JPRS ID: 9754 USSR REPORT POLITICAL AND SOCIOLOGICAL AFFAIRS

• Document Type: CREST
• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000400050050-7
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 33
• Document Creation Date: November 1, 2016
• Sequence Number: 50
• Content Type: REPORTS

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00854R000440050054-7
FOR OFFICIAL USE ONLY
~
JPRS L/ 10000
21 Se~tember 1981
USSR Re ort
p
ECONOMIC AFFAIRS
(FOUO 13/81)
FB~$ FOREIGN BROADCAST INFORMATION SERVICE
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
NOTE .
JPRS publications contain information prima.rily from foreign
newspapers, periodicals and books, but also from news agency
transmissions and broadcasts. Materials from foreign-language
sources are translated; those from English-language sources
are transcrihed or reprinted, with the original phrasing and
= other characteristics retained.
Headlines, editorial reports, and material enclosed in brackets
are supplied by JPRS. Processing indicators such as [Text]
or [Excerpt] in the first line of each item, or following ~he
last line of a brief, indicate how the original information was
processed. Where no processing indicator is given, the infor-
mation was summarized or =xtracted.
Unfamiliar names rendered phonetically or transliterated are
' enclosed in parentheses. Words or names preceded by a ques-
tion mark and enclosed in parentheses were not clear in the
original but have been supplied as appropriate in context.
Other unattributed parenthetical notes with in the body of an
item originate with the source. Times within items are as
given by source.
The contents of this publication in no way represent the poli-
cies, views or at.titudes of the U.S. Government.
COPYRIGHT LAWS AND REGULATIONS GOVERNING OWNERSHIP OF
MATERIALS REPRODUCED HEREIN REQUIRE THAT DISSEMINATION
OF THIS PUBLICATION BE RESTRICTED FOR OFFICIAL USE ONLY.
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2447/02109: CIA-RDP82-00850R000400454450-7
JPRS Z/10000
21 September 1981
USSR REPORT
ECONOMIC AFFAIRS
(FOUO 13/81)
CONTENTS
ECONOMIC POLICY, ORGANIZATION AND MANAGEMENT
Problems in Elimination of Distinctions Between Town,
Country Discussed
(P. Savchenko; VOPROSY EKONOMIKI, Jun 81) l.
Kronrod Examines Management, Tncentives Mechanism
(Ya. Kronrod; VOPROSY EKONOMIKI, Jun 81) 13
REGIONAL DEVELOPMENT
- Review of Book on Regional Planning
(V. Pavlenko, 0. Nekrasov; VOPROSY EKONOMIKI, Jun 81) 26
- a - [III - USSR - 3 FOUO]
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02109: CIA-RDP82-00850R040400050050-7
f'OR OFFICIAL USE ONLY
ECONOMSC POLICY, ORGANIZATION AND MANAGL'1~fENT
PROBI.F.~�S IN ELIMINATION C~F DISTINCTIONS BETWEEN TOWN, COUNTRY DISCUSSED
Moscow VOPROSY EKONOMIKI in &ussian No 6, Jun 81 pp 69-79
- /Article by P._Savchenko: "Clvercoming Social and Economic Distinctions Between
Town, Country"/
/Text/ New social and economic pxerequisites for overcoming the essential distinc-
_ tions between town and country are created in the developed socialist society.
The establishment of the material and technical }~~ase of communism, approximation
and merging of the two forms of public property--�kolkhoz-cooperative and national-1
abolition of the re.nainders of the old division of labor between town and country,
transformation af agrarian labor into a variety of industrial labor, change in the
form of wage organization for kolkhuz members a.nd application of the social security
system established for workers and employees to them are the economic foundations
for avercoming these dist3iictions. Overcoming the essential distinctions between
town and country is connected with the development of the social homogeneity of
society and is one of the specif ic forms of manifestation of this process. "Eval-
uating the experience in.the development of our society in the last few decades,"
said L. I. Brezhnev in the accountability report at the 26th CPSU Congress, "I be-
lieve that it can be assumed that the format~.on of a classless structure of society
will occur mainly within the historical�framework of mature socialism."
T'he rural area develops in the general system of social and economic relations,
- primarily production relations, and, ultimately, the ways of changing it are de-
termined by the operation of objective econ:omic laws. The labor of rural resi-
dG:~ts is connected predominantly with land as the basic means of production in
agriculture.
GradLa.lly overcoming the essential dist~.nctions between town and country presup-.
pc~e:,� au Pxpansion. of. the country's social and economic functioils and the develop-
ment of. i.ndustry, the nonproduction sphere and domestic ~ervices in it. "Basic
Directions in the Ecrniomic and Social Development of the USSR.for 1981-1985 and
_ for the Period Until 199U" stress the need for the further development on kolkhozes
and sovkhozes of subsidiary industrial production facilities and cottage indus-
tries for the processing of agricultural products, for the production of building
materials and for the output of consumer goods. As agriculturaZ production is
transferred to a~ industrial basis, as agrarian labor is transformed into a vari-
ety of industrial laboz ancl as nonagricultural sectors are developed, the remain-
ders of the old division of labar between town and country, when the country re-
mained only the sphere of application of agrarian labor and the town, of industrial
- labor and of the concentration of institutions of the nonproduction sphere and do-
mestic services, are overcome. The expansion of the sphere of application of labor
1
FOR OFFtCIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000400050050-7
~ FOR OFF[CIAL USE ONLY
in the country and the combination of agrarian labor with other types of labor
- stren~then the social and economic relations between town and country and bring
the level and way of life in them closer together. The liquidation of the remair_-
derG of the old division of labor bPtween town and country is one of the most im-
portant conditions for overcoming the essential distinctions between them and for
advancing society toward a full social homogeneity and communist equality.
The reproduction of the remainder5 of the old division of labor is due primarily
~to the essential distinctions between agrarian and industrial labor--distinctions
in the level of its socialization, in the specialization and concentration of pro-
duction and so forth. As the essential (social and economic) distinctions between
town and country are over.~~me, agrarian relations will. determine the specific na-
ture of the country as a socia'l and economic body systematically developing with-
in the framework of a single national economic complex. At the same time, the
= transfer of agricultural production to an industrial basis, considerable strengthen-
ing of it~ material and technical base and overall mechanization of labor intensive
work are of decisive importance.
The overall mechanization of sugar beet, flax and cotton production, of the appli-
_ cation of organic and mineral fertilizers to soil and of the use of plant protec-
tion agents is to bs completed during the llth Five-Year Plan. The level of inech-
anization of the harvesting of all crops, in particular cabbage and tea, will rise
and, what is especially important, mechanization on ~.ivestock breeding farms wi11
, be improved.
' Mechanization of Work 3n Plant Growing and Animal Husbandry
(in % of the total volume r,f work)
1965 1970 1975 1979
Sugar beet combine harvesting 67 78 86 90
Potato combine harvesting 11 24 42 43
Mechanized cotton harvesting 22 32 43 53
Overall mechanization of work:
on large-horned cattle farms 9 25 39
on hog farms 23 56 61
on poultry farms 23 59 69
The conclusion of overall mechanization is an important stage in the transfer of
agricultural production to an industrial basis. This transfer is a complex, long
process presupposing profound structural changes in the capital investments of the
country's agrarian and industrial complex, qualitative changes in equipment and
technology and in the specialization and concentration of production and the train-
ing of new types of personnel. In the system of the USSR Administration of the
Poultry Breeding Industry 81 percent of the output was produced in enterprises with
industrial technology in 1980 and, basically, this process is to be completed in
1985. As a result of the introduction of industrial technology the expenditures
of labor and fodder per unit of output were lowered sharply there and production
costs were reduced. At the enterprises of the Administration of the Poultry Breed�-
ing Industry from 1965 through 1979 the expenditures of labor on the product~ion of
= 1,000 eggs were reduced by a factor of 5.3. In 1979 the expenditures of labor on
nonspecialized sovkhozes were 4.2 times and on kolkhoz poultry farms 7 times higher
than at the enterprises of the Administration of the Poultry Breeding Industry.
2
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONLY
I'or a more profound investigation of the social and economic essence of the process
of bringing town and country closer together we will show the industrialization of
agriculture under capiralism. Under the conditions of modern capitalism the village
ceases to be only the sghere of application of agricultural labor--industry and
sectr~rs of the nonproduGtion sphere anrl of domestic services develop in it. Pro-
found changes in the -rillage's technical and economic base, industrialization of
rural regions and modernization and diversification by moving some industrial sec-
tors and service.spheres to rural regions occur under the effect of the scientific
and technical revolution. The process of overall mechanization of cultivation of
- labor intensive crops is being Completed in the farming of a number of countries.
Along witti the introduction of maximum- and average-capacity machines the use of
small-size equipment (of the orchard and garden type) is increasing. The rise in
the 1eve1 of the technical structure of capital in the agriculture of developed
capitali~t countries leads to a reduction in the total number of those employed in
i.t. In 1979 "one farmer in the United States fed 59, in :lestern Europe, 19.2 and
in Japan, 13.7 people."2
Under the effect of scientific and technical progress under capitalism profound
chanp;es occur in the productive forces of agriculture, the sphere of application
of labor and capital expands, but, at the same time, the antagonistic social and
economic contradictions between town and country are not abolished.
Within the framework of the agroindustrial complex the biggest monopolistic cor-
porations concentrate in their hands the production of agricultural equipment,
mineral fertilizers and chemical plant protection agents, as well as the market-
ing and processing of agricultural products. For example, in the United States
four conglomerates--Kellogg, General Mills, General Foods and Quaker Oats--supply
91 percent of the grain to the U.S. market, three conglomerateS--Borden, National
Dairy an3 Carnation--control 60 to 70 percent of the marketing of dairy products
and Campbell produces 90 percent of the soup concentrates. Monopolies buy up ag-
ric~.~ltural produce at low monopoly prices and sell industrial goods at high mon-
opoly prices. For example, from 1945 through 1971 the prices of goods bou~ht~by
U.S. farmers increased by 98.3 percent and of goods sold by them, only by 38.3
percent. In the last 30 years the number of American farms was reduced by 60
percent.
Tt~e state pursues an active policy for the purpose of preventing agrarian crises
or boosting procluction. In various capitalist countries in case of need large
funds are allocated for anticrisis measures and for the implementation of ~a pol-
icy of agrarian protectionism in the interests of big capitalist farms. Accord-
i~g to the data of R. Bergland, former U.S. secretary of agriculture, 6 percent
o� ti~e country's big farms now control. t~he bulk of the f
ood production and 2 per-
cent of the giant farms produce more than one-third of all the foodstuffs.
