A Textbook issued by the Economics Institute of the Academy of Sciences of the U.S.S.R
Part III : THE SOCIALIST MODE OF PRODUCTION
B. THE SOCIALIST ECONOMIC SYSTEM
CHAPTER XXX : THE LAW OF PLANNED PROPORTIONAL DEVELOPMENT OF THE NATIONAL ECONOMY
The Necessity for Planned Development of the Economy in a Socialist System
As is known, every social formation requires for its existence and development definite proportions in the distribution of labour and means of production among the different branches of the national economy. Under capitalism the essential proportions in the development of production are arrived at spontaneously, through constant fluctuations, disproportions and periodic crises. In directing their capital into one or other branch of production, capitalists are guided by such spontaneous barometers of economic life as the fluctuations of market prices, rates of profits, rates of interest, quotations of shares, etc.
In socialist economy, as a result of the socialisation of the means of production, the spontaneous barometers of economic life are abolished. Socialist society cannot develop blindly and by drifting along of its own accord. In socialist conditions the necessary proportions in the distribution of means of production and labour-power between branches of the economy can only be achieved in a planned way. Planned development of socialist economy is made necessary and possible by social ownership of the means of production. Engels stated that the passing of the means of production into social ownership makes possible “socialised production upon a predetermined plan”. (Anti-Duhring, English edition, 1954, p. 395.) In contradistinction to private ownership of the means of production, which disunites the commodity producers and gives rise to competition and anarchy in production, social ownership unites a multitude of enterprises into a single national economic whole, subordinated to a single aim arising from the requirements of the basic economic law of socialism. Large-scale socialised production in a socialist society can develop only through Ii general plan, which provides unity of action for the whole of society and ensures the necessary proportions in the development of individual industries and enterprises and of the national economy as a whole.
Demonstrating the need for the planned development of socialist economy, Lenin pointed out that the economy cannot be run without a longterm plan, and that one of the gigantic tasks of the socialist revolution was
“the transformation of the whole of the State economic mechanism into a single, huge machine, into an economic organism that will work in such a way as to enable hundreds of millions of people to be guided by a single plan”. (Lenin, Selected Works, I2-vol. edition, vol. VII, p. 287.)
Capitalism is inconceivable without competition and anarchy in production, and the consequent waste of social labour; and in the same way socialism is inconceivable without planned development of the national economy, which enables social labour and its products to be utilised rationally and economically.
Thus social, socialist ownership of the means of production, and large-scale socialist production both in industry and in agriculture, make the planned, proportional development of the whole economy objectively possible and necessary.
The planned, proportional development of the national economy is an economic law of socialism.
The Basic Features and Requirements of the Law of Planned Development of the National Economy
The law of planned, proportional development of the national economy is the regulator of socialist industry; distribution of means of production and labour-power among the various branches of socialist economy is effected on the basis of this law. This law requires: planned conduct of the national economy, proportional development of all branches of socialist economy, the fullest and most effective use of the country’s material, labour and financial resources.
The law of planned development of the national economy signifies, above all, the need for due proportion between the parts and elements of the national economy. V.I. Lenin pointed out that planning means constant, deliberately supported proportionality.
But the tasks on which the proportions planned for the national economy must be dependent are not included in the law of planned development. The nature of the proportions in socialist economy is determined by the requirements of the basic economic law of socialism.
“The law of planned development of the national economy can yield the desired result only if there is a purpose for the sake of which economic development is planned. . . . This purpose is inherent in the basic economic law of socialism.” Stalin, Economic Problems of Socialism in the U.S.S.R., 1952, English edition, p. 46.)
Consequently, the law of planned, proportional development of the national economy plays the part of a regulator of production in socialist economy in accordance with the requirements of the basic economic law of socialism.
The way in which the requirements of the basic economic law of socialism are met at each particular stage depends on the level of development of the productive forces which has been reached, the material resources which are available, and the internal and external situation of the socialist country. The proportions in the national economy are fixed in accordance with these factors and on the basis of the law of planned proportional development.
