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Fourth International, September 1946

Review of the Month

The Fourth Five-Year Plan and the Crisis in Soviet Economy

From Fourth International, September 1946, Vol.7 No.9, pp.262-266.
Transcribed, edited & formatted by Ted Crawford & David Walters in 2008 for ETOL.

One year ago, in August 1945, the Kremlin boastfully announced the resumption of planning; the Fourth Five-Year Plan was scheduled to begin in January 1946 and to terminate on December 31, 1950. However, it was not until seven months later, on March 18, 1946, that the Fourth Five-Year Plan was legally promulgated at the first session of the Supreme Soviet. Almost simultaneously came the news of another purge sweeping through every sphere of Soviet economic, social and cultural life.

This purge is in and of itself proof that the economy continues in the throes of a deep-going crisis. Obviously this crisis has not been mitigated by the war but, on the contrary, enormously sharpened. Far from being able to guide the country’s economic and cultural progress more efficiently and easily than in the pre-war epoch, Stalin’s regime reveals itself as an overgrowing obstacle to further Soviet development.

Although one year has passed since the announcement of the latest Plan, no target figures for the current year have been made public. The Kremlin adopted this practice of secrecy in 1939, and obviously intends to continue it. But we do have the general “control figures” for the year 1950, i.e., the last year of the Plan, and they are highly revealing.

We can obtain a very graphic picture of Soviet economic conditions today by juxtaposing the 1950 “control figures” with those planned for 1942 – the end of the Third Five-Year Plan, and with alleged output as reported in 1940, in other words immediately before the outbreak of the war.

As the above table shows, only in the coal industry does the new Plan even pretend to set goals above pre-war levels. It goes without saying that the coal industry today is producing nowhere near the 1950 figure. The comparative figures for pig iron, steel and rolled steel provide decisive proof how the war devastated the key branches of Soviet industry; how despite all the pillaging and looting in the regions occupied by the Red armies, Soviet economy remains in a highly critical condition. The target figures for 1950 in these key industries, are far below the 1942 figures and not very much higher than the goals of the Second Five-Year plan – the 1937 figures.

What an annihilating commentary on Stalin’s program of building Socialism “in one country:’ not to mention the latest brazen boast of “entry into Communism.”

During the period of the Second Five-Year Plan, Soviet industry expanded at an annual average rate of 16.5 per cent. Were the Kremlin oligarchy able to carry through Soviet reconstruction at these previously attained tempos, the 1950 figures would be almost double the actual goals. But the 1937 tempos were never reached again. For the Third Five-Year Plan the annual rate of increase was drastically cut to 11 per cent. But even these much lower quotas proved impossible of attainment. The best that the Stalinist oligarchy can hope for today in the sphere of heavy industry is to pull it back by 1950 approximately to where it was in 1937, at the termination of the Second Five-Year Plan.

So far as the oil industry is concerned, the comparative figures reveal a condition of acute crisis. The 1950 goals are far below both the levels set for 1937 (46.8 mill. tons) and 1942 (48.5 mill. Tons – neither of which were ever realized). It has now been officially confirmed that the rehabilitation of the Donetz coal basin will not be completed before 1949 and that the output of oil in the Baku region has dropped to about half its pre-war volume. This explains in part the Kremlin’s intrigues in Iran and its anxiety to secure some of the oil resources of the Near East.

Literally every other branch of economic life finds itself in a crisis. The bureaucracy has no further hopes than to simply restore the Soviet transportation system to levels attained years ago. The goal set for daily freight car-loadings – by 1950! – is a figure of 115,000, as against the 1941 figure of 103,000 freight cars. The total new trackage is 1,510 miles, which is below the trackage laid down during the previous plans.

