JPRS ID: 10170 USSR REPORT ECONOMIC AFFAIRS

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JPRS L/10170
9 December 1981
USSR Re ort
_ ~
ECONOMIC AFFAIRS
CFQUO 18/81)
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SPRS L/1Q;70
9 December 1981
USSR REPORT
ECONOMIC AFFAIRS
(FOUO 18/81)
_ CONTENTS
INVESTMENT, PRICES, BUDGET AND FINANCE
Soviet-American Sympasium on Prices
(A. Dynkin; VOPROS~ EKONOMIKI, Sep 81) 1
- RESOURCE UTILIZATION AND SUPPLY
Economy Needed in Use of Labor, Material Resources
(Editorial; VOPROSY EKONOMIKI, Aug 81) 9
_ a _ [III - USSR - 3 FOUO]
rnn nr.rtn.. � ��nr. nwrr
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- INVESTTtENT, PRICES, BUDGET AND FINANCE
~ SOVIET-ArIERICA.d SYMPOSIUM ON PRICES
Moscow VOPROSY EKONOMIKI in Russian No 9, Sep 81 pp 154-158
/Article by A. Dynkin: "The State and the Formation of Prices in the USSR and the
United States (The Sixth Soviet-American Symposium of Economists)"/
/Text/ The pricing mechanism is an important lever in the managen~~ent of the econozny
and in the stimulatio.l of the efficient use of all types of resour~es. This wa~
- confirmed at the Sixth Soviet-American Economic Symposium, which was held from
- 8 to 11 JuZy 1981 in Alma-Ata in conformity with the agreement on cooperation be-
tween the USSR Academy of Sciences and the American Council of Learned Societies
anci was organized by the Association of Soviet Economic Scientific Organizations and
the American Economic Association.
The macroeconomic problems of pricing were examined in the reports of Yu. Yakovets,
G. Chubakov (i?SSR) and B. Bosworth (United States).
The growing role oF pricea in ttie system of the planned management of the economy
of mature socialist society was shown in the speech of Doctor of Economic Sciences
Yu. Yakovets (USSR Academy of the National Economy). The importance of the improve-
ment of *_he system of prices in the accomplishment of the main task of the present
stage o~ :he development of planned management--the consistent orientation of all
its links toward the end national economic results, che all-round intensification
of production, the ir~crease of its efficiency, the acceleration of scientific and
Cechnical progress and the economy of resources--was noted.
G. Chubakov (Scientitic Research Institute of Prices of the USSR State Committee
+ for Pr~.~es) empt:asizeci the role of planned pricing as an important tool ~f the eco-
nomic policy of thc~ sacialist state. The speaker analyzed a new direction in pric-
ii~g--the elaboratic~n and approval along with wholesalP prices of the standards of
the net output.
In tti~ discussion u~hich ~eveloped on the.question of price stability in a planned
_ economy Prof.essor A. Ber~son (Harvard University) noted that the aspiration for
stabi.lity of the system of prices can lead to certain difficulties in the assurance
= of balanced development. To this Academician T. Khachaturov responded that the oc-
- currence of some specific disproportions for various reasons, which are of both an
objective and a subjECtive nature, is not at all ruled out. Thev may occur, for
example, as a consequence of abrupt changes in production condi*_ions. But the dis-
proportions with respect to the physical composition of the oi~cput should be
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eliminateci first of all by the corresponding structural changes in production it-
self. In those instances ahen prices promote the eliminatioa of such specific dis-
- prop~~rtions, by stimulating or limiting production and consumption, the necessary
= changes are brought about in the system of planned prices.
In t}~e report of B. Bosworth (Brookings Institution), "The General Policy of Prire
Stabilization," it was reported that during the 1980's the U.S. economy has been
faced with two most important problems: a high level of inflation and a decline of
the growth rate of labor productivity. The problem of inflation, in the opinion of
the speaker, is governed by two factors: first, the "wage-price" spiral and, sec-
ond, t}ie increase of prices for fuel, energy and food resources. Here the second
factor is acquiring ~;reater and greater importance, since the expenditures on energy
resources alone amount to 10 percent in the overall structure of consumer spending.
The increase of energy prices has led to a decline of the growth rate of the real
income: during 1959-1969 it was 2.1 percent, while during 1969-1979 it was only
0.'L perctnt, and for the period of 1978-1979 its decline by 3.1 percent was ob-
served. In addition to the increase of the cost of energy in the 1980's, the real
income of tlle population will decrease in connection with the lengthen~ing of the
trai?iing period of mar.power and the exhaustion of the resources of the additional
involvement of women in the laL-or market. But the reduction of social payments
_ (pensions, unemployment benefits, health care sub~idies) within the economic policy
of R. Reagan's Administration. with the simultaneous increase of defense spending
will have the greatesr negative influence on the level of income of the population.
Thus, as B. Boswortti believes, the further onslaught of inflation is fraught with
soci~~l conflicts in American society. The decline of the growth rate of labor pro-
ductivitv will also act in this direction. During the 1970's the slowing of the
-a grow~h rate of labor productivity did not affect family income that perceptlbly,
sinc~~ this relationship was partially weakened by the increase of female employment,
but in the 1980's these reserves will already be completely exhausted, and all this
will strongly affect the level of income of the population.
The economic policy of the present Administration is attempting to solve the problem
of inflation and labor productivity by stimulating saving. With this aim in view,
taxes are being reduced sharply in the hope of increasing capital investments, whi.ch
for tl~e most part, as is anticipated, will go for new technology. Thus, the main
attention is being clevoted to attempts to increase the growth rate of labor produc-
tivity as a result of the change of fiscal policy. The solution of the problem of
inflation rests on monetary levers, and first of all an attempt is being made to
damp inflation by a high discflunt rate. But a potential conflict between monetary
and fiscal policy is built into this. Under conditions when the overall decrease
of ta:ces is covered by an increase of the discount rate, an automatic slowing of
capital formation occurs. In the opinion of B. Bosworth, if R. Reagan's Adminis-
tration is not able to convince business circles that it is possible to curb infla-
tion on the way ta economic growth, the economic program is doomed to failure. The
speaker comes to the conclusion that some improvement of th~ economic conditions is
pos5ible in 1981;1982,,,, but the reasons for this are beyond government control, yet
are connected, in particular, with a favorable phase of the economic cycle and the
rel~itive stabilizat.ion of the prices on the world market of fuel and energy re-
sources. In subsequent years a high rate of inflation and unemployment is again
anticipated.
Academician L. Kantorovich, V. Cheplanov (USSR) and M. Adelman aiid P. (Joskow)
(United States) spoke in the second group of speakers.
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Acade~mician L. Kantc~rovich tn the report "Prices and the Economic Appraisal of
Resot~rces" substantiated the application of the methodology of optimum modeling on
rhe basis of linear program models to the solution of the problem of the optimum
use of a number of interchangeable and interrelated resources with allowance made
_ for the diversity of the possibilities of their distribution.
In ti~e report of Doctor of Economic ScienceG V. Cheplanov (USSR State Committee for
Pric~:s) the setting of prices for fuel and raw material resources as a stimulus of
- their efficient use was examined and measures, which are connected with the revision
being made of the wholesale prices for fuel and raw materials in the interests of
- the qualitati~~e improvement of the system of prices and the improvement of the
meci~anism of their economic influence on production and consur~iption, were substan-
tiated.
The report of Professor M. Adelman (Massachusetts Institute of Technology) concerned
the setting of prices for energy resources in the United States. During 1973-1980
in the United States energ; consumption decreased annually on the average by 1 per-
cent, while the real prices during this period at least doubled. The present U.S.
ener~;y balance is furmed in the following manner: petroleum--47 percent, gas--26
percent, coal--20 percent, wr.ter power--4 percent, uranium--3 percent. During the
postwar period the practice of state regulation of the setting of prices for petro-
le�m in the United States underwent a number of important changes, which in the re-
� port were characterized on the w'~le as ineffective. T'_~e system of control of the
prices for petroleum resources Iii the United States decreased the supply of petro-
Leuro resources on tne dom~stic market to less than the optimv.m level and increased
the dependence on imported petr�oleum. In February 1981 the control of prices was
abolistied, after which they increased in confor^~ity with world prices. As a result,
according to preliminary estimates, consumers wil; pay tY?e petroleum monopolies dur-
ing the 1980's a"special rent" in the amount of $200 billion. As to the prospects
= of the production and consumption of petroleum in the United Seates, in the opinion
of the autt~or of the report,.petroleum production will decline gradually until 1990
and sharply in the 1990's. The level of imports--5-7 million tarrels a day--will
continue until 1990, while petroleum consumption will decrease negligibly.
The goal of the reform of natural gas prices in 1978 was the incr~ase of prices ro
their lev~l on the free market. At present the growth rate of natural gas prices
refJ.ects rhe rate of inflation, and the complete repeal of price control will take
plac~e by 1985. Such a policy should, as is written in the report, stimulate the
production of gas and the economy of its consumption. But this is encountering
serious difficulties, since about 50 percent of the housing in the United States is
heated witli ~as. At present the government policy of gradually lifting the contr~l
of natural gas prires does not have extensive support. M. Adelman believes that a
definite shift in tl~e di.rection of the supplanting of natural gas by coal will take
pl:~ce after 1985. Tt~e dynamics of the prices for environmental proteetion equip-
ment in case of ari increase of coal consumption will be of great importance in this
process.
