T. Cliff

Changes in Stalinist Russia

Changes in the management of industry

(Summer 1958)

T. Cliff, Changes in Stalinist Russia, International Socialism, No.1, (trial issue, mimeo, Summer 1958), pp.19-56.
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.
Proofread by Anoma Cartwright (March 2008).

Since the death of Stalin a number of changes have taken place in the economic, political and cultural life of Russia. To describe these changes, evaluate their importance and try to see their causes and results, we intend publishing a series of articles on the subject in International Socialism. The series will include the following five titles:

  1. Changes in the management of industry
  2. Tensions on the factory floor
  3. The crisis in agriculture and how Khrushchev tries to overcome it
  4. The cultural impasse
  5. The dynamics of state capitalism


Chapter 1.

On July 1, 1957, a new set-up in the management of Russian industry came into being. The need for a change in the administration of industry reflected a deep conflict between the developing productive forces and the social relations of production in Stalinist Russia. Whether the changes brought about in the institutional set-up by Khrushchev will eliminate this conflict is of paramount importance. After all, as Marx said: “No social order ever disappears before all the productive forces, for which there is room in it, have been developed; and new higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society.” [1] The cause of all social revolutions lies in the conflict between the forces of production and the relations of production. An attempt will be made to show that Khrushchev’s reform of industrial management is one important expression of this conflict which is inexorably growing in state capitalist Russia and pointing the way to its inevitable doom.

Declining rate of industrial growth?

As early as July 1955, at a Plenum of the Central Committee which was called to discuss problems of industry, the Party leaders began to hint publicly that the top-heavy structure of planning, management and control inherited from Stalin was not doing a satisfactory job.

Under increasing strain, another session of the Central Committee in December 1956 decided that it was necessary to revise the Sixth Five-Year Plan downwards: indeed, the target for industrial growth sanctioned for 1957 was the lowest in the thirty years of the Soviet Plan era. [2] The extent to which the new targets of growth for 1957 fell below the original targets for the year [a], even below the actual achievements of the years preceding, and the extent that the revised targets have barely been achieved is clear from the following table:

Actual and Planned Increases in the Production of Selected Items, 1955-1957 [3]



av. ann.





Pig iron (million tons)






Steel (million tons)






Rolled steel (million tons)






Coal (million tons)






Petroleum (million tons)






Cement (million tons)






Electricity (milliard kwh)






It is possible that the decision to draw up a seven-year plan for Soviet economic development over the period 1959-65 [4], which represents a break with the principle followed since 1928 of using a 5-year period for planning, is a means of covering up the failure of the economy to keep up with the previous plan and the actual decline in the rate of growth.

Increasing difficulties on the path of industrial growth

A number of factors incline to affect the rate of growth of industrial output in Russia adversely. First:

The population bottleneck

A census taken on January 17, 1939, showed a population of 170.6 million. In 1940, with the annexation of Lithuania, Latvia, Estonia, Western Ukraine, Belorussia and Moldavia, the population rose to 191.7 million. [5] According to Stalin and Khrushchev the population of the USSR grows by an average of some 3 million a year. In April, 1956, it was officially estimated to be 200.2 million. [6] It is thus clear that the loss from the rise in deaths and decline in births during the war must have been something like 30 million.

Manpower shortages will be especially severe during the period of the new plan, 1959-65, as during this time the sharp fall in the 1941-45 birth rate will be reflected in industry

The population not only rose very little between 1940 and 1956, but it also became older. The shortage is particularly felt in the age groups now reaching working age. The number of pupils in grades 1 to 7 of Soviet general schools in the 1940 school year was 32,140,000, while in the 1955-6 school year it was only 22,900,000. [7]

Some other factors also affect available manpower. Whereas in 1929 women made up 27 per cent of the total number of workers and employees employed in the economy, and this percentage rose to 38 on January 1, 1940, and continued to rise till it was 47 per cent on October 1, 1950, it later not only stabilised itself, but has even started sowing a tendency to fall, dropping to 45 per cent on October 1, 1955. [8]

The extension of the period of full-time education, so that at the end of the Sixth Five-Year Plan nearly all children will be staying at school till 17, is also working towards an aggravation of the shortage. While this, of course, will eventually have a profound effect on the efficiency of labour, for a time it will reduce the numbers available.

In addition, working hours – raised from 7 to 8 (for six days a week) in 1940 – are gradually to be reduced again, so that the standard working week will fall to 41 hours.

Above all, the increased demand for labour in agriculture will affect manpower supply to industry. Ever since the beginning of the Five-Year Plans, the tempo of Russia’s industrial growth has depended largely on a flow of labour from the countryside to the towns. The number of people in the countryside declined by some 7.5 million in the 30 years 1926-1956. This number, together with the natural increase of population, was syphoned off into the towns, the town population increasing in the same thirty years by 60.7 million.

