COMPUTERS IN THE SOVIET ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A003200140001-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 19
• Document Creation Date: December 9, 2016
• Document Release Date: April 2, 2001
• Sequence Number: 1
• Publication Date: April 13, 1966
• Content Type: REPORT

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ORR PROJECT No. 24.4784
COMPUTERS IN TIE SOVIET ECONOMY
Prepared for
The Joint Economic Committee of Congress
STATINTL
13 April 1966
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RIE);
13 April 1966
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I. Introduction
The Soviet Union has not kept pace with the US in development of electronic
computer technology. Obviously, this lag has not prevented the USSR from
achieving spectacular results in its military/space programs. In the area of
economic, business, and industrial accounting, however, the lack of electronic
equipment
data processing / and the rudimentary state of development of this branch
of the Soviet computer industry are causing the Soviet leadership great concern.
The directives for the Five Year Plan (1966-70) give a major emphasis to signi-
ficantly increasing the production of computers, particularly those capable of
handling large volumes of data.
The respect now shown to electronic computers by the business communities
and governments of the technologically-advanced nations can be attributed pri-
marily to the promotional work of the Free World computer producers (principally
US firms) who undertook to study economic activity with a view to developing
computers and computer techniques that would lighten the burden of administra-
tion. This promotional force has not found a place to date in the centrally
planned economies of the communist countries, a fact that helps explain why the
Soviet hierarchy is only at this late date vigorously pressing for a production
program intended to equip its industrial enterprises and bureaucratic structure
with computers for data processing and analysis.
Computer development work in the USSR was concentrated initially at research
institutes under the Acadenxy of Sciences, and was focussed primarily on computers
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1 suitable for scientific calculations. Much discussion and a moderate amount
2 of real effort has been given to the development of computer systems for process
3 control. Heavy emphasis was placed on the development of analog and digital com-
4 puters appropriate to priority military and space programs and consequently,
5 until fairly recently, the Soviet computer industry did not have the capability
6 to design or to produce computers especially adapted to commercial or economic
7 applications. Little research was directed toward the development of peripheral
8 equipment or programming devices necessary for data processing applications.
9 '1 Owing particularly to tardiness in recognizing the value of electronic data pro-
10 cessing computers, as well as to parsimony in the allocation of resources to their
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development and production, the Soviet Union today lags about five years behind
the US in this area of computer technology. There is little evidence that digital
computers were routinely employed in data handling roles in the USSR before 1960.
Rather, they seem to have been used almost exclusively for problem solving.
Following a belated awakening to the benefits that industrialized Western
countries were realizing from the application of data handling computers ifi
commercial activities, the USSR, beginning in about 1962, installed them at a
slow but increasing tempo in enterprises and state administrative organs for
processing plan data, scheduling production and performing accounting tasks.
In contrast, US computer manufacturers, stimulated by the sales
l.otential of the business market, have concentrated since about 1955 on
on raising. operating speeds
the development of expanded internal and external memory systems, on increases
in assortment and efficiency of input/output apparatus and on making
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1 their computers easier to use. Ease of use has been facilitated by provision
2 of additional programming languages and accessability to the computer from
3 remote consoles. In the Free World, and particularly in the US, computers
4 are now used in almost every phase of economic activity from market research
to business accounting.
1-11
6 ' Requirements for Computers in the USSR
7 Two factors have led to the recognition by Soviet officials in recent years
8 of a greatly increased requirement for computers for the Soviet economy. One
9 factor has been the growing difficulty of contending with the flood of informa-
10 tion that accompanies growth in economic activities. The other is the strength-
11 ening conviction of Soviet planners that resource allocation can be better managed
12 by mathematical methods
13 It is obvious that the successful operationof a centrally controlled,
14 highly industrialized economy depends on the ability to analyse vast amounts of
15 data. In the Soviet Union, the collection, processing, transmission, storage,
16 and arrayment of data on every aspect of economic life, transmitted between pro-
17 duction, distribution and sales units and production control, statistical, and
18 planning centers at various levels of authority, through multifarious channels,
19. presents a data processing task unparalleled in human experience. This task is
20 done inefficiently at the present time (principally by vast numbers of clerks
21 armed with abaci and desk calculators). Even punch card machinery, which has
22 been in production for years in the USSR, contributes relatively little compared"
23 with the army of clerks. In 1962, the Soviet system of accounting and statistical
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collection alone employed about three million persons, quite apart from the hordes
employed in the planning system, the material technical supply system, and the
financial and banking system. Moreover, the volume of data on economic activity
to be reported tends to proliferate at a disproportionately higher rate than the
growth of economic activity. The preservation of the centralized system of
economic management in the USSR depnds on, among other things, achieving a very
n
considerable increase in labor productivity in the processing of data.
