JPRS ID: 9233 USSR REPORT INTERNATIONAL ECONOMIC RELATIONS

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000300020005-1
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• Content Type: REPORTS

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JPRS L/9233
6 August 1980
` USSR Re ort
p
INTERNATIONAL ECONOMIC RELATIONS
CFOUO 3/80)
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JPRS L/9233
- 6 August 1980
USSR REPORT
INTERNA~'iONAL ECONOMIC ~ELATIONS
(FOUO 3/80)
- CANTENTS ~
US S R- CE MA TRADE
Convergence as a Principle of Development of Socialist
Count ri es
(I. Dudinskiy; VOPROSY EKONOMIKI, May 80) 1
- Development of International Market Among CEMA Members
(0. Bogomolov; VOPROSY EKOPJOMIIZI, Apr 80) 18
- a - [III - USSR - 38a FOUO]
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USSR-CEMA TRADE
CONVERGENCE AS A PRINCIPLE OF DEVELOPMENT OF SOCIALIST COUNTRIES
Moscow VOPROSY EKONOMIKI in Russian No 5, May 80 pp 83-93 ~
[Article by I. Dudinskiy: "Convergence as a Principle of Development
of Socialist Countries"]
[Text] The communist and worker parties of the countries of the so-
~ cialist community concentrate enormous attention on study of the laws
of social development and their use in the practical work of building
_ socialism and communism. Tfiis affords a basis for identifying the
long-run trends of social development and lays a solid scientific
foundation for sociopolitical policy, causing them to be highly ef-
fective and in accord with contemporary r..eeds. -
One of the important theoretical propositions advanced in recent years
by congresses of the fraternal parties is the conclcsion of the ob-
jective rule of gradual, ~sltifaceted convergence of the socialist
countries. L. I. Brezi~.~iev's speech at the 25th CPSU Congress contains
the essential features of this rule. Summarizing the historical ex-
perience of development of the world socialist system as a cemmunity _
of sovereign socialist states, L. I. Brezhnev formulat_ed and suiistan -
tiated the rule in the following words: "Along with the fluorishing
of each socialist nation and reinforcement of the sovereignity of the
socialist states, their interrelationships are becoming closer and
closer, an increasingly large number of common elements are appearing
in their policies, economies, and social life, and their levels of de-
velopment are gradually evening out. This process of gradual con-
vergence of the socialist countries is manifesting itself today in the
fully definitive form of a rule [Zakonomernost']."
The materials from the congresses and st atements by leaders of the
fraternal parties point out that the cooperation of the socialist coun-
- tries, based on common ideas, goals, and in terests, brings the peoples
who are creating new societies ever closer. There is an indestructible
link between the problems advanced within the country, aliove all the
- problems of building a developed socialist society, and furtherance
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of multifaceted international actions by the fratPrnal countries. Their
basic policy directions, based ~n ~ommon rules of socialism and corre-
, sponding to the develogmental r.aeds of socialist economic integration
and the desire to stren.gthen the ideological and political unity of the
socialist countries,are increasingly similar. Various documents empha- _
size that mutual cooperation is essential for all the socialist
countries. F.~lying on multifaceted aid from the USSR and the other
socialist states, countri~s that were formerly economically backward
have an opportunity to develop at an accelerated pace anci enter upon
the path of commun ist building more or less at the same time.
The pro~lem of the convergence of the socialist countries is reflected
in studies by scientists of the CEMA countries. Their published works
and international discussions emphasize that the gradual convergence of `
the socialist countries expresses the most characteristic feature of
~ development of the socialist community which arises only in a certain
stage of maturity of this s�~stem, has a comprehensive character, and
- synthesizes the results of the action of several other rules.
In the most general form, the rule of gradual convergence of the so-
cialist countries hinges on the interaction of the following processes:
- The growing uniformity in social, economic, and ~
political development of the ~ocialist countries, -
the growing similarity of their national eco- -
noml.c, social, and political s;.ructures, includ-
ing gradual evening out of their levels of
economic nevelopment. On this basis the common ,
- elements in the politics, economics, and social
~ 13fe of the fraternal countries are becoming
strongPr, each s~cialist nation is flourishi.ng,
and the sovereignity of the socia~.ist states is -
being reinforced;
. - The sfieadily growing international interaction of -
the socialist cou:~tries in all spheres of social -
life, including the development and deepening of
socialist economic intagration, political cooper-
ation among the fraternal countries, and their
ties in the areas of ideology and culture.
As a result of the development of these two procGSSes, new features are
~ accumulating, objective in nature, illustrating the growing integra-
tion of the wor].d socialist system as a voluntary fraternal community
of sovereign socialist states joined by a common system, common
ideology, and common ultimate goals of social development. Thus, -
resources are increasingly us.ed jointly to accomplish coordinated
common goals, a coordinated coreign policy is followed, and more -
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cou~on goals, a coordinated foreign policy is followed, and more common
characteristics are forming in the socialist way of life.
The rule of gradual convergence of the socialist countries operates on
three levels at the same time: on the level of individual countries;
on the level of their mutual relations; and finally, at the level of
the world system as a growing socioeconomic and political community
of sovereign socialist states. The last level reflects and fixes the
most important results achieved in the first two levels and at the '
same time promotes intensification of the convergen~e process between
coimtries and in the community as a whole.
~ Naturally, the problems being handled by the socialist countries in the
- areas, of domestic and foreign policy are also increasingly similar.
For example, the socialist~coun tries have many co~on traits in their
steps toward socioeconumic development. The main goal is steady growth
in the well-being of the working people and creating all necessary con-
ditions for the development of the creat~ve capabilities of inembers
of socialist society. In the a:ea of economics, the policy of inten-
sive growth in piiblic production,.raising the efficiency and quality
oi all economic activity, and stepping up the rate of scientific-
technical progress and labor producL-ivity has been adopted.
= The social programs being carried out by the fraternal countries in the
current five-year plan aim at mult ifaceted solutions to such problems `
as ~improving working conditions and strengthening the creative principle
in work, a continuing increase in personal income and consumption,
carrying out iiousing construction and development of the service sphere
on a largP scale, raising the educational level and quality of worker .
- training, and inproving medical care aisd social security.
Another challenge, typical for developed socialism, tfiat unites the
~ �raternal countries is implementation of a policy of consistently ex-
nanding socialist democracy. As socialist statehood is refined
conditions become increasingly good for active involvement by the masses
in the work ef govercxmental and control agencies, management of produc-
tion and distribution, 5acial and cultural policy, and operatiiig tfie =
legal system. Mutual exchange of experience plays an important part in
_ accomplishing these tasks. F~r example, particular features charac-
teristic of the constitutions of the fraternal countries were reflected .
in one form or another in the USSR Constitution, ~ust as their consti-
tutions earlier had dra~~n on previous Soviet legal experience.
The communist and worker parties of all the countries of the socialist
- community constantly focus attention on problems related to further de-
_ velopment of mutual cooperation and expanding socialist economic
_ integration. '?'he process of convergence of the fraternal countries
is stimulated by consistent democratization of the activities ef the
Council of Econom~c Mutual Assistance and unwavering compliance with the
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principle of voluntarism when each country is deciding whether to par-
ticipate in particular cooperative steps. This approach insures an
efficient merging of the interests of particular countries and develop-
ment of joint decisions; it actively encourages the fraternal countries
to deepen their mutual ecanomic ties. The organization of all other
spheres of mutual cooperation is being refined in a si.milar direction.
The socialist c~untries advocate a whole range of causes in tfie
international arena, mainly world peace. The countries of the socialist
community are working together to strengthen their alliance with the
international communist ~nd worker movement and with the international
struggle against imperialism and neocolonialism and for national inde-
pendence and profound socioeconomic cfianges.
Thus, the multifaceted convergence of the socialist countries appears ~
as a dialectica? unity of the process of intensi~ied economic, -
spiritual, political, and ideological communi~y among tfie p~oples of
the socialist countries and the process of international interaction
among the socialist states in all spheres of social lif e and at all
levels of organizational structures. `
The convergence of the fraternal countries is the most distinctive fea-
ture in the developme~t of the entire socialist community. It is
taking place within the framework of the general process of building
socialism and communism and is of great historical significance. The
convergence of the socialist countries manifested itself fully as a
rule in the period when the majoritv of the socialist countries were
making the transition to building a developed socialist society and
furthering their economic integration. The interrelationship of the
two factors mentioned above, which represent qualitative changes in
the inte*_~nal development of t.i~e fratern.al countries and in the system
of their interrelations, make their process of convergence multi-
faceted and give it a stable, irreversible character.
