This made it difficult to compare Soviet growth with growth elsewhere. After the Second World War, when the numbers coming out of the Soviet Union started to become more and more worryingly radiant, it became a major preoccupation of the newly-formed CIA to try to translate the official Soviet figures from NMP to GDP, discounting for propaganda, guessing at suitable weighting for the value of products in the Soviet environment, subtracting items ‘double-counted’ in the NMP, like the steel that appeared there once as its naked new-forged self, twice when panel-beaten into an automobile. The CIA figures were always lower than the glowing stats from Moscow. Yet they were still worrying enough to cause heart-searching among Western governments, and anxious editorialising in Western newspapers, especially once the launch of Sputnik in October 1957 provided a neat symbol for backward Russia’s sudden technological lift-off. For a while, in the late 1950s and early 1960s, people in the West felt the same mesmerised disquiet over Soviet growth that they were going to feel for Japanese growth in the 1970s and 1980s, and for Chinese and Indian growth from the 1990s on. Nor were they just being deceived. Beneath several layers of varnish, the phenomenon was real. Since the fall of the Soviet Union, and the opening of its archives, historians from both Russia and the West have recalculated the Soviet growth record one more time: and even using the most pessimistic of these newest estimates, all lower again than both the Kremlin’s numbers and the CIA’s, the Soviet Union still shows up as growing faster, in the 1950s, than any other country in the world except Japan. Officially, the Soviet economy grew 10.1% a year; according to the CIA, it grew 7% a year; now the estimates range upwards from 5% a year. That was still enough to squeak past West Germany, the other growth star of the period, and to cruise past the US average of around 3.3% a year for the decade.
On the strength of this performance – which they probably valued at their own, higher figure – Stalin’s successors set about civilising their savage growth machine. The prisoners (or most of them) were released from the labour camps. The collective farmers were allowed to earn incomes visible without a microscope, and eventually given old-age pensions. Workers’ wages were raised, and the salaries of the elite were capped, creating a much more egalitarian spread of income. To compensate managers, the stick of terror driving them was discarded too: reporting a bad year’s growth now meant only a lousy bonus. The work day shrank to eight hours, the work week to five days. The millions of families squeezed into juddering tsarist tenements, and damp ex-ballrooms subdivided by walls of cardboard, were finally housed in brand-new suburbs. It was clear that another wave of investment was going to be needed, bigger if anything than the one before, to build the next generation of industries. There’d need to be factories soon turning out plastics, and artificial fibres, and equipment for the just-emerging technologies of information: but i all seemed to be affordable, now. The Soviet Union could give its populace some jam today, and reinvest for tomorrow, and pay the weapons bill of a superpower, all at once. The Bolshevik simulation of capitalism had vindicated itself. The Party could even afford to experiment with a little gingerly discussion; a little closely- monitored blowing of the dust off the abandoned mechanisms for talking about aims and objectives, priorities and possibilities, the road already travelled and the way ahead.
And this was fortunate, because as it happened the board of USSR Incorporated was in need of some expert advice. The growth figures were marvellous, amazing, outstanding – but there was something faintly disturbing about them, even in their rosiest versions. For a start, at a point when the plans called for growth to rise faster still, it was in fact slowing from one plan period to the next, not much, but unmistakeably. And then there was a devil in the detail of the amazing growth, if you looked closely. For each extra unit of output it gained, the Soviet Union was far more dependent than other countries on throwing in extra inputs: extra labour, extra raw materials, extra investment. The USSR got 65% of its output growth from extra inputs, compared to the USA’s 33% and the frugal 8% achieved by France. This kind of ‘extensive’ growth (as opposed to the ‘intensive’ growth of rising productivity) came with built-in limits, and the Soviet economy was already nearing them. There weren’t that many more extra Soviet citizens to employ; timber and minerals couldn’t be slung into the maw of industry very much faster than they already were; and investment was a problem in itself, even for a government that could choose what money meant. Whisper it quietly, but the capital productivity of the USSR was a disgrace. The Soviet Union already got less return for its investments, in terms of extra output, than any of its capitalist rivals. Between 1950 and 1960, for instance, it had sunk 9.4% of extra capital a year into the economy, to earn only 5.8% a year more actual production. In effect, they were spraying Soviet industry with the money they had so painfully extracted from the populace, and wasting more than a third of it in the process.
