Command economics and Stalin
The Soviet Command economy attempted to create a system of economy independent of external markets. Its basis was to establish strong incentives based on the progress of the state instead of the individual. The top-down organization of the governing body provided strict control of resources and controlled the allocation of funds between state run industry and agriculture. The entrance of Stalin spurred an incredibly quick movement toward highly intensive cultivation of heavy industry and created the foundation upon which Soviet Russia achieved the superpower status.
In the command system of economics, the common citizen does not “own” private property as one does in a capitalistic country. In the agricultural sector, individuals work together on state run agricultural sites or collective farms. No one person owns the property upon which production occurs. Instead, as these people all participate in production, the ownership of public land was divided among everyone (Barner-Barry: 141). Cooperative farms were basically collective farms. Individuals in a community where there was not a larger state run farm worked on collective farms. Overseen by a state appointed employee, collective farm workers grew crops, which were not sold for profit as one would do in a capitalistic economy (Barner-Barry:141). As market forces would usually determine a market price and thus determine profits and profit margins, in collective farms the state determines prices of resources, final goods, and the wages of collective farm workers:“…the central decision-makers determine for the state-owned firms their selling prices, the wages they pay their workers, the prices of the inputs they use, and the contribution they owe to the state budget…” (Barner-Barry:140)
People who worked on farms did, however, have the ability to utilize some personal, or private land. They could use the products for themselves and their families , sell the products, or both. The forum that was established to allow this was the collective farm market. This benefit made people able to achieve some additional purchasing power. (Barner-Barry:143)
State run industries faced the same degree of regulation. The state created detailed performance and goal schedules in the form of one or five year plans. These plans would determine the goals for output of the economy in its entirety and divide the overall goal among the various sectors of the industrial and agricultural sectors. Firms were given limits on productivity, and they were not allowed to go default (Barner-Barry:149).
The Communist Party of the Soviet Union and the government were the two governing bodies in this economic structure. They constituted the centralized decision making system that regulated the entire economy. These entities constructed the aforementioned one and five year plans: “The annual plan specified overall production targets for the entire national economy. It also indicated how the responsibility for meeting those targets would be distributed among the main sectors of the economy-heavy industry, consumer goods, agriculture, transportation….” (Barner-Barry:143).
Stalin sought to rebuild the Soviet political and economic structure. He considered the prospect of industrialization to be an act of preservation for the Soviet Union (Barner-Barry:157). His plans involved the intensive collectivization of the agricultural sector and the diverting of resources from other sectors of the economy to develop heavy industry (Barner-Barry:143). During the period of this industrial revolution, late 1920’s to the late 1930’s, the Soviet Union did not have sufficient capital to fund the process. Without adequate capital to invest in the industrial sector to develop, and the agricultural sector to increase productivity, the workers had to be the ones to make the sacrifice (Barner-Barry:158-159):
“Peasants of all economic levels resisted moving onto the collective farms. Under this program, the state expropriated all of the peasants’ property, including livestock. (Barner-Barry:159).
The tremendous sacrifices that the people underwent, however, led to incredible rates of growth, irrespective of the amount of capital actually invested in the endeavor. Heavy manufacturing output had more than doubled. As the industrial machine built up speed, it became more apparent that although Stalin was not able to completely achieve his goals, he had led the country to a period of incredible rates of growth. The consequences of such quick growth were severe. Initially, during the national-scale collectivization effort, many peasants resisted. In knowing that the state was to expropriate their land and livestock, they opted to slaughter the livestock rather than turn it over. Furthermore, the collectivization effort led to a famine lasting from 1932 to 1934, killing up to 7 million people. (Barner-Barry:159)
Stalin’s big industrial push characterized the Soviet brand of a command economy. Granted that persuasion and coersion were large parts of the institution, one cannot ignore the progress that his plans spurred. It was from this progress that the Soviet Union obtained the foundation upon which to build a nation with a massive military presence and a superpower identity. Finally, the great strides that the nation experienced must be considered in the context of the enormous compromise in welfare and sacrifice of human life.