15  Slowdown

    The speed with which the Soviet party leadership moved in 1965 to reorganize the economy was dictated mainly by a worrisome slowdown in industrial productivity.

    In presenting the party's proposals in September that year, Premier Alexei Kosygin was careful to lay the accent on the bright side. He recited a score of statistics showing output increases during the seven-year plan period just ended.

    But there was also a cloud to the silver lining, he added; and it was this which brought him to the subject proper of the proposals:

    "It should be said that in recent years the volume of national income and industrial output per ruble of fixed assets has declined somewhat. The rates of growth of labor productivity in industry, which constitute an important index of the efficiency of social production, have slowed down somewhat in recent years."

    Beyond these vague indications he would not go; and he did not probe more deeply into the probable causes of the slowdown. Fairly detailed statistics were finally made public more than five years afterward, however; and before Kosygin's proposals are looked at it is worth examining this data to gain a clearer idea of the predicament in which the Soviet leadership found itself.

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    The USSR's foremost specialist in matters of what is called "investment efficiency" is academician Tigran Khachaturov. "The most general indicator of efficiency of investments in the national economy as a whole," according to Khachaturov, is the ratio between national income and the sum of fixed and circulating assets in the national economy. This ratio is expressed as a certain number of kopecks of income per ruble of assets. (100 kopecks = 1 ruble.) If the number of kopecks of income realized per ruble of assets is rising, then "efficiency" in the economy is rising and this is good; and, in Khachaturov's view, the inverse is also true. Thus in a single ratio it was possible to estimate "how rationally the plan is formulated and how fully the available resources are utilized."

    Khachaturov presents the following trend in this general index:





(T. Khachaturov, "The Economic Reform and Efficiency of Investments," in Soviet Economic Reform: Progress and Problems, Moscow 1972, p. 159)

    Thus the overall indicator of "economic efficiency" showed a consistent year-to-year decline, finishing the period nearly 10 kopecks per ruble down from the starting point. As Khachaturov put it: "A decline of this indicator during the seven-year period (1959-1965) speaks about the existence of unfavorable phenomena in the Soviet economy. . . ."

    What were these phenomena, more precisely? In the paper just cited, Khachaturov lays the emphasis on "subjective reasons which depended on shortcomings in planning and management." This is a guarded but clear reference to the Khrushchev system of planning via regional economic councils (see part 13 of this series), which, under the 1965 reforms, was scrapped as unsound.

    But in a later paper that goes into the matter somewhat more deeply, Khachaturov tacitly withdraws this line of explanation, without however offering a substitute. Here he compares the rate of increase in the amount of capital per industrial worker with the rate of increase in the amount of output per industrial worker.




Capital per




Output per








(T. Khachaturov, "Improving the Methods of Determining the Effectiveness of Capital Investments," Voprosy Ekonomiki 1973, No. 3; translated in Problems of Economics, September 1973, p. 21.)

    Thus, as is shown in the top line of the table, there was a slowdown in the growth rate of capital per worker. Shortcomings in planning and in the coordination of production might very well explain this. Hampered as it was by the localism inherent in regional planning -- one could plausibly argue -- management was unable to put additional means of production and materials into the factories at the stormy rates of the previous period. The same reasoning could be invoked to explain why the output per worker (line 2 of the table) also decelerated.

    The sticky point however comes in explaining why the latter decelerated so much more steeply than the former.

    During the 1950-1955 period, a 50 percent increase in capital per worker produced a practically equivalent (49 percent) increase in output per worker. This is what one would expect: give the worker more machinery, get correspondingly more output. But in the next five-year period, the output per worker increased 7 percent less than the capital per worker; and during 1960-65, the years immediately leading up to the Kosygin "reform" plan, the gap between capital growth and output growth widened to a rather alarming 17 percent.

    More and more means of production were being thrown at the workers, yet proportionately less and less were

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coming out!

    Khachaturov does not even try to interpret this thought-provoking data and this is not surprising. For apart from the refutable hypothesis that the new machinery was grossly less efficient than the old, the data points straight to the uncomfortable conclusion that the Soviet industrial working class no longer gave a damn about productivity -- and was getting away with it.

    Despite the fact that Khrushchev had ordered a countrywide retiming of industrial jobs, which set significantly higher output targets for machine operatives, the workers were simply not putting into their work the same measure of energy and enthusiasm they had displayed, often with dazzling and heroic results, during the period of socialist construction. (See part 6 of this series.) (On Khrushchev's job retiming, see Mary McAuley, Labour Disputes in Soviet Russia 1957-65, Oxford. 1969, p. 89)

    Instead of going all out to produce more, better, and faster, the industrial workers shifted their strategy in the battle for production to passive resistance. The potency of the means of production confronting the workers on the shop floor continued to rise. But the workers applied their energy and ingenuity now not to the realization and development of that potential, but to its frustration.