'I'he market of uranium for civilian purposes began to be ieveloped in 1966. For a
l~nf; time the supp.ly of uranium led the demand. In 1973 the price of 1 pound of
ur;?r~ium was $7. 'lle situation changed sharply during 1974-1975. In 1976 the price
f~r 1 pouna of uranium, having reached $42, stabilized. The increase of the demand
for enriched uranium on the part of Western Europe and Japan did iiot cause serious
changes in prices due to the decrease of domestic demand following the accident at
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the Threc Mile Island nuclear power plant. In the opinion of M. Adelman, the pros-
pects of thF: develo~ment of nuclear power plants in the United States to 1990 are
- unpromising, but in the more long-term future the return to atomic energy is in-
evitable.
Touching upon the general problems of the deregulation of prices for energy re-
sources, ri. Adelman writes that this means "a major redistribution of revenues in
favor of the petroleum monopolies to the detriment of individual and commercial cor~-
sumers. Decontrol is regarded as unjust treatment of consumers and illegal er.rich-
ment of the oil companies." However, as follows from the report, the real practice
- of R. Reagan's Administration is in flagrantcontradiction with this assertion and is
creating the most favorable conditions for "illegal enrichment of the monopoli?s."
QueSrions of the regulation of prices for electric power were examined in the re-
port of Professor P. (Joskow) (Massachusetts Institute of Technology). The princi-
plc of the reflection in prices of the marginal production costs is tY.e basic prin-
ci}~le of t}ie establisnment ot prices which regulatory commissions use in this
sphere. However, such a practice is encountering serious difficulties. The niost
difficult problem is inflation. UsualYy the regulatory commissions set fixed
prices for electric power for the following year with allowance made for the fore-
cast ot the dynamics of the prices in associated sectors. The consideration of in-
flatiun is accomplishec! by means of the use of correcting formulas in conformity
witt~ the anticipated dynamics of fuel prices. Often the results of such forecast-
ing are unsatisfactory. Since the electric power generating firms cannot change the
prices for their product without the consent of federal and state regulatory commis-
sions, they are often unprofitable. Moreover, the power companies buy some raw
materials and materials in unregulated sectors of the economy, which adaitionally
results in a deviation of the electric power prices fixed for the given year from
- rhe real generating costs in che direction of the leading growth of the latter. As
a result, according to the data of P. (Joskow), on the average for the United States
in the past 10 years the prices of elECtric power have not covered the costs of its
generation. The profitability of electric power generating firms in the United
States has fallen below the average rate of return on capital, which, in turn, is
complicating the issuing of stock by these companies and in practice is depriving
~ ttiem of ~iccess to tlze marker of borrowed capital.
'L'liu:>, at present the financial opportunites for the updating of the fixed capital
ic~ the sphere of electric power generation are extremely limited. This iS one of
r"e causes which ~tru preventing the dissemination of nuclear electric power stations
in the United States, as well as the changeover to the burning of coal f~r the gen-
eration of electric power instead of the modern technology of generating electric
' power by the b~irnin~; of petrol.eum and fuel oil, which predominates in the United
Statc~s. The lack of opi~ortunities for technological modernization in the sphere
of electric power generati~n, in the opinion of the speaker, carries the threat of
a short~ge of electric power in some states in the late 1980's. The general con-
clusion, to which P. ~Joskow) comes, is that government regulation of electric power
prices in the United States is ineffective, does not promote the optimum use of re-
sources and does not stimulate technical progress in this sphere; it is necessary,
}~e believes, to step up the activity of market forces in the sphere of electric
power ~eneration. ,
Que~tions connectecl with the problems were examined in the third group of reports:
L. Roz4nova, I. I.uki~iov, T. Asliimbayev (USSR); D. Johnson, L. Weiss and (F. Warren-
f3ou?ton) (United States).
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,
Thc rul~ of prices in th~ stimulation of technical progress in the USSR was shown
in the report of Candidate of Economic Sciences L. Rozenova (USSR State Cotr~nittee
for Prices). The prices for new prod.ucts, on the one hand, compensate the producer
for the expe~ditures on the development, assimilation and production ~f new techni-
cal equipment and, on the other, create for the user opportunities to decrease the
prodi~ction cost when using the nevr technical equipment.
Academician of the Ukrainian SSR Academy of Sciences I. Lukinov (Institute of Eco-
- nomics of the USSR Academy of Sciences) delivered the report "The General Principles
of the Planned Regulation of Prices in the Agro-Industrial Complex of the USSR,"
whicii was devoted to the problem of ascertaining the specific nature of the forma-
tior, of prices d~rectly for the agricultural products produced in the central block
of tl~e agro-industrial complex--agriculture.
Corresponding Member of the Kaaakh SSR Academy of Sciences T. Ashimbayev (Institute
o� Economics of the Kazakh SSR Academy of Scienees) in the report "Prieing and Cost
Accounting at Socialist Enterprises and Associations" dwelled on questions of the
functions performed by prices in the activity of ent~rprises. The speaker distin-
- guist~ed two functions of prices: a planning and accounting function and a stimulat-
ing function.
. Pricing in ttie private sector of the American economy was examined in the report of
Professor L. Weiss (University of ldisconsin). In his opinion, pricing in the group
of highly monopolized sectors of industry is of the greatest interest. He charac-
terized in detail the evolution of the principies of pricing in U.S. corporations
during the postwar period, beginning with the methods of "target" pricing and "price
leadership," which were disseminated in the 1950's and 1960's, and the transition
to the modern methods of "elastic" pricing and pricing with allowance made for the
"learning curve."
The principle of "elastic" o r. "flexible" pricing implies less dependence on agree-
- ments between the "leaders" on questions of prices and a smaller desiz~e among the
"follo~aers" to go along with its price policy. The special role of computer hard-
ware in the emergence of the new method, which makes it possible to quickly obtain
more complete information on the results of the activity of companies, is usually
emphasized when discussing questions of "flexible" pricing. The production costs,
for example, can be calculated almost daily. Of coursey this does r..ot mean that
the prices should change at the same time as they do. Nevertheless it is possible
that frequent chan~es in price levels will be very profitable, especially for small
com~~~nies. Data on physical production stocks, the level of utilization of produc-
tion capacities ancl the sales volume are also obtained by computer. Al1 this once
a~;ain presumes constlnt fluctuations o� the prices for the products of small com-
panies, but L. Weiss believes that frequent changes in the level of prices for the
produc~s of the "lPader" in the sector with a high degree of concpntration of pro-
duction and capital will be inefficient. "Flexible" pricing implies the re~ection
of ttie establishment of a"target" rate of return. The possibility of obtaining
rapi.d and complete information about the activity of a company enables the adminis-
tration to react quiclcly to thechanging situation and to adhere to various method~
of pric~ policy when producing and marketing one product or another or an assort-
ment of items. At the same time this method enables at least some large companies
to centralize tl~eir. ~~rice poli.cy, having limited the rights of sellers in granting
price discounts. At times the emergence of the method of "flexible" pricing is
linkecl with the increasing influence of imports.
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Tlie "learning curve" method is another modern method of pricing, to which, for
example, Japanese exporters adhere. This means that prices are reduced in time, re-
Electing the decrease of costs in the production of complex durable goods. Some
Amer.ican companies (for example, Texas Instruments, which produces electronic equip-
c~~ent) have adopted such a price strategy. Moreover, many Japanese producers in-
- crease or decrease the level of prices for their products more ~~igorously during
the economic cycle than the largest American industrial companies. During the
1950's the achievement of stable prices was the main goal of large American com-
panies. But at present, as L. Weiss believes, precisely their aspirati~n to stabil-
ize prices during periods of the decline of business activity has led to consider-
able losses in face of the mass invasion of imported goods. Some movement i.n the
direction of the development of cyclically more elastic prices has emerged recently.
Price policy in U.S. agriculture was examined in the report of Professor D. Johnson
(Univers.ity of Chicago). Tlie prices of the ma~ority of agricultural commodities
in tlie United States are governed by the conditions of supply and demand on the
market. In some instances government programs can have an influence on prices by
effecting the supply of agricultural products. But as a whole to a greater extent
than in other countries the prices for agricultural commodities in the United
States are still governed by market forces.
However, the U.S. Covernment reserves the right to pursue a policy of price support
and the regulation of production under some circumstances. During nearly the entire
period since World War II legislation in the area of agriculture has provided the
Department of Agriculture with tools to regulate the volume of agricultural produc-
- tion. The regulation of the production volume (in particular, its restriction)
was always resorted to in those instances when too sharp an increase of the output
of products with a given level of demand and, consequently, a decrease of the prices
and the income of farmers were anticipated. The regulation of the production vol.-
ume assumed various specific forms, but in nearly all instances it included the
limitation of the area. used for the production of certain crops.
