Soviet Economic Development Since 1917

Maurice Dobb

• Publisher: Taylor & Francis
• Year: 2012
• Print ISBN: 9780415523653
• eBook ISBN: 9781136323775
• Edition: 1
• Topic: Economics
• Subtopic: Business General
• Index: Economics

This book follows on from the author's volume Russian Economic Development and although it encompasses some of the same material it charts the history and progress of the Soviet economy down to the efforts at reconstruction after The Second World War. A new chapter was added which covers the post-war decade from the end of the war to the announcement of the Sixth Year Plan.

Part One

Chapter One Introduction The Significance of a Study of Soviet Economic Development for the Problems of Our Time

DOI: 10.4324/9780203120828-2

I

When we contemplate the economic and social changes which have taken place during the past thirty years over the area which used to be called the Russian Empire, novelty and magnitude compete for our attention. It is doubtful whether in any previous age so profound a change, affecting so large an area of the world’s surface, has ever occurred within such a narrow span of time. Until recent years—virtually until the war years of 1941 to 1945—the extent of this transformation in the social and economic face of the former Russian Empire was little appreciated in western countries. Scepticism about official accounts of plans and achievements was almost universal; and even those with access to information, claiming the title of expert, greatly underestimated the extent and durability of the changes that had occurred. For some this disbelief rested on genuine ignorance. In the case of many it was probably the fruit of wishful thinking. But there were also those among the sceptics who lacked the excuse either of ignorance or of deficient training in the objective approach to facts. In view of so much of what had been privately said and both privately and publicly written during the 1930’s about the economic condition of the U.S.S.R., it is hardly surprising that authoritative military forecasts in Washington and London in 1941 as to Soviet powers of resistance to Germany should have been so grotesquely pessimistic as they can now be seen to have been.

The story of the economic development of what at first was Soviet Russia and since 1923 has been the U.S.S.R. holds a special interest for our times for two main reasons. Firstly, it provides the first case in history of a working-class form of State (under the slogan of “the dictatorship of the proletariat”) carrying out the expropriation of the former propertied class and establishing a socialist form of economy. This alone would suffice to give it a unique interest: an interest for economists and economic historians of our century at least as great as that of post-1789 France for political theorists and historians in the last century. But secondly, it affords a unique example of the transformation of a formerly backward country to a country of extensive industrialisation and modern technique at an unprecedentedtempo: a transformation unaided by any considerable import of capital from abroad, but effected under the guidance and control of a national economic plan, instead of in the conditions of laissez-faire and atomistic capitalist enterprise which characterised the classic industrial revolutions of the past. As such it seems likely in turn to become the classic type for the future industrialisation of the countries of Asia. Already it has profoundly influenced the discussion of projects for the economic development of India and those for south-eastern Europe. It may well have the effect to-morrow of shifting the focus of economic inquiry; furnishing it with an entirely new set of questions and new perspectives on economic development.

Since the tempo of industrial growth in the U.S.S.R. in the dozen years before the war was so exceptional, its main interest for the economist will be the light it can throw on the factors governing economic development. Until quite recently economists in this country have been concerned with considerations of equilibrium rather than with those of change. Even when the equilibrium which occupied their attention was a “moving equilibrium”, this was conceived simply in terms of a series of adjustments to certain “arbitrary” shifts in some given factor (e.g. demand, population, technique, capital); the relations of adjustment being such that vectors of movement were generally smooth and continuous. The situation where the rate of movement was greater than the rate of adjustment was seldom considered; although in the last few years there has been a certain amount of attention paid to fluctuating series and the influence of time-lags in adjustment (along the lines of the so-called “cobweb theorem”). It seems not untrue to say that, as a result of this preoccupation with a certain analytical method, some of the most essential features of economic development, especially those which dominate crucial periods of transition, like the transition from an agricultural to an industrial economy or from a backward to an advanced level of technique, were never examined. Economists for the most part were preoccupied with the notion that the heart of the economic problem lay in securing an optimum allocation of resources between alternative uses, with both resources and uses treated as given. The economists who in the period between wars discussed the comparative merits of different economic systems (including at one time the present writer) generally assumed that the success of any system was mainly to be judged by its success in so doing (usually with the implication that this could only be adequately performed by the operation of a pricing system, not only for consumers’ goods, but for intermediate products and factors of production).¹ The notion that successful development from one economic situation, with its given combination of resources and configuration of demand, to another might be a more crucial test of the contribution made by an economic system to human welfare than the attainment of perfect equilibrium in any given situation seldom commanded attention.² It was as though one were to concentrate on the perfection of instruments whereby the summit of any mountain could be precisely located rather than ascertaining which was the highest mountain in the neighbourhood and which was the quickest way to the top.