i
The idea of using mathematical methods to allocate resources for maximum
output was discussed by Kantorovitch J in 1939? The increasing complexity of
the planning process has engendered active interest in these methods. Given
valid statistics and simplified economic models, mathematical methods would permit
testing draft plans for inconsistancies and imbalances. Implementation of the
advanced concept of cybernetic control of the economy, which envisions the drafting
of plans, issuing of instructions and regulation of plan implementation down to
the enterprise level by computers in a completely automated manner, is not being
seriously considered. Such a program would have not only an enormous requirement
for very fast computers with very large memories as a necessary condition for its
implementation but would also deny virtually all significant economic decision
making at the enterprise level. The supply of the necessary computer
A.I. Kitov and Iu. I. Cherniak; Avtomatizatsiia upravlencheskikh rabot",
Avtomatizatsiia Proizvodstva i Promyshlennaia Elektronika, Vol. I, pps. 26-32.
2/ Academician L.V. Kantorovitch, formerly at the Leningrad Branch of Mathematics
Institute imeni Steklov of the Academy of Sciences, USSR is now the Director
of the Laboratory of Mathematical-Economic Methods of the Institute of Mathe-
matics of the Siberian Department of the Academy of Sciences, USSR in
Novosibirsk.
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1 capacity ~`~ e1-ion ould be too great a drain on Soviet
2 industrial resources to be practical in the foreseeable future, and the
3 implied increased interference with the process of optimizing production at
4 the enterprise level would run counter to current policies.
5 The satisfaction of most of the USSR's requirements for computers for
6 processing economic information are envisioned in a program officially adopted
tii~r( (E~ i~ +L.':;~ ~.~ ti%ll..ri~.R ~' L~7?t .^t.~ ~? 7~ ~ ?
7 " for implementation in the Five Year Plan (1966-70). J This program, the cul-
8 mination of proposals now rather well known to students of the Soviet economy,
9 calls for the creation of "a state network of computer centers for the collection
10 and processing of economic information and the solution of problems of planning
11 and control in the national economy." The existing network of the state
12 statistical system, which has computing centers and machine calculating stations
13 in all-union republics and oblast and kray centers, as well as more than 650
14 machine calculation stations in administrative regions and cities, is to be
15 expanded and supplied with modern computing equipment, and will form the base
16 of the state network of computer centers. Along with the state network of
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computer centers sectorial and departmental systems of planning, accounting,
control, and information processing will be created as necessary and inter-
connected with the state network. L Presumably these sectorial and depart-
mental networks will encompass the computers in enterprises and in groups of
21 Decree of the Central Committee, CPSU and Council of Ministers USSR,
published in Izvestiya, 20 March 1966, p. 2.
22
.,7. N. Starovskiy, Chief Central Statistical Administration, USSR, Ekonomicheskaya
23 Gazc"ra, No. 13, March 1966, p. 25.
2 Ibid.
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1 enterprises where the basic economic information is generated. The final
2 consolidation and arrayment of economic information for the use of top planners
'ALZI
3 will presumably be accomplished on the computers of the-Central Statistical
4 Administration USSR, which "is now making ready for the compilation of a de-
5 tailed intersectorial balance of the production and distribution of the social
6 product on the basis of the report data for 1966." J
In a recent d-u son-of-4his-4'eheme,Dorodnitsyn has estimated that
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8 more than 4,000 medium to large-sized computers would be required to equip such
9 a network. It is doubtful that there are more than 3,000 digital computers
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presently installed in the USSR, of which only a fc~ are so deployed that they
would belong to this system. J Although it has been acknowledged that the
Soviet computer industry could not completely install the system in the 1966-70
Five Year Plan 91, increments toward its completion will considerably improve
efficiency in data handling at all levels of the econonq, and will give many
enterprise managers an increased capability to reduce costs and increase output.
