JPRS ID: 8330 TRANSLATIONS ON USSR ECONOMIC AFFAIRS

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000100030033-1
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 82
• Document Creation Date: November 1, 2016
• Sequence Number: 33
• Content Type: REPORTS

APPROVE~ FOR RELEASE= 2007/02/08= CIA-R~P82-00850R000100030033-'1
I ~ ~ 1 OF ~

~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
- FOR OFFICIAL USE ONLY -
- JPRS L/8330
12 Ma rch 19 79
~
~
T RANS LAT I ONS ON USS R ECONOM I C Af=FA I RS
(FOUO 3/79)
? .
!J. S. JOINT PUBLICATIONS RESEARCH SERVICE _
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~
NOTE
JF'RS publications conCnin informaCio~i primarfly from foreign
newspapers, peri~dicals and books, but ~lso from news agency
_ transmissions and broadcasts. Materials from foreign-language
sources ~re translated; those from ~nglish-language sources _
ar.e transcribed or reprinted, with thc original phrasing and -
other characteristics retained.
Headlines, editorial rrlports, and material enclosed in brackets
[j are supplied by JPK5. Processing indicators such as [Textj
or (ExcerptJ in the first line of. each item, or following the
last line of a brief, indicate how the original information was
processed. Where no processing indicator is given, the infor-
mation was summarized or extracted.
Unfamiliar names rendered phonetically or transliCerated are
enclosed in parentheses. Words or names preceded by a ques-
tiun mark and enclosed fn parentheses were not clear in the
original but have been supplied asappropriate in context. ~ ~
Other unattribured parenthetical notes within the body of an -
item originate with the source. Times within items~are as -
given by source.
The contents of this publication in no way represPnt the poli-
cies, views or attitudes of the U.S. Government.
~
COPYRIGHT LAWS AND REGUI.EITIONS GOVERNING OWNERSHIP OF
MATERIr~?LS REPRODUCED HEREIN REQUIRE TNAT DISSEMINATION
OF IY.IS PUBLICATION BE RESTRICTED FOR OFFICiAL USE ONLY.
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
010LIOGRAPHIC OATA 1. Il~ ~.~~ri N,,. 2. J. It~ ~~~~~~.nt'v A~ ~~i ,yi,~?
SHEET .~PHS [,/8330
A. l~~ 1~ .ni,l ~�nb~ i~ I~
'l'ItANtiI,A'l'iUN5 UN ltSSlt I~:c:uNcfMic: AI~I~AIIt5 ,(FOUO 3/79) S It 12'~March 1979
6.
7. .1u~l~~~ii.i 8. I~cr1~Nm~nR (h~;amnni~~n Il~ ~a.
Nu.
V. I'~rl�~~wn~: Itr~;.~~ni.~iiun'~i.im~ .~nd AJJr~x. 10. I~ru~rcc/1'.~sk/u'~~rk Un~i
,ioint Publications Research Service -
1U00 North Glebe Road 11. Contrect/Gr~nt tio,
Arlington, Virginia 22201
_ 1 Z. ~~�~m~~~nnK Ur~;,~n~iau~m `amc ~nd Addresc 13. 'fypc of Repurt 8c Peri~d
Covered
As above
i
is. ~~,,r> ti~~��s
" te. ~r,~~~,~~
'l'i~e report contains information on recent administrative plans, changes, and
- policy [rends, items on the state of the national economy, ~ignificant and
representative comments and statistics on principal industrial sectors.
17. ~ 4~~r,1. .~nd Uck umcnt Analysis. 17a. Ilcscriptors
U5SR
~'�~~onomics
_ 176. IJrmi~u r. U~.~~u l ad~�J 7~t�tm.
Ur. ~ ~~.All I~~�I~1/I.r~~ul� 5C
18. 1. ~~l.d~ili~~� ?r.u~�m~ u~ )9. C~c urity ( lass (7'hi~ 21. \o. I'.~~~ .
I'ur Ufl~icinl ltsc~ Only. I.imitc~d Rcporcl .78
_ ;Vumber uf Copies Available Erom JPRS '`fCUft[Y~ I05i ~I-II15 z2. t~~,�
_ ~.]RC
~ . ~ UnCI.A~~IFIF.D
7IIIS FURM MAY HE REPRODUCED VSCOMM�OC '~95~�P72
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
1~'OR OF'I'ICIAL US~ ONLY
l
JPR5 L/8330 _
12 March 1979
TRAIVS LAT I oNs o(V uss R ECONOM i c AFFA i Rs
(FOUO 3/79)
_ CONTENTS PA~E
Theoretical Problema of Socialist Reproduction Discusaed
. (G. Sorokin; VOPROSY EKONONaIQ, 3an 79) 1
Capital Inveatment Efficiency in Nonproduction Sector Discusse~
(T. Khachapurov; VOPROSY EKONOMIKL, Jan 79~ 18
Intersector C~pital Inveatment Complex Examined
(V. Krasovskiy; VOPROSY EKONONiIKI, Jan 79) 35
Balance Sheet Method of Planning
(P. Krylov; VOPROSY EKONOMIIQ~ Jan 79~ 48
, Final Produrt Accounting Will Improve Agriculture's EfPiciency
(V. Tikhonov, M. Lezina; VOPROSY EKONONNUKK[, Jan 79) 62
- a - ~III - USSR - 3 FOUO)
FOR OFFICIAL USE ONLY _
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~ FOR OFFICIAL USE ONLY `
THEORETICAL PROBLEMS OF SJCIALIST REPRODUCTION DISCUSSED
M~scow VOPROSY EKONOMIKI in Russian. No l, Jan 79 pp 25-36 ~
[Article by Corresponding Member of the USSR Academy of Sciencea
G. Sorokin: "Problema in Cha Theory of Socialiat Reproduction"]
[Text] Reproduction during the period of mature soGialism is character-
- ized, first, by an increaeingly complete manifestation of the featurea -
which are characteriatic of reproduction during the firat phase of the
communist formation, and, secondly, by a broad workfront for the construc-
tion of the material and technical base of communism and the evolution of
socialist reproduction as a whole into communist reproduction. Both of
theae processes occur at the same time and are determined by one another; -
the latter are based on the succeases of the former, and the development
- of the communiat featurea of reproduction promote a fuller manifeatation
- of the advantages of socialism. The tempoa of co~nunist transformationa
_ gradually accelerate.
At the stage uf mature socialism reproduction is increasingly oriented
toward the solution of major social problems. Increasing resources make ~
it possible, in addition to an expansion of the material and technical
base and a thorough strengthening and development of socialist production
relations, to carry out ever wider transformations of all sa?t~aliet
relations. During the course of this transformation the essent~al differ-
ences between town and country and intellectual and physical labor are over- -
come, the social homogeneity of labor becomes atrongert the well-being of
= the worke:s incre~~ses at rapid rates, the comgrehensive development of
every individual is ensured, and relationships of comradely cooperation
- become stronger in the world socialist system. Socialist reproduction
becomes richer in content, its results become directly connected with a -
rise in the material and cultural levels of the populatic,n, and a new way
of life is formed.
1
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
i~OR Oi~FTCiAL Util? ~:iN:,~
At one Cime there wus wlde recognition for r,he point of view in accordance
with which "expaiideci s~cluliat reproducrtc~n means above all an increase in
tlie ~roHS ancial product; Chen...an incr~ase iu the ex:Lsting means of '
rr~~duction (the implem~nta of labor an~! Che ~ub~ectE ~f labor); Chen...Che -
groa~th of the working class and of its wage f.und; and, finally, it means
- the allotment of a certain part of the ;oc1.:~ ~~~roduct: (profits) for the
needs of socialisC accumult~tion and capital construction."1 An analysis
of r.eproducCion in developed socialiat s~ciety and the growing role of
social problems require rhat thEre be lncluded in C~is formula the
reproduction of lat;or p~wer in tl~e economy as a whole (and not only in
industry), aRd also the r~:pro~3uction o� ;~ublic wealCh, th~ environment, atid
the warld socj.ulist economy.
Under developed socialism the e:tpanded reproduction of the first productive
. force of society--labor powei~-~-aad the h~rm_~nious development of the indi-
_ vidual become a very imrortar;t soci.o-ecunomir. task. Yn addiCion to an
increase in current conaumption, society is in need of an accsmularton of -
wealth, in particilar those of its component parts like bastc non-produc-
tion capital and the property of. the population, and of a renewal of the
n~ormal natural conditions for labor and life. Reproductioa in any given ~
_ socialist countr~� is closely interwoven wiCh reproduction in other socialist
countries, and an isol.ated cunsideration of it proves to be invalid.
During the process of the ;radual transition to communism and as a~ingle
communist ownership is formed reproduction becomes socially completely -
homogeneous. Class differences are eliminated in the producCion and
consumption of the social product, national incom~, public wealthy and
so for[h. Gradually, *_he mechanism of reproduction is also transformed:
state ~ontrcl over the measure of labor and production and state planning -
- are replaced by public control and gJ.anning; wages, prices, pXOfits, and ~
other value forms and levers die away and co~t accounting also changes ~.ts
_ forms. Labor becomes a prime vital need and moral stimuli and an endeavor -
to create increasingly become the chief ineans of motivation to highly -
producti~~e labnr. All this presu~poaes an improvement of the socialist
economic mechanism and a fuller use of its possibilities. '
The social thrust of socialist reproduction is very vividly illustrated by
V. I. Lenin's schemes which were published in the Lenin Collection, 38.
These schemes contain a great deal ~n co~non with the schemes in "Capital"
and with the schemes in V. I. Lenin�s work, "About the So-Called Markets
Question." However, in the schemes being considered here the emphasis is
put oa ;liscovering the results of soci~alist reproduction, while in the
. previo~~s schemes the abstrac~ theory of realization was chiefly illustrated.
Before analyzing the new scheme,2 it has to be noted that a terminology is
used in it which is common f,~r capitalism and socialism ("constant capital,"
"variable capital," and so forth). This, of course, is a conventional use
of identica~ terms: each of them hss a fund~mentally different content
under socialism and capitalism. The scheme singles out the workers'
~
2
FOR OFFICIr'~L USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
_ FOR OFFICIAL USE ONLY
consumpC~l.on whose ma~niCude, as follows from the calculations which are ~
cited, embraces Che consumption of a11 of the workers of socialist society.
Finally, etie inclusion in the scheme of Che column "100 yeara of socialism"
presupposes, in our opinion, an examinaCion of socialism noe at its t
initial, but at j.ts mature stage when it is transformed inCo communism,
and the disclosure of Che typical features of socialist (largely commun-
ist) reproduction in general, and not of its iniCial per~.od.
_ V. I. Lenin's schemes are based on the following chief laws of socialist
reproduction: higher economic development raees than under capitalism; -
Lhe subordination of producCion to the tasks of raising public well being
and of the expanded reproducCion of labor power; the development of the
technical organizaCion of production; the preferential development of
subdivision I compared to subdivision II with the gradual equalization !
of their growth rates; and an increase in production efficiency which,
even with a lowered accumulations norm, ensures an increase in econoruic
growth rates.
3 -
FOR OFFICIAI. USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
FOR OrFICIAL U5E ONLY
~
, ~ r o -
= ` y 1: � '
~ r ~ V^)
c~ N n ~ ' N 0 H~
V
a~ r ~ . ~ N N
a S t9 p C ~
c ~ C, C~
~ ~ i
~ ti
~
HU~O1 '
�tlV.tvu~ N . ( ' ' I
�11~ i1111J1' ~ C I
�9dd1U(~ ( ~ ,
~ ~
~ na fi ~9 j ~ . 3E ~ ~ ~
~a,
R r c c ~ ;,8 g4 g2 G.
O M Ir ~ O O O ~
~ o a v~ ~i u~ C'~ t'7 ~ 4~ .
-.v ~ r,
M ~ _
; ~ ^ ~ _ ^ '
u a u o+ , ch ~ h
( ~ N
7 O C~ ~ M Cj ~
1+ ~ .
g ~ -
~ Y
w O ~ N O v v,
~ N O n , ^ G ~
~ ~ Q CV � � y~ ~ 'n N N _
C ~ v ~ ~ . -
u m '
:
a a
R ~ o v s~ e; r; IIcJ.~ The output of subdivision Z ~
greater than the replacement fund in bo~Eh subdivisiona ~1(~ -I- v-~- m) >(Ic Ilc)].
- All of newly created value is gxeater than the output of eubdivision II
ll~v+m) +~II(v-{-m)J> Il(c ,-v-{-m).
In analyzing the social problems of reproduction it would be useful, in our
view, to distinguish one other condition: the output of subdivision ZI ~
exceeds the conaumption of the workers of the sphere of material production
[I[ (c -i- u-;- m) >(v~ v:))� This excess ensures the attraction of new
workers into the sphere of material production, an increase in their
consumption, and the mainten~nce of the workers of the non-material sphere. `
An excess in the production of the means of production over their replace-
ment fund, of newly created value over the outpuC of subdivision II, and
of the p~oduction of consumer goods over current consumption which is
expressed in the creation of additional consumer goods for new workers
and for increasing the consuraption of e:cisting workers comprisea the
- potential of expanded reproduction. _
= In 1959 the newly created out~ut of subdtvision ~.I exceeded the replace-.
ment fur~d of subdivision TI by 22.7 billio~i rubles, in 1966--by 25
billion, in 1972--by 50.7 billion, and in 1975--by 51.8 billion rubles.
= Such is the Freponderance of the total output of subdivision I over the
overall replacement fund, and also of national income over the output of
subdiviaion II. The output of subdivision two exce~~ded total pereonal ~
- consumption in the sphere of production by 41.2 billion rubles in 1959, -
73 billion in 1966, 104.8 billion in i972, and 127.7 biYlion rubles in
1975.
In examining the data on expanded reproduction in the USSR during the years
1959-1975 it is necessary to pay attention to the following. The output
of subdivision I exceeds the replacemenz fund and also the outp~~t of
; 6
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
FOR OFFICIAL USE ONLY
aubdivieion I'I to a amaller degree than it exceeds accumulationa. The
ie explained by the fact Chat the replacement fund is computed not as ot
- Che beginxling of the reproduction period (year), but as of its end (that
is, including the expansion ot production whi.ch has already occurred).
The amount of Che exceas is th~ remnant which goc~ over to the expanded
reproduction fund of the following year. What has been said also applies
" to the preponderance of th~ auCput of aubdivieion II over conaumption -
in the ophere of material production. This contributio~n to the expansion
of production during the following period plaqs an ~mporrant role and
comprises around one-half of total accumulations. If the cgrry-over
remnant proves to ue insufficient, then in order not to lower the reproduc-
tion ratAa it has to be compensated for on the ba~is of the ouCput of the
future period, whichr h~we�?er, is not always posaible; for example, in the
production o� complex equipment.
- xhe figures ahow that the average annual "contributions" to the future
expanaion of the producti.~n of consumer gooda have been systematically
increasing. This is the e�fect of the orientation of aocialist reproduction
toward improving the well-being of the population. On the other hand,
relatively apeaking, the "contributiona" to the future expansion of the
production of the mear.s of production have been decreasing somewhat. This
_ decrease is most noticeabl~ with reapect to the amount of capital, which
tesrifies to shortcomings in its use.
The above-cited analyais of the moat general conditions of realization has
to be supplemented b~ an analysis of thc: realization of the means of
- production, includifi~ the means of labor, the imple;nents of labor, and the -
sub~ects of labor, of the distribution af consumer goods for the expanded
reproduction of l~bc~r ~~wer and for the maintenance of the non-production
_ sphere, of the distrit~u4,ion of the product betw2en industry and agriculture,
and so forth. For e~r;oanded socialist reproduction it is i:nportant that
the surplus of the ~e~ans of production over the rsplacement fund makes it
possible to increase production in both subdivisions I and II and to
~ ensure during necessar;~ periods the gradual equalization of their develop-
ment rates. It is also important that the means of livelihood fund exceed
the costs of the expanded reproduction of labor power in the sphere of
material production, and that the resources for the de~elopment of the non-
production aphere increase.
- Within the total amount of the industrial means of production the proportion
of the means of labor during the years 1960-1972 came to an arerage of 22-23
percan+:, declining somewhat toward the end of this period.. Around 72 ~
percent of the means of production were produced for subdivision I, and
around 28 percent for subdivision II. In 1959 an expansion of production
~ had assigned to i~~ 75.4 percent of the value of the surplus product (of a
subdivision), while in 1972 the figure was 60.9 percent (for the non-pro-
duction aphere--24.6 and 39.~. percent, respectively). A certain shortage
of equipment for the mechanization of Rabor and for reequipping the light -
. 7
FOR OFFICIAL 1'JSE ONLY
k. �
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
_
~
FOR OFFICIAL US~ ONLY
and food industry is being felt. Of grear importance for an analysis of
= reproduction is a study of the distribution of ],abor rea4uraes and of labor ,
power and other more concreee proportions: for example, a:elative analysis
of the turnover of the product and of monetary turnover, and of Che moneCa.ry -
income of the population and retail trade turnover and fee services. This
requires An improvement of the correspon~iing statiskic~l reporting.
~ The increased role of social factors and the expansion of the range of
production problems makes it n~cessary to deepen research on economic
development rates and socio-economic proportions which are different in
- the degree to which they can be studiad and controlled. At the etage of
- the development of socialism into communiam the relationships between the
productive forces and the environment, the productive forces and production
- relations, and material productive forces and labor power become very
important.
_ The movement to devel.op socialist and, especially, communist production,
a rspid development of the non-production sphere, the drawing into
cixculation of new sources of energy and raw materials along w~th the old
ones, a rise in soil ferti.lity, the productivity of agricultural livestoGk,
and the useful biolegical properties of piants, an improvement of the envir-
onment, and so forth require enormous accumu~ations. Of great importance
' here i~ the development of new sources of capital, the replacement of
extensive sources of growth with intensive ones, a sharp increase in the
effectiv~ness of the use of national income (of accumulation and consump-
tion), and thp redistribution of national income between industry and
agriculture. Social reproduction is cntirely subordinate to the law of ~
an economy of time and an economy of live and past labor. An improvement
- of effi.ciency and quality has to become the chief economic criterion of
_ rational reproduction. Already at the stage of socialism the resources _
_ which are formed as a result of increased efficiency have to exceed the =
resources which are obtained with an extensiva expansion of production. ,
The more rapidly sociaiist ~ociety moves to the highest phase of the
- socialist formation, the more impor~ant will be ~he rol~ of the intensive -
~actors of forming accumulations. This requires the development of new
methods of in~re~sing efficiency. As was pointed out at the 25th Congress
of the CPSU, i~t is essenrial to improve the quality of output and the
qua?ity of work, to accelerate scientific and technological progress, to
achieve a substantial new ups~ge iti labor productivity, to reduce materials
int~nsiveness, and to increase yie~d from capital.
In order to determine the gro~wth tendencies of the sources of economic -
- development it is important to correctly evaluate the role of intenaive and
extensive sources in modern reproduction. However, the evaluations which
we have differ ~rom one another by two and more times. At the basis of
the differences are different concepts of intensive and extensive factors. -
Some writers identify intensiveness with a rise in the productivity of
live labor, while other identi~y it with an economy of live and past labor.
8
- FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~ POR OtTICIAL U5~ ONLY -
- In our view, only g calculation of the total economy of labor (live and
paet) correctly reflecte an intengificaCidn o� reproduction.
: ~
The problem of rateB ig one of the moet importent onee in the theory of
socialist reproduCtion whose central task ie the etudy of the conditions
' which enaure high economic growth rates. 7l'hie probl2m can be solved in
- t~a wgYe: by means either of retaining preeent groWth raCes, or of -
increasing them. Some ec:onomiets are putting foreh the problem of
"~ubstantiating the neceasity for maintaiaing high economic gros~th rates."~
In our opinion, it ia necessary to study the puseibilities of accelerating
the present develapment ratea of the Sc,viet economy.
ll~etorically, the growth rates of the socialidt economy have been set by
the competition with c~pitaliem. Socialism and communism are victoriaus
over capitalism on the baeis ~f more de~~eloped productive force~. Therefore,
the socialist economy has to groar more rapidly than tne cEpitalist economy.
The necessity for competing aith the capitalist world will continue through-
ou[ the entire period of communiet conatruction. Aad for this reason the
necessity for higher e~ot~omic groarth rates than in the capitalist countries
Will also continue. Lenin':- scl~eme~ of socialist reproduction set higher
dt~owtt~ ratea under social~.sm than under capitalism, namely: over a period
of 200 years capitaliam increaees the social product by 21.7 times, While
socialism increases it hy more than 80 timea in 100 years.
Groa~th rates depend upon many circumetances and express diverse phenomena.
The growth ratea of production and accumulatioas are one thing, and the
gro~rth rates of coneumptioa an9 of the people's cultural level are ~inother.
The problems of the growth rates of industry and qgricultuy-e are also
solved in various Ways; within industry--heavy and light; Within accumula-
tions--production and non-production. At the eame time, the groWth ratea
are interconnected in the proceas of the fuactioning of the economic complex
and comprise a single system whoae elements depend upon one another.
The development rates of the economy of the USSR have been different dur3ng
differen[ periods. During the pre-war years the develo
~ especially heavy industry, wae accom lished. ~nt of iadustry,
_ 1940's and ia the 1950'a the economypWas rapidlyrreatoredsandntherefwas ahe
preferential development for the branches of ::,~lustry upon Which the
scientific and technical base of socialism wns bae~d. The 1960's and 1970's
have been years of large structural changes in the econmy. The construction
- of the material and [echnical base of communism is tai;ing place, the riae
in public vell-being is intensifyir,g, and more and more resourcea are being
_ ss~itched to the indus[rialization of agriculture. The papulation's incc~me
is gros~ing at stable high rates, the development rates of agricultural
production are increasing~ while the growth rates of induatry are decreasing
somewhat compared aith the previous period,
9
FOR OP1rICIAL OSE OHLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
I~Ok Or'MICIAI. U5~ ONLY
The structural changes which have occurred, tt~e incre~se in the dimensions
_ oE production and its reequipping~ the intQnaification of the economy,
major work to create a gtable nnd highly productive ngriculture, and a rise
_ in the culturul and technicnl level of the workers make it possible, ~n our
vieW~ to pose Che queetion of increasing economic growth raCes in the 1980's.
:4ulti-branch heavy induetry is the baeis for high development rat~s in the
Soviet economy during the forthcomtng decade. During the years 1961-1977
the output of group "A" increased by 3.9 percent and came to three-fourths
of total industrial output. In order to characterize the progrebsive
movement of heavy industry let us examine the growth of the metallurgical,
machine building~ and Fuel and enery complexes. In 1960 the USSR smelted
65 million tons of steel and in 1977--147 million tons. In 1960 steel
smelting in the U5SR came to 71 percent of th~ level which had been re~ched
in the United States. In 1977 the US5~t exceeded the United StaCea in
this respect ay 26 percenG During the years 1961-1917 machine building
output increased by 6.4 times. The Soviet Union occupies first place in -
the world for the number of inetal-cutting machine tools. The Soviet machine
tool pool is younger thun that of the United SCateg of America. The inter-
national specializatior~ and cooperation in producCion vf the socialiet
countriea is promoting the development of machine building. However, the
worlds largeat complex of leading heavy industry branches poesessPS even
greater unutilized reservps, above all, through a better operation of
productioa capacities aad a riae in the technical level of production.
During Che 1960's and 1970's a great increase occurr~d in the productive
capital and output of the fuel and energy complex of the USSR. During these
17 years petroleum extraction increased from 148 to 546 billion tone, coal
extraction--from S10 million to 722 million tcu~~ ar.3 thp production of ele
electric eaergy increased from 292 billion to 1 trillioa 150 bill~an kilo-
watt-hours. Total fuel and enQrgy resources (in terms of conveational fuel)
increased from 836.5 million tons in 1960 to 1,989,300@00~
- tons in 1971 and come to 1.7 tons per capita. The USSR extracts more coal
and petroleum than the United States. As is knowa, the Soviet fuel industry
has uninterruptedly supplied the economy, including during those years when
the capitaliat countries were aeize-~ by an energy crieis.
