English, automated translation (using DeepL), of a 1987 article published by Soviet economist Nikolai Petrovich Shmelyov on the state of Soviet economy. The article is important as it contains numerous first-hand observations and actual economic data, as opposed to the official figures which were frequently quite distant from the reality on the ground (one of the problems also highlighted by Shmelyov). The article in Russian is also available: Николай Петрович Шмелёв “Авансы и долги”. Translation prepared an annotated by Paweł Krawczyk.
Nikolai Petrovich Shmelyov, “Advances and Debts”, New World - 1987 - №6
The state of our economy does not satisfy anyone. Its two central, built-in, so to speak, defects - producer monopoly in a situation of general deficit and the lack of interest of enterprises in scientific and technological progress - are probably clear to everyone. But how to get rid of these defects, what to do, and not in theory but in practice, I am sure there are no wise men either at the top or below today who would dare to claim that they know a completely livable recipe. We all have far more questions than answers at the moment. And we still have a lot to say, to argue, to propose and to reject before the whole world reaches for the answers we need.
In terms of the hopes raised, the depth, the frankness and the courage to discuss our problems, the last two years have been a time of a genuine revival of our public thought, of our national consciousness. The XXVII Congress of the CPSU marked the beginning of revolutionary changes in the life of our society. And direct, honest discussions on pressing economic problems is one of the most important manifestations of this process.
The main causes of vascular congestion and slowing down of the blood circulation in the economy of the country has already been revealed. The principle “from Prodrazverstka to Prodnalog”1 has been put forward, which means that administrative methods of management must be replaced by economic, self-accounting incentives and levers. We can probably say that the road to common sense, at least in ideological and theoretical terms, has been opened. It is clear, however, that a restructuring on such a scale cannot be accomplished, however much we might wish it, in one fell swoop. For too long our economy has been dominated by the order instead of the ruble. So long that we seem to have already forgotten: there was indeed a time when our economy was dominated by the rouble, not the order, i.e. common sense, and not the office-based, speculative arbitrariness.
I am aware of the recriminations I am asking for, but the matter is too serious and vital to mince words and resort to reticences. Without recognition of the fact that the renunciation of the Leninist new economic policy has severely hampered the socialist construction of the USSR, we shall, as in 1953 and 1965, be condemned once again to half measures, with half measures being, as we know, often worse than inactivity. The NEP with its economic incentives and levers was replaced by an administrative management system. This system, by its very nature, could not take care of increasing the quality of production and the efficiency of production, so that the greatest results could be achieved at the lowest cost. It did not reach the required quantity - the total - in accordance with the objective laws of economics, but in defiance of them. And if in spite of - it means at the cost of unthinkably high expenditure of material and, most importantly, human resources.
We are still dominated by the idea that the system of economic relations formed in the country, including the structure of property, is the embodiment of Marxism-Leninism in practice, an embodiment which fully corresponds to the nature of socialism as a social order. It can, they say, be improved and tweaked, but in its fundamental foundations it is inviolable. However, if the scientific conclusions are guided by facts, not by nostalgia for the recent times, but by an honest desire for revolutionary changes, then the question about the historical roots of our economic model will be far from being resolved.
It is known that, at the time of the revolution’s victory in Russia, none of its acknowledged theorists or most authoritative practitioners had (or could have) a more or less complete idea of the contours of the future economic system of socialism. Marx and Engels had developed the theoretical foundations for the revolution, justifying its objective inevitability, but they had only a hunch as to what the post-victory economy would be like. They were mainly concerned with the most general socio-economic aims of socialism. They left us with virtually nothing that could be regarded as practical advice as to the methods of achieving these aims. Lenin’s pre-revolutionary writings were also mainly concerned with pure politics (how to destroy an obsolete social order), but by no means with what would have to be done concretely to establish a full-blooded economic life after the revolution.
The revolution, therefore, caught us unarmed with a well thought out, finished economic theory of socialism. There is, however, reason to believe that in the first months after October, when the situation still allowed, Lenin paid the most serious attention to this problem. It was then that he formulated his famous idea that socialism was Soviet power plus the Prussian order of railways, plus the American technique and organization of trusts, plus the American popular education, etc. It is necessary, he wrote then, to learn socialism from the organisers of the trusts. He also attached great importance to monetary policy and a healthy, balanced financial system. Obviously, at the beginning of the revolution he assumed that capitalism had already created all the necessary economic forms for socialism - they only needed to be filled with new socialist content.
However, the events which followed brought to life the policy of “war communism”, with its purely administrative, volitional methods of organising the economy. At a certain point Lenin, absorbed in this life-and-death struggle, apparently began to believe that the methods of order were the basic methods of socialist economy. Here, undoubtedly, came the conviction that Russia would not be alone for long, that it was not we but the rich industrial West that would pave the way to the new economic system, that a revolution in the West would help to solve many of our most acute economic problems. The Kronstadt Rebellion, “Antonovshchina” and the decline of the revolutionary wave in Europe made us reconsider these views and calculations. The NEP meant a sharp break with the recent past. It was a kind of revolution in economic thinking. For the first time the question was posed in full force: what should the socialist economy be, not in emergency conditions, but under normal, human conditions?
Many still think that the New Economic Policy was only a manoeuvre, only a temporary retreat. Of course it was a setback: the Soviets allowed some room for private enterprise in the towns and cities. But the basic, enduring significance of the New Economic Policy lay elsewhere. For the first time the fundamentals of a scientific, realistic approach to the tasks of socialist economic construction were formulated. From reckless, emotional (also forced by extraordinary circumstances) pressure moved to the daily, balanced, constructive work - to create an economic mechanism which would not suppress, but mobilize all the creative forces and energy of the working population. In essence, the NEP meant the transition from “administrative socialism” to “self-supporting socialism”. Three practical ideas were central to Lenin’s plan to bring the country’s economy into a normal, healthy environment. First, the full development of commodity-money, market relations in the national economy, self-sufficiency and self-financing, the predominant use of monetary levers of control in economic processes: prices, the full-value gold ruble, profit, taxes, bank credit and interest. In other words, full, end-to-end self-accounting in all economic relations from top to bottom. Second, the creation of self-accounting trusts and their voluntary associations - syndicates as the main working links of the organisational structure of the economy. Thirdly, the development of cooperative property and cooperative relations not only in the village, but also in the city - in industry, construction, trade, and what is now called the sphere of consumer services.
In the conditions of the NEP, Lenin wrote, the trusts (associations of enterprises) must work “on the principles of the greatest financial and economic independence, independence from the local Siberian, Kirghiz and other authorities, and direct subordination to the Supreme Economic Council”.
The fiercest struggle that Lenin and those who were then implementing this new course waged against super-centralization, bureaucracy and the monopoly of any agencies is well known. They saw in the economic and organizational independence of the trusts and syndicates the main guarantee against the monopoly and the instrument of self-tuning of the production to the constantly changing market demands.
