JPRS ID: 8482 TRANSLATIONS ON USSR ECONOMIC AFFAIRS

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25 May ~.979
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TRANSLATIONS ON USSR ECONOMIC AFFAIRS
(FOUO 5/79)
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: JPRS L/8482
25 May 1979
TRANSLAtIONS ON USSR ECONOMIC AFFAIRS
(FOUO 5/79)
- CONTENTS PpGc
Increased Sncentives To Pranote Znnovation Urged
( v . r~arov; vo~xosY r~coNOr~, r~x 79 ) . . . . . . . . . . . . . . . . . . . . i
F`1.,!1a1. Soc~.al Product Urged ~,s Indicator
(E. Gorbunov; VOPROSY EKONQI~KI, Mar 79) 11
L'SSR Econo~y--A S3ngle Nat3.ona1 Economic Complex
( Yu . Vorob ~ yev, T. Che cheleva; VOPROSY EK4:10M'C~ff, Mar 79 25
~
- a - [III - USSR - 3 FOUOJ
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INCR~ASED INCENTIVES TO PROd~IO'TE INNOVATION URGED
Moscow VOPROSY EKONOMIKI in Russian No 3, Mar 79 pp 13-20
(Article by V. Makarov (Novosibirek): "IncreESing Incentives for ,
, Innovationa"] '
[TextJ One of the important directions of improving economic methods of
operating a socialist economry? is that of strengthening the role of cost
accouating relatians ~n the interest of better satisfaction of the needs of
society. This presupposes first of all the gradual overcoming of elements
of formalism and of a certain "impunity" found in ecanoaiic activity. In
recent years, the literature has contained many proposals relating to these
questions. Amo~ng these there may be aelected: expansion of the rights of
. self-supporting units of the economy, elimination of net surplus of profit~
increase of responaibility for the results of econanic ectivity and others.
Of courae, we do not meaa the creation of a~ aaalog of the mechanism of "sur-
vival" of profitable aad "ruin" of "unprofitable" enterprises. At the same
time, it is necessary to eliminate a certain "easiness" in the attitude of -
certain directors toward expenditures of atate funds. It is important to
make use of all possibilities for obtaiaing a profit from Rra+th of produc-
tion efficiency. A change in the psychology of managere in this directi.an
. should be reinforced with appropriate state measures. For this r~asan there
exist aad will continue to exist mechanisms of redistributioa of financial
capital not directly related to economic efficiency. The problem is evidently -
to more clearly determine sad provide a basis for theae mechanisms, atxength-
ening thereby objectivity af adopted decisioas.
In the light of what has beea said~ the questioa arises as to what exteat
should processes of introductiaa of innovations be regulated by cost-accounting
cansiderations. The ~ractice of cost accounting oa the Whole so f~r has not
stimulated the creatioa aad introductioa of innovations in productian~ while
~ in a number of cases it does not always correctly orient toward the selection
of ineasures for introductioa from the point of view of their efficiency.
The situativn, ae believe, caa be chanAed by the creation of a certain demand
for innovations d~veloged in productioa with the sid of state organs responsi-
ble for scientific-technical progress. In the future, innovations developed
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in pro~duction ehall be call~ed by us by that desi~nation. They will be con-
sidered as a apecial kind of product preduced by appropriate enterprises~
and tiiey will bear a price and be "uaed" and therefore will be paid for.
Bein~ paid for by appropriate staCe organs~ this type of "product" (innova-
tion) will be included in Che volume of sale of an enterprise ae a reRular
product. Hy way of explanation~ let ua cite an example (~ee xab le on next
page). Let ue assume Chat the development of an innovation reaults in enter-
prises going on to produ~p a new item (a machine tool).
It is assumed that both of the machine tools satisfy one and the same need
and that demand for them is far fYOm being saturated. Inasmuch as the price
of the new machine tool ia 15,000 rubles ch~aper. it is economically more
profitable for the user.which cannot be said of the producer. But if the
enterpriae were to receive an additional 1,500 rubles for each new machine
tool gold, then the yearly profit wouid amount to 240~000 rubles. and the
production of the new machine tool would be economically feasilale. This ad-
diCional sum (1,500 rubles) constitut~s the price of the innovation. It is
nvw paid for not by the user of the machine tool~ but the user of the im~o-
vation (for example, the ministry). The aew introduction can be such only
for the given enterprise~ but neverthelesa it can have a price which in thia
case stimulates the expansion of the scale of use of the innova'cion which
has already been sold to other enterprises.
The introductio~n of the co~ncept price of a developed innovation" reaults in `
our view in a certain uniformity'in the compilation of plans for nes+ equip-
~ ment in the part of generalizing coat indicators in camputations of the econ-
omic effectivenesg of new equipment aad so on. 'ltie price of developed inno-
vations considered in a time frame applicable to an enterprise, asso~iation~ ,
sector and the natiaaal econonry as a whole can characterize the level and
' rate of scientific-techr.ical progress aad applied to cost of outlays--their
effectiveness as well. Planning of the volume of de:~eloped innovations coat-
wise could turn out to be a convenieat form of planning of the effect and re-
sults of scientific-technical progress in a generalized form. This proposal,
we believe, should make it possible to look in a new way at a number of ques-
tions raised a~d considered in the course of a discussion on technical pro-
gress on the pages of a journal.l
The insufficient ecanomic interest of enterprises in the adoption of innova-
tions is to be explained by a number of reasons. We shall mention the moat
important of them. Introductia? of new equipment and technology, development
of new products under existing cost accounting result as a rule in a temporary
worseniug of an enterprise's economic indicators. Work relating Co the cre-
ation and introduction of new equipment diverts resources which could have
been used in production. In most cases, prices of new products +aad new equip-
ment are unecanomical both for the fabricator and for the user. The activity ~
of an enterprise in the creatian and introduction of innovations is connected
as a rule with uncertain results and with risk. All this requires appropriate
skills~ a special psyc.'~~ological attitude on the part of workers aad the allo-
catio~ of rsdditional capital. It would appear that the negative consequences
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Tab le
1~ 2) 3) 4) 5) 6)
. . . . . _ . . ~
~ . ~
, . . ,
,
, ,
~ ~ ~
, , ,
,
I ~ ~
. . ~
7~ . r~~~ ~ ' ~ ~ I .
a1 , , ; . ,
Key:
(1) Productive capacity (S) Total expenditures on development
~ (relative) of innovatioa (in thoueands of
(2) Yearly output rubles)
(3) Price of product (in (6) Price of innovation (in thoueanda
thounands of rubles) of rubles per machine tool)
(4) Yearly profit excluding (7) Old machine tool
expenditures on develop- (8) New machine tool
ment of innovatian
of the reaeons for weakening of the interest of enterpriaea in introducing
innovations could b~ reduced to a significant degree if innovatioas devel-
oped in production, measured by the acale of their use, vere to be cansidered
items of p7oducCion activity.
Let us return to the me~ning of the term "innovation" (novowedeniyeJ. By
innovation We ~an a special type of product of end uae, having no direct
material vehicle, that n~akes it possible to measure $ riae in the level of
the scientific-technical potential of the country's econonry.
Tt~e innovatio:i [novowedeniyeJ ahould not b~ confused With a new product; at
times it is altogether not directly coanected with the production of the
latter. Moreover. one aad the sa~ product may be produced with the aid of
different innovations. The principal difference is that demand for an inno-
vatioa and a new product is formed in different conswnera and varies in
nature. M enterprise adopting an innovation (novshestvo~ assumea a social
function of cooperating in the acceleration of technical progress and rise
of the technical level of production. In making a new product~ the entier~
prise satisfies a concrete need and raises production efficiency amang the
users of its product. By introducing aa ianovation [novowedeniyc] conner
ted vith a neW product, aa enterprise contributes to raising of the general
level uf the scientific-technical potential.2 Therefore the new product
should be paid for by its concrete user and the innovatian [novowedeniye] by
the s~tate organ responaible for seientifirtechnical proqress s.s a whole.
The innovation should also not be taken for a product of productive activity
connected aith the creation of ina~vations (novahestva): digcoveriea, in-
ventions aad even experimental models of new equipment. The last aamed must
be considered as products of scientific or scientifie-production activity.
~ For example, a patent is a product of scientific activity. Innovations
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(novshestva] as products of scientific acCivity are characterized from the
point of view of their output by the fact of whether they exi~t or not.
Tl~e "output" of innovations (novowedeniya] is meaeure~i by a numerical char-
acteris tic--~~$cientificr~roduction activitybcan[havehnSprice~bereoldCandf
scientif ic or p
purchased and participate direCCly in cost-accounting relations.3
Sut ttie creation of innovationa ~novshestvaJ and thei~r use in production in-
volves processes that differ from the economic point of view. The p rice of
an innovation ref lects all costa going into its creation, while the price of
an innovation (novovvedeniye] constitutes only that portion of costs which
do not have to be paid for by the concrete user for a correapondin~ly new
product as these cosCs are for the purpose of raising the general technical
level of the counCry's production. Let us suppose that two enterprises are
producing one and the same product where ane has been produclfgthe priceeofrgl
years and the other has only recently begun to put it out.
the product is set at the level of the coats of the second enterprise, the
expenditures for eatablishing the manufacture of the given product~ that is,
for introducing the corcesponding innovati Se~Nedl eobtainsaan a ditionaly
t h e c o
n s u m e r, a
n d t
h e f i r s t e n t e r p r i s e u
n d Y
profit. If ttie price is set at th~ level of expenditures of the first enter-
prise, the product becomes economically unpro f ita
b le for t
he second enter-
prise. But if the second er.terprise is reimbursed for the innovation [novov-
vedeniye) by an appropriate state organ, the situation chan8es. It goes
without saying that in the process of setting prices for a new product and
for an innovation [novowedeniye~ the price of the new product remaina at the
former level, while the price of the innovation coincides with the costs of
its development only as an exception.
Finally, the cos t ofi"manufacturedsizerofpe~dendituresnfromithe fund fordthe
iya] sttould not be m_xed with the xP
development of new i:quipment for the introduction of corresponding innova- ~
tians [novshestva]. The difference here is about the same as in the case
of ordinary productlon betweenfeaturelofethe proces sofprecoverynof~expendi-
Moreover, it is a significant
In our opinion ra-
tures on the introduction of {nnovatione (novfor thems�elves--in accordance
duced innovations [novovveden_ya~ ahould pay
with the scale of their use. This means that first an innovation [novahestvol ,
is introduced, then it is accepted by society (pays for itself) or it is not
accepted (does not pay for itself). Under the existing system of utilization
of the fund for development of new equipment, reimbursement of expenditurea
for its introduction occurs as a rule p~rior to completion of the introduction
(equivalent to the way servicea in the service sphere are paid for prior to R
them being provided) .
The desire to achieve economic profitability for new products from the first
year ef their manufacture creates conditions for hiking of prices of ~ne~;
prodscts. Various kinds of additions to prices, stepped and accounting
prices do not resolve this problem, especially in those cases where one and
the same new product starts being put out by several enterprises at different
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times. SCepped pricea mny reault in economically paradnxical situations for
conaumers~. ~or example, the Y~S-1030 computers, put out two years after the
start of production.were techttologically more refined and cheaper than the ~
firat models. But now, prior to the next revnlugtion of fixed capital,
they will have a different b alance cost rtnd price.
~ Within the f ramework of the existing mechanism of t~r~ p formation~ the con-
tribution of en enterprise to raising the technical l~~v~t of production can '
be accounted with the help of accounting prices for n~~~ p�oducts given the
condition that the difference between the accounting price ~nd the price to
the consumer may be paid by some state organ. Accountin~ prices are used for
~:?e determination of all indicatore of the operation of an enterprise (pro-
ducts sold, profits, labor productivity and the like). Coneumers pay for
producte on the basis of existing wholesale prices. The difference between
the accounting and the wholesale price in this case is an analoR of the price
of an innovation [novo~rvedeniye).
