How Maoists "Restore Capitalism". in the Soviet Union _ i _!iii liZ- Part 2 OF 2 by Joseph Seymour NY Public Library Assembly line at Togliatti auto works Are Profits in Command in Brezhnev'sRussia? Editor's Note: In the first installment, savvy plant executive would not over­ want and which therefore. remain through more sophisticated plan in­ the myth of a workers paradise in fulfill the plan by too much, since then unsold." dices. But no planning techniques, Stalin's Russia was refuted. In addition, he would be given a much higher output --"On Improving Industrial Management. .. ," in Sharpe, however sophisticated, can prevent the notion presented by Maoist econo­ goal for the following year. In his op. cit. dishonest managers from subverting the mist Martin Nicolaus (recently expelled famous 1962 article, "Plan, Profits, Another problem with the traditional planners' intent and squandering re­ from the October League) that factory Bonuses," Liberman addresses this sources. As we shall see, the 1965 managers in the USSR were the core of problem: system was that output was measured by total (gross) value, not that added by the reforms perpetuated some of the old a new capitalist class was debunked and "How can the enterprises be entrusted problems while generating new forms of the similarity of Khrushchev's regional enterprise. So managers naturally with the job of working out plans when tended to use the most expensive inputs managerial dishonesty and waste of decentralization with Chinese economic at present all their draft targets are resources. organization demonstrated. usually much lower than their actual which thereby maximized the value of capacities') "their" output. And since managers had The elimination of bureaucratic parasitism at the base of the economy as The Kosygin reforms "restored "This can be done if the enterprises have little incentive to minimize cost, hoard­ a maximum interest, both material and ing labor and building up huge invento­ well as at the top is impossible without capitalism" in the USSR, proclaims moraL in making full use of their ~oviet ries of supplies was the rule. In particu­ thoroughgoing democracy, which Martin Nicolaus, and he may well be the reserves...." in turn requires revolutionary action by --reproduced in Myron E. lar, there was no material incentive to only person in the world who thinks so. the working class to topple the Stalinist (Unfortunately for his career as a Sharpe. ed .. Planning. Profit and Incentives in the USSR. bureaucracy. Two requirements, in Maoist, the official Peking line is that Vol. 1(1966) particular, are necessary to ensure capitalism was restored under Khrush­ conscientious management: selection of chev.) However. many commentators Of course. the planning authorities· managers with demonstrated socialist did regard the 1965 Soviet reforms always knew that enterprise managers consciousness and workers control of systematically understated capacity, production. a"nd attempted to correct for this. Plant Review of Restoration of Following the Bolshevik Revolution executives and Gosplan (plan organiza­ and during the 1920's, Soviet economic Capitalism in the USSR tion) authorities played a cat-and­ management had to rely on bourgeois by Martin Nicolaus mouse game with one another, and the experts drawing high salaries. Lenin's resulting output targets bore only a Bolsheviks regarded this as a necessary rough relation to actual production evil. only partly offset by workers associated with the economist E.G. capacity. control. A revolutionary workers gov­ Liberman as capitalistic because oftheir Since managers were rewarded for ernment coming to power in the emphasis on enterprise "profitability." output regardless of the usability of or advanced capitalist countries through Time magazine ran Liberman's picture demand for their products, there was a social revolution or in the USSR and on its front cover with a story entitled tendency to sacrifice quality and assort­ East Europe through political revolu­ "Borrowing from the Capitalists," and ment of goods in order to maximize tion would not face the same situation ten years later the U.S. Maoist Revolu­ output. Targets are set in physical units today. Managers would receive straight tionarv Union (now Revolutionary (e.g., silverware in kilograms, cloth in E. G. Liberman salaries commensurate with the wages Com~unist Party) declared that the square meters) so that managers chose of skilled workers, and a central task of economize on plant and equipment, Kosygin reforms "made the profit items maximizing this index even if the the factory committees would be ensur­ because investment was financed by a motive the major guiding force in the products had little use value. In a ing against managerial