Even today, the dismantling of Leninist policy of “self-sufficient socialism” is often associated with the rise of fascism and the danger of a new war, which became clearly visible in the 30s. This is incorrect: the dismantling began in 1927-1928. The arbitrarily low purchase prices of grain forced the village to reduce not only the sale of bread to the state, but also its production. It was then decided to ensure state procurement using coercive methods. It was at this point that the return to an administrative economy, to the methods of “war communism”, began. These were most evident in collectivisation. But equally arbitrary relations were very quickly extended to the city. Industry began to receive targets from the ceiling and it was no accident that major targets were not met during any of the pre-war five-year plans.
At the cost of extreme effort, the country survived the 1930s, the most terrible war in history, and the difficulties of the postwar reconstruction of the national economy. One can understand those who think it is useless to compare this price with the results today. But one thing is certain: it could only be somehow explained, though not justified, by extraordinary, inhuman circumstances which have not existed since at least the mid-1950s. Meanwhile, the consequences of abandoning the National Economy were not only not eliminated, but accumulated, the ills of the national economy were not cured, but only driven deep into the depths.
The objective requirements of modern scientific and technological progress, the new conditions and new tasks in the economic competition with capitalism revealed even more clearly the historical lifelessness of this voluntaristic, sometimes simply invented in the cabinets system of economic management. From the outset, the whole system has been characterised by an economic romanticism densely mingled with economic illiteracy and an incredible exaggeration of the effectiveness of the so-called administrative, organisational factor. This system is not inherent to socialism, as many still believe; on the contrary, under normal conditions it is contrary to it.
It should be clearly understood that the cause of our difficulties is not only and not even so much the heavy burden of military expenditure and the very costly scale of the country’s global responsibility. Even the remaining material and human resources, if spent wisely, could easily suffice to maintain a balanced, technologically oriented economy and to meet the traditionally modest social needs of our population. However, persistent, long-lasting attempts to override the objective laws of economic life, to suppress the incentives to work which have been developed over centuries and which are in line with human nature have ultimately led to the opposite of what we had hoped for. Today we have an economy that is deficient, unbalanced in virtually every respect and largely unmanageable and, to be perfectly honest, almost unplannable, and which does not accept scientific and technological progress. Industry today rejects up to 80 per cent of new technical solutions and inventions that have been tested. We have one of the lowest productivity among industrialised nations, particularly in agriculture and construction, because the years of stagnation have reduced the mass of the working population to a state of near-total disinterest in full-time, conscientious work.
However, the most intractable results of the “administrative economy” do not even lie in the economic sphere.
A purely administrative view of economic problems, an almost religious “faith in organisation”, an unwillingness and inability to see that nothing good can ever be done in the economy by force, pressure, appeal and coercion. As both our and world experience shows, the main condition for viability and efficiency of complex social systems is self-adjustment, self-regulation and self-development. Attempts to completely subordinate the socio-economic “Brownian motion” with its inevitable, but eventually acceptable costs to some central control point were fruitless from the beginning, and the further it goes, the more obvious it becomes.
Apathy and indifference, theft, disrespect for honest work and at the same time aggressive envy of those who earn a lot, even if they earn honestly, have become massive. Signs of an almost physical degradation of a large part of the people through drunkenness and idleness have appeared. Finally, there is disbelief in the goals and intentions proclaimed, in the fact that a more intelligent organisation of economic and social life is possible. As Academician T.N. Zaslavskaya fairly observed in The Communist (1986, no. 13), “frequent encounters with various forms of social injustice and the futility of individual struggles against its manifestations became one of the main causes of the alienation of some workers from social goals and values”.
It seems unrealistic to expect that all this can be quickly eradicated - it will take years, perhaps even generations. It is much more difficult to build a fully “self-supporting socialism” than it is to eliminate individual cumbersome bureaucratic structures. However, that does not mean that we can sit idly by. There is no way back to “administrative socialism”, given today’s domestic and international realities. But there is also no time for stagnation and half-heartedness.
But it is the indecisiveness in moving towards common sense that worries us most today. Calls cannot change the mindset of many senior managers, who only know the techniques of naked administration and the art of the apparatus. Similarly, no amount of explanatory work will overcome people’s known distrust of words, of the fact that the leaders are seriously committed and will take the planned changes to the end, that after a half-step forward there will be no two steps back again. Only the cause itself can convince. In order to inspire faith in the recovery of the economy, success, tangible, visible signs of improvement are needed already in the near future. First of all, the market has to be saturated - and saturated as soon as possible. It is not easy, but it is possible with the right determination. It is possible, however, only on the path of “self-supporting socialism”, on the path of the development of the market itself.
Consistent self-sufficiency will not require significant capital expenditure. All that is needed is courage, firmness, consistency in unleashing the internal forces of the economy. What prevents this from happening? First of all, ideological overreaction, the fear that we will let the evil spirit of capitalism out of the bottle. Those who understand that the classes that make up any society do not arise, exist and fall out of the historical arena as a result of any managerial decision at all, are quite clear about the groundlessness of these fears. But the risk that along with positive changes there will be new contradictions, difficulties and disadvantages is certainly there. Moreover, certain disadvantages are inevitable - such is the dialectic of the historical process. And it is not possible to defuse everything in advance. It is important not to let these fears paralyse us. “We have to get into a fight, and then we’ll see” - Lenin, as we know, liked to repeat this thought.
When they talk about the probable intensification of natural phenomena, it is necessary to be aware of what our own economic experience really shows. Attempts to establish absolute control over anything and everything lead to such elements, such uncontrollability, in comparison with which any anarchy really seems to be “the mother of order”. Elements of spontaneity will be the inevitable and in fact the minimum price to pay for progress, for the revival of the economy. But this is precisely how the possible new spontaneity will differ from the old, familiar spontaneity that everyone sees and feels, but which many people simply prefer to seem to ignore.
The market needs to be saturated. And the greatest returns can be expected first and foremost from healthy, normal commodity-money relations in the agricultural sector.
By the introduction of prodnalog instead of prodrazverstka the grain production in the Soviet Union rose in just three years (1922-1925) by 33 per cent, livestock production - by 34 per cent, sugar beet - by 480 per cent. The same rapid and significant result was achieved in the 1980s in agriculture in China and to some extent in Vietnam, where the prodnalog was at the heart of economic relations in the countryside.
For a long time the growth rate of agricultural production in our country was less than 1% a year, and in some years the figure had to be accompanied by a minus sign, and this with unthinkably high public investments. Billions are practically vanishing into the sand. Naturally, the question arises: why are we paying such an enormous price for? Is it really for the fear of the market? Or is it for the very thin layer of managerial staff in the agricultural sector to have something to do and seemingly justify its existence?
The decision on a new economic mechanism in agriculture is half-hearted and therefore ineffective. Having said “a”, one must also say “b”.