'1/_ Lever/
The need for data processing computers at the enterprise level is especially
great, not only because at this level most of the data for planning and controlling
the economy are generated and must be consolidated and transmitted upward, but
4Z1 V b! - a' ~I
also because computers can be profitably used for inventory and production control, A
Ibid.
Academician A. Dorodnitsyn, head of the Computing Center, Academy of Sciences of
the USSR, in an article in Pravda, 23 February 1966.
A total of nearly 28,000 general-purpose digital computers had been installed in
the US by the end of 1965 according to Electronic Intelligence Digest,
10 February 1966.
J V. A. Kirillin, Chairman of the State Committee for Science and Technology, in
a speech broadcast from Moscow, 1 January 1966.
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payroll accounting, and the solution of complex engineering problems.
Soviet interest in applying electronic data processing to the problems of
industrial management was highlighted in March 1965 when V. D. Lebedev, then
Deputy Chairman of the USSR Sovnarkhoz, announced plans to modernize management
techniques by installing computers at 119 plants and combines during 1965 and
1966. These plans are a natural consequence of the'recently intensified interest
of the Soviet leaders in improving the efficiency of industrial management. Such
interest is epitomized by the findings of the Collegium of the USSR Sovnaxkhoz,
which met in August 1964 to discuss the introduction of computing equipment and
quantitative economic methods into industrial management. The Collegium con-
cluded that major attention should be given to "the comprehensive mechanization
of engineering and administrative labor, including engineering and design cal-
culations, norm (work standards) setting, planning, material and technical
supply, economic information, accounting, analysis of production activity,
etc." 10 About 100 plants are currently so equipped and these are considered
pilot projects.
The USSR has shown an interest in the application of computer control to
industrial processes since the early 19504s when a rapid increase in industrial
productivity through automation became an important national goal. Nevertheless,
this program has proceeded in a very limited way, probably largely because of
slowness in completing applied research on the processes to be controlled.
10 Ekonomicheskaya Gazeta, No. 37, 12 September 1964, p. 37.
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Among the industrial processes to which computers have been applied in the
USSR since 1957 are chemical and petrochemical production, electric power
3 distribution, steel smelting and rolling, and train dispatching. Although
4 Soviet industry continues to lag behind US industry in the application of
5 computers to industrial automation, increases in computer production and
6 research on applications in Soviet industry are contributing to the number and
7 variety of computers for process control. Moreover, particular emphasis on the
8 need for process control computers is given in the directives for the Five Year
9 Plan for 1966-1970.
10 The requirements of the service industries, e.g., transportation, construe-
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tion, electric power, have been little satisfied so far by the few
installations of computers presently working out linear programs in these areas.
The success of these applications is reflected in plans for greatly expanding
the production of the appropriate computers.
Keeping in mind that digital computers for installations supporting
military/space activities have first claim on Soviet computer production, that
many machines are needed by scientific institutes not employed in direct support
of military/space activities, and, further, that many of the existing machines
are of obsolete design, slow, difficult to maintain, and g ought to be replaced,
it can be estimated that equipping the economy with the necessary data processing
equipment will be a protracted task.
Production
The production of digital computers was carried out on a laboratory scale
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for quite a long time in the USSR, with production on a commercial scale
beginning about 1957. Consequently, although high rates of increase in output
are achieved every year, the shortage of computers remains acute. The following
table compares estimated production of computers in the USSR with the US. It
can be seen that, although a higher growth rate is estimated for the Soviet
Union, the lead of the US in absolute terms increases every year.,. During the
Soviet Seven Year Plan (1959-65) the production area at the major computer
was
plants yre greatly expanded. It is expected that the high priority now
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accorded the production of computers will continue through 1970.
Comparison of US and USSR Production of Computers and Data
Processing Equipment, a/, 1958-65
Millions of Current US Dollars b/
Average Annual
1958 1959 1960 1961 1962 1963 1964 1965 Growth Rate 1958-65
US 41o 1+90 630 895 1,,o65 1,24o 1,375 1,585 21.3%
USSR 35 45 55 70 95 120 11+0 200 29.3%
Rubles have been converted to dollars at the rate of 1 R = US$ 0.75.