The major proportions in the development of the national economy include in the first place a correct relationship between the production of means of production and the production of consumer goods. As was stated above, for continuous growth of production on the basis of a rising technical level branches producing means of production must develop more rapidly than branches making consumer goods. The development of heavy industry is a prerequisite for technically equipping all branches of the national economy, including the light and food industries, which produce consumer goods, and for their continuous growth.
A correct relationship between the two departments of social production therefore requires above all priority development of branches producing means of production, especially heavy industry with engineering as its core. Further, it requires growth of the consumer goods’ branches sufficient to satisfy the continuously increasing needs of the mass of the people to the maximum extent possible at the given level of productive forces.
The development of those branches of industry 4which produce articles of mass consumption is realised on the basis of the development of heavy industry in the U.S.S.R. During the period from 1925 to 1954 the production of means of production as a whole increased more than 60 times and the production of consumer goods 14 times. In 1954 the production of means of production from the whole of industry increased about 3.5 times compared with 1940 and the production of consumer goods almost doubled. The level reached in the production of consumer goods and the rate of its growth are still not in accord with the increased needs of the population for these goods. Real conditions have been established for a rapid increase in the production of consumer goods on the basis of the success achieved in developing heavy industry.
In view of this, the Communist Party and the Soviet State, on the basis of priority development of heavy industry, are putting into effect a large programme for the rapid growth of agriculture and the light and food industries, so that within a short period the production of consumer goods will be considerably increased and the material conditions and cultural level of the Soviet people will be further improved.
Fixing correct proportions between industry and agriculture is of major importance for planned development of the national economy. The proportions in the development of industry and agriculture must ensure, on the One hand, the leading position of industry, which equips agriculture with advanced technique and supplies manufactured goods to the countryside, and on the other hand, the further growth of State farm and collective farm production, so as to supply the urban population with food and industry with raw materials.
During the period of its existence, socialist agriculture has been very successful on the basis of the collective farm system. But the rate of growth of agriculture is insufficient for satisfying society’s growing needs for agricultural products. From 1940 to 1952, industrial output increased 2.3-fold but the gross output of agriculture in comparable prices increased overall by only 10 per cent. Important branches of agriculture such as grain production, livestock farming, and the production of potatoes and vegetables, are particularly behind. As a result an obvious disparity has appeared between the increased need of the population for grain, meat, dairy products, vegetables, fruit, etc., on the one hand, and the level of agricultural production on the other.
The lag of agriculture behind the growing needs of society has made it impossible to increase consumption to the level it could have reached at the present stage of the country’s industrial development. The great development of heavy industry has established conditions for a steep advance in socialist agriculture. It has become possible and necessary to speed up the rate of growth of agricultural production in every way. In view of this, the Plenum of the Central Committee of the Communist Party of the Soviet Union in January 1955 set the following task: to achieve in the next five or six years a gross harvest of grain in the country of not less than 10,000 million poods annually, and to double, or more than double, the output of the chief agricultural products, so that the growing needs of the population. for foodstuffs are satisfied in full and the light and food industries are supplied with the necessary raw materials.
Industry and agriculture are closely interdependent, as are, in their turn, the separate branches of industry and agriculture. Because of this, the uninterrupted development of production is possible only if there are correct proportions between the separate branches within industry—for instance, between extractive and processing industry—and within agriculture, as well as between industry and agriculture as a whole. For example, the lag in livestock farming over a long period has held up the further development of the light and food industries, and in turn the growth of livestock farming was retarded by insufficient fodder supplies, by the lag in grain farming. The Soviet State is getting rid of this disparity by a decisive improvement in livestock farming, in its sources of fodder supplies and in grain farming.
If the continuously rising demand of the working people for agricultural produce and manufactured goods is to be met smoothly and in a planned way, the supply of commodities for personal consumption must correspond to the rising money incomes of the population at the given price-level, and there must be the right proportions between the growth of output of consumer goods and the development of trade turnover.
