LONG-RUN SOVIET ECONOMIC GROWTH

• Document Type: CREST
• Collection: General CIA Records
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• Original Classification: S
• Document Page Count: 124
• Document Creation Date: December 23, 2016
• Document Release Date: April 4, 2013
• Sequence Number: 1
• Publication Date: December 23, 1954
• Content Type: REPORT

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SECRET
ECONOMIC INTELLIGENCE REPORT 1? 2
LONG-RUN SOVIET ECONOMIC GROWTH
CIA/RR 53
23 December 1954
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
SECRET
W9b
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WARNING.
This material contains information affecting
the National Defense of ;the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. (793 -.and .394, the trans-
mission or revelation of which' in any manner
to an unauthorized perspn is prohibited by law.
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ECONOMIC INTELLIGENCE REPORT
LOIC-RUN SOVIET ECONOMIC GROWTH
CIA/RR 53
(cRR project 10.406)
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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YOREWCRD
The primary purpose of this report is to estimate the growth of
the Soviet economy over the next 20 years. The report. is designed
to enable the intelligence community to ascertain the contribution
of future Soviet-economic strength to the over-all capabilities of
the USSR and the econbmic limitations on probable Soviet courses
of action and tO serve as a guide in assessing the long-run inten-
tions of the USSR. The results of the report are highly tentative,
although they are basd upon careful study and research and a
wealth of relevant intelligence and statistical data, already de-
veloped within ORB. The report is to be considered an early progress
report on a subject which is of continuing interest to the intel-
ligence community.
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Conclusions
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CONTENTS
I. Introduction
Page
1
A. General Point of View 5
B. Definition of Economic Growth 6
C. Factors Determining the Rate of. Economic Development 6
1. Supply of Labor 6
2. Supply of Capital 6
3. Supply of Natural Resources 7
4. Efficiency 7
D. Methods of Approach* 7
1. Labor Force Productivity Method 8
2. Factor Inputs Method 8
E. Assumptions 8
II. Labor Force Productivity Method 11
A. Past Production Trends 11
B. Labor Force: Trends and Projection 13
C. Labor Productivity: Trends and Projection . . . . . 21
D. Projection of Gross National Product, Labor Force-
Productivity Method 24
III. Factor Inputs Method 25
A. General Methodology25
B. Agricultural Production and Factor Requirements:
Trends and Projections 26
1. General Statement of the Agricultural Problems
and Historical Summary 26
2. Present Agricultural Problem 27
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3. Projection of Agricultural Output and of Factor
Requirements in Agriculture
Nonagricultural Production: Trends and Projections
Page
28
29
1.
General Methodology ? ? 0 ? . . OOOOOOO
. 0
29
2.
Supply of Labor. . . . . ..........
.
. .
31
a. Concept of Skill . . .
32
b. Education and Training in the USSR .
0
. .
. 32
c. Measurement of Labor Quality ?
?
0 .
33
d. Supply of Soviet Labor . . . ...
.
0, .
34
e. Health and Energy . . . 0 0 0 0 0 b
??
36
3.
Supply of Capital ? 0 0 0 0 ? 0
0
36
a. Allocation of Gross National Product
by End Use . . .........
(1) Defense . . .
37
38
() consumption .........
38
(3) Administration
b. Determination of Capital Stock . .
.40
4.
Efficiency . . . . .
a. Technology . ... . .... . . . ? . ?
41
b. Mineral Resources . 0 0
42
c: Articulation . . . . . . ? 0
43
d. Management ..... . . . . . .......
,
44
e. Factor Proportions and Scale of Output. .
. . .
44
f. Foreign Trade . . . . . . . 0 ? . ..
..
45
g. Worker Incentives and Morale .
. . .
46
h. Conclusions as to Efficiency .
. ?
47
5. Nonagricultural Production: Trends
and Projections . 0 , .... . . 48
D. Final Projection: Factor-Inputs Method .
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?
IV. Conclusions
A. Comparison of Gross National Product Projections
B. Implications for Intelligence
Page
55
55
55
Appendixes
Appendix A. Methodology for Computation of Production
Statistics
59
Appendix B. Supply of Labor
71
Appendix C. Methodology for Factor Inputs Method
105
Appendix D. Capital Stock
111
Appendix E. Projection of US Gross National Product in 1975
121
50X1
Tables
1. Production (Value Added) in the USSR by Sector,
Selected Years, 1902-53
12
2. Average Annual Rates of Growth in Soviet Gross National
Product, by Sector, Selected Yeark, 1902-53
13
3. Estimated and Projected Population of the USSR,
.Selected Years, 1860-1975
it. Estimated and Projected Labor Force of the USSR,
Selected Years, 1902-75
14
16
5. Participation of the Population in the Labor Force
of the USSR, 1950 and 1975
18
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Page
6. Total,.Agricultural, and Nonagricultural Labor Force
of the USSR, Selected Years, 1902-75 20
7. Output per Man-Year in the USSR, by Sector,
Selected Years, 1902-75 . ... .. ? ? ? ? 0 23
Indexes of Growth in the Quality of the Labor Force
of the USSR, Selected Years, 1902-75 35
9. Supply of Labor in the Ism in QualitY Units,
Selected Years, 1902-75 . . . . . . 35
10. Fixed Capital Stock in the USSR, Selected Years,
1928-51 37
11. Division of Gross National Product of the USSR
by End Use, Selected Years, 1928-53 . ..
39,,
12. Determination of the Nonagricultural Production.
of the USSR, Factor Inputs Method, Selected Years,
1928-75 .. .... ? 5 ? ? 6 ...... ..... 49
13. Labor Force, Capital Stock, and Production in the Non-
agricultural Sector of the USSR, Selected Years,
1928-75
52
14. Projection of the Gross National Product of the USSR
Factor Inputs Method, Selected Years, 1928-75 . 53
15. Gross National Product of the USSR, 1953 and 1975 . - 56
16. Comparison of the Gross National Products of the USSR
and the US, 1953 and 1975 . . .
17. Production of Selected Agricultural Commodities
in the USSR, Selebted Years, 1900-1953 61
58
18. Production of Selected Industrial Commodities and Services
in the USSR, Selected Years, 1900-1953 ..... . 67
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19. Estimated Total Population of the USSR, Selected Years
1015-1975
20. Distribution of the Population of the USSR by Age and Sex,
Selected Years, 1897-1975
21. Estimated Average Annual Hours Worked by Nonagricultural
Workers in the USSR, Selected Years, 1897-1975
22. Educational Attainment of the Soviet Population: Number
and Percentage of Persons Between 15 and 59 Years of Age
by Highest Educational Level Reached, Selected Years,
1897-1975
23. Educational Attainment of the Nonagricultural Labor Force
in the USSR by Highest Educational Level Reached,
Selected Years, 1897-1955
24. Estimated Percentage Distribution of the Labor Force
in the USSR by Occupational Group, Selected Years,
1902-53 85
Page
72
73
74
78
82
25. Earnings in the USSR by Level of Education and Occupation,
1950 87
26. Indexes of the Quality of the Labor Force in the USSR,
Selected Years, 1902-75 89
27. Indexes of the Supply of Labor in the USSR in Quality Units,
. Selected Years, 1902-75 91
28. Russian Education, Selected Years, 1875-1975 94
29. Fixed Capital Stocks in the USSR (Socialized Sector),
Selected Years, 1928-50 112
30. Derivation of the Index of Agricultural Capital in the USSR,
Selected Years, 1928-53 117
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Charts
Figure 1. USSR: Indexes of Production of Selected
Agricultural Commodities, Selected Years,
1900-1953 . . . . ... , ....
Figure 2. USSR: Indexes of Production ?of Selected
Industrial Commodities, Selected Years,
1900-1953 . ....... . . .
Following Page
12
12
Figure 3. USSR: Gross National Product, by Sector,
Selected Years, 1900-1953 . .... 12
Figure 4. USSR: Population and Labor Force,
Selected Years, 1900-53 and 1975 20
Figure 5. USSR: Product, Man-Years of Labor,
and Product per Man-Year, Selected Years,
1900-1953 and 1975 . ..... .
Figure 6. USSR: Product and Fixed Capital Stock
in the Nonagricultural Sector, Selected
Years, 1928-53 and 1975 . . . . .
Figure 7. Comparison between Gross National Products
of the USSR and the US, 1929, 1953,
and 1975 ......... . . . .
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CIA/RR 53
(ORB Project 10.406)
LONG-RUN SOVIET ECONOMIC GROWTH*
Conclusions
Soviet economic growth is defined as the increase in the ability
of the USSR to produce goods and services and may be measured in terms
of the increase in Soviet gross national product. It is determined by
the quantities of the factors of production available -- land, labor,
and capital -- and by the efficiency with which they are used --
technology, management, the scale of production, and other elements
which can be treated only qualitatively:
It is unlikely that the gross national product of the USSR will
grow at an annual average rate of 5 percent or more over the period
to 1975. The most probable average annual rate of growth will be
between 4.2 and 4.8 percent, depending on the Soviet policy decisions
concerning the allocation of the Soviet gross national product among
various consuming sectOrs, primarily investment, consumption, and
defense. The chief deterrents to a higher rate are the problems
involved in increasing the output of the agricultural sector above
that projected in this report. This difficulty is illustrated by
the differences in the projected levels of nonagricultural and
agricultural production for 1975: whereas nonagricultural output is
expected to be 170 to 260 percent greater than in 1953, agricultural
output is expected to be only 60 to 80 percent greater than in 1953.
The limits of this range are set by making assumptions as tb the
largest and smallest probable growth in consumption and in agricultural
production. Two methods are used in projecting gross national product
in this report.
The above estimates are based, not upon a sample projection of
the gross national product, but upon projections of the principal
factors determining production. To obtain nonagricultural output,
the quantity and.quality of labor, the stock of capital, and the
net effect of all other factors (technology, management, and so on)
* The estimates and conclusions contained in this report represent
the best judgment of the responsible analyst as of 13 December 1954.
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are projected. In the case of the agricultural Sector, an assumed
level of output serves as a basis for estimating labor and capital
requirements.
A rough comparison of the projected gross national product of
the USSR and that of the US is helpful in assesSing the meaning of
estimates developed in this study. This comparison cannot be precise,
because it involves not only all the inaccuracies of projecting both
the USSR and US data but also the inaccuracies of international com-
parison.
The best estimate is that the Soviet gross national product
will increase from $103 billion in 1953 to $290 billion (4.8 percent
per year), assuming low consumption, and $250 billion (4.2 percent
per year), assuming high consumption, in 1975. It is estimated that
the US gross national product will increase from $350 billion in
1953 to $735 billion (3.4 percent per year in 1975). The gap
(in absdlute terms) between the US and Soviet gross national product
is expected to increase, even though the Soviet gross national
product is expected to become a larger percentage of the corresponding
US value by 1975.
A basic assumption of this report is that international trade will
increase only slightly and will not contribute to the growth of the
USSR substantially more than it currently does. If, however, the
Soviet policy makers decide to supplement the agricultural output of
the USSR by imports to a significant extent', the rate of growth of
the Soviet gross national product could be higher.
Another basic assumption of this report is that expenditures for
defense will be geared to a continuation of the cold war. If, how-
ever, defense expenditures are less than projected, it is possible
that total production in 1975 would be higher than estimated.
It also should be pointed out that the contributions to the
growth of the USSR made by the Satellites have not been explicitly
considered. These effects have, however, been considered implicitly
to the extent that they have affected Soviet growth in the past.
This report necessarily assumes there will be no basic changes
in the Soviet political system.
Finally, it should be noted that the projections of Soviet out-
put in 1975 are limited to the extent that all economic projections
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over a long period of time are limited. They are based on what is
known about the past developments and present conditions and what
can be deduced from this information and reasonable assumptions about
the future. They are limited to the extent that currently unknown
future events affect the quantities which this report attempts to
estimate.
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I. Introduction.
A. General Point of View.
An economy at any point in time may be regarded as an area
having given resources, culture, political and ideological complexion,
and international orientation. These conditions have emerged from its
past historical development and in turn influence its future develop-
ment. The problem, then, is to form judgments on the implications of
these given conditions with reference to future growth.
It involves the writing of a plausible economic history for
the future on the assumption that the future is a logical outgrowth of
the past and of clearly identifiable policies as to the future. . Its
purpose is to reveal basic and persistent trends in the Soviet economy.
It must be emphasized that the data developed here are not to
be viewed as a forecast of what will happen to the Soviet economy in
the year 1975. On the contrary, these data represent the most likely
level to which the Soviet economy Can develop on the basis of the past
history of the long-run forces and the best current estimates of how
these forces may be modified in the future.
Future economic development is primarily concerned with basic
cultural phenomena -- for example, population growth, education, pro-
ducer incentives, consumer demands, and national objectives and ide-
ologies. Although these may change over time, they are likely to be
essentially stable or to change along fairly regular trends. Barring
war or social cataclysm, the projection of future economic develop-
ment for a period so short as 20 years is at least not completely hope-
less or useless. Indeed, if we knew enough about the basic cultural
factors, fairly reliable estimates might be made. The shortcomings
of the present report are due primarily to imperfect, incomplete knowl-
edge rather than to the ultimate impracticability of the task.
One qualification, however, is necessary. A feature of the
totalitarian state is that social changes can sometimes be imposed by
the leadership to a degree not possible in a nontotalitarian state.
This is true only when the leadership holds unchallenged authority
and then only to a limited degree. Nevertheless, the role of leader-
ship may be such that cultural change may be more rapid or more
erratic than in a nontotalitarian regime. But there are limits to
cultural change even in a totalitarian country -- as suggested by the
experience of the USSR in agriculture.
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B. Definition of Economic Growth.
The economic growth or development, of an economy may be defined
as the change over time in its ability to generate gross-national prod-
uct (measured in terms of constant prices). This definition refers to
productive ability, not necessarily to actual production. It does not
refer to the amount of production that the eccnomy actually does or will
achieve -- since this amount depends partly on the state of the business
cycle or on other temporary, organizational factors. Rather, it re-
fers to the amount of production attainable at reasonable levels of
"full employment." The purpose is to estimate attainable productive
ability, not actual production. The question is: how much could the
USSR (or the US or any of the other relevant areas) produce, at various
times in the future, if its economy were operating at practicable full
employment?*
.C. Factors Determining the Rate of Economic Development.
Growth in the ability of an economy to produce is determined by
the quantity and quality of its productive resources -- labor, capital
and natural resources -- and the efficiency with which they are used.
A more detailed examination of the factors to be considered follows.
1. Supply of Labor.
The supply of labor depends on the size of the population,
the proportion of the; population in the labor force, and the number of
hours worked during a year. The proportion of the population in the
labor force in turn depends on the age and sex composition of the pop-
ulation, the number of persons in schools, practices with respect to
retirement, and the employment of women and children. The quality of
the labor force also affects the supply of labor: an increase in
skills through education or training will increase the effectiveness
of a given number of workers.
2. Supply of Capital.
The supply of capital depends on the amount of, investment
and on the current size Of, the rate of retirement from, and the
* In estimating future productive ability, one cannot wholly disre-
gard the business cycle in Western countries or temporary periods of
disorganization or structural imbalance in the Russian orbit, because
these will affect the rate of capital accumulation.
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composition of the capital stock.
3. Supply of Natural Resources.
The supply of natural resources depends on the quantity
and characteristics of the land and available natural materials (that
is, known and technically exploitable resources).
4. Efficiency.
The efficiency with which these resources are utilized
depends on (a) the technology used and the speed with which new tech-
niques are developed and incorporated into the production process;
(b) the skill of management to operate individual plants at minimum
costs consistent with given levels of output; (c) the ability to take
advantage of specialization and division of labor consistent with given
levels of national output; (d) the ability to take advantage of inter-
national specialization and division of labor through international
trade; and (e) the degree to which production is coordinated with de-
mand or plan and to which priorities are assigned so that urgently
needed goods are produced ahead of less urgently needed goods and so
that bottlenecks, gluts, and unemployment are avoided.
To account for past growth or to estimate future growth
requires the measurement of past or prospective changes in these
factors, but only ,a few of them are directly measurable. The rest
are qualitative in nature, and the best that can be done with respect
to them is to attempt to measure their effects on production.
D. Methods of Approach.
It is clear that these factors do not affect the development
of the different sectors of the economy to the same degree. Ideally,
their effects upon each of the principal sectors should be studied.
separately: the results of these studies should then be checked for
consistency and finally combined. For the purpose of this study, the
economy is subdivided into two sectors, the agricultural and:the.
nonagricultural.
Two methods are employed to estimate the gross national product
of the USSR in 1975: the "labor force productivity method" and the
"factor inputs method."
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1. Labor Force Productivity Method.
The labor force productivity method involves a study of
the past and a projection of the future size of the Soviet labor force
in the agricultural and the nonagricultural sectors. Changes in out-
put per man-year in the agricultural and nonagricultural sectors are
calculated for past years and projected. The projections of the labor
force and of output per unit of labor are then combined to obtain agri-
cultural and nonagricultural output. The sum of the agricultural and
nonagricultural projections for 1975 is the gross national product
estimate for the USSR for that year. In this method the only factor
which is explicitly measured and projected is the size of the labor
force. The net effects of the remaining factors are considered as a
whole as they affect the output per unit of labor.
2. Factor Inputs Method.
The factor inputs method treats the agricultural and non-
agricultural sectors separately and both labor and capital explicitly.
The labor and capital requirements in agriculture are projected to per-
mit a reasonable growth in agricultural output. This growth is con-
sistent with the projected growth in consumption and with the past
history and present situation of agriculture in the USSR. Nonagricul-
tural output is based on the projections of labor and capital and the
efficiency with which they are combined. Labor and capital are the
only basic inputs which can conveniently be measured. The projection
of efficiency is an attempt to measure the net effect of the multitude
of all the other forces described above. The combining of these three
projection yields an estimate of nonagricultural output. In projecting
the labor force by this method, adjustments are made to account for the
changes in the quality of labor due to increases in skills and educa-
tion. Actually, two estimates of both nonagricultural and agricultural
output are made for 1975 -- one based on a low consumption-high in-
vestment policy of the government, the other on a high consumption-low
investment policy. High and low estimates of the gross national pro-
duct of the USSR in 1975 are obtained by combining the projections for
the two sectors.
E. Assumptions.
A study of future economic growth necessarily rests upon
assumptions regarding the conditions -- especially political con-
ditions -- likely to obtain during the period under consideration.
