The Political Economy of Stalinism Evidence from the Soviet Secret Archives

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The Political Economy of Stalinism Evidence from the Soviet Secret Archives P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 The Political Economy of Stalinism Evidence from the Soviet Secret Archives This book uses the formerly secret Soviet State and Communist Party archives to describe the creation and operations of the Soviet administrative-command system. It concludes that the system failed not because of the “jockey” (i.e., Stalin and later leaders) but because of the “horse” (the economic system). Although Stalin was the system’s prime architect, the system was managed by thousands of “Stalins” in a nested dictatorship. The core values of the Bolshevik Party dictated the choice of the administrative-command system, and the system dictated the po- litical victory of a Stalin-like figure. This study pinpoints the reasons for the failure of the system – poor planning, unreliable supplies, the preferential treatment of indigenous enterprises, the lack of knowledge of planners, etc. – but also focuses on the basic principal–agent conflict between planners and producers, which created a sixty-year reform stalemate. Once Gorbachev gave enterprises their freedom, the system had no direction from either a plan or a market, and the system im- ploded. The Soviet administrative-command system was arguably the most significant human experiment of the twentieth century. If repeated today, its basic contradictions and inherent flaws would remain, and its economic results would again prove inferior. Paul R. Gregory is Cullen Professor of Economics at the University of Houston and currently serves as a Research Fellow at the Hoover Institution, Stanford University. He is also a research professor at the German Institute for Economic Research (DIW) in Berlin. Professor Gregory has published widely in the field of Russian and Soviet eco- nomics for more than thirty years and served as a visiting professor at Moscow State University. Among his numerous books are Restructur- ing the Soviet Economic Bureaucracy (1990), Before Command: The Russian Economy from Emancipation to Stalin (1994), and Russian National Income, 1885–1913. He is the co-author (with Robert Stuart) of Russian and Soviet Economic Structure and Performance, now in its seventh edition. Professor Gregory received his Ph.D. in economics from Harvard in 1969. i P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 The Political Economy of Stalinism Evidence from the Soviet Secret Archives PAUL R. GREGORY University of Houston Hoover Institution iii Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo Cambridge University Press The Edinburgh Building, Cambridge , United Kingdom Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521826280 © Paul R. Gregory 2004 This book is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2003 isbn-13- 978-0-511-07103-4 eBook (EBL) isbn-10- 0-511-07103-5 eBook (EBL) isbn-13- 978-0-521-82628-0 hardback isbn-10- 0-521-82628-4 hardback isbn-13- 978-0-521-53367-6 paperback isbn-10- 0-521-53367-8 paperback Cambridge University Press has no responsibility for the persistence or accuracy of s for external or third-party internet websites referred to in this book, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 Contents Illustrations page vi Tables vii Preface ix 1 The Jockey or the Horse? 1 2 Collectivization, Accumulation, and Power 22 3 The Principles of Governance 49 4 Investment, Wages, and Fairness 76 5 Visions and Control Figures 110 6 Planners Versus Producers 126 7 Creating Soviet Industry 153 8 Operational Planning 183 9 Ruble Control: Money, Prices, and Budgets 213 10 The Destruction of the Soviet Administrative-Command Economy 243 11 Conclusions 268 Appendix A: Archival Sources 273 Appendix B: The Structure of the State 275 Bibliography 289 Index 301 v P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 Illustrations Fig. 2.1 Soviet grain-procurement crisis 35 Fig. 2.2 Markets vs. coercion 36 Fig. 2.3 Soviet grain production and procurement 39 Fig. 4.1 Choice of maximum investment 87 Fig. 4.2 Dynamics of an increase in capital through investment 88 Fig. 4.3 Dynamics of an increase in the fair wage 90 Fig. 4.4 Nominal and real (1932 prices) investment, USSR, 1928–1938 92 Fig. 4.5 Annual growth rates, 1929–1937, nominal investment and labor productivity 96 Fig. 4.6 