The above examples show What heighta have been attained under socialism by
the production of the means of production. Soviet heavy industry and the
natural resources of the USSR are capabls of satisfying all of the basic
_ needs of a rapidly developing economy.
The transformation of agr~.cultural production in[o a variety of industrial
production should lead to an increase i~n the groWth rates of the economy,
especially of the light and food industries. During che y~ara 1961-1976
10 ~
FOR OFpICW. USE O1~LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~
FOit OFFICIAL USB O1~.Y
_ investmenC~ in agricultural production came to more than 220 billion rubles,
which ie almoaC 12 times more than the ap~,ropriatior~s for the induatriali-
zation of Che country during the entire post-aar period. And, ae followa
from the decieione of the July (1978) Plenum of the CC CPSU, during the
Lleventh Fi.ve-Year Plan capital investments i.n agriculture will remuin on
a high level. All of thiB will ensure an increaee in agriculCural develop-
ment rates. In 1981-1985 it is planned to bring the average annuai grain
harveat to 238-243 million tona~ and in 1990--to 1 ton per per~on.
- When the main line of connecCion between agriculture aad industrial produc-
tion (group "B") ia examined it ia usually rightly pointed out that an
increase of sgricultural raw materials entails an increase in the product~on
- of consumer goods. ~ut agriculture's influence on economic growth ratea :
is wider. In particular, ita ~ynamica hae an important influence un the
dyt~amica of economic accumulation~ which ie witnesaed by the data cited
- below (in bLllions of rubles):
CNIIA:lNN! CNMiIlNN! (RW
_ ~~~wua np0� ~YWeutl ea. -
~1'tqNM teu� RoaterNM ~
tKwo AUI~~� MipO/M0M xo-
~1~ en~ no epa~ ~RI1er~e ao
MeNrp e II~C� CD~~MtNNIU C~2~
~u~riuNr ro� Itpljlll)'t4NY
40Y fOA0f1
1963 f. . . . . 6~1 _1.7 ~
1972 r. . . . . ~ ~ 4.4 -I.8
1974 r. . . . ~ ~,9 -~-0.5
_ . 1975 r. . . . . . . 6,3 _~.S -
(
Key:
- 1. Decrk:ase in groas agricultural 2. Decrease (increase) in accumula-
output compared to previo~s year tions in the economy compared to
previous year
~ A decrease in agricultural output almoat simultaneously leads to a decrease
in economic accumulations. A rise in the standard of living occurs un3er -
socialism even during unfavorabl~ harr~ot yeare. During these years only
accuwulations are a~fected, while the increase in the consumption p~rt of
national income remains unchanged. A etable and high level of agricultural `
- production ensures stability in the dynamics of accumulations.
Scientific and technical potential ie of great importance for increasing
econumic growth rates. As is kaown, during the 1960's and 1910's there
was a rapid growth in the USSR of the number of ecientific workers, e~tgineers,
and of appropriations for acience. Our economy is supplied With many more
scientific and ~echnical cadres than in the capitalist countries. A new
system of polytechnical [raining for skilled workers has been in[roduced--
through the vocational and technical schoals on the basis of ten-year
11
FO~R OFlICIAL DSB O~.Y
\
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
ItOR OFFICIAL USL ONLY
~ educatton. The efficient use of our gigantic scienCific and Cechnical
cadres in order to ~ccelerate acientific and technical progreas is a ~
at~te ta~k of parnmount importnnce. Its accomplishment preaupposes an
intensiEicaCion of ttie u~P of theNe cadres. M increase in the return
_ from scienCific and engineering work will promote boCh an improvement -
= of equi.pmenC--the baeic reaerve for accelerating rates--and an improve-
_ ment of the organizaCion of prod~ction, construcCion, planning~ and so
_ forth. -
An improvement of the management of the economy and increased participa-
tion by Che masses in deciding on production isauea play an important
role in accelerating economic development rates. At the currenC atage -
Chere are much greaCer posaibilitiea for maCerially stimuluCing a rise
in labor produc~ivity. During the 1960's und 1970'e ma~or measurea were
carried out in our couutry Co raise Che standard of living of the broad -
atrata of the population. '1'hese measure were carried out in accordance -
' with the party's Program to improve public we1Z-be~ng and they have helped
to equalize the liv2ng atandards of the population.
During the 1980's not only a further increase in our resources, but also
an improvement of distribution policy will probably make it posaible to
strengthen material sti~ulation for hiRhly productive skilled work. While
bringing living standards and income from labor closer together, socialism
also presupposea their differentiation in relaCion to labor contribution.
Initiative, akill, and discipline in work have to be rewarded. Material
stimulation caunot be reduced to monetary income. The conditions for
the realization of thia income have to be improved. Growing income and
needs and the latter's diversity have to find diverae and high quality
goods and services. With a rise in the standard of living there is a
greater role for aervices which have to be used widely for material
stimulation. However, some economists underestimate the role of the
sphere of services, believing that "the houeing fuad ~nd the network of
institutions in the service sphere are an insufficiently flexible instru-
ment with the help of which to accompliah taske in the field of stimula-
' tion...In all cases their development has to be oriented not toward the
creation of advantages for certain groups of the population, but toward
_ an equalization ~~f the level at which these needs are satisfied ia all
groups of the pop~lation."~� In our opittion, an acceleration of economic
development rates aad of the _;rowth nf labor productivity and scientiftc
_ and technical progress will depend upon a preferential and not a leveling ~
dietribution of the houaing fund, of tickets to sanitoriums and rest homes,
_ tourist aervices, and so forth.
Social reproduction presupposes the unity of the continuous process of
production in time and space and the unity of ratea gnd proportions. The
problems of rates a~nd progortions have an independent aignificance, but,
at the same time, they are interconnected and, in addition, each of them
hae primacy during one or another period. The interaction of high rates
].2 -
YOQ OFPIC W. DSE ~HI,Y
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
P~OR OFi?ICYAL OSB ONLY
and nptimal proporCians is ~n imporCane factor in achieving high raCes ~
of movemenC from socic~liem to cnmmunism. Aa a rule, such raCes eneure
, the moeC rapid balancing of the economy, although exceesive sCrain may
be the reason for diaproporCione. During the T~nCh and Eleventh Five~Year
" Plans, primarily on Che baeis of h~.gh growth raCes for agriculeure and lubor
productivity, it will be poeaib].c tn aubstantially improve the balance of
Che economy, which, in iCa Curn, wi11 make iC poesible to accelerate the
development of many branches of the economy.
- Thus, in their gg8regate, the d~cisive facCors of economic growth may,
in our opin�ton, eneure increased development rates for our socialiat
economy during the 1980's. However, this will require thaC considerable
difficultiea be overcome, that an effective introduction of new equipment
be eneured, that there be a more raCional organizatian of production, an
increase in Che effectiveness of ecientific development work and its uae
in the economy, and eo forth.
~ ~ ~ .
Throughout the entire period of the dev~lopmenC of socialiam into communiam
the law of the growth of the technical and organic atructure of production
- and of the preferential development of the production of Che means of
production is in operation. Expresaing the relationahip between labor
force~ and the mass of material productive forces which are put into move- -
ment by them during the couree of hietorical progress, technical atructure
growa; or, to put it differently, every unit of labor power usea increasingly
greater maeaea of the meAna of production. This is oeA of the important
indicatora of labor productivity whicn cocu.~ecta a relative decrease in
labor power with its capit~l-labor ratio. i~qrx believed that the law of
a more rapid increase in the cona~:ant part of capital compared to its ~
variable part is confirm~d at every step regardlesa of whether different
economic epochs for the same nation are compared, or different nations during ~
the same epoch are compared.s At the same time, along with Cechnical struc-
ture~ the organic etructure of producti~n is examined in "Capital." Organic
structure ie based on technical structure, but for a aumber of reaeons they
_ cannot cAincide. The aecessity for a special examination of the organic
structure of capital ariaes, in uur opinion, fro~ the fact that the practi-
cal solution of the problems of the compoeition of production is based on
exiating prices; value structure also makea it possible to perceive the
influence of the surplus value norm on organic composition. By increasin�
. the aurplus value norm, a capitalist is able to tnc:ease the organic ana
technical compoaitione of production, and make production more profitable
and the working population surplus. -
Since commodity-money relationships are used in a socialist economy, in
addition to technical structure, it is probab].y right to examine th~ organic
~
~3
roQ o~crer, uss o~a.t
.
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OEt O~F'ICIAL USC (1NL1'
- sCrucCure of production. Technical seructure can be expressed in value
_ indicators, but as a result of the luc~C of correspondence between values
and prices und Che physical amounts of Che means of production nnd Che
various surplus product norma, technicgl nnd orgunic struceure may differ
_ subatnntially. Of course, under socialism the surplus product norm cnnnot
be incrc~ased by means of decreasing the atandard of living of the workers,
or by meana of creating a reserve army of labor; bue with the saCisfaction
of the growing needs of Che workers and with full employment an increaeing
aurplus product norm makes it possible in necessary cases not to force
the growth of the Cechnical and organic structure. beapite the obvious
role of the category of the organic structure of production under eocialiem,
cerCain wriCers ignore it in Cheir atudiea.
With the growth of the technical and organic sCrucCure of production the
cost structure of the producC changes: the ahare of Che meana of produc-
tion increases and the ahare of wagea decreases. With respact to the economy
as a whole this is a manifeatation of the law of the preferential developed
growth of subdivision number I; that is, the law in accordance with which,
as Marx noted, constant capital has a tendency to grow at more rapid ratea
than variable capital. Lenin wrote Chat "the proposition concerning the
most rapid growth of Che means of production is a simple rephrasing of this
law in application to all aocial production."6
Various opinions have been expressed in the intensive diacussion of the
- rela~ionship between the aubdiviaions of aocial production. In recent
years the opinion has again appeared which, in our view, is invalid and
which deniea the law of the preferential growCh of subdivision I. Thus,
E. Gorbunov~ asserts that the most characteristic tendency of our preaent
economy is an acceleration of the development of aubdiviaion II, its
stabilization, and even an increase in its share of the gross social product.
He denies the growth of Che organic (technical) structure of socialiat
production, believing that under the influence of a decreuse in capital and
materials~~intensiveness the share of "c" decreases relatively, while the
_ share of v increases. As a result of this, in his opinion, under preeent
conditions the organic structure of production doea not have a tendency to
increase.
Let us first turn to the facts. Let r,s examine how the relationehip between
the two subdiviaions has developed over the entire history of the develop-
ment of the Soviet economy.
14
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OIt 0~~'ICIAL US~ ONLY
YACneue~fl ecc ( n(1 noqpa~qenc~~nfi o nanoaofi
npnaykuNN napo~luoro xoaaiictea u rpynn rA. N eG.
e npo~~e~wncu~iocrn CCCh (u
HinoaNOe 1lpowuw.~eHNoctr
(2)xo~nncteo 3~
1 noapaa~ I 11 noape~~ -
Aeneenc Ae~eioie ~PYnne rpynna .6 ~
_ ~----~5:---~fi~.-~ 71---
. I9I3 r 47 5;i 3b ~ 1 84 ~ 9
1927/I~J28 r, 49 51 39,b 60,5
1932 r.,,,,, 54 4G 53,4 4ti,~i
1953 r. . . , . . , b7 ~3 69,2 30,~
1959 r, b9 41 i 2,0 28, 0
1972 r. 63 3; 73,6 20,4
1975 r. 64 3G 73,7 2G,3
. Key:
1. Share of subdivisions I and II 3. Iudustry
in groas output of Che economy 4. Subdiviaion I
and of groupa "A" and "B" in 5. Subdiviaion II
USSR industry (in percent) 6. Group "A"
2. Economy 7. Group "B" -
The actual data which has been publiahed by the Central Statistical
Administration U5SR doea not permit the asserCion that the ahare of
aubdivision II has been increaeing. 'rhe growth rates of the Cwo aub-
divieiona are geCting closer to one another, but Chere is no outstripping
development of aubdiviaion II. In order to evaluate the dynamics of the -
shares of the subdivisiona it would be necessary to take account of price -
changea. But there are not publiehe~l calculations of thia kind. The
- dynamics of the phyeical volume of the output of group8 "A" and "B" of
induatry could serve as a certain orientation point. During the years
1961-1975 the output of the former increased by 3.5 timea, while that of
the latter increased by 2.8 timea. In order ta aubstantiate hia conclu-
sions E. Gorbunov calculates the output of the subdivisiona in the following
way: he includea non-productioa accumulatione in aubdivision II, excluding
it from the dutput of aubdivision I. However, by virtue of their compoai-
tion the elements of non-production accumulationa (construction materials
and structures, piping for water lines, sewage, gas) become primarily
consumer goods only xfter the completion of construction and are taken
account of through depreciation in the coneumption fund. Nor does the
previously cited data confirm the writer's ap~culative conclusion concerning
the absence under socialiam of a growth in the organic and technical
structure of production. On the contrary, the technical structure of
- production and the capital-labor ratio under socialism are in continuous
growth, which, as we have seen, is taken account of in V. I. Lenin's schemes.
A denial of the preferential development of subdiviaion I and of the growth
~5 -
FOR QFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
CUit U1~'I~ ICT(lL U5~ ONLY -
nf the ~echnical gkructure nF producCion i~ also theoretically inv~lid.
Technological progress, u rise in the capleal-lr~bor ratio, a rise in labor
producCivity, u decreuse in the overall expenditurea of live and pasC labor ~
; per unit of output wiCh ttn increase in tt~e proporCion of expenditures of
pasC labor, and rhe preferential growrh of subdivision I.--Cheae nre very -
importntte prerequisites for ehe economic progress of socie~y, Eor its
movemettC to communiam..
But perhaps Che above-named chain of dependencies between the phenomena
of economic progress is noC pntirely mandatory? Perhaps another pro~edure -
- of ~oining the elementa is posaible? Some economiste assert that for
presenC conditione it is wrong to c~nnect the law of the outstripping
development of subdivision I with a growth in the technical and organic ~
etructure o� production. The relationships in the development of eub- -
divisions I nnd ]:I are tied together with ehe expenditure of the means
of production per unit of consumer goods. And ~he following arguments
are cited here. If the amount of the means of production in phyeical terms
for Che production of a unit of output in aubdiviaion II increases, then
~ubdiviaion I rose more rapidly; if it decreasea. the growth slows down.8
As is known, technological progress reducea the expenditurea of the meana of
production per unit of conaumer gooda, and hence,it would be easy to draw -
a formally logical concluaion to the effect that the preferential develop-
ment of subdiviaion I. ie not mandatory during the epoch of the aCientific
and technological revolution. But it has to be considered that the decrease
in the means of produceion per unit of consumer goode occurs with an even
greater decrease in expenditures of live labor. In the decreasing aggregate
expenditures the ahare of past labor increases, and this means nothing other
than the preferential development of the production of the means of produc-
tion which is caused by the changing relationship between the expenditures
of live and past labor; that is, precisely by a growth in the organic and
technical structure of production.
Is it possible to have cases when a growth in the technical structure of
_ production doe~ not entail the preferential development of aubdiviaion I?
Hypothetically, it can be asawned that with a very substantial increase in
the surplus product norm the growth of the organic structure will not
_ influence a more rapid development of subdiviaior. I. Thus, with a growth
of reproduction when the aurplua product norm increases b~? three times the
output of subdivisions I and II will remain unchanged. But this example
ia far from life. A tripling of the surplus product norm during any planning
period is impossible under modern conditiona. Actually, during the years
1959-1~75 the output of subdivision I increased by 227 perceat, while that
of subdivision II increased by 1~4 percent. The surplus product norm
- increased by 11 percent, while the technical structure of productiou
increased by 3.2 times. In order to have equal development rates for both
subdivisions with the same technical structure it would be necessary to
16
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
FOR 0~'FICIAL U5E ONLY =
_ , -
increc~e~ Ch~ gurplus product by Cwo tin?es, which, of course, is unrealiatic.
FOOTNOTES -
- 1. N. A. Voznesenskiy, "Th~ M1litary Economy of Che USSR duririg t!~e Peripd
of tl~e Fatherland War," OTIZ, 1941, p. 45.
- 2. See Che following diagram. Actual data on r~eproducCi,on in Che US5R
during 1959-1975 is also cited.
3. V. D. Kamayev, "Developed 5ocialiam: Rates and Quality of Economic .
GrowCh," IzdaCel'atvo "Mysl~~~~ 1917~ p. 4.
4. V. Mayer, "Standard of Living of the Population of the USSR,"
IzdaCel'atvo "Mysl'," 1977~ p. 231.
5. K. Marx and F. Engela, "Worka," VQ1. 23, p. 636.
6. V. I. Lenin, "Complete Works," Vol. 1, p. 80. -
1. E. P. Gorbunov, "The Structure and Efficiency of Social Production,"
Izdatel'eCvo "Mysl'," 1974, pp. 132, 145, and others, -
p. V. A. Medvedev, "Socialist ReproducCion snd Structural Changea in the -
Economy," Izdatel'atvo "Ekonomika," 1973, p. 79.
' COPYRIGHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1979
= 2959
CSO: 1820
_ 1
17
FOR OFFICIAI, l1SE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
- FUIt Oi~I~'ICIAL USC ONI.Y
CAPI'rAL INVESTMENT EFFICIENCY IN NONPRODUCTION SECTOR DISCUSSED
_ Moscow VOPROSY EKONOMIKI in Russian No 1, Jan 79 pp 47-58
[Article by Academician T. Khachapurov: "The Effectiveness of Capital
InvesCment~ ~.~i Che Non-product~.on Sector"]
- [TexCJ During the last two decades a theory of the economic efficiency
o� capital investments in Che economy as a component part of the
theory of socialist reproduction has been basically work~ed out and
has received a wide practical application. The Cheoretical proposi-
tions which have been published and the practical recommendations
_ which follow from them are applicable to evaluating the efficiency of
capital investments in the branches of material production. As for
the non-production sphere, in cerCain methodological documents it is
recommended that the efficiency of c~pital inveatments be deCermined ~
on the basis of the same principles as in tixs production sphere. -
However, this applies only to thoae elements of Che non-production
sphere which operate on the basis of cost accounting (urban transport,
municipal services, and others). But for most of the branches of
the non-pr~duction sphere methodological instructions on determining
capital invesCment efficiency have not even been worked out. This is
- a serious gap in economic theory and practice. It is not only that
20 and more percent of our total capital investments (excluding invest- ~
ments in the construction of municipal enterprises) are assigned to -
the non-producCion sphere, but also that its importance has been
increasing at the stage of developed socialism.
The growth of ;roduction is the c~ndition for an increase in consumption
in a sense fo,r the sake of which the non-production sghere and also
all of material production as a whole exists. It is stated in the
Cons~itution of the USSR: "The supreme goal of social production under
socialism is the fuller satisfaction of the growing material and
spiritual needs of the people" (Article 15). A rise in the material
and cultural levels of the people is the chief task of the lOth Five-
Year Plan. This is discussed in the "Basic Directions for the Development
of the Economy of the USSR for 1976-1978" which were adopted by the
~ 18
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
,
i
! ,
, ~
, FOR nFFICTAL USE ONLY ~
I -
25Ch Congrese of ehe CPSU. The basis for thi~~ rlse is the dynamic and
proportional developmenC of production which creates Che posaibiltty for
satisfying the needa of Soviet people gnd itself gives rise to ever
_ new needs. On the one hand, increased needa stimulate the development
_ of production. The decisive element in the interactiona between
production and consumption is producCion the condiCion for the
vital functioning o� socialiat society and the source of ita development.
On Che other hand, an increase in needs and their satisfaction ia uf
_ great importance not only ae atimuli for the development of production,
but also as factors in raising the level of social development and in
improving socialist production relations.
Until recently economists and practical workers devoted litrle aCtention
to the study of needa, consumption, and aupply and demand. In economic
planning the resource approach was primarily used in making up plans.
The problems of consumption not only final and personal consumption,
= but also production consumption were noC studied sufficiently. All
of this can tiardly be regarded as 3uatified. In an analysis it is.
essential to show the diverse character of needs which influences the
= measurement of the exnenditures connected with their satisfaction and
of the effect which is obtained. This does not concern only the desira-
bility ~f an evaluation of the econumic efficiency of auch expenditures
with methods which are uaually used in determining it in the branches -
of material production. It is also useful to attempt to determine the
amounC of social effectiveness which does not lend itself to measurement
by cost indicators.
Works directly devoted to the problems of the efficiency of capital
investments in the non-production sphere have already been published
in our literature, including in our periodical.l In some of them the
methodological problems of determining the efficiency of the non-
- production sphere are treated from correct positions. One must, for
example, agree with B. Vaynshteyn that it is not possible to reduce -
the entire effect of Che non-production sphere to an economic effect
expressed in rubles. In a number of cases calculations of this kind
- produce extremely unconvincing resulta.
_ As analyais shows, it is possible with sufficient accuracy to determine
expenditures for the satisfaction of individual types of needs both
capital and current needs. However, both the total amount of the
expenditures and their distribution for capital and current needs are
- very diverse. For the satisfaction of certain kinds of needs of
decisive importance is. not so much the amount of expenditures as the '
- creative abilities of those who are the creators of the consume3 effect
a scholar, a teacher, an artist, a painter. In evaluating thp
efficiency of thesr expenditures one has to take account not only of
. 19
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
I~Ok OI~rICIAL USE ~NLY
- Che quanCitaeive magnitude oL� what has been creaCed and designated for
_ coneumption, bur also of the quality which is obtained in the proceae
of the consumption of the reaulta. -
Determining an effecC which can be measured against expenditures is �
much more difficult than determining expenditures. This effect can
only partially be expreased in cost indicators. For this reason, in
the caiculations use hae to be made of physical indicators, consumnCion ~
norms which are attained with given expenditures, a decrease in time
expenditures by the consumer, and so forth.
These indicaCors of social effect have to be taken into conaideration =
when the final reaulC of a measure is determined. Howev~r, attempts
to give a cost evaluation of a sociuL effect in order to toCal it up
with the cost indicators of the effect frequently have an artif icial
character. In this connection, in certain cases it is useful to
d~eCermine the indirect damage which is prevented when a given measure
is carried out. For example, Che effece of the fight against water
pollution consists noC only in providing enterprises and the population
with the clean water they need, but also in preventing the destrucCion
of f~sh which can be expressed by the cost indicators of fishing output.
In analyzing the efficiency of capital investments in the non-produc-
tion sphere we shall not consider the satisfaction of material needs
for various consumer ~~ods in their physical form (for example, for
foods, clothing, furniCure, and so forth). The satisfaction of these
= needs depends directly upon the amounts of production and the delivery
to consumers of the corresponding products, and also upon Cheir quality
and price. All of these~Questions belong to an analysis of the mate~ial
production sphere; the apecific nature of services does not manifest
itself here, and, for this reason, these questions can not be the ob3ect -
of Chis study.
Let us begin our examination of the eff iciency of capital investments
in the non-production aphere with housing. Housing construction demands
very substantial investments: During the six post-war five-year plans
and the three years of the lOth Five-Year Plan almost 300 billion rubles -
have been invested in housing construction and this comprises 17 per- .
cent of the t~tal capital investments during those years. As a result,
2,693,400,000 square meters of total (useful) living space has been
commissioned: This represents 56,200,000 apartments in which 235 million
people, that is, 90 percent of the country's population has been
housed.2 5ixty-three percent of the living space has been commiesioned
in cities, and 37 percent in rural areas. As a result of construction,
the urban housing fund has increased compared to 1945 by approximately ~
~ five times and in 1977 came to 2,001,000,000 square meters.
20 ~
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
- rox o~rxcrnr, us~ orrLY `
A lar.ge part of the housing fund, especially in the citiea, has been -
bui1C wiCh state resourcea and provided to citi.zens free o� charge.
