ON THE METHODOLOGY FOR DRAFTING

PERSPECTIVE PLANS

II. THE PRIMARY TASKS AND TECHNIQUES OF PERSPECTIVE PLANNING …

1. …In evaluating perspective plans it is usual to bear in mind one criterion—their correspondence with reality. This criterion might be considered exhaustive if applied to a scientific prognosis of economic development formulated strictly genetically, i.e., based solely on consideration of the objective regularities and trends of a spontaneous economic process. But the “Perspective Plan” is not only a prognosis but a directive, not only a genetic inquiry but a teleological construct, not only a stocktaking of objective capabilities but a system of measures needed for making the most of these capabilities. And if economic policy has not actually been directed along the lines contemplated in the plan, by no means does the plan’s divergence from reality attest in and of itself to methodological errors or factual “miscalculations” on the part of those who drafted it. On the contrary, coincidence with reality would in this case be patent proof of a defect in the plan. On the other hand, hundred-per-cent accomplishment of the plan programs does not yet signify that these programs were projected with ideal accuracy, that the course outlined by them and actually traversed is really the optimum course.

2. The basic task of perspective planning, then, entails the need to combine the genetic and teleological methods in the search for the optimum course of development. Consequently, the chain of crucial methodological problems in perspective planning calls first of all for answers to two questions: (a) what should be the relationship between the genetic and the teleological; and (b) what is meant by the optimum course of development.

(a) The first question is in principle answered very simply. It stands to reason that the more fully a given branch of the economy is encompassed by the direct operational influence of the state, the more markedly does the field for teleological constructs broaden at the expense of genetic prognosis.

Agriculture, parceled into more than 20 million small independent units and, in its commodity production, oriented in large part toward exports, is the sphere in which genetic inquiry plays the predominant role. We can exert a direct influence on peasant farming in the way of planning only to the extent to which there is definite demand for agricultural products from state industry. Indirectly, through the wage fund, the scope of operations of state enterprises and institutions determines the share of the marketable farm output consumed by factory and office workers. Thus, in this respect, the development of productive forces in agriculture is predetermined, in point of quantity and quality, by the requirements of the state sector, within which planning teleology finds its broadest application. For the rest, the program for agriculture should be based on objective study of historically manifested regularities of internal growth and trends in the world market. This does not mean, of course, that agriculture can be split into two independent pieces developing in different ways, independently of one another. No, we have here an organic whole the structure of which is determined, on the one hand, by the planned demand of the state and the complex of measures to stimulate the development of branches which are particularly important for the state and, on the other, by the spontaneous trends of domestic growth and the similarly spontaneous dynamics of demand from the outside capitalist world.

The state sector of the economy is a sphere of teleological constructs primarily. Genetic inquiry yields only a quantitative inventory of the resources which can be utilized by the state sector. Determining the lines that utilization shall take constitutes the chief task for the plan formulations, of which the highest criterion is expediency, the achievement of optimum results with the available manpower and resources.

(b) What meaning do we assign to the concept of “optimum” economic plans? There is no question that the concrete meaning of optimum will itself change to correspond with the distinct stages of economic development. However, there are several requirements which must be fulfilled under any circumstances. These basic “constitutive” characteristics of the optimum can be reduced to the following three propositions:

First, the progress of the national economy from its present state to the eventual point indicated by the General Plan must be smooth, without interruptions, which in turn assumes the existence of definite economic reserves. This requirement is an especially difficult one to meet; particular attention should therefore be focused on it, specifically in the imminent initial period of the reconstruction process. This is why the idea of contingency and maneuvering reserves comes to the fore not only logically, but, if it can be put this way, chronologically as well, in the drafting of the General and Perspective Plans.

Second, the economy must be a harmonious, organic whole—a maximally stable system of mobile equilibrium—not only when the reconstruction mapped by the General Plan has been completed, but at any point in the transition. The emergence of temporary growth disproportions eventuating in crises is inevitable if the course of the reconstruction processes is spontaneous, but is not to be tolerated with planned reconstruction. This second requirement—the requirement of proportionality and internal consistency of the separate elements of the reconstruction process—excludes the possibility of movement on a straight line or any other line drawn in advance, and poses the problem of the intermediate stages of reconstruction as an independent planning problem. Hence the necessity of drawing up, along with the General Plan, a plan that is “perspective” in the narrow meaning of the word, i.e., a plan projecting the immediate stages of the general perspective in their chronological sequence and organic connection.