There is internal evidence, however, that the Kremlin itself knows that even these extremely modest goals cannot and will not be attained. Railways cannot be operated without locomotives. Moscow’s own official figure for locomotives destroyed during the war is 15,800. Yet the 1950 production figure for locomotives is fixed at only 2,200. (The 1937 Plan called for 2,800 locomotives a year!) But even at this figure, Soviet railways would still be in 1950 almost 5,000 locomotives short. As a matter of fact, the Kremlin expects a far bigger shortage. Here is a quotation from the Law governing the Fourth Five-Year Plan:

Rolling stock shall be increased by the addition of 6,165 long-distance steam locomotives, 555 long-distance electric locomotives, 865 long-distance Diesel locomotives, 472,500 freight cars (in terms of two-axle cars) and 6,000 passenger coaches. (Special Supplement of the Fourth Five-Year Plan, Information Bulletin, US Soviet Embassy, June 1946.)

The basic additions to Soviet railways thus come down to 7,585 long-distance locomotives. The far-flung Soviet railways will at best get less than half of the locomotives destroyed during the war.

The situation is no less acute in rolling stock. The foregoing passage speaks of an envisaged “addition” of 472,500 freight cars – in the face of the officially acknowledged war-time destruction of 428,000 freight cars.

The serious crisis of Soviet industry is duplicated in far more aggravated manner in agriculture. The grain production – for 1950! – is calculated for an average harvest of only 12 hundredweights per hectare (approximately 2½ acres). Not only is this production far below that in advanced capitalist countries; it is likewise far below the levels at which machine and tractor stations are able to cover expenses. According to the best available data, in order to cover expenses mechanized agriculture requires harvests of 20-22 hundredweights per hectare. These continued low yields mean that the state must continue to pay out billions in subsidies, which are reflected in the high cost of flour and bread.

More than this; Soviet agriculture, as is well known, depends on mechanized equipment. Hundreds of thousands of tractors, combines and other agricultural machinery have been destroyed during the war. The current law promises that “no less than 325,000 tractors” shall be supplied to the collective farms. Meanwhile, however, the Plan calls for an annual production (by 1950) of 112,000 tractors a year. What this future rate of production really means can be seen by a comparison with the Second Five-Year Plan (1937). At that time, it was calculated that the requirements of the collective farms could not be met by less than 195,000 tractors annually. The conclusion is inescapable: under the best conditions, bread, the staple food of the masses, will continue not only scarce, but dear, in the next immediate period.

Under these circumstances it is out of the question for Soviet agriculture to attain a productivity of 12 hundred weights per hectare, a level never before reached. The claim that by 1950 the annual harvest will “be increased by 27 per cent above the 1940 figure” is nothing less than fantastic.

In addition to food, the production of consumers’ goods affects the masses most vitally and directly. In all the previous Five-Year Plans, the masses had to bear an intolerable load because of the emphasis on capital goods (or heavy industry) production. The Fourth-Plan Law is deliberately vague and deceptive on this score. In addition to a promise that “the rationing of bread, flour, cereals and macaroni [and not of milk, meat, fats and other staples!] shall be abolished in the autumn of 1946,” the Kremlin has only the following to say in connection with consumers’ goods:

The production and sale to the population of high-grade food products, fabrics, clothing and footwear shall be extended.

This appears to be an out-and-out falsehood. Even by 1950 the Soviet masses will not get the quantity (let alone the quality) of the consumers’ goods they obtained as far back as in 1937 – toward the end of the Second Five-Year Plan. This can be proved by the 1950 “control figures.” An analysis of two key items, cotton fabrics and footwear, will suffice.
 

Cotton Fabrics and Footwear

The 1937 Plan called for 5,100 million meters of cotton fabrics. All that the Kremlin is now able to offer (on paper) is a maximum of 4,686 million meters – five years from today. Here is the official breakdown for the various Soviet Republics:

It will be observed that this total happens to be some 30 odd million meters short of the over-all “control figure.” Such minor frauds are not uncommon in the generally falsified system of Stalinist statistics. It is likewise noteworthy that six out of the sixteen Federated Republics are omitted from the list (Ukrainian, Belorussian, Georgian, Lithuanian, Moldavian and Karelo-Finnish). The production in these areas is so insignificant that the authors of the Plan, who carefully include the infinitesimal projected output for Kirghizia, do not even bother to specify it.

