RUSSIA SINCE 1917—III Huge Economic Resources But Some Waste Evident

Press, Volume CVII, Issue 31500, 14 October 1967, Page 19

RUSSIA SINCE 1917—III Huge Economic Resources But Some Waste Evident

(By J. B. WHJTBi ? “It is very important to get enterprises interested in expanding their output and increasing not only the grand total of profits, but also the amount of profits obtained per rouble of production assets allocated them.”

'• That sounds like good, sound capitalist thinking. But when the words are spoken by Mr N. Biabakov, one of Russia’s top economic planners, they illustrate how far the Russian economy and Soviet economic thinking, have come in the last 50 years.

The fact that Mr Bigdhakov’s words wpold have shocked th* fathers of the Bolshevik revolution does not worry the men who run the Russian economy today. Revolutionary theory is all very well. But it has gqt to produce results.

Before the Firxt World Wes, Russia was basically an agricultural country, industry contributing only just over 40 per eent of the gross national product Industrialisation was concentrated maiflly round Moscow, Kiev, Leningrad, in the Southern part of European Russia and to a limited degree in the Urals.

In 1918 industry was warworn and in a state of chaos, made all the worse by the disappearance after the revolution of most of the managers. Agriculture, although the peasants had been freed, was equally chaotic because the directing force of landlords was no longer present

Great Asset In 1917, soon after the Revolution, all land had been declared the property of the

people and the banks had been nationalised. Nothing very much happened until 1921. But the new rulers of Russia realised they had one great asset—supplies of almost every mineral and raw material in almost inexhaustible quantities, plus enormous and unexploited reserves of water power. The oil industry in the Caucasus had been developed under the old regime; there were quite efficient Iron and steel engineering and textile industries. What was needed was a completely new economic plan, in which private ownership and private profit had no place, and which applied correct Marxist principles.

From 1921-1925 it was a ease of producing some sort of order out of chaos, of training management cadres, recruited from the trade unions, and in agriculture of campaigning against the Kulaks, the rich peasants to whom Communism ' was abhorrent

In December, 1920, at the Eighth All-Russian Congress of Soviets, the state plan for the electrification of Russia had been adopted, for Lenin foresaw the importance of electric power to the economy. In 1913 total power production was only 1.9 thousand million kilowatt hours.

d In 1958 it was 233 tbousam million. Since then It ha: >- increased by over 100 pei e cent and, after the Unitec d States, the U.S.S.R. ii - the world’s largest produce: yof electric power. Th< a State Planning Committee I- (G.0.5.P.L.A.N.) was estab il llshed In 1921, and the Nev r Economic Policy (NJE.P.) brought into being. e Corruption 1 Today the Soviet historian! a and economists admit that 1 N.E.P. did not produce the - expected results and that il : was accompanied by muddle t and corruption. It ended ia > 1925 when tbe fourteenth Con - gross of the Communist Party of the Soviet Union adopted i the decision for the “socialist t industrialisation” of tbe t country. , The campaign for the : collectivisation of agriculture, I the enrolment of the peasant! 1 into huge communal farms, 1 and the attempted eliminas tion of the last traces of landlordism and private trading, ’ came soon after. ! In 1927 it was decided to ‘ run the Russian economy on a series of Five Veer Plana, each with a set target for expansion. The first was put ‘ Into operation on October 1, i 1928. By the time the Second . Five Year Plan was launched in 1933—the first had been fulfilled in under four and a half years—the first blast furnace of tfie Magnitogorsk Iron and steel complex was working, the Dnieper hydroelectric station was open, and the Baltic-White Sea canal completed. The Second Five Year Han, fulfilled in four and a half years, was marked by the period of "Stakhanovism”—the encouragement of high individual output by emulating the high example of Alexei Stakhanov, a miner in the Donets Basin who achieved remarkable feats as a coal-cutter. Coal production rose from 29.1 million tons in 1913 to 168 million tons in 1940, oil output from 9.2 million tons to 31.1 million tens and steel production from 4.2 million tons to 14.9 million tons. "War Damage

The industries that lagged behind were those producing consumer goods, the chemical industry and vehicle production. The German invasion in 1941 and the bitter war that followed did immense damage to many great industrial centres, such as Stalingrad, and brought economic progress temporarily to a halt „• The important food-

producing, area of the Jkraine was a battlefield, but

Fifty years after the revolution, in spite of the Second World War, the economy of the U.S.S.R. has changed out of all recognition.