Sut with the help of such accounting prices or markups of existin~ prices to
account for the realized price of only a portion of the innovations (novov-
vedeniya) because some of them may not be counted with the manufacture of
new production. For such innovations, the price snd scale of introduction
are determined in a more complex manner. Moreover, the economic profitabil- _
ity of innovations cannot be assured solely with the help of the pricea of
products.
Tfie proposal made by F. Kovalev is close to the idea of accounting prices; he
bases the determination of production volume and labor ~:roductivity of
enterpriaes-producers of new equipment on the basis of prices higher than
wholesale prices for the coneumer.4 Under conditions of accelerated ecien-
tific-technical progress, cost evaluation of operational production activity
of the manufacturer according to the proposals of some economists ie to be
made on the basis of the upper price limit, while wholesale pricea are sys-
tematically reduced in accordance with changing costs of the manufactur~r.s
This proposal has something in common with F. Kovalev's proposal. The mech-
anism of accounting prices is close to our proposal given the condition that
if the d~.fference between accounting and existing wholesale price goea to the
enterprise, then it is to be paid for by the organs responsible for acientific-
technical progress.
Finally, we shall point out that the existing syatem of incentives for the
introduction of innovations [novshestva] into production, particularly the
system of material rewards, is based on calculations of the economic gains
stemming froffi the introduction of new equipment and is directly connected to
the volume of output of new equipment. With the introdu~tion of volume and
price of r~old innovations (nova�rvedeniya~ , the poasibility arises of includ-
ing pay?~~:nt of bonuses for thre introduction of new equipment in the overall
system of economic incentives of an enterprise since introduction of innova-
tions increases the volume of sales and profits. Here it is more logical
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to fix the size of the material incentives fund for introduction of new equip-
m~nt in re].ation to the volume of sold innovAtions raCher than in relaCion to
the volume of production of new equipment.
We carried out an economical-mathematical etudy of the queation of the theo-
retical possibility of exisCence of prices which under the conditions of tt~e
existing form of cost accounting would be economically advanCageous simulta-
neously .'cor the manufacturer and the consumer and furthermore would correctly
orient the manufacturer in the selection of innovations (novshestva) auited
for int~:oduction. An economical-mathematical model was created, describinq
in abst~ract form the proceases of production a^~d eor~gumption in the national
- economy. Producers (enterpriaes~ production associations) are characterized
in thiss model by collections of e xiating methods of production and liste
of innovations, which they can introduce~ thereby modifying and adding to
existi.ng methods.
For this model, the concept of a globa], optimal plan is defined in relation
to th.is or that criterion of optimality for the entire national economy as a
who1E:, and local optimal plans are also compiled for each producer, depending
on his local purpose functien. (hi the b~sis of a mathematical analysis of
the given model,b the follaaing conclusioi~s were drawn: �
1. In a number of instances, it isei~eas~ith~theireproduction~atnawleveluthat
~ancl materials and other things conn c
would be economically advantageous both for the pro~iucer and for the consumer.
2. If manufacturers consider the production of innovations [novovvedeniyn] .
~7s *_~ie product of their activity, then such prices will always exist. includ-
ing prices of innovations that would be simultaaeously economicallv ad- �
vantageous both for producers and consumers and, from the point of view of ;
the optimal plan, would correctly orient both the former and the latter to-
ward the selection of innovations [novshestva] for introduction. i
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3. For tt~e coordination of local optimal plans of enterprise,~ with the Ren-
eral optimal plan, it would be necessary to take into consideration in the
results of op~ration of enterprises the cost of sold innovations [novovvede-
niya] determined on the basis of their price and scale of introdu^.tion.
Here it is also important to emphasize the follawing. The selection of in-
novations ~.s special products and setr~ng of appropriate prices for them re-
sults not only in a change in the pri~:e of a new product (usually in the di-
rection of reductionj connected with a qiven innovation (novavvedeniye] but
also in certain changes of other prices--of materials~ component items, the
concomitant old product and so forth. This leads to a change in the effi-
ciency of old methods of production, which it is important to take into ac-
count in working out the procedure of correction and .revision of existing
prices. The regulating effect of cost accounting will only then orient
enterprises in the requisite direction when the effectiveness of old methods
of production, which will have to be replaced, will be reduced with the
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- inCroduction of innovations [novshestva). But this does not mean that it is
necesgary to reduce the prices of the outmoded producta. The latter should
~ 'ue kept~ as a rule, stable.
The impossibili.ty of setting a sinRle price for a new product that at the
same time woul~'1 be economically beneficial (both for the producer a~nd for tt~e
canaumer) and properly oriented ta~ward the aelection of effective methods of
production ia related to the fact that, as has already been pointed out, all
outlays under the given methad of price formation relatinR to the introduc-
tion of innovations (novshestvaJ are compensated by the consumer. If the
creation o� an innovation (novovvedeniye) is simply determined and meaeured
by the corresponding manufacture of a new product, then it would be practi-
cable to introduce a so-called accounting price for this product. The con-
sumer in thie case would purchase the product aC a price th at is advantageous
to him but one that dces not compeneate the manufacturer for all hie expenses.
The latte r determinc:a the cost of the sold product according to the accountin~
(h3gher) price ~ and the difference is paid by the state or~an. Thus, a part
of the expenditures on the introduction of innovations is assumed by the
state. But, as it was pointed out above, in the creation of an innovation
not directly connect~d with the production of a new product, the system of
accounting prices canno4: be used.
The reason for the impossibility of setting single prices that are advanta-
geous to both the producer ar?d the consumer is brought about not only by the
fact that the upper limit of a p rice can turn out to be less th an the lower
(by definition the price above the upper limit is economically unfeaeible
for the consumer and below the lawer--for the producer). The f act is that
the appearance of a new product and its price influences the correlation and
2eve1 of prices of related products, materials and the like. For this reason
cases are possib le where in any correlation betWeen upper and lawer limits
the entire aggregate of prices in the making of economic calculationa would
incorrectly direct an ei~terprise teward the selection of variants of
production.
It should be pointed out that in the proposed selection ancl accountinR of
the cost of innovations [novowedeniyaJ a somewhat differenC dynamics arises
compared to the proposals made by A. Koshuta and L. Rozenova.~ The whole-
sale price of a new product is set at the very outset at a level that eorre-
sponds to the costs of making this product as one that is already well estab-
- lished. The cost valuation of the work of the manufacturing enterprise and
also, which fact is of particular importance to cost accounting, the computa-
tion of all financial indicators, are performed on the basis of the sold
product indicator, but it includes at the same Cime the cost of realized
innovations. Innovations connected with the manufacture of a new product
pay for then~selves only in the period of being put into use.
Thus the better the product in put in production, the lower its cost to the
producer, that is, its production with time becomes less profitable, which
stimulates the development of new innovations, and so on. For the consumer,
the price of the product remains unchanged; conaequently, the demand for it
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will not gra~w as it ages, which i~ not excluded in the case of price reduc-
tion. At the same time the ab~ence of citange in the level of prices is -
~usCified in the already inCroduce sysCem of price formation with selected ;
prices of innovaCions. In a transitional period, when existinR prices al-
ready include expenditures of them beinR put in production, Che prices of old ,
products have to be reduced. '
The queation of price setting for innovations is ouCeide Che limits of the ~
preaent article. We shall only point out that regardless of the method of
price computaCion~ at least three parties have to take part in their settinFt i
the producer of an innovaCion, the State Committee for Science and Technology?
and the State Committee for Prices. When an innovation is directly connected ~
with a new product, a f ourth party ia added--the conaumer of the ~iven pro- ~
duct. In thia case the procesaea of setting prices for an innovation and for
a new product ahould evidently be ~combined. Such a mechanism of price forma- :
tion should be centralized, but fr,r small innovations and for minute produc~s
lists, the set*_ing of contractual prices is practicable. ,
The indicator of the cost of developed innovatia~s can be organically included ,
in the existing system of planning and atate statistice. With its aid it is
possible to measure and compare the levels and ratea of technical progreas at
different enterprises, associations, in sectors and the national economy as a
whole. Un the basis of their economic meaning and use value, the created ;
innovations belong to products of final use. When used (by the state), they ~
no longer take part in th~ economic procesa comparably to any other product
of final use.
The question arises as to whether there is a of develo edeinnova gions C~BIt~is
products of final use when account is taken P '
difficult to answer this question unequivocally without research and experi- i_
mentation. On the bas3.s of general considerations, it is clear anly that
the higher the rate of technical progress, the greater the relativ~ share of ~
innovations in the fiaal product. Mathematical analysis of an abstract dynam- ,
ic model also shaws that throughout the entire period of time the integral
cost of final products must remain as before followina the removal of inno- ;
vations, but in some years it may change as a function of change in the rate ;
of technical progress. Since at the same time innovations become part of ~
the final product, then following their deduction the cost of the finsl pro-
duct decreases compared to its cost computed in terms of existing prices.
Thus ,it may be presumed that the system of price formation, in which special
prices are selected for developed innovations, will ensure greater atability
of prices.
The indicator of the cost of developed innovations should be used as an index
of the effect of costs on scientific-technical progress. Its use in the
usual method of comparing of costs and results makes it possible to :neasure
the economic effectiveness both of individual innovations and of dire ctions ,
of technical progress in sectors and for the national economy as a whole. ,
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- ~'OEt f~~~'ICIAL USN: dNLY
At f.irst ~lance it may appear thaC the inclusion among qold product~ af in-
novations developed by enterprises and paid for by a special organ would re-
sult in insufficiency of financial capitul. PiathematicAl an alysie ~f the
corresponding model of the national economy ~haws that the balrmc~ of mon-
etnry nutlnys and receiPta wi11 not be di~turl,ecl. Tf~e F,iven meaeure will
result only in redistribution of financial capital and a change in the a truc-
Cure of Einancial f laws.
The function of uCilization and therefore of remuneration for innovationa
that hava been put into effect tn our opinion should be assumed by the S tate ,
Committee for Science and Technalogy, whicl~ as the leading organ carries the
biggest responaibility for the level and rate of technical proRress in the
country. The more it "uses" innovations, the hiRher doea iCe 1eve1 become.
l~ payment fund for innovationa should be created of funds coming from the .
state budget, and its size (plsnned) is determined on the b asis of the com-
prehensive plun of scientific-technical pro;ress. It would seem that the
relation between the size of the payment f,~d for innovatioas and the rate
of technical progress would have to be regulated by an economic mechanism.
For example~ deducCions going into this fund could graa from incYeased prof.it
obtained from the introduction of innovatior?a. The mechanism of payment for
innovat:.ons put into use shoulc! be centralized. But it would appear that
the payment for small innovations would dictate the creation of correspond-
ing funds in ministries, their size ahould be determined by the State Commit-
tee for Science and Technology.
The payment fund for innovations should in principle be distinguished from
centralized funds for the development of new equipment, which have for their
purpose the covering of expenditures connected with the creation and in tro-
duction of innovations [novshestva). Under the existinp financing system, _
an innovation [novowedeniye] may not have been put into effect while money
for it from the new equipment fund would already have been received. The
difference lies in the fact that the fund for development of new equipment
pays for expenditures but the payment fund for innovations pays for resu lts. _
With the creation of payment funds f or innovations, the size and role af
centralized funds for the development of new equipment should be significa.?~tly
reduced. ,
The prc+posal for payment of inn:rvations [novowedeniya] is of a ge~eral char-
acter and impinges on the whole system of price formation, finances a~d star
tistics. But it can be implemented gradually in the form of an economic
experiment. ltie transition to payment for innovaCions could be done for a
single sector and f or particularly ma~or innovations or for some narrow
group of products. For example, the Novosibirsk Sibsel'mash Plant has been
consistently suffering losses from putting inta production new agricultural
equipment. The LD~15 stubble breaker, which has been produced since the
end of 1974, is better than the LD-15 according to all technical-economic
indicators. In the lOth Five-Year Plan, its production should produce an
9
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.
y
~ I~'tl;t ~1I~E~'tCtAL U~L UNLY
~
economic ~f~ect amounting to 4 million rub~.ee. But Che pric~ sat for it ~
~ (evid~ntly computed correctly with con~ideretuntin~ to~3fAcmi113onetvl~lea
th~t th~ pl~unt will guffer a loeg f.rom it amo g
during the f ive-y~ar plan. 5uch a eieuation ~xiets for certain oCher naw
- typ~~ of sgricultural QquiPn~nt. tJere payment introduaed for innovgtione
aonnecte~ with this a9u~P ofteconom3ctexperiment~8hould~b~ ~r duallyrexpanded
g~.gnific~tly. 7'he field
fur a ~olution to ~:hie problem.