In early 1980 the U.S. Government began the implementation of a liberally subsidiz2d
program of the production of alcohol for use as fuel. The program provides for an
increase of the consumption of biomasses for the production of alcohol. The low
costs of growing corn in the United States make it possible to use this crop for
the Production of alcohol.
Transfer prices in the case of deliveries of products between the decentralized
enterprises of a sin~;le corporation were examined in the report of Professor (F.
~Jarren-Boulton) (Wasllington University of St. Louis). The tasks of transfer pric-
ing include: to be a source of information for the managers of the decentralized
subdivisions of firms, which makes it possible to distribute resources more effi-
ciently and to stimulate the activity of managers in the interests of increasing the
profitability of the company as a unified whole; to be an indicator of the efficien-
cy of the activity of subdivisions and to serve as a tool of the evaluation of the
results of the acti.vity of their. managers; to stimulate efficient decisions of the
board of directors of corporations in the reflection of the amounts of necessary
capital investments with ttie elimination of inefficient units of the corporate
structure; to decrease the amount of taxes or the effectiveness of antitrust legi-
sl.ation by the reallocation of tlie receipt of revenues or profits to the most
favorable stages of the production cycle or to favorably situated subdivisions of
the cor~~oration. For multinational corporations the existing policy of setting
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tr~in~ft~r price5 makes ic gossible to reduce considerably the payment of taxes on
tl~c ,~ruf i c ancl the .lmount of duties, as well as to evade the import quotas on flows
of ~;oods iu the case of large sums of money.
There are several methods of establishing transfer prices: market prices; reference
prices for the marginal or actual (standard) costs; the method of decomposition with
the use of linear progrananing. Taking into account the multipurnose nature of the
tasks assigned to transfer prices in intrafirm settlements, corporations use, as a
rul~:, not one, but simultaneously several methods of establishing the transfer
prices. The speaker described in detail ttie merits and d~:awbacks of. the methods
bein~; used and cited ttie ~esults of surveys of 404 American companies: of them
341 use transFer prices in intrafirm settlements, and 23 percent use two systems of
, est:iblishing the transfer prices and 28 percent use three or more methods.
N. ['etrakov, V. Rybalkin and A. lleryabin (USSR) were in the last group of speakers.
Doct~r of Economic Sciences N. Petrakov (Central Institute of Economic Mathematics
uf tl~e. USSR Academy of Sciences) presented a report on a system of mathematical eco-
noinics models of the balanced growth of the real income of the population, in which
- tl~e r~~sults of the modeling of the mechanism of the coordinated planning of prices,
incumc and the supply of goods were cited.
Tl~e foreign economic aspects of pricing in the socialist economy were analyzed in
tl~e report of V. Rybalkin. In specifying the place of the system of prices in the
control of [he process of socialist economic integration, he noted that, first,
pric~s function as one of the tools of the planned management of integration proc-
esses; second, they are one of the objects of caoperation in the area of planning;
tl~irci, tlie economy of national labor, which is achievable on the basis of the assur-
_ anc~ of ti~e complementarity of the structures of the national economies, is evalu-
ated by means of them.
'Tlie role, features and economic nature and character of the formation of state and
ottier retail prices in ttie USSR were examined in detail in the report of Doctor of
Gconomic Sciences A. Deryabin (Institute of Economics of the USSR Academy of Sci-
ence:~) on the state policy of retail prices for consumer goods.
Tt~ere was a lively exchange of views on all the reports, which was conducive to the
mut~~al clarification of the points of views of the sides both on the most important
problems of the formation of prices in various sectors of the economy of both coun-
tries and on questions of general policy in the area of pricing.
r~t t}it~ final meeting of the symposium Professor L. Reynolds, head of the American
delegation, noted that, in his opinion, the symposium held was the most successful
uF ~ll hc~lc~ previously. He emphasized the high professional level and representa-
t.ive. nature of the 5oviet delegation, the high level of organization of the sympo-
si~im and tlle great importance of such measures for the development of relations be-
t~ac~un t}~e two countries and expressed gratitude to the Soviet party for the organi-
zation an~l holding of this symposium. In an interview granted to a correspondent
of the Kazakh Department of TASS, L. Reynolds stated: "American consumers would
he fir~ppy ta have sucti stable, reasonable prices for foodstuffs and nonfood consumer
item5 as in the USSR. Pricing in the USSR meets the interests of all the people"
(KAZAKHSTANSKAYA PRAVDA, 12 June 1981, p 3).
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Academician i. Khachaturov, chief of t:ie Soviet delegation, noted the successful
work of the symposium and its contribution ~o the strengthening of the scientific
contacts between Soviet and American scholars.
In the final communique adopted Uy the sympQSium participants it was indicated that
it has promoted the search for means to solve economic problems with the use mf
the mechanism of pricing in the area of the efficient use of energy and other natur-
al resources, the production and marketi.ig of various types of industrial ard agri-
cultural products and the stimulation of technical progress. In conformity with
the signed communique the parties expressed agreement to hold the next, Seventh
- Soviet-American Symposium of Economists in the United States in 1982 and to dedi-
cate it to the problems of the cost effectiveness of the use of energy and a number
of other norrenewable resources.
CO1'YRIGHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1981
7807
CSO: 1820/42
8
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~:C'CRCE UTILIZAiI0I1 AI`ID SUPPLY
;:COt;01~1Y I~T`;EDEll II, USE Or I~APOF,~ NATERIAL RESOURCFS
1~ o:-:cow VOP320SY I~r.~~N~N IY' I in Russian No 8, AuR 81 pp j-14
~~i.torial: "Savin~ i~:nterial Resources"
L~~~
~'?'ex~ The 2Fth CFSII Con~;ress has determined that the most important trend in
tt~,e continuous advance of the national economy and the basis for a further in-
- crease iz the k~elfare of the Soviet people is the acceleration of scientific and
technical prop~res~, the tr~nsition of the economy to an intensive path of develap-
ment, r^ore efficient use of the country's production potential, every possible
economy in all types of resources, and improvement in work quality. "Intensifi-
cation of the economy and improvement in its efficiency," L. I. Brezhnev stressed
in the report at the party's 26th con~ress, "if this formula is put in the lan-
r^ua~*e of practical affairs, consis~s mainly of ensuring ~hat the results of pro-
duction increase r~ore rapidly than expenditures on it, so that more can be a-
c?~ieved by involvin~; relatively less resources in production." This requires
' nar.imum use or a].1 the advantap;es of the socialist econamy and our existing in-
~ ternal reserves in the field of accelerating scientific and technical progress,
' ir~provin~; the use of crzpital investments and producer goods, every possible saving
~ in material resources, improvin~ the lev~l of organization in production and la-
F~or and increasint* its produativity, reducin~ the production cost of output while
sir;ultaneously increasing its quality, and improving the organization of adminis~
tration of the national economy.
Savin~s in labor and work tir~e is the most important component in an increase in
! pro~:uction efficiency. In advancing 3.ncrease in production efficiency as the key
zspect of economic strate~*~, the party is guided by the basic coneepta of Narxist-
I.er.i.nist economic theory and is creatively adapting them to new historical condi-
~iors, the conditions of developed socialism. F~caminin~ the efficiency of pro-
dt~ction and its planned develo?xnent in organic unity, the classics of riarxism-
I,eninisr~ have demonstrated that the plan of the future society "will be determined
the final anal;; si~ by wei~hing and comparing the useful ef.fects of different
c~~nsumer r-ooda with each o�~her and with the amounts of labor necessary for theiM
production."1 The more full~~ the constantly increasing requirements of socialist
societ~~ ~nd its r~embers are met, the more c~fficiently and economically past and
l:v~inr lator is utilized in the process and the greater the efficiency of produc-
ti.ori.
9
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Having socialism in mind, K. Marx aaphaeized that both for the individual. and for
- society as well, the comprehensiver~eQs of its development~ its consumption and itb
~ ~ctivity depends on savings in tim~.~ The eocialiet econcmy is developed on the
' basis of the knowledge and conscioue utilization o~ ob~ective economic laws~ ia~
cludiag the law of time eavings. "...Time eavi.ngs~ squally with planned distri-
bution of work time among the different ~ectors of prodwction~" wrote K. Marx~
"remains the first economic law at the foundation oY collective production. This
becomes a law even to a much higher degree."3
� V. I. Lenin attached vast importance to rational~ econamical condu~ct of the eco-
non~.4 He emphasized that "socialiem ie inconceivable...without state orgaaiza-
_ tion according to plan Which subordinates tens of ~,illions of people to the
stri�test obaervance of a unified norm in productian and dietribution of output."5
Socialist economic operation, unlike capitaliem, ia the moBt econanical method of
carrying out prodwction. Thie is determined by the very nature of the economic
- system of socialiem, which i~ baBed oa public owaerBhip of the mea,ns of produc- �
tion, the spontaneous public labor of the working people of sxialiet produc-
tion for theaaselves and their eociety, the univereality of labor~ and the planaed.
development of the national econc~r. All these advantages of eocialiam make im-
plementation of a policy of economy an inherent featnre oP it and bring ~bout the
greategt opportunities for the fullest utilization o~ al.l production.resaurce~--
labor, fixed capital~ raw material aud materials. And it is neceaesry to put
theee opportunitiee ~n practic9 purposeiully and persietently.
