V. Bazarov

PRINCIPLES OF LONG-RANGE PLANNING

...The problem of smoothly absorbing the surplus population into industry, given our cultural backwardness and the limited material resources which we can earmark for reconstruction purposes, makes it imperative that in carrying out industrialization we follow a strict system with respect both to the types of new enterprises to be set up and to the priority to be awarded them. Unfortunately, there has thus far been no settled system in the theory and practice of our industrial development (except for electrification). Guiding ideas deriving from specific Soviet conditions have not been formulated with due clarity, and often thinking inherited from the prerevolutionary past has enjoyed undeserved popularity.

The USSR is a country very rich in latent potentialities, but very poor intangible accumulations. Even with substantial foreign credits, we shall for a long time remain short of the means needed for capital outlays on the reconstruction of the economy. Where the development of productive forces assumes a considerable increase in fixed capital, we are unable to handle reconstruction work fast enough. The guiding principle of our industrialization must therefore be the attainment of maximum efficiency-in regard to physical volume of output, labor productivity, and involvement of new manpower in production-while a minimum is spent on capital construction. Modern technology opens up two possibilities in this respect which, if exploited skillfully and systematically, would enable us to give the industrialization process a remarkably wide scope, far exceeding the rates of growth in capitalist countries at corresponding stages of their development. These possibilities are first, rationalization, and second, electrification.

Let us dwell first on the factor of “rationalization” of industrial enterprises, meaning by this eliminating unnecessary labor processes (scientific organization of labor) and speeding up the working of machinery, with specialization and automation of complex operations. In this latter and most effective form, rationalization is realizable only with mass production on a gigantic scale. Mass production must therefore be the basic criterion determining the order of priority in our reconstruction undertakings. First to be reconstructed must be the industries producing consumers’ goods and those kinds of producers’ goods for which something like mass demand already exists. In all other industries, so long as they have not acquired a broad enough base within the USSR, it would be preferable to purchase essential products abroad or grant concessions to foreign capitalists.

The usual argument against this guiding principle is that it presumes long-term consolidation of commercial relations with foreign countries, whereas the unfavorable and ever worsening international situation obliges us to seek the earliest possible elimination of the slightest economic dependence on the outside world. This argument is based on an obvious misconception. Our present dependence on other countries is due not to any “natural” causes but to the exceptionally low level of our material development, i.e., to the underindustrialization of our country, which, in terms both of its climatic conditions and the abundance of its natural resources, has all that is required for the people inhabiting it to form an almost self-sufficient economic organism (of the type represented by the United States of North America). In other words, emancipation from capitalist encirclement is, under our conditions, above all a function of industrialization. The faster our industrialization proceeds, the faster shall we achieve that emancipation. If, therefore, we can prove that the scheme outlined above ensures the fastest possible rate of industrialization, we shall thereby have proved that it is also the most rational when it comes to relieving the USSR of its economic dependence on outside countries. Let us assume that in bringing about industrialization we fail to observe a rational order of priority enabling us, at any given moment, to concentrate our construction efforts in the areas in which we are best prepared to do so and in which we can straightaway avail ourselves of the most powerful types of modern equipment. Instead, we hasten to build our own enterprises to produce all products of which we are in need. Because of our organizational and technological unpreparedness and the inefficient scattering of resources inevitable with such superficial industrial expansion, these new enterprises, having absorbed a huge aggregate of capital outlays, would drag out a sickly existence, suffering endless “infantile disorders” and putting on the market an insignificant quantity of goods of very low quality produced at very high cost. These hastily contrived domestic substitutes would not, of course, emancipate us from outside countries, while they would retard cancellation of the lags in our economic forms, undermine the strength of the national economy as a whole, and spoil the whole outlook for general reconstruction.