Since 1953, however, the Government’s agricultural programmes have resulted in a sizeable net increase in agricultural manpower. A second impediment to industrial growth is the

Diversion of capital resources from industry.

Under Stalin, a greater portion of capital investment went into industry than was usual in the United States, for instance, at a similar stage of its development. Thus it was estimated that in the United States, of the total capital invested in the years 1880-1912, industry took 19.1 per cent, whereas in Russia the share of industry was: in 1928/29-1932, 41.0 per cent; 1933-7, 37.1 per cent; 1948, 49.4 per cent. [9] Moreover, owing to the more youthful composition of Russian industrial capital to date, and the consequently smaller requirements for replacements, the ratio of net to gross investment has been higher in Russian than American industry (75-88 per cent in Russia as against 50-60 per cent in the US in the same years taken above). [10] Another factor regarding capital investment that gingered up industrial growth was the fact that a larger portion of capital invested in industry was directed to the means of production industries, which are by nature more conducive to growth: a machine-making factory makes machines which can make machines; a textile factory makes cloth that “only” satisfies the needs of the people, without directly affecting production. (Thus, during the period 1929-1941, of the 200 milliard roubles approximately – in current prices – invested in Russian industry, about 170 milliard, or 85 per cent, went into means of production industries. [11])

Now these growth-inducing factors in the pattern of capital investment are to be seriously weakened. In the first place, a much greater proportion of national resources is being devoted to agriculture, housing and armaments. Since 1953, ambitious programmes of agricultural expansion have absorbed tremendous investments. The size of the drive to provide modern equipment for agriculture may be gauged from the fact that the number of combine harvesters promised for 1956-60 is to significantly exceed the total number received by Soviet agriculture up to 1956. The doubling of the rate of housing construction in the Sixth Five-Year Plan also means a large diversion of resources from industrial expansion. Again, it is obvious that the ultra-modern armaments production – the H-bomb, ICBM, Sputnik, etc. – demand quite a large diversion of resources; however, there is no data available to estimate the size of this diversion.

In addition, more capital resources will have to be and actually are being directed to transport. This branch of the national economy was sadly neglected for many years. The emphasis in the past has been on a minimum allocation of new resources to transport, which sharply intensified the use of existing equipment. Now, however, the discrepancy between the level achieved by industry and that of the transport system turns the latter into a bottleneck and greater investments in transport are most necessary.

Furthermore, as the average age of Soviet enterprises rises, a greater portion of capital investment must be devoted to replacements, that is, to keeping present equipment intact instead of increasing the total quantity.

Moreover, an increasing portion of capital goods is intended for export. A steel mill exported to China in exchange for soya beans may well improve consumption standards in Russia, but will directly encourage industrial growth in China, not Russia.

Again, the Kremlin is compelled – under social and economic pressure from below and in order to persuade the people to work better – to devote a slightly larger portion of the capital invested in industry to the consumer goods industries than hitherto. Those industries are of course less growth-inducing than heavy industries.

Possibilities of improving technique

During Stalin’s industrial revolution, practically the whole of industry was built up from scratch. So long as Russia could copy the best techniques of the more industrialised countries, the productivity of labour could take great strides. Now this premium on backwardness fails to accrue to the same extent as in the past. Relatively less remains to be borrowed. Russian industry is backward no more, hence the gain in labour productivity must be on the whole more gradual than in the past.

Counteracting factors

There are a number of factors working in the opposite direction to those mentioned above, and these make for a rise in the rate of industrial growth.

First, Russia’s labour force is much more highly skilled than it was during the industrial revolution. At that time the extremely rapid growth of the industrial working class was accomplished by absorbing into industry large numbers of peasants who were unskilled in industrial techniques and unaccustomed to a factory regime. The move from job to job is, and will continue to be, much less common than in the past.

Secondly, the number of technicians and scientists is increasing and their quality improving, which presupposes the better equipment of industry and improved use of it.

Thirdly, a higher standard of living is sure to bring in its wake more efficient labour power.

Lagging labour productivity

In face of the many difficulties mentioned above, the Russian authorities find it necessary to emphasise intensification – raising the output per worker.

