THE FIRST FIVE-YEAR PLAN
FIVE-YEAR PLANS IN CONTEXT
THE FAILURE OF SOVIET-TYPE PLANNING
BIBLIOGRAPHY
Administrative plans were one of the instruments by which the leaders of the Soviet Union sought to impose their preferences on the economy. The Five-Year Plans for national economic development were the best known of these, but this reflects their important ceremonial functions; other plans and decisions were often more significant from a practical point of view. In all, there were thirteen Soviet Five-Year Plans. The first ran from the autumn of 1928 to 1933; at that time the accounting year began in October with the end of the harvest. The third plan (1938–1942) was interrupted in mid-1941 by World War II. Five-year planning began again with the fourth (1946–1950). The sixth (1956–1960) was abandoned and replaced by a Seven-Year Plan (1959–1965). After that, everything went in step until the unlucky thirteenth plan (1991–1995), barely adopted when the Soviet Union collapsed at the end of 1991. Five-year planning was not limited to the Soviet economy. The socialist economies of Eastern Europe copied it after World War II. Joseph Stalin's Five-Year Plans also provided symbolic inspiration for Adolf Hitler's two "four-year plans" (1933–1940) for Germany's self-sufficiency and war preparations, but there was little or no similarity in underlying respects.
The first "five-year plan of development of the national economy of the USSR" was adopted in April 1929, although it nominally covered the period from October 1928 to September 1933. It called for the country's real national income to double in five years and investment to treble, while consumption per head was to rise by two-thirds. There were ambitious targets to increase the production of industrial and agricultural commodities. The purpose of the plan was not just to expand the economy but to "build socialism"; associated with it was a vast program of new large-scale capital projects that would embody the new society in steel and cement. Indeed a five-year period was chosen partly in the belief that it would allow time to complete these major projects; another motivation was to permit the smoothing of harvest fluctuations. The character of the First Five-Year Plan reflects complex underlying political and institutional changes of the time. In the 1920s leading Soviet political and economic officials disputed the nature of economic planning. Some believed that the task of administrative plans was essentially to replicate a market equilibrium without the mistakes to which they believed the market mechanism was prone; hence, a planned economy could balance public and private wants more efficiently, eliminate unemployment, and smooth out cyclical fluctuations. More radical figures regarded planning as an instrument for mobilizing resources into government priorities, breaking with the limitations of a market economy, and transforming the economic and political system as rapidly as possible. The radicals' victory was completed at the end of the 1920s by Stalin's left turn in favor of forced industrialization and the collectivization of peasant agriculture. It took several years for Gosplan, the USSR's state planning commission, to prepare the First Five-Year Plan; the growing power of the radicals was expressed in increasingly ambitious targets that were set out in successive drafts. The optimism continued to grow even after the plan had been adopted, and this resulted in further upward revisions to particular targets in the course of 1930. The single most ambitious change was the decision to "fulfill the First Five-Year Plan in four years." Halfway through its implementation, the Soviet authorities decided to symbolize the country's transition to an industrial basis by replacing the old, harvest-oriented "economic year" with calendar-year accounts. To accommodate this transition a "special quarter" of extra effort was announced for the last three months of 1930. After that, the targets for 1931/32 and 1932/33 were brought forward to 1931 and 1932, respectively. Judged by its targets, the First Five-Year Plan must be counted a ridiculous failure. The value of national income in 1932 was nearly twice that of 1928, but unacknowledged price increases and other statistical biases accounted for most of the increase. Many of the big projects that had been started remained unfinished. Instead of rising by two-thirds, consumption collapsed; by the end of 1932 the country was in the grip of a catastrophic famine. One reason for the famine was that the efforts to industrialize as rapidly as possible had stripped the countryside of food. On other criteria, however, the same plan was a great success. Real investment had doubled and, under the Second Five-Year Plan (1933–1937), the unfinished projects would be completed and pay off. Although many specific targets were not met, industry's results for 1932 still showed remarkable progress over the starting point. Rapid industrialization was under way; it was the temporary collapse of agriculture that was to blame for the disappointing growth of national income and the severe decline in living standards. Resources were now directed by administrative decrees, not markets and prices. Just as importantly, the critics of planning as all-out economic mobilization had been silenced. As much as anything Stalin used the First Five-Year Plan as a political instrument to flush out moderate opinion, expose critics, taint them with guilt by association with the political opposition to Stalin, and subject them to censorship, dismissal, and arrest. The underfulfillment of detailed targets was important only to the extent that it gave him a weapon with which to beat the oppositionists and fainthearts alike.
