ECONOMIC IMPLICATIONS OF KHRUSHCHEV'S SPEECH ON THE PARTY PROGRAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A002300190002-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 22
• Document Creation Date: December 9, 2016
• Document Release Date: April 5, 2001
• Sequence Number: 2
• Publication Date: October 24, 1961
• Content Type: MF

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24 October 1961
Copy No. 17
MEMORANDUM FOR: Deputy Director/Intelligence
SUBJECT: Economic Implications of Khrushchev's Speech
on the Party Program
I. Introduction
The USSR Communist Party Program reviewed by Khrushchev
on 18 October at the Twenty-Second Party Congress is a poli-
tical document couched in the language of Marxian economics
and philosophy. Its industrial targets differ little in
direction and implied rate of growth from earlier plans, and
its grandiose promises to the Soviet consumer, even if carried
out, would leave him far behind his Western counterpart.
S.G. Strumilin, the dean of Soviet economists, stated in
the September issue of the Soviet journal Kommunist that the
program is intended to be "a graphic example and a clear-cut
program of action" for the " ... two-thirds of mankind who are
doomed to chronic undernourishment ... and to rid all the
peoples forever of ... the malignant ulcers of capitalism ... ."
Strumilin continued: "Dozens of underdeveloped countries are
already beginning to utilize the industrial organization which
brought the socialist camp such amazing successes ... ," and
in summation he predicted that by 1980 the world's population
balance will have shifted in favor of the socialist states,
mainly through recruitment from the underdeveloped areas.
In his speech on the Program, Khrushchev clearly invites
the underdeveloped countries to follow the lead of socialism.
He traces briefly the history of the development of the USSR
and socialism from 1920 to the present: " ... Our country ...
which occupied last place economically among the major
countries of the world now ranks as the second industrial
power ... and leads historical progress." "The socialist
system," says Khrushchev, " ... increasingly determines the
course of world development."
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Thus the challenge to the Western democracies is not only
the implied threat of increased economic aid or arms traffic with
the underdeveloped countries or possible military adventures; it
is also the image of Soviet achievements and methods which,Moscow
hopes will appeal to the young nations of the world as an
attractive and effective model.
The economic characteristics of the program can be summed
up in a phrase: "more of the same" -- that is, in general, a
continuation of the economic pattern and rate of development of
the last 10 years. The primary emphasis of the program is on
the development of a heavy industrial base second to none. This
base, on the one hand, is to serve as an.advertisement of the
Soviet "miracle" of rapid growth and, on the other, is to provide
the basis for the further extension of Soviet power in the world..
Competition with the West is not envisioned in terms of consumer
goods or consumer satisfactions but rather in terms of capability
to produce still additional industrial and military power. Thus
Khrushchev has again defined the competitive area as industrial
growth, where he clearly feels that the Soviet Union enjoys a
comparative advantage over the United States.
For the consumer, Khrushchev again points to distant
objectives which, to the average Asian or African, are indeed
grandiose. The speech leaves very great doubt, however, that
Soviet industry will be reoriented as would be required to
achieve the promises. The ;data on rates of growth.for various
subaggregates of industrial production and for specific commodities
indicate that in 1980 the consumer will receive an even smaller
share of the total output of goods and services than the 60
percent which he is getting in 1961.
The data presented, although far from voluminous, suggests
that the problems of how and for what purposes the expected 1980
output will be used have not yet been seriously considered.
Khrushchev again claims that the projected rates will
permit.Soviet industry to surpass the present level of U$
industrial output during the"next 10:-gears and:,7"leave it far
behind" in 20 years. If the Soviet Union succeeds in increasing
industrial ouput as planned -- and based on the CIA estimate
that Soviet industrial production at the end of 1960 was about
42 percent of that of the United States -- Soviet industrial
output by 1970 should reach the US level of 196.0. However, if
the United States achieves an industrial rate of growth of 4.5
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percent, Soviet output would then be about two-thirds of that
of the US by 1970 and about equal to it in 1980.