The following assumptions underlie this study::
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1. That there will be no changes in international boundaries.
2. That there will be no large-scale war but that psychological,
political, and economic conflicts will continue at present levels of
intensity.
3. That there will be no basic changes in the internal polit-
icalHand-economid system.
4. That the national objectives of the USSR will remain un-
changed throughout the period.
5. That the foreign trade of the USSR will increase only.
slightly and will not contribute to the growth of the USSR substantially
more than it currently does.
All the conclusions of this study are strictly relative to
these assumptions.
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II. litidi 'Force Productivity Method..
The first of the two basic methods, the labor force productivity
method, is the one most often used to project the growth of an economy.
This method involves the following steps: (1) study of the past pro-
duction of an economy; (2) analysis of the historical development of
the labor forde and a projection of the labor force based on this anal-
ysis and on reasonable assumptions as to how the forces influencing the
development of this factor will operate in the future; (3) similar his-
torical analysis and projection of the productivity of labor; and
(4) combining of the projections of the size of the labor force and
labor productivity to obtain the projection of gross national product
of the USSR in 1975.
A. Past Production Trends.
The past growth of production. in the USSR can be illustrated
most vividly by means of data on the actual physical output of impor-
tant commodities. Figures 1 and 2* 'present a variety of data on the
production of Specific agricultural and industrial commodities and
services in the USSR** over the period from 1900 to 1953. Table 1***
and Figure 3.*xxx present summary data (in 1951 rubles) on value
addedxxxxx in the agricultural and nonagricultural sectors and on
gross national product.
The data clearly indicate the sharply divergent movements of
nonagricultural and agricultural production in the USSR. Nonagri-
cultural production has increased persistently and, since the late
1920's, dramatically. Agricultural production, on the other hand,
has floundered and the trend has been much less clearly defined.
* Following p..12. Tables on which these figures are based are
in Appendix A.
** Part of the period covered by this study antedates the
Russian Revolution. The term USSR) when applied to data prior to
1917, refers to the Tsarist Empire.
?*** Table 1 follows on p. 12.
xxxx Following p. ls.
***** Throughout this report the estimates of and references to
output or product for the entire economy or any sector of it should
be taken to mean value added and not gross production.
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Table 1
Production (Value Added) in the USSR, ,by Sector a/
Selected'Yearsj 1902-53
Billion 1951 Rubles
Year
Gross National
Product
Agricultural
.Sector
Nonagricultural
Sector
1902
281
210
71
1913
363
245
118
1928
414
296
118
1938 12/
668
307
361
1947
634
257
377
1948
701
255
446
1949
757
258
499
1950
851
287
56I1
1951
904
275
?629
1952
1,003
309
694
1953
1,031
289
742
a. Data in this table are based on Appendix A.
b. Data for 1938 have been adjusted for boundary changes resulting ?
from World War II.
The average percentage annual changes in nonagricultural pro-
duction, agricultural production, and gross national product between
selected years are shown in Table 2.* ,
The past production data are difficult to interpret because
of the extremely varied conditions in the USSR during the period
under study. There were 2 major wars and 1 minor war, a revolution,
changes in boundaries, and changes in economic organizations and
economic objectives. In addition, agricultural production was affec-
ted by violent changes in weather and other ?crop conditions. Since
the end of World War II the Soviet economy has grown at the very high
rate of 8.4 percent per year. This rate reflects to a great extent
the process of reconstruction, as evidenced by a decrease in the rate
* Table 2 follows on p. 13.
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USSR
INDEXES OF PRODUCTION OF
SELECTED AGRICULTURAL COMMODITIES
SELECTED YEARS, 1900-1953
46400
Figure 1
TOTAL GRA!
100
BARLEY
SI
?07.............3/4
I
1.0
too
0
r,00
WHEAT
CORN
,.. ... .. ..
OATS
S11
-...... 111
%. -.
100
IC?
too
.........
lr
OTHER GRAIN
RYE
RICE
too
100
POTATOES
A
NI -
WOOL
(Grease basis)
100
....
PW
100
COTTON
(Ginned)
?
1900
13640 12.54
1910
1920
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1950 1953
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INDEXES OF PRODUCTION OF
SELECTED INDUSTRIAL COMMODITIES
SELECTED YEARS, 1900-1953
(i908./00)
Figure 2
REFINED SUGAR
COTTON YARN
100
LEATHER AND
RUBBER SHOES
PRIMARY COPPER
UNGLAZED BRICKS
CRUDE PETROLEUM
TOTAL COAL PtODUCTION
RAW STEEL
RAILWAY FREIGHT
OVER 10 YEARS taos
'Ms
ELECTRIC POWER
1900
13641 12.54
1910
1920
1930
SECRET
1940
00
00
00
00
100
100
100,
100
100
1950 1953
Plotted on semi-logarithmic grid.
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SECRET USSR
GROSS NATIONAL PRODUCT, BY SECTOR
SELECTED YEARS, 1900-1953
1000
800
1? 600
In
0
V.
.? 400
rr.
Co
200
GNP
Nonagricultural
Figure 3
d? Agricultural -
A
1900 1910 1920 1930
13642 12.54
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of growth in the nonagricultural sector from 18.3 percent for 1947-48
to 6.9 percent for 1952-53. The average annual rate of growth in gross
national product in the early postwar period (1947-50) of 10.3 percent
fell to 6.6 percent for the period 1950-53.
Table 2
Average Annual Rates of Growth
In Soviet Gross National Product, by Sector 2/
Selected. Years, 1902-53
Percent
Period
Gross National
Product
Agricultural
Sector
Nonagricultural
Sector
1902-13
2.4
1.4
4.7
1928-38
4.9
o.4
11.8
1947-5o
10.3
3.8
14.4
1950-53
6.6
0.2
9.6
1947-53
8.4
2.0
12.0
1902-53
2.6
0.6
4.7
a. Data in this table are based on data in Table 1.
B. Labor Force: Trends and Projection.
The labor productivity method requires a projection of the
Soviet labor force to 1975, in total and broken down between the agri-
cultural and nonagricultural sectors. .Studies of the past and esti-
mated future size of the following are considered in the projection
of the Soviet labor force (see Appendix B): (1) population by age-sex
group; (2) participation of each age-sex group in the labor force; '
(3) labor requirements in agriculture, leaving the nonagricultural
labor force to be computed as a residual; and .(4) average hours worked
per year by Soviet labor.
Table 3* shows the estimated and projected population of the
USSR in selected past years and in 1975 and also its average rate of
* Table 3 follows on p. 14.
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growth between these. years.--/The-grbwth in.population-has.been-erratic,
particularly during,the Soviet era pf,war) revolution,-boundary changes,
and economic dislocation. On the assumption of more-stable.cOnditions,
the 1975 population is estimated by the/USJiureaucoE the Census to be
301.7 million. This estimate involves a projected growth rate for the
period 1950-75 of approximately 1.65 percent per year and an over-all
increase of about 50 percent.
Table 3.
Estimated
Estimated and Projected Population of the USSR a/
Selected Years', 1860-1975
Year
Population
(Millions)-
Average Annual Rate
-of Grbwth V
(Percent)
1860
74,1
1902
136.0
1.5
1913
2/
161.7
1.2
1928
148.0
-0.6
1938
1/
191.0
2/
2.6
2/
1950
-
200.0
:,
-0.4
1953
210.8
1.8
1975
301.7
1.6
a. Data in this table are based' on Table 19,
p..72,heloW. .
b. The change represented is that from the .
previous year shown.
c. Territory in 1913 is-approximately the same
as in the years following World War II.
d. Data for 1938 have been adjusted for boundary
changes- resulting from World War II.?
e. Includes 21 million people acquired in new
territories. The average 'growth rate,-1928-38,
in terms of constant territory would be 1.4 per-
cent.
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Table 4* shows the estimated and projected labor force of the
USSR in numbers of persons and as a percent of the population. It
indicates that the labor force has increased absolutely but has been
a declining percentage of the population .since 1928. This relative
decline has been due in part to the transfer of population from the
country to the cities, with a resulting fall in the participation of
women.**
The ratio of the Soviet labor force to population is expected
to continue to decline from 1950 to 1975. The principal reasons to
expect this decline are the following:
1. Almost all persons less than 15 years of age will be
enrolled in school, and the proportion of these persons in the labor
force will decline to 2 percent by 1975.*** ?
2. The participation of males in the 15-59 age group will
gradually fall to 89 percent as school enrollments of those 15 years
of age and over increase.
* Table 4 follows on p. 16.
** The 1950 ratio of labor force to population is still slightly
higher in the USSR than in most industrialized Western countries, as
.the following tabulation shows:
Country Year
Population Economically Active
(Percent of Total)
Czechoslovakia
1947
48.1
Denmark
1952
49.9
Finland
1950
49.2
France
1946
51.5
Italy
1951
43.1
Japan
1950
43.7
Netherlands
1947
40.2
Norway
1950
42.6
Sweden
1950
44.3
UK
1951
46.2
US
1950
3.9
USSR
1950
50.0
West Germany
1950
46.3
For a discussion of educational enrollments, see Appendix B.
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Table 4
Estimated and Projected Labor Force of the USSR IV
Selected:Year'a, 190275
As a Proportion
Number of Population
Year (Millions) (Percent)
1902
80.0
59
1913
95.0
59
1928
81.6
55
1938 12/
90.3
47
1950
loo.4
50
1953
l04.6
50
1955
109.4
50
1975
132.6
44
a. Data in this table are based on Table 6, P. 20,
below.
b. Data for 1938 have been adjusted for boundary
changes resulting from World War II.
3. The participation of females in the 15-59 age group will
. gradually fall until it reaches 50 percent in .1975. This decline is
expected for several reasons:
a. There will be some easing of demand for labor as com-
pared with the recent period of postwar reconstruction.
b. Increasing urbanization may tend to reduce the number
of women in the labor force, or at least the number of women counted
in the labor force.
c. The surplus of females over males in the 15-59 age
group was 13.3 million in 1953. This surplus will decline to 3.6 mil-
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lion by 1975, and the decline. should reduce the number of unmarried
women as well as the participation of women in the labor force.*
4. The average age of retirement of older workers will drift
downward, and the proportion of persohs 60 years and over in the labor
force will decline.
All these changes would result in a lower participation
of the population in the labor force (as shown in Table 5**) and in
a labor force in 1975 of about 44 percent of the total population
(compared with about 40 percent for the US in 1950).***
The projected increase in the total labor force between
1950 and 1975 from 100.4 millions to 132.6 millions (or by about one-
third) is equal to an increase of about 1.1 percent per year (cm-
pounded). Since the increase will be made up primarily of males in
the prime ages between 15 and 59, its effect on productivity may be
relatively greater than the nnmeriCarincrease-would'auggest:.
In dividing the projected labor force between agriculture
and nonagriculture,, the agricultural labor force was projected sep-
arately, and the nonagricultural labor force was computed as a
residual.
* A different view of the participation of women is held by
W. W. Eason, who says: "...The percentage of females 16-59 in the
labor force, 67.0 in 1949, is assumed to be 70.0 in the projection.
This is by way of acknowledging that the postwar decrease in the
ratio of males to females in the population generally has probably
created an extra incentive for females to be in the labor force; and
the tendency is assumed to be maintained through 1970."1/ I
Mr. Eason does not take into account the strong likelihood that the
present imbalance between the sexes will be largely corrected over the
next 20 years.
** Table 5 follows on p. 18.
*** Another factor determining extent of participation in the labor
force is the degree of urgency of demand for production. Particu-
larly in time of war or national emergency, the labor force will be
larger than in peacetime. In this study, urgency of demand is
assumed to be constant throughout the period 1953-75. This assump-
tion is implicit in the general assumption of no change in the in-
tensity of the cold war.
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Table 5
Participation of the Population in the
Labor Force of the USSR
1950 and 1975
Percent of the Corresponding Age Group.
Age Group
1950 Lq
1975
Male
0-14
6
2
15-59
94
89
6o and over
60
32
Total
59
56
Female
0-14
7
2
15-59
61
50
60 and over
33
,32
Total
32
Male and
female
014
7
2
15-59
75
69
6o and over
44
32
Total
2
44
a. Current estimate.
b. Based on Table .20 and assumptions stated
in the text.
The agricultural labor force declined as a percent of the
total labor force from over 80 percent in 1928 to about 50 percent in
'1950. It declined in absolute terms as well during the 1930's, then ?
recovered slightly during the postwar period.
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The future division of the labor force between the agri-
cultural and nonagricultural sectors will be determined primarily by
the agricultural policy of the USSR. To feed and clothe a growing
population, even at present levels of per capita consumption, will re-
quire continuously expanding agricultural production. If efforts
should be made to raise per capita consumption, even greater expansion
of agricultural output would be needed. The question then is: how
many farm workers will be needed to meet the agricultural objectives?
It is here assumed that the agricultural labor force will
rise slightly to 1955 and then remain constant at the 1955 level of
about 55 millions. This assumption is based on the following con-
siderations: (1) the regime will probably continue to encourage the
movement of people from the country to the cities in order to expand
industrial production, and thus the growth of rural population will be
drained off to the cities; (2) the marginal product of agricultural
labor is atill very low, and it is unlikely that substantial increases
in agricultural production would result from increasing the number of
workers; (3) while the recent trend of the agricultural labor force
has been gradually downward, the demand for farm products arising from
the increasing number of mouths to feed will probably prevent further
substantial reductions in the rural labor supply.
This projection of the agricultural labor force seems to
be consistent with any reasonable projection of agricultural output
(For a further discussion of the agricultural problem, see III, B;
below;)
Given the total labor force and the agricultural labor
force, the nonagricultural labor force is computed as a residual.
All three are shown in Table 6* and Figure 4.**
A further step in estimating the effective labor supply
is to adjust the number of workers to account for changes in average
annual hours. Such an adjustment is made only for the nonagricultural
labor force, the concept of average hours being indefinite in agri-
culture, where much work is seasonal and where leisure and working
hours cannot be clearly separated. In the nonagricultural sector,
average working hours declined steadily from 1897 to 1938, and then
rose under the impact of war and reconstruction needs. They are
* Table 6 follows on p. 20.
** Following p. 20. ?
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- - - - -
projected as remaining constant:after 1953. (See Appendix B for de-
tails.) The adjusted nonagricultural labor force is shown in Table 6.
Table 6
Total, Agricultural, and Nonagricultural Labor Force 2/
, of the USSR /
Selecte&.Years, 1g02.75
Million Persons or Man-years
Year
.Total
Labor Force
Agricultural,
Labor Force 12/
Nonagricultural
labor Force Si
Adjusted
Nonagricultural
Labor Force 11
1902
.80.o
69.o 2/
-11.02/.12.0
?
1913
95.0
80.0 2/
15.0 2/
15.6
1928
81.6
67.8
13.8
13.2
1938 f/
90.3
53.3
37.0.
30.3
1950
100.4
51.8
48.6
1953
104.6
52:7 ?
51.9
50.9
1955
109.4
55.o
54z4.
53.3
1975
132.6
.
:55.0
77.6
76.o
a. Average for stated year, 1928-55. Beginning of year 1902, 1913,
and 1975.
b. Includes collective and individual farmers and state agricultural
workers.
c. Includes workers and employees (excluding state agricultural work-
ers)Imilitary personnel, forced labor, and artisans..
d. Adjusted for changes in the average work year according to the
following indexes: 1902 = 108, 1913 = 104, 1928 = 96, 1938 = 82,
1950 = 100, 1953 . 98, 1955 = 98, 1975 98.
e. Based on the estimated distribution of the population between ,
rural and urban.
f. Data for 1938 have been adjusted for boundary changes resulting
from World War II. Adjustment of 1938 figure for contemporary bound-
aries to account for labor acquired from new territories: 7 million
agricultural and 3.5 million nonagricultural workers added.
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Millions of Persons
USSR
POPULATION AND LABOR FORCE
SELECTED YEARS, 1900-1953 and 1975
1900
13643 12.54
1910 1920 1930 1940 1950
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The projection of the total labor force for 1975 shows an
increase of one-third over 1950. The unadjusted nonagricultural labor
force shows an increase of over 6o percent, while the adjusted non-
agricultural labor force involves a somewhat smaller increase because
of the small drop in the number of hours worked per worker from 1950
to 1953.
C. Labor Productivity: Trends and Projection.
The materials required for projecting Soviet labor productivity
are now assembled. Output per man-year is computed as the ratio of
output (Table 1) to labor force (Table 6). Table 7* presents data on
output per man-year for the agricultural and nonagricultural sectors
in selected past years and in 1975. The average annual percentage in-
creases in output per man-year, computed from Table 7, are as follows:
Period
Agricultural
Sector
Nonagricultural
Sector
1902-13
0.3
2.3
1928-38
2.8
2.9
1950-53
o
8.0
1902-53
1.2
1.8
1928-53
0.9
2.0
1938-53
-0.4
1.4
An examination of average annual percentage changes in output
per man-year shows quite clearly the broad developments within the
Soviet economy during the period under question. Before World War I)
output per man-year was growing slowly in agriculture and somewhat
more rapidly in the nonagricultural sector. During the period 1928-38)
when millions of surplus workers were being transferred from the farms
to the cities, man-year productivity increased at about the same rate
in both sectors. After World Wax II, however) the rise in nonagri-
cultural output per man-year was spectacular, whereas the increase in
the agricultural sector was small.
In interpreting the data on output per man-year in agriculture,
it must be recognized that a major factor explaining past increases
was the transfer of surplus, unproductive labor from farms to the
cities. This reduction in farm labor supply did not substantially
* Table 7 follows on p. 23.
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affect total agricultural output, and output per man-year, therefore,
increased. There still may be some surplus labor power on the farms.
Under the assumptions of this report, however, the agricultural labor
force will be maintained at the 1955 level, and the remaining surplus
labor on the farms will be absorbed in the effort to meet the growing
needs of the USSR for food and fibre. Future increases in output per
man-year, on this basis, will be achieved only by increasing total
output, not by reducing the number of workers.
In view of these considerations, it is apparent that the
average annual increase in agricultural output per man-year of 2.8 per-
cent during the period 1928-38 was higher than can be maintained in the
future. Since World War II, agricultural production has been adversely
affected by generally unfavorable weather conditions. A rate of in-
crease of about 2 percent* per year 2/ is reasonable on the basis of
past experience. Such a rate-would raise the agricultural output per
man-year from 5,500 rubles in 1953 to 8,700 rubles in 1975.