It is certain that in the future the direction of the basic trends of
development of the socialist community will intensify the action of
the rule of gradual multifaceted convergence of the socialist state.
In the first place, the common features in socioeconomic development
of the socialist coim tries will grow. During the building of a ma-
ture socialist society the convergence of socioeconomic structures
in the socialist countries takes place at an accelerated pace and
- the common principles in structure and methods of functioning of their
economic and political mechanisms are intensified. In the second
place, the international i.nteraction of the fraternal countries in
all spheres of social life will deepen and their role in the socio-
economic and political development of the individual countries and
the community as a whole will increase. The further development of -
economic integration and politicaZ consolidation of the fraternal
_ countries will continue in the future to strengthen the socialist
com~.tunity as a new type of international alliance.
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, '
The convergence of the socialist states is the most important process
taking place in the contemporary world. It reflects tfie most pro-
gres sive unification tr~d, a trend whose comprehensive development be-
came possible only under conditi~ns of socialism. The fact that this
asp ect of th~ process of convergence has not been adequately treated
in scientific literature makes it particularly urgent to disclose the
prof ound link between this process and the most general process of
con solidation, socialist collectivization of production and labor.
The classical works of Ma rxlsm-Leninism view collectivization of pro- ~
duct ion as a world historical process which operates simultaneously
in two interrelated spheres (or lev~els) , within particular countries -
and on a world scale. They show that where social production is more
high ly developed and social development has attained greater matur~ty,
the interdependence between the two spheres of the process of col-
_ lect iviz ation will 6e stronger and this process will Be more fiighly
integ rated. "The interrelations between different nations," Marx and
Engels wrote, "depend on the extent to which each of the nations fias
developed its own productive forces, division of labor, and internal
interact ion . "1
Acco rding to the doctrine of the founders of Marxism, each step in the
hist orical development of the human race has also signified an expan-
sion of international interaction. Cnly under conditions of capital-
ism, however, does the process of international interaction assume the
character of a defi.nite rule. This results from the principal char-
acte ristic of the development of productive forces under capitalism:
the appearance and rapid growth of large-scale machine production,
which from the very beginning acted as an internati~nal force. Marx `
and Engels noted that the very natuY�e of large-scale machine produc-
_ tion contains the potential for the a~.~pearance of close economic ties
' amon g people, that large-scale industry "created the means of commu- -
nication and modern world market . It subordinated trade to itself .
It c reated world history for the first time, because it made satis-
fyin g the needs of each civilized country and each individual in it
dependent on the entire w~~rld and because it eradicated the ~arlier,
natu rally developed isolation of particular countries.''2
The new stage in the development of capitalism, that is,, imperialism,
was marked by a number of important new phenomena in the inter-
nat ionalization of economic life. The chief one was the domination
by monopolies, not only within particular countries but also within
the system of their economic ties." "The establishment of cartels in
1 production and i~:~ernational economic life," V. I. Lenin stressed,
"att ained significant scale.i3 The export of capital, including ex-
port in the form of direct production investment, assumed large scope
and the monopolies divided the world into spheres of influence. -
Mult inational corpora*_ions formed rapidly and international economic
alliances took shape.
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Tfie analysis of economic, political, an~d intellectual life under capi-
talism given by the classics of Marxism-Leninism reveals the profound
conflicts inherent in this process. C~~llectivization within national
economies comes into acute conflict wiCh collectivization on the inter-
- national level. This occurs especially vividly under conditions of
imperialism wfien "reactionary, imperialist inteniational financial
capital took the place of national liberation capita7..i4 The economic
convergence of the cap italist states is accomplished in antagonistic
forms, because the motivation of this conversion for each country is
the pursuit of excess prof it, sources of raw materials, and markets
, for the country's own bourgeoisie and monopolies through exploi-
tation and oppression of other countries.
_ Capitalist internationalization is linked to colonialism, wars, na-
tional oppression, and enslavement of weaker countries by stronger
ones; it takes the contradictions of capitalism into the world arena. -
The s~?here of action of the contradictions of capitalism broadens and
they become more acute. Therefore, the intemationalization of eco-
nomic life, a process which is profoundly progressive in essence,
cannot reach its logical conclusion under capitalism. Lenin pointed
out tfiat "There is no question that before a single world trust is
formed, an 'ultraimperialistic' world association of national fi-
nancial capita].,imperialism must burst apart. Capitalism will become
its opposite."5
Indeed, the Great October Socialist Revolution, by removing the enor-
= mous Russian state from the capitalist system, marked the beginning
of the decline of the world cspitalist economy. Evidence of the
continuing decline of rhis economy as a process which is irreversible -
can be seen in the appearance and progress of the world socialist
economy whose steady advance is being carried out on the basis of
fundamentally different laws of social development.
. Marx and Lenin began from the idea that it is socialism that will
complete the world historical trend toward internationalization of pro-
duction and all social life. In the long run this will mean the
elimination of barriers between nations and states. Lenin pointed -
out tfiat, "Even under capitalism all economic, political, and intel-
lectual life in the world is becoming increasingly international.
Socialism will internationalize it in full."6
The classics of Marxism-Leninism linked the characteristics and pros- -
pects of the process of internationalization under socialist condi-
tions witfi the world historical missi~n of the working class above
all. This class is the most consistent social spokesman of inter-
nationalism and it is capable of unifying the national interests of
part icular countries with their international interests~ overcoming
national isolation on this basis, and carrying the process of inter-
nationalization through to its conclusion. -
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The essential prerequisites of the process of socialist internationali-
zation, Marx and Lenin observed, are social liberation of the working
people, elimination of exploitation relations, and the firm establish.-
~ent of socialist social relations. To the extent that exploitation of
one individual by another is eliminated, Marx and Engels wrote, "the
explo itation of one nation by another will also be elim~nated. Class
antagon ism within nations will disappear along with hostile relations
among nations."~
The socialist revolution, which eliminates social antagonisms and es-
tablishes a new social order, not only creates conditions for free -
development of internationalization, but also makes this process a
conscious, plann.ed one and raises it to a fundamentally different
level. Growth in the scale of p~oduction and ex~ansion of sociali~r_
division of labor, furthprance of specialization, cooperation, con- -
centrat ion, and collaboration in production, and improvements in labor ~
organ ization and the management of economic processes are real mani-
festations of the collectivizat ion process. Collectivization
direct ly involves tioth productive forces and production relationships, _
and has a sign ificant impact on many elements of the superstructure.
- The most characteristic feature of the process of collectivization
under socialism is an increase in the degree of maturity of the
directly public nature of labor in each socialist country and the
gradual development of its characteristics in the international
spfiere. These processes reflect collectivist relations among the _
producers of the socialist community, which indicates their profound
interrelationships with the process of convergence.
It is entirely natural, therefore, that the breadth and intensity of
the process of convergence are determined first of all by the
dominance of social production relations. At the present time the
socialist sector provides almost all industria~ output in the coun-
tries of the socialist community. In most of the fratemal countries
this sector produces 90 percent and more of gross agricultural out-
put. It owns wholesale and virtually all retail trade, as well as
- all foreign trade. State ownership as the highest for.m of socialist
ownership in the contemporary phase occupies a leading place in the
fraternal countries. Cooperative ownership is being steadily re--
fined. Within the framework of agroindustrial integration it is be-
coming increasingly similar to state ownership,
A historic acfiievement of the socialist community is overcoming the
economic backwardness and structural disproportion of the economies
of many fraternal countries. These tfiings were a consequence of the
international capitalist division of labor. "In a historically
short period of time, the fundamental differences in level o~ eco-
nomic development among the European CEMA countries have been _
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eliminated. Today they have sophisticated socialist industry and
large-scale agricultural production,"a
This is the social setting, common to all the countries, against which
the significant convergence in parameters of economic development has
ra~,en place. For example, in recent years the countries of the social-
ist community have become much closer in terms of per capita national
- income and industrial output. Rough calculation s show that between
1950 and 1977 the ratio in levels of national income p~r capita
(between the coimtries with the highest and lowest indicators within
the socialist communi~y) decreased f rom 3.2 to 1.3, while the cor-
responding chan~e for production of industrial output was from a factor
of five to 1.7.