Around eight percent of c;ommiasioned housing apace is accounted for
by housing conatruction cooperatives; moreover, the sCaCe allocates `
the c:ooperatives subatantial credit. The construction of houses on
the basis of personal resources of workers and employees and with. the
participation of state c.redit also occurs and is performed primarily
in the cities. "
What,is the economic effectivenesa of the housing construction which _
is,performed by the state? First of all, it ca?~ not be determined
solely on the basis of Che value of housing construction outpuC. Using -
Chis method, the problem could be solved not for the effectiveness of
construction ~tself, but for the effecCiveness of new equipment which
is used in construction, or the effectiveness of new construction -
methods. For example, capital investments in new materials, in the
mechanization oF construction, and so forth, make it possib],e to
~ economize expenditures or to increase the amount of conetruct~,on.
This effect in relati~~n to the investments which gave rise to it _
determines ~ffectivertess. In addition, it is necessary to know if
there is a change in the quality of housing as a result of the use of
new equipment.
An analysis of the data for recent years shows that housing is '
_ ~proving. As a consequence of this, first, the value of one square
meter of housing space has been increasing from year to year, and, -
secondly, the average amount of useful apartment sFace has been
increasing. This is witnessed by the following figures: -
Periods and Years Average Cost of One Average Useful
Square Meter of Space per Apart-
Space (Rubles) ~ ment (sq, meters)
Fifth Five-Year Plan 74 39.7 `
Sixth Five-Year Plan 83 42.0
Seventh Five-Year Plan 92 42.5
Eighth Five-Year Plan 115 45.8
~ Ninth Five-Year Plan 136 48.5
1975 148 49.3
1976 155 50.3
1977 156 51.1
21
FOR OFFICIAL USE ONLY
_
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~ox orrzcrn~ us~ ohi,v
r
~ As we see, Che avecuge value ot one squur.e meter of spz.ce during the
_ time being considered doubled, while the average useful apartment
space increased by 28.7 percent. This meana that the quaLity of -
housing has lmproved, but the sCate has noC obtained any "commercial" _
advanCage from Chis. NeverCheleas, it regards iC as a highly impor-
tRnC economic t~sk ro continue to improvE~. the quality of residential
- houses and Co p~covide more and more conveniences to the people who
move into them. Tndustry which supplies construc*ion materials,
- piping, and houeing construction equipment has a considerable role -
in the accomplishment of this task.
_ In improving the qualiCy of housing and the housing conditions of =
the population, we increasp the social effectiveness of housing con- -
struction, Chose standards by which clients and conCractors and the
suppliers of maCerials and equipment have to guide themselves. Housing
~ is one of the most important consumption articles. Its value, like
that of oCher tqpes of output, is determined by the socially necessary
- labor expenditures. The distinctive feaCure of this type of output is
in the fact that it is not sold, but distributed in accordi~nce with
the right to housing written into our Constitution. The el:fect of
- capital investments in housing construction consists in raising the
- standard of living of Sov3et people and improving their material and
- cultural wellbeing. There is also an economic effect, but an indirect
- one which consists in the fact that an improvemeZt in housing condi-
tions, as, in general, an improvement of the material wellbeing of
the workers, inevitably influences a rise in labor productivity and,
_ this means, the volume of output. The extent to c~hich a rise in
_ .labor productivity is determined by an improvement of housing condi- ~
tions can only be ~udged approximately, on the Y~asis of the data in
questionnaires. It appears that this influence is diverse depending -
~ upon the degree to which the needs for housing are satisfied. For
example, movino from a room in an old house without convenier.ces into
a modern well-equipped apartment will have a greater influence on -
increasing labor produc~ivity than if this same worker were to move
from one apartment witb all conveniences into another, similar one,
but with more space. These diverse influe;~ces of housing can be
disclosed by questionnaires.
Such is the situation with capital investments. As for reducing current `
expenditures for housing repairs and maintenance, capital investments
cannot reimburse themselves on this basis. Only in the capitalist
countries do house owners obtain profits from rents. In our country
rent is very low and its level has been stable for a number of decades.
There can be no question of profits: Rent for housing and municipal
services covers no more than one-third of the expenditures for the
operation and repair of current housing.3 There are even greater
22
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
E~OR Op~ICIAL U5L ONLY -
expenditures for c~pital repaire: They comprise around 40 percent
of the annual capital inveatmenCe in etate and cooperative construc-
tion in the citiea and workere' seCtlemente. M increase in theee
- expenditures can be limited through organizaCionnl nnd Cechaical
meaeuree. They includ_~ the steps nlready being teken to create g
eyetem of large specialized organizations for the technical servi~ing
and current repairing of reeidential houees gnd their equipment
(elevatore~ heating eyatems, Che mechanization and eutomation of -
= operatione processee) and othere.
The task n~,w is to fuxther develop housing conatruction in order to -
provide the population srith even more houeing sp~ce. During the years
of the poeC-war five-year plans we Were able to eatief:y the urgent
needa of the popula[ion for housing, to bring per-pc~son hou~ing epace
close to the hygienic norm~ and to free people from the inconveniencee
of communal apartments. The isaue today ie to provide a~eparate room
for every family roember, to further increase useful space p~r peraon,
and to bring it to 18-20 equare metere in the c~tieg (inatead of the
12.2 square meters at the preaent time). Thie social effect which ie
measured in phyaical indicatora will also increaee the economic effect
�~hich ie created by providing housing. At the same time, there are
important tasks in reducing the cost of coastruCtion, but not through
loaering its quality, but through a better organization of the labor
of construction workers, through its mechaniaation, and through a
thrifty attitude towards materials. The abaolute effect of the con-
struction of residential buildingg is the amount of houaing epace of
a given normal quality which has been commiseioned on achedule, and
the relative effect the difference in the coat of construction per
unit of space ~t a given quality level. '
Needs for domestic services are another type of needs by the population
whi.;h are satisfied through the non-production sphere. Thie includes
needs for footwear and clothing repairs, their individual manufacture~
� repairs of varioua household machines and inatrumenta, furniture repairs
and production, dry cleaning and dyeing, laundering~ apartment repairs~
public bath services, barber-shops, and photography. The domestic
services branch is developing rapidly. Their volume in 1977 was 1.9
times greater than 1970 and comprise 6.3 billion rubles, including
2.2 billion rubles clothing and footwear repairs and manufacture,
1.7 billion rublea repaira of domestic machinery and inatr~ments,
_ and .6 billion rubles hair cutting. _
Domestic services for the population belong to the sphere .~f material
services and in their character are ia many reapects similar to the
production of consumer goods. In order to provide services to the
popula[ion it is necessary to have capital iavestmenta for premisea,
~
''3
FOR OFFICIAL uSE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~ ~orc ~1Fi~i(;r,v, u5?: ~?;vi.~~
eyulvment, ancl inventory, ~nd in ~ertain caeses circulatin~ capital
(Eor materials) is n~eded and algo en incr~ase ii. the wage fund. The
construction of ~pec~~l buildinKe for domastic ser~�ices ie needed
chiefly in building 1{ouses ~f bomestiC Scrvices, Domestic Serv'.Ces
Combines, bry Clea~~inp and Uyeing ~'actories, and oth~rs. The equipment
of domestic eervices enterpriseg ic~ frequcntly comprieed of obgolete
equipment which has Ueen passed on from in~~atrial enterprisee. _
UomestiC ~ervices enterpriaea receive little modern~ new equipment
of high productivity.
- All of thia leada to the effect that cnpital investmenta domeetic
_ services enterprises are emall compared Co the branches of industry
which produce consumer gooda. The toC~l volume of capit~l investments
in domesCic service~ in 1971 was 3.6 times smaller than the investmente
in ligtit industry, and the capital-o~itput ratio came to around .4 rublea
per one ruble of domeatic services. The construction periods for
domegtic services enterprises are also emall: they come to around one
year. On the whole, the service aphere is economically effective;
it~ profits in certain years come to 9-10 percent.
But ttie effect of the sphere of services cannot be characterized solely -
by tt~e profits indicator. Ita aocial effect conaiata in the fact that -
the work of this sphere frees time for the population, freea it from
~ household work, and raiaes its standard of living. Domestic services
are not always prafitable: In amnll citiea and villagea they produce
lossea, but for considerations of social effectiveneas the netWOrk of
domestic services en[erpriaes in the village and in small cities is
continuing to develop.
The quality of services the lack of lines, efficient work by recep-
tion points~ the filling of orders on time is of great importance
for increaeing social effec.tiveness. All of this places aerious tasks
before the workers oc domes[ic enterprises. Their total number in
1975 Was 2.5 million people. The auccess of services depends to a
large extent upon the qualificationa of the employees which for a
number of joba has to be rather high and upon the syetem of material
stimulation. In determining the effectivenesa of domeatic services
with regard not only to the econc~~ic but also to the social effect
it Would be useful to develop and introduce coefficienta for the
evaluation of the quality of services on the basis of the time savings
Which are obtained by a conaumer of these services. For the calcula-
tions one could conventionally equate the value of every man-hour of
this savings to .S of the value of a man-hour of work time. The
average monthly wages of a Worker and employee in the economy, including
payments and benefits from the social consumption fund, came to 212
rubles in 1977, or 1.3 rubles an hour; if one calculates wages to
2~
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~dR O~i~'ICIAL U5~ ONLY
include the surplus product with a ratio of l:l~ then it was 310 rublea,
or 1.9 rubleg per hour. Thie indirect effecC should not be Cotaled up
with the direct effect it ehould be calculaCed "out~ide Che balance."
Ta a large ~xtent the quality df domeetic eerviceg dependg not only
upon the work of domestic services enterprieee theme~lve~ and of their
perennnel, but elso upon the punctual delivery by induatry of Che `
spgre parCe, materiels, gnd equipment Chey need. UnfortunaCely, some-
times the performance of these deliverie~ ie reg~rded as a secondary
task of induetriea. Th~ quality of serviceg suffers from this, ordera
arp not filled in Cime, and refusala Co perform neceseary repaire nnd
other typeg of aervicea are pos~ible. The social effecC of the eervice
ephere is thereby lowered~ and thie loWering hae to be seen as being
the fgult of induetry.
Materigl neede include the service~ of paseenger traneportaCion. We
are not concerning oureelves here with the controvereial quesCion of
whether general uae passenger tranaportation belongs to the ephere of
material servicea, or direcCly to the aphere of material production.
Quite a few different opinione have been expresaed on this poi.nt in
the literature. The Central Statistical Administration USSR, for
example~ classifies neither passenger transportation nor general use
communicationa in material production, which, in our opinion, ia
incorrect. However~ everybody agrees that the effect of transportation -
moving, a change in location ia an entirely material effect
which requires apecific expenditurea of live and past labor. Hence,
the poasibility of calculating the economic efficiency of capital
_ investroents in passenger transpurtation. This efficiency can be
calculnted as it is for other enterpriaes by comparing capital invest-
menta with the c~utput Which is obtained (abaolute efficiency), or
by comparing the difference in capital inveatments for variants with
the difference in coet of output (relative eff~lciency). Cost here
is formed, as at other production enterpriaea, from wages, fuel,
_ energy, and materials expenditurea, and depreciation. A?1 of these
calculations are more aimple to perform for enterprises which are
engaged solely in pasaenger hauls. At railroads and other types of
general use tranpportation the methods of applying both current
expenditures and capital inveatments to freight and pasaenger hauls
have been used auccessfully for a long time already. -
~ The traditionnl calculations of efficiency bASed on comparing
capital investments and current expenditurea will far from alWays
yield a complete picture concerning the expediency of carrying out
various transportation development measures. Let us take as an
example the aubway. The MoscoW subWay carries 2.1 billion pasaengers
a year (1977 data). With a fee of five kopecka per ride the grosa
receipts noW come to approximately 100 million rubles a year. Mean-
While~ at current prices the capital investments in the MoscoW subway
25
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~
I~U1? 0['t� I C I~1L U'.~F: ONLY
sy~tem ~re expreser.d in many billionk of ruble~ (a kilometer of shallow
line is 3,5 timeg more expensive than ~ aurface line and half the coet
oC a deep line), and if the decision on building Che subway had been ~
based nn the c~piCal investment reimbursement peridd through net
profits, it would not I~ave been built at ~11.
Uut the effectivenesg of developing ehe subway is deCermined not so
much by how much can be obtained from it in net profite~ but by ite
social effect an improvement of :he living condiCions of people.
It is also this which determines the remarkable appearance of the
stations which is characterisCic for the 5aviet subway i?oC only in
rtuscow, but in other cities also, The subway also yielde a substan-
tial indirect economic eff~ct in that it saves people time. If the
time economy is taken Co be only 30 minutes pe.r Crip (in fact, the
economy is much greater if on~ considera what eransportation diffi-
culties there might be in a city of 8 million wiChout a aubway) and
the cost of a man-~hour is taken ae one ruble, the indirect economic
effect of the aubway would be expressed in a figure that is ten timee
greater Chan its gross receipCs.
Proceeding from the above-cited considerations, the efficiency of
increasing the speeds of passenger hauls can also be calculated. This -
increase demanda an increase tn direct expenditures for the hauls,
sittce with higher speeds more fuel, energy, and materials are expended
and the wear and tear on the rolling atock and linea is increased.
Correspondingly there hae to be an increase not only in the cost of
the hauls, but also in their price, and this meana in the total income
of transportation enterpriaes also, Which may ~ustify the required
capital investments. But, in addition, account has to be taken of
the indirect effect which is to a large extent a social one an
economy of trip time which makes it posaible to increase production
time and free time. Based on the cost of a man-hour of work and
- free time, the cost equivalent of the economized amount of man-hours
hAe t^ be taken accoun~ o: in a dpecinl manner and compared with the
direct effect from the apeeding up of the hauls. This kind of calcu-
lation can be performed both for an acceleration of hauls on a given
type of transportation and for a shift from one type of transportation
to another. In all of these casP~ one must refrain from total~ng up
the direct effect with the computed conventional indire~t effect.
But it is essential to know the magnitude of the indirect effect and
to consider it in evaluating a variant for speeding up hauls.
One also has to cake account here of another effect from the speeding
up of passenger hauls and from improving their quality a decrease
in so-called transportation weariness as a consequence of shortening
the time spent enroute, or increasing conveniences. As surveys have
shown, transportation weariness which occurs during a trip in an over-
crowded car has an effect on labor productiviCy. If the degree of the
26
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~ , . ~OIt b~~ICIAL US~ ONLY
decregne in ehis wearinegs is known, ehis meatts that iC ia po~sible
to calculgte ies negative influencE on economic indicatore and to
define the advantages which are achieved ae a reaulC of the complete
ar partial elimination of Chis harmfuZ influence. Damage from Crans- -
pnrCation wearinee~ gnmetim~A occurg g~ a reeult of poor operatione by
tran~p~rt~tion, lagging in repairing transportation equipmenC, the
failure of bu~es Co come ouC onto Che line, and eo forCh. The dgmage
reaulting from it in ehese cases has Co be aCtributed Co traneportation
enterprises and reflected in Cheir work indicatora.
Special note hag to be tgken of the effect of ensuring the eafety of
passengere. A pereon'e life cannot be evaluaCed in coat indicators.
The maximum egfety of passengere ie an indispenaible condition of the
effeceiveneae of t~:ansportaCion, and it has to be enaured aC practi-
cally a~,y coet. The methods of estimating Che required level of
safety wh~ich exiet in capitaliat countries and are b~aed on the amounts
of inaurance payments for injury or death from tranaportation accidenta
are unacceptable for the aocialiat sys*.em.
Let us now examine the problem of evaluating the efficiency of the
expenditures for education. Here, perhapa to a greater extent than
in any other sphere it is importanC to determine the social effect.
Universal educaticn, the masCery of knowledge by the great maeses,
and the creation of all of the necess..ry condiCions for the advance-
ment of talent this ie an enormous advantage of aocialism. The
right of citizena of USSR to free education of all kinds ie recorded
in the Constitution of the USSR. This right is made wide use of by
_ the people. An end has been put to illiteracy the lot of the
ma~ority of the people before the revolution. Universal mandatory
secondary education has been effected, and vocational-technical,
secondary apecialized, and higher education have been widely developed.
Training is carried out ~t production. All of these features are
magnificent gains of socialism. The high social effectiveneae which
is characteristic of socialist society manifeste itself in the educa-
tion of the people, the comprehensive development of the individual,
and in satisfying the thirat for knowledge.
But it is not only a matter of social and cultural progresa: the
comprehensive training of cadres is also of great economic importance.
The educational system creates thE most valuable element of the
productive forces qualified cadres who are capable of running ~
modern enterprises with their increasingly complex implemente of
production, of creating theae implements and of organizing relations
between people which correspond to developed socialism.
The expenditures for education as a whole and for its individual types
of cadre training can be determined quite accurately. In 1940 they
27
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~ roit a~~r~tr.Inr, usE: o;vt,r
came to 2 Uillion r.uble~, .in 1965 they }~ad increnaed Co 14 billion
rubleg, and in 1977 to 28.~ billion rubleg. In 197~ capital inve~tmetttg ;
From the ~tate budget for ~cience and educntion reached 1.9 bi111on
rubles.4 Uuring individual. periods Congtruction for educ~tional purposeg
was even greater. Ici Moscow alone bef~re and afCer Che wa~ hun,~r~ds of
echool buildings and th~~ building~ of Mo~cow University attd n number
of insCituCes and educgCional ingtitutione were bui1C. In the counCry
as a wlinle, from 1918 through 1977, 114,000 schoole �or 41 mil~ion
students were put into operation. Dnring the years 1571-1975, 6.2 _
million squure meters of spgce were put inCo operation in higher ~nd
secondary specialized educational inatitutions.
Not only the Cotul amoune of expenditureg is known, but also Che
expendieures for erainin~ cadres in individual apecialties gnd with
- individual qualificaCions. Accordiug to thc datn of st~Ce ~taCisCics,
the state's expenditures per aCudent comes to 180 rubles a year in _
general educaCional schools, 650 rubles a yegr in aecondary specialized
institutiona, and more than 1,000 rubles a yenr in higher educational
institutions.5 Thi~ means Chat training in the average 10-year
school costs 1800 rubles, in the Cekhnikum (three years) 2,000
rubles, and in a higher educational institution from 4,000 to
6,000 rubles. ~here are smaller expendiCures in the humanitarian VUZe~
and greater ones in the technical and medical VUZes.
Thus, ed+~cational expenditures can be calculated more or lesa accur~tely.
- It is much uare difficult to determine the effecC. The social effect
of education conaists in the following. Society has planned to provide
a definite educational level for the popular masses and a definite
level of training as a whole and of training in concrete specialties.
Time and expenditures are required to achieve these goals. These
expenditures can be greater or lesser depending upon the phyaical
plant and personnel provided for the needs of education, but with
high quality absolutely ensured. It is necessary to verify how all
of this has been done. _
It is also important here to evaluate the economic effect. It is
obvious that it should have an effect upon a rise in labor producCivity,
an increase in the amount of out~ut and an improvement of its quality,
and a riae in the technlcal level of production. All of these reaults
are not achieved imsnediately, but with the paesage of sufficient time
to obtain a secondary or higher education and also to accumulate
work experience and advanced training.
- It has already been suggested in published articles that the influence
of a worker's skills on the level of labor productivity be defined. -
It was assumed here that the difficulty of the work performed depends
upon the education which has been obtained (number of years of study).
28
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
I~'tlit O~~ICIAL U5C ONLY
However, Che coefficienes which ~re ae the ba~e of ~uch a calculatiott
(lengrh of etudies) c~n hardly be acknnwledged a~ providing g correcC _
~hgracterization of Che level of qualific~tione~
CalculgCiong nf ttte proportion~l wegee of each category of workers,
keeping in tnind that in the ~~t~bliatunent of wage levels the quglifi-
catione of the worker~ ~re Che basi~, corre~pond mor~ ~logely Cc~ the
adopted economic method,~. Given an equgl inCeneity, the reeult df
rnmplex gnd ekilled lgbor ehould b~ output nf high~r quality and df
gregter quantities. It i~ alregdy po~eible on thig bgs3~ to draw con-
clugione about the effici~ncy of ekilled labor and, thereby, about
the effectivenesa of educatian. Thi~ megtta Chat if, for example, Che
wages of a skilled worker is 1.5 times great~r ehan the wages o~ an
unekilled worker, and the wagee of an engine~r ig 1.5 t3mes greater -
thnn those of the skilled worker, then the effect which is obtgined
from th~ir training can be taken in each ca~e to be 1.5 times greater;
Chat is, proportional to their labor expenditures which are expres~ed
~ in wages. ~xpendiCures of live lxbor in output costa are nlso deter-
mined in accordance with~this. The differencea in the effecCe of the
labor of workera wiCh digsimilar qualificatione can be taken as a
conventional "education renC," as the differentiated effect which is
obtgined from their labor. The toCal effect of the education of each
worker can be determined by means of dividing this "rent" by an
effectiveneas norm:
P
EN
This effect, of courae, is different from the coet of training which
is computed on the basis of ex~enditures, and auch principles of the
calculation of effectiveness should be regarded as only one of the
possible proposals for evaluating it.
An increase in the social effectivenea8 of education is aleo promoted
_ by auch characteristics of the organization of labor wh~ch affect
its productivity as the creative character of labor and the elimina-
tion of monotony, satisfaction with one'8 work, an improvement of
working conditinna and greater eafety~ the elimination of induatrial
in~uries, help in the selection of occupAtione and typea of Work, and
so forth. We do not have the possibility of examining theae charac-
teriatics of work in more detail here, but we would like to note
that in most cases~ in addition to the social effect, accouat should
also be taken of their economic effect through a rise in labor produc-
tivity.
29 _
FCQ OFFICIAL USE ONLY ~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
Fc)li (li~ 1' it' 1 AL U;;i, c1N1,1'
_ In its ~s~ence, the eff~ntivene~s of :~cienCe i~ C1oge to the effeCtive-~
nesg of educatidn, 31Chough the methodnof c~lculating it are very
differene. it~rl M~rx's ~t~t~ment nbnut et~e tran~formgeidtt ~f ~ci~nee
into a ditect productive fbrce is wel.l known. Thi~ applien in full
measure to tt~e applied brat~r.h sciences t~hich dirertly gerviC~ prdduC-
tion. Therefore, the effectivenegx of applied ~cientific re~earch
should be calcul~t~d on ehe basi~ of the g~me method~ ~s the effective-
ness of planning and other produceion operationg. The method~ nf
determining the effectiveness of applied gcientific research were
- developed in "The BagiG Methodological F'ropogitinng nn Determining
the ~cottomic ~ffectivenesB of Scientific Itesearch Work." In
nccnrdgnae with ehege propoeitinn~, we estgblieh the field of its
npplication (~ppli~d r~~earch), g basi~ for compurison (nea ~nd
~ replaced equipment), ecnnnmic potential (with full introductinn), _
and tne division of expenditureg and effect into type~ of work through-
out the entire "science-planning-experimentiug-production" chain.
Capital investments and coatn were dieCinguished within toCal expen-
ditures, and then the relntionship of the obCained effect to expendi-
tures wag Cnlculated.
The siC~atiott is different in determining the effecCiveneas of basic
research. F'irst, it is by no a~an~ always possible Co 3udge its future -
pr~ctical result, not to menCion at least an approximate calculation
of the relationship of effect to expenditures. Sometimes even the
creatore of very importattC scientific diecoveriea do nor have ~ clear
idea of Che possibilitiee fnr rheir direct application in practice.
5econdly, the effect of Che achievements of the fundamental sciences
that is, of scientific discoveries is not limited ta an economic
effect and is aupplemented, as a rule, by a social effect, opening up
for human society ever new proapects for roaetering the s~crets of
nature and helping to perfect man himself.
liowever~ it should be noted that the aocial effect of the development
of science may not only be a poaitive one (a rise in the standard of
living, an improvement of inedical services, an improvement of working
conditions factors which also have an economic significance). A1nng
with this social effect of the development of science there may also
be a negative effect consisting i:~ air or Water pollution, or in a
deterioration of recreation conditions. If one were to apeak about _
the devel.opment of acience in modern capitalist aociety which is
rent by contradictinna, the development of the means of mass destruc-
tion are a great threat for mankind.
