'THE CHALLENGE OF SOVIET INDUSTRIAL GROWTH' BY ALLEN WELSH DULLES DIRECTOR OF CENTRAL INTELLIGENCE BEFORE THE PRINCETON CONFERENCE PRINCETON UNIVERSITY AT 8:30 P.M., EST 12 DECEMBER 1956 PRINCETON, NEW JERSEY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP70-00058R000200050053-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 23
• Document Creation Date: December 9, 2016
• Document Release Date: July 23, 1999
• Sequence Number: 53
• Publication Date: December 12, 1956
• Content Type: SPEECH

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"THE CHALLENGE CF SCVIET INDUSTRIAL GROWTH"
by
ALLEN WELSH DULLES
DIRECTOR OF CENTRA:_, INTELLIGENCE
before
THE PRINCETON CONFERENCE
PRINCETON UNIVERSITY
at 8:30 p, m., EST
l2 December 1956
Princeton, New Jersey
It is a pleasure to return to Princeton to take part in your
discussions on the "Challenge of Soviet Industrial Growth".
During the past two days a group of outstanding experts, meeting
here, have been thoroughly canvassing this subject. I shall endeavor not
to retread the ground they have been over.
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A sober understanding of the facts of life about the Soviet Union is
fundamental to any appreciation of the security position cf the united States.
It has always been a source of great comfort to us in Washington toknow
that so many throughout the country, of which this Princeton Conference
is evidence, ar,G also working on this problem. We, in Washington, are
being ably assisted by scholars, educators and directors of resear~h
foundations; by leaders of business and representatives of labor, a' rid others
w rlcin; individually and in gr : ups, to help toward a better appr. eci tion --4
the true nature of the Soviet challenge.
Tonight, I shall sun up briefly the character and dimensiords of the
Soviet industrial system as it has been built up, and particularly alp the
'`r
leaders of the Soviet themselves view it; and then m..)ve on to the ekternal
manifestations of the Soviet industrial power, particularly the impp.ct it
has had on less industrialized nations in various parts of the worl4. Here,
the Soviet economic shortcuts to industrial strength are glamorouY.ly
attractive but correspondingly politically dangerous., since few inthese
countries have had first-hand experience with the toll paid by pe :Ole who
c _:mo under Communist influence.
Then, I propose we have a look at the Soviet challenge in its impact
on our security interests, particularly in areas where Soviet am'oxtic;ns
most directly conflict with the p:Aicy of the United, States and the Free "I'7'rld
in building a base of peace and stability.
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And finally, I shall deal with the danger which Soviet industrial
and scientific progress represents for the system of government of the
S:)viat Union itself, and the reflection of this problem in the troubles which
the Soviet leaders are encountering in Eastern Europe.
A measure of industrialization today is viewed as a necessary
adjunct for any state that aspires to be a power in the world. f..bviously in
the atomic age, no state can develop real military strength unlesp it has
a substantial industrial base. But even those countries that have no such
aspirations do, nevertheless feel that they will continue to be labelled as
backward and undeveloped unless they industrialize. Almost everyone
must have a steel mill these -lays.
Hence, we see some states attempting, possibly too abruptly for
their own good, to achieve a de3ree of industrialization which wiser counsels
might have told them shout. have been sought more modestly and with more
regard for the proper balance between heavy industry, light industry, and
agriculture.
The spectacular industrial advances made by the Soviet Union,
particularly over the past decade, and the powerful position it has assumed
in the world, in part as a result :,f its industrial growth, have had a great
influence on the thinking of the non-industrialized countries of the world
which comprise approximately three-quarters oof the states now members
of the United Nations.