Finally, the third precondition of the optimum is that at the same time that the first and second preconditions are observed, the path chosen as leading to the goal projected by the General Plan be the shortest one. There arises at this point, consequently, the problem of the “growth rate,” the colossal importance of which has been remarked upon repeatedly in our press. The inherent advantages of the planned economy over the capitalist in this respect are beyond dispute; they add up to the possibility of making more rational use of the share of national income which we spend on reconstruction. But the relative size of that share of our planned economy at the present stage of its development is by no means greater, but rather even smaller, than in a capitalist economy which is at the same level of development of its productive forces. No matter how hard we try to constrict the consumer demand of the masses in the difficult transitional period of the next few years, we shall in no case be able to achieve the norms of capitalist society in this respect. Until now it has been considered normal in our country for wages, which determine the extent of consumer demand among factory and office workers, to grow proportionately to labor productivity. In the period of reconstruction, when advances in labor productivity will be brought about primarily by technological changes in production and not by more efficient planning of the working day, the rise in wages may slow down somewhat as compared with productivity; but under our conditions wages should grow a little faster than the intensity of labor even during this period. Under capitalism, meanwhile wages always grow more slowly than the intensity of labor (piece-work with its corresponding drop in pay rates, Taylorist “bonuses,” etc.). The same thing must be said with regard to the peasantry. All other things being equal, the consumer demand of the peasantry will grow more rapidly in the Soviet countryside than it would if landed proprietorship or capitalist farming were in existence.

On the other hand, our machinery for the planned administration of the economy requires relatively large outlays. In part this is a reflection of our want of proficiency and our inexperience; but to a certain extent the relative costliness of this machinery is an inevitable consequence of the low level of productive forces and efficiency. Under capitalism this extremely complex and widely ramified planning work is lacking, as also, therefore, are the corresponding expenses of administration; and at the present low level of our economic development the economies that could be effected by concentrating and rationalizing the functions of the planning machinery would be highly circumscribed. For these reasons, achieving a faster rate of growth in the reconstruction period than the rates that were observable in the advanced countries of the capitalist world in the years of their most intensive development represents a rather difficult task. In any event, the attainment of this goal is by no means guaranteed, as many think, by the mere fact that a planned economy exists in our country, but calls for the utmost exertion, the greatest concentration of effort. And inasmuch as the problem of the “growth rate” is, for the years immediately ahead, the cardinal problem, which will predetermine the very pattern of subsequent development, the postulate of the fastest possible expansion of productive forces must be the supreme criterion of economic policy.

In particular, it is an especially urgent requirement for the coming period that there be a complex of measures making possible the most effective use of private accumulation both within the country and abroad in the interest of accelerating our economic growth.

The interconnection of the three elements of the postulate of “optimality” may be briefly outlined as follows: The requirement of “uninterrupted” progress identifies the shape of the prospective curve only in the broadest terms and from a negative standpoint at that; i.e., it tells us that the curve we seek should have as few points of inflection as possible and no acute angles or discontinuities at all. The requirement of “proportionality of parts” yields, so to speak, a system of equations interrelating the separate branches of the economy at every moment of its progress under the perspective plan; but these equations define only internal relationships and not the absolute dimensions of the economic process. The first and second requirements combined serve to trace not just one curve but an indeterminate set of possible curves, a whole “family” of curves, as the mathematicians say. It is the principle of the “shortest path” which suggests the ultimate criterion making it possible to select from the set of conceivable curves the only one which is optimum.

It must be pointed out in advance, however, that we are not in a position to plot the optimum curve of perspective development with complete accuracy and rigor, not only because we do not have sufficient factual data at our disposal but because of the very nature of the problem. To compute the shortest or optimum paths given definite, previously stipulated conditions is, as we know, one of the most difficult problems of the art of calculation. Modern mathematics offers methods of solving problems of this nature for only a few very simple cases, and even here the methods to be employed are highly sophisticated (the methods of the so-called “calculus of variations”). In our cases, meanwhile, not only is the problem itself infinitely complex, but the factual data are of necessity most incomplete and not always reliable. It is therefore understandable that no sufficiently detailed and accurate methodology of perspective planning should exist at the present time, and that evolving one at short notice should be impossible; it can only develop gradually, step by step, in the process of prolonged and intensive collective work. For the time being, however, in our search for the optimum we must fall back on rather rough estimates and feel our way to the sought-for goal using variant approximations.