First, any orders, any administrative interference from outside into the production life of collective and state farms should be prohibited by a firm legislative order. Secondly, purchase prices for all types of agricultural products must be equalised in order to eliminate the unprofitability of many sectors of agriculture, such as livestock and potato farming. This can be achieved by reducing the state’s more than fifty-billion-dollar food subsidies. Thirdly, a simple formula for the relationship between the state and the agricultural production collectives must be decided upon: a fixed rate of progressive income tax and (without the utmost urgency) no in-kind assignments. Collective and state farms must be free to sell their products to state and cooperative organisations and consumers. Fourthly, it is necessary to fully equate the homestead farm with the collective farm in terms of economic and social rights.
If the purchase prices are balanced, no one will curtail either field crops or livestock farming. There can only be a reduction in unproductive area and unproductive livestock and, as a result, an increase in the overall productivity of the farm. This is the only way to create conditions for contract farming, and whether it will be collective, brigade or family farming should depend on local conditions.
What real self-accounting in the village can we talk about now, when collective and state farms are still forced to deliver to the state products at one, low price, and all the way down to forage and even seed grain, and then buy a significant part of the same products from the same state at another, double or triple price? Is it not time to finally stop the transfer of income from the countryside through arbitrary prices for farm machinery, repairs, chemicals and the like? Of course, much of this is then compensated to them through irrevocable funding and regularly written off loans. Moreover, it is possible that everything is compensated. But how can we establish self-sufficiency, that is, equivalent exchange, in such abnormal, unhealthy conditions? Instead of calm, sober comparison of incomes and expenditures, profits and losses, today, the manager’s success is defined by wit, dexterity, all sorts of “economic fortune-telling”. To take with one hand and return with the other - why? What economic laws does this mean? It is no longer necessary to take through prices, but to give. In all industrialised countries of the world, agriculture has long enjoyed special and very significant material support from the state, including through prices, and this largely determines its success.
Russia’s Non-Black Soil region requires special measures. The degradation of the village has gone so far that no measures within the framework of the existing system of agrarian relations are likely to help. We can probably only hope for a slow and varied therapy, an individual approach to each district, each farm. It cannot be ruled out that, for many farms which have been lying dormant for a long time, family contracting and leasing out (especially in the suburbs) vacant or currently barren land to anyone who wants it - and there will certainly be some, whether they are rural or urban - will be the answer.
The current moment for our agriculture is truly a watershed. If today (once again) people’s hope for a revival of common sense fails to materialise, apathy may become irreversible.
At one time the slogan of the abolition of the kulaks as a class was proclaimed. But the peasant class was essentially abolished. Now the last generation of this class, the generation of landlords who love the land and peasant labour, still exists, albeit in small numbers. If this generation does not pass the baton to the next, irreparable things can happen. There have been a number of recent decisions designed to fix people on the land, to revive the owner’s spirit, collective entrepreneurship, and to encourage individual farms. But now it sometimes happens again that the right hand does not seem to know what the left hand is doing. By crossing this line the other is trying to force its way in. Under the banner of the struggle for social justice, against unearned income, the most rabid leftism and thuggishness are being advocated. Is it possible, for example, to justify the campaign against productive homestead farms which has flared up again in the press? How can we understand the signs of a new pogrom in the summer of 1986 on homestead greenhouses, orchards and fattening farms? Was it not immediately apparent that this campaign was hostile to the country and anti-state? After all, is it conceivable to buy so much bread and meat abroad and at the same time, fearing that a few would earn extra, stifle the economic initiative of hundreds of thousands and millions of its citizens? How can we understand the depressingly primitive struggle against the middlemen or the bans on exporting local produce to other regions? We must finally decide once and for all what is more important for us: to have a sufficiency of our own products or to indulge the advocates of equality in poverty and all kinds of irresponsible screamers forever.
We need to call things by their proper names: stupidity by stupidity, incompetence by incompetence, acting Stalinism by acting Stalinism. Life demands that we do whatever it takes to ensure our food market in the next few years. Otherwise, all calculations on activization of human factor will hang in the air, people will not respond to them. Let us lose our ideological virginity, which exists, by the way, only in newspaper fable-headlines. There are more thieves and profiteers in this virginity than ever before. And we are talking about people who make money without creating anything, without wanting or being able to create anything. So let those who are willing and able to provide society with real products and services and real values prosper. And when we have solved the problem of securing our daily bread - and not before - we can also think about ensuring that the large incomes of the most industrious and enterprising owners do not lead to the formation of threatening capitals. There are simple, effective means to do this - taxes and proper powers of a financial inspector (reasonable, of course, so as not to kill the hen, which is just beginning to lay golden eggs for the benefit of everyone).
Tax levers can and should provide reasonable control over another means of saturating the consumer market, a means which also does not require large capital investments. We are talking about individual, family and co-operative production in services and small-scale industry. It is probably only today that we can fully appreciate the significance of Lenin’s idea that a system of civilized co-operatives is all we need for the victory of socialism.
The expansion of the individual co-operative sector in the cities will contribute not only to the physical saturation of the market. Our light industry, trade and service sectors are today in unacceptably favourable conditions which encourage hibernation. No one is competing with them. Imports of consumer goods are still too low to make them budge. The emergence of a competitor such as the individual cooperative sector could quickly change the situation on the market. State-owned industrial, commercial and household enterprises would either have to improve their work sharply or cede a considerable part of their revenues to other producers, with all the consequences that this would entail: lower wages and social costs, staff reductions up to and including the dissolution of the defective workforce and the closure of the enterprise.
The present system of material incentives to honest work is not only weak because it is out of whack. Wages and bonuses do not work either because the money earned does not buy a person anything. To revive the situation in the consumer sector of the national economy, to saturate the market, to give the mass buyer the possibility of choice - means to make wages finally start working to the full, to make our people truly wish to earn well by honest, hard work.
The material conditions for the development of the individual cooperative sector in the country are undoubtedly there. There are enough empty premises in the cities. There are billions of roubles worth of surplus or obsolete stock in the stock of state enterprises. - of surplus or obsolete equipment, raw materials stashed away just in case. By letting them be sold free we can, as they say, playfully satisfy the basic needs of small private and cooperative businesses. It goes without saying that with this turn of events theft and corruption can only be avoided under two conditions. The first is free wholesale trade in means of production, raw materials and supplies. The second - in legal and economic respects the individual and cooperative sector must be fully (both as buyer and seller) equal to the state enterprises and organizations.
Already today (without waiting for some surplus or non-funded reserve of basic industrial products to be created) we can decide on a broad wholesale trade in means of production. It is not even necessary to abolish the system of funded (“card”) supplies. The country already has enormous stocks of material assets. They are created spontaneously, as a kind of self-insurance, self-protection of enterprises against the vagaries and vices of the “card” supply. This is uninstalled and often unnecessary to the enterprises-owners equipment, standard and excessive stocks of raw materials, materials, finished products, components, etc. All in all, it is worth no less than 450 billion rubles, of which 170 billion are above-standard reserves. To enable enterprises and organizations to sell, buy, lend these values on the basis of their real needs is to create a powerful, lively commodity market, put the enormous dead commodity resources into business, turn the country’s economic initiative into profit, and unleash in practice, not in words. Naturally, such a market will only survive if the revenues from the stock clearance (after deduction of taxes) remain entirely at the disposal of the enterprise. Under no circumstances should the ministries and departments be allowed anywhere near them. The same applies to all types of super-scheduled production.