Thus, the capitalist form of socialization prepares the technical and economic
prerequisites for the abolition of the old forms of social division of labor bet-
ween town and country and for the industrialization of agriculture, but does not
abolish the economic basis--the private ownership of ineans of production repro-
ducin.g the contrast between town and country. "Tlie contrast between town and
co~.mtry," noted K. Marx, "can exist only within the framework of private proper-
tv,"3 Socialism puts an end to this contrast.4
3
FOR OFFI~[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2407/42/09: CIA-RDP82-40850R000400450050-7
FOR OFFICIAL USE ONLY
The approximation of the two forms of public property is of great importance in
- the developed socialist society. 'I'he kolkhoz-cooperative property has a signifi-
cant effect on the economic situation of rural areas and on their specific nature
in the single national economic complex. Therefore, its integration with state
(natiunal) property is a factor in overcoming the social and economic distinctions
between town and country. At the same time, it retains an important role in the
social and economic development of rur~.l areas at the pres~nt stage. In 1979 the
share of kolkhozes in all the capital investments in agriculture comprised 32.1
percent and in the production of agricultural commodity output, 42 percent.
The kolkhoz-cooperative property determines the fact that to a significant extent
the surplus product of farms is not socialized to the same degree as the surplus
product of state agricultural enterprises, which limits the possibilities of its
utilization according to a single plan on the scale of society or the kolkhoz-co-
operative sector. Certain differences between kolkhozes and state agricultural
enterprises also remain in Che level of socialization of the necessary product.
In the combined budget of the family of a kolkhoz member the income obtained on
the kolkhoz, wages of family members, pensions, stipends, grants and other pay-
ments and privileges from social consumption funds (including free education,
treatment and so forth) comprise 71.5 percent and in the combined income of the
_ family of a worker, 97.4 percent.
Gross income is one of the basic indicators of the economic development of kol-
- khozes. The accumulation and consumption funds of kolkhozes are formed from it.
- As a result of th~ impl~mentation of the agrarian policy of the CPSU outlined by
the March (1965) Plenum of the CPSU Central Committee a big step was taken in the
creat.ion of the basis for the economic and social development of kolkhozes. tn
1979 as compared with 1965 the gross income of kolkhozes (in the comparable range)
increased from 15.7 to 22 billion rubles.
It should be note~ that the social and economic development of rural areas also
presupposes the solution of such a complex problem as overcoming the distinctions
between advanced and lagging farms. According to the data of the USSR Central
Statistical Administration, in 1979 27 percent of the country's kolkhozes obtained
up to 10,000 rubles of gross i.ncome per 100 hectares of arable l~.nd, whereas 24
percent of the country's kolkhozes, more than 40,OOO,rubles. Improvement in the
planning of state purchases envisaged by the decree of the CPSU Central Committee
and the USSR Council of Ministers On Improving Planning and Economic Stimulation
of the Production and Procurement of Agricultural Products" (14 November 1980)
will greatly contriUute to the solution of this problem.
The increas~ng r~le of national property is manifested in the rise in the role of
- sovkhozes ar_d other state agricultural enterprises in the production of gross and
commodity output. During the period from 1965 through 1979 the number of kolkhozes
decreased from 36,300 to 26,000. The average annual number of all kolkhoz members
decreased from I8.6 million to 13.7 million people. During that period the num-
ber of sovkhozes increased from 11,700 to 20,800 and the average annual number of
workers engaged in all the economic sectors of sovkhozes increased from 8.2 mil-
lion to 11.5 million people. Tae role of sovk.hozes increases in connection with
the implementation of a system of ineasures for an improvement in planning and
economic stimulation of the production and procurement of agricultural products
FOR OFFIC[AL USC ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
. . FOR OFFICIAI. USE ONLY
and strengthening of cost accounting. Al1 theae measures are directed toward an
increase in the profitability of agricultural production and improvement in the
financial and economic state of sovkhozes.
During the period under consideration the proportion of sovkhozes and other state
farms in the production of agricultural commodity eutput increased from 36 to 46
percent. The rise in the role of sovkhozes and other state agricultural enter-
prises leads to an expansion of the d3rect participation of state (national) re-
sources fn the liquidation of the remainders of the old division of labor between
town and country, in the industrialization of agriculture and tn the leveling out
of the conditions of management.
In 10 years--from 1965 through 1975--the pro~ortion of those employed in manual ~
labor was reduced from 75.6 to 56.4 percent. True, in plant growing this reduc-
tion was small--from 77.2 to 73.4 percent--whiZe in animal husbandry, although the
proportion of simple manual labor not at machines and mechanisms d~creased consid-
erably,the proportion of manual labor at machines and mechanisms increased signif-
_ icantly. This reflects the nonoverall nature of inechanization carried out in ani-
mal husbandry accompanied by an increase in manual, including unskilled, labor,
which limits the possibilities for enhancing its meaningfulness. As before, agri-
culture remains the most labor intensive sector of the national econ~my. Under
these conditions an accelerated transition from partial to overall mechanization
on the basis of the development of concentration and specialization acquires spe-
cial importance in overcoming the distinctions between agrarian and industrial
sec tors.
Such new forms of socialization of production as interfarm cooperative and inter-
farm cooperative-state enterprises acquire special importa~ce in overcoming the
social and economic distinctions l~etween town and country. In 1978 of the total
number ~f participants in the established interfarm enterprises (without construc-
tion enterprxses) kolkhozes accounted for 79.5 percent, sovkhozes, for 18.8 percent
and other enterprises, for 1.7 percent. The amount of contributions of inember
_ farms was 3.67 billion rubles, of which 85.6 percent was the share of kolkhozes,
11.5 percent, of sovkhozes and 2.9 percent, of other e~terprises.~ During the
period from 1975 through 1979 the fixed capital of interfarm enterprises (includ-
ing co~~struction enterprises) increased from 8,110.9 million to 14,865.2 million
rubles, the average number of workers engaged in the agriculture of interfarm en-
terprises, frc,:n 150,500 to 286,200 and tt�e average annual number of workers engaged
in construction and installation work, from 511,900 to 517,100.
T'ne development of interfarm cooperative enterprises has a significant effect on
soci.~;_ arid e.conom.ic relations fn agriculture, because interkolkhoz ownership of
reans a~ production and a new intraclass social group are created at the base.of
these enterprises. ln their social status the workers of interfarm cooperative
enterprises hardly differ from the workers of s~tate agricultural enterprises.
Their wages, social insurance and social security are provided in accorc~ance with
the standard statute established by the USSR State Committee for Labor and Social
Problems for the worlcers of sovkhozes and other state agricultural enterprises.
Tnterfarm cooperative enterprises play an important role in the acceleration of
th~~ transfer of agricultural production to an industrial basis, in the increase
in the specialization and concentration of production and in the socialization of
5
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONL.Y
the necessary and surplus product in the kolkhoz-cooperative sectmr, unhich accel-
erates the process of overcoming the social and economic distinctions between town
and country. The amount of the capital investments of kolkhozes in ~nterfarm co-
operative enterprises and organizations was 8.9 million rubles in 1960 and 382.8
million rubles in 1978, that is, it izicreased ~3-f~~d. The total property of the
participants in thPSe formations increases more rapidly than t~e prbperty of~indi-
vidual farms.
Interfarm enterprises and production assoc~.ations based on two for~s of property--
kolkhoz-cooperative and state (national)--operate in agriculture along with inter-
farm cooperative enterprises. In 1978 the proportion of mixed enterprises made up
~ 58.3 percent of the total number of interfar-m enterprises and arganizations (with-
out construction enterpri5es).8 Econo,nic practice gave rise to various forms of
joint f~~nctioning of kolkhoz-cooperative and n,~tional property, that is, kolkhoz-
sovkhoz formations, agroindustrial enterprises and association~ and territorial--
. rayon, oblast and other--production associations.
As the productive forces of rural areas develop a~nd as social relations improve,
at the present stage there is an acceleration in t~~e process of socialization of
socialist production and labor. Kolkhoz~cooperative property approximates nation-
al property and, basically, the essential difFerence.s between them are overcome in
the developed socialist society. The drawing togetd~~e~ of classes and social
groups of workers with respect to means af production, the nature and content of
labor and the level of well-being is ensured on this bas~.s.
As agricultural production is industrialized, profournd ct~anges take place in the
way of life of the rural population. The features of industrial labor intensify
in agrarian labor. In rural areas there is an ever greater number of machine op-
erators and other workers connected with the latest equipment. In the 1970's the
number of kolkhoz members with secondary and higher (camplete and incomplete) edu-
~ cation increased from 39 to 60 percer.t. The social and economic development of
rural areas is characterized by changes in the social standards, social and psycho-
logical aims and requirements of the rural populat~on pTaced on the conditions of
work, life, rest and travel and on the use of free time.
Bringing the standards of living of the uxban and '.rural population closer together
has an ever greater effect on the further advance of agricultural production and
increase in its efficiency. On the basis of qualitative shifts in the approxima-
tion of the two forms of socia~ist ownership of ineans of production and of the de-
velopment of interfarm organizations changes occur in the social structure of so-
ciety and its social tiomogeneity grows~ fih~ socialist st�te implements a system-
atic policy of bringing the levels of ir~come of the urban and rural population, the
working class and the peasantry closer *ogether. For example, whereas in 1565 the
real per-capita income of the popu~ation in the families of kolkhoz members com-
prised 75 percent of the real income of workers and employees, in 1979 it reached
89 percent and became almost the same as in the familie~ of sovkhoz workers.
The equalizati~n of the levels of ~ncome of the urban and rural population is de-
termined primarily by the eq~aiization of ehe level of its wages. PracCice shows
that the stage of mature sve3.alfsm is characterized by an acceleration of the
6
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
. HOR OFFICIAL USE ONLY
process of bringing the wages of agricultural workers closer.to the wage level in
industry ar.d other national economic sectors. In 1965 the average monthly.wages
of kolkhoz members comprised 69 percent of the average monthly wages of sovkhoz
workers and in 1979, almost 78 percen.t. This is the result of the higher rates of
incrPase in wages on kolkhozes, which increased 2.2-fold during the indicated pe-
riod;9 whereas the average wages on sovkhozes, 1.9-fold. The wagas of kolkhoz mem-
bers and of workers and employees are brought closer together. In 1965 the aver-
age monthly wages of a kolkhoz member comprised 54 percent of the average wages of
workers and employees and in 19~30, 70 percent. During the lOth Five Year Plan the
wages of kolkhoz members increased at outstripping rates. This tendency will also
remain in the future. For example, in 1981-1985 the income of kolkhoz members
from the public economy will increase by 20 to 22 percent and the average menthly
wages of workers and employees, by 13 to 16 percent.