The claims that :US,per capita total
surpassed: by , 1970.,and -tha t.. the .:USSR.will achieve the world Esc
highest standard of -living by 1,980 rest on
the resent Soviet gross ci s i ort~ o13
pvsl tiop :iii ..:t t
ho: economic, race. g o $ v t
prospects for the future,
III. Aggregates
Soviet industrial production is scheduled to grow by 9 to
10 percent annually throughout the
is on a par with actual achievenientinlrecenthyearstbutfisrowth
p
slightly above that called for in the Seven Year Plan (1959-65),
suggesting that a somewhat higher rate of
growth 1965. Also, Khrushchev's announcement on 17Octoberpthatesometer
heavy industrial goals such as steel, oil, and
been raised for 1965 probably applies here, petver-am have
for industrial production appears, The over-all goal
feasible.
, on the face of it, to be
As the program recognizes, achievement will require a
massive investment effort and a sharp rise in the
pp
of labor as well. Investment, as scheduled in the progratim,
appears likely to be adequate and can be achieved by continuing
the rapid rate of growth of investment of the past few years.
A failure of labor productivity to increase as scheduled or a
failure of expected improvements in the use of capital through
better planning, production relationships, and equipment uti-
lization would call for either a
greater
in industry than planned or a higher leveloofmindustrialtemploy-
ment than planned.
On the basis of past performance the target for agriculture
an annual growth of more than 6 percent through 198.0 -- will
almost certainly not be achieved.
goals would require not only massive investments but allsoctheural
development of new crop strains and efficiency gains which o not
seem to be forthcoming from the present organizational structure.
IV. Labor Requirements-- ProductivityandLabo.r Force
Industrial labor productivity is scheduled to increase
at about 7 percent annually during 1961-70 with a speedup to
nearly 8 percent annually during 1971-80. The rates somewhat
exceed the annual rate of 6,5 percent achieved during the past
-3-
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5 years. Judging by past planning the industry p
goal probably is over optimistic, but shortfalls willcbevmade
by increasing employment above plan at the expense of the
services sector.
The labor force in the Soviet Union is to increase by 40
Percent between 1960 and 1980, or about 1.7 percent .
This rate of growth is consistent with the anticipated growth
in that portion of the
population this estimate alone, theSovietrlabornforceEwouldgnumber
about 154 million in 1980 compared with 110 million in 1960.
Apparently no significant changes in
participation anticipated in spite of Khrushchev?s admonitionthataall must
work, for the proportion of Soviet adults in the labor force
would continue at its present level of about 73 percent.
Implicit in several of the announced long-term goals are
major, but somewhat improbable, changes in the distribution of
the labor force among the various sectors of the economy.
Employment in health, education, and other services, for
example, is scheduled almost to triple during the next two
decades, and industrial employment will have to increase b
almost 80 percent if production and 3'
By these standards, industry and servicescaloneywilllempare lo m990.
v
million persons by 1980, or almost three-fifths of the labor
force compared with little more than one-third in 1960.
Scheduled changes in agricultural output and
dicate no decline in agricultural employment by?197?ibbutyain-
sharp decline of about 40 percent to 28 million by 1980.
Such a decline is very unlikely.
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V. Investment
roughlyAsixmastimesivesctheapitatl investment amount program
rubles --
investment ,-entire
Soviet period to date, is planned for 1961-80, during the'
This sum should be adequate to support the
in the program, if more efficient use of capital occurshasnKhru-
schev hopes. The investment, which apparently includes investment
for collective farming and private housing along with state invest-
ment, could be achieved by continuing the
investment -- 10 percent or more past rate of growth of
f or the next two decades. Achievement of thistrateawouldymean a-
rise in the total share of output going to investment.
Machinery
Two important aspects of the investment program -- machine
building and construction -- were given considerable attention. An
estimated total of 700 billion rubles of equipment will be re-
quired -- about a 13 percent annual increase -- machinery and equipment that are given match thisnrequirement, or
For some categories of machinery, the plans are even more
spectacular. The projected expansion of the chemical industry
would require production of chemical equipment to grow at nearly
twice the average rate for all equipment,
Under the equipment program 2,800 new machine building
plants will be constructed and 1,900 old ones renovated. The
plans for increases of labor productivity and for technological
improvements indicate that industry will receive more than 12,000
automatic and semiautomatic lines in 1980 -- compared with more
than 200 in 1960.
