PERSA Working Paper No. 37

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PERSA Working Paper No. 37 Planning the Soviet Defense Industry: the Late 1920s and 1930s Andrei Markevich Moscow State University PERSA Working Paper No. 37 Political Department of Economics Economy Research in Soviet Archives Version: 7 November 2004 Available from www.warwick.ac.uk/go/persa. Planning the Soviet Defense Industry: the Late 1920s and 1930s* Andrei Markevich† Open Lyceum, All Russian External Multi-Disciplinary School, Moscow State University Abstract The paper describes the procedures for planning the Soviet defense industry in the interwar period and analyses its limitations. Three features differentiated the planning of the defense industry from that of the civilian economy. First, the supply of national defense in the broadest sense had high priority and received the close attention of the country’s top leadership. Second, the process of military and economic planning for defense that created the context of defense industry plans had a strongly forward-looking character and generated increasing demands through the interwar years. Third, the detailed planning of defense industry was carried on simultaneously in two separate bureaucracies, a military hierarchy preoccupied with formulating demands and an industrial hierarchy the task of which was to organize supply; planners made strenuous efforts to reconcile supplies and demands in the defense industry, and met with limited success. * This paper contributes to research on the political economy of the Soviet Union under Stalin funded by the Hoover Institution (principal investigator, Paul Gregory). † Thanks to Paul Gregory and Mark Harrison for advice and comments; I am responsible for remaining errors. Please address communications to Andrei Markevich care of [email protected]. First draft (in Russian) October 11, 2004. This version November 7, 2004. Planning the Soviet Defense Industry: the Late 1920s and 1930s In the twentieth century the waging of war rested on economic foundations. Armies in battle required weapons, ammunition, uniforms, and food rations. Planning for war, whether in aggression or defense, was inconceivable without accounting for resources. This paper reviews the Soviet way of planning the economic aspect of warfare that was laid down at the end of the 1920s and the 1930s following the abandonment of a mixed economy and the transition to forced industrialization. Some relevant issues of Soviet military thought concerning preparation for war have been investigated in the recent literature (Simonov 1996a,b; Samuelson 2000a,b, 2001; Ken 2002). As a rule, scholars have tended to analyse the work of the civil and military agencies separately; Samuelson was the first to investigate the links between military thinking and civilian economic plans. Despite this we still know little about the day-to-day planning of the defense industry, and of the supply of defense more broadly with general-purpose fuels and machinery, transport and medical services, mobilization preparedness and stocks, and so forth. This paper is organized as follows. Part 1 defines the military input into economic planning. This came about in two ways: immediate military demands influenced economic plans for the distribution of current output, while long-term military requirements were reflected in the distribution of investment resources. Part 2 describes the institutional hierarchies through which military requirements were brought into contact with the command economy’s civilian allocation and management systems. Military requirements had a general impact on the economy as a whole as well as specific implications for the defense industry: these are considered in Parts 3 and 4. Part 4 deals at some length with the problem of administrative reconciliation of planned supplies with planned demands. At the stage of implementation ministerial plans had to be translated in detailed contracts for specific enterprises to deliver specific goods to the military purchaser at agreed prices, and this process was decentralized to a considerable extent. Part 5 describes the problems that arose. Finally, in the course of implementation plans were vulnerable to amendment from above and below; the reasons for this and the implications are the theme of Part 6. Part 7 concludes. To limit the use of Russian terms as far as possible, and to clarify possible ambiguities, I use the following conventions. (1) Soviet ministries were called “people’s commissariats” until they were renamed ministries in 1946. I refer to them as ministries. (2) I translate VSNKh as the “industry ministry,” NKTP as the “heavy industry ministry,” NKOP as the “defense industry ministry,” and so on. (3) I translate dogovor as “contract” (or “specific contract”), tipovoi dogovor as “model contract,” and osnovnye usloviia postavki as “master delivery agreement.” (3) I retain six official acronyms in the text, (a) First draft (in Russian) October 11, 2004. This version November 7, 2004. 2 Politburo, the political bureau or decisive core of the party central committee (b) Sovnarkom, the council of people’s commissars, chaired by the prime minister (c) STO, the Council of Labor and Defense (d) NKVD, until 1946 the people’s commissariat (ministry) of internal affairs, responsible for internal security and forced labor (e) Gosplan, the state planning commission, and (f) KPK, the ruling party’s “control” or audit commission. 1. The Military and Economic Planning In the Soviet Union as elsewhere, the military prepared for war on the basis of alternative scenarios for the future evolution of events. Starting from the current political and international situation, the defense ministry and Red Army general staff assessed the most likely external threats and the military requirements that these posed. This informed their plans for military modernization, against which they measured the country’s military and economic potential. As Samuelson (2001, p. 77) and Sokolov (2004) have shown, this led Tukhachevskii and other military leaders to press for greater military control over economic planning and the management of industry. In principle the economic issues that concerned the military may be divided into mobilization planning and operational planning. Mobilization plans prepared the economy for the contingency of a war that might or might not happen and set out the economic tasks that should be undertaken in that event but not otherwise. At this time most Soviet military experts imagined that the war for which they were planning would be protracted over several years; consequently they gave most attention to computing annual average resources and requirements. Thus, the activity of mobilization planning in the broadest sense went on at several levels, including computation of the resources that would meet the “mobilization requirements for a year of waging war”; plans for the “initial period of war,” usually covering three months; plans for the “initial year of war” when the country’s economy would not yet have been mobilized to the full; and also “mobilization plans” in the narrow sense of prescribing procedures for a transition to war production that utilized productive capacities as fully as possible. Operational planning, in contrast, was oriented on the immediate future. The most important economic components of military planning for the immediate future were proposals for national economic development that took into account the needs of defense; and plans of “current military orders” to procure weapons and military equipment, closely linked with economic plans for defense industry. The issues raised by operational and mobilization planning were clearly inseparable; some contemporaries regarded operational planning as no more than a component part of mobilization planning more generally.1 Mobilization planning aimed to prepare the economy for a specific contingency, that of war, and to ensure a seamless transition to wartime production if that contingency 1 GARF, 8418/8/9, ff. 3-6 (Gosplan deputy chairman Mezhlauk, letter to prime minister Molotov “On the procedure for confirming annual and quaterly plans in defense industry,” dated July 31, 1933). On the evolution of mobilization planning in more detail see Davies (2004); for previous accounts see Simonov (1996, 2000), Samuelson (2000), and Ken (2002). 3 was realized. Operational planning aimed to optimize the allocation of current resources for all contingencies, including that of war, and specifically the resources of the defense industry for the army’s peacetime needs. The resource constraints of a poor country posed cruel dilemmas. What was the cheapest way of supplying defense requirements? The Soviet authorities believed that they were faced with a choice between two extremes. At one extreme lay a peacetime defense industry of specialized “cadre” factories mostly or entirely devoted to military products. At the other lay what they saw as the “American” style of industrial mobilization based on the creation of dual-purpose capacities that could be switched from peacetime to wartime priorities at short notice. In the short run the first variant looked cheaper since specialized war production plants offered lower capital costs than factories with built-in flexibility. In the long term, however, the second variant looked cheaper because it would provide more civilian production as long as peace was maintained; meanwhile, specialized armament factories would be less fully utilized and risked rapid obsolescence. The military were more inclined to the first, and the civilian planners to the
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