¹ For example, in his Russian Economic Development since the Revolution in 1928 the present writer wrote as follows: “The chief aspects of any economic planning must be the regulation of the relative proportions in which things are produced, and arising therefrom, the proportions in which economic resources are distributed between the various branches of production…. There are certain objective quantities which should be represented in prices to provide the basis for an adequate social accounting.” It was added, however (unwisely as it now seems) that the inclusion in costs of a capital charge was probably undesirable, because this would “limit the intensive use of capital”; and that the desirable principle was to require “each enterprise to extend its production and the use of its capital equipment up to the point where the marginal prime costs rose to the level of selling-prices and so made further extension undesirable”; deciding whether to increase or decrease capital equipment according to the size of the resulting surplus over average cost when output had been fixed in this way (pp. 168, 176, 179, 180).

² A notable exception to this statement is Schumpeter, who has used the notion of development as the justification of the capitalist entrepreneur—the pioneer of new economic patterns and new combinations of resources—and also for monopoly, on the ground that monopoly gives theentrepreneur control of a wider range of resources and so enables him to carry out such developments and also to face the risks and uncertainties attending economic change.

But the issue is not simply between sacrificing equilibrium-conditions in favour of progress and making the most of what one has at any given time. When we shift the focus of attention to problems of economic development, a more fundamental issue than this appears. One is very soon struck with the fact that the picture of the economic world presented by these problems does not seem at all to resemble the picture which economists have usually presented. In actuality these problems seldom or never seem to have the form of choosing that one among an indefinitely large number of economic patterns or routes which is the best according to some ideal standard. They seem rather to be concerned with discovering how the situation confronting onelimits what it is possible to choose. Instead of an indefinitely large number of ends and limited means to be distributed between them, with an indefinitely large number of possible patterns to choose between, essential problems seem to turn upon the fact that the ends which it is practicable to choose are themselves fairly straitly limited by the means available and that the number of possible combinations which can be chosen is small rather than large. If this is the case, the emphasis of economic inquiry is inevitably shifted to a study of how these limits upon economic action are actually defined: a study of the characteristics of particular types of situation which determine the sort of development that is possible.

This is not the place to venture upon a discussion of the basic premises of economic method. It must suffice to indicate what this issue amounts to in terms of different assumptions about the texture of economic events, and to stress some of the implications of this difference. The traditional approach, with its treatment of economic quantities as subject to continuity of variation, requires that the nature of production (and also of consumers’ wants) should be such that the distribution of productive resources between different sorts of production must be susceptible of variation that is very large (relatively to the scale of wants). Productive resources must be tractable in a high degree; and the possible patterns into which the distribution of them can be woven must be very numerous. On the side of consumers’ wants there must be an analogous flexibility in the degree to which the variety of things which cater for those different wants can be combined without damage to consumers. This picture of the economic situation seems to rest,inter alia, on an implicit assumption that on the side of production “indivisibilities”, occasioned by the size of the basic technical units, or interdependencies between different lines of production (e.g. joint supply relationships) are small relatively to the scale on which things are being viewed; while on the side of demand the particular needs of consumers for particular commodities are for the most part independent of one another, in the sense that each is rival to the rest and the number of possible combinations of these commodities which would be equally satisfying to consumers is very large.