It seems that only in this way - the expansion of the wholesale trade, the free sale of stocks and super-scheduled production - can one of the most acute contradictions between the present life of enterprises and the declared aim of putting them on full cost-accounting basis be overcome. No one needs the money, the extra income, today. Take a factory, a trade association, a collective farm - what can they really buy with their roubles? If there is any chance to realize the revenues not through Moscow, not through bows and humiliation in the highest instances, but on the market, freely, easily, calmly, then the money will again begin to turn into something weighty, significant, keenly desired. Today, the incentive funds and the production development fund, even if they are not taken away by the ministry in the end, are only air, money in the bank, not real values that could be used to modernise the enterprise or to meet its various social needs.
The futile attempts to plan from the centre the entire range of our industrial production, which already has over 25 million items, have been replaced by a method such as the contract between the supplier and the consumer. The free trade in surplus and super-planned products will at once give the contract a vital meaning. This would be the first but most important step in the democratisation of planning, in the development of the market, which alone can awaken production teams.
The decisive widespread introduction of the well-known “Shchekin formula” can also have a very rapid effect. Judging from past experience, blighted by the ministries, it can reduce the number of employees by 25-30 per cent in just a year and a half or two years, without huge investments. This is especially important today, when the production capacity of many industries is underutilized by 20-40%, when most machines are used only in one shift and when the construction sites of the country are desperately short of workers. Fears that the widespread use of the “Shchekin formula” would cause unemployment seem to be greatly exaggerated.
For one thing, natural unemployment among job-seekers and those who change jobs still exists today: it’s scarcely under 2% of the labour force at any given moment, and if the totally unregistered tramps are included, the figure could be as high as 3%. So it is one thing to discuss the problem by pretending that there is no unemployment, and quite another to do it calmly, knowing that there is some unemployment and that it cannot be avoided.
Secondly, there are millions of unemployed and new jobs being created all the time. With proper pivoting, temporary unemployment can be minimised with their help. Naturally this would require considerable additional effort on the part of the state to re-qualify the released workforce, transfer them to other industries and areas, stimulate organised migration and so on.
Thirdly, let’s not close our eyes to the economic damage from our parasitic confidence in job security either. It seems clear to everyone today that we owe much of our rambunctiousness, drunkenness and marriages to excessive full-time employment. We should fearlessly and businesslike discuss what a relatively small reserve army of labour can give us, not left entirely to the mercy of the state, of course. It is a conversation about replacing administrative coercion with purely economic coercion. The real danger of losing one’s job, receiving a temporary benefit, or being obliged to work wherever they are sent is a very good cure for laziness, drunkenness, and irresponsibility. Many experts believe it would be cheaper to pay such temporarily unemployed a sufficient benefit for a few months than to keep the mass of unafraid idlers in production, which can break (and break) any cost accounting, any attempts to raise the quality and efficiency of public work.
“Socialism”, emphasizes the well-known economist Shatalin, “has yet to create a mechanism of not just full employment (this is the passed phase of extensive development), but socially and economically efficient, rational full employment - the principles of socialism are not those of charity, which automatically guarantee a job to everyone regardless of their ability to work on it” (“The Communist”, 1986, #14).
Again: for the “Shchekin formula” to produce tangible results, the bulk of the income must remain at the collective’s disposal. You can cheat people once, you can, though it is more difficult, and you can cheat them twice, but there will be no third. If companies have nothing to buy with their hard-earned money so far, they’d better let it hang out in their bank accounts. At the same time each and every one of the employees would know for sure that the money belonged to them and wasted on their own production and social needs. And it is necessary to pay for these funds not as symbolic but as real interest in roubles, and if it is foreign currency, then in foreign currency as well.
Unfortunately, we generally underestimate the paramount importance of such concepts as economic decency and economic trust. Meanwhile, without economic decency of the governing institutions and economic trust in them by the grassroots, the economic self-sufficiency is simply impossible. We are now experiencing a moment of great responsibility. If what Gorbachev said in Togliatti (they spoke about the impertinence with which the ministries manage the incentive funds of enterprises, their foreign currency revenues), if these manners are again fixed, the economic reform for all the big words about it will be ruined at the root.
Today, the firm, unbreakable word of the state in such matters is more expensive than money, more expensive than anything else. This is the biggest policy, on which the fate of the country depends. And even in difficult, very difficult times, everything must be done to ensure that the State’s decisions, the State’s promises are not violated: it will cost much more in the long run than endurance in times of difficulty. Apparently, unfortunately, this is what happened in the summer of 1986: “Prodrazverstka”, arranged instead of the promised “Prodnalog”, caused probably more damage to agriculture than any drought. Nowhere is one more concerned about the fate of perestroika than in the countryside. The credibility of the district and provincial committees, which were forced to carry out Prodrazverstka, has suffered a blow from which many of them will now find it very difficult to recover.
In thinking about remedies for our economy one cannot but turn to foreign economic relations. It is not only about such obvious, but, unfortunately, long-term or expensive tasks as, for example, radical restructuring of our export structure in favour of high technology products or reduction of the average period of capital construction from eleven-twelve-twelve to prevailing in the world and a half to two years (our “slow construction” prevents us from widely attracting foreign investment credit). It is mainly a question of measures which can give something real in the near future, as early as in the current five-year period.
Isn’t it time to think about how to deal with that dwindling, but still significant debt to us from the CMEA countries, which so far gives us nothing and very little to them? Of course the debt is largely a political problem. However, it is probably possible to make it profitable for our debtors to pay us gradually. This requires opening the Soviet domestic market to any of their products. If you seek to make good money in the U.S.S.R. - leave some of that money to us as repayment of debt, The prospect of stable work for the virtually limitless market of the Soviet Union is a benefit that hardly anybody would want to neglect. Especially when one considers the growing difficulties of international competition. And we benefit from it not only directly, but also indirectly as a side benefit. The presence of a mass of competing foreign products on our market would force the domestic industry to keep itself in good shape, constantly fighting for its consumer. Our partners have repeatedly raised this issue in the past. They could not only sell their products in our country wherever they want, but also buy ours. And not necessarily through Vneshtorg. Direct contacts with sectoral agencies, local authorities and enterprises could gradually solve this problem. They will always find something to buy from us in conditions of free internal trade in means of production. All their conceivable needs for our goods, according to experts’ estimates, do not exceed 1% of Soviet industrial production and can be satisfied (with the proper interest of our enterprises!) at the expense of hidden reserves and unplanned production.