In the nonagricultural sector the increase in output per man-
year has been extremely erratic, partly because of the effects of
World Wars I and II. During the 1928-38 period the growth of the
economy was stimulated by forces which are not expected to exist, or
at least to be so strong, in the future. As the USSR industrialized
rapidly, a great many activities which had previously been performed
within the household entered the "market" (or rather "socialized")
sector of the economy and were consequently registered in the national
product. In addition, the very backwardness of the USSR at the begin-
ning of the period tended to strengthen the effect of the introduction
of foreign technology. The postwar rise in nonagricultural output has
probably been a temporary spurt due to a conjunction of circumstances:
(1) recovery from a low initial level of man-year productivity after
World War II; (2) a sudden harvesting of the results of the extensive
preparatory activities during the 1930s in the form of education,
capital investment, technological advance, improved organization, and
so on; and (3) widespread industrial experience acquired during World
War II. It seems unrealistic to expect indefinite continuation of
rates of increase such as those of recent years. In fact, the rate
of increase has been declining since 1947. From 1947 to 1950, it was
about 12 percent; from 1950 to 1952, 8 percent; and from 1952 to 1953
about 5 percent, although output in 1953 was probably depressed by
* This rate is substantially higher than that attained over the
period 1902-53.
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the necessity for adjusting.to a new economic policy. In the absence
of such a policy shift, output per man-year in the nonagricultural
sector would probably have increased at the 1952 rate of 6 percent.
It is estimated, therefore, that an annual rate of. increase
of perhaps 3 percent.in the nonagricultural sector might be maintained
over a long period. (The US figure is about 2.5 percent.) With these
benchmarks, it seems reasonable to assume a progressive decline in the
annual rate of growth of nonagricultural output per man-year from 5 or
6 percent in 1953-54 to 3 percent by 1965 and thereafter. On this
basis, the output per man-year in the nonagricultural sector would rise
from 14,600 rubles to approximately 32,600 rubles over the period from
1953 to 1975 (an average annual rate of growth of approximately 3.7 per-
cent).
Table 7
Output per Man-Year in the USSR, by Sector
Selected7.years:; 1902-75
Thou-sand 1951 Rubles
Year
Agricultural
Sector
Nonagricultgral
Sector 1Y
1902
3.0
5.9
1913
3.1
7.6
1928
4.4
8.9
1938
5.8
11.9
1950
5.5
11.6
1953
5.5
14.6
1975
8.7 sj
32.6 it/
a. Calculations for 1902-53 based on man-
year data in Table 6 and -output data in
Table 1.
b. Based on adjusted data in Table 6.
c: Projected on an assumed 2 percent annual
rate of growth.
d. Projected at decreasing rate, from 5.5
percent in 1954 to 3 percent in 1965, and at
a 3 percent fixed rate from 1965 to 1975.
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_ _ _ _ _ _
?.i ...
0: Prdjection of Gross.NationalTroducts: Labor Force-Productivity
Method.
Given projections of the labor force in man-years and of output
per man-year, for the agricultural andynonagricultural.sectors (shown
in Figure 5*), it is possible-to compute:total output within each sector,
and by adding these, to derive,total gross national product.: .The
re-
suiting estimates for 1975 are, for the agricultural.sector:,478 billion
1951 rubles; for.the nonagricultural sector: 2,478 billion 1951 rubles,
and for the total (gross national product): 2,956 billion ]95l rubles..
These estimates imply an average annual rate of growth between 1953 and
1975 of about 4.8 percent in grose national product, 5.7 percent in non-
agricultural production -and 2.0 percent in egricultural production. .
* Following p. 24.
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SECRET USSR
PRODUCT, MAN-YEARS OF LABOR, AND
PRODUCT PER MAN-YEAR
SELECTED YEARS, 1900-1953 and 1975
WOO
1600
-a
ac
1-5 1209
800
.0
400
PRODUCT
Non-
A:--Agricultural-
4.
Figure 5
1902
150-
12
5-
00
2 1
?0 50
36
1913
MAN-YEARS OF LABOR
1928
, 1938
1947
1953
1975
131
TOTAL
.kedSraL -
Non.
agricultural
--Agricultural ?
IA
902 1913 1928
1938 1947 1953
1975
PRODUCT PER MAN-YEAR
..????
- -
------
"Nonagricultural
TOTAL -----
N'Agricultural'
1902 1913 1928 1938 1947 1953
13644 12.54
SECRET
1975
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III. Factor Inputs Method.
A. General Methodology.
As was explained in Section I, the factor inputs method of
estimating the Soviet gross national product for 1975 consists of
:projecting hot only the size of the labor force but also several of
the elements which influence labor productivity. The most important
of these are the quality of labor and the stock of capital. The
effects of changing technology, management, foreign trade, and scale
of production also are considered. The nature of the relationship
between the factors of production (inputs) and outputs varies sub-
stantially between,tne type of economic activity ahd another': .
The most significant difference, however, is between agriculture and
the rest of the economy.
Agriculture faces the problem of the scarcity of arable land.
In fact, many students of the subject regard this factor as being
shbstantially fixed. This means that increases in agricultural pro-
duction are likely to require increasing amounts of inputs (labor,.
capital, or both) per unit of output. The tendency toward diminish-
ing returns in agriculture is believed to be serious enough to warrant
separate consideration.
In the nonagricultural sector, on the other hand, land is of
relatively little importance, while capital and labor can be sub-
stituted for each other with comparative ease in the long run. In
addition, improvemente in technology and management appear to be
easier to effect in.this sector than in agriculture. Nonagricultural
output for 1975 is estimated by projecting the supply of labor and
capital and the net effect of all the other forces. In making this
estimate, it is necessary to estimate the future allocation of gross
national product by end use -- consumption, defense, investment, and
administration. Two assumptions are made as to;this allocation.
Assumption A represents a low consumption-high investment pOlicy,
and assumption B represents a high consumptionlow investment
policy. The final projection, therefore, is in the form of a range
whose limits are determined by assumptions A and B.
In the agricultural sector, levels of production are assumed
which are broadly consistent with the assumptions as to the future
level of total consumption. This assumption is necessary because
most of the agricultural production takes the form of consumer goods
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in the final product. The labor and capital requirements of these
two assumed levels of production are then determined.
,
The rest of this section is concerned with the projections
of gross national product in the USSR for 1975 by the factor inputs
method. First, the agricultural estimates are made; then the non-
agricultural projections are developed; and, finally, the projections
of the two sectors are combined.
B. Agricultural Production and Factor Requirements:
Trends and Projections.
1, General Statement of the Agricultural Problems
and Historical SummRry.
The USSR has had great difficulty expanding agricultural
production. This problem is rooted in an eesential fact -- the
relative scarcity of arable land and the low productivity of much
of the arable land as a result of climatic conditions.* This situa-
tion is aggravated by institutional inefficiencies and by the lack
of incentives to agricultural workers, which stem from collectivize,-
tion and from past emphasis on industrial growth.
Agricultural production increased by only 4 percent in
the 1930's** (primarily in industrial crops). The rapid mechanization
of agriculture during this period, although it succeeded in increasing
labor productivity and freeing agricultural labor for other uses, had
little effect on yields per acre. In addition, Soviet agriculture
was hit very hard by peasant resistance to the collectivization pro-
gram during the early and mid-1930's and by the destruction which
took place in World War II. In the course of these events, livestock
herds were decimated. As a result, the level of meat consumption per
capita in 1938 was only three-quarters of the 1927-28 level, and it
* "About 30 % of the Soviet territory is completely barred from
agricultural use by climatic conditions. In the vast forest zone,
the expansion of agriculture is limited by both climate and soil
factors. On the other hand, in the forest-steppe and steppe zones,
the crop area is expanded to its limits, and there is no more free
land for occupation in these zones. Land used for agriculture oc-
cupies less than one sixth of the entire territory of the USSR, and,
if the poor pastures are excluded, less than one eighth of the ter-
ritory.")1/
** See Tablec17, p. 61, below.
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has not risen since then. There was also a rapid drop in the number
of draft animals, which was a partial offset to the increase in the
number of tractors and combines. The improvement in grains and in-
dustrial crops during the late 1930's was partly a result of excep-
tionally favorable weather conditions.
Recovery from World War II has been spotty but rapid.
Eighteen percent of gross investment was in agriculture during the
1948-53 period. 5/ The fixed capital stock in agriculture probably
nearly reached the prewar level in 1950 and had substantially exceeded
it by 1953. The bulk of this new capital, however, was in the form
of machinery and vehicles; there is still a serious shortage of build-
ings to house vehicles and livestock. In spite of all these efforts,
crop yields in 1950-53 were probably not above the 1913 level, and
food consumption per capita was below the 1927-28 level.
2. Present Agricultural Problem.
Given the recent increased emphasis on consumption in
the USSR and the fact that rapid economic growth in the future may
entail substantial increases in total per capita consumption, it is
reasonable to expect even greater Soviet efforts to increase agri-
cultural production than in the past. Several serious problems
present themselves, however.
Increased production requirea'Ancreasesiin4ields_per
acre or in acreage or in both. It is difficult to increase either,
for the areas receiving adequate rainfall are also, in general, areas
of poor soil and short growing seasons, while areas having the best
soil often have uncertain or deficient rainfall. Not many oppor-
tunities remain for irrigation, except in areas far removed from the
water supply, and' then:at'veryAaigh cost.
In the northern regions there is adequate rainfall, but
there are also short growing seasons. It is believed to be difficult
to increase productivity per acre on dry land with known techniques.
Fertilizer, for example, has not been in generar.effectiVe where.
water is lacking.
In addition to the technical and resource problem, there
is an institutional and human problem. Many authorities believe that
the present institutional organization of agriculture, the lack of
incentives to farmers, and the scarcity of skilled workers and trained
managers exercise a strong depressive effect on production.
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There are many possibilities.for increasing labor produc-
tivity in agriculture through greater investment and improved tech-
niques. In spite of the rapid 'mechanization, of. Soviet.agriculture,
there are still three times as many agricultural workers per acre in
the USSR as in the US. The problem is to increase yield per acre.
Many improvements are certainly possible. Techniques of livestock
management, feeding, and breeding can be substantially improved.
The increased use of fertilizer can greatly raise crop yields in
areas of adequate rainfall. Improved practices of cultivation and
harvesting are possible, and new types of seeds requiring less
moisture and warmth may be developed. Increased building space
will increase the productivity of livestock, grain acreage, and
machines. Moreover, it is possible that changes in agricultural
institutions, increased incentives, for farmers through price and
tax concessions, and a flow of more highly trained and educated
personnel to the rural areas will have important effects. The
average level of education of farm workers may rise as much as
50 percent between 1950 and 1957 (see.C, 2, baloW):
_
3. Projection of Agricultural Output and of Factor
Requirements in Agriculture.
In order to estimate the volume of agricultural output
in 1975 and to determine the factors required for this output,
reasonable assumptions must be made as to Soviet policy decisions
regarding the future%allocation.of resources to the various consuming
sectors of the economy. .Two sets of assumptions concerning this
allocation are made. Assumption A corresponds to a low consumption
policy; assumption B, to a high consumption policy. The counterparts
of these policy assumptions in the nonagricultural sector are dis-
cussed in C, 5, below.
Assumption A projects an increase in per capita con-
sumption of agricultural commodities of 1.6 percent per year and.
of 2.2 percent in total agricultural output between 1953 and 1975 -7
a total increase of about 6o percent. According to assumption 13,
there will be a substantial increase in agricultural production
per capita from 1953 to 1957 such that (a) caloric intake per
capita will increase by about 10 percent; (b) per capita consump-
tion (in calories)'of meats, dairy products, vegetables, fruits,
and so on will increase by 50 percent; and (c) per capita consump-
tion of grains and potatoes will decrease by about 10 percent,
leaving total caloric intake at a level 10 percent higher. Under
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assumption B total agricultural production would increase by about
82 percent over the period 1953-75, or at 2.8 percent annually
(1.2 percent per capita). It Is necessary to estimate input re-
quirements for each of these two output projections.
The agricultural labor force is assumed to rise to
55 million in 1955 and to remain at that level. This is the same
projection that is made in connection with the labor force pro-
ductivity method. The principal reasons for it are given in '
Section II, above. It will be noted that many opportunities remain
to replace men by machines. On the other hand, increased output
in certain sectors of agriculture.may,revire more manppwer.. Thia-
projection of the agricultural labor force does hot explicitly take
into account the increased quality of labor as a result of education
or training. Improvements in the quality of agricultural labor may
well be required) however, to make efficient use of increased capi-
tal and new techniques and are, therefore, implicit in the projection
Of agricultural output.
The fixed capital stock in agriculture is assumed to
-rise-from 156 billion rubles in 1950 to 462 billion rubles in 1975
under assumption A and to 777 billion rubles under assumption B.
Thus the capital stock would rise 3-1/2 times as much as outpUt
under assumption A and 5 times as much under assumption B. The
effect of land scarcity is reflected in rapidly increasing capital
requirements. Capital. requirements are deriVed from historical
relationships between output and inputs (labor, land, capital) and
technology) in agriculture. The method of computation is shown in
Appendix C.
The above projections are based on the assumption that
most of the problems discussed earlier can be overcome at a reasonable
cost. It may be too optimistic) although many difficulties which
limit production in the short run may not do so over a period of
over 20 Years. If the difficulties prove insurmountable, the USSR
will have the choice either of moving towardLaclOwen:oonsumptiem4
policy or of importing foodstuffs from abroad.
C. Nonagricultural Production: Trends and Projections.
' 1. General Methodology.
Nonagricultural output is determined by the quantities
of the inputs available to the USSR and by the efficiency with which
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they are combined. The growth elements described in Section I, above,
can be classified into three categories: labor, ,capital? and-. .
efficiency. Labor and capital, however, are the Only basic inputs.
which can conveniently be measured, the nature of the elements
determining efficiency (technology, management, and so on) being
such that only general qualitative judgments can be made as to
their future impact on output. Ideally, labor and capital should
be measured in units of constant quality. Efficiency would then
represent only those growth elements which can properly be attri-
buted to neither labor nor capital separately but rather to combi-
nations of these two factors. Accordingly, an attempt is made to
take into account the change in the quality of labor as measured
by educational attainment. To some extent, also, improvements in -
the quality of capital are implicit in the valuation of capital in
constant rubles. Because the measures of labor and capital are'.
certainly not perfect, however, efficiency here includes not only
the effect of the "unmeasurable" factors (management and so on) but
also the effect of errors in the measures of capital and labor on
output.
For a given past year (1953), the entire nonagricultural
output is imputed to labor and capital by examining the apparent
shares of labor and capital in total factor payments. This year is
used as a base for quantity indexes of labor and capital. A combined
index of labor and capital is then computed by weighting the labor
and capital indexes by the share of these factors in nonagricultural
output during 1953. Any divergence between the combined index of
these two factors and the index of output in any other year is assumed
to result from changes in efficiency.
It is possible to project independently the supply of
labor and also certain determinants of the capital stock and of
efficiency, relying on judgment to eliminate obvious inconsistencies.
The major determinant of the capital stock, however, is investment,
and investment clearly depends on gross national product. The capital
stock and gross national product, therefore, are mutually determined
after all other determinants of gross national product have been
projected. The rationale of this method is shown formally in Appen-
dix C. In practice, consistent projections of gross national product,
capital stock, labor, and efficiency are obtained by a trial-and-
error process. They are shown in the last part of this section. In
2, 3, and 4, below, the basic growth elements are projected: ?the
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supply of labor, the determinants of capital (other than gross
national product), and the determinants of efficiency,* respectively.
2. Supply of Labor.
The first step of the factor inputs method of projecting
nonagricultural output is to project the supply of labor.
The Soviet labor force, expressed in man-years, is esti-
mated in Section II, above, and shown in Table 6.** The quality of
labor, however, does not remain the same. It usually increases
through time with the acquisition by labor of additional skill
through education and specialized training and with improvements in
its health and energy. In this section, an attempt is made to
measure the increase in the quality of the Soviet labor force in
past years and to'projeet this increase in quality to 1975. It
will then be possible to project the labor force in terms of units
of approximately equal average quality.
The following discussion relates to (a) the concept of
labor "skill" and the manner in which skill may be attained;
(b) past and projected developments in Soviet efforts to increase
labor skill through education and other types of training; (c) the
measurement of changes in the skill of the total and nonagricultural
labor force; (d) Conclusions as to historical and projected future
changes in the Soviet labor supply; and (&) the role of health and
energy of the labor force in economic development.
A more detailed discussion of the above problems is given
in Appendix B.
* This relation between inputs and output may be expressed as a
production function of the form:
rjr) KP
(1-X)1
E = 0
Lo Ko
(Where Lo and Ko, Lp and Kp are indexes of capital and labor in the
base year and .the projected year and X is the share of labor in total
product during the base year.)
** P. 20, above.
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? _ _ _
a. Concept of Skill.
It is particularly important to consider degree of
skill, in measuring the USSR's labor supply, because rapid develop-
ment of labor skills has bulked large in explaining past economic
growth and is likely to be of continuing importance in the future.
The term skill, as used here, refers to the produc-
tive capability of workers. The skill of a worker is increased if
he learns how to increase output in a given job or if he learns how
to produce goods or services of higher value. The degree of skill
within a whole society is the weighted average of the skills of all
its workers.
Skill, in this sense, may be acquired through formal
schooling. Much formal education is specifically designed to impart
occupational skills; even general education (reading, writing, arith-
metic, science, and the like) is a prerequisite or aid to the ac-
quisition of many skills. Skills can also be acquired or augmented
through on-the-job training and experience and through improvements
in the health and energy of workers.
b. Education and Training in the USSR.
The USSR has made a determined effort over the past
30 years to increase labor skills. To this end, a rapid extension
of formal education -- much of it oriented toward occupational train-
ing -- and a very large program of on-the-job training have been
instituted.
The educational reforms of the USSR, past and planned,
are impressive. In a generation, illiteracy has been almost com- ?
pletely overcome. Over the period from 1922-23 to 1950-51, the number
of children in elementary and secondary schools increased from about
8.7 million to 32.5 million, or from 17 percent to 47 percent of the
population less than 15 years old, and the number in higher education
from 0.2 million to more than 0.9 million. Education through grade 4
(ages 7-10) became compulsory in 1934, and virtually universal
coverage was achieved a few years later. Education through grade VII
(age 14) was made compulsory in 1950, and in that year about 90 per-
cent of the children between the ages of 11 and 14 were enrolled in
the higher grades (or as retarded pupils in the primary grades). At
present, efforts are being made to establish compulsory education
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through grade 10 (to age 17),. and it is probable that this goal will
be achieved between 1956 and 1960. While this great increase in
formal education was taking place, a very large effort was also being
expended upon adult education and upon on-the-job training of workers.