~ � �
In order to realize the broad prograua of economic and aocial davelopment outliaed
by the congress for the llth Five-Year Plan and th~ 19~'a~ vaet materi~l re-
source~ must be involvad in production. Aad our fu~the~ movement forr~rd rrill
_ depend mare and more how skillf'n11y and eifio3ently ~re csa use theee resourceB.
An economical, proprietary attitude towe~rd public groperty and ra:w mater~.al.~ fuel
and porer and other material reeourcea ac4uires sp~ecial nations~l econamic signifi-
cance under modern conditione, and in this connection~ the constantly in~crea~ing
extraction and tra.nsport of them are becoming mc~o and more eo~peneive~ but the
stocks of minerals cannot be replaced. For e~mple~ in the l,ast 5-year period,
the eapenditures to extract a ton oi petroleum in ovr country were mors tban taice
as high ~e at the. beginning of the 1970~~~ and they r~rill increaee even more in
_ the current five-year plan.
Certain progresa has been made lately in eaving resources. Thue~ the material~
consumption of the national product wae reduc~ed in the last five-year plan. The
savin.gs in raw material, materials, 4ue1, energy and other ob~ecte of labor a-
mounted to 11.4 billion rublee. However, the change due in improving the nse of
material resources has not yet taken place~ and a decisive tura toward strict ob-
servance of a policy of economy in all parte of the national economy is necesse?ry.
"The economy should be economical," L. I. Brezhnev etressed in the CPSU Central
Co~rnnittee Report to the 26th congress, "~uch ie the requirement of the time."
- The congress pointed out that a technical policy~ a policy of capital investmeat~
~ and a system of p].an and accounti.ng indicators mnst ba aimed at an economical re-
lationship toward public wealth.
~ 10
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Cc~asist~atl~ aarryia~ o~t a polim~ o! ~aonAe~,y i~ a statsrids ~md~rtahin6. (3nided
b~ th~ uoagr~~s d~oido~s, tho CP~II C~ntr~l Ce�ritt~~ snd th~ II888 Couao~l oi Mi-
niat~rs ~ppro~ni tine d~srM "On iat,~si~ioati~ oi th~ rark cm ea~iagn vhich aon-
al a,e~ o! raM ~at~rial. in~l and po~r~ aad otba M?t~rial rNOUrc~+s�
ta~iss a aa~p~~h~usivp prosr~u oi ep~oi~io ~eunaras ai~sd at ispro~ao~nt of prodnc-
tian ~ifici~a~ and inta~uixia?tiaa of th~ eao~o�~. Thia decree is campla and
- lon6`-r~a6e i~? aaZtir~ aad ir nissd at obtainin6 ~~th l~~e rs~cnu^aes. Putting
~~~s~ wt t?u ssr~iAe o! ~b~ pnb].ic, the deor~� aoit~s, is the so~t ieport.~at
- ~aa~cmic aad political. t.aat in the anrr~nt stag~.
Th~ d~arN p~ints obt th~ a~coesit~r, vhen plwna ars drnft~d and i~plrn~ted, of
P~oridia~ tor reiaiora~ent of the o~i~anta~ie~ o! econa~.fo dwelop~ent ta~srd a~a
in9r~se in proda~otfon r~su]~.te Mhioh ou~strip ~ocp~di~ur~s, tbat ie, toNard ia-
t~itioatian oi th~ ~coaMp and ma ino=~as~ it? ite ~~ficiemc~.
- On~ of bh~ ~wt itpo~l~it tr~ads ia th~ wrrk ~or ~eoa~eY, aad ratio~a7. us~ oi oa-
taial rs~o~roa?~, a~a! thi~ io note~ ~ep~oially in ths dsar~s. is i~npa~onm~nt in
th~ patlrra o! th~ natio~l ~ooaaq ~ad it~ soct~re vi.~h the aim o? ~ves7 po~eible
r~dnotic~ in the aea~y sad ~t~si,alm ooasnmption oi prod~atias~ tb~ aeo~ieum ~oc-
tr~?a~i~n oi siaa~?1~ lram th� Murth? and th~ i~tia i~duetgg no~re~~a~~~�
sa~E~ri~lr. Th~ psa~cq~tiou ot eat~ria]. ~p~nd ='T
~g p~rcaat ot all eacptaditnr~a $e tnrn out oaauodit~r pa~c~dnotion. 8edaaing th~
b~? ~ust 1 p~ra~t ~al.d m~k~ it ~bl~ to ww abox~.~ 4.5 to g b~l].~caa ru~.~a
wna~aily. In l~at ~~h~ sf~'ie3~ m~ ~h~ red~otiaan c,itsd woald b~ nw greater
i! it ia te~lc~n fsto ~aammnt thnt~ in th~ proa~aa, lisit~d and irre~pUaeabl~ ne~tu-~
nl r~EOaro~t are b~iag co~serv~i aad pollutio~ oi the ~nvis~omisent is being re-
dvaed, ead eo iorth.
f3~vinge 3.a mataria]. reeowrase ir ga~ibls in all stagee oi the production procees~
b~inxi~.na with the eacti^e~ctio~ oi raw satsrials. It ie ~aongh to e~ that np to
30~.40 ptro~t ot th~ ooel~ ug to ~1 psrcmZ oi the gae~ up to 70 p~rc~t of the
petrol~ve' a~ ~ to 20 pera~nt o~ tho iroai or~ ar~ left in drposit~. It 18 n~-
~ a~sseur~ to i~cr~ase th~ yi~ld o= sia~ral r~sonsa~~ n~ia6 ior th3s progre~siv~
~ooe~sing m~rthodo s~oh as thoN aot~d in ~hs "BReic tr~nde ior ths ~ooanamic e?nd
sooia~l de~~lap~t os th~ oss~a i~ i9~-19&S ~d th~ p~riod up to 1990'~--lor
~owpl~, nt~+ mstho~s ot a?oting oa oil-b~aring strata~ th~ proo~dur~ oi g~s liit
atpl.oitation oi re~l~s~ uad th~ ap~].ioation oi 1~~ p~rod~oti~~ d~rp-~11 pu~+~.
With th~ aim o! iaor~a~ia~ th~ ~oct~sotion mt ~3aa~a1 rav ~ate='3~a3.~, th~ ~aoaania
iao~ti~~ oi ~~a~p~is~ in ths ~octswotiv~ i.sQastry ~l~o ~honld b~ r~inioro~d.
W~ o~a, 1~ n~ w~,7~ ~'r~luat~ bh~ t~edts and or~dit th~ir ~].n~ to the balaaae
of th~ ~n~u~iwa. Than i.a dea7. ai~s aollwti~ae ior ~owpl~~ tb~r~ Mi7.]. be
is~amti~ te re?!a ooal ta th~ e~a~t~� frou t1~in ~am~ vhich noM ur'e dieadvaa-
~s~nae to wrk.
Fnil utili~e?tion ot rav amter~l roctract~d yielde a larg~ gain� l~any collsativms
ha~vo aooosnla~ad poai~i'~ ~ri~so� in thia s~pacd. Thvs, at th~ B~t'~emsno-
goa~ak L~ad o~d Siaa C~biae, dfita~~at torma oi ra~ e~at~ar3ra]. ars b~is~ proo~~esd
4nd divu~ili~i antpat ia b~iag prodviaed~ iacl~diag m~u~tput the~t prr3oue],y wae
i~oa~t~d to ~~st tha ~~and. th~ Ballclaash Mia9.ag and 8me~tin~ Coe4bin~, the
~ byrprodnct o~ut~ ~s~aats to np to 30 pa~oent oi or~rall prodtwtion. At th~
il
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Noril'~k M~aiaa and 8n~].tia6 Cambin~, proc~aaos have be~n eet up far the derp eac-
t~rotio~ o! niok~l., oopper and aobalt. 1Sisilar ~a~euapl~+e oould be oont3nw~1. At
th~ eam~ tiM, ons ~anaot h~.p bat notd that ~qy uesivl coapoaze~ts caaitainsd in
rav mate~iale b~3s6 ~ortraated sre not b~ing utili.~d; ~in~o~ bia~anth, uatimomy~
tuagstea, so~l,yb~eaum~ ~g~old a~ad ~il.vsr are going to the du~eping groimds. Thia ei-
tnwtfaa ~ust be oa~r~ated.
Th~ So~iet Dhiaa i~ me oY tbs irr cc~natriea in the tirorld that d~v~3.o~s its eao-
naq am ~he baaie oi ite o~m sna~? rseoaress. A~ pareeent~ ~rs p~oduae nee~r].9 a~e-
litth of th~ vos~ld s~1~. Bnt saoraea of thess resom~ces are~not limitleae, and
- th~ir aa~tr~ctioai~ p~oo~in6 and tsaasport are b~aoming mare and more ecspa~sive.