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A great industrial machine may be put to ;700.1 or evil ends. It is
not always a good in itself The industrialization in Germany both in the
early part of the century and in the period between the two wars, keyed as
they were to a military machine, tended to build ambitions and to create
presrures which led to world conflict The present trend in the Soviet Union,
with its emphasis on heavy industry and the building of a vast rnil.itary
establishment, has forced upon the United Stater, and many other free
countrier, grim expenditures for armament
The Free World, however, cannot be expected to ignore the posrib'e
conrequ:ences of the far-lung; ec -n,mic an -1 industrial strength than has been
developed in the Soviet Un?en an:l has ma-.le it, in a short space of time, the
second most powerful nation in the world
If the leaders of the Soviet Union can be said t - have any
philosophy, I suppose it is their deep respect for power ---- politi.ca'. and
military power They have always been obsessed,-1 with the brute: fact of
strength You remember that Stalin, at one of the World `:Var II c-^nferencer
with Churchill and Roorevel.t, centemptuous'y dismissal the influerce :-,f the
spiritual leader of the millions of Catholics in the world with the -rhetorical
c,-.ze:sti--,n; The Pope how many divisions doer he h-~ve'?" Bulg gin and
T:Chrushchev can be just as cavalier in dealing with peoples with 1-'.tale military
mirh.t There could hardly be a better case in point-th-t th brutal -attempt
to crush the Hung rian revolutionaries
4
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The leaders of the Soviet Union know full well that military power and-
political power, which they also cherish, rest on a foundation of industrial
power. Soviet devotion to the rapid growth of heavy industry is one of the
most unhappy love affairs of the 20th Century. They subordinated the
personal welfare of a whole generation of Soviet people to forced -draft
production : f steel, oil, and machinery.
If any capitalistic country in the world had set its priorities so heavily
in favor of steel and so markedly against humanity, that country would be
thoroughly castigated, and rightly so. In contrast, the Soviet Union is proud
of its success in grinding the makings of a great modern industrial system
out of the flesh of its pe-oople.
The price the USSR has paid for its rapid industrializati'.n must not
blind us to the physical accomplishments of the Soviet Union in this field.
At the 20th Party Congress of the Communist Party of the Soviet Union in
Mo=scow last February, a full-dress presentation of Soviet policy was given,
and on many occasions since, Soviet leaders have described their industrial
achievements and their pr_ gram for the future. They have literally issued
a challenge to the United States to compete with the USSR econo~mically,
and -- through the world-wide use of their economic poweFATor international
political influence. This is a grave challenge,
Soviet leaders believe they have `rounds for the high self -ccmficlence
they have been showing.
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Today the gross national production of the USSR is slightly more than
one--third that of the U.S.; it is about three-.quarters again as large as that
_f the United I ingdom which ranks thir,_l. We still have very re t lead,
but the Soviet rate of progress is rapid. Moreover, in the Soviet Union,
capital goods and basic industrial materials form a much greater share of
overall production than in the United States. Thus, while their gross national
production is only one-third of curs, their production of capital egiAipment
is about 45% of ours. Soviet production -f machine tools actually exceeds
that of t'he United States.
The resources for investment in heavy industry are ma ale available
by a deliberate policy of withholding ec.. nomic benefits from the Sovi iet
consumer. Thus, Soviet pr:)ductio,:n of passenger automobiles is between
1% and ?% of our own, The United States produces 50 washing machines for
every one produced in the USSR, and 5 radio and TV sets for each one they
produce f::r a population almost one-quarter larger than ours.
As I have indicated, the Soviet industrial base is still only a fraction
of our own. It is nevertheless large enough to permit the Soviet leaders to
expand their military capability impressively, to plan an increasingly active
economic role in undeveloped areas, and to speak confidently at the 20th
Party Congress of closing the gap between their output and ours.
The Soviet leaders point bo._ast#ully too, the fact that the value --If Soviet
total economic output has increased almost threefold from 1928 tc,date and
this despite a devastating war which set them back severely during the period
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94'.-45. The rate of their industrial growth Turing this period hats been
about twice as high as the rate of their over-all growth. This has! been
p,.- Gs ele because important parts of their economy have been perr~itted to
lap; behind., particularly agriculture and c:--nsL_.ner goods.
One key factor in achieving this rapid rate _-)f industrial gr wth is
Soviet investment policy, which of course is set by the Soviet Government
not in accord with demand but acccr;ling t- what the traffic will bri ar. A
large part of the total national production of the USSR has consistently been
devoted to investment,
We estimate that 24% of the USSR gross national productit:.{n went
directly int ; capital investment in 1955 to increase the base for future
industrial growth and expanded military capabilities. Only 18% o American
gross national production is currently being used fo;r capital investment, and
this is the highest percentage we have achieved in the post-war p4pri od.