Educational developments have unquestionably been a major factor
underlying Soviet economic growth. Their effects are also cumulative
as the educational process is carried on from one generation to the
next. In the long run, education transforms the culture, the way of
life, and the mode of thought of the people. It is the prime req-
uisite for transforming an agrarian society into a modern industrial
society. By 1975, nearly 50 percent of the adults, ages 15-59, in the
USSR are expected to have completed high school, a proportion only
slightly less than that in the -US in 1950.*
C. Measurement of Labor Quality.
The data on educational enrollments and on educational
attainment include all available information on full-time technical
courses. They exclude part-time courses, on-the-job training, and all
other methods of acquiring skills.
The effect of this education and training, and of
the resulting increases in occupational skills on the quality of
labor, cannot be measured precisely. It is the best available indi-
cator of changes in labor skills, however, and the only one which
can be projected with any degree of reliability.** Measurement at
least can be approximated by converting available man-years of labor
to quality units so that man-years with greater skill can be counted
more heavily than man-years with less skill. For the present pur-
poses, therefore, the distribution of the working population by .
educational attainment is taken as anapproximation of the distribution
of that population by degree of skill. Each level of educational
* Past and probable future changes in Soviet educational levels
are shown in Table 220 p. 78, below.
** Another indication of changes in the quality of the Soviet labor
force is contained in data on the composition of the labor force by
occupational group. (See Table 26, p. 89, below.) These data are
neither ideally suited to the present purpose nor very reliable, yet
they show the effect of the movement of the labor force from the
farms to more productive jobs in the city and the large increases in
the engineering-professional-technical group and in skilled labor.
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attainment is translated into a corresponding degree of skill. (See
Table 25.*)
A reasonably adequate indicator of the relative degree
of skill of each class of Soviet labor is the wage paid to that class.
The .wage data used for this purpose approximate the basic wage expec-
tation in 1950 of persons having attained these various degrees of
education.
Given the distribution of the labor force by educa-
tional level and the corresponding structure of wages in the USSR,
it is possible to estimate the change in the quality of labor from
1950 to 1975.
An attempt also is made to estimate the growth of
education among nonagricultural workers.** Table 8,*** which pre-
sents indexes of the quality of Soviet labor on a 1950 base, pro-
jects for 1975 an increase of 50 percent in the quality of the
average unit of Soviet nonagricultural labor.
d. Supply of Soviet Labor.
The product of the index of labor quality and of
the available number of man-years is the measure of the Soviet labor
force in quality units -- that is, in man-years of the average 'quality
of a Soviet worker in 1950. Table 9xxx shows the past and projected
Soviet labor force expressed in quality units, in total and for the
nonagricultural and agricultural sectors..
Over the period from 1902 to 1950 the increase in
total man-years was about 25 percent, whereas the increase in labor
supply measured in quality units was over 100 percent. Over the
period 1950-275 the increase in man-years is expected to be one-
third; and in quality units of labor, to be double Thus it is evi-
dent that education and training produce highly significant additions
to the effective labor supply. This measurement of the increase in
* P. 87, below.
** It was necessary to use very crude rules of thumb for this purr
pose. The method followed is explained in Appendix B. The estimated
distribution of the nonagricultural labor force by educational level
is shown in Table 23, below.
*** Tables 8 and 9 follow on p. 35.
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Table 8
Indexes of Growth in the Quality 2/ of the Labor Force of the USSR
Selected Years, 1902-75
1950 = 10D
Total 2/
Agricultural 2/
Nonagricultural 2/
1902
6o
61
58
1931
64
64
64
1928
72
72
73
1938
83
86
79
1950
loo
loo
loo
1953
1o6
102
110
1975
150
150
150
a. As measured by the growth in the average level of education
attained in the USSR.
b. Based on Table 26, average educational attainment of the pop-
ulation ages 15-59 is assumed to be the same as for the labor force.
c. Derived from the estimated indexes for the total and nonagri-
cultural labor force. The total labor force index is a weighted
average cif the agricultural and nonagricultural indexes.
Table 9
Supply of Labor in the USSR in Quality Units 2/
Selected Years, 1902-75
Million Units
Total 12/
Agriculturfal Nonagricultural
Sector 2/ Sector E/ '
1902
49.o
42.o
7.0
1913
61.2
51.2
10.0
1928
58.4
48.8
9.6
1938
69.7
45.8
23.9
1950
100.4
51.8
48.6
1953
109.8
53.8
56.0
1975
196.5
82.5
114.0
a. A quality unit
of average quality
b. Total obtained
c. The numbers in
tiplying the labor
the index of labor
Is one man-year of a Soviet worker
(that is, education) in 1950.
by adding the two sectors.
this table were obtained by mul-
force in man-years (Table 24) by
quality (Table 26).
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the labor force in quality units probably understates the effect of
education and training, in that it is confined to formal education
and probably does not allow sufficiently. for the skills acquired by
on-the-job training and experience, On the other hand, it is pos-
sible that the rapid growth of mass education may bring about declines
in the quality of that education. It should be emphasized that
changes in degree of skill are not susceptible of accurate-measure-
ment. The data on labor supply in quality units must be interpreted
for what they are -- indicators of the general magnitude and impor-
tance of education and training.
e. Health and Energy.
Another factor affecting labor skill is the degree of
health and energy of the working population. It is not possible to
make quantitative estimates. of the influence of this factor upon the
effective labor supply. There is little doubt, however, that over
the period covered by this study substantial improvements in the health
and enera of the population have occurred. For example, according to
the mortality rate in 1951 was about half that in 50X1-HUM
19 0. ? It is likely that these health improvements have raised the
efficiency of workers by cutting absenteeism and increasing their
productivity. Moreover, further improvements in health will likely
be achieved over the next 25 years. The progress in health suggests
that the measurement of the labor supply in quality units as presented
in Table 9 may understate the actual and prospective growth.
3. Supply of Capital
Having arrived 'at estimates of the supply of labor in
quality units in the USSR, the supply of another basic productive
resource, capital, must be considered. The first step is to trace
the past growth of capital in the USSR'. Table 10*- presents esti-
mates of the stock of fixed capital** for selected years from 1928
to 1951. This table shows that the stock of fixed capital grew
from 291 billion (1951) rubles in 1928 to 1,159 billion rubles in
1951, giving an average rate of increase of more than 6 percent per
year (compounded).
* Table 10 follows on p.37.
**- All capital stock figures used here represent fixed capital only.
Investment in fixed capital is assumed to be two-thirds of total gross
investment.
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Table 10
Fixed Capital Stock in the USSR
Selected Years, 1928-51
' Billion 1951. Rubles
Year 5./
Total
Agricultural
Sector 1)/
Nonagricultural
:. ...Sector '-
1928
291
117
174
1933
? 433
96
337
1938
793
146
647
1941
' 999
168
831
1946
847 s/
3.951
1,159
156
1,003
a. As of beginning of the year.
b. Includes livestock.
c. Vet of estimated 1..mr losses of 222 billion. See
Appendix D for derivation.
In order to project the size of the Soviet stock of fixed
capital in 1975, it is necessary to estimate the additions to it (the
amount of the gross national product that is devoted to investment)
and the deductions from it (retirements). In this section, the amount
of investment through 1975 is estimated by considering the projected
allocation of gross national product by end use. Investments together
with retirements through 1975 and the size of the capital stock in 1951
determine the size of the total fixed capital stock in 1975. The
nonagricultural fixed capital stock in 1975 is obtained by deducting
the agricultural capital projection obtained above.
a. Allocation of Gross National Product by End Use.
The amount of gross investment is set by the conscious
policy of the Soviet regime concerning the allocation of .current out-
put. These decisions reflect the relative urgency in their scale of
values of capital formation as compared with the other end uses of
national product, namely, defense, consumption, and administration.
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The problem of projecting future investment is basically
that of estimating the future allocations of gross national product
among the four end uses. Some guidance concerning this allocation
may be obtained from past experience. Table- 11*. shows the division
of gross national product by end uses for selected years from 1928 to
1953. Future allocations to each of the four end uses will not be
considered. .
(1) Defense.
One of the basic assumptions of this study is in-
definite continuation of the cold war at about present levels of
intensity. If this assumption is realized, it is likely that the
USSR will make relatively large and stable outlays for defense. A
reasonable supposition is that they will maintain their defense
establishment at about its present level. To do so, according to
estimates of the costs of maintaining technological up-to-dateness,
would require increasing expenditure by 2-1/2 to 3 percent per
annum. It is assumed that annual increases of 2.75 percent will
be made from 1953.
(2) Consumption.
The allocation of national product to consumption
raises many difficult questions. On the one hand, there is the record
of a steadily decreasing percentage of gross national product devoted
to consumption (Table 11) even though the absolute amount has in-
creased. On the other hand, there are the many protestations of the.
regime and some concrete actions -- pointing to recognition of a need.
for increased consumption. Moreover, since a large part of consump-:
tionisHderived from agricultural production, the amount of future
consumption will depend partly upon future farm output.' Because of
the uncertainty-about consumption, two alternative assumptions will
be made.
Assumption A is that long-term historical trends
will continue: that consumption will rise, but at a slower rate than
gross national product on the average. In view of the present low
level of consumption in the USSR (by Western standards), and in view
of the apparent desire of the regime to increase living standards, an
* Table 11 follows on p. 39.
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. Table 11
Division of Gross National Product of the USSR ai by End Use
Selected Years, 1928-53
Percent
Total
? Gross.
:National,
Year
Consumption 12/
Investment 2/
Defense El/
Administration 2/
Product
1928
73.6
21.6
2.4
2.4
100.0
1938
69.6
20.5
7.3
2.6
loom
1948
65.7
22.2
9,2
2.9
100.0
1950
62.3
25.6
9.i
2.7
100.0
1953
57.8
26.9
12.8
2.5
100.0
a. The percentage distribution of gross national product for 1948, 1950, and
1953 is based on the breakdown for 1951. V Each of the four end use categories
is moved by appropriate production indexes to derive the breakdown for the
given year. The 1928 and 1938 divisions of gross national product are based
on calculations by academic scholars. .8./ In order to achieve consistency
between the two sets of estimates, it was necessary to adjust the Hoeffding
and Bergson breakdown according to conventions adopted for the later year
derivations. One-half of the turnover tax was assumed to represent factor
cost ami was therefore redistributed as expenditures among the four end uses
allocated. This adjustment signifies a somewhat larger allocation to con-
sumption than originally calculated by Hoeffding and Bergsbn, who did not
consider the turnover tax an element in factor cost.
b. Consumption includes purchases of goods and services by individuals and
institutions in state and cooperative retail outlets and in collective farm
markets, consumption of farm income in kind, military subsistence, rental
and computed outlays for housing, trade union dues, and communal consump-
tion in the form of healthfandledhcatiOdal mitiaYesiditheYS-Ste-eudkets.?
c. Investment covers_ill outlays for fixed capital, inVentory accretion,
capital repairs, and ierements to the gold stock.
d- Defense includes both thp,budgetary appropriations to the Ministry of
Defense for procurement, ,operations, and maintenance, and minor outlays
considered as military expenditures under US budgetary procedure, hut not
under Soviet accounting.
e. Administration covers outlays for the police, judiciary, and higher
executive organs of government.
f. The derivation of the ruble gross national product figures is described
in Appendix C.
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increase in consumption of 3 percent a year (about 1.3 percent per
capita compared to 2.2 percent from 1950 to 1953) seems to be a
reasonable lower limit.. It is further assumed that consumption ;
will be no less than 45 percent of gross national product. In 1953
it was about 57 percent; in 1928, about 73 percent of gross national
product. It should be noted that consumption did not fall below
50 percent of gross national product in the USSR during 1944 or in '
the US and the UK during the most stringent war years.
Assumption B is that the recent policy of in-
creasing.consUmption rapidly will continue and will not be reversed:
that consumption will rise at the rate of 5 percent per year (3.3 per-
cent per capita) but will remain below 6o percent of gross national
product. This is to be compared with a rate of increase of about
2.5 percent in per capita consumption per year in the US. It does
not seem at all likely, after present difficulties are overcome, that
'the USSR would raise per capita Consumption at a substantially greater
rate than in the US.?
Per capita consuMption increased by about 6 per-
cent between 1929 and 1938. This increase,- however, is undoubtedly .
inflated by the effects of urbanitation and cannot serve, 'therefore,
as a basis for projection. Available statistics in the USSR and
many other countries do not take full account of food and textile
products produced And manufactured on the farm from locally grown
crops. Any drastic shift of population from farms to cities there-
fore overestimates changes in the production of consumer goods, ;
especially in view of the fact that increasing urbanization of the
population compels the' consumptionof services unneeded in rural
environments such as transportation and municipal services.
(3) Administration.
Administration refers to the executive, judicial,
and police functions of all governmental units. It is assumed that
the allocation to administration remains constant at 2.5 percent of
gross national product, as in 1953.
b. DeterMination of Capital Stock.
For any given gross national product, gross invest-
ment can be obtained as a residual after deducting expenditures on
defense, consumption, and administration. These projections of
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investment provide the basis for estimating the future growth of the
fixed capital stock. Starting with the estimated capital stock in
1950, the future stock is estimated by-adding each year's investment
in fixed capital and deducting each year'aretirements.* Investment,
capital, and gross national product are, of course, mutually-deter-
mined. (The final results are shown in Table 12.**) Given the
estimates of agrioultural capital, nonagricultural capital is com-
puted as a residual from total fixed capital determined above.
4. Efficiency.
Changes in production cannot be explained entirely by
changes in the inputs of labor and capital; changes in the efficiency
with which these inputs are used also affect output. The forces
included in efficiency --technology, thineral resources, articulation
of the total economy, enterprise management, scale of production,
foreign trade, and worker morale --may all affect production, but
they are not readily susceptible to measurement. The best that can
be accemplished is to attempt to measure the changes in the net
effect of all these forces working at one time. The analysis of
future efficiency is, therefore, :qualitative, based upon the informal
opinions and judgments of students of these subjects.
a: Technology.
There can be no doubt that technological progress
in the USSR has been swift during the past 30 years. This progress
was largely in the form of rapid borrowing from the West of readymade
technology rather than in the form of the relatively slow accumulation
of new technical knowledge. It is frequently asserted that the
* Retirement as used here means the removal of capital from produc-
tive use. It is assumed that capital items are maintained in service-
able condition until they are retired. The value of the capital stock,
therefore, is not reduced by accounting book-depreciation of_existing
capital. The assumptions used for calculating retirements are that
no new capital is retired during the first 2 or 3 years of its life
and that retirements from this capital are at the yearly_rate of 3.5
percent of its original value thereafter. The method of estimating
retirements is described in Appendix D.
** P. 49, below. The methodology is described in C, 5, below, and
Appendix C.
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borrowing phase is approaching an end and that the rate of technological
change in the USSR will progressively slow down to the rate at which
new methods and products are being currently developed. On the other
hand, it is frequently asserted that there is substantial room for
further continuation of the past rate of technological progress. A
clear distinction must be made between technology as knowledge and
technology as actual productive method. There is no doubt that the
USSR is rapidly catching up with the West in technical knowledge and
that progressively less of such knowledge remains to be borrowed from
the West. It is not so certain, however, that Soviet productive methods
actually correspond to Soviet knowledge. To utilize new technology,
the necessary capital must be produced and the necessary workers
trained. This process takes time. There probably is still room for
much modernization in many sectors of Soviet industry and agriculture.
Within the period to 1975 there may be some slowing down of tech-
nological advance, but the effect is not expected to be pronounced.
In support of this view, it should be added that Soviet encouragement
of education and scientific research is likely to bear increasing
fruit in the form of indigenous technological advance.
b. Mineral Resources.
It is sometimes assumed that mineral resources are
fixed in supply, that economic growth inevitably results-in diminish-
ing returns to the labor and capital employed in the mineral indus-
tries and, therefore, that progress can be achieved only at the cost
of lowered economic efficiency. It is true that the physical supply
of mineral resources is fixed at any given time. Changes in the
effective supply, however, can and do occur, the rate of change de-
pending upon rate of exploitation, rate of discovery and development,
rate of utilization of foreign resources, discovery of new uses for
natural resources, discovery of methods of reducing ores not pre-
viously workable or of increasing the recovery from given ores, and
changes in the structure of the final demands. For this reason, it
is not legitimate to take for granted that economic growth will be
associated with diminishing returns from mineral resources.
It is probable that the USSR can produce or obtain
enough of any and all minerals (or reasonable substitutes) required
for any feasible rate of economic growth in the next 20 years, pro-
vided it is willing to make the necessary allocations of manpower
and capital to the purpose.
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The rate oftechnological advance in the upsR is rapid,
and active measures are being taken toward the discovery and develop-
ment of new mineral resources. It is probable, therefore, that
diminishing returns, if experienced at all within the next 20 years;
will be mild. But even if the USSR should face severe diminishing
returns in the mineral industries, the effect on over-all economic
growth would be mall because the mineral industries, in any case,
employ only a small fraction of the total labor and .capital.*
c. Articulation.
In the past the growth of Soviet output has frequently
been reduced as a result of failure to coordinate production with
demand. The result has been lack of urgently needed gobds, bottle- ?
necks, gluts, and unemployment. These failures of coordination have
been due partly to lack of knowledge and experience on the part of
the planners, partly to lack of skill on the part of plant managers,
partly to doctrinaire rigidities in policy, and partly to rapidly
changing demand conditions arising from war and political factors.
The planners can be expected to became progressively
more efficient in coordinating the economy through additional expe-
rience.
By this time the Russians have made enough trials
and experienced enough errors so that their future planning efforts
should be increasingly efficient, assuming adequate flexibility in
policy.
On the assumption of generally stable conditions over
the period to 1915 (one of the fundamental postulates of this report),
unexpected changes in demand are likely to be fewer than those the
planners have had to cope with in the past. This also should help
them guide the economy more efficiently.
* If the purpose of this report were to find shortages of strategic
materials, in order to guide economic warfare, such Offhand treat-
ment of the mineral industries would not be appropriate. The purpose
here is to measure long-run growth, given plenty of time for over-
coming shortages or finding substitutes.