It must moreover be emphasized that hasty capital construction in industries that had not yet won for themselves a sufficiently broad base in the USSR would not only slow down the growth of productive forces in the immediate future, but fetter it for many, many years to come. When production is on a limited scale, its specialization is not practicable. Consequently, by building new enterprises in industries that are not mass-producing, we should be forced to put large sums into obsolete production facilities-facilities whose efficiency would be much below that of their West European or American competitors. Thus, when the prerequisites for mass production materialize, we shall in a great many instances be faced with the following alternative: either to work to death, to the limits of physical deterioration, enterprises that had been rendered obsolete even before coming into existence, and accept the fact that each new year they were operated would confirm and aggravate our technological backwardness vis-à-vis the capitalist world, or to nullify in their underutilized state the millions of “man-days” embodied in irrational construction-an operation least of all consistent with planning.

Needless to say, the principle of a rational order of priority cannot be implemented in its pure form, without any compromises. To strengthen our defensive capacity we are compelled to build and develop enterprises which do not accord with this principle. But exceptions of this type must be confined to special-purpose output, to a group of cadre enterprises. As for industrialization of all those spheres that in peacetime are called upon to supply, so to speak, “civilian” needs, here the interests of national defense and of the national economy as a whole coincide: to strengthen and enhance the economic power of the USSR is to strengthen its defensive capacity at the same time.

Let us move on to examine the second factor in modern technology, its new “power base.” Electrification opens up very broad horizons in the mechanization of artisan trades without their transformation into factory production, obviating, that is, huge capital outlays on the construction of buildings for production and housing. In the history of capitalism, mechanizing any branch of labor was tantamount to turning it into factory-and-plant production. But not nearly always was this dictated by the actual technology of the product’s manufacture. The main reason was that the steam-power base of those days permitted neither the fractioning of power nor its transmission over a distance.

The shift to electric power, which can at will be fractioned and transmitted over long distances, spells a profound change in the technology and organization of many industries. This change is still nowhere near having been completely assimilated by the capitalist countries, saddled as they are with the gigantic legacy of the old century’s technology and public services. There is every reason to believe that the barrack-like factory style in industry and its fitting social complement-skyscraper buildings-will find their place in the museums of the future socialist society as the most glaring manifestations of the cultural barbarity produced by the crude technology of the age of classical capitalism.

We can and must pioneer in this respect, set out with our very first steps in industrialization to create a new type of enterprise fully in keeping with the possibilities of the new power source. We must make a most painstaking inquiry into the possibilities of industrializing artisan trades while having them retain their “domestic” character. In all those cases-and they are more than a few-where cheap current and the cheap automatic lathe make it possible to raise the level of the artisans’ labor productivity to that of workers in modern enterprises, we must renounce the stereotype for industrialization in the form of urban plants and factories. In every such instance, what represents the last word in modern technology-not only in mechanization, but in specialization and standardization as well-can be, and therefore should be, infused into domestic industry. The added expenses that would inevitably be incurred in the transportation of manufactures would be more than offset by the enormous savings on capital construction, not to mention the tremendous social and cultural significance of introducing industrialization in its most refined forms into the peasant or semi-peasant environment. Needless to say, in bringing electrification and mechanization to artisan trades we must see to it that the industrial workers thus created-industrial workers of a new type-deal not with the capitalist middleman between them and the “free” market, but with the state. The state must, on the one hand, act as the “customer” and the supplier of raw materials and on the other, promote the organization of cooperative production among the technologically renovated crafts

But even when the technology of a particular type of industry necessitates setting it up in plants or factories, it is by no means obligatory that the new enterprises be built in cities, the workers for them being concentrated there, too. Particularly is this undesirable where it is a matter of processing agricultural raw materials.

It would be desirable if production of raw materials and all the stages in their processing were consolidated, not only organizationally but territorially, in unitary combines. Besides the possible savings on capital construction (e.g., housing construction), we must here again keep in mind the more important fact that combines of this nature could represent powerful centers of industrial culture in the very heart of the countryside (this is precisely what Karl Marx had in mind when he spoke of the fusion of city and country).