As a result of the considerable increase in recent years of the real wages of workers and other employees and also of the incomes of collective farmers, the demand of the working people for various commodities is developing much more rapidly than the increase in the output of mass consumer goods and food products. The elimination of this disparity is the purpose of the programme for a steep rise in agriculture and an increase in the output of manufactured commodities and food, on the basis of a further development of heavy industry, which programme was adopted and is being successfully fulfilled by the Communist Party and the Soviet State.
Socialism has abolished the antagonistic contradiction between accumulation and consumption which is inherent in capitalism. In accordance with the requirements of the basic economic law of socialism, the correct proportions between accumulation and consumption are those which enable both the continuous growth of socialist production and the systematic improvement of the material welfare and the cultural level of the mass of the people.
The proportional distribution of resources among the different branches of the national economy largely depends on how far these resources are rationally utilised. If, for example, the average expenditure of metal per lathe is reduced, then the total requirements in metal for the machine-tool industry is reduced, or the output of machine tools is increased. This in turn leads to a change in the proportions between metallurgy and engineering. Rational and economical utilisation of resources is one of the conditions which ensure the constant and rapid growth of industry.
Proportional development of the national economy implies the rational location of socialist production. Industry must be brought as near as possible to sources of raw materials and to the consuming regions, and the economy of each region must be developed as a whole, taking its special features into account, correctly co-ordinating branches of production, and using local resources as fully as possible. Irrational and lengthy hauls by rail and water must be reduced. The national republics must be developed economically and culturally.
Socialist location of industry rests on the country’s division into economic regions. Division into economic regions is a planned division of the whole of the country’s territory into separate large regions in accordance with their economic and natural features.
As already stated, thanks to the advantages of the socialist system, considerable achievements have already been obtained in the rational location of industry in the U.S.S.R. These advantages, however, are by no means utilised to their full extent and consequently there are shortcomings in the location of industry which give rise to partial disproportions in the national economy, hinder a more rational and effective use of local resources and result in superfluous long hauls.
Thus the disproportion between the production and consumption of various sorts of ferrous rolled metal in the South, the Urals and Eastern Siberia inevitably results in massive hauls of ferrous metals. The lag of coal extraction behind coal requirements in the European part of the U.S.S.R. means that coal has to be transported over enormous distances.
About 2,000 wagon loads of uncleansed wool are annually transported from Siberia and Central Asia to the wool-cleansing works situated in the Ukranian S.S.R., but some 500 wagon loads of cleansed wool are annually sent from the Ukraine to Siberia, Central Asia and the Far East.
The elaboration of a scientifically based plan for the development and location of the major branches of Soviet industry during a period of ten to fifteen years has become vitally necessary.
In the conditions of the transition from socialism to the higher phase of communism proportions are also required in developing the national economy which will further strengthen and develop socialist production and gradually establish the material production basis for communism and an abundance of goods. In a situation in which a number of imperialist powers are carrying out an armaments drive, while aggressive imperialist circles are developing plans for war against the countries of the socialist camp, the economic proportions in socialist economy must provide the socialist country with a powerful economic base in the event of a hostile attack from abroad. A rapid growth of socialist industry and collective farm production is a most important prerequisite for strengthening the economic independence and defensive capacity of the U.S.S.R.
The existence of a unified and powerful socialist camp makes essential the planned co-ordination of the economy of all the countries in this camp.
Economic collaboration and mutual assistance between the U.S.S.R. and the People’s Democracies makes it easier to solve problems of socialist construction, leads to an increase in these countries’ economic independence of the capitalist world and a strengthening of their defensive capacity and promotes the building of communism in the Soviet Union.
The Law of Planned Development of the National Economy and Socialist Planning
The requirements of the law of planned development of the national economy are put into effect by the Communist Party and the Socialist State, by means of plans which organise and direct into useful channels the creative activity of the mass of working people. Planned management of the national economy is a very important feature of the work of the Socialist State in its function as economic organiser.
