RUSSIA AFTER KHRUSHCHEV KOSYGIN’S COUNTER-REFORM BRINGS BUREAUCRACY BACK

Press, Volume CIV, Issue 30879, 12 October 1965, Page 20

RUSSIA AFTER KHRUSHCHEV KOSYGIN’S COUNTER-REFORM BRINGS BUREAUCRACY BACK

IBu

ISAAC DEUTSCHER]

The Soviet Union has just become the scene of a gigantic economic and administrative upheaval. The Party’s Central Committee at its last session decided to undo and obliterate most of the Khrushchev reforms of the 19505. The whole structure of the Soviet economy is to be overhauled ; and Mr Kosygin, the Soviet Prime Minister, has made it clear that it must take two or three years before the resulting disarray is brought under control. The overriding purpose of the changes is to re-invest in Moscow the strict central control over the economy that was once, before Khrushchev’s days, exercised from the Kremlin.

It is over eight years now since Mr Khrushchev struck a heavy blow against Moscow’s bureaucracy, ordered the disbandment of scores of central economic Ministries, and set up over a hundred “Sovnarkhozy.” or Economic Councils, each of which was to manage the affairs of the hundred or so economic regions into which the country was divided. That reform was expected to break the rigidities of the Stalinist supercentralisation, to do justice to local interests and to release local initiative and social energy. In the years 1957 and 1958 Moscow witnessed the dispersal of its managerial aristocracy whose members were leaving the capital to take up more modest posts in remote provinces. In vain did Molotov, Kaganovich. and Malenkov then try to rally the industrial “barons” and to preserve the central management of the economy. That was the heyday of de-Stalinisation; and Mr Khrushchev appeared to be the Soviet St. George slaying the dragon of bureaucracy. Dragon Revives Now, a year after Khrushchev’s downfall, the dragon seems to be reviving and returning in triumph. The central economic Ministries are being recreated, while the regional “Sovnarkhozy” are disbanded. A new migration of the bureaucracy is beginning: after a diaspora lasting eight years the barons of the industrial bureaucracy are about to return to the old seats of power in Moscow. Meanwhile, there is an interregnum in the immense realm of Soviet industry: the “Sovnarkhozy” have lost power; the central Ministries are not yet formed; and for the time being the “Gosplan,” the State Planning Commission, which has no experience in the practical management of industry, is supposed to exercise authority. It is with some obvious misgivings that the Soviet Prime Minister has launched this counter-reform. Between the lines of his long and grim speech at the Central Committee he tried to reassure the country that what it is experiencing is not a relapse into the absurdities of the Stalinist bureaucracy While he insisted on the imperative need to restore central control of industry, he also dwelt on the need to restrict that control to a few selected but crucial areas, and to guarantee the rights and prerogatives of local managers and producers.

A special Charter of the Socialist Factory is to rationalise the system of management on the spot and to protect it against arbitrary interference from the top. The new Ministries, unlike their Stalinist predecessors, should avoid pressing managers and workers for more quantitative production records. They should judge the work of any factory not so much by its indices of gross output, which often conceal inferior produce, but by the indices of actual sales which measure more accurately the socio-economic value of the output. In this respect, Mr Kosygin has intimated, Soviet industry should move even further away from the Stalin era than it has done so far. Subsidies To Stop The State, Mr Kosygin has further announced, will gradually stop paying subsidies to all industrial concerns working at a deficit: henceforth every industrial unit should produce at a profit. This does not amount to the “rehabilitation of the profit motive” predicted by some Western Sovietologists in connexion with the socalled Lieberman Debate. For one thing, there has hardly been the need for any “rehab ilitation of profit"; in each of the last two years, for instance profits shown by Soviet industry amounted to something like 40 billion roubles, between 20 and 25 per cent of the net national income. At present half the national investment funds and other Government expenditure is provided by industry’s profits and half by indirect taxation. The proportions between the Government’s revenues from these two sources have been of decisive economic, political, and cultural significance. Throughout the decades of forced industrialisation Stalin obtained most of the accummulated funds from heavy indirect taxation, which served to keep down popular consumption, to subsidise deficit industries, “and to expand industries which were growing much faster than their own accumulation funds. With the progress of industrialisation, indirect taxation has played a decreasing part and industrial profits have played an increasing part in financing further economic development. (Therein, to put it in technical-Marxist terms, consists the transition from “primitive” to “normal” socialist accumulation.) Mr Kosygin has now announced that the Government is going to carry this policy a long step further. Henceforth industry is to ensure its continued expansion by means of self-finance, that" is by drawing on its own profits. This implies a further relative reduction in indirect taxation and a relative increase in the population’s purchasing power, which must find its counterpart in an increased volume of available consumer goods. Price-fixing In a State-owned economy, however, the question whether any industry can draw on its profits is often a matter of bookkeeping, for the. profitability of an industry may depend on the prices it obtains for its produce: and it is the government that fixes the prices. A new Price-fixing Commission is now therefore to revise the entire price structure of the Soviet economy, with an eye to enabling producer industries to become financially self-supporting and consumer industries to expand faster than hitherto.