Construction
The main indication of Soviet intentions in the field
construction is embodied in the of
the magnitude of this
goal, it goal for cement. on the basis of
stallation work is to increase atpanraverage cannualcrate -on-
6
to 7 percent, which is considerably less than the rate maintained
during the last decade,
in spite of the optimistic outlook for Soviet construction
during the next two decades, Khrushchev repeatedly emphasized at
the present Congress that the construction program is plagued
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with serious shortcomings, primarily the result of
and the failure of the building materials and equipmepoor nt industr es
to keep up with the rapid pace of building. Essentially, the
problem is one of dispersion of limited investment resources
among too many construction projects. Projects
genera
substantially beyond their scheduled completion dates, anndran
large volume of resources is tied up in unfinished work. The
core of the problem is the lack of an incentive arrangement that
would rationalize new starts in construction and encourage the
prompt completion of a construction project once it has been under-
taken.
Some improvement has taken place in recent years through
such measures as identifying certain
but apparentl projects for priority effort,
y progress continues to be unacceptably slow. The
latest proposal to attack the problem came from Khrushchev at the
Congress. He "suggested" a moratorium on new starts in construction
perhaps for a year, with exception only for especially imor
projects subject to the decision of the central p tent
government. He
also indicated that a decree had been adopted rece
ntly which se
out the order of priority in investment. is
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VI. Heavy Industry
The continued high priority of heavy industry is clearly
indicated by the specific commodity goals presented by Khrushchev.
The increase in steel production projected for 1961-80 indicates
that Soviet planners are more optimistic now than in earlier
forecasts.
The Soviet Union has sufficient reserves of raw materials
resources to support such an effort, but the program would re-
quire substantially increased capabilities on the part of the carr-
struction industry and the producers of equipment.
The goals for production of electric power occupy a leading
position in the Program and continue Soviet adherence to Lenin's
oft quoted dictum that "Communism is the Soviet power plus the
electrification of the entire country".
Production of electric power in the USSR is to reach
2,700 billion to 3,000 billion kilowatt-hours (kwh) by 1980 --
86 percent of one forecast of US electric power production at that
time. To achieve this goal the industry must continue the 12 per-
cent average annual rate of growth of recent years.
Installation of new capacity in 1980 alone would have to
approximate the capacity planned to be installed in the entire
Seven Year Plan period. The annual investment required for the
electric power industry would reach about 10 billion rubles in
1980; total investment for the 20 year period would be about 100
billion rubles.
Khrushchev announced a series of goals for petroleum,
natural gas, and coal that appear to be illogical. The rates of
increase for the most economical fuels -- natural gas and petro-
leum -- would slow down, particularly after 1970, whereas that
for coal is planned to increase more rapidly after 1970 than
in the present Seven Year Plano
Such a projected pattern of growth in fuels would be con-
sistent with a belief that reserves of natural gas and petroleum
will be more difficult to find after 1970 and that greater
reliance must therefore be placed in high-priced coal.
An element of Khrushchev's effusive description of future
power plans was his failure to mention the development of nuclear
energy, concerning which there was considerable propaganda at
the Twentieth Party Congress. The greater utilization of natural
gas in the European USSR and of open-pit coal in Siberia will
continue to make electric power available at much lower cost than
can now be expected of nuclear power.
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Chemicals
Output of the chemical industry in 1980 is scheduled to
be 17 times that in 1960, almost 3 times the planned growth of
industry as a whole and an almost straight line projection of
the rates of growth stipulated for chemicals in the Seven Year
Plan.
It is likely that the same constraints which have created
doubt that the Seven Year Plan for chemicals will be achieved
-- chiefly lags in technology and equipment -- also will hold for
the Twenty Year Plan.
Implied but not stated by Khrushchev in these ambitious
goals is the continued heavy reliance on imports of chemical
equipment from Western Europe.
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VII. Great Projects
Soviet "great projects" -- long under consideration for
supporting the expanding economy were included in Khrushchev's
outline of the Twenty Year Program. Vast new hydroelectric
projects and systems of waterways for irrigation as well as for
transport are envisioned.
The plans for changing the face of nature through the
construction of hydroelectric powerplants are reminiscent
of the Stalin era but do not imply the necessity for the capital
allocation that drained the economy in the early 1950's. The
hydroelectric powerplants mentioned by Khrushchev
(previously the imprimatur of a major speech) have long been dis-
cussed in Soviet technical literature and have even been reported
as planned for construction by 1980. In the years Khru-
schev's speech in 1958 at Kuybyshev, in which hecalledefor the
priority construction of less capital-intensive thermal-electric
powerplants, hydroelectric powerplant engineers have redesigned
the major hydroelectric projects, thus cutting the capital costs
by 50 percent or more. For the 100 million kilowatts of
hydroelectric capacity to be installed in the 1961-80 period,
this redesigning could result in a saving of 10 billion rubles.