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d. Management.
By management, in this context, is meant the supervision
of production in .individual plants. It involves the physical layout
of production, the organization of personnel; the procurement of
materials, the control of product quality, the disposition of product,
the hiring and firing of labor, the obtaining of capital, negotiation
with government, and the like.
The art of enterprise management in the USSR appears
to be developing, but there is probably much to be learned or to be
put into practice before Soviet management approaches the skill and
efficiency of US management. Further important increases in .pro-
ductiVity by means of improved management are posSible and likely.
e. Factor Proportions and Scale of Output.
The productive efficiency of a country is strongly
affected by the proportions of factors used in output and by the
scale of its total output. As production increases, two opposing
tendencies are experienced -- diminishing returns and increasing
returns.
Diminishing returns will occur if some factors of
production (usually land and other natural resources) cannot be in-
creased in proportion to the increase in other factors. The effort
to squeeze more product out of the slower-growing factor results in
diminishing returns to the faster-growing factors and increasing
costs per unit of output. In this report the possible effect of
diminishing returns has been considered in the discussion on agri-
culture and mineral resources. It also may be of great importance
when there is a major shift in the proportions of capital and labor
used in production. FrOm 1928-to 1953 the Soviet labor force (in
quality units) rose almost as fast as the capital stock in the non-
agricultural sector, as a result of a rapid influx of labor from the
farm to the factory. The proportions of labor and capital used in
nonagricultural output, did not, therefore, change substantially_
during this period. In the future the rate of urbanizationwill be
less, and the nonagricultural capital stock is likely to increase at
a substantially greater rate than the nonagricultural labor force.-
Increasing returns will occur when an increase in
production makes possible (1) a fuller utilization of given fixed
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productive agents (that is, a thinner spreading of overhead costs),
(2) a more economic use of machine methods, or (3) a greater use of
advantageous specialization and division of labor. This is to say,
roughly, that increasing returns are possible when there are advan-
tages in mass production.
As the Soviet economy has grown, one industry after
another has been transformed into a large-scale industry, with
corresponding benefits in the form of lowered costs from mass pro-
duction. The Soviet practice of limiting the number of models and
of changing models only infrequently makes for the ready achievement
of mass production.
In the future a stepping up of the production of
consumer goods would almost surely result in lowered costs of these
goods and therefore in greater economic efficiency.
f. Foreign Trade.
Foreign trade permits specialization in the production
of those goods for which the country has a comparative advantage and
permits it to leave to others the production of those goods for which
it has a comparative disadvantage. Thus through foreign trade total
efficiency can be increased.
In the past the USSR has pursued a persistent policy
of national self-sufficiency. Thus, since trade is already at a very
low level, one can expect no significant future reduction in efficiency
resulting from curtailment of trade. The only significant possibilities
are no change or an improvement.
There is no reason to suppose that the fundamental
aim of national autarky has been abandoned.. Yet there is a strong
probability of increasing trade with other Soviet Bloc countries and
also some chance of at least small increases in East-West trade,
particularly since such trade increases might serve the long-run
political interests of the USSR. But more important, if the USSR is
unable to increase agricultural production in proportion to the in-
crease in population, it may be forced to seek food and fiber from
abroad. For it to do so would be a major change in Soviet policy.
Minor increases in efficiency in the agricultural sector may result
from the probable expansion of intra-Bloc trade and perhaps from
small increases in East-West trade.
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g. Worker Incentives and Morale.
By worker morale is meant all those attitudes, values,
and culture patterns of the working population which, in the context
of existing conditions in the society at large and in the place of work,
affect speed and quality of work, regularity of work, organizational
cooperation, and willingness to develop personal productivity. Worker
morale is affected by objective conditions in the socioeconomic system
and by the degree of adjustment to or acceptance of these conditions.
For example, morale is affected by the general level and distribution,
of consumption, housing, and social services; by the political system
and the obligations of people under that system; and by the general
pattern of social life (religion, family life, recreation, art, and
the like). Similarly, worker morale is affected by objective con-
ditions in the place of work and the degree of adjustment to and
acceptance of these conditions. Among these conditions, for example,
are human relations on the job; physical conditions of work and of
travel to work; the system of rewards, penalties, and other incentives;
and appropriateness of work to individual aptitudes and interests.
Without question, all of these factors are highly
significant in determining the productivity of a country. And there
can be no doubt that some of the fluctuations in Soviet output and
some of the failures of Soviet planning have been due to problems of
worker morale. In spite of their importance, no attempt is made in
the present report to examine worker morale in detail. This is
simply too vast a problem for a report of this limited scope.
It is a generally accepted view that negative incen-
tives in the USSR, based on fear of punishment, have been carried so
far that little extra productivity could be expected from an extension
of incentives of this type. Also, it is widely believed that the wage
system (including nonmonetary prerequisites) provides very strong
positive incentives and that little more could be achieved by changes
along this line. It is believed, however, that morale might be en-
hanced through increasing the quantity and availability of consumer
goods. This view rests on three arguments: (1) that if more con-
sumer goods could be purchased, workers would be more interested in
earning additional income; (2) that, with more consumer goods, people
would have a more positive and cooperative attitude toward the entire
social system; and (3) that increasing supplies of consumer goods
would tend to enhance the health and strength of the population.
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_ _ _ _ _ _
These are persuasive arguments. On the other hand,
it should be pointed out that increased availability of consumer
goods might tend to reduce incentives. With higher real incomes, the
value of the marginal ruble to the worker might become less, and his
incentives might therefore be reduced. Enough has been said to indicate
that the subject of worker morale is a highly subtle one about which
little can be said in the present state of knowledge.
h. Conclusions as to Efficiency.
Although the complexity of the many elements affect-
ing efficiency makes any generalization highly tentative and uncer-
tain, the following conclusions appear to be justified;
.(1) Under the basic assumptions of this report, a
reduction in efficiency could result only from a great increase in
the scarcity of certain factors of production relative to others.
Although there are, in the long run, a great many possibilities for
substituting .one factor of production for another, substitution be-
tween such basic factors as land, labor, and capital is necessarily
limited. The seriousness of this problem in agriculture, with regard
to the scarcity of arable land, is discussed in B, above. The pos-
sibility also has been discussed that mineral tesources would become
scarcer. It is likewise possible that, if the capital stock increases
much faster than the supply of labor, part of it will have to be put
to less valuable uses than before -- its marginal productivity will
decline.
Of course, the introduction of capital-intensive
production techniques would tend to offset this effect by increasing
the volume of output per unit of capital used, and there are many
sectors of the Soviet economy where even known techniques are largely
unexploited. Nevertheless, since the Soviet authorities have much
more control over the growth of the capital stock than over the growth
of the labor supply or even of the growth of technological knowledge,
they have an incentive to rely heavily on capital in attempting to
raise output. Diminishing returns to capital would become more likely
the more rapid the growth of capital during the period, the other
factors being relatively fixed.
(2) All the other factors which have been discussed
in this section are likely to raise efficiency or to leave it unchanged.
This is true of technology, "articulation," management, and so on.
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(3) Factors making for rising efficiency seem stronger
than those making for declining efficiency in the nonagricultural sec-
tor so long as the change in the relative quantities of capital and
labor used is moderate.
(4) The probable increase in efficiency is likely to
be mall. In the 1928-53 period, no upward trend in efficiency was
apparent, as will be seen in the next section. Nearly all of the
increase in output can be accounted for by increases in the quantities
of labor and capital. In addition, most of the qualitative factors
are highly correlated with the quantity of capital and the skill of
labor. Technological advance, for example, often creates a demand
for more engineers and skilled workers. In projecting an increased
supply of these engineers and skilled workers, some of the-effebts'
of newtechnology have been accounted for. Adding the effects of
all these "efficiency" factors to those of the supply of labor and
capital involves, therefore, some double counting.
It is tentatively assumed that efficiency. will
rise slightly, so that by 1975 the combination of labor and capital
inputs will give an output 10 percent greater than the same amounts
of these factors could have given in 1953.
5. Nonagricultural Production: Trends and Projections.
The nonagricultural labor force in quality units, the prin-
cipal determinants of the capital stock (except output), and the gen-
eral movement of efficiency have been projected. In arriving at the
final results, it is necessary to combine the indexes of labor, capital
and efficiency. Labor and capital are computed as relatives of the
shares of nonagricultural output which these factors had in 1953.
The shares of labor and capital were approximately 75 percent and
25 percent,irespectively .21; these shares are based on an examination
of Soviet factor payments in 1951.* These indexes are then added
* In extensive studies of production functions in the US and in
British Commonwealth countries, Paul H. Douglas and others found that
about 55 to 75 percent of manufacturing output is attributable to
labor and 25 to 45 percent attributable to capital, 12/ and that the
relative shares have remained remarkably constant over time. The
figure for the US, 1889-1922, was 63 percent to labor and 34 percent
to capital. Professor Simon Kuznets reported that in the US, in
1919-38, employee compensation constituted about 63 percent of national
income, and other forms of income (entrepreneurial withdrawals, rent,
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_ _ _ _ _ _
together to obtain an index of combined inputs. In order to get mean-
ingful estimates, it is necessary that the estimates of capital and
output be consistent; these can best be determined by trial and error.
The final indexes of capital and labor and the combined inputs index
under both assumptions A and B are shown in Table 12.
Table 12
Determination of the Nonagricultural Production of the USSR
Factor Inputs Method
Selected Years, 1928-75
Indexes) 1953 = loo
' Nonagti-
Combined cultural
Year Labor !I/ Capital 12/ Index Efficiency 2/ Production
1928
1938
1950
1953
1975
17
43
87
100
203
,:
15
55
80
100
A
IN
B-
Tic
17
46
85
100
A B?
-5g3 N5
96
106
89
100
110
..
16
49
76
100
A
765
B
27o
a. Labor series based on quality units. Refers to estimated labor sup-
ply at the middle of stated years.
b. eapital stock was measured in.1951 rubles. Ilefers'to*.the'beginning
of the stated year.
c. Efficiency is defined as the ratio between output and the combined
index of inputs.
dividends, interest, corporate savings, and so on) accounted for 37
percent. 11/ Similarly, the Department of Commerce series of US
national income by'distributive shares indicated that about 69 percent
of the national income (exhluding income of farm proprietors) is in
_T/
the form of compensation of employees. 12 Since wages and salaries
are not the only source of labor income income in kind, and a sub-
stantial portion of the income of unincorporated enterprises must be
included in labor income), and since land is a.small factor in non-
agricultural output, the US proportions for this output are likely to
be close to 75-25.
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? _ _ _
For the years 1928, 1938, and 1950, efficiency can be
determined as the ratio between the nonagricultural output and combined
inputs indexes. Labor and capital both grew rapidly, the growth of
capital being slightly greater than the growth of labor. It is notable
that the growth of combined inputs very closely approximated the growth
of output. No clear trend in efficiency was apparent, although there
were fluctuations in the index. From 1928 to 1938, the rapid inclu-
sion in the national product of goods and services formerly produced
in households may have inflated the measure of output relative to
inputs, and thus May have occasioned the apparent increase in
efficiency. The decline in efficiency from 1938 to 1950 and its rise
from 1950 to 1953 may have resulted from the effects of World War II
and Of subsequent recovery.
Considering the many possible errors involved in
measuring labor and capital, and the very small number of years for
which data are available, it is apparent that no clear conclusion as
to the future trend of efficiency can be derived from historical
relationships. Moreover, the examination of the qualitative growth
factors made in the preceding section gave some reason to expect an
improvement in efficiency. Accordingly, the efficiency index is
projected as rising by 10 percent from 1953 to 1975.
The projection of the labor supply is the same ?under
assumptions A and B -- the labor force in quality units is expected
to double. The entire difference between the A and B projections of
output, therefore, is reflected in the capital stock projections.
The capital stock increases less than 3 times under assumption B and
more than 6 times under assumption A.
Nonagricultural output is projected as rising by 260
percent under assumption A, and by 170 percent under assumption B.
The projection under assumption A may be considered
to be an upper limit. It is most unlikely that Soviet consumption
would be allowed to fall below 45 percent of gross national product,
except under stringent wartime conditions. Moreover, the required
increase in the capital stock labor supply ratio is so large (almost
3 times 1953) that some decline in the marginal productivity of capi-
tal would almost certainly occur because of the difficulty of sub-
stituting capital for labor on too large a scale. As is explained
in Appendix C, an assumption that the marginal productivities of
labor and capital do not change is implicit in the method used to
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combine these factors. The A projection, therefore, has an upward
bias, and possibly a strong one. In fact, efficiency under assumption A
might well not increase or even decline substantially.*
There is also an upward bias in the B projection, but
a much smaller one because assumption B involves only a moderate shift
in the proportions of capital and labor used in output.
Our conclusions as to the growth of nonagricultural
output during the 1953-75 period are the following:
(a) Soviet nonagricultural output may grow at
an average yearly rate of between 4 and 6 percent per year from
1953 to 1975.
(b) It is extremely unlikely, under the basic
conditions assumed in this study (no war, and so on) that the rate
of growth would be above or below this range.
(c) The chances that the rate of growth will be
between 4.5 and 5.5 percent are very high.
Estimates of the Soviet labor force, fixed capital
stock, and production in the nonagricultural sector are shown in
Table 13,** and the results are presented graphically in Figure 6.***
D. Final Projection: Factor-Inputs Method.
The projections of agricultural output and of nonagricultural
output can now be coibined and a final projection of gross national
product can be made. The results are shown in Table 14.xxxx Gross
hational product rises from 1953 to 1975 at the average yearly rate of
5.2 percent under assumption A and of 4.2 percent under assumption B.
* The fixed capital-output ratio increases from 1.6 to 3.1 under
assumption A, and to 2.2 under assumption B. The ratio for the US was
about 2.0 in 1929 and 1.8 in 1947.
** Table 13 follows on p. 52.
*** Following p. 52.
xxxx Table 14 follows on p. 53.
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Table 13
Labor Force, Capital Stock, and Production
in the Nonagricultural Sector of the USSR
Selected Years, 1928-75
Fixed
Labor Supply 12/ Capital Stock 2/ Production
Labor Force 2/ (Million 1950 (Billion 1951 (Billion 1951
Year (Million) Quality Units) Rubles) Rubles)
1928
13.8
9.6
174
118
1938
37.0
23.9
647
361
1950
48.6
48.6
942
564
1953
51.9
56.0
1,184
742
1975
77::.6
114.0
A
B
A
B
5,335
2,671
2,003
4,42g
a. Middle of year.
b. Millions of workers of average quality in 1950.
c. Beginning of year.
Which of the two assumptions is the more reasonable? In the
past the USSR has strongly emphasized economic growth at the expense
of consumption. Although consumption has risen rapidly in recent
years, it is impossible to be sure that this implies a major change
in policy and is not just a temporary bonus to consumers. On the other
hand, a high consumption policy, once started, would be difficult to
reverse.
It is believed that the assumptions A and B represent reasonable
limits as to possible Soviet policies governing the allocation of cur-
rent income -- consumption is almost unlikely to be less than 45 per-
cent or more than 60 percent of the gross national product in 1975.
However, any guess as to the most probable allocation of current income
over a period of over 20 years would be foolhardy in the extreme.
In projecting agricultural output, it is assumed that the
ma* serious difficulties which appear to have limited agricultural
output in recent years can be overcome. If some of these difficulties
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Billions of 1951 Rubles
9000
8000
7000
6000
5000
4000
3000
2000
1000
USSR
PRODUCT AND FIXED CAPITAL STOCK
IN THE NONAGRICULTURAL SECTOR
SELECTED YEARS, 1928-53 and 1975
?7
Product
Capital stock
Figure '6
High Estimateerwww
V
/
e
I /4
%
? //'
/
^ /A
/
%
e
'
e
^ /A
e ^ /4
%
? /4
Low Estimates,
High Estimate
Lbw Estimate
13645 12-54
1938 1950 1953 1975
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were not overcome, agricultural output would rise less, and the Soviet
government would be faced with the alternatives of either slowing down
the increase in consumption or importing agricultural products from
abroad.
In the nonagricultural sector, the projections under assump-
tion A and, to a lesser degree, under assumption B are probably too
high, as is pointed out above and explained in Appendix C.
It may be concluded, therefore, that the chances that Soviet
gross national product will grow at a rate greater than 5 percent
per year are very small-and that a growth rate of 4.2 to 4.8 per-
cent a year is probable.
. Table 14
Projection of the Gross National Product of the USSR
Factor Inputs Method
Selected Years, 1928-75
Billion 1951 Rubles
Agricultural
Year Output
Nonagricultural
Output
Gross National
Product
1928
296
118
414
1938
307
361
668
1950
287
564
851
1953
289
742
1,031
A
T67 527
A
2,671 2,003
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A
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IV. Conclusions.
A. Comparison of Gross National Product Projections.
In the preceding sections of this report, two methods have been
used to develop three projections of the Soviet gross national product
for 1975. Under the first, the labor productivity method,,..tt is esti-
mated that the gross national product would grow from a little over
1 trillion rubles in 1953 to a little under 3 trillion in 1975. The
second, the factor input method, results in two estimates based on two
different assumptions concerning Soviet policy decisions as to the por-
tion of the gross national product which will be allocated to consumption
over the period under consideration. Assumption A, based on a very low
level of consumption, yields a growth of gross national product from a
little over 1 trillion rubles in 1953 to over 3.1 trillion in 1975.
Assumption B, based on a level of consumption consistent with the recent
emphasis on consumption, yields a gross national product of only 2.5
trillion rubles in 1975. The average annual rates of growth involved.
in these three projections are 4.8 percent for the labor productivity
method and 5.2 percent (assumption A) and 4.2 percent (assumption B)
for the factor inputs method.
It is probable that the factor input method yields more reliable
results than the labor productivity method because the latter method
permits a far more detailed consideration of not only the primary
factors of production, labor and capital, and their qualitative changes
but also the many qualitative influences on production which have been
grouped under "efficiency." Although the factor input method is con-
sidered better, it nevertheless involves assumptions as to the substi-
tutability of factors which tend toward an overstatement of the final
results. Because of this overstatement and because Of the extremely low
consumption postulates of assumption A, the most probable projections
for gross national product in 1975 are 2.9 trillion rubles (an annual
rate of growth of 4.8 percent) on the low consumption basis and 2.5
trillion rubles (on annual rate of growth of 4.2 percent) on the more
liberal consumption policy. These data are summarized in Table 15.*
B. Implications for Intelligence.
It is unlikely that the gross national product of the USSR
will grow at an annual average rate of 5 percent or more over the
* Table 15 follows on p. 56.