However, it should be noted that the development of the indicated process requires
a further improvement in distribution relations. Th3.s is connected with a number
of circumstances, that is, with the different level of wages of kolkhoz members
and sovkhoz workers by occupations and with the difference in the work time spent
in the public economy by sovkhoz workers and kolkhoz members. Therefore, the at-
tainM~nt of a.great unity of employmEnt of workers in the public economy ~f.kol-
khozes and sovkhozes is one of the directions in the equalization of the wage lev-
' els of kolkhoz members and sovkhoz workers. If the norms of labor are the same,
the wage rates of kolkhoz members will actually become the same as those of sov-
khoz workers. .
While the wage level of kolkhoz members is relatively high throughout the country,
a signif icant differentiation of their ievels depending on the income of kolkhozes
remains. Among other things, this is explained by the fact that in .the state sec-
tor wage differentiation is regulated in a centrallzed tnanner (in particular,
through an increase in minimum wages). Such a mechanisr~ is absent on kolkhozes.
As a result, with the same labor expenditures the wage level remains diffprent.
It seems that economists proposing the establishment in the kolkhoz sector of a
certain wage minimum for kolkhoz members common for the entire country, which
~~rould be increased as the mini~um in the state sector is increased and as the in-
come of kolkhozes grows, are right,l0
Social consumption funds play an important role in bringing the levels of income
of the urban an4 rural population closer together. The latter are of decisive
importance in meeting the personal needs of kolkhoz members for education, medi-
caI services.and sociaZ security. A number of important measures directed toward
a ful.ler provision of kolkhoz members with benefits distributed through social ~
_ c.onsumption funds were implemented during 1961-1980. A law, according to which a
unified system of pension and social security for kolkhoz members was introduced,
~oas adopted in 1964. A centralized social security fund for kolkhoz members formed.
from the funds of kolkhozes and the state was established. In 1968 the procedure
of establishment of the pension age of workers and employees was also extended to
kolkhoz members. A unified procedure of calculation of pensions for.workers, em-
ployees and kolkhoz members was introduced at the beginning of the Ninth Five-
Year Plan. Measures for social insurance for kolkhoz members were implemented
(temporary disability allowances were introduced). The proposal of the Union
Kol'~choz Council on increasing during the llth Five-Year Plan the minimum amount
7
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONLY
of t;he old-age pension for kolkhoz members to 4U rubles per r~onth ~with ~ simultane-
ous increase in the minimum amounts of disability pensions and ii,? case of loss of
the breadwinner was adopted. The mi.nimum length of the paid 1ea~e estab3_i.shed for
workers and employees is to be determined during the current f~~e-year pl~n.
~
The concentration of the bulk of social consumption funds in the hanc~-s af the state
_ is needed for the creation of conditions for meeting the immedi~ate pers~onal needs
of kolkhoz members. Payments to kolkhoa members from social c~arnsua~~ion futids
play a decisive role in meeting~the needs of their fami~ies ~or educ~tion and pub-
lic health. All this contributes to an increase in the proportion of income from
social consumption funds in the combined income of the kolkhoz family. It reached
19.3 percent in 1979 as compared to 14.6 percent in 1965. 3t s~gnificantly ap-
proached the proportion of the income from social consumpti~n fua~d~s in the co~-
bined income of the family of an industrial worker, whicY~ ce~mpr~.sed 23.1 percent
in 1979. The development of the social consumption ~unds of knikhozes as a form
of national consumption funds is manifested in the inte,gxat3.on of national and
kolkhoz consumption funds and in the gradual forma.~ion af uenifi~d social consump-
tion funds of town and country.
Systematically overcoma.ng the essential d3stincti~a~s lbet'w~e~ town and country pre-
supposes bringing their cultural and domestic conditions ~loser together. In many
rural regions there is now a shortage of well-planned '~ousing, cultural and dom-
estic institutions and good roads. All this cg~~ates ~ertain difficulties in the
formation of stable labor collectives, which lead~ t~o g~eat losses. There are also
essential dist3nctions in the absolute and relative uS~ of social consumption funds
in a number of directions, that is, in the provisabn urith children's preschool in- .
stitutions (in rural areas it is one-third of that in urban areas), in the use of
housing benefits and in the lack of satisfactiom of rural workers with rest homes,
- sanatoriums and so forih. The amount of social consumption funds per member of a
kolkhoz family is two-thirds of that of a warker and employee.ll
The adoption on 19 July 1978 of the decree of the CPSU Central Committee and the
USSR Council of Ministers "On the Further Development of the Construction of Indi- ~
vidual Dwelling Houses and the Retention of Personnel in Rural Areas" is one of
the measures for an improvement in the housing and domestic conditions in rural
areas. This decree establishes preferential ~onditions for granting credit to new-
lyweds and young specialists an3 on farms with an acute shortage of manpower also
to workers in mass occupations transferred to work on these farms. Credit is
granted at an annual interest rate of 0.5 percent with liquidation in 20 years.
At the~same Cime, one-half of the amount of credit is liquidated by sovkhozes and
other enterprises.
The capital investments al7.ocated for the development of the nonproduction sphere
of rural areas increase in the developed socialist society. After 1965 the capital
investment~ of the state and l.colkhozes in projec.ts for nanproduction purposes to-
taled more than 40 billion rubles, or three-fourths of the investments in the so-
cial sphere of rural areas throughout the history of the Soviet state.l2 "Basic
Directions in the Economic and Social Development of the USSR for 1981-].985 and
f or the Period Until 1990" pay special attention to this.13
8
FOR OFFICtAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2447/02/09: CIA-RDP82-00850R000400454450-7
FOR OFFICIAL USE ONLY ~
= Consumer cooperatives,14 which service approximately 45 percent of the cauntr~'s
population, including more than 90 percent of the rural population, are of great
importance in gradually overcoming the social and economic distinctions between
t~,,m and country. The multisectorial activity of consumer cooperatives expands
- the sphere of economic activity of the country and its economic relations with the
town. As public organizations consumer cooperatives, which unite more than 60 mil-
lion members in their ranks, being schools of management in ruxal areas, occupy an
important place in the political system of developed socialism and play a big role
in the development of such important sectors of vital activity in rural areas as
r;~de, public dining and the procurement of agricultural products and.of a number
of .i~~dustrial sectors. Trade is the key sector of consumer cooperatives. Rural
' areas account for about 70 percent of the cooperative trade turnover. Under so-
cialism the rates of retail trade grow more rapidly in rural =han in urban areas.
Howzver, the gap in the level of turnover per urban and rural resident is not re-
ciuced. In 1965 it totaled 438 ri:blss, in 1970, 540 rubles and in 1979, 679 rubles.
All this indicates that essenti~.l distinctions in the satisfaction of effective de-
mand hetween town and country remain.
In the devel~ped socialist society the role of consumer cooperatives intensifies.
Basic Directinns in Economic and Social Development note the following: "To maxi-
mally promote the further development of consumer cooperatives and increase in their ~
economic initiative and act3vity in improving trade services and public dining in
rural areas and augmenting raw material and food resources. To increase the pro-
duction of. the goods necessary for the population at the enterpri5es of consumer
cooperatives as a result of. a more efficient utilization of local supplies and raw
materials, fattening of livestock and poultry and breeding an3 catching of fish in
internal reservoirs. To more actively carry out work on the purchase of agricul-
tural products from the population and kolkhozes, to expand the trade in these prod-
ucts in cities and industrial centers and to more fully utilize the possibilities
f or zncreasing the procurement of honey and wild grow~ng fruits, berries, mushrooms,
nuts and medicinal plants."
- The private subsidiary plots of kolkhoz members, workers and employees occupy a
special place among the problems of overcoming the social and economic distinctions
between town and country. The integration of this small form of the economy with
puhl~c production is now being intensified. The decree of t'he CPSU Central Commit-
tee and the USSR Council of Ministers "On Additional Measures To Increase the Pro-
ducrion of Agr-I.cultural Products on the Private Subsidiary Plots of Citizens"
stresses that "it is important to create everywhere a social climate in which kol-
khoz members, workers, employees and other citizens would feel that, by breeding
livestock and poultry on private subsidiary plots and engaging in gardening and
horticulture, they perform useful State work." ~
When examining the economic role of the private subsidiary sector in the develop-
ment of rural areas, it is necessary to take into consideratioi~ its dual nature.
On the one hand, the private subsidiary sector is a component of the national e-
conomy and, on the oth~r, in its economic nature it does not express the fundamen-
tal re.lations of socialism. Under the conditions of the incomplete integration
of the public and private sector Iabor expended in the subsidiary sector is not di-
r.ec*_lq p~iblic and tl7e product~ produced in it, the object of state planning. A
- signiFicant part of the oueput is consumed within this economy. With respect to
9
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAI. USE ONLY
the labor expended i.z the public sector of kolkhozes or sovkhozes this labor is
separat~ and not socialized. Labor is regulated indi,rectly, by the establishment
of specific sizes of priva:.~ plots of land and the maximum norms of the livestock
population, as well as by the obligation of all kolkhoz m~.mbers and sovkhoz workers
and employees to w~rk in the public sector. With respect to the part of output of
the private subsidiary plots of kolkhoz members, workers and employees received at
the kolkhoz market, it is exchanged for money and is subject to an indirect cost
accounting, that is, it acquires public significance at the ma.rket during its sale
at relatively freely formed prices. The contradiction between the hidden public
nature o� labor in the private subsidiary sector and its nonsocialized form is re-
solved here.
In its economic nature the private subsidiary plot is an accompanying nonsoci~lized
form of the economry at a large socialist enterprise. The relations between the
private subsidiary plot and tha socialist enterprise and society are based on the
consideration of mutual interests. The private subsidiary plot appears as the
sphere of application of the additional labor of assor.iated producers. In accord-
- ance with the new model charter the kolkhoz board can help kolkhoz families in the
cultivation of private plots, in the acquisition of livestock and in its provision
with f odder and pastures, provide agro- and zootechnical services and so forth.
As the private subsidiary sector cooperates with the public sector, the nature of
labor in it changes. Production is more and more carried out according to the gen- ~
eral enterprise plan. Labor and product become the objects of planned regulation.
Farms allocate the necessary means of production for the mechanization o� labor in-
tensive processes on private subsidiary plots. For this purpose, according to the
= decree o.f the CPSU Central Couunittee and the USSR Council of Ministers "On Addi-
- tional Measures To Increase the Production of Agricultural Products on the Private
Subsidiary Plots of Citizens, leasing centers w311 be established in rural areas.
An improvement in the technical servicing of the private subsidiary plots of kol-
- khoz members, workcrs and employees presupposes an increase in ~the production of
small-scale mechanization equipment and the appropriate set of orchard and garden
implements.
The private subsidiary sector c~ntributes to an increase in the production.of ag-
ricultural products and to a bettex use of labor resources, especially the labor of
women and pensioners, in rural areas. It is a certain additional source of income
of kolkhoz members, wor.kers and employees. In 1979 the income from the private.
subsidiary sector comprised 26.9 percent in the combined income of families of. kol-
- khoz members and 0.8 percent in the combined income of families of workers. In the
- future the private subsidi~.iy sector will gradually lose its significance in the
formation of the country~~ .fo~d resources and in the equalization of the income of
town and country. It will be transformed into a form of housekeeping, into amateur
work, into a sphere of physical activities and so forth.