Takin g advantage of the new social~st order, including the possi-
bility of mutual cooperation, the less industrially developed countries
made a significant advance ~nd drew close to the level of the more
highly developed socialist states. Between 1951 and 1978, for example, -
industrial production in Bulgaria increased 22 times and in Roman3a 29 _
times as compared ta the average of 13 times for all the CEMA coun-
tries.l0
Modernization of national economic structures is an important aspect of
convergence. Faster growth of industrial production compared to other _
economic sectors is characteristic of all the countries of the so-
cialist community, and this has led to a signif icant increase in the
share of industry in production of national income. At the present
time the share of industry and construction in national income pro-
duced in most of the CEMA countries exceeds 60 p ercent. In Mongolia,
which had virtually no industrial base of its own 15-17 years ago,
the level of industry in national income reached 32 percent in 1978,11
Within the industry of the fraternal countries, those sectors that de-
termine technical progress in the whole economy are developing most
- rapidly: machine building, electronics, and the chemical industry.
Thus, the share of machine building and metalworking in gross indus-
trial output rose during the p~riod 1950-1978 f rom nine to 28 percent
in Bulgaria, from 21 to 31 percent in Hungary, f rom 22 to 33 percent
in East Germany, f rom eight to 34 percent in Poland, from 13 to 33
percent in Rpmania, and from 14 to 30 percent ir~ Czechoslovakia.12
As a result, all of the European CEMA countries have highly developed
machine bu~.lding sectors. The CEMA countries are much closer in
terms of degree of development of the chemical industry and power
systems.
These data indicate th~it while preserving diff erences in economic
structures resulting from the natural geographic conditions and labor
resources of each country, multisectorial nation al production complexes
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.
are forming that mutually supplement one another and interact vi~or-
ously. By the same token this shows the possibility in principle of
avoiding tfie division of CEMA countries into agrarian and indu:otrial,
wfi ich under capitalism serves as a cover for exploitation by tr~e
highly developed industrial countries which have highly efficient eco-
nomic structures of tfie industrial.ly backward countries witfi ineffi-
ciert economic structures, preventing the latter from acting as
equal partners in relations with the developed capitalist countries.
The general trend in development of the economies of the CEMA coun-
tries shows a gradual convergence of the growth rates of subdivisions
I and II of public production by increasing the growth rate of pro-
duction of the means of production. This reflects one of the im-
portant manifestations of the general tendency of the socialist coun-
tries to insure fuller satisfaction of the growing material and non-
material needs of the working people.
Socialist collectivization is carried out directly in the sphere of
material produc~ion, but it is not limited to that sphere. Changes
: in productive forces in the system of production relations lead to
corresponding changes in other spheres of social life. 'I'his principle
applies both to individual countries and to the entire socialist~
community. Progressive changes are taking place in the class struc-
_ ture of society within each country on the basis of the processes of -
in~egrating the two forms of socialist ownership. With the growth of
industrial integration, cooperation among economic units, conversion
of agricultural labor into a variation of industrial labor, and the
rise in gener~.l sophistication the coaperative peasantry is increas-
ingly similar to the working class. The progressive elimination of
~ dividing lines between the working class, kolkhoz peasants, and
intelligentsia and their growing alliance,with the working class in
- the leading role,are def ined in the USSR Const itution as the social
fotm dation of an all-people's social ist state.
At the same time, within the framework of multinational states thE
sacialist nations are flourishing and converging. Bringing republics
- and other national governmental units that were formerly backward in
an economic, social, and cultural sense up to the level of the more
higfily developed ones is an essential condition of these inter-
related processes. The resources of all the national republics within
tfie natiunal economy are combined in to a single whole unit, which ac- =
celerates progress for each of the components. Within the framework
of such a complex the e~~nomic convergence of nations and peoples re-
sults not just from the social nature of ownership and the new order,
- but also from the demands of progressive development of the national -
econamic complex itself, refining its sectorial and regional struc- ~
ture, and building up its strength. Each national republic is _
organically included wi~hin the state system of division of labor
and specialization and cooperat ion of product ion. _
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The process of collectivization in the sphere of international inter-
action among the socialist countries has its own specific cfiaracter- _
= istics. These result primarily from the existence of national and
state ownership of the implements and means of production and, as a ,
consequence, the separate operation of national reproduction proc-
esses. Ir~ this case the economic cooperation of the socialist _
countries under contemporary conditions and in the foreseeable futuxe
will not erode the national state form of public ownership of the
means and implements of production because the economic , social, and
political factors resulting from the national state organization of
social life continue to be operative in the world socialist system.
The communist and worker parties take these factors into full account
in tfieir own domestic and foreign policy. In the sphere of mutual
cooperat ion among the fraternal countries, therefore, it becomes a
- matter of "harmonious national and international coordination of
social forms of production," as was foreseen by the founders af
Marxism. 13 Socialist economic integration, the Comprehensive Program
_ of CEMA, and all the joint, planned activities of the fraternal coun-
tries reflect this coordination of social forms of production
described by Marx in application to the conditions of the contemporary
phase, It follows from this that any allegations by our ideological
enemies concerning so-called "supernational" and even "coerced" re-
lat ions among countries in the world socialist system are unfounded.
In the absence of a single international form of ownership, the inter-
national planning principle, which is already the determining form of
relationship between the national economic complexes of the particular
- countries, increasingly encompasses the sectors that are interacting
in the process of cooperatio~i and indirectly affects national econo-
mies as whole organisms. But the forms and methods of interstate
planning differ substantially from i.ntrastate ones. In the inter-
national sphere, of course, there is no one center of planned manage-
ment, and the planning principle is i.mplemented by different forms of
_ joint planning activity based on working out coordinated decisions.
It is necessary here to take account uf a number of factors that make
for definite differences in the economic interests of the socialist
countries, among wfiich are different degrees of maturity of socialism,
levels of economic development, and availability of natural resources.
This makes it necessary to coordinate the national stat~ interests of
tfie socialist countries as a prerequisite for fruitful development of
mutual economic cooperation.
Tfie relative isolation of natiotlal economic complexes, however, and
the definite differences in state interests that this engen~ers
exist witfiin tfie framework of a larger unity of fundamental, vital
interests of tfie socialist countries, and this defines the principal
disti.nctive characteristics of the process of internaCionalization of
the economic life of the fraternal countries: the process of social-
ist collectivization, reaching beyond nat~onal boundaries of the
particular states.
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With respeet to the cooperation of the fraternal countries as an inte-
gra.ted economic syste~, this means that the socioeconomic goals of
. mutual division of labor within its framework coincide with the objec-
tives of cooperatior,: within the economic system, but they are not
achieved directly as would be the case within the national economy.
Rather they are mediated by forms of international cooperation based on
interstate coordination of current and long-range goals of cooperation,
forms and methods, and scale of implementation. It is entirely na-
tural, therefore, that as the international socialist division of -
].abor develops and deepens, it increasingly acquires the features of
international socialist cooperation of social labor characterized by
planned, increasing interdependence among the national economic com- _
plexes of the particular countries.14
The steadily growing interdependence of these complexes is evidenced
by the fact that mutual trade among the CEMA countries increased al-
most 23 times between 1950 and 1978 while gross national income in
tfie same period rose 7.6 times and gross industrial output increased
12 ~imes.i5 Such rap id growth in mutual trade, significantly sur-
passin~ the growth rate of physical production, confirms the sta-
bility of the large-scale production ties in the key sectors of
industry in the fraternal countries, in particular between the iron
ore base of the USSR and the ferrous metallurgy of the European CEMA
countries and between the Soviet oil extraction industry and petro-
chemistry in the otfier coun tries of the socialist community. Reali-
zatian of the Coordinated Plan of Multilateral Integration Measures
for 1976-1980, within which imFortant industrial installations with
an estimated cost of 9 billion rubles are being built through the
combined efforts of the fraternal countries (among them are the -
Ust'-Ilim pulp combi.ne, the Riyembayev asbestos mining and concen-
trating combine, an d the Soyuz gas transport system),actively promotes -
stronger production cooperation among the economies of the CEMA
- countries.