FOOTNOTE5
1. 5~s in particular L. Gatovekiy, "Increaeing the Orientxtion of P1An~
and Stimuli T.award t1i$hly Efficient New Equipment" (VOPROSY EKONOMIKI, _
No 5. 1977~ Qp 113-125).
2. The coneideration that activity connected with introducing new equipment
is r~ally a gtate function +~nd therefore requires apeciul compensation
ha~ been noted in the pr~eg ~se~ ~ f or P~on?PeBg~~L ~KONOMIKA IiMATEMATI~
omic Problems of Scientific-Technical $
CNESI:IYE METODY, Vol 10 ~ No 3~ 19 74) . -
3. See in regard to this~~q~e~o�Int rest8thegLeadingth~EKOg~No 3~~1974~u pal
EKO. Yu.M. Ksnygin, H
74-81) .
4. 5ee Kovalev, "Cost Indic977rs o57P~roducts and Labor Productivity"
(VOPROSY ~KONOMIKI, No 8, 1 , P
5. See, for example~ A. Koehuta and L. Rozenova, "~unctions of Pricee Under
Conditious of Scientific-Technical Progreae (VOPROSY LKONOMIKI, No 3.
1977 ~ PP 22-23) .
6. 5ee V.K. Makarov, "The Existence of Econoud~ EquilibrVuL.in the ModeA a?
Innovatians." DOKLADY AN S$SR, Vol 231, No 1, 1976; ~BY~�
Model of Ecanomic Equilibrium~ Taking into A~IKI~SO AN SSSR~Novosibirsk,
ZAT5IYA, No 18 (35). TRUDY INSTITIITA MATEMAT
19 76.
7. 5ee VOPROSY EKONOMIKI~ No 3, 1977, PP 22'23�
COYYRIGHT: Izdatel~stvo "Pravda", "Voprosy ekonosniki"~ 1979
769 7
ao: is2o
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- COI~ Ol~t~'ICIAL USt~ ONLY
rINAL 90CSAL PFtODUCT UR(i~D AS INDICA7'OFi
Moscow VOPNOSY EKONOMIKI in Russian No 3, Mgr 79 Pp 59-69
(Art3cle by t3orbunov: "~'Sna1 Soci~1 Profluct ~e an Indic~tor of National
~CGrGIl1~C f~erform~ce ~nd Soc3ety' a Needs" ]
(mext] 7'he materials of the 25th CpSU Congresg emphasixe that "mansgerial
and above al.l planning ~etivlty should be ni~~d st Pin~l national ~conomic
p~rfbrmance." ~'hig confronts the science of pconomics with the ta~k of
working the pl.ace gnd role of "final national economic performance" as a
c~te~dry in the set of categorfes pertainfng to r~productfon in th~ politi-
ca1 econonpr of socialism, of elaborating its physical and socioeconomic con-
t~nt, ~nd of developing th~ relev~nt 3ndicators. This category'g em~rgence
ha~ resulted from the 1eve1 nf
maturity of social3st production r~lation~
in the period of advanced sociglism, from the higher level of economic de-
vnlopment of ~he USSR and the other countries of the world socialist eco-
nomie system, and from the processes of intensification of social production
which are striking deeper in their econoap?.
~'inal national economtc perform~nce, whnse achievement is the afm of soci-
ety'~ production actfvl.ty in the planning period, reflects the needs of the
econort~?rrhirh hsve to be met. These needs are the basis for proportioning
aocial production ~rhen the balanced national economic pl~n is compiled. In
the process of drafting the plan a prior determination is made of amounts
of the various types of m$~eriel goods and services that need to be produced
and consumed in the natianal econoap? so as to ensure thst the relpvant re-
sources are used completely and xith the greatest efffciency to satisfy the
needs of socfety to the max~mum.
The needs of society, Which figure a~ att internal driving force of produc-
tion, depead at the same time on the level of the productive forces and the
socioeconomic conditions of soeiety's development. They are diree~ly deter-
rained by the resul.ts of its economic activity. It is in this sense that
Marx Wrote about the "quantitatively determined social need...."1 The quan-
titatfve determinacy of society's tteeds for means of product3on is reflected
in the volume of their productive consumption by efficiency norms (indices
of the intensiveneas of fixed productive capital and of all fixed capital
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P'Ult t1h't~'tC i AL 11!~L ON1,1'
~nd the work~r-outp~it rgtio) gnr~ nt~ndgrdn p~rt~9.nin~ tn th~ n~~dg of th~
pub:l ic--the vvlwn~ ni' c~nnuumptidn di' th~: r~~levant, artjcl~~ und ocrv~rr�c~
bu~cc{ c?n rn~,r:u ~t' ~:c~~iEium~tlon, ~tie .l~vt1 pers~un~1 3ncnme: a,nd rrtr~31
pric~n, and gtandgrd ~.evels ~overn3n~ gocinl rnn~vmpt~.on t'unds.
Qu~r~n~t~~3ng b~1.~nced economtc growth presuppose~ ~bov~ ~11 that the dev~1-
op~en~ of eor3el profluction is plarine~ on t;he bas3e of gOC~@'~~?~8 scient~fi-
cn11y 3u~tified need~. When th~ productiv~ forCps o~' th~ pr~sent t3m~,"
~n~eln wrot~, "come tu b~ m~n~g~~ in con~nrmity with th~ir knnwri n~~tur~,
ttien, nf
course, soci~l anarchy in product3.an w~11. be replaced by sncially
planned regul~tion of
production in ~ccordunce with the needs both of ao-
ri~t,~ ag a whole an~ nlgo af every one nf ~ats member~ int~ividu~lly."2 7m~g
pre~uppe~s~a that th~ plsnnin~ ~genClen w31~. hav~ a c~e~r-cut ide~ of the
qu~.nt3.t~tive gnd qu~lit~tive levela o~ ~nciety's needs. 7'hose n~pds of ~o-
c~~ty must be acientific~lly sound end baspd ~n the real capabilities of
proclucti~n. ~o reckon on needs when production lacks the regl csp~bilities
is incomp~tible with scientific pl~nnin~ in the sgme way as compiling g plan
w3thout firat analyzing the needs themselveg.
Lnn~-range prospective economic planning on the bnsis of social needs pr~-
guppnsps accurate economic calculatinn of the resources needed and the ~n-
ticipated production performance of the nation~l econoa~?. The optimum ratio
between the needs of society and sorial worktime guarantees not only the
mo~t effic~cious distribut3on of that warktime among the various apher~s
wh~re society's aggregate labor is applied, but also the most rstional ma~-
nitude of socially necesa~ry labor expenditures correspondin~ to satisfac- _
tion of each of society's specific needs.
Marx wa, the first to discover the mechanism xhereby this laW is manifested. ,
While he defined the magnitude of a commodity's value in terms of expendi-
ture~ of socially necessary worktfine, he also attributed great importance
to establishin~; the ratio bets~een expenditures of aggregate uorktime and
its distribution fn proportion to the volume and propc~rtiona of society's
needs. Marx regarded the correspondence between the expenditures of social
worktime to the totality oi' society's need~ altogAther a more advaneed ex-
pression of the law of value.3
The correspondence of the distribution of social labor among the individual
spheres of its application to the quantitativel,y determined needs of society
is, then, the criterion for 3udging the optimality of t~e structure of the
socialist economy. The optimum structure of the ecanoa~y presupposes minimwn
expenditures of soci~l labor Fer unit of satisfaction of society's needs.
In the light o: these principles one determines the ultimate results of ex- _
panded reproductfon of the social product, of manpoxer aad of production re-
lations.
T'ne interaction between socieLy's needs and ultimate national economic per-
formance is also reflected in the system of socialist production relations.
As s~e know, Engels emphtssized that economic relations of any given socipty
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FOtt O~FICIAL US~ dNLY
~r~ m~nifp~t~d ~bc~ve g].1 in the form of inter~~ta.4 ~'h~ economir 3nter~~~cs
c~l' ittd~viduul ~oGinl ~roups in ~vci~ty d~t.ermine th~ r~lpv~n~t n~~dn Cnr
m~anh ol' production nnd pernr~nal ronaumption, ne~ds whi~h ~r~ ob,~rCti~?~ly
c~eLermined and do not depend ~n p~o~lc'n ~ub,~~ct3ve ~?iehe~. Form~tinn oi'
th~ nepd for means of production is above gll bound up with the level of
t~chnicg~ ~ch~evements gnd thereby with th~ ~n3tud~ o~' gpecffic and grogg
~nci~.l.1y n~reassry ~~enflitures, rthile form~tion of
the need~ for the me~~s
of p~rgon~l consump~ion is prim~r3l,y bound up w~.th l~vels of personal incom~
and rets3l priceg.
The l~ve1 0#' s~+.isfaction o~ the needs of
praduction gnd person~l. need~
~~l~y~ ~ 1~rge role in gh~p~ng the syat~m of m~terial incentivea ~?h~ch ~timu-
lgt~ goci~l production, ~ sy~tem that is linked to the level of
eronomic de-
v~lopment of
society as ~ whole. Thua when gperific megaureg to develop ~o-
cial proc~uction are srork~d out in aational economic ple~ns in the period of
mature soei~lism, not only are the relevarit technical-and-econamic parame-
ters detiermin~d? but the overall results of ~conomic sctivity are taken into
arcount, gnfl a system of specific incentives is devised to ensure th~t th~
- pgrticular economic ~ecision is iffiplemented. The interr~lationahip nf sl.l
these ecbadmi~ c~tegaries thus conforms to thia pattiern: economic inter-
ests--economic needs--factors and incentiv~a of eoci~l production--finsi ng-
tional economic performsnce. ~
netailing the relations among society's needs, the system of economic rela-
tions gnd the reeults of social production has gr~xt importance to carrying
out the economic policy of the CPSU. The role of the indicator o!' contract
product deliveries is increasing in the country's industry and agriculture,
the indicator of finished pro3e~ts put into service ia becoming mQre impor-
tant in construction, the role of boauses for raising efficiency ead quslity
i~ increasing in the material incentive system, and so on. Expansion of
the sphere of application of indicators of final national ecoaomic perfor-
mance nnd of society's needs presupposes that they be strengthened in the
upp~r levels of the system of national economic planning.
The final gross social product, vhich is one ~f the fundamental indicators
in compiling a balanced nationa]. economic plan, is used e~s an economic indi-
cator embodying society's needs aad final national economic performance.s
Introduction of the category of the final social product in planning prac-
tice by no meaas signifiea a diminution of the role of the gmss social
pmduct as a planning instrument. Calculation~ oP the proportions of the
gross social product in value terms (Departments I and II) and in pt~ysical
terms (means of production and consumer goodsj helps in discovering exceed-
ingly important proportions in the national econoapr. Only on the basis of
that indicator can s+e determine the relationship bets+een the expenditures
of social labor and the entire output produced (the indicator of the produc-
tivity of social labor)~ betaeen the production of the sub3ects of labor and
the output of the end product (the indicator of national-economic materigls
intensiveness), betxeen the production of all means of production (imple-
ments of la'bor and sub~ects of labor) and the output of consumer goods:
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1
f~Olt 0~~'IC~AL U5C ONLY
thnt in, the globs~l indicatorg nf ngt3~n~1 economic efi'iciency. Zn the i.n-
b1r: bC1r~w wr ~r3v~ the indicator?z ni tihe gr~~~, intrrmedic~t~, i'inal and n~t
pr~durtu producpd in thc U58R in the 1965-197~f P~~'iod nn tt~e ba.ei~ oi' data
3n the ~t~t3stic~l yearbooke "Naroc'~noye khozyayatvo SSSFt."