Thus, in ttie developed socia2ist society new social and economic prerequisites are
created for overcoming the essential distinctions between town and country, be-
cause, basically, such important problems as the transfer of agriculture to an in-

, dustrial basis and the tran:Eormation of agrarian labor into a variety of industrial
labor will be solved at this stage of construction of communism. Profound changes
_ will take place in the social structure of rural areas and the difference in the
10
FOR OFFICIAL USE ONLY
~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-04850R000400050054-7
FOR OFFICIAL USE ONLY
socl.al status of the worker and the peasant will be abolished. However, as L. I.
Brezhne~r said in thP accountability report at the 26th CPSU Congress, "a great deal
of effort, time and money is still needed to improve the cultural-domestic living
. condttions in rural areas and to overcome the essential. distinctions between town
and country." The approximation of the two torms of socialist property and the de-
- velopment of interfarm organizations, in which kolkhozes and state enterprises part-
icipate, have a great effect on the solution of this problem. The changes in the
forms of labor and wage organization of kolkhoz members and the application of the
social security system established for workers and employees to them are also of
great importance.
(lvercoming the social and economic distj.nctions between town and country presup-
poses a study of the specific nature of the present stage in the development of ru-
ra1 areas, which, on the one hand, lies in the need for an overall, interconnected
transformation of the most important working and living conditions of the rural
population and, on the other, in the need for the attainment qf a qualitative
chan�e in these conditions, which in the most important social characteristics are
gradually equalized with the working and living conditions of the urban.population.
When working out programs for the social and economic development of rural areas
and incurring capital expenses, it is advisable to take into consideration the in-
creasing role of social factors. From the point of view of ttee practical realiza-~
tion o{ this principle under present conditions singling out the social and ecor.-
omic measures directly connected with the expanding processes of industrialization,
~ specialization and concentration of agricultural production and of agrarian and in-
dustrial cooperation is of the greatest importance. This will make it possible to
solve a number of social problems of rural areas with S~.iie~ expenditures and in
some cases without the allocation of special investments for these purposes.
FOOTNOTES
i. It. is a question of the development of the town as an industrial center and of
the country, only as the sphere of application of agricultural labor.
2. "Lkonomicheskoye Polozheniye Kapitalisticheskikh i Razvivayushchikhsya Stram"
/The Bcono~ni.c Situation of Capitalist and Developing Countries/, ~zdatel'stvo
Pravda, .lG~;), p b9.
3. K. Marx and F. Engels, "Soch." /Works/, Vol 3, p 50.
4. At t~ie stage ~.~hen, basically, the socialist society was built, the socialist
system of production began to exercise complete sway both in town and in coun-
try. For example, whereas in 1928 the proportion of the socialist economy in'
_ gross output comprised 3.3 percent, in 1937 it comprised 98.5 percent.
5. Without taking i.nto consideration sovkhoz workers engaged in the repair of ag-
ricultural equipment.
6. In 1978 interfarm enterprises (without construction enterprises) accounted for
- only 2.3 percent of the productive fixed capital for agricultural purposes,
11.8 percent of the productive fixed capital for nonagricultural purposes and
2 percent of the average number of workers on the strength.
il
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-04850R000400050054-7
FOR OFFICIAL USE ONLY
7. See VOPROSY EKONOMIKI No 11, 1980 pp 29-30.
8. See VOPROSY EKONOMIKI No 11, 1980 p 33.
9. The further development of kolkhoz production, transition to guaranteed mone-
tary wages and application of the social security system established for wor-
- k.~rs and employees to kolkhoz members contributed to this.
10. See V. F. Mayer, "Uroven' Zhizni.Naselen~ya SSSR" /The Standard of Living of
the USSR Population/, Izdatel'stvo Mysl', 1977, p 216.
, 11. See A. A. Kostin, "Rost Narodnogo Blagosostoyaniya--Glavnaya Zabota Partii"
/Rise in the People's Well-Being Is the Main Concern of the Part~/, Izdatal'-
stvo Ekonomika, 1977, p 48. .
12. See VOPROSY EKONOMIKI No 1, 1980, p 78.
- 13. "To carry out at outstripping rates the construction of well-planned dwelling
houses..., children's preschool institutions, clubs and other pro~ects.for ,
cultural-domestic purposes in rural areas. To increase the capital investments
for these purposes by 39 percent. To increase the provision of rural settle-
ments with centralized heat and gas supply, water supply and sewer systems. To
expand the scale of construction of intrafarm hard-surface roads."
14. As of 1 January 1980 the value of all the capital of consumer cooperati'ves
totaled 17.310 billion rubles, including fixed capital, among it the regula-
tion fund of the Central Union of Consumer Cooperatives, 14.229 billion rubles,
special funds, 2.336 billion rubles and the share fund, 747 million rubles.
As an economic system consumer cooperatives form part of the single national
economic complex. They carry out about 30 percent of the country's retail
_ trade turnover, 40 to 60 percent of the procurement of more than 60 important
- types of agricultural products and raw materials and the production of consum-
er goods worth about 6 billion rubles and make capital investments amounting
zo 1 billion ruUles.
COPYRIGHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1981
11,439
CSO: 1820/234 ~
- 12
F'OR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007142/09: CIA-RDP82-40854R040400050050-7
FOR OFFICIAL USE ONLY
ECONOMIC POLICY, ORGANIZATION AND MANAGEMENT
KRONROD EXAMINES MANAGEMENT,INCENTIVES MECHANTSM
Moscow VOPROSY EKONOMIKI in Russian No 6, Jun 81 pp 80--91
[Article by Ya. Kronrod: "The Management Mechanism and Compet~tion"J
[Text] Comprehensive, internal improvement within the system of the management
mechanism is a significant aspect of the development of the economtc relations
of developed socialism. In the Accountability Report of the CPSU Central Com-
mittee to the 26th party congress L. I. Brezhnev, speaking of management at the
association and enterprise level, observed: "We have accumulated a great deal
of diverse experience. And exactly what this experience tells us is that we ~
must .:ontinue searching. The general directior? of this search, it appears,
should be toward broadening the independence of associations and enterprises
and expanding the rights and responsibility of economic managers." One of tfie
import~nt and promising aspects of ineeting this challenge is finding, testing,
and impl2menting in the economic mechanism such an effective stimulus to.pro-
duction development as competition in the economic activities of enterprises.
_ lising Lenin's terminology, we will call this economic competition.
_ T:~e issues of the importance of socialist competition in the economic development
of our society have been thoroughly worked out by Marxist-Leninist theory and
proven by long vears of economic experience. "Socialism gives birth to a new
. attitude toward labor. One of its vivid ma,nifestat3ons has been and remains so-
- cialist compc~}~tion," the materials of the 26th CPSU Congress observed. Compe-
tition with par�ticipation by laborers, workers, kolkhoz members, and the in-
telligentsia is a powerful, specifically socialist force in the development of
production forces and imp roving the production relationships of mature socialism.
Competit5.on is a toal to improve our economic and social plans, and to disclose ~
at~d ~itiiize labor, material, and financial reserves. Competition is one of the
fundamental sources of the dynamism of t~e socia�list economy, resolution of its
contr~~!:lictions, and raisiag its efficieney. .
- The inseparable tie between socialist management and competition is obvious in
theory and practice. .
V. t. Lenin, working out the theory of socialist competition and pointing to the
enormou~ part it was to play in tTie new society, demonstrated that socialism,
13
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE UNLY
while rejecting the specifically capitalist form of competition, developed a
different form of competition among socialist laborers an~ collectives. It is
based on the unity of their competitive labor and all-encompassing mutual
assistance in the interests of the entire society. It was his thought that in
the overall process of socialist economic activity there is a special domain
- of competition,. and economic competition is a special facet of it.l This state-
ment by Lenin reflects, I believe, Marx�s view that socialism replaces the com-
petitive struggle for profits typical of capitalism with industrial competition.
But what are the specific features of economic competition, and what place does
it have in the general process of socialist competition? When we speak of com-
petition as a whole, we can identify two specific aspects in it. One of them
(the one that has been most highly developed in theory and practice) is socialist .
competition among the immediate participants in production, individual and labor
competition to achieve the best results. The subjects of this facet of socialist
competition are individual workers or collectives; the object is the results of
their labor. The other facet of competition, which unfortunately has not been
a developed nearly as thoroughly in theory and practice, inc]_udes socialist compe-
tition among enterprises, associations, subsectors, and even entire sectors,
economic regions, cities, and the like. In this case the subjects of competition
are management units of Fublic production that are relatively independent in
economic terms. The object of competition is to achieye tlie best results from
economic activity as a whole, carry out national economic plans, raise produc-
- tion efficiency, intensify production, achieve technical progress, conserve past
and live labor, make production profitable and the like.
The elements of competitiveness are disclosed in the basic economic forms of the
socialist process of production. ror example, let us take the �ormation of
cost accounting (khozraschet) incentive funds. ~ach association and enterprise
forms lsrger or smaller incentive funds, in absoluCe and relative terms, depend-
ing on successes in achieving the best economic results and carrying out economic
plans for raising labor productivity, improving the quality of output, raising
prof~tability, and the like. Each association or enterprise, delivering its
output at uniform nat~.onwide prices, receives profit depending on its indi-
vidual production costs in conformity with the results of participaCion in eco-
nomic circulation (this is the sphere of cost accounting realization of produc-
tion successes). Therefore, earnings from sale of output and price are
definite economic parameters of enterprise competition to reduce individual ex-
penditures to socially necessary expenditures and furtTier. In other words, the
law of value is used as an effective implement of economic competition.
Let us turn to the sphere of the investment process. Here too it is those asso-
ciations and enterprises which are most successful in technical modernization of
iSee V. I. Lenin, "Polnoye Sobraniye Sochineniy" [Complete Works], Vol 36,
p 191. Lenin emphasized that work must be organized in such a way that "com-
paring the work results of individual coumnunes becomes a suTiject of general
interest ~nd study, so that leading communes are immediately rewarded (by
shortening the work day for a certain period, a raise in wages, granting more
cultural or esthetic benefits)" (ibid., p 192).
14
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONLY
production, create output with better tecTinica? features at lower expenditure~,
and best satisfy pi:blic needs that will en~oy puBlic priority in receiving in~
vestment capital for expanded reproduction.
In fact there is perhaps no economic aspect or form of production and economic
circul~tion which is not immediately and directly or at least indirectly and by
mediation involved to some degree in competitive relationships.
Needless to say, labor and economic competition form an unbreakable unity.