“By developing economy in a planned way, the Socialist State is able to ensure uninterrupted, rapid and all-round growth of production and. maximum satisfaction of the needs of the people. In the hands of the Soviet State, planning is a mighty force, organising and guiding the labour of millions of people.” (N. A. Bulganin. “The Tasks of the Further Growth of Industry, Technical Progress and Improvement of the Organisation of Production.” Report of the Plenum of the C.C. of the C.P.S.U., July 4, 1955.)
Socialist planning is built up on a strictly scientific basis. It requires constant generalisation of the practical experience in building communism and the utilisation of all the achievements of science and technology. Managing the national economy in a planned way means being able to anticipate. Scientific foresight is based on knowledge of objective economic laws and on the needs of development in the material life of society which have matured.
The principal prerequisite for the correct planning of socialist economy is that the law of planned development of the national economy must be mastered and skilfully utilised.
The law of planned development of the national economy must not be confused with the planning of the national economy carried out by the appropriate bodies of the Socialist State, nor with the annual and five-year plans of national economic development. The law of planned development of the national economy is an objective economic law. It enables State institutions to plan social production correctly. But possibility must not be confused with reality. To turn possibility into reality it is necessary to learn how to apply the law of planned development, and it is necessary to compile plans which fully reflect the requirements of the law.
In practice, plans do not always fully reflect the requirements of the law of planned development of the national economy. When these requirements are not met, the law of planned development of the national economy makes itself felt by the appearance of disproportions in individual parts of the economy, and by interruptions in the normal process of production and circulation. If it is planned, for example, to produce a certain number of cars, but the plan does not provide for production of the necessary amount of sheet steel, this may lead to under-fulfilment of the car production plan. Similarly, the plan for smelting pig-iron will not be effective unless it is backed by the corresponding production of coke.
Planning bodies have to take the requirements of the law of planned development correctly into account in compiling plans, They must not permit disproportions to appear, and if disproportions do appear the planners must take steps to get rid of them in time. Material, financial, and labour reserves are of great importance for the uninterrupted development of the national economy. They make it possible to get rid of disproportions quickly when they appear in different parts of the economy, or to prevent their appearance: they make flexible switching of resources possible.
Planning the national economy can therefore be successful, and can ensure its proportionate development and uninterrupted growth of production, provided that it correctly reflects the requirements of the law of planned development of economy and conforms in all respects to the requirements of the basic economic law of socialism.
Socialist planning makes use also of the other economic laws of socialism. Thus, making use of the economic law of distribution according to work done is an essential condition for planned management of the economy. This law provides material incentives for workers to increase labour productivity and is one of the prime movers of socialist production.
Socialist planning presupposes the need to make use of economic instruments connected with the operation of the law of value: prices, money, trade and credit. Cost accounting is an instrument of planned management, and provides incentives to produce economically, to mobilise internal reserves, to reduce the cost of output, and to increase the profitability of an enterprise.
Socialist planning requires a profound study and fullest utilisation of modern achievements of science and technology at home and abroad for the purpose of ensuring rapid technical progress in all branches of the national economy, constant improvements in technology and a steady rise in the productivity of labour.
The Communist Party and the Socialist State start from the requirements of the economic laws of socialism, draw general conclusions from their experiences of building the economy and of cultural development, and take into account the whole complex of internal and external conditions in which the country of socialism finds itself. On this basis they fix at each stage the most important economic and political problems to be solved by the State plans. The volume of output, the rate at which production is to expand in each branch of the national economy, the amount of investment, the level of wages, etc., are all determined on this basis.
Planned management of Soviet economy is carried out by the Councils of Ministers of the U.S.S.R. and the Union Republics on the basis of directives from the Communist Party. State plans are worked out on the scale of the national economy as a whole, and also by branches and by individual government departments, by republics, territories, regions, and economic districts. Plans are worked out and their fulfilment is supervised by the State Commission of the Council of Ministers of the U.S.S.R. for Long-Term Planning (Gosplan U.S.S.R.), by the State Economic Commission of the U.S.S.R for Current Planning (Gosekonomkomissiya U.S.S.R.), by Union and Republic ministries, and by those local Soviets which have their own planning organs.