III. THE FRAMING OF THE GENERAL PLAN

1. The disproportions and anomalies hindering the rapid development of the economy of the USSR have been created only in part by the specific conditions of the war and revolutionary periods. An important role is played here by factors of a “secular” nature, so to speak, which are rooted, on the one hand, in the territorial distribution of the country’s natural resources and, on the other, in the grievous economic legacy which has come down to us from prerevolutionary Russia. Thus, the GOELRO plan previously pointed out that our food and fuel resources were located in outlying areas and that our agriculture was enormously backward; this backwardness made the economic position of large agricultural areas (“the drought zone”) very unstable and could be overcome only by protracted effort and major state measures for extensive land improvement. Both in the GOELRO work, therefore, and in the subsequent Gosplan works the General Plan is predicated on nation-wide quantitative and qualitative development of the power base. From this point of view, our main effort should be centered on building the power base and putting the economy’s heat and power structure in order, and on all the factors that are preconditions for the adequate organization and efficiency of the entire army of human and animal labor in both industry and agriculture. In this conception the country’s electrification and its economic regionalization are the chief guiding coordinates for all economic activity. It is clear from this that the framing of a general plan for reconstruction of the national economy essentially boils down to revision and modernization of the GOELRO plan.

2. The foregoing is a sketch of the cardinal lines of economic policy upon which the General Plan is being built. But the General Plan should provide not only a set of economic directives but also a perfectly concrete picture of the state at which the economy of the USSR will have arrived when these directives have been translated into reality. And since there is essentially no limit to the development of the national economy along the lines set by the over-all directives of the General Plan, the following question arises: what are the quantitatively and qualitatively determinate bounds within which the concrete formulations of the General Plan must be made to fit?

The state of society’s productive forces is shown by two basic indices: (1) their level (the productivity of social labor), and (2) their volume (the quantitative dimensions of social output). Consequently, the level and volume of society’s productive forces must be laid down in advance when the General Plan is drawn up.

3. The level, i.e., the limit of the qualitative improvements comprehended by the General Plan, is projected rather distinctly. Actually, the goal of general reconstruction is the optimal utilization of available economic resources as regards both technology and regionalization. Hence the process of general reconstruction cannot be considered completed as long as we still have enterprises or branches of the economy in which labor productivity is lower than that of our foreign competitors in consequence of technological or organizational backwardness. The General Plan is first and foremost a plan for radically overcoming our backwardness. Naturally, despite the abundance of the USSR’s natural resources, there may be and inevitably will be individual areas of production in which, owing to natural conditions, we shall be unable in the foreseeable future to bring the cost of production down sufficiently for the domestic product to cost us no more than the foreign product of the same quality. As a general rule output of this type should be left out of the General Plan. It is true that at present and for the immediate future, as a result of strained relations with the capitalist world surrounding us, we are obliged to stick to the idea of “autarky” for the USSR; but for the General Plan, which is laying the foundation for economic development over many decades, considerations of this sort cannot have decisive force. The international division of labor, the rational regionalization of social productive forces on a world scale, is an idea that is no less mandatory for the General Plan than the principle of rational regionalization of the USSR. Exceptions can be made (when deciding, for instance, on the routing of certain railroad lines) only in consideration of the perfectly obvious defense needs of the Union. We are assuming—and methodologically are forced to assume—that over the ten to fifteen years for which the General Plan is intended, the structure of the capitalist world and its relations with the USSR will remain roughly the same as they are now. Should this premise prove false, we shall be obliged to complete the General Plan under new circumstances for which long-range allowances cannot be made with any degree of accuracy. However, we cannot and must not assume that the secular development for which our general reconstruction is laying the foundation will proceed under conditions of national isolation and a scramble for the world’s economic resources. In this longer perspective the presumption of transition from national economic individualization to a world-embracing economic plan is quite admissible, and for a socialist, mandatory.

Only as general reconstruction is brought up to the indicated qualitative mark shall we create a broad and solid foundation for further economic construction and really eliminate all our present “disproportions.”

The stability of our industry is at present guaranteed by the monopoly of foreign trade. In addition to this protective function, the foreign trade monopoly performs the function of planned commodity exchange with other countries, a function which, in one organizational form or another, is, of course, an inalienable feature of any planned economy. The General Plan can be realized only under the protection of the foreign trade monopoly, but the very process of its realization means gradually eliminating the need for the monopoly’s protective function. And only when that need has been eliminated for good, will industry stand firmly on its own feet and, by the same token, will the “bond” with the peasantry become indestructibly solid; for under these circumstances even the well-to-do stratum of the village, the “commerce-and-industry” stratum, so to speak, will lose its prime incentive to fight the Soviet economic system as a matter of principle.