Of course, it is c_:nsolin to note that 18% for us am ountst a far
greater absolute total than 24% for them. In their case, however, heavy
industry has been the major beneficiary and is now absorbing abut 50% :-,f
their total investment. Thus, industrial plant and equipment in the Soviet
Union has nearly tripled since 1940, and their investments have been
allocated pre:l minantl.y to the coal, coil and electric psower in lusf ries, to
metalworking and metallurgical industries.
While capital goods output was rising; over tenfold, agricultural
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Ambitious goals for heavy industry set in their five year ;flans are
usually met or surpassed; unimpressive goals for consumer goods and
agriculture have fared badly,
For the future, the principal economic task of the Soviet T. nicn as
expressed in the Sixth Five Year Plan, which covers i956-l96Q, is "t,=-
overtake and surpass the most level: ped capitalist countries as s?es azl
per capita production. "
This general objective has been spfnl.ledl out by Saburcv, Chief Soviet
planner, as follows,
"It is true that we have not yet caught up to the United States either
in the volume of production per capita, and s Li far in the v _ l.ume _If industrial
production per capita." "However," he addecl, "the pace of our -'evelc-pment,
I
which by many times exceeds the pace of the growth of industry irk the United
States, permits us t c,verc:. me this la; within a very short historic peri,-.)d
of time.."
From the context, it is clear that Saburcv was thinking in :terms of
fifteen to twenty years.
This, in simplest terms, is the industrial challenge of the USSR.
Without going into the difficulties that the Soviet Union un ,' ~ubte fly will meet
in striving to build an industrial base more li.rectly c.;mparah1e t our own,
we have to admit that Soviet industry is powerful and rapi L = ;r .vying and
that the political effects in the non-Communist w orl.l ..f Soviet inlustrial
strength are bound t- be far--reaching.
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There is no doubt that in many countries, particularly Among the
countries of Asia which have obtained freedom. over the past fo ' decades,
the rapid: industrial progress of the Soviet Union has made a very deep
impact, This impact has been increase,] as the Soviet Union his come for-
war.-1 with tempting offers in the field of military and industrial; equipment,
and of technicians to help in its installation and use.
Before dealing with the Soviet program of economic penetration, it
is worth considering,; why it is that their program in this field seems to have
had. such an initial impact. After all, over the last ten years, the U. S. has
expended far more to aid the undeveloped areas of the world thin the Soviet
Union has given or even promised.
Here are some of the considerations upon which Soviet ~Jiplomacy
has played with cunning effect.
At least until the events of the past few weeks, the "hav4-not"
countries, -- many of them formerly colonial areas,
-- have believed that
the U. S., was so tied in with the colonial. powers that it was not free to exerci~-='
an inlepenlent attitude.
The complexes resulting; from the long period of colcnia1 status, have
caused many of these countries to react toward the U.S. , in the classic way
of self-assertion and opposition. The Soviets, until forced to slow their
hand in Hungary, have been very astute in their approach. They have manage
to create in the countries of Asia and Africa the impression that they do not
look upon these ecple an backw rl t n uses'
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by the West.
Hence, we have the strange situation where the most ruthless colonial
power in the world -- the power that has dealt most cruelly with its own
minorities -- is viewed as a liberator in areas where Soviet conduct and
policies are little known.
The Soviet leaders have also been very flexible in their negotiations.
They have promised liberally. They have not been tied town by l6gal
restrictions which sometimes hamper our own ability to compete with the
Soviets in many crisis areas. They have tailored their demands .s to
interest rates, terms of repayment a.nd the like, to the capabilities of the
receiving state.
The attitude of many of the Asian countries has also been Influenced
by the fact that they have suspected that the manufacturing intered,ts in the
Western world rather wished to discourage industrialization in A is in
order to keep them as good customers.