Yet somehow this economy had to grow, and go on growing, without a pause. It wasn’t just a question of overtaking the Americans. There were still people in the Soviet Union, at the beginning of the 1960s, who believed in Marx’s original idyll: and one of them was the First Secretary of the Party, Nikita Sergeyevich Khrushchev. Somehow, the economy had to carry the citizens of the Bolshevik corporation all the way up the steepening slope of growth to the point where the growing blended into indistinguishable plenty, where the work of capitalism and its surrogate were done at last, where history resumed its rightful course; where the hunting started, and the fishing, and the criticising after dinner, and the technology of abundance would purr in the background like a contented cat.
But how?
Notes – Introduction
1 Socialism would come, not in backward agricultural Russia: at the very end of his life, disappointed by the slow pace of revolution in England and Germany and the USA, Marx reassessed Russia’s political potential. But he did not alter his analyso of the economic prerequisites of socialism. See Teodor Shanin, ed., Late Marx and the Russian Road: Marx and ‘the peripheries of capitalism’ (London: Routledge and Kegan Paul, 1983).
2 But it also created progress: see, to take the most famous of many passages, the paean to the ‘most progressive part’ played by the bourgeoisie, for which read capitalism, in The Communist Manifesto (1848).
3 It would be a world of wonderful machines and ragged humans: as portrayed, for instance, in Marx-influenced turn-of-the-twentieth-century fictions of the future such as H.G.Wells’s When the Sleeper Wakes and Edward Bellamy’s Looking Backwards.
4 All the ‘springs of co-operative wealth’ would flow abundantly: ‘and on its banners society would inscribe at last … according to their needs.’ Marx, ‘Critique of the Gotha Programme’, 1875.
5 It was going to be an idyll: Marx’s own hunting and fishing and criticising version is from The German Ideology (1845–6). For a late nineteenth-century elaboration of the idyll into a full utopia, see William Morris, News from Nowhere; for late twentieth-century Marxian idylls, try Ken Macleod’s The Cassini Division (London: Legend, 1998), and any of Iain M. Banks’s ‘Culture’ novels, especially Look to Windward (London: Orbit, 2000).
6 A tiny, freakish cult: the membership of the Bolshevik faction of the Russian Social-Democratic Labour Party was ‘several thousand’ in 1903, swelled in the aftermath of the failed 1905 revolution to a maximum of maybe seventy-five thousand by 1907 (but this was while temporarily reunified with the Mensheviks), and then (separate again) plunged during the period of disillusionment and police repression that followed, until by 1910 no Bolshevik branch anywhere in the country had more than ‘tens of members’, and from his exile Lenin could contact no more than thirty to forty reliable people. See Alan Woods, Bolshevism – The Road to Revolution: A History of the Bolshevik Party (London: Well Red, 1999). In 1912, when the Bolsheviks held a separate party congress in Prague, the membership was around five hundred, and according to the delegate from St Petersburg, Lenin could count on 109 supporters in the city. See R.B.McKean, St Petersbu
rg Between the Revolutions: Workers and Revolutionaries (New Haven CT: Yale University Press, 1990). That was the nadir, and membership was higher by 1914; but it was the First World War that really changed things.
7 There was in fact an international debate in the 1920s: useful summaries of, and commentaries on, the socialist calculation debate can be found in Mirowski, Machine Dreams, Joseph E. Stiglitz, Whither Socialism? (Cambridge MA: MIT Press, 1994) and Geoffrey M. Hodgson, Economics and Utopia: Why the learning economy is not the end of history (London: Routledge, 1999), especially ‘Socialism and the Limits to Innovation’, pp. 15–61. Von Mises’ opening criticisms are to be found in Ludwig von Mises, Socialism, 1922, translated by J. Kahane (Indianapolis: Liberty Fund, 1981). For Hayek’s initially ignored but deeply infntial contribution, see F.A.Hayek, ‘The Use of Knowledge in Society’, The American Economic Review vol. 35 issue 4 (September 1945), pp. 519–30. For late rejoinders by two Western socialists, see W. Paul Cockshott and Allin F. Cottrell, ‘Calculation, Complexity and Planning: The Socialist Calculation Debate Once Again’, Review of Political Economy vol. 5 no. 1, July 1993, pp. 73–112; and Cockshott and Cottrell, ‘Information and Economics: A Critique of Hayek’, Research in Political Economy vol. 16, 1997, pp. 177–202.