wastage of non-repayable budget grant. Since it Soviet economy..." (Red Papers No.7). famous cartoon from the Russian resources. Under the close scrutiny of was "free," managers consistently over­ humor magazine Krokodil, the annual the workers in the enterprise, incorrigi­ As Liberman points out in defending stated their need for new equipment. output of the nail factory (measured by bly incompetent, abusive or dishonest himself against charges of anti-Marxist It is clear that what we have described weight) is shown as one mammoth nail. managers would simply be removed. revisionism, ever since 1921 Soviet is nothing but hureaucratic parasitism Another example is the notorious enterprises have been expected to make at the enterprise level. A plant manager Objective Pressures for fragility of plate glass in the USSR: "profits," or at least avoid losses. This is . who understates actual enterprise ca­ Economic Reform since plan targets are set in square true. However, the overriding goal of pacity in order to receive an easy plan. meters, managers maximize output by Managerial parasitism and the conse­ traditional Soviet planning was to over­ or one who produces low-quality goods producing over-thin glass. In his Sep­ quent squandering of resources at the fulfill the output target at the expense of so as to more easily meet output goals. tember 1965 speech introducing the new enterprise level have long characterized all other considerations, including other knows he is behaving in an anti-social system, Kosygin bluntly stated the Stalinist bureaucratic planning. Why plan indices. The purpose of the 1965 manner. Some managers may be per­ problem: then did pressure for reform build up in reforms was to eliminate the waste of sonally honest but believe they will be the early 1960's, culminating in the resources caused by pervasive and "Experience indicates that the index of victimized in income and career ad­ action of the incoming Brezhncv. Ko­ many-sided managerial parasitism. volume of gross output does not vancement if they don't over-fulfill the stimulate' the enterprise to produce sygin regime? Since both monetary income and goods which are really needed by the output plan. Moreover, all spokesmen During . the last years 01 the promotion to a higher position de­ national economy and the public. and in for the Soviet bureaucracy regard the Khrushchev period a number of obiec­ pended on over-fulfilling the output manv cases the index tends to limit anv kind of managerial dishonesty depict­ tive factors caused the bureaucracy to impiovement in the assortment of ed above as inherent in the system. become more concerned about micro­ plan, managers usually understated goods and their quality. :"ot infrequent­ enterprise productive capacity so as to ly our enterprises produce low-quality Libermanism is a fruitless effort to economic inefficiency. A rising standard be assigned an easy target. Moreover, a goods which. the consumer does not overcome managerial parasitism of living in the late 19S1)'S made 6 WORKERS VANGUARD .... ~ ·t;~~y· Computer room at Moscow headquarters of the State Planning Committee consumers more selective and unwilling increasingly harmful to the interests of prises were credited only for output higher sales volume on the enterprises. to purchase shoddy or otherwise unde­ the Soviet Stalinist regime. actually sold.) However, there is still an This is an expression of uncertainty sirable merchandise. Also, in Stalin's that, independently. the enterprises will The 1965 Kosygin reforms had four output plan, measured in physical units, sufficiently utilize their production day a manager who played too fast and major elements. First, Khrushchev's which must be fulfilled. A manager who capacities and disclose reserves .... loose with the plan and his superiors regionalism was done away with and the does not fulfill the output plan will not "The question of what the 'product-mix could get into very hot water indeed. economy was recentralil.ed. Also, the receive a bonus (regardless of profit), of most important items' is must be Thus the post-1956 relaxation of totali­ key indices for measuring enterprise and he may also be administratively clarified. At present, its definition is chiefly left to the ministries. But the tarian state terror may have allowed , performance and managerial success disciplined as a state functionary! ministries tend to expand rather than .., greater managerial dishonesty and were changed, the method of financing The standard Soviet work on current restrict this product-mix, and this , violation of planning instructions. and determining investment at the economic policy is Soviet Economic expresses a tendency to retain the old ,• However, the basic motives for the enterprise