SOVIET ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80M01009A001402430013-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 20
• Document Creation Date: December 27, 2016
• Document Release Date: February 28, 2013
• Sequence Number: 13
• Content Type: REPORT

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SOVIET ECONOMY
1. Soviet economic development is dominated by obsession
with rapid growth of heavy industry. Large part of reason
for this is desire for strong military posture.
a. For example, we estimate that 35% of its gross
national product, equivalent to approximately 55
billions of dollars, goes directly into the mili-
tary machine or into capital investment, which is
base for expansion of future military capabilities.
b. In the U.S.A. 27% of our gross national product
is for military or investment purposes.
2. Hence before discussing the economic, industrial and
scientific position of the Soviet Union, I propose to discuss
what we believe its military posture to be.
3. The Soviet Bloc implacably believes in eventual
triumph of international communism. Expects and hopes to achieve
this end without a global war but feels it must be prepared
for war if other means fail or if attacked.
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4. Soviet position due to their fear that global war,
while it might destroy the capitalist system and eventually
lead to a communist world, might also bring about their own
destruction and quite different group of men would rise from
ashes of a global struggle.
5. Therefore, estimate the Soviets will probably try to
avoid global war for the immediate future for this and other
reasons.
a. At the present time and pending the development
of an effective long-range bomber force, or long-
range guided missiles, they are not assured of
being able to destroy the American industrial base
and our retaliatory power and hence win out in
the long run.
b. At the present time they are somewhat behind us
in the nuclear race and probably do not have an
adequate nuclear stockpile for global war purposes,
although they do probably have a stockpile which,
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if surprise were achieved, could effect devastating
damage.
c. They seem to feel a general military inferiority
to the United States except in ground forces and
possibly in guided missile development.
d. The Soviet consider themselves as appreciably
encircled by American overseas bases and that
we have, unless they can neutralize these bases, a
more effective jumping off point to attack them
than they have to attack us.
6. I conclude that over the next decade they will continue
to devote of their gross national product every ounce of
strength which they think their people will stand to heavy
industrial development--the basis for military strength in
even more distant decades.
a. They will give lip service to the increase of
consumer goods, although not so recklessly as
during the Malenkov regime, but it is clear from
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C
the new Sixth Five-Year Plan that the real
priority of heavy industry will remain unchanged.
7. We will, therefore, prObably have a situation during
the next decade or a good part of it where the Soviet Union
will continue to devote as they do today about 35% of their
gross national product to military ends or to capital investment.
a. This means emphasiis on heavy industry, atomic
weapons, aviation, guided missiles, and related
fields of electronics, etc.
b. Where do they stand in this situation today?
Have here chart showing their industrial
production as compared in billions of dollars
to the United States. (See chart)
8. During quarter of century since Stalin consolidated
power position in 1928, USSR has risen from relatively un-
developed country to second largest economy in the world.
a. This growth particularly remarkable considering
destructive effects World War II.
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b. ItOms involved transfer of millions of workers
from agriculture to urban occupations paralleled
by prodigious efforts to educate them in modern
skills and technology.
c. The Soviets have diverted an unusually large
portion of total national product to investment--
twice that of U.S.A. The result has been:
(1) While capital goods output was raised ten-
fold, agricultural production failed to
match growth in population.
(2) Planned goals for heavy industry have usually
been reached or surpassed while modest goals
for consumer goods ?have been chronically
unfulfilled.
9. As indicated above, total output of USSR now is one -
third of U.S.A. but about 1.75 that of U.K. However, USSR
production of capital goods far larger proportion of total
national product than .for U.S.A.
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(
a. For example, USSR production of coal almost
equals that of U.S.A. while the number of machine
tools produced exceeds slightly that of U.S.A.
Its output of automobiles less than 5% of ours.
10. Sixth five-year plan 1956-1960 follows traditional.
Soviet line of heavy industrial output which will bring Soviet
industrial production in 1960 to nearly 2/5 of U.S.A. as against
1/5 in 1950. Electronic output--largely a military item
particularly for guided missiles--will be tripled or quadrupled.
In field of special heat resistant alloys where Soviets have
done much fundamental research a six-fold increase in production
contemplated. (See attached sheet for comparison of present
capital goods production in certain key fields.)
