SPECIAL REPORT PROSPECTS FOR ECONOMIC ADMINISTRATIVE REFORM IN THE USSR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005000020002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: April 19, 2006
• Sequence Number: 2
• Publication Date: August 20, 1965
• Content Type: REPORT

Copy No.
PROSPECTS FOR ECONOMIC ADMINISTRATIVE REFORM IN THE USSR
State Dept. review completed
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downgrading and declassification
CENTRAL INTELLIGENCE
e 2007/03/13 : CIA-RDP79-00927A00;, O00?00Q2-5
ugust 1965
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PROSPECTS FOR ECONOMIC ADMINISTRATIVE REFORM IN THE USSR
The Soviet leadership has apparently had dif-
ficulty deciding how to effect the changes it
promised in the management of industry. This is
a major cause of the long delay in convening the
party central committee p~anum on industrial manage-
ment. The problems stem from the complexity of the
issues and the widespread opposition to significant
reforms. Recent evidence indicates that when the
plenum does meet, it may adopt a sweeping reorganiza-
tion of the central economic administrative apparatus
but will not approve major changes in planning and
management methods.
The improved pricing system and other basic
reforms called for in recent liberal proposals ap-
pear unlikely to be adopted. Moreover, there is lit-
tle likelihood that the plenum will approve a broad
extension of recent liberal experiments. Rather,
such experiments will probably continue to be intro-
duced slowly and cautiously as they have been in re-
cent months. There is some chance, however, that
somewhat greater autonomy will be permitted indus-
trial enterprises, possibly through a revision of
legislation governing the powers of enterprise direc-
tors.
Promised Changes
On coming to power, the
Brezhnev-Kosygin leadership ex-
pressed deep dissatisfaction with
the administrative confusion
created by Khrushchev's "hasty
and ill-advised" reorganizations.
The new leaders called for a
critical but circumspect review
of the central economic adminis-
trative structure. More important,
they stressed that real progress
in solving the USSR's major eco-
nomic problems--falling rates of
industrial growth, waste of re-
sources, lagging improvement in
technology, and poor quality of
products--could not come from ad-
ministrative reorganization alone.
At the December 1964 session of
the Supreme Soviet, the leaders
announced that various proposals
both for clearing away adminis-
trative confusion and for funda-
mental reforms of economic manage-
ment would be reviewed and that
decisions would be reached. The
first of these are expected to
be presented and approved at the
plenum.
The Distorted Economic
Administration
Khrushchev's repeated re-
organizations wrenched the ap-
paratus for administering in-
dustry into a bewildering patchwork
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Administrative Organization
USSR
GOSPLAN
SUPREME COUNCIL OF
NATIONAL ECONOMY
STATE COMMITTEES FOR
BRANCHES OF INDUSTRY (14)
REPUBLIC
GOSPLANS
Marketing & Supply
Administrations
Marketing & Supply
Administrations
COUNCIL OF MINISTERS
USSR
REPUBLIC
SOVNARKHOZES (3)
REGIONAL
SOVNARKHOZES (50) **
Marketing & Supply
Administrations
II
STATE COMMITTEES FOR
BRANCHES OF INDUSTRY (2)
**other republics and regions within
RSFSR, Ukraine, & Kazakhstan.
MINISTRIES FOR
BRANCHES OF INDUSTRY
Marketing & Supply
Administrations
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USSR
GOSSTROY
REPUBLIC
GOSSTROYS
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of fragmented and overlapping
agencies. Responsibility for
planning is separate from the
management of enterprises and the
supply system.
The State Planning Committee
(Gosplan) is largely responsible
for determining economic plans,
but it has little authority for
putting them into practice. Gos-
plan, moreover, shares its plan-
ning authority with the USSR Eco-
nomic Council (Sovnarkhoz), the
USSR State Committee for Construc-
tion Affairs (Gosstroy), the in-
dustrial ministries, and sixteen
state committees for individual
branches of industry. These com-
mittees are charged with ensur-
ing the adoption of new technol-
ogy in their respective indus-
tries, but they have little au-
thority to impose their decisions
on individual enterprises. Real
directive authority over much of
the economy is now vested mainly
in the USSR Sovnarkhoz and the
republic and regional sovnar-
khozes. The country's supply and
marketing organizations and most
industrial enterprises are sub-
ordinate to these councils. The
separation of planning from opera-
tional responsibilities results
in uncoordinated supply and pro-
duction plans with their attend-
ant shortages, excesses, and bot-
tlenecks.
Many proposals for straight-
ening the administrative mess
have called for, strengthening the
directive powers of Gosplan,
thereby reducing those of the
USSR Sovnarkhoz, restoring min-
isterial status and managerial
power to the state committees for
specific branches of industry,
and abolishing the regional
sovnarkhozes. A step toward
implementing these proposals was
the March 1965 reorganization
in which seven ministries were
re-established and their control
over defense industry enterprises
was restored. The regional
sovnarkhozes, however, have been
defended by many party and ad-
ministrative spokesmen, primarily
as a means to control local
economic activity. It is pos-
sible that a compromise may be
worked out in which the regional
councils would be retained but
with greatly reduced powers.
Any major reorganization
would cause the relocation of
many administrative personnel
and a possible loss of power by
local party officials. For this
and many other reasons the ex-
tent and details of any reorganiza-
tion proposals are probably hotly
debated at the highest levels.
Planning and Management
Reforms
In September 1962 the Liber-
man proposals advocated a sharp
increase in the planning and
operational powers of enterprises
and urged that profitability be
made the main criterion of per-
formance. This touched off a
widespread debate on the amount
of autonomy and the kinds of in-
centives that should be granted
to enterprises in order to im-
prove their efficiency and per-
formance. The debate is still
continuing although Soviet leaders
and economists agree that the pres-
ent system is far from satisfactory.
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COUNCIL OF MINISTERS
USSR
SUPREME COUNCIL OF
NATIONAL ECONOMY
STATE COMMITTEES FOR
BRANCHES OF INDUSTRY (14)
USSR
GOSPLAN
REPUBLIC
GOSPLANS
MINISTRIES FOR
BRANCHES OF INDUSTRY
Marketing & Supply
Adnslnistrottons
The lines show the interchange of planning documents. The enterprises
form their plan according to control figures wood by USSR Gosplan;
enrenprise plan are then reviewed and combined at wccetnively higher
levels of the stns