Khrushchev's emphasis in the program on the "inexpensive
hydroelectric power" of the Volga-Kama and Dnepr Rivers su
that he has reconsidered in favor of the long-term efficiency of
investment in hydroelectric stations, especially as their con-
struction can be correlated with gains in water transportation-
and irrigation.
The Khrushchev speech adds few details to previous
announced plans for developing new metallurgical bases. The
intention to construct new plants in the Eastern Regions was
first emphasized in the Sixth Five Year Plan and was restated
in the Seven Year Plan, Construction of new capacity has been
started in Kazakhstan and in West Siberia, but at neither
location has the construction schedule been maintained. Plans
for other new plants proposed as
bases are in the initial stages, parts of the new metallurgical
will be built in the Eastern and CentralgRegions, thetUkrainebtedly
and the Urals will continue to be the principal sources of steel
atprotheductmomention The Soviet Union seems
of
industrial development on a large scalecinltheeEasternCRegi n
for example, the construction of whole new towns with all the
communal services needed.
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lengthening great projects
lengthening outlined by K
USSR from 11 000 the system of artificial hrushchev also
1980. kilometers waterways in the include
The old project for in 1960 to 23,000
kil European
the Black Sea b a deep-water kilometers in fro Bal
wanting cackls a to way a mthe Volga and Don Rivers atheon- tic
to The Volga the Banepr Pripyatgandeted and a new shorter nd con
waterway Neman Rivers is to route by
system y a currently final link in the be initiated.
Y underway with completion first of these
Planned for 1964,
Khrushchev also spoke
of years, to reverse of f ath
into the Kama Plan, discussed for a number
Rivers for Irrigation purposes and -Volga giver s t Pechora and V
o divert Ychegda
for which Probabl ystem. This part of their water
both from an y began in the s project, survey work
Completion engineering and an economicf 1961, is feasible
generating of this project will Point of
capacity hydroelectric increase the view.
a
River stabilizf the nnuhe
Volga the CaRivar Sea e' or reverse the fallingwater le el the
northern timber'regionsprove river transportation taut of of
the
VIII? Agriculture
Khrushchev devoted considerable
for agriculture
for He said, "at the attention to his
building, the CPSU considers present stage goals
sphere of agriculture PSU con its main tasks g of Communist
to ." be in
agriculture, together Probable increased in n
t the
agr Inc eases with new technolo vestment in
ialinc will fall output in the gY' promises but results
times far short of next two decades, but the 1960 level. Although, the targeted increase
receive a higher gh, in the to 3.5
Is still placing Priority than long run, agriculture
is of to raisin emphasis on the " in the Past, Khrushchev
level of g the lagging farm enterprises type the leading Prises to the Pr u operation
ltremendous unuiin ednterprises by Productivity
reserves" bringing into play the
of Socialist agriculture.
Large Increases in Production are
agricultural commodities that are Planned for all
Programs listed se
commodities The Planned levels of out parately in the
approached grain, meat, and
milk for such important
a pr co d Irrigation* y 1980The specialemp are not likely ai
be
agipveprn ton could result emphasis fulfillment
vegetable zones Plan for cotton. in the fulfillment of the
around The establishment of specialized
goals for vegetables lands could permit pecialized
Potatoesa the attainment of
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Khrushchev's statement concerning changes in crop
patterns and land use are confined largely to a restatement of
earlier proposals, although peas, beans, and other leguminous
crops are to play a larger role. Leguminous crops appear to
have received the sanctification by Khrushchev hitherto
reserved only for corn. Not only do the former have fairly
large yields per acre,,but also they produce nitrogen elements
and thus act as a natural soil builder.
Khrushchev repeated the familiar slogans concerning the
general need to increase mechanization; to produce more power-
ful tractors; to create new types of machines; to emphasize
machinery for the harvesting and growth of corn, cotton, flax,
sugar beets, and potatoes as well as for animal husbandry; and
the need for considerable improvement in care and maintenance of
.the tractor and agricultural machinery inventories. However,
he revealed no new programs in these fields. Continuing a
program already underway, facilities for production of tractors
and agricultural machinery are to be enlarged.