Average Mnu~1.
In Current Prices Orowth
~billions of rubleg~ 19 - 1971- 1976-
~ ~o i ` ~ ~ i9--
77-
Grnss aorial prnd-
uc~~ 420.2 643�5 862.6 9~3�9 945�~ 8�90 6.05 k�70
tntermediate prod-
urt 210.8 327�9 ~+53.0 479�d 502�0 9�25 t~.70 5~30
Fina1 product 209.k 315.6 409.6 ~24.3 443.4 8.55 5�35 4.05
National income
(produced) 193.5 23y.9 363.3 385�7 403.0 8.35 ~+�GD 5�~+~
The gross social. product is used as the most general description of the re-
sults of sncial production and reflects the turnover of the sub~ects sr?d in- `
struments of labor in the production process. By comparison xith the gross
social product, atages of manufacturing the raw material passes through in ;
being transformed into the finished product are n~t taken into account in
calculating the final product. The final social product is characterized by
the entire value produced during the year that is intended to satisfy soci-
ety's final productive and nonproductive n2eds, the needs of defense and
those of foreip,n trade.
In tuking up the question of using the indicator of the final social pmduct
in plunning, we must be$r in mind that in this case we are not talking about .
repl~cing the indicator of the gross product, but rather of alLering the
principle of the connection betxeen these categories. In the period of in- i
dustrialization in the USSR the gross aggregate social pmduct produced xas
distributed in accordance s~rith society'a priority needs, ~nost of s+hich com- ,
prised the needs of prnduction and accumulation, s+hich guaranteed high rates
of development oP key sectors of the econoaqr. These xere the sectors pro-
ducing the means of production, that is, products the country vas e~erienc-
ing tbe most acute need forindustat inmthe 1929i19~0 Periodeuent torthet of
all capital investments in rY then, xas done as
~rotirEr~ of these industries. Natfonal economic plaaning,
it xere from the gross product to the final product. In the present period
the indicators of the efffciency and quality of production and of the level
of the prosperity of the people, Which are embodied most f`ully in the cate-
gory of the final product, are advaacing into the f irst place. The distri-
bution of capital investment~ in the period of advaaced socialism is charac-
terized by greaLer uniformity.
Society's final needs are the needs for consumer goods, services and means
of production; the volumes of their production also reflect final nrstional
1~
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~Ott 0~'~tCIAL US~ ~NI.Y ~
ecanomic peri'nrman~~. Whil~ they do characterize glnbnl proportidng in thc
s~Ciul production, the indicntors or n~tional ecnnomic effici~nCy und indi-
rntor~ ot' the grosg ~ocial product, the nnLinnul income nnd ~heir Comranent
rJ.em~nt~ ~ti~.1 do n~t g1v~ ~ preciae id~a ni' sourc~s for meeting society'3
necc33. 771~ grn~~ sorinl. product together with the production of fin~l mei~nc
nf' predurtion algo inrludee intermpdi~te means nf production (rgw m~teri~l~,
suppl3ps and fuel) and thereby encompasses bnth repl~cement and also ~ugmen-
tation of m~terisl goods.6 Thig indicator does not provide an anewer to
questions about the magnitude of
expenditures ~ttributgble to the growth
achieved in the finsl product going to society's consuatption, of the ahgre
of society's resources and of the use form in s~hich they go to fulfillment
of th~ go~ls eonfronting society, nor of the proportions in tot~l expendi-
tures and reaul.tg. A17. of this necessitateg e~dditional calcu].atione. Salv-
ing these problems presupposes thgt xe have ~ clear-cut relstionship between
the c~ynamics, volume and compos3.tion of society's needs and the correspond-
ing sources from xhich they 3re to be met (production performance), rrhich
are in fact reflected in the category of the final social product.
The indicator of the national econoad as computed acaording to the methodol-
ogy aaopted in the USSR Central Statistical Administration does not ~fford
a suffiriently clear-cut division among the different sources of satisfac-
tian of society's needs, uhich diminishes the possibility of reflecting ~o-
ciety's economic and social goals in the plan. For instance, the compr~nent
elements of the national income--the consumption fund and the accumulation
fund--contain elements in coa~mo7. The accumulation fund, for instance, in-
cludes nonproductive accumulation intended to satisfy the personal rind so-
- cial needs of the popuYation. The consumption fund includes p~cpenditures
to maintain scientific, cultural and even administrative institutions. At
the same time the consumption fund and accumulation fund have qual.itatively
different makeup and are reflected in a different use form.
7'!ie final social product is made up of use values intended to meet society's `
final needs. Planning the volume and proportions of the final product will
make it possible to determine clearly, first, the optimum national economic
performance ~+hich should be achieved over a particular period; second, the
volume of the instruments of labor necessary to achieve that performance;
and third, the level of production efficiency over the planning period (by
dividing the f:inal product by the resources used). At the same time it xill
make it possible xhen proportions in the national econoapr are being shaped
to take into eccount more flilly the reel and scientifical]y 3ustified needs
of society for the instruments of labor, consumer goods and services, and
to ensure a clearer sense of direction in acb3eving the hfghest performance
of social production at the lovest expenditure of resources. The statement
by T. I~Qiachaturov, member of the acadeapr, to the effect that "the indicator
of final output is free of the shortcomings of the indicator of the gross
social product.... It can be used to analyze social production, relations
among sectors and industries, aad national economic planning" is altogether
valid in this connection.~
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_
~Ott n~t~'IC IAL L'S~ dNLY
rr? nutidnnl ~conomic pl~nning (both curr~nt gnd prosp~ctive) on th~ b~i~ o~
the final g~ei~l product n qu~.ntitstivp dctermination ig ma~e af proportion~
in snei~by'~ ne~d~ Which ar~ ~a be gati~fi~8 in +.he plannin~ period; the
lntter are aompared to the ~xpenditures requ~r~d fdr that purpose. A reln-
tion ig thereby aet up b~tween the quantity of rrQrktime expendea in tihe pro-
duction of a parbicul~r article ~n8 the eize of ~ociety'~ r~ee8 that is to be
satisfied by me~n~ of this article; that conn~ction, ag Marx urote, i~ most
typic~l of a society "in which productifon ig und~r an ~ffective rontrol that
predetermines that production...."~ The grosg ~greg~tie aori~l product ig
in thi~ context equal to the sum ef the vnlues nf the final product und Lhc
~ mui;ei�i~l. expenditures required for that product'ts praduction. It pluy~ un ~
impor~.3nt role in the practice of n~tion~l economic pl~nning and re~lects
the nb~olute giz,~ of gros~ ~xpenditur~s and groas natio:~a]. economic perfnr-
mstt~e .
To corrertly ~udge the category of the final product it is importgnt to hnve
in mind the fundament~l change which, as indic~ted above, hgs taken place in
the present gtage in the reiation betxeen the ~ggregate social product and
the ff*.:.1 social product. In our viex ignoring this is the error made by
those economists~ ~ho re3ect this category on the basis that since the m$gni-
tude of the final social product comprises the sum of the national income
and d.epreciation, the nationc~l income is in fact, strictly apeaking, the
final social product. But they do not take into account that it is not so
much a quantit~tive matter as a new approach to n~tional economic planning.
Qua~nt3tatively the final social pmduct is actually equal to the magnttude
of the national income and deprecfation (certain authors also include expen-
diture~ to meet the needs of defense and foreign trgde), but its application
alon~ with the gross social product affords additional possibilities of per-
fecting the planning oF social production.
The final social product includes the funds for productive and nonproductive
consumption, ~hich correspond to the t~o basic spheres in Which society's ;
needs ~re formed in the present stage; its makeup can be represented as in
the scheme given beloa.
Makeup of the Final Social Product of the USSR
I. ~'und of resources for nonproductive consumption
1. Fund for personal consumption of the population (consumer goods and ser-
vices)
2. Fund for expansion of the social consumption of the public:
a) gra~rth of fixed nonproductive capital
b) material expenditures in institutions serving the public
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.f
Fdlt dFFICIAL U5~ ONLY .~r~~,~
i. h'un~f in !'hr~3~;n trnde f'c~r prr:3nnr~1 rdnrsumpti~n (n~ti difrerenr~ ai' c~x-
' portcs unci i:r~drt~ df Cdn~um~r ~naclu ) _
l I. 1~'uc?d oi' resourcc~u i'or productivr Cnnnwnpi,inn
l. aroti+th of fixed productive capital (n~t c~pft~l inv~stments reali~ed)
2. Grorrth of current assets in pt~ygical form ar~d regerv~s
3. Replarement of fixed productive capit~l
Materi~l expenclitures in scientific institutiona gnd administration und
mgnagement
5. Net difference of exports and imports of ineang of production
The table, which is based on this scheme, shous the makeup of the USSR finnl
socia7. product in the efghth and ninth 5-year plaas.
Makpup of the USSR Final Social Product (in current prices; in billions of
rubles)*
~ ~
~inal social product 209.4 315�6 409.6
I. Fund for nonproductive consumption 144.8 211.~2 ~70.G
1. Personal consum~tion of the population 12u.9 177�9 231.8
2. Material expenditures in institutions serving
the public 11.2 16.6 2~+.1
3� GrosrLh of fixed nonproductive capital 10.4 19.0 22.4
4. Net difference of exports and imports of con-
sumer goods -1.7 -2.3 -7�7
II. Fund for productive consumption 6k.6 10~.~ 139�~
1. Gros+th of fixed productive capital 17�5 32.1 38.8
2. Groxth of current assets in pl~ysical form and
reserves 22.3 33.1 3~+.6
3. Replacement of fixed productive capital 18.8 29.1 k~.9
4. Material expenditures in scientific institu-
tions and administration and management 4.2 6.8 10.7
5. Net difference of exports and imports of ineans
of production +1.8 +3.3 +5�0
- * The figures in the table vere computed from data in the statistical year-
book of the USSR Central Statistical Admiaistration entitled "Narodnoye
khozyaystvo SssR v 1975 B."
In ana~yzing the composition of the final product We should bear in mind that
- the use form of expression of the fluid for nonproductive consu~ption is het-
erogeneous. The ftiind for personal consumption is calculated as the volume of
~
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i"
~
~OR d~~ICIAL US~ ONLY
[
r~tsl p~rnon~l incom~ r~al.ized (in th~ repdrting p~rind), tnk3n~ 3nto EiCCUUI'lt
r~t~iL priees c~f congum~r gaoda, rate sch~dules for paid services and an e~-
tim~te o� publ.~.c cdngumption funds im m~nzy term~, where~.s the fund for ex-
p~nsinn oi' ~ocial. consumpt3on and the fund for foreign trade are determined
on the ba~is of wholegale priceg of ineang of prnduction ~nd export-3mport
priCes. But for purpo~es of solving the ~pecific problems of planning the
h~t~rd~~neous form of ~etimation of
each of these funds doeg not have esgen-
tiul rignificgnce, since their uge pursues strictly functional s3ms. At the
nume time it does mean that the tot~1. mggnitude of the fund for nonproduc-
tiv~ congwnption has, of course, very provisional significance, reflectin~
_ only the most general trends in development of personal and social needs of ;
thP populstion to be sgtisfied.
In this respect the fund fnr productive consumpt3on is more uniform in its
vulu~tion. We should note the importance of including in ttiis fund depreci-
~tidn, rrhose use in the period of intensive development has great impor~tance
to ensuring not only simple reproduction, but alao expanded reproduction of
fixed productive capital.
In the period of extensive developmen~ and in the initir~l. transition to in-
tensive development the share of depreciation in society's final socit~].
product represents a negligible quantity; the growth of the final product
muinly results from the rapid growth of the total labor and means of produc-
tion applied. So the use of depreciation as a means of expanding production
is limited in that period, since the reproductive and technological pattern
of
fixed productive eapital is characterized by a high relative sl^.are of the
passive portion--production buildings and structures, Whose amortization
rates are one-third or one-fourth as high as the amortization rates on the ,
active part of fixed capital--equipment and the like.