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Table 15
Gross National Product of the USSR
1953 and 1975
Year
Method
Gross .
National Product
(Billion 1951 Rubles)
Average
Annual Rate
of Growth
(Percent)
1953
1,031
1975
Labor productivity
2,960
4.8
Factor inputs
Low consumption
3,130
5.2
High consumption
2,530
4.2
Factor inputs .(most probable)
Low consumption
2,900
4.8
High consumption
2,500
period to 1975. The most probable average annual rate of growth will be
between 4.2 percent and 4.8 percent, depending on the Soviet policy de-
cisions concerning the allocation of the SoViet gross nattonal product
among various consuming sectors -- primarily, among alternative uses of
investment and consumption. The chief deterrents to a higher rate are
the problems involved in increasing the output of the agricultural sector
above that projected in this report. This difficulty is illustrated by
the differences in the projected levels of agricultural and nonagri-
cultural production. Whereas the nonagricultural sector is expected to
increase by from 1.7 to 2.6 times, agricultural output is estimated to
increase only from 6o percent to 80 percent over the 1953 estimates.
A basic assumption of this report is that international trade
will increase only slightly and will not contribute to the growth of
the USSR any more than it currently does. If, however, the Soviet policy
makers decide to supplement the agricultural output of the USSR by im-
ports to a significant extent, it is possible that the rate of growth
of the Soviet gross national product could be considerably higher. The
level to which it would grow depends on the extent of the imports and
on the terms of trade involved. It is, however, important that the
intelligence community be alert to significant increases in Soviet im-
ports, especially of agricultural commodities.
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Another basic assumption of this report (that the cold war will
continue at about the present level of intensity) is translated into
the proposition that expenditures for defense will increase during this
period at the rate of 2.75 percent per year. These expenditures would
be primarily for the maintenance of the current military strength in an
up-to-date condition. If, however, ?defense expenditures are kept at
the current level or reduced, it is possible that total production in
1975 would be higher than estimated. How much higher would depend on ?
the extent of the cut in defense expenditures.
It should also be pointed out that the contributions to the
growth of the USSR made by the Satellites have not been explicitly con-
sidered. These effects have, however, been considered implicitly to
the extent that they have affected Soviet growth in the past.
Finally, it should be noted that the projections of Soviet out-
put in 1975 are limited to the extent that all economic projections
over a long period of time are limited. They are based on what is known
about the past developments and present conditions and what can be de-
duced from this information and reasonable assumptions about the future.
They are limited to the extent that currently unknown future events
affect the quantities which this study attempts to estimate.
A rough comparison of the projected gross national product of
the USSR with that of the US is helpful in assessing the meaning of
estimates developed in this study. This comparison cannot be precise,
because it involves not only all the inaccuracies of projecting both
the Soviet and the US data but also the inaccuracies of international
comparison. The factor inputs projections of Soviet gross national
product and an estimate of US gross national product are compared in
Table 16* and Figure 7.** While the US estimate grows from $350 billion
.in 1953 to $735 billion (3.4 percent per year), the best estimate for
Soviet gross national product grows from $103 billion in 1953 to $290
billion (4.8 percent per year), assuming low consumption, and $250 bil-
lion (4.2 percent per year), assuming high consumption, for 1975. The
difference between the two gross national products grows from $247 bil-
lion in 1953 to $422;bi11-i-on eimyrconsumptitn)aand to $482 billion
(high consumption)-,'while'the Soviet gross tiatioftal ptodact expressed as
a percentage of the US increases from 29 percent in 1953 to 39 percent,
assuming low consumption, and 34 percent, assuming high consumption, in
"TSble 16 follows on p. 58.
** Following p. 58.
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1975. It is also interesting to note that during this period the
average annual increase in the difference between the US and Soviet
gross national products is growing much faster (between 2.7 percent
and 3.1 percent) than the percentage relationship between the two
(between 0.7 percent and 1.3 percent). In summary, the gap (in abso-
lute terms) between the US and Soviet gross national products is ex-
pected to increase, even though the Soviet gross national product is
expected to become a larger percentage of the corresponding US value
by 1975.
Table 16
Comparison of the Gross National Products of the USSR and the US
1953 and 1975
Year
USSR
(Billion
1951
Dollars) 2/
US
(Billion
1951
Dollars)
Difference
(Billion
1951
Dollars)
USSR as
Proportion
of US
(Percent)
1953
103
350
247
29
1975 12/
USSR, low consumption
313
735
.422
43
USSR, high consumption
253
735
482
34.
USSR, low consumption,
most probable
290
735
445
39
USSR, high consumption,
most probable
250
735
485
34
a. Dollar values for the gross
rived on the basis of 10 rubles
b. USSR estimates for 1975 are
for 1975 is based on discussion
national product of the USSR are de-
equal one dollar.
factor inputs estimates. US estimate
in Appendix E.
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Figure 7
COMPARISON BETWEEN GROSS
NATIONAL PRODUCTS OF THE USSR AND THE US
1929, 1953, and 1975
800
?
700
?
"cu
6o0
?
-0
ce
?o
500?

Ca
400
300
?
O.
0
6-3
200
?
100
?
13646 12.54
US USSR
1929 1928
US USSR
1953
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Best
Estimate
US USSR
1975
High
Estimate
Low
Estimate
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APPENDIX A
METliCDCLOGY FOR COMPUTATION OF PRODUCTION STATISTICS
The value-added figures in Table 1* in the text are based on
physical production indexes developed separately for the agricultural
and nonagricultural sectors. The indexes are converted to ruble terms
by valuing the two sectors of gross national product in terms of 1951
rubles. Gross national product is calculated as the sum of the two
sectors in 1951 rubles.
1. Agricultural Index.
For the period 1902-13 the sector index has been moved by a grain
production index. Ideally, an agricultural index should also include
livestock and industrial crops, but data are not available for these
groups in the early period. Their omission may involve some slight
understatement of the growth of agriculture as a whole, if the excluded
sections exhibited a more rapid growth rate than did grain production
in these years,as they have done in later years:
The index for 1913-28 incorporates both grain and livestock products.
It applies to the 1928 boundaries of the USSR. The price weights for
these years, as well as for the entire period 1902-38, are the 1926-27 /
prices for the respective products.. Although 1926-27 prices had become
anachronistic by the late 1930s, -they i areri-efleente Zit comparative .
cost conditions throughout most of the post-World War I period. Given
the absence of prices for the pre-World War I years, .1926-27 prices
have been used as weights in the belief that they do not significantly
distort actual price relationships. The physical production figures
for grain crops are found in Table 17.** The livestock product com-
ponent of the agricultural product index is based on official esti- ?
mates lY as to the value of livestock product output in 1913 and 1929.
The 1929 value estimate has been mewed back to 1928 on the basis of the
behavior of the livestock product component of the comprehensive 1928-38
agricultural production index described below.
* P. 12, above.
** Table 17 follows on p. 61.
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Table 17
Production of Selected Agricultural Commodities
in the USSR 151
Selected Years, 1900-1953
Million Metric Tons
Year 2/
Wheat
Rye
Oats
Barley
Corn
Otherb/
Grain -I
Total
Grain
Rice
Potatoes
Cotton
(Ginned)
Flax
(Scutched
Basis)
Hemp
Fiber
Wool
(Grease
aLELL1_
1900-04
14.9
22.9
12.6
6.6
1.2
4.2
62.4
25.6
1
1905-09
17.4
19.9
13.6
8.5
1.6
4.5
65.5
29.2
i
1910-13
22.1
23.5
15.5
11.0
2.4
5.1
79.6
.3
35.6
1
1921-25
10.1
16.4
7.5
3.8
1.8
4.7
44.3
N.A.
27.6
.07
1926-30
22.5
22.2
15.4
5.9
3.1
6.8
75.9
.4
46.8
.2
mill
.3
.2
1931-35
23.5
20.2
13.5
6.o
3.9
8.o
75.1
.2
55.9
.4
.6
.2
.1
1936-40
35.1
20.1
17.1
8.7
3.6
7.4
92.0
.3
58.4
?7
.6
.1
.1
1945-49
24.0
21.2
11.0
6.0
3.0
6.3
71.5
.3
65.8
.5
.4
.1
.1
I950-53
36.0
20.5
13.4
7.1
2.9
4.5
84.4
.4
67.0
.9
.5
.2
.2
1945
20.1
21.3
11.1
4.8
2.2
5.6
65.1
.2
59.6
.4
.07
.1
1946
21.2
21.8
8.7
4.6
2.0
5.7
64.o
.2
70.0
.5
.4
.07
.1
1947
23.1
24.2
11.9
6.8
3.6
6.8
76.4
.3
71.6
.5
.4
.09
.1
1948
26.8
19.1
11.6
7.0
3.5
7.1
75.1
.4
65.o
.7
.4
.1
.1
1949
28.7
19.3
11.6
6.9
3.6
6.1
76.2
.4
63.0
.7
.5
.2
.1
1950
39.2
18.0
14.5
7.3
3.3
2.3
84.6
.4
72.2
.9
.5
.2
.2
1951
31.3
23.3
13.1
7.0
2.8
4.5
82.0
.4
59.5
1.0
.5
.2
.2
1952
38.8
22.1
14.3
7.6
3.0
5.6
91.4
.4
69.7
.9
.5
.2
.2
1953
34.7
18.7
11.9
6.7
2.6
5.7
80.3
.4
66.4
1.0
.5
.2
.2
* Footnotes for Table 17 follow on p. 63.
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Table 17
Production of Selected Agricultural Commodities
in the USSR 12/
Selected Years, 190071953
(Continued)
a. 1900-1906 -
1907-1910 -
1911-1913 -
1921-1922 -
1923-1927 -
1928-1934 -
1935-1953 -
b. Other grain
Data are for 72 oblasts. Areas not included are the Transcaucasus, Turkmen, and Eastern Siberia..
Data are for 90 oblasts.
Data are for 87 oblasts.
data are for all of the USSR, probably 1922 boundaries.
Data are for the USSR, probably 1927 boundaries.
Data are based on present boundaries except for the territories acquired froth Poland, Germany, Czechoslovakia, and Rumania
at the end of World War II.
Data are based on present boundaries.
includes buckwheat, millet, spelt, peas, beans, and lentils.
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In the 1928-38 comparison a comprehensive list of products, covering
perhaps 90 percent of total agricultural output, comprises the basis of
the index. The territorial coverage is the post-World War II USSR. The
physical estimates of grain products entering into the index have been
adjusted to exclude the proportions of total output used as animal feed
and seed. As noted above, 1926-27 prices have been used as weights.
The index for 1938-53 11/ is intended to be a comprehensive index
of agricultural production, incorporating grain, livestock products, ahd
industrial crop output. The weights are 1951 prices synthesized from
retail prices by deduction of marketing, processing, and transportation
costs. The territory covered is the present day USSR.
2. Nonagricultural Sector.
The ruble series for the years 1902-28 is based on a time series of
industrial output developed by Kondratiev for the years before World
War I and by official Soviet agencies for the period 1913-28. 12q.1/ It
is assumed that industrial growth is representative of nonagricultural
growth in this period. The validity of the index is confirmed by in-
spection of selected output data in Table 18.* Geographically, the
1902-13 comparison is in trms of current boundaries; the 1913-28 com-
parison, in terms of 1928 'territory.
For the period 1928-38 the index has been derived by aggregation of
component sector indexes. The industrial production index is based on
CIA estimates. Individual products have been weighted: by 1949 prices,
and the branches of industry by 1941 value-added proportions. The con-
sttuction index is obtained from a time series of total investment ex- .
penditures deflated by a production goods price index. This procedure
assumes that construction remained a constant proportion of investment
outlays over the decade. The transportation and communications index
Is based on CIA estimates of freight and message traffic. The weights
used to aggregate this component are average 1949 freight and message
rates. The trade sector index is derived from a time series of retail
trade deflated by a consumer price index. The services sector index
Is based on changes in the labor force employed in medical services,
education, fine arts, the armed forces, and government administration
over the period. The services index has been increased by 2 percent
per year to adjust manpower data to account for assumed productivity
Increases.
* Table 18 follows on p. 67.
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Table 18
Production of Selected Indusirial Commoditieb
and Services in the USSR
Selected Years, 1900-1953
Year
Electric
Power
(Billion
Kilowatt-Hours
Railway
Freight
.(Billion
Ton-Kilometers) 2/
Raw
Steel
(Million
Metric Tons)
Total Coal
Production bi
(Million
Metric Tons)-
Crude
Petroleum
(Million
Metric Tons)
Unglazed
Bricks
(Billion
Units)
Primary
Copper
(Thousand
Metric Tons
Cotton
Yarn
(Thousand
Metric Tons)
Leather
and
Rubber Shoes
(Million
Pairs)
? Refined
Sugar
(Thousand
Metric Tons)
1900
33.3 2/
2.8
16.7
10.4
239.1
2,205
1910
50.9J
3.2
25.4
9.6
330.8
2,859
1913
1.9
67.0 2/
4.2
29.1
9.2
2.9
30
371.8
35.9
14,062
1928
5.6
94.2 2/
4.3
35.5 2/
12.3
1.8
19.1
324.0
65.9
1,107
1933
1938
16.4
39.6
172.9 2/
384.4
6.9
18.0
76.3
132.9
21.5
36.2
3.3
8.7
32.7
95.5
367.3
558.9
142.5
189.5
1,017
2,160
1945
43.4
347.6
12.3
149.3
19.4
1.6
160.0
981
1946
47.7
368.0
13.4
164.2
21.7
3.0
170.0
299.1
99.3
1,449
1947
55.0
377.8
14.6
183.9
25.8
4.4
185.0
397.8
161.4
1,386
1948
64.1
468.2
18.7
209.7
29.2
6.9
200.0
493.2
205.5
1,800
1949
75.6
540.8
23.4
236.1
33.4
8.0
225.0
562.3
254.9
1,000
1950
90.2
612.0
27.1
262.0
37.8
9.6
2140.0
6o7.1
310.6
2,070
1951
102.8
690.0 2/
31.2
282.4
42.1
12.3
250.0
667.0
356.9
2,160
1952
117.0
755.0 2/
34.3
301.3
47.0
16.0
287.5
686.0
373.9
2,340
1953
133.0
859.0 2/
38.0
320.0
52.7
17.0
310.0
691.0
395.0
2,520
a.
b.
c.
?d.
Operating ton-kilometers.
Includes lignite di.
Estimated as 2 percent greater than tariff ton-kilometers.
For the period 1 October 1927 through 30 September 1928.
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The task of aggregating the separate sector indexes into one rep-
resenting total nonagricultural activity posed a problem of weighting,
as these years saw considerable change in the Soviet economic structure.
If the sector indexes are combined according to 1928 sector weights, an
average annual growth of 11.6 percent is obtained for the entire non-
agricultural sector; use of 1938 weights yields a growth of 12.3 percent.
As a best estimate, an arithmetic average of 11.95 percent is used to
project nonagricultural expansion in this decade.
The industrial index component is derived from comprehensive time
series of physical production. Individual products are weighted by
1950 prices and branch indexes aggregated into a sector index by use
of 1951 value-added weights. The transportation and communication index
components are similarly constructed. The construction, trade, and services
index components are obtained in the same manner as described for the 1928-
38 period. The territorial coverage is the present-day USSR.
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APPENDIX B
SUPPLY OF LABOR
1. Population and Labor Force.
a. Population.
The projection of the population of the USSR is based on a
recent estimate made in the US Census Bureau. Past and projected pop-
ulation estimates are shown in Table 19.* Table 20** shows the past
and projected distribution of the population by age and sex.
b. Labor Force.
The rationale for the projection of the Soviet labor force is
explained in the text. It should be noted that there is considerable
disagreement as to the effect of continued urbanization and also the
effects of higher incomes on the participation of women in the labor
force.
Another difficulty related to part-time work. Labor partici-
pation ratios have been reduced in the younger age groups to account
for the-greatly.increased number of children and youths expected to be
in school by 1975. Many of these, however, will work on the farm during
vacations.
c. Working Hours.
Information on working hours is extremely sketchy. Estimates
of average hours worked per week by nonagricultural workers are shown .
in Table 21.*** It is assumed that hours for these workers will remain
constant at 48 per week during the period from 1955 to 1975. This
estimate may be supported on the following grounds: (1) only small
gains in efficiency per man-hour are likely to result from further****
?
Table 19 follows on p. 72.
Table 20 follows on p. 73.
Table 21 follows on p. 74.
Continued on p. 75.
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Table 19
Estimated Total Population
of the USSR 12/
Selected-Year-S,71815-1975
Millions
Year
Population,
Contemporary
Territory
Population,
, Present
Territory 2/
1815
1825
1835
1860
42.5
52.3
60.2
74.1
1897
125.6
118.5
1900
131.7
124.2
1902
136.0
129.0
1913
161.7
153.5
1926
147.0
164.3
1939
170.5
190.5
1940
193.0
1945
186.4
186.4
1947
191.1
191.1
1950
200.0
200.0
1952
207.3
207.3
1953
210.8
210.8
1955
217.8
217.8
1956
221.7
221.7
1957
225.6
225.6
1958
229.7
229.7
1959
233.8
233.8
1960
238.1
238.1
1965
260.6
260.6
1970
282.3
282.3
1,41,05
301.7
301.7
a. Data for 1697-1939 adjusted to present-terri-
ttry on the assumption that the percentage growth
ih,:populatiOn.corPresent territory is equal to
that in contemporary territory for periods of no
change in latter.