Stakhanovism 104 Fig. 6.1 Central Soviet administration 130 Fig. 6.2 Vertical vs. horizontal structures 134 Fig. 9.1 Vertical vs. horizontal transactions 216 Fig. 9.2 Monetary aggregates, 1932–1936 (on January 1 of each year) 225 Fig. 9.3 Interenterprise arrears, 1933–1939 (monthly, millions of rubles) 230 Fig. 9.4 Annual growth rates of money and investment goods prices, 1929–1938 240 Fig. 10.1 Soviet GDP growth in comparative perspective 244 Fig. 10.2 Comparative growth of Soviet capital stock 244 Fig. 10.3 Industrial output, industrial capital, and capital productivity, USSR 250 Fig. 10.4 Relative growth rates of consumption and investment 260 vi P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 Tables Table 2.1 Output, State Purchase, and Prices of Grain 33 Table 2.2 Mass Peasants’ Demonstration, 1930a (in USSR Territory) 42 Table 3.1 Politburo Meetings, 1930–1936 70 Table 3.2 Number of Issues Discussed at Politburo Meetings, 1930–1940 71 Table 3.3 Meetings of Politburo Members with Stalin, 1931–1939 73 Table 4.1 Second Five-Year Plan Investment Goals, 1933–1937, by Commissariat (Million Rubles, 1933 Plan Prices) 78 Table 4.2 Alternate Investment Plan Drafts, 1935 and 1936 (Million Rubles) 82 Table 5.1 Targets for the Fifth Five-Year Plan 117 Table 5.2 Mean Absolute Deviation from 100% Plan Fulfillment (Annual Plan vs. Five-Year Plan) 119 Table 6.1 First Quarter 1932 Plans, Cars 148 Table 7.1 Simplified Material Balance 157 Table 8.1 Stages of Annual Planning: Government and Ministries 192 Table 8.2 Stages of Enterprise Plans 193 Table 8.3 Planning Phases for the 1934 Annual Plan, Ministry of Heavy Industry, for 1933 194 Table 8.4 Meetings of Ministry Collegiums of NKTP and NKLP to Discuss the Annual Plan 198 Table 9.1 Distribution of Gosbank Credits, 1933–1936 (Percentages) 227 vii P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 viii Tables Table 9.2 Enterprises Credits: Commercial vs. Gosbank (Rank Orderings) 228 Table 9.3 State Budget, Second Five-Year Plan, 1933–1937 (Billion Rubles) 238 Table b.1 Staff of NKTP, 1930s 276 Table b.2a NKLP Staff, First Half Year–1933 277 Table b.2b Wage Bill of NKLP, First Half of 1933 (Rubles) 278 Table b.3 The Staff and Structure of Gump, March 1937 280 Table b.4 Gump’s Employees and Their Distribution by Profession, March 1937 281 Table b.5a Staff of Leather Footwear Administration of NKLP, 1935–1939 282 Table b.5b Staff of Leather Footwear Administration by Branch and Functional Divisions 282 Table b.6a Staff of Knitting Industry Glavk, 1935–1939 283 Table b.6b Staff of Knitting Administration by Branch and Functional Divisions 283 Table b.7 Schedule of Staff Downsizing in People’s Commissariat and Central Establishments of USSR 284 P1: FCH/FFX P2: FCH/FFX QC: FCH/FFX T1: FCH CB575-FM CB575-Gregory-v1 July 31, 2003 9:53 Preface The collapse of the Soviet Union in December of 1991, in some sense, also signaled the end of scholarly study of the Soviet administrative-command economy by economists. As a long-term student of this economy, I was acutely aware that our lack of knowledge about this economy remained considerable. This ignorance was not due to the lack of acumen or effort but to the veil of secrecy that had been erected by Soviet leaders around this system. As Mikhail Gorbachev began his policy of Glasnost in the mid-1980s, the barriers of secrecy began to fall, but the scholarly com- munity had by then turned its attention to more pressing agendas, such as the Soviet system in collapse and then the fundamental issue of its transi- tion. Specialists on the Soviet economy turned primarily to transition as did numerous newcomers to the field, attracted by the challenge of transi- tioning a planned socialist economy into something resembling a market economy. Few continued to study the fundamental nature of the Soviet administrative-command economy either due to the conviction that we already knew all we needed to know or the belief that there were better uses of our time. This book studies the creation of the Soviet administrative-command economy in the 1930s. I have written it for three reasons: First, only now is it possible to study the Soviet economic system without the barrier of secrecy. The Soviet State and Party Archives were opened to scholars in the early 1990s, and it is now possible to study the Soviet economy using the very records that its administrators used many years earlier.
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