In the context of the intensive type of development of social production the ;
economic role of depreciation increases sharply. The change in the techno-
logicul pattern of the assets used toWard an increase in the relative share
of equipment has a substantial impact on its reproductive pattern as well.
7fiere is a substantir~.l increase in outlqys to replace fixed assets. In the
period of intensive reproduction depreciation has a decisive impact on the
growth of capital investments. A rational depreciation policy i~ a strong
economic lever for speeding up technical progress, it tends to reduce spe-
cific capital investments, and it is an important and ever growing source of
financing capital investments and of their higher efficiency. Depreciation
charges included in the accumulation fund of the final social product com-
prise a source for satisf~ring the productive needs of society that is uni-
fied in its purpose and goals.
Thus both the neecis and the final performance are registered in the forma-
tion of the final social product xith respect to the functional economic
purpose of output. This procedure conforms most closely to the basic prin-
ciple of the balanced national economic plan--that resources correspond to
society's needs.
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N'Ok U~1~' IC t AL US1: t)N1.,Y
Fbr~ign trade, whose volume has incre~s~d 50-fold in the postwar years, i~
becoming an exceedingly important and ever atronger factor in Soviet ecd-
nnmiC drvelnpment. Ag nnted in the muterinla of' the 25th CPSU C~ngrc:sn,
"nne nt' ttie peculi~ritie~ of our time i~ L�he grnwin~ utiliLati~n of i;he iii-
tc:rnutinnal division of' lnbor for each country'~ development regardless ~f
ft:a w~ulth und the economic 1eve1 ft has attain~d."
mo single out within the fin~]. social product 3.ndicators character3zing for-
ei~n trnde's contribution to meeting the productive and nonproductive needs
of cociety and its impact on final performance gives a clear idea, we be-
lfeve, of the role of foreign trade in society's economic activity and makes
it possible to revea]. the importance to the national economdr of the propor-
tions: "forei~ trade ~o accumulation" and "foreign trade to consumption."
It is of
great interest to analyze the c~ynamic pattern of change of the
share of
gociety's satisfied needs in the fina]. social product. The tsble
below shows how this has taken shape by years (in percenta.ge of the total):
~ ~Z ~
1. Needs of the population , 65.2 63�3 63�~
Personal consumption alone* 5d�2 53.3 5~+�3
2. Needs of a general government nature** 7.6 7.4 6.6
3. Needs of production*** 27�2 29�3 30.0
* Personal consumption of individuals; material expenditures in institu-
tions serving the public; growth of fixed nonproductive capital; net differ-
ence of exports and imports of consumer goods.
Expenditures for science, administration and management, etc.
Gro~rth of fixed and working productive capital, reserves and "other"
expenditures; depreciation; net difference of exports and imports of ineans
of production.
The figures in the table show that society's needs over the period under re-
view were satisfied while there was an increase in the relative share of
production needs (from 27 percent in 1965 to 30 percer~t in 1975)� At the
, same time, in recent years we note a certain stabilization of the relative
share of productive consumption i.n the adequate needs of society satisfied
at the level of 29 percent of the Pinal social product and a sizable reduc-
tion in the relative share of general government needs at a level of approx-
imately 7 percent. This reflects certain changes which took place in those
years in connection with the deep turn of the Soviet econo~r toward solving
the problems of raising the prosperity of the people and production effi-
ciency. In spite of a certain decrease in the relative share of the needs
of the public within the total of society's needs satisfied, the average
annual growth rate of their satisfaction is close to the rates of the final
social product. Substantial changes also occurred in the very makeup of the
fund of nonproductive consumption.
~ 19
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' I
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The high ~rnwth rate of the fund for productive accumulation ~nd the increa~~ �
of
i~a share in the finsl social product are explain~d i'irst of ril.~ by th~
tii~h rates r~f ~rorrth of fixed productive c~rit~11 r~nd oi' expendit~ures for
srie.~ntir:ir purposes. High rates were a7.so typical of the funfl for replace-
m~nt attd also the fund for foreign tr~de (means of production).
The fund for nonproductive conaumpt:ton now comprises two-tih3rds of the finnl _
social product (65.2 percent in 1965 and 63.4 percent in 1975). We ~hould
emphasize the large per capita size of the fund for nonproductive con~wnp-
tion which has been achieved. In 1965 it amount~d to 623.6 rubles, in i97o
it wns ulready 866 rubles, and 3n i975 it was more than 1,000 rubles. Most
of it ls used to satisfy the persona7. need~ of the population for food,
c~.othing, footwear, durable consumer goods and housewares, etc. This por-
tion in the total size of the fund for nonproductive conswnption rias changed
as follows in recent years: in 1965 it was 86.3 percent of the fund, in
Z97o it was 84.2 percent, and in i975 it was 85.7 percent, that is, over
those years its average share was about 85 percent of the fund for nonpro-
ductive consumption. '
A number of debatable problems arise in def3n3ng the composition of the fi-
nal social product: for example, the problem of inc7.uding the value of the
output of the sphere of services. In recent years much attention has been
paid in our economic literature to the prob].em of the efficiency of the ~er-
vice sphere from the standpoint of the national econo~y. For ins�tance, rsn
att~,~npt is made in E. Agabab'yan's monograph9 to compute the va].ue of the
ou�.nv~; created in that sector of social production. The results of this
analysis, in our view, provide the basis for including a statistical indica-
tor reflecting the level of satisfaction of social and personal needs for ,
services of various kinds in the national income and in the final :;ocial i
pl�oduc L . '
~
This is important primarily because failure to include L:~e service sphere in i
the system of sectors creating social use values and exclusion of the labor ;
of performing services from total worktime tend to pull down the actual
level of the effective demand of the public and consequently the volume of
production of consumer goods. It is for that reason that today we must talk
not of consumer goods for the public, mainly consisting of pY~ysical goods,
but also of the means of consumption, which would include services along
with pY~ysical goods.
As we know, calculation of effective demand requires an accurate recording
of real personal income and the corresponding funds intended to cover that
income. At the present time the size of real personal income is calculated
as the sum total of the money earnings of workers in the sphere of physical
production, receipts from the financial system (pensions, scholarships, etc.)
and material expenditures in institutions of the nonproductive sphere, from
which contributions to public organizations and also expenditures to pay for
services axe omitted. Thus on the one hand real personal income does in-
clude actual money receipts of workers requiring a corresponding coverage of
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~Olt OC~'IC tAL USL (1N1~Y
gonds and services, while on the other it includes me,terial expend3tures of
- institutions in the nonproductive sphere which are covered in a differeni; �
1'orm of consumption. At the same time, total real peraonal income does not
include payment for servicea in which the live 1~bor of
workers in the non- ~
praduc~ive sphere is represented. Personal income does inc~ude material ex-
penditures, but it omits the resulta of one of the spheres of social labor.
- A comparison of the surplus pi�oduct created and used in our country, accord-
ing to data of the USSR Central Stat3stical Adm,inistration on the shapin~ of
the country's state budget, shows that it includes the suipl~is product cre-
ated in the service sector.l~ These circtunstances lead to the conclusion
t;hat the value of services must be inc~uded in the consumption fund both
within the nation~]. income and also wi~thin the final social product. Then
the size of coverage of their 3.ncome with goods and ~ervices would correspond
to the total amount of rea1. persona]. income ("real" meaning really uaed),11
7'he practical need for computation of the complete consumption fund of the
public, including both the value of physical goods and also the value of
services, led to inclusion in the state plan of a summary standard of liv-
ing indicator (personal consumption plus a monetary estimate of all ser-
vices). The principal purpose of this indicator is to reflect in the na-
tional economic plan the volume of goods and services, which is needed in
order to cover the fund of real personal income (calculated so as to include
payment for services) and figures as the point of depaxture in planning the
level and growth rates of industries and sectors in the consumer sphere and
of Fil.l social production.
Achievement of the goals of co~nunist construction which are contained in
the national economic plan as its basic criteria is reflected through the
inuic~.~or of the volume of effective demand of the public, which on the one
hand gives the level of real personal income (and is thus relai:ed to the
sphere of personal consumption), while on the other--through the retail
price index--it ir~dicates the 1eve1 of production costs determined by the
level of efficiency of the entire socia]. econonopr. Since the constantl,v
growing material and cultural needs of the workers are satisfied through
the commodity coverage of effective demand of the public, this indicator is
linked most closely to the goal of socialist production.
The following model scheme might be proposed for determining the basic pa-
rameters of the national economic plan on the basis of the net final social
product--the volume of ineans of nonproductive consumption.
First, on the basis of an analysis of reported figures on the composition of
the population and its pro~ected change one determines the volume of effec-
tive demand of the public over the planning period in physical terms. The
consumer is concerned with real means of conscuaption (consumer goods and
services), and society must know how much of which particular means of con-
sumption need to be produced to cover the income of each population group.
Of course, the gross volume of production of each of the means of consumption -
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- ~ ~
[~Oit nI~CICT.AL USL UNLY
c~r,.ii l~c~ c~bLuinc~d nnl,y rtil'tc~r wr, d.inc~~ve.r t~h~> ~li Cfcrent~,i~.~i~.rd ciemnnd for a~,ivr.n
~~ru~lur.t, wi I,tii n rr~c.h ~;r~~up. Ul,h~~rw.it.c Llit~rc~ mi.~hL ~bca c~i Lhr.r n drric.i i. ~r
�u.rplu~ ol' me~ns of' consumpt3on. ~
Once we determine the vol.ume of socia~. consumpt3.on funds (relative to some
standard, we suppose), we added to the level of effective demand t'or products
and paid services and thereby determined the volwne of the fund for the pros- ;
perity of the people (output for personal. consumption pl.us services).
Then on the basis of progressive (that 3s, achievabl.e at minimum expendi-
tures of social l~,bor per unit output) norms and balances we calculate the
vo11~7ie of the means of product3on and manpower resources required to produce
the given amount of the means of consuruption, or the production requirement
of Department ZI. R'he most laborious and complicated section of the plan
is determination of the requirement of Department I, which includes a cal-
cul.ation of the entire mprriad composition of production of the means of pro-
duction and ma.npower resources for production of ineans of produ^tion. To-
taling up the production requirements of Departments I and II, including as
well accwnulation for tY?.e growth of labor productivity, we obtain the gross
production requirement or volume of output of Department I and also the
amount of manpower employed in social production.
As a result, since any plan is a balance, the principal task in compiling it ,
comes down to finding the following quantitative relationships: between the -
volume of effective demand of the public and the amount of the means of per-
sonal c~nsumption in physical terms; between the volume of the means of per-
sonal cor;sumption and the amount of the means of production and labor re-
sources required to manufacture those means (production requirement of De-
partment II); between the voltune of the means of production and manpower re-
quired to manufacture the means of production both for production of the
means of consumption and also for the production of the means of production ;
(production requirement of Department I). Thus a c~uantitative link is ob- I
tained between the differentiated balance of personal income and expendi- ;
tures, on the one hand, and the intersector balance of product production
and distribution.
Two t es of adjustment are made in the structure of social production ob- j
YP
tained in this way. First of a11, the original approximate pro3ections of
the volume of effective demand of the public and of its composition are ad-
justed with respect to the level of money income, and second, the figures ;
obtained for the worker-output ratio and for the intensiveness of the ac- ,
tive portion of fixed capital and all of fixed capital (the averaged re- ~
quirement for means of production, manpower and capital investments) are i
revised. By means of forward and backwaxd iterati4ns of the computations
we obtained the principal indicators of the national economic plan: the ;
growth rate of the output of the national economy, the level of productiv- ;
ity of social labor, the volume of personal. money income, the volume of ;
capital investments, etc. '
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Thus division of the final so~ia~. product into i;he fund for product3ve con-
sumption and the fund for nonproduct3ve consumption yields an altogether
clear-cut idea of the functional dependence between the goal and mean~ of
sociul production, of the c~ynamic interrelatinnahip amon~ the individuel
gregates of society's needs, of the conditions for balaneing them, at~d so
on. Pl~nning agencies will have a relf~b~e instrument for xegulating so-
cial product3on in response to changes 3n those needs. .