A tenfold increase in production of mineral fertilizer
and a fourfold increase in irrigated area above that of 1960
is planned for 1980. Substantial progress toward these goals
is likely. The goal for mineral fertilizer goal of 125
million to 135 million metric tons, however, appears to be
much too high both with respect to reasonable requirements
and to likely achievements. Current emphasis on expansion in
,irrigation may result in the goal of 28 million hectares of
irrigated farmland being attained ; ;as planned,.
Khrushchev devoted little attention in his speech to
questions on agricultural organization. He brushed aside
the question of converting collective farms into state farms
by reiterating that these two types of farming units would
continue to develop side by side. Although this policy has
been repeated often since March 1958, the state farm system
nevertheless has grown tremendously at the expense of the
collective farm system in the past several years. A contin-
uation of this trend for another several years would result
in the state farm replacing the collective farm as the
dominant type of production unit in Soviet agriculture.
A thread of discontent with present agricultural
management runs throughout the agricultural section in the
party program and suggests that Khrushchev intends more
revisions and personnel changes, possibly in the near future,
in his as yet ineffectual search for the touchstone of
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agricultural success. Although a comprehensive reorganization
of the Ministry of Agriculture and the new institutions.. for
machinery supply and farm procurement were decreed in January,
the Soviet press implies that the new arrangements are plagued
with many of the defects of the old bureaucratic ineffi-
ciency, lack of initiative throughout the system, and,the
strong desire of many agricultural officials to avoid, as much
as possible, any contact with the farms themselves.
At the Congress Khrushchev further suggested that
regional exhortation meetings such as were called after the
agricultura'. plenum in January, which formalized this year's
reorganization, may again be necessary before the year is out.
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IX. Consumer Program
The consumer goods industry by 1980 is to increase five-
fold, whereas industry as a whole will grow by six times. This
means that both light industry, which produces most of the
consumer goods, and heavy industry are expected to grow at
approximately the rates claimed in recent years -- 8 percent
and.10 to 11 percent, respectively. Although Khrushchev implied
that by 1980 the consumer will be receiving a greater share of
total industrial production than at present, actually the share
will decline.
Khrushchev also attempted to prove the consumer orien-
tation of the program with the claim that heavy industry
increasingly will direct its ouput to the service of the consumer.
That segment of.heavy industry which provides "means of production"
for the light and food industries, agriculture,. and housing
construction is to grow 13 times by 1980, whereas the remainder
of heavy industry is to grow only 6 times. Khrushchev apparently
achieved this effect by a judicious selection of data,, Because
he did not sufficiently identify his selection, the statement has
no analytical use, except to suggest that the.consumer durable
and light industries in the Soviet Union today are operating at
the limits of their relatively small capacities and that any
significant future increases in-output can be achieved only by
expanding the industries.
Housing Goal
In support of his housing goal, Khrushchev stated that the
annual volume of construction will increase from 135 million square
meters in 1961-65 to 400 million in 1976-80. These statistics
imply impressive rates of growth, but by themselves they are not
enough to permit an accurate calculation of the programmed changes
in per capita availabilities during the next two decades.
Housing remains a serious problem in the USSR. because of
several decades of neglect coupled with losses during World War II.
Light Goods and Durables
Khrushchev's speech outlines goals for production of textiles
and footwear for 1970 which, compared with 1960, require rates of
increase slightly higher than those called for by the Seven Year
Plan..
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His figures indicate that by 1970 the over-all plan is to
supply in large part the consumer needs for textiles and leather
footwear as measured by the "scientific norms" for.consumption
which were announced in .1958 and which are roughly equivalent
to.US production in 1957.
After 1970 the rates of growth for light industry are
planned to slow considerably for example, for textiles from
7.5 percent during 1961-70 to 4 to 5 percent during 1971.-80 and
leather footwear from 7 percent in 196a-70 to 1 to 2 percent
during 1971-80 -- probably in favor of increased production of
"cultural and household goods."
In general, the goals set forth are fairly realistic as
measured against the past performance of the light and consumer
durables industries.
