INTRODUCTORY NOTE

In attempting to understand the operation of their own economy, under the newly combined influences of a vastly expanded state sector and of market forces “freed,” as it were, at its borders (notably in agriculture and trade), some of the Soviet economists of the mid-1920’s turned their attention to Marx’s celebrated “schema of simple and enlarged reproduction,” published in the second volume of Capital. Taking the schema as a starting point, P. I. Popov and L. Litoshenko devised a pioneering input-output type of balance; E. A. Preobrazhenskii explored the “trade” relations among the various types of production systems coexisting in the Soviet economy and pointed out their significance in the process of growth; and G. A. Fel’dman devised a new two-sector model in order to clarify the interrelations between sectoral rates of growth and the “limits” which they set to the pace of industrialization.

Those who used as a point of departure Marx’s schema—presented in the opening paper of this section—thought that it was, as Fel’dman put it, “applicable to any social formation since it represents, in its most abstract form, the process of production and exchange apart from its historical specificity.”¹ What allegedly differed from one system to another were the “historical content” of the categories which entered in its structure (e.g., profits under capitalism and under socialism) and the form of the schema itself. Fel’dman, for instance, affirmed that the form of Marx’s schema corresponded “to the requirements of analysis of market relations,” and that it had to be modified in order to disclose the connections among income, consumption, accumulation share, capital formation, effectiveness of capital utilization, and productivity-i.e., the connections between “the economic categories which determine the possibility of realizing the basic conditions of our development: ‘to catch up with and surpass the capitalist countries.’”

The Popov and Litoshenko texts which are given below are excerpted from the Balance of 1923/24, the first and still unique complete Balance published by the Russians for any year. The first text shows the theoretical connection between Marx’s schema and the Balance; the second, the specific sectoral and product input-output connections. These texts are followed by two critical reviews made at the time, by Professor W. Leontief and by V. G. Groman-reviews which are of historical interest today. The input-output view of the economy is completed by a paper by M. Barengol’ts, the first to suggest the use of input coefficients in Soviet planning. The Preobrazhenskii article presented here was originally meant to form a sequel to his principal work, New Economics, of which large excerpts are given below in Part II. The paper presented in this section is, however, self-contained and attempts to present in a detailed way the relations among the state, “capitalist,” and “small producers’” sectors under various assumptions concerning capital formation in the state sector and particularly in its “Department I” (producers’ goods).

Finally, the Fel’dman study, included in this section (Part I of his “On the Theory of Growth Rates of National Income”), sets out his own growth model and the core equations relating its variables. The author shows how, in order to achieve given changes in the growth rate of output, “accumulation” (investment) should be allocated either to increase efficiency in use of existing capital or to change the structure of the economy, i.e., the ratios of capital stocks of his sectors u (producers’ goods) and Р (consumers’ goods). The second part of Fel’dman’s article is included in Part II below, since he explores there the interdependence between the rates of growth of the key variables of the model set out in Part I.

1. The numerous implications of the assertion that the same economic model (Marx’s schema) could portray both a capitalist and a socialist system are discussed in the second chapter of my book, Soviet Strategy for Economic Growth, Indiana University Press, Bloomington, 1964.