Up to now, the productivity of labour in Russian industry has lagged far behind the technical level of its equipment. Being new and built in very large units, it has equipment which does not fall short of the level of American industry, and is certainly far more advanced than that of the countries of Western Europe. However, this does not show up in comparative labour productivity. Before the war comparisons of labour productivity in Soviet industry with those of other countries were quite common. Thus in 1937 a special committee of Gosplan calculated the relative productivity of the USSR, US, Germany and Britain and came to the conclusion that the average productivity of all industries in the USSR was 40.5 per cent of that of the US, 37 per cent of that of Germany, and 103.1 per cent of that of Britain. [12] These calculations probably somewhat exaggerate the achievements of Soviet industry compared with that of Germany and Britain. However they are on the whole supported by the excellent study – the only one available – comparing labour productivity in Russian and US industry, namely W. Galenson’s Labour Productivity in Soviet and American Industry (New York, 1955). According to him Soviet labour productivity in industry in 1937-9 was about 40 per cent of that of America at the time; he goes on to say that between the pre-war years and 1950 – the last year with which he deals – the gap did not diminish. [13]

What has been dealt with so far is based on productivity per man-year. If output per man-hour were taken rather than output per man-year, a concrete factor of at least 16 per cent in favour of the United States would be in order because of the prolongation of the working week in Russia since the war.

Over the whole Plan era, however, the rate of growth of labour productivity in Russian industry has markedly surpassed that in the US. Thus, according to the calculations of Donald Hodgman, which do not incline to an underestimation of Soviet achievements, during the years 1928-40, man-hour productivity of the Soviet industrial worker increased at an average annual percentage rate of 4.4. This may be compared to the 4.2 average annual percentage rate of increase in man-hour productivity in American manufacturing (excluding mining) for the period 1919 to 1939 (indicated in Solomon Fabricant’s study Employment in Manufacturing 1899-1939, New York, 1942, p.331). Over the longer period 1899 to 1939 the annual average percentage rate of increase in man-hour productivity in American manufacturing was only 2.9. [14]

As a result of the quicker rise in labour productivity in Russian than US industry in these years, the gap between the two countries narrowed. Even a productivity of 40 per cent of the US level is no mean achievement when we remember that in 1913 the productivity of labour in Russian industry was estimated to be only 25 per cent of the American. [15]

While in a generation the gap between labour productivity in American and Russian industry was narrowed from 75 to 60 per cent, the gap in the level of industrial output was narrowed oven more, because the number of industrial workers grew much quicker in Russia than in the United States.

The number of workers and employees in Russian industry grew from 3.8 million in 1928 to 17.4 million in 1955 [16], or some 4½ times. As against this the number of industrial workers in the US rose only by a third during the same period. The Russian industrial labour force in 1928 was about a third of the American; in 1955 it was slightly larger than the American.

The tremendous increase in the number of workers in Russia explains the fact that the rate of growth of industrial production has been considerably greater in Russia than in the United States.

Increased Output of Selected Items in Russia and USA,
1929-1955 (in %)




Pig iron















However, with the increasing difficulties being encountered in the recruitment of labour for industry, this compensating factor disappears and the Kremlin has to rely on raising the productivity of labour in industry if it wishes to close the gap between the level of industry in America and Russia.

The urgency to do so is aggravated by the fact that in absolute terms the gap between the output of industry in the United States and Russia has hardly narrowed throughout the last generation, as can be seen from the following table:

Absolute Growth of Output of Some Important Products
in USSR and USA, 1929-1955




Pig iron (million tons)



Steel (million tons)



Coal (million tons)



Petroleum (million tons)



Electricity (milliard kwh)



Khrushchev is set on eliminating the lag in labour productivity in Russian industry. A chief item in his inventory must be the improvement of industrial management. However, before dealing with the recent changes in this sphere, we shall have to deal with the administrative set-up in industry before July 1, 1957.

Chapter 2.
The organisation structure of industry

The organisational structure of Soviet industry is very hierarchical and centralised. Beginning at the lowest level, it has the following rungs: the brigade, shop, department (comprising several shops), firm, trust, chief subdivision (glavk), Ministry, Economic Council attached to the Council of Ministers of the Soviet Union, and finally the Council of Ministers.

In each shop there are several brigades, a number of which work during each shift, each led by a brigadier. He takes part in production alongside the other members of his brigade, but is in charge and sets the pace for the brigade. Like all other executives, he is appointed from above, by the department superintendent. Foremen are selected from among the brigadiers.

Above the brigadier is a junior shop foreman, a senior shift foreman, and in large shops a separate senior foreman who is in charge of all the shifts in the shop. All the orders of the management are transmitted to the workers through him [19]; he has the right to hire and fire (with the approval of the department superintendent), to impose fines on workers and distribute premiums within designated limits, and to rate workers’ skill for the determination of appropriate wage scales. [20] In the words of a Soviet commentator: “The foreman is the junior commander of production, the direct organiser of production processes, and the full master of his section.” [21]

Above the foreman stands the department superintendent. He works out the annual plan of the department, sets the labour norms and piece-rates within over-all designated limits, and is responsible for the smooth running of the department as a whole. The department is considered an independent entity managed on a business-accounting (khozrashchet) basis. The superintendents or major departments are considered important enough to be nominated or dismissed by the Minister himself.

