DISTRIBUTION OF PRODUCERS' GOODS UNDER SOVIET SOCIALISM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700090337-7
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 9
• Document Creation Date: December 22, 2016
• Document Release Date: August 11, 2011
• Sequence Number: 337
• Publication Date: November 18, 1952
• Content Type: REPORT

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SOURCE Bolshevik, No 2, 1952.
REPORT
CD NO.
DATE OF
DATF DIST. if Nov 1952
NO. OF PAGES 10
SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED IP!rnRMATION
DISTRIBUTION OF PRODUCERS' GOODS UNDER SOVIET SOCIALISM
The distribution among various branches of the national economy of that
part of the total social product which is called producers' goods is one of
the most important tasks of socialist planning. As the principal part of the
over-all problem of distributing the total social product, the distribution of
producers' goods is determined by the nature of social reproduction. The proc-
ess of reproduction as a whole represents the coordination of production, cir-
culation, distribution, and consumption.
_he bourgeois political economy treats distribution as a category Inde-
pendent of production and as representing the basic objective of political
economy. Actually, the driving force in the whole process of reproduction is
production. It determines and conditions all the remhining forces, including
distribution.
The nature of socialist distribution corresponds to the socialist system
of production and differs radically from distribution in capitalist society.
Under capitalism, the distribution of the social product reflects the incon-
gruity of the capitalit system of production. It is based on the law of cap-
italist accumulation, under which the privileged group of the bourgeois world
accumulates riches and luxury, while the workers exist under conditions of in-
creasing poverty and unemployment.
The normal course of reproduction assumes the establishment of definite
quantitative proportions between two main subdivisions of social production --
the production of producers' goods and the production of consumers' goods.
In capitalist society, where private ownership of producers' goods is in
effect, the allocation of these goods, as well as the distribution of work
among the individual branches, is based on the arbitrary law of cost operating
CLASSIFICATION R1L,flICT:r
CENTRAL I'JTEI = NCE AGENCY
INFORM., .,,3N FROM
FOREIGN DOCUMENTS OR RADIO BI'OADCASTS
COUNTRY USSR
SUBJECT Economic - Industrial planning
HOW
PUBLISHED Semimonthly periodical
WHERE
PUBLISHED Moscow
DATE
PUBLISHED Jan 1952
LANGUAGE Russian
I STATE IX
NAVY
AIR
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the social wealth, to strengthen the might of the soviet state, and to raise
the material and cultural standard of living. The distinction between the
means of labor and the materiel of labor is expressed as the difference between
fixed and working capital. Fixed and working capital, as the most important
components of national wealth and as principal means for the expansion of so-
cialist reproduction, reflect any new production relationships that arise in
socialist society.
In planning the total volume of production, the government is guided by
the goals of Communist economic development. The volume of planned capital
accumulation, capital construction, and the taking into operation of new as-
sets, as well as increases in production through increased labor productivity
and better utilization of productive capacity, are taken into account. The
proportion of the total social product set aside for production is determined
in conformity with these factors.
The planning of state material reserves is also very important since
large-scale socialist economy cannot continue to develop without reserves.
State reserves are formed both from producers' and consumers' goods. The vol-
ume of state reserves retained for individual branches of production depends
on the importance of that production to the national economy and national de-
fense, on its cost, on the scale of production, on the storage facilities, and
on how rapidly it could be increased in case of emergency. After the general
correlation between the basic components of the social product in relation to
the amount of productive and unproductive consumption and reserves is estLb-
lished, the correct allocation of the material and technical supply fund (pro-
ducers' goods) among the various branches of the economy becomes of primary
significance. These branches are linked by the unity of the whole process of
social reproduction. The prerequisite for the development of each branch is
the replacement and increase of fixed and working capital. For this, each
branch must receive from other branches equipment, raw materials, commodity
stocks, and fuel. In turn, each branch becomes a supplier, since its products
are used either in production or private consumption.
With the constant growth of socialist economy and the increase in the
technological and organizational level of production, the industrial links be-
tween branches widen and become more intricate. Rapid technological progress,
one of the characteristic features of development in the national economy of
the USSR, strengthens the links of all branches of the national economy with
machine building in the reproduction of equipment, which is the most important
component of fixed capital. On the same basis, the links between capital con-
struction in all branches of the national economy with industry, and particu-
larly with machine building, are also strengthened.
Numerous and intricate links also exist in the reproduction of working
capital. For example, the ties of the machine-building industry, metallurgy,
and fuel industry with rail, water, air, and motor transport have been consid-
erably broadened, while successful technological reconstruction of agricultural
production has considerably strengthened production links between industry and
agriculture.