Standard of Living and; Wages and Hours
Khru.shc.bev'.s plans for improved levels of living contain
no sharp departures from previous announcements. The further
planned increase in publicly determined consumption as against
privately determined consumption has been expected and represents,
at a minimum, a. "safe" method of distributing the increasing
national income. Even by the end of the 20 year period., however,
about one-half of total personal income still will be distributed
as wages and salaries.
Although social benefits -- free health service, pensions,
and the like -- are to be increased faster than earnings and
although differentials between lower paid and higher paid workers
are to be reduced, such adjustments are to be made cautiously
so as to maintain .a sufficient incentive to achieve goals of
production and productivity.
The draft program repeats the intention to reduce further
the length of the workweek to .3,5 hours during the first 14-year
period. The shift from a 46-hour to a 41-hour workweek was
complete at the end of 1960, and the workweek is to be further
shortened by 1 hour in 1962. No reductions were announced for
the second 10-year period (1971--80).
A curious omission from a picture of "workers paradise"
was any reference to increasing industrial safety precautions
which Khrushchev had hit hard in his Program and in which the
Soviet Union is appallingly remiss by Western standards.
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Education
Khrushchev emphasized that the Party should direct its
efforts during the next 20 years at implementing universal
.secondary education. Secondary education at present is
"universally available" but not compulsory. While stipulating
that completion of the 11-year school should become the standard
for children of school age during the next decade, he also
indicated that the minimum educational attainment of persons
already in the labor force should be increased to at least 8
years. The formidable nature -of this latter goal is suggested
by the results of the 1959 census of population relating to the
educational attainmentof the labor force, which showed that less
than one-half of all Soviet workers have completed 7 years or
more of schooling. In addition, the next two decades will
witness a rapid expansion in enrollment at higher educational
institutes, from 2.6 million currently to 8.0 million in 198.0.
This represents an annual increase in enrollment of about 6
percent compared with about 7 percent during the 1950's.
Higher education in evening :classes and correspondence courses
is slated to play a dominant role and presumably will account
for an even greater proportion of total enrollment by 1980 than
its current 56 percent.
Life in the Soviet Union, 1980
Khrushchev's version of the program promises a Utopian
future, Communist style, to the Soviet citizen. Indeed, even
before the end of the 20-year period the benefits of Communism
are supposed to be apparent as he goes from his small free
apartment, with its limited but free utilities, via free public
transportation to his 35rhour a week job (secure in the knowledge
that his children are being cared for at the free boarding school
and his wife at the free hopital) hopeful that today's free meal
will be better than yesterday's and looking, forward to his
vacation at the reduced rate rest home at Sochi,
It should be noted, however, that the prospective "free"
items now cost the consumer relatively little in direct outlays
- slightly more than 10 percent of total consumer expenditures
in 1960 -- the balance of the cost of the goods and services
being paid primarily through indirect taxes. Whether the
consumer pays directly or indirectly for such services-'is mainly
a bookkeeping problem and has no effect, as such, on his standard
of living.
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In reality the Soviet citizen can look forward at best
to a Spartan existence by Western standards. Agricultural goals
appear unattainable, even though there may be some improvement
in the consumer's traditional diet, long on potatoes and short
on meat. Light industry, hampered by shortages of agricultural
materials, will provide adequate clothing but of limited and
perhaps poor quality and style. Small, poorly constructed
apartments will be sparsely finished and.,.inspite of promises
of the wide introduction of "cheap household machines," it seems
likely that the Soviet citizen will be expected to share these
with other occupants of his apartment building -- most new
apartments are equipped with electrical circuits only large
enough for lighting. The average citizen will work shorter
hours, but the demands on his leisure time will be increased
for "voluntary" work for the Party's "common good" without
compensation. Everyone, including women, will be expected to
work, and the availability of "free" nurseries and communal
dining will make it difficult to avoid this. obligation. Indeed,
Khrushchev admits that these services are being introduced to
,;know-the already high proportion of women in the labor force
(55 percent of women above 14 years of age in 1960) to increase
still further.
Perhaps most important of all, whether or not the average
Soviet individual is better off in 1980 -- and he undoubtedly
will be -- he will have little or nothing to say in the matter.
He may well be provided with some additional goods, but they
may well not be the goods of his choice. The "new" Soviet man
will have learned to be satisfied with a."reasonable"..standard
of living, Khrushchev hopes.