11. I have read with interest your publication Resources
of the World. As applied to the Soviet Union, the problem of
food availability appears to be more difficult of solution
than those of raw material, energy resource, and technical
manpower scarcities.
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a. Both historical review and current analysis of
Soviet economic policy disclose greater success
and determination in coping with the latter three
problems than with that of adequacy and variety
of diet.
12. The Soviets have inaugurated their'bew lands" program
to increase grain supplies but a big question remains as to
the long run successes of this program.
a. The difficulties encountered this year in the
new lands tend to point up the fact that Soviet
land resources are not unlimited.
b. Increases in production through land expansion
alone cannot be expected to solve the problem of
feeding an ever-increasing population.
13. If the Soviets wish to fulfill their promises of a
more varied and higher quality diet for their people, a heavy
investment program providing for greatly increased production
of fertilizer and special purpose machinery for meat, dairy
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and vegetable output will be required.
SCIENCE AND TECHNOLOGY
14. Kaganovich in a recent public speech said:
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rmik
Capital Goods Production, 1955
US as multiple
of USSR
Commodity
US
USSR
Coal
(million metric tons)
443
390
1.1
Crude Oil & Natural Gas Liquids
(million metric tons)
366
70
5.2
Electric Power
(billion Kwh)
623
170
3.7
Steel
(million metric tons)
106
45
2.4
Primary Aluminum
(million metric tons)
LA
0.5
2.8
Synthetic Rubber
(million metric tons)
0.9
0.23
3.9
Cement
(million metric tons)
50
22
2.3
Mineral Fertilizers
(million metric tons)
25
9,6
2.6
Consumer Goods Production, 1955
Cotton Fabrics
(billion linear meters)
9.0
5.9
1.5
Automobiles and Trucks
(million units)
9.2
0.45
20,4
Washing Machines
(million units)
4.4
.087
50.6
Radio and TV Sets
(million units)
20.3
4.0
5.1
Meat
12.2
4.5
2.7
(million metric tons)
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?
,
SCIENTIFIC RESOURCES OF THE USSR
1. SOVIET SCIENTIFIC AIMS.
KAGANOVICH, MEMBER OF PRESIDIUM OF THE PARTY
AND ONE OF FIVE FIRST DEPUTY CHAIRMEN OF THE COUNCIL OF
MINISTERS, IN 1955 STATED THAT, "ONLY THROUGH THE WIDE AND
RAPID INTRODUCTION OF THE NEWEST ACHIEVEMENTS OF OUR OWN
AND WORLD WIDE SCIENCE AND TECHNOLOGY CAN WE REACH A LEVEL
OF PRODUCTIVITY HIGHER THAN THAT OF CAPITALISM, WHICH IS
NECESSARY FOR THE VICTORY OF COMMUNISM." WHAT DO THE
SOVIETS HAVE WITH WHICH TO MEET THIS AMBITIOUS OBJECTIVE?
2. MANPOWER RESOURCES.
THE FIGURES USED HEREIN MUST BE TAKEN AS INDICATIONS
OF MAGNITUDE ONLY. THEIR ACCURACY CAN NOT BE GUARANTEED.
A. HOW SOVIET SCIENTISTS ARE TRAINED.
ELEMENTARY SCHOOLS STRESS SCIENCE TRAINING
AND THERE ARE NO ELECTIVES. SOVIET HIGH SCHOOL
GRADUATES HAVE FIVE YEARS OF PHYSICS, FIVE YEARS OF
BIOLOGY, FOUR YEARS CHEMISTRY, TEN YEARS MATHEMATICS
AND A YEAR OF ASTRONOMY. RECENTLY, MORE PRACTICAL
TECHNICAL SUBJECTS SUCH AS MACHINE OPERATION WERE
INTRODUCED AT EXPENSE OF HUMANITIES.
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FACTORY AND TRADE SCHOOLS CONDUCT
SPECIALIZED EDUCATION TO SUPPLY SKILLED LABOR.