Naturally, it is impossible to open the Soviet market and create a “common market” of the CMEA countries without changing the current exchange rate of the rouble and introducing free reversibility of it within the CMEA. We would have to gradually abandon the innumerable sectoral currency coefficients now in force, move to a unified ruble exchange rate and allow the free circulation of national currencies within CMEA. It is long overdue, absolutely unavoidable, and there is no sense in postponing it, all the more so because it is not we who must do it today, but we.
A certain revision of our entire policy of economic assistance to socialist and developing countries is also imminent. We are after all also talking about billions. Too many facilities built with our participation do not really benefit us or our partners. Examples in particular are the construction of gigantic hydroelectric power stations (huge sums of money are being spent, while the return is not expected before the next millennium), ruinous steelworks and the general focus on heavy industry where there is the greatest need for small and medium enterprises for the production of mass-market products.
We have ventured to establish enterprises with foreign participation on our territory. Maybe we should also think about establishing “free economic zones”. This is not easy both politically and economically. It is difficult to attract serious foreign capital. It is even more difficult to get mixed companies to coexist easily with our order, so that foreigners would be willing to invest in our industry the profits they have made here (reinvestment). If we could succeed in that, we could not only speed up the saturation of the domestic market, but also noticeably strengthen the export position of the country. Interesting offers are already being made to us. What is worrying, however, is that the terms of the new law, in particular the 45% foreign partner income tax, are considered unattractive abroad. It is thought that customary, unjustified economic stereotypes have played a role here and will inevitably have to be changed.
While it is important to solve the problem of the initial saturation of our domestic market, we must be soberly aware that this is only the most acute, the most urgent part of the whole problem of self-sufficiency, of “self-supporting socialism”.
Consistent self-sufficiency cannot simply be declared or imposed by decree. It requires a certain economic mechanism, certain conditions, many of which have not yet been created.
It is not serious to think that without the control of the Gosplan, an aircraft plant would suddenly switch to the production of prams. And that is exactly what the Gosplan is doing today: they are very vigilant in making sure that cobblers shove boots and pie makers bake pies. For all our super-centralisation, the centre’s strategic role is essentially insignificant, for the simple reason that the centre is not concerned with strategy. It happens that the advocates of consistent, decisive self-financing are still accused of being allegedly for weakening the planned principle, while in fact they are whole-heartedly for strengthening the genuinely planned, genuinely centralized principle, for the State Planning Committee to attend to its own strategic affairs only: it planned in real terms not more than 250-300 types of strategic products (perhaps, much less), distributed the public capital investment fund among branches and republics and, on this basis, supported the most important national productions.
The new economic policy of the 1980s cannot leave our industrial ministries alone. They are so ugly in number, their apparatuses so bloated, that they are often forced to look for things to do and thereby often only obstruct enterprises. The ministries themselves have long since become a serious and, without exaggeration, political problem, which demands a radical solution as soon as possible.
Lenin once wrote: “All of us are drowned in the lousy bureaucratic swamp of ‘departments’. Great authority, intelligence and a hand are needed to fight it on a daily basis. The departments are shit; the decrees are shit. Looking for people, checking the work - that’s all there is to it”. It is possible that we will be forced to return to the Leninist scheme of managing the national economy: Gosplan (or VSNKh) - syndicates - trusts (or associations, in today’s accepted terminology). Syndicates, for example, could fulfil the role of today’s ministries, but with one valuable, fundamental difference: the syndicate is a voluntary association of independent production collectives. It is accountable to them and exists on their voluntary contributions or contributions. The syndicate can and must be not an administrative superstructure over production, not a ministry which, in essence, bears no economic responsibility to those whom it commands, but an organization which, with the full consent of its collective members, undertakes the tasks that are beyond the means of each of them separately: searching for orders, organizing sales, forming a common fund to support weaker industries, encouraging the scientific and technological progress of the industry.
But the most difficult problem in organising a fully self-supporting economy today seems to be the alignment of the main price proportions in the national economy. The voluntaristic price decisions accumulated since the end of the 20s are a truly terrible legacy. Without doing away with it, we will never have objective cost benchmarks for an unquestionable, independent of human arbitrariness, comparison of costs and results of production. Consequently, we will never have true cost-accounting. In today’s theoretical discussions various projects for the transformation of the price system are being put forward. Most of these projects, however, contain one common and, judging from our experience, an extremely dangerous defect: prices are expected to be constructed again in the cabinets, again speculatively, in isolation from life, from real processes both in our economy and in the world economy.
Not only in the capitalist countries, but also in many socialist countries, the price proportions are about the same now. They have developed objectively under the influence of general trends in the development of the productive forces. Of course, national differences in the levels and proportions of prices exist, but the basic ratios tend to remain. If our economy is to recover quickly and reliably, we must gradually equalise first the wholesale and then the retail price proportions to those prevailing in the world. We have sharply underpriced fuel, mineral and agricultural raw materials and overpriced machinery products. The prices of foodstuffs and utilities are unjustifiably low and the prices of all industrial consumer goods are unjustifiably high. Soviet prices should match the world prices as closely as possible. Who will be in charge of price formation (the State Committee of Prices, an industrial ministry or an enterprise-manufacturer itself) is the next question. The first step should be to make the first step and equalize the proportions.
Price levelling is a delicate matter, particularly because the prices of foodstuffs and public utilities will have to rise markedly. But with persistent, methodical and, most importantly, honest and frank preparatory work, it must be done.
Now the Soviet consumer receives more than 50 billion roubles from the treasury in the form of subsidies to unprofitable prices of basic foodstuffs and services. And why shouldn’t he receive the same money in the form of a supplement to his basic salary, and perhaps to his deposit in the savings bank? After all, why underpay for meat and at the same time overpay for cloth and shoes, instead of buying both at real prices? Of course, in order for people to get used to it they need to break their stereotypes, and breaking them will be difficult. Only an honest, understandable desire to improve our economy can convince the average consumer to change his habits. We have to start talking to people in substance, as was done in Hungary, where extensive explanatory training in 1976 helped to introduce new prices painlessly. And we must not forget the sad experience of Poland, where in the same year 1976 they tried to change prices overnight, and therefore had to retreat.
The economic situation of enterprises and associations must depend directly on profits, and until we level out wholesale prices and get rid of planned subsidies, the profitability criterion cannot work. Profit will start to lie one way or the other, it will either exaggerate the real achievements of the collective or understate them. Until when, in assessing the economic effect of enterprises, will we use a cumbersome set of different, often mutually exclusive indicators: gross output in one form or another, marketable products, fulfilment of contractual obligations, reduction of production costs, reduction of material costs, implementation of the plan in kind, on productivity, on new equipment, etc.? When will we stop inventing artificial indicators in offices, such as conditionally net production? It is necessary to look at things realistically. For centuries, mankind has found no other criterion of effective work other than profit. Only it combines the quantitative and qualitative sides of economic activity and makes it possible to compare the costs and results of production objectively and unambiguously.
