It is difficult to believe (one of the many) official Soviet claims that from 1928 to 1940 Soviet national income increased more than 500%, gross industrial output more than 600%, and gross agricultural production more than 50% (especially since the latter figure was later revised downwards to less than 15%!). But behind the facade of fiction lies a firm support of reality: under the influence of the GOELRO (the State Commission for the Electrification of Russia) Plan and the Five-Year Plans, high rates of growth were undoubtedly maintained for many years; the level of capacity and output in the armaments industry were built up to such an extent that the Soviet Union was able to impose a decisive defeat upon the Nazi invader; and the USSR was transformed from a predominantly agrarian society into a powerful industrial state.
By the late 1950s it was becoming evident, however, that the high growth rates of the Soviet economy were beginning to decline, and they virtually ceased in agriculture even before the disastrous harvest of 1963. Between 1951-55 and 1961-64 the average annual rate of increase of national income fell by 44%, the annual rate of increase of industrial output fell by 35%, the annual rate of increase of agricultural production fell by 72% (1954-55 to 1961-64), and the marginal "capital"-output ratio rose considerably, that is, the efficiency of investment fell considerably. (N.B. Capital and means of production are not necessarily synonymous. Capital is that quantity of value advanced to gather surplus for private appropriation, Thus means of production in a workers' state does not constitute capital). After 1958, moreover, the slow-down in growth rates was accompanied by increasing evidence of a fundamental crisis of the entire system of planning.
The changes in the planning mechanism which Krushchev made failed to rationalise the system of planning as a whole. The most significant change in this field was the disbandment of the central planning ministries that had exercised absolute control from Moscow over all branches of the economy. But this did not work. What it produced was a purely administrative decentralisation of industrial management. The framework of bureaucratic management of the economy and the State were not (of course) challenged. By 1964 it had become obvious that the new administrative regime had resulted in a further slowing down of industrial expansion and in a yet lower rate of growth of the national income.
In fact, the level of consumption not only slowed down but eventually actually stopped, under Krushchev. Real consumption per head of population increased by 66% between 1950 and 1958 (a year in which it reached a level nearly double that of 1937 and of 1928 and three times that of 1944). But, in the field of consumer goods, the sixth Five-Year Plan and the Seven-Year Plan which replaced it, were not fulfilled. The increase in the standard of living slowed down to stop altogether for a time in 1962, when the rate of growth of the economy also fell.
Krushchev's de-centralisation was in fact a narrow, one-sided, bureaucratic reaction to Stalin's Over-Centralisation. Its effects were probably beneficial in some cases but harmful in others, and on balance inadequate. What Krushchev's successors, Brezhnev and Kosygin, have since been trying to do, is to substitute economic de-centralisation for the purely administrative one. This is the meaning of the September (1965) Plenum economic management reform, with its emphasis on the autonomy and profitability of the individual enterprise. The principal content of the reform lies in (1) the granting of much greater independence to enterprises and (2) the converting to evaluation of the activity of enterprises in terms of profitability of production (N.B, It is important to distinguish here between profit as a guide to resource allocation, and profit as the very goal of production. Differences in the socio-economic nature of profit and in its role in capitalist and socialist—albeit degenerated—society are determined not by the profit category per se, but by the specific mode of production. Thus, although it is impossible to regard the introduction of measures which emphasise the role of profit as part of "the march to socialism and communism", profit in the Soviet Union, and the other workers' states, has not become the purpose and the motive force of economic growth, and the reform does not mean that capitalism is being re-introduced in the Soviet Union).
Despite the early official claims of the reform's success in attaining its objectives (see, for instance, the figures cited by the Chairman of Gosplan when presenting the 1968 Plan to the Supreme Soviet, quoted by Michael Ellman, "Lessons of the Soviet Economic Reform", Socialist Register 1968, p. 31), it seems that the improvements made in the first year or two of the reform were very much a temporary phenomenon. Soviet industrial Output in July 1969 was running 7% above 1968's figures, and was roughly in line with the growth recorded over the first six months of the year. This is below the 7.3% target of the plan, however, and less than the rises of 8.3% in 1968 and 10% in 1967, In fact, the planned growth rate for industrial production was revised downwards in December; and is now said to have been met. The full figures for 1969, now published, show that 1969 was a generally disappointing year for the Soviet economy, with shortages and failures in important industries, transport and agriculture. Seven ministries underfulfilled their plans, including those responsible for natural gas, iron and steel, chemicals, paper and building materials. Housing construction was below the estimate made in 1968. In the transport sector, neither railways nor ocean shipping met their planned targets. Production of protein foods such as milk and meat, and of fruit and vegetables, is not keeping pace with the growth of the population. The numbers of sheep and cattle have declined. Agriculture as a whole fell 3% below the 1968 level, and the growth rate for national income was the lowest since 1963. Productivity went up by 4.4%—less than planned and less than the rises of 5.7% in 1968 and 6.6% in 1967.
After only a few years, therefore, there are already strong signs that the dynamism of the reform is failing; new dangerous signs of a slowing down in growth rates have begun to appear. Being a bureaucratic reform of bureaucrats, its positive results are limited, especially in time, A political movement whose object is to institute a real soviet socialist democracy in the Soviet Union and the other workers' states, that is, workers' self-management of the factories and society and the formulation of the plans through free debate by a congress of soviets, can and must completely overturn the present system of bureaucratic Management of the economy and the state.
The centenary of Vladimir Lenin's birth, which will be celebrated throughout the "Communist" world (and also elsewhere!), therefore falls at a decidedly awkward time for the Soviet bureaucrats, As the bastard inheritors of the world's first Socialist state, they are confronted by a contradiction of potentially immense consequence: they would like to demonstrate that things are going very well for the country they rule: unfortunately, however, they will have great difficulty in doing this, since the unadulterated facts of life indicate only too clearly that things are not going at all well.