PLANNING    

 

Shortcomings of Command Planning and Agriculture

Kristina Montgomery

 

   -As soon as we deal with an organized national economy, all basic'"problems"of political economy, such as price, value, profit, etc., simply disappear..., for here the economy is regulated not by the blind forces of the market and competition but by the consciously implemented plan.                                -Nicolai Bukharin

Command economy in the Soviet Union was established during the 1920s  and '30s in the struggle to industrialize the U.S.S.R. When the  Bolsheviks took over the Russian Empire in 1917, they had no clear  notion as to how an economy should be run. No guidance was to be found  in the writings of Karl Marx other than the assertion that a socialist  society would operate the economy for the common good. They interpreted  that it was needed to create organs of economic administration to  replace the market system of capitalism. In the future Communist society  there would be no money, no profit motive. No wages would be necessary  to stimulate effort "from each according to his ability, to each  according to his needs." 1            

 Amid confusion and a civil war, gradually a 'command economy' was  established. In this system, subordinate units of the economy operated  in accordance with administrative instructions, and the sole effective  criterion of management decision became conformity to plan, to the  instructions issued by the central administrative planning organs, such  as the Gosplan, central board that supervised various aspects of the  planned economy of the Soviet Union by translating into specific  national plans the general economic objectives outlined by the Communist  Party and the government.3

Economic development was done in five-year  plans and concentrated on heavy industry and quantitative goals such as  tons of metal, millions of square meters of cloth, millions of rubles'  worth of construction or of furniture.

Quality was often sacrificed in  order to fulfill the plan in quantitative terms; planned targets  expressed in tons, for example, encouraged excessive weight in the  product concerned, while targets expressed in rubles discouraged economy  and rewarded the use of expensive materials. Plan-fulfillment as a  dominant criterion of success encouraged management to conceal their  productive potential so as to get an 'easy' plan, while fears of supply  shortages encouraged hoarding.2

 If your local store, did indeed, have  products like flour or sugar, your bought them by the kilogram. The  appearance of a simple necessity such as toilet paper would spread  through the neighborhood instantly and soon there would be a huge line  of people buying 30 rolls of toilet paper at once because you never knew  when the store would have toilet paper again

Agricultural planning in the Soviet Union was particularly wasteful.  With priority given to industrialization, agriculture was essentially  treated as a source of cheap food and materials for the cities. The  peasants were expropriated into huge collective farms, kolkhozy. The  entire system was primarily designed to ensure deliveries of produce at  low prices, and the planners and administrators concentrated on  procurements, while production plans were seldom, if ever fulfilled.

After the death of Stalin, Nikita Khrushchev in the late 50s and early  60s, introduced a substantial change of policy, with greatly improved  prices and a major investment program  designed to restore agriculture.  But the main problem lay in the whole organization or lack of it in the  Soviet Union. Different Ministries would be responsible for different  aspects of agricultural productivity, from Ministry of Transportation to  the Ministry of Soil Science. And frequently co-ordination of action and  information would simply not take place between the organs responsible  for development and implementation of plans.

 Despite increased  government investments and higher farm prices, output still rose slowly  and costs rose quickly, necessitating very large subsidies. Peasant  incomes rose somewhat, but incentives to work on the large state and  collective farms were ineffective, and millions of townspeople had to be  mobilized annually to help with the harvest. Primary targets were  students, who were volunteered to help build the brighter communist  tomorrow.

  Education in general was free and students received stipends  every month for cost of living expenses, however, they could also be  kicked out of university under any reason presented by a professor or  your local, friendly  Komsomol  leader. If you didn't go to pick  potatoes or harvest crops, you were simply kicked out of the university.  Plus, propaganda was one thing done  perfectly in the Soviet Union and  students actually wanted to go and help their fellows citizens with the  "Great Socialist Dream" that according to propaganda posters included  gathering of cabbage.

 Lilia Vladimirovna Roussak was a student during  the 60s at the Moscow State University and she recalls how excited the  students were to go and help with the harvest. But she says that they  ended up simply driving the gathered grain to the Volga river and  dumping it out because they simply did not have enough holding and  processing facilities.    

One of the Communist Party's more brilliant ideas  was to send large numbers of recent graduates to the so-called "Middle  Strip" zone of the Soviet Union to develop agriculture. The only thing  that the planners did not account for was that the quality of soil in  the region just happened to be extremely poor and the climate dry.

In 1987, proposals were adopted that would allow the leasing of land to  families over and above the small plots permitted before.4 With the  break-up of the Soviet Union in 1991, more and more land is in private  hands and collective farms were offered for sale to the farm workers but  reform is slow, not only in the economic system of Russia in general but  also in people's thoughts and attitudes. And unfortunately, the same  problems of poor infrastructure and organization plague the new owners.

Endnotes

1. "Economic Growth and Planning: Economic Planning in Communist countries"       Britannica Online

http://www.eb.com:180/cgi-bin/g?DocF=macro/5001/96/44.html

 2. "Economic Growth and Planning: Economic Planning in Communist countries"      Britannica Online

http://www.eb.com:180/cgi-bin/g?DocF=macro/5001/96/44.html

3. "Gosplan" Britannica Online http://www.eb.com:180/cgi-bin/g?DocF=micro/241/12.html

 4."Economic Growth and Planning: Economic Planning in Communist countries"      Britannica Online

http://www.eb.com:180/cgi-bin/g?DocF=macro/5001/96/44.html

 

 

 

 

 

 

OK Economics was designed and it is maintained by Oldrich Kyn.
To send me a message, please use one of the following addresses:

okyn@bu.edu --- okyn@verizon.net

This website contains the following sections:

General  Economics:

http://econc10.bu.edu/GENEC/Default.htm

Economic Systems:  

http://econc10.bu.edu/economic_systems/economics_system_frame.htm

Money and Banking:

http://econc10.bu.edu/Ec341_money/ec341_frame.htm

Past students:

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

Czech Republic

http://econc10.bu.edu/Czech_rep/czech_rep.htm

Kyn’s Publications

http://econc10.bu.edu/okyn/OKpers/okyn_pub_frame.htm

 American education

http://econc10.bu.edu/DECAMEDU/Decline/decline.htm

free hit counters
Nutrisystem Diet Coupons