M. Ragol’skii

ON THE GROMAN-BAZAROV

SUBVERSIVE THEORY OF PLANNING

... After having proclaimed in 1924 his thesis on the primacy of spontaneity, Bazarov continued to advocate it, only adding to it in 1926 his theory of “the falling rates of growth.”

In a Planovoe khoziaistvo article (1926, No. 7), Bazarov declared: “Long-range planning must combine genetic and teleo-logical methods to find the optimal way of development.”

The solution Bazarov suggests is a very simple one: teleology is to be applied to state enterprises, and genetics to agriculture.

In this same article he writes: “Agriculture, split as it is into more than 20 million small independent units and relying mostly on export in its market production, is an area in which the genetic method plays the dominating role.” Thus the old familiar song is heard again in 1926.

As to the plan being optimal, Bazarov brings in three factors: (1) “The movements of the national economy must be smooth, without any bottlenecks....” (2) “At any transition point, the national economy must be a harmonious organic unit, a system of mobile equilibrium with maximum stability. This requires the balancing and internal coordination of various elements of the recovery process.” And, finally, (3) “the optimum plan assumes that, provided conditions (1) and (2) are fulfilled, the way chosen by the plan to achiève its target should be the shortest possible.... At this point, therefore, the problem of the rafe of growth arises.... The advantages, in this respect, of a planned economy over a capitalist one are obvious and consist in the more efficient use of the share of national income spent on recovery. However, this share in our planned economy at its present stage of development is not larger-in fact if anything it is smaller-than the equivalent share in a capitalist economy at the same stage of development. Try as we may to reduce the demand of the masses for consumer goods during the difficult period of transition, we will not be able to attain, in this respect, the norms of a capitalist society. On the other hand, our planning machinery is costly. This is due partly to our inexperience but also, to a certain extent, to the low level of production forces. Under capitalism there is no complex planning apparatus, and therefore there are no expenses connected with it. We could achieve a comparable economy by streamlining the functioning of the planning apparatus and limiting it considerably at the present low level of our economic development.”

Since in this country wages tend to grow, since the welfare of the peasants is greater, and finally since the planning system and the state machine “require relatively high expenditures,” Bazarov concludes that our sources of growth are smaller than those of a capitalist economy. But the fact that the workers in this country are working for themselves, that the socialist reorganization of small-scale enterprises opens up tremendous vistas for increasing the productive forces of agriculture, that our system eliminates the tremendous wastefulness of capitalism, all these advantages Bazarov calls handicaps.

According to Bazarov, not only are we incapable of reaching rapid rates of growth, but we are even doomed to falling rates.

“We are about to reach the end of the recovery process without sufficient preparation for the forthcoming period of reconstruction. Therefore, in the next years, we shall inevitably witness falling rates of economic growth. Indeed, we must spend on reconstruction considerable sums, the effect of which will not be felt for several years, that is, until the newly built enterprises begin operating one after another. The greater the resources for the construction of new enterprises at the expense of the renewal and repair of enterprises already in operation, the greater will be this fall in growth rates. From the viewpoint of efficient principles of reconstruction, obsolete enterprises must only complete their term of operation and are not worth important capital outlays, since the latter would amount to overpaying for a small increase in output and an even smaller increase in productive efficiency. But it seems that we shall not be able to avoid such ‘irrational’ expenditures. In effect, if we decided to make only capital outlays feat we considered ‘rational’ in fee light of fee general plan, then we should have to invest all our savings in the construction of new enterprises, thereby limiting expenditure on enterprises now in operation to what is known as ‘current repairs.’ As a result, during the period when fee new enterprises are still under construction, we should find not only a fall in fee growth rate, but also a complete stabilization of the physical volume of output and a drop in general labor productivity, combined with a sharp increase in the wage fund at the expense of the proletariat engaged in construction” (ibid.).

And so Bazarov draws this practical conclusion: “Such a policy would obviously violate the condition of the ‘commensu-rability of the parts’ of the national economy taken as a whole and lead us to a sharp crisis and a catastrophic failure to meet our planned targets. Thus, to soften the hardships of the transition period, we must, along with new construction conducted strictly according to the plan of general reconstruction, spend considerable sums on obviously inefficient enterprises in order to obtain an immediate, even if insignificant, improvement in their efficiency” (ibid.).