Above the department superintendent stands the chief engineer, who is “in charge of production, of the planning of flow between departments, of working out norms and standards and of making improvements, and of distributing materials, equipment, and the firm’s labour force.” [22]

The commander-in-chief of the whole factory is the manager (or director), whose orders all personnel have to obey, and who has final rights of hiring and firing. A decision of the Central Committee of the Party as early as September, 1929, placed the manager in full and sole charge of the plant. All his economic orders were now to be “unconditionally binding on his subordinate administrative staff and on all workers.” [23] A textbook on Soviet economic law published in 1935 went as far as to state: “One-man management (is) the most important principle of the organisation of socialist economy.” [24] The same emphasis on the power of the manager and his agents over the workers continues to be repeated in the Soviet press. Thus Pravda called for “a further strengthening of one-man management and an increase in the role of the leader.” [25] B.P. Beshchev, Minister of Transport, stated: “The managers must be granted greater power... We must increase the role and importance of the middle and lower commanding levels, particularly the chiefs of stations, depots, road sections and construction sections and foremen at shops and depots.” [26] Premier Bulganin said in a speech to the Central Committee of the Party: “We must strengthen one-man management... The extension of the Director’s powers and the enhancement of the foreman’s and section manager’s role are urgent problems in industry and building.” [27] The Central Committee accordingly resolved: “The powers of Directors, shop managers and foremen must be extended.” [28]

The manager is assisted by a number of staff sections: planning-production, technical, labour and wages, finance and bookkeeping, technical and quality control, chief mechanic’s, procurement and marketing.

There are also auxiliary units under the manager’s control, including transport, housing, children’s nurseries, etc.

The manager of the firm is appointed or dismissed by the chief of the glavk or the Minister.

Factories engaged in the production of the same goods and located in the same area are under the control of a glavk either directly or through an intermediary – in heavy industry a trust, in light an industrial combine. The glavk carries out the direct and daily management of the factories under it. It elaborates technological plans and organisational set-up, works out the details of production, capital development and finance of each firm, determines their procurement and material supply plans, fixes the prices of the finished products and makes the final decision on norms of output and wage scales. [29]

Intertwined with these chains of administration in industry are a number of different chains which criss-cross at different levels, thus making the set-up much more discordant and irrational, and which also cause a series of tensions in the factory.

Overlapping the administration of industry described above there are a number of systems of control. There are first of all what is usually called the “Soviet apparatus”, secondly the secret police, and thirdly the Party. They will be dealt with in that order.

The Soviet apparatus includes, besides the Ministry administering the particular industry, agencies whose primary task is to check the performance of other ministries: for example, the Ministry of Finance, the District Prosecutors, the State Planning Commission, the State Arbitration Board, the Ministry of State Control.

The Finance Ministry controls economic activity through a Control and Inspection Board, which is a highly centralised organisation with a network of inspectors who, operating from special “control stations”, have the right unexpectedly to audit the books of any industrial plant and report all deficiencies found in the books to the District Prosecutor.

The District Prosecutor commands a network of agents who, acting independently of any other government agency, see to it that managements observe the laws, government decisions and orders.

The State Planning Commission not only draws up economic plans, but controls the planning operations of the individual plants. The State Arbitration Board is empowered to iron out disagreements emerging from contracts between different plants, and to supervise the fulfilment of business contracts.

The Ministry of State Control functions through a complex hierarchy of Controllers-General (one for each glavk), under whom there are senior controllers, controllers and junior controllers. The powers and functions of this Ministry are very wide, and it has supervisors in all the “more important plants, railroads, storage warehouses, military districts, naval units, ports, and certain districts of the country that have special economic importance.” [30]

The Secret Police has its agents in every rung of the economic administration. Each factory of any size has its “special section”, a branch of the political police. This “special section” is not responsible to the plant manager, the administration of the glavk or the appropriate industrial Ministry, but only to the Ministry of Internal Affairs. The “special section” maintains a dossier on every worker and has its network of informers scattered throughout the factory.

The last, but by no means least, organ of control over industry is the Party. Managers of industrial enterprises come under the scrutiny of the Party Central Committee apparatus before their appointment. And, after appointment, Party control over the manager, as well as the rest of the factory personnel, does not cease for a moment. In factories of some size, there is a full-time Party secretary appointed by the town, regional, territorial or republican Party Committees, who is responsible not to the management of the plant, but to his superiors in the Party hierarchy. The Party organisations in the factory have the “right of supervision over the work of the administration.” [31] Their wide functions are largely intertwined with those of the management.