!
/. Neither the estimates of production for the US nor for the USSR include special
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purpose military computers.
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Although, in the early years of production, analog computers were ^rzominatii.
the product mix in the USSR, as in the USS is now heavily weighted in favor of
digital computers. Most of the digital computers in production are of the
general purpose type, although an increasing number of special purpose designs
#,.re in serial production for use in industrial control or industrial planning
Uh%C"
operation.:,. The Soviet produces very few general purpose digital computers that
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would be considered large by US standards. Until 1965, most computers produced
in the USSR were similar to those in production in the US during the period
1954-60. In 1965 the USSR introduced a number of new models of general purpose
digital computers, such as the BESM-6, MINSK-22 and MINSK-23, RAZDAN-3, and URAL-11,
URAL-14 and URAL-16. Most of these embody the memory size, high operating speed,
and peripheral equipment necessary for data processing applications. They repre-
sent a significant advance in both technology and capacity and should be in pro-
duction for the next few years. The BESM-6 is the largest and fastest known
Soviet computer, and is claimed capable of averaging one million operations per
second. It is not likely to be generally available in significant numbers in the
next year or two. The URAL and MINSK machines are typical of the new production
models of computers that are likely to be available for general purpose uses in
the immediate future. 11
It was not until 1961-62 that the first transistorized computers were intro-
duced in the USSR, compared with 1958-59 in the US. Although'all models of Soviet
computers brought into production since early.1964 have been transistorized, the
production of electron tube-type computers was not completely discontinued until
11 Professor Andrei P. Yershov, head of the Computer Center Programming Department,
Siberian Division, Soviet Academy of Sciences, Novosibirsk told a meeting of the
T/ 0'
-man for Computingi,chinery in Culver City, California in June 1965 that the
BESM-6 has a core memory of 16-32,000 words of 48-bit length and an access time of
2 microseconds. A high degree of parallelism permits an average performance of
one million instructions per second. The computer will cost about 3 million rubles
anc, can be used for time sharing operations. Yershov described the URAL-16 as
hav~_ag both fixed and floating-,point, a 48-bit word length, 50,000 operations per
second, s. core memory of 8-64,000 words, memory acce time of 9 microseconds, and
a drum me:;Dry of 130,000 words. (Extracted from Electronic News, 7 June 1965)
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1965. There are no indications of production of third generation computers, i.e.,
those with integrated circuitry, representative of the latest state-of-the-art
in the US. In fact, the development of integrated circuit components for elec-
tronic computers has been identified by Kirillin 12 as a major assignment for
the electronics industry in the plan for the next five years (1966-70).
A dearth of peripheral equipment has persistently plagued Soviet computer
users who have data handling requirements. This is, as mentioned above, a con-
sequence of the long delay in recognizing the need for computers for data handling
tasks. The peripheral equipment described in connection with the newly announced
digital, computers includes auxilliary memories of magnetic tape and drum types,
improved page and line printers, and better punch card and paper tape readers.
Unfortunately for the USSR, the quality of this peripheral equipment still leaves
very much to be desired. Dorodnitsyn 13 considers the lag of Soviet technology
in this area to be too great to be satisfactorily overcome in an acceptable period
of time through domestic research and development and recommends importing the
necessary equipment or licenses to produce it. He reasons that the cost of
acquiring it in this way would not greatly exceed the cost of domestic production
(including research and development costs) and that any additional costs are justi-
fied by the importance of shortening the delivery period.
Continued rapid growth of the industry is independent on the availability of
investment capital, components and trained labor. The component supply has
12 V. A. Kirillin, op. cit.
13 Academician A. Dorodnitsyn, op. cit.
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probably been somewhat eased by the rapid growth in production of semiconductors,
which according to an official source, increased by 40 percent in 1965. 14
There are reports, however, that the quality of transistors used in Soviet
computers is below world standards for this purpose. The provision of the skilled
labor required for computer production has been a persistent problem and is likely
to be a continuing one. The necessity for using labor with inadequate skill tends
to reduce productivity in the Soviet computer industry and to contribute to a low
quality product and excessive maintenance for the user.