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Table 20
Distribution of the Population of the USSR by Age and Sex
Selected Years, 1897-1975 20/
Male
1897
1926
1939
1947
1950
1955
1960
1965
1970
1975
0-14
23.9
27.5
30.2
34.5
34.5
36.5
? 4o.6
46.0
49.1
49.7
15-59
34.3
39.0
46.9
47.9
52.6
58.7
64.7
70.0
77.3
85.7
6o and over
4.2
4.5
4.6
5.5
5.5
6.2
7.0
8.3
9.6
11.0
Total
62.5
71.0
81.7
87.9
92.0
101.5
112.3
124.3
135.9
146.5
- Female
0-14
23.8
27.2
30.1
33.4
34.0
35.7
39.3
44.1
47.0
47.5
15-59
34.9
43.1
52.4
61.8
66.3
71.6
75.9
79.2
83.9
89.3
6o and over
4.4
5.7
6.3
7.9
7.7
9.0
10.6
12.9
15.5
18.4
Total
63.2
76.0
88.8
103.2
108.0
116.3
125.8
136.3
146.3
155.2
Male and
Female
0-14
47.7
54.7
60.3
67.9
68.5
72.3
79.9
90.1
96.0
97.3
15-59
69.2
82.2
99.3
109.7
118.3
130.3
140.6
149.3
161.2
175.0
60 and over
8.6
10.2
10.9
13.4
13.2
15.2
17.6
21.2
25.1
29.4
Total
125.6
147.0
170.5
191.1
200.0
217.8
238.1
260.6
282.3
301.7
Males as per-
cent of total
population
49.81
. 48.3
47.9,
46.0:
46.cf.,
46.6,
47.2',
47.7,
48.1
48.61. .
Persons aged
15-59 as per-
cent of total
population
55.1-
55.9
58.2
57.4'
59.2
59.8
59.1
57.3
57.1
58.o
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Table 21
Estimated Average Annual Hours .Worked
by Nonagricultural Workers in the USSR a/
Selected:Years, 1897-1975
Year
Average
Hours
per Day
Average
Days
per Week
Average
Hours
per Week
Average Hours
per Year of
,50 Weeks
1897
9.0
6
54
2,700
1902
8.8
6
53
2,650
1907
8.7
6
52
2,600
1912
8.5
6
51
2,550
1913
8.5
6
51
2,550
1917
8.o
6
48
2,400
1926
8.o
6
48
2,400
1927
8.0
6
48
2,400
1928
7.8
6
47
2,350
1931
7.3
5 2n
41
2,050
1933
7.0
5 2/3
40
2)000
1935
7.0
5 2/3
40
2,000
1938
7.0
5 2/3
40
2,000
1939
7.3
5 2/3
41
2,050
1940
8.o
6
48
2,400
1944
9.8
6
59
2,950
1947
8.9
6
53
2,650
1950
8.1
6
49
2,450
1952
8.1
6
49
2,450
1953
8.o
6
48
2,400
1955
8.o
6
48
2,400
1960
8.0
6
48
2,i-OO
1965
8.0
6
48
2,4400
1970
8.o
6
48
2,400
1975
8.0
6
48
2,400
a. These data are extremely rough estimates. They are based
upon varied bits of information. 21/ It is assumed that the
48-hour week will be in force during the period 1955-75.
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shortening hours; (2) gains in leisure could be more readily obtained
by increasing the availability of consumer goods and by reducing extra-
curricular obligation than by reducing Working hours; and (3) the
total demand for goods for consumption, investment, and defensebwill
continue strong.
2. Education and Training.
a. Past Trends.
When the Communist government came to power in the USSR, a sub-
stantial part of the adult population (probably about 6o percent) was
illiterate; over 85 percent lived in rural areas and were engaged in
work requiring little formal education and training. Less than 15 per-
cent of the population had completed primary school, and only 1-1/2
percent had a secondary education or higher.
No substantial progress appears to have been made during the
early 1920's, except in reducing adult illiteracy, expanding university
enrollment to make room for deserving Communists -- often graduated
from special high schools (workers' faculties) -- and creating tech-
nical high schools (technicums) for the training of specialists.
The start of the First Five Year Plan was the signal for an
extremely rapid expansion of all schools, both general and specialized.
Labor had to be trained for industrial jobs concurrently with the
growth of the capital plant. Four-year primary education became com-
pulsory in 1934; and 7-year (intermediate) education, by 1950. Ten-
year (complete secondary) education, although interrupted by World War
II and still little developed as late as 1949-50, is to become com-
pulsory by 1960. Technicums graduated 100,000 to 200,000 persons a
year, and higher educational institutions are currently turning out
engineers, teachers, doctors, and other professionals at the rate of
nearly 250,000a year.
In order to meet current industrial needs more rapidly, the
government founded factory schools (FZU) in which the basic elements
of an elementary education could be obtained in addition to technical
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training. Numerous evening courses and on-the-job training courses,
on which there is unfortunately little statistical information) were
also given. Illiteracy was reduced to below 20 percent by 1939.
World War II caused a fall in enrollments of nearly all
schools, but its pressing industrial needs gave rise to a draft of
children into the labor reserve (FZO), an organization which is still
in existence and has graduated between 300,000 and 1 million skilled
workers a year. The labor reserve differed from the factory schools
in that it was centralized and generally took in students who had
completed at least 4 years of school.
Between 1927 and 1939, full-time enrollments in Russian
schools increased from 11.5 million to 34 million (about the same
number as in recent years). Excluding elementary and 7-year schools,
enrollments went from 750,000 in 1927 to 3.8 million in 1939 to 7.6
million in 1953.
b. Projections.
In 1975, there are expected to be 63 million Russians in
school on a full-time basis, of whom about 17 million will be 14 years
old or over. Detailed information on estimated graduations and at-
tendance in Russian schools since 1875 with projections to 1975 is
presented in Table 28.* The percentage of graduations to the esti-
mated number of children of graduating age is also Shown'in Table 28.
Projections of educational enrollments and graduations were made on
the basis of the following assumptions: (1) the percentage of children
of the appropriate age (11 and 14 years) graduating from primary and
7-year schools will rise slowly to a limit of 95 percent and 80 per-
cent, respectively; (2) the percentage of children (age 17) graduating
from 10-year schools will rise very rapidly in line with recent trends
and, given the official Soviet goals of making 10-year education com-
pulsory by 1960, to 80 percent in 1975; _(3) the labor reserve Will
continue at a reduced level of activity to 1960; (4) technicums will
decline slowly until they have been absorbed completely by the 10-year
schools by 1975; and (5) graduations from higher educational insti-
tutions will rise at a sharply decreasing rate and will reach about
315,000 a year by 1975.
* Table 23 follows on p. 94.
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It will be noted that the tremendous expected growth of 10-
year schools is comparable to the past growth of 4-year schools and
(later) 7-year schools, except for the interruption of World War II.
The percentage of adult Soviet citizens having graduated from 10-
year schools is expected to rise from 25 in 1950 to 44 in 1975.
Seven-year sahoOl.attainment.has grown from .7 percent'in 1939 to about
28 percent today, and 4-year school attainment went from 26 percent
in 1926 to 56 percent in 1950. There is, however, likely to be a
substantial change in the nature and function of 10-year schools.'
In the past, their primary purpose was to prepare for higher educa-
tion with a resulting emphasis on pure science, literature, history,
and other academic subjects on an intellectual level comparable per-
haps to West Eurt*ean secondary schools. Nonscholarship students had
to pay tuition. In the future, standards in 10-year schools are
likely to decline as the schools become media of mass education. At
the same time, at least part of the more specialized training now
obtained in technicums, or even on the job, will probably be en-
compassed by the regular school system, although it is not now known
to what degree the 10-year schools themselves will change their cur-
ricula or, alternatively, to what degree additional specialized train-
ing will follow graduation. In any event, 10-year sehools in the
future will prepare Soviet youth not only for professional and white-
collar jobs but also for the bulk of skilled and even semiskilled
warkers.jobs in industry and-agriculture.
c. Educational Attainment of the Soviet Population.
Table 22* shows the number of Russians (aged 15-59) having
graduated from the principal types of schools during selected past
years and every 5 years to 1975:
The method of computation is as follows: (1) the years during
which each 5-year age group of the population in given years is of age
to graduate from 4-, 7-, and 10-year schools are determined; (2) the
percentages of the population of these ages actually graduating for
appropriate 5-yearperrodaare averaged out; (3) actual population for
each 5-year age :-group is multiplied by these percentages, giving the
* Table 22 follows on p. 78.
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Table 22
Education4 Attainment of the Soviet Population: Number and Percentage of Persons
Between 15 and 59 Years of Age by Highest Educational Level ReaEhed
Selected Years,
1897-1975
Millions
1897
1913
1926
1939
1950
1955
1960
1965
1970
1975
Higher education
0.1
0.3
0:4
1.0
1.5
2.4
3.3
i
4.6
5.5
6.6
Technicums
1.0
2.6
3.6 -
-
4.7
5.2
5.3
5.2
10-year schools
0.2
2.3
4.4
13.7
31.9
56.2
83.7
7-year schools
0.6
1.1
1.1
6.9
21.1
34.7
42.0
40.6
37.1
31.4
Labor teserve
5.7
8.0
9.1
9.0
8.9
8.6
4-year schools
6.9
13.6
22.0
32.7
37.7
34.3
30.5
26.7
23.8
22.1
Factory gchools
2.0
2.1
2.1
2.0
1.7
0.8
0.2
Literate
9.7
20.6
24.2
4o.6
4o.6
36.9
32.5
26.6
20.4
13.7
Illiterate
51.9
53.3
34.5
14.9
4.7
3.9
2.8
3.0
3.2
3.5
Population 15-59
69.2
88.9
82.2
99.3
118.3
130.3
1401.6
149.3
161.2
175.0
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Table 22
Educational Attainment qf the Soviet Population: Number and Percentage of Persons
Between 15 and 59 Years of Age by Highest Educational Level Reached
Selected Years, 1897-1975
(Continued)
Percent
1897
1913
1926
1939
1950
1955
1960
1965
1970
1975
Higher education
0.1
0.3
0.5
1.0
1.3
.l.8
2.3
3.1.
' 3.4
3.8
Technicums
1.0
?2.2
2.8
3.3
3.5
3.3
3.0
10-year schools
0.2
1.9
3.11
9.7
21.4
34.9
47.8
7-year schools and
labor reserve
0.9
1.2
1.3
6.9
22.6
32.8
36.3
33.2
28.5
22.9
4-year schools and
factory reserve
10.0
15.3
26.8
34.9
33.6
27.9
23.1
19.0
15.3
12.7
Literate
14.0
23.2
29.4
40.9
34.2
28.3
23.1
17.8
12.6
7.8
Illiterate
75.0
60.0
42.0
15.0
4.0
3.0
2.0
2.0
2.0
2.0
Population 15-59
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
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number of graduates alive in the given year; (4) to obtain the highest
educational level reached, graduations from higher schools are sub-
tracted from graduations from lower schools in the following-manner:
higher education, all graduates; technicums, all graduates minus 5
percent assumed to have later graduated from higher educational
institutions; 10'-year schools and-workers' faculties, all graduates
minus higher education graduates (after adjustment for 5-percent 'of
technicum graduates); 7-year schools, all graduates -minus 10-year
school graduates and technicum graduates; labor reserve, all grad-
uates; 4-year schools, all graduates minus 7-year school graduates
and labor reserve graduates; factory school, all graduates-; and
literate, but without further formal education, residual: total
population 15-69 minus illiterates, minus all graduates of above schools.
Although part of the labor reserve graduates did complete
7-year school, it is believed that the large majority completed only
4-year school. Factory schools are believed to have been-parallel
to 4-year schools and to-have recruited-few-4-year graduates.
The estimates of Soviet educational attainment are probably
fairly reliable because they are based-on a substantial amount of
data and because the effects of errors in estimates of graduations
for particular years are very'smalL The projections could be thrown
off substantially only by a major change in educational policy.
Certain types of training such as on-the-job training, evening courses,
and the like, are excluded-for- lack of adequatetime series.
Although such training-isto-some degree necessary-for any
new employee and is used-widely in the USSR-for-the-Turpose of-mp?
grading existing workers, its-omission is not likely-to bias greatly
the measure of educational attainment,except-perhaps during the 1930 s
when longer on-the-job training was designed to compensate for de-
ficiencies in formal education.
Educational attainment in the, Soviet labor force may be some-
what greater than in the-total adult-population and may have increased
more rapidly. Compared to-the- educational-attainment of the 15-59 age
group, however, differences are probably rather small,-particularly in
view of the large growth in the education of women.
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_ _ _ _
d. Educational Attainment in the Nonagricultural Sector.
There is no statistical information available on educational
attainment in Russian agriculture, or in nonagricultural occupations,
except for data on literacy in 1897 and on the employment of graduates
from higher educational institutions..
An approximation of educational attainment outside agriculture
may be obtained by assuming (1) that nearly all (90 percent) the
graduates from higher educational institutions, technicums, 10-year
schools, labor reserve, and factory schools were employed outside
agriculture from 1897 to 1955; (2) that illiteracy was much more prev-
alent in rural than in urban areas up to 1939 and that virtually none
of the nonagricultural labor force was illiterate after 1939; and
(3) that a high, but diminishing, percentage of 7-year school graduates
were employed in industry up to 1955 (the percentage falling from 90
percent to 75 percent).
The proportion of 4-year school graduates to the nonagricultural
labor force is assumed to be the same as their proportion to the total
population aged 15-59.
The results of these computations are shown in Table 23.* -
They are decidedly less reliable than those pertaining to the total
population aged 15-59. They may understate the growth in the educa-
tional attainment of the nonagricultural labor force, but not to a sub-
stantial degree.
It is not possible to project these series beyond 1955. It is
likely, however, that the rapid spread of 7-year school attainment in
recent years and the future growth in 10-year school attainment will
cause educational standards to rise at least as quickly on the farm
as in the factory, although they will almost certainly not catch up
by 1975..
In view of the present relative educational backwardness of the
agricultural labor force, the greater emphasis in agriculture expected
to take place in the future, and the rapid projected expansion in total
school enrollments, an assumption that agricultural and nonagricultural
education levels will rise at the same rate from 1950 to 1975 is prob-
ably not unrealistic:
* Table 23 follows on p. 82.
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Table 23
Educational Attainment of the Nonagricultural tabor Force
in the USSR by Highest Educational Level Reached
Selected Years,
1897-!1.955
Millions
1897
1913
1926
1939
1950
1955
Higher education
0.1
0.3
0.5
0.9
1.3
2.2
Technicum
0.9
2.3
3.4
10-year schools
0.2
2.1
'4.o
7-year schools
0.6
1.0
1.0
5.2
10.4
16./
4-year schools
0.7
2.3
3.7
14.9
15.5
14.2
Labor reserve
5.1
7.2
Factory schools
1.9
2.0
2.0
Literate
4.1
8.5
7.4
18.8
7.3
1.3
Illiterate
4.5
3.0
1.4
o
o
o
Total nonagricultural
labor force
10.0
15.0
14.0
42.8
46.0
51.0
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Table 23.
Educational Attainment of the Nonagricultural Labor Force
in the USSR by Highest Educational Level Reached
.Selected Years, 1897-1955
(Continued)
Percent
1897
1913
1926
1939
1950
1955
Higher education
1.0
2.0
3.6
2.1
2.8
4.3
Technicum
2.1
5.0
6.7
10-year schools
0.5
4.6
7.9
7-year schools
6.o
6.7
7.1
12.2
22.6
32.8
4-year schools
7.0
15.3
26.4
34.8
33.7
27.8
Labor reserve
11.1
14.1
Factory schools
4.4
4.3
3.9
Literate
41.0
56.0
52.9
43.9
15.9
2.5
Illiterate
45.0
20.0
10.0
o
o
o
Total nonagricultural
labor force
100.0
100.0
100.0
100.0
100.0
100.0
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3. Occupational Skill.
Independently of educational attainment, an attempt was made to
measure the change in the economic functions of the Soviet labor
force. Table 24* shows the percentage distribution of the Soviet
labor force by occupational group. Apart from the broad division of
labor between the agricultural and nonagricultural sectors, the data
in this table are highly conjectural. In addition, some of the
categories are so broad that changes in skills within them may out-
weigh changes in skills requirements between the categories them-
selves
4. Measurement of the Quality of the Labor Force.
The effect of education and training and of changes in occupational
skills cannot be measured precisely. The problem, however, can at
least be approached by converting available man-years of labor to qual-
ity units adjusted for changes in the composition of labor with respect
to education and occupational skill. To convert man-years into quality
units, it is necessary to weight man:years within each educational
level and within each occupational class. The appropriate weights in
each case would be, theoretically, the marginal value product of the
given class of labor. An approximation to this is the relative wage .
(or product per worker) of each of the several classes of workers in
the USSR.
Data are available on Soviet wages and salaries by occupational
skill. Because there are no data for the USSR on relative wages, or
product per worker by educational level, educational levels were
equated to categories of occupational skills and weighted by the wage
pertaining to the appropriate skill category. The weights used for
both the educational and the occupational classifications are shown in
Table 25.**
. Table 24 follows on p. 85.
** Table 25 follows on p. 87. .(Text continued on p. 88.)
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Table 24
Estimated Percentage Distribution of the Labor Force
in the USSR by Occupational Group 22/
Selected Years, 1902-53
Percent
Agricultural Labor Force
State Other '
Year Agricultural Agricultural
Total
Agricultural
Nonagricultural Labor Force
Engineering,
Professional,
and Technical
Skilled
Labor
Other Workers All Other Total
and Employees Nonagricultural ;Nonagricultural
Total
Labor
Force
1902
86.5
Q.1
0.6
12.5
13.5
100
1913
84.2
0.7
1.2
13.9
15.8
100
1928
2.5
80.6
83.1
1.0
1.7
9.1
5.1
16.9
100
1938
2.2
56.8
59.0
1.7
3.1
27.7
8.5
141.0
100
1950
2.6
49.o
51.6
4.2
7.1
24.1
13.0
48.4
100
1953
2.9
47.5
50.14
4.9
8.2
25.1
11.4
49.6
100
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Table 25
Earnings in the USSR by Level of Education and Occupation
1950
Rubles
Education Completed a/ Average Basic Monthly Wage
Higher education 1)500
Technicum 1)000
10-year general 620
7-year general or labor
reserve 500
4-year general or factory
school 350
Literacy (no formal educatioh) 250
Illiterate 200
Occupational Group bi Average Basic Monthly Wage
Engineering, professional,: and
technical 1,240
Skilled labor 620
Other nonagricultural workers
and employees 372
Other nonagricultural labor
force 250
State agriculture 496
Other agriculture:. 186
a. Educational Classification; Wages and salaries represent es-
timates of the average wage or salary expectancy of persons with
diffeient'amounta of education and-formal-training.. Basle wage.
rates by grade of worker and salary ranges for professional or
*technical persons obtained from the above sources were arraye#, and
.6. median wage selected for appropriate grades. On the basis of
evidence as to grades obtained by persons with different types of
training and education upon entering on the job, the educational
background of persons in certain grades, and judgments on .the qual-
ifications gained from various types of training and education, the
following relationships are assumed: literate (no formal educa-
tion), Grade I; 4-year or factory school) Grade IV; 7-year or
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Table, 25
Earnings in the USSR by Level of.Education and Occupation
1950
(Continued)
labor reserve school, Grades V-VI; 10-year school, Grade VII;
technicum? average of technicians' salaries; and higher education,
average of professional and management salaries. It was further
assumed that wages of illiterate labor would be 25 percent below
Grade I.
b. Occupational Classification. The same basic wage scales are
used as for the educational classification: engineering, profes-
sional, and technical, average of salaries of persons in these
positions -- skilled labor, Grade VII; other nonagricultural
workers and employees, Grades IV-V; other nonagricultural labor
force, Grade I; state agriculture, Grades V-VI; and other agri-
culture, half of the wage of Grades IV-V. All above wage rates
are basic rates. They are substantially lower than actual aver-
age wages because they exclude in-grade raises, incentive pay-
ments, bonuses, and other extras.