FOOTNOTES
1. K. Marx and F'. Engels, "Sochineniya," Vol 25, Part II, p 185.
2. K. Marx and F. Engels, "Sochineniya," Vol 20, p 2gi.
1
~ 3. See K. Marx and F. Engels; "Sochineniya,'~ Vo]. 25, Part II, p i86.
4. See K. Marx and F. Engels, "Sochineniya," Vo1 18, p 271
5. "By the firlal social product is mea.nt that portion of the gross product
which in the form of finished products is made ava~ilable to the social-
ist society and is used for the consumption of the workers, fnr replnce-
men~ of fixed assets worn out during the year and for accumulation."
("Politicheskaya ekonomiya. Sotsia7.izm--pervaya faza kommunistich~skogo
sposoba proizvodstva" [Politicfil. EconoIIpr. Socialism as the Ffrst Phuse
of the Communist Mode of ProductionJ, Politizdat, 1977, p 377)
6. It is well known that Ma.rx puts special emphasis on the impermissibility
of multiple inclusion of one and the same value in the gross product
wheri the final result of capitalist production is determined: The
proi'it of' one sphere of production, since it is included in the produc-
tion cost�s of another sphere, has alreac~y been counted here as an inte- ~
gral part~ of the total price of the final product and cannot appear
again in the pYefit column. If it does show up in that column, that is
only becF:use the given commaodity is itself a final product, and conse-
quently i.ts production pr.ice is not included in the production costs of
any other~ commodity.... At the level of the entire society as a whole
the profit contained, say, in the price of flax cannot turn up twice: '
once as u part of the price of the fabric and again as the profit of
the flax producer." (K. Ma.rx and F. Engels, "Sochineniya," Vol 25,
Part I, p 175) In "New Data on Capitalism's Laws of Development in Ag-
riculture" V. I. Lenin also used ~he indicator of industrial output
minus the value of raw materials. (See V. I. Lenin, "Polnoye sobraniye
sochineniy," Vol 27, p 139)
7. T. S. Khachaturov, "Sovetskaya ekonomika na sovremenr_om etape" [The So-
, viet, Economty in the Present Stage], Izdatel'stvo N~ysl', 1975~ p 3~+7. ~
8. K. Marx ~nd F. Engels, "Sochineniya," Vol 25, Part I, p 205.
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- i
N'Utt (~1~ 1~ iCJ N. 1t51: tlNLY
H;, M, A~ab~b'y~n, ~'prn3~vddntvm i p~txpbl~niy~ ug1u~ v~~~yr~t,aY pY+~t1-
l~tk~" C~'rodu~ti~n ~n~ Cnngumpt3nn S~rvic~g in the 10th ~'3v~-Y~gr
p~.r~n J,~xa~t~i ~ gtvn r~yg~. i97't 87-sn7.
n
tU, L. ~1y~zpr, N~k~tdiyy~ vdpr~~y m~tndo~.~gii p].~n~rav~n~.y~ ~bdh~h~c~t-
v~~rir?ykh f'canr~ov {~c~~rr.blCrt3yg~~ [Cc~rtuin Prdbl.em~ in i,hr~ Mht.hnd~.ta(~? nt'
I'.lu~~nln~; ~c~C3.~1 Cnn~iLUn~~t~.nn P'un~iu~, J~a~late~.'~stvv L'kvnnmiku, 196G,
i~p 78 ~ 7~ ~
11. 1nc~.ud3.n~, ths~ i~, thp n~~~gsgry prdduct creat~d ~n the ~ph~r~ df s~r-
v3c~g. .
COPYItIGHm: I~dat~1'stvo "Pr~vda," "Vdpro~y ekonamiki," 197g
'~045
CSn: 1~20
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N'dk f~t~�~IC.LN. U5~ ONLY
US5R ~OONOMY--A S~NCLB NATIONAL ECO~lO~tIC COI~LEX
Maca+ VOPROSY EKONOMIKI in Ru~sia~ No 3~ Mar 79 pp 97�106
(Article by Yu. Vorob'yav aad T. Chech~i~va~
(Toxt~ During ~ha years of SovieC pa+er in the USSR a national eaonomic com-
piax aao creatad~ and it io grawing aad daveloping ~s a comprehenaive, oingle
ec~omic organism on eha scale of the vhole country. ~'hir achieveoent i~ in-
corporated in Article 16 of the naw Constitution~ vhere it �tatest "Tha USSR
economy congtitutea a aiagla e~tioaa~ acoaomic compiex encompas~ieq ali ele~
meata of public productian~ distribution and exchange on tha t~rrit~ry of the
country." ~e ~iugle national ecoaomic compiex of the USSR represents a syn-
theeia of oociai-ecoaamic~ productioe~~ sectorial aad territorial otructuse�
of tha natilonal economy. It amerges aa tha coaeequenoa of a�o~iai-ac~oaomic
commu~ity of ai~ of devalopment basad oa public a+nerrhip.
Th~ craatiaa of a single nationai ecoaomic cosplex for the oocialist country
is the re~ult of progre~oiva dev~~opmeat of intercoanected and interrelated
natural historical processea--eocial division of ~abor aad its cooperatioa.
But both these proceases are of a ooneretely hietorical charecter aad come
into exiatence uader the influence of the fora~ of productian relatioas pre-
doainaut in the couatry and determi~aed by ite ecoaomic la+a. "'Diverse otaaes
in the developmeat of division of labor are at the saee time ~iverse form~ of
a+uership~ that is. each stage of the divisioa of labor aLo determiaes the
relatioae of iadividuaL to each other c~rnapaadiag to thair relation to
materials, tooL aad products of labor." Bach nes+ meaae of production com-
plicates theoe processes~ reaching a hiqher level of divisioa snd cooperation
of labor. "xhe level of development of the produetive forces of the natioa,"
K. Marx aad F. Engels vrote~ "are diacloaed moat graphically in the degree of
deveiopmeat of division of labor in it."2 Each subsequent method of produc-
tion inherits the level of divieion and cooperation of labor achieved in the
preceding stage, transforme these procxsses ia accordance vith the specific
chR~acter of their productioa relations snd develops them further, this time
an ite wn r~ocial-ecanomic fouadation.
Capitaliam immessurably develope~ division and cooperatioa of labor and the
related processee of concentration aad oentralisation o~ labor and capital~
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~~c~is aE~ tct~ nt. u;;r c~N~.~~ .
gdding thereby a~ocial character eo the development of productive forcee
- and ~trengthening their tendency tow8rd coilectivization. The manif.eetation
of thi~ tendancy and partial r~cogniticm of the socigl naturp aE arodu~:tive fer~p~:
emergee ae "convereion of large organisme of production and coennunication--
first into the prop~erty of joint-etock companies and later into truate and
then into eCa~as." gut thi~ doe8 aoe clestroy the capiCalist character of
productive forcees private intera~tir o~ individual cupit~l turn out to be ~
decisiva in the selecrion of a variant of economic development. Th~ aspira- ;
tion for economic unity caused by social divieion of labor and collectiviza-
tion of producCion only intensif iee the baeic contradiction of cnpitalism~
which i~ reproduced as oppoeition between organizations of product~on at
individual factories and anarchy of production in all of aociety." ~
The economic baeis of the economy of a capitalist country is private amer-
ship of tha meaas of production; iti givee rise to competition and ~onarchy .
snd b rings about not tha amaigamation of sectorial~ territoriai and otl~er
economic units and individual people but their die~unctian. Private awne r-
ship~ ag poinCed out by F. Engeis~ isolates each into his ~its~ awn crude
individuality~ inimically opposing ideetical interests.s In taking this
into account~ h~ wrote that such expreeeione ae national wealth. eational
econonry are ia~pplicab le relative to the economy of a capitalist etate. "As
long ag private o~,merehip exiets, this expression doee aot make sense... It
is nec~esary either to re~ect this expression a~together or to adopt such
precoaditiions under vhich it would make sense." Such preca?ditions include
the destruction of private property aad the eetablishment of public ewnerahip
of the meeas of production.
The elimination of private amerehip of tne meana of production is the ct?ief ~
objectively neceeeary precoaditian for the creation of a eingle national
economic complex in a socialiat couatry. Its formation ie a long procees,
encompassing an entire historical stage. In the transitional period from
capitalism to socialism~ basic ob~ective conditions are created for the form-
ation of a siagle national economic complex: collectivization of the means .
of production in all apherea of human activity; victory of socialist produo-
tion relatiana in all sectors of lthe national economy and on the ertire terri- j
tory of the couatry; creation of a material-technical base for socialism
aith a nes~ sectorial aad territorial structure in keeping with the aim of
socialist society; eliminatian of sharp differences in the levele of eocial-
economic developmeat of the regions of the country accompanied by a general
significant rise in the levels of development.of society and coneumption of
the population.
All this in ita turn ensures +the direct subordination of production to all-
round development of the iadividual; the possibility aad neceseity for a cen-
, scious, planned regulatioa of Lhe processea of development of collectiviud
productioa, includiag social division of labor, elimination of exploitatian
of maa by maa~ traasformation of individual labor into the only source of
man's life~ dissemiaation of the principles of remuneration for labor~ com-
radely cooperation and mutual sid over the entire territory of the country
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and in all ~pharee of human activity end in the final enalyeie etrengtheninR
of the solidarity aud ~ociai comnninity of individugl nation~~ naticmalities~
collectivee ard individual8.
The condiCione for the Eorniation of a gingle national ecano~aic complex devel-
oped together with a rise in the ~evel of maturity of eocialiet aociety and
the levele of cogniti.on and employa~nt of economic laws. in the tra~ne~tionai
period f rom capitialiam to socialiem~ the USSR nationgl econony wae cheracter-
iaed by eignificant interAectoriai differences in the material-teclinical base~
eocial and territorial dif~erentiatione in lev~la of labor productivity~ pro-
duction and caneumpCion of the population~ ahich limited the t~alizatian of
poeaibilitieg of formetion of a eingle national ecenomi~ complex. Its basee
were laid with the completion of this period. In 1937 the sb,are of the
country's socialist etructute reached 99.1 percent in the nat~onal income and
ir industrial production--99.8 percaaL. in tha groes production of agri~ul-
ture--98,5 parcent~ ahlle in 1922 this ehare amounted ~o~ reepectively 30.0
percent~ 68.3 percent and 1.5 percent. Ae a resuit of ~hanges in th~a ecanoery?,
the claes compneition of the USSR population radicaliy chaaRed. In 1913~ in
the structure of the population of Ruesia 17 percent were vorkere and ea~ploy-
ees~ 66.7 perceat--individual farmere aacl noncooperative handicraftsmen and
16.3 perceat--exploiting ciaseee (bourgeoieie~ la~ndormers. merchants and
kulalcs). By the end of the 30's, the exploiting classes had beea liquidated~
the number of individual peasaats and noncooperative haudicraftemen wes
reduced to 2.6 percent. The USSR population essentially coneiated of aorkere
and pmployees (50.2 percent) and kolkhos peasantry (47.2 percent). There
came into being an "aesociation i~? vhich the f ree deve;opment of aach person
became the condition for the free development of all."
~urther formatioa of a siagle national eceaomic complex in the USSR aas in-
terrupted by the var~ vhich held back the advancing development of our ecan-
omy for almost eight yeara. 1t~e poatarar period has been characterized by
the high dynamic quality of the coun~ry's social-economic development and
significant y~alitatSve changes in all spherl.e of collectivized production
and the life of Soviet society. The per-capita production of the national
income in 1970 l~ad gYOwn G.9-fold cuWpascu c~ iy~~. Succeeses in the devel-
opaient of productive forces and production relations brouRht oa in the L'SSR
the building Qf as? ecanomy of a developed socialist society, one of whoee
characterietic features ie the creation of a ein~le national ecanomic com-
plex for the country.