In pattianL~r, lat~~~ additiaa~sl ~a~p~aditurss ars made neaeeaary by ~~nep~~~rting
tn~l trao th~ aa~t~ra regioaas to th~ Enrap~aa part oi th~ coaatt?. Evuy poeaibl~
~~in~s 3a it~e~. ana 8ewr r~aans~e~s 1~ oa~ oi th~ most importaat na~tiaa~al eacasario
p~rAbl~e~. Tap~e~r~aat ia th~ p~~ta~n oi th~ ba].~aos oi ~he insi aad pev~r ccepl~~
to Mhioh th~ 26tb party coa~s d~ot~d atteatioa4~ ie import.~nt ia sariag th~
:c~o~ra~e. Th~ qnNl3~ oaavaa~as r~luatiau o! th~ pa~aportioa oY oil aa fti~l and
its mbstitnti~t bpr gw aad ooal~ thr rn~id dwslopment oi ataoic powr, in~olading
- l~tat ~breeder r~,oto~~~ and oaaitianatiaa~ oi th~ s~rah ior innd~m~~al.ly nev
soQro~s oi ~aa~, inaluding ss~ab3.iirl~m~t oi tb~ l~s~a oi thu~noaiuol~e~r power.
The deoree oalla vae of the mo~t ivpo~tant ~re of aore efiioi~atly aaimg and
~ariag mat~3.a7. r~eotia~c~e th~ vid~ iatrodnotion oi eci~tiiic w?d techaical a,-
obis~ao~e~t~ e~im~d at increaaing e!li~3e~ay in the nes of oone~ruatioa and othsr
�ateria~le, tt~~l. and powr snd xsY ~s.terial reeounra~, wnd the crestiam of the im-
pleei~ts oi labor, e3rst~ur st machin~e~ aad high:~j econasical induetrial procee9a~
Mith 13ttle or no waet� whioh ar~ a~c~ae~ry ior thie.
TMO typN oi nw t~chnology oan be dietinguiehed. The firet aatsgory iaclude~
~r we]1 kao~ and p~ann eod~].s o~ aquips~t ~+hia3~~ ho~sr~ are still not being
tiurn~d out ia rutii~ai~?t qnantitT. Mith r~gard to ~nah ~aipm~nt, ~ are aonfroat-
~d rith th~ tuk ot 1ta ~s intrc?dootioa into proBnctivai, rhioh ~r~i1]. meke it pom-
sib.l~ to iaor~ase its tachnica~l. lw~l and to r~a~ir~ a. ]~rg~ eoono~aio gaia. Thne,
~or ia~aisiiioatiou oi p~oanotioai in th~ oil aud gru indw~r~ wa mnet inarenae t~e�
manuta~otur~ o~ am+pl~t~ anitias8 antom~t~d inmtalla:tioas tor the indnstrial prrp~+-
ration oi oi]. ~tsd gaa and t.~~ p~oo~sai~ ot gar wad gae oondstan~t~~ ~ad aamplet�
oambin~d lug~-onp~oity in~t~lla~io~ for oil r~tlniag. Mo~e eocaioaifcal organi-
~atio~ o! produotioan in i~rrove wtu11nr6y aa b~ aahiev~d throngh ~ri8e use of the
mqrg~a-oanwrt~r proo~ea ia st~o]. ps~dnotian in oonn~ctiaan with it� oontinuone
t~~min~ ~ad w inar~as~ ia tIu p~odvatioa of rolled metal irom hali-ki11~d m~tal
in~t~ad oi Id.11~d m~tal. Ia ~atohine bnilding aad m~tal rorking~ great eavings can
b~ obtained as a r~~nl.t ot ~abstitntioa~ ~rh~re thim ia poeeibl~, of ~tal aatting
by prse~ar~~ ~v~ r~hich ths vntpu! o= rolled ehest metal mnat be inar~e~d. The
dst~rioration of ine~ahin~ and ~qnipment parte can be rodnaed by esanuPactnring them
oat oi quality stsele.
Another typ~ o! n~x tschnology ie ivada~oentally ne~e~ euoh aa robot~~ new ty^pea of
oo.~ot and eoaa~a~ical motors vhiah do not ne~d petroieua fusl, and th~ like. A~-
oelera~iom of the d~v~lopm~at and introdu+atian o~ euch techaology is the high
roe�? of teohniaal pr~ogr~e~.
12
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Advanced new materials and industrial processes which contributa to savings of
material resources should be mentioned eepecially. In the CPSII Central Canmittee
Report to the 26th party congress, the intolerable sluggishneBS in assimilati.ng
long-range developments in the field of continuous steel teeming and por~cier me-
_ tallurgy and high-strPngth artificial fiber~ was critically noted. In the lOth
Fi.-ve-Year Plan, the proportion of continuous ,steel teemin$--a method developed in
the USSR and patented in 28 capitalist countriee--wae increased from 7 to 11 per-
cent of the total volume smeltedz while in a number of other co~aatries it makes
~up 40-45 percent. If the annual level of continuoue steel teeming is carried out
to its opti.mum eactent of 30-44 millio~ tone--in conformity with the scalee and
specifications of our economy--then the resources of prepared rolled metal in the
cotmtry will i.ncrease by 2 to 3 million tons. Ovr output of inetallic powdera in-
cr�eased by 28 percent, which aleo is inadequste. Taking into account the progr~s-
~ivenese of powder metallurgy, it has been pl,anned to triple the production of
metallic powders in the llth Five-Year Plan. Our production of polymer materials,
synthetic resinB and plaatics, e.nd synthetic fiberB is etill being inadoqustely
developed. For this reason, a aignificant incree~se hae been specified in the ma-
nufacture of these importaat materie.7.s~ which in many casee effectively replace
ferrows and nonferroue metal~, as well as natural fibers, eapecially for the pro-
s duction of engineeri.ng fabri~s ~ekhnicheekiye tkan~.
A substantial reserve for savinge in materi.al resourcee i6 concee~l.ed in the eharp
~ reduction of waste }~roducts and losses oP raw material and materiale ia all stages
of their processa.ng, etorage and tranaportatioa~ aad in the more complete utilize?-
tion of secondary resources and by-products in produation. The decree denotes
particular attention to the neceaeity for puttiag these reserves in use. I~osses
of material valuables in the nationa]. economy are high enough nox~ In machine
building and me~al. working, a large quantity of inetal ~crap, half of which con-
si~ts of cuttinge, is created avery year. If the losees and ecrap of the metal
in metal working Were redu~ced by ~uet one-ha.].f, this ~vovld be equivalent to in-
creasi.ng the production of Yiniehed roll~d metals ~y 1G percent,. Ia the proce8a
of forest ~xploitation, eawmill o~pere?tion, woodworking aad tram.~ortation~ teas
of millions of cubic meters of timber are loet and become ~ste produ~ctg. Mean-
while, wood pulp, aplint-slab ~nd wood-Piber boards, cellv].ose~ papar~ cardboard~
and a number of wood chemistry prod~cte can be produced frora them. The loeaes of
construction me~terials--brick~ glaas, cement--are significant. The lo~ses of mi-
- neral fertilizers, which we produce more of thaa any other country ia the trorld~
are high. During the harvesti.ng, storage, tranaport and initial proceas~iag, .
a large quantity of agricultural prodwcta~ and so forth, ie lost. A11 these loss-
_ es are linked with the lag in development oY certain works ~roizvodstva~ and the
infrastructure, but sanetimes they are cauaed eimply by poor management. Propo-
sals should be worked out to eeta:blish an economic mechaniem to prevent losses in
work time and material valuables in the national econoa~?.
Utilization of secondary resourcee of raw material and euergy muet be improved.
At present~ tens of milliona of tons of eteel and a eignificaat amount of non-
ferrous metal8, pap~r and cardboard are produced from theee resourcee. The reco-
very of energy and heat represente eeveral tens oY millions of tons in recalcula-
tion for standard fuel. Howev6r, ma~y forms of secondary reeourceB are still
13
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- being i.nadequately used. For eocample, only 40 percent of the mobile resources of
aecondary heat and energy and about one-qv~e~rter of the t~aete paper are reused.
Plastics, industrial rubber items and other products are being.recovered in emal.l
quantities. It wae demonstrated ago that good constru~ction materials can be
obtained from the waste products of thermal eleatric power statioas, ~ut they are
being turned out in very limited quantitieB.
~ Opportunities to improve the organization of the accumulation of secondaiy raw
materi.als and the establishment of their reprocessing at specialized enterprises
exist in practically all sectors of i.nduBtry. It has bec+n calculated that such
investments in production are significantly more efficiP.~t than in e~ctractive
sectors, Bince not o:~ly the economic efiect~ but the ecological effect~ must be
taken into accoimt here. It is necessary to increase attention to this matter~
and to disseminate more widely the work expdrience of party organizations aad
ccllectives of the Magnitogorsk Metallurgical Canbine~ the Vo].kho~v Aluminian Plant~
and the Novopolotsk "Polimir" Aseociation for wsing eecondary energy reaources~
which has been approved by the CPSII Central Committee.
