Soviet and US Economy

Jim heartfield Jim at heartfield.demon.co.uk
Sat Jul 18 01:52:44 PDT 1998

In arguing that the Soviet Economy was less efficient than the American I am not arguing that the American was efficient, only that the Soviet was grotesquely inefficient.

Michael argues that the Soviet economy had no speculative finance sector. Agreed. But it had its own bizarre inefficiences that far outweighed even that weird ritual.

Was the Soviet economy weighed down by its generous welfare provisions? It seems unlikely. After all the US economy dedicates more of its GNP to health care than any other developed economy.

It is something of a myth that the Soviet's stinted on freedom but met their people's material needs. In truth the final denouement of the USSR was precisely in the failure to develop a consumer goods sector.

I suppose like a lot of people on the left, I spent my teenage years fuming at the Western TV reports of endless queues, and the desparate seach for Jeans and other capitalistic consumer goods. The tragedy is that it was not just propaganda: the Soviet economy really did fail to meet the most basic needs of its people.

As Michael says there was indeed a considerable increase in output and industrialisation in the period from forced collectivisation to the 1950s. But it should be borne in mind that this growth was achieved at enormous cost, both in lives and in exploitation.

Forced collectivisation led to the uprooting of a million smallhomesteads. However one looks at the peasantry, whether profiteering Kulaks or saintly martyrs, the truth is that forced collectivisation destroyed Soviet agriculture, leading to famine. Losses of livestock in 1928 alone represented fully 27 percent of all capital stock.

By 1932 famine had killed five million people.

There was growth as a result of the uprooting of the peasantry. Soveit industry grew first by throwing more and more people into the factories. But this process of absolute growth led to falling productivity.

In 1932 industrial output rose by 35 and 45 per cent BUT this rise was acheived through an 89 per cent rise in the number of industrial workers (recruited from the uprooted peasantry) - meaning that output per head had fallen more than 30 per cent. When the reservoir of surplus labour in the countryside dried up in 1933 output fell by by 14 per cent.

The only way to increase production was by cranking up exploitation at work. New labour discipline laws included labour passports, work books, stringent regulations on absenteeism. A 1939 statute defines 20 minutes late as unjustified absence, and in 1940 absenteeism was made a criminal offence.

"Instead of increasing by 110 per cent in five years as foreseen in the first five year plan, output per man in industry declined by perhaps 25 per cent in the last three years of operation. Only a very large decline in real wages may have prevented an increase in production costs in industry"

N Jasny Soviet Industrialisation 1928-52 p 72

This picture of growth by throwing resources - human and material - at heavy industry carried on throughout the next twenty years. By 1950 only 12 per cent of industrial investment was directed towards light industry, consumer goods production and food processing - industrialisation was achieved only by savage exploitation.

BUT, and this is a big but, all of that growth was hollow. There was growth, but that growth was a growth in wasted goods and resources.

As Hillel Ticktin explains in his Origins of the Crisis in the USSR growth in output did not mean that industry was producing useable goods. The only regulator of the economy was the plan. But this plan was a plan in name only. Imposed from the outside by a distant bureaucracy, the plan was experienced by managers as an alien imposition. They fulfilled the targets set in it only formally, without regard to whether the products were useable or not (generally not).

Ticktin gives this example of waste in production:

'the USSR now produces 161 million tons of steel and 617 million tons of oil, not to speak of 744 million tons of coal and 712 thousand cubic meters of gas. These are enormous figures, outdistancing the United States. They are indeed curious in that the United States produces more consumer goods that the USSR. For instance the USSR produces only 1.3 million cars as opposed to the ten million or so made in the United States, even though the latter now produces only half as much steel as the USSR. Again, US oil consumption is not very different from that of the USSR, even though the USSR does not need gasoline on the same vast scale.


The absorption of raw materials occurs because of the deficiencies of the Soviet system. It requires more raw materials for the same job than under capitalism.' p139

For all the increased output - achieved at such terrible human costs - they might as well have thrown the oil and steel straight into the Black Sea (Indeed, judging by appearances they did). It was in Ticktin's words 'a society engaged in producing evermore machinery that has little impact on consumption, even for the elite and the intelligentsia' subject to 'a law of increasing inefficiency, or a growing gap between potential output for the consumer and actual output.' (p117).

In message <35AFBCA6.AB7D5E73 at ecst.csuchico.edu>, michael perelman <michael at ecst.csuchico.edu> writes
>Jim heartfield wrote:
>> the Soviet economy was even less efficient that capitalism, where there
>> was at least an unconscious regulator in the market. The Soviet Union
>> lacked any meachanism for the distribution of labour in society, leading
>> to grotesque shortages, fragmentation of the national economy,
>> astonishing levels of waste.
>I cannot accept this. Soviet staffing was far from optimal, but any question of
>inefficiency must take account of 3 other factors.
>1. The Soviets did not waste resources on a FIRE sector.
>2. Some of the inefficiency was the provision of health care, child care or
>education by the enterprise -- as in the agricultural sector.
>3. The Soviets had a larger relative military burden than the U.S.
>The Soviet economy grew at a phenomonal rate after World War II, then it slowed
>down. The GNP did not begin to falll until after the USSR.
>Michael Perelman
>Economics Department
>California State University
>Chico, CA 95929
>Tel. 530-898-5321
>E-Mail michael at ecst.csuchico.edu
In message <35AFC1B9.BDFCC951 at netcomuk.co.uk>, Mark Jones <Jones_M at netcomuk.co.uk> writes
>James, are you going to try and substantiate these wild assertions, or
>just leave them to crawl off into the night by themselves?

Wild assertions? Wasn't the soviet economy a spectacular failure? Perhaps it is all just Western propaganda that the Russian people have torn down the statues of Lenin and Stalin. Perhaps really socialism was built in Moscow and our masters are keeping it from us, faking footage of Russian events in Hollywood studios. -- Jim heartfield

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