4. More difficult is the question of the magnitude of productive forces that should be adopted as the second, quantitative premise in laying the foundations of the General Plan. Depending on the pace of the reconstruction work, a predetermined level of productive forces can actually be attained with varying volumes of output, since the volume of output would grow even on the old technological base. Out of these many possibilities only one is optimal. But the problem of the pace of development, and of the course of development in general, a problem bound up with the search for that optimum, is a special task not of the General but of the Perspective Plan in the narrow sense of the term, and of the Control Figures drawn up annually. Thus the General Plan, which provides the over-all guide lines and the “goal” of progress, is the prerequisite without which it is impossible to set about exploring the intermediate stages along the way; and, on the other hand, as we have just seen, the most essential element of the goal itself depends, in turn, on the process of transition. We end up with one of those methodological vicious circles which inevitably develop when attempts are made to take the economic process, in which all dynamic and static relationships are linked inseparably by the unity of the organic whole, and break it down into sharply distinct spheres of investigation. There is only one way to break this vicious circle: the General Plan must aim, on the basis of tentative and, perforce, very rough ideas, at being a working hypothesis for the magnitude of productive forces. In the perspective plans, when the problems of stages and growth rates on the path leading to the accomplishment of the General Plan are worked out, this hypothesis is little by little refined. This alone makes it obvious that the General Plan can in no case be viewed as a finished conceptual model which has but to be reproduced with literal exactness in the living reality of economic construction. As in any genuinely creative human activity, we shall thoroughly understand and concretize our task in reconstructing the national economy only in the process of effecting that reconstruction.

5. On the basis of the General Plan principles and framework outlined above, a prospective picture of the reconstructed national economy may be drawn, with any degree of detail desired, for the separate regions and branches of production. But this will still be merely the totality of illustrations for the specific directives of economic policy; it will not be the plan for the “national economy” until the elements of such a plan have been unified by means of balance estimates. The scheme of these estimates is roughly as follows:

Let us suppose, for example, that the level of productive forces adopted by the General Plan assumes that labor productivity will double in industry and rise 50per cent in agriculture. Let the volume of output as an average for all branches of the national economy triple at the same time. The separate branches cannot, of course, grow uniformly. Specifically, since labor productivity is rising and production costs are therefore falling twice as fast in industry as in agriculture, the maintenance of “proportionality of parts” (as a condition of the dynamic equilibrium of the economy) calls for the relatively more rapid expansion of industry. But it certainly cannot be said a priori that industrial growth must be specifically twice as rapid as agricultural growth. The first balance problem for the General Plan is therefore posed as follows: In what proportions should the output of the separate branches of agriculture and industry increase, given the stated material and cost premises?

To answer this question we must look ahead and assess the capacity of the world market for our exports, and of the domestic market for both consumer goods and producer goods. Balance estimates drawn up with this purpose will enable us to gauge the future dynamics of the labor force in qualitative and quantitative terms. In industry the number of workers and employees should, generally speaking, grow proportionately to the value and not the physical volume of output. This determines the need for skilled manpower and, consequently, also determines the expenditures required for the training and retraining of the manpower. The same factor will determine the redistribution of population between town and countryside in conformity with the General Plan. Finally, having ascertained the expected increase of the total urban population (it should be somewhat smaller than the increase in the number of industrial workers and employees), we shall get an idea of the volume of housing construction required by the General Plan. As a result of all these estimates we shall have not only a “financial statement” for the national economy in the shape it will assume when the General Plan has been completed, but also an over-all account of the expenditures required for the general reconstruction of the country’s material and human productive forces. This essentially completes the task of the General Plan.

IV. THE FRAMING OF THE PERSPECTIVE PLAN

1. The purpose of the Perspective Plan is to concretize the stages immediately ahead in the accomplishment of the General Plan; the breakdown of the over-all plan perspective by years is unavoidably arbitrary and approximate, for the changes in the yearly rates of growth hinge not only on constant factors but on crop fluctuations and other conjunctural economic influences that cannot be foreseen. But there is no great misfortune in this. If certain naturally inconstant factors result in one yearly interval of the Perspective Plan being actually compressed into six months while another is stretched out into eighteen months, this sort of readjustment will not in the slightest impair the Perspective Plan’s orientational significance. The only thing that is vitally important is to fulfill the requirement of “proportionality of parts” as painstakingly as possible for each arbitrary yearly segment of the Perspective Plan, i.e., to see to it that every stage in the accomplishment of the General Plan, every stage arbitrarily marked in the Perspective Plan with a particular calendar date, represents an organically connected economic whole and not a haphazard intertwining of separate lines of development.