The shortage of certain types of raw materials needed for the mass production of consumer goods and the impossibility of accelerating the output of these raw materials sufficiently in the USSR oblige us to consider expanding our trade with other countries in every way possible, and, in particular, preparing new mass-export items However, steadily growing dependence on the foreign market for basic raw materials used in great quantity would appear to be undesirable even granted stability in our commerical relations with the outside world. Such dependence becomes a direct threat in the presence of international complications. Germany, cut off from the foreign market during the Great War, undertook to substitute products of domestic origin for imported raw materials and in the space of two or three years accomplished this task for a whole series of industries. Many of these “substitution industries” proved so successful that they were able to hold their own after the war. The USSR is not Germany. But for all our technological backwardness it would not be Utopian to assign our engineers the task of setting up two or three (not a great many, as in Germany) “substitution industries” over a span of five to seven years (not two or three, as in Germany). It would in any event appear to be vital in the extreme that such an assignment be set at least in the case of cotton and rubber.

Among the branches of industry, power and transportation hold a special place. Whereas the scale on which to develop enterprises producing tools of production is determined by the real need actually manifested, the development of power and transportation facilities must be governed not by present but by potential demand. Thus an elaborate network of dirt access roads and rail spurs is a prerequisite for the elimination of subsistence and semisubsistence farming in the countryside. When we set out to build such a network in some region, the flow of goods for which it is intended does not yet exist. But the material and human elements of production are already there; in the absence of good roads they would be doomed to remain in their dissociated, paralyzed state; but after a road has been built they should combine in the process of productive labor, filling the newly constructed transportation arteries with thè products of that labor.

This general criterion also holds for present installations which serve economic needs that may be expected to increase greatly. Here, too, construction priorities must be determined by which of these potential labor fields being newly brought into existence will have the maximum effect on production with the minimum capital outlay. For example, in bringing the electrification plan to fruition, we must first build the electric power stations needed for supplying existing industrial and mining centers as well as thickly populated agricultural districts, and be especially circumspect in starting on power plants whose capacity can be fully utilized only after new industries that take large investments of capital and a long time to build shall have been set up in the area that these power plants will be serving.

The existence of considerable obvious and hidden unemployment makes the concept of labor absorption one of the basic criteria of expediency in reconstruction undertakings. What goes into this criterion? It is often formulated as follows: “All other things being equal, reconstruction must be directed toward enterprises characterized by the greatest labor absorption.” This formulation is ambiguous because, with varying outlays of labor, it is inconceivable that all other things could be equal. Out of the vast number of possible combinations in the way of “other things,” it is essential that we examine two that are antipodal.

First combination: “Capital outlays being equal, the enterprise with greater labor absorption will show a growth in the physical volume of its output proportional to or even greater than the growth in the number of workers employed” (i.e., higher labor absorption is accompanied by higher labor productivity). Thus understood, the criterion of labor absorption is indisputably sound and/under our conditions, is tremendously important as the regulative principle in the choice of methods and patterns for the reconstruction of the national economy. This is the criterion by which we were guided earlier when we emphasized the rationalization of mass-production industries, the electrification and mechanization of artisan trades without turning them into factory enterprises, the formation of industrial-agricultural combines in the countryside instead of concentrating the industrial part of these combines in the cities, and so on.

The second combination: “Capital outlays being equal, the enterprise with greater labor absorption yields less output per worker employed in it than the enterprise with less labor absorption” (i.e., higher labor absorption is accompanied by lower labor productivity). If the concept of labor absorption is taken as the criterion in mis second combination, one can defend the expediency of investing large amounts of capital in the repair and renovation of technologically backward enterprises, as opposed to building modern plants, which are said to threaten the proletariat with increased unemployment by unduly heightening’the productivity of labor. We cannot for one moment accept this formulation of the problem. To maintain obsolete equipment, by dint of considerable outlays on its reproduction, in an unchanged or almost unchanged state over aperiodof many years is outright negation of planned reconstruction, the plainest testimonium paupertatis of the planning principle. As we have already noted, under the Soviet system, the expansion of the physical volume of output to the same extent as the growth in labor productivity cannot run up against the limitation of the internal market. Hence an increase in unemployment as the effect of technological progress is by no means an economic inevitability in our country, and if it is all the same observable, this only attests our organizational inexpertness, which hardly merits perpetuation in our general plan.

Thus the criterion of labor absorption cannot overshadow the main criterion of reconstruction: the rise of the level of productive forces. Only if it enjoys equality with this primary index does the index of labor absorption take on its regulative significance.