Anxious to justify this overhaul of the industrial machinery and the new policies, Mr Kosygin spoke emphatically about the slowing down of Russia's rate of development in recent years. This has shown itself in the not quite satisfactory results of the Seven Year Plan now coming to a close. Although gross industrial output has risen by 84 per cent since 1958, this growth has been, according to the Soviet Prime Minister, far too slow in relation to fixed capital investment, and, similarly, the rise in productivity per man-hour has been sluggish. The continued crisis in agriculture this year has again brought poor harvests—limits the volume of available consumer goods and affects badly the morale and efficiency of industrial workers. AU this. Mr Kosygin concludes, compels a re-centralisation and a rationalisation of economic management. The Soviet administration, he claims, has not been able to cope with Its mounting difficulties, because Mr Khrushchev, in his seal for de-centralisation, has deprived it of the means of effective economic action There is undoubtedlv some truth in all this. It has been clear for quite a long time now that the Khrushchevite reforms, far from curing the Soviet economy of the ill* of too rigid a bureaucratic ?2 ntl ? 1 ’ *“ ve ,<Wed to theae the drawbacks of an extreme de-centralisation The re gional “Sovnarkhozy" have developed their own local interests and particularism* ami have thus weakened the cw hesiveness and the mmuen turn of the national ecoimiio Y ®t it is doubtful, to the least, whether the pie*em return to central control vau

provide the remedy. It is the curse of a bureaucratic regime that it cannot strike a sound balance between central control and local initiative; and Soviet management has floundered between the extremes of despotic overcentralisation and particular-ist-bureaucratic anarchy. There is also in Mr Kosygin’s counter-reform more than a mere reaction against the excesses and disappointments of the Khrushchevite de-centralisation. The Soviet Premier has made a special appeal to the managerial groups with whom Mr Khrushchev had been in some conflict. He rehabilitates them; he promises to raise them up again, and to restore their privileges and prestige. He has pledged himself implicitly to resist the egalitarian trend that has been stirring in the post-Stalinist U.S.S.R. His Charter of the Socialist Factory is to be above all the Charter of the Factory Manager, who is now given the right—unheard of in the U.S.S.R.—to hire and fire workers, and also wide discretion in distributing his wages fund among the workers. Nothing, apart from the much overwrought promise of a greater abundance of consumer goods in the future, is offered to sweeten the pill for the mass of the workers. It remains to be seen what is going to be the reaction to Mr Kosygin’s policies at the factory level and in the trade unions. Political Delicacy The adoption of these decisions has been a matter of some political delicacy. It is not clear just how much support Mr Kosygin has obtained for his moves either in the Presidium or in the Central Committee. His most influential colleagues have behaved in a non-committal manner. He obviously feared considerable opposition within the Central Committee: and he reduced that opposition to silence by the simple device of inviting many outsiders to the Central Committee’s session, a procedure which Mr Khrushchev once favoured and which was held out against him when he fell. Nor the the postponement of the Party Congress till next year, that is, beyond the statutory time limit, of good augury for the present ruling group. Disregard for the Party's statutory rights has in recent years been denounced all too often and ail too loudly as the hallmark of Stalinism! There is indeed a distinct flavour of Stalinism in some of Mr Kosygin’s moves; and the country will hardly like it. The workers are certain to look askance at the increased powers of the managers. In the capitals of the nonRussian nationalities people will resent the renewed concentration of economic power in Moscow. The country as a whole may suspect a shamefaced attempt at something like a bureaucratic Restoration. It seems quite implausible, despite the failures of Khrushchevism, that the Soviet people should be in a mood for such a Restoration; and if they were, Mr Molotov or Mr Malenkov, rather than Messrs Kosygin and Brezhnev, might be the men to preside over it. (Incidentally, there are some signs of a rehabilitation of Mr Molotov being carried out while Mr Khrushchev remains an “un-person.”) And, in any case, Mr Kosygin's performance has been politically so ineffective and unconvincing—it has indeed presented such a strange mixture of bureaucratic obtuseness and recklessness—that it has only underlined the fact that the crisis in the Soviet leadership, the crisis opened with Mr Khrushchev’s downfall a year ago, is still unresolved,—World copyright reserved by Isaac Deutscher.