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X. Planning
The report of the draft program reiterated the impor-
tance of more effective planning and management in the drive
for greater economic efficiency. The program calls for more
exacting planning norms to assure maximum utilization of
materials and equipment and for better integration of the
several components of the plan to minimize supply difficulties.
No specific measures were advanced for achieving these elusive
aims which have been pursued by Khrushchev's government since
July 1955.
The need for more rapid incorporation of new technology
into the production process, expressed in mid-1960 by the
establishment of a system of bonuses for introducing new equip-
ment and in mid-1961 by realigning industrial research
organizations, was again given attention. Khrushchev hinted
that the centralized procedure for introducing new equipment
w1_1.1 be strengthened, but in the traditional Leninist formula,
it is to be accompanied by a program to encourage technical
progress from below.
Similarly, in a more general vein, the program stresses
an increasing role for unified planning and economic coordina-
tion, accompanied by the further gradual extension of the
economic responsibilities of local organs. The appearance of
this phrasing of the Leninist concept of democratic centralism
-- in common use since shortly after the 1957 reorganization
of industrial administration -- suggests only that continuing
attempts will be made to improve the quality of central
planning so that central organizations can control a broader
range of activities. Only as such ability is achieved will
the economic rights of local organs be expanded.
Khrushchev suggests that past emphasis on material
incentives as a device to encourage more efficient perfor-
mance is to be pursued further by giving the enterprise more
opportunity for administering its profits and for using them
more extensively to encourage good work from its staff. He
also suggests, in asserting the need to increase the signi-
ficance of profits, that bonuses for attaining lower produc-
tion costs, which were initiated at the start of 1960, have
not been as effective as anticipated.
XI. International Role of Program
The Program has several international aims peripheral
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to its central one of presenting a strong and confident image
to the world abroad, but nonetheless important. Khrushchev
stressed the importance of receptiveness to foreign ideas,
especially in regard to advancing technology, saying, "we
must ... discerningly adopt everything of value from a point
of view of techniques and organization that exists in the
West, including that which speeds up the turnover of funds and
provides a larger return from capital investments." He also
mentioned the importance of trade both from the point of view
of its usefulness in strengthening the Soviet economy and from
the point of view of its usefulness in the peaceful competi-
tion. He threatened the world market in explicit terms in
regard to agricultural products claiming, "the Soviet Union
in the near future will take such a position in the world
market that Messrs. Imperialists will feel how our agricul-
ture is increasing;" and implied such a threat in regard to
other commodities. Although Soviet agriculture is the least
likely quarter from which Khrushchev could be expected to draw
resources for his export program, the statement does illustrate
intentions, and the fact remains that each year the USSR is
increasingly able to threaten established world market patterns
with its products.
Finally, Khrushchev implied reaffirmation of the
correctness of his current views on economic aid, in spite of
Chinese Communist and perhaps domestic pressure during the
past year to concentrate such aid on nations that closely
pursue the socialist line.
XII. Conclusion
The picture of the Soviet economy in 1980 implied
by the program is of an industrial structure about 2.5 to 3
times that of the US in 1960, with investment 10 times greater
than that of the US in 1960, and of a country with agricultural
surpluses, with defense expenditures that could be 5 times
those of US in 1960, and with a consumers' average standard of
living perhaps slightly more than one-half that of the US in
1960.
All of this picture is based on the assumption that the
goals of the program will be achieved. More realistically, it
would appear that the broad industrial goal might well be
reached but that neither the agricultural goal nor the consumer
goods promises are at all likely to be met.
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In many parts of the world, however, the claims for the
future embodied in the Party program will be accepted, in the
light of the rapid industrial advances made by the USSR.
Likewise, the welfare program will have its appeal. Within
the Soviet Union some will view the program's objectives as.
postponements of benefits expected at earlier dates (the goal
for production of meat, for example, in the remote possibility
that it should be met, would be a full 10 years late on an
earlier Khrushchev promise). Other Soviet citizens with a
taste for privacy and a desire to make their own selections will
think the time period for implementing the "benefits" far too
short. Failure of the program to be more specific on produc-
tion of consumer goods as well as the warning that it may be
necessary to increase defense spending may dampen public
expectations of a sharp improvement in standard of living. In
spite of such reservations most of the Soviet populace,never-
theless, will realize that they "never had it so good" and be
at least complacent toward the regime.