As for the methoda of calculating [he effectiveness of science as a
whole, thia kind of calculation is possible through a computation of
labor productivity. Effectiveness is obtnined from the expresaion
30
FOR OFFICIAI. U5E ONLY
~
I
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~dtt t1~rICIAL U5C UNLY
~ _ ao�M�ti
" G~h ~nk
where ~D i~ the ~nnual incregsp in ehe ~nnual ittcome; t-- ie the
num~rical value of th~ prnportiun of thie incregse which depende upon
a rise in lgbor productivity; n-- i~ ehe numerical vglue of Che
propdreion of Che rise in labor produceivity which depends upon
scienti~ic achievemenrs; C-- ig Che annual exp~nditures for acience; -
K are Che capital investmente in the d~velopment of ~cience; ~1~
is the normed coefficient of effectiveness. On Che basig of this, -
the reimbursement peri~d of the expenditures for science cnmeg to
- fnur to five yenra.6
The nbove-examined pnrtial indic~COrg of Che effectivenegs of scien-
tific research work are indicgCors of ab~olute effectiveness. Alon~ -
with this, it ig entirely possible to make use of relative effective-
nesg calculatidns. ThiB is required in cases when from several posaible
variants of scientific research work it is necessary to aelect the moaC
effective one which enaures the besC correlaeions between expendiCures
attd results. Th~ c~lculations for a relative effectivenesa varignt may
b~ p~rformed in accor~dance with Che recommendations o~ the Standard
Methodology for determining the effectiveness of capital im?estment~ and
new equipment in the USSR economy in accordance with the method of
adduced expenditures.
It ie very unlikely that the effect.venegs of a riee in the level of
culture or srt lends itself to any kind of accurate measurement. -
Hawever, the development of all types of art ia of enormoua social
importance~in that it influences the education of the man of communist
society and his nerfection. Expenditures for the development of
culture and art increase as the level of the development of production
and the level of national income riae. These expenditurea are ~ugti-
fied by their social effect.
Nealth care is a component part of the non-production sphere. The
socigl effect here manife$ts itself in the fact that it is directed
toward improving the health of p~ople, decreasing the amount of time
lost from active life due to illnesa, improving overal?~ health
conditions and, as a result of this, prolonging people's lives. All
of this requires definire expenditures.
In 1977 expenditures for health care (including physical culture) came
to 16 billion rubles in our coun[ry; they had increased by two times
compared to 1965. Within the 1977 expenditures 12.5 billion rubles
had been allocated from the state budget, including 703 million rubles
31
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
!~'d[t ~11~rICiAI, f?Sl' ~~N1.Y
in capieal invesements: The correspondin~ figures in 1970 were 9.3
billion rubleg ~nttd 499 million rubles. A~ a resule o� these expendi-
turea great BUCC@q9e3 h~ve been nchieved in creating a het~lCh care
b~se ~nd decrensing illnes~,
� In 1977 there were 900,000 doctor~ oC all t~pecinlizeeions in the U55R,
or 35 per 10,000 inhnbitnnCg, ~t~ny firgt clags hoapiCals equipped wieh
the lateat equipmenC have been built. The number of eanitoriuma and -
reat hnmes increased by 3.5 percent compared with 1939 and by 35 percenC
compgred wieh 1970. The USSI~ is in first place in ehe world for the
- number of ita doctnrs, and occupies one of the leading places for the
number of its hospiCal beds, As n regult of the succeases of healCh
cnre there has been a ghnrp decreane in infecCious diaeases. MorCality
from diseases of the circulatory organa, malignanC growths, diaeases
of ehe digestive organa, and nthers is lower in the US5R than in the
UniCed States, ~ngland, and the Federal Republic of Germany. '
The above data testifies to the greaC eocial effect of the development
of health care. A decrease in sickness m~kes it possible for the
wnrkers to make �uller uae of the physical and intellecrual goods of
life nnd ensures them a prolonged acCive life and a prolonged life
in general. The social effect from new medicines, means of treatment,
and medical equipment is exceptionally greaC. Thanka to Che diacoveries
of E. Jenner, L. Pasteur, I. Mechnikov, W. Ro~ntgen, A. Fleming, and
J. 5alk a countle8s number of people have had their lives saved or
prolonged. It is posaible to estimate the social effectivenesa, but
iC is impossible Co express it in cost indicators. The social effect
resulting from the improved quality of inedical servicea and also from
treatment and rest in sanitoriums and rest homes can be determined
through special studies. It has to be considered that the improved
health nf people and the prolonging of their lives is influenced not
only by an improvement of health care, but also by the way of life and
a rise in the material and cultural levels of people. To discover the
measure of thia influence requires special study.
Along with the social ach~evements in the field of health care, the
economic effect of ita development also hae to be determined. There
is a decrease in failures to appear for work due to illness, the
amount of time worked increas;~s and along with it the production of
output and labor productivity increase. All of this can be accurately
calculated with the data of the existing statistics.
HoWever, the organization of health care has to be further improved.
The level of comfort in hospitals has to be elevated, more space per
bed has to be provided, meals have to be improved, and better care has
to be ensured. These measures have to be carried out in the very
32
FOR OFFICItiI, U5E ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OR OFFICIAL USE ONLY
sy~Cem of healnc ~gre~ At ehe eame Cime, it is essentinl that ehe
medicnl and pharmaceueical induetries increase the production gnd
improve Che quuliCy of the mediaa]. equi.pment and medicinea, above a11
the acarcest iCema~ which they provide to health care agenciea. The
accompliahment of these Casks requires a further increase in expendi- -
Curea boeh in the healeh care nystem and in the induetry which producea
the ouCput it needa.
As in Che health care system, ttiere ia a subatantial social effect
from physical culture and aports and alao from tourism. Methodologies
for deter~:3ning the effectiveness of expendiCurea in t;hese branchea of the
_ non-production sphere hgve been developed on the basis of the fundamental
~ropoaiCions oY Che theory of efficiency and they have received a
pracCical application.
The dieCributinn ephere in which trade and public catering can be
included merit especial consideration. In a number of publiehed works
on this problem one can encounCer asaerCions that the effect of capital
investmenta ia diacovered by co~n~aring them with the turnover of a
trade enterprise: The greater the Curnover per ruble of investments,
the greater the effecCivenese. It is hardly poasible Co agree with
this way o� framing the matter. The final reault of trade ia not
turnaver by itself, and espec{ally, not the profiCs of a trade enCer-
prise, but Che delivery of goods to Che coneumer with the greatest
convenience for him. It is not only necessary for a good to be aold
to a consumer, but also for Che consumer noC to loae Cime in searching
for a necessary good and in sta+.~dinb on lineR. Thus, in evaluating
_ the effectiveness of trade it is important to kr~ow its social effect
which consiats in satisfying the needs flf the ~eople and in shortening
the time required for a purchase and in m~king morP free time available
to the consumer. The economy of time in these cases can be calculated -
physically on the basis of the number of man-hours, and, if necessary,
evaluated in rublea by using the above-cited calculations of the coat
of a roan-hour of free time.
The problema of determining the effectivenese~ of capital investments
in municipal aervlces which belong to the sphere of services but have
the features of material production have remained outside of our
analysis. The calculation of the ef�ectiveness of capital investments
here does not differ from the analogous calculation in the production
sphere. Nor have we touched upon the methoda of calculating the
effectiveness of capital investmenta in the field of ecology which
require an independent study.
- The above-cited conaiderations ahow that it is time to move to a deter-
mination of the social effectiveness of capital inveatmenta. The
33 _
FOR OFFICIkI. USE ONLY
I
I
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
' I~nEt d1~rICIAL US~ ONLY
develnpmettC of the methodology nf this kind of calculaCion has to be
completed nnd hnnded over to pl~nning in economic agenciea: This
will make it poasible to evaLuate Che social. and economic resulta of
ehe developmenC of the non-production sphere on a single scientific _
bgsis.
FOOTNOTE5
1. Ye. Voronina, "The Effectivenese of 5ocial ExpendiCures on Educa-
tiott~~~ VOPROSY EKONOMIKI~ No. 11~ 1973; Vaynshteyn, ~~On
EvaluaCing the Social Resulte of Scientific and Technological
prngresa," VOPROSY EKONOMIKI, No. 2, 1974; E. Gorbun~v, "The
Effectivenesa of the Sphere of Domeatic Servicea," VOPRO5Y _
~KONOMIKI, No. 7, 1974; V. Komarov, "The Sphere of Services and
the ~ffectiveness of 5ocial Production," VOPROSY EKONOMIKI, No.
2, 1975; A. Vitin, "The Effectiveness of Non-ProducCion Capital
Investments," VOPROSY EKONOMIKI, No. 7, 1918.
2. "USSR Economy in 1977," Izdatel'stvo "Statistika," 1978; pp. 352-
353, 415, 412, 413; "USSR Economy in 1970," Izdatel'stvo "Statiatika,"
1971, p. 546.
3. "USSR Economy in 1977," Izdatel'stvo "Statistika," 1978y p. k15. �
4. Ibid, p. 562.
5. Ibid, p. 408, note. �
6. "Soviet-American Symposium of Economists," Izdatel'atvo "Progress,"
_ 1978, p. 18.
COPYRICHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1979
2959
CSO: 1820
- 34
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
FOR O~FICIAL USE ONLY -
~ ' -
; _
INTERSECTOR CAPITAL INVESTMEDIT COMPLEX F,}CAMINEp
Moscow VOPROSY EKONOMIKI in Rusaian No 1, Jan 79 pp 59-69
[Article by V. Krasovskiy: "The Investment Complex: Planning and Unused
Potential"]
[Text] The economic syatem of advanced socialiat society is chara~terized
by the existence of a powerful group of sectors and industries in Depart-
ment I producing the means of labor for shaping the country's fixed capital
and figur3ng as the basis of socialist expanded reproduction. The 3ntersec-
' tor capital investment complex, that is, the complex of sectors and indus-
tries creating producta that will become fixed capital, is the most cLynamic
part of Department I of the econoa4r, who3e special role was emphasized by
V. I. Lenin when he was analyzing expanded reproduction as a whole. An ad-
vanced intersector capital inveatment complex makes it possible to ensure
stable economic growth rates, to adopt technical progress, and to carry out
.1Qrge-scale socioeconomic programs.
; But sufficient use is not being made of the broad opportunities of the in-
i tersector capital investment complex. At the November (1978) Plenum of the
C^ CPSU L. I. Brezhnev stressed that the state of affairs in capital can-
struci~nn ia alow to improve. It was also noted that a certain lag of ma-
chinebuildi,;p behind the needs of the econom~ has begun to take shape.
Under present-d~}r conditions there are new approaches to the planning of the
intersector capital investment complex, to the mobilization of its unused
_ potential and to more intensified use of its potential.
The Intersector Capital Investment Complex, Its Makeup, Indicators and Ori-
entation Toward End Product
, There are both broad and narrow approaches in defining the makeup of the in-
tersector capital investment complex. The more restricted makeup of the
complex is limited to the ~onstruction and building materia'ls industries,
but machinebuilding is excluded. Yet the mattufacture of the end product of
sectors and industries producing fixed capital in the form of finished pro~-
ects requires not only the passive part of fixed capital in the form of
35
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
roR o~rzcrnr. usc orrLY =
buildings and ins~~llations, but also the mc~st active part--manufactur3ng,
transport and other equipment, and that is the produc~t of machinebuilding
enterpr3sea. The expanded treatment of the complex sees unity in the inter-
sector c~zp3~a1 investment comp7.ex on the basis of resources and 3ncludea the
production of materials used in construc~ion, including nonferrous and fer-
rous metallur~r, as well as a number o3 ,;roupings in the chemical industry
- (for example, production of synthet3c reains, plastics and products m~de
from them). The induatries and sectore in the investment complex included
in the expanded view supposedly accomp7.ishes more enclosed and internal -
turnover of pY~ysica]. resources, l~ut this kind of "vertical" structure of
the investmen~ complex would seem to violate the nomenclature for complexes -
which has alreac~y developed and i~.l which dist3nction is now made for the
fuel and power complex, the comp:Lex of natural and chemical raw materia].s,
- etc, We should also take into account that the principal tasks of the in- -
= vestment complex include the production on schedule of a high-quality end -
_ product of construction in the form of technically advanced fixed capital,
which puts the emphasis rather on the goal than on the orientation toward
resources. Moreover, in the broad treatment considerable double.counting
of the output of the raw matexials industries is inevitable because they _
part3.cipate simultaneous~}r in many complexes. In shaping the makeup of the
- large intersector complex we muat do everything to avoid double counting, -
such as when the raw materia'LS industries in the fliel and power complex in-
clude in their makeup construction organizations for building mines, quar- ~
ries, and so on, while on the other hand the investment complex embraces tt+e
mining of ore and the production of coke. For complexes shaped by their
goal elimination of double counting is an important methodological and plan-
ning problem.
= According to available calculations, the investment complex has a share of -
more than one-fourth of the entire output of the branches of pY~ysical pro-
duction, about 18 percent of fixed productive capital and capital invest-
- ments, and 25 percent of production pers~nnel. We should expect a certain -
growth of these indicators in the ~tux~e. The produc*ive capital of the in- -
vestment complex stood at 138 billion rubles even in 1975, and production -
personnel ran to 20.6 million persons.
Until recently no indicators were singled out in reporting and planning for
the investment complex as a separate group of sectors and industries ac-
countable for expansion and renewal of the country's fixed capital, ~+hich
made it difficult to establish a balance-sheet linkagP for the meaas of
bor and also to achieve the necessary cooperation beicween capital cc~,~ ~
tion and machin~building. Yet in the drafting of inedium-term and la:.., -~+~:~r.~q,~
plans, in which ma~or sacial, economic and investment programs are disl :
guished, it is becoming indispensable to have this kind of record on the
complex. The investment complex has alreac~y been given a special section
in the drafting of the Comprehensive Program for Scientific-Technical Prog-
ress in the USSR Acade~y of Sciences and the USSR State Committee Por Sci- -
ence and Technology.
, 3~
FOR OFFICIAL USE ONLY
1
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
FOR Ol~'~ICIAL U5~ ONLY
'I'he progre~give pra~tice of ianuing planning a~nignmentn coneerning gtartup
of opernting complexen and enterpriseg ns called for by desi~ng to a~ctorn
and induatrieg ~rodticing �ixed asseta nhould be expunded in order to rr~di-
cnlly improve the plunning of cnpitn.t Congtruction and of t}~e entire invegt-
ment cdmplex, un well as to improve the economic ma?chinery in the gphere of
cupital inveetmentd. It i~ evident tha?t we nhould abolish the practice of
plgnning and ~cCepting work by intermediate ntoges in ~ongtruction and in-
stallation ~perationn as the end product of the investment complex. We nc-
_ cordingly muat h~ve a schedule for gradual transition of the relevunt mini~-
triea ruid departments to the ~syetem of delivering the capital investment
product reac~y for operation or, as it is put figurative~}r, "pod klyuch," for
the 1979-1980 period. These measures follow from the requirements ndvanced
by the 25th CPSU Congreu~.
It wnn pointed out at the November (1978) Plentim of the CC CPSU th~t the orf-
entation toWard the end results of production and the aeurch for the atost ef-
ficient and economical wnys of achieving them nhould be put at the center of
all the work on the nex 5-year p1an. There mugt be interrelated planning of
all the capiLal-building sectors azrd industriea, including contract conct.ruc-
Lion orgunizations, enterprises in the building materials and fabricationa
industry, the portion of machinebuilding producing capital goods, organiza-
tions engaged in construction by the direct lab~r method, and also organiza-
tions thnt carry out operations for ma~or repairs and Which assemble equip-
ment and construction fabrications for construction pro,jects. Yet at pree-
ent the investment plan regulates primarily the activity of organization3
operating as contractors in capital construction.
Planning r~ss:gnments for the stgrtup of productive capacities and fucilities
envisaged by 5-year plans oP capital investments should be stable in the -
~ize of investments, the amount of financing, deliveries of manufacturing
and electrical equipment, etc. The investment plan could be ad,iusted ~luring
fulfillment on~y Por the atar`cup of capacities because of the nex problems
that have arisen.
_ We should place restrictions on the practice of defining capital construc-
tion's need for materials, fabrications, ~ire c~nd cable, etc., on the basis
, of standard aiuounts per 1 million rubles of the estimated value of the con-
:~truction and installation work to be done, s+hich is ~ustified only for ap-
~ proximate forecasts. This i~ a consolidated indicator based on averages
that i~ called the "millionnik." It is obtained from summary data on the
resources needed by capital construction as a Whole per 1 million rublea of
construction ~nd installation Work. This indicator is useflil in aggregate
computatior.s, but altogether unsuitable in determining the need for materi- -
_ al~ of conatruction sites and pro~ects, since it does not take into account
, either the specific nature ot' sectors and industries or the phase of comple-
ti~n. Zn the very near future there vill be a need to organize the transi-
tion of pnrticipants in the investment complex to material supply in accor-
dance With the needa stated in pro~ject plans and cost estimates and synchro-
nized aith the construction schedule and deadlines for stcirtup of facilities.
37
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
I~Ok OI'1'It;i~1.i. U;;f. !1,vL't`
At the ~?~,rne timn pro,iect ~.U.~nnin~ ort~atlizu~:iot~~ ~ho~tld furni~h in proJec+.
plnnning document,s oi�der ~pecification~ for buildinp,tnuterial~ ~nd equipment
to be used by ~upply compnnent:~ of USS:t Gossnsb. In addition gll pnrtici-
gnntc in the inve~tment cot~l~x ~hot~ld tnl:e meacsurea to di~~eminute tnc~re
widely and develop further the e.�f~cttve form~ of packa~e delivery of pro-
dur.tibn equipmcnt to cepitc~l conrtructiot pro~~~cts.
The proUlems of improvin~ pl~nning nnd mobilizing unu~ed potential shoulc~ be =
denlt with in the various etugec of the investment proce~s--pro,ject pl~-
r.ing, con~truction, attainment of ratec~ cap~city and retooling of existing
enterprises.
NeW 'rask~ o� Pro~ect plannin~ and Improvement of Its ~ffectiveness
On the s~hole pro,~ect planning organizati.ons are still fulfilling their im-
portunt role in the capital investment ficld unsati~factorily, often out of
touch with those neW requirements ahich capital construction must now meet.
For instance, they ar~ doing little to facilitate adoption of the neW 3ndi-
cators of the output of the investment complex. C~istomers and construction
arganizations at the locr~l level t~re not able to competently distinguish _
Within the overull design the individual line~ and units that optimally make
up independent production complexe3. Only experienced production planning
organizations are capable of this. Yet until recently pro~ject plans xere
not ordinarily developed in elaborate form, the individual lines and com-
- plexes wcre not distinguished, and thi~, of course, made it more difficult
to ~,roduce the product in units of productive capacity that could be put
into operation, as required in the decisions issued a.s directives.
The volume of pro,~ect surveying is steadily increasing in proportion to the
rising estimated cost of construction, since it is established as a certain
percentage of capital investments. This allows pro~ect planning organiza-
tion~ to be rather free in disposing of growing financial resources and in
doing designs for pro~ects not included in the construction plan. As a re-
sult uncompleted pro~ect planning is increasing by almost 700 million rubles
every year, and in 1977 ~mounted to approximately 8 billion rubles. Profit
of pro,ject planning organizations has reached 24 percent, and has risen far
c~bove the standard. The number of pro,~ecL plans developed exceeds by more -
than fourfold the need for new construction starts.
Yet year after year the econo~y is feeling a shortage of pro~ject planning
documentation to cover the pl~nned volume of capital investments, and many
leading construction pro~ects r~ceive blueprints and cost estimates literally _
on the run. At the s~ne time, customers are building up on their books an
increasing ~mount o: unused pro~ect plans and cost estimates ~rhich do not
match the list of pro~ects scheduled for construction. The volume of pro~j- -
ect plunning and cost estimate document~ continues to be excessively large.
Even for plants in the petroleum refining and rubber industr;,� of the same
type all ttre cost estimates are compiled from scratch, though in large part
they duplicate one another, ~+hereas relative~y small changes Would have to
38
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~O~t O~~ICTAL US~ ONLY
be mride if a~tandard vergion uere used. Interesting in this connection i~
the progregnive experience in construction of the Vo1ga Motor Vehicle Ple,nt,
ahere the pro~ect planning Was done concurrently aith congtruction uork.
This made it pognible for the prn~ect plan to tn~ke into ac~ount the mo~t re-
cent developmentg in nrchitectural. layout and design, iti mr~de the d~~eign
more "re~i~tant to obsnlescence," and it aled meant that the first phege of
the plant xent into operation 2.5 years earlier than envi~aged.* .
It Wou].d geem that the rights and dutiee of pro,~ect planning organixationg
need to be expanded eubatantially and th~t they ehould be incorporated intn
the largegt production associations. There they might perform many func-
tiona related to capital construction, including orders to furniah the re-
quired machinea, apparatus, inatruments, and so on to meet the design spec-
ificatinna, auperviaing progresa in conatruction and attainment of rgted c~-
pacity, and control of construction cnst and other technical-and-economic
indicstor~. Pro,~ect planning and design organization~ developing engineer-
ing plans and blueprintg of equipment are even noa part of the relevant ma-
~or associations in mar~y industriea (for example, VNIIMEPMASh ~A11-Union
Scientific Research and Pro~ect Planning and Deaign Inatitute of Metallurgi-
cal Mechinebuilding] in the association headed by the Ural Machinebuilding
Plant, etc.). Pro~ect plaaning organizationa in the construction field
- could become componenta of construction ministries or their associations.
_ Bringing construction organi2ations and pro~ect planning organizations to-
gether xi11 create conditions for reducing the amount of construction pro~-
ect planning documentation, since the c~nsumers and producers of blueprinta
and other pro~ect planning documenta Will be administratively united and _
c~u7 therefore enlist technical~}r sophisticated apecialists among lfne per- r
- sonnel, especially for preparing blueprints. Even noW experience has been
good xith incorporating pro~ject planntng organizations into construction as-
sociations in the petroleum and gas industry, in the electric poXer indus- -
try, in the reclamation field, n*.~.
The relative share of construction done according to standard designs has
- grown considerably in recent years and stands at about 80 percent for the
national econo~r, including 68 perc~nt for inc3ustr~al constructiott, 88 per-
cent for transport construction, 95 percent for construction of agricultural
facilitiea (except for xater-management installations), 96 percent for hous-
ing construction, and final~yr, higher than 85 percent in construction of
cultural and consumer-service facilities. Given this high share for the use
- of standard designs, it is not altogether clear WY~y there must be a growth
in the number of pro,~ect planners and pro,ject planning organizations, esp.~-
cially When We take into account that construction is not receiving a11 the
pro,~ect planning and cost estfmates it needs. At the same time, work has so
far been held up on the development of standard cost estimates and also
price lists for finished capacities and facilities, even though they might
easily be compiled on the basis of the standard designs. It xould seem that
* I~TODY I PRAKTIKA OPREDELENIYA EFFEKTIVNOSTI KAPITAL'NYKH VLOZHENIY I
NOVOY TEKHNIKI, No 25, 1975, p 29�
39
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OR 0~~'ICIAL 1J5~ ONI.Y
th~ grnxth of gt~ndard pro~ect plonning should show resultg in a faster pace
for the procege of pro,ject planning as a whole. Many departments are 1oa?d- -
ing up their pro,~ect plannin~ or~anizations with a11 kin3s of studies, re-
ports, anrslynes of the current state of ongoing enterprises and other mate-
rial~, frequently to the detriment of their principal work of pro,~ect plan-
~ ning r~nd cost estimution.
