The unstable economic situation in the country at the beginning of the 60s of the last century raised doubts about the effectiveness and expediency of the administrative dictatorship even among the leadership of the state. Back in the days of Khrushchev, a discussion about new production incentives began in the print media. A new term appeared on their pages - "the economy of developed socialism." Reforms (a table reflecting the main transformations will be given later in the article) generally did not reject the directive model. However, along with this, certain mechanisms of self-regulation were introduced, as well as the material interest of producers in labor efficiency. Let us further consider what the economy of developed socialism was, the pros and cons of the measures taken.
Transformation in agriculture
What measures did the economy of developed socialism provide? Reforms primarily affected agriculture. Their beginning was announced in March 1965. Measures aimed at solving social problems in the village and introducing economic incentives to work were outlined. Purchasing prices were increased, a 50% mark-up was added to the basic cost for selling products above the plan. Along with this, investment increased. The economics of developed socialism in the USSR assumed the establishment of a ten-year firm plan for public procurement. To increase incentives, restrictions on personal subsidiary plots were reduced .
Disadvantages of change
The economy of developed socialism relied on administrative levers. State authorities continued to try to strengthen the role of the Ministers of Agriculture in the management and planning of the agricultural sector. Emphasis was placed on increasing investment and writing off collective farm debt. Enormous funds were allocated for the development of the agricultural industry. However, they were used extremely inefficiently. Part of the funds was used for the construction of gigantic complexes, the purchase of expensive equipment, the ill-considered chemicalization and land reclamation. Stable cash salaries were introduced on collective farms. At its core, this is one of the most important achievements in the social sphere. However, after their introduction, dependent moods began to develop. What did the economy of developed socialism lead to? The conclusion is very disappointing. As a result of transformations, the activities of state farms and collective farms became unprofitable. Over 25 years, from 1964 to 1988, there was a reduction in developed arable land by 22 million hectares. There were also high losses in agricultural output. Losses in this sector ranged from 20 to 40%. The country, which possessed fertile black earth, has become the world's largest importer of food products and grain.
Industrial sector
The economy of developed socialism at the initial stages developed by improving the economic mechanism or stimulating workers. In September 1965, transformation leaders attempted to combine these approaches. So began the change in the industrial sector. Unlike agriculture, reforms here did not reject the foundations of a policy economy. The main principles of activity were changes in planning conditions and increased incentives. The economy of developed socialism has maintained stringent standards in terms of output. Along with this, new indicators were introduced aimed at ensuring the quality of the goods. To increase incentives, producers were allowed to leave part of the income at the disposal of enterprises. Profit was divided into funds:
- Self-financing production.
- Domestic and socio-cultural development (construction of boarding houses, clubs, housing and so on).
- Material incentives.
The economy of developed socialism assumed that the line ministries that were planned to be restored would not act as former "dictators", but as consultants and partners of enterprises. They were supposed to promote the organization of production on a cost-accounting basis, based on strengthening self-government, self-financing and self-sufficiency. In the framework of the events, which included the economy of developed socialism, a combination of unified state planning and local initiative was envisaged. At the same time, the right to adjust plans that passed approval belonged only to the enterprises themselves.
The Economics of Developed Socialism: A Brief Summary of Industrial Transformation
Despite all the inconsistencies and limitations, the transformations entailed a significant result. At the end of the eighth five-year period from 1966 to 1970, an increase in industrial production by 1.5 times was noted. About 1900 fairly large enterprises were erected in the country. Among them, for example, the Volga plant in the city of Togliatti. But by the end of the 60s, the course of transformations had slowed down. This was due to fairly objective reasons. First of all, the share of the able-bodied population has significantly decreased in the country. In addition, the traditional raw material base was depleted, mining increased sharply, equipment became obsolete, and military spending increased. But the main problem was that the economic model itself, which rejected all the innovations, had exhausted itself - development could go by inertia for some period, but in the long run the system was doomed to failure.
Main problems
The reform gave rise to certain difficulties. In particular, the construction of gigantic industrial complexes led to monopolization in the industry. This, in turn, led to poor product quality and a lack of choice for consumers. The introduction of indicators for assessing quality at the price of a product led not only to its rise in price, but also to a significant reduction in production volume. The result was a shortage of products. Every year, the volume of imports of products that domestic industry was not able to produce increased.