Thus Bazarov tries to found his theory of diminishing rates of growth on two premises: first, denial of the advantages our system has over the capitalist one; and second, insistence that the transition from the recovery period to the reconstruction period will involve colossal expenditures of capital and labor on enterprises that will not show any results for five or six years. If we insist on building new factories, we are threatened by an arrest in the development of our production, and along with it a crisis, a catastrophe, etc. So the fewer new enterprises we construct and the more we expand the old ones, the slower will be the rate of diminution. Such is Bazarov’s conclusion.

There is so much confusion in Bazarov’s theory that it is not too easy to disentangle the mess. First of all, Bazarov is wrong in saying that expanded capital construction would inevitably result in a stationary volume of physical output or a falling growth rate. The scope of capital construction is linked, to a great extent, to the size of the increment in the surplus social product (although the construction of new enterprises can be financed by the part of gross production that covers the amortization of old enterprises that are winding up their operations). The growth of capital outlays requires the growth of the surplus product, i.e. of production as a whole. Construction of new enterprises requires huge amounts of producer goods for building and consumer goods for the builders. It is impossible to build such plants as the Dneprostroi or Magnitogorsk without a tremendous increase in the output of metal, cement, etc.

Increasing capital construction means that every year a great bulk of metal, cement, and bricks is sent to the building sites of new enterprises. These materials are “participating” inthe output of products in the given year. That is true. In this respect, there is a difference between construction materials and equipment which, as soon as it is received in the new enterprise, is used in the production process. However, we can imagine a rapidly increasing annual amount of surplus product and an increasing amount of means for construction. And if the share of the accumulated part of the surplus product increases-and there is no doubt it will-then this becomes more and more possible.

Since the means of production come from the market, as well as the means of consumption for the construction of new enterprises which will start producing only after the completion of their construction, a strain may occur in supply and demand, although it does not necessarily follow that a crisis is imminent. Just like any other difficulties in our building of socialism, they contain within themselves the means for us to overcome them. The growth of labor productivity, socialist competition, the self-sacrificing efforts of the workers-all these lead to growth of the social product, to the speeding up of construction which will enable us to construct and to produce more.

In his theory of diminishing growth rates, Bazarov attributes great importance to the dynamics of labor productivity. He says it will inevitably drop if, in order to avoid the total arrest of the rate of growth, we begin to expand old enterprises. Now, if we give priority to means of production for the construction of new enterprises, we shall again have “a drop in average labor productivity.” In brief, it will drop whatever we do. But a simple “unsophisticated” brain cannot grasp why the construction of new enterprises must result in a drop in labor productivity. Neither is it clear why the expansion of old enterprises must lead to the same result. And Bazarov choses to remain silent about the tremendous reserves that have remained unused, often intentionally unused, by saboteurs.

Now, if the restoration of old enterprises or the construction of new ones is not carried out by saboteurs, the result will be an increase in labor productivity. And an increase in labor productivity is an important way of speeding up the rate of economic growth: it increases the surplus product while simultaneously increasing wages, it increases the volume of goods and the means of labor, it expands the area of labor, etc.

The theory of diminishing growth rates is wrong since it is derived by equating our economy with a capitalist economy, thus ignoring our advantages over capitalism, which become more and more obvious as we approach socialism.

The theory disregards the facts that the socialist revolution has opened up tremendous vistas for increasing the productive forces: that it has broken down the barriers by which capitalism prevented the use of machines, the application of scientific methods in agriculture, electrification; that it has swept away the parasitic class of consumers such as the landlords and the rentiers; that, as we approach socialism, outlays on distribution are reduced; and that new incentives to work have been created. This theory conceals the fact that a very large share of the surplus product in our country is used to expand the means of production, just as it conceals the important fact pointed out by Comrade Stalin at the 16th Congress: that the socialization process of our economy is in itself a source for the increase of our growth rates. All this must be taken into consideration. As we socialize our economy, we bring the full advantages of socialism to our entire economic complex, and thus, instead of a falling rate, we shall find an increase in the growth rates of capital outlays and output....

The theory of diminishing growth rates was very important for the united counterrevolutionary front-it suited the purposes of the wreckers, which was to delay at all costs the successful and rapid development of our economy. According to Bazarov, during the recovery period our growth followed a “smooth S curve,” and thus we must base our plans on the mathematical analysis of this curve which is a falling rates curve. But to the mathematical logic of the S-curve, the proletariat has opposed the dialectical logic of socialist growth. And contrary to Bazarov’s predictions, the reconstruction period showed no slackening in the rate of growth....

“O vreditel’skoi teorii planirovania ‘Gromana-Bazarova,” Planovoe khoziaistvo, No. 10-11, October-November, 1930, pp. 59-97.