Cooperative relations among the machine building sectors of the fra-
ternal countries are expanding and growing stronger. The share of
output delivered on the basis of specialization and cooperation has -
already passed 35 percent of the total volume of mutual d~liveries
of machine building output in the CEMA countries and is continuing
to rise.16 At the 33rd session of CEMA the fraternal ~ountries signed
the most important agreement in the history of their cooperation on
multifaceted international specialization and cooperation in the pro -
~ duction and mutual delivery of equipment for atomic power plants in
1981-1990. This is in essence a plan, agreed upon and mutually
reconciled with respect to capacity and resources, for the production
and exchange of highly intricate machine building products within the
socialist commun ity as a whole. At the same time an agreement was
- signed concerning specialization and cooperation in the production of
chemical output graded by energy-consumptiveness. Participants to
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the agreement will receive energy-consumptive chemical output from the
USSR on the basis of mutual advantage in exchange for less energy-
consumptive cfiemicals.
These and various other agreements that have been concluded illustrate
the beginning of practical realization of long-term tar~;et programs of
cooperation (DTsPS) adopted at the two most recent CEMA sessions. 'I'he
long-range target programs of cooperation, elaborating and giving con-
crete form to the Comprehensive Program of Socialist Economic Inte-
gration, lay out a coordinat ed strategy of coop eration by the fraternal
countries to accomplish key national economic tasks in the period until
1990, and for various problems even further into the future. These
collective documents establish plans of joint actions by tfie fraternal -
countries to insure efficient development of interdependent production
complexes which play the key role in the overall progress of their
_ economies. In the process of its development, therefore, interstate
cooperation anong the CEMA countries is becoming an organic part and
crucial condition of rational domestic economic activity by the indi-
vidual countries and prerequisite to growth in the efficiency of
national production. At the same time, the domestic economic cooper-
atives of the individual countries, working together more and more,
- are bradually becoming an interstate economic complex.
Thus, the directly social character of labor is developing gradually
not only within particular countries, but on the scale of the whole
community. A new economic category is taking shape in the world so-
cialist economy: international directly social labor. Its most
- important feature is the fact that the labor expended to produce
valuables that enter the mutual trade of the CEMA countries receives
its international recognition while still in the phase of coordi-
nating national economic plans, which is to say, before it is
realized through production cooperation. In this case the quanti-
_ tative definition of national expenditures of labor recognized on
the international level is accr+*~~~ished by comparing them with
internationally necessary expenditures embodied in international value.
The growing impact of i.nternational socialist labor cooperation ex-
perienced by each country is a powerful economic stimulus that in- _
tensifies the trend toward multifaceted convergence of the economic
complexes of the particular countries.
The transition of the fraternal coimtries to integration reflects tfie
fact that the real needs of domestic life in these countries in-
creasingly encourages them to strengthen mutual ties because this is
the only way to create conditions for efficient solutions to vitally
important economic and political problems.
For example, let us take the problem of fuel and raw materials. It
has changed from a national problem of particular countries to a truly
international problem for all the countries of the socialist community.
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Tfie approach.to salving it, which is based on long-term reliance on
planned, preferential development of the countries' own energy re-
sources in the common interests of the fraternal countries has made it
possible to supply the growing fuel and energy needs of the national
economies of the socialist countries and protect them against the
numerous grave consequences of tfie world energy crisis. In the current
five-year plan almost 370 million tons of petroleum, 46 million tons of
petroleum products, 88 billion cubic meters of gas, and 64 billion kilo-
watt-hours of electricity are being delivered from the USSR to the other
CEMA countries. In the coming five-year plan deliveries of fuel and
energy resources are to be increased by 20 percent overall.l~
The 33rd session of CEMA pointed out that under contemporary condi-
tions it is not possible to plan to satisfy the total fuel, energy,
and raw material needs of the f raternal countries on an extensive _
base alone, simply by increasing extraction. Therefore, the fraternal
countries begin from tfie need to focus greater attention on the quali-
tative side of things, tc reducing expenditure norms for fuel and raw
materials and devising new sources of energy and raw materials. In
the near future the fuel and e:zergy problem of the CEMA countries will
increasingly be solved ~n the basis of closer unif ication of efforts
1 witfi in the framework of an appropriate long-range target program of
cooperation. The same thing can be said of the problem of speciali-
zation and cooperation of production in sectors of manufacturing
industry, the problem of food, and many others.
Tfie process of socialist collectivization, as has already been said,
takes place at the level of individual countries and at the level of
the entire socialist community. Until a certain time socialist col-
lectivization within the limits of particular countries and collectivi-
zation at the community level are in large part separate, although from -
_ tfie very beginning they are linked with one anor',er by the dominance of
socialist ownership, by the fact tr~at both processes reflect tfie de-
velopment of the communist method of production and communist system.
From the very beginning each of these processes gave rise to trends
toward consolidation and integration both within particular socialist
countries and in the sphere of their mutual re]_ations; these ten-
dencies could be viewed as essential prerequisites to the process of
convergence.
At the same time, the process of development of the socialist community
is also a process of intensification of interdependence between col-
lectivization at both of the above-mentioned levels. When the world
socialist system achieves a definite level of maturity the national
factors of development becomes so interrelated with international fac-
tors that a process of multifaceted convergence of t:ie socialist
countries takes shape within tfie framework of the community. It in-
cludes the results of socialist collectivization at the national and
international levels and to a certain degree combines national and
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international factors of development in the fraternal countries into a
single consolidation process.
Another important circ.umstance that determines the synthetic character _
of this process is that it brings the class and national factors of con- -
vergence together in the same channel: the socialist community becomes
more fiomogeneous and solidified in a class sense and more closely asso-
ciatad with respect to international relations.18
Tfie highest and most complete expression of all consolidation ten-
dencies, which taken together make up the process of convergence of the
socialist states, is the unity of these states. Considered as a cate- -
gory which reflects the level of interdependence of the structural
parts of the world's socialist system achieved at each given moment,
this unity is thus the most general result of multifaceted convergence
of tfie socialist countries and integration of the world's socialist
system. It is a general indicator of the breadth, depth, and effi.ciency
of mutual ties among the socialist states.
- All the areas of social life in the socialist countries, above all
economics, politics and defense, are included in the sphere of unity _
and the sphere of convergence. The unity of the sovereign socialist
states, each of which has its own specific features and national in-
terests within the framework of the general interests, not only does _
not deny, but rather presupposes, allout development of the initia-
tive of the socialist states and strengthening of their sovereignity. -
It is a voluntary, dynamic unity aimed at optimal solutions to na-
~ tional and international problems. It is characterized by a steady
increase in the role and significance of party and state decisions in
the progress of each country and of the community as a whole.
,
Zfiis unity reflects the level of convergence achieved in each par-
ticular period and expresses its primary result. Therefore, of course,
it is historic in nature and assumes the appropriate forms and scale at
each stage of developmen t of the world socialist system. The political
unity of the socialist states, which predetermines their joint, co-
ordinated actions to secure the fundamental interests of socialism,
is a concentrated expression of this unity. It relates both to
certain aspects of the domestic politics of the fraternal countries
and all their mutual relations and to their joint actions in the inter-
national arena. Political unity is an expression of the unity achieved
- by the socialist countries in economics and other splieres and, in turn,
has a definite influence on them.
It is precisely from this standpoint that one should view the funda-
mental agreements achieved in recent years on further development
of the process of socialist integration and the whole complex of
joint actions taken by the countries of the community in the
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- international arena to further international detente. The enormous ;
advances made by the communist and worker parties in international
indoctrination of tfie working people and creating that atmospfiere of
fraternal friendship among people of different countries which serves
as a favorable setting for fruitful development of international co-
operation should be viewed in this connection. This was emphasized by
the 26 April 1979 decree of the CPSU Central Committee entitled
"Further Improvement of Ideological and Political Indoctrination
Work."
- Tfie unity of the socialist countries is above all the result of an
enormous amount of hard work by the communist and worker parties to
solve common problems. It reflects the increasingly international
nature of party palitics. Analyzing this aspect of the unity of the
socialist state in his report at the 25th CPSU Congress, L. I.