Russia is the world’s second largest producer of oil—refining 4,500,000 barrels a day against 10,247,000 in the United States. She is the third largest producer of coal and tiie second largest producer of steel.

Her merchant fleet, has expanded at remarkable speed in the last five years. At the end of the last decade tbe Soviet merchant marine occupied eleventh place in the world in terms of tonnage. Today it occupies sixth place, at over 10 million tons, sbbut half of which is under five years old.

Her deep-sea trawler fleet Is one of the largest and most modern in the world. According to Mr N. Babibakov, the industrial growth-rate in 1966 was 8.4 per cent against a planned 6.7 per cent and he forecast a further increase of 7.4 per cent in 1967. He claimed a record grain harvest in 1966, which followed several lean years, and forecast a slightly smaller harvest for 1967.

On the face of it everything in the Soviet economic garden is lovely. But there are a numer of major problems to be solved.

With a rising population and rising earnings, the Russian people want more food, especially meat and dairy produce. Grain Shortage Agriculture is.still unable to produce sufficient grain to meet the demand for bread and cereals while also providing the animal feeding products required if meat and dairy output are to be increased. Hence the continuing and masrive purchases of grain from capitalist countries. After 50 years of Communism, Russia has not yet produced a really efficient general purpose tractdr, a smooth-running, and adequate spare-parts servicing organisation for farm machinery, nor arrived at an understanding of the proper use of fertilisers. Farm management varies from brilliant in spots to downright bed in many places. Consumer Goods

industry in and beyond the Urals escaped physical damage, as did the mejor oilfields. The post-war period of reconstruction was one of grim, relentless struggle with few rewards, shortages of many foods, of housing, and of almost all consumer goods. In 1947 the rouble was revalued and foodrationing abolished. In 1954 came tbe plan for a ,vast production of grain in the “virgin lands,” which 'Was to prove, partly because of adverse weather conditions and partly because of bad management, a costly failure. Sometime in 1964 the Soviet leaders took a long hard look at the economy and engaged in what has been called “an agonising reappraisal.” They saw that, in spite of massive increases in production, machinery was not being used ss effectively as in the West. There was no Unsocial compulsion on managers to make'a profit. They noted the continuing shortage of consumer goods—especially cars, television sets, good quality clothes—and so the Isck of incentive to workers to earn more. Profound Change It was decided to make carefully controlled use of the profit motive—c profound change in Soviet economic and planning that has still to make its impset felt in full.

In some senses the consumer goods position is worse than before, because demand is rising faster than supply. That is why the Soviet Union is using scarce foreign currency to buy consumer goods abroad. It is also buying, from Britain and other Western countries, expensive plant to make boots and shoes, buses and textiles.

Cars are still a rare luxury in the but deals made with Fiat and Renault should raise car output to about one millicm units in 1971. There is a shortage* of steel Which is slowing down housing, engineering, oil and natural gas expansion. The construction of chemical plants to provide raw materials for the textile Industry has fallen behind schedule.

In spite of the groat prograss of the last 50 years, the Soviet Union still has not achieved a really properly balanced economy, nor a volume of world trade commensurate with her huge national resources. That could come within the next decade. In March, 1939, the Eighteenth Congress of the Communist Party of the Soviet Union adopted a decision “to overtake and surpass the capitalist countries In per capita production” That decision, which suffered the setback of the "Great Patriotic War,” has still to be accomplished. Copyright, 1967, Central Press Features.