The general world trade pattern also looms large in the t*inking of
some of the Afro-Asian countries. For example, the United States as an
exporter of rice is a competitor of countries like Burma and Thailand whose
economy is based largely on their rice exports. At the same time, !due
largely to our increased use of synthetics, we have a diminishinginterest in
acquiring certain surplus raw materials, cotton and rubber, for examples
from countries such as -
Ceylon, and Indlonesia. Thus, strange as it
may se-ern., failures in the Soviet Bloc which have force .-I them to become a
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!
purchaser of agricultural products have led the Soviet to adopt !policies whicic
have tended to improve their relations with countries in Asia a.zd Africa.
Agricultural deficits have thus become an asset,.
Perhaps more impelling than any of these factors is the: attitude of
these countries toward the achievement of their economic revolution. Many
of the-on thought that when their colonial status ceased, their economic advanc
would progress rapidly. It did not, and we have tended to remind them that
progress must of necessity be slow, and req? ires the laying; ofsound
foundations and the undertaking of long-term projects.
The countries in the Afro-Asian area, impatient for prdgress, have
been profoundly impressed by developments in the Soviet Unic.n^ Thirty
years or more ago the USSR was as backward industrially as they now are,
The Soviets claim their transformation in a generation i .tc the world's;
second greatest power is the result of the Communist system. :Thr -)u h
subtle and persistent propaganda, they have tended to make may people in
these countries believe that such is true and that possibly, by c operating
with the Communist Bloc, they too, can somehow achieve a measure of
growth similar to that which they see in the Soviet Union.
Communist China, they feel, is following the same courpe as the
USSR; and many of those people believe that, within a limited space of time,
Communist China, too, will achieve a comparable goal.
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Finally, many of these countries believe that they can noiv have the
best of both the free and the Crrmnunist Worlds, can play one off against
the other, and that very likely the fact that they are the beneficiaries of
Soviet aid will make the United States even more anxious. to give them
counter-balancing; or even greater aid. Haulm; in general adopted a neutralist
role, they feel that they can best continue to maintain this if they accept both
United States and USSR aid.
A cartoon in the NEW YORKER not so long ago, pointec1ly illustrates
this particular problem. It showed the Chief of a cannibal tribe sitting in
his hut with his council of war around him. The Cannibal Chief was saying,
"Now, here's the plan. We let word out that we're in a state of
political ferment, Russia smells an opportunity and makes overtures. The
West gets worried. They make overtures.. :Russia asks to send cultural
amb-assa.lors and we let them. The West asks for equal representation, and
we invite them. Then, when we've ggot them all here, -- we eat 'them. 11
Few of the target countries of the Soviet economic drive are so naive
as to fail to recognize the cons as well as the pros of bee, min;ec:_onomically
dependent on the Soviet Union. This is increasingly true as the Soviet
repression of Hungary's freedom becomes known to these target, countries.
Moreover, actual performance, whether American or Rku.ssian, always
involve s fricticns, frustration and a measure of disillusion. Surplus
commodities taken from an undeveloped country in an initially attractive
barter deal reappear as competing sales for that country's established
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markets.. Cement deliveries exceeding a co,.:ntry's storage facilities lie
under the monsoon deluge and harden into worthlessness? Some customer,
Communist China, for example, fail to get all they want from Russia.
I think we can safely say that on equal terms, Free.-Wprld products
and economic assistance will be preferred to Soviet equivalent's, But we
must recogn4ze that the Soviet's prices, terms and conditions tare always
adjustable so as to confront the underdeveloped country . with an unequal
proposition. And suspicious of Communism as many countrie are, their
urge for capital goods is such that they will remain sorely tem, te-l to accept
the cheapest proffers.
In addition to its strictly economic assets for playing up to these
nations, the USSR has the advantage of possessing an enormouY supply of
obsolescent military equipment, which the smaller nations hunger for, as
elements of prestige and. power. These arms have only marginal or scrap
value to the USSR, and they can be parcelled out on generous credit terms.