All mutual links between various branches must be expressed in precise
quantities. Before the metallurgical industry, for example, can smelt a
planned quantity of pig iron, it must receive the necessary quantity of ore
and coke, while the production of a planned quantity of power requires a cor-
responding quantity of fuel. Accordingly, the production of metallurgical
equipment requires the allocation of a definite Ssant'ity of metal, which in
turn, requires a corresponding quantity of machinery for its production, etc.
Therefore, one of the basic problems of socialist planning consists of the es-
tablishment of correct quantitive proportions among various branches of the
economy.
RESTRICTED
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The planned distribution of producers' good.. among branches is indissol-
ubly linked with the planning of production volume as part of the production
program. In the allocation of coal, for example, the planning organizations
start with the estimated volume of production in the branches consuming coal,
such as metallurgy, steam electric poser stations, railroads, etc. Electric
power is distributed in accordance with the planned volume of smelted ferrous
and nonferrous metals, mining of coal production of machinery, chemicals, etc.
The allocation of machinery is established in relation to the estimated volume
of mined coal, smelted pig iron and steel, production of electric pot, rolled
steel, various chemicals, textiles, and foodstuffs or in relation to
planned volume of construction, etc. Therefore, it is impossible to pi,n the
allocation of producers' goods independently of the volume of production, as
it is impossible to plan production without planned allocation of necessary re-
sources. The initial point in the whole process of planning is the planning
jr production.
The method of material balances plays a large role in the socialist dis-
tribution of producers' goods and is the basic method used for establishing
the proportions between different branches of the national economy. Material
balances make it possible to discover and l?velop the lagging sections of the
national economy, to coordinate the plans for the development of individual
branches, to direct the growth of the national economy in accordance with the
most important economic and political tasks, and to develop and utilize the
internal reserves of production.
Material balances are established for all important industrial and agri-
cultural production and consist of two parts; Cl) the resources part; and (2)
the distribution part. In the resources part of the balance, all sources
available to the national economy for given types of production are added to-
gether. Socialist production itself supplies over 90-95 percent of all re-
sources used in most types of production listed in the balance. The procure-
ment and utilization of stocks accumulated by suppliers and consumers can be
another source of resources. The expenditure part of the balance shows the
basic requirements a..d the amount of expenditure of given types of products.
As a rule, the material balances show the allocations of essential products
for industrial needs, capital construction, the retail market, export, the re-
plenishment of state reserves, and cther state expenditures. The material
balances, therefore, compare and coordinate resources with the requirements
for different types of products.
The method of material balances, or the method of comparing and coordinat-
ing resources and requirements is utilized in the system of socialist planning
from top to bottom. This method is employed in planning production and supply
in enterprises, committees, and ministries. It is widely utilized by the Gas-
plan USSR in planning of production volume, the construction program, as well
as financing of the different branches of the national economy.
In the work of Gossnab USSR (State Committee of the Council of Ministers
USSR for Material and Technical Supply of the National Economy), the method of
material balances is the only method used for planning the allocation of pro-
ducers' goods and for planning the total volume of resources for different
types of production.
The material balances established for the whole national economy of the
USSR are composed of funded products, that is, products allocated directly by
the Council of Ministers USSR. They include pig iron; steel; rolled ferrous
metals* pipes; basic types of metalware; rolled nonferrous metals: fuel and
petrn.'eum products; electric power; basic chemicals and technical rubber prod-
ucts: important construction materials; lumber; paper and paper products; food-
stuffs and industrial goods; agricultural raw materials; many types of machirery,
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mechanisms, and other types of plant and techno:,gical equipment; automobiles;
tractors; machine tools; steam boilers; motors; pumps; metallurgical, coal,
petroleum, chemical and other equipment; locomotives; railroad cars; agricul-
tural machinery; construction machinery; mass-produced instruments; and others.
In the past years, the number of material balances established by the gov-
ernment has significantly increased until it now includes more than 1,600 items,
representing all major products.
All the remaining centralized planned output of the national economy which
is not included in the list of allocations is distributed by ministries, while
a certain part of decentralized planned output is distributed by local Soviet
organs and local trading organizations.
Simultaneously with the planning of material balances, the Cossnab USSR
works out allocation plans for individual ministries and departments. Thus,
while the balance of rolled ferrous metals shows the total quantity of rolled
metal allocated for industrial needs of the economy as a whole, the allocation
plans will indicate how much rolled ferrous metals were allocated to the Min-
istries of Automobile and Tractor Industry, Agricultural Machine Building,
Transport Machine Building, Construction- and Road-Machine Building, Coal In-
dustry, Communications, etc.