Labor competition and its results are tt~.e basis, the foundation of economic
corapetition. Economic competition creates the conditions for labor competi-
tion, serves as a source of labor incentive, and the like. Furthermore, experi-
ence has developed forms in which labor and economic competition are merged and
is constantly developing new ones. Counter planning is such a form; it is one
of the most significant manifestations of socialist competitive activity by the
working people, expressing the process of their labor compet�Ltion. At the same
time, by becoming a part of the state plan of associations and enterprises, the
counter plan serves as a form and object of Qconomic competion.
The nature of socialist production relationships, which i.ncludes the relation-
ships of socialist comperition,gives economic competttion an important role in
the system of the management mechanism. The competitive spirit raises the pro-
g~ressive, stimulating role of f_orms of competition in regulating the economic
process; it is aimed at constant development of the economic mechanism in con-
formity with the needs of economic development, fosters the disclosure and
elimination of shortcomings in it, and so on.
With all the diversity and multiplicity of the relationships between the manage--
ment mechanism and economic competition, three of these relationships plap
special roles: economic competition and tfie formation of cost acc~unting funds;
u?aterial incentive for scientific-techntcal progress; and, improving economic
circulation. ' ~
Economic Competition and Cost Accounting In~entive Funds
To develop the economic inieiative of labor collectives and expand tfie rights of
production a.ssociations and enterprises, the decree of tfie CPSU l:entral Com-
- mittee and I;S~F Council of Ministers entitled "Improving Planning and Inten~ifying
the Influence of the Economic Mechanism on Raising Producti~n Efficiency and Work
Quality" envisions a transition to forming economic incentive funds an tfie basis
of. seable norms with differentiation by types. The determination of norms in
this case is oriented primarily to the qualitative indicators of production ac-
tivit~ established in the plan. The material incentive fund should.be �ormed
out of profit according to a combination of, for the most part, the followtng
fund-formation indj.cators: growth in labor productivity~ production of high-
quality output, arid fulfillment of the plan for deliveries of output in con-
formity with cont~acts. It is also possible, depending on the spec~fic charac-
teristics of the sector, to adopt an orientation to various other qualitative
indicators such as conservation of material resources, rais~ing output-capital
ratio, increase in the level of profitability, and reducing tFce prime cost of
output.
15
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2447/02/09: CIA-RDP82-00850R000400454450-7
FOR OFFICIAL USE ONLY
Thus, the principles of formation of cost accounting material incentive
funds are oriented to the key qualitative results of enterprise or association
economic activity and to maximization of thase results by every means. The
eources of fund formation - profit and fund-formation qualitative indicators -
take shape under the influence of socialist competition, both labor and economic
competition. Thus, the cost accountir,g economic incentive funds are a form of
- realizing this great potential for the functioning and development of socialist
production. However, it is precisely in the relationship between cost ac-
counting incentive funds and the organization of economic competition that sub-
stantial opportunities, which are far from utilized, lie.
The first thing to be mentioned is that in its current condition this form of re--
- lationship is mediated by a large number of complexly interacting economic
factors: price, profit, individual plan norms, resource priorities, and the
like. Therefore, its impact is very weak and felt only in the final result.
Moreover, although a great deal has been done to avoid such negative factors as
providing incentive for associations and enterprises to receive easy plans, con-
- ceal reserves, and the like, the system of formation of cost accounting incentive
funds by no means precludes these possibilities. Whereas earlier the cliief mani-
festation of the action of this factor was annual planning, today it has been
applied to five-year plans. Be~ause realization of the output plan taking into
account performance of contracts is becoming one of the important annual evalu-
ation and fund-formation indlcators, it is apparent in this case too that
there may be those who are fond of "easy accomplishments." This also applies in
one degree or another to all the other norm-established indicators of economic
activity: prices, wage norms, norms for deductions from pro�its, and the like.
The possibility of this negative trend is obvious. Needless to say, the main
way to neutralize it is to raise the scientific level of planning, to introduce
progressive, technically sound norms more broadly and consistently, to use the
initiative of labor collectives in counter planning, and so on. At the same
time it is necess`ry to use another important means of inspiring enterprises and
labor co~lectives to achieve maximum qualitative and quantitative results from
- production activity, to disclose and use reserves, and to adopt and carry out
stepped-up plans. We are referring here to those objective possibilities which
are contained in economic competition as a directly "working" factor of economic
activity.
Associations and enterpris~s that specialize in the production of a particular
type of output are usually not absolutely unique. For all tfieir individual dif-
- ferences (in capacity, structure of out~ut, raw ma.terials, transportation condi-
tions, and the like), within the limits of subsectors or at least gronps of
enterprises they have very similar technical-economic and economic characteris-
tics. Naturally, for exactly this reason the economic results by subsectors� or
groups of enterprises or association~, specifically the rate of growth of final
output, rc*e of growth of profit, Ievel of profitability, rate of growth of
labor productivity, and the like, are not simply formal average statistical
values; they are manifestations of the inevitable, objective results of the
process of reproduction in the concrete economic conditions of each particular
period (year, fiv~: years, and the like). The theoretical and practical im-
portance of this proposition is very great.
- 16
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000400450050-7
F'OR OFFICIAL USE ONLY
But fiow do average subsector (or group) data influence the econom~.c incentive
process? Tn our opinion, under contemporary conditions tfiis takes place only in
the mediated form discussed above. At the same time tfiere is an ob~ective possi-
bility and an increasingly insistent need for the process of economic stimulation
to relq, through the cost accounting funds,on direct, immediate comparisons of
actual individuaJ. economic results o� the work of associations and enterprises
W~til actual subsector and group results. This would make it possible to turn th~s
interrelationship into an implement for the eff.ective, efficient funetioning of
socialist economic competition. It is objectively possihle and necessary to put
constant, daily pressure on the economic incentive of the associations and enter-
prises based on the results actua~.ly achieved by tl:z particular subsector or
group of related associations or enterprises. 7~ve mean that the individual eco-
nomic incentive funds should also be directly correlated ~ritli the actual ratio
between individual and average subsector (or group) results.
This kind of correlation can be represented in princip].s as follows. The ratio
of avera~e results of the ~ubsector or group of associations or enterprises to
the individual results of each of the associations or enterprises of the particu-
lar Rroup for each given period (such as a year) should be the indicator on
whose b asis the economic incentive funds are increased or decreased. Among the
results referred to are the rat'e of growth in profit, labor productivity, sale
of output considering performance of,contracts, and the like. Let us suppose
that the volume of the material incentive fund established by norms for four
- associations or enterprises of a subsector depending on the fund-formation indi--
cators adopted in the pareicular year (as a percentage of profit) are four
percent for enterprise A, five percent for enterprise B, five percent for enter'
prise C, and seven percent for enterprise D. At the same time, the average
level actually realized for this indicator, for example average annual rate of
growth in profit, for the subsector is 10 percent, whereas the individual re-
sults are eight per.cent for enterprise A, 12 percent for enterprise B, 10 per--
cent for enterprise C, and nine percent for enterprise D. The ratio of the
average result (10 percent) and the individual results (8, 12, 10, and 9 per--
cent) should be the basis for the normative scale for formation of tTie material
incentive fund.
Increase or Decrease in the Incentive Fund Depending on the .
Ra,.to Between Individual and Average Sectorial Results of
Economic Activity (Hypothetical Figures).
Ratio of Individual
Rate ot Growth in Profit
to Average Rate 80-89 90--99 100--109 11Q-119 120 129
Percentage of Decrease -15 -5 +10 +18 +25
or Increase in
Norm-Set Volume of Material
Incentive Funds
Thus, in this example the material incentive fund determined by set long-term
norms depending on the ratio of actual individual and average sectorial annual
17
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFIC'IAL USE UNLY
results will be reduced by 15 percent for enterprise A to 3.4 percent; for
enterprise B it will be increased by 25 percent to a figure of six percent,
while for enterprise C it will be increased by 10 percent to 5.5 percent, and
for enterprise D reducQd by five percent to 6.5 percent. Tfiis is only a simpli-
fied diagram, of course, to illustrate the principle itself. In reality, it
may be. structured zaking into account a combination of qualitative indicators
- (profit, labor productivity, quality af output, performance of the plan for con-
� tract deliveries, and the like) with greater or lesser intensity of~economic
incentive fund increments or decrements.
But what is the essential feature of direct correlation of individual and average
sectorial (group) actual results and no~ms for the formation of economic incen~
tive funds? The essential point, evidently, is in the fact that the cost
accounting mechanism directly includes economic competition among enterprises or
associations based on material incentive. In this case, there is not just an
economic incentive to achieve maximum realization of all established plan ~
parameters, but to do so where all the participants in competition have incen-
tive to achieve better results than the actual results of the associations (or
enterprises) of the given subsector or group taken together.
Implementation of these proposals precludes an interest in achieving easy suc-
cess and getting "easy" plans. Suppose that an association or enterprise has
been able to adopt an "easy" plan. In this case the association or enterprise
is doomed either to lag behind in economic competition or to fall far short of
receiving these economic benefits which it makes possible. Such an association
or enterprise will inevitably have results lower than the average for the sub-
sector or will exceed these results to a much smaller degree than it could have.
In either case it will be punished economically. By contrast, the more fully it
utilizes its reserves and the more intensive the plans it adopts are, the
greater its chances it will be in economic competition and the higher the level
of growth in material incentive funds calculated by norms will be.
It seems to me that these forms of direct relationship between formation of
economic stimulation funds and economic competition are one of the important
areas of the search to elaborate those fundamental principles of improving the
economic mechanisms which were defined by the 12 July 1979 decree of the CPSU
Central Committee and USSR Council of Ministers. We wi11 believe it would be
wise to make an experimental test of the system proposed above to d~cide the
question of its later introduction. ~
Economic Competition and Technical Progress
The decree on improving the economic mechanism outlined a system of steps to
insure the introduction of scientific-technical advances. At the same time,
there are great and still-unused opportunities for effective stimulation of
these processes by means of economic competition.
The system reviewed above for directly linking the results achieved by associa-
tions and enterprises in economic corspetition with the forma.tion of incentive
funds aims chiefly at technically progressive development of production. But
this link is not oriented specially to technical progress. In point of fact,
18
:IAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400054450-7
FOR OFF[CIAL USE ONLY
relatively better production results from work are also achieved by better use .
of material and labor reserves, the action of organizational-technical factors,
and to some degree as the result of favorable circumstances, among other con-
siderations.
Meanwhile, the challenge is to see that economic competition by its definite
forms is directly oriented to sugporting technical progress and operates as an
inseparable element of the management mechanism. This can be accomplished by
the use of special forms of economic competition among associations and enter-
prises that promote growth in the technical level of production. This proTilem
is certainly a compl?x one and has been little-stud~ed, but it is unques-
tionably soluble. The chief difficulty and at the same time~the key to solving
it is an objective, economically adequate expression of the technical level of
tne associations (or enterprises) of the particular subsector or a homogeneous
group. This expression, needless to say, is impossible on the basis of direct
technical and technological comparisons. But the system of economic parameters
- which reflects the dynamics of the technical progress of associations and en-
terprises is capable of expressing it with adequate completeness and relia- ~
bility.