The factory Party secretary has the power to compel the manager to change his decisions, including the annual production plan of the plant or of an individual shop. He can appoint “technical brigades of specialists”, whose suggestions to the manager are irrevocable orders. He can also compel the manager to change his subordinate personnel.

The number of bodies controlling the individual firm is so great, and their inspections so frequent that they sometimes reach ridiculous proportions. Thus, for instance, manager N. Egorev complained that in five months of 1940 his plant was once inspected by a brigade of the Commissariat (later renamed Ministry), four times by representatives of the glavk, three times by representatives of the Commissariat of Finance, once by a commission of the District Soviet, and three times by the representatives of the Commission of State Control. [32]

The control apparatus under discussion is additional to the controllers appointed by the director himself. These are also very numerous, making up, we are informed, as many as 10-20 per cent of the productive workers employed in many machine-building enterprises. [33] Khrushchev referred to the inflated administration of control in the following terms:

“At present there are many controllers over the works manager and foreman... At the enterprises there is a vast network of agents from various Ministries and departments which is not always justified. In addition to controllers from departments of technical control, certain clients who have given orders maintain a staff of their own inspectors at the enterprises.., at the enterprises of the automobile and tractor industries, of agricultural and transport machine building alone, about 50,000 controllers and inspectors are employed. For instance, at the Michurin gear-wheel works and at the No.1 bearing works, these controllers and inspectors are equivalent to about 20 per cent of the operational staff of workers.” [34]

Chapter 3.

To understand the working of the administration of Russian industry, a study of its formal structure, the chains of command directing it, is insufficient. One must also study the informal relations, the actual internal workings which, as will be seen, are far from constituting the streamlined structure usually described by the Stalinists and also by most of their critics.

One of the worst bottlenecks that disturbs the smooth, harmonious running of the administration of industry is departmentalism – the trend towards the carve-up of the economy into tightly closed compartments. Each Ministry, each glavk, and even each factory, tends to become a separate empire. Most factories make their own hand tools, large factories have their own small foundries. “There was a time when the war forced each factory to make everything for itself – nuts, bolts, angle-bars, and other small components. But why must I make an angle-bar now? At a specialised factory it would cost 20 kopeks, but it costs me 20 roubles?” complained Glebovsky, Director of the Urals Engineering Works. [35] In similar vein Bulganin complained:

“In the specialised plants making metal articles the cost of production of a bolt 12 by 60 mm. in size amounts to 10 kopeks, whereas the cost of production of the same bolt in the workshops run by the consumer amounts to 1 rouble 40 kopeks, that is, 14 times dearer. While a specialised plant needs 1,100 kilograms of metal to make 1 ton of bolts, a non-specialised plant consumes 2,000 kilograms.” [36]

The reason for this trend towards self-sufficiency is the fact that it is easier to order “your own” factory about, so the Minister prefers not to depend on supplies from factories of other Ministries. The same principle applies to the head of the tlavk or the individual manager of a factory.

What dependence on supplies from other factories may mean was shown by one Demianovich, chief engineer of a Stalingrad tractor factory. He lamented that there were 753 tractors worth 18 million roubles piled up in the yards of the factory because parts worth 100,000 roubles to be bought from other plants were missing. This led to a serious interruption of production. [37]

It is to avoid situations such as this that factories, glavks and Ministries try as far as possible to produce all they need. Thus, for instance, the Commissariat of Medium Machine Building reported that in 1939, 98 per cent of the machine parts replaced in the enterprises of this commissariat were reproduced in the enterprises themselves. [38]

Another result of this tendency to self-sufficiency is the practice of doing a large proportion of the maintenance work in the plant itself. Thus, a comparison of an American steel plant and a similar one in Russia (the former producing 1½ times as much as the latter) showed that the American plant had 298 people engaged in maintenance whereas the Soviet plant had 1519 people. [39]

Even as regards electrical power supplies Ministries and glavks incline to self-sufficiency. Khrushchev pointed out:

“In the power industry too departmental fragmentation has had an unfavourable effect in our country. Ministries and departments have, in a number of cases, insisted upon the building of small independent power stations when this was often economically most unprofitable. At present (there are) many thousands of departmental power stations. These small departmental power stations are considerably less economical. While the ration of fuel consumption per kwh. at power stations of the Ministry of Electric Power Stations was 463 grms. in 1956, it was 680 grms. at the power stations of all other Ministries and departments – i.e., almost one and a half times as much. It has been calculated that as a result the excess consumption of fuel at departmental power stations was more than 13,000,000 tons of coal a year, compared with enterprises of the Ministry of Electric Power Stations.” [40]

A further result of departmentalism is tremendous wastage on the unnecessary transportation of goods. To give an example:

“The Ministry of Non-ferrous Metallurgy ships thousands of tons of pipes annually from the Urals to Kazakhstan. It is threaded at a plant there, then sent back to the Urals and other regions of the Soviet Union. Thus the pipe travels up to 8,000 kms. in both directions.”