According to Lenin’s thought, profit is the basic principle of self-financing. Half a century of experience in managing the economy through administrative and natural levers has only made this idea more relevant. In the self-accounting economy, profit is the basis of self-adjustment, self-development of the dense network of ties between enterprises. Today the number of such links in the country is measured in many tens of billions. There is no and, apparently, never will be such a computer, which could collect all these connections in one node and subordinate to a single control panel. A simple, publicly understandable system of relations between the state, the enterprise and the individual employee will only emerge when we start to use the criterion of profitability.
The extremely suspicious attitude to profit is a kind of historical misunderstanding, a payment for the economic illiteracy of people who thought that since socialism meant no profits and no losses. In reality, the criterion of profitability under socialism is not questionable; it only tells you whether you are working well or poorly.
After deduction of taxes, the enterprise must dispose of its profits in full. But, on the other hand, if there is no profit, this too must somehow fall on the collective’s shoulders. One enterprise may, for example, simply close down as a result of poor performance and financial losses. The state insurance system or targeted subsidies can help another. However, the state will not carry out “rescue operations” indiscriminately, but only selectively, according to its political and economic interests.
Another prejudice is the aversion to the shareholder form. Why cannot our citizens’ and businesses’ surplus funds be used to build new businesses and expand old ones? No reasonable explanation can be given for this position. This is sheer blindness or outright unwillingness to raise what is still lying dormant, but could serve the whole country very well. Our famous economists P. Bunin and V. Moskalenko put the question correctly: the current shortage of investment funds “can be made up, in particular, by selling by the corresponding enterprises their bonds to the enterprises having free resources”. One could only add: also to private individuals. Or is it better for the state if these funds lie in a stocking?
Healthy finances have always been and remain the foundation of any healthy economy. And vice versa - in emergency situations (war, collapse, social upheaval) finances have always been the sphere where unhealthy, crisis-related phenomena were manifested earliest and with the greatest intensity. I am convinced that our economy today needs financial reform of no less depth and scope than in the early 20s. Money, prices, revenues, taxes, credit, the budget, the possibility of public borrowing and, consequently, public debt - all these are issues that we have not even begun to discuss seriously yet. Meanwhile, the defects of the current financial system are obvious: the scale of deferred demand of the population, holes in the budget in various items of income, inflationary methods of funding, such as the inclusion in the budget of revenues from products not yet sold, which in addition may not find a sale at all, turning credit into irrecoverable funding (bad debts only in agriculture is already approaching 100 billion rubles), etc. Sooner or later all these problems will have to be solved - there is no escaping them.
Foreign economic relations will become increasingly important in the future. It is not enough to transfer part of the foreign trade activities to the industrial ministries alone in order to sharply increase the competitiveness of our machine and other exports and, at the same time, make our imports more rational. We need a direct link between external and internal prices. Without it, as well as without direct exchange of the Soviet rouble for foreign currency in our banks (selling, buying, lending), we will hardly be able to awaken a real interest in foreign trade activities among our enterprises. We need a real incentive to produce competitive goods. In addition, without the connection to world prices and direct exchange of the rouble it is unrealistic to seriously count on new forms of cooperation with our foreign partners in the CMEA countries and in the capitalist world, on the success of cooperation and joint ventures. By aligning wholesale prices within the country, we must simultaneously establish a real and unified ruble exchange rate and gradually make our ruble as reversible as the dollar or the pound sterling. As long as the cabinets pretend that such a problem does not exist there will be no transition to a universal and all-round cost accounting.
The fate of the so-called convertible rouble must now be decided. This stillborn child has long since been transformed into a mere instrument of counting. It has no other money functions (I mean Marx’s definition). How is this pipe dream better than the real, live ruble, mark, krone, and lev? Now that its author is dead, I am afraid that no one will be able to answer this question more or less definitively.
Finally, there is the issue of quality. How important the quality of our goods is now is clear to everyone. The decision has been taken to introduce state acceptance of products in the most important sectors of industry. Undoubtedly, this is an important step forward, and we have every right to expect positive results from it. However, if the state authorities and economic departments decide that state acceptance is the main, radical method finally found to drastically improve product quality, it will be a serious mistake. It is a pity that the Chairman of Gosstandart has already rushed to publicly declare that “with the organisation of state acceptance, the Archimedean lever of perestroika, designed to revolutionise industry, has in fact been set in motion”. State-acceptance may have an important, but only a limited effect. Its limitation is inevitable because the output control has only a minor effect on the production process itself. According to estimates of American experts, for example, if all quality assurance measures are taken as 100%, 75% of them will be spent on the search for design solutions, design, development of prototypes, fine-tuning of technology, 20% - on control of production processes and only 5% - on final acceptance of the product. In Japan, this figure is even lower - just 1%.
Good quality is not so much a worker problem as it is a production and management problem, which is the responsibility of top management. Americans believe that only 15-20% of mistakes are the fault of direct performers, the rest are related to decisions and actions of the whole management pyramid standing over the production process. In other words, the economic mechanism.
It should not be overlooked that state acceptance removes the most interested party from quality assessment - the consumer, regardless of whether it is the company for which the product is intended or the person in the shop. By getting the stamp of acceptance on their products, the manufacturer can sometimes exert even more pressure on both of them. In essence, the fundamental flaw of the present economic system - the manufacturer’s diktat - remains intact.
So far, according to the most “patriotic” estimates only 17-18 per cent of the output of our manufacturing industry meets the world standards and, according to the most cautious and pessimistic ones, 7-8 per cent. The target for this five-year plan is to reach 80-90%. The task has been set, but will we be able to achieve it? The roots of this problem are too deep, and for too long it has been an afterthought.
Many theorists and practitioners now agree that the guaranteed market, the distribution of products “based on ration cards”, the rigid and essentially coercive binding of consumers to suppliers, i.e. the producer monopoly, are the main reason why the products of the majority of our industries are of little use. In the meantime, this main disease - producer monopoly - is not addressed by state acceptance. It appears that once again we most of all rely on such factors as firmness, party conscience, fear of the authorities, personal honesty of the individual state acceptor, who, however, may very soon be “tied” by life to all his subordinates.
Yes, state-acceptance is good as a first, fire-fighting measure, as a palliative, but not as an Archimedean lever. Only the gradual weakening and then the complete elimination of the producer monopoly in our economy can produce something fundamentally new. The consumer must have both the right and the opportunity to take what he is offered or not to take it. This means, above all, that he must have a real choice. The producer, on the other hand, is in real danger of going bankrupt if he cannot sell his product. This is the only way to undermine the “mutual amnesty” regime prevailing today, when the consumer forgives defects to the supplier, knowing that the consumer’s trash will be sold somewhere.
