that when the profit idea was first advanced in 1962 there were criticisms that it would mean the use of capitalist methods contrary to a Socialist economy. “Now,” he said, “such voices are seldom raised.” It was clear now that under Soviet conditions, the profit motive would have an “entirely different social essence,” and could be used as an “important instrument” of economic administration.