Socialist planning is constructed by co-ordinating long-term plans, which embody the basic line of development over a period of years, with current plans, which are specific work-programmes covering shorter periods. Long-term plans include both five-year plans of national economic development and plans which cover a longer period. Current plans include annual plans, and are elaborated on the basis of the long-term plans. As socialist economy develops, long-term planning assumes ever greater significance. V.I. Lenin pointed out that “it is impossible to work without having a plan intended for a lengthy period and for achieving serious success”. (V.I. Lenin, “Report on the activity of the Council of People’s Commissars at the Eighth All-Russian Congress of Soviets”, Collected Works, Russian edition, vol. XXXI, p. 479.)
It is part of the task of the State Commission of the U.S.S.R. for Long-term Planning to work out the Five-Year Plans, split up into separate years, and also the long-term plan of development of the branches of national economy and of the whole of the national economy over a longer period, ten to fifteen years.
It is part of the task of the State Economic Commission of the U.S.S.R. to work out, on the basis of the Five-Year Plans, the annual State plans of the development of the national economy and the plans for the supply of materials and technical equipment, split up into quarterly periods. Every works, mine; State farm, M.T.S. and other State enterprise has its technical and production financial plan, compiled on the basis of planned targets fixed by the State: this is an overall plan of the production, technological, and financial work of the enterprise concerned.
In the planned development of socialist economy, centralised planned management of the economy, achieved by fixing the basic planning indices centrally, has to be combined with affording local bodies the necessary independence and initiative in planning production. In the work of planning it is extremely great importance to take into account local conditions and specific local features. A stereotyped approach planning which ignores these specific features ignores also t requirements of the law of the planned development of national economy. Excessive centralisation of planned management, and attempts to plan everything from the centre down to the last detail, without sufficient knowledge and consideration of local conditions and possibilities lead to mistakes in planning, fetter local initiative and prevent the full utilisation of local resources and of the tremendous reserves which can be found in different branches of socialist economy and in different enterprises.
The special features of State planned management of collective farms result from the nature of co-operative and collective farm property. Planned management of collective farms by Socialist State rests on the independent initiative of the mass of collective farmers. The initiative of the collective farms and their members is one of the decisive factors in improving agriculture and in making full use of the economic and natural conditions in every geographical district and every collective farm.
A correct planning system presupposes that basic and decisive indices and targets for agricultural production, and for deliveries of agricultural produce to the State; are fixed for each region, territory and republic by the central planning bodies. These assignments are fixed according to commodity output, starting out from the need to ensure that the needs of the population as regards food, and of industry as regards raw materials, will be satisfied.
Guided by the assignments for the delivery to the State of produce from field cultivation and animal husbandry, the collective farms determine, at their own discretion, the sizes of the areas sown to various crops and also the productivity of animal husbandry and the number of the individual types of livestock. The annual production plans, worked out by the boards of the collective farms, are examined and adopted at general meetings of the collective farmers.
Further improvement in socialist planning methods will require consistent centralisation in planning basic and deciding indices, while at the same time extending in every way the part played by local bodies, industrial enterprises, and State and collective farms in planned management of production and encouraging their initiative. It also presupposes a differentiated approach in planning, suited to every particular economic region, agricultural zone, enterprises and collective farm.
In planned management of the national economy, its key links must be singled out. The plan singles out the most important branches, on which the successful fulfilment of the whole national economic plan depends. The key links of the Five-Year Plans are the branches of heavy industry, including engineering, since they determine the development of all branches of industry and the national economy as a whole. These branches have priority in the allocation of means of production, labour-power, and money. The other branches are planned to conform to the leading branches, so that the whole economy will advance on this basis, and its component parts will be coordinated as rationally as possible.
The law of planned, proportional development of the national economy requires that the development plans of separate branches should be strictly coordinated and inter-connected in a single economic plan.
“The plans of the various branches of production must be strictly co-ordinated, combined, and together made to constitute that single economic plan of which we stand in such great need.” (Lenin, “Report on the work of the Council of People’s Commissars”, delivered at the Eighth All-Russian Congress of Soviets. Selected Works, I2-voL edition, Vol VIII, p. 272.).