Implementation of ineasures to save material reaources requires the apprapriate
capital. The provieion of priority allocation of capital investments~ ~quigment~
and the capacities of construction organizations to carry out these measures is
_ stipulated by the decrQe when p]rans are drafted and put iato effect. bcpandi.ng
the production of, let us eay, more economical. equipment; the creation of energy-
I sa.ving machinery; the construction of gas-collecting syatema~ compresBOr stations~
natural gasoline and other instal].atione, capacities~ and so forth with the aim
of preventing l~rge losses of casing-head gag; improvement in the heat ret.ention
of buildings and structures; and development of the infrastructure presuppose
additional capital expenditures, of course, but the~~e ~xpenditures are highly ef-
ficient. Thus, calculations demonstrate that specific capital.investments dixect-
ed at saving fuel and power resourcee are three to four ti.mes less than specific
investments necessary for an increase in fuel ~xtraction. Or let us ~cake the ia-
frastruature. As a consequence of the insufficient number oY good roads~ w~re-
houses, elevatars and r~frigerators, grain is lost~ potatoes, vegetablea and fruit
are apoiled, and the live weight of cattle Purchased by the state is reduced. As
a result, society bears the direct losees. Meanwhile~ ~xpenditures in develaping
- the infrastructure, if elimination oY the lueses of agricultural and other outpnt
is tal:en into account, pay for themselves in geriods which do not eo~ceed 2 to 3
years. This al8o makea it possible to improve the supply of food prod~ts to the
public, which is eactremely important,
i r �
Improvement in the ef~iciency of production aud the more rational use and eavinge
of all material reaourcea depend directlq ~on~further improvemeut in the mechaai~n
of econamic ~peration. With the aim oi implementi.ng the measure~ outlined by the
decree of the CPSII Central C anmittee and IISSR Cotmcil of Ministers~ the decree
provides for specific organizational and economic measures dir~cted at improning
the level of all work connected with pl.anning and norm eetting for the consumption
of reeources, ~d material incentive for their econo~ical use. Measures have beeai
outlined to imp~rove standard~ and apecifications and normative managemant aimed
at raieing product quality and the econaaical and efficient use of raW mater3,~7.~
materials and fuel and power reeources.
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In conformity with the decree;- we are faced with in~creasing the ffiobilizing impor-
tance of norns and fixed standards, ensurin6' eocPediti.ous SPecification of norms
in force and ~he establishment of new progressivm rates o~ cone~aption for mate-
- rial reeowcces, proceeding from pl.anned tarBete~ and taking into accouat the a-
- chiev~nents of science and technology as vell aa the ~cperieac:e of advanced col-
~ lectives. In five-year and annual Plan~s� t~xed standards wiu be set for mini.s~-
tries and de~artments for expenditure of the most impartant types of material.e~
fuel and energy in ~n5'sical terms per vait of output~ rrhich accordingly muet be
: brought to enterprises and organizz~tions. At the ~ame time~ the raage of ~teri-
al resources for which centralized targets are beiag established in accordance
with the average reduction of ratee of caa$~nnption wi.ll be ~xpanded.
- The production cost of output is a highly importaat indicator and criterion for
evaluating the etatus of production, Practically all the co~rponents of efficiency
- are reflected in it--improvement in the orge~nization of production and labor, bet-
ter utilization of funds, increase in labor productivi~y, a.nd eavi.ngs in raw ma-
terial, materials, fuel and power. One cannot help note that attention to this
indicator hae been relaxed in recent yeara, ~rhich adversely affeats ite incprove-
ment in a nvmbar of caeee. At present, in accordance with the decree, targets in
accordance with the production coet oi output (operationa) rrill be app~oved for
industrial, construction and transport ministries, au~sociatians~ enterpriees and
organizations i.n five-year and aanual plana, and ~orming a part of theee targets
will be a limit (maximum level) of material eocpemditures i.n moaetary..terms per
ruble of output (operatione) which, unqueationably~ r+ill coatribute to improvement
in the overall level of economic aperation in aectors~ aseociations an.d enterpri-
_ ses.
The planned administration oP public production under socialisc? ar'6anioaalY in'
cludes use of a system of economic incentives and levers trhich are adeque~te for
it. The Lenia~ist thesis that cor~cuniem can be approachsd "not directly by enthu-
siasm, but with the aid of enthusiasm born with a great r.evolutioa, by pereonat
i.nterest, by personal concern, by economic calculation..."6 is widely lmo~vn. E-
conomic incentives, to the correct application of which the party and government
have devoted and are devoting mu~ch attention, have been called upon to unite to-
gether personal~ collective and public intereats, to motivate production collec-
tives snd every worker to undertake etapped-up plans~ to economize resource~~ to
reduce the production coet oP output, to impr~ve ite qt~lity--in a t~rord, to carry
out production most efficiently. A further step forward ia being taken by ~he
approved decree in developing eaonomic incentive and in increasi.ng the concern of
r~rorltere, supervisory and engineering and technical perBOanel and esnployees of as--
sociations, enterprises and organizatione for the efficient use of material re-
sourceB. The econamic incentive fuads af ministries and de�paxtmente, associations,
enterprises and organizations now depend not only on an increase i.n labor produc-
tivity and product quality, but on the lenel of mater~.al eocpenditures per ruble
of output (operations) as well.. Beginning in 1983, dj-x'ect deductione will be made
from the sum of savinge obta~ned by reduaing mater~al. expenditus'es compru'ed with
the established limit. In casee where the limit is e~cceeded by enterprisea~ de-
ductione in the funds will be decreased. Begin~ in 19~, the payment of bonus-
es for w~ork~rs, foremen, techno~.ogiste, designer~ and other engineeri.ng arid tech-
_ nical personnel r,rill be eorpanded for savi.ngs of epecific types of material
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resources against establiehe:~ technically sound (average~progreeeive) rates of
consuu~nption. Pa~rment of bonu8es ia provided for o~ a scale oi up to 75 percent
af the total savings of material. reaources, dgpending om their type~ value and
scarcity, Theee bonusea will be paid to workere above the meucim~n rates of bo-
nusee eatablished ~~r eectore. Beginning in 1983~ pe.ymeat of bonneee aleo will
- be introduded~for leading workers and e~ployees oY productiaz~ assxiationa, em-
terprises and organizatione, de~pending on the lsvel oi ~terial ezpeadituree per
ruble of outpttt (cperationa) comparsd ~d.th the eatabiiahed limit~ taking into ac-
couat the f~ilfil:lment_of targe+B for tho production coat of ontput (opera~ions)
- for each a.Bexiation, enterprie~ and organization.
Begin~ in 1982, all or half (depending on a nvarber of conditions)o~ the profit
actun].ly received from the eale of coaeumer goodB and articles for an industri.a~1.
angi.neerin6 Purpos~ ~zdeliya proiztro~8etvenno-teldtnicheekogo aaznacheniya~ man~
_ factured frcm the r+aate producte oY px~oducticzl wi11 remaia at the dispoeal of ae-
sociations, enterppises and organi~ations and be included ia the consuoner goods
fund ~ond ahirpotreba~.
Togethsr with ~ broad syetem of economic incentive meaeurea for eaviag materi,al.
resoureea, tha dscree providea ior the eocpe~nsion of ecoaia~3.c penalties for the
violation of etandard~ and speciiications. Theee pu~altiee xill apply to p]anaiag
and design a~nd saientifia reaearah organi~stione and deve~oper suterprises
~redpriyatiya-re�xabotchik) in the develo~ment and prodaation of output; ~o agri-
cultural, procureunent, aupply e~nd markstiag, rhol~eea].e aad retail trade orgsafza~
tiona and anterprieee in the eQle of output and ite atorege; to traaeport orgeni-
zatione in th~ traneport of output; and to amterpriams and inatitutfona in the
servicee field in rendering eervicsa. At the a~ame t3me~ ro ~s~e iaced rrith the
taek of improving control ovs~c dietribution aad nae of materia7. reeources. For
this a~retem of accounting~ reporting and econamia amalyeis of the caa~sw~pticai
of resourcee will be imparoved and a etrict accounting o~ all tgpem oP ~e and
loases will be introduced. Peaple'a coa~trol organe have beem order6d~to mcercise
tighter coatrol over observance of the poliay oi ecoao~? and thrift ia all parts
of the national econa~pr aad over ra.tional nee of electric and therma]. po~wer~ rar
materi.a~l and ~ateria].e, fuel, agricultural output, machin~~, eq,uip~sent, mesn8 of
tranaporta~ion and labor reeourcee. It ie asceaaar~ to decia3.vely eupp~ess~ the
decree ~phasizes, ar~q manifestations o~ miamanagement and e~stra.vage~a~ce~ aad to
make the persons responsible strictly aneMerable foa~ inflicting harm upon the
etate.