Brezfinev stressed: "The foundation of foundations of our close cooper-
ation, its living spirit and organizing, guiding force is, of course,
the indestructible fighting alliance of the communist parties of. the
socialist countries, the unity of their worldview, goals, and will."
The process of multifaceted convergence of the socialist countries,
expressing the most signif icant facet in tlie development of the so-
cialist community, illustrates the historical superiority of the new
social order and its ability to solve the fundamental problems facing
the entire human race.
FOOTNOTES
1. Marx, K., and Engels, F., "Soch." [Works], Vol 3, pp 19-20.
2. Ibid., Vol 3, p 60.
3. Lenin, V. I.,'~Polnoye Sobraniye Sochineniy" [Complete Works],
Vol 26, p 162.
- 4. Ibid., p 140.
5. Ibid., Vol 27, p 98.
6. Ibid. , Vol 23, p 318,
7, Marx and Engels, op. cit., Vol 4, p 445.
8. EKONOMICHESKOYE SOTRUDNICHESTVO STRAN-CHLENOV SEV No 1, 1979, p 7.
9. Ibid.
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L0. See "Narodnoye Khozyaystvo Stran-Chlenov Soveta Ekonomicheskoy
Jzaimopomoshchi. K 30 Letiyu O~razovaniya SEV" [The Economies
of the Members of the Council Ecoriomic Mutual Assistance.
On the 30th Anniversary of the Fo~ation of CEMA], CEMA Secre-
tariat, Moscow, 1979, p 6(statistical anthoZogy).
11. Ibid., p 5.
12. See ibid., p 87 and "Ekonomika Sotsialisticheskiky Stran v
tsifrakh, 1965" [The Economy of the Socialist Countries in
Figures, 1965], Izdatel'stvo Mysl', 1966, p 26.
13. Marx and Engels, op, cit., Vol 17, p 553.
14. The concept of internation al cooperation of social labor includes
a number of criteria. The determining one is level of directly
social nature of labor achieved within the framework af the inte-
grated community. Among the other criteria are: definite state
. of the production apparatus and above all development of inter-
national production specialization and cooperation; appxopriate
mechanism of social economic management based on collective use
of the action of the economic laws of the socialist method of
production by the states being integrated; essential international
bodies; the set of legal and organizational norms and other struc-
tural elements of planned management of the process of socialist _
cooperation among national economies.
15. See "Sovet Ekonomicheskoy Vzaimopomoshchi. 30 Let" [The Council
of Economic Mutual Assistance. 30 Years], CEMA Secretariat,
Moscow, 1979, pp 21, 23, 77.
16. See VNESHNYAYA TORGOVLYA No 2, 1979, p 5.
17. EKONOMICHESKOYE SOTRUDNICHESTVO STRAN-CHLENOV SEV No 1, 1979, p 44.
18. The convergence of classes and the canvergence of nations are
intertwining processes. But they also differ in both nature and
duration. The Program of the CPSU points out that erasing na-
tional differences is a more prolonged process than eliminating
class divisions. It is perfectly obvious that the problem of
studying different forms of synthesis of social class and inter-
national convergence is extremely urgent for the entire socialist
community not only from the standpoint of investigation of in-
ternai processes within the countries but also from the stand- _
point of development of their international interaction. There
is no doubt that the integratian processes taking place on a
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community scale, in particular the process of convergence of t-he
socialist countries, and the consolidation processes taking place
within the states are based on two fundamental principles, social
class and the nation (in the sense of c~nvergence of nations), .
which are acquiring a single form in the convergence of the
sovereign socialist st ates.
COPYRIGHT: Izdatel'stvo PRAVDA, VOPROSY EKONOMIKI, 1980
11,176
CS0:1825
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USSR-CEMA TRADE
DEVET.OPMENT OF INTERNATIONAL MARKET AMONG CEMA MEMBERS
Moscow VOPROSY EKONOMIKI in Russian No 4, Apr 80 pp 113-121
- [Article by 0. Bogomolov, corresponding member of the Academy of
Sciences USSR: "The International Market of the CEMA Countries"]
[Text] The Proclamation on the 30th Anniversary of the Council for
Economic Mutual Assistance, adopted at the anniversary 33rd session of
_ CEMA, took note of the active part played by commodity-money relation-
ships among the CEMA countries in planned implementation of soc~alist
economic integration. One of the important results of the activity of
the Council men tioned in the Proclamation is that "mutual foreign trade, .
currency-finance, ar.d credit relations have been established and are
being steadily reftned. These relations stimulate plan-based deepening
and elaboration o~ economic and scientific-technical cooperation among
the CEMA countries and facilitate the efforts of these countries to
cushion their economies against the impact of crisis phenomena in the
world capitalist economy."
_ Tfie international market of the G'EMA countries has a number of important
characteristics and specific patterns of development which demand
theoretical interpretation and correct consideration in practical work _
toward integration.
As the process of division of labor among the CEMA countries deepens
- and their economies become more highly integrated, the exchange of. re- .
sults of productive activities, products of labor, and nonmaterial -
values becomes more intensive. Under contemporary conditions the ex-
change of goods has special characteristics and forms.
The most important attributes of commodity exchange both within coun-
tries and among countries are the market and the price. In K. Marx's
definition the market is "the sphere of exchange." The world market -
is not only the international sphere of commodity exchange, but also
- the economic territory within which the exchange is accomplished.
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"The market has external geographic limits," Marx observed.l Alongside
the spati~l-geographic aspect we should note the other essential as-
: pect of the market, the political-economic aspect which is revealed in
the totality of commodity exchange relationships: buying and sel ling, ,
ctirrency paym~nts, and credit transactions.
The international market may develop in breadth, when new econcmic terri-
_ taries are drawn into the sphere of excizange or new national economic
- complexes begin to participate, or in depth, which occurs when exchange
is expanded by deepening production specialization and cooperation. The
world market is a broad international sphere of commodity circula tion in
- which all the world's major regions are involved.
The victory of the Great October Socialist Revolution led to withdrawal
of a significant economic territory from the sphere of imperialism.
A single all-encompassing capitalist world ma*ket ceased to exist from
that moment. The entry of a large number of countries onto the p ath of
socialist development after World W~r II signified a further. reduction
- in the capitalist world market. Parallel to it there formed a market
which is a sphere of international exchange subordinate to the action
of socialist economic laws. This market is one of the important ele-
ments in forming the structure of the socialist world economic system
and actively influences its formation and development.
The world socialist market operates above all as a specific syst em of
commodity-money relations. Its specific quality arises from the fact
that the agents of these relations, the buyers and sellers, are so-
cialist countries which possess monopolies on foreign trade ties and
are represented in the market by corresponding economic organizat ions.
These re].ations, which are planned socialist relations by nature, are
nonetheless commodity-money relations and therefore governed by t he
law of value. They conform to the characteristics of its operat ions
under socialist conditions and express their essential features in cate-
gories such as contract price, collective currency, internationa 1 so-
cialist credit, balance of payments, and supply and demand. All of
these categories are essentially socialist categories and there�o re
differ from analog~us categories in the world capitalist markets.
The existence of the world socialist and world capitalist markets does
not mean that they are entirely isolated from one another. Exchange
relations among them and their economic units are developing under
conditions of peaceful coexistence among states with different so cial
orders. The world market exists as a dialectical unity of two markets
that differ by their social nature: the world socialist market and
the world cap italist market.
1 Marx, K., and Engels, F., "Soch." [Works), Vol 26, Pt 11, p 583. _
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- In addition to the concept of the world market there is the concept of
~ regional international markets. They are formed by groups of countries
joined by special forms and conditions of economic exchange and far-
reaching division of labor; they join and coordinate their foreign
economic activities in in ternational o rganizations. Regional markets
are definitely distinct from the world market. Thus, the European
Economic Community, called the "Co~on Market," which joins together
nine Western European countries, is separated off from the world capital-
ist market by common tariffs and various other economic and other
barriers.