The allocation plans are drawn up for the same range of items as the ma-
terial balances, but they show the annual and, in many cases, the quarterly
allocations to individual consumers.
The material balances and allocation plans provide for the distribution
of the social product in specified types and quantities. Enterprises and con-
struction projects are allocated specific types of rolled-ferrous metals in a
specific number of tons, coal of specific quality and from specific mines,-and
specific types and quantity of machine tools, etc.
One of the most important problems of socialist planning is the coordina-
tion of natural indexes of the state plan with cost indexes. This coordination
is necessary because at the present stage of Communist development relation-
ships between marketable commodities and money s.iil exist in the Soviet econ-
omy. This means that finished production assumes the form of commodities and
moves from one enterprise to another not free of charge but through the process
of buying and selling. It is clear that materials allocated to branches or
enterprises, must be correlated to their ability to pay for these materials,
as shown by financial indexes. Such coordination is obtained by means of mone-
tary evaluation of material assets allocated to each consumer. At present,
monetary evaluation of material assets on a national scale has been strictly
applied in planning the supply for capital construction. It is necessary to
apply the method of monetary evaluation even on a wider scale in planning the
allocation of resources for industrial production.
In allocating producer's goodb, the planning organs must, first of all,
insure the fulfillment of the most important tasks in the development of the
national economy, as specified by the party and the government for a given pe-
riod. Here, as in all planning, all inefficiencies, narrow departmentalism,
and unjustifiable demands from individual economic organizati^ns must not be
tolerated.
identification of key industries is also of primary importance in the al-
location of producers' goods, as it is impossible to set up an allocation plan
without knowing which industries are basic and must receive first priority.
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In planning production and allocation, it i.; necessary to Bet high goals
that will mobilize productive resources. The party and government have re-
peatedly shown that reduced plans do not lead to mobilization, but force pro-
duction to a low level and retard progress. Material balances and allocation
plans are established on the basis of progressive norms of material expendi-
ture based on first-rate Stakhanovite experience. At the same time, they must
be realistic and well founded, taking into account the capabilities of so-
cialist economy.
The continuity of supply is very important in the development of material
and technical supply plans. Interruption of supply may bring about disrup-
tions in the operation of the enterprise, cause an accumulation of above-norm
surpluses, and slow down the turnover of working capital. The coordination of
material balances and I'ocation plans of producers' goods insures the con-
tinuity of supply, which is the most important task of planning organs.
One of the principles of socialist planning is the unceasing improvement
of the plan in the course of its fulfillment. Drawing up the plan is only the
beginning of planning; the plan is amended and made more precise in the course
c: fulfillment. This is fully applicable to planning of supply. In the proc-
ess of supply, there is constant adjustment of material balances and alloca-
tion plane. A systematic check on the fulfillment of the state supply plan is
particularly important, as is the development of measures to improve the de-
livery of needed producers' goods to the national economy.
In drawing up the resources part of material balances, the determination
of the volume of production in individual branches has decisive significance.
The lava of development of socialist production call for the steady rise in
the level and the tempo of production and the complex development of all its
branches. These laws, emanating from the basic characteristics and advantages
of the socialist economy, serve as the most important initial force in social-
1st planning. In planning the rate of growth of individual branches, the im-
portance of a given branch to the national economy, its economic and technical
level of development, the state of its capital construction, its internal re-
serves for increased production, etc., are carefully analyzed. Consideration
is also given to the current and prospective tasks of the national economy.
The planned increase of production volume of the various branches must
have a technical and economic basis. The planning of production volume must
be based on the productive capacity and availability of labor and raw mate-
rials. At the sane time, it is necessary to take into account the possibility
of increasing the productivity of labor and working capital, as well as im-
proving the utilization of the productive capacity. In planning, the economic
and 1?,rty organizations must discover all internal reserves of production and
take into consideration the experience of foremost collectives and Stakhanovite
workers. Concealing industrial reserves and resources from the government is
a crime against the state and is severely punished by the party and the govern-
ment.
The planning of production on a national scale is carried out by the Gos-
plan USSR, while the Gosenab USSR, which maintains direct daily contact with
all branches of the national economy concerning their supply, makes recommenda-
tions to the government concerning the assortment and the volume of output of
various types of products.
Special attention is given to some above-norm commodity stocks that ap-
pear in the resources part of material balances; they consist mostly of prod-
ucts left directly at the plant, in supply bases, and in main trading organ-
izations.