It is also important to turn attention to the produr,tion engineering part of
pr~,ject plunning. The production engineering part of designs, which is the
heart of them, is now in a worse state than the construction part, since `
her~ there are fur more muterials providing information, instructions, meth-
ods and other guidance from USSR Gosstroy. There have been we11-known
achievementa in gtandardization of the construction of buildings and instal-
lations and in the compilation of standard albwns, catalogs and other simi-
lar materials for organizing up-to-date pro,~ect planning. But the produc-
tion engineering part of pro~ject plans is not so well supplied with the nec-
essary information, fs not receiving the materials on standards and methods
it needa, und would seem to be in a neglected state. _
What are called "production modules," whereby the overall manufacturing 18y-
out of new enterprises would be broken doWn as it were into individual units
_ and blocs ahich can be successively put into operation and are capable of
producing finished products on their own, are wide~y knos+n in the foreign
practice of capital conatruction. This kind of syatem makes it possible to
obtain output in the second year after construction begins and to obtain
profit from the first phases to help in financing subaequent construction
work. In the USSR this kind of procedure in pro,~ect planning is used in the
electronics industry, it was used in building the Volga Motor Vehicle Plant,
etc. in ferrous metallurgy the "modular method" would meari the erection of _
a series of vertical production chains--from smelteries to the respective
' set of rolling mills; in nonferrous metallur~ it ~rould mean vertical lines-- _
from tY,e enrichment mills and smelteries to the refineries. But it has not
been given official recognition in pro~ect planning p:actice, in the rePer-
ence materials on production engineering in pro,ject planning or in normative
publications. Construction time indicators ought to be based on synchroni-
zation in the startup oP the various production modules.
Certain Problems in Improving the Planning of Ca~ital Construction
The principal task in drafting plans of capital investments is the. retooling -
of industries, associations and enterprises with recent equipment and ad~-
- vanced production technology. P2~ysical and financial resources are ~irst
co~unitted to performance of ~hese pro~ects at existing enterprises. The or-
der of priority in the conduct of these measures, their expected ePficiency,
corapletion dates, the necessary material support and complete synchroniza-
tion with production plans are determined on the beais of intersector and
sector~ride plans for retooling. Capital investments must be appropriated
not in general terms, for pro~ects, but for the output obtained from the
retooling. In the same We~y the allocation of funds for new construction
~+0
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
COR dF~ICItV. US~ ONLY
shou].d~be ~.lowed only if the required vo7.wne of output cannot be obtained
at exiating enterprisea even after reconatruction or retooling.
Not only conetruction organizatione but also machinebuilding enterprisee
should become extensively involved in ce~rrying out pro~ects for the retool-
ing and reconstruction of existing enterpriaes, and in a number of cases
this al,so spplies to ma~or repaar subdivieiona of the operating industries. ~
Machinebuilding miniatries and agsociations muat unfailingl.y take into ac-
count the peculiarities of enterprise retooling atid reconstruction. Along
With ].arge-scale and power~fL], machines, ~hey ahould also organize the manu-
facture of amall-size and light-duty machines and transport equipment capa-
ble of being "fitted in" to the buildings and winga of exiating enterprises.
The continuing aquandering of cepital investments is causing great concern.
At the November (1978) Plenum of the CC CP3U L. I. Brezhnev aeid: "So far
we have been unable to halt the procesa of the squandering of capital in-
veatments over numerous construction pro,~ects. Unfinished construction is -
growing. Uninstalled equipment worth aeveral billiona of rubles is lying -
idle in warehouses." In the capital inveatment field we find that sizable
" funds are being allocated to new construction pro,~ects instead of concen-
_ trating capital investments on construction pro~ects which are closeat to
completion so that they could be completed more quickly. For instance, cott-
atruction pro~ects in a high stage of completion carried over from the pre-
vious year are allocated altogether inadequate funds--approximately 11-12 _
percent of the entire estimated cost, wh~ch makea it inevitable that they
remain part of unfinished construction for a long time. The problem is not
~ust that thia creates above-alloxance unfinished construction, but that
this unfinished conatruction consiats of a large number of construction
sites and pro~ects with a low level of technical completion.
In order to correct the situation that has come about With the degree of
completion of unfinishzd construction, in our opinion, over the next year -
or two the transition should be made to approval of volumes of capital in-
vestments not on~y for construction pro,jects as a whole, but also for pro~-
ects that promise output. A realistic concentration of investments will re-
sult. .
In plans for development of the Soviet econo~? capital investments should be
given for the ma,~or capital investment programs Which are being devised in
accordance with the decisions on important national-economic problems issued
as directives. They are given on a separate line to indicate the volume of
investments and the date when they will go into operation under each pro-
gram. The techni^al-and-economic ~ustification of the program can be set
forth in special i;.acuments--TID's (technical-and-economic reports), which
would also contain the volume of work planned, the schedule oP stage-by-
stage co~?pletion, arrangements for intersector relations and deliveries, an
exhaustive list of ~ho is responsible for ~hat, a calculation of the total
benefit of the program, and also a plan showing the gradual repqyment of
funds as the various units in the program are completed.
41
� FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
N'UR OF'N [C IAL USI: ~NLY
A progress achedule and interrelated itemized li~t should be korked out for
euch program. The trangition muet be mnde from approval of itemized listg
diveraified by departmen~s t~ the pl~nning ~nd ~pproval ~f the ligts ~ a
boc~y, ~o that they are economically and technologically conaiatent aith one
another.
Incluston of neW enterprises and al.so of pro~ects for recdng~ruction und ex-
pansiot~ of exiating fac313ties in the p1.an for pro~ect planning and construc-
- tion sh~uld be based on TEO's (feasibility studieg~, reflecting advcinced
- techniczsl designs and economic aolutions and stating the maximum coat of
ccnsi,ruc�tion. In determination of the estimated coat of industrial and tech-
nical pzo,~ects it is indispensable to uuilce provision for outlqys for the eon- -
struction of housing and facilities for social welfare and cultural services
for the work force of the enterprises being built.
But the overriding task is to reassess the list of unfinighed conatruction
pro~ects and determine the sequence in which they are to be completed on the
basis of speed in starting up production capacities and facilities that are -
in a high degree of com~letion. At the same time construction pro,jects in a
low state of completion or being done according to outduted designs should
be temporarily helted.
It would be helpful to have full cost ceilings of nerr pro~ects for the
branches of physical production or ceiling levels of specific capital in-
vestments at which the efficiency of newly built enterprises is preserved,
and to organi~e the use of such standards in the expert evaluation of pro~-
ect plans and cost estimates and also in bank supervision of the effective-
ness of credits extended.
A question also arises of the requisite legal enforcement of government de-
cisions concerning reduction of the estimated cost of construction and com-
pilation of timely and good-quality cost estimate documentation. Probably .
the USSR Ministry of Justice ahould draft reco~endations concerning legal
enforcement of decisions concerning the eatimated cost of construction in
view of the fact that cost overruns inf].ict great damage on the country's
~ econoap~ and stend in the Wsy of rapid adoption oP the achievements of tech-
nical progress. The State Price Coammittee of the USSR Council of Minis~ers
should scrutinize the relationship betxeen the cost and capacity of machines
an1 also between the weight of machiiies and their effective output, prevent-
ing a hidden rise in the cost of machines disguised as modernization or mod-
ification.
At the same time, until the estimated cost of capital construction beco~s -
altogether stabilized, temporary indices should be used for converting the
value of capital investments to comparable prices, and they should be used
fn planning capital investments and in the selection oP pro~ects to be in-
cluded in the pltin so that reserve funds are left in case of a cost increase
that cannot be controlled.
~+2
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
I~'Ott Ot~~~ICIAL U5~ ONLY
In order to sharply reduce the length of the investment proce~g cind al~o to
prevent the obnolegcence of enterprigen With long ~on~truction timeg, it i~
_ recommended that full recordg be kept on the time factor in capitul con-
ntruction. This would inelude adoption of the method of ~oncurrent perfor-
mgnce of the varidus stuges of capital construc~ion--gwrveyin~, pro,~ect plan-
ning, Cdnstruction and uttainment of rated capacity, using the progresgive
- experi~nce of the Vo1~g Motdr Vehicle plant, Where congtruci;ion t+ork ws~ con-
current aith pra~~et plttnning ~?nd g1.eo aith the effortg to attsin rated ca- ~
paCity .
There should evidentlyr be tt ch~nge in the procedure for compiling ~tandard
pro,ject planning and congtruction timea ao an to elitnint~te the present prac-
tice of allotting additi~~na1 time in the gtandnrd construction time for the
~tartup of each new ghr~p, complex, and so on. 7'he construction time of pro,~-
ects ~hould be litnited to, sqy, 2 or 3 years, regardlegs of the size of the
proJect; then it would not be the construction time get thaC could vary, bnC Che
numUer oi' simultaneous floxg and the support of construction pro~ects.
In our opinion we should organize gradual reduction of the atendard time for
attainment of rated capacity at neW enterprises as uniform rules are adopted -
for delivery of pro~ects ready for operation so that in the llth Five-Year
Plan ~tandards for attainment of rated capacity could be sbolished at pro,~-
ects converted to this system of delivery. That time would make provision
for only brief aturtup and prestartup periods lasting a maximum of 6 months,
and provi~ion Would also be made for organizing a netkork of teams and crews
for startup and ad,justment.
There is also a question of the gradual transition of capital construction
to Work in tWO and three ahifts kithout increasing the total number of con-
btruction xorkers, using the experience of Leningrad machinebuilding plants.
It is important to correct],y determine the ~apacity of construction organi-
zations and to plan their optimum use. Final~}r, one might recommend adop-
tion in the practice of planning capit~l inves~ments of the indicator of the
_ degree to Which capital investments are determined by investment decisions
made in the past and pro~ect plans and cost eatimates already compiled; it
is these ahich predetermine the future allocation of investments f~r pro,~-
ects alreac~y begun. This coefficient Would be sub~ect tc~ a limit oi 3-~�5
years.
Speeding up the pracess of bringing new enterprises and nex production ca-
pucities up to rated output is an important means of reducing the length of
the production cycle as a xhole. In the USSR the standard time for attain-
ment of rated output ranges from 1 year to 3 years. According to foreign
- data, the startup period and attainment of rated capacity do not exceed half
a year. At the present tfine the actusl time for attainment of rated output
exceeds the norm. A number of scienLific developments call for a still
_ longer period for attainment of rated output, including so-called "economic
assimilation," Which would mean 6-7 years. In our opinion we muat on the
contrary make a thorough examination of all violations of standard periods
43
FOR OFFICIAL USE ONLY -
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
1~111Z UI~I~ ~Cf~~l, USI{ t)Vt,i
�or uttt~inment of rrzted output und gracluullv tighten up the pregent ~stand-
ard~, Very important and unet'ul w~rk ho.s be~~n done in thig re~pect by the
~cientint~ in Ilnshkirnkg}ra ASSIt in tin affiliute vf the ~cientific Council
for the ~fficiency of Cnpitul Investment3. 'I'he researCh Was done c~t enter-
pri~~~ of the petrolewn refining and petrochemicnl. indu~try in Baghkirqk~a
A9SF~, Where in the 19G6-].970 periocl 60 roa,jor pr~duction r~ro,jects With more ~
tha~i 8dd million i~ubles aere put it~t~ operation. But at on~y 11 pro,jects,
which megng 18.3 percent, were the rated output in~lictttors gchieved within `
the standard time. The length and period required to attain rated output -
meant n logs of more than 180 millfon ruble~ of gross output.
~ieseurcher~ of the Bn3hkir affil3~te of the USS~i Acr~de~yr oF Scienceg
Yu. Malyshev, V. Kiseleva, D. $ronghteyn and V. Ivalyuk correctly ndted the
_ similarity of many operation~ carried out in attaining rated capacity and in
the perform~nce ~f ma,~or repairs. tlore nnd more frequently now, ~rhen mc~,jor
repairs are undertf~ken work is done on recot~struction of particul.ar unit~,
to moderni~e equipment and partially replace it with nea equipment ahen thig
ig economically advisable. The principal stages in the preparation of equip-
ment for operation and bringing it up to operating parameters are praeti-
cal~jr identical following the f'ull range of tests and ma,~or repairs. The
only difference is in the level of ttie qualifications of personne2. However,
when we compare the standard time set for ottaining the productivity of
standard units following ma~or repairs and follovring completion of construc-
tion (and the full range of testing), we find that a different time ia plan-
ned for the same Work. For example, follouing mu,jor repairs on a unit for
hydrorefining of diesel fuel 120 hours, or 5 days, are given to echieve full
rated output, While attainment of rated output on the same installstion by a
construction and installation organization is alloxed 2,160 hours, or 90
dqys, which is 18-fold more. Relations like this are typical of almost all
types of capacities being brought up to rated output (hydrorefining of die-
sel fuel, eatalytic reforming, atmospheric-vacuum pipe, eCc.).
The Bashkir economists provide a table in Which standard times for attain-
ment of~rated output folloWing construction and ~,nstallation on the one hand
and ma,jor repairs on the other can be compared. More economical times are
echieved for almost all types of capacities by organizations doing ma~or re-
pairs; in practice the time required to rer~ch rated capacity is reduced to
1/18, 1/45, 1/60, 1/90 or even 1/120!
The time for reaching rated capacity in facilities furnished xith new equip-
ment occurs as a rule because there are "difficult" assemblies. Though in
value terms their sh~re is no more than 5-8 percent, much time is, neverthe-
less, spent on their "ad,justments." For instance, full assimilation and re-
finement of certain assemblies of an inst~.llation for the t~ydrocracking of _
vacuwn gas oil took 23 months, Whereas attainment of full average daily out-
put took only 15 days. For that reason principal attention should be paid
to timely attainment of rated capacity on those assemblies Which are ne~r and
on preparing special reconmmendutions for bringing them to rated capacity,
testing them and muking refinements in them. There is also interesting
44
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~Oit U~~~CIAL US~ dNLY
experienCe in the uge ~f fund~ alln~gted for ma~or repair treated in the
aritingg of the KtLyby~hev economigt ~I, ~iimer, for example). dn the whole
We ~hould note that in the ntage of att~inment of rntecl nutput new pro-
ducti~n cnpncitie~ th~re in ~ large unuaed potpntig~ for gh~rtening the tim~
required fbr thig imp~rt~ttt gtt~ge in the inve~ttnent cycle.
- NeW ~'e~hnicn]. Uirections in C~pit~.1. Cengtruction ~nd the ~agkg di the P].an
In the U55~i a mighty mt~t~rig]. and technic~. bgse has been built in. pagt yegrg
for ~apital congtruction. But ae nrn? note serioug ghortcominga in it. Uefi~
nite migtaltea have been co~mitted in developing the production of cert~in
building meterials and fabricationg. Preference has been given to such mn-
terigls ~n r~infc~rced concrete, cement and meta].. At the same time the prc~
duction of finighing material~ ha~ been in~uffici~ntly developed, and this
h~g had ~n adverse effect on the rige of labor produ~tiv3ty in cepital con-
gtruction. The importance of preaggembl.y in construction hgg been exag-
gerated beyand all measure. Most inatallationa h$ve reached 80-90 percent
in the degree of preasgembly, but labor e~cpenditurea on them are in a number
of cases higher or the game as for brick construction. Mac~y skeleton-panel
apgrtment houses or skeleton-type administrative buildingg aould require 1e~g
labor and would be cheaper if built from brick.
Ac~tording]y the CC CPSU t~nd U33R Council of Ministers ~dopted the course of
- extensive use af light and lightaeight fabric~tions b~ck in 1972. In the
years that have passed since that decree Was issued, considergble aork has
been done in building and putting into operation plants fnr m~king light-
Weight fnbrications, for producing gpecial highiy efficient floors, aluminum
fabrications, asbestos-cement con~truction products, lightae3ght fillers and
therma]. in~ulating materials, etc. Un�ortunate]y, man~y prc~,~ect planning and
construction organizations are reluctant to use these lightWeight building
materials. They seem to have become devoted to the heavy and expenaive ma-
terials and fabrications. It is significant ths~t the construction and re-
construction of plan~s for reinforced-concrete products, ahich number nearly
260, are being carried on more rapidly and vigorous~yr than construction of
enterprises for lightWeight products and fabrications, Where the level of
planned fulfillment for construction and installation work is sometimes not
even ss high as 20 percent. The example of construction of enterprises for
glued Wooden fgbrications is very instructive. By the end of the Ninth Five-
Year Plan capacity Was to be built for the production of 465,000 cu6ic meters
_ of these fabrications, and 31 sets of manufacturing equipment for thoae en-
terprises Were to be manufactured. In actuslity the enterprises built in the
years so far have a capacity of only 90,000 cubic meters, and this is done
on importe~ equipment, and instead of the 31 sets of equipment, on~y 1 proto-
type has been made.
If the same amount of rolled products of ferrous metals no~r ellocated were
used to manufacture 250,000 tons of cellular floor ~ecking instead of
125,000 tons and approximately 300,000 tons of bent profiles instead of
145,000 tons, progressive lightxeight fabrications aould be large~y? in use
in construction.
~+5
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~~ok nF~f~~lctnL t15~; ~N1,Y
motc~l ouLlqyn to build capncitieg for the procluction of flat steel fabrieu-
tion~ nnd rock-WOOl bnttn t~re a t'raction of the co~t of
building CnpnCitieg
for the produetion of reinforced-r.oncrete slab~ nnd the correaponding amount
_ of
enforcin~ gteel, cement, s~nd, gr~vel nnd keramsit~, ~hich rratil_d not be
neEded ~t sll if thn li~tvreight nteel febrications ~rere u~ed.~
One might cite a multitude of ~uch examples and cuses. $ut i.n this case ke -
r~re talking about a regolute reangeggment o� the technical policy in cdn~
struction along the lines indicated in thc decree of the CC CpSU and USS~t
- Council oi' Ministers (19`j2) Which promiaen a tremendous gain in time, qual-
ity and reduction of l.abor intengiveness and mt?te~ia],s intensivenesa of con-
gtruction, but to a congiderable extent this in being held back by the preg-
ent gy~tem of p~yment fdr p~rtial completion, ao thgt there is a c~irive not
toWard cheap versiong, but toWard those Which nre heavy c~nd expengiv~. 'rhe
. plan of the intergector capitgl invegtment complex must be oriented toWard
- the use of progregsive materials und fabrications.
Some Unused Potential for Reduction of the ~ntimated Cost of Con~truction
nnd the ~:conomic,Machinery
Within the group of the capital investment sectors and industrieg (those
Whose products becnme fixed capital) xe observe the sharpegt an3 most per-
sistent departures from ~ system of compgrable prices that has been adopted
in economic prnctice. The reason is that the so-called fixed (comp~rabl~)
prices in capital construction are not prices for the finished produet of
C~nstruction (that is, for capacity, an enterprise ~rith s gtated output, and -
~o on), but prices for partial completion (per cubic meter of earth moved,
per cubfc meter of brick laid, per cubic meter of reinforced conerete poured,
per cubic meter of plastering, and so on). The emergence of theae "compara-
ble" prices for portial completion could substantial~y fncrease tt?e cost per
unit capacity, Which Would not be comparable aith the cost of pro~ects built
earlier.
The increase in the cost of construction and installation xork noW taking
place ev~n in calculations mgde in fixed prices and costing standards is
large~jr the result of the effort to increase the materials intensiveness of =
these operutions, sin~e the more expensSve the building materials and fabri-
cations used, the larger the aage fund and the a~re profit are planned for
construction cind installation organ;zations. At the same Lime even the vol-
ume of pro~ect planning work is determined as a function of the acale of
construction and installation ~ork embodied in the design, Which motivates
even pro,~ect planning organizations to make the pro~ects they design more
expensive. On the whole the procedure used in determining economic incen-
tive3 and in evaluating the performance of builders and pro~ect plaaners
_ does not on the xhole orient them toWard making pro~ects cheaper, but tos+ard
making them more expen3ive. At the same time this is having an impact on
the drop in the output-capital ratio in the econo~.
* See VOPROSY EKONOMIKI, No 3, 1g76, Pp 22-23.
46
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~Oit O~~ICIAL U5~ ONtY
Calcul~?tidn~ ~horr that optimalization of the composition ~nd quality of
building materia].~ mskee it pos~ible to reduce their mesa per xark unit ap-
proxim~tely 25-30 percent,trhieh hag gn effe~t dn con~truction time, on la-
bor intensivenees Qnd glso on the cost of aon0tr~tetion~
Pr~dotningnt uee df heavy fabricationg and material~ in congtruction, heavy
re3nforced edn~rete above all, Whose ~hare ig 35-4b percent of the co~t c~f
gl]. the mat~rial~ used, is mainly the r~sult of nrganizatinnal factors.
terpri~es ~ubordin~te to congt ructinn mini~trieg are producing 96 percent of
all the reinforced concret~. The priceg for prefabricated reinfnrced-con-
crete products offer cdmpare?tively high profitabi~.ity for canstructidn orga-
nizationg--approximat~]y 20-25 per~ent. The COBt of the reinforced cnncrete
u~pd is in turn credited to fu1fY1].ment of the plan of con~tructinn and 3n-
gtall.ation work, so that it eneourages predominant use oP this heavy m~?t~-
ri~l.. 7'tiig i~ ~t~nding in the t+e`y of development of the production df poured
reinforced con~rete, Whoae uee makeg it p~saible to save ag much as 25 per-
cent of the metal and conerete ~.nd to reduce the congtruction co~t consider-
ably. ~'or instance, prefabric eted reinforced-conar~te fc~oting~ for ~olumns
are 1.5-2-folfl more expensive than poured footinge, and their m~nufacture
requires la?rger expenditureg of labor, but th~ output per conatruction korker
ig 2.~-3.5-fold grenter than xhen the footings are poured. This, of caurse,
distorts the indicator of labor productivity, but it predetermines the higher
"profitability" of the heavy materisls. We ahould also bear in mind that
steam curing of 120 million cubic meters of prefabricated reinforced-conerete
praductg requires a tremendous amount of fuel, aince the use of steam is not
alw~yg required with poured concrete.
Within the group of the capital inveatment sectors and induatries vre observe
the sharpeat and most persistent depaitures ~rom a system of comparable
prices that has been adopted in economic practice. It is thought that the
source of the coat shifts ia primarily prices of rax materials and fuel and
porser resources in the group of nonr~placeable resources and sub~ect to the
conditions of rent relatio~ne. But wnder present conditions the most disor-
derly and uncontrolled price changea are taking place in the capital invest-
ment industries and sectora.
The polftical and economic tasks of the present period and also the long-
range tasks of scientific-technical progress cannot be performed if thQ eco-
nomic machinery for the conduct of the capital investment process is left as
~ it stands. Principal attention in the long run should be paid to intensifi-
cation of the investment sphere, to stabilization and reduction of estimc~ted
cost, to the orientation Loxard the end product, to a new organization of
the investment process, to a deciaive improvement in the rate of turnover of
capital investments and therefore to creation of nerr internal potential for
expended regroduction.
COPYRIGiiT: Izdotel'atvo "Pravda," "Voprosy ekonomiki," 1979
- 7045
C50: 1820
~ ~7
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
~Oli OI~I~ ICIAL U51; ~NLY
- ~ALANC~ 5t1~~T M~THdn 0~ PLANNING
Mogcow VOP1tOSY EKONOMIKI itt Rueaian No 1, Jan 79 pp 70-SO
/Article by P. Krylov: "ImprovemenC of the Balance Sheet MeChod of Planning"/ -
/Text/ The balance sheet method occupies a leading place in the methodology
nf planning, wt~ich is governed by its role in ensuring the proportionate de-
velopmenC of the national economy in cenfdrmiCy wiCh Che requirements of the
ecdnomic lnws of socialism. Thia method makes it posaible to draft a uni-
- fied state plan, in which the physical-material and value proportiona of
socialiat expanded reproduction and the development of all the sectora and
regions of the country are integrally coordinated. -
The balnnce aheet merhod--the most impnrtant element of th~ ent:re aystem
of scientific methods of planning--is directly connected with the program-
goal and standard methoda. Its bases were incorporated in the plans of the
State Commission for the Electrification of Russia and the First Five-Year
Plan. The elaboration of the main group of balances during the drafting of
the Firat Five-Year Plan was a significant stage in the formation of the
balance sheet method. Alottg with the physical balances the most important
vnlur balances, as well as the balance of labor resourcea were drawn up for
� the firat time. With allowance for the aocial taeks of the Firet Five-Year
Plan the main types of balances were drawn up by social secCora. The fur-
ther development of the balance aheet method proceeded along the line of
both the enlargement of the group of balances being drawn up and the in-
crease of their validity. The various types of balances now being used en-
compass all the sections and indicators of the plana at all levels of eco-
nomic management: from the plans of enterprises and associationa to the -
unified state plan.