AT THE NEXT LEVEL ARE TECHNICUMS, ROUGHLY
COMPARABLE TO OUR TECHNICAL HIGH SCHOOLS,
WHICH CONDUCT THREE TO FOURYEARS OF SPECIALIZED
TRAINING. MORE TECHNICUMS ARE BEING ESTABLISHED. 1,
TO ACCOMMODATE THE INCREASING DEMAND FOR
SKILLED TECHNICIANS WHO CAN NOT BE ADMITTED TO
UNIVERSITIES OR COLLEGES.
AT THE HIGHEST LEVEL ARE THREE TYPES OF
INSTITUTIONS:
(1) SPECIALIZED ENGINEERING AND TECHNICAL
COLLEGES (ABOUT 180 IN THE PHYSICAL SCIENCES)
WHICH OFFER FOUR-FIVE YEAR COURSES IN SUCH
SPECIALIZED FIELDS AS MACHINE BUILDING AND
CONSTRUCTION TO SUPPLY ENGINEERS AND
SPECIALISTS TO PARTICULAR INDUSTRIES.
(2) POLYTECHNICAL INSTITUTES (ABOUT 24)
OFFERING FOUR-SIX YEAR COURSES IN BROAD
FIELDS, AND
(3) UNIVERSITIES (33) EMPHASIZING
FUNDAMENTAL SCIENCE AND OFFERING COURSES
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5-5 1/2 YEARS IN LENGTH, GRADUATES OF WHICH
ENTER TEACHING OR RESEARCH. THE BETTER
STUDENTS ARE FUNNELED INTO RESEARCH.
vamosupowsWeigegir
THE THREE HIGHEST TYPES OF INSTITUTIONS AWARD THE
CANDIDATE DEGREE, COMPARABLE TO OUR PHD. IN
ADDITION, 4-500 DOCTOR'S DEGREES, AN ADVANCED ACADEMIC
DEGREE, ARE GRANTED EACH YEAR. ABOUT 75% OF ALL
ADVANCED DEGREES ARE AWARDED IN THE NATURAL AND
PHYSICAL SCIENCES.
B. NUMBERS OF TECHNICALLY TRAINED INDIVIDUALS.
THE USSR HAS NOW ABOUT 2/3 RDS THE NUMBER
OF SCIENTISTS THAT THE UNITED STATES HAS IN THE RESEARCH
AND TEACHING ASPECTS OF PHYSICAL AND BIOLOGICAL
SCIENCES (175,000 VERSUS 265,000).
THE USSR HAS ABOUT HALF THE NUMBER THAT U.S.
HAS IN RESEARCH ALONE (120,000 VERSUS PERHAPS 210,000).
SOVIET COLLEGES RECEIVE ABOUT 500,000 STUDENTS
AND GRADUATE ABOUT 250,000 EACH YEAR. US ENTRANTS
AND GRADUATES ARE ABOUT 10% HIGHER, BUT SOVIETS
F A
EDUCATE MORE IN THE SCIENCES THAN WE DO.
THIS IS KEY TO OUTLOOK FOR THE FUTURE. IN 1955
MORE THAN HALF (ABOUT 601c) OF SOVIET GRADUATIONS WERE
IN SCIENTIFIC AND TECHNICAL FIELDS VERSUS ABOUT 25%
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IN THE US. THE SOVIETS GRADUATED NEARLY TWICE AS
MANY ENGINEERS AS DID THE US IN 1955. AT AN INCREASING
RATE OF GRADUATION IN THE USSR (ABOUT 80,000 IN
PHYSICAL SCIENCES AND ENGINEERING AND ABOUT 50,000
IN THE LIFE SCIENCES), THE SOVIETS WILL ATTAIN AN
IMPOSING ADVANTAGE IN NUMBER OF SCIENTISTS AND
ENGINEERS IN A FEW YEARS' TIME IF THEY AND WE
'ATZWIalgtaretp,
CONTINUE AT OUR PRESENT RATES.
C. HOW CANDIATES FOR SCIENTIFIC TRAINING ARE SELECTED.
THE DOMINANT FEATURE IN THE SOVIET SELECTION
PROCESS IS THE USEFULNESS TO THE STATE OF THE POTENTIAL
SCIENTIST. THE STATE THUS CONTROLS BY ADMISSIONS TO
ADVANCED TRAINING THE NUMBERS OF PHYSICISTS, CHEMISTS,
AND SO ON. SIMILARLY, UPON COMPLETION OF HIS EDUCATION,
THE FLEDGLING SOVIET SCIENTIST IS OFFERED POSITIONS
ACCORDING TO STATE NEEDS. ALL ATTEMPTS TO FAVOR
SELECTION OF "PROLETARIANS" WERE ABANDONED AT THE
END OF 1935.