V. Institutional Problems
Several factors inherent in the organization and operation of the Soviet
economic system tend to preclude optimum application of computers. Soviet pro-
duction philosophy tends to emphasize series production of a minimum assortment
of standardized models to the detriment of users who heed computers tailored to
their particular requirements. Moreover, when a standardized computer has become
obsolete, and a replacement model more responsive to user needs has been developed,
the production of the obsolete model usually continues for an excessively long
period. This situation is chronic in all Soviet machine building industries
because the production loss incurred by a plant in changing models typically leads
to losses of bonus payments to the management and the work force. Delay in the
appearance of improved models also has occurred because of poor communications
resulting from' bureaucratic separation of computer users, producers, and designers.
This situation can be contrasted with that in the US where the producer not only
1 A. I. Shbkin, Minister of the Electronics Industry, Izvestiya, 4 January 1966.
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is also the designer, but frequently has his representative physically present
on the user's premises to maintain the computer and provide direct liaison between
user and designer.
In the USSR, very few services presently accompany the sale of a computer.
The customer receives limited instruction in programming, operating and main-
taining his computer, but once it has been installed the manufacturer takes no
further responsibility for its maintenance. Spare parts are often unobtainable
from the computer manufacturer and even from component manufacturers, and the
user is forced to employ makeshift expedients to keep his machine operating.
Such makeshift repairs may change the operating characteristics of the computer
enough to prevent the sharing of programs among users of the same model.
Even before the decree for establishing a state network of computer centers
was announced, measures to correct these deficiencies are been undertaken in
the USSR. As recognition of the seriousness of the losses in computer working
time became stronger, several official bodies were established to investigate
difficulties in the utilization of computers, to make suggestions for further
research and to oversee servicing arrangements. At the national level, repre-
sentatives of the Ministry of the Radio Industry, of the Ministry for Instrument
Making, Means of Automation and Control Systems- and the State Committee for
cience and Technology confer among themselves and with representatives of the
Academy of Sciences and Ministries in which computers are employed, in order to
dec?de which newly developed models should be scheduled for production. At the
hA/z ~ecv,
republic level, computer producers, design facilities and computer users were
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1 formed into production-engineering associations, concerned with advising one
2 another on the problems of planning, designing, producing, installing, and using
3 the computers located in the particular republic.
4 The production-engineering organizations and the scientific research institutes
5 have been playing a major role in the job of assimilating computers into the
6 economy. Between them, they carry out the function that is achieved in the US
7 by manufacturer's sales and service representatives and by private data processing
8 service organizations. Several new cybernetics institutes and economics-engineering
9 institutes have been founded in the USSR in the last few years to create computer
10 programs, perform systems engineering for process control applications, design
11 forms for economic reporting, and train applications and programming personnel.
12 The above measures are to be intensified and expanded under the provisions
13 of the decree on the state computer network, according to Starovskiy. 5
14 The decree provides that installation, adjustment, and putting into operation
15 of the systems and equipment of the state computer network will be contracted
16 out to a new organization, the All-Union Planning and Installation Administration,
17 now being organized under the Ministry of Instrument Making, Automation Equipment
18 and Control Systems. This administration is to have a network of territorial
19 planning sections and installation administrations and will maintain cost
20 accounting on its operations. The Ministry of the Radio Industry is charged with
21 tr.:: installation, adjustment, putting in operation, and servicing of all computers
22 and acc,,ssories which its enterprises produce. Apparently, the All-Union Planning
23 15 V. N. Starovskiy, op. cit.
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1 and Installation Administration is to have a general contractor's role on
2 total systems and the Ministry of the Radio Industry will be held responsible
3 for the installation and correct functioning of its computer equipment. It is
4 intended that the computer centers will keep books on their operations. Hence,
5 it seems likely that an arrangement will be established under which computer
6 centers will pay computer producers for servicing their computers. Such a
7 system would enhance the probability that service would indeed be rendered.
8 Concern in the USSR with the difficulty of maintaining computers in the
9 absence of a conscientious program by manufacturers to provide service after
10 sale is probably responsible for a recommendation made recently by Dr. 0.