The enoraaus scale of the econonry and the complication of national economic
and intersectorial ties under the conditions of a developed soc,~alist soci-
ety nre making increased demands on the balance sheet method. These demande
have been caused first of all by the creatioi~ of new sectors and works, the
expansion of the list of products being produced, the typea of ~obs and serv-
icea~ the formation of more and more diverse intersectorial tiea. Thus, in
the~standardized liat of aectors and eubsectors of industry their number is
48
~OR OFFICII,L U5E ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02/48: CIA-RDP82-44850R000100034433-1
FOE~ O~FICIAL USE ON1,Y
- abouC,G00, while Che deCailed produces lise by gradea and aizea numbers
12 mi111on ttiems. A greae dynamicnese, which i.s deCermined by Che accelera- -
tion of acientific and Cechnical progresa and the change of rhe pattern of
producCion and pereonal consumpCion on the basis of the development o� new
types of producta and Cechnological proceases, ie typical for intersectnrial
Cies under preaenC conditione.
A significant feaeure of the proceae of forming the proportiona at preaent
is the intenaification of their interconnections, in~cluding Che connecCions
of the phyaical-material proportiona with the proporCiona n� Che distribu-
tion of labor and financial reaourcea, The careful coordination of the
physical-material resources with the value indicatora ia especially impor- -
ranC for meeting the effecCive demand of the popula~ion for commodity aerv-
ices of Che neceseary variety. As to the production of Che meana of pro- -
duction, here the production of varioua types of producCs, which meet uni-
form demanda, parCicularly for interchangeable typea of fuel and power,
conatruction material;s and so on, is being rapidly expanded. All this has
caused Che need for the coneiderable developmen.C of all Cypea of balances.
The most important demand on the balance sheet method of planning at present
is its use with allowance for the finding of the most effective m~ans of
_ Che proportionate development of the economy on the basis of the economical
use of resources and their purposeful distribution so as to enaure the meet-
ing of the demands with the leset expenditures. -
The new demanda being made on the balarce sheet meChod of planning are being
me~ in the practical activity of planning organs. The elaboration of bal- -
ances is being accompliahed more completely at all sCages of planning, be-
_ giT~ning wiCh the preparation of variants of the preliminary balance sheet
e~timates for the control figurea of the annual and long-rang~ plans up to
the approval of the main types of balances within the state plans. The sub-
stantiation of the calculations of the demands by individual items of the
balances by using technical and economic standards has been improved. Mo-
dern computer equipment is widely used in the formulat:ion of a number of
bal~nces, for example, in the centralized cal.culationa of the demands for
- rolled ferrous metal products by sectors of machine building, for materi.als
in construction, the aggregate balance of machines and equipment in value
terms and others. A number of models of the interaectorial balance of tha
production and distribution of products in physical and value terms have
been developed, which are beginning to be used also in planning estimates.
_ However, the achieved level of the elaboration of balances does not yet
_ fully meet the increased demands of planning. The development of the balance
sheet method in recent times has proceeded prfmarily in the direction of
the increase of the number of balances being used with the retention of
the basically formed methods af their compilation. A significant drawback
is the fact that the main place in balance sheet work is assigned to the
elaboration of annual balances, while for the present long-range (five-year)
balances are not being used entirely. The neceasary coordination of the
49
FOR OFFICIl~L USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
1~OEt UFFICIAL USC ONLY
Chree main Cypes of balances--physical, labor and flnancial--has not been _
asaured. The principle of efficiency is not always consistenCly followed
in balance aheet work. The inadequately reliable balancing of Che develop-
ment o� individual sectors of the national economy remains one of the unre- �
solved complicated problems. ~
The planning organs at all level.s and especially USSR Gosplan when drafting
plans aCCempt to ensure their balanc3.ng, but there are some difficulties in
solving this problem. They are Che result of a number of causes. Some of
them are of an ob~ective nature, oChers involve shortcomings in the organ-
lzation and methods of planning. The main ob~ective cause is the fact that
in recent years a number of sectors of the extractive industry have been
developed by means of a shift to the use of less rich deposits or deposits
in remote regions, which has led to an increase of the specific capital in-
veatments and the production cost. Thus, during the years of the Ninth
Five-Year Plan in the peCroleum and gas industry, metallurgy and the timber
industry the increase of capital investments outdistanced the increase of _
the production of products. A tendency toward the increase of the produc-
tion cost of the producCs of some sectors of the extractive industry and
agricultural products was noted. All this adversely affected the rate of
development of the basic sectors of heavy industry and the increase of re-
_ sources of agricultural raw materials.
A number of difficulCies in the formation of financial balances are con-
nected above all with a certain lag of the increase of the production of
consumer goods, which enjoy a greater demand, behind the increase of the
monetary income of the population, as well as with the decrease of the
growth rate of the profit.
Serious tasks on Che improvement of the balancing of plans and on the as-
surance of the proporticnate development of the national economy are set in �
the lOth Five-Year Plan. In a reporC at the 2Sth CPSU Congress L. I. Brezh-
nev especially emphasized that the assurance of the stable balanced growth
of heavy industry is the core of the party� ::conomy policy for the long-
range future. At Che congress much attention was also devoted to the 3e-
velopment of agriculture and the production of consumer goods on a scale
which meets the demands of the popu?ation and Che national economy. In con-
_ nection with this during the lOth Five-Year Plan it is planned to increase
the absolutz increments of the production of petroleum and gas, the smelt-
ing of steel, the production of plastics and synthetic resins, chemical
fibers. At the same time stepped-up assignments on the economy of the most
important types of material resources were established. During the first _
three years of the five-year plan the recovery of petroleum and gas and the
production of a number of basic chemical products and construction materials -
increased significantly. However, as L. I. Brezhnev noted at the November
(1978) CC CPSU Plenum, the overall development of the economy in many re-
spects depends on the further increase of the production of inetal and the
extraction of fuel.
50 -
FOR OFFICItiI, USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
F'~1It c1E~'~ICIAL U5~ ONLY
Aciditionnl measure~ nn the acceleration of the developmenC of xgriculture
are Ueing implemented in confnrmity wiCh the deci~iong of the July (1978)
~ CC CPSU Pl~num. Much work on Che improvement of Che ey~tem of planning gg
a whole~ includin~ th~ improvement of the b~lance sheet metihod of planning~
. i~ neces~ary along with the measures being implemented on the increaee of
- production and the n_conomy of maCerial resourcea.
The development aud entuincement of the rol~ of gll eypes of five-year bal--
nnces are the moet impnrtanC direction nf the improvement of the balance
eheet method of plgnning. The five-year plans ~re the main form of planning
of the economic and eocial development of the country. Within the frame- -
~ work of annual planning it ia impoeaible tcr ~mprove subetantially the pro-
portione of Che det~:elopment of the national economy gnd its main eectors,
eince the opportunities to increase production or eave resourcee here ure
very limited. In connection with this Che stricter limiCing of some de-
mande, the reduction of reservea~ the increase nf imports or the reduCtion
of exporCe and ao on are the main way of achieving a balunce of developmpnt
in the annual plnna when there is a ehortage of resources.
_ The complex and effective balancing of the developmenC of the national econ-
omy and its sectors can be assured only in five-yenr plans, which create
considerably more opportunities for the achievement of Che proportionats de-
, velopment of asaociaCed sectora and worke and the necessary value propor-
tians. The drafting and coordination of the five-year plan wieh a brenk-
~ down by yeara as the basis of the proper balancing of annual plana are
eRpecially imp~rtant.
In recent yeare the balance sheeC work when drawing up five-year plans has
Ueen improved. The number of physical balances being elaborated hae in-
creased. Within ti~e lOth Five-Year P?an 232 phyeical balancea with a break-
= down by years were approved, of them 154 ~~ere approved by the USSR Council
of Ministers, while the remainder were approved by USSR Gosplan. The bal-
ance of labor resources and the main financial balances were drawn up by
years. Nowever, the established practice of elaborating balances when draw-
ing up five-year plans still does not completely meet the current demands
of the proportionate development of the national economy.
- A significant drawback of balance sheet work when drawing up five-year plans -
is the fact that USSR Gosanab, as well as miniatries and departments, as a
rule, do not elaborate the physical balancee in accordance with the producta
list being planned by them. Meanwhile, more than 13,000 balances are ap-
proved in the annual plans by USSR Gossnab and ita organs. In the five-year
plans a considerably amaller number of balances of production capacitiea
are also used than in the.annual plans, although the problems of expanded
reproduction can be solved successfully only in long-range plans. All this
- attests to the expedience of enlarging the group of physical balances which
arc elaborated in the five-year plans, which will make it poesible to coor-
dinate quite completely the main intersectorial proportions.
5~
FOR OFFICIAI. USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
I~'Okt UN'[~ iC1AL US1: ONLY
t~'or the beCter provi~ion of the five-year pl~ns of producCion and capital _
conHtruCtion witl~ materinl regources it i~ necessary to determine Che tn~in �
directinns of the diseribution and supplies of allocated regources in a
breakdown by i~ecCord and tl~e m~in consumers. The increase of the number of
phy~icul. bnlanceH nnd the entiancement of rheir role require the correspond- ~
1.ng expanHion of the ~~Lanned product~ .li~t ~nd productinn CgpSC~t~CH~ which -
:~re el~boruted in the five-year plan. At the same time thi~ pr~:durCg list
~hould be more consolidated than in the annual plana, gince in the drafting
of five-year pl~ne the specific types of new machines, equipmenC, instru-
menta ~nd materic~ls ;:nnnot yet be entirely gpecified; aubstantial changes in
tl~e varie~y of consumer goodg and in Che daCes of the placemenC of new _
types of products into production ~re possible.
A drawback of Che system of value balancea, which are drawn up in the five-
year plan, ie the lack of approved five-year financial plana wirh the neces-
~ary estimates by ministrieg, departments and councils of ministers of the
union republics. In connection witl~ thie the plana on production and capi-
tal construction by sectora are inadequately backed by financial resources, ~
changes in the econnmic interrelations of the sector and the state are not -
revealed, Che planning of long-term credits is made difficult. The calcula-
tions oi the main typea of revenuea and expenditures of rhe state, which
are made in the five-year plan, are consolidated ones and subaequently are
ad~usted aubstanCially. This eapecially pertains to the profit. The bal-
ance of the monetary income and expenditure of the population in a breakdown
by uni4n republics in the five-year plan ~.s elaborated only for the final
year of the five-year plan.
The systemaCic revisione during the five-year plan of wholesale pricea,
which are made for many secCors and subsectors~ adversely affecC the'stabil-
ity of the value indicatora and the proportions of the five-year plan. Thus,
during Che yeara of Che NinCh Five-Year Plan the total amount of the changes
of wholesale prices was 15 billion rubles. As a result the coordination of
the financial indicators of the annual and five-year plans was conaiderably
complicated.
All this causes the need for the elaboration in the five-year plan of fi-
nancial balances in the full amount mainly according to the group of bal-
ance sheet estimates of the annual plans, including the drafting of five-
year financial plans for ministriea and departments and their delivery to
associations and enterprises (accor,iing to a consolidated group of indica-
tors). An important condition of the effectiveness of the five-year fi- _
nancial plans and balances is the maintenance of the etability of wholesale
prices, so that their revision during the five-year plan would be made only
for individual types of products in case of sharp changes in the conditions
of production.
In addition to the enlargement of the group of balances elaborated in the
five-year plan, it is necessary to increase their validity. This is con-
nected with the fact that when drafting the five-year plans an adequate
52 .
FOR OFFICII~L USE ONLY _
- t
I
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~ ~OCt d~~ICIAL USC ONLY
C~chnical ~nd ecanomic subetaneigtidn of Che gpplied standards, including
the us~ignmente on the reduction of ehe rnte of con~umption of marerinl re-
eo~rceg~ ie nvr enAUr~d. In p~rt Chie ie caused by ob~ecCive difficultiee
of tnking inCo acco~nt the achievementa of ecienCific and eechnicul progresa.
The shorCcominge in determining the economic efficiency of new equipment nre
the primary cnuse. In connection wir' thie Che developmenC of a eyetem of
, progressive techn3.cg1 and economic norme and atandarda, which is elaborated
for a five-yegr period and ie made more precise aubsequently by yeara, is an
important direction of the improvemenC of balance aheeC work.
- The increase of Che level of validiCy of Cne balances ia the moaC important
prerequieite for Cheir directional nature, approval and delivery Co the
performere. The expansion of the work on the elaboration of the five-ye~r
balance of labor resources, eapecially wiCh a breakdown by individual rayona,
krays and oblasCa, the making of balance eheeC eaCimates of the suppl,~ with
manpower of the main sectore of the national economy, induetry and construc-
tion, ae well as the training of skilled pereonnel and specialiata are also
of great importance.
One of the main prerequisites of Che improvement of the elaboration of the
balances in the five-year plan ia the availability in them of the necessary
reserves of maCerial and financial resources. During the five-year period
additional demands for resources usually arise, which are connected with
the use of the latest achievements of science and Cechnol~gy, the develop-
, ment of new mineral deposits, as well a~ with changea in the conditiona of
foreign trade. Deviationa in the production and purchases of agriculCural
products, which are caused by weather conditions, substantially influence
the development of the national economy. Additional demande also arise
with the need for the accelerated dev~lopment of individual aectore or the
solution of territorial problems.
A shortage of the reserves, which are atipulated in the five-year plans,
especially for capital investments, under the conditions of aubstantial
changes of material and financial resourcea and demands during the five-year
plan leads to ad~uatments of the plane of capital construction, as well as
the plans of production and economic indicaCors for a number of sectors of
industry and the national economy, to violations of the planned proportions
of the five-year plan. Along with the reserves of resources of raw mate-
rials, fuel and materials, including for additional capital inveatmenta,
_ the reserves of co;?sumer gooda with allowance for the possible increase of
the effective demand of the population, the reaerves of financial assets
in the estimates of the balance of income and expenditure of the state and
others are also of great importance.
The creation of a system of fixed atandarda of the teserves of the most im-
portant types of material reaources, which are etipu~ated in the balances,
especially for scarce materials, is the main meana of solving this problem.
In this case all the indicated reserves ehould be coordinated with each
other. At the same time it is improper to direct one's attention toward
53 -
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
rOk U~I'1CIr1L U5C UNLY
Chr. Corm~~tinn i~t tiie Eivc~-ye:~r p1~ns of. eypeci~lly cnn~ider~sble re~erves~
~~~~~?er I ri I I y iu~drr the CUII(I ~ L( UI1H c~ f u Hlic~rtnge o[ u nunber nf Che m~ in CY[)CH
~E raw m~iterinls, mnteriul and tinencial resources. The main wuy of eneur-
ing ehe reliuble balancing of et~e five-year plans ie the more careful de-
terminaeion of Che demand~ of the national ecnnomy nnd the possible re- -
_ sources. The umounCs of Clle reserves should be esC~blished only on the
b~si~ of thoae demands which it is impossible to foresee in Che calcula-
Ciotts of the five-year balances.
Consolidated bglance sheet eseim~~tes for the long-range future of the eco-
nomic, scientific, eechnical and social development of Che counery are cun-
ducive ro the increase of the level of balance eheet work in rhe five-year
plans. They make it possible to characterize ehe main shifts in the pro-
duction and consumption of the mosr important types of maCerial resourcea
with allowance for the trends of scientific and technical progress~ as well =
ns the avnilability of narural resources and manpower by regions of the
country.
Useful experience on the formulation of consolidated phyaical balancea,
as well ns the balance of labor resources for the long-range future has
already been guined in USSR Gosplan during the work on the main direcCions
- of the economic and social development of Che country up to 1990. The data
- of Ctiese balances are also promoting the determination of the changes in
the structure of the demands of the national economy and the population
. during the five-year plans, the establishment of the moat effective ways
- of ineeting them with allowance for the forming Crende for a long period.
All this attests to the need for the development of an intercoordinated
system oE balances for Che long-range future~ for the five-year plan and
the annual plana.
Of great intportance for the successful elaboraCion and fulfillment of the
planning br~lances is the enlargement of the group of annual report balances
which at present are drawn up according to a significantly smaller product~
list than the planning balances, which complicates the analysis of the ac-
tual proportions in the development of the economy. It should be emphasized -
that the annual report balances are the most important means of monitoring
the fulfillment of the planning balances and the observance of the planned
. proportiona. However, in the check of the ful~illment of the plans, espe- -
cially the annual plans, the violations of the planning balances are being
inadequately analyzed. As a reault ~he timely taking of steps to eliminate
the arising individual bottlenecks and disproportions is being complicated.
One of the most complicated problems of the elaboratton of balances is the
assurance of their intercoordination. On the scale of the national econ-
omy the physical, labor and financial balances are coordinated on the basis
,of the comprehensive substantiation of the state plans according to all
types of resources. Such work is also performed within the calculations of
the main indicators of the bala.nce of the national economy. The formulation
of the planning balances of the social product and the national income are
5~+
FOR OFFICI6,L USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~ox nr~icinL us~ otnY
the pximnry conCettt of ehege cglcul~Cinne. The balances for such very im-
portnnt'aspecCe of expand~d reproducCinn ae the dynamicg and uee of fix~d
- ~apitaL and labor resourcea are el~borated ~eparately.
The aeparation of ehe groups of balance~ eepecially influences the drafeing
of the plan~ of developmene by sectore. This finds expresaion above all in '
the inadequate coordinneion o� the balances of mater3a2 and financial re-
sources. Thus, the p1c~n on the production coet and the profiC ie directly
noe coord3naCed with the allocated material reeources, which in moaC aec-
~ tors conatituCe the bulk of the production coeCs. The plans of capital in-
_ veatmenta are coordinated with maCerial resources in value terms only for
deliveriea of ~quipmenC on the baeis of the elaboration of Che aggregate
balance of Ch,e equipment.
- The elaboration of phyaical balancea not only in phyaical-material terma,
but also in monetary terms might be the main means of Che direct coordina-
~
tion of material and finacial reaources. An example of coordination of
, this type ia the above-indicated ~alculaCiona o� the aggregate balance of
equipmenC in value terme, which generalize Che data of a large number of -
balances by its individual types.
_ It is most complicated in the calculationa of physical balancea in value
terms to determine the average wholesale pricea of the material resourcea
which are uaed according to individual directiona. The data of the annual
interaectorial report balancea of the producCion and distribution of pro-
ducts, which characterize the conaumpti~n of material reaources by aectore
of the national economy in value terms, mighC be the underlying baeis for
the calculations of the phyeical balancea in value terma. However, for the
practical use of theae data it ia neceasary to elaborate apecially the dy-
~ namics of the average prices of the consumption of material resources. The
NIIPiN LScientific Research Inatitute of Planning and StandardsT of U5SR
Goaplan in the early 1970's made experimental calculatione of the balance
of ferrous metals in value terms, but, unfortunately, aubaequently this
work was not continued.
Considerable experience on the elaboration of physical balancea in value
terms has been gained for consumer goods. Balances of this type are elab-
- orated primarily for the main nonfood conaumer items. At the same time for
many balances of consumer goods and above all for foodstuffs only the de-
liveries according to the market funds are elaborated in monetary terms,
which complicates the analysis of the atructure of the use of goods by in-
dividual directions. In our opinion, the elaboration of the balances of
� the means of production in monetary terms should be revived and the calcula-
- tions of the balances in value terms for foodstuffs of a complex assortment
should be made.
The more extensive uae in the syatem of balances of calculations in value
terms is of great importance for the consolidation of the unity of the plan-
ning of physical-material and value proportions. This will also make it
55
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
H'Ok U1~ N'IC IAI. IJSL ~)t~li.'~
po~sible Co improve the ~ub~~~nei~tian of ttie fingnci~l balances on tlie
- bxsi~ of their coordin~tion wieh the phy~i~~l b~l~nce~ and w3.11 pronate the
more complet~ nccount~ng in planning of tlie effecr of the law of vulue
und~r socialism.
_ The expan~ion ~f th~ pr~Ceice of el~boratiug complex phygical bal~nCeg as -
tfie moet importnnt cdndition of intercoordinaCeci m~eeric~l and CechniCal sup-
ply ig of great importance tor the improvemenr of the balance ~heeC method.
AC preaent Che ma~oriCy nf the physical balattces ~re compiled as one-pro-
duct balances and only some nf them arc compiled eg aomplex balanrea~ for
example, the balgnce of boiler and furn~ce fuel, of reittforced concrete
strucCures, Che a~gregate b~lance of l~mber in termg of round timber and
aeveral others. However, Che group of interconnected balanceg can be ex-
pnnded~ for example~ by means of ehe balattcea of all types of fibere~ enme
interconnected types of machines and equipment, constructiott materinle and
~o forth. The import~nce for long-renge egCimaCe~ of even more "exteneiv~"
complex balances~ such as the balnnce uf conneruction materiale (ferraus
metals, aluminum, plagtics and wood)~ systems of machines and machinery,
which ensure the complete mechanization of difficult and labor-inCensive
~oba in the sectors of the national economy, textile raw maCerials,~inCer-
changeable food products, is increasing.
The use of complex phyaical balances requires Che ~olution of a number of
_ ~�ethodological and organizational quesCione. It is ne~essary Cn alaboraCe
methods of the determination of generalizing measures, which r.ould char-
- acterize the given aet of interchangeable materials with allow~ance for the
consumer qualities of Che individual typea of producta. For example, in
the balance of construction materials 1 ton of aluminum replaces in con- -
struction 3 tons of ferrous metals, while 1 ton of plastics replacea in
machine building 5 tons of ferrous metals. The NIIPiN df USSR Goaplan
proposed to develop special coefficients of the interchangeability of
material resources, which take into account both the efficiency of the pro-
duct being produced and the conditions of its use by different consumera.
The method of elaborating complex balances is more complicated than that of
one-product balances, since interchangeable types of material resourcea
ahould be diatributed with allowance for the pec:uliarities of their conaump-
tion in individual sectors and the poasible replacement of some materials
~ by oChers. Here it is necpssary to calculate the economic feasibility of
auch a aubstitution depending on th:~ cost of the individual tmterials, their
quality, degree of scarcity and other factors. Due Co the large number of
factors of this Cype when elaborating complex balancea it is necessary to
uae various economic-mathematical models. The use of the calculation~ of
the intersectorial balance of the production and diatribution of products
plays a noticeable role in ensuring the completeness of the entire system
of physical balances. However, this question requires special examination. -
M important direction of the improvement of the elabor~tion of balances
is the assurance of the unity of the fundamental scheme of cheir compila-
tion. The main principle of the e:cisting sCheme of physical and financial
56
FOR OFFICItiI. USE ONLY
i
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
COtt nF~ICIAL US~ ONLY
balanc~~ ig Che c~mp~ri~on of Che d~ou~nds wiCh the re~ources, which mokes
iC pns~ible to eseablish ehe preeence of individual dtsproportion~ and
"bottlen~ckg." The uge of ehia scheroe ie gtt eeeentigL condition of the as-
surance nf Che proporeionaee development of the national economy. However,
- for n number of eypes of balancee Che demanda are not being compared wieh
the reaourcea. Thie perCains ab~ve all to Che balancea of fixed cepitgl
- gnd production cepgcitiee~ Ch~ scheme of which foreseea only Che movement
of capiCal ~nd capaniCieg: Cheir availability, increment~ reCirement ~nd
increg~e by the end of the planning period. Such a echeme doea not make
it pogsible Co eetablish to what ~xCent the planned increase of the fixed
capital and capacities correaponds to the demande of the national economy.