In the mid-1930s the Soviet economy overcame the crisis and settled down to a more "normal" style of economic planning. The Second and Third Five-Year Plans were enacted, and by the end of the decade leading officials were thinking in terms of plans with an even longer fifteen- or twenty-year horizon. But these "perspective" plans did not have much practical significance for management of the economy; Eugène Zaleski later described them as no more than "visions of growth" (1971, p. 291). The plans through which the authorities exerted "operational" control over resources were for shorter periods: yearly, quarterly, and monthly. How did the operational plans work? In theory there was a process of breaking the perspective plans down into shorter time periods and distributing them across production ministries so that the annual and quarterly branch plans were nested arithmetically within the perspective plans for the economy as a whole. In practice, however, operational plans tended to creep away from perspective targets as the economy evolved. Investigations in the Soviet archives of the 1930s have also shown that, even at the "operational" level, the planners' control over day-to-day transactions was much less than might be expected. Gosplan projected supply and demand for a few broad commodity groups in the aggregate, but left it to the ministries in charge of each industry to plan the detailed assortment and distribution of commodities and to link up particular producer and user factories. When there were tens, then hundreds of thousands, and eventually millions of commodities, and tens of thousands of producers, these tasks could not be centralized. Planning was also much less "physical" than the stereotype; planners set targets for the value of industry output using plan prices that were supposedly fixed, but in fact the factories themselves exerted considerable influence over the prices, and could push them up under certain conditions to make the plan easier to fulfill. Finally, the plans themselves were relatively fluid; they were subject to continual revision, and secondary targets were often agreed upon during or after the event, when results were predictable or already known. Most detailed plans existed only in draft form and were never finalized. It is not surprising, therefore, to find that the Soviet record of fulfillment of five-year and other plans tended to improve over time. There were three reasons for this. First, planners adjusted their expectations to results, and became less likely to set targets that were beyond the capacity or desire of the producers to fulfill them. Second, plans remained negotiable, and producers could often bargain inconveniently demanding targets downward during the plan period. Third, producers could also fulfill plans for output by manipulating prices upward, and "hidden" inflation became a persistent phenomenon. Administrative plans never covered the whole Soviet economy. The labor market was planned, if at all, only on the demand side. For much of the Stalin period the supply of labor was fairly harshly regimented, but these controls had nothing to do with economic planning, even in the loose sense described here. Food supplies were partly planned and partly left to a legal unregulated market in which collective farmers sold their sideline private produce directly to households. Many goods and services were diverted out of the planned economy and retraded in illegal markets. The planning system on its own does not fully explain the success of the Soviet state in allocating resources to investment and defense. This is reflected in the fact that, as is now known, Stalin and his immediate colleagues paid relatively little attention to five-year or annual plan figures other than for grain. They gave much closer consideration to the billions of rubles allocated to investment and defense through the state budget. Plan targets for output helped to ensure that output would be produced and resources would be available for use in the aggregate, but did not determine how these products would be used or by whom. Given this, the cash made available to military procurement departments and construction organizations through the budget was critically important in fixing the pattern of final uses. In short, money was more important in the Soviet economy than has sometimes been recognized, and in this sense the role of plans was more to influence the context than to decide outcomes.
Birman, Igor. "From the Achieved Level." Soviet Studies 30, no. 2 (1978): 153–172. Davies, R. W., Melanie Ilic, and Oleg Khlevnyuk. "The Politburo and Economic Policy-Making." In The Nature of Stalin's Dictatorship: The Politburo, 1924–1953, edited by E. A. Rees, 108–133. Houndmills, Basingstoke, U.K., 2004. Ellman, Michael. Socialist Planning. 2nd ed. Cambridge, U.K., 1989. Gregory, Paul R. The Political Economy of Stalinism: Evidence From the Soviet Secret Archives. Cambridge, U.K., 2004. Gregory, Paul R., and Robert C. Stuart. Soviet Economic Structure and Performance. New York, 1974. Rev. ed. as Soviet and Post-Soviet Economic Structure and Performance. New York, 1994. Hanson, Philip. The Rise and Fall of the Soviet Economy: An Economic History of the USSR from 1945. London, 2003. Harrison, Mark. Soviet Planning in Peace and War, 1938–1945. Cambridge, U.K., 1985. Kontorovich, Vladimir. "Lessons of the 1965 Soviet Economic Reform." Soviet Studies 40, no. 2 (1988): 308–316. Zaleski, Eugène. Planning for Economic Growth in the Soviet Union, 1918–1932. Translated by Marie-Christine MacAndrew and G. Warren Nutter. Chapel Hill, N.C., 1971. ——. Stalinist Planning for Economic Growth, 1933–1952. Translated and edited by Marie-Christine MacAndrew and John H. Moore. Chapel Hill, N.C., 1980. Mark Harrison