11 Kozlova, 16 Professor of Economic Sciences. She asserted that it is rational
12 to lease automatic data processing equipment to enterprises and let the manu-
13 facturer assume full responsibility for installing, adjusting and maintaining
14 it. This is, of course, the most common marketing arrangement employed between
15 computer makers and users in the Free World.
16 The Soviet propensity for maximizing production rather than satisfying
17 users' needs has resulted in the design of computers that are difficult to use.
18 Soviet computers generally cannot accept instructions in timesaving "programming
19 language" (such as FORTRAN), and the Soviets have not provided the input/output
20 equipment needed for the use of the automatic language compilers and translators
21 ghat are standard in US. practice. Soviet programmers have had to prepare instruc-
22 tions in : zmerical form, a time consuming process. Moreover, the US practice of
23 ]providing :omputer users with standard for frequently programs run problems is
1 0. Kozlova, Pravda, 4 March 1966.
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seldom employed in the USSR, with the result that much time is spent in
redundant programming work. Recently, some steps have been taken to correct
these deficiencies. Language compilers for some of the new computers are
being developed, a central repository for programs for mathematical problems
has been created at the State Scientific and Technical Library, and several'
economic research institutes are compiling standard programs for common accounting
and control problems in commerce and industry. Under the decree for establishing
the state network of computer centers,'it is planned that responsible departments
and scientific institutions will continue this work and will provide libraries
of standard programs, autocodes and algorithmic language translators. However,
the success of these programs will depend on the provision of, necessary input/output
equipment.
The efficient use of computers is impeded in the USSR, not only because of
the lack of conveniences for programmers, but because of a severe shortage of
qualified personnel for maintenance and programming. Technical and economic
institutes have established courses to train people in the application, programming
and maintenance of computers. However, the number of students enrolled continues
to be inadequate compared with the present requirements, and more steps will
have to be taken to prevent a severe shortage of skilled personnel when the
expected raid increase in the installation of electronic data handling equipment
occurs.
The USSR recognizes the wide application of computers in the economy not
only as an attractive means of significantly reducing the cost of economic
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planning and management but also as the necessary means of retarding the rapidly
mounting rate of absorption of manpower into non-productive data handling tasks.
The Soviet planners realize that they are tardy in developing the technology for
applying computers to data processing. The correction of their backward position
in this respect has been given great emphasis in the directives for the next
Five Year Plan (1966-70), but. with the explicit acknowledgement that five years
is too short a period in which to complete a national system of data processing
computers adequate to handle the statistical reporting needs of the economy.
It is expected that the problem of equipping the economy with computers will
still be a priority national problem at the end of this five year plan period.
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TO : Chief, Economic Research Area
THRU: Chief, Planning and Review Staff
.
TITLE. OR SUBJECT, OF REPORT
Computers in the Soviet Economy
CONTRIBUTING ANALYST(S)
ATTACHMENTS: ORIGINAL AND TWO COPIES
RECOMMENDED PUBLICATION CATEGORY ER RA EM
CG OTHER:
COORDINATING ANALYSTS
NAME
BRANCH
INITIALS
GRAPHICS TO BE PUBLISHED IN TEXT
A/SI
YES NO
AN97
HAS CLEARED ST/P GRAPHICS COORDINATOR
P&EB/OSI
YES NO
25X1A
INFORMATION ON US MILITARY END PRODUCTS AND MANPOWER USED
YES NG
NO. OF MANHOURS TO PRODUCE REPORT
ESTIMATE CARDS SUBMITTED TO ST/P/A
AUTHOR'S NAME REQUESTED TO APPEAR. ON REPORT
YES NO
YES NO
DATE
2 May 1966
SIGNAT E OF AUTHOR
//`v"'1/ 25X 1 A
THIS SPACE FOR USE OF DIVISION AND BRANCFI CHIEFS ONLY
THE ATTRIBUTION OF THIS REPORT TO AUTHOR IS
APPROVED DISAPPROVED
COMMENTS
Coordination in Cybernetics Branch, LSD/OSI delayed for obscure bureaucratic
reasons.
25X1A
SIG
FORM
1060 1,722