8 Investment for industry, therefore, had to come the slow way: a policy particularly associated with Nikolai Bukharin, ‘Rightist’ Bolshevik and theorist of the NEP. See Moshe Lewin, Political Undercurrents in Soviet Economic Debates: From Bukharin to the Modern Reformers (Princeton NJ: Princeton University Press, 1974).
9 Slave labour was a tremendous bargain: see Anne Applebaum, Gulag: A History of the Soviet Camps (New York: Random House, 2003).
10 Ever to leave the kolkhoz: the collective farm, in theory an independent co-operative selling food to the state, in practice a mechanism of forced labour under an appointed director.
11 A society in a state of very high mobility: see Sheila Fitzpatrick, Education and Social Mobility in the USSR 1921–1934 (Cambridge: CUP, 1979); Fitzpatrick, Everyday Stalinism, pp. 85–8.
12 Then a middle-class life beckoned in short order: for the new respectability of the Stalinist bougeoisie, see Vera S. Dunham, In Stalin’s Time: Middleclass Values in Soviet Fiction (Cambridge: CUP, 1976), and T. L. Thompson and R. Sheldon, eds, Soviet Society and Culture: Essays in Honour of Vera S. Dunham (Boulder CO: Westview Press, 1988); Fitzpatrick again.
13 And a fur coat for Mrs Red Plenty to wear: for the wearable dimension of the Stalinist good life, see Djurdja Bartlett, ‘The Authentic Soviet Glamour of Stalinist High Fashion’, Revista de Occidente no. 317, November 2007; and ibid., ‘Let Them Wear Beige: The Petit-Bourgeois World of Official Socialist Dress’, Fashion Theory vol. 8 issue 2, pp. 127–64, June 2004
14 And it did grow. It was designed to: a point made in Mark Harrison, ‘Post-war Russian Economic Growth: Not a Riddle’, Europe–Asia Studies vol. 55 no. 8 (2003), pp. 1,323–9. For a consideration of the specific window of opportunity that was open to a command economy in the middle of the twentieth century, see Stephen Broadberry and Sayantan Ghosal, ‘Technology, organisation and productivity performance in services: lessons from Britain and the United States since 1870’, Structural Change and Economic Dynamics vol. 16 issue 4 (December 2005), pp. 437–66.
15 Indeed, there was a philosophical issue here: for the planners’ philosophical fidelity to Marx, despite everhing, see Paul Craig Roberts, Alienation and the Soviet Economy (Albuquerque: University of New Mexico Press, 2002).