Threading is an “extremely simple operation”. [41]

Again, Khrushchev complained:

“Some departments carry various articles and building materials for their enterprises over thousands of kilometres, while other departments are bringing back from these places similar materials and articles. Here is an example. Last year, the Ministry of the Construction of Metallurgical and Chemical Enter-prises sent 20,000 sq. m. of prefabricated houses from Karelia to Krasnoyarsk Krai. A large number of prefabricated houses were also sent to Krasnoyarsk by the Ministry of Construction, from Kirov Oblast. At the same time, the Ministry of Timber Industry and the Ministry of the Construction of Petroleum Industry Enterprises sent some 170,000 sq. m. of prefabricated houses from the Krasnoyarsk Krai to other posts of the country ... This is all due to departmental chaos. Uneconomical transportation costs the State more than a few hundreds of millions of roubles every year.” [42]

A multiplication of enterprises doing one and the same job in one and the same locality is also an inevitable result of departmentalism.

“In Chelyabinsk region ... construction work is carried on by 182 building and assembly organisations of 25 Ministries and departments. In Sverdlovsk region it is done by 203 building and assembly organisations of 30 Ministries and departments, often working concurrently in one district or oven one street. Things have come to a point where the construction of eight blocks of flats in Kuzbasskaya Street in Sverdlovsk has been entrusted to building organisations of seven different ministries and departments. Such a regional centre as Bielogorod has six building and seven specialised organisations of eight Ministries and departments, doing no more than 90 million roubles’ worth of construction work altogether ...” [43]

Among examples quoted by Pravda (April 15, 1957) was the case of a large quarry worked by eight small quarrying enterprises, each representing a different user Ministry, each seeking to ensure its own supplies; and two steamer fleets operated under two Ministries on the same river: one sailed empty in one direction, the other in the opposite direction.

Departmentalism also causes inflation of the material and equipment supply organisation of industrial and construction enterprises. Khrushchev pointed out:

“Each Ministry and department has its own large sales and supply apparatus. The network of supply organisations is bulky and expensive. In industrial centres, as a rule, numerous sales and supply offices of different Ministries and departments function parallel with one another. In Leningrad, for instance, there are 123 supply organisations, in the Kharkov region 74, in the Novosibirsk region 76. The Ministries frequently organise several supply offices and agencies functioning parallel with one another in one and the same town. Toe USSR Ministry of Construction, for instance, had 15 supply organisations in Moscow, nine in Leningrad, seven in Minsk, six in Novosibirsk.” [44]

These inflated supply organisations do not, however, ensure the satisfaction of the needs of industry and construction:

“Despite the existence of a large apparatus of departmental supply organisations, raw materials and supplies are often delivered to enterprises and construction sites with delays and not in complete sets. This impedes the work of enterprises and construction sites, disturbs the rhythm of work, and sometimes leads to standstills of workers and equipment, to the accumulation and freezing of considerable material values at some enterprises and to a shortage of them at others. The Ministries, being territorially separated from the enterprises, have only a poor knowledge of their needs and frequently do not take timely measures to cater for the demands of enterprises and construction sites.” [45]

Departmentalism also leads to one Ministry’s ignoring of the urgent requests of other Ministries. Why should the Ministry of Tractors and Agricultural Machinery Industry heed the needs of the Ministry of Agriculture, or the Ministry of Sovkhozes, when it produces tractors? As Khrushchev tells us:

“Workers of agricultural bodies and machine builders are well aware that wheeled tractors have considerable advantages over crawler tractors in many kinds of work. The experience of several machine and tractor stations and of agriculture abroad shows that to achieve the best results, crawler tractors should account for some 10 per cent of the total tractor fleet, with wheeled tractors accounting for the other 90 per cent. To arrive at this proportion, the output of crawler tractors should be reduced by several tens of thousands in 1957, and that of wheeled tractors increased accordingly. Such a move would produce the following advantages per tractor with the same engine capacity of 55 hp: 2.2 tons less metal will be spent; the tractor’s weight to hp. ratio will be cut by 33.4 per cent: almost 30 per cent less non-ferrous metals and 50 per cent less labour will be needed, making it possible to increase tractor output with the same production facilities. The tractors’ production cost will drop by approximately 20 per cent and that of repairs and technical maintenance per hectare of field work – by almost 50 per cent... Notwithstanding the tremendous economic advantage of such a replacement, the question was not settled in time because of departmental disputes between various Ministries.” [46]