The degree of increase in the technical level of production ultimately manifests
- itself in dynamic changes in four economic parameters: output-capital ratio,
- conservation of materials used in production, labor productivity (or capital-
intensiveness, materials-intensiveness, and labor-intensiveness of tfie output
being produced), and finally, production of technically progressive output.
The difficulty, however, is tha~ the technical level rises depending on par-
ticular changes in these economic parameters, which may go in different direc-
tions. A rise in the technical level of production through the introduction of
pro~ressive new machines, machine modernization, or tntroduction of progressive
new technological processes may lead to an increase in the output-capital ratio
er to a decrease in this ratio.
_ In both cases the process may be economically rational if it provides at the
same time a compensating savings of raw and processed materials and energy,
growth in the productivity of live labor, the production of technically pro-
gressive output that provides a corresponding national economic savings, and
the likz. The same thing applies to the two other parameters: savings of
materials anc: growth in the productivity of live labor. Their'action in dif-
ferent directions is expected not only to compensate for one another but ulti-
mately to produce a savings. Therefore, objectively speaking, from an eco-
nomic standpoint the technically progressive level of production rises when
ttte four above-listed principal parameters, no matter what direction eacfi of
~ttem individually may move, together produce an overall decrease in social.ly
necessary expenditures of labor per unit of output produced. But tliis cannot
be expressed simply by a change in prime cost or profitability of output be- ~
cause of the many factors involved in changes in the resulting indicators.
Therefore, we need a relatively independent specific economic measure of dy-
namic changes in the technical level of production. It seems to us that this
measure can be an integrated index of the dynamics of the technical level of
production, obtained as the ratio of the sum of savings (or excess) of
19
FOR OFFiCIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2407/02/09: CIA-RDP82-00850R000400450050-7
FOR OFFICIAL USE ONLY
expenditures to create a unit of output through each of the four factors
_ (capital-intensiveness, materials-intensiveness, labor productivity, and the
economic impact of newly produced progressive output) to the total sum of expen-
ditures.
Suppose that in the past year a given subsector (group) has achieved.a total
savings of 100 rubles per unit of output through these four factors, and the
savings can be broken down to 30 rubles (acc~rding to calculated expenditures)
from reducing capital-intensiveness, 40 rubles from reducing materials~~
intensiveness, 25 rubles from raisix~g labor productivity, and five rubles as
savings from newly incorporated progressive output. The total subsector (group)
integrated economic index of growCh in the technical level of production wfiere
a unit of output costs 1,000 rubles will be 10 percent (100/1,000). Corre- ~
sponding indexes are computed for the actual results of tfie work of the enter-
prise, association, and subse~tor or group. It is on the basis of the ratio
between the subsector (gro~p) and individual indexes of growth in technical
level that the degree of achievemen~t of each particular associa~ion or enter-
prise relative to its subsector or group as a whole is determined and specific
material incentive for raising th~e technical level is organized.
What we are referring to is forming a special material incentive fund for tech-
nical progress from the savings achieved through these four economic factors
that reflect growth in the technical level and seeing tliat the formation of this
fund depends on the ratio of individual integrated indexes of the tecfinical
level of associations and enterprises to the average sectorial index..
This form of economic competition creates effective incentives for enterprise
collectives to work on a daily basis for technically progressive development,
' intensification of production, and greater production efficiency.
A number of questions arise in connection with the formation of a special
- material incentive fund for technical progress. In our opinion, such a fund
must be the same as the material incentive fund but not merged witfi it, in
view of its specific function of direct economic stimulation for raising the
technical level of production. Therefore, its source of formation sfiould not be
the entire amount of net profit (as is the case today with formation of cost
accounting incentive funds), but only the part of profit obtained througli tfie
increase in production efficiency resulting from the rise in its technical level.
The share of the different elements through which tfiis part of profit forms
should be different3.ated depending on the nature of the sector. For example,
in one case a relatively small share may come from increase in capital--
intensiveness, while in another a large share or tfie entire amount may arise
from savings of material expenditures, while in a third a smaller share may
come fron growth in labor productivity (through growtfi in the capital-labor
ratio), and in a lourth the entire amount may be received through price sup-
plements for progressive output. Earnings from sale of licenses for the organi-
zation's own design developments and original technology may be a supplemen-
tary source for formation of this fund. Licenses are not currently sold in
domestic circulation, but the consistent development of cost accounting relations
demands that innovative enterprises which bear the costs of developing new
20
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONI.Y
equipment and technology should be reimbursed when they pass their develop-
ment on to other enterprises. Investment credit for~technical improvements of
production could also play a certain part, especially in the initial formation
of this fund.
The fund should be formed gradually, as the sources �rom which it is formed grow,
but in the long run it should be quite significant, reaching some 10 percent
of wages. Ultimately it should be a variable element in wages.
The use of thi~ fund is an important issue. It shoul:d be the chief bonus re-
source for effective and differentiated incentive to engineering-technical
personne"1 and workers who contribute to technical progress. A purposeful and
effective form of distribution of the fund is weighted, progressively increas-
ing bonuses for development and sale of technical improvements, inventions, and
discoveries depending on the volume of the national economic impact and the
corresponding technica.l novelties. Along with creation of this fund, of course,
tt;ere should be a fundamental improvement in practices of giving matarial in-
centive to personnel who support technical progress. This incentive should be
free of the numerous obstacles that lower its level and mitigate its impact.
- Fconomic Competition and Economic Circulation
The principles of economic campetition are used least, perhaps, in material-
technical supply to enterprises and in wholesale circulation of ineans of
production and objects of consumption generally Ebefore they reach the retail
trade network). The present system of deliveries based~on allocations is being
improved. Specifically, the Increasing introduction of stable, direct ties,
rhe transition to evaluating enterprise work and providing incentive dependin~
on performance of contracts, and the development of forms of cost accounting in
r_he supply and marketing system are significant steps forwaxd. The modest ex-
pansi_on of wholesale trade outside the allocation system is also good. How-
ever, tk?ere are still serious shorcomings characteristic of the establisfied
forms of economic circulation. The 26th Congress of the CPSU emphasized ~he
~reat importance of correct management o� production stocks.
The most significant defect of the resource allocation system is often discerned
in the fact that it seems to contain an incentive to stockpile excess material
resources. 7izis leads to the creation of artificial shortages, slows down the
circulation of resources, and so on. Indeed, the allocation system is compli--
car.ed and often too inflexible from the standpoint of maintaining the essential
r~~tio l,c~tween elastic, fast-changing production needs, and supplying them with
mat?rial resources. It is fairly common for excess resources to accwnulate in
certain elements of production while others are short o� them. "We cannot
tolerate a situation," said N. A. Tikhonov in his report at tfie 26th CPSU
Congress, "where many enterprises keep above-norm equipment and raw and
processed materials, especially metals, at the same time as others are short
of them."
Consi~.erable material losses also ensue from th.e practice of allocat3ng re--
sotirces that do not completely meet production needs in a technical-economtc
21
FOR OFFIC[AL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-04850R000400050054-7
FOR O~FICIAL USE ONLY
respect. But the principal shortcoming of the allocation system, we feel, is
on another plane. Tfiis is the fact that with established forms the organization
of distribution of material resources by allocation is divorced from economic
competition, from the system of econornic stimuli tfiat give botfi suppliers and cdn-
- sumers incentive to work fo~� technically progressive development of production.
This is a result of the fact that supply by allocations in its current forms
introduces certain elements of automatism into economic circulation, more exactly
into the process of se'lling outpur, and gives it a kind of forma.listic cfiaracter.
_ Centralized distribution agencies decide where, when, to whom, and what kind of
allocations for material resources will be issued and realized. The user realizes ~
- these allocations accordingly. But in this situation he has no practically sig-.
nificant economic means of influencing the producer to deliver better, tech-
nically progressive output. In economic terms, by the very nature of the process
of disposing of output, the producer in turn has no incentive whatsoever to im-
prove the technical level of output. The allocation system today does not give
the customer the choice of a supplier who provides better, tectinically pro-
gressive output with more effici~nt delivery conditions. Nor does the situation .
ofEer alternatives to the producer: no matter what output the producer may pro-
duce (relatively backward in technical terms, expensive, unsatisfactory in terms
of quality, and the like), it wi11 all be included in allocations, which is to
say sold, because it was manufactured according to plans.
But there is a real opportunity to improve the system of allocation deliveries
on the basis of economic competition and the action of real incentive to quali-
tative improvement in the disposal process. In our view, the allocation system
can and should include a pre-allocation stage of economic competition among
- producers to establish portfolios of deliveries on the basis of offering tech-
nically improved output, better-quality output, Uetter delivery conditions, and
the like. What we are saying is that the processes of establishing allocations
should Uegin with negotiations on delivery between customers and suppliers
(within limits established by Gossnab),and every consumer should have the possi--
bility of establishing contact with a number of suppliers and selecting the one
that is most suitable from the standpoint of output offered. Then allocations
should be established according to agreements reached by suppliers and cus-
- tomers, within the limiL-s set by Gossnab agencies. In other words, a portfolio
af orders would be formed and final contracts (long-term, medium-term, and
current) would be concludede This entire system, of course, should cover de-
liveries based on direct linlcs also.
Such an allocatioa system, based on economic competition among suppliers, has
several advantages. In the fir~t place, it more effectively precludes automatism
and formalism in disposal of output. In the second place, it would stimulate
the producer to raise the technical 1.eve1 of output in order to make up a~good
delivery portfol.io. In the third place, it would give customers a realistic
means of exercising economic influence on suppliers.
Needless to say, the proposed combination of the allocation distribution system
and economic competition is a complex matter that requires revision of many
established forms and, possibly, the surmounting of some biases tfiat still hinder
22
~ FUR UFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/42/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONLY
the allocation proces~. Breaking through these biases would also unquestionably
promote the "shapinb of contemporary economic thougiit" spoken of by L. I.
Brezhnev at the 26th CPSU Congress. This will require a significant bolstering ~
of the nianeuverability of supply agencies and the development of truly commerCial
initiative 6y the associations and enterprises which are suPpliers and customers,
as well as overcoming a certain psychological barrier.
In addition to the above-considered steps to include the allocation system, it can
be very important to develop a new form of organizational planning for wTiolesale
trade in those types of material resources of which there is no significant sfiort-
a~e, whose produ~tion and consumption are balanced, and which permit the creation
of essential reserves. In this case allocation could be effectively replaced by
deliveries based on contract ceilings.