With regards to footwear, the Kremlin’s statisticians have been even more careless. The discrepancy between the 1950 “Control figure” of 240 million pairs, and the breakdown of production quotas for individual Republics, amounts to almost 50 million pairs, or 20 per cent. The breakdown follows:

Of this total, only the production for RSFSR is designated as leather footwear, i.e., 156 million pairs. The 1937 Plan called for 180 million pairs of leather footwear. The Soviet masses have to wait five years just for the possibility of obtaining less than one pair of shoes per head, per year.

To sum up: the figures for cotton fabrics, also woollen fabrics, as well as other mass consumers’ goods, are lower than the corresponding figures not only for the Third but also the Second Five-Year Plans. The Kremlin unquestionably aims to secure additional quantities of” consumers’ goods from its occupied zone. But the demands and needs of rehabilitating Soviet industry are so immense, and the contemplated goals are so low by comparison, that the very fulfillment of the Plan, as well as the organization of trade relations with the occupied regions, are sharply called into question.

The Fourth-Plan Law declares that “the number of workers by hand and brain engaged in the national industries of the USSR in 1950 is projected at 33,500,000 persons.” A previous official figure for the labor force is that of 1938, at the beginning of the Third Five-Year Plan – 27,800,000. Thus according to the Kremlin’s own bookkeeping, it will take 5,700,000 additional workers to keep production at the same or even lower levels than those achieved before the war with a smaller force.

How explain this? First, it is officially admitted that a big drop in the productivity of labor has occurred. This decline affects both heavy and light industry. It is quite common to run across such statements in the Moscow press as the following in a leading Pravda editorial (May 31):

The workers in light industry face titanic labors in order to reach pre-war productivity and restore a pre-war assortment of goods. (Our emphasis.)

It is impossible to determine the full scope of this decline, as this is one of the most carefully guarded secrets of the Kremlin.

Secondly, the Fourth Five-Year program for heavy industry includes a much greater concentration than in the previous two Plans on engineering, with special emphasis on increasing production of machine tools and basic equipment. Here again it is made clear that Soviet industry was terribly ravaged by the war. Huge plants have been destroyed and the general wear and tear of industry was so enormous, that millions upon millions of Soviet workers are once again forced to rebuild a large part of the capital equipment, which they previously built at the cost of unheard-of sacrifices.

Of equally great importance is the fact that the bureaucracy has no hope of obtaining this influx of manpower into industry through normal channels, by attracting to the cities increasing numbers of peasants through better working conditions and higher living standards in industry than in agriculture.

For example, on April 20, Pravda reported that the textile plants in the city of Ivanovo were suffering from labor shortage; the looms were standing idle; the management was unable to get help. Here is Pravda ’s comment:

In particular what is involved is the question of organizing a school of the FZO attached to the factory. Failing this the factory will not be able to replenish its cadres of qualified workers. (Our emphasis.)

The “pupils” attending such “FZO schools,” are boys and girls, 14 years of age and over, who are drafted for child labor. According to official figures (Pravda, July 5), these children will provide in the next period the following labor force:

This child labor is now being drafted at the rate of about 500,000 a year. By 1950 the rate is to be stepped up to 1,200,000 a year, or virtually the total additional force required. This aspect of the Plan is deemed so important that a special Ministry – the Ministry of Labor Reserves – has been permanently set up.
 