- The economic ties and cooperation of the USSR and other socialist coun-
tries which are joined together in the Council of Economic Mutual _
Assistance have, owing to socioeconomic and historical preconditions,
became particularly close. This led to the formation and development '
c~f the i.nternational market of the CEMA countries, which accounts for
more than half of their total foreign trade. -
The international market of the CEMA countries is, in our opinion,
_ a sphere of commodity-money circulation relative].y distinct from both
the intemal national markets and from the world market. This can be
seen in the special system of contract and foreign trade prices and
accounts which differs from national systems and wholesale and other
prices. It can also be seen in the special organizational forms of
foreign trade, the different composition of trade participants them-
selves, and partially in the structure of trade. The dividing line
between the international market of the CEMA countries and their
domestic markets is not, of course, absolute. Relationships among
them still exist, as do relationships between the international CEMA -
market and the world market.
Unlike the world capitalist market, which is under the sway of spon-
taneous laws and subject to the upheavals of chronic currency crises,
trade wars, and crisis balances of trade and payments in particular
countries, the commodity-money relations in the CEMA market are
planned. Long-term trade agreemen ts among the CEMA countries are
based on coordination of their national economic plans and planned or-
ganization of the international socialist division of labor. This
predetermines high and stable rates of growth in trade, steady growth
in the capacity of the market, and the possibilities of consistently
balancing and regulating supply and demand. The law of value operates
in modified form in the market of the CEMA countries within the system
of other economic laws of socialism.
Commodity exchange among the socialist countries is developing at a -
fast and stable rate, without periodic recessions and fluctuations
characteristic of the world capitalist market, which suffers not only
sharp fluctuations in rate of increase of trade but also absolute re-
duction in trade volume.
20. .
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Trade in the C~'MA market in creased almost 23-fold (in current prices)
between 1951 and 1978, and exchange of commodities and services grew
more rapidly than their production in these countries. This means that
a steadily growing share of the output produced by them has been di-
rected to the CEMA market .
The intc~sity of development of the international CEMA market has dif-
fered in different periods. In 1951-1960 when this market was rapidly
taking shape the average annual growth rate of mutual trade in the CEMA
countri es was about 13 percent. A slowdown to 8.6 percent was observed
in 1961 -1970, which can be explained by exhaustion of extensive poten-
tial for development of the mutual trade market. Under these conditions
the in t egration factors of economic growth in the CEMA countries and
mutual cooperation among them assumed particularly great importance.
Implemen tation of the Comprehensive Program of Socialist Economic
Integration was reflected in r.he increasing rate of growth of mutual
trade. In 1971-1975 the average growth rate was 16.2 percent; in large
parr_ ;.t~is was a result of an increase in world prices and, related to
them, contract prices. In 1976-1978 the mutual trade of the CEMA coun-
tries grew at an average annual rate of 13.2 percent.
An impo rt ant feature of the international market of the CEMA countries
is that in it the social conditions that give rise to unequal exchange,
compet itive stniggle, and exploitation of one country by another, that
is, phenomena typical of relations among countries in the capitalist
world, have been completely eliminated.
Compliance with equality and mutual advantage in exchange in the market
of the CEMA countries is insured by relationships of cooperation and
mutual assistance and by coordination of national economic plans. P1eed-
less to say, not all the relations among these countries are subor-
- dinate to the law~ of socialist commodity production, that is, based
on mutual advantage and exchange of equivalent commodities. Mutual
assistance in practice goes beyond the framework of these laws. For
example, the tectuiical documents that make it possible to build new
indust rial installations and set up production of new articles have
been and continue in large part today to be shared among the CEMA coun-
tr.ies free of charge, disregarding compensation for expenditures
related to making copies of the documents themselves. The approximate
value of the patents, licenses, and other documents turned over to one -
another by CEMA countries free of charge in the postwar period is esti-
mated at 15 billion rubles. The scientific-technical cooperation
practiced among the CEMA countries based on the principles of fraternal
mutual assistance plays an important part in their industrialization and
- continu ing industrial progress.
- 21.
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e
Growth in Trade Among CEMA Countries2
1950 1960 1970 1975 1977 1978
Mutual Trade of CEMA 4.5 14.3 33.5 71.0 91.3 102.9
Countries (in prices =
_ of corresponding
year, billions of
rub le s)
Index 100 317 744 1,578 2,029 2,287
The internati.onal market of the CEMA countries differs from the world
capitalist market not only by its patterns of development but also the
principles and forms of ~rganization of exchange itself. During prac-
tical development of cooperation among the socialist countries the
forms and methods of planned regulation of mutual trade that are most
appropriate to the objective laws of development of the world social- '
ist economy, the international divisinn of labor, and the socialist
nature of commodity relations in the CEMA maTket have been found. -
One of the foremost amon g them is coordination of five-year national
economic plaas. Thc~ planning agencies of the countries sign protocols
tfiat reflect the areas of agreement reached with respect to coordina-
tion. The protocols contain lists of the most important goods subject
to delivery from a particular party on a conventional trade basis or
through participation in joint construction of industrial installa-
tions, credit agreements, and the like. Both the total volume of
mutual trade for each pair of coun tries and the amounts of the most
important mutually delivered goods are agreed upon. A balance of
mutual charges arisin g from delivery of goods, rendering of services,
granting and repayment of credit, and the like is achieved during _
planned coordination.
TTie development of trade in the CEMA market in the desired direction
also helps i.nsure a coordinated plan of multilateral integration mea-
sures, agreements on joint construction of economic installations,
and other decisions reached in the course of joint plar_ning work on -
a bilateral or multilateral basis.
Agreements on international cooper.ation and specialization in production
concluded for five yea.rs and longer on a multilateral or bilateral
basis are an important lever of planned regulation of trade in the CEMA
market. These agreements envision not just the assortment but also the
volume of mutual deliveries in physical terms, as well as cost terms in
2Sources: "Statist icheskiy Yezhegondnik Stran-Chlenov Soveta
Ekonomicheskoy Vzaimopomoshchi 1977 g." [Statistical Yearbook of the
CEMA Countries for 1977], Izdatel'stvo Statistika, 1977, p 325;
VNESHNYAYA TORGOVLYA Nos 4, 8, 1979.
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many cases, and determine the quality of output and delivery times.
Specialization and cooperation of production are exerting a stronger
influence on the growth rate and structure of trade among the CEMA
c oun tries .
Bilateral trade agreements concluded for five-year periods and detailed
concretely each year by special protocols stating assortment and
volumes of goods to be delivered have the most effective and direct `
impact on the development of the mutual trade of th~ CEMA countries. -
The lists of mutual deliveries attached to these agreements are i.n
essence a plan of trade agreed upon by the parties which has the force
of an international law obligation for them. These lists reflect the
results of coo~dination of five-year plans and obligations which arise
from agreements on specialization and cooperation of production, joint
construction, and the like.
_ Thus, the trade agreements can be said to unify different understand- .
ings relative to goads deliveries reached at different levels. They
are backed up by the state and its agencies, which are responsible
for the expo rt and import of goods. They fix the economic conditions
of international exchange.
_ Tfie trade agreements are carried out by contracts for the delivery of
specif ic goods. These contracts are concluded by economic or ~oreign
trade organizations specially authorized to do so. The contracts de-
termine the obligations of the part ies with respect to buying and
sellin g the goods and establish all related details of the trans-
action: specific features of the goods, quantity, price, delivery
time, conditions of acceptance, manner of payment, and the like.
Wfiereas the trade agreements determine the basic parameters of trade -
between countries, the contracts Put the obligations in concrete form
and provide sanctions for violation of obligations by the parties.
It is important, therefore, that all points of the trade agreement be
reinforced by contracts. This is one of the principal indicators by
whicfi the course of fulfillment of agreemen ts is mon itored. The
process of concluding contracts is facilitated by the document
"General Conditions of Commodity Delivery Among CEMA Countries," which
is a statement agreed upon by the CEMA countries that determines
standard delivery canditions.
Bilateral forms of trade predomin ate in the planned organization of
~ trade in the international CEMA market at the present time, The role
of multilateral forms of regulation is steadily growing. But multi- ~
lateral agreements, for example witfi respect to specialization and
cooperation of production, receive final form only on the basis of
btlateral agreemen ts and contracts. There is a certain contradiction
in this, because the process of international division of labor and -
socialist integration increasingly demands multilateral planning de-
cisions and multilateral regulation of trade and accounts.