? Indexes of average educational attainment or of average degree of
skill required by the types of occupations extant have been obtained
by weighting each percentage category, for the years shown, by the ap-
propriate wage from Table 25. These indexes (Table 26*) are considered
to be indicators of the change in the quality of labor.
The next step is to adjust the supply of labor, expressed in man-
years to account for the change in labor quality. This has been done
by multiplying the labor force each year by the quality index for that
year. Table 27** shows the labor force in quality units measured by
both educational attainment and occupation. Since 1950 has been se-
lected as the base year for the labor quality indexes, a quality unit
of labor is equal to one man-year of a worker of average education or
in a job requiring average qualifications in 1950.
* Table 26 follows on p. 89.
** Table 27 follows on p. 91.
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Table 26
.Indexes of the Quality-of the Labor Force in the USSR
Selected Years, 1902-75
1950 = 100
As Measured by Educational
Attainment
As Measured by Occupational
Classification
Year
Total
tabor Force
Nonagricultural
Labor Force
Agricultural
Labor Force
Total
Labor Force
Nonagricultural-
Labor. Force
Agricultural
Labor Force
1902
60
58
61
65
78
_ 92
1913
. 64
64
64
68
86
92
1928
72
73
72
72
91
97
1938
83
79
86
87
89
98
1950
100 .
100
100
100
100
100
1953
106
110
102
104
104
?101 .
1975
150
150
150
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Table 27
Indexes of the Supply of Labor in the USSR in Quality Units
Selected Years, 1902-75
1950 = 100
As Measured by
Educational Attainment
As Measured by In Man-Years
Occupational Classification Unadjusted for Changes in Quality
Year
Total
Labor Force
Nonagricultural
Labor Force
Agricultural
Labor Force
Total
Labor Force
Nonagricultural
Labor Force
Agricultural
Labor Force
Total
Labor Force
NonagTicultural
Labor] Force
Agricultural
Labor Force
1902
48
14
81
52
19
122
- 80
25
133
1913
61
20
99
65
27
142
95
32
154
1928
58
20
94
59
25
127
82
27
131
1938
69
49
88
78
55
101
90
62
103
1950
loo
100
loo
160
loo
100
100
loo
loo
1953
109
115
104
109
109
103
105
105
102
1975
196
234
159
.
133
156
106
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It will be noted that the increase in the quantity of the total
Soviet labor force in quality units is slightly greater as measured
by educational attainment than as measured by occupational skill.
This probably would not be the case if occupational skill were broken
down in.m6re detail. The difference between the two measures is much
greater when the agricultural and nonagricultural labor force are
measured separately. This discrepancy is.due to the fact that the
difference between agricultural and nonagricultural wages is an im-
portant element in the skill classification but does not explicitly
enter the classification by educational attainment. The effect of
a movement of labor from agriculture to nonagriculture, therefore, is
not reflected in the efficiency of labor as measured by occupational
skill within the two sectors taken separately. The index of the
labor force in quality units as measured by educational attainment
probably reflects more accurately the improved quality of both the
agricultural and nonagricultural labor force, although it may over-
state agricultural and understate nonagricultural educational
attainment in the peak years.
Within the agricultural and nonagricultural categories the skill
breakdown could only be projected by means of arbitrary assumptions.
Unless acvdrastiC rise in the percent of skilled workers and pro-.
fessionali is assumed; labor quality would be projected as increasing
very slowly in view of the very slow expected shift from agriculture
to industry. This does not appear at all consistent with the rapid
expected rise in educational levels, which must certainly have a
substantial effect on labor productivity.
The rate of increase in the quality of the total labor force (as
measured by educational attainment) has shown a gradual upward trend to
1950. This is not the case for the nonagricultural labor force, whose
quality rose slowly from 1926 to 1939 and extremely rapidly from 1939
to 1950. Although this.could result from the arbitrariness of the
assumptions allocating educational attainment to the nonagricultural
labor force, it does not appear that any reasonable allocation would
give a smoother trend. The reason for the much slower rise in non-
agricultural attainment in 1926-39 than in 1940-50 appears to be that
the large movement of labor from agriculture in the first period
tended to slow down the rise in educational levels while no such
movement took place in the latter period.
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Table 28
Russian Education
Selected Years, 1875-1975
Thousand Persons
Year
Enrollments 121
Grades
I-IV
Grades
V-VII
Grades
VIII-X_
Technic=
(VIII-XI)
Workers'
Faculties
Factory
Schools
Labor Higher
Reserve Education
1875
1880
1885
1890
1895
1900
1905
1910
1914
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1,090
1,425
1,724
2,325
2,619
4,213
5,200
6,620
7,236
(6,aoo) y
(7,500)
(7,000)
(7,500)
(8,000)
(8,500)
(9,000)
(9,500)
(lo,000)
10,350
100
160
160
160
165
260
350
500
565
(500)
(600)
(700)
(800)
(900)
(1,000)
1,437
165
123
133
154
164
18o
18o
188
47
(48)
49
219
(5o)
(60)
(75)
(15o)
178
10
15
16
15
16
27
50
80
112
105
163
207
224
213
2o5
165
16o
163
160
* Footnotes for table. 28 folloW on p. 95.,
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? ? ? ? ? ?
Table 28
Russian Education
Selected Years, 1875-1975
(Continued-)
Thousand Persons;
?
Year
Enrollments 2/ (Continued)
Grades
I-IV
Grades
V-VII
Grades
VIII-X
Technicumq
(VIII-XI)
Workers'
Faculties
Factory
Schools
Labor
Reserve
Higher
Education
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
11,583
15,385
17,732
17,674
17,749
18,280
19,077
20,078
20,755
21,202
20,471
20,903
1,615
1,976
2,814
3,518
4,084
4,848
5,852
6,717
7,677
8,780
9,715
12,551
?
190
66
1
67
139
286
491
723
1,013
1,404
1,870
2,808
208
236
594
748
724
602
636
698
739
850
952
945 2/
975
500
? 700
947 .?
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57
(15o)
232
319
353
271
267
'276
(200)
(150)
108
5o
?

(250)
(400)
585
975
959
(600)
(400)
288
(250)
(250)
244
(275)...
333 a/(850)
300 2/
300 2/
200 2/
100 2/
50 2/
.
(1,100)
(800)
(750)
(732)
(1,176)
(1,796)
167
1917
272, .
391
492
417
47o
516
542
547
590
617
5.05
313
227
, 321
439
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
_Thousand Persons.
Year
Enrol1ment8 41/
(Continued)
., Grades Grades
I-IV V-VII
Grades
VIII-X
Technicums Workers'
(VIII-XI) Faculties
Factory Labor
Schools Reserve
Higher
Education
1947
1948
1949
1950
1951
1952
1953
1954
1955
1957
1960
1965
1970
1975
30,866
21,920 11,080
17,020 12,210
13,020 j2,710
24,423
16,800 2/ 11,200
20,000 2./ 12,000
23,600 2/ 14,200
24,800 2/ 15,700
28,000 e/ 18,300
2/
2/
2/
2/
2/
1,114
2,270
3,270
4,577
5,200
9,300
11,500
13,500
15,700
2/
2/
1,084
1,120
1,084
1,308
1,000
1,000
1,000
610
? 38o
230
6o
2/
2/
2/
2/
2/
2/
(1,723)
(1,271)
(859)
(691)
(626)
(900)
(1,loo)
(500)
632
670
734
774
- 841
910
916
1,000
-1,000
1,150
1,200
1,250
2/
2/
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
Thousand Persons,
.Graduations 2/
Year
Grade,
IV 17
Grade ,
VII 17
Grade,
x I/ Technicum
Workers'
Faculties 1/
/ Factory Labor
School Reserve
Higher
Education
1875
-218
20
2
1880
285
32
3
1885
H345
32
3
1890
425
32
3
1895
524
33
3
19010
843
52
5
1905
1,040
70
10
1910
1,324
100
16
1914
1,400
1919
1,100
1920
1,000
1921
1,100
1922
1,200
1923
1,300
1924
1,400
Negligible
1925
1,500
Negligible
20
1926
1,600
50
Negligible
Negligible
24
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
Thousand Persons
Year
Graduations 2/ (Continued)
Grade
IV f/
Grade
VII f/
Grade,
x17
Technicum
Workers' ,
Faculties f/
Factory
School
Labor
Reserve
Higher
Education
1927
1,700
100
Negligible
12
30
1928
1,800
150
29
12
6o
1929
1,900
200
(50)
13
71
1930
2,000
250
(90)
15
100
1931
2,300
300
(100)
39
loo
1932
2,600
450
108
60
234
1933
3,000
600
Negligible
133
83
390
1934
3,300
750
Negligible
97
92
384
1935
3,400
9oo
46
ilk
58
240
1936
3,500
1,050
109
111
67
160
1937
3,600
1,200
144
156
71
115
1938
3,700 .
1,350
159
201
52
100
101
1939
3,800
1,500
216
204
39
100
102
1940
3,900
17650
312
208
28
200
106
1941
4,000
1,800
359
191 -
13
200
650
109
1942
4,000
1,500
280
(70)
450
69
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
Thousand Persons
Year
Graduations .91 (Continued)
Grade,
IV !'/
Grade ,
VII 1/
Grade
X 1/
Workers' ,
Technicum Faculties 1/
Factory Labor
School Reserve
Higher
Education
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1957
1960
1965
1970
1975
3,700
3,600
3,700
3,800
4,loo
4,500
4,550
4,650
4,700
4,800
4,600
4,400
4,200
4,750 2/
5,900 e/
6,200 -6/
7,000 i/
1,250
1,200
1,350
1,500
1,700
1,825
2,000
2,300
2,600
3,000
3,100
3,200
3,300 2/
3,600 2/
4,200 2/
5,000 2/
5,800 2/
190
100
130
109
150
168
194
230
280
335
440
755
1,110
2,3652/
3,200 2/
4,o5o 2/
4,900 2/
(80)
(100)
loo
191
230
252
246
220
210
205
200 2/
195
190
1352/
90 2/
40 2/
o 2/
4o0
40o
350
382
796
1,000
723
494
365.
326
300
6po 2/
500 2/
100 2/
28
36
54
77
103
136
163
173
181
200
215
230 2/
240 2/
280 e/
295 2/
305 2/
315 2/
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
Percent
Graduations as a .Proportion of the Population of Graduating Age
Year
Grade
IV
Grade Grade
VII X
Technicums
Workers'
Faculties
Factory Labor
Schoolt Reserve
Higher
Education
1875
11
o.8
0.1
188o
13
1.2
0.2
1885
14
1.3
0.2
1890
16
1.2
0.2
1895
20
1.2
0.2
1900
28
2.0
0.3
1905
33
2.7
0.5
1910
37
3.8
0.6
1914
38
4.o
1919
30
1920
28
1921
30
1922
31
1923
32
1924
33
1925
33
o
0.7
1926
35
2
0
o
o.8
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
Percent
Graduations as a Proportion, of the? Ropplp.:tion, of -Graduating Age (Continued)
Year
Grade
IV
Grade
VII
Grade
X
Technicnms
Workers'
Faculties
Factory
School
Labor
Reserves
Higher
Education
1927
41
3
o
0.2
1.0
1928
47
I.
o.6
0.2
1.9
1929
53
6
1.0
0.2
2.3
1930
67
7
1.8
0.3
3.3
1931
86
9
3.0
1.3
5.3
1932
83
13
2.1
2.0
7.9
1933
85
18
3.8
2.9
13J+
1934
87
22
3.0
3.1
13.1
1935
88
25
1-
3.3
2.0
8.o
1936
89
28
3
3.2
2.2
.5-3
1937
89
31
4
4
2.4
3.8
1938
90
34
4
6
1.7
3.2
3.4
1939
90
37
6
6
?1.3
3.2
3.5
1940
91
40
9
5
o.8
5.9
3.5
1941
91
42
lo
6
o.4
5.6
16.7
3.6
1942
85
38
8
12.5
2.1
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)
Percent
Graduations as a Proportion of the Population of Graduating Age (Continued)
Year
Grade
IV
Grade
VII
Grade
X
Workers'
Technicums Faculties
Factory Labor
School Reserver
Higher
Education
1943
80
35
3
2
12.5
0.8
1944
8o
35
2.5
2.5
12.9
1.0
1945
82
39
4
3
11.0
1.4
1946
85
43
3
6
11.8
2.0
1947
87
47
4
6
23.8
2.3
1948
90
51
it.
7
29.7
3.2
1949
91
55
5
7
21.0
3.7
1950
92
62
6
6
14.1
3.9
1951
93
67
7
6
10.2
4.5
1952
95
74
8
6

5.2
1953
95
8o
11
?6
7.5
5.5
1954
95
82
14
6
13.6
5.8
1955
95
85
26
6 '
11.1
6.6
1957
1960
95
87
58
4
2.1
6.4
1965
95
90
71
2. '
6.9
1970
95
90
76
1
7.0
1975
95
90
80
6.1
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Table 28
Russian Education
Selected Years, 1875-1975
(Continued)?
a. Projections. Sum of projected graduations for the following 4 years for Grades I-IV and the
following 3 years for Grades V-VII and VIII-X. Adjustments for retardation: Grades I-IV, none;
Grades V-VI, 10 percent in 1955, 5 percent in 1960-70, none in 1975; Grades VIII-X, 20 percent in
1955,45 percent in 1960, 10 percent in 1965, and 5 percent in 1970 and 1975.
b. Figures in this table in parentheses are interpolated.
c. Includes correspondence students. Projected enrollments computed as sum of projected gradua-
tions during following 4 years adjusted for retardation in the same manner as 10-year schools.
d. 1941 Plan
e. Projected.
f. On the basis of occasional data on graduations and enrollment series, smooth curves were drawn
showing the trend of graduations in past years and projected to 1975. See text for assumptions used
in projecting. Prior to 1914, it was assumed that graduations were 20 percent of enrollments each
year.
g. Graduations given as 274,000 in 1931-34, and as 58,000 in 1935. Assuming a 1-year lag, these
amount to about 25 percent of enrollments. The same percentage is applied to other enrollment
figures to obtain graduations 1 year :later.
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APPENDIX C
METHODOLOOY:FOR FACTOR-INPUTS METROD
1. Nonagricultural Sector.
Independent projections were made of the nonagricultural labor
force and efficiency and of the agricultural capital stock and out-
put. The nonagricultural capital stock, however, had to be deter-
mined simultaneously with nonagricultural output. The fixed capital
stock which the USSR will have in 1975 depends upon the, amount of
fixed capital stock it now has, the additions to this through in-
vestments from now to 1975, and the deductions from this through
retirements during this period. Since the investment in any one
period depends on the allocation of a part of gross national product
to this purpose, investment depends on the size of gross national
product and the other deductionsfromjit. The final estimates for
fixed capital stock and gross national product in 1975 were actually
determined y trial and error so that they were consistent with gross
national product and investment estimates during the 1953-75 period.
The consistent estimates of gross national product and fixed capital
stock in 1975 resulted in the following total fixed investment in
billions of 1951 rubles fon-the period 1953 to 1974:
Assumption
A
Total of gross national products,
1953-74 39,700 35,310
Less: Total allocation to consumption,
1953-74 18,970 21,130
Total allocation to defense,
1953-74 3,920 3,920
Total allocation to administration,
1953-74 990 880
Total allocation to working capital,
1953-74 5,270 3,130
Equals: Total allocation to fixed investment,
1953-74 10,550 6,250
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The final fixed nonagricultural capital stock in billions of 1951
rubles at the beginning of 1975 was determined as follows:
Total fixed capital stock, beginning of 1953
Assumption
A_
1,450
1,450
Plus:
Total allocation to fixed investment,
1953-74
10,550
6,250
Livestock, beginning of 1975
130
150
Less:
Retirements, 1953-74
3,330
2,640
Agricultural fixed capital,
beginning of 1975
460
780
Equals:
Fixed nonagricultural capital stock,
beginning of 1975
8,30
4,430
The 1975 Soviet nonagricultural output can be computed from the
nonagricultural labor supply,* the fixed nonagricultural capital stock,
and the efficiency fact6r. The formula used in computing nonagricultural
output is as follows:
Nonagricultural output = L + (1-a) E7 E
where output, L, and K are quantity indexes (1953 base) of nonagri-
cultural output, nonagricultural labor force, and nonagricultural
capital stock; where a and (1-a) are the shares of labor and capital
in the value of output in a base year; and where E is an Efficiency
index.
Nature of the Production Function.
The production function used in this report is only one of many
possible functions that could be used. It has the advantage of being
relatively simple and of showing clearly the quantities of labor and
capital inputs that may be available to the USSR in 1975, On the
other hand, the efficiency factor used is a conglomeration of many
elements, some of which tend to be offsetting in their effects on
output. For some purposes, it is useful to distinguish between the
problem of substitutability between factors and the problem of returns
to scale. To the degree that factors cannot be perfectly substituted
for each other, a change in their proportions under conditions of constant
* TIT, 9,r2, above.
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technology will tend to reduce output. On the other hand, a proportional
increase in both factors tends to increase output. Consequently, a
disproportionate increase in the factors tends ?to increase output less
than a proportionate one. In an actual growth situation, technological
Changes occur and may occasion both changes in factor proportions with-
out loss in efficiency and also greater returns to scale.
The combined inputs index used in this report can be defined as
an arithmetic mean of the individual input quantities, weighted by
the prices (or marginal productivities) of these inputs in a base
?
year. The fOrmula May be expressed as fallows:.
(alp +4.1(p)
Nonagricultural output
(alio + 41