Special mention should be made of the case where the technological improvement of operations in production, even though it raises the productivity of labor, is from the capitalist point of view unprofitable, since it requires more highly paid labor. The criterion of private enterprise profitability is surely not binding for us. The watchword of our reconstruction is: high intensity and productivity of labor, with high wages and a short working day. However, we can conceive of a situation where not only from the private enterprise viewpoint but from that of the national economy as well “profitability” takes on decisive importance in the choice between types of reconstruction projects. This happens when, by tapping reservoirs of low-paid labor, we can with insignificknt capital outlays launch full-scale reconstruction projects of the kind which are an indispensable prerequisite for raising the level of productive forces in a whole district or in an important branch of the national economy. The classical example is the earthwork that goes with roadbuilding or with the building of hydroelectric power installations. If this work is done manually by the surplus manpower of the villages, and at the rate of pay prevailing on the “free” peasant market, it will cost very little and can be organized on quite a broad footing. If, however, workers were paid at the rates of the construction workers’ union, the wages (including all the extras) would be three or four times as high as for “free-market” labor. This would so increase the cost of the work that it would pay instead to order power shovels from abroad and put them to work. The possibilities of acquiring them, however, are highly circumscribed by the meagerness of our foreign currency resources. Thus, if labor is highly paid and mechanized, the kind of projects (for example, local road building) that absolutely must be accomplished on a broad scale if the most elementary prerequisites are to be created for the normal development of extensive and thickly populated areas, will have to be pared down to a minimum. In this case, from the standpoint not of an entrepreneur, but first and foremost of the given district’s working masses, who figure simultaneously as manpower and as users of the product, projects of the former type are incomparably more “profitable” than projects of the latter type.

The whole preceding argument is pervaded with the idea that the reconstruction plan must be based on the economic districting of the USSR economy. The fundamental task of the plan with respect to the framework of production is to achieve a carefully worked out system for the social division of labor, in terms both of rational differentiation of the Soviet economy by industries and of rational distribution of these industries over the country’s territory. The tendency being shown by some district officials to interpret “industrialization of the districts” as meaning that the greatest possible number of industries should be established in each district, must be fundamentally repudiated. So universal a program would lead not to the vigorous growth but to the paralysis and decay of the productive forces in the economy of the USSR in general and of each district in particular. Real industrialization of the Soviet Union is possible only on condition that all the efforts of local management personnel and of the local population are centered on developing that special function in the social division of labor which falls to the given district by virtue of its geographic, geophysical, demographic, and other qualifications. This basic function makes the district an indispensable and irreplaceable organ of the national economic organ-Ism, and all trades and enterprises of local importance should be rationally combined around this function. This is the only thing the idea of “district combines,” which is popular with us, can possibly mean.

Even the above schematic description of a rational procedure for reconstruction work makes it clear that a long-range plan can be framed with some degree of soundness only if we have for each branch of the national economy not merely general assumptions on the extent of financing needed for the reconstruction and on the coefficients of productivity growth, prime-cost reduction, etc., which the “experts” say can be anticipated from that financing/but also an amply concrete and detailed plan for the reconstruction and construction processes in the performance, so to speak. We must know just what will be built, just where, and just how. We are not, of course, concerned here with blueprints but with data on the sizes and types of the new installations. It is equally essential to know within what periods of time the existing enterprises will be scrapped or reshaped on a new technological base (for example, our technologically backward all-purpose metallurgical plants, to be transformed into specialized modern enterprises turning out standardized products). Only on the basis of such concrete data can we critically gauge the probable rate at which labor efficiency will grow, the manpower that will be required for production, improvements that will be needed in the workers’ skills, and many other elements without which long-range planning Is void of any material substance. Naturally, the planning agencies alone cannot cope with this problem. The cooperation of government departments must be enlisted. We wish to point out that this necessity has long been recognized. Thus far, however, despite repeated inquiries from the Gosplan and the Council of Labor and Defense, we possess no departmental information that is at all explicit about the scope, the type, and the efficiency of construction, not only construction that is still in the planning stage, but construction that has already been accomplished over the past few years....

“Printsipy postroeniia perspektivnogo plana,” Planovoe khoziaistvo, No. 2, 1928, pp. 38-63.