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Price formation in mutual trade and improving this process are un-
questionably a key problem in development of the international market
of the CEMA countries . Goods are, of course, exchanged in proportion
_ to their value, that is, according to the socially necessary latior con-
tained in each product. The law of value determines the proportions
of exchange and requires that different goods be equal to one another
by amount of socially necessary labor embodied in them. From the
point of view of one country alone socially necessary labor ~eans labor
of normal quality for the particular national market (that is, of
average complexity, productivity, and intensity) .
In international exchange, however, the requirements of the law of
value are realized somewhat differently. For this reason domestic _
prices in the socialist countries differ from foreign trade prices for
the very same products, and these differences may be very signifi-
cant.
The fundamental ideas that explain the obj ective process of formation =
of i.nternational value and the world price were expressed by Marx in
"Capital. i3 International value is formed on the basis of averaging
national labor expenditures, which means that the intemational value
is determined by the amount of labor necessary to produce a particular
product not from the point of view of an individual country but rather -
from the standpoint of all participants in the exchange. There arises
the concept of "internationally necessar}~ expenditures" or, in Marx's
words, tfie "average unit of labor of the entire world."
The value of goods is revealed in the most universal way during the
_ process of international exchange. T~'hereas i.n the domestic market
only other products produced within the country may compete with a
particular commodity in exchange, in the world market each commodity
can be compared to any of a practically unlimited number of goods
existing in the world. Expenditures of socially necessary labor
~ evaluated in "average units of labor of the whole world" will be the
foundation of these exchange proportions. In our view, this "average
world labor" means labor of normal quality, considered such by all
countries taking part in world trade. The averaging process here has
its own distinctive features.
In the ~irst place, international value is not formed from average
weighted expenditures of national labor; where other conditions are
equal, cost~ in tfie countries whicfi are the principal exporters of the
particular output have a decisive impact. The share of a country in
world produ~tion of a particular commodity does not by itself reveal
what role the country plays in determining the average world level of
production costs for this commodity. If production is largely or
3 See Marx and Engels, op, cit. , Vol 23, p 571.
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. entirely oriented to domestic consumption, it is not practically involved
~ in formation of international value. When a countr~ s ~s more of its
output to tfie world market and occupies a larger share in the corre-
sponding world trade market, it will have a correspondingly greater .
impact on formation of the international value of this vutput.
In the second place, it is typical of the world market that national -
labor which is more productive than the average is considered to be more
intensive, that is, pTOducing greater value. Tfi is occurs until such
time as competition forces the country which has higher labor produc-
tivity to lower selling prices.
_ Prices form in principle on the basis of value, and world prices are
based on internation al values, even thou gh in practice there are various
factors th3t modify value (both national and international) and cause
the price to deviate from its value base. If a buyer or seller occupies
a monopoly position in the market he can influence prices, raising or
lowering them. Prices are influenced by rent, especially related to
different degrees of accessibility and economy of exploitation of
natural resources and land. Prices for agricultural products and cer-
tain other commodities whose reproduction is limited by natural condi-
tions are formed on the basis of sectors that are not favorable for
exploitation.
. The social nature of commodity-money relations also influences the forma-
tion of international value and, accordingly, foreign trade prices.
Under monopoly and state-monopoly capitalism, of course, serious de-
formations of the process of price formation occur. On the other hand,
the relations of comradely solidarity and cooperation among the so- _
cialist countries create the prerequisites for true mutual advantage -
and equivalence in exchange. Many specialists believe that the spe-
cific socialist exchange relations in the CEMA market lea.d to the
formation of a distinct regional international value which differs
from the international value in the capitalist market.
This is an issue, however, which specialists continue to debate. The
_ foreign trade of the CEMA countries today accoun ts for about six per- -
cent of all world trade, so exchange relations among the CEMA countries
are not as universal as relations in the world market. In practice the
CEMA countries construct mutual trade prices on the basis of the prices
in the world capitalist market purged of speculative and purely competi-
tive i.nf'_uences, that is, in corrected form. Nonetheless, the rela-
tionsfiip between the two markets in price formation is apparent. This
gives reason to argue that there is a universal world value, just as
there is a world marke~; and that this value takes shape under the in-
fluence of countries with different social systems to the extent of
their actual participation i.n world economic relations and that in the
market of the CEMA coun tries this value is not replaced by a different
_ international value, but is only modified in significant fashion rela-
tive to the needs of international socialist relations.
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Without anticipating the outcome of this theoretical debate, we will
review concrete characteristics of foreign trade prices in the CEMA
' countries.
The table below sho~rs the specif ic features of foreign trade contract
prices in the CEMA countries arising from the nature of the interna-
tional socialist division of labor and 12bor cooperation.
Indexes of USSR Contract Prices in Trade with CEMA
Countries and World Prices for Key Commodity Groups _
(1970 = 100)4 -
Commodity Groups 1971 1972 1973 1974 1975 1976 1977
Fu~l, Raw Materials,
Metals:
Contract Prices 105 110 113 119 175 177 185
. World Prices 108 111 168 243 247 258 263
Agricultural Raw
Materials and
Processed Goods;
Contract Prices 96 107 108 lIl 135 148 150
World Prices 103 121 176 216 201 203 229
Machinery and Equipment:
Contract Prices 101 108 105 116 127 145 151
World Prices 103 112 117 128 141 148 155 -
Although the comparison of these indexes is not sufficiently rigorous
from a statistical standpoint, still it reveals unquestionable dif-
ferences not only in changes over time but also in the proportions of
prices among the key commodity groups in the world market and the inter-
national market of the CEMA countries.
The table shows that th. gap between contract prices and world prices
is greatest for fuel and raw materials and least for machinery and
equipment. This illustrates the advantages to the CEMA countries of
trading with the USSR for machinery and equipment as compared to trad-
ing in the world market.
The prices of the world cap italist market in recent years have shown a
general tendency to increase, caused by chronic inflation, devaluation
of the principal capitalist currencies, and the changing ratio of
4 See VOPROSY EKONOMIRI No 8, 1978, p 103; MIROVAYA EKONOMIKA I
- MEZHDUNARODNYYE OTNOSHENIYA No 9, 1979, p 96; MONTHLY BULLETIN OF
STATISTICS May 1979, p XIII, XXX.
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forces in the world capitalist economy. These prices are constantly
fluctuatin g, undergoing speculative upsurges and abnipt drops. By
contrast, the mutual trade prices of the CEMA countries do not change
from day to day under the influence of supply and demand; they remain _
constant throughout the year.
The principles of establishing prices for mutual trade among tfie CEMA
countries which continue in effect today with certain amendments and
refinements were adogted at the 9th Session of CEMA in Bucharest in
1958. They begin from the idea that mutual trade prices should be
. mutually advantageous, promote the development of economic cooperation
among CEMA countries, facilitate the fo~ation of a rational structure
in tfieir economies, and remain stable and uniform in trade among all
CEMA countries. The session proposed that contract prices be deter-
mined on the basis of world prices in the principal commodity markets
by reaching appropriate agreement and by consent among trade partners.
The principle of uniformity of prices for identical goods in the CEMA
country is not always follow~d in practice because trade negotiations
are conducted on a bilateral basis and partners may adopt certain
price concessions on mutual grounds.
One of the principles of price formation approved by the 9th Session of
CEMA was the necessity when agreeing on foreign trade prices to exclude
speculative elements and current market influences from world prices.
This was accomplished by averaging the world prices taken as a base.
For examp~e, the contract prices in effect witfiout change in 1966-1970
were determined by the CEMA countries on the basis of average world
prices for 1960-1964. Stable prices for 1971-1975 were established on
the basis of average world prices for 1965-1969.
The principles of price formation permit the use of an incentive price
which, although it is determined on the basis of the world price, can
deviate significantly from it for the purpose of sti.mulating the ex-
port of a scarce or particularly high-quality product. Examples of
such prices are the prices for Cuban sugar or livestock products from
Mongolia imported by the Soviet Union. These prices are established
with an eye to assisting Cub a and Mongolia in evening out their levels
of economic development.
Many years of economic cooperation by the CEMA countries show that the
principles of price formation in foreign trade upon which they agreed
in 1958 have worked very well, although further improvement in the
price system and fuller reflection of the economic laws of socialism
_ in prices are still challenges today.