D. WOMEN SCIENTISTS. (
THE USSR EDUCATES A MUCH HIGHER PROPORTION
OF WOMEN IN SCIENTIFIC FIELDS. OVER-ALL FIGURE IN
USSR WAS ABOUT 50% IN 1954 WITH GREATER NUMBERS OF
WOMEN IN ENGINEERING AND MEDICINE, AGRICULTURAL AND
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OTHER SPECIALIZED PROFESSIONAL FIELDS THAN IN
THE US. WOMEN ARE EMPLOYED LARGELY IN INDUSTRY
AND TEACHING (ABOUT 35% OF ALL TEACHERS IN HIGHER
EDUCATIONAL ESTABLISHMENTS ARE WOMEN).
E. INCENTIVES
FOR PROMISING STUDENTS, A STATE-FINANCED
EDUCATION IN SCIENCE IS A LIKELY PROSPECT. AS
ULTIMATE GOALS, THE ASPIRING SCIENTIST CAN LOOK
FORWARD TO HIGH RANK EXPRESSED IN TERMS OF
PREFERENTIAL TREATMENT IN SALARY, HOUSING AND
PERQUISITES. STATE PRIZES WORTH SEVERAL THOUSANDS
OF DOLLARS AWAIT MANY KINDS OF OUTSTANDING SCIENTIFIC
ACCOMPLISHMENTS.
F. SUPPORTING TECHNICIANS.
SHORT TERM FACTORY AND TRADE SCHOOLS, AS
WELL AS TECHNICUMS, PROVIDE AN ACADEMIC OUTLET FOR
THE INCREASING NUMBERS OF STUDENTS NOT ADMITTED TO
COLLEGES AND UNIVERSITIES. SOVIETS ARE MORE APT TO
OBTAIN THEIR SKILLED FOREMEN FROM THEIR EDUCATIONAL
SYSTEM THAN FROM PRACTICAL EXPERIENCE IN INDUSTRY.
BETWEEN 1914 AND 1954 ABOUT 1.2 MILLION SKILLED LABORERS
OF THIS CLASS HAD BEEN TRAINED IN SPECIALIZED SEMI-
PROFESSIONAL SJFCHOOLS AND AN ADDITIONAL 600, 000 SINCE
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1949 HAVE BEEN TRAINED IN EXTENSION COURSES. THIS
REPRESENTS A DRAMATIC EFFORT ON THE PART OF THE
USSR TO OVERCOME A DEFICIENCY IN SKILLED SUPPORTING
MANPOWER.
3. UTILIZATION OF TECHNOLOGICAL RESOURCES.
A. ORGANIZATION OF THE SCIENTIFIC EFFORT.
ROUGHLY COMPARABLE TO THAT OF THE US
FOLLOWING THREE GENERAL LINES:
(1) BOTH FUNDAMENTAL AND APPLIED
RESEARCH ARE PLANNED AND SUPERVISED BY
A SYSTEM OF ACADEMIES OF SCIENCES WHICH
ACCOUNT FOR ABOUT 1/10TH OF THE TOTAL
SCIENTIFIC MANPOWER.
(2) INSTITUTES OF INDUSTRIAL AND OTHER
ECONOMIC MINISTRIES EMPLOY ABOUT 2/ 5THS
OF ALL SCIENTISTS. A NOTABLE EXAMPLE IS
THE CENTRAL AEROHYDRODYNAMICS INSTITUTE
(TSAGI) WHICH DOES WORK COMPIRABLE TO THAT
OF OUR NATIONAL ADVISORY COMMITTEE FOR
AERONAUTICAL LABORATORIES.