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One of the tasks of socialist planning consists of determining the minimum
commodity stocks actually needed for normal turnover. In particular, the fin-
ished output must remain at the plant only long enough to be sorted and made
ready for consignment and shipment. At the base of the trading organizations,
the norm of commodity stocks must be determined by two factors: (a) the dis-
tance of the base from the supplying plants and the regularity of commodity
inflow to the base; and (b) the pattern of consumer relationships, which in-
clude the distance they are from the base, their requirements for types of
products, and the frequency of their orders. All above-norm commodity stocks
must be counted as additional sources of supply.
Resources listed in the balance sheet also include reserves of materials,
fuel, and raw materials held by consumers, which, in distinction from commodity
stocae, are called production reserves. While normal commodity stocks are a
necessary part of commodity turnover, normal stocks of production reserves are
essential to uninterrupted production. However, above-norm reserves of mate-
rials and raw materials slow down the turnover of capital, waste resources, im-
pair the financial condition of the economy, and lead to increasing material
losses.
Consequently, the main task before the planning, economic, financial, and
party organizations is to prevent the accumulation of above-norm commodity
stocks and excessive production reserves and to utilize them as sources of sup-
ply, thereby accelerating the turnover of capital and reducing storage expendi-
tures.
of distributing working out the expenditures part of material balances, all problems
the total social product are considered. These problems are
of broader scope than those dealing with the material and technical supply of
the national economy. Material balances cover not only the allocation of pro-
ducers' goods, but also the volume of resources which is included in state re-
serves, in the retail market, in the commodity stocks, the special clothing
fund, etc. These are allocated to the state budget organizations.
The allocation of producers' goods has a central place in material bal-
ances and allocation plans and presents a series of complex problems such as
the problem of allocating resources between industrial production and construc-
tion. Rolled ferrous metals, lumber, cement, and other materials can be uti-
lized in both industry and construction. In determining the volume of indus-
trial production and construction, the apportionment of material resources must
guarantee the designated volume of construction. It is taken into account that
capital construction increases the productive capacity, which, in turn, in-
creases the production volume, although, as a rule, the increase does not occur
in the year when the construction is begun but only after a certain period (de-
pending on the length of construction).
The most important factor in planning the supply of capital construction
is to assure the necessary supply and concentrate material resources on vital
projects and projects already under construction. It is necessary to be con-
stantly on guard against the dispersion of material, monetary, and labor re-
sources between too many construction projects, as this will load to unutilized
resources, long delays, and increased costs.
The process of allocating producers' goods involves the problem of allo-
cating material resources among the branches making producers' goods, (heavy
industry) and the branches producing consumers' goods (light industry).
In working out this problem, Gossnab USSR proceeds from the goals set by
the state plan for the development of heavy and t ',t industry. The production
of producers' goods is the basis of economic eta, sh and wealth of the country
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and is the most vital branch of the national economy. Heavy industry played a
leading role in the industrialization and mechanization of the national economy
in the period of reconstruction, in World War II, and in the first postwar Five-
Year Plan. Even in the present stage, the production of producers' goods is
given primary consideration.
In the allocation of producers' goods, there also arises the problem of
guaranteeing the reproduction of socialist property in its present forms: (1)
state property; and (2) kolkhoz-cooperative property. While insuring the lead-
ing role of state property, the socialist state is concerned with the develop-
ment of both forms of socialist property. Therefore, the government is re-
sponsible for the material and technical supply not only of state industrial
enterprises, railroads, maritime and river transport, sovkhozes, MTS, etc., but
also of kolkhozes and industrial artels. Material assets are allocated to kol-
khozes mostly by the Ministry of Agriculture USSR and to cooperatives by the
Central Council of Industrial Cooperatives, the Central Union of Consumers' Co-
operatives, and the councils of the ministers of union republics.
The needs of an enterprise for material resources are determined by the
planned volume of production, by the extent of capital and current repairs and
other industrial needs, as well as by problems of replenishing industrial re-
serves if they fall below the norm. The requirements of construction projects
for material resources depend on the structure and volume of planned construc-
tion.
In planning the allocation of producers' goods, all possible improvements
in their utilization are considered. The socialist economic system does not
suffer from economic crises and excessive waste of labor and capital, inherent
in capitalist economy. The advantages of the socialist system make possible
the complete and efficient utilization of all elements of production with min-
imum losses.
A more efficient utilization of basic producers' goods is the most im-
portant problem of allocation. Allocation is a powerful economic lever in the
utilization of all producers' goods. Definite norms for the utilization of
fixed capital and the consumption of material resources per each unit of out-
put contribute greatly to economical use of producers' goods.