In concrete terms, this system appears roughly as follows. With tIie goal of fill-
ing the delivery contracts of an association, the customer enterprises receive
a consolidated unaddressed ceiling on the right to conclude a contract with a
freely c'~osen supplier (for example, for 1,000 tons of cast iron, 10 machine tools
of a parricular design and type-size, 10,000 meters of certain types of fabrics,
- azid so on) from Gossnab and its agencies within the framework of tbe planned
balance of the particular commodity (means of production and objects of consump--
tionl. The associations and enterprises that have received ceilings are also
given the right within certain limits (20--25 percent) to transfer them to other
associations at their own discretion either free of charge or in exchange for
ceilings on other output which they have received. Contracts for delivery con-
cluded within the framework of the allocated ceilings are sub~ect to final rati-
fication by Gossnab agencies which, if necessary, may adjust them. This in~-
sures ceiling discipline and a planned hasis for deliveries within the~framework
of this form of economic circulation.
The transi.tion to new forms of organizing the allocation process, developing
ceiling-based wholesale trade as well as wholesale trade in means of production
outside the conventional allocation and ceiling systems (we will not discuss this
matter specially because the question of its advisability as the economic pre-
requisites develop has long been settled), will also demand broader use of such
forms of economic r_irculation as wholesale fairs not only in consumption
~;oods but ai;u means of production, specialized commodity markets, and hroad com-
mercial information and adve:-tising. A full-fledged commercial service will have
to be established within the directorship of associations and enterprises and
headed by a commercial director (deputy to the general director of the associa-
tion or er,terpr.ise director) with broad authority.
The system of allocation on the basis of economic competition in disposing of
output, ceiling-based wholesale trade, and wholesale trade without allocations
and ceilings - all these taken together will make up a whole system of eco-
nomic incentives. In the first place, only technically improved, high-quality
and relatively inexpensive output marketed by means of competitive contracting
w~11 ~i.ve suppliers a full and advantageous portfolio of orders. In tfie second
place, stepped-up, technically progressive plans are more important because this
is rhn only wa5* to increase the chances of success in economic competitTon and in
23
~ FOR OFFICIAL USF ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
_ FoK oFH~ciai oN~v
the marketing sphere. In the third place, the distribution of material resources
_ will be incomparably more adapted to productl.on needs and wi112give all economic
- circulation preater flexibility, mobility, and operationality.
Economic Competition and Certain General Conditions of Its Functioning
" 'I'tie above-~~nsidered aspects of the relationship between, improvement of, and
strengthening the effectiveness of the economic mechanism and economic competi-
~ tion presuppose general conditions in which Lhis relationship would be realized
most complerely and productively. Above all this refers to price formation.
There are still today two levels of prices, for means of production and for con-
sumption goods. The gap between them is significant. Thus, calculated per ruble
of wages in the final price of consumption goods, the volume of surplus product .
- is several times greater than the same ratio in the price of ineans of production.
~ It is even more significant that the deviation of prices From ONZT [social-
l.y necessary labor expenditures] or, which is the same thing, from social cost,
varies greatly in different sectors along the chain of reproduction from the ex-
tracting sectors to the sectors that produce the final output. A11 this, of
course, disrupts a realistic reflection of change in ONZT in the cost calcula-
tion and, consequently, in computing net output. Meanwhile the transition to
normative net profit as the principle evaluation indicator of change in produc-
tion volume, the basis for determining labor productivity, wage norms, and the
like demands that prices provide the most realistic reflection possible of the
costs they contain, in other words, that they be as close as possible to ONZT.
Ttie whole organization of economic competition objectively demands the same
thing. It will be more effective where there is more profit and changes in
profit, both individual and for the sector or group on the average, as well as
part of the savings obtained through the factors of technical progress, are based
on real change in cost, in socially necessary labor expenditures. At the
present time where the profit norms must be determined in tfie price, which corre-
sponds to the wage5 norm, a need has arisen to improve prices and switch to
determining the level of wholesale prices on the basis of ONZT. The question of
price discounts and supplements for obsolete and new, technically progressive ~
output, the issue of step-by-step prices, has been hasically decided. Effec-
- tive implementation of the new price formation system will also create favorable
_ soil for economic competition. In our view, the practice of using price
"scissors" of about 7-10 percent should be gradually introduced. This can
serve as an additional means of rais~.ng the economic efficiency of contract re-
lations and giving the customer influznce over the supplier under conditions of
distribution by allocation, including the forms of economic competition con-
si~ereci ahove as well as ceiling-based wholesale trade.
Another condition is enhancing the role of all fox~ms of credit. Implementing
the aspects of economic competition considered above will stimulate associations
and enterp~ises to use efficient new technical concepts. Often this will occur
not only during ratification of plans but during the process of carrying t~zem
2 The enterprises that do not succeed in competition and do not fill tfieir order
portfolios will have to he switched to a special economic reconstruction status;
it may even be necessary to give them a new technical reorientation or change
their specialization.
- 24
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400054450-7
FOR OFFiCIAL USE ONLY _
out. This is where the role of credit increases. At this time, in our opi:nion,
three things are necessary. First, there sfiould Fie a significant rise in the
interest rate (to S-6 percent) wi:th sufficient differentiation. Second, in-
terest should be charged beyond tF?e payment for capital in the case of credit
invESted in the creation of fixed capital. The principle here is tfiat all active
capatal should receive incentive to att3in equal circulation conditions for the pay-
ment on capital. Interest on credit is a cost accounting paymenC for the us.. of
credit and part of the profit received by the organization. Third, an interest
rate, for example 2-3 percent, should also be instituted for budget investment
capital granted to associations and enterprises by a customer. The purpose here
- is t~ provide economic in~entive~ for those who receive state investment to de-
termine the amount of this investment in a sounder manner and to put the produc-
tion facilities created with this capital into operation as quickly as possible.
The development fund can be the source from wh~.ch this interest is paid.
Th~ development of economic competition makes the problem of material reserves,
an essential element of a fluid economy, more pressing. Rational, planned ac-
cumulation of reserves at all levels, from associations and enterprises to
mini~tries, is becoming more important than ever before.
`C!~.~ mn~t important overall condition for implementing economic competition in
a11 its aspects is insuring t?~at associations and enterprises have the work
force they really need and wqrk out a set of socioeconomic measures to attract
th.e necessary workers and keep them from leaving. The time has come to set up
agencies that ~~ot only mediste in the redistrihution of work force, but also or--
ganize retraining so that associations and enterprises can he completely freed
from the work of finding jobs for employees that are released.
1'he llth Five-Year Plan envisions completion of the transition to associations
- as the principal economic unit. This is creating favorahle con~Ltions for the
dev~loptnerit of economic competition. The larger the associations are, the
greater the opportunities for competition will be. The development of op-
timally large compler.es of cantemporary specialized production within the
framework of associations that provide a contemporary level of concentration and
spec~alization of production and have adequate rights to carry on independent ~
economic activity within the framework of a rational complex of centralized
nationa]. eco:~omzc plan assignments will make it possible to insure efficient use
of the eco*_iomi~ mechanism and guarantee more favorable conditions for the de-
velopment of economic competition.
_ COP`(FIGHT: T.zdatel'stvo "Pxavda", "Voprosy ekonomiki", 1981
11,17b
CSO: 1820/229
25
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOE2 OFFICIAL USE ONLY
R~GIO1~fAL D~V~LOPMENT
RL�'VIEW OF BOOK Oh Itk;GIONAL PLANNING
Moscow VOPROSY EKONOt2IKI in Russian P1o 6, Jun 81 pp 133-136
[Review by V. Pavlenko and 0. Nekrasov af book "Territorial~no-otraslevoy printsip
planirovaniya. Teoriya i praktika" [The Regional-Sectorial Principle of Planninp.
Theory and.Practice). ~,d�'wted by Prof B.M. Mochalov. Moscow, "Mysl"', 1980,
254 pages]
[Text] riany readers~ attention probably has been especially drawn to the unexpect-
ed title of the reviewed monop,raph.l Actually, "sectorial" and "re~ional" nrinci-
ples of planning and management are usually studied not only in the specialized,
but also in educational literature; an ob~ective is set of achieving their unity
or proper combination, wtiich should play an important rol.e in ensuring effective
development of the national economy. Let us note at the outset: the book has not
succeeded in proving the existence of an independent "re~ional-sectorial principle"
- in socialist planning. Moreover, it is not even referred to in the book. There-
fore, while "intriguing" the readers, the authors nevertheless have not succeeded
_ in providin~ a basis for their claim to such an unexpected nerspective for the study.
This could not be ~one because the "regional-sectorial principle of planning" sitr.ply
does not exist either in theory or in plani:in~ nractice.
The sub~ect of analysis in the work,however, were more "traditional" questions,
which were composed and Qrouped into two sections: the first of them deals with
methodological problems o~ combining "princip 1es of sectorial and regional manage-
ment and the second with improvement of the forms of such combination. On the
whole, this has made it possible to differentiate sufficiently clearly on the basis
of the sections the range of probleras touched upo~n in the book. In analyzinQ the
problems of m~ethodology of combining the principles of sectorial and regional man-
agement, the authors investi~ated the developmental laws of public production, econ-
omic organizational problems of the formaCion and development of tlie production ap-
paratus, the regianal structure of the national econom}?, functions and methods of
plannin~ of regional social-economic systems and the place of regional-production
complexes i,i the system of planning.
The first section of the monograph ends with a chapter that studies the economic
mechanism of management of the econovry under the conditions of developed socialism.
1. The collective of authors consists of: r.:4. Rusinov, V.I. Chumakov, ~~.K. Savel'-
yev, ::.V. l:orneyeva, V.A. Popov and V.t~. Mosin,
26 ~
~ ,
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007102/09: CIA-RDP82-00850R000400050050-7
FUR OFFIClAL USE ONLY
First, the economic machanism of manag~ement of the national economy as a 4~hole, of
course, is not a separate element of the "sectorial and regional principles of man-
a~;emsnt" and naturally does not constitute a part of their makeun. Second, the
Fconomic mechanism of mana~ement is a concept that belongs to a different level
fram plannin~. Under these conditions it would be possible to disclose the easen~
tlal ~n~redients of the specific economic procedures (methods), which are used in
the attainment of unity of sectorial and re~ional operation of the national economy.
Ttiey includ~, for example, questions of rerional differentiation of prices and
transport rates contrihuting to the optimization of repional production ties, tal:ing
into consideration regional characteristics in fund formation, creation of econor.d.c
incentives for attractinR and securing ~aorkers in reyions of intensive economic de-
velopment and much else.