Economic plans embrace a definite range of indices, in both physical terms (types and variety of output, etc.) and money terms (amount of output, cost of production, revenue and expenditure, etc.). Physical and monetary indices both include what are distinguished as qualitative indices (growth of labour productivity, reduction in costs, profitability, improvement in the quality of output, and efficiency of utilisation of the means of production such as equipment, machinery, machine tools, raw materials, etc.). The main index in agricultural production: is the maximum quantity of output per 100 hectares (250 acres) of agricultural land, with the least expenditure of labour and means of production per unit of output.
The plan of development of the national economy is divided into the following sections: the production programme for industry, agriculture; plan of transport and development of communications; plan of capital construction work and of development and introduction of new techniques; plan of State supplies for the national economy; labour and wages plan; plan of trade turnover and deliveries; plan of social and cultural measures; plan of production costs in industry; plan of the development of the national economy in each of the Union Republics and economic areas; summarised section of the plan of national economy, including total indices of the development of the national economy and the most important targets of separate branches of industry. The final total index of the plan is the growth of the national income and the relationship in it between the funds of consumption and accumulation. The planning of prices, finances (the State Budget, credit and cash plans of the State Bank) and the planning of foreign trade are a component part of State planning.
The plan of development and introduction of new techniques covers the largest assignments, economically important on a nation-wide scale, for the mechanisation and automation of production processes, the mastering of the production of new, machines and materials, for the introduction of advanced technological processes and also the most important scientific research, and designing and experimental work connected with new techniques.
The correct location of the productive forces, the complex development of economic areas and the co-ordination of the plans of the national economy of the U.S.S.R. with the economic plans of the People’s Democracies assume ever-increasing importance in the field of socialist planning.
The elaboration of a system of balances is one of the most important methods by which correct national economic proportions are established, in conformity with the requirements of the law of planned development of the national economy. The Socialist State uses balances to lay down proportions in national economic development, as expressed in physical and monetary terms, to decide the amount of resources and to distribute them both among the different branches of production and by types of output. In the balances, resources available are set down against requirements, and this makes it possible to discover bottlenecks in the economy and discrepancies in the level and rate of development of different branches, and to adopt measures for getting rid of the bottlenecks. The system of balances also makes it possible to uncover additional resources from savings in materials and improved utilisation of equipment. These resources are utilised to increase production and consumption.
Balances are divided into material (physical) balances, balances in money terms, and manpower balances.
Material balances show the relation between production and consumption of a particular product or group of products, in physical terms. Material balances are compiled for the most important products-there are for example balances of machine tools, ores, metal, cotton, and other means of production; and also balances of Consumer goods, such as meat, sugar, butter, etc.
Material balances are needed in compiling material supply plans, by which means of production are allocated to all branches of the national economy, distinguished according to ministries and government departments. These plans provide for the better utilisation of equipment, raw materials, fuel, etc., through the introduction of progressive standards of output.
Balances in money terms include the balance of money income and expenditure of the population, the balance of the national income and its distribution, etc.
Manpower balances determine the labour and skilled labour requirements of the national economy and the sources from which these requirements will be met.
The most comprehensive balance is the balance of the national economy which represents a system of economic indices characterising the basic relationships and proportions in socialist economy. The balance of the national economy includes the following basic balances: balance of the total social product, balance of the national income, balance of labour.
Socialist planning reflects the requirements of the law of planned development of the national economy, and is therefore directive in character. State plans are not prognostications but directives, binding on governmental bodies and defining the direction of economic development for the whole country.
After State plans have been approved by the supreme bodies of the Socialist State they acquire the force of law, and it is obligatory to carry them out. Business managers are obliged to see that the plan is fulfilled by the respective enterprises rhythmically and evenly, throughout each year and each quarter, in variety of goods as well as in total gross output. They also have to strive for a consistent improvement in the quality of output, and a reduction in costs as fixed in the plan.