World prices that form in the market which accounts for about 94 per-
cent of world trade are still the only realistic basis for the CEMA
countries to use in agreeing upon their prices. This is particularly
true because they carry on trade with the capitalist and developing
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countries as well as with one another. The use of certain prices in the
one case and other, very different prices in the second case would
greatly complicate foreign trade.
Of course, the prices used by the CEMA countries in foreign trade are
not identical to the prices in world capitalist trade; CEMA prices re-
main stable for a year or longer and have been purged of speculative
influences. Nonetheless, these prices reproduce, although in mitigated
form, some of the contradictions of the world economy. World trade _
prices form principally under the influence of capitalist production re-
lations, un.der the domination of state-monopoly capitalism.
One of the most acute contradictions of the capitalist world economy
reflected in worid market prices is the non-equivalence of exchange be-
tween the industrial powers of the West and the young nation states of
Asia, Africa, and Latin America. For many decades there was a discrep-
ancy in the movement of world market prices for raw materials and fuel
_ delivered primarily from the developing countries and prices for
finished goods export ed chiefly by the industrially developed countries.
This gap grew wider and wider until 1974, making conditions of exchange
worse for the developing countries and forcing them to give up more
and more of their raw material commodities for tfie same amount of im-
po rted finished products.
The table below shows that for more than two decades the proportions of
exchange of raw materials for finished products ("terms of trade")
grew steadily worse for tfie countries producing raw materials and fuel.
Tfiis price discrepancy was a result of the profound contradictions
within the capitalist world economic system in its state-monopoly stage
of development. It is difficult to explain these figures by differ-
ences in change in labor productivity over time i.n the extracting and
processing sectors.
U. N. Indexes of Export Prices oi' the Capitalist
Countries (1950 = 100)5
Commodity
Groups 1960 1965 1970 1971 1972 1973 1974 1975 1976 1977
Raw Mater- 90 94 98 107 123 176 299 295 306 304
ials
Finished 121 127 145 152 164 193 235 264 265 282
Products
5 MONTHLY BULLETIN OF STATISTICS for corresponding year.
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� Taking advantage of their monopoly position in the market and indus-
trial property in the developing countries, the large transnational
corporations deliberately follow a policy of low prices for raw ma-
terials and fuel. They have aa objective interest in inhibiting growth
in the standard of living in the developing countries, because it would
ultimately lead to a rise in prices for the export commodities exported
by these countries to the West. It is very instructive ti~at until re-
cent times the level of prices for raw materials has flagrantly
contradicted action of the factor of limitation and irreplaceability -
. of fuel and raw material resources which, where other conditions are
equal, would cause a tendency for prices to rise. "
_ A sharp turnaround in the tre~d of export prices in the world market
began in 1973. The Organization of Petroleum Exporting Countries
adopted a decision to raise oil prices. As a result, durin g the 1970`s
these prices have increased more than 10 times. Following this there -
have been sharp rises in the prices for other types of. raw materials
and fuels, and finished goods too have become more expensive. This
corrected, at least for a certain time, the unjust proportions of ex-
change of fuel and raw materials for finished goods.
Because the change in price proportions in the world market moved i.n -
the direction of restoring the equivalence of exchange that had been
disturbed for many years, the CEMA countries in their mutual trade
could not ignore this process. Agreement was reached to revise con-
tract prices beginning in 1975, by stages bringing them close to the
_ new price ratios of the world market. Under conditions of abrupt
changes in world ~rices it was recognized as expedient to change from
constant base prices for five-year periods to a"sliding" base de-
termined annually by averaging world prices for a number of preceding
years. For 1975 the three preceding years, 1972-1974~were used, and
since 1976 the base each year has been average world prices for the
preceding five-year period (for example, in 1979 the base was 1974-
1978). This has assured a gradual transition to new price ratios
and the countries that import raw materials and fuel received a cer-
tain time to adapt to the new situation.
The "sliding" price base enables the CEMA countries to take economi-
cally justified changes in the proportions of world trade into ac-
count. The 93rd session of the CEMA Executive Committee adopted a
decision to use this base in the upcoming five-year plan. There are.
� a number of circumstances that make it necessary to refine the prices
of mutual trade in the CEMA countries and take fuller account in them -
of the demands of a planned socialist economy.
The world price for standard commodities traded on a large scale such
as petroleum, grain, lumber, metals, rubber, and wool can be deter-
= mined quite easily and definitely. The same cannot be said, however,
of commodities such as machinery, especially complex machines tha.t
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differ in design although used for the same purpose. In this case the
world price can be represented only on the basis of the proposed prices
of various exporting firms, which usually include substantial over- '
charges and differ greatly among tfiemselves, or based on the prices used
_ in actual export and import transactions between CEMA countries and
Western partners. It is even more complex to find the world price for
assemblies and parts delivered by cooperative agreement and for spare
parts. Such deliveries between countries are usually made by circula-
tion within large monopolies at set in-house prices and are, in
effect, removed from world trade (deliveries of this type accounted for
more than 25 percent of total export of the capitalist countries by the -
early 1970's).6
The agricultural policy of the European Economic Community signifi-
cantly distorts the process of price formation for many agricultural
commodities in world trade. This creates substantial difficulties
for the CEMA countries in using the world base.
The procedure of including a transportation component in mutual trade
prices in the CEMA countries gives rise to its own problems. CEMA
coun tries sell goods to one another at a price tfiat is F.O.B, the
border or port of the exporting country. In this case the world base
price, which is the export price in the shipping port that is the main
center of world trade for the particular commodity, is increased by
half of the transportation costs from the center to the port (or
border) of the CEMA country that is importing the particular commodity. _
When buying a commodity in the world market, the importing CEMA
country must pay all transportation costs from the place of sale to
its own port. But when it imports this same commodity from a neigh-
boring CEMA cotm try it incurs only half of the transportation costs,
which give it a definite advantage. However, the supplement to the ex-
porter's price in the amount indicated above (half of tlie transpor-
tation costs) may not cover that country's transport ation costs within
the cotm try from the place of extraction (production) of tfie commodity,
for example petroleum, iron ore, or pulp, to the border if the dis-
tances are fairly substantial (for example, from Siberia to the
western border of the USSR). The arbitrariness of this scheme for con-
' sidering transportation costs in the contract price is also a reason
to improve these prices.
The CEMA covntries have agreed upon the general requirements by which
to be guided in working out ways to improve the system of price for-
mation in mutual trade. Without departing from principles developed
earlier, they announced their intention to improve mutual trade prices
for the purpose of fully promotin g the development of socialist inte-
gration. They want prices to stimulate an expansion of efficient
6 See VNESHNYAYA TORGOVLYA No 6, 1975, p 39,
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mutual trade and help achieve rapid specialization and cooperation in
production; prices should promote a steady rise i.n the scientific-
technical level and quality of goods and promot~ more efficient use
of natural resources and growth in tfie production and export of scarce
types of raw materials and agricultural products.
These tasks are especially pressing with respect to deliveries of spe-
cialized output and cooperative deliveries of parts and assemblies.
Because the output produced withir~ the framework of international pro-
duction cooperat ion is earmarked for a definite consumer and often will
be delivered by circulation within a company, it is quite artificial to
speak of ~oorld prices for such autput. Prices must on occasion be
constructed by analogy or other methods. When agreeing on prices for
parts and assemblies delivered by cooperation, the CEMA countries often
have no other guideline but internal costs of production and indicators
of export and import economic efficiency. Therefore, lively debate is
underway among specialists on the exte~ t to which internal production
costs of a country should be taken into account in adjusting the "world
base" of prices for specialized output and what effort is needed to in-
sure that each country achieves a standard level of efficiency in the
export and import of corresponding output. In thi~ area we may expect
a solution to the problem of improving contract prices for products de-
livered on a cooperative basis and also prices for certain scarce com-
modities, including certain types of food and agricultural raw materials.
Constantly improving commodity relations in the CEMA market is one of
the important and highly complex tasks which is receiving growing at-
tention today, especially in connection with adoption of long-term
target programs of cooperation and the conclusion of agreements to
carry out these programs.
COPYRIGHT: Izdatel'stvo PRAVDA, VOPROSY EKONOI~IKI, 1980
11,176 END
CS0:1825
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