The USSR quickly found it had a valuable combination p-ckage to
dispose of: cheap armaments, industrial equipment, exportable technical
skills in the form of Soviet advisors available on request, a ready market
for raw r_a.a.torials, subtle propaganda, and a total absence of p?litical scrupll_
The fruits of all this we have been seeing in the reccent troubles centering
around the Sues; Carjal,
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It may not be too much of an oversimplification to say that the
eruption of the Middle East into a complex, dangerous crisis stems from a
Soviet decision in April 1955 to buy its way into a power position in the area
with diplomatic and economic support for the Arab states. During the summe-r
of 1955, some eighteen months ago, the Czechs, fronting for the USSR,
entered into serious negotiations with Egypt, offering economic aid in general
and, of particular interest to the Arabs, the opportunity to acquire Soviet
Bloc armaments.
The first Soviet arms deal with Egypt was finalize,' in September 1955.
Similar deals on a smaller scale were made with Syria and Yemen, and offers
were extended to Saudi Arabia, Jordan, Lebanon, the Sudan, aid Libya,
This was no casual commercial enterprise, but deliberate Soviet intervention
in an area where a plentiful supply of arms was almost certain to inflame
ancient animosities and simultaneously reduce the chances for the Western
Powers to exercise restraint on the Arabs. It looked like a tidy little
strategic investment for the USSR almost any way it worked out.,
In fact, it worked out explosively. The USSR poured into Egypt,
planes, tanks, guns, and all the items and equipment that go with them for
over a year -- up to the value of about a quarter-billion dollars. Understan.l-
ably, in view of this build-up and a series of Arab raids, Israel 'began to
fear for its very existence, Britain and France for their economic life lines.
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In this strained situation, it would have been possible for boviet
leaders to say to the Arabs, -.. take the Suez Canal, the oil resources and
pipe lines, and even Israel itself. It is easy to tell people to appropriate
the property of third parties.
It is questionable whether the USSR in fact calculated on t .c dramatic
developments which ensued. The Soviet reaction to the situation as been
belligerent in words, cautious in action,
As events developed, the fighting ceased, and the USSR goinod some
undeserved credit with the Arabs for having stopped it. The USSt is almost
certainly ready to re-supply Egyptian military stockpiles. It has given
Egypt firm diplomatic support at every stage, and will undoubte:ll y bend
,,very effort, behind the scones, to make a political shambles outof the
U. N. negotiations lookingtt?oward real settlement of the Canal Zo$ie issue
and the Arab-Israeli conflict, It sees in the continued, blocking of the Suez
Canal a seriously disruptive factor for the Western Alliance.
At the same time, the USSR has shifted its attention to other states
susceptible to Soviet influence, notably Syria. Here the governme=nt has
mcve:l toward a pro-Soviet position, lured by USSR offers of modern weapons
and planes and Soviet instructors to teach the Syrians h _ w to use them,
The situation is still explosive, and I will not venture to pxedict the
outcome. Out of what has so far transpired, one conclusion is clear enough..-
with a minimum investment of Soviet economic resources, particularly
military equipment, in an area already torn by rivalries and disputes,
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M ,sccw has reaped at least short-range strategic dividends. It is far
easier to create chaos in an area than to stabilize it.
The USSR probably will continue to use these tactics to'disrupt the
Middle East -- and any other areas where it can find similar fuel to set fire.
This is a challenge to American policy planning, and I would say, one of the
most immediate threats arising out of the USS:1's industrial strength.
There are some compensatory factors. As the Arab st.tes today
review the balance sheet of recent events, sober second thoughts are becomi"cG
C
evident, and there may corn.e a reassessment of the net advantage or dis-
advantage of the entire operation.
What, after all, has been the result for the Arab world of following
Soviet advice and of listening to its alluring promises?
Egypt has lost much of the Soviet arms for which it mortgaged its
cotton and its relations with the West. It sacrificed for a time, at least,
the revenue from the Canal. Senseless sabotage operations ha,4c caused
consternation in other Arab countries. Egypt's economy has suffered
severely; its leadership is questioned,
Oil revenues of Iraq, Saudi Arabia, Kuwait and Iran are'declining
due to the blocking of the Canal, the consequent tanker shortage;, and the
wanton destruction of pipe lines and pumping stations,
In fact, on any balance sheet you draw of the Arab world today, the
flirtation with. the Soviet Union has been a costly adventure both for those
who indulged in it, and for the innocent bystanders,
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There would be far more reason to be disturbed about the long-range
implications of the Soviet export of industrial assets and "know how" and
their -c-ant windfall. profits in the Middle East, if it were not for the gravity
of the crises which the Soviet Union is now facing both at home and in the
satellite areas.