2. Though the concrete calculation of yearly growth rates is neither possible nor especially important for the long-range Perspective Plan, this task being specifically essential for the annual Control Figures, the determination of the average growth rate over the entire long-range period is fundamental to the Perspective Plan. And this problem becomes particularly acute within the framework of the coming five-year period. We are nearing completion of the recovery process without having adequately prepared for the approaching period of reconstruction, with the result that in the initial years of the reconstruction process we must inevitably experience a significant slowing down of the rate of economic growth. The fact is that we must immediately spend large sums on reconstruction while the results of that reconstruction will not affect the growth of productive forces until several years hence, when the newly built enterprises will one by one start coming into operation. The larger the share of productively expended accumulations we channel into new construction and the smaller the volume of the funds we are left with for renovating and partially re-equipping obsolete enterprises in being, the greater, obviously, will be the slowing down of the rate of growth. From the standpoint of rational principles of reconstruction, obsolete enterprises should merely live their days out; they do not merit sizable investments of capital, for the small increase in the volume of output and the even smaller rise in the level of productive forces are being purchased in this case at the high price of relatively great expenditures. But we shall obviously be unable to avoid “irrational” expenditures of this kind. Indeed, if we decided to make only such capital investments as appear rational in the light of the General Plan, we should have to steer all the accumulations to be invested in industry into new construction projects, limiting outlays on the maintenance of operating enterprises to so-called “current repairs.” The result would be that for the period immediately ahead, while the new enterprises were still being built, we should have not merely a slackening of the growth rate, but a completely static physical volume of output and sagging average productivity of industrial labor, while the wage bill would rise sharply because of the involvement of proletarian manpower in construction. Obviously, such a policy would be fundamentally at variance with the requirement of “proportionality of parts” in the economic whole and would lead to an acute crisis and catastrophic disruption of all our plans. To mitigate the difficulties of the transition period it is essential, at the same time that new construction is expanded in strict accordance with the plan for general reconstruction, that very large sums be spent on enterprises known to be inferior, just so that an immediate, even if relatively modest, increase may be achieved in their productivity.

As we see, under the conditions that will obtain in the immediate future, the criterion of “proportionality of parts” and the criterion of “the shortest path” plainly conflict. By being compelled, out of a desire to satisfy the former requirement, to direct major resources into intensified production by obsolete methods, and to do so for the next three, four, or five years, we lose in the over-all rate of progress on the General Plan, postpone the date of its completion, and increase its costs.

A paramount task of the Perspective Plan, therefore, is to set proper limits to this policy of reconstruction outlays, which, though economically irrational, is vitally essential, easily implemented, and hence particularly tempting in the eyes of the practical economic manager. The share of productive accumulation which is expended irrationally will obviously be particularly large in the next few years; as the completely rebuilt enterprises come into operation it should dwindle, and we may hope that by the time reconstruction is completed the number of enterprises not covered by the General Plan can be reduced to zero.

3. The Perspective Plan should envisage procedure and methods for eliminating the disproportions of the present economic system in the process of its reconstruction. This refers first of all to the problem of overcoming the goods famine and accumulating stocks of commodities which will make it possible to regulate the domestic market by more effective, more flexible, and cheaper methods than at the present time. Under the Soviet economic system maneuverable stocks of commodities are at the same time the very best currency guaranty, since they provide the state with its most effective tool for regulating domestic market prices and, at the same time, the purchasing power of the paper ruble. The program of the Perspective Plan also calls for working out the problem of special reserve assets which will make it possible to carry on reconstruction work without interruption in spite of weather and seasonal fluctuations in the current state of the economy.

4. One of the most formidable tasks of the Perspective Plan is the projection of price relationships. This is an area in which substantial errors are inevitable. But the task is not to be avoided, in the first place because the balance estimates apply only to value and not at all to the magnitudes of output in kind; and in the second place because the prospective determination of prices constitutes not only a scientific prognosis but an economic policy directive. Without a definite line, representing a directive, for the regulation of selling prices on industrial output, it will be impossible to find the optimum paths for reconstruction. The basic directive in this area, for the future as it has been in past years, should be that prices on manufactured goods are to be brought down commensurately with the reduction of their cost of production. In other words, the aim of state policy should be to have industry develop in a setting of healthy, moderate “animation,” equally avoiding the oppressive atmosphere of an acute depression and the corrupting atmosphere of a “boom” (by “boom” we mean the violent upward spurt of the economy which marks the pre-crisis periods of the capitalist cycle, with their “credit inflation,” enormous increase in profits, and their agiotage and other forms of speculation)….

“O metodologii postroieniya perspektivnykh planov,” Planovoe khoz-iaistvo, No. 7, 1926, pp. 7-21.