The creatian of a aingle national economic complex ie a socialiat country
meaas easuring not only uaity of aim in the development of collactivized
production but also approxi~nately egual conditians for its realisation in
the territorial~ sectorial aad social aspects.
Tt~e term "single" characterizes the internal qualitative featuree of the
economy of a socialist country--commuaity of aima in social-ecmomic devel-
opment, meaae and methods of their achievement. The unity or vholeaess of
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,
~btt ~}~'FICtAL IIS~ ONLY
the cau?t~r'a econonry i~ an ob'ective feature of the AocialieC economy etam-
ming f rom pubiic a+eership and the neceesity of orgenizing the procese of
reprodu~eion on tha baaie of a eingle national economic pian, detetrmininq
the ob~ectives and taeka of eociety's eocigl-aconomic developa?ent ae veii aa
thp vaya and maane of their achievement.
The eatabliehment of eociali~e forne of production in all secrors of the
nationai economy and on the entire territory of the country m~ane in additios?
the creation of ob~aceive condiCiona for the operation of a eyatem of eociai-
ist economic laue datermining the place in vhich ehe fundan?ental economic law
belongs. Its realiaation i~ eneured an the baeis of interaction of econemic
la~+ss plaaned, proportional development of the soc~.aliet economy, dietYibu-
tia~ of labor~ eteady grawth of ehe productivity of collectiviaed labor~ law ~
of valus mnd tha like. The operaeion of the aconomic laae of eocialiem ~s a
system expreesing the eetireCy of the process of sociali.st reproducelon ia
aleo imparted by ehe unity of the ratioeal ecanomic con~~lex.
Tfie fur~her rise of the level of diviaion of callectivized labor and of the
leval of sectorial and territorial specialization of the econoary complicnted
the gectorial atructure~ increaeed aad deapened production ties and intensi- ;
fied their iarersectorial a~d interregional interacCion. M ob~ective cnn-
sequence of theae processes vas the rising degree of integration of the USSR.
national economy. The integrated character of the socialiat syetem of econ-
oray meane harmonioua combination. internal organic interrelation and inter-
action of a21 ita etructures: social-economic~ sectorial, reproductive,
techeicai-econon~ic~ territorial. Zh~ determination of the de~ree of inteRra-
tion of the development of the system of econaay boile dawn to an evaluation
of the compreh~naiveness of optimization of its etructure. The criterion of
optimality is to be eeen ia its moet general form in the attainment of the
greateat economy of the aggreSate (live ead past) expendituree of ir;~or in
all linke of the process of reproductian and on the entire territory of the
couatry for the production of material acalth and apiritual eervices necea- j
sary to society. ~
Co~eequently the aingle national ecanomic complex of a socialiet ca~ntry is
a lanned economically and soc ia l ly pract ic a
b le orqan iza t i o
n o f s o c i a l i r.
e d ~
P ,
production, distribution, exchange and use of interna l ly orRaa? ica l ly in ter-
active reproductive, sectorial ead territorial composite parte of the coun-
try's economy in the interest of a steady rise of the populatian~s livin~
standard and the all-romd development of each individual. Froaa what Was
said above it follows that the establishment of public amerehip of the c~eans
of productioa is the inain end necessarv coadition of the creation of a sirale ~
national economic complex. It is formed in tbe process of the establishn,ent
and development of socialist production relatiens, the conetruction of a '
material-technical base that is adequate to the objectives aad tasks of a
developed socialist society aad also to the provision of the coa~unity of
social-economic interests of all its natiaas~ classes and strata. Uivision
and cooperation of lab or b ring about growth of ita productivity and economic
effectiveness of aocialised productian. The chief factor in the rise of
economic effectiveness of production of cooperation of labor lies in t~+e
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margin~ of many forcee into one comm4n one and the birth on thie basie of a
"new productiva forcei8 vhich eignificentiy exceede the eimpie machanicei
aum of these forcae. "in all s~ch ~~ee the reeult of combined labor either �
cannot be achiaved at ail by eleRie efforte or iC can be a~hievad aithar in
th~ couree of a much long~r time or on a miniecule scale." A aingie netional
economic eomplex of a eocialiet couerry~ constituting tiha higheee of hiAeorie-
a~ly ~xieting formg of cdop~raCioa of sociallzad labor contribute� to the en-
~urieg of highar efficiency of 8ocialised labor.
tn addition Co general factora charactaristic of cooparation~ the ein~le
national economic complex as i;s epecifically eocialist aeanifesCation Rivee
riee to n~wr factore for raising the efficiency of socialiaed production~ re-
f lecting the special features of socialiet relationa of production~ dietribu-
tion and exchange. These Would includa firet of all the poeeibility end the
nace8eity of ali-round planned orgaaisaeion of ehe functioning of a single
netionai eca?omic complex and aleo the gra+~h of the social and labor activ-
� ity of the populatioa,, collective aud individual intereaC in and reapon83b-
ility f or common resulte~ aocialist as+areneee and dieciplina of labor and
the development of relations of comradely cooperation and competition.
The single naCional ecanomic complex is not a cloaed -in economy. One of
the important characteriatics ef the single national economic cc>mplex of the
U55R and other socialist cauntries ie activation of foreign economic tiee
both With couatries of the socialist system and aith capitaliat countries.
~e deepening of socialist econocnic inte~tration and rationalization of econ-
omic tiea with cap3talist countriea cons~itute one of the important factors
in acceleratian of the rate of the scientific-technical revolution and rise
of the economic effectiveness of the cocestantly developing nationa]. economic
complex of each socialist country.
The scale of the single national-economic comp~ex and its structure~ the nucnber
and scale of regional aad other production complexes composing it depend an
the size of t~e country~s economic potential,, the size of its territory~ the
vealth and diversity of its natural resources, and diversities of the geo-
graphic and social-economic environment. The USSR single national eca~~omic
complex is of great size and is characterized by a multistage hierarci~ical
territorial-production structure. Ita management is an the basis af the pria-
ciple of democratic ceratralism, coa~bining etrict centralizatiou with broad
initiative aad opergtional indapendence of all the ecanoraic-or~anizational
units compriaing this complex for more rational and most repid realization
of the aiais of social-ecoc~omic development of society. A leading role in
this is played by provision of the interesta of the national economic complex
of the country as a vhole. Priority of aims of all of society over the aima
of the elements comprising it is oae of the basic principles of socialiam.
Complicatioa of the iaternal organisational structure of the sinAle natioaal
economic complex increases the urgency of the problem *caintaining the inter-
relation of the parts aad the ahole.
The necessity of the formation of the single national economic complex of the
couatry emerges as aa ob~ective lmr for a socialist atate, inasmuch as the
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economic ba~i~ of thi~ proca~~ is public amerehip of the meane of produc~ion.
~t?e cr~a~ion of a eingle nerional economic complex within the limite of aY?
individual ~ocialiet country constitutea a definite steRe ie collectivizatian
of the economy on the road to the building of a commueist eociaty. All thia
pradetarminee ehe common charactie~c~ of this law for ail countriao of tha
vorld syetem of eOOfaeocialirm~and firstitof aii~theVbaeicrecanomic 11a~?~end
the economic lawe
the la~w of planned, proportiional developmene of the ecanomy. :
AC the ~aa~e Cime, thie procees proceede in each socialiet country under the
influen~e of concrete historical~ eocha~lfe~~omio ofd~~~orialiand~terri orial
which exercise a ma~or influence on t
~str~cture of the economy. 7'he Particular feature of the f ormation of the
U5SR national eca?omic complex was determined by: victory of eocialiem in a
countrv with an av~rage 1 hindrence~o t edestablishment offne~r economicetiee ,
by vars and intervention ~ m
and par~icipation !n international division of tabor not only by the post-
revolutionary ecanomic disiocation but aleo by measuree taken by cspitalist
counCriea for artificial economic ieolation ofo ialistRcountry inethe aorld
aorld, the exieterce of rha USSR as the only s c ;
up to the end of World War II; the tremendous aize of the territorq with ite ~
multinational population occupied by the Soviet atate; sharp diffetcences ir
the levels of social-economic development of the regiona of the country
inherited f rom the prerevolutionary p ast, and othere. Under thege conditiens
rhe national economic complex of the USSR had to be formed eco+nomically inde-
pendent of the capitalist encirclement within a short a period as Poaeible.
All thia predeteYmined the high priority of forced induetrial developreent of
our couatry and the predominance in industry of eectors foY the production of
the ~aeans of production in general~ ircluding for the production of the meane �
of production in particular; the ob~ective of the pracees of expanded repro-
duction to provide itself for the satisf acation of its own needa; the complex ;
territorial structure of the singe8 to economicallyibac~ardXreg onstof the~coun- ~
of financial and material resourc ~
try and their accelerated development.
The characteristics of the national economic complex of the aomntry reflect ,
from the point of view of the sectorial structure of production realization
of ~eneral economic proportions of the national economy; its territorial
structure is formed under the influence of Yegional division of socialized
labor and corresponding distributian of productive forces. The relatively
high and stable norm of production accumulation in the national income of the
~ U5SR, maintenance of aa optimal proportian between accumulaCiozi aad consurnp-
tion and consiatent implementation of aa economic policy aimed at Progreasive
chaAges in the sectorial atructure of socialized production ensured high and
stable rates of growth of the gross social product and the national income
of the country, a rapid rise in the level of its economic development and the
~ realization of a broad social program. The ~wst characteristic proRreesive
changes in the sectorial structure of the ninimaterialnp
oductipaneandi thee
US5R are: growth of the share of industry
relative reduction of the share of agricultural production; rise of the
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r~lative ehare of proceg~ing ~ector~; the sharp ri~e of ~he production of
gectorg of indug~ry i!~ which first of all modern achievemente of eciantific-
technical progreeg are applied (machine building~ chemicel induAtry~ electric
pawer). The production output of machine buildieg has grcx~m et the higheet
rate. Thue with a eeven~eenfold increaee of the total volume of production
of ~nduaer~r in the U55R during 1940-1975~ the production output of machine
building grew 68-fold. The structure of machine buildinp iteelf h~e changed
eignificantly~ eapecially in the laet 15 years--the ehare of instrument makinR
and of computer technology equipment aharply increaeed.
Big chaagea have taken place in the dietribution of eocialised labor amonR
the spherea of human activity. In 1977, aectors of the nonproductive sphere
employed 25.1 percent of the Cotal population employed in the national econ-
- omic complex. whereae in 1950 they employed only 13.6 percent and in 1960--
17 percent.
M extremely imporCant aynthetic indicator sh aairg the rise of the country's
economic development and qualitative progreseive changea in the sectorial
structure of the national economic complex is the grawth of exports in
foreign t~ade turnover. This ia largely connected aith a riee of the ahare
of the proceasing seators in the structure of industry~ the demnnd for the
products of which on the foreign market has been growing faeter than rew
and other materials. This tendency reflecte the general patterns in the rise
of the level of the social-economic development of society. In the USSR, the
gr~th rate of Qxport of goods in the poatwar years significantly exceeded
- the growth rate of the country's national income. 11~ue With a 6.96-fold
grovth of the natio~nal income during 1950-1975, exports of gooda in the eame
period grew fifteenfold, during 1960-1975 the corresponding indicatora were
260 and ti80 percent. Zfie structure of USSR exports hes chenged aignificantly.
Exports of agricultural goods have been sharply reduced and those of manufac-
tured gooda have grawn; the structure of the latter is dominated by products
of the proceasing sectors.
Its territorial s~tructure is of ma~or importance for the analysis and study
of the single natiaaal eccmomic complex. K. Marx characterized territorial
division of labor as ~~~~curing certain sectors of production to certain re-
gions of a country... Like sectorial~ territorial diviaion of labor is a
necessary condition of increasing the economic effectiveneas of socialized
production. Sharp regional differencea in the levels of social-~conomic de-
velopm~nt of prerevolutionary Russia and th~ existence in it of nar.ional out- ~
lying districts with the predominance of feudal relations in them did not
permit the creation of firm economic ties aad the all-round use of the coun-
try's natural resources.