One of the main cgusee of the ehorCcominge of the existing scheme of Che
elaboration of Che balances of fixed capital and production capacitiea is
the nonelaboration of atandarda of ths demanda for them by eecCore and
worka. Meanwhile, auch standarde are neceseary for the planning of cnpital
inveatm~nes on the baeis of the increase of production, ae~ well as with al-
- lowance for Che assignmente on the increase of production efficiency and
above a11 the riae of labor productivity.
The demands for some iteme of the physical balr:uces are a?so not being fully
taken into account. Thia pertaina, for example, to material reaources
being allocaCed for capital rept~ir and currenC operating neede~ the market
funds and reaerves of a~ppliera and coneumere of a number of scarce mate-
rials. As a reault it is impoesible to compare the actual amount of the de- ~
mande with the reaourcea, which leada to the incomplete balancing of the
plana according to aome items.
All this att.ests to the need fc+r the consistent use for all types of bal-
ancea of that scheme of estimates, whi~h would provide for the determinetion
of the total amount of th~ demands. For this the data on the total amount -
of the demands should be cited in the used scheme of the elaboration of bal- -
ances for individual directione of the uae of material reaourcea, where the
amount of the demands is not being fully satisfied. The comparison of these -
data as a whole according to the balance will make it possible to establish
the degree of satiafaction of the total demands of the national economy and
the population. Here by a demand we understand a really exiating demand
which sCems from the established atandards~ from the amount of the effective
demand of the population. -
The assurance of the coordination of the physical balances and plans of dis-
tribution, which are elaborated by different links of planning and manage-
- ment, is an important question of the improvement of physical balancea.
- Thus, at preaent USSR Goaplan draws up about 1,700 balances, USSR Goasnab
. directly--about 2,500 balancea, the all-union main administrations of supply
and marketing attached to USSR Gossnab--about 11,000 balancea, the union
and union republic ministries--approximately 40,000 balancea. Here the
balances and plans of distribution of USSR Goaplan cover more than 70 per-
_ cent of the value of the products, while for some very important material
reaourcea this proportion is 90-95 percent, ferrous metals--99 percent,
fuel--100 percent.
57
FOR OFFICIAI. USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
N~~~k ~~rN~ r~; f ni u;7i. ~~rii 5~
Nevertheleus th~: ~~liy~ic:al l~al~!icus attd {~Liu:: of iliFiCriLutidn, whi.Ch ~re
elaborutecl by USSfi Go~tpl~tt, ~_~~nnoC eneure: ~he balai~cing of the demattds attd
productton ~cc:ording to a~pecific productq li~t. Thig work ia done by
U55it Gos:~n~b und it;~ organ.~, a.a well as by ministrie~ and dep~rtmetttb.
The bnl~ncea ~ud plbng of dic~tribution, which ~re elabnrnt~d by them, ~re
_ tl~e concrete expresaion of the bal~nce~ elnborated by USSR Gosplan or tltetr
bup4,leme~i~ primarily by me~uc~ ~f ~he pro~lu~t:~ uf C~IE r.hemic:al indugCry,
equipment ~nd .tnstruments, wtiich ure Congume~.l in rel~tively nm~11 ~mounts.
Under ehe conditions of the performanCe of U~lance gtieet work by different
~rganizuCions cage~ occur when in sntisfying the over~ll demand fnr ba~ic
_ matertal~ and equipment discrepaucieq dn Che specific ligt of products being
produced ~rige and the necessary auxiliary materiralg and componenCs are not
allocaCed. The proper coordination of the deliverieg of material resourceg
which meet similar demands ie sometim~s not ensured. Thus, the balance of
- linoleum fdr floors is elaborat~d by US5R Goeplan, whil~ the bglance of
parquet i~ elabornCed by U5SR Gos3nab.
The nchievement of the completeness of maCerinl and Cechnical supply re-
quires above all the incrense of the coordination in Che work of various
organizations which distribute materialg resa~rc~s, and above all USSR Gos-
plan and USSR Cossc~ab. The proper deCermination of the liat of products,
Che aseignment~ on the production and tlie balancea tor which are establiahed
in the sCate plan, is algo of grenC imporCance. IC is neceasary to include
in Chis list all Che typea of producte, which pl~y an important role in the
establishment of the naCional economic and intersectorial proportiona, the
increase of the standard of livi.ng of the people, the strengthening of Che
defensive capability of the country and the developmenC of foreign economic
ties, as well as scarce types of products. At the eame time it is neceesary
to have and constantly to update the unified list of balencee and plans of
the production of products which are liable to ceaCralixed distribution on
the basis of the All-Union Clasaifier of Industrial and Agricultural Pro-
ducts with an indication of the individual organs of planning and management,
which carry out this distribution. There should also be determined the
procedure of coordination by planning organization of the interrelated -
balancea and pl.ans of distribution.
The development of direct ties between auppliea and consumera~ during which
the peculiarities of the pattern of production and consumption for each pro-
duction association (enterpriae) can be taken fully into account, is an es-
sential condition of the proper balancing of production With material re-
sources according to a detailed products list. The organization of long-
- term direct ties for deliveries of producta should basically be completed
already during the lOth Five-Year Plan.
Above it was noted that the establishment of the most efficient proportions,
in case of which the meeting of the demands is achieved with the least ex- -
penditures of material, labor and financial resources, is the most impor-
tant demand on the balance aheet method. This approach to balance sheet
work in recent years has been especially typical of such a balance as the
- 58
FOR OFFICItiI. USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OFt O~~t~IAL US~ ONLY
b~l~nce of fuel ~nd power regaur~eg. In conner~ion wieh ehe exeen~ive uge
of ga~'gttd peCroleum Che cn~t of a conveneional ton of cnnsumed fuel re-
gourcee hae decre~ged sub~tantially, which 1ed Co g sgving of ase~C~ during
the yegr~ of the laet three five-year pl~ttg in the gmoune of gpprnximately
30 billion rublea. The effectivenesa of Che balgnce of Cextile raw maCe-
rigle increased due Co Che repl~cemenC of natural fibare by areificial
fiberg.
The main direction in increg~ing the pffici~ncy of the uee of regources
when elgboraCing all types of bglgnces ie~ the d~eerminaCion of the demands
nf the ngCiongl ec~nomy on ehe ba~is of progre~eive standarde which provide
. fc~r the gradual reduction of the expenditures per unit of produceion. The
economy of resnurces aC present is playing a greater and greater role in
meeCing Che demandg. Thue, with an overell planned incregse of the produc-
tion of finiehed rolled ferroua metal products during the lOth Five-Year
PLan in the anaunt of 19 million tons~ its economy in 1980 should be more
than 9 million tdne, or aboue 50 perc~nt of the increas~ of the reaources,
for cemen~t--,~nore than 5 million tons, or more Chan 20 perCenC. The economy
of fuel and power reaourceg in 1980 ie envisaged in the amount of 190 mil-
lion tong, that ia, more than 30 percent of the total increase of the re-
sourcea of the fuel and power balance. The economy of lumber in capiCal
- construction and the production of packaging, the planned amount of which--
30 million m3--exceeds many times the atipulated increase of the export of
timber~ is of even greater importance. The eatablished asaignments on the
economy of materials reaources in 1976-1977 on the whole were fulfilled.
The role of the economy of labor inpuCe during the uae of labor resources
is especially great. During the years of Che lOth Five~Year Plan the in-
crease of the number of workera and employees in the sectora of pt~ysical
production is envisaged in the amounr of 4.5 million, while the economy of
manpower by means of the increase of labor productivity in terms of 1980
ahould be 26 million people. During three years of the five-year plan the
economy of manpower was about 11 million people with an increase of the
number o: those employed in physical production of about 4 million people.
However, given the achieved gains in the area of balance aheet work, in
planning practice a unified system of indicators of the evaluation of the
efficiency of the economy of materials resourcea has not yet been created.
Along with the economy due to the decrease of Che rate of consumption of
resources, as compared with the base period, it is neceaeary to calculate
also the economy due to improvementa in the pattern of consumption of mate-
rials. Nere a shift ahould be made to the exCeneive making of calculations
of the economy of materials resources in value terma, which will make it
possible to take this economy more fully into account in the plans on the
_ production coat and the profit. The making of such calculationa is espe-
cially urgent under present conditions, when the economy of individual mate-
rials in physical terms is at times achieved by means of an increase of the
use of other, at times more expensive materials (for example, with an in-
crease of the use of nonferrous metals and plaetics inatead of ferrous
metals).
59
FOR OFFICIl~L USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~'Ok Ul~t'ICI~V. US~, c~N1.1~
The prohlem of making cdmprehensive c~lcu.lc~tiong ot the ~conomy of n11 ex-
penditu~es when elaborating individugl types of balgnces is ~tlsn becoming
urgenr.. Thug, when el~bdr~ting phy~ic~~l bal~nCes r.alculationn ~hnuld be
- m~~de ttot only of Che econc~my of m~eerial~ reyot~rce~, buC ~lgd ~f eh~ ex-
penditure~ of living labor and cgpiCgl invegtmentg. Thig is especially
important becau~e Gl~e economy of maeeric~l expcnditure~ frequently involve~
~n increase oE other Cype~; of expenditures, the inf.luenCe of wl?ich ~~t prey-
enC is not taken into account, The ~aJ.culgtinns of Che eCOnomy ghould be
made not ottly for tlie producing enterprises, but nlso for Che cnnsuming
enterprises~ 'Therefore ehe amounr nf the tot~l economy, which ig connected
wieh ehe use of more er.onomicnl typea of maCerinl resourceg, cen be ob-
tained on the bnsis of ehe data on Che national economic impact, which in-
cludes t}~e toCal economy both for ehe producer and for Che coneumer of the -
prc~duct wiCh allowance for the economy of maCerial regources, living labor
and capit~~l investmentg. Along with thege general indicgtors fnr aome
typeg of balnnce;~ it is expedicnr to use more exten~ively specific indicn-
tors of efficiency. ~'or example, in the bc?lance of rolled ferrous metal
praductg the ~n,fficient of the yield of saCiafactory metal from ingots,
the coefficie~?C of the uge of rolled ferrous meeal products in machine
building and so on can serve as such an indicator.
'The crention of u unified system of norms and standards, which would cover
all types of resources--material~ labor and financial--is of decisive im-
portance for the economiCal use of all types of resources. The exiating
norms and standards characterize at all levels of production mainly the
use nf material expenditures. The standards of the expendiCures of labor
resources nre u~ed primarily at the 1eve1 of associaCiona and enterprises.
The group of financial standards, which includes only the atandarda of the -
provision of enterprises and associations with working capital, Che stand-
ards of the formation of economic incentive funds, the norms of amortiza-
tion deductions and several others, is limited.
The plan of the first section of a comprehensive system of standards, which
covers the main types of material, labor and financial reaources, has pres-
ently been prepared. It is envisaged to elaborate this system from the
level of enterprises up to USSR Gosplan, which will make it poasible to -
accomplish the necessary coordination nf the norms and standarde at various
levels of planning. It is proposed to use considerably more extensively
the standards of the use of equipment and the calculations of the demands
for it, to elaborate a number of ne~~ economic standarda, including the en-
largement of the group of standards of capital investments and the standards
of the expenditures of wages per unit of volume of production. The develop-
ment of systems of economic st~ndards will promote the integral coordina-
tion of the amount of expenditures of certain resources or others with the
achievable results and above all with the output of prod~icts. The creation
of a unified system of standards presumes not only the enlargement of the
group of standards and the assurance of their intercoordination. As prac-
tice shows, the isolated approval of different standards, including stand-
ards of material and labor expendi[ures, frequently has the result that the
60
FOR OFFICItiI. USE ONLY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~0lt c~~~~~IN. U5~ ONLY
pl~nn~d.~cdnnmy of m~e~ri~l expenditureg can be covered by an incre~~~ of
the expenditure~ of 1lving l~bor, and vic~ ~~er~g.
- It i~ exp~dient to exerci~~ cnnerol ovor che achi~vement ~f the overgll
economy of geeete when mgking cglculation~ ~~f Che st~nd~rd~ nf exppnditureg
in moneCary terms. liowever, ~hig requireg t;he perforroance of much prelimi-
nary work gnd the ~xt~n~iv~ uge of cumputere. -
~'he mdge importgnt dem~nd on the ~y~tem of standard~ ie the g~eurance of
their progressive naCure on Che baei~ di the coneidergtion of the gchiev~-
tn~nts of the gcienCific gnd eechnical revoluCion. This p~oblem is eep~ci~l-
ly pressing, aince in planning praceice overstgted, technicglly ungound
r~Ceg of cnn~umption of ~terial resourcea are eti11 being used~ there are
instances when the planning ~tandarde are eetablished higher Chan the actual
consumpCion of materials. In solving Chi~ probl~m iC mu~C not be forgotCen
that frequec~tly the norme of consumpCion af mgt~rial~ are noC obeerved
and orientaCion on the actual con~umptinn would mean the r~fugal to intro-
duce sound etandarde. IC ~eeme Co us that, while maintaining Che exigting
sygtem of deCermining the standarde for Che main consolidated Cypes of
norms and sCand~rds~ the comparison of the planning nnrms not only with the -
preceding norm, buC aleo with the level of the actual congumption should
b~ made.
It is possible to solve many of the above-examined queatians of improving
the balance eheet method of planning only in inCegral connection with the
overall increase of the ecientific leve: of all methods of the economic
and social planning of the development of the national economy in confnrmity
with the main taska aet by the 25th CP5U Congress and the aubeequent de-
~ cisiong of the party and the government.
COPYRIGHT: Izdatel'atvo "Pravda", "Voprosy ekonomiki", 1979
7807 .
CSO: 1820
6~
FOR OFFICIAI. USE ONLY
~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
FOIt QH'1~ TCtAI. It~1: ~~NLY
~INAL ~'~OnUCT ACCOi1NTTNG WILL I~~pROVF AGitICilLTi1RE~S EF~ICIENCY
~~~scaw V0~'~OSY ~KONc1MIKI in Russian No 1, Jan 79, pp 81�91
[ArtiCle by t'~15KHNIL Ac~idemi~i~n Tikhonhv, and Lezina:
"~inal product of the Agroin~iustrial c'nmplex"]
~Text~ On~ of the most important characteristics of contemporary
- economic development is the progressively more complex structiire
of social production, the subdivision and consolidation of pro-
duction f.unctions, and their attachment to rQ~atively, independent
sectors. The expansion of intersector linkages leads to the
increased role and significance of the planned regulation of -
intersector exchange proportions in order to orient each sector
towards the maximiz~tion of final economic results. At the
November (1978) L. I. Br~zhnev stressed that orientaCion
towards the final results of production should be at the
cen[er oE nll work on the neW five-year plan. This "requires
more detailed a-tention both towards intersector and intra-
sector proportions.
The process of the division of labor accompanying the creation
of new sectors, the rapid development of intersector economic
~ linkages forming the material basis for intersector integration,
has, in recent years, been especially intensive in the economy's
agrarian sector. nuring the past decade such specialized large
sectors as water resources and land improvement, machinery build-
ing for animal husbandry and foader production, rural construct.- .
ion, the mixed feeds and microbiological industries, the repair
of equipment, an d material�technical support and supply for
agriculture have been, in essence, built from th~ bottom up. -
The problem now is to farm industrialfined' production and the
meat animal sector. Tractar and agricultural machinery.building,
the production of mineral fertilizers~ the processing industry
specializing in p reparing high quality products from agricultural
raw materials, the transportation and communications system,
a well developed network of wholesale and retail trade in agri-
cultural products, and processed products are all under intensive
62
FOR OFFICI~t. i.'S~' C~~Y
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~Oit 0~'~ICIAL USE ONLY
development. In other words, an entire mul~isectior s s~em
oriented towarc~s the expanded reproduction of agricu~~ura1 output,
its processing into ob3ects o� ~inal consumpt3on, and 3ts delivery
to the consumer is being formed, ~
Although ~his system has not yet been or~an3zationally �ormalized
it existis ~nd functions in the form of a national econom3c -
agroindustrial complex (AIC), being realized through the exist-
ing widespread distr3bution of agroindustrial enterpr3ses and
associations. Each of the sectors making up the AIC carries out
one specific function within the 3ntersector division of labor,
specializxng in i~s own stage o� a single proce~s of reproducing
_ a final product produced �rom agricultural raw materials. At the
same time each sector maint~ins its econom3c 3ndependence and _
- relative economic individuality, Tn this xegaxd i~t has ~.ts otitn
specific sector goals implemented tFirough a sys~em of intersector
commodity relations.
The significance of. the intersector commoda.ty ca.rculation as a
factor determining to a great extent the economic results of _
management has increased especially rapidly for agriculture.
During 1966-1970 the relative share of kolkhoz and sovkhoz
expenses far payments for material deliveries and services from
nonagricultural sectors amounted to 48.5 percent o.f a11 material
- expenses, during 1971-1975 it increased .to 54.6 percent and in _
1976 reached 61.3 percent~ At the same Cime the sector is being
increasingly converted to a supplier of raw materials for the
processing industry. Thus, in 1959, out of a total mass of agri-
c~altural output which entered circulation outside the sector,
- about 43 percent was consumed by the population and almost 52
percent was used as raw material for industrial processing.
During 1972 the share of raw material amounted to 66 percent and
the share of consumed final product 31 percent.
Special reauirements are made upon the planning and management
system. It must, not infringing upon sector economic interests,
orient all sectors of the AIC towards the op~imization of sector
and the maximization of final national economic results. This
presupposes the maintenance of stable, regulated intersector
economic relations which, as is stressed in the decree of the
July (1978) Plenum of the cc,CPSU "should assist in the growth
of the community and the unity ot interests of the state, �
kolkhozes and direct producers of products, ancl serve as an
active factor in the growth of labor productivity." It was noted
at the plenum that certain negative factors with regard to this -
_ problem have not yet been overcome, In recent years the terms
of intersector exchange have become unfavorable for agriculture.
Prices for material resources and rates for productive services
provided to kolkhozes and sovkhozes by nonagricultural sectors
63
FOR OFFICIAi. LTSE OhZY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
�
~r~ roR o~t~ICI~T. us~ ~tvLx
have increased considerably faster than the magnitude of their -
useful effects. As a resul~, despite the increase in procurement
prices, the amount of agricultural output exchange~l for each unit
o~ supply and services is systematically increasing. This leads
to an unjustifiable increase in material outlays, the growth of
product nrime cost, and reductions in the ~rofitability of kolkhoz
- and sovkhoz production. In addition, techn~.ca1 resources ~or
labor are sti11 not suppliFd in an integrated,manner. This reduces
the efficiency of their utilization and makes necessary the
- employment of sizable quantities of manual labor and thP retain-
ment of relative surplus labor in agricultural production.
A11 this is to a considerable degree exp~ained ry the insufficient
- thoroughness ~nd diligenc~ in the orientation of the sectors
making up the AIC towards final economic results, one of the ~
~ most important forms oF which is the final product of. the agro-
- industrial complex. The existing system of statistical accounting
is not yet adapted towards determining the magnitude of the AIC _
final product and the size of the allocations to each sector
_ participating in the production of a given product. This leads -
to difficulties in AIC planning and in the development of an
effective system for econamically orienting each sector towards
the maximization of final product.
~ This is why it is necessary to develop metIiod.s for calculating
the size of AIC final product which would realistically evaluate
- the shar~ of each sector in its formation, T}~e first attempt
at solving this problem was made by M. Eydelman on the basi~s
of the intersector report for 1972. 'Such a mezhodol~gica].
approach was necessary. However, it was very complex and the
potential for its use i.s restricted. It is therefore necessary
to reconstruct the entire system of statistical accounting for
AIC sector activity in order to obtain in.formation on the
role and share in the production of final product. Such a
restructuring reQuires the solution of a number ~f inethodological
_ problems: the essence, boundaries and structure o.f the AIC,
methods for calculating net product and net income created in -
each sector, and on this ~asis developing me~hods for calculating
final p roduct which reliably represents the mechanism of
AIC formation in the mutually related stages of production.
The AIC is a production and economic system, the goal of which -
is the expanded reproduction of ohjects of consumption, reserve
and expor� stocks of products of agricultural origin. '
Theoretzcally, as an economic category of developed socialist
society, the AIC reflects the totality of economic relations
operating within the interlinkage of relatively independent : -
sectors producing agricultural goods and processing them into
finished items of demand and delivering them to the consumer. It
follows from this that; first, the agroindustrial complex
6~+
FOR OrFICI~ L'SE O:v'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~Ok O~~ICIAL U5~ ONLY
inrlu~es only those linkages which arise in the process of
~gricultural production and processing into final consumer
~oods; sec~ncl, ~11 those production and economic linkages
whiCh are irreplaceable in carrying out the target �unction
(tttsks) ~re of major significance. ~
' In its naturnl �orm, the AIC final product is created mainly
in agric~~lture, sectors of the food and light industries, and
partially in the public food s~rvice system. The initial stage
in the reproductive process of the entire complex, the central
element of which is agriculture, is the production of the means =
of production for the sector making up the AIC, and the final
stag~ is retail tr~de, At a11 stages of the reproduction process,
sectors in the AIC infrastructure carry out service .functions,
There is widespread reference in the economic literature to
- the functional structure of the AIC, which reflects the sequen~- -
ial and parallel stages in the process of reproclucing its final
_ product: i- production of the me ans of producti.on for A.IC -
_ sectors; 2- production of agricultural goods; 3- the pro-
duction of produce, footwear, fiber and other goods from agri-
cultural raw materials; 4- sales of AIC p.oods to the consumer
through the wholesale and retail trade system; 5-production
- and technical servicing of ~11 stages in the reproduction cycle.
These structural elements also determine the functional boundaries
of the agroindustrial complexl. In addition, the AIC is al~o
- a totiality of relatively detached sectors, participants in eCOn-
omic interaction, making up the single target function, The
AIC is a complicated multisector subdivision of the national
economy. It is (and should be) a relatively independent and -
unified object of central planning,
If on~ views the agroindustrial complex from this perspective ~
then a more thorough analysis of its sectoral structure is
required. First of all, not all sectors of the national economy
supporting the AIC with means of production can be included
- within it. For example, motor vehicle building, the chemical ~
industry, and the petroleum refining industry, while playing an _
important role in AIC functioninR, are not included within it
and their activities are only included to the extent that they
participate in the formation of the final product of the entire
sector, This means that the sector boundaries of the AIC as a
production subdivision of the national economy substantially
differ from its functional boundaries.
Second, a number of sectors of the food and light industries
processing agricultural goods ~are simultaneously suppliers of
means of production to agriculture. During 1966-1975 the deliv-
eries of such sectors increased more than 6 fold, and, according
to our studies, in 1975 amounted to more than 9 billion rubles.
65
FOR OrFICI,~. [.'SE 0~'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
Hbk Ol~l'iCIAL USC UNLY
l1s can he seen, the sector structure of' the AIC is also dis-
tinguis}ied from its functional structure, Theref.ore~ in order
to study the mechanism 'o� AIC final ~roduct value formation and
to cal~ulate the share of each sector in the final effect, in
adclition an analysis by stages of rhe reproduction process it
- is also necessary to ca~rry out a differential analysis by
elements making up its sector s~ructure.
It is customary to consider the fin~1 ~roduct o~ an intersector
production complex as the output created during a definite
period of time (usually one year) and entering into personal
or productive consumption beyond the boundarie~ of such a
complex, i.e. not entering into the current productive use
within it. The natural, material-physical form o� AIC f.inal
product is the entire amount of items for consumption manufact-
_ ured from raw material of agricultural origin; agricultural
production entering into private and social consumption without -
industrial processing; products entering state export and
reserve stocks, and the productive consumption of sectors in the
national econom not included within the AIC.