For the West the message remains clear. The outstanding
commitment of resources is to industrial growth -- that is,
investment in heavy industry and the capacity to produce more
investment goods. As far as the program is concerned, produc-
tive capacity is committed throughout the 20-year period simply
to building more productive capacity. Between the two other
major alternatives of a state, consumer welfare or military
spending, no commitment is stated, although the Implications
for sharply increased military potential are obvious.
25X1A
OTTO E. TSiHE
Assistant rector
Research and Reports
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USSR Communist Party Program Twenty Year Forecasts*
Average Annual
Percentage Increase
Commodity
1960 level
1970 level
1980 level
Increase
1980/1960(ti
)
6
7
y5 plan
mes
11.9
0-1980)
(195)-1965)
Electric Power
(bil. Kwh)
Crude Steel
292
900
2700-3000
9.2-10.3
12.1
11.8
(mil. metric tons)
6
Petroleum
5
145
250
3.8
6.9
6.6-7.4
(mil. metric tons)
148
Gas
390
690-710
4.7-4.8
8.1
11.1
(bil. cu. meters)
Coal
47
310-325
680-720
14.7-15.2
14.5
26.2
(mil. metric tons)
Machine Building and Metalworking
513
686-700
1180-1200
2.3-2.34
4.3
2.7
(bil. rubles)
Mineral Fertilizers
34
115
334-375
9.8-11
12.4
15.7
1
(mil. metric tons)
Synthetic Resins and Plastics
13.9
77
125-135
9-9.7
11.8
16
(mil. metric tons)
Artificial and Synthetic Fibers
?332
5.3
19-21
57-63
22.7
32.2
(mil. metric tons)
Cement
.211
1.35
3.1-3.3
14.7-15.6
14.6
21-22
(mil. metric tons)
Textiles
45.5
122
233-235
5.1-5.2
8.5
14.3
(bil.sq. meters)
Leather Footwear
6.6
13.6
20-22
3-3.3
5.9
(mil. pairs)
Household goods
419
825
goo
2.1-2.4
4.0
5.5
(bil. rubles)
5.9
18
58.6
9.8-10
12.2
* Footnotes follow on P. 21 .
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USSR Communist Party Program Twenty Year Forecasts
(Continued)
Average Annual
Per:centage_Increase
Commodity
1960 level
1970 le
l
8
Increase
20-year plan
7-year plan
ve
19
0 level
1980/1960 (times)
(1
60
8
9
-19
0)
(1959-1965)
Grain
(bil, goods)
Meat (dressed)
18-19
2.3
4.2
(mil. metric tons)
Milk
8.7
30-32
3.6
6.6
(mil. metric tons)
61.7
170-180
Eggs
(billion)
Wool
(mil. metric tons)
Raw Cotton
27.x+
.3579
110-116
l.045-1.155
5.8
(mil, metric tons)
Sugar Beets
(mil. metric tons)
1.3
57.7
10-11
98-108
Oil crops
(mil, metric tons)
4.3
9-10
Potatoes
1.0
(mil. metric tons)
vegetables
(mil. metric tons)
Fruits, berries
(mil. metric tons)
Rousing
(mil. sq. meters)
84.x+
19.2
4.9
135
47
156
51
4oo C/
2.9
a,
19Z571-95-07.
b.
Average annual 1961-65,
Average annual 1976-1980.
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USSR Communist Party Program Twenty Year Forecasts
Aggregate Data
Increase
8
Average dual
Percentage Increa
19
0/1960 {times)
20-year plan
Gross Industrial Production
not less than 6
9-10
Gross Agricultural Production
about 3.5
6.5
National Income
5
8.4
Real Income per capita
3.5
6.5
Public Consumption Funds
more than 10 times a~
12.2
Industry
Group "A"
6.8-7 1
10.1
share for producer industry
about 6
9.4
share for consumer industry
about 13
13.7
Group "B"
5-5.2 c/
8.5
Industrial Productivity
4-4.2
7.3
a. 1960 -- 21+.5 billion rubles; 1980 -- 255-2.5 billion rubles; approximately half total income.
b. 1960 -- 105 billion rubles; 1970 -- 287 billion rubles; 1980 -- 720-71+0 billion rubles.
c. 1960 50 billion rubles; 1970 -- 121 billion rubles; 1980 -- 250-260 billion rubles.
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