16 This made it difficult to compare Soviet growth: there is a whole specialised literature, spread over fifty years, on the difficulty of assessing the USSR’s growth rate. For an accessible way in, see Alec Nove, Economic History of the USSR, and Paul R. Gregory and Robert C. Stuart, Russian and Soviet Economic Performance and Structure, 6th edn. (Reading MA: Addison-Wesley, 1998). For Western calculations during the Cold War, see Abram Bergson and Simon Kuznets, eds, Economic Trends in the Soviet Union (Cambridge MA: Harvard University Press, 1963); Janet G. Chapman, Real Wages in Soviet Russia Since 1928, RAND Corporation report R-371-PR (Santa Monica CA, October 1963); Franklyn D. Holzman, ed., Readings on the Soviet Economy (Chicago: Rand-McNally, 1962). As a useful retrospective, see Angus Maddison, ‘Measuring the Performance of a Communist Command Economy: An Assessment of the CIA Estimates for the USSR’, Review of Income and Wealth vol. 44 no. 3 (September 1998), pp. 307–23. For Soviet reassessments of the historic growth record during perestroika, see Tatyana Zaslavskaya, ‘The Novosibirsk Report’, English translation by Teresa Cherfas, Survey 1 (1984), pp. 88–108; Abel Aganbegyan, Challenge: The Economics of Perestroika, translated by Michael Barratt Brown (London: I.B.Tauris, 1988); and most pessimistic of all, G.I.Khanin’s calculations, as described in Mark Harrison, ‘Soviet economic growth since 1928: The alternative statistics of G.I.Khanin’, Europe–Asia Studies vol. 45 no. 1 (1993), pp. 141–67. Then, for Khanin’s response to the Western studies, see G.I.Khanin, Sovetskii ekonomicheskii rost: analiz zapadnykh otsenok (‘Soviet economic growth: an analysis of western evaluations’) (Novosibirsk: EKOR, 1993). And finally, for Khanin’s revisionist reappraisal of his own previous pessimism, see Khanin, ‘1950s – The Triumph of the Soviet Economy’, which proposes a completely new growth metric based on fuel consumption.
17 People in the West felt the same mesmerised disquiet: for the analogy between Western reactions to Soviet growth and to the growth of Japan/China/India, see Paul Krugman, ‘The Myth of Asia’s Miracle: A Cautionary Fable’, Foreign Affairs vol. 73 no. 6 (November/December 1994), pp. 62–78.
18 Set about civilising their savage growth machine: see Nove, Economic History of the USSR.
19 There was a devil in the detail: the figures in the discussion that follows come from Gregory and Stuart, Russian and Soviet Economic Performance and Structure.
‘Why do you weep?’ asked the wise wife.
‘How can I help weeping?’ replied the archer. ‘The king has commanded me to make apple trees grow on both sides of the bridge, with ripe apples hanging on them, birds of paradise singing in them, and strange kittens mewing beneath them; if all this is not done by tomorrow, he will cut off my head.’
1.
Shadow Prices, 1960
‘Is this heresy?’ said Leonid Vitalevich, no longer a prodigy, no longer a spectre of thought haunting an oversized suit. Time had thickened him; turned him solid and anchored him to the ground. A Stalin Prize for mathematics had brought the family eggs, cheese, ham and a private car. But the hard white light of creation still shone from time to time inside him, indifferent to the changes of the flesh. He settled his glasses on his nose and patted his notes. ‘It is not an unimportant question. If it is heresy to use these mathematical methods, then work on them will wait, unpublished, for another ten or fifteen years – and the chance of applying them will be lost. But if it is not, as I hope our conference will show, a wide space will open for them to be applied and developed. Undoubtedly they will have a positive effect on the national economy. The opportunity exists to save, not tens or hundreds of millions of roubles, but tens and hundreds of billions.’
We have so little practice at this, thought Academician Nemchinov, watching from the back of the seminar room with his eyes lidded, his arms folded comfortably over his belly. Soviet scientists had learned to be good at telling when the party line in their subject was about to change, like birds who deduce from a particular subtle vibration that the firm earth is firm no longer, and take flight just before the earthquake. But until recently they had not often had to exercise the skill of deciding for themselves whether it was time for a change of mind. A peculiar tension was in the room now, the tension of ambiguity in what had been one of the most warily docile of the sciences. It was not clear, yet, who was going to win the present argument; therefore, not clear where the party of safety was going to lie.
The people he had brought together were a mixture: technologists intoxicated by the new power of electronic comput
ers, cyberneticians gripped by the fashionable vision of the planned economy as a complex control system, economists tired of their subject resembling theology more than it did science. Leonid Vitalevich’s specific mathematical ideas would not be what mattered most to them. What they had in common, or rather what they ought to have in common, if they could persuade themselves it was possible, was the need for the plug of dead thought to be removed that was preventing all their various projects alike from developing. He himself had a nice little practical plan: he wanted to get software written, in the next four or five years, which would run the economy better than the blundering, improvising, suboptimal decisions of human planners.
‘Hey,’ murmured a latecomer, slipping into the neighbouring seat in a cloud of better-than-Soviet cologne.
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