Growth of Bureaucracy

The manpower problem in the Soviet Union was rendered acute in both industry and agriculture by the declining productivity of labor, and the huge civilian and military war casualties. It is further aggravated by another factor which is just beginning to be “discovered” by the official Russian press. It is this: Soviet economic life is staggering under the unprecedented war-time expansion of the bureaucracy. The latter has not only vastly increased its privileges and power, but has inordinately swollen in numbers. In addition to the new huge military caste, there is a greatly enlarged police apparatus, particularly the secret police, or the GPU, whose special (and most privileged) trained troops have been increased sixfold, from 250,000 to approximately 1,500,000. Alongside this bloated apparatus of repression, there are the hordes of “administrators” and “technicians” on the civilian staffs.

The enormous war-time growth of the bureaucracy is reflected in the increased membership of the Russian Party from 1.4 million in pre-war days to more than 5 million. It likewise finds expression in a higher proportion of functionaries to workers. Thus, a ratio of one “administrator” to every five or six workers is not at all uncommon The pre-war ratio was reported as slightly less than one to 10. But this was considered too high at the time. In recent months Pravda has cited cases of ratios of one to three. And at a recent session of the Supreme Soviet of the RSFSR far more scandalous conditions were exposed. Deputy N. M. Vassiliev, Minister of State Control cited the case of a soap factory employing six workers, while maintaining an administrative-technical staff of fifteen; another plant of four workers had six administrators. Minister Vassiliev then went on to add:

Things are permitted to go so far that for the upkeep of an administrative apparatus certain enterprises spend sums many times above the value of their total production. For example, the Volochayevsk promkombinat had an output worth 4,000 roubles, and paid out in salaries to the administrative apparatus – 10,700 roubles.

These rather revealing remarks, according to Pravda, exposed the “impermissible lavishness of certain economic leaders, which is expressed in illegally large staffs, unproductive expenditures, arrangements of all sorts of vecherinkas and banquets, payments of illegal premiums.” Among the industries singled out were: timber, textiles, meat, and milk. Directors of the latter are accused of having squandered 45 million roubles in this way last year.
 

“Squanderers and Embezzlers”

The foregoing is part of a nationwide “exposure” campaign of “squanderers and embezzlers.” To cite only a few: In the Kirghiz Republic heads of five construction firms have been charged with squandering 2,664,000 roubles (Pravda, May 30). In the Astrakhan region charges of embezzling collective-farm property were brought against “the Deputy Secretary of the Regional Committee, Korchunov; Personnel Secretary of the Regional Committee, Permyakov; Chairman of the Regional Executive Committee, Malyavin, and the Regional Prosecutor, Chashechnikov” (Pravda, July 4). The Volga-Caspian Fish Trust has been accused of embezzling 130,000 hundredweight of fish “last year alone” (idem). “The Provincial Committee of the Party had no cause whatever to be surprised by the facts of moral degeneration and criminal acts on the part of the leading workers in the Krasnoyarsk region who have now been removed from their posts and committed for trial. Back in 1944 there were cases of embezzlement of collective-farm wealth” (idem).

Such cases are multiplying in a geometric proportion. The language of Pravda is becoming more and more savage. By this latest purge, the Kremlin hopes to successfully repeat its past performances in providing convenient scapegoats for the inescapable consequences of its own misrule, in particular the intolerable scarcities and the abysmal living and working conditions.

Grave as the situation is in industry and transportation, it is verging on catastrophic in two other spheres: finance and agriculture. Inflationary processes set in even before the war; but the war has completely shattered the country’s fiscal structure. It is not for nothing that the authors of the Fourth Five-Year Plan speak in terms of “1926-1927 prices.” The rouble today is a purely imaginary quantity. It will take several years and many convulsions before the country’s currency is stabilized again.

The chaotic condition of Soviet industry in general and its fiscal system in particular are most crassly revealed in the overall figures for the budget of the new Plan. Here the discrepancies and falsifications assume truly nightmarish proportions.

The text of the Plan Law asserts that the “total volume of production of the industry of the USSR as a whole in 1950” shall amount to “205 billion roubles (in 1926-27 prices).” This allegedly represents “an increase in industrial output of 48 per cent as compared with the pre-war year of 1940.”