Chapter 4.
Paper work and muddle

Extreme centralisation leads to much waste of time and energy on paper work. Khrushchev, in a report on agriculture delivered to the Plenum of the Central Committee, pointed out that while the output of agriculture had hardly risen since before the war, the volume of reporting by each kolkhoz had increased nearly eightfold. [47] The situation in industry is scarcely better. Machine-building factories have to submit information on 193 different forms, each form including hundreds of items. For example, the monthly report on machines used and in store lists 500 kinds of goods and calls for 3,500 figures. Its monthly form on transactions with other plants accounts by itself for 18,000 pages of reporting annually, etc. etc. [48] In one electrical machinery plant, the introduction of any technical improvement required 78 signatures. [49]

In a speech to a miners’ conference in Stalino, Khrushchev stated:

“Officials of the coal industry have a great passion for paper. For example, in seven months of 1956 the Chief of the coal glavk of Voroshilovgrad received 915 orders and 1516 telegrams and itself issued 190 orders, 1124 telegrams and 6375 letters. Special ‘order writers’ are needed for this purpose; I am convinced that the person who signed these pages not only did not write them but did not even read them. After all it is simply impossible to read everything.

“The Nikanor Mine of the Voroshilovgrad Coal Trust last year received 1800 orders and instructions ... Comrade Bukharenko, manager of the mine, states frankly that so many orders are received that they have simply stopped reading them and just send there on. Furthermore, this has become the main duty of the technical secretary. And this is ‘technical supervision’!” [50]

With the extreme centralisation of administration, and the mountains of paper work, the number of administrative workers is naturally very large. Thus, for instance, the Georgian Oil Trust “has three oil fields and 12 offices to serve them. There is one official for every four or five employees. It is not surprising, therefore, that the administrative expenses alone for one ton of oil drilled by the Trust total 60 roubles, while in certain areas the full cost of drilling one ton of oil amounts to only 22 roubles.” [51] Again, in the Moldavian Fishing Industry Trust “there are 112 officials as against 163 workers at the fisheries, of which only 98 are employed in catching fish.” [52]

A Pravda editorial pointed out that in the Ministry of Building Materials 16,700 people, or 26 per cent of all administrative personnel are busy with accounts and records. In addition, other “employees, technicians and foremen are taken from work to complete all sorts of reports.” [53]

The organ of heavy industry, Industriia, compared two coal mines, the Pittsburgh Coal Company in Pennsylvania and the Lenin Mine of the Kizel Trust it the Urals. Production in the former was three times as great as in the latter. However, the Russian mine had 165 administrative and technical personnel, compared with 15 in the US mine, and there were 8 office workers in the US mine, compared with 67 employed in the Russian mine. The number of actual miners was only twice as big in the Russian mine as in the American. [54]

Again, Voprosy Ekonomiki compared the United States Steel Corporation mill in Pittsburgh with a similar Soviet mill (not mentioned by name) which was one of the largest, most recently built and smoothest running mills. While the output of the American mill was some 1½ times that of the Russian, the latter employed four times as large a managerial staff, and four times as many technicians. [55]

The same point is made by a study of the entire coal industry:


Percentage of total wage earners [56]



Face workers



Other underground workers



Surface workers






The directives issued are often quite absurd and totally unnecessary. Thus the above-quoted Pravda editorial states:

“The Ministry of Lumber Industry of USSR distributed this year to the localities a voluminous work entitled Technical, Industrial and Financial Plan for Lumber Camps ... It demanded that lumber workers plan a year in advance ‘rest periods for foaling mares’, ‘days-off and holidays for horses’, ‘idle-time of wagons for lack of good roads’, ‘the number of non-working horse-days’, ‘efficient horse-days’, etc.” [57]

With a top-heavy bureaucracy spreading out in many branches, bureaucratic fiat causes quite serious contradictions in the production plans of factories. A few examples will be quoted.

It was reported that “the basic figures of the plan of Riga Plant (of electrical equipment) are not related to each other. Simple calculations show that the value of production under the various categories adds up to 118 per cent of the value of total output.”

“In order to produce all the articles called for in the plan, the plant would need to increase its labour force by one third above the employment plan, and the productivity of workers would have to be increasing not by 8.4 per cent as specified in the Plan, but by 39.9 per cent!” [58]

A report on the Leningrad Electrical Equipment Factory, one of the largest in the country said: “The factory is plagued by a substantial discrepancy between the production and financial plans... the financial plan calls for an output valued at 13,200,000 roubles above the approved production programme.” [59]


a. Annual targets were not published, but the growth for each year is presumed to be a fifth of the planned increase over the five years.