� � �
Implamentation of a policq of eavinge ie inaonceivable without etrict obeervaaae
of state planning, production aad l,e~bor dieaipl.ine aad oantinnove i~proveaneait in
planning and administration. Suah ehoztcc~inge ae, ae~y~ ehock r~rork and Btappe~ges
in the material. and technical e~rpply of enterpriaee and asaxiationn are fraught
with high loesee. For aacample~ violation o~ the parioc]s of t~me for deliveriee
of equipment a.nd materials compels enterprieee to uae more ea~pensine materials
and articles which make up complete units, aad irregular o~eration adverBely af-
fects the quality oY output. All the praatice oi aocialiet economic maaagement
demonetrates tha.t the vs.at reservea availabla in savings can be put into effect
only undar conditione of improving administration~ raieing the level oY good or-
gani2,ation, and maintaini.ng a etrict procedure in production. Regu]~irity and
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irre~proachable discipline in deliveries, strict observance of aontra~ct abli.gations,
and well regulated control and accounting-all thia is a gne~raatee oY the econami-
cal conduct of production and an increaas in ita efiiciency. But the o~nizing
and mobilizing role of the plaa must be incre~sed for thie. In fact~ ths plaa
m~:~st be the lav of life for every produ~ctiou ao3lective. At every eaterprise,
every eecti.on~ every wnrk place it ia necessary to organize�ete~pped-np, pvrposeful
Work to reduce me~terial and labor eocpsnditurea for the production of c?u~`put and
to c::.~tivate a p~raprietary attitude among workers toward the people'a gro~erty.
Horrever, xi.th all the i.mportaace ~or the rational ~e oi material reeom~ces of
developing apprapria.te organize~tianRl and e~onamic meaaureB~ one cannot help note
that fundamental order is nxeaeary ~iret of all ia thie matter. Casea oi poor
storage and squandering oY fuel, rav materie~l, ~ertilizere aad meta~]. trhich atill
exist cannot be tolerated. IInquestionably~ the loeses of agricultural outpnt
which occur because of miemanag~ment are iatolerable, especial~y eince a number
of cons~er producte, as ie well kaown~ are not being eupplied to the iull eocteat.
- Defective output, which is a squ~.ndering of socialiat praperty~ must be complete-
ly stopped. Decieive, uncoraprc~ieing struggle must be wnged against su~ch manifes-
~ tatione, and all cases of elackaeea and miem~nagement leading to loeaes and ~npro-
_ ductive axpenditures must be given an evaluation baaed ~n pri.n~ciple aad strictly
penalized. And here the line miet be pureued pereistently to increase the perso-
nal responsibility of managers, the necieesity o~ ahich waa noted at the party's
26th coagreas. Problema of discipline should be in their sight continuously.
- The discipli.ne and induatriousnees of workera must be caanbined with their creative
initiative and enterpriee, which ie atrikingly eacprassed in eocialist competition.
Ccxapetition for aavi.ngs and thrift has now taken on a mass character. The over-
whelming ma~ority of our canatry's tirorking people isave become involved in it. In
the CPSU Central Cammi.ttee and IISSR Counail,of Ministere decree on intensifying
work for savinge and rational uae oi materi.al. reeourceB, it is pointed out that
the effectivenees of sxialiet co~petitiom~ ehotild be improved~ and eounterplans
and pledges ehould be directed etill mors at inteneif~?ing the poliay of econoa~r
and mob:;lization of existing reeervee. One of the moet important criteria in
working out aad evaluating the Ytialfillmsat oi aonnterp]a~e and eunming up the re-
aulta of compatition mu~t be the indicatora which char~.at~rize the reduat3on of
material eacpeaditurea and the savinge of other reaouroes~ as xell as the vol~t~
of additional output produced through eavinge.
Implementation of a policy of ee~vings ie not o~nly a production ta~k. I~arge re-
servea for eaving energy and oth~r valuabe reaouraea aleo eo~iet in everyday life.
In the decree approved, the CPSII Centrnl Caonnlitt~e and ~~~e US3R C,almcil of Minis-
ters devote attention to the neeeeaity of signifiaantly increas3ng ths level of
Nork among the public to enenre econaaical consumption of heat, electric posver,
gae and r~rater, and to reinforae the reaponBibilfty o~ enterprisea and institutions
of houeiag and public utilities and the public for ~3i+~ir inefficient uee.
Thrift is a ca~munist trait. "Cammuniem " arx~ote V. I. Leain~ "begins ~rhere the
eelflese concern of /ordina:y worlc~ers/ ~n italiceJ for increasing labor produc-
tivity, for saiegusrding /evsry pood of grain, aoal~ iroz~`~'n~ italic,g~ e~ad other
producte makee ite appeax~nce...7 This trait ie formed by e~ar entirA r~r of life
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and the sociopolitical atmo~phere of onr aociety, but it muat be fostersd. Thim
is xY~,y the decree provides for organization in the ~rstem of ecoacmic eduaatioa~
in inatitutea, in fa~ulties and courees for improviag akilla, and in univeraitieB
o~ Marzism-Lsuiniem for stuc~,ing problems o~ ec~omy aa~d thrift in light of the
tasks advanced by the 26th CPSII Cangrses, ae wel7. as iuteneificatioa of ~rk to
cultivate a spirit of thri~t and a cammuniet attitude ta~rd labor and pnblic pro-
perty among stndente and pnpile. Attention i$ devoted to the neceeeity oi improvb
ing the etuc~y v~ economic dieciplinesi incre~aeing the role of the edu,cational pro-
ceBa i.a thia, of videly conduating~ lec~turms and dieauesi~..~, and utilizing other
forme of explanatory work on the problems of eccno~my. Putting these taeks into
effect ie an important and honorable oblig~tion o~ eaienti~t-eaonomiets ar,d teach-
ers of econanic dieciplinee.
r � o
The decree approved by the party and government defines the prin,cipal directione
' for intenexfying work on eavinga aa~ the re~ion~~l. uae af material reeovrces for
a protracted period. Proceading from thems specifia prflpaeale 8hould be developed
that are aimed at reinforcing the policy of s~vinge in the entire national ecoaooy~
in its different Bectors, in aeeociations, ia anterprises. Econacnic ecience ~ae
been called upon to play an importanL role in thie. ~The taeka brought forth by
life," L. I. Brezhaev atreseed in the CPBU Central Cammittee Report to the 26th
party congreas, "require the develapaent oi theory~ eooaomic ecienoe, that it be
brought nearer to the neede of ~conamio practice." In light of the congrees' de-
ciaions, the development of economic reeearch muet be anbordiaated to a still
greater eoctent to solution of the taeks of en+suriag the etabls~ progree8ive deve-
lcrpment of th~ ne~tional econa~, the aocelsration oi acfentific and teahnical pro-
greae, an inareaae in productian eiSiciency and its intetufYication~ and aa in-
_ crease ia the rrslfare of the Soviet psople on thie baei~,.
All thia preydetermiaes the necesaity o! further research~ mainl.y in the field oY
the political economy of exieliem~ which revea~:e~~ihs ob~ectivr, ~conomic prinaiplee
_ in develo~ment of a socialist exiety and whiah eerveecas the baeiB of the ays~em
of economic sciences. Man,y proble~me have bee~ acanmulated in it which are,it eo-
lution, as L. I. Brezhnev noted at the 26th CPSII CongreBS.
The concept of a develaped socialist soaiety, arorked oiit by the CPSII ~ointly with
other fraternal partiee, ie the most 3anportant contribution to Marxiet~eninist
theory and tha political economy of ex3aliem. Quided by this concept' the party
has epecified and defined concretely the path8 and periode of time for rea3.ization
of program targete, aud haa outlined etrategy aad taatice for~a protra~cted :iistori~-
cal peria~. At the Bame ~ime~ we are eonfronted vith the task of understanding
and disseminating new phenomena in life aad f~irther develaping the~ry. Saiantific
colle~~ivee aad acientist-eeonaniats muet eontinue etuc~y oY the economie probleme
of mature sacialiem, make lmown ita advantagea aad opportunitiee whioh hAVe arisen9
and determine wayr~ for their ree~7.ize~tion in the p~etice of commuaiet co~atructiou.
The problem8 a:f increaaing the col3ectivizatioa of eoeialiet produatiaaa and improv~-
ing socialist production relationahipe aad their dwelopmeazt ~.nto commun3et ones
_ are sub~ect to further elaboration. ReOee~xch on the ayetem of ec~nomic larrs of
socialiem and the mechanism of their use ie a~s indiapeneable condition for the
correct application of each one of them and their eystem with the aim of eneuring
- the progressive movement of ths aoaialiet econaqq.
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Working out the problems of socialist ea~panded reproduction and optimizi.ng its
prop~rtions, d.eveloping the material and technical base of mature t~ocialism and
its pattern, taking into account the latest achievements of scieatific and tech-
nical progress~ anct determining r+~ye of developi.ng it into the materi.al aad tech-
nical base of cammuni~ are inseparably linked with res~az~ch into all theee prob-
lems. At the same time, it ehould be emphaeized that anal,ysis of productioa re-
lationships, economic laws, categories of political econoa~y, and other problems
must be coordinated with the requirements of practice i.n the elosest we~y.
It is highly important to ~ontinue research in the Yield of further im~roving ad-
' ministration of the socialist econamy as a unified nr~.tional economic cample~c. The
problem of providing for the opportunity "to widely propagate and subordinata in
a real Wa,y publi~ producticm and the diBtribution oY output in accordan~ce with
scientific coneidor~tions related to making the lives of all xorking people the
easiest, providing them with the opportunity for well-being"8 is reeolved preciee-
ly in administration of the economy.