We must finally stop kidding ourselves, stop believing armchair ignoramuses and quietly admit that the problem of “consumer choice”, the problem of competition, has no social class implication whatsoever. There is no ideology involved. It is a purely economic, even techno-economic problem. Choice, competition is an objective condition without which no economic system can be viable, or at least sufficiently effective. Universal scarcity, producer diktat, is not an economic environment in which the producers themselves (rather than under a stick) will seek new technical solutions. Any monopoly inevitably leads to stagnation, and absolute monopoly leads to absolute stagnation.
Here we are just making our first steps, just getting started. Everything is new for us, unfamiliar, it does not fit with the existing perceptions. Even in theory, not to mention practice, we cannot yet accept the main feature, the main objective condition of a deficit-free economy - a certain inevitable level of national economic losses, waste products, which have not found a sale as an obligatory payment for the possibility of choice for the consumer. In a desk, speculative pursuit of “one hundred percent rationality”, one hundred percent use of our resources and products, we end up losing incomparably more and at the same time preventing ourselves from ending defects and rising to world quality standards.
Either we manage to create a permanent surplus of all the basic means of production, raw materials and consumer goods, a surplus that would become a material basis, a pressure, a lever, with which the consumer would press on the manufacturer, or we will never produce anything good. Otherwise the problem of quality is unsolvable in principle - leave it to everyone who has them. Without this surplus it is not possible to go from the modern “card” supply to the wholesale trade in inputs and raw materials. This surplus can and must be created from both sides - from above and below, by planned administrative methods, and by the market, by the expansion of commodity-money relations in the national economy.
With a clear understanding of the problem and proper determination, the Gosplan may well ensure a constant 20-30% increase in the output of products planned in kind over their funds flowing into the distribution system per year (or have a corresponding reserve of production capacity). Let these 20-30% be sold by the enterprises themselves on the market, through wholesale trade. Linking material incentives to enterprises with trade revenue could be the first real step towards undermining the monopoly and giving consumers at least some choice.
Let it cause, at first, a certain slowdown in the rate of growth on the rampart. Nothing in life is given for free, and for a way out of the stifling environment of a general deficit, too, of course, something will have to be paid. And what in general in such a slowdown is frightening if it is necessary to shake up the producers, to get rid of overstocking, of out-of-stocks products, to finally make the producer understand that high quality of his products is not a whim, not someone’s caprice, but an inevitable condition of his own existence?
Apparently, the direct link between producer and consumer will become the most important method for current and medium-term planning in the bulk of our industry. The enterprise should have the real possibility, at its own free will (even, if you like, on a whim), to change supplier at any time, with or without penalty, depending on the particular circumstances of this breakdown. Contracts should be renewed every year. Similar rights should be given to trade in its relations with producers of consumer goods.
Direct contractual relations and the wholesale of inputs are two inseparable sides of the same process. If an enterprise sells its planned and over-planned rank-and-file and improved products through the market, this will cause producers to be so interested in the final results that none of those who specialise in “consciousness-raising” can even dream of today. Market-based, self-accounting incentives must be extended to all stages of the process “research - development - investment - production - sales - after-sales service”. Only the market, not mere administrative innovation, can subject this entire chain to consumer demands.
The sooner we recognise that there is little that can be gained by force, by shouting, by threats and that quality is the outcome of the whole system of economic relations, the sooner we will get down to business. In order to transform the Soviet market from a “seller’s market” into a “buyer’s market” we must first of all expand and strengthen this market. For this we have enormous possibilities. We are talking about the same thing: about the free sale of unnecessary equipment and stocks of enterprises, about direct access to the market of collective and state farms, about individual and cooperative activity, about freer imports, first of all from the CMEA countries. Of course, all this will take time. But this will be a real, all-embracing market, something in its very essence the opposite of absolute monopoly and diktat of the producer. Incidentally, contrary to popular belief, except in extreme circumstances, the market has never known full monopoly anywhere. Nor will it be in our country.
Of course it is not just a question of the market and whether businesses do or do not want to compete for a place on it. Quality also depends on the social environment. It does not bode well for engineers and designers to be pushed down by the fact that they are paid much less than unskilled workers. Nor can we fail to see that in the decisive link - science - the low pay of the vast majority of workers is causing widespread apathy. Science has now become a kind of “third class” of people with higher education. The disease is understandable, the ways of its treatment are known, but for some reason we do not dare to speak about it in full voice until now.
The quality of our products is, therefore, only partly a technical and administrative problem. First of all it is an economic and social problem. When people are financially interested in scientific and technological progress, the environment of general scarcity will be a thing of the past, and so will quality. If we do not succeed in this task, we will not find a silver bullet that will allow us to achieve something without a deep economic transformation.
Radical economic reform naturally makes corresponding demands on those who implement it. Simplifying, we can probably say that in the former conditions, the economic manager of any rank had to solve primarily two main problems: he was obliged at all costs to give the plan and to provide his team established from above a living wage. And all too often the minimum did not depend on the results of work. That this was so is evidenced by such mass phenomena in our national economy as the desire of enterprises to consume as much raw materials, energy and materials “alien” as possible, disinterest in quality, indifference to the scientific and technological level of production, universal shortages and simultaneously huge stocks of products which were not marketed, thoughtless performance of work which nobody needed and, moreover, harmful (like turning the river), mass copy-ups, eyewashing, “deduction” and so on.
The economic manager did not (and still does not) answer to his collective, let alone to his economic partners. He knew only one simple, crude administrative responsibility to his superiors. Personal relationships meant exceptionally much, almost everything. At the same time the forms of rewarding managers were (and still are) very special. For an executive even today a big bonus is a matter of tenths. His professional success was measured by other things - orders, deputieship, a place on the Presidium, a company car, subsidized housing, a trip abroad or a move to a more honorable office.
Under conditions of full, consistent self-sufficiency, the work of the executive changes dramatically and becomes just as sharply more complicated. He must not only produce, but ensure the sale of it, not only ship products, but ship them on time and to all the established contracts nomenclature, not just perform the planned tasks, but also ensure sufficient profit, not to pry, beggar, wriggle out by all means the funds, and find and buy the best that is on the market, not to extort from his ministry or the bank irrevocable funds for capital investment, Not to wait for new technical solutions to come down from above but to seek them by himself, not to hide from scientific and technological progress but to chase it, not to make sure that his worker or engineer, God forbid, will earn too much but, on the contrary, to encourage them to do that, not to reject under any pretext the social problems of the collective but to solve them in the first place… Finally, we must not shift responsibility to the shoulders of others, to a higher authority, but be responsible for virtually everything. It is obvious that none of these problems can be solved with a bellyful or a throat, or by diplomatic resourcefulness - they require fundamentally different abilities, methods of leadership and the whole style of life.
They do not call for a “wolfhound” or a fist fighter who is tough and, let’s face it, not particularly burdened by moral brakes, but a businesslike, competent, economically literate and enterprising person who is used to the sacred observance of ethical business relations and always keeps his word in everything, who understands people and their concerns, is benevolent, independent, self-confident and, due to this very confidence, is not afraid of any forms of democratic responsibility to his superiors or, what is especially important today, to his own team.