)n lust ~ialization and the 1-)Y7.ilding of a modern military establishment
calls for a very high degree of sophistication. It requires education on a
massive scale. While this can be scientific anad technical in part, there is no
feasible way of limiting the educational processes solely to the technical and
scientific fields. It is true that at the present time the Soviets are putting
relatively more emphasis on. the scientific side than we. At the present time
the percentage of Soviet graduates in these fields is roughly 60 percent of
the total, whereas in the United States about 30 percent of the graduates Are
in scientific and ?0 percent of our graduates are in other fields of education.
Some 18 months ago in an address at Columbia University, I did
some speculating about the dilemma which the Soviet was then beginning to
face as a result of the broadening of their education system., and. I ventured
to make this prediction; "In introducing mass education the troubled Soviet
leaders have loosed forces dangerous to themselves. It will be very difficult
for them henceforth to close off their own poorle from access to the realities
of the outside world. " These forces are now beginning to plague the Kremlin.
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After all, even in the USSR a policy of rapid industrial izaPioi alone
is not enough to satisfy human longings for a better life. This forced-draft
industrial policy has partially succeeded in economic terms, but it has caused
serious strains within Soviet society.
Under Stalin, many years of extreme emphasis on heavy industry
had depressed living standards, and together with the dictatorial system of
police terror needed to keep the people at the job, produced a lack
initiative among industrial workers, the peasants, the massive government
bureaucracy, and the "intelligentsia."
Realizing that this situation was becoming serious enough to slow down
further industrial growth, the Soviet leaders, after Stalin's death, began
gradually to improve the people's living standards, and to moderate some of
the harsher aspects of the dictatorship. While there has been son.e backing
and filling as ., 'alen''.cov's attempt to meet the needs of the people for
of
consumer goods gave way to a policy/renewed emphasis on heavy industry,
by-and large the old Stalinist policies have been somewhat relaxed at home,
and Stalin's reputation thrown to the wolves.
Gradually, an industrial "intelligentsia" is being built up.. To
run the present Soviet industrial machine requires a vast army of highly trained
technicians from factory foreman to plant manager. A. certain measure of
decentralization has been forced upon the Soviet system. As high production
norms are set, the standards of work and accomplishment of the plant
manager must be correspondingly raised.
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Even though a highly materialistic society has been created, the
reasoning, thinking processes of the workers at all levels have been
stimulated. They are thinking not only of industrial production, but about
the efficiency of the governmental machine itself and what it is doing to give
them a better Life.
There is growing up in Russia today, not only in industry but in all
walks of life, a race of human beings who are becoming inquisitive about the
fundamental principles that make it possible for men to live together in
political societies. In particular, there are well substantiated' reports that
the students are becoming restive, inquisitive and outspoken in their demands
for a critical examination of the infallibility of a system which produced
the abuses of Stalinism.
Pride of country, desire for power, some measure of appreciation to
the Soviet state, which has given them an education and a position of influence
plus fear and uncertainty about the consequences of deviation, may, for a timr
continue to hold most of the Soviet intelligentsia in line. But the leaven of
education has begun its work; the men in the Kremlin have a hard task ahead
to hold this process in chock.
Events in the satellites have vastly complicated the task.
It would be an oversimplification of the present struggle for liberty
and freedom in Eastern Europe, and one that would not do Justice to the cold
courage of the Hungarians and the restrained d,:termination of the Poles,
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to ascribe recent events in these countries to mistaken headlong
industrialization. The causes and motivations of the Polish and Iliungarian
developments go much deeper. They have chosen freedom, and the long
struggle to achieve it has now only begun.