The CPSII Central Committee and IISSR Council of Ministers decrees on improving the
economic mechaniam were an important step foz~ward in i.mproving administration of
the national economy. These decrees aim at planning and administration to achieve
high national ecanoa~ic end results, acceleration of ecienti~ic and technical pro-
gress, more efficient use of produaer goods and material and labor resoe~es~ and
reinforcement of the pol3cy of economy.
They stipulate the neceesity of correct definition of priorit}es in the develop-
ment of sectors and econanic regions for eneuring progressive changeB in natienal
econo~ic proportions and for improving efficiency of capital investment and all
public production. A11 this dictateB the necaesity of raiBing to a qualitatively
new level the maintenance of pl.aaning on the br~sis o~ reinforcement of the rola of
long-range plans, broad applicatioa of the progremming-epecial purpoee method, and
introduction of a sqstem of scientifically valid technical and econanic norms and
fixed standards. In thie connection, it is important to improve the methodolog~y
of planning. Pl.a.ns must be guided by the achievements of science and economic
and engineering calcu:lations. Much work alseady has been carried out in preparing
methodical directives, regulations and instructions, in which the principled pur-
poses o~ the party and government to improve pl.anning and the economic mechanism
have been made specific i.n conformity with various level.e of adminiatration. Im-
plementation of these documents is produci.ng p~sitive results. But life does not
stand still. The progreesive development of eooialist prodwction and efficient
econanic aperation require further improvement in admi.nistration of the ecoaomy.
� Speaking about the decrees on iraproving the economic mechanism and syete~m planning
approved in 1979, L. I. Brezhnev atreseed at the party's 26th congress: 'They must
be put into effect consistently. And at the same time~ we must go further~ resol-
ving the problem8 which have accua~ul,a~ted."
Proposala on improving the organizational. patterns of administra.tion~ on overcom-
ins departmental diseociation, on creatiz~ a system of managing groups of similar
and interrelated sectors, on improving administration at the level of enterpriseB
and associationB, which ara directly linked with rrork on saving material resovrce8,
must be w~orked out. The CPSII Central Committee and II&SR Council of MinieterB de-
cree on eavings and rational use of material resourcBB deYOtes particular
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- attention to the neceseity of improviag coordinatio~ of the vork of minietries,
departments, aBeocia.tions, enterprisee, and ecisntiYic and other organizations in
the econo~ical use of raw material, materiala, fnsl and energy.
Better use o~ e~ch econaanic levera and i~aceatives ae cost acc~ugting~ prolit, ~
pricee, bonusaa, and finanaial aad cred.it instrnmeats are important treada of
- economic devel~pments to ~urther i~aprove the ecoaianic meahanj�~m tram *he etand-
point of etrict implementa.tioa oi the policy o~ eaviaga. Dsvelopment muet con-
tinue on a system of material end ~noral inc mtivf* pe~ltiee for violatioas of
plan and contract di+scipline~ and problema coaneated tivith ia~proving wagea and
:~orm setting ~nd the developmea~t of esooinliat campet3tion. Thie in tura preeup-
poses eoctameion oi reeearch on a ey~ste~ o~ inte~sate ot axialist eociety~ the
mechaniem of utilizing the law of distribution aacordi.ng to labor, trade aad money
relationships xith the new contant aharewteri~stic of it under axialiem, probleme
connected with the creation and uee of -eo~oa~omic inceait3ve fuads, aad aleo ~o lesa '
i.mportant, the study and di~aemination of advamaed eocperience in econamic activity
With ttie ai~~o! it~ br~der introdvction in pre~ctiCe~ _ Correeponding ef~eative cri-
teria for evaluations oi labor aad itr~ efticiency mixst be worked out in order to
induce production collectives and individual v~orkers to achieve a reduction in
epecific eocpenditures of raw a~tsrial anc] materiele al~ya and in a11 caaes. ,
Acceleration of scientiiic and technical progreaa is of paramaunt importAace 3n
putting into eYfect a policy oS econaqy and incree~eiag the efficiancy of pr.:-duc-
tion. For this it ie aeceeeary to brin,g ecieatitic r~eeearch aud pl,aaniag and de-
siga xork closer--econoa~ically and oacganizdtio~lly--to ~roduction. Ia raaolving
thie taek, ecisntist-economiste can raLder much aeeiatancs ia praatice. They have
been callsd upon to give ~sonnd reccmmendationa foor improving planning and m~ter9.a1.
incentive for the introdwctio~ oi ecientiiia a~nd t~chn.ical innovatione in order to
eliminate ~verything xhich ise~lsee the proceee of introduatioa diiiicnlt and alov.
Production muet be vitally aoncern~d wi.th inQOrporating the fruite oi thought an8
- labor oi ecientiate and deeigaere aor~ rapidly and bett~r. Ecomamiste are to
continue elsborati~n oi the theory oi the mocioeconamic eiiicieaay oi ecientiiic
and technical progrees, to make 1aiown ths relative ei~iciexccy oi itB diiferent
trende~ to work out recommendatione to f`urther reini'orce fLs appliaability
~atselemnoet~ to the saving oi m~t~rial reeoura~s and ea~panaioai of the areation
and introduation of resource-eaving techaology and equipmeait~ and to eubetantiate
methode oi improving control of the quality oi aew equipm~nt and increaaing the
efficiency of ecieatitic reaearch and tsahnical elaborations. It ia necesea:y to
bring to 11ght aad scientifiaal~y ~bsteatiate re~~rvee ior intsaaificatiom? a~t~ the
reproduction of fixed capita~ and ite uss, takir~ :itsto~ acca~i::.;~u~a~eri~1~M_~o~r'~~#~u
rstooling �r proavation. .
The devblopment and implementation oi campleoc spsciQl-p~:~pose pro~s~ms pla~ya an ~
important role in the aacel~xation of sciaitific aad t~ahnicul progr~ea. The
June decre� o~ the CP3II Centrail Comnitt~e and th~.II88R Connoil ot hiaist~rs pro-
vid~e for m~aaurea tb imp~ov~ work on pCr~pa~ina aad imDlewnting oompleo~ progrsme
for solution of tha most importaat eoi~ntiiic sad t~ch:aical psoblems aad for im-
provemen~ of organizatioa to introdua~ eoientilic aahisv~s~ats ia production.
CloBer coordinat3on of plana ie necsaeary to impa~ove ths technical level o! ~eec-
tore ~rith final reaulte ior eavin6 rar? ~stsrial, m~t~riale~ iuel aad ensrgy. And
here econamia ecienoe aleo mnet h~vs ite s~,y.
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Taska oi no ema7.1 importance aleo confront eeisnti~t-~c~amiat~s ia ~arking out pro~'
posnle in the etxuggle e~gainat loemes of ~rork tfss and materi.a~l valuablee. As a
rule, measures to reduce�loeees require aaldi~iona~l.-capital iaveet~ents aad aurrent
expeaditnrea. Opportunitiee to apportion reeo~nrata b~ meas?~'ee te rednce losaee
- are limited. For thie reneon, etr~~t eoonami.a e~~tfoa e~a~~ ~ampas'teon ~i aorres"'
ponding meaeurea according to the lavel of eifici~nay of earpenditnree to ca~serve
resourc ee e~re neoesee~ry in order to eate~blieh the pa~iority of th~se mensurea and
enBUre the maziaam gain frqra the capital elloaated. ffiimine~tion oi Zoea~s requires
improvement in ple~nning and ita normati~~ bass~ the meohaaiam oi prodnction incen-
tive~ and ths eatabliehm~nt of aoet e~ooounting r~sponsibilit~ ior th~ ~o~penditure
oi reaonrcee~.
� M �
A vaat prodnction potentia~l p~oviding th~ opportnaity to comp~~ehe,aei~~1J de~elop
the economy and ensure on thia baais a further incr~ase in the people'e rrolfare
has been created by the labor oi th~ Sovi~t psopl~. To make the moat efiicient
u+~e oi thiB potential, to achi~vs gree~t reeulte ia 3abor ti+ith leae ea~penditures
in order to momt efficiently ce?rzy out the decisibme oi the 26th CPSII Congress sad
th~ targeta of the llth Five-Ysar P�l~ar-thie ia ths taek of the party. In reenlv-
ing it, the scientista and eoonaoistm rf].l aialce their own contributioa.
F"OOTNOR~ES
1. K. Marx and F. Engele~ "Bxhinenfya" Idorks~, Vol 20~ P 3~�
2. See K. Marx and F. Engsle, op. cit. ~ Vo1 46, Fart 1, p 117�
3. Ibid.
4. See, ior aacample, V. I. I,eain, "Polnoye eobraniye soohineniy" ICa~p~l.et~ Work~~
voi 36, p i74; voi 43, pp 173~ 26Y, 283.
5. V. I. Zeain, op. cit.~ Vol 36~ p 3~.
6. V. I. Lenin, op. cit.~ Vol 44~ p 151.
7, v. I. Zenin, op. cit., vol 39, p~�
8, V. I. Lenin, op, cit., Yol 36~ p 381. �
COPYRI(3flT: Izdatel'stvo "Pravda", "Voproery skonan~iki"~ 1981.
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