The most important, specific feature of socialist planning is that it combines the ensuring of proportionality with a constant growth of socialist production and technical progress. The proportions of the development of the national economy established in the plan are not something rigid and immutable. Socialist planning is practical and rallies people to get things done. The plans give direction to the work of millions of people on a nation-wide scale, and provide a clear perspective to the mass of working people, inspiring them to great achievements in their work. The plan is the living creative work of the mass of the people. The reality of production plans lies in the millions of working people who are creating a new life.
Drawing up the plan is merely the point at which planning starts. Lenin called the plan for the electrification of Russia (Goelro) a second party programme, and emphasised that “this programme will be improved, elaborated, perfected, and modified, every day, in every workshop and in every volost”. (Lenin, “Report on the work of the Council of People’s Commissars”, delivered at the Eighth All-Russian Congress of Soviets. Selected Works, 12-Vol. edition, vol. VIII, p. 275.) Every plan is made more precise, modified and improved on the basis of the experience of the masses, taking into account the actual way in which it is being fulfilled: for no plan can anticipate all the possibilities latent in socialist society, which are disclosed only in the course of the work. In the struggle to fulfil the plan in factory and mill, State farm and collective farm, the creative initiative and activity of the masses comes into play, socialist emulation develops, and new reserves for speeding-up economic development are discovered. The work of rallying the mass of the people is carried out by the Communist Party and, under its leadership, by State and public organisations, the trade unions and the Young Communist League. The active participation of the mass of the people in the effort to fulfil the plans for developing the national economy is one of the most important conditions for the successful fulfilment and overfulfilment of the plans, for accelerating the rates of construction of Communist society.
Socialist plans can act as a rallying force only if the planning bodies are guided by the new and advanced developments, which appear in the practical work of building communism, and in the creative efforts of the mass of the people. Calculations for plans must not use standards of labour outlay, use of equipment, and consumption of fuel and materials, which are based on arithmetical averages of the level of output achieved in production. They must use advanced standards and output rates, abreast of the experience of the more advanced enterprises and workers.
The Communist Party and the Soviet State struggle hard, on the one hand, against attempts to compile underestimated plans, which do not spur anyone on to greater efforts and take the bottlenecks as their criterion, and, on the other hand, against speculative planning, which does not reckon with the realistic possibilities of developing socialist economy. Socialist planning involves a persistent struggle against tendencies to provincialism and departmentalism. These anti-State tendencies are expressed in attempts to counterpose the interests of a particular enterprise, district, or government department to the general interests of the State.
Checking plan fulfilment is one of the most important aspects of planned management of the national economy, and makes it possible to establish how far the plan correctly reflects the requirements of the law of planned development of the national economy, and how it is being fulfilled. It makes possible the discovery in good time of any disproportions which exist, the forestalling of the appearance of new disproportions in the economy, the finding of new productive reserves, and the making of appropriate adjustments in the national economic plans.
Planned management of socialist economy requires a unified system of national economic accounting. V.I. Lenin taught that “Socialism is accounting”. Planned socialist construction is inconceivable without correct accounting, and accounting inconceivable without statistics. In socialist economy accounting and statistics are intimately connected with the nation economic plan. Statistical data on plan-fulfilment are essential material in compiling the plan for the ensuing period. The socialist system of accounting and statistics makes it possible to supervise the course of the fulfilment of the whole plan and of its separate parts.
Advantages of Planned Economy
Socialist society possesses tremendous advantages over capitalism owing to the planned development of the national economy.
In capitalist society, proportionality is fortuitous and the economy develops cyclically, by means of crises which recur periodically. In contrast to this, socialist economy develops uninterruptedly along an ascending curve and at rapid rate, on the basis of proportions laid down by the Socialist State in conformity with the requirements of the law of planned development of the national economy and the basic economic law of socialism. Socialist economy is free from economic crises, which break up the economy, do colossal material damage to society, and periodically throw it back.