The cultivation of such a figure requires time and a certain climate in the country, but one must begin now, today, otherwise there will be nobody left to build “self-supporting socialism” and work under it. In the years of the first five-year plans and for some time after the war, the economic manager was for the most part a professional administrator, often without any special education, able to do only one thing - lead. Then the central figure in the whole economic hierarchy from the shop manager to the minister became an engineer (with all the advantages and disadvantages of purely engineering thinking), who usually had skills and experience of organizational work, but often did not know and did not understand the economy and economic laws.
It is thought that gradually the main figure in the whole system of economic management should become not an engineer, but an economist, or maybe an economist and a sociologist in one person. Perhaps the engineer (or agronomist) should remain as a direct leader at the grassroots level - in a shop, in a construction unit, in a collective farm brigade or department of a state farm, in a department of a research institute. But an enterprise, an association, a trust, a collective or state farm, a research institute or a department should be headed by an economist, who could be headed by a competent technical specialist, who is thoroughly familiar with the entire technological process.
In leading Western countries today, the main figure in economic management is not an engineer. In the USA, for example, at the turn of the 1980s, only less than 10% of the top management of leading companies and firms were technology experts. The majority of economic managers there have no engineering training, they are graduates of business schools or economists, finance specialists, lawyers. In Japan, purely technical training of business executives is given much more attention than in the USA, but even there the business executive is mainly a businessman, not an engineer.
The best teacher is life itself. If the economic reform is consistent and profound enough, if there is no backsliding, if people finally believe that the process is irreversible, they will start to rebuild themselves not by words but by deeds. The instinct of self-preservation and striving for success is inherent in our people no less than in anybody else. But, like any human being, he must not be deceived. God forbid, if the open and hidden opponents of the reforms will again try to take it sneakily down the notorious path of “the Shchekin experiment”. Who can calculate today not only economic, but also purely moral and social damage, which the corresponding ministries due to their economic dishonesty have inflicted on the country, killing it at the root? And how much time and effort, for instance, do we need before the industrial enterprises, whose honestly earned foreign currency funds have been lying frozen in the Vneshtorgbank for a decade, decide to engage in active foreign economic activities? It is not without reason that now, when it is suggested and imposed on them, they deny it with such obstinacy. And who can now estimate the damage from more than two months of rampant “administrative insanity” all over the country in connection with the adoption of a hasty law on unearned income? Who, exactly, will be responsible for its dumbfounded implementation?
Who will hammer in the heads of our economic cadres from top to bottom that the time of administrative methods of managing economic life is passing, that the economy has its own laws, breaking of which is as impermissible and terrible as the laws of nuclear reactor in Chernobyl, that a modern manager must know these laws and make his business decisions in accordance with them, not in spite of them? For it is not in administrative or technical categories that his activity in the steadily approaching future will be judged, but above all in the categories of profits and losses of the team he heads.
Who will destroy the faith of our economic personnel in the omnipotence of orders, pressure, forceful methods of solving both business and human problems? “Self-accounting socialism” is unthinkable unless the order is replaced by material and moral interests, collegiality, economic rather than administrative coordination of issues and problems both vertically and horizontally. The root defect of our current structure of economic management - complete irresponsibility of the higher levels of the pyramid, the absence of any drive belt “feedback”, hidden from the prying eyes and, as a rule, not connected with the results of enterprises and organizations, forms of incentives that are in contradiction with the ideology of self-financing.
Who will instill in our cadres the understanding that we are not alone in the world, that there are the world criteria of quality and scientific and technical level of production, the world mandatory, immutable requirements to it? Up to now, for the majority of economic managers this is still a chinese alphabet, something that exists somewhere out there, where we are not, and has no relation to their everyday activities both in production and in the market.
Who will wean our economic managers, especially the higher ones, from feudal psychology, caste arrogance, confidence in their unsinkability, their “God-given” right to command, that they are above laws and above criticism? Generations of our economic managers have been accustomed to all dangers but one - the danger coming from below. Even today, interference in their activities by the press, voters or their own staff is not the norm for them, but only an unfortunate emergency occurrence.
All this will be done by those who can and must do it, but only the people, the masses, the grassroots, can do it. How to do it is also well known: glasnost, democratism, true electability from bottom to top, uninhibited public life.
The main opportunities for acceleration of economic and scientific and technical progress of our country are not only or maybe even not so much the priority development of several new and supernovae industries: aerospace industry, nuclear power engineering, electronics and computer manufacturing, flexible manufacturing systems, microprocessors, robotics, laser technology, communications, measuring equipment, new synthetic materials, fine chemical technology, pharmaceuticals, bioengineering.
Even greater opportunities for economic progress lie in the modernization and rational use of what we already have. We produce almost twice as much metal as the USA and we do not need more: we need different metal, of different quality. We do not need more energy: the energy intensity of our national income is almost 1.5 times higher than in most Western countries, and the introduction of advanced energy-saving technology gives the same effect, but it is only 3-4 times cheaper than drilling new oil wells. We do not need new areas for logging: while today we recycle on average only 30% of wood, in the USA, Canada, and Sweden the degree of recycling of raw materials in the timber industry today is over 95%. We do not need more water, we do not need any more river bends: we need to stop the waste and terrible losses of water coming through the existing irrigation systems (according to some estimates, these losses are eventually 75%). We do not need more imports of grain and hence oil exports on this scale: imports of grain actually equal the annual loss of our own harvest. We do not need more tractors, we already produce 6-7 times more than the US; we need to ensure that our existing tractor fleet is operational rather than idle, and that almost every second new tractor is not taken apart for parts. We do not need more machines: we already have almost 2.5 times as many of them as in the USA; we need machines of different quality and they must work not in one shift but at least in two, let alone three. And we do not need more shoes: we already produce more shoes than anyone else in the world, and we have nothing to buy in the shops.
One cannot but agree with Academician A.I. Anchishkin: today more is actually less. We do not need quantitative growth, at least not in most sectors. We need it only in the sectors of “high technology” and, perhaps, in some sectors of the agro-industrial complex. We do not need quantitative but qualitative growth, growth in any sector for the sake of fascinating magic of percentages, but a different quality of growth. This new, technically advanced quality of growth may give a minus in gross output, so what is wrong with that? But quality growth is a guarantee that the metal will be produced not to make the mill heavier, but for new, progressive profiles and that shoes will be produced not to rot in warehouses, but for people to wear them.
Reference to 1921 New Economic Policy which partially replaced strictly administrative control over economy with limited market mechanisms. One of them was replacement of prodrazvyorstka, a policy of forced requisitions of food produce from farmers at specific quotas, with prodnalog, a production tax, whose rate was announced before sowing season and which allowed farmers to sell the remaining produce on the market. NEP represented a significant pragmatic step in Soviet economy. ↩