If, on the other hand, so-called “indivisibilities” in production are large relatively to the scale on which problems are being viewed, the situation has a quite different aspect; as it also will have if the items which compose consumers’ aggregate demand to any large extent form a closely interrelated set, bound together, e.g. by social convention or by links of complementarity between particular wants into “modes of life” or patterns of behaviour which assume the character of organic wholes.¹ In this kind of situation, it will not be possible with limited resources to produce some of each of n commodities which consumers may desire if they can get them. To produce any (or most) of them at all will require that production of them be undertaken on a minimum scale that is sufficiently large to reduce drastically the number of different things that it is practicable to put simultaneously into production. To produce some of a may not merely reduce the quantity of b that can be produced: it may preclude the possibility of producing any of b at all. The possible patterns of allocation of productive resources will then be relatively small. The production can be undertaken only of a fraction of n commodities, and those which are produced must be turned out in certain minimum quantities, so that for practical purposes the relative proportions in which different products can be placed on the market are not capable of any very large degree of variation, but are determined within fairly narrow limits by technical conditions of production.² If, on the side of consumers, wants for different commodities tend to be grouped into sets which are wanted in combination,³ the items in each set not being readily combined with items from another set, then the possible combinations of different commodities which confront the framers of a production plan will be further reduced in number. With any given quantity of productive resources, it may be a question of allocating them to the production of Set A of commodities, or of Set B or Set C, the series of alternative sets consisting of relatively few—of opting between a certain number of mutually exclusive menus (as it were) for atable d’hôte meal rather than the more complicated task of catering for a lengthy à la carte list in proportions adapted to consumers’ requirements.

¹ The largeness of the unit (measured in its value) in which wants are supplied relatively to consumers’ total expenditure (e.g. a motor-car, a house, a refrigerator) will have a similar significance in the context to which we are referring.

² For example, if motor-cars (of a certain type) are to be produced at all, it is desirable to produce them at least in quantities equal to the output-capacity of one (large) specialised motor plant. If more are required than this, then the alternative is one of doubling the initial output by constructing a second plant, and then again trebling it; but intermediate levels of output are for practicable purposes excluded from consideration.

³ For example, the combined set of wants for houses, furniture, gardening equipment, radio, facilities for cooking and eating at home, which constitutes one “mode of life”, and another set consisting of flats or lodgings, motor-car, restaurant feeding, public places of entertainment, etc.

In the degree that the economic situation approximates to this, problems of economic planning seem to acquire a resemblance to the problems of military strategy, where in practice the choice lies between a relatively small number of plans, which have in the main to be treated and chosen between as organic wholes, and which for a variety of reasons do not easily permit of intermediate combinations.¹ The situation will demand a concentration of forces round a few main objectives, and not a dispersion of resources over a very wide range.

¹ This is not to say that in certain aspects of military problems analogies cannot be found with the balancing and transfer of small quantities at a margin; e.g. calculating the comparative advantages of putting an additional gun or battalion or ship in location A or in location B. It is to say that the essential part of the problem has no analogy with this; mainly because each strategic plan requires the use of a certain minimum of forces, which is large relatively to the total available, and a certain combination of different arms (capable of variation outside fairly narrow limits only with damage to the military potential of the force). Hence it is not a question of allocating military resources between various positions from Iceland to Suez so as to equalise their marginal effectiveness at each point, but of choosing between alternative concentrations, e.g. on the “soft under-belly of Europe” or in north-west Europe, each of which is rival to the other.

We cannot stay to consider how far in fact productive resources are tractable or intractable, or the pattern of consumers’ wants is characterised by flexibility or i...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Preface
• Part One
• Part Two
• Part Three
• A Glossary of Terms
• Index of Authorities
• Index of Subjects