Y :
ie~:*::;
The sum of the value of these groups of products reflects the =
total magnitude of AIC final product value at the sales stage,
i.e. where it is manifested. Y~!ith regards to the Sources of its `
formation (production), they turn out to be obscured and the =
extent of AIC sector participation in their creation is dis- o
torted. That is why this method for calculating AIC final
- product can only be used on a restricted scale. In order to `
estimate the role of each sector in the AIC in creating final
product, the production approach is necessary. This would reveal
the actual sources of formation. The st~rting point for this
method is the calculation of the magnitude of the net product -
created in AIC sectors. This is the basis of final product value.
Net product is the totality of all value created within a definite ~
time unit (usually a year). In a multisector system, in which ~
each sector carries out a sequentially implemented stage in the
Process o.f reproducing a single product, tfie magnitude of net
product created at the first stage of t11e cycle can be used -
as a base. At all subsequent stages the newly created value is
"at~ached to this amount. Tfi t~le`AIC the prodUCtion of agri~
cultural goods can be considered as this stage since the sec~ors
_ carrying out subsequent stages --the production of ineans of pro-
_ duction --realize the net product created by them through prices
r~aching back to the beginning of producing and processing agri-
cultural goods. At this stage all newly created value in plant
and animal raising is included in the calculation. The existing -
- methods of statistical accounting do not precisely reflect i~s
magnitude. As a result there is an artificial increase in the
66
FOR OcFICI~i. L'S~' 0:~'LY
~
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
FOR O~~TCIAL US~ nNLY
, �
magnitude o� net income in the reported component of newly
created value in the sector and a corresponding reduction in
the magnitude of necessary product. In addition not a11 net `
, product produced in agricu].ture is taken into considerat3on.
For example, in 1972 the value of agricultural net product -
_ statisticallY r~ported amounted (in current prices) to 59.6
billion rubles. The �und for the paymenti of labor expended in
the production of agricultural products at state enterprises
and kolkhozes was 28 billion rubles and the amount of net
product realized by agricultural enterprises w~5 8 billion
_ rubles. The remaining 23.6 billion rubles (59.6 - 28.0 -8)
is considered the net income of the population engaged in
individual operations. The latter cannot be considered proper~
since, first of all, private subsidiary operations are organ~
ically linked with rublic production at kolkhozes and state
agriculti.iral enter~rises and function with the constant partic-
- ipation of their productive resources, Consequently, part o�
the value of its goods is produced by the labor of workers in
the public sector and is only sold in the private sector.
- Secondly, the payment o� labor in the state and kolkno~z sectors
is below the socially normal level and private operations -
are objectively a source of. part of the necessary product.
All this means that with regard to its economic nature newly -
treated value 2n private subsidiary operations is divided into
three parts: necessary product created by the labor of workers
in social production; necessary product created by the labor of
- workers engaged in private subsidiary operations; surplus produc~
created by them. If one assumes that the avera~e social
- magnitude of outlays for the reprod~.~ction o.f labor power is nt
the level of wages in nonagricultural sectors of the national -
ecoylomy, then the first part amounts to 9.2 billior. rut~les, the
second 8.2 and the third 6.2 billion. Then the structure of. ~
newly created value in agriculture will be as follows (in
billions of rubles):
Public sector 37.2v + 8.Om =45.2
Private sector 8.2v + 6.2m =14.4
Sfi.4v +1 . m - .
A question arises in the analysis of these figure~: yvhy does the ~
norm for surplus product in the private sector turn out to be
several times higher than in the public sector? Theoretically -
there should not only be no difference here, but, on the contrary
in the public sector, characterized by a higher level of labor
- productivity the surplus product norm should be high~r than in
the private sector.
67 -
FOR Ofi~ICIAi. L'SE OIv'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OIt Or~ICIAL US~ ONLY -
mhis is due to inaccuracy in statistical reporting. The USSR
TSSU [Central Statistical Administratiion~ , summing up data
on the size of the net product cre~ted in ~griculture states
t}~at it is reduced since part of the net product of agriculture
is accumulated in the centralized net income of the state by a
system of turnover taxes and is included in industry, that is,
not at tihe site of its creation, but at the site of its sales,~
As is known, the turnover tax not only has a.f.unction.of
accumulating net income in the centralized net income of the
state, but also serves as a tool for redistributing primary
a.ncomes. In ~his case we are not interested in the economic
nature of its component parts, but in its primary sources, from
which part of. the centralized net income is received by the
state. Agriculture is one of these. Part of the net income
created in this, the material basis of which is the surplus
net income in the form of differential rent is, in the course of
intersector exchange, shifted to the processing industry and
realized in the form of industrial product prices. Naturally, the -
~roblem, arises of justifying the incidence of the turnover
tax on production and the industrial processing of agricultural
raw materials, and between sectors carrying out these fur~ctions.
This task is solved in various ways: the method of determining
the magnitude of differential rent on the basis of calculating
unit prices, the method of calculating outlays of reduced labor -
based upon intersector balances, and others, All these produce
roughly equivalent results. Since the first method is disting- -
uished by high labor intensity and requires special study of the
quality of farm lands , in this c~se we prefer the method of
calculating reduced labor outlays. In 1972, the light and food
- industries processed 50.3 percent of agricultural gross output.
This means that out of the average annual total of 28.7 million
agricultural workers, 14.4 million were engaged in the pr~~~zction
of such raw materials. About 3.4 million annual workers in
the light industry sector were engaged in the industrial process- -
ing of agricultural raw ma~erial, and in the food industry -
= the figure is 1.7 million.
- A coefficient of 1.2 was used in order to reduce labor at indust-
rial sectors5 In the study it was established that of the labor
outlays for the production and processing of raw material of
agricultural origin 70.2 percent were in agriculture, 19.8
percent and 10.0 percerit respectively weitt to the"light and .
food industries. This computed structure was used to delineate `
the share of agriculture in the part of the turnover tax which -
is placed upon the light anc~ food industries on~ the sales of
products made from agricultural raw material. �
68
FOR OFFICI,~?i. L'SE 0;~'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
I~'O[t O~~ICIAL U5~ ONLY
- Tn 1972 ~griculture account~d for abot~t 26 billion rubles of
the total turnover tax entering the st~te's centralized net
income from sectors engaged in the proc~essing of agricultural
_ products, The totttl net product ~mounted to 85.6 billion rubles
(59.~ + 26,p), Kolkhozes and state agricultural enterprises
are the suppliers of the overwhelming share of raw material to
- the processing industries.One can therefore be completely
justi~ied in including this part of net income as the puhlic
= sector~pf production. The structure of its net product also
changes correspondingly. In the public sector it amounts to
71.2 billion rubles (45.2 + 26,0), and in the private sector
xemains as before --14,4 billion rubles,
The second st~ge in the study is the determination of the value
o� the "attached" net product created in the food and light
industries, in infrastructure sectors and the circulation
sphere. The value of the net product of these sectors is cal,
culated on the basis of total wages, profits, and turnover t~x, -
In order to determine the net income of these sectors accruing
to agroindustrial product~on, coefficients based upon intersector
balances and current statistical materials which indicate the
relative share of raw materials entering these sectors from
agriculture and the percentage of sector workers engaged in
- its processing and the percentage of services provided to the
sectors making up the complex by sectors in the infrastructure
and circulation sphere have been developed.
Sectors of the food industry, with the exception of the
fisheries indu~stry, work almost completely with agricultural .
_ raw materials. Therefore part of the net product of these
sectors is included in the AIC. The net product of sectors in
the light industry is included in the AIC in proportion to
outlays for labor utilized in the processing of agricultural -
raw material. The size of the net product created in trade, the
procurement system, material-technica~ supply, transport and
communications is determined similarly. The size and structure
of net product value for 1972 calculated by this method and -
arranged by groups of sectors making up the AIC is as follows:
69
FOR OFFICI.~i. L'SE OAZY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
H'Ok U~FICIAL U5I. ONLY -
- Net Including Norm ~or -
produ~t s~~rplus
~hi1l., ecessary urplus nro~tuct
ruhles) nroduCt nroducti (perc~nt)
(bill. (bi.ll.
_ ruhles) ruhles)
Agriculture 85,6 45.4 40.2 88.5
Including
Public Sector 71.2 37,2 34.0 91,4
private sector 14,4 8,2 6,2 76,5
}~ood industry 14.0 3.5 10,5 3~0.0
Light industry 16.7 4.5 12.2 271.1
Trade and puhlic
food service, pro-
curement, material-
technical supply,
and sales 13,1 6.7 6.4 95,5
Transport (freight),
and communications
in service of.
production 2.4 .1.2 1,2 100.0
For AIC as a whole 131.8 61.3 70.5 115.0
rTaterials for the calculation of the size and structure o.f. net
product and net income of the agroindustrial complex produce
extensive and important information for the analysis of the inter-
sector relationship of economic conditions anc~. results o� economic ~
activity. The dynamics of these indicators can be used to
improve the planned management of intersector linkages in -
the AI('. _
From 196fi to 1975 the size of AIC net product increased .from
96.0 to 146.2 billion ruhles, or by 52,3 perc~nt. The lowest
rates of growth in net income were in agriculture. As a result
the relative share of. this sector in total AI(' net income was
reduced from 72.5 percent to 62 percent, while �or the remaining
- sectors it increaseci. This is a normal process, indicating
the intensification of the ~ivision of labor, improvements in the
socialization of production in the AIC, and the constant tendency
- 70 -
FOR OFFICI~. LTSE Oh'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~01~ 0~'~'ZCIAL USE ONLY
towurcls tho trunsformation of agriculture into a specialized
"pure" sector engaged directly in plant and. animal raising, _
Concurrently~ attention should be directed towards two conditions:
Pirst, the high norm for surplus product in the processing
industry sectors. This is due to a number o.f. factors, in partic-
ular the higher 1eve1 0~ l~bor productivity here, compared to
that in agriculture. To a certain extent the surplus product
norm influences price dynamics, There is a large di~ference
between procurement prices for agricultural raw materials and
wholesale prices for processed products entering agriculture _
from these sectors. For example, during 1966-1976.procurement -
prices for grain did not change, but prices for mixed �eeds
delivered to agriculture from the food industry douhled. nuring
these years the deliveries of mixed feeds to kolkhozes and -
sovkhozes increased 2.8 fo1d, while thei.r monetary~ cost,
~.n current prices i.ncreased 5.7 fold. The second factor is the
high growth rates of net product and net income in the sectors
of the circ~ilation sphere, in which the systems of procurement
material-technical supppv and sales occupy a significant share
(See table)
tructure o AIC Average ann~iA.l
_ net product growth rate of
(percent) AIC net product
_ (percent)
1966 1972 1975 1966-1975
Agriculture 72.5 64.2 62.0 3.0
Light industry 10,4 12.7 13.8 8.0
Food industry 9.7 10.6 11.6 6.9
Trade, procurement,
material-technical
supply and sales 5.7 9.9 10.5 12.1
Transport and
communications 1.7 1.9 2,1 7.3
AIC as a whole 100.0 ~00,0 100.0 4.7
71
FOR OFFICI~i, L'SE Oh'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~OIt O~F'ICIAL US~ ONLY
5uch a xelationship of growth rates can hardly be justified,
_ Characteristically, the growth in net income per 1 percent '
~rowth in wages durin~ 1966-1975 in agriculture was 1~3 percent -
whi~e the number o� empl.oyees was reduced, in sectors in tlle
circulation sphere it was more t1~an 1.5 percent, in spite of
the fact that the average annual growth rate in the wages ~und.
in such sectors was 9,2 percent with an average rate of such
growth in the AIC as a whole o.f. 4 percent. Obviously, the
difference between sectors in the ATC with regard to surplus
product norms and growth rates of net product is to a consider-
able extent explained by proportions in intrasector exchange
which are unfavorable for agriculture.
~xamined from a value perspective, the final product of the AI(' ~
is the total net product created in AIC sectors, amortization -
deductions made from fixed productive capital, the value o�
- objects of labor and productive services obtained..from sectors
producing means of production and conducting production service
�unctions (for example, repair, land improvement construction,
and the servicing of water resources systems, etc). The final
product of the AIC should include the net product and amort-
ization deductions of specialized sectors in machinery building
producing the means of~labor for all other sectors of the AIC. -
- With regard to the objects of labor, the AIC final product
should include the value of those goods from outside of the
the complex. This will take place in due course when the
- agroindustrial complex is formed as a relatively independent
subsystem of the national economy and as an integral object
of management. Now, however, when this formation has not yet -
occurred,the calculation of the value of subjects of labor
created in these sectors and used for the production of AIC -
final product is the sole method .for re.f.lecting the growing
role of these sectors in the creation of faod products and
other consumer goods manufactured from agricultural raw
materials.
Output directed towards intrassctor production are intermediate -
products, just like the value of agricultural raw materials
entering the processing industry within the complex. The final -
- product of these elements is :-eflected through the size of
net product. One should keep in mind that a sizable share of -
the subjects of labor ~~11 seeds and part of the feed) created
in agriculture for intersector consumption are stocks at the
- beginning of the year. That is, they are intended for consumpti~n
in a future period and consec{uently should be included in AIC
final product. To the extent that it is assumed that the value
of seeds and �feeds consumed in a given period of production are
equal to the vai~.e of these subjects of labor intended for a
future period we include this nagnitude in f.inal product. .
_ 72
FOR OFFICIAi. US~ 0~'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~Ott OF'~ICIAL US~ ONLY
_ However,,such values do not coa,nca.de, and consequently in
calculata,ng ATC �sna~. product theix d3,�~erences shou7.d be
taken 3n~o cons3derat3on,
The cont~mporary information base does not perm3t the direct
estimation of the magnitude and structure o� AIC .f.3na1 product. _
It is necessary to carxy out complex and laborious calculations
using materials from intersector b alances, current sector anc~.
gen3ral state statistics in order, 3n particular to determine
the share of each sector in AIC final product: We made the
calculations o� amortization deductions of fixed capital similar
to the net product calculation wzth the help of specially
developed coef�icients.
~ At the present stage of its formati.on AIC .�inal product value
is broken down into the following elements: magnitude of net
product created in agriculture; part of the net product o.f,
sectors .of the food and light industries, sectors of the
servic~ sphere, transport and communications (engaged 3.n
production servicing) rendered to the processing, transport
and sales of agricultural output and processed products: amort-
ization deductions from the value of fixed productive capital
o.f agriculture, sectors of the processing industry, the circul- _
ation sphere, transport and communications utilized for the
production, processing, transport, and sales of agricultural
products and processed items; the value of. subjects o.f. labor
entering agriculture, the processing industry, the circulation
sphere, and transport and communications from resource producing
sectors to the extent that they are utilized for the production,
transport, processing and sales of agricultural products and
processed good. In the appropriate accounting one can also =
include here the difference between the value of goods of .
agricultural origin productively consumed in agriculture in a
given year and the value o� their reserves at the beginning -
of the su~sequent year.
- The agroindustrial complex is characterized by an abutidance of
intsrsector linkages. A given sector is a supplier and consumer
of the same types of products. An orientation towards the _
gross turnover between results in the cor~plication of the
accounts and double counting, which amounts up to 40 percent
of gross output volume, but also promotes increases in unprod-
uctive expenditures. This is especially manifest in the operat-
' ion of the procurement system, where counter flows of the same
types of products assume gigantic scales, For example, in
1960, 15.4 percent of the total grain procured was returned
to agricultural enterprises in the form of feed and seed ,
while in 1976 the figure had reached 36.6 percent. This leads
to unjustifiable increases in agricultural enterprise production
73
FOR OFFICI.~?i. L'SE O~ZY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
H'Olt O~~ICIAL US~ ONLY
costs ~ Xn our opa.na.on it a.s necessary to deca.sive].y move
~owards the pl~nning not o� commerca.al or gross output, but
fin~1 product~ tttking intio cons3dera~3.on the real scales of
intra comrlex commoclity ci.rcul~tion, which should he based
prim~rily on direCt intersector linkages formalized hy the
aprropriate contracts.
Sector Structur~~ and ilynamics of Agroindustrial Complex Final
Pro duct 1966 1972 1975 -
Bill o Bill. o ill 0 19
_ rub. total rub, total rub. total 1 69 6
Cap it a~1 ~
sectors 19.0 16.5 38.4 22.6 56.4 27,8 2.968
Agri.culture 69.6 60.5 85.6 50.3 90.7 44.8 1ti303
Food
industry 9.3 8.1 14.0 8.2 16.9 8.3 1.817
Light
industry 10.0 8.7 16.7 9.8 20.2 10,0 2.020
Sectors in the
sphere of cir-
culation
(public food
service, pro-
curement,
- material-
technical
supply and
sales 5.5 4.8 13.1 7.7 15.4 7.6 2,800
Transport
(freight)
and
communications 1.6 1.4 2.4 1.4 3.0 1.5 1.875
F.ntire AIC
final product 115,0 100,0 170.2 I00,0 202.6 100,0 1,7h~
_ Including
net product 96.0 131.8 1~6.2 1,523
7~+
FOR OcFICI~i L'SE 0'~'LY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
rox o~~icrnt, us~ ox~,Y
In order to obtain th~ sector structiuxe o~ f.inal product in
the process o� its distribut3on between AZC s~ctors, ~he sum
of ~mortiz~ti.on deduct~.ons fTOm fi.xec~ nroductive cApi~a1 of
.inciustri~l origin, and the value of sub~ects of lahor are
_ included in the share of. resource producing sectors. The share
of the remaining sectors in AIC �inal product 3s primari.ly
net product.
During the decade from 1966 to 1975 the ~truc~ural dynamics of
_ final product clearly revealed. a tendency towards reducing the
share of agriculture an~ increasing the share of. remaining AIC
sectors. There was an especially rapid increase in the share
of resource producing sectors supplying means o� production and
producta.ve serviees. During 1966-1975 the value which these
sectors contributed to AIC final product increased almost 3 ~
fold, including 2.3 fold for products of light industry and -
transport, 2,4 fold for the food industry and circulation sphere,
3.4 fold for agricultural products, with an increase of. net
product amounting to 30,3 percent. There are theoretical ex~lan-
a.tions for this process of more rapid growth rates of material
expenditures comPared to growth rates o.f. net proc?uct. However,
in each specific case, the size of the more rapid increase is
determined by several optimal boundaries. .Cutput material
intensity is one of the indicators of. these boundaries.
T~uring these years the index of material intensity per un~.t o.f.
agricultural output calculated hy the physical volume of the
delivery of ineans of production to agri_culture from nonagricul-
tural amounted to 1.79, while the index of. material expenditures
of the sector for their payment in money terms was 2.38. This
_ means that the total index for t:~e price of delivered means of
production was 1.33. According to our studies, during these
years the price of a unit of capacity in the tractor fleet
and its "train" of agricultural machinery increased by 1,8
fold, the price of mixed feeds by 2 fold, the units of productive
_ area in livestock raising by 2.3 fold, and in swine raising
by almost 4.fo1d. Thi.s lead to corresponc~.:ing increases in
amortization deductions. This process, improving the conditions
in resource producing sectors leads to reductions in growth
rates of agricultural net income.
(:ompensations �or the growth in material outlays through
increased procurement prices to some extent promote the normal- -
i.zation of conditions for exp anded renroduction in agriculture,
_ hut cause corresponding changes in the level of material outlays
� in the rrocessing sectors, increased rates .for services rendered
hy sectors in the circulata.on sphere and the infrastructure,
and in the .f.inal event give ri.se to a tend.ency towards
hi.dden increase in retail prices, Tn other words, in the
75
FOR OFFICIAi. L'SE O:~ZY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
~Oit d~F'ICIAL l?5~ ONLY
~ourse ~f. intCrsector ~x~hange a process o~f rec~.a.stributa.ng
net product created in agriculture tnkes p~~?ce. Tor examnle, -
the volume of. work f,~r the rerai.r anc~ techn3.ca1 sorvi.cing
, oF enterprises in rosselkhoztekhnika rendered to kolkhozes and
sovkhozes increaseci Hy 3.9 Fold in monetary terms during
1966-1977~ The profits f.rom these operatinns increased hy
5.3 fold. The volume of procurec~ agricultural products
- ificreased by 50.7 percent. nuring this period the profit of
enterprises and institi~tions in th~ procurement system
increase~ from 668 to .1,364 ~aillion ruhles, i.e, it more than
doubled, The magnitude of net income at kolkhozes and. sovkhozes
during this period has practically no change, whil~ the profit-
ability 1eve1 constantly declinecl. Tncreases in agriculture's
material outlays, involvi,ng above a11 the growth in prices for
inclustrial gooc~s and services, and related increases in pro-
= curement prices accompanied by stahle retail prices have had
a numher of negative effect~ hindering progressive changes in
AIC production structure, anci in the systems of retail trac~e,
transportation services and communications. Therefore the instru-
_ ctions of the .1uly (1978) Plenum of the cC CPSU on the necessity
of seriously imp roving economic relations between sectors of the
_ agroindustrial complex are of special significance, ~
The final product indicator can play an importa.nt role in the
implementation of these instructions, since it can be the basis
for obtaining a reliable estimate of. the results of AIC prod-
uctive activity in general, and role o� each sector within it.
This will help solve the problem o.f orienting all sectors in
the complex towards the maximization of national economic
results. The suggested methodology for calculating final product
can in principle be implemented on the basis of official stat~
istical information from the TSSIT and a number o.f. coefficients
calculated on the b asis of data from national economic inter-
sector balances. This involves quite laborious computations.
With appropriate improvements in statistical reporting this
work could be carried out with less labor and with a higher
degree of accuracy. Therefore, it seems to us under contemporary
conditions i.t is very necessary to restructure the accounting
system for the productive actitiity of the AIC and its sectors. -
It is above all essential to bring some order into annual
information on the value of ineans of production entering the -
AIC from capital producing sectors, on the share of. agricultural
products in the raw materials o.f processing industry sectors,
the numher of workers engaged in processing agricultural raw
materials, and to the extent to which trade and transport
participate in servicing AIC sectors. The availability of this
information will permit the development of a single proven and
su~ficiently simple algorithm for calculating AIC final product
76 �
FOR OiFICIAi. LTS~' 0:\ZY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1

APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000100034433-1
_ Foa or~rcr~ us~ ox~,Y
which will ensure ~lte pract~.cally complete re.f.lecta.on of -
its formation ~xocesses at vara.ous stages of xe~rod~uction,
FO~TN(1TRS
1. Some economists distinguish sector infrastructure as an
inc~ependent sphere of the ATC~ In this work we will not
take that position, since we see our t ask as the analysis
of on].y the production functions o� the AIC which are
reflected in the final product.
2. See."Narodnoye Khozyaystvo SSSR v 1975 godu"[National ~
R~onomy of the 11,S5P, during 1975], Statistical annual,
Tzdatel'stvo Statistika, 1976, p 564,
- 3, op. sit,p 564
4. VOFROSY EKONOr4IKI , No 4, 1975, p 59."Nr~rodnoye Khozyaystvo -
SSSR v 1975 Aodu" [National Economy of the iT~Sn durin~ 19751
p 11U.
_ S. T1, Eydel'man, "Mezhotraslevov balans obshchestvenno~o
produkta" [Intersector Balance of tne Social Product] p~oscow.
p S f 1.
6. The share of agriculture in the raw material base of the
sector (without fisheries) was 96.4 percer` in 1972. See
"Narodnoye Khozyaystvo SSSR v 1975 go~.u", pp~101-108.
7. We did not include the value of imported agricultural raw -
materials entering the AI(; into its final product because,
in our opinion only real internal resources measure the
productive capacity of the AZC.
8. "Narodnoye Khozyaystvo SSSR v 1977" [National Economv o� the
USSP, Durin~ 1y77~ , Izdatel'stvo Statistika, 1978, p 541.
COPYRIGHT: jzciatel'stvo "Pravcla", "~'onrosY EYonomiki.", 1974
11.574 -
CSO: 1820 E~
- F
~
77
FOR OFFICI~i. LTSE 0'~ZY
APPROVED FOR RELEASE: 2007/02/08: CIA-RDP82-00850R000100030033-1