Establishment of the Soviet power brought significant changes in hisCorically
existing ti~es among separate regions of the country: economically based ties
were further developed; in addition to this new economic ties and new rela-
tions arose under the influence of objective laws of the distribution of
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1~'dit nN'F'ICiAI. USl: dNLY
~ociallgt produckion and principi~s of territorial orRanizAtion af ~ocialixrd
production developad on th~ir b agig. General tiealization of the requiremente
of tl~e ~conomic lawa of gocialigm end planned riee of the effectiveneA~ of
the country~e aingle naCional economic compl~x lie at theiY basie. ~or tliese
purposes theYe are carried ouC: raCional territorial diviaien of eocialized
labor amon~ Yepublica and gconomic regions and the cempreheneive development
of their economy; bYinRinR of production closer to seurcco of raw materials
and regions of product congumption;equaliz~tion ef the levels of social-
economic development of the regiona, and othera. 'fhe con~istent planned
puttin~ inCO operation of the socialigt principlee of territorial economic
management ensured the creation of the single national economic complex witli
a practicab le territorial division of socialized labor and advantageously
mutuLily created economic ties.
The single national economic complex e~dsting under the conditions of mature
gocialiam is characterized by a developed ayetgm of territorial proportions
correeponding to acientifically based principles of distribution of produc-
tive forces. In the union rapublics and large economic rayong there have
been created intercannected aectora of the productive and nanproductive
spheres; the sharply grown potential of the republics provided a aiqnificaat
rise in the degree of participation by each of them in the country's overall
potential. At the same time the integration of each republic's economy grew.
In the single national ecanomic complex of the USSR there is eneured the co-
ordinated deve lopment of the economies of the union republics~ and interre-
public economic ties are being comprehenaively improved. Regional economic
complexes conatitute integral component parte of the country's national econ-
omic complex. They operate on the basis of produetion ties~ the besis of
which is national economic specialization of econond c regiona, determininR
their place in all-union division of socialfzed labor. The higher the level
of a region's national economic specialization, the more diveree and cloae
are its production ties with other regions of the country. Specialization
of the regional complex also determines its specific character, distinguish-
ing the given complex from the others. It thus adds a apecial character to
the make-up of the aectors and the production ties of each region.
Tl~e deepening under current conditions of the interconnection of the repub-
lics' economic complexes is expressed in the fact that the results of their
economic artivity are inf luencing increasinRly more directly the attainment
of national plans and goals. This is particularly clearly manifested in the
implementation of comprehensive inCersectorial territorial programe of union
significaace: agroindustrial, fuel-pawer, investment~ machine-building and
others.
Side by side wi,th existing ones, the West-Siberian, Pavlodar-Ekibastuz,
Mangyshlalc, Orenburg, Nizhnekamsk, Yuzhno-Tadzhik~ Dratsko-Ust'-Ilimakiy and
other territorial-production complexes are beinR created and are developing
successfully. Their formation is through the ~oint efforts of all republics
in the interest of all the Soviet people.
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The preeminence of th~ planned gystem of econony is ensured by the combina-
tion of comprehen~ive development of the economy of the republice~ includinF
diver~e mutually complementary sectore~ with the gpecialir.ation of thoae aec-
tore for whose functioning moet favorable conditione exiati in a aiven repub-
lic. n� great importance to Chie are rational uae of an alreadv created
economic potential~ the eatabliahroent of a propar correlation between inten-
giv~ and ~xten~ive factora of the developrrent of re>>ubllce' econoraies ~ and
maintenance of the moet effective intersectorial and territori~l propertionA.
Th~ increaeed interdependence of the economies of the yo~mp, republic as parte
of ~ single economic organiem enhances the role of ea~:h in the solutios? of. the
national economic problem of the economic effectiveness of socialized produc-
tion of the country as a whole~
The contribution of Che repub lice to the development of the all-union national
economic complex ia not determined solely by the ecales of their production.
An important role ia played by the level of each republic's efficiency of
socialized production. Thia increases the importance of developing a method-
ologyfor the valuation of the effectiveness of republic complexea with con-
sideraCion of the satisfaction of both intrarepublic and all-union require-
ments. So far calculationa in thia field have been of an experimental char-
acter~and reporting and plan indicatorg have not been included in Che syatem.
Increased ecanomic effectiveaesa of territorial-production complexes can be
achieved in different ways. M economic effect~ as we know. can be produced
from the grantinE of additional financial and material resourcea. But such a
situation is usually of a temporary character, since it may bting an an
insufficiency of financial and material reeources in other component parte of
the single national economic complex and reduce the general results of an in-
crease in the efficiency of production. Under the conditions of the country~e
national economic complex, individual territorial and secCorial production
can achieve better economic results only through increased economic effec-
tiveness in the use of material resources allocated to each econondc link
with maintenance of reciprocal intersectorial and interterritorial produc-
tion ties.
Ti~e country's national economic complex ie a dynamic system~ the optimality
of whose sectorial and territorial atructures changes with a rise in the
level of social-economic development and a change in the ob~ective conditions
of the procees of reproduction. Thus putting into use of the world~s achieve-
~ents of the scientific-technicul revolution creates new demands on the pro-
gressive sectors of the economy and introduces significant chanqes in the
correlation between the spheres of material and nonmaterial production~ in-
dustry and aqricultural and the processing and extractive aectors. ~lith a
rise in the level of development of productive forces and production rela-
tions, problems of economy and raCional use of natural resourcea, protection
of man's environment tend to require an increasingly more complex approach
and solutian; the development of new uninhabited regions of the country be-
comes economically effective. At the same time, with the rise in the level
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~0lt (~1~rICIAt~ U51: dNLY
o� gocial-economic dev~lopment of gociety un~l a change in the oU~ectiv~ con-
ditinns of production~ the advantagee of gocialism are manifeeted incr~asinR-
ly clearly. putting into effect of Chese c~dvAncageq requiYee a constianC im-
provement of the forms and meChodg of organizetion and operation of the na-
tional economic complex. It ia namely this approach to the development of
the naticm gl economi.c complex of the country that ie attested to by the ex-
perien~e of economic conatruction in the U55R. Thus, taking into account
the rige of the level of the country'a aocial-economic devalopment and the
enery of d~e USCk economy into the stage of developed eocialiam~ the party
and the Rovernment have worked out and are implementing an economic policy
pYOViding f or a transition to a predominantly intenaive type of management
of thp economy and a rise in the economic effectiveness of production and
quality of work at all economic-organizational levels. For these ende, a
broad proRram ia being implemented in the lOth Five-Year Plan to improve tlie
organizational structure of administerinR of the country's national eco~nomy--
the creation of production associations in industry is being completed~
interfarm cooperation and aRroindustrial integration are underRoinR wi~te de-
velopment. general schemea of management in capital conatruction are bein~
developed, and so forth. In this a great deal of attention is bein~ fiiven
to rai~ing the level of sectorial and territorial apecialization of aocialized
production and the r~al~~d8u~liary sectorstand alsohsectors ofttheuproduc-
development of link
tive and social inf rastructure.
An important role in boosting the economic effectiveness of the country's
sin~le national economy complex is played by improvement of its organization
and operation as a system ensuring the interaction of the whole with iThe
parts in economic-organizational, aecCorial and territorial aspecte.
solution of this problem is complicated with the risinR level of complexity `
of the econonry, growth of production ties and acceleration of their change
under the influence of Che scientific-technical ~o~o~~i~�alityninhtt~ecdevel- ,
tion there is complicated the task of ensuring p P
opment of the compoi~eincreases its importyanceninithelsolutioncof~ heeprob- ,
wliich at the same t
lem of efficiency of socialized production.
With a rising level of the country~s social-ecanomic development and chanRinR
conditions of socialized production, t8i economicecomplexcare also underRoin
rial organization of the single nation
change. At the preaent stage, there is required the enauring of a dynamic~
proportional development of the union republic in the single national economic
complex. Further development of the economiea of rept~blics and regions~
intensification of their specialization, expansion of the sectorial structure
~ of their economies and forniation in the republics and regions of territorial-
production complexea complicates the solution of the problem of their coordi-
nation. Of b asic significance to this question are the decisions of the 24th
and 25th CPSU Congresses, which determined ways of iu~rovinq the combination
of sectorial and territorial planning.
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Ttie 25th (~'SU Congre~s poinCed out the negd for increaein~ Che role and r~-
gponaibiliCy of the union repub lics in Che eoluCion of prob leme of production
and social-cultural conatruction. This presumes fuller utilixation by repub-
lics of Che rights granted to them in the managemenC of the econenry and in
increasing Che compreheneiveness of plenning of Che developinent of productive
force~, producCion relatione and the solution of a wide ra~nge of social
p rob lemg . '
Centralized planning manageroenC of Che national economy ensurea Che all-round
economic unity of Che union republics. At the same time, with a developed
socialist society~ all the conditions have been creaCed for the full realiza-
tion of the principles of democratic centraliam in ma~nagement of the national
economy. The powers of the union repub lice and the tasks aesigned to them in
the development of the national economy have been seC forth in the USSR Con-
stitution, where there is indicate d a wide range of rights and dutiea for re-
public organs relating to management o� the economy, coordination and control
of the operation of enterprises and organizatfone of union subordination. Of
ma~or significance in this is improvement of the system of territorial plan-
ning and economic management, enauring a harmonioua combination and conaider-
ation of all-union and republic interests. The planned improvement of divi-
sion of labor between republics and regions occurs on the basis of a consider-
ation of the influence of scientific-technical progress on the development of
productive forces and the utilization of the raw-material resources of the
natural environment.
Further strengChening of relations of mutual asaistance and improvement of
the forros and methods of cooperaticm of socialist nations and nationalities
constitute an important factor of development of the ecanomy of each repub-
lic and improvement of the single national eaonomic complex.
FOOTNOTES
1. K. Marx and F. Engels, "Sochineniya" (Works~~ Vol 3, p 20.
2. Ibidem.
3. Ibidem, Vol 19, p 229.
4. Ibidem, p 217. ~
5. Ibidem~ Vol 1~ p 559.
6. Ibidem~ p 548.
7, Ibidem, Vol 4~ p 447.
S. Ibidem, Vol 23, p 337.
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~
~,o~ o~rr.crnr, usz oN~,v ~
9. Ibidem.
- 10. Ibid~m, p 366.
LIST OF RECOI~R~NDEA LIT~RATURE
1. K. Marx and F. Engels, "German Ydeology" (K. Marx and F. En~els,
"Sochineniya" [Works ] , Vol 3) .
2~ En~els, "5ketches �or a Criticism of Political Fconomy" (Ibidem,
Vol 1) .
3. Engels, "The Development of Socialiam from Utopia to S~ience (Ibidem,
Vol 23) . ;
4. V.I. ~Lenin, "Statie and Revolution (V.I. Lenin, "Polnoye sobraniye sochi-
neniy ( Completg Collection of Works Vol 33) .
5. "Konstitutsiya (Osnovnoy Zakon) Soyuza Sovetskikh Setsialisticlieskikh
Respublik" (Constitution (Fundamental Law) of the Union of Soviet
Socialiat Republics]. PolitizdaC, 1977. ~
6. L.I. Brezhnev, "0 proyekte Konstitutsii (Osnovno~o ?.akona) Soyuza Sovet- ;
skikh 5otsialisticheskikh Resrublik i ito~akh ye~o vaenarodno~o obsuzh-
deniya" (On the Dra�t of the Constitution (Fundamental Law) of the Union
of Soviet Socialist Republics and the Results of ita Nationwide Discus-
sionJ. Yolitizdat, 1977.
7. V.N. Cherkovets, "The USSR Economy--a Single National Ecanomic Complex"
(PRAVDA, 20 October 1978). '
i
COPYRIGHT: Izdatel~stvo "Pravda", "~oprosy ekonomiki", 1979 ~
;
769 7 j
CSO: 1820 ~ �
~
36 .
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