Political Conservation
The economy of developed socialism was failing. What caused this? In the leadership apparatus, Brezhnev’s opinion was retold regarding the report made by Kosygin at the plenum in September 1965. In the ruling circles, it was believed that reform would lead to nothing. And it was not a need for change, but a lack of desire to work. According to some authors, it was this attitude that caused the reform to fail. Soon, the emphasis shifted to new resources of raw materials that were discovered in the eastern territory of the country. Along with this, it was decided to adjust the economic management system. In 1979, an attempt was made to revive the situation by improving economic leverage and strengthening the influence of the party leadership. But all these efforts could not solve the problems. In the ruling circles, they again began to talk about the advantages of moral incentive over material. To compensate for the shortcomings of the imperfection of the economic mechanism, socialist competitions revived . Only in 1983, after the death of Brezhnev, Andropov, the new leader of the country, undertook a "large-scale experiment." In the course of it, it was supposed to weaken centralized distribution and planning, to carry out a series of changes in pricing at the level of certain regions and enterprises. These events were successful, but the effect was short-lived. The change of economic levers remained an urgent problem.
NTP
By the beginning of the 70s, the stage of post-industrial development began in the West. This entailed the automation of production processes, the massive use of computers and robots, the introduction of new high technology. Along with this, the individualization of labor began, its transformation into creative activity, free from restrictions. In the USSR, they talked a lot about NTP. As part of the emerging scientific and technological progress in the country, first-class models of computers were created. In 1971, at the next congress of the CPSU, a new installation was voiced. The plan for the next years was to be realized when combining the achievements of progress with the advantages of socialism. But the shortcomings of the current regime significantly slowed down the progress of technology and science, the introduction of achievements in the production process. Periodically, there were reports of major developments and discoveries. However, if they did not carry military significance, then they remained unrealized due to lack of funds, as well as the lack of support from developers in those bodies where the fate of the discoveries was decided.
Attempts to solve the NTP problem
The country's leadership was beginning to understand the need for a transition to progressive production methods. As a result, the number of large enterprises under construction each year was reduced by 4 times. Instead, NGOs (scientific production associations) began to be created, new industries appeared (nuclear engineering, microelectronics, robotics, and so on). Despite the efforts made, these trends could not be decisive. Soviet scientists conducted first-class, and sometimes unique, developments in fundamental science. However, in practical life, scientific and technological progress was almost not felt. By the 80s, about 40% of workers, 60% of builders, 75% of village workers still worked manually.
Global response
It should be noted that by 1985 in the United States there were about 1.5 million of the latest computers and about 17 million PCs. In the USSR, at this point, several tens of thousands of similar machines operated, the vast majority of which were outdated models. The aggravation of the situation was caused by the sanctions adopted in the West in the early 80s. As a result of their introduction into the USSR, the import of advanced types of equipment, as well as high technology from abroad, has practically stopped. Thus, by the mid-80s, the country again, as in the twenties, was threatened with a new lag behind the Western states.
The economy of developed socialism (table)
Reform | Content | results |
In the agricultural sector | Introduction of material interest of the producer, self-regulation mechanisms, solution of problems in rural areas. | Unprofitableness of collective farms and state farms, loss of agricultural products, reduction of developed arable land. |
In industry | Improving economic mechanisms in combination with strengthening material incentives for workers. | The growth of production volumes, the emergence of large factories and industrial complexes. The weakening of the able-bodied population, the depletion of the raw material base, the cost of mining, the aging and depreciation of equipment, an increase in military spending. |
In the social sphere | Reducing healthcare costs, introducing a card system for distributing products. | Increase in mortality, aggravation of the food problem, increase in food imports, decrease in real incomes of the population. |
Finally
What ultimately led the economy of developed socialism? The table above shows that the overall picture is depressing. However, the situation of the bulk of the state’s residents has improved somewhat. Fewer people continued to live in communal apartments, televisions, refrigerators, washing machines began to appear in houses. A slight increase in salaries was also noted. Nevertheless, in terms of consumption, the country occupied only 77th place in the world.