Nevertheless, the tough Stalinist program of forcing indusItrializ,ation
on Poland and Hungary a policy that was continued by Moscow=p puppet
leaders, Beirut and Ra'cosi, even after Stalin was buried and his acts
repudiated by Moscow was one of the factors which led to the revolts.
Neither the overlords in Moscow, nor the puppet leaders in the
satellites fully appreciated that a scale of industrialization which !might be
tolerable for a time in the USSR could not be imposed to the same; degree
in smaller and very differently constituted states.
Actually, the people in the satellites who were supposed to benefit
did not. Instead, they suffered from tyranny and mi^management. The
satellite rra.tio-ras found in practice that the Soviet magic formula oi forced-draft
industrialization simply was not a good model for small and relatively
resourc-e,-poor states, Soviet pretensions to leadership of non-Communist
nations seeking to industrialize, find no support in the miser-able failure of the
Soviet economic system throughout Eastern Europe.
After the event, even Moscow has admitted this..
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An extraordinary editorial in PRAVD.A of November 23, referred to
serious miscalculations in Hungary, and the building of large undertakings
far be_ oal the strength of so small a country as Hungary," The writer went
on to sa?r that the slogan, "Increase the tempo of industrialization" which he
claimed was quite correct under conditions prevailing in the USSR, was
mech_;:ai.ca.ii,? Lran.sferred to Hungary as a matter of routine, "without any
due economic .justification. "Large undertakings, " the writer added,
"were built without being assured of sufficient raw materials,"
Characteristically, the editorial writer claimed that it was local
stupidity in Hungary operating against Soviet advice that brought disaster.
We are .justified in questioning this after-thought. Certainly Ra'.4osi in
Hungary and Beirut in Poland thought that they were doing their bounden duty
as prescribed by Moscow even after in Russia itself, the word had gone out
to temper somewhat the Stalinist pattern of industrialization.
Gomulka, in his speech of October 22, in reviewing Poland's economic
plight, put the issue in even stronger terms, "We contracted important
investment credits for the expansion of industry, and when the time came for
the payment of the first installment we found ourselves in the situation of an
insolvent bankrupt, "
Whatever else the situation in the Soviet satellites shows, it
demonstrates beyond doubt that a policy of headlong pursuit of industrial
strength is not enough to guarantee even economic welfare, let along good
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government and good life in general. I hope that this lesson may gradually
sink into the minds of peoples in small nations outside the Soviet,Bloc who
are tempted to trade their political birthright for a mess of Soviet-style
indu.strial izati on.
It is clear also that the Soviet leaders must now revise their views
not only as to the value of the satellite military establishment, but also the
value of the industrial. contribution which they can expect to receive in the
future, particularly from Poland and Hungary. At the same time, the Soviet
Union will have the problem of making up agricultural shortages in these
former surplus areas which now, due to overemphasis on industrialization,
will have to look either East or West to supplement their deficit in food.
The Soviet Union has made a fetish of industrial and military power,
In doing so, as I have suggested, it has sacrificed the interest aid welfare
of many of its people, and it has dealt recklessly with the econotaies of the
European satellites. In following this program, the USSR has failed to give
either to their own people or to the people of the satellite states, their fair
share of industrial production in the form of consumer goods, or the raising
of the standards of living.
As justification for their actions, the Soviet have asserted that the
development of heavy industry was necessary to their war machine and that
in turn, this was required because the Soviet was threatened and encircled.
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They have built up the war menace and invented the war mongers,
In accomplishing their primary objective of building a Modern
industrial state, they'iave, however, produced -.anew genera.ti3n of highly
technical, sophisticated and competently educated men and women. This
new generation is making itself felt not only in the satellite areas where
there is a hi:s ;orical hatred for the Russian oppressors, It is also beginning
to be heard in the Soviet Union itself where youth is not prepared to accept
the strictly materialistic and militaristic bases of Soviet society.
Hence, the challenge of Soviet industrial growth is not only directed
outward to the Free World, it is also a challenge addressed inward to the
peoples of the Soviet Bloc, It threatens the very basis of C 'mrzunist
doctrine and the type of government set up in the Kremlin.
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