The authors of the Plan further project a national income of “177 billion roubles,” which allegedly represents an increase of “30 per cent above the pre-war level.”

On the basis of these “estimates” people unacquainted with Stalinist statistical methods have jumped to the conclusion that the Soviet Union stands on the verge of not only re-establishing pre-war levels but rapidly surpassing them. How is the national income to be increased by 51.5 billion roubles as against 1940 when the national income was reported at 125.5 billion roubles, on the basis of lower levels of production?

The Kremlin jugglers attempt to get around this difficulty by performing breath-taking feats in the domain of wages. They are very explicit in demanding of the workers a 36 per cent increase in productivity in industry and 40 per cent in construction “as compared with pre-war levels.” In return, while carefully evading the question of working hours, conditions, rates of pay, etc., they promise average annual earnings of “6,000 roubles, which is considerably above the 1940 level.” The total pay roll in 1950 they estimate at the stupendous sum of 252.3 billion roubles. Here we come to the first discrepancy – a slight matter of 51.3 billion roubles (a total working force of 33.5 million averaging 6,000 roubles equals a payroll of 201 billion roubles).

But this unexplained 25 per cent hike in payroll figures does not exhaust the Kremlin’s generosity. The Kremlin planners promise that Soviet industry and the state institutions will in addition contribute “in the period 1946-50 a total of 61.6 billion roubles,” or roughly 12 billion a year, for social insurance, etc. Thus a total of 264.3 billion roubles will be paid out to the workers in 1950. The question literally forces itself upon the reader: How can an industry whose gross output will be 205 billion roubles in 1950 pay out, in wages and social insurance alone, over 264 billion roubles? On this basis, how can industry pay any profits to the state, which depends on these profits as its major source of income. And where will the capital come from for necessary reinvestments in industry and for expansion?

The projected annual payroll jibes neither with the projected gross output nor with the estimated national income. It jibes only with the Kremlin’s urgent need to throw sand into the eyes of its own deeply discontented masses, and to throw a statistical veil over the grave crisis which is shaking Soviet economy.
 

The Agricultural Situation

The situation in agriculture is briefly as follows. In 1940 the collective farms disposed of 523,000 tractors, 182,000 combine harvesters, and a vast quantity of other equipment. The official war-losses are listed at 137,000 tractors, 49,000 combine harvesters and more than 5 million plows, harrows and other agricultural implements. In addition, “machines working in the rear regions were worn out sooner because of the shortage of trained cadres and spare parts” (Information Bulletin, US Soviet Embassy, May 16).

The scope of the shortage of “trained cadres” may be gauged by the fact that the Fourth-Plan Law proposes (in the face of the existing acute manpower shortage) to provide agriculture with 2,300,000 tractor and combine-harvester operators and “other qualified workers.”

The current harvest began early in July. The crops had previously suffered from drouth. But the available machines and implements are still in a state of disrepair, or idle for lack of fuel. Thus in Poltava province, although the harvesting had already begun, 40 per cent of the combines remained unrepaired. In the Krasnodarsk and Stravropol regions many of the machines “are still in repair shops although the collectives began harvesting several days ago.” In the Saratov and Kuuibyshev provinces “half of the combines have still to undergo repairs.” The July 6 Pravda, which reports all of this, warns:

Further delay with the repairing of combines can lead to grave results.

In other words, the already drastically reduced crops may be lost through harvest failures.

But Pravda itself has few illusions about any timely improvements in the situation, for the leading editorial in the same issue, demands the utilization of “all the ordinary harvesting machines and hand equipment.”

It ought not to be forgotten (continues the editorial) that in many regions the bulk of the bread-grains is harvested with reaping hooks, scythes and sickles. For this reason the preparation of simple harvest machines is a task of no lesser importance than the repair of combines.