3. (3) HIGHER EDUCATIONAL INSTITUTIONS EMPLOY
THE REAXMDCK REMAINING HALF OF THE SOVIET
SCIENTISTS AS TEACHERS.- THIS SEGMENT HAS
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BEEN CRITICIZED FOR FAILING TO PROVIDE ITS
SHARE OF RESEARCH IN THE WAY THAT AMERICAN
UNIVERSITY SCIENTISTS DO.
B. RESEARCH IS NOT AS CAREFULLY PLANNED AND
COORDINATED AS MIGHT BE EXPECTED IN A TOTALITARIAN ECONOMY.
THERE IS MUCH PARALLELISM SINCE EACH MINISTRY
PLANS ITS OWN RESEARCH PROGRAM. THERE IS THE HEAVY
HAND OF BUREAUCRACY AS SHOWN BY THE COMMENT OF THE
VICE PRESIDENT OF THE SOVIET ACADEMY OF MEDICAL
SCIENCES, "WE NOT ONLY ORGANIZE BADLY, BUT WE
CONSTANTLY REORGANIZE. t' THE ACADEMY OF SCIENCES IS
ATTEMPTING BY A COMMUNITY STRUCTURE TO COORDINATE
ACTIVITIES ON A PROJECT BASIS.
C. ROLE OF THE COMMUNIST PARTY.
THE PARTY HAS, OF COURSE, GREAT POWER AND
IS AN EFFECTIVE MEANS OF INSURING COORDINATION IN
AREAS OF HIGH PRIORITY. WE CAN SEE THE EFFECT OF PAgrY
DISCIPLINE IN PROGRAMS, SUCH AS ATOMIC ENERGY, GUIDED
MISSILES, AIRCRAFT AND ELECTRONICS. FOR EXAMPLE,
THE SOVIET FIVE YEAR PLAN RECENTLY ANNOUNCED PLANS
FOR CONSTRUCTION IN THE PERIOD 1956-1960 AF 2,000 TO
2,500 MEGAWATTS OF ELECTRICAL POWER GENERATING
CAPACITY USING NUCLEAR ENERGY. (AS COMPARED WITH
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PRESENT U.S. PLANS FOR APPROXIMATELY 800 MEGAWATTS
IN THE SAME PERIOD). EVEN GRANTING AN ECONOMIC BASIS
FOR THIS FORMIDABLE SOVIET GOAL, WE CAN ALSO SEE THE
POLITICAL EXPEDIENCY AND THE DRAMATIC SUPPORT TO
SOVIET PROPAGANDA LINES.
ON THE OTHER SIDE OF THE LEGER, PARTY INTER-
FERENCE IN GENETICS DURING THE LYSENKO CONTROVERSY
CERTAINLY CONTRIBUTED TO THE SOVIETS' SIZEABLE
AGRICULTURAL PROBLEMS. GENERALLY SPEAKING,
HOWEVER, PARTY INTERFERENCE HAS NOT PRESENTED A MAJOR
OBSTACLE TO PROGRESSIVE RESEARCH.
D. FUNDS.
ANNOUNCED EXPENDITURES FOR RESEARCH ARE
COMPARABLE TO (PERHAPS GREATER THAN) THOSE OF THE
U.S. IN TERMS OF PER CENT OF GNP (ABOUT= 1%).
HOWEVER, THE SOVIET GNP IS ONLY ABOUT 1/3 THAT OF THE
U.S.
E. DISSEMINATION OF SCIENTIFIC KNOWLEDGE.
THE SOVIETS HAVE A COMPREHENSIVE SYSTEM OF
ABSTRACTING OF THE WORLD'S SCIENTIFIC LITERATURE WHICH
PUTS THEM IN AN ENVIABLE POSITIONTO EXPLOIT FOREIGN
DEVELOPMENTS. WE HAVE EXAMPLES OF AMERICAN CHEMICAL
JOURNALS BEING ABSTRACTED AND TRANSLATED IN PART OR
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\-/
IN TOTO SO AS TO BE IN THE HANDS OF SOVIET RECIPIENTS
WITHIN TWO MONTHS OF THE AMERICAL PUBLICATION DATE.
OUR CHEMICAL ABSTRACTS ON THE AVERAGE RUNS ABOUT
EIGHT MONTHS BEHIND ORIGINAL PUBLICATION DATE.