1. K. Marx, Introduction to Critique of Political Economy.

2. Izvestia, December 25, 1956.

3. The National Economy of USSR in 1956 (Russian), Moscow 1957, pp.62-91; Pravda, February 26, 1956; January 31, February 6, December 20, 1957; January 27, 1958.

4. Pravda, September 26, 1957.

5. The National Economy of USSR. Statistical Collection (Russian), Moscow 1956, p.17.

6. Ibid.

7. Ibid., p.234.

8. Ibid., p.191.

9. M.N. Kaplan, Capital Formation and Allocation, in A. Bergson, editor, Soviet Economic Growth, Evanston 1953, pp.52-4.

10. Ibid., pp.43, 45.

11. E.Y. Lokshin, An Outline of the History of the Industry of USSR, (Russian), Moscow 1956, p.276.

12. Ia. Ioffe, USSR and the Capitalist Countries (Russian), Moscow 1939, pp.75-80.

13. W. Galenson, Labor Productivity in Soviet and American Industry, New York p.244-5.

14. D.R. Hodgman, Soviet Industrial Production, Cambridge (Mass.) 1954, pp.116-17.

15. I. Kuzminov, The Stakhanovite Movement, the Highest Stage of Socialist Competition (Russian), Moscow 1940, pp.184-8.

16. The National Economy of USSR, op. cit., p.190.

17. Calculated from, Problems of Socialist Economy (Russian), Moscow 1956, pp.5-6 and W.S. and E.S. Voytinsky, World Population and Production, New York 1953, pp.870, 966, 1117, 1127.

18. Ibid.

19. I.I. Evtikhiev and V.A. Vlasov, The Administrative Law of USSR, (Russian), Moscow 1956, pp.298-300.

20. Decision of the Council of People’s Commissars and the CC of the Party of May 27, 1940; Directives of the Communist Party of the Soviet Union and the Soviet Government on Economic Problems (Russian), Vol.II, Moscow 1957, p.634.

21. A. Liapin, On Bolshevik Principles of Economic Work, Bolshevik, Nos.15-16, 1940, p.84.

22. D. Granick, Management of the industrial Firm in the USSR, New York 1954, p.33.

23. All-Union Communist Party (Bolsheviks) in Resolutions and Decisions of the Congresses, Conferences and Plenums of the Central Committee (Russian), Moscow 1941, Sixth Edition, Vol. II, p.812.

24. L. Gintsburg and E. Pashukanis, Course of Soviet Economic Law (Russian), Moscow 1935, Vol. I, p.3.

25. Pravda, April 26, 1953.

26. Pravda, May 19, 1954.

27. N.A. Bulganin, Tasks of Further Development of Industry, Technical Progress and Better Organisation of Production, Moscow 1955, pp. 57, 80.

28. Decision of the Plenum of the CC, CPSU, held in July, 1955, Moscow 1955, p.25.

29. S.S. Studonikin, Soviet Administrative Law (Russian), Moscow 1950, p.84.

30. State Control, The Great Soviet Encyclopaedia, Vol. XII, Moscow 1952, pp.321-2.

31. Resolutions of the 18th Congress of the CPSU (b) (Russian), Moscow 1939, pp.55-61.

32. Pravda, Sept. 26, 1940. Quoted in Granick, op. cit., p.196.

33. V.P. Dyachenko, et al, editors, Problems of Raising Labour Productivity in the Industry of USSR (Russian), Moscow 1955, p.19.

34. Pravda, May 8, 1957.

35. Novy Mir, No.7, 1955, p.9.

36. Bulganin, op. cit., p.35.

37. Pravda, October 27, 1940.

38. B. Sukhareveski, Problems of the Reproduction of Fixed Capital in Industry, Problemy Ekonomiki, 1940, No.11-12, p.167.

39. S. Kheinman, On Surplus Labour Power and the Productivity of Labour, Problemy Ekonomiki, 1940, No.11-12, pp.103-18.

40. Pravda, May 8, 1957.

41. Pravda, November 2, 1955.

42. Pravda, May 8, 1957.

43. N.S. Khrushchev, Reorganisation of Management of Industry and Construction in the USSR, Pravda, March 30, 1957.

44. Ibid.

45. Ibid.

46. Ibid.

47. Pravda, September 15, 1953.

48. Bukhgalterskii Uchet, 1954, No.6, pp.6-13.

49. Pravda, January 1, 1955.

50. Pravda, August 18, 1955.

51. Pravda, August 13, 1954.

52. Pravda, December 6, 1954.

53. Pravda, August 13, 1954.

54. Industria, July 18, 1940.

55. Voprosy Ekonomiki, 1936, Nos. 11-12, p.109.

56. Ibid., p.85.

57. Pravda, August 13, 1954.

58. Pravda, July 5 1956.

59. Pravda, October 5, 1954.

Last updated on 3.5.2008