During the pre-war Five-Year Plans (a period of about thirteen years), the Soviet Union made a leap which transformed it from a backward and agrarian country into an advanced and industrial one. In this period the capitalist world experienced two economic crises (1929-33 and 1937), which were accompanied by tremendous destruction of the forces of production, a huge growth in unemployment and acute further impoverishment of the mass of the people. In the post-war period, socialist economy in the U.S.S.R. has continuously gone forward according to plan, while the U.S.A. and a number of other capitalist countries experienced in these years the 1948-9 crisis, which caused a decline in output and an increase in unemployment. There was also a crisis fall of production in the U.S.A. in 1953-4.
Unemployment is eliminated from socialist planned economy, so that the whole of the labour-power of society is utilised. Capitalist economy inevitably gives rise to unemployment, and the capitalists use unemployment as a means of providing their enterprises with cheap labour-power.
Planned economy presupposes that the development of production will be directed to satisfying the needs of the whole of society. Capitalists invest in those branches in which the rate of profit is higher.
In socialist planned economy, science and technology develop in a planned way, corresponding to the needs of the economy. Under capitalism, technological development is governed by the law of competition and anarchy in production. It takes place extremely unevenly, and this inevitably increases disproportionality in production.
The profitability principle of private capitalism is governed by the aim of acquiring the maximum profits. In contrast to this, the law of planned development of the national economy, and socialist planning, ensure a higher form of profitability: profitability considered from the point of view of the economy as a whole.
Socialist planned economy frees society from the huge wastage of social labour inherent in capitalist economy; it makes possible the most economical and effective use of all resources, both those existing within enterprises and on a national economic scale, continually uncovering new sources and reserves for increasing production.
By planning, the Socialist State ties together the production of different enterprises and brings about the most rational location of socialist production.
The experience of the Soviet Union in the field of planning the national economy attracts the attention and interest of all countries of the world. Bourgeois scientists preach “planned capitalism”, sowing illusions among the working people that the monopolies, by eliminating competition, provide the conditions for planning capitalist economy and eliminating economic crises. But, as we have shown, the decisive prerequisite for planned management of economy is the existence of social ownership of the means of production and of the law of planned, proportional development of the national economy. Capitalist society, however, is dominated by private ownership of the means of production and the law of competition and anarchy of production. The limitation of competition in the monopoly enterprises and industries is accompanied by a sharp intensification of competition among the monopolies themselves and also between the monopoly and non-monopoly enterprises and industries. All attempts at planning the national economy and eliminating crises of overproduction in the capitalist countries inevitably meet with failure. The Soviet experience of planning the national economy is widely used in the People’s Democracies, which are successfully developing their economy on the basis of State plans.
(1) Planned development of the national economy is made necessary and possible by social, socialist ownership of the means of production. Planned, proportional development of the economy is an economic law of socialism.
(2) The law of planned, proportional development of the economy is a regulator of the distribution of means of production and manpower in socialist economy, in accordance with the basic economic law of socialism. It requires the planned management of the national economy, the development of all branches of sodalist economy on a proportional basis, the fullest and most effective use of material, labour and financial resources.
(3) Socialist planning is successful if it correctly meets the requirements of the law of planned development of the national economy, and conforms fully to the requirements of the basic economic law of socialism. In the actual planned management of the economy, economic instruments connected with the operation of the law of value are utilised. The balance method of planning is of great importance in fixing correct proportions for national economic development.
(4) Planned management of the national economy is a most important aspect of the Socialist State’s function as economic organiser. National economic plans are worked out by State bodies on the basis of directives determined by the Communist Party, and are based on scientific generalisation from the experience of socialist construction, on taking into account the advantages afforded by a sodalist economic system, and on the external and internal situation. State plans are geared to everything advanced which arises in the practice of communist construction, in the creative work of the masses, and are directive in character. To carry on the national economy in a planned way, the mass of the people must be rallied to fulfil and exceed the plan targets, and daily checking of the fulfilment of the plan must be organised.
(5) A very great advantage of socialism over capitalism is planned development of the national economy, without crises. This brings about a saving in resources which the bourgeois system cannot achieve, and makes it fully possible for all sides of production to grow continuously and rapidly in the interests of the mass of the people.