    The new, negative attitude toward labor which reflects itself in the statistics of the Khrushchev period stemmed chiefly from the development discussed at the outset of part 13 of this series, namely the expropriation of the working class upon the revisionist seizure of state power in 1956-57. Perhaps rather few workers summed up the situation at the time in terms of expropriation and drew the parallel with the "expropriation of the mass of the people by a few usurpers" at the dawn of the capitalist order which Marx described so vividly in Capital. (Vol. I, p. 764) Yet the change, however they might formulate it, could hardly escape even the moderately conscious worker.

    -- Under Stalin, the party had been the workers' weapon against factory directors who overstepped their authority. (See part 8 of this series.) Could it escape the attention of the workers that, after Khrushchev's seizure of power, the

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party switched its class stand and called for strengthening the directors against the workers? (See parts 13 and 14).

    -- Could it escape the workers' attention that directors who failed to live up to the plan, and who violated the rules regarding the speed, organization and conditions of work, were -- under Khrushchev -- almost never punished or removed from their posts? (McAuley, p. 83)

    -- Could the workers fail to be aware of the fact that such directors were not only members but often also officers of the trade unions in the plant? (McAuley, p. 67)

    These and similar shifts in power, perceptible to a great many workers at least, were quite sufficient to communicate the essence of the new relationship of property and to breed in response the new attitude toward productivity described by Marx a century ago: Since "the workman finds the instruments of labor existing independently of him as another man's property, economy in their use . . . does not concern him." (Capital, Vol. I, p. 325)

    The really striking fact about the Soviet workers' slowdown, however, and undoubtedly the most worrisome aspect of it from the party leadership's viewpoint in 1965, was that the workers were getting away with it.

    This was due to the freakish transitional situation in Soviet society at the time. The workers had been expropriated. They no longer held state power or owned the means of production. Hence they resisted at the point of production by slowing down.

    But the bourgeoisie, while it owned the means of production and held state power, still had its hands tied by many of the old, socialist relations of production. It did not yet have in its hands the full arsenal of weapons for making the workers speed up.

    The ultimate among these weapons, as was mentioned earlier (part 8 of this series) is the power to fire workers, to lay them off for "economic reasons." This power implies that labor power is a commodity to be bought and sold like any other; or, to put it the other way around, wherever labor power has the character of a commodity, there the owner of the means of production has the right to throw the workers out onto the street.

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    The necessary mate and companion to this right is the owner's right to sell (or buy) means of production also like any other commodity, e.g., by shutting down unprofitable divisions, discontinuing one type of production in favor of another, etc.

    A moment's thought will show these two powers cannot survive separately from one another. The exercise of the one necessitates the exercise of the other.

    It is precisely the exercise of these two powers however -- as was pointed out at the conclusion of part 5 of this series -- that convert the owner of the means of production into a capitalist and convert a society's relations of production into relations of production of a capltalist character. (See Guardian, March 19)

    In a fully capitalist society, the Soviet workers could not have carried on their slowdown for as long and as effectively as they did. Long before the gap between investment and productivity had reach the dimensions it did under Khrushchev, investment would have come to a halt and a spiral of layoffs would have "stimulated" those remaming within the factories to put out greater efforts.

    The "stlmulating" effect of the capitalist relations of productlon can be observed in the advanced stages of each economic crisis, such as the current one. As the lines of the unemployed stretch outside the factories toward the horizon, the regime of speedup, sweating and humiliation on the inside reaches its most brutal extremes.

    In this way are produced the "investment efficiencies" and the close correlations and short lags between capital per worker and output per worker which academician Khachaturov, and Khrushchev before him, eyed with so much envy.

    It is a fallacy to suppose that the transition backward from soclahsm to capitalism in the basic, determinant relations of production can occupy a very long period of time. The seizure of state power by a bourgeoisie and hence, the expropriation of the working class, necessarily provokes among the working class a movement of resistance to increased production. The advance of this movement rather quickly throws the expropriators into an untenable economic position, a crisis of general

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underproduction which is no less real for being covered up.

    The more active forms of resistance -- strikes, rebellions, riots -- may be put down and dealt with at gunpoint. Several were, as mentioned earlier. But the bayonet is a notoriously ineffective and impractical prod in the everyday grind of industrial production. The bourgeoisie cannot station a soldier behind every three workers in every factory without provoking open war. To break the workers' passive resistance at the point of production the bourgeoisie requires weapons of a different order. These are the weapons inherent in the capitalist relations of production. The bourgeoisie cannot dally to apply them. However much it might hesitate to turn means of production and labor power into commodities with all the consequences thereof, it must conquer its scruples, if it has any, and march full steam ahead into the capitalist order.

    This was the background behind Alexei Kosygin's declaration, keynoting the September 1965 "reform" proposals, that "the existing forms of management, planning and stimuli in industry are no longer in conformity with modern technico-economic conditions and the present level of the productive forces."