There happens also to be a grave shortage of these “simple machines.”
 

Rural Neo-Bourgeoisie

But there is even a direr threat to the collective-farm system and therefore to the grain supply of the urban population. Demechanization, manpower shortage, the scarcity of manufactured goods have greatly reinforced the centrifugal tendencies within the collectives. The authorities are alarmed lest the peasants, especially the neo-bourgeois agrarian elements (the “millionaire collective-farmers”), withhold the grain. The columns of the Moscow press are filled with warning upon warning that strictest accounting must be kept and “strictest guard established over the collective-farm grain through every single stage of the harvest, all along the road – from the fields to the state granaries, to the collective-farm bins (Pravda, July 6).

The same issue reports that in two regions (Dnepropetrovsk and Krasnodarsk), deliveries of grain were refused at state granaries, and warns ominously:

These facts cannot be regarded otherwise than as anti-Soviet practices whose aim is to ruin the grain deliveries.

Similar critical conditions prevail in cattle-breeding. Soviet stock-raising never recovered from the excesses of Stalin’s original “100 per cent collectivization” (which led to a wholesale slaughter of cattle by the peasants), and it was further depleted by the war. A comparison of figures for 1929, the year 1945 and the projected 1950 goals of the Fourth Five-Year Plan discloses the grave situation in this sector:

While the Kremlin is painting its none-too alluring picture of the future, cattle are dying from lack of fodder, or are being slaughtered for meat. This is the situation reported by Pravda on June 15 in Buryat-Mongolia, one of the important cattle-raising regions. In addition, numerous cases are cited of large discrepancies between the official figures and the actual number of animals on the collective farms. “Where is the guarantee that similar conditions do not prevail in other regions?” asks Pravda.

The same forces that are undermining the grain deliveries are likewise manifesting themselves in cattle-breeding, This is evidenced by the following report from the Altai region, one of the largest stock-breeding areas in the country:

Cattle-breeding here is “farmed-out” to various agricultural bodies. Other facts confirm this, too. The production of milk is proceeding poorly in the region; a number of collectives permit a big decline of cattle and the alienation of calves. (Pravda, July 5)

The peasants refuse to harvest hay. A common practice among the collective farms is to sell the hay crop, which is then harvested by outsiders, in most cases, the local bigwigs. What are the collective farmers doing meanwhile? The answer is supplied by a report from the Voroshilovsk region:

Many of them are busy on their own [private]land strips. They have long ago prepared the day for their own cattle. Other collective farmers are whiling away their time in the market places of Stavropol. (Pravda, July 6)

This report concludes with the revealing comment:

Sad to say, similar things are to be observed not only in the Voroshilovsk region but elsewhere, too.

To remedy this, the Kremlin passed a special decree offering special inducements for harvesting hay. Each peasant, in addition to regular pay, is to receive 10 per cent of what he harvests. For every hectare over 40, he receives in addition 20 kilos of hay, or, if preferable, equivalent amounts of potatoes and vegetables. But there has been no noticeable improvement thus far. It still is much more profitable for the peasant to tend his own land or cattle, or to “while his time away” in the market places.

The greatest difficulties lie ahead and not behind. Pravda acknowledges quite frankly in its leading editorial of July 5 that the crisis will reach its peak by the latter part of this year. It says:

The decisive months of the struggle for the Plan are here. Upon this struggle depends the success of the whole year, and consequently the success of the whole Five-Year Plan.

Thus the Kremlin oligarchy, despite its policy of looting and ravaging in Europe and Asia, finds itself beset again by a great crisis in every sphere of Soviet economy. The launching of a mass purge coincident with the launching of the new Plan is an ominous reminder that Soviet economy, under Stalin’s rule, is condemned to a permanent state of convulsions and crisis. Try as they may, the Kremlin clique cannot achieve stability. Its regime remains as shaky, its leading circles as jittery as in the most critical days of 1929.

 
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