T'r.ese questions, however, which bear a most direction relation to the methodolo~v
rorms of sectorisl and re~ional development of the.national econonry are bypassed in
the book. Instead, there are described the substance of economic methods of man-
ahament, snecial features of cost accounting under condition~ of improved production
man:~~.~men~ a~d the role of finances, credii and prices in economic operation. At
the same time, the authors have excluded from the economic mechanism of operation
all pl~.nnir.~;. They probably included it under "organizational-administrative" meth-
ods, reducin, the essential ingredients of econor.~ic methods to such as "~�ith thc
iiel~~ of w:~icti control is achieved tnroufih the creation of a combination of condi-
tions that ar~ of interest to pzoduction ar.d industrial associations, re~;ional rro-
d~_~ctioti complexesin raisin,~ the ef.ficiencv of man~ ~ement" (p 108). itiis positi~n in
icsel~ i~ d~-~vatable, but it would be sensihle to discuss it only in the c:~se. w};ere
it bears on the theme of tt:e monoc;raph.
~LIlE' attentioil of readers is directed to an analys~s in the boolc o.f. the develonmental
- l~;as of the structure of public production and economic organizational problems of
forr~ation of the preduction apparatus. Iiere are elucidated the substance of t1~e
system of or,r,lnizational econon~ic relations, the development of the structure of
pubii.c production, r.ender.cies of social combination and the structural elements of
the unified national-economic complex. In the book there are examined ir. detail
tE~e la~~s of develonment of the sector and questions of formation of the modern sys-
tet;: of mana~ement of production.
Un tt~e c~hole, tiie ideas discussed l~ere undoubtedly interestin~. But it seems to us
ti~at tne a~~ttic,: s liave approact~ed somewhat uncritically the determination of. or~ani-
zational forms of public production, using in this connect3on sucli terms as "pro-
duction-operational complexes," "production associations of developed socialism,"
"r.r~duc.tioa social-economic systems" and so forth. Today, the expressi_on
"r~~;i~~r.al-produc:.ion cor.?b3.nation (complex)' in our economic literature finds its
lexica? correspondence in 92 terms. ~urther "terminolo~ical work" could hardly
contribute to a realistic e~aboration of the scientific content of the problems.
A special place is occupied in the monograph by an investigation of the regional
aspect of mana~ement of public nroduction. The third chapter is specially devoted
~ to it; separate questions are touched upon only in the first, second and seventh
c~tapt~~rs. Since the authors of Che chapters are different, this could not but help
Al_:~~r the wholeness of the general conception in the interpretation of a number of
c~uestions, not to s~eak of repetitions.
27
FOR OFF[CIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USf? ONLY
'rlic tliird chapter "i�Settiodological I'roblems of Combinin~~ Sectorial and P.coional Prin-
ciples of Plannin~" is central to the first section of the book. It, in our vi.ec~�,
penetratin~l~; and not stereotypically examines such important and complex c~uestione
as specialization of regions, re~ional organization of nroduction, re~ional struc-
ture of ttie economy. There are presented ori~rinal, albeit not alcrays indisputable
definitions of a number of fundamental concepts of reQional economics. The charac-
terization of regional systems of different levels is interestin~. It is er.rphasized
that thev in distinction to sectorial systems are, as a rule, multisectorial and
multifunctional. The regional economic complex is defined as the ap~repate of or-
eanizational forms of various types of operational activity in these systems with a
leadin~; nucleus in the form of regional praduction comPlexes (RPC).
The book proposes a system of evaluations used in scientific validation of the ~iis-
triUution of }~roductive forces and a rational regional structure (pp 8U-81). The
- importance of the new USSR Constitution as a legal basis for the improvement of
regional planning is quite correctly emphasized. A unified complex of livinp condi-
tions of people, the sectors putting out products for intrare~ional use and the re-
gional infrastructure are considexed as ind~ependent elements of the latter. It is
proposed to boost the role of re~ional or~ans in comprehensive planning of the build-
in~ industry, pr~duction of not particularly transportable products and, within the
scale of large regional systems, products of intersectorial use (p 89).
Gn the whole, no objections are to be found in the views relatin~ to the plannin~ of_
regional production complexes as they essentially correspond to the methodological
instructions relating to this question adopted by Gosplan USSR.
At the same time, the chapter, which as a whole is written on a rather hig.h theo-
ret:tcal level, contains debatable positions. These include, for example, the def.i-
nition of sectors of specialization. One can hardly agree with the position that
"their makeup is formed not only from sectors of material production Uut also in-
creasingly from the nonproduction sphere" (p 87) ox with the assi~nment of communi-
cations, interregional transport and specialized construction organizations to sec-
tors of specialization (p 88). The point of view that regional production complexes
are to be considered as a universal form of regional organization of. productive
froces is most debatable. With such an approach, the entire country becomes an
ag~re~ate of different-rank re~ional production complexes (f rom economic Zones to
basic administrative rayons), ~vhile the actual term"re~;ional nroduction complexes"
loses its essential meaning. This would u~ake sense only in the case where "produc-
tion nuclei" were to be formed in all regions wit}~ account bein~ taking of the ~rob-
lems of optimization of regional production Cies among enterprises included within
regional production complexes, which, unfortunately, is not the case. Consequently,
it would hardly be correct to consider any concentration of tuzrelated Cerritories lo-
cated on a given territory as re~ional production complexes.
The elucida~ion of re~ional problems in other chap~ters has been not only fragmentary
but even inaccurate. The classification of forms of regional or~anization of pro-
ductive forces presented on page 27 was not carefully thought out. On page 5B,
"requirements" are described thaC are to serve as guides "in the formation and de-
velopment of POC (production operational complexes)," but at the same time there is
a confusion of positions relatin~ to the organization of production associations and
enterprises with the principles of location of nroduction. Such, for example, is
28
FOR OFFICIAL USE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
F'OR OFFICIAL USE ONLY
the principle of ~~~i Droxi.~.ty of production to sources of raw materials, which
is correct in rFgard to the location of individual enterprises but completely wrong
in the formation of tnany sectorial associations.
In the second ~ection of the m~onograph, different forms of combining sectorial and
regior.al management are analyzed. Some of the formulations contained here we consid-
er to be apt. This applies in particular to probrems of. improvinq the organization
of production operational complexes and their mana~ement, validation of the content
of ~uestions af lon~-term development of associations (enterprises) rec4mmended by
the authors for coordination with territorial organs. Readers will find useful the
da~a utilized in the book on the develonment of share participation of the leading
entEr~~rises of IZizhniy Tagil in the building of f acilities of the nonproduction
sphere, which in certain measure ref lects the work experience of combininp sectorial
and re~ional interests in the plans of social-economic development of cities.
On the whole, the chapter on improvement of planning of comprehensive development of
regions is a'lso useful. liut it is very brief, and the j.deas stated in it (on plan-
ning of caoital investment for regional production complexes, qrowth rate of P. and
L~roups, the infrastructure) by no means take in the more acute, ur~ent questions
_ rel:~ti~:g to ttie improvement of re~*ional plannin~. And here some inaccuracies are to
be found, for example, on pa~es 202-203 reference is made to "b alance methods" as if
there r�Jere several of then:. The assertion is ~rrong that the size of allocations for
the development of municipal services depends on "the level of development of local
_ industr~" (p 2U7). Of course, it is i~ossible to aRree with the f act that that de-
velopment of the production sphere and others" comes under specific tasks for
re~ional planning (p 200) .
T!iis ciiaptFr contains ~roposals which it would have been advisable to treat in more
detail, for exampleY on the reflection of outlines on the service sphere in the
production cost of products of ttie region's enterprises, with subsec~uent deductions
~oin~; into the local bud~et (pp 208-209).
~ In an anal;~sis of questions of assessment of the efficiency of functionin~ of pro-
durtion operational complexes, the recommendation is ~r~ade to utilize the indicator
n~^--`ssion nf relation of national income to the sum of wa~es, fixed capital and ~
wor.k~.nf; capital.
's~'e consider tt~'s recommendation to Le rallacious. Let us look at the denominator
ot tl~e formul�. Evidently the idea of a direct summin~ u~~ of the cost of fi~:ed
capital usect over ttic course of many years toQether with yearly taa~e fund could in
:~era1 tiardly be c;ebated now. The need of adducins*. nonsimultane.ous ex~enditures
;ic~es :iot: give rise to douL-t amon~ representatives of ttie mos[ varied directions
5tud;~~nt~ these questlous.
~;iit it is not just a ma~ter of lack of adduction of nonsj.multanous expenditures and
rr,ixin,* of used ancl consumed funcis. The inclusion in the denominator in addition of
"retatinc~ capital" definitely confuses everythinr. '~irst, it is not clear vhat they
~ have in mind: jtist own and e~uivalent wort.ir.g canital or all material ~~orlci.nr capi-
ta1? ~r perhap~ it is proposed to use sor;~e calculated annual volune of cansumed
t�lOt~lil}~ capital, or is it s~lmmed up tog:ether ~�~ith the annual ~~rane f.und? Rut in anv
case, 4rorki.n^ capital includes a part of the wac~e fund whicl: is considered as an
29
FOR OFF[CIAL t1SE ONLY
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7

APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7
FOR OFFICIAL USE ONLY
element of "commodity-material assets" and of "~;oods of diapatctied and providr.d
services"--two of the most important constituent forms of workin~ capttal.
Prob~bly, the appearance of the idea of calculatin~; sucli a denominator is connected
with the introduction at one time of the indicator of profitaUility for production
funds into the system of economic measurements. Inasmuch as general expenditures
for payment of living labor is included in only an insignificant volume in the sum
o� fi:ced and working capital, here the wage fund~aes added on while losinp~ siQht
of the fact that, first, sucli an operation required the exclusion from workin~ capi-
tal of the wage element and, second, the utilization not of the annual wage fund but
its calculated size for the full production cycle, providing a qualitative uniformity
of the actual category "sum of advanced expenditures."
As a result, instead of an indicator that makes clear economic sense, another is pro-
posed, one that has been "adjusted," but, unfortunately, one that is deprived of any
seiise. It is no accident that the authors have not confirmed the "applicability" of
this formula with real calculations on the national-economic level. Moreover, that
wnicn would nave been obtained thereby w.ould probably have forced them to revise
their attitude to this idea.
It should be noted that more place should have been given to an analysis of specific
experience in the work; this would have permitted the authors to prove more thorough-
ly their proposals.
As we can see.from the analysis of the contents of the monograph, it contains many
debatable positions; furtliermore, we consider so~e of them to be fallacious. The
book in this regard is most instructive--it lays bare the "weak elements" in the
elucidation of one of the most important directions in improvement of the economic
mechanism in the USSR. Nonetheless, the formulation in it of a number o� new posi-
tions and proposed ways of solving some of them are of interest to specialists en-
gaged in these problems.
COPYRIGHT: Izdatel~stvo "Pravda", "Voprosy e~onomiki", 1981
7697
CSO: 1820/224 END
30
- E ONLY ~
APPROVED FOR RELEASE: 2007/02/09: CIA-RDP82-00850R000400050050-7