Norm setting in socialist economy means the establishment of planned goals
for the expenditure of labor, means of labor, and tools of labor per each unit
of-finished output or completed task. The norms serve as quantitative expres-
sions of these tasks. They also establish the basis for developing socialist
plans and organization of socialist production, as without them, planned econ-
omy would not be possible. The norms should not be confused with the socially
necessary working time; the first represents planned volume, the second, vol-
ume &-':wally attained. Under capitalism, the socially necessary working time
for the production of coenodities is established haphazardly under the influ-
ence of capitalist competition. In socialist economy, the socially necessary
working time is developed under planned state control. Normalization of labor
and material expenditures is one of the basic features of this system.
The norms used in socialist production are far different from those exist-
ing in capitalist production. In the first place, the norms in capitalism are
established individually for each different enterprise. In the second place,
disorder and lack of planning eliminate the possibility of genuine scientific
and technical norm setting for productive expenditures. In the third place,
the normalization of productive expenditures in capitalist enterprises is di-
rected toward increasing profits through the exploitation of the working class
and the worsening of working conditions. The working class in capitalism is
not interested in the economical utilization of producers' goods.
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In socialist economy, the normalization of roductive expenditures is the
instrument for planning the reduction of socially necessary working time, for
improving the utilization of productive resources, and for increasing capital
accumulation. In the USSR, the normalization of productive expenditures on a
national scale is a method of perfecting the production process and increasing
labor productivity.
The socialist economic system makes wide use of socialist competition for
the overfulfillment of norms; for the achievement of new, more progressive in-
dexes of the productivity of equipment; for the conservation of raw materials;
etc. The Stakhanovite movement does away with obsolete norms which hinder the
growth of Soviet economy and establishes new, more effective norms.
Progressive norm setting must be founded on a sound technical and economic
basis. In norm setting, it is necessary to consider the possibility of improv-
ing the whole organization of production and technology and to strive for an
uninterrupted mechanization of production, the introduction of substitutes and
improved designs, and utilization of industrial waste products. The analysis
and application of Stakhanovite experience in the conservation of materials has
decisive significance in norm setting. So,:ialist competition serves as an ef-
fective means of discovering and utilizing huge reserves present in the Soviet
economy, and the creative initiative of the foremost people in Soviet industry
continuously brings forth new processes for economical utilization of material
resources.
The distribution of producers' goods among the branches is based on the
name of expenditure of basic and subsidiary materials. For example, there are
norms of expenditure of fuel and electric power per one unit of output or per
one unit of accomplished task (as for a ton-kilometer of freight), norms of
industrial and commodity stocks, norms of equipment utilization, etc.
In construction, the estimates of requirements of the great construction
projects, as well as of vital and already initiated construction are deter-
mined according to the physical volume of work in relation to norms of material
expenditures per each unit (per one cubic meter of foundation, per one square
meter of sheeting, etc.). Estimates for other construction projects are made
according to the norms of material expenditure per one million rubles of con-
struction and installation work.
The planned volume of production and construction and the norms serve as
the most important prerequisite for determining the actual requirements of in-
dividual branches for producers' goods. By determining the available resources
and the requirements, the planning organs coordinate both factors in the final
drafting of the material balances. If the resources exceed the requirements,
the question arises as to the expediency of increasing the original plan for
replenishment of state reserves and also of shifting part of the productive ca-
pacity to more essential production. The rate of grcath in all branches of
the national economy of the USSR, however, is so great that more often, the
reverse is true -- when the resources allocated for different types of produc-
tion are insufficient to meet all requirements. In these cases, the planning
organizations study the possibility of decreasing the total requirements for a
given product by reducing the expenditure norms per unit of output, by de-
c!-easing the expenditure of this product for secondary needs, and by introduc-
ing substitutes. At the same time, the possibility of increasing the resources
of the product in question through stepped-up production and through utiliza-
tion of stocks is carefully considered.
The drafting of material balances can be considered completed only when
the coordination between both parts is reached, or when the allocation desig-
nated in the plan corresponds to the availability of resources.
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prod ecopeT a slannledaallocdtionoof ex duucers' goods, is specified by the nature and
economy, on the tempo great influence on the whole national
and on the o its economic development, on its defense potential,
standard of living.
The Bale, aedptlb n o~y,the organs of material and technical supply and
sale of all resources of party organizations must strive for the mobiliza-
rials,fall production; for the maximum conservation of raw mate-
, and electric power; for the best possible utilization of produc-
tive capacity; and for the liquidation of above-norm reserves. It is also
necessary to perfect the whole system of norm setting, to analyze the foremost
Stakhanovite experience, and to develop new technology.
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