4. ACHIEVEMENTS.
THE ACHIEVEMENTS OF SOVIET RESEARCH VARY ACCORDING
TO THE NATURE OF THE RESEARCH ITSELF AND THE FIELD OF PROBABLE
APPLICATION. GENERALLY, SOVIET SCIENTISTS ARE QUITE GOOD IN
THEORY; IN THE THEORETICAL ASPECTS OF PHYSICS, FOR EXAMPLE,
THE SOVIETS ARE PERHAPS ON A PAR WITH ANY COUNTRY IN THE
WORLD, THEIR THEORETICAL METALLURGY IS OUTSTANDING, AND SOME
OF THEIR RESEARCH INTO THE HUMAN NERVOUS SYSTEM, FOLLOWING
THE PAVLOVIAN SCHOOL, IS QUALITATIVELY UNIQUE. THEY MAY TEND
TO LAG A BIT IN EXPERIMENTAL WORK, BUT THERE ARE ENOUGH
EXCEPTIONS HERE TO MAKE SURA A GENERALIZATION PRECARIOUS.
CERTAINLY WE HAVE TO GIVE FULL CREDIT TO THEIR DEVELOPMENT OF
THEIR TEN BILLION ELECTRON VOLTED PROTON SYNCHROTRON, THE
LARGEST PARTICLE ACCELERATOR IN THE WORLD.
5. SCIENTIFIC RESEARCH AND TECHNOLOGICAL DEVELOPMENT.
SOVIET RESEARCH ACHIEVEMENTS AFFECT SOVIET TECHNOLOGY
BY A SYSTEM OF PRIORITIES. THE SOVIET ECONOMY DOES NOT HAVE
THE CAPACITY TO ABSORB RESEARCH RESULTS IN ALL FIELDS AS DOES
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r r
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OURS. GREATEST USE OF RESEARCH RESULTS THEREFORE IS MADE
IN AREAS ESSENTIAL TO NATIONAL POWER AND _MILITARY STRENGTH
AS OPPOSED TO THE CONSUMPTION SECTOR OF THE CIVIL ECONOMY.
THE LATTER HAS BEEN LITTLE AFFECTED BY SCIENTIFIC RESEARCH
AND DEVELOPMENT.
SUMMARY
THESE ARE HIGHPOINTS OF THIS REVIEW OF SOVIET
SCIENTIFIC RESOURCES:
A. THEIR POOL OF HIGHLY TRAINED SCIENTISTS
v, AND ENGINEERS, NOW APPROXIMATELY EQUAL TO THAT
OF USA- IS BEING INCREASED AT A PROPORTIONATELY
GREATER RATE THAN OURS -- IN A FEW YEARS WE MAY SEE
THEM ATTAIN A DECISIVE ADVANTAGE IN TOTAL NUMBERS.
B. A VIGOROUS PROGRAM OF TRAINING OF
SPECIALIZED TECHNICIANS WILL IMPROVE THEIR RELATIVE
STANDING IN THIS IMPORTANT CATEGORY.
C. BY THE FUNCTIONING OF STATE CONTROL THE
SOVIETS ARE ABLE TO DIRECT THE STREAM OF TRAINED
SCIENTISTS IN PROPER CHANNELS ACCORDING TO NEED.
D. THERE IS NO SPARING OF FUNDS FOR
SCIENTIFIC RESEARCH.
E. IT IS THE ANNOUNCED SOVIET INTENTION TO
UTILIZE THE BEST OF AVAILABLE FOREIGN SCIENTIFIC
KNOWLEDGE AND THEY HAVE INSTITUTED A LARGE-SCALE
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SYSTEM FOR SUCH EXPLOITATION.
F. SCIENTIFIC ACHIEVEMENT IS ENCOURAGED BY
A SYSTEM OF AWARDS AND SPECIAL PRIVILEGES WHICH
ELEVATES SCIENTISTS TO THE TOP RUNG IN THE COMMUNIST
VERSION OF THE SOCIO-ECONOMIC LADDER.
G. THE USSR MAKES FULL USE OF THE CONTRIBUTION
WHICH WOMEN CAN MAKE TO ITS SCIENTIFIC EFFORT.
THESE ARE STATEMENTS WORTH PONDERING.
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